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EXHIBIT 10.3
RECEIVABLES SALE AGREEMENT
DATED AS
OF SEPTEMBER 7, 2004
BETWEEN
EQUIFAX CAPITAL MANAGEMENT, INC.,
AS SELLER,
AND
EQUIFAX RECEIVABLES
FINANCE LLC,
AS BUYER
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TABLE OF CONTENTS
PAGE
ARTICLE I AMOUNTS AND TERMS OF THE
PURCHASE....................................2
Section 1.1 Initial Contribution of
Receivables..............................2
Section 1.2 Purchase of
Receivables..........................................2
Section 1.3 Payment for the
Purchases........................................3
Section 1.4 Purchase Price Credit
Adjustments................................4
Section 1.5 Payments and Computations,
Etc...................................5
Section 1.6 License of
Software..............................................5
Section 1.7
Characterization.................................................6
ARTICLE II REPRESENTATIONS AND
WARRANTIES......................................6
Section 2.1 Representations and
Warranties of Seller.........................6
ARTICLE III CONDITIONS OF
PURCHASE............................................10
Section 3.1 Conditions Precedent to
Purchase................................10
Section 3.2 Conditions Precedent to
Subsequent Payments.....................10
ARTICLE IV
COVENANTS..........................................................10
Section 4.1 Affirmative Covenants of
Seller.................................10
Section 4.2 Negative Covenants of
Seller....................................15
ARTICLE V TERMINATION
EVENTS..................................................16
Section 5.1 Termination
Events..............................................16
Section 5.2
Remedies........................................................17
ARTICLE VI
INDEMNIFICATION....................................................17
Section 6.1 Indemnities by
Seller...........................................17
Section 6.2 Other Costs and
Expenses........................................20
ARTICLE VII
MISCELLANEOUS.....................................................20
Section 7.1 Waivers and
Amendments..........................................20
Section 7.2
Notices.........................................................20
Section 7.3 Protection of Ownership
Interests of Buyer......................20
Section 7.4 Confidentiality; Tax
Treatment..................................21
Section 7.5 Bankruptcy
Petition.............................................22
Section 7.6 Limitation of
Liability.........................................23
SECTION 7.7 CHOICE OF
LAW...................................................23
SECTION 7.8 CONSENT TO
JURISDICTION.........................................23
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SECTION 7.9 WAIVER OF JURY
TRIAL............................................23
Section 7.10 Integration; Binding Effect;
Survival of Terms..................24
Section 7.11 Counterparts; Severability;
Section References..................24
EXHIBITS AND SCHEDULES
Exhibit I -
Definitions
Exhibit II - Principal Place
of Business; Location(s) of Records; State
of Organization; Federal Employer Identification Number;
Organizational Identification Number; Other Names
Exhibit III - Lock-Boxes;
Collection Accounts; Collection Banks
Exhibit IV - Form of
Compliance Certificate
Exhibit V -
Copy of Credit and
Collection Policy
Exhibit VI - Form of
Subordinated Note
Exhibit VII
Form of Purchase Report
Schedule A
List of Documents to Be Delivered to Buyer Prior to the
Purchases
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RECEIVABLES SALE AGREEMENT
THIS RECEIVABLES SALE AGREEMENT, dated as of September 7, 2004 (as
the
same may from time to time hereafter be
amended, supplemented, restated or
otherwise modified, this "AGREEMENT" or the
"SECOND STEP RECEIVABLES SALE
AGREEMENT"), is by and among EQUIFAX
CAPITAL MANAGEMENT, INC., a Georgia
corporation ("SELLER" or "ECM"), and
Equifax Receivables Finance LLC, a Delaware
limited liability company ("BUYER"). UNLESS
DEFINED ELSEWHERE HEREIN,
CAPITALIZED TERMS USED IN THIS AGREEMENT
SHALL HAVE THE MEANINGS ASSIGNED TO
SUCH TERMS IN EXHIBIT I HERETO (OR, IF NOT
DEFINED IN EXHIBIT I HERETO, THE
MEANING ASSIGNED TO SUCH TERM IN EXHIBIT I
TO THE CREDIT AND SECURITY
AGREEMENT).
PRELIMINARY STATEMENTS
Pursuant to a Receivables Sale Agreement dated as of
September 7, 2004, by and among Equifax Inc., a Georgia
corporation
("PARENT"), Equifax Information Services LLC, a Georgia limited
liability company ("EIS"), Equifax Direct Marketing Solutions, a
Georgia
limited liability company, Equifax Information Services of Puerto
Rico
Inc., a Georgia corporation, and Compliance Data Center, Inc., a
Georgia
corporation (each of the foregoing, an "ORIGINATOR" and
collectively,
the "ORIGINATORS"), and Equifax Capital Management, Inc., a
Georgia
corporation ("BUYER") (as the same may from time to time hereafter
be
amended, supplemented, restated or otherwise modified, the "FIRST
STEP
RECEIVABLES SALE AGREEMENT"), Seller has acquired from the
Originators,
and from time to time hereafter will acquire from the
Originators,
Receivables, together with the Related Security and Collections
with
respect thereto. Seller wishes to sell and assign to Buyer, and
Buyer
wishes to purchase from Seller, all of Seller's right, title
and
interest in and to the Receivables, together with the Related
Security
and Collections with respect thereto.
Seller and Buyer intend the transactions contemplated hereby
to be true sales to Buyer by Seller of the Receivables, providing
Buyer
with the full benefits of ownership of such Receivables, and
neither
Seller nor Buyer intends these transactions to be, or for any
purpose to
be characterized as, loans from Buyer to Seller.
Buyer may finance a portion of the Purchase Price of the
Receivables by pledging the Receivables and borrowing under the
Credit
and Security Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the
mutual agreements herein contained and
other good and valuable consideration,
the receipt and adequacy of which are
hereby acknowledged, the parties hereto
agree as follows:
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ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASE
Section 1.1 INITIAL
CONTRIBUTION OF RECEIVABLES. On the date hereof,
Seller does hereby contribute, assign,
transfer, set-over and otherwise convey
to Buyer, and Buyer does hereby accept from
Seller as a contribution to Buyer's
capital, all of Seller's right, title and
interest in and to the Initial
Contributed Receivables, together with all
Related Security relating thereto and
all Collections thereof.
Section 1.2 PURCHASE OF
RECEIVABLES.
(a)
Effective on the date hereof, in consideration for the
Purchase Price paid to Seller and upon the
terms and subject to the conditions
set forth herein, Seller does hereby sell,
assign, transfer, set-over and
otherwise convey to Buyer, without recourse
(except to the extent expressly
provided herein), and Buyer does hereby
purchase from Seller, all of Seller's
right, title and interest in and to all
Receivables in which Seller has any
rights as of the date hereof (other than
the Initial Contributed Receivables)
and all Receivables in which Seller
hereafter acquires any rights through and
including the Termination Date, together,
in each case, with all Related
Security relating thereto and all
Collections thereof. In accordance with the
preceding sentence, on the date hereof
Buyer shall acquire all of Seller's
right, title and interest in and to all
Receivables (other than the Initial
Contributed Receivables) in which Seller
has any rights as of the date hereof
and all Receivables in which Seller
thereafter acquires any rights through and
including the Termination Date, together
with all Related Security relating
thereto and all Collections thereof. Buyer
shall be obligated to pay the
Purchase Price for the Receivables
purchased hereunder in accordance with
SECTION 1.3.
(b)
On the 20th day of each month hereafter (or if any such
day is not a Business Day, on the next
succeeding Business Day thereafter,
Seller shall (or shall require the Servicer
to) deliver to Buyer a report in
substantially the form of Exhibit VII
hereto (each such report being herein
called a "PURCHASE REPORT") with respect to
the Receivables sold by Seller to
Buyer during the Settlement Period then
most recently ended. In addition to, and
not in limitation of, the foregoing, in
connection with the payment of the
Purchase Price for any Receivables
purchased hereunder, Buyer may request that
Seller deliver, and Seller shall deliver,
such approvals, opinions, information
or documents as Buyer may reasonably
request.
(c)
It
is the intention of the parties hereto that each
Purchase of Receivables from Seller made
hereunder shall constitute a sale,
which sale is absolute and irrevocable and
provides Buyer with the full benefits
of ownership of the Receivables. Except for
the Purchase Price Credits owed to
Buyer pursuant to SECTION 1.4, the sale of
Receivables hereunder by Seller is
made without recourse to Seller; PROVIDED,
HOWEVER, that (i) Seller shall be
liable to Buyer for all representations,
warranties, covenants and indemnities
made by Seller pursuant to the terms of the
Transaction Documents to which
Seller is a party, and (ii) such sale does
not constitute and is not intended to
result in an assumption by Buyer or any
assignee thereof of any obligation of
Seller or any other Person arising in
connection with the Receivables, the
related Contracts and/or other Related
Security or any other obligations of
Seller. In view of the intention of the
parties hereto that each Purchase of
Receivables made hereunder shall constitute
a sale of such Receivables rather
than loans secured thereby, Seller agrees
that it will, on or prior to the date
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hereof and in accordance with SECTION
4.1(E)(II), mark its books and records
including aged trial balance with respect
to the Receivables with a legend
acceptable to Buyer and to the Agent (as
Buyer's assignee), evidencing that
Buyer has purchased such Receivables as
provided in this Agreement and to note
in its financial statements that its
Receivables have been sold to Buyer. Upon
the request of Buyer or the Agent (as
Buyer's assignee), Seller will execute and
file such financing or continuation
statements, or amendments thereto or
assignments thereof, and such other
instruments or notices, as may be necessary
or appropriate to perfect and maintain the
perfection of Buyer's ownership
interest in the Receivables and the Related
Security and Collections with
respect thereto, or as Buyer or the Agent
(as Buyer's assignee) may reasonably
request.
Section 1.3 PAYMENT FOR THE
PURCHASES.
(a)
The Purchase Price for the Purchase from Seller of
Receivables as of the date hereof (other
than the Initial Contributed
Receivables) shall be payable in full by
Buyer to Seller on the date hereof, and
shall be paid to Seller in the following
manner:
(i)
by delivery of immediately available funds, and
(ii) the
balance, by delivery of the proceeds of a
subordinated revolving loan from Seller to Buyer (a "SUBORDINATED
LOAN")
in an amount not to exceed the least of (A) the remaining unpaid
portion
of such Purchase Price, (B) the maximum Subordinated Loan that
could be
borrowed without rendering Buyer's Net Worth less than the
Required
Capital Amount, and (C) fifteen percent (15%) of such Purchase
Price.
Seller is hereby authorized by Buyer to endorse on the schedule
attached
to its Subordinated Note an appropriate notation evidencing the
date and
amount of each advance thereunder, as well as the date of each
payment
with respect thereto, PROVIDED THAT the failure to make such
notation
shall not affect any obligation of Buyer thereunder.
The Purchase Price for each Receivable
acquired by Seller after the date hereof
shall be due and owing in full by Buyer to
Seller or its designee on the date
each such Receivable is acquired by Seller
(except that Buyer may, with respect
to any such Purchase Price, offset against
such Purchase Price any amounts owed
by Seller to Buyer hereunder and which have
become due but remain unpaid) and
shall be paid to Seller in the manner
provided in the following paragraphs (b),
(c) and (d).
(b)
With respect to any
Receivables acquired by Seller after
the date hereof, on each Settlement Date,
Buyer shall pay Seller the Purchase
Price therefor in accordance with SECTION
1.3(D) and in the following manner:
FIRST, by delivery to Seller or its designee of
immediately available funds, to the extent of funds available to
Buyer
from cash on hand or from borrowings under the Credit and
Security
Agreement;
SECOND, by delivery to Seller or its designee of the
proceeds of a Subordinated Loan, PROVIDED THAT the making of any
such
Subordinated Loan shall be subject to the provisions set forth
in
SECTION 1.3(A)(II); and
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THIRD, unless the Termination Date has occurred in
accordance with this Agreement, by accepting a contribution to
its
capital in an amount equal to the remaining unpaid balance of
such
Purchase Price.
Subject to the limitations set forth in
SECTION 1.3(A)(II), Seller irrevocably
agrees to advance each Subordinated Loan
requested by Buyer on or prior to the
Termination Date. The Subordinated Loans
owing to Seller shall be evidenced by,
and shall be payable in accordance with the
terms and provisions of its
Subordinated Note and shall be payable
solely from funds which Buyer is not
required under the Credit and Security
Agreement to set aside for the benefit
of, or otherwise pay over to, the
Lenders.
(c)
From and after the Termination Date, Seller shall not be
obligated to (but may, at its option) sell
or contribute Receivables to Buyer.
(d)
Although the Purchase Price for each Receivable acquired
by Seller after the date hereof shall be
due and payable in full by Buyer to
Seller on the date such Receivable was
acquired by Seller, settlement of the
Purchase Price between Buyer and Seller
shall be effected on a monthly basis on
Settlement Dates with respect to all
Receivables acquired by Seller during the
same Calculation Period and based on the
information contained in the Purchase
Report delivered by Seller for the
Calculation Period then most recently ended.
Although settlement shall be effected on
Settlement Dates, increases or
decreases in the amount owing under the
Subordinated Note made pursuant to
SECTION 1.3 and any contribution of capital
to Buyer made pursuant to SECTION
1.3(B) shall be deemed to have occurred and
shall be effective as of the last
Business Day of the Calculation Period to
which such settlement relates.
Section 1.4 PURCHASE PRICE
CREDIT ADJUSTMENTS. If on any day:
(a)
the Outstanding Balance of a Receivable purchased from
Seller is:
(i)
reduced as a result of any defective or rejected
or returned goods or services, any discount or any adjustment
or
otherwise by Seller (other than as a result of such Receivable
becoming
a Defaulted Receivable or to reflect cash Collections on account of
such
Receivable),
(ii)
reduced or canceled as a result of a setoff in
respect of any claim by any Person (whether such claim arises out
of the
same or a related transaction or an unrelated transaction), or
(b)
any of the representations and warranties set forth in
SECTIONS 2.1(H), (I), (J), (L), (R), (S),
(T), (U), the second sentence of
SECTION 2.1(Q) hereof and the last clause
(relating to bulk sales laws) of
SECTION 2.1(C) are not true when made or
deemed made with respect to any
Receivable,
then, in such event, Buyer shall be
entitled to a credit (each, a "PURCHASE
PRICE CREDIT") against the Purchase Price
otherwise payable to Seller hereunder
equal to (x) in the case of a partial
reduction, the amount of such reduction,
and (y) in the case of a total reduction or
cancellation, the lesser of the
total Purchase Price paid for and the
Outstanding Balance of such Receivable
(calculated before giving effect to the
applicable reduction or cancellation).
If such Purchase
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Price Credit exceeds the Original Balance
of the Receivables sold by Seller on
any day, Seller shall pay the remaining
amount of such Purchase Price Credit in
cash immediately, PROVIDED that if the
Termination Date has not occurred, Seller
shall be allowed to deduct the remaining
amount of such Purchase Price Credit
from any indebtedness owed to it under its
Subordinated Note.
Section 1.5 PAYMENTS AND
COMPUTATIONS, ETC. All amounts to be paid
or deposited by Buyer hereunder shall be
paid or deposited in accordance with
the terms hereof on the day when due in
immediately available funds to the
account of Seller designated from time to
time by Seller or as otherwise
directed by Seller. In the event that any
payment owed by any Person hereunder
becomes due on a day that is not a Business
Day, then such payment shall be made
on the next succeeding Business Day. If any
Person fails to pay any amount
hereunder when due, such Person agrees to
pay, on demand, the Default Fee in
respect thereof until paid in full;
PROVIDED, HOWEVER, that such Default Fee
shall not at any time exceed the maximum
rate permitted by applicable law. All
computations of interest payable hereunder
shall be made on the basis of a year
of 360 days for the actual number of days
(including the first but excluding the
last day) elapsed.
Section 1.6 LICENSE OF
SOFTWARE.
(a)
To the extent that any software used by Seller to
account for the Receivables is
non-transferable, Seller hereby grants to each of
Buyer, the Agent and the Servicer an
irrevocable, non-exclusive license to use,
without royalty or payment of any kind, all
such software used by Seller to
account for such Receivables, to the extent
necessary to administer such
Receivables, whether such software is owned
by Seller or is owned by others and
used by Seller under license agreements
with respect thereto, PROVIDED THAT
should the consent of any licensor of such
software be required for the grant of
the license described herein to be
effective: (x) the license granted herein
shall not apply to such software unless and
until such consent is obtained, and
(y) Seller hereby agrees that, upon the
request of Buyer (or Buyer's assignee)
made at any time during the continuation of
a Termination Event or an
Amortization Event, Seller will use its
reasonable efforts (i) to obtain the
consent of such third-party licensor, and
(ii) in advance of obtaining such
consent, in connection with each Review
pursuant to SECTION 4.1(D), to make
personnel who are covered by Seller's
license of such software and knowledgeable
about its use, available to Buyer (or
Buyer's assignee) to test data or generate
such reports relating the Receivables that
may be reasonably requested. The
license granted hereby shall be irrevocable
until the later to occur of (i)
indefeasible payment in full of the
Obligations (as defined in the Credit and
Security Agreement), and (ii) the date each
of the First Step Receivables Sale
Agreement, this Agreement and the Credit
and Security Agreement terminates in
accordance with its terms.
(b)
Seller (i) shall take such action requested by Buyer
and/or the Agent (as Buyer's assignee),
from time to time hereafter, that may be
necessary or appropriate to ensure that
Buyer and its assigns under the Credit
and Security Agreement have an enforceable
ownership or security interest in the
Records relating to the Receivables, and
(ii) shall use its reasonable efforts
to ensure that Buyer, the Agent and the
Servicer each has an enforceable right
(whether by license or sublicense or
otherwise) in accordance with SECTION
1.6(A) to use all of the computer software
used to account for such Receivables
and/or to recreate such Records.
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Section 1.7
CHARACTERIZATION. If, notwithstanding the intention of
the parties expressed in SECTION 1.2(c),
any sale or contribution by Seller to
Buyer of Receivables hereunder shall be
characterized as a secured loan and not
a sale or such sale shall for any reason be
ineffective or unenforceable, then
this Agreement shall be deemed to
constitute a security agreement under the UCC
and other applicable law. For this purpose
and without being in derogation of
the parties' intention that the sale of
Receivables by Seller hereunder shall
constitute a true sale thereof, Seller
hereby grants to Buyer a duly perfected
security interest in all of Seller's right,
title and interest in, to and under
all Receivables of Seller which are now
existing or hereafter arising, all
Collections and Related Security with
respect thereto, each Lock-Box and
Collection Account, all other rights and
payments relating to such Receivables
and all proceeds of the foregoing to secure
the prompt and complete payment of a
loan deemed to have been made in an amount
equal to the Purchase Price of the
Receivables purchased from Seller together
with all other obligations of Seller
hereunder, which security interest shall be
prior to all other Adverse Claims
thereto. Buyer and its assigns shall have,
in addition to the rights and
remedies which they may have under this
Agreement, all other rights and remedies
provided to a secured creditor under the
UCC and other applicable law, which
rights and remedies shall be
cumulative.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS
AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Buyer on the
date hereof, on the date of each
Purchase from Seller hereunder and on each
date that any Receivable is acquired
by Seller on or after the date of such
Purchase, that:
(a)
EXISTENCE AND POWER. Seller is a limited liability
company, duly organized under the laws of
the jurisdiction set forth after its
name in the preamble to this Agreement (the
"APPLICABLE JURISDICTION"), and no
other jurisdiction, and as to which such
Applicable Jurisdiction must maintain a
public record showing the limited liability
company to have been organized.
Seller is validly existing and in good
standing under the laws of its Applicable
Jurisdiction and is duly qualified to do
business and is in good standing as a
foreign entity, and has and holds all power
and all governmental licenses,
authorizations, consents and approvals
required to carry on its business in each
jurisdiction in which its business is
conducted except where the failure to so
qualify or so hold could not reasonably be
expected to have a Material Adverse
Effect.
(b)
POWER AND AUTHORITY; DUE AUTHORIZATION, EXECUTION AND
DELIVERY. The execution and delivery by
Seller of this Agreement and each other
Transaction Document to which it is a
party, and the performance of its
obligations hereunder and thereunder, and
Seller's use of the proceeds of the
Purchases made from it hereunder, are
within its organizational powers and
authority and have been duly authorized by
all necessary organizational action
on its part. This Agreement and each other
Transaction Document to which Seller
is a party has been duly executed and
delivered by Seller.
(c)
NO CONFLICT. The execution and delivery by Seller of
this Agreement and each other Transaction
Document to which it is a party, and
the performance of its obligations
hereunder and thereunder do not contravene or
violate (i) its Organizational Documents,
(ii) any law, rule or regulation
applicable to it, (iii) any restrictions
under any agreement, contract or
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instrument to which it is a party or by
which it or any of its property is
bound, or (iv) any order, writ, judgment,
award, injunction or decree binding on
or affecting it or its property, and do not
result in the creation or imposition
of any Adverse Claim on assets of Seller or
its Subsidiaries (except as created
hereunder) except, in any case, where such
contravention or violation could not
reasonably be expected to have a Material
Adverse Effect; and no transaction
contemplated hereby requires compliance
with any bulk sales act or similar law.
(d)
GOVERNMENTAL AUTHORIZATION. Other than the filing of the
financing statements required hereunder, no
authorization or approval or other
action by, and no notice to or filing with,
any governmental authority or
regulatory body is required for the due
execution and delivery by Seller of this
Agreement and each other Transaction
Document to which it is a party and the
performance of its obligations hereunder
and thereunder.
(e)
ACTIONS, SUITS. There are no actions, suits or
proceedings pending, or to the best of
Seller's knowledge, threatened, against
or affecting Seller, or any of its
properties, in or before any court,
arbitrator or other body, that could
reasonably be expected to have a Material
Adverse Effect. Seller is not in default
with respect to any order of any court,
arbitrator or governmental body.
(f) BINDING EFFECT. This
Agreement and each other
Transaction Document to which Seller is a
party constitute the legal, valid and
binding obligations of Seller enforceable
against Seller in accordance with
their respective terms, except as such
enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or
other similar laws relating to or
limiting creditors' rights generally and by
general principles of equity
(regardless of whether enforcement is
sought in a proceeding in equity or at
law).
(g)
ACCURACY OF INFORMATION. All information heretofore
furnished by Seller or any of its
Affiliates to Buyer (or its assigns) for
purposes of or in connection with this
Agreement, any of the other Transaction
Documents or any transaction contemplated
hereby or thereby is, and all such
information hereafter furnished by Seller
or any of its Affiliates to Buyer (or
its assigns) will be, true and accurate in
every material respect on the date
such information is stated or certified and
does not and will not contain any
material misstatement of fact or omit to
state a material fact or any fact
necessary to make the statements contained
therein, taken as a whole, not
misleading; provided that, with respect to
any projected financial information,
Seller represents only that such
information was prepared in good faith based
upon assumptions believed to be reasonable
at the time.
(h)
USE OF PROCEEDS. No portion of any Purchase Price
payment hereunder will be used by Seller
(i) for a purpose that violates, or
would be inconsistent with, any law, rule
or regulation applicable to Seller or
(ii) to acquire any margin stock in
violation of Regulation T, U or X of the
Board of Governors of the Federal Reserve
System.
(i)
GOOD TITLE. Immediately prior to the applicable Purchase
from Seller hereunder and upon the creation
of each Receivable acquired by
Seller after the date hereof, Seller (i) is
the legal and beneficial owner of
such Receivables and (ii) is the legal and
beneficial owner of the Related
Security with respect thereto or possesses
a valid and perfected security
interest therein, in each case, free and
clear of any Adverse Claim, except
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Permitted Encumbrances. There have been
duly filed all financing statements or
other similar instruments or documents
necessary under the UCC (or any
comparable law) of all appropriate
jurisdictions to perfect Seller's ownership
interest in each such Receivable, its
Collections and the Related Security.
(j)
PERFECTION. This Agreement, together with the filing of
the financing statements contemplated
hereby, is effective to transfer to Buyer
(and Buyer shall acquire from Seller) (i)
legal and equitable title to, with the
right to sell and encumber each Receivable,
whether now existing and hereafter
arising, together with the Collections with
respect thereto, and (ii) all of
Seller's right, title and interest in the
Related Security associated with each
such Receivable, in each case, free and
clear of any Adverse Claim, except as
created by the Transactions Documents.
There have been duly filed all financing
statements or other similar instruments or
documents necessary under the UCC (or
any comparable law) of all appropriate
jurisdictions to perfect Buyer's
ownership interest in such Receivables, the
Related Security and the
Collections. Originator's jurisdiction of
organization is a jurisdiction whose
law generally requires information
concerning the existence of a nonpossessory
security interest to be made generally
available in a filing, record or
registration system as a condition or
result of such a security interest's
obtaining priority over the rights of a
lien creditor which respect to
collateral.
(k)
PLACES OF BUSINESS AND LOCATIONS OF RECORDS. The
principal places of business and chief
executive office and jurisdiction of
organization of Seller and the offices
where it keeps all of its Records are
located at the address(es) listed on
EXHIBIT II or such other locations of which
Buyer has been notified in accordance with
SECTION 4.2(A) in jurisdictions where
all action required by SECTION 4.2(A) has
been taken and completed. Seller's
Federal Employer Identification Number and
organizational identification number
are correctly set forth on EXHIBIT II.
(l)
COLLECTIONS. The conditions and requirements set forth
in SECTION 4.1(J) have at all times been
satisfied and duly performed. The names
and addresses of all Collection Banks,
together with the account numbers of the
Collection Accounts of Seller at each
Collection Bank and the post office box
number of each Lock-Box, are listed on
EXHIBIT III. Seller has not granted any
Person, other than Buyer (and its assigns)
dominion and control of any Lock-Box
or Collection Account, or the right to take
dominion and control of any such
Lock-Box or Collection Account at a future
time or upon the occurrence of a
future event.
(m)
MATERIAL ADVERSE EFFECT. Since March 31, 2004, and
except as disclosed in the reports made by
the Parent to the Securities and
Exchange Commission prior to the date of
this Agreement, no event has occurred
that could reasonably be expected to have a
Material Adverse Effect.
(n)
NAMES. The name in which Seller has executed this
Agreement is identical to the name of
Seller as indicated on the public record
of its jurisdiction of organization which
shows Seller to have been organized.
In the past five (5) years, Seller has not
used any limited liability company
names, trade names or assumed names other
than the name in which it has executed
this Agreement except as disclosed on
Exhibit II attached hereto.
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(o)
OWNERSHIP OF BUYER. Parent owns, directly or indirectly,
100% of the issued and outstanding equity
interests of EIS. EIS owns directly
100% of the issued and outstanding equity
interests of Buyer. Such equity
interests are validly issued, fully paid
and nonassessable, and there are no
options, warrants or other rights to
acquire securities of Buyer.
(p)
NOT A HOLDING COMPANY OR AN INVESTMENT COMPANY. Seller
is not a "HOLDING COMPANY" or a "SUBSIDIARY
HOLDING COMPANY" of a "HOLDING
COMPANY" within the meaning of the Public
Utility Holding Company Act of 1935,
as amended, or any successor statute.
Seller is not an "INVESTMENT COMPANY"
within the meaning of the Investment
Company Act of 1940, as amended, or any
successor statute.
(q)
COMPLIANCE WITH LAW. Seller has complied in all respects
with all applicable laws, rules,
regulations, orders, writs, judgments,
injunctions, decrees or awards to which it
may be subject, except where the
failure to so comply could not reasonably
be expected to have a Material Adverse
Effect. Each Receivable, together with the
Contract related thereto, does not
contravene any laws, rules or regulations
applicable thereto (INCLUDING, WITHOUT
LIMITATION, laws, rules and regulations
relating to truth in lending, fair
credit billing, fair credit reporting,
equal credit opportunity, fair debt
collection practices and privacy), and no
part of such Contract is in violation
of any such law, rule or regulation, except
where such contravention or
violation could not reasonably be expected
to have a Material Adverse Effect.
(r)
COMPLIANCE WITH CREDIT AND COLLECTION POLICY. Seller has
complied in all material respects with the
Credit and Collection Policy with
regard to each Receivable and the related
Contract, and has not made any
material change to such Credit and
Collection Policy, except such material
change as to which Buyer (or its assigns)
has been notified in accordance with
SECTION 4.1(A)(VII).
(s) PAYMENTS TO
SELLER. With respect to each Receivable sold
to Buyer hereunder, the Purchase Price
received by Seller constitutes reasonably
equivalent value in consideration therefor.
No transfer hereunder by Seller of
any Receivable is or may be voidable under
any section of the Bankruptcy Reform
Act of 1978 (11 U.S.C. ss.ss. 101 ET SEQ.),
as amended.
(t)
ENFORCEABILITY OF CONTRACTS. Each Contract with respect
to each Receivable is effective to create,
and has created, a legal, valid and
binding obligation of the related Obligor
to pay the Outstanding Balance of the
Receivable created thereunder and any
accrued interest thereon, enforceable
against the Obligor in accordance with its
terms, except as such enforcement may
be limited by applicable bankruptcy,
insolvency, reorganization or other similar
laws relating to or limiting creditors'
rights generally and by general
principles of equity (regardless of whether
enforcement is sought in a
proceeding in equity or at law).
(u)
ELIGIBLE RECEIVABLES. Each Receivable reflected in any
Purchase Report as an Eligible Receivable
was an Eligible Receivable on the date
of sale or contribution to Buyer
hereunder.
(v)
ACCOUNTING. The manner in which Seller accounts for the
transactions contemplated by this Agreement
in its financial statements does not
jeopardize the characterization of the
transactions contemplated herein as being
true sales.
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ARTICLE III
CONDITIONS OF PURCHASE
Section 3.1 CONDITIONS
PRECEDENT TO PURCHASE. The Purchases under
this Agreement are subject to the
conditions precedent that (a) Buyer shall have
been capitalized with the Initial
Contributed Receivables, (b) Buyer shall have
received on or before the date of such
purchase those documents listed on
SCHEDULE A and (c) all of the conditions to
the initial loan under the Credit
and Security Agreement shall have been
satisfied or waived in accordance with
the terms thereof.
Section 3.2 CONDITIONS
PRECEDENT TO SUBSEQUENT PAYMENTS. Buyer's
obligation to pay for Receivables acquired
by Seller after the date hereof shall
be subject to the further conditions
precedent that: (a) the Facility
Termination Date shall not have occurred
under the Credit and Security
Agreement; (b) Buyer (or its assigns) shall
have received such other approvals,
opinions or documents as it may reasonably
request and (c) on the date such
Receivable is acquired by Seller under the
First Step Receivables Sale
Agreement, the following statements shall
be true (and acceptance of the
proceeds of any payment for such Receivable
shall be deemed a representation and
warranty by Seller that such statements are
then true):
(i)
the representations and warranties set forth in
ARTICLE II are true and correct in all material respects on and as
of
the date such Receivable was acquired by Seller as though made on
and as
of such date; PROVIDED, HOWEVER, that the preceding standard shall
not
apply to those representations and warranties which themselves
contain
materiality standards; and
(ii) no
event has occurred and is continuing that
will constitute a Termination Event or an Unmatured Termination
Event.
Notwithstanding the foregoing conditions
precedent, upon payment of the Purchase
Price for any Receivable (whether by
payment of cash, through an increase in the
amounts outstanding under the Subordinated
Note, by offset of amounts owed to
Buyer and/or by offset of capital
contributions), title to such Receivable and
the Related Security and Collections with
respect thereto shall vest in Buyer,
whether or not the conditions precedent to
Buyer's obligation to pay for such
Receivable were in fact satisfied. The
failure of Seller to satisfy any of the
foregoing conditions precedent, however,
shall give rise to a right of Buyer to
rescind the related purchase and direct
Seller to pay to Buyer an amount equal
to the Purchase Price payment that shall
have been made with respect to any
Receivables related thereto.
ARTICLE IV
COVENANTS
Section 4.1 AFFIRMATIVE
COVENANTS OF SELLER. Until the date on which
this Agreement terminates in accordance
with its terms, Seller hereby covenants
as set forth below:
(a)
FINANCIAL REPORTING. Seller will maintain, for itself
and each of its Subsidiaries, a system of
accounting established and
administered in accordance with GAAP, and
furnish to Buyer (or its assigns):
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(i)
ANNUAL REPORTING. As soon as practicable and in
any event within ninety-five (95) days
after the end of each Fiscal Year, the
financial statements and report required to
be delivered under Section 4.1(a)(i)
of the First Step Receivables Sale
Agreement.
(ii)
QUARTERLY
REPORTING. As soon as practicable and
in any event, within fifty (50) days after
the end of each of the first three
(3) fiscal quarters of each Fiscal Year,
the report or financial statements
required to be delivered under Section
4.1(a)(ii) of the First Step Receivables
Sale Agreement.
(iii) COMPLIANCE
CERTIFICATE. Together with the
financial statements required hereunder, a
compliance certificate in
substantially the form of EXHIBIT IV signed
by an Authorized Officer of ECM and
dated the date of such annual financial
statement or such quarterly financial
statement, as the case may be.
(iv)
SHAREHOLDERS STATEMENTS AND REPORTS. Promptly
upon receipt thereof, copies of all
financial statements, reports and proxy
statements furnished to ECM under Section
4.1(a)(iv) of the First Step
Receivables Sale Agreement.
(v)
S.E.C. FILINGS. Promptly after the filing
thereof, a copy of each report or filing
furnished to ECM under Section
4.1(a)(v) of the First Step Receivables
Sale Agreement.
(vi)
COPIES OF NOTICES. Promptly upon its receipt of
any notice, request for consent, financial
statements, certification, report or
other communication under Section
4.1(a)(vi) of the First Step Receivables Sale
Agreement or in connection with any
Transaction Document from any Person other
than Buyer, the Agent or Blue Ridge, copies
of the same.
(vii) CHANGE IN
CREDIT AND COLLECTION POLICY. At least
thirty (30) days prior to the effectiveness
of any material change in or
material amendment to the Credit and
Collection Policy, a copy of the Credit and
Collection Policy then in effect and a
notice (A) indicating such proposed
change or amendment ,and (B) if such
proposed change or amendment would be
reasonably likely to adversely affect the
collectibility of the Receivables or
decrease the credit quality of any newly
created Receivables, requesting Buyer's
(and the Agent's, as Buyer's assignee)
consent thereto.
(viii) OTHER
INFORMATION. Promptly, from time to time,
such other information, documents, records
or reports relating to the
Receivables or the condition or operations,
financial or otherwise, of Seller as
Buyer (or its assigns) may from time to
time reasonably request in order to
protect the interests of Buyer (and its
assigns) under or as contemplated by
this Agreement.
(b)
NOTICES. Seller will notify Buyer (or its assigns) in
writing of any of the following promptly
upon learning of the occurrence thereof
by any Responsible Officer, describing the
same and, if applicable, the steps
being taken with respect thereto:
(i)
TERMINATION EVENTS OR UNMATURED TERMINATION
EVENTS. The occurrence of each Termination
Event and each Unmatured Termination
Event, by a statement of an Authorized
Officer of Seller.
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(ii)
JUDGMENT AND PROCEEDINGS. (1) The entry of any
judgment or decree against Seller or any of
its Subsidiaries if the aggregate
amount of all judgments and decrees then
outstanding against the Originators and
their Subsidiaries exceeds $10,000,000
after deducting (a) the amount with
respect to which Seller or Subsidiary is
insured and with respect to which the
insurer has assumed responsibility in
writing, and (b) the amount for which
Seller or Subsidiary is otherwise
indemnified if the terms of such
indemnification are satisfactory to Buyer
(or its assigns), and (2) the
institution of any litigation, arbitration
proceeding or governmental proceeding
against Seller which, individually or in
the aggregate, could reasonably be
expected to have a Material Adverse
Effect.
(iii) MATERIAL
ADVERSE EFFECT. The occurrence of any
event or condition that has had, or could
reasonably be expected to have, a
Material Adverse Effect.
(iv)
DEFAULTS UNDER PARENT CREDIT AGREEMENT. The
occurrence of any Default or Event of
Default under (and as such term is defined
in) the Parent Credit Agreement.
(v)
ERISA EVENTS. The occurrence of any ERISA Event
that could reasonably be expected to have a
Material Adverse Effect.
(vi)
DOWNGRADE OF PARENT. Any downgrade in the rating
of any Indebtedness of Parent by S&P or
by Moody's, setting forth the
Indebtedness affected and the nature of
such change (but excluding any private
indicative ratings that the Parent may
request from time to time from Moody's or
S&P).
(c)
COMPLIANCE WITH LAWS AND PRESERVATION OF EXISTENCE.
Seller will (i) comply in all respects with
all applicable laws, rules,
regulations, orders, writs, judgments,
injunctions, decrees or awards to which
it may be subject, except where the failure
to so comply could not reasonably be
expected to have a Material Adverse Effect
and (ii) will preserve and maintain
its legal existence, rights, franchises and
privileges in the jurisdiction of
its organization, and qualify and remain
qualified in good standing as a foreign
entity in each jurisdiction where its
business is conducted, except where the
failure to so qualify or remain in good
standing could not reasonably be
expected to have a Material Adverse Effect;
provided, however, that nothing in
the foregoing shall prevent Seller from
discontinuing any line of business if
(x) no Termination Event or Unmatured
Termination Event exists or would result
therefrom, and (y) with respect to the
discontinuance of a material line of
business, the board of directors (or
comparable governing body) of Seller
determines in good faith that such
discontinuance is in the best interest of the
Parent and its Consolidated Subsidiaries,
taken as a whole.
(d)
AUDITS. Seller will furnish to Buyer (or its assigns)
from time to time such information with
respect to it and the Receivables sold
by it as Buyer (or its assigns) may
reasonably request. Seller will, from time
to time during regular business hours as
requested by Buyer (or its assigns),
upon reasonable notice and at the sole cost
of Seller, permit Buyer (or its
assigns) or their respective agents or
representatives, (i) to examine and make
copies of and abstracts from all Records in
the possession or under the control
of Seller relating to the Receivables and
the Related Security, including,
without limitation, the related Contracts,
and (ii) to visit the offices and
properties of Seller for the purpose of
examining such materials
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described in clause (i) above, and to
discuss matters relating to Seller's
financial condition or the Receivables and
the Related Security or Seller's
performance under any of the Transaction
Documents or Seller's performance under
the Contracts and, in each case, with any
of the officers or employees of Seller
having knowledge of such matters (each of
the foregoing examinations and visits,
a "REVIEW"); PROVIDED, HOWEVER, that, so
long as no Amortization Event (under
and as defined in the Credit and Security
Agreement) has occurred and is
continuing: (A) Seller and the Originators,
collectively, shall only be
responsible for the reasonable costs and
expenses of one (1) Review in any one
calendar year, and (B) the Agent (as
Buyer's assignee) will not request more
than four (4) Reviews in any one calendar
year. To the extent that Buyer (or its
assigns), in the course of any Review,
obtains any Proprietary Information
pertaining to Seller or any of its
Affiliates, Buyer (or its assign) shall
handle such information in accordance with
the requirements of SECTION 7.4
hereof.
(e)
KEEPING AND MARKING OF RECORDS AND BOOKS.
(i)
Seller will maintain and implement
administrative and operating procedures (including, without
limitation,
an ability to recreate records evidencing Receivables in the event
of
the destruction of the originals thereof), and keep and maintain
all
documents, books, records and other information reasonably
necessary or
advisable for the collection of all Receivables (including,
without
limitation, records adequate to permit the immediate identification
of
each new Receivable and all Collections of and adjustments to
each
existing Receivable). Seller will give Buyer (or its assigns)
notice of
any material change in the administrative and operating
procedures
referred to in the previous sentence.
(ii)
Seller will (A) on or prior to the date hereof,
mark its books and records including aged trial balance with
respect to
the Receivables with a legend, acceptable to Buyer (or its
assigns),
describing Buyer's ownership interests in the Receivables and
further
describing the security interest in the Receivable of the Agent
(on
behalf of the Lenders) under the Credit and Security Agreement and
(B)
upon the request of Buyer (or its assigns) made at any time when
a
Termination Event has occurred and is continuing: (x) mark each
Contract
with a legend describing Buyer's ownership interests in the
Receivables
and further describing the security interests in the Receivable of
the
Agent (on behalf of
the Lenders) and (y) deliver to Buyer (or its
assigns) all Contracts (including, without limitation, all
multiple
originals of any such Contract) relating to such Receivables.
(f)
COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION
POLICY. Seller will timely and fully (i)
perform and comply in all material
respects with all provisions, covenants and
other promises required to be
observed by it under the Contracts related
to the Receivables, and (ii) comply
in all material respects with the Credit
and Collection Policy in regard to each
such Receivable and the related
Contract.
(g)
[Intentionally Omitted]
(h)
OWNERSHIP. Seller will take all necessary action to
establish and maintain, irrevocably in
Buyer, (A) legal and equitable title to
the Receivables and the Collections and
(B)
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all of Seller's right, title and interest
in the Related Security associated
with the Receivables, in each case, free
and clear of any Adverse Claims other
than Permitted Encumbrances (INCLUDING,
WITHOUT LIMITATION, the filing of all
financing statements or other similar
instruments or documents necessary under
the UCC (or any comparable law) of all
appropriate jurisdictions to perfect
Buyer's interest in such Receivables,
Related Security and Collections and such
other action to perfect, protect or more
fully evidence the interest of Buyer as
Buyer (or its assigns) may reasonably
request).
(i)
LENDERS' RELIANCE. Seller acknowledges that the Agent
and the Lenders are entering into the
transactions contemplated by the Credit
and Security Agreement in reliance upon
Buyer's identity as a legal entity that
is separate from Seller and any Affiliates
thereof. Therefore, from and after
the date of execution and delivery of this
Agreement, Seller will take all
reasonable steps including, without
limitation, all steps that Buyer or any
assignee of Buyer may from time to time
reasonably request to maintain Buyer's
identity as a separate legal entity and to
make it manifest to third parties
that Buyer is an entity with assets and
liabilities distinct from those of
Seller and any Affiliates thereof and not
just a division of Seller or any such
Affiliate. Without limiting the generality
of the foregoing and in addition to
the other covenants set forth herein,
Seller (i) will not hold itself out to
third parties as liable for the debts of
Buyer nor purport to own any of the
Receivables and other assets acquired by
Buyer, (ii) will take all other actions
necessary on its part to ensure that Buyer
is at all times in compliance with
the "separateness covenants" set forth in
SECTION 7.1(I) of the Credit and
Security Agreement and (iii) will cause all
tax liabilities arising in
connection with the transactions
contemplated herein or otherwise to be
allocated between Seller and Buyer on an
arm's-length basis and in a manner
consistent with the procedures set forth in
U.S. Treasury Regulations
ss.ss.1.1502-33(d) and 1.1552-1.
(j)
COLLECTIONS. Seller will cause (1) all proceeds from all
Lock-Boxes to be directly deposited by a
Collection Bank into a Collection
Account and (2) each Lock-Box and
Collection Account to be subject at all times
to a Collection Account Agreement that is
in full force and effect. In the event
any payments relating to Receivables are
remitted directly to Seller or any
Affiliate of Seller, Seller will remit (or
will cause all such payments to be
remitted) directly to a Collection Bank and
deposited into a Collection Account
within two (2) Business Days following
receipt thereof and, at all times prior
to such remittance, Seller will itself hold
or, if applicable, will cause such
payments to be held in trust for the
exclusive benefit of Buyer and its assigns.
Seller will transfer exclusive ownership,
dominion and control of each Lock-Box
and Collection Account to Buyer and, will
not grant the right to take dominion
and control of any Lock-Box or Collection
Account at a future time or upon the
occurrence of a future event to any Person,
except to Buyer (or its assigns) as
contemplated by this Agreement and the
Credit and Security Agreement.
(k)
TAXES. Unless otherwise filed by the Parent, (i) Seller
will file all tax returns and reports
required by law to be filed by it and
promptly pay all taxes and governmental
charges at any time owing, except
(x)such taxes that are being contested in
good faith by appropriate proceedings
and for which Performance Guarantor has set
aside on its books adequate reserves
or (y) to the extent the failure to do so
could not reasonably be expected to
have a Material Adverse Effect and (ii)
Seller will pay when due any taxes
payable in connection
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with the Receivables, exclusive of taxes on
or measured by income or gross
receipts of Buyer and its assigns.
Section 4.2 NEGATIVE
COVENANTS OF SELLER. Until the date on which
this Agreement terminates in accordance
with its terms, Seller hereby covenants
that:
(a)
NAME CHANGE, OFFICES AND RECORDS. Seller will not change
its (i) state of organization, (ii) name,
(iii) identity or structure (within
the meaning of Article 9 of any
