RECEIVABLES PURCHASE AGREEMENT
dated as of November 13, 1998
among
SEQUA RECEIVABLES CORP.
SEQUA CORPORATION
LIBERTY STREET FUNDING CORP.
and
THE BANK OF NOVA SCOTIA
TABLE OF CONTENTS
ARTICLE I.AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility 1
Section 1.2. Making Purchases 2
Section 1.3. Purchased Interest Computation 3
Section 1.4. Settlement Procedures 3
Section 1.5. Fees 8
Section 1.6. Payments and Computations, Etc 8
Section 1.7. Dividing or Combining Portions of the
Capital of the Purchased Interest 8
Section 1.8. Increased Costs 9
Section 1.9. Requirements of Law 9
Section 1.10. Inability to Determine Eurodollar Rate 10
ARTICLE II.REPRESENTATIONS AND WARRANTIES;
COVENANTS;TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants 11
Section 2.2. Termination Events 11
ARTICLE III.INDEMNIFICATION
Section 3.1. Indemnities by the Seller 11
Section 3.2. Indemnities by the Servicer 13
ARTICLE IV.ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of the Servicer 14
Section 4.2. Duties of the Servicer 15
Section 4.3. Lock-Box Arrangements 16
Section 4.4. Enforcement Rights 17
Section 4.5. Responsibilities of the Seller 18
Section 4.6. Servicing Fee 18
ARTICLE V.MISCELLANEOUS
Section 5.1. Amendments, Etc. 19
Section 5.2. Notices, Etc. 19
Section 5.3. Assignability 19
Section 5.4. Costs, Expenses and Taxes 20
Section 5.5. No Proceedings; Limitation on Payments 21
Section 5.6. GOVERNING LAW AND JURISDICTION 21
Section 5.7. Execution in Counterparts 21
Section 5.8. Survival of Termination 22
Section 5.9. WAIVER OF JURY TRIAL 22
Section 5.10. Entire Agreement 22
Section 5.11. Headings 22
Section 5.12. Issuer's Liabilities 22
EXHIBIT I Definitions
EXHIBIT II Conditions of Purchases
EXHIBIT III Representations and Warranties
EXHIBIT IV Covenants
EXHIBIT V Termination Events
SCHEDULE I Credit and Collection Policy
SCHEDULE II Lock-box Banks and Lock-box Accounts
SCHEDULE III Trade Names
ANNEX A Form of Monthly Report
ANNEX B Form of Purchase Notice
ANNEX C Special Obligors and Special Concentration
Percentages
This RECEIVABLES PURCHASE AGREEMENT (as amended,
supplemented or otherwise modified from time to time, this
"Agreement") is entered into as of November 13, 1998, among SEQUA
RECEIVABLES CORP., a New York corporation, as seller (the
"Seller"),SEQUA CORPORATION, a Delaware corporation ("Sequa"), as
initial servicer (in such capacity, together with its successors
and permitted assigns in such capacity, the "Servicer"), LIBERTY
STREET FUNDING CORP., a Delaware corporation (together with its
successors and permitted assigns, the "Issuer"), and THE BANK OF
NOVA SCOTIA, a Canadian chartered bank acting through its New
York Agency ("BNS"), as administrator (in such capacity, together
with its successors and assigns in such capacity, the
"Administrator").
PRELIMINARY STATEMENTS. Certain terms that are capitalized
and used throughout this Agreement are defined in Exhibit I.
References in the Exhibits hereto to the "Agreement" refer to
this Agreement, as amended, supplemented or otherwise modified
from time to time.
The Seller desires to sell, transfer and assign an undivided
variable percentage interest in a pool of receivables, and the
Issuer desires to acquire such undivided variable percentage
interest, as such percentage interest shall be adjusted from time
to time based upon, in part, reinvestments made by the Issuer.
In consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereto agree as follows:
I.ARTICLE
AMOUNTS AND TERMS OF THE PURCHASES
1. Section PURCHASE FACILITY. On the terms and
conditions hereinafter set forth, the Issuer hereby agrees to
purchase, and make reinvestments in, undivided percentage
ownership interests with regard to the Purchased Interest from
the Seller from time to time from the date hereof to the Facility
Termination Date. Under no circumstances shall the Issuer make
any such purchase or reinvestment if, after giving effect to such
purchase or reinvestment, the aggregate outstanding Capital of
the Purchased Interest would exceed the Purchase Limit.
1. The Seller may, upon at least 30 days' written notice
to the Administrator, terminate in whole or reduce in part the
unused portion of the Purchase Limit; provided, that each partial
reduction shall be in the amount of at least $5,000,000, or an
integral multiple of $1,000,000 in excess thereof, and that,
unless terminated in whole, the Purchase Limit shall in no event
be reduced below $20,000,000.
1. Section MAKING PURCHASES. Each purchase (but not
reinvestment) of undivided percentage ownership interests with
regard to the Purchased Interest hereunder shall be made upon the
Seller's irrevocable written notice in the form of Annex B
delivered to the Administrator in accordance with Section 5.2
(which notice must be received by the Administrator before 11:00
a.m., New York City time): (i) at least three Business Days
before the requested purchase date, in the case of a purchase to
be funded at the Alternate Rate and based upon the Eurodollar
Rate, (ii) at least two Business Days before the requested
purchase date, in the case of a purchase to be funded at the
Alternate Rate and based upon the Base Rate, and (iii) at least
two Business Day before the requested purchase date, in the case
of a purchase to be funded at the CP Rate, which notice shall
specify: (A) the amount requested to be paid to the Seller (such
amount, which shall not be less than $1,000,000, being the
Capital relating to the undivided percentage ownership interest
then being purchased), (B) the date of such purchase (which shall
be a Business Day), and (C) the desired funding basis for such
purchase (which shall be based upon the Eurodollar Rate, the Base
Rate or the CP Rate). If the Seller has requested that the
purchase be funded at the CP Rate, the Administrator shall
promptly thereafter notify the Seller whether the Issuer has
exercised its discretion not to fund such purchase with the
issuance of Notes because such purchase with the issuance of
Notes would be economically inadvisable to the Issuer, the
Administrator, the Seller or any other similarly situated Person,
or otherwise not permitted, in which case the Seller shall be
deemed to have requested that the purchase be funded at the
Alternate Rate and be based upon the Base Rate.
1. On the date of each purchase (but not reinvestment) of
undivided percentage ownership interests with regard to the
Purchased Interest hereunder, the Issuer shall, upon satisfaction
of the applicable conditions set forth in Exhibit II, make
available to the Seller in same day funds, at The Bank of New
York, account number 8900209887, ABA 000000000, an amount equal
to the Capital relating to the undivided percentage ownership
interest then being purchased.
1. Effective on the date of each purchase pursuant to
this Section and each reinvestment pursuant to Section 1.4, the
Seller hereby sells and assigns to the Issuer an undivided
percentage ownership interest in: (i) each Pool Receivable then
existing, (ii) all Related Security with respect to such Pool
Receivables, and (iii) all Collections with respect to, and other
proceeds of, such Pool Receivables and Related Security.
1. To secure all of the Seller's obligations (monetary or
otherwise) under this Agreement and the other Transaction
Documents to which it is a party, whether now or hereafter
existing or arising, due or to become due, direct or indirect,
absolute or contingent, the Seller hereby grants to the Issuer a
security interest in all of the Seller's right, title and
interest (including any undivided interest of the Seller) in, to
and under all of the following, whether now or hereafter owned,
existing or arising: (i) all Pool Receivables, (ii) all Related
Security with respect to such Pool Receivables, (iii) all
Collections with respect to such Pool Receivables, (iv) the Lock-
Box Accounts, the Concentration Accounts and the Liquidation
Account and all amounts on deposit therein, and all certificates
and instruments, if any, from time to time evidencing such Lock-
Box Accounts, Concentration Accounts and Liquidation Account and
amounts on deposit therein, (v) all rights (but none of the
obligations) of the Seller under the Sale Agreement, and (vi) all
proceeds of, and all amounts received or receivable under any or
all of, the foregoing (collectively, the "Pool Assets"). The
Issuer shall have, with respect to the Pool Assets, and in
addition to all the other rights and remedies available to the
Issuer, all the rights and remedies of a secured party under any
applicable UCC.
A. Section PURCHASED INTEREST COMPUTATION. The Purchased
Interest shall be initially computed on the date of the initial
purchase hereunder. Thereafter, until the Facility Termination
Date, the Purchased Interest shall be automatically recomputed
(or deemed to be recomputed) on each Business Day other than a
Termination Day. The Purchased Interest as computed (or deemed
recomputed) as of the day before the Facility Termination Date
shall thereafter remain constant. The Purchased Interest shall
become zero when the Capital thereof and Discount thereon shall
have been paid in full, all the amounts owed by the Seller and
the Servicer hereunder to the Issuer, the Administrator and any
other Indemnified Party or Affected Person are paid in full, and
the Servicer shall have received the accrued Servicing Fee
thereon.
1. Section SETTLEMENT PROCEDURES. The collection of the
Pool Receivables shall be administered by the Servicer in
accordance with this Agreement. The Seller shall provide to the
Servicer on a timely basis all information needed for such
administration, including notice of the occurrence of any
Termination Day and current computations of the Purchased
Interest.
1. The Servicer shall, on each Business Day on which
Collections of Pool Receivables are received (or deemed received)
by the Seller or Servicer or are deposited into the Lock-Box
Accounts, transfer such Collections therefrom and deposit such
Collections into the Concentration Accounts. With respect to
such Collections on such day, the Servicer shall:
a. transfer from the Concentration Accounts to
the Liquidation Account for the benefit of the Issuer,
out of the percentage of such Collections represented
by the Purchased Interest, FIRST an amount equal to the
Discount accrued through such day for each Portion of
Capital and not previously transferred, SECOND, an
amount equal to the fees set forth in the Fee Letter
accrued through such day for the Purchased Interest and
not previously transferred, and THIRD, to the extent
funds are available therefor, an amount equal to the
Issuer's Share of the Servicing Fee accrued through
such day and not previously transferred; and
a. subject to Section 1.4(f), if such day is
not a Termination Day, remit to the Seller, on behalf
of the Issuer, the remainder of the percentage of such
Collections, represented by the Purchased Interest, to
the extent representing a return on the Capital; such
Collections shall be automatically reinvested in Pool
Receivables, and in the Related Security and
Collections and other proceeds with respect thereto,
and the Purchased Interest shall be automatically
recomputed pursuant to SECTION 1.3; IT BEING
UNDERSTOOD, that prior to remitting to the Seller the
remainder of such Collections by way of reinvestment in
Pool Receivables, the Servicer shall have calculated
the Purchased Interest on such day, and if such
Purchased Interest shall exceed 100% of the Net
Receivables Pool Balance on such day, such Collections
shall not be remitted to the Seller but shall be
transferred to the Liquidation Account for the benefit
of the Issuer in accordance with paragraph (iii) below;
a. if such day is a Termination Day,
(A) transfer to the Liquidation Account for the benefit
of the Issuer the entire remainder of the percentage of
the Collections represented by the Purchased Interest;
provided that so long as the Facility Termination Date
has not occurred if any amounts are so transferred to
the Liquidation Account on any Termination Day and
thereafter, the conditions set forth in Section 2 of
Exhibit II are satisfied or are waived by the
Administrator, such previously transferred amounts
shall, to the extent representing a return on the
Capital, be reinvested in accordance with the preceding
paragraph (ii) on the day of such subsequent
satisfaction or waiver of conditions, and (B) transfer
to the Liquidation Account for the benefit of the
Issuer the entire remainder of the Collections in the
Concentration Accounts represented by the Seller's
Share of the Collections, if any; provided that so long
as the Facility Termination Date has not occurred if
any amounts are so set aside on any Termination Day and
thereafter, the conditions set forth in Section 2 of
Exhibit II are satisfied or are waived by the
Administrator, such previously set aside amounts shall
be distributed to the Seller on the day of such
subsequent satisfaction or waiver of conditions; and
a. if such day is not a Termination Day,
release to the Seller (subject to Section 1.4(f)) for
its own account any Collections (including amounts
representing Collections with respect to Receivables
that are not Eligible Receivables) in excess of (x) any
amounts that are required to be reinvested in
accordance with the foregoing paragraph (ii) or the
proviso to paragraph (iii), (y) the amounts that are
required to be transferred to the Liquidation Account
pursuant to paragraph (i) above and (z) in the event
the Seller is not the Servicer, all reasonable and
appropriate out-of-pocket costs and expenses of such
Servicer of servicing, collecting and administering the
Pool Receivables.
1. The Servicer shall deposit into the
Administrator's Account (or such other account designated by
the Administrator), on each Settlement Date relating to a
Portion of Capital or the payment of Fees:
a. Collections held on deposit in the
Liquidation Account for the benefit of the Issuer
pursuant to Section 1.4(b)(i) in respect of accrued
Discount on such Portion of Capital and accrued and
unpaid Fees;
a. Collections held on deposit in the
Liquidation Account for the benefit of the Issuer
pursuant to Section 1.4(f) with respect to such Portion
of Capital; and
a. the lesser of (x) the amount of Collections
then held on deposit in the Liquidation Account for the
benefit of the Issuer pursuant to Section 1.4(b)(iii)
and (y) such Portion of Capital.
The Servicer shall deposit to its own account from
Collections held on deposit in the Liquidation Account
pursuant to Section 1.4(b)(i) in respect of the accrued
Servicing Fee, an amount equal to such accrued Servicing
Fee.
1. Upon receipt of funds deposited into the
Administration Account pursuant to clause (c), the
Administrator shall cause such funds to be distributed as
follows:
a. if such distribution occurs on a day that is
not a Termination Day and the Purchased Interest does
not exceed 100%, FIRST to the Issuer in payment in full
of all accrued Discount with respect to each Portion of
Capital and accrued and unpaid Fees, and SECOND, if the
Servicer has set aside amounts in respect of the
Servicing Fee pursuant to clause (b)(i) and has not
retained such amounts pursaunt to clause (c), to the
Servicer (payable in arrears on each Monthly Settlement
Date) in payment in full of the Issuer's Share of
accrued Servicing Fees so set aside, and
a. if such distribution occurs on a Termination
Day or on a day when the Purchased Interest exceeds
100%, FIRST to the Issuer in payment in full of all
accrued Discount with respect to each Portion of
Capital and accrued and unpaid Fees, SECOND to the
Issuer in payment in full of Capital (or, if such day
is not a Termination Day, the amount necessary to
reduce the Purchased Interest to 100%), THIRD, if Sequa
or an Affiliate thereof is not the Servicer, to the
Servicer in payment in full of all accrued Servicing
Fees, FOURTH, if the Capital and accrued Discount with
respect to each Portion of Capital have been reduced to
zero, and all accrued Servicing Fees payable to the
Servicer (if other than Sequa or an Affiliate thereof)
have been paid in full, to the Issuer, the
Administrator and any other Indemnified Party or
Affected Person in payment in full of any other amounts
owed thereto by the Seller under this Agreement and,
FIFTH, unless such amount has been retained by the
Servicer pursuant to clause (c), to the Servicer (if
the Servicer is Sequa or an Affiliate thereof) in
payment in full of the Issuer's Share of all accrued
Servicing Fees.
After the Capital, Discount, Fees and Servicing Fees with
respect to the Purchased Interest, and any other amounts
payable by the Seller and the Servicer to the Issuer, the
Administrator or any other Indemnified Party or Affected
Person hereunder, have been paid in full, all additional
Collections with respect to the Purchased Interest shall be
paid to the Seller for its own account.
1. For the purposes of this Section 1.4:
a. if on any day the Outstanding Balance of any
Pool Receivable is reduced or adjusted as a result of
any defective, rejected, returned, repossessed or
foreclosed goods or services, or any revision,
cancellation, allowance, discount or other adjustment
made by any Originator, the Servicer, the Seller or any
Affiliate of the Seller, or any setoff or dispute
between any Originator, the Seller or any Affiliate of
the Seller and an Obligor, the Seller shall be deemed
to have received on such day a Collection of such Pool
Receivable in the amount of such reduction or
adjustment;
a. if on any day any of the representations or
warranties in Section 1(g) or (m) of Exhibit III is not
true with respect to any Pool Receivable, the Seller
shall be deemed to have received on such day a
Collection of such Pool Receivable in full (Collections
deemed to have been received pursuant to clause (i) and
(ii) of this paragraph (e) are hereinafter sometimes
referred to as "Deemed Collections");
a. except as otherwise required by applicable
law or the relevant Contract, all Collections received
from an Obligor of any 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 in writing
its payment for application to specific Receivables;
and
a. if and to the extent the Administrator or
the Issuer shall be required for any reason to pay over
to an Obligor (or any trustee, receiver, custodian or
similar official in any Insolvency Proceeding) any
amount received by it hereunder, such amount shall be
deemed not to have been so received by the
Administrator or the Issuer but rather to have been
retained by the Seller and, accordingly, the
Administrator or the Issuer, as the case may be, shall
have a claim against the Seller for such amount,
payable when and to the extent that any distribution
from or on behalf of such Obligor is made in respect
thereof.
1. If at any time the Seller shall wish to cause the
reduction of Capital of the Purchased Interest (but not to
commence the liquidation, or reduction to zero, of the
entire Capital of the Purchased Interest), the Seller may do
so as follows:
a. the Seller shall give the Administrator and
the Servicer at least two Business Days' prior written
notice thereof (including the amount of such proposed
reduction and the proposed date on which such reduction
will commence);
a. on the proposed date of commencement of such
reduction and on each day thereafter, the Servicer
shall cause Collections not to be reinvested until the
amount thereof not so reinvested shall equal the
desired amount of reduction; and
a. the Servicer shall hold such Collections in
the Liquidation Account for the benefit of the Issuer,
for payment to the Administrator on the next Settlement
Date immediately following the current Yield Period,
and the Capital of the Purchased Interest shall be
deemed reduced in the amount to be paid to the
Administrator only when in fact finally so paid;
provided, that:
(A) the amount of any such reduction shall be not
less than $5,000,000 and shall be an integral multiple
of $1,000,000, and the entire Capital of the Purchased
Interest after giving effect to such reduction shall be
not less than $20,000,000 and shall be in an integral
multiple of $1,000,000 (unless Capital shall have been
reduced to zero); and
(B) the Seller shall choose a reduction amount,
and the date of commencement thereof, so that to the
extent practicable such reduction shall commence and
conclude in the same Yield Period.
A. Section FEES. The Seller shall pay to the
Administrator certain fees in the amounts and on the dates
set forth in a letter, dated the date hereof, among Sequa,
the Seller and the Administrator (as such letter agreement
may be amended, supplemented or otherwise modified from time
to time, the "Fee Letter").
1. Section PAYMENTS AND COMPUTATIONS, Etc. All
amounts to be paid or deposited by the Seller or the
Servicer hereunder shall be made without reduction for
offset or counterclaim and shall be paid or deposited no
later than noon (New York City time) on the day when due in
same day funds to the Administration Account. All amounts
received after noon (New York City time) will be deemed to
have been received on the next Business Day.
1. The Seller or the Servicer, as the case may be,
shall, to the extent permitted by law, pay interest on any
amount not paid or deposited by the Seller or the Servicer,
as the case may be, when due hereunder, at an interest rate
equal to 1.0% per annum above the Base Rate, payable on
demand.
1. All computations of interest under clause (b) and
all computations of Discount, fees and other amounts
hereunder shall be made on the basis of a year of 360 (or
365 or 366, as applicable, with respect to Discount or other
amounts calculated by reference to the Base Rate) days for
the actual number of days 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 Business Day and such extension of time shall be
included in the computation of such payment or deposit.
A. Section DIVIDING OR COMBINING PORTIONS OF THE
CAPITAL OF THE PURCHASED INTEREST. The Seller may, on the
last day of any Yield Period, pursuant to written notice
delivered to the Administrator in accordance with Section
5.2: (a) at least three Business Days before such last day
in the case of a Portion of Capital to be funded based upon
the Eurodollar Rate and (b) at least two Business Days
before such last day in all other cases, either: (i) divide
the Capital of the Purchased Interest into two or more
portions (each a "Portion of Capital"), which Portions of
Capital may accrue Discount by reference to different rates,
equal, in aggregate, to the Capital of the Purchased
Interest; provided, that after giving effect to such
division the amount of each such Portion of Capital shall be
not less than $5,000,000 and shall be an integral multiple
of $1,000,000, or (ii) combine any two or more Portions of
Capital outstanding on such last day and having Yield
Periods ending on such last day into a single Portion of
Capital equal to the aggregate of the Capital of such
Portions of Capital.
1. Section INCREASED COSTS. If the Administrator,
the Issuer, any Purchaser, any other Program Support
Provider or any of their respective Affiliates (each an
"Affected Person") reasonably determines that the existence
of or compliance with: (i) any law or regulation or any
change therein or in the interpretation or application
thereof, in each case adopted, issued or occurring after the
date hereof, or (ii) any request, guideline or directive
from any central bank or other Governmental Authority
(whether or not having the force of law) issued or occurring
after the date of this Agreement, affects or would affect
the amount of capital required or expected to be maintained
by such Affected Person, and such Affected Person determines
that the amount of such capital is increased by or based
upon the existence of any commitment to make purchases of
(or otherwise to maintain the investment in) Pool
Receivables related to this Agreement or any related
liquidity facility, credit enhancement facility and other
commitments of the same type, then, upon demand by such
Affected Person (with a copy to the Administrator), the
Seller shall promptly pay to the Administrator, for the
account of such Affected Person, from time to time as
specified by such Affected Person, additional amounts
sufficient to compensate such Affected Person. A certificate
as to such amounts submitted to the Seller and the
Administrator by such Affected Person shall be conclusive
and binding for all purposes, absent manifest error.
1. If, due to either: (i) the introduction of or any
change in or in the interpretation of any law or regulation
or (ii) compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the
cost to any Affected Person of agreeing to purchase or
purchasing, or maintaining the ownership of, the Purchased
Interest in respect of which Discount is computed by
reference to the Eurodollar Rate, then, upon demand by such
Affected Person, the Seller shall promptly pay to such
Affected Person, from time to time as specified by such
Affected Person, additional amounts sufficient to compensate
such Affected Person for such increased costs. A certificate
as to such amounts submitted to the Seller and the
Administrator by such Affected Person shall be conclusive
and binding for all purposes, absent manifest error.
A. Section REQUIREMENTS OF LAW. If any Affected
Person reasonably determines that the existence of or
compliance with: (a) any law or regulation or any change
therein or in the interpretation or application thereof, in
each case adopted, issued or occurring after the date
hereof, or (b) any request, guideline or directive from any
central bank or other Governmental Authority (whether or not
having the force of law) issued or occurring after the date
of this Agreement:
(i) does or shall subject such Affected Person to
any tax of any kind whatsoever with respect to this
Agreement, any increase in the Purchased Interest or in
the amount of Capital relating thereto, or does or
shall change the basis of taxation of payments to such
Affected Person on account of Collections, Discount or
any other amounts payable hereunder (excluding taxes
imposed on the overall pre-tax net income of such
Affected Person, and franchise taxes imposed on such
Affected Person, by the jurisdiction under the laws of
which such Affected Person is organized or a political
subdivision thereof),
(ii) does or shall impose, modify or hold
applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of,
purchases, advances or loans by, or other credit
extended by, or any other acquisition of funds by, any
office of such Affected Person that are not otherwise
included in the determination of the Eurodollar Rate or
the Base Rate hereunder, or
(iii) does or shall impose on such Affected Person
any other condition,
and the result of any of the foregoing is: (A) to increase
the cost to such Affected Person of acting as Administrator,
or of agreeing to purchase or purchasing or maintaining the
ownership of undivided percentage ownership interests with
regard to the Purchased Interest (or interests therein) or
any Portion of Capital, or (B) to reduce any amount
receivable hereunder (whether directly or indirectly), then,
in any such case, upon demand by such Affected Person, the
Seller shall promptly pay to such Affected Person additional
amounts necessary to compensate such Affected Person for
such additional cost or reduced amount receivable. All such
amounts shall be payable as incurred. A certificate from
such Affected Person to the Seller as to the amount of such
additional costs or reduced amount receivable shall be
conclusive and binding for all purposes, absent manifest
error.
A. Section INABILITY TO DETERMINE EURODOLLAR RATE.
If the Administrator shall have determined before the first
day of any Yield Period (which determination shall be
conclusive and binding upon the parties hereto), by reason
of circumstances affecting the interbank Eurodollar market,
either that: (a) dollar deposits in the relevant amounts and
for the relevant Yield Period are not available, (b)
adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Yield Period or (c) the
Eurodollar Rate determined pursuant hereto does not
accurately reflect the cost to the Issuer (as conclusively
determined by the Administrator) of maintaining any Portion
of Capital during such Yield Period, the Administrator shall
promptly give telephonic notice of such determination,
confirmed in writing, to the Seller before the first day of
such Yield Period. Upon delivery of such notice: (i) no
Portion of Capital shall be funded thereafter at the
Alternate Rate determined by reference to the Eurodollar
Rate unless and until the Administrator shall have given
notice to the Seller that the circumstances giving rise to
such determination no longer exist, and (ii) with respect to
any outstanding Portions of Capital then funded at the
Alternate Rate determined by reference to the Eurodollar
Rate, such Alternate Rate shall automatically be converted
to the Alternate Rate determined by reference to the Base
Rate at the respective last days of the then-current Yield
Periods relating to such Portions of Capital.
I.ARTICLE
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
A. Section REPRESENTATIONS AND WARRANTIES;
COVENANTS. Each of the Seller, Sequa and the Servicer hereby
makes the representations and warranties, and hereby agrees
to perform and observe the covenants, applicable to it set
forth in Exhibits III and IV, respectively.
A. Section TERMINATION EVENTS. If any of the
Termination Events set forth in Exhibit V shall occur, the
Administrator may, by notice to the Seller, declare the
Facility Termination Date to have occurred (in which case
the Facility Termination Date shall be deemed to have
occurred); 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 (f) of
Exhibit V, the Facility Termination Date shall occur. Upon
any such declaration, occurrence or deemed occurrence of the
Facility Termination Date, the Issuer and the Administrator
shall have, in addition to the rights and remedies that they
may have under this Agreement, all other rights and remedies
provided after default under the New York UCC and under
other applicable law, which rights and remedies shall be
cumulative.
I.ARTICLE
INDEMNIFICATION
A. Section INDEMNITIES BY THE SELLER. Without
limiting any other rights that the Administrator, the
Issuer, any Program Support Provider or any of their
respective Affiliates, employees, officers, directors,
agents, counsel, successors, transferees or assigns (each,
an "Indemnified Party") may have hereunder or under
applicable law, the Seller hereby agrees to indemnify each
Indemnified Party from and against any and all claims,
damages, expenses, costs, losses and liabilities (including
Attorney Costs) (all of the foregoing being collectively
referred to as "Indemnified Amounts") arising out of or
resulting from this Agreement (whether directly or
indirectly), the use of proceeds of purchases or
reinvestments, the ownership of the Purchased Interest, or
any interest therein, or in respect of any Receivable,
Related Security or Contract, excluding, however: (a)
Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such
Indemnified Party or its officers, directors, agents or
counsel, (b) recourse (except as otherwise specifically
provided in this Agreement) for uncollectible Receivables,
or (c) any overall net income taxes or franchise taxes
imposed on such Indemnified Party by the jurisdiction under
the laws of which such Indemnified Party is organized or any
political subdivision thereof. Without limiting or being
limited by the foregoing, and subject to the exclusions set
forth in the preceding sentence, the Seller shall pay on
demand to each Indemnified Party any and all amounts
necessary to indemnify such Indemnified Party from and
against any and all Indemnified Amounts relating to or
resulting from any of the following:
a. the failure of any Receivable included in
the calculation of the Net Receivables Pool Balance as
an Eligible Receivable to be an Eligible Receivable,
the failure of any information contained in an Monthly
Report to be true and correct, or the failure of any
other information provided to the Issuer or the
Administrator with respect to Receivables or this
Agreement to be true and correct,
a. the failure of any representation, warranty
or statement made or deemed made by the Seller (or any
of its officers) under or in connection with this
Agreement to have been true and correct as of the date
made or deemed made in all respects when made,
a. the failure by the Seller to comply with any
applicable law, rule or regulation with respect to any
Pool Receivable or the related Contract, or the failure
of any Pool Receivable or the related Contract to
conform to any such applicable law, rule or regulation,
a. the failure to vest in the Issuer a valid
and enforceable: (A) perfected undivided percentage
ownership interest, to the extent of the Purchased
Interest, in the Receivables in, or purporting to be
in, the Receivables Pool and the other Pool Assets, or
(B) first priority perfected security interest in the
Pool Assets, in each case, free and clear of any
Adverse Claim,
a. the failure to have filed, or any delay in
filing, financing statements or other similar
instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with
respect to any Receivables in, or purporting to be in,
the Receivables Pool and the other Pool Assets, whether
at the time of any purchase or reinvestment or at any
subsequent time,
a. any dispute, claim, offset or defense (other
than discharge in bankruptcy of the Obligor) of the
Obligor to the payment of any Receivable in, or
purporting to be in, the Receivables Pool (including a
defense based on such Receivable or the related
Contract not being a legal, valid and binding
obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim
resulting from the sale of the goods or services
related to such Receivable or the furnishing or failure
to furnish such goods or services or relating to
collection activities with respect to such Receivable
(if such collection activities were performed by the
Seller or any of its Affiliates acting as Servicer or
by any agent or independent contractor retained by the
Seller or any of its Affiliates),
a. any failure of the Seller (or any of its
Affiliates acting as the Servicer) to perform its
duties or obligations in accordance with the provisions
hereof or under the Contracts,
a. any products liability or other claim,
investigation, litigation or proceeding arising out of
or in connection with merchandise, insurance or
services that are the subject of any Contract,
a. the commingling of Collections at any time
with other funds,
a. the use of proceeds of purchases or
reinvestments, or
a. any reduction in Capital as a result of the
distribution of Collections pursuant to Section 1.4(d),
if all or a portion of such distributions shall
thereafter be rescinded or otherwise must be returned
for any reason.
A. Section INDEMNITIES BY THE SERVICER. Without
limiting any other rights that the Administrator, the Issuer
or any other Indemnified Party may have hereunder or under
applicable law, the Servicer hereby agrees to indemnify each
Indemnified Party from and against any and all Indemnified
Amounts arising out of or resulting from (whether directly
or indirectly): (a) the failure of any information contained
in a Monthly Report to be true and correct, or the failure
of any other information provided to the Issuer or the
Administrator by, or on behalf of, the Servicer to be true
and correct, (b) the failure of any representation, warranty
or statement made or deemed made by the Servicer (or any of
its officers) under or in connection with this Agreement to
have been true and correct in all respects as of the date
made or deemed made, (c) the failure by the Servicer to
comply with any applicable law, rule or regulation with
respect to any Pool Receivable or the related Contract, (d)
any dispute, claim, offset or defense of the Obligor to the
payment of any Receivable in, or purporting to be in, the
Receivables Pool resulting from or related to the collection
activities with respect to such Receivable, or (e) any
failure of the Servicer to perform its duties or obligations
in accordance with the provisions hereof.
I.ARTICLE
ADMINISTRATION AND COLLECTIONS
1. Section APPOINTMENT OF THE SERVICER. The
servicing, administering and collection of the Pool
Receivables shall be conducted by the Person so designated
from time to time as the Servicer in accordance with this
Section. Until the Administrator gives notice to Sequa (in
accordance with this Section) of the designation of a new
Servicer, Sequa is hereby designated as, and hereby agrees
to perform the duties and obligations of, the Servicer
pursuant to the terms hereof. Upon the occurrence of a
Termination Event, the Administrator may designate as
Servicer any Person (including itself) to succeed Sequa or
any successor Servicer, on the condition in each case that
any such Person so designated shall agree to perform the
duties and obligations of the Servicer pursuant to the terms
hereof.
1. Upon the designation of a successor Servicer as
set forth in clause (a), Sequa agrees that it will terminate
its activities as Servicer hereunder in a manner that the
Administrator determines will facilitate the transition of
the performance of such activities to the new Servicer, and
Sequa shall cooperate with and assist such new Servicer.
Such cooperation shall include access to and transfer of
related records and use by the new Servicer of all licenses,
hardware or software necessary or desirable to collect the
Pool Receivables and the Related Security.
1. Sequa acknowledges that, in making their decision
to execute and deliver this Agreement, the Administrator and
the Issuer have relied on Sequa's agreement to act as
Servicer hereunder. Accordingly, Sequa agrees that it will
not voluntarily resign as Servicer.
1. The Servicer may delegate its duties and
obligations hereunder to any subservicer (each a "Sub-
Servicer"); provided, that, in each such delegation: (i)
such Sub-Servicer shall agree in writing to perform the
duties and obligations of the Servicer pursuant to the terms
hereof, (ii) the Servicer shall remain primarily liable for
the performance of the duties and obligations so delegated,
(iii) the Seller, the Administrator and the Issuer shall
have the right to look solely to the Servicer for
performance, and (iv) the terms of any agreement with any
Sub-Servicer shall provide that the Administrator may
terminate such agreement upon the termination of the
Servicer hereunder by giving notice of its desire to
terminate such agreement to the Servicer (and the Servicer
shall provide appropriate notice to each such Sub-Servicer);
provided, however, that if any such delegation is to any
Person other than an Originator, the Administrator shall
have consented in writing in advance to such delegation.
1. Section DUTIES OF THE SERVICER. The Servicer
shall take or cause to be taken all such action as may be
necessary or advisable to administer and collect each Pool
Receivable from time to time, all in accordance with this
Agreement and all applicable laws, rules and regulations,
with reasonable care and diligence, and in accordance with
the Credit and Collection Policies. The Servicer shall set
aside, for the accounts of the Seller and the Issuer, the
amount of the Collections to which each is entitled in
accordance with Article I. The Servicer may, in accordance
with the applicable Credit and Collection Policy, extend the
maturity of any Pool Receivable (but not beyond 30 days) and
extend the maturity or adjust the Outstanding Balance of any
Defaulted Receivable as the Servicer may determine to be
appropriate to maximize Collections thereof; provided,
however, that: (i) such extension or adjustment shall not
alter the status of such Pool Receivable as a Delinquent
Receivable or a Defaulted Receivable or limit the rights of
the Issuer or the Administrator under this Agreement and
(ii) if a Termination Event has occurred and Sequa or an
Affiliate thereof is serving as the Servicer, Sequa or such
Affiliate may make such extension or adjustment only upon
the prior written approval of the Administrator. The Seller
shall deliver to the Servicer and the Servicer shall hold
for the benefit of the Seller and the Administrator
(individually and for the benefit of the Issuer), in
accordance with their respective interests, all records and
documents (including computer tapes or disks) with respect
to each Pool Receivable. Notwithstanding anything to the
contrary contained herein, the Administrator may direct the
Servicer (whether the Servicer is Sequa or any other Person)
to commence or settle any legal action to enforce collection
of any Pool Receivable or to foreclose upon or repossess any
Related Security.
1. The Servicer shall, as soon as practicable
following actual receipt of collected funds, turn over to
the Seller the collections of any indebtedness that is not a
Pool Receivable, less, if Sequa or an Affiliate thereof is
not the Servicer, all reasonable and appropriate out-of-
pocket costs and expenses of such Servicer of servicing,
collecting and administering such collections. The Servicer,
if other than Sequa or an Affiliate thereof, shall, as soon
as practicable upon demand, deliver to the Seller all
records in its possession that evidence or relate to any
indebtedness that is not a Pool Receivable, and copies of
records in its possession that evidence or relate to any
indebtedness that is a Pool Receivable.
1. The Servicer's obligations hereunder shall
terminate on the later of: (i) the Facility Termination Date
and (ii) the date on which all amounts required to be paid
to the Issuer, the Administrator and any other Indemnified
Party or Affected Person hereunder shall have been paid in
full.
After such termination, if Sequa or an Affiliate
thereof was not the Servicer on the date of such
termination, the Servicer shall promptly deliver to the
Seller all books, records and related materials that the
Seller previously provided to the Servicer, or that have
been obtained by the Servicer, in connection with this
Agreement.
A. Section ESTABLISHMENT AND USE OF CERTAIN
ACCOUNTS. (a) Prior to the initial purchase hereunder, the
Seller shall enter into Lock-Box Agreements establishing the
Lock-Box Accounts listed on Schedule II with all of the
Lock-Box Banks, and deliver original counterparts thereof to
the Administrator.
(b) The Servicer agrees to establish the
Concentration Accounts on or before the date of the first
purchase hereunder. The Concentration Accounts shall be
used to accept the transfer of Collections of Pool
Receivables from the Lock-Box Accounts pursuant to Section
1.4(b) and for such other purposes described in the
Transaction Documents.
(c) The Servicer agrees to establish the
Liquidation Account on or before the date of the initial
purchase hereunder. The Liquidation Account shall be used
to receive transfers of certain amounts of Collections of
Pool Receivables prior to the Settlement Dates and for such
other purposes described in the Transaction Documents. No
funds other than those transferred in accordance with
Section 1.4 shall be intentionally transferred into the
Liquidation Account.
(d) Any amounts in the Liquidation Account or the
Concentration Accounts, as the case may be, may be invested
by the Liquidation Account Bank or Concentration Account
Banks, respectively, at Servicer's direction, in Permitted
Investments, so long as Issuer's interest in such Permitted
Investments is perfected and such Permitted Investments are
subject to no Adverse Claims other than those of the Issuer
provided hereunder.
(e) Upon the occurrence of a Termination Event,
the Administrator may at any time thereafter give notice to
each Lock-Box Bank, each Concentration Account Bank and the
Liquidation Account Bank that the Administrator is
exercising its rights under the Lock-Box Agreements, the
Concentration Account Agreements and the Liquidation Account
Agreement, as applicable, to do any or all of the following:
(i) to have the exclusive ownership and control of the Lock-
Box Accounts, the Concentration Accounts and the Liquidation
Account transferred to the Administrator and to exercise
exclusive dominion and control over the funds deposited
therein, (ii) to have the proceeds that are sent to the
respective Lock-Box Accounts redirected pursuant to the
Administrator's instructions rather than deposited in the
applicable Lock-Box Account, and (iii) to take any or all
other actions permitted under the applicable Lock-Box
Agreement, Concentration Account Agreement and the
Liquidation Account Agreement. The Seller hereby agrees that
if the Administrator at any time takes any action set forth
in the preceding sentence, the Administrator shall have
exclusive control of the proceeds (including Collections) of
all Pool Receivables and the Seller hereby further agrees to
take any other action that the Administrator may reasonably
request to transfer such control. Any proceeds of Pool
Receivables received by the Seller or the Servicer
thereafter shall be sent immediately to the Administrator.
The parties hereto hereby acknowledge that if at any time
the Administrator takes control of any Lock-Box Account, any
Concentration Account and/or the Liquidation Account, the
Administrator shall not have any rights to the funds therein
in excess of the unpaid amounts due to the Administrator,
the Issuer or any other Person hereunder, and the
Administrator shall distribute or cause to be distributed
such funds in accordance with Section 4.2(b) and Article I
(in each case as if such funds were held by the Servicer
thereunder).
1. Section ENFORCEMENT RIGHTS. At any time
following the occurrence of a Termination Event:
a. the Administrator may direct the Obligors
that payment of all amounts payable under any Pool
Receivable is to be made directly to the Administrator
or its designee,
a. the Administrator may give notice of the
Issuer's interest in Pool Receivables to each Obligor,
which notice shall direct that payments be made
directly to the Administrator or its designee, and
a. the Administrator may request the Servicer
to, and upon such request the Servicer shall: (A)
assemble all of the records necessary or desirable to
collect the Pool Receivables and the Related Security,
and transfer or license to a successor Servicer the use
of all software necessary or desirable to collect the
Pool Receivables and the Related Security, and make the
same available to the Administrator or its designee at
a place selected by the Administrator, and (B)
segregate all cash, checks and other instruments
received by it from time to time constituting
Collections in a manner acceptable to the Administrator
and, promptly upon receipt, remit all such cash, checks
and instruments, duly endorsed or with duly executed
instruments of transfer, to the Administrator or its
designee.
1. The Seller hereby authorizes the Administrator,
and irrevocably appoints the Administrator as its attorney-
in-fact with full power of substitution and with full
authority in the place and stead of the Seller, which
appointment is coupled with an interest, to take any and all
steps in the name of the Seller and on behalf of the Seller
necessary or desirable, in the determination of the
Administrator, after the occurrence of a Termination Event,
to collect any and all amounts or portions thereof due under
any and all Pool Assets, including endorsing the name of the
Seller on checks and other instruments representing
Collections and enforcing such Pool Assets. Notwithstanding
anything to the contrary contained in this subsection, none
of the powers conferred upon such attorney-in-fact pursuant
to the preceding sentence shall subject such attorney-in-
fact to any liability if any action taken by it shall prove
to be inadequate or invalid, nor shall they confer any
obligations upon such attorney-in-fact in any manner
whatsoever.
1. Section RESPONSIBILITIES OF THE SELLER. Anything
herein to the contrary notwithstanding, the Seller shall pay
when due any taxes, including any sales taxes payable in
connection with the Pool Receivables and their creation and
satisfaction. The Administrator and the Issuer shall not
have any obligation or liability with respect to any Pool
Asset, nor shall either of them be obligated to perform any
of the obligations of the Seller, Sequa or an Originator
thereunder.
1. Sequa hereby irrevocably agrees that if at any
time it shall cease to be the Servicer hereunder, it shall
act (if the then-current Servicer so requests) as the data-
processing agent of the Servicer and, in such capacity,
Sequa shall conduct the data-processing functions of the
administration of the Receivables and the Collections
thereon in substantially the same way that Sequa conducted
such data-processing functions while it acted as the
Servicer.
A. Section Servicing Fee. (a) Subject to clause
(b), the Servicer shall be paid a fee equal to 1.0% per
annum (the "Servicing Fee Rate") of the daily average
aggregate Outstanding Balance of the Pool Receivables. The
Issuer's Share of such fee shall be paid through the
distributions contemplated by Section 1.4(d), and the
Seller's Share of such fee shall be paid by the Seller.
(b) If the Servicer ceases to be Sequa or an Affiliate
thereof, the servicing fee shall be the greater of: (i) the
amount calculated pursuant to clause (a), and (ii) an
alternative amount specified by the successor Servicer not
to exceed 100% of the aggregate reasonable costs and
expenses incurred by such successor Servicer in connection
with the performance of its obligations as Servicer.
I.ARTICLE
MISCELLANEOUS
A. Section AMENDMENTS, ETC. No amendment or waiver
of any provision of this Agreement or any other Transaction
Document, or consent to any departure by the Seller or the
Servicer therefrom, shall be effective unless in a writing
signed by the Administrator, and, in the case of any
amendment, by the other parties thereto; and then such
amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which
given; provided, however, that no such material amendment
shall be effective until both Moody's and Standard & Poor's
have notified the Servicer and the Administrator in writing
that such action will not result in a reduction or
withdrawal of the rating of any Notes. No failure on the
part of the Issuer or the Administrator to exercise, and no
delay in exercising any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The
Administrator shall provide each Rating Agency with a copy
of each amendment to or waiver or consent under this
Agreement promptly following the effective date thereof.
A. Section NOTICES, ETC. All notices and other
communications hereunder shall, unless otherwise stated
herein, be in writing (which shall include facsimile
communication) and be sent 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 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 first class mail), and notices and communications sent by
other means shall be effective when received.
1. Section ASSIGNABILITY. This Agreement and the
Issuer's rights and obligations herein (including ownership
of the Purchased Interest or an interest therein) shall be
assignable, in whole or in part, by the Issuer and its
successors and assigns with the prior written consent of the
Seller; provided, however, that such consent shall not be
unreasonably withheld; and provided further, that no such
consent shall be required if the assignment is made to BNS,
any Affiliate of BNS, any Purchaser or other Program Support
Provider or any Person that is: (i) in the business of
issuing Notes and (ii) associated with or administered by
BNS or any Affiliate of BNS.
1. The Issuer may at any time grant to one or more
banks or other institutions (each a "Purchaser") party to
the Liquidity Agreement, or to any other Program Support
Provider, participating interests in the Purchased Interest.
In the event of any such grant by the Issuer of a
participating interest to a Purchaser or other Program
Support Provider, the Issuer shall remain responsible for
the performance of its obligations hereunder. The Seller
agrees that each Purchaser or other Program Support Provider
shall be entitled to the benefits of Sections 1.8 and 1.9.
1. This Agreement and the rights and obligations of
the Administrator hereunder shall be assignable, in whole or
in part, by the Administrator and its successors and
assigns; provided, that unless: (i) such assignment is to an
Affiliate of BNS, (ii) it becomes unlawful for BNS to serve
as the Administrator or (iii) a Termination Event exists,
the Seller has consented to such assignment, which consent
shall not be unreasonably withheld.
1. Except as provided in Section 4.1(d), none of the
Seller, Sequa or the Servicer may assign its rights or
delegate its obligations hereunder or any interest herein
without the prior written consent of the Administrator.
1. Without limiting any other rights that may be
available under applicable law, the rights of the Issuer may
be enforced through it or by its agents.
1. Section COSTS, EXPENSES AND TAXES. In addition
to the rights of indemnification granted under Section 3.1,
the Seller agrees to pay on demand all reasonable costs and
expenses in connection with the preparation, execution,
delivery and administration (including periodic internal
audits by the Administrator of Pool Receivables) of this
Agreement, the other Transaction Documents and the other
documents and agreements to be delivered hereunder (and all
reasonable costs and expenses in connection with any
amendment, waiver or modification of any thereof),
including: (i) Attorney Costs for the Administrator, the
Issuer and their respective Affiliates and agents with
respect thereto and with respect to advising the
Administrator, the Issuer and their respective Affiliates
and agents as to their rights and remedies under this
Agreement and the other Transaction Documents, and (ii) all
reasonable costs and expenses (including Attorney Costs), if
any, of the Administrator, the Issuer and their respective
Affiliates and agents in connection with the enforcement of
this Agreement and the other Transaction Documents.
1. In addition, the Seller shall pay on demand 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 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.
A. Section NO PROCEEDINGS; Limitation on Payments.
Each of the Seller, Sequa, the Servicer, the Administrator,
each assignee of the Purchased Interest or any interest
therein, hereby covenants and agrees that it will not
institute against, or join any other Person in instituting
against, the Issuer any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar
law, for one year and one day after the latest maturing Note
issued by the Issuer is paid in full. The provision of this
Section 5.5 shall survive any termination of this Agreement.
1. Section GOVERNING LAW AND JURISDICTION. THIS
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT
TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF A SECURITY
INTEREST OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
1. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT
OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW,
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE
PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY NEW YORK LAW.
A. Section 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.
A. Section SURVIVAL OF TERMINATION. The provisions
of Sections 1.8, 1.9, 3.1, 3.2, 5.4, 5.5, 5.6, 5.9 and 5.12
shall survive any termination of this Agreement.
A. Section WAIVER OF JURY TRIAL. EACH OF THE PARTIES
HERETO WAIVES THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY
TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY
OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH
OF THE PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
A. Section Entire Agreement. This Agreement and the
other Transaction Documents embody the entire agreement and
understanding between the parties hereto, and supersede all
prior or contemporaneous agreements and understandings of
such Persons, verbal or written, relating to the subject
matter hereof and thereof.
r Section HEADINGS. The captions and headings of
this Agreement and any Exhibit, Schedule or Annex hereto are
for convenience of reference only and shall not affect the
interpretation hereof or thereof.
A. Section ISSUER'S LIABILITIES. The obligations of
the Issuer under the Transaction Documents are solely the
corporate obligations of the Issuer. No recourse shall be
had for any obligation or claim arising out of or based upon
any Transaction Document against any stockholder, employee,
officer, director or incorporator of the Issuer; provided,
however, that this Section shall not relieve any such Person
of any liability it might otherwise have for its own gross
negligence or willful misconduct.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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.
SEQUA RECEIVABLES CORP.
By:
Name:
Title:
Address:
Sequa Receivables Corp.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
SEQUA CORPORATION
By:
Name:
Title:
Address:
Sequa Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
LIBERTY STREET FUNDING CORP.
By:
Name:
Title:
Address:
Liberty Street Funding Corp.
c/o Global Securitization
Services, LLC
00 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
The Bank of Nova Scotia
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
THE BANK OF NOVA SCOTIA,
as Administrator
By:
Name:______________________________
Title:____________________________
Address:
The Bank of Nova Scotia
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits,
Schedules and Annexes), 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). Unless
otherwise indicated, all Section, Annex, Exhibit and Schedule
references in this Exhibit are to Sections of and Annexes,
Exhibits and Schedules to the Agreement.
"Administration Account" means the account, account number
2158-13 of the Administrator maintained at the office of The Bank
of Nova Scotia, or such other account as may be so designated in
writing by the Administrator to the Servicer.
"Administrator" has the meaning set forth in the preamble
to the Agreement.
"Adverse Claim" means a lien, security interest or other
charge or encumbrance, or any other type of preferential
arrangement; it being understood that any thereof in favor of the
Issuer or the Administrator (for the benefit of the Issuer) shall
not constitute an Adverse Claim.
"Affected Person" has the meaning set forth in Section 1.8
of the Agreement.
"Affiliate" means, as to any Person: (a) any Person that,
directly or indirectly, is in control of, is controlled by or is
under common control with such Person, or (b) who is a director
or officer: (i) of such Person or (ii) of any Person described in
clause (a), except that, with respect to the Issuer, Affiliate
shall mean the holder(s) of its capital stock. For purposes of
this definition, control of a Person shall mean the power, direct
or indirect: (x) to vote 25% or more of the securities having
ordinary voting power for the election of directors of such
Person, or (y) to direct or cause the direction of the management
and policies of such Person, in either case whether by ownership
of securities, contract, proxy or otherwise.
"Agreement" has the meaning set forth in the preamble to
the Agreement.
"Alternate Rate" for any Yield Period for any Portion of
Capital of the Purchased Interest means an interest rate per
annum equal to, at the Seller's option: (a) 0.75% per annum above
the Eurodollar Rate for such Yield Period, or
(b) the Base Rate for such Yield Period; provided, however, that
in the case of:
a. any Yield Period on or before the first day
of which the Administrator shall have been notified by
the Issuer, a Purchaser or any other Program Support
Provider that the introduction of or any change in or
in the interpretation of any law or regulation makes it
unlawful, or any central bank or other Governmental
Authority asserts that it is unlawful, for the Issuer,
such Purchaser or other Program Support Provider, as
applicable, to fund any Portion of Capital based on the
Eurodollar Rate (and the Issuer, such Purchaser or
other Program Support Provider shall not have
subsequently notified the Administrator that such
circumstances no longer exist),
a. any Yield Period of one to (and including)
29 days,
a. any Yield Period as to which: (A) the
Administrator does not receive notice before noon (New
York City time) on: (1) the second Business Day
preceding the first day of such Yield Period that the
Seller desires that the related Portion of Capital be
funded at the CP Rate, or (2) the third Business Day
preceding the first day of such Yield Period that the
Seller desires that the related Portion of Capital be
funded at the Alternate Rate and based on the
Eurodollar Rate, or (B) the Seller has given the notice
contemplated by clause (A)(1), and the Administrator
shall have notified the Seller that funding the related
Portion of Capital at the CP Rate is (in the
Administrator's sole discretion) economically
inadvisable to the Issuer, the Administrator, the
Seller or any similarly situated Person, or the Issuer
is not permitted to issue Notes to fund the Purchased
Interest hereunder, or
a. any Yield Period relating to a Portion of
Capital that is less than $5,000,000,
the "Alternate Rate" for each such Yield Period shall be an
interest rate per annum equal to the Base Rate in effect on
each day of such Yield Period. The "Alternate Rate" for any
day while a Termination Event exists shall be an interest
rate equal to 1% per annum above the Base Rate in effect on
such day.
"Attorney Costs" means and includes all reasonable fees
and disbursements of any law firm or other external counsel,
the reasonable allocated cost of internal legal services and
all reasonable disbursements of internal counsel.
"Bankruptcy Code" means the United States Bankruptcy
Reform Act of 1978 (11 U.S.C. 101, et seq.), as amended
from time to time.
"Base Rate" means, for any day, 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 higher of:
1. the rate of interest in effect for such day
as publicly announced from time to time by BNS in New
York, New York as its "reference rate". Such
"reference rate" is set by BNS based upon various
factors, including BNS's costs and desired return,
general economic conditions and other factors, and is
used as a reference point for pricing some loans, which
may be priced at, above or below such announced rate,
and
1. 0.75% per annum above the latest Federal
Funds Rate.
"Benefit Plan" means any employee benefit pension plan
as defined in Section 3(2) of ERISA in respect of which the
Seller, any Originator, Sequa or any ERISA Affiliate is, or
at any time during the immediately preceding six years was,
an "employer" as defined in Section 3(5) of ERISA.
"BNS" has the meaning set forth in the preamble to the
Agreement
"Business Day" means any day (other than a Saturday or
Sunday) on which: (a) banks are not authorized or required
to close in New York City, New York and (b) if this
definition of "Business Day" is utilized in connection with
the Eurodollar Rate, dealings are carried out in the London
interbank market.
"Capital" means the amount paid to the Seller in
respect of the Purchased Interest by the Issuer pursuant to
the Agreement, or such amount divided or combined in
accordance with Section 1.7 of the Agreement, in each case
reduced from time to time by Collections distributed and
applied on account of such Capital pursuant to Section
1.4(d) of the Agreement; provided, that if such Capital
shall have been reduced by any distribution, and thereafter
all or a portion of such distribution is rescinded or must
otherwise be returned for any reason, such Capital shall be
increased by the amount of such rescinded or returned
distribution as though it had not been made.
"Change in Control" means (a) that the Originators
cease to own, directly or indirectly, 100% of the capital
stock of the Seller free and clear of all Adverse Claims or
(b) that Sequa ceases to own, directly or indirectly, a
majority of the capital stock of any Originator.
"Closing Date" means November 13, 1998.
"Collections" means, with respect to any Pool
Receivable: (a) all funds that are received by any
Originator, Sequa, the Seller or the Servicer in payment of
any amounts owed in respect of such Receivable (including
purchase price, finance charges, interest and all other
charges), or applied to amounts owed in respect of such
Receivable (including insurance payments and net proceeds of
the sale or other disposition of repossessed goods or other
collateral or property of the related Obligor or any other
Person directly or indirectly liable for the payment of such
Pool Receivable and available to be applied thereon), (b)
all Deemed Collections and (c) all other proceeds of such
Pool Receivable.
"Company Note" has the meaning set forth in Section 3.1
of the Sale Agreement.
"Concentration Account" means (a) that certain bank
account numbered 8900209887 maintained at The Bank of New
York in New York, New York and (b) that certain bank account
numbered 0000000 maintained at Mellon Bank, N.A. in
Pittsburgh, Pennsylvania, each of which is (i) identified as
the "Sequa Receivables Corp. Concentration Account," (ii) in
the Seller's name, (iii) pledged, on a first-priority basis,
to the Issuer pursuant to Section 1.2(d), and (iv) is
governed by a Concentration Account Agreement.
"Concentration Account Agreement" means each letter
agreement among the Seller, the Agent and each Concentration
Account Bank, as the same may be amended, supplemented,
amended and restated, or otherwise modified from time to
time in accordance with the Agreement.
"Concentration Account Bank" means each bank
maintaining a Concentration Account.
"Concentration Percentage" means: (a) for any Group A
Obligor, 10%, (b) for any Group B Obligor, 8%, (c) for any
Group C Obligor, 6% and (d) for any Group D Obligor, 3.75%;
provided, however, that the Issuer may, with prior written
consent from the Administrator and the Liquidity Agent, and
if the Rating Agency Condition is satisfied, approve higher
Concentration Percentages for selected Obligors
"Concentration Reserve" means, at any time the
aggregate Capital at such time multiplied by (a) the
Concentration Reserve Percentage divided by (b) 1, minus the
Concentration Reserve Percentage at such time.
"Concentration Reserve Percentage" means, at any time,
the largest of: (a) the sum of four largest Group D Obligor
Percentages, (b) the sum of the two largest Group C Obligor
Percentages and (c) the largest Group B Obligor Percentage.
"Contract" means, with respect to any Receivable, any
and all contracts, instruments, agreements, leases,
invoices, notes or other writings pursuant to which such
Receivable arises or that evidence such Receivable or under
which an Obligor becomes or is obligated to make payment in
respect of such Receivable.
"CP Rate" for any Yield Period for any Portion of
Capital of the Purchased Interest means, to the extent the
Issuer funds such Portion of Capital for such Yield Period
by issuing Notes, a rate per annum equal to the sum of (i)
the rate (or if more than one rate, the weighted average of
the rates) at which Notes of the Issuer having a term equal
to such Yield Period and to be issued to fund such Portion
of Capital may be sold by any placement agent or commercial
paper dealer selected by the Administrator on behalf of the
Issuer, as agreed between each such agent or dealer and the
Administrator and notified by the Administrator to the
Servicer; provided, that if the rate (or rates) as agreed
between any such agent or dealer and the Administrator with
regard to any Yield Period for such Portion of Capital is a
discount rate (or rates), then such rate shall be the rate
(or if more than one rate, the weighted average of the
rates) resulting from converting such discount rate (or
rates) to an interest-bearing equivalent rate per annum,
plus (ii) the commissions and charges charged by such
placement agent or commercial paper dealer with respect to
such Notes, expressed as a percentage of such face amount
and converted to an interest-bearing equivalent rate per
annum.
"Credit and Collection Policy" means, as the context
may require, those receivables credit and collection
policies and practices of each Originator in effect on the
date of the Agreement and described in Schedule I to the
Agreement, as modified in compliance with the Agreement.
"Cut-off Date" has the meaning set forth in the Sale
Agreement.
"Days' Sales Outstanding" means, for any calendar
month, an amount computed as of the last day of such
calendar month equal to: (a) the average of the Outstanding
Balance of all Pool Receivables as of the last day of each
of the three most recent calendar months ended on the last
day of such calendar month divided by (b) the aggregate
amount of new Receivables generated by each Originator
during the three calendar months ended on or before the last
day of such calendar month multiplied by (c) 90.
"Debt" means: (a) indebtedness for borrowed money,
(b) obligations evidenced by bonds, debentures, notes or
other similar instruments, (c) obligations to pay the
deferred purchase price of property or services, (d)
obligations as lessee under leases that shall have been or
should be, in accordance with generally accepted accounting
principles, recorded as capital leases, and (e) 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 (a) through (d).
"Deemed Collections" has the meaning set forth in
Section 1.4(e)(ii) of the Agreement.
"Default Ratio" means the ratio (expressed as a
percentage and rounded to the nearest 1/100 of 1%, with
5/1000th of 1% rounded upward) computed as of the last day
of each calendar month by dividing: (a) the sum of (i) the
aggregate Outstanding Balance (excluding credit balances) of
all Pool Receivables as to which any payment, or part
thereof, remained unpaid 121-150 days from the original due
date for such payment during such month plus (ii) the
aggregate Outstanding Balance of all Pool Receivables that
remained unpaid for less than 121 days from the original due
date and were written off as uncollectible during such
month, by (b) the aggregate credit sales made by each
Originator during the month that is five calendar months
before such month.
"Defaulted Receivable" means a Receivable:
(a) as to which any payment, or part thereof,
remains unpaid for more than 90 days from the original
due date for such payment, or
(b) without duplication (i) as to which an Event
of Bankruptcy shall have occurred with respect to the
Obligor thereof or any other Person obligated thereon
or owning any Related Security with respect thereto, or
(ii) which has been, or, consistent with the Credit and
Collection Policy would be, written off the Seller's
books as uncollectible.
"Delinquency Ratio" means the ratio (expressed as a
percentage and rounded to the nearest 1/100 of 1%, with
5/1000th of 1% rounded upward) computed as of the last day
of each calendar month by dividing: (a) the aggregate
Outstanding Balance of all Pool Receivables that were
Delinquent Receivables on such day by (b) the Net
Receivables Pool Balance on such day.
"Delinquent Receivable" means a Receivable (other than
a Defaulted Receivable) as to which any payment, or part
thereof, remains unpaid for more than 60 days from the
original due date for such payment.
"Dilution Reserve" means, on any day, an amount equal
to: (a) the Capital on such date, multiplied by (b) (i)
5.0%, divided by (ii) 1 minus 5.0%.
"Discount" means:
(a) for the Portion of Capital for any Yield
Period to the extent the Issuer will be funding such
Portion of Capital during such Yield Period through the
issuance of Notes:
CPR x C x ED/360
(b) for the Portion of Capital for any Yield
Period to the extent the Issuer will not be funding
such Portion of Capital during such Yield Period
through the issuance of Notes:
AR x C x ED/Year + TF
where:
AR = the Alternate Rate for the Portion of
Capital for such Yield Period,
C = the relevant Portion of Capital during
such Yield Period,
CPR = the CP Rate for the Portion of Capital,
ED = the actual number of days during such
Yield Period,
Year = if such Portion of Capital is funded
based upon: (i) the Eurodollar Rate,
360 days, and (ii) the Base Rate, 365
or 366 days, as applicable, and
TF = the Termination Fee, if any, for the
Portion of Capital for such Yield Period;
provided, however, that during the occurrence and
continuance of a Termination Event, the CP Rate shall not be
available and Discount for the Portion of Capital shall be
determined for each day in a Yield Period using a rate equal
to the Base Rate in effect on such day plus 1%; provided,
further, that no provision of the Agreement shall require
the payment or permit the collection of Discount in excess
of the maximum permitted by applicable law; and provided
further, that Discount for the Portion of Capital shall not
be considered paid by any distribution to the extent that at
any time all or a portion of such distribution is rescinded
or must otherwise be returned for any reason.
"Eligible Receivable" means, at any time, a Pool
Receivable:
(a) the Obligor of which is (i) a United States
resident; provided, however, if the Obligor of such
Receivable is a resident of a jurisdiction other than
the United States, the aggregate Outstanding Balance
of all Pool Receivables of such Obligor that are
Eligible Receivables when added to the aggregate
Outstanding Balance of all other Eligible Receivables
of Obligors that are not residents of the United States
shall not exceed 10% of the Net Receivables Pool
Balance (not counting any otherwise Eligible
Receivables the Obligors of which are not residents of
the United States) at such time, (ii) not a government
or a governmental subdivision, affiliate or agency;
provided, however, if the Obligor of such Receivable is
a government or a governmental subdivision, affiliate
or agency, the aggregate Outstanding Balance of all
Pool Receivables of such Obligor that are Eligible
Receivables when added to the aggregate Outstanding
Balance of all other Eligible Receivables of Obligors
that are governments or governmental subdivisions,
affiliates or agencies shall not exceed 10% of the Net
Receivables Pool Balance (not counting any otherwise
Eligible Receivables the obligors of which are
governments or governmental subdivisions, affiliates or
agencies) at such time, (iii) not subject to any action
of the type described in paragraph (f) of Exhibit V to
the Agreement and (iv) not an Affiliate of Sequa or any
Affiliate of Sequa,
(b) that is denominated and payable only in U.S.
dollars in the United States,
(c) that does not have a stated maturity which is
more than 30 days after the original invoice date of
such Receivable,
(d) that arises under a duly authorized Contract
for the sale and delivery of goods and services in the
ordinary course of each Originator's business,
(e) that arises under a duly authorized Contract
that is in full force and effect and that is a legal,
valid and binding obligation of the related Obligor,
enforceable against such Obligor in accordance with its
terms,
(f) that conforms in all material respects with
all applicable laws, rulings and regulations in effect,
(g) that is not the subject of any asserted
dispute, offset, hold back defense, Adverse Claim or
other claim,
(h) that satisfies all applicable requirements of
the applicable Credit and Collection Policy,
(i) that has not been modified, waived or
restructured since its creation, except as permitted
pursuant to Section 4.2 of the Agreement,
(j) in which the Seller owns good and marketable
title, free and clear of any Adverse Claims, and that
is freely assignable by the Seller (including without
any consent of the related Obligor),
(k) for which the Issuer shall have a valid and
enforceable undivided percentage ownership or security
interest, to the extent of the Purchased Interest, and
a valid and enforceable first priority perfected
security interest therein and in the Related Security
and Collections with respect thereto, in each case free
and clear of any Adverse Claim,
(l) that constitutes an account as defined in the
UCC, and that is not evidenced by instruments or
chattel paper,
(m) that is not a Defaulted Receivable,
(n) for which neither the Originator thereof, the
Seller nor the Servicer has established any offset
arrangements with the related Obligor,
(o) for which Defaulted Receivables of the related
Obligor do not exceed 25% of the Outstanding Balance of
all such Obligor's Receivables, and
(p) that represents amounts earned and payable by
the Obligor that are not subject to the performance of
additional services by the Originator thereof.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any successor
statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor
sections.
"ERISA Affiliate" means: (a) any corporation that is a
member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Internal Revenue Code)
as the Seller, any Originator or Sequa, (b) a trade or
business (whether or not incorporated) under common control
(within the meaning of Section 414(c) of the Internal
Revenue Code) with the Seller, any Originator or Sequa, or
(c) a member of the same affiliated service group (within
the meaning of Section 414(m) of the Internal Revenue Code)
as the Seller, any Originator, any corporation described in
clause (a) or any trade or business described in clause (b).
"Eurodollar Rate" means, for any Yield Period, an
interest rate per annum (rounded upward to the nearest
1/16th of 1%) determined pursuant to the following formula:
LIBOR
100% - Eurodollar Rate Reserve Percentage
where "Eurodollar Rate Reserve Percentage" means, for any
Yield Period, the maximum reserve percentage (expressed as a
decimal, rounded upward to the nearest 1/100th of 1%) in
effect on the date LIBOR for such Yield Period is determined
under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to "Eurocurrency"
funding (currently referred to as "Eurocurrency
liabilities") having a term comparable to such Yield Period.
"Event of Bankruptcy" means (a) any case, action or
proceeding before any court or other governmental authority
relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief
of debtors or (b) any general assignment for the benefit of
creditors of a Person composition, marshalling of assets for
creditors of a Person, or other similar arrangement in
respect of its creditors generally or any substantial
portion of its creditors; in each of cases (a) and (b)
undertaken under U.S. Federal, state or foreign law,
including the U.S. Bankruptcy Code.
"Excess Concentration" means the sum of the amounts by
which the Outstanding Balance of Eligible Receivables of
each Obligor then in the Receivables Pool exceeds an amount
equal to: (a) the Concentration Percentage or Special
Concentration Percentage, as applicable, for such Obligor
multiplied by (b) the Outstanding Balance of all Eligible
Receivables then in the Receivables Pool.
"Facility Termination Date" means the earliest to occur
of: (a) November 13, 2003,(b) the date determined pursuant
to Section 2.2 of the Agreement, (c) the date the Purchase
Limit reduces to zero pursuant to Section 1.1(b) of the
Agreement and (d) the date that the commitments of the
Purchasers terminate under the Liquidity Agreement.
"Federal Funds Rate" means, for any day, the per annum
rate set forth in the weekly statistical release designated
as H.15(519), or any successor publication, published by the
Federal Reserve Board (including any such successor,
"H.15(519)") for such day opposite the caption "Federal
Funds (Effective)." If on any relevant day such rate is not
yet published in H.15(519), the rate for such day will be
the rate set forth in the daily statistical release
designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication,
published by the Federal Reserve Bank of New York (including
any such successor, the "Composite 3:30 p.m. Quotations")
for such day under the caption "Federal Funds Effective
Rate." If on any relevant day the appropriate rate is not
yet published in either H.15(519) or the Composite 3:30 p.m.
Quotations, the rate for such day will be the arithmetic
mean as determined by the Administrator of the rates for the
last transaction in overnight Federal funds arranged before
9:00 a.m. (New York time) on that day by each of three
leading brokers of Federal funds transactions in New York
City selected by the Administrator.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System, or any entity succeeding to any
of its principal functions.
"Fee Letter" has the meaning set forth in Section 1.5
of the Agreement.
"Fees" means the fees payable by the Seller to the
Administrator pursuant to the Fee Letter.
"GAAP" means the generally accepted United States
accounting principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors
and successors from time to time.
"Governmental Authority" means any nation or
government, any state or other political subdivision
thereof, any central bank (or similar monetary or regulatory
authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any
court, and any Person owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Group A Obligor" means any Obligor, not a Special
Obligor, with a short-term rating of at least: (a) "A-1" by
Standard & Poor's, or if such Obligor does not have a short-
term rating from Standard & Poor's, a rating of "A+" or
better by Standard & Poor's on its long-term senior
unsecured and uncredit-enhanced debt securities, and (b) "P-
1" by Moody's, or if such Obligor does not have a short-term
rating from Xxxxx'x, "X0" or better by Moody's on its long-
term senior unsecured and uncredit-enhanced debt securities.
"Group B Obligor" means an Obligor, not a Group A
Obligor or a Special Obligor, with a short-term rating of at
least: (a) "A-2" by Standard & Poor's, or if such Obligor
does not have a short-term rating from Standard & Poor's, a
rating of "BBB+" to "A" by Standard & Poor's on its long-
term senior unsecured and uncredit-enhanced debt securities,
and (b) "P-2" by Moody's, or if such Obligor does not have a
short-term rating from Moody's, "Baa1" to "A2" by Moody's
on its long-term senior unsecured and uncredit-enhanced debt
securities.
"Group B Obligor Percentage" means, at any time, for
each Group B Obligor, the percentage equivalent of: (a) the
aggregate Outstanding Balance of the Eligible Receivables of
such Group B Obligor less any Excess Concentrations of such
Obligor, divided by (b) the aggregate Outstanding Balance of
all Eligible Receivables at such time.
"Group C Obligor" means an Obligor, not a Group A
Obligor, Group B Obligor or Special Obligor, with a short-
term rating of at least: (a) "A-3" by Standard & Poor's, or
if such Obligor does not have a short-term rating from
Standard & Poor's, a rating of "BBB-" to "BBB" by Standard
& Poor's on its long-term senior unsecured and uncredit-
enhanced debt securities, and (b) "P-3" by Moody's, or if
such Obligor does not have a short-term rating from Moody's,
"Baa3" to "Baa2" by Moody's on its long-term senior
unsecured and uncredit-enhanced debt securities.
"Group C Obligor Percentage" means, at any time, for
each Group C Obligor, the percentage equivalent of: (a) the
aggregate Outstanding Balance of the Eligible Receivables of
such Group C Obligor less any Excess Concentrations of such
Obligor, divided by (b) the aggregate Outstanding Balance of
all Eligible Receivables at such time.
"Group D Obligor" means any Obligor that is not a Group
A Obligor, Group B Obligor, Group C Obligor or Special
Obligor.
"Group D Obligor Percentage" means, at any time, for
each Group D Obligor: (a) the aggregate Outstanding Balance
of the Eligible Receivables of such Group D Obligor less any
Excess Concentrations of such Obligor, divided by (b) the
aggregate Outstanding Balance of all Eligible Receivables at
such time.
"Impermissible Qualification" means, relative to the
opinion or certification of any independent public
accountant as to any financial statement of Seller, Sequa,
each Originator or each other Subsidiary or Affiliate of
Sequa, any qualification or exception to such opinion or
certification:
(i) which is of a "going concern" or similar
nature; or
(ii) which relates to the limited scope of
examination of matters relevant to such financial
statement (other than any standard qualification of
such nature).
"Indemnified Amounts" has the meaning set forth in
Section 3.1 of the Agreement.
"Indemnified Party" has the meaning set forth in
Section 3.1 of the Agreement.
"Independent Director" has the meaning set forth in
paragraph 3(c) of Exhibit IV to the Agreement.
"Insolvency Proceeding" means: (a) any case, action or
proceeding before any court or other Governmental Authority
relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief
of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors,
or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors, in
each case undertaken under U.S. Federal, state or foreign
law, including the Bankruptcy Code.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended from time to time, and any successor
statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time.
References to sections of the Internal Revenue Code also
refer to any successor sections.
"Issuer" has the meaning set forth in the preamble to
the Agreement.
"Issuer's Share" of any amount means such amount
multiplied by the Purchased Interest at the time of
determination.
"LIBOR" means the rate of interest per annum determined
by the Administrator to be the arithmetic mean (rounded
upward to the nearest 1/16th of 1%) of the rates of interest
per annum notified to the Administrator by the Reference
Bank as the rate of interest at which dollar deposits in the
approximate amount of the Portion of Capital to be funded at
the Eurodollar Rate during such Yield Period would be
offered by major banks in the London interbank market to
such Reference Bank at its request at or about 11:00 a.m.
(London time) on the second Business Day before the
commencement of such Yield Period.
"Liquidation Account" means that certain bank account
numbered 8900367083 maintained at The Bank of New York in
New York, New York which is (i) identified as the "Sequa
Receivables Corporation" Liquidation Account, (ii) in the
Seller's name, (iii) pledged on a first priority basis to
the Issuer pursuant to Section 1.2(d), and (iv) is governed
by the Liquidation Account Agreement.
"Liquidation Account Agreement" means a letter
agreement among the Seller, the Administrator and the
Liquidation Account Bank, as the same may be amended,
supplemented or otherwise modified from time to time.
"Liquidation Account Bank" means the bank holding the
Liquidation Account.
"Liquidity Agent" means BNS in its capacity as the
Liquidity Agent pursuant to the Liquidity Agreement.
"Liquidity Agreement" means the Liquidity Asset
Purchase Agreement, dated as of November 13, 1998 between
the purchasers from time to time party thereto, the Issuer
and BNS, as Administrator and Liquidity Agent, as the same
may be further amended, supplemented or otherwise modified
from time to time.
"Lock-Box Account" means an account maintained at a
bank or other financial institution for the purpose of
receiving Collections.
"Lock-Box Agreement" means an agreement, in
substantially the form of Annex A to the Agreement, among
the Seller, the Servicer and a Lock-Box Bank.
"Lock-Box Bank" means any of the banks or other
financial institutions holding one or more Lock-Box
Accounts.
"Loss Reserve" means, on any date, an amount equal to
(a) the Capital at the close of business of the Servicer on
such date multiplied by (b)(i) the Loss Reserve Percentage
on such date divided by (ii) 1 minus the Loss Reserve
Percentage on such date.
"Loss Reserve Percentage" means, on any date, the
greater of: (a) 10% and (b) (i) the product of (x) 2 times
the highest average of the Default Ratios for any three
consecutive calendar months during the twelve most recent
calendar months multiplied by (y) the aggregate credit sales
made during the four most recent calendar months divided by
(ii) the Net Receivables Pool Balance on such date.
"Material Adverse Effect" means, relative to any Person
with respect to any event or circumstance, a material
adverse effect on:
(a) the assets, operations, business or financial
condition of such Person,
(b) the ability of any such Person to perform its
obligations under the Agreement or any other
Transaction Document to which it is a party,
(c) the validity or enforceability of any other
Transaction Document, or the validity, enforceability
or collectibility of a material portion of the Pool
Receivables, or
(d) the status, perfection, enforceability or
priority of the Issuer's or the Seller's interest in
the Pool Assets.
"Monthly Report" means a report, in substantially the
form of Annex A to the Agreement, furnished to the
Administrator pursuant to the Agreement.
"Monthly Settlement Date" means the first Business Day
of each calendar month.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Net Receivables Pool Balance" means, at any time: (a)
the Outstanding Balance of Eligible Receivables then in the
Receivables Pool minus (b) the Excess Concentration.
"Notes" means short-term promissory notes issued, or to
be issued, by the Issuer to fund its investments in accounts
receivable or other financial assets.
"Obligor" means, with respect to any Receivable, the
Person obligated to make payments pursuant to the Contract
relating to such Receivable.
"Originator" has the meaning set forth in the Sale
Agreement.
"Originator Assignment Certificate" means each
assignment, in substantially the form of Exhibit C to the
Sale Agreement, evidencing Seller's ownership of the
Receivables generated by each Originator, as the same may be
amended, supplemented, amended and restated, or otherwise
modified from time to time in accordance with the Sale
Agreement.
"Outstanding Balance" of any Receivable at any time
means the then outstanding principal balance thereof.
"Payment Date" has the meaning set forth in Section 2.1
of the Sale Agreement.
"Permitted Investments" means certificates of deposit
that are not represented by instruments, have a maturity of
one week or less and are issued by the Concentration Account
Banks, Liquidation Account Bank (with respect to the
investment of funds in the Concentration Accounts or
Liquidation Account, respectively) or The Bank of Nova
Scotia; provided, however, that the Administrator on behalf
of Issuer) may, from time to time, upon three Business Days'
prior written notice to Servicer, remove from the scope of
"Permitted Investments" certificates of deposit of any such
bank(s) and specify to be within such scope, certificates of
deposit of any other bank.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture, limited liability
company or other entity, or a government or any political
subdivision or agency thereof.
"Pool Assets" has the meaning set forth in Section
1.2(d) of the Agreement.
"Pool Receivable" means a Receivable in the Receivables
Pool.
"Portion of Capital" has the meaning set forth in
Section 1.7 of the Agreement. In addition, at any time when
the Capital of the Purchased Interest is not divided into
two or more such portions, "Portion of Capital" means 100%
of the Capital.
"Program Support Agreement" means and includes the
Liquidity Agreement and any other agreement entered into by
any Program Support Provider providing for: (a) the issuance
of one or more letters of credit for the account of the
Issuer, (b) the issuance of one or more surety bonds for
which the Issuer is obligated to reimburse the applicable
Program Support Provider for any drawings thereunder, (c)
the sale by the Issuer to any Program Support Provider of
the Purchased Interest (or portions thereof) and/or (d) the
making of loans and/or other extensions of credit to the
Issuer in connection with the Issuer's Receivables-
securitization program contemplated in the Agreement,
together with any letter of credit, surety bond or other
instrument issued thereunder (but excluding any
discretionary advance facility provided by the
Administrator).
"Program Support Provider" means and includes any
Purchaser and any other Person (other than any customer of
the Issuer) now or hereafter extending credit or having a
commitment to extend credit to or for the account of, or to
make purchases from, the Issuer pursuant to any Program
Support Agreement.
"Purchase and Sale Indemnified Amounts" has the meaning
set forth in Section 9.1 of the Sale Agreement.
"Purchase and Sale Indemnified Party" has the meaning
set forth in Section 9.1 of the Sale Agreement.
"Purchase and Sale Termination Date" has the meaning
set forth in Section 1.4 of the Sale Agreement.
"Purchase and Sale Termination Event" has the meaning
set forth in Section 8.1 of the Sale Agreement.
"Purchase Facility" has the meaning set forth in
Section 1.1 of the Sale Agreement.
"Purchase Limit" means $90,000,000, as such amount may
be reduced pursuant to Section 1.1(b) of the Agreement.
References to the unused portion of the Purchase Limit shall
mean, at any time, the Purchase Limit minus the then
outstanding Capital.
"Purchase Price" has the meaning set forth in Section
2.1 of the Sale Agreement.
"Purchase Report" has the meaning set forth in Section
2.1 of the Sale Agreement.
"Purchased Interest" means, at any time, the undivided
percentage ownership interest in: (a) each and every Pool
Receivable now existing or hereafter arising, (b) all
Related Security with respect to such Pool Receivables and
(c) all Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security. Such undivided
percentage interest shall be computed as:
Capital + Total Reserves
Net Receivables Pool Balance
The Purchased Interest shall be determined from time to time
pursuant to Section 1.3 of the Agreement.
"Purchaser" has the meaning set forth in Section 5.3(b)
of the Agreement.
"Rating Agency Condition" means, with respect to any
event or occurrence, receipt by the Issuer of written
confirmation from Standard & Poor's and Moody's that such
event or occurrence shall not cause the rating on the then
outstanding Notes to be downgraded or withdrawn.
"Receivable" means any indebtedness and other
obligations owed to the Seller as assignee of any Originator
or any Originator by, or any right of the Seller or any
Originator to payment from or on behalf of, an Obligor
whether constituting an account, chattel paper, instrument
or general intangible arising in connection with the sale of
goods or the rendering of services by such Originator, and
includes the obligation to pay any finance charges, fees and
other charges with respect thereto.
"Receivables Pool" means, at any time, all of the then
outstanding Receivables purchased or purported to be
purchased by the Seller or contributed to the Seller
pursuant to the Sale Agreement prior to the Facility
Termination Date.
"Reference Bank" means BNS.
"Related Rights" has the meaning set forth in Section
1.1 of the Sale Agreement.
"Related Security" means, with respect to any
Receivable:
(a) all of the Seller's and each Originator's
interest in any goods (including returned goods), and
documentation of title evidencing the shipment or
storage of any goods (including returned goods),
relating to any sale giving rise to such Receivable,
(b) all instruments and chattel paper that may
evidence such Receivable,
(c) all other 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 UCC financing statements
or similar filings relating thereto, and
(d) all of the Seller's and each Originator's
rights, interests and claims under the Contracts and
all guaranties, indemnities, insurance and other
agreements (including the related Contract) or
arrangements of whatever character from time to time
supporting or securing payment of such Receivable or
otherwise relating to such Receivable, whether pursuant
to the Contract related to such Receivable or
otherwise.
"Sale Agreement" means the Purchase and Sale Agreement,
dated as of November 13, 1998, between the Seller and the
Originators as such agreement may be amended, amended and
restated, supplemented or otherwise modified from time to
time.
"Seller" has the meaning set forth in the preamble to
the Agreement.
"Seller's Share" of any amount means the greater of:
(a) $0 and (b) such amount minus the Issuer's Share.
"Servicer" has the meaning set forth in the preamble to
the Agreement.
"Servicing Fee" shall mean the fee referred to in
Section 4.6 of the Agreement.
"Servicing Fee Rate" shall mean the rate referred to in
Section 4.6 of the Agreement.
"Servicing Fee Reserve" for the purchased interest at
any time means the sum of (a) the then accrued and unpaid
Servicing Fee relating to the Purchased Interest plus (b)
the product of (i) the Outstanding Balance of Pool
Receivables at such time, times (ii) the product of (x) the
Servicing Fee Rate multiplied by (y) a fraction, the
numerator of which is 1.5 times the Days' Sales Outstanding
(calculated on the last day of the most recent preceding
calendar month) and the denominator of which is 360.
"Settlement Date" means (a) with respect to any Portion
of Capital, the last day of the Yield Period for such
Portion of Capital and (b) with respect to any Fees, the
Monthly Settlement Date.
"Solvent" means, with respect to any Person at any
time, a condition under which:
(i) the fair value and present fair saleable
value of such Person's total assets is, on the date of
determination, greater than such Person's total
liabilities (including contingent and unliquidated
liabilities) at such time;
(ii) the fair value and present fair saleable
value of such Person's assets is greater than the
amount that will be required to pay such Person's
probable liability on its existing debts as they become
absolute and matured ("debts," for this purpose,
includes all legal liabilities, whether matured or
unmatured, liquidated or unliquidated, absolute, fixed,
or contingent);
(iii) such Person is and shall continue to be
able to pay all of its liabilities as such liabilities
mature; and
(iv) such Person does not have unreasonably small
capital with which to engage in its current and in its
anticipated business.
For purposes of this definition:
(A) the amount of a Person's contingent or
unliquidated liabilities at any time shall be that
amount which, in light of all the facts and
circumstances then existing, represents the amount
which can reasonably be expected to become an actual or
matured liability;
(B) the "fair value" of an asset shall be the
amount which may be realized within a reasonable time
either through collection or sale of such asset at its
regular market value;
(C) the "regular market value" of an asset shall
be the amount which a capable and diligent business
person could obtain for such asset from an interested
buyer who is willing to Purchase such asset under
ordinary selling conditions; and
(D) the "present fair saleable value" of an asset
means the amount which can be obtained if such asset is
sold with reasonable promptness in an arm's-length
transaction in an existing and not theoretical market.
"Special Concentration Percentage" means with respect
to any Special Obligor, the percentage, if any, for such
Special Obligor set forth opposite such Special Obligor's
name on Annex C to the Agreement; provided, however, that
the Administrator may, from time to time, adjust the Special
Concentration Percentage of any Special Obligor if such
Special Obligor's short-term rating, as of the date such
Person became a Special Obligor, is thereafter reduced or
withdrawn by Moody's or Standard & Poor's.
"Special Obligor" means each Obligor listed on Annex C
to the Agreement as such Annex C may be amended,
supplemented or otherwise modified from time to time.
"Standard & Poor's" means Standard & Poor's, a division
of The XxXxxx-Xxxx Companies, Inc.
"Subsidiary" means, as to any Person, a corporation,
partnership, limited liability company or other entity of
which shares of stock of each class or other interests
having ordinary voting power (other than stock or other
interests having such power only by reason of the happening
of a contingency) to elect a majority of the Board of
Directors or other managers of such entity are at the time
owned, or management of which is otherwise controlled: (a)
by such Person, (b) by one or more Subsidiaries of such
Person or (c) by such Person and one or more Subsidiaries of
such Person.
"Termination Day" means: (a) each day on which the
conditions set forth in Section 2 of Exhibit II to the
Agreement are not satisfied or (b) each day that occurs on
or after the Facility Termination Date.
"Termination Event" has the meaning specified in
Exhibit V to the Agreement.
"Termination Fee" means, for any Yield Period during
which a Termination Day occurs, the amount, if any, by
which: (a) the additional Discount (calculated without
taking into account any Termination Fee or any shortened
duration of such Yield Period pursuant to the definition
thereof) that would have accrued during such Yield Period on
the reductions of Capital relating to such Yield Period had
such reductions not been made, exceeds (b) the income, if
any, received by the Issuer from investing the proceeds of
such reductions of Capital, as determined by the
Administrator, which determination shall be binding and
conclusive for all purposes, absent manifest error.
"Total Reserves" means, at any time the sum of : (a)
the Yield Reserve, plus (b) Servicing Fee Reserve, plus
(c) the greater of (i) the sum of (A) the Loss Reserve plus
(B) the Dilution Reserve and (ii) the Concentration Reserve.
"Transaction Documents" means the Agreement, the Lock-
Box Agreement(s), the Concentration Account Agreements, the
Liquidation Account Agreement, the Fee Letter, the Sale
Agreement and all other certificates, instruments, UCC
financing statements, reports, notices, agreements and
documents executed or delivered under or in connection with
the Agreement, in each case as the same may be amended,
supplemented or otherwise modified from time to time in
accordance with the Agreement.
"UCC" means the Uniform Commercial Code as from time to
time in effect in the applicable jurisdiction.
"Unmatured Purchase and Sale Termination Event" means
any event which, with the giving of notice or lapse of time,
or both, would become a Purchase and Sale Termination Event.
"Unmatured Termination Event" means an event that, with
the giving of notice or lapse of time, or both, would
constitute a Termination Event.
"Year 2000 Problem" has the meaning set forth in
Section 2(j) of Exhibit III to the Agreement.
"Yield Period" means, with respect to each Portion of
Capital:
(a) initially the period commencing on the date
of a purchase pursuant to Section 1.2 and ending such
number of days as the Seller shall select, subject to
the approval of the Administrator pursuant to
Section 1.2, up to 60 days after such date; and
(b) thereafter each period commencing on the last
day of the immediately preceding Yield Period for any
Portion of Capital of the Purchased Interest and ending
such number of days (not to exceed 60 days) as the
Seller shall select, subject to the approval of the
Administrator pursuant to Section 1.2, on notice by the
Seller received by the Administrator (including notice
by telephone, confirmed in writing) not later than
11:00 a.m. (Chicago time) on such last day, except that
if the Administrator shall not have received such
notice or approved such period on or before 11:00 a.m.
(Chicago time) on such last day, such period shall be
one day; provided, that
(i) any Yield Period in respect of
which Discount is computed by reference to the
Alternate Rate shall be a period from one to and
including 60 days;
(ii) any Yield Period (other than of
one day) which would otherwise end on a day which
is not a Business Day shall be extended to the
next succeeding Business Day; provided, however,
if Discount in respect of such Yield Period is
computed by reference to the Eurodollar Rate, and
such Yield Period would otherwise end on a day
which is not a Business Day, and there is no
subsequent Business Day in the same calendar month
as such day, such Yield Period shall end on the
next preceding Business Day;
(iii) in the case of any Yield Period
of one day, (A) if such Yield Period is the
initial Yield Period for a purchase pursuant to
Section 1.2, such Yield Period shall be the day of
purchase of the Purchased Interest; (B) any
subsequently occurring Yield Period which is one
day shall, if the immediately preceding Yield
Period is more than one day, be the last day of
such immediately preceding Yield Period, and, if
the immediately preceding Yield Period is one day,
be the day next following such immediately
preceding Yield Period; and (C) if such Yield
Period occurs on a day immediately preceding a day
which is not a Business Day, such Yield Period
shall be extended to the next succeeding Business
Day; and
(iv) in the case of any Yield Period
for any Portion of Capital of the Purchased
Interest which commences before the Facility
Termination Date and would otherwise end on a date
occurring after the Facility Termination Date,
such Yield Period shall end on such Facility
Termination Date and the duration of each Yield
Period which commences on or after the Facility
Termination Date shall be of such duration as
shall be selected by the Administrator
"Yield Reserve" means, at any time:
( BR x 1.5(DSO) x Capital)
360
where:
BR = the Base Rate in effect at such time, and
DSO = Days' Sales Outstanding.
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. Unless the context otherwise requires, "or"
means "and/or," and "including" (and with correlative
meaning "include" and "includes") means including without
limiting the generality of any description preceding such
term.
EXHIBIT II
CONDITIONS OF PURCHASES
I. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The Initial
Purchase under this Agreement is subject to the following
conditions precedent that the Administrator shall have
received on or before the date of such purchase, each in
form and substance (including the date thereof) satisfactory
to the Administrator:
A. A counterpart of the Agreement and the other Transaction
Documents executed by the parties thereto.
A. Certified copies of: (i) the resolutions of the Board of
Directors of each of the Seller, the Originators and Sequa
authorizing the execution, delivery and performance by the
Seller, each Originator and Sequa, as the case may be, of
the Agreement and the other Transaction Documents to which
it is a party; (ii) all documents evidencing other necessary
corporate action and governmental approvals, if any, with
respect to the Agreement and the other Transaction Documents
and (iii) the certificate of incorporation and by-laws of
the Seller, each Originator and Sequa.
A. A certificate of the Secretary or Assistant Secretary of
the Seller, each Originator and Sequa certifying the names
and true signatures of its officers who are authorized to
sign the Agreement and the other Transaction Documents.
Until the Administrator receives a subsequent incumbency
certificate from the Seller, each Originator or Sequa, as
the case may be, the Administrator shall be entitled to rely
on the last such certificate delivered to it by the Seller,
such Originator or Sequa, as the case may be.
A. Acknowledgment copies, or time stamped receipt copies, of
proper financing statements, duly filed on or before the
date of such initial purchase under the UCC of all
jurisdictions that the Administrator may deem necessary or
desirable in order to perfect the interests of the Seller,
Sequa and the Issuer contemplated by the Agreement and the
Sale Agreement.
A. 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
Receivables, Contracts or Related Security previously
granted by any Originator, Sequa or the Seller.
B. Completed UCC search reports, dated on or shortly before
the date of the initial purchase hereunder, listing the
financing statements filed in all applicable jurisdictions
referred to in subsection (e) above that name any Originator
or the Seller as debtor, together with copies of such other
financing statements, and similar search reports with
respect to judgment liens, federal tax liens and liens of
the Pension Benefit Guaranty Corporation in such
jurisdictions, as the Administrator may request, showing no
Adverse Claims on any Pool Assets.
A.copies of the executed (i) Lock-Box Agreement[s] with the
Lock-Box Bank[s], (ii) Concentration Account Agreements with
the Concentration Account Banks and (iii) Liquidation
Account Agreement with the Liquidation Account Bank.
A. Favorable opinions, in form and substance reasonably
satisfactory to the Administrator, of general counsel for
Seller and each Originator.
A. Satisfactory results of a review and audit (performed by
representatives of the Administrator) of the Servicer's
collection, operating and reporting systems, the Credit and
Collection Policy of each Originator, historical receivables
data and accounts, including satisfactory results of a
review of the Servicer's operating location(s) and
satisfactory review and approval of the Eligible Receivables
in existence on the date of the initial purchase under the
Agreement.
A. A pro forma Monthly Report representing the performance
of the Receivables Pool for the calendar month before
closing.
A. Evidence of payment by the Seller of all accrued and
unpaid fees (including those contemplated by the Fee
Letter), costs and expenses to the extent then due and
payable on the date thereof, including any such costs, fees
and expenses arising under or referenced in Section 5.4 of
the Agreement and the Fee Letter.
A. The Fee Letter duly executed by the Seller and the
Servicer.
A. Good standing certificates with respect to each of the
Seller, the Originators and the Servicer issued by the
Secretary of State (or similar official) of the state of
each such Person's organization and principal place of
business.
A. Letters from each of the rating agencies then rating the
Notes confirming the rating of such Notes after giving
effect to the transaction contemplated by the Agreement.
A. The Liquidity Agreement and all other Transaction
Documents duly executed by the parties thereto.
A. A file (computer generated or otherwise) containing all
information with respect to the Receivables as the
Administrator or the Issuer may reasonably request.
A. Such other approvals, opinions or documents as the
Administrator or the Issuer may reasonably request.
Conditions Precedent to All Purchases and Reinvestments.
Each purchase (except as to clause (a), including the
initial purchase) and each reinvestment shall be subject to
the further conditions precedent that:
A. in the case of each purchase, the Servicer shall have
delivered to the Administrator on or before such purchase,
in form and substance satisfactory to the Administrator, a
completed pro forma Monthly Report to reflect the level of
Capital and related reserves after such subsequent purchase;
and
A. on the date of such purchase or reinvestment the
following statements shall be true (and acceptance of the
proceeds of such purchase or reinvestment shall be deemed a
representation and warranty by the Seller that such
statements are then true):
1. the representations and warranties contained in
Exhibit III to the Agreement are true and correct in
all material respects on and as of the date of such
purchase or reinvestment as though made on and as of
such date; and
1. no event has occurred and is continuing, or would
result from such purchase or reinvestment, that
constitutes a Termination Event or an Unmatured
Termination Event.
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
1. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller represents and warrants as follows:
A. The Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of New York, and is duly qualified to do business and
is in good standing as a foreign corporation in every
jurisdiction where the nature of its business requires it to
be so qualified, except where the failure to be so qualified
would not have a Material Adverse Effect.
A. The execution, delivery and performance by the
Seller of the Agreement and the other Transaction Documents
to which it is a party, including its use of the proceeds of
purchases and reinvestments: (i) are within its corporate
powers; (ii) have been duly authorized by all necessary
corporate action; (iii) do not contravene or result in a
default under or conflict with: (A) its charter or by-laws,
(B) any law, rule or regulation applicable to it, (C) any
indenture, loan agreement, mortgage, deed of trust or other
agreement or instrument to which it is a party or by which
it is bound, or (D) any order, writ, judgment, award,
injunction or decree binding on or affecting it or any of
its property; and (iv) do not result in or require the
creation of any Adverse Claim upon or with respect to any of
its properties. The Agreement and the other Transaction
Documents to which it is a party have been duly executed and
delivered by the Seller.
A. No authorization, approval or other action by,
and no notice to or filing with, any Governmental Authority
or other Person is required for its due execution, delivery
and performance by the Seller of the Agreement or any other
Transaction Document to which it is a party, other than the
Uniform Commercial Code filings referred to in Exhibit II to
the Agreement, all of which shall have been filed on or
before the date of the first purchase hereunder.
A. Each of the Agreement and the other Transaction
Documents to which the Seller is a party constitutes its
legal, valid and binding obligation of the Seller
enforceable against the Seller in accordance with its terms,
except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws from time
to time in effect affecting the enforcement of creditors'
rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law.
A. There is no pending or, to Seller's best
knowledge, threatened action or proceeding affecting Seller
or any of its properties before any Governmental Authority
or arbitrator.
A. No proceeds of any purchase or reinvestment will
be used by the Seller to acquire any equity security of a
class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
A. The Seller is the legal and beneficial owner of
the Pool Receivables and Related Security, free and clear of
any Adverse Claim. Upon each purchase or reinvestment, the
Issuer shall acquire a valid and enforceable perfected
undivided percentage ownership or security interest, to the
extent of the Purchased Interest, in each Pool Receivable
then existing or thereafter arising and in the Related
Security, Collections and other proceeds with respect
thereto, free and clear of any Adverse Claim. The Agreement
creates a security interest in favor of the Issuer in the
Pool Assets, and the Issuer has a first priority perfected
security interest in the Pool Assets, free and clear of any
Adverse Claims. No effective financing statement or other
instrument similar in effect covering any Pool Asset is on
file in any recording office, except those filed in favor of
the Seller pursuant to the Sale Agreement and the Issuer
relating to the Agreement.
A. Each Monthly Report (if prepared by the Seller or
one of its Affiliates, or to the extent that information
contained therein is supplied by the Seller or an
Affiliate), information, exhibit, financial statement,
document, book, record or report furnished or to be
furnished at any time by or on behalf of the Seller to the
Administrator in connection with the Agreement or any other
Transaction Document to which it is a party is or will be
complete and accurate in all material respects as of its
date or as of the date so furnished,
A. The Seller's principal place of business and
chief executive office (as such terms are used in the UCC)
and the office where it keeps its records concerning the
Receivables are located at the address referred to in
Sections 1(b) and 2(b) of Exhibit IV to the Agreement.
A. 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 Schedule
II to the Agreement (or at such other Lock-Box Banks and/or
with such other Lock-Box Accounts as have been notified to
the Administrator in accordance with the Agreement) and all
Lock-Box Accounts are subject to Lock-Box Agreements.
A. The Seller is not in violation of any order of
any court, arbitrator or Governmental Authority.
A. No proceeds of any purchase or reinvestment will
be used for any purpose that violates any applicable law,
rule or regulation, including Regulations G or U of the
Federal Reserve Board.
A. Each Pool Receivable included as an Eligible
Receivable in the calculation of the Net Receivables Pool
Balance is an Eligible Receivable.
A. No event has occurred and is continuing, or would
result from a purchase in respect of, or reinvestment in
respect of, the Purchased Interest or from the application
of the proceeds therefrom, that constitutes a Termination
Event or an Unmatured Termination Event.
A. The Seller has complied in all material respects
with the Credit and Collection Policy of each Originator
with regard to each Receivable originated by such
Originator.
A. The Seller has complied in all material respects
with all of the terms, covenants and agreements contained in
the Agreement and the other Transaction Documents that are
applicable to it.
A. The Seller's complete corporate name is set forth
in the preamble to the Agreement, and it does not use and
has not during the last five years used any other corporate
name, trade name, doing-business name or fictitious name,
except as set forth on Schedule III to the Agreement and
except for names first used after the date of the Agreement
and set forth in a notice delivered to the Administrator
pursuant to Section 1(k)(iv) of Exhibit IV to the Agreement.
A. The Seller is not an "investment company," or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
In addition, the Seller is not a "holding company," a
"subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(s) The Seller has reviewed the areas within its
business and operations which could be adversely affected
by, and has developed or is developing a program to address
on a timely basis, the risk that certain computer
applications used by the Seller may be unable to recognize
and perform properly date-sensitive functions involving
dates prior to and after December 31, 1999 (the "Year 2000
Problem"). The Year 2000 Problem is not expected to have any
Material Adverse Effect on Seller's Business.
2. REPRESENTATIONS AND WARRANTIES OF SEQUA (including
in its capacity as the Servicer).Sequa, individually and in
its capacity as the Servicer, represents and warrants as
follows:
A. Sequa is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware, and is duly qualified to do business and is in
good standing as a foreign corporation in every jurisdiction
where the nature of its business requires it to be so
qualified, except where the failure to be so qualified would
not have a Material Adverse Effect.
A. The execution, delivery and performance by Sequa
of the Agreement and the other Transaction Documents to
which it is a party, including the Servicer's use of the
proceeds of purchases and reinvestments: (i) are within its
corporate powers; (ii) have been duly authorized by all
necessary corporate action; (iii) do not contravene or
result in a default under or conflict with: (A) its charter
or by-laws, (B) any law, rule or regulation applicable to
it, (C) any indenture, loan agreement, mortgage, deed of
trust or other material agreement or instrument to which it
is a party or by which it is bound, or (D) any order, writ,
judgment, award, injunction or decree binding on or
affecting it or any of its property; and (iv) do not result
in or require the creation of any Adverse Claim upon or with
respect to any of its properties. The Agreement and the
other Transaction Documents to which Sequa is a party have
been duly executed and delivered by Sequa.
A. No authorization, approval or other action by,
and no notice to or filing with any Governmental Authority
or other Person, is required for the due execution, delivery
and performance by Sequa of the Agreement or any other
Transaction Document to which it is a party.
A. Each of the Agreement and the other Transaction
Documents to which Sequa is a party constitutes the legal,
valid and binding obligation of Sequa enforceable against
Sequa in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or
other similar laws from time to time in effect affecting the
enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at
law.
A. The balance sheets of Sequa and its consolidated
Subsidiaries as at December 31, 1997, and the related
statements of income and retained earnings for the fiscal
year then ended, copies of which have been furnished to the
Administrator, fairly present the financial condition of
Sequa and its consolidated Subsidiaries as at such date and
the results of the operations of Sequa and its Subsidiaries
for the period ended on such date, all in accordance with
generally accepted accounting principles consistently
applied, and since December 31, 1997 there has been no event
or circumstances which have had a Material Adverse Effect.
A. Except as disclosed in the most recent audited
financial statements of Sequa furnished to the
Administrator, there is no pending or, to its best
knowledge, threatened action or proceeding affecting it or
any of its Subsidiaries before any Governmental Authority or
arbitrator that could have a Material Adverse Effect.
A. Each Monthly Report (if prepared by Sequa or one
of its Affiliates, or to the extent that information
contained therein is supplied by Sequa or an Affiliate),
information, exhibit, financial statement, document, book,
record or report furnished or to be furnished at any time by
or on behalf of the Servicer to the Administrator in
connection with the Agreement is or will be complete and
accurate in all material respects as of its date or (except
as otherwise disclosed to the Administrator at such time) as
of the date so furnished.
A. Sequa is not in violation of any order of any
court, arbitrator or Governmental Authority, which could
have a Material Adverse Effect.
A. The Servicer has complied in all material
respects with the Credit and Collection Policy of each
Originator with regard to each Receivable originated by such
Originator.
(j) Sequa has reviewed the areas within its business
and operations which could be adversely affected by, and has
developed or is developing a program to address on a timely
basis, the risk that certain computer applications used by
the Sequa may be unable to recognize and perform properly
date-sensitive functions involving dates prior to and after
December 31, 1999 (the "Year 2000 Problem"). The Year 2000
Problem is not expected to have any Material Adverse Effect
on Sequa's Business.
EXHIBIT IV
COVENANTS
1. COVENANTS OF THE SELLER. Until the latest of the
Facility Termination Date, the date on which no Capital of
or Discount in respect of the Purchased Interest shall be
outstanding or the date all other amounts owed by the Seller
under the Agreement to the Issuer, the Administrator and any
other Indemnified Party or Affected Person shall be paid in
full:
A. Compliance with Laws, Etc. The Seller shall
comply in all material respects with all applicable laws,
rules, regulations and orders, and preserve and maintain its
corporate existence, rights, franchises, qualifications and
privileges, except to the extent that the failure so to
comply with such laws, rules and regulations or the failure
so to preserve and maintain such rights, franchises,
qualifications and privileges would not have a Material
Adverse Effect.
A. Offices, Records and Books of Account, Etc. The
Seller: (i) shall keep its principal place of business and
chief executive office (as such terms or similar terms are
used in the UCC) and the office where it keeps its records
concerning the Receivables at the address of the Seller set
forth under its name on the signature page to the Agreement
or, pursuant to clause (k)(iv) below, at any other locations
in jurisdictions where all actions reasonably requested by
the Administrator to protect and perfect the interest of the
Issuer in the Receivables and related items (including the
Pool Assets) have been taken and completed and (ii) shall
provide the Administrator with at least 15 days' written
notice before making any change in the Seller's name or
making any other change in the Seller's identity or
corporate structure (including a Change in Control) that
could render any UCC financing statement filed in connection
with this Agreement "seriously misleading" as such term (or
similar term) is used in the UCC; each notice to the
Administrator pursuant to this sentence shall set forth the
applicable change and the effective date thereof. The Seller
also will maintain and implement (or cause the Servicer to
maintain and implement) administrative and operating
procedures (including an ability to recreate records
evidencing Receivables and related Contracts in the event of
the destruction of the originals thereof), and keep and
maintain (or cause the Servicer to keep and maintain) all
documents, books, records, computer tapes and disks and
other information reasonably necessary or advisable for the
collection of all Receivables (including records adequate to
permit the daily identification of each Receivable and all
Collections of and adjustments to each existing Receivable).
A. Performance and Compliance with Contracts and
Credit and Collection Policy. The Seller shall (and shall
cause the Servicer to) fully comply in all material respects
with the applicable Credit and Collection Policies with
regard to each Receivable and the related Contract.
A. Ownership Interest, Etc. The Seller shall (and
shall cause the Servicer to), at its expense, take all
action necessary or desirable to establish and maintain a
valid and enforceable undivided percentage ownership or
security interest, to the extent of the Purchased Interest,
in the Pool Receivables, the Related Security and
Collections with respect thereto, and a first priority
perfected security interest in the Pool Assets, in each case
free and clear of any Adverse Claim, in favor of the Issuer,
including taking such action to perfect, protect or more
fully evidence the interest of the Issuer as the Issuer,
through the Administrator, may reasonably request.
A. Sales, Liens, Etc. The Seller shall 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 or all of its right, title or
interest in, to or under any Pool Assets (including the
Seller's undivided interest in any Receivable, Related
Security or Collections, or upon or with respect to any
account to which any Collections of any Receivables are
sent), or assign any right to receive income in respect of
any items contemplated by this paragraph.
A. Extension or Amendment of Receivables. Except as
provided in the Agreement, the Seller shall not, and shall
not permit the Servicer to, extend the maturity or adjust
the Outstanding Balance or otherwise modify the terms of any
Pool Receivable, or amend, modify or waive any term or
condition of any related Contract.
A. Change in Credit and Collection Policy. The
Seller shall not make (or permit any Originator to make) any
material change in the character of its business or in any
Credit and Collection Policy, or any change in any Credit
and Collection Policy that would adversely affect the
collectibility of the Receivables Pool or the enforceability
of any related Contract or the ability of the Seller or
Servicer to perform its obligations under any related
Contract or under the Agreement.
A. Audits. (i) The Seller shall (and shall cause
each Originator to)(a) prior to the occurrence of a
Termination Event or an Unmatured Termination Event, from
time to time (but no more frequently than annually) during
regular business hours as reasonably requested in advance by
the Administrator or (b) at any time on and after the
occurrence of a Termination Event or an Unmatured
Termination Event or, if in the opinion of the Administrator
reasonable grounds for insecurity exist with respect to the
collectibility of the Pool Receivables or with respect to
the Seller's performance or ability to perform its
obligations under the Agreement, permit the Administrator,
or its agents or representatives: (A) to examine and make
copies of and abstracts from all books, records and
documents (including computer tapes and disks) in the
possession or under the control of the Seller (or any
Originator) relating to Receivables and the Related
Security, including the related Contracts, and (B) to visit
the offices and properties of the Seller and each Originator
for the purpose of examining such materials described in
clause (i)(A) above, and to discuss matters relating to
Receivables and the Related Security or the Seller's,
Sequa's or such Originator's performance under the
Transaction Documents or under the Contracts with any of the
officers, employees, agents or contractors of the Seller,
Sequa or such Originator having knowledge of such matters;
and (ii) without limiting the provisions of
clause (i) next above, from time to time during regular
business hours, upon five Business Days prior written notice
from the Administrator, permit certified public accountants
or other auditors acceptable to the Administrator to conduct
a review of the Seller's or any Originator's books and
records, at the Seller's or such Originator's expense (as
the case may be), with respect to the Receivables.
A. Change in Lock-Box Banks, Lock-Box Accounts and
Payment Instructions to Obligors. The Seller shall not, and
shall not permit the Servicer or any Originator to, add or
terminate any bank as a Lock-Box Bank or any account as a
Lock-Box Account from those listed in Schedule II to the
Agreement, or make any change in its instructions to
Obligors regarding payments to be made to the Seller, such
Originator, the Servicer or any Lock-Box Account (or related
post office box), unless the Administrator shall have
consented thereto in writing and the Administrator shall
have received copies of all agreements and documents
(including Lock-Box Agreements) that it may request in
connection therewith.
A. Deposits to Lock-Box Accounts. The Seller shall
(or shall cause the Servicer to): (i) instruct all Obligors
to make payments of all Receivables to one or more Lock-Box
Accounts or to post office boxes to which only Lock-Box
Banks have access (and shall instruct the Lock-Box Banks to
cause all items and amounts relating to such Receivables
received in such post office boxes to be removed and
deposited into a Lock-Box Account on a daily basis), and
(ii) deposit, or cause to be deposited, any Collections
received by it, the Servicer or any Originator into Lock-Box
Accounts not later than one Business Day after receipt
thereof. Each Lock-Box Account, Concentration Account and
the Liquidation Account shall at all times be subject to a
Lock-Box Agreement, a Concentration Account Agreement and a
Liquidation Account Agreement, respectively. The Seller will
not (and will not permit the Servicer to) 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.
A. Reporting Requirements. The Seller will provide
to the Administrator (in multiple copies, if requested by
the Administrator) the following:
1. as soon as available and in any event within
95 days after the end of each fiscal year of the
Seller, a copy of the annual report for such year for
the Seller, containing unaudited financial statements
for such year certified as to accuracy by the chief
financial officer or treasurer of the Seller;
1. as soon as possible and in any event within
five days after the occurrence of each Termination
Event or Unmatured Termination Event, a statement of
the chief financial officer of the Seller setting forth
details of such Termination Event or Unmatured
Termination Event and the action that the Seller has
taken and proposes to take with respect thereto;
1. promptly after the filing or receiving
thereof, copies of all reports and notices that the
Seller or any Affiliate files under ERISA with the
Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that the
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 the
Seller or any of its Affiliates 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 that could, in the
aggregate, result in the imposition of liability on the
Seller and/or any such Affiliate;
2. at least fifteen days before any change in
the Seller's name or any other change requiring the
amendment of UCC financing statements, a notice setting
forth such changes and the effective date thereof;
1. promptly after the Seller obtains knowledge
thereof, notice of any: (A) material litigation,
investigation or proceeding that may exist at any time
between the Seller and any Person or (B) material
litigation or proceeding relating to any Transaction
Document;
1. promptly after the occurrence thereof,
notice of a material adverse change in the business,
operations, property or financial or other condition of
the Seller, the Servicer or any Originator; and
1. such other information respecting the
Receivables or the condition or operations, financial
or otherwise, of the Seller or any of its Affiliates as
the Administrator may from time to time reasonably
request.
A. Certain Agreements. Without the prior written
consent of the Administrator, the Seller will not (and will
not permit any Originator to) amend, modify, waive, revoke
or terminate any Transaction Document to which it is a party
or any provision of Seller's certificate of incorporation or
by-laws.
A. Restricted Payments. (i) Except pursuant to
clause (ii) below, the Seller will not: (A) purchase or
redeem any shares of its capital stock, (B) declare or pay
any dividend or set aside any funds for any such purpose,
(C) prepay, purchase or redeem any Debt, (D) lend or advance
any funds or (E) repay any loans or advances to, for or from
any of its Affiliates (the amounts described in clauses (A)
through (E) being referred to as "Restricted Payments").
(ii) Subject to the limitations set forth in
clause (iii) below, the Seller may make Restricted
Payments so long as such Restricted Payments are made
only in one or more of the following ways: (A) the
Seller may make cash payments (including prepayments)
on the Company Notes in accordance with its terms, and
(B) if no amounts are then outstanding under the
Company Notes, the Seller may declare and pay
dividends.
(iii) The Seller may make Restricted Payments only
out of the funds it receives pursuant to Sections
1.4(b)(ii) and (iv) of the Agreement. Furthermore, the
Seller shall not pay, make or declare: (A) any dividend
if, after giving effect thereto, the Seller's tangible
net worth would be less than $50,000,000, or (B) any
Restricted Payment (including any dividend) if, after
giving effect thereto, any Termination Event or
Unmatured Termination Event shall have occurred and be
continuing.
A. Other Business. The Seller will not: (i) engage
in any business other than the transactions contemplated by
the Transaction Documents; (ii) create, incur or permit to
exist any Debt of any kind (or cause or permit to be issued
for its account any letters of credit or bankers'
acceptances) other than pursuant to this Agreement or the
Company Notes; or (iii) form any Subsidiary or make any
investments in any other Person; provided, however, that the
Seller shall be permitted to incur minimal obligations to
the extent necessary for the day-to-day operations of the
Seller (such as expenses for stationery, audits, maintenance
of legal status, etc.).
A. Use of Seller's Share of Collections. The Seller
shall apply the Seller's Share of Collections to make
payments in the following order of priority: (i) the payment
of its expenses (including all obligations payable to the
Issuer and the Administrator under the Agreement and under
the Fee Letter); (ii) the payment of accrued and unpaid
interest on the Company Notes; and (iii) other legal and
valid corporate purposes.
A. Tangible Net Worth. The Seller will not permit
its tangible net worth, at any time, to be less than
$50,000,000.
2. Covenants of the Servicer and Sequa. Until the
latest of the Facility Termination Date, the date on which
no Capital of or Discount in respect of the Purchased
Interest shall be outstanding or the date all other amounts
owed by the Seller under the Agreement to the Issuer, the
Administrator and any other Indemnified Party or Affected
Person shall be paid in full:
A. Compliance with Laws, Etc. The Servicer and, to
the extent that it ceases to be the Servicer, Sequa shall
comply (and shall cause each Originator to comply) in all
material respects with all applicable laws, rules,
regulations and orders, and preserve and maintain its
corporate existence, rights, franchises, qualifications and
privileges, except to the extent that the failure so to
comply with such laws, rules and regulations or the failure
so to preserve and maintain such existence, rights,
franchises, qualifications and privileges would not have a
Material Adverse Effect.
A. Records and Books of Account, Etc. The Servicer
and, to the extent that it ceases to be the Servicer, Sequa,
also will (and will cause each Originator to) maintain and
implement administrative and operating procedures (including
an ability to recreate records evidencing Receivables and
related Contracts in the event of the destruction of the
originals thereof), and keep and maintain all documents,
books, records, computer tapes and disks and other
information reasonably necessary or advisable for the
collection of all Receivables (including records adequate to
permit the daily identification of each Receivable and all
Collections of and adjustments to each existing Receivable).
A. Change in Credit and Collection Policy. The
Servicer and, to the extent that it ceases to be the
Servicer, Sequa, shall not make (and shall not permit any
Originator to make) any material change in the character of
its business or in any Credit and Collection Policy, or any
change in any Credit and Collection Policy that would
adversely affect the collectibility of the Receivables Pool
or the enforceability of any related Contract or the ability
of the Seller or Servicer to perform its obligations under
any related Contract or under the Agreement.
A. Audits. (i) The Servicer and, to the extent that
it ceases to be the Servicer, Sequa, shall (and shall cause
each Originator to)(a) prior to the occurrence of a
Termination Event or an Unmatured Termination Event, from
time to time (but no more frequently than annually) during
regular business hours as reasonably requested in advance by
the Administrator or (b) at any time on and after the
occurrence of a Termination Event or an Unmatured
Termination Event or, if in the opinion of the Administrator
reasonable grounds for insecurity exist with respect to the
collectibility of the Pool Receivables or with respect to
the Servicer's performance or ability to perform its
obligations under the Agreement, permit the Administrator,
or its agents or representatives: (A) to examine and make
copies of and abstracts from all books, records and
documents (including computer tapes and disks) in its
possession or under its control relating to Receivables and
the Related Security, including the related Contracts, and
(B) to visit its offices and properties for the purpose of
examining such materials described in clause (i)(A) above,
and to discuss matters relating to Receivables and the
Related Security or its performance hereunder or under the
Contracts with any of its officers, employees, agents or
contractors having knowledge of such matters; and (ii)
without limiting the provisions of clause (i) next above,
from time to time during regular business hours, upon five
Business Days prior written notice from the Administrator,
permit certified public accountants or other auditors
acceptable to the Administrator to conduct, at Servicer's
expense, a review of the Servicer's books and records with
respect to the Receivables.
A. Deposits to Lock-Box Accounts. The Servicer
shall: (i) instruct all Obligors to make payments of all
Receivables to one or more Lock-Box Accounts or to post
office boxes to which only Lock-Box Banks have access (and
shall instruct the Lock-Box Banks to cause all items and
amounts relating to such Receivables received in such post
office boxes to be removed and deposited into a Lock-Box
Account on a daily basis); and (ii) deposit, or cause to be
deposited, any Collections received by it into Lock-Box
Accounts not later than one Business Day after receipt
thereof. Each Lock-Box Account, Concentration Account and
the Liquidation Account shall at all times be subject to a
Lock-Box Agreement, a Concentration Account Agreement, and a
Liquidation Account Agreement respectively. The Servicer
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.
A. Reporting Requirements. Sequa shall provide to
the Administrator (in multiple copies, if requested by the
Administrator) the following:
1. As soon as available and in any event within
50 days after the end of each of the first three
quarters of each fiscal year of Sequa, (a) copies of
the unaudited consolidated balance sheet of Sequa and
its consolidated Subsidiaries as at the end of such
quarter, together with unaudited statements of
earnings, stockholders' equity and cash flows for such
quarter and the portion of the fiscal year through such
quarter, prepared in accordance with GAAP and certified
by the chief financial officer, treasurer or chief
accounting officer of Sequa, (b) a letter from the
chief financial officer, treasurer or chief accounting
officer of Sequa certifying to the best knowledge of
such officer, that neither a Termination Event nor an
Unmatured Termination Event has occurred and is
continuing;
1. As soon as available and in any event within
95 days after the end of each fiscal year of Sequa, (a)
a copy of the consolidated balance sheet of Sequa and
its consolidated Subsidiaries as at the end of such
fiscal year, together with the related statements of
earnings, stockholders' equity and cash flows for such
fiscal year, each prepared in accordance with GAAP
applied consistently throughout the periods reflected
therein (Sequa's consolidated balance sheet and such
related statements to be certified without any
Impermissible Qualification by independent certified
public accountants of nationally recognized standing),
and (b) a letter from the chief financial officer,
treasurer or chief accounting officer of Sequa
certifying to the best knowledge of such officer, that
neither a Termination Event nor an Unmatured
Termination Event has occurred and is continuing, in
each case as at the end of each such fiscal year and
the date of delivery of such letter;
1. as to the Servicer only, as soon as
available and in any event not later than (i) 15 days
after the last day of each calendar month and (ii) 25
days after the last day of each fiscal year of Sequa, a
Monthly Report as of the last day of such month or,
within six Business Days of a request by the
Administrator, a Monthly Report for such periods as is
specified by the Administrator (including on a semi-
monthly, weekly or daily basis);
1. promptly after the sending or filing
thereof, copies of all reports that Sequa sends to any
of its security holders, and copies of all reports and
registration statements that Sequa or any Subsidiary
files with the Securities and Exchange Commission or
any national securities exchange;
1. promptly after the filing or receiving
thereof, copies of all reports and notices that Sequa
or any of its Affiliate files under ERISA with the
Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that
such Person or any of its Affiliates receives from any
of the foregoing or from any multiemployer plan (within
the meaning of Section 4001(a)(3) of ERISA) to which
such Person or any of its 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 that could, in the
aggregate, result in the imposition of liability on
Sequa and/or any such Affiliate;
1. promptly after Sequa obtains knowledge
thereof, notice of any: (A) litigation, investigation
or proceeding that may exist at any time between Sequa
or any of its Subsidiaries and any Governmental
Authority that, if not cured or if adversely
determined, as the case may be, would have a Material
Adverse Effect; (B) litigation or proceeding adversely
affecting such Person or any of its Subsidiaries in
which the amount involved is $3,500,000 or more and not
covered by insurance or in which injunctive or similar
relief is sought; or (C) litigation or proceeding
relating to any Transaction Document;
1.
As soon as available and in any event within 100
days after the end of each fiscal year of Servicer, the
Servicer shall, at the Servicer's expense, cause a firm
of independent public accountants, acceptable to the
Administrator, to furnish a report to the Administrator,
to the effect that such firm has (i) compared the
information contained in the Monthly Reports delivered
during such fiscal year then ended with the information
contained in the Servicer's records and computer systems
for such period, and that, on the basis of such
examination and comparison, such firm is of the opinion
that the information contained in the Monthly Reports
reconciles with the information contained in the
Servicer's records and computer systems and that the
servicing of the Receivables has been conducted in
compliance with the Agreement, (ii) confirmed the Net
Receivables Pool Balance as of the end of each Yield
Period during such fiscal year, (iii) verified that the
Receivables treated by the Servicer as Eligible
Receivables in fact satisfied the requirements of the
definition thereof contained in Exhibit I to the
Agreement, and (iv) conducted a "negative confirmation"
of a sample of Receivables and verified that the
Servicer's records and computer systems used in servicing
the Receivables contained correct information with regard
to due dates and outstanding balances, except in each
case for (a) such exceptions as such firm shall believe
to be immaterial (which exceptions need not be
enumerated) and (b) such other exceptions as shall be set
forth in such statement; and
(viii) such other information respecting the
Receivables or the condition or operations, financial or
otherwise, of Sequa or any of its Affiliates as the
Administrator may from time to time reasonably request.
3. Separate Existence. Each of the Seller and Sequa
hereby acknowledges that the Purchasers, the Issuer and the
Administrator are entering into the transactions
contemplated by this Agreement and the other Transaction
Documents in reliance upon the Seller's identity as a legal
entity separate from Sequa and its Affiliates. Therefore,
from and after the date hereof, each of the Seller and Sequa
shall take all steps specifically required by the Agreement
or reasonably required by the Administrator to continue the
Seller's identity as a separate legal entity and to make it
apparent to third Persons that the Seller is an entity with
assets and liabilities distinct from those of Sequa and any
other Person, and is not a division of Sequa, its Affiliates
or any other Person. Without limiting the generality of the
foregoing and in addition to and consistent with the other
covenants set forth herein, each of the Seller and Sequa
shall take such actions as shall be required in order that:
(a) The Seller will be a limited purpose
corporation whose primary activities are restricted in
its certificate of incorporation to: (i) purchasing or
otherwise acquiring from the Originators, owning,
holding, granting security interests or selling
interests in Pool Assets, (ii) entering into agreements
for the selling and servicing of the Receivables Pool,
and (iii) conducting such other activities as it deems
necessary or appropriate to carry out its primary
activities;
(b) The Seller shall not engage in any business or
activity, or incur any indebtedness or liability, other
than as expressly permitted by the Transaction
Documents;
(c) Not less than one member of the Seller's Board
of Directors (the "Independent Director") shall be an
individual who is not a direct, indirect or beneficial
stockholder, officer, director, employee, affiliate,
associate or supplier of Sequa or any of its
Affiliates. The certificate of incorporation of the
Seller shall provide that: (i) the Seller's Board of
Directors shall not approve, or take any other action
to cause the filing of, a voluntary bankruptcy petition
with respect to the Seller unless the Independent
Director shall approve the taking of such action in
writing before the taking of such action, and (ii) such
provision cannot be amended without the prior written
consent of the Independent Director;
(d) The Independent Director shall not at any time
serve as a trustee in bankruptcy for the Seller, Sequa
or any Affiliate thereof;
(e) Any employee, consultant or agent of the
Seller will be compensated from the Seller's funds for
services provided to the Seller. The Seller will not
engage any agents other than its attorneys, auditors
and other professionals, and a servicer and any other
agent contemplated by the Transaction Documents for the
Receivables Pool, which servicer will be fully
compensated for its services by payment of the
Servicing Fee, and a manager, which manager will be
fully compensated from the Seller's funds;
(f) The Seller will contract with the Servicer to
perform for the Seller all operations required on a
daily basis to service the Receivables Pool. The Seller
will pay the Servicer the Servicing Fee pursuant
hereto. The Seller will not incur any material indirect
or overhead expenses for items shared with Sequa (or
any other Affiliate thereof) that are not reflected in
the Servicing Fee. To the extent, if any, that the
Seller (or any Affiliate thereof) shares items of
expenses not reflected in the Servicing Fee or the
manager's fee, such as legal, auditing and other
professional services, such expenses will be allocated
to the extent practical on the basis of actual use or
the value of services rendered, and otherwise on a
basis reasonably related to the actual use or the value
of services rendered; it being understood that Sequa
shall pay all expenses relating to the preparation,
negotiation, execution and delivery of the Transaction
Documents, including legal, rating agency and other
fees;
(g) The Seller's operating expenses will not be
paid by Sequa or any other Affiliate thereof;
(h) All of the Seller's business correspondence
and other communications shall be conducted in the
Seller's own name and on its own separate stationery;
(i) The Seller's books and records will be
maintained separately from those of Sequa and any other
Affiliate thereof;
(j) All financial statements of Sequa or any
Affiliate thereof that are consolidated to include
Seller will contain detailed notes clearly stating
that: (i) a special purpose corporation exists as a
Subsidiary of Sequa, and (ii) the Originators have sold
receivables and other related assets to such special
purpose Subsidiary that, in turn, has sold undivided
interests therein to certain financial institutions and
other entities;
(k) The Seller's assets will be maintained in a
manner that facilitates their identification and
segregation from those of Sequa or any Affiliate
thereof;
(l) The Seller will strictly observe corporate
formalities in its dealings with Sequa or any Affiliate
thereof, and funds or other assets of the Seller will
not be commingled with those of Sequa or any Affiliate
thereof except as permitted by the Agreement in
connection with servicing the Pool Receivables. The
Seller shall not maintain joint bank accounts or other
depository accounts to which Sequa or any Affiliate
thereof (other than Sequa in its capacity as the
Servicer) has independent access. The Seller is not
named, and has not entered into any agreement to be
named, directly or indirectly, as a direct or
contingent beneficiary or loss payee on any insurance
policy with respect to any loss relating to the
property of Sequa or any Subsidiary or other Affiliate
of Sequa. The Seller will pay to the appropriate
Affiliate the marginal increase or, in the absence of
such increase, the market amount of its portion of the
premium payable with respect to any insurance policy
that covers the Seller and such Affiliate; and
(m) The Seller will maintain arm's-length
relationships with Sequa (and any Affiliate thereof).
Any Person that renders or otherwise furnishes services
to the Seller will be compensated by the Seller at
market rates for such services it renders or otherwise
furnishes to the Seller. Neither the Seller nor Sequa
will be or will hold itself out to be responsible for
the debts of the other or the decisions or actions
respecting the daily business and affairs of the other.
The Seller and Sequa will immediately correct any known
misrepresentation with respect to the foregoing, and
they will not operate or purport to operate as an
integrated single economic unit with respect to each
other or in their dealing with any other entity.
(n) Sequa shall not pay the salaries of Seller's
employees, if any.
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
A. (i) the Seller, any Originator or the Servicer (if
Sequa or any of its Affiliates) shall fail to make when due
any payment or deposit to be made by it under the Agreement
and such failure shall continue unremedied for one Business
Day or (ii) the Seller, any Originator or the Servicer (if
Sequa or any of its Affiliates) shall fail to perform or
observe any other term, covenant or agreement under the
Agreement or any other Transaction Document and such failure
shall continue for 30 days;
A. Sequa (or any Affiliate thereof) shall fail to
transfer to any successor Servicer when required any rights
pursuant to the Agreement that Sequa (or such Affiliate)
then has as Servicer;
A. any representation or warranty made or deemed
made by the Seller, Sequa or any Originator (or any of their
respective officers) under or in connection with the
Agreement or any other Transaction Document, or any
information or report delivered by the Seller, Sequa or such
Originator or the Servicer pursuant to the Agreement or any
other Transaction Document, shall prove to have been
incorrect or untrue in any material respect when made or
deemed made or delivered;
A. the Seller or the Servicer shall fail to deliver
the Monthly Report pursuant to the Agreement, and such
failure shall remain unremedied for five days;
A. the Agreement or any purchase or reinvestment
pursuant to the Agreement shall for any reason: (i) cease to
create, or the Purchased Interest shall for any reason cease
to be, a valid and enforceable perfected undivided
percentage ownership or security interest to the extent of
the Purchased Interest in each Pool Receivable, the Related
Security and Collections with respect thereto, free and
clear of any Adverse Claim, or (ii) cease to create with
respect to the Pool Assets, or the interest of the Issuer
with respect to such Pool Assets shall cease to be, a valid
and enforceable first priority perfected security interest,
free and clear of any Adverse Claim,
A. the Seller, Sequa or any Originator shall
generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted
by or against the Seller, Sequa or any Originator seeking to
adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for
any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by
it), either such proceeding shall remain undismissed or
unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including 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 the
Seller, Sequa or any Originator shall take any corporate
action to authorize any of the actions set forth above in
this paragraph;
A. (i) the (A) Default Ratio shall exceed 5% or (B)
the Delinquency Ratio shall exceed 10% or (ii) the average
for three consecutive calendar months of: (A) the Default
Ratio shall exceed 5% or (B) the Delinquency Ratio shall
exceed 8%.
A. a Change in Control shall occur,
A. at any time (i) the sum of (A) the Capital plus
(B) the Total Reserves, exceeds (ii) the sum of (A) the Net
Receivables Pool Balance at such time plus (B) the Issuer's
Share of the amount of Collections then on deposit in the
Lock-Box Accounts, the Concentration Accounts and the
Liquidation Account(other than amounts set aside therein
representing Discount and Fees), and such circumstance shall
not have been cured within five Business Days,
(j) (i) Sequa or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any of its
Debt that is outstanding in a principal amount of at least
$3,500,000 in the aggregate when the same becomes due and
payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any,
specified in the agreement, mortgage, indenture or
instrument relating to such Debt (and shall have not been
waived); or (ii) any other event shall occur or condition
shall exist under any agreement, mortgage, indenture or
instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such
agreement, mortgage, indenture or instrument (and shall have
not been waived), if, in either case: (a) the effect of such
non-payment, event or condition is to give the applicable
debtholders the right (whether acted upon or not) to
accelerate the maturity of such Debt, or (b) 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 before the stated maturity
thereof;
(k) either: (i) a contribution failure shall occur with
respect to any Benefit Plan sufficient to give rise to a
lien under Section 302(f) of ERISA, (ii) the Internal
Revenue Service shall file a notice of lien asserting a
claim pursuant to the Internal Revenue Code with regard to
any of the assets of Seller, any Originator, Sequa or any
ERISA Affiliate, or (iii) the Pension Benefit Guaranty
Corporation shall file a notice of lien asserting a claim
pursuant to ERISA with regard to any assets of the Seller,
such Originator, Sequa or any ERISA Affiliate.
SCHEDULE I
CREDIT AND COLLECTION POLICY
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
Lock-Box Bank
Lock-Box Accounts Lock-
Box Number
SCHEDULE III
TRADE NAMES
ANNEX A
to Receivables Purchase Agreement
FORM OF MONTHLY REPORT
ANNEX C
to Receivables Purchase Agreement
SPECIAL OBLIGORS AND SPECIAL CONCENTRATION PERCENTAGES
Special
Concentration
Special Obligor Percentage
General Electric Company 25%
Xxxxx & Xxxxxxx (a wholly
owned subsidiary of
United Technologies
Corporation) 8%
