Exhibit 10 (n)
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of September 28, 2000
Between
FERRO CORPORATION
and
FERRO ELECTRONIC MATERIALS, INC.
AS SELLERS
and
FERRO FINANCE CORPORATION
AS PURCHASER
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENTS...........................................................................................1
ARTICLE I DEFINITIONS.......................................................................1
SECTION 1.01. Certain Defined Terms.............................................................1
SECTION 1.02. Other Terms.......................................................................9
ARTICLE II AMOUNTS AND TERMS OF PURCHASES AND
CONTRIBUTIONS.....................................................................9
SECTION 2.01. Facility..........................................................................9
SECTION 2.02. Making Purchases..................................................................9
SECTION 2.03. Collections......................................................................10
SECTION 2.04. Settlement Procedures............................................................11
SECTION 2.05. Payments and Computations, Etc...................................................11
SECTION 2.06. Contributions....................................................................12
ARTICLE III CONDITIONS OF PURCHASES..........................................................12
SECTION 3.01. Conditions Precedent to Initial
Purchase from the Sellers........................................................12
SECTION 3.02. Conditions Precedent to All Purchases............................................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES...................................................14
SECTION 4.01. Representations and Warranties of the Sellers....................................14
ARTICLE V COVENANTS........................................................................16
SECTION 5.01. Covenants of the Sellers.........................................................16
SECTION 5.02. Grant of Security Interest.......................................................20
SECTION 5.03. Covenant of each Seller and the Purchaser........................................20
ARTICLE VI ADMINISTRATION AND COLLECTION....................................................21
SECTION 6.01. Designation of Collection Agent..................................................21
SECTION 6.02 Duties of Collection Agent.......................................................21
SECTION 6.03. Collection Agent Fee.............................................................22
SECTION 6.04. Certain Rights of the Purchaser..................................................22
SECTION 6.05. Rights and Remedies..............................................................23
SECTION 6.06. Transfer of Records to Purchaser.................................................24
ARTICLE VII EVENTS OF TERMINATION............................................................24
SECTION 7.01. Events of Termination............................................................24
ARTICLE VIII INDEMNIFICATION..................................................................26
SECTION 8.01. Indemnities by the Sellers.......................................................26
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ARTICLE IX MISCELLANEOUS....................................................................28
SECTION 9.01. Amendments, Etc..................................................................28
SECTION 9.02. Notices, Etc.....................................................................28
SECTION 9.03. Binding Effect; Assignability....................................................29
SECTION 9.04. Costs, Expenses and Taxes........................................................29
SECTION 9.05. No Proceedings...................................................................29
SECTION 9.06. Confidentiality..................................................................30
SECTION 9.07. Governing Law....................................................................30
SECTION 9.08. Third Party Beneficiary..........................................................30
SECTION 9.09. Execution in Counterparts........................................................30
SECTION 9.10. Judgment.........................................................................30
EXHIBITS
EXHIBIT A Credit and Collection Policy
EXHIBIT B Lock-Box Banks
EXHIBIT C Form of Promissory Note for Deferred Purchase Price
EXHIBIT D Form of Promissory Note for Purchaser Loans
ii
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of September 28, 2000
FERRO CORPORATION, an Ohio corporation ("FERRO CORPORATION"), and FERRO
ELECTRONIC MATERIALS, INC., a Delaware corporation ("FERRO ELECTRONIC") (Ferro
Corporation and Ferro Electronic being hereinafter sometimes referred to as the
"SELLERS"), and FERRO FINANCE CORPORATION, an Ohio corporation (the
"PURCHASER"), agree as follows:
PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized and
used throughout this Agreement (in addition to those defined above) are defined
in Article I of this Agreement.
(2) The Sellers have Receivables that they wish to sell to the
Purchaser, and the Purchaser is prepared to purchase such Receivables on the
terms set forth herein.
(3) The Sellers may also wish to contribute Receivables to the capital
of the Purchaser on the terms set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADVERSE CLAIM" means a lien, security interest, or other
charge or encumbrance, or any other type of preferential arrangement.
"AFFILIATE" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under
common control with such Person or is a director or officer of such
Person.
"AGENT" means Citicorp North America, Inc., in its capacity as
agent under the Sale Agreement or any successor agent thereunder.
"ALTERNATE BASE RATE" means a fluctuating interest rate per
annum as shall be in effect from time to time, which rate shall be at
all times equal to the highest of:
(a) the rate of interest announced publicly by
Citibank, N.A. in New York, New York, from time to time as
Citibank, N.A.'s base rate;
(b) 1/2 of one percent above the latest three-week
moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of
major United States money market banks, such three-week moving
average being determined weekly on each Monday (or, if such
day is not a Business Day, on the next succeeding Business
Day) for the three-week period ending on the previous Friday
by Citibank, N.A. on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be
suspended or terminated, on the basis of quotations for such
rates received by Citibank, N.A. from three New York
certificate of deposit dealers of recognized standing selected
by Citibank, N.A., in either case adjusted to the nearest 1/4
of one percent or, if there is no nearest 1/4 of one percent,
to the next higher 1/4 of one percent; or
(c) the Federal Funds Rate.
"APC RECEIVABLE" means any receivable created or originated by
the Advance Polymer Compounding Division of Ferro Corporation.
"BUSINESS DAY" means any day on which banks are not authorized
or required to close in New York, New York or Cleveland, Ohio.
"COLLECTION AGENT" means at any time the Person then
authorized pursuant to Section 6.01 to service, administer and collect
Transferred Receivables.
"COLLECTION AGENT FEE" has the meaning specified in Section
6.03.
"COLLECTIONS" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including,
without limitation, all cash proceeds of Related Security with respect
to such Receivable, and all funds deemed to have been received by the
Seller or any other Person as a Collection pursuant to Section 2.04.
"CONTRACT" means an agreement between a Seller and an Obligor,
substantially in the form of one of the written contracts or (in the
case of any open account agreement) one of the invoices approved by the
Purchaser, pursuant to or under which such Obligor shall be obligated
to pay for merchandise, insurance or services from time to time.
"CONTRIBUTED RECEIVABLE" has the meaning specified in Section
2.06.
"CREDIT AND COLLECTION POLICY" means those receivables credit
and collection policies and practices of each Seller in effect on the
date of this Agreement applicable to the Receivables and described in
Exhibit A hereto, as modified in compliance with this Agreement.
"DEBT" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations to pay the deferred
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purchase price of property or services, (iv) obligations as lessee
under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases,
and (v) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in
clauses (i) through (iv) above.
"DEFAULTED RECEIVABLE" means a Receivable:
(i) as to which any payment, or part thereof, remains
unpaid for 90 days or more from the original due date for such
payment;
(ii) as to which the Obligor thereof or any other
Person obligated thereon or owning any Related Security in
respect thereof has taken any action, or suffered any event to
occur, of the type described in Section 7.01(g); or
(iii) which, consistent with the Credit and
Collection Policy, would be written off as uncollectible.
"DEFERRED PURCHASE PRICE" means the portion of the Purchase
Price of Purchased Receivables purchased on any Purchase Date exceeding
the amount of the Purchase Price under Section 2.02 to be paid in cash,
which portion when added to the cumulative amount of all previous
Deferred Purchase Prices (after giving effect to any payments made on
account thereof) shall not exceed 32.0% of the Outstanding Balance of
the Transferred Receivables. The obligations of the Purchaser in
respect of the Deferred Purchase Price shall be evidenced by the
Purchaser's subordinated promissory note in the form of Exhibit C
hereto.
"DESIGNATED OBLIGOR" means, at any time, each Obligor;
PROVIDED, HOWEVER, that any Obligor shall cease to be a Designated
Obligor upon three Business Days' notice by the Purchaser to the
relevant Seller.
"DILUTION" means, with respect to any Receivable, the
aggregate amount of any reductions or adjustments in the Outstanding
Balance of such Receivable as a result of any defective, rejected,
returned, repossessed or foreclosed merchandise or services or any cash
discount, discount for quick payment or other adjustment or setoff.
"DISCOUNT" means, in respect of each Purchase, 2.5% of the
Outstanding Balance of the Receivables that are the subject of such
Purchase; provided, however, the foregoing Discount may be revised
prospectively by request of the relevant Seller or the Purchaser to
reflect changes in recent experience with respect to write-offs, timing
and cost of Collections and cost of funds, provided that such revision
is consented to by both of such parties (it being understood that each
party agrees to duly consider such request but shall have no
obligation, to give such consent).
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"ELIGIBLE RECEIVABLE" means a Receivable:
(i) the Obligor of which is a resident of the United
States (including, without limitation, Puerto Rico) or Canada
(other than the Northwest Territories and Nunavit) or an Other
Approved Jurisdiction, provided that the aggregate Outstanding
Balance of all Eligible Receivables having Obligors which are
residents of Canada (other than the Northwest Territories and
Nunavit) may not exceed 5% of the then outstanding Capital
under the Sale Agreement and the aggregate Outstanding Balance
of all Eligible Receivables having Obligors which are
residents of Other Approved Jurisdictions may not exceed 10%
of the then outstanding Capital under the Sale Agreement;
(ii) the Obligor of which is not an Affiliate of any
of the parties hereto and is not a government or a
governmental subdivision or agency;
(iii) the Obligor of which, at the time of the
transfer of such Receivable under this Agreement, is a
Designated Obligor and is not the Obligor of any Defaulted
Receivables which in the aggregate constitute 10% or more of
the aggregate Outstanding Balance of all Receivables of such
Obligor;
(iv) which, at the time of the transfer thereof to
the Purchaser under this Agreement, is not a Defaulted
Receivable;
(v) which, according to the Contract related thereto,
is required to be paid in full either (A) within 30 days of
the original billing date therefor or (B) within more than 30
but no more than 90 days of the original billing date therefor
if the aggregate Outstanding Balance of such Receivable and
all other Receivables having similar payments terms does not
exceed 25% of the then outstanding Capital under the Sale
Agreement;
(vi) which is an obligation representing all or part
of the sales price of merchandise, insurance or services
within the meaning of Section 3(c) (5) of the Investment
Company Act of 1940, as amended, and the nature of which is
such that its purchase with the proceeds of notes would
constitute a "current transaction" within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended;
(vii) which is an "account" within the meaning of
Section 9-106 of the UCC of the applicable jurisdictions;
(viii) which is denominated and payable only in
United States dollars in the United States;
(ix) which arises under a Contract which, together
with such Receivable, is in full force and effect and
constitutes the legal, valid and binding obligation of the
Obligor of such Receivable and is not subject to any dispute,
offset, counterclaim or defense whatsoever (except the
potential discharge in bankruptcy
4
of such Obligor);
(x) which, together with the Contract related
thereto, does not contravene in any material respect any laws,
rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to usury,
consumer protection, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no
party to the Contract related thereto is in violation of any
such law, rule or regulation in any material respect;
(xi) which arises under a Contract which (A) does not
require the Obligor under such Contract to consent to the
transfer, sale or assignment of the rights and duties of the
relevant Seller under such Contract and (B) does not contain a
confidentiality provision that purports to restrict the
ability of the Purchaser and its assignees to exercise their
rights under this Agreement, including, without limitation,
their right to review the Contract;
(xii) which was generated in the ordinary course of
the relevant Seller's business;
(xiii) which, at the time of the transfer of such
Receivable under this Agreement, has not been extended,
rewritten or otherwise modified from the original terms
thereof;
(xiv) the transfer, sale or assignment of which does
not contravene any applicable law, rule or regulation; and
(xv) which (A) satisfies all applicable requirements
of the Credit and Collection Policy and (B) complies with such
other criteria and requirements (other than those relating to
the collectibility of such Receivable) as the Purchaser or its
designee may from time to time specify to the Sellers upon 30
days' notice.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"EVENT OF TERMINATION" has the meaning specified in Section
7.01.
"FACILITY" means the willingness of the Purchaser to consider
making Purchases of Receivables from the Seller from time to time
pursuant to the terms of this Agreement.
"FACILITY TERMINATION DATE" means the earliest of (i)
September 30, 2005, (ii) the date of termination of the Facility
pursuant to Section 7.01 and (iii) the date which the Sellers designate
by at least two Business Days' notice to the Purchaser.
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"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by Citibank, N.A. from three Federal funds
brokers of recognized standing selected by it.
"GENERAL TRIAL BALANCE" of either Seller on any date means
such Seller's accounts receivable trial balance (whether in the form of
a computer printout, magnetic tape or diskette) on such date, listing
Obligors and the Receivables respectively owed by such Obligors on such
date together with the aged Outstanding Balances of such Receivables,
in form and substance satisfactory to the Purchaser.
"INCIPIENT EVENT OF TERMINATION" means an event that but for
notice or lapse of time or both would constitute an Event of
Termination.
"INDEMNIFIED AMOUNTS" has the meaning specified in Section
8.01.
"LOCK-BOX ACCOUNT" means one or more accounts, under the
exclusive ownership and control of the Purchaser (or its assignees or
designees), maintained for the purpose of receiving Collections.
"LOCK-BOX AGREEMENT" means an agreement among a Seller, the
Purchaser (or its assignees or designees) and any Lock-Box Bank in form
and substance satisfactory to the Purchaser (or its assignees or
designees)
"LOCK-BOX BANK" means any of the banks or other financial
institutions holding one or more Lock-Box Accounts.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"OBLIGOR" means a Person obligated to make payments to a
Seller pursuant to a Contract.
"OTHER APPROVED JURISDICTION" means a country (other than the
United States and Canada) (i) which is a member of the Organization of
Economic Cooperation and Development, (ii) which has a sovereign
long-term debt rating of at least AA- by S&P and Aa3 by Moody's, (iii)
as to which the Outstanding Balance of Receivables due from Obligors
residing in such country was at least $20,000 as of August 31, 2000,
(iv) as to which the Purchaser and the Agent have received such
opinions of counsel or other evidence satisfactory to them confirming
that the Purchaser and the Agent have acquired a valid and perfected
first priority interest and other rights with respect to Receivables
due from Obligors residing in such country which interest and rights
are substantially as protected and favorable as the Purchaser's and the
Agent's rights under the UCC and (v)
6
which the Purchaser and the Agent have approved in writing; provided,
however, that during the period from the initial Purchase to and
including October 31, 2000, (x) the preceding clause (iv) shall not be
applicable (it being understood that during such period the Purchaser,
the Agent and their counsel will review the laws of the applicable
countries to determine the requirements, if any, needed to satisfy the
conditions of such clause (iv)), and (y) each of the following
countries shall be considered to be an "Other Approved Jurisdiction":
Germany, United Kingdom, Japan, France, Italy, Ireland, Netherlands,
Norway, New Zealand, Spain, Belgium, Austria, Sweden and Denmark.
"OUTSTANDING BALANCE" of any Receivable at any time means the
then outstanding principal balance thereof.
"PERSON" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
"PURCHASE" means a purchase by the Purchaser of Receivables
from the Seller pursuant to Article II.
"PURCHASE DATE" means each day on which a Purchase is made
pursuant to Article II.
"PURCHASED RECEIVABLE" means any Receivable which is purchased
by the Purchaser pursuant to Section 2.02.
"PURCHASE PRICE" for any Purchase means an amount equal to the
Outstanding Balance of the Receivables that are the subject of such
Purchase as set forth in the relevant Seller's General Trial Balance,
minus the Discount for such Purchase.
"PURCHASER LOAN" means any loan made by the Purchaser, at its
option, to a Seller, upon such Seller's request, provided that (a) the
aggregate principal amount at any one time outstanding of Purchaser
Loans shall not exceed $5,000,000, and (b) no such Purchaser Loans may
be made if an Event of Termination or an Incipient Event of Termination
has occurred and is continuing, or would occur after giving effect
thereto, or if any amounts are outstanding under the Deferred Purchase
Price. Purchaser Loans made by the Purchaser hereunder shall be
evidenced by a promissory note of each Seller in substantially the form
of Exhibit D hereto.
"RECEIVABLE" means the indebtedness of any Obligor under a
Contract, and includes the right to payment of any interest or finance
charges and other obligations of such Obligor with respect thereto;
PROVIDED, HOWEVER, that "Receivable" shall not include any APC
Receivable until such time as (i) Ferro Corporation has requested, and
the Purchaser and the Agent have approved in writing, the inclusion of
the APC Receivables in the Facility and (ii) Ferro Corporation has
directed all Obligors of APC Receivables to make payments thereon to a
Lock-Box or Lock-Box Account specified on Exhibit B as to which a
Lock-Box Agreement is in effect.
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"RELATED SECURITY" means with respect to any Receivable:
(i) all of the relevant Seller's interest in any
merchandise (including returned merchandise) relating to any
sale giving rise to such Receivable;
(ii) all security interests or liens and property
subject thereto from time to time purporting to secure payment
of such Receivable, whether pursuant to the Contract related
to such Receivable or otherwise, together with all financing
statements signed by an Obligor describing any collateral
securing such Receivable;
(iii) all guaranties, insurance and other agreements
or arrangements of whatever character from time to time
supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or
otherwise; and
(iv) the Contract and all other books, records and
other information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software
and related property and rights) relating to such Receivable
and the related Obligor.
"S&P" means Standard & Poor's Rating Services, a division of
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"SALE AGREEMENT" means that certain Receivables Purchase
Agreement, dated as of the date hereof, among the Purchaser, as seller,
▇▇▇▇▇▇ ▇.▇., as purchaser, Citicorp North America, Inc., as agent,
Ferro Electronic, as an originator, and Ferro Corporation, as
collection agent and an originator, as amended or restated from time to
time.
"SELLER REPORT" means a report, in form and substance
satisfactory to the Purchaser, furnished by the Collection Agent to the
Purchaser pursuant to Section 6.02(b).
"SETTLEMENT DATE" means the tenth day of each month (or if
such day is not a Business Day, the immediately succeeding Business
Day); PROVIDED, HOWEVER, that following the occurrence of an Event of
Termination, Settlement Dates shall occur on such days as are selected
from time to time by the Purchaser or its designee in a written notice
to the Collection Agent.
"SPECIAL EVENT" means any of the long term public senior
unsecured debt securities of Ferro Corporation are rated below BBB by
S&P or Baa2 by Moody's, or if Ferro Corporation does not have long term
public senior unsecured debt ratings from both S&P and Moody's, ▇▇▇▇▇
Corporation is judged by the Agent, in its sole discretion, to be of
credit quality below (with respect to each missing rating) BBB by S&P
or Baa2 by Moody's.
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"TRANSFERRED RECEIVABLE" means a Purchased Receivable or a
Contributed Receivable.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
"UNDERTAKING AGREEMENT" means the Undertaking Agreement dated
as of the date of this Agreement made by Ferro Corporation in favor of
the Purchaser, relating to the Obligations of Ferro Electronic
hereunder, as the same may be amended, modified or restated from time
to time.
SECTION 1.02. OTHER TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles. All terms used in Article 9 of the UCC in the
State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.
ARTICLE II
AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS
SECTION 2.01. FACILITY. On the terms and conditions hereinafter set
forth and without recourse to either Seller (except to the extent specifically
provided herein), each Seller may at its option sell or contribute to the
Purchaser all Receivables originated by it from time to time and the Purchaser
may at its option purchase or accept as a contribution from Ferro Corporation
all Receivables of such Seller from time to time, in each case during the period
from the date hereof to the Facility Termination Date.
SECTION 2.02. MAKING PURCHASES.
(a) INITIAL PURCHASE. Each Seller shall give the Purchaser at least one
Business Day's notice of its request for the initial Purchase hereunder, which
request shall specify the date of such Purchase (which shall be a Business Day)
and the proposed Purchase Price for such Purchase. The Purchaser shall promptly
notify such Seller whether it has determined to make such Purchase. On the date
of such Purchase, the Purchaser shall, upon satisfaction of the applicable
conditions set forth in Article III, pay the Purchase Price for such Purchase in
the manner provided in Section 2.02(c).
(b) SUBSEQUENT PURCHASES. On each Business Day following the initial
Purchase, unless either Seller or the Purchaser shall notify the other parties
to the contrary, each Seller shall, sell to the Purchaser and the Purchaser
shall purchase from such Seller, upon satisfaction of the applicable conditions
set forth in Article III, all Receivables originated by such Seller which have
not previously been sold or contributed to the Purchaser; PROVIDED, HOWEVER,
that such Seller may, at its option on any Purchase Date, contribute all or any
of such Receivables to the Purchaser pursuant to Section 2.06, instead of
selling such Receivables to the Purchaser pursuant to this Section 2.02(b). On
or within five Business Days after the date of each such
9
Purchase, the Purchaser shall pay the Purchase Price for such Purchase in the
manner provided in Section 2.02(c).
(c) PAYMENT OF PURCHASE PRICE. The Purchase Price for each Purchase
shall be paid on or within five Business Days after the Purchase Date therefor
by means of any one or a combination of the following: (i) a deposit in same day
funds to the relevant Seller's account designated by such Seller, (ii) an
increase in the Deferred Purchase Price (subject at all times to the limitations
contained in the definition thereof), or (iii) a credit against interest and/or
principal owed by the relevant Seller with respect to any Purchaser Loan. The
allocation of the Purchase Price as among such methods of payment shall be
subject in each instance to the approval of the Purchaser and the relevant
Seller.
(d) OWNERSHIP OF RECEIVABLES AND RELATED SECURITY. On each Purchase
Date, after giving effect to the Purchase (and any contribution of Receivables)
on such date, the Purchaser shall own all Receivables originated by the Sellers
as of such date (including Receivables which have been previously sold or
contributed to the Purchaser hereunder). The Purchase or contribution of any
Receivable shall include all Related Security with respect to such Receivable.
SECTION 2.03. COLLECTIONS. (a) Unless otherwise agreed, the Collection
Agent shall, on each Settlement Date, deposit into an account of the Purchaser
or the Purchaser's assignee all Collections of Transferred Receivables then held
by the Collection Agent.
(b) In the event that either Seller believes that Collections which are
not Collections of Transferred Receivables have been deposited into an account
of the Purchaser or the Purchaser's assignee, such Seller shall so advise the
Purchaser and, on the Business Day following such identification, the Purchaser
shall remit, or shall cause to be remitted, all Collections so deposited which
are identified, to the Purchaser's satisfaction, to be Collections of
Receivables which are not Transferred Receivables to such Seller.
(c) On each Settlement Date, the Purchaser shall pay to the Sellers
accrued interest on the Deferred Purchase Price and the Purchaser may, at. its
option, prepay in whole or in part the principal amount of the Deferred Purchase
Price; provided that each such payment shall be made solely from (i) Collections
of Transferred Receivables after all other amounts then due from the Purchaser
under the Sale Agreement have been paid in full and all amounts then required to
be set aside by the Purchaser or the Collection Agent under the Sale Agreement
have been so set aside or (ii) excess cash flow from operations of the Purchaser
which is not required to be applied to the payment of other obligations of the
Purchaser; and provided further, that no such payment shall be made at any time
when an Event of Termination shall have occurred and be continuing. At such time
following the Facility Termination Date when all Capital, Yield and other
amounts owed by the Purchaser under the Sale Agreement shall have been paid in
full, the Purchaser shall apply, on each Settlement Date, all Collections of
Transferred Receivables received by the Purchaser pursuant to Section 2.03(a)
(and not previously distributed) first to the payment of accrued interest on the
Deferred Purchase Price, and then to the reduction of the principal amount of
the Deferred Purchase Price.
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SECTION 2.04. SETTLEMENT PROCEDURES. (a) If on any day the Outstanding
Balance of any Transferred Receivable is reduced or adjusted as a result of any
defective, rejected, returned, repossessed or foreclosed merchandise or services
or any cash discount, discount for quick payment or other adjustment made by the
relevant Seller, or any set-off or dispute in respect of any claim by the
Obligor thereof against such Seller (whether such claim arises out of the same
or a related transaction or an unrelated transaction but EXCLUDING adjustments,
reductions or cancellations in respect of such Obligor's bankruptcy), such
Seller shall be deemed to have received on such day a Collection of such
Transferred Receivable in the amount of such reduction or adjustment. If such
Seller is not the Collection Agent, such Seller shall pay to the Collection
Agent on or prior to the next Settlement Date all amounts deemed to have been
received pursuant to this subsection.
(b) Upon discovery by either Seller or the Purchaser of a breach of any
of the representations and warranties made by a Seller in Section 4.01(j) with
respect to any Transferred Receivable, such party shall give prompt written
notice thereof to the other party, as soon as practicable and in any event
within three Business Days following such discovery. Such Seller shall, upon not
less than two Business Days' notice from the Purchaser or its assignee or
designee, repurchase such Transferred Receivable on the next succeeding
Settlement Date for a repurchase price equal to the Outstanding Balance of such
Transferred Receivable. Each repurchase of a Transferred Receivable shall
include the Related Security with respect to such Transferred Receivable. The
proceeds of any such repurchase shall be deemed to be a Collection in respect of
such Transferred Receivable. If such Seller is not the Collection Agent, such
Seller shall pay to the Collection Agent on or prior to the next Settlement Date
the repurchase price required to be paid pursuant to this subsection.
(c) Except as stated in subsection (a) or (b) of this Section 2.04 or
as otherwise required by law or the underlying Contract, all Collections from an
Obligor of any Transferred Receivable shall be applied to the Receivables of
such Obligor in the order of the age of such Receivables, starting with the
oldest such Receivable, unless such Obligor designates its payment for
application to specific Receivables.
SECTION 2.05. PAYMENTS AND COMPUTATIONS, ETC. (a) All amounts to be
paid or deposited by either Seller or the Collection Agent hereunder shall be
paid or deposited no later than 11:00 A.M. (New York City time) on the day when
due in same day funds to an account or accounts designated by the Purchaser from
time to time, which accounts, during the existence of the Sale Agreement, shall
be those set forth in the Sale Agreement.
(b) Each Seller shall, to the extent permitted by law, pay to the
Purchaser interest on any amount not paid or deposited by such Seller (whether
as Collection Agent or otherwise) when due hereunder at an interest rate per
annum equal to 2.0% per annum above the Alternate Base Rate, payable on demand.
(c) All computations of interest and all computations of fees hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed. Whenever any payment
or deposit to be made hereunder shall be due on a day other than a Business Day,
such payment or deposit shall be made on the next
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succeeding Business Day and such extension of time shall be included in the
computation of such payment or deposit.
SECTION 2.06. CONTRIBUTIONS. Each Seller may from time to time at its
option, by notice to the Purchaser on or prior to the date of the proposed
contribution, identify Receivables which it proposes to contribute to the
Purchaser as a capital contribution. On the date of each such contribution and
after giving effect thereto, the Purchaser shall own in fee simple the
Receivables so identified and contributed (collectively, the "CONTRIBUTED
RECEIVABLES") and all Related Security with respect thereto. The foregoing
notwithstanding, on the date of the initial Purchase hereunder each Seller
agrees to contribute to the Purchaser all Receivables which are not included in
such initial Purchase.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. CONDITIONS PRECEDENT TO INITIAL PURCHASE FROM THE
SELLERS. The initial Purchase of Receivables from the Sellers hereunder is
subject to the conditions precedent that the Purchaser shall have received on or
before the date of such Purchase the following, each (unless otherwise
indicated) dated such date, in form and substance satisfactory to the Purchaser:
(a) Evidence that each Seller has taken any necessary
corporate action to authorize this Agreement and certified copies of
all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement.
(b) A certificate of the Secretary or Assistant Secretary of
each Seller certifying the names and true signatures of the officers of
such Seller authorized to sign this Agreement and the other documents
to be delivered by it hereunder.
(c) Acknowledgment copies or time stamped receipt copies of
proper financing statements, duly filed on or before the date of the
initial Purchase, naming each Seller as the seller/debtor and the
Purchaser as the purchaser/secured party, or other similar instruments
or documents, as the Purchaser may deem necessary or desirable under
the UCC of all appropriate jurisdictions or other applicable law to
perfect the Purchaser's ownership of and security interest in the
Transferred Receivables and Related Security and Collections with
respect thereto.
(d) Acknowledgment copies or time stamped receipt copies of
proper financing statements, if any, necessary to release all security
interests and other rights of any Person in the Transferred
Receivables, Contracts or Related Security previously granted by each
Seller.
(e) Completed requests for information, dated on or before the
date of such initial Purchase, listing all effective financing
statements filed in the jurisdictions referred to in subsection (c)
above that name either Seller as debtor, together with copies of such
other financing statements (none of which shall cover any Transferred
Receivables,
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Contracts or Related Security)
(f) A favorable opinion of Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.,
counsel for the Sellers, in form and substance satisfactory to the
Purchaser, as to such matters as the Purchaser may reasonably request.
(g) The Undertaking Agreement, duly executed by Ferro
Corporation.
(h) Lock-Box Agreements in respect of each Lock-Box Account,
duly executed by the relevant Seller and the Lock-Box Bank holding such
Lock-Box Account.
SECTION 3.02. CONDITIONS PRECEDENT TO ALL PURCHASES. Each Purchase
(including the initial Purchase) hereunder shall be subject to the further
conditions precedent that:
(a) with respect to any such Purchase, on or prior to the date
of such Purchase, the relevant Seller shall have delivered to the
Purchaser, (i) if requested by the Purchaser, such Seller's General
Trial Balance (which if in magnetic tape or diskette format shall be
compatible with the Purchaser's computer equipment) as of a date not
more than 31 days prior to the date of such Purchase, and (ii) a
written report identifying, among other things, the Receivables to be
included in such Purchase and such additional information concerning
such Receivables as may reasonably be requested by the Purchaser;
(b) with respect to any such Purchase, on or prior to the date
of such Purchase, the Collection Agent shall have delivered to the
Purchaser, in form and substance satisfactory to the Purchaser, a
completed Seller Report for the most recently ended reporting period
for which information is required pursuant to Section 6.02(b) and
containing such additional information as may reasonably be requested
by the Purchaser;
(c) The relevant Seller shall have marked its master data
processing records and, at the request of the Purchaser, each Contract
giving rise to Purchased Receivables and all other relevant records
evidencing the Receivables which are the subject of such Purchase with
a legend, acceptable to the Purchaser, stating that such Receivables,
the Related Security and Collections with respect thereto, have been
sold in accordance with this Agreement; and
(d) on the date of such Purchase the following statements
shall be true (and the relevant Seller, by accepting the amount of such
Purchase, shall be deemed to have certified that)
(i) The representations and warranties contained in
Section 4.01 are correct on and as of the date of such
Purchase as though made on and as of such date,
(ii) No event has occurred and is continuing, or
would result from such Purchase, that constitutes an Event of
Termination or would constitute an Incipient Event of
Termination and
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(iii) The Purchaser shall not have delivered to such
Seller a notice that the Purchaser shall not make any further
Purchases hereunder; and
(e) the Purchaser shall have received such other approvals,
opinions or documents as the Purchaser may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each
Seller represents and warrants, as to itself, as follows:
(a) Such Seller is a corporation duly incorporated, validly
existing and in good standing, with respect to Ferro Corporation, under
the laws of Ohio, and, with respect to Ferro Electronic, under the laws
of Delaware, and is duly qualified to do business, and is in good
standing, in every jurisdiction where the nature of its business
requires it to be so qualified, unless the failure to so qualify would
not have a material adverse effect on (i) the interests of the
Purchaser hereunder, (ii) the collectibility of the Transferred
Receivables, or (iii) the ability of the Seller or the Collection Agent
to perform their respective obligations hereunder.
(b) The execution, delivery and performance by such Seller of
this Agreement and the other documents to be delivered by it hereunder,
including such Seller's sale and contribution of Receivables hereunder
and such Seller's use of the proceeds of Purchases, (i) are within such
Seller's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) do not contravene (1) such Seller's
charter or by-laws, (2) any law, rule or regulation applicable to such
Seller, (3) any contractual restriction binding on or affecting such
Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting such Seller or its
property, and (iv) do not result in or require the creation of any
lien, security interest or other charge or encumbrance upon or with
respect to any of its properties (except for the transfer of such
Seller's interest in the Transferred Receivables pursuant to this
Agreement). This Agreement has been duly executed and delivered by such
Seller.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by such
Seller of this Agreement or any other document to be delivered by it
hereunder.
(d) This Agreement constitutes the legal, valid and binding
obligation of such Seller enforceable against such Seller in accordance
with its terms.
(e) Sales and contributions made pursuant to this Agreement
will constitute a
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valid sale, transfer, and assignment of the Transferred Receivables to
Purchaser, enforceable against creditors of, and purchasers from, such
Seller. Such Seller shall have no remaining property interest in any
Transferred Receivable.
(f) The balance sheets of Ferro Corporation and its
subsidiaries as at December 31, 1999, and the related statements of
income and retained earnings of Ferro Corporation and its subsidiaries
for the fiscal year then ended, copies of which have been furnished to
the Purchaser, fairly present the financial condition of Ferro
Corporation and its subsidiaries as at such date and the results of the
operations of Ferro Corporation and its subsidiaries for the period
ended on such date, all in accordance with generally accepted
accounting principles consistently applied, and since December 31, 1999
there has been no material adverse change in the business, operations,
property or financial or other condition of Ferro Corporation.
(g) There is no pending or threatened action or proceeding
affecting such Seller or any of its subsidiaries before any court,
governmental agency or arbitrator which may materially adversely affect
the financial condition or operations of such Seller or any of its
subsidiaries or the ability of such Seller to perform its obligations
under this Agreement or any other document to be delivered by it
hereunder, or which purports to affect the legality, validity or
enforceability of this Agreement or any other document to be delivered
by it hereunder.
(h) No proceeds of any Purchase will be used to acquire any
equity security of a class which is registered pursuant to Section 12
of' the Securities Exchange Act of 1934.
(i) No transaction contemplated hereby requires compliance
with any bulk sales act or similar law.
(j) Each Receivable purported to be sold by such Seller
hereunder is an Eligible Receivable (unless identified by such Seller
as not an Eligible Receivable at the time of sale and in each
applicable Seller Report), and each such Receivable and each
Transferred Receivable, together with the Related Security, is owned
(prior to its sale or contribution hereunder) by such Seller free and
clear of any Adverse Claim (other than any Adverse Claim arising solely
as the result of any action taken by the Purchaser). When Purchaser
makes a Purchase it shall acquire valid and perfected first priority
ownership of each Purchased Receivable and the Related Security and
Collections with respect thereto free and clear of any Adverse Claim
(other than any Adverse Claim arising solely as the result of any
action taken by the Purchaser), and no effective financing statement or
other instrument similar in effect covering any Transferred Receivable,
any interest therein, the Related Security or Collections with respect
thereto is on file in any recording office except such as may be filed
in favor of Purchaser in accordance with this Agreement or in
connection with any Adverse Claim arising solely as the result of any
action taken by the Purchaser.
(k) Each Seller Report (if prepared by the relevant Seller, or
to the extent that information contained therein is supplied by such
Seller), information, exhibit, financial
15
statement, document, book, record or report furnished or to be
furnished at any time by such Seller to the Purchaser in connection
with this Agreement is or will be accurate in all material respects as
of its date or (except as otherwise disclosed to the Purchaser at such
time) as of the date so furnished, and no such document contains or
will contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they
were made, not misleading.
(l) The principal place of business and chief executive office
of the Seller and the office where such Seller keeps its records
concerning the Transferred Receivables are located at the address or
addresses referred to in Section 5.01(b).
(m) The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts at such
Lock-Box Banks, are specified in Exhibit B (as the same may be updated
from time to time pursuant to Section 5.01(h))
(n) Such Seller is not known by and does not use any tradename
or doing-business-as name.
(o) With respect to any programs used by such Seller in the
servicing of the Receivables, no sublicensing agreements are necessary
in connection with the designation of a new Collection Agent pursuant
to Section 6.01(b) so that such new Collection Agent shall have the
benefit of such programs (BEING UNDERSTOOD that, however, the
Collection Agent, if other than Ferro Corporation, shall be required to
be bound by a confidentiality agreement reasonably acceptable to such
Seller)
(p) The transfers of Transferred Receivables by such Seller to
the Purchaser pursuant to this Agreement, and all other transactions
between such Seller and the Purchaser, have been and will be made in
good faith and without intent to hinder, delay or defraud creditors of
such Seller.
(q) Such Seller has no office or place of business in the
province of Quebec, Canada.
ARTICLE V
COVENANTS
SECTION 5.01. COVENANTS OF THE SELLERS. From the date hereof
until the first day following the Facility Termination Date on which all of the
Transferred Receivables are either collected in full or become Defaulted
Receivables:
(a) COMPLIANCE WITH LAWS, ETC. Each Seller will comply in all
material respects with all applicable laws, rules, regulations and
orders and preserve and maintain its corporate existence, rights,
franchises, qualifications and privileges except to the extent
16
that the failure so to comply with such laws, rules and regulations or
the failure so to preserve and maintain such existence, rights,
franchises, qualifications, and privileges would not materially
adversely affect the collectibility of the Transferred Receivables or
the ability of such Seller to perform its obligations under this
Agreement.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT. Each Seller will
keep its principal place of business and chief executive office and the
office where it keeps its records concerning the Transferred
Receivables at the address of such Seller set forth under its name on
the signature page to this Agreement or, upon 30 days' prior written
notice to the Purchaser, at any other locations in jurisdictions where
all actions required by Section 5.01(j) shall have been taken and
completed. Each Seller also will maintain and implement administrative
and operating procedures (including, without limitation, an ability to
recreate records evidencing Transferred Receivables and related
Contracts 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
Transferred Receivables (including, without limitation, records
adequate to permit the daily identification of each new Transferred
Receivable and all Collections of and adjustments to each existing
Transferred Receivable). Each Seller shall make a notation in its books
and records, including its computer files, to indicate which
Receivables have been sold or contributed to the Purchaser hereunder.
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND
COLLECTION POLICY. Each Seller will, at its expense, timely and fully
perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Contracts related to
the Transferred Receivables, and timely and fully comply in all
material respects with the Credit and Collection Policy in regard to
each Transferred Receivable and the related Contract.
(d) SALES, LIENS, ETC. Except for the sales and contributions
of Receivables contemplated herein, each Seller will not sell, assign
(by operation of law or otherwise) or otherwise dispose of, or create
or suffer to exist any Adverse Claim upon or with respect to, any
Transferred Receivable, Related Security, related Contract or
Collections, or upon or with respect to any account to which any
Collections of any Transferred Receivable are sent, or assign any right
to receive income in respect thereof.
(e) EXTENSION OR AMENDMENT OF TRANSFERRED RECEIVABLES. Except
as provided in Section 6.02(c), each Seller will not extend, amend or
otherwise modify the terms of any Transferred Receivable, or amend,
modify or waive any term or condition of any Contract related thereto.
(f) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Each
Seller will not make any change in the character of its business or in
the Credit and Collection Policy that would, in either case, materially
adversely affect the collectibility of the Transferred Receivables or
the ability of such Seller to perform its obligations under this
Agreement.
17
(g) AUDITS. Each Seller will, from time to time during regular
business hours as requested by the Purchaser or its assigns, permit the
Purchaser, or its agents, representatives or assigns, (i) to examine
and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the
possession or under the control of such Seller relating to Transferred
Receivables and the Related Security, including, without limitation,
the related Contracts, and (ii) to visit the offices and properties of
such Seller for the purpose of examining such materials described in
clause (i) above, and to discuss matters relating to Transferred
Receivables and the Related Security or such Seller's performance
hereunder or under the Contracts with any of the officers or employees
of such Seller having knowledge of such matters.
(h) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. Each Seller
will not add or terminate any bank or bank account as a Lock-Box Bank
or Lock-Box Account from those listed in Exhibit B to this Agreement,
or make any change in its instructions to Obligors regarding payments
to be made to any Lock-Box Bank, unless the Purchaser shall have
received notice of such addition, termination or change (including an
updated Exhibit B) and executed copies of Lock-Box Agreements with each
new Lock-Box Bank or with respect to each new Lock-Box Account.
(i) DEPOSITS TO LOCK-BOX ACCOUNTS. Each Seller will instruct
all Obligors to remit all their payments in respect of Transferred
Receivables into Lock-Box Accounts. If such Seller shall receive any
Collections directly, it shall immediately (and in any event within two
Business Days) deposit the same to a Lock-Box Account. Such Seller will
not deposit or otherwise credit, or cause or permit to be so deposited
or credited, to any Lock-Box Account cash or cash proceeds other than
Collections of Transferred Receivables.
(j) FURTHER ASSURANCES. (i) Each Seller agrees from time to
time, at its expense, promptly to execute and deliver all further
instruments and documents, and to take all further actions, that may be
necessary or desirable, or that the Purchaser or its assignee may
reasonably request, to perfect, protect or more fully evidence the sale
and contribution of Receivables under this Agreement, or to enable the
Purchaser or its assignee to exercise and enforce its respective rights
and remedies under this Agreement. Without limiting the foregoing, such
Seller will, upon the request of the Purchaser or its assignee, (A)
execute and file such financing or continuation statements, or
amendments thereto, and such other instruments and documents, that may
be necessary or desirable to perfect, protect or evidence such
Transferred Receivables; and (B) deliver to the Purchaser copies of all
Contracts relating to the Transferred Receivables and all records
relating to such Contracts and the Transferred Receivables, whether in
hard copy or in magnetic tape or diskette format (which if in magnetic
tape or diskette format shall be compatible with the Purchaser's
computer equipment)
(ii) Each Seller authorizes the Purchaser or its
assignee to file financing or continuation statements, and
amendments thereto and assignments thereof, relating to the
Transferred Receivables and the Related Security, the related
Contracts and the Collections with respect thereto without the
signature of such
18
Seller where permitted by law. A photocopy or other
reproduction of this Agreement shall be sufficient as a
financing statement where permitted by law.
(iii) Each Seller shall perform its obligations under
the Contracts related to the Transferred Receivables to the
same extent as if the Transferred Receivables had not been
sold or transferred.
(k) REPORTING REQUIREMENTS. Each Seller will provide to the
Purchaser the following:
(i) as soon as possible and in any event within five
days after the occurrence of each Event of Termination or
Incipient Event of Termination, a statement of the chief
financial officer of such Seller setting forth details of such
Event of Termination or Incipient Event of Termination and the
action that such Seller has taken and proposes to take with
respect thereto;
(ii) promptly after the filing or receiving thereof,
copies of all reports and notices that such Seller or any
Affiliate files under ERISA with the Internal Revenue Service
or the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor or that such Seller or any Affiliate
receives from any of the foregoing or from any multiemployer
plan (within the meaning of Section 4001(a)(3) of ERISA) to
which such Seller or any Affiliate is or was, within the
preceding five years, a contributing employer, in each case in
respect of the assessment of withdrawal liability or an event
or condition which could, in the aggregate, result in the
imposition of liability on such Seller and/or any such
Affiliate in excess of $5,000,000;
(iii) at least ten Business Days prior to any change
in such Seller's name, a notice setting forth the new name and
the effective date thereof; and
(iv) such other information respecting the Transferred
Receivables or the condition or operations, financial or
otherwise, of such Seller as the Purchaser may from time to
time reasonably request.
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(l) SEPARATE CONDUCT OF BUSINESS. Each Seller will: (i)
maintain separate corporate records and books of account from those of
the Purchaser; (ii) conduct its business from an office separate from
that of the Purchaser; (iii) ensure that all oral and written
communications, including without limitation, letters, invoices,
purchase orders, contracts, statements and applications, will be made
solely in its own name; (iv) have stationery and other business forms
and a mailing address and a telephone number separate from those of the
Purchaser; (v) not hold itself out as having agreed to pay, or as being
liable for, the obligations of the Purchaser; (vi) not engage in any
transaction with the Purchaser except as contemplated by this Agreement
or as permitted by the Sale Agreement; (vii) continuously maintain as
official records the resolutions, agreements and other instruments
underlying the transactions contemplated by this Agreement; and (viii)
disclose on its annual financial statements (A) the effects of the
transactions contemplated by this Agreement in accordance with
generally accepted accounting principles and (B) that the assets of the
Purchaser are not available to pay its creditors.
SECTION 5.02. GRANT OF SECURITY INTEREST. To secure all obligations of
each Seller arising in connection with this Agreement, and each other agreement
entered into in connection with this Agreement, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent,
including, without limitation, Indemnified Amounts, payments on account of
Collections received or deemed to be received, and any other amounts due the
Purchaser hereunder, each Seller hereby assigns and grants to Purchaser a
security interest in all of such Seller's right, title and interest now or
hereafter existing in, to and under all Receivables which do not constitute
Transferred Receivables, the Related Security and all Collections with regard
thereto.
SECTION 5.03. COVENANT OF EACH SELLER AND THE PURCHASER. Each Seller
and the Purchaser have structured this Agreement with the intention that each
Purchase of Receivables hereunder be treated as a sale of such Receivables by
such Seller to the Purchaser for all purposes and each contribution of
Receivables hereunder shall be treated as an absolute transfer of such
Receivables by such Seller to the Purchaser for all purposes. Each Seller and
the Purchaser shall record each Purchase and contribution as a sale or purchase
or capital contribution, as the case may be, on its books and records, and
reflect each Purchase and contribution in its financial statements and tax
returns as a sale or purchase or capital contribution, as the case may be. In
the event that, contrary to the mutual intent of each Seller and the Purchaser,
any Purchase or contribution of Receivables hereunder is not characterized as a
sale or absolute transfer, such Seller shall, effective as of the date hereof,
be deemed to have granted (and such Seller hereby does grant) to the Purchaser a
first priority security interest in and to any and all Receivables, the Related
Security and the proceeds thereof to secure the repayment of all amounts
advanced to such Seller hereunder with accrued interest thereon, and this
Agreement shall be deemed to be a security agreement.
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ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. DESIGNATION OF COLLECTION AGENT. The servicing,
administration and collection of the Transferred Receivables shall be conducted
by such Person (the "COLLECTION AGENT") so designated hereunder from time to
time. Until the Purchaser or its assignee gives notice to Ferro Corporation of
the designation of a new Collection Agent, Ferro Corporation is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Collection Agent pursuant to the terms hereof. Ferro Corporation agrees that
such notice may be given at any time in the Purchaser's or assignee's
discretion. Upon receipt by Ferro Corporation of such notice, Ferro Corporation
agrees that it will terminate its activities as Collection Agent hereunder in a
manner which the Purchaser (or its designee) believes will facilitate the
transition of the performance of such activities to the new Collection Agent,
and Ferro Corporation shall use its best efforts to assist the Purchaser (or its
designee) to take over the servicing, administration and collection of the
Transferred Receivables, including, without limitation, providing access to and
copies of all computer tapes or disks and other documents or instruments that
evidence or relate to Transferred Receivables maintained in its capacity as
Collection Agent and access to all employees and officers of Ferro Corporation
responsible with respect thereto. The Purchaser at any time after giving such
notice may designate as Collection Agent any Person (including itself) to
succeed Ferro Corporation or any successor Collection Agent, if such Person
shall consent and agree to the terms hereof. The Collection Agent may, with the
prior consent of the Purchaser, subcontract with any other Person for the
servicing, administration or collection of Transferred Receivables (and the
Purchaser, on behalf of itself and the Agent, hereby consents to the
subcontracting to Ferro Electronic of the servicing, administration and
collection of Transferred Receivables originated by Ferro Electronic). Any such
subcontract shall not affect the Collection Agent's liability for performance of
its duties and obligations pursuant to the terms hereof.
SECTION 6.02. DUTIES OF COLLECTION AGENT. (a) The Collection Agent
shall take or cause to be taken all such actions as may be necessary or
advisable to collect each Transferred Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy. The
Purchaser hereby appoints the Collection Agent, from time to time designated
pursuant to Section 6.01, as agent to enforce its ownership and other rights in
the Transferred Receivables, the Related Security and the Collections with
respect thereto. In performing its duties as Collection Agent, the Collection
Agent shall exercise the same care and apply the same policies as it would
exercise and apply if it owned the Transferred Receivables and shall act in the
best interests of the Purchaser and its assignees.
(b) Prior to the tenth Business Day of each month, the Collection Agent
shall prepare and forward to the Purchaser (i) a Seller Report, relating to all
then outstanding Transferred Receivables, and the Related Security and
Collections with respect thereto, in each case, as of the close of business of
the Collection Agent on the last day of the immediately preceding month, and
(ii) if requested by the Purchaser, a listing by Obligor of all Transferred
Receivables correlating Purchased Receivables and Purchases, together with an
aging report of
21
such Transferred Receivables.
(c) If no Event of Termination, Special Event or Incipient Event of
Termination shall have occurred and be continuing, Ferro Corporation, while it
is the Collection Agent, may, in accordance with the Credit and Collection
Policy, extend the maturity or adjust the Outstanding Balance of any Transferred
Receivable as Ferro Corporation deems appropriate to maximize Collections
thereof, or otherwise amend or modify the terms of any Transferred Receivable.
(d) Each Seller shall deliver to the Collection Agent, and the
Collection Agent shall hold in trust for each Seller and the Purchaser in
accordance with their respective interests, all documents, instruments and
records (including, without limitation, computer tapes or disks) which evidence
or relate to Transferred Receivables.
(e) The Collection Agent shall as soon as practicable following receipt
turn over to the relevant Seller any cash collections or other cash proceeds
received with respect to Receivables not constituting Transferred Receivables,
less, in the event such Seller is not the Collection Agent, all reasonable and
appropriate out-of-pocket costs and expenses of the Collection Agent of
servicing, collecting and administering the Receivables to the extent not
covered by the Collection Agent Fee received by it.
(f) The Collection Agent also shall perform the other obligations of
the "Collection Agent" set forth in this Agreement with respect to the
Transferred Receivables.
SECTION 6.03. COLLECTION AGENT FEE. The Purchaser shall pay to the
Collection Agent, so long as it is acting as the Collection Agent hereunder, a
periodic collection fee (the "COLLECTION AGENT FEE") of 0.25% per annum on the
average daily aggregate Outstanding Balance of the Transferred Receivables,
payable on the tenth day of each month (or, if such day is not a Business Day,
the immediately succeeding Business Day) or such other day during each calendar
month as the Purchaser and the Collection Agent shall agree.
SECTION 6.04. CERTAIN RIGHTS OF THE PURCHASER. (a) The Purchaser may,
at any time, give notice of ownership and/or direct the Obligors of Transferred
Receivables and any Person obligated on any Related Security, or any of them,
that payment of all amounts payable under any Transferred Receivable shall be
made directly to the Purchaser or its designee. Each Seller hereby transfers to
the Purchaser (and its assigns and designees) the exclusive ownership and
control of each Lock-Box Account maintained by such Seller for the purpose of
receiving Collections.
(b) At any time following the designation of a Collection Agent other
than Ferro Corporation pursuant to Section 6.01 or following an Event
Termination, a Special Event or an Incipient Event of Termination:
(i) Each Seller shall, upon the Purchaser's request and at such
Seller's expense, give notice of the Purchaser's ownership to each
Obligor of Transferred Receivables and direct that payments of all
amounts payable under such
22
Transferred Receivables be made directly to the Purchaser or its
designee.
(ii) At the Purchaser's request and at the relevant Seller's
expense, each Seller and the Collection Agent shall (A) assemble all of
the documents, instruments and other records (including, without
limitation, computer tapes and disks) that evidence or relate to the
Transferred Receivables, and the related Contracts and Related
Security, or that are otherwise necessary or desirable to collect the
Transferred Receivables, and shall make the same available to the
Purchaser at a place selected by the Purchaser or its designee, and (B)
segregate all cash, checks and other instruments received by it from
time to time constituting Collections of Transferred Receivables in a
manner acceptable to the Purchaser and, promptly upon receipt, remit
all such cash, checks and instruments, duly indorsed or with duly
executed instruments of transfer, to the Purchaser or its designee. The
Purchaser shall also have the right to make copies of all such
documents, instruments and other records at any time.
(iii) Each Seller authorizes the Purchaser to take any and all
steps in such Seller's name and on behalf of such Seller that are
necessary or desirable, in the determination of the Purchaser, to
collect amounts due under the Transferred Receivables, including,
without limitation, endorsing such Seller's name on checks and other
instruments representing Collections of Transferred Receivables and
enforcing the Transferred Receivables and the Related Security and
related Contracts.
SECTION 6.05. RIGHTS AND REMEDIES. (a) If either Seller or the
Collection Agent fails to perform any of its obligations under this Agreement,
the Purchaser may (but shall not be required to) itself perform, or cause
performance of, such obligation, and, if such Seller (as Collection Agent or
otherwise) fails to so perform, the costs and expenses of the Purchaser incurred
in connection therewith shall be payable by such Seller as provided in Section
8.01 or Section 9.04 as applicable.
(b) Each Seller shall perform all of its obligations under the
Contracts related to the Transferred Receivables to the same extent as if such
Seller had not sold or contributed Receivables hereunder and the exercise by the
Purchaser of its rights hereunder shall not relieve such Seller from such
obligations or its obligations with respect to the Transferred Receivables. The
Purchaser shall not have any obligation or liability with respect to any
Transferred Receivables or related Contracts, nor shall the Purchaser be
obligated to perform any of the obligations of such Seller thereunder.
(c) Each Seller shall cooperate with the Collection Agent in collecting
amounts due from Obligors in respect of the Transferred Receivables.
(d) Each Seller hereby grants to Collection Agent an irrevocable power
of attorney, with full power of substitution, coupled with an interest, to take
in the name of such Seller all steps necessary or advisable to endorse,
negotiate or otherwise realize on any writing or other right of any kind held or
transmitted by such Seller or transmitted or received by Purchaser
23
(whether or not from such Seller) in connection with any Transferred Receivable.
SECTION 6.06. TRANSFER OF RECORDS TO PURCHASER. Each Purchase and
contribution of Receivables hereunder shall include the transfer to the
Purchaser of all of the relevant Seller's right and title to and interest in the
records relating to such Receivables and shall include an irrevocable
non-exclusive license to the use of such Seller's computer software system to
access and create such records. Such license shall be without royalty or payment
of any kind, is coupled with an interest, and shall be irrevocable until all of
the Transferred Receivables are either collected in full or become Defaulted
Receivables.
Each Seller shall take such action requested by the Purchaser, from
time to time hereafter, that may be necessary or appropriate to ensure that the
Purchaser has an enforceable ownership interest in the records relating to the
Transferred Receivables and rights (whether by ownership, license or sublicense)
to the use of such Seller's computer software system to access and create such
records.
In recognition of each Seller's need to have access to the records
transferred to the Purchaser hereunder, the Purchaser hereby grants to such
Seller an irrevocable license to access such records in connection with any
activity arising in the ordinary course of such Seller's business or in
performance of its duties as Collection Agent, provided that (i) such Seller
shall not disrupt or otherwise interfere with the Purchaser's use of and access
to such records during such license period and (ii) such Seller consents to the
assignment and delivery of the records (including any information contained
therein relating to such Seller or its operations) to any assignees or
transferees of the Purchaser provided they agree to hold such records
confidential.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. EVENTS OF TERMINATION. If any of the following events
("EVENTS OF TERMINATION") shall occur and be continuing:
(a) The Collection Agent (if Ferro Corporation or any of its
Affiliates) (i) shall fail to perform or observe any term, covenant or
agreement under this Agreement (other than as referred to in clause (ii) or
(iii) of this subsection (a)) and such failure shall remain unremedied for
five Business Days or (ii) shall fail to deliver the monthly Seller Report
when due and such failure shall remain unremedied for three Business Days
or (iii) shall fail to make when due any payment or deposit to be made by
it under this Agreement; or
(b) Ferro Corporation shall fail to transfer to the Purchaser when
requested any rights, pursuant to this Agreement, which Ferro Corporation
then has as Collection Agent, or either Seller shall fail to make any
payment required under Section 2.04(a) or 2.04(b); or
(c) Any representation or warranty made or deemed made by either Seller
(or any of its officers) under or in connection with this Agreement or any
information or report
24
delivered by such Seller pursuant to this Agreement shall prove to have
been incorrect or untrue in any material respect when made or deemed
made or delivered; or
(d) Either Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for 10
days after written notice thereof shall have been given to the Seller by
the Purchaser; or
(e) Either Seller shall fail to pay any principal of or premium or
interest on any of its Debt which is outstanding in a principal amount of
at least $5,000,000 in the aggregate when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Debt; or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt and shall continue after
the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or
to permit the acceleration of, the maturity of such Debt; or any such Debt
shall be declared to be due and payable, or required to be prepaid (other
than by a regularly scheduled required prepayment), redeemed, purchased or
defeased, or an offer to repay, redeem, purchase or defease such Debt shall
be required to be made, in each case prior to the stated maturity thereof;
or
(f) Any Purchase or contribution of Receivables hereunder, the Related
Security and the Collections with respect thereto shall for any reason
cease to constitute valid and perfected ownership of such Receivables,
Related Security and Collections free and clear of any Adverse Claim; or
(g) Either Seller shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors;
or any proceeding shall be instituted by or against either Seller seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its property
and, in the case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 30 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other
similar official for, it or for any substantial part of its property) shall
occur; or either Seller or any of its subsidiaries shall take any corporate
action to authorize any of the actions set forth above in this subsection
(g); or
(h) an Event of Termination shall have occurred under the Sale
Agreement; or
(i) There shall have occurred any material adverse change in the
financial
25
condition or operations of Ferro Corporation since December 31, 1999; or
there shall have occurred any event which may materially adversely affect
the collectibility of the Transferred Receivables or the ability of either
Seller to collect Transferred Receivables or otherwise perform its
obligations under this Agreement; or
(j) At least 80% of the outstanding capital stock of Ferro Electronic
Materials, Inc. shall cease to be owned, directly or indirectly, by Ferro
Corporation; or
(k) The Undertaking Agreement shall cease to be in full force and
effect, or Ferro Corporation shall fail to perform or observe any term,
covenant or agreement contained in the Undertaking Agreement on its part to
be performed or observed and any such failure shall remain unremedied for
fifteen days after written notice thereof shall have been given to Ferro
Corporation;
then, and in any such event, the Purchaser may, by notice to each Seller, take
either or both of the following actions: (x) declare the Facility Termination
Date to have occurred (in which case the Facility Termination Date shall be
deemed to have occurred) and (y) without limiting any right under this Agreement
to replace the Collection Agent, designate another Person to succeed Ferro
Corporation as Collection Agent; PROVIDED, that, automatically upon the
occurrence of any event (without any requirement for the passage of time or the
giving of notice) described in paragraph (g) of this Section 7.01, the Facility
Termination Date shall occur, Ferro Corporation (if it is then serving as the
Collection Agent) shall cease to be the Collection Agent, and the Purchaser (or
its assigns or designees) shall become the Collection Agent. Upon any such
declaration or designation or upon such automatic termination, the Purchaser
shall have, in addition to the rights and remedies under this Agreement, all
other rights and remedies with respect to the Receivables provided after default
under the UCC and under other applicable law, which rights and remedies shall be
cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. INDEMNITIES BY THE SELLERS. Without limiting any other
rights which the Purchaser may have hereunder or under applicable law, each
Seller hereby agrees to indemnify the Purchaser and its assigns and transferees
(each, an "INDEMNIFIED PARTY") from and against any and all damages, claims,
losses, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "INDEMNIFIED AMOUNTS"), awarded against or incurred by any
Indemnified Party arising out of or as a result of this Agreement or the
purchase or contribution of any Transferred Receivables originated by such
Seller or in respect of any Transferred Receivable or any Contract originated by
such Seller, including, without limitation, arising out of or as a result of:
(i) the inclusion, or purported inclusion, in any Purchase of any
Receivable that is not an Eligible Receivable on the date of such Purchase,
or the characterization in any Seller Report or other statement made by
such Seller of any Transferred Receivable as
26
an Eligible Receivable which is not an Eligible Receivable as of the date
of such Seller Report or statement;
(ii) any representation or warranty or statement made or deemed made by
such Seller (or any of its officers) under or in connection with this
Agreement, which shall have been incorrect in any material respect when
made;
(iii) the failure by such Seller to comply with any applicable law,
rule or regulation with respect to any Transferred Receivable or the
related Contract; or the failure of any Transferred Receivable originated
by such Seller or the related Contract to conform to any such applicable
law, rule or regulation;
(iv) the failure to vest in the Purchaser absolute ownership of the
Receivables that are, or that purport to be, the subject of a Purchase or
contribution under this Agreement and the Related Security and Collections
in respect thereof, free and clear of any Adverse Claim;
(v) the failure of such Seller 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 Receivables that are, or that purport to be, the subject of a Purchase
or contribution under this Agreement and the Related Security and
Collections in respect thereof, whether at the time of any Purchase or
contribution or at any subsequent time;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
originated by such Seller that is, or that purports to be, the subject of a
Purchase or contribution under this Agreement (including, without
limitation, a defense based on such Receivable or the related Contract not
being a legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting from
the sale of the merchandise or services related to such Receivable or the
furnishing or failure to furnish such merchandise or services or relating
to collection activities with respect to such Receivable (if such
collection activities were performed by Ferro Corporation acting as
Collection Agent);
(vii) any failure of such Seller, as Collection Agent or otherwise, to
perform its duties or obligations in accordance with the provisions hereof
or to perform its duties or obligations under any Contract related to a
Transferred Receivable originated by such Seller;
(viii) any products liability or other claim arising out of or in
connection with merchandise, insurance or services which are the subject of
any Contract;
(ix) the commingling of Collections of Transferred Receivables by such
Seller or a designee of such Seller, as Collection Agent or otherwise, at
any time with other funds of such Seller or an Affiliate of such Seller;
27
(x) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of Purchases or the ownership of
Receivables, the Related Security, or Collections with respect thereto or
in respect of any Receivable, Related Security or Contract;
(xi) any failure of such Seller to comply with its covenants contained
in this Agreement;
(xii) any Collection Agent Fees or other costs and expenses payable to
any replacement Collection Agent;
(xiii) any claim brought by any Person other than an Indemnified Party
arising from any activity by such Seller or any Affiliate of such Seller in
servicing, administering or collecting any Transferred Receivable; or
(xiv) any Dilution with respect to any Transferred Receivable
originated by such Seller.
It is expressly agreed and understood by the parties hereto (i) that the
foregoing indemnification is not intended to, and shall not, constitute a
guarantee of the collectibility or payment of the Transferred Receivables and
(ii) that nothing in this Section 8.01 shall require either Seller to indemnify
any Person (A) for Receivables which are not collected, not paid or
uncollectible on account of the insolvency, bankruptcy, or financial inability
to pay of the applicable Obligor, (B) for damages, losses, claims or liabilities
or related costs or expenses resulting from such Person's gross negligence or
willful misconduct, or (C) for any income taxes or franchise taxes incurred by
such Person arising out of or as a result of this Agreement or in respect of any
Transferred Receivable or any Contract.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement or consent to any departure by either Seller therefrom shall
be effective unless in a writing signed by the Purchaser and, in the case of any
amendment, also signed by the Sellers, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No failure on the part of the Purchaser to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
SECTION 9.02. NOTICES, ETC. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and be faxed or delivered, to each party
hereto, at its address set forth under its name on the signature pages hereof or
at such other address as shall be designated by such party in a written
28
notice to the other parties hereto. Notices and communications by facsimile
shall be effective when sent (and shall be followed by hard copy sent by regular
mail), and notices and communications sent by other means shall be effective
when received.
SECTION 9.03. BINDING EFFECT; ASSIGNABILITY. (a) This Agreement shall
be binding upon and inure to the benefit of the Sellers, the Purchaser and their
respective successors and assigns; PROVIDED, HOWEVER, that neither Seller may
assign its rights or obligations hereunder or any interest herein without the
prior written consent of the Purchaser. In connection with any sale or
assignment by the Purchaser of all or a portion of the Transferred Receivables,
the buyer or assignee, as the case may be, shall, to the extent of its purchase
or assignment, have all rights of the Purchaser under this Agreement (as if such
buyer or assignee, as the case may be, were the Purchaser hereunder) except to
the extent specifically provided in the agreement between the Purchaser and such
buyer or assignee, as the case may be.
(b) This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until such time, after the Facility Termination Date,
when all of the Transferred Receivables are either collected in full or become
Defaulted Receivables; PROVIDED, HOWEVER, that rights and remedies with respect
to any breach of any representation and warranty made by either Seller pursuant
to Article IV and the provisions of Article VIII and Sections 9.04, 9.05 and
9.06 shall be continuing and shall survive any termination of this Agreement.
SECTION 9.04. COSTS, EXPENSES AND TAXES. (a) In addition to the rights
of indemnification granted to the Purchaser pursuant to Article VIII hereof,
each Seller agrees to pay on demand all costs and expenses in connection with
the preparation, execution and delivery of this Agreement and the other
documents and agreements to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Purchaser with respect thereto and with respect to advising the Purchaser as to
its rights and remedies under this Agreement, and each Seller agrees to pay all
costs and expenses, if any (including reasonable counsel fees and expenses), in
connection with the enforcement of this Agreement and the other documents to be
delivered hereunder EXCLUDING, HOWEVER, any costs of enforcement or collection
of Transferred Receivables which are not paid on account of the insolvency,
bankruptcy or financial inability to pay of the applicable Obligor.
(b) In addition, each Seller agrees to pay any and all stamp and other
taxes and fees payable in connection with the execution, delivery, filing and
recording of this Agreement or the other documents or agreements to be delivered
hereunder, and each Seller agrees to save each Indemnified Party harmless from
and against any liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
SECTION 9.05. NO PROCEEDINGS. Each Seller hereby agrees that it will
not institute against the Purchaser any proceeding of the type referred to in
Section 7.01(g) so long as there shall not have elapsed one year plus one day
since the later of (i) the Facility Termination Date and (ii) the date on which
all of the Transferred Receivables are either collected in full or become
Defaulted Receivables.
29
SECTION 9.06. CONFIDENTIALITY. Each party hereto agrees to maintain the
confidentiality of this Agreement in communications with third parties and
otherwise; provided that this Agreement may be disclosed (i) to third parties to
the extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the other party
hereto, and (ii) to such party's legal counsel and auditors and the Purchaser's
assignees, if they agree in each case to hold it confidential and (iii) to the
extent required by applicable law or regulation or by any court, regulatory body
or agency having jurisdiction over such party (including, without limitation,
the filing of this Agreement with the SEC as an exhibit to an annual or
quarterly report under the Securities Exchange Act of 1934); and PROVIDED,
FURTHER, that such party shall have no obligation of confidentiality in respect
of any information which may be generally available to the public or becomes
available to the public through no fault of such party.
SECTION 9.07. GOVERNING LAW. THIS AGREEMENT, IN ACCORDANCE WITH SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR
THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO THE EXTENT
THAT, PURSUANT TO THE UCC OF THE STATE OF NEW YORK, THE PERFECTION AND THE
EFFECT OF PERFECTION OR NON-PERFECTION OF THE PURCHASER'S OWNERSHIP OF OR
SECURITY INTEREST IN THE RECEIVABLES ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
SECTION 9.08. THIRD PARTY BENEFICIARY. Each of the parties hereto
hereby acknowledges that the Purchaser may assign all or any portion of its
rights under this Agreement and that such assignees may (except as otherwise
agreed to by such assignees) further assign their rights under this Agreement,
and each Seller hereby consents to any such assignments. All such assignees,
including parties to the Sale Agreement in the case of assignment to such
parties, shall be third party beneficiaries of, and shall be entitled to enforce
the Purchaser's rights and remedies under, this Agreement to the same extent as
if they were parties thereto, except to the extent specifically limited under
the terms of their assignment.
SECTION 9.09. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement.
SECTION 9.10. JUDGMENT. (a) If for the purposes of obtaining judgment
in any court it is necessary to convert a sum due hereunder in U.S. Dollars into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Purchaser could purchase U.S.
Dollars with such other currency at New York, New York on the Business Day
preceding that on which final judgment is given.
(b) The obligation of each Seller in respect of any sum due from it to
the Purchaser hereunder shall, notwithstanding any judgment in a currency other
than U.S. Dollars, be
30
discharged only to the extent that on the Business Day following receipt by the
Purchaser of any sum adjudged to be so due in such other currency the Purchaser
may in accordance with normal banking procedures purchase U.S. Dollars with such
other currency; if the U.S. Dollars so purchased are less than the sum
originally due to the Purchaser in U.S. Dollars, such Seller agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Purchaser against such loss, and if the U.S. Dollars so purchased exceed the sum
originally due to the Purchaser in U.S. Dollars, the Purchaser shall remit to
such Seller such excess.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SELLERS: FERRO CORPORATION
By:
----------------------------------------
Treasurer
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
FERRO ELECTRONIC MATERIALS, INC.
By:
----------------------------------------
Treasurer
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary
Facsimile No.: (▇▇▇)▇▇▇-▇▇▇▇
PURCHASER: FERRO FINANCE CORPORATION
By:
----------------------------------------
Treasurer
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
32
EXHIBIT A
CREDIT AND COLLECTION POLICY
A-1
EXHIBIT B
LOCK-BOX BANKS
B-1
EXHIBIT C
FORM OF
DEFERRED PURCHASE PRICE NOTE
New York, New York
September 28, 2000
FOR VALUE RECEIVED, FERRO FINANCE CORPORATION, an Ohio
corporation (the "Purchaser"), hereby promises to pay to [NAME OF SELLER] (the
"Seller") the principal amount of this Note, determined as described below,
together with interest thereon at a rate per annum equal at all times to 1.50%
per annum above the Eurodollar Rate (as defined in the Sale Agreement) for
periods of one month, in each case in lawful money of the United States of
America. Capitalized terms used herein but not defined herein shall have the
meanings assigned to such terms in the Purchase and Contribution Agreement dated
as of September 28, 2000 among the Seller, [Name of other Seller] and the
Purchaser (such agreement, as it may from time to time be amended, restated or
otherwise modified in accordance with its terms, the "PURCHASE AND CONTRIBUTION
AGREEMENT"). This Note is the note referred to in the definition of "Deferred
Purchase Price" in the Purchase and Contribution Agreement.
The aggregate principal amount of this Note at any time shall
be equal to the difference between (a) the sum of the aggregate principal amount
of this Note on the date of the issuance hereof and each addition to the
principal amount of this Note pursuant to the terms of Section 2.02 of the
Purchase and Contribution Agreement minus (b) the aggregate amount of all
payments made in respect of the principal amount of this Note, in each case, as
recorded on the schedule annexed to and constituting a part of this Note, but
failure to so record shall not affect the obligations of the Purchaser to the
Seller.
The entire principal amount of this Note shall be due and
payable one year and one day after the Facility Termination Date or such later
date as may be agreed in writing by the Seller and the Purchaser. The principal
amount of this Note may, at the option of the Purchaser, be prepaid in whole at
any time or in part from time to time. Interest on this Note shall be paid in
arrears on each Settlement Date, at maturity and thereafter on demand. All
payments hereunder shall be made by wire transfer of immediately available funds
to such account of the Seller as the Seller may designate in writing.
Notwithstanding any other provisions contained in this Note,
in no event shall the rate of interest payable by the Purchaser under this Note
exceed the highest rate of interest permissible under applicable law.
The obligations of the Purchaser under this Deferred Purchase
Price Note are subordinated in right of payment, to the extent set forth in
Section 2.03(c) of the Purchase and Contribution Agreement, to the prior payment
in full of all Capital, Yield, Fees and other obligations of the Purchaser under
the Sale Agreement.
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Notwithstanding any provision to the contrary in this Deferred
Purchase Price Note or elsewhere, other than with respect to payments
specifically permitted by Section 2.03(c) of the Purchase and Contribution
Agreement, no demand for any payment may be made hereunder, no payment shall be
due with respect hereto and the Seller shall have no claim for any payment
hereunder prior to the occurrence of the Facility Termination Date and then only
on the date, if ever, when all Capital, Yield, Fees and other obligations owing
under the Sale Agreement shall have been paid in full.
In the event that, notwithstanding the foregoing provision
limiting such payment, the Seller shall receive any payment or distribution on
this Deferred Purchase Price Note which is not specifically permitted by Section
2.03(c) of the Purchase and Contribution Agreement, such payment shall be
received and held in trust by the Seller for the benefit of the entities to whom
the obligations are owed under the Sale Agreement and shall be promptly paid
over to such entities.
The Purchaser hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever.
Neither this Note, nor any right of the Seller to receive
payments hereunder, shall, without the prior written consent of the Purchaser
and (so long as the Sale Agreement remains in effect or any amounts remain
outstanding thereunder) the Agent under the Sale Agreement, be assigned,
transferred, exchanged, pledged, hypothecated, participated or otherwise
conveyed.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
FERRO FINANCE CORPORATION
By:
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Title: Treasurer
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SCHEDULE TO DEFERRED PURCHASE PRICE NOTE
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Date Principal Amount Paid or Prepaid Balance Notation Made By
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EXHIBIT D
FORM OF PURCHASER LOAN NOTE
New York, New York
_____________, 2000
$-----------------
FOR VALUE RECEIVED, [NAME OF SELLER], a [State of
incorporation] corporation (the "COMPANY"), hereby promises to pay to FERRO
FINANCE CORPORATION (the "Lender"), no later than twelve (12) months from the
date hereof or on demand if sooner made, the principal sum of _____________
Dollars (or such lesser amount as shall equal the aggregate unpaid principal
amount of the Purchaser Loans made by the Lender to the Company under the
Purchase and Contribution Agreement referred to below), and to pay on each
Settlement Date interest on the unpaid principal amount of the Purchaser Loans
at a rate per annum equal at all times to 1% per annum above the Eurodollar Rate
(as defined in the Sale Agreement) for periods of one month, in each case in
lawful money of the United States of America and in immediately available funds.
The date and amount of each Purchaser Loan made by the Lender
to the Company from the date hereof until the repayment of all sums due
hereunder, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books and, prior to any transfer of this Note,
endorsed by the Lender on the schedule attached hereto or any continuation
thereof.
This Note is one of the Purchaser Loan Notes referred to in
the Purchase and Contribution Agreement (as amended, restated or otherwise
modified from time to time, the "PURCHASE AND CONTRIBUTION AGREEMENT") dated as
of September 28, 2000 among the Company, [Name of other Seller] and the Lender,
and evidences Purchaser Loans made by the Lender thereunder. Capitalized terms
used in this Note and not defined herein have the respective meanings assigned
to them in the Purchase and Contribution Agreement.
The principal amount of this Note may, at the option of the
Company, be prepaid in whole at any time or in part from time to time.
Notwithstanding any other provisions contained in this Note,
in no event shall the rate of interest payable by the Company under this Note
exceed the highest rate of interest permissible under applicable law.
The Company hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever with respect to this Note.
In the event the Lender shall refer this Note to an attorney
for collection, the Company agrees to pay, in addition to unpaid principal and
interest, all the costs and expenses incurred in attempting or effecting
collection hereunder, including reasonable attorney's fees,
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whether or not suit is instituted.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
[NAME OF SELLER]
By:
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Name:
Title:
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SCHEDULE TO PURCHASER LOAN NOTE
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Amount of
Date Amount of Principal Paid Unpaid Principal Notation
Purchaser Loan or Prepaid Balance Made By
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