EXHIBIT 10.2
AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
dated as of December 30, 2005
between
THE TIMKEN CORPORATION,
as Originator
and
TIMKEN RECEIVABLES CORPORATION,
as Buyer
TABLE OF CONTENTS
Page
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ARTICLE I AMOUNTS AND TERMS......................................... 3
Section 1.1 Purchase of Receivables................................... 3
Section 1.2 Payment for the Purchase.................................. 4
Section 1.3 Purchase Price Credit Adjustments......................... 7
Section 1.4 Payments and Computations, Etc............................ 7
Section 1.5 Transfer of Records....................................... 8
Section 1.6 Characterization; Assignment to Agent..................... 8
ARTICLE II REPRESENTATIONS AND WARRANTIES............................ 9
Section 2.1 Representations and Warranties of Originator.............. 9
ARTICLE III CONDITIONS OF PURCHASE.................................... 12
Section 3.1 Conditions Precedent to Purchase.......................... 12
Section 3.2 Conditions Precedent to Subsequent Payments............... 13
ARTICLE IV COVENANTS................................................. 13
Section 4.1 Affirmative Covenants of Originator....................... 13
Section 4.2 Negative Covenants of Originator.......................... 17
ARTICLE V TERMINATION EVENTS........................................ 19
Section 5.1 Termination Events........................................ 19
Section 5.2 Remedies.................................................. 20
ARTICLE VI INDEMNIFICATION........................................... 20
Section 6.1 Indemnities by Originator................................. 20
Section 6.2 Other Costs and Expenses.................................. 22
ARTICLE VII MISCELLANEOUS............................................. 22
Section 7.1 Waivers and Amendments.................................... 22
Section 7.2 Notices................................................... 22
Section 7.3 Protection of Ownership Interests of Buyer................ 23
Section 7.4 Confidentiality........................................... 23
Section 7.5 Bankruptcy Petition....................................... 24
Section 7.6 CHOICE OF LAW............................................. 24
Section 7.7 CONSENT TO JURISDICTION................................... 24
Section 7.8 WAIVER OF JURY TRIAL...................................... 25
Section 7.9 Integration; Binding Effect; Survival of Terms............ 25
Section 7.10 Counterparts; Severability; Section References............ 25
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EXHIBITS
Exhibit I Definitions
Exhibit II Principal Place of Business of the Seller Parties; Location(s) of
Records; Federal Employer Identification Number(s); Prior Names
Exhibit III Lock-Boxes; Collection Accounts; Collection Banks
Exhibit IV Form of Compliance Certificate: Performance Guarantor
Exhibit V Credit and Collection Policy
Exhibit VI Form of Subscription Agreement
Exhibit VII Form of Subordinated Note
Exhibit VIII Form of L/C Note
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AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
This AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, dated as of December 30,
2005, is by and between The Timken Corporation, an Ohio corporation
("Originator"), and Timken Receivables Corporation, a Delaware corporation
("Buyer"). Unless defined elsewhere herein, capitalized terms used in this
Agreement shall have the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
Originator now owns, and from time to time hereafter will own,
Receivables. Originator wishes to sell and assign to Buyer, and Buyer wishes to
purchase from Originator, all of Originator's right, title and interest in and
to such Receivables, together with the Related Security and Collections with
respect thereto.
Originator and Buyer intend the transactions contemplated hereby to be
true sales of the Receivables from Originator to Buyer, providing Buyer with the
full benefits of ownership of the Receivables, and Originator and Buyer do not
intend these transactions to be, or for any purpose to be characterized as,
loans from Buyer to Originator.
Following the purchase of Receivables from Originator, Buyer will sell
undivided interests therein and in the associated Related Security and
Collections pursuant to that certain Amended and Restated Receivables Purchase
Agreement of even date herewith (as the same may from time to time hereafter be
amended, supplemented, restated or otherwise modified, the "Purchase Agreement")
among Buyer, The Timken Corporation, as Servicer, Jupiter Securitization
Corporation ("Jupiter"), JPMorgan Chase Bank, N.A. (successor by merger to Bank
One, NA (Main Office Chicago)) ("JPMorgan") as letter of credit issuer (in such
capacity, the "L/C Issuer"), the financial institutions from time to time party
thereto as "Financial Institutions" and JPMorgan, as agent for the Purchasers
and the L/C Issuer (in such capacity, the "Agent").
ARTICLE I
AMOUNTS AND TERMS
Section 1.1 Purchase of Receivables.
(a) Effective on the date hereof, in consideration for the Purchase
Price in accordance with Section 1.2 below, and upon the terms and subject to
the conditions set forth herein, Originator does hereby sell, assign, transfer,
set-over and otherwise convey to Buyer, without recourse (except to the extent
expressly provided herein), and Buyer does hereby purchase from Originator, all
of Originator's right, title and interest in and to all Receivables existing as
of the close of business on the Business Day immediately prior to the date
hereof and all Receivables thereafter arising through and including the
Termination Date, together, in each case, with all Related Security relating
thereto and all Collections thereof and all Lock-Boxes and Collection Accounts
into which any Obligors on the Receivables remit payments thereon. In accordance
with the preceding sentence, on the date hereof Buyer shall acquire all of
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Originator's right, title and interest in and to all Receivables existing as of
the close of business on the Business Day immediately prior to the date hereof
and thereafter arising through and including the Termination Date, together with
all Related Security relating thereto and all Collections thereof; and Buyer
shall be obligated to pay the Purchase Price therefor in accordance with Section
1.2.
(b) It is the intention of the parties hereto that the Purchases of
Receivables made hereunder shall constitute "sales of accounts" or "payment
intangibles" (as each such term is used in Article 9 of the UCC), which sales
are absolute and irrevocable and provide Buyer with the full benefits of
ownership of the Receivables. The parties hereto intend that Originator retain
no interest in the Receivables transferred to Buyer hereunder. Except for the
Purchase Price Credits owed pursuant to Section 1.3, the sales of Receivables
hereunder are made without recourse to Originator; provided, however, that (i)
Originator shall be liable to Buyer for all representations, warranties and
covenants made by Originator pursuant to the terms of the Transaction Documents
to which Originator is a party, and (ii) such sales do not constitute and is not
intended to result in an assumption by Buyer or any assignee thereof of any
obligation of Originator or any other Person arising in connection with the
Receivables, the related Contracts and/or other Related Security or any other
obligations of Originator. In view of the intention of the parties hereto that
the Purchase of Receivables made hereunder shall constitute sales of such
Receivables rather than loans secured thereby, Originator agrees that it will,
on or prior to the date hereof and in accordance with Section 4.1(e)(ii), xxxx
its master data processing records relating to the Receivables with a legend
acceptable to Buyer and to the Agent (as Buyer's assignee), evidencing that
Buyer has purchased such Receivables as provided in this Agreement and to note
in its financial statements that its Receivables have been sold to Buyer. Upon
the request of Buyer or the Agent (as Buyer's assignee), Originator will execute
and file such financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be necessary
or appropriate to perfect and maintain the perfection of Buyer's ownership
interest in the Receivables and the Related Security and Collections with
respect thereto, or as Buyer or the Agent (as Buyer's assignee) may reasonably
request.
Section 1.2 Payment for the Purchase.
(a) The Purchase Price for the Purchase of Receivables in existence on
the close of business on the Business Day immediate preceding the date hereof
(the "Initial Cutoff Date") shall be payable in full by Buyer to Originator on
the date hereof, and shall be paid to Originator by delivery of immediately
available funds, to the extent of funds made available to Buyer in connection
with its subsequent sale of an interest in such Receivables to the Purchasers
under the Purchase Agreement. To the extent that the Purchase Price of such
Receivables (x) exceeds the amount of immediately available funds then available
to the Buyer, (y) is not otherwise paid through the issuance of a Letter of
Credit and a related L/C Note and (z) is not elected by the Originator to be a
contribution to Buyer's capital, the balance shall be paid by delivery of the
proceeds of a subordinated revolving loan from Originator to Buyer (a
"Subordinated Loan") in an amount not to exceed the lesser of (i) the remaining
unpaid portion of such Purchase Price and (ii) the maximum Subordinated Loan
that could be borrowed without rendering Buyer's Net Worth less than the
Required Capital Amount. Originator is hereby authorized by Buyer to endorse on
the schedule attached to the Subordinated Note an appropriate
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notation evidencing the date and amount of each advance thereunder, as well as
the date of each payment with respect thereto, provided that the failure to make
such notation shall not affect any obligation of Buyer thereunder.
(b) If the Originator so requests, Buyer shall pay all or part of the
Purchase Price of Receivables to be paid by causing the Agent to arrange for (i)
the issuance by the L/C Issuer of a Letter of Credit in favor of one or more
beneficiaries selected by the Originator or (ii) the Modification of any
previously issued Letter of Credit to increase the face amount thereof. In the
event that the Originator requests that all or any portion of the Purchase Price
of Receivables be paid for by the issuance or Modification of a Letter of
Credit, the Originator shall on a timely basis provide Buyer with such
information as is necessary for Buyer to obtain or Modify such Letter of Credit
pursuant to the terms of the Purchase Agreement. The Originator shall reimburse
Buyer for its expenses incurred in connection with obtaining or Modifying such
Letter of Credit and shall reimburse the Buyer for any Fronting Fees (as defined
in the Fee Letter referenced in the Purchase Agreement) incurred by the Buyer in
connection with procuring or Modifying such Letter of Credit, in each case, at
the time the of issuance or Modification of such Letter of Credit; provided that
such amounts may be offset against the outstanding principal amount of the
Subordinated Loans payable to the Originator. The Originator shall not have any
reimbursement obligations in respect of any Letter of Credit. On the date of
issuance or Modification, the face amount (or in the case of any Modification,
the increase in the face amount) of each Letter of Credit shall be deemed to
constitute payment of the Purchase Price for Receivables being transferred on
such date and shall be applied (x) as a deduction from the applicable Purchase
Price otherwise payable by Buyer, (y) to the extent such face amount exceeds
such Purchase Price, as a reduction in the aggregate outstanding principal
amount of the Subordinated Loans of the Originator and (z) to the extent the
aggregate outstanding principal amount of the Subordinated Loans has been
reduced to zero, as payment of and a credit against the Purchase Price payable
for future purchases of Receivables; provided, however, that such credit shall
at no time exceed the aggregate amount of capital contributions theretofore made
by the Originator to the Buyer. The obligation of Buyer to pay the Originator
the aggregate deductions, reductions and credits described in clauses (x), (y)
and (z) of the preceding sentence shall be evidenced by a note in the form of
Exhibit VIII hereto (the "L/C Note"), and shall be payable in accordance with
the terms and provisions of the L/C Note and this Agreement. The principal
amount of the L/C Note shall be reduced by the amount of any draws on the
related Letter of Credit. In the event that a Letter of Credit (as the same may
be extended, replaced or renewed and after giving effect to any partial draws)
expires undrawn or is surrendered to the L/C Issuer or Buyer, an amount equal to
the undrawn face amount of such Letter of Credit shall be payable within 10
Business Days thereafter and, upon giving effect to such payment, the principal
amount of the L/C Note shall be reduced by such payment.
Each Receivable coming into existence after the Initial Cutoff Date shall be
sold to Buyer on the date it comes into existence and the Purchase Price for
such Receivable shall be due and owing in full by Buyer to Originator on the
Business Day occurring immediately following such date (except that Buyer may,
with respect to any such Purchase Price, offset against such Purchase Price any
amounts owed by Originator to Buyer hereunder and which have become due but
remain unpaid) and shall be paid to Originator in the manner provided in the
following paragraphs (b), (c) and (d).
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(c) With respect to any Receivable coming into existence after the
Initial Cutoff Date, Buyer shall pay the Purchase Price therefor in accordance
with Section 1.2(d) and in the following manner:
first, by (i) delivery of immediately available funds, to the
extent of funds available to Buyer from its subsequent sale of an interest in
the Receivables to the Agent for the benefit of the Purchasers and the L/C
Issuer under the Purchase Agreement or other cash on hand or (ii) causing the
issuance or Modification of one or more Letters of Credit by the L/C Issuer in
accordance with the Purchase Agreement; provided that the issuance or
Modification of such Letter of Credit and the related increase in the
outstanding principal balance of the L/C Note shall not cause the Buyer's Net
Worth to be less than the Required Capital Amount; and/or
second, by delivery of the proceeds of a Subordinated Loan,
provided that the making of any such Subordinated Loan shall be subject to the
provisions set forth in Section 1.2(a)(i); and/or
third, at Originator's election as contemplated in Section
1.2(e), by accepting such Receivables as a contribution to Buyer's capital
pursuant to the Subscription Agreement in an amount equal to the remaining
unpaid balance of such Purchase Price.
Subject to the limitations set forth in Section 1.2(a), Originator irrevocably
agrees to advance each Subordinated Loan requested by Buyer on or prior to the
Termination Date. The Subordinated Loans shall be evidenced by, and shall be
payable in accordance with the terms and provisions of the Subordinated Note and
shall be payable solely from funds which Buyer is not required under the
Purchase Agreement to set aside for the benefit of, or otherwise pay over to,
the Agent, the L/C Issuer or the Purchasers. Originator is hereby authorized by
Buyer to endorse on the schedule attached to the Subordinated Note an
appropriate notation evidencing the date and amount of each advance thereunder,
as well as the date of each payment with respect thereto, provided that the
failure to make such notation shall not affect any obligation of Buyer
thereunder.
(d) From and after the Termination Date, Originator shall not be
obligated to sell Receivables to Buyer, but may at is option, based on such
considerations it determines to be appropriate at the time, including, without
limitation, the creditworthiness of Buyer at such time, elect to continue
selling Receivables to Buyer.
(e) Although the Purchase Price for each Receivable coming into
existence after the Initial Cutoff Date shall be due and payable by Buyer to
Originator promptly following the date such Receivable comes into existence, a
precise reconciliation of the Purchase Price between Buyer and Originator shall
be effected on a monthly basis on Settlement Dates with respect to all
Receivables sold during the same Calculation Period most recently ended prior to
such Settlement Date and based on the information contained in the Monthly
Report delivered by the Servicer pursuant to Article VIII of the Purchase
Agreement for the Calculation Period. Although such reconciliation shall be
effected on Settlement Dates, increases or decreases in the amount owing under
the Subordinated Note and the L/C Notes made pursuant to Section 1.2(b) and any
contribution of capital by Originator to Buyer made pursuant to Section 1.2(b)
shall be
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deemed to have occurred and shall be effective as of the date that the Purchase
Price is due and payable. On each Settlement Date, Originator shall determine
the net increase or the net reduction in the outstanding principal amount of the
Subordinated Note and the L/C Notes occurring during the immediately preceding
Calculation Period and shall account for such net increase or net reduction in
its books and records.
(f) Each contribution of a Receivable by Originator to Buyer shall be
deemed to be a Purchase of such Receivable by Buyer for all purposes of this
Agreement. Buyer hereby acknowledges that Originator shall have no obligations
to make further capital contributions to Buyer, in respect of Originator's
equity interest in Buyer or otherwise, in order to provide funds to pay the
Purchase Price to Originator under this Agreement or for any other reason.
Section 1.3 Purchase Price Credit Adjustments. If on any day:
(a) the Outstanding Balance of a Receivable is:
(i) reduced as a result of any defective or rejected goods or
services, any discount or any adjustment or otherwise by Originator (other than
cash Collections on account of the Receivables), or
(ii) reduced or canceled as a result of a setoff in respect of
any claim by any Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction), or
(b) any of the representations and warranties set forth in Article II
shall have been untrue when made with respect to all or a portion, as the case
may be, of any Receivable or the Related Security with respect thereto,
then, in such event, Buyer shall be entitled to a credit (each, a "Purchase
Price Credit") against the Purchase Price otherwise payable hereunder equal to,
the Outstanding Balance of such Receivable. If the aggregate amount of all
Purchase Price Credits during any Calculation Period shall exceed the aggregate
amount of Purchase Price payable in respect of Receivables coming into existence
during such Calculation Period, Originator shall pay an amount in cash equal to
such excess to Buyer on the Settlement Date following the end of such
Calculation Period or on such earlier date as the Agent may direct, provided
that if the Termination Date has not occurred, Originator shall be allowed to
deduct the remaining amount of such Purchase Price Credit from any indebtedness
owed to it under the Subordinated Note.
Section 1.4 Payments and Computations, Etc. All amounts to be paid or
deposited by Buyer hereunder shall be paid or deposited in accordance with the
terms hereof on the day when due in immediately available funds to the account
of Originator designated from time to time by Originator or as otherwise
directed by Originator. If any payment owed by any Person hereunder becomes due
on a day that is not a Business Day, then such payment shall be made on the next
succeeding Business Day. If any Person fails to pay any amount hereunder when
due, interest shall accrue on such unpaid amount at the Default Rate until such
amount is paid in full and, such Person agrees to pay such interest on demand;
provided, however, that such Default Rate shall not at any time exceed the
maximum rate permitted by applicable law. All
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computations of interest payable hereunder shall be made on the basis of a year
of 365/6 days for the actual number of days (including the first but excluding
the last day) elapsed.
Section 1.5 Transfer of Records.
(a) In connection with the Purchases of Receivables hereunder,
Originator hereby sells, transfers, assigns and otherwise conveys to Buyer all
of Originator's right and title to and interest in the Records relating to all
Receivables sold hereunder, without the need for any further documentation in
connection with the Purchases. In connection with such transfer, Originator
hereby grants to each of Buyer, the Agent and the Servicer an irrevocable,
non-exclusive license to use, without royalty or payment of any kind, all
software used by Originator to account for the Receivables, to the extent
necessary to administer the Receivables, whether such software is owned by
Originator or is owned by others and used by Originator under license agreements
with respect thereto, provided that should the consent of any licensor of
Originator to such grant of the license described herein be required, Originator
hereby agrees that upon the request of Buyer (or the Agent as Buyer's assignee),
Originator will use its reasonable efforts to obtain the consent of such
third-party licensor. The license granted hereby shall be irrevocable, and shall
terminate on the date this Agreement terminates in accordance with its terms.
(b) Originator (i) shall take such action requested by Buyer and/or
the Agent (as Buyer's assignee), from time to time hereafter, that may be
necessary or appropriate to ensure that Buyer and its assigns under the Purchase
Agreement have an enforceable ownership interest in the Records relating to the
Receivables purchased from Originator hereunder, and (ii) shall use its
reasonable efforts to ensure that Buyer, the Agent and the Servicer each has an
enforceable right (whether by license or sublicense or otherwise) to use all of
the computer software used to account for the Receivables and/or to recreate
such Records.
Section 1.6 Characterization; Assignment to Agent.
(a) If, notwithstanding the intention of the parties expressed in
Section 1.1(b), any sale or contribution by Originator to Buyer of Receivables
hereunder shall be characterized as a secured loan and not a sale or such sale
shall for any reason be ineffective or unenforceable, then this Agreement shall
be deemed to constitute a security agreement under the UCC and other applicable
law. For this purpose and without being in derogation of the parties' intention
that the sale of Receivables hereunder shall constitute a true sale thereof,
Originator hereby grants to Buyer a valid and perfected security interest in all
of Originator's right, title and interest in, to and under all Receivables now
existing and hereafter arising, all Collections, all Related Security with
respect thereto, each Lock-Box and Collection Account, the Inventory Agreement,
all other rights and payments relating to the Receivables and all proceeds of
the foregoing, and all other assets in which Buyer has acquired, may hereafter
acquire and/or purports pursuant to the terms and provisions of this Agreement
to have acquired an interest under this Agreement to secure the prompt and
complete payment of a loan deemed to have been made in an amount equal to the
Purchase Price of the Receivables together with all other obligations of
Originator hereunder which security interest shall be prior to all other Adverse
Claims thereto other than Permitted Adverse Claims. Buyer and its assigns shall
have, in addition to the rights and remedies which they may have under this
Agreement, all other rights and remedies provided to a secured creditor under
the UCC and other applicable law, which rights and remedies shall be cumulative.
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Originator hereby authorizes Buyer (and any of its assigns), within the meaning
of Section 9-509 of any applicable enactment of the UCC, as secured party, to
file, without the signature of the debtor, the UCC financing statements
contemplated hereby.
(b) Originator acknowledges that Buyer, pursuant to the Purchase
Agreement, shall assign to the Agent, for the benefit of the Agent, the L/C
Issuer and the Purchasers thereunder, all of its rights, remedies, powers and
privileges hereunder and that the Agent may further assign such rights,
remedies, powers and privileges to the extent permitted in the Purchase
Agreement. Originator agrees that the Agent, as the assignee of Buyer, shall,
subject to the terms of the Purchase Agreement, have the right to enforce this
Agreement and to exercise directly all of Buyer's rights and remedies under this
Agreement (including, without limitation, the right to give or withhold any
consents or approvals of Buyer to be given or withheld hereunder, and, in any
case, without regard to whether specific reference is made to Buyer's assigns in
the provisions of this Agreement which set forth such rights and remedies) and
Originator agrees to cooperate fully with the Agent, the L/C Issuer and the
Purchasers in the exercise of such rights and remedies. Originator further
agrees to give to the Agent copies of all notices it is required to give to
Buyer hereunder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Originator. Originator
hereby represents and warrants to Buyer and its assigns as of the date hereof
and on the date of each Purchase hereunder that:
(a) Corporate Existence and Power. Originator is (1) a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation, and (2) is duly qualified to do business and is in good
standing as a registered foreign corporation and has and holds all corporate
power and all governmental licenses, authorizations, consents and approvals
required to carry on its business in each jurisdiction in which its business is
conducted. Originator is organized solely under the laws of the State of Ohio.
(b) Power and Authority; Due Authorization Execution and Delivery. The
execution and delivery by Originator of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, Originator's use of the proceeds of
the Purchase made hereunder, are within its corporate powers and authority and
have been duly authorized by all necessary corporate action on its part. This
Agreement and each other Transaction Document to which Originator is a party has
been duly executed and delivered by Originator.
(c) No Conflict. The execution and delivery by Originator of this
Agreement and each other Transaction Document to which it is a party, and the
performance of its obligations hereunder and thereunder do not (i) violate its
certificate or articles of incorporation or by-laws (or equivalent
organizational documents), (ii) violate any law, rule or regulation of any
governmental authority binding upon it, (iii) result in a breach of or
constitute a default under any agreement, contract or instrument to which it is
a party or by which it or any of its property is bound, or (iv) violate any
order, writ, judgment, award, injunction or decree of any
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governmental authority binding upon or affecting it or its property, and do not
result in the creation or imposition of any Adverse Claim on assets of
Originator or its Subsidiaries (except as created by the Transactional
Documents).
(d) Governmental Authorization. Other than the filing of the financing
statements required hereunder, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority is required for the
due execution and delivery by Originator of this Agreement and each other
Transaction Document to which it is a party and the performance of its
obligations hereunder and thereunder.
(e) Actions, Suits. There are no actions, suits or proceedings pending
by or before any governmental authority, or to the best of Originator's
knowledge, threatened, against or affecting Originator, or any of its
properties, in or before any court, arbitrator or other body, that could
reasonably be expected to have a Material Adverse Effect. Originator is not in
default with respect to any order of any court, arbitrator or governmental
authority.
(f) Binding Effect. This Agreement and each other Transaction Document
to which Originator is a party constitute the legal, valid and binding
obligations of Originator enforceable against Originator in accordance with
their respective terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to or
limiting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(g) Accuracy of Information. All information heretofore furnished by
Originator or any of its Affiliates to Buyer (or its assigns) for purposes of or
in connection with this Agreement, any of the other Transaction Documents or any
transaction contemplated hereby or thereby is, and all such information
hereafter furnished by Originator or any of its Affiliates to Buyer (or its
assigns) will be, true and accurate in every material respect on the date such
information is stated or certified and does not and will not contain any
material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(h) Use of Proceeds. No proceeds of the Purchase hereunder will be
used (i) for a purpose that violates, or would be inconsistent with, Regulation
T, U or X promulgated by the Board of Governors of the Federal Reserve System
from time to time or (ii) to acquire any security other than on a non-hostile
basis pursuant to a negotiated acquisition or merger agreement approved by the
board of directors or other applicable governing body of the seller or entity to
be acquired and under circumstances in which no material challenge to such
acquisition shall be pending or threatened by any shareholder or director of the
seller or entity to be acquired.
(i) Good Title. Immediately prior to the time each Receivable is sold
hereunder, Originator shall be the legal and beneficial owner of each such
Receivables and Related Security with respect thereto, free and clear of any
Adverse Claim, except Permitted Adverse Claims.
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(j) Perfection. This Agreement, together with the filing of the
financing statements contemplated hereby, is effective to, and shall, upon each
Purchase hereunder, transfer to Buyer (and Buyer shall acquire from Originator)
legal and equitable title to, with the right to sell and encumber each
Receivable existing and hereafter arising, together with the Related Security
and Collections with respect thereto, free and clear of any Adverse Claim,
except Permitted Adverse Claims. There have been duly filed all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect Buyer's
ownership interest in the Receivables, the Related Security and the Collections.
(k) Places of Business. The principal places of business and chief
executive office of Originator and the offices where it keeps all of its Records
are located at the addresses listed on Exhibit II or such other locations of
which Buyer has been notified in accordance with Section 4.2(a) in jurisdictions
where all action required by Section 4.2(a) has been taken and completed.
Originator's Federal Employer Identification Number is correctly set forth on
Exhibit II.
(l) Collections. The conditions and requirements set forth in Section
4.1(i) have at all times been satisfied and duly performed. The names and
addresses of all Collection Banks, together with the account numbers of the
Collection Accounts of Originator at each Collection Bank and the post office
box number of each Lock-Box, are listed on Exhibit III.
(m) Material Adverse Effect. Since December 31, 2004 no event has
occurred that would have a Material Adverse Effect.
(n) Names. In the past five (5) years, Originator has not used any
corporate names, trade names or assumed names other than the name in which it
has executed this Agreement and has not been organized in any jurisdiction other
than the State of Ohio.
(o) Ownership of Buyer. Originator owns, directly or indirectly, 100%
of the issued and outstanding capital stock of Buyer, free and clear of any
Adverse Claim, except Permitted Adverse Claims. Such capital stock is validly
issued, fully paid and nonassessable, and there are no options, warrants or
other rights to acquire securities of Buyer.
(p) Not a Holding Company or an Investment Company. Originator is not
a "holding company" or a "subsidiary holding company" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, or any successor statute. Originator is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or any
successor statute.
(q) Compliance with Law. Originator has complied in all respects with
all applicable laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject. Each Receivable, together with the
Contract related thereto, does not contravene any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and regulations
relating to truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy), and no part of
such Contract is in violation of any such law, rule or regulation.
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(r) Compliance with Credit and Collection Policy. Originator has
complied in all material respects with the Credit and Collection Policy with
regard to each Receivable and the related Contract, and has not made any
material change to such Credit and Collection Policy, except as permitted by the
Purchase Agreement.
(s) Payments to Originator. With respect to each Receivable
transferred to Buyer hereunder, the Purchase Price received by Originator
constitutes reasonably equivalent value in consideration therefor, taking into
account the issuance of and Modifications to Letters of Credit and any increase
in the balance of the amounts payable by the Buyer under the Subordinated Note
and the L/C Note, and such transfer was not made for the account of any
antecedent debt. No transfer by Originator of any Receivable hereunder is or may
be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C.
Sections 101 et seq.), as amended.
(t) Enforceability of Contracts. Each Contract with respect to each
Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net
Receivables Balance as an Eligible Receivable on the date of its purchase
hereunder was an Eligible Receivable on such date.
(v) Accounting. The manner in which Originator accounts for the
transactions contemplated by this Agreement is consistent with the treatment of
the transfers hereunder as true sales.
(w) Compliance with Representations. On and as of the date of each
Purchase hereunder, Originator hereby represents and warrants that all of the
other representations and warranties set forth in this Article II are true and
correct on and as of each such date (and after giving effect to all Receivables
in existence on each such date) as though made on and as of each such date.
(x) Purpose. Originator has determined that, from a business
viewpoint, the sale of the Receivables and related interests to Buyer hereunder
are in the best interests of Originator.
ARTICLE III
CONDITIONS OF PURCHASE
Section 3.1 Conditions Precedent to Purchase. The initial Purchase
under this Agreement is subject to the conditions precedent that all of the
conditions to the initial purchase under the Purchase Agreement shall have been
satisfied or waived in accordance with the terms thereof.
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Section 3.2 Conditions Precedent to Subsequent Payments. Buyer's
obligation to pay for Receivables coming into existence after the Initial Cutoff
Date shall be subject to the further conditions precedent that (a) the
Termination Date shall not have occurred; and (b) Buyer (or its assigns) shall
have received such other approvals, opinions or documents as it or they may
reasonably request pursuant to the terms of Section 6.2 of the Purchase
Agreement.
ARTICLE IV
COVENANTS
Section 4.1 Affirmative Covenants of Originator. Until the date on
which this Agreement terminates in accordance with its terms, Originator hereby
covenants as set forth below:
(a) Financial Reporting. Originator will maintain, for itself and each
of its Subsidiaries, a system of accounting established and administered in
accordance with GAAP, and furnish to Buyer (and its assigns):
(i) Annual Reporting. Within 90 days after the close of each of
its fiscal years, audited, unqualified financial statements (which shall include
balance sheets, statements of income and retained earnings and a statement of
cash flows, each on a consolidated basis) for the Performance Guarantor for such
fiscal year certified in a manner acceptable to Buyer (or its assigns) by
independent public accountants acceptable to Buyer (or its assigns).
(ii) Quarterly Reporting. Within 45 days after the close of the
first three (3) quarterly periods of each of its fiscal years, the Originator
shall furnish with respect to the Performance Guarantor, on a consolidated
basis, balance sheets of the Performance Guarantor as at the close of each such
period and statements of income and retained earnings and a statement of cash
flows for the Performance Guarantor for the period from the beginning of such
fiscal year to the end of such quarter, all certified by the chief financial
officer of the Performance Guarantor.
(iii) Compliance Certificate. Together with the financial
statements required hereunder, a compliance certificate in substantially the
form of Exhibit IV signed by the Performance Guarantor's Authorized Officer and
dated the date of such annual financial statement or such quarterly financial
statement, as the case may be.
(iv) Shareholders Statements and Reports. Promptly upon the
furnishing thereof to the shareholders of the Performance Guarantor of all
financial statements, reports and proxy statements so furnished.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies of
all registration statements and annual, quarterly, monthly or other regular
reports which Originator, the Performance Guarantor or any of their Subsidiaries
files with the Securities and Exchange Commission.
(vi) Copies of Notices. Promptly upon its receipt of any notice,
request for consent, financial statements, certification, report or other
communication under or in
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connection with any Transaction Document from any Person other than Buyer, the
Agent or Jupiter, copies of the same.
(vii) Change in Credit and Collection Policy. At least thirty
(30) days prior to the effectiveness of any material change in or amendment to
the Credit and Collection Policy, a description, or if available, a copy of the
Credit and Collection Policy then in effect and a notice indicating such change
or amendment.
(viii) Other Information. Promptly, from time to time, such other
information, documents, records or reports relating to the Receivables or the
condition or operations, financial or otherwise, of Originator as Buyer (or its
assigns) may from time to time reasonably request in order to protect the
interests of Buyer (and its assigns) under or as contemplated by this Agreement.
(ix) Avoidance of Duplication. To the extent compliance with
clause (v) above provides the information required under clause (i), (ii) or
(iv) above on a timely and complete basis, such that the requirement for
separate deliveries under clause (i), (ii) or (iv) above would merely duplicate
the materials theretofore provided under clause (v) above, separate reports for
purposes of clause (i), (ii) or (iv), as applicable, shall not be required.
Documents required to be delivered pursuant to clauses (i), (ii), (iv) or (v)
(to the extent any such documents are included in materials otherwise filed with
the Securities and Exchange Commission) may be delivered electronically and if
so delivered, shall be deemed to have been delivered on the date (i) on which
the Performance Guarantor posts such documents, or provides a link thereto on
the Performance Guarantor's website on the Internet at xxx.xxxxxx.xxx or (ii) on
which such documents are delivered to the Buyer; provided, that (i) upon the
request of the Buyer, the Originator shall deliver paper copies of any such
documents requested by the Buyer and (ii) the Originator shall notify (which may
be by facsimile or electronic mail) the Buyer of the posting of any such
documents.
(b) Notices. Originator will notify Buyer (or its assigns) in writing
of any of the following promptly upon learning of the occurrence thereof,
describing the same and, if applicable, the steps being taken with respect
thereto:
(i) Termination Events or Potential Termination Events. The
occurrence of each Termination Event and each Potential Termination Event, by a
statement of an Authorized Officer of Originator.
(ii) Judgment and Proceedings. (1) The entry of any judgment or
decree against Originator or any of its Subsidiaries if the aggregate amount of
all judgments and decrees then outstanding against Originator and its
Subsidiaries exceeds the Material Judgement Level or (2) the institution of any
litigation, arbitration proceeding or governmental proceeding against Originator
asserting a claim in excess of the Material Judgment Level.
(iii) Material Adverse Effect. The occurrence of any event or
condition that has, or could reasonably be expected to have, a Material Adverse
Effect.
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(iv) Defaults Under Other Agreements. The occurrence of a default
or an event of default under any other financing arrangement pursuant to which
Originator is a debtor or an obligor.
(v) Downgrade of the Performance Guarantor. Any downgrade of the
Debt Rating of the Performance Guarantor setting forth the nature of such
change.
(c) Compliance with Laws and Preservation of Corporate Existence.
Originator will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject. Originator will preserve and maintain its corporate
existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified in good standing as a registered
foreign corporation in each jurisdiction where its business is conducted.
(d) Audits. Originator will furnish to Buyer (and its assigns) from
time to time such information with respect to it and the Receivables as Buyer
(or its assigns) may reasonably request. Originator will, from time to time
during regular business hours as requested by Buyer (or its assigns), upon prior
reasonable notice and at the sole cost of Originator, permit Buyer (or its
assigns) or their respective agents or representatives, (i) to examine and make
copies of and abstracts from all Records in the possession or under the control
of Originator relating to the Receivables and the Related Security, including,
without limitation, the related Contracts, and (ii) to visit the offices and
properties of Originator for the purpose of examining such materials described
in clause (i) above, and to discuss matters relating to Originator's financial
condition or the Receivables and the Related Security or Originator's
performance under any of the Transaction Documents or Originator's performance
under the Contracts and, in each case, with any of the officers or employees of
Originator having knowledge of such matters. Any such audit of the Records shall
be at the sole cost of Originator; provided that, unless a Termination Event or
an Amortization Event under the Purchase Agreement shall have occurred and be
continuing at the time any such audit is requested by the Buyer, Originator
shall not be required to reimburse the Buyer for the costs or expenses in
respect of more than two such audits during any calendar year.
(e) Keeping and Marking of Records and Books.
(i) Originator will maintain and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing Receivables in the event of the destruction of the originals
thereof), and keep and maintain all documents, books, records and other
information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit the
immediate identification of each new Receivable and all Collections of and
adjustments to each existing Receivable). Originator will give Buyer (or its
assigns) notice of any material change in the administrative and operating
procedures referred to in the previous sentence.
(ii) Originator will (A) on or prior to the date hereof, xxxx its
master data processing records and other books and records relating to the
Receivables with a legend, acceptable to Buyer (or its assigns), describing
Buyer's ownership interests in the
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Receivables and further describing the Purchaser Interests of the Agent (on
behalf of the Purchasers) under the Purchase Agreement and (B) upon the request
of Buyer (or its assigns) after a Termination Event or an Amortization Event
under the Purchase Agreement has occurred and is continuing, (x) xxxx each
Contract with a legend describing Buyer's ownership interests in the Receivables
and further describing the Purchaser Interests of the Agent (on behalf of the
Purchasers) and (y) deliver to Buyer (or its assigns) all Contracts (including,
without limitation, all multiple originals of any such Contract relating to the
Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. On the
date hereof, the Credit and Collection Policy exists in the form of procedures
and protocols that have been consistently observed by Originator over a period
of years in the origination and servicing of the Receivables and have been set
forth in writing in the form of general procedures attached hereto as Exhibit V.
Originator will timely and fully (i) perform and comply with all provisions,
covenants and other promises required to be observed by it under the Contracts
related to the Receivables, and (ii) comply in all respects with the Credit and
Collection Policy in regard to each Receivable and the related Contract.
(g) Performance and Enforcement of Inventory Agreement. Originator
will and will require Original Seller to, perform each of their respective
obligations and undertakings under and pursuant to the Inventory Agreement, will
purchase inventory thereunder in strict compliance with the terms thereof and
will vigorously enforce the rights and remedies accorded to Originator under the
Inventory Agreement. Originator will take all actions to perfect and enforce its
rights and interests (and the rights and interests of Buyer as assignee of
Originator) under the Inventory Agreement as Buyer (or its assigns) may from
time to time reasonably request, including, without limitation, making claims to
which it may be entitled under any indemnity, reimbursement or similar provision
contained in the Inventory Agreement.
(h) Ownership. Originator will take all necessary action to (i) vest
legal and equitable title to the inventory and related assets purchased under
the Inventory Agreement irrevocably in Originator, free and clear of any Adverse
Claims other than Permitted Adverse Claims (including, without limitation, the
filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Originator's interest in such inventory and related assets and such
other action to perfect, protect or more fully evidence the interest of
Originator therein as Buyer may reasonably request), and (ii) establish and
maintain, irrevocably in Buyer, legal and equitable title to the Receivables,
the Related Security and the Collections, free and clear of any Adverse Claims
other than Permitted Adverse Claims (and its assigns) (including, without
limitation, the filing of all financing statements or other similar instruments
or documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect Buyer's interest in such Receivables, Related Security
and Collections and such other action to perfect, protect or more fully evidence
the interest of Buyer as Buyer (or its assigns) may reasonably request).
(i) Purchasers' Reliance. Originator acknowledges that the Agent, the
L/C Issuer and the Purchasers are entering into the transactions contemplated by
the Purchase Agreement in reliance upon Buyer's identity as a legal entity that
is separate from Originator and any Affiliates thereof. Therefore, from and
after the date of execution and delivery of this Agreement, Originator will take
all reasonable steps including, without limitation, all steps that
16
Buyer or any assignee of Buyer may from time to time reasonably request to
maintain Buyer's identity as a separate legal entity and to make it manifest to
third parties that Buyer is an entity with assets and liabilities distinct from
those of Originator and any Affiliates thereof and not just a division of
Originator. Without limiting the generality of the foregoing and in addition to
the other covenants set forth herein, Originator (i) will not hold itself out to
third parties as liable for the debts of Buyer nor purport to own the
Receivables and other assets acquired by Buyer, (ii) will take all other actions
necessary on its part to ensure that Buyer is at all times in compliance with
the covenants set forth in Section 7.1(i) of the Purchase Agreement and (iii)
will cause all tax liabilities arising in connection with the transactions
contemplated herein or otherwise to be allocated between Originator and Buyer on
an arm's-length basis.
(j) Collections. Originator will (i) instruct all Obligors to remit
all Collections to either a Lock-Box or a Collection Account, (ii) cause all
proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into
a Collection Account and (iii) each Lock-Box and Collection Account to be
subject at all times to a Collection Account Agreement that is in full force and
effect. In the event any payments relating to Receivables are remitted directly
to Originator or any Affiliate of Originator, Originator will remit (or will
cause to be remitted) directly to a Collection Bank and will deposit (or will
cause to be deposited) all such remittances into a Collection Account within two
(2) Business Days following receipt thereof. At all times prior to such
remittance, Originator will itself hold or, if applicable, will cause such
payments to be held in trust for the exclusive benefit of Buyer and its assigns.
Originator will transfer exclusive ownership, dominion and control of each
Lock-Box and Collection Account to Buyer and, will not grant the right to take
dominion and control of any Lock-Box or Collection Account at a future time or
upon the occurrence of a future event to any Person, except to Buyer (or its
assigns) as contemplated by this Agreement and the Purchase Agreement.
(k) Taxes. Originator will file all tax returns and reports required
by law to be filed by it and promptly pay all taxes and governmental charges at
any time owing. Originator will pay when due any taxes payable in connection
with the Receivables, exclusive of taxes on or measured by income or gross
receipts of Buyer and its assigns.
(l) Accounting. Originator will account for the transactions
contemplated by this Agreement in its financial statements in a manner that is
consistent with the parties' characterization of such transactions as true sales
as described in Section 1.1(b).
Section 4.2 Negative Covenants of Originator. Until the date on which
this Agreement terminates in accordance with its terms, Originator hereby
covenants that:
(a) Name Change, Offices and Records. Originator will not make any
change to its name (within the meaning of Section 9-507(c) of any applicable
enactment of the UCC), identity, or jurisdiction of organization, unless (i) at
least forty-five (45) days prior to the effective date of any such change,
Originator provides written notice thereof to Buyer and the Agent (ii) at least
ten (10) days prior to such effective date, delivers to Buyer and the Agent such
financing statements (Forms UCC-1 and UCC-3), executed by Originator (if
required under applicable law) which Buyer or the Agent may reasonably request
to reflect such change, together with such other documents and instruments that
Buyer or the Agent may reasonably request in connection therewith (iii) at least
ten (10) days prior to such effective date, has taken
17
all other steps to ensure that Buyer and the Agent, for the benefit of itself,
the L/C Issuer and the Purchasers, continue to have a first priority perfected
ownership in the Receivables, the Related Security related thereto and any
Collections thereon and (iv) in the case of any change in its jurisdiction of
organization, if requested by Buyer or Agent, the Buyer and Agent shall have
received, prior to such change, an opinion of counsel, in form and substance
reasonably satisfactory to Buyer and the Agent, as to such incorporation and
Originator's valid existence and good standing and the perfection and
preservation of priority of Buyer's ownership interest in, and the Agent's
ownership or security interest in, the Receivables, the Related Security and
Collections.
(b) Change in Payment Instructions to Obligors. Originator will not
add or terminate any bank as a Collection Bank, or make any change in the
instructions to Obligors regarding payments to be made to any Lock-Box or
Collection Account, unless Buyer (and its assigns) shall have received, at least
ten (10) days before the proposed effective date therefor, (i) written notice of
such addition, termination or change and (ii) with respect to the addition of a
Collection Bank or a Collection Account or Lock-Box, an executed Collection
Account Agreement with respect to the new Collection Bank, Collection Account or
Lock-Box; provided, however, that Originator may make changes in instructions to
Obligors regarding payments if such new instructions require such Obligor to
make payments to another existing Collection Account.
(c) Modifications to Contracts and Credit and Collection Policy.
Originator will not make any change to the Credit and Collection Policy that
could reasonably be expected to adversely affect the collectibility of the
Receivables or decrease the credit quality of any newly created Receivables.
Except as otherwise permitted in its capacity as Servicer pursuant to Article
VIII of the Purchase Agreement, Originator will not extend, amend or otherwise
modify the terms of any Receivable or any Contract related thereto other than in
accordance with the Credit and Collection Policy.
(d) Sales, Liens. Originator will not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to,
or create or suffer to exist any Adverse Claim upon (including, without
limitation, the filing of any financing statement) or with respect to, any
Receivable, Related Security or Collections, or upon or with respect to any
Contract under which any Receivable arises, or any Lock-Box or Collection
Account, or assign any right to receive income with respect thereto (other than,
in each case, the creation of the interests therein in favor of Buyer provided
for herein), and Originator will defend the right, title and interest of Buyer
in, to and under any of the foregoing property, against all claims of third
parties claiming through or under Originator. Originator shall not create or
suffer to exist any mortgage, pledge, security interest, encumbrance, lien,
charge or other similar arrangement on any of its inventory.
(e) Accounting for Purchase. Originator will not, and will not permit
any Affiliate to, account for or treat (whether in financial statements or
otherwise) the transactions contemplated hereby in any manner other than the
sale of the Receivables and the Related Security by Originator to Buyer or in
any other respect account for or treat the transactions contemplated hereby in
any manner other than as a sale of the Receivables and the Related
18
Security by Originator to Buyer except to the extent that such transactions are
not recognized on account of consolidated financial reporting in accordance with
GAAP.
ARTICLE V
TERMINATION EVENTS
Section 5.1 Termination Events. The occurrence of any one or more of
the following events shall constitute a Termination Event:
(a) Originator shall fail (i) to make any payment or deposit required
hereunder when due or (ii) to perform or observe any term, covenant or agreement
hereunder (other than as referred to in clause (i) of this paragraph (a)) or any
other Transaction Document to which it is a party and such failure shall
continue for five (5) consecutive Business Days.
(b) Any representation, warranty, certification or statement made by
Originator in this Agreement, any other Transaction Document or in any other
document delivered pursuant hereto or thereto shall prove to have been incorrect
when made or deemed made.
(c) Failure of Originator to pay any Indebtedness when due in an
amount in excess of the Material Indebtedness Level; or the default by
Originator in the performance of any term, provision or condition contained in
any agreement under which any such Indebtedness was created or is governed, the
effect of which is to cause, or to permit the holder or holders of such
Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any such Indebtedness of Originator shall be declared to be due and
payable or required to be prepaid (other than by a regularly scheduled payment)
prior to the date of maturity thereof.
(d) (i) Originator or any of its Subsidiaries shall generally not pay
its debts as such debts become due or shall admit in writing its inability to
pay its debts generally or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against Originator or any
of its Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other similar
official for it or any substantial part of its property; provided that, in the
case of any proceeding instituted against Originator or any of its Subsidiaries
(other than the Buyer), such event shall not constitute a Termination Event
until either (A) such proceeding shall have remained undismissed or unstayed for
a period of sixty (60) days, (B) an order for relief shall have been entered
against Originator or the applicable Subsidiary under the Federal bankruptcy
laws or (C) Originator or such Subsidiary (as applicable) shall have taken
corporate action consenting to, approving or acquiescing in the commencement or
maintenance of such proceeding; or (ii) Originator or any of its Subsidiaries
shall take any corporate action to authorize any of the actions set forth in the
foregoing clause (i) of this subsection (d).
(e) A Change of Control shall occur.
(f) One or more final judgments for the payment of money shall be
entered against Originator on claims not covered by insurance or as to which the
insurance carrier has
19
denied its responsibility, and such judgment shall continue unsatisfied and in
effect for thirty (30) consecutive days without a stay of execution.
Section 5.2 Remedies. Upon the occurrence and during the continuation
of a Termination Event, Buyer may take any of the following actions: (i) declare
the Termination Date to have occurred, whereupon the Termination Date shall
forthwith occur, without demand, protest or further notice of any kind, all of
which are hereby expressly waived by Originator; provided, however, that upon
the occurrence of Termination Event described in Section 5.1(d), the Termination
Date shall automatically occur, without demand, protest or any notice of any
kind, all of which are hereby expressly waived by Originator and (ii) to the
fullest extent permitted by applicable law, declare that any amounts then due
and owing by Buyer to Originator shall bear interest at the Default Rate. The
aforementioned rights and remedies shall be in addition to all other rights and
remedies of Buyer and its assigns available under this Agreement, by operation
of law, at equity or otherwise, all of which are hereby expressly preserved,
including, without limitation, all rights and remedies provided under the UCC,
all of which rights shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnities by Originator. Without limiting any other
rights that Buyer may have hereunder or under applicable law, Originator hereby
agrees to indemnify Buyer and its assigns, officers, directors, agents and
employees (each an "Indemnified Party") from and against any and all damages,
losses, claims, taxes, liabilities, costs, expenses and for all other amounts
payable, including reasonable attorneys' fees (which attorneys may be employees
of Buyer) and disbursements (all of the foregoing being collectively referred to
as "Indemnified Amounts") awarded against or incurred by any of them arising out
of or as a result of this Agreement or the acquisition, either directly or
indirectly, by Buyer of an interest in the Receivables, excluding, however:
(i) Indemnified Amounts to the extent a final judgment of a court
of competent jurisdiction holds that such Indemnified Amounts resulted from
gross negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(ii) Indemnified Amounts to the extent the same includes losses
in respect of Receivables that are uncollectible on account of the insolvency,
bankruptcy or lack of creditworthiness of the related Obligor; or
(iii) net income taxes (or franchise taxes paid in lieu thereof)
imposed on an Indemnified Party that are not in excess of the amount that would
be owed if the transactions described in the Purchase Agreement are given the
Intended Characterization for tax purposes;
provided, however, that nothing contained in this sentence shall limit the
liability of Originator or limit the recourse of Buyer to Originator in respect
of any representations or warranties made by Originator under or in connection
with this Agreement. Without limiting the generality of the foregoing
indemnification, Originator shall indemnify the Indemnified Parties for
Indemnified
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Amounts (including, without limitation, losses in respect of uncollectible
receivables, regardless of whether reimbursement therefor would constitute
recourse to Originator) relating to or resulting from:
(i) any representation or warranty made by Originator (or any
officers of Originator) under or in connection with this Agreement, any other
Transaction Document or any other information or report delivered by Originator
pursuant hereto or thereto, which shall have been false or incorrect when made
or deemed made;
(ii) the failure by Originator, to comply with any applicable
law, rule or regulation with respect to any Receivable or Contract related
thereto, or the nonconformity of any Receivable or Contract included therein
with any such applicable law, rule or regulation or any failure of Originator to
keep or perform any of its obligations, express or implied, with respect to any
Contract;
(iii) any failure of Originator to perform its duties, covenants
or other obligations in accordance with the provisions of this Agreement or any
other Transaction Document;
(iv) any products liability or similar claim arising out of or in
connection with merchandise, insurance or services that are the subject of any
Contract;
(v) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or service related to such Receivable
or the furnishing or failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables at any time
with other funds;
(vii) any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the transactions
contemplated hereby, the use of the proceeds of the Purchase, the ownership of
the Receivables or any other investigation, litigation or proceeding relating to
Originator in which any Indemnified Party becomes involved as a result of any of
the transactions contemplated hereby;
(viii) any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being immune from civil
and commercial law and suit on the grounds of sovereignty or otherwise from any
legal action, suit or proceeding;
(ix) any Termination Event described in Section 5.1(d);
(x) any failure to vest and maintain vested in Buyer, or to
transfer to Buyer, legal and equitable title to, and ownership of, the
Receivables, the Related Security and the Collections, free and clear of any
Adverse Claim;
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(xi) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any Receivable,
the Related Security and Collections with respect thereto, and the proceeds of
any thereof, whether at the time of the Purchase or at any subsequent time;
(xii) any action or omission by Originator which reduces or
impairs the rights of Buyer with respect to any Receivable or the value of any
such Receivable;
(xiii) any attempt by any Person to void the Purchase hereunder
under statutory provisions or common law or equitable action; and
(xiv) any failure of Originator to acquire and maintain legal and
equitable title to, and ownership of any inventory, the sale or disposition of
which purportedly gave rise to any Receivable, or any related assets from
Original Seller, free and clear of any Adverse Claim other than Permitted
Adverse Claims; or any failure of Originator to give reasonably equivalent value
to Original Seller under the Inventory Agreement in consideration of the
transfer by Original Seller of any Receivable, or any attempt by any Person to
void such transfer under statutory provisions or common law or equitable action.
Section 6.2 Other Costs and Expenses. Originator shall pay to Buyer on
demand all reasonable costs and out-of-pocket expenses in connection with the
preparation, execution, delivery and administration of this Agreement, the
transactions contemplated hereby and the other documents to be delivered
hereunder. Originator shall pay to Buyer on demand any and all reasonable costs
and expenses of Buyer, if any, including reasonable counsel fees and expenses in
connection with the enforcement of this Agreement and the other documents
(including any amendments hereto or thereto) delivered hereunder and in
connection with any restructuring or workout of this Agreement or such
documents, or the administration of this Agreement following a Termination
Event.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Waivers and Amendments. (a) No failure or delay on the
part of Buyer (or its assigns) in exercising any power, right or remedy under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other further
exercise thereof or the exercise of any other power, right or remedy. The rights
and remedies herein provided shall be cumulative and nonexclusive of any rights
or remedies provided by law. Any waiver of this Agreement shall be effective
only in the specific instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing signed by Originator and Buyer and, to the
extent required under the Purchase Agreement, the Agent and the Financial
Institutions or the Required Financial Institutions.
Section 7.2 Notices. Except as provided below, all communications and
notices provided for hereunder shall be in writing (including bank wire,
telecopy or electronic
22
facsimile transmission or similar writing) and shall be given to the other
parties hereto at their respective addresses or telecopy numbers set forth on
the signature pages hereof or at such other address or telecopy number as such
Person may hereafter specify for the purpose of notice to each of the other
parties hereto. Each such notice or other communication shall be effective (i)
if given by telecopy, upon the receipt thereof, (ii) if given by mail, three (3)
Business Days after the time such communication is deposited in the mail with
first class postage prepaid or (iii) if given by any other means, when received
at the address specified in this Section 7.2.
Section 7.3 Protection of Ownership Interests of Buyer.
(a) Originator agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that Buyer (or its assigns) may
request, to perfect, protect or more fully evidence the interests of Buyer in
the Receivables, the Related Security, the Collections, the Lock-Boxes and the
Collection Accounts, or to enable Buyer (or its assigns) to exercise and enforce
their rights and remedies hereunder. At any time, Buyer (or its assigns) may, at
Originator's sole cost and expense, direct Originator to notify the Obligors of
Receivables of the ownership interests of Buyer under this Agreement and may
also direct that payments of all amounts due or that become due under any or all
Receivables be made directly to Buyer or its designee.
(b) If Originator fails to perform any of its obligations hereunder,
Buyer (or its assigns) may (but shall not be required to) perform, or cause
performance of, such obligation, and Buyer's (or such assigns') costs and
expenses incurred in connection therewith shall be payable by Originator as
provided in Section 6.2. Originator irrevocably authorizes Buyer (and its
assigns) at any time and from time to time in the sole discretion of Buyer (or
its assigns), and appoints Buyer (and its assigns) as its attorney(es)-in-fact,
to act on behalf of Originator (i) to execute on behalf of Originator as debtor
and to file financing statements and amendments thereto necessary or desirable
in Buyer's (or its assigns') sole discretion to perfect and to maintain the
perfection and priority of the interest of Buyer in the Receivables, Related
Security, and Collections and (ii) to file a carbon, photographic or other
reproduction of this Agreement or any financing statement with respect to the
Receivables as a financing statement in such offices as Buyer (or its assigns)
in their sole discretion deem necessary or desirable to perfect and to maintain
the perfection and priority of Buyer's interests in the Receivables, Related
Security and Collections. This appointment is coupled with an interest and is
irrevocable.
Section 7.4 Confidentiality.
(a) Originator shall maintain and shall cause each of its employees
and officers to maintain the confidentiality of this Agreement and the other
confidential proprietary information with respect to the Agent and Jupiter and
their respective businesses obtained by it or them in connection with the
structuring, negotiating and execution of the transactions contemplated herein,
except that Originator and its officers and employees may disclose such
information to Originator's external accountants and attorneys and as required
by any applicable law or order of any judicial or administrative proceeding.
(b) Anything herein to the contrary notwithstanding, Originator hereby
consents to the disclosure of any nonpublic information with respect to it (i)
to Buyer, the Agent,
23
the Financial Institutions or Jupiter by each other, (ii) by Buyer, the Agent,
the L/C Issuer or the Purchasers to any prospective or actual assignee or
participant of any of them or (iii) by the Agent to any rating agency,
Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity
enhancement to Jupiter or any entity organized for the purpose of purchasing, or
making loans secured by, financial assets for which JPMorgan acts as the
administrative agent and to any officers, directors, employees, outside
accountants and attorneys of any of the foregoing. In addition, the Purchasers,
the L/C Issuer and the Agent may disclose any such nonpublic information
pursuant to any law, rule, regulation, direction, request or order of any
judicial, administrative or regulatory authority or proceedings (whether or not
having the force or effect of law).
Section 7.5 Bankruptcy Petition.
(a) Originator and Buyer each hereby covenants and agrees that, prior
to the date that is one year and one day after the payment in full of all
outstanding senior Indebtedness of Jupiter, it will not institute against, or
join any other Person in instituting against, Jupiter any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
(b) Originator hereby covenants and agrees that, prior to the date
that is one year and one day after the payment in full of all outstanding senior
Indebtedness of Buyer, it will not institute against, or join any other Person
in instituting against, Buyer any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceeding under the laws
of the United States or any state of the United States.
Section 7.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF
THE STATE OF ILLINOIS.
Section 7.7 CONSENT TO JURISDICTION. ORIGINATOR HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY
ORIGINATOR PURSUANT TO THIS AGREEMENT AND ORIGINATOR HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST
ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
ORIGINATOR AGAINST BUYER (OR ITS ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO
THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
24
Section 7.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY
ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER
OR THEREUNDER.
Section 7.9 Integration; Binding Effect; Survival of Terms.
(a) This Agreement and each Transaction Document contain the final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof superseding all prior
oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and remedies with
respect to (i) any breach of any representation and warranty made by Originator
pursuant to Article II, (ii) the indemnification and payment provisions of
Article VI, and Section 7.5 shall be continuing and shall survive any
termination of this Agreement.
Section 7.10 Counterparts; Severability; Section References. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section" or "Exhibit" shall mean articles and sections of, and
schedules and exhibits to, this Agreement.
Section 7.11 Amendment and Restatement.
(a) This Agreement amends and restates in its entirety the Receivables
Sale Agreement dated as of December 18, 2002 between the Originator and the
Buyer (as amended or otherwise modified prior to the date hereof. Upon the
effectiveness of this Agreement, the "Earlier Sale Agreement"), the terms and
provisions of the Earlier Sale Agreement shall, subject to this Section 7.11, be
superseded hereby.
(b) Notwithstanding the amendment and restatement of the Earlier Sale
Agreement by this Agreement:
(i) each Subordinated Loan existing on the date hereof under the
Earlier Sale Agreement shall continue in effect as a Subordinated Loan
hereunder, without any diminution or
25
other modification thereto or effect thereon occurring or being deemed to occur
by reason of the amendment and restatement of the Earlier Sale Agreement hereby;
and
(ii) Originator shall continue to be liable to the Buyer with respect
to all obligations of it under the Existing Sale Agreement, including, without
limitation, (A) any obligations to repurchase Receivables from the Buyer under
the Existing Sale Agreement and (B) all agreements on the part of the Originator
under the Earlier Sale Agreement to indemnify the Buyer in connection with
events or conditions arising or existing prior to the effective date of this
Agreement, including, but not limited to, those events and conditions set forth
in Article VI thereof.
(c) This Agreement is given in substitution for the Earlier Sale
Agreement and not as payment of any of the obligations of Originator or the
Seller thereunder, and is in no way intended to constitute a novation of the
Earlier Sale Agreement. Nothing contained herein is intended to amend, modify or
otherwise affect any obligation of the Buyer, the Originator or the Performance
Guarantor (in respect of its obligations under any Performance Undertaking)
existing prior to the date hereof.
(d) Upon the effectiveness of this Agreement, each reference to the
Earlier Sale Agreement in any other document, instrument or agreement executed
and/or delivered in connection therewith shall mean and be a reference to this
Agreement unless the context otherwise requires.
(e) Upon the effectiveness of this Agreement, the terms of this
Agreement shall govern all aspects of the transactions contemplated herein.
[signature page follows]
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
THE TIMKEN CORPORATION
as Originator
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
----------------------------------
Title: Executive Vice President,
Finance and Administration
---------------------------------
Address:
-------------------------------
TIMKEN RECEIVABLES CORPORATION
as Buyer
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
----------------------------------
Title: President
---------------------------------
Address:
-------------------------------
Signature Page to Amended and Restated Receivables Sale Agreement
EXHIBITS
Exhibit I - Definitions
Exhibit II - Principal Place of Business; Location(s) of Records; Federal
Employer Identification Number; Other Names
Exhibit III - Lock-Boxes; Collection Accounts; Collection Banks
Exhibit IV - Form of Compliance Certificate
Exhibit V - Credit and Collection Policy
Exhibit VI - Form of Subscription Agreement
Exhibit VII - Form of Subordinated Note
Exhibit VIII - Form of L/C Note
1
