<PAGE>
- --------------------------------------------------------------------------------
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
From the transition period from to
Commission File Number 1-9753
GEORGIA GULF CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 58-1563799
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Perimeter Center Terrace, Suite 595, Atlanta, Georgia 30346
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (770) 395-4500
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 / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding as of
Class May 6, 1998
-----------------
<S> <C>
Common Stock, $0.01 par value..............................31,652,472 shares
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
GEORGIA GULF CORPORATION
FORM 10-Q
QUARTERLY PERIOD ENDED MARCH 31, 1998
INDEX
<TABLE>
<CAPTION>
Page
PART I. FINANCIAL INFORMATION Numbers
-------
Item 1. Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets as of March 31, 1998
and December 31, 1997........................................ 1
Condensed Consolidated Statements of Income for the Three
Months Ended March 31, 1998 and 1997......................... 2
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1998 and 1997......................... 3
Notes to Condensed Consolidated Financial Statements as of
March 31, 1998............................................... 4-5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................. 6-7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...................................... 8
SIGNATURES.............................................................................. 9
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------------ -----------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 5,149 $ 1,621
Receivables 65,505 67,553
Inventories 80,447 92,921
Prepaid expenses 7,127 6,508
Deferred income taxes 7,409 7,409
------------------ -----------------
Total current assets 165,637 176,012
------------------ -----------------
Property, plant and equipment, at cost 658,555 650,968
Less accumulated depreciation 250,739 240,108
------------------ -----------------
Property, plant and equipment, net 407,816 410,860
------------------ -----------------
Other assets 28,305 25,831
------------------ -----------------
Total assets $ 601,758 $ 612,703
------------------ -----------------
------------------ -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 80,340 $ 92,588
Interest payable 4,030 2,218
Accrued income taxes 6,752 564
Accrued compensation 4,411 7,281
Accrued pension 2,615 2,257
Other accrued liabilities 15,079 13,632
------------------ -----------------
Total current liabilities 113,227 118,540
------------------ -----------------
Long-term debt 398,840 393,040
------------------ -----------------
Deferred income taxes 68,520 65,520
------------------ -----------------
Stockholders' equity
Common stock - $0.01 par value 319 328
Retained earnings 20,852 35,275
------------------ -----------------
Total stockholders' equity 21,171 35,603
------------------ -----------------
Total liabilities and stockholders' equity $ 601,758 $ 612,703
------------------ -----------------
------------------ -----------------
Common shares outstanding 31,872,472 32,781,439
------------------ -----------------
------------------ -----------------
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
1998 1997
------------- ------------
<S> <C> <C>
Net sales $ 232,705 $ 239,225
------------- ------------
Operating costs and expenses
Cost of sales 187,699 203,460
Selling and administrative 10,745 11,098
------------- ------------
Total operating costs and expenses 198,444 214,558
------------- ------------
Operating income 34,261 24,667
Other income (expense)
Interest, net (7,126) (5,262)
------------- ------------
Income before income taxes 27,135 19,405
Provision for income taxes 10,179 7,344
------------- ------------
Net income $ 16,956 $ 12,061
------------- ------------
------------- ------------
Basic earnings per share $ 0.52 $ 0.35
------------- ------------
------------- ------------
Diluted earnings per share $ 0.52 $ 0.35
------------- ------------
------------- ------------
Weighted average common shares 32,438,607 34,441,497
------------- ------------
------------- ------------
Weighted average common shares and equivalents 32,721,604 34,807,712
------------- ------------
------------- ------------
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
1998 1997
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 16,956 $ 12,061
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 10,927 7,875
Change in operating assets, liabilities and other 9,899 9,546
-------------- -------------
Net cash provided by operating activities 37,782 29,482
-------------- -------------
Cash flows from financing activities:
Long-term debt proceeds 37,000 45,000
Long-term debt payments (31,200) (38,600)
Proceeds from issuance of common stock 981 325
Repurchase and retirement of common stock (30,884) (9,783)
Dividends paid (2,564) (2,750)
-------------- -------------
Net cash used in financing activities (26,667) (5,808)
-------------- -------------
Cash flows from investing activities:
Capital expenditures (7,587) (20,330)
-------------- -------------
Net cash used in investing activities (7,587) (20,330)
-------------- -------------
Net change in cash and cash equivalents 3,528 3,344
Cash and cash equivalents at beginning of period 1,621 698
-------------- -------------
Cash and cash equivalents at end of period $ 5,149 $ 4,042
-------------- -------------
-------------- -------------
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report for the year ended December 31, 1997.
Operating results for Georgia Gulf Corporation and its subsidiaries
(the "Company" or "Georgia Gulf") for the three-month period ended March 31,
1998, are not necessarily indicative of the results that may be expected for the
year ending December 31, 1998.
NOTE 2: NEW ACCOUNTING PRONOUNCEMENT
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," which
requires additional disclosure and presentation of amounts comprising
comprehensive income beyond net income. The Company had no other comprehensive
income amounts for the periods presented. As a result, the adoption had no
impact on the Company's reporting under generally accepted accounting
principles.
NOTE 3: INVENTORIES
The major classes of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------------- -------------
<S> <C> <C>
Raw materials and supplies $ 28,843 $ 34,451
Finished goods 51,604 58,470
------------ ---------
$ 80,447 $ 92,921
------------ ---------
------------ ---------
</TABLE>
NOTE 4: STOCKHOLDERS' EQUITY
The Company repurchased and retired 1,021,700 shares of its common
stock for $30,884,000 during the three months ended March 31, 1998. As of March
31, 1998, the Company had authorization to repurchase up to 6,500,000 additional
shares under the current common stock repurchase program.
4
<PAGE>
NOTE 5: DERIVATIVE FINANCIAL INSTRUMENTS
The Company has two interest rate swap agreements for a total notional
amount of $100,000,000 maturing in June 2002 to fix the interest rate on a term
loan. Also, the Company has an interest rate swap agreement for a notional
amount of $100,000,000 as a cash flow hedge for a cogeneration facility
operating lease agreement. This interest rate swap agreement will mature August
2002.
The Company does not use derivatives for trading purposes. Interest
rate swap agreements, a form of derivative, are used by the Company to manage
interest costs on certain portions of the Company's long-term debt. These
financial statements do not reflect temporary market gains and losses on
derivative financial instruments, although the estimated fair value is disclosed
in the Company's annual report for the year ended December 31, 1997. Amounts
paid or received on the interest rate swap agreements are recorded to interest
expense as incurred. As of March 31, 1998, and December 31, 1997, interest rate
swap agreements were the only form of derivative financial instruments
outstanding.
NOTE 6: EARNINGS PER SHARE
Income available to common stockholders, the numerator in basic and
diluted earnings per share computations, is $16,956,000, and $12,061,000 for the
three months ended March 31, 1998 and 1997, respectively.
The following table reconciles the denominator for the basic and
diluted earnings per share computations shown on the condensed consolidated
statements of income (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1998 1997
--------- ---------
<S> <C> <C>
Weighted average common shares 32,439 34,441
Plus incremental shares from
assumed conversions:
Options 261 340
Employee stock purchase plan rights 22 27
-------- -------
Weighted average common shares and equivalents 32,722 34,808
-------- --------
-------- --------
</TABLE>
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS
First Quarter of 1998 Compared With the First Quarter of 1997:
For the first quarter ended March 31, 1998, diluted earnings per share
was $0.52 on net income of $17.0 million and net sales of $232.7 million. This
compares with diluted earnings per share of $0.35, net income of $12.1 million
and net sales of $239.2 million for the first quarter of 1997.
Operating income for the first quarter of 1998 was $34.3 million, an
increase of 39 percent from $24.7 million for the same period in 1997. Compared
with the first quarter of 1997, profit margins improved as overall sales volumes
rose slightly and lower costs for raw materials more than offset lower selling
prices. Phenol and acetone sales increased, resulting from the Company's late-
1997 plant expansion, and the Company's electrochemical products experienced
higher sales as well. These increases were somewhat offset by lower volumes from
methanol and cumene. The overall average selling price of the Company's products
decreased by four percent, as improvements in caustic soda and acetone pricing
were more than offset by lower results from cumene, polyvinyl chloride ("PVC")
resins, and vinyl chloride monomer ("VCM").
Interest expense increased to $7.1 million for the first quarter of
1998, compared with $5.3 million for the same period in 1997. This increase
primarily reflects less interest being capitalized than in 1997 in connection
with capital expansion activity and to a lesser extent slightly higher interest
rates during the first quarter of 1998.
Basic and diluted earnings per share for the first quarter of 1998 were
favorably impacted by a reduction in the number of outstanding common shares
from the first quarter of 1997 as a result of the Company's stock repurchase
programs.
LIQUIDITY AND CAPITAL RESOURCES
Georgia Gulf's primary liquidity focus is to maintain debt at a
manageable level, regardless of the Company's position in the economic cycle.
Management believes that cash provided by operations and the availability of
borrowings under the Company's revolving credit facility will provide sufficient
funds to support planned capital expenditures, dividends, stock repurchases,
working capital fluctuations and debt service requirements.
For the three months ended March 31, 1998, Georgia Gulf generated $37.8
million of cash flow from operating activities as compared with $29.5 million
for the three months ended March 31, 1997. Major sources of cash flow from
operating activities in the first quarter of 1998 were net income of $17.0
million, non-cash provisions of $10.9 million for depreciation and amortization,
and fluctuations in working capital items, primarily resulting from a decrease
in inventories offset in part by a lower accounts payable balance and higher
accrued income taxes payable due to the timing of payments. Changes in working
capital during the first three months of 1997 were primarily attributable to a
higher accounts payable balance due to the timing of raw material purchases and
an increase in accounts receivable from higher sales during the first quarter of
1997.
6
<PAGE>
Debt increased by $5.8 million during the three months ended March 31,
1998, to a level of $398.8 million. The Company had approximately $180.0 million
of availability under its $350.0 million revolving credit loan as of March 31,
1998.
Capital expenditures for the three months ended March 31, 1998 were
down significantly to $7.6 million as compared to $20.3 million for the same
1997 period. Georgia Gulf completed a capital spending program in 1997, which
included capacity expansions in the phenol, acetone, alpha- methyl styrene
("AMS"), cumene, VCM and PVC compound plants. Capital expenditures for 1998 will
be directed toward certain environmental projects and increased efficiency of
existing operations. The Company estimates that total capital expenditures for
1998 will approximate $45.0 million.
The Company declared dividends of $0.08 per share or $2.6 million
during the first quarter of 1998. The Company also repurchased and retired 1.0
million shares of its common stock at a cost of $30.9 million during the same
period. As of March 31, 1998, the Company had authorization to repurchase up to
6.5 million additional shares under the current common stock repurchase program.
OUTLOOK
Several of the Company's products have continued to perform well during
the first part of the second quarter, particularly caustic soda and PVC
compounds. There are some indications of an improvement in operating profits
from aromatic chemicals as well. However, concern about the length and severity
of the ongoing economic problems in Southeast Asia and the resulting impact on
the PVC resins and VCM businesses, as well as the sudden collapse of methanol
pricing in the face of higher natural gas costs, has resulted in anticipation of
lower earnings for the second quarter of 1998 as compared with the first
quarter.
FORWARD-LOOKING STATEMENTS
This form 10-Q and other communications to stockholders, as well as
oral statements made by representatives of the Company, may contain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements relate to, among other things,
the Company's outlook for future periods, supply and demand, pricing trends and
market forces within the chemical industry, cost reduction strategies and their
results, planned capital expenditures, long-term objectives of management and
other statements of expectations concerning matters that are not historical
facts.
Predictions of future results contain a measure of uncertainty and,
accordingly, actual results could differ materially due to various factors.
Factors that could change forward-looking statements are, among others, changes
in the general economy, changes in demand for the Company's products or
increases in overall industry capacity that could affect production volumes
and/or pricing, changes and/or cyclicality in the industries to which the
Company's products are sold, availability and pricing of raw materials,
technological changes affecting production, difficulty in plant operations and
product transportation, governmental and environmental regulations and other
unforseen circumstances. A number of these factors are discussed in this Form
10-Q and in the Company's other periodic filings with the Securities and
Exchange Commission, including the Company's annual report on Form 10-K for the
year ended December 31, 1997.
7
<PAGE>
PART II. OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K.
a) The following exhibits are filed as part of this Form 10-Q
Quarterly Report.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------------
<S> <C>
10 (a) Receivable Transfer Agreement dated March 10, 1998,
by and among GGRC Corp., as Transferor, Georgia Gulf
Corporation, individually and as Collection Agent, and
Blue Ridge Asset Funding Corporation.
10 (b) Receivable Purchase Agreement dated March 10, 1998,
between Georgia Gulf Corporation, as Seller and as
Collection Agent and GGRC Corp., as Purchaser.
</TABLE>
b) No reports on Form 8-K were filed with the Securities and
Exchange Commission during the first quarter of 1998.
8
<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.
GEORGIA GULF CORPORATION
(Registrant)
Date May 8, 1998 /s/ Edward A. Schmitt
-------------------------------------- ---------------------
Edward A. Schmitt
President and Chief
Executive Officer
(Principal Executive Officer)
Date May 8, 1998 /s/ Richard B. Marchese
-------------------------------------- -----------------------
Richard B. Marchese
Vice President Finance,
Chief Financial Officer and
Treasurer
(Principal Financial Officer)
9
<PAGE>
Exhibit 10(a)
RECEIVABLES TRANSFER AGREEMENT
by and among
GGRC CORP.,
as Transferor,
GEORGIA GULF CORPORATION,
individually and
as Collection Agent,
and
BLUE RIDGE ASSET FUNDING CORPORATION
Dated as of March 10, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I Definitions................................................. 1
SECTION 1.1 Certain Defined Terms....................................... 1
SECTION 1.2 Other Terms.................................................17
SECTION 1.3 Computation of Time Periods.................................18
ARTICLE II Transfers and Settlements...................................18
SECTION 2.1 Assignment and Conveyance; Facility.........................18
SECTION 2.2 Transfers...................................................18
SECTION 2.3 Selection of Tranche Periods and Tranche Rates..............20
SECTION 2.4 Discount, Fees and Other Costs and Expenses.................21
SECTION 2.5 Non-Liquidation Settlement and Reinvestment Procedures......22
SECTION 2.6 Liquidation Settlement Procedures...........................22
SECTION 2.7 Fees ......................................................23
SECTION 2.8 Protection of Company's Ownership Rights....................23
SECTION 2.9 General Settlement Procedures...............................24
SECTION 2.10 Payments and Computations, Etc..............................24
SECTION 2.11 Reports.....................................................25
SECTION 2.12 Increase in and Reduction of Facility Limit.................25
SECTION 2.13 Optional Retransfer.........................................25
ARTICLE III Representations and Warranties..............................25
SECTION 3.1 Representations and Warranties..............................25
SECTION 3.2 Reaffirmation of Representations and Warranties.............29
ARTICLE IV Conditions Precedent........................................30
SECTION 4.1 Conditions to Closing.......................................30
ARTICLE V Covenants...................................................32
SECTION 5.1 Reporting Obligations.......................................32
SECTION 5.2 Negative Covenants of the Transferor and Georgia Gulf.......35
ARTICLE VI Administration and Collections..............................37
SECTION 6.1 Appointment of Collection Agent; Collection Agent Fee.......37
SECTION 6.2 Duties of Collection Agent..................................37
SECTION 6.3 Rights After Designation of New Collection Agent............38
SECTION 6.4 Responsibilities of the Transferor and Georgia Gulf.........39
SECTION 6.5 Lock-Box Notices............................................39
ARTICLE VII Termination Events..........................................40
SECTION 7.1 Termination Events..........................................40
SECTION 7.2 Termination.................................................42
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE VIII Indemnification.............................................42
SECTION 8.1 Indemnities by the Transferor...............................42
SECTION 8.2 Tax Indemnification.........................................44
SECTION 8.3 Additional Costs............................................45
SECTION 8.4 Other Costs and Expenses....................................46
SECTION 8.5 Reconveyance Under Certain Circumstances....................47
ARTICLE IX Miscellaneous...............................................47
SECTION 9.1 Term of Agreement...........................................47
SECTION 9.2 Waivers; Amendments.........................................47
SECTION 9.3 Notices.....................................................47
SECTION 9.4 Governing Law; Submission to Jurisdiction; Integration......49
SECTION 9.5 Severability; Counterparts..................................49
SECTION 9.6 Assignments.................................................49
SECTION 9.7 Confidentiality.............................................49
SECTION 9.8 No Bankruptcy Petition Against the Company..................50
SECTION 9.9 Limited Recourse; Waiver of Setoff..........................50
SECTION 9.10 Tax Characterization of the Transactions Contemplated by
this Agreement........................................... 50
EXHIBITS
EXHIBIT A Form of Contract...........................................A-1
EXHIBIT B Credit Policy..............................................B-1
EXHIBIT C List of Lock-Box Banks.....................................C-1
EXHIBIT D Form of Lock-Box Notice....................................D-1
EXHIBIT E Form of Monthly Report.....................................E-1
EXHIBIT F Form of Tranche Selection Notice...........................F-1
EXHIBIT G List of Top Ten Obligors By Aging..........................G-1
EXHIBIT H List of Actions/Suits......................................H-1
EXHIBIT I Schedule of Location of Records............................I-1
EXHIBIT J Schedule of Corporate Names, Trade Names or Assumed Names..J-1
EXHIBIT K Form of Compliance Certificate.............................K-1
</TABLE>
ii
<PAGE>
RECEIVABLES TRANSFER AGREEMENT
RECEIVABLES TRANSFER AGREEMENT, dated as of March 10, 1998 (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Agreement") between GGRC CORP., a Delaware corporation, as transferor (the
"Transferor"), GEORGIA GULF CORPORATION, a Delaware corporation ("Georgia
Gulf"), individually and as the initial collection agent (in such capacity, the
"Collection Agent") and BLUE RIDGE ASSET FUNDING CORPORATION, a Delaware
corporation (the "Company" or "Blue Ridge"), individually and as agent for and
on behalf of itself and any commercial paper funding conduit (each, a "Conduit")
or bank or liquidity bank, designated by the Administrative Agent.
PRELIMINARY STATEMENT
The Transferor desires to sell and assign, from time to time, undivided
percentage interests in the domestic accounts receivable generated in the normal
course of Georgia Gulf's business, and the Company desires to acquire such
undivided percentage interests, subject to the terms and conditions of this
Agreement. The Collection Agent has agreed to service, upon the terms and
conditions described herein, the accounts receivable sold to the Company.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Additional Costs" shall have the meaning specified in Section 8.3(a).
"Adjusted Dilution Ratio" shall mean the average Dilution Ratio
calculated for the 12 monthly Reporting Periods immediately preceding the date
of determination.
"Adjusted LIBOR" applicable to any Interest Period means a rate per
annum equal to the quotient obtained (rounded upwards, if necessary, to the next
higher 1/100th of 1%) by dividing (i) the applicable LIBOR for such Interest
Period by (ii) 1.00 minus the Eurodollar Reserve Percentage.
"Administration Fee" shall mean the fee payable by the Transferor to
Blue Ridge pursuant to Section 2.7 hereof, the terms of which are set forth in
the Fee Letter.
<PAGE>
"Administrative Agent" shall mean Wachovia Bank, N.A. and its
successors and assigns.
"Advance Rate" shall mean the difference, expressed as a percentage, of
1.00 less the Required Reserve Factor.
"Adverse Claim" shall mean a lien, security interest, charge or
encumbrance, or other right, or claim or interest in, of or on any Person's
assets or properties in favor of any other Person.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, another Person
or a Subsidiary of such other Person. A Person shall be deemed to control
another Person if the controlling Person owns, directly or indirectly, 10% or
more of any class of voting securities of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
stock or otherwise.
"Aggregate Net Investment" shall mean the sum of the amounts paid to
the Transferor for all Transfers less the aggregate amount of Collections (or
payments, if any, pursuant to the first sentence of Section 2.6) received and
applied by the Company to reduce such Aggregate Net Investment pursuant to
Sections 2.5 or 2.6; provided that the Aggregate Net Investment shall be
restored in the amount of any Collections so received and applied if at any time
the distribution of such Collections is rescinded or returned for any reason.
"Aggregate Unpaids" shall mean, at any time, an amount equal to the sum
of (i) the aggregate accrued and unpaid Discount with respect to all Tranche
Periods at such time, (ii) the Aggregate Net Investment at such time and (iii)
all other amounts owed (whether due or accrued) hereunder by the Transferor to
the Company at such time.
"Allocated Net Investment" shall mean, with respect to any Tranche
Period, the portion of the Aggregate Net Investment allocated to such Tranche
Period.
"Assets" shall have the meaning specified in Section 2.1.
"Bankruptcy Code" shall have the meaning specified in Section 3.1(m).
"Base Rate" means for any Base Rate Loan for any day, the rate per
annum equal to the higher as of such day of (i) the Prime Rate, or (ii) one-half
of one percent above the Federal Funds Rate. For purposes of determining the
Base Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall
be effective on the date of each such change.
2
<PAGE>
"BR Tranche" shall mean a Tranche as to which Discount is calculated at
the Base Rate.
"BR Tranche Period" shall mean, with respect to a BR Tranche, prior to
the Termination Date, a period of up to thirty (30) days (which period shall be
equal to the number of calendar days by which the date of the related Transfer
precedes the related due date for such Receivable) commencing on a Business Day
selected by the Transferor pursuant to this Agreement, and after the Termination
Date or the occurrence of the event described in Section 7.1(e)(i) (exclusive of
any days of grace), at the Company's option pursuant to Section 2.3(b), up to
thirty (30) days. If such BR Tranche Period would end on a day which is not a
Business Day, such BR Tranche Period shall end on the next succeeding Business
Day.
"Business Day" shall mean (i) with respect to any matters relating to
the Eurodollar Rate, a day on which banks are open for business in New York, New
York and in Atlanta, Georgia and on which dealings in Dollars are carried on in
the London interbank market and (ii) for all other purposes, any day other than
a Saturday, Sunday or other day on which banking institutions or trust companies
in New York, New York or Atlanta, Georgia are authorized or obligated by law,
executive order or governmental decree to be closed.
"Capitalized Lease" of a Person shall mean any lease of property by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with GAAP.
"Closing Date" shall mean March 10, 1998.
"Collection Agent" or "Servicer" shall mean, at any time, the Person
then authorized pursuant to Section 6.1 to service, administer and collect
Receivables.
"Collection Agent Fee" shall have the meaning specified in Section 6.1.
"Collections" shall mean all payments (including Recoveries),
collections and other proceeds of Receivables, including all Finance Charges and
proceeds of all Residual Receivable Interests with respect to such Receivables
received by the Collection Agent in cash or cash equivalents with respect to
such Receivables, whether in the form of checks, wire transfers, ACH or
electronic entry, and any Collections of such Receivables deemed to have been
received pursuant to Section 2.9 hereof.
"Commercial Paper" shall mean the commercial paper promissory notes, if
any, issued by or on behalf of the Company or that fund the Company's purchase
of Assets in connection with a CP Tranche.
3
<PAGE>
"Concentration Limit" shall mean, at any time for any Obligor and its
Affiliates, subject to specific review and approval by the Company, from time to
time, as follows on any date of determination:
<TABLE>
<CAPTION>
Obligor's Short-Term Maximum Allowable Concentration
Unsecured Credit Rating as a % of Receivables
----------------------- ---------------------
<S> <C>
A-1 +/ P-1 10.0%
A-1 / P-1 8.0
A-2 / P-2 6.0
A-3 / P-3 3.0
Unrated or below
A-3/P-3 2.0
</TABLE>
In the event the Obligor has split short-term unsecured ratings, the
Concentration Limit shall be calculated using the lowest of the ratings;
provided, however, that nothing contained in this definition shall be construed
to require more than one rating from a Rating Agency.
"Contract" shall mean any invoice in substantially the form of Exhibit
A hereto or any other written agreement, invoice or purchase order relating
thereto approved in writing by the Company, pursuant to, or under which, an
Obligor is obligated to pay for goods and services purchased or otherwise
obtained from Georgia Gulf.
"Coverage Amount" shall mean, at any time, the amount equal to the
product of (i) the Coverage Percentage at such time and (ii) the Aggregate Net
Investment at such time.
"Coverage Percentage" shall mean, at any time, a Percentage equal
to the sum of (i) 100% plus (ii) the Required Reserve Factor at such time.
"CP Rate" shall mean, with respect to any CP Tranche Period, the rate
equivalent to the rate (or if more than one rate, the weighted average of the
rates) at which Commercial Paper having a term equal to such CP Tranche Period
is sold by any placement agent or commercial paper dealer, as agreed between
each such dealer or agent and the Company, plus the amount of any placement
agent or commercial agent fees.
"CP Tranche" shall mean a Tranche as to which Discount is calculated at
a CP Rate.
"CP Tranche Period" shall mean, with respect to a CP Tranche, a period
of up to 270 days commencing on a Business Day requested by the Transferor
pursuant to Section 2.3. If such CP Tranche Period would end on a day which is
not a Business Day, such CP Tranche Period shall end on the preceding Business
Day.
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<PAGE>
"Credit Agreement" shall mean that certain Credit Agreement, dated as
of March 30, 1995, between Georgia Gulf and The Chase Manhattan Bank N.A., as in
effect on the Closing Date, and for purposes of determining whether a Potential
Termination Event or Termination Event has occurred, such Credit Agreement as it
may from time to time be amended, supplemented, or otherwise modified and in
effect for the purposes of termination.
"Credit Policy" shall mean Georgia Gulf's credit and collections
policies, procedures and practices relating to its determination of the
creditworthiness of customers, extensions of credit to customers and collection
of the Receivables as attached hereto as Exhibit B and as such credit policies
may be modified from time to time in accordance with Section 5.2(c) hereof.
"Cut-off Date" shall mean the last business day of each monthly
Reporting Period, except that the Initial Cut-off Date shall be February 28,
1998.
"Days Sales Outstanding" shall mean, as of any day, an amount equal to
the product of (a) 91 multiplied by (b) the amount obtained by dividing the
aggregate outstanding balance of Total Receivables by the aggregate amount of
Sales less total Dilutive Credits created during the three fiscal months
immediately preceding the most recent Settlement Date.
"Default Ratio" shall mean, on any date of determination, the amount
(expressed as a percentage) equal to a fraction, the numerator of which is, (i)
the aggregate Total Receivables that became Defaulted Receivables during the
most recent monthly Reporting Period, divided by (ii) the Sales during the
Reporting Period four monthly Reporting Periods prior to the most recent monthly
Reporting Period.
"Default Horizon Ratio" shall mean the amount, expressed as a
percentage, obtained by dividing the Sales during the most recent four
Settlement Periods by the Net Pool Balance as of the most recent Cut-off Date.
"Defaulted Receivable" shall mean that portion of a Total Receivable:
(i) as to which the payment related thereto, remains unpaid for 91 days or more
from the original due date for such payment; (ii) as to which Georgia Gulf or
the Transferor has notice that the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in Section 7.1(e) (as if
references to the Transferor therein refer to such Obligor, excluding any cure
period); or (iii) which, consistent with the requirements of the Credit Policy,
have been or should have been written off the Transferor's or Georgia Gulf's
books as uncollectible.
"Delinquency Ratio" shall mean, for any date of determination, the
ratio (expressed as a percentage) of (i) the aggregate Outstanding Balance of
all Delinquent
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<PAGE>
Receivables, to (ii) the total amount of Sales generated two
months prior to such date of determination
"Delinquent Receivable" shall mean that portion of a Total Receivable
as to which the payment related thereto remains unpaid for more than 30 days,
but less than 91 days, from the due date for such payment.
"Dilution Horizon Ratio" shall mean the amount obtained by dividing (i)
aggregate Sales during the two most recent monthly Reporting Periods preceding
the date of determination by (ii) the aggregate Eligible Receivables outstanding
as of the most recent Cut-off Date.
"Dilution Ratio" shall mean the amount, expressed as a percentage,
obtained by dividing (i) aggregate Dilutive Credits incurred during the
Reporting Period immediately preceding the date of determination, by (ii) the
Sales for the Reporting Period immediately preceding the Reporting Period
referenced in clause (i) of this definition.
"Dilution Reserve" initially shall be zero, provided, however, if at
any time Georgia Gulf fails to meet the Minimum Credit Standard, the Dilution
Reserve will be the amount, expressed as a percentage, equal to the product of
(i) the Dilution Horizon Ratio and (ii) the sum of (x) 150% of the Adjusted
Dilution Ratio and (y) the Dilution Volatility Component.
"Dilution Volatility Component" shall mean an amount, expressed as a
percentage, equal to the product of (i) the difference between (x) the highest
average Dilution Ratio for any three consecutive monthly Reporting Periods
calculated in the Monthly Report for each of the 12 monthly Reporting Periods
preceding the date of determination, provided that, for the first two monthly
Reporting Periods following the Initial Cut-off Date, the Dilution Ratio used
for the purpose of this clause (x) for the first month, shall be the Dilution
Ratio for the first such month, and for the second month, shall be the average
Dilution Ratio for the first two months, and (y) the Adjusted Dilution Ratio;
multiplied by (ii) a fraction the numerator of which is equal to the amount
calculated under clause (i)(x) of this paragraph, and the denominator of which
is equal to the amount calculated in clause (i)(y) of this paragraph.
"Dilutive Credit" shall have the meaning provided in Section 6.2 of the
Receivables Purchase Agreement.
"Discount" shall mean, with respect to any Tranche Period:
(TR) x (TA) x (AD)
-----
(360)
Where:
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<PAGE>
TR = the Tranche Rate applicable to such Tranche Period.
TA = the portion of the Aggregate Net Investment allocated to such Tranche
Period.
AD = the actual number of days in such Tranche Period.
provided, however, that no provision of this Agreement shall require the payment
or permit the collection of Discount in excess of the maximum permitted by
applicable law; and provided further, that Discount shall not be considered paid
by any distribution if at any time such distribution is rescinded or must be
returned for any reason.
"Discount Payable" shall mean, on any date of determination,(A) if
Georgia Gulf is the Collection Agent, the sum of the accrued and unpaid Discount
for all outstanding Tranche Periods and (B) if Georgia Gulf is not the
Collection Agent, or if a Termination Event has occurred and is continuing, the
sum of (i) the accrued and unpaid Discount for all outstanding Tranche Periods
and (ii) the aggregate Discount to become due (other than as specified in clause
(i)) with respect to all outstanding Tranche Periods.
"Dollars" or "$" shall mean the lawful currency of the United States of
America.
"Early Collection Fee" shall mean, for any Tranche Period (such Tranche
Period to be determined without regard to the last sentence in Section 2.3(a))
during which the Allocated Net Investment allocated to such Tranche Period is
reduced (other than by reason of a termination of a Tranche Period by the
Company pursuant to Section 7.2), the excess, if any, of (i) the additional
Discount that would have accrued during such Tranche Period if such reductions
had not occurred, minus (ii) the income, if any, received by the Company from
investing the proceeds of such reductions.
"Eligible Receivable" shall mean, at any date of determination, any
Receivable:
(i) which has been originated by Georgia Gulf in the ordinary
course of its business consistent with its Credit Policy and has been
sold to the Transferor pursuant to (and in accordance with) the
Receivables Purchase Agreement and to which the Transferor has good
title thereto and is the sole owner thereof, free and clear of all
Adverse Claims;
(ii) the Obligor of which is (A) a resident of, or (B)
organized and existing under, the laws of the United States of America,
is not an Affiliate of any of the parties hereto, and is not a
government or a governmental subdivision or agency;
(iii) which is not a Defaulted Receivable;
7
<PAGE>
(iv) which is not a Delinquent or Defaulted Receivable at the
time of the initial creation of an interest of the Company therein;
(v) which, according to the Contract related thereto, is
required to be paid in full within 60 days of the original billing date
thereof or, in the case of Contracts relating to the sale of polyvinyl
chloride resin, 90 days of the original billing date thereof;
(vi) an acquisition of which by the Company with the proceeds
of Commercial Paper would constitute a "current transaction" within the
meaning of Section 3(a)(3) of the Securities Act of 1933, as amended
(the "1933 Act");
(vii) which is either (A) an account receivable representing
all or part of the sales price of merchandise, insurance or services
which have been shipped or rendered, and meets the requirements of
Section 3(c)(5) of the Investment Company Act of 1940, as amended (the
"1940 Act") or (B) an "eligible asset" within the meaning of Rule 3a-7
promulgated under the 1940 Act;
(viii) which is an "account" or a "general intangible" within
the meaning of Section 9-106, or "chattel paper" within the meaning of
Section 9-105, of the Relevant UCC;
(ix) which is denominated and payable only in Dollars;
(x) which is evidenced by a Contract as to which, together
with such Receivable, is (A) in full force and effect and constitutes
the legal, valid and binding obligation of all related Obligors,
enforceable against such Obligors in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors', rights generally, (B) subject to no
rescission, setoff, counterclaim or other defense, and (C) the terms of
such Contract have not been extended, modified, waived or adjusted in
any manner except consistent with the Credit Policy and that will not
have a Material Adverse Effect on the collectibility of the related
Receivables or would cause such Receivables not to be Eligible
Receivables;
(xi) which, together with the Contract related thereto,
Georgia Gulf or the Transferor has no knowledge and has not received
notice that such Receivable contravenes or violates in any material
respect any laws, rules or regulations applicable thereto (including
laws, rules and regulations relating to truth in lending, fair credit
billing, fair credit reporting, interest and usury, equal credit
opportunity, fair debt collection practices and privacy);
8
<PAGE>
(xii) which arises under a Contract which (A) is freely
transferable and does not require the Obligor under such Contract to
consent to the transfer of the rights and duties of Georgia Gulf under
such contract (provided that, breach of any such consent provision
shall not be deemed to cause this condition to be breached unless such
breach causes the related Contract to be unenforceable) and (B) does
not contain a confidentiality provision that purports to restrict the
ability of the Company to exercise its rights under this Agreement,
including its right to review the Contract;
(xiii) which satisfies all applicable requirements of the
Credit Policy;
(xiv) the Obligor of which has been directed to make all
payments to a specified account of the Collection Agent with respect to
which there shall be a Lock-Box Agreement;
(xv) as to which the Company has not notified Georgia Gulf or
the Transferor in writing that such Receivable is not acceptable for
acquisition hereunder because of credit-related reasons determined in
the Company's sole discretion; and
(xvi) in which the Company has a perfected security interest
prior in right to the rights of any other Person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations promulgated
thereunder.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Tranche
Period, a rate per annum determined by the Liquidity Bank to be equal to the sum
of (a) 0.45% and (b) Adjusted LIBOR for such Eurodollar Tranche Period.
"Eurodollar Tranche" shall mean a Tranche as to which Discount is
calculated at the Eurodollar Rate.
"Eurodollar Tranche Period" shall mean, with respect to a Eurodollar
Tranche, a period of one month commencing on a Business Day as requested by the
Transferor and agreed to by the Company pursuant to Section 2.3. If such
Eurodollar Tranche Period would end on a day which is not a Business Day, such
Eurodollar Tranche Period shall end on the next succeeding Business Day, unless
such extension would cause the last day of such Period to occur in the next
following calendar month, in which event the last day of such Period shall occur
on the next preceding Business Day.
"Excess Concentration Amount" shall mean, with respect to all Obligors,
the sum of all amounts by which the outstanding aggregate unpaid balance of all
Total Receivables of each Obligor exceeds the Concentration Limit related to
such Obligor,
9
<PAGE>
without counting for such purpose any Receivables of such Obligor
not deemed to be Eligible Receivables.
"Facility Limit" shall mean an amount equal to $50,000,000, as such
amount may be increased or reduced from time to time in accordance with
Section 2.12.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to the Administrative Agent on such day on such transactions, as
determined by the Administrative Agent.
"Fee Letter" shall mean the letter agreement between the Transferor and
the Company, as from time to time amended, supplemented or otherwise modified
and in effect.
"Finance Charges" shall mean, with respect to a Contract, any finance,
interest, late fee or similar charges owing by the Obligor pursuant to such
Contract.
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied during the periods involved.
"Guaranty" of a Person shall mean any agreement by which such Person
assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes liable upon, the obligation of any
other Person, or agrees to maintain the net worth, working capital or other
financial condition of any other Person, or otherwise assures any creditor of
such other Person against loss, including, without limitation, any comfort
letter, administrative agreement or take-or-pay contract and shall include the
contingent liability of such Person in connection with any letter of credit or
bankers' or trade acceptance.
"Indebtedness" shall mean, as to any Person (determined without
duplication) any Indebtedness as such is defined and used in the Credit
Agreement.
"Indemnified Amounts" shall have the meaning specified in Section 8.1.
"Initial Settlement Date" shall mean March 11, 1998.
10
<PAGE>
"LIBOR" shall mean for each Eurodollar Tranche Period, the rate per
annum determined on the basis of the offered rate for deposits in Dollars of
amounts equal or comparable to the principal amount of such Eurodollar Tranche
offered for a term comparable to such Eurodollar Tranche Period, which rates
appear on the Telerate Page 3750 effective as of 11:00 A.M., London time, two
Business Days prior to the first day of such Eurodollar Tranche Period, provided
that if no such offered rates appear on such page, the "London Interbank Offered
Rate" or "LIBOR" for such Interest Period will be the arithmetic average
(rounded upwards, if necessary, to the next higher 1/100th of 1%) of rates
quoted by not less than two major banks in New York City, selected by the
Administrative Agent, at approximately 10:00 A.M., New York City time, two
Business Days prior to the first day of such Eurodollar Tranche Period, for
deposits in Dollars offered by leading European banks for a period comparable to
such Eurodollar Tranche Period in an amount comparable to the principal amount
of such Eurodollar Tranche.
"LIBOR Reserve Percentage" shall mean, with respect to any Eurodollar
Tranche Period, the maximum reserve percentage, if any, applicable to the
Liquidity Bank under Regulation D during such Eurodollar Tranche Period (or if
more than one percentage shall be applicable, the daily average of such
percentages for those days in such Eurodollar Tranche Period during which any
such percentage shall be applicable) for determining the Liquidity Bank's
reserve requirement (including any marginal, supplemental or emergency reserves)
with respect to liabilities or assets having a term comparable to such
Eurodollar Tranche Period consisting or included in the computation of
Eurocurrency liabilities. Without limiting the effect of the foregoing, the
LIBOR Reserve Percentage shall reflect any other reserves required to be
maintained by the Liquidity Bank by reason of any Regulatory Change against (a)
any category of liabilities which includes deposits by reference to which LIBOR
is to be determined or (b) any category of extensions of credit or other assets
which include LIBOR-based credits or assets.
"Liquidity Bank" shall mean Wachovia Bank, N.A., and such other
liquidity banks as may be designated by the Administrative Agent.
"Liquidity Facility" shall mean any revolving liquidity facility
entered into between the Company and the Liquidity Bank pursuant to which the
Liquidity Bank has agreed to make certain liquidity loans from time to time to
the Company.
"Lock-Box Account" shall mean an account maintained by the Collection
Agent at a Lock-Box Bank for the purpose of receiving Collections from
Receivables.
"Lock-Box Bank" shall mean each of the banks set forth in Exhibit C and
such banks as may be added thereto or deleted therefrom pursuant to Section 2.8.
"Lock-Box Notice" shall mean a notice in substantially the form of
Exhibit D from the Transferor to any Lock-Box Bank.
11
<PAGE>
"Loss Reserve" shall mean, on any date of determination, an amount,
expressed as a percentage equal to the product of (i) 2.0 times the highest
Default Ratio for any three consecutive monthly Reporting Periods calculated in
the Monthly Report for each of the 12 monthly Reporting Periods preceding the
date of determination, and (ii) the Default Horizon Ratio.
"Material Adverse Effect" shall mean a material adverse effect on (i)
the condition (financial or otherwise) or operations of (x) Georgia Gulf and its
Subsidiaries (except the Transferor) taken as one enterprise, or (y) the
Transferor, (ii) the ability of Georgia Gulf or the Transferor to perform their
respective obligations under this Agreement or the Receivables Purchase
Agreement, (iii) the legality, validity or enforceability of this Agreement or
the Receivables Purchase Agreement, (iv) the Company's interest in the aggregate
amount of Receivables or in any significant portion of the Receivables, the
Residual Receivable Interest or the Collections with respect thereto, or (v) the
collectibility of the aggregate amount of Receivables or of any significant
portion of the Receivables.
"Minimum Credit Standard" shall mean that (i) Georgia Gulf's Leverage
Ratio (as defined in the Credit Agreement on and as of the Closing Date) is
3.25x or less, (ii) Georgia Gulf's Interest Coverage Ratio (as defined in the
Credit Agreement on and as of the Closing Date) is 2.75x or higher, or (iii)
Georgia Gulf's Restricted Payments (as defined in the Credit Agreement) are less
than or equal to the sum of (x) $200,000,000 and (y) 50.0% of Cumulative Net
Income (as defined in the Credit Agreement on and as of the Closing Date).
"Monthly Report" shall mean a report, in substantially the form of
Exhibit E or in such other form as is mutually agreed to by the Transferor and
the Company, furnished by the Collection Agent to the Company pursuant to
Section 2.11.
"Net Pool Balance" or "Net Receivables Balance" shall mean, at any
time, the aggregate Outstanding Balance of all Eligible Receivables at such time
reduced by (i) the Excess Concentration Amount and (ii) the Outstanding Balance
of all Defaulted Receivables and Delinquent Receivables at such time.
"1933 Act" shall have the meaning specified in Sub-section (vi) of the
definition of Eligible Receivable.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"1940 Act" shall have the meaning specified in Sub-section (vii) of the
definition of Eligible Receivable.
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<PAGE>
"Obligor" shall mean any Person obligated to make payments to the
Transferor pursuant to or with respect to a Contract, whether such obligation is
direct or indirect, contingent or non-contingent, absolute or conditional, or
matured or unmatured.
"Other Costs" shall have the meaning specified in Section 8.4.
"Other Transferors" shall have the meaning specified in Section 8.1.
"Outstanding Balance" of any Receivable at any time shall mean the then
outstanding principal amount thereof, plus any accrued and outstanding Finance
Charges related thereto.
"Percentage Factor" shall mean the percentage computed at any time of
determination as follows:
ANI + RR
--------
NPB
Where:
ANI= the Aggregate Net Investment at the time of such computation.
RR= the Required Reserve at the time of such computation.
NPB= the Net Pool Balance.
Notwithstanding the foregoing computation, the Percentage Factor shall
not exceed 100%. The Percentage Factor shall be calculated by the Collection
Agent on the day of the Initial Settlement Date. Thereafter, until the
Termination Date, the Collection Agent shall daily recompute the Percentage
Factor and report such recomputations to the Company monthly in the Monthly
Report or as requested by the Company. The Percentage Factor shall remain
constant from the time as of which any such computation or recomputation is made
until the time as of which the next such recomputation shall be made,
notwithstanding any additional Receivables arising, any incremental Transfer
made pursuant to Section 2.2(a) or any reinvestment Transfer made pursuant to
Sections 2.2(b) and 2.5 during any period between computations of the Percentage
Factor. On and after the Termination Date, the Percentage Factor shall be
calculated as of the close of business on the Business Day immediately preceding
the Termination Date, and shall remain constant at all times thereafter until
such time as the Company shall have received the Aggregate Unpaids, at which
time the Percentage Factor shall be recomputed in accordance with Section 2.6.
"Person" shall mean any corporation, natural person, firm, joint
venture, partnership, trust, joint stock company, limited liability company,
unincorporated
13
<PAGE>
organization, enterprise, or any government, any department or
agency of any government or any governmental authority.
"Potential Termination Event" shall mean an event which, but for the
lapse of time or the giving of notice or both, would constitute a Termination
Event.
"Prime Rate" refers to that interest rate so denominated and set by
Wachovia from time to time as an interest rate basis for borrowings. The
Prime Rate is but one of several interest rate bases used by Wachovia.
Wachovia lends at interest rates above and below the Prime Rate.
"Proceeds" shall mean "proceeds" as defined in Section 9-306(l) of the
Relevant UCC.
"Rating Agency" shall mean any nationally recognized statistical rating
organization, which as of the date hereof, shall be Moody's Investor Services,
Standard & Poor's Rating Service, a Division of McGraw Hill, Inc., Duff & Phelps
Credit Rating Co. and Fitch IBCA.
"Receivable" shall mean indebtedness that is (i) owed to Georgia Gulf
by an Obligor that is a resident of the United States of America or organized
and existing under the laws of the United States of America or any state
thereof, and that has a mailing address in the United States under a Contract,
and (ii) sold by Georgia Gulf to the Transferor pursuant to the Receivables
Purchase Agreement, whether constituting an account, chattel paper, instrument
or general intangible, arising in connection with the sale of products or
services by Georgia Gulf, and includes the right to payment of any Finance
Charges and other obligations of all Obligors with respect thereto.
Notwithstanding the foregoing, once a Receivable has been deemed collected
pursuant to Section 2.9 hereof, it shall no longer constitute a Receivable
hereunder.
"Receivables Purchase Agreement" shall mean that certain Receivables
Purchase Agreement, dated as of March 10, 1998, between Georgia Gulf, as seller,
and the Transferor, as purchaser, as the same may from time to time be amended,
supplemented or otherwise modified and in effect.
"Records" shall mean all Contracts and other documents, books, records
and other information (including without limitation computer programs, tapes,
discs, punch cards, data processing software and related property and rights)
maintained by the Transferor and Georgia Gulf with respect to the Receivables
and the Obligors.
"Recoveries" shall mean all amounts (including insurance proceeds, if
any) received by the Collection Agent or the Seller with respect to Defaulted
Receivables.
14
<PAGE>
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time.
"Regulatory Change" shall mean any change after the date of this
Agreement in United States (federal, state or municipal) or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives or requests applying to a class of banks
(including the Liquidity Bank) of or under any United States (federal, state or
municipal) or foreign, laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Relevant UCC" shall mean, with respect to any state, the Uniform
Commercial Code as from time to time in effect in such state.
"Reporting Date" shall mean the 20th day following the end of each
monthly Reporting Period.
"Reporting Period" shall mean each monthly fiscal period for which the
Collection Agent is required to deliver a report hereunder.
"Required Reserve" shall mean an amount equal to the product of (i) the
Required Reserve Factor and (ii) the aggregate outstanding balances of the Net
Pool Balance.
"Required Reserve Factor" shall mean an amount equal to the greater of
(x) 8.0% (the "Required Reserve Factor Floor") or (y) the sum of (i) the Loss
Reserve, (ii) the Dilution Reserve, (iii) the Yield Reserve and (iv) the
Servicing Reserve; provided, however, in the event Georgia Gulf at any time
fails to meet the Minimum Credit Standard, the Required Reserve Factor Floor
shall be 8.0% plus the product of (x) the Adjusted Dilution Ratio and (y) the
Dilution Horizon Ratio.
"Requirements of Law" shall mean with respect to any Person, the
certificate or articles of incorporation and the by-laws or other organizational
governing documents of such Person, and any law, treaty or rule or regulation,
or determination of an arbitrator or governmental authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether federal, state or local (including, but not limited to, usury laws, the
Federal Truth-in-Lending Act, and the Fair Debt Collection Practices Act).
"Residual Receivable Interest" shall mean with respect to any
Receivable:
(i) all of the Transferor's interest, if any, in the product
(including returned product), the sale of which by the Transferor gave
rise to such Receivable;
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<PAGE>
(ii) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure or
guarantee payment of such Receivable, whether pursuant to the Contract
related to such Receivable or otherwise, together with all financing
statements signed by the Obligor describing any collateral securing
such Receivable;
(iii) all guarantees, letters of credit, acceptances,
insurance and other agreements, instruments or arrangements of whatever
character (including the beneficial interest in any insurance policy or
bill of lading) from time to time supporting or securing payment of
such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise;
(iv) all Records; and
(v) all Proceeds of the foregoing.
"Sales" shall mean the gross sales (excluding intercompany sales)
recorded by Georgia Gulf in accordance with GAAP, on its books and records for
the period referenced.
"Section 8.2 Costs" shall have the meaning specified in Section 8.2.
"Section 8.3 Costs" shall have the meaning specified in Section 8.3.
"Servicing Reserve" shall mean the product of the Servicing Fee
applicable to a replacement Servicer and a fraction, the numerator of which is
the highest Days Sales Outstanding of Total Receivables and the denominator of
which is 360.
"Settlement Date" shall mean the first Business Day of each monthly
Reporting Period.
"Settlement Period" shall mean the period beginning on the calendar day
immediately following the Settlement Date for the immediately preceding
Settlement Period and ending on the immediately succeeding Settlement Date;
provided, however, the initial Settlement Period shall begin on the Closing Date
and shall end on the first Settlement Date.
"Subsidiary" shall mean, for any Person, any corporation or other
business organization 50% or more of the outstanding voting securities of which
shall at the time be owned or controlled, directly or indirectly, by such Person
or by one or more such corporations or organizations or by such Person and one
or more such corporations or organizations, and any partnership of which such
Person or any such corporation or organization is a general partner.
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<PAGE>
"Termination Date" shall mean the earliest to occur of (i) the date
that the Company terminates outstanding Tranche Periods pursuant to Section 7.2
hereof, (ii) that Business Day designated by the Transferor as the Termination
Date at any time following 90 days' written notice to the Company, and (iii)
March 9, 1999 , unless extended from time to time upon written agreement between
the Company and the Transferor.
"Termination Event" shall mean an event described in Section 7.1.
"Total Receivable" shall have the meaning set forth herein in the
definition of "Receivable", except that a Total Receivable shall include
indebtedness owed to Georgia Gulf by Obligors with mailing addresses outside the
United States.
"Tranche" shall mean a portion of the Aggregate Net Investment
allocated to a Tranche Period pursuant to Section 2.3.
"Tranche Period" shall mean a CP Tranche Period, Eurodollar Tranche
Period or a BR Tranche Period, as the case may be.
"Tranche Rate" shall mean the CP Rate, the Eurodollar Rate or the Base
Rate, as the case may be.
"Tranche Selection Notice" shall have the meaning set forth in
Section 2.2(a).
"Transfer" shall mean a transfer, sale and conveyance by the Transferor
on each Transfer Date of an undivided percentage ownership interest in each and
every Receivable, together with all Residual Receivable Interest, Collections
and Proceeds with respect thereto and any security or collateral therefor.
"Transfer Date" shall mean, with respect to each Transfer, either (i)
one, two or three Business Days from the Transfer Notice Date, as specified in
Sections 2.2(a) and 2.3(a) relating to such Transfer hereof or (ii) each day on
which Collections are received by the Collection Agent and reinvested in
accordance with Section 2.2(a) and Section 2.2(b) hereof.
"Transfer Notice Date" shall mean, with respect to each Transfer
pursuant to Section 2.2(a) hereof, the Business Day indicated in a written
notice provided by the Transferor to the Company, which date is agreed to by the
Company.
"Transfer Price" shall mean, with respect to any Transfer, an amount
equal to the product of the Advance Rate and the Eligible Receivables to be
transferred.
"Transferred Interest" shall mean, at any time of determination, an
undivided percentage ownership interest in (i) each and every then outstanding
Receivable, (ii) all Residual Receivable Interest with respect to each such
Receivable, (iii) all Collections
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with respect thereto, and (iv) other Proceeds
of the foregoing, equal to the Percentage Factor at such time, and only at such
time (without regard to prior calculations).
"Yield Reserve" shall mean, on any date of determination, 1.5 times the
Base Rate multiplied by a fraction, the numerator of which is the 12-month high
Days Sales Outstanding and the denominator of which is 360.
SECTION 1.2. Other Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. To the extent the definitions
of accounting terms used herein are inconsistent with the meanings of such terms
under GAAP, the definitions contained herein shall control. All terms used in
Article 9 of the Relevant UCC, and not specifically defined herein, are used
herein as defined in such Article 9. The definitions of all terms used herein
shall include the singular as well as the plural forms of such terms and the
masculine as well as the feminine and neuter genders of such terms. The terms
"include", "including" and "includes" shall mean including without limitation by
way of enumeration or otherwise. References herein to Articles, Sections,
Exhibits and Schedules shall, unless otherwise specified, refer respectively to
Articles and Sections hereof and Exhibits and Schedules hereto.
SECTION 1.3. Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding".
ARTICLE II
TRANSFERS AND SETTLEMENTS
SECTION 2.1. Assignment and Conveyance; Facility. Upon the terms and
subject to the conditions herein set forth, the Transferor may sell, transfer,
assign, deliver, convey and set over to the Company, and the Company shall,
subject to its ability to obtain financing therefor through the issuance of
Commercial Paper or the obtaining of liquidity loans pursuant to the Liquidity
Facility (it being understood that the Company shall have no obligation to
obtain such financing through the obtaining of a Eurodollar Tranche or BR
Tranche unless financing is not available through a CP Tranche on such day),
acquire from the Transferor undivided percentage ownership interests in
Receivables, together with the Residual Receivable Interest and Collections with
respect thereto and all proceeds of the foregoing (collectively, the "Assets");
provided, however, that no such acquisition shall be made in excess of the
Transfer Price if, after giving effect to such acquisition, the sum of the
Aggregate Net Investment and the aggregate amount of Discount applicable to all
existing Tranches would exceed the Facility Limit; provided further, however,
that no such acquisition shall be made unless such Transfer Price, together with
any Discount is equal to at least $1,000,000, and no such acquisition
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shall be made on or after (i) the occurrence of a Termination Event or (ii) the
Termination Date. The Company will pay the Transfer Price of any Transfer made
pursuant to Section 2.2(a) with the proceeds of (a) a CP Tranche or (b) the
obtaining of liquidity loans pursuant to the Liquidity Facility.
SECTION 2.2. Transfers. (a) On each Transfer Notice Date, the
Transferor shall provide the Company with notice in substantially the form of
Exhibit F hereto (each, a "Tranche Selection Notice") which shall specify, among
other things, the face amount of the Commercial Paper proposed to be issued by
or on behalf of the Company; provided that all Commercial Paper issued to fund
Receivables purchased hereunder shall have maturities no later than fifteen (15)
days prior to the scheduled Termination Date hereunder. Such Tranche Selection
Notice shall also contain the Tranche Period(s) and Tranche Rate(s) requested by
the Transferor as required by, and subject to, the limitations of Sections 2.1
and 2.3. The Company shall inquire as to the availability of such Tranche Period
and Tranche Rate and shall, if available and if the terms of the transfer of
such Receivables is otherwise satisfactory, transfer such Receivables on the
following Transfer Date. Following each Transfer on a Transfer Date pursuant to
this Section 2.2(a), the Company shall deposit to the Transferor's account (No.
910-2-624310), account name "GGRC Corp." maintained at the office of The Chase
Manhattan Bank, N.A. in New York, New York, in immediately available funds, an
amount equal to the Transfer Price for such Transfer. Each Tranche Selection
Notice shall be irrevocable and binding on the Transferor, and the Transferor
shall indemnify the Company against any loss or expense incurred by the Company
as a result of any failure by the Transferor to complete such Transfer
including, without limitation, any loss or expense incurred by the Company by
reason of the liquidation or reemployment of funds acquired or requested by the
Company to fund such Transfer.
(b) Reinvestment Transfers. On each Business Day
occurring after the initial Transfer hereunder and prior to the Termination
Date, the Transferor hereby sells, transfers, assigns, delivers, conveys and
sets over to the Company, and the Company hereby acquires from the Transferor,
undivided percentage ownership interests in each and every Receivable, together
with the Residual Receivable Interest and Collections with respect thereto, to
the extent the Collections are available for such Transfer in accordance with
Section 2.5, such that, after giving effect to such Transfer, (i) the amount of
the Company's Aggregate Net Investment at the close of the Company's business on
such Business Day, shall be equal to the amount of the Company's Aggregate Net
Investment at the close of the Company's business on the Business Day
immediately preceding such Business Day, plus the Transfer Price of any Transfer
made on such day, if any, but in no event shall the Aggregate Net Investment
plus Discount be greater than the then Facility Limit, nor shall the Coverage
Amount exceed the Net Pool Balance, and (ii) the Company's Transferred Interest
in each Receivable, together with the Residual Receivable Interest and
Collections with respect thereto, shall be equal to its Transferred Interest in
each other Receivable, together with the Residual Receivable Interest and
Collections with respect thereto.
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(c) All Transfers. Each Transfer shall constitute an
absolute sale, transfer and assignment of undivided percentage ownership
interests in each and every Receivable, together with the Residual Receivable
Interest and Collections with respect thereto then existing, as well as each and
every Receivable, together with the Residual Receivable Interest and Collections
with respect thereto which arises at any time after the date of such Transfer
until the Termination Date. The Company's aggregate undivided percentage
ownership interest in the Receivables, together with the Residual Receivable
Interest and Collections with respect thereto, shall equal the Percentage Factor
in effect from time to time. The Transferred Interest in each Receivable,
together with the Residual Receivable Interest and Collections with respect
thereto, shall at all times be equal to the Transferred Interest in each other
Receivable, together with the Residual Receivable Interest and Collections. To
the extent that the Transferred Interest shall decrease as a result of a
recalculation of the Percentage Factor, the Company shall be considered to have
reconveyed to the Transferor an undivided percentage ownership interest in such
Receivable, together with the Residual Receivable Interest and Collections with
respect thereto, in an amount equal to such decrease such that, in each case,
the Transferred Interest in Receivable shall be equal to the Transferred
Interest in each other Receivable.
It is the express intent of the Transferor and the Company
that the conveyance of the Receivables by the Transferor to the Company pursuant
to this Agreement be construed as a sale of such Receivables by the Transferor
to the Company. Further, it is not the intention of the Transferor and the
Company that such conveyance be deemed a grant of a security interest in the
Receivables by the Transferor to the Company to secure a debt or other
obligation of the Transferor. However, in the event that, notwithstanding the
intent of the parties, the Receivables are construed to constitute property of
the Transferor, then (i) this Agreement also shall be deemed to be, and hereby
is, a security agreement within the meaning of the Relevant UCC; and (ii) the
conveyance by the Transferor provided for in this Agreement shall be deemed to
be, and the Transferor hereby grants to the Company, a security interest in, to
and under all of the Transferor's right, title and interest in, to and under the
Receivables outstanding on the Closing Date and thereafter purchased by the
Transferor pursuant to the Receivables Purchase Agreement, together with all
Residual Receivable Interest and Collections with respect thereto and all
proceeds of the foregoing, to secure the rights of the Company set forth in this
Agreement or as may be determined in connection therewith by applicable law. The
Transferor and the Company 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 Receivables, such security interest
would be deemed to be a perfected security interest in favor of the Company
under applicable law and will be maintained as such throughout the term of this
Agreement.
(d) Percentage Factor. The Percentage Factor shall be
initially computed on the Initial Settlement Date. Thereafter, until the
Termination Date, the
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Percentage Factor shall be automatically recomputed as of
the close of business of the Collection Agent on each day (other than a day
after the Termination Date). The Percentage Factor shall remain constant from
the time as of which any such computation or recomputation is made until the
time as of which the next such recomputation, if any, shall be made. The
Percentage Factor, as computed as of the day immediately preceding the
Termination Date, shall remain constant at all times on and after such
Termination Date until the date on which the Aggregate Net Investment shall
become zero.
SECTION 2.3. Selection of Tranche Periods and Tranche Rates.
(a) At all times hereafter, but prior to the occurrence
of a Termination Event, the Transferor shall, subject to availability and the
Company's approval as provided in Sections 2.1 and 2.2 and the limitations
described below, request Tranche Periods and Tranche Rates applicable thereto
and allocate each Transfer to each selected Tranche Period, so that the
aggregate amounts allocated to outstanding Tranche Periods at all times shall
equal the Aggregate Net Investment. In the Tranche Selection Notice, the
Transferor shall give the Company irrevocable notice of each new Tranche Period
(i) with respect to a BR Tranche, by 12:00 P.M. (Eastern Time) on the day of
expiration of any then existing Tranche Period, (ii) with respect to a
Eurodollar Tranche, by 12:00 P.M. Eastern Time) on a Business Day not less than
three Business Days prior to the expiration of any then existing Tranche Period,
and (iii) with respect to a CP Tranche, by the close of business in Atlanta,
Georgia not less than three Business Days prior to the expiration of any then
existing Tranche Period; provided, however, that the Company may select, in its
sole discretion, any such new Tranche Period and Tranche Rate if (i) the
Transferor fails to provide such notice on a timely basis or (ii) the Company
determines, in its sole discretion, that the Tranche Rate or Tranche Period
selected by the Transferor is unavailable; and provided further, however, that
any such Tranche Period chosen by the Company, in its sole discretion, shall be
for a term of one day. Subject to the provisions of this Agreement, including
Section 2.1, and without changing the limitations on the Company's obligations
hereunder, in the event the Transferor does not specify a Tranche Rate or
Tranche Period, the Tranche Period and Tranche Rate shall be the CP Rate for a
CP Tranche Period of 30 days or the actual number of days until the next
Settlement Date. In the event that the Company after exercising all reasonable
efforts, cannot sell or cause to be sold the Commercial Paper pursuant to the
preceding sentence, then for the next two Business Days the tranche shall be a
BR Tranche, and thereafter the tranche shall be a Eurodollar Tranche for a
Eurodollar Tranche Period and the Tranche Rate shall be the corresponding
Eurodollar Rate. The Company shall promptly confirm to the Transferor each
Tranche Rate and each Tranche Period. In the case of any Tranche Period
outstanding at the time of the Company's notice of termination of all
outstanding Tranche Periods given pursuant to Section 7.2, such Tranche Period
shall end on the date of such notice.
(b) Notwithstanding anything to the contrary contained
herein, at all times on and after the occurrence of a Termination Event, (i) the
Company shall select all
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Tranche Periods and Tranche Rates (which shall be the Base Rate) applicable
thereto and (ii) the Facility Limit will be reduced on each day thereafter to
the Aggregate Unpaids as of such day.
SECTION 2.4. Discount, Fees and Other Costs and Expenses. The
Transferor shall pay or cause to be paid, as and when due in accordance with
this Agreement (to the extent unpaid after giving effect to any payments made
pursuant to Section 2.5 or Section 2.6), all amounts payable as Discount, all
fees hereunder, all dealer commissions (if applicable), all amounts payable
pursuant to Article VIII, if any, and all Collection Agent costs, if any,
payable pursuant to Section 6.2. Discount shall accrue with respect to each
Tranche on each day occurring during the Tranche Period related thereto, and
shall be paid on each Settlement Date. The Transferor may, at its option and
prior to the occurrence of a Termination Event or 15 days prior to any scheduled
Termination Date hereunder, satisfy its obligation to pay Discount accrued on a
Tranche by requesting a new CP Tranche Period in accordance with Section 2.3(a).
Such new CP Tranche will increase the Aggregate Net Investment by the amount of
such accrued Discount which is allocated to such new CP Tranche Period and will
constitute a Transfer pursuant to Section 2.2(a). In the event that the proceeds
from such new CP Tranche exceed the sum of such Discount and tranche amounts
that are refinanced pursuant to the second preceding sentence, the excess amount
shall be treated in a manner consistent with the treatment of the Percentage
Factor of Collections under Section 2.5 and the Aggregate Net Investment shall
be increased accordingly All per annum fees shall be paid monthly on the
Settlement Date. If any amount hereunder shall be paid on a day which is not a
Business Day, such amount shall be payable on the next succeeding Business Day.
Discount and all per annum fees payable hereunder shall be calculated for the
actual days elapsed and on a year consisting of 360 days. Nothing in this
Agreement shall limit in any way the obligations of Transferor to pay the
amounts set forth in this Section 2.4.
SECTION 2.5. Non-Liquidation Settlement and Reinvestment Procedures. On
each day after the date of the initial Transfer, but prior to the Termination
Date, the Collection Agent shall, out of the Percentage Factor of Collections
received on such day or prior to such day and not previously applied or
accounted for, allocate funds in the following order: (i) from and after the
request of the Company, set aside and hold in trust for the Company, an amount
equal to all Discount and all facility fees and charges accrued through such day
and not previously set aside or paid and (ii) apply the balance of such
Percentage Factor of Collections remaining after application as provided in
clause (i) of this Section 2.5 to (x) the Transfer, for the benefit of the
Company, of additional undivided percentage interests in each Receivable, to the
extent that a transfer under Section 2.5(ii)(x) would cause a Termination Event
as described in Section 7.1(k) or 7.1(l), together with Residual Receivable
Interest and Collections with respect thereto, pursuant to Section 2.2(b) or (y)
as necessary to reduce the sum of the Aggregate Net Investment plus Discount to
not more than the Facility Limit. On the last day of each Tranche Period, from
the amounts set aside as described in clause (i) of the first sentence
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of this Section 2.5, the Collection Agent shall deposit to the Company's account
an amount equal to the accrued and unpaid Discount for such Tranche Period.
SECTION 2.6. Liquidation Settlement Procedures.
(a) If, on the Termination Date, the Net Receivables
Balance is less than the Coverage Amount, then the Transferor shall
immediately pay to the Company an amount equal to the difference between the
Coverage Amount and the Net Receivables Balance, and such amount shall be
applied to the reduction of the Aggregate Net Investment for Tranche Periods
selected by the Company. On the Termination Date and on each day thereafter,
the Collection Agent shall set aside and hold in trust for the Company, the
Percentage Factor of all Collections received on such day. On the last day of
each Tranche Period to occur on or after the Termination Date, the Collection
Agent shall deposit to the Company's account the amounts set aside pursuant
to the preceding sentence, together with any remaining amounts set aside
pursuant to Section 2.5(i) prior to the Termination Date, but not to exceed
the sum of (i) the Discount for such Tranche Period, (ii) the portion of the
Aggregate Net Investment allocated to such Tranche Period, and (iii) the
aggregate of all other amounts then owed (whether due or accrued) hereunder
by Transferor to the Company. If Georgia Gulf is the Collection Agent, the
Collection Agent shall pay all the amounts described in clauses (i), (ii) and
(iii) of this Section 2.6(a) from any funds available therefor, up to the
amount that would have been set aside by the Collection Agent had the
Collection Agent been required to comply with the second sentence of this
Section 2.6.
(b) If there shall be insufficient funds on deposit for the
Collection Agent to distribute funds in payment in full of the amounts
described in Section 2.6(a), the Collection Agent shall distribute funds
first, to pay the accrued Discount, second, to reduce the Aggregate Net
Investment, third, to pay all fees and expenses payable to the Company, and
fourth, in payment of all other amounts payable to the Company. Following the
date on which the Aggregate Net Investment has been reduced to zero, all
accrued Discount has been paid in full and all other Aggregate Unpaids have
been paid in full, (i) the Collection Agent shall recompute the Percentage
Factor as zero, (ii) the Company shall be deemed to have reconveyed to the
Transferor any interest in the Receivables (including the Transferred
Interest), (iii) the Collection Agent shall pay to the Transferor all amounts
held pursuant to the second sentence of Section 2.6(a) and (iv) the Company
shall promptly at the request of the Transferor execute and deliver to the
Transferor any documents required or advisable to terminate its interest in
the Receivables and the Residual Receivable Interest.
SECTION 2.7. Fees. Notwithstanding any limitation on recourse
contained in this Agreement, the Transferor shall pay the following fees in
the following priority:
(a) to the Company, on the first Business Day of each
month, the Administration Fee for the preceding month,
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(b) to the Company, on the date of incurrence thereof, any
Early Collection Fee,
(c) to the Collection Agent, on the first Business Day of
each month, the Servicing Fee .
SECTION 2.8. Protection of Company's Ownership Rights.
(a) The Transferor agrees that from time to time, at its
expense, it will promptly execute and deliver all instruments and documents
and take all actions that the Company may reasonably request in order to
perfect or protect the Transferred Interest or to enable the Company to
exercise or enforce any of its rights hereunder. Without limiting the
foregoing, each of the Transferor and Georgia Gulf will, upon the request of
the Company, in order to accurately reflect this transaction, execute and
file such financing and continuation statements, and amendments thereto or
assignments thereof (as permitted pursuant to Section 9.6) as may be
reasonably requested by the Company and mark its master data processing
records and other documents with a legend describing the acquisition by the
Company of the Transferred Interest, as the Company may reasonably request.
To the fullest extent permitted by applicable law, the Company shall be
permitted to sign and file continuation statements and amendments thereto and
assignments thereof without the Transferor's signature in such cases where
the Transferor is obligated hereunder to sign such statements, amendments or
assignments. Carbon, photographic or other reproductions of this Agreement or
any financing statement shall be sufficient as a financing statement. Neither
the Transferor nor Georgia Gulf shall change its name, identity or corporate
structure (within the meaning of Section 9-402(7) of the Relevant UCC) nor
relocate its chief executive office or any office where Records are kept
unless it shall have: (i) given the Company at least fifteen (15) days' prior
notice thereof and (ii) delivered to the Company all financing statements,
instruments and other documents reasonably requested by the Company in
connection with such change or relocation and deemed reasonably appropriate
by the Company to preserve its ownership of in the Receivables and the
Residual Receivable Interest.
(b) Each Contract shall instruct the Obligor with respect
thereto to cause all Collections to be deposited directly with a Lock-Box
Bank. Neither the Transferor nor the Collection Agent shall add any bank as a
Lock-Box Bank to those listed on Exhibit C hereto unless the Company shall
have received notice of such addition and undated executed copies of Lock-Box
Notices to each new Lock-Box Bank. Neither the Transferor nor the Collection
Agent shall terminate any bank as a Lock-Box Bank or terminate any account as
a Lock-Box Account unless the Company shall have received thirty (30) days'
prior notice of such termination. If the Transferor or the Collection Agent
receives any Collections or is deemed to receive any Collections pursuant to
Section 2.9, the Transferor or the Collection Agent shall immediately, and
not later than the next business day, remit such Collections to the Company.
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SECTION 2.9. General Settlement Procedures. If on any day the
Outstanding Balance of a Receivable is either (x) reduced as a result of any
defective or rejected goods or services, any cash discount or any adjustment by
the Transferor or the Collection Agent or (y) reduced or canceled as a result of
a setoff in respect of any claim by any Person (whether such claim arises out of
the same or a related transaction or an unrelated transaction) or (z) canceled
as a result of the Transferor or the Collection Agent exercising its right to
assign a Receivable back to the Obligor thereof, the Transferor shall be deemed
to have received on such day a Collection of such Receivable in the full amount
of such reduction or cancellation, and the Aggregate Net Investment shall not be
deemed to be reduced hereunder until such time as such amount is remitted to,
and received by, the Company. If on any day any of the representations or
warranties with respect to the Receivables in Section 3.1(d), (e), (f), (i),
(j), (k), (n), (o), (p) or (r) is no longer true with respect to a Receivable,
as the Transferor or the Company shall notify the other, the Transferor shall be
deemed to have received on such day a Collection of such Receivable in full, and
the Aggregate Net Investment shall not be deemed to be reduced hereunder until
such time as such amount is remitted to, and received by, the Company. Any
payment by an Obligor in respect of any Receivable shall, except as otherwise
specified by such Obligor or otherwise required by contract or law, be applied
as a Collection of the Receivable of such Obligor (starting with the oldest such
Receivable) to the extent of any amounts then due and payable thereunder before
being applied to any other Receivable of such Obligor.
SECTION 2.10. Payments and Computations, Etc. All amounts to be paid or
deposited by the Transferor or the Collection Agent hereunder shall be paid or
deposited in accordance with the terms hereof no later than 11:00 A.M. (Eastern
Time) on the day when due in funds immediately available to the Company in
Atlanta, Georgia; if such amounts are payable to the Company they shall be paid
or deposited to Account Number 8735-098787, titled "Blue Ridge Asset Funding
Corporation, "CP"," and maintained at the offices of Wachovia Bank N.A., until
otherwise notified by the Company. The Transferor shall pay to the Company upon
demand, interest on all amounts not paid or deposited when due to the Company
hereunder at a rate equal to 2% per annum plus the Base Rate, provided such
interest shall in no event exceed the maximum permitted by law. All computations
of interest hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first but excluding the last day) elapsed.
SECTION 2.11. Reports. Prior to the 20th day of each month, the
Collection Agent shall prepare and forward to the Company (i) a Monthly
Report, as of the close of business of the Collection Agent on the last day
of the immediately preceding Reporting Period, in the form attached hereto as
Exhibit E, (ii) a listing of the ten (10) largest Obligors by Receivables
balance, together with an aging of such Receivables, in substantially the
form of Exhibit G hereto and (iii) such other information as the Company may
reasonably request. The Transferor shall, by not later than May 10, 1998,
change the Monthly Report to show categories of aged Receivables based on
Sales and
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the Sales for each month related to such Monthly Report and the related dollar
amounts of customer credits in a manner reasonably acceptable to the Company.
SECTION 2.12. Increase in and Reduction of Facility Limit. The
Transferor may, upon at least 30 days' prior written notice to the Company, and
with the consent of the Company, either (i) increase in part the Facility Limit
or (ii) terminate in whole or reduce in part the unused portion of the Facility
Limit; provided that each partial increase or reduction of the Facility Limit
shall be in an amount equal to $5,000,000 or an integral multiple thereof.
SECTION 2.13. Optional Retransfer. On any day on which the Aggregate
Unpaids falls below 10% of the Facility Limit, then, in such event, the
Transferor may, in its sole discretion, direct the Company to retransfer the
Transferred Interest to the Transferor at a price equal to the Aggregate Unpaids
calculated as of the proposed date of such retransfer. The Company further
agrees to take, on or prior to such transfer, at the sole expense of the
Transferor, any action reasonably necessary to effectuate the transfer to the
Transferor of all of the Company's interest in, to and under the Receivables and
the Residual Receivable Interest and Collections with respect thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each of the Transferor
and Georgia Gulf, as applicable to itself and not as to the other, hereby
represents and warrants to the Company that:
(a) Corporate Existence and Power. Each of the Transferor
and Georgia Gulf is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all corporate
power, authority and legal right to own its properties and conduct its
businesses as presently conducted and to execute, deliver and perform its
obligations under this Agreement. Each of the Transferor and Georgia Gulf is
duly qualified to do business and is in good standing (or is exempt from such
requirements) and has obtained all necessary licenses and approvals,
authorizations and consents with respect to the Transferor or Georgia Gulf,
as applicable, in each jurisdiction which failure to so qualify or to obtain
such licenses, approvals, consents and authorizations would render any
Receivable or Contract unenforceable by it, the Company or the Company's
assigns, and would have a Material Adverse Effect on the Company's or the
Collection Agent's ability to perform their respective obligations under this
Agreement or the Receivables Purchase Agreement.
(b) Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by the Transferor and
Georgia Gulf of this Agreement and each other document and instrument
required to be delivered by the
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Transferor and Georgia Gulf, respectively, hereunder (collectively, the
"Conveyance Papers") are within their respective corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official (except
as contemplated by Section 2.8). The execution and delivery of this Agreement
by the Seller, the performance by the Transferor and Georgia Gulf,
respectively, of the transactions contemplated hereby, and the performance by
the Transferor and Georgia Gulf, respectively, of the terms hereof and of the
Receivables Purchase Agreement will not conflict with, violate or result in
any breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time, or both) a default under, any
Requirement of Law applicable to the Transferor or and Georgia Gulf, as
applicable, or any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Transferor or Georgia Gulf, as applicable, is a
party or by which it or any of their respective properties are bound and
which conflict, violation, breach or default would have a Material Adverse
Effect on the Company or its successors and assigns or on the Company's or
the Collection Agent's ability to perform their respective obligations under
this Agreement or the Receivables Purchase Agreement.
(c) Binding Effect of Agreement. Each of this Agreement and
the Receivables Purchase Agreement constitutes the legal, valid and binding
obligation of the Transferor and Georgia Gulf, enforceable against each of
them in accordance with the terms hereof, subject to the effect of
bankruptcy, insolvency, reorganization or other similar laws affecting
enforcement of creditors' rights generally.
(d) Perfection. Immediately preceding each Transfer
hereunder, the Transferor shall be the sole owner of all of the Receivables
and all Residual Receivable Interest, free and clear of any Adverse Claim. On
or prior to each Transfer, all financing statements and other documents and
instruments required to be recorded or filed in order to perfect and protect
the Transferred Interest against all creditors of, and purchasers of
Receivables from, the Transferor or Georgia Gulf, as applicable (other than
any financing statements or assignments of financing statements required to
perfect the Transferred Interest), will have been duly filed in each filing
office necessary for such purpose and all filing fees and taxes, if any,
payable in connection with such filings shall have been paid in full.
(e) Accuracy of Information. All information heretofore
furnished by the Transferor and Georgia Gulf to the Company for purposes of
or in connection with this Agreement, the Receivables Purchase Agreement or
any transaction contemplated hereby is, and all such information hereafter
furnished by the Transferor or Georgia Gulf, as applicable, to the Company
and/or any successor and assign will be, true and accurate in every material
respect, on the date such information is stated or certified.
(f) Tax Returns. The Transferor has filed or properly
extended all tax returns (federal, state and local) required to be filed and
has paid or made adequate
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provision for the payment of all taxes, assessments and other government
charges except where the failure by the Transferor to perform such
obligations would not have a Material Adverse Effect.
(g) Actions, Suits. Except as set forth in Exhibit H, there
are no actions, suits or proceedings pending, or to the knowledge of the
Transferor and/or Georgia Gulf threatened, against or affecting the
Transferor, Georgia Gulf or any Affiliate of either of them or their
respective properties or with respect to the Receivables, in or before any
court, arbitrator, governmental authority or other body, (i) asserting the
invalidity of this Agreement or the Receivables Purchase Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated
by this Agreement or the Receivables Purchase Agreement, (iii) seeking any
determination or ruling that, in the reasonable judgment of the Transferor
and/or Georgia Gulf, would materially and adversely affect the performance by
the Transferor or Georgia Gulf of their respective obligations hereunder,
(iv) seeking any determination or ruling that would materially and adversely
affect the validity or enforceability of this Agreement or the Receivables
Purchase Agreement, or (v) which may have a Material Adverse Effect.
(h) Place of Business. The principal place of business and
chief executive office of Georgia Gulf and the Transferor are located at 400
Perimeter Center Terrace, Suite 595, Atlanta, Georgia 30346, and the offices
where each of Georgia Gulf and the Transferor keeps all its Records are
located at the address(es) described on Exhibit I or such other locations
notified to the Company in accordance with Section 2.8 in jurisdictions where
all action required by Section 2.8 has been taken and completed.
(i) Good Title. This Agreement constitutes a valid sale,
transfer and assignment to the Company of all right, title and interest of
the Transferor in and to the Receivables, whether existing on the date
hereof, or hereafter created and all proceeds thereof, which are effective as
to each Receivable upon the creation thereof. Upon each Transfer, the Company
shall acquire a valid and perfected first priority undivided percentage
ownership interest in each Receivable and Related Security that exists on the
date of such Transfer and in the Residual Receivable Interest and Collections
with respect thereto, free and clear of any Adverse Claim.
(j) Nature of Receivables; Use of Proceeds. Each Receivable
is (A) an account receivable representing all or part of the sales price of
merchandise, insurance or services (or an "eligible asset" within the meaning
of Rule 3a-7 under the 1940 Act) and the proceeds of the Commercial Paper
with which the Company will acquire the Receivables are to be used by the
Transferor for current transactions within the meaning of Section 3(a)(3) of
the 1933 Act, and (B) an Eligible Receivable. No proceeds of any Transfer
will be used by the Transferor to acquire any security in any transaction
which is subject to Section 13 or 14 of the 1934 Act, or for the purpose of
acquiring or holding any margin securities.
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(k) Lock-Box Accounts. The names and addresses of all the
Lock-Box Banks, together with the account numbers of the Transferor at such
Lock-Box Banks are described on Exhibit C or described in a notice provided
by the Transferor and Georgia Gulf to the Company pursuant to Section 2.8.
All Obligors have been instructed to make payment directly to a Lock-Box
Account, and all Collections are deposited into the Lock-Box Accounts.
(l) No Material Adverse Change. Since September 30, 1997,
there has been no change in the condition (financial or otherwise), business,
operations or prospects of the Transferor or Georgia Gulf, or in the ability
of either of them to perform their respective obligations hereunder or in the
collectibility of the Receivables, which change might have a Material Adverse
Effect.
(m) Trade Names. Except as described in Exhibit J, neither
the Transferor nor Georgia Gulf has used any corporate names, trade names or
assumed names other than its name set forth on the signature pages of this
Agreement and, within the last five years, has not changed its name, merged
with or into or consolidated with any other corporation or been the subject
of any proceeding under Title 11, United States Code (the "Bankruptcy Code").
(n) Binding Effect of Receivables and Contract. Each
Receivable and the related Contract and any Residual Receivable Interest
constitutes a legal, valid and binding obligation of the Obligor enforceable
against the Obligor, subject to the effect of bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally.
(o) No Restriction on Transfer. No Contract requires the
prior consent of an Obligor or contains any other restriction relating to the
transfer or assignment of rights of payment under such Contract which are
legally enforceable (other than a consent or waiver of such restriction that
has been obtained prior to the Closing Date).
(p) Restrictions on Chattel Paper. The Transferor and
Georgia Gulf shall not permit any portion of the Transferred Interest that
constitutes chattel paper within the meaning of Section 9-105 of the Relevant
UCC to be transferred to or possessed by any other party other than the
Company or the Transferor, as appropriate.
(q) Coverage Requirement. The Net Receivables Balance
equals or exceeds the Coverage Amount.
(r) Credit Policy. Since February 2, 1998, there have been
no material changes in the Credit Policy, and since such date, no material
adverse change has occurred in the overall rate of collection of Receivables.
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(s) No Termination Event. No event has occurred and is
continuing and no condition exists which constitutes a Termination Event or
a Potential Termination Event.
(t) Not an Investment Company. The Transferor and Georgia
Gulf are (i) not, and are not controlled by, an "investment company" within
the meaning of the 1940 Act, or (ii) are exempt from all provisions of the
1940 Act.
(u) ERISA. Each of the Transferor and Georgia Gulf is in
compliance in all material respects with ERISA and no lien in favor of the
Pension Benefit Guaranty Corporation on any of the Receivables exists, or to
the knowledge of the Transferor or Georgia Gulf, is pending or threatened.
(v) Bulk Sales. No transaction contemplated by this
Agreement requires compliance with any bulk sales act or similar law.
(w) No Preference, etc. The conveyance of the Receivables,
the Collections and Related Security to the Company, and each such
conveyance, shall not have been made for or on account of an antecedent debt
owed by the Transferor or Georgia Gulf to the Company.
Any document, instrument, certificate or notice delivered to
the Company hereunder shall be deemed a representation and warranty by the
Transferor and Georgia Gulf.
SECTION 3.2. Reaffirmation of Representations and Warranties On each
day that a Transfer is made hereunder, the Transferor, by accepting the proceeds
of such Transfer or reinvestment pursuant to Section 2.2(b), shall be deemed to
have certified that (i) all representations and warranties described in Section
3.1 are true and correct on and as of such day as though made on and as of such
day and (ii) no event has occurred or is continuing, or would result from any
such Transfer or recomputation, which constitutes a Termination Event or a
Potential Termination Event. The representations and warranties set forth in
Section 3.1 shall survive the conveyance of the Receivables to the Company and
the termination of this Agreement. Upon discovery by the Company, or the
Transferor or Georgia Gulf of a breach of the representations and warranties set
forth in Section 3.1, the party discovering such breach shall give written
notice to the others within three Business Days of such discovery.
ARTICLE IV
CONDITIONS PRECEDENT
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SECTION 4.1. Conditions to Closing. This Agreement shall become
effective on the first date on which the Transferor and Georgia Gulf shall
deliver to the Company the following documents and instruments, all of which
shall be in form and substance acceptable to the Company:
(a) A Certificate of the Secretary of the Transferor
certifying (i) the names and signatures of the officers and employees
authorized on its behalf to execute this Agreement and any other documents to
be delivered by it hereunder (on which Certificate the Company may
conclusively rely until such time as the Company shall receive from the
Transferor a revised Certificate meeting the requirements of this clause
(a)(i)), (ii) a copy of the Transferor's Certificate of Incorporation,
certified by the Secretary of State of the State of Delaware, (iii) a copy of
the Transferor's By-Laws, (iv) a copy of resolutions of the Board of
Directors of the Transferor approving this Agreement and the transactions
contemplated herein, and (v) certificates of the Secretaries of State of the
States of Delaware and Georgia certifying the Transferor's good standing
under the laws of the States of Delaware and Georgia, respectively.
(b) A Certificate of the Secretary of Georgia Gulf
certifying (i) the names and signatures of the officers and employees
authorized on its behalf to execute this Agreement and any other documents to
be delivered by it hereunder (on which Certificate the Company may
conclusively rely until such time as the Company shall receive from Georgia
Gulf a revised Certificate meeting the requirements of this clause (b)(i)),
(ii) a copy of Georgia Gulf's Certificate of Incorporation, certified by the
Secretary of State of the State of Delaware, (iii) a copy of Georgia Gulf's
By-Laws, (iv) a copy of resolutions of the Board of Directors of Georgia Gulf
approving this transaction and (v) certificates of the Secretaries of State
of the States of Delaware and Georgia certifying the Transferor's good
standing under the laws of the States of Delaware and Georgia, respectively.
(c) Acknowledgment copies of proper financing statements
(Form UCC-1), dated a date reasonably near to the date of the initial
Transfer naming the Transferor as the transferor of Receivables and the
Company as acquiror or other similar instruments or documents as may be
necessary or in the opinion of the Company desirable under the Relevant UCC
of all appropriate jurisdictions or any comparable law to perfect the
Company's ownership interest in all Receivables and the Residual Receivable
Interest with respect thereto hereunder.
(d) Acknowledgment copies of proper financing statements
(Form UCC-1), dated a date reasonably near to the date of the initial
Transfer naming Georgia Gulf as the seller of Receivables and the Transferor
as purchaser or other similar instruments or documents as may be necessary or
in the opinion of the Company desirable under the Relevant UCC of all
appropriate jurisdictions or any comparable law to perfect the Transferor's
ownership interest in all Receivables and the Residual Receivable Interest
with respect thereto under the Receivables Purchase Agreement.
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(e) Acknowledgment copies of proper financing statements
(Form UCC-3) and lien releases, if any, necessary to release all security
interests and other rights of any person in Receivables previously granted by
Georgia Gulf and/or the Transferor.
(f) Certified copies of request for information or copies
of UCC-1 or similar search reports (certified by parties acceptable to the
Company) dated a date reasonably near the date of the initial Transfer
listing all effective financing statements which name Georgia Gulf (under its
present name and any previous name) as transferor or debtor and which are
filed in appropriate jurisdictions together with copies of such financing
statements.
(g) A favorable opinion of Jones, Day, Reavis and Pogue,
special counsel for Georgia Gulf, as to such matters as the Company may
reasonably request.
(h) A favorable opinion of Jones, Day, Reavis and Pogue,
special counsel for the Transferor, as to such matters as the Company may
reasonably request.
(i) A favorable opinion of Jones, Day, Reavis and Pogue,
special counsel for Georgia Gulf and the Transferor, covering certain
bankruptcy, insolvency and substantive nonconsolidation matters, in form and
substance satisfactory to the Company and the Company's counsel.
(j) A certificate in the form of Exhibit K, executed by
the chief financial officer or corporate controller of the Transferor.
(k) A Monthly Report relating to the Receivables for the
months of January and February 1998.
(l) Undated executed copies of Lock-Box Notices to Lock-Box
Banks.
(m) Executed copies of the Receivables Purchase Agreement
and the Fee Letter.
(n) Draft consolidated financial statements for (i) Georgia
Gulf and its Subsidiaries and (ii) the Transferor, as of and for the year
ended December 31, 1997 (with executed finals to be provided as soon as these
are available to Georgia Gulf and by not later than April 5, 1998), and
agreed upon procedures prepared by Arthur Andersen LLP dated March 1998 with
respect to servicing.
(o) Such other documents as the Company shall reasonably
request.
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ARTICLE V
COVENANTS
SECTION 5.1. At all times from the date hereof to the latest to occur
of (i) the Termination Date or (ii) the date on which the Company's Transferred
Interest shall be equal to zero, unless the Company shall otherwise consent in
writing:
(a) Reporting Obligations. The Transferor will, and will
cause Georgia Gulf to, maintain, each for itself and each Subsidiary, a
system of accounting established and administered in accordance with GAAP,
and furnish to the Company:
(i) SEC Filings. Within 5 days of filing thereof, copies of
all registration statements, annual (Form 10-K) report, including
financial statements audited by, with a report thereon prepared by,
nationally recognized independent public accountants, (Form 10-Q),
monthly or other reports, including Form 8-K current reports which the
Transferor, Georgia Gulf or any Subsidiary thereof files with the
Securities and Exchange Commission pursuant to the 1934 Act.
(ii) Compliance Certificate. Together with the reports
required above, a compliance certificate in substantially the form of
Exhibit K hereto signed by its chief financial officer or corporate
controller stating that no Termination Event or Potential Termination
Event exists, or if any Termination Event or Potential Termination
Event exists, stating the nature and status thereof.
(iii) Change in Credit Policy. Within 10 days after the date
any material change in or amendment to the Credit Policy is made
(including changes in payment instructions to Obligors), a copy of the
Credit Policy then in effect indicating such change or amendment.
(iv) Other Information. Such other information (including
non-financial information) as the Company may from time to time
reasonably request.
(b) Certain Notices. Each of the Transferor and Georgia
Gulf will notify the Company in writing of any of the following, immediately
upon learning of the occurrence thereof, describing the same and, if
applicable, the steps being taken by the Person(s) affected with respect
thereto:
(i) Notice of Termination Events or Potential Termination
Events. As soon as possible and in any event within two (2) days after
the occurrence of each Termination Event or each Potential Termination
Event of which the Transferor or Georgia Gulf has knowledge, a
statement of the chief financial officer or corporate controller of the
Transferor or Georgia Gulf, as applicable, setting forth details of
such Termination Event or Potential Termination Event and the action
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which the Transferor or Georgia Gulf, as applicable, proposes to take
with respect thereto.
(ii) Litigation. The institution of any litigation,
arbitration proceeding or governmental proceeding which may have a
Material Adverse Effect.
(iii) Judgments. The entry of any judgment or decree against
the Transferor, or Georgia Gulf or any of its Subsidiaries (other than
the Transferor) if the aggregate amount of all judgments or decrees
then outstanding against the Transferor or Georgia Gulf and its
Subsidiaries, respectively, exceeds $5,000,000 after deducting (A) the
amount with respect to which the Transferor or Georgia Gulf and its
Subsidiaries is insured and (B) the amount for which the Transferor or
Georgia Gulf and such Subsidiary is otherwise indemnified if the terms
of such indemnification are satisfactory to the Company.
(c) Conduct of Business. Each of the Transferor and Georgia
Gulf will, and Georgia Gulf will cause each of its Subsidiaries to, carry on
and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted and
will do all things necessary to remain duly incorporated, validly existing
and in good standing as a domestic corporation in its jurisdiction of
incorporation and will maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted, except
where the failure to obtain any such approval would not have a Material
Adverse Effect.
(d) Compliance with Laws. Each of the Transferor and
Georgia Gulf will, and Georgia Gulf will cause each of its Subsidiaries to,
comply with all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where the
failure to comply with such laws and regulations would not have a Material
Adverse Effect.
(e) Furnishing of Information and Inspection of Records.
Each of the Transferor and Georgia Gulf will furnish to the Company from time
to time such information with respect to the Receivables as the Company may
reasonably request, including listings identifying the Outstanding Balance
for each Receivable. Each of the Transferor and Georgia Gulf will, at any
time and from time to time during regular business hours with prior written
notice, permit the Company or its agents or representatives, (i) to examine
and make copies of and abstracts from all Records and (ii) to visit the
offices and properties of the Transferor or Georgia Gulf for the purpose of
examining such Records, and to discuss matters relating to Receivables or the
Transferor's or Georgia Gulf's performance hereunder with any of the
officers, directors, employees or independent public accountants of the
Transferor or Georgia Gulf having knowledge of such matters.
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(f) Keeping of Records and Books of Account. Each of the
Transferor and Georgia Gulf will maintain and implement administrative and
operating procedures (including an ability to recreate all Records evidencing
Receivables in the event of the destruction of the originals thereof), and
keep and maintain, or obtain, as and when required, all documents, books,
records and other information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, records
adequate to permit the daily identification of each new Receivable and all
Collections of, and adjustments to, each existing Receivable). Without
limiting the foregoing, the Transferor will, in order to accurately reflect
this purchase and sale transaction, execute and file such financing or
continuation statements or amendments thereto or assignments thereof (as
permitted pursuant hereto) as may be requested by the Company and mark its
master data processing records and other documents including the Detailed
Aged Trial Balance and the Summary Aged Trial Balance by the Closing Date or
as soon as practicable thereafter (but in no event to exceed 20 days from the
Closing Date), with a legend describing the purchase by the Company of the
Receivables pursuant to the Transfer Agreement and stating "These accounts
receivable have been purchased from Georgia Gulf Corporation by GGRC Corp.
pursuant to a Receivables Purchase Agreement dated as of March 10, 1998 and
GGRC Corp. has conveyed an interest in these accounts receivable to Blue
Ridge Asset Funding Corporation pursuant to a Receivables Transfer Agreement
dated as of March 10, 1998." Each of the Transferor and Georgia Gulf will
give the Company prompt written notice of any change in the administrative
and operating procedures referred to in this paragraph (f).
(g) Performance and Compliance with Receivables and
Contracts. Each of the Transferor and Georgia Gulf will at its own expense
timely and fully perform and comply with all provisions, covenants and other
promises required to be observed by it under the Contracts related to the
Receivables.
(h) Credit Policy. Each of the Transferor and Georgia
Gulf will comply with the Credit Policy in regard to each Receivable and the
related Contract.
(i) Collections. The Transferor and/or Georgia Gulf
shall instruct all Obligors to cause all Collections to be deposited directly
to a Lock-Box Account.
(j) Payment to Georgia Gulf. With respect to any Receivable
sold by Georgia Gulf to the Transferor, the Transferor shall, and shall cause
Georgia Gulf to, effect such sale under, and pursuant to the terms of, the
Receivables Purchase Agreement, including the payment by the Transferor
either in cash, by a capital contribution or by an increase in the amount of
the Subordinated Note (as defined in the Receivables Purchase Agreement) to
Georgia Gulf of an amount equal to the purchase price for such Receivable as
required by the terms of the Receivables Purchase Agreement.
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SECTION 5.2. Negative Covenants of the Transferor and Georgia Gulf.
During the term of this Agreement, unless the Company shall otherwise consent
in writing:
(a) No Sales, Transfers, Liens, etc. Except as otherwise
provided herein and in the Receivables Purchase Agreement, neither the
Transferor nor Georgia Gulf will sell, transfer, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon (including the filing of any financing statement) or with
respect to, any Receivable or related Contract, or upon or with respect to
any account which concentrates in a Lock-Box Bank to which any Collections of
any Receivable are sent, or assign any right to receive income in respect
thereof.
(b) No Extension or Amendment of Receivables. Neither the
Transferor nor Georgia Gulf will extend, amend or otherwise modify the terms
of any Receivable, or amend, modify or waive any term or condition of any
Contract related thereto, without the prior written consent of the Company if
such amendment, modification or waiver might result in a Material Adverse
Effect, or would breach any of their respective representations, warranties
or covenants under this Agreement.
(c) Change in Business or Credit Policy. Neither the
Transferor nor Georgia Gulf will make any change in the character of its
business or in the Credit Policy, which change might result in a Material
Adverse Effect.
(d) Use of Proceeds. No proceeds of any Transfer will be
used by the Transferor or Georgia Gulf to purchase or carry any margin stock
(as defined in Regulation U of the Board of Governors of the Federal Reserve
System) in violation of Regulations T, U or X of the Board of Governors of
the Federal Reserve System.
(e) No Mergers, Etc. Neither the Transferor nor Georgia
Gulf will (i) consolidate or merge with or into any other Person, (ii) sell,
lease or transfer all or substantially all of its assets to any other person
(except with respect to the Transferor, to the Company hereunder) or (iii)
enter into any plan of liquidation, partial liquidation, spin-off or
split-off.
(f) Change in Payment Instructions to Obligors. Neither the
Transferor nor Georgia Gulf will add or terminate any bank as a Lock-Box Bank
or any account as a Lock-Box Account to or from those listed in Exhibit C
hereto or make any change in its instructions to Obligors regarding payments
to be made to any Lock-Box Account, unless (i) such instructions are to
deposit such payments to another existing Lock-Box Account or (ii) the
Company shall have received written notice of such addition, termination or
change (including any change in the officer or agent of the Transferor or
Georgia Gulf executing the related Lock-Box Notice) at least 30 days prior
thereto and the Company shall have received a Lock-Box Notice executed by
each new
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Lock-Box Bank or an existing Lock-Box Bank with respect to each new Lock-Box
Account, as applicable.
(g) Deposits to Lock-Box Accounts. Neither the Transferor
nor Georgia Gulf will deposit or otherwise credit, or cause or permit to be
so deposited or credited, to any Lock-Box Account cash or cash proceeds other
than Collections of Receivables.
(h) Change of Name, Etc. Neither the Transferor nor Georgia
Gulf will change its name, identity or structure or its chief executive
office, unless, at least 10 days prior to the effective date of any such
change, the Transferor or Georgia Gulf, as applicable, delivers to the
Company (i) UCC financing statements, executed by the Transferor or Georgia
Gulf (as applicable), necessary to reflect such change and to continue the
perfection of the Company's or Transferor's, as applicable, ownership
interests or security interests in the Receivables and the Residual
Receivable Interest and Collections with respect thereto and (ii) new or
revised Lock-Box Notices executed by the Lock-Box Banks which reflect such
change and enable the Company to continue to exercise its rights contained in
Section 2.8.
(i) Sale Treatment. The Transferor will not and will not
permit Georgia Gulf to, (i) account for (including for financial reporting
purposes), or otherwise treat, the transactions contemplated by the
Receivables Purchase Agreement in any manner other than as a sale of
Receivables by Georgia Gulf to the Transferor, or (ii) account for (other
than for tax purposes) or otherwise treat the transactions contemplated
hereby in any manner other than a sale of Receivables by the Transferor to
the Company. In addition, the Transferor shall, and shall cause Georgia Gulf
to, disclose (in a footnote or otherwise) in all of its respective financial
statements (including any such financial statements consolidated with any
other Persons' financial statements) the existence and nature of the
transactions contemplated hereby and by the Receivables Purchase Agreement
and the interest of the Transferor (in the case of Georgia Gulf's financial
statements) and the Company in the Transferred Property.
(j) Separate Business. The Transferor shall at all times
comply in all respects with Articles X, XV and XVII of its Certificate of
Incorporation. The officers and directors of the Transferor (as appropriate)
shall make decisions with respect to the business and daily operations of the
Transferor independent of and not dictated by any controlling entity. The
Transferor shall not engage in any business not permitted by its Certificate
of Incorporation as in effect on the Closing Date.
(k) Corporate Documents. The Transferor shall only amend,
alter, change or repeal its Certificate of Incorporation with the prior
written consent of the Administrative Agent.
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ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1. Appointment of Collection Agent; Collection Agent Fee. The
servicing, administering and collection of the Receivables shall be conducted by
such Person (the "Collection Agent") so designated from time to time in
accordance with this Section 6.1. Until the Company gives notice to Georgia Gulf
of the designation of a new Collection Agent, Georgia Gulf is hereby designated
as, and hereby agrees to perform the duties and obligations of, the Collection
Agent pursuant to the terms hereof. The Company may, upon the occurrence of a
Termination Event (other than a Termination Event solely with respect to Section
7.1(n), but including any Termination Event under Subsections 7.1(a) and 7.1(c)
regardless of whether Georgia Gulf is then serving as the Collection Agent) (i)
designate as Collection Agent any Person (including itself) to succeed Georgia
Gulf or any successor Collection Agent, on the condition in each case that any
such Person so designated shall agree to perform the duties and obligations of
the Collection Agent pursuant to the terms hereof and (ii) notify any Obligor of
the Transferred Interest. For the period Georgia Gulf serves as the Collection
Agent, the Receivables Purchase Agreement provides that the Collection Agent
shall receive one Collection Agent Fee (the "Collection Agent Fee") of 0.50% per
annum, payable monthly on the aggregate amount of Receivables sold, provided,
however, that if a successor Collection Agent is appointed that is not a Georgia
Gulf Affiliate, such successor shall receive a Collection Agent Fee of 1.00% per
annum payable monthly.
SECTION 6.2. Duties of Collection Agent.
(a) The Collection Agent shall take or cause to be taken
all such action as may be necessary or advisable to collect each Receivable
from time to time, in accordance with all applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Credit Policy. Each of the Transferor and the Company hereby appoints as its
agent the Collection Agent, from time to time designated pursuant to Section
6.1, to enforce their respective rights and interests in and under the
Receivables, the Residual Receivable Interest, the Collections and the
Contracts. The Collection Agent shall set aside for the account of the
Transferor and the Company their respective allocable shares of the
Collections of Receivables in accordance with Sections 2.5 and 2.6. The
Collection Agent shall segregate and deposit to the Company's account the
Company's allocable share of Collections of Receivables when required
pursuant to Article II hereof. The Transferor and Georgia Gulf shall deliver
to the Collection Agent, and the Collection Agent shall hold in trust for the
Transferor and the Company in accordance with their respective interests, all
Records which evidence or relate to Receivables, the Residual Receivable
Interest or Collections. Notwithstanding anything to the contrary contained
herein, the Company shall have the absolute and unlimited right to direct the
Collection Agent (whether the Collection Agent is Georgia Gulf or any other
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Person) to commence or settle any legal action to enforce collection of
any Receivable or to foreclose upon or repossess any Residual Receivable
Interest.
(b) The Collection Agent shall hold, for the benefit of the
Transferor, Collections received minus the Percentage Factor of such
Collections. On the last day of each Tranche Period, the Collection Agent
shall deduct from such Collections and pay to the Company in reduction of the
Aggregate Net Investment and accrued Discount and any amounts due under
Section 2.9 hereof and unpaid from the Transferor and turn the remainder of
such Collections over to the Transferor. In addition, the Collection Agent
shall, as soon as practicable following receipt thereof, turn over to the
Transferor any collections of any indebtedness of any Obligor which is not a
Receivable. The Collection Agent, if other than the Transferor, shall as soon
as practicable upon demand, deliver to the Transferor all Records in its
possession which evidence or relate to indebtedness of an Obligor which is
not a Receivable or the Residual Receivable Interest.
(c) On or before 90 days after the end of each fiscal year
of the Collection Agent, beginning with December 31, 1998, the Collection
Agent shall cause a firm of nationally recognized independent public
accountants (who may also render other services to the Collection Agent,
Georgia Gulf or the Transferor) to furnish a report to the Company
substantially to the effect that (i) such accountants have performed certain
agreed upon procedures related to certain documents and records relating to
the servicing of the Receivables under this Agreement, compared on a test
basis the information contained in the Monthly Reports delivered pursuant to
Section 2.11 during the period covered by such reports with such documents
and records and that, on the basis of such procedures, and subject to such
limitations and qualifications as may be reasonably and customarily set forth
in such report, that the servicing has been conducted substantially in
compliance with the terms and conditions as set forth in this Agreement,
except for such exceptions as they believe to be immaterial and such other
exceptions as shall be set forth in such statement and (ii) such accountants
have compared on a test basis the mathematical calculations of the amounts
set forth in the Monthly Reports delivered pursuant to Section 2.11 during
the period covered by such reports, with the Transferor's and Collection
Agent's computer reports which were the source of such amounts and that, on
the basis of such comparison, such accountants are of the opinion that such
amounts are in agreement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such statement.
(d) Notwithstanding anything to the contrary contained in
this Article VI, the Collection Agent, if not Georgia Gulf, shall have no
obligation to collect, enforce or take any other action described in this
Article VI with respect to any Receivable that is not included in the
Transferred Interest other than to deliver to the Transferor the Collections
and documents with respect to any such Receivable as described in Section
6.2(b).
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SECTION 6.3. Rights After Designation of New Collection Agent. At any
time following the designation of a Collection Agent (other than Georgia Gulf)
pursuant to Section 6.1:
(i) The Company may direct that payment of all amounts payable
under any Receivable be made directly to the Company or its designee.
(ii) The Transferor shall, at the Company's request and at the
Transferor's expense, give notice of the Company's ownership of
Receivables to each Obligor and direct that payments be made directly
to the Company or its designee.
(iii) The Transferor shall, at the Company's request, (A)
assemble all of the Records, and shall make the same available to the
Company at a place selected by the Company or its designee, and (B)
segregate all cash, checks and other instruments received by it from
time to time constituting Collections of Receivables in a manner
acceptable to the Company and shall, promptly upon receipt, remit all
such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Company or its designee.
(iv) Each of Georgia Gulf and the Transferor hereby authorizes
the Company to take any and all steps in the Transferor's name and
Georgia Gulf's name and on behalf of the Transferor and Georgia Gulf,
as applicable, necessary or desirable in the determination of the
Company, to collect all amounts due under any and all Receivables,
including endorsing the Transferor's name and Georgia Gulf's name on
checks and other instruments representing Collections and enforcing
such Receivables and the related Contracts.
SECTION 6.4. Responsibilities of the Transferor and Georgia Gulf.
Anything herein to the contrary notwithstanding, each of the Transferor and
Georgia Gulf shall (i) perform all of its obligations under the Contracts
related to the Receivables to the same extent as if such Receivables had not
been sold hereunder, and the exercise by the Company of its rights hereunder
shall not relieve the Transferor and Georgia Gulf from such obligations and (ii)
pay when due any taxes of the Transferor and Georgia Gulf, including all sales
taxes payable in connection with the Receivables. The Company shall not have any
obligation or liability with respect to any Receivable or related Contracts, nor
shall it be obligated to perform any of the obligations of the Transferor and
Georgia Gulf thereunder.
SECTION 6.5. Lock-Box Notices. From and after the occurrence of a
Potential Termination Event, the Company is hereby authorized at any time to
date, and to deliver to the Lock-Box Banks, the Lock-Box Notices delivered
hereunder; provided that for so long as this Agreement is in full force and
effect and a Potential Termination Event has not occurred, the Company hereby
covenants and agrees with the Transferor and Georgia
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Gulf that it will hold any such Lock-Box Notice provided by the Transferor and
Georgia Gulf to the Company in safekeeping. Each of the Transferor and Georgia
Gulf, when the Company shall deliver the Lock-Box Notices to the Lock-Box Banks,
hereby transfers to the Company the exclusive ownership and control of the
Lock-Box Accounts to which the Obligors of Receivables shall make payments and
in which Collections may be concentrated, and shall take any further action that
the Company may reasonably request, to effect such transfer. In case any
authorized signatory of the Transferor or Georgia Gulf whose signature shall
appear on any Lock-Box Notice shall cease to have such authority before the
delivery of such Lock-Box Notice, such signature shall nevertheless be valid and
sufficient for all purposes as if such authority had remained in force at the
time of such delivery. Notwithstanding the delivery of such Lock-Box Notices,
the Collection Agent shall continue to comply with the provisions of this
Section 6.5.
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1. Termination Events. The occurrence of any one or
more of the following events shall constitute a Termination Event:
(a) the Transferor, Georgia Gulf or the Collection Agent
(provided, except for purposes of Section 6.1 only, Georgia Gulf is the
Collection Agent) shall fail to perform or observe any term, covenant,
agreement or undertaking hereunder (other than as referred to in clause (c)
below) and such failure shall remain unremedied for two Business Days after
written notice thereof has been given to the Transferor, Georgia Gulf or the
Collection Agent, as applicable, by the Company; or
(b) any representation, warranty, certification or
statement made by the Transferor or Georgia Gulf in this Agreement or in any
other document delivered pursuant hereto or in connection herewith, including
the Receivables Purchase Agreement and the Credit Agreement, shall prove to
have been incorrect in any material respect when made or deemed made and such
condition shall continue unremedied for a period of five days; or
(c) any event or occurrence that has a material adverse
effect on Georgia Gulf, the Transferor or on Blue Ridge or any Affiliates
thereof to perform in all material respects their respective obligations
hereunder under the Receivables Purchase Agreement or any related agreement,
including the Credit Agreement, or on the status, existence, perfection,
priority or enforceability of Blue Ridge's interest in the Receivables; or
(d) either the Transferor, Georgia Gulf or the Collection
Agent (provided, except for purposes of Section 6.1 only, Georgia Gulf is the
Collection Agent)
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shall fail, for a period of two Business Days, to make any
payment or deposit to be made by it hereunder when due; or
(e) (i) failure of the Transferor, Georgia Gulf or any of
their respective Subsidiaries to pay any Indebtedness (other than
Indebtedness subject to a good faith dispute) when due; or (ii) any
Indebtedness (other than Indebtedness subject to a good faith dispute) shall
be declared to be due and payable or required to be prepaid (other than by a
regularly scheduled payment) prior to the date of maturity thereof (other
than any acceleration arising out of a good faith dispute), and such
condition shall continue unremedied for a period of two Business Days; or
(f) (i) the Transferor, Georgia Gulf or any of their
respective Subsidiaries shall generally not pay its debts as such debts
become due or shall admit in writing its inability to pay its debts generally
or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by the Transferor, Georgia Gulf or any of
their respective Subsidiaries, or 30 days shall have elapsed since the
commencement of any proceeding against the Transferor, Georgia Gulf or any of
their respective Subsidiaries (which proceeding shall not have been
dismissed), seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection
relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or
other similar official for it or any substantial part of its property, or
(ii) the Transferor, Georgia Gulf or any of their respective Subsidiaries
shall take any corporate action to authorize any of the actions set forth in
clause (i) above in this subsection (e); or
(g) the institution of any litigation, arbitration
proceedings or governmental proceeding involving the Transferor, Georgia
Gulf, any of their respective Subsidiaries or the Receivables which may have
a Material Adverse Effect; or
(h) the entry of any judgment or decree against the
Transferor, Georgia Gulf or any of their respective Subsidiaries if the
aggregate amount of all judgments and decrees then outstanding against any of
them or their Subsidiaries for which insurance is not available and the
collection of which has not been stayed, might result in a Material Adverse
Effect; or
(i) a change in the majority ownership of the voting stock
of Georgia Gulf or the Transferor shall have occurred, or Georgia Gulf or the
Transferor shall enter into any transaction, merger, consolidation or sale of
all or substantially all its assets whereby it is not the surviving entity; or
(j) the Default Ratio (averaged over the previous three
consecutive months) shall exceed 2.5% or the Delinquency Ratio (averaged over
the previous three consecutive months) shall exceed 2.5%; or
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(k) the Net Receivables Balance shall be less than the
Coverage Amount and such failure shall remain unremedied for five consecutive
Business Days thereafter; or
(l) the Aggregate Net Investment plus Discount exceeds the
Facility Limit, and the Aggregate Net Investment plus Discount is not reduced
by the Transferor by the payment of cash to the Company to an amount not more
than the Facility Limit within five business days following notice from the
Company; or
(m) an Event of Default (as defined by the Credit
Agreement) shall have occurred under the Credit Agreement; or
(n) the Company is unable to obtain liquidity loans under
the Liquidity Facility in support of Commercial Paper issued or to be issued
by or on behalf of the Company in connection with the transactions
contemplated by this Agreement; or
(o) the Receivables Purchase Agreement shall have
terminated in accordance with the terms of Article VIII thereof; or
(p) the Internal Revenue Service, the Pension Benefit
Guaranty Corporation or any other governmental authority files notice of a
lien with respect to taxes of $1,000,000 or more with respect to the
Receivables and such lien is not released within 30 days; or
(q) Georgia Gulf, Blue Ridge or any successor or assign
becomes an "investment company" within the meaning of the 1940 Act.
SECTION 7.2. Termination. If a Termination Event occurs, (i) the
Company may, by notice to the Transferor, declare all outstanding Tranche
Periods to be ended and designate the Tranche Rate applicable to the Aggregate
Net Investment plus the Discount, (ii) the Company shall have no further
obligation to make any Advances hereunder or otherwise fund any transfers of
Receivables, and the Facility Limit shall be reduced on each day thereafter to
the aggregate, as of the preceding day, of the Aggregate Net Investment plus the
Discount, (iii) the Company may cease to issue or cause to be issued Commercial
Paper or obtain liquidity loans for the purpose of reinvestment from the
Liquidity Bank under the Liquidity Facility, (iv) if Georgia Gulf is the
Collection Agent at the time, the Company may terminate Georgia Gulf as
Collection Agent and appoint a new Collection Agent, which may be the Company,
Wachovia Bank, N.A. or any affiliate of either, and (v) the Company shall have
all of the rights and remedies provided to a secured creditor or a transferee
under the Relevant UCC and applicable local law.
ARTICLE VIII
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INDEMNIFICATION
SECTION 8.1. Indemnities by the Transferor. Without limiting any other
rights which the Company may have hereunder or under applicable law, the
Transferor hereby agrees to hold harmless and indemnify the Company and the
Administrative Agent and their respective officers, directors, agents and
employees from and against any and all damages, losses, claims, liabilities,
costs and expenses, including reasonable attorneys' fees and disbursements (all
of the foregoing being collectively referred to as "Indemnified Amounts")
awarded against or incurred by the Company and/or the Administrative Agent
arising out of or as a result of this Agreement or the ownership, either
directly or indirectly, by the Company of the Transferred Interest excluding,
however, (i) Indemnified Amounts to the extent resulting from gross negligence
or willful misconduct on the part of the Company and/or the Administrative Agent
or (ii) recourse (except as otherwise specifically provided in this Agreement)
for uncollectible Receivables. Without limiting the generality of the foregoing,
the Transferor shall hold harmless and indemnify the Company and the
Administrative Agent for Indemnified Amounts relating to or resulting from:
(a) reliance on any representation or warranty made by the
Transferor (or any of its officers) under or in connection with this
Agreement or any other information or report delivered by or on behalf of the
Transferor pursuant hereto, which shall have been false or incorrect in any
material respect when made or deemed made;
(b) the failure by the Transferor or the Collection Agent
to comply with any applicable law, rule or regulation with respect to any
Receivable or the related Contract, or the nonconformity of any Receivable or
the related Contract with any such applicable law, rule or regulation;
(c) the failure to vest and maintain vested in the Company
or the Liquidity Bank, as applicable, the Transferred Interest in the
Receivables free and clear of any Adverse Claim;
(d) the failure to file, or delay in filing, financing
statements or other similar instruments or documents under the UCC or the
laws of any applicable jurisdiction or other applicable laws with respect to
any Receivable;
(e) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such Receivable
or the related Contract not being a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms), or any
other claim resulting from the sale of products or services related to such
Receivable or the furnishing or failure to furnish such products or services;
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(f) any failure of the Transferor or the Collection Agent
to perform its duties or obligations in accordance with the provisions of
this Agreement;
(g) any products liability claim, environmental liability
claim, or personal injury or property damage suit or other similar or related
claim or action of whatever sort arising out of or in connection with
products or services which are the subject of any Receivable;
(h) the transfer of an undivided percentage ownership
interest in any Receivable other than an Eligible Receivable, if, on the date
of such transfer the Net Receivables Balance was less than the Coverage
Amount; or
(i) the inability of the Company after using all reasonable
efforts to sell or cause to be sold Commercial Paper to fund any CP Tranche
requested by the Transferor.
If the Company and/or the Administrative Agent enter into
agreements for the transfer of interests in receivables from one or more other
Persons ("Other Transferors"), the Company and the Administrative Agent shall
allocate such Indemnified Amounts which are attributable to the Transferor and
to the Other Transferors to the Transferor and each Other Transferor; provided,
however, that if such Indemnified Amounts are attributable to the Transferor and
not attributable to any Other Transferor, the Transferor shall be solely liable
for such Indemnified Amounts or if such Indemnified Amounts are attributable to
Other Transferors and not attributable to the Transferor, such Other Transferors
shall be solely liable for such Indemnified Amounts.
SECTION 8.2. Tax Indemnification. The Transferor and the Collection
Agent hereby agree to pay, and to indemnify the Company and the Administrative
Agent from and against, any taxes which may at any time be asserted in respect
of this transaction or the subject matter hereof or any funding agreement or the
subject matter thereof (including any sales, gross receipts, general
corporation, personal property, privilege or license taxes, but not including
any federal or (except as provided below) other income taxes imposed upon the
Company and/or the Administrative Agent, with respect to its net income or
profits arising out of the transactions contemplated hereby), whether arising by
reason of the acts to be performed by the Transferor hereunder or imposed
against the Transferor, or the Company and/or the Administrative Agent, the
property involved or otherwise. If any tax, fee or similar charge measured by
net income or profits is imposed or with respect to any payment for the account
of the Company or the Administrative Agent provided for in this Agreement by any
State or political subdivision thereof (other than income taxes of the Company),
the Transferor will, upon demand by the Company or the Administrative Agent, pay
an amount necessary to make the Company and/or the Administrative Agent whole,
taking into account any tax consequences to the Company of the payment of such
tax and the receipt of the indemnity provided for by this Section 8.2, including
the effect of such tax or refund on the amount of tax measured by net
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income or profits which is or was payable by the Company and/or the
Administrative Agent in the jurisdiction in which its principal executive office
is located, provided, however, that if the Company and/or the Administrative
Agent enters into agreements for the transfer of interests in receivables from
Other Transferors, the Company shall allocate among the Transferor and such
Other Transferors any amounts owing under this Section 8.2 which are
attributable to the Transferor or to the Other Transferors ("Section 8.2
Costs"); provided, further, that if such Section 8.2 Costs are attributable to
the Transferor and not attributable to any other Transferor, the Transferor
shall be solely liable for such Section 8.2 Costs or if such Section 8.2 Costs
are attributable to Other Transferors and not attributable to the Transferor,
such Other Transferors shall be solely liable for such Section 8.2 Costs; and
provided, further, that such Section 8.2 Costs shall include any amounts the
Company and/or the Administrative Agent must pay to the Liquidity Bank pursuant
to the Liquidity Facility on account of any tax described in this Section 8.2
and applicable to the Liquidity Bank.
SECTION 8.3. Additional Costs.
(a) The Transferor shall pay to the Company from time to
time on demand of the Company such amounts as the Company and/or the
Administrative Agent may reasonably determine to be necessary to compensate
it for any increase in costs which the Company determines are attributable to
its making a Transfer or maintaining any Tranche under this Agreement or its
obligation to make any such Transfer or reinvestment hereunder, or any
reduction in any amount receivable by the Company hereunder in respect of any
such Tranche or such obligation (such increases in costs, payments and
reductions in amounts receivable being herein called "Additional Costs")
resulting from any Regulatory Change which (i) changes the method or basis of
taxation of (A) any amounts payable to the Company under this Agreement in
respect of any such Tranche or (B) such amounts when considered together with
any amounts to be paid by the Company in respect of its Commercial Paper
notes relating to such Tranche, (ii) imposes or modifies any reserve, special
deposit, deposit insurance or assessment, capital or similar requirements
relating to any extensions of credit or other assets of, or any deposits with
or other liabilities of, the banks that are parties to the Liquidity
Facility, or (iii) imposes any other condition affecting this Agreement (or
any of such extensions of credit or liabilities). The Company will notify the
Transferor of any event that will entitle the Company to compensation
pursuant to this Section 8.3(a) as promptly as practicable after it obtains
knowledge thereof.
(b) Without limiting the effect of the foregoing provisions
of this Section 8.3 (but without duplication), the Transferor shall pay to
the Company from time to time on demand of the Company such amounts as the
Company may reasonably determine to be necessary to compensate it for any
costs which the Company determines are attributable to its making a Transfer
or maintaining any Tranche under this Agreement or its obligation to make any
transfers or reinvestments hereunder, in respect of any amount of capital
maintained by the banks that are parties to the Liquidity Facility
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pursuant to any law or regulation of any jurisdiction or any interpretation,
directive or request (whether or not having the force of law) of any court or
governmental or monetary authority, whether in effect on the date of this
Agreement or thereafter or in respect of any costs or expenses incurred by the
Company under the Liquidity Facility. The Company will notify the Transferor if
the Company is entitled to compensation pursuant to this Section 8.3(b) as
promptly as practicable after it obtains knowledge of such event or condition.
(c) Determinations and allocations by the Company for
purposes of this Section 8.3 shall be conclusive, provided that such
determinations and allocations are made in good faith and on a reasonable
basis, reasonable evidence (including an explanation of the applicable
Regulatory Change and an accounting for any amounts demanded) of which shall
be provided to the Transferor upon request.
(d) Anything in this Section 8.3 to the contrary
notwithstanding, if the Company enters into agreements for the transfer of
interests in receivables from Other Transferors, the Company shall allocate
the liability for any amounts under this Section 8.3 ("Section 8.3 Costs") to
the Transferor and each Other Transferor which is attributable to the
Transferor, which amounts shall be paid by the Transferor or to the Other
Transferors; and provided, further, that if such Section 8.3 Costs are
attributable to the Transferor and not attributable to any Other Transferor,
the Transferor shall be solely liable for such Section 8.3 Costs, or if such
Section 8.3 Costs are attributable to Other Transferors and not attributable
to the Transferor, such Other Transferors shall be solely liable for such
Section 8.3 Costs.
SECTION 8.4. Other Costs and Expenses. The Transferor shall pay on
demand all costs and expenses in connection with the preparation, execution,
delivery and administration of this Agreement, any operating agreement, any
funding agreement by and between the Company, the Administrative Agent and any
financial institution and the other documents to be delivered hereunder,
including reasonable fees and charges of legal counsel for the Company, the
Administrative Agent and the financial institution party to such funding
agreement (which such counsel may be employees of the Company, the
Administrative Agent or such financial institution) with respect thereto and
with respect to advising the Company, the Administrative Agent, and any such
financial institution as to its rights and remedies under this Agreement, any
operating agreement and any funding agreement, respectively, and all costs and
expenses, if any, including reasonable counsel's fees and expenses in connection
with the enforcement or amendment of this Agreement and the other documents
delivered hereunder. The Transferor shall reimburse the Company and the
Administrative Agent immediately on demand for any amounts the Company and/or
the Administrative Agent must pay to any financial institution pursuant to any
funding agreement on account of any tax described in Section 8.2 and applicable
to such financial institution. The Transferor shall reimburse the Company and/or
the Administrative Agent for any and all commissions of placement agents and
commercial paper dealers in respect of Commercial Paper issued to fund any CP
Tranche hereunder.
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The Transferor shall reimburse the Company and the Administrative Agent on
demand for all other costs and expenses incurred by the Company and/or the
Administrative Agent or any shareholder of the Company and/or the Administrative
Agent, including reasonable counsel's fees and expenses incurred in connection
with the enforcement of, or amendment to, this Agreement and any documents
related hereto, to the extent such fees, costs and expenses are incurred in
respect of such enforcement or amendment by or in respect of the Transferor
("Other Costs") (provided that with respect to legal fees of the Company and the
Administrative Agent incurred in connection with the negotiation and
implementation of this Agreement, the Transferor shall be obligated to pay such
fees, together with any reasonable charges of such counsel); provided, however,
that if the Company or the Administrative Agent enters into agreements for the
transfer of interests in receivables from Other Transferors, the Company or the
Administrative Agent shall allocate the liability for such Other Costs to the
Transferor and each Other Transferor; and provided, further, that if such Other
Costs are attributable to the Transferor and not attributable to any Other
Transferor, the Transferor shall be solely liable for such Other Costs or if
such Other Costs are attributable to Other Transferors and not attributable to
the Transferor, such Other Transferors shall be solely liable for such other
Costs.
SECTION 8.5. Reconveyance Under Certain Circumstances. The Transferor
agrees to accept the reconveyance from the Company of a particular portion of
the Transferred Interest if the Company notifies the Transferor of a breach of
any representation or warranty made or deemed made at the time of such Transfer
pursuant to Article III of this Agreement, with respect to such portion of the
Transferred Interest and the Transferor shall fail to cure such breach with
respect to such portion within five days after becoming aware thereof. The
reconveyance price shall be paid by the Transferor to the Company in immediately
available funds on such day in an amount equal to the Outstanding Balance of the
Receivables related to such portion of the Transferred Interest.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Term of Agreement. This Agreement shall terminate
following the Termination Date when all Aggregate Unpaids have been paid in
full; provided, however, that (i) the rights and remedies of the Company with
respect to any representation and warranty made or deemed to be made by
Transferor and Georgia Gulf pursuant to this Agreement and (ii) the
indemnification and payment provisions of Article VIII, shall be continuing and
shall survive any termination of this Agreement, subject to applicable statutes
of limitation.
SECTION 9.2. Waivers; Amendments. No failure or delay on the part of
the Company in exercising any power, right or remedy under this Agreement shall
operate as
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a waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise
of any other power, right or remedy. The rights and remedies herein provided
shall be cumulative and nonexclusive of any rights or remedies provided by
law. Any provision of this Agreement may be amended if, but only if, such
amendment is in writing and is signed by the Transferor, Georgia Gulf and the
Company.
SECTION 9.3. Notices. Except as provided below, all communications and
notices provided for hereunder shall be in writing (including bank wire, telex,
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other party at its address or facsimile set forth below. Each such
notice or other communication shall be effective if given by facsimile, when
such facsimile is transmitted to the facsimile number specified in this Section
9.3 and the appropriate answerback or written confirmation is received, if given
by any other means when received at the address specified in this Section 9.3.
However, anything in this Section 9.3 to the contrary notwithstanding, the
Transferor hereby authorizes the Company to effect Transfers, Tranche Period and
Tranche Rate selections based on telephonic notices made by any Person which the
Company in good faith believes to be acting on behalf of the Transferor. The
Transferor agrees to deliver promptly to the Company a written confirmation of
each telephonic notice signed by an authorized officer of Transferor. However,
the absence of such confirmation shall not affect the validity of such notice.
If the written confirmation differs in any material respect from the action
taken by the Company, the records of the Company shall govern, absent manifest
error.
If to the Transferor:
---------------------
GGRC CORP.
400 Perimeter Center Terrace, Suite 595
Atlanta, Georgia 30346
Attention: Donald P. Burke
Telephone: (404) 395-4533
Telecopy: (404) 395-4572
If to Georgia Gulf:
-------------------
GEORGIA GULF CORPORATION
400 Perimeter Center Terrace, Suite 595
Atlanta, Georgia 30346
Attention: Donald P. Burke
Telephone: (404) 395-4533
Telecopy: (404) 395-4572
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If to the Company:
------------------
BLUE RIDGE ASSET FUNDING CORPORATION
c/o Wachovia Bank, N.A.
191 Peachtree Street, GA-423
Atlanta, GA 30303
Attention: Deborah E. Williams, Administrative Specialist
Telephone: (404) 332-4363
Telecopy: (404) 332-5152
If to the Administrative Agent:
-------------------------------
WACHOVIA BANK, N.A.
191 Peachtree Street, GA-423
Atlanta, GA 30303
Attention: Deborah E. Williams, Administrative Specialist
Telephone: (404) 332-4363
Telecopy: (404) 332-5152
SECTION 9.4. Governing Law; Submission to Jurisdiction; Integration.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Georgia. Each of the Transferor and Georgia Gulf hereby submits to
the nonexclusive jurisdiction of the United States District Court for the
Northern District of Georgia and of any Georgia State Court sitting in such
Northern District of Georgia for purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated hereby. Each
of the Transferor and Georgia Gulf hereby irrevocably waives, to the fullest
extent it may effectively do so, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. Nothing in this Section 9.4 shall affect the right of
the Company to bring any action or proceeding against the Transferor, Georgia
Gulf or their respective properties in the courts of other jurisdictions. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire Agreement among the parties hereto with respect to the
subject matter hereof superseding all prior oral or written understandings.
SECTION 9.5. Severability; Counterparts. Any provisions of this
Agreement which are prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. 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
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deemed to be an original and all of which when taken together shall constitute
one and the same Agreement.
SECTION 9.6. Assignments. This Agreement shall be binding on the
parties hereto and their respective successors and assigns; provided, however,
that neither the Transferor nor Georgia Gulf may assign any of its rights or
delegate any of its duties hereunder without the prior written consent of the
Company. No provision on this Agreement shall in any manner restrict the ability
of the Company to assign, participate, grant security interests in, or otherwise
transfer any portion of the Transferred Interest.
SECTION 9.7. Confidentiality.
(a) Each of the Transferor and Georgia Gulf hereby consents
to the disclosure of any non-public information with respect to it to (i) the
Company by the others and (ii) the Liquidity Bank (or any prospective or actual
participant in the Liquidity Facility) by the Company.
(b) Each of the Transferor and Georgia Gulf shall
maintain, and shall cause each of its officers, employees and agents to
maintain, the confidentiality of this Agreement, all documents related hereto
and all other confidential proprietary information with respect to the Company
and its successors and assigns, the Liquidity Bank and each of their respective
businesses, obtained by them in connection with the structuring, negotiation and
execution of the transactions contemplated herein, except for information that
has become publicly available and has been disclosed to (i) legal counsel,
accountants and other professional advisors to the Transferor and Georgia Gulf,
(ii) as required by law, regulation or legal process, and (iii) in connection
with any legal or regulatory proceeding to which the Transferor and/or Georgia
Gulf is subject. The Company hereby consents to the disclosure of information in
the manner and to the Persons set forth in clauses (i) through (iii) above.
SECTION 9.8. No Bankruptcy Petition Against the Company. Each of the
Transferor and Georgia Gulf hereby covenants and agrees that, prior to the date
which is one year and one day after the date upon which all outstanding
Commercial Paper is paid in full, it will not institute against, or join any
other Person in instituting against, the Company any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of any jurisdiction.
SECTION 9.9. Limited Recourse; Waiver of Setoff.
(a) Notwithstanding anything to the contrary contained
herein, the obligations of the Company under this Agreement are solely the
corporate obligations of the Company and shall be payable at such time as funds
are received from the Transferor, Georgia Gulf and other transferors or from any
party to any agreement with the Company in accordance with the terms thereof in
excess of funds necessary to pay matured and
51
<PAGE>
maturing Commercial Paper and, to the extent funds are not available to pay such
obligations, the claims relating thereto shall continue to accrue. Each party
hereto agrees that the payment of any claim (as defined in Section 101 of Title
11 of the Bankruptcy Code) of any such party shall be subordinated to the
payment in full of all Commercial Paper. No recourse shall be had for the
payment of any amount owing in respect of any obligation of, or claim against,
the Company arising out of or based upon this Agreement against any stockholder,
employee, officer, director or incorporator of the Company or any Affiliate
thereof provided, however, that the foregoing shall not relieve any such person
or entity from any liability they might otherwise have as a result of fraudulent
actions or omissions taken by them.
(b) Each of the Transferor and Georgia Gulf hereby agrees
to waive any right of setoff which it may have or to which it may be entitled
against the Company and its assets.
SECTION 9.10. Tax Characterization of the Transactions Contemplated by
this Agreement. The Transferor and the Company agree to treat the transactions
contemplated by this Agreement as a financing for tax purposes and further agree
to file on a timely basis all federal and other income tax returns consistent
with such treatment.
52
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Receivables
Transfer Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
GGRC CORP., as Transferor
By
-----------------------------
Name: Samuel M. Hensley
Title: Treasurer
GEORGIA GULF CORPORATION,
individually and as Collection Agent
By
-----------------------------
Name: Samuel M. Hensley
Title: Corporate Controller
BLUE RIDGE ASSET FUNDING
CORPORATION,
as Company
By
----------------------------
Name: Victoria A. Dudley
Title: Senior Vice President
53
<PAGE>
EXHIBIT A
FORM OF CONTRACT
A-1
<PAGE>
EXHIBIT B
CREDIT POLICY
B-1
<PAGE>
EXHIBIT C
LIST OF LOCK-BOX BANKS
Bank Account Number
Wachovia Bank, N.A 18-340-667
191 Peachtree Street, NE
Atlanta, Georgia 30303-1757
Attn: William R. McCamey
Tel: (404) 332-1371
Customers make payments to:
Georgia Gulf Corporation
P.O. Box 75250
Charlotte, North Carolina 28275-5250
Attn: William R. McCamey
191 Peachtree Street
Atlanta, Georgia 30303
Lock-Box #: 75250 (Data transmission)
75259 18-340-667
C-1
<PAGE>
EXHIBIT D
FORM OF LOCK-BOX NOTICE
______________________, 19___
[Name and Address of
Lock-Box Bank]
Ladies and Gentlemen:
We hereby notify you that we have transferred exclusive ownership and
control of our lock-box account[s] no[s]. __________ maintained with you (the
"Lock-Box Account[s]") to Blue Ridge Asset Funding Corporation, c/o Wachovia
Bank, N.A., 191 Peachtree Street, GA-423, Atlanta, Georgia 30303 (the
"Company").
We hereby irrevocably instruct you to make all payments to be made by
you out of or in connection with the Lock-Box Account[s] directly to Wachovia
Bank, N.A., [_______] Branch, Account no. ____ in the name of the Company, for
the account of the Company, or otherwise in accordance with the instructions of
the Company.
We also hereby notify you that the Company shall be irrevocably
entitled to exercise any and all rights in respect of or in connection with the
Lock-Box Account[s], including, without limitation, the right to specify when
payments are to be made out of or in connection with the Lock-Box Account[s].
Please agree to the terms of, and acknowledge receipt of, this notice
by signing in the space provided below on two copies hereto sent herewith and
send one signed copy to the Company, at its address referred to above,
Attention: Deborah E. Williams, Administrative Specialist, and send the other
signed copy via overnight courier to the undersigned at its address at
________________________, Attention of ____________________. In addition, please
furnish a copy to Wachovia Bank, N.A., 191 Peachtree Street, GA-423, Atlanta,
Georgia 30303, Attention: Deborah E. Williams, Administrative Specialist.
Very truly yours,
-----------------------------
By:
-------------------------
Name:
Title:
<PAGE>
Agreed and acknowledged:
[NAME OF BANK]
By:
---------------------------
Name:
Title:
E-2
<PAGE>
EXHIBIT E
FORM OF MONTHLY REPORT
E-1
<PAGE>
EXHIBIT F
FORM OF TRANCHE SELECTION NOTICE
GGRC CORP.
400 Perimeter Center Terrace, Suite 595
Atlanta, Georgia 30346
Transfer Notice Date:______________________
Blue Ridge Asset Funding Corporation
c/o Wachovia Bank, N.A.
191 Peachtree Street, GA-423
Atlanta, Georgia 30303
Attention: Deborah E. Williams
TRANCHE SELECTION NOTICE
Dear Sir or Madam:
With reference to Section 2.2 of the Receivables Transfer Agreement,
dated as of March 10, 1998 (as amended, the "Transfer Agreement") by and among
Blue Ridge Asset Funding Corporation (the "Company"), GGRC Corp., (the
"Transferor") and Georgia Gulf Corporation, the Transferor hereby requests the
Company to accept the Transfer or maintain the Transfer of Receivables, as the
case may be, from the Transferor utilizing the proceeds of the following:
CP Tranche (A CP Tranche is automatically chosen unless otherwise specified).
Commercial Paper Face Value: -------------------
Transfer Date: -------------------
Maturity Date: -------------------
Eurodollar Tranche
Amount: -------------------
Transfer Date: -------------------
Maturity Date: -------------------
BR Tranche.
Amount: -------------------
Transfer Date: -------------------
F-1
<PAGE>
Maturity Date: -------------------
Sincerely,
-------------------
Name:
Title:
F-2
<PAGE>
EXHIBIT G
LIST OF TOP TEN OBLIGORS BY AGING
Georgia-Pacific
Allied Signal
Mitsui
Borden
Klockner Pentaplast
Genova
Puretec Corp
Lamson & Sessions
Royal Plastics, Inc.
Imperial Chemical Industries
G-1
<PAGE>
EXHIBIT H
LIST OF ACTIONS/SUITS
None
H-1
<PAGE>
EXHIBIT I
SCHEDULE OF LOCATION OF RECORDS
Georgia Gulf Corporation
Highway 405
Plaquemine, Louisiana 70764
Attention: Credit Department
Georgia Gulf Corporation
400 Perimeter Center Terrace Suite 595
Atlanta, Georgia 30346
I-1
<PAGE>
EXHIBIT J
SCHEDULE OF CORPORATE NAMES,
----------------------------
TRADE NAMES OR ASSUMED NAMES
----------------------------
GG Terminal Management Corporation
Georgia Gulf Export Corporation
Georgia Gulf Corporation
Georgia Gulf
J-1
<PAGE>
EXHIBIT K
FORM OF COMPLIANCE CERTIFICATE
I, the undersigned Treasurer of GGRC Corp. ("GGRC") DO HEREBY CERTIFY
pursuant to Section 5.1(a)(iii) of the Receivables Transfer Agreement, dated as
of March 10, 1998 (as amended, supplemented or otherwise modified and in effect
from time to time, the "Transfer Agreement"), between GGRC Corp., Georgia Gulf
Corporation and Blue Ridge Asset Funding Corporation, that on and as of the date
hereof, there exists no Termination Event or Potential Termination Event.
Capitalized terms not otherwise defined herein have the meanings
assigned to them in the Transfer Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
___day of _________, 199___.
GGRC CORP. , as
Transferor
By: --------------------
Name:
Title: [Treasurer]
K-1
<PAGE>
Exhibit 10(b)
RECEIVABLES PURCHASE AGREEMENT
between
GEORGIA GULF CORPORATION,
as Seller and as Collection Agent
and
GGRC CORP.,
as Purchaser
Dated as of March 10, 1998
<PAGE>
TABLE OF CONTENTS
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I DEFINITIONS............................................................... 1
SECTION 1.1. Definitions............................................................... 1
SECTION 1.2. Other Terms............................................................... 4
SECTION 1.3. Computation of Time Periods............................................... 5
ARTICLE II PURCHASE, CONVEYANCE AND SERVICING OF RECEIVABLES......................... 6
SECTION 2.1. Sale...................................................................... 6
SECTION 2.2. Servicing of Receivables.................................................. 7
SECTION 2.3. Rights After Designation of New Servicing and Collection Agent............ 8
ARTICLE III CONSIDERATION AND PAYMENT; RECEIVABLES.................................... 10
SECTION 3.1. Purchase Price............................................................ 10
SECTION 3.2. Payment of Purchase Price................................................. 10
SECTION 3.3. Monthly Report............................................................ 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................ 12
SECTION 4.1. Seller's Representations and Warranties................................... 12
SECTION 4.2. Reaffirmation of Representations and Warranties by the Seller; Notice of
Breach.................................................................... 16
ARTICLE V COVENANTS OF THE SELLER................................................... 17
SECTION 5.1. Covenants of the Seller................................................... 17
ARTICLE VI REPURCHASE OBLIGATION..................................................... 21
SECTION 6.1. Mandatory Repurchase...................................................... 21
SECTION 6.2. Dilutions, Etc............................................................ 21
ARTICLE VII CONDITIONS PRECEDENT...................................................... 22
SECTION 7.1. Conditions to the Purchaser's Obligations Regarding Receivables........... 22
ARTICLE VIII TERM AND TERMINATION...................................................... 23
SECTION 8.1. Term ..................................................................... 23
SECTION 8.2. Effect of Termination..................................................... 23
ARTICLE IX MISCELLANEOUS PROVISIONS.................................................. 24
SECTION 9.1. Amendment................................................................. 24
SECTION 9.2. Governing Law; Submission to Jurisdiction................................. 24
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 9.3. Notices................................................................... 24
SECTION 9.4. Severability of Provisions................................................ 25
SECTION 9.5. Assignment................................................................ 25
SECTION 9.6. Further Assurances........................................................ 25
SECTION 9.7. No Waiver; Cumulative Remedies............................................ 26
SECTION 9.8. Counterparts.............................................................. 26
SECTION 9.9. Binding Effect; Third-Party Beneficiaries................................. 26
SECTION 9.10. Merger and Integration.................................................... 26
SECTION 9.11. Headings.................................................................. 26
SECTION 9.12. Exhibits.................................................................. 26
ARTICLE X INDEMNIFICATION........................................................... 27
SECTION 10.1. Indemnities by the Seller................................................. 27
SECTION 10.2. Tax Indemnification....................................................... 28
SECTION 10.3. Other Costs and Expenses.................................................. 28
SECTION 10.4. Reconveyance Under Certain Circumstances.................................. 29
EXHIBITS
EXHIBIT A Form of Contract - Georgia Gulf Corporation
EXHIBIT B Form of Subordinated Note
EXHIBIT C Form of Monthly Report
EXHIBIT D Form of Capital Contribution Note
EXHIBIT E Detailed Aged Trial Balance and Summary Aged Trial Balance
</TABLE>
ii
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES PURCHASE AGREEMENT, dated as of March 10, 1998 (as
amended, supplemented or otherwise modified and in effect from time to time,
this "Agreement"), among GEORGIA GULF CORPORATION, a Delaware corporation, as
seller (in such capacity, the "Seller") and as collection agent and servicer
(in such capacity, the "Collection Agent") and GGRC CORP., a Delaware
corporation, as purchaser (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Purchaser desires to purchase from time to time all
accounts receivable existing on the Closing Date and acquired or generated
thereafter in the normal course of the Seller's business pursuant to written
agreements or with invoices on open accounts;
WHEREAS, the Seller desires to sell and assign from time to time
such certain accounts receivable to the Purchaser upon the terms and
conditions hereinafter set forth;
WHEREAS, the Collection Agent has agreed to service the accounts
receivable sold to the Purchaser by the Seller hereunder;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser and the Seller,
intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. All capitalized terms used herein
shall have the meanings specified herein or, if not so specified, the
meanings assigned to such terms in the Transfer Agreement:
"Administrative Agent" shall mean Wachovia Bank, N.A., as agent on
behalf of any other bank or conduit investors pursuant to the Transfer
Agreement.
"Advance" shall have the meaning specified in Section 3.2(b).
"Advance Limit" shall have the meaning specified in Section 3.2(b).
<PAGE>
"Assets" shall have the meaning specified in Section 2.1(a).
"Blue Ridge" shall mean Blue Ridge Asset Funding Corporation, a
Delaware corporation and its successors and assigns.
"Closing Date" shall mean March 10, 1998.
"Collections" shall mean all payments (including Recoveries) and
other proceeds of each Receivable, including all Finance Charges and proceeds
of the Residual Receivable Interest with respect to such Receivables received
by the Collection Agent in cash or cash equivalent with respect to such
Receivables, whether in the form of checks, wire transfers, ACH, electronic
entry or other form of payment, and any Collections of such Receivables
deemed to have been received pursuant to Section 6.1 hereof.
"Conduit" shall mean any commercial paper funding conduit designated
by the Administrative Agent or Blue Ridge.
"Contract" shall mean any invoice in substantially the form of
Exhibit A hereto or any other written agreement, invoice or purchase order
relating thereto, approved in writing by the Purchaser and Blue Ridge,
pursuant to or under which an Obligor is obligated to pay for goods and
services purchased or otherwise obtained from the Seller.
"Conveyance Papers" shall have the meaning set forth in Section
4.1(b) hereof.
"Default Ratio" shall mean on any date of determination, the amount
(expressed as a percentage), equal to a fraction, the numerator of which is
(i) the aggregate Total Receivables that became Defaulted Receivables during
the most recent monthly Reporting Period, divided by (ii) the Sales during
the Reporting Period four monthly Reporting Periods prior to the most recent
monthly Reporting Period.
"Defaulted Receivable" shall mean that portion of a Total
Receivable: (i) as to which the payment related thereto, remains unpaid for
91 days or more from the original due date for such payment; (ii) as to which
Georgia Gulf or the Transferor has notice that the Obligor thereof has taken
any action, or suffered any event to occur, of the type described in Section
7.1(e) of the Transfer Agreement (as if references to the Transferor therein
refer to such Obligor, excluding any cure period); or (iii) which, consistent
with the requirements of the Credit Policy have been or should have been
written off the Transferor's or Georgia Gulf's books as uncollectible.
"Eligible Receivable" shall have the meaning specified in the
Transfer Agreement.
"Event of Bankruptcy" shall mean, with respect to any Person, (i)
that such Person (a) shall generally not pay its debts as such debts become
due or (b) shall admit in writing its inability to pay its debts generally or
(c) shall make a general assignment for the benefit of creditors; (ii) any
proceeding shall be instituted by or against such Person
2
<PAGE>
seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, receivership, conservatorship, arrangement,
adjustment, protection, relief or composition of it or its debts under any
law relating to bankruptcy, insolvency, reorganization, relief of debtors or
similar laws, or seeking the entry of an order for relief or the appointment
of a receiver, conservator, trustee or other similar official for it or any
substantial part of its property or (iii) if such Person is a corporation,
such Person or any Subsidiary shall take any corporate action to authorize
any of the actions set forth in the preceding clauses (i) or (ii).
"Finance Charges" shall mean, with respect to a Contract, any
finance, interest, late or similar charges owing by the Obligor pursuant to
such Contract.
"GAAP" shall mean United States generally accepted accounting
principles.
"Loss-to-Liquidation Ratio" means the ratio (expressed as a
percentage) computed as of the last day of each calendar month for such month
and the preceding 11 months by dividing (i) the aggregate Outstanding Balance
of all Receivables which have been written off as uncollectible by the Seller
during such period, together with the aggregate Outstanding Balance of all
Receivables which are more than 61 days past due, by (ii) the aggregate
amount of Collections received by the Seller during such period.
"Obligor" shall mean any Person obligated to make payments to the
Seller pursuant to or with respect to a Contract, whether such obligation is
direct or indirect, contingent or noncontingent, absolute or conditional, or
matured or unmatured.
"Purchase Discount" shall mean for any day, an amount, calculated in
good faith by the Purchaser, equal to the decimal equivalent of the sum of
(i) the product of (A) the sum of (x) the "AA" rated commercial paper index
rate for a maturity most closely corresponding to the estimated maturity
period of the Receivables plus 0.20%, (y) 0.50%, and (z) the greater of (1)
0.25% or (2) the Loss-to-Liquidation Ratio, and (B) a fraction the numerator
of which is the estimated maturity period of the Receivables and the
denominator of which is 360.
"Purchase Price" shall have the meaning set forth in Section 3.1
hereof.
"Receivable" shall mean, for purposes of this Agreement,
indebtedness owed to the Seller by an Obligor, whether constituting an
account, chattel paper, instrument or general intangible, arising in
connection with the sale of products or services by the Seller, and includes
the right of payment of any Finance Charges and other obligations of the
Obligor with respect thereto. Notwithstanding the foregoing, once a
Receivable has been deemed collected pursuant to Article VI hereof, it shall
no longer constitute a Receivable hereunder.
"Requirements of Law" shall mean with respect to any Person, the
certificate or articles of incorporation and the by-laws or other
organizational governing documents of
3
<PAGE>
such Person, and any law, treaty or rule or regulation, or determination of
an arbitrator or governmental authority, in each case applicable to or
binding upon such Person or to which such Person is subject, whether federal,
state or local (including, but not limited to, usury laws, Federal
Truth-in-Lending Act, Fair Debt Collection Practices Act).
"Residual Receivable Interest" shall mean with respect to any
Receivable:
(i) all of the Seller's interest, if any, in the product
(including returned product), the sale of which by the Seller gave rise
to such Receivable;
(ii) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment
of such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise, together with all financing statements signed
by the Obligor describing any collateral securing such Receivable;
(iii) all guarantees, letters of credit, acceptances,
insurance and other agreements, instruments or arrangements of whatever
character (including the beneficial interest in any insurance policy or
bill of lading) from time to time supporting or securing payment of
such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise;
(iv) all Records; and
(v) all Proceeds of the foregoing.
"Secured Obligations" shall have the meaning set forth in Section
2.1(d) hereof.
"Subordinated Note" shall have the meaning specified in Section 3.2(b).
"Transfer Agreement" shall mean that certain Receivables Transfer
Agreement, dated as of March , 1998, by and among the Seller, the Purchaser
and Blue Ridge, as such agreement may be amended, supplemented or otherwise
modified and in effect from time to time.
"Transferred Receivables" shall have the meaning specified in
Section 3.2(b).
SECTION 1.2. Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. To the extent the
definitions of accounting terms used herein are inconsistent with the
meanings of such terms under GAAP, the definitions contained herein shall
control. All terms used in Article 9 of the Relevant UCC, and not
specifically defined herein, are used herein as defined in such Article 9.
The definitions of all terms used herein shall include the singular as well
as the plural form of such terms and the masculine of such terms as well as
the feminine and neuter genders of such terms. The terms "include",
"including" and "includes" shall mean
4
<PAGE>
including without limitation by way of enumeration or otherwise. The cover,
table of contents, and Article and Section headings are for convenience of
reference and shall not affect the interpretation of the terms of this
Agreement.
SECTION 1.3. Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date
to a later specified date, the word "from" means "from and including" and the
words "to" and "until" each means "to but excluding."
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
<PAGE>
ARTICLE II
PURCHASE, CONVEYANCE AND SERVICING OF RECEIVABLES
SECTION 2.1. Sale. (a) Upon the terms and subject to the conditions
set forth herein, the Seller hereby sells, assigns, transfers, conveys and
sets-over to the Purchaser, and the Purchaser hereby purchases from the
Seller, on the terms and subject to the conditions specifically set forth
herein, all of the Seller's right, title and interest, whether now owned or
hereafter acquired, in, to and under all of the Total Receivables now
existing or hereafter created or owned by the Seller, through any Termination
Date (as defined in Section 8.1 hereof) (but not thereafter), together with
all Residual Receivable Interest and Collections with respect thereto and all
proceeds of the foregoing (collectively, the "Assets"). Such sale by the
Seller and purchase by the Purchaser of the Assets shall be deemed to occur
automatically on the date of origination of each new Receivable by the
Seller. The foregoing sale, assignment, transfer and conveyance does not
constitute an assumption by the Purchaser of any obligations of the Seller or
any other Person to Obligors or to any other Person in connection with the
Receivables or under any Residual Receivable Interest or other agreement and
instrument relating to the Receivables. With respect to Receivables sold by
the Seller on the Closing Date, such Receivables shall be deemed to be all
the Receivables of the Seller that exist as of the close of business on the
Cut-off Date together with any Receivables created thereafter prior to the
Closing Date. With respect to Receivables to be sold pursuant to this
Agreement by the Seller after the Closing Date, such Receivables shall be
deemed to be all the Receivables created on and after the Closing Date.
(b) In connection with the foregoing sale, the Seller has
filed or will record and file on or prior to the Closing Date, at its own
expense, a financing statement or statements with respect to the Assets sold
by the Seller hereunder meeting the requirements of applicable state law in
such manner and in such jurisdictions as are necessary to perfect and protect
the interests of the Purchaser created hereby under the Relevant UCC
(subject, in the case of Residual Receivable Interest constituting returned
inventory, Collections and any other proceeds, to the applicable provisions
of Section 9-306 of the Relevant UCC) against all creditors of and purchasers
from the Seller, and to deliver either the originals of such financing
statements or a file-stamped copy of such financing statements or other
evidence of such filings to the Purchaser on the Closing Date.
(c) The Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all instruments and documents
and take all actions as may be necessary or as the Purchaser may reasonably
request in order to perfect or protect the interest of the Purchaser in the
Receivables purchased hereunder or to enable the Purchaser to exercise or
enforce any of its rights hereunder, including UCC financing statement
reports relating to the Receivables, together with copies of such financing
statements. Without limiting the foregoing, the Seller will, in order to
accurately reflect this purchase and sale transaction, execute and file such
financing or continuation
6
<PAGE>
statements or amendments thereto or assignments thereof (as permitted
pursuant hereto) as may be requested by the Purchaser and mark its master
data processing records and other documents including the Detailed Aged Trial
Balance and the Summary Aged Trial Balance, the forms of which are attached
hereto as Exhibit E, by the Closing Date or as soon as practicable thereafter
(but in no event to exceed 20 days from the Closing Date), with a legend
describing the purchase by the Purchaser of the Receivables and the
subsequent transfer thereof to Blue Ridge pursuant to the Transfer Agreement
and stating "These accounts receivable have been sold by Georgia Gulf
Corporation to GGRC Corp. pursuant to a Receivables Purchase Agreement dated
as of March 10, 1998 and GGRC Corp. has conveyed an interest in these
accounts receivable to Blue Ridge Asset Funding Corporation pursuant to a
Receivables Transfer Agreement dated as of March 10, 1998." The Seller shall,
upon request of the Purchaser, obtain such additional search reports as the
Purchaser shall reasonably request. To the fullest extent permitted by
applicable law, the Purchaser shall be permitted to sign and file
continuation statements and amendments thereto and assignments thereof
without the Seller's signature. Carbon, photographic or other reproductions
of this Agreement or any financing statement shall be sufficient as a
financing statement.
(d) It is the express intent of the Seller and the
Purchaser that the conveyance of the Assets by the Seller to the Purchaser
pursuant to this Agreement be construed as a sale of such Assets by the
Seller to the Purchaser. Further, it is not the intention of the Seller and
the Purchaser that such conveyance be deemed a grant of a security interest
in the Assets by the Seller to the Purchaser to secure a debt or other
obligation of the Seller. However, in the event that, notwithstanding the
intent of the parties, the Assets are construed to constitute property of the
Seller, then (i) this Agreement also shall be deemed to be, and hereby is, a
security agreement within the meaning of the Relevant UCC; and (ii) the
conveyance by the Seller provided for in this Agreement shall be deemed to
be, and the Seller hereby grants to the Purchaser, a security interest in, to
and under all of the Seller's right, title and interest in, to and under the
Receivables outstanding on the Closing Date and thereafter originated by the
Seller through any Termination Date (but not thereafter), together with all
Residual Receivable Interest and Collections with respect thereto and all
proceeds of the foregoing, to secure the rights of the Purchaser set forth in
this Agreement or as may be determined in connection therewith by applicable
law (collectively, the "Secured Obligations"). The Seller and the Purchaser
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 Receivables, such security interest would be deemed
to be a perfected security interest in favor of the Purchaser under
applicable law and will be maintained as such throughout the term of this
Agreement.
SECTION 2.2. Servicing of Receivables. (a) The servicing,
administering and collection of the Receivables shall be conducted by the
Seller, who hereby agrees to perform, take or cause to be taken all such
action as may be necessary or advisable to collect each Receivable from time
to time, all in accordance with applicable laws, rules and regulations and
with the care and diligence which the Seller employs in servicing
7
<PAGE>
similar receivables for its own account, in accordance with the Credit
Policy. The Purchaser hereby appoints the Seller as its agent to enforce the
Purchaser's rights and interests in, to and under the Receivables, the
Residual Receivable Interest and the Collections with respect thereto. The
Seller shall hold in trust for the Purchaser, in accordance with its
interests, all Records which evidence or relate to the Receivables or
Residual Receivable Interest, Collections and proceeds with respect thereto.
Notwithstanding anything to the contrary contained herein, the Purchaser at
any time and, from and after the occurrence of a Termination Event, Blue
Ridge, as the Purchaser's assignee hereof, shall have the absolute and
unlimited right to terminate the Seller's servicing activities described in
this Section 2.2. In consideration of the foregoing, the Purchaser agrees to
pay the Seller a servicing fee of 0.50% per annum on the aggregate amount of
Receivables sold, payable monthly, for its performance of the duties and
obligations described in this Section 2.2; provided that any such monthly
payment shall be reduced by any amounts payable in such month by Blue Ridge
to the Seller, in its capacity as Collection Agent, or to a third party
successor Collection Agent, pursuant to the Transfer Agreement.
(b) The Seller hereby grants to each of the Purchaser and the
Collection Agent, an irrevocable, non-exclusive license to use, without
royalty or payment of any kind, all software used by the Seller to account
for the Receivables, to the extent necessary to administer the Receivables,
whether such software is owned by the Seller or is owned by others and used
by the Seller under license agreements with respect thereto, provided
however, should the consent of any licensor of the Seller to such grant of
the license described herein be required, the Seller hereby agrees that upon
the request of the Purchaser (or Blue Ridge as the Purchaser's assignee) the
Seller will use its reasonable efforts to obtain the consent of such
third-party licensor. The license granted hereby shall be irrevocable, and
shall terminate on the date this Agreement terminates in accordance with its
terms.
SECTION 2.3. Rights After Designation of New Servicing and
Collection Agent. At any time after the termination of the Transfer
Agreement, Purchaser may designate a Person other than the Seller as the
servicing and collection agent for the Receivables and:
(i) The Purchaser may direct that payment of all amounts
payable under any Receivable be made directly to the Purchaser or its
designee.
(ii) The Seller shall, at the Purchaser's request and at the
Seller's expense, give notice of the Purchaser's ownership of
Receivables to each Obligor and direct that payments be made directly
to the Purchaser or its designee.
(iii) The Seller shall, at the Purchaser's request, (A)
assemble all of the Records, and shall make the same available to the
Purchaser at a place selected by the Purchaser or its designee, and (B)
segregate all cash, checks and other instruments received by it from
time to time constituting Collections of
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Receivables in a manner acceptable to the Purchaser and shall,
promptly upon receipt, remit all such cash, checks and instruments,
duly endorsed or with duly executed instruments of transfer, to the
Purchaser or its designee.
(iv) The Seller hereby authorizes the Purchaser to take any
and all steps in the Seller's name and on behalf of the Seller
necessary or desirable, in the determination of the Purchaser, to
collect all amounts due under any and all Receivables, including,
without limitation, endorsing the Seller's name on checks and other
instruments representing Collections and enforcing such Receivables and
the related Contracts.
(v) No further servicing fees shall be payable or be paid to
the Seller in its capacity as Collection Agent, except for such
services preceding such termination.
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ARTICLE III
CONSIDERATION AND PAYMENT; RECEIVABLES
SECTION 3.1. Purchase Price. The purchase price (the "Purchase
Price") for the Receivables and related property conveyed to the Purchaser by
the Seller under this Agreement shall be a dollar amount equal to the product
of (i) the aggregate Outstanding Balance of the Receivables sold on such date
and (ii) one minus the Purchase Discount applicable on such date.
SECTION 3.2. Payment of Purchase Price.
(a) The Purchase Price for any portion of the Receivables sold by
the Seller on any date after the date hereof shall be paid either (i) in cash
or (ii) if Purchaser does not have sufficient cash to pay the Purchase Price,
by means of (A) an advance under the Subordinated Note (each, an "Advance")
or (B) with the consent of the Seller, capital contributed by the Seller to
Purchaser in the form of a contribution of additional Receivables or (iii)
with the consent of the Seller, any combination of the foregoing. In the
event Purchaser does not have sufficient cash to pay the Purchase Price due
on any Purchase Date and the Seller is not willing to consent to the payment
of such insufficiency by means of a capital contribution, such insufficiency
shall be evidenced by the making of an Advance on such Purchase Date in an
original principal amount equal to such cash shortfall owed to the Seller;
provided, however, that the Seller shall not make any Advance to the
Purchaser such that, after giving effect thereto, the sum of (x) the
outstanding principal balance of the Subordinated Note plus (y) all other
liabilities of the Purchaser would at such time exceed 60% of the book value
of all of the Purchaser's assets (the "Advance Limit"). All Advances made by
the Seller to Purchaser shall be evidenced by a single subordinated note,
duly executed on behalf of Purchaser, in substantially the form of Exhibit B
annexed hereto, delivered and payable to the Seller with a face amount equal
to $130,000,000 (the "Subordinated Note"). The Seller is hereby authorized by
Purchaser to endorse on the schedule attached to the Subordinated Note (or a
continuation of such schedule attached thereto and made a part thereof) an
appropriate notation evidencing the date and amount of each Advance, as well
as the date and amount of each payment with respect thereto; provided,
however, that the failure of any Person to make such a notation shall not
affect any obligations of Purchaser thereunder. Any such notation shall be
conclusive and binding as to the date and amount of such Advance, or payment
of principal or interest thereon, absent manifest error. The Receivables with
respect to which the Purchase Price therefor is paid pursuant to either
clause (i) or clause (ii)(A) above are referred to herein as the "Purchased
Receivables", and the Receivables with respect to which the Purchase Price
therefor is paid pursuant to clause (ii)(B) above is referred to herein as
the "Contributed Receivables". The Purchased Receivables and the Contributed
Receivables are collectively referred to herein as the "Transferred
Receivables".
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(b) The terms and conditions of the Subordinated Note and all
Advances thereunder shall be as follows:
(i) Repayment of Advances. All amounts paid by the Purchaser
with respect to the Advances shall be allocated first to the repayment
of accrued interest until all such interest is paid, and then to the
outstanding principal amount of the Advances. Subject to the provisions
of this Agreement, the Purchaser may borrow, repay and reborrow
Advances on and after the date hereof and prior to the termination of
this Agreement, subject to the terms, provisions and limitations set
forth herein, including, without limitation, the requirement that no
Advance be made to the extent that after giving effect thereto the
aggregate outstanding principal amount of all Advances would exceed the
Advance Limit.
(ii) Interest. The Subordinated Note shall bear interest from
its date on the outstanding principal balance thereof at a rate per
annum equal to 12 month LIBOR as published in The Wall Street Journal
or if unavailable therein, as published in another available source
therefor satisfactory to the parties hereto. Interest on each Advance
shall be computed based on the number of days elapsed in a year of 360
days, and the interest rate shall be reset on each anniversary hereof.
(iii) Sole and Exclusive Remedy; Subordination. The Purchaser
shall be obligated to repay Advances to the Seller only to the extent
of funds available to the Purchaser and, to the extent that such funds
are insufficient to pay all amounts owing to the Seller under the
Subordinated Note, the Seller shall not have any claim against the
Purchaser for such amounts and no further or additional recourse shall
be available against the Purchaser. The Subordinated Note shall be
fully subordinated to all rights of Blue Ridge and its assigns pursuant
to the Transfer Agreement, and shall not evidence any rights in, or
liens or claims on, the Receivables.
(iv) Offsets, etc. The Purchaser may offset any amount due and
owing from the Seller against any amount due and owing by Purchaser to
the Seller under the terms of the Subordinated Note.
SECTION 3.3. Monthly Report. On the last Business Day of each monthly
Reporting Period, the Seller shall deliver to the Purchaser a monthly report,
substantially in the form of Exhibit C attached hereto, showing (i) the
aggregate Purchase Price of Receivables sold by the Seller to the Purchaser
hereunder in the preceding month and (ii) the aggregate Outstanding Balance of
such Receivables that are Eligible Receivables.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Seller's Representations and Warranties. The Seller
represents and warrants to the Purchaser as of the Closing Date and shall be
deemed to represent and warrant as of the date of the creation of any sale of
any Receivables to the Purchaser pursuant to this Agreement that:
(a) Corporate Existence and Power. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware, and has all corporate power , authority and legal right to own
is properties and conduct its businesses as presently conducted and to
execute, deliver and perform its obligations under this Agreement. The Seller
is duly qualified to do business and is in good standing (or is exempt from
such requirements) and has obtained all necessary licenses and approvals,
authorizations and consents with respect to the Seller, in each jurisdiction
which failure to so qualify or to obtain such licenses, approvals, consents
and authorizations would render any Receivable or Contract unenforceable by
it, the Purchaser or the Purchaser's assigns, and would have a material
adverse effect on the Purchaser's or the Servicer's ability to perform their
respective obligations under this Agreement or the Transfer Agreement.
(b) Corporate and Governmental Authorization; Contravention. The
execution, delivery and performance by the Seller of this Agreement and each
other document and instrument required to be delivered by the Seller
hereunder (collectively, the "Conveyance Papers") are within its corporate
powers, have been duly authorized by all necessary corporate action, require
no action by or in respect of, or filing with, any governmental body, agency
or official (except as contemplated by Section 2.8 of the Transfer
Agreement). The execution and delivery of this Agreement by the Seller, the
performance by the Seller of the transactions contemplated hereby, and the
performance by the Seller of the terms hereof and of the Transfer Agreement
will not conflict with, violate or result in any breach of any of the
material terms and provisions of, or constitute (with or without notice or
lapse of time, or both) a default under, any Requirement of Law applicable to
the Seller or any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it or any of its
properties are bound and which conflict, violation, breach or default would
have a Material Adverse Effect on the Purchaser or its successors and assigns
or on the Purchaser's or the Collection Agent's ability to perform their
respective obligations under this Agreement or the Transfer Agreement.
(c) Binding Effect of Agreement. This Agreement constitutes the
legal, valid and binding obligation of the Seller, enforceable against it in
accordance with the terms hereof, subject to the effect of bankruptcy,
insolvency, reorganization or other similar laws affecting enforcement of
creditors' rights generally.
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(d) Perfection. Immediately preceding each sale of Receivables
hereunder, the Seller shall be the owner of all of the Receivables and all
Residual Receivable Interest, free and clear of any Adverse Claim (except as
created by Purchaser and its assigns). On or prior to each sale of
Receivables hereunder, all financing statements and other documents and
instruments required to be recorded or filed in order to perfect and protect
the ownership interest of the Purchaser against all creditors of, and
purchasers of Receivables from, the Seller, as applicable, will have been
duly filed in each filing office necessary for such purpose and all filing
fees and taxes, if any, payable in connection with such filings shall have
been paid in full.
(e) Accuracy of Information. All information heretofore furnished by
the Seller to the Purchaser for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by the Seller to the Purchaser and/or its successors and
assigns will be, true and accurate in every material respect, on the date
such information is stated or certified.
(f) Tax Returns. The Seller has filed or properly extended all tax
returns (federal, state and local) required to be filed and has paid or made
adequate provision for the payment of all taxes, assessments and other
government charges, except where the failure by the Seller to perform such
obligations may have a Material Adverse Effect.
(g) Actions, Suits. Except as set forth in Exhibit H to the Transfer
Agreement, there are no actions, suits or proceedings pending, or to the
knowledge of the Seller threatened, against or affecting the Seller or any of
its Affiliates or their respective properties, in or before any court,
arbitrator, governmental authority or other body, (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or the Transfer Agreement,
(iii) seeking any determination or ruling that, in the reasonable judgment of
the Seller, would materially and adversely effect the performance by the
Seller of its obligations hereunder, (iv) seeking any determination or ruling
that would materially and adversely effect the validity or enforceability of
this Agreement, or (v) which may have a Material Adverse Effect.
(h) Place of Business, Trade Names, etc. The principal place of
business and chief executive office of the Seller are located at 400
Perimeter Center Terrace, Suite 595, Atlanta, Georgia 30346, and the offices
where the Seller keeps all its Records are located at the address(es)
described on Exhibit I to the Transfer Agreement or such other locations
notified to the Purchaser and Blue Ridge in accordance with Section 2.8 of
the Transfer Agreement in jurisdictions where all action required by such
Section 2.8 has been taken and completed.
(i) True Sale. This Agreement constitutes a valid sale, transfer and
assignment to the Purchaser of all right, title and interest of the
Transferor in and to the Receivables, whether existing on the date hereof, or
hereafter created and that all
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proceeds thereof, which are effective as to each Receivable upon the creation
thereof, and upon each sale of Receivables hereunder, the Purchaser shall
acquire a valid and perfected first priority ownership interest in each
Receivable that exists on the date of such sale and in the Residual
Receivable Interest and Collections with respect thereto, free and clear of
any Adverse Claim (other than Adverse Claims created by the Purchaser or its
assignees).
(j) Nature of Receivables; Use of Proceeds. Each Receivable is (A)
an account receivable representing all or part of the sales price of
merchandise, insurance or services (or an "eligible asset" within the meaning
of Rule 3(a)-7 under the Investment Company Act of 1940, as amended) and (B)
complies with all of the Seller's representations and warranties made herein
and in the Transfer Agreement with respect thereto. No proceeds of any sale
will be used by the Seller to (i) acquire any security in any transaction
which is subject to Section 13 or 14 of the Securities Exchange Act of 1934,
as amended, or (ii) to purchase or hold any margin securities.
(k) Lock-Box Accounts. The names and addresses of all the Lock-Box
Banks, together with the account numbers of the Seller at such Lock-Box Banks
are described on Exhibit C to Transfer Agreement or described in a notice
provided by the Seller to the Purchaser and Blue Ridge pursuant to Section
2.8 of the Transfer Agreement. All Obligors have been instructed to make
payment directly to a Lock-Box Account, and all Collections are deposited
daily to the Lock-Box Accounts.
(l) No Material Adverse Change. Since September 30, 1997, there has
been no change in the condition (financial or otherwise), business,
operations or prospects of the Seller, in the ability of the Seller to
perform its obligations hereunder or in the collectibility of the Receivables
which change might have a Material Adverse Effect.
(m) Trade Names. Except as described in Exhibit J to the Transfer
Agreement, the Seller has not used any corporate names, trade names or
assumed names other than its name set on the signature pages of this
Agreement and, within the last five (5) years, has not changed its name,
merged with or into, consolidated with any other corporation or been the
subject of any proceeding under Title 11, United States Code (Bankruptcy).
(n) Binding Effect of Receivables and Contract. Each Receivable and
the related Contract and any Residual Receivable Interest, constitutes a
legal, valid and binding obligation of the Obligor enforceable against the
Obligor, subject to the effect of bankruptcy, insolvency, reorganization or
similar laws affecting enforcement of creditors' rights generally.
(o) No Restriction on Transfer. No Contract requires the prior
written consent of an Obligor or contains another restriction relating to the
transfer or assignment of rights of payment under such Contract which are
legally enforceable (other
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than a consent or waiver of such restriction that has been obtained prior to
the Closing Date).
(p) Restrictions on Chattel Paper. The Seller shall not permit any
portion of the Transferred Interest that constitutes chattel paper within the
meaning of Section 9-105 of the Relevant UCC to be transferred to or
possessed by any other party other than the Purchaser or Blue Ridge, as
appropriate.
(q) Credit Policy. Since February 2, 1998, there have been no
changes in the Credit Policy.
(r) Not an Investment Company. The Seller is not an "investment
company" or controlled by an investment company, within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"), or is exempt
from all provisions of the 1940 Act.
(s) ERISA. The Seller is in compliance in all material respects with
ERISA and no lien in favor of the Pension Benefit Guaranty Corporation on any
of the Receivables exists, is pending, or to the Seller's knowledge, is
threatened.
(t) Bulk Sales. No transaction contemplated by this Agreement
requires compliance with any Bulk Sales Act or similar law.
(u) No Insolvency. The Seller is not insolvent immediately prior to
any transfer receivables hereunder, and will not be rendered insolvent
immediately following such transfer.
(v) Reasonably Equivalent Value. The Purchaser has given reasonably
equivalent value to the Seller in consideration for the transfer and sale to
the Purchaser of the applicable Receivable and other Assets from such Seller.
The Seller acknowledges that it has received or will receive reasonably
equivalent value in consideration for the transfer to the Purchaser of all
Receivable and other Assets now or hereafter to be transferred and sold
hereunder.
(w) No Preference, etc. The conveyance of the Receivables, the
Collections and Related Security to Blue Ridge, and each such conveyance,
shall not have been made for or on account of an antecedent debt owed by the
Transferor or Georgia Gulf to Blue Ridge.
(x) Capital Contribution Note. The Seller entered into a Capital
Contribution Note with the Purchaser dated December 4, 1996, in the form of
Exhibit D attached hereto, and such Capital Contribution Note remains in full
force and effect.
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Any document, instrument, certificate or notice delivered to the
Purchaser hereunder shall be deemed a representation and warranty by the
Seller, all which have been and will be relied upon by the Purchaser and its
successor and assigns.
SECTION 4.2. Reaffirmation of Representations and Warranties by the
Seller; Notice of Breach. On each sale date, the Seller, by accepting the
proceeds of such sale, shall be deemed to have certified that all
representations and warranties described in Section 4.1 are true and correct
on and as of such day as though made on and as of such day. The
representations and warranties set forth in Section 4.1 shall survive the
conveyance of the Receivables to the Purchaser, and termination of the rights
and obligations of the Purchaser and the Seller under this Agreement. Upon
discovery by the Purchaser or the Seller of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the other within three (3) Business Days of such
discovery.
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ARTICLE V
COVENANTS OF THE SELLER
SECTION 5.1. Covenants of the Seller. The Seller hereby covenants
and agrees with the Purchaser that, for so long as this Agreement is in
effect, and until all Receivables which have been sold to the Purchaser
pursuant hereto shall have been paid in full or written-off as uncollectible,
and all amounts owed by the Seller pursuant to this Agreement have been paid
in full, unless the Purchaser otherwise consents in writing, the Seller
covenants and agrees as follows:
(a) Conduct of Business. The Seller will, and will cause each of its
Subsidiaries to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and will do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and will maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted,
the failure of which would render any Receivable or other Asset unenforceable
by it, the Purchaser or the Purchaser's successors and assigns, would have a
material adverse effect upon Purchaser's or Collection Agent's ability to
perform their respective obligations under this Agreement or the Transfer
Agreement, or would have a Material Adverse Effect.
(b) Compliance with Laws. The Seller will, and will cause each of
its Subsidiaries to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, except
where the failure to comply with such laws and regulations would not have a
Material Adverse Effect.
(c) Furnishing of Information and Inspection of Records. The Seller
will furnish to the Purchaser from time to time such information with respect
to the Receivables as the Purchaser may reasonably request, including, (i)
all Records, and (ii) listings identifying the Outstanding Balance for each
Receivable. The Seller will, at any time and from time to time during regular
business hours with prior written notice, permit the Purchaser or its agents
or representatives, (i) to examine and make copies of and abstracts from all
Records and remove the same as property of Purchaser, and (ii) to visit the
offices and properties of the Seller for the purpose of examining and
removing such Records, and to discuss matters relating to Receivables or the
Seller's performance hereunder with any of the officers, directors, employees
or independent public accountants of the Seller having knowledge of such
matters.
(d) Keeping of Records and Books of Account. The Seller will
maintain and implement a system of accounting in accordance with GAAP, and
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Receivables in the event of the
destruction of the originals thereof), and keep and maintain, or obtain, as
and when required, all documents, books,
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records and other information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, records adequate
to permit the daily identification of each new Receivable and all Collections of
and adjustments to each existing Receivable). The Seller will give the Purchaser
prompt notice of any material change in the administrative and operating
procedures referred to in the previous sentence.
(e) Performance and Compliance with Receivables and
Contracts. The 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 related to the Receivables.
(f) Credit Policy. The Seller will comply with the Credit
Policy in regard to each Receivable and the related Contract.
(g) Collections. The Seller shall instruct all Obligors to
cause all Collections to be deposited directly to a Lock-Box Account. The
Seller authorizes the Purchaser to notify any Obligor of the sale of the
Assets hereunder.
(h) Sale Treatment. The Seller agrees to treat this
conveyance for all purposes (including tax and financial accounting purposes)
as a sale and, to the extent any such reporting is required, shall report the
transactions contemplated by this Agreement on all relevant books, records,
tax returns, financial statements and other applicable documents as a sale of
the Receivables to the Purchaser.
(i) Indemnification. The Seller agrees to indemnify, defend
and hold the Purchaser harmless from and against any and all loss, liability,
damage, judgment, claim, deficiency, or expense (including interest,
penalties, reasonable attorneys' fees and amounts paid in settlement) to
which the Purchaser or any assignee thereof may become subject insofar as
such loss, liability, damage, judgment, claim, deficiency, or expense arises
out of or is based upon a breach by the Seller of its representations,
warranties and covenants contained herein, or any information certified in
any schedule or certificate delivered by the Seller hereunder or in
connection with the Conveyance Papers, being untrue in any material respect
at any time. The obligations of the Seller under this Section 5.1(i) shall be
considered to have been relied upon by the Purchaser and Blue Ridge and shall
survive the execution, delivery, performance and termination of this
Agreement and any sale or transfer of the Assets or any interest therein by
the Purchaser, regardless of any investigation made by the Purchaser, Blue
Ridge or on behalf of any of them.
(j) No Sales, Transfers, Liens, etc. Except as otherwise
provided herein, the Seller will not sell, transfer, assign (by operation of
law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon (including, without limitation, the filing of any
financing statement) or with respect to, any Receivable or related Contract,
or upon or with respect to any account which concentrates
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in a Lock-Box-Bank to which any Collections of any Receivable are sent, or
assign any right to receive income in respect thereof.
(k) No Extension or Amendment of Receivables. The Seller
will not extend, amend or otherwise modify the terms of any Receivable, or
amend, modify or waive any term or condition of any Contract related thereto
(except (i) in the ordinary course of business in accordance with the
Seller's credit policies, and (ii) if such extension, amendment or
modification would not result in a Material Adverse Effect on the Purchaser
and/or Blue Ridge), without the prior written consent of the Purchaser and
Blue Ridge.
(l) Change in Business or Credit and Collection Policy. The
Seller will not make any change in the character of its business or in the
Credit and Collection Policy, which change might result in a Material Adverse
Effect.
(m) No Mergers, Etc. The Seller will not (i) consolidate or
merge with or into any other Person, (ii) sell, lease or transfer all or
substantially all of its assets to any other person, except to the Purchaser
hereunder, or (iii) enter into any plan of liquidation, spin-off or split-off.
(n) Change in Payment Instructions to Obligors. The Seller
will not add or terminate any bank as a Lock-Box Bank or any account as a
Lock-Box Account to or from those listed in Exhibit C to the Transfer
Agreement, or make any change in its instructions to Obligors regarding
payments to be made to any Lock-Box Account, unless (i) such instructions are
to deposit such payments to another existing Lock-Box Account or (ii) the
Purchaser, Blue Ridge and the Administrative Agent shall have received
written notice of such addition, termination or change (including any change
in the officer or agent of the Seller executing the related Lock-Box Notice)
at least thirty (30) days prior thereto and Blue Ridge and the Administrative
Agent shall have received a Lock-Box Notice executed by each new Lock-Box
Bank or an existing Lock-Box Bank with respect to each new Lock-Box Account,
as applicable.
(o) Deposits to Lock-Box Accounts. The Seller will not
deposit or otherwise credit, or cause or permit to be so deposited or
credited, to any Lock-Box Account cash or cash proceeds other than
Collections of Receivables.
(p) Change of Name, Etc. The Seller will not change its
name, identity or structure or its chief executive office, unless, at least
ten (10) days prior to the effective date of any such change, the Seller
delivers to the Purchaser and Blue Ridge (i) UCC financing statements,
executed by the Seller, necessary to reflect such change and to continue the
perfection of the Purchaser's or Blue Ridge's, as applicable, ownership
interests in the Receivables and the Residual Receivable Interest and
Collections with respect thereto and (ii) new or revised Lock-Box Notices
executed by the Lock-Box Banks which reflect such change and enable Blue
Ridge to continue to exercise its rights contained in Section 2.8 of the
Transfer Agreement.
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(q) Termination of Transfer Agreement. In the event that
the Transfer Agreement is terminated and this Agreement remains thereafter in
full force and effect, then upon such termination of the Transfer Agreement,
all references herein to Blue Ridge herein shall be disregarded and of no
force or effect.
(r) ERISA. The Seller shall promptly give the Purchaser
written notice upon becoming aware that (i) the Seller or any of its ERISA
Affiliates is not in compliance in all material respects with ERISA and to the
extent required of the Purchaser and its ERISA Affiliates in the Transfer
Agreement or that (ii) any ERISA Lien on any of the Receivables exists.
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ARTICLE VI
REPURCHASE OBLIGATION
SECTION 6.1. Mandatory Repurchase. The Seller agrees that, with respect
to any Receivable sold hereunder, in the event of a breach of any of the
representations and warranties set forth in Sections 4.1(a), (b), (d), (e), (f),
(g), (h), (i), (j), (k), (m), (n), (o), (p) or (r), the Seller agrees to accept
the reconveyance of such Receivable upon receipt by the Seller of notice given
in writing by the Purchaser and the Seller's failure to cure such breach within
thirty (30) days (or, in the case of representations and warranties found in
Sections 4.1(d), (h), (i), (h) or (m), within three (3) days) of such notice. In
the event of a reconveyance under this Section 6.1(b), the Seller shall pay to
the Purchaser in immediately available funds on such 30th day (or third day, if
applicable) an amount equal to the Outstanding Balance of any such Receivable.
SECTION 6.2. Dilutions, Etc. The Seller agrees that if on any day the
Outstanding Balance of a Receivable sold by the Seller hereunder is a dilutive
credit ("Dilutive Credit") as a result of such Outstanding Balance of a
Receivable being (x) reduced as a result of defective, rejected or returned
goods or other dilution factor, any billing adjustment or other adjustment, or
(y) reduced or canceled as a result of (i) a setoff or offset in respect of any
claim by any Obligor (whether such claim arises out of the same or a related
transaction or an unrelated transaction), (ii) any action by any federal or
state taxing authority or as a result of the payment by any Obligor of any
portion of a Receivable constituting a tax or governmental fee or charge to any
Person other than the Purchaser, or (iii) any other non-cash reduction to
Receivables not resulting from a charge-off of bad debt, then the Seller shall
be deemed to have received on such day a collection of such Receivable in the
amount of such reduction, cancellation or payment made by the Obligor and shall
on such day pay to the Purchaser an amount equal to such reduction or
cancellation.
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21
<PAGE>
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. Conditions to the Purchaser's Obligations Regarding
Receivables. The obligations of the Purchaser to purchase the Receivables on any
Business Day shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Seller
contained in this Agreement shall be true and correct on the Closing Date and
on the day of creation of any Receivable thereafter with the same effect as
though such representations and warranties had been made on such date;
(b) All information concerning the Receivables provided to
the Purchaser shall be true and correct in all material respects as of the
Closing Date, in the case of any Receivables existing on the Closing Date, or
the date such Receivables are created, in the case of any Receivables created
after the Closing Date;
(c) The Seller shall have substantially performed all
other obligations required to be performed by the provisions of this
Agreement;
(d) The Seller shall have filed or caused to be filed the
financing statement(s) required to be filed pursuant to Section 2.1(b);
(e) All corporate and legal proceedings and all instruments
in connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Purchaser, and the Purchaser shall
have received from the Seller copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Purchaser may reasonably have requested; and
(f) On the Closing Date, the Seller shall deliver to the
Purchaser and Blue Ridge a certification of the aggregate Outstanding Balance
of the Receivables in existence as of the close of business on the second
Business Day prior to the Closing Date.
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22
<PAGE>
ARTICLE VIII
TERM AND TERMINATION
SECTION 8.1. Term. This Agreement shall commence as of the date of
execution and delivery hereof and shall continue in full force and effect until
the date following the earlier of (i) the date designated by the Purchaser or
the Seller as the termination date at any time following 60 days' written notice
to the other (with a copy thereof to Blue Ridge), (ii) the date on which Blue
Ridge declares a Termination Event pursuant to Section 7.2 of the Transfer
Agreement, (iii) upon the occurrence of an Event of Bankruptcy with respect to
either the Purchaser or the Seller or (iv) the date on which either the
Purchaser or the Seller becomes unable for any reason to purchase or repurchase
any Receivable in accordance with the provisions of this Agreement or defaults
on its obligations hereunder, which default continues unremedied for more than
30 days after written notice (any such date being a "Termination Date");
provided, however, that the termination of this Agreement pursuant to this
Section 8.1 hereof shall not discharge any Person from any obligations incurred
prior to such termination, including, without limitation, any obligations to
make any payments with respect to the interest of the Purchaser in any
Receivable sold prior to such termination.
SECTION 8.2. Effect of Termination. Following the termination of this
Agreement pursuant to Section 8.1, the Seller shall not sell, and the Purchaser
shall not purchase, any Receivables. No termination or rejection or failure to
assume the executory obligations of this Agreement in any Event of Bankruptcy
with respect to the Seller or the Purchaser shall be deemed to impair or affect
the obligations pertaining to any executed sale or executed obligations,
including, without limitation, pre-termination breaches of representations and
warranties by the Seller or the Purchaser. Without limiting the foregoing, prior
to termination, the failure of the Seller to deliver computer records of
Receivables or any reports regarding the Receivables shall not render such
transfer or obligation executory, nor shall the continued duties of the parties
pursuant to Article V or Section 9.1 of this Agreement render an executed sale
executory.
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23
<PAGE>
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. Amendment. This Agreement and any other Conveyance Papers
and the rights and obligations of the parties hereunder may not be changed
orally, but only by an instrument in writing signed by the Purchaser and the
Seller and consented to in writing by Blue Ridge. Any reconveyance executed in
accordance with the provisions hereof shall not be considered amendments to this
Agreement.
SECTION 9.2. Governing Law; Submission to Jurisdiction.
(a) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Georgia.
(b) The parties hereto hereby submit to the nonexclusive
jurisdiction of the United States District Court for the Northern District of
Georgia and of any Georgia state court sitting in the Northern District of
Georgia for purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. Each party hereto
hereby irrevocably waives, to the fullest extent it may effectively do so,
any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Nothing in this Section 9.2 shall affect the right of the Purchaser to bring
any other action or proceeding against the Seller or its property in the
courts of other jurisdictions.
SECTION 9.3. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to:
(a) in the case of the Purchaser:
GGRC CORP.
400 Perimeter Center Terrace, Suite 595
Atlanta, Georgia 30346
Attention: Donald P. Burke
Telephone: (404) 395-4533
Telecopy: (404) 395-4572
24
<PAGE>
with a copy to:
BLUE RIDGE ASSET FUNDING CORPORATION
c/o Wachovia Bank, N.A.
191 Peachtree Street, GA-423
Atlanta, Georgia 30303
Attention: Deborah E. Williams, Administrative
Specialist
Telephone: (404) 332-4363
Telecopy: (404) 332-5152
(b) in the case of the Seller:
GEORGIA GULF CORPORATION
400 Perimeter Center Terrace, Suite 595
Atlanta, Georgia 30346
Attention: Donald P. Burke
Telephone: (404) 395-4533
Telecopy: (404) 395-4572
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party.
SECTION 9.4. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement or any other
Conveyance Paper shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions, or terms shall be deemed severable from the
remaining covenants, agreements, provisions, or terms of this Agreement or any
other Conveyance Paper and shall in no way affect the validity or enforceability
of the other provisions of this Agreement or of any other Conveyance Paper.
SECTION 9.5. Assignment. This Agreement and all other Conveyance Papers
may not be assigned by the parties hereto, except that the Purchaser assign its
rights hereunder pursuant to the Transfer Agreement to Blue Ridge (other than
Purchaser's rights to purchase Receivables hereunder), and Blue Ridge may assign
any or all of its rights hereunder. Upon any such assignment, all
representations, warranties, covenants and other provisions (other than
Purchaser's rights to purchase Receivables hereunder) shall inure to the benefit
of and be enforceable by Blue Ridge or any other assignee. The Purchaser hereby
notifies the Seller (and the Seller hereby acknowledges) that the Purchaser,
pursuant to the Transfer Agreement, has assigned its rights hereunder to Blue
Ridge. All rights of the Purchaser hereunder may be exercised by Blue Ridge or
any collateral agent it may designate.
SECTION 9.6. Further Assurances. The Purchaser and the Seller agree to
do and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by the other party more
fully to effect the
25
<PAGE>
purposes of this Agreement and the other Conveyance Papers, including, without
limitation, the execution of any financing statements or continuation statements
or equivalent documents relating to the Receivables for filing under the
provisions of the Relevant UCC or other laws of any applicable jurisdiction.
SECTION 9.7. No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Purchaser, the Seller or Blue Ridge,
any right, remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privilege provided by law.
SECTION 9.8. Counterparts. This Agreement and all other Conveyance
Papers may be executed in two or more counterparts including telecopy
transmission thereof (and by different parties on separate counterparts), each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
SECTION 9.9. Binding Effect; Third-Party Beneficiaries. This Agreement
and the other Conveyance Papers will inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns. Blue
Ridge is intended by the parties hereto to be a third-party beneficiary of this
Agreement (including, but not limited to, the provisions of Article X hereof).
SECTION 9.10. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the other Conveyance Papers set forth the
entire understanding of the parties relating to the subject matter hereof, and
all prior understandings, written or oral, are superseded by this Agreement and
the other Conveyance Papers. This Agreement and the other Conveyance Papers may
not be modified, amended, waived or supplemented except as provided herein.
SECTION 9.11. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 9.12. Exhibits. The schedules and exhibits referred to
herein shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.
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26
<PAGE>
ARTICLE X
INDEMNIFICATION
SECTION 10.1. Indemnities by the Seller. Without limiting any other
rights which the Purchaser may have hereunder or under applicable law, the
Seller hereby agrees to indemnify the Purchaser and its respective officers,
directors, agents and employees from and against any and all damages, losses,
claims, liabilities, costs and expenses, including reasonable attorneys' fees
and disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by the Purchaser arising out
of or as a result of this Agreement or the ownership, either directly or
indirectly, by the Purchaser of the Transferred Receivables excluding, however,
(i) Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of the Purchaser or (ii) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Receivables. Without
limiting the generality of the foregoing, the Seller shall indemnify the
Purchaser for Indemnified Amounts relating to or resulting from:
(a) reliance on any representation or warranty made by the
Seller (or any of their respective officers) under or in connection with this
Agreement or any other information or report delivered by the Seller pursuant
hereto, which shall have been false or incorrect in any material respect when
made or deemed made;
(b) the failure by the Seller to comply with any applicable
law, rule or regulation with respect to any Receivable or the related
Contract, or the nonconformity of any Receivable or the related Contract with
any such applicable law, rule or regulation;
(c) the failure to vest and maintain vested in the
Purchaser, the Transferred Receivables in the Receivables free and clear of
any Adverse Claim (except as created by the Purchaser or its assigns);
(d) the failure to file, or delay in filing, financing
statements or other similar instruments or documents under the UCC or the
laws of any applicable jurisdiction or other applicable laws with respect to
any Receivable;
(e) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such Receivable
or the related Contract not being a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms), or any
other claim resulting from the sale of products or services related to such
Receivable or the furnishing or failure to furnish such products or services;
(f) any failure of the Seller, as servicing and collection
agent or otherwise, to perform its duties or obligations in accordance with
the provisions of this Agreement or under the Transfer Agreement;
27
<PAGE>
(g) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of whatever
sort arising out of or in connection with products or services which are the
subject of any Receivable; or
(h) the transfer of an ownership interest in any
Receivable for which reconveyance is required under Section 6.1 hereof.
SECTION 10.2. Tax Indemnification. The Seller hereby agrees to pay, and
to indemnify the Purchaser from and against, any taxes which may at any time be
asserted in respect of this transaction or the subject matter hereof or any
funding agreement or the subject matter thereof (including, without limitation,
any sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or (except as provided below) other
income taxes imposed upon the Purchaser, with respect to its net income or
profits arising out of the transactions contemplated hereby), whether arising by
reason of the acts to be performed by the Seller hereunder or imposed against
the Seller or the Purchaser, the property involved or otherwise. If any tax, fee
or similar charge measured by net income or profits is imposed or with respect
to any payment for the account of the Purchaser provided for in this Agreement
by any State or political subdivision thereof (other than income taxes and
personal property taxes of the Purchaser), the Seller will, upon demand by the
Purchaser, pay an amount necessary to make the Purchaser whole, taking into
account any tax consequences to the Purchaser of the payment of such tax and the
receipt of the indemnity provided for by this Section 10.2, including the effect
of such tax or refund on the amount of tax measured by net income or profits
which is or was payable by the Purchaser in the jurisdiction in which its
principal executive office is located.
SECTION 10.3. Other Costs and Expenses. The Seller shall pay on demand
all costs and expenses in connection with the preparation, execution, delivery
and administration of this Agreement, any operating agreement, any funding
agreement by and between the Purchaser and any financial institution and the
other documents to be delivered hereunder, including without limitation,
reasonable fees and out-of-pocket expenses of legal counsel for the Purchaser,
any operating agent and the financial institution party to such funding
agreement (which such counsel may be employees of the Purchaser, such operating
agent or such financial institution) with respect thereto and with respect to
advising the Purchaser, such operating agent and such financial institution as
to its rights and remedies under this Agreement, any operating agreement and any
funding agreement, respectively, and all costs and expenses, if any, including
reasonable counsel fees and expenses in connection with the enforcement or
amendment of this Agreement and the other documents delivered hereunder. The
Seller shall reimburse the Purchaser on demand for all other costs and expenses
incurred by the Purchaser, any operating agent or any shareholder of the
Purchaser, including reasonable counsel fees and expenses incurred in connection
with the enforcement of, or amendment to, this Agreement and any documents
related hereto, to the extent such fees, costs and expenses
28
<PAGE>
are incurred in respect of such enforcement or amendment by or in respect of the
Seller ("Other Costs").
SECTION 10.4. Reconveyance Under Certain Circumstances. The Seller
agrees to accept the reconveyance from the Purchaser of a particular portion of
the Transferred Receivables if the Purchaser notifies the Seller of a breach of
any representation or warranty made or deemed made at the time of such Transfer
pursuant to Article IV of this Agreement with respect to such portion of the
Transferred Receivables and the Seller shall fail to cure such breach with
respect to such portion within five (5) days after becoming aware thereof. The
reconveyance price shall be paid by the Seller to the Purchaser in immediately
available funds on such day in an amount equal to the Outstanding Balance of the
Receivables related to such portion of the Transferred Receivables.
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29
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Seller each have caused this
Receivables Purchase Agreement to be duly executed by their respective officers
as of the day and year first above written.
GEORGIA GULF CORPORATION, as Seller
By:
-------------------------------
Name: Samuel M. Hensley
Title: Corporate Controller
GGRC CORP., as Purchaser
By:
-------------------------------
Name: Samuel M. Hensley
Title: Treasurer
Acknowledged and agreed as
of the date first above written:
BLUE RIDGE ASSET FUNDING CORPORATION,
as assignee of the Purchaser
By:
--------------------------------
Name: Victoria A. Dudley
Title: Senior Vice President
30
<PAGE>
EXHIBIT A
CONTRACT
GEORGIA GULF CORPORATION
A-1
<PAGE>
EXHIBIT B
FORM OF SUBORDINATED NOTE
$130,000,000
Atlanta, Georgia
March 10, 1998
FOR VALUE RECEIVED, the undersigned, GGRC CORP., a Delaware corporation
(the "Maker"), hereby unconditionally promises to pay to the order of GEORGIA
GULF CORPORATION (the "Payee"), on June 30, 2003 or earlier as provided for in
the Receivables Purchase Agreement dated as of the date hereof between the Maker
and the Payee (as such agreement may from time to time be amended, supplemented
or otherwise modified and in effect, the "Receivables Purchase Agreement"), the
lesser of the principal sum of up to ONE HUNDRED THIRTY MILLION DOLLARS AND
NO/100 ($130,000,000) or the aggregate unpaid principal amount of all Advances
to the Maker from the Payee pursuant to Section 3.2(b) and the other terms of
the Receivables Purchase Agreement, in lawful money of the United States of
America in immediately available funds, and to pay interest from the date
thereof on the principal amount hereof from time to time outstanding, in like
funds, at said office, at the rate per annum set forth in Section 3.2(c)(ii) of
the Receivables Purchase Agreement and shall be payable in arrears on the first
day of each calendar month (or if any such day is not a Business Day, on the
succeeding Business Day).
The Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder hereof of any of
its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Subordinated Note and all payments and
prepayments of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the holder hereof on the schedule attached hereto
and made a part hereof, or on a continuation thereof which shall be attached
hereto and made a part hereof, or otherwise recorded by such holder in its
internal records; provided, however, that (a) the failure of the holder hereof
to make such a notation or record, or (b) any error in such a notation shall not
in any manner affect the obligation of the Maker to make payments of principal
and interest in accordance with the terms of this Subordinated Note and the
Receivables Purchase Agreement. Any such notation or record shall be conclusive
and binding as to the date and amount of such Advance, or payment of principal
or interest thereon, absent manifest error.
The Maker shall have the right to borrow, prepay and, subject to the
limitations set forth in the Receivables Purchase Agreement, reborrow Advances
made to it without penalty, premium, or charge. The Payee shall be obligated to
repay Advances to the
B-1
<PAGE>
Maker only to the extent of funds available to the Payee from Collections on the
Receivables and, to the extent that such payments are insufficient to pay all
amounts owing to the Maker under the Subordinated Note, the Maker shall not have
any claim against the Payee for such amounts and no further or additional
recourse shall be available against the Payee.
This Subordinated Note is the Subordinated Note referred to in the
Receivables Purchase Agreement. The indebtedness evidenced by this Subordinated
Note is subordinated to the prior payment in full of all of the Maker's recourse
obligations under the Receivables Purchase Agreement and the Transfer Agreement.
The subordination provisions contained herein are for the direct benefit of, and
may be enforced by, Blue Ridge, the Administrative Agent and the Liquidity Bank
and/or any of their respective permitted assignees (collectively, the "Senior
Claimants") under the pursuant to the Receivables Purchase Agreement and the
Transfer Agreement. Until the date on which all obligations of the Maker and/or
the Servicer under the Receivables Purchase Agreement and the Transfer Agreement
(all such obligations, collectively, the "Senior Claims") have been indefeasibly
paid and satisfied in full, the Payee shall not demand, accelerate, sue for,
take, receive or accept from the Maker, directly or indirectly, in cash or other
property or by set-off or any other manner (including, without limitation, from
or by way of collateral) any payment or security of all or any of the
indebtedness under this Subordinated Note or exercise any remedies or take any
action or proceeding to enforce the same; provided, however, that nothing in
this paragraph shall restrict the Maker from paying, or the Payee from
requesting, any payments under this Subordinated Note so long as the Maker is
not required under the Receivables Purchase Agreement or the Transfer Agreement
to set aside for the benefit of, or otherwise pay over to, the funds used for
such payments to any of the Senior Claimants and further provided that the
making of such payment would not otherwise violate the terms and provisions of
the Receivables Purchase Agreement and the Transfer Agreement. Should any
payment, distribution or security or proceeds thereof be received by the Payee
in violation of the immediately preceding sentence, the Payee agrees that such
payment shall be segregated, received and held in trust for the benefit of, and
deemed to be the property of, and shall be immediately paid over and delivered
to the Administrative Agent for the benefit of the Senior Claimants.
Upon the occurrence of any Potential Termination Event with respect to
the Maker, then and in any such event the Senior Claimants shall receive payment
in full of all amounts due or to become due on or in respect of the Senior
Claims before the Payee is entitled to receive payment on account of this
Subordinated Note, and to that end, any payment or distribution of assets of the
Maker of any kind or character, whether in cash, securities or other property,
in any applicable insolvency proceeding, which would otherwise be payable to or
deliverable upon or with respect to any or all indebtedness under this
Subordinated Note, is hereby assigned to and shall be paid or delivered by the
Person making such payment or delivery (whether a trustee in bankruptcy, a
receiver, custodian or liquidating trustee or otherwise) directly to the
Administrative Agent for
B-2
<PAGE>
application to, or as collateral for the payment of, the Senior Claims until
such Senior Claims shall have been paid in full and satisfied.
Capitalized terms not otherwise defined herein are used herein with the
respective meanings given them in the Receivables Purchase Agreement.
This Note shall be governed by, and construed in accordance with, the
laws of the State of Georgia.
GGRC CORP.
By:
-----------------------------
Name: Samuel M. Hensley
Title: Treasurer
B-3
<PAGE>
Advances and Payments
<TABLE>
<CAPTION>
Amount of Payments Unpaid Principal Name of Person
Date Advance Principal/Interest Balance of Note Making Notation
- ---- --------- ------------------ ---------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
B-4
<PAGE>
EXHIBIT C
FORM OF MONTHLY REPORT
C-1
<PAGE>
EXHIBIT D
CAPITAL CONTRIBUTION NOTE
$5,000,000
Atlanta, Georgia
December 4, 1996
FOR VALUE RECEIVED, the undersigned, GEORGIA GULF CORPORATION, a
Delaware corporation (the "Maker"), hereby promises to pay to the order of GGRC
CORP. (the "Payee"), ON DEMAND FIVE MILLION DOLLARS ($5,000,000.00) in lawful
money of the United States of America in immediately available funds.
The Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder hereof of any of
its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York.
GEORGIA GULF CORPORATION
By: /s/ Joel I. Beerman
------------------------
Name: Joel I. Beerman
Title: Vice-President
D-1
<PAGE>
EXHIBIT E
DETAILED AGED TRIAL BALANCE
AND
SUMMARY AGED TRIAL BALANCE
E-1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEORGIA GULF
CORPORATION FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,149
<SECURITIES> 0
<RECEIVABLES> 67,905
<ALLOWANCES> 2,400
<INVENTORY> 80,447
<CURRENT-ASSETS> 165,637
<PP&E> 658,555
<DEPRECIATION> 250,739
<TOTAL-ASSETS> 601,758
<CURRENT-LIABILITIES> 113,227
<BONDS> 398,840
0
0
<COMMON> 319
<OTHER-SE> 20,852
<TOTAL-LIABILITY-AND-EQUITY> 601,758
<SALES> 232,705
<TOTAL-REVENUES> 232,705
<CGS> 187,699
<TOTAL-COSTS> 187,699
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,126
<INCOME-PRETAX> 27,135
<INCOME-TAX> 10,179
<INCOME-CONTINUING> 16,956
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,956
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
</TABLE>
