EXHIBIT 10.9
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF APRIL 30, 2002
BETWEEN
CENTRAL RECEIVABLES, INC.
AS PURCHASER,
AND
CENTRAL FREIGHT LINES, INC.
AS ORIGINATOR,
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS
Section 1.1 Certain Defined Terms............................................................................. 1
Section 1.2 Accounting and UCC Terms.......................................................................... 3
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES
Section 2.1 Purchase and Contribution of Receivables.......................................................... 3
Section 2.2 Purchase Price.................................................................................... 4
Section 2.3 Payment of Purchase Price......................................................................... 4
Section 2.4 Deemed Collections................................................................................ 5
Section 2.5 Adjustments....................................................................................... 5
Section 2.6 Finance Charges................................................................................... 6
Section 2.7 Allocations of Collections........................................................................ 6
ARTICLE III CONDITIONS TO PURCHASES
Section 3.1 Conditions Precedent to Purchaser's Initial Purchase.............................................. 6
Section 3.2 Conditions Precedent to All Purchases............................................................. 7
Section 3.3 Conditions Precedent to Originator's Initial Sale................................................. 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Parties. ................................................... 8
Section 4.2 Additional Representations of the Originator...................................................... 9
ARTICLE V GENERAL COVENANTS
Section 5.1 Affirmative Covenants of the Originator........................................................... 11
Section 5.2 Negative Covenants of the Originator.............................................................. 15
ARTICLE VI ADMINISTRATION AND COLLECTION OF PURCHASED RECEIVABLES
Section 6.1 Collection Procedures............................................................................. 17
Section 6.2 Purchase Information.............................................................................. 17
Section 6.3 Compliance Statements............................................................................. 17
Section 6.4 Allocations and Applications of Collections....................................................... 18
Section 6.5 Termination....................................................................................... 18
Section 6.6 Responsibilities of the Originator................................................................ 18
ARTICLE VII PURCHASE TERMINATION EVENTS
Section 7.1 Purchase Termination Events....................................................................... 19
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Section 7.2 Remedies.......................................................................................... 19
ARTICLE VIII INDEMNIFICATION
Section 8.1 Indemnities by the Originator..................................................................... 21
ARTICLE IX THE ORIGINATOR NOTE
Section 9.1 Originator Note................................................................................... 22
Section 9.2 Restrictions on Transfer of Originator Note....................................................... 23
ARTICLE X MISCELLANEOUS
Section 10.1 Amendments, Etc.................................................................................. 23
Section 10.2 Notices, Etc..................................................................................... 24
Section 10.3 No Waiver; Remedies.............................................................................. 24
Section 10.4 Binding Effect; Governing Law.................................................................... 24
Section 10.5 Costs, Expenses and Taxes........................................................................ 24
Section 10.6 No Bankruptcy Petition........................................................................... 25
Section 10.7 Acknowledgment of Assignments.................................................................... 25
Section 10.8 Waiver of Setoff................................................................................. 25
Section 10.9 Severability..................................................................................... 25
Section 10.10 Counterparts.................................................................................... 25
Section 10.11 Grant of License to Use Trademarks.............................................................. 26
Section 10.12 Jurisdiction; Consent to Service of Process..................................................... 26
Section 10.13 Third Party Beneficiaries....................................................................... 26
Section 10.14 Confirmation of Intent.......................................................................... 26
Section 10.15 Confidentiality of Agreement.................................................................... 27
Section 10.16 Section and Paragraph Headings.................................................................. 27
EXHIBITS
Exhibit A Form of Originator Note
Exhibit B Form of Purchase Report
SCHEDULES
Schedule I Offices Where Books, Records, Etc., Evidencing Receivables are Kept
Schedule II List of Trade Names
Schedule III Authorized Officers of Originator
Schedule IV Notice Addresses of Parties
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RECEIVABLES PURCHASE AGREEMENT
RECEIVABLES PURCHASE AGREEMENT, dated as of April 30, 2002, by and between
CENTRAL FREIGHT LINES, INC., a Texas corporation ("Central Texas" or the
"Originator") and CENTRAL RECEIVABLES, INC., a Nevada corporation ("Central
Receivables" or "Purchaser"), as Purchaser.
W I T N E S S E T H:
WHEREAS, Originator intends to sell Receivables to Purchaser on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, to obtain the necessary funds to purchase such Receivables,
Purchaser, the Servicer, Three Pillars Funding Corporation and SunTrust Capital
Markets, Inc., as Administrator, have entered into the Loan Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS.
Capitalized terms used in this Agreement but not defined herein shall
have the meanings assigned to such terms in the Loan Agreement (defined below).
This Agreement is the Receivables Purchase Agreement referred to in the Loan
Agreement. As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
Additional Receivable: Any Receivable which shall be purchased by, or
contributed to, Purchaser on any Purchase Date other than the Closing Date.
Authorized Officers: Those officers of Originator designated in Schedule III
hereto (or in such other Schedule as may be delivered to the parties hereto from
time to time) as duly authorized to execute and deliver this Agreement and any
instruments or documents in connection herewith on behalf of Originator and to
take, from time to time, all other actions on behalf of Originator in connection
herewith.
Available Funds: As defined in Section 2.3(b)(i).
Business Day: A day on which Originator and Purchaser is open at its respective
address specified in this Receivables Purchase Agreement for the purpose of
conducting its business, except that, in respect of such performance or rights
under this Agreement as involve the Administrator, such term shall have the
meaning assigned to it by the Loan Agreement.
Contributed Receivables: As defined in Section 2.1(c).
Cost Discount: As of any Period End Date, the product of (i) the Days Sales
Outstanding Ratio for the Due Period ending on such Period End Date, times (ii)
the Cost Rate for such Period End Date.
Cost Rate: For any day during a Due Period means a rate equal to (a) the sum of
(i) the LIBOR Rate for such Due Period, plus (ii) 2.00% divided by (b) 360.
Dilution Credit: As defined in Section 2.5.
Fair Market Value Discount: With respect to any Receivable, (i) the Unpaid
Balance of such Receivable, times (ii) the sum of the most recently calculated
Loss Discount, plus the most recently calculated Cost Discount.
Incipient Purchase Termination Event: Any condition, act or event specified in
Section 7.1 that, with the giving of notice or the lapse of time, or both, would
become a Purchase Termination Event.
Ineligible Receivable: As defined in Section 2.4.
Initial Contributed Receivables: As defined in Section 2.1(b).
Loan Agreement: The Loan Agreement, dated as of April 30, 2002, among Purchaser,
as borrower, Central Freight Lines, a Nevada corporation, as servicer, Three
Pillars Funding Corporation, as lender, and SunTrust Capital Markets, Inc., as
administrator, as amended, supplemented or otherwise modified from time to time.
Loss Discount: As of any Period End Date means the ratio, expressed as a
percentage, of (i) the losses recognized for all Receivables during the
immediately preceding thirteen Due Periods prior to such Period End Date divided
by (ii) the Collections on all Receivables received during such period.
Purchase Date: Each Business Day occurring prior to the Purchase Termination
Date on which Purchaser purchases Receivables from Originator pursuant to the
terms hereof.
Purchase Price: As defined in Section 2.2.
Purchase Report: A report in the form of Exhibit B.
Purchase Termination Date: The date on which Purchaser's obligation to purchase
Receivables shall terminate pursuant to Section 7.1.
Purchase Termination Event: As defined in Section 7.1.
Purchased Asset: As defined in Section 2.1(a).
Purchaser: As defined in the Preamble.
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SECTION 1.2 ACCOUNTING AND UCC TERMS.
All accounting terms not specifically defined herein shall be construed
in accordance with GAAP; and all terms used in Article 9 of the UCC that are
used but not specifically defined herein are used herein as defined therein.
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.1 PURCHASE AND CONTRIBUTION OF RECEIVABLES.
(a) Originator hereby sells, absolutely assigns, transfers and conveys
to Purchaser on each Purchase Date, on the terms and subject to the conditions
specifically set forth herein, all of its right, title and interest, in, to and
under (i) all Receivables (other than Contributed Receivables), now existing or
arising hereafter and prior to the Purchase Termination Date, and all payment
and enforcement rights (but not any obligations) to, in and under the related
Contracts, (ii) all Collections and other monies due or to become due with
respect to the foregoing, (iii) all Related Security for the Receivables, (iv)
all lockboxes and accounts to which Collections are sent, and all funds and
investments from time to time therein (including, without limitation, the
Collection Account and the Depository Account), (v) all books and records
related to the foregoing and (vi) all proceeds of the foregoing, including,
without limitation, insurance proceeds relating thereto (collectively, the
"Purchased Assets").
(b) In consideration of the capital stock of Purchaser issued to
Originator, Originator agrees to contribute, and does hereby contribute to
Purchaser, and Purchaser hereby accepts from Originator, all of Originator's
right, title and interest in and to (i) Receivables, and all of the rights
described in clauses (ii) through (vi) of Section 2.1(a) related thereto,
starting with the oldest such Receivable such that the aggregate Unpaid Balance
of all such Receivables shall be as close as possible to, but not less than,
$3,000,000 (the "Initial Contributed Receivables") and (ii) all other
Contributed Receivables.
(c) On each Purchase Date, all of Originator's right, title and
interest in and to the newly created Receivables (other than Receivables
indicated on a Purchase Report as having been contributed by Originator to
Purchaser (such Receivables, together with the Initial Contributed Receivables,
the "Contributed Receivables")) and the other Purchased Assets shall be sold,
absolutely assigned, transferred and conveyed to Purchaser by the sale, absolute
assignment, transfer and conveyance set forth in paragraph (a) above without any
further action by Originator or Purchaser; all Contributed Receivables (other
than the Initial Contributed Receivables) shall be contributed to Purchaser on
the date they are created without further action by Originator or Purchaser.
(d) The parties to this Agreement intend that the transactions
contemplated hereby shall be, and shall be treated as, a purchase by Purchaser
and a sale by Originator of the Purchased Assets (or, in the case of Contributed
Receivables, as a contribution by Originator to Purchaser) and not as a lending
transaction. All sales and contributions of Receivables by Originator hereunder
shall be without recourse to, or representation or warranty of any kind
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(express or implied) by, Originator, except as otherwise specifically provided
herein. The foregoing sale, absolute assignment, transfer and conveyance does
not constitute and is not intended to result in a creation or assumption by
Purchaser of any obligation of Originator or any other Person in connection with
the Purchased Assets, including, without limitation any obligation to any
Obligor.
SECTION 2.2 PURCHASE PRICE.
The amount payable by Purchaser (the "Purchase Price") for the newly
created Receivables sold on any Purchase Date to Purchaser under this Agreement
shall equal the aggregate Unpaid Balance of such Receivables less the Fair
Market Value Discount for such Receivables.
SECTION 2.3 PAYMENT OF PURCHASE PRICE.
(a) On the Closing Date, Purchaser shall pay the Purchase Price for the
purchase to be made from Originator with respect to the Receivables existing on
or prior to the Closing Date (other than the Initial Contributed Receivables)
(i) in cash in an amount equal to the amount received by Purchaser from the
Lender in connection with the first Loan made pursuant to the Loan Agreement and
(ii) by the issuance of the Originator Note (subject to the terms in clause (b)
below) in the initial principal amount equal to the remainder of the Purchase
Price owing after subtracting the amount paid in cash.
(b) On each Purchase Date falling after the Closing Date until the
Purchase Termination Date, on the terms and subject to the conditions of this
Agreement, Purchaser shall pay to Originator the Purchase Price for the
Receivables and other Purchased Assets purchased from Originator on such
Purchase Date as follows:
(i) First, by paying to Originator a portion of the Purchase
Price due by depositing into such account as Originator shall specify
immediately available funds from monies held by or on behalf of
Purchaser solely to the extent that such monies do not constitute
Collections that are required to be segregated and held by the Servicer
or distributed to the Administrator or the Lender pursuant to the Loan
Agreement on the next Distribution Date or required to be paid to the
Servicer as the Servicer's Fee on the next Distribution Date, or
otherwise necessary to pay current expenses of Purchaser (in its
reasonable discretion) (such available monies, the "Available Funds"),
subject to the terms of the Loan Agreement. Any Collections that have
been paid to Originator during any Due Period shall be credited towards
Purchaser's obligation pursuant to this clause first; provided,
however, that, if Collections paid to Originator exceed the Purchase
Price for Receivables and the other Purchased Assets purchased from
Originator for such Due Period, or, absent a cash payment, Purchaser
shall not have sufficient cash to meet its payment obligations pursuant
to the Loan Agreement, Originator shall turn over such excess to
Purchaser; and
(ii) Second, by increasing the principal amount outstanding
under the Originator Note issued to Originator; provided, however, that
the aggregate of the
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principal amounts outstanding at any time under the Originator Notes
may not exceed 3% of the Facility Limit; and
(iii) Third, unless the Purchase Termination Date has
occurred, at the option of Originator, by accepting a contribution to
Purchaser's capital in an amount equal to the remaining unpaid balance
of such Purchase Price in exchange for the capital stock of Purchaser
issued to the Originator making such contribution.
To the extent that (x) the amount due pursuant to Section 2.2 with respect to
all Receivables created or originated by Originator that arose during the
corresponding Due Period is exceeded by (y) the amount paid to Originator during
such Due Period pursuant to the foregoing sentences for such Receivables, and
such excess is not turned over to Purchaser pursuant to clause first above, such
excess shall be treated as a reduction in the principal amount of the Originator
Note, effective as of the last day of the related Due Period; provided, however,
that if at any time the unpaid principal amount of the Originator Note has been
reduced to zero, Originator shall pay Purchaser the remainder owed with respect
thereto in immediately available funds.
(c) All payments hereunder shall be made not later than 3:00 p.m. (New
York time) on the date specified therefor in lawful money of the United States
of America in same day funds (i) if to Originator, to the bank account
designated in writing by Originator to Purchaser and (ii) if to Purchaser, to
the Collection Account. Whenever any payment to be made hereunder shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day.
(d) Except as expressly set forth herein, neither Originator shall have
any right under this Agreement, by implication or otherwise, to repurchase from
Purchaser any Purchased Asset nor to rescind or otherwise retroactively affect
any purchase of any Purchased Asset after the Purchase Date relating thereto.
SECTION 2.4 DEEMED COLLECTIONS.
If any of the representations or warranties of Originator contained in
subsection (a) or (b) of Section 4.2 was not true with respect to any Receivable
as of the applicable Purchase Date (any such Receivable, an "Ineligible
Receivable"), Originator shall pay to Purchaser a deemed Collection equal to the
Unpaid Balance of such Ineligible Receivable on the next Purchase Date or, if
the Purchase Termination Date has occurred, on the next Business Day. Prior to
the Purchase Termination Date, but subject to the next sentence, such deemed
Collection shall be paid (a) by reducing the Purchase Price payable by Purchaser
to Originator on the applicable Purchase Date pursuant to Section 2.2 hereof,
and (b) to the extent such deemed Collection exceeds the Purchase Price payable
on such Purchase Date, by reducing the amount of the Originator Note on such
Purchase Date (or, once the amount of the Originator Note has been reduced to
zero, by making a cash payment to an account designated by Purchaser). On or
subsequent to the Purchase Termination Date or if such amount is necessary to
enable Purchaser to make any payment required to be made on such date under the
Loan Agreement, such deemed Collection shall be paid by wire transfer of cash to
the Collection Account.
SECTION 2.5 ADJUSTMENTS.
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Originator may make an adjustment in the principal amount or finance or
other charges accrued or payable with respect to a Receivables, provided that
such adjustment is made in accordance with the Collection Policy and the Loan
Agreement. If the Unpaid Balance of any Receivable is (a) reduced or cancelled
as a result of any defective or rejected goods or services, any cash discount or
other adjustment or otherwise by Originator or any Affiliate thereof, or as a
result of any governmental or regulatory action; (b) reduced or canceled as a
result of setoff in respect of any claim by the Obligor thereof (whether such
claim arises out of the same or a related transaction or an unrelated
transaction); (c) reduced on account of the obligation of the related Originator
or any Affiliate thereof to pay the related Obligor any rebate or refund, (d)
less than the amount included in calculating the Unpaid Balance for purposes of
any Purchase Report (for any reason other than such Receivables becoming a
Defaulted Receivable or payment in full of the entire Unpaid Balance being made
on such Receivable) or (e) reduced with respect to any other item of Dilution,
the aggregate amount of all such adjustments (each a "Dilution Credit") made by
Originator subsequent to each Purchase Date shall be due and payable to
Purchaser on the next Purchase Date following the date of processing in respect
thereof or, if the Purchase Termination Date has occurred, on the next Business
Day following such date of processing. Each Dilution Credit shall be a deemed
Collection and shall be paid on the due date therefore (i) by reducing the
Purchase Price, if any, payable by Purchaser on such date, and (ii) to the
extent the Dilution Credit exceeds the Purchase Price payable on such date, or
if a payment of cash is necessary so that Purchaser can make the payments due on
the next Distribution Date pursuant to the Loan Agreement, by wire transfer of
cash to the Collection Account.
SECTION 2.6 FINANCE CHARGES.
Finance charges, late charge revenue, other fees and charges and other
similar items, whenever created (whether prior to or after the occurrence of a
Purchase Termination Event) and whenever received (prior to or after the
occurrence of a Purchase Termination Event), accrued in respect of Receivables
shall be the property of Purchaser and all Collections with respect thereto
shall be allocated and treated as Collections in respect of Receivables.
SECTION 2.7 ALLOCATIONS OF COLLECTIONS.
For purposes of determining the Unpaid Balances of Receivables at any
time, Purchaser and Originator agrees that Originator shall apply all
Collections on a Receivable by Receivable basis.
ARTICLE III
CONDITIONS TO PURCHASES
SECTION 3.1 CONDITIONS PRECEDENT TO PURCHASER'S INITIAL PURCHASE.
The obligation of Purchaser to purchase Receivables hereunder on the occasion of
the Closing Date is subject to the conditions precedent (any one or more of
which can be waived by Purchaser) that (a) the Loan Agreement and the other
Transaction Documents shall be in full
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force and effect and all conditions to the initial advance under the Loan
Agreement shall have been satisfied or waived, (b) Purchaser shall have received
on or before the Closing Date the following, each (unless otherwise indicated)
dated the day of such sale and in form and substance satisfactory to Purchaser
and (c) the conditions set forth in clauses (iii), (iv) and (v) shall have been
satisfied:
(i) a copy of duly adopted resolutions of the Board of
Directors of Originator authorizing or ratifying the execution,
delivery and performance, respectively, of the Transaction Documents to
which it is a party, certified by the Secretary or Assistant Secretary
of Originator;
(ii) a duly executed certificate of the Secretary or an
Assistant Secretary of Originator certifying the names and true
signatures of the Authorized Officers authorized on behalf of
Originator to sign the Transaction Documents to which it is a party;
(iii) the Administrator shall be satisfied with Originator's
systems, computer programs, related materials, computer tapes, disks
and cassettes, procedures and record keeping relating to and required
for the collection of Receivables by Purchaser, and the Administrator
shall be reasonably satisfied that the procedures of Originator for the
preparation, storage and retrieval of such materials are sufficient to
permit the administration and collection of the Receivables by a
servicer without the participation of Originator or Purchaser;
(iv) Originator shall have filed and recorded, at its own
expense, UCC-1 financing statements with respect to the Purchased
Assets in such manner and in such jurisdictions as are necessary or
desirable to perfect Purchaser's ownership interest thereof under the
UCC and delivered a file-stamped copy of such UCC-1 financing
statements or other evidence of such filings to Purchaser and the
Administrator on or prior to the date hereof; and all other action
necessary or desirable, in the opinion of Purchaser or the
Administrator, to establish Purchaser's ownership of the Purchased
Assets shall have been duly taken;
(v) Purchaser and the Administrator shall have received
photocopies of reports of UCC searches in the central filing office of
Originator and any necessary local offices of Originator with respect
to the Purchased Assets reflecting the absence of Liens thereon, except
the Liens created hereunder, pursuant to the Loan Agreement in favor of
the Administrator and except for Liens as to which Purchaser has
received executed UCC termination statements; and
(vi) Purchaser and the Administrator shall have received such
other documents, certificates and opinions as Purchaser or the
Administrator may request.
SECTION 3.2 CONDITIONS PRECEDENT TO ALL PURCHASES.
The obligation of Purchaser to pay for each Receivable on each Purchase
Date (including the Closing Date) shall be subject to the further conditions
precedent (any one of which can be waived by Purchaser) that on such Purchase
Date:
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(a) the following statements shall be true (and the acceptance by
Originator of the Purchase Price for any Receivables on any Purchase
Date shall constitute a representation and warranty by Originator that
on such Purchase Date such statements are true):
(i) the representations and warranties of Originator contained
in Sections 4.1 and 4.2 shall be correct on and as of such Purchase
Date as though made on and as of such date; and
(ii) no Purchase Termination Event or Incipient Purchase
Termination Event shall have occurred and be continuing;
(b) Originator shall have clearly and unambiguously marked its
accounting records evidencing the Receivables being purchased hereunder on such
Purchase Date with a legend stating that such Receivables have been sold to
Purchaser in accordance with this Agreement;
(c) no material change shall have occurred after the Closing Date with
respect to Originator's systems, computer programs, related materials, computer
tapes, disks and cassettes, procedures and record keeping relating to and
required for the collection of the Receivables by Originator which makes them
not sufficient and satisfactory in order to permit the purchase, administration
and collection of the Receivables by Purchaser in accordance with the terms and
intent of this Agreement; and
(d) Purchaser shall have received such other approvals, opinions or
documents as Purchaser may reasonably request.
SECTION 3.3 CONDITIONS PRECEDENT TO ORIGINATOR'S INITIAL SALE.
The obligation of Originator to make its initial sale is subject to the
conditions precedent that Originator shall have received on or before the date
of such sale the following, each (unless otherwise indicated) dated the day of
such sale and in form and substance satisfactory to Originator:
(a) a copy of duly adopted resolutions of the Board of Directors of
Purchaser authorizing this Agreement, the documents to be delivered by Purchaser
hereunder and the transactions contemplated hereby, certified by the Secretary
or Assistant Secretary of Purchaser; and
(b) a duly executed certificate of the Secretary or Assistant Secretary
of Purchaser certifying the names and true signatures of the officers authorized
on its behalf to sign this Agreement and the other documents to be delivered by
it hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE PARTIES.
Purchaser and Originator each represents and warrants as to itself as
follows:
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(a) Each of Originator and Purchaser, has been duly organized and is
validly existing, is in good standing under the laws of the state of its
organization as set forth in the preamble and is a "registered organization" as
defined in the UCC in effect in such jurisdiction, with full corporate power and
authority to own its properties and to conduct its business as presently
conducted. Each of Originator and Purchaser is duly qualified to do business and
is in good standing as a foreign entity (or is exempt from such requirements),
and has obtained all necessary licenses and approvals, in the jurisdiction where
its principal place of business and chief executive office are located and in
each other jurisdiction in which failure to so qualify or to obtain such
licenses and approvals would have a material adverse effect on the conduct of
Originator's or Purchaser's business or on the ability of Originator or
Purchaser, as the case may be, to perform its obligations under this Agreement.
(b) The sale and contribution of Receivables and the other Purchased
Assets pursuant to this Agreement, the performance of its obligations under this
Agreement and the consummation of the transactions herein contemplated have been
duly authorized by all requisite corporate action and will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to this Agreement or the other Transaction
Documents) upon any of its property or assets, pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
property or assets is subject, nor will such action result in any violation of
the provisions of its organizational documents or of any statute or any order,
rule or regulation of any federal or state court or governmental agency or body
having jurisdiction over it or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
any such regulatory authority or other such governmental agency or body is
required to be obtained by or with respect to Originator or Purchaser for the
sale or contribution of Receivables and the other Purchased Assets or the
consummation of the transactions contemplated by this Agreement.
(c) This Agreement has been duly executed and delivered by Originator
and Purchaser and constitutes a valid and legally binding obligation of
Originator and Purchaser, respectively, enforceable against Originator and
Purchaser, respectively, in accordance with its terms, except that the
enforceability thereof may be subject to (a) the effects of any applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship or other
laws, regulations and administrative orders affecting the rights of creditors
generally and (b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or law).
(d) There is no pending or, to its knowledge after due inquiry,
threatened action or proceeding affecting it or any of its Subsidiaries before
any court, governmental agency or arbitrator, that may reasonably be expected to
materially and adversely affect its condition (financial or otherwise),
operations, properties or prospects, or its ability to perform its obligations
under this Agreement, or that purports to affect the legality, validity or
enforceability of this Agreement. None of the transactions contemplated hereby
is or is threatened to be restrained or enjoined (temporarily, preliminarily or
permanently).
SECTION 4.2 ADDITIONAL REPRESENTATIONS OF THE ORIGINATOR.
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Originator additionally represents and warrants as follows:
(a) Eligible Receivable. Unless otherwise specified in the applicable
Purchase Report, all Receivables sold, contributed and absolutely assigned to
Purchaser hereunder on the Closing Date are Eligible Receivables as of the
Closing Date and all Receivables sold and absolutely assigned to Purchaser
hereunder on any Purchase Date subsequent to the Closing Date will be Eligible
Receivables as of such Purchase Date.
(b) Sale of Receivables. Originator is, as of the time of the transfer
to Purchaser of each Receivable being sold or contributed to Purchaser on the
Closing Date, and will be, as of the time of the transfer to Purchaser of each
Receivable sold or contributed to Purchaser on any subsequent Purchase Date, the
sole owner of such Receivable, free from any lien, security interest,
encumbrance or other right, title or interest of any Person. Each Receivable
existing on the Closing Date has been, and in the case of Additional Receivables
sold or contributed hereafter, such Additional Receivables will be, on the
applicable Purchase Date, conveyed to Purchaser free and clear of any Lien.
There is no effective financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) now on file or registered in any
public office filed by or against Originator or any Subsidiary of Originator or
purporting to be filed on behalf of Originator or any Subsidiary of Originator
covering any interest of any kind in any Purchased Assets which are being, or
which hereafter will be, sold or contributed to Purchaser, and Originator will
not execute nor will there be on file in any public office any effective
financing statement (or similar statement or instrument of registration under
the laws of any jurisdiction) or statements relating to such Purchased Assets,
except in each case any financing statements filed in respect of and covering
the purchase of the Purchased Assets by Purchaser pursuant to this Agreement and
the security interest created pursuant to the Loan Agreement. All filings and
recordings (including pursuant to the UCC) required to perfect the title of
Purchaser in each Purchased Asset sold or contributed hereunder have been
accomplished and are in full force and effect and Originator shall, at its
expense, perform all acts and execute all documents necessary or reasonably
requested by Purchaser or the Administrator at any time and from time to time to
evidence, perfect, maintain and enforce the title or the security interest of
Purchaser or the Administrator in the Purchased Assets and the priority thereof.
Originator's jurisdiction of organization is a jurisdiction whose law generally
requires information to be made generally available in a filing, record or
registration system as a condition or result of such a security interest
obtaining priority over the rights of a lien creditor with respect to
collateral.
(c) Accuracy of Information. All information heretofore furnished by,
or on behalf of, Originator to Purchaser or the Administrator in connection with
any Transaction Document, or any transaction contemplated thereby, is true and
accurate in every material respect (without omission of any information
necessary to prevent such information from being materially misleading).
(d) Location of Office and Records. The jurisdiction of organization,
principal place of business and chief executive office of Central Texas, and the
office where all Documents are kept, is located at 0000 Xxxx Xxxx Xxxxx, Xxxx,
XX 00000.
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(e) Trade Names. Set forth on Schedule II hereto is a complete and
accurate list of the trade names of Originator and its Subsidiaries for the
six-year period preceding the date of this Agreement.
(f) Financial Statements. Originator has heretofore furnished to
Purchaser and the Administrator copies of Central Nevada's balance sheet and
consolidating statements, if any, and statement of income and changes in
financial condition as of and for the Fiscal Years ended December 31, 2000 and
December 31, 2001, audited by and accompanied by the opinion of KPMG LLP,
independent public accountants. Except as disclosed in writing to the
Administrator prior to the date of this Agreement, such financial statements
present fairly in all material respects the financial condition and results of
operations of Originator and its consolidated subsidiaries as of such dates and
for such periods; such balance sheets and the notes thereto disclose all
liabilities, direct or contingent, of Originator and its consolidated
subsidiaries as of the dates thereof required to be disclosed by GAAP and such
financial statements were prepared in accordance with GAAP applied on a
consistent basis. Since December 31, 2001, there has been no material adverse
change in the condition (financial or otherwise), operations, properties, assets
or prospects of Originator, except as disclosed in writing to the Administrator
on or prior to the date hereof.
(g) No Consent. No action, consent or approval of, registration or
filing with or any other action by any Governmental Authority is or will be
required in connection with execution,delivery and performance of this Agreement
and the consummation of the transactions contemplated by this Agreement, except
such as have been made or obtained and are in full force and effect.
(h) Administrator Can Perform. Upon the delivery by Originator to the
Administrator of the computer tapes, disks, cassettes and related materials (in
a generally acceptable readable format) relating to the administration of the
Receivables pursuant to Section 6.2, the Administrator shall have been furnished
with all materials and data necessary to permit immediate collection of the
Receivables by the Administrator, or any party designated by the Administrator,
without the participation of Originator in such collection.
(i) Security Interest of Purchaser. This Agreement constitutes a valid
sale, transfer and absolute assignment to Purchaser of all right, title and
interest in the Purchased Assets. Upon the filing of the financing statements
described in Section 3.1(c)(iv), Purchaser shall have a first priority perfected
ownership interest in the Purchased Assets and the Contributed Receivables
(except to the extent such first priority perfected security interest was
assigned to the Administrator pursuant to the Loan Agreement). Except as
otherwise provided in this Agreement, neither Originator nor any Subsidiary
thereof (other than Purchaser) nor any Person claiming through or under
Originator or any Subsidiary thereof (other than Purchaser) has any claim to or
interest in any Collection Account or the Depository Account.
(j) No Material Adverse Change. Since December 31, 2001, there has been
no material adverse change in the collectibility of the Receivables or
Originator's ability to perform its obligations under any Transaction Document.
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(k) Solvency. Both before and after giving effect to the transactions
contemplated herein, Originator is Solvent.
ARTICLE V
GENERAL COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS OF THE ORIGINATOR.
So long as Purchaser shall have any interest in any Purchased Asset,
Originator shall, unless Purchaser otherwise consents in writing:
(a) Financial Statements, Reports, Etc. Deliver or cause to be
delivered to Purchaser and the Administrator:
(i) as soon as available and in any event within 120 days
after the end of each Fiscal Year of Central Nevada, a balance sheet of
Central Nevada as of the end of such year and statements of income and
retained earnings and of source and application of funds of Central
Nevada for the period commencing at the end of the previous Fiscal Year
and ending with the end of such year, in each case setting forth
comparative figures for the previous Fiscal Year, certified without
material qualification in a manner satisfactory to Purchaser and the
Administrator by KPMG LLP or other nationally recognized, independent
public accountants acceptable to the Administrator, together with a
certificate of such accounting firm stating that in the course of the
regular audit of the business of Central Nevada, which audit was
conducted in accordance with GAAP, such accounting firm has obtained no
knowledge that a Purchase Termination Event or Incipient Purchase
Termination Event has occurred and is continuing, or if, in the opinion
of such accounting firm, such a Purchase Termination Event or Incipient
Purchase Termination Event has occurred and is continuing, a statement
as to the nature thereof;
(ii) as soon as available and in any event within 45 days
after the end of each fiscal quarter, quarterly balance sheets and
quarterly statements of source and application of funds and quarterly
statements of income and retained earnings of Central Nevada, certified
by the chief financial or executive officer or controller of Central
Nevada (which certification shall state that such balance sheets and
statements fairly present the financial condition and results of
operations for such fiscal quarter, subject to year-end audit
adjustments), delivery of which balance sheets and statements shall be
accompanied by a certificate of such chief financial or executive
officer or controller to the effect that no Purchase Termination Event
or Incipient Purchase Termination Event has occurred and is continuing;
and
(iii) as soon as possible and in any event within one Business
Day after any officer of Central Nevada becomes aware of the occurrence
of a Servicer Event of Default, a Purchase Termination Event or
Incipient Purchase Termination Event or an event that, with the giving
of notice or time elapse, or both, would constitute a Servicer Event of
Default, an officer's certificate of Central Nevada setting forth
details of such event and the action that the Servicer proposes to take
with respect thereto.
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(b) Compliance with Laws, Etc. Comply, and cause all of the Receivables
to comply, in all material respects with all applicable laws, rules,
regulations and orders applicable to Originator and the Receivables,
including, without limitation, rules and regulations relating to truth
in lending, retail installment sales, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices,
privacy environmental matters, labor, taxation and ERISA, where in any
such case failure to so comply could reasonably be expected to have an
adverse impact on the Receivables or the amount of Collections
thereunder, or on the ability of Originator to perform its obligations
hereunder or under the other Transaction Documents to which it is a
party.
(c) Preservation of Corporate Existence. Preserve and maintain its
existence, status as a "registered organization", rights, franchises and
privileges solely in the jurisdiction of its incorporation or organization, and
qualify and remain qualified in good standing as a foreign entity in the
jurisdiction where its principal place of business and its chief executive
office are located and in each other jurisdiction where the failure to preserve
and maintain such existence, rights, franchises, privileges and qualifications
would have a Material Adverse Effect.
(d) Visitation Rights. Permit Purchaser, the Administrator or their
duly authorized representatives, attorneys or auditors to inspect the
Receivables, the Documents and the related accounts, records and computer
systems, software and programs used or maintained by Originator at such times as
Purchaser or the Administrator may reasonably request. Upon instructions from
Purchaser or the Administrator, Originator shall release any Document to
Purchaser or the Administrator, as the case may be.
(e) Keeping of Records and Books of Account. Maintain and implement, or
cause to be maintained or implemented, administrative and operating procedures
necessary or advisable for the administration of all Receivables, and, until the
delivery to Purchaser or its designee, keep and maintain, or cause to be kept
and maintained, all documents, books, records and other information necessary or
advisable for the administration of all Receivables.
(f) Performance and Compliance with Receivables. Duly fulfill all
obligations on its part to be fulfilled under or in connection with the
Receivables and the related Contracts, including complying with all requirements
of law applicable thereto, and will do nothing to impair the right, title and
interest of Purchaser in the Purchased Assets; provided, however, that an
adjustment or compromise of a Receivable pursuant to Section 2.5 shall not be
deemed to be a violation of this paragraph.
(g) Location of Records. Keep the chief executive office of Central
Texas located at 0000 Xxxx Xxxx Xxxxx, Xxxx, XX 00000 and keep originals or
duplicates of any Documents that it maintains at, and only at, said offices.
Originator will not move its jurisdiction of organization, chief executive
office or permit any Documents and books evidencing the purchased Receivables
that it ma y maintain to be moved unless (i) Originator shall have given to
Purchaser and the Administrator not less than forty-five (45) days' prior
written notice thereof, clearly describing the new location, and (ii) at least
ten (10) days' prior to such change Originator shall have taken such action,
satisfactory to Purchaser and the Administrator, to maintain the title or
ownership of Purchaser and any security interest of, or any filing in respect of
title of, Purchaser or the Administrator in the Purchased Assets at all times
fully perfected and
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in full force and effect. Originator may not, in any event, move its
jurisdiction of organization or the location where it conducts any
administration of the Receivables from 0000 Xxxx Xxxx Xxxxx, Xxxx, XX 00000
without the prior written consent of the Administrator.
(h) Collection Policy. Comply in all material respects with the
Collection Policy.
(i) Insurance. Keep its insurable properties adequately insured at all
times by financially sound and responsible insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies of the same
or similar size in the same or similar businesses; maintain in full force and
effect public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it or any Subsidiary, as the case
may be, in such amounts and with such deductibles as are customary with
companies of the same or similar size in the same or similar businesses and in
the same geographic area; and maintain such other insurance as may be required
by law.
(j) Obligations and Taxes. Pay and discharge promptly when due all
material obligations incurred or arising, all sales tax and all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property before the same shall become in
default, as well as all material lawful claims for labor, materials and supplies
or otherwise which, if unpaid, might become a Lien or charge upon such
properties or any part thereof; provided, however, that it and each Subsidiary
shall not be required to pay and discharge or to cause to be paid and discharged
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
for which Originator shall have set aside on its books adequate reserves with
respect thereto in accordance with GAAP.
(k) Obligations with Respect to Receivables. Use all reasonable
measures to assist Purchaser in preventing or minimizing any loss being realized
on a Receivable in which Purchaser owns an interest and take all reasonable
steps to assist Purchaser in recovering the full amount of such loss. Originator
shall, at its own expense, take any such steps as are necessary to maintain
perfection of the security interest, if any, associated with a Receivable in the
related goods and merchandise subject thereto.
(l) Furnishing Copies, Etc. Furnish to Purchaser and the Administrator
(i) upon Purchaser's or the Administrator's request, a certificate of the chief
financial or executive officer of Originator certifying, as of the date thereof,
that no Purchase Termination Event has occurred and is continuing; (ii) promptly
after obtaining knowledge that a Receivable was, at the time of Purchaser's
purchase thereof, not an Eligible Receivable (unless specified as such pursuant
to Section 4.2(a)), notice thereof; and (iii) promptly following request
therefor, such other information, documents, records or reports with respect to
the Purchased Assets or the conditions or operations, financial or otherwise, of
Originator, as Purchaser or the Administrator may from time to time reasonably
request.
(m) Obligation to Record and Report. To the fullest extent permitted by
GAAP and by applicable law, record each purchase of Purchased Assets hereunder
as a sale on its books and
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records, reflect each such purchase in its financial statements as a sale and
recognize gain or loss, as the case may be, on each such purchase.
(n) Continuing Compliance with the Uniform Commercial Code. At its
expense perform all acts and execute all documents necessary or reasonably
requested by Purchaser or the Administrator at any time to evidence, perfect,
maintain and enforce the title or the security interest of Purchaser or the
Administrator in the Purchased Assets and the priority thereof. Originator will
execute and deliver financing statements relating to or covering the Purchased
Assets (reasonably satisfactory in form and substance to Purchaser) and, where
permitted by law, Originator will authorize the Administrator to file one or
more financing statements signed only by the Administrator. Originator shall
cause its computer records, master data processing records and other books and
records relating to the Receivables to be marked, with a legend stating that the
Receivables have been sold, absolutely assigned and transferred to Purchaser.
Originator shall deliver the Receivable Files related to each Receivable to the
Administrator upon request by Purchaser or the Administrator; provided that
while any Document is in custody of Originator, Originator will hold the same
for the benefit of Purchaser. Originator will not execute any effective
financing statement (or similar statement or instrument of registration under
the laws of any jurisdiction) or statements relating to any Purchased Assets,
except any financing statements filed or to be filed in respect of and covering
the purchase of the Purchased Assets by Purchaser pursuant to this Agreement and
the security interest created in favor of the Administrator pursuant to the Loan
Agreement.
(o) Proceeds of Purchased Receivables. In the event that Originator
receives any amounts in respect of Receivables, deposit or otherwise credit, or
cause to be deposited or otherwise credited, such amounts in accordance with the
procedures set forth in Section 11.2 of the Loan Agreement.
(p) Further Action Evidencing Purchases. Provide such cooperation,
information and assistance, and prepare and supply Purchaser, the Servicer and
the Administrator with such data regarding the performance by the Obligors of
their obligations under the Receivables and the performance by Originator of its
obligations under the Transaction Documents, as may be reasonably requested by
Purchaser, the Servicer and the Administrator from time to time.
(q) Trade Names. Promptly notify Purchaser and the Administrator of any
new trade names of Originator.
SECTION 5.2 NEGATIVE COVENANTS OF THE ORIGINATOR.
So long as Purchaser shall have any interest in any Receivables,
Originator shall not, unless Purchaser otherwise consents in writing:
(a) Liens. Sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Lien upon or with respect to, any
Purchased Asset, or assign any right to receive proceeds in respect thereof
except as created or imposed by this Agreement or the Loan Agreement.
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(b) Change in Business. Make any material change in the nature of its
business as carried on at the date hereof or engage in or conduct any business
or activity that is materially inconsistent with such business.
(c) Extension or Amendment of Purchased Receivables. Extend, amend or
otherwise modify, or attempt or purport to extend, amend or, otherwise modify,
the terms of any Receivables other than in accordance with the Collection Policy
and the terms of the Loan Agreement.
(d) Change in Payment Instructions to Obligors. Instruct the Obligors
on any Receivables to make any payments with respect to such Receivables to any
place other than the places specified in Section 6.1.
(e) Sale of Receivables. Sell Receivables or transfer any interest in
the Receivables to any Person other than Purchaser.
(f) Cause a Default. Take any action which would cause Purchaser to be
in default under the Loan Agreement, a copy of which has been furnished to
Originator, unless such action shall have been approved and the default waived
by prior written approval of the Administrator and Purchaser.
(g) Mergers; Sales of Assets. Sell all or substantially all of its
property and assets to, or consolidate with or merge into, any other
corporation, if the effect of such sale or merger would cause a "default" or "an
event of default" under this Agreement or the Loan Agreement.
(h) No Amendments. (i) Amend, supplement or otherwise modify this
Agreement or (ii) otherwise take or fail to take any action under this Agreement
that could adversely affect Purchaser's interests hereunder or the
Administrator's interests under the Loan Agreement.
(i) Accounting Changes. Make any material change (i) in accounting
treatment and reporting practices except as permitted or required by GAAP, (ii)
in tax reporting treatment except as permitted or required by law, (iii) in the
calculation or presentation of financial and other information contained in any
reports delivered hereunder, or (iv) in any financial policy of Originator if
such change could have an adverse effect on the Receivables or the collection
thereof.
(j) Maintenance of Separate Existence. (i) Fail to do all things
necessary to maintain its corporate existence separate and apart from Purchaser
including, without limitation, holding regular meetings of its shareholders and
Board of Directors (or executing unanimous written consents in lieu thereof) and
maintaining appropriate books and records (including current minute books); (ii)
except as required by applicable law, suffer any limitation on the authority of
its own directors and officers or partners to conduct its business and affairs
in accordance with their independent business judgment, or authorize or suffer
any Person other than its own officers and directors to act on its behalf with
respect to matters (other than matters customarily delegated to others under
powers of attorney) for which a corporation's own officers and directors would
customarily be responsible; (iii) fail to (A) maintain or cause to be maintained
by an agent of Originator under Originator's control physical possession of all
its books and records, (B) maintain capitalization adequate for the conduct of
its business, (C) account for and
16
manage all of its liabilities separately from those of any other Person,
including, without limitation, payment by it of all payroll and other
administrative expenses and taxes from its own assets, (D) segregate and
identify separately all of its assets from those of any other Person, (E)
maintain employees, or pay its employees, officers and agents for services
performed for Originator or (F) allocate shared overhead fairly and reasonably;
or (iv) commingle its funds with those of Purchaser or use Purchaser's funds for
other than the uses permitted hereunder.
ARTICLE VI
ADMINISTRATION AND COLLECTION OF PURCHASED RECEIVABLES
SECTION 6.1 COLLECTION PROCEDURES.
(a) On or before the Closing Date, Originator and Purchaser shall have
established and shall maintain thereafter the system of collecting and
processing Collections of Receivables in accordance with Section 11.2 of the
Loan Agreement.
(b) Any funds held by Originator representing Collections of
Receivables shall, until deposited in the Collection Account or the Depository
Account or applied to the Purchase Price of Receivables in accordance with this
Agreement, be held in trust by Originator for and as the Administrator's
property.
(c) Originator hereby irrevocably waives any right to set off against,
or otherwise deduct from, any Collections.
(d) Originator acknowledges that Originator shall have no right, title
or interest in and to the Collection Account or the Depository Account and
hereby subordinates its rights in each LockBox to the Administrator.
SECTION 6.2 PURCHASE INFORMATION.
(a) On each Reporting Date, Originator shall prepare and deliver to
Purchaser and the Administrator a duly completed Purchase Report with respect to
Receivables created during the immediately preceding Due Period and with respect
to activity in such Receivables.
(b) Purchaser and Originator agree that, upon request of Purchaser,
Originator shall provide Purchaser with all information required to prepare
periodic reports that may be required to be furnished to the Administrator
pursuant to the Loan Agreement, as promptly as possible on each Business Day on
the basis of the sales and collections figures transmitted the previous day to
Originator's central computer processing center.
(c) Upon discovery of any error in any report furnished to Purchaser or
the Administrator, the Administrator, Purchaser and Originator shall confer and
shall agree upon any necessary adjustments to correct any such errors. Until
correction of such error, all Collections relating to such errors shall be
retained in the Collection Account or the Depository Account, to the extent such
Collections have been deposited in the Collection Account or the Depository
Account, as the case may be, pursuant to the terms hereof. Unless the
Administrator has
17
received actual notice of any discrepancy, the Administrator and Purchaser may
rely on such reports for all purposes hereunder.
SECTION 6.3 COMPLIANCE STATEMENTS.
Originator shall deliver, or cause to be delivered, to Purchaser and
the Administrator, on or before the date that is 120 days after the end of each
Fiscal Year, an officer's certificate signed by the Chief Executive Officer, the
President or any Vice President of Originator, dated as of the last day of the
preceding Fiscal Year, stating that (a) a review of the activities of Originator
during the preceding Fiscal Year period and of its performance under this
Agreement has been made under such officer's supervision and (b) to the best of
such officer's knowledge, based on such review, Originator has fulfilled its
obligations under this Agreement throughout such Fiscal Year and has complied in
all respects with the Collection Policy, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
SECTION 6.4 ALLOCATIONS AND APPLICATIONS OF COLLECTIONS.
Collections shall be allocated and distributed by the Administrator in
accordance with the provisions of the Loan Agreement and Section 2.7.
SECTION 6.5 TERMINATION.
Originator's obligation to sell Receivables under this Agreement shall
terminate on the Purchase Termination Date; provided, however, that finance
charges, late charges and other fees, charges and similar items in respect of
the Receivables sold or contributed prior to the Purchase Termination Date shall
continue to be the property of Purchaser after the Purchase Termination Date
notwithstanding that such amounts may arise or accrue after the Purchase
Termination Date.
SECTION 6.6 RESPONSIBILITIES OF THE ORIGINATOR.
Notwithstanding anything herein to the contrary (a) Originator shall
perform all its obligations under the Collection Policy related to the
Receivables to the same extent as if such Receivables had not been transferred
to Purchaser hereunder, (b) the exercise by Purchaser of any of its rights
hereunder shall not relieve Originator from its obligations with respect to the
Receivables and (c) except as provided by law, Purchaser shall not have any
obligation or liability with respect to any Receivables or the underlying
Contracts, nor shall Purchaser be obligated to perform any of the obligations or
duties of Originator thereunder. Originator hereby agrees to act as subservicer
with respect to all Receivables conveyed by Originator to Purchaser hereunder
and, with respect thereto shall be a "subservicer" under the Loan Agreement.
Accordingly, in connection with such Receivables conveyed by Originator to
Purchaser hereunder, Originator hereby assumes all of the responsibilities and
obligations under the Loan Agreement of the Servicer with respect to the
servicing of all Receivables conveyed by it to Purchaser hereunder.
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ARTICLE VII
PURCHASE TERMINATION EVENTS
SECTION 7.1 PURCHASE TERMINATION EVENTS.
If any of the following events (each, a "Purchase Termination Event")
shall occur and be continuing:
(a) any representation or warranty made or deemed made by or on behalf
of Originator under or in connection with this Agreement or any Purchase Report
or other information or report delivered by Originator pursuant hereto shall
prove to have been false or incorrect in any material respect when made or
deemed made; provided, however, that the falsity or incorrectness of any
representation made pursuant to Section 4.2(a) with respect to any Receivable
shall not constitute a Purchase Termination Event so long as Originator has
complied with its obligations in respect of such Receivable pursuant to Section
2.4;
(b) Originator shall fail to (i) perform or observe any term, covenant
or agreement contained in Sections 5.1(b), 5.1(c), 5.1(d), 5.1(g), 5.1(h),
5.1(i), 5.1(j), 5.1(k), 5.1(l), 5.1 (m) or 5.1 (n), or (ii) make any payment or
deposit to be made by it hereunder within three (3) Business Days after the same
became due and payable;
(c) Originator shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed and any such failure shall remain unremedied for thirty (30) days;
(d) Originator shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, shall
make a general assignment for the benefit of creditors, or shall take any
corporate action to authorize any of the actions set forth above in this
subsection (d) or Originator shall be the subject of an Event of Bankruptcy;
(e) Originator transfers, sells or otherwise disposes of (whether in
one transaction or a series of transactions) all or substantially all of its
assets; or
(f) the Loan Agreement shall cease to be in full force and effect, a
Significant Event shall have occurred under the Loan Agreement or the Lender's
Commitment under the Loan Agreement shall be terminated;
then, and in any such event, Purchaser may, by notice to Originator, declare its
obligation to purchase Receivables from Originator to be terminated, whereupon
such obligation shall forthwith be terminated; provided, however, that in the
case of any event described in subsection (d) above, such termination shall
automatically occur upon the happening of such event. No termination under this
Section 7.1 of Purchaser's obligation to purchase Receivables shall affect the
then-existing obligations of Originator hereunder (other than Originator's
obligations to sell Receivables to Purchaser pursuant hereto).
SECTION 7.2 REMEDIES.
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If a Purchase Termination Event has occurred and is continuing:
(a) Purchaser (and its assignees) shall have all of the rights and
remedies provided to a secured creditor or a purchaser of accounts or chattel
paper under the UCC by applicable law in respect thereto.
(b) Purchaser (and its assignees) may at any time (i) notify the
respective Obligors of Purchaser's ownership of the Receivables and may direct
that payment of all amounts due or to become due under the Receivables be made
directly to Purchaser or its designee or (ii) give notice, or require that
Originator, at Originator's expense, give notice of such ownership to each such
Obligor and direct that all payments be made directly to Purchaser or its
designee.
(c) Purchaser (and its assignees) may elect to (i) xxx for collection
on any Receivables or (ii) sell any Receivables to any Person for a price that
is acceptable to Purchaser (or its assignees). In connection with any such sale,
Purchaser or its assignees shall have the right to assign its rights under this
Agreement to a third party. Any such Receivable shall cease to be a Receivable
for all purposes under this Agreement as of the effective date of such sale.
(d) Originator shall, upon Purchaser's (or its assignee's) request and
at Originator's expense (i) assemble all of Originator's documents, instruments
and other records (including, without limitation, credit files and computer
tapes or disks) that (A) evidence or will evidence or record Receivables sold or
contributed by Originator, (B) evidence the underlying Contracts relating to
such Receivables and (C) are otherwise necessary or desirable to effect
Collections of such Receivables and (ii) deliver such documents to Purchaser or
its designee at a place designated by Purchaser or, at Purchaser's option,
provide Purchaser or its designee with access thereto.
(e) Originator hereby irrevocably authorizes Purchaser or its designee
or assignees to take any and all steps in Originator's name and on Originator's
behalf necessary or desirable, in the reasonable opinion of Purchaser, designee
or assignee, to collect all amounts due under the Receivables and the other
Purchased Assets, including, without limitation, endorsing Originator's name on
checks and other instruments representing Collections, enforcing the Receivables
and the other Purchased Assets and exercising all rights and remedies in respect
thereof.
(f) Originator will (i) deliver to Purchaser, its designees or
assignees all computer programs, material and data necessary to the immediate
collection of the Receivables by Purchaser, or a party designated by Purchaser,
with or without the participation of Originator and (ii) make such arrangements
with respect to the collection of the Receivables as may be reasonably required
by the Administrator.
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ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 INDEMNITIES BY THE ORIGINATOR.
Without limiting any other rights that Purchaser may have hereunder or
under applicable law, Originator hereby agrees to indemnify Purchaser (and its
assignees) and each Indemnified Party, on an after-tax basis, from and against
any and all claims, losses and liabilities (including reasonable attorneys'
fees) (all the foregoing being collectively referred to as "Indemnified
Amounts") arising out of or resulting from this Agreement or in respect of any
Receivable, any related Contract or any other Purchased Asset, excluding,
however, Indemnified Amounts to the extent resulting from gross negligence or
willful misconduct on the part of Purchaser or such Indemnified Party, as the
case may be. Without limiting or being limited by the foregoing, Originator
shall pay on demand to Purchaser or any Indemnified Party any and all amounts
necessary to indemnify such Person from and against any and all Indemnified
Amounts relating to or resulting from:
(a) reliance on any representation or warranty or statement made or
deemed made by Originator (or any of their respective officers) under or in
connection with this Agreement or in any certificate, report or document
delivered pursuant hereto that, in any such case, shall have been false or
incorrect when made or deemed made;
(b) the failure by Originator to comply with any applicable law, rule
or regulation with respect to any Receivable or the related Contract, or the
nonconformity of any Receivable or the related Contract with any such applicable
law, rule or regulation;
(c) the failure to have filed or pay any recording or other similar tax
with respect to, or any delay in filing or payment of any recording or other
similar tax with respect to, financing statements or other similar instruments
or documents under the Uniform Commercial Code of any applicable jurisdiction or
other applicable laws with respect to Purchaser's or any assignee's interest in
any Purchased Asset;
(d) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or services related to any such
Receivable or the furnishing or failure to furnish such merchandise or services;
(e) any failure of Originator to perform its duties or obligations
under this Agreement or the applicable Contract;
(f) any products liability or warranty claim arising out of or in
connection with merchandise, insurance or services that are the subject of any
Receivable;
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(g) the commingling of Collections of Receivables at any time with
other funds of Originator, regardless or whether such commingling shall be
permitted by the Transaction Documents;
(h) any investigation, litigation or proceeding related to this
Agreement or in respect of any Receivable or any Contract;
(i) the payment by Purchaser of any taxes owed by Originator,
including, but not limited to, federal, state or local income taxes, excise
taxes or business taxes; or
(j) the failure to vest, and maintain vested, in Purchaser a valid and
enforceable (i) ownership interest or (ii) a first priority perfected security
interest in the items described in Section 2.1(a) (except to the extent such
first priority perfected security interest was assigned to the Administrator
pursuant to the Loan Agreement).
Notwithstanding the foregoing, Originator shall not under any circumstances
indemnify Purchaser (or its assignees) for any Indemnified Amounts that result
solely from a default by an Obligor with respect to a Receivable other than as
described in clause (d) above or resulting from the circumstances described in
clause (b) or (e) above.
ARTICLE IX
THE ORIGINATOR NOTE
SECTION 9.1 ORIGINATOR NOTE.
(a) On the Closing Date, Purchaser shall issue to Originator a
revolving subordinated note in the form attached hereto as Exhibit A (the
"Originator Note"). The principal amount of the Originator Note outstanding from
time to time shall be determined in accordance with Sections 2.3, 2.4, and 2.5.
It is understood and agreed that no cash shall be paid to Originator in respect
of the Originator Note as a result of the principal amount of the Originator
Note decreasing pursuant to the calculations in Sections 2.4 and 2.5. Anything
to the contrary notwithstanding, Purchaser shall have the right (but not the
obligation) to offset or adjust the Originator Note by any amounts owed by
Originator to Purchaser under this Agreement.
(b) Until the Obligations have been indefeasibly paid in full in cash,
no payments (whether for principal or interest) may be made, directly or
indirectly, by Purchaser on the Originator Note except from amounts received by
Purchaser under the Loan Agreement. Originator agrees not to ask, demand, xxx
for or take or receive from Purchaser in cash or other property by set-off
(including, without limitation, from or by way of collateral), payment of all or
any part of the Originator Note, except as permitted by the Loan Agreement.
Originator agrees that upon any distribution of all or any of the assets of
Purchaser to creditors of Purchaser upon the dissolution, winding up, total or
partial liquidation, arrangement, reorganization, adjustment, protection,
relief, or composition of Purchaser or its debts, any payment or distribution of
any kind in respect of the Originator Note that otherwise would be payable or
deliverable upon or with respect to the Originator Note, directly or indirectly,
by set-off or in any other manner, including, without limitation, from or by way
of collateral, shall be paid or delivered directly to the Administrator for
application (in the case of cash) to or as collateral (in the case of non-cash
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property or securities) for the payment or prepayment in full of, the
Obligations until the Obligations shall have been indefeasibly paid in full in
cash. All payments or distributions upon or with respect to the Originator Note
that are received by Originator contrary to the provisions of the Loan Agreement
or the Originator Note shall be received in trust for the benefit of the Secured
Parties, shall be segregated from other funds and property held by Originator
and shall be forthwith paid over to the Administrator in the same form as so
received (with any necessary endorsement) to be applied (in the case of cash)
to, or held as collateral (in the case of non-cash property or securities) for
the payment or prepayment in full of, the Obligations until the Obligations
shall have been indefeasibly paid in full in cash. Originator agrees that no
payment or distribution to the Secured Parties pursuant to the provisions of the
Originator Note shall entitle Originator to exercise any rights or subrogation
in respect thereof until the Obligations shall have been indefeasibly paid in
full in cash. Originator and Purchaser each hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and the Originator Note and any requirement that any Secured Party protect,
secure, perfect or insure any security interest or lien on any property subject
thereto or exhaust any right or take any action against Purchaser or any other
Person or any Collateral.
(c) Originator agrees and confirms that the Originator Note represents
solely the right to receive certain amounts from funds available to Purchaser
under the Loan Agreement and that the Originator Note does not represent a
security interest in the Receivables or their proceeds. No payments may be
received, directly or indirectly, by Originator (and if received, Originator
agrees to return such payments to Purchaser) on the Originator Note unless all
amounts required pursuant to the Loan Agreement to be paid have been paid.
(d) Originator agrees and confirms that the Administrator shall not
have any duty whatsoever to Originator as holder of the Originator Note and that
the Administrator shall not be liable to Originator for any action taken or
omitted to be taken with respect to the Originator Note.
SECTION 9.2 RESTRICTIONS ON TRANSFER OF ORIGINATOR NOTE.
Neither the Originator Note, nor any right of Originator to receive
payments thereunder, shall be assigned, transferred, exchanged, pledged,
hypothecated, participated or otherwise conveyed.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 AMENDMENTS, ETC.
No amendment, modification or waiver of any provision of this
Agreement, or consent to any departure by Originator therefrom, shall in any
event be effective unless the same shall be in writing and signed by Purchaser
and the Administrator and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
SECTION 10.2 NOTICES, ETC.
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All notices and other communications provided for hereunder shall be in
writing (including telegraphic, facsimile or cable communication) and mailed,
telegraphed, transmitted, cabled or delivered, at its address set forth on
Schedule IV; or, as to each party, at such other address as shall be designated
by such party in a written notice to the other parties. All such notices and
communications shall when mailed or telecopied be effective when deposited in
the mails, or transmitted by facsimile, respectively, except that notices to
Purchaser pursuant to Article II shall not be effective until received by
Purchaser.
SECTION 10.3 NO WAIVER; REMEDIES.
No failure on the part of Purchaser to exercise, and no delay in
exercising, any right under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 10.4 BINDING EFFECT; GOVERNING LAW.
This Agreement shall be binding upon and inure to the benefit of
Originator and Purchaser and their respective successors and assigns, except
that Originator shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of Purchaser and the
Administrator. 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 Purchase Termination Date,
until Purchaser shall not have any interest in any Purchased Asset and all
obligations of Originator hereunder shall have been paid in full; provided,
however, that the indemnification provisions of Article VIII shall be continuing
and shall survive any termination of this Agreement. This Agreement and the
Originator Note shall be governed by, and construed in accordance with, the laws
of the State of New York without regard to the conflict of laws principles
thereof (other than Section 5-1401 of the New York General Obligations Law).
SECTION 10.5 COSTS, EXPENSES AND TAXES.
In addition to the rights of indemnification granted to Purchaser under
Article VIII, Originator agrees to pay on demand all costs and expenses of
Purchaser and the Administrator in connection with the preparation, execution
and delivery of this Agreement, the Loan Agreement and the other agreements and
documents to be delivered hereunder and thereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for
Purchaser and the Administrator with respect thereto and with respect to
advising Purchaser and the Administrator as to their rights and remedies under
this Agreement, and all costs and expenses (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this Agreement
and the documents to be delivered hereunder. In addition, Originator agrees to
pay any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of this
Agreement or the other documents to be delivered hereunder, and agrees to hold
Purchaser harmless from and against any and all
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liabilities with respect to or resulting from any delay in paying or omitting to
pay such taxes and fees.
SECTION 10.6 NO BANKRUPTCY PETITION.
Originator covenants and agrees that prior to the date which is one
year and one day after the payment in full of all Senior Indebtedness (as
defined in the Originator Note) it will not institute against, or join any other
Person in instituting against, Purchaser or the Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law. This Section
10.6 shall survive the termination of this Agreement.
SECTION 10.7 ACKNOWLEDGMENT OF ASSIGNMENTS.
Originator hereby acknowledges and consents to the assignment by
Purchaser of the Purchased Assets and the rights of Purchaser under this
Agreement to the Administrator pursuant to the Loan Agreement. Originator
further acknowledges that, in accordance with the terms of the Loan Agreement,
the Administrator may, under certain circumstances, exercise some or all of the
rights of Purchaser hereunder.
SECTION 10.8 WAIVER OF SETOFF.
Except as expressly set forth in this Agreement, all payments hereunder
by Originator to Purchaser or by Purchaser to Originator shall be made without
setoff, counterclaim or other defense and each of Purchaser and Originator
hereby waives any and all of its rights to assert any right of setoff,
counterclaim or other defense to the making of a payment due hereunder to
Originator or Purchaser, as the case may be; provided, however; that,
notwithstanding the foregoing, Purchaser hereby reserves any and all of its
rights to assert any such right of setoff, counterclaim or other defense against
Originator with respect to the Purchase Price of Receivables purchased from
Originator.
SECTION 10.9 SEVERABILITY.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
SECTION 10.10 COUNTERPARTS.
This Agreement and any amendment or supplement hereto or any waiver
granted in connection herewith may be executed in any number of counterparts and
by the different parties on separate counterparts and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same agreement. Delivery of an executed counterpart
of a signature page to this Agreement by facsimile shall be effective as
delivery of a manually executed counterpart of this Agreement.
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SECTION 10.11 GRANT OF LICENSE TO USE TRADEMARKS.
For the sole purpose of enabling Purchaser (or its assignees) to
perform the functions of servicing and collecting the Receivables upon a
Purchase Termination Event, Originator hereby grants to Purchaser (or its
assignees) an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to Originator) to use, license, or sublicense any
copyright, trade name, trademark or similar rights or properties now owned or
hereafter acquired by Originator, and wherever the same may be located, and
including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer and automatic
machinery software and programs used for the compilation or printout thereof.
The aforementioned servicing and collecting functions shall be performed in
accordance with customary business practices and in a manner which will not
materially adversely affect any of such licenses or licensed items.
SECTION 10.12 JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) Originator and Purchaser hereby submit to the nonexclusive
jurisdiction of any United States District Court for the Southern District of
New York and of any New York state court sitting in New York, New York for
purposes of all legal proceedings arising out of, or relating to, the
Transaction Documents or the transactions contemplated thereby. Originator and
Purchaser hereby irrevocably waive, to the fullest extent possible, any
objection it may now or hereafter have to the venue of any such proceeding and
any claim that any such proceeding has been brought in an inconvenient forum.
Nothing in this Section 10.12 shall affect the right of the Administrator or
Lender to bring any action or proceeding against Originator and Purchaser or its
property in the courts of other jurisdictions.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, ANY TRANSACTION DOCUMENT OR
ANY MATTER ARISING THEREUNDER.
SECTION 10.13 THIRD PARTY BENEFICIARIES.
Each of the Secured Parties shall be third-party beneficiaries of this
Agreement.
SECTION 10.14 CONFIRMATION OF INTENT.
It is the express intent of the parties hereto that the sale and
contribution to Purchaser pursuant to Section 2.1 hereof of all of Originator's
right, title and interest, in, to and under all Purchased Assets and the
Contributed Receivables shall be treated under applicable state law and Federal
bankruptcy law as a sale or contribution, as the case may be, by Originator to
Purchaser. However, if it is determined contrary to the express intent of the
parties that the transfer is not a sale or contribution, as the case may be, and
that all or any portion of the assets described in Section 2.1 continue to be
property of Originator, then Originator hereby grants to Purchaser a security
interest in all of Originator's right, title and interest in, to and under all
Purchased Assets and Contributed Receivables and this Agreement shall constitute
a security agreement under applicable law. Originator, Purchaser and the
Administrator shall, to the extent consistent with the Loan Agreement and this
Agreement, take such action as may be necessary to ensure that, if
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this Agreement were deemed to create a security interest in the assets
described in Section 2.1, such interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the terms of this Agreement and the Loan Agreement.
SECTION 10.15 CONFIDENTIALITY OF AGREEMENT.
Unless otherwise consented to by the Administrator, Originator hereby
agrees that it will not disclose the contents of any Transaction Document, or
any other confidential or proprietary information furnished by the
Administrator, the Lender or Purchaser, to any Person other than its Affiliates
(which Affiliates shall have executed an agreement satisfactory in form and in
substance to the Administrator to be bound by the provisions of this Section
10.15), auditors and attorneys or as required by applicable law.
SECTION 10.16 SECTION AND PARAGRAPH HEADINGS.
Section and paragraph headings used in this Agreement are provided
solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CENTRAL RECEIVABLES, INC.,
as Purchaser
By: /s/ Xxx Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
CENTRAL FREIGHT LINES, INC.,
a Texas corporation,
as Originator
By: /s/ Xxx Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
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