Master Accounts Receivable Purchase Agreement

Exhibit 10.2

 

 

Master Accounts Receivable Purchase Agreement

among

Bank of America, N.A.
(the “Bank” )

and

The Scotts Company LLC
( the “ Company ” )

and

The Scotts Miracle-Gro Company
( the “Parent ” )

Dated as of April 9, 2008

 

 

Table of Contents

Section		Heading		Page
Section 1.		Definitions and Interpretation		1
Section 2.		The Agreement		8
Section 3.		Conditions Precedent		8
Section 4.		Purchase of Receivables		9
Section 5.		Limited Liability		15
Section 6.		The Company as Servicer and Agent of Bank		16
Section 7.		Payments		18
Section 8.		Changes in Circumstances		19
Section 9.		Further Assurances		20
Section 10.		Representations and Warranties		21
Section 11.		Covenants		24
Section 12		Partial Invalidity		27
Section 13.		No Bank Liability for Contract		27
Section 14.		Notices, Addresses, Language		27
Section 15.		Fees, Costs and Indemnity		28
Section 16		Calculations and Certificate		31
Section 17.		Set-Off		31

Section		Heading		Page
Section 18.		Termination		31
Section 19.		Miscellaneous		33
Section 20.		Governing Law		35
Section 21.		Optional Repurchase		36
Section 22.		Guaranty		37
Section 23.		Removal; Reinstatement of Debtor		38
Section 24.		Confidentiality		39

Schedule 1		—		Purchase Request
Schedule 2		—		Conditions Precedent
Schedule 3		—		UCC Details Schedule
Schedule 4		—		Form of Portfolio Report

Master Accounts Receivable Purchase Agreement

      Master Accounts Receivable Purchase Agreement , dated as of April 9, 2008 (this “Agreement” ), among The Scotts Company, LLC, a limited liability company organized under the laws of Ohio (the “Company” ), The Scotts Miracle-Gro Company , a company organized under the laws of Ohio (the “Parent” ), and Bank of America, N.A. (the “Bank” ), a bank organized under the laws of the United States of America.

      Whereas, the Company and LaSalle Bank National Association ( “LaSalle” ) entered into that certain Master Accounts Receivable Purchase Agreement dated as of April 11, 2007 (the “LaSalle Agreement” ) pursuant to which the Company sold to LaSalle certain receivables.

      Whereas, on the date hereof LaSalle is assigning all of the outstanding receivables purchased pursuant to the terms of the LaSalle Agreement to the Company pursuant to that certain Termination and Release Agreement dated the date hereof.

      Whereas , after the date hereof and subject to the terms and conditions of this Agreement, the Company shall sell to the Bank and the Bank shall purchase from the Company, on a revolving basis, certain Purchased Receivables.

      Whereas , the transactions hereunder shall constitute a true sale of the Purchased Receivables, providing the Bank with the full risks and benefits of ownership of the Purchased Receivables without recourse to the Company, except as may otherwise be set forth herein.

      Now, Therefore , in consideration of the above premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1. Definitions and Interpretation.

     In this Agreement and each Schedule:

      “Adverse Claim” means any Encumbrance on a Purchased Receivable other than those arising under this Agreement.

      “Agreed Base Value” shall be an amount equal to the product of (a) the difference between (i) the full Original Amount of the Receivable being purchased less (ii) the Trade Credit Amount times (b) 100% less the Agreed Dilution Percentage.

      “Agreed Dilution Percentage” is equal to 5.0% or such other percentage agreed on, from time to time, by the Bank and the Company.

      “Agreement Amount” means the maximum aggregate Funded Amounts of all Purchased Receivables as set forth below during the relevant time periods, as such amount may be reduced from time to time pursuant to the terms of Section 4.3(d) hereof:

January		$	40,000,000			July		$	200,000,000
February		$	125,000,000			August		$	100,000,000
March		$	275,000,000			September		$	75,000,000
April		$	300,000,000			October		$	75,000,000
May		$	300,000,000			November		$	30,000,000
June		$	300,000,000			December		$	10,000,000

      “Agreement Office” means the office through which the Bank will perform its obligations under this Agreement.

      “Approved Debtor” means each Person listed on the Approved Debtor Certificate, excluding any Approved Debtor removed therefrom pursuant to the terms of Section 23 hereof and including any Debtor reinstated therein as an Approved Debtor pursuant to the terms of Section 23 hereof.

      “Approved Debtor Certificate” means the Approved Debtor Certificate of even date herewith executed by the Bank and the Company.

      “Approved Participants” means Sumitomo Mitsui Banking Corporation, Calyon New York Branch, BNP Paribas, New York Branch and The Bank of Nova Scotia.

      “Blocked Accounts” means each account opened by the Company in its name for each Approved Debtor with JPMorgan Chase Bank, N. A. or such other bank approved by the Bank for the purpose of collecting the Purchased Receivables of such Approved Debtor and which shall be subject to a blocked account agreement with the Bank.

      “Business Day” means a day on which banks are open for business in Chicago, New York and, in the case of the determination of LIBOR, London.

      “Closing Date” means the date of this Agreement or such later Business Day upon which each condition described on Schedule 2 shall be satisfied or waived in a manner acceptable to the Bank in its reasonable discretion.

      “Collections” means all payments made on each Purchased Receivable and any other payments, receipts or recoveries (including any casualty insurance proceeds) by, or on behalf of, any Debtor or otherwise with respect to any Purchased Receivable.

      “Contract” means a contract or purchase order between the Company and a Debtor, as the same may be amended and supplemented from time to time in accordance with the terms hereof, out of which has arisen one or more Purchased Receivables.

      “Cost of Funds” means, with respect to any Purchased Receivable(s), the rate, as determined by the Bank as of the purchase date of such Purchased Receivable(s) (which determination shall be conclusive and binding on the Company absent manifest error) at which Dollars of a term comparable to the period of time from the purchase date to the Maturity Date for such Receivable(s) and in an amount comparable to the Purchase Price for such Receivable(s) are generally available to the Bank.

      “Credit Agreement” means that certain Amended and Restated Credit Agreement dated as of February 7, 2007, among the Parent, the subsidiary borrowers from time to time party thereto, the several lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and the various lenders from time to time to the party thereto.

      “Debtor” means a person obligated to make payments in respect of a Receivable.

      “Debtor Sublimits” means the sublimits for each Approved Debtor listed on the Approved Debtor Certificate.

      “Dilution” means any discount, adjustment, set-off, counterclaim, deduction, reduction, warranty issue or refusal to pay not arising from such Debtor’s Financial Inability to Pay, which would have the effect of reducing the amount of part or all of any Purchased Receivable owed by a Debtor.

      “Dollar, USD” and “$” shall mean the lawful currency of the United States of America.

      “Downgrade” means each rating category reduction by a nationally recognized rating agency of the long-term unsecured, unenhanced indebtedness rating of any Person, for example, a rating reduction from “A-” (or its equivalent) to “BBB” (or its equivalent) would constitute two Downgrades for purposes of this Agreement.

      “Encumbrance” means a mortgage, assignment, security interest, pledge, lien or other encumbrance securing any obligation of any person or any other type of adverse claim or preferential arrangement (including, without limitation, title transfer and retention arrangements) having a similar effect.

      “Final Collection Date” means the date, following the termination of purchases under this Agreement, on which all amounts to which the Bank shall be entitled in respect of Purchased Receivables and all other amounts owing to the Bank hereunder and under the other Transaction Documents are paid in full.

     “ Financial Inability to Pay” means a Debtor’s failure to pay a Receivable as a result of a deterioration in such Debtor’s credit quality as evidenced by an event where such Debtor (A)(i) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (iv) institutes or has instituted against it a proceeding seeking judgment of insolvency or bankruptcy or any other relief under any

bankruptcy or insolvency law or other similar law affecting creditor’s rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (aa) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding up or liquidation or (bb) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (v) has a resolution passed for its winding-up, official management or liquidation; (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all of its assets; (vii) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter, (viii) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (i) to (vii) (inclusive); (ix) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or (x) at any time that the long-term unenhanced, unsecured indebtedness rating of such Debtor is “CCC” (or its equivalent) or lower, fails to pay 10% or more of the aggregate amount of Purchased Receivables owed by it, for more than 90 days beyond the relevant Maturity Dates thereof (unless such Debtor claims, and the Company agrees, such failure to pay is a result of a commercial dispute related to such Purchased Receivables), or (B) fails, after giving effect to any applicable grace period for the relevant obligation(s) of such Debtor (other than such Receivable), to make, when due, any payments equal to or exceeding $10,000,000 under such obligations.

      “Funded Amount” means the aggregate amount of Purchase Prices paid by the Bank hereunder, less the Collections, if any, theretofore paid to and received by the Bank.

      “Governmental Authority” means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

      “Invoice” means an invoice issued by the Company to a Debtor for payment for goods or services supplied pursuant to a Contract between the Company and such Debtor.

      “Law” means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of any Governmental Authority.

      “LIBOR” means in relation to a Purchased Receivable for any period:

     (a) the applicable Screen Rate for the relevant period; or

     (b) (if no Screen Rate is available) the arithmetic mean of the rates (rounded upwards to four decimal places) at which the Bank was offering deposits for the relevant period in an amount comparable to the Purchased Receivables or overdue amount in Dollars to leading banks in the London interbank market.

      “Margin” means 0.80% per annum, subject to the right of the Bank, upon the occurrence of a Downgrade relating to any Account Debtor that does not otherwise cause a Termination Event, on 30 days’ prior written notice to the Company to revise the margin applicable to subsequent purchases hereunder.

      “Maturity Date” means, with respect to a Purchased Receivable, the date on which such Purchased Receivable becomes due and payable by the Debtor.

      “Monsanto Agreement” means the Amended and Restated Exclusive Agency and Marketing Agreement by and between The Monsanto Company and the Company.

      “Monsanto Receivables” means accounts receivable (and all related proceeds) originated and owned by The Monsanto Company of an Approved Debtor and otherwise subject to the terms of the Monsanto Agreement.

      “Moody’s” means Moody’s Investors Service, Inc.

      “Original Amount” means, in relation to a Purchased Receivable, the amount owing from the Debtor in respect of such Purchased Receivable being the aggregate amount payable under the relevant Invoice.

      “Outstanding Amount” means the aggregate amount from time to time in Dollars of the Original Amounts of all Purchased Receivables which are outstanding. For the avoidance of doubt, the Outstanding Amount of any Purchased Receivable shall not be reduced as a result of any write-down or write-off of such Purchased Receivable by the Bank.

      “Outstanding Net Amount” means, as of any date of determination, the amount equal to the difference between (x) the product of (a) the difference between (i) the aggregate Outstanding Amount of Purchased Receivables less (ii) the aggregate Trade Credit Amounts times (b) 100% less the most recently calculated Agreed Dilution Percentage less (y) the aggregate Discount as most recently calculated for the Purchased Receivables.

      “Participation Agreement” is defined in Section 19 hereof.

      “Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

      “Portfolio Report” means a report, substantially in the form of Schedule 4, signed by an officer of the Company and which shall contain, inter alia, the list of Receivables which have been determined to be Purchased Receivables hereunder as well as a list of all relevant Invoices.

      “Purchase Price” means, in relation to any Purchased Receivable, the purchase price computed and payable in accordance with Section 4.1 hereof.

      “Purchased Receivable” means, at any time, any Receivable sold by the Company and acquired by the Bank under this Agreement.

      “Purchase Request” means a request for purchase in the form attached hereto as Schedule 1.

      “Receivable” means the indebtedness of an Approved Debtor to the Company arising under a Contract which is evidenced by an Invoice (including the right to receive payment of any interest or finance charges or other liabilities of such Debtor under the Contract), all Related Assets with respect thereto, and all Collections and other proceeds with respect to the foregoing.

      “Related Assets” means, with respect to the Receivables (i) all related rights and remedies under or in connection with the Contract with respect thereto including bills of lading, bills of exchange, promissory notes and accessions, (ii) all guaranties, suretyships, letters of credit, security, liens and other arrangements supporting payment thereof, (iii) all Sales Records (including electronic records) with respect thereto, (iv) all related insurance, and (v) all proceeds of the foregoing.

      “Replacement Receivables” are Receivables purchased with the proceeds of Collections purchased between two Settlement Dates as provided in Section 4.2.

      “Repurchase Event” means, with respect to a Purchased Receivable:

     (i) any representation or warranty made by the Company in Section 10 of this Agreement with respect to such Receivable is inaccurate, incorrect or untrue, in any material respect, on any date as of which it is made or deemed to be made; or

     (ii) the Company fails to comply with any of its covenants with respect to such Receivable set forth in Section 11 of this Agreement; or on any day the Original Amount of such Purchased Receivable (i) is reduced or adjusted as a result of any defective, rejected, returned, repossessed or foreclosed merchandise, any defective or rejected services, any discount or other adjustment by the Company (including on account of credits, rebates, chargebacks, inventory transfers, allowances for early payments and other allowances) or any obligation of the Company owed to the applicable Debtor to make such a discount or adjustment, (ii) is reduced or cancelled as a result of a setoff, deduction or counterclaim in respect of any claim by the Debtor thereof against the Company (whether such claim arises out of the same or a related or an unrelated transaction) or (iii) otherwise is less than the amount reported by the Company in (or for purposes of) any settlement statement delivered pursuant to this Agreement (for any reason other than receipt of Collections on such Purchased Receivable or such Purchased Receivable being written off as uncollectible based on Debtor’s Financial Inability to Pay); provided, however, that to the extent that the occurrence of any matter described in the foregoing paragraphs (i) or (ii) would otherwise result in a Repurchase Event, no Repurchase Event with respect to any such Purchased Receivable shall occur if the amount of any such adjustment caused by the occurrence of such event has already been

included in the calculation of the Purchase Price paid with respect to such Purchased Receivable.

      “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

      “Sales Records” means the accounts, all sales ledgers, purchase and sales day books, sales invoices, supply contracts and other related books and records of the Company relating to a Debtor and on an individual Purchased Receivable basis for the purpose of identifying amounts paid or to be paid in respect of such Purchased Receivable.

      “Screen Rate” means the interest rate for Dollar deposits for a three month period which is displayed on the screen displays designated “LIBOR01” and “ICAP01” of the Reuters service (or such other page which may replace them for the purpose of displaying British Bankers’ Association Interest Settlement Rates or US Dollar Swaps Rates for Dollar deposits in the London interbank market).

      “Settlement Date” means, in respect of any Settlement Period, the Wednesday of the calendar week following such Settlement Period (or, if such Wednesday is not a Business Day, the immediately succeeding Business Day) or such other date as the Bank and the Company may from time to time agree to, provided that (i) with respect to the initial purchase hereunder, the date of such purchase shall be the initial Settlement Date and (ii) on or after the Termination Date, the Bank may select Settlement Dates by notice to the Company.

      “Settlement Period” means (a) with respect to the initial purchase, a period from the date of such purchase pursuant to Section 4.1 to the Wednesday of the calendar week following the calendar week in which such purchase is made (or, if such Wednesday is not a Business Day, the immediately succeeding Business Day) or as otherwise agreed between the Bank and the Company and (b) thereafter, each period commencing on the last day of the immediately preceding such period and ending on the next Settlement Date or as otherwise agreed between the Bank and the Company, provided , however, that at any time the Bank and the Company may mutually agree to select any different period as the Settlement Period; provided, further, however, that if such agreement is not reached within 10 days, a Termination Event may be declared by the Bank.

      “Stated Termination Date” means April 8, 2009, or such later date as may be extended by mutual agreement of the Bank and the Company.

      “Tax” means any present or future withholding tax, levy, impost, duty or other tax or charge of any similar nature (including but not limited to any interest or penalty payable in connection with any failure to pay any of the same); and Taxation shall be construed accordingly.

      “Termination Date” means the earliest to occur of (i) termination of this Agreement pursuant to Section 18, (ii) the Stated Termination Date and (iii) the Business Day designated by the Company with no less than thirty (30) days prior notice to the Bank.

      “Termination Event” means any of the events set forth in Section 18.

      “Trade Credit Amount” means, with respect to a Purchased Receivable, the Dollar amount from time to time accrued on the books and records of the Company and as reported to the Bank on each Portfolio Report as a trade credit, trade allowance, return allowance or similar arrangement between the Company and the related Approved Debtor that might result in a reduction of such Purchased Receivable in the future.

      “Transaction Document” means each of this Agreement, each Purchase Request, each Portfolio Report, the blocked account agreements, the Approved Debtor Certificate and all related documents.

      “UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.

Section 2. The Agreement.

      Section 2.1. Prior to the Termination Date, subject to the terms and conditions of this Agreement, the Company hereby sells and assigns to the Bank, and the Bank hereby agrees to purchase, in each case, up to the Agreement Amount and subject to the applicable Debtor Sublimits (it being understood that the Outstanding Amount of the Purchased Receivables when sold and purchased will be greater than the Agreement Amount), a 100% interest in all of the present and future Receivables of each Approved Debtor (subject to the removal of an Approved Debtor pursuant to the terms of Section 23) and as identified in the most recent Portfolio Report delivered to the Bank under this Agreement or as identified in such other manner acceptable to the Bank; provided, however, that in any event the Receivables purchased and sold hereunder with respect to an Approved Debtor shall be deemed to be the Receivables of such Approved Debtor with the earliest due date (based upon their net invoice value excluding all accruals for any discounts).

Section 3. Conditions Precedent.

      Section 3.1. The Company shall not be entitled to request the Bank to make the initial purchase of Purchased Receivables unless:

     (a) the Bank has received all of the documents listed in Schedule 2 in form and substance reasonably satisfactory to it;

     (b) the representations and warranties made by the Company in Section 10 of this Agreement are true and correct as of the Closing Date;

     (c) the Bank has received the fees and other amounts payable by the Company pursuant to Section 15;

     (d) the Company shall have established the segregated Blocked Accounts for the collection of the Purchased Receivables;

     (e) no Termination Event shall have occurred; and

     (f) the Closing Date falls at least one Business Day after the date of the delivery of the initial Purchase Request and initial Portfolio Report to the Bank. Such Portfolio Report shall list the Receivables requested to be purchased in a format and contain such information as shall be reasonably satisfactory to Bank.

      Section 3.2. No purchase shall be made hereunder unless:

     (a) the Bank has received a Purchase Request in connection with the initial purchase and any incremental purchase that increases the then current Funded Amount.

     (b) The aggregate of the Outstanding Net Amount of the Receivables referred to in the Portfolio Report (after giving effect to such purchase) as of the applicable purchase date will not exceed the Agreement Amount or the Debtor Sublimits on the applicable purchase date.

     (c) The Invoices referred to in the Portfolio Report each have a date certain for payment which is no more than 90 days from the relevant purchase date, and are denominated in Dollars.

Section 4. Purchase of Receivables.

      Section 4.1. The Bank shall pay a Purchase Price to the Company for the Purchased Receivables sold to the Bank, equal to the Agreed Base Value less any other amounts owing to the Bank hereunder. With respect to the payment of Discount by the Company, the Bank has agreed that Discount will be payable in arrears in installments on each Settlement Date. The “Discount” will equal the product of (1) the Agreed Base Value of the Purchased Receivables to be purchased on such date, (2) the applicable LIBOR plus , the Margin (computed on the basis of a 360-day year), and (3) a fraction the numerator of which is the weighted average number of days until Purchased Receivables are due and the denominator of which is 360. Notwithstanding the foregoing, for only the initial purchase hereunder, Discount shall be calculated using Cost of Funds (computed on the weighted average tenor of the Purchased Receivables) and not the applicable LIBOR. Two Business Days prior to each Settlement Date, the Bank shall determine the applicable LIBOR for the subsequent Settlement Period. The Company shall be entitled, to the extent collected by the Company, to receive and retain, an amount equal to Collections on the Purchased Receivables in excess of the Agreed Base Value of such Purchased Receivables, such amounts to first be applied to the delivery to the Company of any Trade Credit Amounts due to the Company, as applicable, with the remainder of such amounts to be paid to the Company as a servicing fee. Without limiting the liability and obligations of the Company hereunder, the Bank shall be entitled to offset against and deduct from such excess all amounts owing by the Company to the Bank under this Agreement and the Transaction Documents. So long as the Company is acting as servicer for the Purchased Receivables, the Company will be entitled to retain such excess (less such offsets and deductions) as the Purchased Receivables are collected. Should the Bank terminate the Company’s appointment as servicer, the Bank will pay to the

Company such excess over and above the amounts which the Bank is entitled to offset, upon collection of all amounts owing in respect of the Purchased Receivables.

     The parties agree that the calculation of Agreed Base Value of Purchased Receivables included Trade Credit Amounts which the Approved Debtors have historically been entitled to receive if certain conditions in the future are met. To the extent that such Approved Debtors are not entitled to receive any such Trade Credit Amounts, or in the event that any such Approved Debtors are entitled to receive such Trade Credit Amounts but elect not to apply the corresponding Trade Credit Amount to the reduction of any payment made on a Purchased Receivable, and the Collections with respect to such Purchased Receivable include any such corresponding Trade Credit Amount, the amount thereof shall be attributable to and paid to the Company.

      Section 4.2. Until the Termination Date, Collections may be used by the Company, as servicer, and as agent for and on account of the Bank, to purchase from the Company Receivables of Approved Debtors that meet all of the requirements contained herein applicable to the initial Purchased Receivables ( “Replacement Receivables” ), which Replacement Receivables shall be held for the exclusive benefit and account of the Bank to the same extent as the original Purchased Receivables and shall constitute Purchased Receivables for all purposes of the Agreement. For purposes of maintaining the perfection of the Bank’s interest in any Purchased Receivables and the proceeds thereof, the Bank hereby appoints the Company as its agent in respect of any Collections prior to such Collections being used to purchase Replacement Receivables, provided that the Company’s sole duty as such agent shall be to hold such Collections in trust for the benefit of the Bank or to purchase Replacement Receivables as aforesaid.

      Section 4.3. (a) The Company will instruct all Debtors under the Purchased Receivables to make all payments on account thereof to the relevant Blocked Accounts. Each Invoice shall also require that payments be made to the relevant Blocked Accounts. All Collections will be received and held in the Blocked Accounts in the name of and for the Bank as the owner thereof and, except as otherwise provided in this Agreement, will be applied in the manner set forth in (b) below. The Bank may suspend or terminate all of the Company’s right, power and interest in a Blocked Account at any time upon the occurrence and during the continuance of a Termination Event.

     (b) Prior to the Termination Date, all of the Collections deposited into the Blocked Accounts shall be swept daily and transferred into the Company’s operating account, as designated by the Company to the financial institution maintaining such Blocked Accounts and the Bank hereby directs the Company to, no later than on the Business Day following the day on which Collections are received in such operating account, pay, apply or reserve for payment, as the case may be, such Collections as follows:

     (i) first, reserve for payment to the Bank at the next Settlement Date, an amount on account of the Discount equal to the portion of the Discount accrued (calculated prior to the Collections of Purchased Receivables being distributed in accordance with this Section 4.3(b)) to such day for all Settlement Periods, to the extent

any part thereof has not been previously paid to the Bank, and the Company agrees to hold such amount in trust for the Bank;

     (ii) second, with respect to any Collections of Purchased Receivables which include any Trade Credit Amounts owing to the Company, reserve for payment to the Company for such corresponding Trade Credit Amounts; and

     (iii) third, reserve for payment to the Bank at the next Settlement Date the amount of any Dilutions which may have accrued or been granted in relation to the relevant Receivables that were not otherwise accounted for in the calculation of Purchase Price and all other amounts which may be owing to the Bank under this Agreement or any other Transaction Document; and

     (iv) fourth, subject to the conditions precedent to each purchase set out in this Agreement, pay to or for the account of the Company, on the Bank’s behalf, the remaining balance of such Collections ( “Net Daily Collections” ) for the purchase of all right, title and interest of the Company in Replacement Receivables at the price determined in accordance with Section 4.1.

     Notwithstanding the foregoing, the Bank may at any time upon the occurrence and during the continuance of any Termination Event direct the Company to cease, and at all times after the Termination Date, the Company shall cease, paying the Purchase Price for Replacement Receivables title to which has not yet transferred to the Bank pursuant hereto with Net Daily Collections and, in each case, the Company shall remit and hold all Collections (including, without limitation, Collections received relating to Trade Credit Amounts) in the Blocked Accounts until the Final Collection Date all in accordance with and subject to Section 18.4. The Company shall comply in all respects with each such direction. The Company’s interest in any Collections relating to Trade Credit Amounts or that it would otherwise receive as its servicing fee shall at all times following the occurrence of a Termination Event be subordinate to the Bank’s interest in the Collections until the Final Collection Date.

     (c) While the Company is acting in the capacity of Servicer, any amounts in respect of the payment of any Discount or Net Daily Collections shall be deemed to have been paid to the Company and deposited into the Blocked Account immediately upon receipt thereof by the Company.

     (d) Without limiting any other rights of the Bank, the Company may upon five Business Days prior written notice to the Bank request (a “Reduction Request” ) that (i) the Aggregate Amount for any particular period(s) be decreased in increments of $5,000,000 so long as the Aggregate Amount as so reduced is no less than the Funded Amount as of the date of such reduction and/or (ii) the purchase of Replacement Receivables from Net Daily Collections be suspended until such time as the then current Funded Amount is reduced to the Agreement Amount stipulated in the Reduction Request. Upon the expiry of such five Business Days, if in the Reduction Request the Company has requested a suspension of the purchase of Replacement Receivables, Net Daily Collections shall not be used to pay for any purchase of any Receivables in respect of which title has not already transferred to the Bank pursuant hereto but shall be

retained in the Blocked Account until the Funded Amount is so reduced. Any amount so retained shall be paid to the Bank on each Settlement Date following the date specified in the Reduction Request until the Funded Amount is so reduced.

     (e) The Company agrees to give and grant all conveyances, assignments and transfers, by way of sale of title to and ownership in the Purchased Receivables as may be necessary to give effect to the purchases hereunder. Except as set forth in Section 21, at no time shall the Company have any right, title or interest in or to, or be the owner of, any Purchased Receivable. If any action is required to be taken to effect such conveyances, assignments and transfers, such action shall be taken at the expense of the Company. For the avoidance of doubt, it is hereby confirmed that the sale, assignment and transfer of Purchased Receivables pursuant hereto is intended to be absolute and unconditional and is not intended by the parties to be and should not be construed as a loan or the grant of collateral security for a loan.

     (f) The Bank agrees that at no time shall the Bank have any rights or interest in any Monsanto Receivables and that the Company shall at all times be entitled to any collections deposited into the Blocked Accounts related to Monsanto Receivables; provided, however , that if at any time after the Termination Date, an Approved Debtor does not make a full payment on the Purchased Receivables and the Monsanto Receivables and the Approved Debtor shall have not otherwise stated to which accounts receivable the payment should be applied and the Company has notified the Bank that the Company has not determined pursuant to the terms of this Agreement and the Monsanto Agreement as to which accounts receivable the payment should be applied, the Bank agrees that such payment shall be applied on a pro rata basis to the Purchased Receivables and the Monsanto Receivables of such Approved Debtor.

      Section 4.4. (a) The Company and the Bank shall settle amounts owing as between them hereunder on each Settlement Date.

     (b) The Company shall deliver to the Bank prior to the Closing Date the initial Portfolio Report, in the form of a hard copy or electronically in a manner acceptable to the Bank, as at the last day of the immediately preceding week.

     (c) Thereafter:

     (i) three Business Days prior to each Settlement Date; and

     (ii) within five Business Days following the Termination Date,

the Company shall deliver to the Bank, in the form of a hard copy or electronically in a manner acceptable to the Bank, a Portfolio Report as at the following dates (or on the date otherwise agreed between the Company and the Bank):

     (iii) as at the last day of the immediately preceding Settlement Period (in the case of paragraph (i) above);

     (iv) as at the Company’s close of business on the day immediately preceding the Termination Date (in the case of paragraph (ii) above).

     (d) To the extent available from Collections, if, on any Settlement Date, the Outstanding Net Amount of all Purchased Receivables as at the last day of the immediately preceding Settlement Period is less than the Funded Amount as at such day, the Company shall immediately (and in any event by not later than 10:00 a.m. (New York time) on the Business Day immediately following such Settlement Date) pay to the Bank by a deposit in US Dollars to the Bank’s account the amount by which the Funded Amount exceeds the Outstanding Net Amount of all Purchased Receivables as at such Settlement Date.

     (e) If, on any Settlement Date, the Outstanding Net Amount of all Purchased Receivables as at the last day of the immediately preceding Settlement Period is more than the Funded Amount as at such day, the Bank shall, subject to the terms and conditions set forth in this Agreement, pay by deposit to the Company’s operating account the amount by which the Outstanding Net Amount of all Purchased Receivables exceeds the Funded Amount as set forth in the related Purchase Request.

     (f) On each Settlement Date, to the extent available from Collections:

     (i) the Company shall pay to the Bank by deposit to the Bank’s account an amount equal to the portion of all Discount accrued (calculated prior to the Collections of Purchased Receivables being distributed) to such Settlement Date for all Settlement Periods, to the extent any part thereof has not been previously paid;

     (ii) the Company shall pay to the Bank by deposit to the Bank’s account an amount equal to the aggregate amount of all Dilutions granted or accrued during the Settlement Period ended on such Settlement Date that were not otherwise accounted for in the calculation of Purchase Price; and

     (iii) to the extent that the Bank has received any Collections directly, so long as no Termination Event has occurred, the Bank shall pay to the Company by deposit to the Company’s operating account (as designated by the Company) an amount equal to the aggregate amount of all Trade Credit Amounts that the Company is entitled to receive that have been received by the Bank from such Collections.

     (g) At any time following the occurrence and continuation of a Termination Event, the Company shall in any event on demand of the Bank pay to the Bank an amount equal to the amount by which the Funded Amount at any time exceeds the Outstanding Net Amount of all Purchased Receivables at such time. Such difference shall be paid by the Company to the Bank not later than the three Business Days following notice from the Bank to the Company.

      Section 4.5. (a) On the date hereof, title to all currently existing Receivables of the Approved Debtors set forth in the initial Portfolio Report originated by the Company shall, ipso facto , and without any further action on the part of the Company or the Bank transfer to the Bank to the extent necessary so that the Outstanding Net Amount of all Purchased Receivables is

equal to the Funded Amount (such Funded Amount being calculated as if the initial Purchase had been completed).

     (b) On each Business Day following the date hereof, title to all Receivables of the Approved Debtors originated by the Company, and not already transferred to the Bank pursuant hereto, shall, ipso facto , and without any further action on the part of the Company or the Bank, to the extent necessary so that at all times the Outstanding Net Amount of all Purchased Receivables is equal to the Funded Amount. If at any time the sale of all of the Receivables by the Company hereunder is limited by the Agreement Amount and/or the applicable Debtor Sublimit, the Receivables of such Approved Debtor originated by the Company that are otherwise purchased and sold hereunder up to such limitations shall be deemed to be the Receivables of such Approved Debtor with the earliest due date (based upon their net invoice value excluding all accruals for any discounts).

      Section 4.6. (a) The Company will from time to time within 5 days following any request, furnish the Bank with a calculation of the amounts paid or held for or in trust for the Bank by the Company under this Agreement.

     (b) The Company will provide the Bank with such other reports, information, documents, books and records as the Bank may reasonably request and which may be lawfully disclosed or provided to the Bank, including, without limitation, a certificate signed by its officers attesting to: the balance owing on each Purchased Receivable, the maturity date of each Purchased Receivable and the fact that the goods sold and/or services provided under the terms of the relevant Contracts were shipped in accordance with the terms of such Contracts, a copy of the purchase order or sales order and invoices relating to each Purchased Receivable, a copy of the bill of lading and any other shipping document relating to the Purchased Receivable and all billings, statements, correspondence and memoranda directed to the customer in relation to each Purchased Receivable and after the Termination Date, a full accounting of daily Collections received.

      Section 4.7. The Bank is irrevocably authorized by the Company to keep records of all purchases, which records shall be consistent with all information set forth in the Portfolio Reports delivered to the Bank, and evidence the dates and amounts of purchases and the applicable Discount in effect from time to time. Such records shall be presumptive evidence but the failure to record any purchase shall not limit or otherwise affect any obligations of the Company hereunder or the Debtor’s obligations to make payments on the Purchased Receivables when due.

      Section 4.8. The Company will, from time to time, at its expense, promptly execute and deliver all instruments and documents and take all action that may be reasonably necessary and that the Bank may reasonably request, in order to perfect, protect or more fully evidence the Bank’s ownership of the Purchased Receivables, or to enable the Bank to exercise or enforce any of its rights hereunder.

      Section 4.9. By effecting the payment under Section 4.1 and Section 4.2, the Bank shall complete the purchase of all right, title and interest, whether now owned or hereafter acquired

and wherever located, in, to and under such Purchased Receivables, without recourse, except as set forth in Sections 5.2, 7.2, 7.4, 8 and 15. By accepting such payment, the Company shall be conclusively deemed to sell, set over, assign, transfer and convey to the Bank and its successors and assigns, without recourse, except as set forth in Sections 5.2, 7.2, 7.4, 8 and 15, all of its right, title and interest in, to and under such Purchased Receivable.

      Section 4.10. Any payment by a Debtor in respect of any indebtedness owed by it to the Company in respect of Purchased Receivables shall, except as otherwise specified by such Debtor or required by the related Contract or law, be applied, first, as a Collection of any Purchased Receivable or Purchased Receivables then outstanding of such Debtor in the order of the age of such Purchased Receivables, starting with the oldest of such Purchased Receivables and, second, to any other indebtedness of such Debtor to the Company in respect of Purchased Receivables. The Company shall direct each Debtor to make all payments in respect of Purchased Receivables to a Blocked Account which shall be a special segregated account under the control of the Bank or its affiliates.

Section 5. Limited Liability.

      Section 5.1. Except as set forth in Sections 5.2, 7.2, 7.4, 8 and 15, the purchase and sale of Purchased Receivables under this Agreement shall be without recourse to the Company. The Company and the Bank intend the transactions hereunder to constitute true sales of Purchased Receivables, providing the Bank with the full risks and benefits of ownership of the Purchased Receivables (such that the Purchased Receivables would not be property of the Company’s estate in the event of its bankruptcy).

      Section 5.2. Deemed Collections/Repurchase Obligation.

          5.2.1 If a Repurchase Event with respect to a Purchased Receivable occurs under clause (ii) of the definition thereof and the related reduction, adjustment, cancellation or setoff relates only to a portion of the Outstanding Amount and not the entire Outstanding Amount, the Company shall be deemed to have received on such day a Collection on such Purchased Receivable in the amount of such reduction, adjustment, cancellation or setoff. All such Collections deemed received by the Company under this Section 5.2.1 shall be remitted by the Company to such account, as directed by the Bank in accordance with Section 6.1. On receipt of all amounts referred to above, the Bank shall (at the cost and expense of the Company) execute such documents as may be necessary to re-assign that portion of the applicable Purchased Receivables which represents the amounts so paid without recourse, representation or warranty (except as to the title thereto by the Bank), to the Company.

          5.2.2 Except as set forth in Section 5.2.1 with respect to partial reductions, adjustments, cancellations or setoffs of any Outstanding Amount, if a Purchased Receivable remains unpaid and a Repurchase Event with respect to such Purchased Receivable has occurred, the Bank may, by written notice, require the Company to pay to the Bank in respect of such Purchased Receivable, as directed by the Bank, an amount equal to the Purchase Price of such

Purchased Receivable (or so much of it as was paid by the Bank to the Company and remains unpaid), less the amount of the unearned portion of the related Discount, if any, if such Purchased Receivable is being repurchased by the Company prior to the due date of such Purchased Receivable as computed pursuant to Section 4.1 hereof and if such Purchased Receivable is being repurchased by the Company after the due date of such Purchased Receivable, together with interest thereon at the interest rate specified in Section 7.6 from the due date to the date of the Company’ payment in full thereof, and any other amounts then payable by the Company hereunder including breakage costs under Section 7.4, whereupon such amount shall become due and payable from the Company to the Bank on the date specified in such notice and shall be paid into an account specified by the Bank. On receipt of all amounts referred to above, the Bank shall (at the cost and expense of the Company) execute such documents as may be necessary to re-assign the applicable Purchased Receivables without recourse, representation or warranty (except as to the title thereto by the Bank), to the applicable account of the Company.

      Section 5.3. True Sale. It is the intention of the parties hereto that such purchase made hereunder shall constitute a sale and assignment of the related Purchased Receivable (and not merely a pledge), which sale and assignment is absolute, irrevocable and without recourse except as set forth in Sections 5.2, 7.2, 7.4, 8 and 15 and shall provide the Bank with the full benefits of ownership of such Purchased Receivable. In the event that, notwithstanding the intent of the parties, such purchase is deemed by a court of competent jurisdiction to constitute a pledge rather than a sale and assignment, the Company does hereby grant to the Bank, in order to secure all the obligations of the Company to the Bank hereunder, a first priority security interest in, to and on, the Purchased Receivables and the products and proceeds thereof including, without limitation, all Collections, all Trade Credit Amounts, all Related Assets and all other monies, instruments, securities, documents, investment property, financial assets and other property related to the Purchased Receivables from time to time on deposit in or credited to the Blocked Accounts or any other accounts and all other such property relating to the Purchased Receivables or any of them.

Section 6. The Company as Servicer and Agent of Bank.

      Section 6.1. Appointment of Servicer. Notwithstanding the sale of Purchased Receivables pursuant to this Agreement, the Company shall continue to be responsible for the servicing and administration of the Purchased Receivables sold by it as ag