Page 66
Exhibit 10(i)A(3)
RECEIVABLES SALE AND CONTRIBUTION AGREEMENT
DATED AS OF MAY 2, 2001
BETWEEN
National Service Industries, Inc., A GEORGIA CORPORATION,
AS SELLER,
AND
NSI Funding, Inc., A DELAWARE CORPORATION,
AS BUYER
Page 67
Exhibit 10(i)A(3)
ARTICLE I AMOUNTS AND TERMS OF THE PURCHASE..................................2
Section 1.1 Initial Contribution of Receivables........................2
Section 1.2 Purchases of Receivables...................................2
Section 1.3 Payment for the Purchases..................................3
Section 1.4 Purchase Price Credit Adjustments..........................4
Section 1.5 Payments and Computations, Etc.............................5
Section 1.6 Transfer of Records........................................5
Section 1.7 Characterization...........................................5
ARTICLE II REPRESENTATIONS AND WARRANTIES....................................6
Section 2.1 Representations and Warranties of NSI Georgia..............6
(a) Existence and Power..............................................6
(b) Power and Authority; Due Authorization, Execution and Delivery...6
(c) No Bulk Sale.....................................................6
(d) Governmental Authorization.......................................7
(e) Actions, Suits...................................................7
(f) Binding Effect...................................................7
(g) Accuracy of Information..........................................7
(h) Use of Proceeds..................................................7
(i) Good Title.......................................................7
(j) Perfection.......................................................7
(k) Places of Business and Locations of Records......................8
(l) Collections......................................................8
(m) Material Adverse Effect..........................................8
(n) Names............................................................8
(o) Not a Holding Company or an Investment Company...................8
(p) Compliance with Law..............................................8
(q) Compliance with Credit and Collection Policy.....................9
(r) Payments to NSI Georgia..........................................9
(s) Enforceability of Contracts......................................9
(t) Accounting.......................................................9
(u) Eligible Receivables.............................................9
ARTICLE III CONDITIONS OF PURCHASES..........................................9
Section 3.1 Conditions Precedent to Initial Purchase...................9
Section 3.2 Conditions Precedent to All Purchases......................9
ARTICLE IV COVENANTS........................................................10
Section 4.1 Affirmative Covenants of NSI Georgia......................10
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Exhibit 10(i)A(3)
(a) Financial Reporting.............................................10
(i) Annual Reporting.............................................10
(ii) Quarterly Reporting..........................................11
(iii) Compliance Certificate.......................................11
(iv) Shareholders Statements and Reports..........................11
(v) S.E.C. Filings...............................................11
(vi) Copies of Notices............................................11
(vii) Change in Credit and Collection Policy.......................11
(viii) Other Information.........................................11
(b) Notices.........................................................12
(i) Termination Events or Unmatured Termination Events...........12
(ii) Defaults Under Other Agreements..............................12
(iii) ERISA Events.................................................12
(c) Compliance with Laws and Preservation of Existence..............12
(d) Audits..........................................................12
(e) Keeping and Marking of Records and Books........................13
(f) Compliance with Contracts and Credit and Collection Policy......13
(g) Performance and Enforcement of First-Step Sale Agreement........14
(h) Ownership.......................................................14
(i) Lenders' Reliance...............................................14
(j) Collections.....................................................15
(k) Taxes...........................................................15
(l) Payment to NSI Enterprises......................................15
Section 4.2 Negative Covenants of NSI Georgia.........................15
(a) Name Change, Offices and Records................................15
(b) Change in Payment Instructions to Obligors......................16
(c) Modifications to Contracts and Credit and Collection Policy.....16
(d) Sales, Liens....................................................16
(e) Accounting for Purchases........................................16
ARTICLE V TERMINATION EVENTS................................................17
Section 5.1 Termination Events........................................17
Section 5.2 Remedies..................................................18
ARTICLE VI INDEMNIFICATION..................................................19
Section 6.1 Indemnities by NSI Georgia................................19
Section 6.2 Other Costs and Expenses..................................21
ARTICLE VII MISCELLANEOUS...................................................21
Section 7.1 Waivers and Amendments....................................21
Section 7.2 Notices...................................................22
Section 7.3 Protection of Ownership Interests of Buyer................22
Page 69
Exhibit 10(i)A(3)
Section 7.4 Confidentiality of Fee Letter.............................23
Section 7.5 Bankruptcy Petition.......................................23
Section 7.6 Limitation of Liability...................................24
Section 7.7 CHOICE OF LAW.............................................24
Section 7.8 CONSENT TO JURISDICTION...................................24
Section 7.9 WAIVER OF JURY TRIAL......................................24
Section 7.10 Integration; Binding Effect; Survival of Terms............25
Section 7.11 Counterparts; Severability; Section References............25
EXHIBITS AND SCHEDULES
----------------------
Exhibit I - Definitions
Exhibit II - Principal Place of Business; Location(s) of Records;
Federal Employer Identification Number; Other Names
Exhibit III - Lock-Boxes; Collection Accounts; Collection Banks
Exhibit IV - Form of Compliance Certificate
Exhibit V - Copy of Credit and Collection Policy
Exhibit VI - Form of Subordinated Note
Exhibit VII Form of Purchase Report
Schedule A List of Documents to Be Delivered to Buyer Prior to
the Initial Purchase
Page 70
Exhibit 10(i)A(3)
RECEIVABLES SALE AND CONTRIBUTION AGREEMENT
THIS RECEIVABLES SALE AND CONTRIBUTION AGREEMENT, dated as of May 2, 2001,
is by and between National Service Industries, Inc., a Georgia corporation ("NSI
Georgia"), and NSI Funding, Inc., a Delaware corporation ("Buyer"). Unless
defined elsewhere herein, capitalized terms used in this Agreement shall have
the meanings assigned to such terms in Exhibit I hereto (or, if not defined in
Exhibit I hereto, the meaning assigned --------- to such term in Exhibit I to
the Credit and Security Agreement).
PRELIMINARY STATEMENTS
NSI Georgia now owns, and from time to time hereafter will own,
Receivables. NSI Georgia wishes to contribute all Existing Receivables to
Buyer's capital, together with the Related Security and Collections with
respect thereto, and Buyer wishes to accept such contribution. In addition,
NSI Georgia wishes to sell and assign all Additional Receivables to Buyer,
together with the Related Security and Collections with respect thereto,
and Buyer wishes to acquire all such Additional Receivables, Related
Security and Collections from NSI Georgia.
NSI Georgia and Buyer intend the transactions contemplated hereby to
be true sales or other outright conveyances of the Receivables from NSI
Georgia to Buyer, providing Buyer with the full benefits of ownership of
the Receivables, and NSI Georgia and Buyer do not intend these transactions
to be, or for any purpose to be characterized as, loans from Buyer to NSI
Georgia.
Immediately following the contribution of Existing Receivables
hereunder, Buyer will borrow and pledge its assets pursuant to that certain
Credit and Security Agreement dated as of May 2, 2001 (as the same may from
time to time hereafter be amended, supplemented, restated or otherwise
modified, the "Credit and Security Agreement") among Buyer, as Borrower,
NSI Georgia, as initial Servicer, Blue Ridge Asset Funding Corporation
("Blue Ridge"), the banks and other financial institutions from time to
time party thereto as "Liquidity Banks" and Wachovia Bank, N.A. or any
successor agent appointed pursuant to the terms of the Credit and Security
Agreement, as agent for Blue Ridge and such Liquidity Banks (in such
capacity, the "Agent").
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
the parties hereto agree as follows:
Page 71
Exhibit 10(i)A(3)
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASE
Section 1.1 Initial Contribution of Receivables. On the date hereof, NSI
Georgia does hereby contribute, assign, transfer, set-over and otherwise convey
to Buyer, and Buyer does hereby accept from NSI Georgia, all Existing
Receivables, whether originated by NSI Enterprises and acquired by NSI Georgia
or originated by NSI Georgia (collectively, the "Initial Contributed
Receivables"), together with all Related Security relating thereto and all
Collections thereof.
Section 1.2 Purchases of Receivables.
(a) Effective on each day after the Initial Cutoff Date on which any
Receivable is created (each such Receivable, an "Additional Receivable"),
in consideration for the Purchase Price and upon the terms and subject to
the conditions set forth herein, NSI Georgia does hereby sell, assign,
transfer, set-over and otherwise convey to Buyer, without recourse (except
to the extent expressly provided herein), and Buyer does hereby purchase
from NSI Georgia, all of NSI Georgia's right, title and interest in and to
all Additional Receivables existing as of such date, together with all
Related Security relating thereto and all Collections thereof.
(b) Buyer shall be obligated to pay the Purchase Price for the
Additional Receivables purchased hereunder in accordance with Section 1.3.
(c) It is the intention of the parties hereto that each Purchase of
Receivables made hereunder shall constitute a sale, which sale is absolute
and irrevocable and provides Buyer with the full benefits of ownership of
the Receivables. Except for the Purchase Price Credits owed pursuant to
Section 1.4, each sale of Receivables hereunder is made without recourse to
NSI Georgia; provided, however, that (i) NSI Georgia shall be liable to
Buyer for all representations, warranties, covenants and indemnities made
by NSI Georgia pursuant to the terms of the Transaction Documents to which
NSI Georgia is a party, and (ii) such sale does not constitute and is not
intended to result in an assumption by Buyer (or the Agent, as its
assignee) of any obligation of NSI Georgia or any other Person arising in
connection with the Receivables, the related Contracts and/or other Related
Security or any other obligations of NSI Georgia. In view of the intention
of the parties hereto that each transfer of Receivables made hereunder
shall constitute a sale of such Receivables rather than loans secured
thereby, NSI Georgia agrees that it will, on or prior to the date hereof
and in accordance with Section 4.1(e)(ii), xxxx its master data processing
records relating to the Receivables with a legend stating that Buyer has
purchased the Receivables, together with the associated Related Security
and Collections, and, to the extent that NSI Georgia prepares any
Page 72
Exhibit 10(i)A(3)
stand-alone financial statements, to note in such financial statements that
the Receivables, together with the associated Related Security and
Collections, have been sold to Buyer.
Section 1.3 Payment for the Purchases.
(a) The Purchase Price for each Purchase of Additional Receivables
shall become owing to NSI Georgia on the date each such Additional
Receivable comes into existence but shall be paid on the next succeeding
Settlement Date in the following manner (except that Buyer may, with
respect to any such Purchase Price, offset against such Purchase Price any
amounts owed by NSI Georgia to Buyer hereunder and which have become due
but remain unpaid) and shall be paid to NSI Georgia in the manner provided
in the following paragraphs (b) and (c):
first, by delivery of immediately available funds, to the extent of
funds available to Buyer from its borrowings under the Credit and Security
Agreement or other cash on hand;
second, by delivery of the proceeds of a subordinated revolving loan
from NSI Georgia to Buyer (a "Subordinated Loan") in an amount not to
exceed the least of (A) the remaining unpaid portion of such Purchase
Price, (B) the maximum Subordinated Loan that could be borrowed without
rendering Buyer's Net Worth less than the Required Capital Amount, and (C)
fifteen percent (15%) of such Purchase Price; and
third, unless NSI Georgia or Buyer has declared the Termination Date
to have occurred pursuant to this Agreement, by accepting a contribution to
its capital in an amount equal to the remaining unpaid balance of such
Purchase Price.
Subject to the limitations set forth in clause second above, NSI Georgia
irrevocably agrees to advance each Subordinated Loan requested by Buyer on
or prior to the Termination Date. NSI Georgia is hereby authorized by Buyer
to endorse on the schedule attached to the Subordinated Note an appropriate
notation evidencing the date and amount of each advance thereunder, as well
as the date of each payment with respect thereto, provided that the failure
to make such notation shall not affect any obligation of Buyer thereunder.
The Subordinated Loans shall be evidenced by, and shall be payable in
accordance with the terms and provisions of the Subordinated Note and shall
be payable solely from funds which Buyer is not required under the Credit
and Security Agreement to set aside for the benefit of, or otherwise pay
over to, the Agent or the Lenders.
(b) From and after the Termination Date, NSI Georgia shall not be
obligated to (but may, at its option): (i) sell Receivables to Buyer, or
(ii) contribute Receivables to Buyer's capital pursuant to clause third of
Section 1.3(a) unless NSI Georgia reasonably determines that the Purchase
Page 73
Exhibit 10(i)A(3)
Price therefor will be satisfied with funds available to Buyer from sales
of interests in the Receivables pursuant to the Credit and Security
Agreement, Collections, proceeds of Subordinated Loans, other cash on hand
or otherwise.
(c) Although the Purchase Price for each Additional Receivable shall
be due and payable in full by Buyer to NSI Georgia on the date such
Receivable came into existence, settlement of the Purchase Price between
Buyer and NSI Georgia shall be effected on at least a monthly basis on
Settlement Dates with respect to all Receivables coming into existence
during the same month (or shorter period, as applicable) and based on the
information contained in the Purchase Report delivered by NSI Georgia for
the month then most recently ended. Although settlement shall be effected
on Settlement Dates, increases or decreases in the amount owing under the
Subordinated Note made pursuant to clause second of Section 1.3 and any
contribution of capital by NSI Georgia to Buyer made pursuant to clause
third of Section 1.3(a) shall be deemed to have occurred and shall be
effective as of the last Business Day of the month to which such settlement
relates.
Section 1.4 Purchase Price Credit Adjustments. If on any day:
(a) the Outstanding Balance of any Additional Receivable is:
(i) reduced as a result of any defective or rejected or returned
goods or services, any discount or any adjustment or otherwise by an
Originator (other than as a result of such Additional Receivable's
being charged off for credit reasons or reduced as a result of cash
Collections actually received),
(ii) reduced or canceled as a result of a setoff in respect of
any claim by any Person (whether such claim arises out of the same or
a related transaction or an unrelated transaction), or
(b) any of the representations and warranties set forth in Section
2.1(c), (h), (i), (j), (l), (q), (r), (s) or the second sentence
of Section 2.1(p) hereof are not true when made or deemed made
with respect to any Additional Receivable,
then, in such event, Buyer shall be entitled to a credit (each, a "Purchase
Price Credit") against the Purchase Price otherwise payable hereunder equal to
(x) in the case of a partial reduction, the amount of such reduction, and (y) in
the case of a total reduction or cancellation, the lesser of the Purchase Price
paid for and the Outstanding Balance of such Receivable. If such Purchase Price
Credit exceeds the aggregate Purchase Price payable for Receivables coming into
existence on any day, then Buyer shall pay the remaining amount of such Purchase
Price Credit in cash immediately, provided that if the Termination Date has not
occurred, NSI Georgia shall be allowed to deduct the remaining amount of such
Purchase Price Credit from any indebtedness owed to it under the Subordinated
Note.
Page 74
Exhibit 10(i)A(3)
Section 1.5 Payments and Computations, Etc. All amounts to be paid or
deposited by Buyer hereunder shall be paid or deposited in accordance with the
terms hereof on the day when due in immediately available funds to the account
of NSI Georgia designated from time to time by NSI Georgia or as otherwise
directed by NSI Georgia. In the event that any payment owed by any Person
hereunder becomes due on a day that is not a Business Day, then such payment
shall be made on the next succeeding Business Day. If any Person fails to pay
any amount hereunder when due, such Person agrees to pay, on demand, the Default
Fee in respect thereof until paid in full; provided, however, that such Default
Fee shall not at any time exceed the maximum rate permitted by applicable law.
All computations of interest payable hereunder shall be made on the basis of a
year of 360 days for the actual number of days (including the first but
excluding the last day) elapsed.
Section 1.6 Transfer of Records.
(a) In connection with each Purchase of Receivables hereunder, NSI
Georgia hereby sells, transfers, assigns and otherwise conveys to Buyer all
of NSI Georgia's right and title to and interest in the Records relating to
all Receivables sold or contributed hereunder, without the need for any
further documentation in connection with such Purchase. In connection with
such transfer, NSI Georgia hereby grants to each of Buyer, the Agent and
the Servicer an irrevocable, non-exclusive license to use, without royalty
or payment of any kind, all software used by NSI Georgia to account for the
Receivables, to the extent necessary to administer the Receivables, whether
such software is owned by NSI Georgia or is owned by others and used by NSI
Georgia under license agreements with respect thereto, provided that should
the consent of any licensor of such software be required for the grant of
the license described herein, to be effective, NSI Georgia hereby agrees
that upon the request of Buyer (or Buyer's assignee), NSI Georgia will use
its reasonable efforts to obtain the consent of such third-party licensor.
The license granted hereby shall be irrevocable until the indefeasible
payment in full of the Aggregate Unpaids, and shall terminate on the date
this Agreement terminates in accordance with its terms.
(b) NSI Georgia (i) shall take such action reasonably requested by
Buyer and/or the Agent (as Buyer's assignee), from time to time hereafter,
that may be necessary or appropriate to ensure that Buyer and its assigns
under the Credit and Security Agreement have an enforceable ownership
interest in the Records relating to the Receivables purchased from NSI
Georgia hereunder, and (ii) shall use its reasonable efforts to ensure that
Buyer, the Agent and the Servicer each has an enforceable right (whether by
license or sublicense or otherwise) to use all of the computer software
used to account for the Receivables and/or to recreate such Records.
Section 1.7 Characterization. If, notwithstanding the intention of the
parties expressed in Section 1.2(b), any sale or contribution by NSI Georgia to
Buyer of Receivables hereunder shall be characterized as a secured loan and not
a sale or such sale shall for any reason be ineffective or unenforceable, then
Page 75
Exhibit 10(i)A(3)
this Agreement shall be deemed to constitute a security agreement under the UCC
and other applicable law. For this purpose and without being in derogation of
the parties' intention that the sale of Receivables hereunder shall constitute a
true sale thereof, NSI Georgia hereby grants to Buyer a duly perfected security
interest in all of NSI Georgia's right, title and interest in, to and under all
Receivables now existing and hereafter arising, all Collections and Related
Security with respect thereto, each Lock-Box and Collection Account, the
First-Step Sale Agreement, all other rights and payments relating to the
Receivables and all proceeds of the foregoing to secure the prompt and complete
payment of a loan deemed to have been made in an amount equal to the Purchase
Price of the Receivables together with all other obligations of NSI Georgia
hereunder, which security interest shall be prior to all other Adverse Claims
thereto. During the existence of any Termination Event, Buyer and the Agent (as
its assignee) shall have, in addition to the rights and remedies which they may
have under this Agreement, all other rights and remedies provided to a secured
creditor under the UCC and other applicable law, which rights and remedies shall
be cumulative.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of NSI Georgia. NSI Georgia
hereby represents and warrants to Buyer on the date hereof and (except for any
representation or warranty that is limited to a specific date or period) on each
date on or prior to the Termination Date on which any Additional Receivable
comes into existence that:
(a) Existence and Power. NSI Georgia is a corporation duly organized,
validly existing and in good standing under the laws of Georgia, is duly
qualified to transact business in every jurisdiction where, by the nature
of its business, such qualification is necessary, and where the failure to
qualify would have or could reasonably be expected to cause a Material
Adverse Effect, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
(b) Power and Authority; Due Authorization, Execution and Delivery.
The execution, delivery and performance by NSI Georgia of the Transaction
Documents (i) are within NSI Georgia's corporate powers, (ii) have been
duly authorized by all necessary corporate action, (iii) require no action
by or in respect of or filing with, any governmental body, agency or
official, (iv) do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of
incorporation or by-laws of NSI Georgia or of any agreement, judgment,
injunction, order, decree or other instrument binding upon NSI Georgia or
any of its Subsidiaries, and (v) do not result in the creation or
imposition of any Adverse Claim on any asset of NSI Georgia (except as
created hereunder). This Agreement and each other Transaction Document to
which NSI Georgia is a party has been duly executed and delivered by NSI
Georgia.
(c) No Bulk Sale. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
Page 76
Exhibit 10(i)A(3)
(d) Governmental Authorization. Other than the filing of the financing
statements required hereunder, 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 and delivery by NSI
Georgia of this Agreement and each other Transaction Document to which it
is a party and the performance of its obligations hereunder and thereunder.
(e) Actions, Suits. There is no action, suit or proceeding pending, or
to the knowledge of NSI Georgia overtly threatened in writing, against or
affecting NSI Georgia or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official which has or is
likely to have a Material Adverse Effect.
(f) Binding Effect. This Agreement constitutes and, when executed and
delivered in accordance with this Agreement, each other Transaction
Document to which NSI Georgia is a party, will constitute valid and binding
obligations of NSI Georgia enforceable in accordance with their respective
terms, provided that the enforceability hereof and thereof is subject in
each case to general principles of equity and to bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles.
(g) Accuracy of Information. All information heretofore furnished by
NSI Georgia to Buyer or the Agent, as its assignee for purposes of or in
connection with this Agreement or any transaction contemplated hereby is,
and all such information hereafter furnished by NSI Enterprises to Buyer
(or the Agent, as its assignee) will be, true and accurate in every
material respect or based on reasonable estimates on the date as of which
such information is stated or certified. NSI Georgia has disclosed to Buyer
and the Agent in writing any and all facts known to the Executive Officers
which would have or reasonably would be expected to cause a Material
Adverse Effect.
(h) Use of Proceeds. NSI Georgia is not engaged principally, or as one
of its important activities, in the business of purchasing or carrying any
Margin Stock, and no part of the proceeds of any Purchase will be used to
purchase or carry any Margin Stock or to extend credit to others for the
purpose of purchasing or carrying any Margin Stock, or be used for any
purpose which violates, or which is inconsistent with, the provisions of
Regulation T, U or X..
(i) Good Title. Immediately prior to each Purchase hereunder, NSI
Georgia (i) is the legal and beneficial owner of the Receivables that are
the subject of such Purchase and (ii) is the legal and beneficial owner of
the Related Security with respect thereto or possesses a valid and
perfected security interest therein, in each case, free and clear of any
Adverse Claim, except for Permitted Encumbrances. There have been duly
filed all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect NSI Georgia's ownership interest in each
Receivable, its Collections and the Related Security.
(j) Perfection. This Agreement, together with the filing of the
financing statements contemplated hereby, is effective to transfer to NSI
Georgia (and NSI Georgia shall acquire from NSI Georgia) (i) legal and
equitable title to, with the right to sell and encumber each Receivable
existing and hereafter arising,
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Exhibit 10(i)A(3)
together with the Collections with respect thereto, and (ii) all of NSI
Georgia's right, title and interest in the Related Security associated with
each Receivable, in each case, free and clear of any Adverse Claim, except
for Permitted Encumbrances. There have been duly filed all financing
statements or other similar instruments or documents necessary under the
UCC (or any comparable law) of all appropriate jurisdictions to perfect NSI
Georgia's interest in the Receivables acquired from NSI Enterprises under
the First-Step Sale Agreement, together with the associated Related
Security and Collections.
(k) Places of Business and Locations of Records. The principal places
of business and chief executive office of NSI Georgia and the offices where
it keeps all of its Records are located at the address(es) listed on
Exhibit II or such other locations of which NSI Georgia has been notified
in accordance with Section 4.2(a) in jurisdictions where all action
required by Section 4.2(a) has been taken and completed. NSI Georgia's
Federal Employer Identification Number is correctly set forth on Exhibit
II.
(l) Collections. The conditions and requirements set forth in Section
4.1(j) have at all times been satisfied and duly performed. The names and
addresses of all Collection Banks, together with the account numbers of the
Collection Accounts at each Collection Bank and the post office box number
of each Lock-Box, are listed on Exhibit III. NSI Georgia has not granted
any Person, other than Buyer (and the Agent, as its assignee) dominion and
control of any Lock-Box or Collection Account, or the right to take
dominion and control of any such Lock-Box or Collection Account at a future
time or upon the occurrence of a future event.
(m) Material Adverse Effect. During the period from August 31, 2000
through the Initial Cut-Off Date, in the good faith judgment of the
Executive Officers, no event has occurred that has had or could reasonably
be expected to have a Material Adverse Effect.
(n) Names. The name in which NSI Georgia has executed this Agreement
is identical to the name of NSI Georgia as indicated on the public record
of its state of organization which shows NSI Georgia to have been
organized. In the past five (5) years, NSI Georgia has not used any
corporate names, trade names or assumed names other than the name in which
it has executed this Agreement and as listed on Exhibit II.
(o) Not a Holding Company or an Investment Company. NSI Georgia is not
a "holding company" or a "subsidiary holding company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of
1935, as amended, or any successor statute. NSI Georgia is not an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, or any successor statute.
(p) Compliance with Law. NSI Georgia has complied in all respects with
all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where the
failure to so comply could not reasonably be expected to have a Material
Adverse Effect. Each Receivable, together with the Contract related
thereto, does not contravene any laws, rules or regulations applicable
thereto (including, without limitation,
Page 78
Exhibit 10(i)A(3)
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 no part of such Contract is in
violation of any such law, rule or regulation, except where such
contravention or violation could not reasonably be expected to have a
Material Adverse Effect.
(q) Compliance with Credit and Collection Policy. NSI Georgia has
complied in all material respects with the Credit and Collection Policy
with regard to each Receivable and the related Contract, and has not made
any change to such Credit and Collection Policy, except such material
change as to which Buyer (and the Agent, as its assignee) has been notified
in accordance with Section 4.1(a).
(r) Payments to NSI Georgia. With respect to each Receivable
transferred to Buyer hereunder, the Purchase Price received by NSI Georgia
constitutes reasonably equivalent value in consideration therefor and such
transfer was not made for or on account of an antecedent debt. No transfer
by NSI Georgia of any Receivable hereunder is or may be voidable under any
section of the Bankruptcy Reform Act of 1978 (11 U.S.C.ss.ss.101 et seq.),
as amended.
(s) Enforceability of Contracts. Each Contract with respect to each
Receivable is effective to create, and has created, a legal, valid and
binding obligation of the related Obligor to pay the Outstanding Balance of
the Receivable created thereunder and any accrued interest thereon,
enforceable against the Obligor in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting creditors'
rights generally and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(t) Accounting. The manner in which NSI Georgia accounts for the
transactions contemplated by this Agreement does not jeopardize the
characterization of the transactions contemplated herein as being true
sales.
(u) Eligible Receivables. Each Receivable reflected in any Purchase
Report as an Eligible Receivable was an Eligible Receivable on the date of
its acquisition by Buyer hereunder.
ARTICLE III
CONDITIONS OF PURCHASES
Section 3.1 Conditions Precedent to Initial Purchase. The Purchase under
this Agreement is subject to the conditions precedent that (a) Buyer shall have
been capitalized with the Initial Contributed Receivables, (b) Buyer shall have
received on or before the date of such purchase those documents listed on
Schedule A and (c) all of the conditions to the initial purchase under the
Credit and Security Agreement shall have been satisfied or waived in accordance
with the terms thereof.
Section 3.2 Conditions Precedent to All Purchases. Buyer's obligation to
purchase Receivables coming into existence after the Initial Cutoff Date shall
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Exhibit 10(i)A(3)
be subject to the further conditions precedent that: (a) the Facility
Termination Date shall not have occurred under the Credit and Security
Agreement; (b) Buyer (and the Agent, as its assignee) shall have received such
other approvals, opinions or documents as it may reasonably request and (c) on
the date such Receivable came into existence, the following statements shall be
true (and acceptance of the proceeds of any payment for such Receivable shall be
deemed a representation and warranty by NSI Georgia that such statements are
then true):
(i) the representations and warranties set forth in Article II are
true and correct in all material respects on and as of the date such
Receivable came into existence as though made on and as of such date;
provided that the materiality threshold in the preceding clause shall not
be applicable with respect to any representation or warranty which itself
contains a materiality threshold; and
(ii) no event has occurred and is continuing that will constitute a
Termination Event or an Unmatured Termination Event.
Notwithstanding the foregoing conditions precedent, upon payment of the Purchase
Price for any Receivable (whether by payment of cash, through an increase in the
amounts outstanding under the Subordinated Note, by offset of amounts owed to
Buyer and/or by offset of capital contributions), title to such Receivable and
the Related Security and Collections with respect thereto shall vest in Buyer,
whether or not the conditions precedent to Buyer's obligation to purchase such
Receivable were in fact satisfied. The failure of NSI Georgia to satisfy any of
the foregoing conditions precedent, however, shall give rise to a right of Buyer
to rescind the related purchase and direct NSI Georgia to pay to Buyer an amount
equal to the Purchase Price payment that shall have been made with respect to
any Receivables related thereto.
ARTICLE IV
COVENANTS
Section 4.1 Affirmative Covenants of NSI Georgia. Until the date on which
this Agreement terminates in accordance with its terms, NSI Georgia hereby
covenants as set forth below:
(a) Financial Reporting. NSI Georgia will maintain, for itself and
each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish to Buyer (and the Agent,
as its assignee):
(i) Annual Reporting. As soon as available and in any event
within 90 days (or such longer period as may be the subject of an
extension granted by the Securities and Exchange Commission) after the
end of each Fiscal Year, a consolidated balance sheet of the Parent
and its Consolidated Subsidiaries as of the end of such Fiscal Year
and the related consolidated statements of income, stockholders'
equity and cash flows for such Fiscal Year, setting forth in each case
in comparative form the figures for the previous fiscal year, all
certified by Xxxxxx Xxxxxxxx, LLP or other independent public
accountants of nationally recognized standing, with such
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Exhibit 10(i)A(3)
certification to be free of exceptions and qualifications not
acceptable to Buyer and the Agent.
(ii) Quarterly Reporting. As soon as available and in any event
within 45 days (or such longer period as may be the subject of an
extension granted by the Securities and Exchange Commission) after the
end of each of the first 3 Fiscal Quarters of each Fiscal Year, a
consolidated balance sheet of the Parent and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter and the related
statement of income and statement of cash flows for the portion of the
Fiscal Year ended at the end of such Fiscal Quarter, setting forth in
each case in comparative form the figures for the corresponding Fiscal
Quarter and the corresponding portion of the previous Fiscal Year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, GAAP and consistency by the chief financial officer or
the chief accounting officer of the Parent.
(iii) Compliance Certificate. Together with the financial
statements required hereunder, a compliance certificate in
substantially the form of Exhibit IV signed by the chief financial
officer or the chief accounting officer of the Parent and dated the
date of such annual financial statement or such quarterly financial
statement, as the case may be.
(iv) Shareholders Statements and Reports. Promptly upon the
mailing thereof to the shareholders of the Parent generally, copies of
all financial statements, reports and proxy statements so mailed.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies of
all registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and annual,
quarterly or monthly reports which the Parent shall have filed with
the Securities and Exchange Commission.
(vi) Copies of Notices. Promptly upon its receipt of any notice,
request for consent, financial statements, certification, report or
other communication under or in connection with any Transaction
Document from any Person other than Buyer, the Agent or Blue Ridge,
copies of the same.
(vii) Change in Credit and Collection Policy. At least thirty
(30) days prior to the effectiveness of any material change in or
material amendment to the Credit and Collection Policy, a copy of the
Credit and Collection Policy then in effect and a notice (A)
indicating such proposed change or amendment, and (B) if such proposed
change or amendment would be reasonably likely to adversely affect the
collectibility of the Receivables or decrease the credit quality of
any newly created Receivables, requesting Buyer's (and the Agent's, as
Buyer's assignee) consent thereto.
(viii) Other Information. Promptly, from time to time, such other
information, documents, records or reports relating to the Receivables
or the condition or operations, financial or otherwise, of the Parent
or NSI Georgia as Buyer (or the Agent, as its assignee) may from time
to time reasonably request in order to protect the interests of Buyer
(and the
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Exhibit 10(i)A(3)
Agent, as its assignee) under or as contemplated by this Agreement
(except such plans or forecasts which have not been made available by
Parent to its creditors).
(b) Notices. NSI Georgia will notify Buyer (and the Agent, as its
assignee) in writing of any of the following promptly upon learning of the
occurrence thereof, describing the same and, if applicable, the steps being
taken with respect thereto:
(i) Termination Events or Unmatured Termination Events. Within
one (1) Business Day after learning thereof by any Responsible
Officer, the occurrence of each Termination Event and each Unmatured
Termination Event, by a statement of an Authorized Officer of NSI
Georgia.
(ii) Defaults Under Other Agreements. Within one (1) Business Day
after learning thereof by any Responsible Officer, the occurrence of a
default or an event of default under any other financing arrangement
pursuant to which NSI Georgia is a debtor or an obligor and which
relates to a Debt in excess of $25,000,000.
(iii) ERISA Events. If and when any member of the Controlled
Group (i) gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with respect
to any Plan which could reasonably be expected to constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that
the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii)
receives notice of complete or partial withdrawal liability under
Title IV of ERISA, a copy of such notice; or (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate or
appoint a trustee to administer any Plan, a copy of such notice;
provided, however, that each of the foregoing notices shall not be
required to be given unless the reportable event, withdrawal
liability, plan termination or trustee appointment involved could
reasonably be expected to give rise to a liability of more than
$1,000,000 on the part of the Parent or any of its Subsidiaries.
(c) Compliance with Laws and Preservation of Existence. NSI Georgia
will comply in all respects with all applicable laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be
subject, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. NSI Georgia will preserve and
maintain its legal existence, rights, franchises and privileges in the
jurisdiction of its organization, and qualify and remain qualified in good
standing as a foreign entity in each jurisdiction where its business is
conducted, except (i) where the failure to so qualify or remain in good
standing could not reasonably be expected to have a Material Adverse Effect
and (ii) NSI Georgia may merge or consolidate with any other Person to the
extent permitted under Section 7.1(c)(ii) of the Credit and Security
Agreement.
(d) Audits. NSI Georgia will furnish to Buyer (and the Agent, as its
assignee) from time to time such information with respect to it and the
Receivables as Buyer (or the Agent) may reasonably request. NSI Georgia
will, from time to time during regular business hours as requested by Buyer
(the Agent as its assignee), upon not less than 3 Business Days' prior
written notice,
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Exhibit 10(i)A(3)
permit Buyer (and the Agent, as its assignee) or their respective agents or
representatives, (i) to examine and make copies of and abstracts from all
Records in the possession or under the control of NSI Georgia relating to
the Receivables and the Related Security, including, without limitation,
the related Contracts, and (ii) to visit the offices and properties of NSI
Georgia for the purpose of examining such materials described in clause (i)
above, and to discuss matters relating to NSI Georgia's financial condition
or the Receivables and the Related Security or NSI Georgia's performance
under any of the Transaction Documents or NSI Georgia's performance under
the Contracts and, in each case, with any of the officers or employees of
NSI Georgia having knowledge of such matters. To the extent that Buyer (or
the Agent, as its assignee), in the course of any such visit or inspection,
obtains possession of any Proprietary Information pertaining to NSI Georgia
or any of its Affiliates, Buyer (or such assign) shall handle such
information in accordance with the requirements of Section 14.5 of the
Credit and Security Agreement.
(e) Keeping and Marking of Records and Books.
(i) NSI Georgia will (and will cause NSI Enterprises to) maintain
and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing
Receivables in the event of the destruction of the originals thereof),
and keep and maintain 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 immediate identification of each new Receivable and all
Collections of and adjustments to each existing Receivable). NSI
Georgia will (and will cause NSI Enterprises to) give Buyer (and the
Agent, as its assignee) notice of any material change in the
administrative and operating procedures referred to in the previous
sentence.
(ii) NSI Georgia will (and will cause NSI Enterprises to) (A) on
or prior to the date hereof, xxxx its master data processing records
and other books and records relating to the Receivables with a legend,
acceptable to Buyer (and the Agent, as its assignee), describing
Buyer's ownership interests in the Receivables and further describing
the Receivable Interests of the Agent (on behalf of the Lenders) under
the Credit and Security Agreement and (B) upon the request of Buyer
(or the Agent, as its assignee) and when a Termination Event is in
existence: (x) xxxx each Contract with a legend describing Buyer's
ownership interests in the Receivables and further describing the
Receivable Interests of the Agent (on behalf of the Lenders) and (y)
deliver to Buyer (or the Agent, as its assignee) all Contracts
(including, without limitation, all multiple originals of any such
Contract) relating to the Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. NSI
Georgia will (and will cause NSI Enterprises to) timely and fully (i)
perform and comply
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Exhibit 10(i)A(3)
in all material respects with all provisions, covenants and other promises
required to be observed by it under the Contracts related to the
Receivables, and (ii) comply in all material respects with the Credit and
Collection Policy in regard to each Receivable and the related Contract.
(g) Performance and Enforcement of First-Step Sale Agreement. NSI
Georgia will and will require NSI Enterprises to, perform each of their
respective obligations and undertakings under and pursuant to the
First-Step Sale Agreement, will purchase Receivables thereunder in strict
compliance with the terms thereof and will vigorously enforce the rights
and remedies accorded to NSI Georgia under the First-Step Sale Agreement.
NSI Georgia will take all actions to perfect and enforce its rights and
interests (and the rights and interests of Buyer as assignee of NSI
Georgia) under the First-Step Sale Agreement as Buyer (or the Agent, as its
assignee) may from time to time reasonably request, including, without
limitation, making claims to which it may be entitled under any indemnity,
reimbursement or similar provision contained in the First-Step Sale
Agreement.
(h) Ownership. NSI Georgia will (and will cause NSI Enterprises to)
take all necessary action to (i) vest legal and equitable title to the
Receivables, the Related Security and the Collections purchased under the
First-Step Sale Agreement irrevocably in NSI Georgia, free and clear of any
Adverse Claims other than Permitted Encumbrances (including, without
limitation, the filing of all financing statements or other similar
instruments or documents necessary under the UCC (or any comparable law) of
all appropriate jurisdictions to perfect NSI Georgia's interest in such
Receivables, Related Security and Collections and such other action to
perfect, protect or more fully evidence the interest of NSI Georgia therein
as Buyer (or the Agent, as its assignee) may reasonably request), and (ii)
establish and maintain, irrevocably in Buyer, (A) legal and equitable title
to the Receivables and the Collections and (B) all of NSI Georgia's right,
title and interest in the Related Security associated with the Receivables,
in each case, free and clear of any Adverse Claims other than Permitted
Encumbrances (including, without limitation, the filing of all financing
statements or other similar instruments or documents necessary under the
UCC (or any comparable law) of all appropriate jurisdictions to perfect
Buyer's interest in such Receivables, Related Security and Collections and
such other action to perfect, protect or more fully evidence the interest
of Buyer as Buyer (or the Agent, as its assignee) may reasonably request).
(i) Lenders' Reliance. NSI Georgia acknowledges that the Agent and the
Lenders are entering into the transactions contemplated by the Credit and
Security Agreement in reliance upon Buyer's identity as a legal entity that
is separate from NSI Georgia and any Affiliates thereof. Therefore, from
and after the date of execution and delivery of this Agreement, NSI Georgia
will take all reasonable steps including, without limitation, all steps
that Buyer or any assignee of Buyer may from time to time reasonably
request to maintain Buyer's identity as a separate legal entity and to make
it manifest to third parties that Buyer is an entity with assets and
liabilities distinct from those of NSI Georgia and any Affiliates thereof
and not just a division of NSI Georgia or any such Affiliate. Without
limiting the generality of the foregoing and in addition to the other
covenants set forth herein, NSI Georgia (i) will not hold itself out to
third parties as liable for the debts of Buyer nor purport to own the
Receivables and other assets acquired by Buyer, (ii) will take all other
actions necessary on its part to ensure that Buyer is at all times in
compliance with
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Exhibit 10(i)A(3)
the "separateness covenants" set forth in Section 7.1(i) of the Credit and
Security Agreement and (iii) will cause all tax liabilities arising in
connection with the transactions contemplated herein or otherwise to be
allocated between NSI Georgia and Buyer on an arm's-length basis and in a
manner consistent with the procedures set forth in U.S. Treasury
Regulations ss.ss.1.1502-33(d) and 1.1552-1.
(j) Collections. NSI Georgia will cause (1) all proceeds from all
Lock-Boxes to be directly deposited by a Collection Bank into a Collection
Account and (2) each Lock-Box and Collection Account to be subject at all
times to a Collection Account Agreement that is in full force and effect.
In the event any payments relating to Receivables are remitted directly to
NSI Georgia or any Affiliate of NSI Georgia, NSI Georgia will remit (or
will cause all such payments to be remitted) directly to a Collection Bank
and deposited into a Collection Account within two (2) Business Days
following receipt thereof and, at all times prior to such remittance, NSI
Georgia will itself hold or, if applicable, will cause such payments to be
held in trust for the exclusive benefit of Buyer and its assigns. NSI
Georgia will transfer exclusive ownership, dominion and control of each
Lock-Box and Collection Account to Buyer and, will not grant the right to
take dominion and control of any Lock-Box or Collection Account at a future
time or upon the occurrence of a future event to any Person, except to
Buyer (and the Agent, as its assignee) as contemplated by this Agreement
and the Credit and Security Agreement.
(k) Taxes. NSI Georgia will file all material tax returns and reports
required by law to be filed by it and promptly pay all material taxes and
governmental charges at any time owing, except any such taxes which are not
yet delinquent or are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books. NSI Georgia will pay when due
any taxes payable in connection with the Receivables, exclusive of taxes on
or measured by income or gross receipts of Buyer and its assigns.
(l) Payment to NSI Enterprises. With respect to any Receivable
purchased by NSI Georgia from NSI Enterprises, such sale shall be effected
under, and in strict compliance with the terms of, the First-Step Sale
Agreement, including without limitation, the terms relating to the amount
and timing of payments to be made to NSI Enterprises in respect of the
purchase price for such Receivable.
Section 4.2 Negative Covenants of NSI Georgia. Until the date on which this
Agreement terminates in accordance with its terms, NSI Georgia hereby covenants
that:
(a) Name Change, Offices and Records. NSI Georgia will not change its
(i) state of organization, (ii) name, (iii) identity or structure (within
the meaning of Article 9 of any applicable enactment of the UCC) or
relocate its chief executive office at any time while the location of its
chief executive office is relevant to perfection of Buyer's interest in the
Receivables or the associated Related Security and Collections, or any
office where Records are kept unless it shall have: (i) given Buyer (and
the Agent, as its assignee) at least ten (10) days' prior written notice
thereof and (ii) delivered to Buyer (and the Agent, as its assignee) all
financing statements, instruments and other
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Exhibit 10(i)A(3)
documents reasonably requested by Buyer (and the Agent, as its assignee) in
connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. NSI Georgia will not
add or terminate any bank as a Collection Bank, or make any change in the
instructions to Obligors regarding payments to be made to any Lock-Box or
Collection Account, unless Buyer (and the Agent, as its assignee) shall
have received, at least ten (10) days before the proposed effective date
therefor, (i) written notice of such addition, termination or change and
(ii) with respect to the addition of a Collection Bank or a Collection
Account or Lock-Box, an executed Collection Account Agreement with respect
to the new Collection Account or Lock-Box; provided, however, that NSI
Georgia may make changes in instructions to Obligors regarding payments if
such new instructions require such Obligor to make payments to another
existing Collection Account.
(c) Modifications to Contracts and Credit and Collection Policy. NSI
Georgia will not (and will not permit NSI Enterprises to) make any material
change to the Credit and Collection Policy that could adversely affect the
collectibility of the Receivables or decrease the credit quality of any
newly created Receivables. Except as otherwise permitted in its capacity as
Servicer pursuant to the Credit and Security Agreement, NSI Georgia will
not (and will not permit NSI Enterprises to) extend, amend or otherwise
modify the terms of any Receivable or any Contract related thereto other
than in accordance with the Credit and Collection Policy.
(d) Sales, Liens. NSI Georgia will not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect
to, or create or suffer to exist any Adverse Claim upon (including, without
limitation, the filing of any financing statement) or with respect to, any
Receivable, Related Security or Collections, or upon or with respect to any
Contract under which any Receivable arises, or any Lock-Box or Collection
Account, or assign any right to receive income with respect thereto (other
than, in each case, the creation of the interests therein in favor of Buyer
provided for herein and the Permitted Encumbrances), and NSI Georgia will
defend the right, title and interest of Buyer in, to and under any of the
foregoing property, against all claims of third parties claiming through or
under NSI Georgia (other than Permitted Encumbrances).
(e) Accounting for Purchases. NSI Georgia will not, and will not
permit any Affiliate to, account for or treat (whether in financial
statements or otherwise) the transactions contemplated hereby in any manner
other than the sale of the Receivables and the Related Security by NSI
Georgia to Buyer or in any other respect account for or treat the
transactions contemplated hereby in any manner other than as a sale of the
Receivables and the Related Security by NSI Georgia to Buyer except to the
extent that such transactions are not recognized on account of consolidated
financial reporting in accordance with generally accepted accounting
principles.
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Exhibit 10(i)A(3)
ARTICLE V
TERMINATION EVENTS
Section 5.1 Termination Events. The occurrence of any one or more of the
following events shall constitute a Termination Event:
(a) NSI Georgia shall fail to make any payment or deposit required to
be made by it under the Transaction Documents when due and, for any such
payment or deposit which is not in respect of principal, such failure
continues for two (2) consecutive Business Days.
(b) NSI Georgia shall fail to perform or observe any term, covenant or
agreement hereunder (other than as referred to in paragraph (a)) or any
other Transaction Document to which it is a party and such failure shall
continue for and such failure shall not have been cured within 30 days
after the earlier to occur of (i) written notice thereof has been given to
NSI Georgia by the Buyer or (ii) an Executive Officer otherwise becomes
aware of any such failure; provided, however, that such cure period shall
be extended for a period of time, not to exceed an additional 30 days,
reasonably sufficient to permit NSI Georgia to cure such failure if such
failure cannot be cured within the initial 30-day period but reasonably
could be expected to be capable of cure within such additional 30 days, NSI
Georgia has commenced efforts to cure such failure during the initial
30-day period and NSI Georgia is diligently pursuing such cure.
(c) Any representation, warranty, certification or statement made by
NSI Georgia in this Agreement, any other Transaction Document or in any
other document delivered pursuant hereto or thereto shall prove to have
been incorrect in any material respect when made or deemed made; provided
that the materiality threshold in the preceding clause shall not be
applicable with respect to any representation or warranty which itself
contains a materiality threshold.
(d) An Event of Bankruptcy shall occur with respect to the Parent or
any of its Material Subsidiaries.
(e) A Change of Control shall occur.
(f) One or more judgments or orders for the payment of money in an
aggregate amount in excess of 10% of Stockholders' Equity as of the end of
the Fiscal Quarter just ended shall be rendered against the Parent, either
Originator or the Buyer and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days.
(g) Either of the Originators or any Subsidiary shall fail to make any
payment in respect of Debt outstanding in an aggregate amount in excess of
$25,000,000 when due or within any applicable grace period.
Page 87
Exhibit 10(i)A(3)
(h) Any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of either of the
Originators or any Subsidiary in an aggregate amount in excess of
$25,000,000 (including, without limitation, any required mandatory
prepayment or "put" of such Debt to such Originator or Subsidiary) or
enables (or, with the giving of notice or lapse of time or both, would
enable) the holders of such Debt or commitment or any Person acting on such
holders' behalf to accelerate the maturity thereof or terminate any such
commitment (including, without limitation, any required mandatory
prepayment or "put" of such Debt to such Originator or Subsidiary).
(i) The Parent or any member of the Controlled Group shall fail to pay
when due any amount in excess of 10% of Stockholders' Equity as of the end
of the Fiscal Quarter just ended which it shall have become liable to pay
to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans shall be filed under Title IV of ERISA by the
Parent, any member of the Controlled Group, any plan administrator or any
combination of the foregoing if the amount of liability involved is in
excess of 10% of Stockholders' Equity as of the end of the Fiscal Quarter
just ended; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate or to cause a trustee to be appointed to administer any such
Plan or Plans or a proceeding shall be instituted by a fiduciary of any
such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter if the
amount of liability involved is in excess of 10% of Stockholders' Equity as
of the end of the Fiscal Quarter just ended; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating
that any such Plan or Plans must be terminated, if the amount involved is
in excess of 10% of Stockholders' Equity as of the end of the Fiscal
Quarter just ended.
(j) A federal tax lien shall be filed against the Parent, either
Originator or Buyer under Section 6323 of the Tax Code or a lien of the
PBGC shall be filed against the Parent, either Originator or Buyer under
Section 4068 of ERISA and in either case such lien shall remain
undischarged for a period of 25 days after the date of filing if the
aggregate amount involved is in excess of 10% of Stockholders' Equity as of
the end of the Fiscal Quarter just ended.
Section 5.2 Remedies. Upon the occurrence and during the continuation of a
Termination Event, Buyer may take any of the following actions: (i) declare the
Termination Date to have occurred, whereupon the Termination Date shall
forthwith occur, without demand, protest or further notice of any kind, all of
which are hereby expressly waived by NSI Georgia; provided, however, that upon
the occurrence of a Termination Event described in Section 5.1(d), or of an
actual or deemed entry of an order for relief with respect to NSI Georgia under
the Federal Bankruptcy Code, the Termination Date shall automatically occur,
without demand, protest or any notice of any kind, all of which are hereby
expressly waived by NSI Georgia and (ii) to the fullest extent permitted by
applicable law, declare that the Default Fee shall accrue with respect to any
amounts then due and owing by NSI Georgia to Buyer. The aforementioned rights
Page 88
Exhibit 10(i)A(3)
and remedies shall be without limitation and shall be in addition to all other
rights and remedies of Buyer and its assigns otherwise available under any other
provision of this Agreement, by operation of law, at equity or otherwise, all of
which are hereby expressly preserved, including, without limitation, all rights
and remedies provided under the UCC, all of which rights shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnities by NSI Georgia. Without limiting any other rights
that Buyer may have hereunder or under applicable law, NSI Georgia hereby agrees
to indemnify (and pay upon demand to) Buyer and its assigns, officers,
directors, agents and employees (each an "Indemnified Party") from and against
any and all damages, losses, claims, taxes, liabilities, costs, expenses and for
all other amounts payable, including actual and reasonable attorneys' fees
(which attorneys may be employees of Buyer or any such assign) and disbursements
(all of the foregoing being collectively referred to as "Indemnified Amounts")
awarded against or actually incurred by any of them arising out of or as a
result of this Agreement or the acquisition, either directly or indirectly, by
Buyer of an interest in the Receivables, excluding, however:
(a) Indemnified Amounts to the extent such Indemnified Amounts
resulted from gross negligence or willful misconduct on the part of the
Indemnified Party seeking indemnification or by reason of such Indemnified
Party's breach of its obligations hereunder or other legal duty;
(b) Indemnified Amounts to the extent the same includes losses in
respect of Receivables that are uncollectible on account of the insolvency,
bankruptcy or lack of creditworthiness of the related Obligor; or
(c) taxes imposed by the jurisdiction in which such Indemnified
Party's principal executive office is located, on or measured by the
overall net income of such Indemnified Party to the extent that the
computation of such taxes is consistent with the characterization for
income tax purposes of the acquisition by the Lenders of Receivable
Interests under the Credit and Security Agreement as a loan or loans by the
Lenders to Buyer secured by, among other things, the Receivables, the
Related Security and the Collections;
provided, however, that nothing contained in this sentence shall limit the
liability of NSI Georgia or limit the recourse of Buyer to NSI Georgia for
amounts otherwise specifically provided to be paid by NSI Georgia under the
terms of this Agreement. Without limiting the generality of the foregoing
indemnification, but subject in each case to clauses (a), (b) and (c) above, NSI
Georgia shall indemnify Buyer for Indemnified Amounts relating to or resulting
from:
(i) any representation or warranty made by NSI Georgia (or any
officers of NSI Georgia) under or in connection with any Purchase
Report, this Agreement, any other Transaction Document or any other
information or report delivered by NSI Georgia pursuant hereto or
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Exhibit 10(i)A(3)
thereto for which Buyer has not received a Purchase Price Credit that
shall have been false or incorrect when made or deemed made;
(ii) the failure by NSI Georgia, to comply with any applicable
law, rule or regulation with respect to any Receivable or Contract
related thereto, or the nonconformity of any Receivable or Contract
included therein with any such applicable law, rule or regulation or
any failure of NSI Georgia to keep or perform any of its obligations,
express or implied, with respect to any Contract;
(iii) any failure of NSI Georgia to perform its duties, covenants
or other obligations in accordance with the provisions of this
Agreement or any other Transaction Document;
(iv) any products liability, personal injury or damage, suit or
other similar claim arising out of or in connection with merchandise,
insurance or services that are the subject of any Contract or any
Receivable;
(v) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale
of the merchandise or service related to such Receivable or the
furnishing or failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables at any time
with other funds;
(vii) any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby, the use of the proceeds of any
Purchase hereunder, the ownership of the Receivables or any other
investigation, litigation or proceeding relating to NSI Georgia in
which any Indemnified Party becomes involved as a result of any of the
transactions contemplated hereby except to the extent arising from
Buyer's own gross negligence or willful misconduct;
(viii) any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being immune
from civil and commercial law and suit on the grounds of sovereignty
or otherwise from any legal action, suit or proceeding;
(ix) any Termination Event described in Section 5.1(d);
(x) any failure of NSI Georgia to acquire and maintain legal and
equitable title to, and ownership of any Receivable and the Related
Security and Collections with respect thereto from NSI Enterprises,
free and clear of any Adverse Claim (other than as created hereunder);
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Exhibit 10(i)A(3)
or any failure of NSI Georgia to give reasonably equivalent value to
NSI Enterprises under the First-Step Sale Agreement in consideration
of the transfer by NSI Enterprises of any Receivable, or any attempt
by any Person to void such transfer under statutory provisions or
common law or equitable action;
(xi) any failure to vest and maintain vested in Buyer, or to
transfer to Buyer, legal and equitable title to, and ownership of, the
Receivables and the Collections, and all of NSI Georgia's right, title
and interest in the Related Security associated with the Receivables,
in each case, free and clear of any Adverse Claim;
(xii) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivable, the Related Security and Collections with
respect thereto, and the proceeds of any thereof, whether at the time
of any Purchase or at any subsequent time;
(xiii) any action or omission by NSI Georgia which reduces or
impairs the rights of Buyer with respect to any Receivable or the
value of any such Receivable (for any reason other than the
application of Collections thereto or charge-off of any Receivable as
uncollectible) unless the Buyer has received a Purchase Price Credit
therefor;
(xiv) any attempt by any Person to void any Purchase hereunder
under statutory provisions or common law or equitable action; and
(xvi) the failure of any Receivable reflected as an Eligible
Receivable on any Purchase Report to be an Eligible Receivable at the
time acquired by Buyer.
Section 6.2 Other Costs and Expenses. NSI Georgia shall pay to Buyer on
demand all reasonable costs and out-of-pocket expenses actually incurred in
connection with the preparation, execution, delivery and administration of this
Agreement, the transactions contemplated hereby and the other documents to be
delivered hereunder. NSI Georgia shall pay to Buyer on demand any and all
reasonable costs and expenses of Buyer, if any, including reasonable counsel
fees and expenses actually incurred in connection with the enforcement of this
Agreement and the other documents delivered hereunder and in connection with any
restructuring or workout of this Agreement or such documents, or the
administration of this Agreement following a Termination Event.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Waivers and Amendments.
(a) No failure or delay on the part of Buyer (or the Agent, as its
assignee) in exercising any power, right or remedy under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise
of any such power, right or remedy preclude any other further exercise
Page 91
Exhibit 10(i)A(3)
thereof or the exercise of any other power, right or remedy. The rights and
remedies herein provided shall be cumulative and nonexclusive of any rights
or remedies provided by law. Any waiver of this Agreement shall be
effective only in the specific instance and for the specific purpose for
which given.
(b) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing signed by NSI Georgia and Buyer and,
to the extent required under the Credit and Security Agreement, the Agent
and the Liquidity Banks or the Required Liquidity Banks. Any material
amendment, supplement, modification of waiver will required satisfaction of
the Rating Agency Condition.
Section 7.2 Notices. All communications and notices provided for hereunder
shall be in writing (including bank wire, telecopy or electronic facsimile
transmission or similar writing) and shall be given to the other parties hereto
at their respective addresses or telecopy numbers set forth on the signature
pages hereof or at such other address or telecopy number as such Person may
hereafter specify for the purpose of notice to each of the other parties hereto.
Each such notice or other communication shall be effective (a) if given by
telecopy, upon the receipt thereof, (b) if given by mail, three (3) Business
Days after the time such communication is deposited in the mail with first class
postage prepaid or (c) if given by any other means, when received at the address
specified in this Section 7.2.
Section 7.3 Protection of Ownership Interests of Buyer.
(a) NSI Georgia agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that Buyer (or the Agent,
as its assignee) may reasonably request, to perfect, protect or more fully
evidence the interest of Buyer hereunder and the Receivable Interests, or
to enable Buyer (or the Agent, as its assignee) to exercise and enforce
their rights and remedies hereunder. At any time when a Termination Event
Exists, Buyer (or the Agent, as its assignee) may, at NSI Georgia's sole
cost and expense, direct NSI Georgia to notify the Obligors of Receivables
of the ownership interests of Buyer under this Agreement and may also
direct that payments of all amounts due or that become due under any or all
Receivables be made directly to Buyer or its designee.
(b) If NSI Georgia fails to perform any of its obligations hereunder,
Buyer (or the Agent, as its assignee) may (but shall not be required to)
perform, or cause performance of, such obligations, and Buyer's (or such
assigns') actual and reasonable costs and expenses incurred in connection
therewith shall be payable by NSI Georgia as provided in Section 6.2. NSI
Georgia irrevocably authorizes Buyer (and its assigns) at any time and from
time to time in the sole discretion of Buyer (or the Agent, as its
assignee), and appoints Buyer (and its assigns) as its
attorney(ies)-in-fact, to act on behalf of NSI Georgia (i) to execute on
Page 92
Exhibit 10(i)A(3)
behalf of NSI Georgia as debtor and to file financing statements necessary
or desirable in Buyer's (or the Agent, as its assignee') reasonable opinion
to perfect and to maintain the perfection and priority of the interest of
Buyer in the Receivables and associated Related Security and Collections
and (ii) to file a carbon, photographic or other reproduction of this
Agreement or any financing statement with respect to the Receivables as a
financing statement in such offices as Buyer (or the Agent, as its
assignee) in their reasonable opinion deem necessary or desirable to
perfect and to maintain the perfection and priority of Buyer's interests in
the Receivables. This appointment is coupled with an interest and is
irrevocable. From and after July 1, 2001: (A) NSI Georgia hereby authorizes
Buyer (and the Agent, as its assignee) to file financing statements and
other filing or recording documents with respect to the Receivables and
Related Security (including any amendments thereto, or continuation or
termination statements thereof), without the signature or other
authorization of NSI Georgia, in such form and in such offices as Buyer (or
any of its assigns) reasonably determines appropriate to perfect or
maintain the perfection of the ownership or security interests of Buyer
(and the Agent, as its assignee) hereunder, (B) NSI Georgia acknowledges
and agrees that it is not authorized to, and will not, file financing
statements or other filing or recording documents with respect to the
Receivables or Related Security (including any amendments thereto, or
continuation or termination statements thereof), without the express prior
written approval by the Agent (as Buyer's assignee), consenting to the form
and substance of such filing or recording document, and (C) NSI Georgia
approves, authorizes and ratifies any filings or recordings made by or on
behalf of the Agent (as Buyer's assign) in connection with the perfection
of the ownership or security interests in favor of Buyer or the Agent (as
Buyer's assign).
Section 7.4 Confidentiality of Fee Letter. Each of NSI Georgia and Buyer
shall maintain and shall cause each of its employees, officers and advisers to
maintain the confidentiality of the Fee Letter, except that Buyer and its
officers and employees may disclose such information to Buyer's external
consultants, accountants and attorneys and as required by any applicable law,
rule, regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law) or to the extent necessary to enforce its rights under the Transaction
Documents.
Section 7.5 Bankruptcy Petition.
(a) NSI Georgia and Buyer each hereby covenants and agrees that, prior
to the date that is one year and one day after the payment in full of all
outstanding senior indebtedness of Blue Ridge, it will not institute
against, or join any other Person in instituting against, Blue Ridge any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States
or any state of the United States.
(b) NSI Georgia covenants and agrees that, prior to the date that is
one year and one day after the payment in full of all outstanding
obligations of Buyer under the Credit and Security Agreement, it will not
institute against, or join any other Person in instituting against, Buyer
Page 93
Exhibit 10(i)A(3)
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States
or any state of the United States.
Section 7.6 Limitation of Liability. Except with respect to any claim
arising out of the willful misconduct or gross negligence of Blue Ridge, the
Agent or any Liquidity Bank, no claim may be made by NSI Georgia or any other
Person against Blue Ridge, the Agent or any Liquidity Bank or their respective
Affiliates, directors, officers, employees, attorneys or agents for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and NSI Georgia hereby waives, releases, and
agrees not to xxx upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
Section 7.7 CHOICE OF LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF GEORGIA WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER
JURISDICTION GOVERN THE PERFECTION, OR THE EFFECT OF PERFECTION OR
NONPERFECTION, OF THE OWNERSHIP INTERESTS OR SECURITY INTERESTS OF NSI GEORGIA
OR ANY OF ITS ASSIGNS.
Section 7.8 CONSENT TO JURISDICTION. EACH OF NSI GEORGIA AND BUYER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR GEORGIA STATE COURT SITTING IN XXXXXX COUNTY, GEORGIA IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER (OR THE
AGENT, AS ITS ASSIGNEE) TO BRING PROCEEDINGS AGAINST NSI ENTERPRISES IN THE
COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY NSI GEORGIA AGAINST
BUYER (OR ITS ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY NSI GEORGIA PURSUANT TO THIS
AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN XXXXXX COUNTY, GEORGIA.
Section 7.9 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
Page 94
Exhibit 10(i)A(3)
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY NSI GEORGIA PURSUANT TO THIS
AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 7.10 Integration; Binding Effect; Survival of Terms.
(a) This Agreement and each other Transaction Document contain the
final and complete integration of all prior expressions by the parties
hereto with respect to the subject matter hereof and shall constitute the
entire agreement among the parties hereto with respect to the subject
matter hereof superseding all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of
NSI Georgia, Buyer and their respective successors and permitted assigns
(including any trustee in bankruptcy). NSI Georgia may not assign any of
its rights and obligations hereunder or any interest herein without the
prior written consent of Buyer. Buyer may assign at any time its rights and
obligations hereunder and interests herein to any other Person without the
consent of NSI Georgia. Without limiting the foregoing, NSI Georgia
acknowledges that Buyer, pursuant to the Credit and Security Agreement, may
assign to the Agent, for the benefit of the Lenders, its rights, remedies,
powers and privileges hereunder and that the Agent may further assign such
rights, remedies, powers and privileges to the extent permitted in the
Credit and Security Agreement. NSI Georgia agrees that the Agent, as the
assignee of Buyer, shall, subject to the terms of the Credit and Security
Agreement, have the right to enforce this Agreement and to exercise
directly all of Buyer's rights and remedies under this Agreement
(including, without limitation, the right to give or withhold any consents
or approvals of Buyer to be given or withheld hereunder) and NSI Georgia
agrees to cooperate fully with the Agent in the exercise of such rights and
remedies. 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 terminated in accordance with its
terms; provided, however, that the rights and remedies with respect to (i)
any breach of any representation and warranty made by NSI Georgia pursuant
to Article II; (ii) the indemnification and payment provisions of Article
VI; and (iii) Section 7.5 shall be continuing and shall survive any
termination of this Agreement.
Section 7.11 Counterparts; Severability; Section References. 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. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
Page 95
Exhibit 10(i)A(3)
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and
sections of, and schedules and exhibits to, this Agreement.
{signature pages follow}
Page 96
Exhibit 10(i)A(3)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
National Service Industries, Inc., A GEORGIA CORPORATION
By:
-----------------------------------
Name:
Title:
Address:
National Service Industries, Inc.
NSI Center
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Treasurer
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
NSI Funding, Inc., A DELAWARE CORPORATION
By:
-----------------------------------
Name:
Title:
Address:
NSI Funding, Inc.
NSI Center
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
Page 97
Exhibit 10(i)A(3)
Exhibit I
Definitions
-----------
This is Exhibit I to the Agreement (as hereinafter defined). As used in the
Agreement and the Exhibits and Schedules thereto, capitalized terms have the
meanings set forth in this Exhibit I (such meanings to be equally applicable to
the singular and plural forms thereof). If a capitalized term is used in the
Agreement, or any Exhibit or Schedule thereto, and is not otherwise defined
therein or in this Exhibit I, such term shall have the meaning assigned thereto
in Exhibit I to the Credit and Security Agreement (hereinafter defined).
"Additional Receivable" has the meaning set forth in Section 1.2(a) of
the Agreement.
"Agent" has the meaning set forth in the Preliminary Statements to the
Agreement.
"Agreement" means the Receivables Sale and Contribution Agreement,
dated as of April 27, 2001, between NSI Georgia and Buyer, as the same may
be amended, restated or otherwise modified.
"Blue Ridge" has the meaning set forth in the Preliminary Statements
to the Agreement.
"Buyer" has the meaning set forth in the preamble to the Agreement.
"Capital Leases" means leases which are required to be capitalized in
accordance with GAAP.
"Change of Control" means (a) the Parent ceases to own, directly or
indirectly, 100% of the outstanding voting stock of each of the Originators
and Buyer, or (b) (i) any Person or two or more Persons acting in concert
shall have acquired after the Closing Date beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 30% or more of the outstanding shares
of the voting stock of the Parent; or (ii) the individuals who, as of the
Closing Date, are members of the Board of the Parent (the "Incumbent Board"
) cease for any reason thereafter to constitute at least 66-2/3% of the
Board of the Parent; provided, however, that if the election, or nomination
for election by the Parent's stockholders, of any new director was approved
by a vote of at least 66-2/3% of the Incumbent Board, such new director
shall, for purposes of this definition, be considered as a member of the
Incumbent Board.
"Consolidated Debt" means at any date the Debt of the Parent and its
Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"Consolidated Operating Profits" means, for any period, the Operating
Profits of the Parent and its Consolidated Subsidiaries.
Page 98
Exhibit 10(i)A(3)
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be
consolidated with those of the Parent in its consolidated financial
statements as of such date.
"Consolidated Total Assets" means, at any time, the total assets of
the Parent and its Consolidated Subsidiaries, determined on a consolidated
basis, as set forth or reflected on the most recent consolidated balance
sheet of the Parent and its Consolidated Subsidiaries, prepared in
accordance with GAAP.
"Contract" means, with respect to any Receivable, any and all
instruments, agreements, invoices or other writings pursuant to which such
Receivable arises or which evidences such Receivable.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Parent, are treated as a
single employer under Section 414 of the Tax Code.
"Credit and Collection Policy" means NSI Georgia's credit and
collection policies and practices relating to Contracts and Receivables
existing on the date hereof and summarized in Exhibit V, as modified from
time to time in accordance with the Agreement.
"Credit and Security Agreement" has the meaning set forth in the
Preliminary Statements to the Agreement.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under
Capital Leases, (v) all obligations of such Person to reimburse any bank or
other Person in respect of amounts payable under a banker's acceptance,
(vi) all Redeemable Preferred Stock of such Person (in the event such
Person is a corporation), (vii) all obligations of such Person to reimburse
any bank or other Person in respect of amounts paid or to be paid under a
letter of credit or similar instrument, (viii) all Debt of others secured
by a Lien on any asset of such Person, whether or not such Debt is assumed
by such Person, and (ix) all Debt of others Guaranteed by such Person.
"Default Fee" means a per annum rate of interest equal to the sum of
(i) the Prime Rate, plus (ii) 2% per annum.
"Discount Factor" means a percentage calculated to provide Buyer with
a reasonable profit on its investment in the Receivables after taking
account of (i) the time value of money based upon the anticipated dates of
collection of the Receivables and the cost to Buyer of financing its
investment in the Receivables during such period, (ii) the risk of
nonpayment by the Obligors, and (iii) the cost of compensating someone to
service and collect the Receivables for Buyer and the Agent, as their
interests may appear. NSI Georgia and Buyer may agree from time to time to
change the Discount Factor based on changes in one or more of the items
affecting the calculation thereof, provided that any change to the Discount
Page 99
Exhibit 10(i)A(3)
Factor shall take effect as of the commencement of a month, shall apply
only prospectively and shall not affect the Purchase Price payment made
prior to the month during which NSI Georgia and Buyer agree to make such
change.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
"Executive Officer" means any of the chief executive officer,
president, executive vice president or senior vice president of the Parent.
"Existing Receivables" means all Receivables existing as of the
Initial Cutoff Date.
"Fiscal Quarter" means any fiscal quarter of the Parent.
"Fiscal Year" means any fiscal year of the Parent.
"First-Step Sale Agreement" means that certain Receivables Sale
Agreement dated as of May 2, 2001 between NSI Enterprises and NSI Georgia,
as amended, supplemented or restated from time to time.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which are to be used in making the calculations
for purposes of determining compliance with the terms of this Agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person and, without limiting the generality
of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to secure, purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to provide
collateral security, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring
in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning.
"Initial Contributed Receivables" has the meaning set forth in Section
1.1 of this Agreement.
"Initial Cutoff Date" means the Business Day immediately prior to the
date of this Agreement.
Page 100
Exhibit 10(i)A(3)
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security
title, preferential arrangement which has the practical effect of
constituting a security interest or encumbrance, or encumbrance or
servitude of any kind in respect of such asset to secure or assure payment
of a Debt or a Guarantee, whether by consensual agreement or by operation
of statute or other law, or by any agreement, contingent or otherwise, to
provide any of the foregoing. For the purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional
sale agreement, Capital Lease or other title retention agreement relating
to such asset.
"Material Adverse Effect" means a material adverse effect on (i) the
financial condition or operations of the Parent and its Subsidiaries (taken
as a whole), (ii) the ability of NSI Georgia to perform its obligations
under the Agreement or any other Transaction Document, (iii) the legality,
validity or enforceability of the Agreement or any other Transaction
Document, (iv) NSI Georgia's, Buyer's, the Agent's or any Lender's interest
in the Receivables generally or in any significant portion of the
Receivables, the Related Security or Collections with respect thereto, or
(v) the collectibility of the Receivables generally or of any material
portion of the Receivables.
"Material Subsidiary" means (i) each Originator and Buyer and (ii)
each other Consolidated Subsidiary, now existing or hereinafter established
or acquired, that at any time prior to the payment in full of all Aggregate
Unpaids under the Credit and Security Agreement either (x) has or acquires
total assets in excess of 10% of Consolidated Total Assets at the end of
the most recent Fiscal Quarter, or (y) contributed more than 10% of
Consolidated Operating Profits for the 4 most recent Fiscal Quarters then
ended (or, with respect to any Subsidiary which existed during the entire 4
Fiscal Quarter period but was acquired by the Parent during such period,
which would have contributed more than 10% of Consolidated Operating
Profits for such period had it been a Subsidiary for the entire period, as
determined on a pro forma basis in accordance with GAAP).
"Moody's" means Xxxxx'x Investor Service, Inc.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such
period, as determined in accordance with GAAP.
"Net Worth" means as of the last Business Day of each month preceding
any date of determination, the excess, if any, of (a) the aggregate
Outstanding Balance of the Receivables at such time, over (b) the sum of
(i) the Aggregate Invested Amount outstanding at such time, plus (ii) the
aggregate outstanding principal balance of the Subordinated Loans at such
time (including any Subordinated Loan proposed to be made on the date of
determination).
Page 101
Exhibit 10(i)A(3)
"NSI Enterprises" means NSI Enterprises, Inc., a California
corporation, and its successors and permitted assigns.
"NSI Georgia" has the meaning set forth in the preamble to the
Agreement, and such term shall include such Person's successors and
permitted assigns.
"Operating Profits" means, as applied to any Person for any period,
the sum of (i) net revenues, less (ii) cost of goods and services sold,
less (iii) operating expenses (including depreciation and amortization) of
such Person for such period, as determined in accordance with GAAP.
"Organizational Documents" means, for any Person, the documents for
its formation and organization, which, for example, (a) for a corporation
are its corporate charter and bylaws, (b) for a partnership are its
certificate of partnership (if applicable) and partnership agreement, (c)
for a limited liability company are its certificate of formation or
organization and its operating agreement, regulations or the like and (d)
for a trust is the trust agreement, declaration of trust, indenture or
bylaws under which it is created.
"Original Balance" means, with respect to any Receivable coming into
existence after the Initial Cutoff Date, the Outstanding Balance of such
Receivable on the date it was created.
"Originator" means NSI Enterprises in its capacity as the seller under
the First-Step Sale Agreement or NSI Georgia in its capacity as the seller
under this Agreement.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Parent" means National Service Industries, Inc., a Delaware
corporation, and its successors and permitted assigns.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" shall mean the following: (a) Liens for taxes
or assessments or other governmental charges not yet due and payable; and
(b) Liens created by the Transaction Documents.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an unincorporated association, a trust or any other
entity or organization, including, but not limited to, a government or
political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Tax Code and is either (i) maintained by a member
of the Controlled Group for employees of any member of the Controlled Group
or (ii) maintained pursuant to a collective bargaining agreement or any
Page 102
Exhibit 10(i)A(3)
other arrangement under which more than one employer makes contributions
and to which a member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding 5 plan years
made contributions.
"Proprietary Information" means all information about the Performance
Guarantor or any of its Subsidiaries which has been furnished to the Agent
or any Lender by or on behalf of the Performance Guarantor or any of its
Subsidiaries before or after the date hereof or which is obtained by any
Lender or the Agent in the course of any Review made pursuant to Section
7.1(d) of the Credit and Security Agreement; provided, however, that the
term "Proprietary Information" does not include information which (x) is or
becomes publicly available (other than as a result of a breach of Section
14.5 of the Credit and Security Agreement), (y) is possessed by or
available to the Agent or any Lender on a non-confidential basis prior to
its disclosure to the Agent or such Lender by Borrower or Subsidiary or (z)
becomes available to the Agent or any Lender on a non-confidential basis
from a Person which, to the knowledge of the Agent or such Lender, as the
case may be, is not bound by a confidentiality agreement with the
Performance Guarantor or any of its Subsidiaries and is not otherwise
prohibited from transmitting such information to the Agent or such Lender.
In the event the Agent or any Lender is required to disclose any
Proprietary Information by virtue of clause (ii) (but only if and to the
extent such disclosure has not been sought by the Agent or any Lender, and
if neither the Performance Guarantor nor Borrower is a party to such
litigation), (iv) or (v) above, to the extent such Lender or the Agent (as
the case may be) determines in good faith that it is permissible by law so
to do, it shall promptly notify the Performance Guarantor of same so as to
allow the Performance Guarantor or its Subsidiaries to seek a protective
order or to take other appropriate action; provided, however, neither any
Lender nor the Agent shall be required to delay compliance with any
directive to disclose any such information so as to allow the Performance
Guarantor or any of Subsidiaries to effect any such action.
"Purchase" means a purchase pursuant to Section 1.2(a) of the
Agreement by Buyer from NSI Georgia of Additional Receivables and the
Related Security and Collections related thereto, together with all related
rights in connection therewith.
"Purchase Price" means, with respect to the Purchase, the aggregate
price to be paid by Buyer to NSI Georgia for such Purchase in accordance
with Section 1.3 of the Agreement for the Receivables, Collections and
Related Security being sold to Buyer, which price shall equal on any date
(i) the product of (x) the Outstanding Balance of such Receivables on such
date, multiplied by (y) one minus the Discount Factor in effect on such
date, minus (ii) any Purchase Price Credits to be credited against the
Purchase Price otherwise payable in accordance with Section 1.4 of the
Agreement.
"Purchase Price Credit" has the meaning set forth in Section 1.4 of
the Agreement.
"Purchase Report" has the meaning set forth in Section 1.2(b) of the
Agreement.
"Receivable" means (a) any "Receivable" under and as defined in the
First-Step Sale Agreement which is conveyed to NSI Georgia in accordance
with the terms thereof, or (b) all indebtedness and other obligations owed
Page 103
Exhibit 10(i)A(3)
to NSI Georgia (at the times it arises, and before giving effect to any
transfer or conveyance under the Agreement), including, without limitation,
any indebtedness, obligation or interest constituting an account, chattel
paper, instrument or general intangible, arising in connection with the
sale of goods or the rendering of services by any of NSI Georgia's
"Lithonia Lighting" and "NSI Chemicals Group" divisions, and further
includes, without limitation, the obligation to pay any Finance Charges
with respect thereto (except that for purposes of this definition NSI
Georgia's "Xxxxx Chemical" operations shall not be considered part of its
"NSI Chemical Group" division unless and until (i) the Obligors on the
Receivables originated by NSI Georgia's "Xxxxx Chemical" operations are
instructed to pay all Collections on such Receivables directly to a
Lock-Box or Collection Account in accordance with Section 8.2(b) of the
Credit and Security Agreement and (ii) the Agent has expressly consented in
writing to such operations becoming a part of the "NSI Chemical Group" for
purposes of this definition). Indebtedness and other rights and obligations
arising from any one transaction, including, without limitation,
indebtedness and other rights and obligations represented by an individual
invoice, shall constitute a Receivable separate from a Receivable
consisting of the indebtedness and other rights and obligations arising
from any other transaction; provided, further, that any indebtedness,
rights or obligations referred to in the immediately preceding sentence
shall be a Receivable regardless or whether the Obligor or NSI Georgia
treats such indebtedness, rights or obligations as a separate payment
obligation.
"Records" means, with respect to any Receivable, all Contracts and
other documents, books, records and other information (including, without
limitation, computer programs, tapes, disks, punch cards, data processing
software and related property and rights) relating to such Receivable, any
Related Security therefor and the related Obligor.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Termination Date
either (i) mandatorily redeemable (by required sinking fund or similar
payments or otherwise) or (ii) redeemable at the option of the holder
thereof.
"Related Security" means, with respect to any Receivable:
(i) all of the applicable Originator's interest in the inventory
and goods (including returned or repossessed inventory or goods), if
any, the sale, financing or lease of which by the applicable
Originator gave rise to such Receivable, and all insurance contracts
with respect thereto,
(ii) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of
such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise, together with all financing statements and
security agreements describing any collateral securing such
Receivable,
(iii) all guaranties, letters of credit, insurance and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable whether pursuant to
Page 104
Exhibit 10(i)A(3)
the Contract related to such Receivable or otherwise,
(iv) all service contracts and other contracts and agreements
associated with such Receivable,
(v) all Records related to such Receivable,
(vi) all of NSI Georgia's right, title and interest in each
Lock-Box and each Collection Account,
(vii) all of NSI Georgia's interest in, to and under the
First-Step Sale Agreement, and
(viii) all proceeds of any of the foregoing.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC.
"Required Capital Amount" means, as of any date of determination,
an amount equal to the greater of (a) 3% of the Borrowing Limit under
the Credit and Security Agreement, and (b) the product of (i) 1.5
times the product of the Default Ratio times the Default Horizon
Ratio, each as determined from the most recent Monthly Report received
from the Servicer under the Credit and Security Agreement, and (ii)
the Outstanding Balance of all Receivables as of such date, as
determined from the most recent Monthly Report received from the
Servicer under the Credit and Security Agreement.
"Responsible Officer" means any Executive Officer as well as any
other officer of the Parent who is primarily responsible for the
administration of the transactions contemplated by the Transaction
Documents.
"S&P" means Standard & Poor's Ratings Group, a division of The
XxXxxx-Xxxx Companies, Inc.
"Settlement Date" has the meaning given to that term in the
Credit and Security Agreement.
"Stockholders' Equity" means, at any time, the shareholders'
equity of the Parent and its Consolidated Subsidiaries, as set forth
or reflected on the most recent consolidated balance sheet of the
Parent and its Consolidated Subsidiaries prepared in accordance with
GAAP, but excluding any Redeemable Preferred Stock of the Parent or
any of its Consolidated Subsidiaries.
"Subordinated Loan" has the meaning set forth in clause second of
Section 1.3(a) of the Agreement.
Page 105
Exhibit 10(i)A(3)
"Subordinated Note" means a promissory note in substantially the
form of Exhibit VI hereto as more fully described in Section 1.3 of
the Agreement, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Subsidiary" means, with respect 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.
"Tax Code" means the Internal Revenue Code of 1986, as the same
may be amended from time to time.
"Termination Date" means the earliest to occur of (i) the
Termination Date (as defined in the First-Step Sale Agreement), (ii)
the Facility Termination Date (as defined in the Credit and Security
Agreement), (iii) the Business Day immediately prior to the occurrence
of a Termination Event set forth in Section 5.1(d), (iv) the Business
Day specified in a written notice from Buyer to NSI Georgia following
the occurrence and during the continuation of any other Termination
Event, and (v) the date which is 10 Business Days after Buyer's
receipt of written notice from NSI Georgia that it wishes to terminate
the facility evidenced by this Agreement.
"Termination Event" has the meaning set forth in Section 5.1 of
the Agreement.
"Transaction Documents" means, collectively, this Agreement, the
First-Step Sale Agreement, each Collection Account Agreement, the
Subordinated Note, the Credit and Security Agreement, and all other
instruments, documents and agreements executed and delivered in
connection herewith.
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of Georgia;
provided, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Buyer's interest in the Receivables is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of Georgia, the term "UCC" shall
mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions
"Unmatured Termination Event" means an event which, with the
passage of time or the giving of notice, or both, would constitute a
Termination Event.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of
Georgia, and not specifically defined herein, are used herein as defined in such
Article 9.
Page 106
Exhibit 10(i)A(3)
Exhibit II
----------
Places of Business; Locations of Records;
-----------------------------------------
Federal Employer Identification Number(s); Other Names
------------------------------------------------------
Places of Business:
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Locations of Records:
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Xxx Xxxxxxxx Xxx
Xxxxxxx, Xxxxxxx 00000
Xxxxxxx 00 Xxxxx
Xxxxxxx, Xxxxxxx 00000
0000 Xxxxxxxx Xxxxxxxxxx Xxxx.
Xxxxxxx, Xxxxxxx 00000
Federal Employer Identification Number: 00-0000000
Legal, Trade and Assumed Names: [see next page]
Page 107
Exhibit 10(i)A(3)
Legal, Trade and Assumed Names:
Atlantic Envelope Company Lakeland Linen
Atenco Filing Systems Orlando Linen
Lyon Folder Company Pensacola Linen
Stumb Metal Products Sarasota Linen
Techno-Aide Products St Petersburg Linen
Enforcer Products Upton's Healthcare
Lithonia Lighting Tropical Linen Service
Major Reflector Texarkana Uniform & Linen Supply
Holophane Ouachachita Uniform & Linen Supply
Metal Optics Franklin Laundry, Dust Tex Services
Austin Lighting Products N-Pac
Antique Street Lamps Dixie Dust Control
National Linen Service Spauldings
National Uniform Service Xxxxx Chemical Industries
National Healthcare Linen Service Xxxxx Industries
National Dust Control Service Zep Manufacturing Company
Arkansas Linen & Uniform
F & F Dust Control
Dickies
Jacksonville Linen
Page 108
Exhibit 10(i)A(3)
Exhibit III
-----------
NAMES OF COLLECTION BANKS; LOCK-BOXES & COLLECTION ACCOUNTS
LOCK-BOX RELATED COLLECTION ACCOUNT
-------- --------------------------
Name of Current Account Holder: Enforcer Products, a division of NSI GA
P.O. Box 945786 Account Number: Lockbox #945786, DDA #13245324
Atlanta, GA Bank Name: Wachovia Bank of Georgia
30392-5786 ABA Number: 000000000
Contact Person: Xxxxx Xxxx
Contact's Tel: 000-000-0000
Contact's Fax: 000-000-0000
--------------------------------- ------------------------------------------------ ----------------------
Name of Current Account Holder: Zep Chemicals, a division of NSI GA
Account Number: 00000000
n/a Bank Name: Wachovia Bank of Georgia
ABA Number: 000000000
Contact Person: Xxxxx Xxxx
Contact's Tel: 000-000-0000
Contact's Fax: 000-000-0000
--------------------------------- ------------------------------------------------ ----------------------
Name of Current Account Holder: Zep Chemicals, a division of NSI GA
Account Number: 00000000
Bank Name: Wachovia Bank of Georgia
n/a ABA Number: 000000000
Contact Person: Xxxxx Xxxx
Contact's Tel: 000-000-0000
Contact's Fax: 000-000-0000
--------------------------------- ------------------------------------------------ ----------------------
Name of Current Account Holder: Lithonia Lighting, a division of NSI GA
P.O. Box 100863 Account Number: Lockbox #100863, DDA#0000000000
Xxxxxxx, XX 00000 Bank Name: Bank of America
ABA Number: 000000000
Contact Person: Xxxxxx Xxxxxxx
Contact's Tel: 000-000-0000
Contact's Fax: 000-000-0000
--------------------------------- ------------------------------------------------ ----------------------
Name of Current Account Holder: Lithonia Lighting, a division of NSI
P.O. Box 360305 Account Number: DDA#0000000
Xxxxxxxxxx, XX 00000 Bank Name: Mellon Bank, Pittsburgh PA
ABA Number: 000000000
Dept. LA 21025 Contact Person: Xxxxx Xxxxxxxx
Xxxxxxxx, XX 00000-0000 Contact's Tel: 000-000-0000
Contact's Fax: 000-000-0000
--------------------------------- ------------------------------------------------ ----------------------
Page 109
Exhibit 10(i)A(3)
P.O. Box 530737 Name of Current Account Holder: NSI Chemicals (Zep), a division of NSI, GA
Xxxxxxx, XX 00000-0000 Account Number: 0000000
Bank Name: Mellon Bank, Pittsburgh PA
Dept. CH10697 ABA Number: 000000000
Xxxxxxxx, XX 00000-0000 Contact Person: Xxxxx Xxxxxxxx
Contact's Tel: 000-000-0000
Dept. LA21294 Contact's Fax: 000-000-0000
Xxxxxxxx, XX 00000-0000
Dept. 0905
X.X. Xxx 000000
Xxxxxx, XX 00000-0000
Xxx 000000
Xxxxxxxxxx, XX 15250-8012
Xxx 000000
Xxxxxxxxxx, XX 00000-0000
--------------------------------- ------------------------------------------------ -------------------------------------------------------
Page 110
Exhibit 10(i)A(3)
Exhibit IV
----------
Form of Compliance Certificate
------------------------------
This Compliance Certificate is furnished pursuant to that certain
Receivables Sale and Contribution Agreement dated as of May 2, 2001 (the
"Agreement") between National Service Industries, Inc., a Georgia corporation
("NSI Georgia"), and NSI Funding, Inc., a Delaware corporation ("Buyer").
Capitalized terms used and not otherwise defined herein are used with the
meanings attributed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES, IN HIS OR HER REPRESENTATIVE CAPACITY ON
BEHALF OF THE PARENT, THAT:
1. I am the duly elected ______________ of National Service Industries,
Inc., a Delaware corporation (the "Parent").
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Parent and its Consolidated Subsidiaries during the
accounting period covered by the attached financial statements.
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Termination Event or an Unmatured Termination Event, as each such term is
defined under the Agreement, during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate[, except as set forth below].
[4. Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Parent has taken, is taking, or proposes to
take with respect to each such condition or event:
-------------------------------].
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered in the undersigned's representative
capacity on behalf of the Parent, all as of this ____ day of ______________,
200_.
------------------------------
[Name]
Page 111
Exhibit 10(i)A(3)
Exhibit V
---------
Credit and Collection Policy
----------------------------
[see attached]
Page 112
Exhibit 10(i)A(3)
Exhibit VI
----------
Form of Subordinated Note
-------------------------
SUBORDINATED NOTE
May 2, 2001
1. Note. FOR VALUE RECEIVED, the undersigned, NSI Funding, Inc., a Delaware
corporation ("SPV"), hereby unconditionally promises to pay to the order of
National Service Industries, Inc., a Georgia corporation ("NSI Georgia"), in
lawful money of the United States of America and in immediately available funds,
on or before the date following the Termination Date which is one year and one
day after the date on which (i) the Outstanding Balance of all Receivables sold
under the "Sale Agreement" referred to below has been reduced to zero and (ii)
NSI Georgia has paid to Buyer all indemnities, adjustments and other amounts
which may be owed thereunder in connection with the Purchases thereunder (the
"Collection Date"), the aggregate unpaid principal sum outstanding of all
"Subordinated Loans" made from time to time by NSI Georgia to SPV pursuant to
and in accordance with the terms of that certain Receivables Sale and
Contribution Agreement dated as of May 2, 2001 between NSI Georgia and SPV (as
amended, restated, supplemented or otherwise modified from time to time, the
"Sale Agreement"). Reference to Section 1.3 of the Sale Agreement is hereby made
for a statement of the terms and conditions under which the loans evidenced
hereby have been and will be made. All terms which are capitalized and used
herein and which are not otherwise specifically defined herein shall have the
meanings ascribed to such terms in the Sale Agreement.
2. Interest. SPV further promises to pay interest on the outstanding unpaid
principal amount hereof from the date hereof until payment in full hereof at a
rate equal to the 1-month LIBOR rate published in The Wall Street Journal on the
first Business Day of each month (or portion thereof) during the term of this
Subordinated Note, computed for actual days elapsed on the basis of a year
consisting of 360 days and changing on the first business day of each month
hereafter ("LIBOR"); provided, however, that if SPV shall default in the payment
of any principal hereof, SPV promises to pay, on demand, interest at the rate
equal to LIBOR plus 2.00% per annum on any such unpaid amounts, from the date
such payment is due to the date of actual payment. Interest shall be payable on
the first Business Day of each month in arrears; provided, however, that SPV may
elect on the date any interest payment is due hereunder to defer such payment
and upon such election the amount of interest due but unpaid on such date shall
constitute principal under this Subordinated Note. The outstanding principal of
any loan made under this Subordinated Note shall be due and payable on the
Collection Date and may be repaid or prepaid at any time without premium or
penalty.
3. Principal Payments. NSI Georgia is authorized and directed by SPV to
enter on the grid attached hereto, or, at its option, in its books and records,
the date and amount of each loan made by it which is evidenced by this
Subordinated Note and the amount of each payment of principal made by SPV, and
absent manifest error, such entries shall constitute prima facie evidence of the
accuracy of the information so entered; provided that neither the failure of NSI
Page 113
Exhibit 10(i)A(3)
Georgia to make any such entry or any error therein shall expand, limit or
affect the obligations of SPV hereunder.
4. Subordination. NSI Georgia shall have the right to receive, and SPV
shall make, any and all payments and prepayments relating to the loans made
under this Subordinated Note, provided that, after giving effect to any such
payment or prepayment, the aggregate Outstanding Balance of Receivables (as each
such term is defined in the Credit and Security Agreement hereinafter referred
to) owned by SPV at such time exceeds the sum of (a) the Aggregate Unpaids (as
defined in the Credit and Security Agreement) outstanding at such time under the
Credit and Security Agreement, plus (b) the aggregate outstanding principal
balance of all loans made under this Subordinated Note. NSI Georgia hereby
agrees that at any time during which the conditions set forth in the proviso of
the immediately preceding sentence shall not be satisfied, NSI Georgia shall be
subordinate in right of payment to the prior payment of any indebtedness or
obligation of SPV owing to the Agent or any Lender under that certain Credit and
Security Agreement dated as of May 2, 2001 by and among SPV, as Borrower, NSI
Georgia, as initial Servicer, various "Lenders" from time to time party thereto,
and Wachovia Bank, N.A., as the "Agent" (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit and Security Agreement"). The
subordination provisions contained herein are for the direct benefit of, and may
be enforced by, the Agent and the Lenders and/or any of their respective
assignees (collectively, the "Senior Claimants") under the Credit and Security
Agreement. Until the date on which the "Aggregate Invested Amount" outstanding
under the Credit and Security Agreement has been repaid in full and all other
obligations of SPV and/or the Servicer thereunder and under the "Fee Letter"
referenced therein (all such obligations, collectively, the "Senior Claim") have
been indefeasibly paid and satisfied in full, NSI Georgia shall not institute
against SPV any proceeding of the type described in Section 5.1(d) of the Sale
Agreement unless and until the Collection Date has occurred. Should any payment,
distribution or security or proceeds thereof be received by NSI Georgia in
violation of this Xxxxxxx 0, XXX Xxxxxxx agrees that such payment shall be
segregated, received and held in trust for the benefit of, and deemed to be the
property of, and shall be immediately paid over and delivered to the Agent for
the benefit of the Senior Claimants.
5. Bankruptcy; Insolvency. Upon the occurrence of any proceeding of the
type described in Section 5.1(d) of the Sale Agreement involving SPV as debtor,
then and in any such event the Senior Claimants shall receive payment in full of
all amounts due or to become due on or in respect of the Aggregate Invested
Amount and the Senior Claim (including "Yield" as defined and as accruing under
the Credit and Security Agreement after the commencement of any such proceeding,
whether or not any or all of such Yield is an allowable claim in any such
proceeding) before NSI Georgia is entitled to receive payment on account of this
Subordinated Note, and to that end, any payment or distribution of assets of SPV
of any kind or character, whether in cash, securities or other property, in any
applicable insolvency proceeding, which would otherwise be payable to or
deliverable upon or with respect to any or all indebtedness under this
Subordinated Note, is hereby assigned to and shall be paid or delivered by the
Person making such payment or delivery (whether a trustee in bankruptcy, a
receiver, custodian or liquidating trustee or otherwise) directly to the Agent
for application to, or as collateral for the payment of, the Senior Claim until
such Senior Claim shall have been paid in full and satisfied.
Page 114
Exhibit 10(i)A(3)
6. Amendments. This Subordinated Note shall not be amended or modified
except in accordance with Section 7.1 of the Sale Agreement. The terms of this
Subordinated Note may not be amended or otherwise modified without the prior
written consent of the Agent for the benefit of the Lenders.
7. GOVERNING LAW. THIS SUBORDINATED NOTE HAS BEEN MADE AND DELIVERED AT
XXXXXX COUNTY, GEORGIA, AND SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF
THE STATE OF GEORGIA. WHEREVER POSSIBLE EACH PROVISION OF THIS SUBORDINATED NOTE
SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL BE
PROHIBITED BY OR INVALID UNDER APPLICABLE 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
SUBORDINATED NOTE.
8. Waivers. All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor.
NSI Georgia additionally expressly waives all notice of the acceptance by any
Senior Claimant of the subordination and other provisions of this Subordinated
Note and expressly waives reliance by any Senior Claimant upon the subordination
and other provisions herein provided.
9. Assignment. This Subordinated Note may not be assigned, pledged or
otherwise transferred to any party other than NSI Georgia without the prior
written consent of the Agent, and any such attempted transfer shall be void.
NSI Funding, Inc.
By:_____________________________
Title:
Page 115
Exhibit 10(i)A(3)
Schedule
to
SUBORDINATED NOTE
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
-----------------------------------------------------------------------------------------------------------
AMOUNT OF AMOUNT OF PRINCIPAL UNPAID
SUBORDINATED PAID PRINCIPAL NOTATION MADE BY
DATE LOAN BALANCE (INITIALS)
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Page 116
Exhibit 10(i)A(3)
Exhibit VII
-----------
[Form of] Purchase Report
-------------------------
For the month beginning [date] and ending [date]
-------
TO: BUYER AND THE AGENT (AS BUYER's ASSIGNEE)
Aggregate Outstanding Balance of all Receivables sold
during the period: $_____________ A
Less: Aggregate Outstanding Balance of all Receivables
sold during such period which were not Eligible
Receivables on the date when sold:
($____________) (B)
Equals: Aggregate Outstanding Balance of all Eligible
Receivables sold during the period (A - B):
$___________ =C
Less: Purchase Price discount during the Period:
($____________) (D)
Equals: Gross Purchase Price Payable during the period
(C - D) $____________ =E
Less: Total Purchase Price Credits arising during the (F)
Period: ($____________)
Equals: Net Purchase Price payable during the Period
(E - F): $____________ =G
Cash Purchase Price Paid to NSI Georgia during the H
Period: $_____________
Subordinated Loans made during the Period: I
$_____________
Less: Repayments of Subordinated Loans received during (J)
the Period: ($____________)
Equals: Purchase Price paid in Cash or Subordinated
Loans during the period
(H + I - J): $_____________ =K
Aggregate Outstanding Balance of Receivables
contributed during the Period: $_____________ L
Page 117
Exhibit 10(i)A(3)
Schedule A
----------
DOCUMENTS TO BE DELIVERED TO BUYER
ON OR PRIOR TO THE INITIAL PURCHASE
1. Executed copies of the Receivables Sale and Contribution Agreement, duly
executed by the parties thereto.
2. Copy of the Credit and Collection Policy to attach to the Receivables Sale
and Contribution Agreement as an Exhibit.
3. A certificate of NSI Georgia's [Assistant] Secretary certifying:
(a) A copy of the Resolutions of the Board of Directors of NSI
Georgia, authorizing NSI Georgia's execution, delivery and performance of
the Receivables Sale and Contribution Agreement and the other documents to
be delivered by it thereunder;
(b) A copy of the Organizational Documents of NSI Georgia (also
certified, to the extent that such documents are filed with any
governmental authority, by the Secretary of State of the jurisdiction of
organization of NSI Georgia on or within thirty (30) days prior to
closing);
(c) Good Standing Certificates for NSI Georgia issued by the
Secretaries of State of (i) its state of incorporation, and (ii) if
different, the state where it maintains its principal place of business;
and
(d) The names and signatures of the officers authorized on its behalf
to execute the Receivables Sale and Contribution Agreement and any other
documents to be delivered by it thereunder.
4. Pre-filing state and federal tax lien, judgment lien and UCC lien searches
against NSI Georgia from the following jurisdictions:
a. Clerk of Superior Court of Xxxxxx County, Xxxxxxx
x. Georgia Superior Court Clerks Cooperative Authority
5. Proper financing statements, duly filed under the UCC on or before the date
of the initial Purchase (as defined in the Receivables Sale and
Contribution Agreement) in all jurisdictions as may be necessary or, in the
opinion of Buyer (or the Agent, as its assignee), desirable, under the UCC
of all appropriate jurisdictions or any comparable law in order to perfect
the ownership interests contemplated by the Receivables Sale and
Contribution Agreement.
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Exhibit 10(i)A(3)
6. Time stamped receipt copies of proper UCC termination statements, if any,
necessary to release all security interests and other rights of any Person
in the Receivables, Contracts or Related Security previously granted by NSI
Georgia.
7. Executed Collection Account Agreements for each Lock-Box and Collection
Account.
8. A favorable opinion of legal counsel for NSI Georgia licensed to give
opinions under Georgia law reasonably acceptable to Buyer (and the Agent,
as Buyer's assignee) as to the following:
(a) NSI Georgia is a corporation duly organized, validly existing, and
in good standing under the laws of the state of Georgia.
(b) NSI Georgia has all requisite authority to conduct its business in
each jurisdiction where failure to be so qualified would have a material
adverse effect on NSI Georgia's business.
(c) The execution and delivery by NSI Georgia of the Receivables Sale
and Contribution Agreement and each other Transaction Document to which it
is a party and its performance of its obligations thereunder have been duly
authorized by all necessary organizational action and proceedings on the
part of NSI Georgia and will not:
(i) require any action by or in respect of, or filing with, any
governmental body, agency or official (other than the filing of UCC
financing statements);
(ii) contravene, or constitute a default under, any provision of
applicable law or regulation or of its articles or certificate of
incorporation or bylaws or of any agreement, judgment, injunction,
order, decree or other instrument binding xxxx XXX Xxxxxxx; or
(iii) result in the creation or imposition of any Adverse Claim
on assets of NSI Georgia or any of its Subsidiaries (except as
contemplated by the Receivables Sale and Contribution Agreement).
(d) The Receivables Sale and Contribution Agreement and each other
Transaction Document to which it is a party has been duly executed and
delivered by NSI Georgia and constitutes the legally valid, and binding
obligation of NSI Georgia enforceable in accordance with its terms, except
to the extent the enforcement thereof may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and subject also to the availability of equitable remedies if
equitable remedies are sought.
(e) In the event that the Receivables Sale and Contribution Agreement
is held to create a transfer for security purposes rather than a true sale
or other outright assignment, the provisions of the Receivables Sale and
Contribution Agreement are effective to create valid security interests in
favor of Buyer in all of NSI Georgia's right, title and interest in and to
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Exhibit 10(i)A(3)
the Receivables and Related Security described therein which constitute
"accounts," "chattel paper" or "general intangibles" (each as defined in
the UCC) (collectively, the "Opinion Collateral"), as security for the
payment of a loan deemed to have been made by Buyer to NSI Georgia in an
amount equal to the Purchase Price (as defined therein) of the Receivables
(as defined therein), together with all other obligations of Buyer
thereunder.
(f) Each of the UCC-1 Financing Statements naming NSI Georgia as
debtor, Buyer, as secured party, and Agent, as assignee of secured party to
be filed in the [describe filing offices], is in appropriate form for
filing therein. Upon filing of such UCC-1 Financing Statements in such
filing offices and payment of the required filing fees, the security
interest in favor of Buyer in the Opinion Collateral will be perfected and
assigned of record to the Agent.
(g) Based solely on our review of the [describe UCC Search Reports],
and assuming (i) the filing of the Financing Statements and payment of the
required filing fees in accordance with paragraph (f) and (ii) the absence
of any intervening filings between the date and time of the Search Reports
and the date and time of the filing of the Financing Statements, the
security interest of Buyer in the Opinion Collateral is prior to any
security interest granted in the Opinion Collateral by NSI Georgia, the
priority of which is determined solely by the filing of a financing
statement in the [describe filing offices].
(h) To the best of the opinion giver's knowledge, there is no action,
suit or other proceeding against NSI Georgia or any Affiliate of NSI
Georgia, which would materially adversely affect the business or financial
condition of NSI Georgia and its Affiliates taken as a whole or which would
materially adversely affect the ability of NSI Georgia to perform its
obligations under the Receivables Sale and Contribution Agreement.
(i) NSI Georgia is not an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
9. A "true sale" opinion and "substantive consolidation" opinion of counsel
for NSI Georgia with respect to the transactions contemplated by the
Receivables Sale and Contribution Agreement.
10. A Certificate of NSI Georgia's chief financial officer certifying that, as
of the closing date, no Termination Event or Unmatured Termination Event
exists and is continuing.
11. Executed copies of (i) all consents from and authorizations by any Persons
and (ii) all waivers and amendments to existing credit facilities, that are
necessary in connection with the Receivables Sale and Contribution
Agreement.
12. Executed Subordinated Note by Buyer in favor of NSI Georgia.
