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EXHIBIT 10.28
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of October 25, 2000
among
MOHAWK CARPET CORPORATION, MOHAWK COMMERCIAL, INC. AND
DURKAN PATTERNED CARPETS, INC.,
as Originators,
and
MOHAWK FACTORING, INC.,
as the Buyer
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TABLE OF CONTENTS
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PAGE
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ARTICLE I AMOUNTS AND TERMS OF THE PURCHASE.................................................................................. 2
Section 1.1 Purchase of Receivables.................................................................................. 2
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Section 1.2 Payment for the Purchases................................................................................ 3
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Section 1.3 Purchase Price Credit Adjustments........................................................................ 3
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Section 1.4 Payments and Computations, Etc........................................................................... 4
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Section 1.5 Transfer of Collection Records; License of Software; Access to Contracts................................. 4
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Section 1.6 Characterization......................................................................................... 5
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ARTICLE II REPRESENTATIONS AND WARRANTIES.................................................................................... 5
Section 2.1 Representations and Warranties of Originators.................................................................... 5
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(a) Existence and Power........................................................................................... 5
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(b) Power and Authority; Due Authorization, Execution and Delivery................................................ 6
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(c) No Conflict................................................................................................... 6
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(d) Governmental Authorization.................................................................................... 6
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(e) Actions, Suits................................................................................................ 6
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(f) Binding Effect................................................................................................ 6
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(g) Accuracy of Information....................................................................................... 6
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(h) Use of Proceeds............................................................................................... 7
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(i) Good Title.................................................................................................... 7
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(j) Perfection.................................................................................................... 7
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(k) Places of Business and Locations of Collection Records........................................................ 7
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(1) Collections................................................................................................... 7
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(m) Material Adverse Effect....................................................................................... 7
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(n) Names......................................................................................................... 7
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(o) Not a Holding Company or an Investment Company................................................................ 7
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(p) Compliance with Law........................................................................................... 8
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(q) Compliance with Credit and Collection Policy.................................................................. 8
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(r) Payments to such Originator................................................................................... 8
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(s) Enforceability of Receivables................................................................................. 8
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(t) Eligible Receivables.......................................................................................... 8
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(u) Accounting.................................................................................................... 8
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ARTICLE III CONDITIONS OF PURCHASE........................................................................................... 8
Section 3.1 Conditions Precedent to Purchase......................................................................... 8
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Section 3.2 Conditions Precedent to Subsequent Payments.............................................................. 8
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ARTICLE IV COVENANTS........................................................................................................ 9
Section 4.1 Affirmative Covenants of Originators................................................................. 9
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(a) Financial Reporting.......................................................................................... 9
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(i) Annual Reporting........................................................................................ 9
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(ii) Quarterly Reporting..................................................................................... 9
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(iii) Compliance Certificate.................................................................................. 10
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(iv) Shareholders' Statements and Reports.................................................................... 10
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(v) SEC Filings............................................................................................. 10
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(vi) Change in Credit and Collection Policy.................................................................. 10
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(vii) Other Information....................................................................................... 10
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(b) Notices...................................................................................................... 10
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(i) Termination Events or Unmatured Termination Events...................................................... 10
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(ii) Material Adverse Effect................................................................................. 10
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(iii) ERISA Events............................................................................................ 10
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(c) Compliance with Laws and Preservation of Existence........................................................... 11
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(d) Audits....................................................................................................... 11
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(e) Keeping and Marking of Records and Books..................................................................... 11
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(f) Compliance with Contracts and Credit and Collection Policy................................................... 12
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(g) Ownership.................................................................................................... 12
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(h) Lenders' Reliance............................................................................................ 12
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(i) Taxes........................................................................................................ 12
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Section 4.2 Negative Covenants of Originators.................................................................... 12
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(a) Name Change, Offices and Collection Records.................................................................. 12
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(b) Change in Payment Instructions to Obligors................................................................... 13
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(c) Modifications to Credit and Collection Policy................................................................ 13
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(d) Sales, Liens................................................................................................. 13
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(e) Accounting for Purchases..................................................................................... 13
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ARTICLE V TERMINATION EVENTS................................................................................................ 13
Section 5.1 Termination Events................................................................................... 13
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Section 5.2 Remedies............................................................................................. 14
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ARTICLE VI INDEMNIFICATION.................................................................................................. 15
Section 6.1 Indemnities by Originators........................................................................... 15
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Section 6.2 Other Costs and Expenses............................................................................. 17
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ARTICLE VII MISCELLANEOUS................................................................................................... 17
Section 7.1 Waivers and Amendments............................................................................... 17
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Section 7.2 Notices.............................................................................................. 18
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Section 7.3 Protection of Ownership Interests of the Buyer....................................................... 18
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Section 7.4 Confidentiality...................................................................................... 19
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ii
section 7.5 Bankruptcy Petition...................................................................................... 20
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Section 7.6 CHOICE OF LAW............................................................................................ 20
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Section 7.7 CONSENT TO JURISDICTION.................................................................................. 20
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Section 7.8 WAIVER OF JURY TRIAL..................................................................................... 20
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Section 7.9 Integration; Binding Effect; Survival of Terms........................................................... 21
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Section 7.10 Counterparts; Severability; Section References........................................................... 21
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Exhibits and Schedules
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Exhibit I Definitions
Exhibit II Principal Place of Business; Location(s) of Collection Records;
Federal Employer Identification Number; Other Names
Exhibit III Lock-Boxes and Collection Accounts
Exhibit IV Form of Compliance Certificate
Exhibit V Copy of Credit and Collection Policy
Exhibit VI Form of Purchase Report
Schedule A List of Documents to Be Delivered to the Buyer Prior to the
Purchases
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RECEIVABLES PURCHASE AND SALE AGREEMENT
THIS RECEIVABLES PURCHASE AND SALE AGREEMENT, dated as of October 25,
2000, is by and among Mohawk Carpet Corporation, a Delaware corporation ("Mohawk
Carpet"), Mohawk Commercial, Inc., a Delaware corporation ("Mohawk Commercial"),
Durkan Patterned Carpets, Inc., a Georgia corporation ("Durkan;" each of Mohawk
Carpet, Mohawk Commercial and Durkan being hereinafter referred to as an
"Originator" and collectively, as the "Originators"), and Mohawk Factoring,
Inc., a Delaware corporation ("Buyer"), and replaces and supersedes the
following agreements (each, an "Existing Agreement") in their entirety:
(i) that certain Receivables Purchase and Sale Agreement dated
December 31, 1997 by and between the Buyer and Mohawk Carpet;
(ii) that certain Receivables Purchase and Sale Agreement dated May
13, 1999 by and between the Buyer and Durkan;
(iii) that certain Receivables Purchase and Sale Agreement dated
December 31, 1997 by and between the Buyer and Mohawk Commercial.
Unless defined elsewhere herein, capitalized terms used in this Agreement shall
have the meanings assigned to such terms in Exhibit I hereto.
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PRELIMINARY STATEMENTS
Each of the Originators has from time to time sold Receivables to the
Buyer pursuant to the Existing Agreement to which such Originator is a
party and wishes to terminate and replace such Existing Agreement in its
entirety with this Agreement.
Each of the Originators and the Buyer intended that the past transfers
of Receivables under the Existing Agreements, and that all transfers of
Receivables hereunder, be true sales to the Buyer by such Originator of the
Receivables originated by it, providing the Buyer with the full benefits of
ownership of such Receivables, and none of the Originators nor the Buyer
intends these transactions to be, or for any purpose to be characterized as
loans from the Buyer to such Originator.
Each of the Originators acknowledges that from and after October 26,
2000, the Buyer intends to finance purchases of Receivables from the
Originators, in part, from the proceeds of loans made pursuant to a Credit
and Security Agreement of even date herewith (as the same may from time to
time hereafter be amended, supplemented, restated or otherwise modified,
the "Credit and Security Agreement") among the Buyer, as the borrower,
Mohawk Servicing, Inc., a Delaware corporation, as the initial Servicer,
Blue Ride Asset Funding Corporation ("Blue Ridge") and certain other
lenders from time to time party
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thereto, and Wachovia Bank, N.A., as agent for Blue Ridge and the other
Lenders (in such capacity, together with its successors, the "Agent").
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASE
Section 1.1 Purchase of Receivables.
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(a) Effective on October 26, 2000, in consideration for the Purchase
Price paid to each Originator and upon the terms and subject to the conditions
set forth herein, each Originator does hereby sell, assign, transfer, set-over
and otherwise convey to the Buyer, without recourse (except to the extent
expressly provided herein), and the Buyer does hereby purchase from such
Originator, all of such Originator's right, title and interest in and to all
Receivables originated by such Originator and existing as of the close of
business on the Initial Cutoff Date and all Receivables thereafter originated by
such Originator through and including the Termination Date, together, in each
case, with all Related Security relating thereto. In accordance with the
preceding sentence, on October 26, 2000 the Buyer shall acquire all of each
Originator's right, title and interest in and to all Receivables existing as of
the Initial Cutoff Date and thereafter arising through and including the
Termination Date, together with all of such Originator's rights in and to all
Related Security relating thereto. The Buyer shall be obligated to pay the
Purchase Price for the Receivables purchased hereunder from each Originator in
accordance with Section 1.2. From and after the Termination Date, the Buyer
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shall not be obligated to purchase Receivables from any Originator.
(b) On each Monthly Reporting Date, each Originator shall (or shall
require the Servicer to) deliver to the Buyer a report in substantially the form
of Exhibit VI hereto (each such report being herein called a "Purchase Report")
with respect to the Receivables sold by such Originator to the Buyer during the
fiscal month then most recently ended. In addition to, and not in limitation of,
the foregoing, in connection with the payment of the Purchase Price for any
Receivables purchased hereunder, the Buyer may request that the applicable
Originator deliver, and such Originator shall deliver, such approvals, opinions,
information or documents as the Buyer may reasonably request.
(c) It is the intention of the parties hereto that each Purchase of
Receivables from an Originator made hereunder shall constitute a sale, which
sale is absolute and irrevocable and provides the Buyer with the full benefits
of ownership of the Receivables originated by such Originator. Except for the
Purchase Price Credits owed to such Originator pursuant to Section 1.3, the sale
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of Receivables hereunder by each Originator is made without recourse to such
Originator; provided, however, that (i) such Originator shall be liable to the
Buyer for all representations, warranties, covenants and indemnities made by
such Originator pursuant to the terms of the Transaction Documents to which such
Originator is a party, and (ii) such sale does
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not constitute and is not intended to result in an assumption by the Buyer or
any assignee thereof of any obligation of such Originator or any Person arising
in connection with the Receivables, the related Contracts and /or other Related
Security or any other obligations of such Originator. In view of the intention
of the parties hereto that each Purchase of Receivables ma hereunder shall
constitute a sale of such Receivables rather than loans secured thereby, each
Originator agrees that it will, on or prior to the date hereof and in accordance
with Section 4.1 (e)(ii), xxxx its master data processing records relating to
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the Receivables originated by it with a legend properly evidencing that the
Buyer has purchased such Receivables as provided ii this Agreement and to note
in its financial statements that its Receivables have been sold to the Buyer.
Upon the request of the Buyer or the Agent (as the Buyer's assignee), each
Originator will 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 perfect and maintain the perfection
of the Buyer's ownership interest in the Receivables originated by such
Originator and the Related Security with respect thereto, or as the Buyer may
reasonably request.
Section 1.2 Payment for the Purchases.
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(a) The Purchase Price for the Purchase from each Originator of
its Receivables in existence as of the close of business on the Initial Cutoff
Date and not previously (assigned or transferred to the Buyer, if any, shall be
payable in full by the Buyer to such Originator on October 26, 2000 in
immediately available funds.
(b) The Purchase Price for each Receivable coming into existence
after the Cutoff Date shall be due and owing in full by the Buyer to the
applicable Originator or its designee immediately available funds on the date
each such Receivable came into existence except that Buyer may, with respect to
any such Purchase Price:
(i) offset against such Purchase Price any amounts owed by such
Originator to the Buyer hereunder and which unpaid); and/or
(ii) elect to defer payment of all or any portion of the Purchase
Price for Receivables originated by such Originator during the same
Calculation Period (based on the information contained in the Purchase
Report delivered by such Originator for the Calculation Period then most
recently ended) until the next succeeding Settlement Date.
Section 1.3 Purchase Price Credit Adjustments. If on any day:
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(a) the Outstanding Balance of a Receivable purchased from any
Originator is:
(i) reduced as a result of any defective or rejected or
returned goods or services, any discount or any adjustment or
otherwise by such
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Originator (other than as a result of such Receivable becoming a
Charged-Off Receivables or to reflect cash Collections on account of
such Receivable),
(ii) reduced or canceled as a result of a setoff in respect
of any claim by any Person (whether such claim arises out of the same
or a related transaction or an unrelated transaction), or
(b) any of the representations and warranties set forth in Section
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2.1(i), (l), (p), (q), (r),(s) or (t) hereof is not true when made or
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deemed made with respect to any Receivable,
then, in such event, the Buyer shall be entitled to a credit (each, a "Purchase
Price Credit") against the Purchase Price otherwise payable to the applicable
Originator hereunder equal to the Outstanding Balance of such Receivable
(calculated before giving effect to the applicable reduction or cancellation).
If such Purchase Price Credit exceeds the Original Balance of the Receivables
originated by the applicable Originator on any day, such Originator shall pay
the remaining amount of such Purchase Price Credit in cash immediately.
Section 1.4 Payments and Computations. Etc. All amounts to be paid or
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deposit the Buyer hereunder shall be paid or deposited in accordance with the
terms hereof on the day when due in immediately available funds to the account
of the applicable Originator designated from time to time by such Originator or
as otherwise directed by such Originator. In the event that any payment owed by
any Person hereunder becomes due on a day that is not a Business Day, then such
payment shall be made on the next succeeding Business Day. If any Person to pay
any amount hereunder when due, such Person agrees to pay, on demand, the Default
in respect thereof until paid in full; provided, however, that such Default Fee
shall not at any time exceed the maximum rate permitted by applicable law. All
computations of interest payable hereunder shall be made on the basis of a year
of 360 days for the actual number of days elapsed.
Section 1.5 Transfer of Collection Records; License of Software; Access
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to Contracts. In connection with, and in consideration of, the Purchase from
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each Originator of Receivables originated by it, each Originator will deliver to
the Buyer or to the Servicer, on behalf of the Buyer, originals or copies (in
written, photostatic, electronic or other mutually acceptable form) of such
Originator's Collection Records relating to all Receivables sold by it
hereunder. Each Originator shall permit the Servicer and the Buyer during such
Originator's normal business hours and without undue disruption to the
Originator's operations, at the expense of the Buyer or the Servicer, as
applicable (but in no event at the expense of the Agent), to inspect and copy
all such collection Records and other books and records regarding the
Receivables and the Contracts solely for purposes of administering and
collecting the Receivables hereunder and under the Collection Services
Agreement. In order to facilitate such administration, collection and servicing
of such Receivables, each Originator hereby grants to each of the Buyer,
Servicer, and, for so long as the Credit and Security Agreement remains in
effect, the Agent, an irrevocable, non-exclusive license to use, without royalty
or payment of any kind, all software used by such Originator to account for such
Receivables, to the extent necessary to administer such Receivables, whether
such software is owned
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by such Originator or is owned by others and used by such Originator under
license agreements with respect thereto, provided that should the consent of any
licensor of such software be required for the grant of the license described
herein, to be effective, such Originator hereby agrees that upon the request of
the Servicer or the Buyer, such Originator will use its reasonable efforts to
obtain the consent of such third-party licensor. The license granted hereby
shall be irrevocable until the later to occur of (i) the indefeasible payment in
full of the Aggregate Unpaids under the Credit and Security Agreement, and (ii)
the date on which this Agreement terminates in accordance with its terms.
Section 1.6 Characterization. If, notwithstanding the intention of the
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parties expressed in Section 1.1(c), any sale by an Originator to the Buyer of
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Receivables hereunder shall be characterized as a secured loan and not a sale or
such sale shall for any reason be ineffective or unenforceable, then this
Agreement shall be deemed to constitute a security agreement under the UCC and
other applicable law. For this purpose and without being in derogation of the
parties' intention that the sale of Receivables by each Originator hereunder
shall constitute a true sale thereof, such Originator hereby grants to the Buyer
a duly perfected security interest in all of such Originator's right, title and
interest in and to all Receivables of such Originator which exist on the Initial
Cutoff Date or arise thereafter through and including the Termination Date,
together with all Related Security with respect thereto, all other rights and
payments relating to such Receivables and all proceeds of the foregoing, to
secure the prompt and complete payment of a loan deemed to have been made in an
amount equal to the Purchase Price of the Receivables purchased from such
Originator together with any Purchase Interest applicable thereto and all other
obligations of such Originator hereunder, which security interest shall be prior
to all other Adverse Claims thereto. Upon the occurrence of a Termination Event,
the Buyer shall have, in addition to the rights and remedies which it may have
under this Agreement, all other rights and remedies provided to a secured
creditor upon default under the UCC and other applicable law, which rights and
remedies shall be cumulative.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Originators. Each Originator
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hereby represents and warrants to the Buyer on the date of the Purchase from
such Originator hereunder and, except for representations and warranties that
are limited to a certain date, on each date that any Receivable is originated by
such Originator on or after the date of such Purchase through and including the
Termination Date, that:
(a) Existence and Power. Such Originator is a corporation, duly
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organized,validly existing and in good standing under the laws of the state set
forth after its name in the preamble to this Agreement, and is duly qualified to
do business and is in good standing as a foreign entity, and has and holds all
organizational power, and all governmental licenses, authorizations, consents
and approvals required to carry on its business in each jurisdiction in which
its business is conducted except where the failure to so qualify or so hold is
not reasonably likely to have a Material Adverse Effect.
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(b) Power and Authority; Due Authorization, Execution and Delivery.
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The execution and delivery by such Originator of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder, and such Originator's use of the proceeds
of the Purchase made from it hereunder, are within its corporate powers and
authority and have been duly authorized by all necessary corporate action on its
part. This Agreement and each other Transaction Document to which such
Originator is a party has been duly executed and delivered by such Originator.
(c) No Conflict. The execution and delivery by such Originator of
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this Agreement and each other Transaction Document to which it is a party, and
the performance of its obligations hereunder and thereunder do not contravene or
violate (i) its Organizational Documents, (ii) any law, rule or regulation
applicable to it, (iii) any restrictions under any agreement, contract or
instrument to which it is a party or by which it or any of its property is
bound, or (iv) any order, writ, judgment, award, injunction or decree applicable
to it, and do not result in the creation or imposition of any Adverse Claim on
assets of such Originator or its Subsidiaries (except as created hereunder)
except, in any case, where such contravention or violation is not reasonably
likely to have a Material Adverse Effect; and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of the
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financing statements required hereunder, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by such
Originator of this Agreement and each other Transaction Document to which it is
a party and the performance of its obligations hereunder and thereunder.
(e) Actions, Suits. There are no actions, suits or proceedings
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pending, or to the best of such Originator's knowledge, threatened, before any
court, arbitrator or other body, that could reasonably be expected to have a
Material Adverse Effect, except as previously disclosed or for which reserves in
reasonable amounts have been established. Such Originator is not in default with
respect to any order of any court, arbitrator or governmental body.
(f) Binding Effect. This Agreement and each other Transaction
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Document to which such Originator is a party constitute the legal, valid and
binding obligations of such Originator enforceable against such Originator in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All written information heretofore
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furnished by such Originator or any of its Affiliates to the Buyer for purposes
of or in connection with this Agreement, any of the other Transaction Documents
or any transaction contemplated hereby or thereby is, and all such information
hereafter furnished by such Originator or any of its Affiliates to the Buyer, as
of the date thereof, does not and will not contain any material misstatement of
fact or omit to state a material fact necessary to make the statements contained
therein, in light the circumstances under which they were made, not misleading.
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(h) Use of Proceeds. No payment made to any Originator hereunder will
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be used for a purpose that violates Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
(i) Good Title. Each Receivable which is sold to the Buyer hereunder
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shall be owned by the respective Originator, free and clear of any Adverse
Claim, except as provided herein or except as may be granted by the Buyer.
Whenever the Buyer makes a purchase hereunder, it shall have acquired and shall
continue to have maintained a valid ownership interest (free and clear of any
Adverse Claim) in the respective Originator's entire right, title and interest
in and to each Receivable and the Related Security with respect thereto. There
have been duly filed all financing statements or other similar instruments or
documents necessary under the UCC of all appropriate jurisdictions to perfect
the Buyer's ownership interest in such Receivables and the Related Security to
the extent such interest can be perfected by filing a financing statement under
the UCC.
(j) [Reserved].
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(k) Places of Business and Locations of Collection Records. The
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principal places of business and chief executive office of such Originator and
the offices where it keeps its Collection Records are located at the address(es)
listed on Exhibit II or such other locations of which the Buyer has been
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notified in accordance with Section 4.2(a) in jurisdictions where all action
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required by Section 4.2(a) has been taken and completed. Such Originator's
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Federal Employer Identification Number is correctly set forth on Exhibit II.
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(l) Collections. Such Originator has directed all Obligors on the
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Receivables originated by it existing on or after the Initial Cutoff Date to
make payments thereon directly to a Collection Account or Lock-Box of the Buyer
which is listed on Exhibit III hereto as the same may be amended from time to
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time by the Buyer upon not less than 30 days' prior written notice to the
Originators.
(m) Material Adverse Effect. Since June 30, 2000, no event has
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occurred that would have a Material Adverse Effect.
(n) Names. In the 5 years ending on the date of this Agreement, such
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Originator has not used any corporate name in which a financing statement naming
such Originator (or any entity which has merged with and into such Originator)
as a debtor may be properly recorded and effective to grant a security interest
under the UCC as in effect in any applicable jurisdiction other than (i) the
name in which it has executed this Agreement, and (ii) as listed on Exhibit II.
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(o) Not a Holding Company or an Investment Company. Such Originator
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is not a "holding company" or a "subsidiary holding company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or any successor statute. Such Originator is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or any successor statute.
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(p) Compliance with Law. Each Receivable reflected in any Purchase
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Report as an Eligible Receivable, together with the Invoice related thereto,
does not violate any laws, rules or regulations applicable thereto (including,
without limitation, laws, rules and regulations relating to truth in lending,
fair credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy), except where such violation is not reasonably
likely to have a Material Adverse Effect.
(q) Compliance with Credit and Collection Policy. Such Originator has
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complied in all material respects with the Credit and Collection Policy with
regard to each Receivable originated by it and the related Contract, and has not
made any change since the Initial Cut-Off Date to such Credit and Collection
Policy, except such material change as to which the Buyer has been notified and
has consented, as required, in accordance with Section 4.1 (a)(vi).
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(r) Payments to such Originator. With respect to each Receivable
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originated by such Originator and sold to the Buyer hereunder, the Purchase
Price (and, if applicable, Purchase Interest) received by such Originator
constitutes fair and reasonably equivalent value in consideration therefor.
(s) Enforceability of Receivables. Each Receivable sold by such
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Originator to the Buyer hereunder is a legal, valid and binding obligation of
the related Obligor to pay the Outstanding Balance of the Receivable created
thereunder and accrued Finance Charges (if any) thereon, enforceable against the
Obligor in accordance with its terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or limiting creditors' rights generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).
(t) Eligible Receivables. Each Receivable reflected in any Purchase
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Report as an Eligible Receivable was an Eligible Receivable on the date of its
acquisition by the Buyer hereunder.
(u) Accounting. The manner in which such Originator accounts for the
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transactions contemplated by this Agreement does not jeopardize the
characterization of the transactions contemplated herein as being true sales.
ARTICLE III
CONDITIONS OF PURCHASE
Section 3.1 Conditions Precedent to Purchase. The Purchase from each
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Originator under this Agreement is subject to the conditions precedent that the
Buyer shall have received on or before the date thereof the documents listed on
Schedule A.
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Section 3.2 Conditions Precedent to Subsequent Payments. the Buyer's
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obligation to pay for Receivables coming into existence after the Initial Cutoff
Date shall be subject to the further conditions precedent that: (a) the Facility
Termination Date shall not have occurred under
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the Credit and Security Agreement; (b) the Buyer (or, at any time the Credit
and Security Agreement remains in effect, the Agent as the Buyer's assignee)
shall have received such other approvals, opinions or documents as it may
reasonably request; and (c) on the date such Receivable came into existence, the
following statements shall be true (and acceptance of the proceeds of any
payment for such Receivable shall be deemed a representation and warranty by
such Originator that such statements are then true):
(i) the representations and warranties set forth in Article II
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are true and correct on and as of the date such Receivable came into
existence as though made on and as of such date; and
(ii) no event has occurred and is continuing that will constitute
a Termination Event.
Notwithstanding the foregoing conditions precedent, and subject to the
applicable Originator's receipt of payment of the Purchase Price for any
Receivable, all of such Originator's right, title and interest in and under such
Receivable and the Related Security with respect thereto shall vest in the
Buyer, whether or not the conditions precedent to the Buyer's obligation to pay
for such Receivable were in fact satisfied. The failure of such Originator to
satisfy any of the foregoing conditions precedent may, however, give rise to a
claim for indemnity under Article VI of this Agreement.
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ARTICLE IV
COVENANTS
Section 4.1 Affirmative Covenants of Originators. Until the date on
------------------------------------
which this Agreement terminates in accordance with its terms, each Originator
hereby covenants as set forth below:
(a) Financial Reporting. Such Originator will maintain, for itself
-------------------
and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish to the Buyer (or, at any time
the Credit and Security Agreement remains in effect, the Agent as the Buyer's
assignee):
(i) Annual Reporting. Promptly upon the filing thereof, and
----------------
within 90 days after the close of each of Parent's fiscal years, audited,
unqualified consolidated financial statements (which shall include balance
sheets, statements of earnings and stockholders' equity and cash flows) for
Parent and its consolidated Subsidiaries (which include such Originator) for
such fiscal year, accompanied by an opinion of independent public accountants of
recognized national standing.
(ii) Quarterly Reporting. Promptly upon the filing thereof, and
-------------------
within 45 days after the close of the first three (3) quarterly periods of each
of Parent's fiscal years, consolidated balance sheets of Parent and its
consolidated Subsidiaries (including such Originator) as at the close of each
such period and consolidated statements of earnings and
9
stockholders' equity and cash flows for Parent and its consolidated Subsidiaries
for the period from the beginning of such fiscal year to the end of such
quarter, all certified by a Responsible Financial Officer of Parent.
(iii) Compliance Certificate. Together with the financial
----------------------
statements required hereunder, a compliance certificate in substantially the
form of Exhibit IV signed by an Authorized Officer of Parent and dated the date
----------
of such annual financial statement or such quarterly financial statement, as the
case may be.
(iv) Shareholders' Statements and Reports. Promptly upon the
------------------------------------
furnishing thereof generally to the shareholders of Parent, copies of all
financial statements, reports and proxy statements so furnished.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies of
--------------
all registration statements (other than registration statements on Forms S-8 or
S-3 covering benefit or compensation plans, stock purchase or dividend
repurchase plans, or for purposes of resales of securities by holders) and
annual, quarterly or other periodic reports which Parent or any of its
Subsidiaries files with the Securities and Exchange Commission.
(vi) Change in Credit and Collection Policy. At least thirty
--------------------------------------
(30) days prior to the effectiveness of any material change in or material
amendment to the Credit and Collection Policy, a copy of the Credit and
Collection Policy then in effect and a notice indicating such proposed change or
amendment and, if such proposed change is reasonably likely to adversely affect
the collectibility of the Receivables generally or materially decrease the
credit quality of newly created Receivables generally, requesting the Buyer's
consent thereto.
(vii) Other Information. Promptly, from time to time, such other
-----------------
information, documents, records or reports relating to the Receivables
originated by such Originator or the condition or operations, financial or
otherwise, of such Originator as the Buyer may from time to time reasonably
request in order to protect the interests of the Buyer under or as contemplated
by this Agreement; provided, however, that the Buyer shall keep all such
information which is not otherwise in the public domain confidential and require
a confidentiality agreement from any third party that may properly request such
information.
(b) Notices. Such Originator will notify the Buyer in writing of any
-------
of the following promptly upon learning of the occurrence thereof, describing
the same and, if applicable, the steps being taken with respect thereto:
(i) Termination Events or Unmatured Termination Events. The
--------------------------------------------------
occurrence of each Termination Event and each Unmatured Termination Event,
by a statement of an Authorized Officer of such Originator.
(ii) Material Adverse Effect. The occurrence of any event or
-----------------------
condition that has had, or is reasonably likely to have, a Material Adverse
Effect.
(iii) ERISA Events. The occurrence of any ERISA Event.
------------
10
(c) Compliance with Laws and Preservation of Existence. Such
--------------------------------------------------
Originator will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject, except where the failure to so comply is not reasonably
likely to have a Material Adverse Effect. Such Originator will preserve and
maintain its legal existence, rights, franchises and privileges in the
jurisdiction of its organization, and qualify and remain qualified in good
standing as a foreign entity in each jurisdiction where its business is
conducted, except where the failure to so qualify or remain in good standing is
not reasonably likely to have a Material Adverse Effect.
(d) Audits. Such Originator will furnish to the Buyer from time to
------
time such information with respect to it and the Receivables sold by it as the
Buyer may reasonably request. Such Originator will, from time to time during
regular business hours as requested by the Buyer (or, at any time the Credit and
Security Agreement remains in effect, the Agent as the Buyer's assignee), upon
not less than two (2) Business Days' prior written notice unless a Termination
Event has occurred, permit the Buyer or their respective agents or
representatives: (i) to examine and make copies of and abstracts from all Other
Records in the possession or under the control of such Originator relating to
the Receivables and the Related Security, including, without limitation, the
related Contracts to the extent permitted by Section 1.5, and (ii) to visit the
offices and properties of such Originator for the purpose of examining such
materials described in clause (i) above, and to discuss, on a confidential
basis, matters relating to such Originator's financial condition or the
Receivables and the Related Security or such Originator's performance under any
of the Transaction Documents or such Originator's performance under the
Contracts and, in each case, with any of the officers or employees of such
Originator having knowledge of such matters.
(e) Keeping and Marking of Records and Books.
----------------------------------------
(i) Such Originator will maintain or will cause the Servicer to
maintain administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in
the event of the destruction of the originals thereof), and keep and
maintain all documents, books, records and other information
reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit
the immediate identification of each new Receivable and all
Collections of and adjustments to each existing Receivable). Such
Originator will give, or will direct the Servicer to give, the Buyer
notice of any material change in the administrative and operating
procedures referred to in the previous sentence.
(ii) Such Originator will (A) on or prior to the date hereof,
xxxx its master data processing records and other books and records
relating to the Receivables with a legend or code describing the
Buyer's ownership interests in the Receivables and (B) upon the
request of the Buyer following the occurrence of a Termination Event,
xxxx each Invoice
11
applicable to any Receivable sold by such Originator to the Buyer
hereunder with a legend or code describing the Buyer's ownership
thereof.
(f) Compliance with Contracts and Credit and Collection Policy.
----------------------------------------------------------
Such Originator will timely (i) perform and comply in all material respects with
all provisions, covenants and other promises required to be observed by it under
the Contracts related to the Receivables originated by it, and (ii) comply in
all material respects with the Credit and Collection Policy in regard to each
such Receivable and the related Contract.
(g) Ownership. Such Originator will take all necessary action to
---------
establish and maintain, irrevocably, the Buyer's right, title and interest in
and to the Receivables originated or acquired by such Originator and sold to the
Buyer hereunder, and to keep the Receivables and associated Related Security, in
each case, free and clear of any Adverse Claims other than Adverse Claims in
favor of the Buyer (including, without limitation, the filing of all financing
statements, continuation statements and/or financing statement amendments
necessary under the UCC of all appropriate jurisdictions to perfect the Buyer's
interest in such Receivables and Related Security to the extent such interest
can be perfected by filing any of the foregoing under the UCC and such other
action to perfect, protect or more fully evidence the interest of the Buyer as
the Buyer may reasonably request).
(h) Lenders' Reliance. Such Originator acknowledges that creditors
-----------------
of the Buyer are relying upon the Buyer's identity as a legal entity that is
separate from such Originator and its other Affiliates and agrees to take all
reasonable steps to maintain the Buyer's identity as a separate legal entity and
to make it manifest to third parties that the Buyer is an entity with assets and
liabilities distinct from those of such Originator and its other Affiliates and
not just a division thereof Without limiting the generality of the foregoing and
in addition to the other covenants set forth herein, such Originator (i) will
not hold itself out to third parties as liable for the debts of the Buyer nor
purport to own any of the Receivables or Related Security sold to the Buyer
hereunder, and (ii) will conduct all business with the Buyer on terms reasonably
believed by such Originator and the Buyer to be reasonably comparable to those
applicable in transactions with an unaffiliated Person in similar circumstances.
(i) Taxes. To the extent not handled by Parent, such Originator
-----
will file all tax returns and reports required by law to be filed by it and
promptly pay all taxes and governmental charges at any time 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 GAAP shall have been set aside on its books. Such Originator
will pay when due any taxes payable in connection with the Receivables
originated by it, exclusive of taxes on or measured by income or gross receipts
of the Buyer and its assigns.
Section 4.2 Negative Covenants of Originators. Until the date on which
---------------------------------
this Agreement terminates in accordance with its terms, each Originator hereby
covenants that:
(a) Name Change, Offices and Collection Records. Such Originator
-------------------------------------------
will not (i) change its state of organization, (ii) change its legal name, or
(iii) change its identity or
12
corporate structure (within the meaning of Section 9-402(7) of any applicable
enactment of the UCC), (iv) relocate its chief executive office (so long as its
chief executive office determines the place of perfection of the Buyer's
ownership interest in such Originator's Receivables), or (v) relocate any office
where Collection Records are kept by or on behalf of such Originator unless, in
each of the foregoing cases, it shall have: (A) given the Buyer at least 30
days' prior written notice thereof and (B) delivered to the Buyer all financing
statements, instruments and other documents requested by the Buyer in connection
with such change or relocation.
(b) Change in Payment Instructions to Obligors. Such Originator
------------------------------------------
will not direct any Obligor on the Receivables sold by it to the Buyer hereunder
to make payments to any location other than to one of the Buyer's Lock-Boxes or
Collection Accounts listed on Exhibit III hereto as the same may be amended
-----------
from time to time by the Buyer upon not less than 30 days' prior written notice
to the Originators.
(c) Modifications to Credit and Collection Policy. Such
---------------------------------------------
Originator will not, and will not cause or authorize the Servicer to, make any
material change to the Credit and Collection Policy that would materially
decrease the collectibility of its Receivables generally.
(d) Sales, Liens. Such Originator will not sell, assign (by
------------
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, or create or suffer to exist any Adverse Claim upon (including,
without limitation, the filing of any financing statement) or with respect to,
any Receivable or the Related Security, or upon or with respect to any Contract
under which any Receivable arises, or assign any right to receive income with
respect thereto (other than, in each case, the creation of the interests therein
in favor of the Buyer provided for herein), and such Originator will defend the
right, title and interest of the Buyer in, to and under any of the foregoing
property, against all claims of third parties claiming through or under such
Originator.
(e) Accounting for Purchases. Such Originator will not account
------------------------
for the transactions contemplated hereby in any manner other than the sale for
financial accounting purposes by such Originator to the Buyer of the Receivables
sold and transferred by such Originator on or after the Initial Cutoff Date
through and including the Termination Date, together with the associated Related
Security, except to the extent that such transactions are not recognized on
account of consolidated financial reporting in accordance with generally
accepted accounting principles.
ARTICLE V
TERMINATION EVENTS
Section 5.1 Termination Events. The occurrence of any one or more of the
------------------
following events shall constitute a Termination Event:
(a) Such Originator shall fail to make any payment or deposit
required hereunder when due, or to perform or observe any term, covenant or
agreement hereunder or
13
under any other Transaction Document to which it is a party and such failure
shall continue for 30 days after written notice of such failure is given.
(b) Any representation, warranty, certification or statement made
by such Originator in this Agreement, any other Transaction Document to which it
is a party, or in any other document delivered pursuant hereto or thereto shall
prove to have been incorrect in any material respect when made or deemed made;
provided that the materiality threshold in the preceding clause shall not be
applicable with respect to any representation or warranty which itself contains
a materiality threshold.
(c) Failure of any Originator to pay any Indebtedness when due in
excess of $25,000,000 ("Material Debt"); or the default by any Originator in the
performance of any term, provision or condition contained in any agreement under
which any Material Debt was created or is governed, the effect of which is to
cause, or to permit the holder or holders of such Material Debt to cause, such
Indebtedness to become due prior to its stated maturity; or any Material Debt of
any Originator shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the date of maturity
thereof.
(d) (i) Any Originator or any of its Material Subsidiaries
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 (ii) any proceeding shall be
instituted by or against such Originator or any of its Material Subsidiaries
seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or
any substantial part of its property or (iii) any Originator or any of its
Material Subsidiaries shall take any corporate action to authorize any of the
actions set forth in the foregoing clauses (i) or (ii) of this subsection (d).
(e) A Change of Control shall occur.
(f) One or more final judgments for the payment of money in an
amount in excess of $25,000,000, individually or in the aggregate, shall be
entered against any Originator on claims not covered by insurance or as to which
the insurance carrier has denied its responsibility, and such judgment shall
continue unsatisfied and in effect for thirty (30) consecutive days without a
stay of execution.
(g) The PBGC or Internal Revenue Service shall file any notice of
lien on any of the Receivables or the Related Security.
Section 5.2 Remedies. Upon the occurrence and during the continuation of a
--------
Termination Event, the Buyer may take any of the following actions: (i) declare
the Termination Date to have occurred, whereupon the Termination Date shall
forthwith occur, without demand, protest or further notice of any kind, all of
which are hereby expressly waived by each Originator;
14
provided, however, that upon the occurrence of a Termination Event described in
Section 5.1(d), or of an actual or deemed entry of an order for relief with
--------------
respect to such Originator under the Federal Bankruptcy Code, the Termination
Date shall automatically occur, without demand, protest or any notice of any
kind, all of which are hereby expressly waived by each Originator and (ii) to
the fullest extent permitted by applicable law, declare that the Default Fee
shall accrue with respect to any amounts then due and owing by such Originator
to the Buyer. The aforementioned rights and remedies shall be without limitation
and shall be in addition to all other rights and remedies of the Buyer and, so
long as the Credit and Security Agreement remains in effect, the Agent as the
Buyer's assignee otherwise available under any other provision of this
Agreement, by operation of law, at equity or otherwise, all of which are hereby
expressly preserved, including, without limitation, all rights and remedies
provided under the UCC, all of which rights shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnities, by Originators. Without limiting any other rights
---------------------------
that the Buyer may have hereunder or under applicable law, each Originator
hereby agrees to indemnify (and pay upon demand to) the Buyer and its assigns,
officers, directors, agents and employees (each an "Indemnified Party") from and
against any and all damages, losses, claims, taxes, liabilities, costs, expenses
and for all other amounts payable, including reasonable attorneys' fees and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against and actually paid or actually incurred by
any of them arising out of or as a result of this Agreement or the acquisition,
either directly or indirectly, by the Buyer of any interest in the Receivables
originated by such Originator, excluding, however:
(a) Indemnified Amounts to the extent a final judgment of a court
of competent jurisdiction holds that such Indemnified Amounts resulted from
gross negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(b) Indemnified Amounts to the extent the same includes losses in
respect of Receivables originated by such Originator that are uncollectible
on account of the insolvency, bankruptcy or lack of creditworthiness of the
related Obligor; or
(c) taxes imposed by the jurisdiction in which such Indemnified
Party's principal executive office is located, on or measured by the
overall net income or gross receipts of such Indemnified Party;
provided, however, that nothing contained in this sentence shall limit the
liability of such Originator or limit the recourse of the Buyer to such
Originator for amounts otherwise specifically provided to be paid by such
Originator under the terms of this Agreement. Without limiting the generality of
the foregoing indemnification, but subject in each case to clauses (a),
15
(b) and (c) above, each Originator shall indemnify the Buyer for Indemnified
Amounts relating to or resulting from:
(i) any representation or warranty made by such Originator
(or any officers of such Originator) under or in connection with any
Purchase Report, this Agreement, any other Transaction Document or any
other information or report delivered by such Originator pursuant hereto or
thereto for which the Buyer has not received a Purchase Price Credit that
shall have been false or incorrect when made or deemed made;
(ii) the failure by such Originator, to comply with any
applicable law, rule or regulation with respect to any Receivable or
Contract related thereto, or the nonconformity of any Receivable or
Contract included therein with any such applicable law, rule or regulation
or any failure of such Originator to keep or perform any of its
obligations, express or implied, with respect to any Contract;
(iii) any failure of such Originator to perform its duties,
covenants or other obligations in accordance with the provisions of this
Agreement or any other Transaction Document;
(iv) any products liability, personal injury or damage, suit
or other similar claim arising out of or in connection with goods or
services that are the subject of any Contract or any Receivable;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment of
any Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its
terms), or any other claim resulting from the sale of the goods or service
related to such Receivable or the furnishing or failure to furnish such
goods or services;
(vi) any Collections received, directly or indirectly by an
Originator (or its agent) which are not promptly remitted to Buyer;
(vii) any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby, such Originator's use of the proceeds of
the Purchase from it hereunder, the ownership of the Receivables originated
by such Originator or any other investigation, litigation or proceeding
relating to such Originator in which any Indemnified Party becomes involved
as a result of any of the transactions contemplated hereby;
(viii) any inability to litigate any claim against any Obligor
in respect of any Receivable reflected in any Purchase Report as being an
Eligible Receivable as a result of such Obligor being immune from civil and
commercial law and suit on the grounds of sovereignty or otherwise from any
legal action, suit or proceeding;
(ix) any Termination Event described in Section 5.1(d);
--------------
16
(xi) any failure to vest and maintain vested in the Buyer,
or to transfer to the Buyer, ownership of the Receivables originated by
such Originator and purported to be conveyed to the Buyer hereunder,
together with the associated Related Security, in each case, free and clear
of any Adverse Claim;
(xii) 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 the applicable laws of Canada with
respect to any Receivable originated by such Originator and the Related
Security with respect thereto, and the proceeds of any thereof, whether at
the time of the Purchase from such Originator hereunder or at any
subsequent time;
(xiii) any action or omission by such Originator which
impairs the rights of the Buyer with respect to any Receivable or reduces
the value of any such Receivable (for any reason other than the application
of Collections thereto or charge-off of any Receivable as uncollectible)
unless the Buyer has received a Purchase Price Credit therefor; and
(xiv) the failure of any Receivable reflected as an Eligible
Receivable on any Purchase Report prepared by such Originator to be an
Eligible Receivable at the time acquired by the Buyer.
Section 6.2 Other Costs and Expenses. Each Originator shall pay to the
------------------------
Buyer on demand all reasonable costs and out-of-pocket expenses actually
incurred in connection with the preparation, execution and delivery of this
Agreement, the transactions contemplated hereby and the other documents to be
delivered hereunder. In addition to the foregoing, each Originator shall pay, on
demand, any and all reasonable costs and expenses, including reasonable counsel
fees and expenses, actually incurred by the Buyer (or, at any time the Credit
and Security Agreement remains in effect, the Agent as the Buyer's assignee) in
connection with (i) any amendment to or waiver of this Agreement, and/or (ii)
the enforcement of this Agreement and the other documents delivered hereunder
following a Termination Event.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Waivers and Amendments.
----------------------
(a) No failure or delay on the part of the Buyer (or, at any time
the Credit and Security Agreement remains in effect, the Agent as the
Buyer's assignee) in exercising any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other
further exercise thereof or the exercise of any other power, right or
remedy. The rights and remedies herein provided shall be cumulative and
nonexclusive of any rights or remedies provided by law.
17
Any waiver of this Agreement shall be effective only in the specific
instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing signed by each Originator and the
Buyer and, to the extent required under the Credit and Security Agreement,
the Agent and the Liquidity Banks or the Required Liquidity Banks. At any
time while the Credit and Security Agreement remains in effect, any
material amendment, supplement, modification or waiver will require
satisfaction of the Rating Agency Condition.
Section 7.2 Notices. All communications and notices provided for hereunder
-------
shall be in writing (including bank wire, telecopy or electronic facsimile
transmission or similar writing) and shall be given to the other parties hereto
at their respective addresses or telecopy numbers set forth on the signature
pages hereof or at such other address or telecopy number as such Person may
hereafter specify for the purpose of notice to each of the other parties hereto.
Each such notice or other communication shall be effective (a) if given by
telecopy, upon the receipt thereof, (b) if given by mail, three (3) Business
Days after the time such communication is deposited in the mail with first class
postage prepaid or (c) if given by any other means, when received at the address
specified in this Section 7.2.
-----------
Section 7.3 Protection of Ownership Interests of the Buyer.
----------------------------------------------
(a) Each Originator agrees that from time to time, at its expense,
it will promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that the Buyer (or, at any time
the Credit and Security Agreement remains in effect, the Agent as the Buyer's
assignee) may request, to perfect, protect or more fully evidence the interest
of the Buyer (or, at any time the Credit and Security Agreement remains in
effect, the Agent as the Buyer's assignee) hereunder, or to enable the Buyer
(or, at any time the Credit and Security Agreement remains in effect, the Agent
as the Buyer's assignee) to exercise and enforce their rights and remedies
hereunder. At any time following a Termination Event, the Buyer (or, at any time
the Credit and Security Agreement remains in effect, the Agent as the Buyer's
assignee) may, at such Originator's sole cost and expense, direct such
Originator to notify the Obligors of Receivables of the ownership interests of
the Buyer under this Agreement and may also direct that payments of all amounts
due or that become due under any or all Receivables be made directly to the
Buyer (or, at any time the Credit and Security Agreement remains in effect, the
Agent as the Buyer's assignee) or the Buyer's (or such assigns') designee.
(b) If any Originator fails to perform any of its obligations
hereunder, the Buyer (or, at any time the Credit and Security Agreement remains
in effect, the Agent as the Buyer's assignee) may (but shall not be required to)
perform, or cause performance of, such obligations, and the Buyer's (or such
assigns') costs and expenses incurred in connection therewith shall be payable
by such Originator as provided in Section 6.2. Each Originator irrevocably
------------
authorizes the Buyer (and, at any time the Credit and Security Agreement remains
in
18
effect, the Agent as the Buyer's assignee) at any time and from time to time in
the sole discretion of the Buyer (or, at any time the Credit and Security
Agreement remains in effect, the Agent as Buyer's assignee), and appoints the
Buyer (and, at any time the Credit and Security Agreement remains in effect, the
Agent as the Buyer's assignee) as its attorney(ies)-in-fact, to act on behalf of
such Originator (i) to execute on behalf of such Originator as debtor, in the
event such Originator fails to timely execute, and to file financing statements
necessary in the Buyer's my time while the Credit and Security Agreement remains
in effect, the Agent's) reasonable opinion to perfect and to maintain the
perfection and priority of the interest of the in the Receivables originated by
such Originator and (ii) in the event such Originator fails to deliver any
financing statement requested pursuant to the preceding clause (i), to file a
carbon photographic or other reproduction of this Agreement or any financing
statement with respect to receivables as a financing statement in such offices
as the Buyer (or, at any time the Credit Security Agreement remains in effect,
the Agent as the Buyer's assignee) in their sole discretion deem necessary or
desirable to perfect and to maintain the perfection and priority of the Buyer's
interest in such Receivables. This appointment is coupled with an interest and
is able.
Section 7.4 Confidentiality.
---------------
(a) Each Originator shall maintain and shall cause each of its
employees and officers to maintain the confidentiality of the Fee Letter (under
and as defined in the Credit and Security Agreement) and the electronic models
and files (including electronic files containing model accounting entries for
securitization transactions) provided by the Agent or Blue Ridge in connection
with the Credit and Security Agreement, provided, however, such information may
be disclosed to third parties to the extent such disclosure is (i) required to
comply with any applicable law (including federal and state securities laws) or
order of any judicial or administrative proceeding, or (ii) required in response
to any summons or subpoena or in connection with any litigation, provided,
further, that such Originator inform such person that such information is
sensitive, proprietary and confidential. Notwithstanding the foregoing, each
Originator shall have no obligation of confidentiality in respect of any
information which may be generally available to the public or becomes available
to the public through no fault of such Originator or its Affiliates.
(b) The Buyer (and, accordingly, each of its assigns) shall
maintain, shall cause each of its employees, officers and agents to maintain,
and shall require the Lenders to maintain and to cause each of their respective
employees, officers and agents to maintain, the confidentiality of any
information obtained by it in respect of the Receivables (including, without
limitation, credit losses and delinquency levels) and any other proprietary or
confidential information with respect to Parent, the Obligors, the Receivables,
the Originators and the Servicer in communications with third parties; provided,
however, such information may be disclosed to third parties to the extent such
disclosure is (i) required to comply with any applicable law (including federal
and state securities laws) or order of any judicial or administrative
proceeding, or (ii) required in response to any summons or subpoena or in
connection with any litigation, or (iii) to any Person specified in Section 14.5
of the Credit and Security Agreement on the terms set forth therein.
19
Section 7.5 Bankruptcy Petition.
-------------------
(a) Each Originator and the Buyer covenant and agree that, prior
to the date that is one year and one day after the payment in full of all
outstanding senior indebtedness of Blue Ridge, it will not institute against, or
join any other Person in instituting against, Blue Ridge any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
(b) Each Originator covenants and agrees that, prior to the date
that is one year and one day after the payment in full of all outstanding
obligations of the Buyer under the Credit and Security Agreement, it will not
institute against, or join any other Person in instituting against, the Buyer
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.
Section 7.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
-------------
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF GEORGIA.
Section 7.7 CONSENT TO JURISDICTION. ORIGINATOR HEREBY IRREVOCABLY SUBMITS
-----------------------
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR GEORGIA STATE
COURT SITTING IN XXXXXX COUNTY, GEORGIA IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT
TO THIS AGREEMENT AND ORIGINATOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST ORIGINATOR IN THE COURTS OF
ANY OTHER JURISDICTION.
Section 7.8 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO THIS
AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
20
Section 7.9 Integration; Binding Effect; Survival of Terms.
----------------------------------------------
(a) The Transaction Documents contain the final and complete
integration of all prior expressions by the parties hereto with respect to the
sale and collection of the Receivables and Related Security and shall constitute
the entire agreement among the parties hereto with respect to such subject
matter, superseding all prior oral or written understandings with respect to the
sale and collection of the Receivables and Related Security.
(b) Nothing contained herein or in any other Transaction Document
shall be deemed to prohibit or limit any merger or consolidation of an
Originator with another Originator so long as any necessary financing statements
are filed, promptly after the effectiveness of such merger or consolidation,
under the UCC in all jurisdictions necessary to make the representations and
warranties contained in this Agreement true and correct after giving effect to
such merger or consolidation. This Agreement shall be binding upon and inure to
the benefit of the Originators, the Buyer and their respective successors and
permitted assigns (including any trustee in bankruptcy). No Originator may
assign any of its rights and obligations hereunder or any interest herein
without the prior written consent of the Buyer; provided, however, that no
consent of the Buyer shall be required in connection with an assignment by
operation of law to the surviving Originator in a merger or consolidation
described in the first sentence of this Section 7.9(b). The Buyer may pledge or
assign at any time its rights and obligations hereunder and interests herein to
any other Person without the consent of any Originator. Without limiting the
foregoing, each Originator acknowledges that the Buyer, pursuant to the Credit
and Security Agreement, may grant to the Agent for the benefit of the Secured
Parties (under and as defined in the Credit and Security Agreement), a security
interest in the Buyer's rights, remedies, powers and privileges hereunder. 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 terminated in accordance with its terms; provided, however, that the
rights and remedies with respect to (i) any breach of any representation and
warranty made by any Originator pursuant to Article II; (ii) the indemnification
----------
and payment provisions of Article VI; and (iii) Section 7.4 shall be continuing
---------- -----------
and shall survive any assignment or termination of this Agreement.
Section 7.10 Counterparts; Severability; Section References. 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. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and
sections of, and schedules and exhibits to, this Agreement.
(Signature pages follows)
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
hereof in Wilmington, Delaware.
MOHAWK CARPET CORPORATION
By: __________________________
Name: Xxxxxx X. Xxxxx
Title: Vice President and Treasurer
Address: 000 X. Xxxxxxxxxx Xxxx.
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
MOHAWK COMMERCIAL, INC.
By: __________________________
Name: Xxxxxx X. Xxxxx
Title: Vice President and Treasurer
Address: 000 X. Xxxxxxxxxx Xxxx.
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
DURKAN PATTERNED CARPETS, INC.
By: __________________________
Name: Xxxxxx X. Xxxxx
Title: Vice President, Treasurer and
Secretary
Address: 000 X. Xxxxxxxxxx Xxxx.
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
22
MOHAWK FACTORING, INC.
By: __________________________
Name: Xxxxx Xxxxxx
Title: Assistant Treasurer and Secretary
Address: 000 Xxxxxxxx Xxx.
Xxxxx 0000 X
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
23
Exhibit I
Definitions
-----------
This is Exhibit I to the Agreement (as hereinafter defined). As used in the
Agreement and the Exhibits and Schedules thereto, capitalized terms have the
meanings set forth in this Exhibit I (such meanings to be equally applicable to
the singular and plural forms thereof).
"Adverse Claim" means a lien, security interest, charge or encumbrance, or
other right or claim in, of or on any Person's assets or properties in favor of
any other Person.
"Agent" has the meaning set forth in the Preliminary Statements to the
Agreement.
"Agreement" means the Receivables Purchase and Sale Agreement, dated as of
October 25, 2000, among Originators and the Buyer, as the same may be amended,
restated or otherwise modified.
"Blue Ridge" has the meaning set forth in the Preliminary Statements to the
Agreement.
"Business Day" means any day on which banks are not authorized or required
to close in New York, New York or Atlanta, Georgia, and The Depository Trust
Company of New York is open for business, and, if the applicable Business Day
relates to any computation or payment to be made with respect to the LIBO Rate,
any day on which dealings in dollar deposits are carried on in the London
interbank offering market.
"Buyer" has the meaning set forth in the preamble to the Agreement.
"Calculation Period" means each fiscal month of the Buyer or portion
thereof which elapses during the term of the Agreement. The first Calculation
Period shall commence on the date of the Purchases hereunder and the final
Calculation Period shall terminate on the Termination Date. For purposes of the
use of this term in other definitions in Exhibit I to this Agreement,
Calculation Periods occurring prior to the date of the Purchases hereunder shall
mean a fiscal month of the Buyer.
"Canadian Receivable" means a Receivable owing from an Obligor domiciled
in, or organized under the laws of, Canada or one of its political subdivisions.
"Change of Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 30% or more of the outstanding shares of voting stock of Parent,
or Parent ceases to own, directly or indirectly, all of the outstanding shares
of voting stock of each Originator.
24
"Collection Accounts" means those accounts shown on Exhibit III, as the
-----------
same may be amended from time to time by the Buyer in accordance with the terms
hereof.
"Collection Records" means, with respect to any Receivable, all Invoices
and all other documents, books, records and other information (including,
without limitation, computer programs, tapes, disks, punch cards, data
processing software and related property and rights) relating to amounts paid on
or owing in respect of such Receivable.
"Collections" means, with respect to any Receivable, all cash collections
and other cash proceeds in respect of such Receivable, including, without
limitation, all Finance Charges or other related amounts accruing in respect
thereof and all cash proceeds of Related Security with respect to such
Receivable.
"Collection Services Agreement" means that certain Servicing Agreement
dated as of October 25, 2000 by and between the Buyer and Mohawk Servicing,
Inc., as Servicer, providing for the collection and servicing of all Receivables
held by the Buyer.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.
"Contract" means, with respect to any Receivable, any and all instruments
and agreements, if any, pursuant to which such Receivable arises but excluding
any Invoice.
"Credit and Collection Policy" means each Originator's credit and
collection policies and practices relating to Contracts and Receivables existing
on and as administered historically prior to the date hereof and summarized in
Exhibit V, as modified from time to time in accordance with the Agreement.
"Credit and Security Agreement" has the meaning set forth in the
Preliminary Statements to the Agreement.
"Default Fee" means a per annum rate of interest equal to the sum of (i)
the Prime Rate, plus (ii) 2% per annum.
"Defaulted Receivable" means a Receivable: (i) as to which the Obligor
thereof has suffered an Event of Bankruptcy; (ii) which, consistent with the
Credit and Collection Policy, would be written off Originator's books as
uncollectible; or (iii) as to which any payment, or part thereof, remains unpaid
for 61 days or more from the original due date for such payment.
"Delinquent Receivable" means a Receivable as to which any payment, or part
thereof, remains unpaid for 31-60 days from the original due date for such
payment.
25
"Discount Factor" means a percentage calculated to provide the Buyer with a
reasonable return on its investment in the Receivables originated by each
Originator after taking account of (i) the time value of money based upon the
anticipated dates of collection of such Receivables and the cost to the Buyer of
financing its investment in such Receivables during such period and (ii) the
risk of nonpayment by the Obligors. Each Originator and the Buyer may agree from
time to time to change the Discount Factor based on changes in one or more of
the items affecting the calculation thereof, provided that any change to the
Discount Factor shall take effect as of the commencement of a Calculation
Period, shall apply only prospectively and shall not affect the Purchase Price
payment made prior to such Calculation Period during which such Originator and
the Buyer agree to make such change.
"Durkan" has the meaning set forth in the preamble to the Agreement.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which (a) if a natural person, is a resident of
the United States or Canada or, if a corporation or other business
organization, is organized under the laws of the United States, Canada or
any political subdivision of the United States or Canada and has its chief
executive office in the United States or Canada; (b) is not an Affiliate of
any of the parties hereto; and (c) is not a government or a governmental
subdivision or agency; provided, however, that in no event may the sum of
100% of all Canadian Receivables denominated in United States Dollars that
are included as Eligible Receivables plus 85% of all Canadian Receivables
denominated in Canadian Dollars that are included as Eligible Receivables
exceed 3% of total Receivables at any time,
(ii) which is not a Defaulted Receivable,
(iii) which was not a Delinquent Receivable on (A) the date of
Purchase (if such Receivable was in existence on the Initial Cutoff Date),
or (B) the date on which such Receivable came into existence (in all other
cases),
(iv) which (A) by its terms is due and payable within 91 days of
the original billing date therefor, (B) has not had its payment terms
extended more than once, and (C) will not, when added to all other Eligible
Receivables, cause the weighted average of the payment terms for all
Eligible Receivables to exceed 50 days,
(v) which is an "account," a "general intangible" or "chattel
paper" within the meaning of Article 9 of the UCC in the applicable
jurisdiction, and is not evidenced by an "instrument" within the meaning of
Article 9 of the UCC,
26
(vi) which is denominated and payable only in United States Dollars
or Canadian Dollars in the United States or Canada,
(vii) which is in full force and effect and constitutes the legal,
valid and binding obligation of the related Obligor enforceable against
such Obligor in accordance with its terms,
(viii) which (A) does not require the Obligor's consent to the
transfer, sale, pledge or assignment of the rights of the applicable
Originator under the applicable Contract or Invoice and (B) does not
contain a confidentiality provision that purports to restrict the ability
of the Buyer (or, at any time the Credit and Security Agreement remains in
effect, the Agent as the Buyer's assignee) to exercise its rights under
this Agreement, including, without limitation, its right to review the
Contract or Invoice applicable thereto,
(ix) which represents an obligation to pay a specified sum of
money, contingent only upon (A) the sale of goods or the provision of
services by the applicable Originator (which sale has been consummated or
services have been performed), and (B) satisfaction by such Originator of
any applicable warranty claims which have not yet been made or asserted,
(x) which does not contravene any law, rule or regulation
applicable thereto (including, without limitation, any law, rule and
regulation relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy),
(xi) which satisfies all applicable requirements of the applicable
Credit and Collection Policy,
(xii) which was generated in the ordinary course of the applicable
Originator's business,
(xiii) which arises solely from the sale (and not the lease) of goods
or the provision of services to the related Obligor by the applicable
Originator or a predecessor to such Originator, and not by any other Person
(in whole or in part),
(xiv) which is not the subject of, to the Originator's knowledge,
any dispute, counterclaim, right of rescission, set-off, counterclaim or
any other defense (including defenses arising out of violations of usury
laws) of the applicable Obligor against the applicable Originator or any
other Adverse Claim, and the Obligor thereon holds no right as against such
27
Originator to cause such Originator to repurchase the goods or merchandise
the sale of which shall have given rise to such Receivable (except with
respect to sale discounts effected pursuant to the Contract, or defective
goods returned in accordance with the terms of the Contract); provided,
however, that if such dispute, offset, counterclaim or defense affects only
a portion of the Outstanding Balance of such Receivable, then such
Receivable may be deemed an Eligible Receivable to the extent of the
portion of such Outstanding Balance which is not so affected, and provided,
further, that Receivables of any Obligor which has any accounts payable by
the applicable Originator or by a wholly-owned Subsidiary of such
Originator (thus giving rise to a potential offset against such
Receivables) may be treated as Eligible Receivables to the extent that the
Obligor of such Receivables has agreed pursuant to a written agreement in
form and substance satisfactory to the Buyer (and, at any time the Credit
and Security Agreement remains in effect, the Agent as the Buyer's
assignee), that such Receivables shall not be subject to such offset,
(xv) as to which the applicable Originator has satisfied and fully
performed all obligations on its part with respect to such Receivable
required to be fulfilled by it, and no further action is required to be
performed by any Person with respect thereto other than payment thereon by
the applicable Obligor, and
(xvi) as to which each of the representations and warranties
contained in Sections 2.1(i), (1) and (s) is true and correct.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with any Originator within the meaning of Section 4 14(b)
or (c) of the Code (and Sections 4 14(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by any Originator or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001 (a) (2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by any Originator or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 404 IA
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer
28
Plan; or (f) the imposition of any liability under Tide IV of ERISA, other than
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
Originator or any ERISA Affiliate.
"Factored Receivable" means, with respect to any Originator, any right to
payment for goods sold or services performed by such Originator existing on or
after the Initial Cutoff Date which is sold or pledged to any factor and
designated on such Originator's accounting system with code "C", "D", "S", "I"
or any other code identified as such in writing by the Originator to the Buyer
(and, as long as the Credit and Security Agreement remains in effect, the Agent
as the Buyer's assignee), or which directs that payment be made to a factor
other than the Buyer.
"Finance Charges" means, with respect to any Contract, any finance,
interest, late payment charges or similar charges owing by an Obligor pursuant
to such Contract.
"Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by liens or payable out of the proceeds or
production from property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, or other instruments, (v)
capitalized lease obligations, (vi) net liabilities under interest rate swap,
exchange or cap agreements, (vii) Contingent Obligations and (viii) liabilities
in respect of unfunded vested benefits under plans covered by Title IV of ERISA.
"Initial Cutoff Date" means the close of business on the Business Day
immediately prior to the date hereof.
"Invoice" means any paper or electronic invoice evidencing any Receivable.
"Lock-Boxes" means those lock-boxes shown on Exhibit III, as the same may
-----------
be amended from time to time by the Buyer in accordance with the terms hereof.
"Material Adverse Effect" means a material adverse effect on (i) the
financial condition or results of operations of Parent and its Subsidiaries,
considered as a whole, (ii) the ability of any Originator to perform its
obligations under this Agreement or any other Transaction Document to which such
Originator is a party, (iii) the legality, validity or enforceability of this
Agreement or any other Transaction Document to which such Originator is a party,
(iv) any Originator's, the Buyer's, the Agent's or any Lender's interest in the
Receivables generally or in any significant portion of the Receivables or the
Related Security with respect thereto, or (v) the collectibility of the
Receivables generally or of any material portion of the Receivables.
"Material Subsidiary" means, as of the date of any determination thereof,
any Subsidiary that either: (a) owns assets having a book value equal to or
greater than 5% of the consolidated total assets shown on the consolidated
balance sheet of Parent and its consolidated
29
subsidiaries, or (b) had net income for any prior period of four consecutive
fiscal quarters equal to or greater than 5% of the Parent's and its consolidated
subsidiaries consolidated net income shown on the statements of earnings for the
same four fiscal quarter period.
"Mohawk Carpet" has the meaning set forth in the preamble to the Agreement.
"Mohawk Commercial" has the meaning set forth in the preamble to the
Agreement.
"Monthly Reporting Date" means the 18th day of each calendar month
hereafter (or if any such day is not a Business Day, the next succeeding
Business Day thereafter).
"Multiemployer Plan" means a "multiemployer plan," within the meaning of
Section 4001(a)(3) of ERISA, to which any Originator or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the preceding
three calendar years, has made, or been obligated to make, contributions.
"Obligor" means a Person obligated to make payments on a Receivable.
"Organizational Documents" means, for any Person, the documents for its
formation and organization, which, for example, (a) for a corporation are its
corporate charter and bylaws, (b) for a partnership are its certificate of
partnership (if applicable) and partnership agreement, (c) for a limited
liability company are its certificate of formation or organization and its
operating agreement, regulations or the like and (d) for a trust is the trust
agreement, declaration of trust, indenture or bylaws under which it is created.
"Original Balance" means, with respect to any Receivable coming into
existence after the Initial Cutoff Date, the Outstanding Balance of such
Receivable on the date it was created.
"Originator" has the meaning set forth in the preamble to the Agreement.
"Other Records" means, with respect to any Receivable: (a) all Contracts
and (b) all other documents, books, records and other information (including,
without limitation, computer programs, tapes, disks, punch cards, data
processing software and related property and rights) relating to the
creditworthiness of any Obligor in respect thereof.
"Outstanding Balance" of any Receivable at any time means then outstanding
principal balance thereof.
"Parent" means Mohawk Industries, Inc., a Delaware corporation, and its
successors.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
30
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which any Originator sponsors or maintains, or to
which it makes, is making, or is obligated to make contributions, or in the case
of a multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five plan years.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which any Originator or any of its ERISA Affiliates sponsors or maintains or to
which any Originator or any of its ERISA Affiliates makes, is making, or is
obligated to make contributions and includes any Pension Plan, other than a Plan
maintained outside the United States primarily for the benefit of Persons who
are not U.S. residents.
"Purchase" means the purchase by the Buyer from an Originator pursuant to
Section 1.1(a) of the Agreement of the Receivables originated by such Originator
--------------
and the Related Security related thereto, together with all related rights in
connection therewith.
"Purchase Price" means, with respect to the Purchase from each Originator,
the aggregate price to be paid by the Buyer to such Originator for such Purchase
in accordance with Section 1.2 of the Agreement for the Receivables originated
-----------
by such Originator and the associated Related Security being sold to the Buyer,
which price shall equal on any date (i) the product of (x) the Outstanding
Balance of such Receivables on such date, multiplied by (y) one minus the
Discount Factor in effect on such date, minus (ii) any Purchase Price Credits to
be credited against the Purchase Price otherwise payable in accordance with
Section 1.3 of the Agreement.
-----------
"Purchase Price Credit" has the meaning set forth in Section 1.3 of the
-----------
Agreement.
"Purchase Report" has the meaning set forth in Section 1.1(b) of the
--------------
Agreement.
"Rating Agency Condition" means, at any time the Credit and Security
Agreement remains in effect, the Rating Agency Condition as defined therein.
"Receivable" means all indebtedness and other obligations owed to an
Originator, at the times it arises and before giving effect to any transfer or
conveyance under the Agreement, arising in connection with the sale of goods or
the rendering of services by such Originator or a predecessor (including,
without limitation, any indebtedness, obligation or interest constituting an
account, chattel paper or general intangible) together with the obligation, if
any, to pay any Finance Charges with respect thereto and all proceeds thereof;
provided, however, in no event shall the term "Receivable" include any Factored
Receivable or any Receivable coming into existence after the Termination Date.
All Receivables are identified with the legend paid to
31
Buyer or similar language. For purposes of this Agreement, indebtedness and
other rights and obligations arising from any one transaction, including,
without limitation, indebtedness and other rights and obligations represented by
an individual invoice, shall constitute a Receivable separate from a Receivable
consisting of the indebtedness and other rights and obligations arising from any
other transaction; provided, further, that any indebtedness, rights or
obligations referred to in the immediately preceding sentence shall be a
Receivable regardless or whether the account debtor or such Originator treats
such indebtedness, rights or obligations as a separate payment obligation.
"Related Security" means, with respect to any Receivable:
(i) all of the applicable Originator's interest, if any, in
the goods (including returned or repossessed goods), the sale of which by
such Originator gave rise to such Receivable,
(ii) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment of
such Receivable, together with all financing statements and security
agreements describing any collateral securing such Receivable,
(iii) all guaranties, letters of credit, credit insurance and
other agreements or arrangements of whatever character from time to time
supporting payment of such Receivable,
(iv) all service contracts and agreements, if any, associated
with such Receivable,
(v) all Collections, and
(vi) all other proceeds and insurance proceeds of any of the
foregoing or of any Receivable.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Responsible Financial Officer" of Parent means any of its chief
financial officer, vice president & corporate controller or vice president &
treasurer, acting singly.
"Servicer" means Mohawk Servicing, Inc. and its permitted successors
and assigns.
"Settlement Date" means the second Business Day after each Monthly
Reporting Date.
32
"Termination Date" means the earliest to occur of (i) the date on which the
Buyer is unable to pay the Purchase Price for any Receivable in accordance with
Section 1.2, (ii) the Business Day immediately prior to the occurrence of a
-----------
Termination Event set forth in Section 5.1(d), (iii) the Business Day specified
--------------
in a written notice from the Buyer (or, at any time the Credit and Security
Agreement remains in effect, the Agent as the Buyer's assignee) to the
Originators following the occurrence of any other Termination Event, (iv) the
date which is 5 Business Days after the Buyer's receipt of written notice from
any Originator that it wishes to terminate sales under this Agreement, and (v)
the date which is 5 Business Days after each Originator receives written notice
that the Buyer wishes to terminate purchases under this Agreement.
"Termination Event" has the meaning set forth in Section 5.1 of the
-----------
Agreement.
"Transaction Documents" means, collectively, this Agreement, the Collection
Services Agreement, and all Purchase Reports.
"Unmatured Termination Event" means an event which, with the passage of
time or the giving of notice, or both, would constitute a Termination Event.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of
Georgia, and not specifically defined herein, are used herein as defined in such
Article 9.
33
Exhibit II
----------
Places of Business; Locations of Collection Records;
----------------------------------------------------
Federal Employer Identification Number(s); Other Names
------------------------------------------------------
Places of Business:
Mohawk Carpet Corporation Durkan Patterned Carpets, Inc.
FEI# 00-0000000 FEI# 00-0000000
Address: Address:
000 X. Xxxxxxxxxx Xxxx. 000 X. XxxxxxxxXxxx.
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Mohawk Commercial, Inc.
FEI# 00-0000000
Address:
000 X. Xxxxxxxxxx Xxxx.
Xxxxxxx, XX 00000
Location of Collection Records:
Mohawk Servicing, Inc Mohawk Servicing, Inc.
000 Xxxxxxxxxx Xxxx. 000 X. Xxxxxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Federal Employer Identificati on Number:
Mohawk Carpet Corporation Durkan Patterned Carpets, Inc.
FEI # 00-0000000 FEI# 00-0000000
Mohawk Commercial, Inc.
FEI# 00-0000000
34
Legal, Trade and Assumed Names:
Xxxxxxx Xxxxx Insignia
World Contract Sunrise
Mohawk Commercial Hamilton
IMAGE Cyboney
Galaxy Mohawk Rug & Textile
Merit Hospitality Ultra Weave
Custom Weave Durkan Commercial
Wunda Wave American Weavers
Mohawk International
Karastan
Alliance Pad
Mohawk Non-Woven
Mohawk Carpet
World
Diamond
Durkan Patterned Carpet
Rug & Textile Group
Aladdin Rug
Townhouse
New Xxxx & Xxxxx
J MAR
American Rug Craftsman
Horizon
Xxxxxxxxx Xxxxx
Xxxxxxx
Harbinger
Helios
Delaware Valley Wool ________
Greenville Yarn
Xxxxxx Rug
35
EXHIBIT III
Lock-Boxes and Collection Accounts
----------------------------------------------------------------------------------------
BUYER'S RELATED COLLECTION ACCOUNT
------- --------------------------
LOCK-BOX OF BUYER
-------- --------
----------------------------------------------------------------------------------------
X.X. Xxx 00000 Account No. 8188602028 at
Xxxxxxx, XX 00000-0000 Bank of America in Chicago, Illinois
ABA No. 000000000
-----------------------------------------------------------------------------------------
X.X. Xxx 00000 Account No. 8188602028 at
Xxxxxxx, XX 00000-0000 Bank of America in Chicago, Illinois
ABA No. 000000000
-----------------------------------------------------------------------------------------
P.0. Xxx 00000 Account No. 8188602028 at
Xxxxxxx, XX 00000-0000 Bank of America in Chicago, Illinois
ABA No. 000000000
-----------------------------------------------------------------------------------------
P.O. Xxx 000000 Account No. 00000000 at
Xxxxxxx, XX 00000-0000 Wachovia in Atlanta, GA
ABA No. 000000000
-----------------------------------------------------------------------------------------
P.O. Xxx 000000 Account No. 00000000 at
Xxxxxxxxx, XX 00000-0000 Wachovia in Charlotte, NC
ABA No. 000000000
-----------------------------------------------------------------------------------------
P.O. Xxx 000000 Account No. 00000000 at
Xxxxxx, XX 00000-0000 Wachovia in Dallas, TX
ABA No. 000000000
-----------------------------------------------------------------------------------------
P.O. Xxx 000000 Account No. 00000000 at
Xxxxxxx, XX 00000-0000 Wachovia in Atlanta, GA
ABA No. 000000000
-----------------------------------------------------------------------------------------
P.O. Xxx 000000 Account No. 00000000 at
Xxxxxxxxx, XX 00000-0000 Wachovia in Charlotte, NC
ABA No. 000000000
-----------------------------------------------------------------------------------------
36
---------------------------------------------------------------------------------------------------------
X.X. Xxx 000000 Account No. 00000000 at
Xxxxxx, XX 00000-0000 Wachovia in Dallas, TX
ABA No. 000000000
---------------------------------------------------------------------------------------------------------
Unit 80033 (for Canadian funds) Bank of Montreal Account No. 3144-
P.O. Box 5600, Station Main 0000000 at Bank of Montreal in
Xxxxxxxxxx, Xxxxxxx, Xxxxxx X0X0X0 Burlington, Ontario
---------------------------------------------------------------------------------------------------------
Unit 00067 (for Canadian funds) Bank of Montreal Account No. 3144-
P.O. Box 2488, Station M 0000000 at Bank of Montreal in Xxxxxxx,
Xxxxxxx, Xxxxxxx, Xxxxxx X0X0X0 Xxxxxxx
---------------------------------------------------------------------------------------------------------
Xxxx 000000 (xxx XX Dollars) Bank of Montreal Account No. 3144-
P.O. Box 5600, Station Main 0000000 at Bank of Montreal in
Xxxxxxxxxx, Xxxxxxx, Xxxxxx X0X0X0 Burlington, Ontario
---------------------------------------------------------------------------------------------------------
Unit 800067 (for US Dollars) Bank of Montreal Account No. 3144-
P.O. Box 2488, Station M 0000000 at Bank of Montreal in Xxxxxxx,
Xxxxxxx, Xxxxxxx, Xxxxxx X0X0X0 Xxxxxxx
---------------------------------------------------------------------------------------------------------
The foregoing may be changed by the Buyer at any time upon 30 days prior written
notice to each Originator.
37
Exhibit IV
----------
Form of Compliance Certificate
------------------------------
This Compliance Certificate is furnished pursuant to that certain
Receivables Purchase and Sale Agreement dated as of October 25, 2000, among
Mohawk Carpet Corporation, Mohawk Commercial, Inc., Durban Patterned Carpets,
Inc., and Mohawk Factoring, Inc. (as amended, restate or otherwise modified from
time to time in accordance with the Transaction Documents, the "Agreement").
Capitalized terms used and not otherwise defined herein are used with the
meanings attributed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES XXX T:
1. I am the duly elected _______________ and, accordingly, a
Responsible Financial Officer, of Mohawk Industries, Inc., a Delaware
corporation (the "Parent").
2. I have reviewed the terms of the Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of Parent and its Subsidiaries during the accounting
period covered by the attached financial statements.
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Termination Event or an Unmatured Termination Event, as each such term is
defined under the Agreement, during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate[, except as set forth below].
[4. Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which Parent and its Subsidiaries have
taken, is taking, or proposes to take with respect to each such condition or
event: ___________________].
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this ____ day of ________,
200_.
___________________________
[Name]
38
Exhibit V
---------
Credit and Collection Policy
----------------------------
[attach copy]
39
Exhibit VI
----------
[Form of] Purchase Report
------------------------
For the Calculation Period beginning [date] and ending [date]
------
TO: THE BUYER
CC: (WHILE THE CREDIT AND SECURITY AGREEMENT REMAINS IN EFFECT)
THE AGENT
FROM: [INSERT ORIGINATOR NAME]
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Aggregate Outstanding Balance of all
Receivables sold during the period: $ _____________ A
------------------------------------------------------------------------------------------------------------------------------------
Less: Aggregate Outstanding Balance of all
Receivables sold during such period which
were not Eligible Receivables on the date
when sold: ($ ___________) (B)
------------------------------------------------------------------------------------------------------------------------------------
Equals: Aggregate Outstanding Balance of all
Eligible Receivables sold during the
period (A-B): $ __________ =C
------------------------------------------------------------------------------------------------------------------------------------
Less: Purchase Price discount during the
Period: ($ ___________) (D)
------------------------------------------------------------------------------------------------------------------------------------
Equals: Gross Purchase Price Payable
during the period (C -- D) $ __________ =E
------------------------------------------------------------------------------------------------------------------------------------
Less: Total Purchase Price Credits arising (F)
during the Period: ($ ___________)
------------------------------------------------------------------------------------------------------------------------------------
Equals: Net Purchase Price payable during
the Period (E -- F): $ __________ =G
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Cash Purchase Price Paid to Originator H
during the period: ($ ___________)
------------------------------------------------------------------------------------------------------------------------------------
40
The undersigned hereby represents and warrants that the information set forth
above is accurate and complete as of the last day of the Calculation Period set
forth above.
[ORIGINATOR NAME]
By: _______________________________________________
Name:
Title:
41
Schedule A
----------
DOCUMENTS TO BE DELIVERED TO BUYER
ON OR PRIOR TO THE INITIAL PURCHASE OF RECEIVABLES
1. Executed copies of the Receivables Purchase and Sale Agreement, duly
executed by the parties thereto.
2. Copy of each Credit and Collection Policy to attach to the Receivables
Purchase and Sale Agreement as an Exhibit.
3. A certificate of each Originator's [Assistant] Secretary certifying:
(a) A copy of the Resolutions of the Board of Directors of such
Originator, authorizing Originator's execution, delivery and performance
of the Receivables Purchase and Sale Agreement and the other documents
to be delivered by it thereunder;
(b) A copy of the Organizational Documents of such Originator (also
certified, to the extent that such documents are filed with any
governmental authority, by the Secretary of State of the jurisdiction of
organization of such Originator on or within thirty (30) days prior to
closing);
(c) Good Standing Certificates for such Originator issued by the
Secretaries of State of its state of incorporation and the State of
Georgia; and
(d) The names and signatures of the officers authorized on its
behalf to execute the Receivables Purchase and Sale Agreement and any
other documents to be delivered by it thereunder.
4. Pre-filing state and federal tax lien, judgment lien and UCC lien searches
against each Originator from the following jurisdictions:
a. State of Delaware
b. Superior Court Clerk's Cooperative Authority (State of Georgia)
c. Superior Court Clerk's Office in the following Georgia
Counties:
(i) Xxxxxx
(ii) Xxxxxx
(iii) Xxxxxxxxx
42
5. Duly executed UCC financing statements, in form appropriate for filing in
all jurisdictions as may be necessary or, in the opinion of the Buyer (or,
at any time the Credit and Security Agreement remains in effect, the Agent
as the Buyer's assignee), desirable, under the UCC of all appropriate
jurisdictions or any comparable law in order to perfect the transfer of the
ownership interests contemplated by the Receivables Purchase and Sale
Agreement.
6. Duly executed UCC termination statements, in form suitable for filing, if
any, necessary to release all security interests and other rights of any
Person in the Receivables, Contracts Related Security previously granted by
each Originator.
7. A favorable opinion of legal counsel for each Originator licensed to give
opinions under Georgia law reasonably acceptable to the Buyer (and the
Agent, as the Buyer's assignee) as to the following:
(a) Such Originator is a corporation duly organized, validly
existing, and it good standing under the laws of the State of Delaware.
(b) Such Originator has all requisite authority to conduct its
business in the jurisdiction where it maintains its chief executive office.
(c) The execution and delivery by such Originator of the Receivables
Purchase and Sale Agreement and each other Transaction Document to which it is a
party and its performance of its obligations thereunder have been duly
authorized by all necessary organizational action and proceedings on the part of
such Originator and will not:
(i) require any action by or in respect of, or filing with, any
governmental body, agency or official (other than the filing of UCC
financing statements);
(ii) contravene, or constitute a default under, any provision of
applicable law or regulation or of its articles or certificate of
incorporation or bylaws or of any agreement, judgment, injunction, order,
decree or other instrument binding upon such Originator; or
(iii) result in the creation or imposition of any Adverse Claim on
assets of such Originator or any of its Subsidiaries (except as
contemplated by the Receivables Purchase and Sale Agreement).
(d) The Receivables Purchase and Sale Agreement and each other
Transaction Document to which it is a party has been duly executed and delivered
by such Originator and constitutes the legally valid, and binding obligation of
such Originator enforceable in accordance with its terms, except to the extent
the enforcement thereof may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and subject also to the
availability of equitable remedies if equitable remedies are sought.
43
(e) In the event that the Receivables Purchase and Sale Agreement is
held to create a transfer for security purposes rather than a true sale or other
outright assignment, the provisions of the Receivables Purchase and Sale
Agreement are effective to create valid security interests in favor of the Buyer
in all of such Originator's right, title and interest in and to the Receivables
described therein which constitute "accounts," "chattel paper" or "general
intangibles" (each as defined in the UCC) (collectively, the "Opinion
Collateral").
(f) Upon filing of such UCC-1 Financing Statements in such filing
offices and payment of the required filing fees, the security interest in favor
of the Buyer in the Opinion Collateral will be perfected and assigned of record
to the Agent.
(g) Based solely on our review of the UCC Search Reports and assuming
(i) the filing of the Financing Statements and payment of the required filing
fees in accordance with paragraph (f) and (ii) the absence of any intervening
filings between the date and time of the Search Reports and the date and time of
the filing of the Financing Statements and other customary exhibits, the
security interest of the Buyer in the Opinion Collateral is prior to any
security interest granted in the Opinion Collateral by such Originator, the
priority of which is determined solely by the filing of a financing statement in
the [describe filing offices].
(h) To the best of the opinion giver's knowledge, there is no action,
suit or other proceeding against such Originator which would materially
adversely affect the ability of such Originator to perform its obligations under
the Receivables Purchase and Sale Agreement.
(i) Such Originator is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
8. A "true sale" opinion and "substantive consolidation" opinion of counsel
for Originator with respect to the transactions contemplated by the
Receivables Purchase and Sale Agreement.
9. A Certificate of a Responsible Financial Officer of each Originator
certifying that, as of the closing date, no Termination Event or Unmatured
Termination Event exists and is continuing.
10. Executed copies of (i) all consents from and authorizations by any Persons
and (ii) all waivers and amendments to existing credit facilities, that are
necessary in connection with the Receivables Purchase and Sale
Agreement./1/
11. A copy of the Servicing Agreement duly executed by the parties thereto.
________________
/1/ Per Xxxxxx & Bird, no consents / waivers are needed.
44
