Exhibit 10.1
EXECUTION COPY
RECEIVABLES PURCHASE AGREEMENT
dated as of October 7, 2004
among
FLOWSERVE RECEIVABLES CORPORATION,
as Seller
FLOWSERVE US INC.,
as Servicer
JUPITER SECURITIZATION CORPORATION
and
BANK ONE, NA (MAIN OFFICE CHICAGO)
as Financial Institution and as Agent
TABLE OF CONTENTS
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Exhibits and Schedules
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Exhibit I
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Definitions
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Exhibit II
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Form of Purchase Notice
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Exhibit III
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Places of Business of
the Seller Parties; Locations of Records; Federal Employer Identification
Number(s)
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Exhibit IV-A
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Names of Collection
Banks; Collection Accounts; Lock-Boxes; Shared Collection Accounts
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Exhibit IV-B
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Names of Securitization
Banks; Securitization Accounts
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Exhibit V
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Form of Compliance
Certificate
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Exhibit VI-A
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Form of Lock-Box
Agreement
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Exhibit VI-B
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Form of Securitization
Account Agreement
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Exhibit VII
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Form of Assignment
Agreement
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Exhibit VIII
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Credit and Collection
Policy
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Exhibit IX-A
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Form of Monthly Report
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Exhibit IX-B
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Form of Weekly Report
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Exhibit IX-C
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Form of Daily Report
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Exhibit X
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Form of Performance
Undertaking
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Schedule A
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Commitments
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Schedule B
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Closing
Documents
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iii
RECEIVABLES PURCHASE AGREEMENT
This Receivables Purchase Agreement dated as of
October 7, 2004 is among FLOWSERVE RECEIVABLES CORPORATION, a Delaware
corporation (Seller), FLOWSERVE US INC., a Delaware corporation, as
initial Servicer (the Servicer together with Seller, the Seller Parties
and each a Seller Party), the entities listed on Schedule A to
this Agreement (together with any of their respective successors and assigns
hereunder, the Financial Institutions), JUPITER SECURITIZATION
CORPORATION (Company) and Bank One, NA (Main Office Chicago), as agent
for the Purchasers hereunder or any successor agent hereunder (together with
its successors and assigns hereunder, the Agent). Unless defined elsewhere herein, capitalized
terms used in this Agreement shall have the meanings assigned to such terms in Exhibit
I.
PRELIMINARY STATEMENTS
Seller desires to transfer and assign Purchaser
Interests to the Purchasers from time to time.
Company may, in its absolute and sole discretion,
purchase Purchaser Interests from Seller from time to time.
In the event that Company declines to make any
purchase, the Financial Institutions shall, at the request of Seller, purchase
Purchaser Interests from time to time.
In addition, the Financial Institutions have agreed to provide a
liquidity facility to Company in accordance with the terms of a Liquidity
Agreement entered into among the Company and the Financial Institutions.
Bank One, NA (Main Office Chicago) has been requested
and is willing to act as Agent on behalf of Company and the Financial
Institutions in accordance with the terms hereof.
(a) Upon
the terms and subject to the conditions hereof, Seller may, at its option, sell
and assign Purchaser Interests to the Agent for the benefit of one or more of
the Purchasers. In accordance with the
terms and conditions set forth herein, Company may, at its option, instruct the
Agent to purchase on behalf of Company, or if Company shall decline to
purchase, the Agent shall purchase, on behalf of the Financial Institutions,
Purchaser Interests from time to time in an aggregate amount not to exceed at
such time the lesser of (i) the Purchase Limit and (ii) the aggregate amount of
the Commitments during the period from the date hereof to but not including the
Facility Termination Date.
(b) Seller
may, upon at least ten (10) Business Days notice to the Agent, terminate in
whole or reduce in part, ratably among the Financial Institutions, the unused
portion of the Purchase Limit; provided that each partial reduction of the
Purchase Limit shall be in an amount equal to $1,000,000 or an integral
multiple thereof.
Seller shall provide the Agent with at least one (1)
Business Days prior notice in a form set forth as Exhibit II hereto of
each Incremental Purchase (a Purchase Notice). Each Purchase Notice shall be subject to Section
6.2 hereof and, except as set forth below, shall be irrevocable and shall
specify the requested Purchase Price (which shall be an amount equal to
$1,000,000 or an integral multiple of $100,000 in excess thereof) and date of
purchase and, in the case of an Incremental Purchase to be funded by the
Financial Institutions, the requested Discount Rate and Tranche Period. Seller may not request more than five (5)
Incremental Purchases during any Accrual Period. Following receipt of a Purchase Notice, the Agent will determine whether
Company agrees to make the purchase. If
Company declines to make a proposed purchase, Seller may cancel the Purchase
Notice or, in the absence of such a cancellation, the Incremental Purchase of
the Purchaser Interest will be made by the Financial Institutions. On the date of each Incremental Purchase,
upon satisfaction of the applicable conditions precedent set forth in Article
VI, Company or the Financial Institutions, as applicable, shall initiate a
wire transfer to an account designated by Seller of immediately available
funds, no later than 12:00 noon (Chicago time), in an amount equal to (i) in
the case of Company, the aggregate Purchase Price of the Purchaser Interests
Company is then purchasing or (ii) in the case of a Financial Institution, such
Financial Institutions Pro Rata Share of the aggregate Purchase
Price of the Purchaser Interests the Financial Institutions are purchasing.
Section 1.3 Decreases. Seller shall provide the Agent with one (1)
Business Days prior written notice (a Reduction Notice) of any
proposed reduction of Aggregate Capital from Collections. Such Reduction Notice shall designate (i)
the date (the Proposed Reduction Date) upon which any such reduction
of Aggregate Capital shall occur, and (ii) the amount of Aggregate Capital to
be reduced which shall be applied ratably to the Purchaser Interests of Company
and the Financial Institutions in accordance with the amount of Capital (if
any) owing to Company, on the one hand, and the amount of Capital (if any)
owing to the Financial Institutions (ratably, based on their respective Pro
Rata Shares), on the other hand (the Aggregate Reduction). Only one (1) Reduction Notice shall be
outstanding at any time. No Aggregate
Reduction will be made following the occurrence of the Amortization Date
without the consent of the Agent.
Section 1.4 Payment
Requirements. All amounts to be
paid or deposited by any Seller Party pursuant to any provision of this
Agreement shall be paid or deposited in accordance with the terms hereof no
later than 12:00 noon (Chicago time) on the day when due in immediately
available funds, and if not received before 12:00 noon (Chicago time) shall be
deemed to be received on the next succeeding Business Day. If such amounts are payable to a Purchaser
they shall be paid to the Agent, for the account of such Purchaser, at 1 Bank
One Plaza, Chicago, Illinois 60670 until otherwise notified by the Agent. All computations of Yield,
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per annum fees calculated as part of any CP Costs, per annum fees
hereunder and per annum fees under the Fee Letter shall be made on the basis of
a year of 360 days for the actual number of days elapsed. If any amount hereunder shall be payable on
a day which is not a Business Day, such amount shall be payable on the next
succeeding Business Day.
Section 2.1 Payments. Notwithstanding any limitation on recourse
contained in this Agreement, Seller shall immediately pay to the Agent (or, in
the case of clause (vii) of this Section 2.1, the Servicer) when
due, for the account of the relevant Purchaser or Purchasers on a full recourse
basis, (i) such fees as set forth in the Fee Letter (which fees shall be
sufficient to pay all fees owing to the Financial Institutions), (ii) all CP
Costs, (iii) all amounts payable as Yield, (iv) all amounts payable as Deemed
Collections (which shall be due and payable by Seller no later than the date of
the next Collateral Report and applied to reduce outstanding Aggregate Capital
hereunder in accordance with Sections 2.2 and 2.3 hereof), (v)
all amounts payable pursuant to Section 2.6, (vi) all amounts payable
pursuant to Article X, if any, (vii) all Servicer costs and expenses,
including the Servicing Fee, in connection with servicing, administering and
collecting the Receivables, (viii) all Broken Funding Costs and (ix) all
Default Fees (collectively, the Obligations). If any Person fails to pay any of the
Obligations when due, such Person agrees to pay, within one (1) Business Day of
written demand, the Default Fee in respect thereof until paid. Notwithstanding the foregoing, no provision
of this Agreement or the Fee Letter shall require the payment or permit the
collection of any amounts hereunder in excess of the maximum permitted by applicable
law. If at any time Seller receives any
Collections, Seller shall promptly, but in any event, within one (1) Business
Day of receipt thereof, pay such Collections to the Servicer for application in
accordance with the terms and conditions hereof and, at all times prior to such
payment, such Collections or Deemed Collections shall be held in trust by
Seller for the exclusive benefit of the Purchasers and the Agent.
Section 2.2 Collections
Prior to Amortization. Prior to the
Amortization Date, any Collections and/or Deemed Collections received by the
Servicer shall be set aside and held in trust by the Servicer for the payment
of any accrued and unpaid Aggregate Unpaids or for a Reinvestment as provided
in this Section 2.2. If at any
time any Collections are received by the Servicer prior to the Amortization
Date, (i) the Servicer shall set aside the Termination Percentage (hereinafter
defined) of Collections evidenced by the Purchaser Interests of each
Terminating Financial Institution, if any, and (ii) Seller hereby requests and
the Purchasers (other than any Terminating Financial Institutions) hereby agree
to make, simultaneously with such receipt, a reinvestment (each a Reinvestment)
with that portion of the balance of each and every Collection received by the
Servicer that is part of any Purchaser Interest (other than any Purchaser
Interests of Terminating Financial Institutions), such that after giving effect
to such Reinvestment, the amount of Capital of such Purchaser Interest
immediately after such receipt and corresponding Reinvestment shall be equal to
the amount of Capital immediately prior to such receipt. On each Settlement Date (Capital) prior to
the occurrence of the Amortization Date, the Servicer shall remit to the
Agents account the amounts set aside during the preceding
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Settlement Period that have not been subject to a Reinvestment and
apply such amounts (if not previously paid in accordance with Section 2.1)
first, to reduce unpaid Obligations and second, to reduce the
Capital of all Purchaser Interests of Terminating Financial Institutions, if
any, applied ratably to each Terminating Financial Institution according to its
respective Termination Percentage. If
such Capital and Obligations shall be reduced to zero, any additional
Collections received by the Servicer (i) if applicable, shall be remitted to
the Agents account no later than 12:00 noon (Chicago time) to the extent
required to fund any Aggregate Reduction on such Settlement Date (Capital) and
(ii) any balance remaining thereafter shall be remitted from the Servicer to
Seller on such Settlement Date (Capital).
Each Terminating Financial Institution shall be allocated a ratable
portion of Collections from the date of any assignment by Company pursuant to Section
12.3 (the Termination Date) until such Terminating Financing
Institutions Capital shall be paid in full.
This ratable portion shall be calculated on the Termination Date of each
Terminating Financial Institution as a percentage equal to (i) Capital of such
Terminating Financial Institution outstanding on its Termination Date, divided
by (ii) the Aggregate Capital outstanding on such Termination Date (the
Termination Percentage). Each
Terminating Financial Institutions Termination Percentage shall remain
constant prior to the Amortization Date.
On and after the Amortization Date, each Termination Percentage shall be
disregarded, and each Terminating Financial Institutions Capital shall be
reduced ratably with all Financial Institutions in accordance with Section
2.3.
Section 2.3 Collections
Following Amortization Date. On the
Amortization Date and on each day thereafter, the Servicer shall set aside and
hold in trust, for the holder of each Purchaser Interest, all Collections
received on such day for the payment of any accrued and unpaid Obligations owed
by Seller and not previously paid by Seller in accordance with Section 2.1. Nothing contained herein shall impair the
Agents or the Purchasers claim with respect to the Obligations owed by the
Seller set forth in Section 2.1. On and after the Amortization Date, the
Servicer shall, at any time upon the request from time to time by (or pursuant
to standing instructions from) the Agent (i) remit to the Agents account the
amounts set aside pursuant to the preceding sentence, and (ii) apply such
amounts to reduce the Capital associated with each such Purchaser Interest and
any other Aggregate Unpaids.
Section 2.4 Application
of Collections. If there shall be
insufficient funds on deposit for the Servicer to distribute funds in payment
in full of the aforementioned amounts pursuant to Section 2.2 or 2.3
(as applicable), the Servicer shall distribute funds:
first, to the payment of the Servicers reasonable
out-of-pocket costs and expenses in connection with servicing, administering
and collecting the Receivables, including the Servicing Fee, if Seller or one
of its Affiliates is not then acting as the Servicer,
second, to the reimbursement of the Agents costs of
collection and enforcement of this Agreement,
third, (to the extent applicable) to the
ratable reduction of the Aggregate Capital (without regard to any Termination
Percentage),
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fourth, for the ratable payment of all other unpaid Obligations,
provided that to the extent such Obligations relate to the payment of Servicer
costs and expenses, including the Servicing Fee, when Seller or one of its
Affiliates is acting as the Servicer, such costs and expenses will not be paid
until after the payment in full of all other Obligations, and
fifth, after the Aggregate Unpaids have been reduced to
zero, to Seller.
Collections applied to the payment of Aggregate
Unpaids shall be distributed in accordance with the aforementioned provisions,
and, giving effect to each of the priorities set forth in Section 2.4
above, shall be shared ratably (within each priority) among the Agent and the
Purchasers in accordance with the amount of such Aggregate Unpaids owing to
each of them in respect of each such priority.
Section 2.5 Payment
Rescission. No payment of any of
the Aggregate Unpaids shall be considered paid or applied hereunder to the
extent that, at any time, all or any portion of such payment or application is
rescinded by application of law or judicial authority, or must otherwise be
returned or refunded for any reason.
Seller shall remain obligated for the amount of any payment or
application so rescinded, returned or refunded, and shall promptly pay to the
Agent (for application to the Person or Persons who suffered such rescission,
return or refund) the full amount thereof, plus the Default Fee. The Default fee shall accrue from the date
of any such rescission, return or refunding and shall be payable within three
(3) Business Days notice of demand.
Section 2.6 Maximum
Purchaser Interests. Seller shall
ensure that the Purchaser Interests of the Purchasers shall at no time exceed
in the aggregate 100%. If the aggregate
of the Purchaser Interests of the Purchasers exceeds 100%, Seller shall pay to
the Agent within one (1) Business Day an amount to be applied to reduce the
Aggregate Capital (as allocated by the Agent), such that after giving effect to
such payment the aggregate of the Purchaser Interests equals or is less than
100%.
Section 2.7 Clean
Up Call. In addition to Sellers
rights pursuant to Section 1.3, Seller shall have the right, on not less
than two (2) Business Days prior written notice to the Agent, at any time
following the reduction of the Aggregate Capital to a level that is less than
15.0% of the original Purchase Limit, to repurchase from the Purchasers all,
but not less than all, of the then outstanding Purchaser Interests. The purchase price in respect thereof shall
be an amount equal to the Aggregate Unpaids through the date of such
repurchase, payable in immediately available funds. Such repurchase shall be without representation, warranty or
recourse of any kind by, on the part of, or against any Purchaser or the Agent.
Section 3.1 CP
Costs. Seller shall pay CP Costs
with respect to the Capital associated with each Purchaser Interest of Company
for each day that any Capital in respect of
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such Purchaser Interest is outstanding. Each Purchaser Interest funded substantially with Pooled
Commercial Paper will accrue CP Costs each day on a pro rata basis, based upon
the percentage share the Capital in respect of such Purchaser Interest
represents in relation to all assets held by Company and funded substantially
with Pooled Commercial Paper.
Section 3.2 CP
Costs Payments. On each Settlement
Date (Fees), Seller shall pay to the Agent (for the benefit of Company) an
aggregate amount equal to all accrued and unpaid CP Costs in respect of the Capital
associated with all Purchaser Interests of Company for the immediately
preceding Accrual Period in accordance with Article II.
Section 3.3 Calculation
of CP Costs. On the third Business
Day immediately preceding each Settlement Date (Fees), Company shall calculate
the aggregate amount of CP Costs for the applicable Accrual Period and shall
notify Seller of such aggregate amount.
Section 4.1 Financial
Institution Funding. Each Purchaser
Interest of the Financial Institutions shall accrue Yield for each day during
its Tranche Period at either the LIBO Rate or the Base Rate in accordance with
the terms and conditions hereof. Until
Seller gives notice to the Agent of another Discount Rate in accordance with Section
4.4, the initial Discount Rate for any Purchaser Interest transferred to
the Financial Institutions pursuant to the terms and conditions hereof or any
Liquidity Agreement shall be the Base Rate.
If the Financial Institutions acquire by assignment from Company any
Purchaser Interest pursuant to a Liquidity Agreement, each Purchaser Interest
so assigned shall each be deemed to have a new Tranche Period commencing on the
date of any such assignment.
Section 4.2 Yield
Payments. On the Settlement Date (Fees)
for each Purchaser Interest of the Financial Institutions, Seller shall pay to
the Agent (for the benefit of the Financial Institutions) an aggregate amount
equal to the accrued and unpaid Yield for the entire Tranche Period of each
such Purchaser Interest in accordance with Article II.
Section 4.3 Selection
and Continuation of Tranche Periods.
(a) With
consultation from (and approval by) the Agent, Seller shall from time to time
request Tranche Periods for the Purchaser Interests of the Financial Institutions,
provided that, if at any time the Financial Institutions shall have a Purchaser
Interest, Seller shall always request Tranche Periods such that at least one
Tranche Period shall end on each date a Monthly Report is required to be
delivered to the Agent in accordance with Section 8.5
(b) Seller
may, with the consent of the Agent obtained at least three (3) Business Days
prior to the end of a Tranche Period for any Purchaser Interest (and the Agent
may, on notice given to the Seller at least three (3) Business Days prior to
the end of a Tranche Period) (the Terminating Tranche), effective on
the last day of the Terminating Tranche:
(i) divide any such Purchaser Interest into multiple Purchaser
Interests, (ii) combine any such
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Purchaser Interest with one or more other Purchaser Interests that have
a Terminating Tranche ending on the same day as such Terminating Tranche or
(iii) combine any such Purchaser Interest with a new Purchaser Interests to be
purchased on the day such Terminating Tranche ends, provided, that in no
event may a Purchaser Interest of Company be combined with a Purchaser Interest
of the Financial Institutions.
Section 4.4 Financial
Institution Discount Rates. Seller
may select the LIBO Rate or the Base Rate for each Purchaser Interest of the
Financial Institutions. Seller shall by
12:00 noon (Chicago time): (i) at least three (3) Business Days, (or, two (2)
Business Days if reasonably practicable in the judgment of the Agent to give
effect thereto within such shorter period), prior to the expiration of any
Terminating Tranche with respect to which the LIBO Rate is being requested as a
new Discount Rate and (ii) at least one (1) Business Day prior to the
expiration of any Terminating Tranche with respect to which the Base Rate is
being requested as a new Discount Rate, give the Agent irrevocable notice of
the new Discount Rate for the Purchaser Interest associated with such
Terminating Tranche. Until Seller gives
notice to the Agent of another Discount Rate, the initial Discount Rate for any
Purchaser Interest transferred to the Financial Institutions pursuant to the
terms and conditions hereof or any Liquidity Agreement shall be the Base Rate.
Section 4.5 Suspension
of the LIBO Rate. (a) If any Financial Institution notifies the
Agent that it has determined that funding its Pro Rata Share of the Purchaser
Interests of the Financial Institutions at a LIBO Rate would violate any
applicable law, rule, regulation, or directive of any governmental or
regulatory authority, whether or not having the force of law, or that (i)
deposits of a type and maturity appropriate to match fund its Purchaser
Interests at such LIBO Rate are not available or (ii) such LIBO Rate does not
accurately reflect the cost of acquiring or maintaining a Purchaser Interest at
such LIBO Rate, then the Agent shall suspend the availability of such LIBO Rate
and require Seller to select the Base Rate for any Purchaser Interest accruing
Yield at such LIBO Rate.
(b) If
less than all of the Financial Institutions give a notice to the Agent pursuant
to Section 4.5(a), each Financial Institution which gave such a notice
shall be obliged, at the request of Seller, Company or the Agent, to assign all
of its rights and obligations hereunder to (i) another Financial Institution or
(ii) another funding entity nominated by Seller or the Agent that is acceptable
to Company and willing to participate in this Agreement and the related
Liquidity Agreement through the Liquidity Termination Date in the place of such
notifying Financial Institution; provided that (i) the notifying
Financial Institution receives payment in full, pursuant to an Assignment
Agreement, of an amount equal to such notifying Financial Institutions Pro Rata
Share of the Capital and Yield owing to all of the Financial Institutions and
all accrued but unpaid fees and other costs and expenses payable in respect of
its Pro Rata Share of the Purchaser Interests of the Financial Institutions,
and (ii) the replacement Financial Institution otherwise satisfies the
requirements of Section 12.1(b).
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Section 5.1 Representations
and Warranties of the Seller Parties.
Each Seller Party hereby represents and warrants to the Agent and the
Purchasers, as to itself, as of the date hereof and as of the date of each
Incremental Purchase and the date of each Reinvestment that:
(a) Corporate
Existence and Power. Such Seller
Party is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation.
Such Seller Party is duly qualified to do business and is in good
standing as a foreign corporation, and has and holds all corporate power and
all governmental licenses, authorizations, consents and approvals required to
carry on its business in each jurisdiction in which its business is conducted.
(b) Power
and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Seller
Party of this Agreement and each other Transaction Document to which it is a
party, and the performance of its obligations hereunder and thereunder and, in
the case of Seller, Sellers use of the proceeds of purchases made 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 Seller
Party is a party has been duly executed and delivered by such Seller Party.
(c) No
Conflict. The execution and
delivery by such Seller Party of 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 certificate or
articles of incorporation or by-laws, (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 binding
on or affecting it or its property, and do not result in the creation or
imposition of any Adverse Claim on assets of such Seller Party or its
Subsidiaries (except as created hereunder); and no transaction contemplated
hereby requires compliance with any bulk sales act or similar law.
(d) Governmental
Authorization. Other than the
filing of the 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 Seller Party 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 pending, or to the best of such Seller Partys knowledge,
threatened, against or affecting such Seller Party, or any of its properties,
in or before any court, arbitrator or other body, that could reasonably be
expected to have a Material Adverse Effect.
Such Seller Party 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 Document to which such Seller Party is a party constitute the
legal, valid and binding obligations of such
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Seller Party enforceable against such Seller Party 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 information
heretofore furnished by such Seller Party or any of its Affiliates to the Agent
or the Purchasers 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 Seller Party
or any of its Affiliates to the Agent or the Purchasers will be, true and
accurate in every material respect on the date such information is stated or
certified and does not and will not contain any material misstatement of fact
or omit to state a material fact or any fact necessary to make the statements
contained therein not misleading.
(h) Use
of Proceeds. No proceeds of any
purchase hereunder will be used (i) for a purpose that violates, or would be
inconsistent with, Regulation T, U or X promulgated by the Board of Governors
of the Federal Reserve System from time to time or (ii) to acquire any security
in any transaction which is subject to Section 12, 13 or 14 of the Securities
Exchange Act of 1934, as amended.
(i) Good
Title. Immediately prior to each
purchase hereunder, Seller shall be the legal and beneficial owner of the
Receivables and Related Security with respect thereto, free and clear of any
Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect Sellers
ownership interest in each Receivable, its Collections and the Related
Security.
(j) Perfection. This Agreement, together with the filing of
the financing statements contemplated hereby, is effective to, and shall, upon each
purchase hereunder, transfer to the Agent for the benefit of the relevant
Purchaser or Purchasers (and the Agent for the benefit of such Purchaser or
Purchasers shall acquire from Seller) a valid and perfected first priority
undivided percentage ownership or security interest in each Receivable existing
or hereafter arising and in the Related Security and Collections with respect
thereto, free and clear of any Adverse Claim, except as created by the
Transactions Documents. There have been
duly filed all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect the Agents (on behalf of the Purchasers) ownership or
security interest in the Receivables, the Related Security and the Collections.
(k) Places
of Business and Locations of Records.
The principal places of business and chief executive office of such
Seller Party and the offices where it keeps all of its Records are located at
the address(es) listed on Exhibit III or such other locations of which
the Agent has been notified in accordance with Section 7.2(a) in
jurisdictions where all action required by Section 14.4(a) has been
taken and completed. Sellers Federal
Employer Identification Number is correctly set forth on Exhibit III.
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(l) Collections. The conditions and requirements set forth in
Section 7.1(j) and Section 8.2 have at all times been satisfied
and duly performed. The names and
addresses of all Collection Banks, together with the account numbers of the
Collection Accounts at each Collection Bank and the post office box number of
each Lock-Box, are listed on Exhibit IV-A. Each Collection Account that
constitutes a Shared Collection Account is identified as such on Exhibit
IV-A. The names and addresses of
the Securitization Banks, together with the account numbers of the
Securitization Accounts at each Securitization Bank, are listed on Exhibit
IV-B. Seller has not granted any Person, other than (i) the Agent (in the
case of the Lock-Boxes and the Securitization Accounts) as contemplated by this
Agreement and (ii) the Bank Group or the Bank Group Agent (in the case of
Shared Collection Accounts) as contemplated by the Intercreditor Agreement,
dominion and control of any Lock-Box, Collection Account or Securitization
Account, or the right to take dominion and control of any such Securitization
Account, Lock-Box or Collection Account at a future time or upon the occurrence
of a future event. In the case of each
Shared Collection Account, the rights of the Bank Group and the Bank Group
Agent in respect thereof are subject to the Intercreditor Agreement, and the
Intercreditor Agreement remains in full force and effect.
(m) Material
Adverse Effect. (i) The initial
Servicer represents and warrants that since December 31, 2003, no event has
occurred that would have a material adverse effect on the financial condition
of the initial Servicer and its Subsidiaries or the ability of the initial Servicer
to perform its obligations under this Agreement, and (ii) Seller represents and
warrants that since the date of this Agreement, no event has occurred that
would have a material adverse effect on (A) the financial condition of Seller,
(B) the ability of Seller to perform its obligations under the Transaction
Documents, or (C) the collectibility of the Receivables generally or any
material portion of the Receivables.
(n) Names. In the past five (5) years, (i) Seller has
not used any corporate names, trade names or assumed names other than the name
in which it has executed this Agreement and (ii) the initial Servicer has not
used any corporate names, trade names or assumed names other than as may be
identified on Exhibit III hereto.
(o) Ownership
of Seller. Provider owns, directly
or indirectly, 100% of the issued and outstanding capital stock of Flowserve
and Seller, in each case free and clear of any Adverse Claim. In the case of Seller, such capital stock is
validly issued, fully paid and nonassessable, and there are no options,
warrants or other rights to acquire securities of Seller.
(p) Not
a Holding Company or an Investment Company. Such Seller Party 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 Seller Party is not an investment
company within the meaning of the Investment Company Act of 1940, as
amended, or any successor statute.
(q) Compliance
with Law. Such Seller Party has
complied in all respects with all applicable laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject,
except for such non-compliance that will not have a Material Adverse
10
Effect. Each Receivable,
together with the Contract related thereto, does not contravene 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), and no part of such Contract is in violation of any such law,
rule or regulation.
(r) Compliance
with Credit and Collection Policy.
Such Seller Party has complied in all material respects with the Credit
and Collection Policy with regard to each Receivable and the related Contract,
and has not made any change to such Credit and Collection Policy, except such material
change as to which the Agent has been notified in accordance with Section
7.1(a)(vii) and which, if applicable, has been approved by the Agent.
(s) Payments
to Originator. With respect to each
Receivable transferred to Seller under the Receivables Sale Agreement, Seller
has given reasonably equivalent value to Originator in consideration therefor
and such transfer was not made for or on account of an antecedent debt. No transfer by Originator of any Receivable
under the Receivables Sale Agreement is or may be voidable under any section of
the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq.), as
amended.
(t) Enforceability
of Contracts. Each Contract with
respect to each Receivable is effective to create, and has created, a legal,
valid and binding obligation of the related Obligor to pay the Outstanding
Balance of the Receivable created thereunder and any accrued interest 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).
(u) Eligible
Receivables. Each Receivable
included in the Net Receivables Balance as an Eligible Receivable on the date
of its purchase under the Receivables Sale Agreement was an Eligible Receivable
on such purchase date.
(v) Net
Receivables Balance. Seller has
determined that, immediately after giving effect to each purchase hereunder,
the aggregate Purchaser Interests of the Purchasers does not exceed 100%.
(w) Accounting. The manner in which such Seller Party
accounts for the transactions contemplated by this Agreement and the
Receivables Sale Agreement, taken as a whole, does not prevent the
characterization by such Seller Party and its accountants at any time of the
transfers thereunder as being true sales.
Section 5.2 Financial
Institution Representations and Warranties. Each Financial Institution hereby represents and warrants to the
Agent and Company that:
(a) Existence
and Power. Such Financial
Institution is a corporation or a banking association duly organized, validly
existing and in good standing under the laws of its
11
jurisdiction of incorporation or organization, and has all corporate
power to perform its obligations hereunder.
(b) No
Conflict. The execution and
delivery by such Financial Institution of this Agreement and the performance of
its obligations hereunder are within its corporate powers, have been duly
authorized by all necessary corporate action, do not contravene or violate (i)
its certificate or articles of incorporation or association or by-laws, (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 any of its property
is bound, or (iv) any order, writ, judgment, award, injunction or decree binding
on or affecting it or its property, and do not result in the creation or
imposition of any Adverse Claim on its assets.
This Agreement has been duly authorized, executed and delivered by such
Financial Institution.
(c) Governmental
Authorization. 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 Financial Institution of this Agreement and the performance of its obligations
hereunder.
(d) Binding
Effect. This Agreement constitutes
the legal, valid and binding obligation of such Financial Institution
enforceable against such Financial Institution 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 such
enforcement is sought in a proceeding in equity or at law).
Section 6.1 Conditions
Precedent to Initial Incremental Purchase.
The initial Incremental Purchase of a Purchaser Interest under this
Agreement is subject to the conditions precedent that the Agent shall have
received on or before the date of such purchase those documents listed on Schedule
B and the Agent shall have received all fees and expenses required to be
paid on such date pursuant to the terms of this Agreement and the Fee Letter.
Section 6.2 Conditions
Precedent to All Purchases and Reinvestments. Each purchase of a Purchaser Interest (other than pursuant to a
Liquidity Agreement) and each Reinvestment shall be subject to the further
conditions precedent that in the case of each such purchase or Reinvestment: (a) the Servicer shall have delivered to the
Agent on or prior to the date of such purchase, in form and substance
satisfactory to the Agent, all Collateral Reports due under Section 8.5;
(b) the Facility Termination Date shall not have occurred; (c) the Agent shall
have received such other approvals, opinions or documents as the Agent may have
requested in accordance with the terms of this Agreement or any other
Transaction Document or as the Agent may reasonably request in light of any
event, circumstance or condition arising or occurring after the date of this
Agreement which could reasonably be expected to have a Material Adverse Effect
and (d) on the date of each such Incremental Purchase or Reinvestment, the
following
12
statements shall be true (and acceptance of the proceeds of such
Incremental Purchase or Reinvestment shall be deemed a representation and
warranty by Seller that such statements are then true):
(i) the representations
and warranties set forth in Section 5.1 are true and correct on and as
of the date of such Incremental Purchase or Reinvestment as though made on and
as of such date;
(ii) no event has occurred
and is continuing, or would result from such Incremental Purchase or
Reinvestment, that will constitute an Amortization Event, and no event has
occurred and is continuing, or would result from such Incremental Purchase or
Reinvestment, that would constitute a Potential Amortization Event;
(iii) the Aggregate Capital
does not exceed the Purchase Limit and the aggregate Purchaser Interests do not
exceed 100%; and
(iv) if such Incremental
Purchase or Reinvestment is funded by the Company, the Company shall be party
to an unexpired Liquidity Agreement with an aggregate commitment limit equal to
at least 102% of the Commitments.
It is expressly understood that each Reinvestment
shall, unless otherwise directed by the Agent or any Purchaser, occur
automatically on each day that the Servicer shall receive any Collections
without the requirement that any further action be taken on the part of any
Person and notwithstanding the failure of Seller to satisfy any of the
foregoing conditions precedent in respect of such Reinvestment. The failure of Seller to satisfy any of the
foregoing conditions precedent in respect of any Reinvestment shall give rise
to a right of the Agent, which right may be exercised at any time on demand of
the Agent, to rescind the related purchase and direct Seller to pay to the
Agent for the benefit of the Purchasers an amount equal to the Collections
prior to the Amortization Date that shall have been applied to the affected
Reinvestment.
Section 7.1 Affirmative
Covenants of the Seller Parties.
Until the date on which the Aggregate Unpaids have been paid in full and
this Agreement terminates in accordance with its terms, each Seller Party
hereby covenants, as to itself, as set forth below:
(a) Financial
Reporting. Such Seller Party will
maintain, for itself and each of its Subsidiaries, a system of accounting
established and administered in accordance with GAAP, and furnish or cause to
be furnished to the Agent:
(i) Annual Reporting. Within 100 days after the close of each of
Providers fiscal years,
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(A) Providers consolidated
balance sheet and related statements of income, stockholders equity and cash
flows showing the financial condition of Provider and its consolidated
Subsidiaries as of the close of such fiscal year and the results of its
operations and the operations of such Subsidiaries during such year, all
audited by PricewaterhouseCoopers LLP or other independent public accountants
of recognized national standing and accompanied by an opinion of such
accountants (which shall not be qualified in any material respect) to the
effect that such consolidated financial statements fairly present the financial
condition and results of the operations of Provider and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP; and
(B) unaudited financial
statements (which shall include balance sheets, statements of income and
retained earnings and a statement of cash flows) for Seller for such fiscal
year, certified by an Authorized Officer of Seller.
(ii) Quarterly Reporting. Within 50 days after the end of the first
three fiscal quarters of each of Providers fiscal years, Providers
consolidated balance sheet and related statements of income, stockholders
equity and cash flows showing the financial condition of Provider and its
consolidated Subsidiaries as of the close of such fiscal quarter and the
results of its operations and the operations of such Subsidiaries during such
fiscal quarter and the then elapsed portion of the fiscal year, compared with
the consolidated budget for such fiscal quarter as well as the results of its
operations and the operations of its Subsidiaries in the corresponding quarter
from the prior fiscal year, all certified by an Authorized Officer of Provider
as fairly presenting the financial condition and results of operations of
Provider and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP, subject to normal year-end audit adjustments.
(iii) Compliance
Certificates.
(A) In the case of Provider,
at the time any compliance certificate is submitted by Provider or any of its
Affiliates under or in connection with the Bank Credit Agreement, a copy of
such certificate addressed to the Agent and the Purchasers hereunder; and
(B) For the case of Seller,
at the time of delivery of any financial statements required hereunder, a
compliance certificate in substantially the form of Exhibit V signed by
an Authorized Officer of Seller and dated the date of such annual financial
statement or such quarterly financial statement, as the case may be.
(iv) Shareholder
Statements and S.E.C. Filings.
Promptly after the same become available, copies of all periodic and
other reports, proxy statements and other materials filed by Provider or any of
its Subsidiaries with the Securities and Exchange
14
Commission, or any governmental authority succeeding
to any or all of the functions of the Securities and Exchange Commission, or
with any national securities exchange, or distributed to its shareholders, as
the case may be.
(v) Copies of Notices.
(A) In the case of Provider,
promptly upon its receipt of any notice, request for consent, financial
statements, certification, report or other communication under or in connection
with the Bank Credit Agreement, copies of the same; and
(B) In the case of any
Seller Party, promptly upon its receipt of any notice, request for consent,
financial statements, certification, report or other communication under or in
connection with any Transaction Document from any Person other than the Agent
or Company, copies of the same.
(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 (A) indicating such proposed
change or amendment, and (B) if such proposed change or amendment would be
reasonably likely to adversely affect the collectibility of the Receivables or
decrease the credit quality of any newly created Receivables, requesting the
Agents consent thereto.
(vii) Other Information. Promptly, from time to time, such other
information, documents, records or reports relating to the Receivables or the
condition or operations, financial or otherwise, of Provider or such Seller
Party as the Agent may from time to time reasonably request in order to protect
the interests of the Agent and the Purchasers under or as contemplated by the
Transaction Documents.
(viii) Avoidance of
Duplication. To the extent
compliance with clause (iv) above provides the information required under
clause (i) and clause (ii) above on a timely and complete basis, such that the
requirement for separate deliveries under clause (i) and clause (ii) above
would merely duplicate the materials theretofore provided under clause (iv)
above, separate reports for purposes of clause (i) and clause (ii) shall not be
required.
(b) Notices. Such Seller Party will notify the Agent 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) Amortization Events
or Potential Amortization Events.
The occurrence of each Amortization Event and each Potential
Amortization Event, by a statement of an Authorized Officer of such Seller
Party.
(ii) Judgment and
Proceedings. Any of the following:
15
(A) The entry of any
judgment or decree against Provider or any of its Subsidiaries if the aggregate
amount of all judgments and decrees then outstanding against Provider and its
Subsidiaries exceeds $5,000,000,
(B) The institution of any
litigation, arbitration proceeding or governmental proceeding against Provider,
Flowserve or any of their respective Subsidiaries which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, or
(C) The entry of any
judgment or decree or the institution of any litigation, arbitration proceeding
or governmental proceeding against Seller.
(iii) Material Adverse
Effect. The occurrence of any event
or condition that has had a Material Adverse Effect.
(iv) Termination Date. The occurrence of the Termination Date
under and as defined in the Receivables Sale Agreement.
(v) Defaults Under Other
Agreements. The occurrence of any
Event of Default or Default under the Bank Credit Agreement.
(vi) Downgrade of Provider. Any downgrade in the rating of any
Indebtedness of Provider by S&P or Moodys, setting forth the Indebtedness
affected.
(c) Compliance
with Laws and Preservation of Corporate Existence. Such Seller Party 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 could not reasonably be expected to have a
Material Adverse Effect. Such Seller
Party will preserve and maintain its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction where
its business is conducted except where the failure to so preserve and maintain
or qualify could not reasonably be expected to have a Material Adverse Effect.
(d) Audits.
Such Seller Party will furnish to the Agent from time to time such information
with respect to it and the Receivables as the Agent may reasonably
request. Such Seller Party will, from
time to time during regular business hours as requested by the Agent upon
reasonable notice and at the sole cost of such Seller Party, permit the Agent,
or its agents or representatives (and shall cause Originator to permit the
Agent or its agents or representatives), (i) to examine and make copies of and
abstracts from all Records in the possession or under the control of such
Person relating to the Receivables and the Related Security, including, without
limitation, the related Contracts, and (ii) to visit the offices and properties
of such Person for the purpose of examining such materials described in clause
(i) above, and to discuss matters relating to such Persons financial condition
or the Receivables and the Related Security or any
16
Persons performance under any of the Transaction Documents or any
Persons performance under the Contracts and, in each case, with any of the
officers or employees of Seller or the Servicer having knowledge of such
matters.
(e) Keeping
and Marking of Records and Books.
(i) The Servicer will (and
will cause Originator to) maintain and implement 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). The Servicer
will (and will cause Originator to) give the Agent notice of any material
change in the administrative and operating procedures referred to in the
previous sentence.
(ii) Such Seller Party will
(and will cause Originator to) (A) on or prior to the date hereof, mark its
master data processing records and other books and records relating to the
Purchaser Interests with a legend, acceptable to the Agent, describing the
Purchaser Interests and (B) after the occurrence of an Amortization Event, upon
the request of the Agent, take all actions reasonably requested by the Agent in
respect of the maintenance or handling of the Contracts in order to perfect or
more fully protect the interests of the Agent and the Purchasers in the
Receivables, the Collections, the Related Security and all proceeds thereof or
to facilitate the collection and servicing of the Receivables.
(f) Compliance
with Contracts and Credit and Collection Policy. Such Seller Party will (and will cause Originator to) timely and
fully (i) perform and comply with all provisions, covenants and other promises
required to be observed by it under the Contracts related to the Receivables,
and (ii) comply in all respects with the Credit and Collection Policy in regard
to each Receivable and the related Contract.
(g) Performance
and Enforcement of Receivables Sale Agreement. Seller will, and will require Originator to, perform each of
their respective obligations and undertakings under and pursuant to the
Receivables Sale Agreement, will purchase Receivables thereunder in strict
compliance with the terms thereof and will vigorously enforce the rights and
remedies accorded to Seller under the Receivables Sale Agreement. Seller will take all actions to perfect and
enforce its rights and interests (and the rights and interests of the Agent and
the Purchasers as assignees of Seller) under the Receivables Sale Agreement as
the Agent may from time to time reasonably request, including, without
limitation, making claims to which it may be entitled under any indemnity,
reimbursement or similar provision contained in the Receivables Sale Agreement.
(h) Ownership. Seller will (or will cause Originator to)
take all necessary action to (i) vest legal and equitable title to the
Receivables, the Related Security and the Collections purchased under the
Receivables Sale Agreement irrevocably in Seller, free and clear of any Adverse
Claims other than Adverse Claims in favor of the Agent and the Purchasers
17
(including, without limitation, the filing of all financing statements
or other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect Sellers interest
in such Receivables, Related Security and Collections and such other action to
perfect, protect or more fully evidence the interest of Seller therein as the
Agent may reasonably request), and (ii) establish and maintain, in favor of the
Agent, for the benefit of the Purchasers, a valid and perfected first priority
undivided percentage ownership interest (and/or a valid and perfected first
priority security interest) in all Receivables, Related Security and
Collections to the full extent contemplated herein, free and clear of any
Adverse Claims other than Adverse Claims in favor of the Agent for the benefit
of the Purchasers (including, without limitation, the filing of all financing
statements or other similar instruments or documents necessary under the UCC
(or any comparable law) of all appropriate jurisdictions to perfect the Agents
(for the benefit of the Purchasers) interest in such Receivables, Related
Security and Collections and such other action to perfect, protect or more
fully evidence the interest of the Agent for the benefit of the Purchasers as
the Agent may reasonably request).
(i) Purchasers
Reliance. Seller acknowledges that
the Purchasers are entering into the transactions contemplated by this
Agreement in reliance upon Sellers identity as a legal entity that is separate
from Provider, Originator and each other Flowserve Entity. Therefore, from and after the date of execution
and delivery of this Agreement, Seller shall take all reasonable steps,
including, without limitation, all steps that the Agent or any Purchaser may
from time to time reasonably request, to maintain Sellers identity as a
separate legal entity and to make it manifest to third parties that Seller is
an entity with assets and liabilities distinct from those of the Flowserve
Entities and not just a division of a Flowserve Entity. Without limiting the generality of the
foregoing and in addition to the other covenants set forth herein, Seller will:
(A) conduct its own business
in its own name and require that all full-time employees of Seller, if any,
identify themselves as such and not as employees of any Flowserve Entity
(including, without limitation, by means of providing appropriate employees
with business or identification cards identifying such employees as Sellers
employees);
(B) compensate all
employees, consultants and agents directly, from Sellers own funds, for
services provided to Seller by such employees, consultants and agents and, to
the extent any employee, consultant or agent of Seller is also an employee,
consultant or agent of any Flowserve Entity, allocate the compensation of such
employee, consultant or agent between Seller and each applicable Flowserve
Entity, as applicable, on a basis that reflects the services rendered to Seller
and such Flowserve Entity, as applicable;
(C) clearly identify its
offices (by signage or otherwise) as its offices and, if such office is located
in the offices of any Flowserve Entity, Seller shall lease such office at a
fair market rent;
18
(D) have a separate
telephone number, which will be answered only in its name and separate
stationery, invoices and checks in its own name;
(E) conduct all
transactions with each Flowserve Entity and the Servicer (including, without
limitation, any delegation of its obligations hereunder as Servicer) strictly
on an arms-length basis, allocate all overhead expenses (including, without
limitation, telephone and other utility charges) for items shared between
Seller and any such Flowserve Entity on the basis of actual use to the extent
practicable and, to the extent such allocation is not practicable, on a basis
reasonably related to actual use;
(F) at all times have a
Board of Directors consisting of three members, at least one member of which is
an Independent Director;
(G) observe all corporate
formalities as a distinct entity, and ensure that all corporate actions
relating to (A) the selection, maintenance or replacement of the Independent
Director, (B) the dissolution or liquidation of Seller or (C) the initiation
of, participation in, acquiescence in or consent to any bankruptcy, insolvency,
reorganization or similar proceeding involving Seller, are duly authorized by
unanimous vote of its Board of Directors (including the Independent Director);
(H) maintain Sellers books
and records separate from those of each Flowserve Entity thereof and otherwise
readily identifiable as its own assets rather than assets of any Flowserve
Entity;
(I) prepare its unaudited
financial statements separately from those of any Flowserve Entity and insure
that any consolidated financial statements of any Flowserve Entity that include
Seller and that are filed with the Securities and Exchange Commission or any
other governmental agency have notes clearly stating that Seller is a separate
corporate entity and that its assets will be available first and foremost to
satisfy the claims of the creditors of Seller;
(J) except with respect to
Collections deposited into a Collection Account and maintained in such
Collection Account prior to the date upon which such Collections are remitted
to the Securitization Banks and deposited in the Securitization Accounts in
accordance with Section 7.1(j) or as specifically otherwise provided
herein, maintain the funds or other assets of Seller separate from, and not
commingled with, those of any Flowserve Entity and only maintain bank accounts
or other depository accounts to which Seller alone is the account party, into
which Seller alone makes deposits and from which Seller alone (or the Agent or,
19
subject to the terms of the Intercreditor Agreement,
the Bank Group Agent) has the power to make withdrawals;
(K) pay all of Sellers
operating expenses from Sellers own assets (except for certain payments by any
Flowserve Entity or other Persons pursuant to allocation arrangements that
comply with the requirements of this Section 7.1(i));
(L) operate its business
and activities such that: it does not
engage in any business or activity of any kind, or enter into any transaction
or indenture, mortgage, instrument, agreement, contract, lease or other undertaking,
other than the transactions contemplated and authorized by this Agreement and
the Receivables Sale Agreement; and does not create, incur, guarantee, assume
or suffer to exist any indebtedness or other liabilities, whether direct or
contingent, other than (1) as a result of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, (2) the incurrence of obligations under this Agreement, (3)
the incurrence of obligations, as expressly contemplated in the Receivables
Sale Agreement, to make payment to Originator thereunder for the purchase of
Receivables from Originator under the Receivables Sale Agreement, and (4) the
incurrence of operating expenses in the ordinary course of business of the type
otherwise contemplated by this Agreement;
(M) maintain its corporate
charter in conformity with this Agreement, such that it does not amend,
restate, supplement or otherwise modify its Certificate of Incorporation or
By-Laws in any respect that would impair its ability to comply with the terms
or provisions of any of the Transaction Documents, including, without
limitation, Section 7.1(i) of this Agreement;
(N) maintain the
effectiveness of, and continue to perform under the Receivables Sale Agreement
and the Performance Undertaking, such that it does not amend, restate,
supplement, cancel, terminate or otherwise modify the Receivables Sale
Agreement or the Performance Undertaking, or give any consent, waiver,
directive or approval thereunder or waive any default, action, omission or breach
under the Receivables Sale Agreement or the Performance Undertaking or
otherwise grant any indulgence thereunder, without (in each case) the prior
written consent of the Agent;
(O) maintain its corporate
separateness such that it does not merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions, and except as otherwise contemplated herein) all
or substantially all of its
20
assets (whether now owned or hereafter acquired) to,
or acquire all or substantially all of the assets of, any Person, nor at any
time create, have, acquire, maintain or hold any interest in any Subsidiary.
(P) maintain at all times
the Required Capital Amount (as defined in the Receivables Sale Agreement) and
refrain from making any dividend, distribution, redemption of capital stock or
payment of any subordinated indebtedness which would cause the Required Capital
Amount to cease to be so maintained; and
(Q) take such other actions
as are necessary on its part to ensure that the facts and assumptions set forth
in the opinion issued by Chapman and Cutler LLP, as counsel for Seller, in
connection with the closing or initial Incremental Purchase under this
Agreement and relating to substantive consolidation issues, and in the
certificates accompanying such opinion, remain true and correct in all material
respects at all times.
(j) Collections. Such Seller Party will cause (1) all
proceeds from all Lock-Boxes to be promptly and directly deposited into the
Securitization Accounts without being first deposited into any Collection
Account or any other concentration account, depositary account, lock-box
account or similar account for any period of time; (2) all Collections in any
Collection Account to be remitted by the related Collection Bank to the
Securitization Banks and deposited in the Securitization Accounts (A) on each
Tuesday of each calendar week (or, if such date is not a Business Day, on the
next following Business Day) when Rating Level 1, Rating Level 2, Rating Level
3, Rating Level 4 or Rating Level 5 is in effect, and (B) on each Business Day
when Rating Level 6 is in effect, (3) each Lock-Box to be subject at all times
to a Lock-Box Agreement that is in full force and effect and (4) each
Securitization Account to be subject at all times to a Securitization Account
Agreement that is in full force and effect. In the event any payments relating
to Receivables are remitted directly to Seller or any Affiliate of Seller,
Seller will remit (or will cause all such payments to be remitted) directly to
the Securitization Banks and deposited into the Securitization Accounts within
two (2) Business Days following receipt thereof, and, at all times prior to
such remittance, Seller will itself hold or, if applicable, will cause such
payments to be held in trust for the exclusive benefit of the Agent and the
Purchasers. Seller will maintain
exclusive ownership, dominion and control (subject to the terms of this
Agreement) of each Securitization Account, Lock-Box and Collection Account and
shall not grant the right to take dominion and control of any Securitization
Account, Lock-Box or Collection Account at a future time or upon the occurrence
of a future event to any Person, except (i) with respect to Lock-Boxes and the
Securitization Accounts, to the Agent as contemplated by this Agreement and
(ii) with respect to Shared Collection Accounts, to the Bank Group Agent,
subject to the terms of the Intercreditor Agreement.
(k) Taxes. Such Seller Party will file all tax returns
and reports required by law to be filed by it and will promptly pay all taxes
and governmental charges at any time owing, except, in the case of Servicer,
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
21
accordance with GAAP shall have been set aside on its books. Seller will pay when due any taxes payable
in connection with the Receivables, exclusive of taxes on or measured by income
or gross receipts of Company, the Agent or any Financial Institution.
(l) Payment
to Originator. With respect to any
Receivable purchased by Seller from Originator, such sale shall be effected
under, and in strict compliance with the terms of, the Receivables Sale
Agreement, including, without limitation, the terms relating to the amount and
timing of payments to be made to Originator in respect of the purchase price
for such Receivable.
(m) Change
in Servicing Operations. The
definition herein of Receivable makes specific reference to certain servicing
operations and systems (each, a Servicing System). In the event the Originator elects to utilize
a servicing operation or system different from any of the Servicing Systems or
to combine, relocate, recharacterize or otherwise modify any of the Servicing
Systems now in effect, Seller shall provide the Agent not less than 45 days
written notice prior to the date of implementation of such new servicing
operation or system. Seller shall (i)
provide such information to the Agent relating to such new servicing operation
or system as the Agent may reasonably request to accommodate any change in the
reporting hereunder necessitated by such change and (ii) execute and deliver to
the Agent such amendments to this Agreement, and to cause the Originator to
execute and deliver such amendments to the Receivables Sale Agreement, and the
other Transaction Documents as the Agent may reasonably request to maintain
perfected the interests of the Agent and Purchaser in all Receivables intended
to be conveyed hereunder, in each case prior to the characterization of any
Receivable serviced by the affected operations as being an Eligible Receivable
hereunder.
Section 7.2 Negative
Covenants of the Seller Parties.
Until the date on which the Aggregate Unpaids have been paid in full and
this Agreement terminates in accordance with its terms, each Seller Party
hereby covenants, as to itself, that:
(a) Name
Change, Offices and Records. Such
Seller Party will not change its name, identity or corporate structure or
relocate (except as indicated on the signature pages hereto) its chief
executive office or any office where Records are kept unless it shall
have: (i) given the Agent at least
forty-five (45) days prior written notice thereof and (ii) delivered to the
Agent all financing statements, instruments and other documents requested by
the Agent in connection with such change or relocation.
(b) Change
in Payment Instructions to Obligors.
Except as may be required by the Agent pursuant to Section 8.2(b), such
Seller Party will not add or terminate any bank as a Collection Bank, a
Securitization Bank or make any change in the instructions to Obligors
regarding payments to be made to any Lock-Box, Collection Account or
Securitization Account, unless (i) the
Agent shall have received, at least ten (10) days before the proposed effective
date therefor, (A) written notice of such addition, termination or change and
(B) (1) with respect to the addition of a Lock-Box, an executed Lock-Box
Agreement with respect to the new Lock-Box or (2) with respect to the addition
of a Securitization Account, an executed Securitization Account Agreement with
respect to the new Securitization Account; provided, however,
that the
22
Servicer may make changes in instructions to Obligors regarding
payments if such new instructions require such Obligor to make payments to
another existing Collection Account, and (ii) in the case of any Shared
Collection Account, the Agent shall have received assurances satisfactory to
the Agent that the terms and provisions of the Intercreditor Agreement remain
in full force and effect with respect thereto.
(c) Modifications
to Contracts and Credit and Collection Policy. Such Seller Party will not, and will not permit Originator to,
make any change to the Credit and Collection Policy that could adversely affect
the collectibility of the Receivables or materially decrease the credit quality
of any newly created Receivables.
Except as provided in Section 8.2(d), the Servicer will not, and
will not permit Originator to, extend, amend or otherwise modify the terms of
any Receivable or any Contract related thereto other than in accordance with
the Credit and Collection Policy.
(d) Sales,
Liens. Seller 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, Related Security or Collections, or upon or with
respect to any Contract under which any Receivable arises, any Securitization
Account, Lock-Box or Collection Account, or any of its other assets or
interests in property 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 Agent and the Purchasers provided for herein), and Seller will
defend the right, title and interest of the Agent and the Purchasers in, to and
under any of the foregoing property, against all claims of third parties
claiming through or under Seller or Originator.
(e) Net
Receivables Balance. At no time
prior to the Amortization Date shall Seller permit the Net Receivables Balance
to be less than an amount equal to the sum of (i) the Aggregate Capital plus
(ii) the Aggregate Reserves; provided that during the Transition Period,
the Net Receivables Balance may be less than such sum so long as the aggregate
Purchaser Interests of the Purchasers do not exceed 100% at any time.
(f) Termination
Date Determination. Prior to the
later to occur of the Facility Termination Date and the date the Aggregate
Unpaids shall be reduced to zero, Seller will not designate the Termination
Date (as defined in the Receivables Sale Agreement), or send any written notice
to Originator in respect thereof, without the prior written consent of the
Agent, except with respect to the occurrence of such Termination Date arising
pursuant to Section 5.1(d) of the Receivables Sale Agreement.
(g) Restricted
Junior Payments. From and after the
occurrence of any Amortization Event, Seller will not make any Restricted
Junior Payment if, after giving effect thereto, Seller would fail to meet its
obligations set forth in Section 7.2(e).
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Section 8.1 Designation
of Servicer.
(a) The
servicing, administration and collection of the Receivables shall be conducted
by such Person (the Servicer) so designated from time to time in
accordance with this Section 8.1.
Flowserve is hereby designated as, and hereby agrees to perform the
duties and obligations of, the Servicer pursuant to the terms of this
Agreement. At any time after an
Amortization Event has occurred, the Agent may designate as Servicer any Person
to succeed Flowserve or any successor Servicer.
(b) Without
the prior written consent of the Agent and the Required Financial Institutions,
Flowserve shall not be permitted to delegate any of its duties or
responsibilities as Servicer to any Person other than (i) Seller, (ii) with
respect to certain Charged-Off Receivables, outside collection agencies in
accordance with its customary practices and (iii) any Affiliate of Flowserve; provided,
that Flowserve shall be and remain primarily liable to the Agent and the
Purchasers for the full and prompt performance of all duties and
responsibilities of the Servicer hereunder after delegating such duties and
responsibilities to any Affiliate of Flowserve. Seller shall not be permitted to further delegate to any other
Person any of the duties or responsibilities of the Servicer delegated to it by
Flowserve. If at any time after the
occurrence of an Amortization Event, the Agent shall designate as Servicer any
Person other than Flowserve, all duties and responsibilities theretofore
delegated by Flowserve to Seller may, at the discretion of the Agent, be
terminated forthwith on notice given by the Agent to Flowserve and to Seller.
(c) Notwithstanding
the foregoing subsection (b), (i) until the Agent designates any Person other
than an Affiliate of Flowserve to succeed Flowserve in accordance with Section
8(a), Flowserve shall be and remain primarily liable to the Agent and the
Purchasers for the full and prompt performance of all duties and
responsibilities of the Servicer hereunder and (ii) the Agent and the
Purchasers shall be entitled to deal exclusively with Flowserve in matters
relating to the discharge by the Servicer of its duties and responsibilities
hereunder (unless the Agent has replaced Flowserve as Servicer hereunder, in
which case the Agent and Purchasers shall deal directly with such successor
Servicer). The Agent and the Purchasers
shall not be required to give notice, demand or other communication to any
Person other than Flowserve in order for communication to the Servicer and its
sub-servicer or other delegate with respect thereto to be accomplished. Flowserve, at all times that it is the
Servicer, shall be responsible for providing any sub-servicer or other delegate
of the Servicer with any notice given to the Servicer under this Agreement.
Section 8.2 Duties
of Servicer. The Servicer shall
take or cause to be taken all such actions as may be necessary or advisable to
collect each Receivable from time to time, all in accordance with applicable
laws, rules and regulations, with reasonable care and diligence, and in
accordance with the Credit and Collection Policy.
(a) The
Servicer will instruct all Obligors to pay all Collections directly to a
Lock-Box, a Securitization Account or a Collection Account. The only Collections remitted to
24
any Collection Account shall be wire transfer payments or ACH payments
from Obligors. The Servicer shall effect a Lock-Box Agreement substantially in
the form of Exhibit VI-A with each bank holding a Lock-Box at any time.
The Servicer shall effect an Securitization Account Agreement substantially in
the form of Exhibit VI-B with each bank holding the Securitization
Account at any time. In the case of any remittances received in any Lock-Box
that shall have been identified, to the satisfaction of the Servicer, to not
constitute Collections or other proceeds of the Receivables or the Related
Security, the Servicer shall promptly remit (or cause to be remitted) such
items to the Person identified to it as being the owner of such remittances.
(b) The
Servicer will issue irrevocable standing instructions to each Collection Bank
to remit all payment items and other Collections and proceeds in the Lock-Boxes
directly to the Securitization Banks for deposit in the Securitization Accounts
as set forth in Section 7.1(j) without the prior deposit of the same
into any other account. The Servicer
will issue instructions to and otherwise cause each Collection Bank, not less
frequently than is required for the Seller Parties to remain in compliance with
Section 7.1(j), to remit the proceeds of all wire transfer
payments, ACH payments and other Collections received directly in any
Collection Account to the Securitization Banks for timely deposit in the
securitization Accounts as set forth in Section 7.1(j).
(c) From
and after the occurrence of a Redirection Event, the Agent may request that the
Servicer, and the Servicer thereupon promptly shall, instruct all Obligors then
making wire-transfer payments for Receivables to a Collection Account to
instead remit by wire transfer all payments thereon directly to the
Securitization Accounts.
(d) From
and after the date the Agent delivers to any Collection Bank or any
Securitization Bank a Collection Notice pursuant to Section 8.3, the
Agent may request that the Servicer, and the Servicer thereupon promptly shall,
instruct all Obligors with respect to the Receivables, to remit all payments
thereon to a new depositary account specified by the Agent, and, at all times
thereafter, neither the Seller nor the Servicer shall (i) at any time direct
that any remittance be made to such new depository account other than payments
constituting Collections, or (ii) deposit or otherwise credit, and shall not
permit any other Person within their reasonable control to deposit or otherwise
credit to such new depositary account any cash or payment item other than
Collections.
(e) The
Servicer shall administer the Collections in accordance with the procedures
described in the Credit and Collection Policy and this Agreement. The Servicer shall set aside and hold in
trust for the account of Seller and the Purchasers their respective shares of
the Collections in accordance with Article II.
(f) The
Servicer may, in accordance with the Credit and Collection Policy, extend the
maturity of any Receivable or adjust the Outstanding Balance of any Receivable
as the Servicer determines to be appropriate to maximize Collections thereof; provided,
however, that such extension or adjustment shall not alter the status of
such Receivable as a Delinquent Receivable or Charged-Off Receivable or limit
the rights of the Agent or the Purchasers under this Agreement. Notwithstanding anything to the contrary
contained herein, the Agent shall have
25
the absolute and unlimited right following the occurrence of an
Amortization Event to direct the Servicer to commence or settle any legal
action with respect to any Receivable which has ceased to be an Eligible
Receivable hereunder or to foreclose upon or repossess any Related Security
with respect thereto.
(g) The
Servicer shall hold in trust for Seller and the Purchasers all Records that (i)
evidence or relate to the Receivables, the related Contracts and Related
Security or (ii) are otherwise necessary or desirable to collect the
Receivables and shall, as soon as practicable upon demand of the Agent, deliver
or make available to the Agent all such Records, at the locations at which such
Receivables are serviced, or, after the occurrence of an Amortization Event, at
any location in the continental United States selected by the Agent.
(h) Any
payment by an Obligor in respect of any indebtedness owed by it to Originator
or Seller shall, except as otherwise specified by such Obligor or otherwise
required by contract or law and unless otherwise instructed by the Agent, be
applied as a Collection of any Receivable of such Obligor (starting with the
oldest such Receivable) to the extent of any amounts then due and payable
thereunder before being applied to any other receivable or other obligation of
such Obligor.
Section 8.3 Collection
Notices. The Agent is authorized at
any time that either (i) Rating Level 4, Rating Level 5 or Rating Level 6 shall
then be in effect, (ii) during the Transition Period, Rating Level 3 shall be
in effect and the Agent shall have determined, in its reasonable credit
judgment, that the Collection Notices should be delivered to the Collection
Banks or a Securitization Banks, or (iii) an Amortization Event shall have
occurred (each of such events or circumstances being a Collection Trigger
Event) to deliver to the Securitization Banks and the Collection Banks the
Collection Notices; provided that in the case of a Collection Trigger
Event occurring solely under clause (ii) above, the Agent may deliver
Collection Notices only in respect of Lock-Boxes or Securitization Accounts to
which Collections on BAAN Receivables are then being remitted. Seller hereby transfers to the Agent for the
benefit of the Purchasers, effective when the Agent delivers such notice,
dominion and control of each Securitization Account and each Lock-Box which
dominion and control shall be exclusive.
In case any authorized signatory of Seller whose signature appears on a
Lock-Box Agreement or a Securitization Account Agreement shall cease to have
such authority before the delivery of such notice, such Collection Notice shall
nevertheless be valid as if such authority had remained in force. Seller hereby authorizes the Agent, and
agrees that the Agent shall be entitled after the occurrence of a Collection
Trigger Event to (i) endorse Sellers name on checks and other instruments
representing Collections, (ii) enforce the Receivables, the related Contracts
and the Related Security and (iii) take such action as shall be necessary or
desirable to cause all cash, checks and other instruments constituting
Collections of Receivables to come into the possession of the Agent rather than
Seller.
Section 8.4 Responsibilities
of Seller. Anything herein to the
contrary notwithstanding, the exercise by the Agent and the Purchasers of their
rights hereunder shall not release the Servicer, Originator or Seller from any
of their duties or obligations with respect to any Receivables or under the
related Contracts. The Purchasers shall
have no obligation or
26
liability with respect to any Receivables or related Contracts, nor
shall any of them be obligated to perform the obligations of Seller.
Section 8.5 Collateral
Reports. (a) The Servicer shall prepare and forward to
the Agent the following collateral reports in respect of the Receivables (each,
a Collateral Report) at the following times:
(i) on the third Tuesday
of each calendar month (or, if such date is not a Business Day, on the next
following Business Day), such collateral report (a Monthly Report) to
be substantially in the form of Exhibit IX-A hereto and to relate to the
calendar month then most recently ended,
(ii) on each Tuesday of each
calendar week (or, if such date is not a Business Day, on the next following
Business Day), such collateral report (a Weekly Report) to be
substantially in the form of Exhibit IX-B hereto and to relate to the
calendar week then most recently ended, and
(iii) on any Business Day on
which Rating Level 6 shall then be in effect, such collateral report (a Daily
Report) to be substantially in the form of Exhibit IX-C hereto and
to relate to the calendar day or days since the then most recently issued Collateral
Report.
(b) During
the Transition Period, each Collateral Report shall set forth detailed
performance information with respect to all Receivables other than the BAAN
Receivables and shall set forth certain general information as to the BAAN
Receivables, as more particularly described in the forms of Collateral Report
attached hereto.
The Servicer shall prepare and forward to the Agent,
at such times as the Agent shall request, a listing by Obligor of all
Receivables together with an aging of such Receivables.
Section 8.6 Servicing
Fees. In consideration of
Flowserves agreement to act as Servicer hereunder, the Purchasers hereby agree
that, so long as Flowserve shall continue to perform as Servicer hereunder,
Seller shall pay over to Flowserve a fee (the Servicing Fee) on each
Settlement Date (Fees), in arrears, equal to 0.50% per annum of the average Net
Receivables Balance during the period from the immediately preceding Settlement
Date (Fees) as compensation for its servicing activities.
Section 9.1 Amortization
Events. The occurrence of any one
or more of the following events shall constitute an Amortization Event:
(a) Any
Seller Party shall
27
(i) fail to make any
payment or deposit required hereunder when due, including, without limitation,
any payment required under Section 2.6; or
(ii) fail to perform or
observe any term, covenant or agreement hereunder or under any other
Transaction Document (other than as referred to in Section 9.1(a)(i) or Section
9.1(h)) and such failure shall continue for:
(A) in the case of Section
7.2(e), one (1) Business Day;
(B) in the case of any of Section
7.1(a)(v), Section 7.1(b)(i), Section 7.1(b)(iii)-(vi), Section
7.1(h), Section 7.1(i)(M)-(P), Section 7.1(j), Section 7.2
(other than as referred to in clause (A) above), or Article VIII, three (3)
Business Days; or
(C) in any other case,
fifteen (15) days.
(b) Any
representation, warranty, certification or report made by Provider or any
Seller Party in this Agreement, any other Transaction Document or in any other
document delivered pursuant hereto or thereto shall prove to have been
incorrect when made or deemed made; provided that in the case of any
representation or warranty that is determined to be incorrect when made or
deemed made in respect of any Receivable, such event shall not constitute an
Amortization Event if (i) no action is then required to be taken under Section
2.6 and (ii) a Deemed Collection in respect of such Receivable is timely
made and recorded in accordance with the terms of this Agreement.
(c) The
occurrence of any of the following:
(i) The failure of Seller
to pay any Indebtedness when due;
(ii) The failure of
Provider, Originator or Servicer to pay any amount when due in respect of any
Indebtedness outstanding in an aggregate amount in excess of $10,000,000 (Material
Indebtedness);
(iii) The default by Provider,
Originator or Servicer in the performance of any term, provision or condition
contained in any agreement under which any Material Indebtedness was created or
is governed, the effect of which is to cause such Material Indebtedness to be
declared or automatically become due and payable prior to its stated maturity;
or any such Material Indebtedness of Provider, Originator or Servicer shall be
declared to be due and payable prior to the date of maturity thereof; or
(iv) With respect to the Bank
Credit Agreement,
(A) any Event of Default
under or in connection with the Bank Credit Agreement shall occur, or
28
(B) any other event,
circumstance or condition having the effect of permitting the termination of
any financing commitments or the acceleration of any outstanding Indebtedness
or recourse to any guaranty or collateral for any outstanding Indebtedness
under the Bank Credit Agreement shall occur or exist.
(d) Provider,
Originator or any Seller Party or any material domestic Subsidiary of Provider
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 Provider, Originator or any Seller Party or any
material domestic Subsidiary of Provider 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) Provider, Originator or any Seller Party or any material
domestic Subsidiary of Provider shall take any corporate action to authorize
any of the actions set forth in clauses (i) or (ii) above in this subsection
(d).
(e) As
at the end of any Accrual Period,
(i) the average Loss Ratio
in respect of the three Accrual Periods then most recently ended shall exceed
3.5%;
(ii) the average Delinquency
Ratio in respect of the three Accrual Periods then most recently ended shall
exceed 26%; or
(iii) the average Dilution
Ratio in respect of the three Accrual Periods then most recently ended shall
exceed 7.5%.
(f) A
Change of Control shall occur.
(g) (i)
One or more final judgments for the payment of money shall be entered against
Seller or (ii) one or more final judgments for the payment of money in an
amount in excess of $10,000,000, individually or in the aggregate, shall be
entered against Provider, Originator or the Servicer which is not covered by
insurance or stayed on appeal or otherwise being appropriately contested in
good faith and as to which no enforcement actions have been commenced, and such
judgment shall continue unsatisfied and in effect for thirty (30) consecutive
days without a stay of execution.
(h) Originator
shall fail to perform or observe any term, covenant or agreement required to be
performed by it under the Receivables Sale Agreement (subject to any cure
periods in the Receivables Sale Agreement), or the Termination Date under and
as defined in the Receivables Sale Agreement shall occur under the Receivables
Sale Agreement or Originator shall for any reason cease to transfer, or cease
to have the legal capacity to transfer, or
29
otherwise be incapable of transferring Receivables to Seller under the
Receivables Sale Agreement.
(i) This
Agreement shall terminate in whole or in part (except in accordance with its
terms), or shall cease to be effective or to be the legally valid, binding and
enforceable obligation of either Seller Party, or any Obligor shall directly or
indirectly contest in any manner such effectiveness, validity, binding nature
or enforceability, or the Agent for the benefit of the Purchasers shall cease
to have a valid and perfected first priority security interest in the
Receivables, the Related Security and the Collections with respect thereto and
the Securitization Accounts.
(j) Provider
shall fail to perform or observe any term, covenant or agreement required to be
performed by it under the Performance Undertaking, or any term or provision of
Performance Undertaking shall in any material respect cease to be effective or
to be the legally valid, binding and enforceable obligation of Provider, or
Provider shall directly or indirectly contest in any manner such effectiveness,
validity, binding nature or enforceability.
(k) The
senior implied issuer rating then assigned to Provider by Moodys shall be B3
or less, or the long term local issuer credit rating then assigned to Provider
by S&P shall be B- or less.
(l) The
Reporting Completion Date with respect to any system of the Originator (other
than the BAAN System and the PRMS system) shall not have occurred by March 31,
2005.
Section 9.2 Remedies. Upon the occurrence and during the
continuation of an Amortization Event, the Agent may, or upon the direction of
the Required Financial Institutions shall, take any of the following actions:
(i) declare the Amortization Date to have occurred, whereupon the Amortization
Date shall forthwith occur, without demand, protest or further notice of any
kind, all of which are hereby expressly waived by each Seller Party; provided,
however, that upon the occurrence of an Amortization Event described in Section
9.1(d)(ii), the Amortization Date shall automatically occur, without
demand, protest or any notice of any kind, all of which are hereby expressly
waived by each Seller Party, (ii) to the fullest extent permitted by applicable
law, declare that the Default Fee shall accrue with respect to any of the
Aggregate Unpaids outstanding at such time, (iii) deliver the Collection
Notices to the Collection Banks and the Securitization Banks, and (iv) notify
Obligors of the Purchasers interest in the Receivables. The aforementioned rights and remedies shall
be without limitation, and shall be in addition to all other rights and
remedies of the Agent and the Purchasers 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.
30
Section 10.1 Indemnities
by The Seller Parties. Without
limiting any other rights that the Agent or any Purchaser may have hereunder or
under applicable law, (A) Seller hereby agrees to indemnify (and pay, within
five (5) Business Days of written notice, to) the Agent and each Purchaser and
their respective 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 (which attorneys may be employees of the Agent or
such Purchaser) and itemized out-of-pocket disbursements (all of the foregoing
being collectively referred to as Indemnified Amounts) awarded against
or incurred by any of them arising out of or as a result of this Agreement or
the acquisition, either directly or indirectly, by a Purchaser of an interest
in the Receivables, and (B) the Servicer hereby agrees to indemnify (and pay
upon demand to) each Indemnified Party for Indemnified Amounts awarded against
or incurred by any of them arising out of the Servicers activities as Servicer
hereunder excluding, however, in all of the foregoing instances under the
preceding clauses (A) and (B):
(i) 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;
(ii) Indemnified Amounts to
the extent the same includes losses in respect of Receivables that are
uncollectible on account of the insolvency, bankruptcy or lack of
creditworthiness of the related Obligor; or
(iii) taxes imposed that are
measured by the overall net income of such Indemnified Party to the extent that
the computation of such taxes is consistent with the characterization for
income tax purposes of the acquisition by the Purchasers of Purchaser Interests
as a loan or loans by the Purchasers to Seller secured by the Receivables, the
Related Security, the Securitization Accounts and the Collections;
(it being understood that certain representations,
warranties and covenants expressly set forth in this Agreement or in other
Transaction Documents may, independent of this Section 10.1, give rise
to claims against the Seller Parties without regard to clauses (i), (ii) and
(iii) above). Without limiting the
generality of the foregoing indemnification, Seller shall indemnify each
Indemnified Party for Indemnified Amounts (including, without limitation,
losses in respect of uncollectible receivables, regardless of whether
reimbursement therefor would constitute recourse to Seller or the Servicer)
relating to or resulting from:
(iv) any representation or
warranty made by Provider or any Seller Party or Originator (or any officers of
any such Person) under or in connection with this Agreement, any other
Transaction Document or any other information or report delivered by any such
Person pursuant hereto or thereto, which shall have been false or incorrect
when made or deemed made;
31
(v) the failure by Seller,
the Servicer or 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 Originator to keep or
perform any of its obligations, express or implied, with respect to any
Contract;
(vi) any failure of Provider,
Seller, the Servicer or Originator to perform its duties, covenants or other
obligations in accordance with the provisions of this Agreement or any other
Transaction Document;
(vii) any products liability,
personal injury or damage suit, or other similar claim arising out of or in
connection with merchandise, insurance or services that are the subject of any
Contract or any Receivable;
(viii) 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 merchandise or
service related to such Receivable or the furnishing or failure to furnish such
merchandise or services;
(ix) the commingling of
Collections of Receivables at any time with other funds;
(x) any investigation,
litigation or proceeding related to or arising from this Agreement or any other
Transaction Document, the transactions contemplated hereby, the use of the
proceeds of an Incremental Purchase or a Reinvestment, the ownership of the
Purchaser Interests or any other investigation, litigation or proceeding
relating to Provider, Seller, the Servicer or Originator in which any
Indemnified Party becomes involved as a result of any of the transactions
contemplated hereby;
(xi) any inability to
litigate any claim against any Obligor in respect of any 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;
(xii) any Amortization Event;
(xiii) any failure of Seller to
acquire and maintain legal and equitable title to, and ownership of any Receivable
and the Related Security and Collections with respect thereto from Originator,
free and clear of any Adverse Claim (other than as created hereunder); or any
failure of Seller to give reasonably equivalent value to Originator under the
Receivables Sale Agreement in consideration of the transfer by Originator of
any Receivable, or any attempt by any Person to void such transfer under
statutory provisions or common law or equitable action;
32
(xiv) any failure to vest and
maintain vested in the Agent for the benefit of the Purchasers, or to transfer
to the Agent for the benefit of the Purchasers, legal and equitable title to,
and ownership of, a first priority perfected undivided percentage ownership interest
(to the extent of the Purchaser Interests contemplated hereunder) or security
interest in the Receivables, the Related Security and the Collections, free and
clear of any Adverse Claim (except as created by the Transaction Documents);
(xv) the failure to have
filed, or any delay in filing, financing statements or other similar
instruments or documents under the UCC of any applicable jurisdiction or other
applicable laws with respect to any Receivable, the Related Security and
Collections with respect thereto, and the proceeds of any thereof, whether at
the time of any Incremental Purchase or Reinvestment or at any subsequent time;
(xvi) any action or omission by
any Seller Party which reduces or impairs the rights of the Agent or the
Purchasers with respect to any Receivable or the value of any such Receivable;
(xvii) any attempt by any Person
to void any Incremental Purchase or Reinvestment hereunder under statutory
provisions or common law or equitable action; and
(xviii) the failure of any Receivable
included in the calculation of the Net Receivables Balance as an Eligible
Receivable to be an Eligible Receivable at the time so included.
Section 10.2 Increased
Cost and Reduced Return. (a) If after the date hereof, any Funding Source
shall be charged any fee, expense or increased cost on account of the adoption
of any applicable law, rule or regulation (including any applicable law, rule
or regulation regarding capital adequacy), any accounting principles or any
change in any of the foregoing, or any change in the interpretation or
administration thereof by any governmental authority, any central bank or any
comparable agency charged with the interpretation or administration thereof, or
compliance with any request or directive (whether or not having the force of
law) of any such authority or agency (a Regulatory Change): (i) that subjects any Funding Source to any
charge or withholding on or with respect to any Funding Agreement or a Funding
Sources obligations under a Funding Agreement, or on or with respect to the
Receivables, or changes the basis of taxation of payments to any Funding Source
of any amounts payable under any Funding Agreement (except for changes in the
rate of tax on the overall net income of a Funding Source or taxes excluded by Section
10.1) or (ii) that imposes, modifies or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of a Funding Source, or credit
extended by a Funding Source pursuant to a Funding Agreement or (iii) that
imposes any other condition the result of which is to increase the cost to a
Funding Source of performing its obligations under a Funding Agreement, or to
reduce the rate of return on a Funding Sources capital as a consequence of its
obligations under a Funding Agreement, or to reduce the amount of any sum
received or receivable by a Funding Source under a Funding Agreement or to
require
33
any payment calculated by reference to the amount of interests or loans
held or interest received by it, then, upon demand by the Agent, Seller shall
pay to the Agent, for the benefit of the relevant Funding Source, such amounts
charged to such Funding Source or such amounts to otherwise compensate such
Funding Source for such increased cost or such reduction.
(b) Failure
or delay on the party of any Funding Source to demand compensation under Section
10.2(a) shall not constitute a waiver of such Funding Sources right to
demand such compensation; provided that Seller shall not be under any
obligation to compensate any Funding Source under Section 10.2(a) with
respect to increased costs or reductions incurred during any period prior to
the date that is 90 days prior to the demand by the Agent on behalf of such
Funding Source under Section 10.2(a) if such Funding Source knew or
could reasonably have been expected to know of the circumstances giving rise to
such increased costs or reductions and of the fact that such circumstances
would result in a claim for increased compensation by reason of such increased
costs or reductions; provided that the forgoing limitation shall not
apply to any increased costs or reductions arising out of the retroactive
application of any change in law within such 90-day period. The protection of this Section 10.2
shall be available to each Funding Source regardless of any possible contention
of the invalidity or inapplicability of the law, rule, regulation, agreement,
guideline or other change or condition that shall have occurred or been
imposed.
Section 10.3 Other
Costs and Expenses. (a) Seller shall pay to the Agent and Company,
within five (5) Business Days of written demand, all reasonable costs and
out-of-pocket expenses in connection with the preparation, execution, delivery,
administration and enforcement of this Agreement, the transactions contemplated
hereby and the other documents to be delivered hereunder, including without
limitation, (i) the cost of Companys auditors auditing the books, records and
procedures of Seller, (ii) reasonable fees and itemized out-of-pocket expenses
of legal counsel for Company and the Agent with respect thereto and with
respect to advising Company and the Agent as to their respective rights and
remedies under this Agreement, (iii) the reasonable costs and out-of-pocket
expenses of Banc One Capital Markets, Inc., as arranger of the facility
contemplated herein, and (iv) all reasonable costs and out-of-pocket expenses
incurred in connection with any restructuring or workout of this Agreement or
such documents; provided that in the case of any amendment or other
modification to the Transaction Documents which has not been requested by a
Seller Party, Seller shall not have any obligation to reimburse the Agent,
Company or Banc One Capital Markets, Inc. in respect of the fees or
out-of-pocket expenses of legal counsel for the Agent, Company or Banc One
Capital Markets, Inc. in connection with the documentation or closing of such
amendment or modification without the prior consent of a Seller Party.
(b) Without
limiting the generality of Section 10.3(a), Seller shall reimburse the
Agent and Company, within five (5) Business Days of written demand, in respect
of all reasonable fees and out-of-pocket expenses incurred in connection with
any audit conducted of Originator, Seller and Servicer; provided that
unless an Amortization Event shall have occurred, (i) in the case of any period
in which Rating Level 1, Rating Level 2 or Rating Level 3 shall be in effect,
Seller shall not be required to reimburse the Agent or Company in respect of
more than one audit at each site of Originator, Seller and Servicer during any
calendar year; and (ii) in the
34
case of any period in which any other Rating Level shall be in effect,
Seller shall not be required to reimburse the Agent or Company in respect of
more than two audits at each site of Originator, Seller and Servicer during any
calendar year.
Section 11.1 Authorization
and Action. Each Purchaser hereby
designates and appoints Bank One to act as its agent hereunder and under each
other Transaction Document, and authorizes the Agent to take such actions as
agent on its behalf and to exercise such powers as are delegated to the Agent
by the terms of this Agreement and the other Transaction Documents together
with such powers as are reasonably incidental thereto. The Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in any other
Transaction Document, or any fiduciary relationship with any Purchaser, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Agent shall be read into this Agreement or any
other Transaction Document or otherwise exist for the Agent. In performing its functions and duties
hereunder and under the other Transaction Documents, the Agent shall act solely
as agent for the Purchasers and does not assume nor shall be deemed to have
assumed any obligation or relationship of trust or agency with or for any
Seller Party or any of such Seller Partys successors or assigns. The Agent shall not be required to take any
action that exposes the Agent to personal liability or that is contrary to this
Agreement, any other Transaction Document or applicable law. The appointment and authority of the Agent
hereunder shall terminate upon the later to occur of the termination of this
Agreement and payment in full of all Aggregate Unpaids.
Section 11.2 Delegation
of Duties. The Agent may execute
any of its duties under this Agreement and each other Transaction Document by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 11.3 Exculpatory
Provisions. Neither the Agent nor
any of its directors, officers, agents or employees shall be (i) liable for any
action lawfully taken or omitted to be taken by it or them under or in
connection with this Agreement or any other Transaction Document (except for
its, their or such Persons own gross negligence or willful misconduct), or
(ii) responsible in any manner to any of the Purchasers for any recitals,
statements, representations or warranties made by any Seller Party contained in
this Agreement, any other Transaction Document or any certificate, report,
statement or other document referred to or provided for in, or received under
or in connection with, this Agreement, or any other Transaction Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, or any other Transaction Document or any other document
furnished in connection herewith or therewith, or for any failure of any Seller
Party to perform its obligations hereunder or thereunder, or for the
satisfaction of any condition specified in Article VI, or for the
perfection, priority, condition, value or sufficiency of any collateral pledged
35
in connection herewith. The
Agent shall not be under any obligation to any Purchaser to ascertain or to
inquire as to the observance or performance of any of the agreements or
covenants contained in, or conditions of, this Agreement or any other
Transaction Document, or to inspect the properties, books or records of the
Seller Parties. The Agent shall not be
deemed to have knowledge of any Amortization Event or Potential Amortization
Event unless the Agent has received notice from Seller or a Purchaser.
Section 11.4 Reliance
by Agent. The Agent shall in all
cases be entitled to rely, and shall be fully protected in relying, upon any
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to Seller),
independent accountants and other experts selected by the Agent. The Agent shall in all cases be fully
justified in failing or refusing to take any action under this Agreement or any
other Transaction Document unless it shall first receive such advice or
concurrence of Company or the Required Financial Institutions or all of the
Purchasers, as applicable, as it deems appropriate and it shall first be
indemnified to its satisfaction by the Purchasers, provided that unless
and until the Agent shall have received such advice, the Agent may take or
refrain from taking any action, as the Agent shall deem advisable and in the
best interests of the Purchasers. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, in accordance with a request of Company or the Required Financial
Institutions or all of the Purchasers, as applicable, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Purchasers.
Section 11.5 Non-Reliance
on Agent and Other Purchasers. Each
Purchaser expressly acknowledges that neither the Agent, nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates has
made any representations or warranties to it and that no act by the Agent
hereafter taken, including, without limitation, any review of the affairs of
any Seller Party, shall be deemed to constitute any representation or warranty
by the Agent. Each Purchaser represents
and warrants to the Agent that it has and will, independently and without
reliance upon the Agent or any other Purchaser and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, prospects, financial and
other conditions and creditworthiness of Seller and made its own decision to
enter into this Agreement, the other Transaction Documents and all other
documents related hereto or thereto.
Section 11.6 Reimbursement
and Indemnification. The Financial
Institutions agree to reimburse and indemnify the Agent and its officers,
directors, employees, representatives and agents ratably according to their Pro
Rata Shares, to the extent not paid or reimbursed by the Seller Parties (i) for
any amounts for which the Agent, acting in its capacity as Agent, is entitled
to reimbursement by the Seller Parties hereunder and (ii) for any other
expenses incurred by the Agent, in its capacity as Agent and acting on behalf
of the Purchasers, in connection with the administration and enforcement of
this Agreement and the other Transaction Documents.
36
Section 11.7 Agent
in its Individual Capacity. The
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with Seller or any Affiliate of Seller as though
the Agent were not the Agent hereunder.
With respect to the acquisition of Purchaser Interests pursuant to this
Agreement, the Agent shall have the same rights and powers under this Agreement
in its individual capacity as any Purchaser and may exercise the same as though
it were not the Agent, and the terms Financial Institution, Purchaser,
Financial Institutions and Purchasers shall include the Agent
in its individual capacity.
Section 11.8 Successor
Agent. The Agent may, upon five
days notice to Seller and the Purchasers, and the Agent will, upon the
direction of all of the Purchasers (other than the Agent, in its individual
capacity) resign as Agent. If the Agent
shall resign, then the Required Financial Institutions during such five-day
period shall appoint from among the Purchasers a successor agent. If for any reason no successor Agent is
appointed by the Required Financial Institutions during such five-day period,
then effective upon the termination of such five day period, the Purchasers shall
perform all of the duties of the Agent hereunder and under the other
Transaction Documents and Seller and the Servicer (as applicable) shall make
all payments in respect of the Aggregate Unpaids directly to the applicable
Purchasers and for all purposes shall deal directly with the Purchasers. After the effectiveness of any retiring
Agents resignation hereunder as Agent, the retiring Agent shall be discharged
from its duties and obligations hereunder and under the other Transaction
Documents and the provisions of this Article XI and Article X
shall continue in effect for its benefit with respect to any actions taken or
omitted to be taken by it while it was Agent under this Agreement and under the
other Transaction Documents.
(a) Seller
and each Financial Institution hereby agree and consent to the complete or
partial assignment by Company of all or any portion of its rights under,
interest in, title to and obligations under this Agreement to the Financial
Institutions pursuant to a Liquidity Agreement and upon such assignment,
Company shall be released from its obligations so assigned. In addition, Company may at any time assign
all or a portion of its rights hereunder, interest in, title to and obligations
under this Agreement to any Person that is a special purpose company (an Asset-Backed
Conduit) in the business of purchasing assets or interests in property of
a type comparable to the Receivables with the proceeds of commercial paper,
medium term notes or similar instruments, provided that (i) prior to the
occurrence of an Amortization Event, the consent of the Seller (which consent
shall not be unreasonably withheld) shall be required for any such assignment
and (ii) Bank One or an Affiliate thereof is then acting as the administrative
agent or in a comparable capacity for such Asset-Backed Conduit. Seller and each Financial Institution hereby
agree that any assignee of Company of this Agreement or all or any of the
Purchaser Interests of Company shall have all of the rights and benefits under
this Agreement as if the term Company explicitly referred to such
party, and no such
37
assignment shall in any way impair the rights and benefits of Company
hereunder. Neither Seller nor the
Servicer shall have the right to assign its rights or obligations under this
Agreement without the prior written consent of the Agent and the Purchasers.
(b) Any
Financial Institution may at any time and from time to time assign to one or
more Persons (Purchasing Financial Institutions) all or any part of
its rights and obligations under this Agreement pursuant to an assignment
agreement, substantially in the form set forth in Exhibit VII hereto
(the Assignment Agreement) executed by such Purchasing Financial
Institution and such selling Financial Institution. The consent of Company and, prior to the occurrence of an
Amortization Event, the consent of Seller (which consent shall not be
unreasonably withheld) shall be required prior to the effectiveness of any such
assignment. Each assignee of a
Financial Institution party to a Liquidity Agreement must (i) have a short-term
debt rating of A-1 or better by Standard & Poors Ratings Group and P-1 by
Moodys Investor Service, Inc. and (ii) agree to deliver to the Agent, promptly
following any request therefor by the Agent or Company, an enforceability
opinion in form and substance satisfactory to the Agent and Company. Upon delivery of the executed Assignment
Agreement to the Agent, such selling Financial Institution shall be released
from its obligations hereunder to the extent of such assignment. Thereafter the Purchasing Financial
Institution shall for all purposes be a Financial Institution party to this
Agreement and shall have all the rights and obligations of a Financial
Institution under this Agreement to the same extent as if it were an original
party hereto, and no further consent or action by Seller, the Purchasers or the
Agent shall be required.
(c) Each
of the Financial Institutions party to a Liquidity Agreement agrees that in the
event that it shall cease to have a short-term debt rating of A-1 or better by
Standard & Poors Ratings Group and P-1 by Moodys Investor Service, Inc.
(an Affected Financial Institution), such Affected Financial
Institution shall be obliged, at the request of Company or the Agent, to assign
all of its rights and obligations hereunder to (x) another Financial
Institution or (y) another funding entity nominated by the Agent and acceptable
to Company, and willing to participate in this Agreement through the Liquidity
Termination Date in the place of such Affected Financial Institution; provided
that the Affected Financial Institution receives payment in full, pursuant to
an Assignment Agreement, of an amount equal to such Financial Institutions Pro
Rata Share of the Aggregate Capital and Yield owing to the Financial
Institutions and all accrued but unpaid fees and other costs and expenses
payable in respect of its Pro Rata Share of the Purchaser Interests of the
Financial Institutions.
Section 12.2 Participations. Any Financial Institution may, in the
ordinary course of its business at any time sell to one or more Persons (each a
Participant) participating interests in its Pro Rata Share of the
Purchaser Interests of the Financial Institutions, its obligation to the
Company pursuant to a Liquidity Agreement or any other interest of such
Financial Institution hereunder. Notwithstanding
any such sale by a Financial Institution of a participating interest to a
Participant, such Financial Institutions rights and obligations under this
Agreement shall remain unchanged, such Financial Institution shall remain
solely responsible for the performance of its obligations hereunder, and
Seller, Company and the Agent shall continue to deal solely and directly with
such Financial Institution in connection with such Financial Institutions
rights and obligations under this Agreement.
Each Financial Institution
38
agrees that any agreement between such Financial Institution and any
such Participant in respect of such participating interest shall not restrict
such Financial Institutions right to agree to any amendment, supplement,
waiver or modification to this Agreement, except for any amendment, supplement,
waiver or modification described in Section 14.1(b)(i).
Section 12.3 Terminating
Financial Institutions.
(a) Each
Financial Institution hereby agrees to deliver written notice to the Agent not
more than 30 Business Days and not less than 5 Business Days prior to the
Liquidity Termination Date indicating whether such Financial Institution
intends to renew its Commitment hereunder.
If any Financial Institution fails to deliver such notice on or prior to
the date that is 5 Business Days prior to the Liquidity Termination Date, such
Financial Institution will be deemed to have declined to renew its Commitment
(each Financial Institution which has declined or has been deemed to have
declined to renew its Commitment hereunder, a Non-Renewing Financial
Institution). The Agent shall
promptly notify Company of each Non-Renewing Financial Institution and Company,
in its sole discretion, may (A) to the extent of Commitment Availability,
declare that such Non-Renewing Financial Institutions Commitment shall, to
such extent, automatically terminate on a date specified by Company on or
before the Liquidity Termination Date or (B) upon one (1) Business Days notice
to such Non-Renewing Financial Institution assign to such Non-Renewing
Financial Institution on a date specified by Company its Pro Rata Share of the
aggregate Purchaser Interests then held by Company, subject to, and in
accordance with the applicable Liquidity Agreement. In addition, Company may, in its sole discretion, at any time (x)
to the extent of Commitment Availability, declare that any Affected Financial
Institutions Commitment shall automatically terminate on a date specified by
Company or (y) assign to any Affected Financial Institution on a date specified
by Company its Pro Rata Share of the aggregate Purchaser Interests then held by
Company, subject to, and in accordance with the applicable Liquidity Agreement
(each Affected Financial Institution or each Non-Renewing Financial Institution
is hereinafter referred to as a Terminating Financial Institution). The parties hereto expressly acknowledge
that any declaration of the termination of any Commitment, any assignment
pursuant to this Section 12.3 and the order of priority of any such
termination or assignment among Terminating Financial Institutions shall be
made by Company in its sole and absolute discretion.
(b) Upon
any assignment to a Terminating Financial Institution as provided in this Section
12.3, any remaining Commitment of such Terminating Financial Institution
shall automatically terminate. Upon
reduction to zero of the Capital of all of the Purchaser Interests of a
Terminating Financial Institution (after application of Collections thereto
pursuant to Sections 2.2 and 2.3) all rights and obligations of such
Terminating Financial Institution hereunder shall be terminated and such
Terminating Financial Institution shall no longer be a Financial Institution
hereunder; provided, however, that the provisions of Article X
shall continue in effect for its benefit with respect to Purchaser Interests
held by such Terminating Financial Institution prior to its termination as a
Financial Institution.
39
(a) No
failure or delay on the part of the Agent or any Purchaser 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. 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 in accordance with the provisions of this Section 14.1(b). Company, Seller and the Agent, at the
direction of the Required Financial Institutions, may enter into written
modifications or waivers of any provisions of this Agreement, provided, however,
that no such modification or waiver shall:
(i) without the consent of
each affected Purchaser, (A) extend the Liquidity Termination Date or the date
of any payment or deposit of Collections by Seller or the Servicer, (B) reduce
the rate or extend the time of payment of Yield or any CP Costs (or any
component of Yield or CP Costs), (C) reduce any fee payable to the Agent for
the benefit of the Purchasers, (D) except pursuant to Article XII
hereof, change the amount of the Capital of any Purchaser, any Financial
Institutions Pro Rata Share (except as may be required pursuant to a Liquidity
Agreement) or any Financial Institutions Commitment, (E) amend, modify or
waive any provision of the definition of Required Financial Institutions or
this Section 14.1(b) or (F) amend or modify any defined term (or any
defined term used directly or indirectly in such defined term) used in clauses
(A) through (E) above in a manner that would circumvent the intention of the
restrictions set forth in such clauses; or
(ii) without the written
consent of the then Agent, amend, modify or waive any provision of this
Agreement if the effect thereof is to affect the rights or duties of such
Agent.
Notwithstanding the foregoing, (i) without the consent
of the Financial Institutions, but with the consent of Seller, the Agent may
amend this Agreement solely to add additional Persons as Financial Institutions
hereunder and (ii) the Agent, the Required Financial Institutions and Company
may enter into amendments to modify any of the terms or provisions of Article
XI, Article XII, Section 14.13 or any other provision of this Agreement
without the consent of Seller, provided that such amendment has no negative
impact upon Seller. Any modification or
waiver
40
made in accordance with this Section 14.1 shall apply to each of the
Purchasers equally and shall be binding upon Seller, the Purchasers and the
Agent.
Section 14.2 Notices. (a)
Except as provided in this Section 14.2, 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.
(b) In
the case of any notice by the Agent or any Purchaser to Seller declaring the
occurrence of an Amortization Event or the Amortization Date or making a demand
for any payment (other than in respect of any payment due on any Settlement
Date (Capital) or Settlement Date (Fees)), such notice shall be effective upon
delivery
(i) by certified mail,
return receipt requested,
(ii) by overnight courier,
or
(iii) by hand,
in each case when received at the address for Seller
specified in this Section 14.2.
(c) In
the case of any other notice or communication hereunder, the same shall be effective:
(i) upon delivery by one
of the means described in Section 14.2(b),
(ii) if given by telecopy,
upon the receipt thereof,
(iii) if given by electronic
mail, when delivered, and
(iv) if given by any other
means, when received at the address specified in this Section 14.2.
(d) Seller
hereby authorizes the Agent to effect purchases and Tranche Period and Discount
Rate selections based on telephonic notices made by any Person whom the Agent
in good faith believes to be acting on behalf of Seller. Seller agrees to deliver promptly to the
Agent a written confirmation of each telephonic notice signed by an authorized
officer of Seller; provided, however, the absence of such
confirmation shall not affect the validity of such notice. If the written confirmation differs from the
action taken by the Agent, the records of the Agent shall govern absent
manifest error.
Section 14.3 Ratable
Payments. If any Purchaser, whether
by setoff or otherwise, has payment made to it with respect to any portion of
the Aggregate Unpaids owing to such Purchaser (other than payments received
pursuant to Section 10.2 or 10.3) in a greater
41
proportion than that received by any other Purchaser entitled to
receive a ratable share of such Aggregate Unpaids, such Purchaser agrees,
promptly upon demand, to purchase for cash without recourse or warranty a
portion of such Aggregate Unpaids held by the other Purchasers so that after
such purchase each Purchaser will hold its ratable proportion of such Aggregate
Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without interest.
Section 14.4 Protection
of Ownership Interests of the Purchasers.
(a) Seller 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 Agent may request, to perfect, protect or more fully evidence the
Purchaser Interests, or to enable the Agent or the Purchasers to exercise and
enforce their rights and remedies hereunder.
At any time after the occurrence of an Amortization Event, the Agent
may, or the Agent may direct Seller or the Servicer to, notify the Obligors of
Receivables, at Sellers expense, of the ownership or security interests of the
Purchasers 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
Agent or its designee. Seller or the
Servicer (as applicable) shall, at any Purchasers written request, withhold
the identity of such Purchaser in any such notification.
(b) If
any Seller Party fails to perform any of its obligations hereunder, the Agent
or any Purchaser may (but shall not be required to) perform, or cause
performance of, such obligations, and the Agents or such Purchasers
reasonable costs and expenses incurred in connection therewith shall be payable
by Seller as provided in Section 10.3.
Each Seller Party irrevocably authorizes the Agent at any time and from
time to time in the sole discretion of the Agent, and appoints the Agent as its
attorney-in-fact, to act on behalf of such Seller Party (i) to execute on
behalf of Seller as debtor and to file financing statements necessary or
desirable in the Agents sole discretion to perfect and to maintain the
perfection and priority of the interest of the Purchasers in the Receivables
and (ii) to file a carbon, photographic or other reproduction of this Agreement
or any financing statement with respect to the Receivables as a financing
statement in such offices as the Agent in its sole discretion deems necessary or
desirable to perfect and to maintain the perfection and priority of the
interests of the Purchasers in the Receivables. This appointment is coupled with an interest and is irrevocable.
Section 14.5 Confidentiality. (a)
Each party hereto shall maintain and shall cause each of its employees
and officers to maintain the confidentiality of this Agreement and the other
confidential or proprietary information with respect to the other parties
hereto and their respective businesses obtained by it or them in connection
with the structuring, negotiating and execution of the transactions
contemplated herein, except that such Person and its officers and employees may
disclose such information to its external accountants and attorneys and as
required by any applicable law or order of any judicial or administrative
proceeding.
(b) Anything
herein to the contrary notwithstanding, each Seller Party hereby consents to
the disclosure of any nonpublic information with respect to it (i) to the
Agent, the Financial Institutions or Company by each other, (ii) by the Agent
or the Purchasers to any
42
prospective or actual assignee or participant of any of them, provided,
that, in the case of a prospective assignee or participant, the information
disclosed by the Agent or the Purchasers shall be limited to the terms of this
Agreement and information of the type contained in the Collateral Reports
without disclosure of the names of specific Obligors, and (iii) by the Agent to
any rating agency, Commercial Paper dealer or provider of a surety, guaranty or
credit or liquidity enhancement to Company or any entity organized for the
purpose of purchasing, or making loans secured by, financial assets for which
Bank One acts as the administrative agent and to any officers, directors,
employees, outside accountants and attorneys of any of the foregoing. In addition, the Purchasers and the Agent
may disclose any such nonpublic information pursuant to any law, rule,
regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law).
(c) Anything
herein to the contrary notwithstanding, each Seller Party, each Purchaser, the
Agent, each Indemnified Party and any successor or assign of any of the
foregoing (and each employee, representative or other agent of any of the
foregoing) may disclose to any and all Persons, without limitation of any kind,
the tax treatment and tax structure (in each case, within the meaning of
Treasury Regulation Section 1.6011-4) of the transactions contemplated herein
and all materials of any kind (including opinions or other tax analyses) that
are or have been provided to any of the foregoing relating to such tax treatment
or tax structure, and it is hereby confirmed that each of the foregoing have
been so authorized since the commencement of discussions regarding the
transactions.
Section 14.6 Bankruptcy
Petition. Seller, the Servicer, the
Agent and each Financial Institution hereby covenants and agrees that, prior to
the date that is one year and one day after the payment in full of all
outstanding senior indebtedness of Company, it will not institute against, or
join any other Person in instituting against, Company or any such entity 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 14.7 Limitation
of Liability. Except with respect
to any claim arising out of the willful misconduct or gross negligence of
Company, the Agent or any Financial Institution, no claim may be made by any
Seller Party or any other Person against Company, the Agent or any Financial
Institution or their respective Affiliates, directors, officers, employees,
attorneys or agents for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract or any other theory of
liability arising out of or related to the transactions contemplated by this
Agreement, or any act, omission or event occurring in connection therewith; and
each Seller Party hereby waives, releases, and agrees not to sue upon any claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.
Section 14.8 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 ILLINOIS.
43
Section 14.9 CONSENT
TO JURISDICTION. EACH SELLER PARTY
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT AND EACH SELLER
PARTY 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 THE AGENT OR ANY PURCHASER TO BRING PROCEEDINGS
AGAINST ANY SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY SELLER PARTY
AGAINST THE AGENT OR ANY PURCHASER OR ANY AFFILIATE OF THE AGENT OR ANY
PURCHASER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY
SUCH SELLER PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT
IN CHICAGO, ILLINOIS.
Section 14.10 WAIVER
OF JURY TRIAL. 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 ANY SELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER OR THEREUNDER.
Section 14.11 Integration;
Binding Effect; Survival of Terms.
(a) This
Agreement and each other Transaction Document contain the final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof superseding all prior
oral or written understandings.
(b) This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns (including any trustee in
bankruptcy). 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 Seller Party pursuant to Article V, (ii) the
indemnification and payment provisions of Article X, and Sections
14.5 and 14.6 shall be continuing and shall survive any termination
of this Agreement.
44
Section 14.12 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.
Section 14.13 Bank
One Roles. Each of the Financial
Institutions acknowledges that Bank One acts, or may in the future act, (i) as
administrative agent for Company or any Financial Institution, (ii) as issuing
and paying agent for the Commercial Paper, (iii) to provide credit or liquidity
enhancement for the timely payment for the Commercial Paper and (iv) to provide
other services from time to time for Company or any Financial Institution
(collectively, the Bank One Roles).
Without limiting the generality of this Section 14.13, each
Financial Institution hereby acknowledges and consents to any and all Bank One
Roles and agrees that in connection with any Bank One Role, Bank One may take,
or refrain from taking, any action that it, in its discretion, deems
appropriate, including, without limitation, in its role as administrative agent
for Company, and the giving of notice to the Agent of a mandatory purchase
pursuant to any Liquidity Agreement.
Section 14.14 Characterization. It is the intention of the parties hereto
that each purchase hereunder shall constitute and be treated as an absolute and
irrevocable sale, which purchase shall provide the applicable Purchaser with
the full benefits of ownership of the applicable Purchaser Interest. Except as specifically provided in this
Agreement, each sale of a Purchaser Interest hereunder is made without recourse
to Seller; provided, however, that (i) Seller shall be liable to
each Purchaser and the Agent for all representations, warranties, covenants and
indemnities made by Seller pursuant to the terms of this Agreement, and (ii)
such sale does not constitute and is not intended to result in an assumption by
any Purchaser or the Agent or any assignee thereof of any obligation of Seller
or Originator or any other person arising in connection with the Receivables,
the Related Security, or the related Contracts, or any other obligations of
Seller or Originator.
(a) In
addition to any ownership interest which the Agent may from time to time
acquire pursuant hereto, Seller hereby grants to the Agent for the ratable
benefit of the Purchasers a valid and perfected security interest in all of
Sellers right, title and interest in, to and under all Receivables now
existing or hereafter arising, the Collections, each Lock-Box, each
Securitization Account, all Related Security, all other rights and payments
relating to such Receivables, and all proceeds of any thereof prior to all
other liens on and security interests therein to secure the prompt and complete
payment of the Aggregate Unpaids. The
Agent and the Purchasers shall have, in addition to the rights and remedies
that they may have under this Agreement, all other rights and remedies provided
to a secured creditor under the UCC and other applicable law, which rights and
remedies shall be cumulative.
45
[SIGNATURE PAGES FOLLOW]
46
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.
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FLOWSERVE RECEIVABLES CORPORATION, as
Seller
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By:
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Name:
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Title:
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Address:
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FLOWSERVE US INC., as Servicer
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By:
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Name:
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Title:
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Address:
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5215 N. OConnor Blvd.
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Suite 2300
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Irving, TX 75039
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Attention:
Treasurer
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Fax: (972)
443-6800/01
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JUPITER SECURITIZATION CORPORATION
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By:
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Name:
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Title:
Authorized Signer
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Address: c/o Bank One, NA (Main Office Chicago), as
Agent
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Asset Backed Finance
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Suite IL1-0079, 1-19
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1 Bank One Plaza
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Chicago, Illinois 60670-0079
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FAX:
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(312) 732-1844
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BANK ONE, NA (MAIN OFFICE CHICAGO), as a
Financial Institution and as Agent
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By:
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Name:
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Title:
Director, Capital Markets
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Address:
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Bank One, NA (Main Office Chicago)
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Asset Backed Finance
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Suite IL1-0596, 1-21
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1 Bank One Plaza
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Chicago, Illinois 60670-0596
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Fax:
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(312) 732-4487
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48
EXHIBIT I
DEFINITIONS
As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
Accrual Period means each calendar month,
provided that the initial Accrual Period hereunder means the period from (and
including) the date of the initial purchase hereunder to (and including) the
last day of the calendar month thereafter.
Adverse Claim means a lien, security
interest, charge or encumbrance, or other right or claim in, of or on any
Persons assets or properties in favor of any other Person.
Affected Financial Institution has the
meaning specified in Section 12.1(c).
Affiliate means, with respect to any Person,
any other Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, such Person or any Subsidiary of such
Person. A Person shall be deemed to
control another Person if the controlling Person owns 10% or more of any class
of voting securities of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of stock, by
contract or otherwise.
Agent has the
meaning set forth in the preamble to this Agreement.
Aggregate Capital means, on any date of
determination, the aggregate amount of Capital of all Purchaser Interests
outstanding on such date.
Aggregate Reduction has the meaning specified
in Section 1.3.
Aggregate Reserves
means, on any date of determination, the sum of the Loss Reserve, the Yield and
Servicing Reserve and the Dilution Reserve.
Aggregate Unpaids means, at any time, an
amount equal to the sum of all accrued and unpaid fees under the Fee Letter, CP
Costs, Yield, Aggregate Capital and all other unpaid Obligations (whether due
or accrued) at such time.
Agreement means this Receivables Purchase
Agreement, as it may be amended or modified and in effect from time to time.
Amortization Date means the earliest to occur
of (i) the day on which any of the conditions precedent set forth in Section 6.2
are not satisfied, (ii) the Business Day immediately prior to the occurrence of
an Amortization Event set forth in Section 9.1(d)(ii), (iii) the
Business Day specified in a written notice from the Agent following the occurrence
of any other
1
Amortization Event, and (iv) the date which is at least 30 Business
Days after the Agents receipt of written notice from Seller that it wishes to
terminate the facility evidenced by this Agreement.
Amortization Event
has the meaning specified in Article IX.
Applicable Stress
Factor means, at any time, an amount determined in reference to the
following table based upon the Rating Level in effect at such time:
Rating Level
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Applicable
Stress Factor
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Rating Level 1
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2.00
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Rating Level 2
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2.00
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Rating Level 3
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2.00
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Rating Level 4
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2.25
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Rating Level 5
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2.25
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Rating Level 6
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2.50
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Assignment Agreement
has the meaning set forth in Section 12.1(b).
Authorized Officer means, with respect to any
Person, its president, corporate controller, assistant treasurer, treasurer or
chief financial officer.
BAAN Receivable means any Receivable
originated or serviced by or otherwise attributable to the BAAN System.
BAAN Reporting Completion Date means the date
on which (i) an audit of the BAAN System and the BAAN Receivables shall have
been completed and shall have been determined by the Agent, in its sole
discretion, to be satisfactory in scope and content, (ii) the Servicer shall
have implemented reporting systems capable of reporting on the BAAN Receivables
timely and otherwise to the full extent required for compliance with Section
8.5 and (iii) the Servicer shall have furnished to the Agent a duly
completed Collateral Report of the type then most recently required in
accordance with Section 8.5 which sets forth comprehensive information
with respect to the BAAN Receivables then outstanding.
BAAN System means the servicing operations of
the Originator utilizing the BAAN system, currently situated in Phillipsburg,
New Jersey.
Bank Credit Agreement means that certain
First Amended and Restated Credit Agreement dated as of May 2, 2002 by and
among Flowserve Corporation, certain Subsidiaries named therein, certain
Guarantors, Lenders, Credit Suisse First Boston, as Syndication Agent and
Bank of America, as Swingline Lender and Bank Group Agent, as the same may
from time to time be amended, restated, supplemented or otherwise modified.
2
Bank Group means the Lenders and other
financial institutions from time to time parties to the Bank Credit Agreement.
Bank Group Agent means Bank of America, N.A.,
as Administrative Agent and as Collateral Agent for the Bank Group under
the Bank Credit Agreement, and any successor thereto.
Bank One means Bank One, NA (Main Office
Chicago) in its individual capacity and its successors.
Base Rate means a rate per annum equal to the
corporate base rate, prime rate or base rate of interest, as applicable,
announced by the Bank One or Bank One Corporation from time to time, changing
when and as such rate changes.
Broken Funding Costs means for any Purchaser
Interest which: (i) has its Capital reduced without compliance by Seller with
the notice requirements hereunder or (ii) does not become subject to an
Aggregate Reduction following the delivery of any Reduction Notice or (iii) is
assigned to a Financial Institution pursuant to a Liquidity Agreement or
terminated prior to the date on which it was originally scheduled to end; an
amount equal to the excess, if any, of (A) the CP Costs or Yield (as
applicable) that would have accrued during the remainder of the Tranche Periods
or the tranche periods for Commercial Paper determined by the Agent to relate
to such Purchaser Interest (as applicable) subsequent to the date of such
reduction, assignment or termination (or in respect of clause (ii) above, the
date such Aggregate Reduction was designated to occur pursuant to the Reduction
Notice) of the Capital of such Purchaser Interest if such reduction, assignment
or termination had not occurred or such Reduction Notice had not been
delivered, over (B) the sum of (x) to the extent all or a portion of such
Capital is allocated to another Purchaser Interest, the amount of CP Costs or
Yield actually accrued during the remainder of such period on such Capital for
the new Purchaser Interest, and (y) to the extent such Capital is not allocated
to another Purchaser Interest, the income, if any, actually received during the
remainder of such period by the holder of such Purchaser Interest from
investing the portion of such Capital not so allocated. In the event that the amount referred to in
clause (B) exceeds the amount referred to in clause (A), the relevant Purchaser
or Purchasers agree to pay to Seller the amount of such excess. All Broken Funding Costs shall be due and
payable hereunder upon within five (5) Business Days of written demand.
Business Day means any day on which banks are
not authorized or required to close in New York, New York or Chicago, Illinois
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 market.
Capital of any Purchaser Interest means, at
any time, (A) the Purchase Price of such Purchaser Interest, minus (B) the sum
of the aggregate amount of Collections and other payments received by the Agent
which in each case are applied to reduce such Capital in accordance with the
terms and conditions of this Agreement; provided that such Capital shall be
restored (in accordance with Section 2.5) in the amount of any
Collections or other payments so
3
received and applied if at any time the distribution of such
Collections or payments are rescinded, returned or refunded for any reason.
Change of Control means any of the following:
(i) (a) any Person or
group (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934
as in effect on the date hereof) shall own directly or indirectly, beneficially
or of record, shares representing more than 25% of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of
Provider; (b) a majority of the seats (other than vacant seats) on the board of
directors of Provider shall at any time be occupied by persons who were neither
(A) nominated by the board of directors of Provider, nor (B) appointed by
directors so nominated; or (c) any change in control (or similar event, however
denominated) with respect to Provider or any of its Subsidiaries shall occur
under and as defined in any indenture or agreement in respect of Material
Indebtedness to which a Flowserve Entity is a party; or
(ii) the failure at any time
of Provider to own, directly or indirectly, all of the issued and outstanding
capital stock of Originator; or
(iii) the failure at any time
of Originator to own and control all of the issued and outstanding capital
stock of Seller, free and clear of any Adverse Claim.
Charged-Off Receivable means a Receivable
(excluding, during the Transition Period, any BAAN Receivable): (i) as to which
the Obligor thereof has taken any action, or suffered any event to occur, of
the type described in Section 9.1(d) (as if references to Seller Party
therein refer to such Obligor); (ii) as to which the Obligor thereof, if a
natural person, is deceased, (iii) which, consistent with the Credit and
Collection Policy, would be written off Sellers books as uncollectible, or
(iv) which has been identified by Seller as uncollectible due to the lack of
creditworthiness of the Obligor thereof.
Collateral Report means any Monthly Report,
Weekly Report or Daily Report required to be furnished by the Servicer to the
Agent pursuant to Section 8.5.
Collection Account means each concentration
account, depositary account, lock-box account or similar account in which any
Collections are collected or deposited which is not subject to a Securitization
Account Agreement.
Collection Account Deposits to Collections Ratio
means, as determined as of the last day of any Accrual Period, a ratio
(expressed as a percentage) equal to (i) the aggregate Collections remitted to
the Collection Accounts by wire transfer or otherwise during the three most
recently ended Accrual Periods, divided by (ii) the aggregate Collections in
respect of such Accrual Periods.
Collection Bank means, at any time, any of
the banks holding one or more Collection Accounts or Lock-Boxes.
4
Collection Notice means a notice, in substantially
the form of (a) Annex A to Exhibit VI-A, from the Agent to a Collection
Bank or (b) Annex A to Exhibit VI-B, from the Agent to a Securitization
Bank.
Collection Trigger Event has the meaning
specified in Section 8.3.
Collections means, with respect to any
Receivable, all cash collections and other cash proceeds in respect of such
Receivable, including, without limitation, all yield, Finance Charges or other
related amounts accruing in respect thereof and all cash proceeds of Related
Security with respect to such Receivable.
Commercial Paper means promissory notes of
Company issued by Company in the commercial paper market.
Commitment means, for each Financial
Institution, the commitment of such Financial Institution to purchase Purchaser
Interests from (i) Seller and (ii) Company, in an amount not to exceed (i) in
the aggregate, the amount set forth opposite such Financial Institutions name
on Schedule A to this Agreement, as such amount may be modified in
accordance with the terms hereof and (ii) with respect to any individual
purchase hereunder, its Pro Rata Share of the Purchase Price therefor. Solely for purposes of reference, Schedule
A also sets forth the commitment of each Financial Institution as of the
date hereof to purchase its ratable share of Purchaser Interests from the
Company in accordance with the terms and provisions of the applicable Liquidity
Agreement between the Company and such Financial Institution, it being
understood that such amount may be modified from time to time in accordance
with the terms of such Liquidity Agreement.
Commitment Availability means at any time the
positive difference (if any) between (a) an amount equal to the aggregate
amount of the Commitments minus (b) the Aggregate Capital at such time.
Company has the
meaning set forth in the preamble to this Agreement.
Concentration Limit means, at any time, for
any Obligor, the product of (a) the Loss Percentage Floor at such time, (b)
33.33% and (c) the Outstanding Balance of all Eligible Receivables at such
time, or such other amount (a Special Concentration Limit) for such
Obligor designated by the Agent; provided, that in the case of an
Obligor and any Affiliate of such Obligor, the Concentration Limit shall be
calculated as if such Obligor and such Affiliate are one Obligor; and provided,
further, that Company or the Required Financial Institutions may cancel
any Special Concentration Limit which cancellation shall take effect on the
second Tuesday following written notice thereof to Seller. No cancellation of a Special Concentration
Limit shall (i) affect the obligation of any Obligor under any Receivable or
(ii) cause any Receivable that was an Eligible Receivable immediately prior to
such cancellation to cease to be an Eligible Receivable.
Contingent Obligation of a Person means any
agreement, undertaking or arrangement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide
5
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.
Contract means, with respect to any Receivable,
any and all instruments, agreements, invoices or other writings pursuant to
which such Receivable arises or which evidences such Receivable.
CP Costs means, for each day, the sum of (i)
discount or yield accrued on Pooled Commercial Paper on such day, plus (ii) any
and all accrued commissions in respect of placement agents and Commercial Paper
dealers, and issuing and paying agent fees incurred, in respect of such Pooled
Commercial Paper for such day, plus (iii) other costs associated with funding small
or odd-lot amounts with respect to all receivable purchase facilities which are
funded by Pooled Commercial Paper for such day, minus (iv) any accrual of
income net of expenses received on such day from investment of collections
received under all receivable purchase facilities funded substantially with
Pooled Commercial Paper, minus (v) any payment received on such day net of
expenses in respect of Broken Funding Costs related to the prepayment of any
Purchaser Interest of Company pursuant to the terms of any receivable purchase
facilities funded substantially with Pooled Commercial Paper. In addition to the foregoing costs, if
Seller shall request any Incremental Purchase during any period of time
determined by the Agent in its sole discretion to result in incrementally
higher CP Costs applicable to such Incremental Purchase, the Capital associated
with any such Incremental Purchase shall, during such period, be deemed to be
funded by Company in a special pool (which may include capital associated with
other receivable purchase facilities) for purposes of determining such
additional CP Costs applicable only to such special pool and charged each day
during such period against such Capital.
Credit and Collection Policy means Sellers
credit and collection policies and practices relating to Contracts and
Receivables existing on the date hereof and summarized in Exhibit VIII
hereto, as modified from time to time in accordance with this Agreement.
Daily Report means a report, in substantially
the form of Exhibit IX-C hereto (appropriately completed), furnished by
the Servicer to the Agent pursuant to Section 8.5.
Deemed Collections means the aggregate of all
amounts Seller shall have been deemed to have received as a Collection of a
Receivable. Seller shall be deemed to
have received a Collection in full of a Receivable if at any time (i) the
Outstanding Balance of any such Receivable is either (x) reduced as a result of
any defective or rejected goods or services, any discount or any adjustment or otherwise
by Seller (other than cash Collections on account of the Receivables) or (y)
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 (ii) any of the representations or warranties in Article
V are no longer true with respect to any Receivable.
6
Default Fee means with respect to any amount
due and payable by Seller in respect of any Aggregate Unpaids, an amount equal
to the greater of (i) $1000 and (ii) interest on any such unpaid Aggregate
Unpaids at a rate per annum equal to 2% above the Base Rate.
Delinquency Ratio means, at any time, a
percentage equal to (i) the aggregate Outstanding Balance of all Receivables
that were Delinquent Receivables at such time divided by (ii) the aggregate
Outstanding Balance of all Receivables at such time.
Delinquent Receivable means a Receivable as
to which any payment, or part thereof, remains unpaid for 91 days or more from
the original invoice date for such payment.
Designated Obligor means (i)
Ingersoll-Dresser Pump Company and (ii) any other Obligor indicated by the
Agent to Seller in writing.
Dilution Horizon Factor means, in respect of any Accrual Period, a
fraction, (a) the numerator of which shall be an amount equal to the aggregate Original Balance of all Receivables (excluding,
during the Transition Period, BAAN Receivables) originated during the two Accrual Periods ending immediately prior to the
last day of such Accrual Period and (b) the denominator of which shall be an
amount equal to the aggregate Original Balance of all Receivables which are
Eligible Receivables as of the end of such Accrual Period. Notwithstanding the foregoing, after (i) the
BAAN Reporting Completion Date or (ii) the Reporting Completion Date for any
system of the Originator other than the BAAN System or the PRMS system, upon
written notice to the Seller and the Servicer, the Agent may, in its sole
discretion, increase or decrease the number of Accrual Periods used in the
calculation of the numerator of the fraction described in the preceding
sentence in light of the results of the audit completed in connection with the
BAAN Reporting Completion Date or such Reporting Completion Date.
Dilution Percentage
means, as of any date of determination, the greater of (i) the Dilution
Percentage Floor in effect at such
time and (ii) a percentage calculated in accordance with the following formula:
DP = [(ASF x ADR) + [(HDR - ADR) x (HDR/ADR)]] x DHF
where:
DP
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the
Dilution Percentage;
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ADR
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|
the
average of monthly Dilution Ratio in respect of the 12 most recent Accrual
Periods;
|
|
|
|
ASF
|
=
|
the
Applicable Stress Factor at such time;
|
|
|
|
HDR
|
=
|
the
highest average three-month Dilution Ratio occurring during the 12 most
recent Accrual Periods; and
|
|
|
|
DHF
|
=
|
the
Dilution Horizon Factor at such time.
|
7
Dilution Percentage Floor
means, at any time, the percentage determined in reference to the following
table based upon the Rating Level in effect at such time:
Rating Level
|
|
Dilution
Percentage Floor
|
|
|
|
|
|
Rating Level 1
|
|
11
|
%
|
|
|
|
|
Rating Level 2
|
|
11
|
%
|
|
|
|
|
Rating Level 3
|
|
11
|
%
|
|
|
|
|
Rating Level 4
|
|
16.50
|
%
|
|
|
|
|
Rating Level 5
|
|
16.50
|
%
|
|
|
|
|
Rating Level 6
|
|
19.25
|
%
|
Dilution Ratio means, in respect of any
Accrual Period, a ratio (expressed as a percentage) equal to (i) the aggregate
amount of Dilutions which occurred during such Accrual Period, divided by (ii)
the aggregate Original Balance of all Receivables (excluding, during the
Transition Period, BAAN Receivables) generated by Originator during the Accrual
Period which ended two Accrual Periods prior to such Accrual Period.
Dilution Reserve
means, on any date, an amount equal to (i) the Dilution Percentage, determined
in reference to the then most recently issued Monthly Report, multiplied by
(ii) the Net Receivables Balance as of the close of business of the Servicer on
such date.
Dilutions means, (i) during the Transition
Period, the aggregate amount of reductions or cancellations described in clause
(i) of the definition of Deemed Collections related to all Receivables that
are not BAAN Receivables and (ii) after the Transition Period, the aggregate
amount of reductions or cancellations described in clause (i) of the definition
of Deemed Collections.
Discount Rate means, the LIBO Rate or the
Base Rate, as applicable, with respect to each Purchaser Interest of the
Financial Institutions.
Eligible BAAN Receivable means, during the
Transition Period, a BAAN Receivable other than a BAAN Receivable as to which
any payment, or part thereof, remains unpaid for 91 days or more from the
original invoice date for such payment. Notwithstanding the foregoing, after
(i) the BAAN Reporting Completion Date or (ii) December 31, 2004, no BAAN
Receivable shall constitute an Eligible BAAN Receivable.
Eligible Receivable
means, at any time, a Receivable (excluding, during the Transition Period, any
BAAN Receivable):
(i) the Obligor of which
8
(a) if a natural person, is
a resident of the United States or, if a corporation or other business
organization, is organized under the laws of the United States or any political
subdivision thereof and has its chief executive office in the United States; provided
that a Receivable satisfying the requirements of Eligible Receivable but for
this clause (i)(a) may constitute an Eligible Receivable if (x) the Outstanding
Balance of such Receivable, when added to the Outstanding Balance of all other
Receivables then constituting Eligible Receivables by reason of this proviso,
does not exceed an amount equal to 5% of the Outstanding Balance of all Receivables
(excluding, during the Transition Period, BAAN Receivables) at such time, and
(y) any Rating Level other than Rating Level 6 shall then be in effect;
(b) is not an Affiliate of
any of the parties hereto;
(c) is not a Designated
Obligor; and
(d) is not a government or
a governmental subdivision or agency; provided that a Receivable
satisfying the requirements of Eligible Receivable but for this clause (i)(d)
may constitute an Eligible Receivable if (x) the Outstanding Balance of such
Receivable, when added to the Outstanding Balance of all other Receivables then
constituting Eligible Receivables by reason of this proviso, does not exceed an
amount equal to 5% of the Outstanding Balance of all Receivables (excluding,
during the Transition Period, BAAN Receivables) at such time, and (y) any
Rating Level other than Rating Level 6 shall then be in effect,
(ii) (a) the Obligor of
which is not the Obligor of any Charged-Off Receivable and (b) if the Obligor
is the Obligor of any Delinquent Receivables, the aggregate Outstanding Balance
of such Delinquent Receivables does not exceed an amount equal to 25% of the
aggregate Outstanding Balance of all Receivables (excluding, during the
Transition Period, BAAN Receivables) of such Obligor at such time,
(iii) which is not a
Charged-Off Receivable or a Delinquent Receivable,
(iv) which by its terms is
due and payable within 30 days of the original billing date therefor and has
not had its payment terms extended; provided that a Receivable
satisfying the requirements of Eligible Receivable but for this clause (iv)
may constitute an Eligible Receivable if (a) such Receivable by its terms is
due and payable within 60 days of the original billing date therefor and has
not had its payment terms extended, (b) the Outstanding Balance of such
Receivable, when added to the Outstanding Balance of all other Receivables then
constituting Eligible Receivables by reason of this proviso, does not exceed an
amount equal to 5% of the Outstanding Balance of all Receivables (excluding,
during the Transition Period, BAAN Receivables) at such time, and (c) any
Rating Level other than Rating Level 6 shall then be in effect,
(v) which is an account
within the meaning of Section 9-102 of the UCC of all applicable jurisdictions,
9
(vi) which is denominated and
payable only in United States dollars in the United States,
(vii) which, together with any
Contract related thereto, 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 subject to no offset or counterclaim;
provided, that, a Receivable (a) satisfying each of the requirements of
Eligible Receivable but for being subject to offset and (b) the Obligor of
which is E.I. du Pont de Nemours and Company, may constitute an Eligible
Receivable to the extent that the Outstanding Balance of such Receivable is
greater than such offset;
(viii) which, together with any
Contract related thereto, (A) does not require the Obligor thereon to consent
to the transfer, sale or assignment of the rights and duties of Originator or
any of its assignees and (B) is not subject to a confidentiality provision that
purports to restrict the ability of any Purchaser to exercise its rights under
this Agreement, including, without limitation, its right to review such
Contract,
(ix) which constitutes an
obligation to pay a specified sum of money representing all or part of the
sales price of merchandise, insurance or services within the meaning of the
Investment Company Act of 1940, Section 3(c)5 (as amended),
(x) which, together with
any Contract related thereto, 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) and with
respect to which no part of any Contract related thereto is in violation of any
such law, rule or regulation,
(xi) which satisfies all
applicable requirements of the Credit and Collection Policy,
(xii) which was generated in
the ordinary course of Originators business,
(xiii) which arises solely from
the sale of goods or the provision of services to the related Obligor by
Originator, and not by any other Person (in whole or in part),
(xiv) as to which the Agent has
determined that such Receivable or class of Receivables is acceptable as an
Eligible Receivable, including, without limitation, because such Receivable
arises under a Contract that is acceptable to the Agent (and Seller may assume
a Receivable satisfies this clause (xiv) unless and until it shall have
received notice in writing from the Agent to the contrary),
(xv) which is not subject to
any right of rescission, set-off or counterclaim, or any defense arising out of
the violation of any usury laws, of the applicable Obligor against Originator
or any other Adverse Claim, and the Obligor thereon holds no right as against
Originator to cause Originator to repurchase the goods or merchandise the sale
of which shall have given rise to such Receivable (except with respect to sale
discounts
10
effected pursuant to the Contract, or defective goods
returned in accordance with the terms of the Contract),
(xvi) as to which 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 (it being understood that, in the case of any progress
billing arrangement, individual installment obligations of the applicable
Obligor shall not constitute Eligible Receivables until the underlying project
shall have been completed and all performance obligations of Originator in
connection therewith shall have been fully rendered); provided that a
Receivable satisfying the requirements of Eligible Receivable but for this
clause (xvi) may constitute an Eligible Receivable if (a) such Receivable was
originated at or is otherwise attributable to Originators plant located in
Taneytown, Maryland and (b) the Outstanding Balance of such Receivable, when
added to the Outstanding Balance of all other Receivables then constituting
Eligible Receivables by reason of this proviso, does not exceed an amount equal
to 90% of the Outstanding Balance of all Receivables (excluding, during the
Transition Period, BAAN Receivables) originated at or is otherwise attributable
to Originators plant located in Taneytown, Maryland, and
(xvii) all right, title and
interest to and in which has been validly transferred by Originator directly to
Seller under and in accordance with the Receivables Sale Agreement, and Seller
has good and marketable title thereto free and clear of any Adverse Claim.
Facility Termination Date means the earliest
of (i) October 7, 2007, (ii) the
Liquidity Termination Date and (iii) the Amortization Date.
Federal Bankruptcy Code means Title 11 of the
United States Code entitled Bankruptcy, as amended and any successor statute
thereto.
Federal Funds Effective Rate means, for any
period, a fluctuating interest rate per annum for each day during such period
equal to (a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the preceding Business Day) by the Federal Reserve Bank of New York in
the Composite Closing Quotations for U.S. Government Securities; or (b) if such
rate is not so published for any day which is a Business Day, the average of
the quotations at approximately 10:30 a.m. (Chicago time) for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
Fee Letter means that certain letter
agreement dated as of the date hereof among Seller, JP Morgan Securities Inc.
and the Agent, as it may be amended or modified and in effect from time to
time.
11
Finance Charges means, with respect to a
Contract, any finance, interest, late payment charges or similar charges owing
by an Obligor pursuant to such Contract.
Financial Institutions has the meaning set
forth in the preamble in this Agreement.
Flowserve means Flowserve US Inc., a Delaware
corporation.
Flowserve Entity means Provider, Originator
or any of their respective Subsidiaries other than Seller.
Funding Agreement means this Agreement and
any agreement or instrument executed by any Funding Source with or for the
benefit of Company, including a Liquidity Agreement.
Funding Source means (i) any Financial
Institution or (ii) any insurance company, bank or other funding entity
providing liquidity, credit enhancement or back-up purchase support or
facilities to Company. For purposes of
clarification, a Funding Source may become a Financial Institution hereunder
only in accordance with Section 12.1(b) of this Agreement.
GAAP means generally accepted accounting
principles in effect in the United States of America as of the date of this
Agreement.
Incremental Purchase means a purchase of one
or more Purchaser Interests which increases the total outstanding Aggregate
Capital hereunder.
Indebtedness of any Person shall mean,
without duplication, (a) all obligations of such Person for borrowed money, (b)
all obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property or assets purchased by
such Person, (e) all obligations of such Person issued or assumed as the
deferred purchase price of property or services (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business),
(f) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Adverse Claim on property owned or acquired by such Person, whether or not
the obligations secured thereby have been assumed, (g) all guarantees by such
Person of Indebtedness of third parties and (h) all other obligations of such
Person constituting Indebtedness as such term is defined in the Bank Credit
Agreement as in effect on the date hereof..
Independent Director shall mean a member of
the Board of Directors of Seller who is not at such time, and has not been at
any time, (A) a director, officer, employee or affiliate of any Flowserve
Entity, or (B) the beneficial owner (at the time of such individuals
appointment as an Independent Director or at any time thereafter while serving
as an Independent Director) of any of the outstanding common shares of Seller,
or any Flowserve Entity, having general voting rights.
12
Intercreditor Agreement means an
intercreditor agreement in form and substance satisfactory to the Agent between
the Agent, on behalf of the Purchasers, and the Bank Group Agent, on behalf of
the Bank Group, relating to the respective interests and priorities of the
Purchasers and the Bank Group in the Shared Collection Accounts and other
assets and interests in property of Originator and Seller.
LIBO Rate means the rate per annum equal to
the sum (rounded, if necessary, to the next higher 1/16 of 1%) of
(I) (a) the applicable
British Bankers Association Interest Settlement Rate for deposits in U.S.
dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two
Business Days prior to the first day of the relevant Tranche Period, and having
a maturity equal to such Tranche Period, provided that, (i) if Reuters
Screen FRBD is not available to the Agent for any reason, the applicable LIBO
Rate for the relevant Tranche Period shall instead be the applicable British
Bankers Association Interest Settlement Rate for deposits in U.S. dollars as
reported by any other generally recognized financial information service as of
11:00 a.m. (London time) two Business Days prior to the first day of such
Tranche Period, and having a maturity equal to such Tranche Period, and (ii) if
no such British Bankers Association Interest Settlement Rate is available to
the Agent, the applicable LIBO Rate for the relevant Tranche Period shall
instead be the rate determined by the Agent to be the rate at which Bank One
offers to place deposits in U.S. dollars with first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Tranche Period, in the approximate amount to be
funded at the LIBO Rate and having a maturity equal to such Tranche Period,
divided by (b) one minus the maximum aggregate reserve requirement (including
all basic, supplemental, marginal or other reserves) which is imposed against
the Agent in respect of Eurocurrency liabilities, as defined in Regulation D of
the Board of Governors of the Federal Reserve System as in effect from time to
time (expressed as a decimal), applicable to such Tranche Period plus
(II) a per annum rate
equal to (a) at all times that Rating Level 1, Rating Level 2 or Rating Level 3
shall be in effect, 2.00%; (b) at all times that Rating Level 4 shall be in
effect, 2.50%; and (c) at all times that Rating Level 5 or Rating Level 6 shall
be in effect, 3.00%.
Liquidity Agreement means any agreement as
may be in effect from time to time among the Company and the Financial
Institutions or any Funding Source providing for the commitment of such
Financial Institutions to purchase from the Company at any time all or any portion
of the Companys Purchaser Interests.
Liquidity Termination Date means October 6,
2005.
Lock-Box means each locked postal box with
respect to which a bank who has executed a Lock-Box Agreement has been granted
exclusive access for the purpose of retrieving and processing payments made on
the Receivables and which is listed on Exhibit IV-A.
13
Lock-Box Agreement means an agreement
substantially in the form of Exhibit VI among Originator, Seller, the
Agent and a Collection Bank.
Loss Horizon Factor means, in respect of any
Accrual Period, a fraction, (a) the
numerator of which shall be an amount equal to the aggregate Original Balance
of all Receivables (excluding, during the Transition Period, BAAN
Receivables) originated during the three
Accrual Periods ending immediately prior to the last day of such Accrual Period
and (b) the denominator of which shall be an amount equal to the aggregate
Original Balance of all Eligible Receivables as of the end of such Accrual
Period.
Loss Percentage means, at any time, the greater of (i) the Loss Percentage Floor in
effect at such time and (ii) a percentage calculated in accordance with the
following formula:
LP = ASF x LHF x LR
where:
ASF
|
=
|
Applicable
Stress Factor at such time;
|
|
|
|
LP
|
=
|
the
Loss Percentage;
|
|
|
|
LHF
|
=
|
the
Loss Horizon Factor at such time; and
|
|
|
|
LR
|
=
|
the
highest three-month rolling average Loss Ratio occurring during the 12 most
recent Accrual Periods.
|
Loss Percentage Floor means,
at any time, the percentage
determined in reference to the following table based upon the Rating
Level in effect at such time:
Rating Level
|
|
Loss
Percentage Floor
|
|
|
|
|
|
Rating Level 1
|
|
10
|
%
|
|
|
|
|
Rating Level 2
|
|
10
|
%
|
|
|
|
|
Rating Level 3
|
|
10
|
%
|
|
|
|
|
Rating Level 4
|
|
15
|
%
|
|
|
|
|
Rating Level 5
|
|
15
|
%
|
|
|
|
|
Rating Level 6
|
|
17.50
|
%
|
Loss Ratio means, at any time, a ratio (expressed as a percentage) equal to (i)
the sum of (A) the aggregate Outstanding Balance of all Receivables (excluding,
during the Transition Period, BAAN Receivables) as to which any payment, or portion thereof, remains unpaid more than
one hundred fifty (150) days and less than one hundred eighty-one (181) days
past the original invoice date as of the last day of the then most recently
ended Accrual Period plus (B)
14
the aggregate Outstanding Balance of all Charged-Off Receivables
written off during such Accrual Period, divided by (ii) the aggregate Original
Balance of all Receivables (excluding, during the Transition Period, BAAN
Receivables) originated during the Accrual Period which ended five Accrual
Periods prior to such Accrual Period.
Loss Reserve means, on any date, an amount
equal to (i) the Loss Percentage, determined in reference to the then most
recently issued Monthly Report, multiplied by (ii) the Net Receivables Balance
as of the close of business of the Servicer on such date.
Material Adverse Effect means a material
adverse effect on (i) the financial condition of Provider or any Seller Party,
(ii) the ability of any Seller Party to perform its obligations under this
Agreement or the Provider to perform its obligations under the Performance
Undertaking, (iii) the legality, validity or enforceability of this Agreement
or any other Transaction Document, (iv) any Purchasers interest in the
Receivables taken as a whole or in any significant portion of the Receivables,
the Related Security or the Collections with respect thereto, or (v) the
collectibility of the Receivables generally or of any material portion of the
Receivables.
Monthly Report means a report, in
substantially the form of Exhibit IX-A hereto (appropriately completed),
furnished by the Servicer to the Agent pursuant to Section 8.5.
Moodys means Moodys Investors Service, Inc.
and any successor thereto.
Net Receivables Balance means, at any time,
the aggregate Outstanding Balance of all Eligible Receivables at such time
reduced by the aggregate amount by which the Outstanding Balance of all
Eligible Receivables of each Obligor and its Affiliates exceeds the
Concentration Limit for such Obligor.
Non-Renewing Financial Institution has the
meaning set forth in Section 12.3(a).
Obligations
shall have the meaning set forth in Section 2.1.
Obligor means a Person obligated to make
payments pursuant to a Contract.
Original Balance means, in respect of any
Receivable, the principal amount thereof on the date of issuance of the related
invoice.
Originator means Flowserve, in its capacity
as seller under the Receivables Sale Agreement.
Outstanding Balance of any Receivable at any
time means the then outstanding principal balance thereof.
Participant has
the meaning set forth in Section 12.2.
15
Performance Undertaking means that certain
Performance Undertaking of even date herewith made by Provider in favor of
Seller, substantially in the form of Exhibit X, as the same may be amended,
restated or otherwise modified from time to time.
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.
Pooled Commercial Paper means Commercial
Paper notes of Company subject to any particular pooling arrangement by
Company, but excluding Commercial Paper issued by Company for a tenor and in an
amount specifically requested by any Person in connection with any agreement
effected by Company.
Potential Amortization Event means an event
which, with the passage of time or the giving of notice, or both, would
constitute an Amortization Event.
Proposed Reduction
Date has the meaning set forth in Section 1.3.
Pro Rata Share means, for each Financial
Institution, a percentage equal to (i) the Commitment of such Financial
Institution, divided by (ii) the aggregate amount of all
Commitments of all Financial Institutions hereunder, adjusted as necessary to
give effect to the application of the terms of Section 12.3.
Provider means
Flowserve Corporation, a New York corporation.
Purchase Limit
means $75,000,000.
Purchase Notice
has the meaning set forth in Section 1.2.
Purchase Price means, with respect to any
Incremental Purchase of a Purchaser Interest, the amount paid to Seller for
such Purchaser Interest which shall not exceed the least of (i) the amount
requested by Seller in the applicable Purchase Notice, (ii) the unused portion
of the Purchase Limit on the applicable purchase date and (iii) the excess, if
any, of the Net Receivables Balance (less the Aggregate Reserves) on the
applicable purchase date over the aggregate outstanding amount of Aggregate
Capital determined as of the date of the most recent Monthly Report, taking
into account such proposed Incremental Purchase.
Purchasers means
Company and each Financial Institution.
Purchaser Interest means, at any time, an
undivided percentage ownership interest (computed as set forth below)
associated with a designated amount of Capital, selected pursuant to the terms
and conditions hereof in (i) each Receivable arising prior to the time of the
most recent computation or recomputation of such undivided interest, (ii) all
Related Security with respect to each such Receivable, and (iii) all
Collections with respect to, and other proceeds of, each such Receivable. Each such undivided percentage interest
shall equal:
16
(a) during
the Transition Period:
C
|
|
|
[NRB AR] + [0.55
x EB]
|
(b) at
any time after the Transition Period:
where:
C
|
=
|
the Capital of such
Purchaser Interest.
|
|
|
|
AR
|
=
|
the Aggregate Reserves.
|
|
|
|
NRB
|
=
|
the Net Receivables
Balance.
|
|
|
|
EB
|
=
|
an amount equal to (i)
at all times that Rating Level 1, Rating Level 2 or Rating Level 3 shall be
in effect, the aggregate Outstanding Balance of all Eligible BAAN Receivables
and (ii) at all other times, zero.
|
Such undivided percentage ownership interest shall be
initially computed on its date of purchase.
Thereafter, until the Amortization Date, each Purchaser Interest shall
be automatically recomputed (or deemed to be recomputed) on each day prior to
the Amortization Date. The variable
percentage represented by any Purchaser Interest as computed (or deemed
recomputed) as of the close of the business day immediately preceding the
Amortization Date shall remain constant at all times thereafter.
Purchasing Financial Institution has the
meaning set forth in Section 12.1(b).
Rating Level shall mean any of the following,
as determined at any time in reference to (a) the senior implied issuer rating
then assigned to Provider by Moodys (the Moodys Rating) and (b) the
long term local issuer credit rating then assigned to Provider by S&P (the
S&P Rating):
Rating Level 1
|
The S&P Rating is
BB+ or better and the Moodys Rating is Ba1 or better.
|
|
|
Rating Level 2
|
The S&P Rating is
BB or better, the Moodys Rating is Ba2 or better and Rating Level 1 does not
apply.
|
17
Rating Level 3
|
The S&P Rating is
BB- or better, the Moodys Rating is Ba3 or better and neither Rating Level 1
nor Rating Level 2 applies.
|
|
|
Rating Level 4
|
The S&P Rating is
B+ or better, the Moodys Rating is B1 or better and no other Rating Level
applies.
|
|
|
Rating Level 5
|
The S&P Rating is
B+ and
the Moodys Rating is B1.
|
|
|
Rating Level 6
|
The S&P Rating is
less than B+ or the Moodys Rating is less than B1.
|
Receivable means all indebtedness and other
obligations owed to Seller or Originator (at the time it arises, and before
giving effect to any transfer or conveyance under the Receivables Sale
Agreement or hereunder) or in which Seller or Originator has a security interest
or other interest, all or any material portion of the collection activities
with respect to which indebtedness or obligations are being conducted by any of
the following units of the Originator:
(i) the servicing
operations utilizing the PRMS system, situated in Kalamazoo, Michigan;
(ii) the servicing
operations utilizing the Oracle system, situated in Springville, Utah;
(iii) the servicing operations
utilizing the Epic system, situated in Phillipsburg, New Jersey; or
(iv) the BAAN System.
The term Receivable shall include, without
limitation, any such indebtedness, obligation or interest constituting an
account, chattel paper, instrument or general intangible, arising in connection
with the sale of goods or the rendering of services by Originator, and further
includes, without limitation, the obligation to pay any Finance Charges with
respect thereto. 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 of whether the account debtor or Seller treats such
indebtedness, rights or obligations as a separate payment obligation.
Receivables Sale Agreement means that certain
Receivables Sale Agreement, dated as the date hereof, between Originator and
Seller, as the same may be amended, restated or otherwise modified from time to
time.
Records means, with respect to any
Receivable, all Contracts and other documents, books, records and other
information (including, without limitation, computer programs, tapes,
18
disks, punch cards, data processing software and related property and
rights) relating to such Receivable, any Related Security therefor and the
related Obligor.
Redirection Event
means, any time that (i) Rating Level 4, Rating Level 5 or Rating Level 6 is in
effect or (ii) the Collection Account Deposits to Collections Ratio exceeds
30%.
Reduction Notice
has the meaning set forth in Section 1.3.
Reduction Percentage means, for any Purchaser
Interest acquired by the Financial Institutions from Company for less than the
Capital of such Purchaser Interest, a percentage equal to a fraction the
numerator of which is the Company Transfer Price Reduction for such Purchaser
Interest and the denominator of which is the Capital of such Purchaser
Interest.
Regulatory Change
has the meaning set forth in Section 10.2.
Reinvestment has
the meaning set forth in Section 2.2.
Related Security
means, with respect to any Receivable:
(i) all of Sellers
interest in the inventory and goods (including returned or repossessed
inventory or goods), if any, the sale, financing or lease of which by
Originator gave rise to such Receivable, and all insurance contracts with
respect thereto,
(ii) all other security
interests or liens and property subject thereto from time to time, if any,
purporting to secure payment of such Receivable, whether pursuant to the
Contract related to such Receivable or otherwise, together with all financing
statements and security agreements describing any collateral securing such
Receivable,
(iii) all guaranties, letters
of credit, insurance and other agreements or arrangements of whatever character
from time to time supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or otherwise,
(iv) all service contracts
and other contracts and agreements associated with such Receivable,
(v) all Records related to
such Receivable,
(vi) all of Sellers right,
title and interest in, to and under the Receivables Sale Agreement in respect
of such Receivable and all of Sellers right, title and interest in, to and
under the Performance Undertaking, and
(vii) all proceeds of any of
the foregoing.
19
Reporting Completion Date means, with respect
to any system of the Originator, the date on which (i) an audit of the such
system and the Receivables originated under such system shall have been
completed and shall have been determined by the Agent, in its sole discretion,
to be satisfactory in scope and content, (ii) the Servicer shall have
implemented reporting systems capable of reporting the Receivables originated
under such system timely and otherwise to the full extent required for
compliance with Section 8.5 and (iii) the Servicer shall have furnished
to the Agent a duly completed Collateral Report of the type then most recently
required in accordance with Section 8.5 which sets forth comprehensive
information with respect to the Receivables originated under such system then
outstanding.
Required Financial Institutions means, at any
time, Financial Institutions with Commitments in excess of 51% of the Purchase
Limit.
Restricted Junior Payment means (i) any
dividend or other distribution, direct or indirect, on account of any shares of
any class of capital stock of Seller now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock or in any junior class
of stock of Seller, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of capital stock of Seller now or hereafter outstanding,
(iii) any payment or prepayment of principal of, premium, if any, or interest,
fees or other charges on or with respect to, and any redemption, purchase,
retirement, defeasance, sinking fund or similar payment and any claim for
rescission with respect to the Subordinated Loans (as defined in the
Receivables Sale Agreement), (iv) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of capital stock of
Seller now or hereafter outstanding, and (v) any payment of management fees by
Seller (except for reasonable management fees to the Originator or its
Affiliates in reimbursement of actual management services performed).
S&P means Standard
& Poors Ratings Service, a division of The McGraw-Hill Companies, Inc.,
and any successor thereto.
Securitization Account means each
concentration account, depositary account, lock-box account or similar account
in which any Collections are collected or deposited which is subject to a
Securitization Account Agreement.
Securitization Account Agreement means an
agreement substantially in the form of Exhibit VI-B among Originator,
Seller, the Agent and a Securitization Bank.
Securitization Bank
means, at any time, any bank holding the Securitization Account.
Seller has the
meaning set forth in the preamble to this Agreement.
Seller Parties has the meaning set forth in
the preamble to this Agreement.
Servicer means at any time the Person (which
may be the Agent) then authorized pursuant to Article VIII to service,
administer and collect Receivables.
20
Servicing Fee
has the meaning set forth in Section 8.6.
Servicing System
has the meaning set forth in Section 7.1(m).
Settlement Date (Capital) means each Tuesday;
provided that (i) if such date is not a Business Day, the Settlement
Date (Capital) shall occur on the next following Business Day, and (ii) if
Rating Level 6 shall then be in effect, each Business Day shall be a Settlement
Date (Capital).
Settlement Date (Fees) means (i) any date on
which either a Monthly Report or a Daily Report is required to be delivered to
the Agent in accordance with Section 8.5, and (ii) during any period in
which the Financial Institutions shall hold any Purchaser Interest hereunder, a
Settlement Date (Fees) shall, solely with respect to accrued Yield, also occur
on the last day of each Tranche Period in respect of such Purchaser Interest.
Settlement Period means (A) in respect of
each Purchaser Interest of Company, the immediately preceding Accrual Period,
and (B) in respect of each Purchaser Interest of the Financial Institutions,
the entire Tranche Period of such Purchaser Interest; provided that if
Rating Level 6 shall then be in effect, Settlement Period shall mean, in
respect of any Settlement Date (Capital), the period from the immediately
preceding Settlement Date (Capital) to such Settlement Date (Capital).
Shared Collection Account means any
Collection Account in respect of which the Bank Group or the Bank Group Agent
has any dominion, control or Adverse Claim.
Subsidiary of a Person means (i) any
corporation more than 50% of the outstanding securities having ordinary voting
power of which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any partnership,
association, limited liability company, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all
references herein to a Subsidiary shall mean a Subsidiary of Seller.
Termination Date
has the meaning set forth in Section 2.2.
Termination
Percentage has the meaning set forth in Section 2.2.
Terminating Financial Institution has the
meaning set forth in Section 12.3(a).
Terminating Tranche
has the meaning set forth in Section 4.3(b).
Tranche Period means, with respect to any
Purchaser Interest held by a Financial Institution, including any Purchaser
Interest or an undivided interest in a Purchaser Interest assigned to a
Financial Institution pursuant to a Liquidity Agreement:
21
(a) if Yield for such
Purchaser Interest is calculated on the basis of the LIBO Rate, a period of
one, two, three or six months, or such other period as may be mutually
agreeable to the Agent and Seller, commencing on a Business Day selected by
Seller or the Agent pursuant to this Agreement. Such Tranche Period shall end on the day in the applicable
succeeding calendar month which corresponds numerically to the beginning day of
such Tranche Period, provided, however, that if there is no such numerically
corresponding day in such succeeding month, such Tranche Period shall end on
the last Business Day of such succeeding month; or
(b) if Yield for such
Purchaser Interest is calculated on the basis of the Base Rate, a period
commencing on a Business Day selected by Seller and agreed to by the Agent,
provided no such period shall exceed one month.
If any Tranche Period would end on a day which is not
a Business Day, such Tranche Period shall end on the next succeeding Business
Day, provided, however, that in the case of Tranche Periods
corresponding to the LIBO Rate, if such next succeeding Business Day falls in a
new month, such Tranche Period shall end on the immediately preceding Business
Day. In the case of any Tranche Period
for any Purchaser Interest which commences before the Amortization Date and
would otherwise end on a date occurring after the Amortization Date, such
Tranche Period shall end on the Amortization Date. The duration of each Tranche Period which commences after the
Amortization Date shall be of such duration as selected by the Agent.
Transaction Documents means, collectively,
this Agreement, each Purchase Notice, the Receivables Sale Agreement, each
Lock-Box Agreement, each Securitization Account Agreement, the Performance
Undertaking, the Fee Letter, the Subordinated Note (as defined in the
Receivables Sale Agreement) and all other instruments, documents and agreements
executed and delivered in connection herewith.
Transition Period means the period from the
date hereof until the BAAN Reporting Completion Date.
UCC means the Uniform Commercial Code as from
time to time in effect in the specified jurisdiction.
Weekly Report means a report, in
substantially the form of Exhibit IX-B hereto (appropriately completed),
furnished by the Servicer to the Agent pursuant to Section 8.5.
Yield means for each respective Tranche
Period relating to Purchaser Interests of the Financial Institutions,
including, without limitation, any Purchaser Interests or undivided interests
in Purchaser Interests assigned to a Financial Institution pursuant to a
Liquidity Agreement, an amount equal to the product of the applicable Discount
Rate for each Purchaser Interest multiplied by the Capital of such Purchaser
Interest for each day elapsed during such Tranche Period, annualized on a 360
day basis.
22
Yield and Servicing Reserve means, at any
time, an amount equal to 2.0% multiplied by the Net Receivables Balance as of
the close of business of the Servicer on such date.
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 Illinois, and not
specifically defined herein, are used herein as defined in such Article 9.
23
SCHEDULE A
COMMITMENTS
FINANCIAL INSTITUTION
|
|
COMMITMENT
|
|
|
|
|
|
Bank One, NA
(Main Office Chicago)
|
|
$
|
75,000,000
|
|
|
|
|
|
TOTAL
COMMITMENTS
|
|
$
|
75,000,000
|
|
1
SCHEDULE B
CLOSING DOCUMENTS
(Attached)
1