<PAGE>
======================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period to
-------- --------
Commission file number 1-7955
-------------
INTERNATIONAL COMFORT PRODUCTS CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Canada 98-004520009
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
201 Fourth Avenue North, Suite 1700,
Nashville, Tennessee 37219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (615) 726-5200
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
---- ----
As of October 31, 1997, there were 39,813,179 shares of International
Comfort Products Corporation Ordinary Shares outstanding.
======================================================================<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
INDEX TO FINANCIAL STATEMENTS INCLUDED IN THIS
QUARTERLY REPORT ON FORM 10-Q
INTERNATIONAL COMFORT PRODUCTS CORPORATION
AND SUBSIDIARIES
(Unaudited)
Page
----
Consolidated Statements of Income:
Three months ended 9/30/96 and 9/30/97 3
Nine months ended 9/30/96 and 9/30/97 4
Consolidated Balance Sheets (9/30/96, 9/30/97 and 12/31/96) 5 - 6
Consolidated Statements of Changes in Financial Position
(Nine months ended 9/30/96 and 9/30/97) 7
Notes to Consolidated Financial Statements 8 - 10
-2-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION
Consolidated Statements of Income
For the Three Months Ended September 30, 1996 and 1997 - UNAUDITED
(In Millions of U.S. Dollars) - Canadian GAAP
<TABLE>
<CAPTION>
1996 1997
- ----------------------------------------------------------------------------
<S> <C> <C>
Operating Revenue $ 178.7 $ 177.1
Cost of Sales 140.7 142.3
- ----------------------------------------------------------------------------
Gross Margin 38.0 34.8
Selling, General and Administrative Expenses 24.9 22.6
- ----------------------------------------------------------------------------
Operating Profit 13.1 12.2
- ----------------------------------------------------------------------------
Financial Expenses
Interest expense 5.4 4.4
Amortization of debt issuance costs 1.0 0.3
- ----------------------------------------------------------------------------
6.4 4.7
- ----------------------------------------------------------------------------
Net Income $ 6.7 $ 7.5
============================================================================
Average number of shares (in millions) 39.2 39.7
============================================================================
Earnings per Ordinary Share $ 0.17 $ 0.19
============================================================================
</TABLE>
See accompanying notes
-3-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION
Consolidated Statements of Income
For the Nine Months Ended September 30, 1996 and 1997 - UNAUDITED
(In Millions of U.S. Dollars) - Canadian GAAP
<TABLE>
<CAPTION>
1996 1997
- ----------------------------------------------------------------------------
<S> <C> <C>
Operating Revenue $ 506.0 $ 491.3
Cost of Sales 409.4 390.2
- ----------------------------------------------------------------------------
Gross Margin 96.6 101.1
Selling, General and Administrative Expenses 66.8 67.0
- ----------------------------------------------------------------------------
Operating Profit 29.8 34.1
- ----------------------------------------------------------------------------
Financial Expenses
Interest expense 15.0 14.0
Amortization of debt issuance costs 2.2 0.9
- ----------------------------------------------------------------------------
17.2 14.9
- ----------------------------------------------------------------------------
Income From Continuing Operations 12.6 19.2
Discontinued Operations (3.1) -
- ----------------------------------------------------------------------------
Net Income $ 9.5 $ 19.2
============================================================================
Average number of shares (in millions) 39.1 39.6
============================================================================
Earnings per Ordinary Share 1996 1997
- ----------------------------------------------------------------------------
From continuing operations $ 0.32 $ 0.49
After discontinued operations 0.24 0.49
============================================================================
</TABLE>
See accompanying notes
-4-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION
Consolidated Balance Sheets
(In Millions of U.S. Dollars) - Canadian GAAP
<TABLE>
<CAPTION>
September 30, December 31,
----------------- -------------
1996 1997 1996
- ---------------------------------------------------------------------------
UNAUDITED
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and short-term deposits $ 15.2 $ 19.4 $ 17.6
Restricted cash 1.8 2.0 2.4
Accounts receivable 99.8 94.8 78.0
Note receivable from Pameco - 10.1 -
Inventories 124.7 103.8 117.7
Prepaid expenses and other 1.5 1.1 3.6
- -----------------------------------------------------------------------------
243.0 231.2 219.3
- -----------------------------------------------------------------------------
Fixed Assets
Property, plant and equipment 207.1 216.2 213.2
Accumulated depreciation 108.6 123.1 113.0
- -----------------------------------------------------------------------------
98.5 93.1 100.2
- -----------------------------------------------------------------------------
Other and Intangible Assets 25.5 21.5 25.5
- -----------------------------------------------------------------------------
$ 367.0 $ 345.8 $ 345.0
=============================================================================
</TABLE>
See accompanying notes
-5-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION
Consolidated Balance Sheets
(In Millions of U.S. Dollars) - Canadian GAAP
<TABLE>
<CAPTION>
September 30, December 31,
----------------- -------------
1996 1997 1996
- ----------------------------------------------------------------------------
UNAUDITED
<S> <C> <C> <C>
LIABILITIES
Current Liabilities
Short-term borrowings $ 50.7 $ 21.2 $ 39.0
Accounts payable 48.2 44.5 39.6
Accrued liabilities 26.6 22.2 28.2
Product warranty 8.7 8.6 8.7
Current portion of long-term debt 25.0 - -
- -----------------------------------------------------------------------------
159.2 96.5 115.5
Long-Term Debt 140.0 165.0 165.0
Product Warranty 19.6 17.8 17.9
Other Long-Term Liabilities 18.3 17.0 17.8
- -----------------------------------------------------------------------------
337.1 296.3 316.2
- -----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Ordinary Shares 169.1 171.0 169.2
Deficit (137.4) (119.2) (138.4)
Foreign Currency
Translation Adjustment (1.8) (2.3) (2.0)
- -----------------------------------------------------------------------------
29.9 49.5 28.8
- -----------------------------------------------------------------------------
$ 367.0 $ 345.8 $ 345.0
=============================================================================
</TABLE>
See accompanying notes
-6-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION
Consolidated Statements of Changes In Financial Position
For the Nine Months Ended September 30, 1996 and 1997 - UNAUDITED
(In Millions of U.S. Dollars) - Canadian GAAP
<TABLE>
<CAPTION>
Cash Provided By (Used for) 1996 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Income from continuing operations $ 12.6 $ 19.2
Items not involving current cash flows
Depreciation and amortization 14.0 13.0
Changes in working capital
Accounts receivable (13.3) (22.1)
Note receivable from Pameco - (10.1)
Inventories (39.2) ( 3.8)
Prepaid expenses and other 3.9 1.8
Accounts payable, accrued liabilities,
and product warranty 2.2 4.7
- -----------------------------------------------------------------------------
(19.8) 2.7
Discontinued Steel Pipe Operation 0.5 -
- -----------------------------------------------------------------------------
(19.3) 2.7
- -----------------------------------------------------------------------------
INVESTMENT
Property, plant and equipment (7.9) (5.4)
Acquisition of Automatic Control House - (1.8)
Sale of Coastline and factory branches - 22.3
Discontinued Steel Pipe Operation
and other 8.9 -
- -----------------------------------------------------------------------------
1.0 15.1
- -----------------------------------------------------------------------------
FINANCING
Ordinary shares issued 0.4 1.8
Refinancing costs and other (1.8) -
Discontinued Steel Pipe Operation (2.7) -
- -----------------------------------------------------------------------------
(4.1) 1.8
- -----------------------------------------------------------------------------
Increase (Decrease) in Net Borrowings 22.4 (19.6)
Net Borrowings - Beginning of the period 13.1 21.4
- -----------------------------------------------------------------------------
Net Borrowings - End of the period $ 35.5 $ 1.8
=============================================================================
Represented by
Short-term borrowings $ 50.7 21.2
Less: Cash and short-term deposits 15.2 19.4
- -----------------------------------------------------------------------------
$ 35.5 $ 1.8
=============================================================================
</TABLE>
See accompanying notes
-7-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION
Notes to Consolidated Financial Statements
For the Nine Months Ended September 30, 1996 and 1997 - UNAUDITED
(In Millions of U.S. Dollars) - Canadian GAAP
- ----------------------------------------------------------------------------
1. Reference should be made to the consolidated financial statements for
the year ended December 31, 1996 included in Form 20-F filed on June
27, 1997, for details of significant accounting policies. Certain
comparative figures have been reclassified to conform with current
financial statement presentation.
2. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial
position as of September 30, 1996 and 1997, and results of operations
and changes in financial position for the nine months then ended. The
interim results are not necessarily indicative of the results to be
expected for the full year.
3. Details of inventories are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
----------------- ------------
1996 1997 1996
- ----------------------------------------------------------------------------
UNAUDITED
<S> <C> <C> <C>
Finished goods $ 97.3 $ 64.9 $ 86.3
Raw materials and work in process 8.8 11.5 15.7
Service parts 18.6 27.4 15.7
- ----------------------------------------------------------------------------
$ 124.7 $ 103.8 $ 117.7
============================================================================
</TABLE>
-8-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION
Notes to Consolidated Financial Statements
For the Nine Months Ended September 30, 1996 and 1997 - UNAUDITED
(In Millions of U.S. Dollars) - Canadian GAAP
- ----------------------------------------------------------------------------
4. Significant Differences Between Canadian and U.S. Accounting
Practices
Accounting principles adopted by the Company as reflected in
these consolidated financial statements are generally consistent
with accounting principles accepted in the United States ("U.S.
GAAP"). The following reconciliations reflect the approximate
differences in these accounting principles where applicable to
the Company. If accounting principles generally accepted in the
United States were followed, the effect on the consolidated
financial statements would be:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------------
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Income from continuing
operations (as reported) $ 6.7 $ 7.5 $ 12.6 $ 19.2
Accounting for income taxes (.2) (.2) (.5) (.5)
Post-retirement benefits (.6) (.5) (1.3) (1.6)
Loss on early extinguishment of
debt .6 - .6 -
-------------------------------------------
Adjusted income from continuing
operations 6.5 6.8 11.4 17.1
Loss from discontinued operations - - (3.1) -
-------------------------------------------
- -
Income before extraordinary item 6.5 6.8 8.3 17.1
Extraordinary item
Loss on early extinguishment of
debt (.6) - (.6) -
-------------------------------------------
- -
Net income under U.S. GAAP $ 5.9 $ 6.8 $ 7.7 $ 17.1
===========================================
Average number of ordinary shares
outstanding - U.S. GAAP 39.3 40.9 39.3 40.5
Primary income per ordinary share
under U.S. GAAP (in dollars)
From continuing operations $ 0.17 $ 0.17 $ 0.29 $ 0.42
Before extraordinary item $ 0.17 $ 0.17 $ 0.21 $ 0.42
After extraordinary item $ 0.15 $ 0.17 $ 0.20 $ 0.42
</TABLE>
-9-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION
Notes to Consolidated Financial Statements
For the Nine Months Ended September 30, 1996 and 1997 - UNAUDITED
(In Millions of U.S. Dollars) - Canadian GAAP
- -----------------------------------------------------------------------------
4. Significant Differences Between Canadian and U.S. Accounting
Practices (Continued)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
----------------- -------------
1996 1997 1996
----------------------------------------
<S> <C> <C> <C>
Total assets (as reported) $ 367.0 $ 345.8 $ 345.0
Items increasing reported total assets
Deferred income taxes 3.4 4.0 3.5
Post-retirement and pension benefits 3.3 3.3 3.3
---------------------------------------
Total assets - U.S. GAAP $ 373.7 $ 353.1 $ 351.8
=======================================
Shareholders' equity (as reported) $ 29.9 $ 49.5 $ 28.8
Items increasing (decreasing)
reported shareholders' equity
Deferred income taxes 3.4 3.0 3.5
Post-retirement and pension benefits (5.2) (7.2) (5.7)
---------------------------------------
Shareholders' equity - U.S. GAAP $ 28.1 $ 45.3 $ 26.6
=======================================
</TABLE>
-10-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- ----------------------------------------------------------------------------
Effective September 30, 1997, the Company sold substantially all of the
assets and liabilities of General Heating and Cooling Company and a factory-
owned branch ("General Heating") to Pameco Corporation for net book value
of approximately $10.1 million. On January 27, 1997, the Company also sold
Coastline Distribution Inc. and four factory-owned branches ("Coastline")
to Watsco, Inc. for net book value and received approximately $22.1 million.
The consolidated statement of income includes the results of these sold
operations up to their respective effective dates.
RESULTS OF OPERATIONS
Operating Revenue
In the third quarter of 1997, operating revenue was $177.1 million compared
to $178.7 million for the corresponding quarter of 1996, a reduction of $1.6
million or one percent. For the nine months ended September 30, 1997,
operating revenue was $491.3 million, a decline of $14.7 million or 3
percent from the same period in 1996. The decline in revenue is
attributable to the unusually cool weather in the spring and summer
throughout the North American air conditioning market.
Gross Margin
For the three months ended September 30, 1997, gross margin was $34.8
million (19.7% of operating revenue), compared with $38.0 million (21.2%)
in the same period of 1996. On a nine-month basis, gross margin rose 5
percent in 1997 to $101.1 million (20.6% of operating revenue) compared to
$96.6 million (19.1%) for the nine months ended September 30, 1996. During
the third quarter, lower product demand due to unseasonably cool weather
required decreased production to maintain inventories at appropriate levels.
The third quarter reduction in gross margin percentage compared to 1996 was
due to lower fixed burden absorption resulting from these lower production
levels. For the nine months ended September 30, 1997, the gross margin
percentage increased due to continuing manufacturing and engineering cost-
reduction programs and higher pricing, partially offset by lower fixed
burden absorption in the Lewisburg manufacturing facility during the third
quarter.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses amounted to $22.6
million for the third quarter of 1997 (12.8% of operating revenue), compared
with $24.9 million (13.9%) for the three months ended September 30, 1996.
For the nine months ended September 30, 1997, SG&A expenses were $67.0
million (13.7% of operating revenue), compared with $66.8 million (13.2%)
for the same period last year.
-11-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- ----------------------------------------------------------------------------
Selling, General and Administration Expenses (Cont'd)
For the three months ended September 30, 1997, the decline in SG&A expenses
reflects the divestiture of Coastline in January 1997 and lower warranty
expense, partially offset by the expansion of the Company's international
and Canadian distribution businesses.
Operating Profit
The Company earned a $12.2 million operating profit for the three months
ended September 30, 1997, compared with $13.1 million in the corresponding
period in 1996. For the nine months ended September 30, 1997, the operating
profit was $34.1 million, compared with $29.8 million for the corresponding
period in 1996. The reduction in operating profit for the third quarter of
1997 reflects lower fixed burden absorption, partially offset by continuing
manufacturing and engineering cost-reduction programs and lower SG&A
expenses. EBITDA (earnings before interest, taxes depreciation and
amortization) was 16.4 million for the third quarter of 1997 compared with
$16.9 million in the three-month period in 1996. For the nine months ended
September 30, 1997, EBITDA was $46.2 million versus $41.6 million for the
corresponding period in 1996.
Income Taxes
The Company is currently not recording income taxes as a result of
approximately $45.0 million of accumulate tax losses from prior years, which
are available to reduce future years' earnings for income tax purposes.
Net Income
For the three months ended September 30, 1997, net income was $7.5 million,
or 19 cents per share, compared with $6.7 million or 17 cents a share, in
the corresponding quarter in 1996. For the nine months ended September 30,
1997, net income was $19.2 million or 49 cents per share, compared to $9.5
million or 24 cents per share. For the nine months ended September 30,
1996, net income included a $3.1 million loss from discontinued operations
incurred by Thompson Pipe & Steel Company, a wholly-owned subsidiary that
was sold in May 1996.
-12-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- ----------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations was $2.7 million for the nine months ended
September 30, 1997 compared to cash used in operations of $19.3 million in
1996. Working capital was $134.7 million, compared with $83.8 million a
year earlier. At September 30, 1997, inventories were $103.8 million, a
decrease of $20.9 million from $124.7 million at September 30, 1996. The
decrease in inventories was attributable to the divestitures of Coastline and
General Heating. On July 18, 1997, International Comfort Products
Corporation (USA) arranged a new two year, $15 million revolving credit
facility secured by its inventories. The current portion of long-term debt
in the amount of $25.0 million at September 30, 1996 was refinanced in
December 1996 and is included in long-term debt at September 30, 1997.
-13-
<PAGE>
PART II- OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) In accordance with the provisions of Item 601 of Regulation
S-K, the following have been furnished as Exhibits to this Quarterly
Report on Form 10-Q:
3(i), 4.1 Articles of Incorporation of International Comfort
Products Corporation
3(ii), 4.2 Bylaws of International Comfort Products Corporation
filed as Exhibit 1.2 to the Company's Annual Report on
Form 20-F for the year ended December 31, 1993 filed
with the Commission on June 29, 1994, and incorporated
herein by this reference
4.3 Indenture dated as of March 1, 1993 between International
Comfort Products Corporation (USA) (f/k/a Inter-City
Products Corporation (USA)) ("ICP-USA") and United States
Trust Company of New York, as trustee (and correlative form
of Certificate, form of Mortgage, form of Pledge and
Security Agreement and form of Intellectual Property
Security Agreement) relating to ICP-USA's 9 3/4% Senior
Secured Notes due 2000, filed as Exhibit 4.1 to Amendment
No. 3 to ICP-USA's Registration Statement on Form S-1
filed with the Commission on March 2, 1993, and
incorporated herein by this reference
4.4 Master Trust Pooling and Service Agreement, dated as of
July 25, 1996 among Inter-City Products Receivables
Company, L.P.("ICP-Receivables"), ICP-USA and LaSalle
National Bank, as Trustee
4.5 Series 1996-1 Supplement to Master Trust Pooling and
Service Agreement, dated as of July 25, 1996 among
ICP-Receivables, ICP-USA and LaSalle National Bank, as
Trustee (and correlative form of Class A (Series 1996-1)
Certificate and form of Class B (Series 1996-1)
Certificate, and form of Guaranty from ICP-USA
4.6 Receivables Purchase Agreement dated as of July 25, 1996
among ICP-USA, Inter-City Products Partner Corporation
("ICP-Partner") and ICP-Receivables
4.7 Certificate Purchase Agreement (Series 1996-1, Class A)
dated as of July 25, 1996 among ICP-Receivables, ICP-USA,
the Purchasers named therein and The Chicago Corporation,
as Agent
4.8 Certificate Purchase Agreement (Series 1996-1, Class B)
dated as of July 25, 1996 among ICP-Receivables, ICP-USA
and Argos Funding Corp.
-14-
<PAGE>
4.9 First Amendment to Certificate Purchase Agreement (Series
1996-1, Class A) dated as of December 1, 1996 among
ICP-Receivables, ICP-USA, the Purchasers named therein
and The Chicago Corporation, as Agent
4.10 First Amendment to Receivables Purchase Agreement and
Second Amendment to Certificate Purchase Agreement (Series
1996-1, Class A) dated as of January 27, 1997 among
ICP-USA, ICP-Partner, General Heating and Cooling Company,
Coastline Distribution, Inc., ICP-Receivables, Anagram
Funding Corp. and ABN AMRO Chicago Corporation
4.11 Second Amendment to Receivables Purchase Agreement as of
September 30, 1997 among ICP-USA, ICP-Partner, General
Heating and Cooling Company, ICP-Receivables, Anagram
Funding Corp. and ABN AMRO Chicago Corporation
4.12 Loan and Security Agreement dated as of July 18, 1997
between ICP-USA and NationsBank, N.A.
27 Financial Data Schedule.
99.1 Unaudited interim consolidated financial statements
of ICP-USA for the three months and nine months ended
September 30, 1997.
(b) During the quarter ended September 30, 1997, there were no
Current Reports on Form 8-K filed by the Company.
-15-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized both on
behalf of the registrant and in his capacity as principal financial
officer of the registrant.
November 14, 1997 INTERNATIONAL COMFORT PRODUCTS CORPORATION
By:/s/ S. Clanton
---------------------------
Stephen L. Clanton
Senior Vice President
and Chief Financial Officer
(Principal Financial and
Chief Accounting Officer)
-16-
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit No. Description Page Number
- ---------- ---------------------------------- -----------
3(i), 4.1 Articles of Incorporation of International Comfort
Products Corporation
3(ii), 4.2 Bylaws of International Comfort Products Corporation
filed as Exhibit 1.2 to the Company's Annual Report on
Form 20-F for the year ended December 31, 1993 filed
with the Commission on June 29, 1994, and incorporated
herein by this reference
4.3 Indenture dated as of March 1, 1993 between International
Comfort Products Corporation (USA) (f/k/a Inter-City
Products Corporation (USA)) ("ICP-USA") and United States
Trust Company of New York, as trustee (and correlative form
of Certificate, form of Mortgage, form of Pledge and
Security Agreement and form of Intellectual Property
Security Agreement) relating to ICP-USA's 9 3/4% Senior
Secured Notes due 2000, filed as Exhibit 4.1 to Amendment
No. 3 to ICP-USA's Registration Statement on Form S-1
filed with the Commission on March 2, 1993, and
incorporated herein by this reference
4.4 Master Trust Pooling and Service Agreement, dated as of
July 25, 1996 among Inter-City Products Receivables
Company, L.P.("ICP-Receivables"), ICP-USA and LaSalle
National Bank, as Trustee
4.5 Series 1996-1 Supplement to Master Trust Pooling and
Service Agreement, dated as of July 25, 1996 among
ICP-Receivables, ICP-USA and LaSalle National Bank, as
Trustee (and correlative form of Class A (Series 1996-1)
Certificate and form of Class B (Series 1996-1)
Certificate, and form of Guaranty from ICP-USA
<PAGE>
4.6 Receivables Purchase Agreement dated as of July 25, 1996
among ICP-USA, Inter-City Products Partner Corporation
("ICP-Partner") and ICP-Receivables
4.7 Certificate Purchase Agreement (Series 1996-1, Class A)
dated as of July 25, 1996 among ICP-Receivables, ICP-USA,
the Purchasers named therein and The Chicago Corporation,
as Agent
4.8 Certificate Purchase Agreement (Series 1996-1, Class B)
dated as of July 25, 1996 among ICP-Receivables, ICP-USA
and Argos Funding Corp.
4.9 First Amendment to Certificate Purchase Agreement (Series
1996-1, Class A) dated as of December 1, 1996 among
ICP-Receivables, ICP-USA, the Purchasers named therein
and The Chicago Corporation, as Agent
4.10 First Amendment to Receivables Purchase Agreement and
Second Amendment to Certificate Purchase Agreement (Series
1996-1, Class A) dated as of January 27, 1997 among
ICP-USA, ICP-Partner, General Heating and Cooling Company,
Coastline Distribution, Inc., ICP-Receivables, Anagram
Funding Corp. and ABN AMRO Chicago Corporation
4.11 Second Amendment to Receivables Purchase Agreement as of
September 30, 1997 among ICP-USA, ICP-Partner, General
Heating and Cooling Company, ICP-Receivables, Anagram
Funding Corp. and ABN AMRO Chicago Corporation
4.12 Loan and Security Agreement dated as of July 18, 1997
between ICP-USA and NationsBank, N.A.
27 Financial Data Schedule.
99.1 Unaudited interim consolidated financial statements
of ICP-USA for the three months and nine months ended
September 30, 1997.
<PAGE>
ARTICLES OF CONTINUANCE
OF
INTERNATIONAL COMFORT PRODUCTS CORPORATION
(As amended and restated through 9/30/97)
<PAGE>
ARTICLES OF CONTINUANCE
- -------------------------------------------------------------------------
Name of Corporation
INTERNATIONAL COMFORT PRODUCTS CORPORATION
CORPORATION DES PRODUITS DE CONFORT INTERNATIONALE
- -------------------------------------------------------------------------
The place in Canada where the registered office is to be situated
Municipality of Metropolitan Toronto, Province of Ontario
- -------------------------------------------------------------------------
The classes and any maximum number of shares that the corporation
is authorized to issue
An unlimited number of Class A Preference Shares, issuable in series;
An unlimited number of Class B Preference Shares, issuable in series;
An unlimited number of Ordinary Shares;
The annexed Schedule I is incorporated in this form
- -------------------------------------------------------------------------
Restrictions if any on share transfers
None
- -------------------------------------------------------------------------
Number (or minimum and maximum number) of directors
Such number not less than three (3) nor more than thirteen (13) as
the board of directors may from time to time determine
- -------------------------------------------------------------------------
Restrictions if any on businesses the corporation may carry on
None
- -------------------------------------------------------------------------
(1) If change of name effected, (2)Details of incorporation
previous name
September 1, 1991 @ 12:01 a.m.
N/A Certificate and Articles of
Amalgamation - Manitoba
- -------------------------------------------------------------------------
Other provisions if any
The annexed Schedule II is incorporated in this form.
- -------------------------------------------------------------------------
Date / Signature / Description of Office
/ /
July 20, 1992 / Arindra Singh / Senior Vice President, Chief
/ / Financial Officer & Secretary
- -------------------------------------------------------------------------
<PAGE>
Articles of Continuance
INTERNATIONAL COMFORT PRODUCTS CORPORATION
CORPORATION DES PRODUITS DE CONFORT INTERNATIONALE
SCHEDULE 1
A. ORDINARY SHARES
The Ordinary Shares shall have attached thereto the following
rights, privileges, restrictions and conditions:
1. Dividends
1.1 Subject to the prior rights of, and to any preference as to
dividends provided to, the holders of any other shares ranking senior to the
Ordinary Shares with respect to priority in the payment of dividends, the
holders of the Ordinary Shares shall be entitled to receive dividends and
the Corporation shall pay dividends thereon, as and when declared by the
board of directors out of moneys properly applicable to the payment of
dividends, in such amounts and in such form as the board of directors may
from time to time determine and all dividends which the board of directors
may declare on the Ordinary Shares shall be declared and paid in equal
amounts per share upon all Ordinary Shares at the time outstanding.
2. Dissolution
2.1 In the event of the liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of winding
up its affairs, subject to the prior rights of the holder of any other
shares ranking senior to the Ordinary Shares with respect to priority in the
distribution of assets upon liquidation, dissolution or winding-up, the
holders of the Ordinary Shares shall be entitled to receive the remaining
property and assets of the Corporation.
3. Voting Rights
3.1 Except for meetings at which only holders of another specified
class or series of shares of the Corporation are entitled to vote separately
as a class or series, the holders of Ordinary Shares shall be entitled to
receive notice of and to attend all meetings of the shareholders of the
Corporation and shall have one vote for each Ordinary Share held at all
meetings of the shareholders of the Corporation.
B. CLASS A PREFERENCE SHARES
The Class A Preference Shares, as a class, shall have attached
thereto the following rights, privileges, restrictions and conditions:<PAGE>
-2-
(i) the Class A Preference Shares may from time to
time be issued in one or more series and subject to the
following provisions, and subject to the sending of
articles of amendment in prescribed form, and the
endorsement thereon of a certificate of amendment in
respect thereof, the directors may fix from time to time
before such issue the number of shares that is to comprise
each series and the designation, rights, privileges,
restrictions and conditions attaching to each series of
Class A Preference Shares including, without limiting the
generality of the foregoing, the issue price per share of
the shares of such series, the rate or amount of any
dividends or the method of calculating any dividends, the
dates of payment thereof, any redemption, purchase and/or
conversion prices and terms and conditions of any
redemption, purchase and/or conversion, and any sinking
fund or other provisions;
(ii) the Class A Preference Shares of each series
shall, with respect to the payment of any dividends and
any distribution of assets or return of capital in the
event of liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, or any
other return of capital or distribution of the assets of
the Corporation among its shareholders for the purpose of
winding up its affairs, rank on a parity with the Class A
Preference Shares of every other series and be entitled to
preference over the Ordinary Shares, the Class B
Preference Shares and any other shares of the Corporation
ranking junior to the Class A Preference Shares. The
Class A Preference Shares of any series may also be given
such other preferences, not inconsistent with these
articles, over the Ordinary Shares, the Class B
Preferences Shares and any other shares of the Corporation
ranking junior to such Class A Preference Shares as may be
fixed in accordance with paragraph (i);
(iii) if any cumulative dividends or amounts payable on
the return of capital in respect of a series of Class A
Preference Shares are not paid in full, all series of
Class A Preference Shares shall participate rateably in
respect of such dividends and return of capital;
(iv) the Class A Preference Shares of any series may be
made convertible into Ordinary Shares;
(v) unless the directors otherwise determine in the
articles of amendment designating a series, and subject to
the provisions of the Canada Business Corporations Act and
paragraph (vi) below, the Class A Preference Shares shall
have no voting rights as a class; and<PAGE>
-3-
(vi) any amendment to the articles of the Corporation
to remove or vary any rights, privileges, restrictions or
conditions attaching to the Class A Preference Shares as
a class or to create any other class of shares ranking in
priority to or on a parity with the Class A Preference
Shares, in addition to the authorization by special
resolution, must be given by at least two-thirds of the
votes cast at a meeting of the holders of Class A
Preference Shares duly called for that purpose and at
every such meeting a holder of a Class A Preference Share
shall be entitled to one vote in respect of each Class A
Preference Share held in addition to any other vote
required by the Canada Business Corporations Act.
C. CLASS B PREFERENCE SHARES
The Class B Preference Shares, as a class, shall have attached
thereto the following rights, privileges, restrictions and conditions:
(i) the Class B Preference Share from time to time be
issued in one or more series and subject to the following
provisions, ad subject to the sending of articles of
amendment in prescribed form, and the endorsement thereon
of a certificate of amendment i respect thereof, the
directors may fix from time to time before such issue the
number of shares that is to comprise each series and the
designation, rights, privileges, restrictions and
conditions attaching to each series of Class B Preference
Shares including, without limiting the generality of the
foregoing, the issue price per share of the shares of such
series, the rate or amount of any dividends or the method
of calculating any dividends, the dates of payment
thereof, any redemption, purchase and/or conversion prices
and terms and conditions of any redemption, purchase
and/or conversion, and any sinking fund or other
provisions;
(ii) the Class B Preference Shares of each series
shall, with respect to the payment of any dividends and
any distribution of assets or return of capital in the
event of liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, or any
other return of capital or distribution of the assets of
the Corporation among its shareholders for the purpose of
winding up its affairs, rank on a parity with the Class B
Preference Shares of every other series and be entitled to
preference over the Ordinary Shares and any other shares
of the Corporation ranking junior to the Class B
Preference Shares. The Class B Preference Shares of any
series may also be given such other preferences, not
inconsistent with these articles, over the Ordinary Shares<PAGE>
-4-
and any other shares of the Corporation ranking junior to such
Class B Preference Shares as may be fixed in accordance with
paragraph (i);
(iii) if any cumulative dividends or amounts payable on
the return of capital in respect of a series of Class B
Preference Shares are not paid in full, all series of
Class B Preference Shares shall participate rateably in
respect of such dividends and return of capital;
(iv) the Class B Preference Shares of any series may be
made convertible into Ordinary Shares;
(v) unless the directors otherwise determine in the
articles or amendment designating a series, and subject to
the provisions of the Canada Business Corporations Act and
paragraph (vi) below, the Class Preference Shares shall
have no voting rights as a class; and
(vi) any amendment to the articles of the Corporation
to remove or vary any rights, privileges, restrictions or
conditions attaching to the Class B Preference Shares as
a class or to create any other class of shares ranking in
priority to or on a parity with the Class B Preference
Shares, in addition to the authorization by special
resolution, must be given by at least two-thirds of the
votes cast at a meeting of the holders of Class B
Preference Shares duly called for that purpose and at
every such meeting a holder of a Class B Preference Share
shall be entitled to one vote in respect of each Class B
Preference Share held in addition to any other vote by the
Canada Business Corporations Act.
<PAGE>
Articles of Continuance
INTERNATIONAL COMFORT PRODUCTS CORPORATION
CORPORATION DES PRODUITS DE CONFORT INTERNATIONALE
SCHEDULE II
8. Other provisions, if any:
Without limiting the powers of the board of directors as provided
in the Canada Business Corporations Act (the "Act"), the board of directors
may from time to time on behalf of the corporation:
(1) borrow money upon the credit of the corporation;
(2) issue, reissue, sell or pledge debt obligations of the
corporation;
(3) to the extent permitted by the Act, give, directly or
indirectly, financial assistance to any person by means of
a loan, a guarantee to secure the performance of an
obligation or otherwise; and
(4) mortgage, hypothecate, pledge or otherwise create a
security interest in all or any property of the
corporation, owned or subsequently acquired, to secure any
obligation of the corporation.
<PAGE>
INTER-CITY PRODUCTS CORPORATION (USA)
INTER-CITY PRODUCTS RECEIVABLES MASTER TRUST
POOLING AND SERVICING AGREEMENT
dated as of July 25, 1996
among
INTER-CITY PRODUCTS RECEIVABLES COMPANY, L.P.,
as Transferor,
INTER-CITY PRODUCTS CORPORATION (USA)
as Servicer,
and
LASALLE NATIONAL BANK,
as Trustee
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
CONVEYANCE OF ASSETS
SECTION 2.1 Creation of the Trust; Conveyance of Certain Assets 1
SECTION 2.2 Acceptance by Trustee 2
SECTION 2.3 Representations and Warranties of Transferor
Relating to the Transferred Assets 3
SECTION 2.4 No Assumption of Obligations Relating to
Receivables, Related Transferred Assets or Contracts . 4
ARTICLE III
ADMINISTRATION AND SERVICING
SECTION 3.1 Acceptance of Appointment; Other Matters . . . . . . . . . 4
SECTION 3.2 Duties of Servicer and Transferor. . . . . . . . . . . . . 5
SECTION 3.3 Lockbox Accounts; Concentration Accounts . . . . . . . . . 9
SECTION 3.4 Servicing Compensation . . . . . . . . . . . . . . . . . .10
SECTION 3.5 Records of Servicer and Reports to be Prepared by
Servicer. . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 3.6 Monthly Servicer's Certificate . . . . . . . . . . . . . .13
SECTION 3.7 Servicing Report of Independent Public Accountants;
SEC Reports . . . . . . . . . . . . . . . . . . . . . . .13
SECTION 3.8 Rights of Trustee. . . . . . . . . . . . . . . . . . . . .14
SECTION 3.9 Ongoing Responsibilities of the Initial Servicer . . . . .16
SECTION 3.10 Further Action Evidencing Transfers. . . . . . . . . . . .17
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS; ALLOCATIONS
SECTION 4.1 Rights of Certificateholders . . . . . . . . . . . . . . .17
SECTION 4.2 Establishment of Transaction Accounts. . . . . . . . . . .18
SECTION 4.3 Trust-Level Calculations and Funds Allocations . . . . . .19
SECTION 4.4 Investment of Funds in Transaction Accounts. . . . . . . .19
SECTION 4.5 Attachment of Transaction Accounts . . . . . . . . . . . .20
ARTICLE V
DISTRIBUTIONS AND REPORTS
SECTION 5.1 Distributions. . . . . . . . . . . . . . . . . . . . . . .20
<PAGE>
ARTICLE VI
THE CERTIFICATES
SECTION 6.1 The Certificates . . . . . . . . . . . . . . . . . . . . .20
SECTION 6.2 Authentication of Certificates . . . . . . . . . . . . . .21
SECTION 6.3 Registration of Transfer and Exchange of
Certificates. . . . . . . . . . . . . . . . . . . . . . .21
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates. . . . .24
SECTION 6.5 Persons Deemed Owners. . . . . . . . . . . . . . . . . . .24
SECTION 6.6 Appointment of Paying Agent. . . . . . . . . . . . . . . .25
SECTION 6.7 Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . . . . . . . . .25
SECTION 6.8 Authenticating Agent . . . . . . . . . . . . . . . . . . .26
SECTION 6.9 Tax Treatment. . . . . . . . . . . . . . . . . . . . . . .27
SECTION 6.10 Issuance of Additional Series of Certificates. . . . . . .27
ARTICLE VII
TRANSFEROR
SECTION 7.1 Representations and Warranties of Transferor
Relating to Transferor and the Transaction Documents. . .30
SECTION 7.2 Covenants of Transferor. . . . . . . . . . . . . . . . . .33
SECTION 7.3 Indemnification by Transferor. . . . . . . . . . . . . . .38
ARTICLE VIII
SERVICER
SECTION 8.1 Representations and Warranties of Servicer . . . . . . . .40
SECTION 8.2 Covenants of Servicer. . . . . . . . . . . . . . . . . . .42
SECTION 8.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . . . . .43
SECTION 8.4 Indemnification by Servicer. . . . . . . . . . . . . . . .43
SECTION 8.5 Servicer Liability . . . . . . . . . . . . . . . . . . . .44
SECTION 8.6 Limitation on Liability of Servicer and Others . . . . . .44
ARTICLE IX
EARLY AMORTIZATION EVENTS; TERMINATION BY SELLERS
SECTION 9.1 Early Amortization Events. . . . . . . . . . . . . . . . .44
SECTION 9.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . .44
SECTION 9.3 Additional Rights Upon the Occurrence of Certain Events. .44
ARTICLE X
SERVICER DEFAULTS
SECTION 10.1 Servicer Defaults . . . . . . . . . . . . . . . . . . . .46
SECTION 10.2 Trustee to Act; Appointment of Successor. . . . . . . . .47
<PAGE>
SECTION 10.3 Notification of Servicer Default; Notification of
Appointment of Successor Servicer . . . . . . . . . . . .49
SECTION 10.4 Waiver of Servicer Defaults . . . . . . . . . . . . . . .49
ARTICLE XI
TRUSTEE
SECTION 11.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . .50
SECTION 11.2 Certain Matters Affecting Trustee . . . . . . . . . . . .53
SECTION 11.3 Limitation on Liability of Trustee. . . . . . . . . . . .54
SECTION 11.4 Trustee May Deal with Other Parties . . . . . . . . . . .55
SECTION 11.5 Servicer To Pay Trustee's Fees and Expenses . . . . . . .56
SECTION 11.6 Eligibility Requirements for Trustee. . . . . . . . . . .56
SECTION 11.7 Resignation or Removal of Trustee . . . . . . . . . . . .57
SECTION 11.8 Successor Trustee . . . . . . . . . . . . . . . . . . . .57
SECTION 11.9 Merger or Consolidation of Trustee. . . . . . . . . . . .58
SECTION 11.10 Appointment of Co-Trustee or Separate Trustee. . . . . .58
SECTION 11.11 Tax Returns. . . . . . . . . . . . . . . . . . . . . . .60
SECTION 11.12 Trustee May Enforce Claims Without Possession of
Certificates . . . . . . . . . . . . . . . . . . . . . .60
SECTION 11.13 Suits for Enforcement. . . . . . . . . . . . . . . . . .60
SECTION 11.14 Rights of Required Investors To Direct Trustee . . . . .60
SECTION 11.15 Representations and Warranties of Trustee. . . . . . . .61
SECTION 11.16 Maintenance of Office or Agency. . . . . . . . . . . . .61
ARTICLE XII
TERMINATION
SECTION 12.1 Termination of Trust. . . . . . . . . . . . . . . . . . .61
SECTION 12.2 Final Distribution. . . . . . . . . . . . . . . . . . . .62
SECTION 12.3 Rights Upon Termination of the Trust. . . . . . . . . . .63
SECTION 12.4 Optional Repurchase of Investor Interests . . . . . . . .63
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1 Amendment, Waiver, Etc. . . . . . . . . . . . . . . . . .64
SECTION 13.2 Actions by Certificateholders . . . . . . . . . . . . . .66
SECTION 13.3 Limitation on Rights of Certificateholders. . . . . . . .66
SECTION 13.4 Governing Law . . . . . . . . . . . . . . . . . . . . . .67
SECTION 13.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . .68
SECTION 13.6 Severability of Provisions. . . . . . . . . . . . . . . .68
SECTION 13.7 Certificates Nonassessable and Fully Paid . . . . . . . .68
SECTION 13.8 Nonpetition Covenant. . . . . . . . . . . . . . . . . . .68
SECTION 13.9 No Waiver; Cumulative Remedies. . . . . . . . . . . . . .69
SECTION 13.10 Counterparts . . . . . . . . . . . . . . . . . . . . . .69
<PAGE>
SECTION 13.11 Third-Party Beneficiaries. . . . . . . . . . . . . . . .69
SECTION 13.12 Integration. . . . . . . . . . . . . . . . . . . . . . .69
SECTION 13.13 Binding Effect; Assignability; Survival of Provisions. .69
SECTION 13.14 Recourse to Transferor . . . . . . . . . . . . . . . . .70
SECTION 13.15 Recourse to Transferred Assets . . . . . . . . . . . . .70
SECTION 13.16 Submission to Jurisdiction . . . . . . . . . . . . . . .70
SECTION 13.17 Waiver of Jury Trial . . . . . . . . . . . . . . . . . .70
<PAGE>
EXHIBITS
EXHIBIT A Form of Lockbox Account Letter Agreement
EXHIBIT B [Reserved]
EXHIBIT C Form of Monthly Servicer's Certificate
EXHIBIT D Semi-Annual Agreed-Upon Procedures
EXHIBIT E Form of Transferor Certificate
EXHIBIT F Form of Quarterly Servicer's Certificate
EXHIBIT G Form of Credit and Collection Policy
EXHIBIT H Form of Distributor Agreement
SCHEDULES
SCHEDULE 1 Account Banks - Lockbox Banks
APPENDIX
APPENDIX A Definitions
<PAGE>
This POOLING AND SERVICING AGREEMENT, dated as of July 25, 1996
(this "Agreement"), is made among INTER-CITY PRODUCTS RECEIVABLES COMPANY,
L.P., a Tennessee limited partnership ("Transferor"), INTER-CITY PRODUCTS
CORPORATION (USA), a Delaware corporation (the "Initial Servicer"), and
LASALLE NATIONAL BANK, a national banking association, as Trustee.
ARTICLE I
DEFINITIONS
SECTION 2.1 Definitions. Capitalized terms used in this
Agreement have the meanings that Appendix A assigns to them, and this
Agreement shall be interpreted in accordance with Part B of Appendix A.
ARTICLE II
CONVEYANCE OF ASSETS
SECTION 2.1 Creation of the Trust; Conveyance of Certain Assets.
(a) Transferor hereby transfers, assigns, sets over, grants and otherwise
conveys to Trustee, in its capacity as representative of the
Certificateholders, without recourse (except as expressly provided
herein), all of its right, title and interest in, to and under, (i) all
Receivables that have been or are hereafter transferred (whether by sale
or contribution) by the Sellers to Transferor, (ii) all Related Assets,
(iii) all of Transferor's rights under the Seller Transaction Documents
(the property described in clauses (ii) and (iii) being called the
"Related Transferred Assets"), (iv) all funds from time to time on deposit
in each of the Transaction Accounts (including funds deposited in a
Transaction Account in connection with the issuance of any prefunded
Series) and all funds from time to time on deposit in each of the Bank
Accounts representing Collections on, or other proceeds of, the foregoing
and, in each case, all certificates and instruments, if any, from time to
time evidencing such funds, all investments made with such funds, all
claims thereunder or in connection therewith and all interest, dividends,
monies, instruments, securities and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of the foregoing and (v) all moneys due or to become due
and all amounts received or receivable with respect to any of the
foregoing and all proceeds of the foregoing. Such property, whether now
existing or hereafter acquired, shall constitute the assets of the Trust
(collectively, the "Transferred Assets"). The foregoing transfer,
assignment, setover, grant and conveyance to the Trust shall be made to
Trustee, on behalf of the Trust, and each reference in this Agreement to
such transfer, assignment, setover and conveyance shall be construed
accordingly.
(b) In connection with the transfer described in subsection (a),
Transferor and Servicer shall record and file or cause to be recorded and
filed, as an expense of Servicer paid out of the Servicing Fee, Public
Notices with respect to the Transferred Assets meeting the requirements
of applicable law in such manner and in such jurisdictions as are
necessary to perfect the transfer
<PAGE>
and assignment of the Transferred Assets to the Trust. In connection with
the transfer described in subsection (a), Transferor and Servicer further
agree to deliver to Trustee each Transferred Asset (including any original
documents or instruments included in the Transferred Assets as are
necessary to effect such transfer) in which the transfer of an interest
is perfected under the UCC or otherwise by possession. Transferor or
Servicer shall deliver each such Transferred Asset to Trustee, at the
expense of Servicer paid out of the Servicing Fee, immediately upon the
transfer of any such Transferred Asset to Trustee pursuant to subsection
(a).
(c) In connection with the transfer described above in subsection
(a), Servicer shall, on behalf of Transferor, as an expense of Servicer
paid out of the Servicing Fee, on or prior to the First Issuance Date,
mark the master data processing records evidencing the Receivables with
the following legend:
"THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO INTER-CITY
PRODUCTS RECEIVABLES COMPANY, L.P. ("TRANSFEROR") PURSUANT TO A
RECEIVABLES PURCHASE AGREEMENT, DATED AS OF JULY 25, 1996, AMONG
INTER-CITY PRODUCTS CORPORATION (USA) ("PARENT") AND CERTAIN
SUBSIDIARIES OF THE PARENT, AS SELLERS, AND TRANSFEROR, AS BUYER;
AND SUCH RECEIVABLES HAVE BEEN TRANSFERRED TO THE INTER-CITY
PRODUCTS RECEIVABLES MASTER TRUST PURSUANT TO A POOLING AND
SERVICING AGREEMENT, DATED AS OF THE SAME DATE, AMONG THE
TRANSFEROR, PARENT, AS SERVICER, AND LASALLE NATIONAL BANK, AS
TRUSTEE."
(d) Upon the request of Transferor, Trustee will cause
Certificates in authorized denominations evidencing the entire interest
in the Trust to be duly authenticated and delivered to or upon the order
of Transferor pursuant to Section 6.2. Pursuant to the Transferor
Certificate, Transferor shall be entitled to receive current and deferred
transfer payments at the times and in the amounts specified in the various
Supplements executed from time to time.
(e) If the transfer, assignment, set-over, grant and conveyance
described in subsection (a) of this Section 2.1 are deemed to create a
security interest in the property described therein, Transferor hereby
grants to the Trustee, for the benefit of the Trustee and the
Certificateholders, a security interest in that property (which shall be
deemed to be a first priority perfected security interest and shall secure
Transferor's obligations under the Transaction Documents and the
Certificates), and agrees that this Agreement shall constitute a security
agreement under applicable law.
SECTION 2.2 Acceptance by Trustee. Trustee hereby acknowledges
its acceptance on behalf of the Trust of all right, title and interest to
the Transferred Assets and declares that it shall maintain such right,
title and interest, upon the trust herein set forth, for the benefit of
all Certificateholders, on the terms and subject to the conditions
hereinafter set forth.
-2-
<PAGE>
SECTION 2.3 Representations and Warranties of Transferor Relating
to the Transferred Assets.
(a) Representations and Warranties. At the time that any
Receivable or other Transferred Asset is transferred by Transferor to the
Trust, Transferor hereby represents and warrants that:
(i) Quality of Title. (A) Immediately before each
transfer to be made by Transferor hereunder, each Receivable and
other Transferred Asset that was then to be transferred to the
Trust hereunder was owned by Transferor free and clear of any
Adverse Claim (other than any Permitted Adverse Claim); and,
within two Business Days after the First Issuance Date,
Transferor and Servicer made, or caused to be made, all filings
and took all other action under applicable law in each relevant
jurisdiction in order to protect and perfect the Trust's interest
in such Receivables and such Transferred Assets against all
creditors of, and purchasers from, Transferor and the Sellers.
(B) Each transfer of Receivables and other Transferred
Assets by Transferor to the Trust pursuant to this Agreement
constitutes a valid transfer and assignment to the Trustee of all
right, title and interest of Transferor in such Receivables and
other Transferred Assets, free and clear of any Adverse Claim
(other than any Permitted Adverse Claim), and constitutes either
an absolute transfer of such property to the Trust or a grant of
a first priority perfected security interest in such property to
the Trust. Whenever the Trust accepts a transfer of a Receivable
or other Transferred Asset hereunder, it shall have acquired a
valid and perfected first priority security interest in such
Receivable or other Transferred Asset free and clear of any
Adverse Claim (other than any Permitted Adverse Claim).
(C) No effective Public Notice that covers all or part
of any Transferred Asset is on file in any recording office
except such as may be filed (i) in favor of the Transferor in
accordance with the Contracts, (ii) in favor of Transferor
pursuant to the Purchase Agreement and (iii) in favor of the
Trustee, for the benefit of the Investor Certificateholders, in
accordance with this Agreement. No Public Notice relating to
perfection that covers any inventory of such Seller that might
give rise to Receivables is on file in any recording office
except for (so long as an Intercreditor Agreement is in effect)
Public Notice in favor of creditors of such Seller bound by such
Intercreditor Agreement.
(D) No acquisition of any Receivable or other
Transferred Asset by Transferor or the Trust constitutes a
fraudulent transfer or fraudulent conveyance under the
Bankruptcy Code or applicable state bankruptcy or insolvency laws
or is otherwise void or voidable or subject to subordination
under similar laws or principles or for any other reason.
(ii) Approvals. With respect to each Receivable and
other Transferred Asset, all consents, licenses, approvals or
authorizations of, or notices to or registrations, declarations
or filings with, any Governmental Authority or other Person
required to be obtained, effected or made by the Sellers,
Servicer or Transferor in connection with the
-3-
<PAGE>
conveyance of the Receivable and other Transferred Asset by the
Sellers to Transferor, or by Transferor to the Trust, have been
duly obtained, effected or given and are in full force and
effect.
(iii) Eligible Receivables. (A) On the date on which
the applicable Seller transfers a Receivable to Transferor, and
Transferor transfers such Receivable to the Trust, unless
otherwise identified by Servicer in the Daily Report for such
date, such Receivable is an Eligible Receivable, and (B) on the
date of each Daily Report or Monthly Report that identifies a
Receivable as an Eligible Receivable, such Receivable is an
Eligible Receivable.
(b) Notice of Breach. The representations and warranties set
forth in subsection (a) shall survive the transfer of the Receivables and
the other Transferred Assets to the Trust. Upon discovery by Transferor,
Servicer or Trustee of a breach of any of the representations and
warranties set forth in subsection (a), the party discovering the breach
shall give written notice to the other parties to this Agreement and each
Required Person within three Business Days following the discovery;
provided, however, that if such breach arises from a Seller's failure to
perform its obligations under the Purchase Agreement and such failure is
of the type that may be cured by settlement of a Seller Noncomplying
Receivables Adjustment or Seller Dilution Adjustment under Sections 3.1
and 3.5 of the Purchase Agreement, and such settlement shall have (in
fact) been made within the time limit specified therein, then no breach
shall be deemed to have occurred under this Agreement. Trustee's
obligations in respect of discovering any breach are limited as provided
in Section 11.2(h).
SECTION 2.4 No Assumption of Obligations Relating to Receivables,
Related Transferred Assets or Contracts. The transfer, assignment, set
over, grant and conveyance described in Section 2.1 does not constitute
and is not intended to result in a creation or an assumption by the Trust,
Trustee or any Investor Certificateholder of any obligation of Servicer,
Transferor, the applicable Seller or any other Person in connection with
the Receivables or the Related Transferred Assets or under the related
Contracts or any other agreement or instrument relating thereto. None of
Trustee, the Trust or any Investor Certificateholder shall have any
obligation or liability to any Obligor.
ARTICLE III
ADMINISTRATION AND SERVICING
SECTION 3.1 Acceptance of Appointment; Other Matters.
(a) Designation of Servicer. The servicing, administering and
collection of the Receivables and the Related Transferred Assets shall be
conducted by the Person designated as Servicer hereunder from time to time
in accordance with this Section. Until Trustee gives a Termination Notice
to the Initial Servicer pursuant to Section 10.1, the Initial Servicer is
designated (and agrees to act) as Servicer.
-4-
<PAGE>
(b) Delegation of Certain Servicing Activities. In the ordinary
course of business, Servicer may at any time delegate its duties hereunder
with respect to the Receivables and the Related Transferred Assets to any
Person. Each Person to whom any such duties are delegated in accordance
with this Section is called a "Sub-Servicer". Notwithstanding any such
delegation, Servicer shall remain liable for the performance of all duties
and obligations of Servicer pursuant to the terms of this Agreement and
the other Transaction Documents. The fees and expenses of any Sub-
Servicers shall be as agreed between Servicer and the Sub-Servicers from
time to time and none of the Trust, Trustee or any Certificateholder shall
have any responsibility therefor. Upon any termination of a Servicer
pursuant to Section 10.1, all Sub-Servicers designated pursuant to this
subsection by such Servicer shall automatically also be terminated.
(c) Termination. The designation of Servicer (and each Sub-
Servicer) under this Agreement shall automatically terminate upon
termination of the Trust pursuant to Section 12.1.
(d) Resignation of Servicer. The Initial Servicer shall not
resign as Servicer unless it determines that (i) the performance of its
duties is no longer permissible under applicable law and (ii) there is no
reasonable action that it could take to make the performance of its duties
permissible under applicable law. If the Initial Servicer determines that
it must resign for the reasons stated above, it shall, prior to the
tendering of its resignation, deliver to Trustee an Opinion of Counsel
confirming the satisfaction of the conditions set forth in the preceding
sentence. No resignation by the Initial Servicer shall become effective
until Trustee or another Successor Servicer shall have assumed the
responsibilities and obligations of Servicer in accordance with Section
10.2. Trustee shall give prompt notice to the Rating Agencies and each
Required Person of the appointment of any Successor Servicer.
SECTION 3.2 Duties of Servicer and Transferor.
(a) Duties of Servicer in General. Servicer shall service the
Receivables and the Related Transferred Assets and, subject to the terms
and provisions of this Agreement, shall have full power and authority,
acting alone or through any Sub-Servicer, to do any and all things in
connection with such servicing that it may deem necessary or appropriate.
Trustee shall execute and deliver to Servicer any powers of attorney or
other instruments or documents that are prepared by Servicer and stated
in an Officer's Certificate to be, and shall furnish Servicer with any
documents in its possession, necessary or appropriate to enable Servicer
to carry out its servicing duties. Servicer shall exercise at least the
same care and apply the same policies with respect to the collection and
servicing of the Receivables and the Related Transferred Assets that it
would exercise and apply if it owned such Receivables and Related
Transferred Assets, all in substantial compliance with applicable law and
in accordance with the applicable Credit and Collection Policy
substantially in the form of Exhibit G.
Servicer shall take or cause to be taken (and shall cause each
Sub-Servicer (if any) to take or cause to be taken) all such actions as
Servicer deems necessary or appropriate to collect each Receivable and
Related Transferred Asset, all in accordance with applicable law and the
applicable Credit and Collection Policy.
-5-
<PAGE>
Without limiting the generality of the foregoing and subject to
the next preceding paragraph and Section 10.1, Servicer or its designee
is hereby authorized and empowered, unless such power and authority is
revoked by Trustee on account of the occurrence of a Servicer Default, (i)
to instruct Trustee to make withdrawals and payments from the Transaction
Accounts as set forth in this Agreement, (ii) to execute and deliver, on
behalf of the Trust for the benefit of the Certificateholders, any and all
instruments of satisfaction or cancellation, or of partial or full release
or discharge, and all other comparable instruments, with respect to the
Receivables and the Related Transferred Assets, (iii) to make any filings,
reports, notices, applications and registrations with, and to seek any
consents or authorizations from, the Securities and Exchange Commission
and any state securities authority on behalf of the Trust as may be
necessary or appropriate to comply with any Federal or state securities
laws or reporting requirements or other laws or regulations, and (iv) to
the extent permitted under and in compliance with the Credit and
Collection Policy and with all applicable laws, rules, regulations,
judgments, orders and decrees of courts and other Governmental Authorities
(whether Federal, state, local or foreign) and all other tribunals, to
commence or settle collection proceedings with respect to the Receivables
and otherwise to enforce the rights and interests of the Trust and the
Certificateholders in, to and under the Receivables or Related Transferred
Assets (as applicable).
Notwithstanding anything to the contrary in this Section 3.2(a),
the Servicer may not take any action on behalf of Trustee or demand any
power of attorney from Trustee, without Trustee's prior written consent,
which would have the effect under this Agreement or any of the other
Transaction Documents, of (i) increasing Trustee's duties, obligations or
liabilities; (ii) decreasing Trustee's indemnities, immunities,
compensation or rights to reimbursement (as to the amount, timing or
priority of payment, or otherwise), (iii) joining Trustee to any
litigation, (iv) impeding the Trustee's right to enforce the obligations
of Servicer, ICP or any Seller, or (v) waiving any default in the full and
timely payment to LaSalle National Bank for services rendered as Trustee,
Successor Servicer, Paying Agent or Transfer Agent and Registrar of any
fees, expenses or other amounts due to it.
(b) Identification and Transfer of Collections. Servicer shall
cause Collections and all other Transferred Assets that consist of cash
or cash equivalents to be deposited into the Bank Accounts and the
Transaction Accounts pursuant to the terms and provisions of Section 3.3
and Article IV. Following notification from any Seller to Servicer or
discovery by Servicer that collections of any receivable or other asset
that is not a Collection of a Receivable or any other Transferred Asset
have been deposited into a Bank Account or any Transaction Accounts,
Servicer shall cause all such collections to be segregated, apart and in
different accounts, from the Bank Accounts and the Transaction Accounts.
Servicer and, to the extent applicable, Trustee shall hold all such funds
in trust, separate and apart from such Person's other funds. On each
Business Day, after such misdirected collections have been reasonably
identified by Servicer to Trustee, Servicer shall instruct Trustee to, and
Trustee shall, turn over to the appropriate Lockbox Bank, applicable
Seller or other applicable Related Person (or their designees) all such
misdirected collections less all reasonable and appropriate out-of-pocket
costs and expenses, if any, incurred by Servicer or the Trustee in
collecting and otherwise administering such amounts.
Following notification from a Lockbox Bank that any item has been
returned or is uncollected and that such Lockbox Bank has not been
otherwise reimbursed pursuant to the terms
-6-
<PAGE>
of the applicable Lockbox Agreement for any amounts it credited to the
relevant Lockbox Account (and then transferred to the Master Collection
Account), Servicer shall instruct Trustee to, and Trustee shall, turn over
to such Lockbox Bank Collections in such amount from Collections on
deposit in the Master Collection Account (unless the applicable Seller has
not made any payment required pursuant to Section 3.1(a) of the
Receivables Purchase Agreement, in which case such amounts shall be
retained by Trustee to the extent necessary to satisfy such payment
obligation).
(c) Modification of Receivables, Etc. So long as no Servicer
Default shall have occurred and be continuing, Servicer may adjust, and
may permit each Sub-Servicer to adjust, in accordance with Sections
3.2(a), and 3.2(k) and the applicable Credit and Collection Policy, the
Unpaid Balance of any Receivable, or otherwise modify the terms of any
Receivable or amend, modify or waive any term or condition of any Contract
related thereto, all as it may determine to be appropriate to maximize
collection thereof. Servicer shall, or shall cause the applicable Sub-
Servicer to, write off Receivables from time to time in accordance with
the applicable Credit and Collection Policy.
(d) Documents and Records. At any time when the Initial Servicer
is not the Servicer, Transferor, to the extent that it is entitled to do
so under the Purchase Agreement, shall, upon the request of the then-
acting Servicer, cause the applicable Seller to deliver to Servicer, and
Servicer shall hold in trust for Transferor and Trustee in accordance with
their respective interests, all Records that evidence or relate to the
Receivables and other Transferred Assets of the applicable Seller.
(e) Certain Duties to the Sellers. Servicer, if other than the
Initial Servicer, shall, as soon as practicable after a demand by any
Seller, deliver to such Seller all documents, instruments and records in
its possession that evidence or relate to accounts receivable of such
Seller or other Related Persons that are not Receivables or other
Transferred Assets, and copies of all documents, instruments and records
in its possession that evidence or relate to Receivables and other
Transferred Assets.
(f) Identification of Eligible Receivables and Dilution. The
Initial Servicer will (i) establish and maintain such procedures as are
necessary for determining no less frequently than each Business Day
whether each Receivable qualifies as an Eligible Receivable and whether
any Dilution has occurred, and for identifying, on any Business Day, all
Receivables that are not Eligible Receivables, and (ii) include in each
Daily Report information that shows whether, and to what extent, the
Receivables described in such Daily Report are Eligible Receivables and
whether, and to what extent, any Dilution has occurred.
(g) Authorization to Act as Transferor's Agent. Without limiting
the generality of subsection (a), Transferor hereby appoints Servicer,
subject to the terms and conditions of the Transaction Documents, as its
agent for the following purposes: (i) specifying accounts to which
payments are to be made to Transferor, (ii) making transfers among, and
deposits to and withdrawals from, all deposit accounts of Transferor for
the purposes described in the Transaction Documents, and (iii) arranging
payment by Transferor of all fees, expenses and other amounts payable by
Transferor pursuant to the Transaction Documents. Transferor
-7-
<PAGE>
irrevocably agrees that (A) it shall be bound by all actions taken by
Servicer pursuant to the preceding sentence, and (B) Trustee and the banks
holding all deposit accounts of Transferor are entitled to accept
submissions, determinations, selections, specifications, transfers,
deposits and withdrawal requests, and payments from Servicer on behalf of
Transferor.
(h) Grant of Power of Attorney. Transferor and Trustee hereby
each grant to Servicer a power of attorney, with full power of
substitution, to take in the name of Transferor and Trustee all steps that
are necessary or appropriate to endorse, negotiate, deposit or otherwise
realize on any writing of any kind held or transmitted by Transferor or
transmitted or received by Trustee (whether or not from Transferor) in
connection with any Receivable or Related Transferred Asset; provide,
however, that without Trustee's prior written consent, Servicer may not
take any action pursuant to this Section 3.2(h) that would have the effect
of joining Trustee to any litigation. The power of attorney that
Transferor and Trustee have granted to Servicer may be revoked by Trustee,
and shall be revoked by Transferor, on the date on which Trustee shall be
entitled to exercise the powers granted to Trustee pursuant to Section
3.8(b). In exercising its power granted hereby, Servicer shall take
directions from Trustee, if any, arising out of the exercise of the rights
granted under Section 11.14.
(i) Turnover of Collections. If Servicer, Transferor or any of
their respective agents or representatives shall at any time receive any
cash, checks or other payments constituting Collections, such recipient
shall segregate such payments and hold such payments in trust for Trustee
and shall, promptly upon receipt (and in any event within one Business Day
following receipt), remit all such cash, checks and other payments, duly
endorsed or with duly executed instruments of transfer, if applicable, to
a Bank Account or the Master Collection Account.
(j) Quarterly Statement as to Compliance. Servicer will deliver
to Trustee, each Rating Agency and each Required Person no later than 45
days after the end of each fiscal quarter (commencing with the fiscal
quarter ended September 30, 1996), an Officer's Certificate, substantially
in the form of Exhibit F, stating, as to each signer thereof, that (i) a
review of the activities of the Servicer during the preceding fiscal
quarter and of performance under this Agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations under
this Agreement throughout such quarter, or, if there has been a default
in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof and remedies
therefor being pursued.
(k) Discretionary Returns. The Servicer will not, and will not
permit any Seller to, allow any Discretionary Returns, unless Servicer or
such Seller has deposited into the Master Collection Account in connection
with such termination an amount of funds sufficient to ensure that the
aggregate Unpaid Balance of the Receivables held by the Trust (after
adjustment for the impact of any Discretionary Returns) is at least equal
to the aggregate Required Receivables (after adjustment for the impact of
any Discretionary Returns) for all Series. The Servicer will not, and
will not permit any Seller to, exercise its right under a Distributor
Agreement to terminate a Distributor, unless Servicer or such Seller has
deposited into the Master Collection Account in connection with such
termination an amount of funds sufficient to ensure that the aggregate
Unpaid Balance of the Receivables held by the Trust is at least equal to
the aggregate
-8-
<PAGE>
Required Receivables (after adjustment thereof to reflect the amount (the
"Terminated Distributor Amount") of Receivables owing by such Distributor
which are no long Eligible Receivables as a result of such termination)
for all Series. Each such deposit of funds shall be deemed to be
Collections with respect to the Receivables which are the subject of such
Discretionary Returns or Distributor termination. The amounts of any
Discretionary Returns and any Terminated Distributor Amounts which are
permitted pursuant to this Section 3.2(k) are referred to herein as
"Permitted Inventory Discretionary Returns."
SECTION 3.3 Lockbox Accounts; Concentration Accounts. (a) Each
Lockbox Account shall be subject to a Lockbox Agreement substantially in
the form of Exhibit A (or such other form as is acceptable to the
Trustee). Unless instructed otherwise by the Trustee, each Lockbox Bank
shall be instructed by Servicer to remit, on a daily basis (but subject
to the Lockbox Bank's customary funds availability schedule), all amounts
deposited in the Lockbox Accounts maintained with it to a Concentration
Account or the Master Collection Account. Any Concentration Account shall
be maintained in the name of Trustee on behalf of the Trust pursuant to
a Concentration Account Agreement substantially in the form of Exhibit B
(or such other form acceptable to the Trustee). Except as provided in this
Agreement and the applicable Account Agreements, none of any Seller,
Transferor, Servicer, or any Person claiming by, through or under any
Seller, Transferor or Servicer shall have any control over the use of, or
any right to withdraw any item or amount from, any Bank Account. Servicer
and Trustee are each hereby irrevocably authorized and empowered, as
Transferor's attorney-in-fact, to endorse any item deposited in a lockbox
or presented for deposit in any Bank Account requiring the endorsement of
Transferor, which authorization is coupled with an interest and is
irrevocable. Each Bank Account shall be an Eligible Deposit Account.
(b) Servicer shall instruct (or shall cause the applicable Seller
to instruct) all Obligors to make all payments due to Transferor or the
applicable Seller relating to or constituting Collections (or any proceeds
thereof) (i) to lockboxes maintained at the Lockbox Banks for deposit in
a Lockbox Account or a Concentration Account or (ii) directly to a Lockbox
Account. If Transferor or the applicable Seller receives any Collections
or any other payment of proceeds of any Transferred Asset, Servicer shall
cause such recipient to (x) segregate such payment and hold it in trust
for the benefit of Trustee, and (y) as soon as practicable, but no later
than the first Business Day following receipt of such item by such Person,
deposit such payment in a Bank Account or the Master Collection Account.
Servicer shall, and shall cause Transferor and the applicable Seller to,
use best efforts to prevent the deposit of any amounts other than
Collections in any Bank Account. If Servicer is notified by the applicable
Seller that any amount other than Collections has been deposited in any
Bank Account, Servicer shall promptly instruct the appropriate Account
Bank and Trustee to segregate such amount, and shall direct such Account
Bank or Trustee (as appropriate) to turn over such amounts to the
applicable Seller or other Related Person (or their designees) to whom
such amounts are owed (unless the applicable Seller has not made any
payment required pursuant to Section 3.1(a) of the Receivables Purchase
Agreement, in which case such amounts shall be retained by Trustee to the
extent necessary to satisfy such payment obligation).
(c)(i) Servicer may, from time to time after the First Issuance
Date, designate a new account as a Bank Account, and such account shall
become a Bank Account (and the bank at
-9-
<PAGE>
which such account is maintained shall become a Lockbox Bank or a
Concentration Account Bank for purposes of this Agreement); provided that
(x) Trustee and each Required Person shall have received not less than
five Business Days' prior written notice of the account and/or the bank
that are proposed to be added as a Bank Account or an Account Bank (as
applicable), (y) not less than five Business Days prior to the effective
date of any such proposed addition, Trustee and each Required Person shall
have received (A) counterparts of a Lockbox Agreement or a Concentration
Account Agreement, as applicable, with each new Account Bank, duly
executed by such new Account Bank and all other parties thereto and (B)
copies of all other agreements and documents signed by the new Account
Bank or such other parties with respect to any new Bank Account, and (z)
such designation is made with the consent of each Required Person.
(ii) Servicer may, from time to time after the First Issuance
Date, terminate an account as a Bank Account or a bank as an Account Bank;
provided that (x) no such termination shall occur unless Trustee and each
Required Person shall have received not less than five Business Days'
prior written notice of the account and/or the bank that are proposed to
be terminated as a Bank Account or an Account Bank (as applicable) and,
not less than five Business Days prior to the effective date of any such
proposed termination, Trustee and each Required Person shall have received
counterparts of an agreement, duly executed by the applicable Account Bank
and reasonably satisfactory in form and substance to Trustee and each
Required Person, pursuant to which such Account Bank agrees that, if it
receives any funds or items that constitute Collections on or after the
effective date of the termination of the applicable Bank Account or the
effective date of its termination as an Account Bank (as the case may be),
such Account Bank or former Account Bank (as applicable) shall cause such
funds and items to be delivered in the form received to another lockbox
or transferred to another Bank Account or the Master Collection Account
promptly after such Account Bank or former Account Bank (as applicable)
discovers that it has received any such funds or items, and (y)
notwithstanding clause (x), Transferor and Servicer may at any time
establish alternative collection procedures that do not require the use
of Lockbox Accounts with the consent of each Required Person and upon
satisfaction of the Modification Condition.
(d) Servicer shall instruct each Concentration Account Bank (if
any), to transfer on a daily basis (subject to such Concentration Account
Bank's customary funds availability schedule) in same day funds to the
Master Collection Account all collected funds on deposit in the
Concentration Account maintained with such Concentration Account Bank. All
such transfers shall be made in accordance with the relevant Concentration
Account Agreement.
SECTION 3.4 Servicing Compensation. As full compensation for its
servicing activities hereunder and under any Supplement, and as
reimbursement for any expense incurred by it in connection therewith,
Servicer shall be entitled to receive a monthly servicing fee (the
"Servicing Fee") in respect of each Series, payable in arrears on each
Distribution Date in respect of each Distribution Period (or portion
thereof) during which that Series is outstanding. The Servicing Fee in
respect of any Series shall be payable solely as provided in the related
Supplement.
Unless otherwise provided in the applicable Supplement, the
Servicing Fee payable for any Distribution Period with respect to any
Series shall be equal to one-twelfth of the product
-10-
<PAGE>
of (a) 1% multiplied by (b) the aggregate Unpaid Balance of the
Receivables as measured on the first Business Day of that Distribution
Period multiplied by (c) the applicable Series Collection Allocation
Percentage. The fees, costs and expenses of Trustee, the Paying Agent, any
authenticating agent, the Lockbox Banks, the Concentration Account Banks
and the Transfer Agent and Registrar, and certain other costs and expenses
payable from the Servicing Fee pursuant to other provisions of this
Agreement, and all other fees and expenses that are not expressly stated
in this Agreement or any Series Supplement to be payable by the Trust or
Transferor, other than Federal, state, local and foreign income and
franchise taxes, if any, or any interest or penalties with respect
thereto, of the Trust, shall be paid out of the Servicing Fee and shall
be paid by Servicer from the funds that constitute the Servicing Fee.
SECTION 3.5 Records of Servicer and Reports to be Prepared by
Servicer.
(a) Keeping of Records and Books of Account. Servicer shall
maintain at all times accurate and complete books, records and accounts
relating to the Receivables, other Transferred Assets and Contracts of
each Seller and all Collections thereon in which timely entries shall be
made. Servicer shall, or shall cause each Sub-Servicer to, maintain and
implement administrative and operating procedures (including an ability
to generate duplicates of Records evidencing Receivables and the other
Transferred Assets in the event of the destruction of the originals
thereof), and shall keep and maintain all documents, books, records and
other information that Servicer deems reasonably necessary for the
collection of all Receivables and Related Transferred Assets. Upon the
request of the Trustee or any Required Person after the occurrence and
continuance of a Servicer Default, the Servicer will deliver copies of all
books and records maintained pursuant to this Section 3.5(a) to such
Trustee or Required Person.
(b) Receivables Reviews. Subject to the last proviso to the next
sentence, the Servicer, any Sub-Servicer and Transferor shall, during
regular business hours upon not less than two Business Days' prior notice,
permit the Trustee (or such other Person whom the Trustee may designate
from time to time), any Required Person or their respective agents or
representatives (including certified public accountants or other
auditors), as an expense of the Servicer paid out of the Servicing Fee,
(i) to examine and make copies of and abstracts from, and to conduct
accounting reviews of, all Records in the possession or under the control
of any Origination and Servicing Party, including the related Contracts
and purchase orders, invoices and other agreements related thereto, and
(ii) to visit the offices and properties of any Origination and Servicing
Party for the purpose of examining such materials described in clause (i)
above, and to discuss matters relating to the Receivables or the Related
Transferred Assets or the performance by any Origination and Servicing
Party of their respective obligations under any Transaction Document with
any Authorized Officer of any Origination and Servicing Party or
Transferor (as applicable) or, with employees of such Origination and
Servicing Party having knowledge of such matters. The Trustee or any
Required Person may conduct, or cause their respective agents or
representatives to conduct, reviews of the types described in this
paragraph (b) (each such review, a "Receivables Review") whenever the
Trustee or any Required Person, in its reasonable judgment, deems any such
review appropriate, and the Trustee shall conduct, or cause its agents or
representatives to conduct, such a review if requested by any Required
Person; provided that, prior to the occurrence and continuance of an Early
Amortization Event or an Unmatured Early Amortization Event or during the
period in which the most recent
-11-
<PAGE>
quarterly servicing report delivered pursuant to Section 3.7 discloses a
material exception, the Trustee and each Required Person shall have the
right to request a Receivables Review not more than three times in the
aggregate in any calendar year for any Origination and Servicing Party,
each such Receivables Review to be an expense of the Servicer paid out of
the Servicing Fee; and provided, further, that, (A) after the occurrence
and during the continuance of a Early Amortization Event or an Unmatured
Early Amortization Event or during the period in which the most recent
quarterly servicing report delivered pursuant to Section 3.7 discloses a
material exception, such Receivables Reviews shall be conducted during
regular business hours upon not less than two Business Days' prior notice,
and (B) after the occurrence and during the continuance of a Early
Amortization Event or an Unmatured Early Amortization Event or during the
period in which the most recent quarterly servicing report delivered
pursuant to Section 3.7 discloses a material exception, there shall be no
limitation on the number of Receivables Reviews that are conducted by or
on behalf of the Trustee or any Required Person and all such Receivables
Reviews shall be an expense of the Servicer paid out of the Servicing Fee.
Transferor hereby irrevocably authorizes the Trustee, for the
benefit of the Certificateholders, to exercise its rights under Section
6.1(c) of the Purchase Agreement. Any Receivables Reviews that the
Trustee conducts pursuant to Section 6.1(c) of the Purchase Agreement,
under such authorization, shall be conducted concurrently with the
Receivables Reviews with respect to the related Seller that the Trustee
conducts pursuant to this Section 3.5(b). Prior to the occurrence and
continuance of a Early Amortization Event or an Unmatured Early
Amortization Event, the Trustee may conduct no more than three separate
reviews in the aggregate in any calendar year per Origination and
Servicing Party for all reviews conducted pursuant to this Section 3.5(b)
and Section 6.1(c) of the Purchase Agreement. Transferor hereby agrees
that it shall not exercise its rights to conduct any Receivables Review
pursuant to Section 6.1(c) of the Purchase Agreement unless the Trustee,
as the assignee of Transferor pursuant to Section 2.1(a)(iii) hereof,
shall, at the direction of any Required Person, have given its prior
written consent to Transferor's conducting such review; provided that, as
between Transferor and the Trustee, Transferor hereby agrees that it shall
not request the right to conduct, on its own behalf and for its own
benefit, the first Receivables Review in any calendar year. If the
Trustee consents to the conduct of any second Receivables Review by
Transferor pursuant to Section 6.1(c) of the Purchase Agreement, then such
review by Transferor shall be an expense of the Servicer paid out of the
Servicing Fee.
The Trustee shall not be responsible for failing to conduct a
Receivables Review meeting the conditions of this Section 3.5(b) as a
result of any breach of this Section 3.5(b) by any Origination and
Servicing Party.
(c) Daily Reports. Prior to 11:00 a.m., New York City time, on
each Business Day, Servicer shall prepare and deliver to Trustee (and each
Required Person upon its request) a report relating to each outstanding
Series, substantially in the form specified by the applicable Supplement
or in such other form as is reasonably acceptable to Trustee and Servicer
(each such report being a "Daily Report") setting out, among other things,
the Base Amount and Series Collection Allocation Percentage for that
Series as of the end of business on the preceding Business Day.
-12-
<PAGE>
(d) Monthly Report. Prior to 11:00 a.m., New York City time, on
each Report Date, Servicer shall prepare and deliver to Trustee, the
Rating Agencies and each Required Person a report relating to each
outstanding Series, substantially in the form specified by the applicable
Supplement or in such other form as is reasonably acceptable to Trustee
and Servicer (each such report being a "Monthly Report").
(e) Notice of Seller Change Events; Supplements to Monthly
Reports. Section 1.7 of the Purchase Agreement describes circumstances
under which additional Sellers may be added to the Program (such event
being a "Seller Change Event"). Such Section of the Purchase Agreement
requires ICP to give written notice to Transferor of the occurrence of a
Seller Change Event not less than 30 days prior to the occurrence thereof,
and Transferor hereby agrees to give prompt written notice of its receipt
of any such notice to Trustee, the Rating Agencies and each Required
Person. If the notice is given to Trustee, within five Business Days after
the receipt of the notice by Trustee (or such later date, as specified in
the notice, on which the applicable Seller Change Event shall become
effective), Servicer shall deliver to Trustee and the Rating Agencies a
supplement to the Monthly Report then in effect for each outstanding
Series, which supplement shall show the calculation (complete with the
historical and/or pro forma receivables data necessary to do such
calculation) of (A) the Required Receivables and the applicable reserve
ratios (as described in each Supplement) to reflect the addition of
accounts receivable originated by any Person that is being added to the
Program as a Seller, and (B) the Loss Discount and the Purchase Discount
for any such Person that is being added to the Program as a Seller. For
purposes of all calculations hereunder and under the Purchase Agreement,
the Required Receivables, such reserve ratios and (if applicable) the Loss
Discount and the Purchase Discount for the relevant Person shown in such
supplement shall supersede and/or supplement the calculation of such items
in the then outstanding Monthly Report, effective as of the fifth Business
Day following Trustee's receipt of such notice (or such later date, as
specified in such notice, on which the applicable Seller Change Event
shall become effective).
SECTION 3.6 Monthly Servicer's Certificate. On each Report Date,
Servicer shall deliver to Trustee, the Paying Agent, Transferor, the
Rating Agencies and each Required Person a certificate of an Authorized
Officer of Servicer substantially in the form of Exhibit C, with such
additions as may be required by any Supplement.
SECTION 3.7 Servicing Report of Independent Public Accountants;
SEC Reports. (a)(i) On or before 45 days after the end of each fiscal
semi-annual period of Transferor beginning with Transferor's fiscal semi-
annual period ending December 31, 1996, Servicer shall, as an expense of
Servicer paid out of the Servicing Fee, cause Coopers & Lybrand L.L.P. or
another firm of independent certified public accountants that is generally
recognized as being among the "big six" (which may also render other
services to Servicer, the Sellers or Transferor) to furnish a report to
Trustee, Servicer, Transferor and each Required Person (which report shall
be addressed to Trustee and each Required Person and shall relate to
Transferor's most recently ended fiscal semi-annual period). The
accountants' report shall set forth the results of their performance of
the procedures described in Exhibit D with respect to the Monthly Reports
and Daily Reports delivered to Trustee pursuant to Section 3.5 during the
prior semi-annual period.
-13-
<PAGE>
(ii) Each accountants' report shall state that the accountants
have compared the amounts contained in the Monthly Reports and a
reasonable sample randomly selected from all Daily Reports delivered to
Trustee during the period covered by the report with the records
(including computer records) from which the amounts were derived and that,
on the basis of such comparison, the amounts are in agreement with the
documents and records, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in the report.
Except as provided otherwise in a Supplement, a copy of the report may be
obtained by any Investor Certificateholder by a request in writing to
Trustee addressed to the Corporate Trust Office.
(b) Promptly and in any event within two Business Days after the
filing of such reports (if any) with the Securities and Exchange
Commission, ICP shall provide the Trustee, each of the Rating Agencies and
each Required Person with copies of each Quarterly Report on Form 10-Q,
Annual Report on Form 10-K and Report of Form 8-K of ICP. If ICP ceases
to be required to file such reports, or if for any other reason such
reports are not filed, with the Securities and Exchange Commission, ICP
shall provide the Trustee, each of the Rating Agencies and each Required
Person (x) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of ICP, copies of the unaudited consolidated
balance sheets of ICP and its consolidated Subsidiaries as at the end of
the fiscal quarter and the related unaudited statements of earnings and
cash flows, in each case for the fiscal quarter and for the period from
the beginning of the fiscal year through the end of such fiscal quarter,
prepared in accordance with GAAP consistently applied throughout the
periods reflected therein and certified (subject to year end adjustments
and the omission of footnotes) by the chief financial officer or chief
accounting officer of ICP and (y) as soon as possible and in any event
within 90 days after the end of each fiscal year of ICP, a copy of the
audited consolidated balance sheet of ICP and its consolidated
Subsidiaries as at the end of the fiscal year and the related statements
of earnings, stockholders' equity and cash flows of ICP and its
consolidated Subsidiaries for the fiscal year, setting forth in each case
in comparative form for the corresponding figures for the preceding fiscal
year and prepared in accordance with GAAP consistently applied throughout
the periods reflected therein, certified, without Impermissible
Qualification, by Coopers & Lybrand L.L.P. (or another firm of independent
certified public accountants that is generally recognized as being among
the "big six" as shall be selected by ICP (which may also render other
services to Servicer, the Sellers or Transferor).
(c) Promptly upon the receipt thereof, ICP shall provide the
Trustee, each of the Rating Agencies and each Required Person with copies
of all "management letters" received by ICP or any of its Subsidiaries
from their independent accountants.
SECTION 3.8 Rights of Trustee. (a) Trustee has the exclusive
dominion and control over the Bank Accounts, and Transferor shall take any
action that Trustee may reasonably request to effect or evidence such
dominion and control. At any time following the occurrence of a Servicer
Default, Trustee is hereby authorized to give notice to the Account Banks,
as provided in the Account Agreements, of the revocation of Servicer's
authority to give instructions or take any other actions with respect to
the Bank Accounts that Servicer would otherwise be authorized to give or
to take.
-14-
<PAGE>
(b) At any time following the designation of a Servicer other
than the Initial Servicer:
(i) Trustee may direct any Obligors of Receivables to
pay all amounts payable under any Receivable or any Related
Transferred Assets directly to Trustee or its designee; provided
that Trustee shall provide the applicable Seller with a copy of
such notice at least one Business Day prior to sending it to any
Obligor and consult in good faith with the applicable Seller as
to the text of the notice.
(ii) Trustee may direct any Seller to make payment of
all amounts payable to Transferor under any Transaction Document
to which the Seller is a party directly to Trustee or its
designee.
(iii) Transferor and Servicer shall, at Trustee's
request and as an expense of Servicer paid out of the Servicing
Fee, give notice of the Trust's ownership of the Receivables and
the other Transferred Assets to each Obligor and direct that
payments be made directly to Trustee or its designee.
(iv) Transferor shall, and shall cause the Sellers to,
at Trustee's request, (A) assemble all of the Records that are
necessary or appropriate to collect the Receivables and other
Transferred Assets, and shall make the same available to Trustee
at one or more places selected by Trustee or its designee, (B)
segregate all cash, checks and other payments received by it from
time to time constituting Collections in a manner acceptable to
Trustee and shall, promptly upon receipt (and, subject to Section
3.2(i), in no event later than the first Business Day following
receipt), remit all such cash, checks and other payments, duly
endorsed or with duly executed instruments of transfer, if
applicable, to a Bank Account or the Master Collection Account
and (C) permit, upon not less than two Business Days' prior
written notice, any Successor Servicer and its agents, employees
and assignees access to their respective facilities and their
respective Records (including computer programs, tapes and disks,
and purchase orders, invoices and other agreements related to the
Receivables and the Related Transferred Assets).
(c) Each of Transferor and Servicer hereby authorizes Trustee,
from time to time after the designation of a Servicer other than the
Initial Servicer, to take any and all steps in Transferor's name and on
behalf of Transferor and Servicer that are necessary or appropriate, in
the reasonable determination of Trustee, to collect all amounts due under
any and all Receivables or other Transferred Assets, including endorsing
the name of Transferor or the applicable Seller on checks and other
instruments representing Collections and enforcing such Receivables and
the other Transferred Assets.
(d) Transferor hereby irrevocably appoints Trustee to act as
Transferor's attorney-in-fact, with full authority in the place and stead
of Transferor and in the name of Transferor or otherwise, from time to
time after the designation of a Servicer other than the Initial Servicer,
to take (subject to Section 11.14 hereof) any action and to execute any
instrument or document that Trustee, in its reasonable determination, may
deem necessary to accomplish the purposes of this Agreement, including:
-15-
<PAGE>
(i) to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any Receivable or
any Related Transferred Asset;
(ii) to receive, endorse and collect any drafts or
other instruments, documents and chattel paper, in connection
with clause (i);
(iii) to file any claims or take any action or
institute any proceedings that Trustee in its reasonable
determination may deem necessary or appropriate for the
collection of any of the Receivables or any other Transferred
Asset or otherwise to enforce the rights of Trustee and the
Certificateholders with respect to any of the Receivables or any
other Transferred Asset; and
(iv) to perform the affirmative obligations of
Transferor under any Transaction Document.
Transferor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with
an interest.
SECTION 3.9 Ongoing Responsibilities of the Initial Servicer.
Anything herein to the contrary notwithstanding:
(a) If at any time the Initial Servicer shall not be
Servicer, the Initial Servicer shall deliver all Collections
received or deemed received by it or its Subsidiaries to Trustee
no later than one Business Day after receipt or deemed receipt
thereof and Trustee shall distribute such Collections to the same
extent as if such Collections had actually been received from the
related Obligor on the applicable dates. So long as the Initial
Servicer or any of its Subsidiaries shall hold any Collections or
deemed Collections required to be paid to Trustee, each of them
shall hold such amounts in trust (and separate and apart from its
own funds) and shall clearly mark its records to reflect such
trust. The Initial Servicer hereby grants to Trustee an
irrevocable power of attorney, with full power of substitution,
coupled with an interest, upon the occurrence of a Servicer
Default, to take in the name of the Initial Servicer all steps
necessary or appropriate to endorse, negotiate or otherwise
realize on any writing or other right of any kind held or
transmitted by the Initial Servicer or transmitted and received
by Trustee (whether or not from the Initial Servicer) in
connection with any Receivable or other Transferred Asset.
(b) In addition, if at any time the Initial Servicer
shall not be Servicer, the Initial Servicer shall act (if the
Successor Servicer so requests) as the data processing agent of
Servicer and, in such capacity, the Initial Servicer shall
conduct (and shall cause any other necessary Persons to conduct)
the data processing functions of the administration of the
Receivables, the other Transferred Assets and the Collections
thereon in substantially the same way that the Initial Servicer
(or its Sub-Servicers) conducted such data processing functions
while the Initial Servicer acted as Servicer. The Initial
Servicer
-16-
<PAGE>
and each such other Person shall be entitled to reasonable
compensation for such service to be paid from the Servicing Fee.
(c) Notwithstanding any termination of the Initial
Servicer as Servicer hereunder, the Initial Servicer shall
continue to indemnify Trustee on the terms set out in Section
11.5 with respect to circumstances existing, or actions taken or
omitted, prior to such termination.
SECTION 3.10 Further Action Evidencing Transfers. Servicer shall
cause all Public Notices and any other necessary documents relating to the
right, title and interest of Trustee in, to and under the Transferred
Assets to be promptly recorded, registered and filed, and at all times to
be kept recorded, registered and filed, all in such manner and in such
places as may be required by law fully to preserve, maintain and protect
the right, title and interest of Trustee hereunder in and to all property
comprising the Transferred Assets. Servicer shall deliver to Trustee
file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. Transferor shall cooperate fully with
Servicer in connection with the obligations set forth above and will
execute any and all documents that are reasonably required to fulfill the
intent of this section.
If Transferor or Servicer fails to perform any of its agreements
or obligations under any Transaction Document and does not remedy such
failure within the applicable cure period, if any, then Trustee or its
designee may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the reasonable expenses
of Trustee or its designee incurred in connection therewith shall be
payable by Servicer as provided in Section 11.5 and (if applicable) by
Transferor as provided in Section 7.3.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS; ALLOCATIONS
SECTION 4.1 Rights of Certificateholders. Each Series of
Investor Certificates shall collectively represent a fractional undivided
beneficial interest (as to any Series, the "Series Interest") in the
Trust, and the amount of that undivided beneficial interest shall equal
the Series Collection Allocation Percentage for that Series from time to
time. Each Certificate within a Series shall represent a partial ownership
interest in the related Series Interest, representing the right to
receive, to the extent necessary to make the required payments with
respect to that Certificate at the times and in the amounts specified in
this Article IV and in the related Supplement, the portion of Collections
allocable to Investor Certificateholders of such Series pursuant to this
Agreement and such Supplement and funds on deposit in the Transaction
Accounts allocable to Investor Certificateholders of such Series. Unless
the applicable Supplement provides otherwise, the Investor Certificates
of any Series or class shall not represent any interest in any funds
allocable to any other Series. The Transferor Certificate shall represent
an interest in the Trust (the "Transferor Interest") consisting of the
right to receive
-17-
<PAGE>
current and deferred transfer payments in respect of the various Series
outstanding from time to time at the times and in the amounts specified
in the related Supplements.
SECTION 4.2 Establishment of Transaction Accounts. (a) On or
prior to the date of this Agreement, Trustee has established, and until
the Trust is terminated Trustee shall (except as expressly permitted or
required below) maintain, in the name of Trustee and for the benefit of
the Certificateholders, the following accounts:
(i account no. 67-7584-70-8, which shall be called the
"Master Collection Account" and into which all Collections and
all other Transferred Assets consisting of cash or cash
equivalents shall be transferred on a daily basis from the Bank
Accounts;
(ii account no. 67-7584-71-6, which shall be called the
"Carrying Cost Account" and into which funds shall be allocated
from time to time to cover Carrying Costs of each Series
(including interest payable on, and the Servicing Fee allocated
to, each Series);
(iii account no. 67-7584-72-4, which shall be called
the "Equalization Account" and into which funds may from time to
time be transferred from the Master Collection Account to
compensate for fluctuations in the Base Amounts for the
outstanding Series; and
(iv account no. 67-7584-73-2, which shall be called the
"Principal Funding Account" and into which funds will from time
to time be transferred in anticipation of distributions to
Investor Certificateholders on account of their respective
principal investments.
(b In addition, if an Early Amortization Period occurs with
respect to any Series, Trustee shall establish an additional account which
shall be called the "Holdback Account" and into which funds that would
otherwise be remitted by Trustee to the Transferor in respect of the
Transferor Certificate will be deposited to the extent so provided in the
related Supplement.
(c The Master Collection Account, the Carrying Cost Account, the
Equalization Account, the Principal Funding Account, any Holdback Account
and any additional accounts required by any Supplement to be established
(unless otherwise indicated in such Supplement) are collectively called
the "Transaction Accounts." Each of the Transaction Accounts shall be
established and maintained as a segregated trust account maintained at a
bank with a long-term senior unsecured debt rating of at least "A" and
shall bear a designation clearly indicating that funds deposited therein
are held for the benefit of the Certificateholders. If any Transaction
Account ceases to be a segregated trust account maintained at a bank with
a long-term senior unsecured debt rating of at least "A", Servicer shall
cause Trustee to open a substitute Transaction Account that is a
segregated trust account maintained at a bank with a long-term senior
unsecured debt rating of at least "A" and transfer the funds in the
existing Transaction Account to the substitute Transaction Account, and
thereafter all references in any Transaction
-18-
<PAGE>
Document to the original Transaction Account shall be deemed instead to
refer to the substitute Transaction Account.
(d The Master Collection Account, the Carrying Cost Account, the
Equalization Account, the Principal Funding Account and any Holdback
Account shall be held by Trustee for the benefit of all
Certificateholders. However, there shall be established within each of the
Carrying Cost Account, the Equalization Account, the Principal Funding
Account and any Holdback Account an administrative sub-account for each
outstanding Series. Funds allocated to the Carrying Cost Account, the
Equalization Account, the Principal Funding Account and any Holdback
Account pursuant to any Supplement shall be allocated to the applicable
Series' sub-account and shall be available solely to the holders of the
Certificates in that Series, except to the extent that such funds are
subsequently reallocated to another Series, or to the Transferor, in
accordance with the terms of the applicable Supplement and this Agreement.
Any additional Transaction Accounts established pursuant to any Supplement
shall be held by Trustee for the benefit of only the related Series.
(e Trustee shall possess (for its benefit and for the benefit
of the Certificateholders) all right, title and interest in and to all
funds on deposit from time to time in each of the Transaction Accounts and
in all proceeds thereof. The Transaction Accounts shall be under the sole
dominion and control of Trustee for the benefit of the applicable
Certificateholders. Each of Servicer and Trustee agrees that it shall
have no right of setoff against, and no right otherwise to deduct from,
any funds held in any of the Transaction Accounts or the Bank Accounts for
any amount owed to it by the Trust, any party hereto or any
Certificateholder unless such right to deduct is expressly provided for
in a Transaction Document.
SECTION 4.3 Trust-Level Calculations and Funds Allocations.
(a Allocation of Daily Collections. On each Business Day,
Servicer shall determine the amount of collected funds received in the
Master Collection Account (other than funds that are required to be
returned to Related Persons (or their designees) or Lockbox Banks pursuant
to Sections 3.2(b) and 3.3(b)) since the preceding Business Day and shall
allocate to each outstanding Series a share of such funds in an amount
equal to the product of the applicable Series Collection Allocation
Percentage and the amount of such funds. The portion of such funds
allocated to any Series shall be further allocated and otherwise dealt
with in accordance with the terms of the related Supplement. In addition,
funds initially allocated to a Series on any Business Day that are
designated as Shared Investor Collections shall be reallocated to other
Series pro rata based upon the respective Shortfalls (if any) of the other
Series.
(b Allocation of Write-Offs and Dilution. In each Monthly Report
relating to a Series that is in an Early Amortization Period, Servicer
shall calculate the amount of (i) Write-Offs (net of Recoveries) and (ii)
Dilutions as to which no settlement payment has been made pursuant to
Section 3.3 of the Purchase Agreement, in each case during the related
Calculation Period (or the portion of that Calculation Period falling in
the Early Amortization Period) and shall allocate to such Series a portion
of the amounts referred to in clauses (i) and (ii) equal to the product
of each such amount and the related Series Loss Allocation Percentage.
-19-
<PAGE>
SECTION 4.4 Investment of Funds in Transaction Accounts. On any
day when funds on deposit in any Transaction Account exceed $10,000 (after
giving effect to the allocations of such funds required by this Article
IV and the various Supplements), and at such other times as investment is
practicable, Trustee, at the direction of Servicer, shall invest and
reinvest monies on deposit in such Transaction Account (in the name of
Trustee) in such Eligible Investments as are specified in a notice from
Servicer, subject to the restrictions set forth hereinafter. All Eligible
Investments made from funds in any Transaction Account, and the interest,
dividends and income received thereon and therefrom and the net proceeds
realized on the sale thereof, shall be deposited in such Transaction
Account. All Eligible Investments in each Transaction Account shall mature
not later than the next succeeding Distribution Date (or such other date
or dates as may be specified in the applicable Supplement). Trustee may
liquidate an Eligible Investment prior to maturity if such liquidation
would not result in a loss of all or part of the principal portion of such
Eligible Investment or if, prior to the maturity of such Eligible
Investment, a default occurs in the payment of principal, interest or any
other amount with respect to such Eligible Investment. In the absence of
negligence of Trustee or willful misconduct by Trustee, Trustee shall have
no liability in connection with investment losses incurred on Eligible
Investments. It is intended for income tax purposes that the income earned
through investment of funds in the Transaction Accounts shall be treated
as income of Transferor.
SECTION 4.5 Attachment of Transaction Accounts. If Trustee
receives written notice that any Transaction Account has or will become
subject to any writ, judgment, warrant of attachment, execution or similar
process, Trustee shall (notwithstanding any other provision of the
Transaction Documents) promptly notify Transferor, Servicer and the
Certificateholders thereof, and shall not deposit or transfer funds into
such Transaction Account but shall cause funds otherwise required to be
deposited into such Transaction Account to be held in another account
pending distribution of such funds in the manner required by the
Transaction Documents.
ARTICLE V
DISTRIBUTIONS AND REPORTS
SECTION 5.1 Distributions. DISTRIBUTIONS SHALL BE MADE, AND
REPORTS SHALL BE PROVIDED, TO CERTIFICATEHOLDERS AS SET FORTH IN THE
APPLICABLE SUPPLEMENT.
ARTICLE VI
THE CERTIFICATES
SECTION 6.1 The Certificates. The Investor Certificates in each
Series shall be substantially in the forms contemplated by the Supplements
pursuant to which the Investor Certificates are issued, and the Transferor
Certificate shall be substantially in the form of Exhibit
-20-
<PAGE>
E. Upon issuance, all Certificates shall be executed and delivered by
Transferor to Trustee for authentication and redelivery as provided in
Sections 6.2 and 6.10. Except to the extent provided otherwise in an
applicable Supplement, Investor Certificates shall be issued in minimum
denominations of $1,000,000 and in integral multiples of $100,000 and
shall not be subdivided for resale into Certificates smaller than a
Certificate, the initial offering price for which would have been at least
$1,000,000.
Notwithstanding any other provision of this Agreement, unless
otherwise specified in the applicable Supplement or on the face of any
Certificate, no transfer, assignment or other conveyance of, or sale of
any interest in a Certificate shall be made unless, after giving effect
thereto, there shall be no more than 20 Private Holders of Subject
Instruments, as reasonably determined by the Transferor. Any attempted
transfer, assignment, conveyance, participation or subdivision in
contravention of the preceding restrictions, as reasonably determined by
the Transferor, shall be void ab initio and the purported transferor,
seller or subdivider of such Certificate shall continue to be treated as
the Certificateholder of any such Certificate (or interest therein) for
all purposes of this Agreement.
Each Certificate shall be issued as a Definitive Certificate and
shall be executed by manual or facsimile signature on behalf of Transferor
by its President or any Vice President or by any attorney-in-fact duly
authorized to execute the Definitive Certificate on behalf of any such
officer. The Definitive Certificates shall be authenticated on behalf of
the Trust by manual signature of a duly authorized signatory of Trustee.
Definitive Certificates bearing the manual or facsimile signature of the
individual who was, at the time when the signature was affixed, authorized
to sign on behalf of Transferor or the Trust (as applicable) shall be
valid and binding, notwithstanding that the individuals or any of them
ceased to be so authorized prior to the authentication and delivery of the
Definitive Certificates or does not hold such office on the date of
issuance of such Definitive Certificates. No Definitive Certificates shall
be entitled to any benefit under this Agreement, or be valid for any
purpose, unless there appears on the Definitive Certificate a certificate
of authentication substantially in the form provided for herein executed
by or on behalf of Trustee by the manual signature of a duly authorized
signatory, and the certificate of authentication upon any Definitive
Certificate shall be conclusive evidence, and the only evidence, that the
Definitive Certificate has been duly authenticated and delivered hereunder
and is entitled to the benefits of this Agreement. Except as otherwise
provided in the applicable Supplement, all Definitive Certificates shall
be dated the date of their authentication.
SECTION 6.2 Authentication of Certificates. Contemporaneously
with the initial assignment and transfer of Receivables and other
Transferred Assets to the Trust, Trustee shall authenticate and deliver
the Transferor Certificate to Transferor. On each Issuance Date, upon the
order of Transferor, Trustee shall authenticate and deliver to Transferor
the Series of Certificates that are to be issued originally on such
Issuance Date pursuant to the applicable Supplement.
SECTION 6.3 Registration of Transfer and Exchange of
Certificates. (a) Trustee, as agent for Transferor, shall keep, or shall
cause to be kept, at the office or agency to be maintained in accordance
with the provisions of Section 11.16, a register in written form or
capable of being converted into written form within a reasonable time (the
"Certificate Register")
-21-
<PAGE>
in which, subject to such reasonable regulations as it may prescribe, a
transfer agent and registrar (which may be Trustee) (the "Transfer Agent
and Registrar") shall provide for the registration of the Certificates,
transfers and exchanges of the Certificates and the allocation of payments
as herein provided. Transferor hereby appoints Trustee as the initial
Transfer Agent and Registrar.
Transferor, or Trustee as agent for Transferor, may revoke the
appointment as Transfer Agent and Registrar and remove the then-acting
Transfer Agent and Registrar if Trustee or Transferor (as applicable)
determines in its sole discretion that the then-acting Transfer Agent and
Registrar has failed to perform its obligations under this Agreement in
any material respect. The then-acting Transfer Agent and Registrar shall
be permitted to resign as Transfer Agent and Registrar upon 30 days' prior
written notice to Trustee, Transferor, Servicer and each Required Person;
provided that such resignation shall not be effective and the then-acting
Transfer Agent and Registrar shall continue to perform its duties as
Transfer Agent and Registrar until Trustee has appointed a successor
Transfer Agent and Registrar reasonably acceptable to Transferor and the
Person so appointed has given Trustee written notice that it accepts the
appointment. The provisions of Sections 11.1 through 11.5 shall apply to
the Transfer Agent and Registrar as if all references to "Trustee" in the
applicable provisions of Sections 11.1 through 11.5 were references to the
Transfer Agent and Registrar.
It is intended that the registration of Certificates that is
described in this Section comply with the registration requirements
contained in Section 163 of the Internal Revenue Code.
(b) No transfer of all or any part of the Transferor Certificate
shall be made unless (i) Transferor shall have given the Rating Agencies,
Trustee and each Required Person prior written notice of the proposed
transfer, (ii) the Modification Condition shall have been satisfied in
connection with the proposed transfer and (iii) Transferor shall have
delivered to Trustee, the Rating Agencies, and each Required Person a Tax
Opinion for each outstanding Series of Investor Certificates.
(c) Subject to the requirements of subsection (e), if
applicable, having been fulfilled, upon surrender for registration of
transfer of any Certificate, and, in the case of Investor Certificates,
at any office or agency of the Transfer Agent and Registrar maintained for
such purpose, Transferor shall execute, and Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or
more new Certificates of the appropriate class and Series that are in
authorized denominations of like aggregate fractional interest in the
related Series Interest that bear numbers that are not contemporaneously
outstanding.
At the option of an Investor Certificateholder, its Investor
Certificates may be exchanged for other Investor Certificates of the same
class and Series (and bearing the same interest rate as the Investor
Certificate surrendered for registration of exchange) of authorized
denominations of like aggregate fractional interests in the related Series
Interest and bearing numbers that are not contemporaneously outstanding,
upon surrender of the Investor Certificates to be exchanged at any such
office or agency. Whenever any Investor Certificates are so surrendered
for exchange, Transferor shall execute, and Trustee shall authenticate and
deliver, the appropriate number of Investor Certificates of the class and
Series that the Investor Certificateholder making
-22-
<PAGE>
the exchange is entitled to receive. Every Investor Certificate presented
or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in a form satisfactory to
Trustee or the Transfer Agent and Registrar duly executed by the
Certificateholder thereof or his attorney-in-fact duly authorized in a
writing delivered to the Transfer Agent and Registrar.
No service charge shall be made for any registration of transfer
or exchange of Certificates, but the Transfer Agent and Registrar may
require the Certificateholder to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Investor
Certificates.
All Certificates surrendered for registration of transfer and
exchange shall be canceled and disposed of in a manner satisfactory to
Trustee.
The Investor Certificateholders may, with the consent of the
Agent, provide notice to the Trustee as to whom and in what manner payment
should be made in respect of the Investor Certificates held by such
Investor Certificateholders and the Trustee shall make payment of amounts
to which such Investor Certificateholder is entitled in such manner.
(d) Certificates may be surrendered for registration of transfer
or exchange at the office of the Transfer Agent and Registrar designated
in Section 13.6.
(e) Unless otherwise provided in the applicable Supplement,
Certificateholders holding Definitive Certificates shall not sell,
transfer or otherwise dispose of the Certificates unless the sale,
transfer or disposition is being made pursuant to an exemption from the
registration requirements of the Securities Act and applicable state
securities laws and, prior to the proposed sale, transfer or disposition,
the Certificateholder and the proposed transferee each provide Trustee and
Transferor with representations and, if requested by Trustee or
Transferor, an Opinion of Counsel concerning the proposed sale, transfer
or disposition and the availability of the exemption.
(f) The Investor Certificates shall bear such restrictive
legends as shall be set forth in the applicable Supplements.
(g) No transfer of a Certificate shall be made unless the
Trustee and the Transfer Agent and Registrar shall have received either
(i) a representation letter from the proposed transferee of such
Certificate to the effect that such proposed transferee is not an employee
benefit plan subject to the fiduciary responsibility provisions of ERISA,
or Section 4975 of the Code, or a Person acting on behalf of any such plan
or using the assets of any such plan or if the proposed transferee is an
insurance company, a representation that the proposed transferee is an
insurance company which is purchasing such certificates with funds
contained in an "insurance company general account" (as such term is
defined in section v(e) of prohibited transaction class exemption 95-60
("ptce 95-60")) and that the purchase and holding of such certificates are
covered under ptce 95-60, which representation letter shall not be an
expense of the Trust, Trustee, the Transfer Agent and Registrar, the
Servicer or the Transferor or (ii) in the case of any such certificate
presented for registration in
-23-
<PAGE>
the name of an employee benefit plan subject to the fiduciary
responsibility provisions of ERISA, or Section 4975 of the Internal
Revenue Code (or comparable provisions of any subsequent enactments), or
a trustee of any such plan or any other Person who is using the assets of
any such plan to effect such acquisition, an opinion of counsel, in form
and substance reasonably satisfactory to, and addressed and delivered to,
the Trustee, the Transfer Agent and Registrar and the Transferor, to the
effect that the purchase or holding of such Certificate will not result
in the assets of the Trust estate being deemed to be "plan assets" and
subject to the fiduciary responsibility provisions of ERISA or the
prohibited transaction provisions of the Internal Revenue Code, will not
constitute or result in a prohibited transaction within the meaning of
Section 406 or Section 407 of ERISA or Section 4975 of the Internal
Revenue Code, and will not subject the Trust, the Trustee, the Transfer
Agent and Registrar, the Servicer or the Transferor to any obligation or
liability (including obligations or liability under ERISA or Section 4975
of the Internal Revenue Code) in addition to those explicitly undertaken
in this Trust Agreement which opinion of counsel shall not be an expense
of the Trust, the Trustee, the Transfer Agent and Registrar, the Servicer
or the Transferor.
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Transfer Agent and
Registrar, or the Transfer Agent and Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b)
there is delivered to the Transfer Agent and Registrar and Trustee such
security or indemnity as may be required by them and Transferor to hold
each of them, the Trust and Transferor harmless, then, in the absence of
notice to Trustee that such Certificate has been acquired by a bona fide
purchaser, Transferor shall execute and, upon the request of Transferor,
Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like class, Series, tenor, terms and principal amount and bearing a
number that is not contemporaneously outstanding. In connection with the
issuance of any new Certificate under this section, Trustee or the
Transfer Agent and Registrar may require the payment by the
Certificateholder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the reasonable fees and expenses of Trustee and
Transfer Agent and Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this section shall constitute conclusive
and indefeasible evidence of ownership of an interest in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed
Certificate shall be enforceable by anyone, and shall be entitled to all
the benefits of this Agreement equally and proportionately with any and
all Certificates of the same class and Series that are duly issued
hereunder.
SECTION 6.5 Persons Deemed Owners. Prior to due presentation of
a Certificate for registration of transfer, Transferor, Trustee, the
Paying Agent, the Transfer Agent and Registrar and any agent of any of
them may treat the Person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Article V and for all other purposes whatsoever, and none of
Transferor, Trustee, the Paying Agent, the Transfer Agent and Registrar
or any agent of any of them shall be affected by any notice to the
contrary; provided that, in determining whether the Holders of the
requisite principal amount or stated amount (as applicable) of
Certificates have given any request, demand,
-24-
<PAGE>
authorization, direction, notice, consent or waiver hereunder,
Certificates owned by Transferor, Servicer or any Affiliate thereof shall
be disregarded and deemed not to be outstanding, except that, in
determining whether Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Certificates that Trustee knows to be so owned shall be so disregarded.
Certificates so owned that have been pledged in good faith shall not be
disregarded and may be regarded as outstanding if the pledgee establishes
to the satisfaction of Trustee the pledgee's right so to act with respect
to such Certificates and that the pledgee is not Transferor, Servicer or
an Affiliate thereof.
SECTION 6.6 Appointment of Paying Agent. The Paying Agent
initially shall be Trustee. Trustee hereby appoints the Paying Agent as
its agent to make distributions to Certificateholders pursuant to the
applicable Supplements and to report the amounts of the distributions to
Trustee. Any Paying Agent shall have the revocable power to withdraw funds
from the Master Collection Account for the purpose of making the
distributions. Trustee or, at any time when Trustee is also the Paying
Agent, Trustee may revoke such power of the Paying Agent and remove the
Paying Agent if Trustee (as applicable) determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under
this Agreement in any material respect. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' prior written notice to
Trustee, Transferor, Servicer, Rating Agencies and the Investor
Certificateholders. Any resignation or removal of the Paying Agent, and
appointment of a successor Paying Agent, shall not become effective until
the appointment has been accepted by the successor Paying Agent. If no
successor Paying Agent shall have been appointed and shall have accepted
appointment within 30 days after the giving of the notice of resignation,
the resigning Paying Agent may petition any court of competent
jurisdiction to appoint a successor Paying Agent. In the event that
Trustee shall no longer be the Paying Agent, Trustee shall appoint a
successor Paying Agent (which shall be a bank or trust company) reasonably
acceptable to each Required Person, which appointment shall be effective
on the date on which the Person so appointed gives Certificateholders
written notice that it accepts the appointment and on which each Required
Person gives written consent to such appointment. Trustee shall cause the
successor Paying Agent or any additional Paying Agent appointed by Trustee
to execute and deliver to Trustee an instrument in which it shall agree
with Trustee that, as Paying Agent, it will hold all sums, if any, held
for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until the sums shall be paid to the
Certificateholders. The Paying Agent shall return all unclaimed funds to
Trustee, and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to Trustee. The provisions of
Sections 11.1 through 11.5 shall apply to the Paying Agent as if all
references in the applicable provisions thereof to "Trustee" were
references to the Paying Agent.
SECTION 6.7 Access to List of Certificateholders' Names and
Addresses. Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to Transferor, Servicer, any Seller or the Paying
Agent, within two Business Days after receipt by Trustee of a written
request therefor from Servicer or the Paying Agent, a list in the form
Servicer or the Paying Agent may reasonably require of the names and
addresses of the Certificateholders as of the most recent Distribution
Date. If any Holder or group of Holders of Investor Certificates in any
Series evidencing not less than 10% of the aggregate unpaid principal
amount of the Series (the "Applicant") applies in writing to Trustee, and
the application states that the Applicant desires to communicate with
other Certificateholders with respect to their rights under this
Agreement, any Supplement or the Certificates and is accompanied by a copy
of the communication that the Applicant proposes to transmit, then
Trustee, after having been adequately indemnified by the
-25-
<PAGE>
Applicant for its costs and expenses, shall afford or shall cause the
Transfer Agent and Registrar to afford the Applicant access during normal
business hours to the most recent list of Certificateholders held by
Trustee, within five Business Days after the receipt of the application
and indemnification. The list shall be as of a date no more than 45 days
prior to the date of receipt of the Applicant's request.
Every Certificateholder, by receiving and holding a Certificate,
agrees with Trustee that neither Trustee, the Transfer Agent and
Registrar, Transferor, Servicer, any Seller nor any of their respective
agents shall be held accountable by reason of the disclosure of any
information as to the names and addresses of the Certificateholders
hereunder, regardless of the sources from which the information was
derived.
SECTION 6.8 Authenticating Agent. (a) Trustee may appoint one
or more authenticating agents with respect to the Certificates that shall
be authorized to act on behalf of Trustee in authenticating the
Certificates in connection with the issuance, delivery, registration of
transfer, exchange or repayment of the Certificates. Either Trustee or the
authenticating agent, if any, then appointed and acting on behalf of
Trustee shall authenticate the Certificates. Whenever reference is made
in this Agreement to the authentication of Certificates by Trustee or
Trustee's certificate of authentication, such reference shall be deemed
to include authentication on behalf of Trustee by an authenticating agent
and a certificate of authentication executed on behalf of Trustee by an
authenticating agent. Each authenticating agent must be acceptable to
Transferor.
(b) Any institution succeeding to the corporate agency business
of an authenticating agent shall continue to be an authenticating agent
without the execution or filing of any document or any further act on the
part of Trustee, the authenticating agent or any other Person.
(c) An authenticating agent may at any time resign by giving
written notice of resignation to Trustee and Transferor. Trustee may at
any time terminate the agency of an authenticating agent by giving notice
of termination to the authenticating agent and Transferor. Upon receiving
a notice of resignation or upon a termination, or in case at any time an
authenticating agent shall cease to be acceptable to Trustee or
Transferor, Trustee may promptly appoint a successor authenticating agent.
Any successor authenticating agent, upon acceptance of its appointment,
shall become vested with all the rights, powers and duties of its
predecessor, with like effect as if originally named as an authenticating
agent. No successor authenticating agent shall be appointed unless
acceptable to Trustee and Transferor.
(d) Servicer agrees to pay to each authenticating agent (if
any), as an expense of Servicer paid out of the Servicing Fee, reasonable
compensation from time to time for services performed under this section.
(e) The provisions of Sections 11.1, 11.2, 11.3 and 11.4 shall
be applicable to any authenticating agent as if the references in the
applicable provisions thereof to "Trustee" were references to the
authenticating agent.
-26-
<PAGE>
(f) Pursuant to an appointment made under this section, the
Certificates may have endorsed thereon, in lieu of Trustee's certificate
of authentication, an alternate certificate of authentication in
substantially the following form:
"This is one of the Certificates described in the Supplement dated
as of __________ ___, 199_.
LASALLE NATIONAL BANK, as Trustee
By:_________________________
as Authenticating Agent
for Trustee,
By:_________________________
Authorized Officer."
SECTION 6.9 Tax Treatment. It is the intent of Transferor and
the Investor Certificateholders that, for purposes of Federal, state and
local income and franchise taxes and other taxes measured by or imposed
on income, the Investor Certificates will be treated as evidence of
indebtedness secured by the Transferred Assets and the Trust will not be
characterized as an association or publicly traded partnership taxable as
a corporation. Transferor, by entering into this Agreement, and each
Investor Certificateholder, by its acceptance of its Investor Certificate,
agrees to treat the Investor Certificates as indebtedness (or, if so
provided in the applicable Supplement, an interest in a partnership) for
purposes of Federal, state and local income and franchise taxes and any
other taxes measured by or imposed on income. The provisions of this
Agreement and all related Transaction Documents shall be construed to
further these intentions of the parties. In accordance with the foregoing,
Transferor agrees that it will report its income for purposes of Federal,
state and local income or franchise taxes, and any other taxes measured
by or imposed on income, on the basis that it is the owner of the
Receivables. Except to the extent otherwise required by applicable law or
any Governmental Authority, Trustee hereby agrees to treat the Trust as
a security device only, and shall not file tax returns or obtain an
employer identification number on behalf of the Trust.
SECTION 6.10 Issuance of Additional Series of Certificates. (a)
Transferor may from time to time issue and direct Trustee to authenticate
one or more classes of any newly issued Series of Investor Certificates
(a "New Issuance") if (i) each Required Person shall have given their
prior written consent, and (ii) each Rating Agency after notice of such
contemplated issuance of additional series of Certificates, shall have
confirmed the initial rating of the then-issued and outstanding series of
Certificates that were rated by such Rating Agency. In addition, to the
extent permitted for any Series of Investor Certificates as specified in
the related
-27-
<PAGE>
Supplement, the Investor Certificateholders of the Series may tender their
Investor Certificates to Trustee, and Transferor may allocate a portion
of the Transferor Interest pursuant to the terms and conditions set forth
in the Supplement, in exchange for one or more newly issued Series of
Investor Certificates (an "Investor Exchange"). New Issuances and Investor
Exchanges collectively are referred to as "Issuances".
(b) Transferor may direct Trustee to authenticate an Issuance
by notifying Trustee, in writing, at least five Business Days (or such
shorter period as shall be acceptable to Trustee) in advance (an "Issuance
Notice") of the date upon which the Issuance is to occur (an "Issuance
Date"). Any Issuance Notice shall state the designation of any Series to
be issued on the Issuance Date and, with respect to each class or Series:
(i) its initial invested amount (or the method for calculating the initial
invested amount) and (ii) its interest rate (or the method for allocating
interest payments or other cash flows to the Series), if any, with respect
to the Series.
(c) On the Issuance Date, Transferor shall deliver to Trustee
for authentication under Section 6.2, and Trustee shall authenticate and
deliver any such class or classes of Series of Investor Certificates only
upon delivery to it (and, in the case of item (iv) below, each Rating
Agency and each Required Person) of the following:
(i) a Supplement satisfying the criteria set forth in
subsection (d) and in form reasonably satisfactory to Trustee
executed by Transferor and Servicer and specifying the principal
terms of the Series;
(ii) a Tax Opinion for each outstanding Series of
Investor Certificates with respect to such Issuance;
(iii) evidence that the Modification Condition has been
satisfied with respect to such Issuance (unless such Issuance
occurs on the First Issuance Date);
(iv) for any Issuance occurring after the First
Issuance Date, an Officer's Certificate of Transferor that on the
Issuance Date, after giving effect to the Issuance (and the
repayment, on the date of the Issuance Date, of any existing
Investor Certificates with funds (including proceeds of sale of
the new Series) on deposit in the Principal Funding Account), any
requirements set out in the Supplement with respect to any then-
outstanding Series with respect to the amount of Certificates
that may not, by their terms, be transferred has been satisfied;
(v) an Officer's Certificate of Servicer stating that
no Early Amortization Event or Unmatured Early Amortization Event
has occurred and is continuing and that there is not a
substantial likelihood that the Issuance would result in an Early
Amortization Event or an Unmatured Early Amortization Event at
any time in the future;
(vi) in the case of an Investor Exchange, any Investor
Certificates that are being exchanged in connection therewith;
-28-
<PAGE>
(vii) any other documents, certificates and Opinions
of Counsel as may be required by the applicable Supplement; and
(viii) an Officer's Certificate of Servicer to the
effect that all conditions specified in clauses (i) through (ix)
of this subsection (c) have been satisfied.
Upon satisfaction or waiver of the conditions for any Issuance, Trustee
shall cancel any Investor Certificates that are to be cancelled in
connection with such Issuance and issue, as provided above, the new Series
of Investor Certificates dated the Issuance Date. Any such Series of
Investor Certificates shall be substantially in the form specified in the
related Supplement and shall bear, upon its face, the designation for the
Series to which it belongs, as selected by Transferor. There is no limit
to the number of Issuances that may be made under this Agreement.
(d) In conjunction with an Issuance, the parties hereto shall
execute a Supplement, which shall specify the relevant terms with respect
to any newly issued Series of Investor Certificates, which may include:
(i) its name or designation, (ii) the initial invested amount or the
method of calculating the initial invested amount, (iii) the applicable
interest rate (or formula for the determination thereof), (iv) the
Issuance Date, (v) the rating agency or agencies rating the Series, if
any, (vi) the interest payment date or dates and the date or dates from
which interest shall accrue, (vii) the method of allocating Collections
with respect to Receivables for the Series and, if applicable, with
respect to any paired Series and the method by which the principal amount
of Investor Certificates of the Series shall amortize or accrue and the
method for allocating write-offs, (viii) the names of any accounts to be
used by the Series and the terms governing the operation of any such
account, (ix) the base rate applicable to the Series, (x) the terms on
which the Certificates of the Series may be repurchased or remarketed to
other investors, (xi) any deposit into any account provided for the
Series, (xii) the number of classes of the Series, and if more than one
class, the rights and priorities of each class, (xiii) whether any fees,
breakage payments or early termination payments will be included in the
funds available to be paid for the Series, (xiv) the subordination of the
Series to any other Series, (xv) whether the Series will be a part of a
group or subject to being paired with any other Series, (xvi) whether the
Series will be prefunded and (xvii) any other relevant terms of the
Series. The terms of the Supplement may modify or amend the terms of this
Agreement or the Purchase Agreement (including the related definitions)
solely as applied to the new Series.
(e) Except as specified in any Supplement for the related
Series, all Investor Certificates of any Series shall rank pari passu and
be equally and ratably entitled as provided herein to the benefits hereof
without preference, priority or distinction on account of the actual time
or times of authentication and delivery, all in accordance with the terms
and provisions of this Agreement and the related Supplement.
-29-
<PAGE>
ARTICLE VII
TRANSFEROR
SECTION 7.1 Representations and Warranties of Transferor Relating
to Transferor and the Transaction Documents. On the date hereof and on
each Issuance Date, Transferor hereby represents and warrants for the
benefit of the Trustee and the Certificateholders that:
(a) Organization and Good Standing. Transferor is a
limited liability company duly organized and validly existing and
in good standing under the laws of its jurisdiction of
organization and has all necessary corporate power and authority
to acquire, own and transfer the Receivables and the Related
Transferred Assets.
(b) Due Qualification. Transferor is duly qualified to
do business and is in good standing as a foreign limited
liability company (or is exempt from such requirements), and has
obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of property or the
conduct of its business requires qualification, licenses or
approvals.
(c) Power and Authority. Transferor has (i) all
necessary organizational power and authority to execute, deliver
and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes,
and each other Transaction Document to which Transferor is a
party when executed and delivered will constitute, a legal, valid
and binding obligation of Transferor, enforceable against it in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of
whether enforceability is considered in a proceeding in equity or
at law.
(e) Authorization; No Conflict or Violation. The
execution, delivery and performance of, and the consummation of
the transactions contemplated by, this Agreement and the other
Transaction Documents to be signed by Transferor and the
fulfillment of the terms hereof and thereof have been duly
authorized by all necessary action and will not (i) conflict
with, violate, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of
time or both) a default under, (A) its certificate of formation
or limited liability company agreement or (B) any indenture, loan
agreement, mortgage, deed of trust or other material agreement or
instrument to which Transferor is a party or by which it or any
of its properties is bound, (ii) result in the creation or
imposition of any Adverse Claim upon any of its properties
pursuant to the terms of any such contract, indenture, loan
agreement, mortgage, deed of trust, or other agreement or
instrument, other than this Agreement and the other Transaction
Documents, or (iii) conflict with or violate any federal, state,
local or foreign law or any decision, decree, order, rule or
regulation applicable to it or any of its properties of any court
or of any federal, state, local or foreign regulatory body,
-30-
<PAGE>
administrative agency or other governmental instrumentality
having jurisdiction over it or any of its properties.
(f) Litigation and Other Proceedings. (i) There is no
action, suit, proceeding or investigation pending or, to the best
knowledge of Transferor, threatened against it before any court,
regulatory body, arbitrator, administrative agency or other
tribunal or governmental instrumentality and (ii) it is not
subject to any order, judgment, decree, injunction, stipulation
or consent order of or with any court or other government
authority that, in the case of clauses (i) and (ii), (A) asserts
the invalidity of this Agreement or any other Transaction
Document, (B) seeks to prevent the transfer of any Receivables or
Related Transferred Assets to the Trust, the issuance of the
Certificates or the consummation of any of the transactions
contemplated by this Agreement or any other Transaction Document,
(C) seeks any determination or ruling that would materially and
adversely affect the performance by Transferor of its obligations
under this Agreement or any other Transaction Document or the
validity or enforceability of this Agreement or any other
Transaction Document, (D) seeks to affect materially and
adversely the income tax attributes of the transfers hereunder or
the Trust under the United States Federal income tax system or
any state income tax system or (E) individually or in the
aggregate for all such actions, suits, proceedings and
investigations would have a reasonable likelihood of having a
Material Adverse Effect.
(g) Third Party Approvals. All authorizations, consents,
orders and approvals of, or other action by, any Governmental
Authority or other third party that are required to be obtained
by Transferor, and all notices to and filings with any
Governmental Authority or other third party, that are required to
be made by it, in the case of each of the foregoing in connection
with the transfer of Receivables and Related Transferred Assets
to the Trust or the execution, delivery and performance by it of
this Agreement and any other Transaction Documents to which it is
a party and the consummation of the transactions contemplated by
this Agreement, have been obtained or made and are in full force
and effect, except where the failure to obtain or make any such
authorization, consent, order, approval, notice or filing,
individually or in the aggregate for all such failures, would not
have a substantial likelihood of having a Material Adverse
Effect.
(h) Offices. Transferor's principal place of business
and chief executive office is, and since the date of its
organization has been, located at the address set forth under
Transferor's signature hereto (or at such other locations,
notified to Servicer and Trustee in accordance with Section
7.2(c), in jurisdictions where all action required by Section
7.2(c) has been taken and completed).
(i) Account Banks. The names and addresses of all the
Account Banks are specified in Schedule 1 or, after the First
Issuance Date, have been provided by Servicer to Trustee pursuant
to Section 3.3(c), and the account numbers of the Bank Accounts
at such Account Banks have been specified in a letter provided on
or prior to the First Issuance Date to Trustee or, after the
First Issuance Date, have been provided by Servicer to Trustee
pursuant to Section 3.3(c). The Account Agreements to which
Transferor is a party constitute the legal, valid and binding
obligations of the parties
-31-
<PAGE>
thereto enforceable against such parties in accordance with their
respective terms subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally and general equitable principles.
(j) Investment Company Act. Transferor is not, and is
not controlled by, an "investment company" registered or required
to be registered under the Investment Company Act of 1940, as
amended.
(k) Bulk Sales Act. No transaction contemplated by this
Agreement or any other Transaction Document requires compliance
with, or will be subject to avoidance under, by bulk sales act or
similar law.
(l) Margin Regulations. No use of any funds obtained
by Transferor under this Agreement will conflict with or
contravene any of Regulations G, T, U and X promulgated by the
Federal Reserve Board from time to time.
(m) Compliance with Applicable Laws. Transferor is in
compliance with requirements of all applicable laws, rules,
regulations and orders of all Governmental Authorities (federal,
state, local or foreign, and including environmental laws), a
violation of any of which, individually or in the aggregate for
all such violations, would have a substantial likelihood of
having a Material Adverse Effect.
(n) Taxes. Transferor has filed or caused to be filed
all tax returns and reports required by law to have been filed by
it and has paid all taxes, assessments and governmental charges
thereby shown to be owing, except any such taxes, assessments or
charges (i) that are being contested in good faith, (ii) for
which adequate reserves in accordance with GAAP shall have been
set aside on its books and (iii) with respect to which no Adverse
Claim, except Permitted Adverse Claims, has been imposed upon any
Receivables or Transferred Assets.
(o) Transferor will not incur any material indirect
or overhead expenses for items shared between Transferor and any
Affiliate that are not reflected in the Servicing Fee, other than
shared items of expenses not reflected in the Servicing Fee, such
as legal, auditing and other professional services, that will be
allocated to the extent practical on the basis of actual use or
the value of services rendered, and otherwise on a basis
reasonably related to the actual use or the value of services
rendered.
(p) Transferor will account for and manage its
liabilities separately from those of every other Affiliate,
including payment of all payroll and administrative expenses and
taxes (other than taxes that are determined or required to be
determined on a consolidated or combined basis) from its own
assets.
(q) Transferor will conduct its business at an office
segregated from the offices of each of its Affiliates, which
office of Transferor may consist of office space shared with an
Affiliate, a portion of which is allocated solely to Transferor.
-32-
<PAGE>
(r) Transferor will maintain corporate or company
records, books of account and stationery separate from those of
every Affiliate.
(s) Transferor's assets will be maintained in a
manner that facilitates their identification and segregation from
those of any Affiliate.
(t) Transferor will not, directly or indirectly, be
named and shall not enter into an agreement to be named as a
direct or contingent beneficiary or loss payee on any insurance
policy with respect to any loss relating to the property of any
Affiliate.
(u) any transaction between Transferor and any
Affiliate will be the type of transaction which would be entered
into by a prudent Person in the position of Transferor with an
Affiliate, and will be on terms that are at least as favorable as
may be obtained from a Person that is not an Affiliate.
(v) neither Transferor nor any Affiliate will be or
will hold itself out to be responsible for the debts of the
other.
(w) Transferor will operate, conduct its business and
otherwise act in a manner that is consistent with the factual
assumptions in each legal opinion delivered in connection with
any Series.
The representations and warranties set forth in this section shall
survive the transfer and assignment of the Receivables and the other
Transferred Assets to the Trust. Upon discovery by Transferor, Servicer
or Trustee of a breach of any of the foregoing representations and
warranties, the party discovering the breach shall give written notice to
the other parties to this Agreement within two Business Days following the
discovery; provided, however, that if such breach arises from a Seller's
failure to perform its obligations under the Purchase Agreement and such
failure is of the type that may be cured by settlement of a Seller
Noncomplying Receivables Adjustment or Seller Dilution Adjustment under
Sections 3.1 and 3.5 of the Purchase Agreement, and such settlement shall
have (in fact) been made within the time limit specified under such
sections, then no breach shall be deemed to have occurred under this
Agreement. Trustee's obligations in respect of discovering any breach are
limited as provided in Section 11.2(g).
SECTION 7.2 Covenants of Transferor. So long as any Investor
Certificates remain outstanding (other than any Investor Certificates
payment for which has been duly provided for in accordance with this
Agreement), Transferor shall, unless each Required Person shall otherwise
consent in writing:
(a) Compliance with Laws, Etc. Comply in all material
respects with all applicable laws, rules, regulations, judgments,
decrees and orders (including those relating to the Receivables,
the Related Transferred Assets, the funds in the Transaction
Accounts and the related Contracts and any other agreements
related thereto), in each case to the extent the failure to
comply, individually or in the aggregate for all such failures,
would have a substantial likelihood of having a Material Adverse
Effect.
-33-
<PAGE>
(b) Preservation of Organizational Existence. Preserve
and maintain its status and existence as a limited liability
company, rights, franchises and privileges in the jurisdiction of
its organization, and qualify and remain qualified in good
standing as a foreign limited liability company in each
jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualifications
would have a substantial likelihood of having a Material Adverse
Effect.
(c) Location of Offices. Keep its principal place of
business and chief executive office at the address referred to in
Section 7.1(h) or, upon not less than 30 days' (or such shorter
number of days as is acceptable to the Servicer and Trustee)
prior written notice given by Transferor to Servicer and Trustee,
at such other location in a jurisdiction where all action
required pursuant to Section 3.10 shall have been taken and
completed. Transferor will at all times maintain its principal
place of business and chief executive offices within the United
States of America.
(d) Reporting Requirements of Transferor. Furnish to
Trustee, the Investor Certificateholders and the Rating Agencies:
(i) Early Amortization Events. As soon as
possible, and in any event within two Business Days after
an Authorized Officer of Transferor has obtained
knowledge of the occurrence of any Early Amortization
Event or any Unmatured Early Amortization Event, a
written statement of an Authorized Officer of Transferor
describing the event and the action that Transferor
proposes to take with respect thereto, in each case in
reasonable detail,
(ii) Material Adverse Effect. As soon as
possible and in any event within two Business Days after
an Authorized Officer of Transferor has knowledge
thereof, written notice that describes in reasonable
detail any Adverse Claim, other than any Permitted
Adverse Claim, against the Transferred Assets or any
other event or occurrence that, individually or in the
aggregate for all such events or occurrences, has had,
or would have a substantial likelihood of having, in the
reasonable, good faith judgment of Transferor, a Material
Adverse Effect,
(iii) Proceedings. As soon as possible and in
any event within two Business Days after an Authorized
Officer of Transferor has knowledge thereof, written
notice of (A) any litigation, investigation or proceeding
of the type described in Section 7.1(f) not previously
disclosed to Trustee and (B) any material adverse
development that has occurred with respect to any such
previously disclosed litigation, investigation or
proceeding,
(iv) Other. Promptly, from time to time, any
other information, documents, records or reports
respecting the Receivables or the Related Transferred
Assets or any other information respecting the condition
or operations, financial or otherwise, of Transferor, in
each case as Trustee or a Required Person may from time
to time reasonably request in order to protect the
-34-
<PAGE>
interests of Trustee, the Trust or the Investor
Certificateholders under or as contemplated by this
Agreement.
(e) Adverse Claims. Except for any conveyances under the
Transaction Documents, not permit to exist any Adverse Claim
(other than Permitted Adverse Claims) to or in favor of any
Person upon or with respect to, or cause to be filed any
financing statement or equivalent document relating to perfection
that covers, any Transferred Asset or any interest therein.
Transferor shall defend the right, title and interest of the
Trust in, to and under the Transferred Assets, whether now
existing or hereafter created, against all claims of third
parties claiming through or under Transferor.
(f) Extension or Amendment of Receivables; Change in
Credit and Collection Policy or Contracts. Not (i) extend, amend
or otherwise modify the terms of any Receivable or Contract
(except as permitted by the Credit and Collection Policy) in a
manner that would have a material adverse effect on the Investor
Certificateholders, or (ii) permit any Seller to make any change
in its Credit and Collection Policy that would have a material
adverse effect on the Investor Certificateholders; provided that
Transferor or Servicer, as applicable, may change the terms and
provisions of the Credit and Collection Policy if the change is
made with the prior written approval of each Required Person, and
the Modification Condition is satisfied with respect thereto.
(g) Mergers, Acquisitions, Sales, Etc. Not:
(i) (A) be a party to any merger or
consolidation, or directly or indirectly purchase or
otherwise acquire all or substantially all of the assets
or any stock of any class of, or any partnership or joint
venture interest in, any other Person, or (B) except
pursuant to the Transaction Documents, directly or
indirectly, sell, transfer, assign, convey, lease, pledge
or grant a security interest in, whether in one
transaction or in a series of transactions, all or any
part of its assets, or sell or assign with or without
recourse any Receivables or Related Transferred Assets
(other than as provided in the Transaction Documents);
(ii) except as contemplated in the Purchase
Agreement in connection with Transferor's purchases of
Receivables and Related Assets from the Sellers, (A)
make, incur or suffer to exist an investment in, equity
contribution to, or payment obligation in respect of the
deferred purchase price of property or services from, any
Person, or (B) make any loan or advance to any Person
other than for reasonable and customary operating
expenses; or
(iii) create any direct or indirect Subsidiary
or otherwise acquire direct or indirect ownership of any
equity interests in any other Person.
(h) Change in Name. Not change its corporate name or the
name under or by which it does business, or permit any Seller to
change its corporate name or the name under or by which it does
business, unless prior to the change in name, Transferor (i)
shall have given the Servicer and the Trustee 30 days' prior
written notice thereof, (ii)
-35-
<PAGE>
shall have received written consent from the Trustee (at the
direction of the Required Persons) and (iii) shall have filed (or
shall have caused to be filed) any Public Notices as Servicer or
Trustee determines may be necessary to continue the perfection of
the Trust's interest in the Receivables, the Related Transferred
Assets and the proceeds thereof.
(i) Amendment of Certificate of Formation or Limited
Liability Company Agreement; Change in Business. Not amend its
certificate of formation or its limited liability company
agreement, or engage in any business other than as contemplated
by the Transaction Documents, unless (i) the Modification
Condition has been satisfied in connection with the amendment or
change in Transferor's business and (ii) Transferor shall have
received the written consent of the Trustee (at the direction of
the Required Persons).
(j) Amendments to Purchase Agreement. The Transferor
will not (i) cancel or terminate the Purchase Agreement or
consent to or accept any cancellation or termination thereof,
(ii) amend or otherwise modify any term or condition of the
Purchase Agreement or give any consent, waiver or approval
thereunder, (iii) waive any default under or breach of the
Purchase Agreement or (iv) take any other action under the
Purchase Agreement not required by the terms thereof.
(k) Enforcement of Transaction Documents. Perform all
its obligations under and otherwise comply with the Transaction
Documents and will enforce the covenants and agreements of each
of the Sellers in the Purchase Agreements and the other
Transaction Documents to which Transferor is a party, unless
instructed otherwise by Trustee or by Trustee at the direction of
the Required Persons in connection with the exercise of the
Trustee's rights pursuant to its security interest in
Transferor's right, title and interest in, to and under the
Transaction Documents to which Transferor is a party.
(l) Other Indebtedness. Not (i) create, incur or permit
to exist any Indebtedness, Guaranty or liability or (ii) cause or
permit to be issued for its account any letters of credit or
bankers' acceptances, except for (A) Indebtedness incurred
pursuant to the Buyer Notes, (B) other liabilities specifically
permitted to be created, incurred or owed by Transferor pursuant
to or in connection with the Transaction Documents, (C)
liabilities for reasonable and customary operating expenses in an
aggregate amount that do not exceed $10,000 in any of its fiscal
quarters, and (D) other liabilities for expenses that are owed to
a Related Person, the payment of which are subordinate to
obligations of Transferor under the Transaction Documents and
which subordination is evidenced by a written agreement
containing provisions substantially similar to the provisions of
the Buyer Notes.
(m) Separate Organization Existence. Hereby acknowledge
that Trustee and the Investor Certificateholders are, and will
be, entering into the transactions contemplated by the
Transaction Documents in reliance upon Transferor's identity as
a legal entity separate from any Seller, Servicer and any other
Person. Therefore, from and after the First Issuance Date,
Transferor shall take all reasonable steps to maintain its
existence
-36-
<PAGE>
as an organization separate and apart from Servicer, each Seller
and any other Related Person. Without limiting the generality of
the foregoing, Transferor shall take such actions as shall be
reasonably required in order that:
(i) Transferor will not incur any material
indirect or overhead expenses for items shared between
Transferor and any Related Person that are not reflected
in the Servicing Fee, other than shared items of expenses
not reflected in the Servicing Fee, such as legal,
auditing and other professional services, that will be
allocated to the extent practical on the basis of actual
use or the value of services rendered, and otherwise on
a basis reasonably related to the actual use or the value
of services rendered, it being understood that ICP will
pay all expenses owing by Transferor or any Related
Person relating to the preparation, negotiation,
execution and delivery of the Transaction Documents,
including, without limitation, legal, commitment, agency
and other fees.
(ii) Transferor will account for and manage its
liabilities separately from those of every other Related
Person, including payment of all payroll and
administrative expenses and taxes (other than taxes that
are determined or required to be determined on a
consolidated or combined basis) from its own assets.
(iii) Transferor will conduct its business at
an office segregated from the offices of each Related
Person, which office of Transferor may consist of office
space shared with a Related Person, a portion of which
is allocated solely to Transferor.
(iv) Transferor will maintain corporate or
company records, books of account and stationery separate
from those of every Related Person.
(v) Any annual financial statements of any
Related Person that are made publicly available and which
are consolidated to include Transferor will contain
footnotes stating that ICP and certain other Subsidiaries
of ICP have sold Receivables and indicating that the
assets of Transferor will not be available to ICP or such
Subsidiaries unless Transferor's liabilities have been
paid in full.
(vi) Transferor's assets will be maintained in
a manner that facilitates their identification and
segregation from those of any Related Person.
(vii) Transferor shall not, directly or
indirectly, be named and shall not enter into an
agreement to be named as a direct or contingent
beneficiary or loss payee on any insurance policy with
respect to any loss relating to the property of a Related
Person.
(viii) Any transaction between Transferor and
any Related Person will be the type of transaction which
would be entered into by a prudent Person in the position
of Transferor with a Related Person, and will be on terms
that are at
-37-
<PAGE>
least as favorable as may be obtained from a Person that
is not a Related Person (it being understood and agreed
that the transactions contemplated in the Transaction
Documents meet the requirements of this clause).
(ix) Neither Transferor nor any Related Person
will be or will hold itself out to be responsible for the
debts of the other.
(x) Transferor will operate, conduct its
business and otherwise act in a manner that is consistent
with the factual assumptions in each Bankruptcy Opinion
delivered in connection with any Series.
(n) Taxes. File or cause to be filed, and cause each
Person with whom it shares consolidated tax liability to file,
all Federal, state and local tax returns that are required to be
filed by it and pay or cause to be paid all taxes shown to be due
and payable on such returns or on any assessments received by it,
other than any taxes or assessments, the validity of which are
being contested in good faith by appropriate proceedings and with
respect to which Transferor shall have set aside adequate
reserves on its books in accordance with GAAP and which
proceedings would not have a substantial likelihood of having a
Material Adverse Effect.
(o) Maximum Exposure Amount. Not permit the aggregate
outstanding principal amount of the Buyer Notes to exceed the
Maximum Exposure Amount.
The covenants set forth in this section shall survive the transfer
and assignment of the Receivables and the other Transferred Assets to the
Trust. Upon discovery by Transferor, Servicer or Trustee of a breach of
any of the foregoing covenants, the party discovering the breach shall
give written notice to the other parties to this Agreement within two
Business Days following such discovery; provided, however that if such
breach arises from a Seller's failure to perform its obligations under the
Purchase Agreement and such failure is of the type that may be cured by
settlement of a Seller Noncomplying Receivables Adjustment or Seller
Dilution Adjustment under Sections 3.1 and 3.5 of the Purchase Agreement,
and such settlement shall have (in fact) been made within the time limit
specified under such sections, then no breach shall be deemed to have
occurred under this Agreement. Trustee's obligation in respect of
discovering any breach are limited as provided in Section 11.2(g).
SECTION 7.3 Indemnification by Transferor. (a) Without limiting
any other rights which any Indemnified Party may have hereunder or under
applicable law, Transferor hereby agrees to indemnify and hold harmless
the Trust, Trustee and each Certificateholder and each of the successors,
permitted transferees and assigns of any such Person and all officers,
directors, shareholders, controlling Persons, employees, affiliates and
agents of any of the foregoing (each of the foregoing Persons being
individually called an "Indemnified Party"), forthwith on demand, from and
against any and all damages, losses, claims (whether on account of
settlement or otherwise, and whether or not the relevant Indemnified Party
is a party to any action or proceeding that gives rise to any Indemnified
Losses (as defined below)), judgments, liabilities and related reasonable
costs and expenses (including reasonable attorneys' fees and
disbursements) (all of the foregoing being collectively called
"Indemnified Losses") awarded
-38-
<PAGE>
against or incurred by any of them that arise out of or relate to
Transferor's performance of, or failure to perform, any of its obligations
under or in connection with this Agreement, any other Transaction Document
or any of the transactions contemplated herein or therein or the use of
proceeds herefrom or therefrom.
Notwithstanding the foregoing (and with respect to clause (b)
below, without prejudice to the rights that the Trustee may have pursuant
to the other provisions of this Agreement or the provisions of any of the
other Transaction Documents), in no event shall any Indemnified Party be
indemnified against any Indemnified Losses (a) resulting from gross
negligence or willful misconduct on the part of such Indemnified Party (or
the gross negligence or willful misconduct on the part of any of such
Indemnified Party's officers, directors, employees, affiliates or agents),
(b) to the extent the same include Indemnified Losses in respect of
Receivables and reimbursement therefor that would constitute credit
recourse to Transferor for the amount of any Receivable or Related
Transferred Asset not paid by the related Obligor, (c) to the extent such
Indemnified Losses are or result from lost profits, or (d) to the extent
such Indemnified Losses are or result from taxes asserted with respect to
(i) distributions on the Investor Certificates (other than any withholding
taxes, if and to the extent that (A) such withholding taxes should have
been (but in fact were not) withheld and paid over by the Trust to the
relevant taxing authority, (B) such taxing authority asserts a claim for
such withholding taxes against the Trust or the Transferor, and (C) the
assets of the Trust are insufficient to satisfy such claim at the time a
final determination is made that such withholding taxes are due and
payable) and (ii) federal or other income taxes on or measured by the net
income of such Indemnified Party.
If for any reason the indemnification provided in this Section is
unavailable to an Indemnified Party or is insufficient to hold it
harmless, then Transferor shall contribute to the amount paid by the
Indemnified Party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party on the one hand and Transferor
on the other hand, but also the relative fault of such Indemnified Party
(if any) and Transferor and any other relevant equitable consideration.
Notwithstanding any provisions contained in any Transaction
Document to the contrary, Transferor shall not, and shall not be obligated
to, pay any amount pursuant to this Section unless and to the extent that
the Transferor has funds available to pay such amounts or funds are
allocated thereafter to the Transferor pursuant to the provisions of a
Supplement governing the allocation of funds in the Master Collection
Account. Any amount which Transferor does not pay pursuant to the
operation of the preceding sentence shall not constitute a claim (as
defined in Sec. 101 of the Bankruptcy Code) against or organizational
obligation of Transferor for any such insufficiency.
In addition, Transferor agrees to indemnify Trustee and each of
its successors, permitted transferees and assigns, officers, directors,
shareholders, employees, affiliates and agents, and hold them harmless
against, any and all losses, liabilities, damages, claims or expenses
incurred by any of them in connection with the Transaction Documents or
in the exercise or performance of any of the powers or duties of Trustee
hereunder.
-39-
<PAGE>
(b) Transferor shall be liable to all creditors of the Trust for
all liabilities of the Trust to the same extent as it would be if the
Trust constituted a partnership under the Delaware Revised Uniform Limited
Partnership Act and Transferor were a general partner thereof (to the
extent Transferred Assets remaining after Investor Certificateholders have
been paid in full are insufficient to pay such losses, claims, damages or
liabilities). Notwithstanding anything to the contrary herein, any such
creditor shall be a third party beneficiary of this Section 7.3. Nothing
in this provision shall be construed as waiving any rights or claims
(including rights of recoupment or subrogation) which the Transferor may
have against any third party under this Agreement or applicable laws.
ARTICLE VIII
SERVICER
SECTION 8.1 Representations and Warranties of Servicer. On the
date hereof and on each Issuance Date, Servicer hereby makes, and any
Successor Servicer (other than Trustee automatically appointed as
Successor Servicer pursuant to Section 10.2) also shall be deemed to make
by its acceptance of its appointment hereunder, the following
representations and warranties for the benefit of Trustee and the
Certificateholders:
(a) Organization and Good Standing. Servicer is a
corporation duly organized and validly existing and in good
standing under the laws of its jurisdiction of incorporation and
has all necessary corporate power and authority to own its
properties and to conduct its business as the properties
presently are owned and as the business presently is conducted.
(b) Due Qualification. Servicer is duly qualified to do
business and is in good standing as a foreign corporation (or is
exempt from such requirements), and has obtained all necessary
licenses and approvals, in all jurisdictions in which the
servicing of the Receivables and the Related Transferred Assets
as required by this Agreement requires qualification, licenses or
approvals.
(c) Power and Authority. Servicer has all necessary
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the other Transaction
Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes, and
each other Transaction Document to which Servicer is a party when
executed and delivered will constitute, a legal, valid and
binding obligation of Servicer, enforceable against it in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of
whether enforceability is considered in a proceeding in equity or
at law.
-40-
<PAGE>
(e) Authorization; No Conflict or Violation. The
execution and delivery by Servicer of this Agreement and the
other Transaction Documents to which it is a party, the
performance by it of its obligations hereunder and thereunder and
the fulfillment by it of the terms hereof and thereof that are
applicable to it have been duly authorized by all necessary
action and will not (i) conflict with, violate, result in any
breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, (A)
its Certificate of Incorporation or Bylaws or (B) any indenture,
loan agreement, mortgage, deed of trust, or other material
agreement or instrument to which it is a party or by which it or
any of its properties is bound (excluding any such agreement that
is terminated on or before the First Issuance Date or under which
Servicer has obtained all necessary consents) or (ii) conflict
with or violate any federal, state, local or foreign law or any
decision, decree, order, rule or regulation applicable to it or
any of its properties of any court or of any federal, state,
local or foreign regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it or any
of its properties.
(f) Approvals. All authorizations, consents, orders and
approvals of, or other action by, any Governmental Authority that
are required to be obtained by Servicer, and all notices to and
filings with any Governmental Authority or other Person that are
required to be made by it, in the case of each of the foregoing
in connection with the execution, delivery and performance by it
of this Agreement and any other Transaction Documents to which it
is a party and the consummation of the transactions contemplated
by this Agreement, have been obtained or made and are in full
force and effect (other than the filing of the UCC financing
statements referred to in Section 2.3(a)(ii)(A), all of which, at
the time required in Section 2.3(a)(ii)(A), will be duly made),
except where the failure to obtain or make such authorization,
consent, order, approval, notice or filing, individually or in
the aggregate for all such failures, would not have a substantial
likelihood of having a Material Adverse Effect.
(g) Litigation and Other Proceedings. (i) There is no
action, suit, proceeding or investigation pending or, to the best
knowledge of Servicer, threatened against it before any court,
regulatory body, arbitrator, administrative agency or other
tribunal or governmental instrumentality and (ii) it is not
subject to any order, judgment, decree, injunction, stipulation
or consent order of or with any court or other government
authority that, in the case of clauses (i) and (ii), (A) seeks to
affect adversely the income tax attributes of the transfers
hereunder or the Trust under the United States federal income tax
system or any state income tax system or (B) individually or in
the aggregate for all such actions, suits, proceedings and
investigations would have a reasonable likelihood of having a
Material Adverse Effect.
(h) [Reserved.]
(i) In addition to the servicing reports required to
be delivered pursuant to Section 3.7(a), on or before 60 days
after the end of the third fiscal quarter in 1996, Servicer
shall, as an expense of Servicer paid out of the Servicing Fee,
cause Coopers & Lybrand L.L.P. or another firm of independent
certified public accountants that is
-41-
<PAGE>
generally recognized as being among the "big six" (which may also
render other services to Servicer, the Sellers or Transferor) to
furnish a report to Trustee, Servicer and Transferor (which
report shall be addressed to Trustee and the Purchasers and shall
relate to the period from the Closing Date to the last day of the
most recently ended fiscal quarter). The accountant's report
shall set forth the results of its performance of the procedures
described in Exhibit D hereof with respect to the Monthly Reports
and Daily Reports delivered to Trustee pursuant to Section 3.5
during the period covered by such accountant's report.
(j) The accountant's report described in clause (i)
shall state that the accountant has compared the amounts
contained in the Monthly Reports and a sample randomly selected
from all Daily Reports delivered to Trustee during the period
covered by the report with the records (including computer
records) from which the amounts were derived and that, on the
basis of such comparison, the amounts are in agreement with the
documents and records, except for such exceptions as it believes
to be immaterial and such other exceptions as shall be set forth
in the report. A copy of the report may be obtained by a Holder
by a request in writing to Trustee addressed to the Corporate
Trust Center.
The representations and warranties set forth in this section shall
survive the transfer and assignment of the Receivables and the other
Transferred Assets to the Trust. Upon discovery by Transferor, Servicer
or Trustee of a breach of any of the foregoing representations and
warranties, the party discovering the breach shall give written notice to
the other parties to this Agreement and each Required Person within three
Business Days following the discovery. Trustee's obligations in respect
of discovering any breach are limited as provided in Section 11.2(g).
SECTION 8.2 Covenants of Servicer. So long as any Investor
Certificates remain outstanding (other than any Investor Certificates
payment for which has been duly provided for in accordance with this
Agreement), Servicer shall:
(a) Compliance with Laws, Etc. Maintain in effect all
qualifications required under applicable law in order to service
properly the Receivables and shall comply with all applicable
laws, rules, regulations, judgments, decrees and orders.
(b) Preservation of Corporate Existence. Preserve and
maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in
each jurisdiction in which the ownership or lease of property or
the conduct of its business requires such qualification, licenses
or approvals.
(c) Notice. As soon as possible (and in any event within
two Business Days after an Authorized Officer has knowledge
thereof), furnish to Transferor, Trustee, the Investor
Certificateholders and the Rating Agencies notice of any of the
events described in clauses (i), (ii) and (iii) of Section
7.2(d).
-42-
<PAGE>
(d) Location of Offices. Maintain at all times its
principal place of business and chief executive office in the
United States of America.
The covenants set forth in this section shall survive the transfer and
assignment of the Transferred Assets to the Trust. Upon discovery by
Transferor, Servicer or Trustee of a breach of any of the foregoing
covenants, the party discovering the breach shall give written notice to
the other parties to this Agreement and each Required Person within two
Business Days following the discovery. Trustee's obligations in respect
of discovering any breach are limited as provided in Section 11.2(g).
SECTION 8.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Servicer shall not consolidate with or merge
into any other Person or convey, transfer or sell all or substantially all
of its properties and assets to any Person, unless (a) Servicer is the
surviving entity or, if it is not the surviving entity, the Person formed
by the consolidation or into which Servicer is merged or the Person that
acquires by conveyance, transfer or sale all or substantially all of the
properties and assets of Servicer shall be a corporation organized and
existing under the laws of the United States of America or any State
thereof or the District of Columbia and such corporation shall expressly
assume, by an agreement supplemental hereto, executed and delivered to
Trustee and in form and substance satisfactory to Trustee, the performance
of every covenant and obligation of Servicer hereunder and under the other
Transaction Documents to which Servicer is a party, and (b) Servicer shall
have delivered to Trustee and each Required Person an Officer's
Certificate stating that the consolidation, merger, conveyance, transfer
or sale and the supplemental agreement comply with this Section and an
Opinion of Counsel stating that the supplemental agreement is a valid and
binding obligation of the surviving entity enforceable against it in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general
principles of equity.
SECTION 8.4 Indemnification by Servicer. Servicer hereby agrees
to indemnify each Indemnified Party forthwith on demand, from and against
any and all Indemnified Losses awarded against or incurred by any of them
that arise out of or relate to Servicer's performance of, or failure to
perform, any of its obligations under or in connection with any
Transaction Document.
Notwithstanding the foregoing (and with respect to clause (b)
below, without prejudice to the rights that such Indemnified Party may
have pursuant to the other provisions of this Agreement or the provisions
of any of the other Transaction Documents), in no event shall any
Indemnified Party be indemnified against any Indemnified Losses (a)
resulting from gross negligence or willful misconduct on the part of such
Indemnified Party (or the gross negligence or willful misconduct on the
part of any of such Indemnified Party's officers, directors, employees,
affiliates or agents), (b) to the extent the same includes Indemnified
Losses in respect of Receivables and reimbursement therefor that would
constitute credit recourse to Servicer for the amount of any Receivable
or Related Transferred Asset not paid by the related Obligor, (c) to the
extent such Indemnified Losses are or result from lost profits (other than
breakage payments or early termination payments), or (d) to the extent
such Indemnified Losses are or result from taxes (including interest and
penalties thereon) asserted with respect to (i)
-43-
<PAGE>
distributions on the Investor Certificates or (ii) federal or other income
taxes on or measured by the net income of such Indemnified Party and costs
and expenses in defending against the same.
If for any reason the indemnification provided in this section is
unavailable to an Indemnified Party or is insufficient to hold it
harmless, then Servicer shall contribute to the amount paid by such
Indemnified Party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party on the one hand and Servicer
on the other hand, but also the relative fault of such Indemnified Party
(if any) and Servicer and any other relevant equitable consideration.
SECTION 8.5 Servicer Liability. Servicer shall be liable in
accordance with this Agreement only to the extent of the obligations
specifically undertaken by Servicer in such capacity herein and as set
forth herein.
SECTION 8.6 Limitation on Liability of Servicer and Others.
Servicer shall not be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its duties to service
the Receivables in accordance with this Agreement or any Supplement that
in its reasonable opinion may involve it in any expense or liability.
Servicer may, in its sole discretion, undertake any legal action relating
to the servicing, collection or administration of Receivables and Related
Transferred Assets that it may reasonably deem necessary or appropriate
for the benefit of the Certificateholders with respect to this Agreement
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder.
ARTICLE IX
EARLY AMORTIZATION EVENTS; TERMINATION BY SELLERS
SECTION 9.1 Early Amortization Events. The Early Amortization
Events with respect to each Series shall be specified in the related
Supplement.
SECTION 9.2 Remedies. Upon the occurrence of an Early
Amortization Event, Trustee shall have, in addition to all other rights
and remedies available to Trustee under this Agreement or otherwise, (a)
the right to apply Collections as provided herein, and (b) all rights and
remedies provided under all other applicable laws, which rights, in the
case of each and all of the foregoing, shall be cumulative. Trustee shall
exercise the rights at the direction of the Investor Certificateholders
pursuant to (and subject to the limitations specified in) Section 11.14.
SECTION 9.3 Additional Rights Upon the Occurrence of Certain
Events. (a) If a Bankruptcy Event shall occur with respect to
Transferor, this Agreement (other than this Section 9.3) and the Trust
shall be deemed to have terminated on the day of the Bankruptcy Event.
Within seven Business Days of the date of written notice to Trustee of the
Bankruptcy Event, Trustee shall:
(i) publish a notice in an Authorized Newspaper that a
Bankruptcy Event has occurred with respect to Transferor, that
the Trust has terminated, and that Trustee
-44-
<PAGE>
intends to sell, dispose of or otherwise liquidate the
Receivables and the Related Transferred Assets pursuant to this
Agreement in a commercially reasonable manner and on commercially
reasonable terms, which shall include the solicitation of
competitive bids (a "Disposition"), and
(ii) send written notice to the Investor
Certificateholders describing the provisions of this section and
requesting each Investor Certificateholder to advise Trustee in
writing whether (A) it wishes Trustee to instruct Servicer not to
effectuate a Disposition, (B) it refuses to advise Trustee as to
the specific action Trustee shall instruct Servicer to take or
(C) it wishes Servicer to effect a Disposition.
If, after 60 days from the day notice pursuant to subsection
(a)(i) is first published (the "Publication Date"), Trustee shall not have
received the written instruction described in subsection (a)(ii)(A) from
Holders representing at least a majority in interest within the meaning
of Internal Revenue Service Revenue Procedure 94-46 (or subsequent
authority promulgated by the Internal Revenue Service), determined as if
the Trust were classified as a partnership for Federal income tax purposes
(a "majority in interest"), of all outstanding Series of Investor
Certificates, Trustee shall instruct Servicer to effectuate a Disposition,
and Servicer shall proceed to consummate a Disposition. If, however,
Holders representing at least a majority of interest of all Series of
Investor Certificates instruct Trustee not to effectuate a Disposition,
the Trust shall be reconstituted and continue pursuant to the terms of
this Agreement.
(b) Notwithstanding the termination of this Agreement and the
Trust pursuant to subsection (a), the proceeds from any Disposition of the
Receivables and the Related Transferred Assets pursuant to subsection (a)
shall be treated as Collections on the Receivables and shall be allocated
and deposited in accordance with the provisions of Article IV.
(c) Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this section with respect to competitive
bids.
(d) Transferor or any of its Affiliates shall be permitted to bid
for the Receivables and the Related Transferred Assets. Trustee may obtain
a prior determination from any bankruptcy trustee, receiver or liquidator
that the terms and manner of any proposed Disposition are commercially
reasonable.
(e) Notwithstanding the termination of this Agreement and the
Trust pursuant to subsection (a), Trustee shall continue to have the
rights described in Section 9.2 and Article XI, and be subject to
direction on terms consistent with those set out in Section 11.14, pending
the completion of any Disposition and/or the reconstitution of the Trust.
-45-
<PAGE>
ARTICLE X
SERVICER DEFAULTS
SECTION 10.1 Servicer Defaults. Any of the following events
shall constitute a "Servicer Default":
(a) any failure by Servicer to take any action that it
is required to take in its capacity as Servicer to make any
payment, transfer or deposit required by any Transaction Document
or to give instructions or to give notice to Trustee to make such
payment, transfer or deposit, which failure continues unremedied
for three Business Days,
(b) failure on the part of Servicer duly to observe or
perform any other covenants or agreements of Servicer set forth
in this Agreement or any other Transaction Document, which
failure continues unremedied for a period of 25 Business Days
after the date on which written notice of the failure, requiring
the same to be remedied, shall have been given to Servicer by
Trustee, or to Servicer and Trustee by any Investor
Certificateholder,
(c) Servicer shall assign its duties under this
Agreement, except as permitted by Sections 3.1(b) and 8.3,
(d) any representation, warranty or certification made
by Servicer in any Transaction Document or in any certificate or
other document or instrument delivered pursuant to any
Transaction Document shall prove to have been incorrect when made
or delivered, and continues to be incorrect in any material
respect for a period of 15 Business Days after the date on which
written notice of such failure, requiring the same to be
remedied, shall have been given to Servicer by the Trustee, or to
the Servicer and Trustee by any Investor Certificateholder, or
(e) any Bankruptcy Event shall occur with respect to
Servicer.
In the event of any Servicer Default, so long as such Servicer Default
shall not have been remedied, Trustee (at the direction of the Required
Investors), by notice then given in writing to Servicer (a "Termination
Notice"), shall terminate all the rights and obligations (other than
obligations of such Servicer under Sections 8.4 and 11.5) of Servicer as
Servicer under this Agreement and in and to the Receivables, the Related
Transferred Assets and the proceeds thereof.
As soon as possible, and in any event within two Business Days,
after an Authorized Officer of Servicer has obtained knowledge of the
occurrence of any Servicer Default, Servicer shall furnish Transferor,
Trustee, each Required Person and the Rating Agencies, and Trustee shall
promptly furnish each other Investor Certificateholder, notice of such
Servicer Default.
-46-
<PAGE>
SECTION 10.2 Trustee to Act; Appointment of Successor. (a) On
and after Servicer's receipt of a Termination Notice pursuant to Section
10.1, Servicer shall continue to perform all servicing functions under
this Agreement until the date specified in the Termination Notice or
otherwise specified by Trustee in writing or, if no such date is specified
in the Termination Notice, or otherwise specified by Trustee, until a date
mutually agreed upon by Servicer and Trustee. Trustee shall, as promptly
as possible after the giving of a Termination Notice, nominate an Eligible
Servicer as successor servicer (the "Successor Servicer"); provided that
(i) in so appointing any Successor Servicer, Trustee shall give due
consideration to any Successor Servicer proposed by any Required Person,
(ii) such Successor Servicer is approved by the Required Persons and (iii)
such Successor Servicer shall accept its appointment by a written
assumption in a form acceptable to Trustee and each Required Person. Any
Person who is nominated to be a Successor Servicer shall accept its
appointment by a written assumption in form and substance acceptable to
Trustee. In the event that a Successor Servicer has not been appointed or
has not accepted its appointment at the time when Servicer ceases to act
as Servicer, Trustee without further action shall automatically be
appointed the Successor Servicer. Trustee may delegate any of its
servicing obligations to an affiliate or agent in accordance with Section
3.1(b). If Trustee is prohibited by applicable law from performing the
duties of Servicer hereunder, Trustee may appoint, or may petition a court
of competent jurisdiction to appoint, a Successor Servicer hereunder.
Trustee shall give prompt notice to the Rating Agencies and each Investor
Certificateholder upon the appointment of a Successor Servicer.
(b) After Servicer's receipt of a Termination Notice, and on the
date that a Successor Servicer shall have been appointed by Trustee and
shall have accepted the appointment pursuant to subsection (a), all
authority and power of Servicer under this Agreement shall pass to and be
vested in the Successor Servicer (a "Service Transfer"); and, without
limitation, Trustee is hereby authorized and empowered to execute and
deliver, on behalf of Servicer, as attorney-in-fact or otherwise, all
documents and instruments, and to do and accomplish all other acts or
things that Trustee reasonably determines are necessary or appropriate to
effect the purposes of the Service Transfer. Upon the appointment of the
Successor Servicer and its acceptance thereof, Servicer agrees that it
will terminate its activities as Servicer hereunder in a manner that
Trustee indicates will facilitate the transition of the performance of
such activities to the Successor Servicer. Servicer agrees that it shall
use best efforts to assist the Successor Servicer in assuming the
obligations to service and administer the Receivables and the Related
Transferred Assets, on the terms and subject to the conditions set forth
herein, and to effect the termination of the responsibilities and rights
of Servicer to conduct servicing hereunder, including the transfer to such
Successor Servicer of all authority of Servicer to service the Receivables
and Related Transferred Assets provided for under this Agreement and all
authority over all cash amounts that shall thereafter be received with
respect to the Receivables or the Related Transferred Assets. Servicer
shall, within five Business Days after the designation of a Successor
Servicer, transfer its electronic records (and any related software and
software licenses, appropriately assigned and prepaid) relating to the
Receivables, the related Contracts and the Related Transferred Assets to
the Successor Servicer in such electronic form as the Successor Servicer
may reasonably request and shall promptly transfer to the Successor
Servicer all other records, correspondence and documents necessary for the
continued servicing of the
-47-
<PAGE>
Receivables and the Related Transferred Assets in the manner and at such
times as the Successor Servicer shall request. To the extent that
compliance with this Section shall require ICP or any Servicer to disclose
to the Successor Servicer information of any kind that ICP deems to be
confidential, prior to the transfer contemplated by the preceding sentence
the Successor Servicer shall be required to enter into a reasonable
confidentiality agreement which shall permit it to carry out its duties
in the best interests of the Investor Certificateholders. All reasonable
costs and expenses (including attorneys' fees and disbursements) incurred
in connection with transferring the Receivables, the Related Transferred
Assets and all related Records (including the related Contracts) to the
Successor Servicer and amending this Agreement and the other Transaction
Documents to reflect such succession as Servicer pursuant to this Section
(including a one time up front payment payable on the first Distribution
Date following the appointment of such Successor Servicer as negotiated
between the Trustee and the Successor Servicer as reasonable compensation
for assuming the responsibilities of the Successor Servicer in an amount
not to exceed $150,000) shall be paid by the predecessor Servicer (or, if
Trustee serves as Successor Servicer on an interim basis, the preceding
Servicer) within 15 days after presentation of reasonable documentation
of the costs and expenses; provided that if the predecessor Servicer or
preceding Servicer, as the case may be, fails to make such payment within
such time, Transferor shall make such payment within five days thereafter.
(c) Upon its appointment and acceptance thereof, the Successor
Servicer shall be the successor in all respects to Servicer with respect
to servicing functions under this Agreement and shall be subject to all
the responsibilities and duties relating thereto placed on Servicer by the
terms and provisions hereof (and shall carry out such responsibilities and
duties in accordance with standards of reasonable commercial prudence),
and all references in this Agreement to Servicer shall be deemed to refer
to the Successor Servicer.
(d) All authority and power granted to Servicer or the Successor
Servicer under this Agreement shall automatically cease and terminate upon
termination of the Trust pursuant to Section 12.1, and shall pass to and
be vested in Transferor and, without limitation, Transferor is hereby
authorized and empowered, on and after the effective date of such
termination, to execute and deliver, on behalf of the Servicer or the
Successor Servicer, as attorney-in-fact or otherwise, all documents and
other instruments and to do and accomplish all other acts or things that
Transferor reasonably determines are necessary or appropriate to effect
the purposes of such transfer of servicing rights. The Servicer or
Successor Servicer agrees to cooperate with Transferor in effecting the
termination of the responsibilities and rights of the Servicer or
Successor Servicer to conduct servicing of the Receivables and the Related
Transferred Assets. The Servicer or Successor Servicer shall, within five
Business Days after such termination, transfer its electronic records
relating to the Receivables and the Related Transferred Assets to
Transferor in such electronic form as Transferor may reasonably request
and shall transfer all other records, correspondence and documents
relating to the Receivables and the Related Transferred Assets to
Transferor in the manner and at such times as Transferor shall reasonably
request. To the extent that compliance with this Section shall require the
Servicer or Successor Servicer to disclose to Transferor information of
any kind that the Servicer or Successor Servicer deems to be confidential,
Transferor shall be required to enter into such customary licensing and
confidentiality agreements as the Servicer or Successor Servicer shall
deem necessary to protect
-48-
<PAGE>
its interests. All reasonable costs and expenses (including attorneys'
fees and disbursements) incurred by Trustee, in its capacity as Successor
Servicer (including a one time up front payment payable on the first
Distribution Date following the appointment of Trustee as Successor
Servicer as determined by the Trustee as reasonable compensation for
assuming the responsibilities of Successor Servicer in an amount not to
exceed $150,000), in connection with the termination shall be paid by
Transferor within 15 days after presentation of reasonable documentation
of the costs and expenses. The Trustee may reserve and withhold from
distributions to the Transferor such amounts as it reasonably determines
may be required for the payment of such costs and expenses.
Notwithstanding any provisions contained in any Transaction
Document to the contrary, Transferor shall not, and shall not be obligated
to, pay any amount pursuant to this Section unless funds are allocated for
such payment pursuant to the provisions of a Supplement governing the
allocation of funds in the Master Collection Account. Any amount which
Transferor does not pay pursuant to the operation of the preceding
sentence shall not constitute a claim (as defined in Sec. 101 of the
Bankruptcy Code) against or company obligation of Transferor for any such
insufficiency.
(e) To the extent that this Agreement or any other
Transaction Document requires the Servicer to obtain information from
another Person or to cause another Person to act or abstain from acting,
such provision shall be construed only to require a Successor Servicer to
use reasonable efforts to obtain information from another Person or to
cause another Person to act or abstain from acting.
SECTION 10.3 Notification of Servicer Default; Notification of
Appointment of Successor Servicer. Within two Business Days after an
Authorized Officer of Servicer becomes aware of any Servicer Default,
Servicer shall give written notice thereof to Transferor, Trustee, each
Required Person and the Rating Agencies, and Trustee shall, promptly upon
receipt of the written notice, give notice to the other Investor
Certificateholders at their respective addresses appearing in the
Certificate Register. Upon any termination or appointment of a Successor
Servicer pursuant to this Article X, Trustee shall give prompt written
notice thereof to the Investor Certificateholders at their respective
addresses appearing in the Certificate Register and to the Rating
Agencies.
SECTION 10.4 Waiver of Servicer Defaults. The Required Investors
may, on behalf of the Transferor and all the Holders of each Series, waive
in writing any Servicer Default hereunder and its consequences (other than
a continuing failure to pay fees or expenses owing to the Trustee) and
shall provide a copy of such written waiver to the Rating Agencies. Upon
any such waiver of a Servicer Default, such Servicer Default shall cease
to exist, and shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other
Servicer Default or impair any right consequent thereon except to the
extent expressly so waived.
-49-
<PAGE>
ARTICLE XI
TRUSTEE
SECTION 11.1 Duties of Trustee. Trustee shall have no duty
(unless it is specifically identified in this Agreement). (a) Trustee
undertakes to perform the duties and only the duties as are specifically
set forth in this Agreement. The provisions of this Article XI shall apply
to Trustee solely in its capacity as Trustee, and not to Trustee in its
capacity as Servicer if it is acting as Servicer. Following the occurrence
of a Servicer Default of which a Responsible Officer has actual knowledge,
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in their exercise as
a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs; provided that if Trustee shall assume
the duties of Servicer pursuant to Section 10.2, Trustee in performing the
duties shall use the degree of skill and attention customarily exercised
by a servicer with respect to trade receivables that it services for
itself or others. Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in, or incidental to the performance of its duties under, the
Transaction Documents.
(b) Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to Trustee that are specifically required to be furnished to the
Trustee pursuant to any provision of this Agreement, shall examine them
to determine whether they are substantially in the form required by this
Agreement. Trustee shall give written notice to the Person who furnished
any item of the type listed in the preceding sentence of any lack of
substantial conformity of any such item to the applicable requirements of
this Agreement. In addition, Trustee shall give prompt written notice to
the Investor Certificateholders of any lack of substantial conformity of
any such instrument to the applicable requirements of this Agreement
discovered by Trustee that would entitle a specified percentage of the
Investor Certificateholders or the Holders of any Series of Certificates
or any Required Person to take any action pursuant to this Agreement.
Within two Business Days of its receipt of any Monthly Report, Trustee
shall verify the mathematical computations contained therein (based upon
an examination of the face of the Monthly Report) and shall notify
Servicer, the Required Persons and each of the Rating Agencies of the
accuracy of such computations or of any discrepancies therein (provided
that the rounding of numbers will not constitute a discrepancy), whereupon
Servicer shall deliver to the Required Persons and the Rating Agencies
within five Business Days thereafter a certificate describing the nature
and cause of such discrepancies and the action that Servicer proposes to
take with respect thereto. During the first week of each year, Trustee
shall provide the Rating Agencies and each Required Person with a
certificate, signed by a Responsible Officer, to the effect that Trustee
is not aware of any Early Amortization Event (or, if it is aware of any
Early Amortization Event, specifying the nature of that event).
(c) Subject to subsection (a), no provision of this Agreement
shall be construed to relieve Trustee from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided that:
-50-
<PAGE>
(i) Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible
Officers of Trustee, unless it shall be proved that Trustee was
negligent in ascertaining the pertinent facts,
(ii) Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction (as applicable) of any Required
Person or the Required Series Holders relating to the time,
method and place of conducting any proceeding for any remedy
available to Trustee, or exercising any trust or power conferred
upon Trustee, under this Agreement,
(iii) Trustee shall not be charged with knowledge of (A)
any failure by Servicer to comply with the obligations of
Servicer referred to in subsections (a), (b) or (c) of Section
10.1, (B) any breach of the representations and warranties of
Transferor set forth in Section 2.3 or 7.1 or the representations
and warranties of Servicer set forth in Section 8.1, (C) any
breach of the covenants of Transferor set forth in Section 7.2 or
the covenants of Servicer set forth in Section 8.2 or (D) the
ownership of any Certificate for purposes of Section 6.5, in each
case unless a Responsible Officer of Trustee obtains actual
knowledge of the matter or Trustee receives written notice of the
matter from Servicer or from any Holder,
(iv) the duties and obligations of Trustee shall be
determined solely by the express provisions of this Agreement,
Trustee shall not be liable except for the performance of the
duties and obligations that specifically shall be set forth in
this Agreement, no implied covenants or obligations shall be read
into this Agreement against Trustee and, in the absence of bad
faith on the part of Trustee, Trustee may conclusively rely on
the truth of the statements and the correctness of the opinions
expressed in any certificates or opinions that are furnished to
Trustee and that conform to the requirements of this Agreement,
and
(v) without limiting the generality of this section or
Section 11.2, Trustee shall have no duty (A) to see to any
recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement
evidencing a security interest in the Receivables or the Related
Transferred Assets, or to see to the maintenance of any such
recording or filing or depositing or to any rerecording, refiling
or redepositing of any thereof (except that Trustee (x) shall
note in its records the date of filing of each Public Notice
identified to it in writing as having been filed in connection
with the Transaction Documents, or filed in connection with a
predecessor receivables securitization and amended and/or
assigned in connection with the Transaction Documents, and naming
Trustee as secured party or assignee of the secured party (y)
shall, unless it shall have received an Opinion of Counsel to the
effect that no such filing is necessary to continue the
perfection of Transferor's or Trustee's interests in the
Receivables and the Related Assets, cause continuation statements
to be filed with respect to each such Public Notice that is a UCC
financing statement not less than four years and six months and
not more than five years after (1) its filing date and (2) the
date of filing of any prior continuation statement and (z) shall,
unless it shall have received an Opinion
-51-
<PAGE>
of Counsel to the effect that no such filing is necessary to
continue the perfection of Transferor's or Trustee's interests in
the Receivables and the Related Assets, cause appropriate Public
Notices that are not UCC financing statements to be filed to
continue the perfection of Transferor's or Trustee's interests in
the Receivables and the Related Assets within the requisite time
periods), (B) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any Adverse Claim or
encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust, (C) to confirm or verify the
contents of any reports or certificates of Servicer delivered to
Trustee pursuant to this Agreement that are believed by Trustee
to be genuine and to have been signed or presented by the proper
party or parties or (D) to ascertain or inquire as to the
performance or observance of any of Transferor's or Servicer's
representations, warranties or covenants or Servicer's duties and
obligations as Servicer.
(d) Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers, if
Trustee reasonably believes that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it,
and none of the provisions contained in this Agreement shall in any event
require Trustee to perform, or be responsible for the manner of
performance of, any obligations of Servicer under this Agreement except
during the time, if any, that Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, Servicer in
accordance with the terms of this Agreement
Notwithstanding the foregoing, as Successor Servicer, Trustee
shall have no liability arising out of or resulting from any act, omission
or breach of this Agreement and of any other Transaction Document of the
terminated Servicer, Transferor or any Seller. The Successor Servicer
shall have no liability to any Certificateholder, Trustee, or to any other
Person, for any costs, expenses, losses, damages, claims and liabilities
arising out of or resulting from delays of the terminated Servicer,
Transferor, or any Seller in transmitting Records to the Successor
Servicer, permitting inspection of Records or facilities, or for any other
costs, expenses, losses, damages, claims and liabilities incurred in the
servicing transition.
(e) Except for actions expressly authorized by this Agreement,
Trustee shall take no action reasonably likely to impair the interests of
the Trust in any Transferred Asset now existing or hereafter created or
to impair the value of any Transferred Asset now existing or hereafter
created.
(f) Except to the extent expressly provided otherwise in this
Agreement, Trustee shall have no power to vary the Transferred Assets.
(g) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the
manner or on the day on which such obligation, duty or agreement is
required to be performed by the Paying Agent or the Transfer Agent and
Registrar, as the case may be, under this Agreement, Trustee shall be
obligated, promptly upon its actual knowledge thereof, to perform the
obligation, duty or agreement in the manner so required.
-52-
<PAGE>
SECTION 11.2 Certain Matters Affecting Trustee. Except as
otherwise provided in Section 11.1:
(a) Trustee may rely on and shall be protected in acting
on, or in refraining from acting in accordance with, any
resolution, Officer's Certificate, opinion of counsel,
certificate of auditors or any other certificate, statement,
instrument, instruction, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document and
any information contained therein believed by it to be genuine
and to have been signed or presented to it pursuant to this
Agreement by the proper party or parties including, but not
limited to, reports and records required by Article III,
(b) Trustee may consult with counsel and any opinion of
counsel rendered by counsel reasonably satisfactory to Transferor
shall be full and complete authorization and protection in
respect of any action taken or permitted or omitted by it
hereunder in good faith and in accordance with such opinion of
counsel,
(c) Trustee (including in its role as Successor
Servicer, if it ever acts in that capacity) shall be under no
obligation to exercise any of the rights or powers vested in it
by this Agreement, or to institute, conduct or defend any
litigation or other proceeding hereunder or in relation hereto,
at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to Trustee
reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; provided
that nothing contained herein shall relieve Trustee of the
obligations, upon the occurrence and continuance of a Servicer
Default that has not been cured, to exercise such of the rights
and powers vested in it by this Agreement and to use the same
degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of
his or her own affairs,
(d) Trustee shall not be personally liable for any
action taken, permitted or omitted by it in good faith and
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement,
(e) Trustee shall not be bound to make any investigation
into the facts of matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless
requested in writing to do so by the Required Investors; provided
that if the payment within a reasonable time to Trustee of the
costs, expenses, or liabilities likely to be incurred by it in
connection with making such investigation shall be, in the
opinion of Trustee, not reasonably assured to Trustee by the
security afforded to it by the terms of this Agreement, Trustee
may require reasonable indemnity from the Required Investors
against such cost, expense, or liability as a condition to
proceeding with the investigation. The reasonable expense of
every examination shall be paid by Servicer or, if paid by
Trustee, shall be reimbursed by Servicer upon demand or
Transferor if Servicer fails to make such payment,
-53-
<PAGE>
(f) Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents, representatives, attorneys or a custodian, and
Trustee shall not be responsible for any misconduct or negligence
on the part of any agent, representative, attorney or custodian
appointed with due care by it hereunder,
(g) except as may be required by Sections 11.1(b) and
11.1(c)(v) hereof, Trustee shall not be required to make any
initial or periodic examination of any documents or records
related to the Transferred Assets for the purpose of establishing
the presence or absence of defects or for any other purpose,
(h) whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting
the liability of or affording protection to Trustee shall be
subject to the provisions of this section,
(i) Trustee shall have no liability with respect to the
acts or omissions of Servicer (except and to the extent Servicer
is Trustee), including, but not limited to, acts or omissions in
connection with: (A) the servicing, management or administration
of the Receivables or the Related Transferred Assets, (B)
calculations made by Servicer whether or not reported to Trustee,
and (C) deposits into or withdrawals from any Bank Accounts or
Transaction Accounts established pursuant to the terms of this
Agreement, and
(j) in the event that Trustee is also acting as Paying
Agent or Transfer Agent and Registrar hereunder, the rights and
protections afforded to Trustee pursuant to this Article XI shall
also be afforded to Trustee acting as Paying Agent or as Transfer
Agent and Registrar.
SECTION 11.3 Limitation on Liability of Trustee. Trustee shall
at no time have any responsibility or liability for or with respect to the
correctness of the recitals contained herein or in the Certificates (other
than the certificate of authentication on the Certificates). Except as set
forth in Section 11.15, Trustee makes no representations as to the
validity or sufficiency of this Agreement, any Supplement, the
Certificates (other than the certificate of authentication on the
Certificates) any other Transaction Document or any Transferred Asset or
related document. Trustee shall not be accountable for the use or
application (i) by Transferor of any of the Certificates or of the
proceeds of such Certificates, or (ii) for the use or application of any
funds paid to Transferor or to Servicer (other than to Trustee in its
capacity as Servicer) in respect of the Transferred Assets or deposited
by Servicer in or withdrawn by Servicer from the Bank Accounts, the
Transaction Accounts or any other accounts hereafter established to
effectuate the transactions contemplated herein or in the other
Transaction Documents and in accordance with the terms hereof or thereof.
Except as provided in Section 11.1(c)(v), Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity, or enforceability of any ownership or security interest in any
Transferred Asset, or the perfection or priority of such a security
interest or the maintenance of any such perfection or priority, or for the
generation of the payments to
-54-
<PAGE>
be distributed to Certificateholders under this Agreement, including: (a)
the existence and substance of any Transferred Asset or any related Record
or any computer or other record thereof, (b) the validity of the transfer
of any Transferred Asset to the Trust or of any preceding or intervening
transfer, (c) the performance or enforcement of any Transferred Asset, (d)
the compliance by Transferor or Servicer with any warranty or
representation made under this Agreement or in any other Transaction
Document and the accuracy of any such warranty or representation prior to
Trustee's receipt of actual notice of any noncompliance therewith or any
breach thereof, (e) any investment of monies pursuant to Section 4.4 or
any loss resulting therefrom, (f) the acts or omissions of Transferor,
Servicer or any Obligor, (g) any action of Servicer taken in the name of
Trustee, or (h) any action by Trustee taken at the instruction of
Servicer; provided that the foregoing shall not relieve Trustee of its
obligation to perform its duties (including but not limited to its duties,
if any, to act as Servicer in accordance with Section 10.2) under the
Agreement in accordance with the terms hereof.
Except with respect to a claim based on the failure of Trustee to
perform its duties under this Agreement or based on Trustee's negligence
or willful misconduct, no recourse shall be had against Trustee in its
individual capacity for any claim (a "Non-Recourse Claim") based on any
provision of this Agreement, any other Transaction Document, the
Certificates, any Transferred Asset or any assignment thereof. Trustee
shall not have any personal obligation, liability, or duty whatsoever to
any Certificateholder or any other Person with respect to any Non-Recourse
Claim, and any such claim shall be asserted solely against the Trust or
any indemnitor who shall furnish indemnity to the Trust or Trustee as
provided in this Agreement.
SECTION 11.4 Trustee May Deal with Other Parties. Subject to any
restrictions that may otherwise be imposed by Section 406 of ERISA or
Section 4975(e) of the Internal Revenue Code, Trustee in its individual
or any other capacity may deal with the other parties hereto (other than
Transferor) and their respective affiliates, with the same rights as it
would have if it were not Trustee.
SECTION 11.5 Servicer To Pay Trustee's Fees and Expenses. (a)
To the extent not paid by Servicer to Trustee from funds constituting the
Servicing Fee, Servicer covenants and agrees to pay to Trustee from time
to time, and Trustee shall be entitled to receive, such reasonable
compensation as is agreed upon in writing between Trustee and Servicer
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered
by it in connection with the Transaction Documents and in the exercise and
performance of any of the powers and duties hereunder of Trustee, and
Servicer will pay or reimburse Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by Trustee in
accordance with any of the provisions of the Transaction Documents to
which it is a party (including the reasonable fees and expenses of its
agents, any co-Trustee and counsel) except any expense, disbursement or
advance that may arise from Trustee's negligence or willful misconduct.
(b) In addition, Servicer agrees to indemnify Trustee from, and
hold it harmless against, any and all losses, liabilities, damages, claims
or expenses incurred by Trustee in connection with the Transaction
Documents or in the exercise or performance of any of the powers or duties
-55-
<PAGE>
of Trustee hereunder, other than those resulting from the negligence or
willful misconduct of Trustee.
(c) If Trustee is appointed Successor Servicer pursuant to
Section 10.2, the provisions of this section shall not apply to expenses,
disbursements and advances made or incurred by Trustee in its capacity as
Successor Servicer, which shall be paid out of the Servicing Fee.
Servicer's covenant to pay the fees, expenses, disbursements and advances
provided for in this section shall survive the resignation or removal of
Trustee and the termination of this Agreement.
(d) Trustee shall look solely to Servicer for payment of amounts
described in this Section 11.5, and Trustee shall have no claim for
payment of such amounts against Transferor or the Transferred Assets.
SECTION 11.6 Eligibility Requirements for Trustee. Trustee
hereunder shall at all times: (a) be (i) a banking institution organized
under the laws of the United States, (ii) a member bank of the Federal
Reserve System or (iii) any other banking institution or trust company,
incorporated and doing business under the laws of any State or of the
United States, a substantial portion of the business of which consists of
receiving deposits or exercising fiduciary powers similar to those
permitted to national banks under the authority of the Comptroller of the
Currency, and that is supervised and examined by a state or federal
authority having supervision over banks, (b) have, in the case of an
entity that is subject to risk-based capital adequacy requirements, risk-
based capital of at least $250,000,000 or, in the case of an entity that
is not subject to risk-based capital adequacy requirements, a combined
capital and surplus of at least $250,000,000 and (c) have an unsecured
long-term debt rating of at least "A" or its equivalent from each Rating
Agency. If such corporation or association publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then, for the purpose of this section,
the combined capital and surplus of the corporation or association shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time Trustee shall
cease to be eligible in accordance with the provisions of this section,
Trustee shall resign immediately in the manner and with the effect
specified in Section 11.7.
SECTION 11.7 Resignation or Removal of Trustee. (a) Trustee may
at any time (a) resign and be discharged from its obligations hereunder
by giving 30 days' prior written notice thereof to Transferor, Servicer,
the Rating Agencies, the Investor Certificateholders and the Required
Persons or (b) be removed and discharged from its obligations hereunder
by the Required Persons giving 10 days' prior written notice thereof to
Transferor, Servicer, the Rating Agencies, the Investor Certificateholders
and the Trustee. Upon receiving the notice of resignation or removal,
Transferor shall promptly appoint, subject to satisfaction of the
Modification Condition, a successor Trustee who meets the eligibility
requirements set forth in Section 11.6 by written instrument, in
duplicate, one copy of which shall be delivered to the resigning Trustee
and one copy to the successor Trustee. If no successor Trustee shall have
been so appointed and shall have accepted appointment within 30 days after
the giving of the notice of resignation or within 10 days after the giving
of the notice of removal, the resigning or
-56-
<PAGE>
removed Trustee, upon notice to each Required Person, may petition any
court of competent jurisdiction to appoint a successor Trustee.
(a) If at any time Trustee shall cease to be eligible to be
Trustee hereunder in accordance with the provisions of Section 11.6 hereof
and shall fail to resign promptly after its receipt of a written request
therefor by Servicer, or if at any time Trustee shall be legally unable
to act, or shall be adjudged bankrupt or insolvent, or if a receiver for
Trustee or of its property shall be appointed, or any public officer shall
take charge or control of Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then Servicer may
remove Trustee and, subject to the consent of the Required Persons (which
consent shall not be unreasonably withheld or delayed) and satisfaction
of the Modification Condition, promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which shall be delivered to
Trustee so removed and one copy to the successor Trustee.
(b) Any resignation or removal of Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this section shall
not become effective until (i) acceptance of appointment by the successor
Trustee as provided in Section 11.8 hereof, and (ii) such successor
Trustee shall have agreed in writing to be bound by any Intercreditor
Agreements then in effect. Any resignation or removal of Trustee, when
effective, shall terminate the Trustee in all capacities under the
Transaction Documents.
SECTION 11.8 Successor Trustee. (a) Any successor Trustee
appointed as provided in Section 11.7 shall execute, acknowledge and
deliver to Transferor, Servicer, the Investor Certificateholders and the
predecessor Trustee an instrument accepting such appointment hereunder and
an instrument pursuant to which it agrees to be bound by any existing
Intercreditor Agreement, and thereupon the resignation or removal of the
predecessor Trustee shall, upon payment of its fees and expenses and other
amounts owed to it pursuant to Section 11.5, become effective and the
successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations
of its predecessor hereunder, with like effect as if originally named as
Trustee herein. The predecessor Trustee shall deliver to the successor
Trustee, at the expense of Servicer, all documents or copies thereof and
statements held by it hereunder; and Transferor and the predecessor
Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully vesting and confirming in
the successor Trustee all such rights, powers, duties and obligations.
Servicer shall promptly give notice to the Required Persons and the Rating
Agencies upon the appointment of a successor Trustee.
(b) No successor Trustee shall accept appointment as provided in
this section unless at the time of the acceptance the successor Trustee
shall be eligible to become Trustee under the provisions of Section 11.6.
(c) Upon acceptance of appointment by a successor Trustee as
provided in this section, the successor Trustee shall mail notice of the
succession hereunder to all Investor Certificateholders at their addresses
as shown in the Certificate Register and to each Required Person and
Rating Agency.
-57-
<PAGE>
SECTION 11.9 Merger or Consolidation of Trustee. Any Person into
which Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which Trustee shall be a party, or any Person succeeding
to all or substantially all of the corporate trust business of Trustee,
shall be the successor of Trustee hereunder, if the Person meets the
requirements of Section 11.6, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. Servicer shall promptly give
notice to the Rating Agencies and each Required Person upon any merger or
consolidation of Trustee.
SECTION 11.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust may at the time be located, Trustee shall have
the power and may execute and deliver all instruments to appoint one or
more Persons (who may be an employee or employees of Trustee) to act as
a co-Trustee or co-Trustees, or separate Trustee or separate Trustees,
with respect to all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and,
subject to the other provisions of this section, such powers, duties,
obligations, rights and trusts as Trustee may consider necessary or
appropriate; provided, that such appointment shall be subject to the prior
written consent of Transferor unless an Early Amortization Event or
Servicer Default is continuing; and provided further, that in any event
Trustee will give Transferor and Servicer prior written notice of such
appointment. No co-Trustee or separate Trustee shall be required to meet
the terms of eligibility as a successor Trustee under Section 11.6 and no
notice to Certificateholders of the appointment of any co-Trustee or
separate Trustee shall be required under Section 11.8.
(b) Every separate Trustee and co-Trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon Trustee shall be conferred or imposed upon and
exercised or performed by Trustee and the separate Trustee or
co-Trustee jointly (it being understood that the separate Trustee
or co-Trustee is not authorized to act separately without Trustee
joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as successor to
Servicer hereunder), Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate Trustee or
co-Trustee, but solely at the direction of Trustee,
(ii) no Trustee or co-Trustee hereunder shall be personally
liable by reason of any act or omission of any other Trustee or
co-Trustee hereunder, and
(iii) Trustee may at any time accept the resignation of or
remove any separate Trustee or co-Trustee.
-58-
<PAGE>
(c) Any notice, request or other writing given to Trustee shall
be deemed to have been given to each of the then separate Trustees and
co-Trustees, as effectively as if given to each of them. Every instrument
appointing any separate Trustee or co-Trustee shall refer to this
Agreement and the conditions of this Article XI. Each separate Trustee and
co-Trustee, upon its acceptance of the trusts conferred, shall be vested
with the estates or property specified in its instrument of appointment,
either jointly with Trustee or separately, as may be provided therein,
subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting
the liability of, or affording protection or indemnity to, Trustee. Every
such instrument shall be filed with Trustee and a copy thereof given to
Servicer.
(d) Any separate Trustee or co-Trustee may at any time constitute
Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect
to this Agreement or any other Transaction Document on its behalf and in
its name. If any separate Trustee or co-Trustee shall die, become
incapable of acting, resign or be removed, all its estates, properties,
rights, remedies and trusts shall vest in and be exercised by Trustee, to
the extent permitted by law, without the appointment of a new or successor
Trustee or co-Trustee.
SECTION 11.11 Tax Returns. No Federal income tax return shall
be filed on behalf of the Trust unless required by applicable law or any
Governmental Authority. In the event the Trust shall be required to file
tax returns, Servicer shall prepare or shall cause to be prepared any tax
returns required to be filed by the Trust and shall remit the returns to
Trustee for signature at least five Business Days before the returns are
due to be filed. Trustee shall promptly sign and deliver the returns to
Servicer and Servicer shall promptly file the returns. Subject to the
responsibilities of Trustee set forth in any Supplement, Servicer, in
accordance with that Supplement, shall also prepare or shall cause to be
prepared all tax information required by law to be made available to
Certificateholders and shall deliver the information to Trustee at least
five Business Days prior to the date it is required by law to be made
available to the Certificateholders. Trustee, upon request, will furnish
Servicer with all the information known to Trustee as may be reasonably
required in connection with the preparation of all tax returns of the
Trust and shall, upon request, execute such returns as Trustee determines
are appropriate.
SECTION 11.12 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement, the
Certificates or the other Transaction Documents may be prosecuted and
enforced by Trustee without the possession of any of the Certificates or
the production thereof in any proceeding relating thereto, and any such
proceeding instituted by Trustee shall be brought in its own name as
Trustee. Any recovery of judgment shall, after provision for the payment
of the reasonable compensation, expenses, disbursements and advances of
Trustee, its agents and counsel, be distributed to the Certificateholders
in respect of which such judgment has been obtained in accordance with the
related Supplement.
-59-
<PAGE>
SECTION 11.13 Suits for Enforcement. If an Early Amortization
Event or a Servicer Default shall occur and be continuing, Trustee, in its
discretion may, subject to the provisions of Sections 11.1 and 11.14,
proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or any other Transaction
Document or in aid of the execution of any power granted in this Agreement
or any other Transaction Document or for the enforcement of any other
legal, equitable or other remedy as Trustee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of
Trustee or the Certificateholders. Nothing herein contained shall be
deemed to authorize Trustee to authorize or consent to or accept or adopt
on behalf of any Certificateholder any plan of reorganization,
arrangement, adjustment or composition affecting the Investor Certificates
or the rights of any Holder thereof, or to authorize Trustee to vote in
respect of the claim of any Investor Certificateholder in any such
proceeding.
SECTION 11.14 Rights of Required Investors To Direct Trustee.
The Required Investors shall have the right to direct the time, method,
and place of conducting any proceeding for any remedy available to
Trustee, or exercising any trust or power conferred on Trustee; provided
that, subject to Section 11.1, Trustee may decline to follow any such
direction if Trustee, being advised by counsel, determines that the action
so directed may not be taken lawfully, or if a Responsible Officer or
Responsible Officers of Trustee shall determine, in good faith, that the
proceedings so directed would be illegal or involve Trustee in incurring
unreimbursed costs and expenses or personal liability or be unduly
prejudicial to the rights of the Investor Certificateholders not giving
such direction; and provided further, that nothing in this Agreement shall
impair the right of Trustee to take any action deemed proper by Trustee
and that is not inconsistent with such direction of the Required
Investors.
SECTION 11.15 Representations and Warranties of Trustee. Trustee
represents and warrants that:
(a) it is a national banking association, organized
existing and in good standing under the laws of the United
States,
(b) it has full power, authority and right to execute,
deliver and perform the Transaction Documents to which it is a
party, and has taken all necessary action to authorize the
execution, delivery and performance by it of the Transaction
Documents, and
(c) the Transaction Documents to which it is a party
have been duly executed and delivered by Trustee and, in the case
of all such Transaction Documents, are legal, valid and binding
obligations of Trustee, enforceable in accordance with their
respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
-60-
<PAGE>
SECTION 11.16 Maintenance of Office or Agency. Trustee will
maintain, at its address designated pursuant to Section 13.6, an office,
offices, agency or agencies where notices and demands to or upon Trustee
in respect of the Certificates and the Transaction Documents to which it
is a party may be served. Trustee will give prompt written notice to
Servicer and to the Certificateholders of any change in the location of
the Certificate Register or any such office or agency.
ARTICLE XII
TERMINATION
SECTION 12.1 Termination of Trust. (a) If not earlier
terminated pursuant to Section 9.3, the Trust and the respective
obligations and responsibilities of Transferor, Servicer and Trustee
created hereby (other than the obligation of Trustee to make payments to
Certificateholders as hereinafter set forth and the obligations of
Servicer contained in Section 11.11) shall terminate, except with respect
to the duties and obligations described in Sections 3.9(c), 7.3, 8.4,
11.5, 12.2(b), 13.8, 13.13, 13.14 and 13.15 upon the earliest to occur of
(i) the day on which the Investor Certificateholders and Trustee shall
have been paid all amounts required to be paid to them pursuant to this
Agreement and Trustee has disposed of all property held hereunder
(including pursuant to Section 12.3) and (ii) the day which is 21 years
less one day after the death of the officers and the last survivor of all
the lineal descendants of every officer of the Trustee who are living on
the date hereof.
(b) Notwithstanding the foregoing, the last payment of the
principal of and interest on the Investor Certificates of any Series shall
be due and payable no later than the Final Scheduled Payment Date for such
Series. If, on the Distribution Date immediately prior to the Final
Scheduled Payment Date for any Series, Servicer determines that the
Invested Amount for such Series on such Final Scheduled Payment Date
(after giving effect to all changes therein on such date) will exceed
zero, Servicer shall solicit bids for the sale of undivided interests in
the Transferred Assets for a purchase price equal to 110% of the Base
Amount (or comparable amount) for such Series on the Final Scheduled
Payment Date for such Series (after giving effect to all distributions
required to be made on the Final Scheduled Payment Date for the Series);
provided, that the undivided interests so transferred shall not exceed the
Series Collection Allocation Percentage for such Series of the Transferred
Assets held by the Trust as of the date of transfer. Transferor shall be
entitled to participate in and to receive notice of each bid submitted in
connection with the bidding process. Upon the expiration of the period,
Servicer shall determine (x) the Highest Bid and (y) the Available Final
Distribution Amount for such Series. Servicer shall sell such undivided
interests in the Transferred Assets on the Final Scheduled Payment Date
for such Series to the bidder with the Highest Bid and shall deposit the
proceeds of such sale in the Master Collection Account for allocation
(together with the Available Final Distribution Amount for such Series)
to the Certificateholders of such Series.
SECTION 12.2 Final Distribution. (a) Servicer shall give
Trustee at least 20 Business Days' prior written notice of the date on
which the Trust is expected to terminate in accordance
-61-
<PAGE>
with Section 12.1(a). The notice shall be accompanied by a certificate of
an Authorized Officer of Servicer setting forth the information specified
in Section 3.6 covering the period during the then current calendar year
through the date of the notice. Upon receiving the notification from
Servicer, Trustee shall give the Certificateholders written notice as soon
as practicable after Trustee's receipt of notice from Servicer, which
notice shall specify (i) the Distribution Date (the "Final Distribution
Date") upon which final payment with respect to the Certificates is
expected to be made and (ii) the amount of any such final payment. Trustee
shall give the notice to the Transfer Agent and Registrar and the Paying
Agent at the time such notice is given to Certificateholders. On the Final
Distribution Date, Trustee shall, based upon the Daily Report relating to
the Final Distribution Date, cause to be distributed to the
Certificateholders the amounts distributable to them on the Final
Distribution Date pursuant to the applicable Supplement. Each
Certificateholder shall present its Certificate to Trustee and surrender
its Certificate for cancellation at the address of Trustee set forth in
Section 13.5 not more than ten Business Days after the Final Distribution
Date upon which final payment with respect to the Certificates has been
made.
(b) Notwithstanding the termination of the Trust pursuant to
Section 12.1(a), all funds then on deposit in the Master Collection
Account shall continue to be held in trust for the benefit of the
Certificateholders and the Paying Agent or Trustee shall pay such funds
to the Certificateholders at the time set forth in Section 12.1(a). If any
Certificateholder does not claim the portion of such funds to which it is
entitled to receive on the Final Distribution Date, interest shall cease
to accrue on its Certificate and Trustee shall hold such funds in trust
for such Person, subject to the further provisions of this Section. In
the event that any of the Certificateholders shall not have claimed their
final payment with respect to their Certificates within six months after
the Final Distribution Date, Trustee shall give a second written notice
to the remaining Certificateholders concerning payment of the final
distribution with respect thereto and surrender of their Certificates for
cancellation. If within one year after the second notice all the
Certificates shall not have been surrendered for cancellation, Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds in the
Master Collection Account held for the benefit of such Certificateholders.
Trustee and the Paying Agent shall pay to Transferor any monies held by
them for the payment of principal of or interest on the Certificates that
remains unclaimed for two years after the termination of the Trust
pursuant to Section 12.1(a). After payment of the monies to Transferor,
Certificateholders entitled to the money must look to Transferor for
payment as unsecured general creditors unless an applicable abandoned
property law designates another Person.
SECTION 12.3 Rights Upon Termination of the Trust. Upon the
termination of the Trust pursuant to Section 12.1 and the surrender of the
Transferor Certificate by Transferor to Trustee, Trustee shall transfer,
assign, set over and otherwise convey to Transferor (without recourse,
representation or warranty), all right, title and interest of the Trust
in the Receivables, whether then existing or thereafter created, the
Related Transferred Assets and all of the other property and rights
previously conveyed to Trustee hereunder, except for amounts held by
Trustee pursuant to Section 12.2(b) and except for the rights of RPA
Indemnified Parties (other than Transferor and its officers, directors,
shareholders, controlling Persons, employees and
-62-
<PAGE>
agents) to indemnification and contribution under Section 9.1 of the
Purchase Agreement. Trustee shall execute and deliver the instruments of
transfer and assignment (including any document necessary to release the
security interest in favor of Trustee (for the benefit of the
Certificateholders) in such Receivables and Related Transferred Assets,
to release any filing evidencing or perfecting such security interest and
to terminate all powers of attorney created by the Transaction Documents),
in each case without recourse, representation or warranty, that shall be
reasonably requested by Transferor to vest in Transferor all right, title
and interest that Trustee had in the Transferred Assets.
SECTION 12.4 Optional Repurchase of Investor Interests. Any
Supplement may provide that on any Distribution Date occurring on or after
the date that the Invested Amount of the Series governed by such
Supplement is reduced to 10% or less of the initial aggregate principal
amount of the Investor Certificates of such Series, Transferor shall have
the option, upon the giving of 45 days' prior written notice to Servicer,
Trustee, each Required Person and the Rating Agencies, to repurchase the
undivided interest of such Series in the Trust by depositing into the
Principal Funding Account, on such Distribution Date (the "Repurchase
Distribution Date") an amount (the "Repurchase Amount") equal to the
unpaid Invested Amount of the Series plus accrued and unpaid interest on
the unpaid principal amount of the Series (and accrued and unpaid interest
with respect to interest amounts that were due but not paid on a prior
Distribution Date) through the day preceding such Distribution Date at the
Certificate Rate applicable to such Series. Upon tender of all outstanding
Certificates of the Series owned by a Certificateholder, Trustee shall
then distribute to such Certificateholder the portion of such amounts owed
to such Certificateholder, together with all other amounts on deposit in
the Principal Funding Account with respect to that Series that are owed
to such Certificateholder, on the next Distribution Date in repayment of
the principal amount and all accrued and unpaid interest owing to such
Certificateholder. Following the Repurchase Distribution Date, the
Certificateholders of the Series shall have no further rights with respect
to the Transferred Assets and Trustee shall execute and deliver the
instruments of transfer and assignment (including any document necessary
to release the security interest in favor of Trustee (for the benefit of
the Certificateholders) in the Transferred Assets and to release any
filing evidencing or perfecting the security interest), in each case
without recourse, representation or warranty, as shall be reasonably
requested by Transferor to vest in Transferor all right, title and
interest that Trustee had in the Transferred Assets. In the event that
Transferor fails for any reason to deposit the Repurchase Amount for in
accordance with the terms of this Agreement, payments shall continue to
be made to the Certificateholders of each Series in accordance with the
terms of this Agreement.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1 Amendment, Waiver, Etc. (a) Except to the extent
provided otherwise hereinafter in clauses (i) through (iii), the
provisions of this Agreement may be amended, modified or waived from time
to time by the Servicer, Transferor and the Trustee, with the
-63-
<PAGE>
consent of the Required Persons, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment,
modification or waiver shall:
(i) reduce in any manner the amount of, or delay the
timing of, allocations, payments or distributions in respect of
the portion of the Invested Amount attributable to any Series or
class of Certificates, yield on any Series or class of
Certificates or other distributions on any Series or class of
Certificates without the consent of each Certificateholder of
such Series or class, as applicable;
(ii) adversely affect the rating of any Series or
class of Certificates by any Rating Agency without the consent of
the Certificateholders evidencing not less than a two-thirds
majority of such Series or class; or
(iii) amend, modify or waive any provision of this
Agreement which requires the approval or consent of a specified
percentage of Certificateholders without the consent of the same
percentage of Certificateholders.
The Trustee shall establish a record date for determining which
Certificateholders may give such waivers and consents. No waiver of any
Early Amortization Event or other default hereunder given at any time
shall apply to any other prior or subsequent Amortization Event or
default.
(b) As soon as practicable before the execution and delivery
of any amendment, consent or waiver pursuant to Section 13.1(a), but in
no event later than twenty Business Days prior to such execution and
delivery, the Servicer shall deliver a copy of such proposed amendment,
consent or waiver to the Rating Agencies and each Certificateholder.
(c) Unless the requisite percentage of a Series or class of
Certificates shall approve an amendment, consent or waiver pursuant to
Section 13.1(a)(iii) above, or the majority of the Holders of each
affected Series or class waive the requirement of this Section 13.1(c),
no such amendment to this Agreement shall become effective unless each
Rating Agency, after having reviewed such amendment, shall have confirmed
the initial rating of the then-issued and outstanding Series or class of
Certificates that were rated by such Rating Agency.
(d) Promptly after the execution of any such amendment,
consent or waiver, the Trustee shall furnish copies of such amendment or
consent to each Certificateholder, and the Servicer shall furnish copies
of such amendment or consent to the Rating Agencies.
(e) The manner of obtaining any waiver or consent given by
the Certificateholders under this Section 13.1 and of evidencing the
authorization of the execution thereof by the Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
(f) If each Rating Agency shall not have confirmed the
initial rating on all the-issued and outstanding series of Certificates
rated by such Rating Agency after they have reviewed any
-64-
<PAGE>
amendment or modification of, or supplement to, any Purchase Agreement and
the Buyer Notes as provided in Section 7.2(j), then such amendment,
modification or supplement shall only become effective if each
Certificateholder of such Series has consented to such amendment.
(g) Each consent or waiver given by any Certificateholder in
connection with any matter described in Section 13.1 or in any other
provision of this Agreement shall be conclusive and binding on such
Certificateholder and on all future Certificateholders and of any
Certificate issued upon the transfer thereof or in exchange therefor or
in lieu thereof whether or not notation of such consent is made upon such
Certificate.
SECTION 13.2 Actions by Certificateholders. (a) By its
acceptance of Certificates pursuant to this Agreement and the applicable
Supplement, each Certificateholder acknowledges and agrees that, wherever
in this Agreement a provision states that an action may be taken or a
notice, demand or instruction given by any Series of Investor Certificate-
holders, any class of Investor Certificateholders or the Investor
Certificateholders, the action, notice or instruction may be taken or
given by any Holder of an Investor Certificate of the Series or class or
by any Investor Certificateholder, respectively, unless the provision
requires a specific percentage of the Series or class of Investor
Certificateholders or of all Investor Certificateholders.
(b) By its acceptance of Certificates pursuant to this Agreement
and the applicable Supplement, each Certificateholder acknowledges and
agrees that any request, demand, authorization, direction, notice,
consent, waiver or other act by the Holder of a Certificate shall bind the
Holder and every subsequent Holder of the Certificate and of any
Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done or
omitted to be done by Trustee or Servicer in reliance thereon, whether or
not notation of the action is made upon such Certificate.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement or any
Supplement to be given or taken by Certificateholders may be embodied in
and evidenced by one or more instruments of substantially similar tenor
signed by the Certificateholders in person or by agent duly appointed in
writing; and except as herein otherwise expressly provided, the action
shall become effective when the instrument or instruments are delivered
to Trustee and, when required, to Servicer. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Agreement, any Supplement and conclusive in favor
of Trustee and Servicer, if made in the manner provided in this section.
(d) The fact and date of the execution by any Certificateholder
of any such instrument or writing may be proved in any reasonable manner
that Trustee deems sufficient.
SECTION 13.3 Limitation on Rights of Certificateholders. (a)
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement, any Supplement or the Trust, nor shall the death
or incapacity entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or commence any
proceeding in any court for
-65-
<PAGE>
a partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) No Certificateholder shall have any right to vote (except as
expressly provided otherwise in this Agreement) or in any manner otherwise
to control the operation and management of the Trust, or the obligations
of the parties hereto, nor shall anything herein set forth, or contained
in the terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an
association, nor shall any Certificateholder be under any liability to any
third Person by reason of any action taken by the parties to this
Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to the Transaction
Documents (except to the extent any Supplement or related certificate
purchase agreement creates independent and non-duplicative rights), unless
the Certificateholder previously shall have given to Trustee, and unless
the Required Investors shall have made, written request upon Trustee to
institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to Trustee such reasonable indemnity as
it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and Trustee, for 30 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused
to institute any such action, suit or proceeding; it being understood and
intended, and being expressly covenanted by each Certificateholder with
every other Certificateholder and Trustee, that no one or more
Certificateholders shall have any right in any manner whatever by virtue
of, or by availing itself or themselves of, any provisions of a
Transaction Document to affect, disturb or prejudice the rights of any
other Investor Certificateholder, or to obtain or seek to obtain priority
over or preference to any such other Investor Certificateholder, except
to the extent provided in the Transaction Documents, or to enforce any
right under the Transaction Documents, except in the manner herein
provided and for the equal, ratable and common benefit of, all Investor
Certificateholders (subject to the priorities set forth in the Transaction
Documents). For the protection and enforcement of the provisions of this
section, each and every Certificateholder and Trustee shall be entitled
to such relief as can be given either at law or in equity.
(d) By their acceptance of Certificates pursuant to this
Agreement and the applicable Supplement, the Certificateholders agree to
the provisions of this section.
SECTION 13.4 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES, EXCEPT (I) WITH RESPECT TO TRANSFEROR, TO THE
EXTENT THAT THE PERFECTION AND THE EFFECT OF PERFECTION OR NONPERFECTION
OF THE SECURITY INTERESTS OF TRUSTEE IN THE RECEIVABLES AND THE RELATED
ASSETS OF SUCH TRANSFEROR ARE GOVERNED BY THE LAWS OF A JURISDICTION (SUCH
TRANSFEROR'S "HOME STATE") OTHER THAN THE STATE OF NEW YORK AND EXCEPT
THAT WITH RESPECT TO TRANSFEROR THE CREATION OF SUCH SECURITY INTERESTS
OF
-66-
<PAGE>
TRUSTEE SHALL BE GOVERNED BY THE LAWS OF SUCH TRANSFEROR'S HOME STATE.
SECTION 13.5 Notices. All demands, notices, instructions and
communications hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered, four Business Days after mailing
if mailed by registered mail, return receipt requested, or sent by
facsimile transmission (a) in the case of Transferor, to its address set
forth below its signature hereto, (b) in the case of the Initial Servicer,
to its address set forth below its signature hereto, and (c) in the case
of Trustee, the Paying Agent or the Transfer Agent and Registrar, to the
address of Trustee set forth on the signature pages hereof; or, as to each
party, at such other address or facsimile number as shall be designated
by it in a written notice to each other party given in accordance with
this section. Except to the extent expressly provided otherwise in an
applicable Supplement, any notice required or permitted to be mailed to
a Certificateholder shall be sent by first-class mail, postage prepaid,
to the address of such Certificateholder as shown in the Certificate
Register. Except to the extent expressly provided otherwise in an
applicable Supplement, any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given on
the fourth Business Day after the notice is so mailed, whether or not a
Certificateholder receives the notice. Servicer shall deliver or make
available to the Rating Agencies each certificate and report required to
be prepared, forwarded or delivered pursuant to Section 3.5 (excluding the
Daily Reports) or 3.6 and a copy of any amendment, consent or waiver to
this Agreement, at the address of the Rating Agency set forth above or at
the other address as shall be designated by the Rating Agency in a written
notice to Servicer.
SECTION 13.6 Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement or any
of the other Transaction Documents shall for any reason whatsoever be held
invalid, then the unenforceable covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement or the other Transaction Documents
(as applicable) and shall in no way affect the validity or enforceability
of the other provisions of this Agreement, the Certificates or any of the
other Transaction Documents or the rights of the Certificateholders.
SECTION 13.7 Certificates Nonassessable and Fully Paid. Except
to the extent otherwise expressly provided in Section 7.3 with respect to
Transferor, it is the intention of the parties to this Agreement that the
Certificateholders shall not be personally liable for obligations of the
Trust, that the interests in the Trust represented by the Certificates
shall be nonassessable for any losses or expenses of the Trust or for any
reason whatsoever and that Certificates upon authentication thereof by
Trustee pursuant to Section 6.2 are and shall be deemed fully paid.
SECTION 13.8 Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, each of Trustee, Servicer, Transferor, the
Paying Agent, the Authenticating Agent and the Transfer Agent and
Registrar (and each Investor Certificateholder by its acceptance of a
Certificate) agrees that it shall not, with respect to the Trust or
Transferor, institute or join any other Person in instituting any
proceeding of the type referred to in the definition of "Bankruptcy Event"
so long as any Certificates issued by the Trust shall be outstanding or
there shall not have
-67-
<PAGE>
elapsed one year plus one day since the last day on which any such
Certificates shall have been outstanding. The foregoing shall not limit
the right of Servicer, Transferor, the Paying Agent, the Authenticating
Agent, the Transfer Agent and Registrar and any Investor Certificateholder
to file any claim in or otherwise take any action with respect to any such
insolvency proceeding that was instituted against Transferor or the Trust
by any other Person. In addition, each of Servicer, the Paying Agent, the
Authenticating Agent, the Transfer Agent and Registrar, each
Certificateholder (by its acceptance of a Certificate) and (as to the
Trust) Transferor agree that all amounts owed to them by the Trust or
Transferor shall be payable solely from amounts that become available for
such payment pursuant to this Agreement and the Receivables Purchase
Agreement, and no such amounts shall constitute a claim against the Trust
or Transferor to the extent that they are in excess of the amounts
available for their payment.
SECTION 13.9 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of Trustee or the
Investor Certificateholders, 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 are not exhaustive of any
rights, remedies, powers and privileges provided by law.
SECTION 13.10 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original, and all of which together shall constitute one and the same
instrument.
SECTION 13.11 Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto and the
Certificateholders and their respective successors and permitted assigns.
Except as otherwise expressly provided in this Agreement, nothing
contained in this Agreement shall confer any rights upon any Person that
is not a party to, or a permitted assignee of a party to, this Agreement.
SECTION 13.12 Integration. This Agreement and the other
Transaction Documents contain a final and complete integration of all
prior expressions by the parties hereto with respect to the subject matter
hereof and thereof and shall together constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and
thereof, superseding all prior oral or written understandings.
SECTION 13.13 Binding Effect; Assignability; Survival of
Provisions. This Agreement shall be binding upon and inure to the benefit
of Transferor, Servicer and Trustee and their respective successors and
permitted assigns; provided, that Transferor shall not delegate any of its
obligations hereunder. This Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with its terms,
and shall remain in full force and effect until the termination of the
Trust pursuant to Section 12.1. The rights and remedies with respect to
(a) any breach of any representation and warranty made by Transferor in
Section 2.3 or Section 7.1, (b) any breach of any representation and
warranty made by Servicer in Section 8.1 and (c)
-68-
<PAGE>
the indemnification and payment provisions in Sections 3.9, 7.3, 8.4, 11.5
and 12.2(b) shall be continuing and shall survive any termination of this
Agreement.
SECTION 13.14 Recourse to Transferor. Payments to be made by
Transferor pursuant to this Agreement shall be paid to the extent that
funds are available to make the payments after all amounts to be paid to
the Servicer, Trustee and Certificateholders pursuant to the applicable
Supplement shall have been paid, and there shall be no recourse to
Transferor for all or any part of any amounts payable pursuant to any
Transaction Document to the extent that the funds are at any time
insufficient to make all or part of any such payments. The provisions of
this section shall survive the termination of this Agreement.
SECTION 13.15 Recourse to Transferred Assets. The Certificates
do not represent an obligation of, or an interest in, Transferor, any
Seller, Servicer, Trustee or any Affiliate of any of them. Except as
expressly provided otherwise in this Agreement, the Certificates are
limited in right of payment to the Transferred Assets.
SECTION 13.16 Submission to Jurisdiction. Each party hereto
hereby irrevocably (a) submits to the non-exclusive jurisdiction of any
Illinois State or Federal court sitting in Chicago, Illinois over any
action or proceeding arising out of or relating to the Transaction
Documents, (b) irrevocably agrees that all claims in respect of the action
or proceeding may be heard and determined in each State or Federal court,
(c) irrevocably waives, to the fullest extent it may effectively do so,
the defense of an inconvenient forum to the maintenance of the action or
proceeding, and (d) each of Transferor and Servicer irrevocably consents
to the service of any and all process in any action or proceeding by the
mailing of copies of the process to Transferor or Servicer (as applicable)
at its address specified herein. Nothing in this section shall affect the
right of any party hereto to serve legal process in any other manner
permitted by law or affect the right of any party hereto to bring any
action or proceeding against any or all of the other parties hereto or any
of their respective properties in the courts of any other jurisdiction.
SECTION 13.17 Waiver of Jury Trial. Each party hereto waives any
right to a trial by jury in any action or proceeding to enforce or defend
any rights under or relating to the Transaction Documents, or any
amendment, instrument, document or agreement delivered or that may in the
future be delivered in connection therewith or arising from any course of
conduct, course of dealing, statements (whether oral or written), actions
of any of the parties hereto or any other relationship existing in
connection with the Transaction Documents, and agrees that any such action
or proceeding shall be tried before a court and not before a jury.
[Remainder of page intentionally left blank.]
-69-
<PAGE>
IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
INTER-CITY PRODUCTS
RECEIVABLES COMPANY, L.P.,
as Transferor
By: Inter-City Products Partner
Corporation, its general partner
By: /s/ David P. Cain
-------------------------------
Name: David Cain
Title: Senior Vice President
Address: 650 Heil-Quaker Boulevard
Lewisburg, Tennessee 37091
Attention: David Cain
Telephone: (615) 270-4136
Facsimile: (615) 270-4220
INTER-CITY PRODUCTS CORPORATION (USA),
as initial Servicer
By: /s/ David P. Cain
-------------------------------
Name: David Cain
Title: Senior Vice President
Attention: David Cain
Telephone: (615) 270-4136
Facsimile: (615) 270-4220
LASALLE NATIONAL BANK,
as Trustee
By: /s/ Shashank Mishra
---------------------------------
Name: Shashank Mishra
Title: Vice President
Address:
Attention:
Telephone:
Facsimile:
<PAGE>
EXHIBITS AND SCHEDULES OMITTED AS NOT MATERIAL
<PAGE>
INTER-CITY PRODUCTS CORPORATION (USA)
APPENDIX A
DEFINITIONS
A. Defined Terms. As used in the Transaction Documents, unless
otherwise defined therein:
"Account Agreements" means the Concentration Account Agreements
and the Lockbox Agreements.
"Account Banks" means the Concentration Account Banks and the
Lockbox Banks.
"Adverse Claim" means any claim of ownership interest or any
mortgage, deed of trust, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other) or other security
interest.
"Affiliate" means, with respect to a Person, any other Person
directly or indirectly controlling, controlled by or under common control
with such Person. As used in this definition of "Affiliate," the term
"control" means the power, directly or indirectly, to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of such Person's voting securities, by contract or otherwise,
and the terms "affiliated," "controlling" and "controlled" have the
meanings correlative to the term "control."
"Aggregate Unpaid Balance" is defined in Section 2.1(b) of the
Purchase Agreement.
"Amortization Period" is defined, for purposes of any Series, in
the related Supplement.
"Applicant" is defined in Section 6.7 of the Pooling Agreement.
"Authorized Newspaper" means a newspaper of general circulation
in the Borough of Manhattan, The City of New York, printed in the English
language and customarily published on each Business Day, whether or not
published on Saturdays, Sundays and holidays.
"Authorized Officer" means, with respect to Transferor, Servicer
or any Seller, the Chief Executive Officer, the President, the Treasurer,
the Chief Financial Officer, any Vice President and any Assistant
Treasurer provided, that if Trustee is Servicer, such Authorized Officers
of Servicer shall be limited to Responsible Officers.
<PAGE>
"Available Final Distribution Amount" means with respect to any
Series, the amount that would be available in the Master Collection
Account on the Final Scheduled Payment Date for the Series for
distribution to the Certificateholders of such Series.
"Bank Accounts" means the Lockbox Accounts and the Concentration
Accounts.
"Bankruptcy Code" means the United States Bankruptcy Reform Act
of 1978 (11 U.S.C. Sections 101 et seq.).
"Bankruptcy Event" means, for any Person, any of the following
events:
(a) a case or other proceeding shall be commenced,
without the application or consent of such Person, in any court,
seeking the liquidation, reorganization, debt arrangement,
dissolution, winding up or composition or readjustment of debts
of such Person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for
such Person or any substantial part of its assets, or any similar
action with respect to such Person under any law relating to
bankruptcy, insolvency, reorganization, winding up or composition
or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of
(i) in the case of any Person other than Transferor, 60 days and
(ii) in the case of Transferor, 10 days; or an order for relief
in respect of such Person shall be entered in an involuntary case
under the Federal bankruptcy laws or other similar laws now or
hereafter in effect, or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency,
reorganization, debt arrangement, dissolution or other similar
law now or hereafter in effect, or shall consent to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator or the like, for such
Person or any substantial part of its property, or shall make any
general assignment for the benefit of creditors, or shall fail
to, or admit in writing its inability to, pay its debts generally
as they become due.
"Bankruptcy Opinion" means (i) with respect to any Series, the
Opinion of Counsel regarding true sale and substantive consolidation
issues rendered in connection with the original issuance of such Series,
and (ii) with respect to any other action, an Opinion of Counsel
substantially in the form of the opinion referred to in clause (i) above.
"Base Amount" is defined, for purposes of any Series, in the
applicable Supplement.
"Business Day" means any day other than a Saturday, Sunday or
public holiday under the laws of the State of New York or other day on
which banking institutions are authorized or obligated to close in the
Borough of Manhattan in the City of New York in the State of New York.
-2-
<PAGE>
"Buyer" is defined in the preamble to the Purchase Agreement.
"Buyer Note" is defined in Section 3.2 of the Purchase Agreement.
"Calculation Period" means a calendar month, provided, however,
that with respect to Coastline for periods ending prior to the First
Issuance Date, Calculation Period means a one-month period beginning on
the 26th day of the calendar month and ending on the 25th day of the next
succeeding calendar month.
"Carrying Cost Account" is defined in Section 4.2 of the Pooling
Agreement.
"Carrying Costs" means, for any period, (a) interest or yield
payable with respect to any Series for that period, (b) the aggregate
Servicing Fee for the period in the applicable amount provided for in
Section 3.4 of the Pooling Agreement, (c) the operating expenses described
in Section 7.2(m) of the Pooling Agreement for the period and (d) other
fees, costs and expenses incurred by Transferor and Trustee for the period
and paid to Persons other than Related Persons in connection with their
duties under the Transaction Documents (in the case of Trustee, to the
extent not included in the Servicing Fee).
"Certificate" means any Investor Certificate or the Transferor
Certificate.
"Certificateholder" means the Person in whose name a Certificate
is registered in the Certificate Register.
"Certificate Purchase Agreements" means the Certificate Purchase
Agreement (Series 1996-1, Class A) dated as of the First Issuance Date
among ICP and Anagram Funding Corp., as Purchaser and the Certificate
Purchase Agreement (Series 1996-1, Class B) dated as of the First Issuance
Date among ICP and Argos Funding Corp., as Purchaser.
"Certificate Register" means the register maintained pursuant to
Section 6.3 of the Pooling Agreement.
"Coastline" means Coastline Distribution, Inc., a Delaware
corporation and indirect wholly-owned Subsidiary of ICP.
"Collections" means all funds that are received by any Seller,
Transferor, Servicer or Trustee from or on behalf of any Obligor in
payment of any amounts owed (including invoice prices, finance charges,
interest and all other charges, if any) in respect of any Receivable or
Related Asset, or otherwise applied to repay or discharge any Receivable
(including insurance payments that any Seller, Transferor or Servicer
applies in the ordinary course of its business to amounts owed in respect
of such Receivable and net proceeds of sale or other disposition of
repossessed goods that were the subject of such Receivable) or otherwise
constituting proceeds of Receivables.
-3-
<PAGE>
"Commercial Stocking Receivable" means a Receivable that (i)
arises from a sale of a minimum of 25 items, each of which constitutes
two-20 ton three-phase-equipment, to a Distributor and (ii) has a final
due date that is no more than 170 days after the invoice date.
"Concentration Account" means any bank account that is maintained
in accordance with, and to perform the functions contemplated for
Concentration Accounts in, Section 3.3 of the Pooling Agreement.
"Concentration Account Agreement" means a letter agreement,
substantially in the form of Exhibit B to the Pooling Agreement (or such
other form as to which the Modification Condition has been satisfied),
among Transferor, Servicer, a Concentration Account Bank and Trustee that
relates to one or more Concentration Accounts, as it may be amended,
supplemented or otherwise modified from time to time.
"Concentration Account Banks" means any of the banks at which one
or more Concentration Accounts are maintained from time to time.
"Contract" means an agreement between a Seller and any Person
pursuant to which such Person is obligated to make payments in respect of
any Receivable or Related Asset and any Distributor Agreement.
"Contributed Initial Receivable" is defined in Section 1.8(a) of
the Purchase Agreement.
"Contributed Receivables" is defined in Section 1.8(b) of the
Purchase Agreement.
"Contributed Subsequent Receivable" is defined in Section 1.8(b)
of the Purchase Agreement.
"Cooling Preseason Receivable" means a Receivable that (i) arises
from a sale to a Distributor of air conditioning units with an invoice
date between December 1 and February 28 of the following year, (ii) a
final due date that is no more than 135 days after the invoice date and
(iii) is designated as such by Seller in accordance with Seller's seasonal
sale promotional policies which apply to Distributors generally and which
are in existence as of the Closing Date.
"Corporate Trust Office" means the principal office of Trustee in
Chicago, Illinois, at which at any particular time its corporate trust
business shall be principally administered.
"Credit and Collection Policy" means (a) so long as no Successor
Servicer has been appointed, with respect to any Seller, its credit and
collection policies and practices relating to the Contracts and
Receivables of such Seller that are attached to the Pooling Agreement as
Exhibit G, as such credit and collection policies may be modified without
violating Section 6.3(b) of the Purchase Agreement or Section 7.2(f) of
the Pooling Agreement or (b) with respect
-4-
<PAGE>
to any Successor Servicer, its collection policies and practices with
respect to receivables like the Receivables.
"Cut-Off Date" means the last day of any Calculation Period.
"Daily Report" is defined in Section 3.5 of the Pooling Agreement.
"DCR" means Duff & Phelps Credit Rating Co.
"Definitive Certificates" means any Certificate.
"Dilution" means any reduction in the balance of a Receivable or
payment (whether by credit, check, wire transfer or otherwise) issued by
any Seller to an Obligor on account of discounts, incorrect billings,
credits, rebates, allowances, chargebacks, returned or repossessed goods,
allowances for early payments or any other reduction in the balance of a
Receivable for any other reason unrelated to the inability of the Obligor
to pay the Receivable. Dilution shall also include any shortfall in
Collections on the Unpaid Balance of a Receivable denominated in a
currency other than U.S. dollars as a result of an increase in the
exchange rate of such foreign currency for U.S. dollars from the date of
origination of such Receivable to the date of such Collection.
"Discount Rate" is defined in Section 2.2(c) of the Purchase
Agreement.
"Discretionary Returns" means the voluntary acceptance of a return
of merchandise from a Distributor to ICP not required by such
Distributor's Distributor Agreement, other than (i) Terminated Distributor
Returns (ii) returns pursuant to ICP's standard or extended limited
warranties on replacement and service parts and (iii) returns of defective
merchandise.
"Disposition" is defined in Section 9.3 of the Pooling Agreement.
"Distribution Date" means the 25th day of each calendar month (or,
if not a London/U.S. Business Day, the next London/U.S. Business Day).
"Distribution Period" means each period from one Distribution Date
to the next Distribution Date.
"Distributor" means a wholesale distributor who purchases from ICP
for the purpose of resale to independent contractors heating and air
conditioning products, accessories, parts, literature and sales
promotional materials.
"Distributor Agreement" means a written distribution sales
agreement between ICP and a wholesale distributor whereby the wholesale
distributor purchases from ICP for the purpose of resale to independent
contractors heating and air conditioning products, accessories, parts,
-5-
<PAGE>
literature, and sales promotional materials substantially in the form of
Exhibit H to the Pooling Agreement.
"Dollars" means dollars in lawful money of the United States of
America.
"Domestic Person" means any Person that has a place of business
located in the United States of America or Puerto Rico or otherwise is
subject to the jurisdiction of one or more civil courts of the United
States of America (other than solely by reason of contractual submission
to such jurisdiction).
"Domestic Subsidiary" means any direct or indirect Subsidiary of
ICP that: (a) is organized under the laws of a jurisdiction in the United
States of America (whether Federal or state), and (b) has both its chief
executive office and principal place of business located in the United
States of America.
"Early Amortization Event" means, with respect to any Series, any
event identified as an Early Amortization Event in the related Supplement.
"Early Amortization Period" is defined, for purposes of any
Series, in the related Supplement.
"Eligible Deposit Account" means (a) a segregated trust account
maintained at a bank with a long-term senior unsecured debt rating of at
least "A" (or, in the case of a Bank Account, at least "BBB") from S&P,
(b) a deposit account maintained with a bank that has an unsecured long-
term senior unsecured debt rating of at least "A", or a short-term rating
of at least "A-1", from S&P or (c) another deposit account as to which the
Modification Condition has been satisfied.
"Eligible Investments" means any of the following:
(a) negotiable instruments or securities represented by
instruments in registered or book-entry form which
evidence:
(i) obligations which have the benefit of the full
faith and credit of the United States of
America, including depository receipts issued by
a bank as custodian with respect to any such
instrument or security held by the custodian for
the benefit of the holder of such depository
receipt,
(ii) demand deposits or time deposits in, or bankers'
acceptances issued by, any depositary
institution or trust company incorporated under
the laws of the United States of America or any
state thereof and subject to supervision and
examination by Federal or state
-6-
<PAGE>
banking or depositary institution authorities,
provided that at the time of such investment or
contractual commitment to invest therein, the
certificates of deposit or short-term deposits,
if any, or long-term unsecured debt obligations
(other than any such obligation whose rating is
based on collateral or on the credit of a Person
other than such institution or trust company),
of such depositary institution or trust company
are rated A-1+ by S&P and (if such certificates
of deposit or short-term deposits are then rated
by DCR) D-1+ by DCR, in the case of the
certificates of deposit or short-term deposits,
or are rated AAA by S&P and (if such obligations
are then rated by DCR) AAA by DCR, in the case
of long-term unsecured debt obligations,
(iii) certificates of deposit which, at the
time of such investment or contractual
commitment to invest therein, are rated
A-1+ by S&P and (if such certificates
of deposit are then rated by DCR) D-1+
by DCR, or
(iv) freely redeemable shares in open-end money
market mutual funds (including such mutual funds
that are offered by the Person who is acting as
the Trustee or by any agent of such Person)
which (1) maintain a constant net-asset value,
(2) at the time of such investment have been
rated not less than "AAAm" by S&P and, if rated
by DCR, "AAA" by DCR, (3) have offering
materials which explicitly state that such fund
will not invest in derivative instruments or
enter into derivative contracts and (4) invest
solely in obligations, deposits, bankers'
acceptances, certificates of deposit, repurchase
agreements and commercial paper of the types
described in clauses (a)(i) through (a)(iii)
above and (b) through (e) below, without regard
to the limitation set forth in such clauses as
to the maturity of such obligations, deposits,
bankers' acceptances, certificates of deposit,
repurchase agreements or commercial paper;
(b) demand deposits in the name of Trustee in any depositary
institution or trust company referred to in clause
(a)(ii) above;
(c) commercial paper (having original or remaining maturities
of no more than 270 days) which, at the time of Trustee's
investment or contractual commitment to invest therein,
is rated A-1+ by S&P and (if such commercial paper is
then rated by DCR) D-1+ by DCR;
-7-
<PAGE>
(d) Eurodollar time deposits that are obligations of
institutions whose time deposits are rated AAA by S&P and
(if such time deposits are then rated by DCR) AAA by DCR;
(e) repurchase agreements involving any Eligible Investment
described in any of clauses (a)(i), (a)(iii) or (d)
above, so long as the other party to such repurchase
agreement is rated AAA by S&P and (if such party is then
rated by DCR) AAA by DCR; and
(f) the following:
(i) negotiable instruments or securities represented
by instruments in registered or book-entry form
which evidence:
(1) demand deposits or time deposits in, or
bankers' acceptances issued by, any
depositary institution or trust company
incorporated under the laws of the
United States of America or any state
thereof and subject to supervision and
examination by Federal or state banking
or depositary institution authorities,
provided that at the time of the
Trustee's investment or contractual
commitment to invest therein, the
certificates of deposit or short-term
deposits, if any (other than any such
obligation whose rating is based on
collateral or on the credit of a Person
other than such institution or trust
company), of such depositary
institution or trust company are rated
A-1 by S&P and (if such certificates of
deposit or short-term deposits are then
rated by DCR) D-1 by DCR, in the case
of certificates of deposit or short-
term deposits, or are rated A by S&P
and (if such obligations are then rated
by DCR) A by DCR, in the case of long-
term unsecured debt obligations,
(2) certificates of deposit which, at the
time of the Trustee's investment or
contractual commitment to invest
therein, are rated A-1 by S&P and (if
such certificates of deposit are then
rated by DCR) D-1 by DCR, or
(3) freely redeemable shares in open-end
money market mutual funds (including
such mutual funds that are offered by
the Person who is acting as the Trustee
or by any agent of such Person) which
(A) maintain a constant net-asset
value, (B) at the time of such
investment have been rated not less
than "Am" by S&P and, if rated by DCR,
"A" by DCR,
-8-
<PAGE>
(C) have offering materials which
explicitly state that such fund will
not invest in derivative instruments or
enter into derivative contracts and
(D) invest solely in obligations,
deposits, bankers' acceptances,
certificates of deposit, repurchase
agreements and commercial paper of the
types described in this clause (f),
without regard to the limitation set
forth in such clauses as to the
maturity of such obligations, deposits,
bankers' acceptances, certificates of
deposit, repurchase agreements or
commercial paper;
(ii) demand deposits in the name of the Trustee in
any depositary institution or trust company
referred to in clause (f)(i)(1) above; and
(iii) commercial paper (having original or remaining
maturities of no more than 270 days) which, at
the time of the Trustee's investment or
contractual commitment to invest therein, is
rated A-1 by S&P and (if such commercial paper
is then rated by DCR) D-1 by DCR;
provided that (x) funds on deposit in the Equalization
Account may not be invested in any Eligible Investment
described in clauses (f)(i) through (f)(iii) above,
(y) each investment described in clauses (f)(i) through
(f)(iii) above must have a maturity of 30 or fewer days
after the time of the investment therein by the Trustee,
and (z) the aggregate amount invested in all investments
which are described in any of clauses (f)(i) through
(f)(iii) above at any time may not exceed 20% of the
total funds on deposit in all Transaction Accounts at
such time; and
(g) any other type of investment which is expressly permitted
by each Required Person and each Rating Agency (as
confirmed in writing by each Required Person and each
Rating Agency).
provided, that any such Eligible Investment specified in clauses
(a) through (f) shall (x) have a predetermined fixed dollar
amount of principal due at maturity that cannot vary or change;
(y) if such Eligible Investment is rate by S&P, not have an "r"
highlighter affixed to such rating; and (z) if the interest rate
on such Eligible Investment is not fixed, such interest rate
shall be tied to a single interest rate index plus a single fixed
spread, if any, and shall move proportionately with such index.
"Eligible Obligor" means, for purposes of any Series (unless
otherwise specified in the related Supplement) at any time, an Obligor
that satisfies the following criteria (unless such
-9-
<PAGE>
Obligor is expressly approved as an Eligible Obligor by each Required
Person and each Rating Agency (as confirmed in writing by each Required
Person and each Rating Agency)):
(a) it is not (except as otherwise specified for any
Series in the related Supplement) a Governmental Authority;
(b) it is not a direct or indirect Subsidiary of or an
Affiliate of Inter-City Products Corporation, a Canadian
corporation, or any other entity with respect to which Inter-City
Products Corporation, a Canadian corporation, or any of its
Subsidiaries or Affiliates own, directly or indirectly, more than
20% of the entity's equity interests;
(c) with respect to which no Bankruptcy Event had
occurred and was continuing without respect to such 60 day grace
period contained in clause (a)(i) of the definition of
"Bankruptcy Event"; provided that this clause shall not apply if
a bankruptcy court has approved the Obligor's payment of its
obligations on the Receivables;
(d) as of the end of the most recent Calculation Period,
either (i) no more than 25% of all Receivables of the Obligor
were (for reasons other than legitimate disputes) aged more than
120 days past their respective original invoice dates or (ii) no
more than 10% of all Receivables of the Obligor were (for reasons
other than legitimate disputes) aged more than 180 days past
their respective original invoice dates;
(e) which, if a Distributor is a party to a valid,
binding and enforceable Distribution Agreement with ICP that is
in full force and effect;
(f) as of the end of the most recent Calculation Period,
none of the Receivables of the Obligor were evidenced by
promissory notes;
(g) it is not an Obligor with whom the applicable Seller
has a "cash in advance" or "cash on account" arrangement (but may
be an Obligor that the applicable Seller bills in advance in
accordance with that Seller's customary practices, and not on
account of concerns about the creditworthiness of the Obligor);
and
(h) it is not Fahnestock or an Affiliate of Fahnestock
to the extent that a substantial portion of such entity's
Receivables are derived pursuant to floor plan financing
activities.
"Eligible Receivable" means, for purposes of any Series (unless
otherwise specified in the related Supplement) at any time, a Receivable:
(a) that arises from the sale of goods or services by a
Seller in the ordinary course of its business; provided that such
Receivable (i) is not an Excluded International
-10-
<PAGE>
Receivable, or (ii) does not arise out of brokerage services
rendered by Heaven Engineering, a division of General;
(b) that represents a bona fide obligation resulting
from a sale of goods that have been shipped or services that have
been performed and is (i) an Extended Term Receivable or (ii) due
and payable not more than 61 days after the date on which the
invoice for services or merchandise, the sale of which gave rise
to such Receivable, is provided or delivered;
(c) that, as of that time, is not aged more than 90 days
past its original due date;
(d) that constitutes an account or a general intangible
for the payment of money and not an instrument or chattel paper;
(e) the Obligor of which is an Eligible Obligor;
(f) with regard to which both the representation and
warranty of Transferor in Section 2.3(a)(i) of the Pooling
Agreement and the representation and warranty of the relevant
Seller in Section 5.1(k) of the Purchase Agreement are true and
correct;
(g) the transfer of which (including the sale by the
applicable Seller to Transferor and the transfer by Transferor to
the Trust) does not contravene or conflict with any law, rule or
regulation or any contractual or other restriction, limitation or
encumbrance that applies to the applicable Seller, Transferor or
the Trust, and the sale, assignment or transfer of which, and the
granting of a security interest in which, does not require the
consent of the Obligor thereof or any other Person, other than
any such consent that has been obtained and continues in full
force and effect;
(h) that, unless it is an Extended Term Receivable, is
non-interest bearing; provided that a Receivable shall not be
deemed to be interest-bearing solely as a result of the
applicable Seller's imposition of an interest or other charge on
any such Receivable that remains unpaid for some specified period
(but no interest charge or other charge shall be included in the
Unpaid Balance of a Receivable for purposes of calculating the
Base Amount);
(i) that arises under a Contract that has been duly
authorized and that, together with such Receivable, is in full
force and effect and constitutes the legal, valid and binding
obligation of the Obligor of such Receivable enforceable against
such Obligor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law;
-11-
<PAGE>
(j) that is not subject to any asserted reduction,
cancellation, or refund or any dispute, offset, counterclaim,
lien or defense whatsoever (including any Permitted Adverse Claim
or other potential reduction on account of any offsetting account
payable of Transferor or the applicable Seller to an Obligor or
funds of an Obligor held by Transferor or the Seller); provided
that a Receivable that is subject only in part to any of the
foregoing shall be an Eligible Receivable to the extent not
subject to reduction, cancellation, refund, dispute, offset,
counterclaim, lien or other defense;
(k) that, together with the Contract related thereto,
was created in accordance with, and conforms in all material
respects with, all applicable laws, rules, regulations, orders,
judgments, decrees and determinations of all courts and other
Governmental Authorities (whether Federal, state, local or
foreign) and including usury laws;
(l) that satisfies all applicable requirements of the
Credit and Collection Policy of the applicable Seller or, if
there is a Successor Servicer, the Successor Servicer and that
arises from a line of business in which such Seller was engaged
on the First Issuance Date;
(m) that has not been compromised, adjusted, satisfied,
subordinated, rescinded or modified (including by extension of
time or payment or the granting of any discounts, allowances or
credits), except as permitted by Section 7.2(f) of the Pooling
Agreement; and
(n) if such Receivable is payable to a Person who becomes
a Seller after the First Issuance Date, such Receivable satisfies
the conditions specified in Section 1.7 of the Receivables
Purchase Agreement.
"Eligible Servicer" means (a) the Initial Servicer, (b) Trustee
or (c) an entity that, at the time of its appointment as Servicer, (i) is
servicing a portfolio of trade receivables, (ii) is legally qualified and
has the capacity to service the Receivables, (iii) has demonstrated the
ability to service professionally and competently a portfolio of trade
receivables similar to the Receivables in accordance with high standards
of skill and care, (iv) is qualified to use the software that is then
being used to service the Receivables or obtains the right to use such
software or has its own software that is adequate to perform its duties
under the Pooling Agreement and (v) as to which the Modification Condition
has been satisfied.
"Equalization Account" is defined in Section 4.2 of the Pooling
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Estimated Base Amount" is defined in Section 3.5 of the Pooling
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934.
-12-
<PAGE>
"Excluded International Receivable" means, (i) an International
Receivable designated as such by the Agent if (a) ICP has given written
notice to the Agent that the level of Excess Foreign Obligor Balances is
unacceptably high to ICP, (b) ICP uses its good faith effort to reduce the
level of Excess Foreign Obligor Balances for a period of 90 days after
such notice, and (c) after such 90-day period a level of Excess Foreign
Obligor Balances which is unacceptably high to ICP continues to exist;
provided that if the Agent fails to make such designation within 30 days
after such 90-day period, such designation shall be made by ICP up to an
amount not to exceed the Excess Foreign Obligor Balances at such time and
(ii) at the election of ICP, all International Receivables originated
after ICP gives the Agent notice of such election to include all
International Receivables as Excluded International Receivables.
"Extended Term Receivable" means a Commercial Stocking Receivable,
Cooling Preseason Receivable, Heating Preseason Receivable, FAST Parts
Receivable, Selected Extended Term Receivable or International Receivable.
"FAST Parts Receivable" means a Receivable that (i) arises from
a sale to a Distributor of parts for heating and air conditioning units
and (ii) a final due date that is no more than 170 days after the invoice
date.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any successor thereto or to the functions
thereof.
"Final Distribution Date" is defined in Section 12.2 of the
Pooling Agreement.
"Final Scheduled Payment Date" is defined, for purposes of any
Series, in the applicable Supplement.
"First Issuance Date" means July 25, 1996.
"GAAP" means United States of America generally accepted
accounting principles.
"General" means General Heating and Cooling Company, a Delaware
corporation and indirect wholly-owned Subsidiary of ICP.
"Governmental Authority" means the United States of America, any
state or other political subdivision thereof and any entity in the United
States of America or any applicable foreign jurisdiction that exercises
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government.
"Guaranty" means any agreement or arrangement by which any Person
directly or indirectly guarantees, endorses, agrees to purchase or
otherwise becomes contingently liable upon any liability of any other
Person (other than by endorsements of instruments in the course of
collection) or guarantees the payment of distributions upon the shares of
any other Person.
-13-
<PAGE>
"Heating Preseason Receivable" means a Receivable that (i) arises
from a sale to a Distributor of heating units with an invoice date between
July 1 and October 31, (ii) a final due date that is no more than 135 days
after the invoice date and (iii) is designated as such by Seller in
accordance with Seller's seasonal sale promotional policies which apply
to Distributors generally and which were in existence as of the Closing
Date.
"Highest Bid" means the highest cash purchase offer for a Series
received by Servicer pursuant to Section 12.1 of the Pooling Agreement.
"Holdback Account" is defined in Section 4.2 of the Pooling
Agreement.
"Holder" means the Person in whose name a Certificate is
registered in the Certificate Register at the time of determination.
"ICP" means Inter-City Products Corporation (USA), a Delaware
corporation.
"ICP Person" means ICP or any of its Affiliates.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent certified public accountant as to any
financial statement of the Initial Servicer or ICP, any qualification or
exception to such opinion or certification that is of a "going concern"
or similar nature.
"Indebtedness" of any Person means all of that Person's
obligations for borrowed money, obligations evidenced by bonds,
debentures, notes or other similar instruments, obligations as lessee
under leases that are required by GAAP to be recorded as capitalized
leases and obligations to pay the deferred purchase price of property or
services.
"Indemnified Losses" is defined in Section 7.3 of the Pooling
Agreement.
"Indemnified Party" is defined in Section 7.3 of the Pooling
Agreement.
"Initial Cut-Off Date" means the Business Day immediately
preceding the First Issuance Date.
"Initial Servicer" means Inter-City Products Corporation (USA),
a Delaware corporation.
"Intercreditor Agreement" means an intercreditor agreement, in
form and substance satisfactory to the Trustee and each Required Person,
between the Trustee and a secured creditor of a Seller.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended.
-14-
<PAGE>
"International Receivable" means a right of any Seller to payment,
whether constituting an account, chattel paper, instrument, general
intangible or otherwise, arising from the sale of goods, services or
future services by such Seller (and including the right to payment of any
interest or finance charges and other obligations with respect thereto)
owing from an entity (i) with its chief executive office outside of the
United States and Canada, (ii) that transacts a substantial portion of its
business and maintains a substantial portion of its fixed assets outside
the United States and Canada and (iii) which is not engaged primarily in
financing the operations of businesses within the United States and
Canada.
"Invested Amount" is defined, with respect to any Series, in the
related Supplement.
"Investor Certificateholder" means the Person in whose name an
Investor Certificate is registered in the Certificate Register at the time
of determination.
"Investor Certificates" means the Certificates issued pursuant to
any Supplement.
"Investor Exchange" is defined in Section 6.10(a) of the Pooling
Agreement.
"Issuance" is defined in Section 6.10(a) of the Pooling Agreement.
"Issuance Date" is defined in Section 6.10(b) of the Pooling
Agreement.
"Issuance Notice" is defined in Section 6.10(b) of the Pooling
Agreement.
"Lockbox Accounts" means the bank accounts, maintained at those
certain locations described in Schedule 1 to the Pooling Agreement, into
which Collections from Receivables are deposited, and any bank account
that is hereafter created in accordance with, and to perform the functions
contemplated for "Lockbox Accounts" in, Section 3.3 of the Pooling
Agreement.
"Lockbox Agreement" means any of the letter agreements delivered
in connection with the Pooling Agreement and any other letter agreement,
substantially in the form of Exhibit A to the Pooling Agreement (or such
other form as to which the Modification Condition is satisfied), among a
Lockbox Bank, one or more Sellers, Servicer and Trustee that relates to
one or more Lockbox Accounts, as they may be amended, supplemented or
otherwise modified from time to time.
"Lockbox Bank" means any of the banks at which one or more Lockbox
Accounts are maintained from time to time.
"Loss to Liquidation Ratio" means, as calculated in each Monthly
Report, a fraction (a) the numerator of which is the aggregate Unpaid
Balance of Receivables (net of recoveries) that were written off as
uncollectible or (without duplication) converted into promissory notes
during the three preceding Calculation Periods in accordance with the
Credit and Collection Policy, and
-15-
<PAGE>
(b) the denominator of which is the aggregate amount of Collections on the
Receivables received during such three Calculation Periods.
"Master Collection Account" is defined in Section 4.2 of the
Pooling Agreement.
"Material Adverse Effect" means, with respect to Transferor, any
ICP Person, any Servicer and any event or circumstance at any time, a
material adverse effect on (a) the ability of that Person to perform its
obligations under any Transaction Document or (b) the validity,
enforceability or collectibility of any Receivables, Related Assets or
Contracts; provided, that for the purpose of determining whether any
Adverse Claim or other event or circumstance results (or has a likelihood
of resulting) in a Material Adverse Effect, the effect of such event or
circumstance shall be considered in the aggregate with the effect of all
other Adverse Claims (including Permitted Adverse Claims) or other events
and circumstances occurring or existing at the time of such determination.
"Maximum Exposure Amount" shall be the lowest amount specified in
any Supplement as the "Maximum Exposure Amount."
"Modification Condition" means, with respect to any action, that
(a) each Rating Agency has confirmed in writing that such action will not
result in a reduction or withdrawal of the initial rating of any
outstanding Series that was rated by such Rating Agency and (b) each
Required Person has consented to such action in writing.
"Monthly Report" is defined in Section 3.5(d) of the Pooling
Agreement.
"Net Invested Amount" is defined, for purposes of any Series, in
the applicable Supplement.
"New Issuance" is defined in Section 6.10(a) of the Pooling
Agreement.
"Noncomplying Receivables and Dilution Adjustment" is defined in
Section 3.1(b) of the Purchase Agreement.
"Non-Recourse Claim" is defined in Section 11.3 of the Pooling
Agreement.
"Obligations" means (a) all obligations of Buyer, the Sellers and
the Servicer to the Trustee, the Trust, any other Indemnified Party, the
Investor Certificateholders and their respective successors, permitted
transferees and assigns, arising under or in connection with the
Transaction Documents, and (b) all obligations of a Seller to Buyer, any
other RPA Indemnified Party and their respective successors, transferees
and assigns, arising under or in connection with the Transaction
Documents, in each case howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, now or hereafter existing, or
due or to become due.
-16-
<PAGE>
"Obligor" means a Person obligated to make payments on a
Receivable.
"Officer's Certificate" means, unless otherwise specified in the
Pooling Agreement or in any Supplement, a certificate signed by an
Authorized Officer of Transferor or the Initial Servicer, as the case may
be, or, in the case of a Successor Servicer, a certificate signed by the
President, any Vice President, Assistant Treasurer or the financial
controller (or an officer holding an office with equivalent or more senior
responsibilities) of such Successor Servicer, that, in the case of any of
the foregoing, is delivered to Trustee.
"Opinion of Counsel" means a written opinion of counsel, who shall
be reasonably acceptable to Trustee and each Required Person and, if the
Rating Agencies are addressees, the Rating Agencies.
"Origination and Servicing Party" means any of each Seller, the
Servicer, each Sub-Servicer and Transferor.
"Paying Agent" means any paying agent appointed pursuant to
Section 6.6 of the Pooling Agreement and shall initially be Trustee.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Adverse Claims" means (a) ownership or security
interests arising under the Transaction Documents, (b) liens for taxes,
assessments or charges of any Governmental Authority (other than Tax or
ERISA Liens) and liens of landlords, carriers, warehousemen, mechanics and
materialmen imposed by law in the ordinary course of business, in each
case (i) for amounts not yet due or (ii) which are being contested in good
faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in
accordance with GAAP, provided that the aggregate amount secured by all
liens referred to in this clause (ii) does not exceed $250,000 (or for
purposes of any Series, any different amount that may be specified in the
applicable Supplement).
"Permitted Discretionary Returns" is defined in Section 3.2(k) of
the Pooling Agreement.
"Person" means an individual, partnership, limited liability
company, corporation (including a business trust), joint stock company,
trust, unincorporated association, joint venture, government or any agency
or political subdivision thereof or any other entity.
"Pooling Agreement" means the Pooling and Servicing Agreement,
dated as of the First Issuance Date, among Transferor, as transferor, the
Initial Servicer, as Servicer, and Trustee, as it may be amended,
supplemented or otherwise modified from time to time.
"Portfolio Collection Days" means, at any time, the product of (i)
30 and (ii) the quotient of (x) the sum of the Unpaid Balance of
Receivables as of the end of each of the three
-17-
<PAGE>
Calculation Periods ending on the most recent Cut-Off Date divided by (y)
the sum of the aggregate amounts payable pursuant to invoices giving rise
to Receivables generated by the Sellers during the three Calculation
Periods ending on the most recent Cut-Off Date.
"Principal Funding Account" is defined in Section 4.2 of the
Pooling Agreement.
"Private Holder" shall mean each holder of a right to receive
interest or principal with respect to a Certificate, other than
Certificates with respect to which an opinion is rendered that such
Certificates will be treated as debt for Federal income tax purposes, and
any holder of a right to receive any amount in respect of the Transferor
Certificate. A Person holding more than one interest in the Trust each
of which separately would cause such Person to be a Private Holder shall
be treated as a single Private Holder; a Private Holder that would be a
partnership, an S corporation or a grantor trust under the Internal
Revenue Code shall be treated as one or more Private Holders in accordance
with the provisions of Treasury Regulation Section 1.7704-1 or any
successor provision of law.
"Program" means the transactions contemplated in the Transaction
Documents.
"Publication Date" is defined in Section 9.3(a) of the Pooling
Agreement.
"Public Notice" means all financing statements (and continuation
statements or financing change statements with respect to such financing
statements where applicable), filings, notices and registrations and any
other instrument similar in effect, and all amendments or assignments of
any of the foregoing, relating to assignment or perfection of a security
interest meeting the requirements of applicable state, provincial,
territorial or other local law.
"Purchase" means each purchase of Receivables and Related Assets
by Transferor from a Seller under the Purchase Agreement.
"Purchase Agreement" means the Receivables Purchase Agreement,
dated as of the First Issuance Date, among the Sellers and Transferor, as
it may be amended, supplemented or otherwise modified from time to time.
"Purchase Discount Reserve Ratio" is defined in Section 2.2(b) of
the Purchase Agreement.
"Purchase Price" is defined in Section 2.1(b) of the Purchase
Agreement.
"Purchase Price Percentage" is defined in Section 2.2(a) of the
Purchase Agreement.
"Purchase Termination Date" means the date of occurrence of any
event referred to in Section 8.1 of the Purchase Agreement.
-18-
<PAGE>
"Purchased Assets" is defined in Section 1.1 of the Purchase
Agreement.
"Purchased Receivables" is defined in Section 1.1 of the Purchase
Agreement.
"Rating Agency" means each statistical rating agency, if any, that
at the request of ICP or Transferor has rated any then-issued and
outstanding Series of Investor Certificates.
"Receivable" means any right of any Seller to payment, whether
constituting an account, chattel paper, instrument, general intangible or
otherwise, arising from the sale of goods, services or future services by
such Seller (and including the right to payment of any interest or finance
charges and other obligations with respect thereto); provided that such
right to payment is not an Excluded International Receivable.
"Receivables Pool" means at any time all Receivables then held by
the Trust.
"Record Date" means the Business Day that is three Business Days
prior to a Distribution Date.
"Records" means all Contracts, purchase orders, invoices and other
agreements, documents, books, records and other media for the storage of
information (including tapes, disks, punch cards, computer programs and
databases and related property) maintained by Transferor, the Sellers or
Servicer with respect to the Transferred Assets and/or the related
Obligors.
"Recoveries" means all Collections received by the Trust in
respect of any Write-Off held by the Trust.
"Related Assets" is defined in Section 1.1 of the Purchase
Agreement.
"Related Contributed Assets" is defined in Section 1.8(b) of the
Purchase Agreement.
"Related Contributed Initial Assets" is defined in Section 1.8(a)
of the Purchase Agreement.
"Related Contributed Subsequent Assets" is defined in Section
1.8(b) of the Purchase Agreement.
"Related Person" means the Initial Servicer and each of its
Affiliates (other than Transferor).
"Related Purchased Assets" is defined in Section 1.1 of the
Purchase Agreement.
-19-
<PAGE>
"Related Security" means, with respect to any Receivable, (a) all
of the applicable Seller's right, title and interest in and to the goods,
if any, relating to the sale that gave rise to the Receivable, (b) all
other security interests or liens and property subject thereto from time
to time purporting to secure payment of the Receivable, whether pursuant
to the Contract related to the Receivable or otherwise, (c) all
merchandise (including returned merchandise), if any, relating to the sale
which gave rise to such Receivable for so long as such Receivable remains
outstanding or (in the case of returned merchandise) until the Seller has
complied with its obligations relating to any Seller Dilution Adjustment
arising in connection therewith, and (d) all letters of credit, guarantees
and other agreements or arrangements of whatever character from time to
time supporting or securing payment of the Receivable, whether pursuant
to the Contract related to the Receivable or otherwise.
"Related Transferred Assets" is defined in Section 2.1(a) of the
Pooling Agreement.
"Report Date" means the Business Day that is three Business Days
prior to a Distribution Date.
"Repurchase Amount" is defined in Section 12.4 of the Pooling
Agreement.
"Repurchase Distribution Date" is defined in Section 12.4 of the
Pooling Agreement.
"Required Investors" means Holders of Investor Certificates that
evidence at least 66-2/3% of the total outstanding principal amount of
Investor Certificates.
"Required Person" means each person designated as such pursuant
to any Supplement.
"Required Receivables" is defined, for purposes of any Series, in
the applicable Supplement.
"Required Series Holders" means with respect to any action to be
taken by Investor Certificateholders of any Series, unless otherwise
specified in the related Supplement, Investor Certificateholders that
evidence at least 66-2/3% of the principal amount of those Certificates.
"Responsible Officer" means, when used with respect to Trustee,
(a) any officer within the Corporate Trust Office (or any successor group
of Trustee), including any vice president, assistant vice president or any
officer or assistant trust officer of Trustee customarily performing
functions similar to those performed by the persons who hold the office
of vice president, assistant vice president, or assistant secretary and
(b) any other officer within the Corporate Trust Office with direct
responsibility for the administration of the Pooling Agreement or to whom
any corporate trust matter is referred at Trustee's Corporate Trust Office
because of his knowledge of and familiarity with the particular subject.
-20-
<PAGE>
"Revolving Period" means, with respect to any Series, the period
before the commencement of the earliest of any applicable amortization
period, accumulation period or early amortization period (other than a
prepayment accumulation period with respect to a partial prepayment of any
such Series) for any such Series; provided, that the Revolving Period for
any such Series shall be suspended during a prepayment accumulation period
with respect to a partial prepayment of any such Series.
"RPA Indemnified Losses" is defined in Section 9.1 of the Purchase
Agreement.
"RPA Indemnified Party" is defined in Section 9.1 of the Purchase
Agreement.
"S&P" means Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.
"Scoring Model" means an automated system of ICP, satisfactory to
the Agent, that is used to measure the creditworthiness of Distributors
by analyzing, among other things, each Distributor's balance sheets,
income statements, statements of cash flow and payment history, which
system shall be applied consistently among all Distributors by
incorporating uniform procedures.
"Securities Act" means the Securities Act of 1933, as amended.
"Selected Extended Term Receivable" means a Receivable (i) that
arises from a sale to a Distributor that is rated "20" or better under the
Servicer's Scoring Model, and (ii) that has a final due date that is no
more than 150 days after the invoice date.
"Seller" means each Person from time to time party to the Purchase
Agreement as a "Seller."
"Seller Assignment Certificate" means an assignment by a Seller,
substantially in the form of Exhibit B to the Purchase Agreement,
evidencing Transferor's acquisition of the Purchased Assets generated by
the Seller, as it may be amended, supplemented or otherwise modified from
time to time.
"Seller Change Event" is defined in Section 3.5(e) of the Pooling
Agreement.
"Seller Dilution Adjustment" is defined in Section 3.5(b) of the
Purchase Agreement.
"Seller Guaranty" means the Guaranty, dated as of the First
Issuance Date, by ICP of the Obligations of the other Sellers, as it may
be amended, supplemented or otherwise modified from time to time.
"Seller Maturity Date" is defined in Section 3.2 of the Purchase
Agreement.
-21-
<PAGE>
"Seller Noncomplying Receivable" means a Receivable that does not
meet the criteria set forth in the definition of Eligible Receivables.
"Seller Noncomplying Receivables Adjustment" is defined in Section
3.5(a) of the Purchase Agreement.
"Seller Noncomplying Receivables and Dilution Excess" is defined
in Section 3.1(c) of the Purchase Agreement.
"Seller Receivables Review" is defined in Section 6.1(c) of the
Purchase Agreement.
"Seller Transaction Documents" means the Purchase Agreement, the
Seller Assignment Certificates, the Account Agreements and the Seller
Guaranty.
"Senior Interest" is defined in each Buyer Note.
"Series" means any series of Investor Certificates issued pursuant
to Section 6.10 of the Pooling Agreement.
"Series Collection Allocation Percentage" means, for any Series,
at any time, the percentage equivalent of a fraction: (a) the numerator
of which is the Required Receivables for that Series and (b) the
denominator of which is the sum of the Required Receivables for all then
outstanding Series.
"Series Interest" is defined in Section 4.1 of the Pooling
Agreement.
"Series Loss Allocation Percentage" means, for any Series for
purposes of any Monthly Report, the percentage equivalent of a fraction:
(a) the numerator of which is the Invested Amount of that Series and (b)
the denominator of which is the sum of the Invested Amounts of all then
outstanding Series, in each case determined as of the beginning of the
related Calculation Period (or such other date as may be specified in the
related Supplement).
"Servicer" means at any time the Person then authorized pursuant
to Article III of the Pooling Agreement to service, administer and collect
Receivables and Related Transferred Assets.
"Servicer Default" is defined in Section 10.1 of the Pooling
Agreement.
"Service Transfer" is defined in Section 10.2(b) of the Pooling
Agreement.
"Servicing Fee" is defined in Section 3.4 of the Pooling
Agreement.
"Shared Investor Collections" means any funds identified as such
in any Supplement.
-22-
<PAGE>
"Shortfall" is defined, for any Series, in the related Supplement.
"Specified Assets" is defined in Section 1.1 of the Purchase
Agreement.
"Specified Receivables" is defined in Section 1.1 of the Purchase
Agreement.
"Subject Instruments" means any Certificates with respect to which
the Transferor shall not have received an Opinion of Counsel to the effect
that such Certificates will be treated as debt for Federal income tax
purposes.
"Sub-Servicer" is defined in Section 3.1 of the Pooling Agreement.
"Subsidiary" means, with respect to any Person, any corporation
of which more than 50% of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time capital stock of any
other class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency) is at the time directly or
indirectly owned by such Person.
"Successor Servicer" is defined in Section 10.2(a) of the Pooling
Agreement.
"Supplement" means each supplement to the Pooling Agreement
executed by Transferor, Servicer and Trustee to specify the terms of a
Series of Certificates, as the same may be amended, supplemented or
otherwise modified from time to time.
"Tax or ERISA Lien" means a lien arising under Section 6321 of the
Internal Revenue Code or Section 302(f) or 4068 of ERISA.
"Tax Opinion" means, with respect to any action, an Opinion of
Counsel to the effect that, for Federal and state income and franchise tax
purposes, (a) such action will not adversely affect the existing
characterization of the Investor Certificates of any outstanding Series
or class as debt or (if applicable) as interests in a partnership (that
is not a publicly traded partnership), (b) following such action the Trust
will not be treated as an association (or publicly traded partnership)
taxable as a corporation, (c) such action will not be treated as a taxable
event to any Investor Certificateholder or Certificate Owner and (d) in
the case of the original issuance of any Series or class of Investor
Certificates, unless specified otherwise in the applicable Supplement, the
Investor Certificates of the new Series or class will properly be
characterized as debt.
"Terminated Distributor Returns" means a return of merchandise
from a Distributor to a Seller due to the termination of such
Distributor's status as a Distributor.
"Termination Notice" is defined in Section 10.1 of the Pooling
Agreement.
"Transaction Accounts" is defined in Section 4.2 of the Pooling
Agreement.
-23-
<PAGE>
"Transaction Documents" means each Seller Transaction Document,
the Pooling Agreement, the Seller Guaranty, each Supplement, the
Certificate Purchase Agreements and the related Certificates, and each
other agreement designated as a Transaction Document in any Supplement,
as any of the same from time to time may be amended, supplemented, amended
and restated or otherwise modified in accordance with the terms thereof.
"Transfer Agent and Registrar" means any transfer agent and
registrar appointed pursuant to Section 6.3 of the Pooling Agreement and
shall initially be Trustee.
"Transferor" means Inter-City Products Receivables Company, L.P.,
a Tennessee limited partnership.
"Transferor Certificate" means a certificate substantially in the
form of Exhibit E to the Pooling Agreement, as described in Section 4.1
of the Pooling Agreement.
"Transferor Interest" is defined in Section 4.1 of the Pooling
Agreement.
"Transferor Retained Interest" means, on any date of
determination, the sum of the Transferor Interest and the interest in the
Trust represented by any Investor Certificates (regardless of Series or
class) owned or otherwise retained by the Transferor.
"Transferred Assets" is defined in Section 2.1 of the Pooling
Agreement.
"Trigger Event" is defined in Section 9.3(a) of the Pooling
Agreement.
"Trust" means the trust created by the Pooling Agreement, which
shall be known as the Inter-City Products Receivables Master Trust.
"Trust Asset Shortfall" means, as of any date of determination,
that the aggregate Required Receivables for all outstanding Series exceeds
the aggregate Unpaid Balance of Receivables held by the Trust on such
date.
"Trustee" means LaSalle National Bank, a national banking
association, in its capacity as agent for the Certificateholders, or its
successor-in-interest, or any successor trustee appointed as provided in
the Pooling Agreement.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the applicable jurisdiction or jurisdictions.
"Unmatured Early Amortization Event" means any event that, with
the giving of notice or lapse of time, or both, would become an Early
Amortization Event.
-24-
<PAGE>
"Unpaid Balance" of any Receivable means at any time the unpaid
amount thereof (excluding interest accrued for the period after the due
date of such Receivable and related service charges) as shown in the books
of Servicer at such time.
"Write-Off" means any Receivable that, consistent with the
applicable Credit and Collection Policy, has been written off as
uncollectible.
B. Other Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. To the extent that the
definitions of accounting terms in any Transaction Document are
inconsistent with the meanings of such terms under GAAP, the definitions
contained in such Transaction Document shall control.
C. Reference. The words "hereof", "herein" and "hereunder" and
words of similar import when used in any Transaction Document shall refer
to such Transaction Document as a whole and not to any particular
provision of such Transaction Document; and reference to "Section",
"subsection", "Schedule" and "Exhibit" in any Transaction Document are
references to Sections, subsections, Schedules and Exhibits in or to such
Transaction Document unless otherwise specified in such Transaction
Document .
D. Number and Gender. Each defined term used in the Transaction
Documents has a comparable meaning when used in its plural or singular
form. Each gender-specific term used in the Transaction Documents has a
comparable meaning whether used in a masculine, feminine or gender-neutral
form.
E. Including. Whenever the term "including" (whether or not that
term is followed by the phrase "but not limited to" or "without
limitation" or words of similar effect) is used in the Transaction
Documents in connection with a listing of items within a particular
classification, that listing will be interpreted to be illustrative only
and will not be interpreted as a limitation on, or exclusive listing of,
the items within that classification.
F. Taking Actions. Actions permitted under the Transaction
Documents may be taken at any time and from time to time in the actor's
sole discretion.
G. Reference to Statutes and Regulations. References to a
statute shall refer to such statute and any successor statute, and to all
regulations promulgated under or implementing the statute or successor,
as in effect at the relevant time. References to a regulation shall refer
to such regulation and any successor regulation, as in effect from time
to time.
H. Regulatory Bodies. References to a governmental or quasi-
governmental agency, authority or instrumentality shall also refer to a
regulatory body that succeeds to the functions of such agency, authority
or instrumentality.
-25-
<PAGE>
I. Time Periods. In computing periods from a specified date to
a later specified date, when precise times of day are not stated, the
words "from" and "commencing on" (and the like) mean "from and including,"
and the words "to," "until" and "ending on" (and the like) mean "to but
excluding."
J. Time of Day. Unless otherwise specified, indications of time
of day mean New York, New York time.
K. Interpretation of Standards. The parties acknowledge
that this Pooling Agreement and the other Transaction Documents contain
many determinations, standards and measurements which must be made or
applied by the Transferor and the Servicer in the process of performing
their obligations under this Agreement and the other Transaction
Documents, including the determination of whether Receivables constitute
Eligible Receivables, when or whether Dilutions, Write-offs or Early
Amortization Events have occurred, and many other matters. The Transferor
and the Servicer shall make or apply such determinations, standards and
measurements in good faith and using reasonable judgment, and the
Transferor and the Servicer shall bear the burden of proof in any dispute
with the Trustee or any Required Person regarding any such determinations,
standards or measurements.
L. "Or." The word "or" is not exclusive. Thus, "A or B" means
"A or B or both."
M. Agreements. References to any agreement, arrangement or other
document (including the Buyer Note) shall refer to such agreement,
arrangement or other document as the same may be amended, supplemented,
amended and restated, endorsed or otherwise modified from time to time,
together with any other agreement, arrangement or other document entered
into or executed in substitution therefor or renewal thereof in accordance
with the Transaction Documents.
N. Valuation of Foreign Currency Receivables. Amounts
payable with respect to any Receivable denominated in a currency other
than Dollars shall be calculated at the applicable exchange rate in effect
at the time of the origination of such Receivable, except that Collections
with respect to any such Receivable shall be calculated at the applicable
exchange rate in effect on the date on which such Collection is received.
-26-
<PAGE>
INTER-CITY PRODUCTS CORPORATION (USA)
SERIES 1996-1 SUPPLEMENT
to POOLING AND SERVICING AGREEMENT
dated as of July 25, 1996
among
INTER-CITY PRODUCTS RECEIVABLES COMPANY, L.P.,
as Transferor,
INTER-CITY PRODUCTS CORPORATION (USA),
as Servicer,
and
LASALLE NATIONAL BANK,
as Trustee
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; INCORPORATION OF TERMS
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Incorporation of Terms . . . . . . . . . . . . . .19
ARTICLE II
DESIGNATION
SECTION 2.1 Designation. . . . . . . . . . . . . . . . . . . .20
ARTICLE III
CONDITIONS TO ISSUANCE
SECTION 3.1 Conditions to Issuance . . . . . . . . . . . . . .20
ARTICLE IV
PAYMENTS AND ALLOCATIONS
SECTION 4.1 Interest; Additional Amounts . . . . . . . . . . .20
SECTION 4.2 Daily Calculations and Series Allocations. . . . .21
SECTION 4.3 Allocations of Daily Series Collections During
Revolving Period. . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 4.4 Allocations of Daily Series Collections (Other
than During the
Revolving Period). . . . . . . . . . . . . . . . . . .22
SECTION 4.5 Withdrawals from the Equalization Account. . . . .24
SECTION 4.6 Available Subordinated Amount. . . . . . . . . . .24
SECTION 4.7 Write-Offs and Recoveries. . . . . . . . . . . . .25
SECTION 4.8 Certain Dilution in an Amortization Period or
Early Amortization
Period . . . . . . . . . . . . . . . . . . . . . . . .26
SECTION 4.9 Pre-Closing Modification Notification. . . . . . .27
SECTION 4.10 Calculations of Reserves. . . . . . . . . . . . .27
SECTION 4.11 Investment of Funds in Transaction Accounts. . . .27
ARTICLE V
DISTRIBUTIONS AND REPORTS
SECTION 5.1 Distributions. . . . . . . . . . . . . . . . . . .28
SECTION 5.2 Payments in Respect of Transferor Certificate. . .29
SECTION 5.3 Daily Reports and Monthly Reports. . . . . . . . .30
SECTION 5.4 Annual Tax Information . . . . . . . . . . . . . .30
<PAGE>
SECTION 5.5 Periodic Perfection Certificate. . . . . . . . . .30
ARTICLE VI
EARLY AMORTIZATION EVENTS
SECTION 6.1 Early Amortization Events. . . . . . . . . . . . .31
SECTION 6.2 Early Amortization Period. . . . . . . . . . . . .33
ARTICLE VII
OPTIONAL REDEMPTION; INDEMNITIES
SECTION 7.1 Optional Redemption of Investor Interests. . . . .33
SECTION 7.2 Indemnification by Transferor. . . . . . . . . . .34
SECTION 7.3 Indemnification by Servicer. . . . . . . . . . . .35
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Governing Law. . . . . . . . . . . . . . . . . . .35
SECTION 8.2 Counterparts . . . . . . . . . . . . . . . . . . .35
SECTION 8.3 Severability of Provisions . . . . . . . . . . . .35
SECTION 8.4 Amendment, Waiver, Etc.. . . . . . . . . . . . . .35
SECTION 8.5 Trustee. . . . . . . . . . . . . . . . . . . . . .36
SECTION 8.6 Instructions in Writing. . . . . . . . . . . . . .36
SECTION 8.7 Rule 144A. . . . . . . . . . . . . . . . . . . . .36
SECTION 8.8 Supplemental Ratings Requirement . . . . . . . . .36
EXHIBITS
EXHIBIT A Part 1. Form of Class A Certificate
Part 2. Form of Class B Certificate
EXHIBIT B Form of Daily Report
Part 1. For Use other than in Early
Amortization Period
Part 2. For Use in Early Amortization Period
EXHIBIT C Form of Monthly Report
Part 1. For Use other than in Early
Amortization Period
Part 2. For Use in Early Amortization Period
EXHIBIT D Form of Seller Guaranty
<PAGE>
This SERIES 1996-1 SUPPLEMENT, dated as of July 25, 1996 (this
"Supplement"), is made among INTER-CITY PRODUCTS RECEIVABLES COMPANY,
L.P., a Tennessee limited partnership, as Transferor, INTER-CITY PRODUCTS
CORPORATION (USA), a Delaware corporation, as the Initial Servicer, and
LASALLE NATIONAL BANK, a national banking association, as Trustee.
Pursuant to the Pooling and Servicing Agreement, dated as of the
date hereof (as it may be amended, supplemented or otherwise modified from
time to time, and as supplemented hereby, the "Pooling Agreement"), among
Transferor, Servicer and Trustee, Transferor may from time to time issue,
and direct Trustee to authenticate, on behalf of the Trust, one or more
Series of Certificates representing undivided interests in the Transferred
Assets. Certain terms applicable to a Series are to be set forth in a
Supplement. This Supplement is a "Supplement" as that term is defined in
the Pooling Agreement.
Pursuant to this Supplement, Transferor and Trustee shall create
a Series of Certificates ("Series 1996-1") and specify certain of their
terms.
ARTICLE I
DEFINITIONS; INCORPORATION OF TERMS
SECTION 1.1 Definitions. (a) Capitalized terms used and not
otherwise defined herein are used as defined in Appendix A to the Pooling
Agreement. This Supplement shall be interpreted in accordance with the
conventions set forth in Part B of that Appendix A.
(b) Each reference in this Supplement to funds on deposit in the
Carrying Cost Account, the Equalization Account or the Principal Funding
Account (or similar phrase) refers only to funds in the administrative
sub-accounts of those Accounts that are allocated to Series 1996-1. Unless
the context otherwise requires, in this Supplement: (i) each reference to
a "Daily Report" or "Monthly Report" refers to a Daily Report or Monthly
Report for the Series 1996-1 Certificates; (ii) each reference to the
"Servicing Fee" refers to the Servicing Fee allocable to Series 1996-1;
(iii) each reference to the "Series Collection Allocation Percentage" or
the "Series Loss Allocation Percentage" refers to the Series Collection
Allocation Percentage or Series Loss Allocation Percentage for the Series
1996-1 Certificates; and (iv) each reference to the Transaction Documents
shall include a reference to the Certificate Purchase Agreements.
(c) Each capitalized term defined below relates only to the Series
1996-1 Certificates and to no other Series of Certificates. Whenever used
in this Supplement, the following words and phrases shall have the
following meanings:
<PAGE>
"ABR Tranche" means, during any Interest Period, and as the
context shall indicate, (i) any portion of the Class A Invested Amount
that, in accordance with the Class A Certificate Purchase Agreement,
accrues interest based on the Alternate Base Rate and (ii) if the Holder
of the Class B Certificates shall have given the notice specified in
Section 3.2 of the Class B Certificate Purchase Agreement (and for so long
as such notice continues in effect), the Class B Invested Amount.
"Additional Amounts" means all amounts payable to the Holders or
the Agent pursuant to the Certificate Purchase Agreements, including,
without limitation pursuant to Sections 2.2(c), 2.3(b), 4.2, 4.3, 4.5,
4.6, 9.10, and 10.5 of the Class A Certificate Purchase Agreement and
Sections 3.2, 3.3, 3.4, 3.5 and 8.5 of the Class B Certificate Purchase
Agreement; provided that "Additional Amounts" shall not include principal
or interest on the Series 1996-1 Certificates or Non-Usage Fees.
"Adjusted Eligible Receivables" means, on any Business Day, the
result of (a) the aggregate Unpaid Balance of Eligible Receivables, minus
(b) the Unapplied Cash, plus (c) the Aggregate Retained Balances, minus
(d) the sum of Excess Foreign Obligor Balances, Excess Foreign Currency
Receivables, Co-Op Advertising Reserves and Cash Discount Reserves, minus
(e) on or after April 1, 2001, all Extended Term Receivables arising on
or after such date in each case as reflected in the Daily Report for that
day.
"Aged Receivables Ratio" means, as calculated in each Monthly
Report as of the Cut-Off Date for the related Calculation Period, a
fraction (expressed as a percentage) having (a) a numerator that is the
sum of (i) the aggregate Unpaid Balance of Eligible Receivables (and
Receivables that would be Eligible Receivables but for clause (c) of the
definition of Eligible Receivables) that remained outstanding 151 to 180
days (except Receivables of General, for which the reference shall be to
61 to 90 days) after their respective original due dates, as determined
as of the Cut-Off Date for such Calculation Period, plus (ii) the
aggregate Unpaid Balance of Eligible Receivables (and Receivables that
would be Eligible Receivables but for clause (c) of the definition of
Eligible Receivables) that were written off as uncollectible during the
most recently ended Calculation Period and that, if not so written off,
would have been outstanding not more than 180 days (except Receivables of
General, for which the reference shall be to 90 days) after their
respective original due dates, as determined as of that Cut-Off Date, plus
(iii) the aggregate amount of unpaid credit memoranda issued by the
Servicer, to the extent that such unpaid credit memoranda have reduced the
aggregate balance of Eligible Receivables pursuant to clause (i), and (b)
a denominator that is the aggregate amount payable pursuant to invoices
giving rise to Eligible Receivables (and Receivables that would be
Eligible Receivables but for clause (c) of the definition of Eligible
Receivables) that were generated by the Sellers during the Calculation
Period that occurred seven Calculation Periods (except Eligible
Receivables of General, for which the reference shall be to three
Calculation Periods and except for Eligible Receivables of Coastline, for
which the reference shall be to six Calculation Periods) and prior to the
most recently ended Calculation Period, as determined as of the Cut-Off
Date for such prior Calculation Period;
-2-
<PAGE>
provided, however, that for purposes of calculating this ratio, any
unapplied credit memoranda shall be excluded.
"Agent" means The Chicago Corporation, a Delaware corporation, and
its successors and assigns.
"Aggregate Retained Balances" means, on any Business Day, the
aggregate of the balances retained in Lockbox Accounts or Concentration
Accounts for items in the process of collection but for which funds have
not been made available by the related Lockbox Bank or Concentration
Account Bank, provided that (i) no notice of insufficient funds or similar
situation shall exist with respect thereto; (ii) the Unpaid Balance of
Receivables shall have been reduced by an amount equal to such balances;
and (iii) the Obligor which remitted such funds shall have no Receivables
which have aged more than 120 days past their respective original invoice
dates.
"Alternate Base Rate" means, on any day, a fluctuating rate of
interest per annum equal to the highest of:
(a) the rate of interest announced, from time to time,
by the Trustee as its prime commercial rate for United States
dollar loans made in the United States for any day, and
(b) the Federal Funds Rate.
Any change in the interest rate resulting from a change in the prime
commercial rate announced by the Trustee shall become effective without
prior notice to Transferor or Servicer as of 12:01 a.m., New York City
time, on the Business Day on which each change in the prime commercial
rate is announced by the Trustee. The prime commercial rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged by the Trustee to any customer. The Trustee may make
commercial loans or other loans at rates of interest at, above or below
the prime commercial rate.
"Amortization Period" means the period (x) beginning on July 1,
2001, and (y) ending on the earlier of (i) the Expected Final Payment Date
and (ii) the date, if any, on which an Early Amortization Period
commences.
"Applicable Ratings Factor" means the Class A Ratings Factor or
the Class B Ratings Factor, as specified in each calculation where the
Applicable Ratings Factor is used.
"Applicable Receivables" is defined in Section 4.10.
"ASA Measuring Period" means, for any Cut-Off Date falling in an
Early Amortization Period, the Calculation Period ending on that Cut-Off
Date (or the portion thereof falling after
-3-
<PAGE>
the Early Amortization Calculation Date, in the case of the first Cut-Off
Date falling in the Early Amortization Period).
"Available Subordinated Amount" means, at any time during an Early
Amortization Period, the amount calculated pursuant to Section 4.6.
"Base Amount" means, on any Business Day, the result of the
following formula:
[NER x SCAP x (100%-CBRR)] - CASD - CCRR
where:
NER = the Net Eligible Receivables as
reported in the Daily Report for that
Business Day;
SCAP = the Series Collection Allocation
Percentage for that Business Day;
CBRR = the Class B Reserve Ratio in effect for
that Business Day;
CASD = the Class A Subordination Deficit for that
Business Day; and
CCRR = the Carrying Cost Receivables Reserve as
reported in the Daily Report for such
day.
"Carrying Cost Cash Required Amount" means, on any Business Day,
an amount equal to the Current Carrying Costs.
"Carrying Cost Receivables Reserve" means, on any Business Day,
the result of:
(a) the Current Carrying Costs; plus
(b) (i) the Class A Invested Amount, multiplied by
(ii) 1.5 multiplied by the weighted average of the interest rates
on Class A Certificates, multiplied by (iii) a fraction the
numerator of which is the product of two and the number of
Portfolio Collection Days and the denominator of which is 360;
plus
(c) (i) the Class B Invested Amount, multiplied by
(ii) 1.5 multiplied by the weighted average of the interest rates
on the Class B Certificates, multiplied by (iii) a fraction the
numerator of which is the product of two and the number of
Portfolio Collection Days and the denominator of which is 360;
plus
(d) (i) the Class A Stated Amount minus the Class A
Invested Amount, multiplied by (ii) the Non-Usage Fee Rate,
multiplied by (iii) a fraction the numerator of which is the
product of two and the number of Portfolio Collection Days and
the denominator of which is 360; plus
-4-
<PAGE>
(e) the product of (i) the Series Collection
Allocation Percentage at the close of business on the next
preceding Distribution Date, multiplied by (ii) the aggregate
Unpaid Balance of Receivables on the next preceding Distribution
Date, multiplied by (iii) 1%, multiplied by (iv) a fraction the
numerator of which is the product of two and the number of
Portfolio Collection Days and the denominator of which is 360;
minus
(f) the balance on deposit in the Carrying Cost
Account at the beginning of that Business Day.
"Cash Discount Credits" means, with respect to any period of time,
all cash discounts for prompt payment taken by Obligors with respect to
Eligible Receivables of ICP during such period.
"Cash Discount Reserves" means, on any day, 1.5% of the aggregate
Unpaid Balance of those Eligible Receivables of ICP for which cash
discounts for prompt payment are available.
"Certificate Purchase Agreements" means the Class A Certificate
Purchase Agreement and the Class B Certificate Purchase Agreement.
"Class A Certificate" is defined in Section 2.1. Each Class A
Certificate shall be substantially in the form of Part 1 of Exhibit A.
"Class A Certificate Purchase Agreement" means the Class A
Certificate Purchase Agreement dated as of the Closing Date among
Transferor, Servicer and the purchaser of the Class A Certificates. The
Class A Certificate Purchase Agreement is hereby designated a "Transaction
Document" for purposes of the Pooling Agreement.
"Class A Certificate Spread" means with respect to any Tranche of
the Class A Certificates, 1.20% per annum; provided that at any time that
an Unmatured Early Amortization Event or an Early Amortization Event has
occurred and is continuing, "Class A Certificate Spread" means with
respect to any Tranche of the Class A Certificates, 3.20% per annum.
"Class A Excess Concentration Balances" means, on any day and with
respect to all Obligors as a group, the minimum aggregate outstanding
balance of Eligible Receivables that do not satisfy all of the following
tests:
(i) no single Obligor may account for a percentage of
Adjusted Eligible Receivables greater than the Class A
Concentration Percentage multiplied by 35.0%;
(ii) no two Obligors together may account for a
percentage of Adjusted Eligible Receivables in excess of the
Class A Concentration Percentage multiplied by 50.0%;
-5-
<PAGE>
(iii) no six Obligors together may account for a
percentage of Adjusted Eligible Receivables in excess of the
Class A Concentration Percentage; and
(iv) no Obligor (other than the six Obligors with the
largest outstanding balances of Eligible Receivables after the
eliminations effected pursuant to clauses (i) to (iii) above) may
account for more than 10% of the Class A Concentration
Percentage;
where "Class A Concentration Percentage" means the Class A Reserve
Ratio minus the product of the average of the Dilution Ratios for the
period of 12 preceding Calculation Periods ending on the Cut-Off Date,
multiplied by the Dilution Horizon Variable for the Cut-Off Date.
Class A Excess Concentration Balances will be measured on each day during
each Distribution Period with respect to Obligors for such period. For
purposes of this definition, all Obligors that are Affiliates of each
other shall be treated as a single Obligor.
"Class A Incremental Concentration Balance" means at any time, the
excess, if any, of (i) the sum of the Class A Excess Concentration
Balances with respect to all Obligors over (ii) the sum of the Class B
Excess Concentration Balances with respect to all Obligors. The Class A
Incremental Concentration Balance will be measured on each day during each
Distribution Period.
"Class A Invested Amount" means, at any time, the sum of the
purchase prices paid for Class A Purchases made at or prior to that time,
reduced (but not below zero) by (a) the aggregate amount of all
distributions that have been made to the Holders of the Class A
Certificates on account of principal, and (b) the amount of all Investor
Write-Offs that have been applied to reduce the Class A Invested Amount
(net of Investor Allocable Recoveries and Investor Allocable Dilution
Adjustments that have been applied to reinstate the Class A Invested
Amount).
"Class A Purchases" means Purchases made in respect of Class A
Certificates pursuant to the Class A Certificate Purchase Agreement.
"Class A Ratings Factor" means 2.50.
"Class A Required Reserves" means, at any time, the product of (a)
the excess of the Net Eligible Receivables over the Class A Incremental
Concentration Balance multiplied by (b) the Class A Reserve Ratio
multiplied by (c) the Series Collection Allocation Percentage.
"Class A Reserve Ratio" means, during any Distribution Period, the
greatest of (a) 25%, (b) the Loss Reserve Ratio plus the Dilution Reserve
Ratio (each calculated using the Class A Ratings Factor), and (c) the Loss
Reserve Ratio (Z-value) plus the Dilution Reserve Ratio (Z-value) (each
calculated using the Class A Ratings Factor and the Class A Z-value), in
-6-
<PAGE>
each case as calculated in the Monthly Report required to be delivered on
the Report Date immediately prior to the start of that Distribution
Period, provided that during the period from the Closing Date to the first
Distribution Date thereafter, the Class A Reserve Ratio shall be 50.92%.
"Class A Restrictive Components" means on any Business Day, the
sum of (i) the Class A Incremental Concentration Balance and (ii) Included
Foreign Obligor Balances; provided that to the extent any Class B Excess
Concentration Balance exists as a result of taking into account any
Included Foreign Obligor Balance, such Included Foreign Obligor Balance
shall be excluded from the calculation of Class A Restrictive Components.
"Class A Stated Amount" means as to any Class A Certificate, the
initial maximum principal amount that may be required to be funded by the
Holder of such Certificate, as such amount may be reduced pursuant to
Section 2.3 of the Certificate Purchase Agreement, which initial amount
in the aggregate is $60,000,000.
"Class A Subordination Deficit" means on any Business Day, the
positive result (if any) of
(a) the Class A Required Reserves, minus the Class
B Required Reserves, plus
(b) the Class A Restrictive Components, minus
(c) the Class B Invested Amount.
(all calculated as of the beginning of that Business Day); provided that
at any time when no Class A Certificates are outstanding the Class A
Subordination Deficit shall equal zero.
"Class A Z-value"means 2.58.
"Class B Certificate" is defined in Section 2.1. Each Class B
Certificate shall be substantially in the form of Part 2 of Exhibit A.
"Class B Certificate Purchase Agreement" means the Class B
Certificate Purchase Agreement dated as of the Closing Date among
Transferor, Servicer and the purchasers of the Class B Certificates. The
Class B Certificate Purchase Agreement is hereby designated a "Transaction
Document" for purposes of the Pooling Agreement.
"Class B Certificate Spread" means with respect the Class B
Certificates, 3.50% per annum; provided that at any time that an Unmatured
Early Amortization Event or an Early Amortization Event has occurred and
is continuing, "Class B Certificate Spread" means with respect to the
Class B Certificates 5.50% per annum.
-7-
<PAGE>
"Class B Excess Concentration Balances" means, on any day and with
respect to all Obligors as a group, the minimum aggregate outstanding
balance of Eligible Receivables that do not satisfy all of the following
tests:
(i) no single Obligor may account for a percentage of
Adjusted Eligible Receivables greater than the Class B
Concentration Percentage multiplied by 45.0%;
(ii) no two Obligors together may account for a
percentage of Adjusted Eligible Receivables in excess of the
Class B Concentration Percentage multiplied by 67.5%;
(iii) no four Obligors together may account for a
percentage of Adjusted Eligible Receivables in excess of the
Class B Concentration Percentage; and
(iv) no Obligor (other than the four Obligors with the
largest outstanding balances of Eligible Receivables after the
eliminations effected pursuant to clauses (i) to (iii) above) may
account for more than 12.5% of the Class B Concentration
Percentage;
where "Class B Concentration Percentage" means (i) the Class B
Reserve Ratio minus (ii) the product of the average of the Dilution Ratios
for the period of 12 preceding Calculation Periods ending on the Cut-Off
Date, multiplied by the Dilution Horizon Variable for the Cut-Off Date,
minus (iii) the quotient of (x) Included Foreign Obligor Balances divided
by (y) Adjusted Eligible Receivables.
Class B Excess Concentration Balances will be measured on each day during
each Distribution Period with respect to Obligors for such period. For
purposes of this definition, all Obligors that are Affiliates of each
other shall be treated as a single Obligor.
"Class B Invested Amount" means, at any time, the sum of the
purchase prices paid for Class B Purchases made at or prior to that time
divided by 99.45%, reduced (but not below zero) by (a) the aggregate
amount of all distributions that have been made to the Holders of the
Class B Certificates on account of principal, and (b) the amount of all
Investor Write-Offs that have been applied to reduce the Class B Invested
Amount (net of Investor Allocable Recoveries and Investor Allocable
Dilution Adjustments that have been applied to reinstate the Class B
Invested Amount).
"Class B Purchases" means Purchases made in respect of Class B
Certificates pursuant to the Class B Certificate Purchase Agreement.
"Class B Ratings Factor" means 2.0.
"Class B Required Reserves" means, at any time, the product of (a)
the Net Eligible Receivables multiplied by (b) the Class B Reserve Ratio
multiplied by (c) the Series Collection Allocation Percentage.
-8-
<PAGE>
"Class B Reserve Ratio" means, during any Distribution Period, the
greatest of (a) 18%, (b) the Loss Reserve Ratio plus the Dilution Reserve
Ratio (each calculated using the Class B Ratings Factor), and (c) the Loss
Reserve Ratio (Z-value) plus the Dilution Reserve Ratio (Z-value) (each
calculated using the Class B Ratings Factor and the Class B Z-value), in
each case as calculated in the Monthly Report required to be delivered on
the Report Date immediately prior to the start of that Distribution
Period, provided that during the period from the Closing Date to the first
Distribution Date thereafter, the Class B Reserve Ratio shall be 41.54%.
"Class B Z-value"means 1.96.
"Closing Date" means July 25, 1996.
"Co-Op Advertising Credits" mean cooperative advertising credits
granted by ICP, but only to the extent that (i) such credits are
calculated by means of a flat percentage of sales and require no further
action by Obligors to be earned and (ii) such credits are recorded as
credits concurrently with the sending of the related invoice.
"Co-Op Advertising Reserves" means, on any day, all outstanding
and unpaid Co-Op Advertising Credits in existence with respect to all
Eligible Receivables.
"Current Carrying Costs" means, on any Business Day during any
Distribution Period, the sum of (i) the amount of accrued and unpaid
interest on the Series 1996-1 Certificates through such Business Day, (ii)
the amount of additional interest that will be accrued and unpaid on the
Series 1996-1 Certificates through the last day of such Distribution
Period at the interest rates applicable to the Invested Amount as of such
Business Day, (iii) the amount of the Servicing Fee that will be payable
on the next Distribution Date, (iv) the amount of accrued and unpaid Non-
Usage Fees with respect to the Class A Certificates through such Business
Day, and (v) the amount of Non-Usage Fees that will accrue and be payable
on the next Distribution Date based on the current Stated Amount and
Invested Amount of the Class A Certificates.
"Daily Series Collections" is defined in Section 4.2.
"DCR" means Duff & Phelps Credit Rating Co.
"Designated Receivables" is defined in Section 4.10.
"Dilution Horizon Variable" means, at any time, a fraction having
(a) a numerator equal to the sum of the aggregate amounts payable pursuant
to invoices giving rise to Receivables and generated by the Sellers during
the three Calculation Periods ending on the most recent Cut-Off Date (as
of that Cut-Off Date) and (b) a denominator equal to the Net Eligible
Receivables as of the most recent Cut-Off Date.
-9-
<PAGE>
"Dilution Ratio" means, as calculated in each Monthly Report as
of the most recent Cut-Off Date, a fraction (expressed as a percentage)
having (a) a numerator equal to the aggregate amount of Dilution on the
Eligible Receivables occurring during the three Calculation Periods ending
on the most recent Cut-Off Date (except for Planned ICP Dilution), and (b)
a denominator equal to the aggregate amounts payable pursuant to invoices
giving rise to Eligible Receivables that were generated by the Seller
during the fifth, fourth and third preceding Calculation Periods (so that,
for example, if the Calculation Periods specified in clause (a)
corresponded to the April, May and June Calculation Periods, the
Calculation Periods in this clause (b) would be the ones corresponding to
the January, February and March Calculation Periods).
"Dilution Reserve Ratio" means, as calculated in each Monthly
Report, the result (expressed as a percentage) calculated in accordance
with the following formula:
{(ARF x ADR) + [(HDR-ADR) x (HDR/ADR)]} x DHV
where:
ADR = the average of the Dilution Ratios during the
period of 12 consecutive Calculation Periods
ending on the related Cut-Off Date;
ARF = the Applicable Ratings Factor;
DHV = the Dilution Horizon Variable; and
HDR = the highest Dilution Ratio as of the end of any
of the 12 consecutive Calculation Periods ending
on the related Cut-Off Date.
"Dilution Reserve Ratio (Z-value)" means, as calculated in each
Monthly Report, the result (expressed as a percentage) calculated in
accordance with the following formula:
[(ARF x ADR) + (Z-value x SD)] x DHV
where:
ADR = the average of the Dilution Ratios during the
period of 12 consecutive Calculation Periods
ending on the related Cut-Off Date.
ARF = the Applicable Ratings Factor.
DHV = the Dilution Horizon Variable.
SD = the sample standard deviation, during the period
of 12 consecutive Calculation Periods ending on
the related Cut-Off Date, of the Dilution Ratio.
"Early Amortization Calculation Date" means the day before an
Early Amortization Period begins.
-10-
<PAGE>
"Early Amortization Period" means the period beginning on the date
(if any) specified in Section 6.2 and ending on the day on which the
Invested Amount has been reduced to zero.
"Eurodollar Tranche" means, during any Interest Period, and as the
context shall indicate, (i) any portion of the Class A Invested Amount
that, in accordance with the Class A Certificate Purchase Agreement,
accrues interest based on LIBOR or (ii) unless the Holder of the Class B
Certificates shall have given the notice specified in Section 3.2 of the
Class B Certificate Purchase Agreement (and for so long as such notice
continues in effect), the Class B Invested Amount.
"Excess Foreign Currency Receivables" means, on any day, the
positive result (if any), of the aggregate Unpaid Balance of Eligible
Receivables which are denominated and payable in currencies other than
Dollars, minus 0.5% of the aggregate Unpaid Balance of Eligible
Receivables.
"Excess Foreign Obligor Balances" means, on any day, without
duplication, the sum of (a) the positive result (if any), of the aggregate
Unpaid Balance of Eligible Receivables generated by Obligors (other than
ICP Canada) who are not Domestic Persons, minus 5% of the aggregate Unpaid
Balance of Eligible Receivables, plus (b) the positive result (if any),
of the aggregate Unpaid Balance of Eligible Receivables generated by any
single Obligor who is not a Domestic Person, minus 1% of the aggregate
Unpaid Balance of Eligible Receivables, plus (c) the positive result (if
any), of the aggregate Unpaid Balance of Eligible Receivables generated
by Obligors who are located in countries whose Dollar denominated
obligations have a debt rating from S&P of less than "A" (or its
equivalent), minus 2% of the aggregate Unpaid Balance of Eligible
Receivables.
"Expected Final Payment Date" means the Distribution Date
occurring in September 2001.
"Federal Funds Rate" means (a) 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 for the day
(or, if the day is not a Business Day, the immediately preceding Business
Day) by the Federal Reserve Bank of New York; provided that if the rate
is not so published for any Business Day, the rate for purposes of this
clause will be the average of the quotations for the day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it, plus (b) 100 basis points.
"Final Scheduled Payment Date" means the Distribution Date
occurring in August 2002.
"First Issuance Date" means July 25, 1996.
-11-
<PAGE>
"Fully Funded Date" means the first date falling in the
Amortization Period or an Early Amortization Period on which there are
funds on deposit in the Carrying Cost Account and the Principal Funding
Account that, in the aggregate, equal or exceed the sum of (i) any
Servicing Fee payable to anyone other than a Related Person on the first
Distribution Date falling after that date, and (ii) the Investor Repayment
Amount.
"Guarantor" means ICP, in its capacity as the guarantor under the
Seller Guaranty.
"Holdback Account Termination Date" is defined in Section 4.4.
"Holder" means a Holder (as defined in the Pooling Agreement) of
a Class A Certificate or Class B Certificate.
"Included Foreign Obligor Balances" means, on any day, the result
of (i) the aggregate Unpaid Balance of Eligible Receivables generated by
Obligors (other than ICP Canada) who are not Domestic Persons minus (ii)
the Excess Foreign Obligor Balances.
"Interest Payment Date" means, (i) with respect to any ABR
Tranche, the date that is one month after the first day of such Tranche's
Interest Period (provided that if such day is not a London/U.S. Business
Day, the Interest Payment Date shall instead be the next London/U.S.
Business Day), or (ii) with respect to a Eurodollar Tranche, the date that
is one month after the first day of such Eurodollar Tranche's Interest
Period (provided that if such day is not a London/U.S. Business Day, the
Interest Payment Date shall instead be the next day that is a London/U.S.
Business Day, unless such day falls in the next calendar month, in which
case the Interest Payment Date shall instead be the next preceding day
that is a London/U.S. Business Day).
"Interest Period" means as to each Tranche (if any) from time to
time, each period from and including the date upon which that Tranche was
first designated as such pursuant to the Class A Certificate Purchase
Agreement (or the end of the preceding Interest Period for such Tranche,
if there has been one) to but excluding the date that is one month
thereafter; (provided, with respect to an Interest Period for a Eurodollar
Tranche, that if such day is not a London/U.S. Business Day, the Interest
Payment Date shall instead be the next day that is a London/U.S. Business
Day, unless such day falls in the next calendar month, in which case the
Interest Payment Date shall instead be the next preceding day that is a
London/U.S. Business Day).
"Invested Amount" means, at any time, the sum of the Class A
Invested Amount plus the Class B Invested Amount.
"Investor Allocable Dilution" means for any Calculation Period or
ASA Measuring Period, the product of the aggregate amount of Dilution for
that Calculation Period or ASA Measuring Period as to which neither the
applicable Seller nor the Guarantor has made any
-12-
<PAGE>
payment required by Section 3.1 of the Purchase Agreement or the Seller
Guaranty on account of Seller Dilution Adjustments multiplied by the
Series Loss Allocation Percentage as of the beginning of that Calculation
Period or ASA Measuring Period, multiplied by the Investor Allocation
Percentage as of the first Business Day of that Calculation Period or ASA
Measuring Period.
"Investor Allocable Dilution Adjustments" is defined in Section
4.8.
"Investor Allocable Loss Amount" means, for any ASA Measuring
Period, the product of the Loss Amount for that ASA Measuring Period,
multiplied by the Series Loss Allocation Percentage as of the beginning
of that ASA Measuring Period, multiplied by the Investor Allocation
Percentage as of the first Business Day of that ASA Measuring Period.
"Investor Allocable Recoveries" means, for any ASA Measuring
Period, the product of the Net Recoveries for that ASA Measuring Period,
multiplied by the Series Loss Allocation Percentage as of the beginning
of that ASA Measuring Period, multiplied by the Investor Allocation
Percentage as of the first Business Day of that ASA Measuring Period.
"Investor Allocation Percentage" means:
(x) on any Business Day falling in the Revolving Period,
a fraction (expressed as a percentage, which in any event may not
exceed 100%) (a) the numerator of which is the Net Invested
Amount as of that Business Day, and (b) the denominator of which
is the Base Amount as of that Business Day; and
(y) on any Business Day falling in the Amortization
Period or an Early Amortization Period, a fraction (expressed as
a percentage, which in any event may not exceed 100%) (a) the
numerator of which is the Net Invested Amount as of the first day
of the Amortization Period or the Early Amortization Calculation
Date, as applicable, and (b) the denominator of which is the Base
Amount as of the first day of the Amortization Period or the
Early Amortization Calculation Date, as applicable.
"Investor Repayment Amount" means, on any Business Day falling in
the Amortization Period or an Early Amortization Period, the sum of (a)
the outstanding principal amount of the Series 1996-1 Certificates, plus
(b) the interest and any Additional Amounts known to be payable on the
Series 1996-1 Certificates on the first Distribution Date falling after
that date, plus (c) an amount determined by the Trustee as reasonably
expected to constitute Additional Amounts but are not known to be payable
on the Series 1996-1 Certificates on the first Distribution Date falling
after that date.
"Investor Write-Offs" means, as calculated in any Monthly Report
relating to a Calculation Period falling completely or partially in an
Early Amortization Period:
-13-
<PAGE>
(a) if the Available Subordinated Amount is greater than
zero at the end of the related ASA Measuring Period, zero; and
(b) if the Available Subordinated Amount is zero at the
end of the related ASA Measuring Period (after taking into
account any reduction in the Available Subordinated Amount shown
in such Monthly Report), the excess (if any) of (x) the sum of
the Investor Allocable Loss Amount and the Investor Allocable
Dilution minus the sum of Investor Allocable Recoveries and
Investor Allocable Dilution Adjustments for the related ASA
Measuring Period, over (y) the Available Subordinated Amount as
of the beginning of that ASA Measuring Period.
"LIBOR" means, for any Interest Period, the quotient determined
by dividing (i) the one-month rate described on the Dow Jones Telerate
System, page 3750, as of 11:00 a.m. London time on the LIBOR Determination
Date, by (ii) a percentage equal to 100% minus the stated maximum rate of
all reserve requirements (including any marginal, emergency, supplemental,
special or other reserves) applicable on the LIBOR Determination Date to
any member bank of the Federal Reserve System in respect of "Eurocurrency
liabilities" as defined in Regulation D of the Federal Reserve Bank (or
any successor category of liabilities under Regulation D).
Notwithstanding the foregoing, in the event that such rate is not
provided, LIBOR shall mean the rate determined in accordance with the
following procedure:
(i) The Agent on the LIBOR Determination
Date will request the principal London offices of each of
four major reference banks in the London interbank
market, as selected by the Agent, to provide the Agent
with its offered quotation for deposits in United States
Dollars for the upcoming one-month period, commencing on
the second London Business Day immediately following such
LIBOR Determination Date, to prime banks in the London
interbank market at approximately 11:00 a.m. London time
on such LIBOR Determination Date and in a principal
amount that is representative for a single transaction in
United States Dollars in such market at such time. If at
least two such quotations are provided, LIBOR determined
on such LIBOR Determination Date will be the arithmetic
mean of such quotations.
(ii) If fewer than two quotations are
provided, LIBOR determined on such LIBOR Determination
Date will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m. in New York City on such LIBOR
Determination Date by three major banks in New York City
selected by the Agent for one-month United States Dollar
loans to leading European banks, in a principal amount
that is representative for a single transaction in United
States Dollars in such market at such time; provided,
however, that if the banks so selected by the Agent are
not quoting as mentioned in this sentence, LIBOR
determined on such LIBOR Determination Date will continue
to be LIBOR as then currently in effect on such LIBOR
Determination Date.
-14-
<PAGE>
"LIBOR Determination Date" means, for any Interest Period, the
date which is two London/U.S. Business Days prior to the date on which
such Interest Period begins.
"London Business Day" means any day on which dealings in deposits
in United States Dollars are transacted in the London interbank market.
"London/U.S. Business Day" means a day that is both a Business Day
and a London Business Day.
"Loss Amount" means, with respect to any ASA Measuring Period, an
amount equal to the positive difference (if any) of (a) the amount of
Receivables held by the Trust that became Write-Offs during that ASA
Measuring Period, minus (b) the amount of Recoveries received during that
ASA Measuring Period.
"Loss Reserve Ratio" means, as calculated in each Monthly Report,
the result (expressed as a percentage) of (a) the Applicable Ratings
Factor multiplied by (b) the highest average of the Aged Receivables Ratio
for any three consecutive Calculation Periods that occurred during the
preceding 12 consecutive Calculation Periods ending on the most recent
Cut-Off Date multiplied by (c) a fraction having (i) a numerator equal to
the sum of the aggregate amounts payable pursuant to invoices giving rise
to Receivables generated by the Sellers during the five Calculation
Periods ending on the most recent Cut-Off Date, and (ii) a denominator
equal to the Net Eligible Receivables, as of the most recent Cut-Off Date,
multiplied by (d) one plus the Remaining Payment Term Adjustment.
"Loss Reserve Ratio (Z-value)" means, as calculated in each
Monthly Report, the result (expressed as a percentage) of (a) the Loss
Reserve Ratio plus (b) the product of the Z-value multiplied by the sample
standard deviation of the Aged Receivables Ratio during the preceding 12
consecutive Calculation Periods ending on the most recent Cut-Off Date.
"Maximum Exposure Amount" means, as of any Business Day, the
positive result (if any) of (a) the product of (i) the Pro Forma Eligible
Receivables, multiplied by (ii) the result (expressed as a decimal) of
100% minus the Pro Forma Reserve Ratio, minus (b) the Net Invested Amount.
"Net Eligible Receivables" means, at any time, (a) the Adjusted
Eligible Receivables, minus (b) the then aggregate amount of all Class B
Excess Concentration Balances with respect to all Obligors.
"Net Invested Amount" means, on any Business Day, the Invested
Amount, reduced by the aggregate balance on deposit in the Equalization
Account and the Principal Funding Account.
-15-
<PAGE>
"Net Recoveries" means, with respect to any ASA Measuring Period,
an amount equal to the positive difference (if any) of (a) the amount of
Recoveries received in that ASA Measuring Period minus (b) the amount of
Receivables that became Write-Offs in that ASA Measuring Period.
"Non-Usage Fee Rate" means a per annum rate equal to 0.55%.
"Non-Usage Fees" means the fees payable to the Class A
Certificateholders as provided in Section 4.2(a) of the Class A
Certificate Purchase Agreement.
"Planned ICP Dilution" means, with respect to any period of time,
Dilution (i) arising as a result of Permitted Inventory Management Product
Returns or Permitted Terminated Distributor Returns occurring during such
period, (ii) constituting Co-Op Advertising Credits granted during such
period, or (iii) constituting Cash Discount Credits granted during such
period.
"Principal Payment Date" means (i) with respect to the Class A
Certificate during the Revolving Period, any date on which the Class A
Invested Amount is to be reduced pursuant to Section 3.1 of the Class A
Certificate Purchase Agreement, (ii) with respect to the Class A
Certificate during an Amortization Period or Early Amortization Period,
each Interest Payment Date falling in such Amortization Period or Early
Amortization Period and (iii) with respect to the Class B Certificate,
each Distribution Date falling in an Amortization Period or Early
Amortization Period.
"Pro Forma Eligible Receivables" means, at any time, (a) the
Adjusted Eligible Receivables, minus (b) the then aggregate amount of all
Pro Forma Excess Concentration Balances with respect to all Obligors.
"Pro Forma Excess Concentration Balances" means, on any day and
with respect to all Obligors as a group, the minimum aggregate outstanding
balance of Eligible Receivables that do not satisfy all of the following
tests:
(i) no single Obligor may account for a percentage of
Adjusted Eligible Receivables greater than the Pro Forma Reserve
Ratio multiplied by 60.0%; and
(ii) no three Obligors together may account for a
percentage of Adjusted Eligible Receivables in excess of the Pro
Forma Reserve Ratio; and
(iv) no Obligor (other than the two Obligors with the
largest outstanding balances of Eligible Receivables after the
eliminations effected pursuant to clauses (i) to (iii) above) may
account for a percentage of Adjusted Eligible Receivables that is
larger than the Obligor with the third largest balance of
Adjusted Eligible Receivables after then eliminations effected
pursuant to clauses (i) and (ii) above).
-16-
<PAGE>
Pro Forma Excess Concentration Balances will be measured on each day
during each Distribution Period with respect to Obligors for such period.
For purposes of this definition, all Obligors that are Affiliates of each
other shall be treated as a single Obligor.
"Pro Forma Ratings Factor" means 1.5.
"Pro Forma Reserve Ratio" means, on any Business Day, the greatest
of (a) 13.5%, (b) the Loss Reserve Ratio (calculated using the Pro Forma
Ratings Factor), and (c) the Loss Reserve Ratio (Z-value) (calculated
using the Class B Z-value).
"Rating Agency" means either of S&P and DCR.
"Remaining Payment Term" shall mean, as calculated in each Monthly
Report as of the most recently ended Cut-Off Date, with respect to any
Receivable, the number of days remaining between such Cut-Off Date and its
due date (such number not to be less than zero).
"Remaining Payment Term Adjustment" shall mean, as calculated in
each Monthly Report as of the most recently ended Cut-Off Date, the result
of (i) (A) (1) the aggregate Remaining Payment Term Weightings divided by
the aggregate Unpaid Balance of all Eligible Receivables as of such Cut-
Off Date minus (2) 60, divided by (B) 60, multiplied by (ii) 0.4.
"Remaining Payment Term Weightings" shall mean, as calculated in
each Monthly Report as of the most recently ended Cut-Off Date, with
respect to each Eligible Receivable, the product of (i) the Unpaid Balance
of such Receivable as of such Cut-Off Date multiplied by (ii) the
Remaining Payment Term with respect to such Receivable.
"Required Persons" means
(i) for the purposes of instructing the Trustee to
declare that the Early Amortization Period has commenced pursuant
to Section 6.2. either (x) Holders of Class A Certificates whose
aggregate Class Percentages (as defined in the Class A
Certificate Purchase Agreement) exceed 66_% or (y) Holders of
Class B Certificates whose aggregate Class Percentages (as
defined in the Class B Certificate Purchase Agreement) exceed
66_%; and
(ii) for all other purposes, the Agent.
"Required Receivables" means, on any Business Day:
(a) So long as an Early Amortization Period has not
commenced, the result of the following formula:
SIA + CCRR X R
(1 - CARR) NER
-17-
<PAGE>
where:
SIA = the Specified Invested Amount;
CCRR = the Carrying Cost Receivables Reserve, as
reported in the Daily Report for that
Business Day;
CARR = the Class A Reserve Ratio in effect for that
Business Day;
R = the aggregate Unpaid Balance of
Receivables held by the Trust as
reported in the Daily Report for that
Business Day; and
NER = the Net Eligible Receivables minus the
Class A Restrictive Components, each as
reported in the Daily Report for that
Business Day.
(b) If an Early Amortization Period has commenced, the
result of the following formula:
ASIA + ASA + UCCRR
where:
ASIA = the Adjusted Specified Invested Amount,
which shall be the Specified Invested
Amount on that Business Day (which
shall equal the Specified Invested
Amount, reduced (but not below zero) by
the amount of all Investor Write-Offs
(net of Investor Allocable Recoveries
and Investor Allocable Dilution
Adjustments that have been applied to
reinstate the Invested Amount));
ASA = the Available Subordinated Amount on
that Business Day; and
UCCRR = the Unfunded Carrying Cost Receivables Reserve
on that Business Day.
.
"Revolving Period" means the period beginning on the Closing Date
and ending on the day before the first day of the Amortization Period or
an Early Amortization Period.
"Series Allocable Dilution Adjustments" means, for any ASA
Measuring Period, the product of the aggregate amount of payments pursuant
to Section 3.1 of the Purchase Agreement or pursuant to the Seller
Guaranty received during that ASA Measuring Period relating to Dilution
that occurred prior to that ASA Measuring Period, multiplied by the Series
Loss Allocation Percentage as of the beginning of that ASA Measuring
Period.
"Series 1996-1" is defined in the preamble.
-18-
<PAGE>
"Series 1996-1 Certificates" means any of the Class A Certificates
and the Class B Certificates.
"Specified Invested Amount" means (i) during the Revolving Period,
the Invested Amount, and (ii) thereafter, the Invested Amount as of the
last day of the Revolving Period.
"Specified Reserves" is defined in Section 4.10.
"Stated Amount" means as to any Certificate, the initial maximum
principal amount that may be required to be funded by the Holder of such
Certificate, as such amount may be reduced pursuant to Section 2.3 of the
Series A Certificate Purchase Agreement.
"Tranche" means an ABR Tranche or a Eurodollar Tranche.
"Transferor Indemnified Losses" is defined in Section 7.2.
"Transferor Indemnified Party" is defined in Section 7.2.
"Transferor Payment Percentage" means, on any Business Day, the
difference of 100% minus the Investor Allocation Percentage on that
Business Day.
"Trustee One-Time Fees" means all amounts payable to the Trustee
pursuant to the last sentence of Section 10.2(b) of the Pooling Agreement
(if any).
"Unapplied Cash" means, on any Business Day, available funds
received in the Master Collection Account and reflected in the Daily
Report for that Business Day that have not been applied as Collections on
a particular Receivable on or prior to the time as of which that Daily
Report is prepared.
"Unfunded Carrying Cost Receivables Reserve" means, on any
Business Day falling in an Early Amortization Period, the difference (but
not less than zero) of (a) the Carrying Cost Receivables Reserve as of the
Early Amortization Calculation Date, minus (b) the aggregate Collections
deposited into the Carrying Cost Account during the portion of the Early
Amortization Period up to and including that Business Day.
"Unmatured Early Amortization Event" means an event or condition
that, upon the giving of notice or the passage of time, would become an
Early Amortization Event.
"Z-value" means the Class A Z-value or the Class B Z-value, as
specified in each calculation where the Z-value is used.
SECTION 1.2 Incorporation of Terms. The terms of the Pooling
Agreement are incorporated in this Supplement as if set forth in full
herein. As supplemented by this
-19-
<PAGE>
Supplement, the Pooling Agreement is in all respects ratified and
confirmed and both together shall be read, taken and construed as one and
the same agreement. If the terms of this Supplement and the terms of the
Pooling Agreement conflict, the terms of this Supplement shall control
with respect to the Series 1996-1 Certificates.
ARTICLE II
DESIGNATION
SECTION 2.1 Designation. There is hereby created a Series to be
known as the "Series 1996-1 Certificates," consisting of two classes: the
$60,000,000 Variable Rate Class A Trade Receivables Backed Certificates,
Series 1996-1 (the "Class A Certificates"); and the $10,000,000 Variable
Rate Class B Trade Receivables Backed Certificates, Series 1996-1 (the
"Class B Certificates"). Subject to the conditions set forth in Article
II, Trustee shall authenticate and deliver the Class A Certificates and
the Class B Certificates, to or upon the order of Transferor in the
aggregate principal amount indicated for each above.
ARTICLE III
CONDITIONS TO ISSUANCE
SECTION 3.1 Conditions to Issuance. Trustee will not authenticate
the Series 1996-1 Certificates unless all conditions to the issuance of
the Series 1996-1 Certificates under Section 6.10 of the Pooling Agreement
shall have been satisfied.
ARTICLE IV
PAYMENTS AND ALLOCATIONS
SECTION 4.1 Interest; Additional Amounts. (a) Subject to Section
4.1 of the Class A Certificate Purchase Agreement, Transferor may from
time to time allocate the outstanding principal amount under the Class A
Certificates to one ABR Tranche and up to three Eurodollar Tranches
(although the total number of tranches may not exceed three at any one
time). Interest on each Tranche shall be payable on the Interest Payment
Date applicable to such Tranche.
(b) Interest on a Eurodollar Tranche of the Class A Certificates
shall accrue during any Interest Period at a rate per annum equal to LIBOR
plus the applicable Class A Certificate Spread and shall be calculated on
the basis of actual days over a year of 360 days.
-20-
<PAGE>
(c) Interest on an ABR Tranche of the Class A Certificates shall
accrue during any Interest Period at the Alternate Base Rate in effect
from time to time plus the applicable Class A Certificate Spread and shall
be calculated on the basis of actual days over a year of 360 days.
(d) Interest on the Class B Certificates shall accrue during any
Distribution Period at a rate per annum equal to LIBOR plus the Class B
Certificate Spread and shall be calculated on the basis of actual days
over a year of 360 days.
(e) Interest with respect to the Series 1996-1 Certificates due
but not paid on any Distribution Date or the last day of an Interest
Period, as the case may be, will be due on demand with additional interest
on the amount at 2% per annum above the Alternate Base Rate to the extent
permitted by law (and such interest will be compounded daily); provided,
however, that Transferor may direct any such overdue interest (together
with such additional interest thereon) to be paid on any Business Day
prior to such next Distribution Date or last day of the next Distribution
Period from funds on deposit in the Carrying Cost Account.
(f) Non-Usage Fees shall be payable with respect to the Series
1996-1 Certificates at a daily rate equal to (i) the Non-Usage Fee Rate
multiplied by (ii) the remainder of (A) the Stated Amount minus (B) the
Class A Invested Amount on each day divided by (iii) 360.
(g) Trustee One-Time Fees shall also be payable with respect to
the Series 1996-1 Certificates as specified in the Pooling Agreement and
to the extent (but only to the extent) that funds become available for
such Trustee One-Time Fees in accordance with Sections 4.3 and 4.4.
(h) Additional Amounts shall also be payable with respect to the
Series 1996-1 Certificates as specified in the Certificate Purchase
Agreements and to the extent (but only to the extent) that funds become
available for such Additional Amounts in accordance with Sections 4.3 and
4.4.
SECTION 4.2 Daily Calculations and Series Allocations. On each
Business Day, Servicer shall calculate the Series Collection Allocation
Percentage for Series 1996-1 (and, if necessary for that calculation, the
Required Receivables), the Carrying Cost Cash Required Amount and, during
the Revolving Period and the Amortization Period, the Base Amount. On each
Business Day during the Revolving Period or the Amortization Period,
Servicer shall also determine whether the Net Invested Amount is greater
than, equal to or less than the Base Amount.
Pursuant to Section 4.3 of the Pooling Agreement, Servicer shall
allocate the Series Collection Allocation Percentage of available funds
received in the Master Collection Account since the preceding Business
Day's allocation to Series 1996-1. The portion of funds so
-21-
<PAGE>
allocated, together with any funds released from the Equalization Account
in accordance with Section 4.5 on that Business Day, are called the "Daily
Series Collections."
SECTION 4.3 Allocations of Daily Series Collections During
Revolving Period. On each Business Day falling in the Revolving Period,
Servicer shall allocate the Investor Allocation Percentage of the Daily
Series Collections to the following purposes, in the priority indicated
(and to the extent of Daily Series Collections available):
first, to the Carrying Cost Account until the amount
allocated to the Carrying Cost Account equals the Carrying Cost
Cash Required Amount;
second, if Transferor shall have notified the Required
Persons in accordance with Section 3.1 of the Class A Certificate
Purchase Agreement that it desires to reduce the Invested Amount,
to the Principal Funding Account until the funds on deposit in
that account equal the amount of such reduction;
third, if the Net Invested Amount is greater than the
Base Amount, to the Equalization Account in an amount sufficient
to reduce the Net Invested Amount to an amount equal to the Base
Amount;
fourth, to hold in the Master Collection Account the
amount necessary to pay on the next Distribution Date all Trustee
One-Time Fees payable to the Trustee; and
fifth, to hold in the Master Collection Account the
amount necessary to pay on the next Distribution Date all
Additional Amounts payable to the Holders.
On such Business Day, Servicer shall allocate the remainder of
Daily Collections to make current and/or deferred transfer payments to
Transferor in respect of the Transferor Certificate, provided that
Transferor may, from time to time, direct Servicer to direct Trustee to
hold all or part of the funds to be paid pursuant to this sentence in the
Master Collection Account to be applied as Daily Series Collections on the
following Business Day.
If, on any day, the amount of Collections that is then allocated
to the Carrying Cost Account exceeds the amount of Collections that is
then required to be allocated to the Carrying Cost Account, Servicer shall
reallocate such Collections on such day to one or more of the obligations
described in priorities second through fifth, and in the preceding
paragraph, in the order of priority set forth therein.
SECTION 4.4 Allocations of Daily Series Collections (Other than
During the Revolving Period). On each Business Day (i) not falling in the
Revolving Period and (ii) prior to or on the Fully Funded Date, Servicer
shall allocate the Daily Series Collections to the following purposes, in
the priority indicated (and to the extent of Daily Series Collections
available):
-22-
<PAGE>
first, to the Carrying Cost Account to the extent that
the balance therein is less than the amount of Current Carrying
Costs (other than any Servicing Fee payable to any ICP Person)
payable on the Distribution Date relating to the Calculation
Period during which such Business Day falls;
second, to the Principal Funding Account and to
Transferor (or, prior to the Holdback Account Termination Date,
to the Holdback Account) in the following amounts:
(a) the amount to be transferred to the
Principal Funding Account shall equal the product of (i)
the Investor Allocation Percentage, multiplied by (ii)
the excess of the Daily Series Collections over the
amount allocated on that Business Day pursuant to
priority first, provided that the aggregate amount so
transferred on such Business Day shall in no event exceed
the Net Invested Amount prior to such transfer; and
(b) the amount to be transferred to Transferor
(or, prior to the Holdback Account Termination Date, to
the Holdback Account) shall equal the product of (i) the
Transferor Payment Percentage, multiplied by (ii) the
excess of the Daily Series Collections over the amount
allocated on that Business Day pursuant to priority
first;
the amount allocated to the Principal
Funding Account pursuant to clause (a)
of this priority second shall be
divided as follows:
(1) first such amount shall
be allocated to the sub-account for the
Class A Certificates, but the amount
deposited in such sub-account shall in
no event cause the balance therein to
exceed the Class A Invested Amount; and
(2) any remaining amount
shall be allocated to the sub-account
for the Class B Certificates, but the
amount deposited in such sub-account
shall in no event cause the balance
therein to exceed the Class B Invested
Amount;
third, to hold in the Master Collection Account the
amount necessary to pay on the next Distribution Date all Trustee
One-Time Fees payable to the Trustee;
fourth, to hold in the Master Collection Account the
amount necessary to pay on the next Distribution Date all
Additional Amounts payable to the Holders;
fifth, to pay any Servicing Fee payable to any ICP Person
on the Distribution Date relating to the Calculation Period
during which such Business Day falls; and
-23-
<PAGE>
sixth, the balance to Transferor, provided that prior to
the Holdback Account Termination Date, amounts payable to
Transferor pursuant to this priority sixth shall be deposited
into the Holdback Account and held as provided below.
The "Holdback Account Termination Date" shall be the earlier to
occur of (i) the date that falls twelve months after the beginning of the
Early Amortization Period and (ii) the Fully Funded Date. If at any time
prior to the Holdback Account Termination Date, the amount of funds on
deposit in the Holdback Account exceeds the difference of (1) the Investor
Repayment Amount minus (2) the amount of funds then held in the Carrying
Cost Account and the Principal Funding Account that are available to pay
the Investor Repayment Amount, then the amount of such excess funds shall
be released from the Holdback Account and paid to Transferor as current
and/or deferred transfer payments. On the Holdback Account Termination
Date, Servicer shall calculate an amount equal to (x) the aggregate amount
of funds held in the Holdback Account, minus (y) the aggregate Investor
Allocable Dilution for the Early Amortization Period as to which no Series
Allocable Dilution Adjustments have been received. The amount of such
difference, if positive, will be first applied to any outstanding Current
Carrying Costs or Additional Amounts, and then the balance will be paid
to Transferor. The funds remaining in the Holdback Account after the
payment of such amount to Transferor shall be transferred to the Master
Collection Account and applied to the items listed in priorities first
through sixth above, in that order (except that no such funds shall be
allocated to Transferor or the Holdback Account pursuant to priority
second and the amount allocable to the Principal Funding Account shall
computed using an Investor Allocation Percentage of 100%).
SECTION 4.5 Withdrawals from the Equalization Account. On any
Business Day during the Revolving Period on which no Early Amortization
Event or Unmatured Early Amortization Event exists, Servicer may instruct
Trustee in writing to withdraw funds from the Equalization Account and
apply such funds as Daily Series Collections, so long as the Net Invested
Amount would not exceed the Base Amount after giving effect to such
transfer and application. On the first day of the Amortization Period or
an Early Amortization Period, Servicer shall instruct Trustee to transfer
the entire balance in the Equalization Account to the Principal Funding
Account.
SECTION 4.6 Available Subordinated Amount. (a) If an Early
Amortization Period begins, Servicer shall promptly calculate the
Available Subordinated Amount as of the Early Amortization Calculation
Date and report such amount in the Daily Report for the first day in the
Early Amortization Period. Servicer shall also calculate the Available
Subordinated Amount as of each Cut-Off Date falling in the Early
Amortization Period, such calculation to be reflected in the related
Monthly Report.
(b) The Available Subordinated Amount as of the Early
Amortization Calculation Date shall equal the product of (x) the Investor
Allocation Percentage, multiplied by (y) the result of:
-24-
<PAGE>
(i) the product of the Unpaid Balance of Receivables held
by Trustee at the opening of business on the Early Amortization
Calculation Date, multiplied by the Series Collection Allocation
Percentage on that date; minus
(ii) the sum of (i) the lesser of (A) the Base Amount and
(B) the Net Invested Amount and (ii) the Carrying Cost
Receivables Reserve at the opening of business on the Early
Amortization Calculation Date.
(c) The Available Subordinated Amount, as of any Cut-Off Date in
the Early Amortization Period, shall equal the result of:
(i) the Available Subordinated Amount as of the
preceding Cut-Off Date (or as of the Early Amortization
Calculation Date, in the case of the first Cut-Off Date falling
in the Early Amortization Period); minus
(ii) the Investor Allocable Loss Amount with respect to
the ASA Measuring Period ending on that Cut-Off Date; minus
(iii) any Investor Allocable Dilution with respect to
the ASA Measuring Period ending on that Cut-Off Date; plus
(iv) subject to Sections 4.7 and 4.8, the Investor
Allocable Recoveries and Investor Allocable Dilution Adjustments
with respect to the ASA Measuring Period ending on that Cut-Off
Date.
(d) Notwithstanding the foregoing, in no event shall the
Available Subordinated Amount at any time be less than zero or greater
than the initial Available Subordinated Amount calculated pursuant to
subsection (b).
SECTION 4.7 Write-Offs and Recoveries. (a) In each Monthly
Report required to be delivered during the Early Amortization Period,
Servicer shall calculate the Investor Write-Offs and the Investor
Allocable Recoveries for the most recently ended ASA Measuring Period.
(b) If the Investor Write-Offs calculated in any Monthly Report
exceed zero, the Invested Amount and the outstanding principal amount of
the Series 1996-1 Certificates shall be reduced by the amount of the
Investor Write-Offs with effect from the related Distribution Date. Any
such reduction shall be allocated to the Class B Invested Amount until the
Class B Invested Amount has been reduced to zero. Any remaining reduction
shall be allocated to the Class A Invested Amount.
(c) If the Invested Amount has been reduced on account of any
Investor Write-Offs, then any Investor Allocable Recoveries with respect
to any Calculation Period ending after the
-25-
<PAGE>
reduction takes place shall be applied to reinstate the Invested Amount
and the outstanding principal amount of the Series 1996-1 Certificates,
to the extent of such prior reductions that have not previously been
reinstated, with effect from the related Distribution Date. Any such
reinstatement shall be allocated to the Class A Invested Amount until all
prior reductions to the Class A Invested Amount on account of Investor
Write-Offs have been reinstated. Any remaining reinstatement shall be
allocated to the Class B Invested Amount.
(d) If Investor Allocable Recoveries applied pursuant to
subsection (c) above to reinstate the Invested Amount on any Distribution
Date, then Investor Allocable Recoveries shall be applied to increase the
Available Subordinated Amount on the same Distribution Date only to the
extent of the excess, if any, of the Investor Allocable Recoveries, minus
the amount of Investor Allocable Recoveries so applied to reinstate the
Invested Amount.
(e) The outstanding principal amount under the Class A
Certificates shall be reduced by any reduction, and increased by any
reinstatement, of the Class A Invested Amount pursuant to this Section 4.7
or Section 4.8, in the amount of such reduction or reinstatement. The
outstanding principal amount under the Class B Certificates shall be
reduced by any reduction, and increased by any reinstatement, of the Class
B Invested Amount pursuant to this Section 4.7 or Section 4.8, in the
amount of such reduction or reinstatement.
SECTION 4.8 Certain Dilution in an Amortization Period or Early
Amortization Period. (a) In each Monthly Report required to be delivered
during the Amortization Period or any Early Amortization Period, Servicer
shall calculate the Investor Allocable Dilution and the Series Allocable
Dilution Adjustments for the most recently ended Calculation Period or ASA
Measuring Period.
(b) If the Investor Allocable Dilution calculated in any Monthly
Report is greater than zero, and there are funds in the Holdback Account,
then those funds (up to an amount equal to the amount of the Investor
Allocable Dilution), shall be allocated (i) first, in accordance with
priority first of the first paragraph of Section 4.4, (ii) second, to the
Principal Funding Account (in accordance with priority second of the first
paragraph of Section 4.4), so long as the aggregate amount on deposit
therein does not exceed the Invested Amount and (iii) third, in accordance
with priorities third through sixth of the first paragraph of Section 4.4,
in that priority.
(c) If the Available Subordinated Amount or the Invested Amount
has been reduced on account of any Investor Allocable Dilution, then (i)
any Series Allocable Dilution Adjustments with respect to any Calculation
Period or ASA Measuring Period ending after the reduction takes place and
(ii) any additional funds deposited in the Holdback Account (the "Investor
Allocable Dilution Adjustments") shall be allocated (x) first, to
reinstate the Invested Amount and the outstanding principal amount of the
Series 1996-1 Certificates, and (y) second, to reinstate the Available
Subordinated Amount, in each case to the extent not previously reinstated.
Any amount so allocated on any day shall be allocated (i) first, in
accordance with priority first of Section 4.4, (ii) second, to the
Principal Funding Account, so long as the
-26-
<PAGE>
aggregate amount on deposit therein does not exceed the Invested Amount
and (iii) third, in accordance with priorities third through sixth of the
first paragraph of Section 4.4, in that priority.
SECTION 4.9 Pre-Closing Modification Notification. The Agent,
in its sole discretion, shall be entitled to deliver notice to the
Transferor prior to the initial Purchase under the Certificate Purchase
Agreements which shall have the following effect:
(a) the Interest Period for each Tranche shall end on the
Distribution Date next succeeding the day on which such Tranche is
designated;
(b) with respect to each Tranche for which the applicable
Interest Period does not commence on the first day of a Distribution
Period, interest will accrue at a rate equal to the rate upon which
interest would otherwise accrue pursuant to Section 4.1(c); and
(c) a fee (a "Minimum LIBOR Return Fee") would be payable to
the Purchasers on each Distribution Date equal to the product of (i) the
excess, if any, of (A) LIBOR over (B) such Purchaser's average return on
investments in cash or cash equivalents during the preceding Distribution
Period multiplied by (ii) the result of (A) the Stated Amount minus (B)
the weighted average Class A Invested Amount during such Distribution
Period.
SECTION 4.10 Calculations of Reserves. In calculating each of the
Co-Op Advertising Reserves, Cash Discount Reserves, Excess Foreign
Currency Receivables, and the amounts in each of the clauses of the
definition of Excess Foreign Obligor Balances(collectively, the "Specified
Reserves"), Servicer may (but is not required to) deduct from the
Receivables of each Obligor whose Receivables are included in the
calculation of that Specified Reserve (as to any Specified Reserve, the
"Applicable Receivables") an amount equal to any Class B Excess
Concentration Balance applicable to that Obligor. In addition, on each
Business Day Servicer may calculate the Specified Reserves in any order
that it chooses. After having calculated any particular Specified Reserve
on a Business Day, Servicer may designate one or more of the Applicable
Receivables for that Specified Reserve, with an aggregate Unpaid Balance
equal to the amount of that Specified Reserve (and for this purpose one
such Applicable Receivable may be so designated as to only the necessary
portion of its Unpaid Balance), as "Designated Receivables." Such
designation shall be made in an exhibit to the applicable Daily Report.
In calculating each of the remaining Specified Receivables on that
Business Day, each of the Designated Receivables shall be deemed not to
be Eligible Receivables.
SECTION 4.11 Investment of Funds in Transaction Accounts. Funds
invested in Eligible Investments in the Transaction Accounts in accordance
with Section 4.4 of the Pooling Agreement shall mature not later than: (i)
with respect to the Equalization Account, the Master Collection Account
and the Holdback Account, the next succeeding Distribution Date; and (ii)
with respect to the Principal Funding Account and the Carrying Cost
Account, the Interest Payment Date(s) on which such funds will be required
to be paid out in accordance with the then outstanding Tranches (so that,
for example, if two tranches are outstanding, funds up to the
-27-
<PAGE>
amounts required be repaid on the earlier Interest Payment Date shall be
invested with maturities not later than such Interest Payment Date and
funds in excess thereof may be invested with maturities not later than the
second Interest Payment Date).
ARTICLE V
DISTRIBUTIONS AND REPORTS
SECTION 5.1 Distributions. On each Interest Payment Date, Trustee
shall, in accordance with instructions set out in the applicable Daily
Report (following delivery within the time period required under Section
3.5(c) of the Pooling Agreement), distribute to the Holders of Class A
Certificates at or before 2:00 p.m., New York City time, all accrued and
unpaid interest on the Class A Certificates, and any additional interest
payable to the Holders of Class A Certificates pursuant to Section 4.1,
to the extent funds are available for such payment in the Carrying Cost
Account. In addition, on each Distribution Date and (with respect to
clause (b) below) each Principal Payment Date, Trustee shall, in
accordance with instructions set out in the applicable Daily Report
(following delivery within the time period required under Section 3.5(c)
of the Pooling Agreement), distribute to the Holders at or before 2:00
p.m., New York City time, the following amounts:
(a) Non-Usage Fees on the Class A Certificates and
accrued and unpaid interest on the Class B Certificates, and any
additional interest payable to the Holders of Class B
Certificates pursuant to Section 4.1, to the extent funds are
available for such payment in the Carrying Cost Account (and in
the event of any shortfall, the Holders of Class A Certificates
shall first be paid such Non-Usage Fees, and the Holders of Class
B Certificates shall second be paid such interest); provided that
if any interest which was due and payable to the Holders of Class
A Certificates on any Interest Payment Date preceding such
Distribution Date pursuant to the first sentence of this Section
5.1 has not yet been paid in full, then before any payments are
made to the Holders pursuant to this clause (a), all such overdue
interest shall first be paid to the Holders of Class A
Certificates;
(b) on each Principal Payment Date, all funds deposited
in the Principal Funding Account on or prior to the most recent
Cut-Off Date (but in no event in excess of the Invested Amount)
shall be distributed (subject to any applicable notification
period) in reduction of the Invested Amount; all such amounts on
deposit in the Principal Funding Account shall be paid to the
Holders of Class A Certificates until they have been paid or
provided for in full before any such amounts are paid to the
Holders of Class B Certificates;
(c) if, on the Expected Final Payment Date or any
Distribution Date falling in an Early Amortization Period, the
funds on deposit in the Carrying Cost Account (less any Servicing
Fee payable on that day to anyone other than an ICP Person) will
be
-28-
<PAGE>
equal to or greater than the Invested Amount (after giving effect
to the distribution required by subsection (b)), then an amount
equal to such remaining Invested Amount shall be withdrawn from
the Carrying Cost Account and distributed in reduction of the
Invested Amount; all such amounts withdrawn from the Carrying
Cost Account shall be paid to the Holders of Class A Certificates
until they have been paid or provided for in full before any such
amounts are paid to the Holders of Class B Certificates;
(d) any Trustee One-Time Fees payable to the Trustee to
the extent that funds have been allocated for those Trustee One-
Time Fees pursuant to priority fourth of Section 4.3 or priority
third of Section 4.4; and
(e) any Additional Amounts payable with respect to
Series 1996-1 Certificates to the extent that funds have been
allocated for those Additional Amounts pursuant to priority fifth
of Section 4.3 or priority fourth of Section 4.4 (and in the
event of any shortfall, Additional Amounts shall be paid first to
Holders of Class A Certificates (pro rata among such Holders
according to the Additional Amounts owed to each of them), and
second to Holders of Class B Certificates (pro rata among such
Holders according to the Additional Amounts owed to each of
them)).
On each Distribution Date, Trustee shall also, in accordance with
instructions set out in the applicable Daily Report (following delivery
within the time period required under Section 3.5(c) of the Pooling
Agreement), distribute at or before 2:00 p.m., New York City time, the
Servicing Fee (after having made the distributions specified in Section
5.1(a) herein) to the Servicer to the extent that funds are available for
that purpose in the Carrying Cost Account.
On any Business Day, Trustee shall, in accordance with
instructions set out in the applicable Daily Report (following delivery
within the time period required under Section 3.5(c) of the Pooling
Agreement), distribute to the Holders, at or before 2:00 p.m., New York
City time, overdue interest payable pursuant to Section 4.1(e) on such
Business Day, to the extent funds are available for such payment in the
Carrying Cost Account and such other fees (including Minimum LIBOR Return
Fees, Commitment Reduction Fees, Breakage Fees, Non-Usage Fees,
Administration Fees, Commitment Fees and Minimum Usage Fees) as shall be
due and owing on such day.
All distributions pursuant to this Section 5.1 shall be
distributed to the Holders in immediately available funds by wire
transfer.
SECTION 5.2 Payments in Respect of Transferor Certificate. On
each day on which funds are allocated pursuant to Sections 4.3 and 4.4
(and subject to the terms of Section 4.4 relating to the Holdback
Account), Trustee shall, in accordance with instructions set out in the
applicable Daily Report (following delivery within the time period
required under Section 3.5(c) of the Pooling Agreement), distribute to
Transferor, in respect of the Transferor Certificate, at or before 2:00
p.m., New York City time, all funds allocated for that purpose in
accordance with those Sections. In addition, after the Invested Amount
has been repaid in full
-29-
<PAGE>
and all interest and Additional Amounts owed to the Holders and the Agent
have been paid, any additional funds on deposit in the Carrying Cost
Account, the Equalization Account or the Principal Funding Account shall
similarly be paid to Transferor, at or before 2:00 p.m., New York City
time, in respect of the Transferor Certificate. Any funds paid to the
Transferor pursuant to this Section 5.2 shall be subject to any then-
current indemnity obligations of the Transferor pursuant to Section 7.2
of this Supplement, Section 7.3(a) of the Pooling Agreement, Section 10.5
of the Class A Certificate Purchase Agreement and Section 8.5 of the Class
B Certificate Purchase Agreement.
SECTION 5.3 Daily Reports and Monthly Reports. Each Daily Report
and Monthly Report shall be substantially in the applicable form set out
in Exhibit B or C or in such other form as may be satisfactory to Servicer
and Trustee and consistent with the terms of this Supplement and the
Pooling Agreement. Copies of each Monthly Report and, upon request, the
Daily Report shall be provided free of charge by the Servicer to the
Holders of Series 1996-1 Certificates.
SECTION 5.4 Annual Tax Information. On or before February 15 of
each calendar year, beginning with calendar year 1997, Servicer, on behalf
of Trustee, shall furnish or cause to be furnished to each Person who at
any time during the preceding calendar year was a Holder the information
for the preceding calendar year, or the applicable portion thereof during
which the Person was a Holder, as is required to be provided by an issuer
of indebtedness under the Internal Revenue Code to the holders of the
issuer's indebtedness and such other customary information as is necessary
to enable such Holders to prepare their federal income tax returns.
Notwithstanding anything to the contrary contained in this Agreement,
Trustee shall, to the extent required by applicable law, from time to time
furnish to the appropriate Persons a Form 1099-INT within the period
required by applicable law.
SECTION 5.5 Periodic Perfection Certificate. On or before March
15 of each calendar year, beginning with calendar year 1997, Servicer, on
behalf of Trustee, shall furnish or cause to be furnished to Trustee and
the Holders an Officer's Certificate setting forth a list of all changes
in (a) the name, identity or corporate structure of Transferor or any
Seller and (b) the chief executive office of Transferor or any Seller (or
in the place of business of Transferor or any Seller that has only one
place of business) that have taken place since the date of the Officer's
Certificate most recently delivered pursuant to this Section 5.5 (or since
the Closing Date, in the case of the first such Officer's Certificate to
be delivered), or indicating that no such events have taken place, and
stating in each case what filings of UCC financing statements, or
amendments thereto, relating to the Transaction Documents have been made
in connection with each such event (identifying the date and filing index
numbers for each). Any financing statement identified in such an Officer's
Certificate delivered to Trustee shall be deemed to have been identified
to Trustee in writing for purposes of subsection 11.1(c)(v) of the Pooling
Agreement. If any such new UCC financing statements are filed, Servicer
shall cause Trustee to be named as secured party (in the case of any
filing against Transferor) or assignee of the secured party (in the case
of any filing against a Seller).
-30-
<PAGE>
ARTICLE VI
EARLY AMORTIZATION EVENTS
SECTION 6.1 Early Amortization Events. Each of the following
shall constitute an "Early Amortization Event":
(a) any of the following shall occur;
(i) failure on the part of Transferor
or Servicer to make any payment of the principal
amount of or any interest on the Series 1996-1
Certificates when due, or to make any deposit
required by the terms of any Transaction
Document within one Business Day after the date
the deposit is required to be made, or to make
any other payment required by the terms of any
Transaction Document on or before three Business
Days after the date such payment is required to
be made; or
(ii) failure on the part of Servicer to
deliver a Daily Report within the time period
required under Section 3.5(c) of the Pooling
Agreement, and continuance of such failure for
three Business Days; provided that if the
Servicer shall have estimated the Base Amount in
the Daily Report for one or more days due to
adverse circumstances beyond its control (as
described in, and subject to the limitations in,
such Section 3.5(c)), then the three day grace
period specified in this clause (ii) shall be
reduced by the number of days on which the Base
Amount was estimated (of, if such number of days
exceeds three, shall be reduced to zero); or
(iii) failure on the part of the
Servicer to deliver a Monthly Report within the
time required under Section 3.5(d) of the
Pooling Agreement and the applicable Supplement,
and continuance of such failure for three
Business Days; or
(iv) failure on the part of Transferor,
Guarantor, Servicer or any Seller duly to
observe or perform Section 6.1(f), 6.1(h),
6.1(i), 6.1(j), 6.3(a), 6.3(b), 6.3(c), 6.3(e),
6.3(f) or 6.3(g) of the Purchase Agreement or
Section 7.2(c), 7.2(d), 7.2(e), 7.2(f), 7.2(h),
7.2(i), 7.2(j), 7.2(k), 7.2(m) or 7.2(o) of the
Pooling Agreement, which failure continues
unremedied for a period of five Business Days;
or
(v) failure on the part of Transferor,
Guarantor, Servicer or any Seller duly to
observe or perform any other covenant or
agreement set forth in any Transaction Document,
which failure continues unremedied for a period
of 30 days; or
-31-
<PAGE>
(vi) Guarantor gives notice of
termination of the Seller Guaranty;
(b) any representation or warranty made by a Seller in
subsection 5.1(d), 5.1(k), 5.1(n), 5.1(o) or 5.1(r) of the
Purchase Agreement or by Transferor in subsection 2.3(a)(i),
2.3(a)(ii) or 7.1(i) of the Pooling Agreement shall prove to have
been incorrect in any material respect when made, and continues
to be incorrect in any material respect for a period of five
Business Days, or any other representation or warranty made by
Transferor, Servicer or any Seller in any Transaction Document
shall prove to have been incorrect in any material respect when
made, and continues to be incorrect in any material respect for
a period of 30 days; provided that a mistake in the
representation of a Receivable as an Eligible Receivable or the
breach of a representation and warranty with respect to a
Receivable shall not constitute an Early Amortization Event
unless and until the applicable Seller has failed to make the
cash payments (if any) owed under Sections 3.1 of the Purchase
Agreement in respect of such mistake or breach (it being
understood that certain of such mistakes or breaches may result
in a non-cash adjustment under the Purchase Agreement);
(c) a Bankruptcy Event shall occur with respect to
Transferor, Servicer, Guarantor or any Seller, or Transferor
shall become unable, for any reason, to transfer Receivables or
other Transferred Assets to the Trust in accordance with the
provisions of this Agreement and the Pooling Agreement; provided
that if, at the time any event that would, with the passage of
time, become a Bankruptcy Event occurs as a result of a
bankruptcy proceeding being filed against Transferor or any
Seller, then, on and after the day on which the bankruptcy
proceeding is filed until the earlier to occur of the dismissal
of the proceeding and the Early Amortization Commencement Date,
Transferor shall not purchase Receivables and Related Assets from
the affected Seller or, if Transferor is the subject of the
proceeding, transfer Receivables and Related Transferred Assets
to the Trust;
(d) the Trust or Transferor shall be required to be
registered as an "investment company" under and within the
meaning of the Investment Company Act of 1940, as amended;
(e) the Net Invested Amount exceeds the Base Amount for
a period of two or more consecutive Business Days;
(f) a Servicer Default shall have occurred and shall not
have been remedied;
(g) ICP shall cease to own, directly or indirectly, 100%
of the equity interests of Transferor;
(h) the Internal Revenue Service or the PBGC files one
or more Tax or ERISA Liens against the assets of Transferor or
any Seller (including Receivables);
-32-
<PAGE>
(i) the cessation of, or the failure to create, a valid
first-priority perfected ownership or security interest in favor
of Trustee in the Receivables or the rights of Transferor under
the Purchase Agreement;
(j) the aggregate outstanding principal amount of the
Buyer Notes exceeds the Maximum Exposure Amount for five or more
consecutive Business Days; or
(k) any foreclosure or similar proceeding in respect of
any adverse claim on any Buyer Note or the Transferor's common
stock shall have been commenced; or title to any Buyer Note or
Transferor's common stock shall pass to the holders of such
adverse claim.
SECTION 6.2 Early Amortization Period. Upon the occurrence and
continuance of any Early Amortization Event described in subsections
6.1(c), (d), (i) or (j), an Early Amortization Period shall commence
without any notice or other action on the part of Trustee or the Series
1996-1 Certificateholders, immediately upon the occurrence of such Early
Amortization Event. On the tenth day after Transferor receives notice or
otherwise becomes aware of the occurrence of any Early Amortization Event
described in subsection 6.1(e), an Early Amortization Period shall
commence without any notice or other action on the part of Trustee or the
Series 1996-1 Certificateholders, unless waived by the Required Persons
(except that an Early Amortization Period shall commence immediately upon
notice thereof from Trustee or the Required Persons prior to the running
of such ten day period). Upon the occurrence and continuance of any other
Early Amortization Event, after the applicable grace period, if any, set
forth in such subsection, Trustee may (and, at the direction of the
Required Persons, shall) by notice then given in writing to Transferor and
Servicer, declare that an Early Amortization Period has commenced as of
the date of Transferor's receipt of the notice.
ARTICLE VII
OPTIONAL REDEMPTION; INDEMNITIES
SECTION 7.1 Optional Redemption of Investor Interests. On any
Distribution Date occurring during an Early Amortization Period with
respect to the Series 1996-1 Certificates on or after the date that the
Invested Amount is reduced to ten percent or less of the sum of the
initial Stated Amounts for the Certificates, Transferor shall have the
option to redeem the Series 1996-1 Series Interest. The purchase price
will be an amount equal to the Invested Amount plus accrued and unpaid
interest (and accrued and unpaid interest with respect to interest that
was due but not paid on any prior Distribution Date) through the day
preceding the Distribution Date at the applicable interest rates (as
specified in Section 4.1) for such Certificates plus the aggregate amount
by which the Invested Amount has been reduced on account of Investor
Write-Offs and Investor Allocable Dilution (and not subsequently
reinstated) plus any Additional Amounts then due. Upon the tender of the
outstanding Certificates of the Series by the Holders, Trustee shall
distribute the amounts, together with all
-33-
<PAGE>
funds on deposit in the Principal Funding Account that are allocable to
the Series 1996-1 Certificates, to the Holders of the Series on the next
Distribution Date in repayment of the principal amount and accrued and
unpaid interest owing to the Holders. Following any redemption, the
Holders of the Series shall have no further rights with respect to the
Receivables. In the event that Transferor fails for any reason to deposit
in the Principal Funding Account the aggregate purchase price for the
Series 1996-1 Certificates, payments shall continue to be made to the
Holders of the Series in accordance with the terms of the Pooling
Agreement and this Supplement.
SECTION 7.2 Indemnification by Transferor. Transferor hereby
agrees to indemnify the Trust, Trustee, each Holder of a Series 1996-1
Certificate and each of the successors, permitted transferees and assigns
of any such Person and all officers, directors, shareholders, controlling
Persons, employees, affiliates and agents of any of the foregoing (each
of the foregoing Persons individually being called a "Transferor
Indemnified Party"), forthwith on demand, from and against any and all
damages, losses, claims (whether on account of settlements or otherwise,
and whether or not the relevant Indemnified Party is a party to any action
or proceeding that gives rise to any Transferor Indemnified Losses (as
defined below)), judgments, liabilities and related reasonable costs and
expenses (including reasonable attorneys' fees and disbursements) (all of
the foregoing collectively being called "Transferor Indemnified Losses")
awarded against or incurred by any of them that arise out of or relate to
Transferor's performance of, or failure to perform, any of its obligations
under or in connection with any Transaction Document.
Notwithstanding the foregoing (and with respect to clause (ii)
below, without prejudice to the rights that the Trustee may have pursuant
to the other provisions of this Agreement or the provisions of any of the
other Transaction Documents), in no event shall any Transferor Indemnified
Party be indemnified against any Transferor Indemnified Losses (i)
resulting from gross negligence or willful misconduct on the part of such
Transferor Indemnified Party (or the gross negligence or willful
misconduct on the part of any of such Indemnified Party's officers,
directors, employees, affiliates or agents), (ii) to the extent the same
include Transferor Indemnified Losses in respect of Receivables and
reimbursement therefor that would constitute credit recourse to Transferor
for the amount of any Receivable or Related Transferred Asset not paid by
the related Obligor, (iii) to the extent such Indemnified Losses are or
result from lost profits (other than any prepayment premium or breakage
fee), or (iv) to the extent such Indemnified Losses are or result from
taxes asserted with respect to (A) distributions on the Investor
Certificates (other than any withholding taxes, if and to the extent that
(a) such withholding taxes should have been (but in fact were not)
withheld and paid over by the Trust to the relevant taxing authority, (b)
such taxing authority asserts a claim for such withholding taxes against
the Trust or the Transferor, and (c) the assets of the Trust are
insufficient to satisfy such claim at the time a final determination is
made that such withholding taxes are due and payable) and (B) federal or
other income taxes on or measured by the net income of such Indemnified
Party.
-34-
<PAGE>
If for any reason the indemnification provided in this section is
unavailable to a Transferor Indemnified Party or is insufficient to hold
a Transferor Indemnified Party harmless, then Transferor shall contribute
to the amount paid by such Transferor Indemnified Party as a result of any
loss, claim, damage or liability in such proportion as is appropriate to
reflect not only the relative benefits received by such Transferor
Indemnified Party on the one hand and Transferor on the other hand, but
also the relative fault (if any) of such Transferor Indemnified Party and
Transferor and any other relevant equitable considerations.
Notwithstanding any provisions contained in any Transaction
Document to the contrary, Transferor shall not, and shall not be obligated
to, pay any amount pursuant to this Section unless and to the extent that
the Transferor has funds available to pay such amounts or funds are
allocated thereafter to the Transferor pursuant to the penultimate
paragraph of Section 4.3 or priority sixth of Section 4.4 of this
Supplement. Any amount which Transferor does not pay pursuant to the
operation of the preceding sentence shall not constitute a claim (as
defined in Sec. 101 of the Bankruptcy Code) against or corporate obligation
of Transferor for any such insufficiency.
SECTION 7.3 Indemnification by Servicer. Servicer agrees that
each Holder of a Series 1996-1 Certificate shall be an "Indemnified Party"
for purposes of the Pooling Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Governing Law. THIS SUPPLEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
SECTION 8.2 Counterparts. This Supplement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original, and all of which together shall constitute one and the same
instrument.
SECTION 8.3 Severability of Provisions. If any one or more of the
provisions or terms of this Supplement shall for any reason whatsoever be
held invalid, then the unenforceable provision(s) or term(s) shall be
deemed severable from the remaining provisions or terms of this Supplement
and shall in no way affect the validity or enforceability of the other
provisions or terms of this Supplement.
SECTION 8.4 Amendment, Waiver, Etc. The provisions of this
Supplement may be amended, modified, or waived, subject to Section 13.1
of the Pooling Agreement, Section 10.1 of the Class A Certificate Purchase
Agreement and Section 7.1 of the Class B Certificate
-35-
<PAGE>
Purchase Agreement, from time to time by Servicer, Transferor, Trustee and
each Required Person by a written instrument signed by each of them,
without the consent of any Holders; provided, that such amendment,
modification or waiver shall have the effect specified in clauses (i),
(ii) or (iii) of the Pooling Agreement without obtaining the consent
specified in such clause.
SECTION 8.5 Trustee. Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplement or for or in respect of the recitals contained herein, all of
which recitals are made solely by Transferor and Servicer.
SECTION 8.6 Instructions in Writing. All instructions given by
Servicer to Trustee pursuant to this Supplement shall be in writing, and
may be included in a Daily Report or Monthly Report.
SECTION 8.7 Rule 144A. So long as any of the Series 1996-1
Certificates are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, Transferor shall, unless it becomes
subject to and complies with the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended, or rule 12g3-
2(b) thereunder, provide to any Holder of such restricted securities, or
to any prospective purchaser of such restricted securities designated by
a Holder, upon the request of such Holder or prospective purchaser, any
information required to be provided by Rule 144A(d)(4) under the Act.
SECTION 8.8 Supplemental Ratings Requirement. So long as any of
the Series 1996-1 Certificates are outstanding, if any provision of the
Purchase Agreement, the Pooling Agreement, this Supplement or the
Certificate Purchase Agreement requires a person or investment to have a
certain rating from S&P, and such person or investment is also rated by
DCR, such provision shall be read to also require a rating from DCR that
is equivalent to the required rating from S&P.
* * * * *
-36-
<PAGE>
IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused
this Supplement to be duly executed by their respective officers thereunto
duly authorized as of the day and year first above written.
INTER-CITY PRODUCTS RECEIVABLES
COMPANY, L.P., as Transferor
By: Inter-City Products
Partner Corporation
By:
Name: David Cain
Title: Senior Vice President
INTER-CITY PRODUCTS CORPORATION
(USA), as Servicer
By:
Name: David Cain
Title: Senior Vice President
LASALLE NATIONAL BANK, as Trustee
By:
Name:
Title:
<PAGE>
EXHIBIT A
<PAGE>
EXHIBIT A-Part I
to the Series 1996-1 Supplement
FORM OF
CLASS A, SERIES 1996-1 CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN
CONTRAVENTION OF THAT ACT. THIS CERTIFICATE WILL NOT BE ACCEPTED FOR
REGISTRATION OF TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY
TO THE REGISTRAR AND TRANSFER AGENT THAT THE RESTRICTIONS ON TRANSFER SET
FORTH IN THE POOLING AGREEMENT HAVE BEEN COMPLIED WITH.
INTER-CITY PRODUCTS TRADE RECEIVABLES BACKED CERTIFICATES
CLASS A SERIES 1996-1 CERTIFICATE
Maximum Principal Amount:
First Distribution Date: $_______________
THIS CERTIFIES THAT _________________ is the registered owner of
a nonassessable, fully-paid, fractional undivided interest in the Inter-
City Products Receivables Master Trust (the "Trust") that was created
pursuant to (a) the Pooling and Servicing Agreement, dated as of July 25,
1996 (as the same may be amended, supplemented or otherwise modified from
time to time, the "Pooling Agreement"), among Inter-City Products
Receivables Company, L.P., a Tennessee limited partnership,
("Transferor"), INTER-CITY PRODUCTS CORPORATION (USA), a Delaware
corporation, ("Servicer"), and LASALLE NATIONAL BANK, as trustee (together
with its successors and assigns in such capacity, "Trustee") and (b) the
Supplement dated as of the same date relating to the Series 1996-1
Certificates (the "Supplement"). This Certificate is one of the duly
authorized Series 1996-1 Certificates designated and issued under the
Pooling Agreement and the Supplement. Except as otherwise defined herein,
capitalized terms have the meanings that Appendix A to the Pooling
Agreement assigns to them. This Certificate is subject to the terms,
provisions and conditions of, and is entitled to the benefits afforded by,
the Pooling Agreement and the Supplement, to which terms, provisions and
conditions the Holder of this Certificate by virtue of the acceptance
hereof assents and by which the Holder is bound.
Unless the certificate of authentication hereon shall have been
executed by or on behalf of Trustee by the manual signature of a duly
authorized signatory, this Certificate shall not<PAGE>
entitle the Holder hereof to any benefit under the Transaction Documents
or be valid for any purpose.
This Certificate does not represent a recourse obligation of, or
an interest in, Transferor, any Seller, Servicer, Trustee or any Affiliate
of any of them. This Certificate is limited in right of payment to the
Transferred Assets.
By its acceptance of this Certificate, each Holder hereof (a)
acknowledges that it is the intent of Transferor, and agrees that it is
the intent of the Holder that, for purposes of Federal, applicable state
and local income and franchise and other taxes measured by or imposed on
income, the Class A, Series 1996-1 Certificates (including this
Certificate) will be treated as evidence of indebtedness secured by the
Transferred Assets and the Trust will not be characterized as an
association taxable as a corporation or a publicly-traded partnership, (b)
agrees that the provisions of the Transaction Documents shall be construed
to further that intent, and (c) agrees to treat this Certificate for
purposes of Federal, applicable state and local income and franchise and
other taxes measured by or imposed on income as indebtedness.
This Certificate shall be construed in accordance with the laws
of the State of New York, without regard to its conflict of laws
principles, and all obligations, rights and remedies under or arising in
connection with this Certificate shall be determined in accordance with
the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, Transferor has caused this Certificate to be
executed by its officer thereunto duly authorized.
INTER-CITY PRODUCTS RECEIVABLES COMPANY,
L.P.
By: Inter-City Products Partner
Corporation, its general partner
By:
Name:
Title:
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Series 1996-1 Certificates referred to in the
Pooling Agreement, as supplemented by the Supplement.
LASALLE NATIONAL BANK, as
Trustee
By:
Name:
Title:
Dated: ___________, 1996
<PAGE>
PURCHASES AND REPAYMENTS
Principal
Amount of Outstanding
Amount Purchase Principal Stated
Purchased Repaid Balance Amount
- --------- --------- ----------- ------
Distribution
Base LIBOR Period (if Base LIBOR Base LIBOR Reduction
Rate applicable) Rate Rate Net
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
<PAGE>
EXHIBIT A-Part II
to the Series 1996-1 Supplement
FORM OF
CLASS B SERIES 1996-1 CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN
CONTRAVENTION OF THAT ACT. THIS CERTIFICATE WILL NOT BE ACCEPTED FOR
REGISTRATION OF TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY
TO THE REGISTRAR AND TRANSFER AGENT THAT THE RESTRICTIONS ON TRANSFER SET
FORTH IN THE POOLING AGREEMENT HAVE BEEN COMPLIED WITH.
INTER-CITY PRODUCTS TRADE RECEIVABLES BACKED CERTIFICATES
CLASS B, SERIES 1996-1 CERTIFICATE
Maximum Principal Amount:
First Distribution Date: $_______________
THIS CERTIFIES THAT _________________ is the registered owner of
a nonassessable, fully-paid, fractional undivided interest in the Inter-
City Products Receivables Master Trust (the "Trust") that was created
pursuant to (a) the Pooling and Servicing Agreement, dated as of July 25,
1996 (as the same may be amended, supplemented or otherwise modified from
time to time, the "Pooling Agreement"), among Inter-City Products
Receivables Company, L.P., a Tennessee limited partnership,
("Transferor"), INTER-CITY PRODUCTS CORPORATION (USA), a Delaware
corporation, ("Servicer"), and LASALLE NATIONAL BANK, as trustee (together
with its successors and assigns in such capacity, "Trustee") and (b) the
Supplement dated as of the same date relating to the Series 1996-1
Certificates (the "Supplement"). This Certificate is one of the duly
authorized Series 1996-1 Certificates designated and issued under the
Pooling Agreement and the Supplement. Except as otherwise defined herein,
capitalized terms have the meanings that Appendix A to the Pooling
Agreement assigns to them. This Certificate is subject to the terms,
provisions and conditions of, and is entitled to the benefits afforded by,
the Pooling Agreement and the Supplement, to which terms, provisions and
conditions the Holder of this Certificate by virtue of the acceptance
hereof assents and by which the Holder is bound.
Unless the certificate of authentication hereon shall have been
executed by or on behalf of Trustee by the manual signature of a duly
authorized signatory, this Certificate shall not entitle the Holder hereof
to any benefit under the Transaction Documents or be valid for any
purpose.<PAGE>
This Certificate does not represent a recourse obligation of, or
an interest in, Transferor, any Seller, Servicer, Trustee or any Affiliate
of any of them. This Certificate is limited in right of payment to the
Transferred Assets.
By its acceptance of this Certificate, each Holder hereof (a)
acknowledges that it is the intent of Transferor, and agrees that it is
the intent of the Holder that, for purposes of Federal, applicable state
and local income and franchise and other taxes measured by or imposed on
income, the Class B, Series 1996-1 Certificates (including this
Certificate) will be treated as evidence of indebtedness secured by the
Transferred Assets and the Trust will not be characterized as an
association taxable as a corporation or a publicly-traded partnership, (b)
agrees that the provisions of the Transaction Documents shall be construed
to further that intent, and (c) agrees to treat this Certificate for
purposes of Federal, applicable state and local income and franchise and
other taxes measured by or imposed on income as indebtedness.
This Certificate shall be construed in accordance with the laws
of the State of New York, without regard to its conflict of laws
principles, and all obligations, rights and remedies under or arising in
connection with this Certificate shall be determined in accordance with
the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, Transferor has caused this Certificate to be
executed by its officer thereunto duly authorized.
INTER-CITY PRODUCTS RECEIVABLES
COMPANY, L.P.
By: Inter-City Products Partner
Corporation, its general partner
By: ____________________________________
Name:
________________________________
Title:
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Series 1996-1 Certificates referred to in the
Pooling Agreement, as supplemented by the Supplement.
LASALLE NATIONAL BANK, as Trustee
By:__________________________________
Name:
______________________________
Title:
Dated: ___________, 1996<PAGE>
EXHIBIT B OMITTED AS NOT MATERIAL
<PAGE>
EXHIBIT C OMITTED AS NOT MATERIAL
<PAGE>
EXHIBIT D
<PAGE>
Inter-City Products Corporation (USA)
EXHIBIT D
to Series 1996-1 Supplement
GUARANTY
THIS GUARANTY, dated as of July 25,1996 (this "Guaranty"), is
issued by INTER-CITY PRODUCTS CORPORATION (USA), a Delaware corporation
("Guarantor"), for the benefit of INTER-CITY PRODUCTS RECEIVABLES COMPANY,
L.P., a Tennessee limited partnership ("Buyer"), and its successors and
assigns.
Guarantor agrees as follows:
SECTION 1. Definitions. Capitalized terms used in this Guaranty,
unless otherwise defined herein, shall have the meaning set forth in
Appendix A to the Pooling and Servicing Agreement, dated as of the date
hereof (as it may be amended, supplemented or otherwise modified from time
to time, the "Pooling Agreement" among Buyer, Guarantor, as Servicer, and
LASALLE NATIONAL BANK, as Trustee.
SECTION 2. Guaranty. FOR VALUE RECEIVED, Guarantor hereby
unconditionally guarantees the full and prompt payment when due, whether
by acceleration or otherwise, and at all times thereafter, and the full
and prompt performance, of each Seller's (each, a "Guaranteed Party")
obligations, howsoever created, arising or evidenced, whether direct or
indirect, primary or secondary, absolute or contingent, joint or several,
now or hereafter existing or due or to become due, which arise out of or
in connection with any Seller Transaction Document other than this
Guaranty (all of such obligations being hereinafter collectively called
the "Liabilities"); provided that nothing contained herein shall be
deemed to constitute credit recourse for the payment of any Receivable;
provided further that to the extent (but solely to the extent) that
Guarantor's obligations under this Guaranty would breach, violate or
constitute an event of default under, that certain Indenture, dated as of
March 1, 1993, by and between Guarantor and United States Trust Company
of New York, as trustee (the "Indenture"), such obligations shall be
deemed void and unenforceable against Guarantor until such time as the
Indenture is terminated, at which time such obligations shall be. deemed
fully enforceable against Guarantor. Guarantor further agrees to pay all
expenses (including reasonable attorneys' fees and legal expenses) paid
or incurred by Buyer or its assigns in endeavoring to collect the
Liabilities, or any part thereof, and in enforcing this Guaranty.
SECTION 3. Continuing Guaranty. This Guaranty shall in all
respects be a continuing, absolute and unconditional guaranty, and shall
remain in full force and effect (notwithstanding, without limitation, that
at any time or from time to time all Liabilities may have been paid in
full), subject to discontinuance only upon actual receipt by Trustee of
written notice from Guarantor of the discontinuance hereof, provided,
however, that no such notice of discontinuance hereof shall affect or
impair any of the agreements and obligations of Guarantor hereunder with
respect to (i) any and all Liabilities existing prior to the time of
actual receipt of such notice by Trustee, any and all Liabilities created
or acquired thereafter pursuant to any commitments and agreements made by
<PAGE>
Buyer under and with respect to the Purchase Agreement, and any and all
extensions or renewals thereof, and (ii) any and all expenses paid or
incurred by Buyer or its assigns in endeavoring to collect any of the
foregoing and in enforcing this Guaranty; and all of the agreements and
obligations under this Guaranty shall, notwithstanding any such notice of
discontinuance, remain fully in effect until all such Liabilities
(including any extensions or renewals of any thereof) and all such other
obligations and expenses finally shall have been paid in full.
SECTION 4. Rescission. Guarantor further agrees that, if at any
time all or any part of any payment theretofore applied by Buyer to any
of the Liabilities is or must be rescinded or returned by Buyer for any
reason whatsoever, such Liabilities shall, for the purposes of this
Guaranty, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence, notwithstanding such
application by Buyer, and this Guaranty shall continue to be effective or
be reinstated, as the case may be, as to such Liabilities, all as though
such application by Buyer had not been made.
SECTION 5. Certain Actions. Buyer may, from time to time at its
sole discretion and without notice to Guarantor, take any or all of the
following actions without affecting the obligations of Guarantor
hereunder: (a) retain or obtain a lien upon or a security interest in any
property to secure any of the Liabilities or any obligation hereunder; (b)
retain or obtain the primary or secondary obligation of any obligor or
obligors, in addition to Guarantor, with respect to any of the Liabilities
or any obligation hereunder; (c) extend or renew for one or more periods
(regardless of whether longer than the original period), alter or exchange
any of the Liabilities, or release or compromise any obligation of
Guarantor hereunder or any obligation of any nature of any other obligor
(including any Guaranteed Party) with respect to any of the Liabilities;
(d) release or fail to perfect its lien upon or security interest in, or
impair, surrender, release or permit any substitution or exchange for, all
or any part of any property securing any of the Liabilities or any
obligation hereunder, or extend or renew for one or more periods
(regardless of whether longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any obligor
with respect to any such property; and (e) resort to Guarantor for payment
of any of the Liabilities, regardless of whether Buyer shall have resorted
to any property securing any of the Liabilities or any obligation
hereunder or shall have proceeded against any other obligor primarily or
secondarily obligated with respect to any of the Liabilities.
SECTION 6. Subrogation. Any amounts received by Buyer from
whatsoever source on account of the Liabilities may be applied by it
toward the payment of such of the Liabilities, and in such order of
application, as Buyer or its assigns may from time to time elect. Until
such time as Buyer shall have received payment of the full amount of all
Liabilities and performance of all of Guarantor's obligations hereunder,
no payment made by or for the account of Guarantor pursuant to this
Guaranty shall entitle Guarantor by subrogation, indemnity or otherwise
to any payment by any Guaranteed Party or from or out of any property of
any Guaranteed Party and Guarantor shall not exercise any right or remedy
against any Guaranteed Party or any property of any Guaranteed Party by
reason of any performance by Guarantor of this Guaranty.
SECTION 7. Waiver. Guarantor hereby expressly waives: (a) notice
of Purchaser's acceptance of this Guaranty; (b) notice of the existence
or creation or non-payment of all or any of the Liabilities, (c)
presentment, demand, notice of dishonor, protest, and ' all other notices
whatsoever (provided that nothing contained in this clause (c) shall
affect any obligations to give notice or make
-2-
<PAGE>
demand as set forth in the Purchase Agreement or the Pooling Agreement);
and (d) all diligence in collection or protection of or realization upon
the Liabilities or any thereof, any obligation hereunder, or any security
for or guaranty of any of the foregoing.
SECTION 8. Unconditional Nature of Guaranty. No delay on
Purchaser's part in the exercise of any right or remedy shall operate as
a waiver thereof, and no single or partial exercise by Purchaser of any
right or remedy shall preclude other or @her exercise thereof or the
exercise of any other right or remedy; nor shall any modification or
waiver of any of the provisions of this Guaranty be binding upon Purchaser
except as expressly set forth in a writing duly signed by Purchaser. No
action or omission of Purchaser permitted hereunder shall in any way
affect or impair Purchaser's rights or Guarantor's obligations under this
Guaranty. For the purposes of this Guaranty, Liabilities shall include
all of each Guaranteed Party's obligations under the Transaction
Documents, notwithstanding any right or power of such Guaranteed Party or
anyone else to assert any claim or defense as to the invalidity or
unenforceability of any such obligation, and no such claim or defense
shall affect or impair the obligations of Guarantor hereunder.
Guarantor's obligations under this Guaranty shall be absolute and
unconditional irrespective of any circumstance whatsoever which might
constitute a legal or equitable discharge or defense of Guarantor.
Guarantor hereby acknowledges that there are no conditions to the
effectiveness of this Guaranty.
SECTION 9. Information. Guarantor has and will continue to have
independent means of obtaining information concerning each Guaranteed
Party's affairs, financial condition and business. Purchaser shall not
have any duty or responsibility to provide Guarantor with any credit or
other information concerning any Guaranteed Party's affairs, financial
condition or business which may come into Purchaser's possession.
SECTION 10. Representations and Warranties. Guarantor represents
and warrants as follows:
(a) Organization and Good Standing. It has been duly
organized and is validly existing as a corporation in good
standing under the laws of its state of incorporation, with
corporate power and authority to own its properties and to
conduct its business as such properties are presently owned and
such business is presently conducted.
(b) Due Qualification. It is duly licensed or
qualified to do business as a foreign corporation in good
standing in each jurisdiction in which (i) the ownership or lease
of its property or the conduct of its business requires such
licensing or qualification, and (ii) the failure to be so
licensed or qualified reasonably could be expected to have a
Material Adverse Effect.
(c) Power and Authority, Due Authorization. It has
(i) all necessary power, authority and legal right to execute,
deliver and perform its obligations under this Guaranty and (ii)
duly authorized by all necessary corporate action such execution,
delivery and performance of this Guaranty.
(d) Binding Obligations. This Guaranty constitutes
the legal, valid and binding obligation of Guarantor, enforceable
in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the
-3-
<PAGE>
enforcement of creditors' rights generally and by general principles
of equity, regardless of whether such enforceability is considered
in a proceeding in equity or at law.
(e) No Violation. The execution, delivery and
performance of this Guaranty will not (i) conflict with, or result
in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under (A)
the certificate of incorporation or by-laws of Guarantor or (B) any
indenture, loan agreement, receivables purchase agreement, mortgage,
deed of trust, or other agreement or instrument to which Guarantor
is a party or by which it or any of its property is bound, (ii)
result in or require the creation or imposition of any Adverse Claim
(other than a Permitted Adverse Claim) upon any of its properties
pursuant to the terms of any such indenture, loan agreement,
receivables purchase agreement, mortgage, deed of trust, or other
agreement or instrument or (iii) violate any law or any order, rule
or regulation applicable to Guarantor of any court or of any federal,
state or foreign regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over Guarantor or
any of its properties.
SECTION 11. Successors and Assigns. (a) This Guaranty shall be
binding upon Guarantor and upon Guarantor's successors and assigns and all
references herein to Guarantor or any Guaranteed Party shall be deemed to
include any successor or successors, whether immediate or remote, to such
Person. Guarantor shall not assign any of its obligations hereunder without
the prior written consent of Buyer.
(b) This Guaranty shall inure to the benefit of Purchaser and
its
successors and assigns. Guarantor acknowledges and agrees that Purchaser's
rights under this Guaranty are being assigned to Trustee, for the benefit of
the Certificateholders and the Purchasers, pursuant to the Pooling Agreement,
as supplemented from time to time (including by the Series 1996-1 Supplement
to the Pooling Agreement, of even date with this Guaranty).
SECTION 12. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES. Wherever possible each provision of
this Guaranty.. shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of this Guaranty.
SECTION 13. Consent to Jurisdiction, Waiver of July Trial. Buyer
may enforce any claim arising out of this Guaranty in any state or federal
court having subject matter jurisdiction and located in New York City, New
York and with respect to any such claim, Guarantor hereby irrevocably submits
to the Jurisdiction of such courts. Guarantor irrevocably consents to the
service of process out of said courts by mailing a copy thereof, by
registered mail, postage prepaid, to Guarantor, and agrees that such service,
to the fullest extent permitted by law, (i) shall be deemed in every respect
effective service of process upon it in any suit, action or proceeding and
(ii) shall be taken and held to be valid personal service upon and personal
delivery to it. Nothing herein contained shall preclude Buyer from bringing
an action or proceeding in respect hereof in any other country, state or
place having jurisdiction over such action. Guarantor irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of
-4-
<PAGE>
the venue of any such suit, action or proceeding brought in such a court
located in New York City, New York and any claim that any such suit, action
or proceeding brought in such court has been brought in an inconvenient
forum. GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
SECTION 14. Notices. All notices hereunder shall be given in the
manner set forth in Section 13.5 of the Pooling Agreement.
* * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been executed and delivered by
Guarantor duly authorized officer as of the date first written above.
INTER-CITY PRODUCTS CORPORATION
(USA)
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Address: 650 Heil-Quaker Blvd.
Lewisburg, Tennessee 37091
Attn:
Telephone:
Facsimile:
<PAGE>
APPENDIX X
to Certificate Purchase Agreement
Series 1996-1, Class A
INDEX OF ADDITIONAL DEFINED TERMS
Administration Fee. . . . . . . . . . . . . . . . . . . . . . . . . 3
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Agent Administration Fee. . . . . . . . . . . . . . . . . . . . . . 25
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Arrangement Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Assignee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Breakage fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class Percentage. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Commitment Reduction Fee. . . . . . . . . . . . . . . . . . . . . . 4
Credit Exposure . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ICP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Initial Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . 5
LIBOR Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Minimum Usage Fee . . . . . . . . . . . . . . . . . . . . . . . . . 8
Non-Usage Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Pooling Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 5
Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Purchasers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Receivables Review. . . . . . . . . . . . . . . . . . . . . . . . . 22
Required Class A Purchasers . . . . . . . . . . . . . . . . . . . . 25
Required Purchasers . . . . . . . . . . . . . . . . . . . . . . . . 25
Series Percentage . . . . . . . . . . . . . . . . . . . . . . . . . 2
Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Stated Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Supplement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Transferee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Transferor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trust Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
<PAGE>
Inter-City Products Corporation (USA)
==========================================================================
RECEIVABLES PURCHASE AGREEMENT
dated as of July 25,1996
among
INTER-CITY PRODUCTS CORPORATION (USA)
and
CERTAIN SUBSIDIARIES,
as Sellers
INTER-CITY PRODUCTS PARTNER CORPORATION,
and
INTER-CITY PRODUCTS RECEIVABLES COMPANY, L.P.
as Buyer
==========================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 Agreement to Purchase and Sell 1
SECTION 1.2 Timing of Purchases 2
SECTION 1.3 Consideration for Purchases 2
SECTION 1.4 No Recourse 2
SECTION 1.5 No Assumption of Obligations Relating to Receivables,
Related Assets or Contracts 2
SECTION 1.6 True Sales 3
SECTION 1.7 Addition of Sellers 3
SECTION 1.8 Contribution of Receivables 4
ARTICLE II
CALCULATION OF PURCHASE PRICE
SECTION 2.1 Calculation of Purchase Price 6
SECTION 2.2 Definitions and Calculations Related to
Purchase Price Percentage 7
ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING, ETC.
SECTION 3.1 Purchase Price Payments 8
SECTION 3.2 The Buyer Notes 11
SECTION 3.3 Application of Collections and Other Funds 11
SECTION 3.4 Servicing of Receivables and Related Assets 12
SECTION 3.5 Adjustments for Noncomplying Receivables and Dilution 12
SECTION 3.6 Payments and Computations, Etc 12
ARTICLE IV
CONDITIONS TO PURCHASES
SECTION 4.1 Conditions Precedent to Initial Purchase 13
SECTION 4.2 Certification as to Representations and Warranties 14
SECTION 4.3 Effect of Payment of Purchase Price 14
-i-
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Representations and Warranties of the Sellers 15
SECTION 5.2 Representations and Warranties of Buyer 20
ARTICLE VI
GENERAL COVENANTS OF THE SELLERS
SECTION 6.1 Affirmative Covenants 21
SECTION 6.2 Reporting Requirements 24
SECTION 6.3 Negative Covenants 25
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE SPECIFIED ASSETS
SECTION 7.1 Rights of Buyer 28
SECTION 7.2 Responsibilities of the Sellers 29
SECTION 7.3 Further Action Evidencing Purchases 29
SECTION 7.4 Collection of Receivables; Rights of Buyer
and Its Assignees 30
ARTICLE VIII
TERMINATION
SECTION 8.1 Automatic Termination 31
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Indemnities by the Sellers 32
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments; Waivers, Etc 34
-ii-
<PAGE>
SECTION 10.2 Notices, Etc 34
SECTION 10.3 Cumulative Remedies 34
SECTION 10.4 Binding Effect; Assignability; Survival of Provisions 35
SECTION 10.5 Governing Law 35
SECTION 10.6 Costs, Expenses and Taxes 35
SECTION 10.7 Submission to Jurisdiction 36
SECTION 10.8 Waiver of Jury Trial 36
SECTION 10.9 Integration 36
SECTION 10.10 Counterparts 37
SECTION 10.11 Acknowledgment and Consent 37
SECTION 10.12 No Partnership or Joint Venture 37
SECTION 10.13 No Proceedings 37
SECTION 10.14 Severability of Provisions 38
SECTION 10.15 Recourse to Buyer 38
EXHIBITS
EXHIBIT A Form of Buyer Note
EXHIBIT B Form of Seller Assignment Certificate
SCHEDULES
SCHEDULE 1 Litigation and Other Proceedings
SCHEDULE 2 Changes in Financial Condition
SCHEDULE 3 Offices of the Sellers where Records are Maintained
SCHEDULE 4 Legal Names, Trade Names and Names Under Which the
Companies Do Business
SCHEDULE 5 Software Programs and Licenses
-iii-
<PAGE>
This RECEIVABLES PURCHASE AGREEMENT, dated as of July 25, 1996
(this "Agreement"), is made among INTER-CITY PRODUCTS CORPORATION (USA),
a Delaware corporation ("ICP"), INTER-CITY PRODUCTS PARTNER CORPORATION,
a Delaware corporation ("ICPPC"), certain direct or indirect domestic
subsidiaries of ICP that are listed on the signature pages hereto or that
become party hereto in accordance with the terms hereof (together with ICP
and ICPPC, the "Sellers"), and INTER-CITY PRODUCTS RECEIVABLES COMPANY,
L.P., a Tennessee limited partnership ("Buyer").
Pursuant to the Pooling and Servicing Agreement dated as of the
date hereof (as amended, supplemented or otherwise modified from time to
time, the "Pooling Agreement"), Buyer intends to transfer its interests
in the Receivables sold pursuant hereto, together with Receivables
contributed to Buyer by ICP and ICPPC from time to time, to the Trust in
order to, among other things, finance its purchases hereunder. Except as
otherwise defined herein, capitalized terms have the meanings assigned to
them in Appendix A to the Pooling Agreement, and this Agreement shall be
interpreted in accordance with the conventions set forth in Part B of such
Appendix A.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 Agreement to Purchase and Sell. Each Seller hereby
sells, transfers, assigns, sets over and conveys to Buyer, and Buyer
agrees to purchase from each Seller, at the times set forth in Section
1.2, all of such Seller's right, title and interest in, to and under:
(a) all Receivables of such Seller (other than
Contributed Initial Receivables) that existed and were owing to such
Seller as at the closing of such Seller's business on the Initial Cut-Off
Date,
(b) all Receivables created by such Seller (other than
Contributed Subsequent Receivables) that arise during the period from and
including the closing of such Seller's business on the Initial Cut-Off
Date to but excluding the Purchase Termination Date,
(c) all Related Security with respect to such
Receivables of such Seller,
(d) all proceeds of the foregoing, including all funds
received by any Person in payment of any amounts owed (including invoice
prices, finance charges, interest and all other charges, if any) in
respect of any Receivable described above or Related Security with respect
to any such Receivable, or otherwise applied to repay or discharge any
such Receivable (including insurance payments that a Seller or the
Servicer applies in the ordinary course of its business to amounts owed
in respect of any such Receivable and net proceeds of any sale or
<PAGE>
other disposition of repossessed goods that were the subject of any such
Receivable) or other collateral or property of any Obligor or any other
party directly or indirectly liable for payment of such Receivables, and
(e) all Records relating to any of the foregoing.
As used herein, (i) "Purchased Receivables" means the items listed
above in clauses (a) and (b), (ii) "Related Purchased Assets" means the
items listed above in clauses (c), (d) and (e), (iii) "Related Assets"
means the Related Purchased Assets and the Related Contributed Assets,
(iv) "Purchased Assets" means the Purchased Receivables and the Related
Purchased Assets, (v) "Specified Assets" means the Purchased Receivables,
the Contributed Receivables and the Related Assets and (vi) "Specified
Receivables" means the Purchased Receivables and the Contributed
Receivables.
SECTION 1.2 Timing of Purchases.
(a) Initial First Issuance Date Purchases. All of the
Purchased Assets of each Seller that existed at the closing of such
Seller's business on the Initial Cut-Off Date shall be sold automatically
to Buyer on the First Issuance Date.
(b) Regular Purchases. Except to the extent otherwise
provided in Section 8.1, after the closing of a Seller's business on the
Initial Cut-Off Date until the closing of such Seller's business on the
Business Day immediately preceding the Purchase Termination Date, all
Purchased Receivables and the Related Purchased Assets of each Seller
shall be sold automatically to Buyer pursuant hereto immediately (and
without further action by any Person) upon the creation of the Purchased
Receivable or Related Purchased Asset.
SECTION 1.3 Consideration for Purchases. On the terms and
subject to the conditions set forth in this Agreement, Buyer agrees to
make Purchase Price payments to the Sellers in accordance with Article
III.
SECTION 1.4 No Recourse. Except as specifically provided in
this Agreement, the sale and purchase of Purchased Assets under this
Agreement shall be without recourse to the Sellers; it being understood
that (i) each Seller shall be liable to Buyer for all representations,
warranties, covenants and indemnities made by such Seller pursuant to the
terms of this Agreement, all of which obligations are limited so as not
to constitute recourse to such Seller for the credit risk of the Obligors,
and (ii) ICP shall be liable to Buyer to the extent specified in the
Seller Guaranty.
SECTION 1.5 No Assumption of Obligations Relating to
Receivables, Related Assets or Contracts. None of Buyer, any Servicer nor
the Trustee shall have any obligation or liability to any Obligor or other
customer or client of a Seller (including any obligation to perform any
of the obligations of such Seller under any Receivable, related Contracts
or any other related
-2-
<PAGE>
purchase orders or other agreements). No such obligation or liability is
intended to be assumed by Buyer, any Servicer or the Trustee hereunder,
and any assumption thereof is expressly disclaimed.
SECTION 1.6 True Sales. The Sellers and Buyer intend the
transfers of Receivables hereunder to be true sales (or, with respect to
Contributed Receivables, true conveyances) by the Sellers to Buyer that
are absolute and irrevocable and that provide Buyer with the full benefits
of ownership of the Receivables, and none of the Sellers nor Buyer intends
the transactions contemplated hereunder to be, or for any purpose to be
characterized as, loans from Buyer to any Seller. ICP and ICPPC intend
the transfers of Receivables by ICP to ICPPC to be true conveyances by ICP
to ICPPC that are absolute and irrevocable and that provide ICPPC with the
full benefits of ownership of such Receivables, and neither ICP nor ICPPC
intends the transactions contemplated hereunder to be, or for any purpose
to be characterized as, loans from ICPPC to ICP.
It is, further, not the intention of Buyer or any Seller that the
conveyance of the Specified Assets by a Seller be deemed a grant of a
security interest in the Specified Assets by such Seller to Buyer (or
ICPPC, as the case may be) to secure a debt or other obligation of such
Seller. However, in the event that, notwithstanding the intent of the
parties, any Specified Assets are property of any Seller's estate, then
(i) this Agreement also shall be deemed to be and hereby is a security
agreement within the meaning of the UCC, and (ii) the conveyance by such
Seller provided for in this Agreement shall be deemed to be a grant by
such Seller to Buyer (or ICPPC, as the case may be) of, and such Seller
hereby grants to Buyer (or ICPPC, as the case may be), a security interest
in and to all of such Seller's right, title and interest in, to and under
the Specified Assets to secure (1) the rights of Buyer (or ICPPC, as the
case may be) hereunder and (2) a loan by Buyer (or ICPPC, as the case may
be) to such Seller in the amount of the related Purchase Price of the
Purchased Assets sold by it or the Unpaid Balance of any Contributed
Receivables and the Related Contributed Assets, as the case may be. Each
Seller and Buyer shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Specified Assets, such
security interest would be deemed to be a perfected security interest of
first priority (subject to Permitted Adverse Claims) in favor of Buyer (or
ICPPC, as the case may be) under applicable law and will be maintained as
such throughout the term of this Agreement.
SECTION 1.7 Addition of Sellers. ICP shall cause each
Subsidiary of ICP which originates any right of such Subsidiary to
payment, whether constituting an account, chattel paper, instrument,
general intangible or otherwise, arising from the sale of goods, services
or future services by such Subsidiary, to become a Seller hereunder
immediately upon such entity becoming a Subsidiary and shall cause such
Subsidiary to sell its accounts receivable and property of the types that
constitute Related Assets hereunder to Buyer. ICP and each Person that
will be added as a Subsidiary shall give to Buyer, the Trustee, the Rating
Agencies and each Required Person not less than 30 days' prior written
notice of the effective date of the addition
-3-
<PAGE>
of such Person as a Subsidiary. Once the notice has been given, the
Receivables given by any Subsidiary of ICP as a Seller added to this
Agreement pursuant to this section shall satisfy clause (n) of the
definition of "Eligible Receivables" on the first Business Day following
the expiration of the notice period (or such later date as may be
specified in the notice) on which (i) the Required Persons have consented
(if the Subsidiary is General or Coastline) or the Modification Condition
has been satisfied (for any other Subsidiary), (ii) the Servicer shall
have delivered to the Trustee a supplement to the Monthly Report then in
effect as described in Section 3.5(e) of the Pooling Agreement and shall
have confirmed in writing to the Trustee that the Seller Guaranty covers
Obligations of such Subsidiary, (iii) such Subsidiary and the parties
hereto shall have executed and delivered the agreements, instruments and
other documents and the amendments or other modifications to the
Transaction Documents, in form and substance reasonably satisfactory to
Buyer, the Trustee and each Required Person, that Buyer, the Trustee or
any Required Person reasonably determine are necessary or appropriate to
effect the addition and (iv) shall have delivered such legal opinions as
are in form and substance satisfactory to the Rating Agencies, each
Required Person and the Trustee.
SECTION 1.8 Contribution of Receivables. (a) ICP hereby
transfers to ICPPC, as a contribution to the capital of ICPPC, all its
right, title and interest in, to and under:
(i) $1,017,156,.79 of Receivables of ICP having, among
the existing Receivables, the oldest invoice dates as of the
closing of ICP's business on the Initial Cut-Off Date (the
"Contributed ICPPC Initial Receivables"),
(ii) all Related Security with respect to the
Contributed ICPPC Initial Receivables,
(iii) all proceeds of the foregoing, including all funds
received by any Person in payment of any amounts owed (including
invoice prices, finance charges, interest and all other charges,
if any) in respect of any Contributed ICPPC Initial Receivable or
Related Security with respect to any such Contributed ICPPC
Initial Receivable, or otherwise applied to repay or discharge
any such Contributed ICPPC Initial Receivable (including
insurance payments that ICP or the Servicer applies in the
ordinary course of its business to amounts owed in respect of any
such Contributed ICPPC Initial Receivable and net proceeds of any
sale or other disposition or repossessed goods that were the
subject of any such Contributed ICPPC Initial Receivable) or
other collateral or property of any Obligor or any other party
directly or indirectly liable for payment of such Contributed
ICPPC Initial Receivables, and
(iv) all Records relating to any of the foregoing (the
items listed above in clauses (ii), (iii) and (iv) being referred
to herein as the "Related Contributed ICPPC Initial Assets").
-4-
<PAGE>
(b) ICPPC hereby transfers to Buyer, as a contribution
to the capital of Buyer, all its right, title and interest in, to and
under the Contributed ICPPC Initial Receivables and the Related
Contributed ICPPC Initial Assets.
(c) ICP hereby transfers to Buyer, as a contribution to
the capital of Buyer, all its right, title and interest in, to and under:
(i) $54,926,466.85 of Receivables of ICP having, among
the existing Receivables (other than the Contributed ICPPC
Initial Receivables), the oldest invoice dates as of the closing
of ICP's business on the Initial Cut-Off Date (the "Contributed
ICP Initial Receivables," and collectively with the Contributed
ICPPC Initial Receivables, the "Contributed Initial
Receivables"),
(ii) all Related Security with respect to the
Contributed ICP Initial Receivables,
(iii) all proceeds of the foregoing, including all funds
received by any Person in payment of any amounts owed (including
invoice prices, finance charges, interest and all other charges,
if any) in respect of any Contributed ICP Initial Receivable or
Related Security with respect to any such Contributed ICP Initial
Receivable, or otherwise applied to repay or discharge any such
Contributed ICP Initial Receivable (including insurance payments
that ICP or the Servicer applies in the ordinary course of its
business to amounts owed in respect of any such Contributed ICP
Initial Receivable and net proceeds of any sale or other
disposition or repossessed goods that were the subject of any
such Contributed ICP Initial Receivable) or other collateral or
property of any Obligor or any other party directly or indirectly
liable for payment of such Contributed ICP Initial Receivables,
and
(iv) all Records relating to any of the foregoing (the
items listed above in clauses (ii), (iii) and (iv) being referred
to herein as the "Related Contributed ICP Initial Assets," and
collectively with the Related Contributed ICPPC Initial Assets,
the "Related Contributed Initial Assets").
(d) On any date following the date hereof, (x) ICP may
elect to transfer to Buyer or to ICPPC (in which case ICPPC shall
immediately transfer to Buyer), as a contribution to capital, or (y) ICP
may be required to transfer to Buyer or to ICPPC (in which case ICPPC
shall immediately transfer to Buyer), as a contribution to capital
pursuant to Section 3.1(a)(iii):
(i) any Receivables which have arisen since the
preceding Business Day which ICP shall have identified on a
schedule (a "Contributed Subsequent Receivables Schedule")
delivered to the Buyer on such date (such Receivables being
"Contributed Subsequent Receivables" and, together with
Contributed Initial Receivables, "Contributed Receivables"),
-5-
<PAGE>
(ii) all Related Security with respect to the
Contributed Subsequent Receivables,
(iii) all proceeds of the foregoing, including all funds
received by any Person in payment of any amounts owed (including
invoice prices, finance charges, interest and all other charges,
if any) in respect of any Contributed Subsequent Receivable or
Related Security with respect to any such Contributed Subsequent
Receivable, or otherwise applied to repay or discharge any such
Contributed Subsequent Receivable (including insurance payments
that ICP or the Servicer applies in the ordinary course of its
business to amounts owed in respect of any such Contributed
Subsequent Receivable and net proceeds of any sale or other
disposition or repossessed goods that were the subject of any
such Contributed Subsequent Receivable) or other collateral or
property of any Obligor or any other party directly or indirectly
liable for payment of such Contributed Subsequent Receivables,
and
(iv) all Records relating to any of the foregoing (the
items listed above in clauses (ii), (iii) and (iv) being referred
to herein as the "Related Contributed Subsequent Assets" and,
together with the Related Contributed Initial Assets, "Related
Contributed Assets").
ARTICLE II
CALCULATION OF PURCHASE PRICE
SECTION 2.1 Calculation of Purchase Price. (a) On each
Business Day (including the First Issuance Date), the Servicer shall
deliver to Buyer, the Trustee and ICP a Daily Report with respect to
Buyer's purchases of Receivables from the Sellers:
(i) that are to be made on the First Issuance Date (in
the case of the Daily Report to be delivered on the First
Issuance Date) or
(ii) that were made on the immediately preceding
Business Day (in the case of each subsequent Daily Report).
(b) On each day when Receivables are purchased by Buyer from
a Seller pursuant to Article I, the "Purchase Price" to be paid to such
Seller on such day for the Purchased Receivables and Related Purchased
Assets that are to be sold by such Seller on such day shall be determined
in accordance with the following formula:
PP = AUB x PPP
where:
PP = the aggregate Purchase Price for the Purchased
Receivables and Related Purchased Assets to be
purchased from such Seller on such day,
-6-
<PAGE>
AUB = the "Aggregate Unpaid Balance" of the Purchased
Receivables that are to be purchased from such
Seller on such day. For purposes of this
calculation, "Aggregate Unpaid Balance" shall mean
(i) for purposes of calculating the Purchase Price
to be paid to such Seller on the First Issuance
Date, the sum of the Unpaid Balance of each
Receivable generated by such Seller (other than
Contributed Initial Receivables), as measured as
at the closing of such Seller's business on the
Initial Cut-Off Date, and (ii) for purposes of
calculating the Purchase Price on each Business
Day thereafter, the sum of the Unpaid Balance of
each Receivable to be purchased from such Seller
on such day, calculated at the time of the
Receivable's sale to Buyer, and
PPP = the Purchase Price Percentage applicable to the
Receivables to be purchased on such day, as
determined pursuant to Section 2.2.
SECTION 2.2 Definitions and Calculations Related to Purchase
Price Percentage.
(a) "Purchase Price Percentage" for the Receivables to be
sold by a Seller on any day during a Distribution Period shall mean the
percentage determined in accordance with the following formula:
PPP = 100% - (LLR + PDRR)
where:
PPP = the Purchase Price Percentage in effect during
such Distribution Period,
LLR = the Loss to Liquidation Ratio (expressed as a
percentage) in effect during such Distribution
Period, and
PDRR = the Purchase Discount Reserve Ratio (expressed as
a percentage) in effect during such Distribution
Period, as determined on such day pursuant to
subsection (b) below.
The Purchase Price Percentage, the Loss to Liquidation Ratio and the
Purchase Discount Reserve Ratio shall be recomputed by the Servicer on
each Report Date, in each case as of the then most recent Cut-Off Date,
and shall become effective on the next Distribution Date.
(b) "Purchase Discount Reserve Ratio" for the Receivables to
be sold on any day shall mean a percentage determined in accordance with
the following formula:
PDRR = (TD/360 x DR) + PD
-7-
<PAGE>
where:
PDRR = the Purchase Discount Reserve Ratio in effect
during such Distribution Period,
TD = the Portfolio Collection Days during the
Calculation Period preceding the first day of such
Distribution Period,
DR = the Discount Rate (expressed as a percentage) in
effect during such Distribution Period as
determined pursuant to subsection (c) below, and
PD = a profit discount equal to .25%; provided that
such percentage may be changed by written
agreement of the Sellers and Buyer if, prior to
giving effect to such change, (i) Buyer shall have
provided to the Trustee, the Agent and the Rating
Agencies a Bankruptcy Opinion that takes such
change into account and (ii) the Modification
Condition shall have been satisfied.
(c) "Discount Rate" for the Receivables to be sold on any day
during a Distribution Period shall mean a fraction (expressed as a
percentage) having (i) a numerator equal to 12 multiplied by an amount
equal to the sum for the Calculation Period ending prior to the first day
of such Distribution Period of (A) accrued Carrying Costs and (B) accrued
interest on Buyer Notes and (ii) a denominator equal to the aggregate
Unpaid Balance of the Receivables as of the last day of the Calculation
Period preceding the first day of such Distribution Period.
ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING, ETC.
SECTION 3.1 Purchase Price Payments. (a) On the First
Issuance Date and on the Business Day following each day on which any
Purchased Receivables and Related Purchased Assets are purchased by Buyer
pursuant to Article I, on the terms and subject to the conditions of this
Agreement, Buyer shall pay to the Sellers the Purchase Price for the
Purchased Receivables and Related Purchased Assets purchased on such day
by Buyer (i) by making a cash payment to Servicer (for the account of the
Sellers) to the extent that Buyer has cash available to make the payment
pursuant to Section 3.3, (ii) if the Purchase Price to be paid for such
Receivables and Related Assets of any Seller exceeds the amount of any
cash actually paid for the account of such Seller on such day pursuant to
clause (i), by automatically increasing the principal amount outstanding
under the relevant Buyer Notes by the amount of such excess and (iii) if
the Purchase Price to be paid for such Receivables and Related Assets of
ICP exceeds the sum of (x) the amount of any cash paid to the Servicer on
such day pursuant to clause (i) and (y) the aggregate amount by which all
Buyer Notes may be increased without exceeding the Maximum Exposure
Amount, by deeming (x) Receivables in an amount equal to 99% of such
excess to have been contributed to Buyer by ICP as a capital contribution,
(y) Receivables in an
-8-
<PAGE>
amount equal to 1% of such excess to have been contributed to ICPPC by ICP
as a capital contribution and (z) the Receivables contributed to ICPPC
pursuant to clause (y) to have been contributed to Buyer by ICPPC as a
capital contribution.
Each Seller agrees that, prior to the Seller Maturity Date, Buyer
shall be required to make payments in respect of the payment obligations
evidenced by the Buyer Notes only to the extent that it has cash available
under Section 3.3.
(b) Except as provided in a Supplement, on each Business Day,
the "Noncomplying Receivables and Dilution Adjustment" shall be equal to
the result (whether the result is positive or negative) of (i) the sum of
(A) the aggregate Seller Dilution Adjustments in respect of all Sellers,
if any, for the immediately preceding Business Day, as shown in the Daily
Report for such day, plus (B) the aggregate Seller Noncomplying
Receivables Adjustments in respect of all Sellers, if any, for the
immediately preceding Business Day, as shown in the Daily Report for such
day, in the case of each of clauses (A) and (B), as the amounts are
determined pursuant to Section 3.5, minus (ii) the amount of the payments
(if any) that Buyer shall have received on the immediately preceding
Business Day on account of any Seller Noncomplying Receivables that had
been the subject of an earlier Seller Noncomplying Receivables Adjustment.
If the Noncomplying Receivables and Dilution Adjustment is positive on any
day, Buyer shall reduce the Purchase Price payable on such day pursuant
to subsection (a) above by the amount of the Noncomplying Receivables and
Dilution Adjustment. If instead, the Noncomplying Receivables and
Dilution Adjustment is negative on any day, Buyer shall increase the
Purchase Price payable pursuant to subsection (a) above on such day by the
amount of the Noncomplying Receivables and Dilution Adjustment.
(c) If on any day the Noncomplying Receivables and Dilution
Adjustment attributable to any Seller exceeds the Purchase Price payable
by Buyer to such Seller pursuant to subsection (a) above on such day (the
amount of such excess being a "Seller Noncomplying Receivables and
Dilution Excess") then (i) if a Trust Asset Shortfall exists on such day
or if the Purchase Termination Date has occurred, such Seller shall pay
to the Servicer an amount equal to the lesser of (A) the amount of the
Trust Asset Shortfall and (B) the amount of the Seller Noncomplying
Receivables and Dilution Excess, (ii) to the extent of any remaining
Seller Noncomplying Receivables and Dilution Excess after reducing it by
the amount paid to the Servicer pursuant to clause (i), the principal
amount of Seller's Buyer Note shall be reduced automatically by the amount
of such remaining Seller Noncomplying Receivables and Dilution Excess and
(iii) any Seller Noncomplying Receivables and Dilution Excess remaining
after reduction by the amounts specified in clauses (i) and (ii) shall be
paid to Servicer. Amounts paid to Servicer pursuant to this Section
3.1(c) shall be deposited on behalf of such Seller into the Master
Collection Account and shall be deemed a Collection in accordance with
Section 3.5.
(d) If, on any day, the amounts, if any, allocated to any
Seller pursuant to clause (b)(ii) above exceed the sum of any Seller
Dilution Adjustments and the Seller Noncomplying Receivables Adjustments,
if any, in respect of such Seller (as determined pursuant to Section
-9-
<PAGE>
3.5) for such day, then Buyer shall either (i) pay Servicer (for the
account of such Seller) in cash the amount of such excess, or (ii) if
Buyer does not have sufficient cash to pay such amount in full, increase
the principal amount of such Seller's Buyer Note by the amount of such
excess that is not paid in cash to Servicer.
(e) Amounts received by Servicer pursuant to this Section 3.1
shall be allocated among the Sellers in accordance with Section 3.3, and
the Seller Dilution Adjustments and the Seller Noncomplying Receivables
Adjustments, if any, in respect of each such Seller (as determined
pursuant to Section 3.5) shall be allocated to such Seller. Servicer
shall maintain a bookkeeping account (the "Seller Account") for purposes
of tracking:
(i) the Purchase Price payable to each Seller in
respect of Receivables and Related Assets sold by it to Buyer
(including the extent to which cash and non-cash payments made by
Buyer should be allocated to each Seller),
(ii) the extent to which such Purchase Price should be
reduced on account of such Seller's Seller Dilution Adjustments
and Seller Noncomplying Receivables Adjustments (including any
allocation of Seller Noncomplying Receivables and Dilution
Excess),
(iii) if a Seller makes cash payments in respect of the
Noncomplying Receivables and Dilution Adjustment (including any
payment in respect of Seller Noncomplying Receivables and
Dilution Excess), the obligation of each other Seller to
reimburse such Seller for its proportionate share thereof,
(iv) if Purchase Price payments attributable to a
Seller's Receivables and Related Assets have been reduced on
account of another Seller's Seller Dilution Adjustment or the
Seller Noncomplying Receivables Adjustment, the obligation of
such other Seller to reimburse the Seller subject to such
reduction,
(v) the extent to which payments (whether cash or non-
cash) by Buyer in respect of a negative Noncomplying Receivables
and Dilution Adjustment should be allocated to each Seller, and
(vi) cash payments made to and by each Seller in respect
of the items described above.
Servicer shall calculate each of the items set forth above on each
day. Intercompany accounts among the Sellers resulting from the items
described above and any payments made by ICP pursuant to the Seller
Guaranty will be settled in accordance with the intercompany cash
management system customarily employed by ICP and its Subsidiaries.
-10-
<PAGE>
SECTION 3.2 The Buyer Notes. (a) On the First Issuance Date,
Buyer will deliver to each Seller a promissory note, substantially in the
form of Exhibit A, payable to the order of such Seller (each such
promissory note, as the same may be amended, supplemented, endorsed or
otherwise modified from time to time, together with any promissory note
issued from time to time in substitution therefor or renewal thereof in
accordance with the Transaction Documents, being herein called a "Buyer
Note"), that is subordinated to all Senior Interests now or hereafter
arising under or in connection with the Pooling Agreement. Each Buyer
Note is payable in full on the date (the "Seller Maturity Date") that is
one year and one day after the date on which all Investor Certificates
have been repaid in full and the Revolving Periods for all Investor
Certificates have terminated. Each Buyer Note bears interest at a rate
per annum equal to the rate publicly announced by the Trustee from time
to time as its "reference" or "prime" rate, determined as of each Cut-Off
Date. Buyer may prepay all or part of the outstanding balance of any
Buyer Note from time to time without any premium or penalty, unless the
prepayment would result in a default in Buyer's payment of any other
amount required to be paid by it under any Transaction Document.
(b) The Initial Servicer (or its designee) shall hold all
Buyer Notes for the benefit of the Sellers and shall make all appropriate
recordkeeping entries with respect to the Buyer Notes or otherwise to
reflect the payments on and adjustment of the Buyer Notes. The Initial
Servicer's books and records shall constitute rebuttable presumptive
evidence of the principal amount of and accrued interest on each Buyer
Note at any time. Each Seller hereby irrevocably authorizes the Initial
Servicer to mark its Buyer Note "CANCELLED" and return it to Buyer upon
the final payment thereof.
SECTION 3.3 Application of Collections and Other Funds. If,
on any day, Buyer receives proceeds of transfers pursuant to the Pooling
Agreement, Buyer shall apply the funds as follows:
(a) first, to pay its existing expenses and to set
aside funds for the payment of expenses that are then accrued (in
each case to the extent such expenses are permitted to exist
under Section 7.2(m) of the Pooling Agreement),
(b) second, to pay the Purchase Price as adjusted
pursuant to Section 3.1 for Receivables and Related Assets
purchased by Buyer from the Sellers on such day (in the case of
the First Issuance Date) or the next preceding Business Day,
(c) third, in such order among Sellers as Buyer shall
elect, to repay amounts owed by Buyer to the Sellers under the
Buyer Notes,
(d) fourth, to pay amounts owed pursuant to Section
3.1(d), and
(e) fifth, if the Buyer shall elect, to declare and
make distributions to its partners to the extent permitted by law
and the Transaction Documents.
-11-
<PAGE>
SECTION 3.4 Servicing of Receivables and Related Assets.
Consistent with Buyer's ownership of the Receivables and the Related
Assets, as between the parties to this Agreement, Buyer shall have the
sole right to service, administer and collect the Receivables, to assign
the right and to delegate the right to others. Without limiting the
generality of Section 10.11, each Seller hereby acknowledges and agrees
that Buyer shall assign to the Trustee for the benefit of the Investor
Certificateholders the rights and interests of Buyer hereunder and agrees
to cooperate fully with the Servicer and the Trustee in the exercise of
such rights and interests. As more fully described in Section 7.4(b) and
in the Pooling Agreement, the Trustee may exercise the rights in the place
of Buyer (as assignee or otherwise) only after the designation of a
Servicer other than the Initial Servicer pursuant to Section 10.2 of the
Pooling Agreement.
At Trustee's request, each Seller will (A) assemble all of the
Records that are necessary or appropriate to collect the Receivables and
Related Transferred Assets, and shall make the same available to Trustee
at one or more places selected by Trustee or its designee, and (B) permit,
upon not less than two Business Days' prior written notice, any Successor
Servicer and its agents, employees and assignees access to their
respective facilities and their respective Records.
SECTION 3.5 Adjustments for Noncomplying Receivables and
Dilution. (a) If at any time any of Buyer, the Servicer, the Trustee or
a Seller shall determine that any Receivable identified by the Servicer
as an Eligible Receivable on the date of Purchase thereof by Buyer or the
contribution thereof to Buyer was in fact a Seller Noncomplying Receivable
on such date, or that any of the representations and warranties made by
the related Seller in Section 5.1(k) with respect to such Receivable was
not true on such date, such Seller shall be deemed to have received on the
date of such determination a Collection of the Receivable in an amount
equal to the Unpaid Balance of the Receivable on such date (the sum of all
such amounts for such Seller on any day being called the "Seller
Noncomplying Receivables Adjustment" for such Seller for such day), and
such Seller Noncomplying Receivables Adjustment shall be settled in the
manner provided for in Section 3.1.
(b) If on any day the aggregate Unpaid Balance of the
Receivables sold or contributed to Buyer on or before such date by a
Seller is reduced in any manner described in the definition of "Dilution"
(the total of the reductions being called the "Seller Dilution Adjustment"
for the Seller for such day), then such Seller shall be deemed to have
received on such day a Collection of Receivables in the amount of the
Seller Dilution Adjustment and such Seller Dilution Adjustment shall be
settled in the manner provided in Section 3.1.
SECTION 3.6 Payments and Computations, Etc. (a) All amounts
to be paid by a Seller to Buyer hereunder shall be received in accordance
with the terms hereof no later than 1:00 p.m., New York City time, on the
day when due in Dollars in immediately available funds in the Master
Collection Account. Payments received by Buyer after such time shall be
deemed to have been received on the next Business Day. In the event that
any payment otherwise is scheduled to become due on a day that is not a
Business Day, then payment shall become due
-12-
<PAGE>
on the next Business Day. Each Seller shall, to the extent permitted by
law, pay to Buyer, on demand, interest on all amounts not paid when due
hereunder at 2% per annum above the interest rate on the applicable Buyer
Note in effect on the date the payment was due; provided, however, that
the interest rate shall not at any time exceed the maximum rate permitted
by applicable law. All computations of interest payable hereunder shall
be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed.
(b) All amounts to be paid by Buyer to a Seller hereunder
shall be paid to Servicer (for the account of such Seller) no later than
2:00 p.m., New York City time, on the day when due in Dollars in
immediately available funds to an account that Servicer shall from time
to time specify in writing. Payments received by Servicer after such time
shall be deemed to have been received on the next Business Day. Servicer
shall promptly remit payments received by it in immediately available
funds to such account as the applicable Seller shall from time to time
specify in writing. In the event that any payment otherwise is scheduled
to become due on a day that is not a Business Day, then such payment shall
become due on the next Business Day.
(c) Permitted Inventory Discretionary Returns shall not be
deemed to give rise to a Seller Noncomplying Receivables Adjustment or a
Seller Dilution Adjustment if effected in accordance with Section 3.2(k)
of the Pooling Agreement.
ARTICLE IV
CONDITIONS TO PURCHASES
SECTION 4.1 Conditions Precedent to Initial Purchase. The
initial purchase hereunder is subject to the conditions precedent that (i)
each of the conditions precedent to the execution, delivery and
effectiveness of each other Transaction Document (other than a condition
precedent in any other Transaction Document relating to the effectiveness
of this Agreement) shall have been fulfilled to the satisfaction of Buyer,
and (ii) Buyer shall have received (or in the case of subsection (f)
below, shall have delivered) each of the following, on or before the First
Issuance Date, each (unless otherwise indicated) dated the date hereof or
the First Issuance Date and each in form and substance satisfactory to
Buyer:
(a) Seller Assignment Certificates. A Seller
Assignment Certificate from each Seller in the form of Exhibit B,
duly completed, executed and delivered by such Seller,
(b) Resolutions. A copy of the resolutions of the
Board of Directors of each Seller approving this Agreement and
the other Transaction Documents to be delivered by it hereunder
and the transactions contemplated hereby and thereby and
addressing such other matters as may be required by Buyer,
certified by its Secretary or Assistant Secretary, each as of a
recent date acceptable to Buyer,
-13-
<PAGE>
(c) Good Standing Certificate of each Seller;
Certificates as to Foreign Qualification of each Seller. A good
standing certificate for each Seller, issued as of a recent date
by the Secretary of State of: (i) the jurisdiction of its
incorporation and (ii) each state in which such Seller does
business and where the failure so to be in good standing
reasonably could be expected to have a Material Adverse Effect,
(d) Incumbency Certificate. A certificate of the
Secretary or Assistant Secretary of each Seller certifying, as of
a recent date reasonably acceptable to Buyer, the names and true
signatures of the officers authorized on such Seller's behalf to
sign the Transaction Documents to be delivered by such Seller (on
which certificate Buyer, the Trustee and the Servicer may
conclusively rely until such time as Buyer shall receive from
such Seller (with a copy to the Trustee and the Servicer), a
revised certificate meeting the requirements of this subsection),
(e) Other Transaction Documents. Original copies,
executed by each of the parties thereto in such reasonable number
as shall be specified by Buyer, of each of the other Transaction
Documents to be executed and delivered in connection herewith,
(f) Buyer Notes. The Buyer Notes, executed by Buyer,
and
(g) License Agreements. Duly executed counterparts of
(i) software license agreements between each Seller or Servicer
that uses its own proprietary software in the origination or
servicing of Receivables or Related Assets and Buyer, and (ii)
amendments to any license agreement between a Seller or Servicer
and any third party vendor, adding any substitute Servicer as a
licensee.
(h) Auditors' Letter. A letter from Coopers & Lybrand
L.L.P. in form and substance satisfactory to Buyer, as to certain
agreed-upon procedures performed prior to the First Issuance
Date.
SECTION 4.2 Certification as to Representations and Warranties.
Each Seller (by accepting the Purchase Price paid for each Purchase), ICP
(upon a contribution of Receivables and Related Assets to the Buyer or
ICPPC) and ICPPC (upon a contribution of Receivables and Related Assets
to the Buyer) shall be deemed to have certified with respect to such
Receivables and Related Assets to be sold or contributed on such day that
its representations and warranties contained in Article V (excluding, with
respect to any day after the First Issuance Date, Section 5.1(i)) are true
and correct on and as of such day, with the same effect as though made on
and as of such day.
SECTION 4.3 Effect of Payment of Purchase Price. Upon the
payment of the Purchase Price (whether in cash or by an increase in a
Buyer Note pursuant to Section 3.1) for any Purchase or, in the case of
ICP or ICPPC as a Seller, by a capital contribution, title to the
Receivables and the Related Assets included in the Purchase shall vest in
Buyer, whether or not
-14-
<PAGE>
the conditions precedent to the Purchase were in fact satisfied; provided,
however, that Buyer shall not be deemed to have waived any claim it may
have under this Agreement for the failure by a Seller in fact to satisfy
any such condition precedent. Upon any capital contribution of
Receivables and Related Assets by ICP to ICPPC, title to the Receivables
and Related Assets included in the contribution shall vest in ICPPC.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Representations and Warranties of the Sellers. In
order to induce Buyer to enter into this Agreement and to make purchases
hereunder, each Seller hereby makes the representations and warranties set
forth in this section with respect to itself at the times and to the
extent set forth in Section 4.2 (it being understood that only ICP makes
the representations and warranties set forth below with respect to any
Contributed Receivables and Related Contributed Assets). Furthermore, in
order to induce ICPPC to enter into this Agreement, ICP hereby makes the
representations and warranties set forth in this section with respect to
itself at the times and to the extent set forth in Section 4.2 with
respect to any Contributed Receivables and Related Contributed Assets
contributed to ICPPC.
(a) Organization and Good Standing. Such Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has
full power and authority to own its properties and to conduct its
business as the properties presently are owned and the business
presently is conducted. Such Seller had at all relevant times,
and now has, all necessary power, authority and legal right to
own, sell and (if applicable) contribute its Receivables and the
Related Assets.
(b) Due Qualification. Such Seller is duly qualified
to do business and is in good standing as a foreign corporation
(or is exempt from such requirements), and has obtained all
necessary licenses and approvals, in all jurisdictions in which
the ownership or lease of property or the conduct of its business
requires qualification, licenses or approvals.
(c) Power and Authority; Due Authorization. Such
Seller has (i) all necessary power and authority to (A) execute
and deliver this Agreement and the other Transaction Documents to
which it is a party, (B) perform its obligations under this
Agreement and the other Transaction Documents to which it is a
party, and (C) sell, assign and (if applicable) contribute the
Receivables and the Related Assets on the terms and subject to
the conditions herein and therein provided and (ii) duly
authorized by all necessary action such sale, assignment and (if
applicable) contribution, the execution, delivery and performance
of this Agreement and the other Transaction Documents to which it
is a
-15-
<PAGE>
party and the consummation of the transactions provided for in
this Agreement and the other Transaction Documents to which it is
a party.
(d) Valid Sale; Binding Obligations. Each sale of
Receivables and Related Assets made by such Seller pursuant to
this Agreement, and each contribution of Receivables and Related
Assets made to Buyer shall constitute a valid sale (except in the
case of Contributed Receivables and Related Contributed Assets),
transfer and assignment of all of such Seller's right, title and
interest in, to and under such Receivables and the Related Assets
of such Seller to Buyer that is perfected and of first priority
under the UCC and otherwise, enforceable against creditors of,
and purchasers from, such Seller and free and clear of any
Adverse Claim (other than any Permitted Adverse Claim); and this
Agreement constitutes, and each other Transaction Document to
which such Seller is a party when duly executed and delivered
will constitute, 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, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general
principles of equity, regardless of whether enforceability is
considered in a proceeding in equity or at law.
(e) No Conflict or Violation. The execution, delivery
and performance of, and the consummation of the transactions
contemplated by, this Agreement and the other Transaction
Documents to be signed by such Seller and the fulfillment of the
terms hereof and thereof will not (i) conflict with, violate,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a
default under, (A) its Certificate of Incorporation or Bylaws or
(B) any indenture, loan agreement, mortgage, deed of trust or
other agreement or instrument to which such Seller is a party or
by which it or any of its properties is bound, (ii) result in the
creation or imposition of any Adverse Claim upon any of the
Receivables or Related Assets pursuant to the terms of any such
indenture, loan agreement, mortgage, deed of trust or other
agreement or instrument, other than to this Agreement and the
other Transaction Documents, or (iii) conflict with or violate
any federal, state, local or foreign law or any decision, decree,
order, rule or regulation applicable to it or any of its
properties of any court or of any federal, state, local or
foreign regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it or any
of its properties.
(f) Litigation and Other Proceedings. Except as
described in Schedule 1, (i) there is no action, suit, proceeding
or investigation pending or, to the best knowledge of such
Seller, threatened against it before any court, regulatory body,
arbitrator, administrative agency or other tribunal or
governmental instrumentality and (ii) it is not subject to any
order, judgment, decree, injunction, stipulation or consent order
of or with any court or other government authority that, in the
case of each of clauses (i) and (ii), (A) asserts the invalidity
of this Agreement or any other Transaction Document, (B) seeks to
prevent the sale, assignment or contribution of any Receivables
or Related
-16-
<PAGE>
Assets by such Seller to Buyer, the issuance of the applicable
Seller Assignment Certificate or the consummation of any of the
transactions contemplated by this Agreement or any other
Transaction Document, (C) seeks any determination or ruling that
would materially and adversely affect the performance by such
Seller of its obligations under this Agreement or any other
Transaction Document or the validity or enforceability of this
Agreement or any other Transaction Document, (D) seeks to affect
adversely the income tax attributes of the purchases hereunder or
the applicable Seller Assignment Certificate, in the case of each
of the foregoing whether under the United States Federal income
tax system or any state income tax system, or (E) individually or
in the aggregate for all such actions, suits, proceedings and
investigations would have a reasonable likelihood of having a
Material Adverse Effect.
(g) Third Party Approvals. Except for the filing of
the Public Notices referred to in Article IV, all of which, at
the time required in Article IV, shall have been duly made and
shall be in full force and effect, all authorizations, consents,
orders and approvals of, or other action by, any Governmental
Authority or other third party that are required to be obtained
by such Seller, and all notices to and filings with any
Governmental Authority or other third party that are required to
be made by it, in the case of each of the foregoing in connection
with the conveyance of Receivables and Related Assets or the due
execution, delivery and performance by such Seller of this
Agreement, such Seller's Seller Assignment Certificate or any
other Transaction Document to which it is a party and the
consummation of the transactions contemplated by this Agreement
and the other Transaction Documents, have been obtained or made
and are in full force and effect.
(h) Bulk Sales Act. No transaction contemplated by
this Agreement or any other Transaction Document requires
compliance with, or will be subject to avoidance under, any bulk
sales act or similar law.
(i) Financial Condition. The audited consolidated
balance sheet of ICP and its consolidated Subsidiaries as at the
end of ICP's most recent fiscal year and the related statements
of earnings, stockholders' equity and cash flows of ICP and its
consolidated Subsidiaries for such fiscal year and the unaudited
consolidated balance sheet of ICP and its consolidated
Subsidiaries as at the end of ICP's most recent fiscal quarter
and the related statements of earnings, stockholders' equity and
cash flows of ICP and its consolidated Subsidiaries for such
fiscal quarter, copies of which have been furnished to Buyer, the
Trustee and each Required Person, fairly present the consolidated
financial position and business of ICP and its consolidated
Subsidiaries as at the dates specified therein and the
consolidated results of the operations of ICP and its
consolidated Subsidiaries for the periods ended on such dates,
all in accordance with GAAP consistently applied throughout the
periods reflected therein, and, since the end of ICP's most
recent fiscal year through the date hereof there has been no
material adverse change
-17-
<PAGE>
in the condition (financial or otherwise), business or operations
of ICP and its consolidated Subsidiaries.
(j) Margin Regulations. No use of any funds obtained
by such Seller under this Agreement will conflict with or
contravene any of Regulations G, T, U and X promulgated by the
Federal Reserve Board from time to time.
(k) Quality of Title. (i) Immediately before each
purchase to be made by Buyer hereunder and (in the case of ICP
and ICPPC) each contribution to be made to Buyer, each Receivable
and Related Asset of such Seller that is then to be transferred
to Buyer thereunder, and the related Contracts, shall be owned by
such Seller free and clear of any Adverse Claim (other than any
Permitted Adverse Claim or any Adverse Claim arising solely as
the result of any action taken by Buyer hereunder or by the
Trustee under the Pooling Agreement); provided that the existence
of an Adverse Claim that is released on the First Issuance Date
(upon application of the proceeds of the issuance of Certificates
on that date) shall not constitute a breach of this
representation and warranty; and such Seller shall have made or
effected all Public Notices and shall have taken all other action
under applicable law in each relevant jurisdiction in order to
protect and perfect the ownership interest of Buyer and its
successors in the Receivables and Related Assets against all
creditors of, and purchasers from, such Seller.
(ii) Whenever Buyer makes a purchase hereunder
from such Seller (or accepts a contribution from ICP or
ICPPC), Buyer shall have acquired a valid and perfected
first priority ownership interest in each Specified Asset
sold by such Seller or contributed by ICP or ICPPC on
such date, free and clear of any Adverse Claim (other
than any Permitted Adverse Claim).
(iii) No effective Public Notice that covers all
or part of any Receivable originated by such Seller, any
interest therein or any Related Asset with respect
thereto is on file in any recording office except such as
may be filed (A) in favor of such Seller in accordance
with the Contracts, (B) in favor of Buyer pursuant to
this Agreement and (C) in favor of the Trustee, for the
benefit of the Investor Certificateholders, in accordance
with the Pooling Agreement. No Public Notice relating to
perfection that covers any inventory of such Seller that
might give rise to Receivables is on file in any
recording office except for (x) (so long as an
Intercreditor Agreement is in effect) Public Notices in
favor of creditors of such Seller bound by such
Intercreditor Agreement and (y) that certain Public
Notice in favor of The Toronto Dominion Bank which covers
certain inventory of ICP but which does not cover any
Specified Assets (including, without limitation, any
Related Security).
(iv) No Purchase by Buyer from such Seller (or,
in the case of ICP and ICPPC, no capital contribution to
Buyer) constitutes a fraudulent transfer or
-18-
<PAGE>
fraudulent conveyance under the United States Bankruptcy
Code or applicable state bankruptcy or insolvency laws or
is otherwise void or voidable or subject to subordination
under similar laws or principles or for any other reason.
(v) Each Purchase by Buyer from such Seller
constitutes a true and valid sale of the Receivables and
Related Assets under applicable state law and true and
valid assignments and transfers for consideration (and
not merely a pledge of the Receivables and Related Assets
for security purposes), enforceable against the creditors
of such Seller, and no Receivables or Related Assets
transferred to Buyer hereunder shall constitute property
of such Seller.
(l) Eligible Receivables. (i) On the date of each
Purchase of Receivables hereunder from such Seller (or, in the
case of ICP or ICPPC, contribution from ICP or ICPPC,
respectively), each such Receivable, unless otherwise identified
to Buyer and the Trustee by the Servicer in the Daily Report for
such date, is an Eligible Receivable, and (ii) on the date of
each Daily Report or Monthly Report that identifies a Receivable
originated by such Seller as an Eligible Receivable, such
Receivable is an Eligible Receivable.
(m) Accuracy of Information. All written information
furnished by or on behalf of such Seller to Buyer, the Servicer
or the Trustee pursuant to or in connection with any Transaction
Document or any transaction contemplated herein or therein shall
not contain any untrue statement of a material fact or omit to
state material facts necessary to make the statements made
therein not misleading, in each case in the light of the
circumstances under which the statements were made or the
information was furnished.
(n) Offices. The principal place of business and chief
executive office of such Seller is located at the address set
forth on Schedule 3, and any other location which has been such
Seller's principal place of business or chief executive office
during the past four months or in which such Seller keeps (or has
kept during the past four months) all Records and all Contracts,
invoices, purchase orders and agreements related to the
Receivables or Related Assets (and all original documents
relating thereto) is specified in Schedule 3 (or at such other
locations, notified to the Servicer, the Trustee, each Rating
Agency and each Required Person in accordance with Section
6.1(f), in jurisdictions where all action required pursuant to
Section 7.3 has been taken and completed).
(o) Account Banks and Payment Instructions. The names
and addresses of all the banks, together with the account numbers
of the accounts at the banks, into which Collections are paid as
of the First Issuance Date have been accurately identified to
Buyer in a letter from such Seller to Buyer dated the First
Issuance Date or have been specified in the notices as shall have
been delivered thereafter pursuant to Section 6.3(c). Each
Account Bank has executed and delivered an Account Agreement to
Buyer and the
-19-
<PAGE>
Trustee. Such Seller has instructed all Obligors to submit all
payments on the Receivables and Related Assets directly to one of
the Lockbox Accounts. Any payments not made directly to the
Account Banks will be forwarded by the recipient of such payments
to the Account Banks within two Business Days.
(p) Compliance with Applicable Laws. Such Seller is in
compliance with the requirements of all applicable laws, rules,
regulations and orders of all Governmental Authorities (federal,
state, local or foreign, and including consumer protection and
environmental laws).
(q) Legal Names. Except as set forth in Schedule 4,
since January 1, 1990 such Seller has not been known by any legal
name other than its corporate name as of the date hereof, except
to the extent permitted otherwise pursuant to Section 6.3(e), nor
has such Seller been the subject of any merger, consolidation,
amalgamation or other corporate reorganization since January 1,
1990 that resulted in a change of name, identity or corporate
structure. Such Seller uses no trade names other than its actual
corporate name and the trade names set forth in Schedule 4.
(r) Investment Company Act. Such Seller is not, and is
not controlled by, an "investment company" registered or required
to be registered under the Investment Company Act of 1940, as
amended.
(s) Taxes. Such Seller has filed or caused to be filed
all tax returns (foreign or domestic, federal, province,
territory, state or local) and reports required by law to have
been filed by it and has paid all taxes, assessments and
governmental charges which are due and payable by it, except any
such taxes, assessments or charges (i) that are being diligently
contested in good faith by appropriate proceedings, (ii) for
which adequate reserves in accordance with GAAP have been set
aside on its books and (iii) with respect to which no Adverse
Claim, except Permitted Adverse Claims, has been imposed upon any
Receivables or Related Assets.
(t) Software Programs. Each software program, and any
license or other agreement relating to such program, used in the
origination or servicing of Receivables and Related Assets is
described in Schedule 5.
SECTION 5.2 Representations and Warranties of Buyer. From the
date hereof until the Purchase Termination Date, Buyer hereby represents
and warrants that (a) this Agreement (i) has been duly authorized,
executed and delivered by Buyer and (ii) constitutes the legal, valid and
binding obligation of Buyer, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity,
regardless of whether enforceability is considered in a proceeding in
equity or at law, and
-20-
<PAGE>
(b) the execution, delivery and performance of this Agreement does not
violate any applicable law or any agreement to which Buyer is a party or
by which its properties are bound.
ARTICLE VI
GENERAL COVENANTS OF THE SELLERS
SECTION 6.1 Affirmative Covenants. From the First Issuance
Date until the first day following the Purchase Termination Date on which
all Obligations of the Sellers shall have been finally and fully paid and
performed and the Invested Amount for each Series shall have been reduced
to zero, unless Buyer shall otherwise give its prior written consent, each
Seller hereby agrees that it will perform the covenants and agreements set
forth in this section.
(a) Compliance with Laws, Etc. Such Seller will comply
in all material respects with all applicable laws, rules,
regulations, judgments, decrees and orders (including those
relating to the Receivables, the Related Assets, the related
Contracts of such Seller and any other agreements related
thereto), in each case to the extent the failure to comply,
individually or in the aggregate for all such failures,
reasonably could be expected to have a Material Adverse Effect.
(b) Preservation of Corporate Existence. Such Seller
will preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified in good standing
as a foreign corporation in each jurisdiction where the failure
to preserve and maintain such existence, rights, franchises,
privileges and qualifications reasonably could be expected to
have a Material Adverse Effect.
(c) Receivables Reviews. Such Seller shall, during
regular business hours upon not less than two Business Days'
prior notice, permit Buyer and its agents or representatives, at
the expense of such Seller, (i) to examine and make copies of and
abstracts from, and to conduct accounting reviews of, all Records
in the possession or under the control of such Seller relating to
the Receivables or Related Assets generated by such Seller, and
(ii) to visit the offices and properties of such Seller for the
purpose of examining the materials described in clause (i) above,
and to discuss matters relating to any Receivables or any Related
Assets of such Seller or such Seller's performance hereunder with
any of the Authorized Officers of such Seller or, with the prior
consent of an Authorized Officer of such Seller, with employees
of such Seller having knowledge of such matters (the examinations
set forth in the foregoing clauses (i) and (ii) being herein
called a "Seller Receivables Review"). Buyer and its agents or
representatives shall be entitled to conduct Seller Receivables
Reviews whenever Buyer, in its reasonable judgment, deems it
appropriate; provided, that prior to the occurrence and
continuance of an Early Amortization Event or an Unmatured Early
Amortization Event or during the period in which the most recent
quarterly servicing report delivered pursuant to Section
-21-
<PAGE>
3.7 of the Pooling Agreement discloses a material exception,
Buyer (or its agent or representative) shall give such Seller at
least one Business Day's prior notice of any Seller Receivables
Review, and Buyer shall have the right to request a Seller
Receivables Review not more than three times in any calendar
year.
(d) Keeping of Records and Books of Account. Such
Seller shall maintain and implement administrative and operating
procedures (including an ability to recreate records evidencing
its Receivables and Related Assets in the event of the
destruction of the originals thereof), and shall keep and
maintain all documents, books, records and other information
that, in the reasonable determination of Buyer and the Trustee,
are necessary or advisable in accordance with prudent industry
practice and custom for transactions of this type for the
collection of all Receivables and the Related Assets. Upon the
reasonable request of Buyer made at any time after the occurrence
and continuance of a Servicer Default, such Seller will deliver
copies of all books and records maintained pursuant to this
subsection to the Trustee. Such Seller shall maintain at all
times accurate and complete books, records and accounts relating
to the Receivables, Related Assets and Contracts and all
Collections thereon in which timely entries shall be made. Such
books and records shall be marked to indicate the sales (and, in
the case of ICP and ICPPC, contributions) of all Receivables and
Related Assets hereunder and shall include (i) all payments
received and all credits and extensions granted with respect to
the Receivables and (ii) the return, rejection, repossession or
stoppage in transit of any merchandise, the sale of which has
given rise to a Receivable that has been purchased by or
contributed to Buyer.
(e) Performance and Compliance with Receivables and
Contracts. Such Seller will, at its expense, timely and fully
perform and comply with all provisions, covenants and other
promises required to be observed by it under the Contracts of
such Seller related to the Receivables and Related Assets, in
each case to the extent failure to perform or comply reasonably
could be expected to have a Material Adverse Effect.
(f) Location of Records and Offices. Such Seller will
keep its principal place of business and chief executive office,
and the offices where it keeps all Records related to the
Receivables and the Related Assets (and all original documents
relating thereto), at the addresses referred to in Schedule 3 or,
upon not less than 30 days' prior written notice given by such
Seller to Buyer, the Trustee, the Rating Agencies and each
Required Person at such other locations in jurisdictions where
all action required by Section 7.3 shall have been taken and
completed.
(g) Credit and Collection Policies. Such Seller will
comply with its Credit and Collection Policy in regard to each
Receivable of such Seller and the Related Assets and the
Contracts related to each such Receivable.
-22-
<PAGE>
(h) Separate Existence of Buyer. Such Seller hereby
acknowledges that the Trustee, on behalf of the Trust, is
entering into the transactions contemplated by the Transaction
Documents in reliance upon Buyer's identity as a legal entity
separate from such Seller and the other Related Persons.
Therefore, from and after the date hereof until the first day
following the Purchase Termination Date on which all Obligations
shall have been fully paid and performed and the Invested Amount
for each Series shall have been reduced to zero, such Seller
will, and will cause each other Related Person to, take all
reasonable steps to continue their respective identities as
separate legal entities and to make it apparent to third Persons
that each is an entity with assets and liabilities distinct from
those of Buyer and that Buyer is not a division of the Servicer,
such Seller, ICP or any other Person. Without limiting the
foregoing, ICP and each Seller will, and will cause each other
ICP Person to, operate, conduct their respective businesses and
otherwise act in a manner which is consistent with the factual
assumptions in each Bankruptcy Opinion for each Series.
(i) Payment Instructions to Obligors. Such Seller will
instruct all Obligors to submit all payments either (i) to one of
the lockboxes maintained at the Lockbox Banks for deposit in a
Lockbox Account or (ii) directly to one of the Lockbox Accounts.
(j) Segregation of Collections. Such Seller shall use
best efforts to minimize the deposit of any funds other than
Collections into any of the Lockbox Accounts and, to the extent
that any such funds nevertheless are deposited into any of the
Lockbox Accounts, shall promptly identify any such funds, or
shall cause the funds to be so identified, to Buyer, the
Servicer, the Trustee and each Required Person (following which
notice, Buyer shall use best efforts to cause the Servicer to
return all the funds to such Seller).
(k) Identification of Eligible Receivables. Such Seller
will (i) establish and maintain such procedures as are necessary
for determining no less frequently than each Business Day whether
each Receivable qualifies as an Eligible Receivable, and for
identifying, on any Business Day, all Receivables to be sold on
that date that are not Eligible Receivables, and (ii) except as
permitted in Section 3.5(c) of the Pooling Agreement, notify
Buyer prior to the occurrence of a Purchase (and, in the case of
ICP and ICPPC, before a contribution of Receivables and Related
Assets) if a Receivable to be sold or contributed hereunder will,
to such Seller's knowledge, not be an Eligible Receivable as of
the date of such Purchase or contribution.
(l) Accuracy of Information. All written information
furnished on and after the First Issuance Date by or on behalf of
such Seller to Buyer, the Servicer or the Trustee pursuant to or
in connection with any Transaction Document or any transaction
contemplated herein or therein shall not contain any untrue
statement of a material fact or omit to state material facts
necessary to make the statements made not misleading, in each
case on the date the statement was made and in light of the
circumstances under which the statements were made or the
information was furnished.
-23-
<PAGE>
(m) Taxes. Such Seller shall file or cause to be filed,
and cause each Person with whom it shares consolidated tax
liability to file, all Federal, state and local tax returns
(foreign or domestic, federal, state, province, territory or
local) and reports required by law to have been filed by it
(except where the failure to file such returns or reports
reasonably could not be expected to have a Material Adverse
Effect) and pay or cause to be paid all taxes, assessments and
governmental charges which are due and payable by it (including
any obligation, as agent or otherwise, to pay or remit any goods
and services tax) except any such taxes or assessments the
validity of which are being contested in good faith by
appropriate proceedings and with respect to which such Seller
shall have set aside adequate reserves on its books in accordance
with GAAP and which proceedings reasonably could not be expected
to have a Material Adverse Effect.
(n) Software Licenses. Such Seller shall cause all
software licenses or similar agreements used by the Sellers or
Servicer in the origination or servicing of Receivables to
expressly permit use by any Successor Servicer of the materials
subject to such licenses or agreements.
SECTION 6.2 Reporting Requirements. From the First Issuance
Date until the first day following the Purchase Termination Date on which
all Obligations of the Sellers shall have been finally and fully paid and
performed and the Invested Amount for each Series shall have been reduced
to zero, such Seller agrees that it will, unless Buyer and the Trustee
shall otherwise give prior written consent, and (with respect to the
notices described below in subsections (c) and (d)) unless the
Modification Condition has been satisfied, furnish to Buyer, the Trustee
and each Required Person (and in the case of the notices described below
in subsections (c), (d) and (f), to the Rating Agencies):
(a) Quarterly Financial Statements. Within 45 days
after the end of each of the first three fiscal quarters of each
fiscal year of ICP, copies of the unaudited consolidated balance
sheets of ICP and its consolidated Subsidiaries as at the end of
the fiscal quarter and the related unaudited statements of
earnings and cash flows, in each case for the fiscal quarter and
for the period from the beginning of the fiscal year through the
end of such fiscal quarter, prepared in accordance with GAAP
consistently applied throughout the periods reflected therein and
certified (subject to year end adjustments and the omission of
footnotes) by the chief financial officer or chief accounting
officer of ICP,
(b) Annual Financial Statements. As soon as possible
and in any event within 90 days after the end of each fiscal year
of ICP, a copy of the audited consolidated balance sheet of ICP
and its consolidated Subsidiaries as at the end of the fiscal
year and the related statements of earnings, stockholders' equity
and cash flows of ICP and its consolidated Subsidiaries for the
fiscal year, setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year and prepared
in accordance with GAAP consistently applied throughout the
periods reflected therein, certified, without Impermissible
Qualification, by Coopers & Lybrand L.L.P. (or such other
-24-
<PAGE>
independent certified public accountants of a nationally
recognized standing in the United States of America as shall be
selected by ICP),
(c) Early Amortization Events. As soon as possible, and
in any event within two Business Days after any officer of such
Seller has obtained knowledge of the occurrence of any Early
Amortization Event or any Unmatured Early Amortization Event, a
written statement of an Authorized Officer of such Seller
describing the event and the action that such Seller proposes to
take with respect thereto, in each case in reasonable detail,
(d) Material Adverse Effect. As soon as possible and in
any event within two Business Days after any officer of such
Seller has knowledge thereof, written notice that describes in
reasonable detail any event or occurrence that, individually or
in the aggregate for all such events or occurrences, has had, or
reasonably could be expected to have, a Material Adverse Effect,
(e) Proceedings. As soon as possible and in any event
within two Business Days after any officer of such Seller has
knowledge thereof, written notice of (i) any litigation,
investigation or proceeding of the type described in Section
5.1(f) not previously disclosed to Buyer and (ii) any judgment,
settlement or other final disposition with respect to any such
previously disclosed litigation, investigation or proceeding, and
(f) Other. Promptly, from time to time, (i) such other
information, documents, records or reports respecting the
Receivables or the Related Assets or (ii) such other publicly
available information respecting the condition or operations,
financial or otherwise, of such Seller, in each case as Buyer may
from time to time reasonably request in order to protect the
interests of Buyer, the Trustee or the Certificateholders under
or as contemplated by this Agreement.
SECTION 6.3 Negative Covenants. From the First Issuance Date
until the first day following the Purchase Termination Date on which all
Obligations of the Sellers shall have been finally and fully paid and
performed and the Invested Amount for each Series shall have been reduced
to zero, unless Buyer and the Trustee shall otherwise give prior written
consent, each Seller hereby agrees that it will perform the covenants and
agreements set forth in this section.
(a) Sales, Liens, Etc. Except as otherwise provided
herein or in the Pooling Agreement, such Seller will not (i)(A)
sell, assign (by operation of law or otherwise) or otherwise
transfer to any Person, (B) pledge any interest in, (C) grant,
create, incur, assume or permit to exist any Adverse Claim (other
than Permitted Adverse Claims) to or in favor of any Person upon
or with respect to, or (D) cause to be filed any Public Notice
relating to perfection with respect to, any Transferred Asset or
any Contract related to any Receivable, or upon or with respect
to any lockbox or account to which any Collections of any such
Receivable or any Related Assets are sent or any interest
-25-
<PAGE>
therein, or (ii) assign to any Person any right to receive income
from or in respect of any of the foregoing.
In the event that such Seller fails to keep any Specified
Assets free and clear of any Adverse Claim (other than a
Permitted Adverse Claim, any Adverse Claims arising hereunder,
and other Adverse Claims permitted by any other Transaction
Document), Buyer may (without limiting its other rights with
respect to such Seller's breach of its obligations hereunder)
make reasonable expenditures necessary to release the Adverse
Claim. Buyer shall be entitled to indemnification for any such
expenditures pursuant to the indemnification provisions of
Article IX. Alternatively, Buyer may deduct such expenditures as
an offset to the Purchase Price owed to such Seller hereunder.
Such Seller will not pledge or grant any security
interest in its inventory, the Buyer Note or its ownership
interest in Buyer unless (i) prior to any pledge or grant such
Seller, Buyer, the Trustee and the Person for whose benefits the
pledge or grant is being made have entered into an Intercreditor
Agreement and (ii) the Modification Condition has been satisfied;
provided that the continuing existence of that certain security
interest previously granted by ICP in favor of The Toronto
Dominion Bank in certain inventory of ICP (but no Specified
Assets (including, without limitation, any Related Security))
shall not be a breach of the covenant contained in this
paragraph.
(b) Extension or Amendment of Receivables; Change in
Credit and Collection Policy or Contracts. Such Seller will not,
(i) without the prior written consent of Buyer and the Trustee,
extend, amend or otherwise modify the terms of any Receivable or
Contract in a manner that reasonably could be expected to have a
Material Adverse Effect or (ii) change the terms and provisions
of the Credit and Collection Policy in any material respect
unless (x) with respect to collection policies, the change is
made with the prior written approval of the Trustee and Buyer and
the Modification Condition is satisfied with respect thereto, (y)
with respect to collection procedures, the change is made with
prior written notice to the Trustee, Buyer and each Required
Person and no Material Adverse Effect would result and (z) with
respect to accounting policies relating to Receivables that have
become Write-Offs, the change is made in accordance with GAAP.
(c) Change in Payment Instructions to Obligors. Such
Seller will not (i) add or terminate any bank as an Account Bank
from those listed in the letter referred to in Section 5.1(o)
unless, prior to any such addition or termination, Buyer, the
Trustee, the Rating Agencies and the Required Persons shall have
received not less than ten Business Days' prior written notice of
the addition or termination and, not less than ten Business Days
prior to the effective date of any such proposed addition or
termination, Buyer and the Trustee shall have received (A)
counterparts of the applicable type of Account Agreement with
each new Account Bank, duly executed by such new Account Bank and
all other parties thereto, and (B) copies of all other agreements
and documents signed by
-26-
<PAGE>
the Account Bank and such other parties with respect to any new
Bank Account, all of which agreements and documents shall be
reasonably satisfactory in form and substance to Buyer and the
Trustee, or (ii) make any change in its instructions to Obligors,
given in accordance with Section 5.1(o), regarding payments to be
made to such Seller or payments to be made to any Account Bank,
other than changes in the instructions that direct Obligors to
make payments to another Bank Account at such Account Bank or
another Account Bank or to the Master Collection Account.
(d) Mergers, Acquisitions, Sales, etc. Except for
(i) mergers or consolidations in which such Seller is the
surviving Person, (ii) mergers or consolidations of a Subsidiary
of ICP into such Seller or (iii) mergers or consolidations in
which the surviving Person expressly assumes the performance of
this Agreement and the Modification Condition shall have been
satisfied with respect to the consolidation or merger, such
Seller will not be a constituent corporation to any merger or
consolidation. Such Seller will give the Rating Agencies, the
Trustee and each Required Person written notice of any such
permitted merger or consolidation promptly following completion
thereof. Unless the Modification Condition is satisfied, such
Seller will not, directly or indirectly, transfer, assign, convey
or lease, whether in one transaction or in a series of
transactions, all or substantially all of its assets or sell or
assign, with or without recourse, any Receivables or Related
Assets, in each case other than pursuant to this Agreement.
(e) Change in Name. Such Seller will not (i) change
its corporate name or (ii) change the name under or by which it
does business in any manner that would or may make any Public
Notice filed by such Seller in accordance herewith seriously
misleading within the meaning of Section 9-402(7) of an
applicable enactment of the UCC, in each case unless such Seller
shall have given Buyer, the Servicer, the Trustee, the Rating
Agencies and each Required Person 30 days' prior written notice
thereof and unless, prior to any change in name, such Seller
shall have taken and completed all action required by Section
7.3.
(f) Certificate of Limited Partnership. ICP will not
cause or permit Buyer to amend its Certificate of Limited
Partnership or partnership agreement without the prior written
consent of the Required Persons.
(g) Amendments to Transaction Documents. Such Seller
will not amend or otherwise modify or supplement any Transaction
Document to which it is a party unless (i) Buyer and the Trustee
shall have given prior written consent to each amendment,
modification or supplement and (ii) the Modification Condition
shall have been satisfied.
(h) Accounting for Purchases. Such Seller shall
prepare its financial statements in accordance with GAAP, and any
financial statements that are made publicly available and which
are consolidated to include Buyer will contain footnotes stating
that such Seller
-27-
<PAGE>
has sold or contributed its Receivables to Buyer and that the
assets of Buyer will not be available to ICP and its Subsidiaries
(other than Buyer) unless Buyer's liabilities have been paid in
full. Such Seller shall not prepare any financial statements
that account for the transactions contemplated in this Agreement
in any manner other than as a sale or contribution of Specified
Assets by such Seller to Buyer, or in any other respect account
for or treat the transactions contemplated in this Agreement
(including but not limited to accounting and, where taxes are not
consolidated, for tax reporting purposes) in any manner other
than as a sale or contribution of Specified Assets by such Seller
to Buyer.
(i) Discretionary Returns and Terminations of
Distributors. Such Seller will not allow any Discretionary
Returns or exercise its right to terminate a Distributor under a
Distributor Agreement unless it has complied with the provisions
of Section 3.2(k) of the Pooling Agreement.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE SPECIFIED ASSETS
SECTION 7.1 Rights of Buyer. (a) Subject to Section 7.4(b),
each Seller hereby authorizes Buyer, the Servicer and/or their respective
designees to take any and all steps in such Seller's name and on behalf
of such Seller that Buyer, the Servicer and/or their respective designees
determine are reasonably necessary or appropriate to collect all amounts
due under any and all Specified Assets, including endorsing the name of
such Seller on checks and other instruments representing Collections and
enforcing such Seller's rights under such Specified Assets.
(b) Except as set forth in Section 3.1 with respect to payments
that Buyer shall have received on account of Seller Noncomplying
Receivables that had been the subject of an earlier Seller Noncomplying
Receivables Adjustment, Buyer shall have no obligation to account for any
Specified Asset to any Seller. Buyer shall have no obligation to account
for, or to return Collections, or any interest or other finance charge
collected pursuant thereto, to any Seller, irrespective of whether such
Collections and charges are in excess of the Purchase Price for the
Purchased Assets.
(c) Buyer shall have the unrestricted right to further assign,
transfer, deliver, hypothecate, subdivide or otherwise deal with the
Specified Assets, and all of Buyer's right, title and interest in, to and
under this Agreement, on whatever terms Buyer shall determine, pursuant
to the Pooling Agreement or otherwise.
-28-
<PAGE>
(d) Buyer shall have the sole right to retain any gains or
profits created by buying, selling or holding the Specified Assets and
shall have the sole risk of and responsibility for losses or damages
created by such buying, selling or holding.
SECTION 7.2 Responsibilities of the Sellers. Anything herein
to the contrary notwithstanding, each Seller hereby agrees:
(a) to deliver directly to the Servicer (for Buyer's
account), within two Business Days after receipt thereof, any
Collections that it receives, in the form so received, and agrees
that all such Collections shall be deemed to be received in trust
for Buyer and shall be maintained and segregated separate and
apart from all other funds and moneys of such Seller until
delivery of such Collections to the Servicer,
(b) to perform all of its obligations hereunder and
under the Contracts at least to the same extent as if the
Receivables had not been sold hereunder, and the exercise by
Buyer or its designee or assignee of Buyer's rights hereunder or
in connection herewith shall not relieve such Seller from any of
its obligations under the Contracts or Related Assets related to
the Receivables,
(c) that it hereby grants to Buyer an irrevocable power
of attorney, with full power of substitution, coupled with an
interest, to take in the name of such Seller all steps necessary
or advisable to endorse, negotiate or otherwise realize on any
writing or other right of any kind held or transmitted by such
Seller or transmitted or received by Buyer (whether or not from
such Seller) in connection with any Transferred Asset, and
(d) to the extent that such Seller does not own the
computer software that such Seller uses to account for
Receivables, such Seller shall provide Buyer, any Successor
Servicer and the Trustee with such licenses, sublicenses and/or
assignments of contracts as Buyer, such Successor Servicer or the
Trustee shall require with regard to all services and computer
hardware or software used by such Seller that relate to the
servicing of the Specified Assets.
SECTION 7.3 Further Action Evidencing Purchases. Each Seller
agrees that from time to time, at its expense, it will promptly, upon
reasonable request by Buyer, Servicer or Trustee, execute and deliver all
further instruments and documents, and take all further action, in order
to perfect, protect or more fully evidence the Purchase by Buyer or
contribution to Buyer of the Receivables and the Related Assets under this
Agreement (as applicable), or to enable Buyer to exercise or enforce any
of its rights under any Transaction Document. Each Seller further agrees
that from time to time, at its expense, it will promptly, upon request,
take all action that Buyer, the Servicer or the Trustee may reasonably
request in order to perfect, protect or more fully evidence the Purchase
or contribution of the Receivables and the Related
-29-
<PAGE>
Assets or to enable Buyer or the Trustee (as the assignee of Buyer) to
exercise or enforce any of its rights hereunder or under any other
Transaction Document. Without limiting the generality of the foregoing,
upon the request of Buyer or the Trustee, each Seller will:
(a) execute and file such Public Notices and such other
instruments or notices, as Buyer or the Trustee may reasonably
determine to be necessary or appropriate, and
(b) mark the master data processing records evidencing
the Receivables with the following legend:
"THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD
TO INTER-CITY PRODUCTS RECEIVABLES COMPANY, L.P.
("BUYER") PURSUANT TO A RECEIVABLES PURCHASE
AGREEMENT, DATED AS OF JULY 25, 1996, AMONG
INTER-CITY PRODUCTS CORPORATION (USA), CERTAIN
OF ITS SUBSIDIARIES AND BUYER; AND SUCH
RECEIVABLES HAVE BEEN TRANSFERRED TO THE INTER-
CITY PRODUCTS MASTER TRUST PURSUANT TO A
POOLING AND SERVICING AGREEMENT, DATED AS OF THE
SAME DATE, AMONG BUYER, AS TRANSFEROR, INTER-
CITY PRODUCTS CORPORATION (USA) AS THE INITIAL
SERVICER, AND LASALLE NATIONAL BANK, AS
TRUSTEE."
Each Seller hereby authorizes Buyer or its designee to file one
or more Public Notices relative to all or any of the Receivables and
Related Assets of such Seller, in each case whether now existing or
hereafter generated by such Seller. Except for material performance
obligations of such Seller to any Obligor hereunder or under any of the
Contracts, if (i) such Seller fails to perform any of its agreements or
obligations under this Agreement and does not remedy the failure within
the applicable cure period, if any, and (ii) Buyer in good faith
reasonably believes that the performance of such agreements and
obligations is necessary or appropriate to protect its interests under
this Agreement, then Buyer or its designee may (but shall not be required
to) perform, or cause performance of, such agreement or obligation and the
reasonable expenses of Buyer or its designee or assignee incurred in
connection with such performance shall be payable by such Seller as
provided in Section 9.1.
SECTION 7.4 Collection of Receivables; Rights of Buyer and Its
Assignees. (a) Each Seller hereby transfers to the Trustee (as
transferee of Buyer's interest in the Specified Assets) the ownership of,
and the exclusive dominion and control over, each of the Bank Accounts and
all related lockboxes owned by such Seller, and such Seller hereby agrees
to take any further action that Buyer or the Trustee may reasonably
request in order to effect or complete the transfer. Each Seller further
agrees to use best efforts to prevent funds other than proceeds of the
Specified Assets from being deposited in any Bank Account.
-30-
<PAGE>
(b) Buyer may, at any time after an Early Amortization Event or
Servicer Default, direct the Obligors of Receivables, or any of them, to
pay all amounts payable under any Transferred Asset directly to the
Trustee or its designees. Furthermore, each Seller shall, at the request
of Buyer and at such Seller's expense, promptly give notice of the Trust's
interest in the Receivables of the Obligor and the Related Assets to each
such Obligor and direct that payments be made directly to the Trustee or
its designee, which notice shall be acceptable in form and substance to
Buyer. In addition, each Seller hereby authorizes Buyer to take any and
all steps in such Seller's name and on its behalf that are necessary or
desirable, in the reasonable determination of Buyer, to collect all
amounts due under any and all Specified Assets, including endorsing such
Seller's name on checks and other instruments representing Collections and
enforcing the Specified Assets and the Contracts related to the
Receivables. The Trustee may exercise any of the foregoing rights in the
place of Buyer (as assignee or otherwise) at any time following the
designation of a Servicer other than the Initial Servicer pursuant to
Section 10.2 of the Pooling Agreement.
(c) At any time when (i) an Early Amortization Event shall have
occurred and remain continuing or (ii) a Servicer other than the Initial
Servicer has been designated pursuant to Section 10.2 of the Pooling
Agreement, each Seller shall, at Buyer's request, assemble all of the
Records that evidence the Receivables and Related Assets originated by
such Seller, or that are otherwise necessary or desirable to collect the
Receivables or Related Assets, and make the same available to Buyer or the
Trustee at a place selected by the Trustee or its designee.
ARTICLE VIII
TERMINATION
SECTION 8.1 Automatic Termination. (a) This Agreement shall
terminate on the date on which the Pooling Agreement terminates in
accordance with its terms. Notwithstanding anything to the contrary in
this Agreement, if, at any time prior to such date, an event specified in
the definition of Bankruptcy Event occurs (without regard to the 60 day
grace period specified in paragraph (a) of that definition), then on and
after the date on which such bankruptcy proceeding is filed until the
dismissal of the proceeding Buyer shall not purchase Receivables and
Related Assets from such Seller.
(b) If the Internal Revenue Service or the PBGC files one or more
Tax or ERISA Liens against the assets of any Seller or Buyer (including
Receivables), then (unless such liens are removed and the Modification
Condition is satisfied) Buyer shall not purchase any Receivables or
Related Assets from such Seller (or from any Seller if such Lien is filed
against Buyer).
-31-
<PAGE>
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Indemnities by the Sellers. Without limiting any
other rights that any RPA Indemnified Party (as defined below) may have
hereunder or under applicable law, each Seller agrees to indemnify Buyer,
each of its successors, permitted transferees and assigns, and all
officers, directors, shareholders, controlling Persons, employees and
agents of any of the foregoing (each of the foregoing Persons being
individually called a "RPA Indemnified Party"), forthwith on demand, from
and against any and all damages, losses, claims (whether on account of
settlements or otherwise), judgments, liabilities and related reasonable
costs and expenses (including reasonable attorneys' fees and
disbursements) awarded against or incurred by any of them arising out of,
in connection with, or as a result of any of the following (all of the
foregoing being collectively called "RPA Indemnified Losses"):
(a) any representation or warranty by such Seller (or
any of its Authorized Officers) under any of the Transaction
Documents, any Monthly Report, any Daily Report or any other
information or report delivered by or on behalf of such Seller or
the Servicer with respect to such Seller or the Receivables or
Related Assets originated by such Seller (including without
limitation any representation, warranty, information or report
relied upon by Buyer in connection with the offering or sale of
any Certificate), that contained any untrue statement or omitted
to state facts necessary to make the statements not misleading
when made,
(b) the failure by such Seller to comply with any
applicable law, rule or regulation with respect to any Receivable
or any Related Asset or to comply with any Contract related
thereto, or the nonconformity of any Receivable, the related
Contract or any Related Assets with any such applicable law, rule
or regulation,
(c) the failure to vest and maintain vested in Buyer a
first priority perfected ownership interest in the Receivables
originated by such Seller and the Related Assets, free and clear
of any Adverse Claim (other than an Adverse Claim created in
favor of Buyer pursuant to this Agreement or in favor of the
Trustee pursuant to the Pooling Agreement), whether existing at
the time of the sale of such Receivable or at any time thereafter
and without regard to whether such Adverse Claim was a Permitted
Adverse Claim,
(d) any failure of such Seller to perform its duties or
obligations in accordance with the provisions of the Transaction
Documents,
(e) any products liability claim, personal injury or
property damage suit, environmental liability claim or any other
claim or action by a party other than Buyer of whatever sort,
whether sounding in tort, contract or any other legal theory,
arising out
-32-
<PAGE>
of or in connection with the goods or services that are the
subject of any Specified Assets with respect thereto,
(f) the failure to file, or any delay in filing, any
Public Notice with respect to any Specified Assets, whether at
the time of any sale or at any subsequent time,
(g) any dispute, claim, offset or defense (other than
the discharge in bankruptcy) of an Obligor to the payment of any
Receivable originated by such Seller or Related Asset, or
purported Receivable or Related Asset, including a defense based
on such Receivable's or the related Contract's not being a legal,
valid and binding obligation of the Obligor enforceable against
it in accordance with its terms, and
(h) any tax or governmental fee or charge (other than
franchise taxes and taxes on or measured by the net income of
Buyer or any of its assignees), all interest and penalties
thereon or with respect thereto, and all reasonable out-of-pocket
costs and expenses, including the reasonable fees and expenses of
counsel in defending against the same, that may arise by reason
of the purchase or ownership of the Receivables originated by
such Seller or any Related Asset connected with any such
Receivables.
Notwithstanding the foregoing (and with respect to clause (ii) below,
without prejudice to the rights that Buyer may have pursuant to the other
provisions of this Agreement or the provisions of any of the other
Transaction Documents), in no event shall any RPA Indemnified Party be
indemnified for any RPA Indemnified Losses (i) resulting from gross
negligence or willful misconduct on the part of the RPA Indemnified Party,
(ii) to the extent the same includes losses in respect of Receivables and
reimbursement therefor that would constitute credit recourse to such
Seller for the amount of any Receivable or Related Asset not paid by the
related Obligor, (iii) to the extent the same are or result from lost
profits (other than any breakage amounts or early termination amounts owed
to any RPA Indemnified Party) or (iv) to the extent the same are or result
from taxes on or measured by the net income of the RPA Indemnified Party.
If for any reason the indemnification provided above in this
section is unavailable to a RPA Indemnified Party or is insufficient to
hold a RPA Indemnified Party harmless, then such Seller shall contribute
to the maximum amount payable or paid to the RPA Indemnified Party as a
result of the loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the RPA
Indemnified Party on the one hand and such Seller on the other hand, but
also the relative fault of the RPA Indemnified Party (if any) and such
Seller and any other relevant equitable considerations.
-33-
<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments; Waivers, Etc. (a) The provisions of
this Agreement may from time to time be amended, modified or waived, if
such amendment, modification or waiver is in writing and signed by Buyer
and each Seller (with respect to an amendment) or by Buyer (with respect
to a waiver or consent by it) and, in the case of any amendment,
modification or waiver, to the extent provided in Section 7.2(k) of the
Pooling Agreement, by the Trustee and each Required Person, and then any
such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. This Agreement shall not
be amended unless Buyer shall have delivered the proposed amendment to the
Rating Agencies at least ten Business Days (or such shorter period as
shall be acceptable to each of them) prior to the execution and delivery
thereof and the Modification Condition has been satisfied with respect to
such amendment.
(b) No failure or delay on the part of Buyer, any RPA
Indemnified Party, the Trustee or any other third party beneficiary
referred to in Section 10.11(a) in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or
demand on any Seller in any case shall entitle it to any notice or demand
in similar or other circumstances. No waiver or approval by Buyer, the
Trustee or any Required Person under this Agreement shall, except as may
otherwise be stated in the waiver or approval, be applicable to subsequent
transactions. No waiver or approval under this Agreement shall require
any similar or dissimilar waiver or approval thereafter to be granted
hereunder.
SECTION 10.2 Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in
writing (including facsimile communication) and shall be personally
delivered or sent by certified mail, postage prepaid, by facsimile or by
overnight courier, to the intended party at the address or facsimile
number of such party set forth under its name on the signature pages
hereof or at such other address or facsimile number as shall be designated
by the party in a written notice to the other parties hereto given in
accordance with this section. Copies of all notices and other
communications provided for hereunder shall be delivered to the Trustee,
the Rating Agencies and any Required Person at their respective addresses
for notices set forth in the Pooling Agreement. All notices and
communications provided for hereunder shall be effective, (a) if
personally delivered, when received, (b) if sent by certified mail, four
Business Days after having been deposited in the mail, postage prepaid and
properly addressed, (c) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means and (d) if sent by overnight
courier, two Business Days after having been given to the courier unless
sooner received by the addressee.
SECTION 10.3 Cumulative Remedies. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law. Without
limiting the foregoing, each Seller
-34-
<PAGE>
hereby authorizes Buyer, at any time and from time to time, to the fullest
extent permitted by law, to set-off, against any Obligations of any Seller
to Buyer that are then due and payable or that are not then due and
payable from a Seller to Buyer but have then accrued, any and all
indebtedness or other obligations at any time owing to any Seller by Buyer
to or for the credit or the account of any Seller or that are not then due
and payable from Buyer to a Seller but have then accrued.
SECTION 10.4 Binding Effect; Assignability; Survival of
Provisions. This Agreement shall be binding upon and inure to the benefit
of Buyer and the Sellers and their respective successors and permitted
assigns (including, in the case of the Buyer, the Trustee). No Seller may
assign any of its rights hereunder or any interest herein without (i) the
prior written consent of Buyer and the Trustee and (ii) the satisfaction
of the Modification Condition. This Agreement shall create and constitute
the continuing obligations of the parties hereto in accordance with its
terms, and shall remain in full force and effect until the first date
following the Purchase Termination Date, but not later than the date on
which the Trust is terminated pursuant to Section 12.1 of the Pooling
Agreement, on which all Obligations shall have been finally and fully paid
and performed or such other time as the parties hereto shall agree and as
to which the Trustee (at the direction of the Majority Investors) shall
have given its prior written consent, which consent shall not be
unreasonably withheld or delayed. The rights and remedies with respect
to any breach of any representation and warranty made by a Seller pursuant
to Article V and the indemnification and payment provisions of Article IX
and Section 10.6 shall be continuing and shall survive any termination of
this Agreement.
SECTION 10.5 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES, EXCEPT (I) WITH RESPECT TO EACH SELLER, TO
THE EXTENT THAT THE PERFECTION AND THE EFFECT OF PERFECTION OR
NONPERFECTION OF THE SECURITY INTERESTS OF BUYER IN THE RECEIVABLES AND
THE RELATED ASSETS OF SUCH SELLER ARE GOVERNED BY THE LAWS OF A
JURISDICTION (SUCH SELLER'S "HOME STATE") OTHER THAN THE STATE OF NEW YORK
AND (II) WITH RESPECT TO EACH SELLER THE CREATION OF SUCH SECURITY
INTERESTS OF BUYER SHALL BE GOVERNED BY THE LAWS OF SUCH SELLER'S HOME
STATE.
SECTION 10.6 Costs, Expenses and Taxes. In addition to the
obligations of the Sellers under Article IX, the Sellers agree jointly and
severally to pay on demand:
(a) all reasonable out-of-pocket and other costs and
expenses in connection with the enforcement of this Agreement,
the Seller Assignment Certificates or the other Transaction
Documents by Buyer or any successor in interest to Buyer, and
(b) all stamp and other taxes and fees payable or
determined to be payable in connection with the execution and
delivery, and the filing and recording, of this
-35-
<PAGE>
Agreement or the other Transaction Documents, and agrees to
indemnify each RPA Indemnified Party against any liabilities with
respect to or resulting from any delay in paying or omission to
pay the taxes and fees.
SECTION 10.7 Submission to Jurisdiction. Each party hereto
hereby irrevocably submits to the non-exclusive jurisdiction of any New
York State or Federal court sitting in the Borough of Manhattan in the
City of New York, New York over any action or proceeding arising out of
or relating to the Transaction Documents, and hereby (A) irrevocably
agrees that all claims in respect of the action or proceeding may be heard
and determined in the state or Federal court, (B) irrevocably waives, to
the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of the action or proceeding, and (C)
irrevocably consents to the service of any and all process in any action
or proceeding by the mailing of copies of the process to Buyer or a Seller
(as applicable) at its address specified herein.
Nothing in this section shall affect the right of any party hereto
to serve legal process in any other manner permitted by law or affect the
right of any party hereto to bring any action or proceeding against the
other party or any of its properties in the courts of any other
jurisdiction.
SECTION 10.8 Waiver of Jury Trial. Each party hereto waives any
right to a trial by jury in any action or proceeding to enforce or defend
any rights under or relating to the Transaction Documents or any
amendment, instrument, document or agreement delivered or that may in the
future be delivered in connection therewith or arising from any course of
conduct, course of dealing, statements (whether verbal or written),
actions of either of the parties hereto or any other relationship existing
in connection with the Transaction Documents, and agrees that any such
action or proceeding shall be tried before a court and not before a jury.
SECTION 10.9 Integration. This Agreement and the other
Transaction Documents contain a final and complete integration of all
prior expressions by the parties hereto with respect to the subject matter
hereof and thereof and shall together constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and
thereof, superseding all prior oral or written understandings.
SECTION 10.10 Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same
agreement.
SECTION 10.11 Acknowledgment and Consent. (a) The Sellers
acknowledge that, contemporaneously herewith, Buyer is selling,
transferring, assigning, setting over and otherwise conveying to the Trust
all of Buyer's right, title and interest in, to and under the Specified
-36-
<PAGE>
Assets, this Agreement and all of the other Transaction Documents pursuant
to Sections 2.1 and 2.4 of the Pooling Agreement. The Sellers hereby
consent to the sale, transfer, assignment, set over and conveyance to the
Trust by Buyer of all right, title and interest of Buyer in, to and under
the Specified Assets, this Agreement and the other Transaction Documents,
and all of Buyer's rights, remedies, powers and privileges, and all claims
of Buyer against the Sellers, under or with respect to this Agreement and
the other Transaction Documents (whether arising pursuant to the terms of
this Agreement or otherwise available at law or in equity), including (i)
the right of Buyer, at any time, to enforce this Agreement against the
Sellers and the obligations of the Sellers hereunder, (ii) the right to
appoint a successor to the Servicer at the times and upon the conditions
set forth in the Pooling Agreement, and (iii) the right, at any time, to
give or withhold any and all consents, requests, notices, directions,
approvals, demands, extensions or waivers under or with respect to this
Agreement, any other Transaction Document or the obligations in respect
of the Sellers thereunder to the same extent as Buyer may do. Each of the
parties hereto acknowledges and agrees that the Trustee and the Trust are
third party beneficiaries of the rights of Buyer arising hereunder and
under the other Transaction Documents to which any Seller is a party
except to the extent the Trustee's rights have been expressly limited
hereunder. Each Seller hereby acknowledges and agrees that it has no
claim to or interest in any of the Bank Accounts or the Trust Accounts.
(b) The Sellers hereby agree to execute all agreements,
instruments and documents, and to take all other action, that Buyer or the
Trustee reasonably determines is necessary or appropriate to evidence its
consent described in subsection (a) above. To the extent that Buyer,
individually or through the Servicer, has granted or grants powers of
attorney to the Trustee under the Pooling Agreement, the Sellers hereby
grant a corresponding power of attorney on the same terms to Buyer. The
Sellers hereby acknowledge and agree that Buyer, in all of its capacities,
shall assign to the Trustee for the benefit of the Certificateholders the
powers of attorney and other rights and interests granted by the Sellers
to Buyer hereunder and agrees to cooperate fully with the Trustee in the
exercise of the rights.
SECTION 10.12 No Partnership or Joint Venture. Nothing contained
in this Agreement shall be deemed or construed by the parties hereto or
by any third person to create the relationship of principal and agent or
of partnership or of joint venture.
SECTION 10.13 No Proceedings. Each Seller hereby agrees that it
will not institute against Buyer or the Trust, or join any other Person
in instituting against Buyer or the Trust, any insolvency proceeding (such
as any proceeding of the type referred to in the definition of Event of
Bankruptcy) so long as any Investor Certificates issued by the Trust shall
be outstanding or there shall not have elapsed one year plus one day since
the last day on which any such Investor Certificates shall have been
outstanding. The foregoing shall not limit the right of a Seller to file
any claim in or otherwise take any action with respect to any insolvency
proceeding that was instituted against Buyer or the Trust by any Person
other than a Seller or any other Related Person (provided that no such
action may be taken by a Seller until such proceeding has continued
undismissed, unstayed and in effect for a period of 10 days).
-37-
<PAGE>
SECTION 10.14 Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement or any
of the other Transaction Documents shall for any reason whatsoever be held
invalid, then the unenforceable covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement or the other Transaction Documents
(as applicable) and shall in no way affect the validity or enforceability
of the other provisions of this Agreement or any of the other Transaction
Documents.
SECTION 10.15 Recourse to Buyer. Except to the extent expressly
provided otherwise in the Transaction Documents, the obligations of Buyer
under the Transaction Documents to which it is a party are solely the
obligations of Buyer. No recourse shall be had for payment of any fee
payable by or other obligation of or claim against Buyer that arises out
of any Transaction Document to which Buyer is a party against any
director, officer or employee of Buyer. The provisions of this section
shall survive the termination of this Agreement.
[Remainder of page intentionally left blank.]
-38-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
INTER-CITY PRODUCTS CORPORATION (USA),
as Seller
By: /s/ David P. Cain
------------------------------------
Title: Senior Vice President
Address: 650 Heil-Quaker Boulevard
Lewisburg, Tennessee 37091
Attention: David Cain
Telephone: (615) 270-4136
Facsimile: (615) 270-4220
INTER-CITY PRODUCTS PARTNER CORPORATION,
as Seller
By: /s/ David P. Cain
--------------------------------------
Title: Senior Vice President
Address: 650 Heil-Quaker Boulevard
Lewisburg, Tennessee 37091
Attention: David Cain
Telephone: (615) 270-4136
Facsimile: (615) 270-4220
<PAGE>
GENERAL HEATING AND COOLING COMPANY,
as Seller
By: /s/ David P. Cain
--------------------------------------
Title: Senior Vice President
Address: 650 Heil-Quaker Boulevard
Lewisburg, Tennessee 37091
Attention: David Cain
Telephone: (615) 270-4136
Facsimile: (615) 270-4220
COASTLINE DISTRIBUTION, INC., as Seller
By: /s/ David P. Cain
--------------------------------------
Title: Senior Vice President
Address: 650 Heil-Quaker Boulevard
Lewisburg, Tennessee 37091
Attention: David Cain
Telephone: (615) 270-4136
Facsimile: (615) 270-4220
INTER-CITY PRODUCTS
RECEIVABLES COMPANY, L.P.,
as the Buyer
By: Inter-City Products Partner Corporation,
its general partner
By: /s/ David P. Cain
--------------------------------------
Title: Senior Vice President
Address: 650 Heil-Quaker Boulevard
Lewisburg, Tennessee 37091
Attention: David Cain
Telephone: (615) 270-4136
Facsimile: (615) 270-4220
<PAGE>
EXHIBIT A
<PAGE>
EXHIBIT A
to Receivables Purchase Agreement
FORM OF BUYER NOTE
___________, 1996
FOR VALUE RECEIVED, the undersigned, INTER-CITY PRODUCTS
RECEIVABLES COMPANY, L.P., a Tennessee limited partnership ("Buyer"),
promises to pay to _________________________, a ____________ corporation
(the "Seller" and together with its successors and assigns, the "Holder"),
on the terms and subject to the conditions set forth in this promissory
note (this "Note") and in the Receivables Purchase Agreement, dated as of
July 25, 1996 (the "Agreement") among Buyer, Inter-City Products
Corporation (USA), ("ICP") and certain of its Subsidiaries, an amount
equal to the aggregate deferred Purchase Price owed by Buyer to the Seller
pursuant to Article III of the Agreement. Such amount, as shown in the
records of the Servicer, will be rebuttable presumptive evidence of the
principal amount and interest owing under this Note.
1. Purchase Agreement. This Note is a Buyer Note described in,
and is subject to the terms and conditions set forth in, the Agreement.
Reference is hereby made to the Agreement for a statement of certain other
rights and obligations of Buyer and the Seller.
2. Rules of Construction; Definitions. Certain rules of
construction governing the interpretation of this Note are as set forth
in Appendix A to the Pooling Agreement (as defined in the Agreement) and,
except as otherwise specifically provided herein, capitalized terms used
but not defined herein have the meanings ascribed to them in such Appendix
A. In addition, as used herein, the following terms have the following
meanings:
"Bankruptcy Proceedings" means any dissolution, winding
up, liquidation, readjustment, reorganization or other similar
event relating to Buyer, whether voluntary or involuntary,
partial or complete, and whether in bankruptcy, insolvency,
receivership or other similar proceedings, or upon an assignment
for the benefit of creditors, or any other marshalling of the
assets and liabilities of Buyer or any sale of all or
substantially all of the assets of Buyer; provided, however, that
none of the following shall constitute a "Bankruptcy Proceeding"
so long as no Bankruptcy Event shall have occurred with respect
to the Buyer and is continuing: (i) the commencement of an
amortization period, accumulation period or early amortization
period, (ii) the allocation and distribution of Collections and
other amounts during an amortization period, accumulation period
or early amortization period in accordance with the terms of the
Pooling Agreement and (iii)
A-1
<PAGE>
the liquidation, dissolution and winding up of Buyer during an
amortization period, accumulation period or early amortization
period in accordance with the Pooling Agreement after the
termination of the Pooling Agreement in accordance with Section
12.1 thereof.
"Final Maturity Date" means the date occurring one year
and one day after the Final Scheduled Payment Date of the latest
maturing Series from time to time outstanding.
"Highest Lawful Rate" has the meaning set forth in
paragraph 9.
"Junior Liabilities" means all obligations of Buyer to
the Holder under this Note.
"Reference Rate" means, with respect to any day occurring
in a Calculation Period, the rate of interest publicly announced
from time to time by the Trustee as its "reference rate" or
"prime rate" and in effect on the first day of such Calculation
Period, as determined by the Servicer.
"Senior Interests" means all obligations of Buyer to the
Trustee or the Investor Certificateholders under or in connection
with the Transaction Documents, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to
become due, including without limitation interest or other
amounts due or to become due after an Event of Bankruptcy.
"Subordination Provisions" means, collectively, the
provisions of paragraph 7.
3. Interest. Subject to the Subordination Provisions, Buyer
promises to pay interest on the aggregate unpaid principal amount of this
Note outstanding on each day at an adjustable rate per annum equal to the
Reference Rate in effect on such day.
4. Interest Payment Dates. (a) Subject to the Subordination
Provisions, Buyer shall pay accrued interest on this Note on each
Distribution Date and on the Final Maturity Date. Buyer also shall pay
accrued interest on the principal amount of each prepayment hereof on the
date of such prepayment.
(b) Notwithstanding the provisions of paragraph 4(a), in the
event that on the date an interest payment is due hereunder the amount of
funds available therefor pursuant to Section 3.3 of the Agreement is
insufficient to pay any amount due pursuant to paragraph 4(a), then
interest shall be payable only to the extent that funds are available
therefor in accordance with Section 3.3 of the Agreement. All interest
on this Note that is not paid when due pursuant to this paragraph shall
be payable on the next date on which an interest payment on this Note is
due and on which funds are available therefor pursuant to Section 3.3 of
the Agreement, and all such unpaid interest shall accrue interest at the
Reference Rate until paid in full.
A-2
<PAGE>
5. Basis of Computation. Interest accrued hereunder shall be
computed for the actual number of days elapsed on the basis of a 360-day
year.
6. Principal Payment Dates. Subject to the Subordination
Provisions, any unpaid principal of this Note shall only become due and
payable on the Final Maturity Date. Subject to the Subordination
Provisions, the principal amount of and accrued interest on this Note may
be prepaid on any Business Day without premium or penalty; provided, that
no prepayment shall be made by Buyer to the extent that such prepayment
would result in a default in the payment of any other amount required to
be paid by Buyer under any Transaction Document.
7. Subordination Provisions. Buyer covenants and agrees, and the
Holder, by its acceptance of this Note, likewise covenants and agrees,
that the payment of all Junior Liabilities is hereby expressly
subordinated in right of payment to the payment and performance of the
Senior Interests to the extent and in the manner set forth in this
paragraph:
(a) In the event of any Bankruptcy Proceeding, the
Senior Interests shall first be paid and performed in full and in
cash before the Holder shall be entitled to receive and to retain
any payment or distribution in respect of the Junior Liabilities.
In order to implement the foregoing: (i) all payments and
distributions of any kind or character in respect of the Junior
Liabilities to which the Holder would be entitled except for this
clause (a) shall be made directly to the Trustee (for the benefit
of itself and the Investor Certificateholders), and (ii) if a
Bankruptcy Proceeding has been commenced, the Holder shall
promptly file a claim or claims, in the form required in any
Bankruptcy Proceedings, for the full outstanding amount of the
Junior Liabilities, and shall use commercially reasonable efforts
to cause said claim or claims to be approved and all payments and
other distributions in respect thereof to be made directly to the
Trustee (for the benefit of itself and the Investor
Certificateholders) until the Senior Interests shall have been
paid and performed in full and in cash.
(b) In the event that the Holder receives any payment
or other distribution of any kind or character from Buyer or from
any other source whatsoever, in payment of the Junior
Liabilities, after the commencement of any Bankruptcy Proceeding,
such payment or other distribution shall be received in trust for
the Trustee and the Investor Certificateholders and shall be
turned over by the Holder to the Trustee forthwith.
(c) Upon the date that is a year and a day after the
final payment in full and in cash of all Senior Interests, the
Holder shall be subrogated to the rights of the Trustee and the
Investor Certificateholders to receive payments or distributions
from Buyer that are applicable to the Senior Interests until the
Junior Liabilities are paid in full.
(d) These Subordination Provisions are intended solely
for the purpose of defining the relative rights of the Holder, on
the one hand, and the Trustee and the Investor Certificateholders
on the other hand. Nothing contained in these Subordination
A-3
<PAGE>
Provisions or elsewhere in this Note is intended to or shall
impair, as between Buyer, its creditors (other than the Trustee
and the Investor Certificateholders) and the Holder, Buyer's
obligation, which is unconditional and absolute, to pay the
Junior Liabilities as and when the same shall become due and
payable in accordance with the terms hereof and of the Agreement
or to affect the relative rights of the Holder and creditors of
Buyer (other than the Trustee and the Investor
Certificateholders).
(e) Except as otherwise permitted in Section 10.4 of
the Agreement, the Holder shall not, until the Senior Interests
have been finally paid and performed in full and in cash, (i)
cancel, waive, forgive, transfer or assign, or commence legal
proceedings to enforce or collect, or subordinate to any
obligation of Buyer (other than to the Senior Interests),
howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, or now or hereafter existing,
or due or to become due, the Junior Liabilities or any rights in
respect hereof or (ii) convert the Junior Liabilities into an
equity interest in Buyer, unless, in the case of each of clauses
(i) and (ii), the Holder shall have received the prior written
consent of the Trustee in each case.
(f) The Holder shall not, without the advance written
consent of the Trustee, commence, or join with any other Person
in commencing, any Bankruptcy Proceedings with respect to Buyer
until at least one year and one day shall have passed after the
Senior Interests shall have been finally paid and performed in
full and in cash; provided, however, that the Holder shall at all
times have the right to file any claim in or otherwise take any
action with respect to any insolvency proceeding instituted
against Buyer by any Person other than the Holder or any other
Related Person (provided that no such action may be taken by the
Holder until such proceeding has continued undismissed, unstayed
and in effect for a period of 10 days).
(g) If, at any time, any payment (in whole or in part)
made with respect to any Senior Interest is rescinded or must be
restored or returned by a Certificateholder (whether in
connection with any Bankruptcy Proceedings or otherwise), these
Subordination Provisions shall continue to be effective or shall
be reinstated, as the case may be, as though such payment had not
been made.
(h) Each of the Trustee and the Investor
Certificateholders may, from time to time, in its sole
discretion, without notice to the Holder, and without waiving any
of its rights under these Subordination Provisions, take any or
all of the following actions: (i) retain or obtain an interest in
any property to secure any of the Senior Interests, (ii) retain
or obtain the primary or secondary obligations of any other
obligor or obligors with respect to any of the Senior Interests,
(iii) extend or renew for one or more periods (whether or not
longer than the original period), alter, increase or exchange any
of the Senior Interests, or release or compromise any obligation
of any nature with respect to any of the Senior Interests, (iv)
amend, supplement, amend and restate, or otherwise modify any
Transaction Document to which it is a party, and (v) release its
security
A-4
<PAGE>
interest in, or surrender, release or permit any substitution or exchange
for all or any part of any rights or property securing any of the Senior
Interests, or extend or renew for one or more periods (whether or not
longer than the original period), or release, compromise, alter or
exchange any obligations of any nature of any obligor with respect to any
such rights or property.
(i) The Holder hereby waives: (i) notice of acceptance
of these Subordination Provisions by the Trustee or any of the
Investor Certificateholders, (ii) notice of the existence,
creation, non-payment or non-performance of all or any of the
Senior Interests, and (iii) all diligence in enforcement,
collection or protection of, or realization upon, the Senior
Interests, or any thereof, or any security therefor.
(j) These Subordination Provisions constitute a
continuing offer from Buyer to all Persons who become the holders
of, or who continue to hold, Senior Interests, and these
Subordination Provisions are made for the benefit of the Trustee
and the Investor Certificateholders, and the Trustee may proceed
to enforce such provisions on behalf of each of such Persons.
8. General. No failure or delay on the part of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power or right
preclude any other or further exercise thereof or the exercise of any
other power or right. No amendment, modification or waiver of, or consent
with respect to, any provision of this Note shall in any event be
effective unless (a) the same shall be in writing and signed and delivered
by Buyer and the Seller, and (b) all consents required for such actions
under the Transaction Documents shall have been received by the
appropriate Persons.
9. Limitation on Interest. Notwithstanding anything in this Note
to the contrary, Buyer shall never be required to pay unearned interest
on any amount outstanding hereunder, and shall never be required to pay
interest on the principal amount outstanding hereunder, at a rate in
excess of the maximum nonusurious interest rate that may be contracted
for, charged or received under applicable federal or state law (such
maximum rate being herein called the "Highest Lawful Rate"). If the
effective rate of interest that would otherwise be payable under this Note
would exceed the Highest Lawful Rate, or the Holder shall receive any
unearned interest or shall receive monies that are deemed to constitute
interest that would increase the effective rate of interest payable by
Buyer under this Note to a rate in excess of the Highest Lawful Rate, then
(a) the amount of interest that would otherwise be payable by Buyer under
this Note shall be reduced to the amount allowed by applicable law, and
(b) any unearned interest paid by Buyer or any interest paid by Buyer in
excess of the Highest Lawful Rate shall be refunded to Buyer. Without
limitation of the foregoing, all calculations of the rate of interest
contracted for, charged or received by the Holder under this Note that are
made for the purpose of determining whether such rate exceeds the Highest
Lawful Rate shall be made, to the extent permitted by applicable usury
laws (now or hereafter enacted), by amortizing, prorating and spreading
in equal parts during the actual period during which any amount has been
outstanding hereunder all interest
A-5
<PAGE>
at any time contracted for, charged or received by the Holder in
connection herewith. If at any time and from time to time (i) the amount
of interest payable to the Holder on any date shall be computed at the
Highest Lawful Rate pursuant to the provisions of the foregoing sentence,
and (ii) in respect of any subsequent interest computation period the
amount of interest otherwise payable to the Holder would be less than the
amount of interest payable to the Holder computed at the Highest Lawful
Rate, then the amount of interest payable to the Holder in respect of such
subsequent interest computation period shall continue to be computed at
the Highest Lawful Rate until the total amount of interest payable to the
Holder shall equal the total amount of interest that would have been
payable to the Holder if the total amount of interest had been computed
without giving effect to the provisions of the foregoing sentence.
10. No Negotiation. This Note is not negotiable.
11. Governing Law. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND CONSTRUED IN ACCORDANCE WITH THE AGREEMENT AND THE INTERNAL
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
12. Security Interest. The Seller may grant a security interest
in or otherwise pledge this Note as security, and any Person to whom such
security interest is granted or to whom this Note is pledged shall be
bound by, and for all purposes takes this Note subject to, the
restrictions and other provisions (including the Subordination Provisions)
set forth herein.
13. Captions. Paragraph captions used in this Note are provided
solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Note.
INTER-CITY PRODUCTS
RECEIVABLES COMPANY, L.P.
By: Inter-City Products Partner Corporation
By:
--------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
A-6
<PAGE>
EXHIBIT B
<PAGE>
EXHIBIT B
to Receivables Purchase Agreement
FORM OF
SELLER ASSIGNMENT CERTIFICATE
Reference is made to the Receivables Purchase Agreement, dated as
of July 25, 1996 (as the same may be amended, supplemented, amended and
restated or otherwise modified from time to time, the "Agreement") between
INTER-CITY PRODUCTS CORPORATION (USA), CERTAIN OF ITS SUBSIDIARIES and
INTER-CITY PRODUCTS RECEIVABLES COMPANY, L.P. ("Buyer"). Unless otherwise
defined herein, capitalized terms used herein have the meanings ascribed
to them pursuant to the Agreement.
The undersigned (the "Seller") hereby sells, transfers, assigns,
sets over and conveys unto Buyer and its successors and assigns all right,
title and interest of the Seller in, to and under:
(a) all Receivables of the Seller (other than
Contributed Receivables) that existed and was owing to the Seller
as at the closing of the Seller's business on the Initial Cut-Off
Date,
(b) all Receivables created by the Seller (other than
Contributed Receivables) that arise during the period from and
including the closing of the Seller's business on the Initial
Cut-Off Date to but excluding the Purchase Termination Date,
(c) all Related Security with respect to all Receivables
(other than Contributed Receivables) of the Seller,
(d) all proceeds of the foregoing, including all funds
received by any Person in payment of any amounts owed (including
invoice prices, finance charges, interest and all other charges,
if any) in respect of any Receivable described above (other than
a Contributed Receivable) or Related Security with respect to any
such Receivable, or otherwise applied to repay or discharge any
such Receivable (including insurance payments that the Seller or
the Servicer applies in the ordinary course of its business to
amounts owed in respect of any such Receivable and net proceeds
of any sale or other disposition of repossessed goods that were
the subject of any such Receivable) or other collateral or
property of any Obligor or any other party directly or indirectly
liable for payment of such Receivables, and
(e) all Records relating to any of the foregoing.
B-1
<PAGE>
This Seller Assignment Certificate is made without recourse but
on the terms and subject to the conditions set forth in the Transaction
Documents to which the Seller is a party. The Seller acknowledges and
agrees that Buyer is accepting this Seller Assignment Certificate in
reliance on the representations, warranties and covenants of the Seller
contained in the Transaction Documents to which the Seller is a party.
THIS SELLER ASSIGNMENT CERTIFICATE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE AGREEMENT AND THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
IN WITNESS WHEREOF, the undersigned has caused this Seller
Assignment Certificate to be duly executed and delivered by its duly
Authorized Officer this _____ day of _______________, 1996.
[SELLER'S FULL NAME]
By:
------------------------------
Title:
----------------------------
<PAGE>
SCHEDULE 1
to Receivables Purchase Agreement
LITIGATION AND OTHER PROCEEDINGS
[OMITTED]
<PAGE>
SCHEDULE 2
to Receivables Purchase Agreement
CHANGES IN FINANCIAL CONDITION
[OMITTED]
<PAGE>
SCHEDULE 3
to Receivables Purchase Agreement
OFFICES OF THE SELLERS WHERE
RECORDS ARE MAINTAINED
[OMITTED]
<PAGE>
SCHEDULE 4
to Receivables Purchase Agreement
LEGAL NAMES
TRADE NAMES
[OMITTED]
<PAGE>
SCHEDULE 5
to Receivables Purchase Agreement
SOFTWARE LICENSES
[OMITTED]
<PAGE>
INTER-CITY PRODUCTS CORPORATION (USA)
==========================================================================
CERTIFICATE PURCHASE AGREEMENT
(Series 1996-1, Class A)
dated as of July 25, 1996
among
INTER-CITY PRODUCTS RECEIVABLES COMPANY, L.P.,
INTER-CITY PRODUCTS CORPORATION (USA)
AS THE INITIAL SERVICER,
THE PURCHASERS DESCRIBED HEREIN,
and
THE CHICAGO CORPORATION,
as Agent
==========================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . .
2
ARTICLE II
PURCHASE AND SALE OF CERTIFICATES
SECTION 2.1 The Commitments; Percentages. . . . . . . . . . . . . . .
2
SECTION 2.2 Purchase Mechanics During Revolving Period. . . . . . . .
3
SECTION 2.3 Reduction of Stated Amounts . . . . . . . . . . . . . . .
4
SECTION 2.4 Certificates. . . . . . . . . . . . . . . . . . . . . . .
4
ARTICLE III
REDUCTIONS IN INVESTED AMOUNT
SECTION 3.1 Transferor's Right to Reduce Invested Amount. . . . . . .
5
SECTION 3.2 Mandatory Reduction of Invested Amount.. . . . . . . . . .
6
SECTION 3.3 Notice to Purchasers. . . . . . . . . . . . . . . . . . .
6
ARTICLE IV
TRANCHES, INTEREST AND FEES
SECTION 4.1 Tranches. . . . . . . . . . . . . . . . . . . . . . . . .
6
SECTION 4.2 Non-Usage and Minimum Usage Fees. . . . . . . . . . . . .
8
SECTION 4.3 Yield Protection. . . . . . . . . . . . . . . . . . . . .
8
SECTION 4.4 Illegality; Unavailability. . . . . . . . . . . . . . . .10
SECTION 4.5 Indemnity . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 4.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE V
OTHER PAYMENT TERMS
SECTION 5.1 Time and Method of Payment. . . . . . . . . . . . . . . .13
SECTION 5.2 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . .13
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
i
<PAGE>
SECTION 6.1 Transferor. . . . . . . . . . . . . . . . . . . . . . . .14
SECTION 6.2 ICP . . . . . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 6.3 Purchasers. . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE VII
CONDITIONS
SECTION 7.1 Conditions to Initial Purchase. . . . . . . . . . . . . .16
SECTION 7.2 Conditions to Each Purchase . . . . . . . . . . . . . . .20
SECTION 7.3 Conditions to Signing . . . . . . . . . . . . . . . . . .20
ARTICLE VIII
COVENANTS
SECTION 8.1 Affirmative Covenants . . . . . . . . . . . . . . . . . .21
SECTION 8.2 Transfers . . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 8.3 Procedure Letter and Report . . . . . . . . . . . . . . .22
ARTICLE IX
AGENT; REQUIRED PURCHASERS
SECTION 9.1 Appointment . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 9.2 Nature of Duties. . . . . . . . . . . . . . . . . . . . .22
SECTION 9.3 Lack of Reliance on Agent and Financial Advisor . . . . .23
SECTION 9.4 Certain Rights of Agent . . . . . . . . . . . . . . . . .23
SECTION 9.5 Reliance. . . . . . . . . . . . . . . . . . . . . . . . .23
SECTION 9.6 Indemnification . . . . . . . . . . . . . . . . . . . . .24
SECTION 9.7 Agent in its Individual Capacity. . . . . . . . . . . . .24
SECTION 9.8 Resignation by Agent. . . . . . . . . . . . . . . . . . .24
SECTION 9.9 Required Purchasers. . . . . . . . . . . . . . . . . . .25
SECTION 9.10 Agent Administration Fee . . . . . . . . . . . . . . . .25
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 Amendments . . . . . . . . . . . . . . . . . . . . . . .25
SECTION 10.2 No Waiver; Remedies. . . . . . . . . . . . . . . . . . .26
SECTION 10.3 Successors and Assigns; Assignments. . . . . . . . . . .26
SECTION 10.4 Survival of Agreement. . . . . . . . . . . . . . . . . .29
SECTION 10.5 Expenses; Indemnification. . . . . . . . . . . . . . . .29
SECTION 10.6 Entire Agreement . . . . . . . . . . . . . . . . . . . .31
SECTION 10.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . .31
SECTION 10.8 No Third-Party Beneficiaries . . . . . . . . . . . . . .31
ii
<PAGE>
SECTION 10.9 Severability of Provisions . . . . . . . . . . . . . . .31
SECTION 10.10 Counterparts. . . . . . . . . . . . . . . . . . . . . .32
SECTION 10.11 Governing Law . . . . . . . . . . . . . . . . . . . . .32
SECTION 10.12 Tax Characterization. . . . . . . . . . . . . . . . . .32
SECTION 10.13 No Proceedings. . . . . . . . . . . . . . . . . . . . .32
iii
<PAGE>
SCHEDULE
SCHEDULE I Stated Amounts and Percentages
EXHIBITS
EXHIBIT A Form of Pooling and Servicing Agreement
EXHIBIT B Form of Receivables Purchase Agreement
EXHIBIT C Form of Series 1996-1 Supplement
EXHIBIT D Form of Assignment Agreement
APPENDIX
APPENDIX X Index of Additional Defined Terms
iv
<PAGE>
This CERTIFICATE PURCHASE AGREEMENT, dated as of July 25, 1996
(this "Agreement"), is made among INTER-CITY PRODUCTS RECEIVABLES COMPANY,
L.P., a Tennessee limited partnership ("Transferor"), INTER-CITY PRODUCTS
CORPORATION (USA), a Delaware corporation ("ICP", "Servicer" or "Initial
Servicer"), the purchasers named on the signatures pages of this Agreement
(together with their respective permitted assigns, the "Purchasers"), and
THE CHICAGO CORPORATION, as agent for the Purchasers (in that capacity,
together with any successors in that capacity, "Agent").
BACKGROUND
1. Transferor will enter into (a) a Pooling and Servicing
Agreement substantially in the form of Exhibit A (the "Pooling Agreement")
with Initial Servicer, as initial Servicer, and, LaSalle National Bank, a
national banking association, as trustee (in that capacity, together with
any successors in that capacity, the "Trustee"), (b) a Receivables Purchase
Agreement substantially in the form of Exhibit B and (c) a Series 1996-1
Supplement to the Pooling Agreement substantially in the form of Exhibit C
(the "Supplement"). Pursuant to the Pooling Agreement and the Supplement,
Transferor will obtain the Series 1996-1, Class A Certificates (the
"Certificates"), which will represent fractional undivided beneficial
interests in the assets of the Inter-City Products Receivables Master Trust
(the "Trust"), a trust to be organized pursuant to the Pooling Agreement.
2. Transferor wishes to sell the Certificates to the Purchasers
and obtain their commitment to purchase fractional undivided beneficial
interests in the assets of the Trust (each a "Trust Interest") that will be
evidenced by the Certificates. Subject to the terms and conditions of this
Agreement, each Purchaser is willing (a) to purchase a Certificate with an
initial Stated Amount in the amount set forth opposite its name on Schedule
I to this Agreement and (b) to agree to so make purchases of Trust
Interests up to the Stated Amount (as defined below) set forth opposite its
name on Schedule I. Initial Servicer has joined in this Agreement to
confirm certain representations, warranties and covenants for the benefit
of the Purchasers and the Agent.<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Capitalized terms used and not otherwise
defined herein have the meanings assigned to them in the Supplement or, if
not defined in the Supplement, in Appendix A to the Pooling Agreement. An
index of terms defined directly in this Agreement is attached as Appendix
X.
ARTICLE II
PURCHASE AND SALE OF CERTIFICATES
SECTION 2.1 The Commitments; Percentages. Subject to the terms
and conditions of this Agreement, the Pooling Agreement and the Supplement,
each Purchaser agrees, severally and for itself alone, upon Transferor's
request (through Servicer), to make purchases (each a "Purchase") of Trust
Interests from time to time during the Revolving Period for the 1996-1
Certificates; provided, that no Purchaser will be required or permitted to
make a Purchase on any date if the funded principal amount of its
Certificate, after giving effect to the Purchase, would exceed the lesser
of (a) the Stated Amount of its Certificate and (b) its Class Percentage
multiplied by the Class A Invested Amount. In addition, no Purchaser will
be required or permitted to make a Purchase if, after giving effect thereto
(and any corresponding reduction to the Series Invested Amount pursuant to
Section 3.1), the Net Invested Amount would exceed the Base Amount. The
Purchases by the Purchasers shall be made ratably in accordance with their
respective Class Percentages; provided, that the failure of any Purchaser
to make any Purchase shall not relieve any other Purchaser of its
obligation to make Purchases hereunder. No Purchaser shall, however, be
responsible for the failure of any other Purchaser to make any Purchase.
Subject to the terms of this Agreement, the aggregate principal amount of a
Purchaser's investment represented by its Certificate may be increased or
decreased from time to time.
For purposes of this Agreement, (i) "Class Percentage" means, with
respect to each Purchaser, the percentage equivalent (carried out to twelve
decimal places) of a fraction, the numerator of which is the Stated Amount
of such Purchaser's Certificate and the denominator of which is the sum of
the Stated Amounts of all of the Purchasers' Certificates and (ii) "Series
Percentage" means, with respect to each Purchaser, the percentage
equivalent (carried out to
-2-
<PAGE>
twelve decimal places) of a fraction, the numerator of which is the Stated
Amount of such Purchaser's Certificate and the denominator of which is the
sum of the Stated Amounts for all of the Series 1996-1 Certificates. The
initial Class Percentages and Series Percentages of the initial Purchasers
are set forth opposite their names on Schedule I.
SECTION 2.2 Purchase Mechanics During Revolving Period. (a)
During the Revolving Period, whenever Transferor wishes the Purchasers to
make Purchases, it shall cause Servicer to notify the Agent and the Trustee
if the Trust Interests to be purchased initially will be (i) the one
permitted ABR Tranche, not later than 11:00 a.m., New York City time, two
Business Days prior to the date of the proposed Purchase and (ii) one of
the three permitted Eurodollar Tranches, not later than 11:00 a.m., New
York City time, three London/U.S. Business Days prior to the date of the
proposed Purchase; provided that the Trust Interests acquired in the
initial Purchase hereunder shall be the ABR Tranche unless the Servicer
notifies the Agent and obtains the prior written consent of the Agent at
least three London/U.S. Business Days prior to such initial Purchase to
allow such initial Purchase to constitute a Eurodollar Tranche; provided
further that the total number of Tranches may not exceed three at any one
time. Each notice shall be irrevocable and shall in each case refer to
this Agreement and specify (x) the aggregate purchase price for the
requested Purchases (which shall be in a minimum amount of $2,000,000 or a
greater integral multiple of $1,000,000 (or in the total unutilized amount
of the various Purchasers' Stated Amounts)), (y) whether the Trust
Interests to be purchased will be the ABR Tranche or a Eurodollar Tranche
and (z) the date of the Purchase (which shall be a London/U.S. Business
Day) and the amount thereof. The Agent shall promptly advise the
Purchasers of any notice given pursuant to this section and of the amount
of each Purchaser's Purchase. No requests that the Purchasers make
Purchases shall be made by the Transferor during the Amortization Period or
Early Amortization Period.
(b) After receiving notice from the Agent of any notice given
pursuant to subsection (a) and subject to the conditions in Article VII,
each Purchaser shall make a Purchase in the amount of its pro rata portion
of aggregate Purchases requested to be made, ratably according to its Class
Percentage, on the proposed date thereof by wire transfer in Dollars of
immediately available funds to Transferor.
(c) The Agent shall be entitled to receive from Collections a fee
(an "Administration Fee") equal to (i) the aggregate number of Purchases,
reductions in the Invested Amount of a Tranche, reductions in the Stated
Amount and modifications in the allocation of the Trust Interests among the
Eurodollar Tranches and the ABR Tranche occurring during any calendar month
in excess
-3-
<PAGE>
of two multiplied by (ii) $1,000. The Administration Fee shall be payable
in arrears on the Distribution Date following such calendar month. Such
Administration Fees shall constitute "Additional Amounts" for purposes of
the Supplement.
(d) Notwithstanding anything to the contrary, if any
Purchaser's funding source fails to provide it with funds necessary to make
a Purchase, such Purchaser shall not have any obligation under Section 2.1
to make such Purchase.
SECTION 2.3 Reduction of Stated Amounts. (a) Transferor may
reduce the Stated Amounts of the Certificates effective as of any
Distribution Date by delivering an irrevocable notice to the Agent and the
Trustee, not later than 11:00 a.m., New York City time, at least ten
Business Days prior to such Distribution Date; provided, that (i) each
partial reduction of the Stated Amounts shall be, in the aggregate for all
Certificates, in an integral multiple of $1,000,000; (ii) no partial
reduction shall be made that would reduce the aggregate Stated Amounts to
an amount less than the Class A Invested Amount at the time of the
reduction; and (iii) no such reduction shall be effected unless the
Commitment Reduction Fee is paid on the date of such reduction. Each
reduction in the Stated Amounts shall be made ratably among the Purchasers
in accordance with their respective Stated Amounts. The Agent shall
promptly advise the Purchasers of any notice given pursuant to this
section. Each reference in this Agreement to the "Stated Amount" of a
Certificate means the Stated Amount of the Certificate after giving effect
to any reductions made pursuant to this section.
(b) Each Purchaser shall be entitled to receive from Collections
a fee (a "Commitment Reduction Fee") determined for each reduction in the
Stated Amount (x) pursuant to this Section 2.3 or (y) upon the occurrence
of an Early Amortization Event (in which case the Stated Amount, for
purposes of this paragraph 2.3(b), will be deemed to be reduced to zero),
equal to the sum of (i) the product of (A) the amount of such reduction
multiplied by (B) the number of months or partial months from the date of
such reduction until the Expected Final Payment Date multiplied by (C)
0.03% and (ii) the product of (A) the lesser of (x) the amount of such
reduction or (y) $35,000,000 less the Stated Amount (after taking into
account such reduction, but in any event, not less than zero) multiplied by
(B) the number of months or partial months from the date of such reduction
until the Expected Final Payment Date multiplied by (C) 0.03%. The
Commitment Reduction Fee shall be payable on the Distribution Date such
reduction is effected.
SECTION 2.4 Certificates. The outstanding amounts of the
Purchases made by each Purchaser shall be evidenced by its Certificate, to
be issued on the Closing Date substantially in the form of Exhibit A (Part
I) to the Supplement.
-4-
<PAGE>
Each Purchaser shall and is hereby authorized to record on the grid
attached to its Certificate (or at its option, in its internal books and
records) the date and amount of each Purchase made by it, the amount of
each repayment of the principal amount represented by its Certificate, the
portions of its Purchases that are from time to time allocated to the ABR
Tranche and any Eurodollar Tranche, and any reductions to the Stated Amount
of its Certificate made pursuant to Section 2.3(a) (which shall be
conclusive absent manifest error); provided, that failure to make any
recordation on the grid or records or any error in the grid or records
shall not adversely affect the Purchaser's rights with respect to its
interest in the assets of the Trust and its right to receive interest in
respect of the outstanding principal amount of all Purchases made by the
Purchaser.
ARTICLE III
REDUCTIONS IN INVESTED AMOUNT
SECTION 3.1 Transferor's Right to Reduce Invested Amount. (a)
During the Revolving Period, if Transferor wishes to reduce the Class A
Invested Amount of any Tranche, Transferor shall notify the Agent and the
Trustee in writing, not later than 11:00 a.m., New York City time, three
London/U.S. Business Days prior to the date of the proposed reduction (and
state in such notice the desired amount of the reduction and to which
Tranche(s) such reduction would apply), and cause an amount of funds equal
to the desired amount of the reduction that are available for this purpose
in accordance with the terms of the Supplement to be transferred to the
Agent on the date of the proposed reduction, for the account of the
Purchasers (and application to the respective and ratable reduction of the
funded principal amount of the Certificate of each Purchaser); provided
that any reduction to the aggregate funded principal amounts represented by
the Certificates must be in a minimum amount of $1,000,000 (or the entire
funded principal amount, if less) or integral multiples thereof and the
remaining Class A Invested Amount, if any, must be equal to or greater than
$2,000,000; provided, further that the amount of the desired reduction (as
of the receipt of such notice by the Agent until such funds are transferred
to the Agent) shall not exceed the sum, without duplication, of the funds
that are then available to be applied to reduce the Class A Invested Amount
in accordance with the terms of the Supplement; provided, further, that no
repayment in respect of a Eurodollar Tranche on a day other than the last
day of the related Interest Period shall be permitted unless an amount of
funds equal to the Breakage Fee, if any, payable on the date of such
reduction has been transferred to the Agent on such date. In the event any
Tranche is reduced to zero on a date other than the last day of the
Interest Period applicable to such Tranche, then, notwithstanding anything
herein or in the Supplement to the contrary, such Tranche shall be deemed
to be in
-5-
<PAGE>
existence until the last day of such Interest Period for purposes of
calculating the number of outstanding Tranches and determining whether an
additional Eurodollar Tranche or ABR Tranche is available. Such Breakage
Fees shall constitute "Additional Amounts" for purposes of the Supplement.
(b) Notwithstanding the foregoing, any reduction in the Class A
Invested Amount shall only be effective if (i) the Base Amount is then
greater than the Net Invested Amount or (ii) the Transferor or Servicer
obtains the prior written consent from the Agent.
SECTION 3.2 Mandatory Reduction of Invested Amount. During the
Amortization Period or Early Amortization Period, Transferor shall notify
the Agent and the Trustee in writing, not later than 11:00 a.m., New York
City time, three London/U.S. Business Days prior to the Interest Payment
Date applicable to each Tranche that it will repay all or a portion of the
Invested Amount applicable to such Tranche and shall state in such
notice the amount of funds deposited in the Principal Funding Account as of
the time of such notice, and shall cause an amount of funds equal to the
lesser of (i) the principal amount of such Tranche and (ii) the amount of
funds deposited in the Principal Funding Account as of the time of such
notice, to be transferred to the Agent on the date of the reduction, for
the account of the Purchasers (and for application to the respective and
ratable reduction of the funded principal amount of the Certificate of each
Purchaser).
SECTION 3.3 Notice to Purchasers. The Agent shall promptly
advise the Purchasers of any notice received by the Agent pursuant to
Sections 3.1 or 3.2.
ARTICLE IV
TRANCHES, INTEREST AND FEES
SECTION 4.1 Tranches. (a) Each time Transferor requests the
Purchasers to make Purchases hereunder, Transferor will notify the Agent
and Servicer in writing as to whether the Trust Interests included in the
Purchase shall, in whole or in part, be deemed to be the one permitted ABR
Tranche or (subject to subsections (b)(iii) and (b)(iv) below) one of the
three permitted Eurodollar Tranches (subject to the limitation in Section
4.1 of the Supplement that the total number of Tranches may not exceed
three at any one time).
(b) Subject to the terms and conditions set forth in this section
and Sections 4.4 and 4.5, unless Transferor notifies Agent and Servicer to
the contrary on or before 11:00 a.m., New York City time, on the third
London/U.S.
-6-
<PAGE>
Business Day preceding the end of an Interest Period, subject to Section
3.1, (x) on the last day of such Interest Period, if such Interest Period
relates to the ABR Tranche, such ABR Tranche shall convert to a Eurodollar
Tranche (and such conversion shall be deemed to increase the number of
Eurodollar Tranches by one and reduce the number of ABR Tranches to zero)
and (y) on the last day of such Interest Period, if such Interest Period
relates to a Eurodollar Tranche, such Eurodollar Tranche shall continue as
a new Eurodollar Tranche (and such continuance shall not be deemed to
increase the number of Eurodollar Tranches), in each case, the Interest
Period for such Tranche shall commence immediately upon the termination of
the prior Interest Period; provided, that:
(i) subject to Section 4.4, each conversion or
continuation shall be made ratably among the Purchasers in
accordance with their respective amounts of the Purchases
comprising the converted or continued Tranche, and
(ii) if less than all of the outstanding amount of any
Tranche shall be converted or continued (i.e., if a portion of the
Class A Invested Amount is reduced pursuant to Article III), the
aggregate amount of the Tranche converted or continued shall be in
an amount equal to $2,000,000 or an integral multiple of
$1,000,000 in excess of $2,000,000.
(c) Subject to the terms and conditions set forth in this
section, if Transferor wishes to continue an existing ABR Tranche for the
subsequent Interest Period applicable to such Tranche, or convert an
existing Eurodollar Tranche into the ABR Tranche for the subsequent
Interest Period applicable to such Tranche, Transferor shall notify the
Agent in writing of such election not later than 11:00 a.m., New York City
time, on the third London/U.S. Business Day preceding the end of the
Interest Period applicable to the Tranche to be so continued or converted,
in which case the number of Eurodollar Tranches and ABR Tranches shall be
adjusted accordingly and the Interest Period for such Tranche shall
commence immediately upon the termination of the prior Interest Period;
provided, that each conversion or continuation shall be made ratably among
the Purchasers in accordance with their respective amounts of the Purchases
comprising the converted or continued Tranche.
(d) In accordance with Section 4.1 of the Supplement, each
Purchaser and the Agent will be entitled to receive additional interest (at
the rate specified therein) on amounts that are not paid when due under
this Agreement or under its Certificate.
(e) The Agent shall promptly advise the Purchasers of any notice
given pursuant to this section and of each Purchaser's portion of any
converted or continued Tranche.
-7-
<PAGE>
SECTION 4.2 Non-Usage and Minimum Usage Fees. (a) Each
Purchaser shall be entitled to receive from Collections a fee (a "Non-Usage
Fee") for the period from and including the date hereof, until the end of
the Revolving Period, equal to 0.55% per annum, on the daily average of (i)
the Stated Amount of its Certificate minus (ii) the amount represented by
the Purchaser's Class Percentage of the Class A Invested Amount. The Non-
Usage Fee shall be payable in arrears on each Distribution Date. The Non-
Usage Fee for any Distribution Date shall be calculated on the basis of the
actual number of days elapsed since the preceding Distribution Date (or, if
prior to the first subsequent Distribution Date after the Closing Date,
during the period from the Closing Date to such Distribution Date) over a
year of 360 days.
(b) Each Purchaser shall be entitled to receive from Collections
an annual fee (a "Minimum Usage Fee") determined as of each anniversary of
the First Issuance Date, equal to the product of (i) the difference between
(A) the quotient determined by dividing (x) the aggregate of the amounts
represented by the Purchaser's Class Percentage of the Class A Invested
Amount as of the end of each day in such period by (y) the number of days
in such period minus (B) the result of (1) $11,600,000 minus (2) the
weighted average Class B Invested Amount during such period multiplied by
(ii) 0.65%. The Minimum Usage Fee shall be payable in arrears on the first
Distribution Date following each anniversary of the First Issuance Date.
Such Minimum Usage Fees shall constitute "Additional Amounts" for purposes
of the Supplement.
SECTION 4.3 Yield Protection. (a) Notwithstanding any other
provision herein, if, after the date hereof, either:
(i) any law, rule or regulation (including any imposition
or increase of reserve requirements) or any interpretation or
administration of any law, rule or regulation by any Governmental
Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or
(ii) the compliance by a Purchaser with any guideline or
request from any central bank or other Governmental Authority or
quasi-governmental authority exercising control over banks or
financial institutions generally (whether or not having the force
of law),
shall subject a Purchaser to the imposition or modification of any reserve
(including any imposed by the Federal Reserve Board), special deposit or
similar requirement (including a reserve, special deposit or similar
requirement that takes
-8-
<PAGE>
the form of a tax) against assets of, deposits with or for the account of,
or credit extended by, the Purchaser or the office from time to time that
it designates to the Agent as the office through which it makes and
maintains its Purchases comprising part of a Eurodollar Tranche (as to each
Purchaser, its "LIBOR Office") or impose any other condition on a Purchaser
affecting its Eurodollar Tranches or its obligations hereunder, and as a
result of either of the foregoing there shall be any increase in the cost
to the Purchaser of agreeing to make or making, funding or maintaining
Purchases as Eurodollar Tranches, or there shall be a reduction in the
amount received or receivable by the Purchaser or its LIBOR Office, then,
upon written notice from the Purchaser to Transferor and Servicer (with a
copy to the Agent and the Trustee), signed by an officer of the Purchaser
with knowledge of and responsibility for such matters, and setting forth in
reasonable detail the calculation used to arrive at the amounts, additional
amounts sufficient to indemnify that Purchaser against the increased cost
or reduction in amounts received or receivable shall constitute "Additional
Amounts" for purposes of the Supplement, and the Purchaser shall be
entitled to receive these additional amounts solely from amounts allocated
thereto and paid pursuant to the Supplement.
(b) If a Purchaser shall reasonably determine that the adoption
after the date hereof of any law, rule or regulation regarding capital
adequacy or capital maintenance, or any change after the date hereof in any
of the foregoing or in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Purchaser,
any of its lending offices or its holding company with any new or revised
request or directive regarding capital adequacy or capital maintenance
(whether or not having the force of law) of any such Governmental
Authority, central bank or comparable agency, has or would have the effect
of reducing the rate of return on the Purchaser's capital or the capital of
its holding company as a consequence of this Agreement, the commitment of
such Purchaser to make Purchases or the Purchases made by such Purchaser
pursuant hereto to a level below what the Purchaser or its holding company
could have achieved but for the adoption, change or compliance (taking into
consideration the Purchaser's policies, and the policies of its holding
company, with respect to capital adequacy), then, upon written notice from
the Purchaser to Transferor and Servicer (with a copy to the Agent), signed
by an officer of the Purchaser with knowledge of and responsibility for
such matters, and setting forth in reasonable detail the calculation used
to arrive at the amounts, any additional amounts as will compensate the
Purchaser or its holding company for the reduction shall constitute
"Additional Amounts" for purposes of the Supplement, and the Purchaser
shall be entitled to receive these additional amounts solely from amounts
allocated thereto and paid pursuant to the Supplement.
-9-
<PAGE>
(c) A Purchaser shall promptly notify Transferor, Servicer and
the Agent in writing of any event of which it has knowledge occurring after
the date hereof that will entitle it to compensation pursuant to this
section. A certificate of the Purchaser, signed by an officer of the
Purchaser with knowledge of and responsibility for such matters, and
setting forth in reasonable detail the calculation used to arrive at the
amounts necessary to compensate the Purchaser or its holding company as
specified in subsection (a) or (b), as the case may be, shall be delivered
to Transferor and Servicer and shall be conclusive absent manifest error.
(d) Failure on the part of a Purchaser to demand compensation for
any amounts as specified in subsection (a) or (b) with respect to any
period shall not constitute a waiver of its right to demand compensation
with respect to that period or any other period. The protection of this
section shall be available to the Purchasers regardless of any possible
contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition that shall have occurred
or been imposed.
(e) Promptly after giving any notice to Transferor pursuant to
this section, a Purchaser will seek to designate one of its offices located
at an address other than that previously designated pursuant to this
Agreement as the office from which its Purchases will be made after the
designation if it will avoid the need for, or materially reduce the amount
of, any payment to which the Purchaser would otherwise be entitled pursuant
to this section and will not, in the sole discretion of the Purchaser, be
otherwise disadvantageous to the Purchaser.
SECTION 4.4 Illegality; Unavailability. (a) In the event that on
any date any Purchaser shall have determined (which determination shall be
final and conclusive and binding upon all parties) that the making or
continuation of its Purchases as Eurodollar Tranches has become unlawful by
compliance by the Purchaser in good faith with any law, governmental rule,
regulation or order or has become impossible as a result of a contingency
occurring after the date hereof that materially and adversely affects its
interbank eurodollar market, then, and in any such event, such Purchaser
shall promptly give notice (by telephone confirmed in writing) to
Transferor, Servicer and the Agent (which notice the Agent shall promptly
transmit to each other Purchaser) of that determination. The obligation of
the affected Purchaser to make or maintain its Purchases as Eurodollar
Tranches during any such period shall be terminated at the earlier of the
termination of the Interest Period then in effect for any Eurodollar
Tranche or when required by law, and Transferor shall, no later than the
time specified for the termination, convert any Purchases of the affected
Purchaser that constitute part of any Eurodollar Tranche into ABR Tranches
(in which case, notwithstanding anything herein or in the Supplement to the
contrary, the number of ABR Tranches may be increased to up to three).
-10-
<PAGE>
(b) If, prior to the beginning of any Interest Period, the Agent
shall have determined (which determination shall be final and conclusive
and binding upon all parties) that: (i) Dollar deposits in the relevant
amount and for the Interest Period are not available in the relevant
interbank eurodollar market or (ii) by reason of circumstances affecting
the interbank eurodollar market, that adequate and fair means do not exist
for ascertaining the LIBOR rate applicable to a Eurodollar Tranche, then
the Agent shall promptly give notice of this determination to Transferor,
Servicer and each Purchaser. Thereafter, and continuing until the Agent
shall notify Transferor, Servicer and each Purchaser that the circumstances
giving rise to this determination no longer exist, (x) each Eurodollar
Tranche will, on the last day of the applicable Interest Period, convert
into a part of the ABR Tranche, (y) the right of Transferor to request
Eurodollar Tranches shall be suspended and (z) any Purchases requested to
be made as Eurodollar Tranches prior to such time but not yet made shall be
made as ABR Tranches.
SECTION 4.5 Indemnity. (a) If a Purchaser shall incur any
losses, expenses or liabilities (including any interest paid to lenders of
funds borrowed by it to fund any Purchase of a Certificate as a Eurodollar
Tranche and any loss sustained in connection with the re-deployment of such
funds) as a result of (i) the failure of a Purchase to be made on a date
specified therefor in a notice delivered by Transferor pursuant to Section
2.2 (other than any such failure resulting from the Purchaser's default in
the performance of its obligations hereunder) or (ii) any repayment,
including under Section 3.1, of any part of the Invested Amount allocated
to a Eurodollar Tranche on a date that is other than the date specified in
a notice of repayment given by Servicer, then, upon written notice (which
notice shall be signed by an officer of the Purchaser with knowledge of and
responsibility for such matters and shall set forth in reasonable detail
the basis for requesting the amounts) from the Purchaser to Transferor and
Servicer, additional amounts sufficient to indemnify the Purchaser against
the losses, expenses and liabilities, but not for any lost profits
associated therewith, shall constitute "Additional Amounts" for purposes of
the Supplement, and the Purchaser shall be entitled to receive these
additional amounts, solely from amounts allocated thereto and paid pursuant
to the Supplement.
(b) In the event the Class A Invested Amount allocable to any
Tranche is reduced on a day other than the last day of the Interest Period
applicable to such Tranche, each Purchaser shall be entitled to receive
from Collections a fee (a "Breakage Fee") which fee shall be payable on the
date of such reduction, in an amount equal to the product of (A) the amount
of such reduction multiplied by (B) the excess, if any, of (x) LIBOR plus
the Class A Certificate Spread (for a Eurodollar Tranche), the Alternate
Base Rate plus the Class A Certificate Spread (for an ABR Tranche) over (y)
the rate quoted by the Trustee on purchases of its
-11-
<PAGE>
commercial paper multiplied by (C) the number of days from the day of
determination to the last day of such Distribution Period divided by 360;
provided that if the Trustee's commercial paper ceases to be rated at least
"A-1+" by S&P or if such commercial paper is not available, then the Agent
may designate another commercial paper issuer for purposes of clause (y)
above.
Such Breakage Fees shall constitute "Additional Amounts" for purposes of
the Supplement.
SECTION 4.6 Taxes. (a) Any and all payments made to each
Purchaser under its Certificate shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, duties,
charges, fees, deductions or withholdings of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed, excluding taxes imposed by the
jurisdiction in which that Purchaser's principal office (and/or the office
where it books its investment in its Certificate) is located on all or part
of the net income, profits or gains of that Purchaser (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in
or to relate to a particular jurisdiction, or otherwise) (all the
nonexcluded taxes, levies, imposts, charges, deductions, withholdings and
liabilities being hereinafter referred to as "Taxes"). If Trustee or the
Agent are required by law to deduct or withhold any Taxes from or in
respect of any sum payable hereunder or under any Certificate to a
Purchaser, then the sum payable shall be increased by the amount necessary
to yield to such Purchaser (after payment of all Taxes) an amount equal to
the sum it would have received had no such deductions or withholdings been
made, and the additional amount shall constitute "Additional Amounts" for
purposes of the Supplement, and the Purchaser shall be entitled to receive
these additional amounts, solely from amounts allocated thereto and paid
pursuant to the Supplement.
(b) Whenever any Taxes are paid by Trustee pursuant to subsection
(a), as promptly as possible thereafter Servicer shall send to the relevant
Purchaser the original or a certified copy of an original official receipt
showing payment thereof (if any) or any other evidence of the payment as
may be available to Servicer through the exercise of its reasonable
efforts. If Trustee fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Purchaser the required receipts
or other required documentary evidence, the Purchaser shall be entitled to
receive, solely from amounts allocated with respect thereto and paid
pursuant to the Supplement, additional amounts necessary to indemnify it
for any incremental taxes, interest or penalties that may become payable by
the Purchaser as a result of any such failure, and the amounts shall
constitute "Additional Amounts" for purposes of the Supplement, and the
-12-
<PAGE>
Purchaser shall be entitled to receive these additional amounts, solely
from amounts allocated thereto and paid pursuant to the Supplement.
(c) On or before the date it becomes a party to this Agreement
(and, so long as it may properly do so, periodically thereafter, as
requested by Servicer, to keep forms up to date), each Purchaser, including
any Assignee, that is not a United States person (as defined in section
7701(a)(30) of the Internal Revenue Code), shall deliver to Trustee any
certificates, documents or other evidence that shall be required by the
Internal Revenue Code or Treasury Regulations issued pursuant thereto to
establish that, assuming the Certificates are properly characterized as
indebtedness for Federal income tax purposes, it is exempt from existing
United States Federal withholding (including backup withholding)
requirements, including (i) two original copies of Internal Revenue Service
Form 1001 or Form 4224 or successor applicable form, properly completed and
duly executed by the Purchaser or Assignee certifying that it is entitled
to receive payments under this Agreement or any Certificate without
deduction or withholding of any United States Federal income taxes, and
(ii) an original copy of Internal Revenue Service Form W-8 or W-9 or
applicable successor form, properly completed and duly executed; provided,
that if any Purchaser does not comply with this subsection 4.6(c), amounts
payable to such Purchaser under this Section 4.6 shall be limited to
amounts that would have been payable under this section if such Purchaser
had so complied.
ARTICLE V
OTHER PAYMENT TERMS
SECTION 5.1 Time and Method of Payment. All amounts payable to
any Purchaser hereunder or with respect to its Certificate shall be made to
such Purchaser by wire transfer of immediately available funds in Dollars
not later than 2:00 p.m., New York City time, on the date due. Any funds
received after that time will be deemed to have been received on the next
Business Day.
SECTION 5.2 Pro Rata Treatment. Each repayment of the principal
of the Certificates, each payment of interest thereon, each payment of the
Non-Usage Fee, each reduction of the Stated Amounts of the Certificates and
each conversion or continuation of any Tranche in respect of the
Certificates (except as otherwise required by Sections 4.3(c) and 4.4(b)
with respect to conversions) shall be allocated pro rata among the
Purchasers of the Certificates on the date of payment or reduction, in
accordance with their respective Class Percentages, in which case such
allocation shall be pro rata in accordance with funded principal amounts).
Each Purchaser agrees that in computing its portion of any
-13-
<PAGE>
Purchases to be made hereunder, the Agent may, in its discretion, round
each Purchaser's pro rata share of the Purchases to the next higher or
lower whole dollar amount.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Transferor. As of the Closing Date, Transferor
represents and warrants to the Purchasers and the Agent that each of its
representations and warranties in the Pooling Agreement and Purchase
Agreement is true and correct, as if made on the Closing Date, and further
represents and warrants that:
(a) no Early Amortization Event or Unmatured Early
Amortization Event exists;
(b) assuming the accuracy of each Purchaser's
representations set out in Section 6.3 and that no Purchaser (and
no Person acting on any Purchaser's behalf) has made a general
solicitation or general advertising within the meaning of the
Securities Act, the offer and sale of the Certificates in the
manner contemplated by this Agreement is a transaction exempt from
the registration requirements of the Securities Act, and the
Pooling Agreement is not required to be qualified under the Trust
Indenture Act of 1939, as amended;
(c) Transferor has not dealt with any financial advisor,
or other Person who may be entitled to any commission or
compensation in connection with the sale of the Certificates;
(d) no information supplied by or on behalf of
Transferor, ICP or any of its Subsidiaries to the Agent or the
Purchasers in connection with the Transaction Documents contains
any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which
they were made; and
(e) the Certificates have been duly and validly
authorized by Transferor and, from and after the date on which the
Certificates are executed by Transferor and authenticated by the
Trustee in accordance with the terms of the Pooling Agreement and
the Supplement and delivered to and paid for by the Purchasers in
accordance with the terms of this Agreement, will be validly
issued and outstanding and will constitute valid and legally
binding obligations of the Trust entitled to the
-14-
<PAGE>
benefits of the Pooling Agreement and the Supplement and
enforceable against the Trust in accordance with their terms.
SECTION 6.2 ICP. As of the Closing Date, ICP represents and
warrants to the Purchasers and the Agent that:
(a) each of its representations and warranties in the
Pooling Agreement (in its capacity as Servicer) and the Purchase
Agreement (in its capacity as a Seller) is true and correct, as if
made on the Closing Date with the same effect as if made on that
date (unless specifically stated to relate to an earlier date);
(b) the audited consolidated balance sheet of ICP and its
consolidated Subsidiaries as at the end of ICP's most recent
fiscal year and the related statement of earnings, stockholders'
equity and cash flows of ICP and its consolidated Subsidiaries for
such fiscal year and the unaudited consolidated balance sheet of
ICP and its consolidated Subsidiaries as at the end of ICP's most
recent fiscal quarter and the related statement of earnings,
stockholders' equity and cash flows of ICP and its consolidated
Subsidiaries for such fiscal quarter, copies of which have been
furnished to the Trustee and each Purchaser, fairly present the
consolidated financial position and business of ICP and its
consolidated Subsidiaries as at the dates specified therein and
the consolidated results of the operations of ICP and its
consolidated Subsidiaries for the periods ended on such dates, all
in accordance with GAAP consistently applied throughout the
periods reflected therein;
(c) since January 1, 1996 through the Closing Date, (i)
there has been no material adverse change in the condition,
financial or otherwise, or the earnings, business affairs or
business prospects of Transferor or ICP whether or not arising in
the ordinary course of business, and (ii) there have been no
transactions entered into by Transferor, ICP or the Sellers that
are material with respect to the condition, financial or
otherwise, or the earnings, business affairs or business prospects
of Transferor or ICP; and
(d) no information supplied by or on behalf of
Transferor, ICP or any of its Subsidiaries to the Agent or the
Purchasers in connection with the Transaction Documents contains
any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which
they were made.
-15-
<PAGE>
SECTION 6.3 Purchasers. As of the Closing Date (or such later
date on which it acquires its Certificate in accordance with Section 10.3),
each Purchaser represents and warrants (and each Assignee shall be deemed
to represent and warrant as of the date that its assignment becomes
effective) that it is an "accredited investor" as that term is defined in
any of paragraphs (1), (2), (3) or (7) of Rule 501(a) under the Securities
Act and is not purchasing its Certificate with a view to making a
distribution thereof (within the meaning of the Securities Act).
ARTICLE VII
CONDITIONS
SECTION 7.1 Conditions to Initial Purchase. The obligation of
each Purchaser to Purchase its Certificate shall be subject to the
satisfaction of the conditions precedent that
(a) the conditions precedent specified in Section 4.1 of
the Purchase Agreement and Sections 5.1 and 5.2 of the Class B
Certificate Purchase Agreement (other than those that relate to
this Agreement) shall be satisfied;
(b) the Agent shall have received, for the account of such
Purchaser, a duly executed and authenticated Certificate
registered in its name and in a Stated Amount equal to the amount
set out opposite its name on Schedule I to this Agreement;
(c) the Agent shall have received from the Transferor (i)
certain fees and reimbursement of any expenses referred to in
Section 10.5 for which invoices have been presented and (ii) an
arrangement fee in the amount of $350,000 ($100,000 of which the
Agent hereby acknowledges has already been paid) (the "Arrangement
Fee"); and such Purchaser shall have received from the Transferor
(x) certain fees and reimbursement of any expenses referred to in
Section 10.5 for which invoices have been presented and (y) a fee
(the "Commitment Fee") equal to the Stated Amount for its
Certificate multiplied by 0.55%;
(d) the Agent shall have received, for the account of
such Purchaser, an original (except as indicated below)
counterpart of the following (each of which, if not in a form
attached to this Agreement, shall be in form and substance
satisfactory to the Agent):
-16-
<PAGE>
(i) the Pooling Agreement, the Purchase Agreement
and the Guaranty, each of which shall be in full force and
effect, and all actions required to be taken under those
documents in connection with the issuance of the
Certificates shall have been taken;
(ii) photocopies of each Account Agreement;
(iii) a certificate of the Secretary, or an
Assistant Secretary, of each of Transferor, Servicer,
Guarantor and each Seller with respect to:
(A) attached copies of resolutions of
its Board of Directors (or, if applicable, its
managing body) then in full force and effect
authorizing the execution, delivery and
performance of the Transaction Documents,
(B) the incumbency and signatures of
those of its officers authorized to act with
respect to the Transaction Documents, and
(C) attached copies of its certificate
of incorporation and by-laws (or, if applicable,
its limited partnership agreement);
(iv) a certificate of an Authorized Officer of
each of Transferor, Servicer and each Seller as to the
satisfaction of the conditions precedent set forth in
Section 7.2, and a certificate of Transferor that the
representations and warranties of the Transferor set out
in this agreement are true and correct as of the date of
such initial purchase and that no Early Amortization Event
or Unmatured Early Amortization Event exists;
(v) a certificate of an appropriate officer of
Trustee stating that the Pooling Agreement has been duly
authorized, executed and delivered by Trustee and the
Certificates have been duly authenticated by Trustee in
accordance with the Pooling Agreement and an opinion of
counsel to Trustee as to related matters;
(vi) evidence that each of S&P and DCR has rated
the Class A Certificates "AAA";
(vii) the Daily Report for the Closing Date;
-17-
<PAGE>
(viii) agreed-upon procedures letter, in form and
substance satisfactory to the Agent, from Coopers &
Lybrand LLP with respect to certain historical information
provided by ICP relating to the Receivables;
(ix) copies of any management or other agreements
with regard to the administration of Transferor's
business, certified by an Authorized Officer of
Transferor;
(x) a pro forma balance sheet of Transferor as of
the date hereof, after giving effect to the transactions
contemplated by the Supplement, and a certificate of an
Authorized Officer of ICP as to the capitalization of
Transferor (the amount and type of which capitalization
shall be satisfactory to the Agent);
(xi) results of recent searches of the UCC
filing records and tax and ERISA and judgment lien records
in each jurisdiction in which a filing referred to in
subsection (xii) is to be made for filings against each
Seller (including any predecessors in interest to any
Seller going back five years) and Transferor, showing no
filings of record that cover any of the Receivables or the
other Transferred Assets other than (i) the financing
statements referred to in subsection (xii) (to the extent
shown in the searches) and (ii) any other filings as to
which the Agent has received signed UCC-3 termination
statements or pay-off letters in form and substance
satisfactory to it;
(xii) confirmation satisfactory to the Agent that
(x) the following have been placed with Lexis Document
Services or another filing service selected by the Agent
for filing, the filing to occur on the Closing Date or the
first Business Day thereafter and (y) any filing fees and
indebtedness taxes necessary to perfect or protect true
security interests by means of such filings have been paid
in full:
(A) UCC financing statements naming each
Seller, as seller/debtor, and Transferor, as
secured party/purchaser, in each office where the
filing is necessary for the perfection of the
sales or contribution of Receivables and Related
Assets by each Seller to Transferor;
(B) assignments of such existing UCC
financing statements to Trustee, as assignee of
the secured party, in each office where the filing
is necessary for the perfection
-18-
<PAGE>
of the sales of Receivables and Related Assets by
each Seller to Transferor; and
(C) UCC financing statements naming
Transferor, as seller/debtor, and Trustee, as
secured party/purchaser, in each office where the
filing is necessary for the perfection of the
transfers of Receivables and other Transferred
Assets by Transferor to Trustee;
(xiii) the following opinions addressed to the
Agent, the Purchaser and Trustee, and in each case as to
the matters and in such form and substance as shall be
satisfactory to the Agent, the Purchaser and Trustee:
(A) opinions of Steptoe and Johnson as
to certain corporate and securities matters
concerning ICP, Federal and state tax and UCC
matters, true sale and non-consolidation; and
(B) opinions of Tuke Yopp & Sweeney as
to certain corporate and securities matters
concerning General and Coastline, and Tennessee
limited partnership, Tennessee state tax and
Tennessee UCC matters; and
(C) opinions of White & Case and Lewis,
Rice & Fingersh as to certain state tax matters
under Florida law and Missouri law, respectively;
(xiv) evidence, reasonably satisfactory to the
Agent and the Purchaser, of the payment of all taxes, fees
and other governmental charges, if any, incidental to the
issuance of the Certificates and to the consummation of
the transactions contemplated hereunder and under the
Pooling Agreement;
(xv) a solvency certificate of the chief
financial officer of ICP with respect to the Sellers,
which opinion shall be addressed to the Agent and the
Purchasers and shall be in form and substance satisfactory
to the Agent;
(xvi) such sublicenses and assignments as the
Agent shall require with regard to all computer and data
recovery software used by Servicer or any Seller in
connection with the servicing of the Transferred Assets,
which sublicenses and assignments will permit any
substitute Servicer to use such software; and
-19-
<PAGE>
(xvii) any other information, certificates,
opinions and documents as the Agent may have reasonably
requested.
If the conditions specified above have not been fulfilled
on the date hereof, any condition specified in this Agreement shall not
have been fulfilled when and as required in this Agreement or waived by the
Purchasers, in each case a Purchaser's obligations to purchase the
Certificates pursuant to this Agreement may be terminated by notice to
Transferor. In addition, if, under the circumstances, it shall not be
feasible for the Purchasers to invest on the date the funds that are held
available by the Purchasers for the Purchase, Transferor and Servicer,
jointly and severally shall pay the Purchasers interest on the funds at the
Alternate Base Rate plus two percent from the date of the notice until the
next succeeding Business Day on which it is feasible for the Purchasers to
invest the funds in the Certificates. Nothing in this paragraph shall
operate to relieve Transferor from any of its obligations hereunder or
otherwise waive any of the Purchasers' rights against Transferor.
SECTION 7.2 Conditions to Each Purchase. The obligation of each
Purchaser to make any Purchase on any day (including those comprising the
initial Purchase) shall be subject to the Agent's receipt of the Daily
Report for that day and to the conditions precedent that on the date of the
Purchase, before and after giving effect thereto and to the application of
any proceeds therefrom, the following statements shall be true:
(a) the representations and warranties of Transferor and
Initial Servicer set out in this Agreement are true and accurate
as of that date with the same effect as though made on that date
(unless specifically stated to relate to an earlier date); and
(b) no Early Amortization Event or Unmatured Early
Amortization Event has occurred and is continuing.
The giving of any notice pursuant to Section 2.2 shall constitute
a representation and warranty by Transferor, ICP and Initial Servicer that
the foregoing statements (limited, in the case of subsection (a) to the
representations and warranties of the Person deemed to make the
representation and warranty referred to in this sentence) are true.
SECTION 7.3 Conditions to Signing. (a) Amounts received by the
Transferor from the initial Purchase shall be used to pay all expenses then
due and payable under the transaction documents.
(b) If the initial Purchase does not occur on the date hereof,
the Transferor shall nevertheless pay all transaction expenses on the date
hereof,
-20-
<PAGE>
including the Arrangement Fee, the Commitment Fee, all legal fees, Rating
Agency fees and Trustee fees.
ARTICLE VIII
COVENANTS
SECTION 8.1 Affirmative Covenants. Transferor and ICP (in its
capacity as a Seller, as Guarantor and as Initial Servicer) each severally
covenant and agree that, until the Certificates have been paid in full, it
will:
(a) duly and timely perform all of its covenants and
obligations under each Transaction Document to which it is a
party;
(b) with reasonable promptness deliver to each Purchaser
such information, documents, records or reports respecting the
Program or the Receivables as the Purchaser may from time to time
reasonably request;
(c) at the same time any report (including any Daily
Report, Monthly Report or annual auditors' report), notice or
other document is provided, or caused to be provided, by
Transferor or Servicer to Trustee under the Pooling Agreement,
provide the Agent and each Purchaser with a copy of the report;
(d) during regular business hours and (so long as no
Early Amortization Event has occurred and is continuing) upon two
Business Days prior written notice, permit the Agent (or such
other Person as the Agent may designate from time to time) and any
Required Person that is a Class A Holder, or their respective
agents or representatives (including certified public accountants
or other auditors), at the expense of the Servicer paid out of the
Servicing Fee, (i) to examine and make copies of and abstracts
from, and to conduct accounting reviews of, all Records in the
possession or under the control of Servicer, Transferor or any
Seller, including the related Contracts and purchase orders,
invoices and other agreements related thereto, and (ii) to visit
the offices and properties of Servicer, Transferor or any Seller
for the purpose of examining such materials described in clause
(i), and to discuss matters relating to the Receivables or the
Related Transferred Assets or the performance by Servicer,
Transferor or any Seller of their respective obligations under any
Transaction Document with any officer, employee or representative
of Servicer, Transferor or any Seller. The Agent may (but shall
not be obligated to) conduct, or cause its agents or
representatives to conduct, reviews of the types described in this
paragraph (each such review, a
-21-
<PAGE>
"Receivables Review") whenever the Agent, in its reasonable
judgment, deems any such review appropriate.
SECTION 8.2 Transfers. Purchaser agrees that it will not
transfer its Class A Certificate (or any portion thereof) to any Person
unless such Person shall have provided the Trustee and Transferor with a
certificate to the effect that such Person is an "accredited investor" as
that term is defined in any of paragraphs (1), (2), (3) or (7) of Rule
501(a) under the Securities Act and is not purchasing its Certificate with
a view to making a distribution thereof (within the meaning of the
Securities Act).
SECTION 8.3 Procedure Letter and Report. The Agent shall
receive, for the account of the Purchasers, on or before September 30,
1996, an agreed-upon procedures letter in form and substance similar to the
procedures letter delivered pursuant to Section 7.1(d)(viii) and a report
from Coopers & Lybrand L.L.P. of the type specified in Section 3.7(a)(i) of
the Pooling Agreement except that such report shall pertain only to
Receivables originated by General and Coastline during the period from the
Closing Date through August 31, 1996.
ARTICLE IX
AGENT; REQUIRED PURCHASERS
SECTION 9.1 Appointment. The Purchasers hereby designate The
Chicago Corporation as Agent. Each Purchaser hereby irrevocably authorizes
the Agent to take action on its behalf under the provisions of the
Transaction Documents and any other instruments and agreements referred to
therein and to exercise the powers and perform the duties hereunder and
thereunder that are specifically delegated to or required of the Agent by
the terms hereof and thereof, and any other powers as are reasonably
incidental thereto. The Agent may perform any of its duties by or through
its officers, directors, agents or employees.
SECTION 9.2 Nature of Duties. The Agent shall not have any duties
or responsibilities except those expressly set forth in this Agreement.
Neither the Agent nor any of its officers, directors, agents or employees
shall be liable for any action taken or omitted by it or them under any
Transaction Document or in connection herewith or therewith, unless caused
by their gross negligence or willful misconduct. The duties of the Agent
shall be mechanical and administrative in nature, the Agent shall not have
by reason of this Agreement a fiduciary relationship in respect of any
Purchaser, and nothing in any Transaction Document, expressed or implied,
is intended to or shall be construed as to impose
-22-
<PAGE>
upon the Agent any obligations in respect of any Transaction Document
except as expressly set forth herein.
SECTION 9.3 Lack of Reliance on Agent and Financial Advisor.
Independently and without reliance upon the Agent, each Purchaser, to the
extent it deems appropriate, has made and shall continue to make (a) its
own independent investigation of the financial condition and affairs of
Transferor, the Sellers, Servicer, Guarantor and the Trust in connection
with the making and the continuation of each Purchase and the taking or not
taking of any action in connection herewith and (b) its own appraisal of
the creditworthiness of Transferor, the Sellers, Guarantor and Servicer and
the merits and risks of an investment in the Certificates, and, except as
expressly provided in this Agreement, the Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to provide any
Purchaser with any credit or other information with respect thereto,
whether coming into its possession before the making of a Purchase or at
any time or times thereafter. The Agent shall not be responsible to any
Purchaser for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing
delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority
or sufficiency of the Transaction Documents or the financial condition of
Transferor, the Sellers, Guarantor, Servicer or the Trust or be required to
make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of any Transaction Document, or the
financial condition of Transferor, the Sellers, Guarantor, Servicer or the
Trust or the existence or possible existence of any Early Amortization
Event or Unmatured Early Amortization Event.
SECTION 9.4 Certain Rights of Agent. If the Agent shall request
instructions from the Required Class A Purchasers (as defined below) with
respect to any act or action (including failure to act) in connection with
any Transaction Document, the Agent shall be entitled to refrain from
acting or taking the action unless and until the Agent shall have received
instructions from the Required Class A Purchasers, and the Agent shall not
incur liability to any Person by reason of so refraining. Without limiting
the foregoing, no Purchaser shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining from acting
under any Transaction Document in accordance with the instructions of the
Required Class A Purchasers or for refraining to act in the absence of
instruction.
SECTION 9.5 Reliance. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed,
sent or made by any Person that the
-23-
<PAGE>
Agent believed to be the proper Person. The Agent may consult with legal
counsel (including counsel for any Related Person), independent public
accountants and other experts selected by the Agent and shall not be liable
for any action taken or omitted to be taken in accordance with the advice
of such counsel, accountants or experts.
SECTION 9.6 Indemnification. To the extent the Agent is not
reimbursed and indemnified by Transferor or Servicer, the Purchasers will
reimburse and indemnify the Agent ratably in accordance with their
respective Series Percentages from and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses or disbursements of whatsoever kind or nature that may be
imposed on, asserted against or incurred or suffered by the Agent
(including fees and expenses of legal counsel, accountants and experts) in
performing its duties or as a result of any action taken or omitted to be
taken by the Agent under any Transaction Document or in any way relating to
or arising out of any Transaction Document; provided that no Purchaser
shall be liable for any portion of these liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final
and non-appealable order).
SECTION 9.7 Agent in its Individual Capacity. The Agent and its
Affiliates may accept deposits from, lend money to and generally engage in
any kind of banking, trust or other business with Transferor or Servicer or
any Related Person as if the Agent were not performing the duties specified
herein, and may accept fees and other consideration from Transferor or
Servicer for services in connection with this Agreement and otherwise
without having to account for the same to the Purchasers.
SECTION 9.8 Resignation by Agent. (a) The Agent may resign at
any time by giving notice to Transferor and the Purchasers. Such
resignation shall take effect upon the appointment of a successor Agent
pursuant to subsections (b) and (c) below or as otherwise provided below.
(b) Upon any notice of resignation of the Agent, the Required
Class A Purchasers shall appoint a successor Agent hereunder who shall be a
commercial bank or trust company, broker-dealer or other financial
institution reasonably acceptable to Transferor (it being understood and
agreed that each of ABN AMRO Securities (USA) Inc., ABN AMRO Bank, N.A. and
any Purchaser is deemed to be acceptable to Transferor).
-24-
<PAGE>
(c) If a successor Agent is not appointed pursuant to subsection
(b) within 30 days after the delivery of the notice referred to in
subsection (a), the resigning Agent, with the consent of Transferor, shall
then appoint a successor Agent who shall serve as Agent hereunder until the
time, if any, that the Required Class A Purchasers appoint a successor
Agent as provided above.
(d) If no successor Agent has been appointed pursuant to
subsection (b) or (c) above by the 60th day after the date notice of
resignation was given by the resigning Agent, such Agent's resignation
shall become effective and the Purchasers shall thereafter perform all the
duties of the Agent under the Transaction Documents until the time, if any,
that the Required Class A Purchasers appoint a successor Agent as provided
above.
SECTION 9.9 Required Purchasers. "Required Purchasers" means
Purchasers (defined for purposes of this Section 9.9 as Purchasers
hereunder and under the Certificate Purchase Agreement (Series 1996-1,
Class B) dated as of the date hereof, among Inter-City Products Receivables
Company, L.P., Inter-City Products Corporation (USA) and the Purchasers
described therein) having Series Percentages that aggregate over 50%.
"Required Class A Purchasers" means Purchasers having Class Percentages
that aggregate over 50%.
SECTION 9.10 Agent Administration Fee. The Agent shall be
entitled to receive a fee (an "Agent Administration Fee") of $5,000 per
annum payable in advance as of the Closing Date and each anniversary
thereof for rendering administrative services on behalf of the Purchasers.
The Agent shall also be entitled to receive reimbursement for traveling
expenses incurred in rendering such services. The Agent Administration Fee
and the reimbursement for related travel expenses shall constitute
"Additional Amounts" for purposes of the Supplement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 Amendments. Except as provided in Section 13.1(a) or
(b) of the Pooling Agreement, Transferor, ICP and Initial Servicer shall
not amend, waive or otherwise modify any provision of any Transaction
Document to which it is a party, consent to any departure therefrom, or
grant any waiver or consent thereunder, unless the same shall have been
consented to in writing by the Required Purchasers prior to the
effectiveness of the same; provided, however, that no amendment
modification, waiver or consent shall (a) decrease in any manner the amount
of, or delay the timing of, any allocation, payment or
-25-
<PAGE>
distribution in respect of any Certificate without the prior written
consent of each Purchaser affected thereby, (b) amend, modify or waive any
provision of this Agreement that requires the approval or consent of a
specified percentage of Purchasers without the prior written consent of
that percentage of Purchasers, (c) amend, modify or waive the provisions of
this section with respect to the rights of any Purchaser, or the Class
Percentage or Series Percentage of any Purchaser, without the consent of
that Purchaser, (d) waive any Early Amortization Event arising from a
Bankruptcy Event with respect to Transferor, ICP or any Seller without the
consent of each Purchaser, (e) amend or modify the Class Percentage of any
Purchaser, without its prior written consent, (f) waive any of the
requirements hereunder that the interests of Trustee in the Receivables and
the other Transferred Assets be perfected by appropriate UCC filings
without the prior written consent of each Purchaser or (g) amend, modify,
waive or otherwise affect the rights or duties of the Agent hereunder
without the prior written consent of the Agent; provided further that
neither the execution and delivery of a Supplement relating to a
refinancing of the Certificates as contemplated by Section 4.9 of the
Supplement relating to the Certificates, nor any other amendment to the
Transaction Documents in connection with such a refinancing, shall require
any consent from any Purchaser, so long as the prior or contemporaneous
repayment in full of the Certificates in accordance with Section 5.2 of the
Supplement relating to the Certificates is a condition to the issuance of
the refinancing certificates, and of the effectiveness of such related
amendment. Each Purchaser shall be bound by any modification, waiver or
consent authorized by this section.
SECTION 10.2 No Waiver; Remedies. Any waiver, consent or approval
given by any party hereto shall be effective only in the specific instance
and for the specific purpose for which given, and no waiver by a party of
any breach or default under this Agreement shall be deemed a waiver of any
other breach or default. No failure on the part of any party hereto to
exercise, and no delay in exercising, any right hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right
hereunder, or any abandonment or discontinuation of steps to enforce the
right, power or privilege, preclude any other or further exercise thereof
or the exercise of any other right. No notice to or demand on any party
hereto in any case shall entitle such party to any other or further notice
or demand in the same, similar or other circumstances. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 10.3 Successors and Assigns; Assignments. (a) This
Agreement shall be binding upon, and inure to the benefit of, Transferor,
Servicer, ICP, the Agent, the Purchasers and their respective successors
and assigns; provided that none of Transferor, Servicer or ICP may assign
its rights or obligations hereunder
-26-
<PAGE>
or in connection herewith or any interest herein (voluntarily, by operation
of law or otherwise) without the prior written consent of all the
Purchasers, except that Servicer may be terminated in accordance with
Sections 10.1 and 10.2 of the Pooling Agreement; and provided further, that
no Purchaser or Participant may transfer, pledge, assign, sell
participations in or otherwise encumber its rights or obligations hereunder
or any interest herein except as permitted under this section. The Agent
may (in its sole discretion) assign all or any portion of its rights
hereunder or under the Supplement and/or delegate all or any portion of its
duties hereunder or under the Supplement to one or more third parties, in
which case such assignee or delegee will be deemed the "Agent" with respect
to such assigned right or delegated duty for purposes of this Agreement and
the Supplement.
(b) Subject to the terms of Section 10.3(e), any Purchaser may
at any time assign to any Permitted Transferee or to one or more banks or
institutional investors (each, an "Assignee") all or any part of its
participating interests in all or any portion of its Certificate and its
obligations hereunder (its "Credit Exposure"); provided that (i) unless
assigned to an Affiliate of the Purchaser or to a Permitted Transferee, it
assigns all of its Credit Exposure or a portion of its Credit Exposure in
an amount not less than $5,000,000, (ii) such Assignee, other than an
existing Purchaser, an Affiliate of the Purchaser or a Permitted
Transferee, must be reasonably acceptable to the Agent, which acceptance
shall not be delayed or withheld unreasonably, (iii) if such Assignee is
not a United States person (as defined in section 7701(a)(30) of the
Internal Revenue Code), such Assignee shall satisfy the requirements of
Section 4.6(c), provided, that if such Assignee thereafter fails to comply
with the requirements of Section 4.6, amounts payable to it under Section
4.6 shall be limited to amounts that would be payable if such Assignee had
complied with Section 4.6(c), and (iv) such Assignee shall have certified
to the assigning Purchaser that such Assignee is an "accredited investor"
as that term is defined in any of paragraphs (1), (2), (3) or (7) of Rule
501(a) under the Securities Act.
In the event of any assignment, the Purchaser (x) shall comply
with Article VI of the Pooling Agreement; provided that no Opinion of
Counsel shall be required to be delivered pursuant to Section 6.3(e) of the
Pooling Agreement with respect to any transfer to a Permitted Transferee,
and (y) shall give notice to Transferor and the Agent and shall deliver to
the Agent, for acceptance and recording in its records, an assignment
agreement substantially in the form of Exhibit D together with a processing
and recordation fee of, in the case of assignments to a Purchaser or an
Affiliate of a Purchaser, $1,500 and, in cases of any other assignment,
$3,500. Within five Business Days of receipt thereof, the Agent shall, if
the assignment agreement has been fully executed by the Assignee and the
assignor Purchaser, is completed and is in substantially the form
-27-
<PAGE>
of Exhibit D, execute the assignment agreement and record the information
contained therein in its records. Upon the earlier of the expiration of
such five Business Day period or the date of the recording, the assignment
will become effective.
Transferor, Servicer, ICP, the Agent and the Purchasers agree to
extend the rights and benefits with respect to Transferor under this
Agreement to the Assignee to the extent the Assignee would have had if it
were a Purchaser that was an original signatory to this Agreement;
provided, that the parties hereto shall be entitled to continue to deal
solely and directly with the assignor Purchaser in connection with the
interests so assigned to the Assignee until the assignment agreement and
any required fee, as described above, shall have been delivered to the
Agent by the Purchaser and the Assignee and the assignment shall have
become effective. Upon the effective assignment of its Credit Exposure,
the Purchaser shall be relieved of its obligations hereunder to the extent
of the assignment.
(c) The sale or assignment by a Purchaser of any Credit Exposure
to any Assignee (each, a "Transferee") shall not be effective until it has
agreed to be bound by the provisions of Section 10.13 and has obtained the
prior written consent of the Agent. Transferor and, the Sellers, the
Servicer and ICP each authorize the Purchasers to disclose to any
Transferee and any prospective Transferee any and all information in their
possession concerning Transferor, the Sellers, the Servicer or ICP in
connection with the Transferee's credit evaluation of the Program prior to
entering into this Agreement.
(d) Notwithstanding any other provision set forth in this
Agreement, the Purchasers may at any time create a security interest in all
or any portion of their rights under this Agreement and the Certificates in
favor of any Federal Reserve Bank in accordance with Regulation A of the
Board of Governors of the Federal Reserve System.
(e) No transfer, assignment or other conveyance of, or sale of
any Credit Exposure of a Purchaser in, a Certificate shall be made unless
(i) the aggregate outstanding principal amount of all Certificates
transferred, or in which any Credit Exposure is sold, pursuant to such
transfer or sale is equal to a principal amount of Certificates that would
represent at least 2.1% of the total interests in partnership capital or
profits, within the meaning of Treasury Regulation Section 1.7704-1, and
(ii) after giving effect thereto, there shall be no more than 20 Private
Holders of Subject Instruments, as reasonably determined by Transferor. No
Certificate may be subdivided into an aggregate principal amount that would
represent less than 2.1% of the total interest in partnership capital or
profits as determined pursuant to the preceding sentence. Any attempted
transfer, assignment, conveyance, participation or subdivision in
contravention of the
-28-
<PAGE>
preceding restrictions, as reasonably determined by the Transferor, shall
be void ab initio and the purported transferor, seller or subdivider of
such Certificate shall continue to be treated as the Certificateholder of
any such Certificate for all purposes of this Agreement.
(f) Each Affected Party with respect to each Purchaser shall be
entitled to receive additional payments pursuant to Sections 4.3, 4.5, 4.6,
and 10.5 as though it were a Purchaser and such Sections applied to its
interest in a Certificate or commitment to make or acquire interests in
Purchases; provided that such Affected Party shall not be entitled to
additional payments pursuant to Section 4.6 attributable to its failure to
satisfy the requirements of subsection 4.6(c) as if it were an Assignee.
(g) Each Affected Party claiming increased amounts described in
Sections 4.3, 4.5, 4.6 or 10.5 shall furnish, through its related
Purchaser, to the Trustee, the Agent, Servicer and Transferor a certificate
setting forth in reasonable detail the basis and amount of each request by
such Affected Party for any such amounts referred to in such Section, which
certificate will be prepared in accordance with the requirements of such
Section (if any). Determinations by an Affected Party of any increased
amounts referred to in such Sections shall be conclusive, absent
demonstrable error. Each Affected Party shall promptly notify, through its
related Purchaser, the Trustee, the Agent, Servicer and Transferor of the
occurrence of any event of which such Affected Party is aware that would be
likely to result in a demand for compensation pursuant to Section 4.3, 4.5,
4.6 or 10.5.
SECTION 10.4 Survival of Agreement. All covenants, agreements,
representations and warranties made herein and in the Certificates
delivered pursuant hereto shall survive the making and the repayment of the
Purchases and the execution and delivery of this Agreement and the
Certificates and shall continue in full force and effect until all
obligations have been paid in full and all commitments of the Purchasers
hereunder have been terminated. In addition, the obligations of Transferor
under Sections 2.2(b), 2.3(c), 4.2, 4.3, 4.5, 4.6, 9.10, and 10.5 and the
obligations of the Purchasers under Section 9.6 shall survive the
termination of this Agreement.
SECTION 10.5 Expenses; Indemnification. Transferor and ICP
jointly and severally shall pay on demand (a) all reasonable out-of-pocket
fees and expenses (including reasonable attorneys' fees and expenses) of
the Agent incurred in connection with the preparation, execution, delivery,
administration, amendment, modification and waiver of the Transaction
Documents and the making and repayment of the Purchases, including any
Servicer or collection agent fees paid to any third party for services
rendered to the Purchasers and the Agent in collecting the Receivables and
(b) all reasonable out-of-pocket fees and expenses
-29-
<PAGE>
of the Purchasers and the Agent (including reasonable attorneys' fees and
expenses of their counsel) incurred in connection with performance by the
Agent of its administrative duties under this Agreement, any consulting
performed by the Agent at the request of the Transferor, and the
enforcement of the Transaction Documents against Transferor, Servicer,
Guarantor and the Sellers and in connection with any workout or
restructuring of the Transaction Documents. In addition, Transferor will
pay any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing, recording or
enforcement of this Agreement or any payment made under the Transaction
Documents, and hereby indemnifies and saves the Agent and the Purchasers
harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay the taxes and fees.
Transferor and ICP jointly and severally agree to reimburse and indemnify
the Agent and each Purchaser and their respective officers, directors,
shareholders, controlling Persons, employees and agents (collectively, the
"Indemnitees") from and against any and all actions, judgments, costs,
expenses or disbursements of whatsoever kind or nature that may be imposed
on, asserted against or incurred or suffered by the Agent or the Purchasers
(including fees and expenses of legal counsel, accountants and experts) in
any way relating to or arising out of any Transaction Document. Additional
amounts sufficient to indemnify the Purchasers, Agent or other Indemnitees
under this Section 10.5 shall constitute "Additional Amounts" for purposes
of the Supplement, and the Purchasers, Agent or other Indemnities shall be
entitled to receive these additional amounts, solely from amounts allocated
thereto and paid pursuant to the Supplement.
Notwithstanding the foregoing (and with respect to clause (x)
below, without prejudice to the rights that an Indemnitee may have pursuant
to the other provisions of the Transaction Documents), in no event shall
any Indemnitee be indemnified against any amounts (w) resulting from gross
negligence or willful misconduct on the part of such Indemnitee (or any of
its officers, directors, employees, affiliates or agents) or the failure of
such Indemnitee to perform its obligations under the Transaction Documents,
(x) to the extent they include amounts in respect of Receivables and
reimbursement therefor that would constitute credit recourse to Servicer
for the amount of any Receivable or Related Transferred Asset not paid by
the related Obligor or (y) to the extent they are or result from lost
profits (other than any interest or prepayment premium or early termination
amount).
If for any reason the indemnification provided in this section is
unavailable to an Indemnitee or is insufficient to hold it harmless, then
Transferor and ICP jointly and severally shall contribute to the amount
paid by the Indemnitee as a result of any loss, claim, damage or liability
in a proportion that is appropriate to reflect not only the relative
benefits received by the Indemnitee on the one hand and Transferor and ICP
on the other hand, but also the relative fault of the
-30-
<PAGE>
Indemnitee (if any), Transferor and ICP and any other relevant equitable
considerations; provided that the Transferor shall not, and shall not be
obligated to, pay any amount pursuant to this Section unless and to the
extent that the Transferor has funds available to pay such amounts or funds
are allocated thereafter to the Transferor pursuant to the penultimate
paragraph of Section 4.3 or priority fifth of Section 4.4 of the
Supplement, and there shall be no recourse to Transferor for all or any
part of any amounts payable pursuant to this section if the funds are at
any time insufficient to make all or part of any such payments. Any amount
which Transferor does not pay pursuant to the operation of the preceding
sentence shall not constitute a claim (as defined in Sec. 101 of the
Bankruptcy Code) against or corporate obligation of Transferor for any such
insufficiency.
SECTION 10.6 Entire Agreement. This Agreement, together with the
documents delivered pursuant to Section 7.1 and the other Transaction
Documents, including the exhibits and schedules thereto, contains a final
and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter
hereof, superseding all previous oral statements and other writings with
respect thereto.
SECTION 10.7 Notices. All communications hereunder shall be in
writing and shall be deemed to have been duly given if personally
delivered, sent by overnight courier or mailed by registered mail, postage
prepaid and return receipt requested, or transmitted by facsimile
transmission and confirmed by a similar mailed writing to any party at the
address for that party set forth (a) on the signature page to this
Agreement, (b) in the case of the Trustee, LaSalle National Bank, ABS Trust
Services, 135 South LaSalle Street, Chicago, Illinois 60674, Attention:
Shashank Mishra, or (c) to another address as that party may designate in
writing to the Agent and Transferor.
SECTION 10.8 No Third-Party Beneficiaries. Nothing expressed
herein is intended or shall be construed to give any Person (other than the
parties hereto, and Assignees described in Section 10.3 and, to the extent
provided in Section 10.3, the other Affected Parties) any legal or
equitable right, remedy or claim under or in respect of this Agreement.
SECTION 10.9 Severability of Provisions. Any covenant, provision,
agreement or term of this Agreement that is prohibited or is held to be
void or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of the prohibition or unenforceability without
invalidating the remaining provisions of this Agreement.
-31-
<PAGE>
SECTION 10.10 Counterparts. This Agreement may be executed in any
number of counterparts (which may include facsimile) and by the different
parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original, and all of which together shall
constitute one and the same instrument.
SECTION 10.11 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
SECTION 10.12 Tax Characterization. Each party to this Agreement
(a) acknowledges that it is the intent of the parties to this Agreement
that, for purposes of Federal, applicable state and local income and
franchise and other taxes measured by or imposed on income, the
Certificates will be treated as evidence of indebtedness secured by the
Transferred Assets and the Trust will not be characterized as an
association (or publicly traded partnership) taxable as a corporation, (b)
agrees that the provisions of the Transaction Documents be construed to
further that intent, and (c) agrees to treat the Certificates, for purposes
of Federal, state and local income and franchise and other taxes measured
by or imposed on income, as indebtedness.
SECTION 10.13 No Proceedings. (a) Each of Servicer, the Agent
(solely in its capacity as such) and each Purchaser (solely in its capacity
as such) hereby agrees that it will not institute against Transferor, or
join any other Person in instituting against Transferor, any insolvency
proceeding (namely, any proceeding of the type referred to in the
definition of "Bankruptcy Event") so long as any Series 1996-1 Certificates
shall be outstanding or there shall not have elapsed one year plus one day
since the last day on which any Series 1996-1 Certificates shall have been
outstanding. The foregoing shall not limit the right of Servicer, the Agent
or any Purchaser to file any claim in or otherwise take any action with
respect to any insolvency proceeding that was instituted against Transferor
by any other Person.
* * * * *
-32-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their duly authorized officers and delivered as of
the day and year first above written.
INTER-CITY PRODUCTS
RECEIVABLES COMPANY, L.P.
By: Inter-City Products Partner
Corporation, its general partner
By: /s/ David P. Cain
------------------------------------
Title: Senior Vice President
Address: 650 Heil-Quaker Boulevard
Lewisburg, Tennessee 37091
Attention: David Cain
Telephone: (615) 270-4136
Facsimile: (615) 270-4220
INTER-CITY PRODUCTS CORPORATION (USA), as
Servicer
By: /s/ David P. Cain
------------------------------------
Title: Senior Vice President
Address: 650 Heil-Quaker Boulevard
Lewisburg, Tennessee 37091
Attention: David Cain
Telephone: (615) 270-4136
Facsimile: (615) 270-4220
<PAGE>
THE CHICAGO CORPORATION,
as Agent
By: /s/ Mike Woodhead
------------------------------------
Name: Mike Woodhead
Title: Senior Vice President
Address: 208 South LaSalle Street
Chicago, Illinois 60604
Attention: Mike Woodhead
Telephone: (312) 855-7555
Facsimile: (312) 553-6832
ANAGRAM FUNDING CORP.,
as a Purchaser
By: /s/ Andrew L.Stidd
------------------------------------
Name: Andrew L. Stidd
Title: President
Address:
Attention:
Telephone:
Facsimile:
<PAGE>
SCHEDULE I
to Certificate Purchase Agreement
Series 1996-1, Class A
AMOUNT OF EACH INITIAL PURCHASER'S CERTIFICATE
----------------------------------------------
Purchaser Stated Amount of Certificate
----------------------------
Anagram Funding Corp. $60,000,000.00
Class Percentage
----------------
Anagram Funding Corp. 100%
Series Percentage
-----------------
Anagram Funding Corp. 85.71%
<PAGE>
EXHIBIT A
to Certificate Purchase Agreement
Series 1996-1, Class
A
FORM OF POOLING AND SERVICING AGREEMENT
[OMITTED]
<PAGE>
EXHIBIT B
to Certificate Purchase Agreement
Series 1996-1, Class A
FORM OF RECEIVABLES PURCHASE AGREEMENT
[OMITTED]
<PAGE>
EXHIBIT C
to Certificate Purchase Agreement
Series 1996-1, Class A
FORM OF SERIES 1996-1 SUPPLEMENT
[OMITTED]
<PAGE>
EXHIBIT D
to Certificate Purchase Agreement
Series 1996-1, Class A
FORM OF ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT, dated as of [____________] (this
"Agreement"), is made between ____________________ ("Assignor"), and
[_____________________] ("Assignee"). Except as otherwise defined herein,
capitalized terms have the meanings assigned to them in the Certificate
Purchase Agreement (as defined below).
BACKGROUND
A. Assignor is a party to the Certificate Purchase Agreement, dated
as of July 25, 1996 (as amended, supplemented or otherwise modified from time
to time, the "Certificate Purchase Agreement"), among INTER-CITY PRODUCTS
RECEIVABLES COMPANY, L.P., a Tennessee limited partnership ("Transferor"),
INTER-CITY PRODUCTS CORPORATION (USA), a Delaware corporation, the
Purchasers party thereto (including Assignor), and THE CHICAGO CORPORATION,
as Agent.
B. Assignor wishes to assign, and Assignee wishes to be so assigned,
Assignor's rights and obligations arising on and after the Effective Date (as
defined below) under the Certificate Purchase Agreement and its Certificate
including (a) its obligations to make Purchases (its "Credit Exposure") and
(b) its outstanding Purchases (the "Purchases").
C. Assignor and Assignee also wish (a) Assignee to assume the
obligations of Assignor under the Certificate Purchase Agreement with respect
to Assignee's Share (as defined below) to the extent of the rights assigned
and (b) Assignor to be released from the obligations assumed by Assignee.
D. Transferor and the Agent, by their execution hereof, are providing
their written consent to the assignment accomplished by this Agreement.
SECTION 1. Assignment. Effective on the Effective Date (as defined
below) and upon payment of the amount specified in Section 3(a), Assignor
hereby assigns and transfers to Assignee, without recourse, representation or
warranty of any kind, express or implied (except as provided in Sections 6(a)
and<PAGE>
(b)), and subject to Section 4(b), Assignee's Share (as specified in Annex I
hereto) (the "Assignee's Share") of all of Assignor's rights, title and
interest arising under (a) the Certificate Purchase Agreement relating to
Assignor's Credit Exposure including all rights and obligations with respect
to the Purchases attributable to Assignee's Share and (b) Assignor's
Certificate with respect to Assignee's Share as will result in Assignee
having from and after the Effective Date the Class Percentage ("Assignee's
Percentage") specified in Annex I.
SECTION 2. Assumption. Effective on the Effective Date, Assignee
hereby irrevocably purchases, assumes and takes from Assignor, and Assignor
is hereby expressly and absolutely released from, all of Assignor's
obligations arising under the Certificate Purchase Agreement relating to
Assignee's Share and of any outstanding Purchases attributable to Assignee's
Share. Assignee hereby agrees to be bound by the provisions of the
Certificate Purchase Agreement.
SECTION 3. Payment. In consideration of the assignment by Assignor
to Assignee as set forth above, Assignee agrees to pay to Assignor, in
Dollars and in immediately available funds, (a) on or prior to the Effective
Date, an amount specified by Assignor in writing on or prior to the Effective
Date that represents Assignee's Share attributable to the principal amount of
the Purchases made pursuant to the Certificate Purchase Agreement and
outstanding on the Effective Date, and (b) from time to time thereafter,
other amounts (if any) that Assignee has agreed in writing to pay to Assignor
after the Effective Date. In consideration of the assumption by Assignee,
Assignor agrees to pay to Assignee within two Business Days of the Effective
Date, an assignment fee (if any) that previously has been agreed to in
writing by both parties.
Notwithstanding anything to the contrary in this Agreement, if and
when Assignee receives or collects (x) any payment of principal or interest
relating to any Purchases or (y) any payment of fees that are required to be
paid to Assignor pursuant to this Agreement, then Assignee shall forward the
payment to Assignor.
To the extent payment of funds to Assignee or Assignor are not made
within two Business Days, each, as the case may be, shall be entitled to
recover the due amount, together with interest thereon at the Federal Funds
Rate per annum accruing from the date of payment or the date of receipt of
the funds by the other party.
SECTION 4. Effectiveness. (a)(i This Agreement shall become
effective on the date (the "Effective Date") on which it shall have been duly
executed by all parties and the Agent shall have recorded the information
contained herein in its records (or automatically upon the Agent's receipt of
this Agreement signed by Assignor and Assignee if not so recorded within five
Business Days of such
-2-
<PAGE>
receipt) Assignor hereby notifies the Agent of the assignment, effective as
of the Effective Date, of Assignee's Share and any Purchases attributable to
the Assignee's Share, and directs the Agent to pay Assignee (A) any payment
of principal of, or interest on, any Purchase attributable to the Assignee's
Share of any Purchases and (B) any Non-Usage Fees attributable to the
Assignee's Share of the Credit Exposure. No (x) failure of either Assignee
or Assignor to settle any amount owed to the other (except with respect to
the payment of the processing and recordation fee to the Agent and the
payment due under Section 3(a)), (y) dispute respecting any other settlement,
including in respect of Transferor, or (z) bankruptcy, insolvency or other
condition whatsoever respecting any Person, shall in any way impair, reduce
or otherwise affect the effectiveness of this Agreement.
(ii Assignor, Assignee and the Agent each acknowledges and agrees
that from and after the Effective Date, the Agent shall make all payments
under the Certificate Purchase Agreement in respect of Assignee's Share
(including all payments of principal, interest and Non-Usage Fees with
respect thereto, whether or not the payments shall have accrued prior to or
after the Effective Date) to Assignee only. Assignor and Assignee hereby
agree further to make all appropriate adjustments in payments to either of
them under the Certificate Purchase Agreement for periods prior to the
Effective Date directly between themselves.
(b With respect to any Purchase attributable to Assignee's Share,
if and when Assignor receives or collects any payment of principal, interest,
Non-Usage Fees or Additional Amounts with respect to Assignee's Share for any
period commencing on or after the Effective Date, Assignor shall distribute
to Assignee the portion attributable to Assignee's Share, but only to the
extent it accrued on or after the Effective Date and was not theretofore paid
to Assignee by Transferor or otherwise. Any principal, interest, Non-Usage
Fees and Additional Amounts paid prior to the Effective Date shall be
retained by Assignor. Any principal, interest, Non-Usage Fees and Additional
Amounts received by Assignee that accrued prior to the Effective Date shall
be forwarded promptly, in the form received, to Assignor. Assignee recognizes
and agrees that (i) it shall receive no payment on account of any Agent's
fees or other amounts or expenses (including counsel fees) payable to the
Agent (in such capacities and for their own account), (ii) this Agreement
shall not operate to assign any rights or delegate any obligations of the
Agent (in such capacities), and (iii) notwithstanding anything to the
contrary in this Agreement, Assignor shall retain all of its rights to
indemnification under the Certificate Purchase Agreement for any events, acts
or omissions occurring prior to the Effective Date.
-3-
<PAGE>
(c) The Agent, by its execution hereof, acknowledges the assignment
and agrees to make payments in respect of principal, interest, fees and
Additional Amounts as described in clause (a).
SECTION 5. Rights as Purchaser under Certificate Purchase Agreement.
In accordance with Section 10.3 of the Certificate Purchase Agreement, (a) as
of the Effective Date, Assignee will be a Purchaser under, and party to, the
Certificate Purchase Agreement and shall have (i) all of the rights and
obligations of a Purchaser (to the extent of the assignment and assumption of
Assignee's Share effected by this Agreement) and (ii) the addresses for (A)
notice purposes and (B) LIBOR Office as set forth in items 2 and 3,
respectively, of Annex I hereto and (b) promptly on or after the Effective
Date, Transferor will execute and deliver any documents and instruments that
Assignor or Assignee reasonably may require.
SECTION 6. Representations and Warranties. (a) Each of Assignor
and Assignee represents and warrants to the other as follows:
(i) it has full power and authority, and has taken all
action necessary, to execute and deliver this Agreement, to fulfill
the obligations hereunder and to consummate the transactions
contemplated hereby,
(ii) the making and performance of this Agreement and all
documents required to be executed and delivered hereunder do not and
will not violate any law or regulation of the jurisdiction of its
incorporation or any other applicable law or regulation,
(iii) this Agreement has been duly executed and delivered
and constitutes its legal, valid and binding obligation, enforceable
in accordance with its terms, and
(iv) all approvals, authorizations or other actions by, or
filing with, any Governmental Authority necessary for the validity
or enforceability of its obligations under this Agreement have been
obtained.
(b) Assignor represents and warrants to Assignee that Assignee's
Share and the Purchases attributable to Assignee's Share are not subject to
any liens or security interests created by Assignor.
(c) Except as set forth in subsections (a) and (b), Assignor makes
no representations or warranties, express or implied, to Assignee and shall
not be responsible to Assignee for (i) the execution, effectiveness,
genuineness, legality, validity, enforceability, collectibility, regulatory
status or sufficiency of the Certificate Purchase Agreement or any of the
other Transaction Documents, (ii)
-4-
<PAGE>
the perfection, priority, value or adequacy of any collateral security or
guaranty, (iii) the taking of any action, or the failure to take any action,
with respect to any of the Transaction Documents, (iv) any representations,
warranties, recitals or statements made in any of the Transaction Documents
or in any written or oral financial or other statements, instruments,
reports, certificates or documents made or furnished by Assignor to Assignee
or by or on behalf of Transferor or any of its Affiliates to Assignor or
Assignee in connection with the Transaction Documents and the transactions
contemplated thereby, (v) the financial or other condition of Transferor or
any other Person or (vi) any other matter having any relation to any of the
foregoing. Assignor shall not be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the Transaction Documents or the
existence or possible existence of any Unmatured Early Amortization Event,
Early Amortization Event or Servicer Default. Additionally, Assignor shall
not have any duty or responsibility either initially or on a continuing basis
to make any investigation or any appraisal on Assignee's behalf or to provide
Assignee with any credit or other information with respect thereto, whether
coming into Assignor's possession before the execution of the Certificate
Purchase Agreement or at any time thereafter. Assignor shall have no
responsibility with respect to the accuracy of, or the completeness of, any
information provided to Assignee, whether by Assignor or by or on behalf of
Transferor or any other Person obligated under the Certificate Purchase
Agreement or any related instrument or document.
(d) Assignee represents and warrants that (x) it has made its own
independent investigation of each of the foregoing matters, including the
financial condition and affairs of Transferor and its Affiliates, in
connection with the making of the Purchases and the execution of this
Agreement (including the solvency of Transferor and its Affiliates, their
ability to pay their respective debts as they mature and the capital of
Transferor and its Affiliates remaining after the closing under the
Transaction Documents and the consummation of the transactions contemplated
thereby) and has made and shall continue to make its own appraisal of the
creditworthiness of Transferor and its Affiliates, and (y) the
representations and warranties set forth in Section 6.3 of the Certificate
Purchase Agreement are true and correct with respect to the Assignee.
Assignee hereby agrees that it will not make any general solicitation or
general advertising for the offer or sale of the Certificates. Assignee (i)
confirms that it has received copies of the Transaction Documents together
with copies of certain other closing documents delivered in connection with
the Certificate Purchase Agreement, financial statements and any other
documents and information that it has requested or deemed appropriate to make
its own credit analysis and decision to enter into this Agreement and (ii)
agrees that it will, independently and without reliance upon the Agent,
Assignor or any other Purchaser and based on such documents
-5-
<PAGE>
and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under the Transaction
Documents.
(e) Assignee represents and warrants to Transferor that the
representations and warranties in Section 6.3 of the Certificate Purchase
Agreement are true and correct in respect of such Assignee as of the date
hereof.
SECTION 7. No Proceedings. Assignee hereby agrees to be bound by the
provisions of Section 10.13 of the Certificate Purchase Agreement.
SECTION 8. Withholding Taxes. [In accordance with Section 4.6 of the
Certificate Purchase Agreement, Assignee agrees to execute and deliver to the
Trustee, as Paying Agent, and the Agent, for delivery to Transferor, on or
before the Effective Date, (a) two original copies of Internal Revenue
Service Form 1001 or 4224 or successor applicable form, properly completed
and duly executed by the Assignee certifying that it is entitled to receive
payments under the Certificate Purchase Agreement and any Certificate without
deduction or withholding of any United States Federal income taxes, and (b)
an original copy of Internal Revenue Service Form W-8 or W-9 or applicable
successor form, properly completed and duly executed. Assignee represents and
warrants to Transferor and Assignor that, as of the Effective Date, it shall
be entitled to receive payments of principal and interest under its
Certificate, the Certificate Purchase Agreement and hereunder without
deduction for or on account of any taxes imposed by the United States of
America or any political subdivision thereof. In the event that, after
delivering the applicable form, Assignee shall cease to be exempt from
withholding and/or deduction of taxes, then the Agent may withhold and/or
deduct the applicable amount from any payments of principal, interest and any
fees to which Assignee otherwise would be entitled, and the Agent shall have
no liability whatsoever to Assignee for any such withholding or deduction.
Assignee shall indemnify Transferor and the Agent from and against all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs or expenses that result from Assignee's breach of such
representation and warranty.]1
SECTION 9. Miscellaneous. (a) Each of the parties hereto agrees to
take any action and execute and deliver any documents that any party hereto
reasonably may request from time to time in order to implement more fully the
purposes of this Agreement. Without limiting the generality of the foregoing,
Assignor and Assignee will cooperate in obtaining for Assignee a Certificate
(as well as a replacement Certificate for Assignor representing any retained
interest of Assignor).
- --------------------------
1/ If the Assignee is not a U.S. person within the meaning of Section
7701(a)(30) of the Internal Revenue Code.
-6-
<PAGE>
(b) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
(c) Except as otherwise set forth herein, this Agreement sets forth
the entire agreement between the parties relating to the subject matter
hereof, and no term or provision of this Agreement may be amended, changed,
waived, discharged or terminated orally or otherwise, except in a writing
signed by Assignor and Assignee.
(d) This Agreement may be executed in any number of counterparts and
by the different parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
(e) Each of the parties hereto agrees that each party shall bear its
own expenses in connection with the preparation and execution of this
Agreement and the consummation of the Assignment described herein. Assignee
further agrees that it shall send a check in the amount of [$1,500] [3,500]
to the Agent on or prior to the Effective Date, as payment of the processing
and recordation fee described in Section 10.3(c) of the Certificate Purchase
Agreement. [Select correct amount in accordance with that Section.]
(f) All representations and warranties made, and indemnities
provided for, herein shall survive the consummation of the transactions
contemplated hereby.
(g) Assignor may at any time or from time to time grant assignments
in its rights and obligations under the Certificate Purchase Agreement and
its Certificate to other Persons, but not in the portions thereof assigned to
Assignee.
(h) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. Neither
Assignor nor Assignee may assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of the other party.
The preceding sentence shall not limit the right of Assignee to assign all or
part of Assignee's Share in the manner contemplated by the Certificate
Purchase Agreement.
(i) Assignee acknowledges that all obligations of the Agent are
subject to Article IX of the Certificate Purchase Agreement.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized officers and delivered as of the
day and year first above written.
-----------------------------,
as Assignor
By:
---------------------------
Title:
------------------------
-----------------------------,
as Assignee
By:
---------------------------
Title:
------------------------
The undersigned hereby acknowledges the terms and provisions of this
Agreement, and agrees to make payments in respect of principal, interest and
fees as described in Section 4(a).
THE CHICAGO CORPORATION,
as Agent
By:
-------------------------------
Title:
----------------------------
<PAGE>
ANNEX I
to Assignment Agreement
Item 1. Assignee's Share:
(a) Assignee's Stated Amount $
(b) Assignee's Class Percentage %
Item 2. Address of Assignee for notice purposes:
----------------------------------------
----------------------------------------
----------------------------------------
Attention:
------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Item 3. LIBOR Office of Assignee:
----------------------------------------
----------------------------------------
----------------------------------------
<PAGE>
APPENDIX X
to Certificate Purchase Agreement
Series 1996-1, Class A
INDEX OF ADDITIONAL DEFINED TERMS
Administration Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Agent Administration Fee. . . . . . . . . . . . . . . . . . . . . . . . 25
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Arrangement Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Assignee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Breakage Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class Percentage. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Commitment Reduction Fee. . . . . . . . . . . . . . . . . . . . . . . . 4
Credit Exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ICP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Initial Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
LIBOR Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Minimum Usage Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Non-Usage Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Pooling Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Purchasers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Receivables Review. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Required Class A Purchasers . . . . . . . . . . . . . . . . . . . . . . 25
Required Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Series Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Stated Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Supplement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Transferee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Transferor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trust Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
<PAGE>
INTER-CITY PRODUCTS CORPORATION (USA)
CERTIFICATE PURCHASE AGREEMENT
(Series 1996-1, Class B)
dated as of July 25, 1996
among
INTER-CITY PRODUCTS RECEIVABLES COMPANY, L.P.,
INTER-CITY PRODUCTS CORPORATION (USA)
AS THE INITIAL SERVICER,
and
ARGOS FUNDING CORP.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
PURCHASE AND SALE OF CERTIFICATE
SECTION 2.1 The Purchase; Percentages. . . . . . . . . . . . . . . . . 3
ARTICLE III
YIELD PROTECTION, ETC.
SECTION 3.1 Yield Protection . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3.2 Illegality; Unavailability . . . . . . . . . . . . . . . . 4
SECTION 3.3 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.4 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.5 Early Termination Fee . . . . . . . . . . . . . . . . . . . 6
SECTION 3.6 Mandatory Reduction of Invested Amount. . . . . . . . . . . 6
ARTICLE IV
OTHER PAYMENT TERMS
SECTION 4.1 Time and Method of Payment . . . . . . . . . . . . . . . . 7
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Transferor . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5.2 ICP. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5.3 Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VI
CONDITIONS
SECTION 6.1 Conditions to Purchase . . . . . . . . . . . . . . . . . . 9
SECTION 6.2 Payment of Expenses . . . . . . . . . . . . . . . . . . . .13
-i-
<PAGE>
ARTICLE VII
COVENANTS
SECTION 7.1 Affirmative Covenants. . . . . . . . . . . . . . . . . . .13
SECTION 7.2 Transfers. . . . . . . . . . . . . . . . . . . . . . . . .14
SECTION 7.3 Procedures Letter and Report . . . . . . . . . . . . . . .14
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 8.2 No Waiver; Remedies. . . . . . . . . . . . . . . . . . . .15
SECTION 8.3 Successors and Assigns; Assignments. . . . . . . . . . . .16
SECTION 8.4 Survival of Agreement. . . . . . . . . . . . . . . . . . .18
SECTION 8.5 Expenses; Indemnification. . . . . . . . . . . . . . . . .18
SECTION 8.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . .20
SECTION 8.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . .20
SECTION 8.8 No Third-Party Beneficiaries . . . . . . . . . . . . . . .20
SECTION 8.9 Severability of Provisions . . . . . . . . . . . . . . . .20
SECTION 8.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . .20
SECTION 8.11 Governing Law . . . . . . . . . . . . . . . . . . . . . .21
SECTION 8.12 Tax Characterization. . . . . . . . . . . . . . . . . . .21
SECTION 8.13 No Proceedings. . . . . . . . . . . . . . . . . . . . . .21
SCHEDULE
SCHEDULE I Stated Amounts and Percentages
EXHIBITS
EXHIBIT A Form of Pooling and Servicing Agreement
EXHIBIT B Form of Receivables Purchase Agreement
EXHIBIT C Form of Series 1996-1 Supplement
EXHIBIT D Form of Assignment Agreement
APPENDIX
APPENDIX X Index of Additional Defined Terms
-ii-
<PAGE>
This CERTIFICATE PURCHASE AGREEMENT, dated as of July 25, 1996
(this "Agreement"), is made among INTER-CITY PRODUCTS RECEIVABLES
COMPANY, L.P., a Tennessee limited partnership ("Transferor"), INTER-
CITY PRODUCTS CORPORATION (USA), a Delaware corporation ("ICP",
"Servicer" or "Initial Servicer"), and ARGOS FUNDING CORP. (together
with its permitted assigns, the "Purchaser").
BACKGROUND
1. Transferor will enter into (a) a Pooling and Servicing
Agreement substantially in the form of Exhibit A (the "Pooling
Agreement") with Initial Servicer, as initial Servicer, and, LaSalle
National Bank, a national banking association, as trustee (in that
capacity, together with any successors in that capacity, the
"Trustee"), (b) a Receivables Purchase Agreement substantially in the
form of Exhibit B and (c) a Series 1996-1 Supplement to the Pooling
Agreement substantially in the form of Exhibit C (the "Supplement").
2. Pursuant to the Pooling Agreement and the Supplement,
Transferor will obtain the Series 1996-1, Class B Certificate in the
principal amount of $10,000,000 (the "Certificate"), which will
represent a fractional undivided beneficial interest in the assets of
the Inter-City Products Receivables Master Trust (the "Trust"), a trust
to be organized pursuant to the Pooling Agreement. Initial Servicer
has joined in this Agreement to confirm certain representations,
warranties and covenants for the benefit of the Purchaser.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Capitalized terms used and not
otherwise defined herein have the meanings assigned to them in the
Supplement or, if not defined in the Supplement, in Appendix A to the
Pooling Agreement. An index of terms defined directly in this
Agreement is attached as Appendix X.
ARTICLE II
PURCHASE AND SALE OF CERTIFICATE
SECTION 2.1 The Purchase; Percentages. On the date hereof,
the Transferor will issue and sell to the Purchaser and, subject to the
terms and
<PAGE>
conditions of this Agreement, the Pooling Agreement and the Supplement,
the Purchaser will purchase (such purchase being a "Purchase") from the
Transferor the Certificate for a purchase price equal to 99.45% of the
principal amount of such Certificate.
For purposes of this Agreement, (i) "Class Percentage" means
the percentage equivalent (carried out to twelve decimal places) of a
fraction, the numerator of which is the Stated Amount of the
Purchaser's Certificate and the denominator of which is the sum of the
Stated Amounts of all Class B Certificates and (ii) "Series Percentage"
means the percentage equivalent (carried out to twelve decimal places)
of a fraction, the numerator of which is the Stated Amount of the
Purchaser's Certificate and the denominator of which is the sum of the
Stated Amounts for all of the Series 1996-1 Certificates. The Class
Percentages and Series Percentages of the Purchaser are set forth
opposite its name on Schedule I.
ARTICLE III
YIELD PROTECTION, ETC.
SECTION 3.1 Yield Protection. (a) Notwithstanding any other
provision herein, if, after the date hereof, either:
(i) any law, rule or regulation (including any imposition or
increase of reserve requirements) or any interpretation or
administration of any law, rule or regulation by any
Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
(ii) the compliance by the Purchaser with any guideline or
request from any central bank or other Governmental Authority
or quasi-governmental authority exercising control over banks
or financial institutions generally (whether or not having the
force of law),
shall subject the Purchaser to the imposition or modification of any
reserve (including any imposed by the Federal Reserve Board), special
deposit or similar requirement (including a reserve, special deposit or
similar requirement that takes the form of a tax) against assets of,
deposits with or for the account of, or credit extended by, the
Purchaser or the office from time to time that it designates to the
Transferor as the office through which it makes and maintains its
Purchase (its "LIBOR Office") or impose any other condition on the
Purchaser affecting the Certificate or its obligations hereunder, and
as a result of either of the foregoing there shall be any increase in
the cost to the Purchaser of agreeing to make or
-2-
<PAGE>
making, funding or maintaining its Purchase, or there shall be a
reduction in the amount received or receivable by the Purchaser or its
LIBOR Office, then, upon written notice from the Purchaser to
Transferor and Servicer (with a copy to the Trustee), signed by an
officer of the Purchaser with knowledge of and responsibility for such
matters, and setting forth in reasonable detail the calculation used to
arrive at the amounts, additional amounts sufficient to indemnify the
Purchaser against the increased cost or reduction in amounts received
or receivable shall constitute "Additional Amounts" for purposes of the
Supplement, and the Purchaser shall be entitled to receive these
additional amounts solely from amounts allocated thereto and paid
pursuant to the Supplement.
(b) If the Purchaser shall reasonably determine that the
adoption after the date hereof of any law, rule or regulation regarding
capital adequacy or capital maintenance, or any change after the date
hereof in any of the foregoing or in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by the Purchaser, any of its lending offices or
its holding company with any new or revised request or directive
regarding capital adequacy or capital maintenance (whether or not
having the force of law) of any such Governmental Authority, central
bank or comparable agency, has or would have the effect of reducing the
rate of return on the Purchaser's capital or the capital of its holding
company as a consequence of this Agreement or the Purchase made by the
Purchaser pursuant hereto to a level below what the Purchaser or its
holding company could have achieved but for the adoption, change or
compliance (taking into consideration the Purchaser's policies, and the
policies of its holding company, with respect to capital adequacy),
then, upon written notice from the Purchaser to Transferor and Servicer
(with a copy to the Trustee), signed by an officer of the Purchaser
with knowledge of and responsibility for such matters, and setting
forth in reasonable detail the calculation used to arrive at the
amounts, any additional amounts as will compensate the Purchaser or its
holding company for the reduction shall constitute "Additional Amounts"
for purposes of the Supplement, and the Purchaser shall be entitled to
receive these additional amounts solely from amounts allocated thereto
and paid pursuant to the Supplement.
(c) A Purchaser shall promptly notify Transferor and Servicer
in writing of any event of which it has knowledge occurring after the
date hereof that will entitle it to compensation pursuant to this
section. A certificate of the Purchaser, signed by an officer of the
Purchaser with knowledge of and responsibility for such matters, and
setting forth in reasonable detail the calculation used to arrive at
the amounts necessary to compensate the Purchaser or its holding
company as specified in subsection (a) or (b), as the case may be,
shall be delivered to Transferor and Servicer and shall be conclusive
absent manifest error.
-3-
<PAGE>
(d) Failure on the part of the Purchaser to demand
compensation for any amounts as specified in subsection (a) or (b) with
respect to any period shall not constitute a waiver of its right to
demand compensation with respect to that period or any other period.
The protection of this section shall be available to the Purchaser
regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change
or condition that shall have occurred or been imposed.
SECTION 3.2 Illegality; Unavailability. (a) In the event that
on any date the Purchaser shall have determined (which determination
shall be final and conclusive and binding upon all parties) that the
making or continuation of its Purchase has become unlawful by
compliance by the Purchaser in good faith with any law, governmental
rule, regulation or order or has become impossible as a result of a
contingency occurring after the date hereof that materially and
adversely affects its interbank eurodollar market, then, and in any
such event, the Purchaser shall promptly give notice (by telephone
confirmed in writing) to Transferor and Servicer of that determination.
The obligation of the affected Purchaser to make or maintain its
Purchase as a Eurodollar Tranche during any such period shall be
terminated at the earlier of the termination of the Interest Period
then in effect for the Eurodollar Tranche or when required by law, and
Transferor shall, no later than the time specified for the termination,
convert the Purchase into an ABR Tranche.
(b) If, prior to the beginning of any Distribution Period, the
Purchaser shall have determined (which determination shall be final and
conclusive and binding upon all parties) that: (i) Dollar deposits in
the relevant amount and for the Distribution Period are not available
in the relevant interbank eurodollar market or (ii) by reason of
circumstances affecting the interbank eurodollar market, that adequate
and fair means do not exist for ascertaining the LIBOR rate applicable
to the Eurodollar Tranche, then the Purchaser shall promptly give
notice of this determination to Transferor, Servicer and the Purchaser.
Thereafter, and continuing until the Purchaser shall notify Transferor
and Servicer that the circumstances giving rise to this determination
no longer exist, (x) the Eurodollar Tranche will, on the last day of
the applicable Distribution Period, convert into an ABR Tranche, and
(y) the right of Transferor to request a Eurodollar Tranche shall be
suspended.
SECTION 3.3 Indemnity. (a) If the Purchaser shall incur any
losses, expenses or liabilities (including any interest paid to lenders
of funds borrowed by it to fund its Purchase of the Certificate as a
Eurodollar Tranche and any loss sustained in connection with the re-
deployment of such funds) as a result of (i) the failure of the
Purchase to be made on the date hereof (other than any such failure
resulting from the Purchaser's default in the performance of its
obligations hereunder) or (ii) any repayment of the Certificate on a
date that is other than the
-4-
<PAGE>
last day of the Distribution Period applicable thereto, then, upon
written notice (which notice shall be signed by an officer of the
Purchaser with knowledge of and responsibility for such matters and
shall set forth in reasonable detail the basis for requesting the
amounts) from the Purchaser to Transferor and Servicer, additional
amounts sufficient to indemnify the Purchaser against the losses,
expenses and liabilities, but not for any lost profits associated
therewith, shall constitute "Additional Amounts" for purposes of the
Supplement, and the Purchaser shall be entitled to receive these
additional amounts, solely from amounts allocated thereto and paid
pursuant to the Supplement.
SECTION 3.4 Taxes. (a) Any and all payments made to the
Purchaser under the Certificate shall be made free and clear of and
without deduction for any and all present or future taxes, levies,
imposts, duties, charges, fees, deductions or withholdings of any
nature and whatever called, by whomsoever, on whomsoever and wherever
imposed, levied, collected, withheld or assessed, excluding taxes
imposed by the jurisdiction in which the Purchaser's principal office
(and/or the office where it books its investment in the Certificate) is
located on all or part of the net income, profits or gains of the
Purchaser (whether worldwide, or only insofar as such income, profits
or gains are considered to arise in or to relate to a particular
jurisdiction, or otherwise) (all the nonexcluded taxes, levies,
imposts, charges, deductions, withholdings and liabilities being
hereinafter referred to as "Taxes"). If Trustee is required by law to
deduct or withhold any Taxes from or in respect of any sum payable
hereunder or under any Certificate to the Purchaser, then the sum
payable shall be increased by the amount necessary to yield to the
Purchaser (after payment of all Taxes) an amount equal to the sum it
would have received had no such deductions or withholdings been made,
and the additional amount shall constitute "Additional Amounts" for
purposes of the Supplement, and the Purchaser shall be entitled to
receive these additional amounts, solely from amounts allocated thereto
and paid pursuant to the Supplement.
(b) Whenever any Taxes are paid by Trustee pursuant to
subsection (a), as promptly as possible thereafter Servicer shall send
to the Purchaser the original or a certified copy of an original
official receipt showing payment thereof (if any) or any other evidence
of the payment as may be available to Servicer through the exercise of
its reasonable efforts. If Trustee fails to pay any Taxes when due to
the appropriate taxing authority or fails to remit to the Purchaser the
required receipts or other required documentary evidence, the Purchaser
shall be entitled to receive, solely from amounts allocated with
respect thereto and paid pursuant to the Supplement, additional amounts
necessary to indemnify it for any incremental taxes, interest or
penalties that may become payable by the Purchaser as a result of any
such failure, and the amounts shall constitute "Additional Amounts" for
purposes of the Supplement, and the Purchaser shall be entitled to
-5-
<PAGE>
receive these additional amounts, solely from amounts allocated thereto
and paid pursuant to the Supplement.
(c) On or before the date any Assignee becomes a party to this
Agreement (and, so long as it may properly do so, periodically
thereafter, as requested by Servicer, to keep forms up to date), if
such Assignee is not a United States person (as defined in section
7701(a)(30) of the Internal Revenue Code), it shall deliver to Trustee
any certificates, documents or other evidence that shall be required by
the Internal Revenue Code or Treasury Regulations issued pursuant
thereto to establish that, assuming the Certificates are properly
characterized as indebtedness for Federal income tax purposes, it is
exempt from existing United States Federal withholding (including
backup withholding) requirements, including (i) two original copies of
Internal Revenue Service Form 1001 or Form 4224 or successor applicable
form, properly completed and duly executed by the Assignee certifying
that it is entitled to receive payments under this Agreement or any
Certificate without deduction or withholding of any United States
Federal income taxes, and (ii) an original copy of Internal Revenue
Service Form W-8 or W-9 or applicable successor form, properly
completed and duly executed; provided, that if any Assignee does not
comply with this subsection (c), amounts payable to such Assignee under
this Section 3.4 shall be limited to amounts that would have been
payable under this section if such Assignee had so complied.
SECTION 3.5 Early Termination Fee. If for any reason all or
any portion of the Invested Amount of Class B Certificates is reduced
at any time before July 1, 2001, the Purchaser shall be entitled to
receive from Collections a fee (an "Early Termination Fee") equal to
the product of (A) the amount of such reduction in the Invested Amount
of such Purchaser's Class B Certificate multiplied by (B) the number of
months or partial months from the date of such reduction until the
Expected Final Payment Date multiplied by (C) 0.30%. The Early
Termination Fee shall be payable on the date such reduction is effected
and shall constitute "Additional Amounts" for purposes of the
Supplement, and the Purchaser shall be entitled to receive these
additional amounts, solely from amounts allocated thereto and paid
pursuant to the Supplement.
SECTION 3.6 Mandatory Reduction of Invested Amount. During the
Amortization Period or Early Amortization Period, Transferor shall
notify the Agent and the Trustee in writing, not later than 11:00 a.m.,
New York City time, ten London/U.S. Business Days prior to each
Distribution Date that it will repay all or a portion of the Class B
Invested Amount (if required under the Supplement) and shall state in
such notice (x) the amount of funds deposited in the Principal Funding
Account as of the time of such notice and (y) the Class A Invested
Amount as of the time of such notice, and shall cause an amount of
funds equal to the lesser of (i) the principal amount of the Class B
Certificate and
-6-
<PAGE>
(ii) the amount of funds deposited in the Principal Funding Account as
of the time of such notice which are available for application to the
principal amount of the Class B Certificate pursuant to the terms of
the Supplement, to be transferred to the Purchaser for reduction of the
funded principal amount of the Class B Certificate.
ARTICLE IV
OTHER PAYMENT TERMS
SECTION 4.1 Time and Method of Payment. All amounts payable
to the Purchaser or with respect to the Certificate shall be made to
the Purchaser by wire transfer of immediately available funds in
Dollars not later than 2:00 p.m., New York City time, on the date due.
Any funds received after that time will be deemed to have been received
on the next Business Day.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Transferor. As of the Closing Date, Transferor
represents and warrants to the Purchaser that each of its
representations and warranties in the Pooling Agreement and Purchase
Agreement is true and correct, as if made on the Closing Date, and
further represents and warrants that:
(a) no Early Amortization Event or Unmatured Early
Amortization Event exists;
(b) assuming the accuracy of the Purchaser's representations
set out in Section 5.3 and that the Purchaser (and each Person
acting on the Purchaser's behalf) has not made a general
solicitation or general advertising within the meaning of the
Securities Act, the offer and sale of the Certificate in the
manner contemplated by this Agreement is a transaction exempt
from the registration requirements of the Securities Act, and
the Pooling Agreement is not required to be qualified under the
Trust Indenture Act of 1939, as amended;
(c) Transferor has not dealt with any financial advisor, or
other Person who may be entitled to any commission or
compensation in connection with the sale of the Certificate;
-7-
<PAGE>
(d) no information supplied by or on behalf of Transferor, ICP
or any of its Subsidiaries to the Purchaser in connection with
the Transaction Documents contains any untrue statement of a
material fact or omits to state a material fact necessary to
make the statements contained herein or therein not misleading
in light of the circumstances under which they were made; and
(e) the Certificate has been duly and validly authorized by
Transferor and, from and after the date on which the
Certificate is executed by Transferor and authenticated by the
Trustee in accordance with the terms of the Pooling Agreement
and the Supplement and delivered to and paid for by the
Purchaser in accordance with the terms of this Agreement, will
be validly issued and outstanding and will constitute a valid
and legally binding obligation of the Trust entitled to the
benefits of the Pooling Agreement and the Supplement and
enforceable against the Trust in accordance with its terms.
SECTION 5.2 ICP. As of the Closing Date, ICP represents and
warrants to the Purchaser that:
(a) each of its representations and warranties in the Pooling
Agreement (in its capacity as Servicer) and the Purchase
Agreement (in its capacity as a Seller) is true and correct, as
if made on the Closing Date with the same effect as if made on
that date (unless specifically stated to relate to an earlier
date);
(b) the audited consolidated balance sheet of ICP and its
consolidated Subsidiaries as at the end of ICP's most recent
fiscal year and the related statement of earnings,
stockholders' equity and cash flows of ICP and its consolidated
Subsidiaries for such fiscal year and the unaudited
consolidated balance sheet of ICP and its consolidated
Subsidiaries as at the end of ICP's most recent fiscal quarter
and the related statement of earnings, stockholders' equity and
cash flows of ICP and its consolidated Subsidiaries for such
fiscal quarter, copies of which have been furnished to the
Trustee and the Purchaser, fairly present the consolidated
financial position and business of ICP and its consolidated
Subsidiaries as at the dates specified therein and the
consolidated results of the operations of ICP and its
consolidated Subsidiaries for the periods ended on such dates,
all in accordance with GAAP consistently applied throughout the
periods reflected therein;
(c) since January 1, 1996 through the Closing Date, (i) there
has been no material adverse change in the condition, financial
or otherwise, or the earnings, business affairs or business
prospects of Transferor or
-8-
<PAGE>
ICP whether or not arising in the ordinary course of business,
and (ii) there have been no transactions entered into by
Transferor, ICP or the Sellers that are material with respect
to the condition, financial or otherwise, or the earnings,
business affairs or business prospects of Transferor or ICP;
and
(d) no information supplied by or on behalf of Transferor, ICP
or any of its Subsidiaries to the Purchaser in connection with
the Transaction Documents contains any untrue statement of a
material fact or omits to state a material fact necessary to
make the statements contained herein or therein not misleading
in light of the circumstances under which they were made.
SECTION 5.3 Purchaser. As of the Closing Date, the Purchaser
represents and warrants (and each Assignee shall be deemed to represent
and warrant as of the date that its assignment becomes effective) that
it is an "accredited investor" as that term is defined in any of
paragraphs (1), (2), (3) or (7) of Rule 501(a) under the Securities Act
and is not purchasing its Certificate with a view to making a
distribution thereof (within the meaning of the Securities Act).
ARTICLE VI
CONDITIONS
SECTION 6.1 Conditions to Purchase. The obligation of the
Purchaser to Purchase the Certificate shall be subject to the
satisfaction of the conditions precedent that
(a) the conditions precedent specified in Section 4.1 of the
Purchase Agreement and Sections 7.1 and 7.2 of the Class A
Certificate Purchase Agreement (other than those that relate to
this Agreement) shall be satisfied;
(b) the Purchaser shall have received a duly executed and
authenticated Certificate registered in its name and in a
Stated Amount equal to $10,000,000;
(c) the Purchaser shall have received (i) certain fees and
reimbursement of any expenses referred to in Section 8.5 for
which invoices have been presented; and
-9-
<PAGE>
(d) the Purchaser shall have received an original (except as
indicated below) counterpart of the following (each of which,
if not in a form attached to this Agreement, shall be in form
and substance satisfactory to the Purchaser):
(i) the Pooling Agreement, the Purchase Agreement and the
Guaranty, each of which shall be in full force and effect, and
all actions required to be taken under those documents in
connection with the issuance of the Certificate shall have been
taken;
(ii) photocopies of each Account Agreement;
(iii) a certificate of the Secretary, or an Assistant
Secretary, of each of Transferor, Servicer, Guarantor and each
Seller with respect to:
(A) attached copies of resolutions of its Board of Directors
(or, if applicable, its managing body) then in full force and
effect authorizing the execution, delivery and performance of
the Transaction Documents,
(B) the incumbency and signatures of those of its officers
authorized to act with respect to the Transaction Documents,
and
(C) attached copies of its certificate of incorporation and
by-laws (or, if applicable, its limited partnership agreement);
(iv) a certificate of an Authorized Officer of each of
Transferor, Servicer and each Seller as to the satisfaction of
the conditions precedent set forth in Section 6.1, and a
certificate of Transferor that the representations and
warranties of the Transferor set out in this agreement are true
and correct as of the date of such initial purchase and that no
Early Amortization Event or Unmatured Early Amortization Event
exists;
(v) a certificate of an appropriate officer of Trustee stating
that the Pooling Agreement has been duly authorized, executed
and delivered by Trustee and the Certificate has been duly
authenticated by Trustee in accordance with the Pooling
Agreement and an opinion of counsel to Trustee as to related
matters;
-10-
<PAGE>
(vi) evidence that each of S&P and DCR has rated the Class B
Certificate "A";
(vii) the Daily Report for the Closing Date;
(viii) agreed-upon procedures letter, in form and substance
satisfactory to the Purchaser, from Coopers & Lybrand LLP with
respect to certain historical information provided by ICP
relating to the Receivables;
(ix) copies of any management or other agreements with regard
to the administration of Transferor's business, certified by an
Authorized Officer of Transferor;
(x) a pro forma balance sheet of Transferor as of the date
hereof, after giving effect to the transactions contemplated by
the Supplement, and a certificate of an Authorized Officer of
ICP as to the capitalization of Transferor (the amount and type
of which capitalization shall be satisfactory to the
Purchaser);
(xi)results of recent searches of the UCC filing records and
tax and ERISA and judgment lien records in each jurisdiction in
which a filing referred to in subsection (xii) is to be made
for filings against each Seller (including any predecessors in
interest to any Seller going back five years) and Transferor,
showing no filings of record that cover any of the Receivables
or the other Transferred Assets other than (i) the financing
statements referred to in subsection (xii) (to the extent shown
in the searches) and (ii) any other filings as to which the
Purchaser has received signed UCC-3 termination statements or
pay-off letters in form and substance satisfactory to it;
(xii) confirmation satisfactory to the Purchaser that (x) the
following have been placed with Lexis Document Services or
another filing service selected by the Purchaser for filing,
the filing to occur on the Closing Date or the first Business
Day thereafter and (y) any filing fees and indebtedness taxes
necessary to perfect or protect true security interests by
means of such filings have been paid in full:
(A) UCC financing statements naming each Seller, as
seller/debtor, and Transferor, as secured party/purchaser, in
each office where the filing is necessary
-11-
<PAGE>
for the perfection of the sales or contribution of Receivables
and Related Assets by each Seller to Transferor;
(B) assignments of such existing UCC financing statements to
Trustee, as assignee of the secured party, in each office where
the filing is necessary for the perfection of the sales of
Receivables and Related Assets by each Seller to Transferor;
and
(C) UCC financing statements naming Transferor, as
seller/debtor, and Trustee, as secured party/purchaser, in each
office where the filing is necessary for the perfection of the
transfers of Receivables and other Transferred Assets by
Transferor to Trustee;
(xiii) the following opinions addressed to the Purchaser and
Trustee, and in each case as to the matters and in such form
and substance as shall be satisfactory to the Purchaser and
Trustee:
(A) opinions of Steptoe and Johnson as to certain corporate
and securities matters concerning ICP, Federal and state tax
and UCC matters, true sale and non-consolidation;
(B) opinions of Tuke Yopp & Sweeney as to certain corporate
and securities matters concerning General and Coastline, and
Tennessee limited partnership, Tennessee state tax and
Tennessee UCC matters; and
(C)opinions of White & Case and Lewis, Rice & Fingersh as to
certain state tax matters under Florida law and Missouri law,
respectively;
(xiv) evidence, reasonably satisfactory to the Purchaser, of
the payment of all taxes, fees and other governmental charges,
if any, incidental to the issuance of the Certificates and to
the consummation of the transactions contemplated hereunder and
under the Pooling Agreement;
(xv) a solvency certificate of the chief financial officer of
ICP with respect to the Sellers, which opinion shall be
addressed to the Purchaser and shall be in form and substance
satisfactory to the Purchaser;
-12-
<PAGE>
(xvi) such sublicenses and assignments as the Purchaser shall
require with regard to all computer and data recovery software
used by Servicer or any Seller in connection with the servicing
of the Transferred Assets, which sublicenses and assignments
will permit any substitute Servicer to use such software; and
(xvii) any other information, certificates, opinions and
documents as the Purchaser may have reasonably requested.
If the conditions specified above have not been fulfilled on
the date hereof, any condition specified in this Agreement shall not
have been fulfilled when and as required in this Agreement or waived by
the Purchaser, in each case the Purchaser's obligations to purchase the
Certificate pursuant to this Agreement may be terminated by notice to
Transferor. In addition, if, under the circumstances, it shall not be
feasible for the Purchaser to invest on the date the funds that are
held available by the Purchaser for the Purchase, Transferor and
Servicer, jointly and severally, shall pay the Purchaser interest on
the funds at the Alternate Base Rate plus two percent from the date of
the notice until the next succeeding Business Day on which it is
feasible for the Purchaser to invest the funds in the Certificates.
Nothing in this paragraph shall operate to relieve Transferor from any
of its obligations hereunder or otherwise waive any of the Purchaser's
rights against Transferor.
SECTION 6.2 Payment of Expenses. (a) Amounts received by the
Transferor from the Purchase shall be used to pay all expenses then due
and payable under the Transaction Documents.
(b)If the Purchase does not occur on the date hereof, the
Transferor shall nevertheless pay all transaction expenses on the date
hereof, including all legal fees, Rating Agency fees and Trustee fees.
ARTICLE VII
COVENANTS
SECTION 7.1 Affirmative Covenants. Transferor and ICP (in its
capacity as a Seller, as Guarantor and as Initial Servicer) each
severally covenant and agree that, until the Certificate has been paid
in full, it will:
(a) duly and timely perform all of its covenants and
obligations under each Transaction Document to which it is a
party;
-13-
<PAGE>
(b) with reasonable promptness deliver to the Purchaser such
information, documents, records or reports respecting the
Program or the Receivables as the Purchaser may from time to
time reasonably request;
(c) at the same time any report (including any Daily Report,
Monthly Report or annual auditors' report), notice or other
document is provided, or caused to be provided, by Transferor
or Servicer to Trustee under the Pooling Agreement, provide the
Purchaser with a copy of the report;
(d)during regular business hours and (so long as no Early
Amortization Event has occurred and is continuing) upon two
Business Days prior written notice, permit the Purchaser (or
such other Person as the Purchaser may designate from time to
time), or their respective agents or representatives (including
certified public accountants or other auditors), at the expense
of the Servicer paid out of the Servicing Fee, (i) to examine
and make copies of and abstracts from, and to conduct
accounting reviews of, all Records in the possession or under
the control of Servicer, Transferor or any Seller, including
the related Contracts and purchase orders, invoices and other
agreements related thereto, and (ii) to visit the offices and
properties of Servicer, Transferor or any Seller for the
purpose of examining such materials described in clause (i),
and to discuss matters relating to the Receivables or the
Related Transferred Assets or the performance by Servicer,
Transferor or any Seller of their respective obligations under
any Transaction Document with any officer, employee or
representative of Servicer, Transferor or any Seller. The
Purchaser may (but shall not be obligated to) conduct, or cause
its agents or representatives to conduct, reviews of the types
described in this paragraph (each such review, a "Receivables
Review") whenever the Purchaser, in its reasonable judgment,
deems any such review appropriate.
SECTION 7.2 Transfers. Purchaser agrees that it will not
transfer its Certificate (or any portion thereof) to any Person unless
such Person shall have provided the Trustee and Transferor with a
certificate to the effect that such Person is an "accredited investor"
as that term is defined in any of paragraphs (1), (2), (3) or (7) of
Rule 501(a) under the Securities Act and is not purchasing its
Certificate with a view to making a distribution thereof (within the
meaning of the Securities Act).
SECTION 7.3 Procedures Letter and Report. The Agent shall
receive, for the account of the Purchasers, on or before September 30,
1996, an agreed-upon procedures letter in form and substance similar to
the procedures letter delivered pursuant to Section 6.1(d)(viii) and a
report from Coopers & Lybrand L.L.P. of the type specified in Section
3.7(a)(i) of the Pooling Agreement except
-14-
<PAGE>
that such report shall pertain only to Receivables originated by
General and Coastline during the period from the Closing Date through
August 31, 1996.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1 Amendments. Except as provided in Section 13.1(a)
or (b) of the Pooling Agreement, Transferor, ICP and Initial Servicer
shall not amend, waive or otherwise modify any provision of any
Transaction Document to which it is a party, consent to any departure
therefrom, or grant any waiver or consent thereunder, unless the same
shall have been consented to in writing by Purchasers (defined for
purposes of this sentence as the Purchaser hereunder and under the
Certificate Purchase Agreement (Series 1996-1, Class A) dated as of the
date hereof, among Inter-City Products Receivables Company, L.P.,
Inter-City Products Corporation (USA) and the Purchasers described
therein) having Series Percentages that aggregate over 50% prior to the
effectiveness of the same; provided, however, that no amendment
modification, waiver or consent shall (a) decrease in any manner the
amount of, or delay the timing of, any allocation, payment or
distribution in respect of the Certificate without the prior written
consent of the Purchaser, (b) amend, modify or waive the provisions of
this section with respect to the rights of the Purchaser, or the Class
Percentage or Series Percentage of the Purchaser, without the consent
of the Purchaser, (d) waive any Early Amortization Event arising from a
Bankruptcy Event with respect to Transferor, ICP or any Seller without
the consent of the Purchaser, (e) amend or modify the Class Percentage
of the Purchaser, without its prior written consent, or (f) waive any
of the requirements hereunder that the interests of Trustee in the
Receivables and the other Transferred Assets be perfected by
appropriate UCC filings without the prior written consent of the
Purchaser; provided further that neither the execution and delivery of
a Supplement relating to a refinancing of the Certificate as
contemplated by Section 4.9 of the Supplement relating to the
Certificate, nor any other amendment to the Transaction Documents in
connection with such a refinancing, shall require any consent from the
Purchaser, so long as the prior or contemporaneous repayment in full of
the Certificate in accordance with Section 5.2 of the Supplement
relating to the Certificates is a condition to the issuance of the
refinancing certificates, and of the effectiveness of such related
amendment. The Purchaser shall be bound by any modification, waiver or
consent authorized by this section.
SECTION 8.2 No Waiver; Remedies. Any waiver, consent or
approval given by any party hereto shall be effective only in the
specific instance and for the specific purpose for which given, and no
waiver by a party of any breach or
-15-
<PAGE>
default under this Agreement shall be deemed a waiver of any other
breach or default. No failure on the part of any party hereto to
exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any
right hereunder, or any abandonment or discontinuation of steps to
enforce the right, power or privilege, preclude any other or further
exercise thereof or the exercise of any other right. No notice to or
demand on any party hereto in any case shall entitle such party to any
other or further notice or demand in the same, similar or other
circumstances. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 8.3 Successors and Assigns; Assignments. (a) This
Agreement shall be binding upon, and inure to the benefit of,
Transferor, Servicer, ICP, the Purchaser and their respective
successors and assigns; provided that none of Transferor, Servicer or
ICP may assign its rights or obligations hereunder or in connection
herewith or any interest herein (voluntarily, by operation of law or
otherwise) without the prior written consent of the Purchaser, except
that Servicer may be terminated in accordance with Sections 10.1 and
10.2 of the Pooling Agreement; and provided further, that the Purchaser
may not transfer, pledge, assign, sell participations in or otherwise
encumber its rights or obligations hereunder or any interest herein
except as permitted under this section.
(b) Subject to the terms of Section 8.3(e), the Purchaser may
at any time assign to any Permitted Transferee or to one or more banks
or institutional investors (each, an "Assignee") all or any part of its
participating interests in all or any portion of the Certificate and
its obligations hereunder (its "Credit Exposure"); provided that (i)
unless assigned to an Affiliate of the Purchaser or to a Permitted
Transferee, it assigns all of its Credit Exposure or a portion of its
Credit Exposure in an amount not less than $5,000,000, (ii) if such
Assignee is not a United States person (as defined in section
7701(a)(30) of the Internal Revenue Code), such Assignee shall satisfy
the requirements of Section 3.4(c), provided, that if such Assignee
thereafter fails to comply with the requirements of Section 3.4,
amounts payable to it under Section 3.4 shall be limited to amounts
that would be payable if such Assignee had complied with Section
3.4(c), and (iv) such Assignee shall have certified to the Purchaser
that such Assignee is an "accredited investor" as that term is defined
in any of paragraphs (1), (2), (3) or (7) of Rule 501(a) under the
Securities Act.
In the event of any assignment, the Purchaser (x) shall comply
with Article VI of the Pooling Agreement; provided that no Opinion of
Counsel shall be required to be delivered pursuant to Section 6.3(e) of
the Pooling Agreement with respect to any transfer to a Permitted
Transferee, and (y) shall give notice to Transferor and shall deliver
to the Transferor, for acceptance and recording in its
-16-
<PAGE>
records, an assignment agreement substantially in the form of Exhibit
D. Within five Business Days of receipt thereof, the Transferor shall,
if the assignment agreement has been fully executed by the Assignee and
the Purchaser, is completed and is in substantially the form of Exhibit
D, execute the assignment agreement and record the information
contained therein in its records. Upon the earlier of the expiration of
such five Business Day period or the date of the recording, the
assignment will become effective.
Transferor, Servicer, ICP and the Purchaser agree to extend the
rights and benefits with respect to Transferor under this Agreement to
the Assignee to the extent the Assignee would have had if it were the
Purchaser that was an original signatory to this Agreement; provided,
that the parties hereto shall be entitled to continue to deal solely
and directly with the assignor Purchaser in connection with the
interests so assigned to the Assignee until the assignment agreement
and any required fee, as described above, shall have been delivered to
the Transferor by the Purchaser and the Assignee and the assignment
shall have become effective. Upon the effective assignment of its
Credit Exposure, the Purchaser shall be relieved of its obligations
hereunder to the extent of the assignment.
(c) The sale or assignment by the Purchaser of any Credit
Exposure to any Assignee (each, a "Transferee") shall not be effective
until it has agreed to be bound by the provisions of this Agreement.
Transferor and, the Sellers, the Servicer and ICP each authorize the
Purchaser to disclose to any Transferee and any prospective Transferee
any and all information in its possession concerning Transferor, the
Sellers, the Servicer or ICP in connection with the Transferee's credit
evaluation of the Program prior to entering into this Agreement.
(d) Notwithstanding any other provision set forth in this
Agreement, the Purchaser may at any time create a security interest in
all or any portion of its rights under this Agreement and the
Certificate in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System.
(e) No transfer, assignment or other conveyance of, or sale of
any Credit Exposure of the Purchaser in, the Certificate shall be made
unless (i) the aggregate outstanding principal amount of the
Certificate transferred, or in which any Credit Exposure is sold,
pursuant to such transfer or sale is equal to a principal amount of
Certificates that would represent at least 2.1% of the total interests
in partnership capital or profits, within the meaning of Treasury
Regulation Section 1.7704-1, and (ii) after giving effect thereto,
there shall be no more than 20 Private Holders of Subject Instruments,
as reasonably determined by Transferor. No Certificate may be
subdivided into an aggregate principal amount that would represent less
than 2.1% of the total interest in partnership capital or profits as
determined pursuant to the preceding sentence. Any
-17-
<PAGE>
attempted transfer, assignment, conveyance, participation or
subdivision in contravention of the preceding restrictions, as
reasonably determined by the Transferor, shall be void ab initio and
the purported transferor, seller or subdivider of such Certificate
shall continue to be treated as the Certificateholder of any such
Certificate for all purposes of this Agreement.
(f) Each Affected Party with respect to the Purchaser shall be
entitled to receive additional payments pursuant to this Agreement as
though it were a Purchaser and this Agreement applied to its interest
in a Certificate or commitment to make or acquire interests in
Purchases; provided that such Affected Party shall not be entitled to
additional payments pursuant to Section 3.4 attributable to its failure
to satisfy the requirements of subsection 3.4(c) as if it were an
Assignee.
(g) Each Affected Party claiming increased amounts described
in this Agreement shall furnish, through its related Purchaser, to the
Trustee, Servicer and Transferor a certificate setting forth in
reasonable detail the basis and amount of each request by such Affected
Party for any such amounts referred to in this Agreement, which
certificate will be prepared in accordance with the requirements of
this Agreement (if any). Determinations by an Affected Party of any
increased amounts referred to in this Agreement shall be conclusive,
absent demonstrable error. Each Affected Party shall promptly notify,
through its related Purchaser, the Trustee, Servicer and Transferor of
the occurrence of any event of which such Affected Party is aware that
would be likely to result in a demand for compensation pursuant to this
Agreement.
SECTION 8.4 Survival of Agreement. All covenants, agreements,
representations and warranties made herein and in the Certificate
delivered pursuant hereto shall survive the making and the repayment of
the Purchase and the execution and delivery of this Agreement and the
Certificate and shall continue in full force and effect until all
obligations have been paid in full and all commitments of the Purchaser
hereunder have been terminated. In addition, the obligations of
Transferor under Sections 3.2, 3.3, 3.4, 3.5 and 8.5 shall survive the
termination of this Agreement.
SECTION 8.5 Expenses; Indemnification. Transferor and ICP
jointly and severally shall pay on demand (a) all reasonable out-of-
pocket fees and expenses (including reasonable attorneys' fees and
expenses) of the Purchaser incurred in connection with the preparation,
execution, delivery, administration, amendment, modification and waiver
of the Transaction Documents and the making and repayment of the
Purchase, including any Servicer or collection agent fees paid to any
third party for services rendered to the Purchaser in collecting the
Receivables and (b) all reasonable out-of-pocket fees and expenses of
the Purchaser (including reasonable attorneys' fees and expenses of its
counsel)
-18-
<PAGE>
incurred in connection with performance by the Agent of its
administrative duties under this Agreement, any consulting performed by
the Agent at the request of the Transferor, and the enforcement of the
Transaction Documents against Transferor, Servicer, Guarantor and the
Sellers and in connection with any workout or restructuring of the
Transaction Documents. In addition, Transferor will pay any and all
stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing, recording or
enforcement of this Agreement or any payment made under the Transaction
Documents, and hereby indemnifies and saves the Purchaser harmless from
and against any and all liabilities with respect to or resulting from
any delay in paying or omission to pay the taxes and fees. Transferor
and ICP jointly and severally agree to reimburse and indemnify the
Purchaser and its officers, directors, shareholders, controlling
Persons, employees and agents (collectively, the "Indemnitees") from
and against any and all actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature that may be imposed on,
asserted against or incurred or suffered by the Purchaser (including
fees and expenses of legal counsel, accountants and experts) in any way
relating to or arising out of any Transaction Document. Additional
amounts sufficient to indemnify the Purchaser or other Indemnitees
under this Section 8.5 shall constitute "Additional Amounts" for
purposes of the Supplement, and the Purchaser or other Indemnities
shall be entitled to receive these additional amounts, solely from
amounts allocated thereto and paid pursuant to the Supplement.
Notwithstanding the foregoing (and with respect to clause (x)
below, without prejudice to the rights that an Indemnitee may have
pursuant to the other provisions of the Transaction Documents), in no
event shall any Indemnitee be indemnified against any amounts (w)
resulting from gross negligence or willful misconduct on the part of
such Indemnitee (or any of its officers, directors, employees,
affiliates or agents) or the failure of such Indemnitee to perform its
obligations under the Transaction Documents, (x) to the extent they
include amounts in respect of Receivables and reimbursement therefor
that would constitute credit recourse to Servicer for the amount of any
Receivable or Related Transferred Asset not paid by the related Obligor
or (y) to the extent they are or result from lost profits (other than
any interest or prepayment premium or early termination amount).
If for any reason the indemnification provided in this section
is unavailable to an Indemnitee or is insufficient to hold it harmless,
then Transferor and ICP jointly and severally shall contribute to the
amount paid by the Indemnitee as a result of any loss, claim, damage or
liability in a proportion that is appropriate to reflect not only the
relative benefits received by the Indemnitee on the one hand and
Transferor and ICP on the other hand, but also the relative fault of
the Indemnitee (if any), Transferor and ICP and any other relevant
equitable
-19-
<PAGE>
considerations; provided that the Transferor shall not, and shall not
be obligated to, pay any amount pursuant to this Section unless and to
the extent that the Transferor has funds available to pay such amounts
or funds are allocated thereafter to the Transferor pursuant to the
penultimate paragraph of Section 4.3 or priority fifth of Section 4.4
of the Supplement, and there shall be no recourse to Transferor for all
or any part of any amounts payable pursuant to this section if the
funds are at any time insufficient to make all or part of any such
payments. Any amount which Transferor does not pay pursuant to the
operation of the preceding sentence shall not constitute a claim (as
defined in Sec. 101 of the Bankruptcy Code) against or corporate
obligation of Transferor for any such insufficiency.
SECTION 8.6 Entire Agreement. This Agreement, together with
the documents delivered pursuant to Section 6.1 and the other
Transaction Documents, including the exhibits and schedules thereto,
contains a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect
to the subject matter hereof, superseding all previous oral statements
and other writings with respect thereto.
SECTION 8.7 Notices. All communications hereunder shall be in
writing and shall be deemed to have been duly given if personally
delivered, sent by overnight courier or mailed by registered mail,
postage prepaid and return receipt requested, or transmitted by
facsimile transmission and confirmed by a similar mailed writing to any
party at the address for that party set forth (a) on the signature page
to this Agreement or (b) to another address as that party may designate
in writing to the Purchaser and Transferor.
SECTION 8.8 No Third-Party Beneficiaries. Nothing expressed
herein is intended or shall be construed to give any Person (other than
the parties hereto, and Assignees described in Section 8.3 and, to the
extent provided in Section 8.3, the other Affected Parties) any legal
or equitable right, remedy or claim under or in respect of this
Agreement.
SECTION 8.9 Severability of Provisions. Any covenant,
provision, agreement or term of this Agreement that is prohibited or is
held to be void or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement.
SECTION 8.10 Counterparts. This Agreement may be executed in
any number of counterparts (which may include facsimile) and by the
different parties hereto in separate counterparts, each of which when
so executed shall be deemed
-20-
<PAGE>
to be an original, and all of which together shall constitute one and
the same instrument.
SECTION 8.11 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
SECTION 8.12 Tax Characterization. Each party to this
Agreement (a) acknowledges that it is the intent of the parties to this
Agreement that, for purposes of Federal, applicable state and local
income and franchise and other taxes measured by or imposed on income,
the Certificate will be treated as evidence of indebtedness secured by
the Transferred Assets and the Trust will not be characterized as an
association (or publicly traded partnership) taxable as a corporation,
(b) agrees that the provisions of the Transaction Documents be
construed to further that intent, and (c) agrees to treat the
Certificate, for purposes of Federal, state and local income and
franchise and other taxes measured by or imposed on income, as
indebtedness.
SECTION 8.13 No Proceedings. (a) Each of Servicer and the
Purchaser (solely in its capacity as such) hereby agrees that it will
not institute against Transferor, or join any other Person in
instituting against Transferor, any insolvency proceeding (namely, any
proceeding of the type referred to in the definition of "Bankruptcy
Event") so long as any Series 1996-1 Certificates shall be outstanding
or there shall not have elapsed one year plus one day since the last
day on which any Series 1996-1 Certificates shall have been
outstanding. The foregoing shall not limit the right of Servicer or the
Purchaser to file any claim in or otherwise take any action with
respect to any insolvency proceeding that was instituted against
Transferor by any other Person.
* * * * *
-21-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their duly authorized officers and delivered as of
the day and year first above written.
INTER-CITY PRODUCTS
RECEIVABLES COMPANY, L.P.
By: Inter-City Products Partner
Corporation, its general
partner
By:
-----------------------------
Name: David Cain
Title: Senior Vice President
Address: 650 Heil-Quaker Blvd.
Lewisburg, Tennessee 37091
Attention: David Cain
Telephone: (615) 270-4136
Facsimile: (615) 270-4220
INTER-CITY PRODUCTS CORPORATION
(USA), as Servicer
By:
-----------------------------
Name: David Cain
Title: Senior Vice President
Address: 650 Heil-Quaker Blvd.
Lewisburg, Tennessee 37091
Attention: David Cain
Telephone: (615) 270-4136
Facsimile: (615) 270-4220
ARGOS FUNDING CORP.,
as the Purchaser
By:
-----------------------
Name:
-----------------------
Title:
---------------------
Address:
Attention:
Telephone:
Facsimile:
<PAGE>
EXHIBIT A
to Certificate Purchase Agreement
Series 1996-1, Class B
FORM OF POOLING AND SERVICING AGREEMENT
[omitted]<PAGE>
EXHIBIT B
to Certificate Purchase Agreement
Series 1996-1, Class B
FORM OF RECEIVABLES PURCHASE AGREEMENT
[omitted]<PAGE>
EXHIBIT C
to Certificate Purchase Agreement
Series 1996-1, Class B
FORM OF SERIES 1996-1 SUPPLEMENT
[omitted]<PAGE>
EXHIBIT D
to Certificate Purchase Agreement
Series 1996-1, Class B
FORM OF ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT, dated as of [____________] (this "Agreement"),
is made between ____________________ ("Assignor"), and
[_____________________] ("Assignee"). Except as otherwise defined herein,
capitalized terms have the meanings assigned to them in the Certificate
Purchase Agreement (as defined below).
BACKGROUND
A. Assignor is a party to the Certificate Purchase Agreement,
dated as of July 25, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Certificate Purchase Agreement"), among INTER-CITY
PRODUCTS RECEIVABLES COMPANY, L.P., a Tennessee limited partnership
("Transferor"), INTER-CITY PRODUCTS CORPORATION (USA), a Delaware
corporation, and the Purchaser party thereto (including Assignor).
B. Assignor wishes to assign, and Assignee wishes to be so
assigned, Assignor's rights and obligations arising on and after the
Effective Date (as defined below) under the Certificate Purchase Agreement
and its Certificate including (a) its obligations to make Purchases (its
"Credit Exposure") and (b) its outstanding Purchases (the "Purchases").
C. Assignor and Assignee also wish (a) Assignee to assume the
obligations of Assignor under the Certificate Purchase Agreement with
respect to Assignee's Share (as defined below) to the extent of the rights
assigned and (b) Assignor to be released from the obligations assumed by
Assignee.
D. Transferor, by its execution hereof, are providing its written
consent to the assignment accomplished by this Agreement.
SECTION 1. Assignment. Effective on the Effective Date (as
defined below) and upon payment of the amount specified in Section 3(a),
Assignor hereby assigns and transfers to Assignee, without recourse,
representation or warranty of any kind, express or implied (except as
provided in Sections 6(a) and (b)), and subject to Section 4(b), Assignee's
Share (as specified in Annex I hereto)<PAGE>
(the "Assignee's Share") of all of Assignor's rights, title and interest
arising under (a) the Certificate Purchase Agreement relating to Assignor's
Credit Exposure including all rights and obligations with respect to the
Purchases attributable to Assignee's Share and (b) Assignor's Certificate
with respect to Assignee's Share as will result in Assignee having from and
after the Effective Date the Class Percentage ("Assignee's Percentage")
specified in Annex I.
SECTION 2. Assumption. Effective on the Effective Date, Assignee
hereby irrevocably purchases, assumes and takes from Assignor, and Assignor
is hereby expressly and absolutely released from, all of Assignor's
obligations arising under the Certificate Purchase Agreement relating to
Assignee's Share and of any outstanding Purchases attributable to
Assignee's Share. Assignee hereby agrees to be bound by the provisions of
the Certificate Purchase Agreement.
SECTION 3. Payment. In consideration of the assignment by
Assignor to Assignee as set forth above, Assignee agrees to pay to
Assignor, in Dollars and in immediately available funds, (a) on or prior to
the Effective Date, an amount specified by Assignor in writing on or prior
to the Effective Date that represents Assignee's Share attributable to the
principal amount of the Purchases made pursuant to the Certificate Purchase
Agreement and outstanding on the Effective Date, and (b) from time to time
thereafter, other amounts (if any) that Assignee has agreed in writing to
pay to Assignor after the Effective Date. In consideration of the
assumption by Assignee, Assignor agrees to pay to Assignee within two
Business Days of the Effective Date, an assignment fee (if any) that
previously has been agreed to in writing by both parties.
Notwithstanding anything to the contrary in this Agreement, if and
when Assignee receives or collects (x) any payment of principal or interest
relating to any Purchases or (y) any payment of fees that are required to
be paid to Assignor pursuant to this Agreement, then Assignee shall forward
the payment to Assignor.
To the extent payment of funds to Assignee or Assignor are not
made within two Business Days, each, as the case may be, shall be entitled
to recover the due amount, together with interest thereon at the Federal
Funds Rate per annum accruing from the date of payment or the date of
receipt of the funds by the other party.
SECTION 4. Effectiveness. (a)(ii This Agreement shall become
effective on the date (the "Effective Date") on which it shall have been
duly executed by all parties and the Transferor shall have recorded the
information contained herein in its records (or automatically upon the
Transferor's receipt of this Agreement signed by Assignor and Assignee if
not so recorded within five Business Days of such receipt) Assignor hereby
notifies the Transferor of the assignment, effective
-2-
<PAGE>
as of the Effective Date, of Assignee's Share and any Purchases
attributable to the Assignee's Share, and directs the Transferor to pay
Assignee any payment of principal of, or interest on, any Purchase
attributable to the Assignee's Share of any Purchases. No (x) failure of
either Assignee or Assignor to settle any amount owed to the other (except
with respect to the payment of the processing and recordation fee to the
Transferor and the payment due under Section 3(a)), (y) dispute respecting
any other settlement, including in respect of Transferor, or (z)
bankruptcy, insolvency or other condition whatsoever respecting any Person,
shall in any way impair, reduce or otherwise affect the effectiveness of
this Agreement.
(iii) Assignor, Assignee and the Transferor each acknowledges and
agrees that from and after the Effective Date, the Transferor shall make
all payments under the Certificate Purchase Agreement in respect of
Assignee's Share (including all payments of principal and interest with
respect thereto, whether or not the payments shall have accrued prior to or
after the Effective Date) to Assignee only. Assignor and Assignee hereby
agree further to make all appropriate adjustments in payments to either of
them under the Certificate Purchase Agreement for periods prior to the
Effective Date directly between themselves.
(b) With respect to any Purchase attributable to Assignee's
Share, if and when Assignor receives or collects any payment of principal,
interest or Additional Amounts with respect to Assignee's Share for any
period commencing on or after the Effective Date, Assignor shall distribute
to Assignee the portion attributable to Assignee's Share, but only to the
extent it accrued on or after the Effective Date and was not theretofore
paid to Assignee by Transferor or otherwise. Any principal, interest and
Additional Amounts paid prior to the Effective Date shall be retained by
Assignor. Any principal, interest and Additional Amounts received by
Assignee that accrued prior to the Effective Date shall be forwarded
promptly, in the form received, to Assignor. Assignee recognizes and agrees
that notwithstanding anything to the contrary in this Agreement, Assignor
shall retain all of its rights to indemnification under the Certificate
Purchase Agreement for any events, acts or omissions occurring prior to the
Effective Date.
(c) The Transferor, by its execution hereof, acknowledges the
assignment and agrees to make payments in respect of principal, interest,
fees and Additional Amounts as described in clause (a).
SECTION 5. Rights as Purchaser under Certificate Purchase
Agreement. In accordance with Section 8.3 of the Certificate Purchase
Agreement, (a) as of the Effective Date, Assignee will be a Purchaser
under, and party to, the Certificate Purchase Agreement and shall have (i)
all of the rights and obligations
-3-
<PAGE>
of a Purchaser (to the extent of the assignment and assumption of
Assignee's Share effected by this Agreement) and (ii) the addresses for (A)
notice purposes and (B) LIBOR Office as set forth in items 2 and 3,
respectively, of Annex I hereto and (b) promptly on or after the Effective
Date, Transferor will execute and deliver any documents and instruments
that Assignor or Assignee reasonably may require.
SECTION 6. Representations and Warranties. (a) Each of Assignor
and Assignee represents and warrants to the other as follows:
(i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Agreement, to fulfill the
obligations hereunder and to consummate the transactions
contemplated hereby,
(ii) the making and performance of this Agreement and all
documents required to be executed and delivered hereunder do not
and will not violate any law or regulation of the jurisdiction of
its incorporation or any other applicable law or regulation,
(iii) this Agreement has been duly executed and delivered and
constitutes its legal, valid and binding obligation, enforceable
in accordance with its terms, and
(iv) all approvals, authorizations or other actions by, or filing
with, any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been
obtained.
(b) Assignor represents and warrants to Assignee that Assignee's
Share and the Purchases attributable to Assignee's Share are not subject to
any liens or security interests created by Assignor.
(c) Except as set forth in subsections (a) and (b), Assignor
makes no representations or warranties, express or implied, to Assignee and
shall not be responsible to Assignee for (i) the execution, effectiveness,
genuineness, legality, validity, enforceability, collectibility, regulatory
status or sufficiency of the Certificate Purchase Agreement or any of the
other Transaction Documents, (ii) the perfection, priority, value or
adequacy of any collateral security or guaranty, (iii) the taking of any
action, or the failure to take any action, with respect to any of the
Transaction Documents, (iv) any representations, warranties, recitals or
statements made in any of the Transaction Documents or in any written or
oral financial or other statements, instruments, reports, certificates or
documents made or furnished by Assignor to Assignee or by or on behalf of
Transferor or any of its Affiliates to Assignor or Assignee in connection
with the Transaction Documents and the transactions contemplated thereby,
(v) the financial or other
-4-
<PAGE>
condition of Transferor or any other Person or (vi) any other matter having
any relation to any of the foregoing. Assignor shall not be required to
ascertain or inquire as to the performance or observance of any of the
terms, conditions, provisions, covenants or agreements contained in any of
the Transaction Documents or the existence or possible existence of any
Unmatured Early Amortization Event, Early Amortization Event or Servicer
Default. Additionally, Assignor shall not have any duty or responsibility
either initially or on a continuing basis to make any investigation or any
appraisal on Assignee's behalf or to provide Assignee with any credit or
other information with respect thereto, whether coming into Assignor's
possession before the execution of the Certificate Purchase Agreement or at
any time thereafter. Assignor shall have no responsibility with respect to
the accuracy of, or the completeness of, any information provided to
Assignee, whether by Assignor or by or on behalf of Transferor or any other
Person obligated under the Certificate Purchase Agreement or any related
instrument or document.
(d) Assignee represents and warrants that (x) it has made its own
independent investigation of each of the foregoing matters, including the
financial condition and affairs of Transferor and its Affiliates, in
connection with the making of the Purchases and the execution of this
Agreement (including the solvency of Transferor and its Affiliates, their
ability to pay their respective debts as they mature and the capital of
Transferor and its Affiliates remaining after the closing under the
Transaction Documents and the consummation of the transactions contemplated
thereby) and has made and shall continue to make its own appraisal of the
creditworthiness of Transferor and its Affiliates, and (y) the
representations and warranties set forth in Section 5.3 of the Certificate
Purchase Agreement are true and correct with respect to the Assignee.
Assignee hereby agrees that it will not make any general solicitation or
general advertising for the offer or sale of the Certificates. Assignee
(i) confirms that it has received copies of the Transaction Documents
together with copies of certain other closing documents delivered in
connection with the Certificate Purchase Agreement, financial statements
and any other documents and information that it has requested or deemed
appropriate to make its own credit analysis and decision to enter into this
Agreement and (ii) agrees that it will, independently and without reliance
upon the Transferor, Assignor or any other Purchaser and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Transaction Documents.
(e) Assignee represents and warrants to Transferor that the
representations and warranties in Section 5.3 of the Certificate Purchase
Agreement are true and correct in respect of such Assignee as of the date
hereof.
-5-
<PAGE>
SECTION 7. No Proceedings. Assignee hereby agrees to be bound by
the provisions of Section 8.13 of the Certificate Purchase Agreement.
SECTION 8. Withholding Taxes. [In accordance with Section 3.4 of
the Certificate Purchase Agreement, Assignee agrees to execute and deliver
to the Trustee, as Paying Agent, and the Transferor, on or before the
Effective Date, (a) two original copies of Internal Revenue Service Form
1001 or 4224 or successor applicable form, properly completed and duly
executed by the Assignee certifying that it is entitled to receive payments
under the Certificate Purchase Agreement and any Certificate without
deduction or withholding of any United States Federal income taxes, and (b)
an original copy of Internal Revenue Service Form W-8 or W-9 or applicable
successor form, properly completed and duly executed. Assignee represents
and warrants to Transferor and Assignor that, as of the Effective Date, it
shall be entitled to receive payments of principal and interest under its
Certificate, the Certificate Purchase Agreement and hereunder without
deduction for or on account of any taxes imposed by the United States of
America or any political subdivision thereof. In the event that, after
delivering the applicable form, Assignee shall cease to be exempt from
withholding and/or deduction of taxes, then the Transferor may withhold
and/or deduct the applicable amount from any payments of principal,
interest and any fees to which Assignee otherwise would be entitled, and
the Transferor shall have no liability whatsoever to Assignee for any such
withholding or deduction. Assignee shall indemnify Transferor from and
against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs or expenses that result from Assignee's breach of
such representation and warranty.]1
SECTION 9. Miscellaneous. (a) Each of the parties hereto agrees
to take any action and execute and deliver any documents that any party
hereto reasonably may request from time to time in order to implement more
fully the purposes of this Agreement. Without limiting the generality of
the foregoing, Assignor and Assignee will cooperate in obtaining for
Assignee a Certificate (as well as a replacement Certificate for Assignor
representing any retained interest of Assignor).
(b) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES.
_______________
1/ If the Assignee is not a person within the meaning of Section
7701(a)(30) of the Internal Revenue Code.
-6-
<PAGE>
(c) Except as otherwise set forth herein, this Agreement sets
forth the entire agreement between the parties relating to the subject
matter hereof, and no term or provision of this Agreement may be amended,
changed, waived, discharged or terminated orally or otherwise, except in a
writing signed by Assignor and Assignee.
(d) This Agreement may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
(e) Each of the parties hereto agrees that each party shall bear
its own expenses in connection with the preparation and execution of this
Agreement and the consummation of the Assignment described herein.
(f) All representations and warranties made, and indemnities
provided for, herein shall survive the consummation of the transactions
contemplated hereby.
(g) Assignor may at any time or from time to time grant
assignments in its rights and obligations under the Certificate Purchase
Agreement and its Certificate to other Persons, but not in the portions
thereof assigned to Assignee.
(h) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. Neither
Assignor nor Assignee may assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the
other party. The preceding sentence shall not limit the right of Assignee
to assign all or part of Assignee's Share in the manner contemplated by the
Certificate Purchase Agreement.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their duly authorized officers and delivered as of
the day and year first above written.
-----------------------------,
as Assignor
By:
---------------------------
Title:
------------------------
-----------------------------,
as Assignee
By:
---------------------------
Title:
------------------------
The undersigned hereby acknowledges the terms and provisions of
this Agreement, and agrees to make payments in respect of principal,
interest and fees as described in Section 4(a).
INTER-CITY PRODUCTS RECEIVABLES COMPANY, L.P.
By: Inter-City Products Partner Corporation
By:
------------------------------------
Title:
---------------------------------
-8-
<PAGE>
ANNEX I
to Assignment Agreement
Item 1. Assignee's Share:
(a) Assignee's Stated Amount $______________
(b) Assignee's Class Percentage _____________%
Item 2. Address of Assignee for notice purposes:
Attention:
Telephone:
Facsimile:
Item 3. LIBOR Office of Assignee:
<PAGE>
SCHEDULE I
to Certificate Purchase Agreement
Series 1996-1, Class B
AMOUNT OF EACH INITIAL PURCHASER'S CERTIFICATE
Purchaser Invested Amount of Certificate
---------- ------------------------------
Argos Funding Corp. $10,000,000.00
Class Percentage
----------------
Argos Funding Corp. 100%
Series Percentage
-----------------
Argos Funding Corp. 14.29%
<PAGE>
APPENDIX X
to Certificate Purchase Agreement
Series 1996-1, Class B
INDEX OF ADDITIONAL DEFINED TERMS
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Assignee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Bankruptcy Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Class Percentage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Credit Exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Early Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ICP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Initial Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
LIBOR Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Pooling Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Receivables Review. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Series Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Supplement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Transferee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Transferor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
<PAGE>
FIRST AMENDMENT TO
CERTIFICATE PURCHASE AGREEMENT
(Series 1996-1, Class A)
This First Amendment to the Certificate Purchase Agreement (Series
1996-1, Class A) (this "Amendment") dated as of December 1, 1996, is made
among INTER-CITY PRODUCTS RECEIVABLES COMPANY, L.P., a Tennessee limited
partnership ("Transferor"), INTER-CITY PRODUCTS CORPORATION (USA), a
Delaware corporation ("ICP", "Servicer" or "Initial Servicer"), Anagram
Funding Corp. ("Anagram" and together with its permitted assigns, the
"Purchaser(s)"), and THE CHICAGO CORPORATION, a Delaware corporation, as
agent for the Purchaser(s) (in that capacity, together with any successors
in that capacity, "Agent").
REFERENCE IS MADE to a Certificate Purchase Agreement (Series
1996-1, Class A) (the "1996-1 Class A Certificate Purchase Agreement"),
among Transferor, Initial Servicer, Anagram and Agent . Capitalized terms
used and not otherwise defined herein shall have the meanings set forth in
the 1996-1 Class A Certificate Purchase Agreement.
WHEREAS, Section 10.1 of the 1996-1 Class A Certificate Purchase
Agreement provides that the 1996-1 Class A Certificate Purchase Agreement
may be amended by Transferor, ICP and Initial Servicer if such amendment is
consented to in writing by the Required Purchasers.
WHEREAS, pursuant to Section 9.9 of the 1996-1 Class A Certificate
Purchase Agreement, Anagram constitutes the Required Purchasers.
WHEREAS, the parties hereto wish to amend the 1996-1 Class A
Certificate Purchase Agreement.
NOW, THEREFORE, it is hereby agreed that:
1.Section 4.2(a) of the 1996-1 Class A Certificate Purchase
Agreement is hereby amended as follows:
The reference to "0.55%" is hereby deleted and replaced with
"0.65%".
2.The terms of the 1996-1 Class A Certificate Purchase Agreement
shall continue in full force and effect as amended and modified by this
Amendment.
3.This Amendment may be executed in several counterparts, and all
so executed shall constitute one and the same Amendment.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused his Amendment
to be executed on their behalf by their officers duly authorized thereunto,
as of the day and year first above written.
INTER-CITY PRODUCTS RECEIVABLES
COMPANY, L.P., as Transferor
By: _________________________
Name:
Title:
INTER-CITY PRODUCTS CORPORATION
(USA), as Initial Servicer
By: __________________________
Name:
Title:
ANAGRAM FUNDING CORP., as Purchaser
and the Required Purchasers
By: _________________________
Name:
Title:
THE CHICAGO CORPORATION, as
Agent
By: _________________________
Name:
Title:
<PAGE>
FIRST AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT
and
SECOND AMENDMENT TO CERTIFICATE PURCHASE AGREEMENT
(Series 1996-1, Class A)
This First Amendment to the Receivables Purchase Agreement and
Second Amendment to the Certificate Purchase Agreement (Series 1996-1,
Class A) (this "Amendment") dated as of January 27, 1997, is made among
INTER-CITY PRODUCTS CORPORATION (USA), a Delaware corporation ("ICP" or
"Initial Servicer"), INTER-CITY PRODUCTS PARTNER CORPORATION, a
Delaware corporation ("ICPPC"), GENERAL HEATING AND COOLING COMPANY, a
Delaware corporation ("General"), COASTLINE DISTRIBUTION, INC. a
Delaware corporation ("Coastline" and, together with ICP, ICPPC and
General, the "Sellers"), INTER-CITY PRODUCTS RECEIVABLES COMPANY, L.P.,
a Tennessee limited partnership ("Buyer" or "Transferor"), ANAGRAM
FUNDING CORP., a Delaware corporation ("Anagram" and, together with its
permitted assigns, the "Purchaser(s)"), and ABN AMRO CHICAGO
CORPORATION (as successor to The Chicago Corporation), as agent for the
Purchaser(s) (in that capacity, together with any successors in that
capacity, "Agent").
REFERENCE IS MADE to (i) the Receivables Purchase Agreement
(the "Receivables Purchase Agreement") dated as of July 25, 1996, among
Sellers and Buyer and (ii) the Certificate Purchase Agreement (Series
1996-1, Class A) dated as of July 25, 1996, among Transferor, Initial
Servicer, Anagram and Agent (as amended by the First Amendment to the
Certificate Purchase Agreement (Series 1996-1, Class A) dated as of
December 1, 1996, the "1996-1 Class A Certificate Purchase Agreement").
WHEREAS, Section 10.1 of the Receivables Purchase Agreement
provides that the Receivables Purchase Agreement may be amended by
Sellers and Buyer.
WHEREAS, Section 10.1 of the 1996-1 Class A Certificate
Purchase Agreement provides that the 1996-1 Class A Certificate
Purchase Agreement may be amended by Transferor, ICP and Initial
Servicer if such amendment is consented to in writing by the Required
Purchasers (as defined therein).
WHEREAS, pursuant to (i) the Stock and Asset Purchase Agreement
dated as of January 27, 1997 between ICP and A&C Distributors, Inc.
(the "Purchase Agreement"), ICP is selling certain branches engaged in
the business of selling air conditioning and heating parts and
equipment as distributors ("Sold Branches") and ICP is selling its
equity interest in Coastline.
WHEREAS, the parties hereto wish to amend the Receivables
Purchase Agreement and the 1996-1 Class A Certificate Purchase
Agreement.
<PAGE>
NOW, THEREFORE, it is hereby agreed that, effective as of the
opening of business on January 27, 1997:
1.Attached hereto as Exhibit A is a Bill of Sale dated as of
the date hereof between Inter-City Products Corporation (USA) ("ICP")
and LaSalle National Bank, as Trustee ("Trustee") of the Inter-City
Products Receivables Master Trust (the "Trust") (the "Branch Bill of
Sale"), and attached hereto as Exhibit B is a Bill of Sale dated as of
the date hereof between Coastline Distribution, Inc. ("Coastline") and
Trustee (the "Coastline Bill of Sale"), pursuant to which certain
receivables of the Trust shall be sold to ICP and Coastline,
respectively.
(a)Notwithstanding the provisions of the Receivables Purchase
Agreement, the Acquired Receivables, as defined in each Bill of Sale,
may be purchased by the Buyer thereunder in accordance with the terms
of the respective Bill of Sale.
(b)Coastline shall no longer be a Seller under the Receivables
Purchase Agreement and upon payment of the consideration provided in
the Coastline Bill of Sale, Coastline shall have no further obligations
under the Receivables Purchase Agreement.
(c)ICP represents and warrants that the Acquired Receivables
being purchased by it pursuant to the Branch Bill of Sale are
receivables originated by the Sold Branches and such Sold Branches have
been sold by ICP pursuant to the Purchase Agreement.
(d)Coastline represents and warrants that the Acquired
Receivables being purchased by it pursuant to the Coastline Bill of
Sale are receivables originated by Coastline and that Coastline has
been sold by ICP pursuant to the Purchase Agreement.
2.Section 4.2(a) of the 1996-1 Class A Certificate Purchase
Agreement is hereby amended as follows:
The reference to "0.65%" is hereby deleted and replaced with
"0.80%".
3.Section 2.3(b)(i)(C) of the 1996-1 Class A Certificate
Purchase Agreement is hereby amended as follows:
The reference to "0.03%" is hereby deleted and replaced with
"0.06%".
4.The terms of the Receivables Purchase Agreement and the 1996-
1 Class A Certificate Purchase Agreement shall continue in full force
and effect as amended and modified by this Amendment.
5.This Amendment may be executed in several counterparts, and
all so executed shall constitute one and the same Amendment.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused his
Amendment to be executed on their behalf by their officers duly
authorized thereunto, as of the day and year first above written.
INTER-CITY PRODUCTS CORPORATION
(USA)
By: _________________________
Name:
Title:
INTER-CITY PRODUCTS PARTNER
CORPORATION
By: _________________________
Name:
Title:
GENERAL HEATING AND COOLING
COMPANY
By: _________________________
Name:
Title:
COASTLINE DISTRIBUTION, INC.
By: _________________________
Name:
Title:
INTER-CITY PRODUCTS RECEIVABLES
COMPANY, L.P.
By: Inter-City Products Partner
Corporation
Its: General Partner
By: _________________________
Name:
Title:
ANAGRAM FUNDING CORP.
By: _________________________
Name:
Title:
ABN AMRO CHICAGO CORPORATION
By: _________________________
Name:
Title:
<PAGE>
SECOND AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT
This Second Amendment to the Receivables Purchase Agreement
(this "Amendment") dated as of September ___, 1997, is made among
INTERNATIONAL COMFORT PRODUCTS CORPORATION (USA), (formerly known as
Inter-City Products Corporation (USA)), a Delaware corporation ("ICP"),
INTER-CITY PRODUCTS PARTNER CORPORATION, a Delaware corporation
("ICPPC"), GENERAL HEATING AND COOLING COMPANY, a Delaware corporation
("General" and, together with ICP and ICPPC, the "Sellers"), INTER-CITY
PRODUCTS RECEIVABLES COMPANY, L.P., a Tennessee limited partnership
("Buyer"), and ANAGRAM ASSET MANAGEMENT, L.L.C., as agent ("Agent").
REFERENCE IS MADE to the Receivables Purchase Agreement (as
amended by a First Amendment to Receivables Purchase Agreement and
Second Amendment to Certificate Purchase Agreement dated as of January
27, 1997, the "Receivables Purchase Agreement") dated as of July 25,
1996, among Sellers and Buyer.
WHEREAS, Section 10.1 of the Receivables Purchase Agreement
provides that the Receivables Purchase Agreement may be amended by
Sellers and Buyer, provided that the Modification Condition has been
satisfied with respect to such amendment.
WHEREAS, pursuant to (i) the Asset Purchase Agreement dated as
of September 17, 1997 between ICP and General, as sellers, and Pameco
Corporation, a Georgia corporation ("Pameco") (the "Purchase
Agreement"), ICP is selling certain assets of certain branches engaged
in the business of selling air conditioning and heating parts and
equipment as distributors and General is selling all or substantially
all of its assets to Pameco.
WHEREAS, the parties hereto wish to amend the Receivables
Purchase Agreement.
NOW, THEREFORE, it is hereby agreed that, effective as of the
opening of business on September 30, 1997:
1.Attached hereto as Exhibit A is a Bill of Sale dated as of
the date hereof between General and LaSalle National Bank, as Trustee
("Trustee") of the Inter-City Products Receivables Master Trust (the
"Trust") (the "General Bill of Sale"), pursuant to which certain
receivables of the Trust shall be sold to General. Attached hereto as
Exhibit B is a Bill of Sale dated as of the date hereof between ICP and
the Trustee (the "ICP Bill of Sale"), and together with the General
Bill of Sale, the "Bill(s) of Sale"), pursuant to which certain
receivables of the Trust shall be sold to ICP.<PAGE>
(a)Notwithstanding the provisions of the Receivables Purchase
Agreement, the Acquired Receivables, as defined in each Bill of Sale,
may be purchased by the buyer thereunder in accordance with the terms
of the respective Bill of Sale.
(b)General shall no longer be a Seller under the Receivables
Purchase Agreement and upon payment of the consideration provided in
the General Bill of Sale, General shall have no further obligations
under the Receivables Purchase Agreement.
(c)General represents and warrants that the Acquired
Receivables being purchased by it pursuant to the Bill of Sale are
receivables originated by General and that General has sold
substantially all of its assets to Pameco. ICP represents and warrants
that the Acquired Receivables being purchased by it pursuant to the ICP
Bill of Sale are receivables originated by the ICP and such receivables
have been sold by ICP pursuant to the Purchase Agreement.
2.The terms of the Receivables Purchase Agreement shall
continue in full force and effect as amended and modified by this
Amendment.
3.This Amendment may be executed in several counterparts, and
all so executed shall constitute one and the same Amendment.
* * * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed on their behalf by their officers duly
authorized thereunto, as of the day and year first above written.
INTERNATIONAL COMFORT
PRODUCTS
CORPORATION (USA)
By:___________________________
Name:
Title:
INTER-CITY PRODUCTS PARTNER
CORPORATION
By:___________________________
Name:
Title:
GENERAL HEATING AND COOLING
COMPANY
By:___________________________
Name:
Title:
INTER-CITY PRODUCTS
RECEIVABLES
COMPANY, L.P.
By:Inter-City Products
Partner Corporation
Its:General Partner
By:___________________________
Name:
Title:
ANAGRAM ASSET MANAGEMENT,
L.L.C.
By:____________________________
Name:
Title:
<PAGE>
LOAN AND SECURITY AGREEMENT
Dated as of July 18, 1997
Between
INTERNATIONAL COMFORT PRODUCTS
CORPORATION (USA)
(the Borrower)
and
NATIONSBANK, N.A.
(the Lender)
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Referential Provisions. . . . . . . . . . . .13
Section 1.3 Exhibits and Schedules. . . . . . . . . . . . . . .13
ARTICLE 2 - REVOLVING CREDIT FACILITY . . . . . . . . . . . . . . . . .14
Section 2.1 Revolving Credit Loans. . . . . . . . . . . . . . .14
Section 2.2 Manner of Borrowing Revolving Credit Loans. . . . .14
Section 2.3 Repayment of Revolving Credit Loans . . . . . . . .15
Section 2.4 Revolving Credit Note . . . . . . . . . . . . . . .15
Section 2.5 Extension of Facility . . . . . . . . . . . . . . .15
Section 2.6 Effectiveness of Revolving Credit Facility. . . . .15
Section 2.7 Letters of Credit . . . . . . . . . . . . . . . . .16
ARTICLE 3 - GENERAL LOAN PROVISIONS . . . . . . . . . . . . . . . . . .16
Section 3.1 Interest. . . . . . . . . . . . . . . . . . . . . .16
Section 3.2 Fees. . . . . . . . . . . . . . . . . . . . . . . .18
Section 3.3 Notice of Conversion or Continuation of Loans . . .19
Section 3.4. Conversion or Continuation . . . . . . . . . . . .19
Section 3.5 Duration of Interest Periods; Maximum Number of
LIBOR Loans; Minimum Increments . . . . . . . . . . . . . . . .19
Section 3.6 Changed Circumstances . . . . . . . . . . . . . . .20
Section 3.7 Payments Not at End of Interest Period;
Failure to Borrow . . . . . . . . . . . . . . . . .20
Section 3.8 Increased Costs and Reduced Returns . . . . . . . .21
Section 3.9 Manner of Payment . . . . . . . . . . . . . . . . .21
Section 3.10 Statements of Account. . . . . . . . . . . . . . .21
Section 3.11 Termination of Agreement . . . . . . . . . . . . .21
ARTICLE 4 - CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . .22
Section 4.1 Conditions Precedent to Initial Loan. . . . . . . .22
Section 4.2 All Loans . . . . . . . . . . . . . . . . . . . . .24
Section 4.3 Revolving Credit Facility B . . . . . . . . . . . .24
Section 4.4 Revolving Credit Facility C . . . . . . . . . . . .25
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE BORROWER. . . . . . .25
Section 5.1 Representations and Warranties. . . . . . . . . . .25
Section 5.2 Survival of Representations and Warranties, Etc . .29
ARTICLE 6 - SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . .29
Section 6.1 Security Interest . . . . . . . . . . . . . . . . .29
Section 6.2 Continued Priority of Security Interest . . . . . .29
ARTICLE 7 - COLLATERAL COVENANTS. . . . . . . . . . . . . . . . . . . .30
Section 7.1 Collection of Receivables . . . . . . . . . . . . .30
Section 7.2 Sales of Inventory. . . . . . . . . . . . . . . . .30
Section 7.3 Returned Goods. . . . . . . . . . . . . . . . . . .30
Section 7.4 Ownership and Defense of Title. . . . . . . . . . .30
Section 7.5 Insurance . . . . . . . . . . . . . . . . . . . . .31
Section 7.6 Location of Offices and Collateral. . . . . . . . .31
Section 7.7 Records Relating to Collateral. . . . . . . . . . .32
Section 7.8 Inspection. . . . . . . . . . . . . . . . . . . . .32
Section 7.9 Maintenance of Equipment 32
This Table of contents is included for reference purposes only and does
not constitute part of the Loan and Security Agreement.<PAGE>
Section 7.10 Information and Reports. . . . . . . . . . . . . .32
Section 7.11 Power of Attorney. . . . . . . . . . . . . . . . .33
ARTICLE 8 - AFFIRMATIVE COVENANTS 33
Section 8.1 Preservation of Corporate Existence and Similar
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Section 8.2 Compliance with Applicable Law. . . . . . . . . . .33
Section 8.3 Conduct of Business . . . . . . . . . . . . . . . .33
Section 8.4 Payment of Taxes and Claims . . . . . . . . . . . .33
Section 8.5 Accounting Methods and Financial Records. . . . . .33
Section 8.6 Use of Proceeds . . . . . . . . . . . . . . . . . .33
Section 8.7 Accuracy of Information . . . . . . . . . . . . . .34
ARTICLE 9 - INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .34
Section 9.1 Financial Statements. . . . . . . . . . . . . . . .34
Section 9.2 Discussions With Accountants. . . . . . . . . . . .34
Section 9.3 Officer's Certificate . . . . . . . . . . . . . . .34
Section 9.4 Copies of Other Reports . . . . . . . . . . . . . .35
Section 9.5 Notice of Litigation and Other Matters. . . . . . .35
Section 9.6 ERISA . . . . . . . . . . . . . . . . . . . . . . .35
ARTICLE 10 - NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . .36
Section 10.1 Financial Ratios . . . . . . . . . . . . . . . . .36
Section 10.2 Merger, Consolidation and Sale of Assets.. . . . .37
Section 10.3 Investments. . . . . . . . . . . . . . . . . . . .37
Section 10.4 Benefit Plans. . . . . . . . . . . . . . . . . . .37
Section 10.5 Amendments of Other Agreements . . . . . . . . . .37
Section 10.6 Minimum Availability . . . . . . . . . . . . . . .37
Section 10.7 Capital Expenditures . . . . . . . . . . . . . . .37
Section 10.8 Receivables Transfers. . . . . . . . . . . . . . .37
ARTICLE II - DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . .37
Section 11.1 Events of Default. . . . . . . . . . . . . . . . .37
Section 11.2 Remedies . . . . . . . . . . . . . . . . . . . . .39
Section 11.3 Application of Proceeds. . . . . . . . . . . . . .41
Section 11.4 Power of Attorney. . . . . . . . . . . . . . . . .41
Section 11.5 Miscellaneous Provisions Concerning Remedies . . .42
Section 11.6 Trademark License. . . . . . . . . . . . . . . . .42
ARTICLE 12 - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . .42
Section 12.1 Notices. . . . . . . . . . . . . . . . . . . . . .42
Section 12.2 Expenses . . . . . . . . . . . . . . . . . . . . .43
Section 12.3 Stamp and Other Taxes. . . . . . . . . . . . . . .44
Section 12.4 Setoff . . . . . . . . . . . . . . . . . . . . . .44
Section 12.5 Litigation . . . . . . . . . . . . . . . . . . . .44
Section 12.6 Waiver of Rights . . . . . . . . . . . . . . . . .44
Section 12.7 Reversal of Payments . . . . . . . . . . . . . . .45
Section 12.8 Injunctive Relief. . . . . . . . . . . . . . . . .45
Section 12.9 Accounting Matters. . . . . . . . . . . . . . . .45
Section 12.10 Assignment; Participation . . . . . . . . . . . .45
Section 12.11 Amendments. . . . . . . . . . . . . . . . . . . .45
Section 12.12 Performance of Borrower's Duties. . . . . . . . .45
Section 12.13 Indemnification . . . . . . . . . . . . . . . . .46
Section 12.14 All Powers Coupled with Interest. . . . . . . . .46
Section 12.15 Survival. . . . . . . . . . . . . . . . . . . . .46
Section 12.16 Severability of Provisions. . . . . . . . . . . .46
Section 12.17 Governing Law . . . . . . . . . . . . . . . . . .46
Section 12.18 Counterparts. . . . . . . . . . . . . . . . . . .46
Section 12.19 Reproduction of Documents . . . . . . . . . . . .46
Section 12.20 Funds Transfer Services . . . . . . . . . . . . .47
Section 12.21 Consent to Advertising and Publicity. . . . . . .47
Section 12.22 Final Agreement. . . . . . . . . . . . . . . . .47
<PAGE>
EXHIBITS AND SCHEDULES
EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C FORM OF OFFICER'S CERTIFICATE
SCHEDULE 1.1A LETTER OF CREDIT FEES
SCHEDULE 5.1(A) JURISDICTIONS IN WHICH BORROWER IS QUALIFIED
AS A FOREIGN CORPORATION
SCHEDULE 5.1(B) BORROWER'S CAPITAL STOCK
SCHEDULE 5.1(E) BORROWER'S BUSINESS
SCHEDULE 5.1(F) EXCEPTIONS TO GOVERNMENTAL APPROVALS
SCHEDULE 5.1(G) NON LIEN TITLE EXCEPTIONS AND DEFECTS
AND PROPERTY DISPOSED OF OUT OF ORDINARY
COURSE OF BUSINESS
SCHEDULE 5.1(H) LIENS
SCHEDULE 5.1(I) INDEBTEDNESS FOR MONEY BORROWED AND
GUARANTIES
SCHEDULE 5.1(J) LITIGATION
SCHEDULE 5.1(K) TAX RETURNS AND PAYMENTS
SCHEDULE 5.1(O) ERISA
SCHEDULE 5.1(S) LOCATION OF CHIEF EXECUTIVE OFFICE
SCHEDULE 5.1(T) LOCATIONS OF INVENTORY
SCHEDULE 5.1(V) CORPORATE AND FICTITIOUS NAMES
SCHEDULE 5.1(Y) EMPLOYEE RELATIONS
SCHEDULE 5.1(Z) PROPRIETARY RIGHTS
SCHEDULE 8.6 USE OF PROCEEDS
<PAGE>
LOAN AND SECURITY AGREEMENT
Dated as of July 18, 1997
INTERNATIONAL COMFORT PRODUCTS CORPORATION (USA), a Delaware
corporation, and NATIONSBANK, N.A., a national banking association,
agree as follows:
ARTICLE 1 - DEFINITIONS
Section 1.1 Definitions. For the purposes of this Agreement:
"ABN AMRO" means ABN AMRO Chicago Corporation, a Delaware
corporation, and its successors and assigns.
"Acquire" or "Acquisition", as applied to any Business Unit or
Investment, means the acquiring or acquisition of such Business Unit or
Investment by purchase, exchange, issuance of stock or other
securities, or by merger, reorganization or any other method.
"Affiliate" means, with respect to a Person, (a) any officer,
director, employee or managing agent of such Person, (b) any spouse,
parents, brothers, sisters, children and grandchildren of such Person,
(c) any association, partnership, trust, entity or enterprise in which
such Person is a director, officer or general partner, (d) any other
Person that, (i) directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such given Person, (ii) directly or indirectly
beneficially owns or holds 10% or more of any class of voting stock or
partnership or other interest of such Person or any Subsidiary of such
Person, or (iii) 10% or more of the voting stock or partnership or
other interest of which is directly or indirectly beneficially owned or
held by such Person or a Subsidiary of such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether
through ownership of voting securities or partnership or other
interests, by contract or otherwise.
"Agreement" means this Agreement, including the Exhibits and
Schedules hereto, and all amendments, modifications and supplements
hereto and thereto and restatements hereof and thereof.
"Agreement Date" means the date as of which this Agreement is
dated.<PAGE>
"Assignment of Receivables Securitization Proceeds" means the
Assignment of Receivables Securitization Proceeds, dated on or about
the Effective Date, executed by the Borrower, GHC, the Receivables
Purchaser and the Lender, pursuant to which, among other things, (a)
the Borrower and GHC grant the Lender a first priority security
interest in their right to receive proceeds from the sale and
securitization of accounts receivable contemplated by the Receivables
Purchase Agreement, and (b) the Receivables Purchaser agrees to remit
such proceeds to the Lender on behalf of the Borrower and GHC.
"Availability" means, as of the date of determination, the amount
of Revolving Credit Loans available to be borrowed by the Borrower
hereunder in accordance with Section 2.1 less the sum of the
outstanding principal balance of all Revolving Credit Loans hereunder
as of such date.
"Benefit Plan" means an employee benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which a
Person or any Related Company is, or within the immediately preceding 6
years was, an "employer" as defined in Section 3(5) of ERISA, including
such plans as may be established after the Agreement Date.
"Blocked Account Agreement" means the letter agreement, dated on or
about the date hereof, among the Lender, the Borrower, ICPPC, GHC, the
Receivables Purchaser, the Receivables Trustee, ABN AMRO, and LaSalle
National Bank, with respect to the transfer of funds from the Master
Collection Account to the Receivables Purchaser Account (as such terms
are defined therein) and from the Receivables Purchaser Account to
NationsBank for application against the Secured Obligations, and any
substitute agreement acceptable to the Lender with respect to the
subject matter thereof.
"Borrower" means International Comfort Products Corporation (USA),
a Delaware corporation, and its successors and assigns.
"Borrowing Base" means at any time an amount equal to the sum of:
(a) 50% (or such lesser percentage as the Lender may determine
from time to time in its reasonable credit judgment) of the lesser of
cost (computed on a first-in-first-out basis) and fair market value of
Eligible Inventory at such time, plus
-2-
<PAGE>
(b) the lesser of
(i) 50% (or such lesser percentage as Lender may
determine from time to time in its reasonable credit judgment)
of the aggregate undrawn amount of all documentary Letters of
Credit outstanding at such time with respect to the Borrower's
acquisition of Eligible Inventory; and
(ii) $7,500,000, minus
(c) the Letter of Credit Reserve and such other reserves as the
Lender may determine from time to time in the exercise of its
reasonable credit judgment.
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B attached hereto.
"Business Day" means (a) any day other than a Saturday, Sunday or
other day on which banks in the city in which the principal office of
the Lender is located are authorized to close, and (b) in respect of
any determination with respect to a LIBOR Loan, any day referred to in
clause (a) that is also a day on which tradings are conducted in the
London interbank eurodollar market.
"Business Unit" means the assets constituting the business, or a
division or operating unit thereof, of any Person.
"Capital Expenditures" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of
assets (other than assets which constitute a Business Unit) which are
not, in accordance with GAAP, treated as expense items for such Person
in the year made or incurred or as a prepaid expense applicable to a
future year or years.
"Capitalized Lease" means a lease that is required to be cap-
italized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such
Indebtedness
-3-
<PAGE>
shall be the capitalized amount of such obligations determined in
accordance with GAAP.
"Cash" means Dollars or Cash Equivalents.
"Cash Equivalents" means, at any time:
(a) any evidence of full recourse Indebtedness, maturing not
more than one year after such time, to the extent issued or guaranteed
by the United States Government;
(b) commercial paper, maturing not more than nine months from
the date of issuance and rated A-1 by Standard & Poor's Corporation or
P-1 by Moody's Investors Service, Inc., issued by a corporation (except
an Affiliate of the Borrower) organized under the laws of any State of
the United States or of the District of Columbia;
(c) any deposit or account, including any certificate of
deposit, eurodollar time deposit or acceptance, maturing not more than
one year after such time, issued by any commercial banking institution
which is a member of the Federal Reserve System and which has a
combined capital of and surplus and undivided profits of not less than
$250,000,000; or
(d) any repurchase agreement entered into with any commercial
banking institution of the nature referred to in clause (c), secured by
a fully perfected security interest in any obligation of the type
described in any of clauses (a) through (c), having a market value at
the time such repurchase agreement is entered into of not less than
100% of the repurchase obligation thereunder of such commercial banking
institution.
"Change of Control" means (a) the direct or indirect sale, lease,
exchange or other transfer of all or substantially all of the assets of
Holdings to any Person or entity or group of Persons or entities acting
in concert as a partnership or other group (a "Group of Persons") other
than an Affiliate of Holdings, (b) the merger or consolidation of
Holdings with or into another corporation with the effect that the then
existing shareholders of Holdings hold less than 50% of the combined
voting power of the then outstanding securities of the surviving
corporation of such merger or the corporation resulting from such
consolidation ordinarily (and apart from rights arising under special
circumstances) having the right to vote in the election of directors,
(c) the replacement of a majority of the Board of Directors of
Holdings, over a one-year period,
-4-
<PAGE>
from the directors who constituted the Board of Directors at the
beginning of such period, and such replacement shall not have been
approved by the Board of Directors of Holdings as constituted at the
beginning of such period (together with any new directors whose
election by such Board or whose nomination for election by the
stockholders of Holdings was approved by a vote of 66-2/3% of the
directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved), (d) a Person or group of persons (other
than Permitted Holders or an Affiliate of one or more Permitted
Holders) shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of securities of Holdings
representing 50% or more of the combined voting power of the then
outstanding securities of Holdings ordinarily (and apart from rights
arising under special circumstances) having the right to vote in the
election of directors, or (v) Holdings fails to own, directly or
indirectly, 80% of the voting stock (stock of the Borrower entitled
ordinarily to vote in the election of directors) of the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" means and includes all of the Borrower's right, title
and interest in and to each of the following, wherever located and
whether now or hereafter existing or now owned or hereafter acquired or
arising:
(a) all Inventory,
(b) all collateral subject to the Assignment of Receivables
Securitization Proceeds,
(c) all Contract Rights and General Intangibles necessary or
helpful in the realization on the collateral described in clauses (a)
and (b) above or the liquidation thereof,
(d) all documents of title, policies and certificates of
insurance, securities, chattel paper and other documents and instru-
ments evidencing or pertaining to any and all items of Inventory,
-5-
<PAGE>
(e) all files, correspondence, computer programs, tapes, disks
and related data processing software which contain information
identifying or pertaining to any of the Collateral or showing the
amounts thereof or otherwise necessary or helpful in the realization
thereon or the liquidation thereof,
(f) all cash deposited with the Lender or any Affiliate thereof
or which the Lender is entitled to retain or otherwise possess as
collateral pursuant to the provisions of this Agreement or any of the
Security Documents, and
(g) any and all products and cash and non-cash proceeds of the
foregoing (including, but not limited to, any claims to any items
referred to in this definition and any claims against third parties for
loss of, damage to or destruction of any or all of the Collateral or
for proceeds payable under or unearned premiums with respect to
policies of insurance) in whatever form, including, but not limited to,
cash, negotiable instruments and other instruments for the payment of
money, accounts receivable, chattel paper, security agreements and
other documents, but
(h) expressly excluding from the definition of "Collateral" all
"Intellectual Property," as that term is defined as of the date hereof
in the Intellectual Property Security Agreement dated as of March 11,
1993 between the Borrower and the Indenture Trustee.
"Consolidated Subsidiary" means each of the Borrower's Subsidiaries
whose accounts are at the time in question in accordance with GAAP
consolidated with those of the Borrower.
"Contract Rights" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising rights
under contracts not yet earned by performance and not evidenced by an
instrument or chattel paper, to the extent that the same may lawfully
be assigned.
"Default" means any of the events specified in Section 11.1 that,
with the passage of time or giving of notice or both, would constitute
an Event of Default.
"Default Margin" means 3%.
-6-
<PAGE>
"Disbursement Account" means the account maintained by and in the
name of the Borrower with the Lender for the purpose of disbursing
Revolving Credit Loan proceeds and amounts credited thereto pursuant to
Sections 2.2(b)(i) and 7.1(b)(ii).
"Dollar" and "$" means freely transferable United States dollars.
"EBIT" means Net Income before provision for Interest Expense and
income taxes.
"EBITDA" means Net Income before provision for Interest Expense,
income taxes, depreciation expense and amortization.
"Effective Date" means the later of (a) the Agreement Date, and (b)
the first date on which all of the conditions set forth in Section 4.1
shall have been fulfilled or waived by the Lender.
"Effective Interest Rate" means the rate of interest per annum on
the Loans in effect from time to time pursuant to the provisions of
Section 3.1(a), (b) and (c).
"Eligible Inventory" means items of Inventory of the Borrower held
for sale in the ordinary course of the business of the Borrower (but
not including packaging or shipping materials or maintenance supplies)
which are deemed by the Lender in the exercise of its reasonable credit
judgment to be eligible for inclusion in the calculation of the
Borrowing Base. Unless otherwise approved in writing by the Lender, no
Inventory shall be deemed to be Eligible Inventory unless it meets all
of the following requirements: (a) such Inventory is owned by the
Borrower, is subject to the Security Interest, which is perfected as to
such Inventory, and is subject to no other Lien whatsoever other than a
Permitted Lien; (b) such Inventory consists of finished goods or
service parts and does not consist of raw materials, work-in-process,
supplies or consigned goods; (c) such Inventory is in good condition
and meets all standards applicable to such goods, their use or sale
imposed by any governmental agency, or department or division thereof,
having regulatory authority over such matters; (d) such Inventory is
currently either usable or saleable, at prices approximating at least
the cost thereof, in the normal course of the Borrower's business; (e)
such Inventory is not obsolete or returned or repossessed or used goods
taken in trade; (f) such Inventory is located at one of the locations
listed in Schedule 5.1(t); (g) such Inventory is in the possession and
control of the Borrower and not any third party, or,
-7-
<PAGE>
if located in a warehouse or other facility leased by the Borrower, the
warehouseman or lessor has delivered to the Lender a waiver and consent
in form and substance satisfactory to the Lender; and (h) such
Inventory is not subject to any bill and hold sale arrangement or any
similar arrangement.
"Environmental Laws" means all federal, state, local and foreign
laws now or hereafter in effect relating to pollution or protection of
the environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, surface water,
ground water or land) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, removal,
transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes, and any and all
regulations, notices or demand letters issued, entered, promulgated or
approved thereunder.
"Equipment" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising
machinery, apparatus, equipment, motor vehicles, tractors, trailers,
rolling stock, fittings, and other tangible personal property (other
than Inventory) of every kind and description used in such Person's
business operations or owned by such Person or in which such Person has
an interest and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements
therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as in effect from time to time, and any successor statute.
"Event of Default" means any of the events specified in Section
11.1.
"Financing Statements" means the Uniform Commercial Code financing
statements executed and delivered by (a) the Borrower to the Lender,
naming the Lender as secured party and the Borrower as debtor, in
connection with this Agreement, and (b) the Borrower and GHC to the
Lender, naming the Lender as secured party and the Borrower and GHC as
debtor, in connection with the Assignment of Receivables Securitization
Proceeds.
"Funded Indebtedness" means (a) the amount outstanding under the
Revolving Credit Facility as of the date of determination, plus (b) the
-8-
<PAGE>
outstanding balance on the Senior Secured Notes as of the date of
determination, plus, without duplication, (c) Indebtedness for Money
Borrowed having a maturity of more than 12 months from the date of the
most recent balance sheet of the Borrower or having a maturity of less
than 12 months from the date of such balance sheet but by its terms
being renewable or extendible beyond 12 months from the date of such
balance sheet at the option of the Person liable thereon, plus, without
duplication, (d) all Liabilities appearing on the most recent balance
sheet of the Borrower with respect to the Receivables Purchase
Documents, minus (e) unrestricted Cash.
"GAAP" means generally accepted accounting principles consistently
applied and maintained throughout the period indicated and consistent
with the prior financial practice of the Person referred to.
"General Intangibles" means, as to any Person, all of such Person's
then owned or existing and future acquired or arising general
intangibles, choses in action and causes of action and all other
intangible personal property of such Person of every kind and nature
(other than accounts receivable and Intellectual Property), including,
without limitation, corporate or other business records, computer soft-
ware, customer lists, registrations, licenses, franchises, rights and
claims against carriers and shippers, rights to indemnification,
property, casualty or any similar type of insurance, and any proceeds
thereof.
"GHC" means General Heating and Cooling Company, a Delaware
corporation, and its successors and assigns.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with,
and reports to, all governmental bodies, whether federal, state, local,
foreign national or provincial, and all agencies thereof.
"Governmental Authority" means any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand
jury or arbitrator, in each case whether foreign or domestic.
"Guaranty", "Guaranteed" or to "Guarantee," as applied to any
obligation of another Person shall mean and include
-9-
<PAGE>
(a) a guaranty (other than by endorsement of negotiable instru-
ments for collection in the ordinary course of business), directly or
indirectly, in any manner, of any part or all of such obligation of
such other Person, and
(b) an agreement, direct or indirect, contingent or otherwise,
and whether or not constituting a guaranty, the practical effect of
which is to assure the payment or performance (or payment of damages in
the event of nonperformance) of any part or all of such obligation of
such other Person whether by (i) the purchase of securities or
obligations, (ii) the purchase, sale or lease (as lessee or lessor) of
property or the purchase or sale of services primarily for the purpose
of enabling the obligor with respect to such obligation to make any
payment or performance (or payment of damages in the event of
nonperformance) of or on account of any part or all of such obligation
or to assure the owner of such obligation against loss, (iii) the
supplying of funds to, or in any other manner investing in, the obligor
with respect to such obligation, (iv) repayment of amounts drawn down
by beneficiaries of letters of credit, or (v) the supplying of funds to
or investing in a Person on account of all or any part of such Person's
obligation under a guaranty of any obligation or indemnifying or
holding harmless, in any way, such Person against any part or all of
such obligation.
"Holdings" means International Comfort Products Corporation, a
corporation existing under the Canada Business Corporation Act, and its
successors and assigns.
"ICPPC" means International Comfort Products Partner Corporation, a
Delaware corporation, and its successors and assigns.
"Indebtedness" of any Person means, without duplication, (a)
Liabilities, (b) all obligations for money borrowed or for the deferred
purchase price of property or services or in respect of reimbursement
obligations under letters of credit, (c) all obligations represented by
bonds, debentures, notes and accepted drafts that represent extensions
of credit, (d) Capitalized Lease Obligations, (e) all obligations
(including, during the noncancellable term of any lease in the nature
of a title retention agreement, all future payment obligations under
such lease discounted to their present value in accordance with GAAP)
secured by any Lien to which any property or asset owned or held by
such Person is subject, whether or not the obligation secured thereby
shall have been assumed by such Person, (f) all obligations of other
Persons which such Person has Guaranteed, including, but not limited
to, all obligations of such Person consisting of recourse liability
with respect to accounts receivable sold or otherwise disposed of by
such Person, and (g) in the case of the Borrower (without duplication)
the Loans.
-10-
<PAGE>
"Indenture Trustee" means United States Trust Company of New York,
a New York banking corporation, in its capacity as trustee under the
Senior Secured Notes Indenture, and its successors and assigns.
"Initial Loans" means the Revolving Credit Loan made to the
Borrower on the Effective Date.
"Intellectual Property" means, as to any Person, all of such
Person's then owned existing and future acquired or arising patents,
patent rights, copyrights, works which are the subject of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark
and service mark applications, and all licenses and rights related to
any of the foregoing and all other rights under any of the foregoing,
all extensions, renewals, reissues, divisions, continuations and
continuations-in-part of any of the foregoing and all rights to sue for
past, present and future infringements of any of the foregoing.
"Interbank Offered Rate" means, with respect to any LIBOR Loan for
the Interest Period applicable thereto, the average (rounded upward to
the nearest one-sixteenth (1/16) of one percent) per annum rate of
interest determined by the Lender (each such determination to be
conclusive and binding absent manifest error) as of two Business Days
prior to the first day of such Interest Period from Telerate Page 3750
as the effective rate at which deposits in immediately available funds
in Dollars are being offered or quoted to major banks in the interbank
market for eurodollar deposits for a term comparable to such Interest
Period and in the amount of the LIBOR Loan. If such rate is
unavailable from such service, then such rate may be determined by the
Lender from any other interest rate reporting service of recognized
standing that the Lender shall select.
"Intercreditor Agreement re Receivables" means the Intercreditor
Agreement re Receivables, dated on or about the Effective Date, among
the Lender, the Borrower, ICPPC, GHC, the Receivables Purchaser, the
Receivables Trustee and ABN AMRO.
"Interest Expense" means interest on Indebtedness during the period
for which computation is being made, plus, without duplication, the
discount on the Receivables sold pursuant to the Receivables Purchase
Documents during such period; excluding, however, interest paid in kind
and the amortization of fees and costs incurred with respect to the
closing of loans which have been capitalized as transaction costs.
-11-
<PAGE>
"Interest Payment Date" means the first day of each calendar month
commencing on August 1, 1997 and continuing thereafter until the
Secured Obligations have been irrevocably paid in full.
"Interest Period" means, with respect to each LIBOR Loan, the
period commencing on the date of the making or continuation of or
conversion to such LIBOR Loan and ending one, two, three, or six months
thereafter, as the Borrower may elect in the applicable Notice of
Borrowing or Notice of Conversion or Continuation; provided, that:
(a) any Interest Period that would otherwise end on a
day that is not a Business Day shall, subject to the provisions
of clause (c) below, be extended to the next succeeding
Business Day unless such Business Day falls in the next
calendar month, in which case such Interest Period shall end on
the immediately preceding Business Day;
(b) any Interest 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 Interest Period) shall, subject to clause (c) below,
end on the last Business Day of a calendar month;
(c) any Interest Period that would otherwise end after
the Termination Date shall end on the Termination Date; and
(d) notwithstanding clause (c) above, no Interest Period
shall have a duration of less than one month, and, if any
applicable Interest Period would be for a shorter period, such
Interest Period shall not be available hereunder.
"Inventory" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising (a)
goods intended for sale or lease or for display or demonstration, (b)
work in process, (c) raw materials and other materials and supplies of
every nature and description used or which might be used in connection
with the manufacture, packing, shipping, advertising, selling, leasing
or furnishing of goods or otherwise used or consumed in the conduct of
business, and (d) documents evidencing and General Intangibles relating
to any of the foregoing.
-12-
<PAGE>
"Investment" means, with respect to any Person: (a) the direct or
indirect purchase or acquisition of any beneficial interest in, any
share of capital stock of, evidence of Indebtedness of or other
security issued by any other Person, (b) any loan, advance or extension
of credit to, or contribution to the capital of, any other Person,
excluding advances to employees in the ordinary course of business for
business expenses and any of the foregoing contemplated by the
Receivables Purchase Agreement, or (c) any commitment or option to take
any of the actions described in clauses (a) or (b) above.
"Lender" means NationsBank, N.A., a national banking association,
and its successors and assigns.
"Lender's Office" means the office of the Lender specified in or
determined in accordance with the provisions of Section 12.1(c).
"Letter of Credit" means any letter of credit issued by the Lender
for the account of the Borrower.
"Letter of Credit Documents" means each of the documents,
agreements and other writings required by the Lender to be executed
and/or delivered in connection with the issuance of a Letter of Credit,
including, without limitation, each letter of credit application and
reimbursement agreement.
"Letter of Credit Facility" means, at any time, obligations arising
under Letters of Credit in an aggregate face amount not to exceed
$15,000,000 incurred pursuant to Section 2.7.
"Letter of Credit Fees" means fees charged by the Lender in
connection with the issuance of a Letter of Credit determined in
accordance with Schedule 1.1A attached hereto.
"Letter of Credit Reserve" means, at any time, 100% of the sum of
(i) the aggregate undrawn amount of all Letters of Credit outstanding
at such time, plus (ii) the aggregate amount of all drawings under
Letters of Credit for which the Lender has not been reimbursed.
-13-
<PAGE>
"Liabilities" means all liabilities of a Person determined in
accordance with GAAP and includable on a balance sheet of such Person
prepared in accordance with GAAP.
"LIBOR" means, with respect to the Interest Period applicable
thereto, a simple per annum interest rate determined pursuant to the
following formula:
LIBOR = Interbank Offered Rate
1 - LIBOR Reserve Percentage
LIBOR shall be adjusted automatically as of the effective date of any
change in the LIBOR Reserve Percentage.
"LIBOR Loan" means any Revolving Credit Loan bearing interest at
the time in question determined with reference to LIBOR.
"LIBOR Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect from time to time under
Regulation D of the Board of Governors of the Federal Reserve System,
as such regulation may be amended from time to time, or any successor
regulation, as the maximum reserve requirement (including, without
limitation, any basic, supplemental, emergency, special or marginal
reserves) applicable to any member bank with respect to Eurocurrency
liabilities as that term is defined in Regulation D (or against any
other category of liabilities that includes deposits by reference to
which the interest rate of any LIBOR Loan is determined), whether or
not Lender has any Eurocurrency liabilities subject to such reserve
requirement at that time. All LIBOR Loans shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed subject
to reserve requirements without the benefit of credits for proration,
exceptions or offsets that may be available from time to time to
Lender.
"Lien" as applied to the property of any Person means: (a) any
mortgage, deed to secure debt, deed of trust, lien, pledge, charge,
lease constituting a Capitalized Lease Obligation, conditional sale or
other title retention agreement, or other security interest, security
title or encumbrance of any kind in respect of any property of such
Person or upon the income or profits therefrom, (b) any arrangement,
express or implied, under which any property of such Person is
transferred, sequestered or otherwise identified for the purpose of
subjecting the same to the payment
-14-
<PAGE>
of Indebtedness or performance of any other obligation in priority to
the payment of the general, unsecured creditors of such Person, (c) any
Indebtedness which is unpaid more than 30 days after the same shall
have become due and payable and which if unpaid might by law
(including, but not limited to, bankruptcy and insolvency laws) or
otherwise be given any priority whatsoever over general unsecured
creditors of such Person, and (d) the filing of, or any agreement to
give, any financing statement under the UCC or its equivalent in any
jurisdiction.
"Loan" means any Revolving Credit Loan.
"Loan Documents" means, collectively, this Agreement, the Note, the
Security Documents and each other instrument, agreement and document
executed and delivered by the Borrower or GHC in connection with this
Agreement and each other instrument, agreement or document referred to
herein or contemplated hereby executed by or on behalf of the Borrower
or GHC evidencing, documenting or certifying matters in connection
herewith.
"Materially Adverse Effect" means any act, omission, event or
undertaking which would, singly or in the aggregate, have a materially
adverse effect upon (a) the business, assets, properties, liabilities,
condition (financial or otherwise), results of operations or business
prospects of the Borrower or upon the Borrower because of its effect on
any of its Subsidiaries, (b) upon the ability of the Borrower or GHC to
perform any obligations under this Agreement or any other Loan Document
to which it is a party, or (c) the legality, validity, binding effect,
enforceability or admissibility into evidence of any Loan Document or
the ability of Lender to enforce any material rights or remedies under
or in connection with any Loan Document; in any case, whether resulting
from any single act, omission, situation, status, event, or
undertaking, together with other such acts, omissions, situations, sta-
tuses, events, or undertakings .
"Money Borrowed" means, as applied to Indebtedness, (a)
Indebtedness for money borrowed, (b) Indebtedness, whether or not in
any such case the same was for money borrowed, (i) represented by notes
payable and drafts accepted, that represent extensions of credit, (ii)
constituting obligations evidenced by bonds, debentures, notes or
similar instruments, or (iii) upon which interest charges are
customarily paid (other than trade Indebtedness) or that was issued or
assumed as full or partial payment for property, (c) Indebtedness that
constitutes a Capitalized Lease Obligation, and (d) Indebtedness that
is such by virtue of clause (f) of the definition thereof, but only to
the extent that the obligations Guaranteed are obligations that would
constitute Indebtedness for Money Borrowed.
-15-
<PAGE>
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or a Related Company
is required to contribute or has contributed within the immediately
preceding 6 years.
"Net Income" or "Net Loss" means, as applied to any Person, the net
income (or net loss) of such Person for the period in question after
giving effect to deduction of or provision for all operating expenses,
all taxes and reserves (including reserves for deferred taxes and all
other proper deductions), all determined in accordance with GAAP,
provided that there shall be excluded: (a) the net income (or net loss)
of any Person accrued prior to the date it becomes a Subsidiary of, or
is merged into or consolidated with, the Person whose Net Income is
being determined or a Subsidiary of such Person, (b) the net income (or
net loss) of any Person in which the Person whose Net Income is being
determined or any Subsidiary of such Person has an ownership interest,
except, in the case of net income, to the extent that any such income
has actually been received by such Person or such Subsidiary in the
form of cash dividends or similar distributions, (c) any restoration of
any contingency reserve, except to the extent that provision for such
reserve was made out of income during such period, (d) any net gains or
losses on the sale or other disposition, not in the ordinary course of
business, of Investments, Business Units and other capital assets,
provided that there shall also be excluded any related charges for
taxes thereon, (e) any net gain arising from the collection of the
proceeds of any insurance policy, (f) any write-up of any asset, and
(g) any other extraordinary item.
"Net Worth" of any Person means the total shareholders' equity
(including capital stock, additional paid-in capital and retained
earnings, after deducting treasury stock) which would appear as such on
a balance sheet of such Person prepared in accordance with GAAP.
"Note" means the Revolving Credit Note made by the Borrower payable
to the order of the Lender evidencing the obligation of the Borrower to
pay the aggregate unpaid principal amount of all Revolving Credit Loans
made to it by the Lender (and any promissory note or notes that may be
issued from time to time in substitution, renewal, extension,
replacement or exchange therefor, whether payable to the Lender or a
different lender, whether issued in connection with a Person becoming a
lender after the Effective Date or otherwise), substantially in the
form of Exhibit A hereto, with all blanks properly completed.
"Notice of Borrowing" has the meaning set forth in Section
2.2(a)(iii).
-16-
<PAGE>
"Notice of Conversion or Continuation" has the meaning set forth in
Section 3.3.
"Obligor" means the Borrower, each party to the Security Documents
(other than the Lender), and each other party at any time primarily or
secondarily, directly or indirectly, liable on any of the Secured
Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency.
"Permitted Holders" means any individuals who are executive
officers of the Borrower on the Agreement Date.
"Permitted Investments" means Investments in: (a) negotiable
certificates of deposit, time deposits and banker's acceptances issued
by the Lender or any Affiliate of the Lender or by any United States
bank or trust company having capital, surplus and undivided profits in
excess of $250,000,000, (b) any direct obligation of the United States
of America or any agency or instrumentality thereof which has a
remaining maturity at the time of purchase of not more than one year
and repurchase agreements relating to the same, (c) sales on credit in
the ordinary course of business on terms customary in the industry, (d)
notes, accepted in the ordinary course of business, evidencing overdue
accounts receivable arising in the ordinary course of business, and (e)
the "Buyer Note" delivered by the Receivables Purchaser to the Borrower
under the Receivables Purchase Agreement.
"Permitted Liens" means: (a) Liens securing taxes, assessments and
other governmental charges or levies (excluding any Lien imposed
pursuant to any of the provisions of ERISA) or the claims of
materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of busi-
ness, but (i) in all cases, only if payment shall not at the time be
required to be made in accordance with Section 8.4, and (ii) in the
case of warehousemen or landlords controlling locations where Inventory
is located, only if such liens have been waived or subordinated to the
Security Interest in a manner satisfactory to the Lender; (b) Liens of
the Lender arising under this Agreement and the other Loan Documents;
(c) Liens arising out of or resulting from any judgment or award, the
time for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Borrower is fully protected by
insurance or in respect of which the Borrower shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or proceeding
for review shall have been secured, and as to
-17-
<PAGE>
which appropriate reserves have been established on the books of the
Borrower; and (d) Liens on accounts receivable and other "Trust Assets"
(as defined in the Intercreditor Agreement re Receivables) securing
Indebtedness under the Receivables Purchase Agreement, provided the
Person holding such Lien has entered into an intercreditor agreement
with the Lender, in form acceptable to the Lender, subordinating any
Lien such Person may have in proceeds from the liquidation of Inventory
to the Lender's Lien therein.
"Person" means an individual, corporation, partnership, assoc-
iation, trust or unincorporated organization or a government or any
agency or political subdivision thereof.
"Prime Rate" means during the period from the Effective Date
through the last day of the month in which the Effective Date falls,
the per annum rate of interest publicly announced by the Lender at its
principal office as its "prime rate" as in effect on the Effective
Date, and thereafter during each succeeding calendar month, means such
"prime rate" as in effect on the last Business Day of the immediately
preceding calendar month. Any change in an interest rate resulting
from a change in the Prime Rate shall become effective as of 12:01 a.m.
on the first day of the month following the month in which such change
was announced. The Prime Rate is a reference used by the Lender in
determining interest rates on certain loans and is not intended to be
the lowest rate of interest charged on any extension of credit to any
debtor.
"Prime Rate Loan" means a Revolving Credit loan bearing interest at
the time in question determined with reference to the Prime Rate.
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement, dated as of July 25, 1996, among the Borrower, ICPPC, GHC
and the Receivables Purchaser.
"Receivables Purchase Documents" means the Receivables Purchase
Agreement and the other documents executed in connection therewith.
"Receivables Purchaser" means International Comfort Products
Receivables Company, L.P., a Tennessee limited partnership, and its
successors and assigns.
-18-
<PAGE>
"Receivables Trustee" means LaSalle National Bank, a national
banking association, in its capacity as trustee under the Pooling
Agreement (as defined in the Receivables Purchase Agreement), and its
successor and assigns.
"Related Company" means, as to any Person, any (a) corporation
which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as such Person, (b) part-
nership or other trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the Code) with
such Person, or (c) member of the same affiliated service group (within
the meaning of Section 414(m) of the Code) as such Person or any
corporation described in clause (a) above or any partnership, trade or
business described in clause (b) above.
"Revolving Credit Facility" means (a) until Revolving Credit
Facility B becomes effective in accordance with Section 2.6(b),
$15,000,000, (b) thereafter, until Revolving Credit Facility C becomes
effective in accordance with Section 2.6(c), $30,000,000, and (c)
thereafter, $45,000,000.
"Revolving Credit Facility A" means the facility for up to
$15,000,000 in principal amount of Revolving Credit Loans.
"Revolving Credit Facility B" means the facility for up to
$15,000,000 in principal amount of Revolving Credit Loans in addition
to the Revolving Credit Loans available under Revolving Credit
Facility A.
"Revolving Credit Facility C" means the facility for up to
$15,000,000 in principal amount of Revolving Credit Loans in addition
to the Revolving Credit Loans available under Revolving Credit
Facility A and Revolving Credit Facility B.
"Revolving Credit Loans" means loans made to the Borrower pursuant
to Section 2.1.
"Schedule of Inventory" means a schedule delivered by the Borrower
to the Lender pursuant to the provisions of Section 7.10(a).
-19-
<PAGE>
"Secured Obligations" means, in each case whether now in existence
or hereafter arising, (a) the principal of and interest and premium, if
any, on the Loans, (b) all reimbursement and other obligations relating
to Letters of Credit, and (c) all indebtedness, liabilities,
obligations, overdrafts, covenants and duties of the Borrower (i) to
the Lender of every kind, nature and description, direct or indirect,
absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any note
and whether or not for the payment of money under or in respect of this
Agreement, the Note or any of the other Loan Documents and (ii) to any
Affiliate of the Lender arising directly as a result of any service to
(or by or on behalf of) or relationship with the Borrower or the Lender
in connection with the Loans or this Agreement, including without
limitation any operating or checking account relationships.
"Security Documents" means each of (a) the Financing Statements,
(b) the Assignment of Receivables Securitization Proceeds, and (c) each
other writing executed and delivered by any Person securing the Secured
Obligations or evidencing such security.
"Security Interest" means the Liens of the Lender on and in the
Collateral effected hereby or by any of the Security Documents or
pursuant to the terms hereof or thereof.
"Senior Secured Notes" means the 9-3/4% Senior Secured Notes due
2000 issued by the Borrower pursuant to the Senior Secured Notes
Indenture in the original principal amount of $140,000,000.
"Senior Secured Notes Documents" means the Senior Secured Notes
Indenture and the other documents executed in connection therewith.
"Senior Secured Notes Indenture" means the Indenture, dated as of
March 1, 1993, between the Borrower and the Indenture Trustee pursuant
to which the Borrower issued the Senior Secured Notes.
"Subordinated Indebtedness" means any Indebtedness for Money
Borrowed of the Borrower which is subordinated to the Secured
Obligations on terms and conditions acceptable to the Lender in its
sole discretion.
-20-
<PAGE>
"Subsidiary" when used to determine the relationship of a Person to
another Person, means a Person of which an aggregate of 50% or more of
the stock of any class or classes or 50% or more of other ownership
interests is owned of record or beneficially by such other Person or by
one or more Subsidiaries of such other Person or by such other Person
and one or more Subsidiaries of such Person, (i) if the holders of such
stock or other ownership interests (A) are ordinarily, in the absence
of contingencies, entitled to vote for the election of a majority of
the directors (or other individuals performing similar functions) of
such Person, even though the right so to vote has been suspended by the
happening of such a contingency, or (B) are entitled, as such holders,
to vote for the election of a majority of the directors (or individuals
performing similar functions) of such Person, whether or not the right
so to vote exists by reason of the happening of a contingency, or (ii)
in the case of such other ownership interests, if such ownership
interests constitute a majority voting interest.
"Tangible Net Worth" means, as applied to any Person, the Net Worth
of such Person at the time in question, after deducting therefrom all
accounts receivable and other obligations due from Affiliates (provided
that, to and including December 30, 1997, up to $10,000,000 of
receivables due from International Comfort Products Corporation
(Canada) may be included in "Tangible Net Worth") and the amount of all
intangible items reflected therein, including all unamortized debt
discount and expense, unamortized research and development expense,
unamortized deferred charges, goodwill, Intellectual Property,
unamortized excess cost of investment in Subsidiaries over equity at
dates of acquisition, and all similar items which should properly be
treated as intangibles in accordance with GAAP.
"Termination Date" means the earlier of July 23, 1999 or such later
date to which the termination of the Revolving Credit Facility shall be
extended pursuant to Section 2.5.
"Termination Event" means (a) a "Reportable Event" as defined in
Section 4043(b) of ERISA, but excluding any such event as to which the
provision for 30 days' notice to the PBGC is waived under applicable
regulations, (b) the filing of a notice of intent to terminate a
Benefit Plan or the treatment of a Benefit Plan amendment as a
termination under Section 4041 of ERISA, or (c) the institution of
proceedings to terminate a Benefit Plan by the PBGC under Section 4042
of ERISA (other than a standard termination under ERISA Section
4041(b)) or the appointment of a trustee to administer any Benefit
Plan.
-21-
<PAGE>
"Type" means, with respect to a Loan, its classification as a LIBOR
Loan or Prime Rate Loan.
"UCC" means the Uniform Commercial Code as in effect from time to
time in the State of Georgia.
"Unfunded Vested Accrued Benefits" means, with respect to any
Benefit Plan at any time, the amount (if any) by which (a) the present
value of all vested nonforfeitable benefits under such Benefit Plan
exceeds (b) the fair market value of all Benefit Plan assets allocable
to such benefits, as determined using such reasonable actuarial
assumptions and methods as are specified in the Schedule B (Actuarial
Information) to the most recent Annual Report (Form 5500) filed with
respect to such Benefit Plan.
Section 1.2 Other Referential Provisions.
(a) All terms in this Agreement, the Exhibits and Schedules
hereto shall have the same defined meanings when used in any other Loan
Documents, unless the context shall require otherwise.
(b) Except as otherwise expressly provided herein, all
accounting terms not specifically defined or specified herein shall
have the meanings generally attributed to such terms under GAAP
including, without limitation, applicable statements and
interpretations issued by the Financial Accounting Standards Board and
bulletins, opinions, interpretations and statements issued by the
American Institute of Certified Public Accountants or its committees.
(c) All personal pronouns used in this Agreement, whether used
in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural shall
include the singular.
(d) 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 provisions of this
Agreement.
-22-
<PAGE>
(e) Titles of Articles and Sections in this Agreement are for
convenience only, do not constitute part of this Agreement and neither
limit nor amplify the provisions of this Agreement, and all references
in this Agreement to Articles, Sections, Subsections, paragraphs,
clauses, subclauses, Schedules or Exhibits shall refer to the corres-
ponding Article, Section, Subsection, paragraph, clause or subclause
of, or Schedule or Exhibit attached to, this Agreement, unless specific
reference is made to the articles, sections or other subdivisions or
divisions of , or to schedules or exhibits to, another document or
instrument.
(f) Each definition of a document in this Agreement shall
include such document as amended, modified, supplemented or restated
from time to time in accordance with the terms of this Agreement.
(g) Except where specifically restricted, reference to a party
to a Loan Document includes that party and its successors and assigns
permitted hereunder or under such Loan Document.
(h) Unless otherwise specifically stated, whenever a time is
referred to in this Agreement or in any other Loan Document, such time
shall be the local time in the city in which the principal office of
Lender is located.
(i) Whenever the phrase "to the knowledge of the Borrower" or
words of similar import relating to the knowledge of the Borrower are
used herein, such phrase shall mean and refer to (i) the actual
knowledge of the President or chief financial officer or (ii) the
knowledge that such officers would have obtained if they had engaged in
good faith in the diligent performance of their duties, including the
making of such reasonable specific inquiries as may be necessary of the
appropriate persons in a good faith attempt to ascertain the accuracy
of the matter to which such phrase relates.
(j) The terms accounts, chattel paper, documents, equipment,
instruments, general intangibles and inventory, as and when used
(without being capitalized) in this Agreement or the Security
Documents, shall have the meanings given those terms in the UCC.
Section 1.3 Exhibits and Schedules. All Exhibits and Schedules
attached hereto are by reference made a part hereof.
-23-
<PAGE>
ARTICLE 2 - REVOLVING CREDIT FACILITY
Section 2.1 Revolving Credit Loans. Upon the terms and subject
to the conditions of, and in reliance upon the representations and
warranties made under, this Agreement, the Lender shall make Revolving
Credit Loans to the Borrower from time to time from the Effective Date
to the Termination Date, as requested by the Borrower in accordance
with the terms of Section 2.2, in an aggregate principal amount
outstanding not to exceed at any time the lesser of (a) the Revolving
Credit Facility minus the Letter of Credit Reserve and (b) the
Borrowing Base. It is expressly understood and agreed that the Lender
may and at present intends to use the lesser of the amounts referred to
in the foregoing subclauses (a) and (b) as a maximum ceiling on
Revolving Credit Loans; provided, however, that it is agreed that
should Revolving Credit Loans exceed the ceiling so determined or any
other limitation set forth in this Agreement, such Revolving Credit
Loans shall nevertheless constitute Secured Obligations and, as such,
shall be entitled to all benefits thereof and security therefor. The
principal amount of any Revolving Credit Loan which is repaid may be
reborrowed by the Borrower in accordance with the terms of this Section
2.1. The Lender is hereby authorized to record each repayment of
principal of the Revolving Credit Loans in its books and records, such
books and records constituting prima facie evidence of the accuracy of
the information contained therein.
Section 2.2 Manner of Borrowing Revolving Credit Loans.
Borrowings of the Revolving Credit Loans shall be made as follows:
(a) Requests for Borrowing.
(i) Prime Rate Loans. A request for the borrowing of a
Prime Rate Revolving Credit Loan shall be made, or shall be
deemed to be made, in the following manner:
(A)
the Borrower may request a Prime Rate Revolving Credit Loan by
notifying the Lender, before 12:00 noon (Eastern time) on the
proposed borrowing date (10:00 a.m. (Eastern time) in the case
of the last Business Day of each calendar month), of its
intention to borrow, specifying the effective date and amount
of such proposed Prime Rate Revolving Credit Loan;
-24-
<PAGE>
(B)
whenever a check is presented to the Lender for payment against
the Disbursement Account in an amount greater than the then
available balance in such account, such presentation shall be
deemed to be a request for a Prime Rate Revolving Credit Loan
on the date of such notice in an amount equal to the excess of
such check over such available balance, and such request shall
be irrevocable;
(C)
unless payment is otherwise made by the Borrower, the becoming
due of any amount required to be paid under this Agreement or
the Note as interest shall be deemed to be a request for a
Prime Rate Revolving Credit Loan on the due date in the amount
required to pay such interest, and such request shall be
irrevocable;
(D)
unless payment is otherwise made by the Borrower, the maturity
of any Secured Obligation required to be paid shall be deemed
to be a request for a Prime Rate Revolving Credit Loan on the
due date in the amount required to pay such Secured Obligation,
and such request shall be irrevocable; and
(E)
whenever a drawing is made under a Letter of Credit and the
Borrower fails to reimburse the Lender therefor, such failure
to reimburse shall be deemed to be a request for a Prime Rate
Revolving Credit Loan on the date such notification is received
in the amount so unreimbursed, and such request shall be
irrevocable.
(ii) LIBOR Loans. The Borrower may request a LIBOR Loan
by notifying the Lender (which notice shall be irrevocable) not
later than 12:00 noon (Eastern time) on the date two Business
Days before the day on which the requested LIBOR Loan is to be
made, specifying the effective date and amount of such LIBOR
Loan and the duration of the applicable Interest Period;
provided that, notwithstanding anything to the contrary
contained in this Agreement, if an Event of Default exists the
Borrower shall not have the right to request LIBOR Loans.
(iii) Notice of Borrowing. Any request for a Prime Rate
Loan under Section 2.2(a)(i)(A) or a LIBOR Loan under Section
2.2(a)(ii) (a "Notice of Borrowing") shall be made by telephone
or in writing (including telecopy) and, in the case of any
-25-
<PAGE>
telephonic notice, shall be immediately followed by a written
confirmation thereof in a form acceptable to the Lender,
provided that the failure to provide written confirmation shall
not invalidate any telephonic notice and, if such written
confirmation differs in any respect from the action taken by
the Lender, the records of the Lender shall control absent
manifest error.
(b) Disbursement of Loans. The Borrower hereby irrevocably
authorizes the Lender to disburse the proceeds of each borrowing
requested, or deemed to be requested, pursuant to this Section 2.2 as
follows: (i) the proceeds of each borrowing requested under Section
2.2(a)(i)(A) or (B) or Section 2.2(ii) shall be disbursed by the Lender
in lawful money of the United States of America in immediately
available funds, (A) in the case of the initial borrowing, in
accordance with the terms of the written instructions from the Borrower
to the Lender, and (B) in the case of each subsequent borrowing, by
credit to the Disbursement Account or to such other account as may be
agreed upon by the Borrower and the Lender from time to time; and (ii)
the proceeds of each borrowing requested under Section 2.2(a)(i)(C),
(D) or (E) shall be disbursed by the Lender by way of direct payment of
the relevant principal, interest or other Secured Obligation, as the
case may be.
Section 2.3 Repayment of Revolving Credit Loans. The Revolving
Credit Loans will be repaid as follows: (a) whether or not any Default
or Event of Default has occurred, the outstanding principal amount of
all the Revolving Credit Loans is due and payable, and shall be repaid
by the Borrower in full together with accrued and unpaid interest on
the amount repaid to the date of repayment, on the Termination Date;
(b) if at any time the aggregate unpaid principal amount of the
Revolving Credit Loans then outstanding exceeds the lesser of the
amounts referred to in clauses (a) and (b) of Section 2.1, the Borrower
shall repay the Revolving Credit Loans in an amount sufficient to
reduce the aggregate unpaid principal amount of such Loans by an amount
equal to such excess, together with accrued and unpaid interest on the
amount repaid to the date of repayment; and (c) the Borrower hereby
instructs the Lender to repay the Revolving Credit Loans outstanding on
any day in an amount equal to the amount received by the Lender on such
day pursuant to Section 7.1(b).
Section 2.4 Revolving Credit Note. The Revolving Credit Loans
and the obligation of the Borrower to repay such Loans shall also be
evidenced by a single Revolving Credit Note payable to the order of the
Lender. Such Note shall be dated the Effective Date and be duly and
validly executed and delivered by the Borrower.
-26-
<PAGE>
Section 2.5 Extension of Facility. The Termination Date shall
be automatically extended for successive one-year periods unless either
the Lender or the Borrower provides to the other written notice of
termination not less than 60 days prior to the then effective
Termination Date.
Section 2.6 Effectiveness of Revolving Credit Facility.
(a) Revolving Credit Facility A shall be effective upon the
satisfaction of the conditions precedent set forth in Sections 4.1 and
4.2.
(b) Revolving Credit Facility B shall be effective upon the
satisfaction of the conditions precedent set forth in Sections 4.2 and
4.3. The Borrower acknowledges that the Lender has not extended a
commitment to activate Revolving Credit Facility B and that the Lender
has no obligation to do so, or to make any Loans under Revolving Credit
Facility B, unless and until all of the conditions precedent set forth
in Sections 4.2 and 4.3 are satisfied, including the Lender's written
election at such time to accept the Revolving Credit Facility B Closing
Fee (as defined in Section 3.2(d)) and activate Revolving Credit
Facility B.
(c) Revolving Credit Facility C shall be effective upon the
satisfaction of the conditions precedent set forth in Sections 4.2 and
4.4. The Borrower acknowledges that the Lender has not extended a
commitment to activate Revolving Credit Facility C and that the Lender
has no obligation to do so, or to make any Loans under Revolving Credit
Facility C, unless and until all of the conditions precedent set forth
in Sections 4.2 and 4.4 are satisfied, including the Lender's written
election at such time to accept the Revolving Credit Facility C Closing
Fee (as defined in Section 3.2(d)) and activate Revolving Credit
Facility C.
Section 2.7 Letters of Credit.
(a) Upon the request of the Borrower from time to time, the
Lender shall, in accordance with the provisions of this Section 2.7,
issue one or more Letters of Credit up to an aggregate amount available
to be drawn (plus the aggregate amount of unreimbursed drawings under
all Letters of Credit) at any time not to exceed the Letter of Credit
Facility; provided, that (1) all Letter of Credit Documents in
connection with each Letter of Credit shall be satisfactory to the
Lender in its sole discretion, (2) no
-27-
<PAGE>
Letter of Credit shall be issued if, after issuance thereof, the sum of
the aggregate principal amount of Revolving Credit Loans outstanding,
plus the aggregate amount available to be drawn under all Letters of
Credit, plus the aggregate amount of any unreimbursed drawings under
Letters of Credit, would exceed the lesser of (A) the Revolving Credit
Facility and (B) the Borrowing Base plus the Letter of Credit Reserve,
(3) each Letter of Credit shall be a documentary letter of credit
issued to or for the benefit of a supplier of the Borrower in
connection with the purchase of Inventory or a standby letter of credit
issued to a beneficiary and for a purpose acceptable to the Lender in
its sole discretion, and (4) no Letter of Credit shall have an initial
term longer than one year or an expiration date later than the
Termination Date.
(b) The Borrower acknowledges and agrees that if and to the
extent the Borrower shall fail to reimburse the Lender under any Letter
of Credit Documents, the Borrower hereby irrevocably requests and
directs the Lender, subject to and in accordance with the provisions of
Section 2.1, to make payment on its behalf and the amount of any such
payment by the Lender shall constitute a Revolving Credit Loan made at
the time of such payment.
(c) The issuance and negotiation of Letters of Credit shall be
governed by the Uniform Customs and Practices for Documentary Credits
(1993 Revision), as published in the International Chamber of Commerce
Uniform Customs and Practices, Publication No. 500 or such other
policies and practices as may be followed by the Lender with respect to
similar letters of credit at the time.
ARTICLE 3 - GENERAL LOAN PROVISIONS
Section 3.1 Interest.
(a) (i) Prime Rate Loans. The Borrower will pay interest on
the unpaid principal amount of each Prime Rate Loan for each
day from the day such Loan was made until such Loan is paid
(whether at maturity, by reason of acceleration or otherwise),
or is converted to a Loan of a different Type, at a rate per
annum equal to the Prime Rate, payable monthly in arrears on
each Interest Payment Date and on the Termination Date.
(ii) LIBOR Loans. The Borrower will pay interest on the
unpaid principal amount of each LIBOR Loan for the Interest
Period applicable thereto at a rate per annum equal to the sum
-28-
<PAGE>
the Applicable Margin plus LIBOR, payable in arrears on each
Interest Payment Date, on the last day of such Interest Period,
and when such LIBOR Loan is paid (whether at maturity, by
reason of acceleration or otherwise). As used herein,
"Applicable Margin" means, on any date of determination, two
percent (2.0%) per annum, as adjusted in accordance with the
pricing matrix set forth below based upon the ratio of Funded
Indebtedness to EBITDA for the Borrower and its Consolidated
Subsidiaries (excluding GHC):
Funded Indebtedness to
EBITDA Ratio Applicable Margin
Greater than 3.5 2.0%
Greater than 3.0 but less than 3.5 1.75%
3.0 or less 1.50%
Adjustments to the Applicable Margin shall be effective as of
the first day of the calendar month after the Lender's receipt
of the Borrower's quarterly financial statements (commencing
with the financial statements for the fiscal quarter ending on
June 30, 1997) in conformance with Section 9.1(b), together
with the officer's certificate described in Section 9.3 setting
forth the calculation of the above-referenced ratio. In the
event the Borrower fails to timely provide the financial
statements and officer's certificate referred to above, and
without prejudice to any additional rights under Section 11.2,
the maximum Applicable Margin shall apply to all LIBOR Loans
until the first day of the calendar month after the Lender's
receipt of such financial statements and certificate.
(b) The Borrower shall pay interest on the unpaid principal
amount of each Secured Obligation (other than a Loan) for each day from
the day the Borrower receives notice that such Secured Obligation is
due and payable until such Secured Obligation is paid at the rate per
annum applicable to Prime Rate Loans, payable on demand.
(c) From and after the occurrence of an Event of Default, the
unpaid principal amount of each Secured Obligation shall bear interest
until paid in full (or, if earlier, until such Event of Default is
cured or waived in writing by the Lender) at a rate per annum equal to
the Default Margin plus the rate otherwise in effect under Section
3.1(a) or
-29-
<PAGE>
(b), payable on demand. The interest rate provided for in this Section
3.1(c) shall to the extent permitted by applicable law apply to and
accrue on the amount of any judgment entered with respect to any
Secured Obligation and shall continue to accrue at such rate during any
proceeding described in Section 11.1(g) or (h).
(d) The interest rates provided for in Sections 3.1(a), (b) and
(c) shall be computed on the basis of a year of 360 days and the actual
number of days elapsed.
(e) It is not intended by the Lender, and nothing contained in
this Agreement or the Note shall be deemed, to establish or require the
payment of a rate of interest in excess of the maximum rate permitted
by applicable law (the "Maximum Rate"). If, in any month, the
Effective Interest Rate, absent such limitation, would have exceeded
the Maximum Rate, then the Effective Interest Rate for that month shall
be the Maximum Rate, and if, in future months, the Effective Interest
Rate would otherwise be less than the Maximum Rate, then the Effective
Interest Rate shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which
would have been paid if the same had not been limited by the Maximum
Rate. In this connection, in the event that, upon payment in full of
the Secured Obligations, the total amount of interest paid or accrued
under the terms of this Agreement is less than the total amount of
interest which would have been paid or accrued if the Effective
Interest Rate had at all times been in effect, then the Borrower shall,
to the extent permitted by applicable law, pay to the Lender an amount
equal to the difference between (i) the lesser of (A) the amount of
interest which would have been charged if the Maximum Rate had, at all
times, been in effect and (B) the amount of interest which would have
accrued had the Effective Interest Rate, at all times, been in effect,
and (ii) the amount of interest actually paid or accrued under this
Agreement. In the event the Lender receives, collects or applies as
interest any sum in excess of the Maximum Rate, such excess amount
shall be applied to the reduction of the principal balance of the
applicable Secured Obligation, and, if no such principal is then
outstanding, such excess or part thereof remaining shall be paid to the
Borrower.
Section 3.2 Fees.
(a) Commitment Fee. In connection with and as consideration for
the Lender's commitment hereunder, subject to the terms hereof, to lend
to the Borrower under the Revolving Credit Facility, the Borrower shall
pay a fee to the Lender, from the Effective Date until the Termination
Date, in an amount equal to, (i) in the event Revolving Credit
Facility B
-30-
<PAGE>
and Revolving Credit Facility C are not effective in accordance with
Section 2.6, 3/8% per annum of the average daily unused portion of
Revolving Credit Facility A, (ii) in the event Revolving Credit
Facility B (but not Revolving Credit Facility C) is effective in
accordance with Section 2.6, 3/8% per annum of the average daily unused
portion of Revolving Credit Facility A and 1/4% per annum of the average
daily unused portion of Revolving Credit Facility B, and (iii) in the
event Revolving Credit Facility B and Revolving Credit Facility C are
both effective in accordance with Section 2.6, 3/8% per annum of the
average daily unused portion of Revolving Credit Facility A and 1/4% per
annum of the average daily unused portion of Revolving Credit
Facility B and Revolving Credit Facility C. In calculating such fees,
all outstanding Revolving Credit Loans and Letter of Credit obligations
shall be allocated first to Revolving Credit Facility A. All such fees
shall be payable monthly in arrears on the first day of each month.
(b) Closing Fee. On the Effective Date, the Borrower shall pay
to the Lender a closing fee in the amount of $25,000 in connection with
the establishment of the Revolving Credit Facility and in consideration
of the making of Loans under this Agreement and in order to compensate
the Lender for the costs associated with structuring, processing,
approving and closing the Revolving Credit Facility and the Loans, but
excluding expenses for which the Borrower has agreed elsewhere in this
Agreement to reimburse the Lender.
(c) Administration Fee. For services performed by the Lender in
connection with its continuing administration hereof, the Borrower
shall pay to the Lender a fee of $3,125 per quarter, payable quarterly
in advance on the Effective Date and on the first day of each October,
January, April and July thereafter, and continuing so long as any Loan
shall remain outstanding or the Revolving Credit Facility shall not
have been terminated.
(d) Activation Fees.
(i) On the date on which Revolving Credit Facility B becomes
effective in accordance with Section 2.6, the Borrower
shall pay to the Lender a closing fee in the amount of
$25,000 (the "Revolving Credit Facility B Closing Fee")
in connection with the establishment of Revolving
Credit Facility B and in consideration of the making of
Loans thereunder and in order to compensate the
-31-
<PAGE>
Lender for the costs associated with structuring, processing,
approving and closing Revolving Credit Facility B and the Loans
thereunder, but excluding expenses for which the Borrower has
agreed elsewhere in this Agreement to reimburse the Lender.
(ii) On the date on which Revolving Credit Facility C
becomes effective in accordance with Section 2.6(c),
the Borrower shall pay to the Lender a closing fee in
the amount of $25,000 (the "Revolving Credit Facility C
Closing Fee") in connection with the establishment of
Revolving Credit Facility C and in consideration of the
making of Loans thereunder and in order to compensate
the Lender for the costs associated with structuring,
processing, approving and closing Revolving Credit
Facility C and the Loans thereunder, but excluding
expenses for which the Borrower has agreed elsewhere in
this Agreement to reimburse the Lender.
(e) Letter of Credit Fees. As consideration for the issuance by
the Lender of a Letter of Credit, the Borrower agrees to pay to the
Lender all applicable Letter of Credit Fees. Such fees shall be
payable to the Lender in advance on the date of issuance of each Letter
of Credit and shall be calculated according to the face amount of such
Letter of Credit based on its stated term.
(f) General. All fees shall be fully earned by the Lender when
due and payable and, except as otherwise set forth herein, shall not be
subject to refund or rebate. All fees are for compensation for
services and are not, and shall not be deemed to be, interest or a
charge for the use of money.
Section 3.3 Notice of Conversion or Continuation of Loans.
Whenever the Borrower desires, subject to the provisions of Section
3.4, to convert an outstanding Loan into a Loan of a different Type
provided for in this Agreement or to continue all or a portion of an
outstanding LIBOR Loan for a subsequent Interest Period, the Borrower
shall notify the Lender (which notice shall be irrevocable) by
telephone or in writing (including telecopy) not later than 12:00 noon
(Eastern time) on the date
-32-
<PAGE>
one Business Day before the day on which a proposed conversion of a
LIBOR Loan into a Prime Rate Loan is to be effective (which effective
date shall be the last day of the Interest Period applicable to such
LIBOR Loan) and two Business Days before the day on which a proposed
conversion of a Prime Rate Loan into, or continuation of a LIBOR Loan
as, a LIBOR Loan is to be effective (and such effective date of any
continuation shall be the last day of the Interest Period for such
LIBOR Loan). Each such notice (a "Notice of Conversion or
Continuation") shall (a) identify the Loan to be converted or
continued, including the Type thereof, the aggregate outstanding
principal balance thereof and, in the case of a LIBOR Loan, the last
day of the Interest Period therefor, (b) specify the effective date of
such conversion or continuation, (c) specify the principal amount of
such Loan to be converted or continued and, if converted, the Type or
Types of Loan into which conversion of such principal amount or
specified portions thereof is to be made, and (d) in the case of any
conversion into or continuation as a LIBOR Loan, the Interest Period to
be applicable thereto, and, in the case of any telephonic notice, shall
be immediately followed by a written confirmation thereof by the
Borrower in a form acceptable to the Lender, provided that the failure
to provide a written confirmation shall not invalidate any telephonic
notice and, if such written confirmation differs in any respect from
the action taken by the Lender, the records of the Lender shall control
absent manifest error. In the event the Borrower fails to provide
timely notice of the conversion or continuation of any LIBOR Loan, such
Loan shall automatically convert to a Prime Rate Loan as of the last
day of the Interest Period applicable to such LIBOR Loan.
Section 3.4. Conversion or Continuation. Provided that no Event
of Default exists (but subject to the provisions of Sections 3.5 and
3.6), the Borrower may request that all or any part of any outstanding
Loan of one Type (a) be converted into a Loan or Loans of any other
Type provided for in this Agreement, or (b) be continued as a Loan or
Loans of the same Type, in the same aggregate principal amount, on any
Business Day (which, in the case of a conversion or continuation of a
LIBOR Loan, shall be the last day of the Interest Period applicable to
such LIBOR Loan), upon notice (which notice shall be irrevocable) given
in accordance with Section 3.3. Notwithstanding anything to the
contrary contained in this Agreement, if an Event of Default exists (i)
the Borrower shall not have the right to convert Loans into, or
continue Loans as, LIBOR Loans and (ii) all outstanding LIBOR Loans
shall, at the Lender's election, be converted to Prime Rate Loans as of
the date of the occurrence of such Event of Default.
Section 3.5 Duration of Interest Periods; Maximum Number of
LIBOR Loans; Minimum Increments.
-33-
<PAGE>
(a) Subject to the provisions of the definition "Interest
Period", the duration of each Interest Period applicable to a LIBOR
Loan shall be as specified in the applicable Notice of Borrowing or
Notice of Conversion or Continuation. The Borrower may elect a
subsequent Interest Period to be applicable to any LIBOR Loan by giving
a Notice of Conversion or Continuation with respect to such Loan in
accordance with Section 3.3.
(b) If the Lender does not receive a Notice of Conversion or
Continuation in accordance with Section 3.3 with respect to the
continuation of a LIBOR Loan within the applicable time limits
specified in Section 3.3, or if, when such notice must be given, an
Event of Default exists or such Type of Loan is not available, the
Borrower shall be deemed to have elected to convert such LIBOR Loan in
whole into a Prime Rate Loan on the last day of the Interest Period
therefor.
(c) Notwithstanding the foregoing, the Borrower may not select
an Interest Period that would end, but for the provisions of the
definition "Interest Period," after the Termination Date.
(d) In no event shall there be more than five LIBOR Loans
outstanding hereunder at any time. For the purpose of this subsection
(d), each LIBOR Loan having a distinct Interest Period shall be deemed
to be a separate Loan hereunder.
(e) Each LIBOR Loan shall be in a minimum amount of $1,000,000.
Section 3.6 Changed Circumstances.
(a) If the introduction of or any change in or in the
interpretation of (in each case, after the date hereof) any law or
regulation makes it unlawful, or any Governmental Authority asserts,
after the date hereof, that it is unlawful, for the Lender to perform
its obligations hereunder to make or maintain LIBOR Loans, the Lender
shall notify the Borrower of such event, and the right of the Borrower
to select LIBOR Loans for any subsequent Interest Period or in
connection with any subsequent conversion of any Loan shall be
suspended until the Lender shall notify the Borrower that the
circumstances causing such suspension no longer exist, and the Borrower
shall forthwith prepay in full all LIBOR Loans then outstanding, and
shall pay all interest accrued thereon through the date of such
prepayment; provided, that if the date of such repayment is not the
last day of the Interest Period applicable to such LIBOR Loans, the
Borrower shall also pay any amount due pursuant to Section 3.7.
-34-
<PAGE>
(b) If the Lender shall, prior to the disbursement of any
requested Revolving Credit Loan or the effective date of any conversion
or continuation of an existing Loan to be made or continued as or
converted into a LIBOR Loan (each such requested Revolving Credit Loan
made and Loan to be converted or continued, a "Pending Loan"), notify
the Borrower that LIBOR will not adequately reflect the cost to the
Lender of making or funding such Pending Loan as a LIBOR Loan or that
the Interbank Offered Rate is not determinable from any interest rate
reporting service of recognized standing, then the right of the
Borrower to select LIBOR Loans for such Pending Loan, any subsequent
Revolving Credit Loan, or in connection with any subsequent conversion
or continuation of any Loan, shall be suspended until the Lender shall
notify the Borrower that the circumstances causing such suspension no
longer exist, and each Loan comprising each Pending Loan and each such
subsequent Loan requested to be made, continued or converted shall be
made or continued as or converted into a Prime Rate Loan.
Section 3.7 Payments Not at End of Interest Period; Failure to
Borrow. If (a) for any reason any payment of principal with respect to
any LIBOR Loan is made on any day prior to the last day of the Interest
Period applicable to such LIBOR Loan, (b) any LIBOR Loan is converted
to a Prime Rate Loan under Section 3.4 as a result of the occurrence of
an Event of Default, or (c) after having given a Notice of Borrowing
with respect to any Loan to be comprised of LIBOR Loans or a Notice of
Conversion or Continuation with respect to any Loan to be continued as
or converted into a LIBOR Loan, such Loan is not made or is not
continued as or converted into a LIBOR Loan due to the Borrower's
failure to borrow or to fulfill the applicable conditions set forth in
Article 4, the Borrower shall pay to the Lender, in addition to any
other amounts that may be due under this Agreement, an amount (if a
positive number) computed pursuant to the following formula:
L = (R - T) x P x D
360
L = amount payable
R =
interest rate applicable to the LIBOR Loan prepaid, converted
or unborrowed
T =
effective interest rate per annum at which any readily
marketable bonds or other obligations of the United States,
selected at the Lender's sole discretion, maturing on or near
the last day of the then applicable or requested Interest
Period for such Loan and in approximately the same amount as
such Loan, can be purchased by the Lender on the day of such
payment of principal or failure to borrow
-35-
<PAGE>
P =
the amount of principal paid or converted or the amount of the
requested Loan
D =
the number of days remaining in the Interest Period as of the
date of such payment or conversion or the number of days in the
requested Interest Period
The Borrower shall pay such amount upon presentation by the Lender of a
statement setting forth the amount and the Lender's calculation thereof
pursuant hereto, which statement shall be deemed true and correct
absent manifest error.
Section 3.8 Increased Costs and Reduced Returns. The Borrower
agrees that if any law now or hereafter in effect and whether or not
presently applicable to the Lender or any request, guideline or
directive of any Governmental Authority (whether or not having the
force of law and whether or not failure to comply therewith would be
unlawful) or the interpretation or administration thereof by any
Governmental Authority , shall either (a)(i) impose, affect, modify or
deem applicable any reserve, special deposit, capital maintenance or
similar requirement against any Loan, (ii) impose on the Lender any
other condition regarding any Loan, this Agreement, the Note or the
facilities provided hereunder, or (iii) result in any requirement
regarding capital adequacy (including any risk-based capital
guidelines) affecting the Lender being imposed or modified or deemed
applicable to the Lender, or (b) subject the Lender to any taxes on the
recording, registration, notarization or other formalization of the
Loans or the Note, and the result of any event referred to in clause
(a) or (b) above shall be to increase the cost to the Lender of making,
funding or maintaining any Loan or to reduce the amount of any sum
receivable by the Lender or the Lender's rate of return on capital with
respect to any Loan to a level below that which the Lender could have
achieved but for such imposition, modification or deemed applicability
(taking into consideration the Lender's policies with respect to
capital adequacy) by an amount deemed by Lender (in the exercise of its
discretion) to be material, then, upon demand by the Lender, the
Borrower shall immediately pay to the Lender additional amounts which
shall be sufficient to compensate the Lender for such increased cost,
tax or reduced rate of return. A certificate of the Lender to the
Borrower claiming compensation under this Section 3.8 shall constitute
prima facie evidence of the accuracy of the information contained
therein. Such certificate shall set forth the nature of the occurrence
giving rise to such compensation, the additional amount or amounts to
be paid to it hereunder, and the method by which such amounts were
determined. In determining such amount, the Lender may use any
reasonable averaging and attribution methods.
-36-
<PAGE>
Section 3.9 Manner of Payment. (a) Each payment (including
prepayments) by the Borrower on account of the principal of or interest
on the Loans or of any fee or other amounts payable to the Lender under
this Agreement or the Note shall be made not later than 1:30 p.m. on
the date specified for payment under this Agreement (or if such day is
not a Business Day, the next succeeding Business Day) to the Lender at
the Lender's Office, in Dollars, in immediately available funds and
shall be made without any setoff, counterclaim or deduction whatsoever.
(b) The Borrower hereby irrevocably authorizes the Lender and
each Affiliate of the Lender to charge any account of the Borrower
maintained with the Lender or such Affiliate with such amounts as may
be necessary from time to time to pay any Secured Obligations which are
not paid when due.
Section 3.10 Statements of Account. The Lender will account to
the Borrower within 30 days after the end of each calendar month with a
statement of Loans, charges and payments made pursuant to this
Agreement during such calendar month, and such account rendered by the
Lender shall be deemed an account stated as between the Borrower and
the Lender and shall be deemed final, binding and conclusive unless the
Lender is notified by the Borrower in writing to the contrary within 60
days after the date such account is delivered to the Borrower, save for
manifest error. Any such notice shall be deemed an objection only to
those items specifically objected to therein. Failure of the Lender to
render such account shall in no way affect its rights hereunder.
Section 3.11 Termination of Agreement. On the Termination Date,
the Borrower shall pay to the Lender, in same day funds, an amount
equal to the aggregate amount of all Loans outstanding on such date,
together with accrued interest thereon, all fees payable pursuant to
Section 3.2 accrued from the date last paid through the effective date
of termination, any amounts payable to the Lender pursuant to the other
provisions of this Agreement, including, without limitation, Sections
3.7, 3.8, 11.2, 12.12 and 12.13, any and all other Secured Obligations
then outstanding, and an amount equal to the Letter of Credit Reserve
to be held by the Lender as cash collateral security for the payment of
and to be applied to the payment of any amounts which may thereafter
become due with respect to any Letter of Credit, and provide the Lender
with an indemnification agreement in form and substance reasonably
satisfactory to the Lender with respect to returned and dishonored
items and such other matters as the Lender shall reasonably require.
Upon 60 days prior written notice to the Lender, the Borrower may
terminate this Agreement prior to the Termination Date in effect at
such time, upon payment of an early termination fee computed as
follows: (A) $100,000 if such termination occurs on or prior to the
first anniversary of the Effective Date, and (B) $50,000 if such
-37-
<PAGE>
termination occurs at any time thereafter other than on a Termination
Date; provided that no early termination fee shall be due if (a) the
Lender, in accordance with the terms thereof, decreases any of the
advance rates set forth in the definition of Borrowing Base or
materially restricts the eligibility standards set forth in the
definition of Eligible Inventory, (b) the Borrower terminates this
Agreement and pays the Lender all amounts due hereunder within 180 days
after any decrease or restriction described in clause (a) above, (c) no
Event of Default existed at the time of such decrease or restriction,
and (d) no Event of Default exists at the time of such termination.
ARTICLE 4 - CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Initial Loan. Notwith-
standing any other provision of this Agreement, the Lender's obligation
to make the Initial Loans is subject to the fulfillment of each of the
following conditions prior to or contemporaneously with the making of
such Loan:
(a) Closing Documents. The Lender shall have received each of
the following documents, all of which shall be satisfactory in form and
substance to the Lender and its counsel:
(1) this Agreement, duly executed and delivered by the
Borrower;
(2) the Note, dated the Effective Date and duly executed
and delivered by the Borrower;
(3) certified copies of the articles of incorporation
and by-laws of the Borrower as in effect on the Effective Date;
(4) certified copies of all corporate action, including
stockholder approval, if necessary, taken by the Borrower to
authorize the execution, delivery and performance of this
Agreement and the other Loan Documents and the borrowings under
this Agreement;
(5) certificates of incumbency and specimen signatures
with respect to each of the officers of the Borrower who is
authorized to execute and deliver this Agreement or any other
-38-
<PAGE>
Loan Document on behalf of the Borrower or any document,
certificate or instrument to be delivered in connection with
this Agreement or the other Loan Documents and to request
borrowings under this Agreement;
(6) a certificate evidencing the good standing of the
Borrower in the jurisdiction of its incorporation and in each
other jurisdiction in which it does business and where the
failure so to be in good standing could reasonably be expected
to have a Materially Adverse Effect;
(7) the Financing Statements duly executed and delivered
by the Borrower, and evidence satisfactory to the Lender that
the Financing Statements have been filed in each jurisdiction
where such filing may be necessary or appropriate to perfect
the Security Interest;
(8) landlord's waiver and consent agreements duly
executed on behalf of each landlord of real property on which
any Collateral is located;
(9) a Schedule of Inventory prepared as of a recent
date;
(10) certificates or binders of insurance relating to
each of the policies of insurance covering any of the
Collateral together with loss payable clauses which comply with
the terms of Section 7.5(b);
(11) the Assignment of Receivables Securitization
Proceeds, duly executed by the Borrower, GHC and the
Receivables Purchaser, together with the originals of the Buyer
Notes (as defined therein) duly endorsed to the Lender;
(12) the Blocked Account Agreement, duly executed by
each of the parties thereto;
(13) the Intercreditor Agreement re Receivables, duly
executed by the Borrower, ICPPC, GHC, the Receivables
Purchaser, the Receivables Trustee and ABN AMRO;
-39-
<PAGE>
(14) a Borrowing Base Certificate prepared as of the
Effective Date duly executed and delivered by the chief
financial officer of the Borrower;
(15) a letter from the Borrower to the Lender requesting
the Initial Loans and specifying the method of disbursement;
(16) copies of all the financial statements referred to
in Section 5.1(m) and meeting the requirements thereof;
(17) a balance sheet of the Borrower and its
Consolidated Subsidiaries (including and excluding GHC) as at
March 31, 1997, prepared by the Borrower on a pro forma basis,
giving effect to the transactions contemplated by this
Agreement and setting forth the assumptions on which such
balance sheet was prepared; forecasted consolidated financial
statements consisting of balance sheets, cash flow statements
and income statements of the Borrower and its Consolidated
Subsidiaries (including and excluding GHC), giving effect to
the transactions contemplated by this Agreement and reflecting
projected borrowings hereunder and setting forth the
assumptions on which such forecasted financial statements were
prepared, covering the one-year period commencing on January 1,
1997, and prepared on a quarterly basis; and such other
evidence as the Lender shall require supporting the
representation and warranty of the Borrower set forth in
Section 5.1(r);
(18) a certificate of the President of the Borrower
stating that, to the best of his knowledge and based on an
examination sufficient to enable him to make an informed
statement, (a) all of the representations and warranties made
or deemed to be made under this Agreement are true and correct
as of the Effective Date, both with and without giving effect
to the Loans to be made at such time and the application of the
proceeds thereof, and (b) no Default or Event of Default
exists;
(19) true and correct copies of the Receivables Purchase
Documents, as certified by the President of the Borrower;
(20) true and correct copies of the Senior Secured Notes
Documents,
as certified by the President of the Borrower;
-40-
<PAGE>
(21) certified copies of the articles of incorporation and
by-laws
(or certificate of limited partnership and limited partnership
agreement) of GHC and the Receivables Purchaser as in effect on
the Effective Date;
(22) certified copies of all corporate or partnership action
taken by
GHC and the Receivables Purchaser to authorize the execution,
delivery and performance of the Loan Documents to which each is
a party;
(23) certificates of incumbency and specimen signatures with
respect
to each of the officers of GHC and the Receivables Purchaser
who is authorized to execute and deliver the Loan Documents to
which each is a party;
(24) a certificate evidencing the good standing of GHC and the
Receivables Purchaser in the jurisdiction of its incorporation
or organization;
(25) signed opinions of Tuke Yopp & Sweeney, counsel for
the Borrower, GHC and the Receivables Purchaser, and such local
counsel as the Lender shall deem necessary or desirable,
opining as to such matters in connection with this Agreement as
the Lender or its counsel may reasonably request; and
(26) copies of each of the other Loan Documents duly
executed by the parties thereto with evidence satisfactory to
the Lender and its counsel of the due authorization, binding
effect and enforceability of each such Loan Document on each
such party and such other documents and instruments as the
Lender may reasonably request.
(b) Fees. The Lender shall have received all fees payable on
the Effective Date under this Agreement.
(c) Availability. The Lender shall be provided with evidence
satisfactory to it that, as of the Effective Date, after giving effect
to the Initial Loans, Availability will be not less than $5,000,000.
-41-
<PAGE>
(d) No Injunctions, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body to
enjoin, restrain or prohibit or to obtain substantial damages in
respect of or which is related to or arises out of this Agreement or
the consummation of the transactions contemplated hereby or which, in
the Lender's sole discretion, would make it inadvisable to consummate
the transactions contemplated by this Agreement.
(e) Material Adverse Change. As of the Effective Date, there
shall not have occurred any change which, in the Lender's sole
discretion, has had or may have a Materially Adverse Effect as compared
to the condition of the Borrower presented by the most recent unaudited
financial statements of the Borrower described in Section 5.1(m).
(f) Solvency. The Lender shall have received evidence
satisfactory to it that, after giving effect to the Initial Loans (i)
the Borrower has assets (excluding goodwill and other intangible assets
not capable of valuation) having value, both at fair value and at
present fair saleable value, greater than the amount of its
liabilities, and (ii) the Borrower's assets are sufficient in value to
provide the Borrower with sufficient working capital to enable it
profitably to operate its business and to meet its obligations as they
become due, and (iii) the Borrower has adequate capital to conduct the
business in which it is and proposes to be engaged.
(g) Release of Security Interests. The Lender shall have
received evidence satisfactory to it of the release and termination of
all Liens other than Permitted Liens.
Section 4.2 All Loans. At the time of making of each Loan,
including the Initial Loan:
(a) all of the representations and warranties made or deemed to
be made under this Agreement shall be true and correct at such time
both with and without giving effect to the Loans to be made at such
time and the application of the proceeds thereof, except that
representations and warranties which, by their terms, are applicable
only to the Effective Date shall be required to be true and correct
only as of the Effective Date,
-42-
<PAGE>
(b) the corporate actions of the Borrower referred to in Section
4.1(a)(4) shall remain in full force and effect and the incumbency of
officers shall be as stated in the certificates of incumbency delivered
pursuant to Section 4.1(a)(5) or as subsequently modified and reflected
in a certificate of incumbency delivered to the Lender, and
(c) the Lender may, without waiving either condition, consider
the conditions specified in Sections 4.2(a) and (b) fulfilled and a
representation by the Borrower to such effect made if no written notice
to the contrary is received by the Lender from the Borrower prior to
the making of the Loans then to be made.
Section 4.3 Revolving Credit Facility B. In addition to the
conditions set forth in Section 4.2, the effectiveness of Revolving
Credit Facility B and the obligation of the Lender to make Loans
thereunder are subject to the prior fulfillment of each of the
following conditions:
(a) the Borrower shall have paid the $25,000 Revolving Facility
B Closing Fee described in Section 3.2(d)(i);
(b) the Lender shall have elected, in its sole discretion, to
make Revolving Credit Facility B available, as evidenced by the
Lender's written notice to the Borrower accepting the Revolving Credit
Facility B Closing Fee and acknowledging the effectiveness of Revolving
Credit Facility B; and
(c) the Borrower shall execute such documentation as the Lender
may reasonably request in connection therewith, including amendments to
the Financing Statements if necessary or appropriate to reflect the
increased maximum amount of indebtedness covered thereby, and the
Borrower shall pay all recording taxes in connection with the recording
of such amendments.
Section 4.4 Revolving Credit Facility C. In addition to the
conditions set forth in Section 4.2, the effectiveness of Revolving
Credit Facility C and the obligation of the Lender to make Loans
thereunder are subject to the prior fulfillment of each of the
following conditions:
(a) the Borrower shall have given the Lender at least 30 days
prior written notice of its request to activate Revolving Credit
Facility C;
-43-
<PAGE>
(b) the Borrower shall have paid the $25,000 Revolving Credit
Facility C Closing Fee described in Section 3.2(d)(ii);
(c) the Lender shall have elected, in its sole discretion, to
make Revolving Credit Facility C available, as evidenced by the
Lender's written notice to the Borrower accepting the Revolving Credit
Facility C Closing Fee and acknowledging the effectiveness of Revolving
Credit Facility C; and
(d) the Borrower shall execute such documentation as the Lender
may reasonably request in connection therewith, including amendments to
the Financing Statements if necessary or appropriate to reflect the
increased maximum amount of indebtedness covered thereby, and the
Borrower shall pay all recording taxes in connection with the recording
of such amendments.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 5.1 Representations and Warranties. The Borrower
represents and warrants to the Lender as follows:
(a) Organization; Power; Qualification. The Borrower and each
of its Subsidiaries is a corporation (or, in the case of the
Receivables Purchaser, a limited partnership), duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation (as the case may be), has the corporate
power and authority to own its properties and to carry on its business
as now being and hereafter proposed to be conducted and is duly
qualified and authorized to do business in each jurisdiction in which
failure to be so qualified and authorized could reasonably be expected
to have a Materially Adverse Effect. The jurisdictions in which the
Borrower and each of its Subsidiaries is qualified as of the Effective
Date to do business as a foreign corporation or limited partnership (as
the case may be) are listed on Schedule 5.1(a).
(b) Subsidiaries and Ownership of the Borrower. Except as set
forth on Schedule 5.1(b), the Borrower has no Subsidiaries as of the
Effective Date. The outstanding stock of the Borrower and each of its
corporate Subsidiaries has been duly and validly issued and is fully
paid and nonassessable and the number and owners of such shares of
capital stock as of the Effective Date are set forth on Schedule
5.1(b).
-44-
<PAGE>
(c) Authorization of Agreement, Note, Loan Documents and
Borrowing. The Borrower has the right and power and has taken all
necessary action to authorize it to execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party
in accordance with their respective terms and to borrow hereunder.
This Agreement and each of the other Loan Documents to which it is a
party have been duly executed and delivered by the duly authorized
officers of the Borrower and each is, or when executed and delivered in
accordance with this Agreement will be, a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms,
except, as to enforcement, only to bankruptcy, insolvency,
reorganization, moratorium, or similar laws at the time in effect
affecting the enforceability of the rights of creditors generally.
(d) Compliance of Agreement, Note, Loan Documents and Borrowing
with Laws, Etc. The execution, delivery and performance of this
Agreement and each of the other Loan Documents to which the Borrower or
any of its Subsidiaries is a party in accordance with their respective
terms do not and will not, by the passage of time, the giving of notice
or otherwise,
(i) require any Governmental Approval or violate any
applicable law relating to the Borrower or any of its
Subsidiaries,
(ii) conflict with, result in a breach of or constitute
a default under (A) the articles or certificate of
incorporation or by-laws of the Borrower or any of its
Subsidiaries, (B) any material indenture, agreement or other
material instrument to which the Borrower or any of its
Subsidiaries is a party or by which any of its property may be
bound or (C) any Governmental Approval relating to the Borrower
or any of its Subsidiaries, or,
(iii) result in or require the creation or imposition of
any Lien upon or with respect to any property now owned or
hereafter acquired by the Borrower or any of its Subsidiaries
other than the Security Interest.
(e) Business. The Borrower is engaged principally in the
business described on Schedule 5.1(e).
(f) Compliance with Law; Governmental Approvals. Except as set
forth in Schedule 5.1(f), the Borrower and each of its Subsidiaries (i)
has all Governmental Approvals, including permits relating to federal,
-45-
<PAGE>
state and local Environmental Laws, ordinances and regulations required
by any applicable law for it to conduct its business, each of which is
in full force and effect, is final and not subject to review on appeal
and is not the subject of any pending or, to the knowledge of the
Borrower, threatened attack by direct or collateral proceeding, and
(ii) is in compliance with each Governmental Approval applicable to it
and in compliance with all other applicable laws relating to it,
including, without being limited to, all Environmental Laws and all
occupational health and safety laws applicable to it or its properties,
except for matters described in clause (i) or (ii) which would not,
singly or in the aggregate, cause a Default or Event of Default or have
a Materially Adverse Effect and in respect of which adequate reserves
have been established on its books.
(g) Titles to Properties. Except as set forth in Schedule
5.1(g) or, with respect to property other than the Collateral, for such
matters which would not have a Materially Adverse Effect, the Borrower
and each of its Subsidiaries has good and marketable title to or a
valid leasehold interest in all its real estate and valid and legal
title to or a valid leasehold interest in all personal property and
assets used in or necessary to the conduct of its business, including,
but not limited to, those reflected on the consolidated balance sheet
of the Borrower delivered pursuant to Section 5.1(m)(ii).
(h) Liens. Except as set forth in Schedule 5.1(h) or, with
respect to property other than the Collateral, for such matters which
would not have a Materially Adverse Effect, none of the properties and
assets of the Borrower or any of its Subsidiaries is subject to any
Lien, except Permitted Liens. Other than the Financing Statements, no
financing statement under the Uniform Commercial Code of any state
which names the Borrower as debtor and which has not been terminated
has been filed in any state or other jurisdiction, and the Borrower has
not signed any such financing statement or any security agreement
authorizing any secured party thereunder to file any such financing
statement, except to perfect those Liens listed in Schedule 5.1(h) and
Permitted Liens.
(i) Indebtedness and Guaranties. Set forth on Schedule 5.1(i)
is a complete and correct listing as of the Effective Date of all of
the Borrower's and its Subsidiaries' (i) Indebtedness for Money
Borrowed and (ii) Guaranties. Neither the Borrower nor any of its
Subsidiaries is in default of any material provision of any agreement
evidencing or relating to such any such Indebtedness or Guaranty.
-46-
<PAGE>
(j) Litigation. Except as set forth on Schedule 5.1(j), there
are no actions, suits or proceedings pending (nor, to the knowledge of
the Borrower, are there any actions, suits or proceedings threatened,
nor is there any basis therefor) against or in any other way relating
adversely to or affecting the Borrower or any of its Subsidiaries or
any of their property in any court or before any arbitrator of any kind
or before or by any governmental body, which, if determined adversely
to the Borrower or any of its Subsidiaries, could reasonably be
expected to have a Materially Adverse Effect.
(k) Tax Returns and Payments. Except as set forth on Schedule
5.1(k) or for those matters which would not have a Materially Adverse
Effect, all United States federal, state and local and foreign
national, provincial and local and all other tax returns of the
Borrower and each of its Subsidiaries required by applicable law to be
filed have been duly filed, and all United States federal, state and
local and foreign national, provincial and local and all other taxes,
assessments and other governmental charges or levies upon the Borrower
and each of its Subsidiaries and their property, income, profits and
assets which are due and payable have been paid, except any such
nonpayment which is at the time permitted under Section 8.4. The
charges, accruals and reserves on the books of the Borrower and each of
its Subsidiaries in respect of United States federal, state and local
taxes and foreign national, provincial and local taxes for all fiscal
years and portions thereof since the organization of the Borrower and
each of its Subsidiaries are in the judgment of the Borrower adequate,
and the Borrower knows of no reason to anticipate any additional
assessments for any of such years which, singly or in the aggregate,
could reasonably be expected to have a Materially Adverse Effect.
(l) Burdensome Provisions. Neither the Borrower nor any of its
Subsidiaries is a party to any indenture, agreement, lease or other
instrument, or subject to any charter or corporate restriction,
Governmental Approval or applicable law, compliance with the terms of
which could reasonably be expected to have a Materially Adverse Effect.
(m) Financial Statements. The Borrower has furnished to the
Lender a copy of (i) its audited balance sheet as at December 31, 1996,
and the related statements of income, cash flow and retained earnings
for the twelve-month period then ended and (ii) its unaudited balance
sheet as at March 31, 1997, and the related statement of income for the
three-month period then ended. Such financial statements are complete
and correct and present fairly and in all material respects in
accordance with GAAP, the financial position of the Borrower and its
Consolidated Subsidiaries (in the case of such unaudited financial
statements, both including and excluding GHC) as at the dates thereof
and the results of operations of
-47-
<PAGE>
the Borrower and its Consolidated Subsidiaries (including and excluding
GHC) for the periods then ended. Except as disclosed or reflected in
such financial statements, neither the Borrower nor any of its
Consolidated Subsidiaries had any material liabilities, contingent or
otherwise, and there were no material unrealized or anticipated losses
of the Borrower or any of its Consolidated Subsidiaries.
(n) Adverse Change. Since the date of the financial statements
described in clause (i) of Section 5.1(m), (i) no change in the
business, assets, liabilities, condition (financial or otherwise),
results of operations or business prospects of the Borrower or any of
its Subsidiaries has occurred that has had, or could reasonably be
expected to have, a Materially Adverse Effect, and (ii) no event has
occurred or failed to occur which has had, or could reasonably be
expected to have, a Materially Adverse Effect.
(o) ERISA. Neither the Borrower nor any Related Company
maintains or contributes to any Benefit Plan other than those listed on
Schedule 5.1(o). Each Benefit Plan maintained by the Borrower or any
Related Company is in substantial compliance with ERISA, and neither
the Borrower nor any Related Company has received any notice asserting
that a Benefit Plan is not in compliance with ERISA. No material
liability to the PBGC or to a Multiemployer Plan has been, or is
expected by the Borrower to be, incurred by the Borrower or any Related
Company.
(p) Absence of Defaults. Neither the Borrower nor any of its
Subsidiaries is in default under its articles or certificate of
incorporation or by-laws, and no event has occurred which has not been
remedied, cured or waived (i) that constitutes a Default or an Event of
Default or (ii) that constitutes or that, with the passage of time or
giving of notice, or both, would constitute a default or event of
default by the Borrower or any of its Subsidiaries under any material
agreement (other than this Agreement) or judgment, decree or order to
which the Borrower or any of its Subsidiaries is a party or by which
the Borrower or any of its Subsidiaries or any of their properties may
be bound or which would require the Borrower or any of its Subsidiaries
to make any payment thereunder prior to the scheduled maturity date
therefor.
(q) Accuracy and Completeness of Information. All written
information, reports and other papers and data produced by or on behalf
of the Borrower and furnished to the Lender were, at the time the same
were so furnished, complete and correct in all material respects to the
extent necessary to give the recipient a true and accurate knowledge of
the subject matter, no fact is known to the Borrower which has had, or
could reasonably be expected to have (so far as the Borrower can
foresee),
-48-
<PAGE>
a Materially Adverse Effect which has not been set forth in the
financial statements or disclosure delivered prior to the Effective
Date, in each case referred to in Section 5.1(m), or in such written
information, reports or other papers or data or otherwise disclosed in
writing to the Lender prior to the Effective Date. No document
furnished or written statement made to the Lender by the Borrower in
connection with the negotiation, preparation or execution of this
Agreement or any of the Loan Documents contains any untrue statement of
a fact material to the creditworthiness of the Borrower and its
Subsidiaries or omits to state a material fact necessary in order to
make the statements contained therein not misleading.
(r) Solvency. In each case after giving effect to the
Indebtedness represented by the Loans outstanding and to be incurred
and the transactions contemplated by this Agreement, each of the
Borrower and GHC is solvent, having assets of a fair value which
exceeds the amount required to pay its debts (including contingent,
subordinated, unmatured and unliquidated liabilities) as they become
absolute and matured, and each of the Borrower and GHC is able to and
anticipates that it will be able to meet its debts as they mature and
has adequate capital to conduct the business in which it is or proposes
to be engaged.
(s) Chief Executive Office. The chief executive office of the
Borrower and GHC is located at the address or addresses set forth on
Schedule 5.1(s); except as set forth Schedule 5.1(s), neither the
Borrower nor GHC has maintained its chief executive office at any other
address at any time during the four months immediately preceding the
Agreement Date.
(t) Status of Inventory. All Inventory included in any
Borrowing Base Certificate delivered to the Lender pursuant to Section
7.10(a) meets the criteria enumerated in the definition of Eligible
Inventory, except as disclosed in such Borrowing Base Certificate or in
a subsequent Borrowing Base Certificate or as otherwise specifically
disclosed in writing to the Lender. All Inventory is in good condi-
tion, meets all standards imposed by any governmental agency or
department or division thereof having regulatory authority over such
goods, their use or sale, and is currently either usable or saleable in
the normal course of the Borrower's business, except to the extent
reserved against in the financial statements delivered pursuant to
Article 9 or as disclosed on a Schedule of Inventory delivered to the
Lender pursuant to Section 7.10(a). Set forth on Schedule 5.1(t) is
the (i) address (including street, city, county and state) of each
facility at which Inventory is located, (ii) the approximate quantity
in Dollars of the Inventory customarily located at each such facility,
and (iii) if the facility is leased or is a third party warehouse or
processor location, the name of
-49-
<PAGE>
the landlord or such third party warehouseman or processor. All
Inventory is located on the premises set forth on Schedule 5.1(t) or is
in transit to one of such locations, except as otherwise disclosed in
writing to the Lender; the Borrower has not located Inventory at
premises other than those set forth on Schedule 5.1(t) at any time
during the four months immediately preceding the Agreement Date.
(u) Equipment. All Equipment is in good order and repair in all
material respects, normal wear and tear excepted.
(v) Corporate and Fictitious Names; Trade Names. Except as
otherwise disclosed on Schedule 5.1(v), during the one-year period
preceding the Agreement Date, neither the Borrower nor GHC has been
known as or used any corporate or fictitious name other than the
corporate names of the Borrower and GHC on the Effective Date. All
trade names or styles under which the Borrower and GHC sell Inventory
are listed on Schedule 5.1(v).
(w) Federal Regulations. The Borrower is not engaged,
principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any
"margin stock" (as each of the quoted terms is defined or used in
Regulations G and U of the Board of Governors of the Federal Reserve
System).
(x) Investment Company Act. The Borrower is not an "investment
company" or a company "controlled" by an "investment company" (as each
of the quoted terms is defined or used in the Investment Company Act of
1940, as amended).
(y) Employee Relations. As of the Effective Date the Borrower
is not, except as set forth on Schedule 5.1(y), party to any collective
bargaining agreement nor has any labor union been recognized as the
representative of the Borrower's employees; the Borrower knows of no
pending, threatened or contemplated strikes, work stoppage or other
labor disputes involving its employees or those of its Subsidiaries.
(z) Intellectual Property. The Borrower owns or possesses all
Intellectual Property required to conduct its business as now and
presently planned to be conducted without, to its knowledge, conflict
with the rights of others, and Schedule 5.1(z) lists all Intellectual
Property owned as of the Effective Date by the Borrower, the absence of
which would have a Materially Adverse Effect.
-50-
<PAGE>
(aa) Receivables. The Borrower has not transferred any of its
accounts receivable to ICPPC, whether by means of a sale, capital
contribution or other transfer, since the transfer of the "Contributed
ICPPC Initial Receivables" pursuant to Section 1.8(a)(i) of the
Receivables Purchase Agreement.
Section 5.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article 5 and all
statements contained in any certificate, financial statement or other
instrument delivered by or on behalf of the Borrower pursuant to or in
connection with this Agreement or any of the Loan Documents (including,
but not limited to, any such representation, warranty or statement made
in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement. All
representations and warranties made under this Agreement shall be made
or deemed to be made at and as of the Agreement Date, at and as of the
Effective Date and at and as of the date of each Loan, except that
representations and warranties which, by their terms are applicable
only to one such date shall be deemed to be made only at and as of such
date. All representations and warranties made or deemed to be made
under this Agreement shall survive and not be waived by the execution
and delivery of this Agreement, any investigation made by or on behalf
of the Lender or any borrowing hereunder.
ARTICLE 6 - SECURITY INTEREST
Section 6.1 Security Interest. (a) To secure the payment,
observance and performance of the Secured Obligations, the Borrower
hereby mortgages, pledges and assigns all of the Collateral to the
Lender for itself and as agent for any Affiliate of the Lender and
grants to the Lender for itself and as agent for any Affiliate of the
Lender a continuing security interest in, and a continuing Lien upon,
all of the Collateral.
(b) As additional security for all of the Secured Obligations,
the Borrower grants to the Lender for itself and as agent for any
Affiliate of the Lender a security interest in, and assigns to the
Lender for itself and as agent for any Affiliate of the Lender all of
the Borrower's right, title and interest in and to, any deposits or
other sums at any time credited by or due from the Lender and each
Affiliate of the Lender to the Borrower, with the same rights therein
as if the deposits or other sums were credited by or due from the
Lender.
-51-
<PAGE>
Section 6.2 Continued Priority of Security Interest. (a) The
Security Interest granted by the Borrower shall at all times be valid,
perfected and enforceable against the Borrower and all third parties in
accordance with the terms of this Agreement, as security for the
Secured Obligations, and the Collateral shall not at any time be
subject to any Liens that are prior to, on a parity with or junior to
the Security Interest, other than Permitted Liens.
(b) The Borrower shall, at its sole cost and expense, take all
action that may be necessary or desirable, or that the Lender may
reasonably request, so as at all times to maintain the validity,
perfection, enforceability and rank of the Security Interest in the
Collateral in conformity with the requirements of Section 6.2(a) or to
enable the Lender to exercise or enforce its rights hereunder,
including, but not limited to: (i) paying all taxes, assessments and
other claims lawfully levied or assessed on any of the Collateral,
except to the extent that such taxes, assessments and other claims
constitute Permitted Liens, (ii) diligently seeking to obtain, after
the Agreement Date, landlords', mortgagees' or mechanics' releases,
subordinations or waivers, (iii) delivering to the Lender, endorsed or
accompanied by such instruments of assignment as the Lender may
specify, and stamping or marking in such manner as the Lender may
specify, any and all chattel paper, instruments, letters and advices of
guaranty and documents evidencing or forming a part of the Collateral,
and (iv) executing and delivering financing statements, pledges,
designations, hypothecations, notices and assignments, in each case in
form and substance satisfactory to the Lender, relating to the
creation, validity, perfection, maintenance or continuation of the
Security Interest under the UCC or other applicable law.
(c) During the existence of a Default or Event of Default, the
Lender is hereby authorized to file one or more financing or
continuation statements or amendments thereto without the signature of
or in the name of the Borrower for any purpose described in Section
6.2(b). A carbon, photographic or other reproduction of this Agreement
or of any of the Security Documents or of any financing statement filed
in connection with this Agreement is sufficient as a financing
statement, to the extent permitted by applicable law.
(d) The Borrower shall mark its books and records as may be
necessary or appropriate to evidence, protect and perfect the Security
Interest and shall cause its financial statements to reflect the
Security Interest.
-52-
<PAGE>
ARTICLE 7 - COLLATERAL COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the
Lender shall otherwise consent in the manner provided in Section 12.11:
Section 7.1 Collection of Receivables Securitization Proceeds.
(a) The Borrower will cause all moneys, checks, notes, drafts and
other payments relating to or constituting proceeds of the Receivables
Purchase Agreement to be remitted to the Lender for application against
the Secured Obligations, and in particular the Borrower will advise the
Receivables Purchaser to remit all amounts payable on account of the
Receivables Purchase Agreement to the Lender in accordance with the
terms of the Assignment of Receivables Securitization Proceeds and the
Blocked Account Agreement.
(b) All proceeds of the Receivables Purchase Agreement described
above shall be remitted daily to the Lender at the Lender's Office (i)
for application, on account of the Secured Obligations, as provided in
Section 2.3(c), 11.2 and 11.3, such credits to be entered on the second
Business Day after receipt (except in the case of funds received by the
Lender via wire transfer, which shall be entered on the date of
receipt) and to be conditioned upon final payment in cash or solvent
credits of the items giving rise to them, and (ii) with respect to any
balance remaining after such application, so long as no Event of
Default has occurred and is continuing, for transfer to the
Disbursement Account or such other account of the Borrower as the
Borrower and the Lender may agree.
(c) Any moneys, checks, notes, drafts or other payments referred
to in clause (a) of this Section 7.1 which are received by or on behalf
of the Borrower will be held in trust for the Lender and will be
delivered to the Lender at the Lender's Office as promptly as possible
in the exact form received, together with any necessary endorsements.
Section 7.2 Sales of Inventory. All sales of Inventory will be
made in compliance with all requirements of applicable law, with
respect to which noncompliance would have a Materially Adverse Effect.
Section 7.3 Returned Goods. The Security Interest in the
Inventory shall, without further act, attach to the cash and non-cash
proceeds resulting from the sale or other disposition thereof and to
all Inventory which is returned to the Borrower by customers or is
otherwise recovered.
-53-
<PAGE>
Section 7.4 Ownership and Defense of Title. (a) Except for
Permitted Liens, the Borrower shall at all times be the sole owner of
each and every item of Collateral and shall not create any Lien on, or
sell, lease, exchange, assign, transfer, pledge, hypothecate, grant a
security interest or security title in or otherwise dispose of, any of
the Collateral or any interest therein, except for sales of Inventory
in the ordinary course of business (including sales to Affiliates in
accordance with current procedures), for cash or on open account or on
terms of payment ordinarily extended to its customers, sales of
Inventory with a fair market value of up to $1,000,000 in connection
with any sale of the Borrower's St. Louis, Missouri branch permitted
under Section 10.2, and except as otherwise expressly contemplated
herein. The inclusion of "proceeds" of the Collateral under the
Security Interest shall not be deemed a consent by the Lender to any
other sale or other disposition of any part or all of the Collateral.
(b) The Borrower shall defend its title in and to the Collateral
and shall defend the Security Interest in the Collateral against the
claims and demands of all Persons.
(c) In addition to, and not in derogation of, the foregoing and
the requirements of any of the Security Documents, the Borrower shall
(i) protect and preserve all properties material to its business,
including Intellectual Property and maintain all tangible property in
good and workable condition in all material respects, with reasonable
allowance for wear and tear, and (ii) from time to time make or cause
to be made all needed and appropriate repairs, renewals, replacements
and additions to such properties necessary for the conduct of its busi-
ness, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
Section 7.5 Insurance. (a) The Borrower shall at all times
maintain insurance on the Inventory against loss or damage by fire,
theft, burglary, pilferage, loss in transit and such other hazards as
the Lender shall reasonably specify, in amounts and under policies
issued by insurers acceptable to the Lender. All premiums on such
insurance shall be paid by the Borrower and copies of the policies
delivered to the Lender. The Borrower will not use or permit the
Inventory to be used in violation of any applicable law or in any
manner which might render inapplicable any insurance coverage.
(b) All insurance policies required under Section 7.5(a) shall
name the Lender as an additional named insured and shall contain "New
York standard" loss payable clauses in the form submitted to the
Borrower by
-54-
<PAGE>
the Lender, or otherwise in form and substance satisfactory to the
Lender, naming the Lender as loss payee as its interests may appear,
and providing that (i) all proceeds thereunder shall be payable to the
Lender, (ii) no such insurance shall be affected by any act or neglect
of the insured or owner of the property described in such policy, and
(iii) such policy and loss payable clauses may not be canceled, amended
or terminated unless at least 30 days' prior written notice is given to
the Lender, except that only 15 days' prior written notice shall be
required for cancellation due to nonpayment of premiums.
(c) Any proceeds of insurance referred to in this Section 7.5
which are paid to the Lender shall be, at the option of the Lender in
its sole discretion, either (i) applied to rebuild, restore or replace
the damaged or destroyed property, or (ii) applied to the payment or
prepayment of the Secured Obligations.
(d) The Borrower shall at all times maintain, in addition to the
insurance required by Section 7.5(a) or any of the Security Documents,
insurance with responsible insurance companies against such risks and
in such amounts as is customarily maintained by similar businesses or
as may be required by applicable law, including such public liability,
products liability, third party property damage and business
interruption insurance as is consistent with reasonable business
practices, and from time to time deliver to the Lender upon its request
a detailed list of the insurance then in effect, stating the names of
the insurance companies, the amounts and rates of the insurance, the
dates of the expiration thereof and the properties and risks covered
thereby.
Section 7.6 Location of Offices and Collateral. (a) The
Borrower will not change the location of its chief executive office or
the place where it keeps its books and records relating to the
Collateral or change its name, identity or corporate structure without
giving the Lender 30 days' prior written notice thereof.
(b) All Inventory, other than Inventory in transit to any such
location, will at all times be kept by the Borrower at one of the
locations set forth in Schedules 5.1(t), and shall not, without the
prior written consent of the Lender, be removed therefrom except, so
long as no Event of Default shall have occurred and be continuing, for
sales of Inventory permitted under Section 7.2.
-55-
<PAGE>
(c) If any Inventory is in the possession or control of any of
the Borrower's agents or processors, the Borrower shall notify such
agents or processors of the Security Interest and, upon the occurrence
of an Event of Default, shall instruct them (and cause them to
acknowledge such instruction) to hold all such Inventory for the
account of the Lender, subject to the instructions of the Lender.
Section 7.7 Records Relating to Collateral. (a) The Borrower
will at all times (i) keep complete and accurate records of Inventory
on a basis consistent with past practices of the Borrower, itemizing
and describing the kind, type and quantity of Inventory and the
Borrower's cost therefor and a current price list for such Inventory,
and (ii) keep complete and accurate records of all other Collateral.
(b) The Borrower will take a physical listing of all Inventory,
wherever located, at least annually.
Section 7.8 Inspection. The Lender (by any of its officers,
employees or agents) shall have the right, to the extent that the
exercise of such right shall be within the control of the Borrower, at
any time or times to (a) visit the properties of the Borrower, inspect
the Collateral and the other assets of the Borrower and its
Subsidiaries and inspect and make extracts from the books and records
of the Borrower and its Subsidiaries, including, but not limited to,
management letters prepared by independent accountants, all during
customary business hours at such premises, (b) discuss the Borrower's
business, assets, liabilities, financial condition, results of
operations and business prospects, insofar as the same are reasonably
related to the rights of the Lender hereunder or under any of the Loan
Documents, with the Borrower's and its Subsidiaries' (i) principal
officers, (ii) independent accountants and other professionals
providing services to the Borrower, and (iii) any other Person (except
that any such discussion with any third parties shall be conducted only
in accordance with the Lender's standard operating procedures relating
to the maintenance of confidentiality of confidential information of
borrowers), and (c) verify the amount, quantity, value and condition
of, or any other matter relating to, any of the Collateral and in this
connection to review, audit and make extracts from all records and
files related to any of the Collateral. The Borrower will deliver to
the Lender any instrument necessary to authorize an independent
accountant or other professional to have discussions of the type
outlined above with the Lender or for the Lender to obtain records from
any service bureau maintaining records on behalf of the Borrower.
Section 7.9 Maintenance of Equipment. The Borrower shall
maintain all physical property that constitutes Equipment in good and
workable
-56-
<PAGE>
condition in all material respects, with reasonable allowance for wear
and tear, and shall exercise proper custody over all such property.
Section 7.10 Information and Reports.
(a) Schedule of Inventory. The Borrower shall deliver to the
Lender on or before the Effective Date, and no later than the 15th day
after the end of each accounting month of the Borrower thereafter, a
Schedule of Inventory as of the last Business Day of the immediately
preceding accounting month of the Borrower, itemizing and describing
the kind, type, quantity and location of Inventory and the cost
thereof.
(b) Borrowing Base Certificate. The Borrower shall deliver to
the Lender not later than the 15th day of each accounting month of the
Borrower a Borrowing Base Certificate prepared as of the close of
business on the last Business Day of the preceding accounting month.
(c) Monthly Securitization Report. Simultaneous with the
delivery thereof to the Receivables Trustee, and in any event within
the time period set forth in the Pooling Agreement (as defined in the
Receivables Purchase Agreement), the Borrower shall deliver to the
Lender a copy of the Monthly Report described in Section 3.5(d) of the
Pooling Agreement.
(d) Notice of Diminution of Value. The Borrower shall give
prompt notice to the Lender of any matter or event which has resulted
in, or may result in, the actual or potential diminution in excess of
$500,000 in the value of any of its Collateral, except for any
diminution in the value of any Inventory in the ordinary course of
business which has been appropriately reserved against, as reflected in
the financial statements previously delivered to the Lender pursuant to
Article 9.
(e) Certification. Each of the schedules delivered to the
Lender pursuant to this Section 7.10 shall be certified by the Chief
Financial Officer of the Borrower to be true, correct and complete as
of the date indicated thereon.
(f) Other Information. The Lender may, in its discretion, from
time to time require the Borrower to deliver the schedules described in
Section 7.10(a) and (b) more or less often and on different schedules
than specified in such Section, and the Borrower will comply with such
requests, it being understood that initially the Lender will require
that the Borrower deliver Borrowing Base certificates by the second
Business
-57-
<PAGE>
Day of each week (prepared as of the close of business on the last
Business Day of the preceding week). The Borrower shall also furnish
to the Lender such other information with respect to the Collateral as
the Lender may from time to time reasonably request.
Section 7.11 Power of Attorney. The Borrower hereby appoints
the Lender, during the existence of a Default or Event of Default, as
its attorney, with power (a) to endorse the name of the Borrower on any
checks, notes, acceptances, money orders, drafts or other forms of
payment or security that may come into the Lender's possession, and (b)
to sign the name of the Borrower on any invoice or bill of lading
relating to any Inventory or other Collateral, on any drafts against
customers related to letters of credit, and on notices of assignment,
financing statements and other public records relating to the
perfection or priority of the Security Interest.
ARTICLE 8 - AFFIRMATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the
Lender shall otherwise consent in the manner provided for in Section
12.11, the Borrower will, and will cause each of its Subsidiaries to:
Section 8.1 Preservation of Corporate Existence and Similar
Matters. Preserve and maintain its corporate existence, rights,
franchises, licenses and privileges in the jurisdiction of its
incorporation and qualify and remain qualified as a foreign corporation
and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification or authorization and the failure to be so qualified would
have a Materially Adverse Effect.
Section 8.2 Compliance with Applicable Law. Comply with all
applicable laws relating to it where the failure to comply would have a
Materially Adverse Effect.
Section 8.3 Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses conducted on the
Effective Date.
-58-
<PAGE>
Section 8.4 Payment of Taxes and Claims. Pay or discharge when
due (a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or upon any properties
belonging to it, and (b) all lawful claims of materialmen, mechanics,
carriers, warehousemen and landlords for labor, materials, supplies and
rentals which, if unpaid, might become a Lien on any properties of the
Borrower or such Subsidiary, except that this Section 8.4 shall not
require the payment or discharge of any such tax, assessment, charge,
levy or claim which is being contested in good faith by appropriate
proceedings and for which adequate reserves have been established on
the appropriate books.
Section 8.5 Accounting Methods and Financial Records. Maintain
a system of accounting, and keep such books, records and accounts
(which shall be true and complete), as may be required or as may be
necessary to permit the preparation of financial statements in
accordance with GAAP consistently applied.
Section 8.6 Use of Proceeds. (a) Use the proceeds of (i) the
Initial Loans to pay the amounts indicated in Schedule 8.6 to the
Persons indicated therein, and (ii) all subsequent Revolving Credit
Loans only for working capital and general business purposes, including
but not limited to acquisitions of businesses in similar lines of
business as the Borrower, and
(b) not use any part of such proceeds to purchase or carry, or
to reduce or retire or refinance any credit incurred to purchase or
carry, any margin stock (within the meaning of Regulation G or U of the
Board of Governors of the Federal Reserve System) or for any other
purpose which would involve a violation of such Regulation G or U or
Regulation T or X of such Board of Governors or for any other purpose
prohibited by law or by the terms and conditions of this Agreement.
Section 8.7 Accuracy of Information. Furnish to the Lender
written information, reports, statements and other papers and data,
whether pursuant to Article 9 or any other provision of this Agreement
or any of the other Loan Documents, which shall be, at the time the
same is so furnished, complete and correct in all material respects to
the extent necessary to give the Lender true and accurate knowledge of
the subject matter.
-59-
<PAGE>
ARTICLE 9 - INFORMATION
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the
Lender shall otherwise consent in the manner set forth in Section
12.11, the Borrower will furnish to the Lender at the Lender's Office:
Section 9.1 Financial Statements.
(a) Audited Year-End Statements. As soon as available, but in
any event within 150 days after the end of each fiscal year of the
Borrower, copies of the consolidated balance sheets of the Borrower and
its Consolidated Subsidiaries (including and excluding GHC) as at the
end of such fiscal year and the related consolidated and consolidating
statements of income, stockholders' equity and cash flow for such
fiscal year, in each case setting forth in comparative form the figures
for the previous year of the Borrower and its Consolidated Subsidiaries
and reported on, without qualification, by Arthur Andersen LLP or other
independent certified public accountants selected by the Borrower and
acceptable to the Lender.
(b) Quarterly Financial Statements. As soon as available, but
in any event within 45 days after the end of each accounting quarter of
the Borrower, copies of the unaudited consolidated balance sheets of
the Borrower and its Consolidated Subsidiaries (including and excluding
GHC) as at the end of such quarter and the related unaudited
consolidated and consolidating income statement for the Borrower and
its Consolidated Subsidiaries (including and excluding GHC) for such
quarter and for the portion of the fiscal year of the Borrower and its
Consolidated Subsidiaries through such quarter, certified by the chief
financial officer of the Borrower to the best of his knowledge as
presenting fairly the financial condition and results of operations of
the Borrower and its Consolidated Subsidiaries (including and excluding
GHC) as at the date thereof and for the periods ended on such date,
subject to normal year end adjustments.
(c) Projected Financial Statements. As soon as available, but
in any event on or before January 31 following the end of each fiscal
year of the Borrower, forecasted financial statements, prepared by the
Borrower, consisting of balance sheets, cash flow statements and income
statements of the Borrower and its Consolidated Subsidiaries (including
and excluding GHC), reflecting projected borrowings hereunder and
setting forth the assumptions on which such forecasted financial
statements were prepared, covering the one-year period until the next
fiscal year end.
-60-
<PAGE>
All such financial statements shall be complete and correct in all
material respects and all such financial statements referred to in
clauses (a) and (b) shall be prepared in accordance with GAAP (except,
with respect to interim financial statements, for the omission of
footnotes) applied consistently throughout the periods reflected
therein.
Section 9.2 Discussions With Accountants. The Borrower
authorizes the Lender to discuss the financial condition of the
Borrower with the Borrower's independent certified public accountants
and agrees that such discussion or communication shall be without
liability to either the Lender or the Borrower's independent certified
public accountants. The Borrower shall deliver a letter addressed to
such accountants authorizing them to comply with the provisions of this
Section 9.2.
Section 9.3 Officer's Certificate. Together with each delivery
of financial statements required by Section 9.1(a) and (b), a
certificate of the Borrower's President or chief financial officer, in
the form of Exhibit C attached hereto, (a) stating that, based on an
examination sufficient to enable him to make an informed statement, no
Default or Event of Default exists or, if such is not the case,
specifying such Default or Event of Default and its nature, when it
occurred, whether it is continuing and the steps being taken by the
Borrower with respect to such Default or Event of Default, and (b)
setting forth the calculations necessary to establish whether or not
the Borrower was in compliance with the covenants contained in Sections
10.1, 10.2, and 10.5 as of the date of such statements.
Section 9.4 Copies of Other Reports. (a) Promptly upon receipt
thereof, copies of all material reports, if any, submitted to the
Borrower or its Board of Directors by its independent public
accountants, including, without limitation, all management reports .
(b) From time to time and promptly upon each request, such
forecasts, data, certificates, reports, statements, opinions of
counsel, documents or further information regarding the business,
assets, liabilities, financial condition, results of operations or
business prospects of the Borrower and its Subsidiaries as the Lender
may reasonably request. The rights of the Lender under this Section
9.4(b) are in addition to and not in derogation of its rights under any
other provision of this Agreement or any Loan Document.
-61-
<PAGE>
(c) As soon as practicable, copies of all financial statements,
proxy statements and reports that the Borrower or Holdings shall send
to its shareholders generally and of all registration statements and
all regular or periodic reports which the Borrower or Holdings shall
file with the Securities and Exchange Commission or any successor
commission or other securities commission.
(d) If requested by the Lender, statements in conformity with
the requirements of Federal Reserve Form G-1 or U-1 referred to in
Regulations G and U, respectively, of the Board of Governors of the
Federal Reserve System.
(e) As soon as practicable, copies of all amendments,
modifications, supplements and waivers relating to the Senior Secured
Notes Documents or the Receivables Purchase Documents.
Section 9.5 Notice of Litigation and Other Matters. Prompt
notice of:
(a) the commencement, to the extent the Borrower is aware of the
same, of all proceedings and investigations by or before any
governmental or nongovernmental body and all actions and proceedings in
any court or before any arbitrator against or in any other way relating
adversely to, or adversely affecting, the Borrower or any Affiliate of
the Borrower or any of their respective property, assets or businesses
which might, singly or in the aggregate, cause a Default or an Event of
Default or have a Materially Adverse Effect,
(b) any amendment of the articles of incorporation or by-laws of
the Borrower,
(c) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of the Borrower
or any Affiliate of the Borrower which has had or could reasonably be
expected to have any Materially Adverse Effect and any change in the
executive officers (chief executive officer and chief financial
officer) of the Borrower,
-62-
<PAGE>
(d) any (i) Default or Event of Default, (ii) event that
constitutes or that, with the passage of time or giving of notice or
both, would constitute a default or event of default by the Borrower
under any material agreement (other than this Agreement) to which it is
a party or by which it or any of its property is bound if the exercise
of remedies thereunder by the other party to such agreement would have,
either individually or in the aggregate, a Materially Adverse Effect,
(iii) "Default" or "Event of Default" under and as defined in the
Senior Secured Notes Indenture, or (iv) "Early Amortization Event"
under and as defined in the Receivables Purchase Agreement, and
(e) any termination or purported termination of the Blocked
Account Agreement.
Section 9.6 ERISA. As soon as possible and in any event within
30 days after the Borrower knows, or has reason to know, that:
(a) any Termination Event with respect to a Benefit Plan has
occurred or will occur,
(b) the aggregate present value of the Unfunded Vested Accrued
Benefits under all Plans has increased to an amount in excess of
$3,000,000, or
(c) the Borrower is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
required by reason of its complete or partial withdrawal (as described
in Section 4203 or 4205 of ERISA) from such Multiemployer Plan, a
certificate of the President or the chief financial officer of the
Borrower setting forth the details of such of the events described in
clauses (a) through (c) as applicable and the action which is proposed
to be taken with respect thereto and, simultaneously with the filing
thereof, copies of any notice or filing which may be required by the
PBGC or other agency of the United States government with respect to
such of the events described in clauses (a) through (c) as applicable.
ARTICLE 10 - NEGATIVE COVENANTS
-63-
<PAGE>
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the
Lender shall otherwise consent in the manner set forth in Section
12.11, the Borrower will not (and the Borrower will not permit any of
its Subsidiaries to) directly or indirectly:
Section 10.1 Financial Ratios.
(a) Maximum Liabilities to Tangible Net Worth. Permit the ratio
of total Liabilities to Tangible Net Worth for the Borrower and its
Consolidated Subsidiaries (other than GHC) at the end of any fiscal
quarter:
(i) from the Effective Date to and including December
30, 1997, to be greater than 16 to 1;
(ii) from and including December 31, 1997 to and
including December 30, 1998, to be greater than 14 to 1; and
(iii) at any time thereafter, to be greater than 12
to 1.
(b) Minimum Tangible Net Worth. Permit the Tangible Net Worth
of the Borrower and its Consolidated Subsidiaries (other than GHC) at
the end of any fiscal quarter:
(i) from the Effective Date to and including December
30, 1997, to be less than $15,000,000;
(ii) from and including December 31, 1997 to and
including December 30, 1998, to be less than $20,000,000; and
(iii) at any time thereafter, to be less than
$25,000,000.
(c) Minimum Interest Coverage Ratio. Permit the ratio of (i)
the Borrower's and its Consolidated Subsidiaries' (other than GHC) EBIT
to (ii) the Borrower's and its Consolidated Subsidiaries' (other than
GHC)
-64-
<PAGE>
Interest Expense, as of the end of each fiscal quarter of the Borrower,
measured for the immediately preceding four fiscal quarters, to be less
than 1.25 to 1.
(d) Maximum Funded Indebtedness Ratio. Permit the ratio of (i)
Average Funded Indebtedness to (ii) the Borrower's and its Consolidated
Subsidiaries' (other than GHC) EBITDA, as of the end of each fiscal
quarter of the Borrower, measured for the immediately preceding four
fiscal quarters, to be greater than 5.0 to 1. As used herein, "Average
Funded Indebtedness" means (A) the average outstanding amount of Funded
Indebtedness of the Borrower and its Consolidated Subsidiaries (other
than GHC) during the applicable fiscal quarter less (B) the unpaid
amount of the Purchase Price (as defined in the Receivables Purchase
Agreement) due and payable to the Borrower as of the last day of the
applicable fiscal quarter pursuant to Section 3.1(a)(i) of the
Receivables Purchase Agreement (after deducting from such Purchase
Price any applicable setoffs, claims or other deductions).
Section 10.2 Merger, Consolidation and Sale of Assets. Merge or
consolidate with any other Person or sell, lease or transfer or
otherwise dispose of all or a substantial portion of its assets to any
Person, except that (a) the Borrower may merge or consolidate with
another Person (including any Subsidiary) so long as the Borrower is
the surviving corporation and after giving effect thereto no Default or
Event of Default would exist, provided the Borrower has delivered to
the Lender evidence of compliance with the financial covenants set
forth in Article 10 on a pro forma basis after giving effect to such
merger or consolidation, (b) any Subsidiary may merge or consolidate
with another Person so long as such Subsidiary is the surviving
corporation and after giving effect thereto no Default or Event of
Default would exist, and (c) the Borrower may sell or dispose of its
interest in GHC to a non-Affiliated party in an arms length sale,
through a stock or asset sale, merger or consolidation, as long as the
Borrower receives fair consideration for such interest, provided, in
each case, that the Borrower has delivered to the Lender evidence of
compliance with the financial covenants set forth in Article 10 on a
pro forma basis after giving effect to such sale, merger or
consolidation.
Section 10.3 Investments. Except as permitted under Section
4.20 of the Senior Secured Notes Indenture, Acquire, after the
Agreement Date, any Business Unit or Investment or, after such date,
permit any Investment to be outstanding, other than Permitted
Investments; provided, however, that Borrower or any of its
Subsidiaries may Acquire any Business Unit or Person engaged in the
same or substantially similar line of business so long as (a) no
Default or Event of Default exists or will result
-65-
<PAGE>
therefrom, and (b) the Borrower has delivered to the Lender evidence of
compliance with the financial covenants set forth in Article 10 on a
pro forma basis after giving effect to the Acquisition.
Section 10.4 Benefit Plans. Permit, or take any action which
would result in, the aggregate present value of the Unfunded Vested
Accrued Benefits under all Benefit Plans of the Borrower to exceed $0.
Section 10.5 Amendments of Other Agreements. Amend, modify or
supplement, or permit or consent to any amendment, modification or
supplement of: (a) Sections 4.9, 4.10, 4.11, 4.12, 4.13, 4.15 or 4.20
of the Senior Secured Notes Indenture; or (b) any other provision of
the Senior Secured Notes Documents or Receivables Purchase Documents in
any way which would be materially adverse to the Lender.
Section 10.6 Minimum Availability. Permit Availability at any
time to be less than $3,000,000.
Section 10.7 Capital Expenditures. Make or incur any Capital
Expenditures, except that the Borrower and its Subsidiaries may make or
incur Capital Expenditures in any fiscal year in an amount not to
exceed, in the aggregate, $15,000,000 annually.
Section 10.8 Receivables Transfers. Transfer any of its
accounts receivable to ICPPC, whether by means of a sale, capital
contribution or other transfer, unless such receivables are sold by
ICPPC to the Receivables Purchaser pursuant to the Receivables Purchase
Agreement and ICPPC becomes a party to the Assignment of Receivables
Securitization Proceeds and subjects its right to receive the proceeds
from such sale to the first priority security interest of the Lender.
ARTICLE 11 - DEFAULT
Section 11.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment or order of any court or
any order, rule or regulation of any governmental or nongovernmental
body:
-66-
<PAGE>
(a) Default in Payment of Loans. The Borrower shall default in
any payment of principal of, or interest on, any Loan or Note when and
as due (whether at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default in the
payment, as and when due, of principal of or interest on, any other
Secured Obligation, and such default shall continue for five days after
written notice thereof has been given to the Borrower by the Lender.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by the Borrower under this Agreement or any other
Loan Document or any amendment hereto or thereto shall at any time
prove to have been incorrect or misleading in any material respect when
made.
(d) Default in Performance. The Borrower shall default (i) in
the performance or observance of any material term, covenant, condition
or agreement contained in Articles 6, 7, 8, 9 or 10; or (ii) in the
performance or observance of any material term, covenant, condition or
agreement contained in any other provision of this Agreement (other
than as specifically provided for otherwise in this Section 11.1) and
such default shall continue for a period of 30 days after written
notice thereof has been given to the Borrower by the Lender.
(e) Indebtedness Cross-Default.
(i) The Borrower or any of its Subsidiaries shall fail
to pay when due and payable the principal of or interest on
Indebtedness (other than the Loans or Note) where the principal
amount of such Indebtedness is in excess of $1,500,000, or the
maturity of any such Indebtedness shall have been accelerated
in accordance with the provisions of any indenture, contract or
instrument providing for the creation of or concerning such
Indebtedness or been required to be prepaid prior to the stated
maturity thereof, or any event shall have occurred and be
continuing which, with or without the passage of time or the
giving of notice, or both, would permit any holder or holders
of such Indebtedness, any trustee or agent acting on behalf of
such holder or holders or any other Person so to accelerate
such maturity.
-67-
<PAGE>
(ii) A "Default" or "Event of Default" under and as
defined in the Senior Secured Notes Indenture shall have
occurred and be continuing or the Senior Secured Notes
Indenture shall be terminated or for any reason no longer be in
effect.
(iii) An "Early Amortization Event" under and as defined
in the Receivables Purchase Agreement shall have occurred and
be continuing or, at any time prior to the termination of the
Receivables Purchase Agreement, the Blocked Account Agreement
shall be terminated or for any reason no longer be in effect
(or the Lender or the Borrower shall receive a notice
purporting to terminate the Blocked Account Agreement).
(f) Other Cross-Defaults. The Borrower or any of its
Subsidiaries shall default in the payment when due or in the
performance or observance of any material obligation or condition of
any agreement, contract or lease (other than the Security Documents or
any such agreement, contract or lease relating to Indebtedness), if the
exercise of remedies thereunder by the other party to such agreement
could have a Materially Adverse Effect.
(g) Voluntary Bankruptcy Proceeding. The Borrower, any of its
Subsidiaries or any Obligor shall (i) commence a voluntary case under
the federal bankruptcy laws (as now or hereafter in effect), (ii)
commence a proceeding seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts,
(iii) consent to or fail to contest in a timely and appropriate manner
any petition filed against it in an involuntary case under such
bankruptcy laws or other laws, (iv) apply for or consent to, or fail to
contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they
become due, (vi) make a general assignment for the benefit of
creditors, or (vii) take any corporate action for the purpose of
authorizing any of the foregoing.
(h) Involuntary Bankruptcy Proceeding. A case or other
proceeding shall be commenced against the Borrower, any of its
Subsidiaries or any Obligor in any court of competent jurisdiction
seeking (i) relief under the federal bankruptcy laws (as now or
hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts, or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of any such
-68-
<PAGE>
Person or of all or any substantial part of the assets, domestic or
foreign, of any such Person, and such case or proceeding shall continue
undismissed or unstayed for a period of 60 consecutive calendar days,
or an order granting the relief requested in such case or proceeding
against any such Person (including, but not limited to, an order for
relief under such federal bankruptcy laws) shall be entered.
(i) Loan Documents. Any Obligor shall default in the per-
formance or observance of any material term, covenant, condition or
agreement contained in, or the payment of any other sum covenanted to
be paid by any Obligor under, any such Loan Document and such default
shall continue for a period of 30 days after written notice thereof has
been given to the Borrower by the Lender; or any provision of this
Agreement, or of any other Loan Document after delivery thereof
hereunder, shall for any reason cease to be valid and binding, other
than a nonmaterial provision rendered unenforceable by operation of
law, or any Obligor or other party thereto (other than the Lender)
shall so state in writing; or this Agreement or any other Loan
Document, after delivery thereof hereunder, shall for any reason (other
than any action taken independently by the Lender and except to the
extent permitted by the terms thereof) cease to create a valid,
perfected and, except as otherwise expressly permitted herein, first
priority Lien on, or security interest in, any of the Collateral
purported to be covered thereby.
(j) Judgment. A judgment or order for the payment of money
which exceeds $1,500,000 in amount shall be entered against the
Borrower, any of its Subsidiaries or any Obligor by any court and such
judgment or order shall continue undischarged or unstayed for 30 days.
(k) Attachment. A warrant or writ of attachment or execution or
similar process which exceeds $1,500,000 in value shall be issued
against any property of the Borrower, any of its Subsidiaries or any
Obligor and such warrant or process shall continue undischarged or
unstayed for 30 days.
(l) ERISA. (i) Any Termination Event with respect to a Benefit
Plan shall occur that, after taking into account the excess, if any, of
(A) the fair market value of the assets of any other Benefit Plan with
respect to which a Termination Event occurs on the same day (but only
to the extent that such excess is the property of the Borrower) over
(B) the present value on such day of all vested nonforfeitable benefits
under such other Benefit Plan, results in an Unfunded Vested Accrued
Benefit in excess of $0, (ii) any Benefit Plan shall incur an
"accumulated funding deficiency" (as defined in Section 412 of the Code
or Section 302 of
-69-
<PAGE>
ERISA) for which a waiver has not been obtained in accordance with the
applicable provisions of the Code and ERISA, or (iii) the Borrower is
in "default" (as defined in Section 4219(c)(5) of ERISA) with respect
to payments to a Multiemployer Plan resulting from the Borrower's
complete or partial withdrawal (as described in Section 4203 or 4205 of
ERISA) from such Multiemployer Plan, and with respect to clauses (i),
(ii) and (iii) above, any such event or occurrence could reasonably be
expected to heave a Materially Adverse Effect or result in liability to
the Borrower in excess of $1,500,000.
(m) Qualified Audits. The independent certified public
accountants retained by the Borrower shall refuse to deliver an opinion
in accordance with Section 9.1(a) with respect to the annual financial
statements of the Borrower and its Consolidated Subsidiaries.
(n) Change of Control. A Change of Control shall occur.
(o) Material Adverse Change. There occurs any act, omission,
event, undertaking or circumstance or series of acts, omissions,
events, undertakings or circumstances which have, or in the sole
judgment of the Lender would have, either individually or in the
aggregate, a Materially Adverse Effect.
(p) Change in Management. The person serving as the Borrower's
chief executive officer shall for any reason cease to hold such
position and 90 days shall have elapsed during which time no
replacement satisfactory to the Lender shall have been appointed.
Section 11.2 Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon
the occurrence of an Event of Default specified in Section 11.1(g) or
(h), (i) the principal of and the interest on the Loans and the Note at
the time outstanding, and all other amounts owed to the Lender under
this Agreement or any of the Loan Documents and all other Secured
Obligations, shall thereupon become due and payable without pre-
sentment, demand, protest or other notice of any kind, all of which are
expressly waived, anything in this Agreement or any of the Loan
Documents to the contrary notwithstanding, and (ii) the Revolving
Credit Facility and the commitment of the Lender to make advances
thereunder or under this Agreement shall immediately terminate.
-70-
<PAGE>
(b) Other Remedies. If any Event of Default (other than as
specified in Section 11.1(g) or (h)) shall have occurred and be
continuing, the Lender, in its sole and absolute discretion, may do any
of the following:
(i) declare the principal of and interest on the Loans
and the Notes at the time outstanding, and all other amounts
owed to the Lender under this Agreement or any of the Loan
Documents and all other Secured Obligations, to be forthwith
due and payable, whereupon the same shall immediately become
due and payable without presentment, demand, protest or other
notice of any kind, all of which are expressly waived, anything
in this Agreement or the Loan Documents to the contrary
notwithstanding;
(ii) terminate the Revolving Credit Facility and any
commitment of the Lender to make advances hereunder;
(c) Further Remedies. If any Event of Default shall have
occurred and be continuing, the Lender, in its sole and absolute
discretion, may do any of the following:
(i) enter upon any premises on which Inventory may be
located and, without resistance or interference by the
Borrower, take physical possession of any or all thereof and
maintain such possession on such premises or move the same or
any part thereof to such other place or places as the Lender
shall choose, without being liable to the Borrower on account
of any loss, damage or depreciation that may occur as a result
thereof, so long as the Lender shall act reasonably and in good
faith;
(ii) require the Borrower to and the Borrower shall,
without charge to the Lender, assemble the Inventory and
maintain or deliver it into the possession of the Lender or any
agent or representative of the Lender at such place or places
as the Lender may designate;
(iii) at the expense of the Borrower, cause any of the
Inventory to be placed in a public or field warehouse, and the
Lender shall not be liable to the Borrower on account of any
loss, damage or depreciation that may occur as a result
thereof, so long as the Lender shall act reasonably and in good
faith;
-71-
<PAGE>
(iv) without notice, demand or other process, and
without payment of any rent or any other charge, enter any of
the Borrower's premises and, without breach of the peace, until
the Lender completes the enforcement of its rights in the
Collateral, take possession of such premises or place
custodians in exclusive control thereof, remain on such
premises and use the same and any of the Borrower's equipment,
for the purpose of completing any work in process and preparing
any Inventory for disposition and disposing thereof, and the
Lender is hereby granted a license or sublicense and all other
rights as may be necessary, appropriate or desirable to use the
Intellectual Property in connection with the foregoing, and the
rights of the Borrower under all licenses and franchise
agreements shall inure to the Lender's benefit (provided,
however, that any use of any federally registered trademarks as
to any goods shall be subject to the control as to the quality
of such goods of the owner of such trademarks and the goodwill
of the business symbolized thereby);
(v) exercise any and all of its rights under any and all
of the Security Documents;
(vi) apply any cash Collateral to the payment of the
Secured Obligations in any order in which the Lender may elect
or use such cash in connection with the exercise of any of its
other rights hereunder or under any of the Security Documents;
and
(vii) exercise all of the rights and remedies of a
secured party under the UCC (whether or not the UCC is
applicable) and under any other applicable law, including,
without limitation, the right, without notice except as
specified below and with or without taking the possession
thereof, to sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any location chosen
by the Lender, for cash, on credit or for future delivery and
at such price or prices and upon such other terms as the Lender
may deem commercially reasonable. The Borrower agrees that, to
the extent notice of sale shall be required by law, at least 10
days' notice to the Borrower of the time and place of any
public sale or the time after which any private sale is to be
made shall constitute reasonable notice, but notice given in
any other reasonable manner or at any other reasonable time
shall also constitute reasonable notification. The Lender
shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Lender may
adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place
to which it was so adjourned.
-72-
<PAGE>
Section 11.3 Application of Proceeds. All proceeds from each
sale of, or other realization upon, all or any part of the Collateral
following an Event of Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred in
connection with such sale or other realization, including reasonable
attorneys' fees,
(b) Second: to the payment of the Secured Obligations (with the
Borrower remaining liable for any deficiency) in any order which the
Lender may elect,
(c) Third: to the creation of a fund in an amount equal to the
Letter of Credit Reserve, which fund shall be held by the Lender as
security for and applied to the payment of any amounts which may
thereafter become due under the Letter of Credit Facility, and
(d) Fourth: the balance (if any) of such proceeds shall be paid
to the Borrower or, subject to any duty imposed by law or otherwise, to
whomsoever is entitled thereto.
The Borrower shall remain liable and will pay, on demand, any
deficiency remaining in respect of the Secured Obligations, together
with interest thereon at a rate per annum equal to the highest rate
then payable hereunder on such Secured Obligations, which interest
shall constitute part of the Secured Obligations.
Section 11.4 Power of Attorney. In addition to the
authorizations granted to the Lender under Section 7.11 or under any
other provision of this Agreement or any of the Loan Documents, upon
and during the continuance of an Event of Default, the Borrower hereby
irrevocably designates, makes, constitutes and appoints the Lender (and
all Persons designated by the Lender from time to time) as the
Borrower's true and lawful attorney and agent in fact, and the Lender
or any agent of the Lender may, without notice to the Borrower, and at
such time or times as the Lender or any such agent in its sole
discretion may determine, in the name of the Borrower or the Lender,
-73-
<PAGE>
(a) demand payment of the Collateral, enforce payment thereof by
legal proceedings or otherwise, settle, adjust, compromise, extend or
renew any or all of the Collateral or any legal proceedings brought to
collect the Collateral, discharge and release the Collateral or any
portion thereof and exercise all of the Borrower's rights and remedies
with respect to the collection of the Collateral,
(b) prepare, file and sign the name of the Borrower on any proof
of claim in bankruptcy or any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with any of the
Collateral,
(c) endorse the name of the Borrower upon any chattel paper,
document, instrument, notice, freight bill, bill of lading or similar
document or agreement relating to the Inventory or any other
Collateral,
(d) use the stationery of the Borrower, open the Borrower's
mail, and notify the post office authorities to change the address for
delivery of the Borrower's mail to an address designated by the Lender,
(e) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Inventory or other Collateral to which the Borrower or any Subsidiary
of the Borrower has access.
Section 11.5 Miscellaneous Provisions Concerning Remedies .
(a) Rights Cumulative. The rights and remedies of the Lender
under this Agreement, the Note and each of the Loan Documents shall be
cumulative and not exclusive of any rights or remedies which it or they
would otherwise have. In exercising such rights and remedies, the
Lender may be selective and no failure or delay by the Lender in
exercising any right shall operate as a waiver of such right nor shall
any single or partial exercise of any power or right preclude its other
or further exercise or the exercise of any other power or right.
(b) Waiver of Marshalling. The Borrower hereby waives any right
to require any marshalling of assets and any similar right.
-74-
<PAGE>
(c) Limitation of Liability. Nothing contained in this Article
11 or elsewhere in this Agreement or in any of the Loan Documents shall
be construed as requiring or obligating the Lender or any agent or
designee of the Lender to make any demand or to make any inquiry as to
the nature or sufficiency of any payment received by it or to present
or file any claim or notice or take any action with respect to any
Collateral or the moneys due or to become due thereunder or in
connection therewith or to take any steps necessary to preserve any
rights against prior parties, and neither the Lender nor any of its
agents or designees shall have any liability to the Borrower for
actions taken pursuant to this Article 11, any other provision of this
Agreement or any of the Loan Documents, so long as the Lender or such
agent or designee shall act reasonably and in good faith.
(d) Appointment of Receiver. In any action under this Article
11, the Lender shall be entitled to the appointment of a receiver,
without notice of any kind whatsoever, to take possession of all or any
portion of the Collateral and to exercise such power as the court shall
confer upon such receiver.
Section 11.6 Trademark License. The Borrower hereby grants to
the Lender the nonexclusive right and license to use any trademark then
used by the Borrower, for the purposes set forth in Section 11.2(c)(vi)
and for the purpose of enabling the Lender to realize on the Collateral
and to permit any purchaser of any portion of the Collateral through a
foreclosure sale or any other exercise of the Lender's rights and
remedies under the Loan Documents to use, sell or otherwise dispose of
the Collateral bearing any such trademark. Such right and license is
granted free of charge, without the requirement that any monetary
payment whatsoever be made to the Borrower or any other Person by the
Lender. The Borrower hereby represents, warrants, covenants and agrees
that it presently has, and shall continue to have, the right, without
the approval or consent of others, to grant the license set forth in
this Section 11.6.
ARTICLE 12 - MISCELLANEOUS
Section 12.1 Notices.
(a) Method of Communication. Except as specifically provided in
this Agreement or in any of the Loan Documents, all notices and the
communications hereunder and thereunder shall be in writing or by
telephone subsequently confirmed in writing. Notices in writing shall
be
-75-
<PAGE>
delivered personally or sent by overnight courier service, by certified
or registered mail, postage pre-paid, or by facsimile transmission and
shall be deemed received, in the case of personal delivery, when
delivered, in the case of overnight courier service, on the next
Business Day after delivery to such service, in the case of mailing, on
the third day after mailing (or, if such day is a day on which
deliveries of mail are not made, on the next succeeding day on which
deliveries of mail are made) and, in the case of facsimile
transmission, upon transmittal. A telephonic notice to the Lender as
understood by the Lender will be deemed to be the controlling and
proper notice in the event of a discrepancy with or failure to receive
a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent
to it at the following addresses, or any other address of which all the
other parties are notified in writing.
If to the Borrower: International Comfort Products
Corporation (USA)
650 Heil-Quaker Avenue
Nashville, Tennessee 37091
Attention: Legal Department
Facsimile No.: (615) 270-4220
with a copy to: International Comfort Products
Corporation (USA)
Suite 1700
201 Fourth Avenue North
Nashville, Tennessee 37219
Attention: General Counsel
Facsimile No.: (615) 270-4220
-76-
<PAGE>
If to the Lender: NationsBank, N.A.
c/o NationsBank Business Credit
600 Peachtree Street, 13th Floor
Atlanta, Georgia 30308
Attention: Lynn Webster
Facsimile No.: (404) 607-6437
(c) Lender's Office. The Lender hereby designates its
office located at 600 Peachtree Street, 13th Floor, Atlanta, Georgia
30308, or any subsequent office which shall have been specified for
such purpose by written notice to the Borrower, as the office to which
payments due are to be made and at which Loans will be disbursed.
Section 12.2 Expenses. The Borrower agrees to pay or reimburse
on demand all costs and expenses incurred by the Lender, including,
without limitation, the reasonable fees and disbursements of counsel,
in connection with (a) the negotiation, preparation, execution,
delivery, enforcement and termination of this Agreement and each of the
other Loan Documents, whenever the same shall be executed and
delivered, including, without limitation, (i) the costs and expenses of
appraisals of the collateral, (ii) the costs and expenses of lien
searches, and (iii) taxes, fees and other charges of filing the
Financing Statements and continuations and the costs and expenses of
taking other actions to perfect, protect, and continue the Security
Interest; (b) the preparation, execution and delivery of any waiver,
amendment, supplement or consent by the Lender relating to this
Agreement or any of the Loan Documents; (c) sums paid or obligations
incurred in connection with the payment of any amount or taking any
action required of the Borrower under the Loan Documents that the
Borrower fails to pay or take; (d) if an Event of Default exists, costs
of inspections and verifications of the Collateral, including, without
limitation, standard per diem fees charged by the Lender for travel,
lodging, and meals for inspections of the Collateral and the Borrower's
operations and books and records by the Lender's agents; (e) costs and
expenses of forwarding loan proceeds, collecting checks and other items
of payment, and establishing and maintaining each Disbursement Account;
(f) costs and expenses of preserving and protecting the Collateral; (g)
after the occurrence of a Default, consulting with and obtaining
opinions and appraisals from one or more Persons, including personal
property appraisers, accountants and lawyers, concerning the value of
any Collateral for the Secured Obligations or related to the nature,
scope or value of any right or remedy of the Lender hereunder or under
any of the Loan Documents, including any review of factual matters in
connection therewith, which expenses shall include the reasonable fees
and disbursements of such Persons; and (h) costs and expenses paid or
-77-
<PAGE>
incurred to obtain payment of the Secured Obligations, enforce the
Security Interest, sell or otherwise realize upon the Collateral, and
otherwise enforce the provisions of the Loan Documents, or to prosecute
or defend any claim in any way arising out of, related to or connected
with, this Agreement or any of the Loan Documents, which expenses shall
include the reasonable fees and disbursements of counsel and of experts
and other consultants retained by the Lender.
The foregoing shall not be construed to limit any other provisions of
the Loan Documents regarding costs and expenses to be paid by the
Borrower. The Borrower hereby authorizes the Lender to debit the
Borrower's loan accounts (by increasing the principal amount of the
Revolving Credit Loan) in the amount of any such costs and expenses
owed by the Borrower when due.
Section 12.3 Stamp and Other Taxes. The Borrower will pay any
and all stamp, registration, recordation and similar taxes, fees or
charges and shall indemnify the Lender against any and all liabilities
with respect to or resulting from any delay in the payment or omission
to pay any such taxes, fees or charges, which may be payable or
determined to be payable in connection with the execution, delivery,
performance or enforcement of this Agreement and any of the Loan
Documents or the perfection of any rights or security interest
thereunder.
Section 12.4 Setoff. In addition to any rights now or hereafter
granted under applicable law, and not by way of limitation of any such
rights, upon and after the occurrence of any Event of Default, the
Lender and any participant with the Lender in the Loans are hereby
authorized by the Borrower at any time or from time to time, without
notice to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, time or demand, including, but
not limited to, indebtedness evidenced by certificates of deposit,
whether matured or unmatured) and any other indebtedness at any time
held or owing by the Lender or any participant to or for the credit or
the account of the Borrower against and on account of the Secured
Obligations irrespective or whether or not (a) the Lender shall have
made any demand under this Agreement or any of the Loan Documents, or
(b) the Lender shall have declared any or all of the Secured
Obligations to be due and payable as permitted by Section 11.2 and
although such Secured Obligations shall be contingent or unmatured.
-78-
<PAGE>
Section 12.5 Litigation. EACH OF THE LENDER AND THE BORROWER
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN
ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST THE BORROWER OR THE LENDER
ARISING OUT OF THIS AGREEMENT, THE COLLATERAL OR ANY ASSIGNMENT THEREOF
OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN THE
BORROWER AND THE LENDER OF ANY KIND OR NATURE. THE BORROWER AND THE
LENDER HEREBY AGREE THAT THE FEDERAL COURT OF THE NORTHERN DISTRICT OF
GEORGIA OR, AT THE OPTION OF THE LENDER, ANY COURT IN WHICH THE LENDER
SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY AND WHICH SITS IN A
JURISDICTION IN WHICH THE BORROWER TRANSACTS BUSINESS SHALL HAVE NON-
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN THE BORROWER AND THE LENDER, PERTAINING DIRECTLY OR INDIRECTLY
TO THIS AGREEMENT OR THE LOAN DOCUMENTS OR TO ANY MATTER ARISING
THEREFROM. THE BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS,
HEREBY WAIVING PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT OR OTHER
PROCESS OR PAPERS ISSUED THEREIN AND AGREEING THAT SERVICE OF SUCH
SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWER AT THE ADDRESS
SET FORTH IN SECTION 12.1(b), WHICH SERVICE SHALL BE DEEMED MADE UPON
RECEIPT THEREOF. THE NON-EXCLUSIVE CHOICE OF FORUM SET FORTH IN THIS
SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT
TO ENFORCE THE SAME IN ANY APPROPRIATE JURISDICTION.
Section 12.6 Waiver of Rights. THE BORROWER HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS WHICH THE BORROWER HAS
UNDER CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR UNDER
ANY SIMILAR PROVISION OF APPLICABLE LAW TO NOTICE AND TO A JUDICIAL
HEARING PRIOR TO THE ISSUANCE OF A WRIT OF POSSESSION ENTITLING THE
LENDER, ITS SUCCESSORS AND ASSIGNS TO POSSESSION OF THE COLLATERAL UPON
DEFAULT OR EVENT OF DEFAULT. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING AND WITHOUT LIMITING ANY OTHER RIGHT WHICH THE LENDER MAY
HAVE, THE BORROWER CONSENTS THAT, IF THE LENDER FILES A PETITION FOR AN
IMMEDIATE WRIT OF POSSESSION IN COMPLIANCE WITH SECTIONS 44-14-261 AND
44-14-262 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR
PROVISION OF APPLICABLE LAW AND THIS WAIVER OR A COPY HEREOF IS ALLEGED
IN SUCH PETITION AND ATTACHED THERETO, THE COURT BEFORE WHICH SUCH
PETITION IS FILED MAY DISPENSE WITH ALL RIGHTS AND PROCEDURES HEREIN
WAIVED AND MAY ISSUE FORTHWITH AN IMMEDIATE WRIT OF POSSESSION IN
ACCORDANCE WITH CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA
OR IN ACCORDANCE WITH ANY SIMILAR PROVISION OF APPLICABLE LAW, WITHOUT
THE NECESSITY OF AN ACCOMPANYING BOND AS OTHERWISE REQUIRED BY SECTION
44-14-263 OF THE OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE WITH ANY
SIMILAR PROVISION OF APPLICABLE LAW. THE BORROWER HEREBY ACKNOWLEDGES
THAT IT HAS READ AND FULLY UNDERSTANDS THE TERMS OF THIS WAIVER AND THE
EFFECT HEREOF.
-79-
<PAGE>
Section 12.7 Reversal of Payments. To the extent the Borrower
makes a payment or payments to the Lender or the Lender receives any
payment or proceeds of the Collateral for the Borrower's benefit, which
payment(s) or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable
cause, then, the Lender shall have the continuing and exclusive right
to apply, reverse and re-apply any and all payments to any portion of
the Secured Obligations, and, to the extent of such payment or proceeds
received, the Secured Obligations or part thereof intended to be
satisfied shall be revived and continued in full force and effect, as
if such payment or proceeds had not been received by the Lender.
Section 12.8 Injunctive Relief. The Borrower recognizes that,
in the event the Borrower fails to perform, observe or discharge any of
its obligations or liabilities under this Agreement, any remedy of law
may prove to be inadequate relief to the Lender; therefore, the
Borrower agrees that the Lender, at the Lender's option, shall be
entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
Section 12.9 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose
relating to this Agreement, including, without limitation, all
computations utilized by the Borrower to determine whether it is in
compliance with any covenant contained herein, shall, unless there is
an express written direction or consent by the Lender to the contrary,
be performed in accordance with GAAP.
Section 12.10 Assignment; Participation. All the provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights under this
Agreement. The Lender may assign to one or more Persons, or sell
participations to one or more Persons in, all or a portion of its
rights and obligations hereunder and under the Note and, in connection
with any such assignment or sale of a participation, may assign its
rights and obligations under the Security Documents. The Lender may,
in connection with any assignment or proposed assignment or sale or
proposed sale of a participation, disclose to the assignee or proposed
assignee or participant or proposed participant any information
relating to the Borrower furnished to the Lender by or on behalf of the
Borrower.
-80-
<PAGE>
Section 12.11 Amendments. Any term, covenant, agreement or
condition of this Agreement or any of the other Loan Documents may be
amended or waived and any departure therefrom may be consented to if,
but only if, such amendment, waiver or consent is in writing signed by
the Lender and, in the case of an amendment, by the Borrower. Unless
otherwise specified in such waiver or consent, a waiver or consent
given hereunder shall be effective only in the specific instance and
for the specific purpose for which given.
Section 12.12 Performance of Borrower's Duties. The Borrower's
obligations under this Agreement and each of the Loan Documents shall
be performed by the Borrower at its sole cost and expense. If the
Borrower shall fail to do any act or thing which it has covenanted to
do under this Agreement or any of the Loan Documents, the Lender may
(but shall not be obligated to) do the same or cause it to be done
either in the name of the Lender or in the name and on behalf of the
Borrower, and the Borrower hereby irrevocably authorizes the Lender so
to act.
Section 12.13 Indemnification. The Borrower agrees to reimburse
the Lender for all reasonable costs and expenses, including reasonable
counsel fees and disbursements, incurred and to indemnify and hold the
Lender harmless from and against all losses suffered by the Lender,
other than losses resulting from the Lender's gross negligence or
willful misconduct, in connection with (a) the exercise by the Lender
of any right or remedy granted to it under this Agreement or any of the
Loan Documents, (b) any claim, and the prosecution or defense thereof,
arising out of or in any way connected with this Agreement or any of
the Loan Documents, except in the case of a dispute between the
Borrower and the Lender in which the Borrower prevails in a final
unappealed or unappealable judgment, and (c) the collection or
enforcement of the Secured Obligations or any of them.
Section 12.14 All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Lender and any Persons
designated by the Lender pursuant to any provisions of this Agreement
or any of the Loan Documents shall be deemed coupled with an interest
and shall be irrevocable so long as any of the Secured Obligations
remain unpaid or unsatisfied or the Revolving Credit Facility has not
been terminated.
Section 12.15 Survival. Notwithstanding any termination of this
Agreement, (a) until all Secured Obligations arising under or with
respect to this Agreement have been paid in full and the Revolving
Credit Facility terminated, the Lender shall retain its Security
Interest and shall retain
-81-
<PAGE>
all rights under this Agreement and each of the Security Documents with
respect to the Collateral as fully as though this Agreement had not
been terminated, and (b) the indemnities to which the Lender is
entitled under the provisions of this Article 12 and any other
provision of this Agreement and the Loan Documents shall continue in
full force and effect and shall protect the Lender against events
arising after such termination as well as before.
Section 12.16 Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability
without invalidating the remainder of such provision or the remaining
provisions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 12.17 Governing Law. This Agreement and the Note shall
be construed in accordance with and governed by the law of the State of
Georgia.
Section 12.18 Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and shall be binding upon all parties, their successors and
assigns, and all of which taken together shall constitute one and the
same agreement.
Section 12.19 Reproduction of Documents. This Agreement, each
of the Loan Documents and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by the Lender, and
(c) financial statements, certificates and other information previously
or hereafter furnished to the Lender, may be reproduced by the Lender
by any photographic, photostatic, microcard, microfilm, miniature
photographic or other similar process, and the Lender may destroy any
original document so reproduced. Each party hereto stipulates that, to
the extent permitted by applicable laws any such reproduction shall be
as admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original shall be in
existence and whether or not such reproduction was made by such Lender
in the regular course of business), and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible
in evidence.
-82-
<PAGE>
Section 12.20 Funds Transfer Services.
(a) The Borrower acknowledges that the Lender has made available
to it a description of security procedures regarding funds transfers
executed by the Lender or an affiliate bank at the request of such
Borrower (the "Security Procedures"). The Borrower and the Lender agree
that the Security Procedures are commercially reasonable. The Borrower
further acknowledges that the full scope of the Security Procedures
which the Lender or such affiliate bank offers and strongly recommends
for funds transfers is available only if the Borrower communicates
directly with the Lender or such affiliate bank as applicable in
accordance with said procedures. If the Borrower attempts to
communicate by any other method or otherwise not in accordance with the
Security Procedures, the Lender or such affiliate bank, as applicable,
shall not be required to execute such instructions, but if the Lender
or such affiliate bank, as applicable, does so, the Borrower will be
deemed to have refused the Security Procedures that the Lender or such
affiliate bank, as applicable, offers and strongly recommends, and the
Borrower will be bound by any funds transfer, whether or not
authorized, which is issued in the Borrower's name and accepted by the
Lender or such affiliate bank, as applicable, in good faith. The
Lender or such affiliate bank, as applicable, may modify the Security
Procedures at such time or times and in such manner as the Lender or
such affiliate bank, as applicable, in its sole discretion, deems
appropriate to meet prevailing standards of good banking practice. By
continuing to use the Lender's or such affiliate bank's, as applicable,
wire transfer services after receipt of any modification of the
Security Procedures, the Borrower agrees that the Security Procedures,
as modified, are likewise commercially reasonable. The Borrower
further agrees to establish and maintain procedures to safeguard the
Security Procedures and any information related thereto.
(b) The Lender or such affiliate bank, as applicable, will
generally use the Fedwire funds transfer system for domestic funds
transfers, and the funds transfer system operated by the Society for
Worldwide International Financial Telecommunication (SWIFT) for
international funds transfers. International funds transfers may also
be initiated through the Clearing House InterBank Payment System
(CHIPs) or international cable. However, the Lender or such affiliate
bank, as applicable, may use any means and routes that the Lender or
such affiliate bank, as applicable, in its sole discretion, may
consider suitable for the transmission of funds. Each payment order,
or cancellation thereof, carried out through a funds transfer system or
a clearing house will be governed by all applicable funds transfer
system rules and clearing house rules and clearing arrangements,
whether or not the Lender or such affiliate bank, as applicable, is a
member of the system, clearing house or arrangement and the Borrower
acknowledges that the Lender's or such affiliate bank's, as applicable,
right to reverse, adjust, stop payment
-83-
<PAGE>
or delay posting of an executed payment order is subject to the laws,
regulations, rules, circulars and arrangements described herein.
Section 12.21 Consent to Advertising and Publicity. The
Borrower agrees that the Lender may issue and disseminate to the public
information describing the credit accommodation entered into pursuant
to this Agreement, including the name and address of the Borrower and
the amount and a general description of the credit facilities provided
hereunder.
Section 12.22 Final Agreement. This Agreement and the other
Loan Documents are intended by the parties hereto as the final,
complete and exclusive expression of the agreement among them with
respect to the subject matter hereof and thereof. This Agreement and
the other Loan Documents supersede any and all prior oral or written
agreements between the parties hereto relating to the subject matter
hereof and thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in Atlanta, Georgia by their duly authorized officers in
several counterparts all as of the day and year first written above.
BORROWER:
INTERNATIONAL COMFORT PRODUCTS
CORPORATION (USA)
[CORPORATE SEAL]
Attest: By: /s/ Stephen L. Clanton
--------------------------
Name: Stephen L. Clanton
By: /s/ David P. Cain Title: Senior Vice President, CFO
--------------------------- & Treasurer
Name: David P. Cain
Title: Senior Vice President, General
Counsel & Secretary
LENDER:
NATIONSBANK, N.A.
By:
---------------------------------
Name:
Title:
-84-
<PAGE>
EXHIBIT "A"
REVOLVING CREDIT NOTE
$45,000,000 Date: July __, 1997
FOR VALUE RECEIVED, on July __, 1999 the undersigned promises
to pay to the order of NationsBank, N.A., (hereinafter, together with
any holder hereof, called "Holder") at Atlanta, Georgia (or at such
other place as the Holder may designate in writing to the undersigned)
the principal amount of $45,000,000 or so much thereof as has been
advanced hereunder.
The undersigned shall pay interest as provided in that certain
Loan and Security Agreement between the undersigned and Holder dated
July __, 1997 (the "Loan Agreement").
It is contemplated that the principal sum evidenced by this
Note may be reduced from time to time and that additional advances may
be made from time to time, as provided in the Loan Agreement; provided,
however, that the outstanding principal amount evidenced by this Note
shall not exceed the maximum amount provided in the Loan Agreement.
This Note is subject to the terms and conditions of, and
entitled to the benefit of the Collateral described in, the Loan
Agreement. Capitalized terms not defined herein shall have the
meanings given in the Loan Agreement.
No delay or failure on the part of the Holder in the exercise
of any right or remedy hereunder, under the Loan Agreement, the
Security Documents or at law or in equity, shall operate as a waiver
thereof, and no single or partial exercise by the Holder of any right
or remedy hereunder, under the Loan Agreement, the Security Documents,
or at law or in equity shall preclude or estop another or further
exercise thereof or the exercise of any other right or remedy.
Principal and interest on this Note shall be payable and paid
in lawful money of the United States of America.
<PAGE>
The undersigned and all endorsers waive presentment, notice of
dishonor and protest.
Time is of the essence of this Note and, in case this Note is
collected by law or through an attorney at law, or under advice
therefrom, the undersigned agrees to pay all costs of collection,
including reasonable attorneys' fees if collected by or through an
attorney.
The provisions of this Note shall be construed and interpreted
and all rights and obligations of the parties hereunder determined in
accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed, sealed and delivered in Atlanta, Georgia, in its corporate
name, by and through its respective duly authorized officers, as of the
day and year first above written.
INTERNATIONAL COMFORT PRODUCTS
CORPORATION (USA)
By:
(Title)
ATTEST:
By:
(Title)
[CORPORATE SEAL]<PAGE>
OTHER EXHIBITS AND SCHEDULES OMITTED AS NOT MATERIAL
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS
SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE FINANCIAL
STATEMENTS OF INTERNATIONAL
COMFORT PRODUCTS CORPORATION
FOR THE PERIOD ENDED SEPTEMBER
30, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 19,400
<SECURITIES> 0
<RECEIVABLES> 104,900
<ALLOWANCES> 0
<INVENTORY> 103,800
<CURRENT-ASSETS> 231,200
<PP&E> 216,200
<DEPRECIATION> 123,100
<TOTAL-ASSETS> 345,800
<CURRENT-LIABILITIES> 96,500
<BONDS> 165,000
<COMMON> 171,000
0
0
<OTHER-SE> (121,500)
<TOTAL-LIABILITY-AND-EQUITY> 345,800
<SALES> 0
<TOTAL-REVENUES> 491,300
<CGS> 390,200
<TOTAL-COSTS> 67,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,000
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 19,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,200
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0
</TABLE>
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION (USA)
- ------------------------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
(In Millions of U.S. Dollars) - U.S. GAAP
(Unaudited)
Page
----
Consolidated Statements of Income - Three Months Ended
September 30, 1996 and 1997 2
Consolidated Statements of Income - Nine Months Ended
September 30, 1996 and 1997 3
Consolidated Balance Sheets - September 30, 1996 and 1997
and December 31, 1996 4 - 5
Consolidated Statements of Cash Flows - Nine Months Ended
September 31, 1996 and 1997 6
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION (USA)
Consolidated Statements of Income
For the Three Months Ended September 30, 1996 and 1997 - UNAUDITED
(In Millions of U.S. Dollars) - U.S. GAAP
<TABLE>
<CAPTION>
Restated
1996 1997
- ----------------------------------------------------------------------------
<S> <C> <C>
Operating Revenue $ 163.3 $ 160.9
Cost of Sales 129.3 131.3
- ----------------------------------------------------------------------------
Gross Margin 34.0 29.6
Selling, General and Administrative Expenses 22.6 19.4
- ----------------------------------------------------------------------------
Operating Profit 11.4 10.2
- ----------------------------------------------------------------------------
Financial Expenses
Interest expense 4.3 3.9
Amortization of debt issuance costs 1.0 0.3
- ----------------------------------------------------------------------------
5.3 4.2
- ----------------------------------------------------------------------------
Net Income $ 6.1 $ 6.0
============================================================================
</TABLE>
-2-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION (USA)
Consolidated Statements of Income
For the Nine Months Ended September 30, 1996 and 1997 - UNAUDITED
(In Millions of U.S. Dollars) - U.S. GAAP
<TABLE>
<CAPTION>
Restated
1996 1997
- ----------------------------------------------------------------------------
<S> <C> <C>
Operating Revenue $ 463.5 $ 452.9
Cost of Sales 378.2 363.2
- ----------------------------------------------------------------------------
Gross Margin 85.3 89.7
Selling, General and Administrative Expenses 60.2 58.4
- ----------------------------------------------------------------------------
Operating Profit 25.1 31.3
- ----------------------------------------------------------------------------
Financial Expenses
Interest expense 12.7 12.5
Amortization of debt issuance costs 2.2 0.8
- ----------------------------------------------------------------------------
14.9 13.3
- ----------------------------------------------------------------------------
Net Income $ 10.2 $ 18.0
============================================================================
</TABLE>
-3-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION (USA)
Consolidated Balance Sheets
(In Millions of U.S. Dollars) - U.S. GAAP
<TABLE>
<CAPTION>
September 30, December 31,
----------------- -------------
Restated
1996 1997 1996
- ---------------------------------------------------------------------------
UNAUDITED
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 8.0 $ 14.2 $ 11.9
Restricted cash - 0.6 0.6
Accounts receivable 90.8 91.8 72.1
Note receivable from Pameco - 10.1 -
Inventories 97.1 75.6 92.3
Prepaid expenses 1.6 1.1 3.7
- -----------------------------------------------------------------------------
197.5 193.4 180.6
- -----------------------------------------------------------------------------
Fixed Assets
Property, plant and equipment 194.3 202.3 200.4
Accumulated depreciation and
amortization 97.2 111.9 101.8
- -----------------------------------------------------------------------------
97.1 90.4 98.6
- -----------------------------------------------------------------------------
Intangible Assets, Net 21.8 16.9 21.9
- -----------------------------------------------------------------------------
$ 316.4 $ 300.7 $ 301.1
=============================================================================
</TABLE>
-4-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION (USA)
Consolidated Balance Sheets
(In Millions of U.S. Dollars) - U.S. GAAP
<TABLE>
<CAPTION>
September 30, December 31,
----------------- -------------
Restated
1996 1997 1996
- ----------------------------------------------------------------------------
UNAUDITED
<S> <C> <C> <C>
LIABILITIES
Current Liabilities
Checks outstanding in excess
of bank balance $ 9.3 $ 9.7 $ 5.1
Short-term borrowings 35.0 $ 10.3 $ 27.0
Accounts payable 36.2 30.5 32.7
Accrued liabilities 24.9 23.1 26.8
Product warranty 7.7 7.7 7.8
- -----------------------------------------------------------------------------
113.1 81.3 99.4
Long-Term Debt 140.0 140.0 140.0
Product Warranty 17.8 16.3 16.6
Deferred Income and Other 1.9 2.0 2.1
Environmental Liability 2.7 2.8 2.7
Accrued Retiree Medical 3.0 4.9 4.9
- -----------------------------------------------------------------------------
278.5 247.3 265.7
- -----------------------------------------------------------------------------
STOCKHOLDER'S EQUITY
Capital stock 13.0 13.0 13.0
Additional paid-in capital 99.7 99.7 99.7
Deficit (60.8) (45.3) (63.3)
Advances to parent (14.0) (14.0) (14.0)
- -----------------------------------------------------------------------------
37.9 53.4 35.4
- -----------------------------------------------------------------------------
$ 316.4 $ 300.7 $ 301.1
=============================================================================
</TABLE>
-5-
<PAGE>
INTERNATIONAL COMFORT PRODUCTS CORPORATION (USA)
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1996 and 1997 - UNAUDITED
(In Millions of U.S. Dollars) - U.S. GAAP
<TABLE>
<CAPTION>
Restated
1996 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 10.2 $ 18.0
Adjustments to reconcile net income to
net cash used in operating activities
Depreciation and amortization 14.5 13.3
Changes in operating assets and liabilities:
Accounts and notes receivable (21.1) (23.5)
Inventories (34.2) ( 1.7)
Prepaid expenses and other current assets 0.3 2.4
Accounts payable, accrued liabilities,
and product warranty 6.1 (12.0)
- -----------------------------------------------------------------------------
(24.2) (3.5)
- -----------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (6.1) (4.2)
Sale of Coastline and factory branches - 22.3
- -----------------------------------------------------------------------------
(6.1) 18.1
- -----------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds (payments) on short-term
borrowings 33.7 (16.7)
Checks outstanding in excess of bank
balance 4.3 4.6
Debt issuance costs (4.2) (0.2)
- -----------------------------------------------------------------------------
33.8 (12.3)
- -----------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents 3.5 2.3
Cash and Cash Equivalents -
Beginning of the period 4.5 11.9
- -----------------------------------------------------------------------------
Cash and Cash Equivalents -
End of the period $ 8.0 $ 14.2
=============================================================================
</TABLE>
-6-
