Purchase and Sale Agreement

 

Dated as of September 28, 2001

 

among

 

Albany International Corp.,

Geschmay Corp.,

Albany International Research Co.

Albany International Techniweave, Inc.,

Albany International Canada Inc.

and

M&I Door Systems Ltd.

as Originators,

 

and

 

Albany International Receivables Corporation,

as Buyer

 

 

 

Table of Contents

 

Section

Heading

 

Section 1.

Definitions and Related Matters

Section 1.1.

Defined Terms

Section 1.2.

Other Interpretive Matters

 

 

Section 2.

Agreement to Contribute, Purchase and Sell

Section 2.1.

Purchase and Sale

Section 2.2.

Timing of Contribution, Purchases

Section 2.3.

Purchase Price

Section 2.4.

No Recourse or Assumption of Obligations

 

 

Section 3.

Administration and Collection

Section 3.1.

Collection Agent

Section 3.2.

Deemed Collections

Section 3.3.

Application of Collections

Section 3.4.

Responsibilities of Originator

 

 

Section 4.

Representations and Warranties

Section 4.1.

Mutual Representations and Warranties

Section 4.2.

Additional Representations by Each Originator

 

 

Section 5.

General Covenants

Section 5.1.

Covenants

Section 5.2.

Organizational Separateness

 

 

Section 6.

Termination of Purchases

Section 6.1.

Voluntary Termination

Section 6.2.

Automatic Termination

 

 

Section 7.

Indemnification

Section 7.1.

Originators’ Indemnity

Section 7.2.

Indemnification Due to Failure to Consummate Purchase

 

 

Section 8.

Miscellaneous

Section 8.1.

Amendments, Waivers, etc

Section 8.2.

Assignment of Receivables Purchase Agreement

Section 8.3.

Binding Effect; Assignment

Section 8.4.

Survival

Section 8.5.

Costs, Expenses and Taxes

Section 8.6.

Execution in Counterparts; Integration

Section 8.7.

Governing Law; Submission to Jurisdiction

Section 8.8.

No Proceedings

Section 8.9.

Loans by Buyer to Originators

Section 8.10.

Notice

Section 8.11.

Entire Agreement

Section 8.12.

Payments in Relevant Currency.

 

 

Signature

 

 

Exhibit A                Purchase Price

 

This Purchase and Sale Agreement dated as of September 28, 2001 (this
“Agreement”) is among Albany International Corp., a Delaware corporation,
Geschmay Corp., a Delaware corporation, Albany International Research Co., a
Delaware corporation, Albany International Techniweave, Inc., a New Hampshire
corporation, Albany International Canada Inc., a corporation organized under the
laws of Canada and M&I Door Systems Ltd., a corporation organized under the laws
of the province of Ontario (each an “Originator” and collectively, the
“Originators”), and Albany International Receivables Corporation, a Cayman
Islands company (“Buyer”).  The parties agree as follows:

 

Section 1.                Definitions and Related Matters

 

Section 1.1.       Defined Terms.  In this Agreement, unless otherwise specified
or defined herein: (a) capitalized terms are used as defined in Schedule I to
the Receivables Sale Agreement dated as of the date hereof (as amended or
modified from time to time, the “Second Tier Agreement”) among Buyer, Albany
International Corp., as collection agent (the “Initial Collection Agent”),
Amsterdam Funding Corporation, the committed purchasers party thereto, and ABN
AMRO Bank N.V. as the Agent, as such agreement may be amended or modified from
time to time; and (b) terms defined in Article 9 of the UCC and not otherwise
defined herein are used as defined in such Article 9 as in effect on the date
hereof.

 

In addition, the following terms will have the meanings specified below:

 

“Available Funds” is defined in Section 2.3(b) hereof.

 

“Closing Date” means the date on which this Agreement and the Second Tier
Agreement become effective in accordance with their terms.

 

“Excluded Losses” is defined in Section 7.1 hereof.

 

“Initial Funding Date” means September 28, 2001.

 

“Settlement Date” means, with respect to any Settlement Period, the twentieth
day of the immediately succeeding calendar month (or, if such day is not a
Business Day, the next preceding Business Day).

 

“Settlement Period” means a calendar month (or, in the case of the first
Settlement Period, the period from the Initial Funding Date to the end of the
next succeeding calendar month following the calendar month in which the Initial
Funding Date occurs).

 

“Sold Property” is defined in Section 2.1.

 

“United States Originator” means any Originator that is not a Canadian
Originator.

 

Section 1.2.       Other Interpretive Matters.  In this Agreement, unless
otherwise specified:  (a) references to any Section or Annex refer to such
Section of, or Annex to, this Agreement, and references in any Section or
definition to any subsection or clause refer to such subsection or clause of
such Section or definition; (b) “herein,” “hereof,” “hereto,” “hereunder” and
similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement; (c) “including” means including without limitation,
and other forms of the verb “to include” have correlative meanings; (d) the word
“or” is not exclusive; and (e) captions are solely for convenience of reference
and shall not affect the meaning of this Agreement.

 

Section 2.                Agreement to Contribute, Purchase and Sell

 

Section 2.1.       Purchase and Sale.  On the terms and subject to the
conditions set forth in this Agreement, each Originator hereby sells to Buyer,
and Buyer hereby purchases from each Originator, all of such Originator’s right,
title and interest in, to and under the Receivables originated by such
Originator, all Related Security and all proceeds thereof (including all
Collections with respect thereto) (the “Sold Property”), in each case whether
now existing or hereafter arising or acquired.

 

Section 2.2.       Timing of Contribution, Purchases.  $750,000 of the
Receivables of Albany International Corp. existing at the opening of Albany
International Corp.’s business on the Initial Funding Date are hereby
contributed by Albany International Corp. as capital to Buyer on the Initial
Funding Date.  All of the remaining Receivables and Related Security existing at
the opening of the Originators’ business on the Initial Funding Date are hereby
sold to Buyer as of the Initial Funding Date.  After the Initial Funding Date,
each Receivable and Related Security shall be deemed to have been sold to Buyer
immediately (and without further action by any Person) upon the creation of such
Receivable.  The proceeds with respect to each Receivable (including all
Collections with respect thereto) shall be sold at the same time as such
Receivable, whether such proceeds (or Collections) exist at such time or arise
or are acquired thereafter.

 

Section 2.3.       Purchase Price.  (a) The aggregate purchase price for the
Receivables originated by an Originator sold on the Initial Funding Date shall
be such amount as agreed upon prior to the Initial Funding Date between such
Originator and Buyer to be the fair market value of such Receivables on such
date, which shall equal the excess of the (i) estimated aggregate outstanding
balance of such Receivables over (ii) an amount agreed upon by Buyer and such
Originator representing the uncertainty of payment and cost of purchase of such
Receivables.  The purchase price for Receivables subsequently sold during any
Settlement Period shall be calculated in accordance with the provisions set
forth in Exhibit A hereto.

 

(b) On the Initial Funding Date, Buyer shall pay each Originator the purchase
price for the Receivables originated by it sold on that date.  On each Business
Day after the Initial Funding Date on which an Originator sells any Receivables
originated by it to Buyer pursuant to the terms of Section 2.1, until the
termination of the purchase and sale of Receivables under Section 6 hereof,
Buyer shall pay to such Originator the purchase price of such Receivables (i) by
depositing into such account as such Originator shall specify immediately
available funds from monies then held by or on behalf of Buyer solely to the
extent that such monies do not constitute Collections that are required to be
identified or are deemed to be held by the Collection Agent pursuant to the
Second Tier Agreement for the benefit of, or required to be distributed to, the
Agent or the Purchasers pursuant to the Second Tier Agreement or required to be
paid to the Collection Agent as the Collection Agent Fee, or otherwise necessary
to pay current expenses of Buyer (in its reasonable discretion) (such available
monies, the “Available Funds”) and provided that such Originator has paid all
amounts then due by such Originator hereunder or (ii) by increasing the
principal amount owed to such Originator under a promissory note (as amended or
modified from time to time, each a “Note” and collectively the “Notes”) executed
and delivered by Buyer to the order of such Originator as of the Initial Funding
Date.  The outstanding principal amount owed to an Originator under the related
Notes may be reduced from time to time as provided in Section 3.2 hereof or by
payments made by Buyer from Available Funds, provided that such Originator has
paid all amounts then due by such Originator hereunder.  Each Originator shall
make all appropriate record keeping entries with respect to amounts due to such
Originator under the related Notes to reflect payments by Buyer thereon and
increases of the principal amount thereof, and such Originator’s books and
records shall constitute rebuttable presumptive evidence of the principal amount
of and accrued interest owed to such Originator under the related Notes.

 

Section 2.4.       No Recourse or Assumption of Obligations.  Except as
specifically provided in this Agreement, the contribution, purchase and sale of
Receivables under this Agreement shall be without recourse to the Originators. 
Each Originator and Buyer intend the transactions hereunder to constitute true
sales of Receivables by such Originator to Buyer, providing Buyer with the full
risks and benefits of ownership of the Receivables originated by such Originator
(such that the Receivables would not be property of such Originator’s estate in
the event of such Originator’s bankruptcy).  If, however, with respect to Sold
Property conveyed to the Buyer by the Originators, despite the intention of the
parties, the conveyances provided for in this Agreement are determined not to be
“true sales” of such Sold Property from the Originators to Buyer, then this
Agreement shall also be deemed to be a “security agreement” within the meaning
of Article 9 of the UCC and (i) each United States Originator hereby grants to
Buyer a “security interest” within the meaning of Article 9 of the UCC, (ii) M&I
Door Systems Ltd. hereby grants to Buyer a “security interest” within the
meaning of the Personal Property Act (Ontario), and, (iii) Albany International
Canada Inc. hereby grants to Buyer a “movable hypothec” within the meaning of
the Civil Code of Quebec, in each case in all of such Originator’s right, title
and interest in and to the such Sold Property, now existing and thereafter
created, to secure a loan in an amount equal to the aggregate purchase prices
therefor and each of such Originator’s other payment obligations under this
Agreement.

 

Buyer shall not have any obligation or liability with respect to any Receivable,
nor shall Buyer have any obligation or liability to any Obligor or other
customer or client of an Originator (including any obligation to perform any of
the obligations of such Originator under any Receivable).

 

Section 3.                Administration and Collection.

 

Section 3.1.       Collection Agent.  The Initial Collection Agent shall be
responsible for the servicing, administration and collection of the Receivables,
all on the terms set out in (and subject to any rights to terminate the Initial
Collection Agent as Collection Agent pursuant to) the Second Tier Agreement. 
Pursuant to the terms of the Second Tier Agreement, the Initial Collection Agent
has the right to appoint an Affiliate of the Initial Collection Agent to perform
certain services set forth in Article III of the Second Tier Agreement.

 

Section 3.2.       Deemed Collections.  If on any day the outstanding balance of
a Receivable is reduced or cancelled as a result of any defective or rejected
goods or services, any cash discount or adjustment (including any adjustment
resulting from the application of any special refund or other discounts or any
reconciliation), any setoff or credit (whether such claim or credit arises out
of the same, a related, or an unrelated transaction) or other reason not arising
from the financial inability of the Obligor to pay undisputed indebtedness,
(i) the applicable Originator shall be deemed to have received on such day a
Collection on such Receivable in the amount of such reduction or cancellation
and (ii) such Receivable shall thereupon be, or be deemed to be reconveyed to an
Originator.  If on any day any representation, warranty, covenant or other
agreement of an Originator related to a Receivable set forth in Section 4.2(a)
and 4.2(g) is not true or is not satisfied, (i) such Originator shall be deemed
to have received on such day a Collection in the amount of the outstanding
balance of such Receivable and (ii) such Receivable shall thereupon be, or be
deemed to be reconveyed to such Originator.  Not later than the first Settlement
Date after an Originator is deemed pursuant to this Section 3.2 to have received
any Collections, such Originator shall transfer to Buyer, in immediately
available funds, the amount of such deemed Collections; provided, however, that
if no such application is required under the Second Tier Agreement, Buyer and
such Originator may agree to reduce the outstanding principal amount of the
Notes in lieu of all or part of such transfer.  To the extent that Buyer
subsequently collects any payment with respect to any such “receivable,” Buyer
shall pay the applicable Originator an amount equal to the amount so collected,
such amount to be payable not later than the first Settlement Date after Buyer
has so collected such amount.

 

Section 3.3.       Application of Collections.  Any payment by an Obligor in
respect of any indebtedness owed by it to the related Originator shall, except
as otherwise specified by such Obligor (including by reference to a particular
invoice), or required by the related contracts or law, be applied, first, as a
Collection of any Receivable or Receivables then outstanding of such Obligor in
the order of the age of such Receivables, starting with the oldest of such
Receivables, and, second, to any other indebtedness of such Obligor to such
Originator.

 

Section 3.4.       Responsibilities of Originator.  Each Originator shall pay
when due all Taxes payable in connection with the Receivables originated by it
or their creation or satisfaction.  Each Originator shall perform all of its
obligations under agreements related to the Receivables originated by it to the
same extent as if interests in such Receivables had not been transferred
hereunder.  The Agent’s or any Purchaser’s exercise of any rights hereunder or
under the Second Tier Agreement shall not relieve any Originator from such
obligations.  Neither the Agent nor any Purchaser shall have any obligation to
perform any obligation of any Originator in connection with the Receivables.

 

Section 4.                Representations and Warranties.

 

Section 4.1.       Mutual Representations and Warranties.  Each of the
Originators represents and warrants to the Buyer and its assignee as follows:

 

(a)   Corporate Existence and Power.  It is an exempted company or corporation,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all power and authority and all
governmental licenses, authorizations, consents and approvals required to carry
on its business in each jurisdiction in which its business is now conducted,
except where failure to obtain such license, authorization, consent or approval
would not have a material adverse effect on (i) its ability to perform its
obligations under, or the enforceability of, any Transaction Document, (ii) its
business or financial condition, (iii) the interests of Buyer or its assigns
under any Transaction Document or (iv) the enforceability or collectibility of a
material portion of the Receivables.

 

(b)   Authorization and No Contravention.  Its execution, delivery and
performance of each Transaction Document to which it is a party and the creation
of all security interests provided for herein and therein (i) are within its
powers, (ii) have been duly authorized by all necessary company action, (iii) do
not contravene or constitute a default under:  (A) any applicable law, rule or
regulation, (B) its articles of incorporation or charter or by–laws or other
organizational documents or (C) any agreement, order or other instrument to
which it is a party or its property is subject and (iv) will not result in any
Adverse Claim on any Receivable other than pursuant to the Transaction
Documents, Related Security or Collection or give cause for the acceleration of
any of its indebtedness.

 

(c)   No Consent Required.  No approval, authorization or other action by, or
filings with, any Governmental Authority or other Person is required in
connection with the execution, delivery and performance by it of any Transaction
Document to which it is a party or any transaction contemplated thereby.

 

(d)   Binding Effect.  Each Transaction Document to which it is a party
constitutes the legal, valid and binding obligation of such Person enforceable
against that Person in accordance with its terms, except as limited by
bankruptcy, insolvency, or other similar laws of general application relating to
or affecting the enforcement of creditors’ rights generally and subject to
general principles of equity.

 

Section 4.2.           Additional Representations by Each Originator.  Each
Originator further represents and warrants to Buyer as follows:

 

(a)   Perfection of Ownership Interest.  Immediately preceding its sale of
Receivables to the Buyer, the applicable Originator was the owner of, had good
title to, and effectively sold, such Receivables to the Buyer, free and clear of
any Adverse Claim.  Each Originator owns and has good title to the Receivables
free of any Adverse Claim other than the interests of the Buyer therein that are
created hereby, and the Buyer shall at all times have a valid and continuing
ownership interest, enforceable as such against creditors of and purchasers from
each Originator, in the Receivables and Collections.  Other than the ownership
interest granted to the Buyer pursuant to this Agreement, no Originator has
pledged, assigned, sold or granted a security interest in, or otherwise
conveyed, the Receivables or the Collections.  Each Originator has authorized
the filing of and is not aware of any financing statements against that include
a description of collateral covering the Receivables or the Collections other
than any financing statement relating to the security interest granted to the
Buyer hereunder.  Each Originator has caused or will have caused, within ten
days after the date hereof, the filing of all appropriate financing statements
in the proper filing office in the appropriate jurisdictions under the
applicable law in order to perfect the conveyance of Receivables by such
Originator hereunder.

 

(b)   Accuracy of Information.  The information furnished by each Originator, in
connection with any Transaction Document, or any transaction contemplated
thereby, is true and accurate in all material respects (and is not incomplete by
omitting any information necessary to prevent such information from being
materially misleading, provided that, with respect to projected financial
information, each Originator represents only that such information was prepared
in good faith, subject to any express qualifications set forth in such
projections, based upon assumptions believed to be reasonable at the time).

 

(c)   No Actions, Suits.  There are no actions, suits or other proceedings
(including matters relating to environmental liability) pending or threatened
against or affecting any Originator or any of its properties, that (i) have a
reasonable likelihood of an adverse outcome and, if adversely determined
(individually or in the aggregate), can reasonably be expected to have a
material adverse effect on the financial condition of the Parent and its
subsidiaries, taken as a whole, or on the collectibility of a material portion
of the Receivables or (ii) involve any Transaction Document or any transaction
contemplated thereby.  No Originator is in default of any contractual obligation
or in violation of any order, rule or regulation of any Governmental Authority,
which default or violation is reasonably likely to have a material adverse
effect upon (i) the financial condition of the Parent and its subsidiaries,
taken as a whole or (ii) the collectibility of a material portion of the
Receivables.

 

(d)   No Material Adverse Change.  Except as described in the Parent’s Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, 2001 and June 30,
2001, there has been no material adverse change since December 31, 2000 in
(i) such Originator’s financial condition, business, operations or prospects or
(ii) such Originator’s ability to perform its obligations under any Transaction
Document.

 

(e)   Accuracy of Exhibits.  All information on Exhibits D and E of the Second
Tier Agreement (to the extent describing an Originator) is true and complete in
all material respects, subject to any changes permitted by, and notified to the
Agent in accordance with the Second Tier Agreement.  None of the Originators’
locations (including without limitation their respective chief executive offices
and principal places of business) has changed within the past 12 months.  During
the past 12 months, no Originator has used any corporate, fictitious or trade
name other than a name set forth of Exhibit D to the Second Tier Agreement. 
Exhibit D to the Second Tier Agreement lists the federal employer identification
numbers of the Originators.

 

(f)    Sales by United States Originators.  Each sale by a United States
Originator to Buyer of an interest in Receivables and their Collections has been
made for “reasonably equivalent value” (as such term is used in Section 548 of
the Bankruptcy Code) and not for or on account of “antecedent debt” (as such
term is used in Section 547 of the Bankruptcy Code) owed by such Originator to
Buyer.

 

(g)   Eligible Receivables.  Each Receivable listed on the Periodic Report as
part of the Eligible Receivables Balance was an Eligible Receivable as of the
date of such Periodic Report.

 

(h)   Location of Receivables.  The contracts relating to any Receivable are not
governed by the laws of the Cayman Islands. None of the Receivables are located
in the Cayman Islands within the meaning of Cayman Islands law.

 

Section 5.                General Covenants.

 

Section 5.1.       Covenants.  Each Originator hereby covenants and agrees to
comply with the following covenants and agreements, unless Buyer (with the
consent of the Agent) shall otherwise consent:

 

(a)   Financial Reporting.  Each Originator will maintain a system of accounting
established and maintained in accordance with GAAP and will furnish to Buyer:

 

(i)    Annual Financial Statements.  Within 90 days after each fiscal year of
(A) the Parent, a copy of Parent’s annual audited financial statements
(including a consolidated balance sheet, consolidated statement of income and
retained earnings and statement of cash flows, with related footnotes) certified
by PriceWaterhouseCoopers or other independent certified public accountants of
national standing and prepared on a consolidated basis in conformity with GAAP
and (B) each Originator (other than the Parent) the annual balance sheet for
such Originator certified by a Designated Financial Officer thereof, in each
case prepared on a consolidated basis in conformity with GAAP as of the close of
such fiscal year for the fiscal year then ended;

 

(ii)   Quarterly Financial Statements.  Within 45 days after each (except the
last) fiscal quarter of each fiscal year of (A) the Parent, copies of the
Parent’s unaudited financial statements (including at least a consolidated
balance sheet as of the close of such quarter and statements of income, retained
earnings and cash flows for the period from the beginning of the fiscal year to
the close of such quarter) certified by a Designated Financial Officer and
prepared in a manner consistent with the financial statements described in part
(A) of clause (i) of this Section 5.1(a) and (B) each of the Originators (other
than the Parent), the quarterly balance sheet for such Person for the period
from the beginning of such fiscal year to the close of such quarter, in each
case certified by a Designated Financial Officer thereof and prepared in a
manner consistent with part (B) of clause (i) of Section 5.1(a);

 

(iii)  Public Reports.  Promptly upon becoming available, a copy of each report
or proxy statement filed by the Parent with the Securities and Exchange
Commission or any securities exchange; and

 

(iv)  Other Information.  With reasonable promptness such other information
(including non-financial information) as may be reasonably requested by the
Buyer or its assignee.

 

(b)   Notices.  Promptly upon a Financial Officer (as defined in the Credit
Agreement) or other executive officer of an Originator becoming aware of any of
the following, such Originator will notify Buyer and provide a description of:

 

(i)    Potential Termination Events.  The occurrence of any Potential
Termination Event;

 

(ii)   Representations and Warranties.  The failure of any representation or
warranty herein to be true (when made or at any time thereafter) in any material
respect;

 

(iii)  Litigation.  The institution of any litigation, arbitration proceeding or
governmental proceeding reasonably likely to be material to such Originator or
the collectibility or quality of a material portion of the Receivables;

 

(iv)  Judgments. The entry of any judgment, award or decree against such
Originator if the aggregate amount of all unsatisfied and unstayed judgments
then outstanding against such Originator, the Seller Entities and the
Subsidiaries exceeds $10,000,000; or

 

(v)   Changes in Business.  Any change in the character of any Originator’s
business that is reasonably expected to impair the collectibility or quality of
any material portion of the Receivables.

 

(c)   Conduct of Business.  Each Originator will perform all actions necessary
to remain duly incorporated, validly existing and in good standing in its
jurisdiction of incorporation and to maintain all requisite authority to conduct
its business in each jurisdiction in which it conducts business.

 

(d)   Compliance with Laws.  Each Originator will comply with all laws,
regulations, judgments and other directions or orders imposed by any
Governmental Authority to which each Originator or any Receivable, any Related
Security or Collection may be subject, except to the extent non-compliance will
have a material adverse effect on (i) the collectibility of the Receivables, or
(ii) the financial condition, business or operations of Parent and its
Subsidiaries, taken as a whole.

 

(e)   Furnishing Information and Inspection of Records.  Each Originator will
furnish to Buyer such information concerning the Receivables originated by it as
Buyer may reasonably request.  Each Originator will permit, at any time during
regular business hours, upon reasonable advance notice, Buyer (or any
representatives thereof) (i) to examine and make copies of all Records, (ii) to
visit the offices and properties of such Originator or office of any other
Person for the purpose of examining the Records and (iii) to discuss matters
relating hereto with any of such Originator’s officers, directors, employees or
independent public accountants having knowledge of such matters.  Once during
each calendar year in connection with any proposed extension of the Liquidity
Termination Date and at any time after the occurrence of a Termination Event or
Potential Termination Event relating to clause (f) of the definition of
Termination Event, Buyer may (at the expense of the applicable Originator) have
an independent public accounting firm conduct an audit of the Records or make
test verification of the Receivables and Collections in connection with the
audit and test verifications conducted on behalf of the Agent under the Second
Tier Agreement (it being understood that such audit has already been conducted
for calendar year 2001).

 

(f)    Keeping Records.  (i) Each Originator will have and maintain
(A) administrative and operating procedures (including an ability to recreate
Records if originals are destroyed), (B) adequate facilities, personnel and
equipment and (C) all Records and other information necessary or advisable for
collecting the Receivables originated by it (including Records adequate to
permit the immediate identification of each new Receivable originated by it and
all Collections of, and adjustments to, each existing Receivable originated by
it).  Each Originator will give Buyer prior notice of any material change in
such administrative operating procedures.

 

(ii)   Each Originator will, (A) at all times from and after the date hereof,
clearly and conspicuously mark its computer and master data processing books and
records with a legend describing Buyer’s interest in the Receivables originated
by it and the Collections and (B) upon the request of the Buyer after a
Termination Event, so mark each contract relating to a Receivable and deliver to
the Buyer all such contracts (including all multiple originals of such
contracts), with any appropriate endorsement or assignment, or segregate (from
all other receivables then owned or being serviced by such Originator) the
Receivables and all contracts relating to each Receivable and hold in trust and
safely keep such contracts so legended in separate filing cabinets or other
suitable containers at such locations as the Buyer may specify.

 

(g)   Perfection.  (i) Each Originator will at its expense, promptly execute and
deliver all instruments and documents and take all action necessary or requested
by the Buyer (including the execution and filing of financing or continuation
statements, amendments thereto or assignments thereof) to enable the Buyer to
exercise and enforce all its rights hereunder and to vest and maintain vested in
the Buyer a valid, first priority perfected security interest in such
Receivables, the Collections, the Related Security the Lock-Box Accounts and
proceeds thereof free and clear of any Adverse Claim (and a perfected ownership
interest in such Receivables and Collections to the extent of the Sold Interest)
(and a perfected ownership interest in the Receivables and Collections to the
extent of the Sold Interest).  The Buyer will be permitted to sign and file any
continuation statements, amendments thereto and assignments thereof without the
Buyer’s signature.

 

(ii)   Each Originator will only change its name, identity or corporate
structure or relocate its jurisdiction or chief executive office or the Records
following thirty (30) days advance written notice to the Buyer and the delivery
to the Buyer of all financing statements, instruments and other documents
(including direction letters) requested by the Buyer.

 

(iii)  Each United States Originator will at all times maintain its chief
executive office and jurisdiction of organization within a jurisdiction in the
USA in which Article 9 of the UCC (as it may be amended from time to time) is in
effect.  The Canadian Originators will maintain their jurisdictions of
organization and chief executive offices in the Province of Canada in which they
are currently located.  If any Originator moves its chief executive office to a
location that imposes Taxes, fees or other charges to perfect the Buyer’s
interests hereunder, such Originator will pay all such amounts and any other
costs and expenses incurred in order to maintain the enforceability of the
Transaction Documents, the Sold Interest and the interests of the Buyer in the
Receivables, the Related Security and Collections.

 

(h)   Payments on Receivables, Accounts.  Each Originator will at all times
instruct all Obligors to deliver payments on the Receivables (including Deemed
Collections) to a Lock-Box or Lock-Box Account.  The provisions of the previous
sentence shall only apply to payments on Receivables originated by the Canadian
Originators on and after the 61st day following the date of the Second Tier
Agreement.  If any such payments or other Collections are received by an
Originator, it shall hold such payments in trust for the benefit of the Buyer
and promptly (but in any event within two Business Days after receipt) remit
such funds into a Lock-Box Account.  Each Originator will cause each Lock-Box
Bank to comply with the terms of each applicable Lock-Box Letter.  After the
occurrence of a Termination Event or the Liquidity Termination Date, such
Originator will not, and will not permit any Collection Agent or other Person
to, commingle Collections or other funds to which the Buyer is entitled with any
other funds.  Each Originator shall only add a Lock-Box Bank, Lock-Box, or
Lock-Box Account to those listed on Exhibit E of the Second Tier Agreement if
the Buyer has received notice of such addition, a copy of any new Lock-Box
Agreement and an executed and acknowledged copy of a Lock-Box Letter
substantially in the form of Exhibit F of the Second Tier Agreement (with such
changes as are acceptable to the Buyer) from any new Lock-Box Bank.  Each
Originator shall only terminate a Lock-Box Bank or Lock-Box, or close a Lock-Box
Account, upon 30 days advance notice to the Buyer.

 

(i)    Sales and Adverse Claims Relating to Receivables.  Except as otherwise
provided herein, no Originator will (by operation of law or otherwise) dispose
of or otherwise transfer, or create or suffer to exist any Adverse Claim upon,
any Receivable or any proceeds thereof.

 

(j)    Extension or Amendment of Receivables.  Except as otherwise permitted in
Section 3.2(b) of the Second Tier Agreement and then subject to Section 1.5 of
the Second Tier Agreement, no Originator will extend, amend, rescind or cancel
any Receivable.

 

(k)   Performance of Duties.  Each Originator will perform its duties or
obligations in accordance with the provisions of each of the Transaction
Documents.  Each Originator (at its expense) will (i) fully and timely perform
in all material respects all agreements required to be observed by it in
connection with each Receivable, (ii) comply in all material respects with the
Credit and Collection Policy, and (iii) refrain from any action that may impair
the rights of Buyer in the Receivables, the Related Security, Collections or
Lock-Box Accounts.

 

(l)    Change in Business or Credit and Collection Policy.  No Originator will
make any material change in the character of its business and will not make any
material adverse change to the Credit and Collection Policy.

 

(m)  Accounting for Sale.  No Originator will account for, or otherwise treat,
the transactions contemplated hereby other than as a sale of Receivables or
inconsistent with the Purchasers’ ownership interests in the Receivables and
Collections.

 

(n)   Certain Agreements.  Except as otherwise permitted by this Agreement, no
Originator will amend, modify, waive, revoke or terminate any Transaction
Document to which it is a party.

 

Section 5.2.       Organizational Separateness.  Each Originator agrees not to
take any action that would cause Buyer to violate its formative documents or the
Separateness Agreement, dated as of September 28, 2001, to which Buyer and
Albany International Corp. are parties.  Buyer agrees to conduct its business in
a manner consistent with its formative documents and such Separateness
Agreement.

 

Section 6.                Termination of Purchases

 

Section 6.1.       Voluntary Termination.  The purchase and sale of Receivables
pursuant to this Agreement may be terminated by any party, upon at least five
Business Days' prior written notice to the other parties.

 

Section 6.2.        Automatic Termination.  The purchase and sale of Receivables
pursuant to this Agreement shall automatically terminate upon the occurrence of
(i) a Bankruptcy Event with respect to any Originator, or (ii) the Liquidity
Termination Date.

 

Section 7.                Indemnification

 

Section 7.1.       Originators’ Indemnity.  Without limiting any other rights
any Person may have hereunder or under applicable law, each Originator, jointly
and severally, hereby indemnifies and holds harmless Buyer and its officers,
directors, agents and employees (each an “Indemnified Party”) from and against
any and all damages, losses, claims, liabilities, penalties, Taxes, costs and
expenses (including reasonable attorneys’ fees and court costs actually
incurred) (all of the foregoing collectively, the “Indemnified Losses”) at any
time imposed on or incurred by any Indemnified Party arising out of or otherwise
relating to any Transaction Document, the transactions contemplated thereby, or
any action taken or omitted by any of the Indemnified Parties, whether arising
by reason of the acts to be performed by such Originator hereunder or otherwise,
excluding only Indemnified Losses (“Excluded Losses”) to the extent (a) a final
judgment of a court of competent jurisdiction holds such Indemnified Losses
resulted solely from gross negligence or willful misconduct of the Indemnified
Party seeking indemnification, (b) due to the credit risk or financial inability
to pay of the Obligor and for which reimbursement would constitute recourse to
such Originator or the Collection Agent for uncollected or uncollectible
Receivables, (c) such Indemnified Losses include Taxes on, or measured by, the
overall net income or gross receipts of the Buyer or any of its assignees (d)
such Taxes include Taxes imposed in any jurisdiction other than the United
States, Canada or the Cayman Islands by reason of the organization of the Agent
or any Purchaser (or any of their Affiliates) in such jurisdiction, the location
of assets of the Agent or any Purchaser (or any of their Affiliates) in such
jurisdiction, or the conduct of activities by the Agent or any Purchaser (or any
of their Affiliates) in such jurisdiction.  Without limiting the foregoing
indemnification, but subject to the limitations set forth in clauses (a), (b),
(c) and (d) of the previous sentence, each Originator, jointly and severally,
shall indemnify each Indemnified Party for Indemnified Losses relating to or
resulting from:

 

(i)            any representation or warranty made by or on behalf of an
Originator under or in connection with this Agreement, any Periodic Report or
any other information or report delivered by an Originator pursuant to the
Transaction Documents, which shall have been false or incorrect in any material
respect when made or deemed made;

 

(ii)           the failure by an Originator to comply with any applicable law,
rule or regulation related to any Receivable, or the nonconformity of any such
Receivable with any such applicable law, rule or regulation;

 

(iii)          the failure of an Originator to vest and maintain vested in
Buyer, a perfected ownership or security interest in the Receivables and the
other property conveyed pursuant hereto, free and clear of any Adverse Claim;

 

(iv)          any commingling of funds to which Buyer is entitled hereunder with
any other funds;

 

(v)           any failure of a Lock-Box Bank to comply with the terms of the
applicable Lock-Box Letter;

 

(vi)          any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor or financial inability of the Obligor to pay) of the
Obligor to the payment of any Receivable, or any other claim resulting from the
sale or lease of goods or the rendering of services related to such Receivable
or the furnishing or failure to furnish any such goods or services or other
similar claim or defense not arising from the financial inability of any Obligor
to pay undisputed indebtedness;

 

(vii)         any failure of an Originator to perform its duties or obligations
in accordance with the provisions of this Agreement or any other Transaction
Document to which an Originator is a party; or

 

(viii)        any environmental liability claim, products liability claim or
personal injury or property damage suit or other similar or related claim or
action of whatever sort, arising out of or in connection with any Receivable or
any other suit, claim or action of whatever sort relating to any of any
Originator’s obligations under the Transaction Documents.

 

Section 7.2.       Indemnification Due to Failure to Consummate Purchase.  Each
Originator will indemnify Buyer on demand and hold it harmless  against all
costs (including, without limitation, breakage costs) and expenses incurred by
Buyer resulting from any failure by such Originator to consummate a purchase
after Buyer has requested a transfer of the applicable Receivables to the
Purchasers under the terms of the Second Tier Agreement.

 

Section 8.                Miscellaneous.

 

Section 8.1.       Amendments, Waivers, etc.  No amendment of this Agreement or
waiver of any provision hereof or consent to any departure by either party
therefrom shall be effective without the written consent of the party that is
sought to be bound. Any such waiver or consent shall be effective only in the
specific instance given. No failure or delay on the part of either party to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. Each Originator agrees that the Purchasers may rely
upon the terms of this Agreement, and that the terms of this Agreement may not
be amended, nor any material waiver of those terms be granted, without the
consent of the Agent; provided that such Originator and Buyer may agree to an
adjustment of the purchase price for any Receivable originated by such
Originator without the consent of the Agent provided that the purchase price
paid for such Receivable shall be an amount not less than adequate consideration
that represents fair value for such Receivable.

 

Section 8.2.       Assignment of Receivables Purchase Agreement.  Each
Originator hereby acknowledges that on the date hereof Buyer has collaterally
assigned for security purposes all of its right, title and interest in, to and
under this Agreement to the Agent for the benefit of the Purchasers pursuant to
the Second Tier Agreement and that the Agent and the Purchasers are third party
beneficiaries hereof.  Each Originator hereby further acknowledges that after
the occurrence and during the continuation of a Termination Event all provisions
of this Agreement inuring to the benefit of the Buyer shall inure to the benefit
of the Agent and the Purchasers, including the enforcement of any provision
hereof to the extent set forth in the Second Tier Agreement, but that neither
the Agent nor any Purchaser shall have any obligations or duties under this
Agreement. No purchases shall take place hereunder at any time that the Agent
has exercised its right to enforce Buyer’s rights hereunder pursuant to Section
1.8 of the Second Tier Agreement.  Each Originator hereby further acknowledges
that the execution and performance of this Agreement are conditions precedent
for the Agent and the Purchasers to enter into the Second Tier Agreement and
that the agreement of the Agent and Purchasers to enter into the Second Tier
Agreements will directly or indirectly benefit such Originator and constitutes
good and valuable consideration for the rights and remedies of the Agent and
each Purchaser with respect hereto.

 

Section 8.3.       Binding Effect; Assignment.  This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns and shall also, to the extent provided herein, inure to
the benefit of the parties to the Second Tier Agreement.  Each Originator
acknowledges that Buyer's rights under this Agreement are being assigned to the
Agent under the Second Tier Agreement and consents to such assignment and to the
exercise of those rights directly by the Agent, to the extent permitted by the
Second Tier Agreement.

 

Section 8.4.       Survival.  The rights and remedies with respect to any breach
of any representation and warranty made by an Originator or Buyer pursuant to
Section 4 and the indemnification provisions of Section 7 shall survive any
termination of this Agreement.

 

Section 8.5.       Costs, Expenses and Taxes.  In addition to the obligations of
the Originators under Section 7, each party (the Originators being one party and
the Buyer the other party) hereto agrees to pay on demand all costs and expenses
incurred by the other party and its assigns (other than Excluded Losses) in
connection with the enforcement of, or any actual or claimed breach of, this
Agreement, including the reasonable fees and expenses of counsel to any of such
Persons incurred in connection with any of the foregoing or in advising such
Persons as to their respective rights and remedies under this Agreement in
connection with any of the foregoing. Each Originator, jointly and severally,
also agrees to pay on demand all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing, and
recording of this Agreement.

 

Section 8.6.       Execution in Counterparts; Integration.  This Agreement may
be executed in any number of counterparts and by the different parties in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement.

 

Section 8.7.       Governing Law; Submission to Jurisdiction.  This Agreement
shall be governed by, and construed in accordance with, the internal laws (and
not the law of conflicts) of the State of New York.  Each Originator hereby
submits to the nonexclusive jurisdiction of the United States District Court for
the Southern District of New York and of any New York state court sitting in New
York City for purposes of all legal proceedings arising out of, or relating to,
the Transaction Documents or the transactions contemplated thereby.  Each
Originator hereby irrevocably waives, to the fullest extent permitted by law,
any objection it may now or hereafter have to the venue of any such proceeding
and any claim that any such proceeding has been brought in an inconvenient
forum.  Nothing in this Section 8.7 shall affect the right of Buyer to bring any
action or proceeding against an Originator or its property in the courts of
other jurisdictions.

 

Section 8.8.       No Proceedings.  Each Originator agrees, for the benefit of
the parties to the Second Tier Agreement, that it will not institute against
Buyer, or join any other Person in instituting against Buyer, any proceeding of
a type referred to in the definition of Bankruptcy Event until one year and one
day after no investment, loan or commitment is outstanding under the Second Tier
Agreement.

 

Section 8.9.       Loans by Buyer to Originators.  Buyer may make loans to an
Originator from time to time if so agreed between such parties and to the extent
that Buyer has funds available for that purpose after satisfying its obligations
under this Agreement and the Second Tier Agreement. Any such loan shall be
payable upon demand (and may be prepaid with penalty or premium) and shall bear
interest at such rate as Buyer and such Originator shall from time to time
agree.

 

Section 8.10.     Notices.  Unless otherwise specified, all notices and other
communications hereunder shall be in writing (including by telecopier or other
facsimile communication), given to the appropriate Person at its address or
telecopy number set forth in the Second Tier Agreement or at such other address
or telecopy number as such Person may specify, and effective when received at
the address specified by such Person.

 

Section 8.11.     Entire Agreement.  This Agreement constitutes the entire
understanding of the parties thereto concerning the subject matter thereof.  Any
previous or contemporaneous agreements, whether written or oral, concerning such
matters are superseded thereby.

 

Section 8.12.     Payments in Relevant Currency.  All payments to be made by
each Originator hereunder shall be made in Dollars (the “relevant currency”). 
To the fullest extent permitted by law, the obligation of each Originator in
respect of any amount due in the relevant currency under this Agreement shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the Buyer or its assignee, as applicable, may, in
accordance with normal banking procedures, purchase with the sum paid in such
other currency (after any premium and costs of exchange) on the Business Day
immediately following the day on which the Buyer or its assignee, as applicable,
receives such payment.  If the amount in the relevant currency that may be so
purchased for any reason falls short of the amount originally due, each
Originator shall pay such additional amounts, in the relevant currency, as may
be necessary to compensate for the shortfall.  Any obligations of the
undersigned not discharged by such payment shall, to the fullest extent
permitted by applicable law, be due as a separate and independent obligation
and, until discharged as provided herein, shall continue in full force and
effect.

 

In Witness Whereof, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized, as of the date first above
written.

 

 

 

Albany International Corp., as Originator

 

 

and Initial Collection Agent

 

 

 

 

 

 

 

By

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Geschmay Corp., as Originator

 

 

 

 

 

 

 

By

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Albany International Research Co., as Originator

 

 

 

 

 

 

 

By

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Albany International Techniweave, Inc., as Originator

 

 

 

 

 

 

 

By

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Albany International Canada Inc., as Originator

 

 

 

 

 

 

 

By

 

 

 

Name: 

 

 

 

Title: 

 

 

 

 

 

M&I Door Systems Ltd., as Originator

 

 

 

 

 

 

 

By

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Albany International Receivables

 

 

Corporation, as Buyer

 

 

 

 

 

 

 

By

 

 

 

Name:

 

 

 

Title: