Ferguson Enterprises Inc 10-Q for FY2026 Q3
Ferguson Enterprises Inc. (FERG)
10-Q
2026-11-09
For: 2026-09-30
View Original
Added on
November 10, 2026
About this 10-Q
Ferguson Enterprises Inc filed this 10-Q on November 9, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $9.03B
- Net income
- $598M
- Diluted EPS
- $3.08
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
For the quarterly period endedSeptember 30, 2026
For the transition period from to
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number: 001-42200
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
+1 -757 -874-7795
| (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) | ||||||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of Each Class: | Trading Symbol: | Name of Each Exchange on Which Registered: | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of November 2, 2026, the number of outstanding shares of common stock was 193,648,602 .
TABLE OF CONTENTS
| PAGE | |||||
CERTAIN TERMS
Unless otherwise specified or the context otherwise requires, the terms “Company,” “Ferguson,” “we,” “us,” and “our” and other similar terms used in this Quarterly Report on Form 10-Q (this “Quarterly Report”) refer to Ferguson Enterprises Inc. and its consolidated subsidiaries. The term “FloWorks Acquisition” refers to the Company’s acquisition of FWI Holdings, Inc. (“FloWorks”) on August 31, 2026.
In connection with its fiscal year-end change from July 31st to December 31st, the Company filed audited financial statements for the five-month transition period from August 1, 2025 to December 31, 2025, on a Transition Report on Form 10-KT (the “Transition Report”). The condensed consolidated financial statements on this Quarterly Report should be read in conjunction with the financial statements and related notes thereto included in the Transition Report filed with the SEC on February 27, 2026. Except as otherwise specified or the context otherwise requires, references to years indicate the calendar year ended December 31st of the respective year. For example, references to the “third quarter of 2025” refer to the three months ended September 30, 2025.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included in this Quarterly Report is forward-looking, including within the meaning of the Private Securities Litigation Reform Act of 1995, and involves risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied by forward-looking statements. Forward-looking statements cover all matters which are not historical facts and include, without limitation, statements or guidance regarding or relating to our future financial position, results of operations and growth, plans and objectives for the future including our capabilities and priorities, expectations regarding global and regional economic, market and political conditions, ability to manage supply chain challenges, the expected synergies and financial impact of recent acquisitions, ability to manage the impact of product price fluctuations, our financial condition and liquidity, legal or regulatory changes, capital deployment strategy, including the amount and timing of our dividends and share repurchases, investments and capital expenditures, and other statements concerning the success of our business and strategies.
Forward-looking statements can be identified by the use of forward-looking terminology, including terms such as “believes,” “estimates,” “anticipates,” “expects,” “forecasts,” “intends,” “continues,” “plans,” “projects,” “goal,” “target,” “aim,” “may,” “will,” “would,” “could” or “should” or, in each case, their negative or other variations or comparable terminology and other similar references to future periods. Forward-looking statements speak only as of the date on which they are made. They are not assurances of future performance and are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Therefore, you should not place undue reliance on any of these forward-looking statements. Although we believe that the forward-looking statements contained in this Quarterly Report are based on reasonable assumptions, you should be aware that many factors could cause actual results to differ materially from those contained in such forward-looking statements, including but not limited to:
•weakness in the economy, market trends, uncertainty and other conditions in the markets in which we operate and the macroeconomic impact of factors beyond our control (including, among others, inflation/deflation, recession, labor and wage pressures, trade restrictions such as tariffs, sanctions and retaliatory countermeasures, interest rates, and geopolitical conditions);
•failure to rapidly identify or effectively respond to direct and/or end customers’ wants, expectations or trends, including costs and potential problems associated with new or upgraded information technology systems or our ability to timely deploy new omni-channel capabilities;
•decreased demand for our products as a result of operating in highly competitive industries and the impact of declines in the residential and non-residential markets and our ability to effectively manage inventory as a result;
•changes in competition, including as a result of market consolidation, new entrants, vertical integration or competitors responding more quickly to emerging technologies (such as generative or agentic artificial intelligence (“AI”));
•failure of a key information technology system or process as well as payment-related risks, including exposure to fraud or theft;
•privacy and protection of sensitive data failures, including failures due to data corruption, cybersecurity incidents, network security breaches or the use of AI;
1
•ineffectiveness of or disruption in our domestic or international supply chain or our fulfillment network, including delays in inventory availability at our distribution facilities and branches, increased delivery costs or lack of availability due to loss of key suppliers;
•failure to effectively manage and protect our facilities and inventory or to prevent personal injury to customers, suppliers or associates, including as a result of workplace violence;
•unsuccessful execution of our operational strategies, including the failure to quickly adapt our strategy to emerging technologies;
•failure to attract, retain and motivate key associates;
•exposure of associates, contractors, customers, suppliers and other individuals to health and safety risks and fleet incidents;
•risks associated with acquisitions, partnerships, joint ventures and other business combinations, dispositions or strategic transactions;
•risks associated with sales of private label products, including regulatory, product liability and reputational risks and the adverse impact such sales may have on supplier relationships and rebates;
•the failure to achieve and maintain a high level of product and service quality or comply with responsible sourcing standards;
•inability to renew leases on favorable terms or at all, as well as any remaining obligations under a lease when we close a facility;
•changes in, interpretations of, or compliance with tax laws and accounting standards;
•our access to capital, indebtedness and changes in our credit ratings and outlook;
•fluctuations in product prices/costs (e.g., including as a result of the use of commodity-priced materials, inflation/deflation, trade restrictions and/or failure to qualify for or maintain supplier rebates) and foreign currency;
•funding risks related to our defined benefit pension plans;
•legal proceedings in the ordinary course of our business as well as any failure to comply with domestic and foreign laws, regulations and standards, as those laws, regulations and standards or interpretations and enforcement thereof may change;
•the occurrence of unforeseen developments such as litigation, investigations, governmental proceedings or enforcement actions;
•our failure to comply with the obligations associated with being a public company listed on the New York Stock Exchange (“NYSE”) and the costs associated therewith;
•the costs and risk exposure relating to sustainability matters and disclosures, including regulatory or legal requirements and disparate stakeholder expectations; and
•other risks and uncertainties as set forth under the heading “Risk Factors” in our Transition Report and in other filings we make with the SEC in the future.
Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with our legal or regulatory obligations, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
2
Part I - FINANCIAL INFORMATION
Item 1.Financial Statements
Ferguson Enterprises Inc.
Condensed Consolidated Statements of Earnings
(unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions, except per share amounts) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | ( | ( | ( | ( | |||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Selling, general and administrative expenses | ( | ( | ( | ( | |||||||||||||||||||
| Restructuring expenses | ( | ( | ( | ( | |||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | |||||||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per share - Basic | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per share - Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
3
Ferguson Enterprises Inc.
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive (loss) income: | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ( | ||||||||||||||||||||
Pension adjustments, net of tax impacts of ($ | ( | ( | |||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | ( | ( | ( | ||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
4
Ferguson Enterprises Inc.
Condensed Consolidated Balance Sheets
(unaudited)
| As of | |||||||||||
| (In millions, except share amounts) | September 30, 2026 | December 31, 2025 | |||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, less allowances of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid and other current assets | |||||||||||
| Assets held for sale | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Deferred income taxes, net | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and stockholders’ equity | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Short-term debt | |||||||||||
| Current portion of operating lease liabilities | |||||||||||
| Other current liabilities | |||||||||||
| Liabilities held for sale | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term portion of operating lease liabilities | |||||||||||
| Deferred income taxes, net | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock, par value $ | |||||||||||
| Paid-in capital | |||||||||||
| Retained earnings | |||||||||||
Treasury shares, | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
5
Ferguson Enterprises Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions, except per share data) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Common stock: | |||||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Common stock issued | |||||||||||||||||||||||
| Balance at end of period | |||||||||||||||||||||||
| Paid-in capital: | |||||||||||||||||||||||
| Balance at beginning of period | $ | $ | |||||||||||||||||||||
| Share-based compensation expense | |||||||||||||||||||||||
| Balance at end of period | |||||||||||||||||||||||
| Retained earnings: | |||||||||||||||||||||||
| Balance at beginning of period | $ | $ | |||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||
Cash dividends declared of $ | ( | ( | ( | ( | |||||||||||||||||||
| Shares issued under employee stock plans | ( | ( | ( | ||||||||||||||||||||
| Balance at end of period | |||||||||||||||||||||||
| Treasury shares: | |||||||||||||||||||||||
| Balance at beginning of period | ( | ( | ($ | ($ | |||||||||||||||||||
| Share repurchases | ( | ( | ( | ||||||||||||||||||||
| Shares issued under employee share plans, net | |||||||||||||||||||||||
| Balance at end of period | ( | ( | ( | ( | |||||||||||||||||||
| Accumulated other comprehensive loss: | |||||||||||||||||||||||
| Balance at beginning of period | ( | ( | ($ | ($ | |||||||||||||||||||
| Total other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
| Balance at end of period | ( | ( | ( | ( | |||||||||||||||||||
| Total stockholders’ equity | $ | $ | $ | $ | |||||||||||||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
6
Ferguson Enterprises Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
| (In millions) | Nine months ended | ||||||||||
| September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Depreciation and amortization | |||||||||||
| Share-based compensation | |||||||||||
| Changes in deferred income taxes | |||||||||||
| Changes in inventories | ( | ( | |||||||||
| Changes in receivables and other assets | ( | ( | |||||||||
| Changes in accounts payable and other liabilities | |||||||||||
| Changes in income taxes payable | ( | ( | |||||||||
| Other operating activities | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of businesses acquired, net of cash acquired | ( | ( | |||||||||
| Capital expenditures | ( | ( | |||||||||
| Other investing activities | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Purchase of treasury shares | ( | ( | |||||||||
| Repayments of debt | ( | ( | |||||||||
| Proceeds from debt | |||||||||||
| Change in bank overdrafts | ( | ||||||||||
| Cash dividends | ( | ( | |||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Change in cash, cash equivalents and restricted cash | ( | ||||||||||
| Effects of exchange rate changes | ( | ||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
| Supplemental Disclosures: | |||||||||||
| Cash paid for income taxes, net | $ | $ | |||||||||
| Cash paid for interest | |||||||||||
| Accrued capital expenditures | |||||||||||
| Accrued dividends | |||||||||||
| Lease assets obtained in exchange for new operating lease liabilities (non-cash) | |||||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
7
Ferguson Enterprises Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Note 1: Summary of significant accounting policies
Background
Ferguson Enterprises Inc. (including subsidiaries, the “Company”) (NYSE: FERG) is a Delaware corporation. Ferguson is a value-added distributor of essential water and air solutions, serving the specialized professional in the residential and non-residential North American construction markets. We help make our customers’ complex projects simple, successful and sustainable by providing expertise and a wide range of products and services from plumbing, HVAC, appliances, and lighting to PVF, water and wastewater solutions, and more. We sell through a common network of distribution centers, branches, counter service and expert sales associates, showroom consultants and e-commerce channels. The corporate headquarters of the Company is located at 751 Lakefront Commons, Newport News, Virginia 23606.
Basis of presentation
The accompanying unaudited condensed consolidated financial statements and notes to the condensed consolidated financial statements are presented in accordance with the rules and regulations of the SEC and accounting principles generally accepted in the United States of America (“U.S. GAAP”), but do not include all disclosures normally required in annual consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented.
These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Transition Report. The financial results for the interim period may not be indicative of the financial results for the entire annual period.
Use of estimates
The preparation of the Company's interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions affecting certain reported amounts in the interim condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits with banks with original maturities of three months or less and overdrafts to the extent there is a legal right of offset and practice of net settlement with cash balances. Cash equivalents also include amounts due from third-party credit card processors as they are both short-term and highly liquid in nature and are typically converted to cash within a few days of the sales transaction.
Restricted cash primarily consists of deferred consideration for business combinations, subject to various settlement agreements. These amounts are recorded in prepaid and other current assets and other non-current assets in the Company’s condensed consolidated balance sheets.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows.
| As of | |||||||||||
| (In millions) | September 30, 2026 | December 31, 2025 | |||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
8
Supplier finance program
Recently issued accounting standard updates (“ASU”)
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU requires new financial statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions, including information about purchases of inventory, employee compensation, depreciation, and intangible asset amortization for each relevant expense caption on the face of the income statement. Per ASU No. 2025-01, the amendments under ASU No. 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The ASU No. 2024-03 can be adopted either prospectively or retrospectively. The Company is currently evaluating the ASU to determine the impact on its disclosures.
In September 2025, the FASB issued ASU No. 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40).” The amendments in this update remove all references to the previously existing software development project stages and require entities to start capitalizing software costs when management has authorized and committed funding to a software project and it is probable that the project will be completed with its intended functionality. The new standard is effective for fiscal years beginning after December 15, 2027. Early adoption is permitted and can be applied prospectively, retrospectively, or utilizing a modified transition approach. The Company is currently evaluating the ASU to determine the impact on its consolidated financial statements.
In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818).” The standard provides accounting and disclosure guidance for environmental credits and related obligations. The guidance is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted. The standard is required to be applied using a modified retrospective approach through a cumulative-effect adjustment to beginning retained earnings in the period of adoption. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
Recent accounting pronouncements pending adoption that are not discussed above are either not applicable, or will not have, or are not expected to have, a material impact on our consolidated financial condition, results of operations or cash flows.
9
Note 2: Segment and net sales information
The Company reports its financial results of operations on a geographical basis in the following two reportable segments: United States and Canada. Each segment generally derives its revenues in the same manner as described in Note 1, Summary of significant accounting policies included in the Transition Report. The Company uses adjusted operating profit as its measure of segment profit. Certain income and expenses are not allocated to the Company’s segments and, thus, the information that management uses to make operating decisions and assess performance does not reflect such amounts.
This segment structure reflects the financial information and reports used by the Company’s management, specifically its chief operating decision makers (“CODM”), to make decisions regarding the Company’s business, including resource allocations and performance assessments, as well as the current operating focus in compliance with ASC 280, Segment Reporting. The Company’s CODM are the Chief Executive Officer and the Chief Financial Officer.
The significant expenses reviewed by the CODM include operating costs and costs of sales. The operating costs evaluated by the CODM are primarily SG&A, including depreciation expense on long lived assets and software amortization expense. The CODM use segment adjusted operating profit to evaluate performance and allocate resources (including employees, property, and financial or capital resources) in conjunction with the annual budget process, as well as during periodic business reviews.
Segment results were as follows:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Canada | |||||||||||||||||||||||
| Total net sales | |||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||
| United States | ( | ( | ( | ( | |||||||||||||||||||
| Canada | ( | ( | ( | ( | |||||||||||||||||||
| Operating costs: | |||||||||||||||||||||||
| United States | ( | ( | ( | ( | |||||||||||||||||||
| Canada | ( | ( | ( | ( | |||||||||||||||||||
| Adjusted operating profit: | |||||||||||||||||||||||
| United States | $ | $ | |||||||||||||||||||||
| Canada | |||||||||||||||||||||||
| Total segment adjusted operating profit | |||||||||||||||||||||||
Central and other costs(1) | ( | ( | ( | ( | |||||||||||||||||||
Restructuring expenses(2) | ( | ( | ( | ( | |||||||||||||||||||
Acquisition and integration costs(3) | ( | ( | |||||||||||||||||||||
| Amortization of acquired intangible assets | ( | ( | ( | ( | |||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Income before income taxes | $ | $ | $ | $ | |||||||||||||||||||
(1)Primarily includes SG&A that is not related to a segment.
(2)See Note 13, Restructuring expenses for further information.
(3)Incremental costs related to the FloWorks Acquisition are not included in segment adjusted operating profit.
10
Capital expenditures and depreciation and amortization by segment were as follows:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Capital expenditures: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Canada | |||||||||||||||||||||||
| Total capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation and amortization: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Canada | |||||||||||||||||||||||
Total depreciation and amortization(1) | $ | $ | $ | $ | |||||||||||||||||||
(1) Includes amortization of acquired intangible assets of $ | |||||||||||||||||||||||
Assets by segment included:
| As of | |||||||||||
| (In millions) | September 30, 2026 | December 31, 2025 | |||||||||
| Assets: | |||||||||||
| United States | $ | $ | |||||||||
| Canada | |||||||||||
| Total segment assets | |||||||||||
| Corporate | |||||||||||
| Total assets | $ | $ | |||||||||
Long-lived assets are as follows:
| As of | |||||||||||
| (In millions) | September 30, 2026 | December 31, 2025 | |||||||||
| Long-lived assets: | |||||||||||
| United States | $ | $ | |||||||||
| Canada | |||||||||||
| Total long-lived assets | $ | $ | |||||||||
11
Net sales disaggregation
A disaggregation of net sales by customer group in the United States is as follows:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Customer Group | |||||||||||||||||||||||
| Waterworks | % | % | % | % | |||||||||||||||||||
| Ferguson Home | % | % | % | % | |||||||||||||||||||
| Commercial/Mechanical | % | % | % | % | |||||||||||||||||||
| Residential Trade Plumbing | % | % | % | % | |||||||||||||||||||
| HVAC | % | % | % | % | |||||||||||||||||||
| Industrial | % | % | % | % | |||||||||||||||||||
| Facilities Supply | % | % | % | % | |||||||||||||||||||
| Fire & Fabrication | % | % | % | % | |||||||||||||||||||
| Total United States | % | % | % | % | |||||||||||||||||||
The Company does not disaggregate sales for Canada based on materiality. No sales to an individual customer accounted for more than 10% of net sales during any of the periods presented.
Note 3: Weighted average shares
The following table shows the calculation of diluted shares:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||
| Basic weighted average shares | |||||||||||||||||||||||
Effect of dilutive shares(1) | |||||||||||||||||||||||
| Diluted weighted average shares | |||||||||||||||||||||||
| Excluded anti-dilutive shares | |||||||||||||||||||||||
(1)Represents the potential dilutive impact of share-based awards.
12
Note 4: Income tax
The Company’s tax provision for each period presented was calculated using an estimated annual tax rate, adjusted for discrete items occurring during the applicable period to arrive at an effective tax rate. The effective income tax rates for the relevant periods were as follows:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Effective tax rate | % | % | % | % | |||||||||||||||||||
During the nine months ended September 30, 2026, the Company’s unrecognized tax benefits balance decreased by $19 million. The decrease was mainly due to the lapsing of statutes of limitations.
The Company’s net deferred tax position shifted from a net deferred tax asset as of December 31, 2025, to a net deferred tax liability as of September 30, 2026, primarily due to the FloWorks Acquisition. The acquired deferred tax liabilities primarily reflect differences between the financial reporting basis and tax basis of acquired intangible assets. The purchase price allocation, including the related deferred tax amounts, remains preliminary and may be adjusted during the measurement period as additional information becomes available.
Note 5: Debt
The Company’s debt obligations consisted of the following:
| As of | |||||||||||
| (In millions) | September 30, 2026 | December 31, 2025 | |||||||||
| Variable-rate debt: | |||||||||||
| Term Loan | $ | $ | |||||||||
| Fixed-rate debt: | |||||||||||
| Private placement notes | |||||||||||
| Unsecured senior notes, due April 2027 - October 2034 | |||||||||||
2029 Senior Notes, | |||||||||||
2036 Senior Notes, | |||||||||||
| Subtotal | $ | $ | |||||||||
| Less: current maturities of debt | ( | ( | |||||||||
| Unamortized discounts and debt issuance costs | ( | ( | |||||||||
| Interest rate swap - fair value adjustment | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
Receivables Securitization Facility
The Company maintains a Receivables Securitization Facility (the “Receivables Facility”) which is primarily governed by the Receivables Purchase Agreement, dated July 31, 2013, as amended from time to time (the “Receivables Purchase Agreement”). The Receivables Facility consists of funding for up to $900 million, terminating on October 29, 2027. The Company has the ability to increase the aggregate total available amount under the Receivables Facility up to a total of $1.5 billion, subject to lender participation. As of September 30, 2026, no borrowings were outstanding under the Receivables Facility.
In November 2026, the Company and certain of its subsidiaries entered into an amendment and restatement of the agreements governing the Receivables Facility. Among other things, the amendments extended the scheduled termination date of the Receivables Facility until November 2029. For additional information, see Part II, Item 5, "Other Information.”
13
Revolving Credit Facility
The Company, pursuant to a revolving credit agreement (the “Revolving Credit Agreement”), maintains a revolving credit facility that has aggregate total available credit commitments of $1.5 billion (the “Revolving Facility”). The Revolving Credit Agreement provides the Company with the ability to increase the aggregate capacity of the facility by $500 million under certain conditions, including the receipt of additional or increased lender commitments. As of September 30, 2026, no borrowings were outstanding under the Revolving Facility.
On April 2, 2026, the Company extended the stated maturity date of the commitments under the Revolving Facility from April 2, 2030 to April 2, 2031 by utilizing one of the two extension options available in the Revolving Credit Agreement.
Term Loan Credit Agreement
On August 11, 2026, the Company, as borrower, entered into a term loan credit agreement (the “Term Loan Credit Agreement”) with Ferguson UK Holdings Limited (“FUKHL”), as guarantor, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the lenders. The Term Loan Credit Agreement provides for a term loan facility in an aggregate committed amount of up to $900 million (the “Term Loan Facility”), which is unsecured and matures August 31, 2029. Capitalized terms used in this summary have the meaning set forth in the Term Loan Credit Agreement. The Borrowing under the Term Loan Facility bears interest, at the Company’s option, at either the Base Rate or the Term SOFR Rate, plus a margin. The proceeds of the Term Loan Facility were used to fund a portion of the consideration, including related fees and expenses, payable in connection with the FloWorks Acquisition.
As of September 30, 2026, $850 million of the borrowing under the Term Loan Facility was outstanding. The interest rate under the Term Loan Facility was approximately 4.9 % as of September 30, 2026.
Private Placement Notes
In November 2026, $150 million of private placement notes will mature. The remaining $150 million of private placement notes will mature in September 2027.
Unsecured Senior Notes
In August 2026, the Company issued and sold an aggregate of $1.2 billion of unsecured senior notes in two series: $700 million of 4.80 % senior notes due August 2029 and $500 million of 5.60 % senior notes due August 2036 (together, the “August 2026 Senior Notes”). The obligations of the Company under the August 2026 Senior Notes are fully and unconditionally guaranteed by FUKHL.
Each series of August 2026 Senior Notes may be redeemed, in whole or in part, at any time at the applicable redemption prices and on the terms and conditions set forth in the supplemental indenture and indenture governing the August 2026 Senior Notes (the “Indenture”). The Indenture contains certain covenants and restrictions, including covenants that limit the Company’s and FUKHL’s ability to incur specified debt secured by liens and that require the Company and FUKHL to satisfy certain conditions in order to merge or consolidate with another entity. The Indenture also provides for customary events of default.
In April 2027, $300 million of unsecured senior notes will mature.
Other
Concurrently with the Term Loan Credit Agreement and in connection with the FloWorks Acquisition, the Company, as borrower, entered into a bridge term loan credit agreement (the “Bridge Credit Agreement”). The Bridge Credit Agreement provided for an unsecured bridge credit facility of up to $700 million (the “Bridge Facility”). Following the issuance of the August 2026 Senior Notes, the commitments under the Bridge Credit Agreement were terminated in full on August 14, 2026. The Bridge Facility was never drawn.
The Company was in compliance with all debt covenants that were in effect as of September 30, 2026.
14
Note 6: Assets and liabilities at fair value
The Company has not changed its valuation techniques for measuring the fair value of any financial assets or liabilities during the periods presented. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and other debt instruments, such as the Term Loan Facility due to the variable interest rate, approximated their fair values as of September 30, 2026 and December 31, 2025.
The Company’s derivatives (interest rate swaps which are considered fair value hedges) and investments in equity instruments are carried at fair value on the condensed consolidated balance sheets (Level 2 and Level 3 fair value inputs, respectively) and are not material. The notional amount of the Company’s outstanding fair value hedges was $150
Carrying amounts and the related estimated fair value of the Company’s long-term debt were as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| (In millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||
| Unsecured senior notes | $ | $ | $ | $ | |||||||||||||||||||
| Private placement notes | |||||||||||||||||||||||
Note 7: Commitments and contingencies
The Company is, from time to time, involved in various legal proceedings considered to be normal course of business in relation to, among other things, the products that we supply, contractual and commercial disputes, fleet incidents and disputes with employees. Provision is made if, on the basis of current information and professional advice, liabilities are considered probable. In the case of unfavorable outcomes, the Company may benefit from applicable insurance protection. The Company does not expect any of its pending legal proceedings to have a material adverse effect on its results of operations, financial position or cash flows.
15
Note 8: Accumulated other comprehensive loss
The change in accumulated other comprehensive loss was as follows:
| (In millions, net of tax) | Foreign currency translation | Pensions | Total | ||||||||||||||
Balance at December 31, 2025 | ($ | ($ | ($ | ||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | |||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | ( | ( | |||||||||||||||
| Balance at March 31, 2026 | ( | ( | ( | ||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | |||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | ( | ( | |||||||||||||||
| Balance at June 30, 2026 | ( | ( | ( | ||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | |||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | ( | ||||||||||||||||
Balance at September 30, 2026 | ( | ( | ( | ||||||||||||||
| (In millions, net of tax) | Foreign currency translation | Pensions | Total | ||||||||||||||
Balance at December 31, 2024 | ( | ( | ( | ||||||||||||||
| Other comprehensive income before reclassifications | |||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | |||||||||||||||||
| Balance at March 31, 2025 | ( | ( | ( | ||||||||||||||
| Other comprehensive (loss) income before reclassifications | |||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | |||||||||||||||||
| Balance at June 30, 2025 | ( | ( | ( | ||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | ( | ||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | ( | ( | ( | ||||||||||||||
Balance at September 30, 2025 | ( | ( | ( | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss related to pension and other post-retirement items include the related income tax impacts. Such amounts consisted of the following:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Amortization of actuarial losses | $ | $ | $ | $ | |||||||||||||||||||
| Tax benefit | ( | ( | ( | ||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | $ | $ | $ | $ | |||||||||||||||||||
16
Note 9: Retirement benefit obligations
The Company maintains pension plans in the U.K. and Canada. The components of net periodic pension cost, which are included in Other expense, net in the condensed consolidated statements of earnings, were as follows:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Interest cost | ($ | ($ | ($ | ($ | |||||||||||||||||||
| Expected return on plan assets | |||||||||||||||||||||||
| Amortization of net actuarial losses | ( | ( | ( | ( | |||||||||||||||||||
| Net periodic cost | ($ | ($ | ($ | ($ | |||||||||||||||||||
The impact of exchange rate fluctuations is included in the amortization of net actuarial losses line above.
Note 10: Stockholders’ equity
The following table presents a summary of the Company’s share activity:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Common stock: | |||||||||||||||||||||||
| Balance at beginning of period | |||||||||||||||||||||||
| Common stock issued | |||||||||||||||||||||||
| Balance at end of period | |||||||||||||||||||||||
| Treasury shares: | |||||||||||||||||||||||
| Balance at beginning of period | ( | ( | ( | ( | |||||||||||||||||||
| Share repurchases | ( | ( | ( | ||||||||||||||||||||
| Treasury shares used to settle share-based compensation awards | |||||||||||||||||||||||
| Balance at end of period | ( | ( | ( | ( | |||||||||||||||||||
| Total shares outstanding at end of period | |||||||||||||||||||||||
Share Repurchases
As of April 30, 2026, the Company had completed $4.7 billion in share repurchases under a September 2021 program that authorized up to $5.0 billion. On April 30, 2026, the Board authorized a new share repurchase program of up to $2 billion in aggregate purchases of common stock, replacing the prior program. As of September 30, 2026, the Company has completed $136 million in share repurchases under the April 2026 program.
17
Note 11: Share-based compensation
The Company grants share-based compensation awards that can be broadly characterized by the underlying vesting conditions as follows:
•Time vested, restricted stock units (“RSU”) vest over time. RSU awards granted prior to October 2024 cliff vest, typically at the end of three years . RSU awards granted in October 2024 and beyond will vest in equal, annual installments over three years . The fair value of these awards is based on the closing share price on the date of grant.
•Multiple metric performance stock units granted to certain members of management (“PSU-EX”) typically vest following three-year performance cycles. The number of shares issued will vary based upon the Company’s performance against pre-determined goals for adjusted EPS growth (diluted), return on capital employed (“ROCE”) and relative total shareholder return (“rTSR”). The fair value of awards vesting based upon EPS growth (diluted) and ROCE are equal to the closing share price on the date of grant and the fair value of rTSR awards are determined using a Monte Carlo simulation. The assumptions used in the Monte Carlo simulations for the rTSR granted in 2026 were as follows:
| rTSR Fair value assumptions: | |||||
| Expected annualized volatility | % | ||||
| Risk free interest rate | % | ||||
| Simulation period | |||||
| Grant date fair value of rTSR awards | $ | ||||
The following table summarizes the share-based incentive awards activity for the nine months ended September 30, 2026:
| Number of shares | Weighted average grant date fair value | ||||||||||
Outstanding as of December 31, 2025 | $ | ||||||||||
| RSU awards granted | |||||||||||
| PSU-EX granted | |||||||||||
| Share adjustments based on performance | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
Outstanding as of September 30, 2026 | $ | ||||||||||
The following table relates to all share-based compensation awards:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Share-based compensation expense (within SG&A) | $ | $ | $ | $ | |||||||||||||||||||
| Income tax benefit | |||||||||||||||||||||||
Total unrecognized share-based compensation expense for all share-based payment plans was $118 million as of September 30, 2026, which is expected to be recognized over a weighted average period of 1.9 years.
Stock Options
The Company grants stock option awards to certain members of management with an exercise price equal to the closing share price of the Company's common stock on the last trading day prior to the date of grant. These options vest and become exercisable over three years , in equal, annual installments beginning one year from the date of grant, and expire 10 years from the date of grant.
The fair value of the Company's stock options was estimated on the date of grant using the Black-Scholes option-pricing model. When determining expected volatility, the Company considers the historical volatility of the Company’s stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, based on the options’ expected term. The expected term of the options was estimated using the “simplified method” as permitted under Staff Accounting Bulletin 110. We consider the use of the simplified method appropriate due to the lack of sufficient historical data.
The assumptions used in the Black-Scholes option-pricing model in 2026 were as follows:
18
| Stock option fair value assumptions used: | |||||
| Expected annualized volatility | % | ||||
| Dividend yield | % | ||||
| Risk free interest rate | % | ||||
| Expected term | |||||
| Grant date fair value of stock option awards | $ | ||||
Stock option activity in 2026 is summarized in the following table:
| Number of shares | Weighted average exercise price per share | Aggregate intrinsic value (in millions) | Weighted average remaining contractual life (years) | ||||||||||||||||||||
Outstanding as of December 31, 2025 | $ | ||||||||||||||||||||||
| Granted | |||||||||||||||||||||||
Outstanding as of September 30, 2026 | $ | $ | |||||||||||||||||||||
Exercisable as of September 30, 2026 | $ | $ | |||||||||||||||||||||
Employee share purchase plan
Ferguson Enterprises Inc. Employee Share Purchase Plan 2021 (the “ESPP”) provides for a limit of 20 million shares of common stock that can be offered for purchase under the plan subject to certain guidelines set forth in the ESPP.
As of September 30, 2026, 19.5 million shares of common stock remain available for purchase under the ESPP. The exercise price per share of common stock is prescribed by the Compensation Committee of the Board for each offering period and may not be less than 85 % of the lesser of the fair market value of common stock on the date of grant and the fair market value of common stock on the date of exercise. During the second quarter of 2026, approximately 136,659 shares were purchased under the ESPP at an average price of $132.23 . The expense associated with the ESPP is not material.
19
Note 12: Acquisitions
The Company acquired ten businesses during the nine months ended September 30, 2026, the largest of which was the FloWorks Acquisition. Each of the acquired businesses is generally engaged in the distribution of plumbing, HVAC, waterworks, wastewater, industrial or infrastructure related products or solutions and was acquired to support growth. In each acquisition, the Company obtained control of an integrated set of activities and assets that met the definition of a business under FASB Accounting Standards Codification (ASC) 805, Business Combinations. Accordingly, the acquisitions were accounted for as business combinations in accordance with ASC 805.
The following table summarizes the preliminary purchase price allocation for the assets acquired and liabilities assumed in regard to the Company's acquisitions completed in the year-to-date period, with the FloWorks Acquisition presented separately and all other acquisitions presented in aggregate:
| (In millions) | FloWorks | Other | Total | ||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Trade and other receivables | $ | ||||||||||||||||
| Inventories | $ | ||||||||||||||||
| Property, plant and equipment | $ | ||||||||||||||||
| Right of use assets | $ | ||||||||||||||||
| Trade names and brands | $ | ||||||||||||||||
| Customer relationships | $ | ||||||||||||||||
| Other intangible assets | $ | ||||||||||||||||
| Trade and other payables | ( | ( | ($ | ||||||||||||||
| Lease liabilities | ( | ( | ($ | ||||||||||||||
| Deferred tax | ( | ( | ($ | ||||||||||||||
| Other | ( | ($ | |||||||||||||||
| Total | |||||||||||||||||
| Goodwill | |||||||||||||||||
| Consideration | $ | $ | $ | ||||||||||||||
| Satisfied by: | |||||||||||||||||
| Cash | $ | $ | $ | ||||||||||||||
| Deferred & other consideration | |||||||||||||||||
| Total consideration | $ | $ | $ | ||||||||||||||
The fair values of the net assets acquired are considered preliminary and are based on management’s best estimates. Further adjustments may be necessary in connection with acquisitions completed in a prior period when additional information becomes available about events that existed at the date of acquisition. Amendments to fair value estimates may be made to these figures during the measurement period following the date of acquisition. There were no material adjustments in the current year that related to the closing of the measurement period of acquisitions made in the prior year. As of the date of this Quarterly Report, the Company has made all known material adjustments related to acquisitions in 2026.
The fair value estimates of intangible assets are considered non-recurring, Level 3 measurements within the fair value hierarchy and are estimated as of each respective acquisition date.
The goodwill on these acquisitions is attributable to the anticipated profitability of the new markets and product ranges to which the Company has gained access and additional profitability, operating efficiencies and other synergies available in connection with existing markets. The goodwill acquired during the nine months ended September 30, 2026 was attributed to the United States, with $131 million expected to be deductible for tax purposes.
Deferred consideration represents the expected payout due to certain sellers of acquired businesses that is subject to either 1) a contractual settle-up period or 2) a contingency related to contractually defined performance metrics. If the deferred consideration is contingent on achieving performance metrics, the liability is estimated using assumptions regarding the expectations of an acquiree’s ability to achieve such performance metrics over a period of time that typically spans to three years . When ultimately paid, deferred consideration is reported as a cash outflow from financing activities.
20
The businesses acquired during the year-to-date period of 2026 contributed $271 million to net sales and $37 million in losses to the Company’s income before income tax, including transaction and integration costs of $49 million, as well as related acquired intangible asset amortization for the period between the applicable date of acquisition and September 30, 2026. Acquisition costs are expensed as incurred and included in selling, general and administrative expenses in the Company’s consolidated statements of earnings.
The net outflow of cash related to business acquisitions is as follows:
| Nine months ended | |||||
| (In millions) | September 30, 2026 | ||||
| Purchase consideration | $ | ||||
| Cash, cash equivalents and bank overdrafts acquired | ( | ||||
| Cash consideration paid, net of cash acquired | |||||
Deferred and contingent consideration(1) | |||||
| Net cash outflow in respect of the purchase of businesses | $ | ||||
(1) Included in other financing activities in the Condensed Consolidated Statements of Cash Flows.
Pro forma disclosures
If each acquisition had been completed on the first day of the prior year, the Company’s unaudited pro forma net sales and income before tax would have been:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Pro forma net sales | $ | $ | $ | $ | |||||||||||||||||||
| Pro forma income before income tax | $ | $ | $ | $ | |||||||||||||||||||
These unaudited pro forma results do not necessarily represent financial results that would have been achieved had the acquisition actually occurred at the beginning of the prior year.
Note 13: Restructuring expenses
The Company’s restructuring expenses are summarized below:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Corporate restructuring expenses | $ | $ | $ | $ | |||||||||||||||||||
| Business restructuring expenses | |||||||||||||||||||||||
| Restructuring expenses | $ | $ | $ | $ | |||||||||||||||||||
Corporate restructuring expenses
In the three and nine months ended September 30, 2026 and 2025, corporate restructuring expenses primarily related to transition activities following the establishment of our parent company’s domicile in the United States. The Company does not expect further charges to be material.
Business restructuring expenses
In the three and nine months ended September 30, 2025, the Company implemented targeted actions to streamline operations, enhancing speed and efficiency to better serve customers and drive further profitable growth. As a result of these actions, non-recurring business restructuring expenses of $73 million were incurred in the year-to-date period, primarily in the United States. The charges primarily related to severance costs of $46 27
21
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to convey management’s perspective regarding the Company’s operational and financial performance for the three and nine months ended September 30, 2026 and 2025, respectively. This MD&A should be read in conjunction with the unaudited condensed consolidated financial statements and related notes appearing in “Item 1. Financial Statements” of this Quarterly Report (the “Condensed Consolidated Financial Statements”) and the consolidated financial statements and related notes in “Item 8. Financial Statements and Supplementary Data” of the Transition Report.
The following discussion contains trend information and other forward-looking statements. Actual results could differ materially from those discussed in these forward-looking statements, as well as from our historical performance, due to various factors, including, but not limited to, those referred to in “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this Quarterly Report.
Overview
Ferguson is a value-added distributor of essential water and air solutions, serving the specialized professional in the residential and non-residential North American construction markets. We help make our customers’ complex projects simple, successful and sustainable by providing expertise and a wide range of products and services from plumbing, HVAC, appliances, and lighting to PVF, water and wastewater solutions, and more. Ferguson is headquartered in Newport News, Virginia.
The following table presents highlights of the Company’s performance for the periods below:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions, except per share amounts) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales | $9,026 | $8,245 | $25,249 | $23,821 | |||||||||||||||||||
| Operating profit | 885 | 844 | 2,390 | 2,193 | |||||||||||||||||||
| Net income | 598 | 638 | 1,678 | 1,617 | |||||||||||||||||||
| Earnings per share - diluted | 3.08 | 3.24 | 8.63 | 8.17 | |||||||||||||||||||
| Net cash provided by operating activities | 1,472 | 1,884 | |||||||||||||||||||||
Supplemental non-GAAP financial measures:(1) | |||||||||||||||||||||||
| Adjusted operating profit | 962 | 883 | 2,541 | 2,386 | |||||||||||||||||||
| Adjusted earnings per share - diluted | 3.43 | 3.18 | 9.09 | 8.48 | |||||||||||||||||||
(1) The Company uses certain non-GAAP measures, which are not defined or specified under U.S. GAAP. See the section titled “Non-GAAP Reconciliations and Supplementary Information.”
For the third quarter of 2026, net sales increased by 9.5% compared with the third quarter of 2025, primarily due to price inflation, higher volume and incremental sales from acquisitions.
For the third quarter of 2026, operating profit increased by 4.9% (adjusted operating profit increased 8.9%), compared with the third quarter of 2025. The year-over-year change was driven by higher sales and the associated gross profit, partially offset by higher variable operating costs and incremental costs in connection with the FloWorks Acquisition.
For the third quarter of 2026, diluted earnings per share was $3.08, a decrease of 4.9% compared with the third quarter of 2025, primarily due to the timing and extent of tax benefits in 2025, higher acquisition costs in connection with the FloWorks Acquisition and higher interest expense, partially offset by higher operating profit and the impact of share repurchases. Adjusted diluted earnings per share was $3.43, an increase of 7.9% compared with the third quarter of 2025, primarily driven by higher adjusted operating profit and the impact of share repurchases, partially offset by higher interest expense.
Net cash provided by operating activities decreased to $1,472 million in the year-to-date period of 2026 compared with $1,884 million in the same period of 2025, primarily reflecting an increased investment in working capital and higher cash tax payments, partially offset by higher net income after adjusting for non-cash items.
22
Results of Operations
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales | $9,026 | $8,245 | $25,249 | $23,821 | |||||||||||||||||||
| Cost of sales | (6,240) | (5,662) | (17,433) | (16,409) | |||||||||||||||||||
| Gross profit | 2,786 | 2,583 | 7,816 | 7,412 | |||||||||||||||||||
| Selling, general and administrative expenses | (1,783) | (1,640) | (5,108) | (4,855) | |||||||||||||||||||
| Restructuring expenses | (2) | (3) | (6) | (79) | |||||||||||||||||||
| Depreciation and amortization | (116) | (96) | (312) | (285) | |||||||||||||||||||
| Operating profit | 885 | 844 | 2,390 | 2,193 | |||||||||||||||||||
| Interest expense, net | (64) | (47) | (161) | (142) | |||||||||||||||||||
| Other expense, net | (16) | (6) | (18) | (1) | |||||||||||||||||||
| Income before income taxes | 805 | 791 | 2,211 | 2,050 | |||||||||||||||||||
| Provision for income taxes | (207) | (153) | (533) | (433) | |||||||||||||||||||
| Net income | $598 | $638 | $1,678 | $1,617 | |||||||||||||||||||
Net sales
For the third quarter of 2026, net sales were $9.0 billion, an increase of $0.8 billion, or 9.5%, compared with the third quarter of 2025. The increase in net sales was primarily driven by low- to mid-single-digit price inflation, higher volume and incremental sales from acquisitions of 2.7%. The Company’s increase in net sales was driven by non-residential growth and, to a lesser extent, residential growth within its United States segment.
Net sales were $25.2 billion in the year-to-date period of 2026, an increase of $1.4 billion, or 6.0%, compared with the same period in 2025. The increase in net sales was primarily driven by low- to mid-single-digit price inflation and incremental sales from acquisitions of 1.5% and, to a lesser extent, higher sales volume.
Gross profit
Gross profit in the third quarter of 2026 increased $203 million, or 7.9%, compared with the third quarter of 2025, primarily reflecting increased net sales. Gross profit as a percentage of sales was 30.9% in the third quarter of 2026 compared with 31.3% in the third quarter of 2025. The decrease of 0.4% primarily reflects the timing and extent of supplier price increases in the prior year.
Gross profit in the year-to-date period of 2026 increased $404 million, or 5.5%, compared with the same period in 2025. Gross profit as a percentage of sales was 31.0% in the year-to-date period of 2026 compared with 31.1% in the same period in 2025. The factors impacting the year-to-date comparisons were largely the same as those noted above for the quarter.
Selling, general and administrative (“SG&A”) expenses
SG&A expenses in the third quarter of 2026 increased $143 million, or 8.7%, compared with the third quarter of 2025. SG&A as a percentage of sales was 19.8% in the third quarter of 2026 compared with 19.9% in the third quarter of 2025. The decrease in SG&A as a percentage of sales primarily reflects operating leverage of the Company’s cost base, partially offset by acquisition and integration costs related to the FloWorks Acquisition.
SG&A expenses in the year-to-date period of 2026 increased $253 million, or 5.2%, compared with the same period in 2025. SG&A as a percentage of sales was 20.2% in the year-to-date period of 2026 compared with 20.4% in the same period in 2025. The factors impacting the year-to-date comparisons were largely the same as those noted above for the quarter.
23
Interest expense
Net interest expense was $64 million and $47 million for the third quarters of 2026 and 2025, respectively, and $161 million and $142 million for the year-to-date periods of 2026 and 2025, respectively. The year-over-year increases in net interest expense were primarily due to higher average debt resulting from the Company’s $1.2 billion of unsecured senior notes and $900 million of term loans entered into during the third quarter of 2026, mainly to provide funding for the FloWorks Acquisition.
Income tax
Income tax expense was $207 million in the third quarter of 2026, an increase of $54 million, or 35.3%, compared with the third quarter of 2025, primarily reflecting a release of unrecognized tax benefits in the prior-year period.
In the year-to-date period of 2026, income tax expense was $533 million, an increase of $100 million, or 23.1%, compared to the same period in 2025, primarily reflecting higher income before income taxes and discrete tax benefits recorded in the prior-year period.
The Company’s effective tax rates were 25.7% and 19.3% for the third quarters of 2026 and 2025, respectively. The Company’s effective tax rates were 24.1% and 21.1% for the year-to-date periods of 2026 and 2025, respectively. In both year-over-year comparisons, the higher effective tax rates primarily reflected discrete tax adjustments recorded in the respective prior-year periods.
Net income
Net income was $598 million in the third quarter of 2026, a decrease of $40 million, or 6.3%, compared with the third quarter of 2025. Net income for the year-to-date period of 2026 was $1,678 million, an increase of $61 million, or 3.8%, compared with the same period in 2025. These changes were due to the various elements described in the sections above.
Segment results
United States
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales | $8,621 | $7,821 | $24,110 | $22,672 | |||||||||||||||||||
Adjusted operating profit | 952 | 875 | 2,533 | 2,385 | |||||||||||||||||||
Net sales for the United States segment were $8.6 billion in the third quarter of 2026, an increase of $0.8 billion, or 10.2%, compared with the third quarter of 2025. The increase in net sales was primarily driven by low- to mid-single-digit price inflation, higher volume and incremental sales from acquisitions of 2.8%. Net sales in non-residential markets, representing approximately half of revenue in the United States, increased approximately 15% compared with the third quarter of 2025. This increase was driven by commercial/mechanical, industrial and waterworks, including large capital project activity. Net sales in residential markets increased approximately 6% compared with the third quarter of 2025, primarily due to growth in HVAC and, to a lesser extent, residential trade plumbing and Ferguson Home.
Net sales were $24.1 billion in the year-to-date period of 2026, an increase of $1.4 billion, or 6.3%, compared with the same period in 2025. The increase in net sales was primarily driven by low- to mid-single-digit price inflation and incremental sales from acquisitions of 1.5%. Net sales in non-residential markets increased approximately 11% compared with the year-to-date period of 2025. This increase was driven by commercial/mechanical, industrial and waterworks, including large capital project activity. Net sales in residential markets increased 2% compared with the year-to-date period of 2025 due to growth in HVAC.
Adjusted operating profit for the United States segment was $952 million in the third quarter of 2026, an increase of $77 million, or 8.8%, compared with the third quarter of 2025, primarily reflecting higher sales and the associated gross profit, partially offset by higher variable operating costs.
Adjusted operating profit for the United States segment was $2,533 million in the year-to-date period of 2026, an increase of $148 million, or 6.2%, compared to the same period in 2025. The factors impacting the year-to-date comparison were largely the same as those noted above for the quarter.
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Canada
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales | $405 | $424 | $1,139 | $1,149 | |||||||||||||||||||
Adjusted operating profit | 23 | 22 | 50 | 51 | |||||||||||||||||||
Net sales for the Canada segment were $405 million in the third quarter of 2026, a decrease of $19 million, or 4.5%, compared with the third quarter of 2025. This decrease in net sales was primarily driven by the impact of non-core business divestments of 3.2%, the impact of foreign currency exchange rates of 1.9%, along with lower sales volume, partially offset by low-single-digit price inflation.
Net sales were $1,139 million in the year-to-date period of 2026, a decrease of $10 million, or 0.9%, compared with the same period in 2025. The decrease was primarily driven by the impact of non-core business divestments of 3.7%, along with lower sales volume. These decreases were partially offset by low- to mid-single-digit price inflation, incremental sales from acquisitions of 1.6% and the impact of foreign currency exchange rates of 0.6%.
Adjusted operating profit for the Canada segment increased by $1 million in the third quarter of 2026, compared with the third quarter of 2025 due to lower operating costs, partially offset by lower gross margins.
Adjusted operating profit for the Canada segment decreased by $1 million in the year-to-date period of 2026, compared with the same period of 2025 due to lower gross margins, partially offset by lower operating costs.
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Non-GAAP Reconciliations and Supplementary Information
The Company reports its financial results in accordance with U.S. GAAP. However, the Company believes certain non-GAAP financial measures provide users of the Company’s financial information with additional meaningful information to assist in understanding financial results and assessing the Company’s performance from period to period. These non-GAAP financial measures include adjusted operating profit, adjusted net income and adjusted earnings per share (“adjusted EPS”) - diluted. Management believes these measures are important indicators of operations because they exclude items that may not be indicative of our core operating results and provide a better baseline for analyzing trends in our underlying businesses, and they are consistent with how business performance is planned, reported and assessed internally by management and the Company’s Board of Directors (the “Board”). Such non-GAAP adjustments include amortization of acquired intangible assets, discrete tax items, certain significant acquisition-related transaction and integration costs associated with acquisitions that are outside the Company’s typical acquisition profile and any other items that are non-recurring. Non-recurring items may include various restructuring charges, gains or losses on the disposals of businesses which by their nature do not reflect primary operations, as well as certain other items deemed non-recurring in nature and/or that are not a result of the Company’s primary operations. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These non-GAAP financial measures should not be considered in isolation or as a substitute for results reported under U.S. GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of operations that, when viewed with U.S. GAAP results, provide a more complete understanding of the business. The Company strongly encourages investors and shareholders to review the Company’s financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.
Reconciliation of net income to adjusted operating profit
The following table reconciles net income (U.S. GAAP) to adjusted operating profit (non-GAAP):
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income | $598 | $638 | $1,678 | $1,617 | |||||||||||||||||||
| Provision for income taxes | 207 | 153 | 533 | 433 | |||||||||||||||||||
| Interest expense, net | 64 | 47 | 161 | 142 | |||||||||||||||||||
| Other expense, net | 16 | 6 | 18 | 1 | |||||||||||||||||||
| Operating profit | 885 | 844 | 2,390 | 2,193 | |||||||||||||||||||
Corporate restructuring expenses(1) | 2 | 2 | 6 | 6 | |||||||||||||||||||
Business restructuring expenses(2) | — | 1 | — | 73 | |||||||||||||||||||
Acquisition and integration costs(3) | 25 | — | 25 | — | |||||||||||||||||||
| Amortization of acquired intangibles | 50 | 36 | 120 | 114 | |||||||||||||||||||
| Adjusted operating profit | $962 | $883 | $2,541 | $2,386 | |||||||||||||||||||
(1)For the three and nine months ended September 30, 2026 and 2025, corporate restructuring expenses primarily related to incremental costs in connection with transition activities following the establishment of our parent company’s domicile in the United States.
(2)For the three and nine months ended September 30, 2025, business restructuring expenses primarily related to the Company’s implementation of targeted actions to streamline operations, enhancing speed and efficiency to better serve customers and drive further profitable growth.
(3)For the three and nine months ended September 30, 2026, acquisition and integration costs related to the Company’s incremental costs in connection with the FloWorks Acquisition.
26
Reconciliation of net income to adjusted net income and adjusted EPS - diluted
The following table reconciles net income (U.S. GAAP) to adjusted net income and adjusted EPS - diluted (non-GAAP):
| Three months ended | |||||||||||||||||||||||
| September 30, | |||||||||||||||||||||||
| (In millions, except per share amounts) | 2026 | 2025 | |||||||||||||||||||||
per share(1) | per share(1) | ||||||||||||||||||||||
| Net income | $598 | $3.08 | $638 | $3.24 | |||||||||||||||||||
Corporate restructuring expenses(2) | 2 | 0.01 | 2 | 0.01 | |||||||||||||||||||
Business restructuring expenses(3) | — | — | 1 | 0.01 | |||||||||||||||||||
Acquisition and integration costs(4) | 25 | 0.13 | — | — | |||||||||||||||||||
| Amortization of acquired intangibles | 50 | 0.26 | 36 | 0.18 | |||||||||||||||||||
Loss on disposal of non-operating entity(5) | 9 | 0.05 | — | — | |||||||||||||||||||
Discrete tax adjustments(6) | (4) | (0.02) | (42) | (0.21) | |||||||||||||||||||
Tax impact on non-GAAP adjustments(7) | (16) | (0.08) | (9) | (0.05) | |||||||||||||||||||
| Adjusted net income | $664 | $3.43 | $626 | $3.18 | |||||||||||||||||||
| Diluted weighted average shares outstanding | 193.9 | 196.9 | |||||||||||||||||||||
| Nine months ended | |||||||||||||||||||||||
| September 30, | |||||||||||||||||||||||
| (In millions, except per share amounts) | 2026 | 2025 | |||||||||||||||||||||
per share(1) | per share(1) | ||||||||||||||||||||||
| Net income | $1,678 | $8.63 | $1,617 | $8.17 | |||||||||||||||||||
Corporate restructuring expenses(2) | 6 | 0.03 | 6 | 0.03 | |||||||||||||||||||
Business restructuring expenses(3) | — | — | 73 | 0.37 | |||||||||||||||||||
Acquisition and integration costs(4) | 25 | 0.13 | — | — | |||||||||||||||||||
| Amortization of acquired intangibles | 120 | 0.62 | 114 | 0.58 | |||||||||||||||||||
Loss on disposal of non-operating entity(5) | 9 | 0.05 | — | — | |||||||||||||||||||
Discrete tax adjustments(6) | (38) | (0.20) | (85) | (0.43) | |||||||||||||||||||
Tax impact on non-GAAP adjustments(7) | (34) | (0.17) | (48) | (0.24) | |||||||||||||||||||
| Adjusted net income | $1,766 | $9.09 | $1,677 | $8.48 | |||||||||||||||||||
| Diluted weighted average shares outstanding | 194.4 | 197.9 | |||||||||||||||||||||
(1)Per share on a dilutive basis.
(2)For the three and nine months ended September 30, 2026 and 2025, corporate restructuring expenses primarily related to incremental costs in connection with transition activities following the establishment of our parent company’s domicile in the United States.
(3)For the three and nine months ended September 30, 2025, business restructuring expenses primarily related to the Company’s implementation of targeted actions to streamline operations, enhancing speed and efficiency to better serve customers and drive further profitable growth.
(4)For the three and nine months ended September 30, 2026, acquisition and integration costs related to the Company’s incremental costs in connection with the FloWorks Acquisition.
(5)For the three and nine months ended September 30, 2026, the Company disposed of a non-operating entity at a loss. This loss is included in other expense, net in the Company’s consolidated statement of earnings.
(6)For the three and nine months ended September 30, 2026 and 2025, discrete tax adjustments primarily related to the release of uncertain tax positions due to lapses in statutes of limitations, the tax treatment of certain compensation items that were not individually significant, and, for the year-to-date periods, adjustments related to prior-year tax positions.
(7)For the three and nine months ended September 30, 2026, the tax impact on non-GAAP adjustments primarily related to the amortization of acquired intangibles, and, to a lesser extent, certain costs related to the FloWorks Acquisition. For the three and nine months ended September 30, 2025, the tax impact on non-GAAP adjustments primarily related to the amortization of acquired intangibles, along with the tax impact of certain restructuring expenses.
27
Liquidity and Capital Resources
The Company believes its current cash position coupled with cash flow anticipated to be generated from operations and access to capital should be sufficient to meet its operating cash requirements for the next 12 months and will also enable the Company to invest and fund capital expenditures, acquisitions, dividend payments, share repurchases, required debt payments and other contractual obligations through the next several years. The Company also anticipates that it has the ability to obtain alternative sources of financing, if necessary.
The Company’s material cash requirements include contractual and other obligations arising in the normal course of business. These obligations primarily include debt service and related interest payments, operating lease obligations and other purchase obligations. The nature and composition of such existing cash requirements have not materially changed from those disclosed in the Transition Report other than items updated in this Quarterly Report.
Cash flows
As of September 30, 2026 and December 31, 2025, the Company had cash and cash equivalents of $476 million and $557 million, respectively. In addition to cash, the Company had $2.45 billion of available liquidity from undrawn debt facilities as of September 30, 2026.
As of September 30, 2026, the Company’s total debt was $6.2 billion. The Company anticipates that it will be able to meet its debt obligations as they become due.
Cash flows from operating activities
| Nine months ended | |||||||||||
| September 30, | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Net cash provided by operating activities | $1,472 | $1,884 | |||||||||
Net cash provided by operating activities was $1,472 million and $1,884 million for the year-to-date periods of 2026 and 2025, respectively. The $412 million decrease was mainly due to an increased investment in working capital, higher cash tax payments and the timing of incentive compensation payouts due to the transition to a calendar year-end, partially offset by higher net income (adjusted for non-cash items). The increase in working capital was primarily driven by an increase in receivables due to the timing of collections year-over-year and the timing of vendor payments compared with the prior year.
Cash flows from investing activities
| Nine months ended | |||||||||||
| September 30, | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Net cash used in investing activities | ($2,597) | ($468) | |||||||||
Capital expenditures totaled $342 million and $247 million for the year-to-date periods of 2026 and 2025, respectively. These investments were primarily for strategic projects to support future growth, such as new market distribution centers, our branch network and new technology. In addition, the Company invested $2,257 million and $276 million in new acquisitions for the nine months ended September 30, 2026 and 2025, respectively, including $1.6 billion in 2026 related to the FloWorks Acquisition.
Cash flows from financing activities
| Nine months ended | |||||||||||
| September 30, | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Net cash provided by (used in) financing activities | $1,068 | ($1,344) | |||||||||
Dividends paid to shareholders were $519 million and $493 million for the year-to-date periods of 2026 and 2025, respectively.
Share repurchases under the Company’s authorized share repurchase programs were $438 million and $611 million for the year-to-date periods of 2026 and 2025, respectively. The Company has temporarily paused its share repurchase program in connection with the FloWorks Acquisition. We expect to resume share repurchases once certain leverage targets are achieved, subject to market conditions, capital allocation priorities and other relevant factors.
28
Net proceeds from debt transactions were $2,044 million compared with net payments of $78 million for the year-to-date periods of 2026 and 2025, respectively. In the year-to-date period of 2026, the Company received $1,194 million in net proceeds from the issuance of the August 2026 Senior Notes (as defined below) and net borrowings of $850 million under the Term Loan Facility (as defined below). In the year-to-date period of 2025, the Company had net repayments of $78 million, including debt repayments of $400 million in connection with the maturity of certain Private Placement Notes and net repayments of $425 million under the Company’s Receivables Facility (each, as defined below), partially offset by $747 million in proceeds from the issuance of certain unsecured senior notes.
Debt facilities
The following section summarizes certain material provisions of our long-term debt facilities and current obligations. The following description is only a summary, does not purport to be complete and is qualified in its entirety by reference to the documents governing such indebtedness.
| As of | |||||||||||
| (In millions) | September 30, 2026 | December 31, 2025 | |||||||||
| Short-term debt | $599 | $148 | |||||||||
| Long-term debt | 5,571 | 3,978 | |||||||||
| Total debt | $6,170 | $4,126 | |||||||||
Private Placement Notes
In June 2015 and November 2017, Wolseley Capital, Inc., a wholly-owned subsidiary of the Company, privately placed fixed rate notes (the “Private Placement Notes”). As of September 30, 2026, $300 million in Private Placement Notes remain outstanding.
In November 2026, $150 million of private placement notes will mature. The remaining $150 million of private placement notes will mature in September 2027.
Unsecured Senior Notes
The Company has issued $5.05 billion in various issuances of unsecured senior notes, including the August 2026 issuance of $700 million aggregate principal amount of unsecured senior notes due August 2029 and $500 million aggregate principal amount of unsecured senior notes due August 2036 (together, the “August 2026 Senior Notes”).
In April 2027, $300 million of unsecured senior notes will mature.
Receivables Securitization Facility
The Company maintains a Receivables Securitization Facility with an aggregate total available amount of $900 million (the “Receivables Facility”). The Company has the ability to increase the aggregate total available amount under the Receivables Facility up to a total of $1.5 billion from time to time, subject to lender participation. As of September 30, 2026, no borrowings were outstanding under the Receivables Facility.
In November 2026, the Company and certain of its subsidiaries entered into an amendment and restatement of the agreements governing the Receivables Facility. Among other things, the amendments extended the scheduled termination date of the Receivables Facility until November 2029. For additional information, see Part II, Item 5, "Other Information.”
Revolving Credit Facility
The Company, pursuant to a revolving credit agreement (the “Revolving Credit Agreement”), maintains a revolving credit facility that has aggregate total available credit commitments of $1.5 billion (the “Revolving Facility”). The Revolving Credit Agreement provides the Company with the ability to increase from time to time the aggregate capacity of the facility by $500 million under certain conditions, including the receipt of additional or increased lender commitments. As of September 30, 2026, no borrowings were outstanding under the Revolving Facility.
29
Term Loan and Bridge Credit Facilities
In August 2026, the Company entered into an unsecured $900 million term loan facility (the “Term Loan Facility”) and an unsecured $700 million bridge facility (the “Bridge Facility”) to finance a portion of the purchase price, fees and expenses associated with the FloWorks Acquisition. The FloWorks Acquisition was funded through net proceeds from the August 2026 Senior Notes, a borrowing under the Term Loan Facility and available cash on hand, and the Bridge Facility was never drawn. The commitments under the Bridge Facility were terminated in full on August 14, 2026. The Term Loan Facility matures on August 31, 2029. As of September 30, 2026, $850 million of the borrowing was outstanding under the Term Loan Facility.
Other
The Company was in compliance with all debt covenants that were in effect as of September 30, 2026.
See Note 5, Debt to the Condensed Consolidated Financial Statements and the notes to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of the Transition Report for further details.
There have been no significant changes to the Company’s policies on accounting for, valuing or managing the risk of financial instruments during the three months ended September 30, 2026.
Guarantor Disclosures
Ferguson Enterprises Inc. (the “Issuer”) is the issuer of the 4.350% Senior Notes due 2031, 5.000% Senior Notes due 2034, 4.800% Senior Notes due 2029 and 5.600% Senior Notes due 2036. The obligations under these series of senior notes are unsecured and are fully and unconditionally guaranteed on an unsecured basis by Ferguson UK Holdings Limited (the “Guarantor” and together with the Issuer, the “Obligor Group”).
The Issuer is a holding company that primarily repurchases shares and pays dividends, issues and services third-party debt obligations, and engages in certain corporate and headquarters activities, as well as holds an investment in its direct subsidiary, that primarily holds investments in and borrows from the Guarantor. The Guarantor is a holding company that primarily issues and services third-party debt obligations and holds investments in, borrows from and lends to non-guarantor subsidiary operating companies. These activities are generally funded by non-guarantor subsidiaries. The Guarantor is a private limited company incorporated under the laws of England and Wales and an indirect subsidiary of the Issuer.
30
Summarized Financial Information of Obligor Group
The following tables present the summarized financial information specified in Rule 1-02(bb)(1) of Regulation S-X for the Obligor Group on a combined basis, after elimination of intercompany transactions and balances between the Obligor Group, and excluding the investments in and equity in the earnings of any non-guarantor subsidiaries. The summarized financial information has been prepared in accordance with Rule 13-01 of Regulation S-X. The summarized financial information should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included herein and the audited consolidated financial statements and notes thereto included in the Transition Report.
| As of | |||||||||||||||||||||||
| (In millions) | September 30, 2026 | December 31, 2025 | |||||||||||||||||||||
| Current assets | $71 | $46 | |||||||||||||||||||||
| Non-current assets | 2 | 2 | |||||||||||||||||||||
| Current liabilities | 207 | 214 | |||||||||||||||||||||
| Non-current liabilities | 3,543 | 1,500 | |||||||||||||||||||||
| Due (to)/from non-guarantor subsidiaries, net | 887 | 370 | |||||||||||||||||||||
| Nine months ended | |||||||||||||||||
| September 30, | |||||||||||||||||
| (In millions) | 2026 | ||||||||||||||||
| Net sales | $— | ||||||||||||||||
| Gross profit | — | ||||||||||||||||
| Operating loss | (36) | ||||||||||||||||
| Net loss | (119) | ||||||||||||||||
| Other interest income, net from non-guarantor subsidiaries | 41 | ||||||||||||||||
Other loss, net from non-guarantor subsidiaries(1) | (14) | ||||||||||||||||
(1)Includes income from intercompany transaction with non-guarantor subsidiaries, primarily from non-cash dividend transactions.
Critical accounting policies and estimates
There have been no material changes to our critical accounting policies as disclosed in the Transition Report.
31
Item 3.Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to the quantitative and qualitative disclosures about market risk disclosed in the Transition Report.
Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has carried out an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, 2026. The term “disclosure controls and procedures” means controls and other procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding our required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well conceived and operated, can only provide reasonable assurance that the objectives of the disclosure controls and procedures are met.
Based on their evaluation as of the end of the period covered by this Quarterly Report, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
32
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to such lawsuits, claims and proceedings, the Company records reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not expect any of its pending legal proceedings to have a material adverse effect on its results of operations, financial position or cash flows. The Company maintains liability insurance for certain risks that are subject to certain self-insurance limits.
Item 1A.Risk Factors
As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Transition Report. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 5.Other Information
Insider Trading Arrangements
Amended and Restated Bylaws
On November 4, 2026, the Board approved and adopted the Company’s Amended and Restated Bylaws (the “Amended Bylaws”), effective immediately. Among other things, the Amended Bylaws:
•Revise the advance notice provisions for stockholder nominations and proposals to clarify that:
◦supporting a nomination or proposal means providing financial support;
◦“Public Disclosure,” means disclosure made by the Company; and
◦stockholders may authorize a representative to present a nomination or proposal by electronic transmission.
•Require any stockholder soliciting proxies from other stockholders to use a proxy card color other than white, which is reserved for the exclusive use of the Board.
•Clarify that an officer to whom the Board has delegated such authority may fill officer vacancies.
•Revise the indemnification and advancement provisions to clarify:
◦that mandatory advancement of expenses applies only in connection with the defense of a proceeding;
◦that an indemnitee may deliver the undertaking required to receive advancement either in a separate writing or by signing an indemnification agreement that includes the undertaking;
◦that officers appointed by another officer under authority delegated by the Board are officers for purposes of the indemnification bylaw; and
◦that indemnification and advancement are not available in a proceeding initiated by an indemnitee unless the commencement of the proceeding was authorized by the Board in advance.
The Amended Bylaws also include certain technical, clarifying and conforming changes, including, without limitation, updates to defined terms, deletion of unnecessary language and the removal of an obsolete transition provision.
The foregoing description is a summary and is qualified in its entirety by reference to the full text of the Amended Bylaws, filed as Exhibit 3.2 to this Quarterly Report.
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Amendment and Restatement of Agreements Governing Receivables Facility
On November 6, 2026, the Company and certain of its subsidiaries entered into (i) an Amended and Restated Receivables Purchase Agreement (the “A&R Receivables Purchase Agreement”), among the Company, Ferguson Receivables, LLC (“FRL”) and certain other subsidiaries, the conduit purchasers, committed purchasers, letter of credit banks and facility agents party thereto, and Royal Bank of Canada, as administrative agent, and (ii) an Amended and Restated Purchase and Contribution Agreement (the “A&R Purchase and Contribution Agreement” and, together with the A&R Receivables Purchase Agreement, the “Amended Agreements”), among Ferguson Enterprises, LLC, FRL and certain other subsidiaries of the Company.
Among other things, the Amended Agreements: (i) extend the scheduled termination date of the Receivables Facility from October 29, 2027 to November 6, 2029; (ii) modify certain termination event provisions, including by increasing the cross-default and judgment thresholds that apply to the Company and its subsidiaries (other than FRL); and (iii) make certain other technical updates.
The foregoing description is a summary and is qualified in its entirety by reference to the full text of the A&R Receivables Purchase Agreement and A&R Purchase and Contribution Agreement, filed as Exhibits 10.2 and 10.3, respectively, to this Quarterly Report.
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Item 6.Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
| (a) | Exhibits | ||||
| Exhibit | Description | ||||||||||
| 3.1 | |||||||||||
| 3.2* | |||||||||||
| 10.1 | Term Loan Credit Agreement, dated August 11, 2026, by and among Ferguson Enterprises Inc., as borrower, Ferguson UK Holdings Limited, as guarantor, the other guarantors from time to time party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K (File No. 001-42200) filed by Ferguson Enterprises Inc. with the SEC on August 11, 2026). | ||||||||||
10.2*† | |||||||||||
| 10.3* | |||||||||||
| 22.1 | |||||||||||
| 31.1* | |||||||||||
| 31.2* | |||||||||||
| 32.1** | |||||||||||
| 32.2** | |||||||||||
| 101.INS* | Inline XBRL Instance Document—this instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document | ||||||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | ||||||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||||||||
* Filed herewith
** Furnished herewith
† Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Item 601(b)(10) of Regulation S-K.
The Registrant agrees to furnish to the SEC, upon request, copies of any instruments that define the rights of holders of long-term debt of the Registrant that are not filed as exhibits to this Quarterly Report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
November 9, 2026
Ferguson Enterprises Inc. | ||||||||
| /s/ William Brundage | ||||||||
| Name: | William Brundage | |||||||
| Title: | Chief Financial Officer | |||||||
| (Principal Financial Officer and Duly Authorized Officer) | ||||||||
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Exhibit 3.2
AMENDED AND RESTATED
BYLAWS
OF
FERGUSON ENTERPRISES INC.
A Delaware Corporation
A Delaware Corporation
(As amended and restated on November 4, 2026)
ARTICLE I
Offices
Section 1.1 Registered Office and Registered Agent. The registered office and registered agent of Ferguson Enterprises Inc. (the “Corporation”) is designated in the Amended and Restated Certificate of Incorporation of the Corporation (as amended, restated, modified and/or supplemented from time to time, the “Certificate of Incorporation”).
Section 1.2 Other Offices. The Corporation may have other offices, both inside and outside the State of Delaware, as the board of directors of the Corporation (the “Board”) may from time to time determine or as the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 2.1 Place of Meetings. All meetings of stockholders shall be held at such place, if any, either inside or outside the State of Delaware, or in whole or in part by means of remote communication as authorized under the General Corporation Law of the State of Delaware (“DGCL”), as shall be designated from time to time by resolution of the Board and stated in the notice of meeting. If no designation is so made, the place of meeting shall be the principal executive offices of the Corporation.
Section 2.2 Annual Meeting. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly come before the meeting in accordance with these bylaws (as amended, restated, modified and/or supplemented from time to time, the “Bylaws”) shall be held at such date, time and place, if any, as shall be determined by the Board and stated in the notice of the meeting. The Board may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.
Section 2.3 Special Meetings.
(a)Purpose. Special meetings of stockholders for any purpose or purposes shall be called only:
(i) by the Board Chair (as defined below) or the Chief Executive Officer (as defined below) of the Corporation;
(ii) by the Corporate Secretary (as defined below) of the Corporation, within 10 calendar days after receipt of a request in writing or by electronic transmission of a majority of the members of the Board then in office; or
(iii) by the Corporate Secretary of the Corporation, in accordance with Section 2.3(c) and Section 2.5 of these Bylaws, after receipt of one or more valid written demands to call a special meeting of stockholders in accordance with, and subject to, this Section 2.3 from stockholders of record who collectively Own (as defined below), in the aggregate, at least 10% of the voting power of the outstanding shares of the Corporation (the “Requisite Percentage”) then entitled to vote on the matter or matters to be brought before the proposed special
meeting (any meeting called pursuant to this clause (iii), a “Stockholder Requested Special Meeting”) (each such stockholder of record, a “Requesting Stockholder”).
(b)Notice. A request to the Corporate Secretary for a Stockholder Requested Special Meeting (a “Special Meeting Request”) shall be delivered to the Corporate Secretary at the Corporation’s principal executive offices and signed and dated by each of the Requesting Stockholders entitled to vote on the matter or matters proposed to be brought before the proposed special meeting that collectively Own the Requisite Percentage, or by one or more Qualified Representatives (as defined below) of such Requesting Stockholders, requesting the Stockholder Requested Special Meeting and shall set forth:
(i) a brief description of each matter of business desired to be brought before the Stockholder Requested Special Meeting;
(ii) the reasons for conducting such business at the Stockholder Requested Special Meeting;
(iii) the text of any proposal or business to be considered at the Stockholder Requested Special Meeting (including the text of any resolutions proposed to be considered and, in the event that such business includes a proposal to amend these Bylaws, the language of the proposed amendment);
(iv) the information required by Section 2.12(b) of these Bylaws (for stockholder nominations), Section 2.12(c) of these Bylaws (for all other stockholder proposals), as applicable, Section 2.12(d) and Section 2.12(f) of these Bylaws, which in each case, for the avoidance of doubt, shall be further updated and supplemented in compliance with Section 2.13(a) of these Bylaws;
(v) evidence reasonably satisfactory to the Corporation that the Requesting Stockholders collectively Own the Requisite Percentage as of the date on which the Special Meeting Request is delivered to the Corporate Secretary; and
(vi) as to each Requesting Stockholder, an affidavit by each such person (A) stating the number of shares of the Corporation then entitled to vote on the matter or matters to be brought before the Stockholder Requested Special Meeting that it Owns as of the date such Special Meeting Request was signed and (B) agreeing to (1) continue to Own at least such number of shares of the Corporation then entitled to vote on the matter or matters proposed to be brought before the Stockholder Requested Special Meeting through the date of the Stockholder Requested Special Meeting and (2) update and supplement such affidavit and the information provided pursuant to Sections 2.3(b)(iv) and 2.3(b)(v) of these Bylaws; provided that in the event of any decrease in the number of shares of the Corporation entitled to vote on the matter or matters proposed to be brought before the Stockholder Requested Special Meeting Owned by such person at any time before the Stockholder Requested Special Meeting, such person’s Special Meeting Request shall be deemed to have been revoked with respect to such shares of the Corporation comprising such reduction and shall not be counted towards the calculation of the Requisite Percentage.
(c)Time and Date. A Stockholder Requested Special Meeting shall be held at such date and time as may be fixed by the Board; provided, however, that the date of any such Stockholder Requested Special Meeting (the “Stockholder Requested Special Meeting Date”) shall be not more than 90 days after a valid Special Meeting Request is received by the Corporate Secretary (or, in the event of any litigation related to the validity of the Special Meeting Request, 90 days after the final, non-appealable resolution of such litigation). At any Stockholder Requested Special Meeting, the chair of the meeting, or in advance of any such meeting, the Board, shall determine whether all requirements set forth in this Section 2.3 have been satisfied and, if not, such Stockholder Requested Special Meeting shall not be held. Notwithstanding the foregoing, a Stockholder Requested Special Meeting shall not be held if:
(i) the Special Meeting Request does not comply with this Section 2.3;
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(ii) the Board has called or calls for an annual or special meeting of stockholders to be held within 90 days after the Corporate Secretary receives the Special Meeting Request and the Board determines in good faith that the business of such meeting includes (among any other matters properly brought before the meeting) the business specified in the Special Meeting Request;
(iii) the stated business to be brought before the Stockholder Requested Special Meeting is not a proper subject for stockholder action under applicable law;
(iv) an identical or substantially similar item (a “Similar Item”) was presented at any meeting of stockholders held within 90 days prior to the receipt by the Corporate Secretary of the Special Meeting Request (and, for purposes of this Section 2.3(c)(iv), the election of directors shall be deemed a Similar Item with respect to all items of business involving the election or removal of directors);
(v) the Special Meeting Request was made in a manner that involved a violation of Regulation 14A under the Securities Exchange Act of 1934, as amended (including the rules and regulations promulgated thereunder, the “Exchange Act”); or
(vi) the Special Meeting Request is delivered during the period commencing 90 days prior to the first anniversary of the date of the immediately preceding annual meeting of stockholders and ending on the date of the next annual meeting.
(d)Revocation. A Requesting Stockholder may revoke a Special Meeting Request at any time by written revocation delivered to the Corporate Secretary.
(e)Cancellation. The Board may cancel a Stockholder Requested Special Meeting if, at any time, the Requesting Stockholders own less than the Requisite Percentage, whether as a result of a revocation pursuant to Section 2.3(d) of these Bylaws, a deemed revocation pursuant to Section 2.3(b)(vi) of these Bylaws or otherwise.
(f)Definitions. For the purposes of this Section 2.3, a stockholder or beneficial owner shall be deemed to “Own” only those outstanding shares of the Corporation as to which such person possesses both (i) the full voting and investment rights pertaining to such shares and (ii) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (A) sold by such person or any of its Affiliates in any transaction that has not been settled or closed, (B) borrowed by such person or any of its Affiliates for any purposes, (C) purchased by such person or any of its Affiliates pursuant to an agreement to resell or (D) subject to any option, warrant, forward contract, swap, contract of sale or other derivative or similar agreement entered into by such person or any of its Affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of outstanding shares of the Corporation, in any such case which instrument or agreement has, or is intended to have, or if exercised would have the purpose or effect of (1) reducing in any manner, to any extent or at any time in the future, such person’s or Affiliates’ full right to vote or direct the voting of any such shares, and/or (2) hedging, offsetting or altering to any degree any gain or loss arising from the full economic ownership of such shares by such person or Affiliate. A stockholder or beneficial owner shall “Own” shares held in the name of a nominee or other intermediary so long as the person retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. A person shall be deemed to continue to Own shares during any period in which the person has loaned such shares provided that the person has the power to recall such loaned shares on five Business Days’ (or less) notice, and has delegated any voting power only by means of a proxy, power of attorney or other instrument or arrangement which is revocable at any time by the person. The determination of the extent to which a stockholder or beneficial owner “Owns” any shares of the Corporation for these purposes shall be made by the Board. The terms “Owned,” “Ownership” and other variations of the word “Own” shall have a corresponding meaning. As used in these Bylaws, the terms “Affiliate(s)” and “Associate(s)” shall have the meanings attributed to such terms in Rule 12b-2 under the Exchange Act.
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Section 2.4 Adjournments. Any meeting of the stockholders, annual or special, may be adjourned from time to time to reconvene at the same or some other place, if any, and, except as provided in this Section 2.4, notice need not be given of any such adjourned meeting if the time, place, if any, thereof and the means of remote communication, if any, are (i) announced at the meeting at which the adjournment is taken, (ii) displayed, during the time scheduled for the meeting, on the same electronic network used to enable stockholders and proxy holders to participate in the meeting by means of remote communication or (iii) set forth in the notice of meeting. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date is fixed for stockholders entitled to vote at the adjourned meeting, the Board shall fix a new record date for notice of the adjourned meeting and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at the adjourned meeting as of the record date fixed for notice of the adjourned meeting.
Section 2.5 Notice. Notice of the place (if any), date, hour, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting), and means of remote communication, if any, of every meeting of stockholders shall be given by the Corporation not less than 10 days nor more than 60 days before the meeting (unless a different time is specified by law, the Certificate of Incorporation or these Bylaws) to every stockholder entitled to vote at the meeting as of the record date for determining the stockholders entitled to notice of the meeting. Notices of special meetings shall also specify the purpose or purposes for which the meeting has been called. Except as otherwise provided herein or permitted by applicable law, notice to stockholders shall be in writing and delivered personally or mailed to the stockholders at their address appearing on the books of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, notice of meetings may be given to stockholders by means of electronic transmission in accordance with applicable law. Notice of any meeting need not be given to any stockholder who shall, either before or after the meeting, submit a waiver of notice or who shall attend such meeting, except when the stockholder attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any stockholder so waiving notice of the meeting shall be bound by the proceedings of the meeting in all respects as if due notice thereof had been given.
Section 2.6 Stockholders List. The Corporation shall prepare a complete list of the stockholders entitled to vote at any meeting of stockholders (provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares of the Corporation registered in the name of each stockholder not later than the tenth day before each meeting of the stockholders. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of 10 days ending on the day before the meeting date: (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list was provided with the notice of the meeting; or (b) during ordinary business hours, at the principal executive offices of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. Except as provided by applicable law, the stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger and the list of stockholders or to vote in person or by proxy at any meeting of stockholders.
Section 2.7 Quorum. Unless otherwise required by law, the Certificate of Incorporation or these Bylaws, at each meeting of stockholders, a majority in voting power of the outstanding shares of the Corporation entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum. The chair of the meeting shall have the power to recess, reschedule, postpone and/or adjourn meetings of stockholders for any (or no) reason from time to time and, if a quorum shall not be present or represented at any meeting of stockholders, the stockholders present in person or represented by proxy shall also have the power, by the affirmative vote of a majority in voting power of the outstanding shares of the Corporation present in person or represented by proxy and entitled to vote at the meeting, to adjourn the meeting from time to time, in the manner provided in Section 2.4 of these Bylaws, until a quorum shall be present or represented. A quorum, once established, shall not be broken by
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the subsequent withdrawal of enough votes to leave less than a quorum. At any such adjourned meeting reconvened at which there is a quorum, any business may be transacted that might have been transacted at the meeting originally called.
Section 2.8 Organization. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. At every meeting of stockholders, the Board Chair, or such other director or officer of the Corporation designated by the Board, shall act as chair of, and preside at, the meeting. The Corporate Secretary or, in the Corporate Secretary’s absence or inability to act, the person whom the chair of the meeting shall appoint secretary of the meeting, shall act as secretary of the meeting and keep the minutes thereof. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the chair of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations, and procedures and to do all such acts as, in the judgment of such chair, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the chair of the meeting, may include, without limitation, the following:
(a)the establishment of an agenda or order of business for the meeting;
(b)the determination of when the polls shall open and close for any given matter to be voted on at the meeting;
(c)rules and procedures for maintaining order at the meeting and the safety of those present;
(d)limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies, or such other persons as the chair of the meeting shall determine;
(e)restrictions on entry to the meeting after the time fixed for the commencement thereof;
(f)limitations on the time allotted to questions or comments by participants; and
(g)restrictions on the use of cell phones, audio or video recording devices and other devices at the meeting.
Section 2.9 Voting; Proxies.
(a)General. Unless otherwise required by law or provided in the Certificate of Incorporation, each stockholder shall be entitled to one vote, in person or by proxy, for each share of the Corporation held by such stockholder. Voting at meetings of stockholders need not be by written ballot.
(b)Election of Directors. Unless otherwise required by law, the Certificate of Incorporation or these Bylaws, each director nominee shall be elected by a majority of the votes cast with respect to such director nominee’s election at any meeting for the election of directors at which a quorum is present; provided that director nominees shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors in a Contested Election (as defined below). For purposes of these Bylaws, a “majority of the votes cast” means that the number of shares voted “for” a director nominee must exceed the number of shares voted “against” that director nominee, and “abstentions” and “broker non-votes” shall not be counted as votes cast with respect to that director nominee’s election, and a “Contested Election” means an election of directors at a meeting of stockholders at which a quorum is present where (x) the Corporate Secretary receives notice that one or more stockholders have proposed to nominate one or more persons for election or re-election to the Board, which notice purports to be in compliance with the advance notice requirements for stockholder nominations set forth in these Bylaws, irrespective of whether the Board at any time determines that any such notice is not in compliance with such requirements, and (y) such nomination or nominations have not been formally and irrevocably withdrawn by such stockholder or stockholders on or prior to the date that is 14 days in advance of the date the Corporation files its definitive proxy statement (regardless of whether or not thereafter revised or supplemented) with the Securities and Exchange Commission (the “SEC”).
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(c)Other Matters. Unless a different or minimum vote is required or provided for such matter by law, applicable stock exchange rule or other applicable rule, the Certificate of Incorporation or these Bylaws, in which case such different or minimum vote shall be the required vote for such matter, any matter, other than the election of directors, brought before any meeting of stockholders at which a quorum is present shall be decided by the affirmative vote of the majority in voting power of outstanding shares of the Corporation present in person or represented by proxy at the meeting and entitled to vote on the matter.
(d)Proxies. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Such authorization must be in writing and executed by the stockholder or his or her authorized officer, director, employee or agent. Notwithstanding the previous sentence, to the extent permitted by law, a stockholder may authorize another person or persons to act for him, her or it as proxy by transmitting or authorizing the transmission of an electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that the electronic transmission either sets forth or is submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder. A copy, facsimile transmission or other reliable reproduction of a writing or transmission authorized by this Section 2.9(d) may be substituted for or used in lieu of the original writing or electronic transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile transmission or other reproduction shall be a complete reproduction of the entire original writing or transmission. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy that is not irrevocable by attending the meeting and voting in person or by delivering to the Corporate Secretary a revocation of the proxy or a new proxy bearing a later date.
Section 2.10 Inspectors at Meetings of Stockholders. In advance of any meeting of stockholders, the Corporation shall appoint one or more inspectors, who may be employees of the Corporation, to act at the meeting or any adjournment thereof and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting, the chair of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors may appoint or retain other persons or entities to assist the inspector or inspectors in the performance of their duties. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders, the inspector or inspectors may consider such information as is permitted by applicable law. No person who is a candidate for office at an election may serve as an inspector at such election. When executing the duties of inspector, the inspector or inspectors shall:
(e)ascertain the number of shares outstanding and the voting power of each;
(f)determine the shares represented at the meeting and the validity of proxies and ballots;
(g)count all votes and ballots;
(h)determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and
(i)certify their determination of the number of shares represented at the meeting and their count of all votes and ballots.
Section 2.11 Fixing the Record Date.
(a)In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be
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more than 60 nor less than 10 days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the determination of stockholders entitled to notice of or to vote at the adjourned meeting.
(b)In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
Section 2.12 Advance Notice of Stockholder Nominations and Proposals.
(a)Annual Meetings of Stockholders. At an annual meeting of stockholders, only such nominations of persons for the election of directors and such other business shall be conducted as shall have been properly brought before the meeting. The number of nominees a Proposing Stockholder (as defined below) may nominate on its own behalf (or in the case of one or more Proposing Stockholders giving the notice on behalf of a beneficial owner, the number of nominees such Proposing Stockholders may collectively nominate for election on behalf of such beneficial owner) for election at the annual meeting shall not exceed the number of directors to be elected at such annual meeting. To be properly brought before an annual meeting, nominations or such other business must be:
(i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board or any duly authorized committee thereof;
(ii) otherwise properly brought before the meeting by or at the direction of the Board or any duly authorized committee thereof; or
(iii) otherwise properly brought before an annual meeting by a stockholder who is a stockholder of record of the Corporation at the time the notice provided for in this Section 2.12 is delivered to the Corporate Secretary, on the record date for the determination of stockholders entitled to notice of and to vote at such meeting and at the time of such meeting, who is entitled to vote at the meeting, and who complies with the procedures set forth in this Section 2.12 and Section 2.13(a) of these Bylaws.
In addition, any proposal of business (other than the nomination of persons for election to the Board) must be a proper matter for stockholder action. For business (including, but not limited to, director nominations) to be properly brought before an annual meeting by a stockholder pursuant to Section 2.12(a)(iii) of these Bylaws, a Proposing Stockholder must have given timely notice thereof pursuant to this Section 2.12 in writing to the Corporate Secretary. To be timely, a Proposing Stockholder’s notice for an annual meeting must comply with the requirements of this Section 2.12 (including the updating and supplementing requirements set forth under Section 2.13(a) of these Bylaws) and must be delivered to the principal executive offices of the Corporation: (A) if such meeting is to be held on a day which is not more than 30 days in advance of the anniversary of the previous year’s annual meeting or not later than 70 days after the anniversary of the previous year’s annual meeting, not later than the close of business on the 90th day, nor earlier than the 120th day prior to the first anniversary of the previous year’s annual meeting ; and (B) with respect to any other annual meeting of stockholders, including in the event that no annual meeting was held in the previous year, not earlier than the 120th day prior to the annual meeting and not later than the close of business on the later of: (1) the 90th day prior to the annual meeting and (2) the 10th day following the first date of Public Disclosure (as defined below) of the date of such meeting. In no event shall the Public Disclosure of any adjournment, recess, rescheduling or postponement of an annual meeting commence a new
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notice time period (or extend any notice time period). Notwithstanding anything in this paragraph to the contrary, in the event that the number of directors to be elected to the Board is increased and there is no Public Disclosure by the Corporation naming all of the nominees for director proposed by the Board or specifying the size of the increased Board at least 10 days prior to the last day a Proposing Stockholder may deliver a notice of nominations in accordance with the third sentence of this paragraph, a Proposing Stockholder’s notice required by this Section 2.12 shall also be considered timely, but only with respect to proposed nominees for any new positions created by such increase, if it shall be delivered to the Corporate Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which Public Disclosure of such increase is first made by the Corporation.
Solely for the purposes of Section 2.3, Section 2.12 and Section 2.13 of these Bylaws: (a) “Business Day” means any day other than Saturday or Sunday or a day on which commercial banks are authorized or required by law or executive order to be closed in New York, New York; (b) the “close of business” means 5:00 p.m. local time at the Corporation’s principal executive offices, and if an applicable deadline falls on the “close of business” on a day that is not a Business Day, then the applicable deadline shall be deemed to be the close of business on the immediately preceding Business Day; (c) “delivered” shall mean and require both (i) hand delivery, overnight courier service or by United States certified or registered mail, return receipt requested, in each case to the Corporate Secretary at the principal executive offices of the Corporation, and (ii) email or electronic transmission to the Corporate Secretary; (d) “Holder(s)” means a Proposing Stockholder and/or the beneficial owner, if any, on whose behalf any business (including, but not limited to, director nominations) is proposed to be brought at any meeting of the stockholders of the Corporation; (e) “Proposing Stockholder” means a stockholder or stockholders of record intending to propose any business (including, but not limited to, director nominations) at any meeting of the stockholders of the Corporation, including, but not limited to, any Requesting Stockholder; (f) “Public Disclosure” shall mean a disclosure made by the Corporation in a press release reported by the Dow Jones News Services, The Associated Press or a comparable national news service or in a document filed by the Corporation with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act; (g) “Qualified Representative” of a stockholder means a duly authorized officer, director, employee or agent of such stockholder or a person authorized by a writing or electronic transmission executed or given in compliance with Section 2.9(d) of these Bylaws and delivered to the Corporation prior to the presentation of such matters at the meeting; (h) “Short Interest” means any agreement, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, involving any Holder or any Stockholder Associated Person, on the one hand, and any person, on the other hand, directly or indirectly, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such Holder or any Stockholder Associated Person with respect to any class or series of the shares or other securities of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any class or series of the shares or other securities of the Corporation; and (i) “Stockholder Associated Person” of any Holder means (y) any Affiliate or Associate of such Holder, and (z) any member of the immediate family of such Holder sharing the same residence as such Holder.
(b)Stockholder Nominations. For the nomination of any person or persons for election to the Board pursuant to Section 2.12(a)(iii) or Section 2.12(e) of these Bylaws, to be in proper form, a Proposing Stockholder’s notice to the Corporate Secretary must set forth or include, as to each individual, if any, whom the Proposing Stockholder proposes to nominate for election or reelection to the Board:
(i) the name, age, business address and residential address of such proposed nominee;
(ii) a complete biography and statement of such person’s qualifications, including the principal occupation or employment of such proposed nominee (at present and for the past five years);
(iii) the Specified Information of such proposed nominee and any Affiliate or Associate of such proposed nominee;
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(iv) a complete and accurate description of all agreements, arrangements and understandings between each Holder and any Stockholder Associated Person, on the one hand, and such proposed nominee, on the other hand (at present and for the past three years), including, without limitation, a complete and accurate description of all direct and indirect compensation and other monetary agreements, arrangements and understandings between such proposed nominee and such parties (including all biographical, related party transaction and other information that would be required to be disclosed pursuant to the federal and state securities laws, including Item 404 promulgated under Regulation S-K under the Securities Act of 1933, as amended (or any successor provision), if any Holder or any Stockholder Associated Person were the “registrant” for purposes of such rule and such proposed nominee were a director or executive officer of such registrant);
(v) a complete and accurate, signed written questionnaire with respect to the background and qualification of such proposed nominee (which questionnaire shall be provided by the Corporate Secretary upon written request of any stockholder of record identified by name within five Business Days of such written request) and a written statement and agreement (in the form provided by the Corporate Secretary upon written request of any stockholder of record identified by name within five Business Days of such written request) executed by such proposed nominee acknowledging that such person:
(A)consents to being named in any proxy statement as a nominee and to serving as a director if elected,
(B)intends to serve as a director for the full term for which such person is standing for election,
(C)makes the following representations: (1) that such person, in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable rules of the exchanges upon which the securities of the Corporation are listed and all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation, and (2) that the proposed nominee is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, and (3) that the proposed nominee is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification (“Compensation Arrangement”) that has not been disclosed to the Corporation in connection with such person’s nomination for director or service as a director; and
(vi) all other information relating to such proposed nominee that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;
(vii) a statement whether such proposed nominee, if elected, intends to tender, promptly following such person’s election or re-election, an irrevocable resignation effective upon such person’s failure to receive the required vote for re-election at the next meeting at which such person would face re-election and upon acceptance of such resignation by the Board;
(viii) the first date of contact between any Holder and/or Stockholder Associated Person, on the one hand, and such proposed nominee, on the other hand, with respect to the Corporation (including the names of the individuals involved in such contact); and
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(ix) the amount and nature of any direct or indirect economic or financial interest, if any, of such proposed nominee, or of any immediate family member of such proposed nominee sharing the same residence as such proposed nominee, in any funds or vehicles managed by, under common management with, or affiliated with any Holder or Stockholder Associated Person.
(c)Other Stockholder Proposals. For all business other than director nominations, to be in proper form, a Proposing Stockholder’s notice to the Corporate Secretary must set forth as to each matter the Proposing Stockholder proposes to bring before the meeting:
(i) a brief description of the business desired to be brought before the meeting;
(ii) the reasons for conducting such business at the meeting;
(iii) the text of any proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend these Bylaws, the language of the proposed amendment);
(iv) any material interest of such Holder or Stockholder Associated Person in such business, including any anticipated benefit therefrom to such Holder or Stockholder Associated Person;
(v) a description of all agreements, arrangements and understandings between each Holder and any Stockholder Associated Person and any other person or persons (including their names) in connection with the proposal of such business by such stockholder; and
(vi) any other information relating to such stockholder and beneficial owner, if any, on whose behalf the proposal is being made, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the proposal and pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder.
(d)Information about Holders. In addition, for all business (including director nominations), to be in proper form, a Proposing Stockholder’s notice to the Corporate Secretary must set forth or include, as to each of the Holders:
(i) the name and address of the Proposing Stockholder as they appear on the Corporation’s books and of any other Holder and any Stockholder Associated Person;
(ii) a description of any agreement, arrangement or understanding (whether written or oral) with respect to the applicable nomination and/or proposal between or among the Proposing Stockholder or the beneficial owner, if any, on whose behalf the applicable nomination and/or proposal is being made and any of their Affiliates or Associates;
(iii) the class and number of shares of the Corporation which are directly or indirectly held of record or beneficially owned by each Holder and any Stockholder Associated Person (beneficially and of record); provided, that for purposes of this Section 2.12, any such person shall in all events be deemed to beneficially own any shares of the Corporation as to which such person has a right to acquire beneficial ownership at any time in the future (whether such right is exercisable immediately or only after the passage of time or the fulfillment of a condition or both);
(iv) a description of any short position, profits interest, option, warrant, convertible security, stock appreciation right or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class of shares of the Corporation or with a value derived in whole or in part from the value of any class of shares of the Corporation, or any derivative or synthetic arrangement having the characteristics of a long position in any class of shares of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class of shares of the Corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or
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volatility of any class of shares of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class of shares of the Corporation, through the delivery of cash or other property, or otherwise, and without regard to whether the Holder and any Stockholder Associated Person may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right, or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation (any of the foregoing, a “Derivative Instrument”) directly or indirectly owned or held, including beneficially, by each Holder and any Stockholder Associated Person, and any Short Interest held by each Holder or any Stockholder Associated Person within the last twelve (12) months in any class or series of the shares or other securities of the Corporation;
(v) a description of any proxy, contract, arrangement, understanding or relationship pursuant to which each Holder and any Stockholder Associated Person has any right to vote or has granted a right to vote any shares of stock or any other security of the Corporation;
(vi) any rights to dividends or payments in lieu of dividends on the shares of the Corporation owned beneficially by each Holder or any Stockholder Associated Person that are separated or separable from the underlying shares of stock or other security of the Corporation;
(vii) any proportionate interest in shares of stock or other securities of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership or limited liability company or other entity in which any Holder or any Stockholder Associated Person is a general partner or directly or indirectly beneficially owns an interest in a general partner, is the manager, managing member or directly or indirectly beneficially owns an interest in the manager or managing member of a limited liability company or other entity;
(viii) any direct or indirect legal, economic or financial interest (including Short Interest) of each Holder and each Stockholder Associated Person, if any, in the outcome of any vote to be taken at any meeting of stockholders of the Corporation with respect to any matter that is related, directly or indirectly, to any nomination or business proposed by any Holder under these Bylaws;
(ix) any material pending or threatened action, suit or proceeding (whether civil, criminal, investigative, administrative or otherwise) in which any Holder or any Stockholder Associated Person is, or is reasonably expected to be made, a party or material participant involving the Corporation (subclauses (iii)–(ix) of this Section 2.12(d) shall be referred to as the “Specified Information”);
(x) a certification that each Holder and any Stockholder Associated Person, has complied with all applicable federal, state and other legal requirements in connection with its acquisition of shares or other securities of the Corporation and such person’s acts or omissions as a stockholder of the Corporation;
(xi) a representation that the Proposing Stockholder is a holder of record of shares of the Corporation entitled to vote at the meeting, will continue to be a stockholder of record of the Corporation entitled to vote at such meeting through the date of such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons and/or propose the business specified in the notice;
(xii) a representation as to whether the Proposing Stockholder intends or is part of a group that intends to (x) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s shares required to elect such proposed nominees and/or approve or adopt any other business proposed to be brought and/or (y) otherwise to solicit proxies from stockholders in support of such nominations or other business proposed to be brought;
(xiii) the information and statement required by Rule 14a-19(b) of the Exchange Act (or any successor provision);
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(xiv) the names and addresses of other stockholders (including beneficial owners) known by any Holder or Stockholder Associated Person to provide financial support with respect to such proposals and/or nominations, and to the extent known the class or series and number of all shares of the Corporation owned beneficially or of record by each such other stockholder or other beneficial owner;
(xv) all information that would be required to be set forth in a Schedule 13D filed pursuant to Rule 13d-1(a) or an amendment pursuant to Rule 13d-2(a) if such a statement were required to be filed under the Exchange Act and the rules and regulations promulgated thereunder by each Holder and each Stockholder Associated Person, if any;
(xvi) any other information relating to any Holder or any Stockholder Associated Person that would be required to be disclosed in a proxy statement and form or proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the business proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;
(xvii) a representation by the Proposing Stockholder as to the accuracy of the information set forth in the notice; and
(xviii) a representation by the Proposing Stockholder confirming its intention to notify the Corporation of any defects in, and otherwise update and supplement, the information provided to the Corporation pursuant to this Section 2.12 as required by Section 2.13(a) of these Bylaws.
(e)Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Business transacted at any special meeting of stockholders shall be limited to the purpose(s) stated by the persons(s) calling the special meeting or, in the case of a Stockholder Requested Special Meeting, the purpose(s) stated in the Special Meeting Request(s); provided, however, that nothing herein shall prohibit the Board from submitting matters to the stockholders at any special meeting. In the event that a special meeting of stockholders is called for the purpose of electing one or more directors to the Board, nominations of persons for election to the Board may be made at such special meeting:
(i) by or at the direction of the Board or any committee thereof;
(ii) by the Requesting Stockholder who submitted a valid Special Meeting Request relating to such meeting in accordance and in compliance with Section 2.3 of these Bylaws, but, for the avoidance of doubt, solely to the extent specified; or
(iii) by any stockholder of the Corporation (other than any Requesting Stockholder who submitted a valid Special Meeting Request relating to such meeting in accordance and in compliance with Section 2.3 of these Bylaws that included the election of directors in such valid Special Meeting Request) who (x) is a stockholder of record (I) at the time the notice provided for in this Section 2.12(e) is delivered to the Corporate Secretary, (II) on the record date for the determination of stockholders entitled to notice of and to vote at such meeting and (III) at the time of such meeting, (y) is entitled to vote at the meeting and (z) delivers a proper and timely notice that complies with the requirements of this Section 2.12 and Section 2.13(a) of these Bylaws to the Corporate Secretary at its principal executive offices not earlier than on the 120th day prior to such special meeting and not later than the close of business on the later of: (I) the 90th day prior to such special meeting or (II) the 10th day following the date of the first Public Disclosure of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. In no event shall the Public Disclosure of an adjournment, recess, rescheduling or postponement of a special meeting commence a new time period (or extend any notice time period). For the avoidance of doubt, the number of nominees a Proposing Stockholder may nominate for election on its own behalf (or in the case of one or more Proposing Stockholders giving the notice on behalf of a beneficial owner, the number of nominees such Proposing Stockholders may collectively nominate for election on behalf of such beneficial owner) at the special meeting shall not exceed the number of directors to be elected at such special meeting.
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(f)Additional Information. The Corporation and the Board may, as a condition to any business (including, but not limited to, director nominations) being deemed properly brought before a meeting of stockholders, require any Holder or any proposed nominee to deliver to the Corporate Secretary within five Business Days of any such request (x) such other information as may be reasonably requested by the Board to determine (I) whether such proposed nominee is qualified under the Certificate of Incorporation, these Bylaws, the rules and regulations of any stock exchange applicable to the Corporation, or any law or regulation applicable to the Corporation to serve as a director of the Corporation and (II) whether such proposed nominee qualifies as an “independent director” or “audit committee financial expert,” or otherwise meets heightened standards of independence under applicable law, stock exchange rule or regulation or any publicly disclosed corporate governance guideline or committee charter of the Corporation or (y) such other information that the Board reasonably determines could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such proposed nominee.
(g)Any stockholder directly or indirectly soliciting proxies from other stockholders must use a proxy card color other than white, which shall be reserved for the exclusive use by the Board.
Section 2.13 Updates and Supplements; Effect of Noncompliance.
(a)Updates and Supplements. To be considered timely and in proper form, a Proposing Stockholder’s notice pursuant to Section 2.12 of these Bylaws and any Special Meeting Request (including the accompanying affidavit) shall be further updated and supplemented, if necessary, so that the information provided or required to be provided therein shall be true and correct as of the record date for the applicable meeting and as of the date that is 15 days prior to the applicable meeting or any adjournment, recess, rescheduling or postponement thereof, and such update and supplement shall be delivered to the Corporate Secretary at the principal executive offices of the Corporation not later than five days after the later of the record date for the applicable meeting and the date of the first Public Disclosure of such record date in the case of the update and supplement required to be made as of the record date, and not later than 10 days prior to the date for the applicable meeting or any adjournment, recess, rescheduling or postponement thereof in the case of the update and supplement required to be made as of 15 days prior to the applicable meeting or any adjournment, recess, rescheduling or postponement thereof. In addition, if the Proposing Stockholder has delivered to the Corporation a notice relating to director nominations or the Special Meeting Request relates to director nominations, the Proposing Stockholder or Requesting Stockholder, as applicable, shall deliver to the Corporation not later than 10 days prior to the date of the meeting or any adjournment, recess, rescheduling or postponement thereof, evidence reasonably satisfactory to the Corporation that it has complied with the requirements of Rule 14a-19 of the Exchange Act (or any successor provision). For the avoidance of doubt, the obligation to update and supplement set forth in this paragraph or any other Section of these Bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or under any other provision of these Bylaws or enable or be deemed to permit a stockholder who has previously submitted notice hereunder or under any other provision of these Bylaws to amend or update any proposal or to submit any new proposal, including by changing or adding nominees, matters, business and/or resolutions proposed to be brought before a meeting of stockholders.
(b)Effect of Noncompliance. Only such persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible to be elected at any meeting of stockholders of the Corporation to serve as directors and only such other business shall be conducted at a meeting as shall be brought before the meeting in accordance with the procedures set forth in these Bylaws. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, at any meeting of stockholders, the chair of the meeting, or in advance of any such meeting, the Board, shall have the power and duty to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in these Bylaws. If any proposed nomination was not made or proposed in compliance with these Bylaws, or other business was not made or proposed in compliance with these Bylaws, then except as otherwise required by law, the chair of the meeting, or in advance of any such meeting, the Board, shall have the power and duty to declare that such nomination or other business was not properly brought before the meeting and in accordance with the provisions of these Bylaws, and that such nomination shall be disregarded or that such proposed other business shall not be transacted. Notwithstanding anything in these Bylaws to the contrary, unless
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otherwise required by law, if a stockholder intending to propose business or make nominations at a meeting of stockholders pursuant to Section 2.3 and/or Section 2.12 of these Bylaws does not provide the information required under Section 2.12 or Section 2.13(a) to the Corporation or such stockholder (or a Qualified Representative of the such stockholder) does not appear at the meeting to present the proposed business or nominations, such business or nominations shall not be considered, notwithstanding that proxies in respect of nominations or other business may have been received by the Corporation. For the avoidance of doubt, if a stockholder provides notice pursuant to Rule 14a-19(b) under the Exchange Act and such stockholder subsequently either (x) notifies the Corporation that such stockholder no longer intends to solicit proxies in support of director nominees other than the Corporation’s nominees in accordance with Rule 14a-19 under the Exchange Act or (y) fails to comply with the requirements of Rule 14a-19 under the Exchange Act (or fails to timely provide evidence reasonably satisfactory to the Corporation that the stockholder has satisfied the requirements of Rule 14a-19 under the Exchange Act), then the nomination of such nominee for election or reelection to the Board will be disregarded and no vote on the election of such proposed nominee will occur (notwithstanding that proxies in respect of such vote may have been received by the Corporation).
(c)Rule 14a-8. Section 2.12 and Section 2.13 of these Bylaws shall not apply to a proposal proposed to be made by a stockholder if the stockholder has notified the Corporation of the stockholder’s intention to present the proposal in compliance with Rule 14a-8 under the Exchange Act and such proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such meeting.
ARTICLE III
Directors
Section 3.1 General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board. The Board may adopt such rules and procedures, not inconsistent with the Certificate of Incorporation, these Bylaws or applicable law, as it may deem proper for the conduct of its meetings and the management of the Corporation.
Section 3.2 Number of Directors. The number of the directors shall be determined from time to time by resolution adopted by the Board. No decrease in the number of directors constituting the Board shall shorten the term of any incumbent director. For the avoidance of doubt, a decrease in the number of directors effective upon the election of directors at an annual meeting shall not be deemed to shorten the term of any incumbent director who is not reelected at such annual meeting.
Section 3.3 Resignation. Any director may resign at any time by notice given in writing or by electronic transmission to the Corporation. Such resignation shall take effect at the date of receipt of such notice by the Corporation or at such later effective date or upon the happening of an event or events as is therein specified.
Section 3.4 Majority Voting Resignation Policy.
(a)In order for any incumbent director to become a nominee of the Board for further service on the Board, such person must submit an irrevocable resignation, which resignation shall become effective upon (A) that person not receiving a majority of the votes cast in an election that is not a Contested Election (an “Unsuccessful Incumbent”), and (B) acceptance by the Board of that resignation in accordance with the policies and procedures adopted by the Board for such purpose. For the avoidance of doubt, the irrevocable resignation required by this Section 3.4(a) would be deemed to have been submitted by a person who timely executes and delivers an appointment letter or similar agreement, in such form as determined by the Corporation from time to time, that provides for the resignation of such person in accordance with the provisions of this Section 3.4.
(b)The Board, acting on the recommendation of the Nominations & Governance Committee, shall no later than 90 days following certification of the stockholder vote, determine whether to accept the resignation of an Unsuccessful Incumbent. The Nominations & Governance Committee, in making its recommendation, and the Board, in acting on such recommendation, may consider any factors or other information that they determine to be appropriate and relevant.
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(c)Any director whose resignation is being considered pursuant to this Section 3.4 will not participate in the Nominations & Governance Committee recommendation or Board consideration regarding whether or not to accept such director’s resignation. If the resignation of a member of the Nominations & Governance Committee is under consideration with respect to the same election, then the independent directors who were elected at such election will consider the tendered resignations and will recommend to the Board whether to accept or reject them.
Section 3.5 Fees and Expenses. Directors shall receive such fees for their services on the Board and any committee thereof and such reimbursement of their expenses incurred in connection with the discharge of their duties as directors as may be fixed or determined by the Board.
Section 3.6 Regular Meetings. Regular meetings of the Board may be held without notice at such times and at such places as may be determined from time to time by the Board.
Section 3.7 Special Meetings. Special meetings of the Board may be held at such times and at such places as may be determined by the (i) Board Chair, (ii) Chief Executive Officer, (iii) lead independent director (if one exists) or (iv) Corporate Secretary on the request in writing or by electronic transmission of a majority of the directors then in office, or the sole director, as the case may be, in each case on at least 24 hours’ notice to each director given by one of the means specified in Section 3.10 of these Bylaws, other than by mail, or on at least two days’ notice if given by mail. The notice need not state the purposes of the special meeting and, unless indicated in the notice thereof, any and all business may be transacted at a special meeting.
Section 3.8 Remote Meetings. Board or Board committee meetings may be held by means of telephone conference or other communications equipment by means of which all persons participating in the meeting can hear each other and be heard. Participation by a director in a meeting pursuant to this Section 3.8 shall constitute presence in person at such meeting.
Section 3.9 Adjourned Meetings. A majority of the directors present at any meeting of the Board, including an adjourned meeting, whether or not a quorum is present, may adjourn and reconvene such meeting to another time and place. At least 24 hours’ notice of any adjourned meeting of the Board shall be given to each director whether or not present at the time of the adjournment, if such notice shall be given by one of the means specified in Section 3.10 of these Bylaws other than by mail, or at least two days’ notice if by mail. Any business may be transacted at an adjourned meeting that might have been transacted at the meeting as originally called.
Section 3.10 Notices. Subject to Section 3.7, Section 3.9 and Section 3.11 of these Bylaws, whenever notice is required to be given to any director by applicable law, the Certificate of Incorporation or these Bylaws, such notice shall be deemed given effectively if given in person or by telephone, by mail addressed to such director at such director’s address as it appears on the records of the Corporation, facsimile, e-mail or by other means of electronic transmission.
Section 3.11 Waiver of Notice. Whenever notice to directors is required by applicable law, the Certificate of Incorporation or these Bylaws, a waiver thereof, in writing or by electronic transmission, given by the director entitled to the notice, whether before or after such notice is required, shall be deemed equivalent to notice. Attendance by a director at a meeting shall constitute a waiver of notice of such meeting except when the director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting was not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special Board or Board committee meeting need be specified in any waiver of notice.
Section 3.12 Organization. At each regular or special meeting of the Board, the Board Chair or, in his or her absence, another director or officer selected by the Board, shall preside. The Corporate Secretary shall act as secretary at each meeting of the Board. If the Corporate Secretary is absent from any meeting of the Board, an assistant secretary of the Corporation shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Corporate Secretary and all assistant secretaries of the Corporation, the person presiding at the meeting may appoint any person to act as secretary of the meeting.
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Section 3.13 Quorum of Directors. Except as otherwise provided by these Bylaws, the Certificate of Incorporation or required by applicable law, the presence of a majority of the total number of directors on the Board shall be necessary and sufficient to constitute a quorum for the transaction of business at any meeting of the Board.
Section 3.14 Action by Majority Vote. Except as otherwise provided by these Bylaws, the Certificate of Incorporation, or required by applicable law, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board.
Section 3.15 Action by Written Consent. Unless otherwise restricted by the Certificate of Incorporation, these Bylaws or applicable law, any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if all directors or members of such Board committee, as the case may be, consent thereto in writing or by electronic transmission. After an action is taken, the consent or consents relating thereto shall be filed with the minutes of proceedings of the Board or committee in the same paper or electronic form as the minutes are maintained.
Section 3.16 Chair of the Board. The Board shall elect one of its members to be its chair (the “Board Chair”), which may be an executive chair or a non-executive chair, and shall fill any vacancy in the position of Board Chair at such time and in such manner as the Board shall determine. The Board may at any time remove the Board Chair from such office. Except as otherwise provided in these Bylaws, the Board Chair shall preside at all meetings of the Board and of stockholders. The Board Chair shall perform such other duties and services as shall be assigned to or required of the Board Chair by the Board.
Section 3.17 Committees of the Board. The Board may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. If a member of a committee shall be absent from any meeting, or disqualified from voting thereat, the remaining member or members present at the meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent permitted by applicable law, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers that may require it to the extent so authorized by the Board. Unless the Board provides otherwise, at all meetings of such committee, a majority of the members of the committee then serving shall constitute a quorum for the transaction of business, and the vote of a majority of the members of the committee present at any meeting at which there is a quorum shall be the act of the committee. Each committee shall keep regular minutes of its meetings. Unless the Board provides otherwise, each committee designated by the Board may make, alter and repeal rules and procedures for the conduct of its business. In the absence of such rules and procedures, each committee shall conduct its business in the same manner as the Board conducts its business pursuant to this Article III.
Section 3.18 Newly Created Directorships and Vacancies. Newly created directorships resulting from any increase in the authorized number of directors and vacancies on the Board resulting from death, resignation, disqualification, removal or other cause shall only be filled by the affirmative vote of a majority of the remaining directors then in office or by a sole remaining director, even though less than a quorum of the Board. Any director appointed in accordance with the preceding sentence of this Section 3.18 shall hold office until the first annual meeting of the stockholders held after such director’s appointment for the purpose of electing directors and, unless the number of directors is reduced effective at such annual meeting in accordance with the Certificate of Incorporation and Section 3.2 of these Bylaws, until such Director’s successor shall have been elected and qualified or until his or her earlier death, resignation, disqualification or removal.
Section 3.19 Removal. Directors of the Corporation may be removed in the manner provided in the Certificate of Incorporation and applicable law.
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ARTICLE IV
Officers
Section 4.1 Officers Position and Election. The officers of the Corporation shall be appointed by the Board and shall include a chief executive officer (the “Chief Executive Officer”), a president (the “President”), a chief financial officer (the “Chief Financial Officer”), a treasurer (the “Treasurer”), a chief legal officer (the “Chief Legal Officer”), a corporate secretary (the “Corporate Secretary”), as well as such other officers as the Board (or any other officer to whom such authority has been delegated by the Board) may from time to time determine including, but not limited to, one or more vice presidents, treasurers, assistant treasurers and assistant secretaries. To the extent authorized by the Board, the Chief Executive Officer, the Chief Financial Officer, the Chief Legal Officer and the Corporate Secretary may appoint such other officers as determined appropriate. Any two or more offices may be held by the same person.
Section 4.2 Term of Office; Removal; Resignation. Each officer of the Corporation shall hold office until such officer’s successor is elected and qualified or until such officer’s earlier death, resignation, or removal in the manner provided in these Bylaws and in any employment agreement that the Corporation enters into with such officer. Any officer may be removed, either with or without cause, by the Board or, except in the case of any officer elected by the Board, by any superior officer upon whom such power may be conferred by the Board. The removal of an officer shall be without prejudice to his or her contract rights, if any. The election or appointment of an officer shall not of itself create contract rights. Any officer of the Corporation may resign at any time by giving notice in writing or by electronic transmission of his or her resignation in accordance with the provisions of his or her employment agreement, if any. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Should any vacancy occur among the officers, the position shall be filled by an appointment made by the Board or by any superior officer upon whom such authority has been delegated by the Board.
Section 4.3 Powers and Duties. The powers and duties of the officers of the Corporation shall be as provided from time to time by resolution of the Board (or any other officer to whom such authority has been delegated by the Board). In the absence of such determination, the respective officers shall have the powers and shall discharge the duties customarily and usually held and performed by like officers of corporations similar in organization and business purposes to the Corporation, subject to the control of the Board.
Section 4.4 Duties of Officers May Be Delegated. In case any officer is absent, or for any other reason that the Board may deem sufficient, the Chief Executive Officer or the Board may delegate for the time being the powers or duties of such officer to any other officer or to any director.
ARTICLE V
Certificates of Stock and Their Transfer
Section 5.1 Certificates Representing Shares.
(a)The shares of the Corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. If shares are represented by certificates, such certificates shall be in the form, other than bearer form, approved by the Board. Any uncertificated shares may be evidenced by a book-entry system maintained by the registrar of such stock.
(b)Any certificates representing shares of stock shall be signed by, or in the name of, the Corporation by any two authorized officers of the Corporation, which shall include, without limitation, the Chief Executive Officer, the President, the Treasurer and the Corporate Secretary, as well as such other officers as the Board may from time to time determine including, but not limited to, one or more presidents, vice presidents, treasurers, assistant treasurers and assistant secretaries. Any or all such signatures may be facsimiles. In the event that any
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officer, transfer agent or registrar whose manual or facsimile signature is affixed to such a certificate ceases to be such officer, transfer agent or registrar before such certificate has been issued, the certificate may nevertheless be issued by the Corporation with the same effect as if such officer, transfer agent or registrar were still such at the date of its issue.
(c)If the Board chooses to issue shares of stock without certificates, the Corporation, if required by the DGCL, shall, within a reasonable time after the issuance or transfer of shares without certificates, send the stockholder of the Corporation a written statement of the information required by the DGCL. The Corporation may adopt a system of issuance, recordation and transfer of its shares of stock by electronic or other means not involving the issuance of certificates; provided, however, that the use of such system by the Corporation is permitted by applicable law.
Section 5.2 Transfer of Stock. Stock of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws. Transfers of stock shall be made on the books administered by or on behalf of the Corporation only by the direction of the registered holder thereof or such person’s attorney, lawfully constituted in writing, and, in the case of certificated shares, upon the surrender to the Corporation or its transfer agent or other designated agent of the certificate thereof, which shall be cancelled before a new certificate or uncertificated shares shall be issued; provided, however, that such surrender shall not be required in any case in which the officers of the Corporation shall determine to waive such requirement.
Section 5.3 Transfer Agents and Registrars. The Board may appoint, or authorize any officer or officers to appoint, one or more transfer agents and one or more registrars.
Section 5.4 Lost, Stolen or Destroyed Certificates. The Corporation may direct a new certificate or uncertificated shares to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the owner of the allegedly lost, stolen or destroyed certificate. A new certificate or uncertificated shares of stock may be issued in the place of any certificate previously issued by the Corporation that has become mutilated upon the surrender by such owner of such mutilated certificate. When authorizing such issue of a new certificate or uncertificated shares, the Corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of the lost, stolen or destroyed certificate, or the owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of such new certificate or uncertificated shares.
ARTICLE VI
General Provisions
Section 6.1 Seal. The Corporation may adopt a corporate seal, which shall be adopted (and may be revised from time to time) by the Board. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise, as may be prescribed by law or custom or by the Board.
Section 6.2 Fiscal Year. The fiscal year of the Corporation shall end on December 31 of each year or such other date as may be fixed from time to time by the Board.
Section 6.3 Execution of Documents. The Board shall designate the officers, employees and agents of the Corporation who shall have power to execute and deliver deeds, contracts, mortgages, bonds, debentures, notes, checks, drafts and other orders for the payment of money and other documents for and in the name of the Corporation and may authorize (including authority to redelegate) by written instrument to other officers, employees or agents of the Corporation. Such delegation may be by resolution or otherwise and the authority granted shall be general or confined to specific matters, all as the Board or any such committee may determine. In the absence of such designation referred to in the first sentence of this Section 6.3, the officers of the Corporation shall have such power so referred to, to the extent incident to the normal performance of their duties.
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Section 6.4 Books and Records. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be maintained on any information storage device, method or one or more electronic networks or databases (including one or more distributed electronic networks or databases) at such place or places, whether inside or outside of the State of Delaware; provided that the records so kept can be converted into clearly legible paper form within a reasonable time, and, with respect to the stock ledger, the records so kept comply with Section 224 of the DGCL. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records pursuant to applicable law.
Section 6.5 Emergency Bylaws. This Section 6.5 shall be operative during any emergency, disaster or catastrophe, as referred to in Section 110 of the DGCL or any other similar emergency condition (an “Emergency”), notwithstanding any different or conflicting provisions in these Bylaws, the Certificate of Incorporation or the DGCL. In the event of any Emergency, or other similar emergency condition, if a quorum cannot be readily convened for a meeting, the director or directors in attendance at a meeting of the Board or a standing committee thereof shall constitute a quorum. Such director or directors in attendance may further take action to appoint one or more of themselves or other directors of the Corporation to membership on any standing or temporary committees of the Board as they shall deem necessary and appropriate. Except as the Board may otherwise determine, during any Emergency, the Corporation and its directors and officers may exercise any authority and take any action or measure contemplated by Section 110 of the DGCL.
Section 6.6 Severability. If any provision of these Bylaws shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision in any other circumstance and of the remaining provisions of these Bylaws and the application of such provision to other persons or entities or circumstances shall not in any way be affected or impaired thereby.
ARTICLE VII
Indemnification, Advancement of Expenses and Insurance
Section 7.1 Right to Indemnification In Proceedings Other than Proceedings by or in the Right of the Corporation. Each person who was or is made a party or is threatened to be made a party to or participant in, or otherwise becomes involved in, any Proceeding (as defined below), other than a Proceeding by or in the right of the Corporation (as defined below), shall be indemnified by the Corporation to the Fullest Extent Permitted By Applicable Law (as defined below) against all Losses (as defined below) and Expenses (as defined below) actually and reasonably incurred by such person, or on such person’s behalf, in connection with such Proceeding or any claim, issue or matter therein, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal Proceeding, had no reasonable cause to believe such person’s conduct was unlawful.
Section 7.2 Right to Indemnification in Proceedings by or in the Right of the Corporation. Each person who was or is made a party or is threatened to be made a made a party to or participant in, or otherwise becomes involved in, any Proceeding brought by or in the right of the Corporation shall be indemnified by the Corporation to the Fullest Extent Permitted By Applicable Law against all Expenses actually and reasonably incurred by such person, or on such person’s behalf, in connection with such Proceeding or any claim, issue or matter therein, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Chancery Court of the State of Delaware or the court in which such Proceeding was brought shall determine that such person is fairly and reasonably entitled to such indemnification.
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Section 7.3 Indemnification of Expenses. To the extent that the Indemnitee (as defined below) is successful, on the merits or otherwise, in defense of any Proceeding, the Indemnitee shall be indemnified to the Fullest Extent Permitted By Applicable Law, against all Expenses actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf in connection therewith. If the Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Corporation shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section 7.3 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, on substantive or procedural grounds, shall be deemed to be a successful result as to such claim, issue or matter.
Section 7.4 Advancement of Expenses. The Corporation shall advance, to the Fullest Extent Permitted By Applicable Law, all Expenses incurred by or on behalf of the Indemnitee in defense of any Proceeding within thirty (30) days after the receipt by the Corporation of a statement or statements from the Indemnitee requesting such advance or advances from time to time. Such statement or statements shall reasonably evidence the Expenses incurred by the Indemnitee. The Indemnitee shall qualify for advances upon the execution and delivery to the Corporation of an undertaking (provided that if the Indemnitee is a party to an Indemnification Agreement (as defined below) containing an undertaking, the execution of such Indemnification Agreement shall constitute an undertaking) providing that the Indemnitee undertakes to repay the amounts advanced by the Corporation, if and only to the extent that it is ultimately determined that the Indemnitee is not entitled to be indemnified by the Corporation. Unless otherwise determined by the Board, no other form of undertaking shall be required other than the execution of an Indemnification Agreement. Any advances and undertakings to repay pursuant to the Indemnification Agreement shall be unsecured and interest free.
Section 7.5 Insurance. The Corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was or has agreed to become a director, officer (as defined below), employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer (as defined below), partner, trustee, member, manager, employee, agent or fiduciary of another Enterprise (as defined below), against any Expenses or Losses asserted against them and incurred by them in any such capacity, or arising out of their Corporate Status (as defined below), whether or not the Corporation would have the power to indemnify such person against such Expenses or Losses under the DGCL.
Section 7.6 Service for Subsidiaries. Any person serving as a director, officer, partner, trustee, member, manager, employee, agent or fiduciary of any Enterprise, at least 50% of whose equity interests are owned, directly or indirectly, by the Corporation shall be conclusively presumed to be serving in such capacity at the request of the Corporation.
Section 7.7 Reliance. Persons who after the date of the adoption of this provision become or remain directors or officers of the Corporation or who, while a director or officer of the Corporation, become or remain, at the request of the Corporation, a director, officer, partner, trustee, member, manager, employee, agent or fiduciary of any Enterprise, shall be conclusively presumed to have relied on the rights to indemnity, advancement of Expenses and other rights contained in this Article VII in entering into or continuing such service. To the fullest extent permitted by law, the rights to indemnification and to the advancement of Expenses conferred in this Article VII shall apply to claims made against an Indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof. Any amendment or repeal of this Article VII that adversely affects any right of an Indemnitee or its successors shall be prospective only and shall not eliminate, reduce or otherwise adversely affect any such right or protection with respect to any Proceeding involving any action or omission that occurred or allegedly occurred prior to such amendment or repeal.
Section 7.8 Contract Rights; Continuation of Rights of Indemnification; Rights Subject to Indemnification Agreement. All rights to indemnification and advancement of Expenses under this Article VII shall be deemed to be a contract between the Corporation and each director or officer of the Corporation who serves or served in such capacity at any time while this Article VII is in effect. The rights to indemnification and to the advancement of Expenses conferred in this Article VII shall not be exclusive of any other right which any person may have or hereafter acquire under the Certificate of Incorporation or under any statute, agreement, vote of
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stockholders or disinterested directors or otherwise; provided that, if the Indemnitee and the Corporation are parties to an Indemnification Agreement, for so long as such Indemnification Agreement is in effect, the rights and obligations of the Corporation and the Indemnitee with respect to indemnification and the advancement of Expenses under such Indemnification Agreement shall supersede and replace the rights to indemnification and advancement provided to such Indemnitee under these Bylaws, and such Indemnitee shall have no rights of indemnification and to the advancement of expenses except as provided in such Indemnification Agreement, which are incorporated into these Bylaws by reference and made a part hereof.
Section 7.9 Savings Clause. To the Fullest Extent Permitted By Applicable Law, if this Article VII or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and advance Expenses to each person entitled to indemnification under this Article VII as to all Expenses and Losses actually and reasonably incurred or suffered by such person and for which indemnification and advancement of Expenses is available to such person pursuant to this Article VII to the fullest extent permitted by any applicable portion of this Article VII that shall not have been invalidated. Any repeal or amendment of this Article VII or, to the Fullest Extent Permitted By Applicable Law, repeal or modification of relevant provisions of the DGCL or any other applicable laws shall not in any way eliminate, reduce or otherwise adversely affect any rights to indemnification and advancement of Expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to any Proceeding arising out of, or relating to, any actions or omissions that occurred or alleged to have occurred prior to the final adoption of such repeal, amendment or modification.
Section 7.10 Definitions. Solely for the purpose of this Article VII:
(a)“Corporate Status” means the status of a person who is or was a director or officer, of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, member, manager, employee, agent or fiduciary of any other Enterprise.
(b)“Enterprise” means the Corporation and any corporation, partnership, joint venture, trust, limited liability company, employee benefit plan or other enterprise that the Indemnitee is or was serving at the request of the Corporation as a director, officer, trustee, partner, member, manager, employee, agent or fiduciary.
(c)“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
(d)“Expenses” means all reasonable direct and indirect costs, fees and expenses of any type or nature whatsoever and shall specifically include, without limitation, all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees and costs of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in, or otherwise participating in, a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and any federal, state, local or foreign taxes imposed on a person as a result of the actual or deemed receipt of any payments under this Article VII, as well as all reasonable attorneys’ fees and all other expenses incurred by or on behalf of the Indemnitee in connection with preparing and submitting any requests or statements for indemnification, advancement, contribution or any other right provided by this Article VII. Expenses, however, shall not include amounts paid in settlement by the Indemnitee or the amount of judgments or fines against the Indemnitee.
(e)“Fullest Extent Permitted By Applicable Law” includes, but is not limited to: (i) to the fullest extent permitted by the applicable provision of the DGCL, or the corresponding provision of any amendment to or replacement of the DGCL, and (ii) to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted hereafter that increase the extent to which a corporation may indemnify its directors and officers.
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(f)“Indemnitee” means a person who may be entitled to be indemnified by the Corporation pursuant to Article VII of these Bylaws.
(g)“Indemnification Agreement” means any agreement between the Corporation and an Indemnitee providing Indemnitee with rights to indemnification and advancement of expenses incurred in defending any Proceeding brought against the Indemnitee by virtue of Indemnitee’s Corporate Status, whether now existing or hereafter entered into.
(h)“Losses” means all liabilities, judgments, fines, penalties, costs, losses, excise taxes or penalties under ERISA (as defined above), amounts paid in settlement (including all interest assessments and other charges paid or payable in connection with or in respect of such liabilities, losses, judgements, fines, excise taxes, penalties and costs) and other amounts that the Indemnitee reasonably incurs and that result from, arise in connection with or are by reason of the Indemnitee’s Corporate Status.
(i)any references to the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any Indemnitee shall stand in the same position under this Article VII with respect to the resulting or surviving corporation as they would have with respect to such constituent corporation if its separate existence had continued.
(j)any reference to an “officer” of the Corporation shall be deemed to refer exclusively to the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer, the Chief Legal Officer and the Corporate Secretary appointed pursuant to Article IV of these Bylaws, and to any other officer of the Corporation appointed by the Board or by any other officer to whom such authority has been delegated by the Board pursuant to Article IV of these Bylaws, including, without limitation, any “executive officer” or “Section 16 officer,” and any reference to an officer of any other Enterprise shall be deemed to refer exclusively to an officer appointed by the board of directors or equivalent governing body of such other entity pursuant to the certificate of incorporation and bylaws or equivalent organizational documents of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The fact that any person who is or was an employee of the Corporation or an employee of any other Enterprise, but not an officer thereof as described in the preceding sentence, has been given or has used the title of “Vice President” or any other title that could be construed to suggest or imply that such person is or may be such an officer of the Corporation or of such other Enterprise shall not result in such person being constituted as, or being deemed to be, such an officer of the Corporation or of such other Enterprise for purposes of this Article VII.
(k)“Proceeding” includes any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Corporation or otherwise and whether civil, criminal, administrative or investigative, in which the Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise, by reason of the Indemnitee’s Corporate Status or by reason of any action taken by the Indemnitee or of any inaction on the Indemnitee’s part while acting in the Indemnitee’s Corporate Status, in each case whether or not the Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under these Bylaws, but excluding one initiated by an Indemnitee unless the commencement thereof was authorized in the specific case by the Board or it is to enforce the Indemnitee’s rights under this Article VII.
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ARTICLE VIII
Amendments
Section 8.1 Amendments. In furtherance and not in limitation of the powers conferred by law, these Bylaws may be amended, altered or repealed, and new bylaws may be made by, (i) the Board or (ii) the stockholders by the affirmative vote of the holders of a majority of the voting power of the then outstanding shares of the Corporation entitled to vote thereon, voting together as a single class, which vote shall be in addition to any vote of the holders of any class or series of shares of the Corporation required in the Certificate of Incorporation; provided that any proposal by a stockholder to amend these Bylaws will be subject to the provisions of Article II of these Bylaws, except as otherwise required by law.
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Exhibit 10.2
Certain portions of this Exhibit have been redacted pursuant to Items 601(a)(6) and 601(b)(10) of Regulation S-K and, where applicable, have been marked with “[_]” and “[***]”, respectively, to indicate where such redactions have been made.
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
dated as of November 6, 2026
among
FERGUSON RECEIVABLES, LLC,
as Seller,
as Seller,
FERGUSON ENTERPRISES, LLC,
as Servicer,
as Servicer,
THE ORIGINATORS PARTY HERETO FROM TIME TO TIME,
THE CONDUIT PURCHASERS LISTED ON SCHEDULE I FROM TIME TO TIME,
THE COMMITTED PURCHASERS LISTED ON SCHEDULE I FROM TIME TO TIME,
THE LC BANKS LISTED ON SCHEDULE III FROM TIME TO TIME,
THE FACILITY AGENTS LISTED ON SCHEDULE I FROM TIME TO TIME,
ROYAL BANK OF CANADA,
as Administrative Agent,
as Administrative Agent,
and
FERGUSON ENTERPRISES INC.,
as Parent
as Parent
Table of Contents
| PAGE | |||||||||||
| 1 | |||||||||||
| 1 | |||||||||||
| 21 | |||||||||||
| 21 | |||||||||||
| 21 | |||||||||||
| ARTICLE II | PURCHASES AND SETTLEMENTS | 21 | |||||||||
| Section 2.01. | General Assignment and Conveyance; Intent of the Parties | 21 | |||||||||
| Section 2.01A. | Certain Reconveyances | 22 | |||||||||
| Section 2.02. | Incremental Purchases | 22 | |||||||||
| Section 2.03. | Purchase Price | 23 | |||||||||
| Section 2.04. | Payments to Seller | 23 | |||||||||
| Section 2.05. | Reinvestment Purchases | 23 | |||||||||
| Section 2.06. | Benchmark Replacement | 23 | |||||||||
| Section 2.07. | Yield, Fees and Costs | 24 | |||||||||
| Section 2.08. | Settlements and Other Payment Procedures | 24 | |||||||||
| Section 2.09. | Mandatory Reduction of Aggregate Exposure Amount | 26 | |||||||||
| Section 2.10. | Letters of Credit | 26 | |||||||||
| Section 2.11. | Letter of Credit Reimbursements; Payments | 28 | |||||||||
| Section 2.12. | Defaulting Purchasers | 29 | |||||||||
| Section 2.13. | Payments and Computations, Etc | 30 | |||||||||
| Section 2.14. | Increased Costs | 30 | |||||||||
| Section 2.15. | Optional Reduction of Maximum Net Investment; Optional Reduction of Aggregate Net Investment | 30 | |||||||||
| Section 2.16. | Increase in Maximum Net Investment | 30 | |||||||||
| Section 2.17. | Procedures for Extension of a Scheduled Termination Date; Non-Extending Purchase Groups | 31 | |||||||||
| Section 2.18. | Facility Termination | 31 | |||||||||
| Section 2.19. | Swingline Purchases | 31 | |||||||||
| ARTICLE III | CLOSING PROCEDURES | 32 | |||||||||
| Section 3.01. | Purchase and Sale Procedures | 32 | |||||||||
| Section 3.02. | Conditions to Closing | 33 | |||||||||
| Section 3.03. | Conditions to Purchases and Letter of Credit Usage | 34 | |||||||||
| Section 3.04. | Conditions to Purchase/Acceptance of Assignment of Receivables of Additional Originator; Release and Reconveyance of Certain Receivables | 34 | |||||||||
| Section 3.05. | Post-Closing Covenant | 35 | |||||||||
| ARTICLE IV | PROTECTION OF THE OWNERS; ADMINISTRATION AND SERVICING OF RECEIVABLES; COLLECTIONS | 36 | |||||||||
| Section 4.01. | Acceptance of Appointment and Other Matters Relating to the Servicer | 36 | |||||||||
| Section 4.02. | Maintenance of Information and Marking of Computer Records | 36 | |||||||||
| Section 4.03. | Protection of the Interests of the Purchasers and LC Banks | 36 | |||||||||
| Section 4.04. | Maintenance of Writings and Records | 37 | |||||||||
| Section 4.05. | Information | 37 | |||||||||
| Section 4.06. | Audits; Agreed-Upon Procedures | 37 | |||||||||
-i- | ||
| Section 4.07. | No Impairment | 37 | |||||||||
| Section 4.08. | Administration and Collections | 37 | |||||||||
| Section 4.09. | Complete Servicing Transfer | 38 | |||||||||
| Section 4.10. | Lockboxes; Blocked Accounts | 39 | |||||||||
| Section 4.11. | Reports | 40 | |||||||||
| Section 4.12. | Servicer Default | 40 | |||||||||
| Section 4.13. | Servicer Indemnification of Indemnified Parties | 41 | |||||||||
| Section 4.14. | Servicing Fee | 41 | |||||||||
| ARTICLE V | PARENT UNDERTAKING | 41 | |||||||||
| Section 5.01. | Guaranty | 41 | |||||||||
| Section 5.02. | Guaranty Absolute | 42 | |||||||||
| Section 5.03. | Waiver | 42 | |||||||||
| Section 5.04. | Subrogation | 42 | |||||||||
| ARTICLE VI | REPRESENTATIONS AND WARRANTIES | 43 | |||||||||
| Section 6.01. | General Representations and Warranties of the Ferguson Parties | 43 | |||||||||
| ARTICLE VII | COVENANTS | 46 | |||||||||
| Section 7.01. | Affirmative Covenants of the Ferguson Parties | 46 | |||||||||
| Section 7.02. | Negative Covenants of the Ferguson Parties | 50 | |||||||||
| Section 7.03. | Separateness Covenants | 52 | |||||||||
| ARTICLE VIII | TERMINATION | 53 | |||||||||
| Section 8.01. | Termination Events | 53 | |||||||||
| Section 8.02. | Consequences of a Termination Event | 54 | |||||||||
| ARTICLE IX | THE ADMINISTRATIVE AGENT AND THE FACILITY AGENTS | 55 | |||||||||
| Section 9.01. | Authorization and Action | 55 | |||||||||
| Section 9.02. | UCC Filings | 55 | |||||||||
| Section 9.03. | Administrative Agent’s and Facility Agents’ Reliance, Etc | 56 | |||||||||
| Section 9.04. | Non-Reliance on the Administrative Agent and the Facility Agents | 56 | |||||||||
| Section 9.05. | Administrative Agent, Facility Agents and Affiliates | 57 | |||||||||
| Section 9.06. | Indemnification | 57 | |||||||||
| Section 9.07. | Successor Administrative Agent | 58 | |||||||||
| Section 9.08. | Erroneous Payments | 58 | |||||||||
| ARTICLE X | INDEMNIFICATION; EXPENSES | 59 | |||||||||
| Section 10.01. | Indemnity by Seller | 59 | |||||||||
| Section 10.02. | Indemnity for Taxes | 61 | |||||||||
| Section 10.03. | Indemnity by Originators | 61 | |||||||||
| Section 10.04. | Expenses | 62 | |||||||||
| ARTICLE XI | MISCELLANEOUS | 62 | |||||||||
| Section 11.01. | Amendments and Waivers | 62 | |||||||||
| Section 11.02. | Successors and Assigns; Assignments; Participations | 63 | |||||||||
| Section 11.03. | No Implied Waiver; Cumulative Remedies | 64 | |||||||||
-ii- | ||
| Section 11.04. | No Discharge | 64 | |||||||||
| Section 11.05. | [Reserved] | 64 | |||||||||
| Section 11.06. | Payments Set Aside | 64 | |||||||||
| Section 11.07. | Tax Forms and Status | 64 | |||||||||
| Section 11.08. | Replacement of Purchase Groups | 65 | |||||||||
| Section 11.09. | No Petition | 65 | |||||||||
| Section 11.10. | No Recourse | 65 | |||||||||
| Section 11.11. | Holidays | 65 | |||||||||
| Section 11.12. | Records | 65 | |||||||||
| Section 11.13. | Term of Agreement | 66 | |||||||||
| Section 11.14. | Notices | 66 | |||||||||
| Section 11.15. | Severability | 66 | |||||||||
| Section 11.16. | Prior Understandings | 66 | |||||||||
| Section 11.17. | Governing Law; Submission to Jurisdiction | 66 | |||||||||
| Section 11.18. | Counterparts; Electronic Signature | 66 | |||||||||
| Section 11.19. | Confidentiality | 66 | |||||||||
| Section 11.20. | USA Patriot Act | 67 | |||||||||
| Section 11.21. | Receivables from Acquisitions | 67 | |||||||||
| Section 11.22. | Waiver of Jury Trial | 67 | |||||||||
| Section 11.23. | Designated Excluded Receivables | 67 | |||||||||
| Section 11.24. | Acknowledgement and Consent to Bail-In of EEA Financial institution | 68 | |||||||||
| Section 11.25. | Amendment and Restatement | 68 | |||||||||
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EXHIBIT A — Credit and Collection Policy
EXHIBIT B — Form of Monthly Report
EXHIBIT C — Form of Assumption Agreement
EXHIBIT D — Form of Addendum/Amendment (Extension of Scheduled Termination Date)
EXHIBIT E — Form of Purchase Notice/Letter of Credit Request
EXHIBIT F — Form of Optional Reduction Notice
EXHIBIT G — Form of Notice of Designated Excluded Receivables
SCHEDULE I — Schedule of Purchase Groups, Purchase Group Maximum Net Investments, Purchase Group Percentages,
Notice Addresses and Funds Transfer Address
Notice Addresses and Funds Transfer Address
SCHEDULE II — Schedule of Depositary Banks, Accounts and Lockboxes
SCHEDULE III — Schedule of LC Banks, LC Bank Sublimits, Notice Addresses and Funds Transfer Information
SCHEDULE IV — Schedule of Designated Excluded Receivables
-iv- | ||
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, dated as of November 6, 2026 (this “Agreement”), among FERGUSON RECEIVABLES, LLC, a Delaware limited liability company (the “Seller”), FERGUSON ENTERPRISES, LLC, a Virginia limited liability company (“Ferguson”), as servicer (in such capacity, the “Servicer”), FERGUSON AND THE OTHER ORIGINATORS (as defined herein) party hereto from time to time (the “Originators”), the CONDUIT PURCHASERS (as defined herein) party hereto from time to time and listed on Schedule I hereto, the COMMITTED PURCHASERS (as defined herein) party hereto from time to time and listed on Schedule I hereto, the LC BANKS (as defined herein) party hereto from time to time and listed on Schedule III hereto, the FACILITY AGENTS (as defined herein) party hereto from time to time and listed on Schedule I hereto, ROYAL BANK OF CANADA, as administrative agent for the Conduit Purchasers, the Committed Purchasers, the LC Banks and the Facility Agents (together with its successors and assigns, in such capacity, the “Administrative Agent”) and FERGUSON ENTERPRISES INC., a Delaware corporation (the “Parent”).
RECITALS
WHEREAS, the Seller, the Servicer, the Originators, the Conduit Purchasers, the Committed Purchasers, the LC Banks, the Facility Agents, the Administrative Agent, and the Parent are parties to that certain Receivables Purchase Agreement, dated as of July 31, 2013 (as amended, supplemented, or otherwise modified prior to the date hereof, the “Existing RPA”); and
WHEREAS, the parties hereto desire to amend and restate the Existing RPA as of the date hereof.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
DEFINITIONS; CONSTRUCTION
Section 1.01. Certain Definitions. As used in this Agreement, the following terms shall have the following meanings:
“Account” shall mean any Blocked Account, any Local Account or the Collection Account. Each Account shall be identified on Schedule II hereto, as amended from time to time with the consent of the Administrative Agent.
“Acquisition Receivable” shall have the meaning specified in Section 11.21 hereof.
“Administrative Agent” shall mean Royal Bank of Canada, and its successors and assigns.
“Administrative Agent Fee Letter” shall mean the agreement between the Seller and the Administrative Agent, setting forth the fees payable by the Seller to the Administrative Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affected Person” shall have the meaning specified in Section 2.14 hereof.
“Affiliate” shall mean, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“Affiliated Obligor” shall mean any Obligor that is an Affiliate or Subsidiary of another Obligor.
“Aggregate Exposure Amount” shall mean, at any time, the sum of (i) the Aggregate Net Investment, (ii) the undrawn Stated Amount of all Letters of Credit outstanding and (iii) Reimbursement Obligations.
“Aggregate Net Investment” shall mean, at any time, the sum of (i) each Purchase Group’s Net Investment (other than the Net Investment attributable to a Swingline Purchase) at such time and (ii) the Swingline Purchaser’s Net Investment attributable to a Swingline Purchase at such time.
“Aggregate Unpaids” shall mean, at any time, an amount equal to the sum of (i) the aggregate accrued and unpaid Yield on the Aggregate Net Investment and the Reimbursement Obligations at such time, (ii) the Aggregate Net Investment at such time, (iii) the aggregate amount of Reimbursement Obligations at such time; (iv) all fees accrued and unpaid hereunder or under the Transaction Fee Letters at such time and (v) all other amounts owed (whether due or accrued) hereunder by the Seller to the Purchasers (including the Swingline Purchaser), the Facility Agents, the LC Banks and the Administrative Agent or the Support Providers at such time.
“Agreement” shall mean this Amended and Restated Receivables Purchase Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Alternate Base Rate” shall mean, for any Purchase Group, on any day, a fluctuating interest rate per annum as shall be in effect from time to time, which rate shall be at all times equal to the highest of (i) the prime rate announced from time to time by the related Facility Agent, Swingline Purchaser or LC Bank, as applicable, in effect on such day, (ii) the Federal Funds Rate and (iii) the Term SOFR of a tenor of one month plus the sum of the Benchmark Margin and one percent (1%) per annum.
“Anti-Terrorism Law” shall mean the OFAC Laws and Regulations, the Executive Order, the USA Patriot Act, the BSA and any other applicable requirements of law and governmental guidance for the prevention of terrorism, terrorist financing and drug trafficking or the prevention and detection of money laundering violations, in each case, of the United States or any member state of the European Union.
“Approved Data Reporting System” shall mean the Trilogie system.
“A&R Effective Date” shall mean November 6, 2026.
“Assumption Agreement” shall mean an agreement in the form of Exhibit C hereto (with such changes as may be appropriate under the specific circumstances) executed and delivered in accordance with Sections 2.16, 2.17, 11.02, and 11.08 hereof.
“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” shall mean (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Benchmark” shall mean Term SOFR, provided that if a Term SOFR Replacement Event has occurred with respect to Term SOFR, then the “Benchmark” shall mean the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.06.
“Benchmark Margin” shall mean (i) initially, 0.10% per annum and (ii) with respect to a Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Required Facility Agents and the Seller in accordance with Section 2.06.
“Benchmark Replacement” shall mean a benchmark rate which is:
(a)formally designated, nominated or recommended as the replacement for Term SOFR by:
(i)the administrator of Term SOFR (provided that the market or economic reality that such benchmark rate measures is the same as that measured by Term SOFR); or
(ii)any Relevant Nominating Body,
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Benchmark Replacement” will be the replacement under paragraph (ii) above;
(b)in the opinion of the Required Facility Agents and the Seller, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to Term SOFR; or
(c)in the opinion of the Required Facility Agents and the Seller, an appropriate successor to Term SOFR;
provided that, if such Benchmark Replacement as so determined would be less than 0.00%, such Benchmark Replacement will be deemed to be 0.00% for the purposes of this Agreement and the other Transaction Documents.
“Beneficiaries” shall mean the Administrative Agent, for the benefit of itself, the Facility Agents, the Purchasers and the LC Banks.
“Beneficial Ownership Certificate” shall mean a certificate regarding beneficial ownership as required by the Beneficial Ownership Regulation, in substantially the form prescribed in the Beneficial Ownership Regulation.
-2- | ||
“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.
“Bill and Hold Receivable” shall mean a Receivable originated as a “billed but not shipped” or as a “bill and hold”.
“Blocked Account” shall mean an account, including a Lockbox Account, established and maintained at a Depositary Bank by the Seller into which Collections are received or deposited, which account is subject to a Blocked Account Agreement.
“Blocked Account Agreement” shall mean the “control” agreement related to each Blocked Account, in form and substance reasonably acceptable to the Administrative Agent, by and among the Seller, the Servicer, the Administrative Agent and the applicable Depositary Bank.
“BSA” shall mean the United States Bank Secrecy Act, 31 U.S.C. §§ 5311 et seq.
“Business Day” shall mean any day on which (i) banks are not authorized or required to close under the Laws of New York, (ii) a bond market holiday is not recommended by the Securities Industry and Financial Markets Association or (iii) if used in connection with SOFR, such day shall also be a U.S. Government Securities Business Day.
“Calculation Period” shall mean a calendar month.
“Carrying Cost Reserve Amount” shall mean, on any day, the product of (i) the Carrying Cost Reserve Ratio and (ii) the Net Receivables Balance on such day.
“Carrying Cost Reserve Ratio” shall mean, on any day, calculated for the preceding Calculation Period, the product of (i) the Stress Factor, (ii) the Default Rate and (iii) a fraction, the numerator of which is the highest Days Sales Outstanding for the prior 12 Calculation Periods and the denominator of which is 360.
“Change of Control” shall mean (i) with respect to the Seller, Ferguson shall cease to own directly or indirectly 100% of the issued and outstanding Equity Interests therein, (ii) with respect to Ferguson, the Parent shall cease to own directly or indirectly 100% of the issued and outstanding Equity Interests therein, (iii) with respect to any Originator other than Ferguson, Ferguson shall cease to own directly or indirectly 100% of the issued and outstanding Equity Interests therein, or (iv) with respect to the Parent, any Person (whether acting alone or in concert) gains Control (directly or indirectly) of the management and policies of the Parent, whether through the ownership of its Voting Stock, by contract or otherwise.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” shall have the meaning specified in Section 2.01(b) hereof.
“Collection Account” shall mean the account, if any, established and maintained by, and in the name of, the Administrative Agent (for the benefit of the Purchase Groups), in accordance with Section 4.10(e) hereof.
“Collections” shall mean, for any Receivable as of any date, all cash collections and other cash proceeds (whether in the form of cash, wire transfer, or checks) of that Receivable, including, without limitation, all finance charges, if any, and cash proceeds of the related property with respect to such Receivable, any Deemed Collections of such Receivable and any amounts received with respect to a Participation Interest in such Receivable.
“Commercial Paper” shall mean the commercial paper notes which fund the purchase of Receivables by each Conduit Purchaser and which are issued in the commercial paper market by such Conduit Purchaser or an entity sponsored by the same financial institution to provide funding to the related Conduit Purchaser.
“Committed Purchaser” shall mean each entity which is or becomes a party to this Agreement in such capacity by executing this Agreement or an Assumption Agreement and that is identified as such from time to time on Schedule I to this Agreement, and any of its successors and assigns. Unless the context herein requires otherwise, the Swingline Purchaser is a Committed Purchaser.
“Complete Servicing Transfer” shall have the meaning specified in Section 4.09(a) hereof.
“Concentration Limit” shall mean, on any day, the aggregate Outstanding Balance of all Receivables with respect to the following specified Obligor or type of Obligor may not exceed the applicable concentration limit of the aggregate Outstanding Balance of all Eligible Receivables: (i) in the case of a single Obligor (including a Government Obligor) and such Obligor’s Affiliated Obligors (except in the case of multiple Government Obligors), 2%; and (ii) in the case of all Government Obligors, 4%.
“Conduit Purchaser” shall mean each entity that is or becomes a party to this Agreement in such capacity by executing this Agreement or an Assumption Agreement and that is identified as such from time to time on Schedule I to this Agreement, and any of its successors and assigns.
-3- | ||
“Conduit Support Document” shall mean any agreement entered into by any Support Provider providing for the issuance of one or more letters of credit for the account of any Conduit Purchaser, the issuance of one or more surety bonds for which any Conduit Purchaser is obligated to reimburse the applicable Support Provider for any drawings thereunder, the sale by any Conduit Purchaser to any Support Provider of its interest in the Receivables (or any portion thereof) and/or the making of loans and/or other extensions of credit to any Conduit Purchaser in connection with such Conduit Purchaser’s securitization program (whether for liquidity or credit enhancement support), together with any letter of credit, surety bond or other instrument issued thereunder.
“Contra Account” shall mean a Receivable that may be offset by a current account payable due from an Originator to the related Obligor.
“Contract” shall mean a contract between an Originator and an Obligor, and/or any and all invoices and other writings which, in either case, give rise to a receivable arising from the sale by such Originator of goods or rendering of services in the ordinary course of such Originator’s business.
“Control” shall mean the power, directly or indirectly, to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and “Controlling” and “Controlled” shall have meanings correlative thereto.
“Control Date” shall mean the date on which the Administrative Agent delivers a notice of exclusive control pursuant to Section 4.10(b).
“Control Event” shall mean (i) the occurrence and continuance of a Termination Event or (ii) a Downgrade Event.
“Credit Agreement” shall mean (i) the $1,500,000,000 Revolving Facility Agreement dated as of April 2, 2025, between the Parent, the Guarantors party thereto, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Swingline Lender and an Issuing Bank and the other Issuing Banks party thereto, as the same may be amended, restated, supplemented or otherwise modified from time to time, or (ii) any credit agreement between the Parent and/or any Ferguson Party and a group of lenders which replaces the Credit Agreement in preceding clause (i).
“Credit and Collection Policy” shall mean the Servicer’s credit, collection, enforcement and other policies and practices relating to Contracts and Receivables existing on the date hereof and as set forth on Exhibit A hereto, as the same may be modified from time to time in compliance with Section 4.05 hereof.
“Days Sales Outstanding” shall mean, on any day for the preceding Calculation Period, an amount equal to the product of (i) a fraction, the numerator of which is the Outstanding Balance of all Receivables on the first day of such Calculation Period and the denominator of which is the aggregate amount of Receivables generated during such Calculation Period and (ii) 30.
“Deemed Collections” shall mean collections deemed received by the Seller in an amount equal to (i) all Dilutions and (ii) the aggregate Outstanding Balance of any Receivables (a) which were included in the Net Receivables Balance and which were not Eligible Receivables, (b) in which the Administrative Agent does not have a first priority perfected ownership or security interest or (c) as to which the other representations and warranties set forth in Sections 6.01(d), (e), (g) and (h) and made by the Seller or the Servicer are no longer true and correct in all material respects (or, if made as of a particular date, which was not true and correct in all material respects as of such date).
“Defaulted Receivable” shall mean the debit balance of a Receivable (i) which remains unpaid for 121 days or more from the original due date (other than the portion of a Receivable subject to retainage that is re-aged in the normal course of business), (ii) the Obligor of which is in a bankruptcy or similar proceeding as debtor, (iii) which has been identified by the Servicer or the applicable Originator as uncollectible or (iv) which, consistent with the Credit and Collection Policy, should be written off as uncollectible.
“Defaulting Purchaser” shall mean any Committed Purchaser that fails to make a Purchase when all conditions to such Purchase have been satisfied.
“Default Rate” shall mean the Alternate Base Rate plus 2.0% per annum.
“Default Ratio” shall mean the ratio (expressed as a percentage) calculated on any day, for the preceding Calculation Period, of (i) the aggregate Outstanding Balance of Receivables that were not Defaulted Receivables at the beginning of such Calculation Period but that became Defaulted Receivables or that were written off the books of the applicable Originator during such Calculation Period (without duplication) to (ii) the aggregate amount payable in respect of Receivables originated five months prior to such Calculation Period.
-4- | ||
“Delinquency Ratio” shall mean the ratio (expressed as a percentage), calculated on any day, for the preceding Calculation Period, of (i) the aggregate Outstanding Balance of Delinquent Receivables as of the last day of such Calculation Period to (ii) the aggregate Outstanding Balance of all Receivables on such last day.
“Delinquent Receivable” shall mean the debit balance of a Receivable which remains unpaid for 91 days or more from the original due date (other than the portion of a Receivable subject to retainage that is re-aged in the normal course of business).
“Depositary Bank” shall mean, at any time, any financial institution reasonably acceptable to the Administrative Agent which holds an Account.
“Designated Account” shall mean the Seller’s bank account as follows:
Bank of America
411 North Akard Street
Dallas, TX 75201
ABA No.: [_]
Account Name: Ferguson Receivables, LLC
Account No.: [_]
“Designated Excluded Receivables” shall mean the receivables of the Designated Types listed on Schedule IV hereto from time to time in accordance with the provisions of Section 11.23 hereof.
“Designated Person” shall mean any Person (a) listed in the annex to, or otherwise subject to the provisions of, an Executive Order; (b) listed on any Lists; or (c) owned by or controlled by, or acting for or on behalf of, any person referred to in preceding clause (a) or (b).
“Designated Type” shall mean each (i) Obligor or (ii) Originator log-on location(s), each of which has a customer number or log-on number, as identified on Schedule IV hereto from time to time. For the avoidance of doubt, a group of Obligors taken together can constitute a Designated Type, and a group of Originator log-on locations taken together can constitute a Designated Type.
“Dilution” shall mean the portion of any Receivable which is reduced or canceled as a result of (a) any defective, rejected, returned or repossessed goods or services, any cash or other discount, or any failure by an Originator to deliver any goods or perform any services or otherwise perform under the underlying Contract, (b) any change in or cancellation of any of the terms of such Contract or any other adjustment by an Originator or the Seller which reduces the amount payable by the Obligor on the related Receivable, (c) any rebates, warranties, allowances or charge-backs, or (d) any setoff or credit in respect of any claim by the Obligor thereof (regardless of whether such claim arises out of the same or a related transaction or an unrelated transaction). The Seller shall be deemed to have received a Collection in an amount equal to the amount of such Dilution of each Receivable on the day such Dilution occurs.
“Dilution Horizon Ratio” shall mean a fraction, calculated on any day for the preceding Calculation Period, (i) the numerator of which equals the aggregate amount of all Receivables generated during such Calculation Period and (ii) the denominator of which equals the Net Receivables Balance at the end of such Calculation Period.
“Dilution Ratio” shall mean the ratio (expressed as a percentage), calculated on any day for the preceding Calculation Period, of (i) the amount of Dilution for such Calculation Period to (ii) the aggregate Outstanding Balance of all Receivables generated during the Calculation Period prior to such Calculation Period.
“Dilution Reserve Amount” shall mean, on any day, the product of (i) the Dilution Reserve Percentage and (ii) the Net Receivables Balance on such day.
“Dilution Reserve Percentage” shall mean, on any day, a percentage equal to the greater of (i) 5.0% (the “Dilution Reserve Floor”) and (ii) the amount expressed as a percentage and calculated in accordance with the following formula:
{(SF x ED) + ((DS – ED) x (DS/ED))} x DHR
Where:
SF = the Stress Factor;
ED = the average of the Dilution Ratios for the twelve most recently ended Calculation Periods;
DS = the highest three month average Dilution Ratio during the twelve most recently ended Calculation Periods; and
DHR = the Dilution Horizon Ratio at such time.
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“Distribution Date” shall mean each of (i) before the Termination Date, (a) the second (2nd) Business Day after each Monthly Report Date and (b) the Business Day after each Weekly Report Date and (ii) on and after the Termination Date, each Business Day.
“Dollar” and “$” shall mean lawful currency of the United States of America.
“Downgrade Event” shall mean that the Parent’s senior unsecured debt rating shall be rated below Ba3 from Moody’s or BB- from S&P, as applicable, or suspended or withdrawn.
“EEA Financial Institution” shall mean (a) any credit institution or investment firm established in any EEA Member Country that is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country that is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country that is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” shall mean any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Eligible Purchaser” shall mean a financial institution (i) having two of the following short-term debt ratings: A-1 or better by S&P, P-1 or better by Moody’s, and F1 or better by Fitch and (ii) which, if there are LC Banks, is acceptable to such LC Banks (such determination not to be unreasonably withheld or delayed).
“Eligible Receivable” shall mean, at any time for the determination thereof, any Receivable:
(a) which arises from the sale of products or services of an Originator in the ordinary course of business and has been invoiced;
(b) which is an “account” or “payment intangible” as defined in Article 9 of the UCC;
(c) the Obligor of which is not an affiliate of the Seller or any Originator;
(d) which is denominated in U.S. dollars and payable in the U.S.;
(e) the Obligor of which is a U.S. Obligor, except that up to 5.0% of the aggregate Outstanding Balance of all non-Defaulted Receivables may consist of Receivables owing by Foreign Obligors;
(f) the sale of or granting of a security interest in which does not contravene any law and the related Contract does not contain any enforceable restriction on assignment of such Receivable that is effective under applicable Law;
(g) which represents a bona fide obligation of the Obligor to pay the stated amount (which stated amount does not include any service charges), and the Receivable, together with the related Contract, is enforceable against the related Obligor in accordance with its terms;
(h) which if, to the knowledge of the Servicer, is subject to any asserted dispute, counterclaim, defense or asserted right of set-off (including any portion of such Receivable that is attributable to accrued rebate), is the portion thereof not subject to such assertion;
(i) which, together with the related Contract, does not contravene in any material respect applicable law, rule or regulation (including those relating to consumer protection) and no party to such Contract is in violation of any such law, rule or regulation if such contravention or violation, as applicable, would impair the collectability of such Receivable;
(j) which satisfies all applicable requirements of the Credit and Collection Policy in all material respects;
(k) except as provided in clause (r)(ii) of this definition, which is due within 90 days of the original billing date therefor;
(l) in and to which the applicable Originator has validly sold all of its right, title and interest in and to the Seller, and Seller owns good and marketable title to the Receivable, free and clear of any encumbrance, lien or security interest;
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(m) the representations and warranties with respect to which in the Purchase and Contribution Agreement and this Agreement are true and correct in all material respects;
(n) which arises under a Contract that contains an obligation to pay a specified sum of money, contingent only upon the sale of goods or the provision of services;
(o) unless and until the Seller and the Required Facility Agents have agreed, in their respective reasonable credit judgment, is a Receivable or type of Receivable or has a related Obligor which will no longer be deemed to be an Eligible Receivable;
(p) which is payable by an Obligor who is not the subject of bankruptcy or similar proceedings;
(q) which is not an Ineligible Delinquent/Defaulted Receivable;
(r) which has not been extended, rewritten or otherwise modified from the original terms thereof except (i) in accordance with the Credit and Collection Policy, or (ii) with respect to retainage re-aging completed in the normal course of business, which Receivables subject to retainage re-aging shall not exceed 1% of all Receivables;
(s) which has been fully earned by performance on the part of the applicable Originator and, no further action is required to be performed by such Originator or any other Person with respect thereto other than payment thereon by the applicable Obligor, provided, that a Receivable subject to retainage and a Bill and Hold Receivable shall be considered fully earned for the purposes of this clause (s);
(t) as to which the Obligor is required to make payments to a Lockbox, a Blocked Account or a Local Account;
(u) which was originated by the applicable Originator and (i) was not originated by a business group/division/unit of the applicable Originator created or resulting from the acquisition of a Person or its assets unless the Receivables originated in connection with such acquired Person or assets have been approved by the Facility Agents in accordance with Section 11.21 hereof (solely to the extent such approval is required under Section 11.21), and (ii) which is reported by the applicable Originator on an Approved Data Reporting System;
(v) the purchase of the obligation constitutes a current transaction within the meaning of the Section 3(a)(3) of the Securities Act of 1933;
(w) which represents the sales price of goods or services within the meaning of Section 3(c)(5) of the Investment Company Act of 1940;
(x) on and after a Downgrade Event, which is not a Contra Account; and
(y) on and after a Downgrade Event, which is not a Bill and Hold Receivable.
“Equity Interests” shall mean with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such securities (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with the Parent or Ferguson, is treated as a single employer under Section 414 of the Code.
“ERISA Event” shall mean (a) any Reportable Event with respect to a Plan ; (b) a withdrawal by the Parent or Ferguson or any of their respective ERISA Affiliates from a Plan subject to Section 4063 of ERISA during a plan year in which the relevant entity is a “substantial employer” (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA which could reasonably be expected to give rise to any liability with respect to such withdrawal; (c) a complete or partial withdrawal by the Parent or Ferguson or any of their respective ERISA Affiliates from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan or Multiemployer Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the
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commencement of proceedings to terminate a Plan or Multiemployer Plan, other than any of the foregoing that is a standard termination; (e) an event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Parent, Ferguson or any of their respective ERISA Affiliates.
“Erroneous Payment” shall have the meaning specified in Section 9.08(a).
“Erroneous Payment Subrogation Rights” shall have the meaning specified in Section 9.08(d).
“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“EU Securitisation Regulation” shall mean Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation and amending certain other European Union directives and regulations, as amended, and as may be further amended and in effect from time to time.
“EU Securitisation Rules” shall mean the EU Securitisation Regulation, together with all relevant implementing regulations in relation thereto, all regulatory and implementing technical standards in relation thereto or applicable in relation thereto pursuant to any transitional arrangements made pursuant to the EU Securitisation Regulation and, in each case, any relevant guidance and directions published in relation thereto by the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority (or in each case, any other applicable regulatory authority) or by the European Commission, in each case as may be amended and in effect from time to time.
“Excess Concentration Amount” shall mean, on any day, the sum of, without duplication of the amount of each excess concentration, (i) the aggregate amount by which the aggregate Outstanding Balance of Eligible Receivables of an Obligor and its Affiliated Obligor(s) exceeds the applicable Concentration Limit and (ii) the aggregate amount by which the Outstanding Balance of Eligible Receivables of all Government Obligors exceeds the applicable Concentration Limit.
“Excluded Receivables” shall mean (i) the indebtedness and payment obligations owed by Obligors arising in connection with the sale of merchandise or rendering of services by the divisions of Ferguson known as “Lincoln Products/Ferguson Parts and Packaging” and “Ferguson International”, (ii) on and after November 10, 2025, the indebtedness and payment obligations owed by [***] to Ferguson arising in connection with the sale of merchandise or rendering of services by Ferguson, (iii) Designated Excluded Receivables, and (iv) Acquisition Receivables.
“Excluded Taxes” shall mean, with respect to an Indemnified Party, any of the following Taxes imposed on or with respect to such Indemnified Party or required to be withheld or deducted from a payment to such Indemnified Party: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, state gross receipts Taxes, and branch profits Taxes imposed as a result of such Indemnified Party being organized under the laws of, or having its principal office or its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or that are Other Connection Taxes, (b) in the case of an Indemnified Party, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Indemnified Party with respect to its portion of any Exposure Amount pursuant to a law in effect on the date on which (i) such Indemnified Party acquires or becomes obligated to acquire its portion of any Exposure Amount (other than pursuant to an assignment request by the Seller under Section 11.08) or (ii) such Indemnified Party changes its lending office (unless such change is at the request of the Seller), except in each case to the extent that amounts with respect to such Taxes were payable either to such Indemnified Party’s assignor immediately before such Indemnified Party became a party hereto or to such Indemnified Party immediately before it changed its lending office, (c) any Tax, assessment or other governmental charge attributable to and which would not have been imposed but for such Indemnified Party’s failure to comply with the delivery requirements contained in Section 11.07 with respect to the applicable tax forms (including any successor forms), reports and documentation required to be properly completed and duly executed by such Indemnified Party establishing such Indemnified Party’s exemption from or reduction in U.S. federal withholding tax, and (d) any U.S. Federal withholding Taxes imposed under FATCA.
“Exclusion Date” shall mean, with respect to each Designated Type, the date after which the receivables owing to an Originator of such Designated Type shall be Designated Excluded Receivables.
“Executive Order” shall mean United States Executive Order No. 13224, 66 Fed. Reg. 49079, on Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism issued on 23rd September, 2001.
“Exposure Amount” shall mean, for each Purchase Group, the sum of (i) its Net Investment and (ii) the applicable Purchase Group Percentage of (a) the undrawn Stated Amount of all Letters of Credit outstanding and (b) Reimbursement Obligations.
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“Facility” shall mean the facility governed by the terms and conditions set forth in this Agreement, pursuant to which (i) the Facility Agents, on behalf of their respective Purchase Groups, purchase from the Seller undivided interests in the Receivables, the Related Security and the Collections, and (ii) the LC Banks make available to the Seller Letters of Credit in favor of beneficiaries specified by the Seller and permissible under applicable Law.
“Facility Agent” shall mean, with respect to any Conduit Purchaser, Committed Purchaser or LC Bank, the entity acting as agent for such Conduit Purchaser, Committed Purchaser or LC Bank identified from time to time on Schedule I hereto, which executes this Agreement or an Assumption Agreement, and any successor thereto.
“Facility Termination” shall mean the date on which (i) all Aggregate Unpaids have been fully paid, (ii) the Maximum Net Investment is reduced to zero and (iii) no Letters of Credit remain outstanding.
“FATCA” shall mean the Foreign Account Tax Compliance Act under Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
“Federal Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as amended, and any successor statute thereto.
“Federal Funds Rate” shall mean the percentage rate per annum which is the aggregate of:
(a)the short-term interest rate target set by the US Federal Open Market Committee as published by the Federal Reserve Bank of New York from time to time or, if that target is not a single figure, the arithmetic mean of (i) the upper bound of the short-term interest rate target range set by the US Federal Open Market Committee and published by the Federal Reserve Bank of New York, and (ii) the lower bound of that target range; and
(b)the applicable Federal Funds Rate Adjustment.
“Federal Funds Rate Adjustment” shall mean, in relation to the Federal Funds Rate prevailing at close of business on any US Government Securities Business Day, the 20% trimmed arithmetic mean (calculated by the Administrative Agent) of the Federal Funds Rate Spreads for the five most immediately preceding US Government Securities Business Days for which Term SOFR is available.
“Federal Funds Rate Spread” shall mean, in relation to any US Government Securities Business Day, the difference (expressed as a percentage rate per annum) calculated by the Administrative Agent of (i) Term SOFR for that Business Day; and (ii) the Federal Funds Rate prevailing at close of business on that US Government Securities Business Day.
“Fee Collateral Amount” shall mean, on any day on and after the Termination Date, the sum of the Used Fees, the Letter of Credit Fronting Bank Fees and other fees to accrue on the Letters of Credit that are outstanding and undrawn on such day through their stated expiration dates (as such stated expiration dates may be extended in accordance with the proviso in the definition of LC Obligations herein).
“Fee Letter” shall mean the agreement setting forth certain fees payable by the Seller in connection with the purchase by the Facility Agents (on behalf of their respective Purchase Groups) of the Receivable Interest, as the same may be, in each case, amended, restated, supplemented or otherwise modified from time to time.
“Ferguson” shall mean Ferguson Enterprises, LLC, a Virginia limited liability company.
“Ferguson Parties” shall mean, collectively, the Seller, each Originator, the Servicer, and the Parent.
“Foreign Obligor” shall mean an Obligor which is domiciled in Canada or Mexico or any political subdivision thereof.
“Foreign Plan” shall mean any employee benefit plan maintained or contributed to by the Parent or any Affiliate which is mandated or governed by any Law of any Governmental Authority outside the United States.
“GAAP” shall mean generally accepted accounting principles in effect in the United States of America from time to time.
“Government Obligor” shall mean (i) the United States of America, any territory, possession or commonwealth of the United States of America, or any agency, department or instrumentality of any of the foregoing or (ii) any state or local government, including counties, cities and towns, any political subdivision of any of the foregoing, or any agency, department or instrumentality of any of the foregoing.
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“Governmental Authority” shall mean any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“Group” shall mean the Parent and its Subsidiaries, and for the purposes of the Parent’s consolidated financial statements, shall include subsidiary undertakings (within the meaning of Section 1162 of the Companies Act of 2006).
“Inclusion Date” shall have the meaning specified in Section 11.21 hereof.
“Incremental Purchase” shall have the meaning specified in Section 2.02 hereof.
“Indemnified Parties” shall have the meaning specified in Section 10.01(a) hereof.
“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Seller under any Transaction Document and (b) to the extent not otherwise described in (a), Other Taxes.
“Ineligible Delinquent/Defaulted Receivables” shall mean, with respect to the Receivables of an Obligor, the net balance of the Receivables of such Obligor which remain unpaid more than 91 days netted against the offsetting credits due such Obligor.
“Interpolated Term SOFR” shall mean, in relation to Term SOFR of the applicable tenor for any Calculation Period, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
(a)either:
(i)the most recent applicable Term SOFR for the longest period (for which Term SOFR is available) which is less than such applicable tenor for such Calculation Period (or portion thereof); or
(ii)if no such Term SOFR is available for a period which is less than such applicable tenor for that Calculation Period, SOFR for a day which is two US Government Securities Business Days before the Quotation Day; and
(b)the most recent applicable Term SOFR for the shortest period (for which Term SOFR is available) which exceeds such applicable tenor for such Calculation Period.
“Issuance” shall mean the initial issuance by an LC Bank of a Letter of Credit in accordance with the provision of Section 2.10 hereof.
“Issue” shall mean the doing of such action.
“Law” shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of any Official Body.
“LC Bank” and “LC Banks” shall mean each financial institution which agrees to issue Letters of Credit at the request of the Seller by being or becoming a party to this Agreement by executing this Agreement or an Assumption Agreement and which is identified as such from time to time on Schedule III to this Agreement, and any of its successors.
“LC Bank Fee Letter” shall mean, for each LC Bank, the fee letter between such LC Bank and the Seller, setting forth the Letter of Credit Fronting Bank Fee and the other fees payable by the Seller to such LC Bank in connection with the Issuance and/or Modification of a Letter of Credit, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“LC Bank Sublimit” shall mean, with respect to any LC Bank, the dollar amount indicated from time to time on Schedule III to this Agreement. For the avoidance of doubt, although the aggregate of the LC Bank Sublimits may exceed the LC Sub-Facility, the Stated Amount of the outstanding Letters of Credit may not exceed at any time the LC Sub-Facility.
“LC Cash Collateral Account” shall mean the account designated as the LC Cash Collateral Account to be established and maintained at JPMorgan Chase Bank, N.A., which account shall be in the name of the Administrative Agent, for the benefit of the Purchase Groups, in respect of the Facility.
“LC Effective Date” shall mean the date on which all of the following have occurred: (i) the LC Banks shall have agreed to provide the LC Sub-Facility and all Facility Agents shall have consented thereto; (ii) the LC Banks and their respective LC Bank Sublimits shall have been agreed upon and Schedule III shall have been completed to reflect the same; (iii) the LC Cash Collateral Account shall have been established; (iv) there shall have been delivered to each LC Bank, the LC Bank Fee Letter; (v) forms of Letter
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of Credit and Letter of Credit Application shall have been delivered by each LC Bank; and (vi) there shall have been delivered to the Facility Agents all certificates and opinions as are reasonably required by the Administrative Agent and the LC Banks.
“LC Obligations” shall mean, at any time, an amount equal to the sum of (a) the aggregate Stated Amount of the then undrawn and outstanding Letters of Credit and (b) the aggregate Reimbursement Obligations described in clause (i) of the definition thereof that have not then been reimbursed pursuant to Section 2.11; provided that any Letter of Credit that has expired by its terms but may still be drawn upon in accordance with Rule 3.14 of the International Standby Practices, shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“LC Sub-Facility” shall mean the maximum aggregate amount of Letters of Credit which the LC Banks agree to Issue and have outstanding at any one time, which amount shall equal 33 1/3% of the Maximum Net Investment.
“Letter of Credit” shall have the meaning set forth in Section 2.10(a) of this Agreement.
“Letter of Credit Application” shall mean, for each LC Bank, such LC Bank’s form of Letter of Credit Application, or such other form agreed to from time to time by the Seller and such LC Bank.
“Letter of Credit Fronting Bank Fee” shall mean the fees payable to an LC Bank which issues a Letter of Credit, as provided in the applicable LC Bank Fee Letter.
“Letter of Credit Request” shall mean the request for the Issuance or Modification of a Letter of Credit in substantially the form of Exhibit E hereto.
“Lien,” with respect to any asset, shall mean any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset (including any production payment, proceeds production payment or similar financing arrangement with respect to such asset).
“Limited Liability Company Agreement” shall mean the Limited Liability Company Agreement of the Seller dated July 29, 2013.
“Lists” shall mean the list of Specially Designated Nationals and Blocked Persons maintained by OFAC and/or on any other similar list of any United States or European Union governmental organization.
“Local Account” shall mean a deposit account established and maintained by a Depositary Bank in the name of an Originator into which account Obligor payments with respect to Receivables as well as payments on cash sales generated by such Originator are deposited.
“Lockbox” shall mean a post office box to which Collections are sent and which is administered by a Depositary Bank.
“Lockbox Account” shall mean an account maintained in the name of the Seller at a Depositary Bank into which Collections are deposited.
“Lookback Period” shall mean (i) with respect to the Exclusion Date for any Designated Type, the 12 calendar month period most recently ended prior to such Exclusion Date and (ii) with respect to each Monthly Report relating to Reassigned Receivables delivered after the end of each calendar quarter pursuant to Section 2.01A, the 12 calendar month period most recently ended prior to the delivery of such Monthly Report.
“Loss Horizon Ratio” shall mean a fraction, calculated on any day, for the preceding Calculation Period, (i) the numerator of which equals the aggregate Outstanding Balance of all Receivables generated during the four most recent Calculation Periods (including such Calculation Period) times the Weighted Average Term Factor and (ii) the denominator of which is equal to the Net Receivables Balance on the last day of such Calculation Period.
“Losses” shall have the meaning specified in Section 10.01(a) hereof.
“Loss Ratio” shall mean, on any day, the highest average of the Default Ratios for any three consecutive Calculation Periods during the twelve Calculation Periods preceding the day on which determined.
“Loss Reserve Amount” shall mean, on any day, the product of (i) the Loss Reserve Percentage and (ii) the Net Receivables Balance on such day.
“Loss Reserve Percentage” shall mean, the percentage, calculated on any day, equal to the greater of (a) 10.00% (the “Loss Reserve Floor”) and (b) the product of (i) the Stress Factor, (ii) the Loss Ratio and (iii) the Loss Horizon Ratio.
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“Mandatory Reduction Amount” shall mean the amount necessary to cause the Percentage Interest to be less than or equal to 100%.
“Mandatory Reduction Date” shall mean the date on which a Mandatory Reduction Amount is paid.
“Material Adverse Effect” shall mean a material adverse effect on (i) the financial condition or operations of (a) the Seller, (b) Ferguson and its Subsidiaries, taken as a whole, or (c) the Parent and its Subsidiaries, taken as a whole; (ii) the ability of the Seller, Ferguson or any other Originator, or the Parent to perform its obligations under any Transaction Document; (iii) the legality, validity or enforceability of any material provision of the Transaction Document, or (iv) any Purchaser’s or LC Bank’s interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or the Collections with respect thereto.
“Maximum Net Investment” shall mean $900,000,000, unless such amount shall be reduced as provided in Section 2.15 or the next sentence or following the termination of a Purchase Group pursuant to Section 11.08 hereof or increased as provided in Section 2.16. On a Non-Pro Rata Extension Date for any Non-Extending Purchase Group, unless such Non-Extending Purchase Group’s Purchase Group Maximum Net Investment has been assigned pursuant to Section 2.17, the Maximum Net Investment shall be reduced by that Non-Extending Purchase Group’s Purchase Group Maximum Net Investment. On any day on and after the occurrence and continuance of a Termination Event or the Scheduled Termination Date of all Purchase Groups, the Maximum Net Investment shall be equal to the Aggregate Exposure Amount. The Swingline Sublimit is a component of, and not in addition to, the Maximum Net Investment.
“Modification” shall mean any renewal, extension (to the extent not automatically renewed subject to the terms of Section 2.10(a)), increase, decrease or other modification of a Letter of Credit, other than a ministerial amendment.
“Modify” shall mean the doing of such action.
“Monthly Report” shall have the meaning specified in Section 4.11(a)(i) hereof.
“Monthly Report Date” shall mean the 25th calendar day of each month, or, if such day is not a Business Day, the next Business Day.
“Moody’s” shall mean Moody’s Investors Service, Inc., together with any successor that is a nationally recognized statistical rating association.
“Multiemployer Plan” shall mean a multiemployer plan within the meaning of Section 3(37) of ERISA to which the Parent, Ferguson or any ERISA Affiliate makes or is obligated to make contributions.
“Net Investment” shall mean, (i) for each Purchase Group, at any time, the sum of the amounts of Purchase Price paid by the Purchasers in that Purchase Group to the Seller for each Incremental Purchase, Reimbursement Purchase and to the Swingline Purchaser for each Swingline Reimbursement Purchase less the aggregate amount of Collections and other amounts received and applied by the Servicer or the related Facility Agent to reduce such Net Investment in accordance with the terms hereof, (ii) for the Swingline Purchaser, the amount of the Swingline Purchase(s) made by the Swingline Purchaser less the aggregate amount of (a) Collections and other amounts paid by the Seller to the Swingline Purchaser and (b) the proceeds of any Swingline Reimbursement Purchases received by the Swingline Purchaser, in each case, to reduce such Net Investment in accordance with the terms hereof; provided, that the Net Investment of each Purchase Group or the Swingline Purchaser, as applicable, shall be increased by the amount of any Collections, other amounts or proceeds so received and applied if at any time the distribution of such Collections is rescinded or must otherwise be returned or restored for any reason.
“Net Receivables Balance” shall mean, at any time, the Outstanding Balances of the Eligible Receivables at such time reduced by the sum of, without duplication of amounts reducing the amount of total Receivables to determine Eligible Receivables, the following: (i) the Excess Concentration Amount, (ii) the aggregate amount of Collections that are unidentified cash, and (iii) the Sales Tax Payable in connection with the Receivables.
“Non-Extending Purchase Group” shall have the meaning specified in Section 2.17(c) hereof.
“Non-Pro Rata Extension Date” shall have the meaning specified in Section 2.17(c) hereof.
“Obligor” shall mean a Person who purchased merchandise or services on credit under a Contract and who is obligated to make payments to an Originator.
“OFAC” shall mean the Office of Foreign Assets Control of the U.S. Department of the Treasury.
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“OFAC Laws and Regulations” shall mean the Executive Order or regulation of OFAC codified at 31 C.F.R., Subtitle B, Chapter V.
“Official Body” shall mean any government or political subdivision or any agency, authority, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case, whether foreign or domestic.
“Optional Reduction Amount” shall mean the amount of reduction of the Aggregate Net Investment specified by the Seller pursuant to Section 2.15(b) hereof.
“Optional Reduction Date” shall mean the date on which an Optional Reduction Amount is paid.
“Optional Reduction Notice” shall have the meaning specified in Section 2.15(b) hereof.
“Original Closing Date” shall mean July 31, 2013.
“Originator” shall mean each of Ferguson and each other Subsidiary of Ferguson identified as such from time to time on the signature pages or an addendum hereto and which has not been removed as an Originator under Section 3.03 of the Purchase and Contribution Agreement; provided that each Subsidiary of Ferguson which is not a party to this Agreement on the A&R Effective Date shall become an Originator hereunder only upon satisfaction of the conditions precedent contained in Section 3.04 hereof.
“Other Companies” shall have the meaning set forth in Section 7.03(a) hereof.
“Other Connection Taxes” shall mean with respect to any Indemnified Party, Taxes imposed as a result of a present or former connection between such Indemnified Party and the jurisdiction imposing such Tax (other than connections arising from such Indemnified Party having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Transaction Document, or sold or assigned an interest in any portion of its Aggregate Exposure).
“Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Transaction Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 11.08).
“Outstanding Balance” of any Receivable shall mean, at any time, the then outstanding amount thereof.
“Parent” shall mean Ferguson Enterprises Inc., a Delaware corporation.
“Parent Undertaking” shall mean the unconditional guarantee by the Parent, for the benefit of the Beneficiaries, specified in Section 5.01 hereof.
“Participant” shall have the meaning set forth in Section 11.02(b).
“Participant Register” shall have the meaning set forth in Section 11.02(f).
“Participation Interest” shall mean, with respect to any Reassigned Receivable, a 100% undivided beneficial interest in the applicable Originator’s right, title and interest, whether now owned or hereafter arising, in, to and under such Receivable and all Related Security and Collections with respect thereto.
“Payment Processor Agreement” shall mean an agreement executed by Ferguson, a Payment Processor, the Seller and the Administrative Agent, which sets forth certain payment instructions and other terms relating to the business arrangement between Ferguson and such Payment Processor for the processing of credit card and other forms of payments from Obligors.
“Payment Processors” shall mean each of American Express Travel Related Services Company, Inc., Factor Systems, LLC dba Billtrust, PNC Merchant Services Company, and any other payment processor reasonably acceptable to the Administrative Agent.
“Payment Recipient” shall have the meaning specified in Section 9.08(a).
“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
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“Percentage Interest” shall mean, at any time of determination, an undivided percentage interest in the Receivables, Related Security and Collections, which percentage is equal to the following:
AEA– LCA + TRA
NRB
Where:
AEA = the Aggregate Exposure Amount at the time of such determination;
LCA = the amount on deposit in the LC Cash Collateral Account (other than the amount deposited therein pursuant to Section 2.12(a) or (c) hereof or allocable to the Fee Collateral Amount) at the time of determination;
TRA = the Total Reserve Amount at the time of such determination; and
NRB = the Net Receivables Balance at the time of such determination.
Following the Scheduled Termination Date of all Purchase Groups or the occurrence and continuance of a Termination Event, for the purpose of allocating Collections pursuant to Section 2.08, the Percentage Interest shall be equal to 100% until the Facility Termination.
“Permitted Liens” shall mean, on any day, any Liens (i) securing the obligations of any Originator in connection with inventory financing and (ii) of a consignor in its consigned goods (and proceeds thereof) in the ordinary course of business, which in the aggregate for all Originators of clauses (i) and (ii) do not exceed 0.25% of the aggregate Outstanding Balance of Receivables on such day.
“Person” shall mean an individual, corporation, limited liability company, partnership (general or limited), trust, business trust, unincorporated association, joint venture, joint-stock company, Official Body or any other entity of whatever nature.
“Plan” shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan and a Foreign Plan, that is subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Parent or Ferguson or any ERISA Affiliate of either of them contributes or has an obligation to contribute (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to contribute or have an obligation to contribute).
“Potential Termination Event” shall mean any event that, with the giving of notice or the passage of time, or both, would constitute a Termination Event.
“Proceeds” shall mean “proceeds” as defined in Section 9-102(a)(64) of the Uniform Commercial Code as in effect in the State of New York and the jurisdiction whose Law governs the perfection of the Administrative Agent’s ownership or security interests therein.
“Proposed Effective Date” shall have the meaning specified in Section 2.17(a) hereof.
“Purchase” shall mean a purchase, including each Reinvestment Purchase, Incremental Purchase, Reimbursement Purchase and Swingline Reimbursement Purchase, by a Facility Agent (on behalf of its related Purchasers) of the Receivable Interest. Unless the context requires otherwise, the term “Purchase” also includes a Swingline Purchase.
“Purchase and Contribution Agreement” shall mean the Amended and Restated Purchase and Contribution Agreement dated as of November 6, 2026, by and between the Seller, as purchaser, Ferguson and the Originators, as sellers, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Purchase Group” shall mean each separate group consisting of one or more Conduit Purchasers, if any, one or more Committed Purchasers, one or more LC Banks, if any, one or more Swingline Purchaser(s), if any, and a Facility Agent, identified from time to time on Schedule I to this Agreement.
“Purchase Group Maximum Net Investment” shall mean, with respect to any Purchase Group, the dollar amount indicated from time to time on Schedule I to this Agreement; provided, that if any Purchase Group becomes a Non-Extending Purchase Group, then, effective on its Non-Pro Rata Extension Date, such Non-Extending Purchase Group’s Purchase Group Maximum Net Investment will equal the Net Investment until repaid in accordance with Section 2.17 hereof; and provided further, that if any Purchase Group is terminated without replacement pursuant to Section 11.08, such Purchase Group’s Purchase Group Maximum Net Investment will be reduced to $0. For the avoidance of doubt, the Purchase Group Maximum Net Investment of the Purchase Group including the Swingline Purchaser shall include the Swingline Sublimit.
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“Purchase Group Percentage” shall mean, with respect to a Purchase Group, the percentage equivalent of a fraction, (i) unless the Termination Date has occurred, the numerator of which is the Purchase Group Maximum Net Investment of such Purchase Group and the denominator of which is the Maximum Net Investment and (ii) on each day on and after the Termination Date, the numerator of which is the Exposure Amount of such Purchase Group on such day and the denominator of which is the Aggregate Exposure Amount on such day.
“Purchase Notice” shall mean a notice of an Incremental Purchase, a Swingline Purchase, a Reimbursement Purchase or a Swingline Reimbursement Purchase substantially in the form of Exhibit E hereto.
“Purchase Price” shall mean (i) with respect to any Incremental Purchase (other than a Swingline Purchase), the amount described in Section 2.03(a) paid to the Seller by the Facility Agents, on behalf of the Purchasers, as set forth in the Purchase Notice related to such Incremental Purchase, (ii) with respect to any Swingline Purchase, the amount described in Section 2.19 paid to the Seller by the Swingline Purchaser, as set forth in the Purchase Notice related to such Swingline Purchase, (iii) with respect to any Reimbursement Purchase, the amount drawn under the Letter of Credit as specified in the related Purchase Notice and (iv) with respect to any Swingline Reimbursement Purchase, the amount of the Swingline Purchase to be reimbursed as specified in the related Purchase Notice.
“Purchaser” or “Purchasers” shall mean a Conduit Purchaser or a Committed Purchaser (including the Swingline Purchaser), or one or more Conduit Purchasers or Committed Purchasers, as the context so requires, and shall include a Support Provider and any of their respective successors and assigns that may purchase any portion of the Receivable Interest pursuant hereto or which acquires an undivided interest in any Conduit Purchaser’s Receivable Interest pursuant to a Conduit Support Document.
“Quotation Day” shall mean, in relation to any period for which an interest rate is to be determined, two (2) US Government Securities Business Days before the first day of that period.
“Rating” shall mean, at any time, the rating assigned by each of S&P and Moody’s to the Parent’s senior unsecured debt.
“Rating Agencies” shall mean, collectively, Moody’s, S&P and Fitch Ratings.
“RBC” shall mean Royal Bank of Canada, a Canadian chartered bank.
“Reassigned Receivable” shall have the meaning specified in Section 2.01A hereof.
“Receivable” shall mean all indebtedness and other payment obligations owed to an Originator by an Obligor arising from the sale of merchandise or rendering of services, by such Originator under a Contract, including all rights to payment of any interest or finance charges and any security related thereto. “Receivables” shall not include Excluded Receivables.
“Receivable Interest” shall mean, at any time, an undivided percentage ownership or security interest in (i) each and every then outstanding Receivable owned by the Seller, (ii) all Related Security with respect to each such Receivable, (iii) all Collections with respect thereto, and (iv) all cash and non-cash Proceeds of the foregoing, equal to the Percentage Interest at such time, and only at such time (without regard to prior calculations).
“Records” shall mean correspondence, memoranda, computer programs, tapes, discs, reports, papers, books or other documents or transcribed information of any type whether expressed in ordinary or machine readable language; provided, that any intellectual property (such as software) or rights therein that are not permitted by applicable Law or contract to be assigned shall not be included herein.
“Register” shall have the meaning set forth in Section 11.02(e).
“Registrar” shall have the meaning set forth in Section 11.02(e).
“Regulatory Change” shall mean the occurrence after May 19, 2021 (or with respect to any Purchaser or LC Bank, such later date on which such Purchaser or LC Bank, as the case may be, becomes a party to this Agreement) of (i) the adoption of any applicable Law, rule, regulation or treaty (including any applicable law, rule, regulation or treaty regarding capital adequacy or liquidity) or any change therein, (ii) any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency, or (iii) the compliance, application or implementation, whether commenced prior to or after May 19, 2021, by any Affected Person with the requirements of the revised BASEL ACCORD prepared by the BASEL Committee on Banking Supervision entitled “A global regulatory framework for more resilient banks and banking systems”, revised June 2011 (“BASEL III”) or any existing or future rules, regulations, guidance, interpretations or directives from U.S., Canadian, or other foreign bank regulatory agencies relating to BASEL III (whether or not having the force of law), regardless of the date any of the foregoing is enacted, adopted or issued.
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“Reimbursement Obligation” shall mean the obligation of the Seller to (i) reimburse the LC Bank pursuant to Section 2.11(a) for amounts drawn under Letters of Credit that have not been satisfied by a Reimbursement Purchase in accordance with the terms of Section 2.11(a) and/or (ii) cash collateralize the Stated Amount of undrawn and outstanding Letters of Credit pursuant to Section 2.11(e), as the context requires.
“Reimbursement Purchase” shall have the meaning specified in Section 2.11(a) or (b) hereof.
“Reinvestment Purchase” shall have the meaning specified in Section 2.05 hereof.
“Relevant Governmental Body” shall mean the Board of Governors of the Federal Reserve System and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System and/or the Federal Reserve Bank of New York, or any successor thereto.
“Related Parties” shall mean, with respect to any Person, such Person’s Affiliates and the respective directors, officers, employees and agents of such Person and such Person’s Affiliates.
“Related Security” shall mean with respect to any Receivable:
(a) all Contracts with respect to such Receivable (other than any parts of such Contracts to the extent they relate to Excluded Receivables);
(b) all of the Seller’s interest, if any, in the goods (including returned goods) sold by the applicable Originator and which gave rise to such Receivable;
(c) all other security interests or Liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements signed by an Obligor describing any collateral securing such Receivable;
(d) all guarantees, indemnities, letters of credit, insurance or other agreements or arrangements of any kind from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise (other than any parts of such supporting agreements or arrangements to the extent they relate to Excluded Receivables);
(e) all Records relating to, and all service contracts and any other contracts associated with, such Receivable, the related Contracts or the related Obligors (other than any parts of such Records to the extent they relate to Excluded Receivables); and
(f) all Proceeds of the foregoing.
“Relevant Nominating Body” shall mean any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
“Reportable Event” shall mean a “reportable event” as that term is defined in Section 4043 of ERISA or the regulations issued thereunder (other than an event for which the 30-day notice period is waived).
“Required Facility Agents” shall mean the Administrative Agent and the Facility Agents representing Purchase Groups having Purchase Group Maximum Net Investments equal to more than 50% of the Maximum Net Investment; provided, that if any Facility Agent’s Purchase Group includes a Defaulting Purchaser, its Purchase Group Maximum Net Investment (including as part of the Maximum Net Investment) shall not be included for purposes of this definition.
“Required LC Cash Collateral Amount” shall mean on any day, the sum of (i) if before the Termination Date, the amount, if any, required to be deposited in the LC Cash Collateral Account to cause the Percentage Interest to be less than 100% on such day, (ii) the amount required to be deposited therein pursuant to Section 2.12(a) with respect to a Defaulting Purchaser, and (iii) on and after the Termination Date, the aggregate Stated Amount of outstanding and undrawn Letters of Credit on such day plus the Fee Collateral Amount, which amount is held in the LC Cash Collateral Account for the benefit of the LC Banks, the Facility Agents and the Purchasers.
“Resolution Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Response Date” shall have the meaning specified in Section 2.17(a) hereof.
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“Responsible Officer” shall mean, with respect to each Ferguson Party, the chief executive officer, the president, the chief financial officer or treasurer of such Person and any other Person designated as a Responsible Officer by any such officers, as such Ferguson Party may from time to time notify the Administrative Agent.
“Retained Interest” shall have the meaning set forth in Section 7.01(f)(i).
“S&P” shall mean S&P Global Ratings, a division of S&P Global Inc., and any successor thereto.
“Sales Tax Payable” shall mean, on and after a Downgrade Event, the sales tax accrual balance maintained in the Servicer’s books and records to reflect the amount of sales tax payable in respect of the Receivables at any time of determination, which as of May 19, 2021 is reflected in GL accounts #2260 through #2270. The Servicer shall notify the Administrative Agent of any change in location in its books and records of the sales tax accrual balance.
“Sanctions” shall mean all sanctions administered and enacted by the United States of America, the United Nations Security Council, the European Union, the United Kingdom or Australia or the respective governmental institutions and agencies of any of the foregoing (including, without limitation, the U.S. Department of the Treasury Office of Foreign Assets Control).
“Scheduled Termination Date” shall mean November 6, 2029, or such later date as the Seller, the Parent, Ferguson and the Facility Agents shall agree in writing in accordance with the provisions of Section 2.17 hereof.
“SEC” shall mean the United States Securities and Exchange Commission or any successor regulatory body.
“Securities Act” shall mean the Securities Act of 1933, as amended from time to time and any successor statute thereto.
“Seller” shall have the meaning defined in the preamble hereto.
“Servicer” shall mean, initially, Ferguson, and thereafter, any Person which upon the termination of a Servicer succeeds to the functions performed by such Person as the Servicer of the Receivables pursuant to a Complete Servicing Transfer.
“Servicer Default” shall have the meaning specified in Section 4.12 hereof.
“Servicer Report” shall mean, as applicable, a Monthly Report or a Weekly Report.
“Servicer Report Date” shall mean, as applicable, each Monthly Report Date and each Weekly Report Date.
“Servicing Fee” shall have the meaning specified in Section 4.14.
“Servicing Fee Percentage” shall mean 1.0%.
“Servicing Fee Reserve Amount” shall mean, on any day, the product of (i) the Servicing Fee Reserve Ratio and (ii) the aggregate Outstanding Balance of all Receivables on such day.
“Servicing Fee Reserve Ratio” shall mean, on any day, for the preceding Calculation Period, the product of (i) the Servicing Fee Percentage, (ii) the Stress Factor and (iii) a fraction the numerator of which is the highest Days Sales Outstanding for the preceding twelve Calculation Periods (including such Calculation Period) and the denominator of which is 360.
“Settlement Date” shall mean (i) the third (3rd) Business Day of each calendar month beginning in September, 2013, and (ii) on and after the Termination Date, each Business Day.
“SOFR” shall mean a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” shall mean the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Stated Amount” shall have the meaning specified in Section 2.10(g) hereof.
“Stress Factor” shall mean 2.25.
“Sub-Servicer” shall mean each Originator (other than Ferguson) in its capacity as sub-servicer of the Receivables originated by it under Section 4.01.
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“Subsidiary” shall mean, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with relevant GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which Voting Stock representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, or held by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
“Support Provider” shall mean and include any Person now or hereafter extending credit, or having a commitment to extend credit to or for the account of, or to make purchases from, any Conduit Purchaser or issuing a letter of credit, surety bond or other instrument to support any obligations arising under or in connection with such Conduit Purchaser’s securitization program (excluding any such Person providing any of the foregoing credit or support obligations only with respect to a transaction not related to this Agreement).
“Swingline Effective Date” shall mean the date on which the following have occurred: (i) a Purchaser shall have agreed to make Swingline Purchases and all Facility Agents, Seller and Servicer shall each have consented thereto; and (ii) the Swingline Purchaser and its Swingline Sublimit shall have been agreed upon and Schedule I shall have been amended to reflect the same.
“Swingline Purchase” shall mean a Purchase made by the Swingline Purchaser of a Receivable Interest.
“Swingline Purchaser” shall mean the Committed Purchaser which agrees in writing to make Swingline Purchases at the request of the Seller by being or becoming a party to this Agreement by executing this Agreement or an Assumption Agreement and which is identified as such from time to time on Schedule I to this Agreement, and any of its successors.
“Swingline Reimbursement Purchase” shall have the meaning specified in Section 2.19(b) hereof.
“Swingline Settlement Date” shall mean, with respect to any Swingline Purchase, the earlier of (i) the Tuesday next following the day of such Swingline Purchase, provided, that if any such Tuesday is not a Business Day, the next succeeding Business Day, and (ii) the day of an Incremental Purchase next following the day of such Swingline Purchase.
“Swingline Sublimit” shall mean the maximum amount of Swingline Purchases which the Swingline Purchaser may agree to make and have outstanding at any one time, as indicated on Schedule I hereto.
“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed on an Indemnified Party by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Termination Date” shall mean the earlier of (i) the Scheduled Termination Date of all Purchase Groups and (ii) the date on which, following the occurrence and continuance of a Termination Event, a wind-down period is determined (or deemed to have been determined) to commence pursuant to Section 8.02(a).
“Termination Event” shall have the meaning specified in Section 8.01 hereof.
“Term SOFR” shall mean:
(a) the term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant Calculation Period published (before any correction, recalculation or republication by the administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the publication of that rate) and if such page or service is replaced or ceases to be available, the Administrative Agent may specify another page or service displaying the relevant rate in accordance with Section 2.06;
(b) if the term SOFR reference rate of the applicable tenor is not available for any Calculation Period, Interpolated Term SOFR (rounded to the same number of decimal places as Term SOFR) for that tenor and Calculation Period; or
(c) if:
(i) no term SOFR reference rate of the applicable tenor is available for that Calculation Period; and
(ii) it is not possible to calculate Interpolated Term SOFR of that tenor for that Calculation Period,
the Federal Funds Rate (or if the Federal Funds Rate is not available at 10:00 a.m., New York City time on the Quotation Day, most recent Federal Funds Rate for a day which is no more than five US Government Securities Business Days before the relevant Quotation Day),
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as of, in the case of paragraphs (a) and (c) above, 10:00 a.m., New York City time, on the Quotation Day and for the applicable tenor and, if the aggregate of any Benchmark Margin and any such rate is below 0.00%, Term SOFR will be deemed to be 0.00%.
“Term SOFR Replacement Event” shall mean:
(a)the methodology, formula or other means of determining Term SOFR has, in the opinion of the Required Facility Agents and the Seller materially changed;
(b)
(i)
(A)the administrator of Term SOFR or its supervisor publicly announces that such administrator is insolvent; or
(B)information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of Term SOFR is insolvent,
provided that, in each case, at that time, there is no successor administrator to continue to provide Term SOFR;
(ii)the administrator of Term SOFR publicly announces that it has ceased or will cease, to provide Term SOFR permanently or indefinitely and, at that time, there is no successor administrator to continue to provide Term SOFR;
(iii)the supervisor of the administrator of Term SOFR publicly announces that it has been or will be permanently or indefinitely discontinued; or
(iv)the administrator of Term SOFR or its supervisor announces that Term SOFR may no longer be used; or
(c)the administrator of Term SOFR determines that Term SOFR should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either:
(i)the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Required Facility Agents and the Seller) temporary; or
(ii)Term SOFR is calculated in accordance with any such policy or arrangement for a period no less than the applicable tenor; or
(d)in the opinion of the Required Facility Agents and the Seller, Term SOFR is otherwise no longer appropriate for the purposes of calculating interest under this Agreement.
“Total Reserve Amount” shall mean the sum of (i) the Loss Reserve Amount, (ii) the Dilution Reserve Amount, (iii) the Carrying Cost Reserve Amount and (iv) the Servicing Fee Reserve Amount.
“Transaction Documents” shall mean this Agreement, the Purchase and Contribution Agreement, the Purchase Notices, the Transaction Fee Letters, the Letter of Credit Requests, the Letter of Credit Applications, the Blocked Account Agreements, the Payment Processor Agreements, the Limited Liability Company Agreement, and all other material agreements, documents and agreements executed and delivered in connection therewith.
“Transaction Fee Letters” shall mean the Fee Letters, the Administrative Agent Fee Letter and the LC Bank Fee Letters.
“UCC” shall mean, with respect to any jurisdiction, the Uniform Commercial Code as in effect from time to time in such jurisdiction.
“UK” shall mean the United Kingdom.
“UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
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“UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unused Fee” shall have the meaning specified in the Fee Letters.
“Used Fee” shall have the meaning specified in the Fee Letters.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Obligor” shall mean an Obligor that (i) if a natural person, is a resident of the United States or (ii) if a corporation or other business organization, (a) is organized under the laws of the United States or any political subdivision thereof and (b) has its principal place of business in the United States or any political subdivision thereof.
“USA Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, 115 Stat. 272 (2001), of the United States, as amended.
“Voting Stock” shall mean, with respect to any Person, the outstanding shares of Equity Interests voting power for the election of directors of such Person, whether at all times or only so long as no senior class of Equity Interests has such voting power because of default in dividends or such other default.
“Weekly Report” shall have the meaning specified in Section 4.11(a)(ii) hereof.
“Weekly Report Date” shall mean, if a Weekly Report is required to be delivered pursuant to Section 4.11(a)(ii) hereof, the second Business Day of each week.
“Weighted Average Term Factor” shall mean, on any day, the greater of (i) 1.0 and (ii) (A) the weighted average payment terms of the Receivables plus 90 (B) divided by 120.
“Write-Down and Conversion Powers” shall mean, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
“Yield” shall mean, for any Purchase Group, for any Calculation Period (or portion thereof), the sum of, for each day in such Calculation Period (or portion thereof):
(a) to the extent any portion of the Net Investment of such Purchase Group is funded on such day by a Conduit Purchaser through the issuance of Commercial Paper, the product of (i) the portion of the Net Investment of such Purchase Group funded on such day by a Conduit Purchaser through the issuance of Commercial Paper, (ii) a rate of interest equal to the per annum rate (expressed as a percentage and an interest yield equivalent) or, if more than one rate, the weighted average thereof, paid or payable by such Conduit Purchaser from time to time as interest on or otherwise in respect of the Commercial Paper issued by such Conduit Purchaser that is allocated, in whole or in part, by the related Facility Agent to fund such portion of Net Investment on such day and (iii) a fraction the numerator of which is one and the denominator of which is 360;
(b) to the extent Net Investment is funded by a Purchaser other than through the issuance of Commercial Paper, the product of (i) the Net Investment on such day of the Purchaser, (ii) a rate per annum equal to (y) the Term SOFR of a tenor of three months for such day plus the applicable Benchmark Margin, or (z) on and after a Term SOFR Replacement Event, the Benchmark Replacement plus the applicable Benchmark Margin determined in accordance with Section 2.06 for such day, and (iii) a fraction the numerator of which is one and the denominator of which is 365 or 366, as applicable; or
(c) to the extent such Purchase Group includes a related LC Bank which is owed a Reimbursement Obligation described in clause (i) of the definition thereof, the product of (i) the amount of such Reimbursement Obligation owed to such LC Bank on such day, (ii) a rate per annum equal to the Term SOFR of a tenor of three months for such day, or on and after a Benchmark Replacement Date, the Benchmark Replacement for such day, and (iii) a fraction the numerator of which is one and the denominator of which is 365 or 366, as applicable;
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provided, that at any time when any Termination Event shall have occurred and be continuing, Yield with respect to each Purchase Group’s Net Investment on each day shall be the product of (i) the Net Investments of all Purchasers (including the Swingline Purchaser, as applicable) in such Purchase Group on such day, (ii) a rate per annum equal to the Default Rate on such day and (iii) a fraction the numerator of which is one and the denominator of which is 365 or 366, as applicable, and provided, further, that at any time when any Termination Event shall have occurred and be continuing, Yield for each Purchase Group that includes an LC Bank which is owed a Reimbursement Obligation on each day shall be the product of (i) the amount of such Reimbursement Obligation owed to such LC Bank on such day, (ii) a rate per annum equal to the Default Rate on such day and (iii) a fraction the numerator of which is one and the denominator of which is 365 or 366, as applicable.
Section 1.02. Interpretation and Construction. Unless the context of this Agreement otherwise clearly requires, references to the plural include the singular, and references to the part include the whole and the words “include”, “including” and “includes” shall be deemed to be followed by “without limitation”. The words “hereof,” “herein,” “hereunder” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.” The section and other headings contained in this Agreement are for reference purposes only and shall not control or affect the construction of this Agreement or the interpretation hereof in any respect. Section, subsection, exhibit and schedule references are to this Agreement unless otherwise specified. As used in this Agreement, the masculine, feminine or neuter gender shall each be deemed to include the others whenever the context so indicates. Terms not otherwise defined herein which are defined in the UCC as in effect in the State of New York from time to time shall have the respective meanings ascribed to such terms therein unless the context otherwise clearly requires.
Section 1.03. [Reserved].
Section 1.04. Use of Historical Data. When necessary to calculate any ratios or other amounts under this Agreement with reference to periods prior to the date hereof, historical data shall be used.
ARTICLE II
PURCHASES AND SETTLEMENTS
PURCHASES AND SETTLEMENTS
Section 2.01. General Assignment and Conveyance; Intent of the Parties. (a) At the time of each Incremental Purchase (including the initial Incremental Purchase) pursuant and subject to Sections 2.02 and 2.03 hereof, each Reinvestment Purchase pursuant and subject to Section 2.05 hereof, each Reimbursement Purchase pursuant and subject to Section 2.11(a) or (b) hereof and each Swingline Reimbursement Purchase pursuant and subject to Section 2.19 hereof, the Seller hereby sells to the Facility Agents, for the benefit of the applicable Purchasers, and the Facility Agents, on behalf of the applicable Purchasers, purchases from the Seller all of the Seller’s right, title and interest in and to the Receivable Interest representing such Purchases. At the time of each Swingline Purchase pursuant and subject to Sections 2.03 and 2.19(a) hereof, the Seller hereby sells to the Facility Agent for the Swingline Purchaser, for the benefit of the Swingline Purchaser, and such Facility Agent, on behalf of the Swingline Purchaser, purchases from the Seller all of the Seller’s right, title and interest in and to the Receivable Interest representing such Swingline Purchase. At the time of each Issuance or Modification of a Letter of Credit, as applicable, pursuant and subject to Section 2.10 hereof, and at all times as such Letters of Credit are outstanding, the Seller hereby assigns to the Facility Agents, for the benefit of the applicable Purchasers and LC Banks, and the applicable Facility Agents, on behalf of the applicable Purchasers and LC Banks, accept the assignment from the Seller all of the Seller’s right, title and interest in and to the Receivable Interest securing such Letters of Credit. Any change in the Receivable Interest on any day shall be deemed to be (i) in the event of an increase in the Percentage Interest, a further sale or assignment by the Seller to the Facility Agents, ratably in accordance with their respective Purchase Group Percentages, of an undivided percentage ownership or security interest in each Receivable, together with Related Security and Collections, equal to the amount of such increase or (ii) in the event of a reduction in the Percentage Interest, a reassignment by each Facility Agent, ratably in accordance with its applicable Purchase Group Percentage, to the Seller of an undivided percentage ownership or security interest in each Receivable, together with Related Security and Collections, equal to (in the aggregate for all Facility Agents) the amount of such reduction.
(b) It is the intention of the parties hereto that each Purchase (other than a Swingline Purchase) shall convey to each Facility Agent (for the benefit of its Purchasers), the applicable Purchase Group Percentage of the Receivable Interests, an undivided ownership interest in the Receivables, Related Security, Collections and Proceeds in respect thereof and that such transaction shall not constitute a secured loan. It is the intention of the parties hereto that each Swingline Purchase shall convey to the Facility Agent for the Swingline Purchaser (for the benefit of the Swingline Purchaser), additional Receivable Interests, an undivided ownership interest in the Receivables, Related Security, Collections and Proceeds in respect thereof and that such transaction shall not constitute a secured loan. It is not the intention of the parties that the Incremental Purchases, Reinvestment Purchases, Swingline Purchases, Reimbursement Purchases and Swingline Reimbursement Purchases be deemed a pledge of the Receivable Interests in the Receivables, Related Security, Collections and Proceeds from the Seller to the Facility Agents (on behalf of the Purchasers) to secure a debt or other obligation of the Seller. However, in the event that, notwithstanding the intent of the parties, the Receivable Interests in
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the Receivables, Related Security, Collections or Proceeds is characterized as collateral for a secured loan or otherwise held to be the property of the Seller, or if for any other reason this Agreement is held or deemed to create a security interest in the Receivable Interests in the Receivables, Related Security, Collections or Proceeds (any of the foregoing being a “Recharacterization”), then it is the intention of the parties hereto that this Agreement shall be a security agreement and the conveyance provided for in Section 2.01(a) shall be deemed to be a grant by the Seller to the Administrative Agent (for the benefit of the Facility Agents and the related Purchasers) of a first priority perfected security interest, securing repayment of the Aggregate Net Investment and all other amounts payable to the Administrative Agent, the Facility Agents and the Purchasers hereunder, in the Collateral. In the case of any Recharacterization, the Seller represents and warrants as to itself that each remittance of Collections to the Administrative Agent, the Facility Agents or the Purchasers hereunder will have been (i) in payment of a debt incurred in the ordinary course of its business or financial affairs and (ii) made in the ordinary course of its business or financial affairs. It is the intention of the parties hereto that each Issuance or Modification of a Letter of Credit shall convey to each Facility Agent (for the benefit of its related LC Bank(s) and Purchasers), the applicable Purchase Group Percentage of the Receivable Interest, a first priority security interest in the Collateral, securing repayment of all Reimbursement Obligations and all other amounts payable to the Administrative Agent, the Facility Agents, the Purchasers and the LC Banks hereunder. “Collateral” shall mean the Seller’s right, title, and interest, whether now owned or hereafter acquired, in and to (a) (i) the Receivables, (ii) the Related Security with respect to such Receivables, (iii) all Collections, (iv) all Participation Interests, and (v) the Accounts and the LC Cash Collateral Account and (b) all Proceeds of any of the foregoing.
Notwithstanding anything to the contrary in this Agreement and in any Transaction Document, all the parties to this Agreement shall treat this Agreement as indebtedness for U.S. federal income tax purposes secured by the Receivables and shall take no position inconsistent therewith.
Section 2.01A. Certain Reconveyances. If the Servicer determines in its reasonable judgment that (i) the filing of a mechanics lien or the making of a claim on a payment bond is necessary or advisable in order to collect a Receivable that is due from an Obligor, (ii) it desires to recover any sales or similar tax paid with respect to a Receivable, or (iii) legal action against an Obligor of a Receivable is necessary or desirable in order to collect on such Receivable, the Servicer shall prepare the necessary documentation for filing and pursuing such lien claim, tax refund or legal action for, and on behalf of, the applicable Originator which originated such Receivable. Immediately prior to the execution of such documentation, and without any further action hereunder (unless notice is required pursuant to subsection (b) of this Section 2.01A), the Administrative Agent (on behalf of the Facility Agents and their respective Purchase Groups) shall be deemed to have sold and assigned to the Seller and released its security interest in each such Receivable (each such Receivable, a “Reassigned Receivable”) and pursuant to the Purchase and Contribution Agreement, the Seller shall be deemed to have simultaneously sold all of its right, title and interest in each such Receivable to the applicable Originator. The purchase price paid by the applicable Originator for each sale of a Reassigned Receivable under the Purchase and Contribution Agreement shall be in the form of the Seller’s retention of a Participation Interest in such Reassigned Receivable, which shall entitle the Seller to receive from such Originator (by deposit into any Blocked Account) all Collections subsequently received with respect to such Reassigned Receivable, but only to the extent actually received. Upon each reconveyance of a Reassigned Receivable pursuant to this Section, the Administrative Agent shall receive a security interest in the Participation Interest relating to such Reassigned Receivable and in any security interest obtained by the Seller in such Reassigned Receivable. In the Monthly Report for the last Calculation Period in each calendar quarter, the Servicer shall report the aggregate Outstanding Balance of Reassigned Receivables (in each case determined as of the date of reconveyance) for (i) such Calculation Period and the two (2) preceding Calculation Periods in such calendar quarter and (ii) for the related Lookback Period. In the event that a Monthly Report indicates that the aggregate Outstanding Balance of Reassigned Receivables reconveyed under this Section 2.01A during the related Lookback Period exceeded 1% of the aggregate Outstanding Balance of the Receivables generated during such Lookback Period, then no further reconveyances of Receivables shall be permitted under this Section 2.01A until a Monthly Report reporting Reassigned Receivables pursuant to this Section demonstrates that the aggregate Outstanding Balance of Reassigned Receivables over the related Lookback Period reflected on such Monthly Report is less than 1% of the aggregate Outstanding Balance of Receivables generated during such Lookback Period.
(b) If, on any day, the Servicer determines to effect a reconveyance of Receivables pursuant to this Section 2.01A, and the Outstanding Balance of Receivables proposed to be reconveyed on such day would exceed $10,000,000, the Servicer will not effect such reconveyance until it has notified the Administrative Agent and the Facility Agents of such proposed reconveyance and of the Outstanding Balance of Receivables proposed to be reconveyed.
Section 2.02. Incremental Purchases. Subject to the terms and conditions hereof, including Section 3.03 and, as applicable, Section 3.04, (i) the Seller may at any time and from time to time at its option sell to the Facility Agents (as agents for the applicable Purchaser(s)) undivided percentage ownership interests in each and every Receivable, together with the Related Security and Collections with respect thereto (each an “Incremental Purchase”), and (ii) each Facility Agent, on behalf of the applicable Purchaser(s) shall make an Incremental Purchase. The Seller shall provide the Administrative Agent and the Facility Agents with a Purchase Notice by 1:00 p.m. (New York City time) at least one Business Day prior to each Incremental Purchase. Each Purchase Notice shall specify (a) the Purchase Price requested to be paid to the Seller and the allocation among the Purchase Groups (which shall be based on their respective Purchase Group Percentages) and (b) the date of such requested Purchase. Subject to the terms and conditions hereof, for any Purchase Group that includes a Conduit Purchaser, if any Conduit Purchaser in such Purchase Group
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chooses not to purchase (through its related Facility Agent) an Incremental Purchase, the applicable Committed Purchaser in such Conduit Purchaser’s Purchase Group shall purchase (through the related Facility Agent) such Incremental Purchase. Subject to the terms and conditions hereof, Incremental Purchases shall be allocated among the Facility Agents pro rata in accordance with the respective Purchase Group Percentages. No Facility Agent shall have any obligation to make an Incremental Purchase on any day if the conditions set forth in Section 3.03 and, as applicable, Section 3.04, hereof are not satisfied. No Facility Agent, on behalf of its related Purchaser(s), shall make any such Purchase on or after the Termination Date. Each Incremental Purchase shall be in an aggregate amount of at least $1,000,000 or any higher multiple of $100,000 per each Purchase Group. Each Facility Agent shall purchase its related Purchase Group Percentage of each Incremental Purchase.
Section 2.03. Purchase Price. (a) On the closing date for each Incremental Purchase, each Facility Agent, on behalf of the applicable Purchaser(s), shall pay to the Seller in immediately available funds an amount equal to its Purchase Group Percentage of the Purchase Price for such Incremental Purchase. The Purchase Price of the initial Incremental Purchase shall equal the initial Aggregate Net Investment; each Facility Agent, on behalf of its Purchase Group, shall pay its Purchase Group Percentage of such initial Purchase Price. The Purchase Price of each subsequent Incremental Purchase shall equal the amount by which the Aggregate Net Investment is increased by such Incremental Purchase and shall be funded by the Facility Agents, pro rata on the basis of their respective Purchase Group Percentages. Each Purchase Notice shall be irrevocable and binding on the Seller.
(b) On the day of each Reimbursement Purchase, the Facility Agents, on behalf of the applicable Purchasers shall pay to the applicable LC Bank in immediately available funds an amount equal to the Purchase Price for such Reimbursement Purchase. The Purchase Price for a Reimbursement Purchase shall be equal to the amount drawn under the applicable Letter of Credit. Each Facility Agent, on behalf of its Purchase Group, shall pay its Purchase Group Percentage of the Purchase Price for each Reimbursement Purchase. The Aggregate Net Investment shall be increased by the amount of each Purchase Price for a Reimbursement Purchase.
(c) On the day of each Swingline Purchase, the Facility Agent for the Swingline Purchaser, on behalf of the Swingline Purchaser, shall pay to the Seller the Purchase Price specified in Section 2.19(a).
(d) On the day of each Swingline Reimbursement Purchase, the Facility Agents (including the Facility Agent for the Purchase Group including the Swingline Purchaser), on behalf of the applicable Purchasers, shall pay to the Swingline Purchaser in immediately available funds an amount equal to the Purchase Price for such Swingline Reimbursement Purchase. The Purchase Price for a Swingline Reimbursement Purchase shall be equal to the Net Investment of the Swingline Purchase due on the Swingline Settlement Date. Each Facility Agent, on behalf of its Purchase Group (other than the Facility Agent for the Swingline Purchase, whose funding, for administrative convenience, shall be deemed made), shall pay its Purchase Group Percentage of the Swingline Reimbursement Purchase.
Section 2.04. Payments to Seller. The Purchase Price for each Purchase and all other amounts paid by any Facility Agent or the Administrative Agent hereunder to the Seller shall be made to the Designated Account.
Section 2.05. Reinvestment Purchases. Subject to Section 3.03 hereof, on each Business Day occurring after the initial Purchase, whichever first occurs hereunder, and prior to the Termination Date, the Seller hereby sells as set forth in Section 2.01 to the Facility Agents, for the benefit of the applicable Purchasers, and each Facility Agent shall, on behalf of the related Purchaser, purchase from the Seller undivided percentage ownership interests in each and every Receivable Interest not previously purchased to the extent that Collections are available for such Purchase in accordance with Section 2.08(a) hereof (each, a “Reinvestment Purchase”), such that after giving effect to such Purchase (and for each Facility Agent that is making such Reinvestment Purchase), (i) the amount of the Aggregate Net Investment of such Facility Agents, for the benefit of their respective Purchasers, at the end of each such day shall be equal to the amount of the Aggregate Net Investment of such Facility Agents, for the benefit of the related Purchasers, at the end of the day immediately preceding such day, plus the Purchase Price paid with respect to any Incremental Purchase, Reimbursement Purchase or Swingline Reimbursement Purchase made on such day, if any, minus the reduction in Aggregate Net Investment pursuant to Section 2.08, 2.09 or 2.15(b) hereof made on such day, if any, and (ii) such Facility Agent’s (for the benefit of its related Purchaser) Purchase Group Net Investment, at the end of each such day shall be equal to the amount of its Purchase Group Net Investment at the end of the day immediately preceding such day, plus its Purchase Group Percentage of the Purchase Price paid with respect to any Incremental Purchase, Reimbursement Purchase or Swingline Reimbursement Purchase made on such day, if any, minus its pro rata portion of the reduction in the Aggregate Net Investment pursuant to Section 2.08, 2.09 or 2.15(b) hereof made on such day. Subject to the terms and conditions hereof, each such Reinvestment Purchase shall be allocated among the Facility Agents (for the benefit of their related Purchasers) based on their respective Exposure Amounts as a percentage of the Aggregate Exposure Amount on such day.
Section 2.06. Benchmark Replacement. (a) Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Term SOFR Replacement Event has occurred in relation to Term SOFR, the Administrative Agent, acting with the consent of the Required Facility Agents, and the consent of the Seller, may amend or waive a provision of this Agreement and the other Transaction Document which relates to:
(i)providing for the use of a Benchmark Replacement in place of Term SOFR; and
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(ii)
(A)aligning any provision of any Transaction Document to the use of that Benchmark Replacement;
(B)enabling that Benchmark Replacement to be used for the calculation of Yield under this Agreement (including, without limitation, any consequential changes required to enable that Benchmark Replacement to be used for the purposes of this Agreement);
(C)implementing market conventions applicable to that Benchmark Replacement;
(D)providing for appropriate fallback (and market disruption) provisions for that Benchmark Replacement; or
(E)adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one party to another as a result of the application of that Benchmark Replacement (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation).
(b) The Administrative Agent will promptly (in one or more notices) notify the Seller and each Facility Agent of (i) any occurrence of a Term SOFR Replacement Event, (ii) the implementation of any Benchmark Replacement, and (iii) the need for aligning any provision of any other Transaction Document to the use of that Benchmark Replacement and shall request consent of the Seller, and subject to paragraph (c) below, the Required Facility Agents with respect to the Benchmark Replacement and the alignment of any provision of any Transaction Document, which changes shall not be effective unless and until such consent is received.
(c) If any Facility Agent fails to respond to a request for an amendment or waiver described in paragraph (a) above within 15 Business Days (or such longer time period in relation to any request which the Seller and the Administrative Agent may agree) of that request being made: (i) its Purchase Group Maximum Net Investment(s) shall not be included for the purpose of calculating the Maximum Net Investment when ascertaining whether any relevant percentage of Maximum Net Investment has been obtained to approve that request; and (ii) its status as a Facility Agent and its Purchase Group shall be disregarded for the purpose of ascertaining whether the agreement of any specified Facility Agents has been obtained to approve that request.
(d) Upon the Seller’s receipt of notice of the commencement of a Term SOFR Replacement Event, the Seller may revoke any pending request for a Purchase that accrues Yield based on Term SOFR or, failing that, will be deemed to have converted such request into a request for a Purchase that accrues Yield at the Alternate Base Rate (other than clauses (ii) or (iii) of that definition).
Section 2.07. Yield, Fees and Costs. (a) The Seller shall pay the Facility Agents (for distribution to the Purchasers and LC Banks, as applicable) Yield due on their Net Investment on each Settlement Date. On the first Business Day of each calendar month, each Facility Agent will provide the Seller and the Servicer with an invoice showing (a) the Yield due on the Net Investment funded by the Purchaser(s) (including the Swingline Purchaser, as applicable) in its Purchase Group and (b) the Yield due on the Reimbursement Obligations owed by the Seller to the LC Banks on the related Settlement Date for the preceding Calculation Period.
(b) The Seller shall pay the Facility Agents (for distribution to the Purchasers and LC Banks, as applicable), and the Administrative Agent, as applicable, the non-refundable fees set forth in the Transaction Fee Letters on each Settlement Date. For each Settlement Date, the Administrative Agent and each Facility Agent will provide the Seller and Servicer with an invoice showing the fees due to it and/or the related Purchasers and LC Banks in its Purchase Group on such Settlement Date.
(c) All payments made by the Seller or the Servicer to any Facility Agent pursuant to this Section 2.07 shall be made to the account designated by such Facility Agent on Schedule I hereto.
(d) The calculations of amounts owing to any Facility Agent (for itself or on behalf of its Purchase Group) or to the Administrative Agent in any invoice or certificate provided in this Section 2.07 shall be conclusive and binding for all purposes, absent manifest error.
Section 2.08. Settlements and Other Payment Procedures. (a) The Servicer shall, on each day before the Termination Date on which Collections are received or deemed received by it (including amounts held in the Collection Account):
(i) set aside on its books and Records and hold in trust from the Percentage Interest in such Collections, an amount equal to (A) with respect to each Purchase Group, the aggregate amount of Yield, Used Fee, Unused Fee and other fees, costs, expenses and indemnity amounts accrued through, or payable on, such day for such Purchase Group, (B) with respect to each LC Bank to which Reimbursement Obligations are due and owing, an amount equal to accrued and unpaid Yield on any outstanding Reimbursement Obligations owed to such LC Bank, (C) with respect to each LC Bank that has issued Letters of Credit, all fees, including the Letter of Credit Fronting Bank Fee, accrued and unpaid to such LC Bank, (D)
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with respect to the Administrative Agent, any accrued and unpaid fees due to the Administrative Agent, and (E) with respect to the Servicer, any accrued and unpaid Servicing Fees;
(ii) deposit to the LC Cash Collateral Account, the amount required to cash collateralize any Defaulting Purchaser’s pro rata share of the aggregate undrawn Stated Amount of Letters of Credit pursuant to Section 2.12(a) hereof;
(iii) with respect to any LC Bank to which Reimbursement Obligations are owed, set aside the entire amount of such Reimbursement Obligations owed;
(iv) with respect to the Swingline Purchaser, set aside the amount of any Swingline Reimbursement Purchase owed;
(v) with respect to any Non-Extending Purchase Group, on and after the applicable Non-Pro Rata Extension Date (so long as a Termination Event shall not have occurred and be continuing), set aside on its books and Records its ratable share of Collections as described in Section 2.17(c) hereof;
(vi) if the Seller has provided timely notice of an optional reduction of the Aggregate Net Investment or a Mandatory Reduction Amount is due and unpaid, set aside on its books and Records from such Collections the Optional Reduction Amount and Mandatory Reduction Amount, as applicable, but for the avoidance of doubt, without any breakage costs;
(vii) apply all or a portion of the remainder of the Percentage Interest in such Collections, such that the Aggregate Net Investment after such receipt and Reinvestment Purchases is the same as before such receipt and Reinvestment Purchases; and
(viii) release any remaining Collections to the Seller;
and on each Settlement Date, Distribution Date, Mandatory Reduction Date, Optional Reduction Date or other day on which other amounts are due and payable pursuant to the terms of this Agreement, pay the amounts set aside above, together with other amounts paid by the Seller, the Servicer or the Parent hereunder, to the Administrative Agent, the Facility Agents (on behalf of their Purchase Groups), the Purchasers or the LC Banks, as the case may be. If the Control Date but not the Termination Date shall have occurred, the daily set asides, applications and payments specified in this Section 2.08(a) shall be performed by the Administrative Agent, based on the information provided in the Servicer Reports and pursuant to Section 4.10(f).
(b) On the Termination Date and each Business Day thereafter, all Collections received or deemed received (including amounts in the Collection Account), together with other amounts paid by the Seller, the Servicer or the Parent hereunder, shall be applied in the following order of priority (whether or not such funds are sufficient to pay in full all such amounts and pro rata within each level based on the amounts due at such level):
FIRST, to the Servicer in payment of all accrued and unpaid Servicing Fee and all other out-of-pocket costs and expenses owed to it, if any, in connection with the servicing, administering and collecting the Receivables;
SECOND, on a pro rata basis (a) to each Facility Agent, the accrued and unpaid Yield due on its Purchase Group’s Net Investment and (b) to any LC Bank, accrued and unpaid Yield on any outstanding Reimbursement Obligations;
THIRD, on a pro rata basis, (a) to each Facility Agent, the accrued and unpaid Used Fees and Unused Fees due to its related Purchase Group, (b) to each LC Bank, all accrued and unpaid Letter of Credit Fronting Bank Fees due to it and (c) to the Administrative Agent, all accrued and unpaid fees due to the Administrative Agent;
FOURTH, to the LC Cash Collateral Account, the amount necessary to cause the amount therein to equal the Required LC Cash Collateral Amount;
FIFTH, to any LC Bank, in payment in full of any outstanding Reimbursement Obligations owed to it;
SIXTH, to each Facility Agent, to reduce the related Purchase Group’s Net Investment to zero;
SEVENTH, to the Administrative Agent and each Facility Agent, any amounts necessary to reimburse the Administrative Agent or such Facility Agent for the costs of collection and enforcement of the Facility;
EIGHTH, to each Facility Agent and LC Bank, in payment in full of any other amounts owed by the Seller to the Purchasers and LC Banks in their related Purchase Groups pursuant to this Agreement; and
NINTH, to the Administrative Agent, in payment of expenses owed to it by the Seller pursuant to this Agreement.
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(c) After the Aggregate Net Investment, Reimbursement Obligations, Yield, fees and any other Aggregate Unpaids have been paid in full and, if required hereunder, the LC Cash Collateral Account has been funded in an amount equal to the Required LC Cash Collateral Amount, all additional Collections with respect to the Receivable Interest shall be paid to the Seller for its own account.
(d) For the purposes of this Section 2.08:
(i) if, on any day, there arises a Deemed Collection with respect to any Receivable, the Seller shall be deemed to have received on such day a Collection of such Receivable in the amount of such Deemed Collection;
(ii) except as otherwise required by applicable Law or in (i) above or the relevant Contract, all Collections (other than Deemed Collections) received from an Obligor of any Receivable shall be applied to the Receivables of such Obligor in order of the age of such Receivables, starting with the oldest such Receivable, unless such Obligor designates its payment for application to specific Receivables, provided that Deemed Collections shall be applied to the applicable Receivable that gave rise to such Deemed Collection; and
(iii) if and to the extent any Purchaser or LC Bank shall be required for any reason to pay over to an Obligor any amount received on its behalf hereunder, such amount shall be deemed not to have been so received but rather to have been retained by the Seller and, accordingly, such Purchaser or LC Bank, as applicable, shall have a claim against the Seller for such amount, payable when and to the extent that any distribution from or on behalf of such Obligor is made in respect thereof.
(e) The funds deposited into the LC Cash Collateral Account pursuant to (i) Section 2.08, Section 2.09 or Section 2.12 may be applied as set forth in (A) Section 2.11(b) to satisfy the Seller’s Reimbursement Obligations or (B) Sections 2.12(a) or (c) to satisfy a Defaulting Purchaser’s obligations to fund its portion of Reimbursement Purchases, or (ii) Section 11.08 may be applied to satisfy the Seller’s Reimbursement Obligation and the Required LC Cash Collateral Amount. If on any Monthly Report Date the amount on deposit in LC Cash Collateral Account (other than amounts deposited therein pursuant to Section 11.08 and not then applied pursuant to clause (ii) of the preceding sentence) exceeds the Required LC Cash Collateral Amount, the Administrative Agent shall, on the second Business Day after the next Monthly Report Date, withdraw such excess funds on deposit in the LC Cash Collateral Account, and pay the same to the Seller.
Section 2.09. Mandatory Reduction of Aggregate Exposure Amount. If, on any day, the Seller knows or should know that the Percentage Interest exceeds 100%, the Servicer or the Seller shall promptly notify the Administrative Agent and the Facility Agents and shall specify the Mandatory Reduction Amount. By the second Business Day after the date of such notification, the Seller shall pay the Mandatory Reduction Amount to the Administrative Agent. The Administrative Agent shall distribute such funds (i) first, to each LC Bank owed any Reimbursement Obligations(s), its pro rata share (based on such LC Banks’ Reimbursement Obligation(s) as a percentage of the aggregate amount of Reimbursement Obligations owed to LC Banks) of such Mandatory Reduction Amount (but in no event in excess of the Reimbursement Obligations(s) owed to each such LC Bank), (ii) second, to the Swingline Purchaser, any Swingline Reimbursement Purchase owed to it, (iii) third, to pay to each Facility Agent, its Purchase Group’s Purchase Group Percentage of any remaining Mandatory Reduction Amount to repay all or a portion of the related Purchase Group’s Net Investment, and (iv) fourth, to the LC Cash Collateral Account, any remaining Mandatory Reduction Amount. On any day on which a Mandatory Reduction Amount is due and payable, the Seller shall not be obligated to pay to any Purchaser any breakage costs in connection with the payment of such Mandatory Reduction Amount, even if paid on a date other than a Settlement Date.
Section 2.10. Letters of Credit. (a) On and after the LC Effective Date, subject to the terms and conditions hereof, each LC Bank, in reliance on the agreements of the Facility Agents set forth in Section 2.11, agrees to issue standby and documentary letters of credit (the “Letters of Credit”) for the account of the Seller on any Business Day during the period from the LC Effective Date to the Termination Date (or, in the case of an LC Bank in a Non-Extending Purchase Group, the applicable Non-Pro Rata Extension Date) in such form as may be approved from time to time by such LC Bank; provided that no LC Bank shall have any obligation to Issue any Letter of Credit if, after giving effect to such Issuance, (i) without the consent of the applicable LC Bank, the LC Obligations owed to such LC Bank at such time would exceed such LC Bank’s LC Bank Sublimit, (ii) the Percentage Interest would exceed 100%, (iii) the portion of the LC Obligations attributable to Letters of Credit with expiry dates after the Scheduled Termination Date of any Purchase Group (which may occur by reason of a Purchase Group which is a Non-Extending Purchase Group) will exceed the portion of the Maximum Net Investment attributable to the Maximum Net Investment of the Purchase Groups with Scheduled Termination Dates that have not occurred, or (iv) any Committed Purchaser is a Defaulting Purchaser, unless (x) arrangements with respect to such Defaulting Purchaser have been made which are reasonably satisfactory to such LC Bank to mitigate such LC Bank’s risk with respect to such Defaulting Purchaser (as to both existing Letters of Credit and any proposed new Issuance), (y) the Seller has fulfilled the requirements set forth in Section 2.12(a), or (z) such Defaulting Purchaser has assigned all of its rights, interests and obligations hereunder to assignee(s) in accordance with Section 11.08 hereof. Each Letter of Credit shall (A) be denominated in Dollars, (B) have a face amount of at least $5,000,000, (C) expire no later than the earlier of (1) the first anniversary of its date of issuance and (2) the date that is five Business Days prior to the Scheduled Termination Date of all Purchase Groups (or, in the case of an LC Bank in a
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Non-Extending Purchase Group, the applicable Non-Pro Rata Extension Date), provided that any Letter of Credit with a one-year term may provide for the automatic renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (2) above) and (D) provide for the payment of sight drafts or other written demands for payment no earlier than the next Business Day after being presented for honor thereunder (as long as presented by 2:00 p.m., New York City time, on such Business Day, and, if presented after 2:00 p.m., the second Business Day after being presented) in accordance with the terms thereof and when accompanied by the documents described therein.
(b) The Seller may from time to time request that an LC Bank Issue or Modify a Letter of Credit, as the case may be, by delivering to such LC Bank, at its address for notices specified on Schedule I hereto (or transmit by electronic communication, if arrangements for doing so have been approved by such LC Bank) and the Administrative Agent a Letter of Credit Application therefor, completed to the satisfaction of such LC Bank, and a Letter of Credit Request. Additionally, the Seller shall furnish to the applicable LC Bank such other certificates, documents and other papers and information as such LC Bank may request. Upon receipt of any Letter of Credit Application, such LC Bank will also provide a copy thereof to the Administrative Agent and, following receipt, the Administrative Agent shall advise the Facility Agents thereof. Such LC Bank will process such Letter of Credit Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures. Unless such LC Bank has knowledge, or has received written notice from any Facility Agent, the Administrative Agent or the Seller at least one Business Day prior to the requested date of the applicable Issuance or Modification, that one or more applicable conditions contained in Section 3.03 shall not then be satisfied, then, subject to the terms and conditions hereof, such LC Bank shall on the requested date of the applicable Issuance or Modification, Issue or Modify the Letter of Credit, as the case may be, requested by such Letter of Credit Application and related documentation (but in no event shall such LC Bank be required to Issue or Modify any Letter of Credit earlier than three Business Days after its receipt of the Letter of Credit Application therefor and all related documentation) by Issuing the original of such Letter of Credit (or requested Modification, if applicable) to the beneficiary thereof or as otherwise may be agreed to by such LC Bank and the Seller. Such LC Bank shall furnish a copy of such Letter of Credit or any amendment thereto to the Seller promptly following the Issuance or Modification thereof. Such LC Bank shall promptly furnish to the Administrative Agent, which shall in turn promptly furnish to the Facility Agents, notice of the Issuance or Modification, as applicable, of each Letter of Credit (including the amount thereof), each increase or decrease in the amount of such Letter of Credit (including the amount thereof) and the termination of such Letter of Credit.
(c) Notwithstanding the foregoing or anything else to the contrary contained herein, no LC Bank shall be under any obligation to Issue any Letter of Credit if: (i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such LC Bank from Issuing such Letter of Credit, or any Law applicable to such LC Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such LC Bank (x) shall prohibit, or request that such LC Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular, (y) shall impose upon such LC Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such LC Bank is not otherwise entitled to be compensated hereunder) not in effect on the LC Effective Date, or (z) shall impose upon such LC Bank any unreimbursed loss, cost or expense which was not applicable on the LC Effective Date and which such LC Bank in good faith deems material to it; provided that, in the cases of clauses (y) and (z), such LC Bank shall have provided written notice to the Seller of its refusal to issue any Letter of Credit and the specific reasons therefor and the Seller shall not have compensated such LC Bank for the imposition of such restriction, reserve or capital requirement or reimbursed such LC Bank for such loss, cost or expense, as applicable; (ii) the Issuance of such Letter of Credit would otherwise conflict with, or cause such LC Bank or any Purchase Group to exceed any limits imposed by, any applicable Law; or (iii) the Issuance of such Letter of Credit would violate one or more policies of such LC Bank applicable to letters of credit generally. An LC Bank shall not be obligated to Modify any Letter of Credit if (A) such LC Bank would have no obligation at such time to Issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed amendment to the Letter of Credit.
(d) The Seller shall authorize and direct each LC Bank to name the Seller as the “Applicant” or “Account Party” of each Letter of Credit; provided, that any such Letter of Credit may indicate that it is issued “on behalf of Ferguson Enterprises, LLC or an Affiliate of Ferguson Enterprises, LLC.” Notwithstanding that a Letter of Credit issued or otherwise outstanding hereunder is in support of any obligations of a Person other than the Seller, the Seller shall be obligated to reimburse the applicable LC Bank hereunder for any and all drawings under such Letter of Credit as provided in this Agreement.
(e) If any draft shall be presented for payment under any Letter of Credit, the relevant LC Bank shall promptly notify the Seller and the Administrative Agent of the date and the amount thereof and whether such LC Bank has made or will make a payment thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Seller of its obligation to reimburse such LC Bank with respect to any drawing under a Letter of Credit in accordance with the terms hereof. Upon receipt of any such notice, the Administrative Agent shall promptly advise the Facility Agents thereof. The responsibility of such LC Bank to the Seller in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit.
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(f) To the extent that any provision of any Letter of Credit Application related to any Letter of Credit is inconsistent with the provisions of this Section 2.10, the provisions of this Section 2.10 shall apply.
(g) For purposes of determining the “Stated Amount” of a Letter of Credit at any time hereunder, such amount shall be deemed to be the maximum stated amount (including any automatic increases provided by its terms) of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
(h) The Seller shall cause the aggregate Stated Amount of all Letters of Credit outstanding hereunder and all Reimbursement Obligations under clause (i) of that definition to be secured at all times by the Receivable Interest, and shall on every Business Day make such further grant, assignment, transfer and conveyance to the Facility Agents, for the benefit of the related Purchasers and LC Banks, in the Receivables, Related Security and Collections, as is necessary (if any) to cause such Receivable Interest to be so maintained.
(i) All payments made by an LC Bank pursuant to any Letter of Credit shall be made from funds of such LC Bank, and not from the funds of any other Person.
(j) Whenever any LC Bank issues a Letter of Credit, each Facility Agent, on behalf of its related Purchasers, shall, automatically and without further action of any kind upon the effective date of issuance of such Letter of Credit, have irrevocably (i) agreed to acquire a participation interest therein in an amount equal to its Purchase Group Percentage of the Stated Amount of such Letter of Credit and (ii) committed to make a Reimbursement Purchase hereunder equal to its ratable share of the applicable Reimbursement Obligation in the event that such Letter of Credit is subsequently drawn and such drawn amount shall not have been reimbursed by the Seller upon such draw. In the event that any Letter of Credit expires or is surrendered to the issuing LC Bank without being drawn (in whole or in part) then, in such event, the foregoing commitment to make a Reimbursement Purchase with respect to draws under such Letter of Credit shall expire with respect to such Letter of Credit and the Aggregate Exposure Amount shall automatically reduce by the Stated Amount of the Letter of Credit which is no longer outstanding.
Section 2.11. Letter of Credit Reimbursements; Payments. (a) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the applicable LC Bank will promptly notify the Seller and the Administrative Agent of such request on the date such request is made, and the Administrative Agent shall, in turn, promptly advise the Facility Agents thereof. Upon such drawing, the Seller will have a Reimbursement Obligation to reimburse such LC Bank at or prior to 11:00 a.m., New York time on the date on which such draw is required to be paid, in an amount equal to the amount paid by such LC Bank under such Letter of Credit in respect of such drawing. The Seller shall use its own funds available therefor to satisfy its Reimbursement Obligation; provided, that on and after the Termination Date, the Administrative Agent shall apply funds on deposit in the LC Cash Collateral Account to pay the applicable LC Bank the Reimbursement Obligation owed to it. If the Seller shall not have satisfied its Reimbursement Obligation, the applicable LC Bank shall promptly notify the Administrative Agent, the Seller and the Facility Agents of such non-payment by the Seller of its Reimbursement Obligation and the Seller shall be deemed to have requested that a Purchase (each such Purchase, a “Reimbursement Purchase”) be made on the date of the required drawing in the amount paid by such LC Bank under such Letter of Credit in respect of such drawing on such date and (ii) the Seller will deliver promptly to the Facility Agents a Purchase Notice with respect to such Reimbursement Purchase. Such Purchase Notice will specify the amount of the Reimbursement Purchase and the allocation thereof among the Purchase Groups and remittance instructions provided by the applicable LC Bank. Upon receipt of such Purchase Notice, a Reimbursement Purchase will be made by each Facility Agent (on behalf of its related Purchasers) by delivering its portion of such Reimbursement Purchase (or, in the case of a Defaulting Purchaser, by the Administrative Agent using funds in the LC Cash Collateral Account, if available, to fund such Defaulting Purchaser’s portion of the Reimbursement Purchase) to the Seller by 5:00 p.m. (New York time) on such Business Day; provided, that in no event shall any Facility Agent make a Reimbursement Purchase in the event that, after giving effect to the making of such Reimbursement Purchase, the related Purchase Group’s Exposure Amount would exceed such Purchase Group’s Maximum Net Investment. The requirement to make Reimbursement Purchases hereunder shall continue until the last to occur of any of the following events: (i) each LC Bank ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (ii) no Letter of Credit issued hereunder remains outstanding and uncancelled; and (iii) all Persons (other than the Seller or any Affiliate) have been fully reimbursed for all payments made under or relating to Letters of Credit. To the extent that any Facility Agent (on behalf of its related Purchasers) does not fund such Reimbursement Purchase hereunder, the aggregate amount of such unfunded Reimbursement Purchases shall be deemed to be a Reimbursement Obligation of the Seller until such time (if at all) that any such Facility Agent(s) (on behalf of their related Defaulting Purchaser(s)) fund their Reimbursement Purchase(s) to such LC Bank. Each Facility Agent’s funding of its ratable portion of a Reimbursement Purchase shall reduce the Seller’s Reimbursement Obligation by the amount of such funding.
(b) If an LC Bank is required at any time to return to the Seller or any other Person, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by the Seller to such LC Bank pursuant to this Agreement in payment of a Reimbursement Obligation, each Facility Agent’s obligation (on behalf of its related Purchaser) to make a Reimbursement Purchase in accordance with the terms of Section 2.11(a) shall thereupon arise, and following demand by such LC Bank, each such Facility Agent shall make a Reimbursement Purchase of its ratable amount of any amounts so returned by such LC Bank.
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(c) Notwithstanding any other provision of this Agreement, prior to the date on which a drawing occurs on any Letter of Credit (each such date, a “Drawing Date”), no Yield shall accrue or be payable on the Stated Amount of such Letter of Credit, but fees with respect thereto shall be payable in accordance with any applicable Fee Letter and each LC Bank Fee Letter. Following the Drawing Date of any Letter of Credit and funding of a Reimbursement Purchase, applicable Yield shall accrue and be payable on the outstanding unpaid amount of such Reimbursement Purchase for each day from and including the date such Reimbursement Purchase is made. In addition, following the Drawing Date of any Letter of Credit (and until a Reimbursement Purchase or payment in satisfaction of a Reimbursement Obligation in full), applicable Yield shall accrue and be payable on the outstanding amount of such Reimbursement Obligation for each day from and including the date such Reimbursement Obligation arose to but excluding the date the Seller reimburses the Reimbursement Obligation (or such time as the Reimbursement Purchase is made in full to satisfy the Reimbursement Obligation).
(d) The Seller’s obligations under this Section 2.11 and the Facility Agents’ obligations to fund Reimbursement Purchases under this Section 2.11 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Seller or any such Facility Agent may have or have had against any LC Bank, any beneficiary of a Letter of Credit or any other Person. The Seller also agrees with each LC Bank that no LC Bank shall be responsible for, and the Seller’s Reimbursement Obligations shall not be affected by, among other things, (i) any lack of validity or enforceability of any Letter of Credit or any Transaction Document or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by any LC Bank under a Letter of Credit against presentation of a draft or other document that does not strictly comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.11(d), constitute a legal or equitable discharge of, or provide a right of setoff against, the Seller’s obligations hereunder. Neither the Administrative Agent, the Facility Agents, the Purchasers nor the LC Banks, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of any LC Bank; provided, that the foregoing shall not be construed to excuse the relevant LC Bank from liability to the Seller to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Seller to the extent permitted by applicable Law) suffered by the Seller that are caused by such LC Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of an LC Bank (as finally determined by a court of competent jurisdiction), such LC Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, an LC Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.
(e) If any Letter of Credit remains outstanding and undrawn (either in full or in part) on the Termination Date, effective as of such date, the Seller shall have a Reimbursement Obligation with respect to all such Letters of Credit in an amount equal to the aggregate Stated Amount of outstanding and undrawn Letters of Credit on such day, together with the associated Fee Collateral Amount, and the Seller agrees to satisfy such Reimbursement Obligation by depositing such amount into the LC Cash Collateral Account.
Section 2.12. Defaulting Purchasers. (a) If any Committed Purchaser becomes a Defaulting Purchaser at any time when there are undrawn Letters of Credit outstanding, then the Servicer shall on each day following such occurrence apply Collections to cash collateralize for the benefit of the LC Banks the portion of the amount of the then outstanding Letters of Credit equal to such Defaulting Purchaser’s ratable share of such undrawn Stated Amount of outstanding Letters of Credit by depositing all Collections available pursuant to Section 2.08 into the LC Cash Collateral Account until the amount therein is equal to such Defaulting Purchaser’s ratable share of undrawn Stated Amount of outstanding Letters of Credit (including increased amounts due to newly-issued Letters of Credit and reductions due to terminations of Letters of Credit). The Administrative Agent shall (1) apply funds deposited into the LC Cash Collateral Account pursuant to this Section 2.12(a) to satisfy a Defaulting Purchaser’s obligation to fund its portion of a Reimbursement Purchase pursuant to Section 2.11(a) or (b) hereof and (2) transfer funds in the LC Cash Collateral Account in excess of the Required LC Cash Collateral Amount to the Seller as provided in Section 2.08(e) hereof. For the avoidance of doubt, the amount required to be deposited and maintained in the LC Cash Collateral Account pursuant to this Section 2.12(a) is only one component of the Required LC Cash Collateral Amount, and other amounts may be required to be deposited and maintained in the LC Cash Collateral Account pursuant to Section 2.08 or 2.09.
(b) The Seller shall not be required to pay any Defaulting Purchaser the portion of the Used Fee or Unused Fee pursuant to its related Fee Letter with respect to the amount of the undrawn Letters of Credit that is cash collateralized pursuant to Section 2.12(a).
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(c) Except for the portion of any fees not otherwise payable to such Defaulting Purchaser pursuant to Section 2.12(b), no amount payable by the Seller for the account of a Defaulting Purchaser under this Agreement (whether on account of Net Investment, Yield, indemnity payments or other amounts) shall be paid or distributed to such Defaulting Purchaser (or its Facility Agent), but instead shall be deposited to the LC Cash Collateral Account until the amount therein is equal to the amount of such Defaulting Purchaser’s ratable share of the Stated Amount of the undrawn Letters of Credit that is not cash collateralized in accordance with Section 2.12(a), and to the extent of any remaining amounts, to pay to such Defaulting Purchaser amounts owed to it.
Section 2.13. Payments and Computations, Etc. All per annum fees payable under this Agreement shall be calculated for the actual days elapsed on the basis of a 360-day year. All amounts to be paid or deposited by the Seller or the Servicer hereunder shall be paid or deposited in accordance with the terms hereof in immediately available funds no later than the time specified in the applicable provision of this Agreement, or, if not so specified, by 11:00 a.m. (New York City time) on the day when due. All such amounts shall be paid or deposited to the applicable party or account, as applicable, at the address listed on Schedule I hereto (or in the applicable Assumption Agreement); provided, that, if such amounts are payable to any Purchasers or LC Banks, they shall be paid or deposited in the applicable Facility Agent’s account indicated on Schedule I hereto (or in the applicable Assumption Agreement), until otherwise notified by such party. The Seller shall, to the extent permitted by Law, pay interest on all amounts not paid or deposited when due hereunder at a rate equal to the Default Rate. All computations of Yield 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 other than computations of interest calculated by reference to the Alternate Base Rate which shall be calculated on the basis of a 365- or 366-day year, as applicable.
Section 2.14. Increased Costs. The Seller will indemnify each Purchaser (and any of its Support Providers) and LC Bank if any Regulatory Change (i) subjects such Person (each an “Affected Person”) to any charge on or with respect to such Affected Person’s obligations in connection with the Facility, or on or with respect to the Receivables, or subjects any such Affected Person to Tax on its Exposure Amount or its obligation to fund a portion of the Aggregate Exposure Amount (except for Indemnified Taxes and Excluded Taxes), (ii) imposes, modifies or deems applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or liabilities of any Affected Person, or credit extended by any Affected Person in connection with the Facility (excluding Taxes) or (iii) imposes any other condition the result of which is to increase the cost to any Affected Person of performing its obligations in connection with the Facility, or to reduce the rate of return on any Affected Person’s capital as a consequence of its obligations in connection with the Facility, or to reduce the amount of any sum received or receivable by any Affected Person in connection with this Facility, or to require any payment calculated by reference to the amount of interests or loans held or interest received by it (excluding Taxes). The Seller will promptly pay to the Facility Agent for the Affected Person such indemnity amount as shall be specified to the Seller in a certificate of the Affected Person (or its Facility Agent, on its behalf) setting forth the calculations of such amount, together with the basis therefor. Any such certificate submitted by or on behalf of the Affected Person shall be conclusive and binding for all purposes, absent manifest error.
Section 2.15. Optional Reduction of Maximum Net Investment; Optional Reduction of Aggregate Net Investment. (a) The Seller may at any time and from time to time reduce in whole or in part the Maximum Net Investment (but not below the Aggregate Exposure Amount) and/or the Swingline Sublimit by giving the Facility Agents and/or the Swingline Purchaser, if applicable, written notice thereof at least five (5) Business Days before such reduction is to take place; provided, however, that any partial reduction of the Maximum Net Investment or the Swingline Sublimit shall be in an amount of $5,000,000 or any higher multiple of $100,000. Any reduction in the Maximum Net Investment shall be allocated ratably among the Purchase Groups. The Seller shall pay each Facility Agent any accrued and unpaid Unused Fee on the date of such reduction with respect to the reduction amount.
(b) The Seller may reduce, in whole or in part, the Aggregate Net Investment (the amount of any such reduction, the “Optional Reduction Amount”) by giving the Administrative Agent and the Facility Agents written notice thereof at least two (2) Business Days before such optional reduction (each, an “Optional Reduction Notice”) substantially in the form of Exhibit F hereto. Each such Optional Reduction Notice shall specify the requested Optional Reduction Amount and the requested optional reduction date. If the Seller has delivered an Optional Reduction Notice with respect to the Aggregate Net Investment, then on the requested Optional Reduction Date, the Servicer shall apply Collections that would have been used for Reinvestment Purchases to pay (i) first, to the Facility Agent for the Swingline Purchaser, any Swingline Purchase Net Investment or Swingline Reimbursement Purchase that is owed, and (ii) second, to the Facility Agents (for the benefit of their respective Purchasers), their ratable shares of the reduction amount, but for the avoidance of doubt, without any breakage costs. Each partial reduction shall be in minimum increments of $5,000,000 or any higher multiple of $100,000.
Section 2.16. Increase in Maximum Net Investment. The Seller may at any time and from time to time as long as no Termination Event or Potential Termination Event exists increase the Maximum Net Investment up to $1,500,000,000 by (a) either (i) adding additional Purchase Groups or (ii) causing an existing Purchase Group or Groups to increase its Purchase Group Maximum Net Investment and (b) executing an amendment to this Agreement. Each new Purchase Group shall become a party hereto by executing and delivering to the Administrative Agent, the Seller and the Servicer an Assumption Agreement (which Assumption Agreement shall be executed by all Purchasers in such new Purchase Group).
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Section 2.17. Procedures for Extension of a Scheduled Termination Date. (a) No more than 90 days prior to the date as of which the proposed extension would become effective (the “Proposed Effective Date”), the Seller may request in writing that a Facility Agent consent to the extension of the Scheduled Termination Date for its Purchase Group for an additional period specified in such request, which decision shall be made by such Facility Agent (after consultation with its Purchase Group) in its sole discretion. Each such Facility Agent shall notify the Seller of its willingness or its determination not to consent to such extension of the Scheduled Termination Date for its Purchase Group as soon as practical after receiving such request, and in any event by the thirtieth day following the day such request is received (the “Response Date”). Any such Facility Agent which does not expressly notify the Seller of its willingness to extend by the Response Date will be deemed not to have consented to such extension for its Purchase Group. With respect to Purchase Groups having the same Scheduled Termination Date, the Seller shall request an extension of such Scheduled Termination Date and propose the same extended Scheduled Termination Date for all such Purchase Groups.
(b) If, by the Response Date, all requested Facility Agents have notified the Seller of their determination to extend the Scheduled Termination Date for their respective Purchase Group, then on the Proposed Effective Date, the Scheduled Termination Date for all Purchase Groups will be so extended by the period agreed between the Seller and the Purchase Groups, such extension to be evidenced in an addendum or amendment to this Agreement substantially in the form of Exhibit D, signed by all parties hereto.
(c) If, by the Response Date, a Facility Agent has notified (or is deemed to have notified) the Seller of its determination not to extend, then such Purchase Group will become a “Non-Extending Purchase Group” on the Proposed Effective Date unless on or before such Proposed Effective Date, the Seller withdraws its request for an extension, in which case, such Purchase Group shall maintain its existing Purchase Group Maximum Net Investment for the unextended Scheduled Termination Date. If the Seller elects not to withdraw its request, then on the Proposed Effective Date (or such date as is agreed by the Seller and the relevant Facility Agent) (i) for any Facility Agent which has agreed to the extension of the Scheduled Termination Date for its Purchase Group, the Scheduled Termination Date for such Purchase Group will be extended for the period requested by the Seller and accepted by such Facility Agent and (ii) the Seller shall either (A) cause each Non-Extending Purchase Group to assign, and each Non-Extending Purchase Group hereby agrees to make such assignment, governed by the terms of Section 11.08, of its interests, rights and obligations (including its obligation to make Swingline Purchases, if applicable) under this Agreement to existing Purchase Groups, an Eligible Purchaser, or other Purchaser acceptable to the Administrative Agent and following the LC Effective Date, the LC Banks, which agree to the extended Scheduled Termination Date, or (B) declare a “Non-Pro Rata Extension Date” as of which date (1) the Maximum Net Investment (and the LC Sub-Facility) will be reduced by the amount of each Non-Extending Purchase Group’s Purchase Group Maximum Net Investment, (2) if such Non-Extending Purchase Group includes the Swingline Purchaser, the Swingline Sublimit will be reduced by the amount of the Swingline Sublimit, and (3) the Servicer shall set aside and hold in trust for each Non-Extending Purchase Group, a ratable percentage of Collections (based on the Exposure Amount of such Non-Extending Purchase Group as a percentage of the Aggregate Exposure Amount). If the amount so set aside on such Non-Pro Rata Extension Date is not adequate to repay each Non-Extending Purchase Group’s Net Investment, together with Yield thereon and other Aggregate Unpaids due to it, then on each Business Day after the Non-Pro Rata Extension Date, unless a Termination Event or Potential Termination Event shall have occurred and be continuing or would occur after giving effect to the payment of such amounts, the Servicer shall allocate to each Non-Extending Purchase Group its ratable portion of Collections (up to such Net Investment, Yield and other amounts) and on each Distribution Date after the Non-Pro Rata Extension Date, shall pay to the Facility Agent for the Non-Extending Purchase Group the Non-Extending Purchase Group’s Net Investment, Yield thereon and other Aggregate Unpaids due them until such amounts have been paid in full. The Facility Agent for a Non-Extending Purchase Group shall not be obligated to make any Purchases or Issue or Modify Letters of Credit on and after its Non-Pro Rata Extension Date. An extension of a Scheduled Termination Date shall be evidenced by an addendum or amendment to this Agreement substantially in the form of Exhibit D, executed by the Seller and the Facility Agent(s) of the affected Purchase Group(s) (including any new Purchasers and Facility Agents).
Section 2.18. Facility Termination. Subject to other provisions of this Agreement requiring earlier termination, the Facility Agents’ obligations (on behalf of their respective Purchasers) to make Purchases hereunder and LC Banks’ obligations to Issue or Modify (and honor draws under) the Letters of Credit hereunder shall terminate at Facility Termination.
Section 2.19. Swingline Purchases. (a) On and after the Swingline Effective Date, subject to the terms and conditions hereof, including Section 3.03 and, as applicable, Section 3.04, from time to time, upon receipt by the Facility Agent for the Swingline Purchaser from the Seller of a Purchase Notice, the Swingline Purchaser hereby agrees to make a Swingline Purchase in an aggregate amount not to exceed at any time the Swingline Sublimit. The Seller shall provide the Facility Agent for the Swingline Purchaser with a Purchase Notice by 1:00 p.m. (New York City time) on the Business Day on which such Swingline Purchase is requested (and if the Facility Agent shall receive such Purchase Notice after 1:00 p.m. (New York City time), on a Business Day, such Swingline Purchase shall be deemed to be requested to be made on the next following Business Day). Each Purchase Notice shall specify the Purchase Price of the Swingline Purchase requested to be made. Not later than 4:00 p.m. (New York City time) on the Business Day on which such Purchase Notice is received (or if such Purchase Notice is received after 1:00 p.m., (New York City time) on a Business Day, no later than 1:00 p.m. (New York City time), on the Business Day next following the Business Day on which such Purchase Notice is received), the Swingline Purchaser will make the Swingline Purchase by paying to the Seller in immediately available funds an
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amount equal to the Purchase Price for such requested Swingline Purchase. The Swingline Purchaser shall have no obligation to make a Swingline Purchase on any day if the conditions set forth in Section 3.03 and, as applicable, Section 3.04, hereof are not satisfied. The Swingline Purchaser shall make no such Swingline Purchase on or after the tenth Business Day before its Scheduled Termination Date or after the Termination Date. Each Swingline Purchase shall be in an aggregate amount of at least $1,000,000 or any higher multiple of $100,000. The Seller will provide the Administrative Agent with a copy of each Purchase Notice for a Swingline Purchase at the same time as such Purchase Notice is provided to the Facility Agent for the Swingline Purchaser, and the Administrative Agent will, in turn, promptly provide such Purchase Notice to the Facility Agents.
(b) On the Swingline Settlement Date related to each Swingline Purchase, such Swingline Purchase shall be repaid by Purchase by the Purchase Groups (each such Purchase, a “Swingline Reimbursement Purchase”). On or prior to 1:00 p.m., New York time on the Business Day before each Swingline Settlement Date, the Swingline Purchaser shall deliver to the Administrative Agent and the Facility Agents a Purchase Notice. Such Purchase Notice will specify the amount of the Swingline Reimbursement Purchase and the allocation thereof among the Purchase Groups (which shall be based on their respective Purchase Group Percentages) and remittance instructions. Upon receipt of such Purchase Notice, a Swingline Reimbursement Purchase will be made by each Facility Agent (other than the Facility Agent for the Swingline Purchaser whose funding, for administrative convenience, will be deemed made), on behalf of its related Purchasers, by delivering its portion of such Swingline Reimbursement Purchase to the Facility Agent for the Swingline Purchaser by 1:00 p.m. New York time, on the applicable Swingline Settlement Date; provided, that in no event shall any Facility Agent make a Swingline Reimbursement Purchase in the event that, after giving effect to the making of such Swingline Reimbursement Purchase, the related Purchase Group’s Exposure Amount would exceed such Purchase Group’s Maximum Net Investment. The requirement to make Swingline Reimbursement Purchases hereunder shall continue until the last to occur of any of the following events: (i) the Swingline Purchaser ceases to be obligated to make Swingline Purchases hereunder; and (ii) the Net Investment attributable to Swingline Purchases has been repaid.
(c) In the event any Facility Agent fails to make available to the Swingline Purchaser its portion of the Swingline Reimbursement Purchase, such Facility Agent shall continue to owe to the Swingline Purchaser its portion of the Swingline Reimbursement Purchase, together with interest thereon in respect of each day from and including the applicable Swingline Settlement Date to the date such amount is repaid to the Swingline Purchaser in same day funds at the Alternate Base Rate.
(d) In the event that, on a Swingline Settlement Date, a Termination Event occurs and either (i) such Termination Event is of the type described in Section 8.01(f) hereof or (ii) no further Purchases are being made under this Agreement, so long as any such Termination Event is continuing, then, the Seller will be deemed to have sent to each of the Facility Agents (on behalf of their respective Purchase Groups) a Purchase Notice for a Swingline Reimbursement Purchase and the procedures of clause (b) shall apply.
(e) The Facility Agents’ obligations to fund Swingline Reimbursement Purchases on and after the Swingline Effective Date under this Section 2.19 shall be absolute and unconditional under any and all circumstances, and irrespective of any setoff, counterclaim or defense to payment that the Seller or any such Facility Agent may have or have had against the Swingline Purchaser or any other Person, and shall apply regardless of whether the conditions precedent thereto set forth in Section 3.03 and, as applicable, Section 3.04 hereof, are then satisfied and whether or not any Termination Event or Potential Termination Event exists.
ARTICLE III
CLOSING PROCEDURES
CLOSING PROCEDURES
Section 3.01. Purchase and Sale Procedures.
(a) General. Each Purchase (other than a Swingline Purchase) hereunder shall constitute a purchase of, and shall transfer ownership to the Facility Agents for the benefit of the Purchasers of, undivided percentage ownership interests in each and every Receivable, together with Related Security and Collections with respect thereto, then existing. Each Swingline Purchase hereunder shall constitute a purchase of, and shall transfer ownership to the Facility Agent for the benefit of the Swingline Purchaser of, additional undivided percentage ownership interests in each and every Receivable, together with Related Security and Collections with respect thereto, then existing.
(b) Sale Without Recourse. The Receivable Interest sold by the Seller hereunder shall be made without recourse except as specifically provided herein.
(c) Non-Assumption by the Purchase Groups of Obligations. No obligation or liability of the Seller to any Obligor or any third party under any Receivable or Contract which is part of the Receivables in which the Facility Agents, on behalf of their respective Purchase Groups, have acquired the Receivable Interest shall be assumed by any Facility Agent or Purchaser, and any such assumption is hereby expressly disclaimed. Each Purchaser, each LC Bank, each Facility Agent and the Administrative Agent shall be indemnified by the Seller in accordance with Section 10.01 hereof in respect of any Losses arising out of or incurred in connection with any Obligor’s assertion of such obligation or liability against the Purchasers, the LC Banks, the Facility Agents or the Administrative Agent.
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Section 3.02. Conditions to Closing. On or prior to the execution of this Agreement on the A&R Effective Date, the Seller shall deliver or cause to be delivered to the Administrative Agent the following documents and instruments:
(a) Copies of the resolutions of the board of managers or directors of each Ferguson Party (other than Ferguson Fire & Fabrication, Inc.), each certified as of the date hereof by such Person’s secretary or an assistant secretary authorizing the execution, delivery and performance of this Agreement, any other Transaction Document to which such Person is a party, and the other documents to be delivered by such Person hereunder and approving the transactions contemplated hereby and thereby;
(b) The certificate of formation or incorporation of each Ferguson Party (other than Ferguson Fire & Fabrication, Inc.) certified as of a date reasonably near the date hereof by the Secretary of State or other similar official of such Person’s jurisdiction of organization or incorporation, as applicable;
(c) A good standing certificate for each Ferguson Party (other than Ferguson Fire & Fabrication, Inc.) issued by the Secretary of State or other similar official of such Person’s jurisdiction of organization or incorporation, each such certificate to be dated a date reasonably near the date hereof;
(d) A certificate of the secretary or, in the case of the Seller, other authorized officer, of each Ferguson Party (other than Ferguson Fire & Fabrication, Inc.) dated the date hereof and certifying (i) the names and signatures of the officers authorized on such Person’s behalf to execute, and the Responsible Officers authorized to perform, this Agreement, any other Transaction Document to which such Person is a party, and any other documents to be delivered by such Person hereunder (on which certificate the Administrative Agent, the Facility Agents, the Purchasers and the LC Banks may conclusively rely until such time as the Administrative Agent shall receive from such Person a revised certificate meeting the requirements of this clause (d)(i)) and (ii) a copy of such Person’s By-laws or, in the case of the Seller, the Limited Liability Company Agreement;
(e) An opinion of Mayer Brown LLP, as counsel to the Ferguson Parties, dated the date hereof, relating to bankruptcy matters, including (i) true sale between each Originator and the Seller, and (ii) no substantive consolidation of any Ferguson Party with the Seller;
(f) A favorable opinion or opinions of Mayer Brown LLP, as special counsel to the Ferguson Parties, each dated the date hereof, relating to (i) corporate or limited liability company matters with respect to the Seller and the Parent, (ii) enforceability of the Transaction Documents, (iii) no conflicts with laws or agreements, (iv) no consents, (v) first priority perfected security interest of (A) the Seller’s interest in the Receivables, Related Security and Collections and (B) the Facility Agents’ interest in the Receivable Interest and (vi) such other matters as the Administrative Agent may reasonably request;
(g) A favorable opinion of Troutman Pepper Locke LLP, as counsel to the Ferguson Parties formed or incorporated in Virginia, dated the date hereof, relating to (i) corporate or limited liability company matters and (ii) such other matters as the Administrative Agent may reasonably request;
(h) If applicable, executed copies of the Transaction Fee Letters;
(i) Payment to each Facility Agent and the Administrative Agent, of all fees payable in accordance with the Transaction Fee Letters, as applicable, and payment of rating agency fees and fees of Chapman and Cutler LLP, counsel to the Administrative Agent and Facility Agents to the extent invoiced at least two business days before the closing of the Facility;
(j) An executed copy of the Purchase and Contribution Agreement;
(k) A pro forma Monthly Report for the Calculation Period ended October 31, 2026;
(l) If applicable, for each Purchase Group which includes a Conduit Purchaser (if so required by such Purchase Group), rating agency confirmation of the commercial paper rating of such Conduit Purchaser’s Commercial Paper;
(m) Credit approval for the Facility from each Facility Agent; and
(n) Such other documents as the Administrative Agent or any Facility Agent may reasonably request.
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Section 3.03. Conditions to Purchases and Letter of Credit Usage. In addition to any applicable terms set forth in Section 2.02 and 2.05, each Incremental Purchase, Reinvestment Purchase and Swingline Purchase and each Issuance or Modification of a Letter of Credit shall be subject to the following terms and conditions:
(a) in the case of the initial Issuance, the LC Effective Date shall have occurred;
(b) the Termination Date shall not have occurred;
(c) (i) in the case of an Incremental Purchase, the Administrative Agent and each Facility Agent shall have received a Purchase Notice, and (ii) in the case of an Issuance or Modification of a Letter of Credit, the applicable LC Bank and the Administrative Agent shall have received a Letter of Credit Request and, if applicable, a Letter of Credit Application;
(d) in the case of a Swingline Purchase, the Swingline Effective Date shall have occurred and the Facility Agent for the Swingline Purchaser and the Administrative Agent shall have received a Purchase Notice;
(e) the representations and warranties made by each of the Ferguson Parties in any Transaction Document are true and correct in all material respects as of such day, except to the extent that such representation or warranty relates to a prior date;
(f) the Ferguson Parties are in compliance with their respective covenants and agreements in the Transaction Documents;
(g) no Termination Event or Potential Termination Event shall have occurred and be continuing or shall occur as a result of such Purchase and/or Issuance/Modification of a Letter of Credit;
(h) both before and after such Purchase and/or Issuance/Modification of a Letter of Credit, (i) the Aggregate Exposure Amount shall not exceed the Maximum Net Investment (and in the case of each Purchase Group, the Exposure Amount shall not exceed the related Purchase Group Maximum Net Investment), and (ii) the aggregate Stated Amount of Letters of Credit shall not exceed the LC Sub-Facility;
(i) in the case of a Swingline Purchase, both before and after such Swingline Purchase, the aggregate of the Net Investments attributable to Swingline Purchase(s) shall not exceed the Swingline Sublimit;
(j) the Facility Agents shall have received all reports and other information required to be delivered by any Ferguson Party; and
(k) both before and after such Purchase and/or Issuance/Modification of a Letter of Credit, the Percentage Interest shall not exceed 100%.
Each Reimbursement Purchase shall be subject to the terms and conditions set forth in Section 2.11(a) or (b) hereof and each Swingline Reimbursement Purchase shall be subject to the terms and conditions set forth in Section 2.19(b) through (d) hereof.
Section 3.04. Conditions to Purchase/Acceptance of Assignment of Receivables of Additional Originator; Release and Reconveyance of Certain Receivables. The initial Purchase or acceptance of an assignment of security interest of Receivables generated by a Subsidiary of Ferguson which is not an Originator party hereto on the A&R Effective Date is subject to the conditions precedent that on or prior to the date of such Purchase or acceptance, the Seller shall deliver or cause to be delivered to the Administrative Agent the following documents and instruments, all of which shall be in form and substance acceptable to the Administrative Agent and each Facility Agent (with copies for the Facility Agents, and with such additional copies thereof as the Administrative Agent may request):
(a) Consent of all Facility Agents to the addition of such Subsidiary as an Originator hereunder to the extent such consent is required pursuant to Section 3.02 of the Purchase and Contribution Agreement;
(b) A signature page or addendum to this Agreement by which such Subsidiary becomes a party to this Agreement;
(c) A signature page or joinder agreement to the Purchase and Contribution Agreement by which such Subsidiary becomes a party to the Purchase and Contribution Agreement;
(d) An acknowledgment by the Parent that the Obligations of such Subsidiary are guaranteed by it pursuant to the provisions of Article V of this Agreement;
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(e) For such Subsidiary, each document or certificate specified in Section 3.02(a) through (d), dated a date reasonably near the addition of such Subsidiary;
(f) A financing statement (Form UCC-l) in proper form for filing naming such Subsidiary as the debtor/seller, the Seller, as the secured party/purchaser, and RBC, as Administrative Agent (on behalf of the Facility Agents for the benefit of the Purchasers and the LC Banks), as assignee, for filing in the state of such Subsidiary’s organization;
(g) Executed copies of proper financing statements (Form UCC-2 or UCC-3), necessary under the laws of all appropriate jurisdictions to release all security interests and other rights of any Person in Receivables previously granted by such Subsidiary;
(h) A certified copy of a request for information (Form UCC-11) (or a similar search report certified by parties acceptable to the Administrative Agent) dated a date reasonably near such addition listing all effective financing statements which name such Subsidiary as debtor and which, in each case, are filed in jurisdictions in which the filings related to each such Subsidiary were made pursuant to item (g) above, together with copies of such Liens and financing statements;
(i) Executed Blocked Account Agreements for any Lockboxes, Lockbox Accounts and other Blocked Accounts holding Collections originated by such Subsidiary;
(j) An opinion of Mayer Brown LLP, dated a date reasonably near such addition, addressing all such matters included in the opinions described in clauses (e) and (f) of Section 3.02 with respect to such Subsidiary;
(k) Such historical portfolio information and data with respect to such Subsidiary hereunder as may be requested by the Administrative Agent;
(l) Evidence satisfactory to the Administrative Agent that such Subsidiary is able to provide information on a monthly basis sufficient for inclusion in the Monthly Report required by Section 4.11(a); and
(m) Such other documents as the Administrative Agent or any Facility Agent may reasonably request.
Contemporaneously with any release and reconveyance of Receivables and Related Security to any Originator in accordance with Section 3.03 of the Purchase and Contribution Agreement, and without any further consideration other than as specified therein, the Administrative Agent (for the benefit of the Facility Agents and the related Purchasers) agrees to reconvey to Seller or its designee, all of its right, title and interest in and to such Receivables and Related Security and to release any security interest it may have in, and all of its right, title and interest in and to such Receivables and Related Security.
Section 3.05. Post-Closing Covenant. No later than November 20, 2026 (or such later date as the Administrative Agent may otherwise agree in writing in its sole discretion), the Seller shall deliver or cause to be delivered to the Administrative Agent the following documents and instruments:
(a) Copies of the resolutions of the board of directors of Ferguson Fire & Fabrication, Inc., certified as of the date hereof by such Person’s secretary or an assistant secretary authorizing the execution, delivery and performance of this Agreement, any other Transaction Document to which such Person is a party, and the other documents to be delivered by such Person hereunder and approving the transactions contemplated hereby and thereby;
(b) The certificate of incorporation of Ferguson Fire & Fabrication, Inc. certified as of a date reasonably near the date hereof by the Secretary of State or other similar official of such Person’s jurisdiction of incorporation;
(c) A good standing certificate for Ferguson Fire & Fabrication, Inc. issued by the Secretary of State or other similar official of such Person’s jurisdiction of incorporation, each such certificate to be dated a date reasonably near the date hereof;
(d) A certificate of the secretary of Ferguson Fire & Fabrication, Inc. dated the date hereof and certifying (i) the names and signatures of the officers authorized on such Person’s behalf to execute, and the Responsible Officers authorized to perform, this Agreement, any other Transaction Document to which such Person is a party, and any other documents to be delivered by such Person hereunder (on which certificate the Administrative Agent, the Facility Agents, the Purchasers and the LC Banks may conclusively rely until such time as the Administrative Agent shall receive from such Person a revised certificate meeting the requirements of this clause (d)(i)) and (ii) a copy of such Person’s By-laws;
(e) A favorable opinion or opinions of Mayer Brown LLP, as special counsel to Ferguson Fire & Fabrication, Inc., each dated the date hereof, relating to (i) corporate matters with respect to such Person, (ii) enforceability of the Transaction Documents, (iii) no conflicts with laws or agreements, (iv) no consents, and (v) first priority perfected security interest of the Seller’s interest in the Receivables, Related Security and Collections.
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ARTICLE IV
PROTECTION OF THE PURCHASERS;
ADMINISTRATION AND SERVICING
OF RECEIVABLES; COLLECTIONS
PROTECTION OF THE PURCHASERS;
ADMINISTRATION AND SERVICING
OF RECEIVABLES; COLLECTIONS
Section 4.01. Acceptance of Appointment and Other Matters Relating to the Servicer. Ferguson agrees to act, and has been appointed by the Seller, the Administrative Agent and the Facility Agents to act, subject to the terms hereof, as the Servicer under this Agreement, and all Purchasers and the LC Banks hereby consent to Ferguson acting as Servicer. The Servicer shall collect payments due under the Receivables in accordance with the standards that would be employed by a prudent institution in servicing comparable receivables for its own account and in accordance with the Credit and Collection Policy and shall have full power and authority, acting alone or through any party properly designated by it hereunder, to do any and all things in connection with such servicing and administration which it may deem necessary or desirable.
(a) Without limiting the generality of the foregoing and subject to Sections 2.08 and 4.09 hereof, the Servicer is hereby authorized and empowered (i) to receive and hold in trust for the Facility Agents (for the benefit of their respective Purchasers and the LC Banks) and Seller (to the extent of its interest) Collections received from Receivables as set forth in Article II and elsewhere in this Agreement and (ii) to execute and deliver, on behalf of the Seller and the Facility Agents (for the benefit of the Purchasers and the LC Banks), any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Receivables permitted under and in compliance with applicable Law and regulations. To the extent Collections are transferred to or otherwise received by the Servicer, the Servicer is hereby authorized and empowered to receive and hold in trust such Collections for the Facility Agents (for the benefit of their respective Purchasers and LC Banks) and Seller (to the extent of its interest) to be allocated and distributed as provided in this Agreement.
(b) Subject to the rights retained by the Administrative Agent pursuant to Section 4.09 hereof, each of the Seller, the Purchasers, the LC Banks, the Facility Agents and the Administrative Agent hereby appoint the Servicer to enforce its respective rights and interests in and to the Receivable Interest. If any Person succeeds the initial Servicer as a Servicer, the replaced Servicer shall promptly deliver to such successor Servicer and the replaced Servicer shall hold in trust for the Administrative Agent, the Purchasers, the LC Banks, the Facility Agents and the Seller, in accordance with their respective interests, all documents instruments and records (including computer tapes or disks) that are reasonably necessary to service or collect the Receivables.
(c) Without the prior written consent of the Required Facility Agents, the Servicer shall not be permitted to delegate any of its duties or responsibilities as Servicer to any other Person other than (i) to each Originator (other than itself), acting as Sub-Servicer with respect to the Receivables which it originated, (ii) to a Payment Processor with respect to processing credit card and other payment forms pursuant to a Payment Processor Agreement, and (iii) to outside collection agencies in accordance with its customary practices with respect to written-off Receivables. The Servicer shall be responsible for coordinating the servicing of the Receivables by the Sub-Servicers and all other Persons to whom any servicing responsibilities are delegated in accordance with this Section 4.01(c). The Servicer shall notify the Administrative Agent prior to entering into a business arrangement with a new Payment Processor. No delegation of duties by the Servicer permitted hereunder shall relieve the Servicer of its liability and responsibility with respect to such duties.
Section 4.02. Maintenance of Information and Marking of Computer Records. The Servicer will hold in trust and keep safely for the Purchasers and the LC Banks all evidence of the Facility Agents’ (for the benefit of the Purchasers and the LC Banks) right, title and interest in and to the Receivable Interest. Each of the Servicer and each Originator acting as a Sub-Servicer will place an appropriate code or notation in its computer Records to indicate that the Facility Agents, on behalf of the Purchasers and the LC Banks, have acquired the Receivable Interest.
Section 4.03. Protection of the Interests of the Purchasers and LC Banks. (a) The Servicer will, or will cause the Seller and the Originators to, from time to time and at Seller’s sole expense, take all actions reasonably requested by the Administrative Agent necessary to perfect or protect the Facility Agents’ (for the benefit of their respective Purchasers and LC Banks) right, title and interest in the Receivable Interest, together with Related Security and all Collections with respect thereto, against all Persons whomsoever or to enable the Facility Agents or the Administrative Agent to exercise or enforce any of their respective rights hereunder.
(b) To the fullest extent permitted by applicable Law, the Seller hereby irrevocably grants to the Administrative Agent an irrevocable power of attorney, with full power of substitution, coupled with an interest, to sign and file in the name of the Seller, or in its own name, such financing statements and continuation statements (including “initial financing statements in lieu of continuation statements” under Revised Article 9 of the UCC) and amendments thereto or assignments thereof as the Administrative Agent or any Facility Agent deems necessary to protect or perfect the Receivable Interest; provided, however, that the rights of the Administrative Agent pursuant to such power of attorney shall be exercised only if a Control Event exists.
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(c) The Administrative Agent shall have the right to do all such acts and things as they may deem necessary to protect the interests of the Purchasers and the LC Banks, including, without limitation, confirmation and verification of the existence, amount and status of the Receivables; provided, however, that the Administrative Agent shall not contact any Obligor or mark any invoice as “assigned” unless a Termination Event shall have occurred and be continuing; and provided, further, that the Administrative Agent shall not deliver any “shifting control notice” or exercise any other right or remedy set forth as being available upon or during a Control Event or a Termination Event unless a Control Event or a Termination Event, as applicable, shall have occurred and be continuing.
Section 4.04. Maintenance of Writings and Records. The Servicer will, and will cause each Originator to, at all times until completion of a Complete Servicing Transfer keep each writing or Record which evidences, and which is necessary or desirable to establish or protect, including such books of account and other Records as will enable the Administrative Agent and the Facility Agents or their designees to determine at any time the status of, the Receivable Interest of the Facility Agents (for the benefit of their respective Purchasers and LC Banks). The Servicer shall at its own expense prepare and maintain such Records in electronically-readable form in such format as the Servicer customarily maintains its records; provided, however, that upon a Complete Servicing Transfer with respect to the Servicer, the replaced Servicer shall within 10 Business Days of such Complete Servicing Transfer prepare such Records in such format as may be required to permit or facilitate the transfer of such Records to the successor Servicer.
Section 4.05. Information. The Servicer will, or will cause each Originator to, furnish to the Administrative Agent such information with respect to the Receivables (including but not limited to such Originator’s standards and procedures for selling goods or services on credit) as the Administrative Agent may reasonably request, in consultation with the Facility Agents. The Servicer will also furnish to the Administrative Agent and each Facility Agent all material modifications, adjustments or supplements to the Credit and Collection Policy; provided, however, the Servicer shall not, without each Facility Agent’s prior written consent, alter or consent to the alteration of the Credit and Collection Policy as in effect from time to time unless such alteration would not impair the collectability of any Receivables in any material respect or would not otherwise be reasonably likely to have a Material Adverse Effect.
Section 4.06. Audits; Agreed-Upon Procedures. (a) Each of the Seller, the Servicer and each Originator will, from time to time during regular business hours as requested by the Administrative Agent or any Facility Agent upon reasonable notice and subject to any applicable restrictions or limitations on access to any facility or information that is classified or restricted by contract or by law, regulation or governmental guidelines, and at the sole cost of such Person, permit the Administrative Agent, the Facility Agents 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 such Person relating to the Receivables and the Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person’s financial condition or the Receivables and the Related Security or any Person’s performance under any of the Transaction Documents or any Person’s performance under the Contracts and, in each case, with any of the officers or employees of Seller, the Servicer or such Originator having knowledge of such matters; provided, that as long as no Termination Event shall have occurred and be continuing, the Administrative Agent and the Facility Agents hereby agree to conduct only one due diligence visit annually and to coordinate their annual visits.
(b) The Servicer shall cause a firm selected and engaged by the Administrative Agent to furnish to the Facility Agents, once every two (2) calendar years, a report pursuant to procedures agreed upon by the Servicer and the Administrative Agent (in consultation with the Facility Agents), , provided that if, and only for so long as, Ferguson shall be rated below “BBB-“ by S&P or “Baa3” by Moody’s, such audit report shall be furnished once each calendar year; and provided further, that if a Potential Termination Event or Termination Event shall have occurred, such audit report shall be furnished at any time and from time to time upon request of the Administrative Agent. The Administrative Agent shall assist the Seller and the Servicer in preparing for each audit and addressing any recommendations made in the audit report.
Section 4.07. No Impairment. Neither the Servicer nor any Originator will take any action or cause any action to be taken to impair the rights of any Facility Agents (for the benefit of the Purchasers and LC Banks) in the Receivable Interest.
Section 4.08. Administration and Collections.
(a) General. Until a Complete Servicing Transfer shall have occurred, the Servicer will be responsible for the administration, servicing and collection of the Receivables.
(b) Administration. The Servicer shall, to the full extent permitted by Law, have the power and authority, on behalf of the Seller and each Facility Agent, to take such action in respect of any Receivable as the Servicer may deem advisable, including the resale of any repossessed, returned or rejected goods. In addition, the Servicer may adjust or modify (including by extension of time for payment or granting any discounts, allowances or credits) the Outstanding Balance of any Receivable as it determines to be appropriate to maximize Collections thereof.
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(c) Enforcement Proceedings. If there is a default under any Receivable, the Servicer shall, at the Seller’s sole expense, to the full extent permitted by Law and as it determines to be appropriate to maximize recoveries on that Receivable, have the power and authority, on behalf of the Seller and each Facility Agent (for the benefit of its related Purchasers and LC Banks), to take or cause to be taken any action in respect of any such Receivable as the Servicer may deem advisable, including, but not limited to, the authority to effectuate the reconveyance of Reassigned Receivables as provided in Section 2.01A hereof. The Servicer will apply or will cause to be applied at all times when a Termination Event does not exist the same standards and follow the same procedures with respect to deciding to commence, and in prosecuting, litigation on such Receivable as is applied and followed with respect to like accounts serviced by it that are not owned by the Facility Agents (for the benefit of their respective Purchasers and LC Banks). The Facility Agents hereby authorize the Servicer and each Sub-Servicer, to the extent the Servicer deems it necessary or desirable, to bring suit in the name of the Servicer or the applicable Sub-Servicer, to collect on a Receivable or enforce the terms of its related Contract. In no event shall the Servicer or the Seller, as the case may be, be entitled to make or authorize any Person to make any Facility Agent, Purchaser or LC Bank a party to any litigation without such Facility Agent’s, Purchaser’s or LC Bank’s, as the case may be, express prior written consent.
(d) Facility Agents’ Rights to Enforce Receivables. At any time that a Control Event exists, the Facility Agents may, but shall have no obligation to, take any action or commence any proceeding to realize upon any Receivable, including, but not limited to, delivery to an Obligor of notice of the Facility Agents’ (for the benefit of their respective Purchasers and LC Banks) interest in the Receivables, any such action or commencement of proceeding to be at the sole expense of the Seller. At such time as the Servicer has any obligation to pursue the collection of Receivables and the Administrative Agent, the Facility Agents or any Purchaser or LC Bank possesses any documents necessary therefor, the Administrative Agent or such Facility Agent, Purchaser or LC Bank, as the case may be, agrees to furnish such documents to the Servicer, to the extent and for the period necessary for the Servicer to comply with its obligations hereunder.
Section 4.09. Complete Servicing Transfer.
(a) General. The Administrative Agent may, and at the request of the Required Facility Agents shall, by notice in writing to the Seller, the Servicer and each Originator terminate the Servicer’s capacity as Servicer in respect of the Receivables (such termination referred to herein as a “Complete Servicing Transfer”) if a Termination Event shall have occurred and be continuing or a Downgrade Event shall exist. Upon a Complete Servicing Transfer, the Originators’ duties as Sub-Servicers shall also be terminated. After a Complete Servicing Transfer, the Administrative Agent (or its designee approved by the Facility Agents) may itself administer, service and collect the Receivables, and in such event, may retain the Servicing Fee for its own account, in any manner it sees fit, including, without limitation, by compromise, extension or settlement of such Receivables. Alternatively, the Facility Agents may engage affiliated or unaffiliated contractors to perform all or any part of the administration, servicing and collection of the Receivables and require the Seller to pay to such contractors all or a portion of the Servicing Fee in consideration thereof.
(b) Transition. The Servicer and each Originator, promptly but in no event later than twenty (20) days after receiving a notice pursuant to Section 4.09(a) hereof, shall, at the Seller’s sole expense, (x) deliver to the Administrative Agent and the Facility Agents or their designated agents (i) a schedule of the Receivables serviced by the Servicer or sub-serviced by such Originator, as the case may be, in which the Facility Agents (for the benefit of their respective Purchasers and LC Banks) have a Receivable Interest indicating as to each such Receivable information as to the related Obligor, the Outstanding Balance as of such date of such Receivable and the location of the evidences of such Receivable, together with such other information as the Administrative Agent and the Facility Agents may reasonably request and (ii) true copies of such Receivables and such other Records related thereto (including, without limitation, true copies of all evidence of any computer tapes and data in computer memories), (y) permit the Administrative Agent and the Facility Agents reasonable access to the Servicer’s or such Originator’s premises, equipment and files and other Records relating to the Receivables and (z) to the extent not prohibited by contract or applicable Law, take all actions as are necessary to transfer or cause to be transferred to the Administrative Agent or its designated agent any software that relates to, and is necessary for the servicing of, such Receivables, in each case as the Administrative Agent and the Facility Agents may reasonably deem necessary to enable them to protect and enforce their rights and the rights of the Purchasers and LC Banks in the Receivable Interest. Following the termination of the Facility, the Administrative Agent and the Facility Agents or any of their applicable designated agents hereby agree to return to the Servicer any materials previously delivered pursuant to this Section 4.09(b) and still in their possession.
(c) Collections. If at any time there shall be a Complete Servicing Transfer, the terminated Servicer or each Originator will cause to be transmitted and delivered directly to the successor Servicer, promptly upon receipt and in the exact form received, all Collections (properly endorsed, where required, so that such items may be collected on behalf of the Facility Agents (for the benefit of their respective Purchasers and LC Banks)) to be distributed to the Facility Agents as provided herein. All such Collections consisting of cash shall not be commingled with other items or monies of the terminated Servicer or an Originator for a period longer than two Business Days after the Servicer’s knowledge of its receipt thereof. If the successor Servicer receives items or monies that are not payments on account of the Receivables, such items or monies shall be delivered promptly to the terminated Servicer after being so identified by or to such successor Servicer. After a Complete Servicing Transfer, each of the Seller, the terminated Servicer and each Originator hereby irrevocably grants the Administrative Agent or each of its designated agents, if any, an irrevocable power of
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attorney, with full power of substitution, coupled with an interest, to take in the name of the Seller or the terminated Servicer, as the case may be, all steps with respect to any Receivable which the Administrative Agent, after consultation with the Facility Agents, may deem reasonably necessary or advisable to negotiate or otherwise realize on any right of any kind held or owned by the Seller or the terminated Servicer, as the case may be, or transmitted to or received by any Facility Agent or its designated agent (whether or not from the Seller or any Obligor) in connection with the Facility Agents’ (for the benefit of their respective Purchasers and LC Banks) Receivable Interest, which power of attorney shall automatically terminate upon the termination of the Facility.
(d) Collection and Administration at Expense of the Seller. The Seller agrees that in the event of a Complete Servicing Transfer it will reimburse the Administrative Agent, each Facility Agent, each Purchaser and LC Bank for all reasonable out-of-pocket expenses (including, without limitation, attorneys’ and accountants’ and other third parties’ fees and expenses, expenses incurred by the Administrative Agent, such Facility Agent, such Purchaser or such LC Bank, as the case may be, expenses of litigation or preparation therefor, and expenses of audits and visits to the offices of the Seller or any Originator) incurred by the Administrative Agent, such Facility Agent, such Purchaser or such LC Bank in connection with the transfer of functions following a Complete Servicing Transfer whenever such expenses are incurred.
(e) Payments by Obligors. At any time, and from time to time, following a Complete Servicing Transfer, the Seller, the terminated Servicer and each Originator shall permit such Persons as the Administrative Agent, with the consent of the Facility Agents, may designate to open and inspect all mail received by the Seller or the terminated Servicer and reasonably believed to relate to the Receivables, and to remove from such mail any and all Collections.
Section 4.10. Collections; Lockboxes; Accounts. (a) Each of the Servicer and each Originator, acting in its capacity as Sub-Servicer, shall instruct all Obligors to make all payments in respect of the Receivables to a Lockbox, a Blocked Account or a Local Account (either by check, wire transfer or electronic funds transfer to a Depositary Bank), except to the extent that the Servicer or such Originator, in the normal course of its business and consistent with past and ongoing practices has permitted Obligors to remit payments directly to such Originator at its business locations for deposit to a Local Account. Each of the Servicer and each Originator, acting in its capacity as Sub-Servicer, also shall have established separate collection systems that are intended to keep payments in respect of Excluded Receivables separate from payments in respect of the Receivables.
(b) The Seller and the Servicer shall have established the Lockboxes and related Lockbox Accounts and other Blocked Accounts specified on Schedule II hereto. The Seller and Servicer hereby agree as follows: (i) each Blocked Account shall be established in the name of the Seller as a segregated account and, except as provided in Section 7.02(l), the funds deposited therein from time to time shall not be commingled with any other funds of the Seller or any Affiliate thereof; (ii) each Blocked Account shall be maintained with a Depositary Bank pursuant to the terms of the related Blocked Account Agreement; (iii) except as provided in Section 7.02(l), not to direct any funds other than Collections to be mailed to Lockboxes or deposited into related Lockbox Accounts or other Blocked Accounts; (iv) not to change any Depositary Bank, any Blocked Account Agreement or the location of any Lockbox or Blocked Account without the consent of the Administrative Agent; and (v) if a Control Event exists, the Administrative Agent may, or shall at the direction of the Required Facility Agents, deliver a “shifting control notice” to the Depositary Banks, upon receipt of which notice, the Depositary Banks will, upon direction of the Administrative Agent, transfer funds in their respective Blocked Accounts to the Collection Account within two (2) Business Days of deposit into those Blocked Accounts.
(c) [Reserved]
(d) Ferguson has established and maintains the Local Accounts specified on Schedule II hereto. Ferguson hereby agrees as follows: (i) to transfer, within two (2) Business Days of deposit therein, funds therein to a Blocked Account; (ii) not to change the location of such Local Account without the consent of the Administrative Agent; and (iii) if a Downgrade Event has occurred, within 30 days of the request of the Administrative Agent, to transfer such Local Account to the Seller’s name and enter into a Blocked Account Agreement with a Depositary Bank with respect to such Local Account which is subject to the same terms as the Blocked Account Agreement as described in preceding clause (b).
(e) The Administrative Agent shall have the right at any time to establish the Collection Account. On or after the Control Date, the Administrative Agent shall direct the Depositary Banks to transfer funds in their respective Accounts to the Collection Account within two (2) Business Days of deposit into the respective Accounts. The Administrative Agent shall set aside and hold in trust for the Seller such portion of funds in the Collection Account as are not allocated to the Purchase Groups.
(f) On each Business Day, the Servicer shall have the ability to identify which of the collected funds received in the Blocked Accounts and the Local Accounts, or if the Administrative Agent has directed that funds be transferred to the Collection Account, funds received in the Collection Account, on the second preceding Business Day do not constitute Collections on account of Receivables, and shall, upon request, provide such information to the Administrative Agent on such Business Day; provided that, on each Business Day following a Control Event the Servicer shall provide such information to the Administrative Agent on a daily basis. The Servicer agrees to transfer, within two (2) Business Days of deposit therein, any funds received in the Blocked Accounts specified in Section 7.02(l)(ii). The parties hereto agree and acknowledge that due to the Servicer’s systems limitations, the data reported in the
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Monthly Report (and, if applicable, the Weekly Report) with respect to sales generated by Originators and Collections will include cash sales. For the avoidance of doubt, proceeds of cash sales remain the property of the applicable Originators, and do not constitute Collections.
(g) If the Seller or the Servicer determines that it is advisable to add or close any Account, the Servicer shall provide written notice of such determination to the Administrative Agent at least 30 days prior to the date on which such addition or closure is proposed to take effect. If any such addition or closure necessitates changes to any Blocked Account Agreement, the Seller, the Servicer and the Administrative Agent shall work together with the Depositary Bank to make such changes. Schedule II hereof shall be deemed amended (and a replacement Schedule prepared and distributed to the Facility Agents) to reflect any addition or closure of an Account proposed by the Seller or Servicer and consented to by the Administrative Agent.
Section 4.11. Reports. (a) (i) On or prior to the Monthly Report Date in each month, the Servicer shall deliver to each Facility Agent a monthly report, substantially in the form of Exhibit B (a “Monthly Report”), as of the close of business on the last day of the immediately preceding Calculation Period.
(ii) In addition to delivery of Monthly Reports in accordance with clause (a) above, whenever a Downgrade Event exists, the Servicer shall, on each Weekly Report Date, deliver to each Facility Agent a report in form and substance to be agreed upon by the Servicer and the Required Facility Agents (each a “Weekly Report”).
(b) The Seller shall, or shall cause the Servicer and each Originator to, furnish to the Administrative Agent (who shall promptly deliver the same to each Facility Agent) at any time and from time to time such other or further information in respect of the Receivables, the Seller and the Obligors as the Administrative Agent or any Facility Agent may reasonably request.
(c) [Reserved].
(d) The Administrative Agent shall assist the Seller and the Servicer (i) in preparing the Monthly Reports and Weekly Reports, (ii) if a Weekly Report is required to be delivered, in developing the form of that Weekly Report, and (iii) in updating the form of the Monthly Report from time to time as is necessary and desirable to improve the presentation of information about the Receivables and the Facility, address changed circumstances or respond to recommendations made in the agreed-upon procedures reports provided pursuant to Section 4.06(b).
Section 4.12. Servicer Default. The occurrence of each of the following events shall constitute a “Servicer Default”:
(a) Failure of Servicer to perform or observe any covenant or agreement under the Transaction Documents, and such failure shall continue for five (5) Business Days after the Servicer receives written notice or has actual knowledge of such failure;
(b) Failure of the Servicer to make when due any payment or deposit required to be made by it under any Transaction Document, and such failure shall continue for two (2) Business Days;
(c) Any representation or warranty made or deemed made by the Servicer under or in connection with any Transaction Document or any certificate, report or other statement delivered by the Servicer pursuant to the terms set forth in the Transaction Documents shall prove to have been incorrect or untrue in any material respect when made or deemed made or delivered (unless such representation or warranty in Section 6.01(d) or Section 6.01(g) herein relates solely to one or more specific Receivables and immediately following the removal of the related Receivables from the Net Receivables Balance, the Percentage Interest does not exceed 100%);
(d) The Servicer or any Originator shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian or the like of itself or of all or a substantial part of its property, (ii) become unable, admit in writing its inability or fail to pay its debts generally as they become due, (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, (v) commence a voluntary case under the Federal Bankruptcy Code or file a voluntary petition or answer seeking reorganization, an arrangement with creditors or an order for relief or seeking to take advantage of any insolvency law or file an answer admitting the material allegations of a petition filed against it in any bankruptcy, reorganization or insolvency proceeding, or action shall be taken by it for the purpose of effecting any of the foregoing, or (vi) if without the application, approval or consent of the Servicer or any Originator, a proceeding shall be instituted in any court of competent jurisdiction, under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking in respect of the Servicer or any Originator an order for relief or an adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition or arrangement with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or custodian or the like of the Servicer or such Originator or of all or any substantial part of its assets, or other like relief in respect thereof under any bankruptcy or insolvency law, and (A) is not challenged by appropriate means by the Servicer or such Originator within thirty (30) days and (B) the same shall continue undismissed or unstayed for any period of 60 consecutive days after commencement of such case; or
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(e) the Servicer shall fail to deliver any Monthly Report or Weekly Report when required under the Transaction Documents, and such failure shall continue for three (3) consecutive Business Days (one (1) Business Day on or after a Downgrade Event); or
(f) there shall occur any change in the business, financial or other condition of the Servicer which could reasonably be expected to have a Material Adverse Effect on the collectability of the Receivables.
Section 4.13. Servicer Indemnification of Indemnified Parties. (a) The Servicer agrees to indemnify and hold harmless the Indemnified Parties from and against any Losses (other than any Losses to the extent resulting from the gross negligence or willful misconduct of the Indemnified Party, the Indemnified Party’s breach of contract under any Transaction Document or any document delivered pursuant to any Transaction Document, Taxes (except as provided in this Agreement), or recourse (except as provided in this Agreement) for uncollectible Receivables) arising out of or resulting from (i) false or incorrect representations warranties or certifications of the Servicer, acting in that capacity, in any Transaction Document or any document delivered pursuant to any Transaction Document or (ii) any breach (whether by action or omission) by the Servicer, acting in that capacity, of any of its obligations or covenants under any Transaction Document.
(b) Promptly upon receipt by any Indemnified Party under this Section 4.13 of notice of the commencement of any suit, action, claim, proceeding or governmental investigation against such Indemnified Party, such Indemnified Party shall, if a claim in respect thereof is to be made against the Servicer hereunder, notify the Servicer in writing of the commencement thereof. The Servicer may participate in and assume the defense of any such suit, action, claim, proceeding or investigation at its expense, and no settlement thereof shall be made without the approval of the Servicer and the Indemnified Party. The approval of the Servicer and the Indemnified Party will not be unreasonably withheld or delayed. After notice from the Servicer to the Indemnified Party of its intention to assume the defense thereof with counsel reasonably satisfactory to the Administrative Agent and the Indemnified Party, and so long as the Servicer so assumes the defense thereof in a manner reasonably satisfactory to the Administrative Agent and the Indemnified Party, the Servicer shall not be liable for any legal expenses of counsel unless there shall be a conflict between the interests of the Servicer and the Indemnified Party, in which case the Indemnified Party(ies) shall have the right to employ counsel to represent it (them).
(c) The Servicer will promptly pay to the Facility Agent for the Indemnified Party such indemnity amount as shall be specified to the Servicer in a certificate of the Indemnified Party (or its Facility Agent, on its behalf) setting forth the calculations of such amount, together with the basis therefor. Any such certificate submitted by or on behalf of the Indemnified Party shall be conclusive and binding for all purposes, absent manifest error. The provisions of this Section 4.13 shall survive the termination of this Agreement.
Section 4.14. Servicing Fee. The monthly fee due to the Servicer for performing its obligations hereunder shall be equal to (A) the product of (1) the Servicing Fee Percentage, expressed as a decimal, and (2) the average daily Outstanding Balances of Receivables during the preceding Calculation Period, divided by (B) twelve (the “Servicing Fee”). Such monthly Servicing Fee shall be paid to the Servicer in arrears on the second (2nd) Business Day after each Monthly Report Date.
ARTICLE V
PARENT UNDERTAKING
PARENT UNDERTAKING
Section 5.01. Guaranty. The Parent hereby unconditionally guarantees the punctual payment and performance when due, whether at stated maturity, by acceleration or otherwise, of all obligations of (a) Ferguson and its successor legal entities, in its capacities as Originator, Servicer and the party requesting Letters of Credit, and (b) the other Originators and their successor legal entities, in their respective capacities as Originators and sub-servicers and parties on behalf of which the Seller will request Letters of Credit hereunder, now or hereafter existing under the Transaction Documents, whether for Collections, repurchase, indemnification payments, fees, expenses or otherwise (such obligations being the “Obligations”), and agrees to pay any and all reasonable and properly documented out-of-pocket expenses (including counsel fees and expenses) incurred by any Beneficiary in enforcing any rights under this Parent Undertaking, together with interest on such amounts from the time when the Parent was notified that such amounts were due, based on a 365-day year, at a rate per annum for each day equal to 2.00% over the Alternate Base Rate on such day. Without limiting the generality of the foregoing, the Parent’s liability shall extend to all amounts which constitute part of the Obligations and would be owed by Ferguson or any Originator to the Seller or any Beneficiary under any Transaction Document but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving Ferguson or such Originator as debtor. For the avoidance of doubt, the obligations of the Parent under this Parent Undertaking do not include losses in respect to Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor.
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Section 5.02. Guaranty Absolute. The Parent guarantees that the Obligations will be performed or paid strictly in accordance with the terms of the applicable Transaction Documents, regardless of the rights of the Administrative Agent or any Beneficiary with respect thereto. The obligations of the Parent under this Parent Undertaking are independent of the Obligations, and a separate action or actions may be brought and prosecuted against the Parent to enforce this Parent Undertaking, irrespective of whether any action is brought against Ferguson or any Originator, as the case may be, or whether Ferguson or such Originator is joined in any such action or actions. The liability of the Parent under this Parent Undertaking shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any Transaction Document, or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from any Transaction Document, including, without limitation, any increase in the Obligations resulting from additional Purchases or Issuances/ Modifications of Letters of Credit or otherwise;
(c) any failure or omission to enforce any right, power or remedy with respect to the Obligations or any part thereof or any agreement relating thereto, or any collateral securing the Obligations or any part thereof;
(d) any waiver of any right, power or remedy or of any default with respect to the Obligations or any part thereof or any agreement relating thereto;
(e) any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Obligations;
(f) any manner of application of collateral, or proceeds thereof, to all or any of the Obligations, or any manner of sale or other disposition of any collateral for all or any of the Obligations or any other assets of Ferguson, any Originator or any of their respective Subsidiaries;
(g) the existence of any claim, setoff or other rights which the Parent may have at any time against Ferguson or any Originator in connection herewith or any unrelated transaction;
(h) any assignment or transfer of the Obligations or any part thereof permitted under the Purchase and Contribution Agreement, this Agreement or any other Transaction Document;
(i) any change, restructuring or termination of the corporate structure or existence of Ferguson, any Originator or any of their respective Subsidiaries; or
(j) any other circumstance which might otherwise constitute a defense available to, or a discharge of Ferguson or any Originator.
Section 5.03. Waiver. (a) The Parent hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations and this Parent Undertaking and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against Ferguson, any Originator or any other Person or entity or any collateral.
(b) The Parent hereby waives any right to revoke this Parent Undertaking, and acknowledges that this Parent Undertaking is continuing in nature and applies to all Obligations, whether existing now or in the future.
(c) The Parent acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Transaction Documents and that the waivers set forth in this Section 5.03 are knowingly made in contemplation of such benefits.
Section 5.04. Subrogation. The Parent will not exercise any rights which it may acquire by way of subrogation under this Parent Undertaking, by any payment made hereunder or otherwise, until all the Obligations and other amounts payable under this Parent Undertaking shall have been paid in full and the Facility Termination shall have occurred. If any amount shall be paid to the Parent on account of such subrogation rights at any time prior to the later of (x) the payment in full of the Obligations and all other amounts payable under this Parent Undertaking and (y) the date after the Termination Date that all Aggregate Unpaids are paid in full, such amount shall be held in trust for the benefit of the Beneficiaries and shall forthwith be paid to the Administrative Agent to be credited and applied to the Obligations, whether matured or unmatured, in accordance with the terms of the applicable Transaction Document or to be held by the Administrative Agent as collateral security for any Obligations thereafter existing. If (i) the Parent shall make payment to the Beneficiaries of all or any part of the Obligations, (ii) all the Obligations and all other amounts payable under this Parent Undertaking shall be paid in full and (iii) the date after the Termination Date that all Aggregate Unpaids are paid in full
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shall have occurred, the Administrative Agent and the Facility Agents on behalf of their respective Beneficiaries will, at the Parent’s request, execute and deliver to the Parent appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Parent of an interest in the Obligations resulting from such payment by the Parent.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
Section 6.01. General Representations and Warranties of the Ferguson Parties. Except as otherwise set forth below, each of the Ferguson Parties, as to itself (and, if so specified, its Subsidiaries), hereby represents and warrants to each Purchaser, each LC Bank, each Facility Agent and the Administrative Agent on and as of the date hereof and on and as of the date of each Purchase and each Issuance or Modification that:
(a) Corporate Existence, Power and Authority, Etc. It is duly organized, validly existing and in good standing in its jurisdiction of organization; it is duly qualified to do business in each jurisdiction where the conduct of its business so requires and except where failure to be so qualified would not be reasonably expected to have a Material Adverse Effect; it has power and authority to execute and deliver the Transaction Documents and to carry out the transactions contemplated thereby; each of the Transaction Documents to which it is a party has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject to usual and customary bankruptcy and equitable principles exceptions); it has all necessary authorizations and approvals to execute, deliver and perform its obligations under all of the Transaction Documents to which it is a party, except where failure to obtain any such authorization or approval would not reasonably be expected to result in a Material Adverse Effect; no notices to, or filings with, any Governmental Authority are required for the due execution, delivery or performance by it of any of the Transaction Documents to which it is a party, except for the filing of financing statements referred to therein and except where the failure to provide any such notice or make any such filing would not reasonably be expected to result in a Material Adverse Effect;
(b) No Conflicts. The execution and delivery by such Ferguson Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder, in each case, do not contravene or violate (i) its certificate or articles of incorporation or formation, or its by-laws or limited liability company agreement, as applicable, (ii) any Law applicable to it, (iii) any restrictions under any agreement, contract or 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 such Ferguson Party or its Subsidiaries (except that created in favor of the Administrative Agent (for the benefit of the Purchasers and the LC Banks)) except, in the case of Ferguson Parties other than the Seller, where any such contraventions or violations would not reasonably be expected to result in a Material Adverse Effect; and no transaction contemplated under any Transaction Document requires compliance with any bulk sales act or similar law;
(c) No Termination Event. No Termination Event or Potential Termination Event has occurred and is continuing, or will, after giving effect to the Purchase and/or Issuance or Modification to occur on such day, occur;
(d) Eligible Receivables. All Receivables represented as being Eligible Receivables are Eligible Receivables at such time;
(e) Accuracy of Information. The written reports, financial statements, certificates and other written information furnished by it or on its behalf in connection with the negotiation of the Transaction Documents or delivered in connection therewith (as modified or supplemented by other written information when so furnished), when taken as a whole, did not contain as of the date such written reports, financial statements or other written information were so furnished, any material misstatement of fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(f) Servicer Reports. The information furnished by it or on its behalf in each Monthly Report or Weekly Report is true and complete as of the date of such report;
(g) Good Title. In the case of each Originator, each Receivable sold under the Purchase and Contribution Agreement is owned by such Originator free and clear of any lien or adverse claim (except that created in favor of the Administrative Agent (for the benefit of the Purchasers and the LC Banks) and Permitted Liens). In the case of the Seller, the Administrative Agent (on behalf of the Purchasers and LC Banks) has acquired from the Seller a valid and perfected first priority security interest in each Receivable sold and/or assigned under this Agreement free and clear of any Lien or adverse claim (except for liens created pursuant to any of the Transaction Documents);
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(h) Ownership/Security Interest. It has taken or caused to be taken all actions, including necessary filings, to evidence the Administrative Agent’s (on behalf of the Purchasers and the LC Banks) first priority undivided percentage ownership or security interest in all Receivables (whether existing or thereafter arising) and in the Related Security and Collections with respect thereto;
(i) Credit and Collection Policy. It has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract. It has not made any change in its underwriting policies or the Credit and Collection Policy that would (i) impair the collectability of any Receivables in any material respect or (ii) be reasonably likely to have a material adverse effect on the Servicer’s performance of its obligations under the Transaction Documents;
(j) Litigation. There are no actions, suits or proceedings pending or, to the knowledge of the Ferguson Party, asserted against it, which would be reasonably likely to have a Material Adverse Effect as specified in clauses (ii) through (iv) of that definition;
(k) Collections. Except as described in Section 4.10(a), all Obligors have been directed to remit their Collections to Lockboxes, Lockbox Accounts or other Blocked Accounts, as applicable, listed on Schedule II to this Agreement;
(l) Payments to the Originators. The Seller has given reasonably equivalent value to the applicable Originator under the Purchase and Contribution Agreement in connection with each sale of Receivables thereunder, and no such sale was made for or on account of an antecedent debt owed by such Originator to the Seller or is or may be voidable as a fraudulent transfer under Section 548 of the Federal Bankruptcy Code or a voidable preference under Section 547 of the Federal Bankruptcy Code;
(m) Change of Control. No Change of Control has occurred with respect to any Ferguson Party (other than, in the case of the Parent, a “Permitted Change of Control”, as defined in the Credit Agreement);
(n) Subsidiaries, Business. The Seller has no subsidiaries and is engaged in no other business activities other than the business activities contemplated by the Transaction Documents;
(o) Solvency. After giving effect to any Purchase, Issuance, or Modification on such date and the application of the proceeds therefrom, the Seller is (i) not “insolvent” (as such term is defined in the Federal Bankruptcy Code), (ii) able to pay its debts as they become due, (iii) does not have unreasonably small capital for the business in which it is engaged or for any business or transaction in which it reasonably expects to engage, and (iv) has tangible net worth equal to at least 6% of the aggregate Outstanding Balance of Receivables (for the avoidance of doubt, for the purposes of this subsection (o), the calculation of tangible net worth shall take into account any intercompany debt issued by the Seller to Ferguson or any other Originator);
(p) Tax. The Seller or other Ferguson Party has paid when due all material sales, use or property taxes payable in connection with the origination or ownership of the Receivables, exclusive of any taxes the validity of which are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Each of the Seller or other Ferguson Party has filed or caused to be filed all material federal, state and local income tax returns and all other material tax returns on or before the applicable due date (as such due date may have been timely extended), and has paid or caused to be paid all taxes due pursuant to such returns or pursuant to any assessment received by it (other than those which are currently being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with relevant GAAP shall have been set aside on its books).
(q) ERISA. Such Ferguson Party and each of its ERISA Affiliates have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Plan, except as any noncompliance could not reasonably be expected to result in a Material Adverse Effect. No Reportable Event has occurred with respect to any Plan nor has any prohibited transaction under Section 406 of ERISA occurred with respect to any “Employee Benefit Plan” (as that term is defined in Section 3(3) of ERISA), of such Ferguson Party or any of its ERISA Affiliates which, in either case, could reasonably be expected to result in a Material Adverse Effect. No prohibited transaction under Section 406 of ERISA which could be expected to result in a Material Adverse Effect has occurred with respect to such Ferguson Party or any of its ERISA Affiliates or will occur upon the closing of any Purchase or any Issuance or Modification or the execution of any Transaction Document. Neither the Parent nor any of its Subsidiaries has (i) engaged in any transaction prohibited by any Law applicable to any Foreign Plan; (ii) failed to make full payment when due of all amounts due as contributions to any Foreign Plan; or (iii) otherwise failed to comply with the requirements of any Law applicable to any Foreign Plan, where singly or cumulatively, the above could reasonably be expected to result in a Material Adverse Effect. No ERISA Event has occurred or is reasonably likely to occur which is reasonably likely to result in a Material Adverse Effect;
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(r) Material Adverse Effect. Since the date of its formation, the Seller is not aware of the occurrence of any event or circumstance which has had or will have a Material Adverse Effect. There has been no change in the business or financial condition of the Ferguson Parties, taken as a whole, since the delivery of the combined financial statements of the Group for the period ending in December 31, 2025, which could reasonably be expected to have a Material Adverse Effect as specified in clauses (ii) and (iii) of that definition;
(s) Investment Company Act. It is not and is not required to be registered as an “investment company” or a company “controlled” by an “investment company,” each as defined in the Investment Company Act of 1940, as amended;
(t) Required Credit Enhancement. After giving effect to the Purchase and/or Issuance or Modification on such date, the Percentage Interest shall not exceed 100%;
(u) [Reserved];
(v) Use of Proceeds. It has not taken and will not take any action which would cause the use of the proceeds of the Purchases to violate the provisions of Regulation U of the Board of Governors of the Federal Reserve System;
(w) Accuracy of Financial Statements. (i) The audited combined financial statements of the Group as of the most recent fiscal year-end fairly present in all material respects, in conformity with GAAP, the combined financial position of the Group as of such date and their combined results of operations and cash flows for such fiscal year; and (ii) the audited financial statements of Ferguson and its Subsidiaries and the operating companies under its Control as of the most recent fiscal year-end fairly present in all material respects, in conformity with GAAP, the financial position of Ferguson and its Subsidiaries and the operating companies under its Control as of such date and their results of operations and cash flows for such fiscal year;
(x) Accounting. On its consolidated financial statements, each of the Parent and Ferguson consolidates the transactions contemplated by the Purchase and Contribution Agreement, but includes appropriate notations to indicate that the Seller is a separate entity from each Ferguson Party and that the assets of the Seller are not available to satisfy the debts and obligations of any Ferguson Party;
(y) Purpose. The Seller has determined that, from a business viewpoint, the purchase of the Receivables and the Related Security with respect thereto from the Originators under the Purchase and Contribution Agreement, and the sale of the Receivables to the Administrative Agent, for the benefit of the Purchasers and the LC Banks, and the other transactions contemplated herein, are in the best interests of the Seller;
(z) Parent Undertaking. The Parent’s guaranty in the Parent Undertaking is a direct and unsecured obligation of the Parent ranking pari passu as against all other present and future unsecured indebtedness of the Parent which is not expressed to be subordinate or junior in rank to any other indebtedness of the Parent, except for obligations mandatorily preferred by Law applying to companies generally; and
(aa) Foreign Assets Control, Sanctions, Etc.
(i) It has in place policies and procedures designed to promote and achieve compliance with applicable Sanctions.
(ii) It is not and, to the best of its knowledge, none of its directors, employees, officers or Affiliates (when acting in their capacity as such) is an individual or entity currently the target of any Sanctions.
(bb) Not a Covered Fund. The Seller is not a “covered fund” under Section 13 of the Bank Holding Company Act of 1956, as amended (together with the implementing regulations thereunder, commonly referred to as the “Volcker Rule”). In determining that the Seller is not a “covered fund,” the Seller is entitled to rely on the exception to the definition of “investment company” set forth in Section 3(c)(5) of the Investment Company Act of 1940, as amended; and
(cc) Beneficial Ownership Certificate. The information included in the Beneficial Ownership Certificate is true and correct in all respects.
(dd) EU Securitisation Rules. With respect to the Facility, Ferguson (i) is an originator established in a “third country” for the purposes of the EU Securitisation Rules (that is, a country not established in the European Union), (ii) it was not established for the sole purpose of securitizing the Receivables, (iii) originated its respective Receivables on the basis of sound and well-defined criteria for credit-granting and clearly established processes for approving, originating, and financing such Receivables and (iv) it has effective systems in place to apply those criteria and processes in order to ensure that credit-granting is based on a thorough assessment of each Obligor's creditworthiness.
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ARTICLE VII
COVENANTS
COVENANTS
Section 7.01. Affirmative Covenants of the Ferguson Parties. In addition to its other covenants contained herein or made pursuant hereto, until the Facility Termination, each of the Ferguson Parties (as applicable) covenants to each Purchaser, each Facility Agent and the Administrative Agent as follows:
(a) General:
(i) Compliance with Laws, Etc. It will comply, and will cause each of its Subsidiaries to comply, with all applicable Laws and preserve and maintain its corporate or organizational existence, rights, franchises, qualifications, and privileges except to the extent that the failure so to comply with such laws, rules and regulations or the failure so to preserve and maintain such rights, franchises, qualifications, and privileges would not reasonably be expected to have a Material Adverse Effect;
(ii) Offices, Records, and Books of Account. It will keep its jurisdiction of organization and the office where it keeps its records concerning the Receivables at the address set forth under its name on the signature pages to this Agreement or upon 30 days’ prior written notice to the Administrative Agent, at any other locations in jurisdictions where all actions reasonably requested by the Administrative Agent to protect and perfect the interest in the Receivables have been taken and completed. In the case of each of the Servicer and each Originator, it also will maintain and implement administrative and operating procedures (including, without limitation, the ability to recreate records evidencing Receivables and related Contracts 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 Receivables (including, without limitation, records adequate to permit the daily identification of each Receivable and all Collections of and adjustments to each existing Receivable). Each Originator will mark its data processing records and other books and records to indicate which Receivables have been sold or contributed to the Seller under the Purchase and Contribution Agreement and the Seller will mark its data processing records and other books and records to indicate that the Receivables have been sold or assigned to the Administrative Agent;
(iii) Taxes. It will file all material tax returns and reports required by law to be filed by it and will promptly pay all taxes and governmental charges at any time owing, except when failure to pay would not reasonably be expected to have a Material Adverse Effect or such as are being contested in good faith by appropriate proceedings and for which appropriate reserves in accordance with relevant GAAP (in the case of the Seller, in accordance with GAAP) shall have been set aside on its books. It or other Ferguson Party will pay when due any sales, use or property taxes payable in connection with the origination or ownership of the Receivables, exclusive of any taxes the validity of which are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with relevant GAAP (in the case of the Seller, in accordance with GAAP) shall have been set aside on its books;
(iv) Performance and Compliance with Credit and Collection Policy. It will, as applicable and at its own expense, timely and fully comply in all material respects with the Credit and Collection Policy in regard to each Receivable and the related Contracts;
(v) Payments to the Originators. With respect to any Receivable purchased or accepted as a capital contribution from any Originator, such sale or acceptance shall be effected under, and in strict compliance with the terms of, the Purchase and Contribution Agreement, including the terms relating to the amount and timing of payments to be made to such Originator in respect of the purchase price for such Receivable;
(vi) Transfers from Local Accounts. It will direct the Depositary Banks holding the Local Accounts to transfer, within two (2) Business Days of deposit therein, Collections received in such Local Accounts to a Blocked Account;
(vii) Other Information. It will cause to be provided to the Administrative Agent and each Facility Agent such other information in respect of the Receivables or its condition or operations, financial or otherwise, as the Administrative Agent or such Facility Agent may from time to time reasonably request, including, but not limited to, all notices delivered to it under the Purchase and Contribution Agreement; and
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(viii) Payments to Payment Processors. To the fullest extent practicable, Ferguson will use its own funds (rather than funds in any related Blocked Account) to pay the entities processing the credit card and other forms of payments pursuant to Payment Processor Agreements with respect to its receivables (including the Receivables) the fees, assessments, chargebacks and other amounts owed to those Payment Processors.
(b) Reporting:
(i) The Parent will cause to be provided to the Administrative Agent (who shall promptly distribute the same to the Facility Agents) as soon as available and in any event within 90 days after the close of each of its fiscal years, its audited consolidated financial statements, certified by independent public accountants as having been prepared in accordance with the relevant GAAP;
(ii) [Reserved];
(iii) The Seller will cause to be provided to the Administrative Agent (who shall promptly distribute the same to the Facility Agents) as soon as available and in any event within 120 days after the close of each of its fiscal years, financial statements of the Seller, (which may be unaudited), prepared in accordance with the relevant GAAP;
(iv) The Parent will cause to be provided to the Administrative Agent (who shall promptly distribute the same to the Facility Agents) as soon as available and in any event within 60 days after the end of each fiscal quarter, its condensed consolidated financial statements prepared in accordance with the relevant GAAP;
(v) Each of the Parent and Ferguson will cause to be provided to the Administrative Agent (who shall promptly distribute the same to the Facility Agents) at the time of the delivery of the financial statements provided for in clause (b)(i) above, a certificate of, in regards to the Parent, a director, and in regards to Ferguson, a Responsible Officer, to the effect that such financial statements fairly represent its financial condition as of the date as at which such financial statements were prepared;
(vi) Each of the Parent and Ferguson will cause to be provided to the Administrative Agent (who shall promptly distribute the same to the Facility Agents) within 10 days after the delivery of the financial statements provided for in clause (b)(i) above, a certificate of, in regards to the Parent, a director, and in regards to Ferguson, a Responsible Officer, to the effect that to the best of such officer’s knowledge, no Termination Event or Potential Termination Event has occurred and is continuing or, if any Termination Event or Potential Termination Event has occurred and is continuing, specifying the nature and extent thereof;
(vii) [Reserved];
(viii) Each of the Parent and Ferguson shall provide to the Administrative Agent (who shall promptly distribute the same to the Facility Agents) such additional information regarding its and its Subsidiaries’ operations, business affairs and financial condition, or compliance with the terms of this Agreement or any other Transaction Document, as may be reasonably requested by the Administrative Agent.
(c) Notices:
(i) Termination. It will provide or cause to be provided to the Administrative Agent (and the Administrative Agent shall promptly distribute the same to the Facility Agents) promptly and in any event within five Business Days after obtaining knowledge of the occurrence of a Termination Event or Potential Termination Event, with a statement of its financial officer setting forth details of such Termination Event or Potential Termination Event;
(ii) Credit Agreement. It will provide to the Administrative Agent (and the Administrative Agent shall promptly distribute the same to the Facility Agents) notice of the occurrence of an “Event of Default” under the Credit Agreement, together with a copy of the same, as soon as practicable after, but in no event later than 15 days following such occurrence;
(iii) ERISA Event. It will cause to be provided to the Administrative Agent (and the Administrative Agent shall promptly distribute the same to the Facility Agents) promptly and in any event within five Business Days after obtaining knowledge thereof, notice of the occurrence or existence of any ERISA Event which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;
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(iv) Tax Lien. It will cause to be provided to the Administrative Agent (and the Administrative Agent shall promptly distribute the same to the Facility Agents) promptly and in any event within five Business Days after obtaining knowledge of the arising or existence of any tax Lien which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;
(v) Material Event. It will provide or cause to be provided to the Administrative Agent (and the Administrative Agent shall promptly distribute the same to the Facility Agents) promptly after the occurrence thereof, notice of any event or condition of which it has knowledge that has had or could reasonably be expected to have a Material Adverse Effect; and
(vi) Changes with respect to Beneficial Ownership Certificate; etc. The Seller shall, promptly upon a responsible officer of the Seller becoming aware thereof, notify the Administrative Agent and each Facility Agent of any change in the information provided in the Beneficial Ownership Certificate that would result in a change to the list of beneficial owners or control party identified in such certification. Without limiting the generality of the preceding sentence, promptly following any request therefor, the Seller shall provide such information and documentation reasonably requested by the Administrative Agent or any Facility Agent for purposes of compliance with the Beneficial Ownership Regulation.
(d) Anti-Terrorism Laws and Anti-Money Laundering Laws.
(i) It shall immediately notify the Administrative Agent (and the Administrative Agent shall promptly distribute the same to the Facility Agents) if it obtains knowledge that any of the representations contained in Section 6.01(aa) is incorrect as of any date;
(ii) It shall not, and it will procure that none of its Subsidiaries shall knowingly, in contravention of any Anti-Terrorism Law: (A) conduct any business with or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any Designated Person; or (B) deal in, or otherwise engage in any transaction relating to, any property or interest in property blocked pursuant to any Anti-Terrorism Law.
(iii) No Designated Person shall have a controlling interest of any nature whatsoever in such Ferguson Party with the result that an investment in such Ferguson Party (whether direct or indirect) or the obligation to fund Purchases hereunder would be in violation of any Anti-Terrorism Law.
(iv) At all times throughout the term of this Agreement, to the knowledge of such Ferguson Party, based upon its reasonable inquiry, none of the funds that are used to repay any portion of the Aggregate Exposure Amount shall be derived from any unlawful activity, with the result that (A) such repayment or any transaction contemplated by the Transaction Documents (whether directly or indirectly) is prohibited by law or (B) the Purchases or obligation to fund Purchases would be in violation of law.
(v) It shall not, and shall not permit any of its Subsidiaries to:
(A) violate any Anti-Terrorism Law;
(B) require any Purchaser or Facility Agent to take any action that would cause it to violate any Anti-Terrorism Law, it being understood that each Purchaser or Facility Agent can refuse to honor any such request otherwise validly made by such Ferguson Party under this Agreement;
(C) conduct any transaction for the benefit of any Designated Person in violation of any Anti-Terrorism Law;
(D) engage in any transaction relating to any property blocked pursuant to any Anti-Terrorism Law, in violation of any Anti- Terrorism Law;
(E) repay any Aggregate Exposure Amount with any funds derived from any unlawful activity with the result that the making of Purchases hereunder would be in violation of law; or
(F) cause or permit the proceeds of any Purchase to be used, directly or indirectly, to make a loan or other advance to, invest or contribute or otherwise support the activities or business of any person, entity, country or Governmental Authority that is subject to sanctions administered under any Anti-Terrorism Law; or
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(G) engage in or conspire to engage in any transaction that evades or violates, or is intended to evade or violate, or attempts to evade or violate any Anti-Terrorism Law.
(vi) It shall deliver to any Facility Agent any certificates or other evidence requested from time to time by such Facility Agent in its reasonable discretion, to confirm such Ferguson Party’s compliance with this Section 7.01(d) to the extent the same is requested so as to enable such Facility Agent to comply with an applicable law or regulation or request made of it by a regulatory body or an advisor which such Facility Agent is customarily in the habit of complying with in respect of such matters.
(vii) No part of any Purchase Price or Letter of Credit draw will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases that such Act applies to any of the Ferguson Parties.
(e) Sanctions. It shall not, and shall not permit any of its Subsidiaries to:
(i) knowingly (having taken the requisite due diligence), directly or indirectly, use the proceeds of the Facility or lend, contribute or otherwise make available such proceeds to any Subsidiaries, joint venture partner or other person or entity (each a “Relevant Transaction”) to fund any activities or business of or with any person or entity or in any country or territory where, at the time of such funding, such Relevant Transaction would be in breach of applicable Sanctions;
(ii) knowingly (after due and careful enquiry) engage in, or conspire to engage in, any transaction that breaches, or is intended to breach, any Sanctions; or
(iii) otherwise breach any Sanctions that it is aware (after due and careful enquiry) are binding on it.
(f) Risk Retention and Due Diligence under EU Securitisation Rules. Ferguson, as the originator which is managing the Facility for the purposes of Article 6 of the EU Securitisation Regulation, undertakes, for so long as there is Net Investment outstanding to any Purchaser subject to the EU Securitisation Regulation, for the benefit of each Purchaser that is required to comply with the EU Securitisation Rules:
(i) to hold and maintain a net economic interest in the Receivables (such net economic interest, the “Retained Interest”) in an amount (determined in accordance with Article 6 of the EU Securitisation Regulation) as in effect as at the A&R Effective Date at least equal to 5% of the aggregate Outstanding Balance of the Receivables;
(ii) to maintain the Retained Interest in the form of a first loss tranche as referenced in paragraph (d) of Article 6(3) of the EU Securitisation Regulation as in effect as at the A&R Effective Date by holding, directly or indirectly, all of the equity interests of the Seller;
(iii) that it will not (and will not permit any of its Affiliates to) subject the Retained Interest to any credit risk mitigation or hedging, or sell, transfer or otherwise surrender all or part of the rights, benefits or obligations arising from the Retained Interest, except to the extent permitted under the EU Securitisation Rules;
(iv) to include in each Monthly Report confirmation of its continuing compliance with clauses (i) through (iii) of this Section 7.01(f);
(v) that it will (A) promptly, and in any event within five (5) Business Days, notify, or cause to be notified, the Administrative Agent in the event that it ceases to hold the Retained Interest in accordance with clauses (i) and (ii) or otherwise fails to comply with clauses (i) through (iii) of this Section 7.01(f) in any way; and
(vi) it will, promptly following a reasonable request in writing by any Facility Agent from time to time, provide such further information as that Facility Agent may reasonably require in order to enable the Purchasers in its Purchase Group to perform their due diligence and monitoring obligations (if any) under the EU Securitisation Rules (excluding, however, Article 5(1)(e) and Article 7 of the EU Securitisation Regulation and any other EU Securitisation Rules adopted pursuant to, implementing or otherwise to the extent relating to those provisions), to the extent such information is reasonably available to Ferguson (or other Originators or the Seller) and Ferguson (or the other Originators or the Seller) can provide it without breaching confidentiality obligations; provided, that if the provision of any such information specifically required under this Section 7.01(f) would result in Ferguson incurring any material third-party costs in addition to those that it would otherwise incur in
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connection with its compliance with any provision of this Agreement, the relevant Purchaser shall reimburse Ferguson in respect of any reasonable and documented expenses incurred in connection with the provision of such information;
provided, however, that each such Purchaser, by accepting the benefits of this Section 7.01(f), acknowledges that (A) each Purchaser must independently assess and determine whether the agreement by Ferguson to retain the Retained Interest as described above and the information to be provided to the Purchasers in the Monthly Reports and otherwise pursuant to, or in connection with, this Agreement are sufficient for the purposes of complying with the EU Securitisation Rules and any corresponding national measures which may be relevant and (B) none of the Originators, Ferguson, the Seller, the Servicer, or any of their Affiliates makes any representation or provides any assurance to the effect that the terms of this Agreement and such information are sufficient for any such purpose or that compliance with such terms and provisions of such information would render the transactions described herein compliant with any EU Securitisation Rules.
Section 7.02. Negative Covenants of the Ferguson Parties. Except as otherwise specified below and in addition to its other covenants contained herein or made pursuant hereto, until the Facility Termination, each of the Ferguson Parties (as applicable) covenants and agrees as follows:
(a) Sales, Liens, Etc. Such Ferguson Party (other than the Seller) will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any adverse claim (except for the interest in favor of the Seller created pursuant to the Purchase and Contribution Agreement, the interest in favor of the Administrative Agent (for the benefit of the Purchasers and the LC Banks) created pursuant to this Agreement and Permitted Liens) upon or with respect to, any Receivable, Related Security, related Contract or Collections, or upon or with respect to any Account, or assign any right to receive income in respect thereof;
(b) Change in Payment Instructions to Obligors. It will not add or terminate any bank as a Depositary Bank from those listed on Schedule II hereto provided to the Facility Agents, or make any change in its instructions to Obligors regarding payments to be made in respect of the Receivables or payments to be made to any Depositary Bank, unless the Administrative Agent will have received notice of such addition, termination or change (including an updated Schedule II) and a fully executed Blocked Account Agreement in form and substance satisfactory to the Administrative Agent with respect to each new Lockbox Account or other Blocked Account;
(c) Change in Name or Jurisdiction of Organization, Etc. It will not change its name, identity or organizational structure unless the Administrative Agent shall have received at least thirty (30) days’ advance written notice of such change and all action by such Ferguson Party, necessary or appropriate to perfect or maintain the perfection of the Administrative Agent’s (for the benefit of the Purchasers and the LC Banks) ownership or security interest in the Receivables, the Related Security and the Collections (including, without limitation, the filing of all financing statements and the taking of such other action as the Administrative Agent may request in connection with such change or relocation) will have been duly taken;
(d) Treatment as Sales. It will not account for or treat (whether in financial statements or otherwise) the transactions contemplated by the Purchase and Contribution Agreement and this Agreement in any manner other than as the sale and/or absolute conveyance of Receivables, except that the transactions under this Agreement will be treated (i) under relevant GAAP as a liability in the Parent’s consolidated financial statements and in Ferguson’s consolidated financial statements and (ii) for U.S. federal income tax purposes, as a financing;
(e) Transaction Documents. The Seller will not terminate, amend, waive or modify, or consent to any termination, amendment, waiver or modification of, any provision of any Transaction Document or grant any other consent or other indulgence under any Transaction Document, in each case without the prior written consent of the Required Facility Agents (provided that any release and reconveyance pursuant to Section 3.03 of the Purchase and Contribution Agreement shall not be prohibited hereunder). The Seller will perform all of its obligations under the Purchase and Contribution Agreement and enforce the Purchase and Contribution Agreement in accordance with its terms;
(f) Nature of Business. The Seller will not engage in any business activities other than those contemplated by the Transaction Documents and will not create or form any subsidiary;
(g) Mergers, Etc. The Seller will not merge with or into or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions), all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets or capital stock or other ownership interest of, or enter into any joint venture or partnership agreement with, any
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Person, other than as contemplated by the Transaction Documents. No other Ferguson Party will (a) consolidate or merge with or into any other person or (b) sell, lease or otherwise transfer (in one transaction or in a series of transactions) all or substantially all of its assets to any other person; provided, that (i) any Person may consolidate or merge with or into the Parent in a transaction in which the Parent is the surviving Person, (ii) any Person may consolidate or merge with or into any Originator in a transaction in which such Originator is the surviving Person, (iii) any Originator may consolidate or merge with or into any other Originator in a transaction in which one or the other such Originator is the surviving Person, and (iv) if at the time thereof and immediately after giving effect thereto no Default (as defined in the Credit Agreement) or Event of Default (as defined in the Credit Agreement) under the Credit Agreement shall have occurred and be continuing, any Person may consolidate or merge with or into the Parent, and the Parent may consolidate or merge with or into any Person, as long as the surviving entity, if other than the Parent, has unsecured debt ratings at least equal to those of the Parent (prior to consolidation or merger) and the surviving entity assumes the obligations of the Parent under this Agreement pursuant to an agreement executed and delivered to the Facility Agents in a form reasonably satisfactory to the Required Facility Agents;
(h) Distributions, Etc. The Seller will not declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any membership interests or other equity interests of the Seller, or return any capital to its members or other equity holders as such, or purchase, retire, defease, redeem or otherwise acquire for value or make any payment in respect of any membership interests or other equity of the Seller or any warrants, rights or options to acquire any membership interests or other equity of the Seller, now or hereafter outstanding; provided, however, that the Seller may declare and pay cash dividends to its member out of Collections available for such purpose pursuant to the Transaction Documents so long as (i) no Termination Event or Potential Termination Event shall then exist or would occur as a result thereof, (ii) such dividends are in compliance with all applicable law including the Delaware Limited Liability Company Act, and (iii) such dividends have been approved by all necessary and appropriate limited liability company action of the Seller and its board of directors;
(i) Debt. The Seller will not create, incur, guarantee, assume or suffer to exist any indebtedness or other liabilities, whether direct or contingent, other than the incurrence of obligations pursuant to, and, as contemplated in, the Transaction Documents and the incurrence of operating expenses in the ordinary course of business or other liabilities;
(j) Sales, Liens. The Seller will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any adverse claim upon (including the filing of any financing statement) or with respect to, any Receivable, Related Security or Collection, or upon or with respect to any Contract under which any Receivable arises, or any Lockbox or Blocked Account or any amounts from time to time on deposit therein or credited thereto, or assign any right to receive income with respect thereto (other than, in each case the creation of the interests therein in favor of the Administrative Agent or the sale or assignment of a Reassigned Receivable pursuant to Section 2.01A hereof), and the Seller will defend the right, title and interest of the Administrative Agent in, to and under any of the foregoing property, against all claims of third parties claiming through or under the Seller or an Originator;
(k) ERISA. (i) Neither it nor any of its ERISA Affiliates shall (A) adopt or institute any Plan; (B) take any action which will result in the partial or complete withdrawal, within the meanings of Sections 4203 and 4205 of ERISA, from a Multiemployer Plan; (C) engage or permit any Ferguson Party, or any Subsidiary or Affiliate thereof to engage in any transaction prohibited by Section 406 of ERISA or Section 4975 of the Code involving any Plan which would subject such Ferguson Party or any ERISA Affiliate thereof to any tax, penalty or other liability including a liability to indemnify; (D) incur or allow to exist any failure by any Plan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA); (E) fail to make full payment when due (including any permissible extensions) of all amounts due as contributions to any Plan or Multiemployer Plan; or (F) fail to comply with the requirements of Section 4980B of the Code or Part 6 of Title I(B) of ERISA, where singly or cumulatively, the above could reasonably be expected to have a Material Adverse Effect; and
(ii) Neither it nor any Subsidiary thereof shall (A) engage in any transaction prohibited by any Governmental Authority applicable to any Foreign Plan; (B) fail to make full payment when due of all amounts due as contributions to any Foreign Plan; or (C) otherwise fail to comply with the requirements of any Governmental Authority applicable to any Foreign Plan, where singly or cumulatively, the above could have a Material Adverse Effect; and
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(l) Commingling. It will not direct any funds to be deposited into any Blocked Account other than Collections; provided, however, that it may direct or allow (i) Collections of Acquisition Receivables being prepared for reporting on an Approved Data Reporting System in accordance with Section 11.21 hereof until the applicable Inclusion Date for such Acquisition Receivables (after which Inclusion Date, the following limit will no longer apply) to be so deposited in an aggregate amount not in excess of $15,000,000 (as determined on the last day of each Calculation Period and reported in the related Monthly Report), (ii) collections of receivables not generated by an Originator that are being transitioned or have been transitioned to the Approved Data Reporting System, and (iii) credit card and other processing fees to be so deposited by Payment Processors pursuant to Payment Processor Agreements.
Section 7.03. Separateness Covenants. Until the Facility Termination, except as set forth below, each of the Ferguson Parties (as applicable) covenants and agrees as follows:
(a) The Seller will at all times maintain at least one independent director or manager who (i) is not currently and has not been during the five years preceding the date of this Agreement an officer, director or employee of any of the Parent, Ferguson, any other Originator, the Servicer, or any of their respective Affiliates or Subsidiaries (except the Seller) (collectively, the “Other Companies”), (ii) is not a current or former officer or employee of the Seller, (iii) is not a stockholder of any of the Other Companies or any of their respective Affiliates, and (iv) who (A) has prior experience as an independent director for a corporation or manager for a limited liability company whose charter documents required the unanimous consent of all independent directors thereof before such corporation or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (B) has at least three years of employment experience with one or more entities that provide, in the ordinary course of their respective businesses, advisory, management or placement services to issuers of securitization or structured finance instruments, agreements or securities. The Seller will provide not less than 30 business days’ prior written notice to the Administrative Agent and the Facility Agents in the event of the replacement of the Seller’s independent director or manager;
(b) The Seller will conduct its business in its own name and from an office separate from that of the Other Companies (but which may be located in the same facility as one or more of the Other Companies). The Seller will have stationery and other business forms separate from that of the Other Companies;
(c) The Seller will at all times be adequately capitalized in light of its contemplated business;
(d) The Seller will at all times provide for its own operating expenses and liabilities from its own funds except that common overhead expenses may be shared by the Seller and one or more of the Other Companies on a basis reasonably related to use;
(e) The Seller will maintain its assets and transactions separately from those of the Other Companies and reflect such assets and transactions in financial statements separate and distinct from those of the Other Companies and evidence such assets and transactions by appropriate entries in books and records separate and distinct from those of the Other Companies. The Seller will hold itself out to the public under the Seller’s own name as a legal entity separate and distinct from the Other Companies. The Seller will not hold itself out as having agreed to pay, or as being liable, primarily or secondarily, for, any obligations of the Other Companies;
(f) The Seller will hold at least one annual duly noticed meeting of its board of directors, make and retain minutes of such meetings and otherwise observe all limited liability company formalities as a distinct entity;
(g) The Seller will prepare its financial statements separately from those of any of the Other Companies and will ensure that any consolidated financial statements of any Other Company that are filed with the SEC or any other Official Body or are furnished to any creditors of any Other Company will include notes clearly stating that the Seller is a separate corporate entity and that its assets are available first and foremost to satisfy the claims of the creditors of the Seller;
(h) The Seller will not direct or participate in the management of any of the Other Companies’ operations;
(i) The Seller will not maintain any joint account with any Other Company or become liable as a guarantor or otherwise with respect to, or grant a security interest in any of its assets to secure, any debt or contractual obligation of any Other Company;
(j) The Seller will not engage in any transaction with, or make loans, advances or otherwise extend credit to, any of the Other Companies except as expressly contemplated by the Transaction Documents;
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(k) The Seller will maintain its Limited Liability Company Agreement in conformity with this Agreement such that it does not amend, restate, supplement or otherwise modify its Limited Liability Company Agreement in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents;
(l) Such Ferguson Party (other than the Seller) will take all actions necessary to maintain the Seller as a separate, limited purpose subsidiary of Ferguson pursuant to, and in accordance with the terms of, the Seller’s Limited Liability Company Agreement; and
(m) Such Ferguson Party (other than the Seller) will take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinions issued by Mayer Brown LLP, as counsel for Seller, in connection with the Facility on the A&R Effective Date relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in all material respects at all times.
ARTICLE VIII
TERMINATION
TERMINATION
Section 8.01. Termination Events. The occurrence of each of the following events shall constitute a “Termination Event”:
(a) Failure of any Ferguson Party (other than Ferguson when acting in its capacity as Servicer) to perform or observe any covenant or agreement under the Transaction Documents other than those listed in clause (h) below, and such failure shall continue for thirty (30) days after such applicable party receives written notice or has actual knowledge of such failure;
(b) Failure of any Ferguson Party (other than Ferguson when acting in its capacity as Servicer) to make when due any payment or deposit required to be made by it under any Transaction Document, and such failure shall continue for one (1) Business Day with respect to payments of principal and three (3) Business Days with respect to all other payments under any Transaction Document;
(c) Any representation or warranty made or deemed made by any Ferguson Party (other than Ferguson when acting in its capacity as Servicer) under or in connection with any Transaction Document or any certificate, report or other statement delivered by such Ferguson Party pursuant to the terms set forth in the Transaction Documents shall prove to have been incorrect or untrue in any material respect when made or deemed made or delivered (unless such representation or warranty in Section 6.01(d) or Section 6.01(g) herein relates solely to one or more specific Receivables and immediately following the removal of the related Receivables from the Net Receivables Balance, the Percentage Interest does not exceed 100%); provided, that (except in the case of any representation or warranty made with respect to any financial statement of the Group or made pursuant to Section 6.01(aa)(ii)) if such lack of correctness is capable of being remedied or cured within a 30-day period, the applicable Ferguson Party shall have a period of thirty (30) days after the earlier of (i) written notice thereof has been given to such Ferguson Party by the Administrative Agent (acting on the request of one or more Purchasers) or (ii) a Responsible Officer of such Ferguson Party has obtained knowledge thereof, within which to remedy or cure such lack of correctness;
(d) the occurrence of (i) an event of default as defined in any mortgage, indenture, agreement or instrument under which there may be issued or evidenced, any indebtedness of the Seller in excess of $50,000; or (ii) an event of default as defined in any mortgage, indenture, agreement or instrument under which there may be issued or evidenced, any indebtedness of any other Ferguson Party (A) relating to the payment of principal of, or interest on, such indebtedness, but only if such indebtedness is in an aggregate amount exceeding $150,000,000 or (B) of any other type which shall result in such indebtedness being accelerated, but only if such indebtedness is in an aggregate amount exceeding $150,000,000;
(e) (i) One or more judgments or decrees involving a liability in excess of $50,000 shall be entered against the Seller; (ii) one or more judgments or decrees shall be entered against any Ferguson Party (other than the Seller) or any of their respective Subsidiaries or any combination thereof involving in the aggregate a liability (not paid or fully covered by insurance) of $150,000,000 and, in the case of either clause (i) or clause (ii), such judgments or decrees shall not have been vacated, dismissed, discharged or stayed within 60 days from the entry thereof;
(f) Any Ferguson Party shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian or the like of itself or of all or a substantial part of its property, (ii) become unable, admit in writing its inability or fail to pay its debts generally as they become due, (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, (v) commence a voluntary case under the Federal Bankruptcy Code or any applicable bankruptcy or insolvency Law of Jersey or file a voluntary petition or answer seeking reorganization, an arrangement with creditors or an order for relief or seeking to take advantage of any insolvency law or file an answer admitting the material
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allegations of a petition filed against it in any bankruptcy, reorganization or insolvency proceeding, or action shall be taken by it for the purpose of effecting any of the foregoing, or (vi) if without the application, approval or consent of any Ferguson Party, a proceeding shall be instituted in any court of competent jurisdiction, under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking in respect of such Ferguson Party an order for relief or an adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition or arrangement with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or custodian or the like of such Ferguson Party or of all or any substantial part of its assets, or other like relief in respect thereof under any bankruptcy or insolvency law, and (A) is not challenged by appropriate means by such Ferguson Party within thirty (30) days and (B) the same shall continue undismissed or unstayed for any period of 60 consecutive days after commencement of such case;
(g) The Administrative Agent (for the benefit of the Purchasers and the LC Banks) shall cease to have, for any reason, a valid and perfected first priority ownership or security interest in the Receivables, the Related Security and the Collections;
(h) Failure of any Ferguson Party to deliver any Monthly Report or Weekly Report or to perform or observe any covenant or agreement set forth in Section 6.01(d), Section 6.01(e), Section 7.01(c)(i), or Section 7.02, and such failure shall continue for five (5) Business Days after such applicable party receives written notice or has actual knowledge of such failure;
(i) Any Transaction Document shall terminate in whole or in part (except in accordance with its terms or with the consent of the parties thereto) or shall cease to be effective or to be legally valid, binding and enforceable obligation of any one of the Ferguson Parties, or any one of the Ferguson Parties shall directly or indirectly contest such effectiveness, validity, binding nature or enforceability of any such Transaction Document;
(j) 3-month rolling average Dilution Ratio exceeds 10.50%;
(k) 3-month rolling average Delinquency Ratio exceeds (i) for any Calculation Period occurring in the months of April through November, 8.00% and (ii) for any Calculation Period occurring in the months of December through March, 9.00%;
(l) 3-month rolling average Default Ratio exceeds 2.50%;
(m) Failure by the Seller to deliver the documents and instruments set forth in Section 3.05 in the timeframe specified therein;
(n) 3-month rolling average of Days Sales Outstanding exceeds 46 days;
(o) the Percentage Interest exceeds 100%, and such circumstance continues for two (2) consecutive Business Days (one (1) Business Day on or after a Downgrade Event) after the Seller knows or should know of such circumstance;
(p) a Servicer Default shall occur;
(q) a Change of Control of Ferguson, any Originator, the Seller or the Parent (other than, in the case of the Parent, a “Permitted Change of Control” as defined in the Credit Agreement) shall occur; or
(r) there shall have been filed against any Ferguson Party (i) notice of a material federal tax Lien from the Internal Revenue Service, which either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, and five (5) days shall have elapsed without such notice having been effectively withdrawn or such Lien having been released or discharged, (ii) notice of a material Lien from the PBGC under Section 430(k) of the Code or Section 303(k) of ERISA for a failure to make a required installment or other payment to plan to which either of such sections applies and five (5) days shall have elapsed without such notice having been effectively withdrawn or such Lien having been released or discharged, or (iii) a notice of any other Lien the existence of which could reasonably be expected to have a Material Adverse Effect with respect to such Person and thirty (30) days shall have elapsed without such notice having been effectively withdrawn or such Lien having been released or discharged.
Section 8.02. Consequences of a Termination Event. (a) Upon the occurrence and continuance of any Termination Event, the Administrative Agent may, or at the direction of the Required Facility Agents shall, by written notice to the Ferguson Parties, determine to commence the wind-down period during or after which no Reinvestment Purchases shall be made; provided, that, upon the occurrence of the Termination Event specified in Section 8.01(f) above, the wind-down period shall be deemed to commence automatically. In addition, (i) upon the occurrence and continuance of any Termination Event, (A) the Percentage Interest shall be increased to 100% and all Collections will be applied to repay the Facility, (B) pricing on the Facility will be at the Default Rate, (C) the Administrative Agent may, or at the direction of the Required Facility Agents shall, deliver the notices of exclusive control to
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the Depositary Banks under the Blocked Account Agreements, and (D) the Administrative Agent may, or at the direction of the Required Facility Agents shall, replace the Servicer and (ii) upon the occurrence of the Termination Date, (X) the Maximum Net Investment shall be reduced as of each calendar date thereafter equal to the Aggregate Exposure Amount as of such date (and each Purchase Group’s Exposure Amount will be reduced ratably) and (Y) the Seller shall deposit into the LC Cash Collateral Account the amount necessary to cause the amount therein to be equal to the Required LC Cash Collateral Amount.
(b) Upon the occurrence and continuance of any Termination Event, the Purchasers, the LC Banks, the Facility Agents and the Administrative Agent shall have, in addition to all rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of the applicable jurisdiction and under other applicable Laws, which rights shall be cumulative.
(c) The parties hereto acknowledge that this Agreement is, and is intended to be, a contract to extend financial accommodations to the Seller within the meaning of Section 365(e)(2)(B) of the Bankruptcy Code (11 U.S.C. § 365(e)(2)(B)) (or any amended or successor provision thereof or any amended or successor code).
ARTICLE IX
THE ADMINISTRATIVE AGENT AND THE FACILITY AGENTS
THE ADMINISTRATIVE AGENT AND THE FACILITY AGENTS
Section 9.01. Authorization and Action. (a) Each Facility Agent, each Purchaser and each LC Bank hereby appoints RBC as Administrative Agent hereunder and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. When requested to do so by a Facility Agent, the Required Facility Agents or the Facility Agents (as the context herein requires or allows), the Administrative Agent shall take such action or refrain from taking such action consistent with its duties hereunder and under the other Transaction Documents as a Facility Agent, the Required Facility Agents or the Facility Agents, as the case may be, direct under or in connection with or on any matter relating to any Ferguson Party, this Agreement and all other Transaction Documents. In the event of a conflict between a determination or calculation made by the Administrative Agent and a determination or calculation made by any Purchaser, LC Bank or any Facility Agent, the determination or calculation of the Purchaser, the LC Bank or the Facility Agent shall control absent manifest error.
(b) Each Purchaser and LC Bank (if any) in a Purchase Group hereby accepts the appointment of the applicable Facility Agent hereunder, and authorizes such Facility Agent to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to such Facility Agent by the terms of this Agreement, if any, together with such other powers as are reasonably incidental thereto. Each other Purchaser or LC Bank within any other Purchase Group hereby accepts the appointment of the related Facility Agent for such Purchase Group and authorizes and empowers such Facility Agent as provided in the preceding sentence.
(c) Except for actions which the Administrative Agent or any Facility Agent is expressly required to take pursuant to this Agreement or any Conduit Support Document, neither the Administrative Agent nor any Facility Agent shall be required to take any action which exposes the Administrative Agent or such Facility Agent to personal liability or which is contrary to applicable Law unless the Administrative Agent or such Facility Agent shall receive further assurances to its satisfaction from the Purchasers and LC Banks of the indemnification obligations under Section 9.06 hereof against any and all liability and expense which may be incurred in taking or continuing to take such action. The Administrative Agent agrees to give to each Facility Agent, each Purchaser and each LC Bank prompt notice of each notice and determination given to it by any Ferguson Party or any Depositary Bank or by it to any Ferguson Party or any Depositary Bank, pursuant to the terms of this Agreement. Each Facility Agent agrees to give the Administrative Agent and such Facility Agent’s respective Purchasers and LC Banks prompt notice of each notice and determination given to it by any Ferguson Party, any Depositary Bank or by it to any Ferguson Party or any Depositary Bank, pursuant to the terms of this Agreement. Notwithstanding the foregoing, neither the Administrative Agent nor any Facility Agent shall be deemed to have knowledge or notice of the occurrence and continuance of any Termination Event unless the Administrative Agent or such Facility Agent has received written notice from a Conduit Purchaser, a Committed Purchaser, any LC Bank, any other Facility Agent, the Seller or the Servicer referring to this Agreement, describing such Termination Event and stating that such notice is a “notice of a Termination Event.” Subject to Section 9.07 hereof, the appointment and authority of the Administrative Agent and each Facility Agent hereunder shall terminate on the date of Facility Termination.
(d) For the avoidance of doubt, notwithstanding any other provision hereof, (i) no Facility Agent in its capacity as such shall have any purchase, reinvestment or funding commitment or obligation hereunder, nor be obligated to remit funds to the Seller hereunder, unless such funds are received from the applicable Conduit Purchaser or Committed Purchaser, and (ii) no Facility Agent shall have any personal liability for any default by its Conduit Purchaser or Committed Purchaser hereunder.
Section 9.02. UCC Filings. The Administrative Agent, the Purchasers, the LC Banks, the Facility Agents, the Seller, Originators, the Servicer and the Parent expressly recognize and agree that the Administrative Agent may be listed as the assignee or secured party of record on, and the Administrative Agent, the Facility Agents, the Purchasers, the LC Banks, expressly authorize the
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Administrative Agent to execute on their behalf as their agent, the various UCC filings required to be made hereunder and under the Transaction Documents in order to perfect the sale and assignment of the Receivable Interest from the Seller to the Facility Agents, for the benefit of the Purchasers and the LC Banks, that such listing and/or execution shall be for administrative convenience only in creating a record or nominee owner to take certain actions hereunder on behalf of the Facility Agents, the Purchasers and the LC Banks or to execute UCC filings on behalf of the Facility Agents, the Purchasers and the LC Banks and that such listing and/or execution will not affect in any way the status of the Administrative Agent, the Facility Agents, and the Purchasers and the LC Banks as the beneficial owners of, and secured parties with respect to, the Receivable Interest. In addition, such listing or execution shall impose no duties on the Administrative Agent other than those expressly and specifically undertaken in accordance with this Article IX. In furtherance of the foregoing, the Administrative Agent, each Facility Agent, Purchaser and LC Bank shall be entitled to enforce their respective rights created under this Agreement without the need to conduct such enforcement through the Administrative Agent except as provided herein.
Section 9.03. Administrative Agent’s and Facility Agents’ Reliance, Etc. (a) Neither the Administrative Agent nor any Facility Agent nor any of their respective directors, officers, agents or employees shall be liable to the Purchasers, the Administrative Agent or the Facility Agents for any action taken or omitted to be taken by it or them as Administrative Agent or Facility Agent under or in connection with this Agreement (including, without limitation, the Administrative Agent’s servicing, administering or collecting Receivables as Servicer pursuant to Section 4.01(c) hereof), except for its or their own gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final non-appealable order. Without limiting the foregoing, the Administrative Agent and each Facility Agent: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Purchaser or LC Bank and shall not be responsible to any Purchaser or LC Bank for any statements, warranties or representations made by any Ferguson Party in connection with this Agreement or any other Transaction Document; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Transaction Document on the part of any Ferguson Party or to inspect the property (including the books and records) of any Ferguson Party; (iv) shall not be responsible to any Purchaser for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (v) shall incur no liability under or in respect of this Agreement by acting upon any notice (including notice by telephone), consent, certificate or other instrument or writing (which may be by telex or electronic means) believed by it in good faith to be genuine and signed or sent by the proper party or parties.
(b) Each Facility Agent shall determine with its related Purchasers and LC Banks, the number of such (each, a “Voting Block”) which shall be required to request or direct such Facility Agent to take action, or refrain from taking action, under this Agreement and the other Transaction Documents on behalf of such Purchasers and LC Banks. Such Facility Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of its appropriate Voting Block, and such request and any action taken or failure to act pursuant thereto shall be binding upon all of such Facility Agent’s Purchasers and LC Banks.
(c) Unless otherwise advised in writing by a Facility Agent or by any Purchaser or LC Bank on whose behalf such Facility Agent is purportedly acting, each party to this Agreement may assume that (i) such Facility Agent is acting for the benefit of each of its respective Purchasers and LC Banks, as well as for the benefit of each assignee or other transferee from any such Purchaser or LC Bank, and (ii) such action taken by such Facility Agent has been duly authorized and approved by all necessary action on the part of the Purchasers and LC Banks on whose behalf it is purportedly acting. Each Conduit Purchaser (or, with the consent of all other members of the respective Purchase Group then existing, any other Purchaser or LC Bank) shall have the right to designate a Facility Agent (which may be itself) to act on its behalf and on behalf of its assignees and transferees for purposes of this Agreement by giving to the Administrative Agent written notice thereof signed by such Purchaser(s) and/or LC Bank(s) and the newly designated Facility Agent; provided, however, if such new Facility Agent is not an Affiliate of a Facility Agent that is party hereto, any such designation of a new Facility Agent shall require the consent of the Seller, which consent shall not be unreasonably withheld. Such notice shall be effective when receipt thereof is acknowledged by the Administrative Agent, which acknowledgement the Administrative Agent shall not unreasonably delay giving, and thereafter the party named as such therein shall be Facility Agent for such Purchasers and LC Banks under this Agreement. Each Facility Agent and its respective Purchasers and LC Banks shall agree among themselves as to the circumstances and procedures for removal and resignation of such Facility Agent.
Section 9.04. Non-Reliance on the Administrative Agent and the Facility Agents. Without limiting the generality of any other provision of this Agreement: (a) each of the Conduit Purchasers, the Committed Purchasers, the LC Banks and the Facility Agents expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of any Ferguson Party, shall be deemed to constitute any representation or warranty by the Administrative Agent to any such Person. Each of the Conduit Purchasers, the Committed Purchasers, the LC Banks and the Facility Agents represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Conduit Purchaser, Committed Purchaser, LC Bank or Facility Agent and based on such documents and information as it has
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deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of any Ferguson Party and made its own decision to enter into this Agreement. Each of the Conduit Purchasers, the Committed Purchasers, the LC Banks and the Facility Agents also represents that it will, independently and without reliance upon the Administrative Agent or any other Conduit Purchaser, Committed Purchaser, LC Bank or Facility Agent, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Transaction Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of any Ferguson Party. Except for notices, reports and other documents expressly required to be furnished to the Facility Agents, the other Purchasers and LC Banks by the Administrative Agent hereunder, the Administrative Agent shall have no duty or responsibility to provide any Conduit Purchaser, any Committed Purchaser, any LC Bank or any Facility Agent with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Ferguson Party which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
Each of the Committed Purchasers and LC Banks expressly acknowledges that neither its Facility Agent (or any other Facility Agent) nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by its Facility Agent (or any other Facility Agent) hereinafter taken, including any review of the affairs of any Ferguson Party shall be deemed to constitute any representation or warranty by any Facility Agent to any such Person. Each of the Committed Purchasers and LC Banks represents to the Facility Agents that it has, independently and without reliance upon its Facility Agent or any other Committed Purchaser, LC Bank or Facility Agent and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of each Ferguson Party and made its own decision to enter into this Agreement. Each of the Committed Purchasers and LC Banks also represents that it will, independently and without reliance upon its Facility Agent, any other Committed Purchaser, LC Bank or Facility Agent, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Transaction Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of each Ferguson Party. Except for notices, reports and other documents expressly required to be furnished to any Purchaser or LC Bank by its Facility Agent hereunder, no Facility Agent shall have any duty or responsibility to provide any Purchaser or LC Bank with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Ferguson Party which may come into the possession of such Facility Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
Section 9.05. Administrative Agent, Facility Agents and Affiliates. RBC, each Facility Agent and their respective Affiliates may generally engage in any kind of business with any Ferguson Party or any Obligor, any of their respective Affiliates and any Person who may do business with or own securities of any Ferguson Party or any Obligor or any of their respective Affiliates, all as if such parties did not have the agency agreements contemplated by this Agreement and without any duty to account therefor to the Purchasers or the LC Banks.
Section 9.06. Indemnification. (a) The Committed Purchasers and LC Banks in each Purchase Group (proportionately, among the Purchase Groups, in accordance with their respective Purchase Group Percentages) severally agree to indemnify the Administrative Agent (to the extent not reimbursed by the Seller or the Servicer), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Administrative Agent under this Agreement; provided, that (i) no Committed Purchaser or LC Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting or arising from the Administrative Agent’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final non-appealable order and (ii) no Committed Purchaser or LC Bank shall be liable for any amount in respect of any compromise or settlement or any of the foregoing unless such compromise or settlement is approved by the Facility Agents. Without limitation of the generality of the foregoing, the Committed Purchasers and LC Banks in each Purchase Group (proportionately, among the Purchase Groups, in accordance with their respective Purchase Group Percentages) agree to reimburse the Administrative Agent (to the extent not reimbursed by the Seller or the Servicer), promptly upon demand, for any reasonable out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrative Agent in connection with the administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement; provided, that no Purchaser or LC Bank shall be responsible for the costs and expenses of the Administrative Agent in defending itself against any claim alleging the gross negligence or willful misconduct of the Administrative Agent to the extent such gross negligence or willful misconduct is determined by a court of competent jurisdiction in a final and non-appealable decision.
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(b) Each Purchaser and LC Bank also agrees to indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Purchaser or LC Bank (but only to the extent that the Seller has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Seller to do so), (ii) any Taxes attributable to such Purchaser’s or LC Bank’s failure to comply with the provisions of Section 11.02 relating to the maintenance of a participant register and (iii) any Excluded Taxes attributable to such Purchaser or LC Bank, in each case that are payable or paid by the Administrative Agent in connection with any Transaction Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.
Section 9.07. Successor Administrative Agent. The Administrative Agent may resign at any time by giving at least sixty days’ written notice thereof to the Purchasers, the LC Banks, the Facility Agents, the Seller, Originators, the Servicer and the Parent. Upon the resignation of the Administrative Agent, the Seller shall have the right to appoint a successor Administrative Agent approved by the Facility Agents (which approval will not be unreasonably withheld or delayed). If no successor Administrative Agent shall have been so appointed by the Seller, and shall have accepted such appointment, within thirty days after the retiring Administrative Agent’s delivery of notice of resignation, then the retiring Administrative Agent may appoint a successor Administrative Agent which, if such successor Administrative Agent is not an Affiliate of any of the Facility Agents, is approved by the Seller (which approval will not be unreasonably withheld or delayed), and which successor Administrative Agent shall be (a) a commercial bank having a combined capital and surplus of at least $250,000,000 and (b) experienced in the types of transactions contemplated by this Agreement. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent’s resignation or removal hereunder, the provisions of this Article IX shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.
Section 9.08. Erroneous Payments. (a) If the Administrative Agent notifies a Purchaser (any such Purchaser, a “Payment Recipient”) that the Administrative Agent has determined in its reasonable sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Payment Recipient) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof) (provided that, without limiting any of its other rights or remedies (whether at law or in equity), the Administrative Agent may not make any such demand under this clause (a) with respect to an Erroneous Payment unless such demand is made within 10 Business Days of the date of receipt of such Erroneous Payment by the applicable Payment Recipient), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Payment Recipient shall promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent demonstrable error.
(b) Without limiting immediately preceding clause (a), each Payment Recipient hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Payment Recipient, otherwise becomes aware was transmitted to it, or received by it, in error or by mistake (in whole or in part), then:
(i) (A) in the case of immediately preceding clauses (x) or (y), an error shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Payment Recipient shall (and shall cause any of its Affiliates that receives all or a portion of such payment, prepayment or repayment on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 9.08(b).
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(c) Each Payment Recipient hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Payment Recipient under any Transaction Document, or otherwise payable or distributable by the Administrative Agent to such Payment Recipient from any source, against any amount due to the Administrative Agent under the immediately preceding clause (a) or under the indemnification provisions of this Agreement. In addition, each party hereto agrees that, irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Payment Recipient under the Transaction Documents with respect to each Erroneous Payment (or portion thereof that is not returned to the Administrative Agent as provided herein) (the “Erroneous Payment Subrogation Rights”).
(d) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any obligations owed by the Seller, any Originator, the Servicer, the Parent or any Facility Agent to the Administrative Agent; provided that this Section 9.08 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the obligations of the Seller, any Originator, the Servicer or the Parent relative to the amount (and/or timing for payment) of the Aggregate Capital and other obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, this clause (d) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Seller, any Originator, the Servicer or the Parent for the purpose of making such Erroneous Payment.
(e) To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(f) Each party’s obligations, agreements and waivers under this Section 9.08 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Purchaser, the termination of the Purchase Group Maximum Net Investments and/or the repayment, satisfaction or discharge of all obligations of the Seller (or any portion thereof) under any Transaction Document.
ARTICLE X
INDEMNIFICATION; EXPENSES
INDEMNIFICATION; EXPENSES
Section 10.01. Indemnity by Seller. (a) The Seller shall indemnify the Administrative Agent, the Facility Agents, the Purchasers, the Support Providers and the LC Banks and their respective assigns, officers, directors and employees (each, an “Indemnified Party”) against all liabilities, claims, damages, costs, expenses, or losses (“Losses”) associated with the Facility, excluding, however, (i) Losses to the extent resulting from the gross negligence or willful misconduct of the Indemnified Party or the Indemnified Party’s breach of contract under any Transaction Document or any document delivered pursuant to any of the Transaction Documents, (ii) recourse (except as provided in this Agreement) for uncollectable Receivables or (iii) Losses that are due to or relate to Taxes (which are addressed in Section 10.02).
Without limiting the foregoing, the Seller shall indemnify the Indemnified Parties for all Losses resulting from:
(i) False or incorrect representations, warranties or certifications of any Ferguson Party in any Transaction Document or any document delivered pursuant to any of the Transaction Documents;
(ii) Failure by any Ferguson Party to comply with applicable law, rules or regulations related to the Receivables;
(iii) Failure to vest in the Administrative Agent (for the benefit of the Purchasers and the LC Banks) a first priority perfected ownership or security interest in the Receivables, the Related Security and the Collections, free and clear of any Liens;
(iv) Failure to file, or delay in filing, any financing statements or similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to the Receivables, the Related Security or the Collections;
(v) Any dispute, claim or defense of an Obligor (other than discharge in bankruptcy) to the payment of any Receivable including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid or binding obligation of such Obligor, or any other claim resulting from the sale of the goods or services related to such Receivable or the furnishing or failure to furnish such goods or services or relating to collection activities with respect to such Receivable or any Contract related thereto, or any adjustment, cash discount, warranty, rebate, return of product or cancellation with respect to such Receivable;
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(vi) Failure by any Ferguson Party to perform any of their respective duties or other obligations or comply with any of their respective covenants under the Transaction Documents;
(vii) Any products liability, personal injury or damage suit, environmental or other claim by an Obligor or other third party arising out of the goods or services which are the subject of any Receivable;
(viii) Any third party investigation, litigation or proceeding (actual or threatened) related to this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, or the use of proceeds of Purchases under this Agreement or the draw under any Letter of Credit, or in respect of any Receivable;
(ix) Commingling of Collections with any other funds of any Ferguson Party or any set-off against Collections by any Payment Processors;
(x) Third party claims arising from the Seller’s, any Originator’s or the Servicer’s administration of the Receivables;
(xi) The sale of any Receivable in violation of applicable Law;
(xii) Any setoff by any Obligor;
(xiii) Any Letter of Credit issued pursuant to this Agreement or the use of the proceeds thereof by the applicable beneficiary or any affiliate, agent, employee or assignee thereof;
(xiv) The failure of the Seller or any Originator to pay when due any sales, excise, business and occupation, property or other similar taxes payable in connection with the Receivables;
(xv) Any action or omission by any Ferguson Party which reduces or impairs the rights of the Administrative Agent, the Facility Agents, the Purchasers or the LC Banks with respect to any Receivable and the Related Security and Collections with respect thereto or the value of any such Receivable and the Related Security and Collections with respect thereto;
(xvi) Any dispute, suit or claim arising out of any provision in any Contract restricting or prohibiting sale and assignment of the related Receivables;
(xvii) Overstatement of the balance of any Receivable due to provisions of the related Contract relating to retainage, data assumptions, cash on delivery sales, or bill and hold sales, or other similar provisions of comparable effect; and
(xviii) Any dispute, suit or claim arising out of the efforts to collect on a Reassigned Receivable.
Except as set forth in Section 10.01(a)(xiv) above, all obligations of the Seller with respect to Taxes are addressed in Section 10.02.
(b) Promptly upon receipt by any Indemnified Party under this Section 10.01 of notice of the commencement of any suit, action, claim, proceeding or governmental investigation against such Indemnified Party, such Indemnified Party shall, if a claim in respect thereof is to be made against the Seller hereunder, notify the Seller in writing of the commencement thereof. Any notice claiming compensation under this Section shall set forth in reasonable detail the amount or amounts to be paid to it hereunder and shall be conclusive in the absence of manifest error. The Seller may participate in and assume the defense and settlement of any such suit, action, claim, proceeding or investigation at its expense, and no settlement thereof shall be made without the approval of the Seller and such Indemnified Party. The approval of the Seller and such Indemnified Party will not be unreasonably withheld or delayed. After notice from the Seller to the Indemnified Party of its intention to assume the defense thereof with counsel reasonably satisfactory to the Administrative Agent and the Facility Agents, and so long as the Seller so assumes the defense thereof in a manner reasonably satisfactory to the Administrative Agent and the Facility Agents, the Seller shall not be liable for any legal expenses of counsel unless there shall be a conflict between the interests of the Seller and the Indemnified Party, in which case the Indemnified Party(ies) shall have the right to employ one counsel to so represent it (them).
(c) The Seller will promptly pay to the Facility Agent for the Indemnified Party such indemnity amount as shall be specified to the Seller in a certificate of the Indemnified Party (or its Facility Agent, on its behalf) setting forth the calculations of such amount, together with the basis therefor. Any such certificate submitted by or on behalf of the Indemnified Party shall be conclusive and binding for all purposes, absent manifest error.
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(d) Each Indemnified Party, on behalf of itself, its assigns, officers, directors and employees, shall use its good faith efforts to mitigate, reduce or eliminate any losses, expenses or claims for indemnification.
Section 10.02. Indemnity for Taxes. (a) Any and all payments by or on account of any obligation of the Seller under any Transaction Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of the Seller) requires the deduction or withholding of any Tax from any such payment by the Seller, then the Seller shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Seller shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 10.02) the applicable Indemnified Party receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(b) The Seller shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the written request of the applicable Indemnified Party timely reimburse it for the payment of, any Other Taxes.
(c) The Seller shall indemnify each Indemnified Party, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 10.02) payable or paid by such Indemnified Party or required to be withheld or deducted from a payment to such Indemnified Party and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. The Administrative Agent and each Facility Agent will promptly notify the Seller of any event of which it has knowledge, which will entitle it or any Person in its Purchase Group to compensation pursuant to this Section 10.02; provided, however, that failure of any Indemnified Party to demand indemnification for any Taxes shall not constitute a waiver of such right to indemnification, except that the Seller shall not be required to indemnify an Indemnified Party for Taxes under this Section 10.02 unless such Indemnified Party notifies the Seller of such claim no later than 180 days after such Indemnified Party has knowledge of such Taxes being imposed or arising. Any notice claiming compensation under this Section 10.02 shall set forth in reasonable detail the additional amount or amounts to be paid to it hereunder and shall be conclusive in the absence of manifest error. Absent manifest error, the Seller shall be obligated to pay any claim for Indemnified Taxes promptly upon receipt of such notice.
(d) Each Indemnified Party agrees that it will use reasonable efforts to reduce or eliminate any claim for indemnity pursuant to this Section 10.02 including, subject to applicable Law, a change in the funding office of such Indemnified Party; provided, however, that nothing contained herein shall obligate any Indemnified Party to take any action that imposes on such Indemnified Party any additional costs (without reimbursement) or imposes legal or regulatory burdens which such Indemnified Party reasonably considers material, nor which, in such Indemnified Party’s reasonable opinion, would have an adverse effect on its business, operations or financial condition.
(e) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (e) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (e), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (e) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection (e) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
Section 10.03. Indemnity by Originators. (a) Each Originator shall indemnify the Indemnified Parties for all Losses (other than recourse for uncollectible Receivables) resulting from:
(i) False or incorrect representations, warranties or certifications of such Originator in this Agreement or any document delivered pursuant to this Agreement; and
(ii) Failure by such Originator to perform any of its duties or other obligations or comply with any of its covenants under this Agreement.
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(b) Promptly upon receipt by any Indemnified Party under this Section 10.03 of notice of the commencement of any suit, action, claim, proceeding or governmental investigation against such Indemnified Party, such Indemnified Party shall, if a claim in respect thereof is to be made against any Originator hereunder, notify such Originator in writing of the commencement thereof. Any notice claiming compensation under this Section 10.03 shall set forth in reasonable detail the amount or amounts to be paid to it hereunder and shall be conclusive in the absence of manifest error. Any affected Originator may participate in and assume the defense and settlement of any such suit, action, claim, proceeding or investigation at its expense, and no settlement thereof shall be made without the approval of such Originator and the Indemnified Party. The approval of such affected Originator will not be unreasonably withheld or delayed. After notice from an affected Originator to the Indemnified Party of its intention to assume the defense thereof with counsel reasonably satisfactory to the Administrative Agent and the Facility Agents, and so long as such Originator so assumes the defense thereof in a manner reasonably satisfactory to the Administrative Agent and the Facility Agents, such Originator shall not be liable for any legal expenses of counsel unless there shall be a conflict between the interests of such Originator and the Indemnified Party, in which case the Indemnified Party(ies) shall have the right to employ one counsel to so represent it (them).
(c) Each affected Originator will promptly pay to the Facility Agent for the Indemnified Party such indemnity amount as shall be specified to such Originator in a certificate of the Indemnified Party (or its Facility Agent, on its behalf) setting forth the calculations of such amount, together with the basis therefor. Any such certificate submitted by or on behalf of the Indemnified Party shall be conclusive and binding for all purposes, absent manifest error.
(d) Each Indemnified Party, on behalf of itself, its assigns, officers, directors and employees, shall use its good faith efforts to mitigate, reduce or eliminate any losses, expenses or claims for indemnification.
Section 10.04. Expenses. The Seller agrees, promptly following receipt of a written invoice, to pay or cause to be paid, and to save each Purchaser, each LC Bank, each Facility Agent and the Administrative Agent harmless against liability for the payment of, (a) all reasonable out-of-pocket expenses (excluding salaries and overhead costs) incurred by or on behalf of any Purchaser, any LC Bank, any Facility Agent and the Administrative Agent in connection with the negotiation, execution, delivery and preparation of this Agreement and the other Transaction Documents and the transactions contemplated by or undertaken pursuant to or in connection herewith or therewith (including, without limitation, rating agency fees, the reasonable fees of Protiviti Inc. in conducting the agreed-upon procedures, and the reasonable fees and expenses of counsel of one law firm representing the Administrative Agent and the Facility Agents) and (b) all reasonable out-of-pocket expenses (including, without limitation, the reasonable fees and expenses of counsel from one law firm representing the Administrative Agent and the Facility Agents), including all reasonable costs and expenses actually incurred by or on behalf of any Purchaser, any LC Bank, any Facility Agent and the Administrative Agent from time to time (i) relating to any requested amendments, waivers or consents under the Transaction Documents, (ii) arising in connection with the Purchasers’, the LC Banks’, the Facility Agents’ or the Administrative Agent’s enforcement or preservation of their respective rights (including, without limitation, the perfection and protection of the Receivable Interest) under the Transaction Documents, (iii) relating to audit and due diligence fees (limited as provided in Section 4.06 hereof) or (iv) relating to the maintenance of the transactions contemplated by or undertaken pursuant to or in connection with this Agreement or the other Transaction Documents.
ARTICLE XI
MISCELLANEOUS
MISCELLANEOUS
Section 11.01. Amendments and Waivers. The Required Facility Agents may, in writing, from time to time, (a) enter into agreements with the Seller, the Originators, the Servicer and the Parent amending, modifying or supplementing this Agreement, and (b) in their sole discretion, grant waivers of the provisions of this Agreement or consents to a departure from the due performance of the obligations of the Seller, the Originators, the Servicer or the Parent under this Agreement; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all Facility Agents and LC Banks:
(i) change the definitions of “Aggregate Exposure Amount”, “Concentration Limit”, “Downgrade Event”, “Eligible Receivable”, “Net Receivables Balance”, “Percentage Interest” or “Total Reserve Amount”, or any components of any of the foregoing, contained in this Agreement;
(ii) [Reserved];
(iii) reduce the amount of Aggregate Net Investment or Yield thereon or delay any scheduled date for payment thereof;
(iv) reduce fees payable by the Seller to the Facility Agents or the Purchasers, or delay the dates on which such fees are payable;
(v) [Reserved];
(vi) change any of the provisions of this Section 11.01 or the definition of “Required Facility Agents”; or
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(vii) change the first sentence of Section 11.02;
and provided, further, that no amendment, waiver or consent shall (a) increase the Purchase Group Maximum Net Investment of a Purchase Group, reduce the amount of Net Investment of, or Yield or fees payable to, any Purchase Group, or extend the Scheduled Termination Date of a Purchase Group, unless in writing and signed by the Facility Agent for such Purchase Group and its related Purchasers, (b) affect the rights of the Swingline Purchaser, including by the increase of the Swingline Sublimit, the reduction of the amount of the Swingline Reimbursement Purchase or Yield on the Swingline Purchase unless in writing signed by the Swingline Purchaser or (c) affect the rights of any LC Banks, including by the reduction of the amount of the Reimbursement Obligation or Yield thereon or any fees payable with respect to the Letters of Credit issued by it, unless in writing signed by such LC Bank. Any waiver of any provision hereof, and any consent to a departure by the Seller, an Originator, the Servicer or the Parent from any of the terms of this Agreement, shall be effective only in the specific instance and for the specific purpose for which given.
Notwithstanding anything in this Section 11.01 to the contrary, any amendments or waivers of any provisions in this Agreement relating to a Term SOFR Replacement Event or Benchmark Replacement shall be governed by the provisions of Section 2.06.
To the extent that any Facility Agent for any Purchase Group determines that it (or the Conduit Purchaser(s) in such Purchase Group) is obligated by S&P or Moody’s to do so, such Facility Agent will provide S&P and/or Moody’s, as applicable, with a copy of each amendment to this Agreement prior to the effectiveness thereof.
Section 11.02. Successors and Assigns; Assignments; Participations. (a) This Agreement shall be binding on the parties hereto and their respective successors and assigns; provided, however, that except as provided in Section 4.01(c), no Ferguson Party may assign any of its rights or delegate any of its duties hereunder without the prior written consent of the Facility Agents. Each of the Purchasers may assign, (a) without any prior written consent, in whole or in part, its interest in the Receivables and obligations hereunder to any other then-existing Purchaser, any Support Provider or to any other Conduit Purchaser administered by its Facility Agent and (b) to any other Person, with the consent of the Seller and the Administrative Agent (and the LC Banks following the LC Effective Date), which consent shall not be unreasonably withheld or delayed; provided, that if a Termination Event exists, the Seller’s consent shall not be required. To effectuate an assignment hereunder, both the assignee and the assignor (including, as appropriate, its Facility Agent) will be required to execute and deliver to the Seller, the Servicer and the Administrative Agent an Assumption Agreement (or other writing acceptable to the remaining parties hereunder), which will require such assignee to, among other things, deliver the tax forms required by Section 11.07, agree to the confidentiality provisions of Section 11.19 and such assignment must be recorded in book entries. Following any assignment in accordance with the foregoing criteria, the Purchase Group Percentage and Purchase Group Maximum Net Investment of each Purchase Group hereunder (after giving effect to the assignment), and if applicable, the Swingline Sublimit, will be adjusted to such extent as may be necessary to reflect such assignment (and Schedule I hereto shall be deemed to be amended accordingly). The Seller, each Originator and the Parent hereby agree and consent to the complete assignment by the applicable Conduit Purchasers of all of their respective rights under, interest in, title to and obligations under the Transaction Documents to the respective collateral agent or trustee under the applicable Conduit Purchaser’s Commercial Paper programs.
(b) Any Committed Purchaser (including the Swingline Purchaser, in such capacity) may sell participating interests (each acquirer of a participating interest, a “Participant”) in its rights and obligations pursuant to this Agreement; provided, however, that the selling Committed Purchaser shall retain all rights and obligations under this Agreement and all parties to this Agreement shall continue to deal solely with such selling Committed Purchaser. Each agreement between a Committed Purchaser and a Participant shall provide that (i) such Committed Purchaser shall retain the sole right to enforce the Transaction Documents and to approve any amendment, modification or waiver of any provision of this Agreement (other than any amendment, modification or waiver of a provision described in clause (ii) in Section 11.01 that affects such Participant), (ii) such Participant shall be entitled to receive no greater indemnity amounts than its related Committed Purchaser would have been entitled to receive (unless the Seller consents to such Participant’s receipt of such greater amounts), and (iii) such Participant provide its related Committed Purchaser with the applicable tax forms that it would have had to provide under Section 11.07, if it were a Purchaser.
(c) Any Purchaser may at any time pledge or grant a security interest in all or any portion of its rights (including, without limitation, any interests in the Receivable Interest and any rights to payment of Net Investment and Yield) under this Agreement to secure obligations of such Purchaser to a Federal Reserve Bank, without notice to or consent of any Ferguson Party; provided, that no such pledge or grant of a security interest shall release a Purchaser from any of its obligations hereunder, or substitute any such pledgee or grantee for such Purchaser as a party hereto.
(d) An LC Bank may assign its interests, rights and obligations as an LC Bank under this Agreement only with the consent of the Seller.
(e) The Administrative Agent, acting solely for this purpose as an agent of the Seller (in such role, “Registrar”), shall maintain a register (a “Register”) for the Purchases, on which it will record the name and address of each applicable Purchase Group and the Purchaser(s) therein (including any assignees), the related Purchase Group Maximum Net Investment, the Net Investment owing to each Purchase Group under this Agreement and any other information necessary to ensure that the Purchases are maintained
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“in registered form” within the meaning of Treasury regulations section 5f.103-1(c). The entries in each Register will be conclusive absent manifest error, and the Seller, the Servicer, the Administrative Agent and the applicable Facility Agent and Purchasers will treat each Person whose name is recorded in a Register pursuant to the terms hereof as the Purchasers hereunder for all purposes of this Agreement. The Registrar shall update the applicable Register promptly upon receiving written notice from any Purchaser (or its Facility Agent) of an assignment of such Purchaser’s interests and obligations hereunder, and no such assignment shall be effective until reflected in the related Register. The Register shall be available for inspection by the Seller, the Servicer and each other Purchaser and Facility Agent at any reasonable time and from time to time upon reasonable prior notice. In the event that the Purchase Group Percentage for any Purchase Group is adjusted in accordance with any assignment in accordance with Section 11.02(a), the Registrar shall update the applicable Register to reflect the updated Purchase Group Percentage for each such Purchase Group.
(f) In the event that any Committed Purchaser sells a participation of its rights and obligations hereunder, such Committed Purchaser shall maintain a register (the “Participant Register”) on which it will record the name and address of each participant, the portion of the Purchase Group Net Investment (if any) of such Participant, and the principal amounts (and stated interest) of each participant’s interest in such rights and obligations, and any other information necessary to ensure that the Purchases are maintained “in registered form” within the meaning of Treasury regulations section 5f.103-1(c). The entries in the Participant Register will be conclusive absent manifest error, and such Committed Purchaser will treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement. Such Committed Purchaser shall update the Participant Register promptly upon a sale of a participation of such Committed Purchaser’s rights and obligations hereunder, and no such sale of a participation shall be effective until reflected in the Participant Register. Such Committed Purchaser will not have any obligation to disclose all or any portion of the Participant Register to any Person except to the extent that such disclosure is necessary to establish that the Purchases are maintained “in registered form” within the meaning of Treasury regulations section 5f.103-1(c). The Registrar and the Administrative Agent shall not have any responsibility to monitor, track or record any such participation of a Committed Purchaser’s participation.
Section 11.03. No Implied Waiver; Cumulative Remedies. No course of dealing and no delay or failure of any Purchaser, any LC Bank, any Facility Agent or the Administrative Agent in exercising any right, power or privilege under the Transaction Documents shall affect any other or future exercise thereof or the exercise of any other right, power or privilege; nor shall any single or partial exercise of any such right, power or privilege or any abandonment or discontinuance of steps to enforce such a right, power or privilege preclude any further exercise thereof or of any other right, power or privilege. The rights and remedies of the Administrative Agent, the Facility Agents, Purchasers and the LC Banks under the Transaction Documents are cumulative and not exclusive of any rights or remedies which the Administrative Agent, any Facility Agent, any Purchaser or any LC Bank would otherwise have.
Section 11.04. No Discharge. The respective obligations of the Seller, the Originators, the Servicer and the Parent under the Transaction Documents shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by (a) any exercise or nonexercise of any right, remedy, power or privilege under or in respect of the Transaction Documents or applicable Law, including, without limitation, any failure to set-off or release in whole or in part by the Administrative Agent, any Facility Agent, any Purchaser or any LC Bank of any balance of any deposit account or credit on its books in favor of any Ferguson Party, as the case may be, or any waiver, consent, extension, indulgence or other action or inaction in respect of any thereof, or (b) any other act or thing or omission or delay to do any other act or thing which could operate as a discharge of any Ferguson Party as a matter of Law.
Section 11.05. [Reserved].
Section 11.06. Payments Set Aside. To the extent that any Ferguson Party or any Obligor makes a payment to a Purchaser or an LC Bank, or a Purchaser or LC Bank exercises its rights of set-off, and such payment or set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by, or is required to be refunded, rescinded, returned, repaid or otherwise restored to such Ferguson Party, such Obligor, a trustee, a receiver or any other Person under any Law, including, without limitation, any bankruptcy law, any state or federal law, common law or equitable cause, the obligation or part thereof originally intended to be satisfied shall, to the extent of any such restoration, be reinstated, revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred. The provisions of this Section 11.06 shall survive the termination of this Agreement.
Section 11.07. Tax Forms and Status. (a) Each Purchaser and each LC Bank agrees to provide the Seller, the Servicer, the Administrative Agent and the Facility Agent for such Purchaser and LC Bank with (A) (x) two appropriately executed copies of Internal Revenue Service Form W-9, or any successor form, on the date hereof (or, if later, on the date on which it becomes a Purchaser or LC Bank under this Agreement) certifying that such Purchaser or LC Bank is exempt from U.S. backup withholding or (y) two appropriate executed copies of Internal Revenue Service Form W-8ECI (or alternatively, Internal Revenue Service Form W-8BEN), or any successor forms, (i) on the date hereof (or, if later, the date on which it becomes an Purchaser or LC Bank under this Agreement), and (ii) upon the occurrence of any event that would require the amendment or resubmission of any such Form previously provided hereunder and (B) any other forms, certificates or information in connection therewith requested by the Seller, the Servicer, the Administrative Agent or the Facility Agent for such Purchaser or LC Bank.
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(b) If a payment made to a Purchaser under this Agreement would be subject to U.S. Federal withholding Tax imposed by FATCA if such Purchaser were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Purchaser shall deliver to the Seller, the Servicer and the Administrative Agent at the time or times prescribed by Law and at such time or times reasonably requested by the Seller or Servicer such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Seller, the Servicer or the Administrative Agent as may be necessary for the Seller, the Servicer and the Administrative Agent to comply with their obligations under FATCA and to determine that such Purchaser has complied with such Purchaser’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for the purposes of this clause (b), FATCA shall include any amendments made to FATCA after the date of this Agreement.
Each Purchaser and each LC Bank agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Seller, the Servicer, and the Administrative Agent in writing of its legal inability to do so.
Section 11.08. Replacement of Purchase Groups. If (i) any Conduit Purchaser’s Commercial Paper ceases to have a short-term debt rating of “A-1” or better by S&P, “P-1” or better by Moody’s or “F-1” or better from Fitch Ratings (but only if such Conduit Purchaser’s Commercial Paper is then rated by such Rating Agency), (ii) any Purchase Group includes a Defaulting Purchaser, or (iii) any Purchase Group makes a claim for indemnity pursuant to Section 2.14 (but not all Purchase Groups make such a claim), as long as no Potential Termination Event or Termination Event then exists (or would occur after giving effect to any termination of a Purchase Group), upon notice to the related Facility Agent and the Administrative Agent, the Seller shall have the right to terminate the interests, rights and obligations of such Purchaser and its Purchase Group or require each Purchaser in such Facility Agent’s Purchase Group to assign and delegate, without recourse, all of its respective interests, rights and obligations under this Agreement to an Eligible Purchaser, or other Purchaser acceptable to the Administrative Agent, that shall execute an Assumption Agreement and, if applicable, shall not have the same cause to make a claim for indemnity pursuant to Section 2.14 or Section 10.02; provided, that each member of such terminated or assigning Purchase Group shall have received payment of an amount equal to all outstanding Net Investment, Yield in respect thereof, accrued and unpaid fees and all other Aggregate Unpaids payable to it hereunder, from the Seller or the assignee, as the case may be; and provided further, that if such terminated or assigning Purchase Group includes an LC Bank whose Letters of Credit will remain outstanding after such termination or assignment, as applicable, (i) the Seller makes a deposit to the LC Cash Collateral Account in an amount equal to the aggregate Stated Amount of such outstanding and undrawn Letters of Credit and (ii) such LC Bank (a) will remain a party hereto and shall continue to have the rights and obligations of an LC Bank under this Agreement with respect to Letters of Credit issued by it prior to such termination or assignment, other than the right to receive the Used Fee or the Unused Fee, and (b) will have no LC Bank Sublimit and no obligation to issue additional Letters of Credit. The Seller agrees to use commercially reasonable efforts to cause the Letters of Credit issued by a LC Bank which is a member of a terminated or assigning Purchase Group to be terminated and replaced. The Administrative Agent shall (1) apply funds deposited to the LC Cash Collateral Account pursuant to this Section 11.08 to satisfy, as necessary, the Seller’s Reimbursement Obligations or the Required LC Cash Collateral Amount, and (2) transfer funds deposited in the LC Cash Collateral Account pursuant to this Section 11.08 to the Seller to the extent they exceed the sum of the aggregate Stated Amount of the outstanding and undrawn Letters of Credit of the LC Banks in the terminated or assigning Purchase Group and the amounts drawn on such Letters of Credit which have been reimbursed to such LC Banks.
Section 11.09. No Petition. Each party hereto agrees, for the benefit of the holders of the privately or publicly placed indebtedness of borrowed money of any Conduit Purchaser not, prior to the date which is one (1) year and one (1) day after the payment in full of all such indebtedness, to acquiesce, petition or otherwise, directly or indirectly, invoke, or cause such Conduit Purchaser to invoke, the process of any Official Body for the purpose of (a) commencing or sustaining a case against such Conduit Purchaser under any federal or state bankruptcy, insolvency or similar law (including the Federal Bankruptcy Code), (b) appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official for such Conduit Purchaser or any substantial part of the property of such Person, or (c) ordering the winding up or liquidation of the affairs of such Conduit Purchaser.
Section 11.10. No Recourse. The obligations of each Conduit Purchaser, under this Agreement shall be payable solely out of the funds of such Conduit Purchaser available for such purpose and shall be solely the corporate or limited liability company obligations of such Conduit Purchaser. No recourse shall be had for the payment of any amount owing by a Conduit Purchaser in respect of this Agreement or for the payment of any fee hereunder or for any other obligation or claim arising out of or based upon this Agreement against any Affected Person, any Facility Agent, the Administrative Agent, any Affiliate of any of the foregoing, or any stockholder, employee, officer, director, incorporator or beneficial owner of any of the foregoing.
Section 11.11 Holidays. Except as may be otherwise provided in this Agreement, if any payment due hereunder shall be due on a day which is not a Business Day, such payment shall instead be due on the next Business Day.
Section 11.12. Records. Except as may be otherwise provided in this Agreement to the contrary, all amounts calculated or due hereunder shall be determined from the records of the Administrative Agent or Facility Agent, which determinations shall be conclusive absent manifest error.
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Section 11.13. Term of Agreement. This Agreement shall terminate on the date of Facility Termination; provided, however, that (i) the indemnification and payment provisions set forth in Sections 2.14, 4.13 and 11.06 and Article X hereof and (ii) the agreement set forth in Section 11.09 and the limitations set forth in Section 11.10 hereof shall be continuing and shall survive any termination of this Agreement.
Section 11.14. Notices. (a) All notices, requests, demands, directions and other communications (collectively “notices”) under the provisions of this Agreement shall be in writing (including electronic communication) unless otherwise expressly permitted hereunder and shall be sent by first-class mail, first-class express mail, courier, electronic mail or other mutually acceptable method of electronic delivery, in all cases with charges prepaid. All notices shall be sent to the applicable party at the notice addresses appearing on the signature page hereof (in the case of each of the Ferguson Parties and the Administrative Agent) or on Schedule I hereto (in the case of the Facility Agents, the Purchasers and the LC Banks) or in accordance with the last unrevoked written direction from such party to the other parties hereto.
(b) All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. Notices sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient.
Section 11.15. Severability. The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability of such provision in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
Section 11.16. Prior Understandings. This Agreement sets forth the entire understanding of the parties relating to the subject matter hereof, and supersedes all prior understandings and agreements, whether written or oral.
Section 11.17. Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO CHOICE OF LAWS PRINCIPLES THEREOF). Each party hereto hereby submits to the nonexclusive jurisdiction of the federal courts for the Southern District of New York for the purpose of adjudicating any claim or controversy arising in connection with any of the Transaction Documents or any of the transactions contemplated thereby, and for such purpose, to the extent they may lawfully do so, waive any objection which each may now or hereafter have to such jurisdiction or to venue therein and any claim of inconvenient forum with respect thereto.
Section 11.18. Counterparts; Electronic Signature. This Agreement, the other Transaction Documents and any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement or any other Transaction Document (each a “Communication”), including Communications required to be in writing, may be in the form of an Electronic Record (as defined below) and may be executed using Electronic Signatures (as defined below). Each of the parties hereto agrees that any Electronic Signature on or associated with any Communication shall be valid and binding on it to the same extent as a manual, original signature, and that any Communication entered into by Electronic Signature, will constitute the legal, valid and binding obligation enforceable against it in accordance with the terms thereof to the same extent as if a manually executed original signature was delivered. Any Communication may be executed in as many counterparts as necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Communication. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by any Facility Agent or the Administrative Agent of a manually signed paper Communication which has been converted into electronic form (such as scanned into PDF format), or an electronically signed Communication converted into another format, for transmission, delivery and/or retention. Each Facility Agent and the Administrative Agent may, at its option, create one or more copies of any Communication in the form of an imaged Electronic Record (“Electronic Copy”), which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document. All Communications in the form of an Electronic Record, including an Electronic Copy, shall be considered an original for all purposes, and shall have the same legal effect, validity and enforceability as a paper record (to the extent permitted by applicable law). Each party shall be entitled to rely on any Electronic Signature purportedly given by or on behalf of any other party without further verification and (b) upon the request of any party, any Electronic Signature shall be promptly followed by such manually executed counterpart. For purposes hereof, “Electronic Record” and “Electronic Signature” shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.
Section 11.19. Confidentiality. Each Ferguson Party agrees to keep the information contained in the Transaction Documents that relates to Yield, fees and other pricing terms strictly confidential. Each Purchaser, each LC Bank, each Facility Agent and the Administrative Agent shall keep all non-public information obtained pursuant to the Transaction Documents and the transactions contemplated or otherwise relating to the Ferguson Party hereby or thereby or effected in connection herewith or therewith confidential and will not disclose such information to outside parties. Notwithstanding the foregoing, any party hereto may make disclosure (i) if it is obligated to do so pursuant to a request or order under any Law or pursuant to a subpoena or other legal process;
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(ii) if it is requested to do so by any regulatory authority; (iii) in the case of the Facility Agents, the Purchasers and the LC Banks, to bank examiners, and to potential assignees and participants; (iv) to its Affiliates, to its and its Affiliates’ directors, officers, employees, agents, auditors, counsel, equity holders and advisors; (v) in connection with any litigation or dispute or the exercise of any remedies under the Transaction Documents; (vi) to any rating agency; or (vii) by way of posting a copy of this Agreement on any website maintained by such party pursuant to the commitment to any Rating Agency relating to such party’s debt rating if required under 17 CFR 240.17g-5(a)(3), subject to, in the case of each of clause (iii), (iv), (v) and (vi), reasonable efforts to cause the recipient of such proprietary information to keep it confidential.
Section 11.20. USA Patriot Act. Each Committed Purchaser that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies the Ferguson Parties that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies each of the Ferguson Parties, which information includes the name and address of each of the Ferguson Parties and other information that will allow such Committed Purchaser to identify each of the Ferguson Parties in accordance with the Act.
Section 11.21. Receivables from Acquisitions. If any Originator acquires the assets of another Person, including that Person’s receivables (such receivables, together with receivables generated by that Person after its acquisition by such Originator as well as receivables generated by such Originator through the business groups/branches/division of that Person, until their respective Inclusion Dates, collectively, “Acquisition Receivables”), the Servicer shall begin reporting such acquisitions of Acquisition Receivables in Monthly Reports at such time as the Acquisition Receivables relating to a particular acquisition are first reported on an Approved Data Reporting System (which, in some cases, may be their date of acquisition), at which time the Receivables from such acquisition will become Receivables hereunder and under the Purchase and Contribution Agreement (each such time, the “Inclusion Date”), and to the extent they satisfy all eligibility criteria, then such Receivables shall automatically be determined to be “Eligible Receivables”.
Section 11.22. Waiver of Jury Trial. Each of the parties hereto waives its respective right to a trial by jury of any claim or cause of action based upon or arising out of or related to this Agreement or the transactions contemplated hereby in any action, proceeding or other litigation of any type brought by any of the parties against any other party or parties, whether with respect to contract claims, tort claims or otherwise. Each of the parties hereto agrees that any such claim or cause of action shall be tried by a bench trial without a jury. Without limiting the foregoing, each of the parties hereto further agrees that its respective right to a trial by jury is waived by operation of this Section 11.22 as to any action, counterclaim or other proceeding that seeks, in whole or in part, to challenge the validity or enforceability of this Agreement or any provision hereof. This waiver shall apply to any subsequent amendments, renewals, supplements or modifications to this Agreement.
Section 11.23. Designated Excluded Receivables. (a) The Facility Agents agree that the receivables of the Designated Types specified on Schedule IV hereto shall be Designated Excluded Receivables. Schedule IV shall specify, for each Designated Type, the applicable Exclusion Date and the Originator(s) to which such Designated Types relate.
(b) The Seller shall have the right to add from time to time the receivables owing to an Originator of a Designated Type as Designated Excluded Receivables as of a specified Exclusion Date, upon satisfaction of the following conditions:
(i) the Seller (or the Servicer, on its behalf) shall provide the Facility Agents with a notice in substantially the form of Exhibit G hereto of its intention to add the receivables owing to an Originator of such Designated Type to the list of Designated Excluded Receivables, which notice shall be delivered not less than ten (10) Business Days before the Exclusion Date specified therein and shall further specify and include: (1) the Obligor name and customer number, or the Originator log-on location and log-on number, as applicable, of such Designated Type; (2) the applicable Originator(s) for such Designated Type’s receivables to be excluded; (3) an explanation of the reason for such addition; and (4) an updated Schedule IV (including the new Designated Excluded Receivables);
(ii) as of such Exclusion Date, no Termination Event or Potential Termination Event shall have occurred and be continuing;
(iii) such designation of a new Designated Type shall not result in there being more than 8 such designations during the Lookback Period for such Exclusion Date;
(iv) such designation shall not have been made for reasons relating to the credit quality of the Receivables of such Designated Type or to manipulate the pool characteristics of the Receivables in a manner that would be expected to be materially adverse to the Purchasers; and
(v) (1) the sum of (x) the aggregate, for all Designated Types added to Schedule IV during the Lookback Period for such Exclusion Date, of the aggregate Outstanding Balances of the Receivables on the first Exclusion Date hereunder for each such prior Designated Type, plus (y) the aggregate Outstanding Balance of Receivables on the first
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Exclusion Date with respect to such new Designated Type, plus (z) the aggregate Outstanding Balance of Receivables reconveyed to any Originator pursuant to Section 3.03 of the Purchase and Contribution Agreement during the Lookback Period for such Exclusion Date, would not exceed (2) 10.0% of the average aggregate Outstanding Balance of the Receivables (other than Excluded Receivables) on the last date of each calendar month in the Lookback Period for such Exclusion Date (all such calculations based on the information included in the Monthly Reports delivered during the relevant Lookback Periods).
(c) For the avoidance of doubt, with respect to any Designated Type and its related Exclusion Date, all Receivables of that Designated Type which were generated prior to that Exclusion Date shall remain Receivables under this Agreement, the Purchase and Contribution Agreement and all other Transaction Documents.
Section 11.24. Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in any Transaction Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Transaction Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder that may be payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Transaction Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.
Section 11.25. Amendment and Restatement. Each of the parties hereto agrees that on the A&R Effective Date, the Existing RPA shall be amended, superseded and restated in its entirety by the terms and provisions of this Agreement. This Agreement is not intended to and shall not constitute a novation of the Existing RPA.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto, by their duly authorized signatories, have executed and delivered this Agreement as of the date first above written.
| ROYAL BANK OF CANADA, as Administrative Agent | ||||||||
| By: | /s/ Edward V. Westerman | |||||||
| Name: Edward V. Westerman | ||||||||
| Title: Authorized Signatory | ||||||||
[Signature Page to A&R Receivables Purchase Agreement (Ferguson Receivables, LLC)]
THUNDER BAY FUNDING, LLC, as a Conduit Purchaser | ||||||||
| By: | Royal Bank of Canada, as attorney-in-fact | |||||||
| By: | /s/ Edward V. Westerman | |||||||
| Name: Edward V. Westerman | ||||||||
| Title: Authorized Signatory | ||||||||
ROYAL BANK OF CANADA, as a Committed Purchaser and a Facility Agent | ||||||||
| By: | /s/ Edward V. Westerman | |||||||
| Name: Edward V. Westerman | ||||||||
| Title: Authorized Signatory | ||||||||
| By: | /s/ Tess Ehrlich | |||||||
| Name: Tess Ehrlich | ||||||||
| Title: Authorized Signatory | ||||||||
[Signature Page to A&R Receivables Purchase Agreement (Ferguson Receivables, LLC)] | ||
TRUIST BANK, as a Committed Purchaser and a Facility Agent | ||||||||
| By: | /s/ Anthony Ballard | |||||||
| Name: Anthony Ballard | ||||||||
| Title: Vice President | ||||||||
[Signature Page to A&R Receivables Purchase Agreement (Ferguson Receivables, LLC)] | ||
SUMITOMO MITSUI BANKING CORPORATION, as a Committed Purchaser and a Facility Agent | ||||||||
| By: | /s/ Jun Ashley | |||||||
| Name: Jun Ashley | ||||||||
| Title: Director | ||||||||
[Signature Page to A&R Receivables Purchase Agreement (Ferguson Receivables, LLC)] | ||
FERGUSON RECEIVABLES, LLC, as Seller | ||||||||
| By: | /s/ Brenda L. Crowder | |||||||
| Name: Brenda L. Crowder | ||||||||
| Title: Treasurer | ||||||||
| Address for Notices: | ||||||||
| 751 Lakefront Commons | ||||||||
| Newport News, VA 23606 | ||||||||
| Attention: Brenda L. Crowder | ||||||||
| Telephone: [_] | ||||||||
| E-mail: [_] | ||||||||
| [_] | ||||||||
[Signature Page to A&R Receivables Purchase Agreement (Ferguson Receivables, LLC)] | ||
FERGUSON ENTERPRISES, LLC, as Servicer and as an Originator | ||||||||
| By: | /s/ Brenda L. Crowder | |||||||
| Name: Brenda L. Crowder | ||||||||
Title: Assistant Treasurer | ||||||||
| Address for Notices: | ||||||||
| 751 Lakefront Commons | ||||||||
| Newport News, VA 23606 | ||||||||
| Attention: Brenda L. Crowder | ||||||||
| Telephone: [_] | ||||||||
| E-mail: [_] | ||||||||
| [_] | ||||||||
[Signature Page to A&R Receivables Purchase Agreement (Ferguson Receivables, LLC)] | ||
ENERGY & PROCESS CORPORATION, as an Originator | ||||||||
| By: | /s/ Brenda L. Crowder | |||||||
| Name: Brenda L. Crowder | ||||||||
Title: Assistant Treasurer | ||||||||
| Address for Notices: | ||||||||
| 751 Lakefront Commons | ||||||||
| Newport News, VA 23606 | ||||||||
| Attention: Brenda L. Crowder | ||||||||
| Telephone: [_] | ||||||||
| E-mail: [_] | ||||||||
| [_] | ||||||||
[Signature Page to A&R Receivables Purchase Agreement (Ferguson Receivables, LLC)] | ||
FERGUSON FIRE DESIGN, LLC, as an Originator | ||||||||
| By: | /s/ Brenda L. Crowder | |||||||
| Name: Brenda L. Crowder | ||||||||
Title: Assistant Treasurer | ||||||||
| Address for Notices: | ||||||||
| 751 Lakefront Commons | ||||||||
| Newport News, VA 23606 | ||||||||
| Attention: Brenda L. Crowder | ||||||||
| Telephone: [_] | ||||||||
| E-mail: [_] | ||||||||
| [_] | ||||||||
[Signature Page to A&R Receivables Purchase Agreement (Ferguson Receivables, LLC)] | ||
FERGUSON FIRE & FABRICATION, INC., as an Originator | ||||||||
| By: | /s/ Brenda L. Crowder | |||||||
| Name: Brenda L. Crowder | ||||||||
Title: Assistant Treasurer | ||||||||
| Address for Notices: | ||||||||
| 751 Lakefront Commons | ||||||||
| Newport News, VA 23606 | ||||||||
| Attention: Brenda L. Crowder | ||||||||
| Telephone: [_] | ||||||||
| E-mail: [_] | ||||||||
| [_] | ||||||||
[Signature Page to A&R Receivables Purchase Agreement (Ferguson Receivables, LLC)] | ||
FERGUSON ENTERPRISES INC., as Parent | ||||||||
| By: | /s/ Shaun McElhannon | |||||||
| Name: Shaun McElhannon | ||||||||
| Title: Treasurer | ||||||||
| Address for Notices: | ||||||||
| 751 Lakefront Commons | ||||||||
| Newport News, VA 23606 | ||||||||
| Attention: Chief Legal Officer & Corporate Secretary | ||||||||
| Telephone: [_] | ||||||||
| E-mail: [_] | ||||||||
| [_] | ||||||||
[Signature Page to A&R Receivables Purchase Agreement (Ferguson Receivables, LLC)] | ||
Exhibit 10.3
Certain portions of this Exhibit have been redacted pursuant to Item 601(a)(6) of Regulation S-K and, where applicable, have been marked with “[_]” to indicate where such redactions have been made.
AMENDED AND RESTATED
PURCHASE AND CONTRIBUTION AGREEMENT
dated as of November 6, 2026
between
FERGUSON ENTERPRISES, LLC AND THE
VARIOUS SUBSIDIARIES LISTED ON SCHEDULE I HERETO FROM TIME TO TIME,
as Originators,
as Originators,
and
FERGUSON RECEIVABLES, LLC,
as PURCHASER
as PURCHASER
Table of Contents
| SECTION | HEADING | PAGE | ||||||
| ARTICLE I | DEFINITIONS; CONSTRUCTION | 1 | ||||||
| Section 1.01. | Certain Definitions | 1 | ||||||
| Section 1.02. | Other Defined Terms | 4 | ||||||
| Section 1.03. | Interpretation and Construction | 4 | ||||||
| ARTICLE II | PURCHASES AND SETTLEMENTS | 5 | ||||||
| Section 2.01. | General Terms; Intent of the Parties. | 5 | ||||||
| Section 2.01A. | Certain Reconveyances | 5 | ||||||
| Section 2.02. | Purchase Price | 6 | ||||||
| Section 2.03. | Purchase Price Credits | 6 | ||||||
| Section 2.04. | Payments and Computations, Etc. | 6 | ||||||
| Section 2.05. | Letters of Credit. | 6 | ||||||
| Section 2.06. | Access to Records | 7 | ||||||
| Section 2.07. | Characterization; Granting Clause | 7 | ||||||
| Section 2.08. | Transfer by Purchaser; Third-Party Beneficiary | 8 | ||||||
| ARTICLE III | CLOSING PROCEDURES | 8 | ||||||
| Section 3.01. | Conditions to Each Purchase | 8 | ||||||
| Section 3.02. | Addition of Originators | 8 | ||||||
| Section 3.03. | Removal of Originators; reconveyance of Certain Receivables | 8 | ||||||
| ARTICLE IV | ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE RECEIVABLES | 9 | ||||||
| Section 4.01. | Rights of the Purchaser | 9 | ||||||
| Section 4.02. | Responsibility of each Originator | 9 | ||||||
| Section 4.03. | Further Action Evidencing Purchases | 9 | ||||||
| ARTICLE V | REPRESENTATIONS AND WARRANTIES | 10 | ||||||
| Section 5.01. | General Representations and Warranties of the Originators | 10 | ||||||
| ARTICLE VI | COVENANTS | 11 | ||||||
| Section 6.01. | Affirmative Covenants of the Originators | 11 | ||||||
| Section 6.02. | Negative Covenants of the Originators | 12 | ||||||
| Section 6.03. | Separateness Covenants | 13 | ||||||
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| ARTICLE VII | PURCHASE TERMINATION EVENTS | 13 | ||||||
| Section 7.01. | Purchase Termination Events | 13 | ||||||
| Section 7.02. | Consequences of a Purchase Termination Event | 13 | ||||||
| ARTICLE VIII | INDEMNIFICATION; EXPENSES | 13 | ||||||
| Section 8.01. | Indemnity | 13 | ||||||
| Section 8.02. | Expenses | 15 | ||||||
| ARTICLE IX | MISCELLANEOUS | 15 | ||||||
| Section 9.01. | Amendments and Waivers | 15 | ||||||
| Section 9.02. | Binding Effect; Assignments | 15 | ||||||
| Section 9.03. | No Implied Waiver; Cumulative Remedies | 15 | ||||||
| Section 9.04. | No Discharge | 15 | ||||||
| Section 9.05. | No Petition | 15 | ||||||
| Section 9.06. | No Recourse | 15 | ||||||
| Section 9.07. | Holidays | 16 | ||||||
| Section 9.08. | Notices | 16 | ||||||
| Section 9.09. | Severability | 16 | ||||||
| Section 9.10. | Prior Understandings | 16 | ||||||
| Section 9.11. | Governing Law; Submission to Jurisdiction | 16 | ||||||
| Section 9.12. | Counterparts | 16 | ||||||
| Section 9.13. | Amendment and Restatement | 16 | ||||||
| SCHEDULE I | — | List of Originators | ||||||
| SCHEDULE II | — | Designated Excluded Receivables | ||||||
| SCHEDULE III | — | Schedule of Depositary Banks, Accounts and Lockboxes | ||||||
| EXHIBIT A | — | Credit and Collection Policy | ||||||
| EXHIBIT B | — | Form of Subordinated Note | ||||||
| EXHIBIT C | — | Form of Joinder Agreement | ||||||
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Amended and Restated Purchase and Contribution Agreement
AMENDED AND RESTATED PURCHASE AND CONTRIBUTION AGREEMENT, dated as of November 6, 2026 (this “Agreement”), between FERGUSON ENTERPRISES, LLC, a Virginia limited liability company (“Ferguson”), THE VARIOUS SUBSIDIARIES OF FERGUSON LISTED ON SCHEDULE I HERETO FROM TIME TO TIME (with Ferguson, each, an “Originator” and collectively, the “Originators”), and FERGUSON RECEIVABLES, LLC, a Delaware limited liability company (the “Purchaser”).
Recitals
WHEREAS, the parties hereto are parties to a Purchase and Contribution Agreement, dated as of July 31, 2013 (as amended, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Existing PCA”); and
WHEREAS, the parties hereto desire to amend and restate the Existing PCA as of the date hereof;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
DEFINITIONS; CONSTRUCTION
Section 1.01. Certain Definitions. As used in this Agreement, the following terms shall have the following meanings:
“A&R Effective Date” shall mean November 6, 2026.
“Account” shall mean any Blocked Account, any Local Account or the Collection Account. Each Account shall be identified on Schedule III hereto, as amended from time to time with the consent of the Administrative Agent.
“Agreement” shall mean this Amended and Restated Purchase and Contribution Agreement, as the same may from time to time be amended, supplemented or otherwise modified.
“Anti-Terrorism Law” shall mean each of: (a) the Executive Order; (b) the Patriot Act; (c) the Money Laundering Control Act of 1986, 18 U.S.C. Sect. 1956; and (d) any other Law of the United States or any member state of the European Union now or hereafter enacted to monitor, deter or otherwise prevent terrorism or the funding or support of terrorism.
“Available Funds” shall mean, on any date of determination, monies then held by or on behalf of the Purchaser after deduction of (a) all Aggregate Unpaids, if any, that are accrued and due and owing under the Receivables Purchase Agreement (together with the Aggregate Net Investment if such date of determination is on and after the Termination Date), (b) all Servicing Fees that are then accrued, and (c) in the Purchaser’s discretion, the accrued and unpaid portion of all current expenses of the Purchaser (whether or not then due and owing), in each of the foregoing cases, whether or not the same have actually been paid as of the time of determination.
“Blocked Account” shall mean an account, including a Lockbox Account, established and maintained at a Depositary Bank by the Purchaser into which Collections are received or deposited, which account is subject to a Blocked Account Agreement.
“Blocked Account Agreement” shall mean the “control” agreement related to each Blocked Account, in form and substance reasonably acceptable to the Administrative Agent, by and among the Purchaser, the Servicer, the Administrative Agent and the applicable Depositary Bank.
“Business Day” shall mean any day on which (i) banks are not authorized or required to close under the Laws of New York or (ii) a bond market holiday is not recommended by the Securities Industry and Financial Markets Association.
“Collections” shall mean, for any Receivable as of any date, all cash collections and other cash proceeds (whether in the form of cash, wire transfer, or checks) of that Receivable, including, without limitation, all finance charges, if any, and cash proceeds of the related property with respect to such Receivable, any Deemed Collections of such Receivable and any amounts received with respect to a Participation Interest in such Receivable.
“Contract” shall mean a contract between an Originator and an Obligor, and/or any and all invoices and other writings which, in either case, give rise to a receivable arising from the sale by an Originator of goods or rendering of services in the ordinary course of such Originator’s business.
“Credit and Collection Policy” shall mean the Servicer’s credit, collection, enforcement and other policies and practices relating to Contracts and Receivables existing on the date hereof and as set forth on Exhibit A hereto, as the same may be modified from time to time.
“Deemed Collections” shall mean collections deemed received by an Originator in an amount equal to (i) all Dilutions and (ii) the aggregate Outstanding Balance of any Receivables (a) which were included in the Net Receivables Balance and which were not Eligible Receivables, (b) in which the Administrative Agent does not have a first priority perfected ownership or security interest or (c) as to which the other representations and warranties set forth in Sections 5.01(b), (c), (d) and (e) and made by an Originator or the Servicer are no longer true and correct in all material respects (or, if made as of a particular date, were not true and correct in all material respects as of such date).
“Default Rate” shall mean the Alternate Base Rate (excluding clause (iii) of that definition on and after the occurrence of a Benchmark Transition Event) plus 2.0% per annum.
“Depositary Bank” shall mean, at any time, any financial institution reasonably acceptable to the Administrative Agent which holds an Account.
“Designated Person” shall mean any Person that is a designated target of any Sanctions or otherwise a subject of any Sanctions, including as a result of being (a) owned or controlled directly or indirectly by any Persons (or Person) that are designated targets of any Sanctions, or (b) organized or operating under the laws of, or a citizen or resident of, any country that is subject to any Sanctions.
“Dilution” shall mean the portion of any Receivable which is reduced or canceled as a result of (i) any defective, rejected, returned or repossessed goods or services, any cash or other discount, or any failure by an Originator to deliver any goods or perform any services or otherwise perform under the underlying Contract, (ii) any change in or cancellation of any of the terms of such Contract or any other adjustment by an Originator which reduces the amount payable by the Obligor on the related Receivable, (iii) any rebates, warranties, allowances or charge-backs, or (iv) any setoff or credit in respect of any claim by the Obligor thereof (whether such claim arises out of the same or a related transaction or an unrelated transaction). An Originator shall be deemed to have received a Collection in an amount equal to the amount of such Dilution of each Receivable on the day such Dilution occurs.
“Discount Factor” means a percentage calculated to provide the Purchaser with a reasonable return on its investment in the Receivables acquired from an Originator after taking into account (i) the time value of money based upon the anticipated dates of collection of the Receivables and the cost to the Purchaser of financing its investment in, or servicing and collecting, such Receivables during such period and (ii) the risk of nonpayment by the Obligors. An Originator and the Purchaser may agree from time to time to change the Discount Factor applicable to Purchases by and from such Originator based on changes in one or more of the items affecting the calculation thereof, provided that any change to the Discount Factor shall take effect as of the commencement of a Calculation Period commencing no earlier than the last day of the current Calculation Period, and shall apply only prospectively.
“Distribution Date” shall mean the second (2nd) Business Day after each Monthly Report Date.
“Excluded Receivables” shall mean (i) the indebtedness and payment obligations owed by Obligors arising in connection with the sale of merchandise or rendering of services by the divisions of Ferguson known as “Lincoln Products/Ferguson Parts and Packaging” and “Ferguson International”, (ii) on and after November 10, 2025, the indebtedness and payment obligations owed by Bristol Meyers Squibb to Ferguson arising in connection with the sale of merchandise or rendering of services by Ferguson, (iii) Designated Excluded Receivables, and (iv) Acquisition Receivables.
“Executive Order” shall mean Executive Order No. 13224 on Terrorist Financings: Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism issued on September 23, 2001.
“Federal Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as amended, and any successor statute thereto.
“Indemnified Parties” shall have the meaning specified in Section 8.01(a) hereof.
“Joinder Agreement” shall mean the agreement signed by a new Originator in substantially the form of Exhibit C hereto.
“Law” shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of any Official Body.
“Lien,” with respect to any asset, shall mean any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset (including any production payment, proceeds production payment or similar financing arrangement with respect to such asset).
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“Local Account” shall mean a deposit account established and maintained by a Depositary Bank in the name of an Originator into which account Obligor payments with respect to Receivables as well as payments on cash sales generated by such Originator are deposited.
“Lockbox” shall mean a post office box to which Collections are sent and which is administered by a Depositary Bank.
“Lockbox Account” shall mean an account maintained in the name of the Purchaser at a Depositary Bank into which Collections are deposited.
“Obligor” shall mean a Person who purchased merchandise or services on credit under a Contract and who is obligated to make payments to an Originator.
“OFAC” shall mean the Office of Foreign Assets Control of the U.S. Department of Treasury.
“Official Body” shall mean any government or political subdivision or any agency, authority, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case, whether foreign or domestic.
“Original Closing Date” shall mean July 31, 2013.
“Originator” shall mean Ferguson and each of its Subsidiaries listed on Schedule I hereto from time to time.
“Outstanding Balance” of any Receivable shall mean, at any time, the then outstanding amount thereof.
“Participation Interest” means, with respect to any Reassigned Receivable, a 100% undivided beneficial interest in the applicable Originator’s right, title and interest, whether now owned or hereafter arising, in, to and under such Receivable and all Related Security and Collections with respect thereto.
“Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (commonly known as the USA Patriot Act).
“Permitted Liens” shall mean, on any day, any Liens (i) securing the obligations of any Originator in connection with inventory financing and (ii) of a consignor in its consigned goods (and proceeds thereof) in the ordinary course of business, which in the aggregate for all Originators of clauses (i) and (ii) do not exceed 0.25% of the aggregate Outstanding Balance of Receivables on such day.
“Proceeds” shall mean “proceeds” as defined in the Uniform Commercial Code as in effect in the jurisdiction whose Law governs the perfection of the Purchaser’s ownership or security interests therein.
“Purchase” shall mean a purchase by the Purchaser of Receivables, Related Security and Collections hereunder, including, without limitation, Receivables as to which a portion of the related Purchase Price is paid by means of a contribution of Receivables by Ferguson to the Purchaser’s capital.
“Purchase Date” shall mean the Original Closing Date (or in the case of any Originator which becomes a party hereto after the Original Closing Date, the day on which such Originator becomes a party hereto pursuant to Section 3.02) and each day thereafter on which Receivables arise.
“Purchase Price” shall have the meaning set forth in Section 2.02(a) hereof.
“Purchase Price Credit” shall have the meaning set forth in Section 2.03 hereof.
“Purchase Termination Event” shall have the meaning set forth in Section 7.01 hereof.
“Reassigned Receivable” shall have the meaning specified in Section 2.01A hereof.
“Receivable” shall mean all indebtedness and any payment obligations of any Obligor owed to an Originator arising from the sale of goods from the sale of merchandise or rendering of services by such Originator under a Contract, including all rights to payment of any interest or finance charges and any security related thereto. “Receivables” shall not include Excluded Receivables.
“Receivables Purchase Agreement” shall mean the Amended and Restated Receivables Purchase Agreement dated as of November 6, 2026, by and among Ferguson Receivables, LLC, as seller, Ferguson, as servicer and originator, the Originators party thereto from time to time, the Conduit Purchasers listed on Schedule I thereto from time to time, the Committed Purchasers listed on Schedule I thereto from time to time, the LC Banks listed on Schedule III thereto from time to time, the Facility Agents listed on
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Schedule I thereto from time to time, Royal Bank of Canada, as administrative agent, and Ferguson Enterprises Inc., as provider of the Parent Undertaking, as the same may from time to time be amended, supplemented or otherwise modified.
“Records” shall mean correspondence, memoranda, computer programs, tapes, discs, reports, papers, books or other documents or transcribed information of any type whether expressed in ordinary or machine readable language; provided that any intellectual property (such as software) or rights therein that are not permitted by applicable Law or contract to be assigned shall not be included herein.
“Related Security” shall mean with respect to any Receivable:
(a) all Contracts with respect to such Receivable (other than any parts of such Contracts to the extent they relate to Excluded Receivables);
(b) all of the applicable Originator’s interest, if any, in the goods (including returned goods) sold by such Originator and which gave rise to such Receivable;
(c) all other security interests or Liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements signed by an Obligor describing any collateral securing such Receivable;
(d) all guarantees, indemnities, letters of credit, insurance or other agreements or arrangements of any kind from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise (other than any parts of such supporting agreements or arrangements to the extent they relate to Excluded Receivables);
(e) all Records relating to, and all service contracts and any other contracts associated with, such Receivable, the related Contracts or the related Obligors (other than any parts of such Records to the extent they relate to Excluded Receivables); and
(f) all Proceeds of the foregoing.
“Responsible Officer” shall mean, with respect to each Originator, the chief executive officer, the president, the chief financial officer or treasurer of such Originator and any other Person designated as a Responsible Officer by any such officers, as such Originator may from time to time notify the Purchaser.
“Subordinated Loan” shall mean a subordinated revolving loan from an Originator to the Purchaser which is evidenced by the Subordinated Note.
“Subordinated Note” shall mean a subordinated promissory note in the form of Exhibit B hereto issued by the Purchaser to an Originator, as the same may be amended or supplemented from time to time.
“UCC” shall mean, with respect to any jurisdiction, the Uniform Commercial Code as in effect from time to time in such jurisdiction.
Section 1.02. Other Defined Terms. Capitalized terms used herein but not otherwise defined shall have the meanings set forth in the Receivables Purchase Agreement.
Section 1.03. Interpretation and Construction. Unless the context of this Agreement otherwise clearly requires, references to the plural include the singular and references to the part include the whole and the words “include”, “includes” and “including” shall be deemed followed by “without limitation”. The words “hereof,” “herein,” “hereunder” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding.” The section and other headings contained in this Agreement are for reference purposes only and shall not control or affect the construction of this Agreement or the interpretation hereof in any respect. Section, subsection, exhibit and schedule references are to this Agreement unless otherwise specified. As used in this Agreement, the masculine, feminine or neuter gender shall each be deemed to include the others whenever the context so indicates. Terms not otherwise defined herein which are defined in the UCC as in effect in the State of New York from time to time shall have the respective meanings ascribed to such terms therein unless the context otherwise clearly requires.
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ARTICLE II
PURCHASES AND SETTLEMENTS
PURCHASES AND SETTLEMENTS
Section 2.01. General Terms; Intent of the Parties. (a) On each Purchase Date, in consideration for the Purchase Price and upon the terms and subject to the conditions set forth herein, each Originator does hereby sell to the Purchaser, without recourse (except to the extent expressly provided herein), and the Purchaser does hereby purchase from such Originator, all of such Originator’s right, title and interest in and to the Receivables originated by such Originator, the Related Security, Collections and all Proceeds of each of the foregoing (other than any such assets contributed to the Purchaser pursuant to Section 2.01(d) below), in each case, whether now existing or hereafter arising or acquired.
(b) The Receivables arising after the initial Purchase Date and while no Purchase Termination Event exists shall be deemed to have been sold by each Originator to the Purchaser immediately (and without further action by any Person) upon the creation of such Receivable by such Originator. Receivables arising while a Purchase Termination Event exists shall not be deemed to have been sold by any Originator to the Purchaser unless and until the first day thereafter on which no Purchase Termination Event exists. The Related Security and Collections with respect to each Receivable (and Proceeds of such Receivable, Related Security and Collections) shall be sold at the same time as such Receivable together with all related Proceeds received thereon.
(c) It is the intention of the parties hereto that each conveyance of Receivables made under this Agreement shall constitute an outright “sale of accounts” or “sale of general intangibles” (as such terms are used in Article 9 of the UCC) or other transfer, in each case which is absolute and irrevocable and shall provide the Purchaser with the full benefits of ownership of the Receivables and the associated Related Security, Collections and Proceeds. Each conveyance of Receivables hereunder is made without recourse to the applicable Originator and without any warranty of collectability or unconventional warranty; provided, however, that (i) each Originator will be liable to the Purchaser for all representations, warranties, covenants and indemnities made by such Originator to the Purchaser pursuant to the terms of the Transaction Documents to which such Originator is a party, and (ii) such conveyance does not constitute and is not intended to result in an assumption by the Purchaser or any assignee thereof of any obligation of such Originator or any other Person arising in connection with the Receivables, the associated Related Security or any other obligations of such Originator. In view of the intention of the parties hereto that the conveyances of Receivables made hereunder shall constitute outright sales or, in the case of Ferguson, contributions, of such Receivables rather than loans secured thereby, each Originator agrees that it will, on or prior to the applicable initial Purchase Date, mark its Records to indicate that the Receivables have been sold or contributed.
(d) On the initial Purchase Date, Ferguson contributed Receivables generated by it having an aggregate Outstanding Balance of $200,000,000.00, together with associated Related Security, Collections and Proceeds, to the Purchaser’s capital. Thereafter, on each Purchase Date, Ferguson, at its option, contributed or may contribute, as applicable, to the Purchaser’s capital, in lieu of selling, Receivables originated by Ferguson and all associated Related Security, Collections and Proceeds, and any such contribution is made with the intention that each such contribution, if any, will be made with the same intentions as are set forth in Section 2.01(c) above. Except as provided in Section 2.02(a)(3), the Purchaser hereby acknowledges that Ferguson shall have no obligations to make capital contributions to Purchaser in respect of Ferguson’s equity interest in Purchaser or otherwise in order to provide funds to pay the Purchase Price to Ferguson under this Agreement or for any other reason.
Section 2.01A. Certain Reconveyances. If Ferguson, as Servicer of the Receivables under the Receivables Purchase Agreement, determines in its reasonable judgment that (i) the filing of a mechanics lien or the making of a claim on a payment bond is necessary or advisable in order to collect a Receivable that is due from an Obligor, (ii) it desires to recover any sales or similar tax paid with respect to a Receivable, or (iii) legal action against an Obligor of a Receivable is necessary or desirable in order to collect on such Receivable, Ferguson shall notify the Purchaser and the Originator which originated such Receivable and shall prepare the necessary documentation for filing and pursuing such lien, claim, tax refund or legal action for, and on behalf of, such Originator. Immediately prior to the execution of such documentation, and without any further action hereunder, the Purchaser shall be deemed to have sold all of its right, title and interest in and to such Receivable to such Originator (immediately following the Purchaser’s purchase thereof from the Administrative Agent pursuant to the Receivables Purchase Agreement) (each such Receivable, a “Reassigned Receivable”) and such Originator shall be deemed to have repurchased such Receivable for a purchase price equal to a Participation Interest in such Reassigned Receivable (which such Originator shall be deemed to have sold), which shall entitle the Purchaser to receive from such Originator (by deposit into the Concentration Account or other Account subject to a Blocked Account Agreement) all Collections subsequently received with respect to such Reassigned Receivable, but only to the extent actually received. Notwithstanding the foregoing, no further reconveyances of Receivables by the Purchaser to any Originator shall be permitted during any period when Receivables are not permitted to be reassigned under Section 2.01A of the Receivables Purchase Agreement.
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Section 2.02. Purchase Price. (a) The purchase price (the “Purchase Price”) for the Receivables, Related Security, Collections and Proceeds payable on each Purchase Date to each Originator shall be equal to 100% of the aggregate Outstanding Balance of the Receivables conveyed by such Originator on that date multiplied by the Discount Factor. Each Originator and the Purchaser have each determined the Purchase Price payable on each Purchase Date approximates the fair value of the Receivables, Related Security, Collections and Proceeds sold by such Originator on such Purchase Date. Such Purchase Price will be payable in full by the Purchaser to such Originator on the related Purchase Date, and shall be paid to such Originator in the following manner:
(1) first, by delivery of immediately available funds, to the extent of the Available Funds;
(2) second, if such Originator has requested a Letter of Credit pursuant to Section 2.05, by the Purchaser’s requesting and delivering such Letter of Credit; and
(3) third, by increasing the amount of the applicable Subordinated Loan, so long as the aggregate principal amount of such Subordinated Loan, together with the aggregate principal amount of all Subordinated Loans owed by the Purchaser, does not cause the Purchaser’s tangible net worth to be less than 6% of the aggregate Outstanding Balance of the Receivables then owned by the Purchaser.
(b) Subject to the limitations set forth in Section 2.02(a)(3), each Originator irrevocably agrees to make each increase in the amount of the Subordinated Loan owing to it as contemplated in Section 2.02(a)(3), so long as no Purchase Termination Event exists. The Subordinated Loan owing to each Originator will be evidenced by, and shall be payable in accordance with the terms and provisions of the related Subordinated Note and any cash repayment of such Subordinated Loan shall be payable solely from Available Funds at the time of each such payment. Each Originator is hereby authorized by the Purchaser to maintain a record with respect to the related Subordinated Note, evidencing the date and amount of each increase in such Subordinated Loan thereunder, as well as the date of each payment with respect thereto, provided that the failure to maintain such a record shall not affect any obligation of the Purchaser thereunder.
(c) Although the Purchase Price for each Purchase of Receivables, Related Security, Collections and Proceeds shall be due and payable in full by the Purchaser to the applicable Originator on each Purchase Date on which Receivables are purchased from such Originator, settlement of the Purchase Price between the Purchaser and such Originator will be effected on each Distribution Date with respect to all Purchases from such Originator within the most recently ended Calculation Period. Although cash settlements shall be effected on each Distribution Date, increases or decreases in the Subordinated Loan owed to each Originator 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.
(d) Each contribution of Receivables, Related Security, Collections and Proceeds by Ferguson to Purchaser pursuant to Section 2.01(d) shall be deemed to be a Purchase of such Receivables, Related Security, Collections and Proceeds by Purchaser for all purposes of this Agreement.
Section 2.03. Purchase Price Credits. On each Purchase Date, all Deemed Collections with respect to Receivables originated by any Originator shall be credited (each, a “Purchase Price Credit”) against the Purchase Price otherwise payable hereunder to such Originator. If, with respect to any Originator, the aggregate amount of Purchase Price Credits exceeds the Purchase Price of the Receivables to be sold by such Originator on such Purchase Date, then such Originator will pay to the Purchaser the remaining amount of such Purchase Price Credit in cash not later than the next Business Day; provided that if no Termination Event or Potential Termination Event exists, such Originator may deduct the remaining amount of such Purchase Price Credit from any amount owed to it under the applicable Subordinated Note.
Section 2.04. Payments and Computations, Etc. All amounts to be paid or deposited by the Purchaser 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 each Originator designated from time to time by such Originator. 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 Business Day. If any Person fails to pay any amount hereunder when due, such Person agrees to pay, on demand, interest on the past due amount at the Default Rate until paid in full; provided, however, that such interest shall not at any time exceed the maximum rate permitted by applicable Law. All computations of the Default Rate shall be calculated based on a 365/366 day year.
Section 2.05. Letters of Credit. (a) With respect to any Originator, upon its request and in accordance with Section 2.02, and subject to the terms and conditions for issuing Letters of Credit under the Receivables Purchase Agreement (including any limitations therein on the amount of any such issuance), the Purchaser agrees to cause the applicable LC Bank to issue, on the Purchase Date specified by such Originator, Letters of Credit on behalf of the Purchaser (and, if applicable, on behalf of, or for the account of, such Originator in favor of such beneficiaries as such Originator may elect). The aggregate Stated Amount of the Letters of Credit being issued on any Purchase Date at the request of an Originator shall constitute a credit against the aggregate Purchase Price otherwise payable by the Purchaser on such Purchase Date to such Originator pursuant to Section 2.02. To the extent that the aggregate Stated Amount of the Letters of Credit being issued on any Purchase Date exceeds the aggregate Purchase Price payable by
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the Purchaser to such Originator on such Purchase Date, such excess shall be deemed to be a reduction in the outstanding principal amount of (and, to the extent necessary, the accrued but unpaid interest on) the applicable Subordinated Note. The aggregate Stated Amount of Letters of Credit to be issued on any Purchase Date cannot exceed the sum of the aggregate Purchase Prices payable on such Purchase Date plus the aggregate outstanding principal amount of and accrued but unpaid interest on the Subordinated Notes on such Purchase Date. In the event that any Letter of Credit issued (i) expires or is cancelled or otherwise terminated with all or any portion of its Stated Amount undrawn or (ii) has its Stated Amount decreased (for a reason other than a drawing having been made thereunder) or that the Purchaser’s Reimbursement Obligation in respect of a Letter of Credit is reduced for any reason other than by virtue of a payment made in respect of a drawing thereunder, then an amount equal to such undrawn amount or such reduction, as the case may be, shall either be paid in cash to the applicable Originator on the next Purchase Date or, if the Purchaser does not then have cash available therefor, shall be deemed to be added to the outstanding principal amount of the Subordinated Note issued to such Originator. Under no circumstances shall any Originator (and no Affiliate thereof (other than the Purchaser)) have any reimbursement or recourse obligations in respect of any Letter of Credit.
(b) In the event that an Originator requests a Letter of Credit hereunder, such Originator shall on a timely basis provide the Purchaser with such information as is necessary for the Purchaser to obtain such Letter of Credit from an LC Bank.
(c) Each Originator agrees to be bound by the terms of each Letter of Credit Application referenced in the Receivables Purchase Agreement and by an LC Bank’s interpretations of any Letter of Credit issued for the Purchaser and by the LC Bank’s written regulations and customary practices relating to letters of credit. The Purchaser agrees to enforce any rights that it has under the Receivables Purchase Agreement against an LC Bank in the event any Originator suffers any direct damages caused by such LC Bank’s failure to exercise care when honoring drafts under a Letter of Credit.
(d) Each Originator appoints the Servicer as its agent (on which appointment the Purchaser, the Facility Agents, the Administrative Agent, the LC Banks and the Purchasers may rely until such Originator provides contrary written notice to all of such Persons) to act on such Originator’s behalf to take all actions and to make all decisions in respect of the issuance, amendment and administration of the Letters of Credit, including, identification of the LC Banks to issue the Letters of Credit, requests for the issuance and extension of Letters of Credit and the allocation of the Stated Amounts of Letters of Credit against the Purchase Price owed to particular Originators and against Subordinated Notes issued to particular Originators. In the event that the Servicer requests a Letter of Credit in accordance with the terms hereof and the Receivables Purchase Agreement, the Servicer shall on a timely basis provide the Purchaser with such information as is necessary for the Purchaser to obtain such Letter of Credit from an LC Bank, and shall notify the relevant Originator, the Purchaser and the Administrative Agent of the allocations described in the preceding sentence. Such allocations shall be binding on the Purchaser and each Originator, absent manifest error.
Section 2.06. Access to Records. (a) In connection with the transfer of Records hereunder, each Originator hereby agrees that following any replacement of Ferguson as the Servicer, it will promptly grant access to the new Servicer to all data embedded in or created by all software used by such Originator to account for its Receivables.
(b) In addition to the requirements of Section 4.03, each Originator (i) shall take such action reasonably requested by the Purchaser or its assignee that may be necessary or desirable to ensure that the Purchaser has an enforceable ownership interest in the Records relating to the Receivables purchased from, or contributed by, such Originator hereunder and (ii) shall use its reasonable efforts to ensure that the Purchaser and the Servicer each has an enforceable right (whether by license or sublicense or otherwise) to use all of the computer software used to account for the Receivables and/or to recreate such Records.
Section 2.07. Characterization; Granting Clause. (a) If, notwithstanding the intention of the parties expressed in Section 2.01(c), any sale or contribution by any Originator to the Purchaser of Receivables, Related Security, Collections and Proceeds hereunder shall be characterized as a secured loan and not a sale or contribution, as the case may be, 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 each sale and contribution of Receivables, Related Security, Collections and Proceeds hereunder shall constitute a true sale or contribution, respectively, thereof, each Originator hereby grants to the Purchaser a duly perfected security interest in all of such Originator’s right, title and interest in, whether now existing or hereafter arising, in and to (i) (A) the Receivables originated by such Originator, (B) all Related Security with respect thereto, and (C) all Collections, (ii) with respect to all Reassigned Receivables of such Originator, all Collections subsequently received with respect thereto, and (iii) all Proceeds of any of the foregoing, which security interest shall be prior to all other Liens thereon. The Purchaser and its assigns shall have as against each Originator, 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. Each Originator hereby authorizes Purchaser (or any of its assigns), as secured party, within the meaning of Section 9-509 of any applicable enactment of the UCC, to file, without further authorization by such Originator, as debtor, the UCC financing statements contemplated hereby. In the event that a court of competent jurisdiction holds that the transactions hereunder are not true sales or contributions, each of the Purchaser and each Originator represents and warrants, as to itself, that, each remittance of Collections by such Originator to the Purchaser hereunder will have been made (i) in payment of a debt incurred by such Originator in the ordinary course of such Originator’s and the Purchaser’s business or financial affairs and (ii) made in the ordinary course of such Originator’s and the Purchaser’s business or financial affairs.
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Section 2.08. Transfer by Purchaser; Third-Party Beneficiary. (a) The Originators acknowledge and agree that the Purchaser may, pursuant to the Receivables Purchase Agreement, sell and assign undivided interests in the Receivables and assign its rights under this Agreement to the Administrative Agent (for the benefit of the Facility Agents and their Purchase Groups) and (b) the Originators and the Purchaser acknowledge and agree that, by virtue of the transactions contemplated in the Receivables Purchase Agreement, the Administrative Agent (for the benefit of the Facility Agents and their Purchase Groups) shall be an assignee of this Agreement and, following the occurrence and continuance of a Termination Event, shall have the right to enforce directly all rights hereunder of Purchaser and all obligations hereunder of the Originators (but without the assumption of any obligations or liabilities hereunder).
ARTICLE III
CLOSING PROCEDURES; ADDITION OF ORIGINATORS
CLOSING PROCEDURES; ADDITION OF ORIGINATORS
Section 3.01. Conditions to Each Purchase. Each Purchase from an Originator hereunder (including the Purchase on the applicable initial Purchase Date) is subject to the conditions precedent that (i) the Purchaser shall have executed and delivered a Subordinated Note in favor of such Originator and (ii) as of such date of such Purchase, no Purchase Termination Event shall have occurred.
Section 3.02. Addition of Originators. Any Subsidiary of Ferguson may become an Originator hereunder with the prior written consent of the Purchaser (and the Administrative Agent and Facility Agents, as assignees of the Purchaser); provided, that such consent shall not be required if the Outstanding Balance of Receivables of such Subsidiary at the time it becomes an Originator hereunder, together with the Outstanding Balance of Receivables at such time of any other Subsidiary of Ferguson that became an Originator hereunder without such consent over the 12 calendar month period ending immediately prior to such date is less than 5.0% of the average Outstanding Balance of all Receivables (other than Excluded Receivables) on the last day of each calendar month during such 12-calendar month period. Each Subsidiary of Ferguson that is proposed to be added as an Originator shall give to the Purchaser (and the Administrative Agent and Facility Agents, as assignees of the Purchaser) prior written notice of its desire to be added as an Originator hereunder. Once the notice has been given, any addition of a Subsidiary of Ferguson as an Originator pursuant to this section shall become effective on the first Business Day following the date on which (i) such Subsidiary and the parties hereto shall have executed a Joinder Agreement and such other agreements, instruments and other documents (including, without limitation, opinions of counsel, lien searches, financing statements, Blocked Account Agreements and a Subordinated Note in favor of the new Originator) and the amendments or other modifications to the Transaction Documents, in form and substance satisfactory to the Purchaser (and the Administrative Agent and Facility Agents, as assignees of the Purchaser), that the Purchaser (and the Administrative Agent and Facility Agents, as assignees of the Purchaser) determines necessary or appropriate to effect the addition; and (ii) the Parent confirms in writing that the obligations of such new Originator are guaranteed by the Parent under the Parent Undertaking. Upon such effectiveness, Schedule I to this Agreement shall be deemed amended to include such added Originator and any reference to “Originator” in this Agreement or any other Transaction Document shall refer to each existing Originator and each Subsidiary of Ferguson added as an Originator pursuant to this Section 3.02.
Section 3.03. Removal of Originators; Reconveyance of Certain Receivables. (a) In the event that any Receivables and Related Security were originated by an Originator or by a business group of any Originator, in each case, that is being sold or otherwise transferred to a third-party purchaser that is not an Affiliate of Parent (in any case, a “Sold Business”), and, at the request of such third-party purchaser, the Receivables and Related Security related to such Sold Business are to be included in such transfer, such Originator shall provide the Purchaser (and the Administrative Agent and Facility Agents as assignees of the Purchaser) notice of such sale or transfer not less than ten (10) Business Days before the date of the proposed sale or transfer and the resulting request for release and reconveyance of Receivables and Related Security. Such notice shall specify (i) if applicable, the business group being sold or transferred and (ii) the proposed date of such sale or transfer and reconveyance.
(b) On the sale or transfer date, the Purchaser shall, at the request of such Originator acting at the sole direction of such third-party purchaser, release and reconvey all of its right, title and interest in such Receivables and Related Security (other than any Collections or proceeds received in connection with such sale, assignment or transfer or received prior to the date thereof) (collectively, the “Transferred Assets”) to such Originator (or its designee) acting on behalf of such third-party purchaser, with such third-party purchaser being obligated to purchase such Transferred Assets, or to the applicable third-party purchaser, free and clear of any Lien created hereby, by executing a release and reconveyance agreement in a form agreed to by such Originator
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at the time of such release and reconveyance and delivering a copy of such executed release and reconveyance to the Administrative Agent, so long as (i) at the time of any such release and reconveyance, the then Outstanding Balance of any such Transferred Assets, together with the Outstanding Balance of any other Transferred Assets released and reconveyed pursuant to this Section 3.03 during the 12 calendar month period ending immediately prior to the date such Transferred Assets are transferred, plus the aggregate Outstanding Balance of Designated Excluded Receivables designated pursuant to Section 11.23 of the Receivables Purchase Agreement during such period (which Outstanding Balance is determined as to any Designated Type on its first respective Exclusion Date), shall not exceed 10.0% of the average aggregate Outstanding Balance of all Receivables (other than Excluded Receivables) on the last day of each calendar month during such 12-calendar month period, (ii) no Termination Event or Potential Termination Event has occurred or will result from such release and reconveyance after the application of all Collections with respect thereto hereunder, and (iii) after giving effect to such release and reconveyance and the application of all Collections with respect thereto under the Transaction Documents the Percentage Interest will not be greater than 100%. Any proceeds of any such release and reconveyance shall be treated as Collections hereunder.
(c) From and after the date any such Originator is terminated pursuant to this Section 3.03, such Originator shall have no further obligations hereunder or under any other Transaction Document, other than with respect to Collections or Deemed Collections on Receivables previously sold by it to the Purchaser and, in respect of Indemnified Amounts arising out of events occurring or circumstances existing prior to such termination, any obligation under Section 8.01.
ARTICLE IV
ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE RECEIVABLES
ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE RECEIVABLES
Section 4.01. Rights of the Purchaser. Each Originator hereby authorizes the Purchaser and the Servicer (if other than such Originator) to take any and all steps in such Originator’s name necessary or desirable, in their respective determination, to collect all amounts due under any and all Receivables originated by such Originator, including, without limitation, endorsing such Originator’s name on checks and other instruments representing Collections and enforcing such Receivables, the invoices and the provisions of the related Contracts that concern payment and/or enforcement of rights to payment.
Section 4.02. Responsibility of each Originator. Anything herein to the contrary notwithstanding, each Originator hereby agrees that:
(a) Servicing. Ferguson, in its capacity as Servicer, shall be responsible for the servicing, administration and collection of the Receivables, all on the terms set out in the Receivables Purchase Agreement. Each Originator shall be responsible for sub-servicing the Receivables originated by it.
(b) Power of Attorney. It hereby grants to the Servicer (if other than such Originator) an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take in the name of such Originator all steps which are necessary or advisable to endorse, negotiate, enforce, or otherwise realize on any writing or other right of any kind held or transmitted by such Originator or transmitted or received by such Originator in connection with any Receivable originated by it or under the Related Security (including the Records).
(c) Performance under Contracts. It will perform all of its obligations under the Contracts generated by it to the same extent as if the Receivables had not been sold or contributed, as applicable, hereunder and the exercise by the Purchaser, the Servicer, the Administrative Agent, any of the Facility Agents of their respective rights hereunder or under the Receivables Purchase Agreement shall not relieve such Originator from such obligations.
Section 4.03. Further Action Evidencing Purchases. (a) Each Originator agrees that from time to time, at its expense, it will promptly execute and deliver all further instruments and documents, and take all further action that the Purchaser (or its assigns) may reasonably request in order to perfect, protect or more fully evidence the Purchaser’s ownership of the Receivables generated by such Originator (and the Related Security and Collections) purchased by the Purchaser hereunder, or to enable the Purchaser to exercise or enforce any of its rights hereunder or under any other Transaction Document.
(b) Each Originator hereby authorizes the Purchaser or the Administrative Agent (as Purchaser’s assignee) to file one or more financing or continuation statements, and amendments thereto and assignment thereof, relative to all or any of the Receivables (and the Related Security and Collections) now existing or hereafter sold or contributed by such Originator. If any Originator fails to perform any of its agreements or obligations under this Agreement, the Purchaser (or its assigns) may (but shall not be required to) itself perform, or cause performance of, such agreement or obligation, and the expenses of the Purchaser or its designee incurred in connection therewith shall be payable by such Originator as provided in Article VIII.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
Section 5.01. General Representations and Warranties of the Originators. Each Originator hereby represents and warrants to the Purchaser as to itself on and as of the date hereof and on and as of each Purchase Date that:
(a) Corporate Existence, Power and Authority, Etc. It is duly organized, validly existing and in good standing in its jurisdiction of organization; it is duly qualified to do business in each jurisdiction where the conduct of its business so requires and except where failure to be so qualified would not be reasonably expected to have a Material Adverse Effect; it has power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to carry out the transactions contemplated hereby and thereby; each of this Agreement and each of the other Transaction Documents to which it is a party has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject to usual and customary bankruptcy and equitable principles exceptions); it has all necessary authorizations and approvals to execute, deliver and perform its obligations under this Agreement and all of the other Transaction Documents to which it is a party, except where failure to obtain any such authorization or approval would not reasonably be expected to result in a Material Adverse Effect; no notices to, or filings with, any Governmental Authority or regulatory body are required for the due execution, delivery or performance by it of this Agreement or any of the other Transaction Documents to which it is a party, except for the filing of financing statements referred to therein and except where the failure to provide any such notice or make any such filing would not reasonably be expected to result in a Material Adverse Effect;
(b) Eligible Receivables. All Receivables generated by such Originator and represented to be Eligible Receivables are Eligible Receivables at such time;
(c) Accuracy of Information. The written reports, financial statements, certificates and other written information furnished by it or on its behalf in connection with the negotiation of this Agreement and the other Transaction Documents or delivered in connection therewith (as modified or supplemented by other written information when so furnished), when taken as a whole, did not contain as of the date such written reports, financial statements or other written information were so furnished, any material misstatement of fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(d) Good Title. Each Receivable sold by such Originator under this Agreement is owned by it free and clear of any lien or adverse claim (except as provided herein and Permitted Liens);
(e) Ownership/Security Interest. It has taken or caused to be taken all actions, including necessary filings, to evidence the Purchaser’s first priority ownership or security interest in all Receivables (whether existing or thereafter arising) sold by it;
(f) Changes to Credit and Collection Policy. It has complied in all material respects with the Credit and Collection Policy with regard to each Receivable originated by it and the related Contract. It has not made any change in the Credit and Collection Policy that would (i) impair the collectability of any Receivables in any material respect or (ii) otherwise be reasonably likely to have a Material Adverse Effect;
(g) Collections. All of its Obligors have been directed to remit their Collections to Lockboxes, Blocked Accounts, or Local Accounts, as applicable, listed on Schedule III hereto, except for those Obligors who pay by credit card or who, in the normal course of such Originator’s business and consistent with such Originator’s past practices, pay directly to such Originator;
(h) Payments from the Purchaser. The Purchase Price payable by Purchaser hereunder in connection with each sale by such Originator of Receivables hereunder represents a reasonable arms-length price for the Receivables sold by such Originator and constitutes reasonably equivalent value for the Receivables so sold. No sale of Receivables by such Originator hereunder was made for or on account of an antecedent debt owed by such Originator to the Purchaser or is or may be voidable as a fraudulent transfer under Section 548 of the Federal Bankruptcy Code or a voidable preference under Section 547 of the Federal Bankruptcy Code;
(i) Taxes. It has filed or caused to be filed all material United States federal, state and local income tax returns and all other material tax returns on or before the applicable due date (as such due date may have been timely extended), and has paid or caused to be paid all taxes due pursuant to such returns or pursuant to any assessment received by it (other than those which are currently being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with relevant GAAP shall have been set aside on its books);
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(j) ERISA. Such Originator and each of its ERISA Affiliates have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Plan, except as any noncompliance could not reasonably be expected to result in a Material Adverse Effect. No Reportable Event (as defined in Section 4043 of ERISA or the regulations thereunder) has occurred with respect to any Plan nor has any prohibited transaction under Section 406 of ERISA occurred with respect to any “Employee Benefit Plan” (as that term is defined in Section 3(3) of ERISA), of such Originator or any of its ERISA Affiliates which, in either case, could reasonably be expected to result in a Material Adverse Effect. No prohibited transaction under Section 406 of ERISA which could be expected to result in a Material Adverse Effect has occurred with respect to such Originator or any of its ERISA Affiliates or will occur on any Purchase Date. No ERISA Event has occurred, is occurring, or is reasonably likely to occur which is reasonably likely to result in a Material Adverse Effect;
(k) Investment Company Act. It is not and is not required to be registered as an “investment company” or a company “Controlled” by an “investment company,” each as defined in the Investment Company Act of 1940, as amended;
(l) Use of Proceeds. It has not taken and will not take any action which would cause the use of the proceeds of the Purchases to violate the provisions of Regulation U of the Board of Governors of the Federal Reserve System; and
(m) Foreign Assets Control, Etc.
(i) Neither it nor any of its Subsidiaries (A) is, or is controlled by, a Designated Person; (B) has received funds or other property from a Designated Person; or (C) is in breach of or is the subject of any action or investigation under any Anti-Terrorism Law. None of the Originators nor any of their respective Subsidiaries engages or will engage in any dealings or transactions, or is or will be otherwise associated, with any Designated Person. Each Originator and each Subsidiary thereof is in compliance, in all material respects, with the Patriot Act. Each Originator and each Subsidiary thereof has taken reasonable measures to ensure compliance with the Anti-Terrorism Laws including the requirement that no Person who owns any direct or indirect interest in any Originator or any Subsidiary thereof is a Designated Person, and funds invested directly or indirectly in any Ferguson Party and each Subsidiary thereof are derived from legal sources.
(ii) No portion of the proceeds of any Purchase made hereunder has been or will be used, directly or indirectly for, and no fee, commission, rebate or other value has been or will be paid to, or for the benefit of, any governmental official, political party, official of a political party or any other Person acting in an official capacity in violation of any applicable law, including the U.S. Foreign Corrupt Practices Act of 1977, as amended.
ARTICLE VI
COVENANTS
COVENANTS
Section 6.01. Affirmative Covenants of the Originators. Until the termination of this Agreement, each Originator covenants to the Purchaser as follows:
(a) General:
(i) Compliance with Laws, Etc. It will comply, and cause each of its Subsidiaries to comply, with all applicable Laws, ordinances, rules, regulations, and requirements of any Governmental Authority (including ERISA and consumer protection laws) except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect;
(ii) Offices, Records, and Books of Account. It will keep its jurisdiction of organization and the office where it keeps its records concerning the Receivables originated by it at the address set forth under its name on the signature pages to this Agreement (or Joinder Agreement, as applicable) or upon 30 days’ prior written notice to the Purchaser (or its assignee), at any other locations in jurisdictions where all actions reasonably requested by the Purchaser (or its assignee) to protect and perfect the interest in the Receivables have been taken and completed. It also will maintain and implement administrative and operating procedures (including, without limitation, the ability to recreate records evidencing Receivables originated by it and related Contracts 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 originated by it (including, without limitation, records adequate to permit the daily identification of each Receivable and all Collections of and adjustments to each existing Receivable). It will mark its data processing records and other books and records to indicate which Receivables it has sold or contributed to the Purchaser under this Agreement;
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(iii) Taxes. It will file all material tax returns and reports required by Law to be filed by it and will promptly pay all taxes and governmental charges at any time owing, except when failure to pay would not reasonably be expected to have a Material Adverse Effect or such as are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established. It will pay when due any sales, use or property taxes payable in connection with the origination or ownership of the Receivables originated by it, except for taxes the validity of which are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with relevant GAAP shall have been set aside on its books;
(iv) Performance and Compliance with Credit and Collection Policy. It will, as applicable and at its own expense, timely and fully comply in all material respects with the Credit and Collection Policy in regard to each Receivable originated by it and the related Contracts;
(v) Deposits to Lockboxes or Accounts. It will instruct all Obligors to remit all their payments in respect of Receivables to a Lockbox, a Blocked Account or a Local Account (either by check, wire transfer or electronic funds transfer to a Depositary Bank), except for those Obligors who pay by credit card or who, in the normal course of such Originator’s business and consistent with such Originator’s past practices, pay directly to such Originator. If it receives any Collections directly, it will promptly (and in any event within two Business Days) cause such Collections to be deposited into the Concentration Account. It will not direct any funds to be deposited into any Blocked Account other than Collections of Receivables; provided, however, that it may direct or allow (i) Collections of Acquisition Receivables being prepared for reporting on an Approved Data Reporting System in accordance with Section 11.21 of the Receivables Purchase Agreement until the applicable Inclusion Date for such Acquisition Receivables (after which Inclusion Date, the following limit will no longer apply) to be so deposited in an aggregate amount not in excess of $15,000,000 (as determined on the last day of each Calculation Period and reported in the related Monthly Report) and (ii) credit card and other processing fees to be deposited by Payment Processors pursuant to Payment Processor Agreements;
(vi) Transfers from Local Accounts. It will direct the Depositary Banks holding the Local Accounts to transfer Collections, within two (2) Business Days of deposit therein, received in such Local Accounts to a Blocked Account; and
(vii) Other Information. It will cause to be provided to the Purchaser (or its assignee) such other information in respect of the Receivables or its condition or operations, financial or otherwise, as the Purchaser (or its assignee) may from time to time reasonably request.
(b) Reporting. Ferguson shall provide to the Purchaser and the Administrative Agent (as Purchaser’s assignee) such information regarding its and its Subsidiaries’ operations, business affairs and financial condition, or compliance with the terms of this Agreement or any other Transaction Document, as may be reasonably requested by the Purchaser or the Administrative Agent (as Purchaser’s assignee).
(c) Notice of Termination. It will cause to be provided to the Purchaser and the Administrative Agent (as Purchaser’s assignee) promptly and in any event within five Business Days after obtaining knowledge of the occurrence of a Termination Event or Potential Termination Event notice thereof, together with a statement of its financial officer setting forth details of such Termination Event or Potential Termination Event.
Section 6.02. Negative Covenants of the Originators. Except as otherwise specified below, until the termination of this Agreement, each Originator covenants and agrees as follows:
(a) Sales, Liens, Etc. It will not sell, assign (by operation of Law or otherwise) or otherwise dispose of, or create or suffer to exist any adverse claim (except for the interest in favor of the Purchaser created pursuant to this Agreement, the interest in favor of the Administrative Agent (for the benefit of the Purchase Groups (as defined in the Receivables Purchase Agreement)) created pursuant to the Receivables Purchase Agreement and Permitted Liens) upon or with respect to, any Receivable, Related Security, related Contract or Collections, or upon or with respect to any Account, or assign any right to receive income in respect thereof;
(b) Change in Payment Instructions to Obligors. It will not add or terminate any bank as a Depositary Bank from those listed on Schedule III hereto, or make any change in its instructions to Obligors regarding payments to be made in respect of the Receivables or payments to be made to any Depositary Bank, unless the Purchaser and the Administrative Agent (as assignee of Purchaser) will have received notice of such addition, termination or change (including an updated schedule) and a fully executed Blocked Account Agreement in form and substance satisfactory to the Administrative Agent with respect to each new Lockbox Account or other Blocked Account;
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(c) Change in Name or Jurisdiction of Organization, Etc. It will not change its name, identity or organizational structure unless the Purchaser and the Administrative Agent (as Purchaser’s assignee) shall have received at least thirty (30) days’ advance written notice of such change and all action by such Originator, necessary or appropriate to perfect or maintain the perfection of the Purchaser’s ownership or security interest in the Receivables originated by it, the Related Security and the Collections (including, without limitation, the filing of all financing statements and the taking of such other action as the Purchaser or the Administrative Agent (as Purchaser’s assignee) may request in connection with such change or relocation) will have been duly taken;
(d) Treatment as Sales. It will not account for or treat (whether in financial statements or otherwise) the transactions contemplated by this Agreement in any manner other than as the sale and/or absolute conveyance of Receivables to the Purchaser (it being understood that the Purchaser is consolidated with Ferguson and the Parent under GAAP). It (or Parent) shall treat the transactions under this Agreement, for U.S. federal income tax purposes, as indebtedness secured by the Receivables and shall take no position inconsistent therewith; and
(e) Merger. It will not consolidate or merge with or into any other Person other than the Parent, Ferguson or any other Originator, and, if the Parent is the surviving entity, only if the Parent assumes the obligations of such Originator hereunder.
Section 6.03. Separateness Covenants. Until the termination of this Agreement, each Originator covenants and agrees that it will take such actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinions issued by Mayer Brown LLP, as counsel for Purchaser, in connection with the Facility on the Original Closing Date and on the A&R Effective Date and relating to substantive consolidation issues, and in the certificates accompanying such opinions, remain true and correct in all material respects at all times.
ARTICLE VII
PURCHASE TERMINATION EVENTS
PURCHASE TERMINATION EVENTS
Section 7.01. Purchase Termination Events. The occurrence of the Termination Date under the Receivables Purchase Agreement shall constitute a “Purchase Termination Event” hereunder.
Section 7.02. Consequences of a Purchase Termination Event. (a) Upon the occurrence of a Purchase Termination Event, there shall be no further sales or contributions of Receivables under this Agreement; provided, however, that the termination of this Agreement shall not discharge any Person from any obligations incurred prior to such termination, including, without limitation, any indemnification obligations.
(b) Upon the occurrence and continuance of a Purchase Termination Event, the Purchaser shall have, in addition to all rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of the applicable jurisdiction and under other applicable Laws, which rights shall be cumulative.
ARTICLE VIII
INDEMNIFICATION; EXPENSES
INDEMNIFICATION; EXPENSES
Section 8.01. Indemnity. (a) Each Originator shall indemnify the Purchaser and its assigns, officers, directors and employees (each, an “Indemnified Party”) against all liabilities, claims, damages, costs, expenses, or losses (“Losses”) arising out of or as a result of this Agreement or the acquisition, either directly or indirectly, by Purchaser of the Receivables, excluding, however, (i) Losses to the extent resulting from the gross negligence or willful misconduct of the Indemnified Party or from the Indemnified Party’s breach of this Agreement or any other Transaction Document or (ii) recourse (except as expressly provided in this Agreement) for uncollectable Receivables.
Without limiting the foregoing, each Originator shall indemnify the Indemnified Parties for all Losses resulting from:
(i) False or incorrect representations, warranties or certifications of such Originator in this Agreement or any report or document delivered by such Originator to the Purchaser pursuant to this Agreement;
(ii) Failure by such Originator to comply with applicable Law, rules or regulations related to the Receivables;
(iii) Failure to vest in the Purchaser a first priority perfected ownership or security interest in the Receivables originated by such Originator;
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(iv) Failure to file, or delay in filing, any financing statements or similar instruments or documents under the UCC of any applicable jurisdiction or other applicable Laws with respect to the Receivables originated by such Originator, the Related Security or the Collections;
(v) Any dispute, claim or defense of an Obligor to the payment of any Receivable originated by such Originator including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid or binding obligation of such Obligor, or any other claim resulting from the sale of the goods or services related to such Receivable or the furnishing or failure to furnish such goods or services or relating to collection activities with respect to such Receivable or any Contract related thereto, or any adjustment, cash discount, rebate, return of product or cancellation with respect to such Receivable (provided that this clause (v) shall not be applied to provide credit recourse in respect of the portion of the Outstanding Balance of any Receivable which has been discharged in bankruptcy);
(vi) Failure by such Originator to perform any of its duties or other obligations, or to comply with any of its covenants, under this Agreement;
(vii) Any products liability, environmental or other claim by an Obligor or other third party arising out of the goods or services which are the subject of any Receivable;
(viii) Any third-party investigation, litigation or proceeding (actual or threatened) related to this Agreement or the transactions contemplated hereby or thereby, or the use of proceeds of Purchases under this Agreement or in respect of any Receivable;
(ix) Commingling of Collections with any other funds of such Originator or any of its Affiliates or Subsidiaries or any set-off against Collections by any credit card servicers;
(x) Third party claims arising from such Originator’s administration of the Receivables;
(xi) The sale of any Receivable in violation of applicable Law;
(xii) Any setoff by any Obligor;
(xiii) Any Letter of Credit issued at the request of an Originator (other than costs associated with the issuance of such Letter of Credit or reimbursement obligations with respect to draws made thereunder) or the use of the proceeds thereof by the applicable beneficiary or any affiliate, agent, employee or assignee thereof;
(xiv) The failure of such Originator to pay when due any sales, excise, motor fuel, business and occupation, property or other similar taxes payable in connection with the Receivables;
(xv) Any dispute, suit or claim arising out of any provision in any Contract restricting or prohibiting sale and assignment of the related Receivables;
(xvi) Overstatement of the balance of any Receivable of such Originator due to provisions in the related Contract relating to retainage, data assumptions cash on delivery sales, or bill and hold sales or other similar provisions of comparable effect; and
(xvii) Taxes, other than Excluded Taxes (as defined in the Receivables Purchase Agreement except modified by replacing the term “Indemnified Party” in each relevant place with “Purchaser and its assigns”), imposed on the Purchaser on account of payments made by or on account of its entering into this Agreement, and Other Taxes (as defined in the Receivables Purchase Agreement except modified by replacing the term “Transaction Document” with “this Purchase and Contribution Agreement”).
(b) Promptly upon receipt by any Indemnified Party under this Section 8.01 of notice of the commencement of any suit, action, claim, proceeding or governmental investigation against such Indemnified Party, such Indemnified Party shall, if a claim in respect thereof is to be made against an Originator hereunder, notify such Originator in writing of the commencement thereof. Any notice claiming compensation under this Section shall set forth in reasonable detail the amount or amounts to be paid to it hereunder and shall be conclusive in the absence of manifest error. Such Originator may participate in and assume the defense and settlement of any such suit, action, claim, proceeding or investigation at its expense, and no settlement thereof shall be made without the approval of such Originator and the Indemnified Party. The approval of such Originator and the Indemnified Party will not be unreasonably withheld or delayed. After notice from such Originator to the Indemnified Party of its intention to assume the defense thereof with counsel reasonably satisfactory to the Purchaser (and its assignee), and so long as such Originator so assumes the defense thereof in a manner reasonably
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satisfactory to the Purchaser (and its assignee), such Originator shall not be liable for any legal expenses of counsel unless there shall be a conflict between the interests of such Originator and the Indemnified Party, in which case the Indemnified Party(ies) shall have the right to employ one counsel to so represent it (them).
(c) Each Originator against which an indemnification claim is made will promptly pay to each Indemnified Party such indemnity amount as shall be specified to such Originator in a certificate of the Indemnified Party setting forth the calculations of such amount, together with the basis therefor.
(d) Each Indemnified Party, on behalf of itself, its assigns, officers, directors and employees, shall use its good faith efforts to mitigate, reduce or eliminate any losses, expenses or claims for indemnification.
Section 8.02. Expenses. The Originators, jointly and severally, are obligated to pay or cause to be paid, to the Purchaser (a) all reasonable out-of-pocket expenses (excluding salaries and overhead costs) incurred by or on behalf of the Purchaser in connection with the negotiation, execution, delivery and preparation of this Agreement and (b) all reasonable out-of-pocket expenses (including, without limitation, the reasonable fees and expenses of counsel for the Purchaser) from time to time (i) relating to any requested amendments, waivers or consents hereunder, or (ii) arising in connection with the Purchaser’s enforcement or preservation of its rights (including, without limitation, the perfection and protection of the Purchaser’s ownership of the Receivables) hereunder.
ARTICLE IX
MISCELLANEOUS
MISCELLANEOUS
Section 9.01. Amendments and Waivers. The provisions of this Agreement may from time to time be amended, restated, otherwise modified or waived, if such amendment, modification or waiver is in writing and consented to by the Originators, the Purchaser and the Administrative Agent. No failure or delay on the part of the Purchaser (or its assigns) in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right.
Section 9.02. Binding Effect; Assignments. This Agreement shall be binding upon and inure to the benefit of the Originators, the Purchaser and their respective successors and permitted assigns. Except as a result of a merger or consolidation permitted by Section 6.02(e), no Originator may assign its rights hereunder or any interest herein without the prior written consent of the Purchaser, the Administrative Agent and the Required Facility Agents. Until the Facility Termination, the Purchaser may not assign its rights hereunder or any interest herein except to the Administrative Agent. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until the Facility Termination. The rights and remedies with respect to any breach of any representation and warranty made by any Originator pursuant to Article V and the indemnification and payment provisions of Article VIII and the provisions of Sections 9.05 and 9.06 shall be continuing and shall survive any termination of this Agreement.
Section 9.03. No Implied Waiver; Cumulative Remedies. No course of dealing and no delay or failure of the parties hereto (or, in the case of the Purchaser, its assigns) in exercising any right, power or privilege under this Agreement shall affect any other or future exercise thereof or the exercise of any other right, power or privilege; nor shall any single or partial exercise of any such right, power or privilege or any abandonment or discontinuance of steps to enforce such a right, power or privilege preclude any further exercise thereof or of any other right, power or privilege. The rights and remedies of the parties hereto (and, in the case of the Purchaser, its assigns) under this Agreement are cumulative and not exclusive of any rights or remedies which such Person would otherwise have.
Section 9.04. No Discharge. The respective obligations of the Originators and the Purchaser under this Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by any exercise or nonexercise of any right, remedy, power or privilege under or in respect of this Agreement or any other Transaction Documents or applicable Law.
Section 9.05. No Petition. Each Originator agrees not, prior to the date which is one (1) year and one (1) day after the Facility Termination, to acquiesce, petition or otherwise, directly or indirectly, invoke, or cause the Purchaser to invoke, the process of any Official Body for the purpose of (a) commencing or sustaining a case against the Purchaser under any federal or state bankruptcy, insolvency or similar Law (including the Federal Bankruptcy Code), (b) appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official for the Purchaser or any substantial part of the property of the Purchaser, or (c) ordering the winding up or liquidation of the affairs of the Purchaser.
Section 9.06. No Recourse. The obligations of the Purchaser payable in cash under this Agreement shall be payable solely out of the Available Funds and shall be solely the limited liability company obligations of the Purchaser.
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Section 9.07. Holidays. Except as may be otherwise provided in this Agreement, if any payment due hereunder shall be due on a day which is not a Business Day, such payment shall instead be due on the next Business Day.
Section 9.08. Notices. (a) All notices, requests, demands, directions and other communications (collectively “notices”) under the provisions of this Agreement shall be in writing (including electronic communication) unless otherwise expressly permitted hereunder and shall be sent by first-class mail, first-class express mail, electronic mail or courier, in all cases with charges prepaid. All notices shall be sent to the applicable party at the notice addresses appearing on the signature pages hereof (or such other address as such party may give by notice to the other).
(b) All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. Notices sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient.
Section 9.09. Severability. The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability of such provision in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
Section 9.10. Prior Understandings. This Agreement sets forth the entire understanding of the parties relating to the subject matter hereof, and supersedes all prior understandings and agreements, whether written or oral.
Section 9.11. Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO CHOICE OF LAWS PRINCIPLES THEREOF). Each party hereto hereby submits to the nonexclusive jurisdiction of the federal courts for the Southern District of New York for the purpose of adjudicating any claim or controversy arising in connection with this Agreement or any of the other Transaction Documents or any of the transactions contemplated hereby or thereby, and for such purpose, to the extent they may lawfully do so, waive any objection which each may now or hereafter have to such jurisdiction or to venue therein and any claim of inconvenient forum with respect hereto or thereto.
Section 9.12. Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.
Section 9.13. Amendment and Restatement. Each of the parties hereto agrees that on the A&R Effective Date, the Existing PCA shall be amended, superseded and restated in its entirety by the terms and provisions of this Agreement. This Agreement is not intended to and shall not constitute a novation of the Existing PCA.
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IN WITNESS WHEREOF, the parties hereto, by their duly authorized signatories, have executed and delivered this Agreement as of the date first above written.
FERGUSON RECEIVABLES, LLC, as Purchaser | ||||||||
| By: | /s/ Brenda L. Crowder | |||||||
| Name: Brenda L. Crowder | ||||||||
| Title: Treasurer | ||||||||
| Address for Notices: | ||||||||
| 751 Lakefront Commons | ||||||||
| Newport News, VA 23606 | ||||||||
| Attention: Brenda L. Crowder | ||||||||
| Telephone: [_] | ||||||||
| E-mail: [_] | ||||||||
| [_] | ||||||||
[Signature Page to Amended and Restated Purchase and Contribution Agreement]
FERGUSON ENTERPRISES, LLC, as an Originator | ||||||||
| By: | /s/ Brenda L. Crowder | |||||||
| Name: Brenda L. Crowder | ||||||||
Title: Assistant Treasurer | ||||||||
| Address for Notices: | ||||||||
| 751 Lakefront Commons | ||||||||
| Newport News, VA 23606 | ||||||||
| Attention: Brenda L. Crowder | ||||||||
| Telephone: [_] | ||||||||
| E-mail: [_] | ||||||||
| [_] | ||||||||
[Signature Page to Amended and Restated Purchase and Contribution Agreement]
ENERGY & PROCESS CORPORATION, as an Originator | ||||||||
| By: | /s/ Brenda L. Crowder | |||||||
| Name: Brenda L. Crowder | ||||||||
Title: Assistant Treasurer | ||||||||
| Address for Notices: | ||||||||
| 751 Lakefront Commons | ||||||||
| Newport News, VA 23606 | ||||||||
| Attention: Brenda L. Crowder | ||||||||
| Telephone: [_] | ||||||||
| E-mail: [_] | ||||||||
| [_] | ||||||||
[Signature Page to Amended and Restated Purchase and Contribution Agreement]
FERGUSON FIRE & FABRICATION, INC., as an Originator | ||||||||
| By: | /s/ Brenda L. Crowder | |||||||
| Name: Brenda L. Crowder | ||||||||
Title: Assistant Treasurer | ||||||||
| Address for Notices: | ||||||||
| 751 Lakefront Commons | ||||||||
| Newport News, VA 23606 | ||||||||
| Attention: Brenda L. Crowder | ||||||||
| Telephone: [_] | ||||||||
| E-mail: [_] | ||||||||
| [_] | ||||||||
[Signature Page to Amended and Restated Purchase and Contribution Agreement]
FERGUSON FIRE DESIGN, LLC, as an Originator | ||||||||
| By: | /s/ Brenda L. Crowder | |||||||
| Name: Brenda L. Crowder | ||||||||
Title: Assistant Treasurer | ||||||||
| Address for Notices: | ||||||||
| 751 Lakefront Commons | ||||||||
| Newport News, VA 23606 | ||||||||
| Attention: Brenda L. Crowder | ||||||||
| Telephone: [_] | ||||||||
| E-mail: [_] | ||||||||
| [_] | ||||||||
[Signature Page to Amended and Restated Purchase and Contribution Agreement]
Exhibit 31.1
Certification of Principal Executive Officer
Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a),
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a),
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Kevin Murphy, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Ferguson Enterprises Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 9, 2026 | /s/ Kevin Murphy | |||||||
| Name: | Kevin Murphy | |||||||
| Title: | President & Chief Executive Officer | |||||||
Exhibit 31.2
Certification of Principal Financial Officer
Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a),
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a),
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, William Brundage, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Ferguson Enterprises Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 9, 2026 | /s/ William Brundage | |||||||
| Name: | William Brundage | |||||||
| Title: | Chief Financial Officer | |||||||
Exhibit 32.1
Certification of Principal Executive Officer
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended (the “Act”), I, Kevin Murphy, the President & Chief Executive Officer of Ferguson Enterprises Inc. (the “Company”), hereby certify, that, to my knowledge:
1.the Quarterly Report on Form 10-Q for the period ended September 30, 2026 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and
2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 9, 2026
| /s/ Kevin Murphy | ||||||||
| Name: | Kevin Murphy | |||||||
| Title: | President & Chief Executive Officer | |||||||
This certification accompanies the Report pursuant to Section 906 of the Act and shall not, except to the extent required by the Act, be deemed filed by the Company for purposes of Section 18 of the Exchange Act. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
Exhibit 32.2
Certification of Principal Financial Officer
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended (the “Act”), I, William Brundage, the Chief Financial Officer of Ferguson Enterprises Inc. (the “Company”), hereby certify, that, to my knowledge:
1.the Quarterly Report on Form 10-Q for the period ended September 30, 2026 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and
2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 9, 2026
| /s/ William Brundage | ||||||||
| Name: | William Brundage | |||||||
| Title: | Chief Financial Officer | |||||||
This certification accompanies the Report pursuant to Section 906 of the Act and shall not, except to the extent required by the Act, be deemed filed by the Company for purposes of Section 18 of the Exchange Act. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.