THIS RECEIVABLES PURCHASE AND SALE AGREEMENT (the "Agreement") is made as of
December 18, 1997, --------- among:
(1) SYNTHETIC INDUSTRIES, INC. ("Synthetic"), a Delaware
corporation, as the originator (the "Originator");
(2) SYNTHETIC FUNDING CORPORATION, a Delaware corporation (the
"Buyer"); and
(3) SYNTHETIC INDUSTRIES, INC., in its capacity as the initial
Collection Agent (as defined below) hereunder (in such
capacity, the "Collection Agent").
WITNESSETH:
WHEREAS, the Originator desires to sell, and the Buyer desires
to purchase, all of the Originator's right, title and interest in the accounts
receivable originated by the Originator on the terms and conditions provided
herein;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms.
(a) Certain capitalized terms used throughout this Agreement
are defined above or in this Section 1.01.
(b) As used in this Agreement and its exhibits, 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).
"Actual Dilution" means, on any Business Day with respect to
any Receivable or Receivables, the actual reduction in the Outstanding Balance
of such Receivable or Receivables as a result of any of the Dilution Factors.
"Adverse Claim" means a lien, security interest, charge,
encumbrance or other right or claim of any Person.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by or under common control with such Person.
"Asset Report" has the meaning set forth in the Receivables
Purchase Agreement.
36
"Asset Report Date" means, with respect to any calendar month,
the eighth day of such month, or if such date is not a Business Day, the next
Business Day to occur thereafter.
"Average Maturity"has the meaning set forth in the Receivables
Purchase Agreement.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978 (11
U.S.C. xx.xx. 101 et seq.), as amended from time to time, or any successor
statute.
"Base Rate" means, on any day, a fluctuating rate of interest
per annum equal to the higher of (a) the per annum rate of interest announced
from time to time by BankBoston, N.A. at its head office in Boston,
Massachusetts as its "base rate", and (ii) 1/2 of one percent per annum above
the Federal Funds Rate.
"Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA in respect of which the Originator or any ERISA Affiliate
of the Originator is, or at any time during the immediately preceding six years
was, an "employer" as defined in Section 3(5) of ERISA.
"Business Day" means a day of the year other than a Saturday
or a Sunday on which banks are required to be open in Xxx Xxxx Xxxx, Xxxxxxx,
Xxxxxxx and Boston, Massachusetts.
"Closing Date" means the date on which the Buyer makes the
Initial Purchase of Receivables under this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute.
"Collection Account" has the meaning set forth in the
Receivables Purchase Agreement.
"Collection Account Bank" means the financial institution
maintaining the Collection Account, which initially shall be BankBoston, N.A.
"Collection Agent" means at any time the Person then
authorized pursuant to Article VI to service, administer and collect
Receivables.
"Collection Agent Fee" has the meaning set forth in the
Receivables Purchase Agreement.
"Collection Agent Termination Event" means the occurrence of
any of the following:
(i) any Event of Termination;
(ii) a material failure on the part of the Collection Agent to
observe or perform any of its duties or obligations as Collection Agent under
this Agreement or as "Collection Agent" under the Receivables Purchase Agreement
and such failure shall continue uncured or unwaived for a period of 15 days
after written notice thereof to the Collection Agent; or
(iii) in the event that the Collection Agent is Synthetic or
any of its Affiliates, Synthetic shall fail to comply at any time with any of
the provisions of Section 12.1 of the Revolving Credit Agreement, or any other
similar provisions of the Revolving Credit Agreement (including, without
limitation, any replacement or refinancing Revolving Credit Agreement) which
from time to time may contain financial covenants or related "Events of Default"
(and in the event that the Revolving Credit Agreement is canceled or terminated
(and not replaced or refinanced), or otherwise ceases to be in force at any time
hereafter, the foregoing provisions shall apply to the above-referenced sections
of the Revolving Credit Agreement, as such provisions were in effect on the day
prior to the day on which the Revolving Credit Agreement was so canceled or
terminated, or otherwise ceased to be in force), and such failure to comply
shall continue uncured or unwaived for a period of 30 days or more.
"Collection Date" means the date following the Termination
Date on which the aggregate Outstanding Balance of all Receivables sold
hereunder has been reduced to zero (or such earlier date which is 365 days after
all outstanding Receivables sold hereunder have become written-off in accordance
with the Credit and Collection Policy), the Buyer has received all other amounts
due to it in connection with this Agreement or any other agreement executed
pursuant hereto or in connection herewith.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of the Related Security with respect thereto.
"Contract" means an invoice issued by the Originator to a
Person, or an agreement between the Originator and a Person, in each case in
substantially the form of one of the forms set forth in Exhibit A pursuant to or
under which such Obligor shall be obligated to make one or more payments to the
Originator.
"Credit and Collection Policy" means those credit and
collection policies and practices relating to Contracts and Receivables
described in Schedule II.
"Daily Settlement Report" means a report prepared by the
Collection Agent under the Receivables Purchase Agreement.
"DCR" means Duff & Xxxxxx Credit Rating Co., and any successor
thereto.
"Debt" of any Person means (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) obligations of such Person to pay the
deferred purchase price of property or services beyond ordinary course of
business payment terms for trade payables, (d) obligations of such Person as
lessee under leases which shall have been or should be, in accordance with GAAP,
recorded as capital leases, (e) obligations secured by an Adverse Claim upon
property or assets owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations and (f) obligations of such
Person under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (a) through (e) above.
"Defaulted Receivable" means a Receivable (a) as to which any
payment, or part thereof, remains unpaid for more than 90 days from the original
due date for such payment, (b) as to which the Obligor thereof has taken any
action constituting an Insolvency Event, or suffered any Insolvency Event to
exist or (c) which, consistent with the Credit and Collection Policy, has been
or should be written off the Originator's books as uncollectible.
"Dilution Factors" means, with respect to the Receivables, any
credits, rebates, freight charges, discounts, allowances, disputes, chargebacks,
returned or repossessed goods, inventory transfers, allowances for early
payments and other allowances or adjustments granted in accordance with the
Collection Agent's or the Originator's usual practices.
"Dilution Adjustment Credit" means, on any Business Day, the
Actual Dilution reported by the Collection Agent in the applicable Daily
Settlement Report for the immediately preceding Business Day.
"Discount Factor" means a percentage calculated to provide the
Buyer with a reasonable return on its investment in the Transferred Assets after
taking account of (i) the time value of money based upon the anticipated dates
of collection of the Transferred Assets, (ii) the risk of nonpayment by the
Obligors and (iii) the costs of servicing the Receivables to be performed by the
Originator. The initial Discount Factor shall be 2.30 %. The Originator and the
Buyer may agree in writing from time to time to change the Discount Factor based
on changes in one or more of the items affecting the calculation thereof;
provided, however, that any change to the Discount Factor shall take effect as
of the commencement of a calendar month, shall apply only prospectively and
shall not affect the Purchase Price payment in respect of Purchases which
occurred during any calendar month ending prior to the calendar month during
which the Originator and the Buyer agree to make such change.
"EagleFunding" means EagleFunding Capital Corporation, a
Delaware corporation.
"Eligible Receivable" means, at any time, a Receivable:
(a) the Obligor of which is not an Affiliate of any of
the parties hereto, and is not a government or a governmental subdivision or
agency;
(b) which is not a Defaulted Receivable and with respect to
which no scheduled payment, or any part thereof, remains unpaid for
more than 30 days from the original due date therefor, and the Obligor
of which is not the Obligor of any Defaulted Receivables in the
aggregate amount of 20% or more of the aggregate Outstanding Balance of
all Receivables of such Obligor;
(c) which arises under a Contract (i) the performance of which
has been completed by the Originator and by all other parties other
than the Obligor, (ii) that requires such Receivable to be paid in full
within 60 days of the original invoice date therefor (provided,
however, that at any time of determination hereunder, no more than 1.0%
of the Outstanding Balance of Purchased Receivables may have terms
which require payment in full within a number of days of the original
invoice date therefor of between 61 and 90, inclusive) and (iii) that
has been duly authorized and, together with such Receivable, is in full
force and effect and constitutes the legal, valid and binding
obligation of the Obligor of such Receivable, enforceable against such
Obligor in accordance with its terms and is not subject to any dispute,
offset, counterclaim or defense whatsoever;
(d) (i) which is an "account" within the meaning of Section
9-106 of the UCC of all applicable jurisdictions, (ii) which has been
invoiced by the Originator and as to which all performance and other
action required to be taken in connection therewith by the Originator
for the Obligor has been so performed or taken, (iii) is denominated
and payable only in United States dollars in the United States, (iv) no
portion of which is payable on account of sales taxes, and (v) in which
the Originator can grant a perfected security interest;
(e) which arises in the ordinary course of the Originator's
business in connection with a sale of goods within the United States;
(f) the assignment of which (including, without limitation,
the sale of an undivided percentage interest therein and the assignment
of any Related Security) does not contravene or conflict with any
applicable laws, rules or regulations or any contractual or other
restriction, limitation or encumbrance;
(g) which does not have an Adverse Claim filed against it
(other than pursuant to the Receivables Purchase Agreement) and is not
otherwise subject to an Adverse Claim and has not been compromised,
adjusted or modified in any material respect (including by extension of
time of payment or the granting of any discounts, allowances or credits
(other than as stated on the invoice));
(h) 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 truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no party to the
Contract related thereto is in violation of any such law, rule or
regulation in any material respect;
(i) which satisfies, and has been originated in accordance
with, all applicable requirements of the Credit and Collection Policy;
(j) as to which the Buyer has not notified the Originator and
the Collection Agent that the "Deal Agent" under the Receivables
Purchase Agreement has determined, in its reasonable business judgement
as detailed in such notice, that the Obligor of such Receivable is an
unreasonable risk;
(k) the Obligor of which is not a Person to whom the
Originator or any of its Affiliates owes any accounts payable or other
Debt and is otherwise not a Person in respect of which the Originator
maintains any contra accounts on its books and records; and
(l) with respect to which, (i) prior to the Purchase
hereunder, the Originator has a first priority ownership interest
therein, free and clear of any Adverse Claim, except as otherwise
contemplated under the Intercreditor Agreement, and (ii) from and after
the Purchase hereunder, Buyer has a properly perfected first priority
ownership interest therein, free and clear of any Adverse Claim.
"ERISA" means the U.S. Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means (a) any corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as the Originator; (b) a trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) with the Originator or (c) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as the Originator, any
corporation described in clause (a) above or any trade or business described in
clause (b) above.
"Event of Termination" has the meaning assigned to that term
in Section 7.01.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, in each case consistently
applied.
"Indemnified Amounts" has the meaning assigned to that term in
Section 8.01.
"Indemnified Parties" has the meaning assigned to that term in
Section 8.01.
"Initial Purchase" means the initial purchase made by the
Buyer hereunder.
"Insolvency Event" means, with respect to any Person, any of
the following events: such Person shall make a general assignment for the
benefit of creditors; or any case or proceeding shall be instituted by or
against such Person seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, dissolution, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property.
"Intercreditor Agreement" means that certain Intercreditor
Agreement, dated as of December 18, 1997, among BankBoston, N.A. (in its
capacity as "Agent" under the Revolving Credit Agreement), the Collection Agent,
the Originator, the Buyer, EagleFunding and BancBoston Securities Inc. (in its
capacity as the "Deal Agent" under the Receivables Purchase Agreement), as the
same may be amended, restated, supplemented or otherwise modified or replaced,
from time to time thereafter.
"Investment" means, with respect to any Person, any direct or
indirect loan, advance or investment by such Person in any other Person, whether
by means of share purchase, capital contribution, loan or otherwise, excluding
the acquisition of Receivables and other Transferred Assets (and interests
therein) pursuant to this Agreement and excluding commission, travel and similar
advances to officers, employees and directors made in the ordinary course of
business.
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"Lock-Box" means a post office box to which Collections are
remitted for retrieval by a Lock-Box Bank and deposited by such Lock-Box Bank
into a Lock-Box Account.
"Lock-Box Account" means an account maintained for the purpose
of receiving Collections at a bank or other financial institution which has
executed a Lock-Box Agreement.
"Lock-Box Agreement" means an agreement, in substantially the
form of Exhibit B, among the Originator, the Buyer, the Collection Agent, the
"Deal Agent" under the Receivables Purchase Agreement and a Lock-Box Bank.
"Lock-Box Bank" means any of the banks or other financial
institutions holding one or more Lock-Box Accounts.
"Materially Adverse Effect" means any act, omission,
situation, circumstance, event or undertaking which could, singly or in any
combination with one or more other acts, omissions, situations, circumstances,
events or undertakings, have, or are reasonably likely to have, a materially
adverse effect upon (a) the business, assets, properties, liabilities, financial
condition, or results of operations of the Originator and its subsidiaries taken
as a whole, (b) the value of the whole or any material part of the Transferred
Assets, the interests therein transferred or purported to be transferred
pursuant to the terms hereof or the priority of such interests, (c) the
respective ability of the Originator or any of its subsidiaries to perform any
obligations under this Agreement or any other Originator Document to which it is
a party, or (d) the legality, validity, binding effect or enforceability of any
Originator Document or the ability of the Buyer or the Deal Agent to enforce any
rights or remedies under or in connection with any Originator Document.
"Moody's" means Xxxxx'x Investors Service, Inc., and any
successor thereto.
"Monthly Payment Date" means, with respect to any calendar
month, the [tenth] day of such month, or if such date is not a Business Day, the
next Business Day to occur thereafter.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding five years contributed to by the Originator or
any ERISA Affiliate on behalf of its employees.
"Noncomplying Receivable" means any Receivable with respect to
which the Originator has received notice from the Buyer that such Receivable was
not an Eligible Receivable as of the date purchased hereunder or that the
Originator otherwise breached any representation, warranty or covenant made with
respect to such Receivable hereunder.
"Noncomplying Receivables Adjustment" means, with respect to
any calendar month, an amount equal to (i) the aggregate Outstanding Balance for
all Receivables which the Buyer identified to the Originator as Noncomplying
Receivables during such calendar month minus (ii) all Collections received
during such calendar month on account of Receivables originated by the
Originator with respect to which Noncomplying Receivables Adjustments were
previously paid.
"Obligor" means a Person obligated to make payments pursuant
to a Contract.
"Originator Documents" means this Agreement, the Lock-Box
Agreements, the Intercreditor Agreement, the Revolving Credit Agreement, and all
other certificates, instruments, UCC financing statements, reports, notices,
agreements and documents executed or delivered under or in connection with this
Agreement, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with this Agreement.
"Outstanding Balance" of any Receivable at any time means the
then outstanding principal balance thereof.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, government (or any agency or political subdivision
thereof) or other entity.
"Purchase" means a purchase of Transferred Assets by the Buyer
from the Originator pursuant to Section 2.01.
"Purchase Price" means, with respect to any Purchase on any
date, the aggregate price to be paid to the Originator for such Purchase in
accordance with Section 2.2 for the Receivables, Related Security and
Collections being sold to the Buyer on such date, which price shall equal the
product of (x) the aggregate Outstanding Balance of such Receivables and (y) one
minus the Discount Factor then in effect.
"Receivable" means the indebtedness of any Obligor under a
Contract whether constituting an account, chattel paper, instrument, general
intangible or any other type of property, which arises from a sale of
merchandise or the performance of services by the Originator. Each Receivable
shall include the right to payment of any interest or finance charges and other
obligations of the Obligor with respect thereto.
"Records" means all Contracts and other documents, books,
records and other information (including without limitation, computer programs,
tapes, disks, punch cards, data processing software and related property and
rights) maintained with respect to Receivables and the related Obligors which
the Originator has itself generated or in which the Originator has otherwise
obtained an interest.
"Related Security" means with respect to any Receivable:
(a) all of the Originator's interest in the merchandise
(including returned, repossessed or foreclosed merchandise), if any,
relating to the sale which gave rise to such Receivable;
(b) all other Adverse Claims 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;
(c)the assignment to the Buyer of all UCC financing statements
covering any collateral securing payment of such Receivable;
(d) all guarantees, indemnities, warranties, letters of
credit, insurance policies and proceeds and premium refunds thereof 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;
(e) all Records; and
(f) all proceeds of the foregoing.
"Receivables Purchase Agreement" means that certain
Receivables Purchase Agreement dated as of December 18, 1997 by and among the
Buyer, as the seller thereunder, EagleFunding, as the purchaser, BancBoston
Securities Inc., as the deal agent, and Synthetic, as the collection agent, as
the same may be amended, restated, supplemented or otherwise modified from time
to time.
"Revolving Credit Agreement" means that certain Loan and
Security Agreement dated as of December 18, 1997, between the Originator, the
financial institutions parties thereto as "Lenders", and BankBoston, N.A., as
agent to the Lenders, as the same may be amended, restated, supplemented,
replaced or otherwise modified from time to time, any successor agreement, and
any agreement pursuant to which the Debt issued under any such "Revolving Credit
Agreement" is refinanced.
"S&P" means Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc., and any successor thereto.
"Termination Date" means the date on which the Originator's
obligation to sell and the Buyer's obligation to purchase Receivables hereunder
terminates, which date shall occur on the earliest of (i) the occurrence of the
"Termination Date" under the Receivables Purchase Agreement, (ii) the date on
which an Insolvency Event occurs with respect to Synthetic, the Originator or
the Buyer and (iii) upon the occurrence and during the continuance of an Event
of Termination, the date on which the Buyer declares its obligation to purchase
Receivables hereunder to be terminated.
"Transferred Assets" means, with respect to any Purchase or
Purchases, (a) the Receivables sold to the Buyer in connection with such
Purchase or Purchases, (b) all Related Security relating to such Receivables,
and (c) all Collections with respect to, and other proceeds of, such
Receivables.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
"United States" means the United States of America.
SECTION 1.02. Accounting and Certain Other Terms. 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 undefined terms contained in this Agreement which are used in Article
9 of the UCC in the State of New York shall have the meanings provided for by
such Article 9.
SECTION 1.03. Other Terms. 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 or supplemented and not to any particular section, subsection,
or clause contained in this Agreement, and all references to Sections, Exhibits
and Schedules shall mean, unless the context clearly indicates otherwise, the
Sections hereof and the Exhibits and Schedules attached hereto, the terms of
which Exhibits and Schedules are hereby incorporated into this Agreement.
Whenever appropriate, in the context, terms used herein in the singular also
include the plural, and vice versa.
SECTION 1.04. 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 mean "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES.
SECTION 2.01. Agreement to Purchase. (a) On the terms and
conditions hereinafter set forth, the Buyer agrees to make the Initial Purchase
hereunder on the Closing Date by purchasing from the Originator, and the
Originator agrees to sell to the Buyer, all Receivables of the Originator
existing as of the close of business on the Business Day immediately prior to
the Closing Date, together with all of the Related Security relating to such
Receivables, all Collections with respect to, and other proceeds of, such
Receivables. On each Business Day after the Initial Purchase until the
occurrence of the Termination Date, the Buyer agrees to purchase from the
Originator, and the Originator agrees to sell to the Buyer, all Receivables of
the Originator existing as of the close of business on the immediately preceding
Business Day which have not been previously purchased hereunder, together with
all of the Related Security relating to such Receivables and all Collections
with respect to and other proceeds of such Receivables. Prior to making any
Purchase hereunder, the Buyer may request of the Originator, and the Originator
shall deliver, such approvals, opinions, information, reports or documents as
the Buyer may reasonably request.
(b) It is the intention of the parties hereto that each
Purchase of Receivables to be made hereunder shall constitute a "sale of
accounts," as such term is used in Article 9 of the UCC of the State of New
York, and not a loan secured by such accounts. Except for the Noncomplying
Receivables Adjustment made on each Asset Report Date and the Dilution
Adjustment Credit made on any Business Day, each sale of Receivables by the
Originator to the Buyer is made without recourse; provided, however, that (i)
the Originator shall be liable to the Buyer for all representations, warranties
and covenants made by the Originator pursuant to the terms of this Agreement,
and (ii) such sale does not constitute and is not intended to result in an
assumption by the Buyer or any assignee thereof of any obligation of the
Originator or any other person arising in connection with the Transferred
Assets, or any other obligations of the Originator. In view of the intention of
the parties hereto that the Purchases of Receivables to be made hereunder shall
constitute a sale of such Receivables rather than a loan secured by such
Receivables, the Originator agrees to note on its financial statements that the
Receivables have been sold to the Buyer.
(c) The parties hereto acknowledge that on the Closing Date
the Originator shall, and from time to time thereafter the Originator may (but
without any obligation to do so), contribute to the capital of Buyer such
amounts as may be necessary or desirable for the operation of Buyer's business
and the payment of its obligations under this Agreement. In connection with any
such contribution, the parties hereto agree that the Originator may, in lieu of
making a cash transfer, authorize Buyer to deduct the amount of such
contributions from the Purchase Price otherwise payable by Buyer to the
Originator on the applicable date. All of the Receivables so paid for through
such deductions shall constitute Transferred Assets within the meaning of this
Agreement and shall be subject to all of the representations, warranties and
covenants hereunder to the same extent as if Buyer had paid the Purchase Price
for such Receivables with cash from its own funds.
SECTION 2.02. Payment for the Purchases. (a) The Purchase
Price for each Purchase shall be payable in full in cash by the Buyer to the
Originator or its designee on the date of such Purchase; except that the Buyer
may, with respect to any Purchase, offset against such Purchase Price, (i) any
positive Noncomplying Receivables Adjustments or other amounts shown on an Asset
Report as owing from the Originator to the Buyer and which remain unpaid; (ii)
any Dilution Adjustment Credits for Receivables sold by the Originator reported
on the Daily Settlement Report for such date and any Dilution Adjustment Credits
for Receivables sold by the Originator and reported in any previous Daily
Settlement Report which remain unpaid; and (iii) any other amounts owed by the
Originator to the Buyer hereunder and which remain unpaid.
(b) If, on any day, the amount of cash available to the Buyer
under the Receivables Purchase Agreement is less than the Purchase Price owing
for all Purchases of Receivables to be made on such day, then the Buyer may, by
written notice to the Originator, elect to pay such remaining part of the
Purchase Price by borrowing a subordinated revolving loan (each an "Originator
Loan") and the Originator shall have irrevocably agreed to advance, and shall be
deemed to have advanced, an Originator Loan in the amount so specified by the
Buyer; provided, however, that the Buyer may not make any such election and the
Originator shall not have any obligation to extend any Originator Loans to the
Buyer if, as a result thereof, the aggregate unpaid principal amount of all of
the Originator Loans would exceed the sum of (i) the aggregate Outstanding
Balance of Eligible Receivables as of the opening of business on such date minus
(ii) the outstanding "Capital" under the Receivables Purchase Agreement minus
(iii) an amount equal to the amount described in clause (ii) above times the
"Loss Reserve Percentage" most recently calculated under the Receivables
Purchase Agreement.
(c) The Originator Loans advanced by the Originator shall be
evidenced by, and payable in accordance with the terms and provisions of, a
promissory note (the "Originator Note") payable to the Originator in the form of
Exhibit E attached hereto. On each Business Day, to the extent that the Buyer
receives either Collections or proceeds from any sales under the Receivables
Purchase Agreement which, in any case, it is not required to hold in trust for,
or remit to, the Collection Agent or the "Deal Agent" under the Receivables
Purchase Agreement, then the Buyer shall remit such funds to the Originator (net
of any funds needed to pay existing expenses which are then accrued and unpaid)
in the following order of priority and application: first to pay the Purchase
Price owed on such date; second to pay any Noncomplying Receivables Adjustment
payments owed under Section 2.03; and third to pay amounts owed under the
Originator Notes.
(d) The Originator Loans shall, subject to the terms of the
Originator Note, be subordinated to the prior right and payment in full of all
recourse obligations of the Buyer under the Receivables Purchase Agreement.
SECTION 2.03. Settlement Procedures. (a) Daily. On each
Business Day, the Collection Agent shall, as part of the Daily Settlement Report
delivered under the Receivables Purchase Agreement, note the Dilution Adjustment
Credit due to the Buyer from the Originator. The Buyer shall subtract such
Dilution Adjustment Credit from the Purchase Price which would otherwise be owed
to the Originator on such day and, if the amount of such credit exceeds the
amount of such Purchase Price, the unused amount of the Dilution Adjustment
Credit shall be applied as a prepayment of the then outstanding principal amount
of the Originator Note issued in favor of the Originator. Any remaining
unutilized amount of the Dilution Adjustment Credit shall be credited by the
Buyer against all future Purchases from the Originator; provided, however, that
if such credits are not fully utilized within five (5) Business Days, the
Originator shall pay the remaining amount of such credit in cash on the next
succeeding Business Day.
(b) Monthly. On or prior to each Asset Report Date, the
Collection Agent shall prepare and deliver to the Buyer, as part of the Asset
Report delivered under the Receivables Purchase Agreement, a statement of the
Noncomplying Receivables Adjustment due to the Buyer from the Originator or from
the Buyer to the Originator, as the case may be. If the Noncomplying Receivables
Adjustment is a positive number, such number shall be shown on the Asset Report
as an amount due to the Buyer and the Buyer shall subtract such Noncomplying
Receivables Adjustment from the Purchase Price which would otherwise be owed to
the Originator on such day and, if the amount of such adjustment exceeds the
amount of such Purchase Price, the unused positive amount of the Noncomplying
Receivables Adjustment shall be applied as a prepayment of the then outstanding
principal amount of the Originator Note held by the Originator. Any remaining
unutilized positive amount of the Noncomplying Receivables Adjustment shall be
credited by the Buyer against all future Purchases from the Originator;
provided, however, that if such credits are not fully utilized within five (5)
Business Days, the Originator shall pay the remaining amount of such adjustment
in cash on the next succeeding Business Day. Alternatively, if the Noncomplying
Receivables Adjustment is a negative number, such number shall be shown on the
Asset Report as an amount due to the Originator, and the Buyer shall pay to the
Originator the amount, if any, shown on the Asset Report as the net amount due
from Buyer to the Originator. To the extent that such net amount due remains
unpaid as of the end of such Asset Report Date, the principal amount of the
Originator Note issued to the Originator shall be increased on the applicable
Asset Report Date by such remaining unpaid amount, subject, however, to the
limits on the amounts of the Originator Note permitted under Section 2.02(b)
above.
(c) Generally. Until the Originator or the Buyer shall notify
the Collection Agent of any exceptions to the calculations contained therein,
the calculations of the Dilution Adjustment Credit and Noncomplying Receivables
Adjustment in each Daily Settlement Report and each Asset Report shall be deemed
to be correct as originally delivered. If the Originator or the Buyer shall have
notified the Collection Agent of any exceptions to such calculations, the
Originator and the Buyer shall promptly endeavor to resolve the matters set
forth in such notice. If no such resolution is agreed upon on or before the next
Asset Report Date, however, then the Asset Report originally delivered by the
Collection Agent shall, absent manifest error, continue to be presumed correct
until a resolution is reached to the contrary. Nothing contained in this Section
2.03(c) shall be deemed to limit the rights of the Buyer under Section 8.01.
SECTION 2.04. Payments and Computations, Etc. All amounts to
be paid by the Originator or the Collection Agent to the Buyer hereunder shall
be paid in accordance with the terms hereof no later than 11:00 A.M. (Boston,
Massachusetts time) on the day when due in immediately available funds to such
account as the Buyer may from time to time specify in writing. Payments received
by the Buyer after such time shall be deemed to have been received on the next
Business Day. In the event that any payment becomes due on a day which is not a
Business Day, then such payment shall be made on the next succeeding Business
Day. The Originator shall, and if the Originator is the Collection Agent, the
Collection Agent shall, to the extent permitted by law, pay to the Buyer, on
demand, interest on all amounts not paid when due hereunder (whether owing by
the Originator individually or by the Collection Agent) at 2.0% per annum above
the Base Rate, payable on demand; provided, however, that such interest rate
shall not at any time exceed the maximum rate permitted by applicable law. All
computations of interest payable hereunder shall be made on the basis of a year
of 360 days for the actual number of days (including the first but excluding the
last day) elapsed.
SECTION 2.05. Transfer of Records to the Buyer. (a) Each
Purchase of Receivables hereunder shall include the transfer to the Buyer of all
of the Originator's right and title to and interest in the Records relating to
such Receivables and rights to the use of the Originator's computer software to
access and create the Records, and the Originator hereby agrees that such
transfer shall be effected automatically with each such Purchase, without any
action on the part of the parties hereto or any further documentation.
(b) The Originator shall take such action requested by the
Buyer, from time to time hereafter, that may be necessary or appropriate to
ensure that the Buyer and its assignees have (i) an enforceable ownership
interest in the Records relating to the Receivables purchased hereunder and (ii)
an enforceable right (whether by license or sublicense or otherwise) to use all
of the computer software used to account for the Receivables and/or to recreate
such Records.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The
Initial Purchase hereunder is subject to the conditions precedent that the Buyer
shall have received on or before the date of such purchase the items listed in
Schedule I, each (unless otherwise indicated) dated such date, in form and
substance satisfactory to the Buyer.
SECTION 3.02. Conditions Precedent to All Purchases and
Remittances of Collections. Each Purchase (including the Initial Purchase) from
the Originator by the Buyer shall be subject to the further conditions precedent
that (a) with respect to any such Purchase (other than the Initial Purchase), on
or prior to the date of such Purchase, the Collection Agent shall have delivered
to the Buyer, in each case in form and substance satisfactory to the Buyer, a
completed Asset Report dated within 30 days prior to the date of such Purchase
and a completed Daily Settlement Report dated no more than one Business Day
prior to the date of such Purchase, and in each case containing such additional
information as may be reasonably requested by the Buyer; (b) on the date of such
Purchase, the following statements shall be true:
(i) The representations and warranties contained in Section
4.01 are correct on and as of such day as though made on and as of such
date,
(ii) No event has occurred and is continuing, or would result
from such Purchase, which constitutes an Event of Termination, and
(iii) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or governmental
body, agency or instrumentality shall prohibit or enjoin, the making of
such Purchase by the Buyer in accordance with the provisions hereof.
and (c) the Buyer shall have received such other approvals, opinions or
documents as the Buyer may reasonably request.
SECTION 3.03. Effect of Payment of Purchase Price. The
Originator, by accepting the proceeds of the Purchase Price for a Purchase,
shall be deemed to have certified to the Buyer the satisfaction of the
conditions precedent described in the immediately preceding Section 3.02. Upon
the payment of the Purchase Price for any Purchase, (whether in cash or by the
making of an Originator Loan pursuant to Section 2.02(b)), title to the
Transferred Assets included in such Purchase shall vest irrevocably in the
Buyer, whether or not the conditions precedent to such Purchase were in fact
satisfied; provided, however, that the Buyer shall not be deemed to have waived
thereby any claim for indemnification it may have under this Agreement for the
failure by the Originator in fact to have satisfied any such condition
precedent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Originator. The Originator represents and warrants that as of the date hereof,
as of the date of the Initial Purchase and as of the date of each subsequent
Purchase:
(a) The Originator is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to do business, and is in good standing, in
every jurisdiction in which the nature of its business requires it to be so
qualified and the failure to do so could reasonably be expected to materially
and adversely affect the Originator's ability to perform hereunder or the
ability to sell or collect the Purchased Receivables hereunder.
(b) The execution, delivery and performance by the Originator
of this Agreement and all other Originator Documents to be entered into by it,
including the Originator's use of the proceeds of Purchases, are within the
Originator's corporate powers, have been duly authorized by all necessary
corporate action, do not contravene (i) the Originator's charter or by-laws,
(ii) any law, rule or regulation applicable to the Originator, (iii) any
contractual restriction binding on or affecting the Originator or its property
or (iv) any order, writ, judgment, award, injunction or decree binding on or
affecting the Originator or its property, and do not result in or require the
creation of any lien, security interest or other charge or encumbrance upon or
with respect to any of its properties (other than in favor of the Buyer with
respect to the Transferred Assets); and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law. This Agreement and
each other Originator Document to be entered into by the Originator has each
been duly executed and delivered by the Originator.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Originator of
this Agreement or any other Originator Document to be entered into by it, except
for the filing of the UCC financing statements referred to in Article III, all
of which financing statements have been duly filed and are in full force and
effect.
(d) This Agreement and each other Originator Document to be
entered into by the Originator constitute the legal, valid and binding
obligation of the Originator enforceable against the Originator in accordance
with their respective terms subject to bankruptcy and similar laws affecting
creditors generally and principles of equity.
(e) (i) The Originator has furnished to the Buyer and the Deal
Agent (as such term is defined in the Receivables Purchase Agreement)
(A) copies of the Originator's audited consolidated balance sheet as at
September 30, 1996, and the related audited consolidated statements of
income and cash flow for the fiscal year of the Originator then ended
reported on by Deloitte & Touche LLP, which financial statements
present fairly in all material respects in accordance with GAAP the
financial position of the Originator and its consolidated subsidiaries
as at September 30, 1996, and the results of operations of the
Originator and its consolidated subsidiaries for the fiscal year of the
Originator then ended, and (B) copies of the Originator's unaudited
consolidated balance sheet as at June 30, 1997, and the related
unaudited consolidated statements of income and cash flow for the
nine-month period then ended, which financial statements present fairly
in all material respects in accordance with GAAP the financial position
of the Originator and its consolidated subsidiaries as at June 30,
1997, and the results of operations of the Originator and its
consolidated subsidiaries for the nine-month period then ended; and
(ii) since June 30, 1997, (A) no material adverse
change has occurred in the business, assets, liabilities, financial
condition, or results of operations or business prospects of the
Originator and its subsidiaries taken as a whole, and (B) no event has
occurred or failed to occur which has had, or may have, singly or in
the aggregate, a Materially Adverse Effect.
(f) Except as described in Schedule 7.1(k) of the Revolving
Credit Agreement as in effect on the date hereof, there is no pending or
threatened action or proceeding affecting the Originator or any other
subsidiaries of the Originator before any court, governmental agency or
arbitrator that could reasonably be expected to have a Material Adverse Effect.
Neither the Originator, nor any subsidiary of the Originator is in default with
respect to any order of any court, arbitrator or governmental body except for
defaults with respect to orders of governmental agencies which defaults are not
material to the business and operations of the Originator or any subsidiary of
the Originator.
(g) No proceeds of any Purchase will be used by the Originator
to acquire any security in any transaction which is subject to Section 13 or 14
of the Securities Exchange Act of 1934, as amended.
(h) Immediately prior to each Purchase hereunder, each
Receivable to be sold hereunder, together with the Contract related thereto and
the other Transferred Assets relating thereto, is owned by the Originator free
and clear of any Adverse Claim except as provided herein or permitted hereby,
and the Buyer shall acquire all of the Originator's right, title and interest in
such Transferred Assets and a valid and perfected first priority ownership
interest in each such Receivable then existing or thereafter arising and in the
Related Security and Collections with respect thereto, free and clear of any
Adverse Claim except as created hereby or by the Buyer in the Receivables
Purchase Agreement or any related document. No effective financing statement or
other instrument similar in effect covering any Transferred Assets shall at any
time be on file in any recording office except such as may be filed in favor of
the Buyer relating to this Agreement or in favor of assignees of the Buyer under
the Receivables Purchase Agreement. The Purchases of the Transferred Assets by
the Buyer constitute true and valid sales and transfers for consideration (and
not merely a pledge of such Transferred Assets for security purposes),
enforceable against creditors of the Buyers and no Transferred Assets shall
constitute property of the Originator.
(i) No Asset Report or Daily Settlement Report (if prepared by
the Originator or any Affiliate thereof, or to the extent that information
contained therein is supplied by the Originator or any such Affiliates),
information, exhibit, financial statement, document, book, record or report
furnished or to be furnished by the Originator to the Buyer in connection with
this Agreement is or will be inaccurate in any material respect as of the date
it is or shall be dated or (except as otherwise disclosed to the Buyer, as the
case may be, at such time) as of the date so furnished, and no such document
contains or will contain any material misstatement of fact or omits or shall
omit to state a material fact or any fact necessary to make the statements
contained therein not misleading.
(j) The principal place of business and chief executive office
of the Originator and the offices where the Originator keeps all the Records is
located at the addresses of the Originator referred to in Section 9.02 hereof
(or at such other locations as to which the notice and other requirements
specified in Section 6.08 shall have been satisfied).
(k) The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts at such Lock-Box
Banks and the names, addresses and account numbers of all accounts to which
Collections of the Receivables outstanding before the Initial Purchase hereunder
have been sent, are specified in Schedule III (which shall be deemed to be
amended in respect of terminating or adding any Lock-Box Account or Lock-Box
Bank upon satisfaction of the notice and other requirements specified in respect
thereof). The Originator has no other lock-box accounts or similar deposit
accounts for the collection of the Transferred Assets except for the Lock-Box
Accounts.
(l) Except as described in Schedule 7.1(x) of the Revolving
Credit Agreement (as in effect on the date hereof), the Originator does not have
any trade names, fictitious names, assumed names or "doing business as" names or
other names under which it has done (at any time during the five year period
preceding the date hereof) or is currently doing business (other than the
corporate name of the Originator on the date hereof).
(m) No event has occurred and is continuing, or would result
from any Purchase hereunder or from the application of the proceeds therefrom,
which constitutes an Event of Termination.
(n) The Purchase Price constitutes reasonably equivalent value
in consideration for the transfer to the Buyer of the Transferred Assets from
the Originator and no such transfer shall have been made for or on account of an
antecedent debt owed by the Originator to the Buyer and no such transfer is or
may be voidable under any Section of the Bankruptcy Code.
(o) The Originator has received advice from its counsel which
is consistent with the conclusions set forth in the legal opinion(s) of King &
Spalding, counsel to the Originator relating to the issues of substantive
consolidation and true sale of the Receivables and the related property.
(p) The Originator is solvent at the time of (and immediately
after) each transfer of Transferred Assets to the Buyer hereunder.
(q) The Originator has accounted for and has otherwise treated
each Purchase of Transferred Assets hereunder in its books, records and
financial statements as a sale, in each case consistent with GAAP and with the
requirements set forth herein.
(r) Synthetic owns one hundred percent (100%) of the
outstanding capital stock of the Buyer and has not granted or issued any
options, warrants or other rights to acquire any such capital stock.
(s) The Originator has not (i) guaranteed any obligation of
the Buyer, allowed any of its other Affiliates to guarantee any obligations of
the Buyer, and neither the Originator nor any of its other Affiliates has held
itself out as responsible for debts of the Buyer or actions with respect to the
business and affairs of the Buyer; or (ii) permitted the commingling or pooling
of its funds or other assets with those of the Buyer and has not otherwise
permitted any other of its Affiliates to commingle or pool any of its funds or
other assets with those of the Buyer. The Originator (i) and the Buyer allocate
between themselves shared corporate operating services and expenses which are
not reflected in the Collection Agent Fee (including, without limitation, the
services of shared employees, consultants and agents and reasonable legal and
auditing expenses) on the basis of the reasonably projected use or the projected
value of services rendered, and otherwise on a basis reasonably related to
actual use or the value of services rendered, (ii) has not named the Buyer, and
has not allowed any other Affiliate to name the Buyer, as a direct or contingent
beneficiary or loss payee on any insurance policy covering the property of the
Originator, Synthetic or any other Affiliates; and (iii) acknowledges that the
Buyer, the "Deal Agent" and the "Purchaser" under the Receivables Purchase
Agreement are entering into the transactions contemplated by the Receivables
Purchase Agreement in reliance on the Buyer's identity as a separate legal
entity from Synthetic, the Originator and Synthetic's other Affiliates.
(t) The Originator is not an "investment company" or a company
controlled by an "investment company" registered or required to be registered
under the Investment Company Act, or otherwise subject to any other federal or
state statute or regulation limiting its ability to incur indebtedness.
(u) The Originator is not engaged, principally or as one of
its important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" (as each of the quoted terms is
defined or used in Regulation G, T, U or X). No part of the proceeds of any
Transferred Asset has been used for so purchasing or carrying margin stock or
for any purpose which violates, or which would be inconsistent with, the
provisions of Regulation G, T, U or X.
(v) The Originator and the Collection Agent have the right
(whether by license, sublicense or assignment) to use all of the computer
software used by the Collection Agent and/or the Originator to account for the
Transferred Assets to the extent necessary to administer the Transferred Assets,
and to assign (by way of sale) or sublicense such rights to use all of such
software to the Buyer.
(w) None of the Originator's inventory, the sale of which
would give rise to a Receivable, is subject to any Adverse Claim except as
contemplated under the Intercreditor Agreement.
(x) The Originator has filed or caused to be filed all
Federal, state and local tax returns which are required to be filed by it, and
has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the Originator has set aside
adequate reserves on its books in accordance with GAAP and which proceedings
have not given rise to any Adverse Claim.
ARTICLE V
GENERAL COVENANTS
SECTION 5.01. General Covenants.
(a) Compliance with Laws; Preservation of Corporate Existence.
The Originator shall comply in all material respects with all applicable laws
(including, without limitation, ERISA and the Code), rules, regulations, orders
and Originator Documents and preserve and maintain its corporate existence,
rights, franchises, qualifications and privileges where the failure to comply
could reasonably be expected to materially adversely affect the Originator's
ability to perform its obligations hereunder or the ability to sell or collect
the Purchased Receivables hereunder.
(b) Sales, Liens, Etc. Except as otherwise specifically
provided herein, the Originator shall not (i) 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 Transferred Asset, or upon or with respect to
any Lock-Box Account, the Collection Account or any other account to which any
Collections of any Receivable are sent, or assign any right to receive income in
respect thereof or (ii) create or suffer to exist any Adverse Claim upon or with
respect to any of the Originator's inventory, the sale of which would give rise
to a Receivable, except such Adverse Claims as are contemplated under the
Intercreditor Agreement.
(c) General Reporting Requirements. The Originator will
provide to the Buyer the following:
(i) as soon as available and in any event within 90 days after
the end of each fiscal year of the Originator, consolidated balance
sheets of the Originator and its consolidated subsidiaries and the
related statement of income for such year, each prepared in accordance
with GAAP and reported on by nationally recognized independent public
accountants;
(ii) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year
of the Originator, consolidated balance sheets of the Originator and
its consolidated subsidiaries and the related statements of income,
shareholders' equity and cash flows each for the period commencing at
the end of the previous fiscal year and ending with the end of such
quarter, prepared in accordance with GAAP and certified by a senior
financial officer of the Originator;
(iii) promptly after the sending or filing thereof (as the
case may be), copies of (1) all reports which the Originator sends to
any of its securityholders, (2) all reports and registration statements
which the Originator files with the Securities and Exchange Commission
or any national securities exchange other than registration statements
relating to employee benefit plans and to registrations of securities
for selling securityholders and (3) all reports, notices and/or
certificates which Synthetic delivers to any of its "Lenders" under the
Revolving Credit Agreement;
(iv) promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which the Originator or any ERISA Affiliate files
under ERISA with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or which the
Originator or any ERISA Affiliate receives from such Corporation;
(v) as soon as possible and in any event within three days
after the occurrence of each Event of Termination or each event which,
with the giving of notice or lapse of time or both, would constitute an
Event of Termination, a statement of the chief financial officer or
chief accounting officer of the Originator setting forth details of
such Event of Termination or event and the action which the Originator
has taken and proposes to take with respect thereto; and
(vi) promptly following the Buyer's request therefor, such
other information respecting the Receivables or the conditions or
operations, financial or otherwise, of the Originator or any of its
Affiliates as the Buyer may from time to time request in order to
protect the interests of the Buyer in connection with this Agreement.
(d) Merger, Etc. The Originator shall not merge or consolidate
with any other Person, or sell, lease, assign, transfer, or otherwise dispose of
any of its assets, except (a) dispositions of inventory in the ordinary course
of business; (b) dispositions of unnecessary, obsolete or worn out equipment;
(c) sales of Transferred Assets contemplated by and in accordance with the terms
of this Agreement, (d) sales of real estate owned by the Originator in
sale/leaseback transactions (i) as to which the purchaser/lessor has delivered
to the "Agent" under the Revolving Credit Agreement a landlord's subordination
and waiver in form and substance satisfactory to such Agent and (ii) that are
otherwise in compliance with the terms of this Agreement and the other
Originator Documents, and (e) other sales or dispositions of assets for fair
value paid in cash at the closing of the disposition and in arm's length
transactions; provided that with respect to any asset disposed of pursuant to
the provisions of this clause (e):
(1) no Event of Termination exists or would result from such
disposition;
(2) the Originator shall have provided the Deal Agent with
written notice of the proposed disposition not less than 10 Business Days prior
to the date of the proposed disposition, together with a certificate
demonstrating compliance with clauses (1) and (3) of this clause (e); and
(3) the sales price for the assets sold (as determined in
accordance with the applicable sale agreement) in such transaction when added to
the sales price for all other assets disposed of in the same Loan Year (as such
term is defined in the Revolving Credit Agreement) does not exceed $2,000,000.
(e) Accounting of Purchases. The Originator will not prepare
any financial statements which shall account for the transactions contemplated
hereby in any manner other than as the sale of the Transferred Assets to the
Buyer or in any other respect account for or treat the transactions contemplated
hereby in any manner other than as a sale of the Transferred Assets by the
Originator to the Buyer (it being understood, however, that such sales may not
be recognized for all accounting and tax purposes due to principles of
consolidated financial reporting and the filing of tax returns on a consolidated
basis).
(f) [Reserved].
(g) Maintenance of Separate Existence. The Originator will
take all actions required on its part to help maintain the Buyer's status as a
separate legal entity, including, without limitation, (i) not misleading third
parties as to the Buyer's identity as an entity with assets and liabilities
distinct from those of the Originator and its Affiliates; (ii) not holding
itself out to be responsible for the debts or decisions or actions relating to
the business and affairs of the Buyer; (iii) using its best efforts not to
commingle its funds or other assets with those of the Buyer, and not to hold its
assets in any manner that would create an appearance that such assets belong to
the Buyer or that the Buyer's assets belong to it; (iv) taking such action as is
necessary on its part to ensure that the covenant made in Section 5.1(i) of the
Receivables Purchase Agreement is not breached; (v) taking such other actions as
are necessary on its part to ensure that the representations made in Section
4.01(s) hereunder and by the Buyer in Section 4.01(t) of the Receivables
Purchase Agreement are true and correct at all times; (vi) taking such actions
as are necessary on its part to ensure that the Buyer's corporate procedures
required by its certificate of incorporation and by-laws are duly and validly
taken; and (vii) taking such other actions on its part to ensure that the
factual assumptions set forth in, and forming the basis of the legal opinion(s)
of King & Spalding, counsel to the Originator, issued in connection with this
Agreement and relating to the issues of substantive consolidation and true sale
of the Receivables and the related property, are true and correct at all times.
Without limiting the foregoing, the Originator will cause any financial
statements consolidated with those of the Buyer to contain footnotes or other
disclosures which describe the Buyer's business and otherwise inform the
Originator's creditors that the Buyer is a separate corporate entity whose
creditors have a claim on its assets prior to those assets becoming available to
its equity holders and therefore to any creditors of the Originator or any of
its Affiliates.
(h) Supplemental Opinions. The Originator will cause to be
delivered to the Buyer within 30 days following the Buyer's request therefor,
but in no event more frequently than once during each calendar year commencing
after the first anniversary date of the Initial Purchase, supplemental opinions
of outside counsel to the Originator in the form of Exhibit D or otherwise in
form and substance reasonably satisfactory to the Buyer, reaffirming the
opinions set forth in the opinion letters of King & Spalding delivered to the
Buyer in connection with the Initial Purchase hereunder pursuant to Section 3.01
or providing in reasonable detail the reasons why any such opinions cannot be
reaffirmed.
(i) Change in Corporate Name. The Originator will not make any
change to its corporate name or use any trade names, fictitious names, assumed
names or conduct business under any names other than those described in Schedule
IV, unless at least 30 days prior to the effective date of any such name change
or use, the Originator shall have delivered to the Buyer such financing
statements (Form UCC-1 and UCC-3) executed by the Originator which the Buyer may
request to reflect such name change or use, together with such other documents
and instruments that the Buyer may request in connection therewith.
(j) Audits. At any time and from time to time upon prior
written notice from the Buyer during regular business hours and on an annual (or
more frequent) basis, if requested by the Buyer, the Originator will permit the
Buyer, or its agents or representatives, (i) to examine and make copies of and
abstracts from all Records, (ii) to visit the offices and properties of the
Originator for the purpose of examining such Records, and to discuss matters
relating to the Receivables or the Originator's performance hereunder with any
of the officers or employees of the Originator having knowledge of such matters
and (iii) to have access to its software for the purposes of examining such
Records. Each such audit shall be at the sole expense of the Originator.
(k) Keeping of Records and Books of Account. The Originator
will maintain (or cause to be maintained) and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing the Receivables in the event of the destruction of the
originals thereof) and keep and maintain, all documents, books, records and
other information which are reasonably necessary or advisable for the collection
of the Transferred Assets (including all Receivables and Collections included
therein). Such books and records shall be marked to indicate the sales of all
Receivables and Related Security hereunder and shall include, without
limitation, records adequate to permit the daily identification of each new
Receivable and all collections of and adjustments (including, without
limitation, adjustments on account of Dilution Factors) to each Receivable.
(l) Location of Records. The Originator will keep its chief
place of business and chief executive office, and the offices where it keeps the
Records, at the addresses referred to in Section 10.02, or, in any such case,
upon 30 days' prior written notice to the Buyer, at such other locations within
the United States where all action required by Section 6.09 shall have been
taken and completed.
(m) Credit and Collection Policies. The Originator will comply
in all material respects with the Credit and Collection Policy in regard to each
Receivable and the related Contract. The Originator shall not, without the
written consent of the Buyer and the "Deal Agent" under the Receivables Purchase
Agreement, make any change in the Credit and Collection Policy.
(n) Change in Payment Instructions to Obligors. The Originator
will not add or terminate any bank as a Lock-Box Bank from those listed in
Schedule III or make any change in its instructions to Obligors regarding
payments to be made to any Lock-Box Bank, unless the Buyer shall have given its
prior written consent to such addition, termination or change (which consent
shall not be unreasonably withheld) and the Buyer shall have received (i) ten
Business Days' prior notice of such addition, termination or change, and (ii)
prior to the effective date of such addition, termination or change, (x)
executed copies of Lock-Box Agreements executed by each new Lock-Box Bank and
the Originator and (y) copies of all agreements and documents signed by either
the Originator or the respective Lock-Box Bank with respect to any new Lock-Box
Account.
(o) Taxes. The Originator will file or cause to be filed all
federal, state and local tax returns which are required to be filed by it. The
Originator shall pay or cause to be paid all taxes shown to be due and payable
on such returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the Originator shall have set
aside adequate reserves on its books in accordance with GAAP.
(p) Segregation of Collections. The Originator will prevent
the deposit into any of the Lock-Box Accounts of any funds other than
Collections and, to the extent that any such funds are nevertheless deposited
into any of such Lock-Box Accounts, promptly identify any such funds to the
Collection Agent for segregation and remittance to the owner thereof.
(q) Insolvency. So long as the Buyer is not "insolvent" within
the meaning of the Bankruptcy Code, the Originator will not cause the Buyer to
file a voluntary petition under the Bankruptcy Code or any other bankruptcy or
insolvency laws.
ARTICLE VI
ADMINISTRATION, COLLECTION AND MONITORING OF ASSETS
SECTION 6.01. Appointment and Designation of the Collection
Agent. The Originator and the Buyer hereby appoint the Person (the "Collection
Agent") designated by the Buyer from time to time pursuant to this Section 6.01,
as the Buyer's agent to service, administer and collect the Receivables and
otherwise to enforce its rights and interests in, to and under the Receivables,
the Related Security and the Contracts. The Collection Agent's authorization
under this Agreement shall terminate on the Collection Date. Until the Buyer
gives notice to the Originator of a designation of a new Collection Agent,
Synthetic is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Collection Agent pursuant to the terms hereof. The Buyer may
designate as Collection Agent any Person to succeed Synthetic or any successor
Collection Agent, on the condition in each case that any such Person so
designated shall agree to perform the duties and obligations of the Collection
Agent pursuant to the terms hereof and of the Receivables Purchase Agreement.
Each of the Originator and the Collection Agent hereby grants to any successor
Collection Agent an irrevocable power of attorney to take any and all steps in
the Originator's or the Collection Agent's name, as applicable, and on behalf of
the Buyer, as may be necessary or desirable, in the determination of the
successor Collection Agent, to collect all amounts due under any and all
Receivables, including, without limitation, endorsing the Originator's name on
checks and other instruments representing Collections and enforcing such
Receivables and the related Contracts. The Collection Agent may, with the prior
consent of the Buyer, subcontract with any other Person for servicing,
administering or collecting the Receivables, provided that the Collection Agent
shall remain liable for the performance of the duties and obligations of the
Collection Agent pursuant to the terms hereof. Notwithstanding anything to the
contrary contained in this Agreement, the Collection Agent, if not Synthetic or
an Affiliate thereof, shall have no obligation to collect, enforce or take any
other action described in this Article VI with respect to any Receivable that is
not a Transferred Asset other than to deliver to the Originator the Collections
and documents with respect to any such Receivable that is not a Transferred
Asset as described in Sections 6.03 and 6.06(b). The Collection Agent hereunder
acknowledges and agrees that the Collection Agent Fee paid under the Receivables
Purchase Agreement shall constitute the consideration for its performance of
services as Collection Agent hereunder.
SECTION 6.02. Collection of Receivables by the Collection
Agent; Extensions and Amendments of Receivables. The Collection Agent shall take
or cause to be taken all such actions as may be necessary or advisable to
collect each Receivable from time to time, all in accordance with applicable
laws, rules and regulations, with reasonable care and diligence, and in
accordance with the Credit and Collection Policy; provided, however, that, (a)
the Buyer shall have the right to direct the Collection Agent (whether the
Collection Agent is Synthetic or otherwise) to commence or settle any legal
action, to enforce collection of any Transferred Asset or to foreclose upon or
repossess any Related Security, and (b) the Collection Agent shall not make the
Buyer a party to any litigation without the express written consent of the
Buyer. If the Termination Date shall not have occurred, Synthetic, while it is
Collection Agent, may, in accordance with the Credit and Collection Policy, (1)
extend the maturity or adjust the Outstanding Balance of any Defaulted
Receivable as Synthetic may determine to be appropriate to maximize Collections
thereof and (2) adjust the Outstanding Balance of any Receivable to reflect
Actual Dilution and any reductions or cancellations as a result of setoff in
respect of any claim by the Obligor thereof, in accordance with the requirements
of the Credit and Collection Policy and provided that such extension or
adjustment shall not alter the status of such Receivable as a Defaulted
Receivable or limit the rights of the Buyer under this Agreement. Except as
otherwise permitted pursuant to the next preceding sentence, neither the
Collection Agent nor the Originator will extend, amend, cancel or otherwise
modify the terms of any Transferred Asset, or amend, modify, cancel or waive any
term or condition of any Contract related thereto without the prior written
approval of the Buyer.
SECTION 6.03. Distribution and Application of Collections. The
Collection Agent shall set aside and segregate funds to the extent required in
the Receivables Purchase Agreement and shall be required to segregate all
Collections on the Receivables from the other funds belonging to the Collection
Agent. The Collection Agent shall as soon as practicable following receipt turn
over to the Originator the Collections of any Receivable which is not a
Transferred Asset less, in the event neither Synthetic nor an Affiliate thereof
is the Collection Agent, all reasonable and appropriate out-of-pocket costs and
expenses of such Collection Agent of servicing, collecting and administrating
the Receivables to the extent not covered by the Collection Agent Fee received
by it.
SECTION 6.04. Other Rights of the Buyer. At any time following
the occurrence of a Collection Agent Termination Event or the designation of a
Collection Agent other than Synthetic or any Affiliate of either thereof
pursuant to Section 6.01:
(a) The Buyer may or, at the request of the Buyer, the
Originator shall (in either case, at the Originator's expense) direct the
Obligors of Receivables, or any of them, to pay all amounts payable under any
Receivable directly to the Buyer or its designee;
(b) The Buyer may, or at the request of the Buyer, the
Originator shall (in either case, at the Originator's expense) give each of the
Obligors notice of the Buyer's interests in the Transferred Assets; and
(c) The Originator shall, at the Buyer's request and at the
Originator's expense, (i) assemble all Records and make the same available to
the Buyer or its designee at a place selected by the Buyer or its designee, and
(ii) segregate all cash, checks and other instruments received by it from time
to time constituting Collections of Receivables in a manner acceptable to the
Buyer and, promptly following receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer, to the
Buyer or its designee.
SECTION 6.05. Records; Audits. (a) The Collection Agent will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing the Receivables in
the event of the destruction of the originals thereof), and keep and maintain
all documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each new Transferred
Asset and all Collections of and adjustments to each existing Transferred
Asset).
(b) The Collection Agent, whether or not Synthetic or an
Affiliate thereof, shall hold all Records in trust for the Buyer. Subject to the
receipt of contrary instructions from the Buyer, the Originator will deliver all
Records to such Collection Agent; provided, however, that the Collection Agent,
if other than Synthetic, shall as soon as practicable upon demand deliver to the
Originator all Records in its possession relating to Receivables of the
Originator other than Transferred Assets, and copies of Records in its
possession relating to Transferred Assets.
(c) The Collection Agent will, from time to time during
regular business hours as requested by the Buyer, permit the Buyer, or its
agents or representatives, (i) to examine and make copies of and abstracts from
all Records and (ii) to visit the offices and properties of the Collection Agent
for the purpose of examining such Records and to discuss matters relating to the
Receivables or the Collection Agent's or the Originator's performance hereunder
with any of the officers or employees of the Collection Agent or the Originator
having knowledge of such matters.
SECTION 6.06. Receivable Reporting. (a) The Collection Agent,
so long as it is Synthetic or an Affiliate thereof, and otherwise the
Originator, will deliver to the Buyer (i) prior to the Asset Report Date
occurring during each calendar month hereafter, a report identifying the
Transferred Assets (and the aged balance thereof), by Obligor and invoice
number, as of the last day of the next preceding month, (ii) on the Termination
Date, a report identifying the Transferred Assets (and the aged balance
thereof), by Obligor and invoice number, on the day immediately preceding the
Termination Date, (iii) upon the Buyer's request, on each day, a report
identifying the Transferred Assets (and the aged balance thereof), by Obligor
and invoice number on such day and (iv) prior to the Asset Report Date occurring
in each calendar month hereafter, a report identifying the outstanding accounts
payable of the Originator as of the last day of the next preceding month,
identified by the relevant account payee.
(b) Prior to the Asset Report Date occurring in each calendar
month, the Collection Agent shall prepare and forward to the Buyer, an Asset
Report relating to all Transferred Assets, as of the close of business of the
Collection Agent on the last day of the next preceding month.
SECTION 6.07. Collections and Lock-Boxes. The Originator and
the Collection Agent will
(i) instruct all Obligors to cause all Collections to be
either (A) remitted to a Lock-Box and will cause each Lock-Box Bank to retrieve
such Collections promptly and deposit the same to the respective Lock-Box
Accounts or (B) deposited directly with the Lock-Box Bank, and
(ii) pursuant to the Receivables Purchase Agreement, instruct
all Lock-Box Banks to transfer such Collections in same day funds to a
Collection Account maintained with a Collection Account Bank. If the Originator
receives any Collections, the Originator will remit such Collections to the
Collection Account within one Business Day following the Originator's receipt
thereof. The Originator will not add or terminate any bank as Lock-Box Bank from
those listed in Schedule III or make any change in its instructions to Obligors
regarding payments to be made to any Lock Box or any Lock-Box Bank, unless the
Buyer shall have received at least ten Business Days' prior written notice of
such addition, termination or change and all actions reasonably requested by the
Buyer to protect and perfect the interest of the Buyer in the Collections of
Transferred Assets have been taken and completed. The Originator hereby
transfers to the Buyer, effective upon the Initial Purchase, the exclusive
ownership and control of each of the Lock-Box Accounts, and each Lock-Box Bank
shall be instructed to remit any amounts deposited in its Lock-Box Accounts
solely according to the direction of the Buyer or its assigns. The Originator
hereby agrees to take any further action necessary that the Buyer may reasonably
request to effect such transfer.
SECTION 6.08. UCC Matters; Protection and Perfection of
Transferred Assets. The Originator will keep its principal place of business and
chief executive office, and the office where it keeps the Records, at the
address of the Originator referred to in Section 9.02 or, upon 30 days' prior
written notice to the Buyer, at such other locations within the United States
where all actions reasonably requested by the Buyer to protect and perfect the
interest of the Buyer in the Transferred Assets have been taken and completed.
The Originator will not make any change to its corporate name or use any
tradenames, fictitious names, assumed names, "doing business as" names or other
names other than those described in Schedule IV, unless prior to the effective
date of any such name change or use, the Originator delivers to the Buyer such
executed financing statements as the Buyer may request to reflect such name
change or use, together with such other documents and instruments as the Buyer
may request in connection therewith. The Originator agrees that from time to
time, at its expense, it will promptly execute and deliver all further
instruments and documents, and take all further action that the Buyer may
reasonably request in order to perfect, protect or more fully evidence the
Transferred Assets acquired by the Buyer hereunder, or to enable the Buyer to
exercise or enforce any of its rights hereunder. Without limiting the generality
of the foregoing, the Originator will: (a) upon the request of the Buyer,
execute and file such financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may be
necessary or appropriate or as the Buyer may request, and (b) on or prior to the
date hereof, xxxx its master data processing records evidencing such Transferred
Assets and related Contracts with a legend, acceptable to the Buyer, evidencing
that the Buyer or its assigns have purchased all right and title thereto. The
Originator hereby authorizes the Buyer to file one or more financing or
continuation statements, and amendments thereto and assignments thereof,
relative to all or any of the Transferred Assets now existing or hereafter
arising without the signature of the Originator where permitted by law. A
carbon, photographic or other reproduction of this Agreement or any financing
statement covering the Transferred Assets or any part thereof shall be
sufficient as a financing statement. If the Originator fails to perform any of
its agreements or obligations under this Section 6.08, the Buyer may (but shall
not be required to) itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Buyer incurred in connection therewith shall
be payable by the Originator upon the Buyer's demand therefor. For purposes of
enabling the Buyer to exercise its rights described in the preceding sentence
and elsewhere in this Article VI, the Originator hereby authorizes the Buyer to
take any and all steps in the Originator's name and on behalf of the Originator
necessary or desirable, in the determination of the Buyer, to collect all
amounts due under any and all Receivables, including, without limitation,
endorsing the Originator's name on checks and other instruments representing
Collections and enforcing such Receivables and the related Contracts.
SECTION 6.09. Obligations of the Originator With Respect to
Receivables. The Originator will (a) at its expense, regardless of any exercise
by the Buyer of its rights hereunder, timely and fully perform and comply with
all material provisions, covenants and other promises required to be observed by
it under the Contracts related to the Transferred Assets to the same extent as
if Transferred Assets therein had not been sold hereunder and (b) pay when due
any taxes, including without limitation, sales and excise taxes, payable in
connection with the Transferred Assets. In no event shall the Buyer have any
obligation or liability with respect to any Transferred Assets or related
Contracts, nor shall it be obligated to perform any of the obligations of the
Originator or any of its Affiliates thereunder. The Originator will timely and
fully comply in all material respects with the Credit and Collection Policy in
regard to each Receivable and the related Contract. The Originator will not make
any change in the character of its businesses or in the Credit and Collection
Policy, which change would, in either case, impair the collectibility of any
Transferred Asset.
SECTION 6.10. Applications of Collections. Any payment by an
Obligor in respect of any indebtedness owed by it to the Originator shall,
except as otherwise specified by such Obligor or otherwise required by contract
or law and unless otherwise instructed by the Buyer, be applied as a Collection
of any Receivables constituting Transferred Assets of such Obligor, in the order
of the age of such Receivables, starting with the oldest such Receivable, to the
extent of any amounts then due and payable thereunder, before being applied to
any Receivable that is not a Transferred Asset or other indebtedness of such
Obligor.
SECTION 6.11. Annual Servicing Report of Independent Public
Accountants. On an annual basis on or before December 31 of each calendar year,
beginning with December 31, 1998, the Collection Agent shall cause nationally
recognized independent public accountants acceptable to the Buyer (the Buyer
acknowledges that in each case any of the "Big 5" accounting firms will be
acceptable to the Buyer,) to furnish a report to each of the Collection Agent
and the Buyer substantially to the effect that (i) such accountants have
examined certain documents and records relating to the servicing of Receivables
under this Agreement, compared the information contained in the Daily Settlement
Reports and Asset Reports delivered by or on behalf of the Originator under this
Agreement during the annual period covered by such report (or such shorter
initial period, as the case may be) with such documents and records and that, on
the basis of such examination, and subject to such reasonable limitations and
qualifications as may be set forth in such report, such accountants are of the
opinion that the servicing has been conducted substantially in compliance with
the terms and conditions as set forth in Article VI of this Agreement, except
for such exceptions as they believe to be immaterial and such other exceptions
as shall be set forth in such statement and (ii) such accountants have compared
the mathematical calculations of each amount set forth in the Daily Settlement
Reports and Asset Reports delivered pursuant to this Agreement during the period
covered by such report with the Collection Agent's computer reports which were
the source of such amounts and that on the basis of such comparison, such
accountants are of the opinion that such amounts are in agreement, except for
such exceptions as they believe to be immaterial and such other exceptions as
shall be set forth in such statement.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following
events ("Events of Termination") shall occur:
(a) (i) The Collection Agent (if Synthetic or any Affiliate
thereof) shall fail to perform or observe any term, covenant or agreement
hereunder (other than as referred to in clause (ii) of this Section 7.01(a)) and
such failure shall remain unremedied for two Business Days or (ii) either the
Collection Agent (if Synthetic or any Affiliate thereof) or the Originator shall
fail to make any payment or deposit to be made by it hereunder when due; or
(b) (i) Any representation or warranty made or deemed to be
made by the Originator (or any of its officers or agents) under or in connection
with this Agreement or any Asset Report or other information or report delivered
pursuant hereto shall prove to have been false or incorrect in any material
respect when made or (ii) any representation or warranty made or deemed to be
made by the Collection Agent (or any of its officers or agents) under or in
connection with the Receivables Purchase Agreement or this Agreement (as the
case may be) shall prove to have been false or incorrect in any material respect
when made; or
(c) The Originator or Synthetic (individually or in its
capacity as Collection Agent) 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 five Business Days
after written notice thereof shall have been given by the Buyer to the
Originator; or
(d) (i) The Originator shall fail to pay any principal of or
premium or interest on any Debt, if the aggregate principal amount of such Debt
is $500,000 or more, 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 (ii) any other default or
any event which, with the passage of time or the giving of notice, or both,
would constitute a default under any agreement or instrument (other than the
Revolving Credit Agreement) relating to any such Debt, shall occur and shall
continue after the applicable grace period, if any, specified in such agreement
or instrument; or (iii) any "Event of Default" as such term is defined in the
Revolving Credit Agreement or any event (however named in any successor
Revolving Credit Agreement to the Revolving Credit Agreement in effect on the
date hereof) under such successor agreement which, with the passage of time or
the giving of notice, or both, would constitute a default shall have occurred
and be continuing for a period which exceeds the lesser of (x) 30 days and (y)
the corresponding period set forth in documents relating to any Debt of
Synthetic or its Affiliates having an aggregate principal balance of greater
than $500,000 as the period during which the holders of such Debt are stayed
from any enforcement or acceleration as a result of the occurrences of such an
"Event of Default" or other event; or (iv) any Debt of the Originator, or of any
of its Affiliates, if, in the case of the Originator the aggregate principal
amount of such Debt is $500,000 or more, shall be declared to be due and payable
or required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; or
(e) Either (i) any Purchase shall for any reason, except to
the extent permitted by the terms hereof, cease to create a valid and perfected
ownership interest in each Transferred Asset with respect thereto free and clear
of an Adverse Claim or (ii) this Agreement shall for any reason cease to
evidence the transfer to the Buyer of legal and equitable title to, and
ownership of, the Transferred Assets; or
(f) (i) The 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 the 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, or other similar official for it or
for any substantial part of its property; or (ii) the Originator shall take any
corporate action to authorize any of the actions set forth in clause (i) above
in this Section 7.01(f); or
(g) There shall have occurred and be continuing an "Event of
Termination" under the Receivables Purchase Agreement;
(h) A Collection Agent Termination Event shall have occurred
and be continuing;
(i) The Originator or the Collection Agent shall fail to
perform or observe any material term, covenant or agreement contained in the
Credit and Collection Policy;
(j) The Revolving Credit Agreement shall cease to (A) be in
full force and effect, or (B) provide for a commitment to fund (subject only to
conditions that are not materially more restrictive than those set forth in the
Revolving Credit Agreement as in effect on the date hereof) in an aggregate
amount of not less than $30,000,000;
(k) The IRS or the PBGC shall have filed notice of one or more
Adverse Claims against the Originator or any of its ERISA Affiliates under ERISA
or the Code, unless such Adverse Claim does not purport to cover the
Receivables, and such notice shall have remained in effect for more than thirty
(30) Business Days unless, prior to the expiration of such period, such Adverse
Claims shall have been adequately bonded by the Originator or any of their ERISA
Affiliates (as the case may be) in a transaction with respect to which the Buyer
has given its prior written approval; or
(l) The Buyer shall have become subject to registration as an
"investment company" within the meaning of the Investment Company Act;
then, and in any such event, the Buyer may, by notice to the Originator declare
the Termination Date to have occurred, except that, in the case of any event
described in Section 7.01(f) above, the Termination Date shall be deemed to have
occurred automatically upon the occurrence of such event. Upon any such
declaration or automatic occurrence, the Buyer shall have, in addition to all
other rights and remedies under this Agreement or otherwise, all other rights
and remedies provided under the UCC of the applicable jurisdiction and other
applicable laws, which rights shall be cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnities by the Originator. Without limiting
any other rights which the Buyer may have hereunder or under applicable law, the
Originator hereby agrees to indemnify the Buyer and its assigns, and each of
their respective directors, officers, employees, agents and attorneys (all of
the foregoing being collectively referred to as "Indemnified Parties") from and
against any and all damages, losses, claims, 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 of them arising out of or resulting from:
(i) the sale of any Receivable under this Agreement which is
not at the date of Purchase an Eligible Receivable;
(ii) reliance on any representation or warranty made or deemed
made by the Originator, the Collection Agent (if Synthetic or one of its
Affiliates) or any of their respective officers under or in connection with this
Agreement, which shall have been false or incorrect in any material respect when
made or deemed made or delivered;
(iii) the failure by the Originator or the Collection Agent
(if Synthetic or one of its Affiliates) to comply with any term, provision or
covenant contained in this Agreement or the Receivables Purchase Agreement or
any of the other Originator Documents, or with any applicable law, rule or
regulation with respect to any Receivable, the related Contract or the Related
Security, or the nonconformity of any Receivable, the related Contract or the
Related Security with any such applicable law, rule or regulation;
(iv) (A) the failure to vest and maintain vested in the Buyer
or to transfer to the Buyer, legal and equitable title to and ownership of, the
Receivables and the other Transferred Assets which are, or are purported to be,
sold by the Originator hereunder; or (B) the failure to grant to the Buyer a
valid and perfected ownership interest under Article 9 of the UCC in and to the
Receivables which are, or are purported to be, Transferred Assets, together with
all Collections and Related Security; in each case free and clear of any Adverse
Claim whether existing at the time of the Purchase of any such Receivable or at
any time thereafter (other than Adverse Claims created in favor of the Buyer
hereunder or by the Buyer under the Receivables Purchase Agreement);
(v) the failure by the Originator to make any payment
required on its part to be made hereunder;
(vi) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any Receivables
and other Transferred Assets which are, or are purported to be, sold by the
Originator hereunder, whether at the time of any Purchase or at any subsequent
time;
(vii) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable which is, or is purported to be sold by an Originator hereunder
(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 such
Receivable or the furnishing or failure to furnish such merchandise or services;
(viii) any failure of the Originator or the Collection Agent
(if Synthetic or one of its Affiliates) to perform its duties or obligations in
accordance with the provisions of this Agreement or any failure by the
Originator or any Affiliate thereof to perform its respective duties under the
Contracts;
(ix) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of whatever
sort arising out of or in connection with goods and/or merchandise which are the
subject of any Receivable or Contract;
(x) the failure to pay when due any taxes, including without
limitation, sales, excise or personal property taxes payable in connection with
the Transferred Assets;
(xi) the commingling of Collections of Transferred Assets at
any time with other funds;
(xii) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of Purchases or the ownership by the Buyer
of Transferred Assets;
(xiii) any attempt by any Person to void or otherwise avoid
any transfer of a Transferred Asset from the Originator to the Buyer under any
statutory provision or common law or equitable action, including, without
limitation, any provision of the Bankruptcy Code; or
(xiv) the failure of the Originator or any of its respective
agents or representatives (including, without limitation, agents,
representatives and employees of the Originator acting pursuant to authority
granted under Section 6.01) to remit to the Collection Agent, Collections of
Transferred Assets remitted to the Originator or any such agent or
representative.
Any amounts subject to the indemnification provisions of this
Section 8.01 shall be paid by the Originator to the Buyer within two (2)
Business Days following the Buyer's demand therefor. Notwithstanding any other
provision of this Agreement to the contrary, the Originator shall not indemnify
the Indemnified Parties for or with respect to any Indemnified Amounts that
would constitute recourse for uncollectible Transferred Assets due to credit
reasons.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments and Waivers. No amendment to or
modification of any provision of this Agreement shall be effective without the
written agreement of the parties hereto and, to the extent then required in the
Receivables Purchase Agreement, the written consent of the "Deal Agent"
thereunder. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including telex communication and communication by facsimile copy)
and mailed, telexed, transmitted or delivered, as to each party hereto, at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto. All such notices and communications shall be effective, upon
receipt, or in the case of (a) notice by mail, five days after being deposited
in the United States mails, first class postage prepaid, (b) notice by telex,
when telexed against receipt of answerback, or (c) notice by facsimile copy,
when verbal communication of receipt is obtained, except that notices and
communications pursuant to Article II shall not be effective until received.
SECTION 9.03. Setoff and Counterclaim. All payments to be made
by the Originator or the Collection Agent under this Agreement shall be made
free and clear of any counterclaim, set-off, deduction or other defense, which
the Originator or the Collection Agent may have against the Buyer, or against
each other.
SECTION 9.04. No Waiver; Remedies. No failure on the part of
the Buyer 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. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9.05. Binding Effect; Assignability. (a) This
Agreement shall be binding upon and inure to the benefit of the Originator, the
Buyer and their respective successors and permitted assigns. The Originator may
not assign its rights and obligations or any interest herein without the prior
written consent of the Buyer. The Buyer may, subject to any restrictions in the
Receivables Purchase Agreement, assign at any time all of its rights and
obligations hereunder and interests herein without the consent of the
Originator. Without limiting the foregoing, the Originator acknowledges the
assignment of Buyer's rights and interests hereunder pursuant to the Receivables
Purchase Agreement and agrees that, subject to the terms set forth in the
Receivables Purchase Agreement, any such assignee of the Buyer (and any further
assignee of such assignee) shall have the right, as the assignee of the Buyer
(or the assignee of such assignee), to enforce the Buyer's rights and remedies
under this Agreement directly against such party (including, without limitation,
the right (i) to appoint a successor Collection Agent and (ii) to give or
withhold any and all consents, requests, notices, directions, approvals,
demands, extensions or waivers under or with respect to this Agreement or the
obligations in respect of the Originator hereunder to the same extent as the
Buyer may do), but without any obligation on the part of any such assignee to
perform any of the obligations of the Buyer hereunder. The Originator also
agrees that it shall send to "Deal Agent" under the Receivables Purchase
Agreement a copy of all notices required or desired to be given by the
Originator to the Buyer hereunder.
SECTION 9.06. Term of this Agreement. This Agreement,
including, without limitation, the Originator's obligations to observe its
covenants set forth in Articles V and VI, and the Collection Agent's obligation
to observe its covenants set forth in Article VI, shall remain in full force and
effect until the Collection Date; provided, however, that the rights and
remedies with respect to any breach of any representation and warranty made or
deemed made by Synthetic or the Originator pursuant to Articles III and IV, and
the indemnification and payment provisions of Article VIII shall be continuing
and shall survive any termination of this Agreement.
SECTION 9.07. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF OBJECTION TO VENUE. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE BUYER, THE ORIGINATOR,
AND THE COLLECTION AGENT EACH HEREBY AGREES TO THE JURISDICTION OF ANY FEDERAL
COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE
OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT.
SECTION 9.08. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE BUYER, THE ORIGINATOR AND THE COLLECTION AGENT EACH WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF
THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
SECTION 9.09. Costs, Expenses and Taxes. In addition to the
rights of indemnification granted to the Buyer and the Indemnified Parties under
Article VIII hereof, the Originator agrees to pay on demand all costs and
expenses of the Buyer and its assignee incurred in connection with the
preparation, execution, delivery, administration (including periodic auditing),
amendment or modification of, or any waiver or consent issued in connection
with, this Agreement and the other documents to be delivered hereunder or in
connection herewith, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Buyer and its assignee with respect
thereto, and with respect to advising the Buyer and its assignee as to its
rights and remedies under this Agreement and the other documents to be delivered
hereunder or in connection herewith, and all costs and expenses, if any
(including reasonable counsel fees and expenses), incurred by the Buyer and its
assignee in connection with the enforcement of this Agreement and the other
documents to be delivered hereunder or in connection herewith.
SECTION 9.10. Execution in Counterparts; Severability;
Integration. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
SECTION 9.11. Confidentiality. Except to the extent otherwise
required by applicable laws, rules or regulation, unless the provider thereof
shall otherwise consent in writing the Originator agrees that it shall (i)
maintain the confidentiality of information obtained as a result of being a
party hereto, to any related documents or to any of the transactions
contemplated hereby or thereby (including, without limitation, the contents of
any summary of indicative terms and conditions with respect to such
transactions, and the provisions of this Agreement and any of the other
Originator Documents)("Confidential Information") and (ii) not disclose, deliver
or otherwise make available to any third party any part of any such Confidential
Information; provided, however, that the Originator may disclose any
Confidential Information (w) to its legal counsel, auditors and accountants, (x)
as may be required or requested by any governmental authority, regulatory body
or rating agency, (y) subject to a written confidentiality agreement having
terms substantially similar to this Section 9.11, to any financial institution
or other party that extends or is considering the extension of material debt or
equity financing to the Originator or (z) as may be required or appropriate in
response to a court order or in connection with any litigation; provided
further, however, that the Originator shall have no obligation of
confidentiality whatsoever in respect of any information which may be generally
available to the public or becomes available to the public through no fault of
the Buyer.
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.
THE ORIGINATOR: SYNTHETIC INDUSTRIES, INC.
By_________________________________
Title:
000 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: 706-
Telephone No.: 706-
THE BUYER: SYNTHETIC FUNDING CORPORATION
By_________________________________
Title:
000 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: 706-
Telephone No.: 706-
THE COLLECTION AGENT: SYNTHETIC INDUSTRIES, INC.
By_________________________________
Title:
000 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: 706-
Telephone No.: 706-
4
SCHEDULE I
CONDITION PRECEDENT DOCUMENTS
As required by Section 3.01 of the Agreement, each of the
following items must be delivered to the Buyer prior to the Closing Date:
(a) a copy of this Agreement duly executed by each of the
Originator, the Collection Agent and the Buyer;
(b) a certificate of the Secretary or Assistant Secretary of
the Originator dated the date of this Agreement, certifying (i) the names and
true signatures of the incumbent officers of the Originator authorized to sign
this Agreement and the other documents to be delivered by it hereunder, (ii)
that the copy of the certificate of incorporation of the Originator attached
thereto is a complete and correct copy and that such certificate of
incorporation has not been amended, modified or supplemented and is in full
force and effect, (iii) that the copy of the by-laws of the Originator attached
thereto is a complete and correct copy and that such by-laws have not been
amended, modified or supplemented and are in full force and effect, and (iv) the
resolutions of the Originator's board of directors approving and authorizing the
execution, delivery and performance by the Originator of this Agreement and the
documents related thereto;
(c) Good standing certificate for the Originator issued by
the Secretary of State of its jurisdiction of incorporation;
(d) Acknowledgment copies of proper financing statements (the
"Facility Financing Statements"), dated a date reasonably near to the Closing
Date, describing the Receivables and Related Security and (i) naming the
Originator as seller of Receivables and Related Security, the Buyer as
purchaser, or other, similar instruments or documents, as may be necessary or,
in the opinion of the Buyer, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the Buyer's interests in all
Receivables and Related Security and other Transferred Assets;
(e) Acknowledgment copies of proper financing statements, if
any, necessary to release all security interests and other rights of any Person
in the Receivables and Related Security previously granted by the Originator;
(f) Certified copies of requests for information or copies (or
a similar search report certified by a party acceptable to the Buyer), dated a
date reasonably near to the Closing Date, listing all effective financing
statements (including the Facility Financing Statements) which name the
Originator and/or Synthetic (under their present names and any previous names)
as debtor and which are filed in the jurisdictions in which the Facility
Financing Statements were filed, together with copies of such financing
statements (none of which, other than the Facility Financing Statements, shall
cover any Receivables or Contracts except to the extent permitted under the
Intercreditor Agreement);
(g) Executed copies of Lock-Box Agreements with each of the
Lock-Box Banks and an executed copy of the Collection Account Agreement with the
Collection Account Bank;
(h) The Intercreditor Agreement executed by all parties
thereto;
(i) An opinion of King & Spalding, counsel to the Originator
relating to the issues of substantive consolidation and true sale of the
Receivables and the related property, in form and substance satisfactory to the
Buyer;
(j) An opinion of King & Spalding, counsel to the Originator,
issued in connection with this Agreement and relating to corporate issues,
perfection and priority of security interests, in substantially the form of
Exhibit D, and as to such other matters as the Buyer may reasonably request;
(k) Original copies of the Receivables Purchase Agreement and
all documents described in Section 3.01 of the Receivables Purchase Agreement
and not otherwise described above; and
(l) A fully and correctly completed Asset Report, as of the
last day of the most recently concluded calendar month and a fully and correctly
completed Daily Settlement Report as of the most recent Business Day.
SCHEDULE II
DESCRIPTION OF CREDIT AND COLLECTION POLICY
Attached.
SCHEDULE III
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
Lock-Box Bank:
SOUTHTRUST BANK, N.A.
One Georgia Center
000 Xxxx Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Title of Account: Account No. Lock-Box No.
Synthetic Industries 00-000-000 A0063
SCHEDULE IV
TRADENAMES, FICTITIOUS NAMES AND "DOING BUSINESS AS" NAMES
Product Name
Fibermesh
EXHIBIT A
FORM OF CONTRACTS
Attached.
EXHIBIT B
FORM OF LOCK-BOX AGREEMENT
____________, 19__
[Name and Address of
Lock-Box Bank]
Re: Synthetic Industries, Inc.
Lock-Box Account No. 00-000-000
(the "Lock-Box Account")
Ladies and Gentlemen:
The undersigned, Synthetic Industries, Inc. ("Synthetic")
hereby notifies you that we have transferred exclusive ownership and control of
the above-referenced Lock-Box Account to Synthetic Funding Corporation, a
Delaware corporation, and that Synthetic Funding Corporation (the "Seller"), in
connection with certain purchase and financing arrangements between the Seller
and EagleFunding Capital Corporation (the "Purchaser"), hereby transfers
exclusive ownership and control of the above-referenced Lock-Box Account to
BancBoston Securities Inc., acting in its capacity as deal agent (the "Deal
Agent") for itself and for the Purchaser.
In connection with the foregoing, Synthetic, the Seller and
the Deal Agent each hereby instructs you, beginning on the date hereof and in
accordance with your existing procedures for management of the Lock-Box Account,
(i) to collect and deposit into the Lock-Box Account all monies, checks,
instruments and other items of payment received in the related lock-box and (ii)
to transfer to the Deal Agent an amount equal to all monies, checks, instruments
and other items of payment deposited in the Lock-Box Account on a daily basis.
All such transfers shall be made on a daily basis by depository transfer check
(DTC), automated clearing house (ACH) transfer, or wire or otherwise, as the
Deal Agent may direct you in its sole discretion, to the following account (the
"Collection Account"):
BankBoston, N.A.
Account No: __________________
Reference: BancBoston Securities Inc. Collection Account,
as Deal Agent for Synthetic Funding Securitization
or to such other account as the Deal Agent may instruct from time to time.
The Seller and Synthetic also each hereby notifies you that
the Deal Agent shall be irrevocably entitled to exercise any and all rights (if
any) of Synthetic and the Seller in respect of or in connection with the
Lock-Box Account, including, without limitation, the right to specify when
payments are to be made out of or in connection with the Lock-Box Account. All
monies in the Lock-Box Account will be held for and in trust for the Deal Agent
upon deposit therein and neither Synthetic nor the Seller will have any control
over the Lock-Box Account or the funds on deposit therein. Without limiting the
generality of the foregoing, neither Synthetic nor the Seller shall have any
right to draw against the Lock-Box Account, direct the transfer of funds therein
or otherwise assign, pledge or have access to the Lock-Box Account or the funds
on deposit therein.
You will have no duty to inquire into the source or use of any
monies, checks, drafts, instruments or other items or amounts deposited into the
Lock-Box Account. The Seller and Synthetic each hereby agrees that any deposits
of monies, checks, drafts, instruments or other items into or withdrawals from
the Lock-Box Account now or hereafter directed by the Deal Agent are authorized
by the Seller and Synthetic, and each of Synthetic and the Seller acknowledges
that it has no right to direct such transfers at any time. You shall be fully
protected in acting on any instruction of the Deal Agent with respect to the
Lock-Box Account without making any inquiry as to the Deal Agent's authority to
give such instruction.
Notwithstanding anything herein or elsewhere to the contrary,
including but not limited to any provision of the Loan and Security Agreement
dated as of December 18, 1997, by and between Synthetic and the financial
institutions party thereto from time to time as lenders and BankBoston, N.A., as
Agent (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the "Loan and Security Agreement"), you hereby waive any and
all rights to bankers liens and rights to deduct from or set-off against amounts
in the Lock-Box Account, except that: (i) in the event that any checks deposited
in the Lock-Box Account are returned unpaid to you, the amount thereof shall be
charged to the Lock-Box Account, and (ii) any monthly maintenance fees in
connection with the Lock-Box Account may also be charged to the Lock-Box
Account. The Seller hereby agrees that if there are insufficient funds in the
Lock-Box Account to cover any such charges to the Lock-Box Account, then it will
pay to you the amount of such deficiency on demand. In the event the Seller
fails to reimburse you as set forth above, you may so notify the Deal Agent, and
the Deal Agent may, but shall have no obligation to, pay the same.
The use of any such checks or electronic or other means of
funds transfer, together with the resolutions authorizing the same, are intended
to affirm the rights and the interests of the Deal Agent in the Lock-Box Account
and all funds deposited therein and not to derogate therefrom.
The taxpayer identification number associated with the
Lock-Box Account shall be that of the Seller and the Seller will report for
federal, state and local income tax purposes the income, if any, earned on funds
in the Lock-Box Account.
This letter agreement may not be terminated at any time by
Synthetic or the Seller, but may be terminated by either you or the Deal Agent
upon 30 days' prior written notice to the other and to the undersigned.
You will not assign or transfer your rights or obligations
hereunder (other than to the Deal Agent) without the prior written consent of
the other parties hereto. Subject to the preceding sentence, this letter
agreement shall inure to the benefit of and be binding upon all parties hereto
and their respective successors and assigns.
Any change, amendment, modification or waiver of this letter
agreement or any provision hereof will not be effective unless such change,
amendment, modification or waiver is in writing and signed by all parties
hereto.
All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto shall be
effective if communicated in writing and personally delivered or sent by
registered, certified, express or regular mail, postage prepaid, return receipt
requested, or by telex, telecopy (receipt promptly confirmed by telephone) or
prepaid telegram (with messenger delivery specified in the case of a telegram)
or by telephone (promptly confirmed in writing) and shall be deemed to be given
for purposes of this letter agreement on the day that such communication is
delivered to the intended recipient thereof in accordance with the provisions of
this paragraph. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this paragraph, notices, demands,
instructions and other communications shall be given to or made upon the
respective parties hereto at their respective addresses (or to their respective
telex, telecopy or telephone numbers) indicated below, or at such other address
as any party hereto may notify to the other parties in accordance with the
provisions of this paragraph.
All bank statements on the Lock-Box Account should be sent to the
Seller at:
Synthetic Funding Corporation
000 XxXxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Attn:
With a copy to the Deal Agent at:
BancBoston Securities Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Mail Stop: 01-09-02
Attn: Xxxx X. Xxxxxxx III
Each of Synthetic and the Seller consents and agrees to the
foregoing, authorizes you to enter into this letter agreement, and agrees to
indemnify and hold you harmless from and against any and all claims, actions and
suits (whether groundless or otherwise), losses, damages, costs, expenses and
liabilities of every nature and character arising out of your compliance with
the terms of this letter agreement, except such as result from your gross
negligence or willful misconduct, and in no event shall you be liable for any
consequential, indirect or special damages and except that losses for
uncollected checks shall be the responsibility of the Seller to the extent not
set-off against other funds in the Lock-Box Account.
You and each of the parties hereto (other than the Seller)
hereby agree (which agreement shall, pursuant to the terms of this letter
agreement, be binding upon its successors and assigns) that you and each of the
parties hereto shall not institute against, or join any other Person in
instituting against the Seller any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, for one year and a day after the payment in
full of all of the indebtedness of the Seller and the termination of any of the
commitments under each of the "Facility Documents", as such term is defined
under the Receivables Purchase Agreement. The provisions of this paragraph shall
survive the termination of this letter agreement.
This letter agreement shall be governed by and construed in
accordance with the internal laws of The Commonwealth of Massachusetts and
applicable federal law.
This letter agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original and all of
which when taken together shall constitute one and the same instrument.
This letter agreement constitutes the entire agreement between
the parties hereto relating to the Lock-Box Account and the other matters herein
described and supersedes any and all prior agreements relating to such matters,
including but not limited to the Agency Account Agreement between Synthetic,
SouthTrust Bank of Georgia, N.A. and BankBoston, N.A. (formerly known as "The
First National Bank of Boston"), dated as of October 20, 1995.
[Remainder of Page Intentionally Left Blank]
Please agree to the terms of, and acknowledge receipt of, this
notice by signing in the space provided below.
Very truly yours,
SYNTHETIC INDUSTRIES, INC.
By:____________________________
Title:
Address: 000 XxXxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Telephone:
Telecopy:
SYNTHETIC FUNDING CORPORATION
By:____________________________
Title:
Address: 000 XxXxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Telephone:
Telecopy:
BANCBOSTON SECURITIES INC.,
as Deal Agent
By:____________________________
Title:
Address: 000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Mail Stop: 01-09-02
Attn: Xxxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
6
Accepted this __th day
of December, 19__
[NAME OF BANK]
By:________________________________
Title:
Address: ___________________
-------------------
Attn: ______________
Telephone: (___) ________
Telecopy: (___) ________
The undersigned, BankBoston, N.A. (formerly known as "The First
National Bank of Boston") on behalf of itself and in its capacity as agent under
(a) the Fourth Amended and Restated Revolving Credit and Security Agreement
among Synthetic Industries, Inc., the financial institutions party thereto from
time to time as the "Lenders" and The First National Bank of Boston, as agent
for the Lenders, dated October 20, 1995, and (b) the "Loan and Security
Agreement" (as defined in the attached letter agreement), hereby agrees that the
attached letter agreement supersedes any and all prior agreements relating to
Account # 00-000-000 at SouthTrust Bank of Georgia, N.A. (the "Lock-Box
Account") and the other matters described in the attached letter agreement,
including but not limited to the Agency Account Agreement between itself,
Synthetic Industries, Inc. and SouthTrust Bank of Georgia, N.A., dated as of
October 20, 1995, and hereby releases, relinquishes and disclaims any and all of
its right, title and interest in, to and under the Lock-Box Account, which
release shall become effective with respect to such Agency Account upon the
effectiveness of the attached letter agreement.
Date: _________________ BANKBOSTON, N.A.
By:_______________________
Title:______________________
EXHIBIT C
FORM OF ASSET REPORT
Attached.
EXHIBIT D
FORM OF OPINION OF COUNSEL FOR THE ORIGINATOR
Attached.
EXHIBIT E
FORM OF ORIGINATOR NOTE
Attached.
5
EXHIBIT E
FORM OF
SYNTHETIC FUNDING CORPORATION
NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE
[Date]
THIS NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE AND ANY
INTEREST REPRESENTED HEREBY SHALL NOT BE TRANSFERRED,
ASSIGNED, EXCHANGED, CONVEYED, PLEDGED, HYPOTHECATED, OR
OTHERWISE THE SUBJECT OF A GRANT OF A SECURITY INTEREST,
ABSENT THE PRIOR WRITTEN CONSENT OF THE HOLDER AND THE DEAL
AGENT, AND ANY ATTEMPT TO TRANSFER, ASSIGN, CONVEY, PLEDGE,
HYPOTHECATE OR GRANT A SECURITY INTEREST IN THIS NOTE OR ANY
INTEREST REPRESENTED HEREBY, EXCEPT WITH THE PRIOR WRITTEN
CONSENT OF THE HOLDER AND THE AGENT, SHALL BE VOID AND OF NO
EFFECT.
SYNTHETIC FUNDING CORPORATION (the "Issuer"), for value
received, hereby promises to pay to SYNTHETIC INDUSTRIES, INC. (the "Holder"),
or its permitted assigns, at its address for payments set forth in the
Originator Purchase Agreement hereinafter referred to, an amount equal to the
aggregate principal amount of the Originator Loans, as calculated under the
Originator Purchase Agreement from time to time (which amount shall be equal to
the Purchase Price of the Purchase made on December ___, 1997 minus the amount
of cash paid to the Holder on the date of such Purchase pursuant to Section
2.02(a) of the Originator Purchase Agreement minus the amount of the Purchase
Price of the Purchase paid by way of a capital contribution under Section
2.01(c) of the Originator Purchase Agreement, upon the date occurring one year
and one day after the occurrence of the Collection Date (the "Final Payment
Date"), unless earlier prepaid pursuant to the provisions for repayment referred
to herein, to the extent permitted under the terms of the Originator Purchase
Agreement, and to pay interest (computed on the basis of a 360-day year and the
actual number of days in each calendar year) on the unpaid principal sum, at a
variable interest rate per annum equal to the Base Rate, from the date such
principal sum is advanced, such interest being payable on (a) __________ __,
1998, and on each Monthly Payment Date thereafter and (b) on the earlier of (1)
the date of prepayment and (2) the Final Payment Date, until the principal
hereof is paid in full. The Holder shall enter on the grid attached hereto, as
Attachment A, information reflecting the date and the amount of any payments
made hereon.
Payments of the principal of and interest on this
Non-negotiable Subordinated Promissory Note (the "Note") will be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts by check
mailed to, or wire transfer in federal funds to the account of, the Holder as
directed by the Holder. If any payment on this Note shall remain unpaid on the
due date thereof, the same shall thereafter be payable with interest thereon (to
the extent permitted by law) at a variable rate equal to 2% per annum above the
Base Rate, from such due date to the date of payment thereof.
This Note is issued under the Receivables Purchase and Sale
Agreement dated as of December 18, 1997, among Synthetic Industries, Inc., as
the originator and the "Collection Agent" thereunder, and the Issuer (as
amended, restated, supplemented or otherwise modified from time to time, the
"Originator Purchase Agreement"), and is the "Originator Note" described in, and
is subject to the terms and conditions set forth in, the Originator Purchase
Agreement. This Note represents all or a portion of the Purchase Price for
Receivables purchased by the Issuer pursuant to the terms of the Originator
Purchase Agreement. Each capitalized term utilized herein which is defined in
the Originator Purchase Agreement shall have the meaning ascribed to such term
in the Originator Purchase Agreement.
This Note is subject to prepayment in full or in part at the
option of the Issuer at any time upon three Business Days' prior notice to the
Holder, without a premium, subject in all events to the terms of the Originator
Purchase Agreement.
This Note is subordinate and junior in right and time of
payment to all obligations and required payments or deposits of the Issuer in
favor of EagleFunding Capital Corporation ("EagleFunding") and/or BancBoston
Securities Inc. (as the "Deal Agent" for and on behalf of Eagle Funding and its
assignees) (collectively, together with their respective successors and
assignees, the "Senior Claimants"), howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter, or due or
to become due on or before the Final Payment Date (collectively, the "Senior
Issuer Claims"), pursuant to the following subordination provisions (the
"Subordination Provisions"):
(A) The Holder agrees upon any distribution of all or any
of the assets of the Issuer to creditors of the Issuer upon the dissolution,
winding up, total or partial liquidation, arrangement, reorganization,
adjustment protection, relief, or composition of the Issuer or its debts, any
payment or distribution of any kind in respect of this Note (including, without
limitation, cash, property, securities and any payment or distribution which may
be payable or deliverable by reason of the payment of any other Debt of the
Issuer being subordinated to the payment of this Note) that otherwise would be
payable or deliverable upon or with respect to this Note, directly or
indirectly, by set-off or in any other manner, including, without limitation,
from or by way of liquidation of the Transferred Assets, shall be paid or
delivered directly to the Deal Agent for application (in the case of cash) to,
or as Related Security or Collections on the Transferred Assets, for the payment
or prepayment in full of all amounts payable under the Senior Issuer Claims,
until all of the Senior Issuer Claims shall have been indefeasibly paid in full
in cash. BancBoston Securities Inc. as the Deal Agent, is irrevocably authorized
and empowered (in its own name or in the name of the Holder or otherwise), but
shall have no obligation, to demand, xxx for, collect and receive every payment
or distribution referred to in the preceding sentence and give acquittance
therefor and to file claims and proofs of claim and take such other action
(including, without limitation, voting this Note and enforcing any security
interest or other lien securing payment of this Note) as the Deal Agent may
request to (i) collect this Note for the
account of itself and the other Senior Claimants and to file appropriate claims
or proofs of claim in respect of this Note, (ii) execute and deliver to the Deal
Agent such powers of attorney, assignments or other instruments as the Deal
Agent may request in order to enable the Deal Agent to enforce any and all
claims with respect to, and any security interest and other liens securing
payment of, this Note, and (iii) collect and receive any and all payments or
distribution which may be payable or deliverable upon or with respect to this
Note.
(B) All payments or distributions upon or with respect to this
Note that are received by the Holder contrary to the provisions of this Note,
any of the Originator Purchase Agreement, the Receivables Purchase Agreement,
the Intercreditor Agreement or the Lock-Box Agreement, or any of the other
documents, agreements and instruments entered into in connection therewith and
the transactions contemplated thereby (collectively, the "Facility Documents")
shall be received in trust for the benefit of the Senior Claimants, shall be
segregated from other funds and property held by the Holder and shall be
forthwith paid over to the Deal Agent in the same form as so received (with any
necessary endorsement) to be applied (in the case of cash) to, or held as
Related Security or Collections (in the case of non-cash property) for the
payment or prepayment in full of the Senior Issuer Claims until the Senior
Issuer Claims shall have been indefeasibly paid in full in cash. The Holder
agrees that no payment or distribution to any of the Senior Claimants pursuant
to the provisions of this Note shall entitle the Holder to exercise any rights
of subrogation in respect thereof against the Issuer until the Senior Issuer
Claims shall have been indefeasibly paid in full and in cash. The Holder and the
Issuer hereby waive promptness, diligence, notice of acceptance and any other
notice with respect to any of the Senior Issuer Claims and any requirement that
the Agent or any other Person protect, secure, perfect or insure any security
interest or lien on any property subject thereto or exhaust any right or take
any action against the Issuer or any other Person or any assets or property.
(C) The Holder agrees and confirms that none of the Senior
Claimants (including, without limitation, the Deal Agent) shall have any duty
whatsoever to the Holder as holder of this Note and that none of the Senior
Claimants shall be liable to the Holder for any action taken or omitted, to the
extent authorized under the terms of any Facility Document, with respect to this
Note.
(D) Prior to the indefeasible payment in full and in cash of
all of the Senior Issuer Claims, the Holder will not seek to collect, ask,
demand, xxx for or take or receive from the Issuer in cash or other property, by
set-off or in any other manner, any amounts owing under this Note in any manner,
or exercise or enforce any of its rights under this Note.
(E) The Holder and the Issuer agree that at no time hereafter
will any part of the indebtedness represented by this Note be represented by any
negotiable instruments or other writings except this Note.
(F) The Holder and the Issuer waive notice of and consent to
the creation of additional Senior Issuer Claims from time to time pursuant to
the other Facility Documents, and any other obligation, any extensions granted
by any of the Senior Claimants with respect thereto, the taking or releasing of
collateral or any obligors or guarantors for the payment thereof, and the
releasing of the Holder or any other subordinating creditors. No failure or
delay by any of the
Senior Claimants to exercise any right granted herein, or in any other agreement
or bylaw shall constitute a waiver of such right or of any other right.
(G) The Holder and the Issuer agree to execute and deliver to
any of the Senior Claimants, such additional documents, and to take such further
actions as any of such Senior Claimants may hereafter reasonably require to
evidence the subordination of this Note.
(H) The terms of this Note and the subordination effected
hereby and the rights of the Senior Claimants, and the obligations of the Holder
and the Issuer arising hereunder and under the Originator Purchase Agreement,
shall not be affected, modified or impaired in any manner or to any extent by
(i) any amendment or modification of or supplement to any provision of any
Facility Document, or any instrument or document executed or delivered pursuant
thereto or in connection with the transactions contemplated thereby; (ii) the
validity or enforceability of any of such documents; (iii) any exercise or
non-exercise of any right, power or remedy under or in respect of any of the
Issuer or the Senior Issuer Claims or any agreements, instruments or documents
related thereto or arising at law or equity; or (iv) any waiver, consent
release, indulgence, extension, renewal, modification, delay or other action,
inaction, or omission in respect of the Issuer, the Senior Issuer Claims or any
of the instruments, documents or agreements related thereto.
(I) All payments of principal, interest and all other amounts
payable in respect of the Senior Issuer Claims must be paid before any portion
of the principal amount of this Note may be paid or prepaid. All payments of
principal, interest and all other amounts then due and payable in respect of the
Senior Issuer Claims must be paid before any portion of the accrued interest on
this Note may be paid on any day. All scheduled payments of principal and
interest then due on this Note shall be payable only to the extent that the
Issuer has available funds to make such payments, and is permitted to make such
payments under the Facility Documents (including, without limitation, the
Originator Purchase Agreement).
The Holder, and any assignee of the Holder, by accepting this
Note, hereby agrees to the Subordination Provisions. Neither this Note nor any
right of the Holder to receive any payment thereunder, shall be assigned,
transferred, exchanged, pledged, hypothecated, participated or otherwise
conveyed; provided, however, that the Holder may pledge or otherwise transfer
this Note with the prior written consent of the Issuer and the Deal Agent;
provided, further, that any assignee of this Note shall be bound by all of the
terms applicable to this Note set forth in the Facility Documents.
The Holder of this Note and any of its assignees, by its
acceptance hereof, hereby covenants and agrees that it will not at any time
institute against the Issuer, or join any other Person in instituting against
the Issuer, any proceedings of the type referred to in clause (i) of Section
7.01(f) of the Originator Purchaser Agreement, or take any corporate action in
furtherance of any such action.
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed manually by its undersigned officer duly authorized thereunto.
Dated: December __, 1997
SYNTHETIC FUNDING CORPORATION
By: _________________________
Name:
Title:
[Execution Version]
[Synthetic]
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of December 18, 1997
Among
SYNTHETIC INDUSTRIES, INC.,
as the Originator
and
SYNTHETIC FUNDING CORPORATION,
as the Buyer
and
SYNTHETIC INDUSTRIES, INC.
as the Collection Agent
iv
TABLE OF CONTENTS
ARTICLE IDEFINITIONS..............................................................................................1
SECTION 1.01. Certain Defined Terms.....................................................................1
SECTION 1.02. Accounting & Certain Other Terms.........................................................11
SECTION 1.03. Other Terms..............................................................................11
SECTION 1.04. Computation of Time Periods..............................................................12
ARTICLE IIAMOUNTS AND TERMS OF THE PURCHASES.....................................................................12
SECTION 2.01. Agreement to Purchase....................................................................12
SECTION 2.02. Payment for the Purchases................................................................13
SECTION 2.03. Settlement Procedures....................................................................14
SECTION 2.04. Payments and Computations, Etc...........................................................16
SECTION 2.05. Transfer of Records to the Buyer..........................................................16
ARTICLE IIICONDITIONS OF PURCHASES...............................................................................17
SECTION 3.01. Conditions Precedent to Initial Purchase.................................................17
SECTION 3.02. Conditions Precedent to All Purchases and Remittances of Collections.....................17
SECTION 3.03. Effect of Payment of Purchase Price......................................................17
ARTICLE IVREPRESENTATIONS AND WARRANTIES.........................................................................18
SECTION 4.01. Representations and Warranties of the Originator.........................................18
ARTICLE VGENERAL COVENANTS.......................................................................................23
SECTION 5.01. General Covenants........................................................................23
ARTICLE VIADMINISTRATION, COLLECTION AND MONITORING OF ASSETS....................................................28
SECTION 6.01. Appointment and Designation of the Collection Agent......................................28
SECTION 6.02. Collection of Receivables by the Collection Agent; Extensions and Amendments of
Receivables....................................................................................29
SECTION 6.03. Distribution and Application of Collections..............................................29
SECTION 6.04. Other Rights of the Buyer................................................................30
SECTION 6.05. Records; Audits..........................................................................30
SECTION 6.06. Receivable Reporting.....................................................................31
SECTION 6.07. Collections and Lock-Boxes...............................................................31
SECTION 6.08. UCC Matters; Protection and Perfection of Transferred Assets.............................32
SECTION 6.09. Obligations of the Originator With Respect to Receivables................................33
SECTION 6.10. Applications of Collections..............................................................34
SECTION 6.11. Annual Servicing Report of Independent Public Accountants................................34
ARTICLE VIIEVENTS OF TERMINATION.................................................................................35
SECTION 7.01. Events of Termination....................................................................35
ARTICLE VIIIINDEMNIFICATION......................................................................................37
SECTION 8.01. Indemnities by the Originator.............................................................37
ARTICLE IXMISCELLANEOUS..........................................................................................40
SECTION 9.01. Amendments and Waivers...................................................................40
SECTION 9.02. Notices, Etc.............................................................................40
SECTION 9.04. No Waiver; Remedies......................................................................40
SECTION 9.05. Binding Effect; Assignability............................................................41
SECTION 9.06. Term of this Agreement...................................................................41
SECTION 9.07. GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF OBJECTION TO VENUE........................................................................41
SECTION 9.08. WAIVER OF JURY TRIAL.....................................................................42
SECTION 9.09. Costs, Expenses and Taxes................................................................42
SECTION 9.10. Execution in Counterparts; Severability; Integration....................................42
SECTION 9.11. Confidentiality..........................................................................43
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE I Condition Precedent Documents
SCHEDULE II Description of Credit and Collection Policy
SCHEDULE III Lock-Box Banks and Lock-Box Accounts
SCHEDULE IV Tradenames, Fictitious Names and "Doing Business As" Names
EXHIBITS
EXHIBIT A Form of Contracts
EXHIBIT B Form of Lock-Box Agreements
EXHIBIT C Form of Asset Report
EXHIBIT D Form of Opinion of Counsel for the Originator
EXHIBIT E Form of Originator Note
::ODMA\PCDOCS\WASHINGTON\37565\11 September 4, 1997 (11:46am)
