CANADIAN RECEIVABLES SALE AGREEMENT Dated as of July 13, 2007 among POLYONE CANADA INC. as the Seller, and POLYONE FUNDING CANADA CORPORATION as the Buyer and POLYONE CORPORATION as the Buyer’s Servicer
Final
Exhibit 10.4
CANADIAN
RECEIVABLES SALE AGREEMENT
Dated as of July 13, 2007
among
POLYONE CANADA INC.
as the Seller,
and
POLYONE FUNDING CANADA CORPORATION
as the Buyer
and
POLYONE CORPORATION
as the Buyer’s Servicer
TABLE OF CONTENTS
| Page | ||||
ARTICLE I DEFINITIONS |
1 | |||
SECTION 1.01. Certain Defined Terms |
1 | |||
SECTION 1.02. Other Terms |
4 | |||
SECTION 1.03. Computation of Time Periods |
4 | |||
ARTICLE II SALE OF SELLER RECEIVABLES |
5 | |||
SECTION 2.01. Sale of Seller Receivables |
5 | |||
SECTION 2.02. Terms of Sales |
5 | |||
SECTION 2.03. General Settlement Procedures |
6 | |||
SECTION 2.04. Payments and Computations, Etc |
7 | |||
SECTION 2.05. Buyer’s Servicer Fee |
8 | |||
SECTION 2.06. Non-Assignable Contracts |
8 | |||
ARTICLE III REPRESENTATIONS AND WARRANTIES |
8 | |||
SECTION 3.01. Representations and Warranties of The Seller |
8 | |||
ARTICLE IV GENERAL COVENANTS OF THE SELLER |
13 | |||
SECTION 4.01. Affirmative Covenants of The Seller |
13 | |||
SECTION 4.02. Negative Covenants of the Seller |
17 | |||
ARTICLE V ADMINISTRATION AND COLLECTION |
20 | |||
SECTION 5.01. Designation of Buyer’s Servicer |
20 | |||
SECTION 5.02. Rights of the Buyer and the Agent |
20 | |||
SECTION 5.03. Responsibilities of the Seller |
21 | |||
SECTION 5.04. Further Actions Evidencing Purchases |
21 | |||
ARTICLE VI INDEMNIFICATION |
22 | |||
SECTION 6.01. Indemnities by the Seller |
22 | |||
ARTICLE VII MISCELLANEOUS |
24 | |||
SECTION 7.01. Amendments, Etc |
24 | |||
SECTION 7.02. Notices, Etc |
24 | |||
SECTION 7.03. Binding Effect; Assignability |
24 | |||
SECTION 7.04. Costs, Expenses, Taxes and Currency |
25 | |||
SECTION 7.05. Non-Business Days |
26 | |||
SECTION 7.06. Confidentiality |
26 | |||
SECTION 7.07. Governing Law |
27 | |||
SECTION 7.08. Consent to Jurisdiction |
27 | |||
i
TABLE OF CONTENTS
(continued)
(continued)
| Page | ||||
SECTION 7.09. Execution in Counterparts |
27 | |||
SECTION 7.10. [Deleted] |
27 | |||
SECTION 7.11. Entire Agreement |
27 | |||
SECTION 7.12. Severability of Provisions |
28 | |||
SECTION 7.13. Waiver of Jury Trial |
28 | |||
SECTION 7.14. No Proceedings |
28 |
EXHIBITS |
||
EXHIBIT A
|
Form of Receivables Activity Report | |
EXHIBIT B
|
Form of Canadian Subordinated Note | |
EXHIBIT C
|
Form of Quebec Assignment | |
SCHEDULES |
||
SCHEDULE I
|
Lock-Box Banks and Lock-Box Accounts | |
SCHEDULE II
|
Description of Credit and Collection Policy | |
SCHEDULE III
|
Forms of Invoices | |
SCHEDULE IV
|
Jurisdiction of Incorporation, Organizational Identification Number, and Location of Principal Place of Business, Chief Executive Office and Office Where Records are Kept | |
SCHEDULE V
|
Trade or other names for Seller |
ii
CANADIAN RECEIVABLES SALE AGREEMENT dated as of July 13, 2007 (this “Agreement”) among
POLYONE CANADA INC., a corporation organized under the laws of Canada (the “Seller”), POLYONE
FUNDING CANADA CORPORATION, a Canadian corporation (the “Buyer”), and POLYONE CORPORATION,
an Ohio corporation (“PolyOne”), as the Buyer’s Servicer.
PRELIMINARY STATEMENTS:
(1) The Seller in the ordinary course of business generates, and will generate from time to
time, Receivables (as defined in the Canadian Receivables Purchase Agreement, as defined below)
from time to time owing to it.
(2) The Seller wishes to sell to the Buyer from time to time hereunder all present and future
Receivables (each such Receivable being a “Seller Receivable”), together with the Related
Security and Collections (as hereinafter defined) with respect thereto.
(3) The Buyer may, from time to time hereafter, sell interests to the Purchasers (as defined
in the Canadian Receivables Purchase Agreement referred to below), in each of the present and
future Seller Receivables, together with the Related Security and Collections with respect thereto,
pursuant to the Canadian Receivables Purchase Agreement dated as of July 13, 2007 (as the same may
from time to time be amended, restated, supplemented or otherwise modified from time to time, the
“Canadian Receivables Purchase Agreement”) among the Buyer, PolyOne, as Servicer
thereunder, the Purchasers (as defined below), Citicorp USA, Inc. (“Citicorp”), as
administrative agent (the “Agent”) for the Purchasers and any other owners thereunder and
National City Business Credit, Inc., as the syndication agent (the “Syndication Agent”).
NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms.
Terms defined in the Canadian Receivables Purchase Agreement and not otherwise defined herein
are used in this Agreement as defined in the Canadian Receivables Purchase Agreement. In addition,
as used in this Agreement and unless otherwise stated herein, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
“Agent” has the meaning specified in Preliminary Statement (3).
“Buyer’s Servicer” has the meaning specified in Section 5.01.
“Buyer’s Servicer Fee” has the meaning specified in Section 2.05.
“Canadian Dollar Receivables” means any Seller Receivable in Canadian Dollars.
“Canadian Dollars” means the lawful currency of Canada.
“Canadian Insolvency Statutes” means collectively, the Companies’ Creditors
Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada), the Assignments and
Preferences Act (Ontario) and the Fraudulent Conveyances Act (Ontario).
“Canadian Receivables Purchase Agreement” has the meaning specified in Preliminary
Statement (3).
“Canadian Subordinated Note” means each subordinated promissory note, in substantially
the form of Exhibit B hereto, executed by the Buyer to the order of the Seller.
“Citicorp” has the meaning specified in Preliminary Statement (3).
“Collections” means, with respect to any Seller Receivable, all cash collections and
other cash proceeds of such Seller Receivable, including, without limitation, (i) all cash proceeds
of the Related Security with respect to such Seller Receivable and (ii) any Collections of such
Seller Receivable deemed to have been received, and actually paid, pursuant to Section 2.03.
“Contract” means an agreement between the Seller and an Obligor, in any written form
acceptable to the Seller, or in the case of any open account agreement as evidenced by one of the
forms of invoices set forth in Schedule III hereto or otherwise approved by the Agent from time to
time (which approval shall not be unreasonably withheld), pursuant to or under which such Obligor
shall be obligated to pay for goods from time to time.
“Credit and Collection Policy” means those credit and collection policies and
practices in effect on the date hereof relating to Contracts and Receivables and described in
Schedule II hereto, as modified from time to time in compliance with Section 4.02(c).
“Indemnified Amounts” has the meaning specified in Section 6.01.
“Indemnified Party” means any or all of the Buyer, the Purchasers and the other Owners
under the Canadian Receivables Purchase Agreement, the Agent and their respective Affiliates and
successors and assigns.
“Initial Purchase Price” has the meaning specified in Section 2.02(a).
“Material Adverse Change” means a material adverse change in any of (a) the condition
(financial or otherwise), business, performance, prospects, operations, contingent liabilities,
material obligations, or properties of the Seller or the Buyer, (b) the collectibility of the
Seller Receivables, or the ability of the Buyer’s Servicer (if PolyOne or any of its Affiliates) to
collect Seller Receivables, (c) the legality, validity or enforceability of any Transaction
Document, (d) the ability of the Seller to perform its obligations under the Transaction Documents
or the Contracts or (e) the rights and remedies of the Buyer, the Agent or the Purchasers under the
Transaction Documents.
“Material Adverse Effect” means an effect that results in or causes, or could
reasonably be expected to result in or cause, a Material Adverse Change.
“Obligor” means any Person obligated to make payments pursuant to a Contract.
“Other Taxes” has the meaning specified in Section 7.04(b).
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“PPSA” means the Personal Property Security Act (Ontario), as amended from time to
time, and any regulations promulgated thereunder.
“Privacy Laws” has the meaning specified in Section 3.01(b).
“Program” means the receivables program established pursuant to this Agreement and the
Canadian Receivables Purchase Agreement.
“Purchase Price” has the meaning specified in Section 2.02(b).
“Purchasers” means the Initial Purchasers and each Assignee that shall become a party
to the Canadian Receivables Purchase Agreement pursuant to Section 9.01 thereof.
“Quebec Assignment” means an assignment of Receivables from the Seller to the Buyer,
substantially in the form of Exhibit C hereto.
“Receivable Assets” has the meaning specified in Section 2.01(a).
“Receivables Activity Report” means a report prepared by the Buyer’s Servicer,
pursuant to Section 2.03(c), in substantially the form attached hereto as Exhibit A.
“Related Security” means with respect to any Receivable:
(i) all of the Seller’s right, title and interest in, under and to all security
agreements or other agreements that relate to such Receivable;
(ii) all of the Seller’s interest in the goods (including returned goods), if
any, relating to the sale which gave rise to such Receivable;
(iii) all other security interests or liens and property subject thereto from
time to time purporting to secure payment of such Receivable, whether pursuant to
the Contract related to such Receivable or otherwise, together with all financing
statements and other applicable filings signed or authenticated by an Obligor
describing any collateral securing such Receivable;
(iv) all rights in respect of lock-boxes and accounts to which Collections are
sent or deposited, and all funds and investments therein;
(v) all letter of credit rights, guaranties, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing payment
of such Receivables whether pursuant to the Contract related to such Receivable or
otherwise; and
(vi) all Records relating to such Receivable.
“Seller Receivable” has the meaning specified in Preliminary Statement (2).
“Solvent” means, with respect to any Person on a particular date, that on such date
(a) the fair value of the property of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its
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debts as they become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person’s property would constitute
an unreasonably small capital. The amount of contingent liabilities at any time shall be computed
as the amount that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or matured liability.
“Syndication Agent” has the meaning specified in Preliminary Statement (3).
“Termination Date” means the Termination Date under and as defined in the Canadian
Receivables Purchase Agreement.
“Transaction Documents” means this Agreement, the Canadian Receivables Purchase
Agreement, the Canadian Subordinated Notes, the Lock-Box Agreements, the Second Amended and
Restated Parent Undertaking, the Canadian Consent and Agreement, the Second Amended and Restated
Fee Letter and the Quebec Assignment.
“Transfer” means sell, assign, convey, set-over and transfer, or, depending upon the
context, sale, assignment, conveyance, set-over and transfer, and “Transferred” shall be
interpreted accordingly.
SECTION 1.02. Other Terms.
All accounting terms not specifically defined herein shall be construed in accordance with
GAAP. All terms used in the PPSA and not specifically defined herein are used herein as defined in
the PPSA. Any reference to a dollar amount herein, shall be a reference to such amount in U.S.
Dollars, unless otherwise expressly stated. For the purposes of Receivables payable in the
Province of Quebec or where the Obligor is located in the Province of Quebec (i.e. as determined by
reference to the mailing address of the invoices), all present and future such Receivables up to
the Termination Date are, for greater certainty and without limiting anything else contained
herein, sold and assigned on the date hereof as contemplated in Section 2.01(a) hereof,
notwithstanding that title to any particular such Receivable may be Transferred and the Purchase
Price therefor paid on some later date and notwithstanding any reference herein (including in
Section 2.02(b) hereof) to a purchase thereof on any date other than the date hereof. Without
limiting the foregoing or Section 2.01(a) hereof, as further evidence of the sale by the Seller to
the Buyer of all Seller Receivables existing on the date hereof and all Seller Receivables
hereafter created from time to time until the Termination Date, the Seller shall, on the date
hereof, deliver to the Buyer the Quebec Assignment.
SECTION 1.03. Computation of Time Periods.
Unless otherwise stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word “from” means “from and including” and each of
the words “to” and “until” means “to but excluding”.
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ARTICLE II
SALE OF SELLER RECEIVABLES
SECTION 2.01. Sale of Seller Receivables.
(a) The Seller hereby Transfers, without recourse (except as expressly provided herein), to
the Buyer, on the terms and subject to the conditions specifically set forth herein, on a servicing
included basis (as provided in Section 5.01 hereof), all of the Seller’s right, title and interest
in, to and under all Seller Receivables existing on the date hereof and hereafter created from time
to time until the Termination Date, all Related Security and Collections with respect thereto and
all proceeds of the foregoing, together with all of the Seller’s rights, remedies, powers and
privileges with respect to the Seller Receivables (collectively, the “Receivable Assets”).
(b) The parties to this Agreement intend that the transactions contemplated hereby shall be,
and shall be created as, a purchase by the Buyer and a sale by the Seller of Receivable Assets and
not as a lending transaction. The foregoing Transfers do not constitute and are not intended to
result in a creation or assumption by the Buyer of any obligation or liability with respect to any
Seller Receivable or Contract, nor shall the Buyer be obligated to perform or otherwise be
responsible for any obligation of the Seller or any other Person in connection with any Receivable
Assets or under any agreement or instrument relating thereto.
(c) In connection with the foregoing Transfers, the Seller agrees to record and file, at its
own expense, proper financing statements or other applicable filings (and proper continuation or
comparable statements with respect to such financing statements or other filings when applicable)
with respect to the Receivable Assets now and hereafter from time to time acquired by the Buyer
under this Agreement, in such manner and in such jurisdictions as are necessary to perfect the
Transfers of the Receivable Assets to the Buyer hereunder, and to deliver copies of such financing
statements or other applicable filings to the Buyer and the Agent on or prior to the initial
Purchase under the Canadian Receivables Purchase Agreement. Such financing statements or other
applicable filings shall name the Seller as debtor/seller and the Buyer as secured party/buyer.
SECTION 2.02. Terms of Sales.
(a) As consideration for such Transfer of Receivable Assets on the date hereof, the Buyer
shall pay (or cause to be paid) to the Seller on such date an amount (the “Initial Purchase Price”)
agreed upon prior to such date, between the Seller and the Buyer; provided, that the Initial
Purchase Price subsequently may be reduced, on a basis to be agreed upon between the Seller and the
Buyer, and such reduction reimbursed by the Seller to the Buyer in accordance with Section 2.03(b),
for any Receivable which, consistent with the Credit and Collection Policy, is written off the
Buyer’s or the Seller’s books as uncollectible following the date of its purchase. The amount of
the Initial Purchase Price, taking into account any such reduction mechanism, shall be reasonably
equivalent and fair market value for such Receivable Assets as of such date. On the date hereof,
the Buyer shall pay to the Seller as part of the total Initial Purchase Price the total amount
which the Purchasers shall pay to the Buyer in Capital on such date under the Canadian Receivables
Purchase Agreement.
(b) On each Business Day after the date hereof until the Termination Date, the Buyer shall
accept from the Seller, and the Seller shall Transfer to the Buyer, all of the Seller’s right,
title and interest in, to and under those Receivable Assets that are created on such Business Day.
As consideration for such continuing Transfer of Receivable Assets after the date hereof, the Buyer
shall pay (or cause to
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be paid) to the Seller an amount (the “Purchase Price”) agreed upon prior to the date
of such Transfer; provided, that the Purchase Price subsequently may be reduced, on a basis to be
agreed upon between the Seller and the Buyer, and such reduction reimbursed by the Seller to the
Buyer in accordance with Section 2.03(b), for any Receivable which, consistent with the Credit and
Collection Policy, is written off the Buyer’s or the Seller’s books as uncollectible following the
date of its purchase. The amount of the Purchase Price for each such date, taking into account any
such reduction mechanism, shall be reasonably equivalent and fair market value for such Receivable
Assets as of such date.
(c) The Purchase Price other than the Initial Purchase Price, and the balance, if any, of the
Initial Purchase Price to be so paid by the Buyer on the date hereof, in accordance with the last
sentence of subsection (a) of this Section 2.02, shall be paid in cash to the Seller in U.S.
Dollars or, with respect to Canadian Dollar Receivables, in Canadian Dollars, in same day funds on
or before the next occurring Yield Payment Date or the date hereof.
(d) In addition to the method of payment specified in subsection (c) of this Section 2.02, the
Purchase Price or Initial Purchase Price may be paid in any of the following ways:
(i) upon the agreement of the Seller and the Buyer, by means of indebtedness owed by
the Buyer to the Seller evidenced by, and payable with interest pursuant to, one or more
Canadian Subordinated Notes payable to the order of the Seller; or
(ii) upon the agreement of the Seller and the Buyer, in consideration for shares of the
Buyer or by means of capital contributed by the Seller to the Buyer in the form of
Receivable Assets Transferred during such Yield Period or on the date hereof, as the case
may be, and in such case, the Purchase Price, or such balance of the Initial Purchase Price,
as the case may be, shall be considered paid in full by reflecting such contribution as an
addition to surplus of the Buyer at an appropriate value; or
(iii) a combination of any of the payment methods set forth above or in subsection (c)
of this Section 2.02.
SECTION 2.03. General Settlement Procedures.
(a) If on any day the Outstanding Balance of a Seller Receivable is either (i) reduced as a
result of any defective, rejected or returned goods or services, any discount, or any adjustment by
the Seller or (ii) reduced or canceled as a result of a setoff in respect of any claim by the
Obligor thereof against the Seller or any Affiliate thereof other than the Buyer (whether such
claim arises out of the same or a related transaction or an unrelated transaction), the Seller
shall be deemed to have received on such day a Collection of such Receivable in the amount of such
reduction or cancellation and shall make the payment required to be made by it in connection with
such Collection on the day required by, and otherwise pursuant to, Section 4.01(i). If on any day
any of the representations or warranties in Section 3.01(f) is no longer true with respect to any
Seller Receivable, the Seller shall be deemed to have received on such day a Collection in full of
such Seller Receivable and shall make the payment required to be made by it in connection with such
Collection on the day required by, and otherwise pursuant to, Section 4.01(i). Except as stated in
the preceding sentences of this Section 2.03 or as otherwise required by law or the underlying
Contract, all Collections received from an Obligor of any Receivable shall be applied to
Receivables then outstanding of such Obligor in the order of the age of such Receivables, starting
with the oldest such Receivable, except if payment is designated by such Obligor for application to
specific Receivables. If at any time any Obligor is required to pay interest or finance charges in
connection with any Receivable or the related Contract, then all payments made by such Obligor in
connection with such Receivable shall, unless otherwise expressly provided for in the applicable
Contract, be applied on
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account of the Outstanding Balance of such Receivable and not on account of such interest or
finance charges, until such time as the Outstanding Balance thereof has been fully repaid.
(b) If the amount of the Initial Purchase Price is reduced in accordance with Section 2.02(a),
or the amount of the Purchase Price for any date is reduced in accordance with Section 2.02(b), the
Seller shall promptly reimburse the Buyer for the amount of such reduction, provided that the
Seller’s obligation to reimburse such amount may be set-off against any amount then owing under any
Canadian Subordinated Note, in which case the amount so owing by the Buyer under that Canadian
Subordinated Note shall be reduced accordingly.
(c) The Buyer’s Servicer shall immediately advise the Buyer and the Agent of each Liquidation
Day.
(d) At least two Business Days before each Yield Payment Date, the Buyer’s Servicer shall
prepare and forward to the Buyer and the Agent a Receivables Activity Report of the Buyer’s
Servicer, as of the close of business of the Buyer’s Servicer on the last day of the immediately
preceding Yield Period, setting forth the calculation of the actual Purchase Price for each
Receivable Asset Transferred during such Yield Period, and the reconciliation of how the Purchase
Price has been paid reflecting the cash paid by the Buyer to the Seller during such Yield Period,
the adjustments to and current balance, if any, due from the Buyer to the Seller under any Canadian
Subordinated Note, and the amount of additional cash, if any, to be paid by the Buyer to the Seller
on such Yield Payment Date.
SECTION 2.04. Payments and Computations, Etc.
(a) All amounts to be paid or deposited by the Seller or the Buyer’s Servicer hereunder shall
be paid or deposited in accordance with the terms hereof no later than 11:00 a.m. (New York City
time) on the day when due in U.S. Dollars, or with respect to Canadian Dollar Receivables in
Canadian Dollars, in same day funds to the Buyer as directed by the Buyer to the Seller or the
Buyer’s Servicer in writing. The Seller shall, to the extent permitted by law, pay to the Buyer
interest on all amounts not paid or deposited when due hereunder (except for those amounts with
respect to which Yield accrues) at 2.00% per annum above the Alternate Base Rate in effect from
time to time, payable on demand; provided, however, that such interest rate shall
not at any time exceed the maximum rate permitted by applicable law.
(b) All computations of interest and fees hereunder shall be made on the basis of a year of
360 days for the actual number of days (including the first but excluding the last day) elapsed.
(c) For purposes of the Interest Act (Canada), where in this Agreement a rate of interest is
to be calculated on the basis of a period of less than one year, the yearly rate of interest to
which the said rate is equivalent is the said rate divided by the actual number of days in the
period for which such calculation is made and multiplied by 365 days (or 366 days in the case of a
leap year).
(d) The Seller hereby irrevocably and unconditionally waives and relinquishes to the fullest
extent it may legally do so (i) any express or implied vendor’s lien, and any other lien, security
interest, charge or encumbrance, which would otherwise be imposed on or affect any Seller
Receivables or any Receivable Asset on account of any unpaid amount of the Initial Purchase Price
or any Purchase Price therefor or on account of any other unpaid amounts otherwise payable by the
Buyer under or in connection with this Agreement or any Canadian Subordinated Note payable to the
order of the Seller or otherwise and (ii) with respect to the obligations of the Seller to make
payments or deposits under this Agreement (including, without limitation, payments under Sections
2.03 and 6.01), any setoff, counterclaim, recoupment, defense and other right or claim which the
Seller may have against the Buyer
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as a result of or arising out of the failure of the Buyer to pay any amount on account of the
Initial Purchase Price or any Purchase Price under Sections 2.01 and 2.02 or any other amount
payable by the Buyer to the Seller under this Agreement or any Canadian Subordinated Note or
otherwise.
SECTION 2.05. Buyer’s Servicer Fee.
So long as PolyOne or any Affiliate thereof is the Buyer’s Servicer, the Buyer’s Servicer
shall not be entitled to any compensation for the performance of its services hereunder or any
reimbursement for any cost or expenses incurred by it as the Buyer’s Servicer, it being
acknowledged and agreed by PolyOne and the Seller that any amounts owing to PolyOne or any such
Affiliate in consideration for such services shall be the responsibility of and paid by the Seller.
The Seller acknowledges that the consideration received by it for the sale of the Seller
Receivables hereunder includes full compensation for its payment of any such amounts owing to the
Buyer’s Servicer. At any time that the Buyer’s Servicer is not PolyOne or an Affiliate thereof, the
Buyer shall pay to the Buyer’s Servicer a servicing fee (the “Buyer’s Servicer Fee”) until
the Termination Date, payable on each Yield Payment Date, in an amount equal to the amount payable
to the Servicer under the Canadian Receivables Purchase Agreement or such other amount calculated
on an arm’s-length basis for services performed as a subcontractor on terms common to servicing
arrangements in comparable asset sale transactions; provided, however, that the
Buyer shall be given a credit against the Buyer’s Servicer Fee payable under this Agreement equal
to the full amount of the Servicer Fee paid under the Canadian Receivables Purchase Agreement.
SECTION 2.06. Non-Assignable Contracts. To the extent that any consent or
acknowledgement of a third Person (including any Governmental Authority) is required for the
effective sale of a Receivable or related Receivables Assets to the Buyer and such consent or
acknowledgement is not obtained by the Seller, or until said consent or acknowledgement is
obtained, the Seller shall (at its sole cost and expense), from and after the date hereof:
(a) hold the benefits of such Receivable or related Receivables Assets (including any payments
thereunder) in trust for the Buyer in accordance with the provisions of this Section 2.06, such
benefits to accrue fully to the benefit of the Buyer; and
(b) in order that the full value of such Receivable or other Receivables Assets may be
realized for the benefit of the Buyer, take, at the request and under the direction of the Buyer,
in the name of the Seller or otherwise as the Buyer may specify, all such actions and do or cause
to be done all such things as are, in the opinion of the Buyer, necessary or proper in order that
the value of such Receivable or other Receivables Assets is preserved and to ensure that the Buyer
(or its assigns) is recognized as having the exclusive beneficial interest in such Receivables or
other Receivables Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of The Seller.
The Seller represents and warrants, as of the date hereof and the date of each Transfer of
Seller Receivables hereunder, before and after giving effect to such Transfer, as though made on
and as of such date, other than any such representations and warranties that, by their terms, refer
to a specific date other than the date of said Transfer, in which case, as of such date, as
follows:
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(a) The Seller is a corporation duly incorporated, validly existing and in good standing or
its equivalent under the laws of its jurisdiction of incorporation indicated at the beginning of
this Agreement, and is duly qualified to do business, and is in good standing or its equivalent, in
every jurisdiction where the nature of its business requires it to be so qualified, except to the
extent that any failure to be so qualified or in good standing as a foreign entity could not
reasonably be expected to have a Material Adverse Effect, and is a resident of Canada for the
purposes of the Income Tax Act (Canada).
(b) The execution, delivery and performance by the Seller of the Transaction Documents to
which it is a party and the other documents to be delivered by it thereunder, and the transactions
contemplated hereby and thereby, including the Seller’s use of the proceeds of the Transfers of
Receivable Assets hereunder, are within the Seller’s corporate powers, have been duly authorized by
all necessary corporate action, do not (i) contravene the Seller’s charter, articles, by-laws or
code of regulations, (ii) violate any applicable law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award, including for greater certainty the Personal
Information Protection and Electronic Documents Act (Canada) or any other applicable privacy laws
(collectively, “Privacy Laws”), or (iii) breach or result in a default under, or result in the
acceleration of (or entitle any party to accelerate) the maturity of any obligation of the Seller
under, or result in or require the creation of any lien upon or security interest in any property
of the Seller pursuant to the terms of, any Contract or any other agreement or instrument (other
than any Transaction Document) binding on or affecting the Seller or any of its properties.
(c) No authorization or approval or other action by, and no notice to or filing with, any
Governmental Authority is required for the due execution, delivery and performance by the Seller of
any Transaction Document to which it is a party or any other agreement or document to be delivered
thereunder, or for the perfection of or the exercise by any Indemnified Party of its rights and
remedies under such Transaction Document and such other agreements or documents, except for the
filings of the financing statements or other applicable filings referred to in Section 2.01(c) and
in Article III of the Canadian Receivables Purchase Agreement.
(d) This Agreement has been, and each other Transaction Document to which the Seller is a
party when delivered will have been, duly executed and delivered by the Seller. This Agreement is,
and the other Transaction Documents to which the Seller is or will be a party when delivered
hereunder will be, the legal, valid and binding obligations of the Seller enforceable against the
Seller in accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors generally and to
general equitable principles.
(e) There is no action, suit, investigation, litigation or proceeding pending or, to the
knowledge of the Seller, threatened in any court or before any arbitrator or governmental
instrumentality that (i) could reasonably be expected to result in a Material Adverse Change or
(ii) restrains, prevents or imposes or can reasonably be expected to impose materially adverse
conditions upon the Transaction Documents or the transactions contemplated thereby.
(f) Immediately prior to each Transfer by the Seller of any Receivable Assets hereunder, the
Seller is the legal and beneficial owner of such Receivable Assets, free and clear of any Adverse
Claim. Upon each Transfer by the Seller of each Receivable Asset hereunder, the Buyer shall have a
valid and perfected first priority undivided 100% ownership interest in such Receivable Asset free
and clear of any Adverse Claim except as created by this Agreement and the Canadian Receivables
Purchase Agreement. No effective financing statement or other filing or instrument similarly in
effect covering any Contract or any Receivable Assets is on file in any recording office, except
those filed in favor of the Buyer and the Agent relating to this Agreement or in favor of the Agent
and relating to the Canadian Receivables Purchase Agreement.
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(g) No proceeds of any Transfer by the Seller of any Seller Receivable hereunder will be used
to acquire any security in any transaction which is subject to Sections 13 and 14 of the Securities
Exchange Act of 1934, as amended.
(h) No proceeds of any Transfer by the Seller of any Seller Receivable hereunder will be used
to purchase or carry any “margin stock” (as defined or used in the regulations of the Board of
Governors of the Federal Reserve System) in contravention of the requirements of Regulation T, U or
X promulgated by the Board of Governors of the Federal Reserve System from time to time. The Buyer
is not engaged in the business of extending credit for the purpose of purchasing or carrying any
margin stock.
(i) Each Receivables Activity Report, Seller Report and Receivables Report (if prepared by the
Seller or one of its Affiliates, or to the extent that information contained therein is supplied by
the Seller or any Affiliate thereof), information, exhibit, financial statement, or other report or
document furnished or to be furnished at any time by or on behalf of the Seller to the Buyer or the
Agent or any Owner in connection with this Agreement or the Canadian Receivables Purchase Agreement
is or will be accurate in all material respects as of its date or as of the date so furnished, and
no such report or document contains, or will contain, as of its date of delivery or the date so
furnished, any untrue statement of a material fact or omits to state, or will omit to state, as of
its date of delivery or the date so furnished, a material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which they were made, not
misleading.
(j) The jurisdiction of incorporation, organizational identification number (if any), and the
address(es) of the principal place of business and chief executive office of the Seller and the
office where the Seller keeps its Records concerning the Receivable Assets, are as set forth in
Schedule IV hereto (or, by notice to the Buyer and the Agent in accordance with Section 4.01(e), at
such other locations in jurisdictions, within the United States or Canada, where all actions
required by Section 5.04(a) have been taken and completed).
(k) The names and addresses of all the Lock-Box Banks, together with the lock-box numbers
related to, and the account numbers and owners (the Buyer or the Seller) of, the Lock-Box Accounts
of the Seller at such Lock-Box Banks, are specified in Schedule I hereto (or such other Lock-Box
Banks and/or such other Lock-Box Accounts as have been notified to the Buyer and the Agent in
accordance with Section 4.02(d)).
(l) Except as set forth on Schedule V hereto, the Seller has not changed its name since
November 17, 2000, and has no trade names, fictitious names, assumed names or “doing business as”
names.
(m) The Purchase Price payable on each Yield Payment Date pursuant to Section 2.02(b) for the
Seller’s Receivable Assets created after such date constitutes fair consideration and approximates
fair market value for such Receivable Assets, and the terms and conditions (including, without
limitation, such Purchase Price therefor, and the terms of the Canadian Subordinated Notes, if
applicable) of the Transfer of such Receivable Assets pursuant to Sections 2.01 and 2.02 reasonably
approximate an arm’s-length transaction between unaffiliated parties. No such Transfer has been
made for or on account of an antecedent debt owed by the Seller to the Buyer and no such Transfer,
at the time such Transfer is made, is or may be voidable or subject to avoidance under any section
of the Canadian Insolvency Statutes or any other applicable bankruptcy laws.
(n) The Seller has filed, or caused to be filed or be included in, all tax reports and returns
(federal, state, provincial, local and foreign), if any, required to be filed by it and paid, or
caused
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to be paid, all amounts of taxes, including interest and penalties, required to be paid by it,
except for such taxes (i) as are being contested in good faith by proper proceedings and (ii)
against which adequate reserves shall have been established in accordance with and to the extent
required by GAAP, but only so long as the proceedings referred to in clause (i) above would not
subject the Agent or any other Indemnified Party to any civil or criminal penalty or liability or
involve any material risk of the loss, sale or forfeiture of any property, rights or interests
covered hereunder or under the Canadian Receivables Purchase Agreement.
(o) The consolidated audited balance sheet of PolyOne and its subsidiaries as at December 31,
2006, and the related consolidated audited statements of income and retained earnings and of cash
flows of PolyOne and its Subsidiaries for the fiscal year then ended, fairly present the
consolidated financial condition of PolyOne and its Subsidiaries as at such date, and the
consolidated results of the operations and cash flows of PolyOne and its Subsidiaries for the
periods ended on such date, all in accordance with generally accepted accounting principles applied
on a consistent basis.
(p) The Seller is in compliance in all material respects with the presently applicable
provisions of the Income Tax Act (Canada) and any applicable pension legislation.
(q) The Seller has not sold, assigned, Transferred, pledged or hypothecated any interest in
any Receivable Assets with respect thereto to any Person other than as contemplated by this
Agreement or that has been released by the Agent from the Receivables Pool.
(r) The Seller has complied with the Credit and Collection Policy in all material respects and
since the date of this Agreement there has been no change in the Credit and Collection Policy
except as permitted hereunder.
(s) Since December 31, 2006, there has been no Material Adverse Change and there have been no
events or developments that, in the aggregate, have had a Material Adverse Effect.
(t) The Seller has not extended or modified the terms of any Seller Receivable or the Contract
under which any such Seller Receivable arose, except in accordance with the Credit and Collection
Policy and in accordance with Section 6.02(b) of the Canadian Receivables Purchase Agreement.
(u) Except under the Lock-Box Agreements, the Seller has not granted any Person dominion or
control of any Lock-Box Account, or the right to take dominion or control over any Lock-Box Account
at a future time or upon the occurrence of a future event.
(v) The Seller is Solvent, and in particular, but without limitation: (i) it is not and will
not be a bankrupt, an insolvent person, in insolvent circumstances or on the eve of insolvency or
unable to meet its engagements, as applicable, within the meaning of any of the Insolvency
Statutes; (ii) it will not become an insolvent person or be in insolvent circumstances within the
meaning of any of the Insolvency Statutes by entering into, or immediately after completion of the
transactions contemplated by, this Agreement; and (iii) it has entered into this Agreement and the
documents contemplated hereby in good faith for the purpose of selling and transferring all of its
right, title and interest in, to and under the Receivables Assets to the Buyer and receiving from
the Buyer the consideration therefor specified herein, and not for the purpose of defeating,
hindering, delaying, defrauding, oppressing, obstructing, injuring or impeding the rights and
claims of creditors or others against it or for any other purpose relating in any way to the claims
of creditors or others against it and not in contemplation of insolvency.
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(w) The Seller is not (i) a party to any contractual obligation the compliance with one or
more of which would have, in the aggregate, a Material Adverse Effect or the performance of which,
either unconditionally or upon the happening of an event, would result in the creation of a Lien
(other than a Lien created by, arising under or relating to this Agreement, the Canadian
Receivables Purchase Agreement, or any other Transaction Document) on the assets of the Seller or
(ii) subject to one or more charter or corporate restrictions that would, in the aggregate, have a
Material Adverse Effect. The Seller is not in default under or with respect to any contractual
obligation owed by it other than those defaults that, in the aggregate, would not have a Material
Adverse Effect.
(x) No Event of Termination or Potential Event of Termination has occurred and is continuing.
(y) The Seller is not (a) an “investment company” or an “affiliated person” of, or “promoter”
or “principal underwriter” for, an “investment company”, as such terms are defined in the
Investment Company Act of 1940, as amended or (b) a “holding company” or an “affiliate” or a
“subsidiary company” of a “holding company”, as each such term is defined and used in the Public
Utility Holding Company Act of 2005, enacted as part of the Energy Policy Act of 2005, Pub. L. No.
109-58 as codified at §§ 1261 et seq., and the regulations adopted thereunder, as amended .
(z) The proceeds of the sale of the Receivable Assets under this Agreement will be used for
general corporate purposes.
(aa) All policies of insurance of any kind or nature of the Seller, including policies of
life, fire, theft, product liability, public liability, property damage, other casualty, employee
fidelity, workers’ compensation and employee health and welfare insurance, are in full force and
effect and are of a nature and provide such coverage as is sufficient and as is customarily carried
by businesses of the size and character of such Person. The Seller has not been refused insurance
for any material coverage for which it had applied or had any policy of insurance terminated (other
than at its request).
(bb) There are no strikes, work stoppages, slowdowns or lockouts pending or, to the Seller’s
knowledge, threatened against or involving the Seller, other than those that, in the aggregate,
would not have a Material Adverse Effect. There are no unfair labor practices, grievances,
complaints or arbitrations pending, or, to the Seller’s knowledge, threatened, against or involving
the Seller, other than those that, in the aggregate, would not have a Material Adverse Effect.
(cc) The operations of the Seller have been and are in compliance with all environmental laws,
including obtaining and complying with all required environmental, health and safety permits, other
than non-compliances that, in the aggregate, would not have a Material Adverse Effect. Neither the
Seller nor any real property currently or, to the knowledge of the Seller, previously owned,
operated or leased by or for the Seller is subject to any pending or, to the knowledge of the
Seller, threatened, claim, order, agreement, notice of violation, notice of potential liability or
is the subject of any pending or threatened proceeding or governmental investigation under or
pursuant to any such laws, to the knowledge of the Seller, other than those that, in the aggregate,
would not have a Material Adverse Effect.
(dd) The Seller owns or licenses or otherwise has the right to use all licenses, permits,
patents, patent applications, trademarks, trademark applications, service marks, trade names,
copyrights, copyright applications, Internet domain names, franchises, authorizations and other
intellectual property rights that are necessary for the operations of its business, without
infringement upon or conflict with the rights of any other Person with respect thereto, including
all trade names set forth on Schedule V hereto. To the Seller’s knowledge, no license, permit,
patent, patent application, trademark, trademark
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application, service xxxx, trade name, copyright, copyright application, Internet domain name,
franchise, authorization, other intellectual property right, slogan or other advertising device,
product, process, method, substance, part or component, or other material now employed, or now
contemplated to be employed, by the Seller infringes upon or conflicts with any rights owned by any
other Person, and no claim or litigation regarding any of the foregoing is pending or, to the
knowledge of the Seller, threatened.
ARTICLE IV
GENERAL COVENANTS OF THE SELLER
SECTION 4.01. Affirmative Covenants of The Seller.
Until the later of (i) the Termination Date and (ii) the date upon which no Capital Investment
shall be existing and no Yield, fees or other amounts remain unpaid under this Agreement and the
Canadian Receivables Purchase Agreement, the Seller shall, unless the Buyer and the Agent (with the
consent of the Required Purchasers) shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with all applicable
laws, rules, regulations and orders with respect to it and all Receivable Assets and related
Contracts, Related Security and Collections with respect thereto.
(b) Payment of Taxes, Etc. Pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon
its property and (ii) all lawful claims that, if unpaid, might by law become a lien upon its
property; provided, however, that the Seller shall not be required to pay or
discharge any such tax, assessment, charge or claim that is being contested in good faith and by
appropriate proceedings and as to which appropriate reserves are being maintained.
(c) Maintenance of Insurance. Maintain insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as is usually carried
by companies engaged in similar businesses and owning similar properties in the same general areas
in which the Seller operates with such deductibles or self-insured retentions as are in accordance
with normal industry practice.
(d) Preservation of Corporate Existence, Etc. Preserve and maintain its corporate
existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in each jurisdiction where the
failure to preserve and maintain such qualification would materially adversely affect the interests
of the Buyer, the Owners or the Agent hereunder, under the Canadian Receivables Purchase Agreement
or in the Receivable Assets and Related Security, or the ability of the Seller or the Buyer’s
Servicer to perform their respective obligations hereunder, under the Canadian Receivables Purchase
Agreement or under the Contracts; provided, however, that the Seller may consummate
any amalgamation, merger or consolidation permitted under Section 4.02(i).
(e) Offices, Records and Books of Accounts.
(i) Keep its principal place of business and chief executive office and the offices
where it keeps its Records concerning the Receivable Assets at the address of the Seller
referred to in Section 3.01(j) or, upon at least thirty days’ prior written notice to the
Buyer and Agent, at any other location in a jurisdiction where all action required by
Section 5.04(a) shall have been taken, and
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(ii) maintain and implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Seller 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 Seller
Receivables (including, without limitation, records adequate to permit the daily
identification of each Seller Receivable, the Outstanding Balance of each Seller Receivable
and the dates which payments are due thereon and all Collections of and adjustments to each
existing Seller Receivable).
(f) Performance and Compliance with Contracts and Credit and Collection Policy. At
its expense, timely and fully (i) perform, or cause to be performed, and comply in all material
respects with, or cause to be complied with in all material respects, all provisions, covenants and
other promises required to be observed by it under the Contracts related to the Seller Receivables,
and timely and fully comply in all material respects with the Credit and Collection Policy in
regard to the Seller Receivables and the related Contracts and (ii) as beneficiary of any Related
Security, enforce such Related Security as reasonably requested by the Agent.
(g) Examination of Records; Audits.
(i) From time to time upon two (2) Business Days’ prior notice (except that during the
continuance of an Event of Termination, no such notice shall be required) and during regular
business hours as requested by the Buyer or the Agent and at the expense of the Seller,
permit the Buyer or the Agent, or their respective agents or representatives, (A) to examine
and make copies of and abstracts from all Records in the possession or under the control of
the Seller, its Affiliates or the agents of the Seller or its Affiliates, relating to Pool
Receivables and the Related Security, including, without limitation, the related Contracts,
and (B) to visit the offices and properties of the Seller, its Affiliates or the agents of
the Seller or its Affiliates, for the purpose of examining such materials described in
clause (A) above, and to discuss matters relating to Pool Receivables and the Related
Security or the Seller’s performance hereunder or under the Contracts with any of the
officers or employees of the Seller having knowledge of such matters.
(ii) At any time and from time to time, upon the Buyer’s or the Agent’s request and at
the expense of the Seller, the Seller shall cause independent public or chartered
accountants or others satisfactory to the Buyer and the Agent, to furnish to the Buyer and
the Agent, reports showing reconciliations, aging and test verifications of, and trial
balances for, the Seller Receivables and/or a written report of an audit conducted by such
accountants with respect to the Seller Receivables, Credit and Collection Policy, Lock-Box
Account activity and the Seller’s performance of its obligations under this Agreement and
the Canadian Receivables Purchase Agreement on a scope and in a form reasonably requested by
the Buyer or the Agent, as the case may be, for such audit; provided,
however, that unless an Event of Termination or Potential Event of Termination shall
be continuing, the Buyer or the Agent shall request no more than one (1) such report during
any calendar year.
(iii) The Seller shall conduct, or shall cause to be conducted, at its expense and upon
request of the Buyer or the Agent, and present to the Buyer and the Agent for approval, such
appraisals, investigations and reviews as the Buyer and the Agent shall request for the
purpose of determining the Net Receivables Pool Balance, all upon notice and at such times
during normal business hours and as often as may be reasonably requested. The Seller shall
furnish to the Buyer and the Agent any information that the Buyer and the Agent may
reasonably request regarding the determination and calculation of the Net Receivables Pool
Balance including correct and complete copies of any invoices, underlying agreements,
instruments or other documents and the identity of all Obligors in respect of Receivables
referred to therein.
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(h) Keeping of Records and Books of Account.
(i) Keep, or cause to be kept, proper books of record and account, which shall be
maintained or caused to be maintained by the Seller and shall be separate and apart from
those of any Affiliate of the Seller, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Seller in accordance with GAAP;
(ii) to the extent Records are in written form, segregate such Records in file cabinets
or storage containers and appropriately label such file cabinets or storage containers to
reflect that the Receivable Assets have been conveyed to the Buyer; and
(iii) to the extent such Records constitute computer programs and other non-written
Records, appropriately legend such Records to reflect that the Receivable Assets have been
conveyed to the Buyer.
(i) Deposits to Lock-Box Accounts. Not later than 60 days following the date hereof
(or such later date to which the Agent shall consent in writing), instruct, or cause the Buyer’s
Servicer to instruct, all Obligors to make payments in respect of all Seller Receivables to a
Lock-Box Account and, if at any time the Seller shall otherwise receive any Collections (including,
without limitation, any Collections deemed to have been received by the Seller pursuant to Section
2.03), segregate and hold in trust such Collections and, if received prior thereto but at the time
of or after the first Purchase under the Canadian Receivables Purchase Agreement, pay such
Collections to the Agent within two (2) Business Days following such receipt;
(j) Reporting Requirements. Until the later of (x) the Termination Date and (y) the
date upon which no Capital Investment shall be existing and no Yield, fees or other amounts remain
unpaid under this Agreement and the Canadian Receivables Purchase Agreement, the Seller will,
unless the Buyer and the Agent (with the consent of the Required Purchasers) shall otherwise
consent in writing, furnish to the Buyer and the Agent:
(i) Monthly Reports. Within 35 days after the end of each of the first 11
fiscal months in each Fiscal Year, financial information regarding PolyOne and its
Subsidiaries consisting of Consolidated unaudited balance sheets as of the close of such
month and the related statements of income and cash flow for such month and that portion of
the current Fiscal Year ending as of the close of such month, in each case certified by the
chief financial officer, treasurer or other Responsible Officer acceptable to the Agent of
PolyOne as fairly presenting the Consolidated financial position of PolyOne and its
Subsidiaries as at the dates indicated and the results of their operations and cash flow for
the periods indicated and recorded in accordance with GAAP (subject to the absence of
footnote disclosure and normal year-end audit adjustments) and in form reasonably acceptable
to the Agent.
(ii) Annual Reports. Within 95 days after the end of each Fiscal Year,
financial information regarding PolyOne and its Subsidiaries consisting of Consolidated
balance sheets of PolyOne and its Subsidiaries as of the end of such year and related
statements of income and cash flows of PolyOne and its Subsidiaries for such Fiscal Year,
all prepared in conformity with GAAP and certified, in the case of such Consolidated
financial statements, without qualification, including, without limitation, as to the scope
of the audit or as to PolyOne being a going concern by PolyOne’s independent public
accountants, together with the report of such accounting firm stating that (A) such
financial statements fairly present the Consolidated financial position of PolyOne and its
Subsidiaries as at the dates indicated and the results of their operations and cash flow for
the periods indicated in conformity with GAAP applied on a basis consistent with prior
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years (except for changes with which PolyOne’s independent public accountants shall
concur and that shall have been disclosed in the notes to the financial statements) and (B)
the examination by PolyOne’s independent public accountants in connection with such
Consolidated financial statements has been made in accordance with generally accepted
auditing standards, and accompanied by a certificate stating that in the course of the
regular audit of the business of PolyOne and its Subsidiaries such accounting firm has
obtained no knowledge that a Potential Event of Termination or Event of Termination has
occurred and is continuing, or, if in the opinion of such accounting firm, a Potential Event
of Termination or Event of Termination has occurred and is continuing, a statement as to the
nature thereof.
(iii) Notice of Event of Termination. As soon as possible and in any event
within two (2) Business Days after a Responsible Officer of the Seller first becomes aware
of each Event of Termination or Potential Event of Termination continuing on the date of
such statement, a statement of a Responsible Officer of the Seller setting forth details of
such Event of Termination or Potential Event of Termination and the action which the Seller
has taken and proposes to take with respect thereto.
(iv) Proceedings. Promptly after the commencement thereof, notice of all
actions and proceedings before any court or governmental agency or arbitrator or other
authority affecting the Seller of the type described in Section 3.01(e).
(v) Business Plan. Not later than the earlier of (i) 15 days after PolyOne has
received the approval of its board of directors therefor and (ii) 90 days after the
commencement of each Fiscal Year: (A) the annual business plan of PolyOne and its
Subsidiaries for such Fiscal Year approved by the Board of Directors of PolyOne, (B)
forecasts prepared by management of PolyOne for each fiscal month in such Fiscal Year and
(C) forecasts prepared by management of PolyOne for such Fiscal Year and each of the
succeeding Fiscal Years through the Termination Date, including, in each instance described
in clauses (B) and (C) above, (x) a projected year-end Consolidated balance sheet and income
statement and statement of cash flows, (y) a statement of all of the material assumptions on
which such forecasts are based and (z) containing the types of financial information
contained in the Amended and Restated Projections.
(vi) Public and Creditors’ Reports. Promptly after the sending or filing
thereof, copies of (A) all reports the Seller sends to its security holders generally or
that PolyOne sends to its security holders generally, (B) all reports and registration
statements that PolyOne or any of its Subsidiaries files with the Securities and Exchange
Commission or any national or foreign securities exchange or the National Association of
Securities Dealers, Inc., (C) all press releases and other statements concerning material
changes or developments in the business of PolyOne made available by PolyOne or any of its
U.S. or Canadian Subsidiaries (including the Seller) to the public or any other creditor.
(vii) Other. Upon demand, such other information, documents, records or reports
respecting the Seller Receivables, the Related Security, the Contracts or the condition or
operations, financial or otherwise, of the Seller as the Buyer or the Agent may from time to
time reasonably request.
(k) Subsidiaries. Maintain the status of the Seller and the Buyer as wholly owned
subsidiaries of PolyOne.
(l) Conduct of Business. Conduct its business consistent with past practice and use
its reasonable efforts, in the ordinary course and consistent with past practice, to preserve its
business and
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the goodwill and business of its customers, advertisers, suppliers and others having business
relations with the Seller, except where the failure to do so would not, in the aggregate, have a
Material Adverse Effect.
(m) Transaction Documents. At its expense, timely and fully perform and comply in all
material respects with all provisions, covenants and other promises required to be observed by it
under each of the Transaction Documents, maintain each of the Transaction Documents to which it is
a party in full force and effect, enforceable in accordance with its terms, take all such action to
such end as may be from time to time reasonably requested by the Agent, and make to any party to
each of the Transaction Documents such demands and requests for information and reports or for
action as the Seller is entitled to make thereunder and as may be from time to time reasonably
requested by the Agent.
SECTION 4.02. Negative Covenants of the Seller.
Until the later of (i) the Termination Date and (ii) the date on which no Capital Investment
shall be existing and no Yield, fees or other amounts remain unpaid under this Agreement or the
Canadian Receivables Purchase Agreement, the Seller shall not, without the prior written consent of
the Buyer and the Agent (with the consent of the Required Purchasers):
(a) Sales, Adverse Claims, Etc. Except as otherwise provided herein, 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 or with respect to, any Receivable Asset, or upon
or with respect to any related Contract or any deposit account to which any Collections of any
Seller Receivables are sent (including, without limitation, any Lock-Box Account), or assign any
right to receive income in respect thereof
(b) Extension or Amendment of Receivables. Except as otherwise permitted in the
Canadian Receivables Purchase Agreement, extend, amend or otherwise modify the terms of any Seller
Receivable, or amend, modify or waive any term or condition of any Contract related thereto.
(c) Change in Business or Credit and Collection Policy. Make any change in the
character of its business or in the Credit and Collection Policy that would, in either case, be
reasonably likely to impair the collectibility of the Seller Receivables.
(d) Change in Payment Instructions to Obligors. Add or terminate any bank as a
Lock-Box Bank, or any deposit account as a Lock-Box Account, from those listed in Schedule I, or
make any change in the instructions to Obligors regarding payments to be made to any Lock-Box
Account, unless the Agent shall have received at least 20 days’ prior written notice of such
addition, termination or change and shall have received, with respect to each new Lock-Box Account,
a Lock-Box Agreement executed by the Lock-Box Bank that maintains such Lock-Box Account and the
Seller.
(e) Deposits to Lock-Box Accounts. Deposit or otherwise credit, or cause or permit to
be so deposited or credited, to any Lock-Box Account cash or cash proceeds other than Collections
of Seller Receivables.
(f) Change of Name, Etc. Change its name, identity, form of legal structure,
jurisdiction of its organization or chief executive office, unless, prior to the effective date of
any such change, the Seller delivers to the Buyer and the Agent (i) PPSA financing statements or
other filings necessary to reflect such change and to continue the perfection of the Buyer’s
ownership interests in the Receivable Assets Transferred hereunder, and (ii) if the identity or
structure of the Seller has changed and such change adversely affects the rights of the Agent under
then existing Lock-Box Agreements with the
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Seller to take control of the Lock-Box Accounts pursuant to Section 6.03(a), new Lock-Box
Agreements executed by the Seller and the Lock-Box Banks to the extent necessary to reflect such
changes and to continue to enable the Agent to exercise such rights.
(g) Accounting of Purchases. Account for (including for accounting and tax purposes)
or otherwise treat the transactions contemplated by this Agreement or prepare any financial
statements which shall account for the transactions contemplated hereby, in each case, in any
manner other than the sale of the Receivable Assets by the Seller to the Buyer or in any other
respect account for or treat the transactions contemplated hereby (including but not limited to
accounting and tax purposes) in any manner other than as a sale of the Receivable Assets by the
Seller to the Buyer.
(h) Voluntary Petitions. Cause the Buyer to file a voluntary petition under the U.S.
Bankruptcy Code or take any similar steps under any other bankruptcy or insolvency laws so long as
the Buyer is not “insolvent” within the meaning of the U.S. Bankruptcy Code and unless, and only
unless, such filing has been authorized in accordance with the Buyer’s articles and by-laws.
(i) Mergers, Etc. Enter into a transaction of consolidation, merger or amalgamation
with any Person unless (i) before and after giving effect on a pro forma basis to such
consolidation, merger or amalgamation, no event shall have occurred and be continuing, or would
result from such consolidation, merger or amalgamation, that constitutes an Event of Termination or
Potential Event of Termination and (ii) such Person is not the Buyer and either (A) the Seller
shall survive such consolidation or merger or (B) such other corporation or entity formed by such
consolidation or into which the Seller shall be merged or amalgamated shall assume, in a writing on
terms reasonably satisfactory to the Buyer and the Agent, all of the Seller’s rights, obligations
and liabilities under the Transaction Documents and all the other instruments or documents
delivered or to be delivered thereunder.
(j) Maintenance of Separate Existence. Take any action, or omit to take any action,
if the effect is to cause the Buyer to fail to perform or observe in any material respect the
covenants contained in Sections 5.01(h) and (i) of the Canadian Receivables Purchase Agreement or
to otherwise cause the Buyer not to be considered as legal entity separate and distinct from the
Seller.
(k) Organization. Change its capital structure (including, without limitation,
redeeming, repurchasing or changing the terms of, its outstanding Stock) or otherwise amend its
charter, code of regulations or by-laws; or cause or permit the Buyer’s charter or by-laws to be
amended, supplemented or otherwise modified.
(l) Capital Stock. Cause or permit to be issued to, or cause or permit to be
Transferred to, any Person (other than the Seller or any wholly-owned direct or indirect Subsidiary
thereof) any shares of the Buyer’s Stock; or create or suffer to exist any Lien upon or with
respect to any of the Buyer’s Stock.
(m) Accounting. Change its (i) accounting treatment and reporting practices or tax
reporting treatment, except as required by GAAP or any Requirement of Law and disclosed to the
Purchasers and the Agent, or (ii) fiscal year.
(n) Asset Sales. Except as otherwise provided herein, sell, convey, transfer, lease
or otherwise dispose of, any of its assets or any interest therein (including the sale or factoring
at maturity or collection of any accounts), whether in single transactions, or a series of related
transactions, to any Person, or permit or suffer any other Person to acquire any interest in any of
its assets except:
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(i) the sale or other disposition of inventory in the ordinary course of business;
(ii) the sale or other disposition of assets or any interest therein having a Fair
Market Value that is less than (x) $250,000 individually and (y) $2,000,000 in the aggregate
for all such dispositions; and
(iii) dispositions of assets or interests therein not otherwise permitted above so long
as (w) no Potential Event of Termination or Event of Termination is continuing or would
result therefrom, (x) such sale or other transfer is for Fair Market Value, (y) if such
asset or interest has a Fair Market Value of $10,000,000 or more, or if when aggregated with
all such assets or interest previously sold at any time after the date hereof, conveyed,
transferred, leased or disposed, $25,000,000 or more, 50% of the proceeds of such sale or
transfer (or such series of related sales or transfers) are payable in cash to the Servicer
upon the consummation of each such sale or transfer, and (z) if the Fair Market Value of
such asset is in excess of $25,000,000, the Board of Directors of the Servicer has approved
such sale.
(o) Liens, Etc. Create or suffer to exist any Lien upon or with respect to any of its
respective properties or assets, whether now owned or hereafter acquired, or assign, or permit any
of its Subsidiaries (other than the Buyer) to assign, any right to receive income, except for the
following:
(i) Liens created by, pursuant to, arising under or relating to this Agreement, the
Canadian Receivables Purchase Agreement or any other Transaction Document;
(ii) Liens existing on the date hereof; provided, however, that such Liens shall not be
permitted with respect to any Receivable Assets unless such Liens arise under, were created
by or were incurred pursuant to any of this Agreement, the Canadian Receivables Purchase
Agreement or any other Transaction Document; and
(iii) statutory liens and other liens created in the ordinary course of business.
(p) Transactions with Affiliates. Except as otherwise contemplated by this Agreement,
the Canadian Receivables Purchase Agreement, or any Transaction Document: (i) make any Investment
in an Affiliate of the Seller that is not a Subsidiary of the Seller; (ii) transfer, sell, lease,
assign or otherwise dispose of any asset to any Affiliate of the Seller that is not a Subsidiary of
the Seller, provided, however, that the Seller may transfer, sell, lease, assign or otherwise
dispose of any asset (other than Receivables) to any Affiliate of the Seller on an arms length
basis; (iii) merge into or consolidate or amalgamate with or purchase or acquire assets from any
Affiliate of the Seller that is not a Subsidiary of the Seller; or (iv) prepay any Indebtedness to
any Affiliate of the Seller that is not a Subsidiary of the Seller.
(q) Speculative Transactions. Engage in any transaction involving hedging contracts
or other similar speculative transactions except for the sole purpose of hedging in the normal
course of business and consistent with industry practices.
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ARTICLE V
ADMINISTRATION AND COLLECTION
SECTION 5.01. Designation of Buyer’s Servicer.
The Seller Receivables shall be serviced, administered and collected by the Person (the
“Buyer’s Servicer”) designated from time to time to perform the duties of the Servicer
under the Canadian Receivables Purchase Agreement in accordance with Section 6.01 of the Canadian
Receivables Purchase Agreement, and shall be serviced, administered and collected by the Buyer’s
Servicer in the manner set forth in Section 6.02 of the Canadian Receivables Purchase Agreement
(including by subcontracting pursuant to Section 6.01 of the Canadian Receivables Purchase
Agreement, but subject to Section 6.02(f) thereof). The Seller acknowledges and agrees to the
restrictions set out in Section 6.02(f) of the Canadian Receivables Purchase Agreement, and further
acknowledges that, to the extent the Servicer subcontracts any of its obligations or
responsibilities as Servicer to the Seller, the Seller acts as an independent contractor of
the Servicer and is not the agent of the Agent, any Owner or any Purchaser. Until
the Agent designates a new Servicer in accordance with Section 6.01 of the Canadian Receivables
Purchase Agreement, PolyOne is hereby designated to act as, and PolyOne hereby agrees to perform
the duties and obligations of, the Buyer’s Servicer hereunder.
SECTION 5.02. Rights of the Buyer and the Agent.
(a) Each of the Buyer and the Agent acting together or alone may notify the Obligors of Seller
Receivables, at any time and at the Seller’s expense, of the Buyer’s interest in the Seller
Receivables and the ownership of Receivables by the Owners. The Seller hereby Transfers to the
Agent the exclusive ownership, dominion and control of any existing or future Lock-Box Accounts to
which the Obligors of Pool Receivables shall make payments, and shall take any further action that
the Agent may reasonably request to effect such Transfer.
(b) At any time:
(i) Each of the Buyer and the Agent acting together or alone may, at the expense of the
Seller, direct the Obligors of the Seller Receivables, or any of them, to make payment of
all amounts due or to become due to the Seller under Seller Receivables directly to the
Agent or its designee.
(ii) The Seller shall, at the Buyer’s or the Agent’s request and at the Seller’s
expense, give notice of such ownership to such Obligors and direct them to make such
payments directly to the Agent or its designee.
(iii) The Seller shall, at the Buyer’s or the Agent’s request and at the Seller’s
expense, (A) assemble all of the Records that evidence or relate to the Receivable Assets,
and shall make the same available to the Agent at a place reasonably selected by the Agent
or its designee, and (B) segregate all cash, checks and other instruments received by it
from time to time constituting collections of Seller Receivables in a manner reasonably
acceptable to the Agent and, promptly upon receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of Transfer, to the Agent or
its designee.
(iv) The Agent may take any and all reasonably commercial steps in the name of the
Seller and on behalf of the Seller, the Buyer and the Owners that are necessary or
desirable, in the
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determination of the Agent, to collect amounts due under the Seller Receivables,
including, without limitation, endorsing the Seller’s name on checks and other instruments
representing Collections of Seller Receivables and enforcing the Seller Receivables and the
Related Security and related contracts, and adjusting, settling or compromising the amount
or payment thereof, in the same manner and to the same extent as the Seller might have done,
and the Seller hereby appoints the Agent as its attorney, with full power of substitution
and delegation, for such purposes and with full authority to take all such steps, such
appointment been coupled with an interest and being irrevocable.
SECTION 5.03. Responsibilities of the Seller.
Anything herein to the contrary notwithstanding:
(a) The Seller shall perform its obligations under the Contracts related to the Seller
Receivables to the same extent as if the Receivable Assets had not been sold and the exercise by
the Buyer or the Agent of its rights hereunder or under the Canadian Receivables Purchase Agreement
shall not release the Buyer’s Servicer or the Seller from any of its duties or obligations with
respect to any Seller Receivables or under the related Contracts; and
(b) Neither the Buyer nor the Agent nor the Owners nor any other Indemnified Party shall have
any obligation or liability with respect to any Seller Receivables or related Contracts, nor shall
any of them be obligated to perform any of the obligations of the Seller thereunder.
SECTION 5.04. Further Actions Evidencing Purchases.
(a) The Seller agrees that from time to time, at its expense, it will promptly execute and
deliver all further instruments and documents, and take all further action, that may be necessary,
or that the Buyer or the Agent may reasonably request, to perfect, protect or more fully evidence
the Transfer of Receivable Assets by the Seller to the Buyer hereunder and the Transfer of
Purchased Property purchased by the Owners under the Canadian Receivables Purchase Agreement, or to
enable any of them or the Agent to exercise and enforce their respective rights and remedies
hereunder or under the Canadian Receivables Purchase Agreement. Without limiting the foregoing,
the Seller will, upon the request of the Buyer or the Agent, in order to perfect, protect or
evidence such Transfers: (i) execute, authenticate and/or file such financing or continuation
statements or amendments thereto, and such other instruments and documents, that may be necessary,
or that the Buyer or the Agent may reasonably request; (ii) xxxx conspicuously each invoice
evidencing each Seller Receivable and the related Contract with a legend, acceptable to the Buyer
or the Agent, as applicable, evidencing that such Seller Receivables have been Transferred to the
Buyer in accordance with this Agreement; and (iii) xxxx its master data processing records
evidencing the Seller Receivables and related Contracts with such legend.
(b) The Seller hereby authorizes each of the Buyer and the Agent acting together or alone
(upon prior written notice to the Seller) to file one or more financing or continuation statements
or other applicable filings and amendments thereto relating to all or any of the Receivable Assets
without the signature of the Seller where permitted by law. A photocopy or other reproduction of
this Agreement shall be sufficient as a financing statement or other applicable filing where
permitted by law.
(c) If PolyOne in its capacity as Buyer’s Servicer fails to perform any of its obligations
hereunder, the Buyer or the Agent may, upon prior written notice to PolyOne, itself perform, or
cause performance of, such obligation, and the reasonable costs and expenses of the Agent or the
Buyer incurred in connection therewith shall be payable by the Seller under Section 6.01 or 7.04,
as applicable.
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ARTICLE VI
INDEMNIFICATION
SECTION 6.01. Indemnities by the Seller.
Without limiting any other rights that any Indemnified Party may have hereunder or under
applicable law, and whether or not any of the transactions contemplated hereby are consummated, the
Seller hereby agrees to indemnify each Indemnified Party from and against, and hold each thereof
harmless from, any and all claims, losses, liabilities, costs and expenses of any kind whatsoever
(including, without limitation, reasonable legal fees and expenses on a full indemnity basis) (all
of the foregoing being collectively referred to as “Indemnified Amounts”) arising out of,
or resulting from, in whole or in part, the activities of the Seller in connection herewith or with
any other Transaction Document or the use of proceeds of Transfers of Receivable Assets
hereunder; excluding, however, Indemnified Amounts to the extent resulting solely
and directly from either (x) the gross negligence or willful misconduct on the part of such
Indemnified Party, or (y) the failure to collect amounts in respect of a Seller Receivable to the
extent such failure results from a discharge of the Obligor with respect thereto in a proceeding in
respect of such Obligor under applicable bankruptcy laws or otherwise results from the Obligor’s
financial inability to pay such amounts. Without limiting or being limited by the foregoing and
whether or not any of the transactions contemplated hereby are consummated, the Seller shall pay on
demand to each Indemnified Party any and all amounts necessary to indemnify such Indemnified Party
from and against any and all Indemnified Amounts which relate to or result from, or which would not
have occurred but for, one or more of the following:
(i) any Receivable becoming a Seller Receivable which is not at the date of its
Transfer hereunder an Eligible Receivable;
(ii) any representation or warranty or statement made or deemed made by the Seller (or
any of its officers) under or in connection with this Agreement or any other Transaction
Document or any Receivables Activity Report, Seller Report, Receivables Report or other
document delivered or to be delivered by the Seller in connection herewith or with any other
Transaction Document being incorrect in any material respect when made or deemed made or
delivered;
(iii) the failure by the Seller to comply with any applicable law, rule or regulation
with respect to any Seller Receivable or the related Contract or any Related Security with
respect thereto, including Privacy Laws; or the failure, as a result of any action or
omission of the Seller, of any Seller Receivable or the related Contract or any Related
Security with respect thereto to conform to any such applicable law, rule or regulation;
(iv) the failure by any action or inaction of the Seller to vest in the Buyer a first
priority perfected 100% ownership interest in each Seller Receivable and the Related
Security and Collections in respect thereof, free and clear of any Adverse Claim;
(v) the failure of the Seller to have filed, or any delay by the Seller in filing,
financing statements or other similar instruments or documents under the PPSA or comparable
legislation of any applicable jurisdiction or other applicable laws with respect to any
Seller Receivable and the Related Security and Collections in respect thereof, whether at
the time of the initial Transfer hereunder or at any subsequent time;
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(vi) any dispute, claim, offset or defense (other than discharge in bankruptcy of the
Obligor) of any Obligor with or against the Seller to the payment of any Seller Receivable
(including, without limitation, any defense based on the fact or allegation that such
Receivable or the related Contract is not 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 by the Seller of the goods or services related to such Receivable or the
Seller’s furnishing or failure to furnish such goods or services;
(vii) any failure of PolyOne, as Buyer’s Servicer, Servicer, or otherwise, to perform
its duties, obligations or covenants under and in accordance with this Agreement or any
other Transaction Document or to perform its duties or obligations under any Contract;
(viii) any product liability, personal injury, copyright infringement, theft of
services, property damage, or other breach of contract, antitrust, unfair trade practices or
tortious claim arising out of or in connection with any action or omission of the Seller and
the subject matter of any Contract or out of or in connection with any transaction
contemplated by this Agreement, any other Transaction Document or any other instrument or
document furnished pursuant hereto or such Contract;
(ix) the commingling by the Seller of Collections of Seller Receivables at any time
with other funds;
(x) any action or omission by the Seller, whether as Servicer or otherwise, reducing or
impairing the rights of the Buyer hereunder or of any Owner under the Canadian Receivables
Purchase Agreement, any other Transaction Document or any other instrument or document
furnished pursuant hereto or thereto or with respect to any Seller Receivable;
(xi) any cancellation or modification of a Seller Receivable, the related Contract or
any Related Security, whether by written agreement, verbal agreement, acquiescence or
otherwise;
(xii) (A) any investigation, litigation or proceeding related to or arising from this
Agreement, any other Transaction Document or any other instrument or document furnished
pursuant thereto, or any transaction contemplated by this Agreement or any Contract, or the
ownership of, or other interest in, any Seller Receivable, the related Contract or Related
Security, excluding, however, Indemnified Amounts to the extent resulting
from a claim of any Indemnified Party that does not arise out of or result from any action
or omission of the Seller or (B) the use by the Seller of proceeds of any Transfer of any
Receivable Asset hereunder;
(xiii) the existence of any Adverse Claim against or with respect to any Seller
Receivable, the related Contract, Related Security or Collections and resulting from any act
or omission of the Seller;
(xiv) any failure by the Seller to pay when due any taxes, including without limitation
sales, excise, GST, PST or other personal property taxes, payable by the Seller in
connection with any Seller Receivable or the related Contract or any Related Security with
respect thereto;
(xv) any claim brought by any Person other than an Indemnified Party arising from any
action or omission of by the Seller or any Affiliate of the Seller (other than the Buyer) in
servicing, administering or collecting any Seller Receivable;
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(xvi) any failure by any Lock-Box Bank holding a Lock-Box Account in the name of the
Seller to comply with the terms of the Lock-Box Agreement to which such Lock-Box Bank is a
party;
(xvii) any present or future Taxes, all interest and penalties thereon or with respect
thereto, and all out-of-pocket costs and expenses, including the reasonable fees and
expenses of counsel in defending against the same, which may arise by reason of the purchase
or ownership of the Seller Receivables or any Related Security with respect thereto, the
financing of such purchase or ownership by the Buyer or any other Indemnified Party or the
servicing of the Seller Receivables, including without limitation, any withholding taxes
that are imposed by Canada or any political subdivision thereof on any Indemnified Party or
that are withheld from any Collections or other payments made hereunder, and any Taxes that
are imposed on any Indemnified Party as a result of such Indemnified Party acquiring a
permanent establishment in Canada as a result of the transactions contemplated hereby or by
the Canadian Receivables Purchase Agreement; or
(xviii) to the extent not covered by the foregoing clauses, the occurrence and
continuance of any Event of Termination resulting from an act or omission of the Seller
other than an Event of Termination arising under Section 7.01(f) of the Canadian Receivables
Purchase Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc.
No amendment or waiver of any provision of this Agreement or consent to any departure by the
Seller or the Buyer therefrom shall be effective unless in a writing and signed by the Agent
pursuant to the terms of the Canadian Receivables Purchase Agreement and, in the case of any such
waiver or consent, the party against which the waiver or consent is to be enforced or, in the case
of any such amendment, the Buyer and the Seller, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No failure on the part
of the Buyer, any Owner or the Agent to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other right.
SECTION 7.02. Notices, Etc.
All notices and other communications hereunder shall, unless otherwise stated herein, be in
writing (including telegraphic, telecopy or telex communication) and mailed, telegraphed,
telecopied, telexed or delivered, to each party hereto, at its address set forth under its name on
the signature pages hereof or at such other address as shall be designated by such party in a
written notice to the other parties hereto. All such notices and communications shall, when
mailed, telegraphed, telecopied or telexed, be effective when received by the Buyer or the Agent,
as applicable.
SECTION 7.03. Binding Effect; Assignability.
This Agreement shall become effective when it shall have been executed by the Seller, by
PolyOne as the Buyer’s Servicer and by the Buyer and acknowledged by the Agent, and thereafter
shall be binding upon and inure to the benefit of the Seller, the Buyer, the Agent, and each other
Indemnified
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Party and their respective successors and assigns, except that the Seller shall not have the
right to assign its rights or obligations hereunder or any interest herein without the prior
written consent of the Buyer and the Agent and each Purchaser, and the Buyer shall not have the
right to assign its rights or obligations hereunder or any interest herein except pursuant to the
Second Amended and Restated Consent and Agreement or the Canadian Receivables Purchase Agreement.
This Agreement shall create and constitute the continuing obligation of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the Termination Date;
provided, however, that rights and remedies with respect to the provisions of
Article VI and Sections 2.03, 7.04, 7.05, 7.06 and 7.14 shall be continuing and shall survive any
termination of this Agreement.
SECTION 7.04. Costs, Expenses, Taxes and Currency.
(a) In addition to the rights of indemnification granted under this Agreement, the Seller
agrees to pay on demand all costs and expenses in connection with the preparation, execution,
delivery and administration (including periodic auditing of Receivables) of, and searches and
filings in respect of, this Agreement, the other Transaction Documents and the other documents and
agreements to be delivered hereunder or thereunder, and costs and expenses, if any, incurred by the
Buyer under Section 11.04 of the Canadian Receivables Purchase Agreement, including, without
limitation, in each case, the reasonable fees and disbursements (on a full indemnity basis) of
counsel for the Agent and the Purchasers with respect thereto and advising the Agent as to its
rights and remedies hereunder. The Seller further agrees to pay on demand all costs and expenses,
if any (including, without limitation, reasonable counsel fees and disbursements on a full
indemnity basis) of each Owner, the Agent or any Affiliate thereof, in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the
other Transaction Documents and the other instruments and documents to be delivered in connection
herewith or therewith.
(b) In addition, the Seller agrees to pay any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies that arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with respect to, this
Agreement, any other Transaction Document, or any other document or instrument delivered in
connection herewith or therewith (but excluding income taxes, such non-excluded taxes being
hereinafter referred to as “Other Taxes”). The Seller shall indemnify each Indemnified
Party for and hold it harmless against the full amount of Other Taxes (including, without
limitation, any taxes imposed by any jurisdiction on amounts payable under this Section 7.04(b))
imposed on or paid by such Indemnified Party and any liability (including penalties, additions to
tax, interest and expenses) arising therefrom or with respect thereto whether or not such Other
Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from
the date such Indemnified Party makes written demand therefor (with a copy to the Agent).
(c) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum
owing hereunder in one currency into another currency, each party hereto agrees, to the fullest
extent that it may effectively do so, that the rate of exchange used shall be that provided for in
the definition of Dollar Equivalent.
(d) The obligations of the Seller in respect of any sum due to any party hereto (or their
respective assigns) or any holder of the obligations owing hereunder (the “Applicable Creditor”)
shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than the currency
in which such sum is stated to be due hereunder (the “Agreement Currency”), be discharged only to
the extent that, on the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with
normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the
Judgment Currency; if
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the amount of the Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, the Seller agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss.
SECTION 7.05. Non-Business Days.
In any case where any payment or action is due under this Agreement on a day which is not a
Business Day, such payment or action may be made on the next succeeding Business Day, but such
extension of time shall in such case be included in the computation of payment of interest or fees,
as the case may be.
SECTION 7.06. Confidentiality.
(a) Each of the Seller and the Buyer hereby agree that each of the Seller and Buyer (and each
of their respective, and their respective Affiliates’ employees, officers, directors, agents and
advisors) is, and has been from the commencement of discussions with respect to the receivables
program established hereunder, permitted to disclose to any and all Persons, without limitation of
any kind, the structure and tax aspects (as such terms are used in Code Sections 6011, 6111 and
6112 and the regulations promulgated thereunder) of the receivables program established hereunder,
and all materials of any kind (including opinions or other tax analyses) that are or have been
provided to each of the Seller and Buyer related to such structure and tax aspects. In this regard,
each of the Seller and Buyer acknowledges and agrees that its disclosure of the structure or tax
aspects of the receivables program established hereunder is not limited in any way by an express or
implied understanding or agreement, oral or written (whether or not such understanding or agreement
is legally binding). Furthermore, each of the Seller and Buyer acknowledges and agrees that it
does not know or have reason to know that its use or disclosure of information relating to the
structure or tax aspects of the receivables program established hereunder is limited in any other
manner (such as where the receivables program established hereunder is claimed to be proprietary or
exclusive) for the benefit of any other Person. To the extent that disclosure of the structure or
tax aspects of the receivables program established hereunder by each of the Seller or Buyer is
limited by any existing agreement between the Seller or Buyer, such limitation is agreed to be void
ab initio and such agreement is hereby amended to permit disclosure of the structure and tax
aspects of the receivables program established hereunder as provided in this clause (a).
(b) Subject to clause (a) of this Section 7.06, except to the extent otherwise required by
applicable law, rule, regulation or judicial process, each of the parties hereto agrees to maintain
the confidentiality of this Agreement, the Canadian Receivables Purchase Agreement, the Second
Amended and Restated Consent and Agreement, the Second Amended and Restated Fee Letter (and all
drafts thereof) and all non-public information delivered in connection herewith in communications
with third parties and otherwise; provided, however, that (i) in the case of the
Canadian Receivables Purchase Agreement, such information may be disclosed to third parties to the
extent such disclosure is (A) limited in scope to the provisions of Article V, VII and X of the
Canadian Receivables Purchase Agreement and, to the extent defined terms are used in Article V, VII
and X, such terms defined in Article I of the Canadian Receivables Purchase Agreement and (B) made
pursuant to a written agreement of confidentiality in form and substance reasonably satisfactory to
the Agent and (ii) in the case of this Agreement, the Second Amended and Restated Consent and
Agreement, the Second Amended and Restated Fee Letter (and all drafts thereof) and all non-public
information delivered in connection herewith in communications with third parties and otherwise,
such information may be disclosed to third parties to the extent such disclosure is made pursuant
to a written agreement of confidentiality in form and substance reasonably satisfactory to the
Agent; provided, further, that this Agreement, the Canadian Receivables Purchase
Agreement, the Second Amended and Restated Consent and Agreement and the
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Second Amended and Restated Fee Letter (and all drafts thereof) may be disclosed (A) to each
party’s, the Agent’s and each Owner’s legal counsel, accountants and auditors on a confidential
basis, (B) to any rating agency, (C) to any regulatory authority having jurisdiction over the
Seller, the Buyer, the Agent or an Owner and (D) pursuant to court order or subpoena;
provided, further, that each party shall have no obligation of confidentiality in
respect of any information which may be generally available to the public or becomes available to
the public through no fault of such party.
SECTION 7.07. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
PROVINCE OF ONTARIO AND THE LAWS OF CANADA APPLICABLE THEREIN.
SECTION 7.08. Consent to Jurisdiction.
(a) Each of the Seller and the Buyer hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal
court of the United States of America sitting in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this Agreement or any of the
other Transaction Documents to which it is a party, or for recognition or enforcement of any
judgment, and each of the Seller and the Buyer hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and determined in any such New
York State court. Each of the Seller and the Buyer agrees that a final, non-appealable, judgment
in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or proceeding relating to
this Agreement or any of the other Transaction Documents in the courts of any other jurisdiction.
(b) Each of the Seller and the Buyer irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or
any of the other Transaction Documents to which it is a party in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
SECTION 7.09. Execution in Counterparts.
This Agreement may be executed in any number of 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. Delivery by telecopier of an executed counterpart of a signature page to this
Agreement shall be effective as delivery of an original executed counterpart of this Agreement.
SECTION 7.10. [Deleted]
SECTION 7.11. Entire Agreement.
This Agreement and the other Transaction Documents to which the parties hereto are party
contain a final and complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire agreement and understanding
among the parties
- 27 -
hereto with respect to the subject matter hereof and supersede all prior agreements and
understandings, written or oral, relating to the subject matter hereof.
SECTION 7.12. Severability of Provisions.
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 7.13. Waiver of Jury Trial.
Each of the parties hereto irrevocably waives to the fullest extent permitted by law all right
to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or any of the other Transaction Documents
or the actions of the Agent or any Indemnified Party in the negotiation, administration,
performance or enforcement hereof or thereof.
SECTION 7.14. No Proceedings.
(a) The Seller hereby agrees that it will not institute against the Buyer or the Purchasers
any proceeding of the type referred to in Section 7.01(f) of the Canadian Receivables Purchase
Agreement so long as there shall not have elapsed one year plus one day since the later of the (i)
the Termination Date and (ii) the date upon which no Capital Investment shall be existing and no
Yield, fees or other amounts remain unpaid under this Agreement and the Canadian Receivables
Purchase Agreement.
(b) The Seller and the Buyer hereby agrees that, in connection with this Agreement and the
other Transaction Documents and the transactions contemplated hereby and thereby, none of the
Indemnified Parties shall be liable to the Seller or the Buyer (except to the extent of such
Indemnified Party’s own gross negligence or willful misconduct) or have any liability for any
special, indirect, consequential or punitive damages.
[Remainder of page intentionally left blank.]
- 28 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective
officers thereunto duly authorized, as of the date above written.
| POLYONE CORPORATION, as Buyer’s Servicer |
||||
| By: | ||||
| Name: | Xxxx Xxxxxxxxx | |||
| Title: | Treasurer | |||
| 00000 Xxxxxx Xxxx | ||||
| Xxxx Xxxx, Xxxx 00000 Attention:Treasurer Telephone No.: 000-000-0000 Telecopier No.: 000-000-0000 |
||||
| POLYONE CANADA INC. as Seller |
||||
| By: | ||||
| Name: | Xxxx Xxxxxxxxx | |||
| Title: | Vice President and Treasurer | |||
| 000 Xxxxxxxx Xxxxx Xxxx | ||||
| X.X. Xxx 0000 Xxxxxxx Xxxxx, Xxxxxxx Xxxxxx X0X 0X0 Attention: Treasurer Telephone No.: 000-000-0000 Telecopier No.: 000-000-0000 |
||||
| POLYONE FUNDING CANADA CORPORATION, as Buyer |
||||
| By: | ||||
| Name: | Xxxx Xxxxxxxxx | |||
| Title: | President | |||
| 000 Xxxxxxxx Xxxxx Xxxx | ||||
| X.X. Xxx 0000 Xxxxxxx Xxxxx, Xxxxxxx Xxxxxx X0X 0X0 Attention:President Telephone No.: 000-000-0000 Telecopier No.: 000-000-0000 |
||||
| Acknowledged as of the date first above written: CITICORP USA, INC., as Agent |
||||
| By: | ||||
| Name: | Xxxxx Xxxxx | |||
| Title: | Vice President/Director | |||
| 000 Xxxxxxxxx Xxxxxx | ||||
| 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxx Xxxxx Telephone No.: (000) 000-0000 Telecopier No.: (000) 000-0000 |
||||
EXHIBIT A
FORM OF
RECEIVABLES ACTIVITY REPORT
RECEIVABLES ACTIVITY REPORT
Date: , 200
Reference is made to the Canadian Receivables Sale Agreement dated as of July ,
2007 (the “Agreement”) among POLYONE CANADA INC., a Canadian corporation
(“PolyOne”), as seller (“Seller”), POLYONE FUNDING CANADA CORPORATION, a Canadian
corporation, as buyer (the “Buyer”), and POLYONE CORPORATION, an Ohio corporation, as the
Buyer’s servicer. Terms defined in the Agreement are used herein as therein defined.
The undersigned Seller hereby certifies to the Agent that, as of the close of business on the
date set forth above: (i) [s]he is the [title] of the Seller; (ii) the information contained in
Exhibit A to this Receivables Activity Report is true and correct in all material respects; and
(iii) the information contained in Exhibit A to this Receivables Activity Report does not contain
any untrue statement of a material fact and does not omit to state, as of the date hereof and as of
the date so furnished, a material fact necessary in order to make the statements contained herein,
in light of the circumstances under which they are made, not misleading.
As of the date of this Receivables Activity Report, no Potential Event of Termination or Event
of Termination exists or has occurred and is continuing.
| POLYONE CANADA INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
A-1
EXHIBIT A to
RECEIVABLES ACTIVITY REPORT
RECEIVABLES ACTIVITY REPORT
Date: , 200
| Receivables Activity | ||||||||||||
| 1 | Total of newly created Pool Receivables during
the Month |
$ | ||||||||||
| 2 | Purchase Price (product of line 1 and the discount
percentage of %) |
$ | ||||||||||
| Payments | ||||||||||||
| 3 | Total dollar amount (including, without
limitation, Collections) transferred to the Seller
under the
Agreement during the Month plus any credit from
the preceding month |
$ | ||||||||||
Subtract line 3 from line 2. If the result is positive, such amount is the Seller’s purchase price for the
Month. If the result is negative, such amount shall be a
credit to be applied in the next succeeding month. |
||||||||||||
| 4 | Seller’s purchase price |
$ | ||||||||||
or |
||||||||||||
| 5 | Credit to be applied to next month |
$ | ||||||||||
| Reconciliation | ||||||||||||
If the result of the above calculations was positive, then such Seller’s purchase
price was paid as follows: |
||||||||||||
| 6 | Cash transferred to Seller |
$ | ||||||||||
| 7 | Adjustment to Seller’s Subordinated Note |
$ | ||||||||||
| 8 | Capital contributed by Seller (PolyOne Canada only) |
$ | ||||||||||
A-2
EXHIBIT B
FORM OF
CANADIAN SUBORDINATED NOTE
THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS
CANADIAN SUBORDINATED NOTE
THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS
SUBORDINATED TO THE PRIOR PAYMENT IN FULL IN CASH OF ALL OF
THE SENIOR DEBT (AS DEFINED BELOW) PURSUANT TO, AND TO THE EXTENT PROVIDED HEREIN.
CANADIAN SUBORDINATED [CANADIAN/US DOLLAR] NOTE
THE SENIOR DEBT (AS DEFINED BELOW) PURSUANT TO, AND TO THE EXTENT PROVIDED HEREIN.
CANADIAN SUBORDINATED [CANADIAN/US DOLLAR] NOTE
[Date]
FOR VALUE RECEIVED, the undersigned, POLYONE FUNDING CANADA CORPORATION, a Canadian
corporation (the “Buyer”), hereby unconditionally promises to pay to the order of POLYONE CANADA
INC., a Canadian corporation (the “Seller”), in lawful money of [Canada/the United States of
America] in immediately available funds the principal amount outstanding on July 26, 2010 (the
“Maturity Date”), in respect of indebtedness incurred by the Buyer in [Canadian/US Dollars]
representing any portion of the Initial Purchase Price or any Purchase Price of the Receivable
Assets purchased from time to time by the Buyer from the Seller pursuant to the Canadian
Receivables Sale Agreement dated as of July , 2007, as it may be amended, supplemented
and otherwise modified from time to time (the “Canadian Receivables Sale Agreement”), among the
Seller, the Buyer and POLYONE CORPORATION, an Ohio corporation, as Buyer’s servicer, and
acknowledged by Citicorp USA, Inc. (“Citicorp”), as administrative agent (in such capacity, the
“Agent”). Subject to the terms of subordination herein contained the Buyer may, at its option,
prepay this Note in whole or in part at any time and from time to time from and after the date
hereof; provided, however, that in no event shall the holder hereof have any right to demand any
payment of principal hereunder prior to the Maturity Date.
Capitalized terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Canadian Receivables Sale Agreement or the Canadian Receivables
Purchase Agreement (as defined below), as the case may be. The term “Note” when used herein refers
to this Canadian Subordinated [Canadian/US Dollar] Note.
The Buyer further agrees to pay interest from the date hereof in like money on the unpaid
principal amount hereof from time to time outstanding, at a rate of 6% per annum. Interest shall
be payable in arrears on each Yield Payment Date commencing on the first such date to occur after
the date hereof and upon final payment of the unpaid principal amount hereof.
This Note is subordinate and junior in right and time of payment to all “Senior Debt” of the
Buyer, which consists of all Indebtedness (as defined below) of the Buyer and all renewals,
extensions, refinancings and refundings thereof other than any
such Indebtedness that expressly provides that it is not senior or superior in right of
payment hereto. The term “Indebtedness” means (i) all obligations of the Buyer from
B-1
time to time under the Canadian Receivables Purchase Agreement dated as of July , 2007,
as it may be amended, supplemented and otherwise modified from time to time (the “Canadian
Receivables Purchase Agreement”), among the Buyer, PolyOne Corporation, as Servicer, the Purchasers
from time to time party thereto and the Agent, whether for Collections received or deemed to have
been received by the Buyer, fees, costs, expenses, taxes, indemnification or otherwise, and (ii)
any indebtedness, whether or not contingent, in respect of borrowed money or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement agreements in
respect thereto) and guarantees of any of the foregoing, whether or not any such indebtedness would
appear as a liability on a balance sheet of the Buyer prepared on a consolidated basis in
accordance with generally accepted accounting principles.
All obligations (the “Senior Obligations”) of the Buyer to pay principal, interest (including,
without limitation, interest, as provided in the instruments and agreements evidencing Senior Debt,
payable after any Insolvency Event (as defined below) whether or not such interest is permitted to
accrue or is allowable), fees, costs, expenses, taxes, indemnifications, and other amounts in
respect of Senior Debt now or hereafter existing must be irrevocably paid in full in cash before
any amount payable under this Note (the “Junior Debt”) shall be payable. Notwithstanding the
foregoing, so long as no Event of Termination or Potential Event of Termination shall have occurred
and be continuing under the Canadian Receivables Purchase Agreement, the Buyer may pay accrued and
unpaid interest on Junior Debt on each Yield Payment Date and may voluntarily prepay the principal
of Junior Debt at any time and from time to time; provided, however, that Junior Debt shall be
payable only to the extent that the Buyer, after paying all its accounts payable and other expenses
and obligations in respect of the Senior Obligations, has the funds to make such payments. No
holder of Junior Debt shall take or receive from the Buyer for or on account of any Junior Debt any
payment or distribution, by setoff or otherwise, in contravention of the subordination provisions
herein contained. In the event (each, an “Insolvency Event”) of any dissolution, winding up,
liquidation, arrangement, reorganization, adjustment, protection, relief or composition of the
Buyer or its debt, whether voluntary or involuntary, in any bankruptcy, insolvency or similar case
or proceeding under any federal or provincial bankruptcy, insolvency, arrangement or similar law or
upon an assignment for the benefit of creditors or any other marshalling of the assets and
liabilities of the Buyer or otherwise, the holders of Senior Obligations shall be entitled to
receive irrevocable payment in full in cash of the Senior Obligations before any holder of any
Junior Debt is entitled to receive any payment of all or any of the Junior Debt, and any payment or
distribution of any kind (whether in cash, property or securities) that otherwise would be payable
with respect to any Junior Debt in any such case, proceeding, assignment, marshalling or otherwise
(including any payment that may be payable by reason of other Indebtedness of the Buyer being
subordinated to payment of the Junior Debt) shall be paid or delivered directly to a representative
(the “Representative”) selected by holders of at least 50% in principal amount of Senior Debt for
the account of all holders of Senior Debt for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for, the payment or prepayment of the
Senior Obligations until the Senior Obligations shall have been irrevocably paid in full in cash.
All payments and distributions upon or with respect to the Junior Debt which are received by any
holder of Junior Debt contrary to the subordination provisions
B-2
herein contained shall be received in trust for the benefit of the holders of Senior Debt,
shall be segregated from other funds and property held by such holder of Junior Debt and shall be
forthwith paid over to the Representative for the account of the holders of Senior Debt in the same
form as so received (with any necessary endorsement) to be applied (in the case of cash) to, or
held as collateral (in the case of non-cash property or securities) for, the payment or prepayment
of the Senior Obligations. The Buyer agrees, and the holder hereof by accepting this Note agrees,
to the subordination provisions herein contained.
Notwithstanding any provision herein to the contrary, the holder hereof by accepting this Note
agrees that it shall be entitled to enforce the obligations of the Buyer hereunder (subject to the
other provisions contained in this Note) only against the interest of the Buyer from time to time
now existing or hereafter arising under the Canadian Receivables Purchase Agreement or any amounts
payable thereunder and that the obligations of the Buyer hereunder shall not constitute a claim
against the Buyer or its other assets in the event that such interest of the Buyer is insufficient
to pay such obligations.
Upon prior written notice to the Buyer, the holder hereof may sell, pledge, assign, or
otherwise transfer this Note, except that no such transfer shall be made (other than a transfer to
any Affiliate (other than the Buyer or any of its subsidiaries) of the Seller) without the prior
written consent of the Agent.
This Note shall be governed by, and construed in accordance with, the laws of the Province of
Ontario.
The holder of this Note, by its acceptance hereof, hereby covenants and agrees that (a) so
long as the Senior Debt shall not have been irrevocably paid in full in cash, such holder will not
xxx for or demand from the Buyer payment of all or any of the Junior Debt and (b) such holder will
not at any time institute against the Buyer any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any federal or provincial bankruptcy,
insolvency, arrangement or similar law.
IN WITNESS WHEREOF, the Buyer has caused this Note to be duly executed as of the day and year
first above written.
| POLYONE FUNDING CANADA CORPORATION |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
X-0
XXXXXXX X
XXXX XX
XXXXXX ASSIGNMENT
XXXXXX ASSIGNMENT
See Attached
C-1
CRSA — EX C
ASSIGNMENT OF RECEIVABLE ASSETS
POLYONE FUNDING CANADA CORPORATION
POLYONE FUNDING CANADA CORPORATION
Reference is made to the Canadian Receivables Sale Agreement dated as of July ___, 2007 by
PolyOne Canada Inc., as seller (the “Seller”), PolyOne Funding Canada Corporation, as buyer (the
“Buyer”) and PolyOne Corporation, as Buyer’s servicer (the “Buyer’s Servicer”) (the “Canadian
Receivables Sale Agreement”).
All capitalized terms used herein, but not otherwise defined herein, shall have the meaning
ascribed to them in the Canadian Receivables Sale Agreement.
FOR VALUE RECEIVED, the Seller does hereby sell, transfer and assign unto the Buyer, all of
the Seller’s right, title and interest to and in all of the present and future Receivable Assets.
This assignment is made without recourse but pursuant to and upon all of the representations,
warranties, covenants and agreements on the part of the undersigned contained in the Canadian
Receivables Sale Agreement and is subject to, governed by, and construed in accordance with, the
Canadian Receivables Sale Agreement and the laws of Ontario. In the event of any inconsistency or
conflict between the Canadian Receivables Sale Agreement and this assignment, the provisions of the
Canadian Receivables Sale Agreement shall govern.
IN WITNESS WHEREOF this assignment has been executed by the Seller and is dated as of the day of July, 2007.
| POLYONE CANADA INC. |
||||
| By: | ||||
| Name: | Xxxx Xxxxxxxxx | |||
| Title Treasurer | ||||
SCHEDULE I
LOCK-BOX BANKS AND
LOCK-BOX ACCOUNTS
LOCK-BOX ACCOUNTS
| Lock-Box Bank | Lock-Box No. | Lock-Box Account No. | Owner | |||||
Bank of Montreal
|
T57659C | 0000000 | PolyOne Canada Inc. | |||||
Bank of Montreal
|
T57659U | 0000000 | PolyOne Canada Inc. | |||||
SCHEDULE II
CREDIT AND COLLECTION POLICY
Purpose and Scope
The Company conducts its operations through dedicated business units and organizational teams.
The purpose of this policy is to establish the essential Company-wide requirements relating to the
management of “credit” risk. The scope of this policy covers all receivables for each business
unit.
Overall Policy
Unless otherwise approved, the Company will only extend credit as part of conducting normal
business operations. Credit will be provided based on an assessment of an individual customer’s
(or other third party’s) ability to pay within terms common (competitive) to the business market
segment. Each business will manage its credit risk by (a) assessing the risk exposure of its
credit portfolio and (b) assessing activities to realize prompt payment collection.
Responsibility and Authority
The Corporate Chief Financial Officer (CFO) is responsible for establishing policy guidelines
consistent with PolyOne Corporation’s target capital structure. The guidelines will cover setting
credit limits and exceptions thereto, for term extensions and credit worthiness, and determining
the appropriate risk exposure of a business’ overall credit portfolio.
The CFO is responsible for this policy and revisions, which may be required from time to time.
The CFO will approve any exceptions to this policy.
It is the responsibility of the business General Manager, delegating through the business
management team (specifically including the business controller and credit manager), to develop and
implement all business unit policies, guidelines and/or procedures necessary to effectively manage
the business unit’s day-to-day credit risk and to adhere to this Company-wide policy. The business
General Manager is delegated the authority to have credit authorized consistent with this policy.
Actions Requiring the Approval of the CFO
| • | Business programs, which in their aggregate extend overall credit levels beyond established risk exposure guidelines | ||
| • | Expansion by more than 10% of previously approved programs | ||
| • | Employee credit other than for relocation and/or nominal amounts not to exceed $500 outstanding per individual (should be discouraged) | ||
| • | Any credit to Company Officers |
Guidelines
The successful implementation of this policy is partially dependent on establishing specific
control and reporting activities that each business unit’s operations are expected to incorporate.
Below are specific activities which each business unit will perform in supporting the (a)
assessment of its credit portfolio risk, (b) prompt collection of outstanding credit and (c)
reporting to Corporate Services (CFO, Treasurer and Corporate Controller).
Assessing portfolio credit risk
| • | Assess the credit risk on an individual account basis | ||
| • | New shipments will only be made within established guidelines | ||
| • | Continuous and periodical assessments of the overall risk profile of the credit portfolio considering industry conditions credit terms/programs, specific account condition with appropriate actions implemented. |
Prompt Payment
| • | Delinquent accounts will be contacted in a timely manner and communications of such delinquency will be made to business management and to the sales organization | ||
| • | Customer accounts will be kept clean, i.e., credit and debit adjustments issued timely, cash applied to invoices, etc. |
Reporting to Corporate Services
| • | In the monthly financial reporting package include key performance measures relating to receivable DSO, aging, dating, etc. The business unit DSO will be shown for domestic, foreign and total and calculated on a Company-wide basis | ||
| • | Quarterly provide a brief communication on the business unit’s credit risk portfolio profile and highlight substantive changes | ||
| • | Annually review any programs which extend credit beyond normal product sale terms |
In addition to the above activities it is important that each business unit establish an
environment consistent with managing its credit risk. Important areas to consider and which may
impact such an environment include the following:
| • | Scope of account responsibility given to sales personnel | ||
| • | Sales personnel basis of incentive compensation | ||
| • | Customer incentives for prompt payment | ||
| • | Level of communications between sales and credit personnel | ||
| • | Use of performance measures and establishing goals |
Also, it is the responsibility of each business unit to quickly communicate to other PolyOne
business units, as appropriate, problem accounts or potential bad credit risks.
SCHEDULE III
FORMS OF INVOICES
SCHEDULE IV
JURISDICTION OF INCORPORATION,
ORGANIZATION IDENTIFICATION NUMBER AND
LOCATION OF SELLER’S PRINCIPAL PLACE OF BUSINESS,
CHIEF EXECUTIVE OFFICE AND OFFICE WHERE RECORDS ARE KEPT
ORGANIZATION IDENTIFICATION NUMBER AND
LOCATION OF SELLER’S PRINCIPAL PLACE OF BUSINESS,
CHIEF EXECUTIVE OFFICE AND OFFICE WHERE RECORDS ARE KEPT
PolyOne Canada Inc.
Jurisdiction of Incorporation
Ontario Canada.
Organization Identification Number
356930-6.
Principal Place of Business, Chief Executive Office and Office Where Records Are Kept
PolyOne Canada Inc.
000 Xxxxxxxx Xxxxx Xxxx
X.X. Xxx 0000
Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxx X0X 0X0
000 Xxxxxxxx Xxxxx Xxxx
X.X. Xxx 0000
Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxx X0X 0X0
SCHEDULE V
TRADEMARK OR OTHER NAMES FOR SELLER
None.
