EXHIBIT 10.7
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AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
between
AK STEEL CORPORATION
and
AK STEEL RECEIVABLES LTD.
Dated as of October 1, 1999
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Table of Contents
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Page No.
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ARTICLE I Definitions.......................................................... 2
1.1 Definitions.......................................................... 2
1.2 Other Definitional Provisions........................................ 3
1.3 Computation of Time Periods.......................................... 4
ARTICLE II Purchase and Sale of Receivables..................................... 4
2.1 Purchase and Sale of Receivables..................................... 4
2.2 Timing of Purchases.................................................. 5
2.3 Consideration For Purchases.......................................... 5
2.4 Calculation of Purchase Price........................................ 5
2.5 Payment of Purchase Price............................................ 8
2.6 Application of Collections.......................................... 10
2.7 Further Assurances.................................................. 10
2.8 Armco Receivables................................................... 11
ARTICLE III The Servicer........................................................ 11
3.1 Seller to Act as Servicer........................................... 11
3.2 Eligibility and Concentration Determinations........................ 12
3.3 Deemed Collections.................................................. 12
ARTICLE IV Covenants, Representations and Warranties........................... 13
4.1 Representations and Warranties of the Seller........................ 13
4.2 Affirmative Covenants of the Seller................................. 17
4.3 Negative Covenants of the Seller.................................... 19
4.4 Obligations Unaffected.............................................. 21
4.5 Representations and Warranties of the Buyer......................... 21
4.6 General Covenants of the Buyer...................................... 22
ARTICLE V Conditions to Effectiveness and Purchases........................... 22
5.1 Closing Date........................................................ 22
5.2 Conditions to All Purchases......................................... 23
ARTICLE VI Events of Termination............................................... 24
6.1 Termination Events.................................................. 24
ARTICLE VII Miscellaneous....................................................... 24
7.1 Payments............................................................ 24
7.2 Costs and Expenses; Indemnifications................................ 24
7.3 Successors and Assigns.............................................. 27
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7.4 Governing Law, Waiver of Jury Trial, Jurisdiction, Consent to
Service of Process.................................................. 28
7.5 No Waiver; Cumulative Remedies...................................... 28
7.6 Amendments and Waivers.............................................. 29
7.7 Severability........................................................ 29
7.8 Notices............................................................. 29
7.9 Counterparts........................................................ 29
7.10 Construction of Agreement........................................... 29
7.11 Termination......................................................... 29
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AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, dated as of
October 1, 1999, by and between AK Steel Corporation, a Delaware corporation (in
its capacity as originator of the Receivables and as seller hereunder, the
"Seller"; in its capacity as servicer hereunder and under the Purchase and
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Servicing Agreement, the "Servicer"), and AK Steel Receivables Ltd., an Ohio
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limited liability corporation (the "Buyer").
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WHEREAS, the Buyer and the Seller are parties to that certain
Receivables Purchase Agreement, dated as of December 1, 1994 (as amended,
supplemented and otherwise modified prior to the date hereof, the "Original
Receivables Purchase Agreement"); and
WHEREAS, the Buyer is an indirect wholly-owned subsidiary of the Seller
and a portion of the Receivables were transferred to the Buyer by the Seller as
a capital contribution to the Buyer on December 1, 1994; and
WHEREAS, the Seller has sold to the Buyer all of its right, title and
interest in, to and under certain Receivables pursuant to the Original
Receivables Purchase Agreement; and
WHEREAS, the Seller desires to continue to sell to the Buyer, and the
Buyer desires to continue to buy from the Seller, on the Closing Date and
thereafter as they arise, all of the Seller's right, title and interest in, to
and under all of the remaining Receivables existing on the Closing Date or
thereafter created; and
WHEREAS, pursuant to that certain Amended and Restated Purchase and
Servicing Agreement, dated of even date herewith (the "Purchase and Servicing
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Agreement"), among the Buyer, AKSR Investments, Inc., as Managing Member, the
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Servicer, PNC Bank, National Association, as Agent for the Purchasers party
thereto (the "Agent"), and such Purchasers, the Buyer has agreed to transfer and
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convey to the Purchasers an undivided interest in, to and under the Transferor
Receivables and the other Transferred Assets; and
WHEREAS, the Seller and Armco have merged pursuant to the AK Steel
Merger, with the Seller being the surviving entity; and
WHEREAS, the Buyer and AFC have merged pursuant to the AKR Merger, with
the Buyer being the surviving entity; and
WHEREAS, the parties desire to amend and restate in its entirety the
Original Receivables Purchase Agreement as set forth below; and
WHEREAS, (A) prior to the AK Steel Merger, AFC was indebted to Armco
pursuant to the "Seller Note" (as defined in the Armco Purchase and Sale
Agreement) from AFC to the order of Armco (as heretofore amended, supplemented
and otherwise modified, the "AFC Note"); (B) as a consequence of the AK Steel
Merger, AFC became indebted to Seller pursuant to the AFC Note, and (C) as a
consequence of the AKR Merger, Buyer is indebted to Seller pursuant to the AFC
Note; and
WHEREAS, pursuant to the Original Receivable Purchaser Agreement, Buyer
is indebted to Seller pursuant to the Subordinated Note (as defined in the
Original Receivables Purchase Agreement); and
WHEREAS, Buyer and Seller wish to combine the indebtedness of Buyer to
Seller under the Subordinated Noted (as defined in the Original Receivable
Purchase Agreement) and under the AFC Note into one new subordinated note in the
form of Exhibit B hereto, so that all references in this Amended and Restated
Receivables Purchase Agreement to the Subordinated Note shall be deemed to mean
such new combined subordinated note;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Original Receivables Purchase Agreement is
amended and restated to read in its entirety as follows:
ARTICLE I
Definitions
1.1 Definitions. Capitalized terms used herein but not otherwise
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defined shall have the meanings set forth in the Purchase and Servicing
Agreement. In addition, the term "Agreement" means this Amended and Restated
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Receivables Purchase Agreement, as the same may from time to time be amended,
supplemented or otherwise modified. The following capitalized terms shall have
the following meanings:
"Armco Purchase and Sale Agreement" means the Purchase and Sale
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Agreement dated as of December 22, 1995, between Armco and AFC, as amended,
supplemented and otherwise modified from time to time.
"Armco Receivables" means the Purchased Receivables, as defined in the
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Armco Purchase and Sales Agreement which are outstanding at the time of the AKR
Merger.
"Closing Date" shall mean the closing date of the Original Receivables
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Purchase Agreement, which was December 1, 1994.
"Early Termination" shall have the meaning specified in Article VI.
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"Effective Period" shall mean the period beginning on the Closing Date
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and terminating on the close of business on the Business Day immediately
preceding the day on which a Termination Event occurs.
"Initial Capital Contribution" shall mean the capital contribution made
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by the Seller to the Buyer on the Closing Date pursuant to the Original
Receivables Purchase Agreement.
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"Purchase Date" shall mean the Closing Date and each subsequent day
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during the Effective Period that the Seller is open for business.
"Receivable" shall mean (i) an Armco Receivable, and (ii) an account
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receivable of the Seller arising from the sale of merchandise or providing of
services by the Seller in the ordinary course of business of the Seller,
including all monies due or to become due and all Collections and other amounts
received from time to time with respect to such Receivable and all proceeds
(including "proceeds" as defined in the UCC of the jurisdiction the law of which
governs the perfection of the interest on the Receivables transferred hereunder)
thereof and "Receivables" shall mean all such Receivables; provided, however,
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that "Receivables" shall not include any amounts payable to the Seller with
respect to licenses of intangible assets.
"Related Assets" means, as to any Receivable: (a) all of Seller's
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right, title and interest (including any right, title and interest acquired by
the Seller in the AK Steel Merger) in and to the receipt of payments (including
the right to xxx for or enforce collection of such Receivable) of Receivables
under all Contracts that relate to such Receivable; (b) all of Seller's interest
(including any right, title and interest acquired by the Seller in the AK Steel
Merger) in the goods (including returned goods), if any, relating to the sale
which gave rise to such Receivable; (c) all other security interests or Liens
and property subject thereto from time to time purporting to secure payment of
such Receivable; (d) the assignment to the Buyer of all UCC financing statements
covering any collateral securing payment of such Receivable; (e) all guarantees
and other agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable; (f) all of the Records; and
(g) all proceeds (including "proceeds" as defined in the UCC of the jurisdiction
the law of which governs the perfection of the interest in such Receivable) of
such Receivable and the foregoing.
"Termination Event" shall have the meaning specified in Article VI.
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1.2 Other Definitional Provisions. (a) All terms defined in this
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Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein;
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement, and accounting terms partly defined in this Agreement to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles. To the extent that the definitions of accounting
terms herein are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained herein shall control;
(c) The words "hereof', "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references contained in this Agreement are references to Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified, and
the term "including" means "including without limitation";
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(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms; and
(e) Any reference to a specific time of day shall mean such time of day
in Cincinnati, Ohio.
1.3 Computation of Time Periods. Unless otherwise stated in this
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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" mean "to but excluding."
ARTICLE II
Purchase and Sale of Receivables
2.1 Purchase and Sale of Receivables. Subject to the terms and
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conditions of this Agreement and in consideration of the Purchase Price, the
Seller shall sell, assign and transfer to the Buyer, and the Buyer shall
purchase and accept from the Seller, during the Effective Period (without
recourse except as specifically provided herein), all right, title and interest
of the Seller in, to and under:
(i) all Receivables existing at the close of business on the
Cut-Off Date and thereafter created from time to time (except those
collected prior to the Closing Date and those constituting the Initial
Capital Contribution), until the termination of the Effective Period;
and
(ii) all of the Related Assets.
The foregoing transfer and the Initial Capital Contribution do not
constitute and are not intended to result in an assumption by the Buyer of any
obligation or liability of the Seller or any other Person in connection with the
Receivables, any Related Asset or under any agreement or instrument relating
thereto, including any obligation to any Obligor or any other customer or client
of the Seller or any Affiliate thereof. All purchases hereunder and the Initial
Capital Contribution shall be made without recourse, but shall be made pursuant
to and in reliance upon the representations, warranties and covenants of the
Seller set forth in this Agreement and in each other Transaction Document. The
Seller and the Buyer intend the transactions hereunder to constitute true sales
of the Receivables and the Related Assets by the Seller to the Buyer, providing
the Buyer with the full risks and benefits of ownership of the Receivables and
the Related Assets.
Without limiting the foregoing, the parties hereto hereby ratify and
confirm as capital contributions or true sales:
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(A) All transfers of Receivables and Related Assets which were made
by Seller to Buyer pursuant to the Original Receivables Purchase Agreement; and
(B) All transfers of Armco Receivables which were made by Armco to
AFC prior the AKR Merger.
2 .2 Timing of Purchases.
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(a) Closing Date Purchases. On the Closing Date, the Seller made the
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Initial Capital Contribution and sold to the Buyer, and the Buyer purchased and
acquired, pursuant to Section 2.1, all of the Seller's right, title and interest
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in (i) each Receivable that existed as of the close of business on the Cut-Off
Date (except those collected prior to the Closing Date and those constituting
the Initial Capital Contribution), (ii) all Receivables created by the Seller
from and including the close of business on the Cut-Off Date to and including
the Closing Date (except those collected prior to the Closing Date), and (iii)
all Related Assets associated therewith.
(b) Regular Purchases. After the Closing Date, each Receivable and
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all Related Assets created or originated by the Seller shall be sold to, and
shall be purchased by, the Buyer (without any further action by any Person) upon
the creation or origination of such Receivable and Related Assets.
2.3 Consideration For Purchases. On the terms and subject to the
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conditions set forth in this Agreement, the Buyer agrees to make all Purchase
Price payments to the Seller in accordance with Section 2.5.
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2.4 Calculation of Purchase Price. (a) On the Closing Date and as
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early as reasonably practicable in each calendar month thereafter, but not later
than the Determination Date occurring in such month, the Servicer shall deliver
to the Buyer and the Agent a report in substantially the form of Exhibit A (each
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such report being herein called a "Purchase Price Report") with respect to the
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Buyer's purchases of Receivables and Related Assets from the Seller:
(i) that arose on or prior to the Cut-Off Date (in the
case of the Purchase Price Report to be delivered on the Closing
Date); and
(ii) that arose after the Cut-Off Date and during the
Collection Period immediately preceding the date of such Purchase
Price Report (in the case of each subsequent Purchase Price Report;
provided, however, that in the case of the December 1994 Purchase
Price Report, those Receivables arising during the period from
November 24, 1994 through November 30, 1994 shall be included in such
report at the same Purchase Price as those Receivables purchased on
the Closing Date).
(b) On each Purchase Date, the "Purchase Price" to be paid by the
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Buyer to the Seller in accordance with the terms of Section 2.5 on such day for
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the Receivables and Related Assets
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that are to be sold hereunder on such day shall be determined in accordance with
the following formula:
PP = AOB - PD
where:
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PP = the aggregate Purchase Price for the Receivables and Related
Assets to be purchased from the Seller on such day;
AOB = the aggregate Outstanding Balance of the Receivables that are
to be purchased from the Seller on such day; and
PD = the Purchase Discount in effect on such day as determined
pursuant to Section 2.4(c).
For purposes of calculating the Purchase Price and the Purchase Discount on the
Closing Date, AOB equaled the aggregate Outstanding Balance of all Receivables
that existed and were owing to the Seller as measured at the Cut-Off Date
(excluding, in each case, all Receivables that had been written off the books of
the Seller as uncollectible), less an amount equal to the sum of (A) the
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aggregate Outstanding Balance of all Receivables that comprised the amount of
the Initial Capital Contribution, and (B) the aggregate Collections received by
the Seller prior to the Closing Date.
(c) Definitions and Calculations Related to Purchase Discount
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(i) "Purchase Discount" for the Receivables to be sold
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hereunder on any Purchase Date during a Collection Period shall mean
the amount determined in accordance with the following formula:
PD = AOB x (LDR + FDR)
where:
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PD = the Purchase Discount in effect on such Purchase Date;
AOB = the aggregate Outstanding Balance of the Receivables to be
sold hereunder on such Purchase Date;
LDR = the Loss Discount Rate (expressed as a percentage) in effect
on such Purchase Date as determined pursuant to clause (ii)
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below; and
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FDR = the Funding Discount Rate (expressed as a percentage) in
effect on such Purchase Date, as determined pursuant to
clause (iii) below.
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The Purchase Discount, the Loss Discount Rate and the Funding Discount
Rate shall initially be computed by the Servicer on the Closing Date
and thereafter shall be recomputed by the Servicer on the date of each
Purchase Price Report and shall become effective on the Closing Date
or on the first day of the month in which the Purchase Price Report is
delivered, as the case may be.
(ii) "Loss Discount Rate" in effect for any day during a
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Collection Period means a percentage equal to the product of
(i) (A) the sum of the aggregate reductions in the
Outstanding Balance of Receivables as a result of credit
write-offs during the twelve calendar-month period next preceding
such Collection Period (or, in the case of the Closing Date, the
twelve-month period ending October 31, 1994), divided by (B) the
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aggregate Outstanding Balance of the Receivables as of the last
day of such twelve-month period, divided by 12, and multiplied by
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(ii) the Turnover Rate applicable to such Collection
Period.
(iii) "Funding Discount Rate" for the Receivables to be sold
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hereunder on the Closing Date or on any day during a Collection Period shall
mean a percentage determined in accordance with the following formula:
FDR = TR x FR
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where:
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FDR = the Funding Discount Rate in effect on such day;
TR = the Turnover Rate applicable to such Collection Period;
and
FR = the Funding Rate, which shall be equal to the Alternate
Base Rate in effect on the Closing Date or the first
day of such Collection Period, as the case may be, plus
2.50%.
(iv) "Turnover Rate" means, on any day in a Collection Period,
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the decimal equivalent of a fraction, the numerator of which is the sum of the
outstanding amounts of Receivables as of the last day of each of the three (3)
most recent calendar months which ended prior to such Collection Period (or, in
the case of the Closing Date, which ended on October 31, 1994), and the
denominator of which is the aggregate Collections received during such
three-month period.
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(d) Adjustments to Purchase Price. The Purchase Price for the
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Receivables and Related Assets sold hereunder on each Purchase Date in any
Collection Period prior to the delivery of the Purchase Price Report for such
Collection Period shall, as a reasonable estimation, be calculated based on the
Purchase Price Report for the immediately preceding Collection Period (or the
Closing Date, in the case of December, 1994) and shall be subsequently adjusted
upon delivery of the Purchase Price Report for the Collection Period in which
such purchases actually occurred to reflect the Purchase Price set forth in such
Purchase Price Report.
2.5 Payment of Purchase Price. (a) By 11:00 a.m. on each Business Day
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during the Effective Period (other than the Closing Date), all amounts to be
paid by the Buyer to the Seller on such day shall be paid to such account as may
be designated by the Seller from time to time in accordance with the terms
hereof in immediately available Dollars, except as provided in Sections (b) and
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(c) below.
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(b) Subject to Section 2.5(c) below, the Purchase Price shall be paid
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to Seller in Dollars to the extent that such funds are available to the Buyer
after (i) satisfaction of all other obligations then due and payable under the
Purchase and Servicing Agreement and (ii) a reduction or satisfaction of the
principal amount of the Subordinated Note until the unpaid principal amount of
the Subordinated Note has been reduced to zero or, if greater, the aggregate
face amount of all Letters of Credit then outstanding, including any Letters of
Credit to be issued on such day. No payment shall be made on the Subordinated
Note if the effect of such payment would be to reduce the aggregate principal
amount of the Subordinated Note to an amount that is less than the aggregate
face amount of all Letters of Credit then outstanding, including any Letters of
Credit to be issued on such day. The excess of the Purchase Price for the
Receivables and Related Assets transferred to the Buyer on any Purchase Date
over the cash payment therefor set forth in the second preceding sentence shall
be evidenced by an increase in the loan by the Seller to the Buyer (the
"Subordinated Loan"), evidenced by the Subordinated Note of the Buyer
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substantially in the form attached hereto as Exhibit B (such promissory note, as
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it may be amended, supplemented, enclosed or otherwise modified from time to
time in substitution therefor or renewal thereof in accordance with the
Transaction Documents, being herein called a "Subordinated Note"). The
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Subordinated Loan shall be fully subordinated to Senior Debt (as defined in the
Subordinated Note).
The parties agree that as of August 31, 1999 the principal indebtedness
of Buyer to Seller under the Subordinated Note which was issued pursuant to the
Original Purchase Agreement was $268,608,316, and the principal indebtedness of
AFC to Armco, and following the AK Steel Merger, to Seller, under the "Seller
Note" (as defined in the Armco Purchase and Sale Agreement) was $136,492,000.
The parties agree that, from and after the Restatement Effective Date, the
indebtedness of Buyer to Seller under such Subordinated Note and such Seller
Note shall be combined and shall be evidenced by (and governed solely by the
terms of) the Subordinated Note in the form of Exhibit B. Interest accrued on
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such indebtedness prior to the Restatement Effective Date shall be paid on the
Restatement Effective Date. Such indebtedness is a continuing indebtedness, and
nothing herein shall be construed to deem paid the indebtedness evidenced by
either of such combined promissory notes. Promptly after the
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Restatement Effective Date, the parties will determine the total outstanding
indebtedness under such new Subordinated Note, and shall make appropriate
entries in their books and records to reflect such total.
(c) (i) The Seller may request that the Buyer cause the L/C Issuing
Bank to issue Letters of Credit in favor of beneficiaries requested by the
Seller, in each case subject to the satisfaction of the conditions for issuance
of such Letters of Credit under the Purchase and Servicing Agreement, and to the
requirements of this Section 2.5(c). Each such Letter of Credit must be in form
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and substance acceptable to the Buyer and the L/C Issuing Bank and the Seller
shall on a timely basis provide the Buyer and the L/C Issuing Bank with such
information as is necessary for the Buyer to obtain such Letter of Credit from
the L/C Issuing Bank. The Buyer, but not the Seller, shall have full
reimbursement obligations in respect of each Letter of Credit. To the extent
that Armco (or Seller as Armco's successor by merger) has any reimbursement
obligation to AFC (or Buyer as AFC's successor by merger) in respect of letters
of credit which were issued pursuant to the Armco Purchase and Sale Agreement,
such liability is released.
(ii) No Letter of Credit may be requested hereunder on any day if,
after giving effect to such issuance and to any purchase of Receivables by the
Buyer and any payments on the Subordinated Note on such day, the aggregate
outstanding principal amount of the Subordinated Note will be less than the
aggregate face amount of all outstanding Letters of Credit, including all
Letters of Credit to be issued on such day.
(iii) Subject to the foregoing, Letters of Credit may be requested
either
(1) in connection with any net increase in the Subordinated
Note resulting from any Purchase on any day as provided in Section
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2.5(b) above; or
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(2) on a day when no such net increase will be made if,
without any such corresponding net increase, the aggregate outstanding
principal amount of the Subordinated Note on such day would be equal to
or greater than the aggregate face amount of all Letters of Credit
outstanding on such day, after giving effect to any Letters of Credit
requested to be issued on such day.
(iv) The principal amount of the Subordinated Note shall be
automatically reduced and deemed paid in an amount equal to the amount of any
payments made by the L/C Issuing Bank on any Letter of Credit.
(d) The making of each Subordinated Loan and each increase or reduction
of the Subordinated Note may be evidenced by recording the date and amount
thereof on the grid attached to the Subordinated Note; provided that failure to
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make any such recordation on such grid or any error in such grid shall not
adversely affect the parties' respective rights to recover the outstanding
unpaid principal amount or interest on the Subordinated Note.
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2 .6 Application of Collections. The Seller hereby agrees that any
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payment by an Obligor in respect of any indebtedness or other obligations owed
by such Obligor to the Seller, shall, except as otherwise specified by such
Obligor or otherwise required by law, be applied as a Collection of a Receivable
(in the order of the age by invoice date of such Receivables, starting with the
oldest such Receivable, as determined under the Credit Policy Manual) to the
extent of any amounts then due and payable thereunder before being applied to
(i) any Receivable arising subsequent to the Amortization Date which has not
been sold hereunder or (ii) any other indebtedness of such Obligor to the
Seller.
2.7 Further Assurances. (a) The Seller (including in its capacity as
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Servicer, when appropriate) agrees that from time to time, at its expense, it
will do and perform any and all acts and will promptly execute and deliver all
further instruments and documents, and take all further action (whether or not
requested by the Buyer or its assignee or designee), in order to perfect,
protect or more fully evidence the purchases hereunder or the purposes of the
Transaction Documents, or to enable the Buyer or its assigns to exercise or
enforce any of their respective rights with respect to the Receivables and the
Related Assets. Without limiting the generality of the foregoing, the Seller
will (whether or not upon the specific request of the Buyer or its designee):
(i) execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such
instruments or notices, as may be necessary or appropriate; and
(ii) xxxx conspicuously each Related Asset evidencing each
Receivable with a legend, acceptable to the Buyer and the Agent,
evidencing that the related Receivables have been sold in accordance
with this Agreement, and clearly and unambiguously xxxx all computer
records and all microfiche storage files, if any, regarding the
Receivables and Related Assets with such legend, and the Seller shall
maintain such records in a manner such that the Buyer's perfected
first priority interest in the Receivables and Related Assets shall
not be adversely affected in any material respect.
(b) The Seller hereby authorizes the Buyer or its designee to file one
or more financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Receivables and the Related
Assets now existing or hereafter arising.
(c) Without limiting the generality of Section 2.7(a) above, the Seller
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shall, not earlier than six (6) months and not later than three (3) months prior
to the fifth (5th) anniversary of the date of filing of the financing statements
filed in connection with the Closing Date or any other financing statement filed
pursuant to this Agreement (including this Section 2.7 (c)), if the Final
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Collection Date (as defined below) shall not have occurred:
(i) execute and deliver and file or cause to be filed
appropriate continuation statements;
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(ii) deliver or cause to be delivered to the Buyer and the
Agent an opinion of counsel for the Seller reasonably satisfactory to
the Buyer and the Agent, in form and substance reasonably satisfactory
to the Buyer and the Agent, confirming and updating the opinion
delivered in connection with the Closing Date relating to the
perfection of the Buyer's interests in the Receivables; and
(iii) to the extent that the Seller is not the Servicer,
cooperate fully with the Servicer in carrying out its duties.
For purposes of this Agreement, "Final Collection Date" means the date, after
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purchases under this Agreement have been terminated pursuant to a Termination
Event, upon which the last Receivable purchased by the Buyer pursuant to this
Agreement has been collected or written off as uncollectible.
2.8 Armco Receivables. Each of the parties hereto agrees that (a) the
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Buyer, as successor by merger to AFC, is the beneficiary of all the
representations, warranties and indemnities which were made by Armco to AFC in
connection with each sale of Armco Receivables under the Armco Purchase and Sale
Agreement, (b) that the Seller, as successor by merger to Armco, is obligated to
Buyer in respect of such representations, warranties and indemnities to the same
extent as Armco was so obligated to AFC, (c) for the purpose of any calculation
that relates to, or is otherwise affected by, the Armco Receivables, including,
without limitation, any calculation of the Purchase Price, pursuant to Section
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2.4, to the extent any such calculations include periods ending on or prior to
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the Restatement Effective Date, shall be based on the actual performance of the
Armco Receivables and the actual performance of the Receivables owned by AKR, in
each case, for the applicable periods prior to the Restatement Effective Date,
and (d) the obligations and agreements and the representations and warranties
contained in this Agreement and the other Transaction Documents with respect to
the Receivables shall from and after the Restatement Effective Date apply
equally to the Armco Receivables as if the Armco Receivables had been purchased
by the Buyer pursuant to this Agreement.
ARTICLE III
The Servicer
3.1 Seller to Act as Servicer. Notwithstanding the sale and
-------------------------
contribution of Receivables pursuant to this Agreement and the Original
Receivables Purchase Agreement, the Seller shall continue to be responsible for
the servicing, administration and collection of the Receivables (including any
Armco Receivables) pursuant to the Purchase and Servicing Agreement, subject to
any rights to terminate the Seller as servicer pursuant to the Purchase and
Servicing Agreement. It is expected that the Seller will be a party to the
Purchase and Servicing Agreement as servicer and that such Purchase and
Servicing Agreement will set out further conditions as to the Seller's rights,
responsibilities and compensation as servicer.
- 11 -
3.2 Eligibility and Concentration Determinations. Among its other
--------------------------------------------
responsibilities as servicer, the Seller shall determine for the Buyer on each
day, to the extent necessary to assure compliance with the Purchase and
Servicing Agreement, what newly created Receivables and Armco Receivables comply
with any eligibility standards under the Purchase and Servicing Agreement and
whether excess concentrations exist with respect to particular Obligors under
the standards set forth in the Purchase and Servicing Agreement. It is
understood that the Buyer will rely upon those determinations in making certain
representations and warranties under the Purchase and Servicing Agreement and,
consequently, that the Buyer will have the rights specified in Section 3.3(b) in
--------------
the event that any such determination is incorrect.
3.3 Deemed Collections. (a) If on any day the Outstanding Balance of
------------------
any Receivable (i) is reduced or adjusted as a result of any defective,
rejected, returned, repossessed or foreclosed merchandise, any defective or
rejected services, any discount or other adjustment by the Seller or any other
Person (including on account of credits, rebates, chargebacks, inventory
transfers, allowances for early payments and other allowances) or any obligation
of the Seller or any other Person to make such a discount or adjustment, (ii) is
reduced or canceled as a result of a setoff in respect of any claim by the
Obligor thereof against the Seller or any other Person (whether such claim
arises out of the same or a related or an unrelated transaction) or (iii)
otherwise is less than the amount reported by the Seller, as servicer, in any
report delivered pursuant to the Purchase and Servicing Agreement (for any
reason other than receipt of Collections on such Receivable or such Receivable
becoming a Defaulted Receivable), then, on such day (which, in the case of any
reduction, cancellation or adjustment described in clauses (i) or (ii) above,
shall be the day when such reduction, cancellation or adjustment is registered
as a chargeback on the books of the Seller in good faith and consistent with
past practice), the Seller shall be deemed to have received a Collection of such
Receivable in the amount of such reduction or cancellation (net of any debit
reversals to the extent that such debits were previously deemed to be
Collections under this Section 3.3) or the difference between the actual
-----------
Outstanding Balance and the amount reported by the Seller, as applicable.
(b) If on any day it is determined that (i) any of the representations
or warranties of the Buyer set forth in the Purchase and Servicing Agreement
were not true when made as to any Receivable, (ii) any of the representations or
warranties of the Seller set forth in Section 4.1(k), (r), (w) or (x) is no
-------------- --- --- ---
longer true as to any Receivable or (iii) any Receivable fails to satisfy any
requirement set forth in clause (x) or (xiii) of the definition of "Eligible
--------------------
Receivable", then, on such day, the Seller shall be deemed to have received a
Collection of such Receivable in the amount of the Outstanding Balance of such
Receivable.
(c) Not later than the first Business Day after the Seller is deemed
pursuant to this Section 3.3 to have received any Collections, the Seller shall
-----------
transfer to the Buyer immediately available funds in the amount of such deemed
Collections, provided that if and to the extent that the amount which is
--------
required to be so transferred is equal to or less than the outstanding principal
amount of the Subordinated Note on such day, and provided further that (1) no
-------- -------
Termination Event shall have occurred, (2) such day is not a Required Coverage
Non-Compliance Date, and (3) such day is a date on which the Buyer would not
otherwise be
- 12 -
prohibited from making payments on the Subordinated Note pursuant to Section
9.04(l) of the Purchase and Servicing Agreement, the Seller may elect not to
make such transfer on such day, in which event the principal amount of the
Subordinated Note shall be reduced, but not below the greater of (A) zero and
(B) the aggregate face amount of the Letters of Credit then outstanding and to
be issued on such day.
ARTICLE IV
Covenants, Representations and Warranties
4.1 Representations and Warranties of the Seller. The Seller
--------------------------------------------
represents and warrants to the Buyer as of the Closing Date and each Purchase
Date that:
(a) Organization and Good Standing. The Seller is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own its properties and
conduct its business as presently owned or conducted, and to execute, deliver
and perform its obligations under this Agreement or any other Transaction
Document to which it is a party.
(b) Due Qualification. The Seller is duly qualified to do business
-----------------
and is in good standing as a foreign corporation, and has obtained all necessary
licenses and approvals, in each jurisdiction in which such failure to so qualify
or to obtain such licenses or approvals would have a material adverse effect on
the Seller's ability to perform its obligations under this Agreement and the
Transaction Documents to which it is a party.
(c) Due Authorization. The execution, delivery and performance by the
-----------------
Seller of this Agreement and the Transaction Documents to which it is a party
and the consummation by the Seller of the transactions provided for herein or
therein have been duly authorized by all necessary corporate action on the part
of the Seller.
(d) Enforceability. Each of this Agreement and the other Transaction
--------------
Documents to which the Seller is a party constitutes a legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally, now or hereafter in effect, and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity). This Agreement is in full force and
effect, and is not subject to any dispute, offset, counterclaim or defense.
(e) No Conflict. The Seller's execution and delivery of this
-----------
Agreement and the other Transaction Documents to which it is a party, and its
performance of the transactions contemplated by this Agreement and the other
Transaction Documents, and fulfillment of the terms hereof and thereof
applicable to the Seller, do not conflict with or violate any
- 13 -
Requirements of Law applicable to the Seller or its property, conflict with its
certificate of incorporation or bylaws, or conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, any indenture, contract, agreement,
mortgage, deed of trust or other instrument to which the Seller is a party or by
which it or its properties are bound, which conflict, violation or breach would
have a material adverse effect on Seller's ability to perform its obligations
hereunder or on the ownership by the Buyer or the Purchasers of the Receivables.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the best knowledge of the Seller, threatened against the Seller
or any of its properties, businesses, assets or revenues before any Governmental
Authority (i) asserting the illegality, invalidity or unenforceability, or
seeking any determination or ruling that would affect the legality, binding
effect, validity or enforceability of this Agreement, the Purchase and Servicing
Agreement or any other Transaction Document, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, the
Purchase and Servicing Agreement or any other Transaction Document, or (iii)
seeking any determination or ruling that is reasonably likely to materially and
adversely affect the financial condition or results of operations of the Seller
or the performance by the Seller of its obligations under this Agreement or any
other Transaction Document or the performance of the Receivables.
(g) Consents. No authorization, consent, license, order or approval
--------
of, registration or declaration with any Governmental Authority is required to
be obtained, effected or given by the Seller in connection with the execution
and delivery of this Agreement by the Seller or its performance of its
obligations hereunder and thereunder or the transactions contemplated hereby and
thereby except for (i) the filings of the financing statements or other
documents required to have been filed on or prior to the Closing Date pursuant
to Section 2.7, all of which were so filed and are in full force and effect, and
-----------
(ii) the filing of any amendments, assignments or continuation statements which
may become applicable pursuant to Section 2.7.
-----------
(h) Liens. Each Receivable is owned by the Seller free and clear of
-----
any Lien except as created under the Transaction Documents; and no effective
financing statement or other instrument similar in effect covering any
Receivable or Collections with respect thereto is on file in any recording
office except such as may be filed in favor of the Buyer and the Agent and the
Purchasers. The Seller is not a party to any contract, agreement, lease or
instrument (other than this Agreement) the performance of which, either
unconditionally or upon the happening of an event, will result in or require the
creation of any Lien or any Receivable or Related Asset or otherwise result in a
violation of this Agreement. Upon the purchase of Receivables and Related Assets
by the Buyer hereunder on the Closing Date, and upon the creation of Receivables
and Related Assets at any time thereafter during the Effective Period, and with
respect to the Armco Receivables, the consummation of the AKR Merger, the Buyer
shall acquire a valid and perfected first priority ownership interest in each
such Receivable and Related Asset, free and clear of any Lien.
- 14 -
(i) Locations. The chief place of business and chief executive office
---------
of the Seller are located at the address of the Seller referred to in Schedule
--------
4.1, and the Seller has not changed the location of its chief executive office
---
or its name, identity or corporate structure within the four months prior to the
date of this Agreement and the locations of the offices where the Seller keeps
the originals of its books, records and documents regarding the Transferred
Assets are listed on Schedule 4.1 hereto (or at such other locations in
------------
jurisdictions with respect to which all applicable action required by Section
-------
2.7 has been taken and completed).
---
(j) Information. (i) Each certificate, report, information, exhibit,
-----------
financial statement, document, book, record or report furnished by the Seller to
Buyer in connection with this Agreement and (ii) any information contained in
the documents set forth in Schedule III to the Purchase and Servicing Agreement
------------
regarding the Seller provided by the Seller to the Buyer, the Agent and the
Purchasers is accurate in all material respects as of its date, when considered
as a whole with all other such documents, and no such document contains any
material misstatement of fact or omits to state any fact necessary to make the
statements contained therein not materially misleading.
(k) Valid Transfers. The Armco Purchase and Sale Agreement
---------------
constituted a valid and true sale, transfer and assignment to AFC of all right,
title and interest to the Armco Receivables which were outstanding as of the
time of the AKR Merger. This Agreement constitutes a valid and true sale,
transfer and assignment to the Buyer of, and the Buyer is the legal and
beneficial owner of, all right, title and interest of the Seller, Armco and AFC
in and to such Armco Receivables and in and to the Receivables and Related
Assets now existing or hereafter created during the Effective Period, and the
proceeds thereof, enforceable against the Seller (including in its capacity as
successor by merger to Armco), and against creditors of, and purchasers from,
the Seller and Armco, as the case may be (except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting creditors' rights generally, now or hereafter in
effect, and by general principles of equity, whether considered in a suit at law
or in equity). The Buyer's ownership interest in such Armco Receivables is free
and clear of any Lien. Upon each purchase of Receivables and Related Assets
pursuant to Section 2.1, the Buyer shall have an ownership interest in those
-----------
Receivables and Related Assets free and clear of any Lien. The Seller has marked
clearly and unambiguously all its computer records and all its microfiche
storage files, if any, regarding the Receivables and Related Assets and such
Armco Receivables as the property of the Buyer and, to the extent of the
Purchased Interest, the Purchasers, and shall maintain such records in a manner
such that the Buyer's and the Purchasers' respective ownership interest in the
Receivables and Related Assets and such Armco Receivables shall not be adversely
affected in any respect. No financing statement or other similar instrument
covering any Receivable including any Armco Receivables, any interest therein,
or any other Transferred Asset is on file in any recording office except such as
may be filed (a) in favor of the Buyer in accordance with this Agreement or (b)
in favor of the Purchasers in accordance with the Purchase and Servicing
Agreement.
- 15 -
(l) Collection Accounts. Schedule I to the Purchase and Servicing
------------------- ----------
Agreement is a complete and accurate list of each Collection Account as of the
Closing Date.
(m) Solvency. The Seller is solvent and will not become insolvent
--------
after giving effect to the transactions contemplated by this Agreement; the
Seller is currently repaying all of its indebtedness as such indebtedness
becomes due; and, after giving effect to the transactions contemplated by this
Agreement, the Seller has adequate capital to conduct its business as presently
conducted.
(n) Compliance. The Seller has complied in all material respects with
----------
all applicable Requirements of Law with respect to it, its business and
properties and all Receivables sold or contributed hereunder and the Related
Assets.
(o) No Rescission. Neither any Receivable sold or contributed
-------------
hereunder nor the Related Assets has been satisfied, subordinated or rescinded
or except as disclosed in writing to the Buyer, amended in any manner and the
amounts billed under such Receivables have not, except as permitted under the
Purchase and Servicing Agreement, been compromised, adjusted, extended,
satisfied, subordinated, rescinded or modified.
(p) No Payment. The Seller has no knowledge of any fact which would
----------
lead it to expect that, when billed, the amount billed under any Receivable sold
or contributed hereunder would not be paid in accordance with its terms when
due.
(q) No Fraudulent Conveyance. The Seller is not entering into the
------------------------
transactions contemplated hereby with the intent of hindering, delaying or
defrauding creditors.
(r) Eligible Receivables. Each Receivable classified as an "Eligible
--------------------
Receivable" by the Seller on its records or in any document or report delivered
hereunder will satisfy the requirements of eligibility contained in the
definition of Eligible Receivable.
(s) Liens on Inventory. As of the Closing Date, neither the Seller
------------------
nor any Subsidiary thereof is a party to agreement which represents or could
create a Lien on inventory.
(t) Other Receivables. As of the Closing Date, the Seller does not
-----------------
own or has not otherwise originated any receivables or similar assets other than
the Receivables and Related Assets sold to the Buyer hereunder.
(u) Investment Company Act. The Seller is not an "investment
----------------------
company", or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company", as such terms are defined in the Investment
Company Act.
(v) Tradenames. The legal name of the Seller is as set forth on the
----------
signature page of this Agreement and the Seller has no tradenames, fictitious
names, assumed names or "doing business as" names.
- 16 -
(w) Investment Company Act. Each sale of Receivables to the Buyer
----------------------
hereunder constitutes a purchase or other acquisition of notes, drafts,
acceptances, open accounts receivable or other obligations representing part or
all of the sales price of merchandise or services within the meaning of Section
3(c)(5) of the Investment Company Act.
(x) No Claim or Interest. Except as otherwise provided in the
--------------------
Purchase and Servicing Agreement, neither the Seller nor any other person
claiming through or under the Seller has any claim to or interest in the
Collection Accounts, the Concentration Account, the Cash Collateral Account or
the Agent's Account.
Upon the discovery of a breach of any of the foregoing representations
and warranties, the Seller shall give prompt written notice to the Buyer and the
Agent.
4.2 Affirmative Covenants of the Seller. The Seller hereby covenants
-----------------------------------
that, until the termination of the Effective Period:
(a) Compliance with Law. The Seller will comply with all Requirements
-------------------
of Law applicable to the Seller, its business and properties and the
Receivables, where failure to so comply would have a material adverse effect on
the Receivables or the ability of the Seller to perform in any material respect
its obligations hereunder or under the Purchase and Servicing Agreement.
(b) Preservation of Corporate Existence. Except as otherwise
-----------------------------------
permitted by Section 11.04(s) of the Purchase and Servicing Agreement, the
Seller will preserve and maintain its corporate existence, rights, franchises
and privileges, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to maintain such
qualification would materially and adversely affect (i) the interest of the
Buyer in the Receivables or Related Assets, (ii) the collectibility of the
Receivables or (iii) the ability of the Seller to perform its obligations
hereunder or under the Purchase and Servicing Agreement.
(c) Keeping of Records and Books of Account. The Seller will (i) keep
---------------------------------------
or cause to be kept proper books of record and account, which shall be
maintained or caused to be maintained by the Seller and shall be separate and
apart from those of any Affiliate of the Seller, in which full and correct
entries shall be made of all financial transactions and the assets and business
of the Buyer in accordance with generally accepted accounting principles, and
(ii) maintain and implement administrative and operating procedures (including
an ability to recreate records evidencing Receivables in the event of the
destruction of the originals thereof) and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Receivables (including records adequate to permit the daily
identification of each new Receivable and all Collections of and adjustments to
each existing Receivable).
The Seller shall provide to the Buyer and the Purchaser Parties and
their agents and auditors access to the documentation regarding the Receivables
and to the officers and
- 17 -
employees having knowledge of said matters, such access being afforded without
charge but, if no Early Amortization Event shall have occurred and be
continuing, only (i) upon reasonable written request (which may be given one (1)
Business Day in advance if there then exists a Potential Early Amortization
Event), (ii) during normal business hours, (iii) subject to the Seller's normal
security and confidentiality procedures and (iv) at reasonably accessible
offices in the continental United States designated by the Seller.
(d) Performance and Compliance with Receivables. The Seller will at
-------------------------------------------
its expense timely and fully perform and comply with all provisions, covenants
and other promises required to be observed by it under the Contracts to the same
extent as if the Receivables had not been sold hereunder, except where the
failure to so perform or comply would not have a material adverse effect on the
collectibility of the Receivables or Seller's ability to perform in all material
respects its obligations hereunder.
(e) Location of Records; Name. The Seller will keep its chief place
-------------------------
of business and chief executive office, and the offices where it keeps its
records concerning the Receivables related thereto (and all original documents
relating thereto), at the address of the Seller referred to in Schedule 4.1 or,
------------
upon 45 days' prior written notice to the Buyer and the Agent, at such other
location in a jurisdiction with respect to which all action required by Section
-------
2.7 shall have been taken and completed. The Seller will not change in its name
---
or use any assumed business or trade name except upon like notice and after all
action required by Section 2.7 shall have been completed.
-----------
(f) Change in Credit Policy Manual. The Seller shall comply with and
------------------------------
perform its servicing obligations with respect to the Receivables, and 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, in accordance
in all material respects with the Credit Policy Manual. The Seller may not
change the terms and provisions of the Credit Policy Manual (A) without the
prior written approval of the Agent, which shall not be unreasonably withheld,
or (B) in any case, in any manner which is reasonably likely to impair the
collectibility of any Receivable.
(g) Protection of Buyer's Interest in Receivables.
---------------------------------------------
(i) The Seller will not create, permit or suffer to exist, and
will defend the Buyer's, the Agent's and the Purchasers' rights to the
Receivables against, and take such other actions as are necessary to
remove, any Lien, claim or right in, to or on the Receivables, other
than the Liens created hereby and by the Purchase and Servicing
Agreement, and will defend the right, title and interest of the Buyer,
the Agent and the Purchasers in and to the Receivables against any
Liens thereon or the claims and demands of all persons whomsoever
based on breaches of representations and warranties in this Agreement.
- 18 -
(ii) The Seller will advise the Buyer, the Agent and the
Purchasers promptly, in reasonable detail, (i) of any Lien or claim
asserted against any of the Receivables, other than the Liens created
hereby and by the Purchase and Servicing Agreement, (ii) of the
occurrence of any breach by the Seller of any of its representations,
warranties and covenants contained herein and (iii) of the occurrence
of any other event which in the case of clauses (i) or (ii) would have
a material adverse effect on the value of the Receivables.
(iii) The Seller shall execute and file such continuation
statements and any other documents reasonably requested by the Buyer
or which may be required by law to fully preserve and protect the
interests of the Buyer hereunder and of the Agent and the Purchasers
under the Purchase and Servicing Agreement in and to the Receivables.
(iv) The Seller will, at its own expense, prior to the Closing
Date and at all times thereafter, indicate in its computer records
that the Receivables and Related Assets have been sold or contributed
to the Buyer in accordance with this Agreement and that such interest,
to the extent of the Purchased Interest therein, has been sold, and a
security interest in the remainder of such interest has been granted,
by the Buyer to the Purchasers in accordance with the Purchase and
Servicing Agreement.
(h) Stock of Buyer; Subordinated Note. The Seller shall at all times
---------------------------------
remain the owner of 100% of the stock of the Managing Member and AKS
Investments, Inc. and the holder of the Subordinated Note, and will not, and
will not permit any Affiliate to, sell, pledge or otherwise permit any Lien on
such stock or Subordinated Note or its interest therein (provided that the
--------
Seller may pledge such stock and the Subordinated Note in connection with a
financing, but only if subject to an intercreditor agreement, as contemplated by
Section 11.04(r) of the Purchase and Servicing Agreement).
4.3 Negative Covenants of the Seller. The Seller will not until the
--------------------------------
termination of the Effective Period:
(a) Sales, Liens, Etc. Except as otherwise provided herein, the
-----------------
Seller will not sell, pledge, assign, transfer or otherwise dispose of (by
operation of law or otherwise), or grant, create, incur, assume or suffer to
exist any Lien on, any Receivable or Related Asset, including any account to
which Collections are sent, or any right to receive proceeds from or in respect
of any of the foregoing, whether now existing or hereafter created, or any
interest therein, and the Seller shall defend the right, title and interest of
the Buyer in and to the Receivables and Related Assets, whether now existing or
hereafter created, against all claims of third parties claiming through or under
the Buyer.
(b) Extension or Amendment of Receivables. Except as permitted by
-------------------------------------
Section 11.01(c) of the Purchase and Servicing Agreement, the Seller will not
----------------
(i) extend, amend or otherwise modify (or consent or fail to object to any such
extension, amendment or modification by the Buyer of) the terms of any
Receivable, or amend, modify or waive (or
- 19 -
consent or fail to object to any such amendment, modification or waiver or
change by the Buyer of) any payment term or condition of any invoice related
thereto (other than as provided in the Credit Policy Manual and in a manner
which the Seller believes in good faith will maximize Collections), or (ii) make
a change in the Credit Policy Manual if the effect of such change in the Credit
Policy Manual would be to impair the collectibility of any Receivable or
otherwise materially and adversely affect the rights, interests or remedies of
any Purchaser Party under any Transaction Document. The Seller will not rescind
or cancel, or permit the rescission or cancellation of, any Receivable except as
ordered by a court of competent jurisdiction or other Governmental Authority.
Notwithstanding the foregoing provisions of this Section 4.3(b), the Seller may
--------------
extend, amend, modify, cancel or rescind any Diluted Receivable in connection
with a valid dispute; provided, however, that such amendment, modification,
-------- -------
cancellation or rescission shall not have an adverse effect on the rights,
interests or remedies of the Buyer which effect is not cured pursuant to Section
-------
3.3.
---
(c) Deposits to Collection Accounts. If the Seller or any Affiliate
-------------------------------
thereof receives any Collections, the Seller agrees to hold, or cause such
Affiliate to hold, all such Collections in trust and to deposit, or cause such
Affiliate to deposit, such Collections to the appropriate Collection Account or
the Concentration Account as soon as practicable, but in no event later than two
(2) Business Days after receipt thereof by the Seller or such Affiliate, and
shall clearly xxxx its records to reflect such trust. The Seller will not
deposit or otherwise credit, or cause to be so deposited or credited, or consent
or fail to object to any such deposit or credit, to the Concentration Account or
any Collection Account cash or cash proceeds other than Collections.
(d) No Actions Against Obligors. Except in accordance with the Credit
---------------------------
Policy Manual and the Purchase and Servicing Agreement, commence or settle any
legal action to enforce collection of any Receivable.
(e) No Bankruptcy Filing Against the Buyer. Commence, or cause to be
--------------------------------------
commenced, any case, proceeding or other action of the type described in Section
-------
6.1(a) below against the Buyer, the Managing Member or AKS Investments, Inc..
------
(f) Limitation on Use of Proceeds. Use any of the proceeds of any
-----------------------------
purchase hereunder to acquire any security in any transaction which is subject
to Sections 13 and 14 of the Exchange Act.
(g) Intercreditor Agreement. The Seller will not, and will not permit
-----------------------
any of its Affiliates to, enter into any agreement which would create a Lien on
inventory except in accordance with the requirements of Section 11.04(r) of the
Purchase and Servicing Agreement relating to an intercreditor agreement.
(h) Other Receivables. The Seller will not generate or otherwise
-----------------
originate any receivables or similar assets other than the Receivables and
Related Assets sold to the Buyer hereunder; provided, however, that
-------- -------
"Receivables" shall not include any amounts payable to the
- 20 -
Seller with respect to licenses of intangible assets. The Seller will not, under
any circumstances, sell any receivables to any Person other than to the Buyer
pursuant to this Agreement.
(i) Receivables Not to be Evidenced by Promissory Notes. The Seller
---------------------------------------------------
will take no action to cause any Receivable to be evidenced by any "instrument"
(as defined in the UCC of the State the law of which governs the perfection of
the interest in such Receivable created hereunder), except in connection with
its enforcement, in which event the Seller shall deliver such instrument to the
Agent as soon as reasonably practicable but in no event more than three (3)
Business Days after execution thereof.
4.4 Obligations Unaffected. The obligations of the Seller to the
----------------------
Buyer under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Receivable or any sale of a Receivable.
4.5 Representations and Warranties of the Buyer. The Buyer represents
-------------------------------------------
and warrants to Seller as follows:
(a) Legal Existence. The Buyer is a limited liability company duly
---------------
organized and validly existing in the State of Ohio incorporation and is duly
qualified to transact business in each jurisdiction in which failure to so
qualify would have a material adverse effect on the Buyer's ability to perform
its obligations under this Agreement and the Transaction Documents to which it
is a party.
(b) Authorization. The execution, delivery and performance by the
-------------
Buyer of this Agreement and the Transaction Documents to which it is a party,
and the consummation by the Buyer of the transactions provided for herein or
therein have been duly authorized by all necessary corporate and other action on
the part of the Buyer.
(c) Enforceability. Each of this Agreement and the other Transaction
--------------
Documents to which the Buyer is a party is the legally valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting Creditor's
rights generally, now or hereafter in effect, and except as such enforceability
may be limited by general principles of equity (whether considered in a suit at
law or in equity).
(d) Compliance with Laws. The Buyer is in material compliance with
--------------------
all Requirements of Law. The execution, delivery and performance by the Buyer of
this Agreement and the other Transaction Documents to which the Buyer is a party
do not require any authorization, approval or other action by, or notice to or
filing with, any Governmental Authority, except for the filings of UCC financing
statements which have been made prior to the date hereof and are consistent with
the requirements of the Transaction Documents.
(e) No Default. The Buyer is not in breach of or default under any
----------
contract to which it is a party or by which its property is bound or affected,
and the execution, delivery and
- 21 -
performance by the Buyer of this Agreement or any other Transaction Document to
which it is a party shall not constitute a breach or default under any such
contract.
4.6 General Covenants of the Buyer. At all times during the Effective
------------------------------
Period, the Buyer shall:
(a) Legal Status. Preserve its legal status and franchises and pay
------------
all taxes and annual fees in connection therewith.
(b) Compliance with Law. Comply in all material respects with all
-------------------
federal, state and local laws, regulations and orders applicable to its business
or property.
(c) Limitation on Activities. Not incur or permit to exist any
------------------------
Indebtedness except as permitted under the Transaction Documents.
ARTICLE V
Conditions to Effectiveness and Purchases
5.1 Closing Date. This Amended and Restated Receivables Purchase
------------
Agreement shall become effective on October 1, 1999 or such other date agreed
upon by the parties in writing (the "Restatement Effective Date") on which:
(a) There shall have been delivered to the Buyer a file-stamped copy
of the financing statement relating to the Receivables, naming the Seller as
seller/debtor and the Buyer as purchaser/secured party that was filed on or
prior to the Closing Date with the Ohio Secretary of State and the Recorder of
Xxxxxx County, Ohio.
(b) There shall have been delivered to the Buyer a copy of the
Certificate of Incorporation of the Seller, certified as of a recent date by the
Secretary of State of Delaware.
(c) There shall have been delivered to the Buyer a certificate of the
Secretary of State of Delaware as to the good standing of the Seller and as to
the documents on file in the office of such Secretary of State.
(d) There shall have been delivered to the Buyer a certificate of the
Secretary or A ssistant Secretary of the Seller, dated as of the Closing Date,
and certifying (i) that attached thereto is a true and complete copy of the
bylaws of the Seller as in effect on the date of such certification, (ii) that
attached thereto is a true and complete copy of resolutions adopted by the Board
of Directors of the Seller authorizing the transactions provided for herein and
the execution, delivery and performance of this Agreement and any other
documents required or contemplated hereunder, (iii) that the Certificate of
Incorporation of the Seller has not been amended since the date of the last
amendment thereto indicated on the certificate of the Secretary of State
furnished pursuant to clause (c) above and (iv) as to the incumbency of the
officers of
- 22 -
the Seller executing this Agreement, and any other documents contemplated
hereunder and appropriate evidence of the incumbency of such Secretary or
Assistant Secretary.
(e) There shall have been delivered to the Seller a certificate of
the Secretary or Assistant Secretary of the Buyer and the Managing Member, dated
the Closing Date, and certifying (i) that attached thereto is a true and
complete copy of resolutions adopted by the Board of Directors of the Buyer and
the Managing Member, as the case may be, authorizing the transactions provided
for herein and the execution, delivery and performance of this Agreement, the
Purchase and Servicing Agreement and any other documents required or
contemplated hereunder, (ii) that attached thereto is a true and complete copy
of (A) Operating Agreement, in the case of the Buyer, and (B) bylaws, in the
case of the Managing Member and (iii) as to the incumbency of the officers of
the Buyer and the Managing Member, as the case may be, executing this Agreement,
the Purchase and Servicing Agreement and any other documents contemplated
hereunder and appropriate evidence of the incumbency of such Secretary or
Assistant Secretary.
(f) The Purchase and Servicing Agreement and all documentation to be
delivered in connection therewith shall have been executed and delivered and all
conditions thereto shall have been satisfied.
(g) There shall have been delivered to each of the Buyer and the
Seller an opinion of counsel in the form of Exhibit C hereto.
---------
(h) All legal matters incident to the execution and delivery of this
Agreement and to the purchases by the Buyer of the Receivables from the Seller
shall be satisfactory to counsel for the Buyer.
5.2 Conditions to All Purchases. The obligation of the Buyer to
---------------------------
purchase the Receivables on any Purchase Date is subject to the following
conditions precedent:
(a) On such Purchase Date the Seller shall have complied in all
material respects with all of its covenants hereunder and shall have fulfilled
in all material respects all of its obligations hereunder; and
(b) No Termination Event shall have occurred and then be continuing.
The acceptance by the Seller of any payment for any Receivables shall
be deemed to be a representation and warranty by the Seller as of such
acceptance date as to the matters in this Section 5.2.
-----------
- 23 -
ARTICLE VI
Events of Termination
6.1 Termination Events. If any of the following events (each herein
------------------
called a "Termination Event") shall have occurred:
(a) With respect to the Seller or the Buyer, an Insolvency Event
shall occur; or
(b) The Amortization Date shall have occurred;
then, so long as any of the foregoing events shall have occurred and be
continuing, the Effective Period shall automatically terminate without notice,
demand, protest or other requirement of any kind.
ARTICLE VII
Miscellaneous
7.1 Payments. Each payment to be made by either the Buyer or the
--------
Seller hereunder shall be made on the required payment date, or on the next
succeeding Business Day if the required payment date is not a Business Day, in
lawful money of the United States and in immediately available funds at the
office of the payee set forth below its signature hereto or to such other office
as may be specified by either party in a written notice to the other party
hereto.
7.2 Costs and Expenses; Indemnifications. The Seller agrees to pay or
------------------------------------
reimburse the Buyer for all its reasonable out-of-pocket costs and expenses
incurred in connection with the transactions contemplated herein and in the
Purchase and Servicing Agreement, including all reasonable fees and
disbursements of its counsel, in connection with (a) the development,
preparation, execution, delivery and administration of this Agreement or of any
amendment or restatement hereof or of any waiver relating hereto, (b) except as
expressly provided herein, the sale of the Receivables hereunder and (c) the
perfection as against all third parties whatsoever of the right, title and
interest of the Buyer and any permitted transferee of the Buyer in, to and under
the Receivables. In addition, without limiting any other rights which the Buyer
may have hereunder or under applicable law, the Seller hereby agrees to
indemnify the Buyer from and against any and all claims, losses, damages,
liabilities, costs and expenses (including reasonable attorneys' fees and
expenses) (all of the foregoing being collectively referred to as "Indemnified
Amounts") arising out of or resulting from this Agreement, the activities of the
Buyer in connection herewith, the Seller's use of proceeds of sales of
Receivables, the interest conveyed hereunder in the Receivables or any Related
Assets, or otherwise in respect of any Receivable or the Purchase and Servicing
Agreement; excluding, however, (1) recourse for uncollectible Receivables
--------- -------
(except as provided herein) or to insure against default by the Obligors, (2)
any overall net income, franchise or other taxes (or interest or penalties with
respect thereto) incurred
- 24 -
by the Buyer arising out of or as a result of this Agreement or the interest
conveyed hereunder in respect of any Receivable or (3) Indemnified Amounts to
the extent resulting from willful misconduct, bad faith or gross negligence of
the Buyer of any of its obligations and duties. Without in any way limiting the
foregoing, except as otherwise provided in this Section 7.2, the Seller shall
-----------
pay to the Buyer, on demand, any and all amounts necessary to indemnify the
Buyer from and against any and all Indemnified Amounts relating to or resulting
from:
(i) any representation or warranty, certificate, report or
other information delivered pursuant to any Transaction Document or
statement made or deemed made by the Seller, or any of its officers,
under or in connection with this Agreement or the Purchase and
Servicing Agreement or any other Transaction Document which shall have
been incomplete or incorrect in any respect when made;
(ii) the failure by the Seller to comply with this Agreement
or the Purchase and Servicing Agreement or any other Transaction
Document, or the failure by the Seller to comply with any applicable
Requirement of Law with respect to any Receivable or the related
Contract or the Purchase and Servicing Agreement, or the nonconformity
of any Receivable or the related invoice or the Purchase and Servicing
Agreement or other Transaction Document with any Requirement of Law;
(iii) the failure of the Seller 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 other interests which are, or are
purported to be, sold by the Seller under this Agreement, free and
clear of any Lien (other than Liens created in favor of the Buyer
hereunder and Liens created in favor of the Purchaser Parties under the
Purchase and Servicing Agreement and under the other Transaction
Documents);
(iv) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivable or Related Asset, whether at the time of
purchase by Buyer thereof or reinvestment of the proceeds thereof or at
any subsequent time;
(v) any investigation, litigation, action or proceeding
related to this Agreement, the Purchase and Servicing Agreement or any
other Transaction Document, or the use of proceeds of purchases of
Receivables, reinvestments of proceeds thereof, the ownership of the
Receivables and the Related Assets or in respect of any Receivable or
Contract, other than any litigation or proceeding between the Seller
or the Buyer or any Affiliate thereof, on the one hand, and the Agent
or any Purchaser or any Affiliate thereof, on the other hand, in which
the Seller or the Buyer or an Affiliate thereof prevails as to
liability in a final non-appealable judgment by a court of competent
jurisdiction;
- 25 -
(vi) the commingling of Collections at any time with other
funds prior to the distribution thereof in accordance with the
Purchase and Servicing Agreement;
(vii) any tax (other than any overall net income or franchise
tax, or any interest or penalties with respect thereto) imposed by
reason of ownership of the Receivables and the Related Assets by the
Buyer;
(viii) the failure by the Seller to be duly qualified to do
business, to be in good standing or to have filed appropriate
fictitious or assumed name registration documents in any jurisdiction
where such action is so required;
(ix) any dispute, claim, offset or defense to the payment of
any Receivable (other than discharge in bankruptcy or under similar
insolvency law) which is, or is purported to be, sold by the Seller
hereunder which dispute, claim, offset or defense is based on the
Receivable or related invoice not being a legal, valid and binding
obligation of the related Obligor, enforceable in accordance with its
terms, or which relates to Dilution, or to such Receivable or related
invoice being an illegal or invalid receivable on the date of purchase
on any ground not related to the creditworthiness of the applicable
Obligor or any other claim asserted against any Indemnitee resulting
from the sale of the goods, merchandise or services related to such
Receivable or the furnishing or failure to furnish such goods,
merchandise or services;
(x) 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 the goods and/or
merchandise or services that are the subject of any Receivable
generated by the Seller or related invoice;
(xi) the failure of the Seller to pay when due any sales
taxes or other charges imposed in connection with the Seller's sale of
Receivables or any Related Asset hereunder;
(xii) the failure of the Seller or any of its agents or
representatives to perform its duties and obligations in accordance
with the provisions of this Agreement or any other Transaction
Document;
(xiii) the violation of any provision of any PBGC requirements
or agreements, any IRS requirements or agreements, or any ERISA
requirements or agreements, the engaging by the Seller, or any ERISA
Affiliate thereof, in any prohibited transaction for which such Person
may be liable for excise tax under the Internal Revenue Code or
otherwise liable under ERISA and for which an exemption is not
available or has not been previously obtained from the Department of
Labor, the existence of any accumulated funding deficiency, as defined
in Section 302(a) of ERISA and Section 412(a) of the Internal Revenue
Code, with respect to any Benefit Plan other than a Multiemployer
Plan; the failure by the Seller, or any ERISA Affiliate thereof, to
make a
- 26 -
payment to any Multiemployer Plan that such Person is required to
make, the termination by such Person of any Benefit Plan or the
withdrawal by such Person from any Multiemployer Plan, or the
existence of a reportable event described in Title IV of ERISA;
(xiv) any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying,
any sales, gross receipts, intangible personal property, privilege or
license taxes, but not including taxes imposed upon the Buyer under
the laws of the United States or any jurisdiction within the United
States in which the Buyer is organized or maintains its principal
office or in which the Buyer books this transaction;
(xv) any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying,
any taxes which may arise at any time and from time to time in the
future in respect of this Agreement, the transactions contemplated
hereby and the subject matter hereof and thereof; and
(xvi) costs, expenses and reasonable counsel fees in
defending against the same, whether arising by reason of the acts to
be performed by the Seller hereunder or imposed against the Buyer or
the Seller, the property involved or otherwise.
It is expressly agreed and understood by the parties that these
indemnification provisions are not intended to constitute a guarantee of the
collectibility or payment of the Receivables.
The agreements in this Section 7.2 shall survive the collection of all
-----------
Receivables, the termination of this Agreement and the payment of all amounts
payable hereunder. For purposes of this Section 7.2, any reference to the Buyer
-----------
shall include any officer, director, employee, agent or affiliate thereof.
7.3 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the Seller and the Buyer and their respective permitted
successors and assigns. The Seller acknowledges that the Buyer shall assign to
the Purchasers in accordance with the Purchase and Servicing Agreement. The
Seller agrees that it will not assign or transfer all or any portion of its
rights or obligations hereunder without the prior written consent of the Buyer
and a Majority in Interest of the Purchasers. The Seller acknowledges that the
Buyer shall assign to the Purchasers, as collateral security for the Buyer's
obligations under the Purchase and Servicing Agreement, all of the Buyer's
rights, remedies, powers and privileges hereunder (including the right to give
any notice which the Buyer may provide to the Seller hereunder), provided that
the Buyer shall not assign or delegate any of its duties or obligations
hereunder to the Agent or the Purchasers.
- 27 -
7.4 Governing Law, Waiver of Jury Trial, Jurisdiction, Consent to
-------------------------------------------------------------
Service of Process.
------------------
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
-------------
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
(b) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES
--------------------
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY
AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY BANKING OR
OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT A JURY TRIAL.
(c) Jurisdiction. Each of the parties hereto hereby irrevocably and
------------
unconditionally submits to the nonexclusive jurisdiction of any federal court of
the United States of America sitting in Cincinnati, Ohio or, if jurisdiction is
not available in such federal court, any Ohio state court sitting in Xxxxxxxx
County, Ohio or Xxxxxx County, Ohio, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such Ohio state or, to the extent permitted by law, in such
federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(d) Consent to Service of Process. Each party to this Agreement
-----------------------------
irrevocably consents to service of process in the manner provided for notices in
Section 7.8. Nothing in this Agreement will affect the right of any party to
-----------
this Agreement to serve process in any other manner permitted by law.
7.5 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Buyer, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
- 28 -
7.6 Amendments and Waivers. Neither this Agreement nor any terms
----------------------
hereof may be amended, supplemented or modified except in writing signed by the
Buyer and the Seller, and approved in writing by the Agent and a Majority in
Interest of the Purchasers.
7.7 Severability. If any provision hereof is void or unenforceable in
------------
any jurisdiction, such voiding or unenforceability shall not affect the validity
or enforceability of (i) such provision in any other jurisdiction or (ii) any
other provision hereof in such or any other jurisdiction.
7.8 Notices. Unless otherwise expressly permitted hereby, all
-------
notices, requests and demands to or upon any party hereto to be effective shall
be in writing delivered by hand or by facsimile and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand to the address set forth below its signature hereto or such address as
may be hereafter notified by it to the other party hereto, or, in the case of
notice by facsimile, when telecopied to the number set forth below its signature
hereto.
7.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, and all of which
taken together shall constitute one and the same agreement.
7.10 Construction of Agreement. It is the intention of the parties
-------------------------
hereto that, pursuant to this Agreement, the Seller shall sell and transfer all
of its right, title and interest in and to the Receivables to the Buyer and that
the Buyer shall purchase and receive all of the Seller's right, title and
interest in and to the Receivables. It is not the intention of the parties that
the Seller merely transfer to the Buyer a security interest in the Receivables.
All references in this Agreement to the filing or amendment of financing
statements and continuation statements in order to perfect the Seller's interest
in the Receivables relate to the parties' intention to comply with the
applicable provisions of the Uniform Commercial Code which may require the
filing of a financing statement to perfect an ownership interest, rather than a
security interest, in accounts. Such references are not intended to evidence or
suggest that Seller merely transferred to the Buyer a first priority security
interest in the Receivables. If, however, such transactions are deemed to be
loans by a court of competent jurisdiction, (i) the Seller hereby grants to the
Buyer a first priority security interest in all of the Seller's right, title and
interest in and to the Receivables and Related Assets now existing and hereafter
created, including all monies due or to become due and all amounts and other
proceeds received with respect thereto, to secure all the Seller's obligations
hereunder, and (ii) this Agreement shall constitute a security agreement under
applicable law. The parties agree to use their best efforts to support the
treatment of the transfer as a sale and not as a financing.
7.11 Termination. This Agreement will terminate upon the occurrence of
-----------
a Termination Event; provided, however, that the indemnities of the Seller to
-------- -------
the Buyer set forth in this Agreement shall survive such termination and
provided, further, that the Buyer shall remain entitled to receive any
-------- -------
collections on Receivables sold hereunder which have become Defaulted
- 29 -
Receivables after it shall have completed its collection efforts in respect
thereof. The Buyer shall remain entitled to receive any collections on
Receivables sold hereunder which have become Defaulted Receivables after it
shall have completed its collection efforts in respect thereof.
- 30 -
IN WITNESS WHEREOF, the parties hereto have caused this Receivables
Purchase Agreement to be executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.
AK STEEL CORPORATION,
as Seller
By:____________________________________
Name:
Title:
Address: __________________
__________________
AK STEEL CORPORATION,
as Servicer
By:____________________________________
Name:
Title:
Address: __________________
__________________
S- 1
AK STEEL RECEIVABLES LTD.
as Buyer
By: AKSR INVESTMENTS, INC.,
as Managing Member
By:____________________________________
Name:
Title:
Address: __________________
__________________
and
By: AKS INVESTMENTS, INC.,
its only other member
By:____________________________________
Name:
Title:
S- 2
