INITIAL PURCHASE AND CONTRIBUTION AGREEMENT

Exhibit 10.12

Execution Version

INITIAL PURCHASE AND CONTRIBUTION AGREEMENT

Dated as of March 31, 2009

Among

The parties listed on Schedule I hereto

as Sellers

and

IR CLIMATE RECEIVABLES FUNDING INC.

as Purchaser

and

INGERSOLL-RAND COMPANY

as Collection Agent

TABLE OF CONTENTS

 

 

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INITIAL PURCHASE AND CONTRIBUTION AGREEMENT

Dated as of March 31, 2009

Each of the parties listed on Schedule I hereto (each, a “ Seller ” and collectively, the “ Sellers ”), IR CLIMATE RECEIVABLES INC., a Delaware corporation, as the purchaser (the “ Purchaser ”), and INGERSOLL-RAND COMPANY, a New Jersey corporation (“ IR Company ”), as the initial Collection Agent (as defined below), agree as follows:

PRELIMINARY STATEMENTS.

(1) Certain terms which are capitalized and used throughout this Agreement (in addition to those defined above) are defined in Article I of this Agreement (as defined below).

(2) The Sellers have Receivables that they wishes to sell to the Purchaser, and the Purchaser is prepared to purchase such Receivables on the terms set forth in this Initial Purchase and Contribution Agreement (as amended, supplemented, restated or otherwise modified in accordance with the terms hereof, this “ Agreement ”).

(3) The Sellers may also wish to contribute Receivables to the capital of the Purchaser on the terms set forth herein.

NOW, THEREFORE, the parties agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Certain Defined Terms . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Agreement ” has the meaning specified in the Preliminary Statements.

“ Business Day ” means any day on which banks are not authorized or required to close in New York City or Charlotte, North Carolina.

“ Collection Agent ” means at any time the Person then authorized pursuant to Section 6.01 to service, administer and collect Transferred Receivables.

“ Collection Agent Default ” means any Event of Termination relating to the Collection Agent set forth in Sections 7.01(a), (c), (g) or (i), or any “Collection Agent Default,” as such term is defined in the Secondary Purchase Agreement or the RIPA.

“ Collection Agent Fee ” has the meaning specified in Section 6.03.

“ Collections ” means, with respect to any Receivable, all cash collections and other cash proceeds of such Receivable, including, without limitation, all cash proceeds of Related Security with respect to such Receivable, and all funds deemed to have been received by the applicable Seller or any other Person as a Collection pursuant to Section 2.04.

“ Contract ” means an agreement between a Seller and an Obligor, in each case substantially in the form of one of the written contracts or (in the case of any open account agreement) one of the invoices approved by the Purchaser, pursuant to or under which such Obligor shall be obligated to pay for merchandise, insurance or services from time to time.

“ Contributed Receivable ” has the meaning specified in Section 2.06.

“ Credit and Collection Policy ” means those receivables credit and collection policies and practices of the Sellers in effect on the date of this Agreement applicable to the Receivables and described in Exhibit A hereto, as modified in compliance with this Agreement.

“ Defaulted Receivable ” means a Receivable:

(i) as to which any payment, or part thereof, remains unpaid for 61 or more days from the original due date for such payment;

(ii) as to which the Obligor thereof or any other Person obligated thereon or owning any Related Security in respect thereof has taken any action, or suffered any event to occur, of the type described in Section 7.01(g); or

(iii) which, consistent with the Credit and Collection Policy, would be written off as uncollectible.

“ Deferred Purchase Price ” means the portion of the Purchase Price of Purchased Receivables purchased on any Purchase Date exceeding the amount of the Purchase Price under Section 2.02 to be paid in cash, which portion when added to the cumulative amount of all previous Deferred Purchase Prices (after giving effect to any payments made on account thereof) shall not exceed 15% of the Outstanding Balance of the Transferred Receivables. The obligations of the Purchaser in respect of the Deferred Purchase Price shall be evidenced by the Purchaser’s subordinated promissory note in the form of Exhibit C hereto.

“ Diluted Receivable ” means that portion (and only that portion) of any Receivable which is either (a) reduced or canceled as a result of (i) any defective, rejected or returned merchandise or services or any failure by a Seller to deliver any merchandise or provide any services or otherwise to perform under the underlying Contract, (ii) any change in the terms of or cancellation of, a Contract or any cash discount, discount for quick payment or other adjustment by a Seller which reduces the amount payable by the Obligor on the related Receivable (except any such change or cancellation resulting from or relating to the financial inability to pay or insolvency of the Obligor of such

 

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Receivable) or (iii) any set-off by an Obligor in respect of any claim by such Obligor as to amounts owed by it on the related Receivable (whether such claim arises out of the same or a related transaction or an unrelated transaction) or (b) subject to any specific dispute, offset, counterclaim or defense whatsoever (except the discharge in bankruptcy of the Obligor thereof); provided that, notwithstanding any of the foregoing, no Receivable or portion of a Receivable shall be considered a Diluted Receivable because of the financial inability to pay or insolvency of the Obligor of such Receivable.

“ Discount ” means, in respect of each Purchase, seven percent (7.00%) per annum on the Outstanding Balance of the Receivables that are the subject of such Purchase adjusted for the average maturity of such Receivables; provided , however , the foregoing Discount will be revised prospectively by request of either of the parties hereto to reflect changes in recent experience with respect to write-offs, timing and cost of Collections and cost of funds; provided that such revision is consented to by both of the parties (it being understood that each party agrees to duly consider such request but shall have no obligation to give such consent).

“ Eligible Receivable ” means a Receivable:

(i) the Obligor of which has a billing address in the United States, is not an Affiliate of any of the parties hereto, and is not a government or a governmental subdivision or agency;

(ii) which, at the time of the transfer thereof to the Purchaser under this Agreement, is not a Defaulted Receivable;

(iii) the Obligor of which is not the Obligor of any Defaulted Receivables which in the aggregate constitute 15% or more of the aggregate Outstanding Balance of all Receivables of such Obligor;

(iv) which, according to the Contract related thereto, is required to be paid in full (A) except in the case of a Seasonal Receivable, within 90 days of the original billing date therefor or (B) in the case of a Seasonal Receivable, within 120 days of the original billing date therefor;

(v) which is an obligation representing all or part of the sales price of merchandise, insurance or services within the meaning of Section 3(c)(5) of the Investment Company Act of 1940, as amended, and the nature of which is such that its purchase with the proceeds of notes would constitute a “current transaction” within the meaning of Section 3(a)(3) of the Securities Act of 1933, as amended;

(vi) which is an “account” or “chattel paper” (other than “electronic chattel paper”) within the meaning of Article 9 of the UCC of the applicable jurisdictions;

(vii) which is denominated and payable only in United States dollars in the United States;

 

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(viii) which arises under a Contract governed by the laws of the United States which, together with such Receivable, is in full force and effect and constitutes the legal, valid and binding obligation of the Obligor of such Receivable and is not subject to any Adverse Claim or any dispute, offset, right of rescission, counterclaim or defense whatsoever (except the potential discharge in bankruptcy of such Obligor);

(ix) which, together with the Contract related thereto, does not contravene in any material respect any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to usury, consumer protection, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no party to the Contract related thereto is in violation of any such law, rule or regulation in any material respect;

(x) which arises under a Contract which (A) does not require the Obligor under such Contract to consent to the transfer, sale or assignment of the rights and duties of the applicable Seller under such Contract and (B) does not contain a confidentiality provision that purports to restrict the ability of the Purchaser and its assignees to exercise their rights under this Agreement, including, without limitation, their right to review the Contract;

(xi) which was generated by the sale of products or services of the applicable Seller in the ordinary course of the applicable Seller’s business;

(xii) which, at the time of the transfer of such Receivable under this Agreement, has not been compromised, adjusted, extended, rewritten or otherwise modified from the original terms thereof;

(xiii) the transfer, sale or assignment of which does not contravene any applicable law, rule or regulation;

(xiv) which (A) satisfies all applicable requirements of the Credit and Collection Policy and (B) complies with such other criteria and requirements as the Purchaser or its assignees may from time to time specify to the applicable Seller upon 30 days’ notice;

(xv) which arises under a Contract which is not an executory contract;

(xvi) as to which (A) the applicable Seller has satisfied and fully performed all obligations with respect to such Receivable required to be fulfilled by it other than customary warranty obligations, and (B) no further action is required to be performed by any Person other than the issuance of an invoice to, and payment thereon by, the applicable Obligor;

(xvii) as to which, at or prior to the later of the date of this Agreement and the date 30 days prior to the date such Receivable is created, the Purchaser or its assignee has not notified the applicable Seller that such Receivable (or the

 

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Obligor of such Receivable) is, in the good faith judgment of the Purchaser or such assignee, no longer acceptable for transfer hereunder (including, without limitation, for bona fide credit reasons as determined by the Purchaser or its assignee); and

(xviii) which is not a Hussmann Progress Receivable;

provided , that, from the occurrence of any Level 1 Downgrade Event, no Receivable which is a Seasonal Receivable which, according to the Contract related thereto, is not required to be paid in full within 90 days of the original billing date therefor shall be an Eligible Receivable.

“ Event of Termination ” has the meaning specified in Section 7.01.

“ Facility ” means the willingness of the Purchaser to consider making Purchases of Receivables from a Seller from time to time pursuant to the terms of this Agreement.

“ Facility Termination Date ” means the earliest of (i) the “Facility Termination Date”, as such term is defined in the RIPA, (ii) the date of termination of the Facility pursuant to Section 7.01 and (iii) the date which the Sellers designate by at least two Business Days’ notice to the Purchaser and, prior to the RIPA Final Payment Date, the Program Agent.

“ General Trial Balance ” of a Seller on any date means such Seller’s accounts receivable trial balance (whether in the form of a computer printout, magnetic tape or diskette) on such date, listing Obligors and the Receivables respectively owed by such Obligors on such date together with the aged Outstanding Balances of such Receivables, in form and substance reasonably satisfactory to the Purchaser.

“ Hussmann ” means Hussmann Corporation, a Missouri corporation.

“ Incipient Event of Termination ” means an event that but for notice or lapse of time or both would constitute an Event of Termination.

“ Indemnified Amounts ” has the meaning specified in Section 8.01.

“ Indemnified Party ” has the meaning specified in Section 8.01.

“ Lock-Box Account ” means a post office box administered by a Lock-Box Bank or an account maintained at a Lock-Box Bank, in each case under the exclusive ownership and control of the Purchaser (or its assignees or designees), and maintained for the purpose of receiving Collections and shall include accounts maintained at a Lock-Box Bank into which (i) Collections in the form of checks and other items are deposited that have been sent to one or more post office boxes by Obligors and/or (ii) Collections in the form of electronic funds transfers and other items are paid directly by Obligors.

 

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“ Lock-Box Agreement ” means an agreement among the applicable Seller(s), the Purchaser (or its assignees or designees) and any Lock-Box Bank in form and substance satisfactory to the Purchaser (or its assignees or designees).

“ Lock-Box Bank ” means any of the banks holding one or more Lock-Box Accounts.

“ Master SPV ” means IR Receivables Funding Trust, a Delaware statutory trust.

“ Material Adverse Effect ” means any event or circumstance that has a material adverse effect on (i) the ability of any Seller to perform its obligations under this Agreement or any other Transaction Document, (ii) the legality, validity or enforceability of this Agreement or any other Transaction Document or (iii) the collectibility of the Receivables taken as a whole.

“ Obligor ” means a Person obligated to make payments pursuant to a Contract.

“ Outstanding Balance ” of any Receivable (or portion thereof) at any time means the then outstanding principal balance thereof.

“ Program Agent ” means the program agent under the RIPA, which as of the date of this Agreement is Citicorp North America, Inc.

“ Purchase ” means a purchase by the Purchaser of Receivables from a Seller pursuant to Article II.

“ Purchase Date ” means each day on which a Purchase or contribution is made pursuant to Article II.

“ Purchase Price ” for any Purchase means an amount equal to the Outstanding Balance of the Receivables that are the subject of such Purchase as set forth in the applicable Seller’s General Trial Balance, minus the Discount for such Purchase.

“ Purchased Receivable ” means any Receivable which is purchased by the Purchaser pursuant to Section 2.02.

“ Receivable ” means the indebtedness of any Obligor under a Contract (whether constituting an account, instrument, chattel paper, payment intangible or general intangible), which has been originated by a Seller (and for which such Obligor has a billing address in the United States), and includes the right to payment of any interest or finance charges and other obligations of such Obligor with respect thereto.

“ Related Security ” means with respect to any Receivable:

(i) all of the applicable Seller’s interest in any merchandise (including returned merchandise) relating to any sale giving rise to such Receivable;

 

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(ii) all security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements or other registrations filed against an Obligor describing any collateral securing such Receivable;

(iii) all guaranties, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise; and

(iv) the Contract and all other books, records and other information (including, without limitation, computer programs, tapes, discs, punch cards, data processing software and related property and rights) relating to such Receivable and the related Obligor.

“ RIPA ” means that certain Receivable Interest Purchase Agreement, dated as of the date hereof, among IR Receivables Funding Trust, as seller, CAFCO, LLC, Enterprise Funding Company LLC and JS Siloed Trust, each as an investor, Citibank, N.A., Bank of America, N.A. and JPMorgan Chase Bank, N.A., each as a bank, Citicorp North America, Inc., as program agent, Citicorp North America, Inc., Bank of America, N.A. and JPMorgan Chase Bank, N.A., each as an investor agent, IR Company, as collection agent, and the parties thereto named as “Originators”, “Designated Entities” and/or “Intermediate SPVs”, as amended, restated or otherwise modified from time to time.

“ RIPA Final Payment Date ” means the later of the “Facility Termination Date” (as such term is defined in the RIPA) and the date on which all Capital, Yield, fees and other obligations under the RIPA are paid in full.

“ Seasonal Receivables ” means Receivables created by Thermo King de Puerto Rico, Inc. and Thermo King Corp. in any of January, February, March or April of any calendar year.

“ SEC ” means the Securities and Exchange Commission.

“ Secondary Purchase Agreement ” means that certain Secondary Purchase and Contribution Agreement, dated as of the date hereof, among the Purchaser, as seller, the Master SPV, as purchaser, and IR Company, as collection agent, as amended, restated or otherwise modified from time to time.

“ Seller Report ” means a report in substantially the form of Exhibit F hereto and containing such additional information as the Purchaser may reasonably request from time to time, furnished by the Collection Agent to the Purchaser pursuant to Section 6.02(b).

“ Settlement Date ” means the Business Day immediately following the due date of each Seller Report; provided , however , that following the occurrence of an Event of Termination, Settlement Dates shall occur on such days as are selected from time to time by the Purchaser or its assignee in a written notice to the Collection Agent.

 

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“ Thermo King Corp. ” means Thermo King Corporation, a Delaware corporation.

“ Transaction Document ” means any of this Agreement, the Secondary Purchase Agreement, the RIPA, the Undertaking, the Lock-Box Agreements and any other agreements and documents delivered and/or related hereto or thereto.

“ Transferred Receivable ” means a Purchased Receivable or a Contributed Receivable.

“ Underlying Inventory Security Interest ” means, with respect to a Receivable, any security interest in inventory granted by the Obligor of such Receivable to secure the repayment of such Receivable.

“ Undertaking ” means either (i) the agreement executed by Parent substantially in the form of Exhibit D hereto, or (ii) if IR Parent has executed and delivered such agreement pursuant to Section 7.01(p) of the RIPA, the agreement executed by IR Parent in substantially the form of Exhibit D hereto, in each case as the same may be amended, modified or restated from time to time.

SECTION 1.02. Other Terms . All accounting terms not specifically defined herein shall be construed in accordance with generally accepted U.S. accounting principles. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9. The following terms used herein shall have the respective meanings set forth in the RIPA: “ Adverse Claim ”; “ Affiliate ”; “ Capital ”; “ Debt ”; “ ERISA ”; “ ERISA Group ”; “ Hussmann Progress Receivable ”; “ IR Parent ”; “ Level 1 Downgrade Event ”; “ Material Debt ”; “ Moody’s ”; “ Multiemployer Plan ”; “ Out-of-Program Collections ”; “ Parent ”; “ PBGC ”; “ Person ”; “ Plan ”; “ S&P ”; “ Subsidiary ”; “ UCC ”; “ Undertaking Party ”; and “ Yield ”.

ARTICLE II

AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS

SECTION 2.01. Facility . On the terms and conditions hereinafter set forth and without recourse to any Seller (except to the extent specifically provided herein), each Seller will at its option either sell or contribute to the Purchaser all Receivables originated by it from time to time and the Purchaser will (as determined by the Purchaser) purchase or accept as a contribution from such Seller all such Receivables of such Seller from time to time, in each case during the period from the date hereof to the Facility Termination Date.

SECTION 2.02. Making Purchases .

(a) Initial Purchase . Each Seller shall give the Purchaser at least one Business Day’s notice of its request for the initial Purchase hereunder, which request shall specify the date of such Purchase (which shall be a Business Day) and the proposed Purchase Price for such Purchase. On the date of such Purchase, the Purchaser shall, upon satisfaction of the applicable conditions set forth in Article III, pay the Purchase Price for such Purchase in the manner provided in Section 2.02(c).

 

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(b) Subsequent Purchases . On each Business Day following the initial Purchase, each Seller shall sell to the Purchaser and the Purchaser shall purchase from such Seller, upon satisfaction of the applicable conditions set forth in Article III, all Receivables originated by such Seller which have not previously been sold or contributed to the Purchaser; provided , however , that such Seller may, at its option on any Purchase Date, contribute all or any of such Receivables to the Purchaser pursuant to Section 2.06, instead of selling such Receivables to the Purchaser pursuant to this Section 2.02(b). On or within five Business Days after the date of each such Purchase, the Purchaser shall pay the Purchase Price for such Purchase in the manner provided in Section 2.02(c).

(c) Payment of Purchase Price . The Purchase Price for each Purchase shall be paid on or within five Business Days after the Purchase Date therefor by means of any one or a combination of the following: (i) a deposit in same day funds to the applicable Seller’s account designated by such Seller, or (ii) an increase in the Deferred Purchase Price (subject at all times to the limitations contained in the definition thereof). Unless otherwise mutually agreed by the applicable Seller and the Purchaser, if on any date set for payment of Purchase Price, the Purchaser does not pay the entire Purchase Price in cash, the amount of the Purchase Price in excess of the amount paid in cash by the Purchaser shall be paid first by an increase in the Deferred Purchase Price (subject to the limitations contained in the definition thereof), and any portion of the Purchase Price which cannot be paid by means of an increase in the Deferred Purchase Price (by reason of the limitations contained in the definition thereof) shall constitute a contribution to the capital of the Purchaser by such Seller. The applicable Seller and the Purchaser will make the appropriate accounting entries in their books and records to reflect the allocation of the Purchase Price as among cash payment, Deferred Purchase Price and capital contribution.

(d) Ownership of Receivables and Related Security . On each Purchase Date, after giving effect to the Purchase (and any contribution of Receivables) on such date, the Purchaser shall own all Receivables originated by the Sellers as of such date (including Receivables which have been previously sold or contributed to the Purchaser hereunder). The Purchase or contribution of any Receivable shall include all Related Security with respect to such Receivable.

SECTION 2.03. Collections . (a) Unless otherwise agreed, the Collection Agent shall, on each Settlement Date, deposit into an account of the Purchaser or the Purchaser’s assignee all Collections of Transferred Receivables then held by the Collection Agent.

(b) In the event that any Seller believes that Collections which are not Collections of Transferred Receivables have been deposited into an account of the Purchaser or the Purchaser’s assignee, such Seller shall so advise the Purchaser and, on the Business Day following such identification, the Purchaser shall remit, or shall cause to be remitted, all Collections so deposited which are identified, to the Purchaser’s satisfaction, to be Collections of Receivables which are not Transferred Receivables to such Seller.

 

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(c) On each Settlement Date, the Purchaser shall pay to each Seller accrued interest on the Deferred Purchase Price owed to such Seller and the Purchaser may, at its option, prepay in whole or in part the principal amount of the Deferred Purchase Price; provided that each such payment shall be made solely from (i) Collections of Transferred Receivables after all other amounts then due from the Purchaser under the Secondary Purchase Agreement and from Master SPV under the RIPA have been paid in full and all amounts then required to be set aside or held by the Purchaser under the Secondary Purchase Agreement and by Master SPV or the Collection Agent under the RIPA have been so set aside and held or (ii) excess cash flow from operations of the Purchaser which is not required to be applied to the payment of other obligations of the Purchaser; and provided further , that no such payment shall be made at any time when an Event of Termination or Incipient Event of Termination shall have occurred and be continuing. Following the RIPA Final Payment Date, the Purchaser shall apply, on each Settlement Date, all Collections of Transferred Receivables received by the Purchaser pursuant to Section 2.03(a) (and not previously distributed) first to the payment of accrued interest on the Deferred Purchase Price, and then to the reduction of the principal amount of the Deferred Purchase Price.

SECTION 2.04. Settlement Procedures . (a) If on any day any Transferred Receivable becomes (in whole or in part) a Diluted Receivable, the Seller which originated such Transferred Receivable shall be deemed to have received on such day a Collection of such Transferred Receivable in the amount of such Diluted Receivable. If such Seller is not the Collection Agent, such Seller shall pay to the Collection Agent on or prior to the next Settlement Date all amounts deemed to have been received pursuant to this subsection.

(b) Upon discovery by any Seller or the Purchaser of a breach of any of the representations and warranties made by a Seller in Section 4.01(j) with respect to any Transferred Receivable, such party shall give prompt written notice thereof to the other party, as soon as practicable and in any event within three Business Days following such discovery. The applicable Seller shall, upon not less than two Business Days’ notice from the Purchaser or its assignee or designee, repurchase (or purchase, in the case of a Contributed Receivable) such Transferred Receivable on the next succeeding Settlement Date for a repurchase (or purchase, in the case of a Contributed Receivable) price equal to the Outstanding Balance of such Transferred Receivable. Each repurchase or purchase of a Transferred Receivable shall include the Related Security with respect to such Transferred Receivable. The proceeds of any such repurchase or purchase, as the case may be, shall be deemed to be a Collection in respect of such Transferred Receivable. If applicable Seller is not the Collection Agent, such Seller shall pay to the Collection Agent on or prior to the next Settlement Date the repurchase (or purchase, in the case of a Contributed Receivable) price required to be paid pursuant to this subsection.

(c) Except as stated in subsection (a) or (b) of this Section 2.04 or as otherwise required by law or the underlying Contract, all Collections from an Obligor of any Transferred Receivable shall be applied to the Transferred Receivables of such Obligor in the order of the age of such Receivables, starting with the oldest such Receivable, unless such Obligor designates its payment for application to specific Receivables.

SECTION 2.05. Payments and Computations, Etc. (a) All amounts to be paid or deposited by any Seller or the Collection Agent hereunder shall be paid or deposited no later than 11:00 A.M. (New York City time) on the day when due in same day funds to an account or accounts designated by the Purchaser from time to time, which accounts, prior to the RIPA Final Payment Date, shall be those set forth in the RIPA.

 

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(b) All computations of interest and all computations of fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed. Whenever any payment or deposit to be made hereunder shall be due on a day other than a Business Day, such payment or deposit shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of such payment or deposit.

SECTION 2.06. Contributions . In addition to contributions pursuant to Section 2.02(c), any Seller may from time to time at its option, by notice to the Purchaser on or prior to the date of the proposed contribution, identify Receivables which it proposes to contribute to the Purchaser as a capital contribution. On the date of each such contribution and after giving effect thereto, the Purchaser shall own the Receivables so identified and contributed (collectively, together with any Receivables contributed pursuant to Section 2.02(c), the “ Contributed Receivables ”) and all Related Security with respect thereto. The foregoing notwithstanding, on the date of the initial Purchase hereunder each Seller agrees to contribute to the Purchaser all Receivables which are not included in such initial Purchase.

ARTICLE III

CONDITIONS OF PURCHASES

SECTION 3.01. Conditions Precedent to Initial Purchase from the Sellers . The initial Purchase of Receivables from the Sellers hereunder is subject to the conditions precedent that the Purchaser shall have received on or before the date of such Purchase the following, each (unless otherwise indicated) dated such date, in form and substance satisfactory to the Purchaser:

(a) Certified copies of the resolutions (or similar authorization) of the Board of Directors of each of the Sellers approving this Agreement and the other applicable Transaction Documents to be delivered by it hereunder and certified copies of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement and the other applicable Transaction Documents to be delivered by it hereunder.

(b) A certificate of the Secretary or Assistant Secretary of each of the Sellers certifying the names and true signatures of the officers of such Seller authorized to sign this Agreement and the other applicable Transaction Documents to be delivered by it hereunder.

(c) Acknowledgment copies or time stamped receipt copies of proper financing statements or other similar instruments or documents, duly filed on or before the date of the initial Purchase, naming each Seller as the seller/debtor and the Purchaser as the purchaser/secured party, or other similar instruments or documents, as the Purchaser may deem necessary or desirable under the UCC or other applicable law of all appropriate jurisdictions to perfect the Purchaser’s ownership of and security interest in the Transferred Receivables and Related Security and Collections with respect thereto.

 

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(d) Acknowledgment copies or time stamped receipt copies of proper financing statements, if any, necessary to release all security interests and other rights of any Person in the Transferred Receivables, Contracts or Related Security previously granted by any Seller.

(e) Completed requests for information, dated on or before the date of such initial Purchase, listing the financing statements referred to in subsection (c) above and all other effective financing statements filed in the jurisdictions referred to in subsection (c) above that name any Seller as debtor, together with copies of such other financing statements (none of which shall cover any Transferred Receivables, Contracts or Related Security).

(f) Favorable opinions of McDermott, Will & Emery LLP, counsel for the Sellers, of Patricia Nachtigal, internal counsel for the Sellers, and Eileen Petito, internal counsel for Hussmann, in each case, in form and substance satisfactory to the Purchaser, as to such matters as the Purchaser may reasonably request.

(g) Executed copies of the Lock-Box Agreements in respect of each Lock-Box Account, duly executed by the applicable Seller(s) and the Lock-Box Bank holding such Lock-Box Account.

(h) An executed copy of the Undertaking.

(i) A copy of the bylaws of each of the Sellers certified by the Secretary or Assistant Secretary of such Seller.

(j) A copy of the certificate or articles of incorporation of each of the Sellers, certified as of a recent date by the Secretary of State or other appropriate official of the state of its incorporation, and a certificate as to the good standing of each of the Sellers from such Secretary of State or other official, dated as of a recent date.

The initial Purchase of Receivables from the Sellers hereunder is additionally subject to the condition precedent that on the date of such initial Purchase, the following statement shall be true (and acceptance of the proceeds of such Purchase shall be deemed a representation and warranty by each of the Sellers that such statement is true): there shall have been no material adverse change in the financial condition of any Seller since December 31, 2008.

SECTION 3.02. Conditions Precedent to All Purchases . Each Purchase (including the initial Purchase) hereunder shall be subject to the further conditions precedent that:

(a) with respect to any such Purchase, on or prior to the date of such Purchase, the applicable Seller shall have delivered to the Purchaser, (i) if requested by the Purchaser, such Seller’s General Trial Balance (which if in magnetic tape or diskette format shall be compatible with the Purchaser’s computer equipment) as of a date not more than 31 days prior to the date of such Purchase, and (ii) a written report identifying, among other things, the Receivables to be included in such Purchase and such additional information concerning such Receivables as may reasonably be requested by the Purchaser;

 

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(b) with respect to any such Purchase, on or prior to the date of such Purchase, the Collection Agent shall have delivered to the Purchaser, in form and substance satisfactory to the Purchaser, a completed Seller Report for the most recently ended reporting period for which information is required pursuant to Section 6.02(b), and containing such additional information as may reasonably be requested by the Purchaser;

(c) [intentionally omitted];

(d) the applicable Seller shall have marked its master data processing records evidencing the Receivables which are the subject of such Purchase with a legend, acceptable to the Purchaser, stating that such Receivables, the Related Security and Collections with respect thereto, have been sold in accordance with this Agreement;

(e) on the date of such Purchase the following statements shall be true (and the applicable Seller, by accepting the Purchase Price for such Purchase, shall be deemed to have certified that):

(i) The representations and warranties contained in Section 4.01 are correct on and as of the date of such Purchase as though made on and as of such date,

(ii) No event has occurred and is continuing, or would result from such Purchase, that constitutes an Event of Termination or an Incipient Event of Termination,

(iii) The Purchaser shall not have delivered to the Sellers a notice that the Purchaser shall not make any further Purchases hereunder, and

(iv) There shall have been no material adverse change in the collectibility of the Receivables taken as a whole since the date hereof; and

(f) the Purchaser shall have received such other approvals, opinions or documents as the Purchaser may reasonably request in response to any change in law or factual circumstances after the date of this Agreement.

Notwithstanding the foregoing conditions precedent in the last paragraph of Section 3.01 and in clauses (i), (ii) and (iv) of Section 3.02(e), upon payment of the Purchase Price for any Receivable (whether by payment of cash, through an increase in the Deferred Purchase Price or by capital contribution), title to such Receivable and the Related Security with respect thereto shall vest in the Purchaser, whether or not such conditions precedent to the Purchase were in fact satisfied. If any of the foregoing conditions precedent is not satisfied, the Purchaser shall have available to it (and shall not be deemed to have waived by reason of completing such Purchase) all applicable rights and remedies under Sections 2.04, 7.01 and 8.01 and otherwise.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Sellers . Each Seller represents and warrants, as to itself, as follows:

(a) Such Seller is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation (as listed in Schedule I hereto as amended from time to time), and is duly qualified to do business, and is in good standing, in every jurisdiction where the nature of its business requires it to be so qualified, unless the failure to so qualify would not have a material adverse effect on (i) the interests of the Purchaser hereunder, (ii) the collectibility of the Transferred Receivables, or (iii) the ability of such Seller or the Collection Agent to perform their respective obligations hereunder.

(b) The execution, delivery and performance by such Seller of this Agreement and the other documents to be delivered by it hereunder, including such Seller’s sale and contribution of Receivables hereunder and such Seller’s use of the proceeds of Purchases, (i) are within such Seller’s corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) do not contravene (1) such Seller’s organizational documents, (2) any law, rule or regulation applicable to such Seller, (3) any contractual restriction binding on or affecting such Seller or its property or (4) any order, writ, judgment, award, injunction or decree binding on or affecting such Seller or its property, and (iv) do not result in or require the creation of any lien, security interest or other charge or encumbrance upon or with respect to any of its properties (except for the transfer of such Seller’s interest in the Transferred Receivables pursuant to this Agreement). This Agreement and each of the other Transaction Documents to be delivered by such Seller pursuant hereto has been duly executed and delivered by such Seller.

(c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by such Seller of the Transaction Documents to which it is a party or any other document to be delivered by it thereunder except for the filing of financing statements which are referred to therein.

(d) This Agreement and each of the other Transaction Documents to be delivered by such Seller pursuant hereto constitutes the legal, valid and binding obligation of such Seller enforceable against such Seller in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights generally and general principles of equity, whether considered in an action at law or equity).

(e) Sales and contributions made pursuant to this Agreement will constitute a valid sale, transfer, and assignment of the Transferred Receivables to the Purchaser, enforceable against creditors of, and purchasers from, such Seller. Such Seller shall have no remaining property interest in any Transferred Receivable.

 

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(f) [Intentionally omitted.]

(g) There is no pending or, to the knowledge of such Seller, threatened, action, investigation or proceeding affecting such Seller or any of its subsidiaries before any court, governmental agency or arbitrator which may have a Material Adverse Effect.

(h) No proceeds of any Purchase will be used (i) to acquire any equity security of a class which is registered pursuant to Section 12 of the Securities Exchange Act of 1934, (ii) to acquire any security in any transaction which is subject to Section 13 or 14 of such Act or (iii) for any other purpose that violates applicable law, including Regulation G or U of the Federal Reserve Board.

(i) No transaction contemplated hereby requires compliance with any bulk sales act or similar law.

(j) Each Receivable characterized in any Seller Report or other written statement made by or on behalf of such Seller (whether as Collection Agent or otherwise) as an Eligible Receivable is, as of the date of such Seller Report or other statement, an Eligible Receivable. Each Transferred Receivable, together with the Related Security, is owned (immediately prior to its sale or contribution hereunder) by such Seller free and clear of any Adverse Claim (other than any Adverse Claim arising solely as the result of any action taken by the Purchaser). When the Purchaser makes a Purchase it shall acquire valid and perfected first priority ownership of each Purchased Receivable and the Related Security and Collections with respect thereto free and clear of any Adverse Claim (other than any Adverse Claim arising solely as the result of any action taken by the Purchaser), and no effective financing statement or other instrument similar in effect covering any Transferred Receivable, any interest therein, the Related Security or Collections with respect thereto is on file in any recording office except such as may be filed in favor of Purchaser in accordance with this Agreement or in connection with any Adverse Claim arising solely as the result of any action taken by the Purchaser. Nothing in this Section 4.01(j) shall constitute a representation or warranty by such Seller as to the priority, as against any other secured creditors of the relevant Obligor, of any Underlying Inventory Security Interest.

(k) Each Seller Report (if prepared by such Seller, or to the extent that information contained therein is supplied by such Seller), information, exhibit, financial statement, document, book, record or report furnished or to be furnished at any time by such Seller to the Purchaser in connection with this Agreement is or will be accurate in all material respects as of its date or (except as otherwise disclosed to the Purchaser at such time) as of the date so furnished.

(l) The principal place of business and chief executive office of such Seller and the office where such Seller keeps its records concerning the Transferred Receivables are located at the address or addresses referred to in Section 5.01(b). Such Seller has not changed its name during the two years prior to the date of this Agreement.

 

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(m) The names and addresses of all the Lock-Box Banks, together with the account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified in Exhibit B (as the same may be updated from time to time pursuant to Section 5.01(g)). The Lock-Box Accounts are the only accounts into which Collections of Receivables are deposited or remitted, except as expressly permitted pursuant to the terms of Section 5.01(h) hereof.

(n) Such Seller is not known by and does not use any registered tradename or doing-business-as name.

(o) With respect to any programs used by such Seller in the servicing of the Receivables, no sublicensing agreements are necessary in connection with the designation of a new Collection Agent pursuant to Section 6.01 so that such new Collection Agent shall have the benefit of such programs (it being understood that, however, the Collection Agent, if other than IR Company, shall be required to be bound by a confidentiality agreement reasonably acceptable to such Seller), except for those programs licensed by such Seller from Persons which are not affiliated with such Seller which by the express terms of such license either (i) require the consent of the licensor for any sublicensing thereof or (ii) prohibit any such sublicensing.

(p) The transfers of Transferred Receivables by such Seller to the Purchaser pursuant to this Agreement, and all other transactions between such Seller and the Purchaser, have been and will be made in good faith and without intent to hinder, delay or defraud creditors of such Seller.

(q) Such Seller has (i) timely filed all federal tax returns required to be filed, (ii) timely filed all other material state and local tax returns, and (iii) paid or made adequate provision for the payment of all taxes, assessments and other governmental charges (other than any tax, assessment or governmental charge which is being contested in good faith and by proper proceedings, and with respect to which the obligation to pay such amount is adequately reserved against in accordance with and to the extent required by generally accepted U.S. accounting principles).

(r) Such Seller is not, and is not controlled by, an “investment company” within the meaning of the Investment Company Act of 1940, or is exempt from all provisions of such act.

(s) The receivables credit and collection policies and practices of such Seller attached hereto as Exhibit A are in effect as of the date of this Agreement. Since the date of this Agreement, there have been no material changes in the Credit and Collection Policy other than in accordance with this Agreement.

(t) No event or circumstance has occurred since the date of this Agreement that has a Material Adverse Effect.

 

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(u) [Intentionally omitted.]

(v) Each Receivable is an “eligible asset” as defined in Rule 3a-7 promulgated under the Investment Company Act of 1940, as amended.

SECTION 4.02. Representations and Warranties of the Purchaser . The Purchaser represents and warrants as follows:

(a) The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware, and is duly qualified to do business, and is in good standing, in every jurisdiction where the nature of its business requires it to be so qualified, unless the failure to so qualify would not have a material adverse effect on (i) the interests of the Sellers hereunder, or (ii) the ability of the Purchaser to perform its obligations hereunder.

(b) The execution, delivery and performance by the Purchaser of this Agreement and the other documents to be delivered by it hereunder, (i) are within the Purchaser’s corporate powers, (ii) have been duly authorized by all necessary corporate action, and (iii) do not contravene (1) the Purchaser’s organizational documents, (2) any law, rule or regulation applicable to the Purchaser, (3) any contractual restriction binding on or affecting the Purchaser or its property or (4) any order, writ, judgment, award, injunction or decree binding on or affecting the Purchaser or its property. This Agreement and each of the other Transaction Documents to be delivered by the Purchaser pursuant hereto has been duly executed and delivered by the Purchaser.

(c) No authorization or appro