EXHIBIT 10.2
ORIGINATOR PURCHASE AGREEMENT
Dated as of December 9, 2004
Among
THE PARTIES LISTED ON SCHEDULE 1 HERETO
as Originators
and
HL FUNDING I, LLC,
as Purchaser
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS....................................................................................... 1
SECTION 1.01. Certain Defined Terms.............................................................. 1
SECTION 1.02. Other Terms and Constructions...................................................... 13
SECTION 1.03. Computation of Time Periods........................................................ 13
ARTICLE II AMOUNTS AND TERMS OF PURCHASES................................................................... 13
SECTION 2.01. Facility........................................................................... 13
SECTION 2.02. Making Purchases................................................................... 14
SECTION 2.03. Collections........................................................................ 17
SECTION 2.04. Payments and Computations, Etc..................................................... 18
SECTION 2.05. Certain Rights of the Purchaser.................................................... 19
SECTION 2.06. Rights and Remedies................................................................ 19
SECTION 2.07. Transfer of Records to Purchaser................................................... 20
SECTION 2.08. Servicer........................................................................... 20
SECTION 2.09. Originators........................................................................ 21
ARTICLE III REPRESENTATIONS AND WARRANTIES.................................................................. 21
SECTION 3.01. Representations and Warranties of the Originators.................................. 21
ARTICLE IV COVENANTS........................................................................................ 25
SECTION 4.01. Covenants of the Originators....................................................... 25
ARTICLE V EVENTS OF TERMINATION............................................................................. 30
SECTION 5.01. Events of Termination.............................................................. 30
ARTICLE VI INDEMNIFICATION.................................................................................. 32
SECTION 6.01. Indemnities by the Originators..................................................... 32
ARTICLE VII MISCELLANEOUS................................................................................... 35
SECTION 7.01. Amendments, Etc.................................................................... 35
SECTION 7.02. Notices, Etc....................................................................... 35
SECTION 7.03. Binding Effect; Assignability...................................................... 35
SECTION 7.04. Costs, Expenses and Taxes.......................................................... 36
SECTION 7.05. WAVIER OF JURY TRIAL; CONSENT TO JURISDICTION...................................... 36
SECTION 7.06. GOVERNING LAW...................................................................... 37
SECTION 7.07. Execution in Counterparts.......................................................... 37
SECTION 7.08. Purchaser's Assignment of Rights to Program Agent.................................. 37
SECTION 7.09. Limited Recourse................................................................... 37
SECTION 7.10. Confidentiality.................................................................... 38
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SCHEDULES
SCHEDULE 1 List of Originators
SCHEDULE 2 Trade Names
SCHEDULE 3 Ownership of Purchaser
EXHIBITS
EXHIBIT A Credit and Collection Policy
EXHIBIT B Form of Subordinated Note
EXHIBIT C Location of Records, Chief Executive Office and Notice Addresses
EXHIBIT D Deposit Banks, Lock Boxes and Deposit Accounts
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ORIGINATOR PURCHASE AGREEMENT
Dated as of December 9, 2004
THIS ORIGINATOR PURCHASE AGREEMENT (as amended, restated,
supplemented and otherwise modified from time to time, this "Agreement") is
entered into among EACH OF THE PARTIES LISTED ON SCHEDULE 1 ATTACHED HERETO
(each, an "Originator" and collectively, the "Originators") and HL FUNDING I,
LLC, a Delaware limited liability company, as the purchaser (the "Purchaser").
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings, or if not defined herein,
shall have the meanings specified in the Financing Agreement (defined below):
"Adverse Claim" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person.
"Agreement" has the meaning specified in the preamble.
"Alternate Base Rate" means a fluctuating interest rate per annum as
shall be in effect from time to time, which rate shall be at all times
equal to the highest of:
(a) the rate of interest announced publicly by Citibank, N.A. in New
York, New York, from time to time as Citibank, N.A.'s base rate; and
(b) 1/2 of one percent above the Federal Funds Rate.
"Applicable Report" has the meaning specified in the Financing
Agreement.
"Bankruptcy Code" means the Bankruptcy Code, 11 U.S.C. Section.101
et seq., as amended, any similar or successor federal statute, and the
rules and regulations thereunder, all as the same shall be in effect from
time to time.
"Banks" means the Persons designated as "Banks" pursuant to the
Financing Agreement.
"Beneficiary" means, as of any date, the Investors, the Banks, the
Investor Agents, the Program Agent and the Disbursement Agent.
"Borrower" means HL Funding II, Inc., a Delaware corporation.
"Borrower Report" has the meaning specified in the Financing
Agreement.
"Business Day" means any day on which banks are not authorized or
required to close in New York, New York.
"Capital Lease" means any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof,
which, in accordance with GAAP, should be capitalized on the lessee's
balance sheet.
"Capital Lease Obligation" of any Person means the obligations of
such Person to pay rent or other amounts under any Capital Lease, which
obligations should be classified and accounted for as capital leases on a
balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in
accordance with GAAP.
"Charter Documents" means, with respect to any corporation or
limited liability company, such Person's articles or certificate of
incorporation or formation and such entity's bylaws or operating
agreement.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable, and all funds deemed to have been received by the applicable
Originator or any other Person as a Collection pursuant to Section 2.03(c)
or 2.03(d).
"Contract" means an agreement between any Originator and a Person,
pursuant to or under which such Person shall be obligated to pay for goods
or services sold by any Originator from time to time.
"Credit Agreement" means that certain Credit Agreement dated as of
June 3, 2004, among HLIOC as borrower, Parent, the "Lenders" and "Issuers"
party thereto, Citicorp North America, Inc. as administrative agent,
Xxxxxx Commercial Paper Inc. as syndication agent and General Electric
Capital Corporation as documentation agent, as the same may be amended,
restated, supplemented or otherwise modified from time to time.
"Credit and Collection Policy" means those receivables credit and
collection policies and practices of each of the Originators in effect on
the date of this Agreement and described in Exhibit A hereto, as modified
in compliance with this Agreement.
"Daily Report" and "Daily Reporting Period" each have the meaning
specified in the Financing Agreement.
"Debt" of any Person means, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, or that bear
interest, (c) all indebtedness of such Person created by or arising under
any conditional sale or other title retention agreement relating to
property acquired by such Person (even though the rights and remedies of
the
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seller or lender under such agreement in the event of a default are
limited to repossession or sale of such property), (d) all indebtedness
for the deferred purchase price of property or services other than
unsecured trade payables incurred in the ordinary course of business that
are (i) not more than 90 days overdue or (ii) being contested in good
faith and by appropriate proceedings if adequate reserves therefor have
been established on the books of such Person in accordance with GAAP, (e)
all Debt of others secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) any Adverse
Claim on property (including accounts and general intangibles) owned or
acquired by such Person, whether or not the Debt secured thereby has been
assumed, (f) all Guarantees by such Person of Debt of others, (g) all
Capital Lease Obligations of such Person and the present value of future
rental payments under all synthetic leases, (h) all reimbursement
obligations and all obligations with respect to letters of credit, surety
bonds and performance bonds, whether or not matured, (i) all obligations
of such Person upon which interest charges are customarily paid, (j) all
obligations, contingent or otherwise, of such Person in respect of
bankers' acceptances, (k) all obligations of such Person to purchase,
redeem, retire, defease or otherwise acquire for value any Stock of stock
equivalents of such Person, valued, in the case of redeemable preferred
stock, at the greater of its voluntary liquidation preference and its
involuntary liquidation preference plus accrued and unpaid dividends, and
(l) all payments that such Person would have to make in the event of an
early termination on the date Debt of such Person is being determined in
respect of Hedging Agreements of such Person.
"Deemed Collections" means Collections deemed to have been received
pursuant to Section 2.03(c) or (d).
"Defaulted Receivable" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid
for 90 or more days from the original due date;
(b) as to which the Servicer or an Originator has received
notice that the Obligor thereof has taken any action, or suffered
any event to occur, of the type described in Section 5.01(f);
(c) which, consistent with the Credit and Collection Policy,
would be written off the applicable Originator's books as
uncollectible; or
(d) as to which the applicable Originator has (or consistent
with the Credit and Collection Policy should have) established a
specific reserve for non-payment.
"Defaulting Originator" means any Originator which becomes a
"Defaulting Originator" in accordance with Section 5.01.
"Defaulting Originator Percentage" means, with respect to any
Defaulting Originator, a percentage equal to (a) the aggregate Outstanding
Balance of Receivables originated by such Defaulting Originator as of the
date on which such Originator became
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a Defaulting Originator, divided by (b) the aggregate Outstanding Balance
of Receivables as of the date on which such Originator became a Defaulting
Originator.
"Deposit Account" means an account maintained at a bank into which
is subject to a Deposit Account Agreement into which (a) Collections in
the form of checks and other items are deposited that have been sent to
one or more related Lockboxes by Obligors and/or (b) Collections in the
form of electronic funds transfers and other items are paid directly by
Obligors.
"Deposit Account Agreement" means an agreement among, other Persons,
the Purchaser (or its assignees or designees) and any Deposit Bank in form
and substance satisfactory to the Purchaser (or its assignees or
designees).
"Deposit Bank" means any of the banks holding one or more Deposit
Accounts.
"Designated Obligor" means, at any time, each Obligor; provided,
however, that any Obligor shall cease to be a Designated Obligor upon five
(5) Business Days' prior written notice by the Program Agent in the
exercise of its reasonable discretion to the Borrower and the Investor
Agents.
"Determination Date" means (a) the twelfth Business Day after the
end of each Month other than December of each year, and (b) the fifteenth
Business Day after the end of December of each year; provided that if an
Event of Termination has occurred and is continuing under and as defined
in the Financing Agreement, the Program Agent or the Borrower may
designate more frequent Determination Dates.
"Diluted Receivable" means that portion (and only that portion) of
any Receivable which is either (a) reduced or canceled as a result of (i)
any defective, rejected or returned goods or services or any failure by an
Originator to deliver any goods or provide any services or otherwise to
perform under the underlying Contract, (ii) any change in the terms of or
cancellation of, a Contract or any cash discount, discount for quick
payment or other adjustment by an Originator which reduces the amount
payable by the Obligor on the related Receivable (except any such change
or cancellation resulting from or relating to the financial inability to
pay or insolvency of the Obligor of such Receivable) or (iii) any set-off
by an Obligor in respect of any claim by such Obligor as to amounts owed
by it on the related Receivable (whether such claim arises out of the same
or a related transaction or an unrelated transaction) or (b) subject to
any specific dispute, offset, counterclaim or defense whatsoever (except
the discharge in bankruptcy of the Obligor thereof); provided that Diluted
Receivables are calculated assuming that all chargebacks are resolved in
the Obligor's favor.
"Disbursement Agent" means Citibank, N.A., or such other Person
designated from time to time as "Disbursement Agent" pursuant to the
Financing Agreement.
"Disbursement Agent's Account" means a segregated non-interest
bearing deposit account accessible only by the Disbursement Agent, which
is identified as the "Disbursement Agent's Account for the Xxxxx Lemmerz
Receivables Financing
4
Agreement" and bears a designation clearly indicating that the funds
deposited therein are held for the benefit of the Beneficiaries.
"Discount" means, in respect of each Purchase from each Originator,
the percentage of the Outstanding Balance of the Receivables that are the
subject of such Purchase as may be agreed upon prospectively, on an arm's
length basis, between such Originator and the Purchaser; provided, that
the Program Agent and Investor Agents shall be notified promptly following
any changes in such agreed-upon percentage.
"Distribution Date" means (a) at any time other than during a Daily
Reporting Period or Weekly Reporting Period, the second Business Day after
each Determination Date, and (b) at any time during a Daily Reporting
Period or Weekly Reporting Period, the fifth Business Day of each Month
(which such day is also a Payment Date).
"Eligible Receivable" means, at any time, a Transferred Receivable:
(i) (A) the Obligor of which is a United States resident which
is not a Governmental Entity, and is not an Affiliate of the Parent,
any Originator, Purchaser or Borrower, (B) the Obligor of which is a
Governmental Entity within the United States but only to the extent
that the aggregate Outstanding Balance of all Transferred
Receivables of all Obligors that are Governmental Entities within
the United States are not in excess of 2.0% of the aggregate
Outstanding Balance of all Transferred Receivables or (C) the
Obligor of which is a Canada resident which is not a Governmental
Entity, and is not an Affiliate of the Parent, any Originator,
Purchaser or Borrower but only to the extent that the aggregate
Outstanding Balance of all Transferred Receivables of all Obligors
under this clause (C) are not in excess of 6.0% of the aggregate
Outstanding Balance of all Transferred Receivables;
(ii) the Obligor of which, at the later of the date of this
Agreement and the date such Receivable is created, is a Designated
Obligor;
(iii) which is not a Defaulted Receivable;
(iv) the Obligor of which is not the Obligor of any Defaulted
Receivables which in the aggregate constitute 15% or more of the
aggregate Outstanding Balance of all Transferred Receivables of such
Obligor;
(v) which has been billed and, according to the Contract
related thereto, is required to be paid in full within 60 days of
the original billing date therefor;
(vi) which is an obligation representing all or part of the
sales price of merchandise, insurance or services within the meaning
of Section 3(c)(5) of the Investment Company Act of 1940, as
amended, and the nature of which is such that financing such
Receivable with the proceeds of notes would constitute a "current
transaction" within the meaning of Section 3(a)(3) of the Securities
Act of 1933, as amended;
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(vii) which is an "account" or a "payment intangible" within
the meaning of Article 9 of the UCC of the applicable jurisdictions
governing the perfection of the security interest created by this
Agreement in the Receivables;
(viii) which is denominated and payable only in United States
dollars in the United States;
(ix) which arises under a Contract which, together with such
Receivable, (A) is in full force and effect and constitutes the
legal, valid and binding obligation of the Obligor of such
Receivable, (B) is not subject to any Adverse Claim or any dispute,
offset, counterclaim or defense whatsoever (except the potential
discharge in bankruptcy of such Obligor) and is not settled on a net
basis, and (C) is governed by the laws of one of the United States
of America or the provinces of Canada; provided, that if it is
governed by the laws of a province of Canada, (1) such Receivable
shall not be interest-bearing, (2) no withholding tax or other
deductions shall be imposed by applicable law on such Receivable and
(3) the Contract therefor shall not contain any prohibition or
restriction on assignment unless the Obligor thereof has waived such
prohibition or restriction in writing;
(x) which, together with the Contract related thereto, does
not contravene in any material respect any laws, rules or
regulations applicable thereto (including, without limitation, laws,
rules and regulations relating to usury, consumer protection, truth
in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with
respect to which none of the Borrower, Purchaser, any Originator,
the Servicer or the Obligor is in violation of any such law, rule or
regulation in any material respect;
(xi) which arises under a Contract which does not contain an
enforceable provision requiring the Obligor thereunder to consent to
(A) the transfer, sale or assignment of the Obligor's payment
obligation by the Originator pursuant to this Agreement or by
Purchaser pursuant to the Secondary Purchase Agreement, or (B) the
grant of a security interest therein pursuant to this Agreement, the
Secondary Purchase Agreement or the Financing Agreement;
(xii) which was generated in the ordinary course of the
applicable Originator's business;
(xiii) which has not been extended, rewritten or otherwise
modified from the original terms thereof (except as permitted by
Section 6.02(c) of the Financing Agreement);
(xiv) the transfer, sale or assignment of which in accordance
with the Transaction Documents does not contravene any applicable
law, rule or regulation;
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(xv) which satisfies all applicable requirements of the Credit
and Collection Policy;
(xvi) which is not a Tooling Receivable; and
(xvii) as to which the applicable Originator has satisfied and
fully performed all obligations required to be fulfilled by it and
the applicable Originator is not a Defaulting Originator.
"Enforceability Exceptions" means exceptions to the enforceability
of an obligation arising under bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights
generally, and general principles of equity (regardless of whether
considered in a proceeding at equity or at law).
"Event of Termination" has the meaning specified in Section 5.01.
"Facility Termination Date" means the earliest of (a) the "Facility
Termination Date" (as such term is defined in the Financing Agreement),
(b) the date determined pursuant to Section 5.01 and (c) the date which
HLIOC or any Originator designates by at least 2 Business Days' prior
notice to the Purchaser and its assignees (including the Program Agent
under the Financing Agreement).
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the quotations for such
day on such transactions received by Citibank, N.A. from three Federal
funds brokers of recognized standing selected by it.
"Final Collection Date" means the date on or following the Facility
Termination Date on which the aggregate Outstanding Balance of all
Transferred Receivables has been reduced to zero and the Originators shall
have paid all amounts payable to the Purchaser pursuant to this Agreement.
"Financial Covenants" has the meaning specified in the Financing
Agreement.
"Financing Agreement" means that certain Receivables Financing
Agreement, dated as of the date hereof, among the Borrower, CAFCO, LLC, as
an investor, Citibank, N.A., as a bank, Citicorp North America, Inc., as
program agent (together with its successors and assigns, "Program Agent"),
Citicorp North America, Inc., as an investor agent, the other investors,
banks and investor agents party thereto from time to time, the Servicer,
and the Disbursement Agent, as amended, restated, supplemented and
otherwise modified from time to time.
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"GAAP" means generally accepted accounting principles in the United
States.
"Governmental Entity" means the United States of America, any state,
any political subdivision of a state and any agency or instrumentality of
the United States of America or any state or political subdivision thereof
and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantee" means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to Debt of
another Person (or with respect to any trade payables, not constituting
Debt, of a foreign Subsidiary of such Person), if the purpose or intent of
such Person in incurring the Guarantee is to provide assurance to the
obligee of such Debt (or such trade payables) that such Debt (or trade
payables) will be paid or discharged, or that any agreement relating
thereto will be complied with, or that any holder of such Debt (or such
trade payables) will be protected (in whole or in part) against loss in
respect thereof, including (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course
of business), co-making, discounting with recourse or sale with recourse
by such Person of Debt of another Person (or such trade payables) and (b)
any liability of such Person for Debt of another Person (or such trade
payables) through any agreement (contingent or otherwise) (i) to purchase,
repurchase or otherwise acquire such Debt (or such trade payables) or any
security therefor, or to provide funds for the payment or discharge of
such Debt (whether in the form of a loan, advance, stock purchase, capital
contribution or otherwise), (ii) to maintain the solvency or any balance
sheet item, level of income or financial condition of another Person,
(iii) to make take-or-pay or similar payments, if required, regardless of
non-performance by another party or parties to an agreement, (iv) to
purchase, sell or lease (as lessor or lessee) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make
payment of such Debt (or such trade payables) against loss or (v) to
supply funds to, or in any other manner invest in, such other Person
(including to pay for property or services irrespective of whether such
property is received or such services are rendered), if in the case of any
agreement described under clause (i), (ii), (iii), (iv) or (v) above the
primary purpose or intent thereof is to provide assurance that Debt of
another Person (or such trade payables) will be paid or discharged, that
any agreement relating thereto will be complied with or that any holder of
such Debt (or such trade payables) will be protected (in whole or in part)
against loss in respect thereof. The amount of any Guarantee shall be
equal to the amount of the Debt (or such trade payables) so guaranteed or
otherwise supported.
"Hedging Agreement" means any rate swap transaction, basis swap,
forward rate transaction, commodity swap, commodity option, equity or
equity index swap, equity or equity index option, bond option, interest
rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency
rate swap transaction, currency option or any other similar transaction
(including any option with respect to any of the foregoing transactions)
or any combination of the foregoing transactions.
"HLIOC" means HLI Operating Company, Inc., a Delaware corporation.
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"Incipient Event of Termination" means an event that but for notice
or lapse of time or both would constitute an Event of Termination;
provided, however, that an Incipient Event of Termination shall not become
an Event of Termination until the grace period applicable thereto, if any,
shall have passed.
"Indemnified Amounts" has the meaning specified in Section 6.01.
"Indemnified Party" has the meaning specified in Section 6.01.
"Initial Cutoff Date" has the meaning specified in Section 2.02(a).
"Initial Purchase Date" means the date on which the first Purchase
made pursuant to this Agreement shall occur.
"Investor Agents" means the Persons designated as "Investor Agents"
pursuant to the Financing Agreement.
"Investors" means the Persons designated as "Investors" pursuant to
the Financing Agreement.
"Lockbox" means a post office box administered by a Deposit Bank for
the purpose of receiving Collections, which is the subject of a Deposit
Account Agreement.
"Material Adverse Change" means a material adverse change in the
business, assets, operations, property, prospects or other condition
(financial or otherwise) of the Originators taken as a whole or the Parent
and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
collectibility of the Receivables, (b) the ability of the Purchaser,
Parent or the Originators taken as a whole to perform any of their
respective material obligations under the Transaction Documents to which
they are a party, (c) the legality, validity or enforceability of the
Transaction Documents (including, without limitation, the validity,
enforceability or priority of the ownership interests and security
interests granted hereunder or thereunder) or the rights of or benefits
available to the Purchaser under the Transaction Documents, or (iv) the
business, assets, operations, condition (financial or otherwise),
property, or prospects of the Originators taken as a whole or the Parent
and its subsidiaries, taken as a whole.
"Month" means a calendar month.
"Negotiation Date" has the meaning specified in the Financing
Agreement.
"Net Receivables Pool Balance" has the meaning specified in the
Financing Agreement.
"Net Worth Percentage" means, with respect to the Purchaser, a
fraction (expressed as a percentage) (a) the numerator of which equals the
excess of the Purchaser's assets over its liabilities, in each case
determined in accordance with GAAP
9
consistently applied and (b) the denominator of which equals the
Outstanding Balance of Transferred Receivables.
"Obligor" means a Person obligated to make payments pursuant to a
Contract.
"Originator" has the meaning specified in the preamble.
"Originator Collateral" has the meaning specified in Section
2.02(h).
"Other Taxes" has the meaning specified in the Financing Agreement.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Parent" means Xxxxx Lemmerz International, Inc., a Delaware
corporation.
"Payment Date" means (a) the fifth Business Day of each Month (the
"Regular Payment Date"), and, (b) if any amounts required to be paid under
the Financing Agreement on such Regular Payment Date are not paid in the
amount so required on such date, each subsequent Business Day until such
amounts are paid in full.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a
Governmental Entity.
"Program Agent" has the meaning specified in the definition of
"Financing Agreement".
"Purchase" means a purchase by the Purchaser of Receivable Assets
from an Originator pursuant to Article II.
"Purchase Date" means each day on which a Purchase is made pursuant
to Article II.
"Purchase Price" for any Purchase means an amount equal to the
Outstanding Balance of the Receivables that are the subject of such
Purchase minus the Discount for such Purchase.
"Purchaser" has the meaning specified in the preamble.
"Receivable" means all indebtedness and other obligations of an
Obligor resulting from the provision or sale of goods or services by any
Originator under a Contract (whether constituting an account, instrument,
chattel paper, payment intangible or general intangible), including
Tooling Receivables, and includes the right to payment of any interest,
finance charges, rebates, administration fees, data fees, late payment
charges, delinquency charges, extension or collection fees and all other
obligations of such Obligor with respect thereto.
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"Receivable Asset" has the meaning specified in Section 2.01.
"Related Security" means with respect to any Receivable:
(a) all of the applicable Originator's interest in goods, if
any, (including returned goods) relating to any sale giving rise to
such Receivable;
(b) all 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
filed against an Obligor describing any collateral securing such
Receivable;
(c) guaranties, letters of credit, insurance and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable whether pursuant
to the Contract related to such Receivable or otherwise;
(d) the Contract and all other books, records and other
information (including, without limitation, computer programs,
tapes, discs, punch cards, data processing software and related
property and rights, subject to the rights of any licensors and to
applicable law) relating to such Receivable or any other Related
Security and the related Obligor;
(e) prepayment penalties, indemnities, warranties, insurance
policies and proceeds and premium refunds thereof; and
(f) all proceeds of the foregoing.
"Repurchase Price" has the meaning specified in Section 2.03(d).
"RFA Final Payment Date" means the later of the "Facility
Termination Date" (as such term is defined in the Financing Agreement) and
the date on which all Principal, Yield, Fees and other Obligations (each
as defined in the Financing Agreement) under the Financing Agreement are
paid in full.
"Secondary Purchase Agreement" means the purchase agreement, dated
as of the date of this Agreement, between Purchaser, as a seller, and
Borrower, as purchaser, as the same may be amended, restated, supplemented
or otherwise modified from time to time.
"Secured Obligations" has the meaning specified in Section 2.02(h).
"Servicer" means at any time the Person then authorized pursuant to
Section 6.01 of the Financing Agreement to administer and collect
Receivables.
"Settlement Date" means a Distribution Date; provided, however, that
following the occurrence of an Event of Termination, Settlement Dates
shall occur on such days as
11
are selected from time to time by the Purchaser or its assignees in a
written notice to the Originators.
"Settlement Period" means (a) with respect to the first Settlement
Period, the period from the date hereof to the first Settlement Date, and
(b) with respect to each other Settlement Period, the period from a
Settlement Date to the next Settlement Date.
"Solvent" shall mean, 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 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 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 as such Debts and liabilities mature; (d) such Person is
not engaged in a business or transaction, and is not about to engage in a
business or transaction, for which such Person's property would constitute
an unreasonably small capital; and (e) such Person generally is not paying
its Debts or liabilities as such Debts or liabilities become due. The
amount of contingent liabilities (such as litigation, guaranties and
pension plan liabilities) at any time shall be computed as the amount
that, in light of all the facts and circumstances existing at the time,
represents the amount that can reasonably be expected to become an actual
or matured liability.
"Stock" means shares of capital stock (whether denominated as common
stock or preferred stock), beneficial, partnership or membership
interests, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability
company, trust or equivalent entity, whether voting or non-voting.
"Subordinated Loan" has the meaning specified in Section 2.02(c)(i).
"Subordinated Note" has the meaning specified in Section 2.02(c)(i).
"Subsidiaries" means any corporation or other entity of which
securities having ordinary voting power to elect a majority of the board
of directors or other persons performing similar functions are at the time
directly or indirectly owned by an Originator, or the Parent, as the case
may be, or one or more Subsidiaries, or by an Originator or the Parent, as
the case may be, and one or more Subsidiaries.
"Taxes" has the meaning specified in the Financing Agreement.
"Tooling Receivable" means an obligation of any Person to pay for
(i) tooling or equipment purchased or built by an Originator for the
purpose of manufacturing products for such Person or (ii) services
rendered in connection with building tooling for the purposes of
manufacturing products for such Person, including in each case, the right
to payment of any interest, sales taxes, finance charges, returned check
or late charges and other obligations of such Person with respect thereto.
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"Transaction Document" means any of this Agreement, the Deposit
Account Agreements, and all other agreements and documents delivered
and/or related hereto or thereto, as amended, restated, supplemented and
otherwise modified from time to time.
"Transferred Asset" means any Receivable Asset which is Purchased or
purported to be Purchased by the Purchaser pursuant to Article II.
"Transferred Receivable" means any Receivable which is Purchased or
purported to be Purchased by the Purchaser pursuant to Article II.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Weekly Report" and "Weekly Reporting Period" each have the meaning
specified in the Financing Agreement.
SECTION 1.02. Other Terms and Constructions. Under this Agreement,
all accounting terms not specifically defined herein shall be construed in
accordance with GAAP, and all accounting determinations made and all financial
statements prepared hereunder shall be made and prepared in accordance with
GAAP. All terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9. The
words "herein," "hereof," and "hereunder" and other words of similar import
refer to this Agreement as a whole, including the exhibits and schedules hereto,
as the same may from time to time be amended, modified or supplemented and not
to any particular section, subsection, or clause contained in this Agreement,
and all references to Sections, Annexes and Schedules shall mean, unless the
context clearly indicates otherwise, the Sections hereof and the Annexes and
Schedules attached hereto, the terms of which Schedules are hereby incorporated
into this Agreement. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience and do not define, limit,
construe or describe the scope or intent of the provisions of this Agreement.
Each of the definitions set forth in Section 1.01 hereof shall be equally
applicable to both the singular and plural forms of the defined terms.
SECTION 1.03. Computation of Time Periods. Unless otherwise stated
in this Agreement, in the computation of a period of time from a specified date
to a later specified date, the word "from" means "from and including" and the
words "to" and "until" each means "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF PURCHASES
SECTION 2.01. Facility. On the terms and conditions hereinafter set
forth and without recourse to the Originators (except to the extent specifically
provided herein), each Originator shall sell to the Purchaser all of its right,
title and interest in, under and to all Receivables originated by it from time
to time, all Related Security, Collections, Deposit Accounts, Lockboxes and all
proceeds of the foregoing (collectively, the "Receivable Assets"), and the
Purchaser shall purchase from such Originator all such Receivable Assets of such
13
Originator from time to time, in each case during the period from the date
hereof to the Facility Termination Date.
SECTION 2.02. Making Purchases.
(a) Initial Purchase. The Originators shall give the Purchaser at
least one Business Day's notice of their request for the initial Purchase, which
request shall specify the date of such Purchase (which shall be a Business Day
on or after the date on which the conditions precedent set forth in Section 3.01
of the Financing Agreement shall have been satisfied) and the proposed Purchase
Price for such Purchase. The Purchaser shall promptly notify the Originators
whether it has determined to make such Purchase. On the date of such Purchase,
the Purchaser shall pay the Purchase Price for such Purchase in the manner
provided in Section 2.02(c). Effective upon such payment, each Originator hereby
sells, conveys, transfers and assigns to the Purchaser all Receivable Assets in
existence as of the close of business on the Business Day immediately prior to
the Initial Purchase Date (the "Initial Cutoff Date").
(b) Subsequent Purchases. On each Business Day following the Initial
Purchase Date until the Facility Termination Date, unless any party shall notify
the other parties to the contrary, each Originator shall sell to the Purchaser
and the Purchaser shall purchase from such Originator, all Receivable Assets
owned by such Originator existing as of the close of business on the immediately
preceding Business Day which have not previously been sold to the Purchaser.
Each Purchase described herein shall automatically occur at 9 A.M. (New York
time) on the date of such Purchase without any further action on the part of any
party hereto. The Purchaser shall pay the Purchase Price for such Purchase in
the manner provided in Section 2.02(c). Effective on each Purchase Date, each
Originator hereby sells, conveys, transfers and assigns to the Purchaser all
Receivable Assets not previously sold, conveyed, transferred or assigned to the
Purchaser.
(c) Payment of Purchase Price.
(i) The Purchase Price for each Purchase of Receivable Assets
(other than any Receivable Assets contributed to the Purchaser's capital)
that are in existence on the Initial Cutoff Date shall be payable in full
by the Purchaser to the Originator thereof on the Initial Purchase Date,
and shall be paid to the Originator thereof in the following manner:
(A) first, by delivery of immediately available funds, to the
extent of funds made available to the Purchaser in connection with a
borrowing of Advances under the Financing Agreement or other cash on
hand; and
(B) second, by: (1) delivery of the proceeds of a subordinated
revolving loan from such Originator to the Purchaser (a
"Subordinated Loan") pursuant to the Purchaser's subordinated
promissory note in the form of Exhibit B hereto (the "Subordinated
Note") payable to HLIOC, as agent for the Originators, in an amount
not to exceed the lesser of (a) the remaining unpaid portion of such
Purchase Price and (b) the maximum Subordinated Loan that could be
borrowed without rendering the Net Worth Percentage less than
10.00%; and/or (2)
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accepting such Receivable Assets (or the relevant portion thereof)
as a capital contribution to the Purchaser's capital in an amount
(without duplication with clause (B)(1) above) equal to the
remaining unpaid balance of such Purchase Price.
(ii) Each Receivable Asset coming into existence after the
Initial Cutoff Date shall be sold or contributed to the Purchaser on the
Business Day immediately following the day such Receivable was originated
or other Receivable Asset was acquired and the Purchase Price for such
Receivable Asset shall be due and owing in full by the Purchaser to the
Originators on such Business Day (except that the Purchaser may, with
respect to any such Purchase Price, offset against such Purchase Price any
amounts owed by the Originator thereof to the Purchaser hereunder and
which have become due but remain unpaid) and shall be paid to the
Originator thereof in the following manner:
(A) first, by delivery of immediately available funds, to the
extent of funds made available to the Purchaser in connection with a
borrowing of Advances under the Financing Agreement or other cash on
hand; and
(B) second, by: (1) delivery of the proceeds of a Subordinated
Loan, provided that the making of any such Subordinated Loan shall
be subject to the provisions of Section 2.02(c)(i)(B)(1); and/or (2)
accepting such Receivable Assets (or the relevant portion thereof)
as a contribution to the Purchaser's capital in an amount (without
duplication with clause (B)(1) above) equal to the remaining unpaid
balance of such Purchase Price; provided, that no such capital
contribution shall be made from and after the Facility Termination
Date.
(d) Subordinated Note. Subject to the limitations set forth in
Section 2.02(c)(i)(B) and Section 2.02(e), each Originator irrevocably agrees to
advance each Subordinated Loan requested by the Purchaser on or prior to the
Facility 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 (i) Collections of
Transferred Assets after all other amounts then due from the Purchaser under the
Secondary Purchase Agreement and from the Borrower under the Financing Agreement
have been paid in full and all amounts then required to be set aside by the
Purchaser or Borrower thereunder have been so set aside and (ii) excess cash
flow from operations of the Purchaser which are not required to be applied to
the payment of other obligations of the Purchaser under the Secondary Purchase
Agreement; provided, that no such payment may be made at any time when an Event
of Termination shall have occurred and be continuing. Each Originator hereby
appoints HLIOC as its agent for the purpose of collecting and remitting to it
amounts payable to it pursuant to the Subordinated Note. HLIOC is hereby
authorized by the Purchaser 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 the Purchaser thereunder.
(e) Settlement of Purchase Price. Although the Purchase Price for
each Receivable Asset coming into existence after the Initial Cutoff Date shall
be paid in full by the
15
Purchaser to the Originators on the date such Receivable Asset is purchased, a
precise reconciliation of the Purchase Price between the Purchaser and the
Originators shall be effected on each Settlement Date with respect to all
Receivable Assets transferred during the Month most recently ended prior to such
Settlement Date and based on the information contained in the Borrower Report
most recently delivered by the Servicer pursuant to the Financing Agreement for
such Month (or if Settlement Dates occur more frequently than Monthly, in the
Applicable Report most recently delivered). Although such reconciliation shall
be effected on Settlement Dates, increases or decreases in the amount owing
under the Subordinated Note made pursuant to Section 2.02(d) and any
contribution of capital by the Originators to Purchaser made pursuant to Section
2.02(c) shall be deemed to have occurred and shall be effective as of the date
that the Purchase Price is paid. On each Settlement Date, HLIOC shall determine
the net increase or the net reduction in the outstanding principal amount of the
Subordinated Note occurring during the immediately preceding Month and shall
account for such net increase or net reduction in its books and records. If the
Purchaser shall fail to make any payment of the applicable Purchase Price in
respect of any Purchase on the date such Purchase Price is due hereunder then
the Originators may, upon written notice to the Purchaser and the Program Agent
(as assignee of the Purchaser), elect to terminate its obligation to sell
Receivable Assets to the Purchaser hereunder and its obligation to make
Subordinated Loans.
(f) Capital Contributions and Purchases in Exchange for Proceeds of
a Subordinated Loan. Each contribution of a Receivable Asset by any Originator
to Purchaser shall be deemed to be a Purchase of such Receivable Asset by the
Purchaser for all purposes of this Agreement. The Purchaser hereby acknowledges
that no Originator shall have any obligation to make further capital
contributions to the Purchaser, in respect of such Originator's equity interest
in the Purchaser or otherwise, in order to provide funds to pay the Purchase
Price to such Originator under this Agreement or for any other reason. Each sale
of a Receivable Asset by any Originator to Purchaser in exchange for the
proceeds of a Subordinated Loan shall be deemed to be a Purchase of such
Receivable Asset by the Purchaser for all purposes of this Agreement.
(g) Ownership of Receivable Assets. On each Purchase Date, after
giving effect to the Purchase on such date, the Purchaser shall own all
Receivables originated by the Originators as of the close of business on the
Business Day immediately prior thereto (including Receivables which have been
previously sold to the Purchaser hereunder) and all other Receivable Assets.
Each sale of Receivable Assets hereunder is made without recourse; provided,
however, that (i) each Originator shall be liable to the Purchaser for all
representations, warranties and covenants made by such Originator hereunder and
(ii) such sale does not constitute and is not intended to constitute an
assumption by the Purchaser or its assignee thereof of any Originator or other
Person arising in connection with the Transferred Assets or any other
obligations or liabilities of any Originator.
(h) Intention Is An Irrevocable Transfer; Grant of Security
Interest. It is the intention of the parties hereto that each Purchase to be
made hereunder shall be absolute and irrevocable and will provide the Purchaser
with the full risks and benefits of ownership of the Transferred Assets so
purchased (such that the Transferred Assets would not constitute property of the
applicable Originator's estate in the event of such Originator's bankruptcy) and
shall constitute a "sale of accounts", as such term is used in Article 9 of the
UCC of the State of New York, to the extent applicable, and not a loan secured
by such Transferred Assets. In the event
16
that, contrary to the mutual intent of the Originators and the Purchaser, any
Purchase of Transferred Assets hereunder is not characterized as a sale but
rather as a collateral transfer for security (or the transactions contemplated
hereby are characterized as a financing transaction), it is the intent of the
parties hereto that this Agreement shall constitute a security agreement under
applicable law and that such Purchase shall be deemed to be a secured financing,
secured by a security interest in all of the related Originator's right, title
and interest now or hereafter existing and hereafter arising in, to and under
(i) all Receivables, (ii) all Related Security, (iii) all Collections with
respect to the items in clauses (i) through (ii), (iv) all Deposit Accounts and
Lockboxes and (v) all proceeds of the foregoing (collectively, the "Originator
Collateral"). In furtherance of the foregoing, each Originator hereby grants to
the Purchaser a security interest in all of such Originator's right, title and
interest now or hereafter existing in, to and under the Originator Collateral to
secure the repayment of all amounts due and owing by such Originator to the
Purchaser hereunder with accrued interest thereon, if applicable, whether now or
hereafter existing, due or to become due, direct or indirect, or absolute or
contingent (such amounts the "Secured Obligations").
SECTION 2.03. Collections.
(a) In the event that an Originator believes that funds which are
not Collections of Transferred Assets have been deposited into an account of the
Purchaser or the Purchaser's assignee, such Originator shall notify the Servicer
who shall so advise the Purchaser and, on the Business Day following such
identification, the Purchaser shall remit, or shall cause to be remitted, all
funds so deposited which are identified to the Purchaser's satisfaction to the
applicable Originator.
(b) On each Settlement Date, the Purchaser shall pay to the
applicable Originator accrued interest on the Subordinated Loan and the
Purchaser may, at its option, prepay in whole or in part the principal amount of
the Subordinated Loan; provided that each such payment shall be made solely from
(i) Collections of Transferred Assets after all other amounts then due from the
Purchaser under the Secondary Purchase Agreement and from the Borrower under the
Financing Agreement have been paid in full and all amounts then required to be
set aside by the Purchaser under the Secondary Purchase Agreement and by the
Borrower or the Servicer under the Financing Agreement have been so set aside
and (ii) excess cash flow from operations of the Purchaser which is not required
to be applied to the payment of other obligations of the Purchaser under the
Secondary Purchase Agreement; and provided further, that no such payment shall
be made at any time when an Event of Termination shall have occurred and be
continuing. At such time following the Facility Termination Date and the RFA
Final Payment Date when all amounts owed by the Purchaser under the Secondary
Purchase Agreement shall have been paid in full, the Purchaser shall apply, on
each Settlement Date, all other Collections of Transferred Assets received by
the Purchaser and not previously distributed first to the payment of accrued
interest on the Subordinated Loan, and then to the reduction of the principal
amount of the Subordinated Loan.
(c) If on any day any Transferred Asset becomes (in whole or in
part) a Diluted Receivable, the Originator which originated such Transferred
Asset shall be deemed to have received on such day a Collection of such
Transferred Asset in the amount of such Diluted
17
Receivable. Such Originator shall pay to the Purchaser on or prior to the next
Business Day all amounts deemed to have been received pursuant to this
subsection.
(d) Upon discovery by any Originator or the Purchaser of any breach
of the representation and warranty made in Section 3.01(j) with respect to any
Transferred Receivable, the party discovering the same shall give prompt written
notice thereof to the other parties hereto. The applicable Originator shall, on
the Business Day following such notice, repurchase the affected Transferred
Receivable, at the option of such Originator, either (i) by making a cash
payment to the Purchaser in an amount equal to the Repurchase Price (defined
below), or (ii) so long as no "Event of Termination" under, and as defined in,
the Financing Agreement has occurred, and no Pool Non-compliance Date has
occurred and is continuing under (and as defined in) the Financing Agreement, by
either (x) reducing the principal amount of the Subordinated Note due to such
Originator by the amount of the Repurchase Price (defined below) or (y)
transferring ownership of a new Eligible Receivable to the Purchaser on such
Business Day having an Outstanding Balance at least equal to the Repurchase
Price. The "Repurchase Price" for any Purchased Receivable to be repurchased
under this Section 2.03(d) shall equal the Purchase Price paid for such
Receivable by the Purchaser minus Collections received in respect thereof minus
any payments or offsets made by the related Originator to the Purchaser in
respect of Dilution Factors relating to such Transferred Receivable.
Simultaneously upon the payment to the Purchaser, or transfer to the Purchaser
of Eligible Receivables in respect of, the Repurchase Price for any such
repurchased Transferred Receivable, such Transferred Receivable and all
Transferred Assets relating solely to such Transferred Receivable shall
automatically be reconveyed by the Purchaser to the related Originator without
any further action by the Purchaser or any other Person, and the Purchaser shall
have no further rights with respect thereto. Each party hereto shall, at the
related Originator's expense, take any action the other party may reasonably
request to further evidence such reconveyance. Each Originator's obligation to
reacquire Transferred Receivables pursuant to this Section 2.03(d) shall, upon
satisfaction thereof, constitute the sole remedy (except for any obligation
under Section 6.01 hereof) respecting the event giving rise to such obligation
and is expressly limited to the Transferred Receivable affected by such event.
Except as expressly provided in this Section 2.03, no Originator shall have any
right or obligation under this Agreement, by implication or otherwise, to
repurchase from the Purchaser any Transferred Assets or to rescind or otherwise
retroactively affect any transfer of any Transferred Assets after the date on
which such Transferred Assets are transferred by the Purchaser hereunder.
(e) Except as stated in subsection (c) or (d) of this Section 2.03
or as otherwise required by law or the underlying Contract, all Collections from
an Obligor of any Transferred Receivable shall be applied to the Receivables of
such Obligor in the order of the age of such Receivables, starting with the
oldest such Receivable, unless such Obligor designates its payment for
application to specific Receivables.
SECTION 2.04. Payments and Computations, Etc.
(a) All amounts to be paid or deposited by an Originator hereunder,
including payments to be made with respect to Deemed Collections, shall be paid
or deposited no later than 2 P.M. (New York City time) on the day when due in
same day funds to an account or accounts designated by the Purchaser from time
to time, which accounts, during the existence of the
18
Financing Agreement, shall be the Distribution Agent's Account or such other
accounts set forth in the Financing Agreement.
(b) Each Originator shall, to the extent permitted by law, pay to
the Purchaser interest on any amount not paid or deposited by such Originator
when due hereunder at an interest rate per annum equal to 2% per annum above the
Alternate Base Rate, payable on demand.
(c) All computations of interest and all computations of 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. Whenever any
payment or deposit to be made hereunder shall be due on a day other than a
Business Day, such payment or deposit shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
such payment or deposit.
SECTION 2.05. Certain Rights of the Purchaser.
(a) The Purchaser may, at any time during the existence of an Event
of Termination, give notice of ownership to, and/or direct, the Obligors of
Transferred Assets and any other Person obligated on any Transferred Assets, or
any of them, that payment of all amounts payable under any Transferred Asset
shall be made directly to the Purchaser or its assignees.
(b) The Initial Purchase hereunder shall include the transfer by
each Originator, and each Originator does hereby transfer, to the Purchaser (and
its assigns and designees) the exclusive ownership and control of the Lockboxes
and Deposit Accounts. From and after the Initial Purchase Date, no Originator
shall have any right to withdraw or order a transfer of funds from the Deposit
Accounts or to direct the investment of any funds therein.
(c) At the Purchaser's request and at the applicable Originator's
expense, each Originator shall (i) assemble all of the documents, instruments
and other records (including, without limitation, computer tapes and disks) that
evidence or relate to the Transferred Assets or that are otherwise necessary or
desirable to collect the Transferred Assets, and shall make the same available
to the Purchaser at a place selected by the Purchaser or its designee, and (ii)
segregate all cash, checks and other instruments received by it from time to
time constituting Collections of Transferred Assets in a manner acceptable to
the Purchaser and, promptly upon receipt, remit all such cash, checks and
instruments, duly indorsed or with duly executed instruments of transfer, to the
Purchaser or its designee. The Purchaser shall also have the right to make
copies of all such documents, instruments and other records at any time.
(d) Each Originator authorizes the Purchaser to take any and all
steps in the applicable Originator's name and on behalf of such Originator that
are necessary or desirable, in the determination of the Purchaser, to collect
amounts due under the Transferred Assets, including, without limitation,
endorsing such Originator's name on checks and other instruments representing
Collections of Transferred Assets and enforcing the Transferred Assets.
SECTION 2.06. Rights and Remedies.
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(a) If any Originator fails to perform any of its obligations under
this Agreement, the Purchaser may (but shall not be required to) itself perform,
or cause performance of, such obligation; and the costs and expenses incurred in
connection therewith shall be payable by such non-performing Originator.
(b) Each Originator shall perform all of its obligations under the
Contracts related to the Transferred Receivables to the same extent as if such
Originator had not sold Receivables hereunder and the exercise by the Purchaser
of its rights hereunder shall not relieve such Originator from such obligations
or its obligations with respect to the Transferred Assets. The Purchaser shall
not have any obligation or liability with respect to any Transferred Assets, nor
shall the Purchaser be obligated to perform any of the obligations of the
applicable Originator thereunder.
SECTION 2.07. Transfer of Records to Purchaser.
(a) Each Purchase hereunder shall include the transfer of, and each
Originator does hereby transfer to the Purchaser, all of each Originator's right
and title to and interest in the records relating to the Transferred Assets, and
each Originator hereby agrees that such transfer shall be effected automatically
with each such Purchase, without any further action on the part of the parties
hereto or any further documentation.
(b) In connection with such transfer, to the extent not prohibited
under the relevant agreement between an Originator and the relevant licensor,
each Originator hereby grants to each of the Purchaser, the Program Agent (as
the Purchaser's assignee) and the Servicer an irrevocable, non-exclusive license
to use, without royalty or payment of any kind, all software used by such
Originator to account for the Transferred Assets, whether such software is owned
by any Originator or is owned by others and used by such Originator under
license agreements with respect thereto; provided that should the consent of any
licensor of such software to grant the license described herein be required,
each Originator hereby agrees that upon request by the Purchaser (or the Program
Agent as the Purchaser's assignee), such 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.
(c) Each Originator shall take such action requested by the
Purchaser, from time to time hereafter, that may be deemed by the Purchaser as
reasonably necessary or appropriate to ensure that the Purchaser has an
enforceable ownership interest in the records relating to the Transferred Assets
and, subject to the limitation in clause (b) above, rights (whether by
ownership, license or sublicense) to the use of such Originator's computer
software system to access and create such records, subject to the rights of any
licensors and applicable law.
SECTION 2.08. Servicer.
(a) Each Originator acknowledges that pursuant to the Financing
Agreement the Program Agent has appointed the Servicer to take certain actions
associated with the administration and collection of the Transferred Assets.
Each Originator agrees that it shall
20
cooperate with the Servicer in collecting amounts due from Obligors in respect
of the Transferred Assets. Each Originator hereby grants to Servicer an
irrevocable power of attorney, with full power of substitution, coupled with an
interest, to take in the name of such Originator all steps necessary or
advisable to endorse, negotiate or otherwise realize on any writing or other
right of any kind held or transmitted by such Originator or transmitted or
received by Purchaser (whether or not from such Originator) in connection with
any Transferred Asset.
(b) Each Originator agrees that in connection with the Servicer's
duties under the Financing Agreement and the agreements in this Section 2.08
that the Servicer shall be a third party beneficiary of this Agreement to the
same extent as if the Servicer was a party hereto.
SECTION 2.09. Originators. With the written consent of the Program
Agent and Purchaser, additional Persons may from time to time be added as
"Originators" hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Originators.
Each Originator represents and warrants as of each Purchase Date as follows:
(a) Due Formation and Good Standing. Each Originator is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization (as listed in Schedule 1 attached hereto),
has all corporate power and authority to carry on its business as now conducted,
and is duly qualified to do business, and is in good standing, in every
jurisdiction where the nature of its business requires it to be so qualified,
except where the failure to do so could not reasonably be expected to result in
a Material Adverse Effect.
(b) Due Authorization and No Conflict. The execution, delivery and
performance by each Originator of this Agreement and the other Transaction
Documents to which it is a party, including such Originator's sale of Receivable
Assets hereunder and such Originator's use of the proceeds of Purchases, (i) are
within such Originator's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) do not contravene (A) such Originator's
Charter Documents, (B) any law, rule or regulation applicable to such Originator
the breach of which could be reasonably expected to have a Material Adverse
Effect, (C) any contractual restriction binding on such Originator or its
property or (D) any order, writ, judgment, award, injunction or decree binding
on such Originator or its property, and (iv) do not result in or require the
creation of any Adverse Claim upon or with respect to any of its properties
(except for the transfer of such Originator's interest in the Transferred Assets
pursuant to this Agreement). This Agreement has been duly executed and delivered
by each Originator.
(c) Governmental Approvals. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Entity is required
for the due execution, delivery and performance by each Originator of this
Agreement or any other document to be delivered by it hereunder, except for the
filing of UCC financing statements referred to herein.
(d) Enforceability of Transaction Documents. Each of the Transaction
Documents to which each Originator is a party constitutes the legal, valid and
binding obligation
21
of such Originator enforceable against such Originator in accordance with its
terms, subject to the Enforceability Exceptions.
(e) Perfection of Interest in Transferred Assets. Immediately after
each Purchase hereunder, the Purchaser will have acquired a valid and perfected
first priority ownership interest or security interest in each such Transferred
Asset so purchased, free and clear of any Adverse Claim. No effective financing
statement or other instrument similar in effect, is filed in any appropriate
recording office listing any Originator as debtor or seller, covering any
Transferred Assets except such as may be filed in favor of the Purchaser in
accordance with this Agreement, in favor of the Borrower in accordance with the
Secondary Purchase Agreement or in favor of the Program Agent in accordance with
the Financing Agreement and except those being released or terminated on or
prior to the date hereof.
(f) Financial Statements. The consolidated balance sheet of HLIOC
and its Subsidiaries as at July 31, 2004, and the related statements of income,
stockholders equity and cash flow of HLIOC and its Subsidiaries for the fiscal
year then ended, reported on by KPMG, LLP, copies of which have been furnished
to the Purchaser, fairly present, in accordance with GAAP, the financial
condition and results of operations and cash flows of HLIOC and its Subsidiaries
as of and for the three-quarter period ended on such date. Since July 31, 2004,
there has been no Material Adverse Change with respect to the Originators, taken
as a whole or the Parent and its Subsidiaries taken as a whole.
(g) No Litigation. Except as disclosed in the Parent's or any
Originator's publicly available SEC filings or otherwise disclosed in writing to
the Program Agent after the date hereof, there is no pending or threatened
action, investigation or proceeding affecting such Originator or any of its
Subsidiaries before any court, Governmental Entity or arbitrator in which there
is a reasonable possibility of an adverse decision which could reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect or
which in any way draws into question the validity or enforceability of this
Agreement or any Transaction Document.
(h) Use of Proceeds. No proceeds of any Purchase will be used to
acquire any security in any transaction which is subject to Section 13 or 14 of
the Securities Exchange Act of 1934, as amended.
(i) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(j) Eligibility of Eligible Receivables. Each Transferred Receivable
characterized in any Borrower Report, Daily Report or Weekly Report as an
Eligible Receivable is, as of the date of such report (or if applicable, as of a
date certain specified in such report) an Eligible Receivable. Each Transferred
Asset is owned (immediately prior to its sale hereunder) by the applicable
Originator free and clear of any Adverse Claim. As of each Purchase Date, each
Receivable originated by each Originator as of the close of business on the
Business Day immediately preceding such Purchase Date has been transferred to
the Purchaser hereby.
(k) Accuracy of Information. All written information, exhibits,
financial statements, documents, books, records and reports furnished or to be
furnished at any time
22
(whether before or after the date of this Agreement) by such Originator to the
Purchaser, Program Agent, any Investor Agent, Bank, Borrower or Investor in
connection with this Agreement or any other Transaction Document is or will be
accurate in all material respects as of its date or (except as otherwise
disclosed to the Purchaser at such time) as of the date so furnished (or, if
applicable, as of a date certain specified in such report), and, as of any such
date, no such document contains or will contain any untrue statement of a
material fact or omits or will omit to state 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.
(l) Location of Chief Executive Office and Records; Organizational
Identification Number. The location of each Originator's principal place of
business and chief executive office, the locations of the offices where it keeps
all the books and records relating to the Transferred Assets, its form of
organization, sole jurisdiction of organization, federal employer identification
number and organizational identification number (if any) are correctly set forth
on Exhibit C. No Originator has had any chief executive office in the past five
(5) years other than that set forth on Exhibit C.
(m) Collection Information. The names and addresses of all the
Deposit Banks, together with the post office boxes and account numbers of the
Lockboxes and Deposit Accounts at such Deposit Banks are specified in Exhibit D
(as the same may be updated from time to time pursuant to Section 4.01(g)). The
Lockboxes and Deposit Accounts are the only post office boxes and bank accounts
into which Collections of Transferred Receivables are deposited or remitted.
(n) No Trade Names. Except as set forth under the name of each
Originator in Schedule 2, no Originator is known by nor uses any tradename or
doing-business-as name.
(o) No Licenses. With respect to any programs (software or
otherwise) used by each Originator in the servicing of the Transferred
Receivables, no sublicensing agreements are necessary in connection with the
designation of any Servicer other than HLIOC so that such other Servicer would
have the benefit of such programs.
(p) Solvency. Each Originator is Solvent. The transfers of
Transferred Assets by each Originator to the Purchaser pursuant to this
Agreement, and all other transactions between each Originator and the Purchaser,
have been and will be made in good faith and without intent to hinder, delay or
defraud creditors of such Originator. The transfers of Transferred Assets
pursuant to this Agreement will not render any Originator insolvent.
(q) Taxes. Each Originator has timely filed all United States
Federal income tax returns (if any) and all other tax returns which are required
to be filed by it and has paid all material taxes, assessments or governmental
charges of any kind that are due and payable by it pursuant to such returns or
pursuant to any assessment received by such Originator; provided that such
Originator may contest in good faith any such taxes, assessments and other
charges and, in such event, may permit the taxes, assessments or other charges
so contested to remain unpaid during any period, including appeals, when such
Originator is in good faith contesting the same, so long as (i) adequate
reserves have been established in accordance with GAAP, (ii) enforcement of the
contested tax, assessment or other charge is effectively stayed for the entire
23
duration of such contest if such enforcement could reasonably be expected to
have a Material Adverse Effect, and (iii) any tax, assessment or other charge
determined to be due, together with any interest or penalties thereon, is
promptly paid as required after final resolution of such contest. The charges,
accruals and reserves on the books of such Originator in respect of taxes and
other governmental charges are, in such Originator's opinion, adequate
(r) Compliance with Laws. Each Originator has complied in all
respects with all applicable laws, rules, tariffs, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject the failure
to comply with which could reasonably be expected to have a Material Adverse
Effect.
(s) Accounting. The manner in which each Originator accounts for the
transactions contemplated by this Agreement is consistent with the "true sale"
opinion to be rendered by Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP on the date
hereof.
(t) No Events of Termination. Immediately after giving effect to
each Purchase, no Event of Termination has occurred.
(u) Ownership. As of the date hereof, the issued and outstanding
Stock of the Purchaser described on Schedule 3 with respect to each Originator
is directly owned of record by such Originator, all of which stock is validly
issued and fully paid and there are no options, warrants or other rights to
acquire any shares of Stock of the Purchaser.
(v) Transaction Documents. The Transaction Documents represent all
agreements between the Originators and the Purchaser relating to the transfer of
the Transferred Receivables except for other agreements related to the
transactions that are permitted by Section 4.01(l).
(w) Investment Company Act; Public Utility Holding Company Act. No
Originator is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
(x) Payments to Originators. With respect to each Transferred Asset
transferred to the Purchaser hereunder, the Purchase Price received by the
Originators constitutes reasonably equivalent value in consideration thereof. No
transfer by any Originator to the Purchaser of a Transferred Asset has been made
for or on account of an antecedent debt owed by any Originator to the Purchaser,
and no such sale is or may be voidable or subject to avoidance under any section
of the Bankruptcy Code.
(y) Compliance with Credit and Collection Policy. Each Originator
has complied in all material respects with the Credit and Collection Policy with
regard to its origination of each Transferred Receivable and the related
Contract and has not made any change to such Credit and Collection Policy other
than as permitted under Section 4.01(f).
(z) Determination by Management. The management of each Originator
has determined that the transactions contemplated hereby, including such
Originator's transfer of the Receivable Assets to the Purchaser, are in such
Originator's best interests and represents a
24
practicable course of action without impairing the rights and interests of such
Originator's creditors.
ARTICLE IV
COVENANTS
SECTION 4.01. Covenants of the Originators. Until the Final
Collection Date, each Originator shall:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders and preserve and maintain its
corporate existence, rights, franchises, qualifications and privileges except to
the extent that the failure so to comply with such laws, rules and regulations
or the failure so to preserve and maintain such rights, franchises,
qualifications, and privileges could not reasonably be expected to result in a
Material Adverse Effect.
(b) Offices, Records, Name and Organization. Keep its principal
place of business and chief executive office and the office where it keeps its
records concerning the Transferred Assets at the address of such Originator set
forth on Exhibit C hereto or, upon 30 days' prior written notice to the
Purchaser and its assignees, at any other locations within the United States. No
Originator will change its name or its jurisdiction of organization, unless (i)
such Originator shall have provided the Purchaser and its assignees with at
least 30 days' prior written notice thereof and (ii) no later than the effective
date of such change, all actions required by Section 4.01(j) shall have been
taken and completed. Such Originator shall make a notation in its books and
records, including its computer files, to indicate which Receivables and other
Receivable Assets have been sold by it to the Purchaser hereunder.
(c) Performance and Compliance with Contracts and Credit and
Collection Policy. 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 the Contracts related to the Transferred Assets, and
timely and fully comply in all material respects with the Credit and Collection
Policy in regard to each Transferred Receivable and the related Contract.
(d) Sales, Liens, Etc. Except for the sales of Transferred Assets
contemplated herein, not sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse Claim upon or
with respect to, any Receivable Asset or Originator Collateral, or upon or with
respect to any account to which any Collections of any Transferred Asset are
sent, or assign any right to receive income in respect thereof.
(e) Extension or Amendment of Receivables. Except as permitted under
Section 6.02(c) of the Financing Agreement in any Originator's capacity as the
Servicer, not extend, amend or otherwise modify the terms of any Transferred
Receivable, or amend, modify or waive any term or condition of any Contract (to
which it is a party) related thereto.
(f) Change in Business or Credit and Collection Policy. Not make any
change in the character of its business or in the Credit and Collection Policy
that would impair the collectibility of the Transferred Receivables.
25
(g) Change in Payment Instructions to Obligors. Not add or terminate
any post office box, bank, or bank account as a Lockbox, Deposit Bank, or
Deposit Account from those listed in Exhibit D to this Agreement, or make any
change in its instructions to Obligors regarding payments to be made to any such
box or account, unless the Purchaser shall have received notice of such
addition, termination or change (including an updated Exhibit D) and a fully
executed Deposit Account Agreement with each new Deposit Bank with respect to
each new Lockbox or Deposit Account.
(h) Deposits to Lockboxes and Deposit Accounts. Instruct all of its
Obligors to remit all their payments in respect of Transferred Assets to Deposit
Accounts or Lockboxes associated therewith. If an Originator shall receive any
Collections directly, it shall immediately (and in any event within one Business
Day) deposit the same to a Deposit Account. No Originator will deposit or
otherwise credit, or cause or permit to be so deposited or credited, to any
Lockbox or Deposit Account cash or cash proceeds other than Collections of
Transferred Assets.
(i) Audits. Will, at their respective expense, from time to time
during regular business hours as requested by the Purchaser, its assignees,
agents or representatives (including independent public accountants, which may
be any Originator's or the Parent's independent public accountants), permit such
Persons (i) to conduct audits of the Transferred Assets and the related books
and records and collections systems of any Originator, (ii) to examine and make
copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under the
control of any Originator relating to the Transferred Assets, and (iii) to visit
the offices and properties of any Originator for the purpose of examining such
materials described in clause (ii) above, and to discuss matters relating to the
Transferred Assets or any Originator's performance under the Transaction
Documents or under the Contracts with any of the officers or employees of any
Originator having knowledge of such matters. In addition, the Purchaser, its
assignees, agents or representatives may appoint independent public accountants
or other Persons acceptable to the Purchaser or its assigns (which shall not be
the Parent's or any Originator's independent public accountants who perform
regular financial statement audits for the Parent and its Subsidiaries), to
prepare and deliver to the Purchaser and its assignees a written report with
respect to the Transferred Assets and the Credit and Collection Policy
(including, in each case, the systems, procedures and records relating thereto)
on a scope and in a form reasonably requested by the Purchaser or its assigns,
and the Originators shall reimburse the Purchaser and its assigns all reasonable
costs and expense incurred in connection therewith; provided, that so long as no
Event of Termination has occurred or is continuing, the Originators'
reimbursement obligations hereunder shall be limited to two such audits per
calendar year (but without such limitation for follow-up audits if an audit
deficiency is described during any such audit or follow-up audit); provided,
further, that satisfaction of the requirements of Section 5.02 of the Financing
Agreement shall also constitute satisfaction of this sentence.
(j) Further Assurances.
(i) From time to time, at its expense, promptly execute and
deliver all further instruments and documents, and take all further
actions, that may be necessary or desirable, or that the Purchaser or its
assignees may reasonably request, to perfect, protect
26
or more fully evidence the sale of Transferred Assets under this
Agreement, or to enable the Purchaser or its assignees to exercise and
enforce its respective rights and remedies under this Agreement. Without
limiting the foregoing, such Originator will, upon the request of the
Purchaser or its assignees, (A) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments
and documents, that may be necessary or desirable to perfect, protect or
evidence such Transferred Assets; and (B) deliver to the Purchaser copies
of all Contracts (to which it is a party) relating to the Transferred
Assets and all records relating to such Contracts and the Transferred
Assets, whether in hard copy or in magnetic tape or diskette format (which
if in magnetic tape or diskette format shall be compatible with the
Purchaser's computer equipment).
(ii) Such Originator authorizes the Purchaser or its assignees
to file financing or continuation statements, and amendments thereto and
assignments thereof, relating to the Transferred Assets and Originator
Collateral.
(iii) Perform its obligations under the Contracts related to
the Transferred Receivables to the same extent as if the Transferred
Assets had not been sold or transferred.
(k) Reporting Requirements. Provide to the Purchaser the following:
(i) as soon as available and in any event prior to the date on
which the Parent is required to file a form 10-Q pursuant to SOXA,
financial information regarding HLIOC and its Subsidiaries consisting of
consolidated unaudited balance sheets as of the close of such quarter and
the related statements of income and cash flow for such quarter and that
portion of the fiscal year ending as of the close of such quarter,
certified by a Financial Officer of the Originators as fairly presenting
the consolidated financial position of HLIOC and its Subsidiaries as at
the dates indicated and the results of their operations and cash flow for
the periods indicated in accordance with GAAP (subject to the absence of
footnote disclosure and normal year-end audit adjustments);
(ii) as soon as available and in any event prior to the date
on which the Parent is required to file a form 10-K pursuant to SOXA,
financial information regarding HLIOC and its Subsidiaries consisting of
consolidated and consolidating balance sheets of HLIOC and its
Subsidiaries as of the end of such year and related statements of income
and cash flows of HLIOC and its Subsidiaries for such fiscal year, all
prepared in conformity with GAAP and certified, in the case of the
consolidated financial statements, without qualification as to the scope
of the audit or as to HLIOC being a going concern by KPMG, LLP or other
independent public accountants of recognized national standing acceptable
to the Program Agent, together with a report of such accounting firm
stating that (A) such financial statements fairly present the consolidated
financial position of HLIOC and its Subsidiaries as at the dates indicated
and the results of their operations and cash flows for the period
indicated in conformity with GAAP applied on a basis consistent with prior
years (except for changes which such accountants shall concur and that
shall have been disclosed in the notes to such financial statements) and
(B) the examination by such accountants in connection with such
consolidated financial
27
statements has been made in accordance with generally accepted auditing
standards, and accompanied by (1) prior to the Negotiation Date, a copy of
the certificate delivered by such accountants with respect to such
accounting firm's knowledge of any events of default or potential events
of default under the Credit Agreement, in the form required to be
delivered under the Credit Agreement, or (2) on and after the Negotiation
Date, a certificate stating that in the course of the regular audit of the
business of the Originators and their Subsidiaries such accounting firm
has obtained no knowledge that a Event of Termination or Incipient Event
of Termination with respect to the Financial Covenants under, as defined
in, the Financing Agreement, has occurred and is continuing, or if in the
opinion of such accounting firm, such a default has occurred and is
continuing, a statement as to the nature thereof;
(iii) as soon as possible and in any event within five
Business Days after the occurrence of each Event of Termination or
Incipient Event of Termination, in each case of which the Originators have
actual knowledge, a statement of a Financial Officer of the Originators
setting forth details of such Event of Termination or Incipient Event of
Termination and the action that the Originators have taken and propose to
take with respect thereto;
(iv) promptly after the sending or filing thereof, copies of
all reports which the Originators or Parent send to any of their
securityholders, and copies of all reports and registration statements
which the Originators or Parent file with the Securities Exchange
Commission or any national securities exchange;
(v) at least 30 days prior to any change in an Originator's
name or state of organization, a notice setting forth the new name or
state of organization and the effective date thereof;
(vi) promptly and in no event more than five (5) Business Days
after obtaining knowledge thereof, notice of any matter or the occurrence
of any event concerning it which could reasonably be expected to have a
Material Adverse Effect; and
(vii) such other information respecting the Transferred Assets
or the condition or operations, financial or otherwise, of any Originator
as the Purchaser may from time to time reasonably request, to the extent
such disclosure is permitted under applicable law, rule or regulation.
Reports and financial statements required to be delivered pursuant to clauses
(i), (ii) and (iv) of this Section 4.01(k) shall be deemed to have been
delivered on the date on which the Parent posts such reports, or reports
containing such financial statements, on the Parent's website on the internet at
xxxx://xxx.xxxxx-xxxxxxx.xxx or when such reports, or reports containing such
financial statements, are posted on the SEC's website at xxx.xxx.xxx.
(l) Limitation on Transactions with the Purchaser. Not enter into,
or be a party to any transaction with the Purchaser, except for (i) the
transactions contemplated by this Agreement and the other Transaction Documents;
and (ii) to the extent not otherwise prohibited under this Agreement, other
transactions in the nature of employment contracts and directors'
28
fees, upon fair and reasonable terms materially no less favorable to the
Purchaser than would be obtained in a comparable arm's-length transaction with a
Person not an Affiliate.
(m) Additional Information. If additional information is requested
by the Obligor as to a xxxx or supporting claim documents, such Originator has
or will promptly provide the same, and if any error has been made with respect
to such information, such Originator will promptly correct the same and, if
necessary, rebill such Receivable.
(n) Records. Record each Purchase as a sale or capital contribution,
as the case may be, on its books and records, and reflect each Purchase in its
financial statements and tax returns as a sale or capital contribution, as the
case may be. Maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing the
Transferred Receivables in the event of the destruction of the originals
thereof) and keep and maintain all documents, books, records and other
information reasonably necessary for the collection of all such Transferred
Receivables, and in which timely entries are made in accordance with GAAP. Such
books and records shall include, without limitation, records adequate to permit
the daily identification of each new Transferred Receivable and all Collections
of and adjustments to each existing Transferred Receivable, as well as its
actual experience with respect to any Dilution Factor. Promptly notify the
Purchaser of any material conversion or substitution (excluding, in each case,
version upgrades) of the computer software used by any Originator in its
collection of Transferred Receivables.
(o) Separate Existence. Take all reasonable steps (including,
without limitation, all steps that the Purchaser may from time to time
reasonably request) to maintain each of the Borrower's and Purchaser's identity
as a separate legal entity from it and to make it manifest to third parties that
each of the Borrower and Purchaser is an entity with assets and liabilities
distinct from those of it and each of its other Affiliates. Without limiting the
generality of the foregoing, it shall (i) maintain its books and records
separate from those of the Borrower and Purchaser and maintain records of all
intercompany debits and credits and transfers of funds made by it on the
Purchaser's behalf; (ii) prevent the commingling of its funds or other assets
with those of the Borrower and Purchaser, and not maintain bank accounts or
other depository accounts to which the Borrower or Purchaser is an account
party, into which the Borrower or Purchaser makes deposits or from which the
Borrower or Purchaser has the power to make withdrawals except as otherwise
contemplated hereunder or under the Financing Agreement with respect to the
Servicer's administration of Collections; (iii) not enter into or permit to
exist any transaction (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with the Borrower
or Purchaser which is on terms that are less favorable to it than those that
might be obtained in an arm's length transaction at the time from Persons who
are not Affiliates and which is not evidenced by or pursuant to a written
agreement; (iv) not pay the operating expenses and liabilities of the Borrower
or Purchaser; (v) clearly identify its office space (by sign or otherwise) as
being separate and distinct from the offices of, or any space occupied by, the
Borrower and Purchaser and allocate fairly with the Borrower and Purchaser any
overhead, if relevant, for shared office space or business facilities or
equipment; (vi) act solely in its own name, through its own officials or
representatives where relevant, and not hold the Borrower or Purchaser out as a
"division" or "part" of it; (vii) have stationery and other business forms and a
telephone number separate from that of the Borrower and Purchaser; and (viii)
take all other actions reasonably necessary on its part to operate its business
and
29
perform its obligations under the Transaction Documents in a manner consistent
with Section 5.01(g) of the Financing Agreement, Section 4.01(o) of the
Secondary Purchase Agreement and the factual assumptions described in the legal
opinions with respect to non-consolidation or true sale matters delivered
pursuant to Section 3.01(g) of the Financing Agreement to the extent applicable
to it. In addition to the foregoing, it will cause any financial statements
consolidated with those of the Borrower or Purchaser to state that the
Purchaser's business consists of the purchase of Receivable Assets from it, the
Borrower's business consists of the purchase of Receivables Assets from
Purchaser and that each of the Borrower and Purchaser is a separate legal entity
with its own separate creditors who, in any liquidation of the Borrower or
Purchaser, will be entitled to be satisfied out of the Borrower's or
Purchaser's, as applicable, assets prior to any value in the Borrower or
Purchaser becoming available to the Borrower's or Purchaser's equity holders.
(p) Taxes. File all material tax returns and reports required by law
to be filed by it and will promptly pay all taxes and governmental charges at
any time owing, except such as are being contested in compliance with Section
3.01(q) and pay when due any taxes payable in connection with the transfer of
the Receivables Assets.
(q) Accounting of Transfers. Not account for or treat (whether in
financial statements or otherwise) the transactions provided for by this
Agreement in any manner other than as the sale and/or absolute conveyance by it
of Transferred Assets to the Purchaser.
(r) Extension or Amendment of Transferred Receivables. Not extend,
amend, waiver or otherwise modify, the terms of any Transferred Receivable or
any Contract related thereto, except (i) in accordance with the Credit and
Collection Policy or (ii) as otherwise permitted hereunder.
ARTICLE V
EVENTS OF TERMINATION
SECTION 5.01. Events of Termination. If any of the following events
("Events of Termination") shall occur and be continuing:
(a) any Originator shall fail to make when due any payment or
deposit to be made by it under this Agreement (including any payment with
respect to any Deemed Collection);
(b) any Originator shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 4.01(l) or 4.01(o) and such failure
shall remain unremedied for 15 days or (ii) any other term, covenant or
agreement contained in this Agreement or any other Transaction Document on its
part to be performed or observed and any such failure shall remain unremedied
for thirty (30) days; provided, that failure to perform or observe any covenant
contained in Sections 4.01(b), 4.01(d), 4.01(g), 4.01(h) or 4.01(q) shall not be
entitled to the benefit of such 30-day or 15-day period;
(c) any representation or warranty (unless such representation or
warranty relates solely to one or more specific Receivables incorrectly
characterized as Eligible
30
Receivables and the applicable Originator shall have made any required Deemed
Collection payment pursuant to Section 2.03 with respect to such Receivables)
made or deemed made by any Originator (or any of its officers) under or in
connection with this Agreement or any information or report delivered by any
Originator pursuant to this Agreement shall prove to have been incorrect or
untrue in any material respect when made or deemed made or delivered (except
that the materiality standard in this clause (c) shall not apply to any such
representation or warranty that is qualified by a materiality standard by its
terms);
(d) any Originator shall fail to pay any principal of or premium or
interest on any of its Debt which is outstanding in a principal amount of at
least $17,500,000 in the aggregate when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Debt; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect
of such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to repay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof;
(e) any Purchase of Transferred Assets hereunder shall for any
reason cease to constitute valid and perfected ownership of such Transferred
Assets or immediately prior to each Purchase hereunder any Originator shall
cease to have a valid and perfected first priority ownership interest therein,
or there shall exist any Adverse Claim in the Originator Collateral;
(f) any Originator 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 any Originator seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or any Originator shall take any corporate action to
authorize any of the actions set forth above in this subsection (f);
(g) an Event of Termination shall have occurred under the Financing
Agreement; or
(h) there shall have occurred any event which may materially
adversely affect the collectibility of the Transferred Receivables or the
ability of any Originator to collect
31
Transferred Receivables or otherwise perform its respective obligations under
this Agreement or the other Transaction Documents;
then, and in any such event, the Purchaser may, by notice to the Originators,
declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred), and all Purchases
hereunder shall cease immediately; provided, however, that in the case of any
event described in clause (f) above, the Facility Termination Date shall occur
automatically upon the occurrence of such event. Upon any such declaration or
designation or upon such automatic termination, the Purchaser shall have, in
addition to the rights and remedies under this Agreement, all other rights and
remedies with respect to the Transferred Assets and Originator Collateral
provided after default under the UCC and under other applicable law, which
rights and remedies shall be cumulative.
Notwithstanding anything in the foregoing to the contrary, if any Event of
Termination set forth in Section 5.01(b), (c), or (h) shall have occurred and be
continuing with respect to any Originator (solely for the purposes of such
determination, the provisions herein shall be construed as applying severally to
each Originator and not jointly), and if (1) the Purchaser shall have received
written notice from such Originator of its election to be treated as a
"Defaulting Originator" hereunder within two Business Days of the occurrence of
such Event of Termination, (2) no other Event of Termination shall have occurred
and be continuing, and (3) the sum of (x) the aggregate existing Defaulting
Originator Percentages and (y) the Defaulting Originator Percentage that would
be applicable to such Originator if such Originator were deemed a Defaulting
Originator hereunder, would not exceed 15%, then such Originator shall become a
"Defaulting Originator" under the Transaction Documents, and such Events of
Termination as they relate to such Defaulting Originator shall be deemed cured
(and no longer applicable to such Defaulting Originator) and the Facility
Termination Date may no longer be declared solely as a result thereof.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. Indemnities by the Originators.
(a) Without limiting any other rights which the Purchaser may have
hereunder or under applicable law, each Originator hereby agrees to indemnify
the Purchaser and its assigns and transferees (each, an "Indemnified Party"),
from and against any and all damages, claims, losses, liabilities and related
costs and expenses, including reasonable attorneys' fees and disbursements (all
of the foregoing being collectively referred to as "Indemnified Amounts"),
awarded against or incurred by any Indemnified Party arising out of or as a
result of any of the following:
(i) the characterization (A) in any Borrower Report, Weekly
Report, Daily Report or (B) for the purpose of inclusion of a Transferred
Receivable in the Net Receivables Pool Balance in any other written
statement made by such Originator to the Program Agent, of any Transferred
Receivable as an Eligible Receivable which is not an Eligible Receivable
as of the date on which such information was certified;
32
(ii) any representation or warranty or statement made or
deemed made by such Originator (or any of its officers) under or in
connection with this Agreement or any other Transaction Document, which
shall have been incorrect in any respect when made or deemed made;
(iii) the failure by such Originator to comply with any
applicable law, rule or regulation with respect to any Transferred Asset
or the related Contract; or the failure of any Transferred Asset or the
related Contract to conform to any such applicable law, rule or
regulation;
(iv) the failure to vest and maintain vested in the Purchaser
absolute ownership of the Transferred Assets that are, or that purport to
be, the subject of a Purchase under this Agreement, free and clear of any
Adverse Claim;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment of
any Receivable that is, or that purports to be, the subject of a Purchase
under this Agreement from such Originator (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 goods or services related to such Receivable or the furnishing or
failure to furnish such goods or services or relating to collection
activities with respect to such Receivable (if such collection activities
were performed by such Originator acting as Servicer);
(vi) any failure of such Originator to comply with any term,
provision or covenant contained in this Agreement or any other Transaction
Document to which it is a party or to perform its duties or obligations
under any Contract related to a Transferred Receivable;
(vii) any products liability or other claim arising out of or
in connection with goods or services which are the subject of any Contract
related to a Transferred Receivable originated by such Originator;
(viii) the commingling of Collections of Transferred Assets by
such Originator (or a designee of such Originator), as Servicer or
otherwise, at any time with other funds;
(ix) any investigation, litigation or proceeding related to
this Agreement or any other Transaction Document to which such Originator
is a party or the use of proceeds of Purchases by such Originator or in
respect of any Transferred Asset with respect thereto;
(x) any claim brought by any Person other than an Indemnified
Party arising from any activity such Originator or any designee of such
Originator in servicing, administering or collecting any Transferred
Asset;
(xi) the sale by any Originator of any Receivable Asset in
violation of any applicable law, rule or regulation;
33
(xii) any Adverse Claim attaching to any Transferred Asset or
any Originator Collateral with respect thereto, except a Lien created
under the Transaction Documents;
(xiii) the failure to pay when due any and all Other Taxes and
the payment by such Indemnified Party of Taxes;
(xiv) any failure by the Purchaser to give reasonably
equivalent value to such Originator in consideration for the transfer by
such Originator to the Purchaser of any Transferred Assets, or any attempt
by any Person to void any Purchases under any statutory provision or
common law or equitable action, including, without limitation, any
provision of the Bankruptcy Code;
(xv) the failure of any Lockbox processor or Deposit Bank to
remit any amounts or items of payment held in a Lockbox or Deposit Account
pursuant to the instructions of the Program Agent given in accordance with
the Financing Agreement, the applicable Deposit Account Agreement or the
other Transaction Documents, whether by reason of the exercise of setoff
rights or otherwise;
(xvi) the failure of such Originator to furnish accurate and
complete documentation (including, without limitation, a Contract or
invoice) to any Obligor; and
(xvii) any Transferred Receivable becoming (in whole or in
part) a Diluted Receivable.
(b) It is expressly agreed and understood by the parties hereto (i)
that the foregoing indemnification is not intended to, and shall not,
constitute a guarantee of the collectibility or payment of the Transferred
Assets and (ii) that nothing in this Section 6.01 shall require any
Originator to indemnify any Person (A) for Transferred Receivables which
are not collected, not paid or uncollectible on account of the insolvency,
bankruptcy, or financial inability to pay of the applicable Obligor or (B)
for damages, losses, claims or liabilities or related costs or expenses to
the extent found in a final non-appealable judgment of a court of
competent jurisdiction to have resulted from such Person's gross
negligence or willful misconduct. In no event, however, shall Originators
be liable for punitive damages other than arising from a third party
claim.
(c) Any amounts subject to the indemnification provisions of this
Section 6.01 shall be paid by the Originators to the related Indemnified
Party within five (5) Business Days following demand therefor accompanied
by reasonable supporting documentation with respect to such amounts.
Notwithstanding anything to the contrary in this Agreement, solely for
purposes of this Section 6.01, any representation, warranty or covenant
qualified by materiality or the occurrence of a Material Adverse Effect
shall not be so qualified.
(d) No Indemnified Party shall have any liability (whether in
contract, tort or otherwise) to any Originator or any of their security
holders or creditors for or in connection with the transactions
contemplated hereby, except to the extent such liability is determined in
a final non-appealable judgment by a court of competent jurisdiction to
have resulted primarily from such Indemnified Party's gross negligence or
willful misconduct or breach of its obligations
34
under the Financing Agreement. In no event, however, shall any Indemnified
Party be liable on any theory of liability for any special, indirect,
consequential or punitive damages (including, without limitation, any loss
of profits, business or anticipated savings).
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or consent to any departure by an Originator
therefrom shall be effective unless in a writing signed by the Purchaser and, in
the case of any amendment, also signed by the Originators, and then such
amendment, 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
Purchaser 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. This Agreement, the Secondary Purchase Agreement and the
Financing Agreement, together with the other written agreements required to be
delivered hereunder and thereunder and the exhibits and schedules hereto and
thereto, contains a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement (together with the exhibits hereto) among the
parties hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings.
SECTION 7.02. Notices, Etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by facsimile, to each party hereto, at its address set
forth on Exhibit C hereto or at such other address as shall be designated by
such party in a written notice to the other parties hereto. Notwithstanding
anything herein to the contrary, delivery of a single notice to HLIOC shall
constitute delivery of a notice to each and every one of the Originators. All
notices and communications given to any party hereto shall be deemed to have
been given on the date of receipt. Each of the Purchaser and the Originators
consents to the service of any and all process in any action or proceeding
described in Section 7.05 by the mailing of copies of such process to it at its
address specified for notice hereunder. Nothing in this Section 7.02 shall
affect the right of the Purchaser or any Originator to serve legal process in
any other manner permitted by law.
SECTION 7.03. Binding Effect; Assignability.
(a) This Agreement shall be binding upon and inure to the benefit of
the Originators, the Purchaser and their respective successors and assigns;
provided, however, that no Originator may assign its rights or obligations
hereunder or any interest herein without the prior written consent of the
Purchaser. In connection with any sale or assignment by the Purchaser of all or
a portion of the Transferred Assets, the buyer or assignee, as the case may be,
shall, to the extent of its purchase or assignment, have all rights of the
Purchaser under this Agreement (as if such buyer or assignee, as the case may
be, were the Purchaser hereunder) except to the extent specifically provided in
the agreement between the Purchaser and such buyer or assignee, as the case may
be.
35
(b) This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until such time, after the Facility Termination Date,
when all of the Transferred Receivables are either collected in full or become
Defaulted Receivables; provided, however, that rights and remedies with respect
to any breach of any representation and warranty made by an Originator pursuant
to Article III and the provisions of Article VI and Sections 7.04 and 7.05 shall
be continuing and shall survive any termination of this Agreement.
SECTION 7.04. Costs, Expenses and Taxes.
(a) In addition to the rights of indemnification granted to the
Purchaser pursuant to Article VI hereof, the Originators agree to pay on demand,
on a joint and several basis, all costs and expenses in connection with the
preparation, execution and delivery of this Agreement and the other documents
and agreements to be delivered hereunder, including, without limitation, the
reasonable fees and reasonable out-of-pocket expenses of counsel for the
Purchaser with respect thereto and with respect to advising the Purchaser as to
its rights and remedies under this Agreement, and the Originators agree to pay,
on a joint and several basis, all costs and expenses, if any (including
reasonable counsel fees and expenses), in connection with the enforcement of
this Agreement and the other documents to be delivered hereunder excluding,
however, any costs of enforcement or collection of Transferred Assets which are
not paid on account of the insolvency, bankruptcy or financial inability to pay
of the applicable Obligor.
(b) In addition, the Originators agree to pay, on a joint and
several basis, any and all stamp and other taxes and fees payable in connection
with the execution, delivery, filing and recording of this Agreement or the
other documents or agreements to be delivered hereunder, and the Originators
agree, on a joint and several basis, to save each Indemnified Party harmless
from and against any liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
SECTION 7.05. WAVIER OF JURY TRIAL; CONSENT TO JURISDICTION. EACH
PARTY HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE AMONG ANY OF THE
ORIGINATORS AND THE PURCHASER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP AMONG THEM IN CONNECTION WITH THIS AGREEMENT.
INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT
A JURY. EACH PARTY HERETO HEREBY AGREES AND SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE COURTS OF THE UNITED
STATES LOCATED IN THE STATE OF NEW YORK FOR THE PURPOSE OF ADJUDICATING ANY
CLAIM OR CONTROVERSY ARISING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
AND, FOR SUCH PURPOSE, HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS
AND ANY OBJECTION TO VENUE THEREIN OF ANY ACTION INSTITUTED HEREUNDER AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 7.05 SHALL AFFECT THE RIGHT OF
ANY ORIGINATOR
36
OR THE PURCHASER TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OTHER PARTY
HERETO OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 7.06. GOVERNING LAW. THIS AGREEMENT SHALL, IN ACCORDANCE
WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 7.07. 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.
SECTION 7.08. Purchaser's Assignment of Rights to Program Agent.
Each Originator acknowledges that all of the Purchaser's right, title and
interest in, to and under this Agreement and each other document, agreement or
instrument executed in connection herewith or therewith, constitutes part of the
Transferred Assets and the Collateral under the Financing Agreement. Pursuant to
and subject to the limitations contained in, and the terms and conditions of,
the Financing Agreement, the Purchaser has assigned to the Program Agent, for
the benefit of the Beneficiaries, all benefits, rights and remedies exercisable
by the Purchaser under this Agreement and each other document, agreement or
instrument executed in connection herewith or therewith. Such assignment
includes, without limitation, (a) all monies due and to become due to the
Purchaser from each Originator, whether as Transferred Receivables or any fees,
expenses, costs, indemnities, or damages for the breach of this Agreement or
otherwise and (b) all rights, remedies, powers, privileges and claims of the
Purchaser against each Originator under or with respect to this Agreement
(whether arising pursuant to the terms of this Agreement or as otherwise
available at law or in equity). Each Originator acknowledges that the Program
Agent shall have the sole right to enforce the Purchaser's rights and remedies
under this Agreement to the extent permitted by the Financing Agreement;
provided, however, that the Program Agent shall not be obligated to perform any
of the obligations of the Purchaser under this Agreement. Each Originator
acknowledges that the rights of the Program Agent with respect to the rights and
remedies in connection with any indemnification or any breach of any
representation, warranty, or covenant made by such Originator under this
Agreement shall be continuing and shall survive any termination of this
Agreement.
SECTION 7.09. Limited Recourse. Notwithstanding anything to the
contrary contained herein, the obligations of the Purchaser under this Agreement
shall be payable solely out of Collections as they are received by or are
available to the Purchaser to make such payments pursuant to the Secondary
Purchase Agreement, and, to the extent Collections are not available to pay such
obligations, the claims relating thereto shall not constitute a claim (as
defined in Section 101 of Title 11 of the Bankruptcy Code) against the Purchaser
but shall continue to accrue. Each Originator agrees that the payment by the
Purchaser of any claim of any such Originator hereunder shall be subordinated in
the priority for such claim on the same subordination terms as set forth in the
Subordinated Note. Each Originator hereby agrees that it will not institute
against the Purchaser any proceeding of the type referred to in Section 5.01(f)
so long as any Obligations shall be outstanding or there shall not have elapsed
one year plus one day since the last day on which any such Obligations shall
have been outstanding.
37
SECTION 7.10. Confidentiality.
(a) Each Originator agrees to maintain the confidentiality of this
Agreement in communications with third parties and otherwise; provided that this
Agreement may be disclosed (i) 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 Purchaser, (ii) to the legal counsel and auditors
of such Originator if they agree to hold it confidential and (iii) to the extent
required by applicable law or regulation or by any court, regulatory body or
agency having jurisdiction over such party; and provided, further, that such
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.
(b) The Purchaser agrees to maintain the confidentiality of all
information with respect to each Originator furnished or delivered to it
pursuant to this Agreement and identified by such Originator as being
confidential; provided, that such information may be disclosed (i) to such
party's legal counsel and auditors and to such party's assignees and
participants and potential assignees and participants and their respective
counsel if they agree to hold it confidential, (ii) to the nationally recognized
statistical rating agencies, (iii) to any actual or potential subordinated
investor in any Investor or any provider of liquidity for any Investor, if such
subordinated investor or provider of liquidity has agreed to hold it
confidential, (iv) to credit enhancers and dealers and investors in respect of
promissory notes of each Investor in accordance with the customary practices of
said Investor for disclosure to credit enhancers, dealers or investors, as the
case may be, it being understood that any such disclosure to dealers or
investors will not identify any Originator or any of their Affiliates by name,
(v) to the extent required by applicable law or regulation or by any court,
regulatory body or agency having jurisdiction over such party (or its
assignees), (vi) in connection with enforcement of the Purchaser's or any
Beneficiary's rights and remedies hereunder or under the other Transaction
Documents, and (vii) to any other Person with HLIOC's prior written consent; and
provided, further, that such 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. Notwithstanding
anything herein to the contrary, the foregoing shall not be construed to
prohibit (A) disclosure as required pursuant to the Transaction Documents, (B)
disclosure of any and all information (w) if required to do so by any applicable
statute, law, rule or regulation, or in working with any taxing authorities or
other governmental agencies, (x) to any government agency or regulatory body
having or claiming authority to regulate or oversee any respects of any
Beneficiary's business or that of its affiliates, (y) pursuant to any subpoena,
civil investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which any Beneficiary or any affiliate
or an officer, director, employer or shareholder thereof is a party, or (z) to
any affiliate, independent or internal auditor, agent, employee or attorney of
any Beneficiary having a need to know the same, provided that such Beneficiary
advises such recipient of the confidential nature of the information being
disclosed.
(c) Notwithstanding any other provision herein or in any other
Transaction Document, the Purchaser hereby confirms that the Originators (and
each employee, representative or other agent of such party) may disclose to any
and all Persons, without
38
limitation of any kind, the U.S. tax treatment and U.S. tax structure of the
transaction contemplated by this Agreement and the other Transaction Documents.
* * *
39
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
ORIGINATORS:
XXXXX LEMMERZ INTERNATIONAL -
SEDALIA, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
Xxxxx Lemmerz International - California, Inc.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
XXXXX LEMMERZ INTERNATIONAL -
HUNTINGTON, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
XXXXX LEMMERZ INTERNATIONAL -
GEORGIA, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
XXXXX LEMMERZ INTERNATIONAL
IMPORT, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
SIGNATURE PAGE TO ORIGINATOR PURCHASE AGREEMENT
XXXXX LEMMERZ INTERNATIONAL -
COMMERCIAL HIGHWAY, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
XXXXX LEMMERZ INTERNATIONAL -
WABASH, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
XXXXX LEMMERZ INTERNATIONAL -
LAREDO, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
XXXXX LEMMERZ INTERNATIONAL - XXXXX, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
XXXXX LEMMERZ INTERNATIONAL -
BRISTOL, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
SIGNATURE PAGE TO ORIGINATOR PURCHASE AGREEMENT
XXXXX LEMMERZ INTERNATIONAL -
CADILLAC, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
XXXXX LEMMERZ INTERNATIONAL -
MONTAGUE, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
XXXXX LEMMERZ INTERNATIONAL -
SOUTHFIELD, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
XXXXX LEMMERZ INTERNATIONAL -
TECHNICAL CENTER, INC.
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
PURCHASER: HL FUNDING I, LLC
By: /s/ Xxxx Xxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxx
Title: Treasurer
SIGNATURE PAGE TO ORIGINATOR PURCHASE AGREEMENT
EXHIBIT A
CREDIT AND COLLECTION POLICY
[omitted]
A-1
EXHIBIT B
FORM OF
SUBORDINATED NOTE
New York, New York
_____________, 2004
FOR VALUE RECEIVED, HL FUNDING I, LLC, a Delaware limited liability
company (the "Purchaser"), hereby promises to pay to HLI OPERATING COMPANY, INC.
("HLIOC"), as agent for the Originators (as defined below), the principal amount
of this Note, determined as described below, together with interest thereon at a
rate per annum equal at all times to the sum of 1.35% plus the Applicable Margin
(as defined in the Financing Agreement defined below) in effect from time to
time plus the Eurodollar Rate (as defined in the Financing Agreement) for
periods of one month, in each case in lawful money of the United States of
America. Capitalized terms used herein but not defined herein shall have the
meanings assigned to such terms in the Originator Purchase Agreement (as
amended, restated, supplemented or otherwise modified from time to time, the
"Originator Purchase Agreement"), dated as of December 9, 2004, among the
"Originators" (as defined therein) party thereto and the Purchaser. This note
(as amended, restated, supplemented and otherwise modified from time to time,
the "Note") is the Subordinated Note referred to in the Originator Purchase
Agreement.
The aggregate principal amount of this Note at any time shall be
equal to the difference between (a) the sum of the aggregate principal amount of
this Note on the date of the issuance hereof and each addition to the principal
amount of this Note pursuant to the terms of Section 2.02 of the Originator
Purchase Agreement minus (b) the aggregate amount of all payments made in
respect of the principal amount of this Note, in each case, as recorded on the
schedule annexed to and constituting a part of this Note, but failure to so
record shall not affect the obligations of the Purchaser to the Originators.
The entire principal amount of this Note shall be due and payable
one year and one day after the Facility Termination Date or such later date as
may be agreed in writing by the Originators and the Purchaser. The principal
amount of this Note may, at the option of the Purchaser, be prepaid in whole at
any time or in part from time to time, subject to the provisions of the
Originator Purchase Agreement. Interest on this Note shall be paid in arrears on
each Settlement Date, at maturity and thereafter on demand. All payments
hereunder shall be made by wire transfer of immediately available funds to such
account of the applicable Originator as HLIOC may designate in writing.
Notwithstanding any other provisions contained in this Note, in no
event shall the rate of interest payable by the Purchaser under this Note exceed
the highest rate of interest permissible under applicable law.
The obligations of the Purchaser under this Note are subordinated in
right of payment, to the extent set forth in Section 2.03(b) of the Originator
Purchase Agreement, to the prior payment in full of certain obligations of the
Purchaser and the Borrower.
B-1
Notwithstanding any provision to the contrary in this Note or
elsewhere, other than with respect to payments specifically permitted by Section
2.03(b) of the Originator Purchase Agreement, no demand for any payment may be
made hereunder, no payment shall be due with respect hereto and no Originator
shall have any claim for any payment hereunder prior to the occurrence of the
Facility Termination Date and the RFA Final Payment Date.
In the event that, notwithstanding the foregoing provision limiting
such payment, HLIOC or any Originator shall receive any payment or distribution
on this Note which is not specifically permitted by Section 2.03(b) of the
Originator Purchase Agreement, such payment shall be received and held in trust
by HLIOC or such Originator for the benefit of the entities to whom the
obligations are owed under the Secondary Purchase Agreement and the Financing
Agreement and shall be promptly paid over to such entities.
The Purchaser hereby waives diligence, presentment, demand, protest
and notice of any kind whatsoever.
Neither this Note, nor any right of HLIOC or the Originators to
receive payments hereunder, shall, without the prior written consent of the
Purchaser and (so long as the Financing Agreement remains in effect or any
amounts remain outstanding thereunder) the Program Agent under the Financing
Agreement, be assigned, transferred, exchanged, pledged, hypothecated,
participated or otherwise conveyed.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
HL FUNDING I, LLC
By: ____________________________________
Name:
Title:
B-2
SCHEDULE TO SUBORDINATED NOTE
Date Addition to Principal Amount of Principal Unpaid Principal Notation
Amount Paid or Prepaid Balance Made By
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B-3
EXHIBIT C
LOCATION OF RECORDS, CHIEF EXECUTIVE OFFICES AND ADDRESSES
PURCHASER ADDRESS
00000 Xxxxxxxxxx Xx.
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Phone: (000) 000-0000
[SEE ATTACHED FOR ORIGINATORS]
C-1
EXHIBIT D
DEPOSIT BANKS, DEPOSIT ACCOUNTS AND LOCKBOXES
[omitted]
D-1
