EXHIBIT 10.13
PURCHASE AND SALE AGREEMENT
Dated as of August 20, 1996
among
TERRA INTERNATIONAL, INC.,
TERRA NITROGEN, LIMITED PARTNERSHIP,
BEAUMONT METHANOL, LIMITED PARTNERSHIP,
TERRA FUNDING CORPORATION
and
TERRA CAPITAL, INC.
TABLE OF CONTENTS
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PAGE
ARTICLE I
AGREEMENT TO SELL............................. 4
1.1. Sales.................................................................. 4
1.2. Timing of Purchases.................................................... 5
1.3. Consideration for Purchases............................................ 6
1.4. Sale Termination Date.................................................. 6
1.5. No Recourse............................................................ 6
1.6. True Sales............................................................. 6
ARTICLE II
CALCULATION OF PURCHASE PRICE....................... 7
2.1. Calculation of Purchase Price.......................................... 7
ARTICLE III
PAYMENT OF PURCHASE PRICE......................... 9
3.1. Initial Purchase Price Payment......................................... 9
3.2. Subsequent Purchase Price Payments..................................... 9
3.3. Settlement as to Specific Receivables.................................. 10
3.4. Settlement as to Dilution.............................................. 11
3.5. Reconveyance of Receivables............................................ 12
ARTICLE IV
CONDITIONS OF PURCHASES.......................... 12
4.1. Conditions Precedent to Initial Purchase............................... 12
4.2. Certification as to Representations and Warranties..................... 14
ARTICLE V
REPRESENTATIONS AND WARRANTIES....................... 14
5.1. Representations of Originators......................................... 14
ARTICLE VI
COVENANTS................................. 19
6.1. Affirmative Covenants.................................................. 19
6.2. Reporting Requirements................................................. 20
6.3. Negative Covenants..................................................... 21
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PAGE
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ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES .................... 22
7.1. Rights of the Company ............................................ 22
7.2. Responsibilities of Originators .................................. 22
7.3. Further Action Evidencing Purchases .............................. 23
7.4. Application of Collections ....................................... 24
7.5. Sub-Servicers .................................................... 24
ARTICLE VIII
INDEMNIFICATION ......................... 24
8.1. Indemnities by Originators ....................................... 24
ARTICLE IX
MISCELLANEOUS ........................... 26
9.1. Amendments, Etc .................................................. 26
9.2. Notices, Etc ..................................................... 27
9.3. No Waiver; Cumulative Remedies ................................... 27
9.4. Binding Effect; Assignability .................................... 27
9.5. Governing Law .................................................... 27
9.6. Costs, Expenses and Taxes ........................................ 28
9.7. Submission to Jurisdiction ....................................... 28
9.8. Waiver of Jury Trial ............................................. 28
9.9. Captions and Cross References; Incorporation by Reference ........ 29
9.10. Execution in Counterparts ........................................ 29
9.11. Acknowledgment and Agreement ..................................... 29
9.12. No Proceedings ................................................... 29
9.13. Addition of Originators .......................................... 29
9.14. Deletion of BMLP ................................................. 30
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PAGE
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EXHIBIT A -- Form of Purchase Report
EXHIBIT B -- Form of the Initial Purchaser Note
EXHIBIT C -- Office Locations
Schedule 5.1(n) Trade Names
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND CONTRIBUTION AGREEMENT (as amended, supplemented or
modified from time to time, this "Agreement"), dated as of August 20, 1996, is
among TERRA INTERNATIONAL, INC., a Delaware corporation ("TI"), TERRA NITROGEN,
LIMITED PARTNERSHIP, a Delaware limited partnership ("TNLP"), BEAUMONT METHANOL,
LIMITED PARTNERSHIP, a Delaware limited partnership ("BMLP"; TI, TNLP, BMLP and
the other Persons that may become parties hereto as originators pursuant to
Section 9.13 are sometimes individually referred to as an "Originator" and
collectively as the "Originators"), TERRA FUNDING CORPORATION, a Delaware
corporation (the "Company"), and TERRA CAPITAL, INC., a Delaware corporation
("Terra Capital"), as initial Servicer.
Definitions
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Unless otherwise indicated, certain terms that are capitalized and used
throughout this Agreement are defined in Schedule I to the Receivables Purchase
Agreement of even-date herewith (as amended, supplemented or otherwise modified
from time to time, the "Receivables Purchase Agreement"), among the Company,
Terra Capital, as initial Servicer, the financial institutions party thereto
from time to time as purchasers ("Purchasers") and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as administrative agent for Purchasers (in such
capacity, the "Administrative Agent").
The following terms have the respective meanings indicated hereinbelow:
Available Funds shall have the meaning assigned to such term in Section 3.2
hereof.
Contributed Receivables shall have the meaning assigned to such term in
Section 1.2(b) hereof.
Deemed Collection means amounts payable by an Originator pursuant to
Section 3.3 or 3.4.
"Designated Receivables" means all Receivables originated or acquired by an
Originator, other than those Receivables designated by such Originator on a
Purchase Report as not being sold, assigned or transferred to the Company,
provided that such excluded Receivables shall have been selected on a random
basis and that, after giving effect to such exclusion, the Aggregate Required
Allocations do not exceed the Required Allocations Limit.
Ineligible Receivable shall have the meaning assigned to such term in
Section 3.3 hereof.
Initial Closing Date shall have the meaning assigned to such term in
Section 1.2 hereof.
Initial Cut-Off Date means July 31, 1996.
Initial Purchaser Note shall have the meaning assigned to such term in
Section 3.1 hereof.
Lock-Box Accounts means one or more accounts held in Lock-Box Banks for
receiving Collections from Designated Receivables.
Originator Material Adverse Effect means, with respect to any event or
circumstance, a material adverse effect on:
(i) the business, financial condition or operations of an
Originator;
(ii) the ability of an Originator to perform its obligations under
this Agreement or any other Transaction Document to which it is a party;
(iii) the validity or enforceability as against an Originator of this
Agreement or any other Transaction Document to which it is a party;
(iv) the status, existence, perfection, priority or enforceability
of the Company's interest in the Transferred Receivables and the Related
Rights sold, contributed or transferred by an Originator; or
(v) the validity, enforceability or collectibility of any Eligible
Receivable, if the effect of the deletion of such Receivable from the Net
Pool Balance would result in a violation of the Required Allocations Limit.
Payment Day means (i) the Initial Closing Date and (ii) each Business Day
thereafter that the Originators are open for business.
Pro Rata Share with respect to any Originator means the ratio, expressed as
a percentage, of (i) the aggregate Unpaid Balance of the Transferred Receivables
generated by such Originator sold or contributed to the Company on the Initial
Closing Date to the aggregate Unpaid Balance of all Transferred Receivables sold
or contributed to the Company on the Initial Closing Date, with respect to all
periods prior to the first Reporting Date and (ii) the aggregate Unpaid Balance
of the Transferred Receivables generated by such Originator sold or
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contributed to the Company during the most recently ended calendar month to the
aggregate Unpaid Balance of all Transferred Receivables sold or contributed
during such month, with respect to all periods thereafter.
Purchase Price shall have the meaning assigned to such term in Section 2.1
hereof.
Purchase Report shall have the meaning assigned to such term in Section
2.1 hereof.
Related Rights shall have the meaning assigned to such term in Section
1.1(a) hereof.
Reporting Date shall have the meaning assigned to such term in Section 2.1.
Sale Indemnified Amounts shall have the meaning assigned to such term in
Section 8.1 hereof.
Sale Indemnified Party shall have the meaning assigned to such term in
Section 8.1 hereof.
Sale Termination Date shall have the meaning assigned to such term in
Section 1.4 hereof.
Transferred Receivable means a Designated Receivable sold, or purported to
have been sold, to the Company pursuant to the Agreement or a Contributed
Receivable.
Background
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1. The Company is a limited purpose corporation, all of the issued and
outstanding shares of capital stock of which are wholly-owned, directly or
indirectly, by Parent.
2. The Originators concurrently with the initial sale hereunder may
transfer certain Receivables and Related Rights to the Company as part of the
capitalization of the Company.
3. In order to finance its business, each Originator wishes to sell
Designated Receivables and Related Rights to the Company, and the Company is
willing, on the terms and subject to the conditions set forth herein, to
purchase Designated Receivables and Related Rights from each Originator.
4. The Company intends to sell to the Administrative Agent, for the
benefit of the Purchasers, from time to time undivided interests in the
Designated Receivables and Related Rights pursuant to the Receivables Purchase
Agreement in order to
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finance, in part, its purchases of Designated Receivables and Related Rights
hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
AGREEMENT TO SELL
1.1. Sales. On the terms and subject to the conditions set forth in this
Agreement (including Article V), and in consideration of the Purchase Price,
until the Sale Termination Date, each Originator agrees to sell, assign, and
transfer, and does hereby sell, assign and transfer to the Company, and the
Company agrees to purchase, and does hereby purchase, from each Originator, all
of such Originator's right, title and interest in and to:
(i) each Designated Receivable (other than Initial Contributed
Receivables, if any) of such Originator that existed and was owing to such
Originator as of the close of such Originator's business on the Initial
Cut-Off Date;
(ii) each Designated Receivable (other than Contributed Receivables,
if any) created, acquired or originated by such Originator from the close
of such Originator's business on the Initial Cut-Off Date, to and including
the Sale Termination Date;
(iii) all rights to, but not the obligations under, the Contracts and
all Related Security with respect to such Designated Receivables;
(iv) all monies due or to become due with respect to the foregoing;
(v) all books and records related to any of the foregoing;
(vi) each lock-box to which Collections of Designated Receivables are
sent, the Lock-Box Accounts, all amounts on deposit and all investments
therein and all related agreements between such Originator and the Lock-Box
Banks, in each case to the extent related to such Collections; and
(vii) all proceeds of the foregoing (as defined in the UCC) received
on or after the Initial Cut-Off Date including, without limitation, all
funds which either are received by
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such Originator, the Company or the Servicer from or on behalf of the
Obligors in payment of any amounts owed (including, without limitation,
finance charges, interest and all other charges) in respect of Designated
Receivables, or are applied to such amounts owed by the Obligors
(including, without limitation, insurance payments, if any, that such
Originator or the Servicer applies in the ordinary course of its business
to amounts owed in respect of any Designated Receivable and net proceeds of
sale or other disposition of repossessed goods or other collateral or
property of the Obligors or any other party directly or indirectly liable
for payment of such Designated Receivable and available to be applied
thereon).
All purchases and capital contributions hereunder shall be made without
recourse, but shall be made pursuant to, and in reliance upon, the
representations, warranties and covenants of the Originator, set forth in each
Transaction Document. The proceeds and rights described in subsections (iii)
through (vii) of this Section 1.1(a) are herein collectively called the "Related
Rights" (it being understood that when the term "Related Rights" is applied to
the Contributed Receivables, the references in subsections (iii) through (vii)
of this Section 1.1(a) to "Designated Receivables" shall be deemed to refer to
"Contributed Receivables").
1.2. Timing of Purchases.
(a) Initial Closing Date Purchases. On the date of the first Purchase
under the Receivables Purchase Agreement (the "Initial Closing Date") each
Originator shall sell to the Company, and the Company shall purchase, pursuant
to Section 1.1, such Originator's entire right, title and interest in (i) each
Designated Receivable (other than Contributed Receivables, if any) that existed
and was owing to such Originator as of the close of such Originator's business
on the Initial Cut-Off Date, and (ii) all Related Rights with respect thereto.
(b) Regular Purchases and Contributions. After the Initial Closing Date,
and continuing until the Sale Termination Date, each Designated Receivable
described in Section 1.1(a)(ii) hereof, and all the Related Rights with respect
thereto, shall be automatically deemed to be sold or contributed by the related
Originator to the Company (without any further action) upon the creation or
origination of such Designated Receivable. All Receivables indicated on a
Purchase Report, if any, as having been contributed to the Company (such
Receivables, together with the Initial Contributed Receivables, the "Contributed
Receivables"), shall be contributed to the Company on such date.
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1.3. Consideration for Purchases. On the terms and subject to the
conditions set forth in this Agreement, the Company agrees to make all Purchase
Price payments to the Originators in accordance with Article III.
1.4. Sale Termination Date. The "Sale Termination Date" shall be the
Commitment Termination Date under the Receivables Purchase Agreement.
1.5. No Recourse. Except as specifically provided in this Agreement, the
purchase and sale of Receivables and Related Rights under this Agreement shall
be without recourse to the related Originator; provided that each Originator
shall be liable to the Company for all representations, warranties, covenants
and indemnities made by such Originator pursuant to the terms of this Agreement,
it being understood that such obligation of the Originators will not arise on
account of the failure of the Obligor for credit reasons to make any payment in
respect of a Receivable.
1.6. True Sales.
(a) Each of the Originators and the Company intend the transactions
hereunder to constitute true sales (or, in the case of Contributed Receivables,
conveyances in the form of capital contributions) of Receivables and Related
Rights by each of the Originators to the Company, providing the Company with the
full benefits of ownership thereof, and no party hereto intends the transactions
contemplated hereunder to be, or for any purpose to be characterized as, a loan
from the Company to any Originator.
(b) In the event (but only to the extent) that the conveyance of
Receivables and Related Rights hereunder is characterized by a court or other
governmental authority as a loan rather than a sale, each Originator shall be
deemed hereunder to have granted to the Company, and each Originator hereby
severally grants to the Company, a security interest in all of such Originator's
right, title and interest in, to and under all of the following, whether now or
hereafter owned, existing or arising: (A) all Transferred Receivables of such
Originator, and (B) all Related Rights of such Originator with respect thereto.
Such security interest shall secure all of such Originator'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 Company shall have,
with respect to the property described in this Section 1.6, and in addition to
all the other rights and remedies available to the Company under this Agreement
and applicable law, all the rights and remedies of a secured party under any
applicable UCC, and this
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Agreement shall constitute a security agreement under applicable law.
ARTICLE II
CALCULATION OF PURCHASE PRICE
2.1. Calculation of Purchase Price. On each Reporting Date (commencing
with the first Reporting Date following the Initial Closing Date), the Servicer
shall deliver to the Company, the Administrative Agent and each Originator (if
the Servicer is other than Terra Capital) a report in substantially the form of
Exhibit A (each such report being herein called a "Purchase Report") with
respect to the Company's purchases of Designated Receivables from the
Originators
(a) that arose on or prior to the Initial Cut-Off Date (in the case of
the first Purchase Report to be delivered hereunder) and
(b) that arose during the calendar month immediately preceding such
Reporting Date (in the case of each successive Purchase Report).
The "Purchase Price" (to be paid to each Originator in accordance with the terms
of Article III) for the Designated Receivables and the Related Rights sold by
such Originator shall be determined in accordance with the following formula:
PP = AUB - (AUB X FMVD)
where:
PP = Purchase Price (to be paid to the related Originator in
accordance with the terms of Article III) as calculated on the
relevant Reporting Date.
AUB = (i) for purposes of calculating the Purchase Price on the Initial
Closing Date, the aggregate Unpaid Balance of, or the amount
shown on the related Originator's books for (if less), all
Designated Receivables generated by such Originator as at the
Initial Cut-Off Date, and
(ii) for purposes of calculating the Purchase Price for
Receivables on each Reporting Date thereafter, the aggregate
Unpaid Balance of the Designated Receivables described in Section
1.1(a)(ii) hereof that were generated by such Originator during
the immediately preceding calendar month.
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FMVD = Fair Market Value Discount Factor on the determination date, which
is the sum of the Loss Discount and the Cost Discount, in each
case as calculated on the most recent Reporting Date as set forth
in the definitions below.
"Loss Discount" as measured on any date, a percentage, determined in good
faith by Servicer, that reflects the historical average losses experienced by
the related Originator with respect to similar receivable generated by such
Originator during the previous twelve (12) months, as such average may be
adjusted by the Servicer, based on current information then available to the
Servicer, to reflect any additional losses that might reasonably be expected to
be incurred, but which at the time of determination may not be reflected in such
average.
"Cost Discount" as measured on [(1) the Initial Closing Date, means the one
month Eurodollar Rate as of two Business Days prior to the Initial Closing Date,
plus .72%] and (2) any Reporting Date means a percentage determined in
accordance with the following formula:
CD = (DSO/360) x CR
where:
CD = the Cost Discount as measured on such Reporting Date;
DSO = the Days of Sales Outstanding, as set forth in the most recent
Purchase Report; and
CR = the Cost Rate as measured on such Reporting Date.
"Cost Rate" as measured on any Reporting Date means a per annum percentage
rate equal to the sum of (i) the blended Purchaser Rate applicable during the
previous calendar month, plus (ii) the percentage used in calculating the
Servicer's Fee for the previous calendar month, plus (iii) .02% (or such higher
percentage which such Originator and the Company shall specify in good faith so
that the purchase price reflects the related fair market value of the related
Receivables), plus (iv) the amount, expressed as a per annum percentage rate, of
any fees, costs and expenses incurred by the Company during the previous
calendar month (and not accounted for in the foregoing clauses (i) and (ii) or
paid by the Company from funds other than Collections), including tax payments,
management fees and indemnity obligations for which the Company is not
indemnified pursuant to this Agreement; provided that, for purposes of
minimizing fluctuations in the Cost Rate, the Servicer may allocate and spread
any costs and expenses of the Company over several months at the Servicer's
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reasonable discretion, subject to the requirement that such allocation be
reasonably calculated to allow the Company to recover such costs and expenses
over a reasonable period of time. It is understood that at the discretion of the
Company, expenses in clause (iv) shall not include expenses paid from
contributions to capital, earnings, fees or sources other than Collections.
ARTICLE III
PAYMENT OF PURCHASE PRICE
3.1. Initial Purchase Price Payment. On the terms and subject to the
conditions set forth in this Agreement, the Company agrees to pay to each
Originator on the Initial Closing Date the Purchase Price for the purchase to be
made from such Originator with respect to Designated Receivables generated by
such Originator existing on or prior to the Initial Cut-Off Date (a) in cash in
an amount equal to such Originator's Pro Rata Share of the amount received by
the Company in connection with the first Purchase made pursuant to the
Receivables Purchase Agreement and (b) by the issuance of a promissory note in
the form of Exhibit B to each Originator (other than TNLP) and to Terra Capital
(each such promissory note, as it may be amended, supplemented, indorsed or
otherwise modified from time to time in substitution therefor or renewal thereof
in accordance with the Transaction Documents, being herein called an "Initial
Purchaser Note") in the initial principal amount equal to the remainder of the
Purchase Price owing to such Originator (or to TNLP in the case of Terra
Capital's Initial Purchaser Note) on the Initial Closing Date after subtracting
the amount paid in cash. The principal of the Initial Purchaser Note issued to
Terra Capital evidences amounts paid by Terra Capital to TNLP.
3.2. Subsequent Purchase Price Payments. On each Business Day after the
Initial Closing Date until the termination of this Agreement pursuant to Section
9.4 hereof, the Company shall pay to each Originator a portion of the Purchase
Price due to such Originator pursuant to Section 2.1 by depositing into such
account as such Originator shall specify immediately available funds from such
Originator's Pro Rata share of monies then held by or on behalf of the Company
(or by permitting such Originator to retain Collections received by such
Originator in its capacity as a sub-servicer) solely to the extent that such
monies do not constitute Collections that are required to be segregated and held
by the Servicer pursuant to the Receivables Purchase Agreement or to be
distributed to the Administrative Agent or the Purchasers pursuant to the
Receivables Purchase Agreement on the next Settlement Date or required to be
paid to the Servicer as the Servicer's Fee on the next Settlement Date, or
otherwise necessary to pay current expenses of the Company or to provide
required reserves for
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Estimated Taxes (in its reasonable discretion) (such available monies, the
"Available Funds") and provided that such Originator has paid all amounts then
owing by it hereunder. To the extent that the Available Funds are insufficient
to pay the Purchase Price then due to any Originator in full, the remaining
portion of such Purchase Price shall be paid by increasing the principal amount
of the Initial Purchaser Note of such Originator (or, in the case of TNLP, of
Terra Capital), effective as of the related Month End Date. To the extent that
(x) the amount due pursuant to Section 2.1 with respect to all Designated
Receivables generated by an Originator that arose during the corresponding month
is exceeded by (y) the amount paid to such Originator during such month pursuant
to the foregoing sentences for such Designated Receivables, such excess shall be
treated as a reduction in the principal amount of the Initial Purchaser Note of
such Originator (or, in the case of TNLP, of Terra Capital), effective as of the
related Month End Date; provided, however, that if at any time the unpaid
principal amount of the Initial Purchaser Note of such Originator (or, in the
case of TNLP, of Terra Capital) has been reduced to zero, such Originator shall
pay the Company the remainder owed with respect thereto in immediately available
funds.
Each Originator (or Terra Capital, in the case of the Initial Purchaser
Note held by it) shall make all appropriate record keeping entries with respect
to the Initial Purchaser Note held by it to reflect payments by the Company
thereon and such Person's books and records shall constitute rebuttable
presumptive evidence of the principal amount of and accrued interest on such
Initial Purchaser Note. Each Originator (or Terra Capital, in the case of the
Initial Purchaser Note held by it) shall return the Initial Purchaser Note held
by it to the Company upon the final payment thereof after the termination of
this Agreement pursuant to Section 9.4 hereof.
3.3. Settlement as to Specific Receivables. Subject to Section 7.2(a)
hereof, if an officer of any Originator obtains knowledge or receives notice
from the Company or the Administrative Agent that (a) on the day that any
Receivable purchased or contributed hereunder was created, acquired or
originated by such Originator (or, in the case of Receivables transferred or
contributed on the Initial Closing Date, on the Initial Closing Date) any of the
representations or warranties set forth in Section 5.1(k) was not true with
respect to such Receivable, or such Receivable was designated as an Eligible
Receivable on the related Purchase Report and was not an Eligible Receivable or,
(b) on any day any of the representations or warranties set forth in Section
5.1(k) with respect to any Transferred Receivable generated by such Originator
is no longer true with respect to a Transferred Receivable (each such
Receivable, an "Ineligible Receivable"), then such Originator as
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soon as practicable, but in any event on or before the next Reporting Date,
shall offset against the Purchase Price with respect to Designated Receivables
generated by such Originator that arose during the same month in which such
knowledge is obtained or notification is received an amount equal to the Unpaid
Balance of such Ineligible Receivable as of the related Month End Date;
provided, however, that if there have been no purchases of Designated
Receivables from such Originator (or insufficiently large purchases of
Designated Receivables from such Originator to create a Purchase Price large
enough to so reduce by the amount of such net reduction) during such month, any
amount owed by which the Purchase Price payable to such Originator would have
been reduced pursuant to the immediately preceding clause of this sentence shall
be paid by either (at the option of such Originator, unless the Company will,
absent such payment in cash, be unable to meet its obligations under the
Receivables Purchase Agreement (including its obligations to maintain reserves
for Estimated Taxes) on the next occurring Settlement Date or other date on
which a payment is due pursuant to the Receivables Purchase Agreement, in which
case such Originator shall make a cash payment on or before such Settlement Date
or other date) a reduction in the principal amount of the Initial Purchaser Note
of such Originator (or, in the case of TNLP, of Terra Capital) (but not below
zero) or by payment within five Business Days after the related Reporting Date
in cash by such Originator to the Company by payment of same day funds;
provided, further, that if the Company receives payment on account of
Collections due with respect to such Ineligible Receivable after such Settlement
Date or other date, as the case may be, the Company promptly shall deliver such
funds to such Originator. The enforcement of the obligations set forth in this
Section 3.3 shall be the sole remedy of the Company with respect to Ineligible
Receivables.
3.4. Settlement as to Dilution. Each Purchase Report shall include, in
respect of the Receivables previously contributed or sold to the Company
(including the Initial Contributed Receivables), a calculation of the aggregate
net reduction in the aggregate Unpaid Balance of such Receivables owed by
particular Obligors on account of any defective or rejected products or
services, returns of unclaimed products, any cash discount, allowances, credits,
billing errors, write-offs, discounts, sales return adjustments, credit memos
and adjustments by, or setoffs in respect of any claims by the Obligor(s)
thereof against, any Originator or any of its Affiliates, other than the Company
(whether such claims arise out of the same or a related or unrelated
transaction), or any rebate or refund during the most recent month. Subject to
Section 7.2(a) hereof, the Purchase Price to be paid to each Originator for the
Designated Receivables generated by it during the month for which such Purchase
Report is delivered shall be decreased by the amount of such net reduction;
provided, however, that if there have been no purchases of
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Receivables from such Originator (or insufficiently large purchases of
Receivables from such Originator to create a Purchase Price large enough to so
reduce by the amount of such net reduction) during such month, any amount owed
by which the Purchase Price payable to such Originator would have been reduced
pursuant to the immediately preceding clause of this sentence shall be paid by
either (at the option of such Originator, unless the Company will, absent such
payment in cash, be unable to meet its obligations under the Receivables
Purchase Agreement on the next occurring Settlement Date, in which case such
Originator shall make a cash payment on or before such Settlement Date) a
reduction in the principal amount of the Initial Purchaser Note (but not below
zero) of such Originator (or, in the case of TNLP, of Terra Capital) or by
payment within two Business Days after the related Reporting Date in cash by
such Originator to the Company by payment of same day funds.
3.5. Reconveyance of Receivables. In the event that an Originator has
paid (by effecting a Purchase Price reduction or otherwise) to the Company the
full Unpaid Balance of any Receivable pursuant to Section 3.3, the Company shall
reconvey such Receivable and all Related Rights with respect thereto, to such
Originator, without recourse, representation or warranty, but free and clear of
all liens created by the Company.
ARTICLE IV
CONDITIONS OF PURCHASES
4.1. Conditions Precedent to Initial Purchase. The initial purchase and
contribution hereunder is subject to the condition precedent that the Company
shall have received, on or before the Initial Closing Date, the following, each
(unless otherwise indicated) dated the Initial Closing Date, and each in form,
substance and date reasonably satisfactory to the Company and the Administrative
Agent:
(a) A copy of the resolutions of the Board of Directors of each
Originator (or, in the case of a partnership, of the general partner of
such Originator) approving the Transaction Documents to be delivered by it
and the transactions contemplated hereby and thereby, certified by the
Secretary or Assistant Secretary of such Person;
(b) Good standing certificate for each Originator issued as of a
recent date by the Secretaries of State of the states of such Person's
incorporation and such Person's principal place of business;
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(c) A certificate of the Secretary or Assistant Secretary of each
Originator (or, in the case of a partnership, of the general partner of
such Originator) certifying the names and true signatures of the officers
authorized on its behalf to sign the Transaction Documents to be delivered
by it (on which certificate the Company and Servicer (if other than Terra
Capital) may conclusively rely until such time as the Company and the
Servicer shall receive from such Originator a revised certificate meeting
the requirements of this subsection (c));
(d) The articles of incorporation of each Originator that is a
corporation, duly certified by the Secretary of State of the state of such
Person's incorporation as of a recent date, together with a copy of the by-
laws of such Person, duly certified by the Secretary or an Assistant
Secretary of such Person; in the case of each Originator that is a
partnership, a copy of such Person's partnership agreement, duly certified
by the Secretary or an Assistant Secretary of the general partners;
(e) Copies of proper financing statements (Form UCC-1) that have
been duly executed and name each Originator as the assignor and the Company
as the assignee (and the Administrative Agent as assignee of the Company)
of the Transferred Receivables and the Related Rights or other, similar
instruments or documents, as may be necessary or, in Servicer's or the
Administrative Agent's opinion, desirable under the UCC of all appropriate
jurisdictions or any comparable law of all appropriate jurisdictions to
perfect the Company's ownership interest in all Receivables and Related
Rights in which an ownership interest may be assigned to it hereunder;
(f) A written search report from a Person satisfactory to Servicer
and the Administrative Agent listing all effective financing statements
that name any Originator as debtor or assignor and that are filed in the
jurisdictions in which filings were made pursuant to the foregoing
subsection (e) together with copies of such financing statements (none of
which, except for those described in the foregoing subsection (e) and those
for which a proper release or amendment shall have been executed by the
related debtor and secured party and delivered to the Administrative Agent,
shall cover any Transferred Receivable or any Related Right), and tax and
judgment lien search reports from a Person satisfactory to Servicer and the
Administrative Agent showing no evidence of such liens filed against any
Originator;
(g) Evidence (i) of the execution and delivery by each of the
parties thereto of each of the other Transaction
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Documents to be executed and delivered in connection herewith and (ii) that
each of the conditions precedent to the execution, delivery and
effectiveness of such other Transaction Documents has been satisfied to the
Company's satisfaction;
(h) The Initial Purchaser Notes in favor of each Originator (other
than TNLP) and Terra Capital, duly executed by the Company; and
(i) A certificate from an officer of each Originator to the effect
that Servicer and such Originator have placed on the most recent, and have
taken all steps reasonably necessary to ensure that there shall be placed
on subsequent, summary master control data processing reports the following
legend (or the substantive equivalent thereof): "DESIGNATED RECEIVABLES
DESCRIBED HEREIN HAVE BEEN SOLD TO TERRA FUNDING CORPORATION PURSUANT TO A
PURCHASE AND SALE AGREEMENT, DATED AS OF AUGUST 20, 1996, AS AMENDED; AND
AN INTEREST IN THE RECEIVABLES DESCRIBED HEREIN HAS BEEN GRANTED AND
ASSIGNED TO BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, AS
ADMINISTRATIVE AGENT, PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT, DATED
AS OF AUGUST 20, 1996, AMONG TERRA FUNDING CORPORATION, TERRA CAPITAL,
INC., CERTAIN FINANCIAL INSTITUTIONS AND BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, AS ADMINISTRATIVE AGENT.
4.2. Certification as to Representations and Warranties. Each Originator,
by accepting the Purchase Price related to each purchase of Designated
Receivables (and Related Rights), shall be deemed to have certified that the
representations and warranties contained in Article V are true and correct on
and as of the day of such purchase, with the same effect as though made on and
as of such day.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations of Originators. In order to induce the Company to
enter into this Agreement and to make purchases hereunder, each Originator
hereby makes the representations and warranties set forth in this Section 5.1.
(a) Organization and Good Standing. Such Originator has been duly
organized and is validly existing as a corporation or partnership in good
standing under the laws of the state of its formation, with power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently conducted.
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(b) Due Qualification. Such Originator is duly licensed or qualified
to do business as a foreign entity in good standing in all jurisdictions in
which the ownership or lease of its property or the conduct of its business
requires such licensing or qualification except where the failure to be so
licensed or qualified has not had and would not reasonably be expected to
have an Originator Material Adverse Effect.
(c) Power and Authority; Due Authorization. Such Originator has (a)
all necessary power, authority and legal right (i) to execute and deliver,
and perform its obligations under, each Transaction Document to which it is
a party, and (ii) to generate, own, sell, contribute and assign Receivables
on the terms and subject to the conditions herein and therein provided; and
(b) duly authorized such execution and delivery and such sale, contribution
and assignment and the performance of such obligations by all necessary
corporate or partnership, as the case may be, action.
(d) Valid Sale; Binding Obligations. Each sale or contribution of
Receivables and Related Rights made by such Originator pursuant to this
Agreement shall constitute a valid sale (or contribution, as the case may
be), transfer, and assignment thereof to the Company, enforceable against
creditors of, and purchasers from, such Originator; and this Agreement
constitutes, and each other Transaction Document to be signed by such
Originator, when duly executed and delivered, will constitute, a legal,
valid, and binding obligation of such Originator, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws 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.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the other Transaction Documents to which such
Originator is a party, and the fulfillment of the terms hereof or thereof
will not (a) conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse of time
or both) a default under (i) such Originator's organizational documents, or
(ii) 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,
except where such violation has not had and would not reasonably be
expected to have an Originator Material Adverse Effect, (b) result in the
creation or imposition of any Adverse Claim upon any of its properties
pursuant to the
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terms of any such indenture, loan agreement, mortgage, deed of trust, or
other agreement or instrument, other than the Transaction Documents, or (c)
violate any law or any order, rule, or regulation applicable to it of any
court or of any federal, state or foreign regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over it
or any of its properties, except where such violation has not had and would
not reasonably be expected to have an Originator Material Adverse Effect.
(f) Proceedings. There is no litigation, proceeding or
investigation pending, or to the best of such Originator's knowledge,
threatened, before any court, regulatory body, arbitrator, administrative
agency, or other tribunal or governmental instrumentality (a) asserting the
invalidity of any Transaction Document to which such Originator is a party,
(b) seeking to prevent the sale or contribution of Receivables to the
Company or the consummation of any of the other transactions contemplated
by any Transaction Document to which such Originator is a party, or (c)
seeking any determination or ruling that would reasonably be expected to
have an Originator Material Adverse Effect.
(g) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(h) Government Approvals. Except for the filing of the UCC
financing statements referred to in Article IV, all of which, at the time
required in Article IV, shall have been duly made and shall be in full
force and effect, no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for such Originator's due execution, delivery and performance of
any Transaction Document to which it is a party.
(i) Financial Condition. On the date hereof such Originator is, and
on the date of each transfer of a new Receivable hereunder (both before and
after giving effect to such transfer), such Originator shall be Solvent.
(j) Margin Regulations. No use of any funds acquired by such
Originator under this Agreement will conflict with or contravene any of
Regulations G, T, U and X promulgated by the Board of Governors of the
Federal Reserve System from time to time.
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(k) Quality of Title.
(i) Each Receivable (together with the Related Rights with
respect to such Receivable) which is to be sold or contributed by such
Originator to the Company hereunder is or shall be, at the time of
such sale or contribution, owned by such Originator, free and clear of
any Adverse Claim. Whenever the Company makes a purchase or accepts a
contribution of a Receivable from such Originator hereunder, it shall
have acquired a valid and perfected ownership interest (free and clear
of any Adverse Claim, other than an Adverse Claim created by or
arising through the Company or the Administrative Agent) in such
Receivable and all Collections related thereto, and in such
Originator's entire right, title and interest in and to the Related
Rights with respect thereto.
(ii) No effective financing statement or other instrument similar
in effect covering any Transferred Receivable or any Related Right is
on file in any recording office except such as may be filed in favor
of the Company in accordance with this Agreement or in favor of the
Administrative Agent in accordance with the Receivables Purchase
Agreement or those that, on or prior to the Initial Closing Date, have
been released.
(l) Accuracy of Information. No information heretofore or
contemporaneously furnished by such Originator to the Company, any
Purchaser or the Administrative Agent for purposes of or in connection with
any Transaction Document or any transaction contemplated hereby or thereby
is, and no other such information hereafter furnished by such Originator to
the Company, any Purchaser, or the Administrative Agent pursuant to or in
connection with any Transaction Document will be, inaccurate in any
material respect as of the date it was furnished or (except as otherwise
disclosed to the Company at or prior to such time) as of the date as of
which such information is dated or certified, or, in light of the
circumstances made, contained or will contain any material misstatement of
fact or omitted or will omit to state any material fact necessary to make
such information not materially misleading.
(m) Offices. Such Originator's principal place of business and chief
executive office is located at the address set forth under such
Originator's signature hereto, and the offices where such Originator keeps
all its books, records and documents evidencing the Receivables, the
related
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Contracts and all other agreements related to such Receivables are located
at the addresses specified in Exhibit C (or at such other locations,
notified to Servicer (if other than Terra Capital), the Company and the
Administrative Agent in accordance with Section 6.1(f), in jurisdictions
where all action required by Section 7.3 has been taken and completed).
(n) Trade Names. Except as disclosed on Schedule 5.1(n), such
Originator does not use any trade name other than its actual corporate or
partnership name. From and after the date that fell five (5) years before
the date hereof, such Originator has not been known by any legal name other
than its corporate or partnership name as of the date hereof, nor has such
Originator been the subject of any merger or other corporate
reorganization, except as disclosed on Schedule 5.1(n).
(o) Taxes. Such Originator has filed all material tax returns and
reports required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such taxes which
are not yet delinquent or are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
generally accepted accounting principles shall have been set aside on its
books.
(p) Compliance with Applicable Laws. Such Originator is in
compliance, in all material respects, with the requirements of all
applicable laws, rules, regulations, and orders of all governmental
authorities (including, without limitation, Regulation Z, laws, rules and
regulations relating to usury, truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices
and privacy and all other consumer laws applicable to the Receivables and
related Contracts), a breach of any of which, individually or in the
aggregate, would be reasonably likely to have an Originator Material
Adverse Effect.
(q) Reliance on Separate Legal Identity. Such Originator is aware
that the Purchasers and the Administrative Agent are entering into the
Transaction Documents to which they are parties in reliance upon the
Company's identity as a legal entity separate from such Originator and any
of its other Affiliates.
(r) Transfers. No purchase of Designated Receivables by the Company
from such Originator constitutes a fraudulent transfer or fraudulent
conveyance or is otherwise void, voidable or subordinated under similar
laws or principles,
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the doctrine of equitable subordination or for any other reason.
ARTICLE VI
COVENANTS
6.1. Affirmative Covenants. From the date hereof until the End Date, each
Originator will, unless the Company and the Administrative Agent shall otherwise
consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders, including those with
respect to the Receivables generated by it and the Contracts and other
agreements related thereto.
(b) Preservation of Existence. Preserve and maintain its corporate
or partnership, as the case may be, existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign entity in each jurisdiction where
the failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would have an Originator Material Adverse
Effect.
(c) Receivables Review. (i) At any time and from time to time
during regular business hours, upon five Business Days' notice (provided
that no such notice shall be required if a Termination Event has accrued
and is continuing), permit the Company, the Administrative Agent or their
respective agents or representatives, (A) to examine, to audit and make
copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under
the control of such Originator relating to the Receivables, including,
without limitation, the Contracts, and purchase orders and other agreements
related thereto, and (B) to visit such Originator's offices and properties
for the purpose of examining such materials described in the foregoing
clause (A) and discussing matters relating to the Receivables generated by
such Originator or such Originator's performance hereunder with any of the
officers or employees of such Originator having knowledge of such matters,
provided that such Originator shall have the right to have a Responsible
Officer present during such discussions; and (ii) to meet with the
independent auditors of such Originator, to review such auditors' work
papers and otherwise to review with such auditors the books and records of
such Originator with respect to the Receivables and the Related Rights,
provided that such Originator shall have the
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right to have a Responsible Officer present during such discussions.
(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Receivables generated by it in
the event of the destruction of the originals thereof), and keep and
maintain all documents, books, records and other information reasonably
necessary or advisable for the collection of all Transferred Receivables
generated by it (including, without limitation, records adequate to permit
the daily identification of each new Transferred Receivable and all
Collections of, and adjustments to, each existing Transferred Receivable).
(e) Performance and Compliance with Receivables and Contracts. At
its expense timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it
under the Contracts and all purchase orders and other agreements related to
the Receivables generated by it.
(f) Location of Records. Keep its principal place of business and
chief executive office, and the offices where it keeps its records
concerning or related to Receivables, at the address(es) referred to in
Exhibit C or, upon 15 days' prior written notice to the Company and the
Administrative Agent, at such other locations in jurisdictions where all
action required by Section 7.3 shall have been taken and completed.
(g) Credit and Collection Policies. Comply in all material respects
with the Credit and Collection Policy in connection with the Receivables
generated by it and all Contracts related thereto.
(h) Separate Corporate Existence of the Company. Take such actions
as shall be required in order to maintain the separate identity of the
Company separate and apart from such Originator and its other affiliates,
including those set forth in Section 7.07 of the Receivables Purchase
Agreement.
6.2. Reporting Requirements. From the date hereof until the End Date, such
Originator will, unless the Company and the Administrative Agent shall otherwise
consent in writing, furnish to the Company, the Administrative Agent, and each
Purchaser:
(a) Proceedings. As soon as possible and in any event within 10
days after a Responsible Officer of such Originator has knowledge thereof,
written notice to the Company and the
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Administrative Agent of (i) all pending proceedings and investigations of
the type described in Section 5.1(f) not previously disclosed to the
Company and/or the Administrative Agent and (ii) all material adverse
developments that have occurred with respect to any previously disclosed
proceedings and investigations;
(b) Credit and Collection Policy. Prior to its effective date,
notice of any change in the Credit and Collection Policy, other than
immaterial changes; and
(c) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables generated by such
Originator or such Originator's performance as seller hereunder that the
Company or the Administrative Agent may from time to time reasonably
request in order to protect the interests of the Company, the Purchasers,
the Administrative Agent or any other Affected Party under or as
contemplated by the Transaction Documents.
6.3. Negative Covenants. From the date hereof until the End Date, such
Originator agrees that, unless the Administrative Agent shall otherwise consent
in writing, it shall not:
(a) Sales, Liens, Etc. Except as otherwise provided herein or in
any other Transaction Document, sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any Transferred Receivable or
related Contract or other Related Right, or any interest therein, or any
Collections thereon, or assign any right to receive income in respect
thereof.
(b) Change in Credit and Collection Policy. Make any change in the
character of its business or in the Credit and Collection Policy that would
impair the collectibility of any Transferred Receivable (unless such
Transferred Receivable is not an Eligible Receivable and the Company
consents to such change) or otherwise adversely affect the interests or
remedies of the Company hereunder or the Administrative Agent or the
Purchasers under any Transaction Document.
(c) Receivables Not to be Evidenced by Promissory Notes. Take any
action to cause or permit any Receivable generated by it to become
evidenced by any "instrument" (as defined in the applicable UCC), except in
connection with the collection of overdue Receivables, provided that, in
the case of Eligible Receivables, the original of such instrument is
delivered to the Administrative Agent, duly endorsed.
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(d) Extension or Amendment of Receivables. Except as permitted
pursuant to the Receivables Purchase Agreement, extend, amend or otherwise
modify the terms of any Transferred Receivable, or amend, modify or waive
any term or condition of any Contract related thereto, if such extension,
amendment, modification or waiver would impair the ultimate collectibility
of such Transferred Receivable or otherwise materially adversely affect the
rights of the Company, any Purchaser or the Administrative Agent hereunder
or in the Transferred Receivables or Related Rights.
(e) Instructions to Obligors. Instruct Obligors to make payments
with respect to any Transferred Receivable to any place other than a lock-
box located at a Lock-Box Bank for which an executed Collection Bank Notice
or Lock-Box Agreement has been delivered to the Administrative Agent.
(f) Change in Name. Change its name unless it shall have provided at
least 30 days' prior written notice thereof to the Company and the
Administrative Agent and shall have taken all action required by Section
7.3.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES
7.1. Rights of the Company. Each Originator hereby authorizes the Company
and the Servicer (if other than such Originator) or their respective designees
to take any and all steps in such Originator's name necessary or desirable, in
their respective determination, to collect all amounts due under any and all
Transferred Receivables, including, without limitation, endorsing such
Originator's name on checks and other instruments representing Collections and
enforcing such Transferred Receivables and the provisions of the related
Contracts.
7.2. Responsibilities of Originators. Anything herein to the contrary
notwithstanding:
(a) Each Originator agrees to direct the Obligors to make payments of
Transferred Receivables directly to a Lock-Box Account that is the subject
of an executed Collection Bank Notice or Lock-Box Agreement at a Lock-Box
Bank. Each Originator further agrees to transfer any Collections that it
receives directly to Servicer within two Business Days of receipt thereof,
and agrees that all such Collections shall be deemed to be received in
trust for the Company; provided that, to the extent permitted pursuant to
Section 3.2, such Originator may retain such Collections as a portion of
the Purchase Price then payable to or apply such Collections to
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the reduction of the outstanding balance of the Initial Purchaser Note held
by it.
(b) Each Originator shall perform its obligations hereunder and
under the Contracts, and the exercise by the Company or its designee of its
rights hereunder shall not relieve such Originator from such obligations.
(c) Each Originator hereby grants to Servicer (if other than each
Originator) an irrevocable power of attorney, with full power of
substitution, coupled with an interest, to take in the name of such
Originator all steps necessary or advisable to indorse, negotiate or
otherwise realize on any writing or other right of any kind held or
transmitted by such Originator or transmitted or received by the Company
(whether or not from such Originator) in connection with any Receivable.
7.3. Further Action Evidencing Purchases. Each Originator agrees that
from time to time, at its expense, it will promptly execute and deliver all
further instruments and documents, and take all further action that the Company
or the Administrative Agent may reasonably request in order to perfect, protect
or more fully evidence the Company's ownership of the Transferred Receivables
(and the Related Rights) purchased or accepted by the Company hereunder, or to
enable the Company to exercise or enforce any of its rights hereunder or under
any other Transaction Document. Without limiting the generality of the
foregoing, upon the request of the Company or the Administrative Agent, each
Originator will:
(a) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate; and
(b) xxxx the summary master control data processing records with the
legend set forth in Section 4.1(i).
Each Originator hereby authorizes the Company or its designee to file one or
more financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Transferred Receivables (and
the Related Rights) now existing or hereafter contributed or sold by such
Originator. If such Originator fails to perform any of its agreements or
obligations under this Agreement, the Company or its designee may (but shall not
be required to) itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Company or its designee incurred in
connection therewith shall be payable by such Originator as provided in Section
9.6.
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7.4. Application of Collections. Any payment by an Obligor in respect of
any indebtedness owed by it to such Originator in respect of any Contract shall,
except as otherwise specified by such Obligor or otherwise required by contract
or law, be applied first, as a Collection of the Transferred Receivables of such
Obligor, in the order of the age of such Transferred Receivables, starting with
the oldest of such Transferred Receivables, and second, to any other
indebtedness of such Obligor.
7.5. Sub-Servicers. The Company hereby appoints each Originator, and each
Originator hereby agrees to act, as sub-servicer with respect to the Transferred
Receivables generated by it. In connection therewith, each Originator agrees to
service such Transferred Receivables in accordance with, and agrees to be bound
by, the provisions of Article VIII of the Receivables Purchase Agreement,
provided that nothing set forth herein shall relieve Terra Capital from primary
responsibility as Servicer pursuant to the Transaction Documents. Each
Originator agrees that it may be terminated as sub-servicer (i) upon notice from
the Administrative Agent after the occurrence of any Servicer Transfer Event and
(ii) upon notice from the Company to such Originator and the Administrative
Agent at any time.
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnities by Originators. Without limiting any other rights which
the Company may have hereunder or under applicable law, each Originator hereby
agrees to indemnify the Company and each of its assigns, officers, directors,
employees and agents (each of the foregoing Persons being individually called a
"Sale Indemnified Party"), on demand, from and against any and all damages,
losses, claims, judgments, liabilities and related costs and expenses, including
reasonable and documented attorneys' fees and disbursements (all of the
foregoing being collectively called "Sale Indemnified Amounts") awarded against
or incurred by any of them arising out of or as a result of the following:
(a) the transfer by such Originator of an interest in any
Transferred Receivable or Related Right to any Person other than the
Company;
(b) without duplication of amounts paid as Deemed Collections, the
breach of any representation or warranty made by such Originator under or
in connection with this Agreement or any other Transaction Document, or any
information or report delivered by such Originator pursuant hereto or
thereto which shall have been false or incorrect in any material respect
when made or deemed made;
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(c) the failure by such Originator to comply with any applicable
law, rule or regulation with respect to any Receivable or the related
Contract, or the nonconformity of any Receivable or the related Contract
with any such applicable law, rule or regulation;
(d) the failure to vest and maintain vested in the Company an
ownership interest in the Transferred Receivables and the Related Rights
free and clear of any Adverse Claim, other than an Adverse Claim arising
solely as a result of an act of the Company, the Purchasers or the
Administrative Agent, whether existing at the time of the purchase of such
Transferred Receivables or at any time thereafter;
(e) the failure of such Originator to file with respect to itself,
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 Transferred Receivables or purported
Transferred Receivables generated by such Originator, whether at the time
of any purchase or at any subsequent time;
(f) without duplication of amounts paid as Deemed Collections, any
dispute, claim, offset or defense (other than discharge in bankruptcy) of
the Obligor to the payment of any Transferred Receivable or purported
Transferred Receivable generated by such Originator (including, without
limitation, a defense based on such Receivables or the related Contracts
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 services or merchandise related to any such Transferred Receivable or
the furnishing of or failure to furnish such services or merchandise;
(g) any product liability claim arising out of or in connection with
services or merchandise that are the subject of any Transferred Receivable
generated by such Originator; and
(h) any tax or governmental fee or charge (but not including
franchise taxes imposed with respect to net income or taxes upon or
measured by net income), all interest and penalties thereon or with respect
thereto, and all out-of-pocket costs and expenses, including the reasonable
and documented fees and expenses of counsel in defending against the same,
which may arise by reason of the purchase or ownership of the Transferred
Receivables generated by such Originator or any Related Right connected
with any such Transferred Receivables;
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excluding, however, (i) Sale Indemnified Amounts to the extent resulting from
gross negligence or willful misconduct on the part of such Sale Indemnified
Party, and (ii) any indemnification which has the effect of recourse to such
Originator for non-payment of the Transferred Receivables due to credit problems
of the Obligors.
If for any reason the indemnification provided above in this Section 8.1 is
unavailable to a Sale Indemnified Party or is insufficient to hold such Sale
Indemnified Party harmless, then such Originator shall contribute to the amount
paid or payable by such Sale Indemnified Party to the maximum extent permitted
under applicable law.
ARTICLE IX
MISCELLANEOUS
9.1. Amendments, Etc.
(a) The provisions of this Agreement may from time to time be
amended, modified or waived, if such amendment, modification or waiver is
in writing and consented to by the parties hereto, the Required Purchasers
and the Administrative Agent.
(b) No failure or delay on the part of the Company, Servicer, any
Originator or any third party beneficiary in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to
or demand on the Company, Servicer, or any Originator in any case shall
entitle it to any notice or demand in similar or other circumstances. No
waiver or approval by the Company or Servicer under this Agreement shall,
except as may otherwise be stated in such waiver or approval, be applicable
to subsequent transactions. No waiver or approval under this Agreement
shall require any similar or dissimilar waiver or approval thereafter to be
granted hereunder.
9.2. Notices, Etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by express
mail or courier or by certified mail, postage-prepaid, or by facsimile, to the
intended party at the address or facsimile number of such party set forth under
its name on the signature pages hereof or at such other address or facsimile
number as shall be designated by such party
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in a written notice to the other parties hereto. All such notices and
communications shall be effective, (i) if personally delivered or sent by
express mail or courier or if sent by certified mail, when received, and (ii) if
transmitted by facsimile, when sent, receipt confirmed by telephone or
electronic means.
9.3. No Waiver; Cumulative Remedies. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
9.4. Binding Effect; Assignability. This Agreement shall be binding upon
and inure to the benefit of the Company, each Originator, Servicer and its
respective successors and permitted assigns. No Originator may assign its
rights hereunder or any interest herein without the prior written consent of the
Company and the Administrative Agent; subject to Section 9.11, the Company may
not assign its rights hereunder or any interest herein without the prior written
consent of each Originator and the Administrative Agent. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
date after the Sale Termination Date on which such Originator has received
payment in full for all Transferred Receivables and Related Rights conveyed
pursuant to Section 1.1 hereof and has paid and performed all of its obligations
hereunder in full. The rights and remedies with respect to any breach of any
representation and warranty made by any Originator pursuant to Article V and the
indemnification and payment provisions of Article VIII and Section 9.6 shall be
continuing and shall survive any termination of this Agreement.
9.5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS.
9.6. Costs, Expenses and Taxes. In addition to the obligations of the
Originators under Article VIII, each Originator agrees to pay on demand:
(a) all costs and expenses, including reasonable and documented
attorneys' fees, in connection with the enforcement against any Originator
of this Agreement and the other Transaction Documents executed by such
Originator; and
(b) all stamp and other similar taxes and fees payable or determined
to be payable in connection with the execution, delivery, filing and
recording of this Agreement or the other Transaction Documents, and agrees
to indemnify each Sale Indemnified Party against any liabilities with
respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
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9.7. Submission to Jurisdiction. EACH PARTY HERETO HEREBY IRREVOCABLY (a)
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY ILLINOIS STATE OR UNITED STATES
FEDERAL COURT SITTING IN CHICAGO, STATE OF ILLINOIS, OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT; (b) AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH STATE OR UNITED STATES FEDERAL COURT; (c) WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; (d) CONSENTS
TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES OF SUCH PROCESS TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN
SECTION 9.2; AND (e) TO THE EXTENT ALLOWED BY LAW, AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. NOTHING IN THIS SECTION 9.7 SHALL AFFECT THE COMPANY'S RIGHT TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY ORIGINATOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTIONS.
9.8. Waiver of Jury Trial. EACH PARTY HERETO EXPRESSLY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR UNDER ANY AMENDMENT,
INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
9.9. Captions and Cross References; Incorporation by Reference. The
various captions (including, without limitation, the table of contents) in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to any underscored Section or Exhibit are to such Section or Exhibit of this
Agreement, as the case may be. The Exhibits hereto are hereby incorporated by
reference into and made a part of this Agreement.
9.10. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement.
9.11. Acknowledgment and Agreement. By execution below, each Originator
expressly acknowledges and agrees that all of the Company's rights, title, and
interests in, to, and under this Agreement shall be assigned by the Company to
the Administrative
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Agent, for the benefit of the Purchasers, pursuant to the Receivables Purchase
Agreement, and each Originator consents to such assignment. Each of the parties
hereto acknowledges and agrees that the Administrative Agent and the Purchasers
are third party beneficiaries of the rights of the Company arising hereunder and
under the other Transaction Documents to which any Originator is a party.
9.12. No Proceedings. Each Originator agrees that it shall not institute
against the Company, or join any other Person in instituting against the
Company, any insolvency proceeding (namely, any proceeding of the type referred
to in the definition of Event of Bankruptcy) so long as there shall not have
elapsed one year plus one day since the End Date. The foregoing shall not limit
such Originator's right to file any claim in or otherwise take any action with
respect to any insolvency proceeding that was instituted by any Person other
than such Originator.
9.13. Addition of Originators. Additional Subsidiaries of the Parent may
be added as Originators hereunder upon satisfaction of all of the following
conditions:
(i) the addition of such Originator is approved in writing by the
Administrative Agent and the Required Purchasers (unless such Originator
generates, on a pro forma basis, less than 10% of the aggregate Unpaid
Balance of Designated Receivables in a calendar year, in which case no
prior consent shall be necessary);
(ii) such Originator delivers the documents referred to in Section
4.1;
(iii) such Originator delivers an opinion of counsel satisfactory in
form and substance to the Administrative Agent;
(iv) such Originator uses the same reporting system, is in similar
lines of business and reports to the same management personnel as the
existing Originators; and
(v) such Originator delivers an agreement in form and substance
satisfactory to the Administrative Agent agreeing to be bound by all of the
terms and conditions of this Agreement and the other Transaction Documents.
9.14. Deletion of BMLP. Upon the sale by Terra Capital of BMLP, or the
partnership interests therein, or the assets thereof, or the equity interests in
one or more of the partners thereof, or the equity interest of BMC Holdings,
Inc. (which is the 99% limited partner of BMLP), BMLP shall no longer be an
Originator hereunder, and shall have no right to continue to sell Receivables
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to the Company. Subject to Section 9.4, BMLP shall be released from all
obligations under this Agreement upon such sale. Terra Capital agrees to
promptly notify the Administrative Agent of the sale of its interests in BMLP.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
TERRA FUNDING CORPORATION
By:___________________________________
Name Printed:______________________
Title:_____________________________
Address:
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Attention:
Facsimile: __________________________
TERRA CAPITAL, INC.
By:___________________________________
Name Printed:______________________
Title:_____________________________
Address:
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Attention:
Facsimile: _________________________
TERRA INTERNATIONAL, INC.
By:___________________________________
Name Printed:______________________
Title:_____________________________
Address:
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Attention:
Facsimile: __________________________
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TERRA NITROGEN, LIMITED PARTNERSHIP
By:___________________________________
Name Printed:______________________
Title:_____________________________
Address:
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Attention:
Facsimile: _________________________
BEAUMONT METHANOL, LIMITED PARTNERSHIP
By:___________________________________
Name Printed:______________________
Title:_____________________________
Address:
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Attention:
Facsimile: _________________________
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