Execution Version
Master
Accounts Receivable Purchase Agreement
among
Calyon New
York Branch, as the Bank
The Scotts
Company LLC, as the Company
and
The Scotts
Miracle-Gro Company, as the Parent
Dated as of May 1, 2009
Table of
Contents
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Section
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Heading
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Page
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Section 1.
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Definitions and
Interpretation
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1
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Section 2.
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The Agreement
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8
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Section 3.
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Conditions
Precedent
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8
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Section 4.
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Purchase of
Receivables
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9
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Section 5.
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Limited
Liability
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15
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Section 6.
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The Company as Servicer
and Agent of Bank
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16
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Section 7.
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Payments
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18
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Section 8.
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Changes in
Circumstances
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19
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Section 9.
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Further
Assurances
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20
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Section 10.
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Representations and
Warranties
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20
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Section 11.
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Covenants
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24
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Section 12
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Partial
Invalidity
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27
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Section 13.
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No Bank Liability for
Contract
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27
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Section 14.
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Notices, Addresses,
Language
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27
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Section 15.
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Fees, Costs and
Indemnity
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28
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Section 16
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Calculations and
Certificate
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30
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Section 17.
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Set-Off
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31
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Section 18.
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Termination
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31
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Section 19.
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Miscellaneous
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33
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Section 20.
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Governing Law
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36
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Section 21.
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Optional
Repurchase
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36
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Section 22.
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Guaranty
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37
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Section 23.
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[Intentionally
Omitted]
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39
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Section 24.
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Confidentiality
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39
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Schedule
1 —
Purchase Request
Schedule
2
— Conditions Precedent
Schedule
3
— UCC Details Schedule
Schedule
4
— Form of Portfolio Report
Schedule
5
— Approved Debtors
Master
Accounts Receivable Purchase Agreement
Master Accounts
Receivable Purchase Agreement , dated as of May 1, 2009 (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 Calyon New York Branch (the
“Bank” ), a duly licensed branch under the New
York Banking Law of a foreign banking corporation organized and
existing under the laws of the Republic of France.
Whereas
, after the date hereof and subject
to the terms and conditions of this Agreement, the Company may sell
to the Bank and the Bank may purchase from the Company, on a
revolving and uncommitted basis, certain 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:
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Section
1.
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Definitions and
Interpretation.
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In this Agreement and each Schedule:
“Act” has the meaning ascribed to it in Section
19.9(a).
“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 and (b) 100% less the Agreed Dilution
Percentage.
“Agreed Dilution
Percentage” means,
with respect to a Purchased Receivable at any time, a rate equal to
(a) 5% if the sum of (i) the product of (x) two (2) and (y)
Historical Dilution for the Approved Debtor in respect of such
Purchased Receivable in the same month of the previous year, and
(ii) Late Interest Percentage then in effect (the “
Sum ”) does not exceed 5%, (b) 10% if the Sum in
respect of such Purchased Receivable is greater than 5% and does
not exceed 10%, and (c) the actual Sum if greater than
10%.
“Agreement Amount”
means the maximum aggregate Funded
Amounts of all Purchased Receivables, which shall not exceed
$80,000,000 at any time.
“Agreement Office”
means the office through which the
Bank will perform its obligations under this Agreement.
“Applicable Margin”
means the applicable margin per
annum for each Approved Debtor as listed on Schedule 5
hereto.
“Approved Debtor”
means each Person listed as an
Approved Debtor on Schedule 5 hereto.
“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
providing the Bank with control over such account.
“Business Day”
means a day on which banks are open
for business in Chicago and New York City.
“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
relevant date (which determination shall be conclusive and binding
on the Company absent manifest error) at which Dollars for a term
comparable to the applicable period of time and in an amount
comparable to the relevant amount in respect of 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 Sublimit”
means the sublimit to the Agreement
Amount for each Approved Debtor as listed on Schedule 5
hereto.
“Defaulted Receivable”
means any Purchased Receivable which
has not been paid when due or cannot be paid solely as a result of
the applicable Approved Debtor’s Financial Inability to
Pay.
“Dilution” means in respect of each Debtor, 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.
“Discount” means, with respect to each Purchased
Receivable, 100% minus the product of (a) the sum of the applicable
Cost of Funds for seven days as of the purchase date thereof plus
the Applicable Margin applicable to the Approved Debtor in respect
of such Purchased Receivable, and (b) a fraction the numerator
of which seven days and the denominator of which is 360.
“Dollar, USD”
and “$” shall
mean the lawful currency of the United States of
America.
“Economic and Trade Sanctions and
Anti-Terrorism Laws” means any laws relating to economic or trade
sanctions, terrorism or money laundering, including without
limitation Executive Order 13224, the Patriot Act, the regulations
administered by OFAC, the Trading with the Enemy Act (12 U.S.C.
§95), and the International Emergency Economic Powers Act (50
U.S.C. §1701-1707).
“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.
“Excess Amount”
has the meaning ascribed to it in
Section 15.1(b).
“Excess Fee” has the meaning ascribed to it in Section
15.1(b).
“Fee Letter”
means the letter among the Bank, the
Company and the Parent of even date herewith providing for the
payment of certain fees by the Company to the Bank as specified
therein.
“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 or inability 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 30 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.
“Historical
Dilution” means,
with respect to a Debtor at any time, a rate equal to a fraction
the numerator of which is the value of the “Credit
Memos” for the same month of the previous year and the
denominator of which is the value of “Sales” for such
month and year, in each case for such Debtor as indicated in the
relevant Portfolio Report received by the Bank.
“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.
“Late Interest
Percentage” means,
with respect to Purchased Receivables, a rate equal to the product
of (a) the sum of (i) the Cost of Funds for ninety-eight (98) days
as of the relevant date, and (ii) 2.25%, and (b) a fraction
the numerator of which is ninety-eight (98) and the denominator of
which is 360.
“Law” means any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance, order,
injunction, writ, decree or award of any Governmental
Authority.
“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.
“OFAC” means the Office of Foreign Assets Control of
the United States Department of the Treasury.
“OFAC Lists” has the meaning ascribed to it in Section
19.9(b).
“OFAC Violation”
has the meaning ascribed to it in
Section 19.9(c).
“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. For the avoidance of doubt, the
Original 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.
“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 Agreed Base Value thereof times the applicable
Discount.
“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.
“Relevant Quarter”
means each three month period ending
June 30, 2009, September 30, 2009, December 31, 2009, and March 31,
2010, respectively.
“Replacement Receivables”
is defined in Section 4.2
hereof.
“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.
“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.
“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 May 1, 2010, 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 either party with no less than thirty (30) days
prior notice to the other party.
“Termination Event”
means any of the events set forth in
Section 18.
“Termination Interest”
means, with respect to the Total
Purchased Receivables, a rate equal to the product of (a) the sum
of (i) the Cost of Funds for five (5) days and (ii) 3.25%,
(b) a fraction the numerator of which is the number of days
during the period referred to in clause (i) above plus fifteen (15)
days, and the denominator of which is 360 and (c) the aggregate
Agreed Base Value of the Total Purchased Receivables.
“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, and all related documents.
“UCC” means the Uniform Commercial Code as from time
to time in effect in the State of New York.
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Section 2.
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Terms of Purchase on an
Uncommitted Basis.
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Section 2.1.
Prior to the
Termination Date, subject to the terms and conditions of this
Agreement, the Company hereby agrees to offer to sell and assign
from time to time to the Bank, and the Bank hereby agrees to
consider on an uncommitted basis to purchase a 100% interest in all
of the present and future Receivables of each Approved Debtor 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 that the Funded Amount at no
time shall exceed (a) the Agreement Amount, (b) the applicable
Debtor Sublimit, or (c) $10,000,000 on the Settlement Date
immediately prior to the last day of each Relevant Quarter
(excluding for purposes of this clause (c) the Funded Amount in
respect of Defaulted Receivables in excess of US$10,000,000) unless
in the case of this clause (c), the Company has received the
Bank’s prior written consent to the Funded Amount exceeding
US$10,000,000 and paid the applicable Excess Fee in accordance with
the terms of Section 15.1); further provided, that in any
event the Receivables that may be 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).
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Section 3.
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Conditions
Precedent.
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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 three Business Days 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 by 12:00 p.m. New York time at least three Business Days
prior to a Settlement Date on which the Company wishes the Bank to
purchase Receivables:
(a) the Bank has
received a Purchase Request in connection with such purchase, and
the Bank shall have agreed in its sole discretion to the purchase
set forth in such Purchase Request, which consent shall be set
forth in writing to the Company where indicated on such Purchase
Request at least one day prior to the relevant Settlement
Date.
(b) The aggregate
of the Funded 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 (i) the Agreement Amount,
(ii) the Debtor Sublimit or (iii) $10,000,000 on the Settlement
Date immediately prior to the last day of each Relevant Quarter,
except as provided in Section 2.1.
(c) The Invoices
referred to in the Portfolio Report each shall have a date certain
for payment which is no more than 90 days from the relevant
purchase date, and are denominated in Dollars.
(d) As of such
Settlement Date, the representations and warranties made by the
Company is Section 10 of this Agreement are true and correct and no
Termination Event shall have occurred
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Section 4.
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Purchase of
Receivables.
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Section 4.1.
(a) If the Bank decides in its sole
discretion (or is required in accordance with Section 4.4(e)), to
purchase Receivables offered by the Company in accordance with
Section 3, the Bank shall pay the Purchase Price to the Company for
the Purchased Receivables sold to the Bank, as calculated by the
Bank in its discretion in accordance with the terms hereof, less
any other amounts owing to the Bank hereunder, by 4:00 p.m. New
York time on the applicable Settlement Date.
(b) If the Bank
decides, in its sole discretion, not to purchase Receivables
offered by the Company in accordance with Section 3 on the terms
and conditions then in effect (but subject to the requirements of
Section 4.4(e)), the Bank may propose in writing to the Company
modifications to the Applicable Margin, Approved Debtors, and/or
Debtor Sublimits as conditions to its consent to purchase such
Receivables within one Business Day of receipt of the applicable
Purchase Request; if the Company agrees to such modifications, it
shall so indicate in writing within one Business Day of receipt of
such proposal, whereupon the Bank may decide to purchase the
Receivables listed in the relevant Purchase Request on such
modified terms in accordance with clause (a) above.
(c) 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 all amounts owed to the Bank as set forth
in Section 4.4(d) and (e), such amount 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 not previously distributed to the
Bank. 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.
(d) The parties agree that the
calculation of Agreed Base Value of Purchased Receivables includes
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, with the
prior consent of the Bank in accordance with Section 3.2(a) if such
purchase is to occur on a Settlement Date, and/or without consent
if such purchase is to occur between two Settlement Dates,
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 the amount
equal to the difference between the Agreed Base Value and the
Purchase Price of the Purchased Receivables (other than Defaulted
Receivables);
(ii) second, 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 Purchased Receivables that were not otherwise accounted
for in the calculation of Purchase Price;
(iii) third, reserve for payment to
the Bank on the next Settlement Date (A) the Purchase Price of the
Purchased Receivables (other than Defaulted Receivables), except
for such amounts as may be used to purchase Replacement Receivables
for the time remaining in the applicable Settlement Period by the
Company on the Bank’s behalf ( “Net Daily
Collections” ) at the price determined in accordance with
Section 4.1, and (B) all other amounts which may be owing to
the Bank under this Agreement or any other Transaction Document
with respect to any Collections of Purchased Receivables;
and
(iv) fourth, with respect to any
Collections of Purchased Receivables which include any Trade Credit
Amounts owing to the Company, reserve for payment to the Company
such corresponding Trade Credit Amounts subject to the last
sentence of the following paragraph.
If on any
Settlement Date the Bank decides in its sole discretion (but
subject to the requirements of Section 4.4(e)), not to purchase
Replacement Receivables title to which has not yet transferred to
the Bank pursuant hereto with Collections, the Company shall remit
and hold all Collections (including, without limitation,
Collections received relating to Trade Credit Amounts) in the
Blocked Accounts until the next Settlement Date, whereupon it shall
follow the procedures set forth in Section 4.4(d) and (e),
provided, however, that if a Termination Event has occurred or the
Termination Date has been declared, on the applicable Final
Collection Date the Company shall follow the procedures set forth
in Section 18. The Company shall comply in all
respects with each such direction of the Bank. 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 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) 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 Sections
4.4(e) and 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.
(e) 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.
(i) by 12:00 p.m.
New York time 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) On each
Settlement Date by 10:00 a.m. New York time, to the extent
available from Collections:
(i) the Company
shall pay to the Bank by deposit to the Bank’s account the
amounts set forth in Section 4.3(b)(i) and (ii) in respect of
Purchased Receivables (other than Defaulted Receivables), to the
extent any part thereof has not been previously paid;
(ii) If the
difference between the amount reserved pursuant to Section
4.3(b)(iii) and the Purchase Price for Replacement Receivables in
accordance with Section 4.2 is positive, then the Company shall pay
to the Bank by deposit to the Bank’s account such
difference.
(iii) If the difference
between the amount reserved pursuant to Section 4.3(b)(iii) and the
Purchase Price for Replacement Receivables in accordance with
Section 4.2 is negative, then the Bank shall pay to the Company
such difference, or at the Bank’s discretion, the Company
shall deduct from the amounts due to the Bank pursuant to clause
(d)(i) above such difference.
(iv) 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),
such amounts as may be used to purchase Replacement Receivables
that the Bank has consented to purchase, as well as 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.
(e) On each Settlement Date, (i) the
Company shall purchase from the Bank all Purchased Receivables
other than Defaulted Receivables for a purchase price equal to the
Agreed Base Value of such receivables minus any amounts received by
the Bank as repayment of such Purchased Receivables and (ii) the
Bank (x) shall repurchase any Receivables previously purchased by
the Bank in accordance with Section 3.2 and any Replacement
Receivables which have been purchased with the Bank’s consent
in accordance with Section 4.2, in each case to the extent such
Receivables have not yet been paid as of such Settlement Date, and
(y) may in its sole discretion purchase such Replacement
Receivables which have been purchased by the Company without the
Bank’s consent during the period between the previous
Settlement Date and the current Settlement Date in accordance with
Section 4.2; in all cases the Company may use the purchase price
that it would have paid the Bank for the Purchased Receivables in
accordance with clause (i) above to purchase Replacement
Receivables in accordance with clause (ii) above, provided in each
case that the Agreement Amount, the Debtor Sublimits and all other
limits provided herein are respected in accordance with Section
2.1.
Section 4.5. (a) On each Settlement Date in respect of
which the Bank has agreed or been required in accordance with
Section 4.4(e) to purchase Receivables, title to all currently
existing Receivables of the Approved Debtors set forth in each
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 Purchase Price of all Purchased Receivables
is equal to the Funded Amount of such Purchased
Receivables.
(b) If at any time
the sale of all of the Receivables by the Company hereunder is
limited by the Agreement Amount, the applicable Debtor Sublimit, or
any other applicable limit set forth herein, 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 five 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 (i) the balance owing on each Purchased Receivable, (ii) 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, (iii) a copy of the purchase order or sales order and
invoices relating to each Purchased Receivable, (iv) 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 (v) after the Termination Date, a full
accounting of daily Collections received.
Section
4.7. The Bank may 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
Debtors’ 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 each 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 4.4(e), 5.2, 7.2, 7.4, 8, 15 and 18.5. 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 4.4(e), 5.2, 7.2, 7.4, 8, 15 and 18.5, 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 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.
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Section 5.
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Limited
Liability.
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Section 5.1.
Except as set forth in Sections
4.4(e), 5.2, 7.2, 7.4, 8, 15 and 18.5, 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 aggregate Original Amount and not the entire
aggregate Original 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 shall be 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 Original 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 Agreed Base Value of such Purchased Receivable (or so
much of it as was paid by the Bank to the Company and remains
unpaid as Collections), and if such Purchased Receivable is being
repurchased by the Company after the Maturity 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 4.4(e), 5.2, 7.2, 7.4, 8, 15 and 18.5
and shall provide the Bank with the full benefits of ownership of
such Purchased Receivable. In the event
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