SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 1995
Commission File Number 1-7724
SNAP-ON INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 39-0622040
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10801 Corporate Drive, Kenosha, Wisconsin 53143
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (414) 656-5200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X
No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Outstanding at October 28, 1995
Common Stock, $1.00 par value 40,449,617 Shares
<PAGE>
SNAP-ON INCORPORATED
INDEX
Page No.
Part I. Financial Information:
Consolidated Balance Sheets -
September 30, 1995 and December 31, 1994 3-4
Consolidated Statements of Earnings -
Thirteen Weeks and Thirty-Nine Weeks Ended
September 30, 1995 and October 1, 1994 5
Consolidated Statements of Cash Flows -
Thirty-Nine Weeks Ended
September 30, 1995 and October 1, 1994 6
Notes to Consolidated Financial Statements 7-9
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-12
Part II. Other Information 13
<PAGE>
PART I. FINANCIAL INFORMATION
SNAP-ON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
(Unaudited)
September 30, December 31,
1995 1994
ASSETS
Current Assets
Cash and cash equivalents $14,273 $9,015
Accounts receivable, less allowances 643,847 568,378
Inventories:
Finished stock 284,535 266,792
Work in process 28,288 26,316
Raw materials 48,836 43,907
Excess of current cost over
LIFO cost (111,566) (107,978)
-------- --------
Total inventory 250,093 229,037
Prepaid expenses and other assets 77,430 66,590
-------- --------
Total current assets 985,643 873,020
Property and Equipment
Land 17,278 18,394
Buildings and improvements 135,832 134,038
Machinery and equipment 310,919 301,175
-------- --------
464,029 453,607
Accumulated depreciation (257,165) (244,465)
-------- --------
Total property and equipment 206,864 209,142
Deferred income tax benefits 66,405 56,695
Intangible and other assets 114,100 96,048
---------- ----------
TOTAL ASSETS $1,373,012 $1,234,905
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
SNAP-ON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
(Unaudited)
September 30, December 31,
1995 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $42,459 $56,679
Notes payable 153,657 10,631
Accrued compensation 32,052 29,957
Dealer deposits 63,467 65,494
Accrued income taxes 10,520 4,744
Other accrued liabilities 98,816 70,364
-------- --------
Total current liabilities 400,971 237,869
Long-term debt 113,889 108,980
Deferred income taxes 5,488 6,264
Retiree health care benefits 78,402 76,833
Other long-term liabilities 44,042 38,561
-------- --------
TOTAL LIABILITIES $642,792 $468,507
SHAREHOLDERS' EQUITY
Preferred stock - authorized 15,000,000
shares of $1 par value; none out-
standing - -
Common stock - authorized 125,000,000
shares of $1 par value; issued -
September 30, 1995 - 43,471,390
shares December 31, 1994 - 43,128,496
shares 43,471 43,128
Additional contributed capital 71,760 61,827
Retained earnings 733,460 684,139
Foreign currency translation
adjustment (8,784) (13,384)
Treasury stock at cost -
September 30, 1995 - 3,047,200 shares
December 31, 1994 - 250,000 shares (109,687) (9,312)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 730,220 766,398
-------- --------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $1,373,012 $1,234,905
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
SNAP-ON INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in Thousands Except Per Share Data)
(Unaudited)
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 30, October 1, September 30, October 1,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $309,065 $278,359 $944,988 $875,888
Cost of goods sold 151,026 137,588 460,433 425,560
-------- -------- -------- --------
Gross profit 158,039 140,771 484,555 450,328
Operating expenses 129,227 123,831 396,063 379,949
Net finance income (16,601) (15,215) (48,717) (44,443)
-------- -------- -------- --------
Operating earnings 45,413 32,155 137,209 114,822
Interest expense (4,134) (2,648) (9,211) (8,700)
Other income 519 3,876 2,972 4,848
-------- -------- -------- --------
Earnings before
income taxes 41,798 33,383 130,970 110,970
Income taxes 15,469 10,677 48,463 39,331
-------- -------- -------- --------
Net earnings $ 26,329 $ 22,706 $ 82,507 $ 71,639
======== ======== ======== ========
Earnings per weighted
average common share $ .65 $ .53 $ 2.00 $ 1.68
======== ======== ======== ========
Dividends declared per
common share $ - $ - $ .81 $ .81
======== ======== ======== ========
Weighted average common
shares outstanding 40,383 42,858 41,180 42,765
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SNAP-ON INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Thirty-Nine Weeks Ended
September 30, October 1,
1995 1994
OPERATING ACTIVITIES
Net earnings $ 82,507 $ 71,639
Adjustments to reconcile net earnings
to net cash provided by:
Depreciation 19,670 20,741
Amortization 5,395 2,702
Deferred income taxes (13,287) (8,046)
Gain on sale of assets (203) (2,880)
Changes in operating assets
and liabilities:
(Increase) decrease in receivables (70,718) 1,507
(Increase) decrease in inventories (17,308) 1,637
Increase in prepaid expenses (9,001) (7,054)
Decrease in accounts payable (15,614) (20,180)
Increase in accruals, deposits and
other long-term liabilities 40,564 15,710
-------- --------
Net cash provided by operating
activities 22,005 75,776
INVESTING ACTIVITIES
Capital expenditures (20,750) (27,287)
Acquisitions of businesses (19,923) (4,141)
Disposal of business - 26,611
Disposal of property and equipment 4,940 9,178
Increase in other noncurrent assets (3,944) (4,681)
-------- --------
Net cash used in investing activities (39,677) (320)
FINANCING ACTIVITIES
Payment of long-term debt (150) (578)
Increase in long-term debt 4,795 196
Increase (decrease) in notes payable 142,043 (42,111)
Purchase of treasury stock (100,375) -
Proceeds from stock plans 10,276 9,191
Cash dividends paid (33,185) (34,623)
--------- --------
Net cash used in financing activities 23,404 (67,925)
Effect of exchange rate changes (474) (1,458)
--------- --------
Increase in cash and cash equivalents 5,258 6,073
Cash and cash equivalents at
beginning of year 9,015 6,729
--------- ---------
Cash and cash equivalents at
end of period $ 14,273 $ 12,802
======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
1. This report should be read in conjunction with the consolidated
financial statements and related notes included in Snap-on
Incorporated's Annual Report for the year ended December 31, 1994.
In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) necessary to a fair statement of
financial condition and results of operations for the thirteen and
thirty-nine weeks ended September 30, 1995 have been made.
Management also believes that the results of operations for the
thirteen and thirty-nine weeks ended September 30, 1995 are not
necessarily indicative of the results to be expected for the full
year.
2. Snap-on Incorporated normally declares and pays in cash four regular,
quarterly dividends. However, the third quarter dividend in each
year is declared in June, giving rise to two regular quarterly
dividends appearing in the second quarter statements and
correspondingly, three regular quarterly dividends appearing in the
first twenty-six weeks' statements.
3. Income tax paid for the thirty-nine week periods ended September 30,
1995 and October 1, 1994 was $50.4 million and $47.6 million.
4. Interest paid for the thirty-nine week periods ended September 30,
1995 and October 1, 1994 was $10.4 million and $8.7 million.
5. Snap-on Incorporated (the "Corporation") has made previous disclosures
with respect to a guarantee of certain lease obligations, including
most recently in a Form 8-K Current Report filed on September 27, 1995.
Prior to the disposition of Systems Control, Inc. by a subsidiary of
the Corporation on September 29, 1994, Systems Control, Inc.'s single-
purpose subsidiaries, Tejas Testing Technology One, L.C. and Tejas
Testing Technology Two, L.C. (the "Tejas Companies"), entered into two
seven-year contracts with the Texas Natural Resources Conservation
Commission, an agency of the State of Texas ("TNRCC"), to perform
automotive emissions testing in the Dallas/Fort Worth and Southeast
regions of Texas in a centralized manner in accordance with the
federal Environmental Protection Agency ("EPA") guidelines relating
to "I/M 240" test-only facilities. The Corporation guaranteed payment
(the "Guaranty") of the Tejas Companies' obligations under an Agreement
for Lease and a seven year Lease Agreement, each dated June 22, 1994,
in the amount of approximately $98.8 million plus an interest factor
(the "Lease Obligations"), pursuant to which the Tejas Companies leased
the facilities (and associated testing equipment) necessary to perform
the emission testing contracts. The Guaranty was assigned to the
lessor's lenders (the "Lenders") as collateral.
On February 1, 1995, the State of Texas suspended the centralized
emissions testing program described in the emissions testing contracts.
On May 1, 1995, the State of Texas enacted legislation that terminated
the centralized testing program and directed the Governor of the State
of Texas to implement a new program after negotiations with the EPA.
On September 12, 1995, the Tejas Companies filed bankruptcy petitions
under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for the Western District of Texas (Austin Division).
The Corporation and the Lenders have been engaged in continuing
discussions concerning this matter, and the Lenders have not exercised
their rights under the terms of the Guaranty to cause the Corporation
to pay all Lease Obligations to the Lenders on an accelerated basis.
Further, the Corporation reached an agreement whereby the Lenders will
forbear from accelerating the Lease Obligations until at least December
31, 1995. The Corporation has been making monthly payments on the
Lease Obligations since May 1995 and has paid approximately $10.4
million to date. It is expected that these payments will total
approximately $14 million through December 31, 1995. The Corporation
is discussing with the Lenders extending beyond December 31, 1995 the
Lender's existing agreement to forbear from accelerating the Lease
Obligations.
While the Corporation previously believed it was probable that there
would be developments, prior to December 31, 1995, to enable the Tejas
Companies to have the ability to ultimately satisfy the Lease
Obligations, the Corporation currently believes, based upon subsequent
events and the uncertain Federal and State political climate, that
such developments may not occur until during the legislative session
scheduled to begin January 14, 1997. One potential basis for such a
development arises under the original contracts to perform centralized
emissions testing. Those contracts obligate the TNRCC to purchase the
Tejas Companies' testing facilities or to reimburse costs that the
Tejas Companies incurred in the construction and implementation of the
centralized testing program and have not recovered through the sale of
the testing facilities to a third party. However, fulfillment of the
TNRCC's purchase or reimbursement obligation requires an appropriation
of funds by the Texas Legislature, which is subject to the political
process. The TNRCC is contractually obligated to seek such appropria-
tion and has affirmed such obligation. A second potential basis is
that the TNRCC's obligation could be satisfied in whole or in part in
various other ways including an arrangement negotiated among the
State of Texas, the Tejas Companies and the Corporation under which,
for example, State agencies would use the testing facilities and/or
some of the facilities would be used in a new emissions testing
program developed in accordance with the May legislation. Whether or
not the new emissions testing program announced by the Governor will
ultimately include substantial use of the testing facilities is
currently unknown and depends, among other things, on negotiations
between the EPA and the State of Texas concerning the manner in which
the new program will satisfy federal requirements, EPA policies that
have reflected a strong preference for test-only testing facilities
and potential federal legislation that may impact those policies.
The emissions testing program announced on November 10, 1995 by the
Governor appears to include little use of the facilities. Accordingly,
at the present time, satisfaction of the Lease Obligations through
significant use of the facilities in a new program now appears
unlikely.
If the Lenders exercise acceleration rights or the Corporation deter-
mines it is probable they will do so, then the remaining Lease
Obligations will be treated as a liability of the Corporation until
they are discharged. However, in such event, the Corporation
believes there are ways by which it will have the opportunity to
recover funds it delivers under the Guaranty. Described above are
two ways by which the Tejas Companies may receive funds to enable
them to discharge the Lease Obligations, which would benefit the
Corporation to the extent it has satisfied the Lease Obligations. In
addition, if the Corporation must satisfy the Lease Obligations and
the TNRCC does not purchase the test facilities, reimburse costs or
otherwise honor its contractual obligations, then the Lender's
interests in the testing facilities and equipment ultimately accrue
to the Corporation.
Accordingly, the Corporation has not established any liability on its
balance sheet in respect of its obligations under the Guaranty. Based
upon discussions with Texas officials and management's belief that the
State of Texas will take sufficient action favorable to the Corpora-
tion, by appropriating funds to enable the TNRCC to fulfill its
contractual obligations or otherwise, to enable the State of Texas to
honor in all material respects the TNRCC's contractual obligations,
it is management's opinion that the Guaranty (and a related Capital
Subscription Agreement that relates to the same obligation) is not
likely to have a material adverse effect on the Corporation's
financial condition or results of operations.
6. Certain prior-year amounts have been reclassified to conform with
current-year presentation.
<PAGE>
SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview: Net earnings for the third quarter of 1995 increased 16.0% over
the year ago quarter on a net sales increase of 11.0%. For the first nine
months, 1995 net earnings increased 15.2% over the comparable 1994 period
on a net sales increase of 7.9%. Earnings per share for the third quarter
and first nine months of 1995 increased 22.6% and 19.0% over 1994
comparable periods. These results reflect broad-based strength across
virtually all of the Corporation's markets and product lines, including
both the North American and European hand tool markets, diagnostic and
shop equipment sales, industrial and other international markets.
Sales: Net sales for the third quarter of 1995 were $309.1 million,
compared with $278.4 million in the third quarter of 1994. Net sales for
the first nine months of 1995 were $945.0 million, compared with $875.9
million for the 1994 comparable period.
North American sales for the third quarter of 1995 were $251.1 million, an
increase of 10.6% over third quarter 1994 sales of $227.0 million. North
American sales for the first nine months of 1995 were $755.8 million, an
increase of 11.2% over nine month 1994 sales of $679.7 million. The third
quarter's results reflect continued sales increases in the U.S. core hand
tool and equipment diagnostic businesses, an improvement in the
Corporation's industrial business, and increased sales in Canada.
Acquisitions made in 1994 contributed incremental 1995 third quarter and
nine-month sales of $8.1 million and $25.8 million, respectively.
European sales for the third quarter of 1995 were $38.2 million, an
increase of 10.6% over third quarter 1994 sales of $34.5 million.
European sales for the first nine months of 1995 were $128.8 million, a
decrease of 14.2% from nine-month 1994 sales of $150.2 million. Nine-
month 1994 sales benefited from approximately $32 million of sales related
to the German emissions-testing program which was substantially completed
during the second quarter of 1994.
Other International sales for the third quarter of 1995 were $19.8
million, an increase of 17.2% over third quarter 1994 sales of $16.9
million. Other International sales for the first nine months of 1995 were
$60.4 million, an increase of 31.3% over nine-month 1994 sales of $46.0
million. The majority of Other International sales are in Japan and
Australia, which continue to experience good sales growth. Sales
benefited in both periods from favorable currency translation.
Earnings: Earnings for the third quarter of 1995 were $26.3 million,
compared with $22.7 million in the third quarter of 1994. Per share
earnings for the third quarter rose to $.65 per share in 1995 from $.53
per share in 1994. Earnings for the first nine months of 1995 were $82.5
million in 1995, compared with $71.6 million in 1994. Per share earnings
for the first nine months rose to $2.00 per share in 1995 compared to
$1.68 per share last year.
Operating expenses: As a percentage of net sales, third quarter operating
expenses net of finance income decreased to 36.4% in 1995 from 39.0% in
1994. As a percentage of net sales, nine-month operating expenses net of
finance income decreased to 36.8% in 1995 from 38.3% in 1994. This
reduction resulted from a higher sales level, productivity improvements,
and cost reduction initiatives, including the consolidation of certain
operations.
FINANCIAL CONDITION
Liquidity: Cash and short-term investments increased to $14.3 million at
the end of the third quarter from $9.0 million at the end of 1994.
Working capital was $584.7 million at the end of the third quarter versus
$635.2 million at the end of 1994. The decrease was primarily due to the
completion of a $100 million share repurchase program that was primarily
funded with short-term debt. At the end of the quarter, the Corporation
had a $100 million revolving credit facility and bank lines of credit
totaling $150 million to support its commercial paper. As of October 6,
1995, in conjunction with the Corporation selling notes in a public
offering on October 3, 1995 and selling accounts receivable on October 6,
1995, the bank lines of credit totaling $150 million have been eliminated.
The Corporation utilized $100 million of its $300 million shelf
registration with the Securities and Exchange Commission to issue debt
securities. On October 3, 1995, the Corporation sold $100 million
aggregate principal amount of its notes to the public. The notes require
payment of interest on a semiannual basis at a rate of 6 5/8% and mature
on October 1, 2005. The net proceeds of such sale (approximately $98.7
million) were used to repay a portion of the Corporation's outstanding
commercial paper and for working capital and general corporate purposes.
The Corporation has sufficient sources of liquidity to support current and
future working capital requirements, finance capital expenditures and pay
dividends.
Accounts receivable: Accounts receivable increased to $643.8 million at
the end of the third quarter from $568.4 million at the end of 1994. This
increase coincides with the current sales level and an increase in leasing
activity related to equipment sales. The majority of accounts receivable
involve customers' extended credit and lease purchases of higher-value
products. Other receivables include those from dealers, industrial and
international customers, and government.
On October 6, 1995, the Corporation entered into certain purchase and sale
agreements (the "Sale Agreements"), which provide for the sale from time
to time by the Corporation of an undivided interest in a pool of certain
of its accounts receivable to a third party financing institution. The
Sale Agreements provide for a maximum of $150 million of such accounts
receivable to be sold and remain outstanding at any one time. Also, on
October 6, 1995, the Corporation sold $100 million of interest bearing
installment receivables under these Sale Agreements.
Inventories: Inventories increased to $250.1 million at the end of the
third quarter from $229.0 million at the end of 1994. This increase
coincides with the current sales level and supports the United Kingdom
vehicle emissions-testing program scheduled to begin on January 1, 1996.
Liabilities: Total short-term and long-term debt was $268.5 million at
the end of the quarter compared with $119.9 million at the end of 1994.
The increase was primarily due to purchases of the Corporation's stock
under the share repurchase program. Also contributing to the increase, the
Corporation increased its ownership in EDGE Diagnostic Systems from 30 to
90 percent during the second quarter of 1995. Total debt to total capital
was 26.9% at the end of the quarter compared with 13.5% at the end of
1994.
Average shares outstanding: Average shares outstanding decreased to 40.4
million for the third quarter and to 41.2 million for the first nine
months of 1995, compared with 42.9 million and 42.8 million for the same
periods last year, respectively. The decrease was due to the completion
of the Corporation's $100 million share repurchase program in the second
quarter of 1995.
<PAGE>
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
Item 6(a): Exhibits
10.1 Receivables Purchase and Sale Agreement, dated as of October 6,
1995, among Snap-on Credit Corporation, as Seller, Corporate Asset
Funding Company, Inc., as Investor, and Citicorp North America
Inc., individually and as Agent.
10.2 Receivables Purchase and Sale Agreement, dated as of October 6,
1995, among Snap-on Credit Corporation, as Seller, the banks set
forth on the signature pages thereof, and Citicorp North America,
Inc., individually and as Agent.
10.3 Support Agreement, dated as of October 6, 1995, by Snap-on
Incorporated in favor of Corporate Asset Funding Company, Inc.,
Citibank, N.A. and Citicorp North America, Inc.
Item 6(b): Reports on Form 8-K Filed During the Reporting Period
Date Filed Date of Report Item
September 27, 1995 September 26, 1995 Item 5. Other Events. Information
summarizing and updating previous
disclosure with respect to a
guarantee of certain lease
obligations of two former indirect
Texas subsidiaries of the
Corporation.
Item 6(c): Reports on Form 8-K Filed After the Reporting Period
Date Filed Date of Report Item
October 3, 1995 September 28, 1995 Item 5. Other Events. Information
with respect to the public
offering of $100 million aggregate
principal amount of the
Corporation's 6 5/8% Notes due
October 1, 2005.
Item 7. Financial Statements and
Exhibits. Final versions of the
Terms Agreements, Officer's
Certificate and Indenture relating
to the issuance and sale of the 6
5/8% Notes due October 1, 2005.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Snap-on Incorporated has duly caused this report to be signed on its
behalf by the undersigned duly authorized persons.
SNAP-ON INCORPORATED
Date: November 14, 1995 /s/ R. A. Cornog
R. A. CORNOG
(Chairman, President and Chief Executive
Officer)
Date: November 14, 1995 /s/ G. D. Johnson
G. D. JOHNSON
(Principal Accounting Officer and
Controller)
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
10.1 Receivables Purchase and Sale Agreement, dated as of
October 6, 1995, among Snap-on Credit Corporation, as
Seller, Corporate Asset Funding Company, Inc., as
Investor, and Citicorp North America Inc., individually
and as Agent.
10.2 Receivables Purchase and Sale Agreement, dated as of
October 6, 1995, among Snap-on Credit Corporation, as
Seller, the banks set forth on the signature pages
thereof, and Citicorp North America, Inc., individually
and as Agent.
10.3 Support Agreement, dated as of October 6, 1995, by Snap-
on Incorporated in favor of Corporate Asset Funding
Company, Inc., Citibank, N.A. and Citicorp North America,
Inc.
27 Financial Data Schedule.
[Execution Copy]
=================================================================
U.S. $150,000,000
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of October 6, 1995
among
SNAP-ON CREDIT CORPORATION
as Seller
and
CORPORATE ASSET FUNDING COMPANY, INC.
as Investor
and
CITICORP NORTH AMERICA, INC.
Individually and as Agent
=================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I DEFINITIONS
SECTION 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . 2
SECTION 1.02. Other Terms . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.03. Computation of Time Periods . . . . . . . . . . . . . 22
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Receivable Facility . . . . . . . . . . . . . . . . . 22
SECTION 2.02. Making Purchases from the Seller . . . . . . . . . . . 23
SECTION 2.03. Termination or Reduction of the
Purchase Limit . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.04. Eligible Asset . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.05. Non-Liquidation Settlement Procedures . . . . . . . . 24
SECTION 2.06. Liquidation Settlement Procedures . . . . . . . . . . 25
SECTION 2.07. General Settlement Procedures . . . . . . . . . . . . 26
SECTION 2.08. Payments and Computations, Etc. . . . . . . . . . . . 26
SECTION 2.09. Dividing or Combining of Eligible Assets . . . . . . . 27
SECTION 2.10. Yield and Fees . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.11. Yield Protection . . . . . . . . . . . . . . . . . . . 29
SECTION 2.12. Increased Capital . . . . . . . . . . . . . . . . . . 30
SECTION 2.13. Taxes and Other Taxes . . . . . . . . . . . . . . . . 31
SECTION 2.14. Sharing of Payments, Etc. . . . . . . . . . . . . . . 32
SECTION 2.15. Agreement to Assign . . . . . . . . . . . . . . . . . 33
ARTICLE III CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase . . . . . . . 33
SECTION 3.02. Conditions Precedent to All Purchases
and Reinvestments . . . . . . . . . . . . . . . . . . 35
ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties
of the Seller . . . . . . . . . . . . . . . . . . . . 37
ARTICLE V GENERAL COVENANTS OF THE SELLER
SECTION 5.01. Affirmative Covenants of the Seller . . . . . . . . . 40
SECTION 5.02. Reporting Requirements of the Seller . . . . . . . . . 43
SECTION 5.03. Negative Covenants of the Seller . . . . . . . . . . . 45
ARTICLE VI ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent . . . . . . . . . . . 47
SECTION 6.02. Duties of the Collection Agent . . . . . . . . . . . . 47
SECTION 6.03. Rights of the Agent . . . . . . . . . . . . . . . . . 49
SECTION 6.04. Responsibilities of the Seller . . . . . . . . . . . . 49
SECTION 6.05. Possession by the Seller as Trustee;
Further Action Evidencing Purchases . . . . . . . . . 50
SECTION 6.06. Delivery of Contracts to Agent . . . . . . . . . . . . 51
SECTION 6.07. Application of Collections . . . . . . . . . . . . . . 51
ARTICLE VII EVENTS OF INVESTMENT INELIGIBILITY
SECTION 7.01. Events of Investment Ineligibility . . . . . . . . . . 51
ARTICLE VIII THE AGENT
SECTION 8.01. Authorization and Action . . . . . . . . . . . . . . . 54
SECTION 8.02. UCC Filings . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.03. Agent's Reliance. Etc. . . . . . . . . . . . . . . . . 55
SECTION 8.04. Agent and Affiliates . . . . . . . . . . . . . . . . . 56
SECTION 8.05. Purchase Decision . . . . . . . . . . . . . . . . . . 56
SECTION 8.06. Indemnification . . . . . . . . . . . . . . . . . . . 56
SECTION 8.07. Successor Agent . . . . . . . . . . . . . . . . . . . 57
ARTICLE IX ASSIGNMENT OF ELIGIBLE ASSETS
SECTION 9.01. Assignment . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE X INDEMNIFICATION
SECTION 10.01. Indemnities by the Seller . . . . . . . . . . . . . . 58
ARTICLE XI MISCELLANEOUS
SECTION 11.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . 61
SECTION 11.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . 61
SECTION 11.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . 62
SECTION 11.04. Binding Effect; Assignability . . . . . . . . . . . . 62
SECTION 11.05. Governing Law . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.06. Costs, Expenses and Taxes . . . . . . . . . . . . . . 63
SECTION 11.07. No Proceedings . . . . . . . . . . . . . . . . . . . 64
SECTION 11.08. Additional Investor . . . . . . . . . . . . . . . . . 64
SECTION 11.09. Confidentiality . . . . . . . . . . . . . . . . . . . 65
SECTION 11.10. Execution in Counterparts; Severability . . . . . . . 65
<PAGE>
LIST OF EXHIBITS
EXHIBIT A Form of Assumption Agreement
EXHIBIT B Form of Contracts
EXHIBIT C Description of Credit and Collection Policy
EXHIBIT D Trade Names, Fictitious Names and "Doing Business As" Names
EXHIBIT E Investor Report
EXHIBIT F List of Offices of Seller where Records
are Kept
<PAGE>
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of October 6, 1995
SNAP-ON CREDIT CORPORATION, a Wisconsin corporation (the
"Seller"), CORPORATE ASSET FUNDING COMPANY, INC., a Delaware corporation
(collectively, with any Person which may become a party hereto pursuant to
Section 11.08, the "Investors" and, individually, an "Investor"), and
CITICORP NORTH AMERICA, INC., a Delaware corporation, individually
("CNAI"), and as agent (the "Agent") for the "Owners" (as defined herein)
agree as follows:
PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized
and used throughout this Agreement (in addition to those defined above)
are defined in Article I of this Agreement.
(2) The Seller has, and expects to have, Receivables in which
the Seller intends to sell interests referred to herein as Eligible
Assets.
(3) Each Investor desires to purchase such Eligible Assets from
the Seller.
(4) In consideration of the reinvestment by the Owners in Pool
Receivables of daily Collections of the Eligible Assets (other than, in
certain circumstances, with regard to accrued Yield), the Seller will sell
additional interests in the Pool Receivables as part of such Eligible
Assets until such reinvestment is terminated. It is intended that such
daily reinvestment of Collections be effected by an automatic daily
adjustment to the Owners' respective Eligible Assets. Such daily
reinvestment is intended to permit the Owners to maintain their respective
Capital fully invested in uncollected Pool Receivables.
(5) CNAI has been requested and is willing to act as Agent.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Additional Reduction Amount" means, at any time, the sum of (a)
the amount by which the aggregate Outstanding Balance of all Receivables
owing from Sales Representatives exceeds $500,000, plus (b) the amount by
which the aggregate Outstanding Balance of all Receivables required,
according to the related Contract, to be paid in full within more than 36
months but no more than 60 months of the Original Date of such Contract,
exceeds $500,000, plus (c) the amount by which the aggregate Outstanding
Balance of all Receivables owing from and Canadian Obligors and Mexican
Obligors exceeds $500,000.
"Adjusted LIBO Rate" for any Owner with respect to any Eligible
Asset for any Fixed Period means an interest rate per annum equal to
(a) 0.125% per annum, plus (b) the rate of interest per annum (the "LIBO
Rate") at which deposits in U.S. Dollars are offered by the principal
office of Citibank in London, England to prime banks in the London
interbank market at 11:00 a.m. (London time) two "LIBO Business Days" (as
defined below) before the first day of such Fixed Period in an amount
approximately equal or comparable to the Capital of such Eligible Asset
and for a period equal to such Fixed Period plus (c) the remainder
obtained by subtracting (i) the LIBO Rate for such Fixed Period from
(ii) the rate obtained by dividing such LIBO Rate by the percentage equal
to 100% minus the "Eurodollar Reserve Percentage" (as defined below) for
such Fixed Period. "LIBO Business Day" means a day of the year on which
dealings are carried on in the London interbank market and banks are open
for business in London and are not required or authorized to close in New
York City. "Eurodollar Reserve Percentage" for any Fixed Period means the
reserve percentage applicable to Citibank during such Fixed Period under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) (or if more than one such
percentage shall be so applicable, the daily average of such percentages
for those days in such Fixed Period during which any such percentage shall
be so applicable) under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for Citibank in respect of liabilities or assets consisting
of or including "Eurocurrency liabilities" (as that term is used in
Regulation D of the Board of Governors of the Federal Reserve System as in
effect from time to time) having a term equal to such Fixed Period.
"Adverse Claim" means a lien, security interest, charge or other
encumbrance.
"Affected Person" means each of the Agent, CNAI, Citibank, any
Owner, any entity which enters into a commitment to purchase Eligible
Assets or interests therein, or any of their respective Affiliates.
"Affiliate" means, with respect to any Person, a Person: (a)
that directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such Person; (b)
that beneficially owns or holds 5% or more of any class of the voting
stock (or, in the case of a Person that is not a corporation, 5% or more
of the equity interest) of such Person; or (c) 5% or more of the voting
stock (or, in the case of a Person that is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held, directly
or indirectly, by such Person; provided, however, that neither the Agent
nor any Owner shall be deemed to be an Affiliate of the Seller. The term
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting stock or an equity interest, by
contract, or otherwise.
"Affiliated Obligor" means any Obligor that is an Affiliate of
another Obligor.
"Alternate Base Rate" means a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall
at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time as Citibank's base rate;
(b) 0.50% per annum above the latest three-week moving average
of secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market
banks, such three-week moving average being determined weekly on each
Monday (or, if any such day is not a Business Day on the next succeeding
Business Day) for the three-week period ending on the previous Friday by
Citibank on the basis of such rates reported by certificate of deposit
dealers to and published by the Federal Reserve Bank of New York or, if
such publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank from three New York
certificate of deposit dealers of recognized standing selected by
Citibank, in either case adjusted to the nearest 0.25% or, if there is no
nearest 1/4 of one percent, to the next higher 0.25%; and
(c) 0.50% per annum above the Federal Funds Rate.
"Assignee Rate" for any Owner with respect to any Fixed Period
for any Eligible Asset means an interest rate per annum equal to the
Adjusted LIBO Rate; provided, however, that (a) in the case of any Fixed
Period of less than one month (measured as described in the definition of
"Fixed Period" with reference to Eligible Assets on which Yield is
calculated based upon the Adjusted LIBO Rate), the "Assignee Rate" for
such Fixed Period for such Eligible Asset shall be calculated using an
interest rate per annum equal to the Alternate Base Rate; (b) if any Owner
shall have notified the Agent on or before the first day of such Fixed
Period that a LIBO Rate Disruption Event has occurred and is continuing,
then the "Assignee Rate" for such Fixed Period for such Eligible Asset
shall be calculated using an interest rate per annum equal to the
Alternate Base Rate; (c) in the case of any Fixed Period for an Eligible
Asset the Capital of which is less than $500,000, the "Assignee Rate" for
such Fixed Period for such Eligible Asset shall be calculated using an
interest rate per annum equal to the Alternate Base Rate; and (d) if an
Event of Investment Ineligibility has occurred and is continuing, the
"Assignee Rate" for any Fixed Period for such Eligible Asset shall be the
sum of the applicable interest rate per annum determined pursuant to the
provisions set forth above plus 1.00% per annum.
"Assumption Agreement" means an Assumption Agreement, in
substantially the form of Exhibit A, by which any Person may become a
party to, and an Investor under, this Agreement.
"Banks" means the financial institutions parties to the Parallel
Purchase Agreement.
"Benefit Plan" means a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of
which the Seller or any ERISA Affiliate is, or at any time during the
immediately preceding six years was, an "employer" as defined in Section
3(5) of ERISA.
"Business Day" means (a) any day other than a Saturday, Sunday
or public holiday or the equivalent for banks in New York City, and (b) if
the term "Business Day" is used in connection with the Adjusted LIBO Rate,
a LIBO Business Day.
"Canadian Obligor" means any Obligor that is a resident of
Canada but whose place of employment is located in the United States.
"Capital" of any Eligible Asset means the original amount paid
to the Seller for such Eligible Asset at the time of its acquisition by an
Investor pursuant to Sections 2.01 and 2.02, reduced from time to time by
Collections received and distributed on account of such Capital pursuant
to Section 2.06 below. If any Owner or the Agent is required (or believes
in good faith that it is required) by law to repay (as a preference or
otherwise, and to the Seller, an Obligor, a trustee for the Seller or any
Obligor, a court or any other Person) any amount that previously caused a
reduction in Capital, then, to the extent that such amount is so repaid,
Capital shall be reinstated by the amount of such repayment and the Seller
will (but without duplication of any recovery made as a result of any
related reinstatement of Capital) indemnify and hold such Owner or the
Agent harmless for the amount of such repayment, interest thereon required
(or believed in good faith by such Owner or the Agent to be required) to
be paid in connection therewith and all losses, liabilities, costs and
expenses related thereto (including but not limited to reasonable
attorneys' fees and expenses).
"Capital Increase Purchase" means any Purchase by an Investor
which, pursuant to Section 2.02, causes the aggregate outstanding Capital
hereunder in respect of such Investor to increase.
"Citibank" means Citibank, N.A., a national banking association.
"Collection Agent" means at any time the Person then authorized
pursuant to Article VI to service, administer and collect Receivables.
"Collection Agent Fee" has the meaning assigned to that term in
Section 2.10.
"Collection Date" means the earliest date following the initial
Purchase hereunder on which all Owners have received the accrued Yield for
their respective Eligible Assets, the Capital of such Eligible Assets and
all other amounts payable to such Owners pursuant to this Agreement, and
the Collection Agent has received the accrued Collection Agent Fee for all
such Eligible Assets.
"Collections" means, (a) with respect to any Receivable, all
cash collections and other cash proceeds of such Receivable, including,
without limitation, all cash proceeds of Related Security with respect to
such Receivable, and any Collection of such Receivable deemed to have been
received pursuant to Section 2.07 (it being understood that the Seller
shall pay all such deemed Collection amounts to the Collection Agent) and
(b) any amounts paid to the Agent pursuant to the terms of the Parent
Support Agreement.
"Commitment Capital" means, at any time, the aggregate "Capital"
of all "Eligible Assets" then outstanding under (and as defined in) the
Parallel Purchase Agreement.
"Concentration Limit" for any Obligor means, at any time, (a)
1.67% of the aggregate outstanding Capital hereunder at such time, or (b)
such higher amount for any Obligor designated by Agent in a writing
delivered to Seller from time to time; provided, however, that in the case
of an Obligor with any Affiliated Obligors, the Concentration Limit and
the Receivables related thereto shall be calculated as if such Obligor and
such one or more Affiliated Obligors were one Obligor.
"Contract" means an agreement in substantially the form of one
of the forms of written contract set forth in Exhibit B or otherwise
approved by the Agent, initially executed between a Dealer or the Parent
and an Obligor, and subsequently assigned, as applicable, (a) by such
Dealer either directly to the Seller or to the Parent and subsequently by
the Parent to the Seller or (b) by the Parent to the Seller, pursuant to
or under which agreement such Obligor shall be obligated to pay for
merchandise sold or services rendered by such Dealer or the Parent, as
applicable.
"Contract Rider" means, with respect to any Contract, any rider
thereto executed and delivered by the Obligor thereunder evidencing the
purchase by such Obligor of additional goods or merchandise manufactured
by the Seller and a resulting increase in the Outstanding Balance of the
Receivable arising under such Contract, which increased Outstanding
Balance has been refinanced as of the date of such rider under terms
providing for the payment in full of such increased Outstanding Balance by
way of substantially equal installments payable no less frequently than
monthly within no more than 60 months of the date of such rider.
"CP Rate" means, for any Eligible Asset for any Fixed Period,
the per annum rate equivalent to the weighted average of the per annum
rates paid or payable by the applicable Investor from time to time as
interest on or otherwise (by means of interest rate hedges or otherwise)
in respect of the commercial paper notes of such Investor that are
allocated, in whole or in part, by such Investor to fund or maintain for
such Fixed Period such Eligible Asset, all other Eligible Assets held by
such Investor hereunder and all interests in receivables or other assets
of "Other Pool Sellers" (as defined below) held by such Investor, which
rates shall reflect and give effect to the commissions of placement agents
and dealers in respect of such commercial paper notes, to the extent such
commissions are allocated, in whole or in part, to such commercial paper
notes by such Investor; provided, however, that (a) if any component of
such rate is a discount rate, in calculating the "CP Rate" for such
Eligible Asset for such Fixed Period, the Investor shall for such
component use the rate resulting from converting such discount rate to an
interest bearing equivalent rate per annum; and (b) to the extent that
such Investor funds or maintains such Eligible Asset at any time during
such Fixed Period other than by issuing commercial paper notes, the "CP
Rate" for such Fixed Period (or applicable portion thereof) shall be the
Assignee Rate or such other rate as the Seller and such Investor shall
agree to in writing. The Investor shall report the "CP Rate" for each
Eligible Asset for each Fixed Period to the Agent and the Seller. As used
in this definition, "Other Pool Sellers" means with respect to any
Investor, all Other Sellers with respect to such Investor to the extent
that the interests in receivables or other financial assets of each such
Other Seller held by such Investor are aggregated with the Eligible Assets
held by such Investor hereunder and funded on a pooled basis by such
Investor, whether by the issuance of commercial paper notes or otherwise.
"Credit and Collection Policy" means those credit and collection
policies and practices relating to Contracts and Receivables described in
Exhibit C, as modified in compliance with Section 5.03(c).
"Dealer" means any Person, authorized pursuant to an effective
Dealer Agreement with the Parent, to act as a dealer for Equipment
manufactured and/or sold or distributed by the Parent.
"Dealer Agreement" means an agreement (as amended, supplemented
or otherwise modified from time to time) between any Person and the Parent
authorizing such Person to act as a dealer for the Parent, including,
without limitation, if the relevant Dealer is a franchise dealer, a
"Dealer Franchise Agreement" or "Conversion Dealer Franchise Agreement."
"Debt" of any Person means (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations of such
Person to pay the deferred purchase price of property or services,
(d) obligations of such Person as lessee under leases which shall have
been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, (e) obligations secured by any
lien or other charge upon property or assets owned by such Person, even
though such Person has not assumed or become liable for the payment of
such obligations, (f) obligations of such Person in connection with any
letter of credit issued for the account of such Person and (g) obligations
of such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (f)
above.
"Default Ratio" means for any month, the average of the Monthly
Default Ratios for such month and each of the immediately preceding two
consecutive months.
"Defaulted Receivable" means a Receivable, other than a Write-
off: (a) as to which any payment, or part thereof, remains unpaid for
more than 90 days from the scheduled due date for such payment (determined
by reference to the payment schedule with respect to such Receivable
established as of the Original Date of the related Contract) or (b) as to
which the Obligor thereof has taken any action, or suffered any event to
occur, of the type described in Section 7.01(g).
"Delinquency Ratio" means for any month the average of the
Monthly Delinquency Ratios for such month and each of immediately
preceding two consecutive months.
"Delinquent Receivable" means a Receivable that is not a
Defaulted Receivable and (a) as to which any payment, or part thereof,
remains unpaid for more than 30 days from the scheduled due date for such
payment (determined by reference to the payment schedule with respect to
such Receivable established as of the Original Date of the related
COntract) or (b) which, consistent with the Credit and Collection Policy,
has been or should be classified as delinquent by the Seller.
"Designated Obligor" means, at any time, any Obligor of any
Receivable, unless the Agent, in the exercise of its reasonable credit
judgment, has advised the Seller following three Business Days' notice
that such Obligor shall not be considered a Designated Obligor.
"Dilution Factors" means, with respect to the Receivables, any
credits, rebates (including, without limitation, in connection with any
prepayment or acceleration of any Receivable), freight charges, cash
discounts, volume discounts, cooperative advertising expenses, royalty
payments, warranties, cost of parts required to be maintained by agreement
(whether express or implied), allowances, disputes, chargebacks, returned
or repossessed goods, inventory transfers, allowances for early payments
and other allowances that are made or coordinated with the Seller's usual
practices.
"Eligible Asset" means, at any time, an undivided percentage
ownership interest at such time in (a) all then outstanding Pool
Receivables arising prior to the time of the most recent computation or
recomputation of such undivided percentage interest pursuant to Section
2.04, (b) all Related Security with respect to such Pool Receivables and
(c) all Collections with respect to, and other proceeds of, such Pool
Receivables. Such undivided percentage interest for such Eligible Asset
shall be computed as
C + YR + LR
NRPB
where:
C = the Capital of such Eligible Asset at the time of such
computation.
YR = the Yield Reserve of such Eligible Asset at the time of
such computation.
LR = the Loss Reserve of such Eligible Asset at the time of such
computation.
NRPB = the Net Receivables Pool Balance at the time of such
computation.
Each Eligible Asset shall be determined from time to time pursuant to the
provisions of Section 2.04. The sum of all Eligible Assets shall equal,
at all times, 100% of the interests described in clauses (a), (b) and (c)
above.
"Eligible Receivable" means, at any time and with respect to any
Eligible Asset, a Receivable:
(a) the Obligor of which, if not a Sales Representative, is not
an Affiliate of any of the parties hereto;
(b) the Obligor of which is a Designated Obligor;
(c) the Obligor of which is not the Obligor of any Defaulted
Receivables;
(d) which is not a Defaulted Receivable;
(e) which, according to the Contract related thereto, is (i)
required to be paid in full within 60 months of the Original Date of such
Contract and (ii) payable in substantially equal installments to be made
no less frequently than monthly;
(f) which arises under a Contract, the performance of which has
been completed by all other applicable parties other than the Obligor, and
which Receivable is fully assignable and has been properly documented in
accordance with the requirements of the Credit and Collection Policy, and
all Equipment, other goods or services in connection therewith have been
delivered to or performed for the Obligor;
(g) which is indebtedness representing all or part of the sales
price of merchandise, insurance or services within the meaning of Section
3(c)(5) of the Investment Company Act of 1940, as amended;
(h) a purchase of which with the proceeds of notes would
constitute a "current transaction" within the meaning of Section 3(a)(3)
of the Securities Act of 1933, as amended;
(i) which constitutes "chattel paper" within the meaning of the
UCC of all applicable jurisdictions and in respect of which only one set
of instruments and other documents evidencing such Receivable has been
executed;
(j) which is denominated and payable only in United States
Dollars in the United States;
(k) which arises under a Contract which has been duly
authorized and which, together with such Receivable (which shall not in
any event satisfy this clause (k) if such Receivable has been paid by the
Obligor thereof), is in full force and effect and constitutes the legal,
valid and binding obligation of the Obligor of such Receivable enforceable
against such Obligor in accordance with its terms and is not subject (at
the time each determination of eligibility is made hereunder) to any
dispute, offset, counterclaim or defense whatsoever;
(l) which was (i) originated by a Dealer and acquired from such
Dealer in the ordinary course of business (A) by the Seller, together with
a security interest in the related Equipment or (B) by the Parent and
subsequently assigned in the ordinary course of business by the Parent to
the Seller, together with a security interest in the related Equipment,
pursuant to the Transfer Agreement or (ii) originated by the Parent and
acquired from the Parent in the ordinary course of business by the Seller,
together with a security interest in the related Equipment, pursuant to
the Transfer Agreement;
(m) which has not been compromised, adjusted, rescheduled or
otherwise modified (including by extension of time of payment) as a result
of delinquency or other negative credit reasons;
(n) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, to the extent applicable, but without
limitation, laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no party to
the Contract related thereto is in violation of any such law, rule or
regulation in any material respect;
(o) which (i) satisfies in all material respects all applicable
requirements of the Credit and Collection Policy and (ii) complies with
such other criteria and requirements as the Agent may, in the exercise of
its reasonable credit judgment, from time to time specify to the Seller
following 30 days' notice;
(p) with respect to which, to the extent required by the Credit
and Collection Policy, the Seller has received a valid, first security
interest in the Equipment, the sale of which gave rise to such Receivable,
and all steps necessary to perfect such security interest in all
applicable jurisdictions shall have been taken, including the filing of
UCC financing statements;
(q) with respect to which the related Equipment is insured, for
the benefit of the Seller, against loss as a result of fire or other
casualty, in accordance with the requirements of Section 5.01(m);
(r) with respect to which none of the related Equipment has
been returned, rejected or repossessed;
(s) the Obligor of which is a United States resident, a
Canadian Obligor or a Mexican Obligor, and is not a government or a
governmental subdivision or agency; and
(t) as to which the Agent has not notified the Seller that the
Agent has determined, in its reasonable credit judgement, that such
Receivable (or class of Receivables) is not acceptable for purchase
hereunder.
"ERISA" means the U.S. Employee Retirement Income Security Act
of 1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" means any (a) corporation which is a member of
the same controlled group of corporations (within the meaning of Section
414(b) of the IRC) as the Seller; (b) partnership or other trade or
business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the IRC) with the Seller or (c) member of the
same affiliated service group (within the meaning of Section 414(m) of the
IRC) as the Seller, any corporation described in clause (a) above or any
partnership or other trade or business described in clause (b) above.
"Equipment" means tools and equipment manufactured and/or sold
by the Parent and/or Dealers, and any attachments thereto, and "related
Equipment" means, when used in reference to any Receivable, the Equipment
financed under the related Contract.
"Event of Investment Ineligibility" has the meaning assigned to
that term in Section 7.01.
"Facility Fee" has the meaning assigned to that term in Section
2.10.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day for such transactions received by
Citibank from three Federal funds brokers of recognized standing selected
by it.
"Fee Letter" means the letter agreement of even date herewith
among the Seller, the Investor, Citibank, CNAI, the Agent and the "Agent"
under and as defined in the Parallel Purchase Agreement.
"Fixed Period" means with respect to any Eligible Asset:
(a) the period commencing on the date of the creation of such
Eligible Asset pursuant to Section 2.02 or 2.09 and ending on (i) if Yield
thereon is to be calculated at the CP Rate for such Fixed Period, the
first day of the immediately succeeding calendar month; (ii) if Yield
thereon is to be calculated at the Assignee Rate using the Adjusted LIBO
Rate for such Fixed Period, the numerically corresponding date occurring
one, two, three or six months thereafter, as selected by the Seller and
approved by the Agent pursuant to Section 2.02 or Section 2.09; and (iii)
if Yield thereon is to be calculated at the Assignee Rate using the
Alternate Base Rate for such Fixed Period, such number of days as the
Seller shall select and the Agent shall approve pursuant to Section 2.02
or Section 2.09, as the case may be, up to 30 days from such date; and
(b) thereafter, each period commencing on the last day of the
immediately preceding Fixed Period for such Eligible Asset and ending on
(i) if Yield thereon is to be calculated at the CP Rate for such Fixed
Period, the first day of the immediately succeeding calendar month; (ii)
if Yield thereon is to be calculated at the Assignee Rate using the
Adjusted LIBO Rate for such Fixed Period, the numerically corresponding
date occurring one, two, three or six months thereafter, as selected by
the Seller and approved by the Agent on notice by the Seller received by
the Agent (including notice by telephone, confirmed in writing) not later
than or 10:00 a.m. (New York City time) on the third LIBO Business Day
prior to the first day of such subsequent Fixed Period; and (iii) if Yield
thereon is to be calculated at the Assignee Rate using the Alternate Base
Rate for such Fixed Period, such number of days, not to exceed 30, as the
Seller shall select and the Agent shall approve on notice by the Seller
received by the Agent (including notice by telephone, confirmed in
writing) not later than 11:00 a.m. (New York City time) on such last day;
provided, however, that
(1) any such Fixed Period (other than of one day) which would
otherwise end on a day which is not a Business Day shall be extended to
the next succeeding Business Day (except that if Yield in respect of such
Fixed Period is computed by reference to the Adjusted LIBO Rate, and such
next succeeding Business Day is in the next calendar month, then such
Fixed Period shall end on the next preceding Business Day);
(2) in the case of Fixed Periods of one day for any Eligible
Asset, (A) the initial Fixed Period shall be the day of the creation of
such Eligible Asset pursuant to Section 2.02 or Section 2.09; (B) any
subsequently occurring Fixed Period which is one day shall, if the
immediately preceding Fixed Period is more than one day, be the last day
of such immediately preceding Fixed Period, and if the immediately
preceding Fixed Period is one day, be the day next following such
immediately preceding Fixed Period; and (C) any Fixed Period of one day
which occurs on a day immediately preceding a day which is not a Business
Day shall be extended to the next succeeding Business Day;
(3) in the case of any Fixed Period for any Eligible Asset,
which commences before the Termination Date and would otherwise end on a
date occurring after such Termination Date, such Fixed Period shall end on
such Termination Date and the duration of each such Fixed Period which
commences on or after the Termination Date shall be of such duration as
shall be selected by the Agent; and
(4) from time to time until the Termination Date, subject to
the exceptions and limitations described above and in Sections 2.02 and
2.09, and the Agent's approval in accordance with the procedures above and
in Sections 2.02 and 2.09, the Seller shall select Fixed Periods for each
Eligible Asset so that the outstanding Capital of all Eligible Assets is
at all times allocated to a Fixed Period.
"Interim Procedures Letter" means a letter agreement of even
date herewith among the Seller, the Parent, the Investor, Citibank, CNAI,
the Agent and the "Agent" under and as defined in the Parallel Purchase
Agreement.
"Investor Investment Fee" has the meaning assigned to that term
in Section 2.10.
"Investor Report" means a report, in substantially the form of
Exhibit E, furnished by the Collection Agent to the Agent for each Owner
pursuant to Section 2.07.
"IRC" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute.
"LIBO Rate Disruption Event" means, for any Owner with respect
to any Eligible Asset for any Fixed Period, any of the following: (a) a
determination by such Owner that it would be contrary to law or to the
directive of any central bank or other governmental authority (whether or
not having the force of law) to obtain United States dollars in the London
interbank market for the purchase or maintenance of such Eligible Asset
for such Fixed Period, (b) the inability of Citibank to furnish a LIBO
Rate quotation to such Owner prior to 1:00 p.m. (London time) on the
second Business Day before the first day of such Fixed Period, (c) a
determination by such Owner that the rate at which deposits of United
States dollars are being offered to such Owner in the London interbank
market does not accurately reflect the cost to such Owner of funding its
purchase or maintenance of such Eligible Asset for such Fixed Period or
(d) the inability of such Owner, by reason of circumstances affecting the
London interbank market generally, to obtain United States dollars in such
market to fund its purchase or maintenance of Eligible Assets for such
Fixed Period.
"Liquidation Fee" means, for each Eligible Asset (or Owner's
interest therein) for the Fixed Period (computed without regard to clause
(3) of the definition of "Fixed Period") during which the Capital for such
Eligible Asset is reduced, the amount, if any, by which (a) the additional
Yield (calculated without taking into account any Liquidation Fee) which
would have accrued on the reductions of Capital of such Eligible Asset (or
Owner's interest therein) during such Fixed Period (as so computed) if
such reductions had remained as Capital exceeds (b) the income received by
the Owner of such Eligible Asset (or interest therein) from such Owner's
investing the proceeds of such reductions of Capital to the extent it may
reasonably do so in the circumstances.
"Liquidation Yield" means, for any Eligible Asset at any time,
an amount equal to the Rate Variance Factor multiplied by the product of
(a) the Capital of such Eligible Asset and (b) the product of (i) the
Assignee Rate for such Eligible Asset for a Fixed Period deemed to
commence at such time for a period of one month and (ii) a fraction having
the number of months in the period equal to the Weighted Average Life, as
numerator, and 12, as denominator.
"Loss-to-Liquidation Ratio" means, for any month, the ratio
(expressed as a percentage) computed by dividing (a) the aggregate
Outstanding Balance of all Receivables that became Write-offs during each
of the immediately preceding twelve months (net of recoveries of Write-
offs received during each of the immediately preceding twelve months) by
(b) the aggregate amount of all Collections received during each of the
immediately preceding twelve months.
"Loss Percentage" for any Eligible Asset means on any day during
any Fixed Period for such Eligible Asset the greatest of (a) three times
the highest Monthly Default Ratio on any day during the three months
preceding such day, (b) three times the Loss-to-Liquidation Ratio for the
current month and (c) 5.00%.
"Loss Reserve" of any Eligible Asset at any time means an amount
equal to
LP x (C + YR)
where:
LP = the Loss Percentage for such Eligible Asset at such
time.
C = the Capital of such Eligible Asset at such time.
YR = the Yield Reserve for such Eligible Asset at such
time.
"Mexican Obligor" means any Obligor that is a resident of Mexico
but whose place of employment is located in the United States.
"Material Subsidiary" means any Subsidiary of the Parent except
a Subsidiary that has neither (a) assets with a book value in excess of
$10,000,000 nor (b) annual revenues for the most recently completed
calendar year in excess of $10,000,000.
"Monthly Default Ratio" means for any month the ratio (expressed
as a percentage) computed as of the last day of the immediately preceding
month by dividing (a) the aggregate Outstanding Balance of all Receivables
that were Defaulted Receivables on such last day or that became Write-offs
at any time during such immediately preceding month by (b) the aggregate
Outstanding Balance of all Receivables on such last day.
"Monthly Delinquency Ratio" means for any month the ratio
(expressed as a percentage) computed as of the last day of the immediately
preceding month by dividing (a) the aggregate Outstanding Balance of all
Receivables that were Delinquent Receivables on such last day by (b) the
aggregate Outstanding Balance of all Receivables on such last day.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding
six years was, contributed to by the Seller or any ERISA Affiliate.
"Net Receivables Pool Balance" means at any time the Outstanding
Balance of the Eligible Receivables in the Receivables Pool at such time,
reduced by the sum of (a) the sum of the aggregate amount by which the
Outstanding Balance of all Pool Receivables of each Obligor exceeds the
Concentration Limit for such Obligor at such time and (b) the Additional
Reduction Amount at such time.
"Obligor" means a Person obligated to make payments pursuant to
a Contract.
"Original Date" means, with respect to any Contract, the later
of (a) the original date of such Contract and (b) the date of the most
recent Contract Rider entered into in compliance with the requirements of
Section 5.03(b).
"Other Costs" has the meaning assigned to that term in Section
11.06(c).
"Other Sellers" has the meaning assigned to that term in Section
11.06(c).
"Outstanding Balance" of any Receivable at any time means the
then outstanding principal balance thereof excluding therefrom any
available cash discounts.
"Owner" shall include each Investor and all other owners by
assignment or otherwise of an Eligible Asset and, to the extent of the
undivided interest so purchased, shall include any participants.
"Parent" means Snap-on Incorporated, a Delaware corporation.
"Parent Support Agreement" means the Support Agreement of even
date herewith between the Parent and the Agent, as the same may be
amended, supplemented or otherwise modified from time to time.
"Parallel Purchase Agreement" means that certain Receivables
Purchase and Sale Agreement of even date herewith between the Seller, the
Banks and CNAI.
"Payment Date" means for any Eligible Asset (a) for any
Settlement Period during which Yield accrues on such Eligible Asset at the
CP Rate, the first Business Day following the last day of such Settlement
Period and (b) for any other Settlement Period, the last day thereof.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, government (or any agency or political
subdivision thereof) or other entity.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Program Fee" has the meaning assigned to that term in Section
2.10.
"Purchase" means a purchase by an Investor of an Eligible Asset
from the Seller pursuant to Article II, including, without limitation, the
initial purchase of an Eligible Asset under Section 2.02, and the
remittance by the Collection Agent to the Seller of Collections of
Receivables pursuant to Section 2.05.
"Purchase Limit" means at any time $150,000,000, as such amount
may be reduced pursuant to Section 2.03; provided, however, that at all
times on and after the Termination Date, the "Purchase Limit" shall mean
the aggregate Capital for all Eligible Assets.
"Rate Variance Factor" means 1.25.
"Ratings Requirement" means the requirement that the senior
unsecured long-term debt of the Parent be rated at least A- by Standard &
Poor's Ratings Group and A3 by Moody's Investors Service, Inc.
"Receivable" means the indebtedness of any Obligor under a
Contract whether constituting an account, chattel paper, instrument or
general intangible, arising from a sale of merchandise or the performance
of services by a Dealer or the Parent, and includes the right to payment
of any interest or finance charges and other obligations of such Obligor
with respect thereto.
"Receivables Pool" means at any time all the outstanding
Receivables of the respective Obligors existing or arising at any time
such respective Obligors are Designated Obligors.
"Records" means 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 with respect to Receivables and the
related Obligors.
"Reinvestment Termination Date" means that Business Day which
the Seller designates as the Reinvestment Termination Date by notice to
the Agent at least ten Business Days prior to such Business Day or, if any
of the conditions precedent in Section 3.02 are not satisfied, such
earlier Business Day which the Agent designates as the Reinvestment
Termination Date by notice to the Seller at least one Business Day prior
to such Business Day or, if the written request of the Seller to the Agent
described in the first sentence of Section 2.15 of the Parallel Purchase
Agreement has been made, the Business Day of such request.
"Related Security" means with respect to any Receivable:
(a) all of the Seller's interest in the merchandise (including
returned, repossessed or foreclosed merchandise), if any, relating to the
sale which gave rise to such Receivable;
(b) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise;
(c) the assignment to the Agent, for the benefit of any Owner,
of all UCC financing statements, if any, covering any collateral securing
payment of such Receivable;
(d) all of the Seller's right and title to, and interest in,
all guarantees, indemnities, warranties, insurance policies and proceeds
and premium refunds thereof and other agreements or arrangements of
whatever character from time to time supporting or securing payment of
such Receivable whether pursuant to the Contract related to such
Receivable or otherwise, including, without limitation, all recourse
rights of the Seller, howsoever arising, against the Dealer that
originated such Receivable and the related Contract or the Parent;
(e) all Records; and
(f) all proceeds of the foregoing.
"Sales Representative" means any individual duly employed by the
Parent as a sales representative for merchandise manufactured by the
Parent.
"Settlement Period" for any Eligible Asset means each period
commencing on the first day of each Fixed Period for such Eligible Asset
and ending on the last day of such Fixed Period, and, on and after the
Termination Date, such period (including, without limitation, a daily
period) as shall be selected from time to time by the Agent or, in absence
of any such selection, each period of thirty days from the last day of the
immediately preceding Settlement Period; provided, however, that with
respect to any Fixed Period of one day as described in clauses (2)(A) and
(B) of the proviso clause of the definition of "Fixed Period," the related
Settlement Period shall be the first day following such Fixed Period.
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the Board of Directors or other
Persons performing similar functions are at the time directly or
indirectly owned by such Person.
"Termination Date" means the earliest of (a) the Reinvestment
Termination Date, (b) the reduction of the Purchase Limit to zero pursuant
to Section 2.04, (c) the declaration or automatic occurrence of the
Termination Date pursuant to Section 7.01, (d) the "Termination Date"
under the Parallel Purchase Agreement, (e) the date that the Seller
reduces the "Commitment" (as defined in the Parallel Purchase Agreement)
to zero and (f) October 2, 1998.
"Transfer Agreement" means the Transfer Agreement of even date
herewith among the Parent, the Seller and Snap-on Financial Services,
Inc., a Nevada corporation, as in effect on the date of the initial
Purchase hereunder.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
"Weighted Average Life" means, on any day, that period
(expressed in months and rounded up to the next full month) equal to the
sum of (a) the weighted average remaining maturity of the Receivables as
of the end of the most recently ended calendar month, plus (b) one month,
as calculated by the Collection Agent and set forth in the Investor Report
prepared as of the end of such most recently ended calendar month;
provided, however, if the Agent shall disagree with any such calculation,
the Agent may recalculate the Weighted Average Life for such day.
"Write-off" means a Receivable that, in accordance with the
Credit and Collection Policy, has been or should be (a) assigned to a
category reserved for doubtful Receivables or otherwise recorded on the
Seller's books as a Receivable the collectibility of which is doubtful or
(b) written off the Seller's books as uncollectible. A Write-off shall
continue to constitute a Receivable for purposes of this Agreement until
the indebtedness of the Obligor related thereto shall have been paid in
full, extinguished by agreement between the Seller and such Obligor or
otherwise extinguished pursuant to applicable law.
"Yield" means for each Eligible Asset for any Fixed Period:
YR x C x ED
360
where:
YR = the applicable Yield Rate for such Eligible Asset for such
Fixed Period,
C = the Capital of such Eligible Asset during such Fixed
Period, and
ED = the actual number of days elapsed during such Fixed Period;
provided, however that (a) no provision of this Agreement shall require
the payment or permit the collection of Yield in excess of the maximum
permitted by applicable law and (b) Yield for any Eligible Asset shall not
be considered paid by any distribution if at any time such distribution is
rescinded or must otherwise be returned for any reason.
"Yield Rate" means with respect to each Eligible Asset for any
Fixed Period, (a) the CP Rate to the extent that the Owner of such
Eligible Asset for such Fixed Period is an Investor, and (b) the Assignee
Rate to the extent that the Owner of such Eligible Asset for such Fixed
Period is a Person other than an Investor.
"Yield Reserve" for any Eligible Asset means (a) so long as the
Ratings Requirement is satisfied, zero and (b) at any time when the
Ratings Requirement is not satisfied, the sum of (i) the Liquidation Yield
for such Eligible Asset and (ii) the accrued and unpaid Yield for such
Eligible Asset.
SECTION 1.02. Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles. All terms used in Article 9 of
the UCC in the State of New York, and not specifically defined herein, are
used herein as defined in such Article 9.
SECTION 1.03. 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
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Receivable Facility. On the terms and conditions
hereinafter set forth, the Investors may, in their sole discretion,
purchase undivided percentage ownership interests in Pool Receivables from
the Seller by making Purchases of Eligible Assets from time to time during
the period from the date hereof to the Termination Date. Under no
circumstances shall an Investor make any Purchase of any Eligible Asset
if, after giving effect to such Purchase, the aggregate Capital for all
Eligible Assets hereunder would exceed the Purchase Limit. In addition,
the Owners may, in their sole discretion, but subject to the terms and
conditions of this Agreement, with the proceeds of Collections in respect
of each of their respective Eligible Assets (or interests therein),
purchase from the Seller, pursuant to Section 2.05, additional undivided
percentage ownership interests in Pool Receivables by making appropriate
readjustments of such Eligible Assets. Nothing in this Agreement shall be
deemed to be or construed as a commitment by any Owner or CNAI to purchase
any Eligible Asset, or to reinvest such proceeds of Collections, at any
time.
SECTION 2.02. Making Purchases from the Seller. Each Capital
Increase Purchase from the Seller by an Investor shall be made on at least
three Business Days' notice from the Seller to the Agent. Each such
notice of a proposed Capital Increase Purchase shall specify the Investor
that will make such Capital Increase Purchase, the desired amount and date
of such Capital Increase Purchase and the duration of the initial Fixed
Period for the Eligible Asset or Eligible Assets to be purchased. The
Agent shall promptly thereafter notify the Seller whether the designated
Investor has determined to make such Capital Increase Purchase. The Agent
shall also notify the Seller whether the desired duration of the initial
Fixed Period for the Eligible Asset or Eligible Assets to be purchased is
acceptable. In the event that the Seller and the Agent fail to agree on
the duration of any Fixed Period for a Capital Increase Purchase prior to
the Business Day of such Capital Increase Purchase, the duration of such
Fixed Period shall be selected by the Agent in its sole discretion. On
the date of each Capital Increase Purchase, the Investor shall, upon
satisfaction of the applicable conditions set forth in Article III, make
available to the Agent at its address referred to in Section 2.08 the
amount of its Capital Increase Purchase in same day funds, and following
receipt by the Agent of such funds from the Investor, the Agent will make
such funds immediately available to the Seller at Citibank's address at
399 Park Avenue, New York, New York.
SECTION 2.03. Termination or Reduction of the Purchase Limit.
The Seller may, upon at least five Business Days' notice to the Agent,
terminate in whole or reduce in part the unused portion of the Purchase
Limit; provided, however, that each partial reduction shall be in an
amount equal to $1,000,000 or an integral multiple thereof. On each day
on which the Seller shall, pursuant to Section 2.03 of the Parallel
Purchase Agreement, reduce in part the unused portion of the "Commitment"
(as defined in the Parallel Purchase Agreement), the Purchase Limit shall
reduce automatically by an equal amount.
SECTION 2.04. Eligible Asset. (a) Each Eligible Asset shall be
initially computed as of the opening of business of the Collection Agent
on the date of Purchase of such Eligible Asset from the Seller.
Thereafter until the Termination Date, such Eligible Asset shall be
automatically recomputed as of (i) the opening of business of the
Collection Agent on any day on which the aggregate Capital of all Eligible
Assets hereunder is increased and (ii) the close of business of the
Collection Agent on each day. An Eligible Asset shall become zero at such
time as the Owner of such Eligible Asset shall have received the accrued
Yield for such Eligible Asset, shall have recovered the Capital of such
Eligible Asset and shall have received all other amounts payable to such
Owner pursuant to this Agreement. Each Eligible Asset 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.
(b) The Agent shall maintain books and records in which shall
be recorded (i) the date and amount of each Capital Increase Purchase
hereunder, the Investor making each such Capital Increase Purchase and
each Eligible Asset purchased pursuant thereto, (ii) the date and amount
of and parties to any assignment of rights and obligations hereunder
pursuant to Article IX or Section 11.04 notified to it, (iii) the amount
of any Yield, fees or other amounts due and payable or to become due from
the Seller to the Agent, any Owner or the Collection Agent hereunder and
(iv) the amount and date of any reduction in the Capital of any Eligible
Asset. The entries made in the Agent's books and records as described in
this Section 2.04(b) shall be conclusive and binding for all purposes
absent manifest error.
SECTION 2.05. Non-Liquidation Settlement Procedures. Prior to
the Termination Date, on each day during each Settlement Period for each
Eligible Asset, the Collection Agent shall, out of Collections of Pool
Receivables allocable in respect of such Eligible Asset received on such
day, to the extent that the Ratings Requirement is not satisfied on such
day, set aside and hold in trust for the benefit of the Owner(s) of such
Eligible Asset an amount equal to the Yield accrued through such day for
such Eligible Asset and not so previously set aside (the amount of such
Yield to be set aside on any day to be determined in consultation with the
Agent at such time as the Ratings Requirement shall no longer be
satisfied) and (b) apply the remainder of such Collections to the
purchase, for the benefit of such Owner(s), of certain additional
undivided interests in Pool Receivables. Such remainder of Collections
shall be paid to the Seller and such Eligible Asset shall be recomputed as
described in Section 2.04(a). The recomputed Eligible Asset shall
constitute the percentage ownership interest in Pool Receivables
(determined pursuant to Section 2.04(a)) on such day held by such
Owner(s). On each Payment Date for each Eligible Asset occurring prior to
the Termination Date, but without limitation to the obligations of the
Seller pursuant to Section 2.10(a) of this Agreement, the Collection Agent
shall deposit to the Agent's account, as described in Section 2.08, the
amounts set aside or required to be set aside with respect to such
Eligible Asset pursuant to clause (a) of the first sentence of this
Section 2.05, but only to the extent that the Seller has not satisfied its
obligations under Section 2.10(a) with respect to such Payment Date. Upon
receipt of such funds by the Agent, the Agent shall distribute them to the
Owner(s) of such Eligible Asset in payment of the accrued and unpaid Yield
for such Eligible Asset. Notwithstanding anything to the contrary in this
Section 2.05, the Collection Agent shall not be required to segregate
Collections set aside for the benefit of the Owners preceding remittance
thereof to the Agent unless the Agent shall have so requested as
contemplated in Section 6.02(b).
SECTION 2.06. Liquidation Settlement Procedures. On the
Termination Date and on each day thereafter, the Collection Agent shall
set aside and hold in trust for the Owner(s) of each Eligible Asset, the
Collections of Pool Receivables allocable in respect of such Eligible
Asset received on such day. On each Payment Date for each Eligible Asset
occurring on or after the Termination Date, but without limitation to the
Seller's obligations under Section 2.10(a) of this Agreement, the
Collection Agent shall deposit to the Agent's account, as described in
Section 2.08 below, the amounts set aside pursuant to the preceding
sentence with respect to such Eligible Asset, together with any remaining
amounts set aside pursuant to Section 2.05 prior to the Termination Date,
but not to exceed the sum of (a) the accrued Yield for such Eligible
Asset, (b) the Capital of such Eligible Asset and (c) the aggregate amount
of other amounts owed hereunder by the Seller to the Owner(s) of such
Eligible Asset. Upon receipt of funds deposited to the Agent's account
pursuant to the preceding sentences, the Agent shall distribute them to
the Owner(s) of such Eligible Asset (x) ratably in accordance with their
respective interests therein, (i) if the Ratings Requirement was not
satisfied as of the Termination Date, in payment of the accrued Yield for
such Eligible Asset, but only to the extent that the Seller has not
satisfied its obligations under Section 2.10(a) with respect to such
Payment Date, (ii) in reduction (to zero) of the Capital of such Eligible
Asset, and (iii) if the Ratings Requirement was satisfied as of the
Termination Date, in payment of the accrued Yield for such Eligible Asset,
but only to the extent that the Seller has not satisfied its obligations
under Section 2.10(a) with respect to such Payment Date, and (y) in
payment of any other amounts owed by the Seller hereunder to such Owner.
If there shall be insufficient funds on deposit for the Agent to
distribute funds in payment in full of the aforementioned amounts, the
Agent shall distribute funds, first, if the Ratings Requirement was not
satisfied as of the Termination Date, in payment of the accrued Yield for
such Eligible Asset, second, in reduction of Capital of such Eligible
Asset, third, if the Ratings Requirement was satisfied as of the
Termination Date, in payment of the accrued Yield for such Eligible Asset,
and fourth, in payment of other amounts payable to the Owner(s) of such
Eligible Asset. On the first Business Day following the Collection Date,
the Collection Agent shall pay to the Seller any remaining Collections set
aside and held by the Collection Agent pursuant to the first sentence of
this Section 2.06. Notwithstanding anything to the contrary in this
Section 2.06, the Collection Agent shall not be required to segregate
Collections set aside for the benefit of the Owners preceding remittance
thereof to the Agent unless the Agent shall have so requested as
contemplated in Section 6.02(b).
SECTION 2.07. General Settlement Procedures.
(a) If on any day the Outstanding Balance of any Pool
Receivable is either (i) reduced or adjusted as a result of any defective,
rejected, returned, repossessed or foreclosed merchandise, any defective
or rejected services, any cash discount or any other adjustment made or
performed by the Seller or any other Person (including, without
limitation, those described in the definition of "Dilution Factors") or
(ii) reduced or canceled as a result of a set-off in respect of any claim
by the Obligor thereof against the Seller or any other Person (whether
such claim arises out of the same or a related transaction or an unrelated
transaction), for purposes of this Agreement, the Seller shall be deemed
to have received on such day a Collection of such Pool Receivable in the
amount of such reduction, cancellation or adjustment. If on any day any
of the representations or warranties in the first sentence of Section
4.01(h) is no longer true with respect to a Pool Receivable, the Seller
shall be deemed to have received on such day a Collection of such Pool
Receivable in full. If on any day the representation and warranty in the
second sentence of Section 4.01(h) is no longer true the Seller shall be
deemed to have received on such day Collections of Pool Receivables in an
amount necessary to make such representation true and accurate.
(b) Prior to the 15th day of each calendar month, the
Collection Agent shall prepare and forward to the Agent for each Owner, an
Investor Report, relating to all Eligible Assets, as of the close of
business of the Collection Agent on the last day of the immediately
preceding calendar month.
SECTION 2.08. Payments and Computations, Etc. All amounts to
be paid or deposited by the Seller or the Collection Agent hereunder
(including, without limitation, Yield, Liquidation Fee and other fees and
expenses) shall be paid or deposited in accordance with the terms hereof
no later than 11:00 a.m. (New York City time) on the day when due in
lawful money of the United States of America in immediately available
funds to a special account (having an account number to be specified by
the Agent to the Seller in writing) in the name of Agent and maintained at
Citibank's office at 399 Park Avenue in New York City. The Seller shall,
to the extent permitted by law, pay to the Agent, on demand, interest on
all amounts not paid or deposited when due hereunder (whether owing by the
Seller individually or as Collection Agent) at 2% per annum above the
Alternate Base Rate; provided, however, that such interest rate shall not
at any time exceed the maximum rate permitted by applicable law. Such
interest shall be retained by the Agent except to the extent that such
failure to make a timely payment or deposit has continued beyond the date
for distribution by the Agent of such overdue amount to the Owner of an
Eligible Asset, in which case such interest accruing after such date shall
be for the account of, and distributed by the Agent to the Owners ratably
in accordance with their respective interests in such overdue amount. All
computations of interest and all computations of Yield, Liquidation Yield,
Liquidation Fee and other fees 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 2.09. Dividing or Combining of Eligible Assets. The
Seller may, prior to the Termination Date, on notice received by the Agent
not later than 11:00 a.m. (New York City time) three Business Days before
the last day of any Fixed Period for any then existing Eligible Asset
("Existing Eligible Asset"), divide such Existing Eligible Asset on such
last day into two or more new Eligible Assets, each such new Eligible
Asset having Capital as designated in such notice and all such new
Eligible Assets collectively having aggregate Capital equal to the Capital
of such Existing Eligible Asset. The Seller may, prior to the Termination
Date, on notice received by the Agent not later than 11:00 a.m. (New York
City time) three Business Days before the last day of any Fixed Period for
two or more Existing Eligible Assets (owned by the same Owner(s) in the
same proportions) or the date of any proposed Purchase of an Eligible
Asset pursuant to Section 2.02 by the same Owner(s) in the same
proportions, either (a) combine such Existing Eligible Assets or
(b) combine such Existing Eligible Asset or Eligible Assets and such
Eligible Asset proposed to be purchased on such last day into one new
Eligible Asset, such new Eligible Asset having Capital equal to the
aggregate Capital of such Existing Eligible Assets, or such Existing
Eligible Asset or Eligible Assets and such Eligible Asset proposed to be
purchased, as the case may be. Each such notice of a proposed division or
combination of Eligible Assets as described above shall, in addition,
specify the desired duration of the initial Fixed Period for each of the
new Eligible Assets resulting from such division or combination. The
Agent shall notify the Seller whether the desired duration of the initial
Fixed Periods for each such new Eligible Asset is acceptable or, if not
acceptable, will advise the Seller of such Fixed Periods, if any, as may
be acceptable. In the event that the Seller and the Agent fail to agree
on the duration of the Fixed Period for any new Eligible Asset resulting
from a division or combination pursuant to this Section 2.09 prior to the
Business Day of such division or combination, the duration of such Fixed
Period shall be selected by the Agent in its sole discretion. On and
after any division or combination of Eligible Assets as described above,
each of the new Eligible Assets resulting from such division, or the new
Eligible Asset resulting from such combination, as the case may be, shall
be a separate Eligible Asset having Capital as set forth above, and shall
take the place of such Existing Eligible Asset or Eligible Assets or
Eligible Asset proposed to be purchased, as the case may be, in each case
under and for all purposes of this Agreement. On and after the
Termination Date, the Agent shall have the right to divide and/or combine
Eligible Assets in any manner which it may select in its sole discretion.
SECTION 2.10. Yield and Fees. (a) From and after the date of
the initial Purchase until the later of the Termination Date and the
Collection Date, the Seller shall, on the Payment Date in respect of each
Settlement Period for each Eligible Asset, pay to the Agent for the
ratable account of the Owner(s) of such Eligible Asset, (i) an amount
equal to the accrued and unpaid Yield for such Eligible Asset and (ii) an
amount equal to the Liquidation Fee, if applicable, for such Eligible
Asset.
(b) From and after the date hereof until the later of the
Termination Date or the Collection Date, the Seller shall pay:
(i) to the Agent, for the account of the Banks, a facility fee
(the "Facility Fee") equal to the product of (i) the average daily amount
of the Purchase Limit, whether used or unused, and (ii) the per annum rate
specified in the Fee Letter;
(ii) to CNAI, in consideration for its support of the program
contemplated herein, a fee (the "Program Fee") equal to the product of (i)
the average daily amount of the aggregate outstanding Capital of all
Eligible Assets hereunder and (ii) the per annum rate specified in the Fee
Letter; and
(iii) to the Agent for the account of the Investors (to be
allocated as the Investors may agree) a fee (the "Investor Investment
Fee") equal to the product of (i) the average daily Purchase Limit and
(ii) the per annum rate of specified in the Fee Letter.
(c) The Seller shall be entitled to a credit against the
Facility Fee payable under this Agreement for any month by the full amount
of the "Facility Fee" (under and as defined in the Parallel Purchase
Agreement) actually paid by the Seller under the Parallel Purchase
Agreement for such month. The Facility Fee and the Program Fee are
payable monthly in arrears for each calendar month (or portion thereof) on
the second Business Day of the immediately succeeding calendar month
during the term of this Agreement and on the later of the Termination Date
and the Collection Date. The Investor Investment Fee is payable in
arrears annually on the last Business Day of November, beginning on
November 30, 1995 and continuing on the last Business Day of each November
thereafter and on the later of the Termination Date and the Collection
Date.
(d) As part of the consideration for the Purchases hereunder,
the Seller agrees to perform the duties of the Collection Agent hereunder
until the Agent designates a new Collection Agent as described in Section
6.01. If at any time the Seller is not the Collection Agent, the Seller
shall pay, for the account of the Collection Agent, a fee (the "Collection
Agent Fee") equal to 110% of the reasonable and appropriate costs and ex-
penses incurred by the Collection Agent in connection with servicing,
collecting and administering the Receivables or paying another Person to
do so.
SECTION 2.11. Yield Protection. If due to either: (a) the
introduction of or any change (including, without limitation, any change
by way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation or (b) the compliance by any
Affected Person with any guideline or request issued or made by or
otherwise emanating from any central bank or other governmental authority
after the date of this Agreement (whether or not having the force of law),
(i) there shall be an increase in the cost to an Affected Person of
making, funding or maintaining any Purchase hereunder or agreeing to
purchase, purchasing or maintaining an investment in an Eligible Asset or
any interest therein, as the case may be (other than by reason of any
interpretation of or change in laws or regulations relating to income
taxes), (ii) there shall be a reduction in the amount receivable with
regard to any Pool Receivable, or (iii) an Affected Person shall be
required to make a payment calculated by reference to the Pool Receivables
in which it has agreed to purchase, has purchased or maintains an interest
or Yield (or other fees calculated on the basis of Yield) received by it
(other than by reason of any interpretation of or change in laws or
regulations relating to income taxes), the Seller shall, from time to
time, within fifteen days after demand by such Affected Person (with a
copy to the Agent), pay to such Affected Person (as a third party
beneficiary, in the case of an Affected Person which is not also an Owner
hereunder), that portion of such increased costs incurred, amounts not
received or receivable or required payment made or to be made, which such
Affected Person reasonably determines is attributable to making, funding
or maintaining any Purchase hereunder or agreeing to purchase, purchasing
or maintaining an investment in an Eligible Asset or any interest therein,
as the case may be. In determining such amount, such Affected Person may
use any reasonable averaging and attribution methods. Such Affected
Person shall submit to the Seller and the Agent a certificate as to such
increased costs incurred, amounts not received or receivable or required
payment made or to be made, which certificate, setting forth the
calculation thereof, shall be conclusive and binding for all purposes
absent manifest error. Each Affected Person that determines to seek
compensation under this Section 2.11 shall notify the Seller of the
circumstances that entitle such Affected Person to such compensation
pursuant to this Section 2.11, and will take such action as such Affected
Person may determine in its sole and absolute discretion will avoid the
need for or reduce the amount of such compensation without disadvantage of
any kind to such Affected Person. Notwithstanding the provisions of this
Section 2.11, the Seller shall not be required to compensate any Affected
Person for amounts claimed under this Section 2.11 to the extent that
those amounts were incurred more than three months prior to the date that
such Affected Person (or the Agent on its behalf) notifies the Seller
thereof.
SECTION 2.12. Increased Capital. If either (a) the
introduction of or any change in or in the interpretation of any law or
regulation or (b) compliance by any Affected Person with any guideline or
request issued or made by or otherwise emanating from any central bank or
other governmental authority after the date of this Agreement (whether or
not having the force of law) affects or would affect the amount of capital
required or expected to be maintained by any Affected Person, and such
Affected Person determines that the amount of such capital is increased by
or based upon (x) the existence of the Investors' agreement, in their
discretion, to make or maintain Purchases hereunder and other similar
agreements or facilities, or (y) the existence of any agreement by
Affected Persons to make purchases of or otherwise maintain an investment
in Eligible Assets or interests therein related to this Agreement or to
the funding thereof and any other commitments of the same type, then,
within fifteen days following demand by such Affected Person (with a copy
to the Agent), the Seller shall immediately pay to such Affected Person
(as a third party beneficiary, in the case of an Affected Person which is
not also an Owner hereunder) from time to time, as specified by such
Affected Person, additional amounts sufficient to compensate such Affected
Person in light of such circumstances, to the extent that such Affected
Person reasonably determines such increase in capital to be allocable to
the existence of the Investors' agreements described in clause (x) above
or the commitments of certain other Affected Persons described in clause
(y) above. A certificate as to such amounts submitted to the Seller and
the Agent by such Affected Person, setting forth the calculation thereof,
shall be conclusive and binding for all purposes absent manifest error.
Each Affected Person agrees, but without limitation to its rights
hereunder, that promptly after becoming aware of any event or circumstance
described in clause (a) or (b) of the first sentence of this Section 2.12
that is likely to give rise to a payment liability on the part of the
Seller under this Section 2.12, such Affected Person will notify the
Seller of such event or circumstance. Each Affected Person that
determines to seek compensation under this Section 2.12 shall notify the
Seller of the circumstances that entitle such Affected Person to such
compensation pursuant to this Section 2.12, and will take such action as
such Affected Person may determine in its sole and absolute discretion
will avoid the need for or reduce the amount of such compensation without
disadvantage of any kind to such Affected Person. Notwithstanding the
provisions of this Section 2.12, the Seller shall not be required to
compensate any Affected Person for amounts claimed under this Section 2.12
to the extent that those amounts were incurred more than three months
prior to the date that such Affected Person (or the Agent on its behalf)
notifies the Seller thereof.
SECTION 2.13. Taxes and Other Taxes. (a) Any and all payments
and deposits required to be made hereunder or under any instrument
delivered hereunder by the Seller and/or the Collection Agent (if the
Seller or appointed by the Seller) shall be made free and clear of and
without deduction for any present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on net income and all income and
franchise taxes of the United States and any political subdivisions
thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Seller and/or the Collection Agent (if the Seller or
appointed by the Seller) shall be required by law to deduct any Taxes from
or in respect of any sum required to be paid or deposited hereunder or
under any instrument delivered hereunder, (i) such sum shall be increased
as may be necessary so that after making all required deductions
(including deductions applicable to additional sums required to be paid or
deposited under this Section 2.13) the amount received by the relevant
Affected Person, or otherwise deposited hereunder or under such
instrument, shall be equal to the sum which would have been so received or
deposited had no such deductions been made, (ii) the Seller or the
Collection Agent (as appropriate) shall make such deductions and (iii) the
Seller or the Collection Agent (as appropriate) shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Seller agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder or under any
instrument delivered hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
instrument delivered hereunder (hereinafter referred to as "Other Taxes").
(c) The Seller will indemnify each Affected Person (as a third
party beneficiary, in the case of an Affected Person which is not also an
Owner hereunder) for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction
on amounts payable under this Section 2.13) paid by such Affected Person
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto whether or not such Taxes or Other Taxes
were correctly or legally asserted. This indemnification shall be made
within 30 days from the date the Affected Person makes written demand
therefor. A certificate as to the amount of such indemnification
submitted to the Seller and the Agent by such Affected Person, setting
forth the calculation thereof, shall be conclusive and binding for all
purposes absent manifest error.
(d) Within 30 days after the date of any payment of Taxes the
Seller will furnish to the Agent the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of
the Seller or the Collection Agent hereunder, the agreements and
obligations of the Seller and the Collection Agent (if the Seller or
appointed by the Seller) contained in this Section 2.13 shall survive the
Collection Date.
SECTION 2.14. Sharing of Payments, Etc. If any Owner shall
obtain any payment (whether voluntary, involuntary, through the exercise
of any right of setoff, or otherwise) on account of Eligible Assets owned
by it (other than pursuant to Section 2.10, 2.11, 2.12, 2.13, or 10.01 and
other than as a result of the differences in the timing of the application
of Collections pursuant to Section 2.05 or 2.06) in excess of its ratable
share of payments on account of Eligible Assets obtained by all the
Owners, such Owner shall forthwith purchase from the other Owners such
participations in the Eligible Assets owned by them as shall be necessary
to cause such purchasing Owner to share the excess payment ratably with
each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Owner, such purchase
from each Owner shall be rescinded and each other Owner shall repay to the
purchasing Owner the purchase price to the extent of such recovery
together with an amount equal to each other Owner's ratable share
(according to the proportion of (i) the amount of such other Owner's
required payment to (ii) the total amount so recovered from the purchasing
Owner) of any interest or other amount paid or payable by the purchasing
Owner in respect of the total amount so recovered.
SECTION 2.15. Agreement to Assign. On any Business Day on or
after the Termination Date and before the occurrence of a "Termination
Date" under the Parallel Purchase Agreement, at the written request of
each of the Banks, each of the Owners shall assign to the Banks (in
accordance with each Bank's "Percentage," as such term is defined in the
Parallel Purchase Agreement) all of its right and title to, and interest
in, all Eligible Assets then owned by such Owners, upon receipt of
consideration (in cash) equal to the amount of aggregate Capital, Yield
and all other amounts then accrued and unpaid or otherwise outstanding
with respect to all such Eligible Assets. Any such assignment shall be
without recourse or warranty, express or implied, except in respect of
Adverse Claims against the Eligible Assets created by the Agent or such
Owners. Upon such assignment, any Settlement Period hereunder ending
after the date of such assignment shall terminate.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The
initial Capital Increase Purchase hereunder is subject to the condition
precedent that the Agent shall have received on or before the date of such
Capital Increase Purchase the following, each (unless otherwise indicated)
dated such date, in form and substance satisfactory to the Agent:
(a) A copy of the resolutions of the Board of Directors of the
Seller approving this Agreement and the other documents to be delivered by
it hereunder and the transactions contemplated hereby, certified by its
Secretary or Assistant Secretary;
(b) The Articles of Incorporation of the Seller certified by
the Secretary of State of Wisconsin.
(c) Good Standing Certificates for the Seller issued by the
Secretaries of State of New Jersey, Minnesota, Indiana and Wisconsin.
(d) A certificate of the Secretary or Assistant Secretary of
the Seller certifying (i) the names and true signatures of the officers
authorized on its behalf to sign this Agreement and the other documents to
be delivered by it hereunder (on which certificate the Agent and the
Owners may conclusively rely until such time as the Agent shall receive
from the Seller a revised certificate meeting the requirements of this
subsection (d)) and (ii) a copy of the Seller's by-laws;
(e) Acknowledgment copies of proper Financing Statements (Form
UCC-1), dated a date reasonably near to the date of the initial Capital
Increase Purchase, naming the Seller as the assignor of Receivables and
Related Security and CNAI, as Agent, as assignee, or other, similar
instruments or documents, as may be necessary or, in the opinion of the
Agent, desirable under the UCC of all appropriate jurisdictions or any
comparable law to perfect the Owners' ownership interests in all
Receivables and Related Security;
(f) Acknowledgment copies of proper Financing Statements (Form
UCC-3), if any, necessary to release all security interests and other
rights of any Person in the Receivables and Related Security previously
granted by the Seller;
(g) Certified copies of Requests for Information or Copies
(Form UCC-11) (or a similar search report certified by a party acceptable
to the Agent), dated a date reasonably near to the date of the initial
Capital Increase Purchase, listing all effective financing statements
which name the Seller (under its present name and any previous name) as
debtor and which are filed in the jurisdictions in which filings were made
pursuant to subsection (f) above, together with copies of such financing
statements (none of which shall cover any Receivables or Contracts);
(h) A copy of the Parallel Purchase Agreement and the other
instruments, agreements and documents required to be delivered thereunder;
(i) A copy of the resolutions of the Board of Directors of the
Parent approving the Parent Support Agreement and the other documents to
be delivered by it hereunder and the transactions contemplated hereby,
certified by its Secretary or Assistant Secretary;
(j) The Articles of Incorporation of the Parent certified by
the Secretary of State of Delaware;
(k) Good Standing Certificates for the Parent issued by the
Secretaries of State of Delaware and Wisconsin;
(l) A certificate of the Secretary or Assistant Secretary of
the Parent certifying (i) the names and true signatures of the officers
authorized on its behalf to sign the Parent Support Agreement and the
other documents to be delivered by it hereunder (on which certificate the
Agent and the Owners may conclusively rely until such time as the Agent
shall receive from the Parent a revised certificate meeting the
requirements of this subsection (l)) and (ii) a copy of the Parent's
by-laws;
(m) Opinions of (i) Susan F. Marrinan, General Counsel of the
Parent acting on behalf the Parent and the Seller and (ii) Foley &
Lardner, counsel for the Seller and the Parent, in each case, as to such
matters as the Agent may reasonably request;
(n) A copy of the Fee Letter;
(o) A copy of the Interim Procedures Letter; and
(p) An opinion of Sidley & Austin, counsel for the Agent, as
the Agent may reasonably request.
SECTION 3.02. Conditions Precedent to All Purchases and
Reinvestments. The rights of the Seller to receive the proceeds of any
Purchase hereunder (including, without limitation, the initial Capital
Increase Purchase and each remittance of Collections by the Collection
Agent to the Seller pursuant to Section 2.06) shall be subject to the
further conditions precedent that (a) with respect to any such Purchase
(other than the initial Capital Increase Purchase), on or prior to the
date of such Purchase, the Collection Agent shall have delivered to the
Agent, in form and substance satisfactory to the Agent, a completed
Investor Report dated within thirty days prior to the date of such
Purchase and containing such additional information as may be reasonably
requested by the Agent; (b) on the date of such Purchase the following
statements shall be true and the Seller by accepting the amount of such
Capital Increase Purchase or by receiving the proceeds of such Collections
shall be deemed to have certified that:
(i) The representations and warranties contained in Section
4.01 (other than in Sections 4.01(e) and 4,01(f)) are correct on and as of
such day as though made on and as of such date,
(ii) No event has occurred and is continuing, or would result
from such Purchase or reinvestment, which constitutes an Event of
Investment Ineligibility or would constitute an Event of Investment
Ineligibility but for the requirement that notice be given or time elapse
or both,
(iii) The Agent shall not have delivered to the Seller a notice
stating that the Investors shall not make any further Purchases hereunder
and/or that the Collection Agent shall not reinvest Collections in any
Eligible Receivables on behalf of the Owners, and
(iv) On such date, all of the Seller's unsecured long-term
public senior debt securities are rated at least BBB- by Standard & Poor's
Corporation and Baa3 by Moody's Investors Service, Inc.,
and (c) the Agent shall have received such other approvals, opinions or
documents as the Agent may reasonably request.
Notwithstanding the fact that any of the above-described conditions
precedent may not, in fact, have been satisfied in connection with any
Purchase hereunder, (x) such failure shall not impair the effectiveness of
the related Purchase, (y) the Purchase of the relevant Eligible Assets
shall be deemed to have been made automatically pursuant to Section 2.01
and Section 2.06 and (z) the relevant Eligible Assets shall be computed
initially pursuant to Section 2.05, but in each case with respect to the
foregoing clauses (x), (y) and (z), without waiver of any claim that the
Agent or any Owner may have against the Seller for failure to satisfy such
condition precedent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller.
The Seller represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction named at
the beginning hereof and is duly qualified to do business, and is in good
standing, in every jurisdiction in which the nature of its business
requires it to be so qualified, except to the extent that the failure to
be qualified to do business or in good standing in any jurisdiction would
not, when taken together with all similar failures, materially adversely
affect the financial condition or operations of the Seller, the
collectibility of any Receivable or the rights of the Agent or any Owner
hereunder. The Seller has no Subsidiaries.
(b) The execution, delivery and performance by the Seller of
this Agreement, the Transfer Agreement and all other instruments and
documents to be delivered hereunder and thereunder, and the transactions
contemplated hereby and thereby, are within the Seller's corporate powers,
have been duly authorized by all necessary corporate action, do not
contravene (i) the Seller's charter or by-laws, (ii) any law, rule or
regulation applicable to the Seller, other than any such laws, rules or
regulations the contravention of which on an aggregate basis would not
materially adversely affect the financial condition or operations of the
Seller, the collectibility of any Receivable or the rights of the Agent or
any Owner hereunder (iii) any contractual restriction contained in any
indenture, loan or credit agreement, lease, mortgage, security agreement,
bond, note, or other agreement or instrument binding on or affecting the
Seller or its property or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its property,
and do not result in or require the creation of any Adverse Claim upon or
with respect to any of its properties (other than as contemplated herein
and in the Parallel Purchase Agreement with respect to the Pool
Receivables and Related Security); and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law. This
Agreement has been duly executed and delivered on behalf of the Seller.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Seller of
this Agreement, the Transfer Agreement or any other document or instrument
to be delivered hereunder or thereunder, except for the filing of the
financing statements referred to in Article III, all of which, at the time
required in Article III, shall have been duly made and shall be in full
force and effect.
(d) This Agreement and the Transfer Agreement constitute the
legal, valid and binding obligations of the Seller enforceable against the
Seller in accordance with their respective terms.
(e) The consolidated balance sheets of the Parent and its
consolidated Subsidiaries as at December 31, 1994, and the related
consolidated statements of cash flows and consolidated statements of
changes in financial position of the Parent and its consolidated
Subsidiaries for the fiscal year then ended, certified by Arthur Andersen
LLP, independent public accountants, copies of which have been furnished
to the Agent, fairly present the consolidated financial condition of the
Parent and its consolidated Subsidiaries as at such date and the
consolidated results of the operations of the Parent and its consolidated
Subsidiaries for the period ended on such date, all in accordance with
generally accepted accounting principles consistently applied, and since
December 31, 1994, there has been no material adverse change in any such
condition or operations.
(f) There are no actions, suits or proceedings pending, or to
the knowledge of the Seller threatened, against or affecting the Parent,
the Seller or any other Subsidiary of the Parent, or the property of the
Parent, the Seller or of any other Subsidiary of the Parent, in any court,
or before any arbitrator of any kind, or before or by any governmental
body, which may reasonably be expected to materially adversely affect the
financial condition or operations of the Seller or the Parent or the
Parent and its consolidated Subsidiaries taken as a whole, or materially
adversely affect the ability of the Seller or the Parent to perform their
respective obligations under this Agreement and the Transfer Agreement.
None of the Parent, the Seller or any Subsidiary of the Parent, is in
default with respect to any order of any court, arbitrator or governmental
body except for defaults with respect to orders of governmental agencies
which defaults are not material to the business or operations of the
Seller or the Parent or the Parent and its consolidated Subsidiaries taken
as a whole.
(g) No proceeds of any Purchase will be used by the Seller to
acquire any security in any transaction which is subject to Section 13 or
14 of the Securities Exchange Act of 1934, as amended.
(h) Each Receivable, together with the Contract related
thereto, is owned by the Seller free and clear of any Adverse Claim except
as provided herein and upon each Purchase and reinvestment, the Owner
making such Purchase or reinvestment shall acquire a valid and perfected
first priority undivided percentage ownership interest to the extent of
the Eligible Asset(s) purchased by such Owner in each Pool Receivable then
existing or thereafter arising and in the Related Security and Collections
with respect thereto, free and clear of any Adverse Claim except as
provided hereunder; and no effective financing statement or other
instrument similar in effect covering any Receivable or the Related
Security or Collections with respect thereto shall at any time be on file
in any recording office except such as may be filed in favor of the Agent
in accordance with this Agreement. The sum of all Eligible Assets and all
"Eligible Assets" under and as defined in the Parallel Purchase Agreement
shall at no time exceed 100%.
(i) No Investor Report (if prepared by the Seller, or, if not
prepared by the Seller, to the extent that information contained therein
is supplied by the Seller), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished by the
Seller to the Agent or any Owner in connection with this Agreement is or
shall be inaccurate in any material respect as of the date it is or shall
be dated or (except as otherwise disclosed to the Agent or such Owner, as
the case may be, at such time) as of the date so furnished, or contains or
shall contain any material misstatement of fact or omits or shall omit to
state a material fact or any fact necessary to make the statements
contained therein not materially misleading.
(j) The chief place of business and chief executive office of
the Seller are located at the address of the Seller referred to in Section
11.02 hereof and the locations of the offices where the Seller keeps all
the Records are listed on Exhibit F (or at such other locations, notified
to the Agent in accordance with Section 5.01(f), in jurisdictions where
all action required by Section 6.05 has been taken and completed).
(k) The Purchase of Eligible Assets and the reinvestment of
Collections pursuant to Section 2.05 will constitute (i) a "current
transaction" within the meaning of Section 3(a)(3) of the Securities Act
of 1933, as amended, and (ii) a purchase or other acquisition of notes,
drafts, acceptances, open accounts receivable or other obligations
representing part or all of the sales price of merchandise, insurance or
services within the meaning of Section 3(c)(5) of the Investment Company
Act of 1940, as amended.
(l) As of the date hereof, except as described on Exhibit D,
the Seller has no trade names, fictitious names, assumed names or "doing
business as" names.
(m) The Seller or the Parent, as applicable, shall have given
reasonably equivalent value to each Dealer in consideration for the
transfer to the Seller or the Parent, as applicable of the Receivables and
related Contracts from such Dealer or the Parent, as applicable, and none
of such transfers is or may be voidable under Sections 544, 545, 548, 549
or 724(a) of the Bankruptcy Code.
(n) Each Receivable and related Contract that has been
transferred to the Seller by the Parent has been purchased by the Seller
from the Parent pursuant to the Transfer Agreement.
ARTICLE V
GENERAL COVENANTS OF THE SELLER
SECTION 5.01. Affirmative Covenants of the Seller. From the
date hereof until the later of the Termination Date or the Collection
Date, the Seller will, unless the Agent shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders with respect to
its business and properties or the Receivables and related Contracts,
except to the extent that any failure to so comply, when taken together
with all similar failures, would not materially adversely affect the
financial condition or operations of the Seller, the collectibility of any
Receivable or the rights and remedies of the Agent or any Owner hereunder.
(b) Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in
good standing in each jurisdiction where the failure to preserve and
maintain such existence, rights, franchises, privileges and qualifications
would materially adversely affect (i) the interests hereunder of the Agent
or any Owner, (ii) the collectibility of any Receivable or (iii) the
ability of the Seller or the Collection Agent to perform their respective
obligations hereunder.
(c) Audits. At any time and from time to time during regular
business hours and upon five Business Days' (or if an Event of Investment
Ineligibility has occurred and is continuing one Business Day's) prior
notice (which may be by telephone) to the Seller, permit the Agent, 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
Seller for the purpose of examining such Records, and to discuss matters
relating to the Receivables or the Seller's performance hereunder with any
of the officers or employees of the Seller having knowledge of such
matters.
(d) Keeping of Records and Books of Account. Maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing the Receivables in
the event of the destruction of the originals thereof) and keep and
maintain all documents, books, records and other information reasonably
necessary or advisable for the collection of all Receivables (including,
without limitation, records adequate to permit the daily identification of
each new Pool Receivable and all Collections of and adjustments to each
existing Pool Receivable).
(e) Performance and Compliance with Receivables and Contracts.
At its expense, timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it
under the Contracts related to the Receivables.
(f) Location of Records. Keep its chief place of business and
chief executive office, and the offices where it keeps the Records, at the
address(es) of the Seller referred to in Section 4.01(j) or, upon 30 days'
prior written notice to the Agent, at such other locations within the
United States where all action required by Section 6.05 shall have been
taken and completed.
(g) Credit and Collection Policies. Comply in all material
respects with its Credit and Collection Policy in regard to each
Receivable and the related Contract.
(h) Collections. Instruct all Obligors to cause all
Collections to be paid directly to a Dealer or the Parent; instruct all
Dealers or the Parent, as applicable, to remit all Collections to the
Seller within ten days of its receipt thereof from the applicable Obligor;
and remit all Collections to the Collection Agent (including, without
limitation, any Collections deemed to have been received pursuant to
Section 2.07) within one Business Day following the Seller's receipt
thereof.
(i) Identification of Eligible Receivables. Establish and
maintain procedures as are necessary for determining whether each
outstanding Pool Receivable qualifies as an Eligible Receivable.
(j) Returned Equipment. At all times on and after the
Termination Date, whenever possession (whether by return, repossession or
otherwise) of any Equipment relating to any Pool Receivable is obtained by
the Seller, any Affiliate of the Seller or any of their respective agents,
such Person shall hold such Equipment in trust for the benefit of the
Owners to the extent of their interest therein, and following the Agent's
request, clearly identify such equipment as subject to such interest;
provided, however, that the Seller may at any time sell or otherwise
realize upon any such returned or repossessed Equipment in accordance with
the terms of the Credit and Collection Policy, subject to the requirement
the proceeds of such sale or other realization be remitted to the
Collection Agent for application pursuant to the terms of this Agreement.
The Seller will use its best efforts to sell or otherwise realize upon any
returned or repossessed Equipment.
(k) Seller's Acquisition of Receivables. With respect to each
Receivable and related Contract acquired by the Parent from a Dealer,
cause the Parent to take all action necessary to perfect, protect and
evidence the Parent's ownership interest in such Receivable and related
Contract and with respect to each Receivable and related Contract acquired
by the Seller from the Parent or a Dealer, take all action necessary to
perfect, protect and evidence the Seller's interest in such Receivable and
related Contract.
(l) Security Interest In Equipment. With respect to each
Receivable and related Contract, to the extent required by the Credit and
Collection Policy, maintain filed UCC financing statements in all
applicable jurisdictions so that the Seller has a perfected security
interest in the Equipment related to such Receivable and related Contract
free and clear of any Adverse Claim.
(m) Insurance. To the extent required by the Credit and
Collection Policy, maintain or cause to be maintained for the benefit of
the Seller, one or more casualty insurance policies on each item of
Equipment relating to the Pool Receivables and the related Contracts
covering loss thereof and damage thereto in an amount at least equal to
the Outstanding Balance of such Pool Receivable and, upon the Agent's
request, deliver, or cause to be delivered, loss payee endorsements
reflecting the Agent's right to receive any payments payable under any
such policies to the extent of the Owners' interest in the Pool
Receivables and related Contracts.
SECTION 5.02. Reporting Requirements of the Seller. From the
date hereof until the later of the Termination Date or the Collection
Date, the Seller will, unless the Agent shall otherwise consent in
writing, furnish to the Agent:
(a) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Parent, consolidated balance sheets of the Parent and its consolidated
Subsidiaries as of the end of such quarter, and the related consolidated
statements of cash flows and consolidated statements of changes in
financial position of the Parent and its consolidated Subsidiaries each
for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter, certified by the chief financial
officer or chief accounting officer of the Parent;
(b) as soon as available and in any event within 120 days after
the end of each fiscal year of the Parent, a copy of the consolidated
balance sheets of the Parent and its consolidated Subsidiaries as of the
end of such year and the related consolidated statements of cash flows and
consolidated statements of changes in financial position of the Parent and
its consolidated Subsidiaries for such year each reported on by nationally
recognized independent public accountants acceptable to the Agent, all in
reasonable detail and certified without adverse opinion or disclaimer by
nationally recognized independent public accountants acceptable to the
Agent, whose certificate shall be in conformity with generally accepted
accounting principles;
(c) together with the financial statements delivered pursuant
to the foregoing clauses (a) and (b), a certificate of the chief financial
officer or chief accounting officer of the Seller stating that there
exists no Event of Investment Ineligibility or event which, with the
passage of time or the giving of notice or both, would constitute an Event
of Investment Ineligibility, or, if any such event exists, specifying the
nature thereof, the period of existence thereof and what action the Seller
proposes to take with respect thereto;
(d) promptly after the sending or filing thereof, copies of all
reports which the Parent sends to any of its security holders and copies
of all reports and other documents which the Parent files with the
Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as amended, and, to the extent requested by the Agent, copies of
such other reports and registration statements as the Parent may file with
the Securities and Exchange Commission or any national securities
exchange;
(e) promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any reportable event defined in
Title IV of ERISA which could result in the imposition of any lien and
which the Parent or any ERISA Affiliate of the Parent files under ERISA
with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which the Parent or any
ERISA Affiliate of the Parent receives from such Corporation;
(f) as soon as possible and in any event within five days after
the occurrence of each Event of Investment Ineligibility or each event
which, with the giving of notice or lapse of time or both, would
constitute an Event of Investment Ineligibility, the statement of the
chief financial officer or chief accounting officer of the Seller setting
forth details of such or event and the action which the Seller proposes to
take with respect thereto;
(g) promptly upon the Agent's request therefor, a certificate
of the chief financial officer or chief accounting officer of the Seller
to the effect that, at such time, the sum of the Eligible Asset and all
"Eligible Assets" under and as defined in the Parallel Purchase Agreement
does not exceed 100%;
(h) promptly after becoming aware thereof, notice of (i) any
pending or threatened actions, suits or proceedings against or affecting
the Parent, the Seller or any other Subsidiary of the Parent, or the
property of the Parent, the Seller or of any other Subsidiary of the
Parent, in any court, or before any arbitrator of any kind, or before or
by any governmental body, which may reasonably be expected to materially
adversely affect the financial condition or operations of the Seller or
the Parent or the Parent and its consolidated Subsidiaries taken as a
whole, or materially adversely affect the ability of the Seller or the
Parent to perform their respective obligations under this Agreement and
the Transfer Agreement and (ii) the existence of any default on the part
of the Parent, the Seller or any Subsidiary of the Parent with respect to
any order of any court, arbitrator or governmental body, other than any
such default that, which when taken together with all other such defaults,
is not material to the business or operations of the Seller or the Parent
or the Parent and its consolidated Subsidiaries taken as a whole.
(i) promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the conditions
or operations, financial or otherwise, of the Seller, the Parent or any
Subsidiary of the Seller or the Parent as the Agent may from time to time
reasonably request in order to protect the interests of the Agent or of
any Owner under or as contemplated by this Agreement.
SECTION 5.03. Negative Covenants of the Seller. From the date
hereof until the later of the Termination Date or the Collection Date, the
Seller will not, without the written consent of the Agent:
(a) Sales, Liens, Etc. Except as otherwise provided herein or
in the Parallel Purchase Agreement, sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any Receivable, Related Security or
Collections, or any related Contract, or upon or with respect to any
account to which any Collections of any Receivable are sent, or assign any
right to receive income in respect thereof.
(b) Extension or Amendment of Receivables. Extend, amend or
otherwise modify the terms of any Pool Receivable, or amend, modify or
waive any term or condition of any Contract related thereto, except (i) as
otherwise permitted in Section 6.02 or (ii) prior to the Termination Date,
in accordance with the terms of the applicable Credit and Collection
Policy; it being understood further that the Seller will not at any time,
without the prior written consent of the Agent, enter into any Contract
Rider with respect to any Contract relating to a Pool Receivable if
immediately prior to entering into such Contract Rider such Pool
Receivable is a Defaulted Receivable.
(c) Change in Business or Credit and Collection Policy. Make
or permit the Parent to make any change in the Credit and Collection
Policy, or make or permit the Parent to make any change in the character
of its business, which change would, in either case, impair the
collectibility of any Pool Receivable.
(d) Change in Payment Instructions to Obligors. Make or permit
to be made any change in the instructions made to Obligors, Dealers or the
Parent regarding payments to be made on Pool Receivables, unless the Agent
shall have received ten Business Days' prior notice of such change, and
prior to the effective date of such change deliver to the Agent such
instruments, agreements and other documents (including, to the extent
payments of Obligors are remitted lock-boxes, lock-box notices to the
relevant lock-box banks) as the Agent shall reasonably request.
(e) Merger, etc. (i) Merge with or into or consolidate with
or into, or convey, transfer, lease or otherwise dispose of (whether in
one transaction or in a series of transactions), all or substantially all
of its assets (whether now owned or hereafter acquired), or acquire all or
substantially all of the assets or capital stock or other ownership
interest of, any Person.
(f) Change in Corporate Names. Make any change to its
corporate name or use any tradenames, fictitious names, assumed names or
"doing business as" names other than those described in Exhibit D, unless
prior to the effective date of any such name change or use, the Seller
delivers to the Agent such Financing Statements (Form UCC-1 and UCC-3)
executed by the Seller which the Agent may request to reflect such name
change or use, together with such other documents and instruments that the
Agent may request in connection therewith.
(g) Change in Transfer Agreement. Amend, modify, waive or
terminate, or permit the Parent to amend, modify, waive or terminate, any
term, provision or condition of the Transfer Agreement.
(h) ERISA Matters. (i) Engage or permit any ERISA Affiliate
to engage in any prohibited transaction described in Sections 406 of ERISA
or 4975 of the Internal Revenue Code of 1986 for which an exemption is not
available or has not previously been obtained from the Department of
Labor; (ii) permit to exist any accumulated funding deficiency, as defined
in Section 302(a) of ERISA and Section 412(a) of the Internal Revenue
Code, or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (iii) fail, or permit any ERISA Affiliate to fail, to
make any payments to any Multiemployer Plan that the Seller or any ERISA
Affiliate may be required to make under the agreement relating to such
Multiemployer Plan or any law pertaining thereto; (iv) terminate, or
permit any ERISA Affiliate to terminate, any Benefit Plan so as to result
in any liability; (v) fail, or permit any ERISA Affiliate to fail, to pay
timely required contributions or annual installments due with respect to
any waived funding deficiency to any Benefit Plan; (vi) fail, or permit
any ERISA Affiliate to fail, to pay any required installment or any other
payment required under Section 412 of the Internal Revenue Code of 1986 on
or before the due date for such installment or other payment; or
(vii) permit to exist any occurrence of any reportable event described in
Title IV of ERISA which represents a material risk of a liability of the
Seller or any ERISA Affiliate under ERISA or the Internal Revenue Code, if
such prohibited transactions, accumulated funding deficiencies, payments,
terminations and reportable events occurring within any fiscal year of the
Seller, in the aggregate, involve a payment of money by or an incurrence
of liability of the Seller or any ERISA Affiliate (collectively, "ERISA
Liabilities") in an amount in excess of $25,000,000.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent. (a) The
servicing, administering and collection of the Receivables shall be
conducted by the Person (the "Collection Agent") so designated from time
to time in accordance with this Section 6.01. Until the Agent gives
notice to the Seller of the designation of a new Collection Agent pursuant
to Section 6.01(b) (a "Servicer Notice"), the Seller is hereby designated
as, and hereby agrees to perform the duties and obligations of, the
Collection Agent pursuant to the terms hereof. The Seller agrees that it
will terminate its activities hereunder as Collection Agent on the day
following the Successor Notice.
(b) At any time following the occurrence of an Event of
Investment Ineligibility, the Agent may designate as Collection Agent any
Person (including itself) to succeed the Seller 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. The Collection Agent may,
with the prior consent of the Agent, subcontract with any other Person for
servicing, administering or collecting the Receivables, provided that the
Collection Agent shall remain liable for the performance of the duties and
obligations of the Collection Agent pursuant to the terms hereof.
SECTION 6.02. Duties of the Collection Agent. (a) The
Collection Agent shall take or cause to be taken all such actions as may
be reasonably necessary or advisable to collect each Receivable from time
to time, all in accordance with applicable laws, rules and regulations,
with reasonable care and diligence, and in accordance with the Credit and
Collection Policy. Each of the Seller, the Owners and the Agent hereby
appoints as its agent the Collection Agent, from time to time designated
pursuant to Section 6.01, to enforce its respective rights and interests
in and under the Receivables, the Related Security and the Contracts. The
Collection Agent shall set aside for the account of the Seller and each
Owner their respective allocable shares of the Collections of Receivables
in accordance with Section 2.05 and Section 2.06 but shall not be required
(unless the Ratings Requirement is no longer satisfied and the Agent shall
have requested otherwise) to segregate the funds constituting such portion
of such Collections prior to the remittance thereof in accordance with
said Sections. If the Ratings Requirement is no longer satisfied and the
Agent so instructs, the Collection Agent shall segregate and deposit with
a bank (which may be Citibank) designated by the Agent such allocable
share of Collections of Pool Receivables, set aside for each Owner, on the
first Business Day following receipt by the Collection Agent of such
Collections and will, if so requested by the Agent, provide payment
instructions to such bank as directed by the Agent. Provided that the
Termination Date shall not have occurred, the Seller, while it is
Collection Agent, may, in accordance with the Credit and Collection
Policy, (i) extend the maturity or adjust the Outstanding Balance of any
Defaulted Receivable as the Seller may determine to be appropriate to
maximize Collections thereof and/or (ii) adjust the Outstanding Balance of
any Receivable to reflect the reductions or cancellations described in the
first sentence of Section 2.07. The Seller shall deliver to the
Collection Agent, and the Collection Agent shall hold in trust for the
Seller and each Owner in accordance with their respective interests, all
Records. Notwithstanding anything to the contrary contained herein, so
long as the Ratings Requirement is not satisfied the Agent shall have the
absolute and unlimited right to direct the Collection Agent (whether the
Collection Agent is the Seller or any other Person) to commence or settle
any legal action to enforce collection of any Pool Receivable or to
foreclose upon or repossess any Related Security.
(b) The Collection Agent shall as soon as practicable following
receipt turn over to the Seller the Collections of any Receivable which is
not a Pool Receivable less, in the event the Seller is not the Collection
Agent, all reasonable and appropriate out-of-pocket costs and expenses of
such Collection Agent of servicing, collecting and administering the
Receivables to the extent not covered by the Collection Agent Fee received
by it. The Collection Agent, if other than the Seller, shall as soon as
practicable upon demand deliver to the Seller all Records in its
possession relating to Receivables of the Seller other than Pool
Receivables, and copies of Records in its possession relating to Pool
Receivables. The Collection Agent's authorization under this Agreement
shall terminate after the Termination Date on the Collection Date.
(c) Notwithstanding anything to the contrary contained in this
Article VI, the Collection Agent, if the Agent or its designee, 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 a Pool
Receivable other than as described in the first two sentences of Section
6.02(b).
SECTION 6.03. Rights of the Agent. (a) The Agent may notify
at any time the Obligors of Pool Receivables, or any of them, of the
Owners' ownership of Eligible Assets.
(b) At any time following the designation of a Collection Agent
other than the Seller pursuant to Section 6.01:
(i) the Agent may direct the Obligors of Receivables, or any of
them, that payment of all amounts payable under any Receivable be made
directly to the Agent or its designee;
(ii) the Seller shall, at the Agent's request and at the
Seller's expense, give notice of the Owners' ownership interest in Pool
Receivables to each Obligor and direct that payments be made directly to
the Agent or its designee;
(iii) the Seller shall, at the Agent's request, (A) assemble
all Records, and shall make the same available to the Agent at a place
selected by the Agent 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 Agent and shall,
promptly upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Agent or
its designee; and
(iv) each of the Seller and the Owners hereby authorizes the
Agent to take any and all steps in the Seller's name and on behalf of the
Seller and the Owners necessary or desirable, in the determination of the
Agent, 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.
SECTION 6.04. Responsibilities of the Seller. Anything herein
to the contrary notwithstanding:
(a) The Seller shall (i) perform all of its obligations under
the Contracts related to the Pool Receivables to the same extent as if
Eligible Assets had not been sold hereunder and the exercise by Agent of
its rights hereunder shall not relieve Seller from such obligations and
(ii) pay when due any taxes (other than taxes based upon or measured by
income of the Agent or any Owner), including without limitation, sales and
excise taxes, payable in connection with the Pool Receivables; and
(b) Except as otherwise contemplated in this Agreement, none of
the Agent or the Owners shall have any obligation or liability with
respect to any Pool Receivables or related Contracts, nor shall any of
them be obligated to perform any of the obligations of the Seller
thereunder.
SECTION 6.05. Possession by the Seller as Trustee; Further
Action Evidencing Purchases. The Seller hereby agrees that until the
Agent requests the Seller to deliver the Contracts relating to Pool
Receivables and/or the documentary items of Related Security to it as
provided in Section 6.06, the Seller shall maintain possession of such
items at its address described in Section 5.01(f) in trust for the benefit
of the Agent and the Owners to the extent of their interests therein. The
Seller agrees that from time to time, at its expense, it will promptly
execute and deliver all further instruments and documents, and take all
further action that the Agent may reasonably request in order to perfect,
protect or more fully evidence the Eligible Assets purchased by the
Investors hereunder, or to enable any of the Owners or the Agent to
exercise or enforce any of their respective rights hereunder. Without
limiting the generality of the foregoing, the Seller will upon the request
of the Agent: (a) execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate or as the Agent
may request to evidence, or otherwise in connection with, this Agreement
and the transactions contemplated hereby, (b) if the Ratings Requirement
is no longer satisfied, mark conspicuously each Contract evidencing the
Pool Receivables with a legend, acceptable to the Agent, evidencing that
the Investors have purchased all right and title thereto and interest
therein as provided in this Agreement; and (c) mark its master data
processing records evidencing such Pool Receivables and related Contracts
with such legend. The Seller hereby authorizes the Agent to file one or
more financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Pool Receivables and
the Related Security now existing or hereafter arising, without the
signature of the Seller where permitted by law. A carbon, photographic or
other reproduction of this Agreement or any financing statement covering
the Pool Receivables, or any part thereof shall be sufficient as a
financing statement. If the Seller fails to perform any of its agreements
or obligations under this Agreement, the Agent may (but shall not be
required to) itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Agent incurred in connection therewith
shall be payable by the Seller upon the Agent's demand therefor.
SECTION 6.06. Delivery of Contracts to Agent. In order to
perfect, protect or more fully evidence the Eligible Assets purchased by
the Investors hereunder, the Agent may at any time that the Ratings
Requirement is not satisfied request the Seller to, and promptly following
Agent's request the Seller shall promptly deliver to the Agent the
original Contracts relating to Pool Receivables fully executed by the
related Obligor, together with (a) all other original documents,
instruments and agreements that constitute part of the Related Security
and (b) endorsements or assignments in blank satisfactory in form and
substance to the Agent and executed by a duly authorized officer of the
Seller.
SECTION 6.07. Application of Collections. Any payment by an
Obligor in respect of any indebtedness owed by it to the Seller shall,
except as otherwise specified by such Obligor or otherwise required by
contract or law and unless otherwise instructed by the Agent, be applied
as a Collection of any Pool Receivable of such Obligor (in the order of
the age of such Receivables, starting with the oldest such Pool
Receivable) to the extent of any amounts then due and payable thereunder
before being applied to any other Receivable or other indebtedness of such
Obligor.
ARTICLE VII
EVENTS OF INVESTMENT INELIGIBILITY
SECTION 7.01. Events of Investment Ineligibility. If any of
the following events ("Events of Investment Ineligibility") shall occur:
(a) (i) The Collection Agent (if the Seller or a Person
designated by the Seller) shall fail to perform or observe any term,
covenant or agreement hereunder in its capacity as the Collection Agent or
the Seller shall fail to perform or observe any term, covenant or
agreement contained in Article VI in its capacity as the Seller (other
than, in either case, as referred to in clause (ii) of this
Section 7.01(a)) and, in either case, any such failure shall remain
unremedied for three Business Days after written notice thereof shall have
been given by the Agent to the Seller or (ii) either the Collection Agent
(if the Seller or a Person designated by the Seller) or the Seller shall
fail to make any payment or deposit to be made by it hereunder when due;
or
(b) Any representation or warranty made or deemed to be made by
the Seller (or any of its officers) under or in connection with this
Agreement or any Investor Report or other information or report delivered
pursuant hereto shall prove to have been false or incorrect in any
material respect when made; provided, however, that except to the extent
that any such falsity or inaccuracy in respect of any of the
representations and warranties set forth in Sections 4.01(a), 4.01(b),
4.01(c), 4.01(g), 4.01(h), 4.01(i) and 4.01(l) would constitute an Event
of Investment Ineligibility under some other subsection of this Section
7.01, if, within ten Business Days following the earlier of the date on
which the Seller learns of such falsity or inaccuracy (on which date the
Seller shall also give the Agent notice thereof) or the date on which the
Agent gives the Seller notice of such inaccuracy or falsity, the Seller
shall cure such falsity or inaccuracy in respect of any of the
representations and warranties set forth in the Sections specified above
in this proviso clause so as to render such representation and warranty
true and accurate, then such falsity or inaccuracy shall not constitute an
Event of Investment Ineligibility under this Section 7.01(b), subject,
however, to the further conditions that (i) the Seller shall pay to the
Agent, on written demand setting forth in reasonable detail the basis
therefor, any amount necessary to indemnify the Owners, the Agent, CNAI
and any of their respective Affiliates in full for any loss, cost or
expense incurred by any of them as a result of such falsity or inaccuracy
and (ii) no purchases of Eligible Assets shall be made during the pendency
of such cure period; or
(c) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for ten
Business Days after written notice thereof shall have been given by the
Agent to the Seller; or
(d) A default or defaults or any other event shall occur under
any agreement or instrument relating to any Debt of the Parent, the Seller
or any other Subsidiary of the Parent in an amount exceeding $25,000,000
in the aggregate, and such default, defaults or other event shall result
in a declaration of acceleration of the payment of such Debt; or
(e) Any Purchase of an Eligible Asset shall for any reason,
except to the extent permitted by the terms hereof, cease to create a
valid and perfected first priority undivided percentage interest to the
extent of such Eligible Asset in each Pool Receivable and the Related
Security and Collections with respect thereto, free and clear of any
Adverse Claims (except to the extent contemplated hereunder or under the
Parallel Purchase Agreement in favor of the Owners or the Banks); or
(f) (i) The Parent, the Seller or any Material Subsidiary
shall generally not pay its debts as such debts become due, or shall admit
in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or (ii) any proceeding
shall be instituted by or against the Parent, the Seller or any Material
Subsidiary seeking to adjudicate it a 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 for any substantial
part of its property; or (iii) the Parent, the Seller or any Material
Subsidiary shall take any corporate action to authorize any of the actions
set forth in clauses (i) or (ii) above in this subsection (f); or
(g) The Loss-to-Liquidation Ratio for any month shall exceed
2.50%, or the Default Ratio for any month shall exceed 2.00%, or the
Delinquency Ratio for any month shall exceed 5.00%; or
(h) The sum of all Eligible Assets hereunder and all "Eligible
Assets" under and as defined in the Parallel Purchase Agreement shall
exceed 100%; or
(i) The Parent shall cease to own, directly or indirectly, 100%
of the issued and outstanding capital stock of the Seller;
(j) The Parent shall terminate, disaffirm or otherwise fail to
honor or perform any of the terms, provisions or covenants of, or any of
its other obligations under the Parent Support Agreement, or notice is
received by the Agent, CNAI, or any Owner from the Parent of the Parent's
intention to take any of the aforementioned action, or any representation
or warranty made by the Parent under the Parent Support Agreement shall
prove to have been false or incorrect when made in any respect material to
the respective interests of any Owner, the Agent or CNAI thereunder, or
the Parent Support Agreement shall cease to constitute the legal, valid
and binding obligation of the Parent enforceable against the Parent in
accordance with its terms; or
(k) There shall have occurred any event which materially
adversely affects the collectibility of the Receivables or there shall
have occurred any other event which materially adversely affects the
ability of the Seller to collect Receivables or the ability of the Seller
to perform hereunder; or
(l) Since December 31, 1994, there shall have occurred any
material adverse change in the consolidated financial condition of the
Parent and its consolidated Subsidiaries or the consolidated results of
the operations of the Parent and its consolidated Subsidiaries for any
period; or
(m) An "Event of Termination" (as defined in the Parallel
Purchase Agreement) shall occur;
then, and in any such event, the Agent may, by notice to the Seller
declare the Termination Date to have occurred, except that, in the case of
any event described in clause (ii) of subsection (f), above, the
Termination Date shall be deemed to have occurred automatically upon the
occurrence of such event. Upon any such declaration or automatic
occurrence, the Agent and the Owners shall have, in addition to all other
rights and remedies under this Agreement or otherwise, all other rights
and remedies provided under the UCC of all applicable jurisdictions and
other applicable laws, which rights shall be cumulative. Without limiting
the foregoing or the general applicability of Article IX or Section 11.04,
any Owner may elect to assign any Eligible Asset (or undivided percentage
interest therein) owned by such Owner to an assignee following the
occurrence of any Event of Investment Ineligibility.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Owner hereby
accepts the appointment of and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. The Agent reserves the right, in its sole discretion
to exercise any rights and remedies under this Agreement or any instrument
or document executed and delivered pursuant hereto, or pursuant to
applicable law, and also to agree to any amendment, notification or waiver
of this Agreement or any instrument or document executed and delivered
pursuant hereto. Notwithstanding anything herein or elsewhere to the
contrary, the Agent shall not be required to take any action which exposes
the Agent to personal liability or which is contrary to this Agreement or
applicable law. The appointment and authority of the Agent hereunder
shall terminate at the Collection Date.
SECTION 8.02. UCC Filings. The Owners and the Seller expressly
recognize and agree that the Agent may be listed as the assignee or
secured party of record on the various UCC filings required to be made
hereunder in order to perfect the transfer of the Eligible Assets from the
Seller to the Owners, that such listing shall be for administrative
convenience only in creating a record or nominee owner to take certain
actions hereunder on behalf of the Owners and that such listing will not
affect in any way the status of the Owners as the beneficial owners of the
Eligible Assets. In addition, such listing shall impose no duties on the
Agent other than those expressly and specifically undertaken in accordance
with this Article VIII. In furtherance of the foregoing, each Owner shall
be entitled to enforce its rights created under this Agreement without the
need to conduct such enforcement through the Agent except as provided
herein.
SECTION 8.03. Agent's Reliance. Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as Agent under or in
connection with this Agreement (including, without limitation, the Agent's
servicing, administering or collecting Receivables as Collection Agent
pursuant to Article VI), except for its or their own gross negligence or
willful misconduct. Without limiting the foregoing, the Agent: (i) may
consult with legal counsel (including counsel for the Seller), independent
public accountants and other experts selected by it and shall not liable
for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (ii)
makes no warranty or representation to any Owner and shall not be
responsible to any Owner for any statements, warranties or representations
made in or in connection with this Agreement; (iii) shall not have any
duty to (A) ascertain or to inquire as to, and shall not be responsible
for, the performance or observance of any of the terms, covenants or
conditions of this Agreement or any instrument or document furnished
pursuant hereto on the part of the Seller or (B) inspect the property
(including the books and records) of the Seller; (iv) shall not be
responsible to any Owner for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement or
any other instrument or document furnished pursuant hereto; (v) shall not
be deemed to be acting as any Owner's trustee or otherwise in a fiduciary
capacity hereunder or under or in connection with the Parallel Purchase
Agreement or any Eligible Asset; and (vi) shall incur no liability under
or in respect of this Agreement by acting upon any notice (including
notice by telephone), consent, certificate or other instrument or writing
(which may be by telex) believed by it to be genuine and signed or sent by
the proper party or parties.
SECTION 8.04. Agent and Affiliates. To the extent that the
Agent or any of its Affiliates shall become an Owner hereunder, the Agent
or such Affiliate, in such capacity, shall have the same rights and powers
under this Agreement as would any Owner hereunder and may exercise the
same as though it were not the Agent. The Agent and its Affiliates may
generally engage in any kind of business with the Seller or any Obligor,
any of their respective Affiliates and any Person who may do business with
or own securities of the Seller or any Obligor or any of their respective
Affiliates, all as if it were not the Agent hereunder and without any duty
to account therefor to the Owners (including, without limitation, acting
as "Agent" under the Parallel Purchase Agreement).
SECTION 8.05. Purchase Decision. Each Owner acknowledges that
it has, independently and without reliance upon the Agent or any other
Owner and based on such documents and information as it has deemed
appropriate, made its own evaluation and decision to enter into this
Agreement and, if it so determines, to purchase an undivided ownership
interest in the Pool Receivables hereunder. Each Owner also acknowledges
that it will, independently and without reliance upon the Agent or any
other Owner, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or
not taking action under this Agreement.
SECTION 8.06. Indemnification. Each Owner agrees to indemnify
the Agent (to the extent not reimbursed by the Seller), ratably according
to its share of the aggregate outstanding Capital from time to time, from
and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any other agreement, document or instrument executed in
connection herewith, or any action taken or omitted by the Agent under
this Agreement or any other agreement, document or instrument executed in
connection herewith; provided, however, that an Owner shall not be liable
for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from the Agent's gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, each Owner agrees
to reimburse the Agent, ratably according to its share of the aggregate
outstanding Capital from time to time, promptly upon demand, for any out-
of-pocket expenses (including reasonable counsel fees) incurred by the
Agent in connection with the administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement.
SECTION 8.07. Successor Agent. The Agent may resign at any
time by giving thirty days' notice thereof to the Owners, the Seller and
the Collection Agent. Upon any such resignation, the Owners shall have
the right to appoint a successor Agent approved by the Seller (which
approval will not be unreasonably withheld or delayed). If no successor
Agent shall have been so appointed by the Owners and accepted such
appointment within thirty days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Owners,
appoint a successor Agent approved by the Seller (which approval will not
be unreasonably withheld or delayed), which successor Agent shall be (a)
either (i) a commercial bank having a combined capital and surplus of at
least $250,000,000 or (ii) an Affiliate of such bank and (b) experienced
in the types of transactions contemplated by this Agreement. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all
of the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
ARTICLE IX
ASSIGNMENT OF ELIGIBLE ASSETS
SECTION 9.01. Assignment. Subject to compliance with Section
11.04, each Owner may assign to each other Owner or to any other Person
all or any portion of its rights and title to, and interest in, any
Eligible Asset owned by such Owner. Such assignments shall be upon such
terms and conditions as the assignor and the assignee may mutually agree,
and such assignor shall promptly execute and deliver all further
instruments and documents, and take all further action, that the assignee
may reasonably request, in order to perfect, protect or more fully
evidence the assignee's right and title to, and interest in, such Eligible
Asset, and to enable the assignee to exercise or enforce any rights
hereunder. Each assignor of an Eligible Asset or any interest therein
shall notify the Agent and the Seller of any such assignment.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Indemnities by the Seller. Without limiting any
other rights which CNAI, the Agent, each Owner or their Affiliates may
have hereunder or under applicable law, the Seller hereby agrees to
indemnify each of the Agent, CNAI, the Owners and their Affiliates from
and against any and all damages, losses, claims, liabilities and related
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 any of them arising out of or as
a result of this Agreement or the ownership of Eligible Assets or in
respect of any Receivable or any Contract, excluding, however, (x)
Indemnified Amounts to the extent resulting from gross negligence or
willful misconduct on the part of the Agent, CNAI, such Owner and their
Affiliates, (y) recourse (except as otherwise specifically provided in
this Agreement) for uncollectible Pool Receivables or (z) Indemnified
Amounts to the extent arising solely in connection with a dispute between
or among CNAI, the Agent, any Owner or any of their respective Affiliates
as a result of an alleged default by any such Person in the performance of
any obligation owing to another such Person in connection with this
Agreement. Without limiting the foregoing, Seller shall indemnify the
Agent, CNAI, each Owner and their Affiliates for Indemnified Amounts
relating to or resulting from:
(a) the transfer hereunder of an interest in any Receivable
other than an Eligible Receivable;
(b) reliance on any representation or warranty made or deemed
made by the Seller (or any of its officers) under or in connection with
this Agreement, any Investor Report or any other information or report
delivered by the Seller pursuant hereto, or by the Parent pursuant to the
Parent Support Agreement, which shall have been false or incorrect in any
material respect when made or deemed made or delivered;
(c) the failure by the Seller (individually or as Collection
Agent) to comply with any term, provision or covenant contained in this
Agreement, or with any applicable law, rule or regulation with respect to
any Receivable, the related Contract or the Related Security, or the
nonconformity of any Receivable, the related Contract or the Related
Security with any such applicable law, rule or regulation;
(d) the failure to vest and maintain vested in each Owner or to
transfer to each Owner a valid and perfected first priority undivided
percentage interest, to the extent of each Eligible Asset owned by it
hereunder, in the Receivables which are, or are intended to be, Pool
Receivables, together with all Collections and Related Security, free and
clear of any Adverse Claim whether existing at the time of the Purchase of
such Eligible Asset or at any time thereafter;
(e) the failure at any time on or before the Termination Date
of the sum of all Eligible Assets and all "Eligible Assets" under and as
defined in the Parallel Purchase Agreement to be less than or equal to
100%;
(f) the failure to perfect or any delay in perfecting as
against the Seller, any of its Affiliates or any Dealer under the UCC of
all applicable jurisdictions or other applicable laws (whether by the
filing of financing statements or other similar instruments or documents
or otherwise) the interests of the Owners and the Agent in all Receivables
that are, or are intended to be, Pool Receivables, whether at the time of
any Purchase or at any subsequent time;
(g) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable which is, or is intended to be, a Pool Receivable (including,
without limitation, a defense based on such Receivable or the related
Contract not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the Equipment or services related to such
Receivable or the furnishing or failure to furnish such Equipment or
services;
(h) any failure of the Seller, as Collection Agent or
otherwise, to perform its duties or obligations in accordance with the
provisions of Article VI;
(i) 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 Equipment or services which are the
subject of any Receivable or Contract;
(j) the failure by the Seller, any of its Affiliates or any
Dealer to pay when due any taxes, including without limitation, sales,
excise or personal property taxes payable in connection with the
Receivables;
(k) the failure of the Parent, the Seller, any Dealer or any of
their respective agents and representatives to collect Receivables as
contemplated by the related Contract and the Credit and Collection Policy
or the failure of the Parent, any Dealer or any of their respective agents
or representatives to remit to the Seller Collections of Pool Receivables
remitted to the Parent or any such Dealer, agent or representative, or the
failure of the Seller or any of its agents and representatives to remit to
the Collection Agent or the Agent, Collections of Pool Receivables
remitted to the Seller or such agent or representative;
(l) the termination as a Dealer of any Dealer by the Parent or
any Affiliate;
(m) any claim, litigation or other action asserted or commenced
by a Dealer for the payment to such Dealer of any dealer reserve or other
amounts or other obligations allegedly owing to such Dealer by the Seller,
the Parent or any of their respective Affiliates;
(n) any failure of the Seller or the Parent to give reasonably
equivalent value to any Dealer or the Parent, as applicable in
consideration for the transfer by such Dealer or the Parent, as applicable
of any Receivable and related Contract, or any attempt by any Person to
void any such transfer under any statutory provision or common law or
equitable action, including, without limitation, any provision of the
Bankruptcy Code;
(o) the failure by the Seller, the Parent or any Dealer to be
duly qualified to do business, to be in good standing or to have filed
appropriate fictitious or assumed name registration documents in any
jurisdiction;
(p) the occurrence with respect to any Dealer of any event of
the type described in Section 7.01(f) hereof; or
(q) the commingling of Collections of Pool Receivables at any
time with other funds, whether by a Dealer, the Seller, the Parent or any
of their respective affiliates.
Any amounts subject to the indemnification provisions of this Section
10.01 shall be paid by Seller to the Agent within two Business Days
following Agent's demand therefor.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Seller
therefrom, shall in any event be effective unless the same shall be in
writing and signed by (i) the Seller, CNAI and the Agent as agent for the
Owners (with respect to an amendment) or (ii) CNAI and the Agent as agent
for the Owners (with respect to a waiver or consent by them) or the Seller
(with respect to a waiver or consent by it), as the case may be, and then
such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. This Agreement contains a
final and complete integration of all prior expressions by the parties
hereto with respect to the subject matter hereof and shall constitute the
entire agreement among the parties hereto with respect to the subject
matter hereof, superseding all prior oral or written understandings.
SECTION 11.02. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated
herein, be in writing (including telex and facsimile communication) and
mailed, telexed, transmitted or delivered, as to each party hereto, at its
address set forth under its name on the signature pages hereof or
specified in such party's Assumption Agreement or at such other address as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, upon
receipt, or in the case of delivery by mail, five days after being
deposited in the mails, postage prepaid, or, in the case of notice by
telex, when telexed against receipt of answer back, or in the case of
notice by facsimile copy, when verbal confirmation of receipt is obtained,
in each case addressed as aforesaid, except that notices and
communications pursuant to Article II shall not be effective until
received.
SECTION 11.03. No Waiver; Remedies. No failure on the part of
CNAI, the Agent or any Owner to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Without limiting the foregoing, the Agent is hereby authorized by the
Seller at any time and from time to time following the occurrence of an
Event of Investment Ineligibility, to the fullest extent permitted by law,
to instruct Citibank or any Affiliate of Citibank to set-off and apply any
and all deposits (whether general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by
Citibank or such Affiliate to or for the credit or the account of the
Seller against any and all of the obligations of Seller, now or hereafter
existing under this Agreement, to the Agent or any Owner or their
respective successors and assigns irrespective of whether or not demand
therefor shall have been made under this Agreement and although such
obligations may be contingent and unmatured. The Seller acknowledges that
the rights of the Agent and any Owner or any of their respective
successors and assigns described in this paragraph are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) such parties may have.
SECTION 11.04. Binding Effect; Assignability. This Agreement
shall be binding upon each of the Seller, CNAI, the Agent, the Owners and
their respective successors and permitted assigns, and shall inure to the
benefit of the Seller, CNAI, Citibank, the Agent, the Owners and any other
Affected Persons and their respective successors and permitted assigns.
Neither the Seller nor any Owner may assign any of its rights and
obligations hereunder or any interest herein without the prior written
consent of the Agent, except that an Owner may assign its rights and
obligations hereunder and its interest herein to any other Owner or any
Affiliate of CNAI without such consent. Each Owner and each permitted
assignee of an Owner may assign its rights and obligations hereunder or
interest herein to (a) any other Owner or any Affiliate of CNAI without
the consent of the Seller and (b) to any other Person with the prior
written consent of the Seller, which consent shall not be unreasonably
withheld. The Agent may assign at any time its rights and obligations
hereunder and interests herein without the consent of the Owners or the
Seller unless the applicable assignee is not an Affiliate of CNAI, in
which case such assignment shall require the prior written consent of the
Seller, which consent shall not be unreasonably withheld. Furthermore,
each Owner and its permitted assigns may, at any time, without the consent
of the Seller, sell undivided participation interests in all or any of its
rights, obligations and interests (including, without limitation, the
Eligible Assets) hereunder. This Agreement shall create and constitute
the continuing obligations of the parties hereto in accordance with its
terms, and shall remain in full force and effect until such time, after
the Termination Date until the Collection Date; provided, however, that
the rights and remedies with respect to any breach of any representation
and warranty made by the Seller pursuant to Article IV, and the
indemnification and payment provisions of Articles VIII, X and XI, and
Sections 2.11, 2.12 and 2.13, shall be continuing and shall survive any
termination of this Agreement.
SECTION 11.05. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the internal laws (as opposed to
conflict of laws provisions) of the State of New York, except to the
extent that the validity or perfection of the interests of the Owners in
the Pool Receivables, or remedies hereunder, in respect thereof, are
governed by the laws of a jurisdiction other than the State of New York.
SECTION 11.06. Costs, Expenses and Taxes. (a) In addition to
the rights of indemnification granted to CNAI, the Agent, the Owners and
their Affiliates under Article X hereof, the Seller agrees to pay on
demand all costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic auditing) of
this Agreement and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for CNAI, the Agent and the Investors with respect
thereto and with respect to advising CNAI, the Agent and the Investors as
to their respective rights and remedies under this Agreement, and all
costs and expenses, if any (including reasonable counsel fees and
expenses) of each of the Agent, the Owners, CNAI and their respective
Affiliates, in connection with the enforcement of this Agreement and the
other documents to be delivered hereunder.
(b) In addition, the Seller shall pay any and all stamp, sales,
excise and other taxes (other than taxes based upon or measured by income
of the Agent or any Owner) and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this
Agreement or the other documents to be delivered hereunder, and agrees to
indemnify CNAI, the Agent and each Owner against any liabilities with
respect to or resulting from any delay by the Seller in paying or omission
to pay such taxes and fees.
(c) In addition, the Seller shall pay on demand all other
costs, expenses and taxes (excluding income taxes) incurred by any
Investor or any general or limited partner or shareholder of any Investor
("Other Costs"), including, without limitation, the cost of auditing such
Investor's books by certified public accountants, the cost of rating such
Investor's commercial paper by independent financial rating agencies, the
taxes (excluding income taxes) resulting from such Investor's operations,
and the reasonable fees and out-of-pocket expenses of counsel for such
Investor or any counsel for any general or limited partner or shareholder
of such Investor with respect to (i) advising such Investor or such
general or limited partner or shareholder as to its rights and remedies
under this Agreement, (ii) the enforcement of this Agreement and the other
documents to be delivered hereunder or (iii) advising such Investor or
such general or limited partner or shareholder as to matters relating to
such Investor's operations; provided, however, that if such Investor
enters into agreements for the purchase of interests in receivables from
one or more other Persons ("Other Sellers"), the Seller and such Other
Sellers shall each be liable for such Other Costs ratably in accordance
with the usage under the respective facilities of such Investor to
purchase receivables or interests therein from the Seller and each Other
Seller; and provided, further, that if such Other Costs are attributable
to the Seller and not attributable to any Other Seller, the Seller shall
be solely liable for such Other Costs.
SECTION 11.07. No Proceedings. Each of the Seller, the Agent,
CNAI, the Owners and each other assignee of an Eligible Asset or any
interest therein and each entity which enters into a commitment to
purchase Eligible Asset or interests therein hereby agrees that it will
not institute against any Investor any proceeding of the type referred to
in clause (ii) of Section 7.01(f) so long as any commercial paper issued
by such Investor shall be outstanding or there shall not have elapsed one
year plus one day since the last day on which any such commercial paper
shall have been outstanding.
SECTION 11.08. Additional Investor. At any time and from time
to time, any party hereto (other than the Agent) may, by notice to the
Agent, propose that a Person specified in such notice become an Investor
hereunder, provided that such person is a receivables investment company
which in the ordinary course of its business issues commercial paper or
other securities to fund its acquisition and maintenance of receivables.
The Agent shall, promptly upon its receipt of any such notice, notify the
other parties hereto (including any Person having become a party pursuant
to this Section 11.08) of such proposal. In the event that all parties
hereto agree in writing to the addition of such Person as an Investor
hereunder (provided that the addition of any receivables investment
company managed by CNAI shall not require the agreement of the Seller or
any other Person), such Person shall become a party hereto as an Investor
hereunder, effective as at the date specified by the parties hereto in
connection with their agreement as to the addition of such Person, and,
effective as at such date, such Person shall become a party hereto and an
Investor hereunder, entitled to the benefits hereof and subject to the
obligations of an Investor hereunder; provided, however, that, on or prior
to such date, such Person shall have delivered to the Agent (in sufficient
counterparts for each party hereto) an Assumption Agreement.
SECTION 11.09. Confidentiality. Unless otherwise required by
applicable law, the Seller agrees to maintain the confidentiality of this
Agreement and all other instruments and documents executed (or proposed to
be executed) in connection herewith (and all drafts thereof) in its
communications with third parties and otherwise; provided, however, that
the Agreement may be disclosed to third parties to the extent such
disclosure is (a) (i) required in connection with a sale of securities of
Seller or (ii) made solely to Persons who are legal counsel for the
purchaser or underwriter of such securities, and (b) made pursuant to a
written agreement of confidentiality in form and substance reasonably
satisfactory to the Agent; provided further, however, that the Agreement
may be disclosed to the Seller's legal counsel or accountants; and
provided further, however, that the Seller shall have no obligation of
confidentiality in respect of any information which may be generally
available to the public or becomes available to the public through no
fault of the Seller.
SECTION 11.10. Execution in Counterparts; Severability. This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired
thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
SELLER: SNAP-ON CREDIT CORPORATION
By /s/ Michael F. Montemurro
Name: Michael F. Montemurro
Title: President
2801 80th Street
Kenosha, Wisconsin 53141-1410
Attention: Chief Financial Officer
Facsimile No.: (414) 656-5127
Confirmation No.: (414) 656-5550
INVESTOR: CORPORATE ASSET FUNDING
COMPANY, INC.
By Citicorp North America,
Inc., as Attorney-in-Fact
By /s/ Michael Storm
Vice President
450 Mamaroneck Avenue
Harrison, N.Y. 10528
Attention: President
Facsimile No.: (312) 993-6730
Confirmation No.: (312) 993-3112
CNAI/AGENT: CITICORP NORTH AMERICA, INC.,
individually and as Agent
By /s/ Michael Storm
Vice President
450 Mamaroneck Avenue
Harrison, N.Y. 10528
Attention: Corporate
Asset Funding Department
Facsimile No.: (312) 993-6730
Confirmation No.: (312) 993-3112
<PAGE>
EXHIBIT A
FORM OF ASSUMPTION AGREEMENT
To Each of the Parties to the
Purchase Agreement Referred to Below
Gentlemen:
Reference is made to the Trade Receivable Purchase and Sale
Agreement, dated as of October 6, 1995, among Snap-on Credit Corporation,
Corporate Asset Funding Company, Inc., [__________________], and Citicorp
North America, Inc., individually and as Agent (the "Purchase Agreement").
We hereby confirm that we desire to be added as a party to and
as an Investor (as defined in the Purchase Agreement) under the Purchase
Agreement, as contemplated by Section 11.08 thereof. Subject to our
receipt of the documents contemplated by Section 11.08(b) of the Purchase
Agreement on or prior to such date, we hereby agree that, effective
_________________, we shall be a party to and an Investor under the
Purchase Agreement, and we hereby expressly agree to be bound by all of
the provisions of the Purchase Agreement as and from such date.
We hereby expressly acknowledge and confirm that we are familiar
with the Purchase Agreement (including, without limitation, Section 8.04
thereof) and the transactions contemplated thereby. Our address for
purposes of Section 11.02 of the Purchase Agreement is set forth beneath
our signature below.
This Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Very truly yours,
[Name of Additional Investor]
By ___________________________
Name:
Title:
Address: ______________________________
______________________________
______________________________
<PAGE>
EXHIBIT B
FORMS OF CONTRACTS
Attached.
<PAGE>
EXHIBIT C
DESCRIPTION OF CREDIT AND COLLECTION POLICIES
Attached.
<PAGE>
EXHIBIT D
TRADE NAMES, FICTITIOUS NAMES AND
"DOING BUSINESS AS" NAMES
None.
<PAGE>
EXHIBIT E
FORM OF INVESTOR REPORT
Attached.
<PAGE>
EXHIBIT F
LIST OF OFFICES OF THE SELLER WHERE RECORDS ARE KEPT
2801 80th Street
Kenosha, Wisconsin 53141-1410
[Execution Copy]
=================================================================
U.S. $150,000,000
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of October 6, 1995
among
SNAP-ON CREDIT CORPORATION
as Seller
and
THE BANKS SET FORTH ON THE SIGNATURES PAGES HEREOF
as the Banks
and
CITICORP NORTH AMERICA, INC.
Individually and as Agent
=================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I DEFINITIONS
SECTION 1.01. Certain Defined Terms . . . . . . . . . . . . . 2
SECTION 1.02. Other Terms . . . . . . . . . . . . . . . . . 23
SECTION 1.03. Computation of Time Periods . . . . . . . . . 23
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Commitment . . . . . . . . . . . . . . . . . . 23
SECTION 2.02. Making Purchases from the Seller . . . . . . . 23
SECTION 2.03. Termination or Reduction of the Commitment . . 25
SECTION 2.04. Eligible Asset . . . . . . . . . . . . . . . . 25
SECTION 2.05. Non-Liquidation Settlement Procedures . . . . 26
SECTION 2.06. Liquidation Settlement Procedures . . . . . . 27
SECTION 2.07. General Settlement Procedures . . . . . . . . 28
SECTION 2.08. Payments and Computations, Etc. . . . . . . . 28
SECTION 2.09. Dividing or Combining of Eligible Assets . . . 29
SECTION 2.10. Yield and Fees . . . . . . . . . . . . . . . . 30
SECTION 2.11. Yield Protection . . . . . . . . . . . . . . . 31
SECTION 2.12. Increased Capital . . . . . . . . . . . . . . 32
SECTION 2.13. Taxes and Other Taxes . . . . . . . . . . . . 33
SECTION 2.14. Sharing of Payments, Etc. . . . . . . . . . . 34
SECTION 2.15. Agreement to Assign . . . . . . . . . . . . . 35
ARTICLE III CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Effectiveness
of this Agreement . . . . . . . . . . . . . . 37
SECTION 3.02. Conditions Precedent to All Purchases
and Reinvestments . . . . . . . . . . . . . . 39
ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of
the Seller . . . . . . . . . . . . . . . . . . 40
ARTICLE V GENERAL COVENANTS OF THE SELLER
SECTION 5.01. Affirmative Covenants of the Seller . . . . . 44
SECTION 5.02. Reporting Requirements of the Seller . . . . . 46
SECTION 5.03. Negative Covenants of the Seller . . . . . . . 48
ARTICLE VI ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent . . . . . . . 50
SECTION 6.02. Duties of the Collection Agent . . . . . . . . 51
SECTION 6.03. Rights of the Agent . . . . . . . . . . . . . 52
SECTION 6.04. Responsibilities of the Seller . . . . . . . . 53
SECTION 6.05. Possession by the Seller as Trustee;
Further Action Evidencing Purchases . . . . . 53
SECTION 6.06. Delivery of Contracts to Agent . . . . . . . . 54
SECTION 6.07. Application of Collections . . . . . . . . . . 55
ARTICLE VII EVENTS OF TERMINATION
SECTION 7.01. Events of Termination . . . . . . . . . . . . 55
ARTICLE VIII THE AGENT
SECTION 8.01. Authorization and Action . . . . . . . . . . . 59
SECTION 8.02. UCC Filings . . . . . . . . . . . . . . . . . 59
SECTION 8.03. Agent's Reliance. Etc. . . . . . . . . . . . . 59
SECTION 8.04. Agent and Affiliates . . . . . . . . . . . . . 60
SECTION 8.05. Purchase Decision . . . . . . . . . . . . . . 60
SECTION 8.06. Indemnification . . . . . . . . . . . . . . . 61
SECTION 8.07. Successor Agent . . . . . . . . . . . . . . . 61
ARTICLE IX ASSIGNMENT OF PERCENTAGE INTERESTS
SECTION 9.01. Register . . . . . . . . . . . . . . . . . . . 62
SECTION 9.02. Assignment . . . . . . . . . . . . . . . . . . 62
ARTICLE X INDEMNIFICATION
SECTION 10.01. Indemnities by the Seller . . . . . . . . . . 63
ARTICLE XI MISCELLANEOUS
SECTION 11.01. Amendments, Etc. . . . . . . . . . . . . . . 66
SECTION 11.02. Notices, Etc. . . . . . . . . . . . . . . . . 68
SECTION 11.03. No Waiver; Remedies . . . . . . . . . . . . . 69
SECTION 11.04. Binding Effect; Assignability . . . . . . . . 70
SECTION 11.05. Governing Law . . . . . . . . . . . . . . . . 71
SECTION 11.06. Costs, Expenses and Taxes . . . . . . . . . . 71
SECTION 11.07. [Reserved] . . . . . . . . . . . . . . . . . 72
SECTION 11.08. [Reserved] . . . . . . . . . . . . . . . . . 72
SECTION 11.09. Confidentiality . . . . . . . . . . . . . . . 72
SECTION 11.10. Execution in Counterparts; Severability . . . 72
<PAGE>
LIST OF EXHIBITS
EXHIBIT A Form of Assignment of Purchase Commitment
EXHIBIT B Form of Contracts
EXHIBIT C Description of Credit and Collection Policy
EXHIBIT D Trade Names, Fictitious Names and "Doing Business As" Names
EXHIBIT E Investor Report
EXHIBIT F List of Offices of Seller where Records
are Kept
<PAGE>
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of October 6, 1995
SNAP-ON CREDIT CORPORATION, a Wisconsin corporation (the
"Seller"), THE BANKS SET FORTH ON THE SIGNATURE PAGES HEREOF (as such
group may be comprised from time to time after giving effect to
assignments and other transfers permitted hereunder, the "Banks"), and
CITICORP NORTH AMERICA, INC., a Delaware corporation, individually
("CNAI"), and as agent (the "Agent") for the Banks, agree as follows:
PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized
and used throughout this Agreement (in addition to those defined above)
are defined in Article I of this Agreement.
(2) This Agreement is being entered into by the parties hereto
in connection with the Receivables Purchase and Sale Agreement dated as of
October 6, 1995 (as the same may be amended, supplemented or otherwise
modified from time to time thereafter, the "Investor Agreement") among the
Seller, Corporate Asset Funding Company, Inc. and the other "Investors"
(as defined therein) parties thereto, and CNAI, individually and as agent
for the "Owners" (as defined therein), and any capitalized terms used and
not otherwise defined herein shall have the meanings assigned to such
terms in the Investor Agreement.
(3) The Seller has, and expects to have, Receivables in which
the Seller intends to sell interests referred to herein as Eligible
Assets.
(3) The Banks desire to purchase such Eligible Assets from the
Seller.
(4) In consideration of the reinvestment by the Banks in Pool
Receivables of daily Collections of the Eligible Assets (other than, in
certain circumstances, with regard to accrued Yield), the Seller will sell
additional interests in the Pool Receivables as part of such Eligible
Assets until such reinvestment is terminated.
(5) CNAI has been requested and is willing to act as Agent.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Additional Reduction Amount" means, at any time, the sum of (a)
the amount by which the aggregate Outstanding Balance of all Receivables
owing from Sales Representatives exceeds $500,000, plus (b) the amount by
which the aggregate Outstanding Balance of all Receivables required,
according to the related Contract, to be paid in full within more than 36
months but no more than 60 months of the Original Date of such Contract,
exceeds $500,000, plus (c) the amount by which the aggregate Outstanding
Balance of all Receivables owing from and Canadian Obligors and Mexican
Obligors exceeds $500,000.
"Adjusted LIBO Rate" for any Bank with respect to any Eligible
Asset for any Fixed Period means an interest rate per annum equal to
(a) 0.125% per annum, plus (b) the rate of interest per annum (the "LIBO
Rate") at which deposits in U.S. Dollars are offered by the principal
office of Citibank in London, England to prime banks in the London
interbank market at 11:00 a.m. (London time) two "LIBO Business Days" (as
defined below) before the first day of such Fixed Period in an amount
approximately equal or comparable to the Capital of such Eligible Asset
and for a period equal to such Fixed Period plus (c) the remainder
obtained by subtracting (i) the LIBO Rate for such Fixed Period from
(ii) the rate obtained by dividing such LIBO Rate by the percentage equal
to 100% minus the "Eurodollar Reserve Percentage" (as defined below) for
such Fixed Period. "LIBO Business Day" means a day of the year on which
dealings are carried on in the London interbank market and banks are open
for business in London and are not required or authorized to close in New
York City. "Eurodollar Reserve Percentage" for any Fixed Period means the
reserve percentage applicable to Citibank during such Fixed Period under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) (or if more than one such
percentage shall be so applicable, the daily average of such percentages
for those days in such Fixed Period during which any such percentage shall
be so applicable) under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for Citibank in respect of liabilities or assets consisting
of or including "Eurocurrency liabilities" (as that term is used in
Regulation D of the Board of Governors of the Federal Reserve System as in
effect from time to time) having a term equal to such Fixed Period.
"Adverse Claim" means a lien, security interest, charge or other
encumbrance.
"Affected Person" means each of the Agent, CNAI, the Banks, any
entity which enters into a commitment to purchase Eligible Assets or
interests therein, or any of their respective Affiliates.
"Affiliate" means, with respect to any Person, a Person: (a)
that directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such Person; (b)
that beneficially owns or holds 5% or more of any class of the voting
stock (or, in the case of a Person that is not a corporation, 5% or more
of the equity interest) of such Person; or (c) 5% or more of the voting
stock (or, in the case of a Person that is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held, directly
or indirectly, by such Person; provided, however, that neither the Agent
nor any Bank shall be deemed to be an Affiliate of the Seller. The term
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting stock or an equity interest, by
contract, or otherwise.
"Affiliated Obligor" means any Obligor that is an Affiliate of
another Obligor.
"Alternate Base Rate" means a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall
at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time as Citibank's base rate;
(b) 0.50% per annum above the latest three-week moving average
of secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market
banks, such three-week moving average being determined weekly on each
Monday (or, if any such day is not a Business Day on the next succeeding
Business Day) for the three-week period ending on the previous Friday by
Citibank on the basis of such rates reported by certificate of deposit
dealers to and published by the Federal Reserve Bank of New York or, if
such publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank from three New York
certificate of deposit dealers of recognized standing selected by
Citibank, in either case adjusted to the nearest 0.25% or, if there is no
nearest 1/4 of one percent, to the next higher 0.25%; and
(c) 0.50% per annum above the Federal Funds Rate.
"Asset Purchase Agreement" means the asset purchase agreement,
if any, among the Agent and the Banks, pursuant to which the Banks shall
commit to purchase undivided interests owned by Corporate Asset Funding
Company, Inc., from time to time.
"Assignee Rate" for any Bank with respect to any Fixed Period
for any Eligible Asset means an interest rate per annum equal to the
Adjusted LIBO Rate; provided, however, that (a) in the case of any Fixed
Period of less than one month (measured as described in the definition of
"Fixed Period" with reference to Eligible Assets on which Yield is
calculated based upon the Adjusted LIBO Rate), the "Assignee Rate" for
such Fixed Period for such Eligible Asset shall be calculated using an
interest rate per annum equal to the Alternate Base Rate; (b) if any Bank
shall have notified the Agent on or before the first day of such Fixed
Period that a LIBO Rate Disruption Event has occurred and is continuing,
then the "Assignee Rate" for such Fixed Period for such Eligible Asset
shall be calculated using an interest rate per annum equal to the
Alternate Base Rate; (c) in the case of any Fixed Period for an Eligible
Asset the Capital of which is less than $500,000, the "Assignee Rate" for
such Fixed Period for such Eligible Asset shall be calculated using an
interest rate per annum equal to the Alternate Base Rate; and (d) if an
Event of Termination has occurred and is continuing, the "Assignee Rate"
for any Fixed Period for such Eligible Asset shall be the sum of the
applicable interest rate per annum determined pursuant to the provisions
set forth above plus 1.00% per annum.
"Assignment of Purchase Commitment" means an Assignment of
Purchase Commitment in substantially the form of Exhibit A, to be
delivered to the Agent for recordation in the Register in connection with
the assignment by any Bank of any of its rights or obligations hereunder
or interests herein.
"Benefit Plan" means a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of
which the Seller or any ERISA Affiliate is, or at any time during the
immediately preceding six years was, an "employer" as defined in Section
3(5) of ERISA.
"Business Day" means (a) any day other than a Saturday, Sunday
or public holiday or the equivalent for banks in New York City, and (b) if
the term "Business Day" is used in connection with the Adjusted LIBO Rate,
a LIBO Business Day.
"Canadian Obligor" means any Obligor that is a resident of
Canada but whose place of employment is located in the United States.
"Capital" of any Eligible Asset means (i) the original amount
paid to the Seller for such Eligible Asset at the time of its acquisition
by the Banks pursuant to Sections 2.01 and 2.02, or (ii) in the case of an
assignment of an "Eligible Asset" (under and as defined in the Investor
Agreement) from the Owners under Section 2.15, the amount of "Capital" of
such "Eligible Asset" as computed at the time of such assignment under the
Investor Agreement, in each case reduced from time to time by Collections
received and distributed on account of such Capital pursuant to Section
2.06 below. If any Bank or the Agent is required (or believes in good
faith that it is required) by law to repay (as a preference or otherwise,
and to the Seller, an Obligor, a trustee for the Seller or any Obligor, a
court or any other Person) any amount that previously caused a reduction
in Capital, then, to the extent that such amount is so repaid, Capital
shall be reinstated by the amount of such repayment and the Seller will
(but without duplication of any recovery made as a result of any related
reinstatement of Capital) indemnify and hold such Bank or the Agent
harmless for the amount of such repayment, interest thereon required (or
believed in good faith by such Bank or the Agent to be required) to be
paid in connection therewith and all losses, liabilities, costs and
expenses related thereto (including but not limited to reasonable
attorneys' fees and expenses). The "Capital" of the Percentage Interest
of a Bank in a Eligible Asset means the product of the Capital of such
Eligible Asset, multiplied by the Percentage of such Bank with respect to
such Eligible Asset.
"Capital Increase Purchase" means any Purchase by the Banks
which, pursuant to Section 2.02 or 2.15, causes the aggregate outstanding
Capital hereunder to increase.
"Citibank" means Citibank, N.A., a national banking association.
"Collection Agent" means at any time the Person then authorized
pursuant to Article VI to service, administer and collect Receivables.
"Collection Agent Fee" has the meaning assigned to that term in
Section 2.10.
"Collection Date" means the earliest date following the initial
Purchase hereunder on which all Banks have received the accrued Yield for
their respective Percentage Interests, the Capital of such Percentage
Interests and all other amounts payable to such Banks pursuant to this
Agreement, and the Collection Agent has received the accrued Collection
Agent Fee for all such Percentage Interest.
"Collections" means, (a) with respect to any Receivable, all
cash collections and other cash proceeds of such Receivable, including,
without limitation, all cash proceeds of Related Security with respect to
such Receivable, and any Collection of such Receivable deemed to have been
received pursuant to Section 2.07 (it being understood that the Seller
shall pay all such deemed Collection amounts to the Collection Agent) and
(b) any amounts paid to the Agent pursuant to the terms of the Parent
Support Agreement.
"Commitment" means, at any time, $150,000,000, as such amount
may be reduced pursuant to Section 2.03; provided, however, that at all
times on and after the Termination Date, the "Commitment" shall mean the
aggregate Capital for all Eligible Assets.
"Concentration Limit" for any Obligor means, at any time, (a)
1.67% of the aggregate outstanding Capital hereunder at such time, or (b)
such higher amount for any Obligor designated by Agent in a writing
delivered to Seller from time to time; provided, however, that in the case
of an Obligor with any Affiliated Obligors, the Concentration Limit and
the Receivables related thereto shall be calculated as if such Obligor and
such one or more Affiliated Obligors were one Obligor.
"Contract" means an agreement in substantially the form of one
of the forms of written contract set forth in Exhibit B or otherwise
approved by the Agent, initially executed between a Dealer or the Parent
and an Obligor, and subsequently assigned, as applicable, (a) by such
Dealer either directly to the Seller or to the Parent and subsequently by
the Parent to the Seller or (b) by the Parent to the Seller, pursuant to
or under which agreement such Obligor shall be obligated to pay for
merchandise sold or services rendered by such Dealer or the Parent, as
applicable.
"Contract Rider" means, with respect to any Contract, any rider
thereto executed and delivered by the Obligor thereunder evidencing the
purchase by such Obligor of additional goods or merchandise manufactured
by the Seller and a resulting increase in the Outstanding Balance of the
Receivable arising under such Contract, which increased Outstanding
Balance has been refinanced as of the date of such rider under terms
providing for the payment in full of such increased Outstanding Balance by
way of substantially equal installments payable no less frequently than
monthly within no more than 60 months of the date of such rider.
"Credit and Collection Policy" means those credit and collection
policies and practices relating to Contracts and Receivables described in
Exhibit C, as modified in compliance with Section 5.03(c).
"Dealer" means any Person, authorized pursuant to an effective
Dealer Agreement with the Parent, to act as a dealer for Equipment
manufactured and/or sold or distributed by the Parent.
"Dealer Agreement" means an agreement (as amended, supplemented
or otherwise modified from time to time) between any Person and the Parent
authorizing such Person to act as a dealer for the Parent, including,
without limitation, if the relevant Dealer is a franchise dealer, a
"Dealer Franchise Agreement" or "Conversion Dealer Franchise Agreement."
"Debt" of any Person means (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations of such
Person to pay the deferred purchase price of property or services,
(d) obligations of such Person as lessee under leases which shall have
been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, (e) obligations secured by any
lien or other charge upon property or assets owned by such Person, even
though such Person has not assumed or become liable for the payment of
such obligations, (f) obligations of such Person in connection with any
letter of credit issued for the account of such Person and (g) obligations
of such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (f)
above.
"Default Ratio" means for any month, the average of the Monthly
Default Ratios for such month and each of the immediately preceding two
consecutive months.
"Defaulted Receivable" means a Receivable, other than a Write-
off: (a) as to which any payment, or part thereof, remains unpaid for
more than 90 days from the scheduled due date for such payment (determined
by reference to the payment schedule with respect to such Receivable
established as of the Original Date of the related Contract) or (b) as to
which the Obligor thereof has taken any action, or suffered any event to
occur, of the type described in Section 7.01(g).
"Delinquency Ratio" means for any month the average of the
Monthly Delinquency Ratios for such month and each of immediately
preceding two consecutive months.
"Delinquent Receivable" means a Receivable that is not a
Defaulted Receivable and (a) as to which any payment, or part thereof,
remains unpaid for more than 30 days from the scheduled due date for such
payment (determined by reference to the payment schedule with respect to
such Receivable established as of the Original Date of the related
Contract) or (b) which, consistent with the Credit and Collection Policy,
has been or should be classified as delinquent by the Seller.
"Designated Obligor" means, at any time, any Obligor of any
Receivable, unless the Agent, in the exercise of its reasonable credit
judgment, has advised the Seller following three Business Days' notice
that such Obligor shall not be considered a Designated Obligor.
"Dilution Factors" means, with respect to the Receivables, any
credits, rebates (including, without limitation, in connection with any
prepayment or acceleration of any Receivable), freight charges, cash
discounts, volume discounts, cooperative advertising expenses, royalty
payments, warranties, cost of parts required to be maintained by agreement
(whether express or implied), allowances, disputes, chargebacks, returned
or repossessed goods, inventory transfers, allowances for early payments
and other allowances that are made or coordinated with the Seller's usual
practices.
"Eligible Asset" means, at any time, an undivided percentage
ownership interest at such time in (a) all then outstanding Pool
Receivables arising prior to the time of the most recent computation or
recomputation of such undivided percentage interest pursuant to Section
2.04, (b) all Related Security with respect to such Pool Receivables and
(c) all Collections with respect to, and other proceeds of, such Pool
Receivables. Such undivided percentage interest for such Eligible Asset
shall be computed as
C + YR + LR
NRPB
where:
C = the Capital of such Eligible Asset at the time of such
computation.
YR = the Yield Reserve of such Eligible Asset at the time of
such computation.
LR = the Loss Reserve of such Eligible Asset at the time of such
computation.
NRPB = the Net Receivables Pool Balance at the time of such
computation.
Each Eligible Asset shall be determined from time to time pursuant to the
provisions of Section 2.04. The sum of all Eligible Assets shall equal,
at all times, 100% of the interests described in clauses (a), (b) and (c)
above.
"Eligible Receivable" means, at any time and with respect to any
Eligible Asset, a Receivable:
(a) the Obligor of which, if not a Sales Representative, is not
an Affiliate of any of the parties hereto;
(b) the Obligor of which is a Designated Obligor;
(c) the Obligor of which is not the Obligor of any Defaulted
Receivables;
(d) which is not a Defaulted Receivable;
(e) which, according to the Contract related thereto, is (i)
required to be paid in full within 60 months of the Original Date of such
Contract and (ii) payable in substantially equal installments to be made
no less frequently than monthly;
(f) which arises under a Contract, the performance of which has
been completed by all other applicable parties other than the Obligor, and
which Receivable is fully assignable and has been properly documented in
accordance with the requirements of the Credit and Collection Policy, and
all Equipment, other goods or services in connection therewith have been
delivered to or performed for the Obligor;
(g) which is indebtedness representing all or part of the sales
price of merchandise, insurance or services within the meaning of Section
3(c)(5) of the Investment Company Act of 1940, as amended;
(h) a purchase of which with the proceeds of notes would
constitute a "current transaction" within the meaning of Section 3(a)(3)
of the Securities Act of 1933, as amended;
(i) which constitutes "chattel paper" within the meaning of the
UCC of all applicable jurisdictions and in respect of which only one set
of instruments and other documents evidencing such Receivable has been
executed;
(j) which is denominated and payable only in United States
Dollars in the United States;
(k) which arises under a Contract which has been duly
authorized and which, together with such Receivable (which shall not in
any event satisfy this clause (k) if such Receivable has been paid by the
Obligor thereof), is in full force and effect and constitutes the legal,
valid and binding obligation of the Obligor of such Receivable enforceable
against such Obligor in accordance with its terms and is not subject (at
the time each determination of eligibility is made hereunder) to any
dispute, offset, counterclaim or defense whatsoever;
(l) which was (i) originated by a Dealer and acquired from such
Dealer in the ordinary course of business (A) by the Seller, together with
a security interest in the related Equipment or (B) by the Parent and
subsequently assigned in the ordinary course of business by the Parent to
the Seller, together with a security interest in the related Equipment,
pursuant to the Transfer Agreement or (ii) originated by the Parent and
acquired from the Parent in the ordinary course of business by the Seller,
together with a security interest in the related Equipment, pursuant to
the Transfer Agreement;
(m) which has not been compromised, adjusted, rescheduled or
otherwise modified (including by extension of time of payment) as a result
of delinquency or other negative credit reasons;
(n) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, to the extent applicable, but without
limitation, laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no party to
the Contract related thereto is in violation of any such law, rule or
regulation in any material respect;
(o) which (i) satisfies in all material respects all applicable
requirements of the Credit and Collection Policy and (ii) complies with
such other criteria and requirements as the Agent may, in the exercise of
its reasonable credit judgment, from time to time specify to the Seller
following 30 days' notice;
(p) with respect to which, to the extent required by the Credit
and Collection Policy, the Seller has received a valid, first security
interest in the Equipment, the sale of which gave rise to such Receivable,
and all steps necessary to perfect such security interest in all
applicable jurisdictions shall have been taken, including the filing of
UCC financing statements;
(q) with respect to which the related Equipment is insured, for
the benefit of the Seller, against loss as a result of fire or other
casualty, in accordance with the requirements of Section 5.01(m);
(r) with respect to which none of the related Equipment has
been returned, rejected or repossessed;
(s) the Obligor of which is a United States resident, a
Canadian Obligor or a Mexican Obligor, and is not a government or a
governmental subdivision or agency; and
(t) as to which the Agent has not notified the Seller that the
Agent has determined, in its reasonable credit judgement, that such
Receivable (or class of Receivables) is not acceptable for purchase
hereunder.
"ERISA" means the U.S. Employee Retirement Income Security Act
of 1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" means any (a) corporation which is a member of
the same controlled group of corporations (within the meaning of Section
414(b) of the IRC) as the Seller; (b) partnership or other trade or
business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the IRC) with the Seller or (c) member of the
same affiliated service group (within the meaning of Section 414(m) of the
IRC) as the Seller, any corporation described in clause (a) above or any
partnership or other trade or business described in clause (b) above.
"Equipment" means tools and equipment manufactured and/or sold
by the Parent and/or Dealers, and any attachments thereto, and "related
Equipment" means, when used in reference to any Receivable, the Equipment
financed under the related Contract.
"Facility Fee" has the meaning assigned to that term in Section
2.10.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day for such transactions received by
Citibank from three Federal funds brokers of recognized standing selected
by it.
"Fee Letter" means the letter agreement of even date herewith
among the Seller, Corporate Asset Funding Company, Inc., Citibank, CNAI,
the Agent and the "Agent" under and as defined in the Investor Agreement.
"Fixed Period" means with respect to any Eligible Asset:
(a) the period commencing on the date of the creation of such
Eligible Asset pursuant to Section 2.02 or 2.09 and ending on (i) if Yield
thereon is to be calculated at the Assignee Rate using the Adjusted LIBO
Rate for such Fixed Period, the numerically corresponding date occurring
one, two, three or six months thereafter, as selected by the Seller and
approved by the Agent pursuant to Section 2.02 or Section 2.09; and (ii)
if Yield thereon is to be calculated at the Assignee Rate using the
Alternate Base Rate for such Fixed Period, such number of days as the
Seller shall select and the Agent shall approve pursuant to Section 2.02
or Section 2.09, as the case may be, up to 30 days from such date; and
(b) thereafter, each period commencing on the last day of the
immediately preceding Fixed Period for such Eligible Asset and ending on
(i) if Yield thereon is to be calculated at the Assignee Rate using the
Adjusted LIBO Rate for such Fixed Period, the numerically corresponding
date occurring one, two, three or six months thereafter, as selected by
the Seller and approved by the Agent on notice by the Seller received by
the Agent (including notice by telephone, confirmed in writing) not later
than or 10:00 a.m. (New York City time) on the third LIBO Business Day
prior to the first day of such subsequent Fixed Period; and (ii) if Yield
thereon is to be calculated at the Assignee Rate using the Alternate Base
Rate for such Fixed Period, such number of days, not to exceed 30, as the
Seller shall select and the Agent shall approve on notice by the Seller
received by the Agent (including notice by telephone, confirmed in
writing) not later than 11:00 a.m. (New York City time) on such last day;
provided, however, that
(1) any such Fixed Period (other than of one day) which would
otherwise end on a day which is not a Business Day shall be extended to
the next succeeding Business Day (except that if Yield in respect of such
Fixed Period is computed by reference to the Adjusted LIBO Rate, and such
next succeeding Business Day is in the next calendar month, then such
Fixed Period shall end on the next preceding Business Day);
(2) in the case of Fixed Periods of one day for any Eligible
Asset, (A) the initial Fixed Period shall be the day of the creation of
such Eligible Asset pursuant to Section 2.02 or Section 2.09; (B) any
subsequently occurring Fixed Period which is one day shall, if the
immediately preceding Fixed Period is more than one day, be the last day
of such immediately preceding Fixed Period, and if the immediately
preceding Fixed Period is one day, be the day next following such
immediately preceding Fixed Period; and (C) any Fixed Period of one day
which occurs on a day immediately preceding a day which is not a Business
Day shall be extended to the next succeeding Business Day;
(3) in the case of any Fixed Period for any Eligible Asset,
which commences before the Termination Date and would otherwise end on a
date occurring after such Termination Date, such Fixed Period shall end on
such Termination Date and the duration of each such Fixed Period which
commences on or after the Termination Date shall be of such duration as
shall be selected by the Agent; and
(4) from time to time until the Termination Date, subject to
the exceptions and limitations described above and in Sections 2.02 and
2.09, and the Agent's approval in accordance with the procedures above and
in Sections 2.02 and 2.09, the Seller shall select Fixed Periods for each
Eligible Asset so that the outstanding Capital of all Eligible Assets is
at all times allocated to a Fixed Period.
"Interim Procedures Letter" means a letter agreement of even
date herewith among the Seller, the Parent, Corporate Asset Funding
Company, Inc., Citibank, CNAI, the Agent and the "Agent" under and as
defined in the Investor Agreement.
"Investor Agreement" has the meaning assigned to that term in
the Preliminary Statements to this Agreement.
"Investor Capital" means, at any time, the then aggregate
"Capital" of all "Eligible Assets" purchased and outstanding at such time
under or pursuant to the Investor Agreement.
"Investor Report" means a report, in substantially the form of
Exhibit E, furnished by the Collection Agent to the Agent for each Bank
pursuant to Section 2.07.
"Involuntary Proceeding" has the meaning assigned to that term
in Section 7.01.
"IRC" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute.
"LIBO Rate Disruption Event" means, for any Bank with respect to
any Percentage Interest in an Eligible Asset for any Fixed Period, any of
the following: (a) a determination by such Bank that it would be contrary
to law or to the directive of any central bank or other governmental
authority (whether or not having the force of law) to obtain United States
dollars in the London interbank market for the purchase or maintenance of
such Percentage Interest for such Fixed Period, (b) the inability of
Citibank to furnish a LIBO Rate quotation to such Bank prior to 1:00 p.m.
(London time) on the second Business Day before the first day of such
Fixed Period, (c) a determination by such Bank that the rate at which
deposits of United States dollars are being offered to such Bank in the
London interbank market does not accurately reflect the cost to such Bank
of funding its purchase or maintenance of such Percentage Interest for
such Fixed Period or (d) the inability of such Bank, by reason of
circumstances affecting the London interbank market generally, to obtain
United States dollars in such market to fund its purchase or maintenance
of such Percentage Interest for such Fixed Period.
"Liquidation Fee" means, for each Eligible Asset (or Bank's
interest therein) for the Fixed Period (computed without regard to clause
(3) of the definition of "Fixed Period") during which the Capital for such
Eligible Asset is reduced, the amount, if any, by which (a) the additional
Yield (calculated without taking into account any Liquidation Fee) which
would have accrued on the reductions of Capital of such Eligible Asset (or
Bank's interest therein) during such Fixed Period (as so computed) if such
reductions had remained as Capital exceeds (b) the income received by the
Bank of such Eligible Asset (or interest therein) from such Bank's
investing the proceeds of such reductions of Capital to the extent it may
reasonably do so in the circumstances.
"Liquidation Yield" means, for any Eligible Asset at any time,
an amount equal to the Rate Variance Factor multiplied by the product of
(a) the Capital of such Eligible Asset and (b) the product of (i) the
Assignee Rate for such Eligible Asset for a Fixed Period deemed to
commence at such time for a period of one month and (ii) a fraction having
the number of months in the period equal to the Weighted Average Life, as
numerator, and 12, as denominator.
"Loss-to-Liquidation Ratio" means, for any month, the ratio
(expressed as a percentage) computed by dividing (a) the aggregate
Outstanding Balance of all Receivables that became Write-offs during each
of the immediately preceding twelve months (net of recoveries of Write-
offs received during each of the immediately preceding twelve months) by
(b) the aggregate amount of all Collections received during each of the
immediately preceding twelve months.
"Loss Percentage" for any Eligible Asset means on any day during
any Fixed Period for such Eligible Asset the greatest of (a) three times
the highest Monthly Default Ratio on any day during the three months
preceding such day, (b) three times the Loss-to-Liquidation Ratio for the
current month and (c) 5.00%.
"Loss Reserve" of any Eligible Asset at any time means an amount
equal to
LP x (C + YR)
where:
LP = the Loss Percentage for such Eligible Asset at such
time.
C = the Capital of such Eligible Asset at such time.
YR = the Yield Reserve for such Eligible Asset at such
time.
"Mexican Obligor" means any Obligor that is a resident of Mexico
but whose place of employment is located in the United States.
"Majority Banks" means, at any time, such Banks as shall then
have outstanding Capital of Percentage Interests in an aggregate amount
exceeding 66-2/3% of the aggregate amount of Capital outstanding
hereunder, and if at such time no Capital is outstanding hereunder, such
Banks as shall have Percentages aggregating more than 66-2/3%.
"Maximum Purchase" means, with respect to any Bank, the maximum
amount of Capital of Percentage Interests that a Bank is obligated to
purchase hereunder. The Maximum Purchase of any Bank shall at all times
equal such Bank's Percentage of the Commitment (as in effect from time to
time). Each Bank's initial Maximum Purchase is set forth opposite the
name of such Bank on the signature pages hereof, or in the relevant
Assignment of Purchase Commitment, as appropriate.
"Material Subsidiary" means any Subsidiary of the Parent except
a Subsidiary that has neither (a) assets with a book value in excess of
$10,000,000 nor (b) annual revenues for the most recently completed
calendar year in excess of $10,000,000.
"Monthly Default Ratio" means for any month the ratio (expressed
as a percentage) computed as of the last day of the immediately preceding
month by dividing (a) the aggregate Outstanding Balance of all Receivables
that were Defaulted Receivables on such last day or that became Write-offs
at any time during such immediately preceding month by (b) the aggregate
Outstanding Balance of all Receivables on such last day.
"Monthly Delinquency Ratio" means for any month the ratio
(expressed as a percentage) computed as of the last day of the immediately
preceding month by dividing (a) the aggregate Outstanding Balance of all
Receivables that were Delinquent Receivables on such last day by (b) the
aggregate Outstanding Balance of all Receivables on such last day.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding
six years was, contributed to by the Seller or any ERISA Affiliate.
"Net Receivables Pool Balance" means at any time the Outstanding
Balance of the Eligible Receivables in the Receivables Pool at such time,
reduced by the sum of (a) the sum of the aggregate amount by which the
Outstanding Balance of all Pool Receivables of each Obligor exceeds the
Concentration Limit for such Obligor at such time and (b) the Additional
Reduction Amount at such time.
"Obligor" means a Person obligated to make payments pursuant to
a Contract.
"Original Date" means, with respect to any Contract, the later
of (a) the original date of such Contract and (b) the date of the most
recent Contract Rider entered into in compliance with the requirements of
Section 5.03(b).
"Outstanding Balance" of any Receivable at any time means the
then outstanding principal balance thereof excluding therefrom any
available cash discounts.
"Parent" means Snap-on Incorporated, a Delaware corporation.
"Parent Support Agreement" means the Support Agreement of even
date herewith between the Parent and the Agent, as the same may be
amended, supplemented or otherwise modified from time to time.
"Payment Date" means for any Eligible Asset for any Settlement
Period, the last day of such Settlement Period.
"Percentage" means, for each Bank, the percentage set forth for
such Bank under the heading "Percentages" opposite its signature line set
forth below, as such percentage may be modified by assignments made from
time to time hereunder, as set forth in the relevant Assignment of
Purchase Commitment and recorded in the Register; provided, however, that
in the event this Agreement is amended to increase the amount of the
Commitment, each Bank's Percentage shall be proportionately reduced (and,
therefore, the amount of each Bank's Maximum Purchase shall remain the
same as prior to such amendment), except that a Bank may elect to maintain
its Percentage hereunder (and, therefore, increase the amount of its
Maximum Purchase) by executing and delivering, within ten days after
receipt of notice of such amendment, an agreement in favor of the Seller
and the Agent (in form and substance satisfactory to the Agent)
reaffirming its Percentage and indicating its new Maximum Purchase amount;
provided further, however, that in the event any Bank is required to
participate in a Capital Increase Purchase under Section 2.02 or Section
2.15, and such Bank (the "Defaulting Bank") fails, for any reason, to make
available to the Agent its Percentage of the amount of Capital of the
Eligible Asset(s) to be purchased pursuant to such Capital Increase
Purchase, then the Defaulting Bank's Percentage with respect to such
Eligible Asset(s) shall be zero, and
(i) if the Agent has not made available to the Seller the
amount of Capital which the Defaulting Bank was required to provide (or if
the Agent has made such amount of Capital available to the Seller, and the
Seller thereafter repays to the Agent the amount of such Capital along
with all interest accrued thereon in accordance with Section 2.02 or 2.15,
as appropriate), the Percentages of each of the other Banks with respect
to such Eligible Asset(s) shall be proportionately increased so that such
Percentages aggregate to 100%, and
(ii) if the Agent has made available to the Seller the amount of
Capital which the Defaulting Bank was required to provide, unless and
until such amount of Capital (along with any interest accrued thereon in
accordance with Section 2.02 or 2.15, as appropriate) is reimbursed to the
Agent by the Seller or the Defaulting Bank, the Agent shall be a "Bank"
hereunder for all purposes relevant to such Eligible Asset(s) and,
notwithstanding anything herein to the contrary, the Agent's Percentage
with respect to such Eligible Asset(s) shall equal the Defaulting Bank's
Percentage (determined without giving effect to this proviso) and the
Defaulting Bank's Percentage with respect to such Eligible Asset(s) shall
be reduced to zero until such time as the Agent is reimbursed by the
Defaulting Bank.
Notwithstanding anything in the foregoing, in Sections 2.02 or 2.15, or
elsewhere in this Agreement to the contrary, the Agent shall have no
commitment whatsoever to make any purchase of a Percentage Interest in an
Eligible Asset, and no Bank shall have any obligation to make available to
the Agent in connection with any Purchase of an Eligible Asset, an amount
of Capital (x) which exceeds the aggregate Capital of such Eligible Asset
multiplied by the Percentage of such Bank (determined without giving
effect to the proviso in the foregoing sentence) or (y) which, when added
to the aggregate outstanding Capital of all Percentage Interests held by
such Bank hereunder, exceeds such Bank's Maximum Purchase.
"Percentage Interest" means, for each Bank, with respect to an
Eligible Asset, its undivided percentage ownership interest in such
Eligible Asset, which percentage shall be equal to such Bank's Percentage
of such Eligible Asset.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, government (or any agency or political
subdivision thereof) or other entity.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Program Fee" has the meaning assigned to that term in Section
2.10.
"Purchase" means a purchase by the Banks of an Eligible Asset
from the Seller or the Owners pursuant to Article II, including, without
limitation, the initial purchase of an Eligible Asset under Section 2.02,
the purchase by the Banks of Eligible Assets from the Owners under Section
2.15 and the remittance by the Collection Agent to the Seller of
Collections of Receivables pursuant to Section 2.05.
"Purchase Commitment" means, with respect to any Bank, such
Bank's obligation to purchase Percentage Interests in Eligible Assets
offered for sale hereunder.
"Rate Variance Factor" means 1.25.
"Ratings Requirement" means the requirement that the senior
unsecured long-term debt of the Parent be rated at least A- by Standard &
Poor's Ratings Group and A3 by Moody's Investors Service, Inc.
"Receivable" means the indebtedness of any Obligor under a
Contract whether constituting an account, chattel paper, instrument or
general intangible, arising from a sale of merchandise or the performance
of services by a Dealer or the Parent, and includes the right to payment
of any interest or finance charges and other obligations of such Obligor
with respect thereto.
"Receivables Pool" means at any time all the outstanding
Receivables of the respective Obligors existing or arising at any time
such respective Obligors are Designated Obligors.
"Records" means 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 with respect to Receivables and the
related Obligors.
"Register" has the meaning assigned to that term in Section
9.01.
"Reinvestment Termination Date" means that Business Day which
the Seller designates as the Reinvestment Termination Date by notice to
the Agent at least ten Business Days prior to such Business Day or, if any
of the conditions precedent in Section 3.02 are not satisfied, such
earlier Business Day which the Agent designates as the Reinvestment
Termination Date by notice to the Seller at least one Business Day prior
to such Business Day.
"Related Security" means with respect to any Receivable:
(a) all of the Seller's interest in the merchandise (including
returned, repossessed or foreclosed merchandise), if any, relating to the
sale which gave rise to such Receivable;
(b) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise;
(c) the assignment to the Agent, for the benefit of any Bank,
of all UCC financing statements, if any, covering any collateral securing
payment of such Receivable;
(d) all of the Seller's right and title to, and interest in,
all guarantees, indemnities, warranties, insurance policies and proceeds
and premium refunds thereof and other agreements or arrangements of
whatever character from time to time supporting or securing payment of
such Receivable whether pursuant to the Contract related to such
Receivable or otherwise, including, without limitation, all recourse
rights of the Seller, howsoever arising, against the Dealer that
originated such Receivable and the related Contract or the Parent;
(e) all Records; and
(f) all proceeds of the foregoing.
"Sales Representative" means any individual duly employed by the
Parent as a sales representative for merchandise manufactured by the
Parent.
"Settlement Period" for any Eligible Asset means each period
commencing on the first day of each Fixed Period for such Eligible Asset
and ending on the last day of such Fixed Period, and, on and after the
Termination Date, such period (including, without limitation, a daily
period) as shall be selected from time to time by the Agent or, in absence
of any such selection, each period of thirty days from the last day of the
immediately preceding Settlement Period; provided, however, that with
respect to any Fixed Period of one day as described in clauses (2)(A) and
(B) of the proviso clause of the definition of "Fixed Period," the related
Settlement Period shall be the first day following such Fixed Period.
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the Board of Directors or other
Persons performing similar functions are at the time directly or
indirectly owned by such Person.
"Termination Date" means the earliest of (a) the Reinvestment
Termination Date, (b) the reduction of the Commitment to zero pursuant to
Section 2.03, (c) the declaration or automatic occurrence of the
Termination Date pursuant to Section 7.01, (d) the date that the Seller
reduces the Purchase Limit to zero and (e) October 4, 1996.
"Transfer Agreement" means the Transfer Agreement of even date
herewith among the Parent, the Seller and Snap-on Financial Services,
Inc., a Nevada corporation, as in effect on the date of the initial
Purchase hereunder.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
"Weighted Average Life" means, on any day, that period
(expressed in months and rounded up to the next full month) equal to the
sum of (a) the weighted average remaining maturity of the Receivables as
of the end of the most recently ended calendar month, plus (b) one month,
as calculated by the Collection Agent and set forth in the Investor Report
prepared as of the end of such most recently ended calendar month;
provided, however, if the Agent shall disagree with any such calculation,
the Agent may recalculate the Weighted Average Life for such day.
"Write-off" means a Receivable that, in accordance with the
Credit and Collection Policy, has been or should be (a) assigned to a
category reserved for doubtful Receivables or otherwise recorded on the
Seller's books as a Receivable the collectibility of which is doubtful or
(b) written off the Seller's books as uncollectible. A Write-off shall
continue to constitute a Receivable for purposes of this Agreement until
the indebtedness of the Obligor related thereto shall have been paid in
full, extinguished by agreement between the Seller and such Obligor or
otherwise extinguished pursuant to applicable law.
"Yield" means for each Eligible Asset for any Fixed Period:
AR x C x ED
360
where:
AR = the Assignee Rate for such Eligible Asset for such Fixed
Period,
C = the Capital of such Eligible Asset during such Fixed
Period, and
ED = the actual number of days elapsed during such Fixed Period;
provided, however that (a) no provision of this Agreement shall require
the payment or permit the collection of Yield in excess of the maximum
permitted by applicable law and (b) Yield for any Eligible Asset shall not
be considered paid by any distribution if at any time such distribution is
rescinded or must otherwise be returned for any reason. The "Yield" for
each Bank's Percentage Interest in any Eligible Asset during any Fixed
Period means the product of (x) the Yield for such Eligible Asset and (y)
the Percentage of such Bank with respect to such eligible Asset.
"Yield Reserve" for any Eligible Asset means (a) so long as the
Ratings Requirement is satisfied, zero and (b) at any time when the
Ratings Requirement is not satisfied, the sum of (i) the Liquidation Yield
for such Eligible Asset and (ii) the accrued and unpaid Yield for such
Eligible Asset.
SECTION 1.02. Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles. All terms used in Article 9 of
the UCC in the State of New York, and not specifically defined herein, are
used herein as defined in such Article 9.
SECTION 1.03. 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
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Commitment. On the terms and conditions
hereinafter set forth, the Banks shall purchase undivided percentage
ownership interests in Pool Receivables from the Seller by making
Purchases of Eligible Assets from time to time during the period from the
"Termination Date" under and as defined in the Investor Agreement to the
Termination Date. Each Bank's interest in an Eligible Asset purchased
hereunder shall equal such Bank' Percentage Interest in such Eligible
Asset. Under no circumstances shall the Banks make any Purchase of any
Eligible Asset if, after giving effect to such Purchase, the aggregate
Capital for all Eligible Assets hereunder would exceed and amount equal to
(i) the Commitment then in effect, minus (ii) the Investor Capital at such
time. In addition, the Banks shall, but subject to the terms and
conditions of this Agreement, with the proceeds of Collections in respect
of each of the Eligible Assets, purchase from the Seller, pursuant to
Section 2.05, additional undivided percentage ownership interests in Pool
Receivables by making appropriate readjustments of such Eligible Assets.
SECTION 2.02. Making Purchases from the Seller. Each Capital
Increase Purchase from the Seller by the Banks shall be made on at least
three Business Days' notice from the Seller to the Agent. Each such
notice of a proposed Capital Increase Purchase shall specify the desired
amount and date of such Capital Increase Purchase and the desired duration
of the initial Fixed Period for the Eligible Asset or Eligible Assets to
be purchased. The Agent shall promptly thereafter notify the Seller
whether the desired duration of the initial Fixed Period for the Eligible
Asset or Eligible Assets to be purchased is acceptable. In the event that
the Seller and the Agent fail to agree on the duration of any Fixed Period
for a Capital Increase Purchase prior to the Business Day of such Capital
Increase Purchase, the duration of such Fixed Period shall be selected by
the Agent in its sole discretion. On the date of each Capital Increase
Purchase, each Bank shall make available to the Agent at its address
referred to in Section 2.08 such Bank's Percentage of the aggregate
Capital of the Eligible Assets to be purchased pursuant to such Capital
Increase Purchase in same day funds, and following receipt by the Agent of
such funds, the Agent will, upon satisfaction of the applicable conditions
set forth in Article III, make such funds immediately available to the
Seller at Citibank's address at 399 Park Avenue, New York, New York, and
each Bank shall thereupon become the owner of its respective Percentage
Interest in each of the Eligible Assets purchased by the Banks pursuant to
such Capital Increase Purchase.
(b) Unless the Agent shall have received notice from a Bank
prior to the date of any Capital Increase Purchase that such Bank will not
make available to the Agent such Bank's ratable portion of such Capital
Increase Purchase, the Agent may assume that such Bank has made such
portion available to the Agent on the date of such Capital Increase
Purchase in accordance with Section 2.02(a) and the Agent may, in reliance
upon such assumption, make available to the Seller on such date a
corresponding amount. If and to the extent that such Bank shall not have
so made such ratable portion of such Capital Increase Purchase available
to the Agent, such Bank and the Seller severally agree to repay to the
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Seller until the date such amount is repaid to the Agent, at (i) in the
case of the Seller, a rate per annum equal to the Assignee Rate then in
effect for the purposes of determining Yield in respect of the Eligible
Asset(s) relating to such Capital Increase Purchase and (ii) in the case
of such Bank, the Federal Funds Rate, and until the Agent is so repaid,
the Agent shall be deemed to own Percentage Interest(s) in such Eligible
Asset(s) corresponding to the Percentage Interest(s) which would have been
owned by such Bank if it had made such ratable portion available to the
Agent, and the Agent shall be deemed to be a "Bank" hereunder for all
purposes relevant to such Eligible Asset(s). If such Bank shall repay to
the Agent such corresponding amount of Capital, together with interest
thereon accrued at the Federal Funds Rate, such amount of Capital so
repaid shall constitute the Capital of such Bank's Percentage Interest in
the Eligible Asset(s) purchased pursuant to such Capital Increase Purchase
for purposes of this Agreement.
(c) The failure of any Bank to pay its Percentage of the amount
of Capital of any Eligible Asset to be purchased pursuant to a Capital
Increase Purchase hereunder shall not relieve any other Bank of its
obligation, if any, hereunder to pay its corresponding Percentage of such
amount of Capital, but no Bank shall be responsible for the failure of any
other Bank to pay the Percentage of Capital required to be paid by such
other Bank on the date of any such Capital Increase Purchase.
SECTION 2.03. Termination or Reduction of the Commitment. The
Seller may, upon at least five Business Days' notice to the Agent,
terminate in whole or reduce in part the unused portion of the Commitment;
provided, however, that each partial reduction shall be in an amount equal
to $1,000,000 or an integral multiple thereof. On each day on which the
Seller shall, pursuant to Section 2.03 of the Investor Agreement, reduce
in part the unused portion of the Purchase Limit, the Commitment shall
reduce automatically by an equal amount. Each reduction in the Commitment
shall be applied to reduce each Bank's Maximum Purchase ratably in
accordance with each Bank's Percentage.
SECTION 2.04. Eligible Asset. (a) Each Eligible Asset shall be
initially computed as of the opening of business of the Collection Agent
on the date of Purchase of such Eligible Asset from the Seller.
Thereafter until the Termination Date, such Eligible Asset shall be
automatically recomputed as of (i) the opening of business of the
Collection Agent on any day on which the aggregate Capital of all Eligible
Assets hereunder is increased and (ii) the close of business of the
Collection Agent on each day. An Eligible Asset shall become zero at such
time as each of the Banks shall have received the accrued Yield with
respect to its Percentage Interest in such Eligible Asset, shall have
recovered its Percentage Interest of the Capital of such Eligible Asset
and shall have received all other amounts payable to such Bank pursuant to
this Agreement. Each Eligible Asset 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.
(b) The Agent shall maintain books and records in which shall
be recorded (i) the date and amount of each Capital Increase Purchase
hereunder and each Eligible Asset purchased pursuant thereto (and each
Percentage Interest purchased therein), (ii) the date and amount of and
parties to any assignment of rights and obligations hereunder pursuant to
Article IX or Section 11.04 notified to it, (iii) the amount of any Yield,
fees or other amounts due and payable or to become due from the Seller to
the Agent, any Bank or the Collection Agent hereunder and (iv) the amount
and date of any reduction in the Capital of any Eligible Asset. The
entries made in the Agent's books and records as described in this Section
2.04(b) shall be conclusive and binding for all purposes absent manifest
error.
SECTION 2.05. Non-Liquidation Settlement Procedures. Prior to
the Termination Date, on each day during each Settlement Period for each
Eligible Asset, the Collection Agent shall, out of Collections of Pool
Receivables allocable in respect of such Eligible Asset received on such
day, to the extent that the Ratings Requirement is not satisfied on such
day, set aside and hold in trust for the benefit of each Bank (ratably in
accordance with each such Bank's Percentage of each such Eligible Asset)
an amount equal to the Yield accrued through such day for such Eligible
Asset and not so previously set aside (the amount of such Yield to be set
aside on any day to be determined in consultation with the Agent at such
time as the Ratings Requirement shall no longer be satisfied) and
(b) apply the remainder of such Collections to the purchase, for the
benefit of the Banks (ratably in accordance with each Bank's respective
Percentage of each applicable Eligible Asset), of certain additional
undivided interests in Pool Receivables. Such remainder of Collections
shall be paid to the Seller and such Eligible Asset shall be recomputed as
described in Section 2.04(a). The recomputed Eligible Asset shall
constitute a percentage ownership interest in Pool Receivables (determined
pursuant to Section 2.04(a)) on such day held by all Banks, and each
Bank's undivided percentage interest of such recomputed Eligible Asset
shall constitute such Bank's undivided percentage interest in such
Eligible Asset on such day. On each Payment Date for each Eligible Asset
occurring prior to the Termination Date, but without limitation to the
obligations of the Seller pursuant to Section 2.10(a) of this Agreement,
the Collection Agent shall deposit to the Agent's account, as described in
Section 2.08, the amounts set aside or required to be set aside with
respect to such Eligible Asset pursuant to clause (a) of the first
sentence of this Section 2.05, but only to the extent that the Seller has
not satisfied its obligations under Section 2.10(a) with respect to such
Payment Date. Upon receipt of such funds by the Agent, the Agent shall
distribute them to the Banks, ratably in accordance with each such Bank's
Percentage of such Eligible Asset in payment of the accrued and unpaid
Yield for such Eligible Asset. Notwithstanding anything to the contrary
in this Section 2.05, the Collection Agent shall not be required to
segregate Collections set aside for the benefit of the Banks preceding
remittance thereof to the Agent unless the Agent shall have so requested
as contemplated in Section 6.02(b).
SECTION 2.06. Liquidation Settlement Procedures. On the
Termination Date and on each day thereafter, with respect to each Eligible
Asset, the Collection Agent shall set aside and hold in trust for the
Banks (ratably in accordance with each such Bank's Percentage of each such
Eligible Asset), the Collections of Pool Receivables allocable in respect
of such Eligible Asset received on such day. On each Payment Date for
each Eligible Asset occurring on or after the Termination Date, but
without limitation to the Seller's obligations under Section 2.10(a) of
this Agreement, the Collection Agent shall deposit to the Agent's account,
as described in Section 2.08 below, the amounts set aside pursuant to the
preceding sentence with respect to such Eligible Asset, together with any
remaining amounts set aside pursuant to Section 2.05 prior to the
Termination Date, but not to exceed the sum of (a) the accrued Yield for
such Eligible Asset, (b) the Capital of such Eligible Asset and (c) the
aggregate amount of other amounts owed hereunder by the Seller to any
Bank. Upon receipt of funds deposited to the Agent's account pursuant to
the preceding sentences, the Agent shall distribute them to the Banks
(x) ratably in accordance with each Bank's Percentage of such Eligible
Asset (i) if the Ratings Requirement was not satisfied as of the
Termination Date, in payment of the accrued Yield for such Eligible Asset,
but only to the extent that the Seller has not satisfied its obligations
under Section 2.10(a) with respect to such Payment Date, (ii) in reduction
(to zero) of the Capital of such Eligible Asset, and (iii) if the Ratings
Requirement was satisfied as of the Termination Date, in payment of the
accrued Yield for such Eligible Asset, but only to the extent that the
Seller has not satisfied its obligations under Section 2.10(a) with
respect to such Payment Date, and (y) in payment of any other amounts owed
by the Seller hereunder to any Bank. If there shall be insufficient funds
on deposit for the Agent to distribute funds in payment in full of the
aforementioned amounts, the Agent shall distribute funds, first, if the
Ratings Requirement was not satisfied as of the Termination Date, in
payment of the accrued Yield for such Eligible Asset, second, in reduction
of Capital of such Eligible Asset, third, if the Ratings Requirement was
satisfied as of the Termination Date, in payment of the accrued Yield for
such Eligible Asset, and fourth, in payment of other amounts payable to
any Bank. On the first Business Day following the Collection Date, the
Collection Agent shall pay to the Seller any remaining Collections set
aside and held by the Collection Agent pursuant to the first sentence of
this Section 2.06. Notwithstanding anything to the contrary in this
Section 2.06, the Collection Agent shall not be required to segregate
Collections set aside for the benefit of the Banks preceding remittance
thereof to the Agent unless the Agent shall have so requested as
contemplated in Section 6.02(b).
SECTION 2.07. General Settlement Procedures.
(a) If on any day the Outstanding Balance of any Pool
Receivable is either (i) reduced or adjusted as a result of any defective,
rejected, returned, repossessed or foreclosed merchandise, any defective
or rejected services, any cash discount or any other adjustment made or
performed by the Seller or any other Person (including, without
limitation, those described in the definition of "Dilution Factors") or
(ii) reduced or canceled as a result of a set-off in respect of any claim
by the Obligor thereof against the Seller or any other Person (whether
such claim arises out of the same or a related transaction or an unrelated
transaction), for purposes of this Agreement, the Seller shall be deemed
to have received on such day a Collection of such Pool Receivable in the
amount of such reduction, cancellation or adjustment. If on any day any
of the representations or warranties in the first sentence of Section
4.01(h) is no longer true with respect to a Pool Receivable, the Seller
shall be deemed to have received on such day a Collection of such Pool
Receivable in full. If on any day the representation and warranty in the
second sentence of Section 4.01(h) is no longer true the Seller shall be
deemed to have received on such day Collections of Pool Receivables in an
amount necessary to make such representation true and accurate.
(b) Prior to the 15th day of each calendar month, the
Collection Agent shall prepare and forward to the Agent for each Bank, an
Investor Report, relating to all Eligible Assets, as of the close of
business of the Collection Agent on the last day of the immediately
preceding calendar month.
SECTION 2.08. Payments and Computations, Etc. All amounts to
be paid or deposited by the Seller or the Collection Agent hereunder
(including, without limitation, Yield, Liquidation Fee and other fees and
expenses) shall be paid or deposited in accordance with the terms hereof
no later than 11:00 a.m. (New York City time) on the day when due in
lawful money of the United States of America in immediately available
funds to a special account (having an account number to be specified by
the Agent to the Seller in writing) in the name of Agent and maintained at
Citibank's office at 399 Park Avenue in New York City. The Seller shall,
to the extent permitted by law, pay to the Agent, on demand, interest on
all amounts not paid or deposited when due hereunder (whether owing by the
Seller individually or as Collection Agent) at 2% per annum above the
Alternate Base Rate; provided, however, that such interest rate shall not
at any time exceed the maximum rate permitted by applicable law. Such
interest shall be retained by the Agent except to the extent that such
failure to make a timely payment or deposit has continued beyond the date
for distribution by the Agent of such overdue amount to the Banks, in
which case such interest accruing after such date shall be for the account
of, and distributed by the Agent to the Banks ratably in accordance with
their respective Percentages of the relevant Eligible Assets. All
computations of interest and all computations of Yield, Liquidation Yield,
Liquidation Fee and other fees 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 2.09. Dividing or Combining of Eligible Assets. The
Seller may, prior to the Termination Date, on notice received by the Agent
not later than 11:00 a.m. (New York City time) three Business Days before
the last day of any Fixed Period for any then existing Eligible Asset
("Existing Eligible Asset"), divide such Existing Eligible Asset on such
last day into two or more new Eligible Assets, each such new Eligible
Asset having Capital as designated in such notice and all such new
Eligible Assets collectively having aggregate Capital equal to the Capital
of such Existing Eligible Asset. The Seller may, prior to the Termination
Date, on notice received by the Agent not later than 11:00 a.m. (New York
City time) three Business Days before the last day of any Fixed Period for
two or more Existing Eligible Assets (owned in the same proportions by the
same Banks) in the same proportions) or the date of any proposed Purchase
of an Eligible Asset pursuant to Section 2.02 or Section 2.15 (to be owned
in the same proportions by the same Banks), either (a) combine such
Existing Eligible Assets or (b) combine such Existing Eligible Asset or
Eligible Assets and such Eligible Asset proposed to be purchased on such
last day into one new Eligible Asset, such new Eligible Asset having
Capital equal to the aggregate Capital of such Existing Eligible Assets,
or such Existing Eligible Asset or Eligible Assets and such Eligible Asset
proposed to be purchased, as the case may be. Each such notice of a
proposed division or combination of Eligible Assets as described above
shall, in addition, specify the desired duration of the initial Fixed
Period for each of the new Eligible Assets resulting from such division or
combination. The Agent shall notify the Seller whether the desired
duration of the initial Fixed Periods for each such new Eligible Asset is
acceptable or, if not acceptable, will advise the Seller of such Fixed
Periods, if any, as may be acceptable. In the event that the Seller and
the Agent fail to agree on the duration of the Fixed Period for any new
Eligible Asset resulting from a division or combination pursuant to this
Section 2.09 prior to the Business Day of such division or combination,
the duration of such Fixed Period shall be selected by the Agent in its
sole discretion. On and after any division or combination of Eligible
Assets as described above, each of the new Eligible Assets resulting from
such division, or the new Eligible Asset resulting from such combination,
as the case may be, shall be a separate Eligible Asset having Capital as
set forth above, and shall take the place of such Existing Eligible Asset
or Eligible Assets or Eligible Asset proposed to be purchased, as the case
may be, in each case under and for all purposes of this Agreement. On and
after the Termination Date, the Agent shall have the right to divide
and/or combine Eligible Assets in any manner which it may select in its
sole discretion.
SECTION 2.10. Yield and Fees. (a) From and after the date of
the initial Purchase until the later of the Termination Date and the
Collection Date, the Seller shall, on the Payment Date in respect of each
Settlement Period for each Eligible Asset, pay to the Agent for the
account of the Banks (ratably in accordance with their Percentages of such
Eligible Asset), (i) an amount equal to the accrued and unpaid Yield for
such Eligible Asset and (ii) an amount equal to the Liquidation Fee, if
applicable, for such Eligible Asset.
(b) From and after the date hereof until the later of the
Termination Date or the Collection Date, the Seller shall pay:
(i) to the Agent, for the account of each Bank, a facility fee
(the "Facility Fee") equal to the product of (i) the average daily amount
of such Bank's Maximum Purchase, whether used or unused, and (ii) the per
annum rate specified in the Fee Letter; and
(ii) to CNAI, in consideration for its support of the program
contemplated herein, a fee (the "Program Fee") equal to the product of (i)
the average daily amount of the aggregate outstanding Capital of all
Eligible Assets hereunder and (ii) the per annum rate specified in the Fee
Letter.
(c) The Seller shall be entitled to a credit against the
Facility Fee payable under this Agreement for any month by the full amount
of the "Facility Fee" (under and as defined in the Investor Agreement)
actually paid by the Seller under the Investor Agreement for such month.
The Facility Fee and the Program Fee are payable monthly in arrears for
each calendar month (or portion thereof) on the third Business Day of the
immediately succeeding calendar month during the term of this Agreement
and on the later of the Termination Date and the Collection Date.
(d) As part of the consideration for the Purchases hereunder,
the Seller agrees to perform the duties of the Collection Agent hereunder
until the Agent designates a new Collection Agent as described in Section
6.01. If at any time the Seller is not the Collection Agent, the Seller
shall pay, for the account of the Collection Agent, a fee (the "Collection
Agent Fee") equal to 110% of the reasonable and appropriate costs and ex-
penses incurred by the Collection Agent in connection with servicing,
collecting and administering the Receivables or paying another Person to
do so.
SECTION 2.11. Yield Protection. If due to either: (a) the
introduction of or any change (including, without limitation, any change
by way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation or (b) the compliance by any
Affected Person with any guideline or request issued or made by or
otherwise emanating from any central bank or other governmental authority
after the date of this Agreement (whether or not having the force of law),
(i) there shall be an increase in the cost to an Affected Person of
making, funding or maintaining any Purchase hereunder or agreeing to
purchase, purchasing or maintaining an investment in an Eligible Asset or
any interest therein, as the case may be (other than by reason of any
interpretation of or change in laws or regulations relating to income
taxes), (ii) there shall be a reduction in the amount receivable with
regard to any Pool Receivable, or (iii) an Affected Person shall be
required to make a payment calculated by reference to the Pool Receivables
in which it has agreed to purchase, has purchased or maintains an interest
or Yield (or other fees calculated on the basis of Yield) received by it
(other than by reason of any interpretation of or change in laws or
regulations relating to income taxes), the Seller shall, from time to
time, within fifteen days after demand by such Affected Person (with a
copy to the Agent), pay to such Affected Person, that portion of such
increased costs incurred, amounts not received or receivable or required
payment made or to be made, which such Affected Person reasonably
determines is attributable to making, funding or maintaining any Purchase
hereunder or agreeing to purchase, purchasing or maintaining an investment
in an Eligible Asset or any interest therein, as the case may be. In
determining such amount, such Affected Person may use any reasonable
averaging and attribution methods. Such Affected Person shall submit to
the Seller and the Agent a certificate as to such increased costs
incurred, amounts not received or receivable or required payment made or
to be made, which certificate, setting forth the calculation thereof,
shall be conclusive and binding for all purposes absent manifest error.
Each Affected Person that determines to seek compensation under this
Section 2.11 shall notify the Seller of the circumstances that entitle
such Affected Person to such compensation pursuant to this Section 2.11,
and will take such action as such Affected Person may determine in its
sole and absolute discretion will avoid the need for or reduce the amount
of such compensation without disadvantage of any kind to such Affected
Person. Notwithstanding the provisions of this Section 2.11, the Seller
shall not be required to compensate any Affected Person for amounts
claimed under this Section 2.11 to the extent that those amounts were
incurred more than three months prior to the date that such Affected
Person (or the Agent on its behalf) notifies the Seller thereof.
SECTION 2.12. Increased Capital. If either (a) the
introduction of or any change in or in the interpretation of any law or
regulation or (b) compliance by any Affected Person with any guideline or
request issued or made by or otherwise emanating from any central bank or
other governmental authority after the date of this Agreement (whether or
not having the force of law) affects or would affect the amount of capital
required or expected to be maintained by any Affected Person, and such
Affected Person determines that the amount of such capital is increased by
or based upon (x) the existence of such Affected Person's agreement to
make or maintain Purchases hereunder and other similar agreements or
facilities, or (y) the existence of any agreement by Affected Persons to
make purchases of or otherwise maintain an investment in Eligible Assets
or interests therein related to this Agreement or to the funding thereof
and any other commitments of the same type, then, within fifteen days
following demand by such Affected Person (with a copy to the Agent), the
Seller shall immediately pay to such Affected Person from time to time, as
specified by such Affected Person, additional amounts sufficient to
compensate such Affected Person in light of such circumstances, to the
extent that such Affected Person reasonably determines such increase in
capital to be allocable to the existence of its agreement described in
clause (x) above or the commitments of certain other Affected Persons
described in clause (y) above. A certificate as to such amounts submitted
to the Seller and the Agent by such Affected Person, setting forth the
calculation thereof, shall be conclusive and binding for all purposes
absent manifest error. Each Affected Person agrees, but without
limitation to its rights hereunder, that promptly after becoming aware of
any event or circumstance described in clause (a) or (b) of the first
sentence of this Section 2.12 that is likely to give rise to a payment
liability on the part of the Seller under this Section 2.12, such Affected
Person will notify the Seller of such event or circumstance. Each
Affected Person that determines to seek compensation under this
Section 2.12 shall notify the Seller of the circumstances that entitle
such Affected Person to such compensation pursuant to this Section 2.12,
and will take such action as such Affected Person may determine in its
sole and absolute discretion will avoid the need for or reduce the amount
of such compensation without disadvantage of any kind to such Affected
Person. Notwithstanding the provisions of this Section 2.12, the Seller
shall not be required to compensate any Affected Person for amounts
claimed under this Section 2.12 to the extent that those amounts were
incurred more than three months prior to the date that such Affected
Person (or the Agent on its behalf) notifies the Seller thereof.
SECTION 2.13. Taxes and Other Taxes. (a) Any and all payments
and deposits required to be made hereunder or under any instrument
delivered hereunder by the Seller and/or the Collection Agent (if the
Seller or appointed by the Seller) shall be made free and clear of and
without deduction for any present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on net income and all income and
franchise taxes of the United States and any political subdivisions
thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Seller and/or the Collection Agent (if the Seller or
appointed by the Seller) shall be required by law to deduct any Taxes from
or in respect of any sum required to be paid or deposited hereunder or
under any instrument delivered hereunder, (i) such sum shall be increased
as may be necessary so that after making all required deductions
(including deductions applicable to additional sums required to be paid or
deposited under this Section 2.13) the amount received by the relevant
Affected Person, or otherwise deposited hereunder or under such
instrument, shall be equal to the sum which would have been so received or
deposited had no such deductions been made, (ii) the Seller or the
Collection Agent (as appropriate) shall make such deductions and (iii) the
Seller or the Collection Agent (as appropriate) shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Seller agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder or under any
instrument delivered hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
instrument delivered hereunder (hereinafter referred to as "Other Taxes").
(c) The Seller will indemnify each Affected Person for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.13) paid by such Affected Person and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days from the date
the Affected Person makes written demand therefor. A certificate as to
the amount of such indemnification submitted to the Seller and the Agent
by such Affected Person, setting forth the calculation thereof, shall be
conclusive and binding for all purposes absent manifest error.
(d) Within 30 days after the date of any payment of Taxes the
Seller will furnish to the Agent the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of
the Seller or the Collection Agent hereunder, the agreements and
obligations of the Seller and the Collection Agent (if the Seller or
appointed by the Seller) contained in this Section 2.13 shall survive the
Collection Date.
SECTION 2.14. Sharing of Payments, Etc. If any Bank shall
obtain any payment (whether voluntary, involuntary, through the exercise
of any right of setoff, or otherwise) on account of Percentage Interests
owned by it in Eligible Assets (other than pursuant to Section 2.10, 2.11,
2.12, 2.13, or 10.01 and other than as a result of the differences in the
timing of the application of Collections pursuant to Section 2.05 or 2.06)
in excess of its ratable share of payments on account of Eligible Assets
obtained by all the Banks, such Bank shall forthwith purchase from the
other Banks such participations in the Percentage Interests owned by them
as shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such
purchasing Bank, such purchase from each Bank shall be rescinded and each
other Bank shall repay to the purchasing Bank the purchase price to the
extent of such recovery together with an amount equal to each other Bank's
ratable share (according to the proportion of (i) the amount of such other
Bank's required payment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered.
SECTION 2.15. Agreement to Assign. On any Business Day on or
before the Termination Date, upon the written request of the Seller to the
Agent, each of the Banks shall request, in writing, that the Owners assign
to each of the Banks (in accordance with each such Bank's Percentage), on
the "Termination Date" under the Investor Agreement, all of their
respective right and title to, and interest in, all "Eligible Assets" (as
defined in the Investor Agreement) then owned by the Owners upon tender by
the Owners to the Agent of an appropriate written assignment duly executed
by the Owners, in form and substance satisfactory to the Agent, each Bank
shall tender to the Agent, for the benefit of the Owners, consideration
(in immediately available funds) equal to such Bank's Percentage of the
"Capital" of the Owners' "Eligible Assets" (as defined in the Investor
Agreement). It shall be a condition precedent to the effectiveness of
such assignment by the Owners that the Owners shall have received all
amounts of "Capital" and "Yield" (as defined in the Investor Agreement)
and all other amounts then accrued and unpaid or otherwise outstanding
under the Investor Agreement with respect to all such "Eligible Assets" by
no later than 2:30 P.M. (New York City Time) (or such later time as may be
agreed to by each of the Owners) on the "Termination Date" under the
Investor Agreement, and upon timely receipt of all such amounts by the
Owners, the assignment by the Owners and the acceptance by the Banks of
such "Eligible Assets" shall become effective, such "Eligible Assets"
shall be deemed to be Eligible Assets for all purposes of this Agreement
and each Bank shall own a Percentage Interest therein corresponding to its
Percentage hereunder, and the underlying "Purchased Interest," "Purchased
Receivables," "Related Security," and related "Contracts" and
"Collections," under and as defined in the Investor Agreement, shall be
deemed to be the Purchased Interest, Purchased Receivables, Related
Security, and related Contracts and Collections, respectively, under and
as defined in this Agreement; provided, however, that in the event that
(A) the Seller and/or the Collection Agent have not paid to the Owners all
amounts of "Yield" (as defined in the Investor Agreement) and all other
amounts then accrued and unpaid or otherwise outstanding under the
Investor Agreement with respect to all such "Eligible Assets," or (B) the
Banks have not paid to the Owners all amounts of "Capital" (as defined in
the Investor Agreement) outstanding under the Investor Agreement with
respect to all such "Eligible Assets," in each case by no later than 2:30
P.M. (New York City Time) (or such later time as may be agreed to by each
of the Owners) on the "Termination Date" under the Investor Agreement,
then the requests of the Seller and each of the Banks described in the
first sentence of this Section 2.15 shall be deemed to have been withdrawn
and the Agent shall return to each Bank all amounts of consideration paid
by such Bank pursuant to such requests. To the extent that any such
assignment by the Owners to each Bank pursuant this Section 2.15 which,
pursuant to the foregoing terms, purports to be an effective assignment,
is not effective to transfer to each such Bank its Percentage Interest in
the Eligible Assets or the underlying Purchased Interest, Purchased
Receivables, Related Security and related Contracts and Collections,
respectively, under and as defined in this Agreement, the Seller hereby
sells to such Bank, upon the closing of such assignment pursuant to this
Section 2.15 (including, without limitation, payment of the amounts
specified above in this Section 2.15 in connection with such assignment),
its Percentage Interest in such Eligible Assets, and the underlying
Purchased Interest, Purchased Receivables, Related Security and related
Contracts and Collections. Notwithstanding anything in the foregoing to
the contrary, the Banks shall have no obligation to consummate any such
requested assignment of Eligible Assets if an event has occurred and is
continuing, or would result from such requested assignment of Eligible
Assets, which constitutes an Event of Termination (or Termination Date) or
would constitute an Event of Termination (or Termination Date) but for the
requirement that notice be given or time elapse or both. Initial Fixed
Periods for all such Eligible Assets shall commence upon the effective
date of such assignment and acceptance. All such assignments shall be
without recourse or warranty, express or implied, except in respect of
Adverse Claims against the "Eligible Assets" (as defined in respect of
Adverse Claims against the "Eligible Assets" (as defined in the Investor
Agreement) created in favor of the Owners.
(b) Unless the Agent shall have received notice from a Bank
prior to the closing of the assignment and acceptance to Section 2.15(a)
that such Bank will not make available to the Agent such Bank's Percentage
of the "Capital" of the Owners' "Eligible Assets" (as defined in the
Investor Agreement), the Agent may assume that such Bank has made such
portion available to the Agent on the date of such assignment and
acceptance in accordance with this Section 2.15(a), and the Agent may, in
reliance upon such assumption, make available to the Owners on such date a
corresponding amount. If and to the extent that such Bank shall not have
so made its Percentage of "Capital" (as defined in the Investor Agreement)
available to the Agent, such Bank agrees to repay to the Agent forthwith
on demand such corresponding amount together with interest thereon, for
each day from the date such amount is made available to the Owners until
the date such amount is repaid to the Agent, at the Federal Funds Rate,
and until the Agent is so repaid, the Agent shall be deemed to own
Percentage Interest(s) in the Eligible Asset(s) so acquired by the Banks
corresponding to the Percentage Interest(s) which would have been owned by
such Bank if it had made such Percentage of Capital available to the
Agent, and the Agent shall be deemed to be a "Bank" hereunder for all
purposes relevant to such Eligible Asset(s). If such Bank shall repay to
the Agent such corresponding amount of Capital, together with interest
thereon accrued at the Federal Funds Rate, such amount of Capital so
repaid shall constitute the Capital of such Bank's Percentage Interest in
the Eligible Asset(s) acquired pursuant to such assignment and acceptance
for purposes of this Agreement.
(c) The failure of any Bank to pay its Percentage of the amount
of "Capital" of the "Eligible Assets" (as defined in the Investor
Agreement) to be assigned pursuant to a Section 2.15(a) shall not relieve
any other Bank of its obligation, if any, hereunder to pay its
corresponding Percentage of such amount of "Capital" (as defined in the
Investor Agreement), but no Bank shall be responsible for the failure of
any other Bank to pay the Percentage of "Capital" (as defined in the
Investor Agreement) required to be paid by such other Bank on the date of
any such assignment.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Effectiveness of this
Agreement. The effectiveness of this Agreement is subject to the
condition precedent that the Agent shall have received on or before the
date of such effectiveness the following (it being understood that the
delivery of any of such following items to the Agent pursuant to the
Investor Agreement shall constitute delivery hereunder), each (unless
otherwise indicated) dated such date, in form and substance satisfactory
to the Agent:
(a) A copy of the resolutions of the Board of Directors of the
Seller approving this Agreement and the other documents to be delivered by
it hereunder and the transactions contemplated hereby, certified by its
Secretary or Assistant Secretary;
(b) The Articles of Incorporation of the Seller certified by
the Secretary of State of Wisconsin.
(c) Good Standing Certificates for the Seller issued by the
Secretaries of State of New Jersey, Minnesota, Indiana and Wisconsin.
(d) A certificate of the Secretary or Assistant Secretary of
the Seller certifying (i) the names and true signatures of the officers
authorized on its behalf to sign this Agreement and the other documents to
be delivered by it hereunder (on which certificate the Agent and the Banks
may conclusively rely until such time as the Agent shall receive from the
Seller a revised certificate meeting the requirements of this subsection
(d)) and (ii) a copy of the Seller's by-laws;
(e) Acknowledgment copies of proper Financing Statements (Form
UCC-1), dated a date reasonably near to the date of the effectiveness of
this Agreement, naming the Seller as the assignor of Receivables and
Related Security and CNAI, as Agent, as assignee, or other, similar
instruments or documents, as may be necessary or, in the opinion of the
Agent, desirable under the UCC of all appropriate jurisdictions or any
comparable law to perfect the Banks' ownership interests in all
Receivables and Related Security;
(f) Acknowledgment copies of proper Financing Statements (Form
UCC-3), if any, necessary to release all security interests and other
rights of any Person in the Receivables and Related Security previously
granted by the Seller;
(g) Certified copies of Requests for Information or Copies
(Form UCC-11) (or a similar search report certified by a party acceptable
to the Agent), dated a date reasonably near to the date of the
effectiveness of this Agreement, listing all effective financing
statements which name the Seller (under its present name and any previous
name) as debtor and which are filed in the jurisdictions in which filings
were made pursuant to subsection (f) above, together with copies of such
financing statements (none of which shall cover any Receivables or
Contracts);
(h) A copy of the Investor Agreement and the other instruments,
agreements and documents required to be delivered thereunder;
(i) A copy of the resolutions of the Board of Directors of the
Parent approving the Parent Support Agreement and the other documents to
be delivered by it hereunder and the transactions contemplated hereby,
certified by its Secretary or Assistant Secretary;
(j) The Articles of Incorporation of the Parent certified by
the Secretary of State of Delaware;
(k) Good Standing Certificates for the Parent issued by the
Secretaries of State of Delaware and Wisconsin;
(l) A certificate of the Secretary or Assistant Secretary of
the Parent certifying (i) the names and true signatures of the officers
authorized on its behalf to sign the Parent Support Agreement and the
other documents to be delivered by it hereunder (on which certificate the
Agent and the Banks may conclusively rely until such time as the Agent
shall receive from the Parent a revised certificate meeting the
requirements of this subsection (l)) and (ii) a copy of the Parent's
by-laws;
(m) Opinions of (i) Susan F. Marrinan, General Counsel of the
Parent acting on behalf the Parent and the Seller and (ii) Foley &
Lardner, counsel for the Seller and the Parent, in each case, as to such
matters as the Agent may reasonably request;
(n) A copy of the Fee Letter;
(o) A copy of the Interim Procedures Letter; and
(p) An opinion of Sidley & Austin, counsel for the Agent, as
the Agent may reasonably request.
SECTION 3.02. Conditions Precedent to All Purchases and
Reinvestments. The rights of the Seller to receive the proceeds of any
Purchase hereunder (including, without limitation, the initial Capital
Increase Purchase and each remittance of Collections by the Collection
Agent to the Seller pursuant to Section 2.06) shall be subject to the
further conditions precedent that (a) with respect to any such Purchase
(other than the initial Capital Increase Purchase), on or prior to the
date of such Purchase, the Collection Agent shall have delivered to the
Agent, in form and substance satisfactory to the Agent, a completed
Investor Report dated within thirty days prior to the date of such
Purchase and containing such additional information as may be reasonably
requested by the Agent; (b) on the date of such Purchase the following
statements shall be true and the Seller by accepting the amount of such
Capital Increase Purchase or by receiving the proceeds of such Collections
shall be deemed to have certified that:
(i) The representations and warranties contained in Section
4.01 (other than in Sections 4.01(e) and 4,01(f)) are correct on and as of
such day as though made on and as of such date,
(ii) No event has occurred and is continuing, or would result
from such Purchase or reinvestment, which constitutes an Event of
Termination or would constitute an Event of Termination but for the
requirement that notice be given or time elapse or both,
(iii) The Termination Date shall not have become effective,
whether pursuant to the designation by the Seller of a Reinvestment
Termination Date or otherwise;
and (c) the Agent shall have received such other approvals, opinions or
documents as the Agent may reasonably request.
Notwithstanding the fact that any of the above-described conditions
precedent may not, in fact, have been satisfied in connection with any
Purchase hereunder, (x) such failure shall not impair the effectiveness of
the related Purchase, (y) the Purchase of the relevant Eligible Assets
shall be deemed to have been made automatically pursuant to Section 2.01
and Section 2.06 and (z) the relevant Eligible Assets shall be computed
initially pursuant to Section 2.05, but in each case with respect to the
foregoing clauses (x), (y) and (z), without waiver of any claim that the
Agent or any Bank may have against the Seller for failure to satisfy such
condition precedent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller.
The Seller represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction named at
the beginning hereof and is duly qualified to do business, and is in good
standing, in every jurisdiction in which the nature of its business
requires it to be so qualified, except to the extent that the failure to
be qualified to do business or in good standing in any jurisdiction would
not, when taken together with all similar failures, materially adversely
affect the financial condition or operations of the Seller, the
collectibility of any Receivable or the rights of the Agent or any Bank
hereunder. The Seller has no Subsidiaries.
(b) The execution, delivery and performance by the Seller of
this Agreement, the Transfer Agreement and all other instruments and
documents to be delivered hereunder and thereunder, and the transactions
contemplated hereby and thereby, are within the Seller's corporate powers,
have been duly authorized by all necessary corporate action, do not
contravene (i) the Seller's charter or by-laws, (ii) any law, rule or
regulation applicable to the Seller, other than any such laws, rules or
regulations the contravention of which on an aggregate basis would not
materially adversely affect the financial condition or operations of the
Seller, the collectibility of any Receivable or the rights of the Agent or
any Bank hereunder (iii) any contractual restriction contained in any
indenture, loan or credit agreement, lease, mortgage, security agreement,
bond, note, or other agreement or instrument binding on or affecting the
Seller or its property or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its property,
and do not result in or require the creation of any Adverse Claim upon or
with respect to any of its properties (other than as contemplated herein
and in the Investor Agreement with respect to the Pool Receivables and
Related Security); and no transaction contemplated hereby requires
compliance with any bulk sales act or similar law. This Agreement has
been duly executed and delivered on behalf of the Seller.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Seller of
this Agreement, the Transfer Agreement or any other document or instrument
to be delivered hereunder or thereunder, except for the filing of the
financing statements referred to in Article III, all of which, at the time
required in Article III, shall have been duly made and shall be in full
force and effect.
(d) This Agreement and the Transfer Agreement constitute the
legal, valid and binding obligations of the Seller enforceable against the
Seller in accordance with their respective terms.
(e) The consolidated balance sheets of the Parent and its
consolidated Subsidiaries as at December 31, 1994, and the related
consolidated statements of cash flows and consolidated statements of
changes in financial position of the Parent and its consolidated
Subsidiaries for the fiscal year then ended, certified by Arthur Andersen
LLP, independent public accountants, copies of which have been furnished
to the Agent, fairly present the consolidated financial condition of the
Parent and its consolidated Subsidiaries as at such date and the
consolidated results of the operations of the Parent and its consolidated
Subsidiaries for the period ended on such date, all in accordance with
generally accepted accounting principles consistently applied, and since
December 31, 1994, there has been no material adverse change in any such
condition or operations.
(f) There are no actions, suits or proceedings pending, or to
the knowledge of the Seller threatened, against or affecting the Parent,
the Seller or any other Subsidiary of the Parent, or the property of the
Parent, the Seller or of any other Subsidiary of the Parent, in any court,
or before any arbitrator of any kind, or before or by any governmental
body, which may reasonably be expected to materially adversely affect the
financial condition or operations of the Seller or the Parent or the
Parent and its consolidated Subsidiaries taken as a whole, or materially
adversely affect the ability of the Seller or the Parent to perform their
respective obligations under this Agreement and the Transfer Agreement.
None of the Parent, the Seller or any Subsidiary of the Parent, is in
default with respect to any order of any court, arbitrator or governmental
body except for defaults with respect to orders of governmental agencies
which defaults are not material to the business or operations of the
Seller or the Parent or the Parent and its consolidated Subsidiaries taken
as a whole.
(g) No proceeds of any Purchase will be used by the Seller to
acquire any security in any transaction which is subject to Section 13 or
14 of the Securities Exchange Act of 1934, as amended.
(h) Each Receivable, together with the Contract related
thereto, is owned by the Seller free and clear of any Adverse Claim except
as provided herein and upon each Purchase and reinvestment, each Bank
shall acquire a valid and perfected first priority undivided percentage
ownership interest, to the extent of its Percentage Interest in the
Eligible Asset(s) purchased by the Banks, in each Pool Receivable then
existing or thereafter arising and in the Related Security and Collections
with respect thereto, free and clear of any Adverse Claim except as
provided hereunder; and no effective financing statement or other
instrument similar in effect covering any Receivable or the Related
Security or Collections with respect thereto shall at any time be on file
in any recording office except such as may be filed in favor of the Agent
in accordance with this Agreement. The sum of all Eligible Assets and all
"Eligible Assets" under and as defined in the Investor Agreement shall at
no time exceed 100%.
(i) No Investor Report (if prepared by the Seller, or, if not
prepared by the Seller, to the extent that information contained therein
is supplied by the Seller), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished by the
Seller to the Agent or any Bank in connection with this Agreement is or
shall be inaccurate in any material respect as of the date it is or shall
be dated or (except as otherwise disclosed to the Agent or such Bank, as
the case may be, at such time) as of the date so furnished, or contains or
shall contain any material misstatement of fact or omits or shall omit to
state a material fact or any fact necessary to make the statements
contained therein not materially misleading.
(j) The chief place of business and chief executive office of
the Seller are located at the address of the Seller referred to in Section
11.02 hereof and the locations of the offices where the Seller keeps all
the Records are listed on Exhibit F (or at such other locations, notified
to the Agent in accordance with Section 5.01(f), in jurisdictions where
all action required by Section 6.05 has been taken and completed).
(k) The "Purchase" of "Eligible Assets" and the Investors'
acquisition of interests in "Pool Receivables" under the Investor
Agreement will constitute (i) a "current transaction" within the meaning
of Section 3(a)(3) of the Securities Act of 1933, as amended, and (ii) a
purchase or other acquisition of notes, drafts, acceptances, open accounts
receivable or other obligations representing part or all of the sales
price of merchandise, insurance or services within the meaning of Section
3(c)(5) of the Investment Company Act of 1940, as amended.
(l) As of the date hereof, except as described on Exhibit D,
the Seller has no trade names, fictitious names, assumed names or "doing
business as" names.
(m) The Seller or the Parent, as applicable, shall have given
reasonably equivalent value to each Dealer in consideration for the
transfer to the Seller or the Parent, as applicable of the Receivables and
related Contracts from such Dealer or the Parent, as applicable, and none
of such transfers is or may be voidable under Sections 544, 545, 548, 549
or 724(a) of the Bankruptcy Code.
(n) Each Receivable and related Contract that has been
transferred to the Seller by the Parent has been purchased by the Seller
from the Parent pursuant to the Transfer Agreement.
ARTICLE V
GENERAL COVENANTS OF THE SELLER
SECTION 5.01. Affirmative Covenants of the Seller.
From the date hereof until the later of the Termination Date or the
Collection Date, the Seller will, unless the Agent shall otherwise consent
in writing:
(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders with respect to
its business and properties or the Receivables and related Contracts,
except to the extent that any failure to so comply, when taken together
with all similar failures, would not materially adversely affect the
financial condition or operations of the Seller, the collectibility of any
Receivable or the rights and remedies of the Agent or any Bank hereunder.
(b) Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in
good standing in each jurisdiction where the failure to preserve and
maintain such existence, rights, franchises, privileges and qualifications
would materially adversely affect (i) the interests hereunder of the Agent
or any Bank, (ii) the collectibility of any Receivable or (iii) the
ability of the Seller or the Collection Agent to perform their respective
obligations hereunder.
(c) Audits. At any time and from time to time during regular
business hours and upon five Business Days' (or if an Event of Termination
has occurred and is continuing one Business Day's) prior notice (which may
be by telephone) to the Seller, permit the Agent, 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 Seller for the
purpose of examining such Records, and to discuss matters relating to the
Receivables or the Seller's performance hereunder with any of the officers
or employees of the Seller having knowledge of such matters.
(d) Keeping of Records and Books of Account. Maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing the Receivables in
the event of the destruction of the originals thereof) and keep and
maintain all documents, books, records and other information reasonably
necessary or advisable for the collection of all Receivables (including,
without limitation, records adequate to permit the daily identification of
each new Pool Receivable and all Collections of and adjustments to each
existing Pool Receivable).
(e) Performance and Compliance with Receivables and Contracts.
At its expense, timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it
under the Contracts related to the Receivables.
(f) Location of Records. Keep its chief place of business and
chief executive office, and the offices where it keeps the Records, at the
address(es) of the Seller referred to in Section 4.01(j) or, upon 30 days'
prior written notice to the Agent, at such other locations within the
United States where all action required by Section 6.05 shall have been
taken and completed.
(g) Credit and Collection Policies. Comply in all material
respects with its Credit and Collection Policy in regard to each
Receivable and the related Contract.
(h) Collections. Instruct all Obligors to cause all
Collections to be paid directly to a Dealer or the Parent; instruct all
Dealers or the Parent, as applicable, to remit all Collections to the
Seller within ten days of its receipt thereof from the applicable Obligor;
and remit all Collections to the Collection Agent (including, without
limitation, any Collections deemed to have been received pursuant to
Section 2.07) within one Business Day following the Seller's receipt
thereof.
(i) Identification of Eligible Receivables. Establish and
maintain procedures as are necessary for determining whether each
outstanding Pool Receivable qualifies as an Eligible Receivable.
(j) Returned Equipment. At all times on and after the
Termination Date, whenever possession (whether by return, repossession or
otherwise) of any Equipment relating to any Pool Receivable is obtained by
the Seller, any Affiliate of the Seller or any of their respective agents,
such Person shall hold such Equipment in trust for the benefit of the
Banks to the extent of their interest therein, and following the Agent's
request, clearly identify such equipment as subject to such interest;
provided, however, that the Seller may at any time sell or otherwise
realize upon any such returned or repossessed Equipment in accordance with
the terms of the Credit and Collection Policy, subject to the requirement
the proceeds of such sale or other realization be remitted to the
Collection Agent for application pursuant to the terms of this Agreement.
The Seller will use its best efforts to sell or otherwise realize upon any
returned or repossessed Equipment.
(k) Seller's Acquisition of Receivables. With respect to each
Receivable and related Contract acquired by the Parent from a Dealer,
cause the Parent to take all action necessary to perfect, protect and
evidence the Parent's ownership interest in such Receivable and related
Contract and with respect to each Receivable and related Contract acquired
by the Seller from the Parent or a Dealer, take all action necessary to
perfect, protect and evidence the Seller's interest in such Receivable and
related Contract.
(l) Security Interest In Equipment. With respect to each
Receivable and related Contract, to the extent required by the Credit and
Collection Policy, maintain filed UCC financing statements in all
applicable jurisdictions so that the Seller has a perfected security
interest in the Equipment related to such Receivable and related Contract
free and clear of any Adverse Claim.
(m) Insurance. To the extent required by the Credit and
Collection Policy, maintain or cause to be maintained for the benefit of
the Seller, one or more casualty insurance policies on each item of
Equipment relating to the Pool Receivables and the related Contracts
covering loss thereof and damage thereto in an amount at least equal to
the Outstanding Balance of such Pool Receivable and, upon the Agent's
request, deliver, or cause to be delivered, loss payee endorsements
reflecting the Agent's right to receive any payments payable under any
such policies to the extent of the Banks' interest in the Pool Receivables
and related Contracts.
SECTION 5.02. Reporting Requirements of the Seller.
From the date hereof until the later of the Termination Date or the
Collection Date, the Seller will, unless the Agent shall otherwise consent
in writing, furnish to the Agent:
(a) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Parent, consolidated balance sheets of the Parent and its consolidated
Subsidiaries as of the end of such quarter, and the related consolidated
statements of cash flows and consolidated statements of changes in
financial position of the Parent and its consolidated Subsidiaries each
for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter, certified by the chief financial
officer or chief accounting officer of the Parent;
(b) as soon as available and in any event within 120 days after
the end of each fiscal year of the Parent, a copy of the consolidated
balance sheets of the Parent and its consolidated Subsidiaries as of the
end of such year and the related consolidated statements of cash flows and
consolidated statements of changes in financial position of the Parent and
its consolidated Subsidiaries for such year each reported on by nationally
recognized independent public accountants acceptable to the Agent, all in
reasonable detail and certified without adverse opinion or disclaimer by
nationally recognized independent public accountants acceptable to the
Agent, whose certificate shall be in conformity with generally accepted
accounting principles;
(c) together with the financial statements delivered pursuant
to the foregoing clauses (a) and (b), a certificate of the chief financial
officer or chief accounting officer of the Seller stating that there
exists no Event of Termination or event which, with the passage of time or
the giving of notice or both, would constitute an Event of Termination,
or, if any such event exists, specifying the nature thereof, the period of
existence thereof and what action the Seller proposes to take with respect
thereto;
(d) promptly after the sending or filing thereof, copies of all
reports which the Parent sends to any of its security holders and copies
of all reports and other documents which the Parent files with the
Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as amended, and, to the extent requested by the Agent, copies of
such other reports and registration statements as the Parent may file with
the Securities and Exchange Commission or any national securities
exchange;
(e) promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any reportable event defined in
Title IV of ERISA which could result in the imposition of any lien and
which the Parent or any ERISA Affiliate of the Parent files under ERISA
with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which the Parent or any
ERISA Affiliate of the Parent receives from such Corporation;
(f) as soon as possible and in any event within five days after
the occurrence of each Event of Termination or each event which, with the
giving of notice or lapse of time or both, would constitute an Event of
Termination, the statement of the chief financial officer or chief
accounting officer of the Seller setting forth details of such or event
and the action which the Seller proposes to take with respect thereto;
(g) promptly upon the Agent's request therefor, a certificate
of the chief financial officer or chief accounting officer of the Seller
to the effect that, at such time, the sum of the Eligible Asset and all
"Eligible Assets" under and as defined in the Investor Agreement does not
exceed 100%;
(h) promptly after becoming aware thereof, notice of (i) any
pending or threatened actions, suits or proceedings against or affecting
the Parent, the Seller or any other Subsidiary of the Parent, or the
property of the Parent, the Seller or of any other Subsidiary of the
Parent, in any court, or before any arbitrator of any kind, or before or
by any governmental body, which may reasonably be expected to materially
adversely affect the financial condition or operations of the Seller or
the Parent or the Parent and its consolidated Subsidiaries taken as a
whole, or materially adversely affect the ability of the Seller or the
Parent to perform their respective obligations under this Agreement and
the Transfer Agreement and (ii) the existence of any default on the part
of the Parent, the Seller or any Subsidiary of the Parent with respect to
any order of any court, arbitrator or governmental body, other than any
such default that, which when taken together with all other such defaults,
is not material to the business or operations of the Seller or the Parent
or the Parent and its consolidated Subsidiaries taken as a whole.
(i) promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the conditions
or operations, financial or otherwise, of the Seller, the Parent or any
Subsidiary of the Seller or the Parent as the Agent may from time to time
reasonably request in order to protect the interests of the Agent or of
any Bank under or as contemplated by this Agreement.
SECTION 5.03. Negative Covenants of the Seller. From
the date hereof until the later of the Termination Date or the Collection
Date, the Seller will not, without the written consent of the Agent:
(a) Sales, Liens, Etc. Except as otherwise provided herein or
in the Investor Agreement, sell, assign (by operation of law or otherwise)
or otherwise dispose of, or create or suffer to exist any Adverse Claim
upon or with respect to, any Receivable, Related Security or Collections,
or any related Contract, or upon or with respect to any account to which
any Collections of any Receivable are sent, or assign any right to receive
income in respect thereof.
(b) Extension or Amendment of Receivables. Extend, amend or
otherwise modify the terms of any Pool Receivable, or amend, modify or
waive any term or condition of any Contract related thereto, except (i) as
otherwise permitted in Section 6.02 or (ii) prior to the Termination Date,
in accordance with the terms of the applicable Credit and Collection
Policy; it being understood further that the Seller will not at any time,
without the prior written consent of the Agent, enter into any Contract
Rider with respect to any Contract relating to a Pool Receivable if
immediately prior to entering into such Contract Rider such Pool
Receivable is a Defaulted Receivable.
(c) Change in Business or Credit and Collection Policy. Make
or permit the Parent to make any change in the Credit and Collection
Policy, or make or permit the Parent to make any change in the character
of its business, which change would, in either case, impair the
collectibility of any Pool Receivable.
(d) Change in Payment Instructions to Obligors. Make or permit
to be made any change in the instructions made to Obligors, Dealers or the
Parent regarding payments to be made on Pool Receivables, unless the Agent
shall have received ten Business Days' prior notice of such change, and
prior to the effective date of such change deliver to the Agent such
instruments, agreements and other documents (including, to the extent
payments of Obligors are remitted lock-boxes, lock-box notices to the
relevant lock-box banks) as the Agent shall reasonably request.
(e) Merger, etc. (i) Merge with or into or consolidate with
or into, or convey, transfer, lease or otherwise dispose of (whether in
one transaction or in a series of transactions), all or substantially all
of its assets (whether now owned or hereafter acquired), or acquire all or
substantially all of the assets or capital stock or other ownership
interest of, any Person.
(f) Change in Corporate Names. Make any change to its
corporate name or use any tradenames, fictitious names, assumed names or
"doing business as" names other than those described in Exhibit D, unless
prior to the effective date of any such name change or use, the Seller
delivers to the Agent such Financing Statements (Form UCC-1 and UCC-3)
executed by the Seller which the Agent may request to reflect such name
change or use, together with such other documents and instruments that the
Agent may request in connection therewith.
(g) Change in Transfer Agreement. Amend, modify, waive or
terminate, or permit the Parent to amend, modify, waive or terminate, any
term, provision or condition of the Transfer Agreement.
(h) ERISA Matters. (i) Engage or permit any ERISA Affiliate
to engage in any prohibited transaction described in Sections 406 of ERISA
or 4975 of the Internal Revenue Code of 1986 for which an exemption is not
available or has not previously been obtained from the Department of
Labor; (ii) permit to exist any accumulated funding deficiency, as defined
in Section 302(a) of ERISA and Section 412(a) of the Internal Revenue
Code, or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (iii) fail, or permit any ERISA Affiliate to fail, to
make any payments to any Multiemployer Plan that the Seller or any ERISA
Affiliate may be required to make under the agreement relating to such
Multiemployer Plan or any law pertaining thereto; (iv) terminate, or
permit any ERISA Affiliate to terminate, any Benefit Plan so as to result
in any liability; (v) fail, or permit any ERISA Affiliate to fail, to pay
timely required contributions or annual installments due with respect to
any waived funding deficiency to any Benefit Plan; (vi) fail, or permit
any ERISA Affiliate to fail, to pay any required installment or any other
payment required under Section 412 of the Internal Revenue Code of 1986 on
or before the due date for such installment or other payment; or
(vii) permit to exist any occurrence of any reportable event described in
Title IV of ERISA which represents a material risk of a liability of the
Seller or any ERISA Affiliate under ERISA or the Internal Revenue Code, if
such prohibited transactions, accumulated funding deficiencies, payments,
terminations and reportable events occurring within any fiscal year of the
Seller, in the aggregate, involve a payment of money by or an incurrence
of liability of the Seller or any ERISA Affiliate (collectively, "ERISA
Liabilities") in an amount in excess of $25,000,000.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent. (a)
The servicing, administering and collection of the Receivables shall be
conducted by the Person (the "Collection Agent") so designated from time
to time in accordance with this Section 6.01. Until the Agent gives
notice to the Seller of the designation of a new Collection Agent pursuant
to Section 6.01(b) (a "Servicer Notice"), the Seller is hereby designated
as, and hereby agrees to perform the duties and obligations of, the
Collection Agent pursuant to the terms hereof. The Seller agrees that it
will terminate its activities hereunder as Collection Agent on the day
following the Successor Notice.
(b) At any time following the occurrence of an Event of
Termination, the Agent may designate as Collection Agent any Person
(including itself) to succeed the Seller 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. The Collection Agent may, with the prior
consent of the Agent, subcontract with any other Person for servicing,
administering or collecting the Receivables, provided that the Collection
Agent shall remain liable for the performance of the duties and
obligations of the Collection Agent pursuant to the terms hereof.
SECTION 6.02. Duties of the Collection Agent.
(a) The Collection Agent shall take or cause to be taken all such actions
as may be reasonably necessary or advisable to collect each Receivable
from time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with
the Credit and Collection Policy. Each of the Seller, the Banks and the
Agent hereby appoints as its agent the Collection Agent, from time to time
designated pursuant to Section 6.01, to enforce its respective rights and
interests in and under the Receivables, the Related Security and the
Contracts. The Collection Agent shall set aside for the account of the
Seller and each Bank their respective allocable shares of the Collections
of Receivables in accordance with Section 2.05 and Section 2.06 but shall
not be required (unless the Ratings Requirement is no longer satisfied and
the Agent shall have requested otherwise) to segregate the funds
constituting such portion of such Collections prior to the remittance
thereof in accordance with said Sections. If the Ratings Requirement is
no longer satisfied and the Agent so instructs, the Collection Agent shall
segregate and deposit with a bank (which may be Citibank) designated by
the Agent such allocable share of Collections of Pool Receivables, set
aside for each Bank, on the first Business Day following receipt by the
Collection Agent of such Collections and will, if so requested by the
Agent, provide payment instructions to such bank as directed by the Agent.
Provided that the Termination Date shall not have occurred, the Seller,
while it is Collection Agent, may, in accordance with the Credit and
Collection Policy, (i) extend the maturity or adjust the Outstanding
Balance of any Defaulted Receivable as the Seller may determine to be
appropriate to maximize Collections thereof and/or (ii) adjust the
Outstanding Balance of any Receivable to reflect the reductions or
cancellations described in the first sentence of Section 2.07. The Seller
shall deliver to the Collection Agent, and the Collection Agent shall hold
in trust for the Seller and each Bank in accordance with their respective
interests, all Records. Notwithstanding anything to the contrary
contained herein, so long as the Ratings Requirement is not satisfied the
Agent shall have the absolute and unlimited right to direct the Collection
Agent (whether the Collection Agent is the Seller or any other Person) to
commence or settle any legal action to enforce collection of any Pool
Receivable or to foreclose upon or repossess any Related Security.
(b) The Collection Agent shall as soon as practicable following
receipt turn over to the Seller the Collections of any Receivable which is
not a Pool Receivable less, in the event the Seller is not the Collection
Agent, all reasonable and appropriate out-of-pocket costs and expenses of
such Collection Agent of servicing, collecting and administering the
Receivables to the extent not covered by the Collection Agent Fee received
by it. The Collection Agent, if other than the Seller, shall as soon as
practicable upon demand deliver to the Seller all Records in its
possession relating to Receivables of the Seller other than Pool
Receivables, and copies of Records in its possession relating to Pool
Receivables. The Collection Agent's authorization under this Agreement
shall terminate after the Termination Date on the Collection Date.
(c) Notwithstanding anything to the contrary contained in this
Article VI, the Collection Agent, if the Agent or its designee, 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 a Pool
Receivable other than as described in the first two sentences of Section
6.02(b).
SECTION 6.03. Rights of the Agent. (a) The Agent
may notify at any time the Obligors of Pool Receivables, or any of them,
of the Banks' ownership of Eligible Assets.
(b) At any time following the designation of a Collection Agent
other than the Seller pursuant to Section 6.01:
(i) the Agent may direct the Obligors of Receivables, or any of
them, that payment of all amounts payable under any Receivable be made
directly to the Agent or its designee;
(ii) the Seller shall, at the Agent's request and at the
Seller's expense, give notice of the Banks' ownership interest in Pool
Receivables to each Obligor and direct that payments be made directly to
the Agent or its designee;
(iii) the Seller shall, at the Agent's request, (A) assemble
all Records, and shall make the same available to the Agent at a place
selected by the Agent 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 Agent and shall,
promptly upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Agent or
its designee; and
(iv) each of the Seller and each Bank hereby authorizes the
Agent to take any and all steps in the Seller's name and on behalf of the
Seller and the Banks necessary or desirable, in the determination of the
Agent, 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.
SECTION 6.04. Responsibilities of the Seller. Anything
herein to the contrary notwithstanding:
(a) The Seller shall (i) perform all of its obligations under
the Contracts related to the Pool Receivables to the same extent as if
Eligible Assets had not been sold hereunder and the exercise by Agent of
its rights hereunder shall not relieve Seller from such obligations and
(ii) pay when due any taxes (other than taxes based upon or measured by
income of the Agent or any Bank), including without limitation, sales and
excise taxes, payable in connection with the Pool Receivables; and
(b) Except as otherwise contemplated in this Agreement, none of
the Agent or the Banks shall have any obligation or liability with respect
to any Pool Receivables or related Contracts, nor shall any of them be
obligated to perform any of the obligations of the Seller thereunder.
SECTION 6.05. Possession by the Seller as Trustee; Further
Action Evidencing Purchases. The Seller hereby agrees that
until the Agent requests the Seller to deliver the Contracts relating to
Pool Receivables and/or the documentary items of Related Security to it as
provided in Section 6.06, the Seller shall maintain possession of such
items at its address described in Section 5.01(f) in trust for the benefit
of the Agent and the Banks to the extent of their interests therein. The
Seller agrees that from time to time, at its expense, it will promptly
execute and deliver all further instruments and documents, and take all
further action that the Agent may reasonably request in order to perfect,
protect or more fully evidence the Eligible Assets (and the Percentage
Interests therein) purchased by the Banks hereunder, or to enable any of
the Banks or the Agent to exercise or enforce any of their respective
rights hereunder. Without limiting the generality of the foregoing, the
Seller will upon the request of the Agent: (a) execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate or as the Agent may request to evidence, or otherwise in
connection with, this Agreement and the transactions contemplated hereby,
(b) if the Ratings Requirement is no longer satisfied, mark conspicuously
each Contract evidencing the Pool Receivables with a legend, acceptable to
the Agent, evidencing that the Banks have purchased all right and title
thereto and interest therein as provided in this Agreement; and (c) mark
its master data processing records evidencing such Pool Receivables and
related Contracts with such legend. The Seller hereby authorizes the
Agent to file one or more financing or continuation statements, and
amendments thereto and assignments thereof, relative to all or any of the
Pool Receivables and the Related Security now existing or hereafter
arising, without the signature of the Seller where permitted by law. A
carbon, photographic or other reproduction of this Agreement or any
financing statement covering the Pool Receivables, or any part thereof
shall be sufficient as a financing statement. If the Seller fails to
perform any of its agreements or obligations under this Agreement, the
Agent may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of the
Agent incurred in connection therewith shall be payable by the Seller upon
the Agent's demand therefor.
SECTION 6.06. Delivery of Contracts to Agent. In
order to perfect, protect or more fully evidence the Eligible Assets
purchased by the Banks hereunder, the Agent may at any time that the
Ratings Requirement is not satisfied request the Seller to, and promptly
following Agent's request the Seller shall promptly deliver to the Agent
the original Contracts relating to Pool Receivables fully executed by the
related Obligor, together with (a) all other original documents,
instruments and agreements that constitute part of the Related Security
and (b) endorsements or assignments in blank satisfactory in form and
substance to the Agent and executed by a duly authorized officer of the
Seller.
SECTION 6.07. Application of Collections. Any
payment by an Obligor in respect of any indebtedness owed by it to the
Seller shall, except as otherwise specified by such Obligor or otherwise
required by contract or law and unless otherwise instructed by the Agent,
be applied as a Collection of any Pool Receivable of such Obligor (in the
order of the age of such Receivables, starting with the oldest such Pool
Receivable) to the extent of any amounts then due and payable thereunder
before being applied to any other Receivable or other indebtedness of such
Obligor.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the
following events ("Events of Termination") shall occur:
(a) (i) The Collection Agent (if the Seller or a Person
designated by the Seller) shall fail to perform or observe any term,
covenant or agreement hereunder in its capacity as the Collection Agent or
the Seller shall fail to perform or observe any term, covenant or
agreement contained in Article VI in its capacity as the Seller (other
than, in either case, as referred to in clause (ii) of this
Section 7.01(a)) and, in either case, any such failure shall remain
unremedied for three Business Days after written notice thereof shall have
been given by the Agent to the Seller or (ii) either the Collection Agent
(if the Seller or a Person designated by the Seller) or the Seller shall
fail to make any payment or deposit to be made by it hereunder when due;
or
(b) Any representation or warranty made or deemed to be made by
the Seller (or any of its officers) under or in connection with this
Agreement or any Investor Report or other information or report delivered
pursuant hereto shall prove to have been false or incorrect in any
material respect when made; provided, however, that except to the extent
that any such falsity or inaccuracy in respect of any of the
representations and warranties set forth in Sections 4.01(a), 4.01(b),
4.01(c), 4.01(g), 4.01(h), 4.01(i) and 4.01(l) would constitute an Event
of Termination under some other subsection of this Section 7.01, if,
within ten Business Days following the earlier of the date on which the
Seller learns of such falsity or inaccuracy (on which date the Seller
shall also give the Agent notice thereof) or the date on which the Agent
gives the Seller notice of such inaccuracy or falsity, the Seller shall
cure such falsity or inaccuracy in respect of any of the representations
and warranties set forth in the Sections specified above in this proviso
clause so as to render such representation and warranty true and accurate,
then such falsity or inaccuracy shall not constitute an Event of
Termination under this Section 7.01(b), subject, however, to the further
conditions that (i) the Seller shall pay to the Agent, on written demand
setting forth in reasonable detail the basis therefor, any amount
necessary to indemnify the Banks, the Agent, CNAI and any of their
respective Affiliates in full for any loss, cost or expense incurred by
any of them as a result of such falsity or inaccuracy and (ii) no
purchases of Eligible Assets shall be made during the pendency of such
cure period; or
(c) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for ten
Business Days after written notice thereof shall have been given by the
Agent to the Seller; or
(d) A default or defaults or any other event shall occur under
any agreement or instrument relating to any Debt of the Parent, the Seller
or any other Subsidiary of the Parent in an amount exceeding $25,000,000
in the aggregate, and such default, defaults or other event shall result
in a declaration of acceleration of the payment of such Debt; or
(e) Any Purchase of an Eligible Asset shall for any reason,
except to the extent permitted by the terms hereof, cease to create a
valid and perfected first priority undivided percentage interest to the
extent of such Eligible Asset in each Pool Receivable and the Related
Security and Collections with respect thereto, free and clear of any
Adverse Claims (except to the extent contemplated hereunder or under the
Investor Agreement in favor of the Owners or the Banks); or
(f) (i) The Parent, the Seller or any Material Subsidiary
shall generally not pay its debts as such debts become due, or shall admit
in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or (ii) any proceeding
shall be instituted against the Parent, the Seller or any Material
Subsidiary (an "Involuntary Proceeding") seeking to adjudicate it a
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
for any substantial part of its property; or (iii) any proceeding of the
type described in clause (ii) above shall be instituted by the Parent, the
Seller or any Material Subsidiary; or (iv) the Parent, the Seller or any
Material Subsidiary shall take any corporate action to authorize any of
the actions set forth in clauses (i) or (iii) above in this subsection
(f); or
(g) The Loss-to-Liquidation Ratio for any month shall exceed
2.50%, or the Default Ratio for any month shall exceed 2.00%, or the
Delinquency Ratio for any month shall exceed 5.00%; or
(h) The sum of all Eligible Assets hereunder and all "Eligible
Assets" under and as defined in the Investor Agreement shall exceed 100%;
or
(i) The Parent shall cease to own, directly or indirectly, 100%
of the issued and outstanding capital stock of the Seller;
(j) The Parent shall terminate, disaffirm or otherwise fail to
honor or perform any of the terms, provisions or covenants of, or any of
its other obligations under the Parent Support Agreement, or notice is
received by the Agent, CNAI, or any Bank from the Parent of the Parent's
intention to take any of the aforementioned action, or any representation
or warranty made by the Parent under the Parent Support Agreement shall
prove to have been false or incorrect when made in any respect material to
the respective interests of any Bank, the Agent or CNAI thereunder, or the
Parent Support Agreement shall cease to constitute the legal, valid and
binding obligation of the Parent enforceable against the Parent in
accordance with its terms; or
(k) There shall have occurred any event which materially
adversely affects the collectibility of the Receivables or there shall
have occurred any other event which materially adversely affects the
ability of the Seller to collect Receivables or the ability of the Seller
to perform hereunder; or
(l) Since December 31, 1994, there shall have occurred any
material adverse change in the consolidated financial condition of the
Parent and its consolidated Subsidiaries or the consolidated results of
the operations of the Parent and its consolidated Subsidiaries for any
period; or
(m) An Event of Investment Ineligibility shall occur;
then, and in any such event, the Agent may, by notice to the Seller,
declare the Termination Date to have occurred, except that,
(x) in the case of any event described in clause (iii) of
subsection (f) above, the Termination Date shall be deemed to have
occurred automatically upon the occurrence of such event, and
(y) in the case of any event described in clause (ii) of
subsection (f) above, the following shall automatically occur: (A) the
settlement procedures described in Section 2.06 shall become applicable
upon the commencement of an Involuntary Proceeding and no further Capital
Increase Purchases or remittances of Collections pursuant to Section 2.05
shall be made, and (B) if an order for relief is entered against the
Seller or the applicable Subsidiary of the Seller, the Termination Date
shall be deemed to have occurred automatically upon the entry of such
order; provided that if such Involuntary Proceeding is dismissed within 30
days following its commencement, and if no other Event of Termination has
occurred, then following such dismissal, the Banks' Commitment to make
Capital Increase Purchases hereunder and to permit the Collection Agent or
the Agent, as applicable, to make remittances of Collections pursuant to
Section 2.05, shall be reinstated as if the Termination Date had not
occurred,
in each case, such automatic events to occur without demand, protest or
notice of any kind, all of which are hereby waived by the Seller. Upon
any such declaration or automatic occurrence, the Banks' Purchase
Commitments hereunder shall terminate and the Agent and the Banks shall
have, in addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of all
applicable jurisdictions and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing or the general applicability
of Article IX or Section 11.04, any Bank may elect to assign any
Percentage Interest in an Eligible Asset owned by such Bank, pursuant to
Section 9.01, following the occurrence of any Event of Termination.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Bank hereby
accepts the appointment of and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. The Agent reserves the right, in its sole discretion
to exercise any rights and remedies under this Agreement, the Investor
Agreement or any instrument or document executed and delivered pursuant
hereto or thereto, or pursuant to applicable law, and, subject to the
terms of Section 11.01, also to agree to any amendment, notification or
waiver of this Agreement, the Investor Agreement or any instrument or
document executed and delivered pursuant hereto or thereto.
Notwithstanding anything herein or elsewhere to the contrary, the Agent
shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or applicable
law. The appointment and authority of the Agent hereunder shall terminate
at the Collection Date.
SECTION 8.02. UCC Filings. The Banks and the Seller expressly
recognize and agree that the Agent may be listed as the assignee or
secured party of record on the various UCC filings required to be made
hereunder in order to perfect the transfer of the Eligible Assets from the
Seller to the Banks, that such listing shall be for administrative
convenience only in creating a record or nominee owner to take certain
actions hereunder on behalf of the Banks and that such listing will not
affect in any way the status of the Banks as the beneficial owners of the
Eligible Assets. In addition, such listing shall impose no duties on the
Agent other than those expressly and specifically undertaken in accordance
with this Article VIII. In furtherance of the foregoing, each Bank shall
be entitled to enforce its rights created under this Agreement without the
need to conduct such enforcement through the Agent except as provided
herein.
SECTION 8.03. Agent's Reliance. Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as Agent under or in
connection with this Agreement (including, without limitation, the Agent's
servicing, administering or collecting Receivables as Collection Agent
pursuant to Article VI), except for its or their own gross negligence or
willful misconduct (other than actions taken at the direction of the
Banks). Without limiting the foregoing, the Agent: (i) may consult with
legal counsel (including counsel for the Seller), independent public
accountants and other experts selected by it and shall not liable for any
action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (ii) makes no warranty
or representation to any Bank and shall not be responsible to any Bank for
any statements, warranties or representations made in or in connection
with this Agreement; (iii) shall not have any duty to (A) ascertain or to
inquire as to, and shall not be responsible for, the performance or
observance of any of the terms, covenants or conditions of this Agreement
or any instrument or document furnished pursuant hereto on the part of the
Seller or (B) inspect the property (including the books and records) of
the Seller; (iv) shall not be responsible to any Bank for the due
execution, legality, validity, enforceability, genuineness, sufficiency,
or value of this Agreement or any other instrument or document furnished
pursuant hereto; (v) shall not be deemed to be acting as any Bank's
trustee or otherwise in a fiduciary capacity hereunder or under or in
connection with the Investor Agreement or any Eligible Asset (or
Percentage Interests therein); and (vi) shall incur no liability under or
in respect of this Agreement by acting upon any notice (including notice
by telephone), consent, certificate or other instrument or writing (which
may be by telex) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 8.04. Agent and Affiliates. To the extent that the
Agent or any of its Affiliates shall become a Bank hereunder, the Agent or
such Affiliate, in such capacity, shall have the same rights and powers
under this Agreement as would any Bank hereunder and may exercise the same
as though it were not the Agent. The Agent and its Affiliates may
generally engage in any kind of business with the Seller or any Obligor,
any of their respective Affiliates and any Person who may do business with
or own securities of the Seller or any Obligor or any of their respective
Affiliates, all as if it were not the Agent hereunder and without any duty
to account therefor to the Banks (including, without limitation, acting as
"Agent" under the Investor Agreement).
SECTION 8.05. Purchase Decision. Each Bank acknowledges that
it has, independently and without reliance upon the Agent or any other
Bank and based on such documents and information as it has deemed
appropriate, made its own evaluation and decision to enter into this
Agreement and, if it so determines, to purchase an undivided ownership
interest in the Pool Receivables hereunder. Each Bank also acknowledges
that it will, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or
not taking action under this Agreement.
SECTION 8.06. Indemnification. Each Bank agrees to indemnify
the Agent (to the extent not reimbursed by the Seller), ratably according
to its Percentage from time to time, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against the Agent in any
way relating to or arising out of this Agreement or any other agreement,
document or instrument executed in connection herewith, or any action
taken or omitted by the Agent under this Agreement or any other agreement,
document or instrument executed in connection herewith; provided, however,
that a Bank shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements resulting from the Agent's gross negligence or
willful misconduct (other than actions taken at the directions of the
Banks). Without limitation of the generality of the foregoing, each Bank
agrees to reimburse the Agent, ratably according to its Percentage from
time to time, promptly upon demand, for any out-of-pocket expenses
(including reasonable counsel fees) incurred by the Agent in connection
with the administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice
in respect of rights or responsibilities under, this Agreement.
SECTION 8.07. Successor Agent. The Agent may resign at any
time by giving thirty days' notice thereof to the Banks, the Seller and
the Collection Agent. Upon any such resignation, the Majority Banks shall
have the right to appoint a successor Agent approved by the Seller (which
approval will not be unreasonably withheld or delayed). If no successor
Agent shall have been so appointed by the Majority Banks and accepted such
appointment within thirty days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent approved by the Seller (which approval will not
be unreasonably withheld or delayed), which successor Agent shall be (a)
either (i) a commercial bank having a combined capital and surplus of at
least $250,000,000 or (ii) an Affiliate of such bank and (b) experienced
in the types of transactions contemplated by this Agreement. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all
of the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
ARTICLE IX
ASSIGNMENT OF PERCENTAGE INTERESTS
SECTION 9.01. Register. The Agent shall maintain at its
address, 450 Mamaroneck Avenue, Harrison, New York 10528, Attention:
Corporate Asset Funding, a copy of this Agreement and the signature pages
hereto and each Assignment of Purchase Commitment delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Banks, their Percentages, Percentage Interests, effective
dates and the aggregate outstanding Capital of Percentage Interests owned
by each Bank from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Seller, the Agent and the Banks may treat each Person whose
name is recorded in the Register as a Bank hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the
Seller or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
SECTION 9.02. Assignment. Subject to compliance with Section
11.04, each Bank may assign to each other Bank or to any other Person all
or any portion of its rights and title to, and interest in, any Percentage
Interest owned by such Bank. Such assignments shall be upon such terms
and conditions as the assignor and the assignee may mutually agree, and
such assignor shall promptly execute and deliver all further instruments
and documents, and take all further action, that the assignee may
reasonably request, in order to perfect, protect or more fully evidence
the assignee's right and title to, and interest in, such Percentage
Interest, and to enable the assignee to exercise or enforce any rights
hereunder. Not less than five days prior to any such assignment, each
assignor of a Percentage Interest shall notify the Agent and the Seller of
any such assignment, and upon the Agent's receipt of an Assignment of
Purchase Commitment executed by an assigning Bank and its assignee, the
Agent shall (i) accept such Assignment of Purchase Commitment, (ii) record
the information contained therein in the Register and (iii) give prompt
notice thereof to the Seller.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Indemnities by the Seller. Without limiting any
other rights which CNAI, the Agent, each Bank or their Affiliates may have
hereunder or under applicable law, the Seller hereby agrees to indemnify
each of the Agent, CNAI, the Banks and their Affiliates from and against
any and all damages, losses, claims, liabilities and related 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 any of them arising out of or as a result
of this Agreement or the ownership of Eligible Assets or in respect of any
Receivable or any Contract, excluding, however, (x) Indemnified Amounts to
the extent resulting from gross negligence or willful misconduct on the
part of the Agent, CNAI, such Bank and their Affiliates, (y) recourse
(except as otherwise specifically provided in this Agreement) for
uncollectible Pool Receivables or (z) Indemnified Amounts to the extent
arising solely in connection with a dispute between or among CNAI, the
Agent, any Bank or any of their respective Affiliates as a result of an
alleged default by any such Person in the performance of any obligation
owing to another such Person in connection with this Agreement. Without
limiting the foregoing, Seller shall indemnify the Agent, CNAI, each Bank
and their Affiliates for Indemnified Amounts relating to or resulting
from:
(a) the transfer hereunder of an interest in any Receivable
other than an Eligible Receivable;
(b) reliance on any representation or warranty made or deemed
made by the Seller (or any of its officers) under or in connection with
this Agreement, any Investor Report or any other information or report
delivered by the Seller pursuant hereto, or by the Parent pursuant to the
Parent Support Agreement, which shall have been false or incorrect in any
material respect when made or deemed made or delivered;
(c) the failure by the Seller (individually or as Collection
Agent) to comply with any term, provision or covenant contained in this
Agreement, or with any applicable law, rule or regulation with respect to
any Receivable, the related Contract or the Related Security, or the
nonconformity of any Receivable, the related Contract or the Related
Security with any such applicable law, rule or regulation;
(d) the failure to vest and maintain vested in each Bank or to
transfer to each Bank a valid and perfected first priority undivided
percentage interest, to the extent of each Percentage Interest owned by
such Bank hereunder in each Eligible Asset, in the Receivables which are,
or are intended to be, Pool Receivables, together with all Collections and
Related Security, free and clear of any Adverse Claim whether existing at
the time of the Purchase of such Eligible Asset or at any time thereafter;
(e) the failure at any time on or before the Termination Date
of the sum of all Eligible Assets and all "Eligible Assets" under and as
defined in the Investor Agreement to be less than or equal to 100%;
(f) the failure to perfect or any delay in perfecting as
against the Seller, any of its Affiliates or any Dealer under the UCC of
all applicable jurisdictions or other applicable laws (whether by the
filing of financing statements or other similar instruments or documents
or otherwise) the interests of the Banks and the Agent in all Receivables
that are, or are intended to be, Pool Receivables, whether at the time of
any Purchase or at any subsequent time;
(g) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable which is, or is intended to be, a Pool Receivable (including,
without limitation, a defense based on such Receivable or the related
Contract not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the Equipment or services related to such
Receivable or the furnishing or failure to furnish such Equipment or
services;
(h) any failure of the Seller, as Collection Agent or
otherwise, to perform its duties or obligations in accordance with the
provisions of Article VI;
(i) 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 Equipment or services which are the
subject of any Receivable or Contract;
(j) the failure by the Seller, any of its Affiliates or any
Dealer to pay when due any taxes, including without limitation, sales,
excise or personal property taxes payable in connection with the
Receivables;
(k) the failure of the Parent, the Seller, any Dealer or any of
their respective agents and representatives to collect Receivables as
contemplated by the related Contract and the Credit and Collection Policy
or the failure of the Parent, any Dealer or any of their respective agents
or representatives to remit to the Seller Collections of Pool Receivables
remitted to the Parent or any such Dealer, agent or representative, or the
failure of the Seller or any of its agents and representatives to remit to
the Collection Agent or the Agent, Collections of Pool Receivables
remitted to the Seller or such agent or representative;
(l) the termination as a Dealer of any Dealer by the Parent or
any Affiliate;
(m) any claim, litigation or other action asserted or commenced
by a Dealer for the payment to such Dealer of any dealer reserve or other
amounts or other obligations allegedly owing to such Dealer by the Seller,
the Parent or any of their respective Affiliates;
(n) any failure of the Seller or the Parent to give reasonably
equivalent value to any Dealer or the Parent, as applicable in
consideration for the transfer by such Dealer or the Parent, as applicable
of any Receivable and related Contract, or any attempt by any Person to
void any such transfer under any statutory provision or common law or
equitable action, including, without limitation, any provision of the
Bankruptcy Code;
(o) the failure by the Seller, the Parent or any Dealer to be
duly qualified to do business, to be in good standing or to have filed
appropriate fictitious or assumed name registration documents in any
jurisdiction;
(p) the occurrence with respect to any Dealer of any event of
the type described in Section 7.01(f) hereof; or
(q) the commingling of Collections of Pool Receivables at any
time with other funds, whether by a Dealer, the Seller, the Parent or any
of their respective affiliates.
Any amounts subject to the indemnification provisions of this Section
10.01 shall be paid by Seller to the Agent within two Business Days
following Agent's demand therefor.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Amendments, Etc. No amendment, modification or
waiver of any provision of this Agreement nor consent to any departure by
the Seller therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Seller and the Agent, and then such
waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no
amendment, waiver or consent shall, unless in writing and signed by
(a) all of the Banks, do any of the following:
(i) amend the definitions of "Eligible Receivable,"
"Defaulted Receivable" or "Delinquent Receivable" or modify the then
existing Concentration Limit or any Special Concentration Limit, or
(ii) amend, modify or waive any provision hereof in any way
which would
(A) reduce the amount of Capital or Yield that is
payable on account of any Eligible Asset or delay any scheduled date for
payment thereof, or
(B) impair any rights expressly granted to an
assignee or participant hereunder, or
(C) reduce the Facility Fee, or delay the dates on
which the Facility Fee is due and payable, or
(D) modify any provisions relating to reserves for
any uncollectible Receivables or Yield, or
(E) release the Parent from any of its obligations
under Parent Support Agreement, or
(b) the Majority Banks, do any of following:
(i) amend the definitions of "Default Ratio," "Delinquency
Ratio," "Loss-to-Liquidation Ratio" or "Net Receivables Pool Balance," or
(ii) amend the Events of Termination to increase the
maximum permitted Default Ratio, Delinquency Ratio or Loss-to-Liquidation
Ratio or permit the sum of the aggregate Capital of all Eligible Assets
hereunder and the Investor Capital to exceed the Net Receivables Pool
Balance, or
(iii) (A) waive violations of the Default Ratio or the
Delinquency Ratio that deviate by more than 10% of the required levels of
such ratios for more than two consecutive months, or
(B) waive a violation of the requirement that the sum
of the Eligible Assets and the "Eligible Assets" under and as defined in
the Investor Agreement not exceed 100% which permits the sum of the
Eligible Assets and the "Eligible Assets" under and as defined in the
Investor Agreement to exceed 105%, for more than one month, unless the
Seller has cured or has agreed to cure such violation within 30 days after
notice from the Agent, or
(C) waive a violation of the Loss-to-Liquidation
Ratio that deviates by more than 10% of the required level of such ratio
for more than two consecutive months unless the Loss Percentage is at
least five times such ratio.
No amendment or waiver of any provision of this Agreement nor consent to
any departure by the Seller therefrom, shall in any event be effective
unless the same shall be in writing and signed by (i) the Seller, CNAI and
the Agent as agent for the Banks (with respect to an amendment) or
(ii) CNAI and the Agent as agent for the Banks (with respect to a waiver
or consent by them) or the Seller (with respect to a waiver or consent by
it), as the case may be, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given. This Agreement contains a final and complete integration of
all prior expressions by the parties hereto with respect to the subject
matter hereof and shall constitute the entire agreement among the parties
hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings.
SECTION 11.02. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated
herein, be in writing (including telex and facsimile communication) and
mailed, telexed, transmitted or delivered, as to each party hereto, at its
address set forth under its name on the signature pages hereof or
specified in such party's Assignment of Purchase Commitment or at such
other address as shall be designated by such party in a written notice to
the other parties hereto. All such notices and communications shall be
effective, upon receipt, or in the case of delivery by mail, five days
after being deposited in the mails, postage prepaid, or, in the case of
notice by telex, when telexed against receipt of answer back, or in the
case of notice by facsimile copy, when verbal confirmation of receipt is
obtained, in each case addressed as aforesaid, except that notices and
communications pursuant to Article II shall not be effective until
received.
SECTION 11.03. No Waiver; Remedies. No failure on the part of
CNAI, the Agent or any Bank to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Without limiting the foregoing, (x) the Agent is hereby authorized by the
Seller at any time and from time to time following the occurrence of an
Event of Termination to the fullest extent permitted by law, to instruct
Citibank or any Affiliate of Citibank to set-off and apply any and all
deposits (whether general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by
Citibank or such Affiliate to or for the credit or the account of the
Seller against any and all of the obligations of Seller, now or hereafter
existing under this Agreement, to the Agent or any Bank or their
respective successors and assigns and (y) each Bank is hereby authorized
by the Seller at any time and from time to time following the Termination
Date to the fullest extent permitted by law, to set-off and apply any and
all deposits (whether general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such
Bank or an Affiliate of such Bank to or for the credit or the account of
the Seller against any and all of the obligations of Seller, now or
hereafter existing under this Agreement, to the Agent or any Bank or their
respective successors and assigns; in each case, irrespective of whether
or not demand therefor shall have been made under this Agreement and
although such obligations may be contingent and unmatured. The Seller
acknowledges that the rights of the Agent and any Bank or any of their
respective successors and assigns described in this paragraph are in
addition to other rights and remedies (including, without limitation,
other rights of set-off) such parties may have.
SECTION 11.04. Binding Effect; Assignability.
(a) This Agreement shall be binding upon each of the Seller,
CNAI, the Agent, the Banks and their respective successors and permitted
assigns, and shall inure to the benefit of the Seller, CNAI, Citibank, the
Agent, the Banks and any other Affected Persons and their respective
successors and permitted assigns.
(b) Neither the Seller nor any Bank may assign any of its
rights and obligations hereunder or any interest herein (including,
without limitation, any Percentage Interest of such Bank) without the
prior written consent of the Agent (which consent shall not be
unreasonably withheld), except that any Bank may assign its rights and
obligations hereunder and its interest herein to any other Bank, or any
Affiliate of CNAI without such consent. Each of the Banks may, with the
consent of the Seller (such consent not to be unreasonably withheld),
assign its rights and obligations hereunder or interest herein to any
Person. Notwithstanding anything in the foregoing to the contrary, any
such permitted assignment of a Bank's rights and obligations hereunder,
and interests herein (including, without limitation, any Percentage
Interest of such Bank) shall be subject to the following requirements:
(i) each such assignment shall be a constant, and not a
varying, percentage of all rights and obligations under this Agreement,
(ii) the amount being assigned pursuant to each assignment shall
in no event be less than the lesser of $5,000,000 and the assigning Bank's
Maximum Purchase,
(iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment of Purchase Commitment in the form of Exhibit A attached
hereto, together with a processing and recordation fee of $2,500, and
(iv) concurrently with such assignment, the assignor thereunder
(other than CNAI or any of its Affiliates) shall assign to such assignee
or such other Bank an equal percentage of its rights and obligations under
the Asset Purchase Agreement, if any.
Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in the Assignment of Purchase Commitment, (x)
the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to this
Agreement, have the rights and obligations of a Bank hereunder and (y) the
Bank assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to this Agreement, relinquish
its rights and be released from its obligations under this Agreement
(other than its obligations of confidentiality under Section 11.09) (and,
in the case of an assignment covering all or the remaining portion of an
assigning Bank's rights and obligations under this Agreement, such Bank
shall cease to be a party hereto).
(c) Furthermore, each Bank and its permitted assigns (as
described above in Section 11.04(b) may, at any time, without the consent
of the Seller, sell undivided participation interests in all or any of its
rights, obligations and interests (including, without limitation, such
Bank's Percentage Interests in the Eligible Assets) hereunder; provided,
however, that (i) such Bank's obligations under this Agreement (including,
without limitation, its Purchase Commitment hereunder) shall remain
unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the Seller,
the Agent and the other Banks shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under
this Agreement, and (iv) concurrently with such participation, the selling
Bank thereunder shall sell to such bank or other entity a participation in
an equal percentage of its rights and obligations under the Asset Purchase
Agreement, if any.
(d) This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall
remain in full force and effect until such time, after the Termination
Date until the Collection Date; provided, however, that all
representations, warranties and indemnities set forth herein, including,
without limitation, in Articles IV, IV, VIII, X, and XI, and Section 2.14,
shall be continuing and shall survive the Collection Date.
SECTION 11.05. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the internal laws (as opposed to
conflict of laws provisions) of the State of New York, except to the
extent that the validity or perfection of the interests of the Banks in
the Pool Receivables, or remedies hereunder, in respect thereof, are
governed by the laws of a jurisdiction other than the State of New York.
SECTION 11.06. Costs, Expenses and Taxes. (a) In addition to
the rights of indemnification granted to CNAI, the Agent, the Banks and
their Affiliates under Article X hereof, the Seller agrees to pay on
demand all costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic auditing) of
this Agreement and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for CNAI, the Agent and Citibank with respect thereto
and with respect to advising CNAI and the Agent as to their respective
rights and remedies under this Agreement, and all costs and expenses, if
any (including reasonable counsel fees and expenses) of each of the Agent,
the Banks, CNAI and their respective Affiliates, in connection with the
enforcement of this Agreement and the other documents to be delivered
hereunder.
(b) In addition, the Seller shall pay any and all stamp, sales,
excise and other taxes (other than taxes based upon or measured by income
of the Agent or any Bank) and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this
Agreement or the other documents to be delivered hereunder, and agrees to
indemnify CNAI, the Agent and each Bank against any liabilities with
respect to or resulting from any delay by the Seller in paying or omission
to pay such taxes and fees.
SECTION 11.07. [Reserved].
SECTION 11.08. [Reserved].
SECTION 11.09. Confidentiality. Unless otherwise required by
applicable law, the Seller agrees to maintain the confidentiality of this
Agreement and all other instruments and documents executed (or proposed to
be executed) in connection herewith (and all drafts thereof) in its
communications with third parties and otherwise; provided, however, that
the Agreement may be disclosed to third parties to the extent such
disclosure is (a) (i) required in connection with a sale of securities of
Seller or (ii) made solely to Persons who are legal counsel for the
purchaser or underwriter of such securities, and (b) made pursuant to a
written agreement of confidentiality in form and substance reasonably
satisfactory to the Agent; provided further, however, that the Agreement
may be disclosed to the Seller's legal counsel or accountants; and
provided further, however, that the Seller shall have no obligation of
confidentiality in respect of any information which may be generally
available to the public or becomes available to the public through no
fault of the Seller.
SECTION 11.10. Execution in Counterparts; Severability. This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired
thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
SELLER: SNAP-ON CREDIT CORPORATION
By /s/ Michael F. Montemurro
Name: Michael F. Montemurro
Title: President
2801 80th Street
Kenosha, Wisconsin 53141-1410
Attention: Chief Financial Officer
Facsimile No.: (414) 656-5127
Confirmation No.: (414) 656-5550
CNAI/AGENT: CITICORP NORTH AMERICA, INC.,
individually and as Agent
By /s/ Michael Storm
Vice President
450 Mamaroneck Avenue
Harrison, N.Y. 10528
Attention: Corporate
Asset Funding Department
Facsimile No.: (312) 993-6730
Confirmation No.: (312) 993-3112
BANKS: CITIBANK, N.A.
By /s/ Michael Storm
Vice President
Percentage: 100.0%
Maximum Purchase: $150,000,000
450 Mamaroneck Avenue
Harrison, N.Y. 10528
Attention: Corporate
Asset Funding Department
Facsimile No.: (312) 993-6730
Confirmation No.: (312) 993-3112
<PAGE>
EXHIBIT A
FORM OF ASSIGNMENT OF PURCHASE COMMITMENT
Attached.
<PAGE>
ASSIGNMENT OF PURCHASE COMMITMENT
Reference is made to the Receivables Purchase and Sale Agreement
dated as of October 6, 1995 (the "Purchase Agreement"), among Snap-on
Credit Corporation, the Banks parties thereto (the "Banks") and Citicorp
North America, Inc., individually and as agent (in its capacity as agent,
the "Agent"). Capitalized terms used herein and not otherwise defined
herein shall have the meaning assigned to such terms in the Purchase
Agreement.
1. _____________ (the "Assignor") hereby sells and assigns,
without recourse, to ____________ (the "Assignee"), and Assignee hereby
purchases and assumes, without recourse, representation, warranty of any
kind (except as set forth below) from Assignor, effective as of the
Effective Date set forth below, a ____% interest in the Assignor's rights
and obligations under the Purchase Agreement, including, without
limitation, the Assignor's outstanding Capital on the Effective Date and
the commitment of the Assignor to make Purchases and Capital Increase
Purchases pursuant to the terms and conditions of the Purchase Agreement.
Each of the Assignor and the Assignee hereby makes and agrees to be bound
by all the agreements set forth in Section 11.04 of the Purchase
Agreement, a copy of which Purchase Agreement has been received by each
such party. From and after the Effective Date, (a) Assignee shall be a
party to and be bound by the provisions of the Purchase Agreement and, to
the extent of the interests assigned by this Assignment of Purchase
Commitment, have the rights and obligations of a Bank thereunder and (b)
Assignor shall, to the extent of the interests assigned by this Assignment
of Purchase Commitment, relinquish its rights and be released from its
obligations under the Purchase Agreement.
2. The Assignor represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and
such interest is free and clear of any adverse claim created by the
Assignor, and as of the date hereof (and without giving effect to any
assignment of such interest which has not become effective) (a) the
Assignor's Percentage is ___% and (b) the aggregate outstanding Capital of
the Assignor is $_______.
3. This Assignment of Purchase Commitment is being delivered to
the Agent pursuant to Section 11.04 of the Purchase Agreement.
4. The Assignee hereby represents and warrants that is has,
independently and without reliance on Assignor, any other Purchaser or the
Agent and based on such documents and information as it has deemed
appropriate, made its own evaluation and decision to enter into this
Assignment of Purchase Commitment.
5. Upon the later of the Effective Date and the date upon which
the Agent accepts this Agreement of Purchase Commitment and records the
assignment hereunder in the Register (the "Recording Date"), the Agent
shall make all payments under the Purchase Agreement in respect of the
interest assigned hereby (including, without limitation, all payments of
Capital, Yield and unpaid Facility Fees with respect thereto) to the
Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Purchase Agreement for periods prior to
the later of the Recording Date and the Effective Date directly between
themselves.
6. This Assignment of Purchase Commitment may be executed in
any number of counterparts which, when taken together, shall be deemed to
constitute one and the same instrument.
7. THIS ASSIGNMENT OF PURCHASE AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS OF NEW YORK, BUT
OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment:
Percentage of Assignee after giving effect to
this Assignment: ______%
Maximum Purchase of Assignee after giving effect
to this Assignment: $___________________
The terms set forth herein
are hereby agreed to as of this
____ day of __________, ____:
[Name of Assignor], as Assignor
By:___________________
Name:
Title:
[Name of Assignee], as Assignee
By:__________________
Name:
Title:
<PAGE>
EXHIBIT B
FORMS OF CONTRACTS
Attached.
<PAGE>
EXHIBIT C
DESCRIPTION OF CREDIT AND COLLECTION POLICIES
Attached.
<PAGE>
EXHIBIT D
TRADE NAMES, FICTITIOUS NAMES AND
"DOING BUSINESS AS" NAMES
None.
<PAGE>
EXHIBIT E
FORM OF INVESTOR REPORT
Attached.
<PAGE>
EXHIBIT F
LIST OF OFFICES OF THE SELLER WHERE RECORDS ARE KEPT
2801 80th Street
Kenosha, Wisconsin 53141-1410
[Execution Copy]
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT ("Agreement") is executed as of this 6th
day of October, 1995 by SNAP-ON INCORPORATED, a Delaware corporation (the
"Parent"), in favor of CORPORATE ASSET FUNDING COMPANY, INC., a Delaware
corporation ("Investor"), CITIBANK, N.A., a national banking association
("Citibank") and CITICORP NORTH AMERICA, INC., a Delaware corporation, as
agent under the Investor Agreement and the Parallel Purchase Agreement (in
each case, as defined below) (the "Agent") (the Investor, Citibank and
their its respective successors and assigns, including without limitation,
the "Owners" under and as defined in the Investor Agreement referred to
below and the "Banks" under and as defined in the Parallel Purchase
Agreement referred to below, are referred to herein as the "Purchase
Parties").
PRELIMINARY STATEMENTS
1. Snap-on Credit Corporation, a Wisconsin corporation (the
"Seller"), the Investor and the Agent have executed that certain
Receivables Purchase and Sale Agreement of even date herewith (the
"Investor Agreement) pursuant to which the Investor and its assigns may,
from time to time, purchase interests in Receivables from the Seller.
2. The Seller, Citibank and the Agent and the Seller have
executed that certain Receivables Purchase and Sale Agreement of even date
herewith (the "Parallel Purchase Agreement") pursuant to which the
Citibank and its assigns may, from time to time, purchase interests in
Receivables from the Seller.
3. The Parent is the owner, directly or indirectly, of 100% of
the capital stock of the Seller.
4. It is a condition precedent to the initial purchase by any
of the Purchase Parties under the Investor Agreement or the Parallel
Purchase Agreement, as applicable, that the Parent execute this Agreement
and deliver it to the Investor, Citibank and the Agent.
In consideration of the execution of the Investor Agreement and
the Parallel Purchase Agreement by the Investor, the Banks and the Agent,
and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by the Parent, the Parent agrees as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Unless otherwise defined in this
Agreement, all defined terms used in this Agreement, including the
Preliminary Statements hereof, shall have the meanings ascribed to such
terms in the Investor Agreement and the Parallel Purchase Agreement.
ARTICLE II
PERFORMANCE SUPPORT OBLIGATION
Section 2.01. Performance Support Obligation. The Parent
hereby unconditionally and irrevocably guarantees for the benefit of each
of the Purchase Parties and the Agent, the due and punctual performance,
observance and payment by the Seller and its respective successors and
assigns of all of the terms, covenants, conditions, agreements,
undertakings and obligations on the part of the Seller (whether
individually or as Collection Agent or otherwise) to be paid, performed or
observed under the Investor Agreement, the Parallel Purchase Agreement, or
any document delivered in connection with the Investor Agreement or the
Parallel Purchase Agreement in accordance with the terms thereof, includ-
ing, without limitation, any agreement of the Seller to pay any money
under either the Investor Agreement, the Parallel Purchase Agreement, or
any such other document (all such terms, covenants, conditions,
agreements, undertakings and obligations on the part of the Seller to be
paid, performed or observed being collectively called the "Seller Obliga-
tions"). In the event that the Seller shall fail in any manner whatsoever
to perform, observe, or pay any of the Seller Obligations when the same
shall be required to be performed, observed or paid under the Investor
Agreement, the Parallel Purchase Agreement or any such other document,
then the Parent will itself duly and punctually perform, observe and pay,
or cause to be duly and punctually performed, observed or paid the Seller
Obligations, and it shall not be a condition to the accrual of the obliga-
tion of the Parent hereunder to perform, observe or pay any Seller
Obligation (or to cause the same to be performed, observed or paid) that
any Purchase Party or the Agent shall have first made any request of or
demand upon or given any notice to the Parent or to the Seller or its
respective successors and assigns or have initiated any action or
proceeding against the Parent or the Seller or any of their respective
successors and assigns in respect thereof. Any Purchase Party, the Agent
or any of them may proceed to enforce the obligations of the Parent under
this Section 2.01 without first pursuing or exhausting any right or remedy
which any Purchase Party or the Agent may have against the Seller, any
other Person, the Receivables or any other property.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of
the Parent. The Parent hereby represents and warrants as follows:
(a) The Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and is duly qualified to do business, and in good
standing, in every jurisdiction where the nature of its business
requires it to be so qualified, except to the extent that the
failure to be so qualified to do business or in good standing in
any jurisdiction would not, when taken together with all similar
failures, materially adversely affect the financial condition or
operations of the Parent.
(b) The execution, delivery and performance by the Parent
of this Agreement and the other instruments and documents to be
delivered hereunder, and the transactions contemplated hereby,
are within the Parent's corporate powers, have been duly
authorized by all necessary corporate action, do not contravene
(i) the Parent's charter or by-laws, (ii) any law, rule or
regulation applicable to the Parent, other than such laws, rules
or regulations the contravention of which would not, on an
aggregate basis, materially adversely affect the financial
condition or operations of the Parent, (iii) any contractual
restriction contained in any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note or
other agreement or instrument binding on the Parent or its
property or (iv) any order, writ, judgment, award, injunction or
decree binding on the Parent or its property, and do not result
in or require the creation of any Adverse Claim upon or with
respect to any of its properties.
(c) This Agreement has been duly executed and delivered on
behalf of the Parent and is the legal, valid and binding
agreement of the Parent enforceable against the Parent in
accordance with its terms.
(d) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Parent of this Agreement or any other
document or instrument to be delivered by the Parent herewith.
(e) There are no actions, suits, or proceedings pending
or, to the knowledge of the Parent, threatened against or
affecting the Parent or any of its Subsidiaries, or the property
of the Parent or any of its Subsidiaries in any court, or before
any arbitrator of any kind, or before or by any governmental
body, which can reasonably be expected to materially adversely
affect either the financial condition or operations of the
Parent or the Parent and its Subsidiaries taken as a whole or
the ability of the Parent to perform its obligations hereunder.
Neither the Parent nor any of its Subsidiaries is in default
with respect to any order of any court, arbitrator or
governmental body, except for defaults with respect to orders of
courts, arbitrators and governmental bodies which defaults are
not material to the business or operations of the Parent and its
Subsidiaries taken as a whole.
(f) The consolidated balance sheets of the Parent and its
consolidated Subsidiaries as of December 31, 1994, and the
related consolidated statements of shareholders equity and cash
flows of the Parent and its consolidated Subsidiaries for the
fiscal year then ended, in each case certified by Arthur
Andersen LP, independent public accountants, copies of which
have been furnished to the Agent, fairly present the consoli-
dated financial condition of the Parent and its consolidated
Subsidiaries at such date and the consolidated results of the
operations of the Parent and its consolidated Subsidiaries for
the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied. Since
December 31, 1994, there has been no material adverse change in
such condition or operations.
(g) The Parent is the direct or indirect owner of 100% of
each class of the issued and outstanding capital stock of the
Seller.
Section 3.02. Continuing Nature of Representations and
Warranties. The Parent hereby covenants and agrees that on each day from
the date hereof until this Agreement is terminated pursuant to
Section 5.07 hereof, the representations and warranties contained in
Section 3.01 shall be true and correct as if made on each such day.
ARTICLE IV
COVENANTS
SECTION 4.01. Reporting Covenants. The Parent covenants and
agrees that, until this Agreement is terminated pursuant to Section 5.07,
the Parent will (unless any of the following is delivered to the Agent
pursuant to the Investor Agreement or the Parallel Purchase Agreement)
deliver to the Agent:
(a) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Parent, consolidated balance sheets of the Parent and its consolidated
Subsidiaries as of the end of such quarter, and the related consolidated
statements of cash flows and consolidated statements of changes in
financial position of the Parent and its consolidated Subsidiaries each
for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter, certified by the chief financial
officer or chief accounting officer of the Parent;
(b) as soon as available and in any event within 120 days after
the end of each fiscal year of the Parent, a copy of the consolidated
balance sheets of the Parent and its consolidated Subsidiaries as of the
end of such year and the related consolidated statements of cash flows and
consolidated statements of changes in financial position of the Parent and
its consolidated Subsidiaries for such year each reported on by nationally
recognized independent public accountants acceptable to the Agent, all in
reasonable detail and certified without adverse opinion or disclaimer by
nationally recognized independent public accountants acceptable to the
Agent, whose certificate shall be in conformity with generally accepted
accounting principles;
(c) promptly after the sending or filing thereof, copies of all
reports which the Parent sends to any of its security holders and copies
of all reports and other documents which the Parent files with the
Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as amended, and, to the extent requested by the Agent, copies of
such other reports and registration statements as the Parent may file with
the Securities and Exchange Commission or any national securities
exchange; and
(d) promptly from time to time furnish the Agent such
information, documents, records or reports respecting the conditions and
operations, financial or otherwise, of the Parent or any Subsidiary of the
Parent as the Agent may reasonably request from time to time to protect
the interests of the Agent, CNAI, the Banks and the Owners under and as
contemplated by this Agreement.
SECTION 4.02. Stock Ownership and Merger Restrictions. The
Parent covenants and agrees that, until this Agreement is terminated
pursuant to Section 5.07, the Parent will continue to be the beneficial
owner, whether directly or indirectly, of 100% of each class of the issued
and outstanding capital stock of the Seller. The Parent shall not merge
or consolidate with any Person unless the Parent shall be the surviving
entity of any such merger or consolidation.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Validity of Obligations. The Parent agrees that
its obligations under this Agreement shall be unconditional, irrespective
of, without limitation, (a) the validity, enforceability, avoidance,
subordination, discharge, or disaffirmance by any Person (including a
trustee in bankruptcy) of the Seller Obligations, any Receivable, the
Investor Agreement or the Parallel Purchase Agreement, (b) the absence of
any attempt to collect any Receivables from the Obligor related thereto or
any guarantor, or to collect the Seller Obligations from the Seller or any
other Person, (c) the waiver, consent extension, forbearance or granting
of any indulgence by any of the Purchase Parties or the Agent with respect
to any provision of any instrument evidencing the Seller Obligations or
any Receivable, (d) any change of the time, manner or place of performance
of, or in any other term of any of the Seller Obligations or any
Receivable, including without limitation, any amendment to or modification
of the Investor Agreement or the Parallel Purchase Agreement, (e) any law,
regulation or order of any jurisdiction affecting any term of any of the
Seller Obligations, any Receivable, or rights of any of the Purchase
Parties or the Agent with respect thereto, (f) the failure by any of the
Purchase Parties or the Agent to take any steps to perfect and maintain
perfected its respective interest in any Receivable or other property
acquired by any of the Purchase Parties from the Seller or in any security
or collateral related to the Seller Obligations, (g) any exchange or
release of any Receivable or other property acquired by the Purchase
Parties from the Seller, (h) any failure to obtain any authorization or
approval from or other action by or to notify or file with, any
governmental authority or regulatory body required in connection with the
performance of the obligations hereunder by the Parent or (i) any impossi-
bility or impracticability of performance, illegality, force majeure, any
act of government, or other similar circumstance which might constitute a
defense available to, or a discharge of the Seller or the Parent. The
Parent further agrees that its obligations under this Agreement shall not
be limited by any valuation, estimation or disallowance made in connection
with any proceedings involving the Seller filed under the United States
Bankruptcy Code, as amended ("Code"), whether pursuant to Section 502 of
the Code or any other Section thereof. The Parent further agrees that
none of the Purchase Parties or the Agent shall be under any obligation to
marshall any assets in favor of or against or in payment of any or all of
the Seller Obligations. The Parent further agrees that, to the extent
that the Seller makes a payment or payments to any of the Purchase Parties
or the Agent, which payment or payments (or any part thereof) are
subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to the Seller, its estate, trustee or
receiver or any other party, including, without limitation, the Parent,
under any bankruptcy law, state or federal law, common law or equitable
cause, then to the extent of such payment or repayment, the Seller Obliga-
tion or part thereof which had been paid, reduced or satisfied by such
amount shall be reinstated and continued in full force and effect as of
the date such initial payment, reduction or satisfaction occurred. The
Parent waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor and
notices of acceptance of this Agreement. The Parent shall perform its
obligations under and as contemplated by this Agreement without set-off or
counterclaim, any such claims to be pursued independently of the Parent's
performance hereunder. The Parent's obligations under this Agreement
shall not be limited if the Purchase Parties or the Agent are precluded
for any reason (including without limitation, the application of the
automatic stay under Section 362 of the Code) from enforcing or exercising
any right or remedy with respect to the Seller Obligations, and the Parent
shall pay to the Purchase Parties and the Agent, upon demand, the amount
of the Seller Obligations that would otherwise have been due and payable
had such rights and remedies been permitted to be exercised.
SECTION 5.02. Irrevocability. The Parent agrees that its
obligations under this Agreement shall be irrevocable. In the event that
under applicable law (notwithstanding the Parent's agreement regarding the
irrevocable nature of its obligations hereunder), the Parent shall have
the right to revoke this Agreement, this Agreement shall continue in full
force and effect until a written revocation hereof specifically referring
hereto, signed by the Parent is actually received by the Agent at Agent's
address at 450 Mamaroneck Avenue, Harrison, New York 10528. Any such
revocation shall not affect the right of any of the Purchase Parties or
the Agent to enforce their respective rights under this Agreement with
respect to (a) any Seller Obligation (including any Seller Obligation that
is contingent or unmatured) which arose on or prior to the date the
aforementioned revocation was received by the Agent or (b) any Receivable
which was a Pool Receivable on the date the aforementioned revocation was
received by the Agent. If any of the Purchase Parties acquire Receivables
or take other action in reliance on this Agreement after any such revoca-
tion by the Parent but prior to the receipt by the Agent of said written
notice, the rights of the Purchase Parties and the Agent with respect
thereto shall be the same as if such revocation had not occurred. Without
limiting the foregoing, this Agreement may not be revoked at any time on
or after the Termination Date.
SECTION 5.03. Waiver. The Parent hereby waives promptness,
diligence, notice of acceptance, notice of default by the Seller, notice
of the incurrence of any Seller Obligation and any other notice with
respect to any of the Seller Obligations, this Agreement, the Investor
Agreement, the Parallel Purchase Agreement and any other document related
to any of the foregoing and any requirement that the Purchase Parties or
the Agent exhaust any right or take any action against the Seller, any
other Person or any property. The Parent warrants to the Purchase Parties
and the Agent that it has adequate means to obtain from the Seller on a
continuing basis, all information concerning the financial condition of
the Seller and the collectibility of the Receivables, and that it is not
relying on the Purchase Parties or the Agent to provide such information
either now or in the future.
SECTION 5.04. Waiver of Subrogation. The Parent hereby waives
any and all rights against the Seller which it may acquire by way of
subrogation under this Agreement.
SECTION 5.05. Costs and Expenses. The Parent shall pay all
reasonable costs and expenses including, without limitation, all court
costs and attorneys' and paralegals' fees and expenses paid or incurred by
any of the Purchase Parties or the Agent in connection with (a) the
enforcement of any term or provision of this Agreement or (b) the prosecu-
tion or defense of any action by or against any of the Purchase Parties or
the Agent in connection with this Agreement, the Investor Agreement or the
Parallel Purchase Agreement, whether involving the Seller, the Parent or
any other Person, including, without limitation, a trustee in bankruptcy.
The Parent shall pay interest on all amounts owing by it under this
Agreement from the date of demand therefor until such obligations are paid
in full, at the per annum rate of 2% plus the Alternate Base Rate.
SECTION 5.06. Successors. This Agreement shall be binding upon
the Parent and upon the successors and assigns of the Parent and shall
inure to the benefit of the successors and assigns of the Purchase Parties
and the Agent; all references herein to the Parent and to the Seller shall
be deemed to include their respective successors and assigns. The
successors and assigns of the Seller shall include, without limitation, a
receiver, trustee or debtor-in-possession of or for the Seller. All
references to the singular shall be deemed to include the plural where the
context so requires.
SECTION 5.07. Termination. This Agreement shall terminate
after the latest to occur of (a) the date on which all the Seller
Obligations are paid and/or performed in full, (b) the Termination Date
under the Investor Agreement, (c) the Termination Date under the Parallel
Purchase Agreement and (d) the date on which the Parent has satisfied in
full its obligations hereunder.
SECTION 5.08. Integration; Conditions. This Agreement contains
a final and complete integration of all prior expressions of the parties
hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings. No course of dealing, course of
performance or trade usage and no parol evidence shall be used to supple-
ment or modify any term hereof. This Agreement is fully effective on the
date of its execution by the Parent.
SECTION 5.09. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated
herein, be in writing (including telex communication and communication by
facsimile copy) and mailed, telexed, transmitted or otherwise delivered,
as to each party hereto, at its address set forth under its name on the
signature pages hereof or at such other address as shall be designated by
such party in a written notice to the other parties hereto. Except as
otherwise specified in the Agreement, all such notices and communications
shall be effective, upon receipt, or in the case of delivery by mail, five
days after being deposited in the United States mails, or, in the case
of notice by telex, when telexed against receipt of answer back, or in
the case of notice by facsimile copy, when verbal communication of
receipt is obtained, or in the case of delivery by commercial overnight
courier, one Business Day after being deposited with such courier for
next Business Day delivery, in each case addressed as aforesaid.
SECTION 5.10. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND REMEDIES OF THE PARTIES
HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS (AS
OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NEW YORK. THE
PARENT HEREBY AGREES TO THE JURISDICTION OF ANY FEDERAL COURT LOCATED
WITHIN THE STATE OF NEW YORK. THE PARENT HEREBY WAIVES ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE BETWEEN THE PARENT AND THE PURCHASER OR THE AGENT
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY
DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A
JURY. THE PARENT HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER
AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 5.10 SHALL
AFFECT THE RIGHT OF THE PURCHASER OR THE AGENT TO BRING ANY ACTION OR
PROCEEDING AGAINST THE PARENT OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
SECTION 5.11 Severability. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions
of this Agreement.
SECTION 5.12. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one
and the same agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Parent this 6th day of October, 1995.
SNAP-ON INCORPORATED
By: /s/ Donald S. Huml
Name: Donald S. Huml
Title: Senior Vice President-
Finance and Chief
Financial Officer
2801 80th Street
Kenosha, Wisconsin 53141-1410
Attention: Chief Financial Officer
Facsimile No.: (414) 656-5127
Confirmation No.: (414) 656-5550
Acknowledged and accepted
this 6th day of October, 1995.
CORPORATE ASSET FUNDING COMPANY, INC.
Citicorp North America, Inc. as
Attorney-in-fact
By /s/ Michael Storm
Vice President
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: Corporate Asset
Funding Department
Facsimile No.: (312) 993-6730
Confirmation No.: (312) 993-3112
CITIBANK, N.A.
By /s/ Michael Storm
Vice President
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: Corporate Asset
Funding Department
Facsimile No.: (312) 993-6730
Confirmation No.: (312) 993-3112
CITICORP NORTH AMERICA, INC.,
as Agent
By /s/ Michael Storm
Vice President
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: Corporate Asset
Funding Department
Facsimile No.: (312) 993-6730
Confirmation No.: (312) 993-3112
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF EARNINGS FOUND ON
PAGES 3, 4 AND 5 OF THE CORPORATION'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
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0
0
<OTHER-SE> 686,749
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<CGS> 460,433
<TOTAL-COSTS> 460,433
<OTHER-EXPENSES> 396,063
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<INTEREST-EXPENSE> 9,211
<INCOME-PRETAX> 130,970
<INCOME-TAX> 48,463
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