Exhibit 10.49
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LOAN AGREEMENT
DATED AS OF DECEMBER 19, 2002
AMONG
BOWATER FUNDING INC., AS BORROWER,
BOWATER INCORPORATED, AS INITIAL SERVICER,
THE LENDERS FROM TIME TO TIME PARTY HERETO,
SUNTRUST CAPITAL MARKETS, INC. AND WACHOVIA BANK, NATIONAL
ASSOCIATION, AS CO-AGENTS,
AND
SUNTRUST CAPITAL MARKETS, INC., AS ADMINISTRATIVE AGENT
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TABLE OF CONTENTS
PAGE
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ARTICLE I. DEFINITIONS............................................................................................2
Section 1.1 Defined Terms....................................................................................2
Section 1.2 Other Definitional Provisions...................................................................24
Section 1.3 Other Terms.....................................................................................24
Section 1.4 Computation of Time Periods.....................................................................24
Section 1.5 Continuance of Significance Events..............................................................24
ARTICLE II. COMMITMENTS, BORROWING PROCEDURES AND LENDER NOTES...................................................24
Section 2.1 Commitments.....................................................................................24
Section 2.2 Borrowing Procedures............................................................................25
Section 2.3 Funding.........................................................................................25
Section 2.4 Representation and Warranty.....................................................................25
Section 2.5 Extension of the Committed Lenders' Commitments.................................................26
Section 2.6 Voluntary Termination of Committed Lenders' Commitments; Reduction of Facility Limit............26
Section 2.7 Notes...........................................................................................27
ARTICLE III. INTEREST, FEES, ETC.................................................................................27
Section 3.1 Interest Rates..................................................................................27
Section 3.2 Interest Payment Dates..........................................................................28
Section 3.3 Applicable Interest Rates.......................................................................28
Section 3.4 Fees............................................................................................28
Section 3.5 Computation of Interest and Fees................................................................28
ARTICLE IV. REPAYMENTS AND PREPAYMENTS; DISTRIBUTION OF COLLECTIONS..............................................28
Section 4.1 Repayments and Prepayments......................................................................28
Section 4.2 Application of Collections......................................................................29
Section 4.3 Application of Certain Payments.................................................................30
Section 4.4 Due Date Extension..............................................................................30
Section 4.5 Timing of Payments..............................................................................31
ARTICLE V. SECURITY INTEREST.....................................................................................31
Section 5.1 Grant of Security...............................................................................31
Section 5.2 Administrative Agent Appointed Attorney-in-Fact.................................................32
Section 5.3 Administrative Agent May Perform................................................................32
Section 5.4 Release of Collateral...........................................................................32
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ARTICLE VI. INCREASED COSTS, ETC.................................................................................33
Section 6.1 Increased Costs.................................................................................33
Section 6.2 Broken Funding Costs............................................................................34
Section 6.3 Withholding Taxes...............................................................................34
ARTICLE VII. CONDITIONS TO BORROWING.............................................................................35
Section 7.1 Initial Loan....................................................................................35
7.1.1 Resolutions...........................................................................35
7.1.2 Consents, etc.........................................................................35
7.1.3 Incumbency and Signatures.............................................................35
7.1.4 Good Standing Certificates............................................................35
7.1.5 Financing Statements..................................................................36
7.1.6 Search Reports........................................................................36
7.1.7 Fee Letters; Payment of Fees..........................................................36
7.1.8 Receivables Sale Agreement............................................................36
7.1.9 Opinions of Counsel...................................................................36
7.1.10 Lender Notes..........................................................................36
7.1.11 Borrowing Base Certificate............................................................37
7.1.12 Lock Box Account Agreements...........................................................37
7.1.13 Releases 37
7.1.14 Performance Undertaking...............................................................37
7.1.15 Other .............................................................................37
Section 7.2 All Advances....................................................................................37
7.2.1 No Default, etc.......................................................................37
7.2.2 Borrowing Request, etc................................................................37
7.2.3 Commitment Termination Date...........................................................37
7.2.4 Accounts 37
ARTICLE VIII. REPRESENTATIONS AND WARRANTIES.....................................................................38
Section 8.1 Existence and Power.............................................................................38
Section 8.2 Power and Authority; Due Authorization, Execution and Delivery..................................38
Section 8.3 No Conflict.....................................................................................38
Section 8.4 Governmental Authorization......................................................................38
Section 8.5 Actions, Suits..................................................................................38
Section 8.6 Binding Effect..................................................................................39
Section 8.7 Accuracy of Information.........................................................................39
Section 8.8 Margin Regulations; Use of Proceeds.............................................................39
Section 8.9 Good Title......................................................................................39
Section 8.10 Perfection.....................................................................................39
Section 8.11 Places of Business and Locations of Records....................................................40
Section 8.12 Accounts 40
Section 8.13 No Material Adverse Effect.....................................................................40
Section 8.14 Names ......................................................................................40
Section 8.15 Ownership of Borrower; No Subsidiaries.........................................................40
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Section 8.16 Not a Holding Company or an Investment Company.................................................40
Section 8.17 Compliance with Credit and Collection Policy...................................................40
Section 8.18 Solvency 41
Section 8.19 Eligible Receivables...........................................................................41
Section 8.20 Sales by BAI...................................................................................41
ARTICLE IX. COVENANTS OF BORROWER AND SERVICER...................................................................41
Section 9.1 Affirmative Covenants...........................................................................41
9.1.1 Compliance with Laws, Etc.............................................................41
9.1.2 Preservation of Legal Existence.......................................................41
9.1.3 Performance and Compliance with Receivables...........................................41
9.1.4 Credit and Collection Policy..........................................................41
9.1.5 Reporting Requirements................................................................42
(a) Financial Statements.........................................................42
(b) Monthly Reports and Borrowing Base Certificates..............................43
(c) Significant Events...........................................................43
(d) Servicing Certificate........................................................43
(e) Procedures Review............................................................43
(f) Other........................................................................44
9.1.6 Use of Proceeds.......................................................................44
9.1.7 Separate Legal Entity.................................................................44
9.1.8 Adverse Claims on Receivables.........................................................45
9.1.9 Further Assurances....................................................................46
9.1.10 Servicing.............................................................................46
9.1.11 Inspection............................................................................46
9.1.12 Cooperation...........................................................................47
9.1.13 Facility 47
9.1.14 Accounts 47
Section 9.2 Negative Covenants..............................................................................47
9.2.1 Sales, Liens, Etc.....................................................................48
9.2.2 Mergers, Acquisitions, Sales, Subsidiaries, etc.......................................48
9.2.3 Change in Business; Change in Credit and Collection Policy............................48
9.2.4 Other Debt............................................................................48
9.2.5 Organizational Documents..............................................................48
9.2.6 Jurisdiction of Organization; Location of Records.....................................49
9.2.7 Financing Statements..................................................................49
9.2.8 Business Restrictions.................................................................49
9.2.9 Other Agreements; Performance Undertaking.............................................49
ARTICLE X. SIGNIFICANT EVENTS AND THEIR EFFECT...................................................................50
Section 10.1 Events of Default..............................................................................50
10.1.1 Non-Payment of Loans, Etc.............................................................50
10.1.2 Non-Compliance with Other Provisions..................................................50
10.1.3 Breach of Representations and Warranties..............................................50
10.1.4 Bankruptcy............................................................................50
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10.1.5 Tax and ERISA Liens...................................................................50
Section 10.2 Amortization Events............................................................................51
10.2.1 Servicer Event of Default.............................................................51
10.2.2 Collateral Reporting..................................................................51
10.2.3 Borrowing Base Deficit................................................................51
10.2.4 Default Ratio.........................................................................51
10.2.5 Dilution Ratio........................................................................51
10.2.6 Delinquency Ratio.....................................................................51
10.2.7 Event of Default......................................................................51
10.2.8 Validity of Transaction Documents.....................................................51
10.2.9 Termination Date......................................................................51
10.2.10 Performance Undertaking...............................................................51
10.2.11 Change of Control.....................................................................52
Section 10.3 Effect of Significant Event....................................................................52
10.3.1 Optional Termination..................................................................52
10.3.2 Automatic Termination.................................................................52
10.3.3 Notice to Rating Agencies.............................................................52
10.3.4 Italian Receivables...................................................................52
ARTICLE XI. THE SERVICER.........................................................................................52
Section 11.1 Bowater as Initial Servicer....................................................................52
Section 11.2 Certain Duties of the Servicer.................................................................53
11.2.1 Authorization to Act as Borrower's Agent..............................................53
11.2.2 Servicer to Act as Servicer...........................................................53
11.2.3 Collections...........................................................................55
11.2.4 Settlement............................................................................56
Section 11.3 Servicing Compensation.........................................................................56
Section 11.4 Agreement Not to Resign........................................................................56
Section 11.5 Designation of Servicer........................................................................57
Section 11.6 Termination....................................................................................57
Section 11.7 Servicer Events of Default.....................................................................57
11.7.1 Failure to Make Payments and Deposits.................................................57
11.7.2 Non-Compliance with Other Provisions..................................................57
11.7.3 Delegation............................................................................57
11.7.4 Breach of Representations and Warranties..............................................57
11.7.5 Bankruptcy............................................................................57
11.7.6 Judgments.............................................................................57
11.7.7 Cross-Default to Material Debt........................................................58
ARTICLE XII. AGENTS..............................................................................................59
Section 12.1 Authorization and Action.......................................................................59
Section 12.2 Delegation of Duties...........................................................................60
Section 12.3 Exculpatory Provisions.........................................................................60
Section 12.4 Reliance by Agents.............................................................................60
Section 12.5 Notice of Significant Events...................................................................61
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Section 12.6 Non-Reliance on Other Agents and Lenders.......................................................61
Section 12.7 Indemnification of Agents......................................................................61
Section 12.8 Agents in their Individual Capacities..........................................................62
Section 12.9 Conflict Waivers...............................................................................62
Section 12.10 UCC Filings....................................................................................63
ARTICLE XIII. ASSIGNMENTS........................................................................................63
Section 13.1 Restrictions on Assignments....................................................................63
Section 13.2 Documentation..................................................................................63
Section 13.3 Rights of Assignees............................................................................63
Section 13.4 Transfer and Maintenance of Register...........................................................63
ARTICLE XIV. INDEMNIFICATION.....................................................................................64
Section 14.1 General Indemnity of Borrower..................................................................64
Section 14.2 Indemnity of Servicer..........................................................................64
ARTICLE XV. MISCELLANEOUS........................................................................................65
Section 15.1 No Waiver; Remedies............................................................................65
Section 15.2 Amendments, Etc................................................................................65
Section 15.3 Notices, Etc...................................................................................65
Section 15.4 Costs, Expenses and Taxes......................................................................66
Section 15.5 Binding Effect; Survival.......................................................................66
Section 15.6 Captions and Cross References..................................................................66
Section 15.7 Severability...................................................................................67
Section 15.8 Governing Law..................................................................................67
Section 15.9 Counterparts...................................................................................67
Section 15.10 Submission to Jurisdiction; Waiver of Trial by JurY............................................67
Section 15.11 No Recourse Against Conduit Lenders............................................................67
Section 15.12 No Proceedings.................................................................................68
Section 15.13 Confidentiality................................................................................68
Section 15.14 Entire Agreement...............................................................................68
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EXHIBITS AND SCHEDULES
EXHIBIT A Form of Borrowing Request
EXHIBIT B Form of Lender Note
EXHIBIT C Form of Monthly Report
EXHIBIT D Form of Borrowing Base Certificate
EXHIBIT E Form of Performance Undertaking
SCHEDULE 8.12 LockBoxes and LockBox Accounts
SCHEDULE 9.1.5 Procedures Review Requirements
SCHEDULE 15.3 Notice Addresses
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of December
19, 2002, among:
(a) BOWATER FUNDING INC., a Delaware corporation ("BORROWER"),
(b) BOWATER INCORPORATED, a Delaware corporation (together
with its successors, "Bowater"), in its capacity as the initial servicer (in
such capacity, together with its successors and permitted assigns in such
capacity, the "SERVICER"),
(c) THREE PILLARS FUNDING CORPORATION ("THREE PILLARS") and
BLUE RIDGE ASSET FUNDING CORPORATION ("BLUE RIDGE" and together with Three
Pillars, the "CONDUIT LENDERS"),
(d) SUNTRUST BANK ("STB") and WACHOVIA BANK, NATIONAL
ASSOCIATION ("WACHOVIA" and, together with STB, the "COMMITTED LENDERS"),
(e) SUNTRUST CAPITAL MARKETS, INC. ("STCM"), as agent and
administrator for Three Pillars, STB and their respective successors and
permitted assigns (in such capacity, together with its successors and assigns in
such capacity, the "THREE PILLARS AGENT"), and WACHOVIA BANK, NATIONAL
ASSOCIATION, as agent and administrator for Blue Ridge, Wachovia and their
respective successors and permitted assigns (in such capacity, together with its
successors and assigns in such capacity, the "BLUE RIDGE AGENT" and, together
with the Three Pillars Agent, the "CO-AGENTS"), and
(f) SUNTRUST CAPITAL MARKETS, INC., as administrative agent
for the Conduit Lenders, the Committed Lenders and the Co-Agents (in such
capacity, together with its successors and assigns in such capacity, the
"ADMINISTRATIVE AGENT").
BACKGROUND
1. Borrower desires that the Lenders (hereinafter defined)
extend financing to Borrower.
2. Each of the Lenders is willing to extend such financing on
the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
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ARTICLE I.
DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, (a)
capitalized terms used and not otherwise defined herein are used with the
meanings attributed thereto in the Receivables Sale Agreement (hereinafter
defined), and (b) the following terms have the following meanings:
"ACCOUNTS RECEIVABLE TURNOVER RATIO" means, on any date of
determination, the ratio computed as of the last day of the most recent
Calculation Period by dividing (a) the aggregate amount of Credit Sales entered
into during the 12 months ending on with such Calculation Period by (b) the
average month-end amount of the aggregate Unpaid Balance of Receivables during
the 12 months ending with such Calculation Period.
"ADMINISTRATIVE AGENT" has the meaning set forth in the
preamble to this Agreement.
"ADMINISTRATIVE AGENT'S FEE LETTER" means that certain fee
letter dated as of December 19, 2002 by and among Bowater, Borrower and STCM, as
the same may be amended, restated and/or otherwise modified from time to time.
"ADVANCE" means the Loans made on any given date.
"ADVANCE RATE" means the percentage equal to (a) 100% minus
(b) the Reserve Percentage.
"ADVERSE CLAIM" has the meaning specified in the Receivables
Sale Agreement.
"AFFECTED PARTY" means each of the Agents, the Lenders, the
Support Providers, any permitted assignee of any of the foregoing, any holder of
a participation interest in the rights and obligations of any of the foregoing,
and any holding company of any Committed Lender.
"AFFILIATE" of any Person means any other Person that (a)
directly or indirectly controls, is controlled by or is under common control
with such Person or (b) is an officer or director of such Person. A Person shall
be deemed to be "controlled by" another Person if such other Person possesses,
directly or indirectly, power (i) to vote 5% or more of the securities (on a
fully diluted basis) having ordinary voting power for the election of directors
or managing partners of such other Person, or (ii) to direct or cause the
direction of the management and policies of such other Person whether by
contract or otherwise. The word "AFFILIATED" has a correlative meaning.
"AGENTS" means, collectively, the Administrative Agent and the
Co-Agents.
"AGGREGATE EXCESS CONCENTRATION AMOUNT" means, on any date of
determination, the aggregate of all Excess Concentration Amounts, without
double-counting any Receivable that would be excluded by virtue of more than one
clause in the definition of "Concentration Limit."
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"AGGREGATE UNPAID BALANCE" means, on any date of
determination, the aggregate Unpaid Balance of all Eligible Receivables at such
time.
"AGREEMENT" means this Loan Agreement, as it may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms hereof.
"ALTERNATIVE RATE" means:
(a) for any Interest Period while the LIBOR Rate is
unavailable, an interest rate per annum equal to the sum of (i) the
Base Rate, plus (ii) the Applicable Margin,
(b) for any Interest Period until the applicable Lender has
received not less than three (3) Business Days' prior notice that
Borrower wishes to select a LIBOR Rate, an interest rate per annum
equal to the sum of (i) the Base Rate, plus (ii) the Applicable Margin,
and
(c) at all other times, an interest rate per annum equal to
the sum of (i) the LIBOR Rate applicable to such Interest Period, plus
(ii) the LIBOR Margin.
"ALTERNATIVE RATE LOAN" means any Loan that is not funded with
Commercial Paper Notes, including, without limitation, any Loan from and after
the time, if any, when the applicable Conduit Lender transfers such Loan, or
borrows to finance such Loan, under its Liquidity Agreement.
"AMORTIZATION EVENT" means any of the events described in
Section 10.2.
"APPLICABLE MARGIN" has the meaning specified in the
Co-Agents' Fee Letter.
"APPROVED FOREIGN COUNTRY" means each of Puerto Rico, Canada,
Italy and England so long as its sovereign debt is rated at least "A-1" by S&P
and "P-1" by Xxxxx'x.
"BAI" has the meaning set forth in the Receivables Sale
Agreement.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11
U.S.C.ss.101 et seq., as amended.
"BASE RATE" means, on any date of determination, a fluctuating
rate of interest per annum equal to the higher of (a) the Prime Rate, or (b) the
Federal Funds Rate most recently determined by the applicable Co-Agent plus
0.50% per annum.
"BLUE RIDGE" has the meaning set forth in the preamble to this
Agreement.
"BLUE RIDGE AGENT" has the meaning set forth in the preamble
to this Agreement.
"BLUE RIDGE GROUP" means, collectively, (a) Blue Ridge, and
(b) Wachovia and its successors and permitted assigns as Committed Lenders or
Blue Ridge Liquidity Banks.
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"BLUE RIDGE LIQUIDITY AGREEMENT" means that certain liquidity
asset purchase agreement dated as of December 19, 2002 by and among Blue Ridge,
the Blue Ridge Liquidity Banks and Wachovia, as Blue Ridge Agent and liquidity
agent, as the same may be amended, restated and/or otherwise modified from time
to time.
"BLUE RIDGE LIQUIDITY BANKS" means Wachovia and its successors
and permitted assigns under the Blue Ridge Liquidity Agreement.
"BORROWER" has the meaning set forth in the preamble to this
Agreement.
"BORROWER'S ACCOUNT" means account no. 9102524478 at XX Xxxxxx
Chase Manhattan Bank in New York, New York.
"BORROWING BASE" means, on any date, an amount equal to (a)
the product of (i) the Advance Rate, calculated as of the last day of the most
recent Calculation Period, times (ii) the excess, if any, as of the most recent
Calculation Date for which a Borrowing Base Certificate has been (or is required
to have been) delivered of (A) the Aggregate Unpaid Balance, minus (B) the sum
of (i) the accrued reserve for contractual discounts and allowances, and (ii)
the aggregate Excess Concentration Amount minus (b) the Foreign Currency Reserve
as of the Calculation Date referred to in "(a)(ii)" above.
"BORROWING BASE CERTIFICATE" means a certificate,
substantially in the form of Exhibit D hereto, duly executed by an authorized
Senior Executive of Servicer.
"BORROWING BASE DEFICIT" means, on any date of determination,
an amount equal to the excess, if any, of (a) the aggregate principal amount of
all outstanding Advances at such time over (b) the Borrowing Base.
"BORROWING REQUEST" means a notice in the form of Exhibit A
(or, if acceptable to the Co-Agents, the information required therein may be
given by telephone and promptly confirmed via fax) specifying the date and
amount of the requested Advance, each Group's Funding Amount and, in the case of
Three Pillars, the duration of the requested CP Tranche Period.
"BOWATER" has the meaning set forth in the preamble to this
Agreement.
"BOWATER DOWNGRADE" has the meaning set forth in the
Receivables Sale Agreement.
"BROKEN FUNDING COSTS" means:
(a) for any CP Loan (i) of Blue Ridge which has its principal
reduced without compliance by Borrower with the notice requirements
hereunder, (ii) of Three Pillars which has its principal reduced on any
date other than the last day of the applicable CP Tranche Period and
(iii) which is assigned by the applicable Conduit Lender to its
Liquidity Banks under its Liquidity Agreement or any other applicable
Support Agreement, an amount equal to the excess, if any, of (A) the
amount of interest that would have accrued at the Commercial Paper Rate
during
4
the remainder of the applicable Interest Periods or CP Tranche Periods
for the Related Commercial Paper subsequent to the date of such
reduction or assignment of the principal of such Loan if such reduction
or assignment had not occurred, over (B) the sum of (1) to the extent
all or a portion of such principal is allocated to another Loan, the
amount of interest actually accrued during the remainder of such period
on such principal for the new Loan, and (2) to the extent such
principal is not allocated to another Loan, the income, if any,
actually received during the remainder of such period by the holder of
such Loan from investing the portion of such principal not so
allocated,
(b) for any CP Loan or LIBOR Loan not prepaid following
delivery of any prepayment notice, the reasonable expenses, if any,
actually incurred by the applicable Lenders following receipt of such
prepayment notice and in connection therewith, and
(c) for any LIBOR Loan that is prepaid on a date other than
the last day of its Interest Period, the excess, if any, of (A) the
amount of interest that would have accrued at the LIBOR Rate during the
remainder of the applicable Interest Periods subsequent to the date of
such prepayment if such prepayment had not occurred, over (B) the sum
of (1) to the extent all or a portion of such principal is allocated to
another Loan, the amount of interest actually accrued during the
remainder of such period on such principal for the new Loan, and (2) to
the extent such principal is not allocated to another Loan, the income,
if any, actually received during the remainder of such period by the
holder of such Loan from investing the portion of such principal not so
allocated
All Broken Funding Costs shall be due and payable hereunder upon demand.
"BUSINESS DAY" means any day on which (a) commercial banks in
New York, New York, and Atlanta, Georgia, are not authorized or required to be
closed and The Depository Trust Company of New York is open for business, and
(b) in the case of a Rate Setting Date for Loans bearing interest by reference
to the LIBOR Rate, banks are open for business in London, England.
"CALCULATION DATE" means the last Business Day of each
Calculation Period; provided that, as to any delivery of a Borrowing Base
Certificate, at any time while (a) Bowater's unsecured senior debt is
Split-Rated, the Calculation Date shall be the fifteenth (15th) day of a
calendar month, or (b) Bowater's unsecured senior debt is rated both "BB+" or
less by S&P and "Ba1" or less by Moody's, the Calculation Date shall be the last
Business Day of each week.
"CALCULATION PERIOD" means a calendar month.
"CHARGE-OFF" means a Receivable not previously deemed a
Defaulted Receivable that is written-off by the Servicer or should, in
accordance with the Credit and Collection Policy, be written-off.
5
"CLOSING DATE" means December 20, 2002, the date of the first
Advance hereunder.
"CO-AGENTS" has the meaning set forth in the preamble to this
Agreement.
"CO-AGENTS' FEE LETTER" means that certain fee letter dated as
of December 19, 2002 by and among Bowater, Borrower and the Co-Agents, as the
same may be amended, restated and/or otherwise modified from time to time.
"COLLATERAL" has the meaning set forth in Section 5.1(a).
"COLLECTIONS" has the meaning set forth in the Receivables
Sale Agreement.
"COMMERCIAL PAPER NOTES" means short-term promissory notes
issued by any of the Conduit Lenders to fund its Loans or investments in
receivables or other financial assets.
"COMMERCIAL PAPER RATE" means:
(a) For any CP Tranche Period of Three Pillars, a rate per
annum equal to the sum of (i) the rate or, if more than one rate, the weighted
average of the rates, determined by converting to an interest-bearing equivalent
rate per annum the discount rate (or rates) at which Three Pillars' Related
Commercial Paper outstanding during such CP Tranche Period has been or may be
sold by any placement agent or commercial paper dealer selected by the Three
Pillars Agent, plus (ii) the commissions and charges charged by such placement
agent or commercial paper dealer with respect to such Related Commercial Paper,
expressed as a percentage of the face amount thereof and converted to an
interest-bearing equivalent rate per annum;
(b) For any CP Tranche Period of Blue Ridge, the rate per
annum that, when applied to the outstanding principal balance of Blue Ridge's
Loans during such CP Tranche Period for the actual number of days elapsed on a
360-day year basis would equate to Blue Ridge's CP Costs for such CP Tranche
Period; and
"COMMITMENT" means, as to each Committed Lender, its
commitment to make Loans to Borrower in an aggregate principal amount at any one
time outstanding not exceeding the amount set forth below its signature to this
Agreement.
"COMMITMENT TERMINATION DATE" means, with respect to the
Committed Lenders, the earliest to occur of (i) the Scheduled Commitment
Termination Date, (ii) the date of any termination of the Committed Lenders'
Commitments pursuant to Section 2.6, (iii) the effective date on which the
Committed Lenders' Commitments are terminated pursuant to Section 10.3, and (iv)
the Liquidity Termination Date of any Conduit Lender.
"COMMITTED LENDERS" has the meaning set forth in the preamble
to this Agreement.
"CONCENTRATION LIMIT" means, as to the applicable group of
Eligible Receivables:
6
(a) for each Obligor whose short term unsecured debt ratings
are (i) equal to A-1+ by S&P and P-1 by Moody's, 12% of the Aggregate
Unpaid Balance; (ii) greater than or equal to A-1 by S&P and P-1 by
Moody's, 10% of the Aggregate Unpaid Balance; (iii) greater than or
equal to A-2 by S&P and P-2 by Moody's but less than the ratings in
clause (ii) 6% of the Aggregate Unpaid Balance; or (iv) less than A-2
by S&P or P-2 by Moody's, 3% of the Aggregate Unpaid Balance; or
(b) for each Obligor who does not have short term unsecured
debt ratings from both S&P and Moody's of at least the levels set forth
in clause (a)(i), (ii) or (iii) above but who has long term unsecured
debt ratings from both S&P and Moody's which are (i) greater than or
equal to both AA by S&P and Aa2 by Moody's, 12% of the Aggregate Unpaid
Balance; (ii) greater than or equal to both A- by S&P and A3 by Moody's
but less than the ratings in clause (i), 10% of the Aggregate Unpaid
Balance; or (iii) greater than or equal to BBB- by S&P and Baa3 by
Moody's but less than the ratings in clause (ii), 6% of the Aggregate
Unpaid Balance;
(c) for each Obligor who does not have short term unsecured
debt ratings or long term unsecured debt ratings from both S&P and
Moody's and is not a Special Obligor, 3% of the Aggregate Unpaid
Balance;
(d) for each Special Obligor, 6% of the Aggregate Unpaid
Balance;
(e) for all Obligors domiciled in Italy considered in the
aggregate, 4.0% of the Aggregate Unpaid Balance;
(f) for all Obligors domiciled in Approved Foreign Countries
(including Italy) considered in the aggregate, 15% of the Aggregate
Unpaid Balance of which 15% up to two-thirds (2/3) may be denominated
in Canadian dollars or Pounds Sterling;
(g) for all Eligible Receivables with payment terms of 31-45
days, 25% of the Aggregate Unpaid Balance; and
(h) for all Eligible Receivables with payment terms of 46-90
days, 15% of the Aggregate Unpaid Balance,
provided that (1) the limitations set forth in the foregoing clauses (a)-(d)
above shall apply to each specified Obligor and its Affiliates, considered as if
they were one and the same Person, and (2) in the event that any Obligor has
both long-term and short-term unsecured debt ratings from both S&P and Moody's
that are covered under the foregoing clauses (a) and (b), the short-term debt
ratings under clause (a) above shall control;
"CONDUIT LENDERS" has the meaning set forth in the preamble to
this Agreement.
"CONTRACT" has the meaning set forth in the Receivables Sale
Agreement.
7
"COVERED TAXES" means Taxes other than Excluded Taxes.
"CP COSTS" means, for Blue Ridge for each day, the sum of (i)
discount or interest accrued on its Pooled Commercial Paper on such day, plus
(ii) any and all accrued commissions in respect of its placement agents and
Commercial Paper Note dealers, and issuing and paying agent fees incurred, in
respect of such Pooled Commercial Paper for such day, plus (iii) other costs
associated with funding small or odd-lot amounts with respect to all receivable
purchase or financing facilities which are funded by its Pooled Commercial Paper
for such day, minus (iv) any accrual of income net of expenses received on such
day from investment of collections received under all receivable purchase or
financing facilities funded substantially with its Pooled Commercial Paper,
minus (v) any payment received on such day net of expenses in respect of Broken
Funding Costs related to the prepayment of any investment of Blue Ridge pursuant
to the terms of any receivable purchase or financing facilities funded
substantially with Pooled Commercial Paper. In addition to the foregoing net
costs, if Borrower shall request any Loan during any period of time determined
by the Blue Ridge Agent in its sole discretion to result in incrementally higher
CP Costs applicable to such Loan, the principal associated with any such Loan
shall, during such period, be deemed to be funded by Blue Ridge in a special
pool (which may include capital associated with other receivable purchase or
financing facilities) for purposes of determining CP Costs applicable to such
Loan.
"CP LOAN" means a Loan made by a Conduit Lender at any time it
is funded or maintained with the proceeds of Commercial Paper Notes.
"CP TRANCHE PERIOD" means:
(a) with respect to Three Pillars' CP Loans, a period of days
from 1 Business Day up to the number of days necessary to extend such
period to include the next Distribution Date, commencing on a Business
Day which period is either (i) requested by Borrower and agreed to by
such Conduit Lender or its Co-Agent or (ii) in the absence of such
request and agreement, selected by such Conduit Lender or its Co-Agent
(it being understood that the goal shall be to select a period which
ends on or as close to the next Distribution Date as possible), and
(b) with respect to Blue Ridge, each month (or portion
thereof) ending on a Distribution Date, during which Blue Ridge has any
outstanding CP Loan hereunder.
"CREDIT AND COLLECTION POLICY" has the meaning set forth in
the Receivables Sale Agreement.
"CREDIT SALES" means, for any period of determination, the
aggregate amount of all Receivables originated by any Seller during such period.
"DAYS SALES OUTSTANDING RATIO" means, on any date of
determination, the ratio computed as of the last day of the most recent
Calculation Period by dividing (a) 360 by (b) the Accounts Receivable Turnover
Ratio for the most recent Calculation Period.
8
"DEBT" of any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) all indebtedness of such
Person for the deferred purchase price of property or services (other than
property and services purchased, and expense accruals and deferred compensation
items arising, in the ordinary course of business), (iii) all obligations of
such Person evidenced by notes, bonds, debentures or other similar instruments
(other than performance, surety and appeal bonds arising in the ordinary course
of business), (iv) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (v) all obligations of such Person under leases which
have been or should be, in accordance with GAAP, recorded as capital leases, to
the extent required to be so recorded, (vi) all reimbursement, payment or
similar obligations of such Person, contingent or otherwise, under acceptance,
letter of credit or similar facilities (other than letters of credit in support
of trade obligations or in connection with workers' compensation, unemployment
insurance, old-age pensions and other social security benefits in the ordinary
course of business), (vii) all net obligations of such Person in respect of
interest rate swap, cap, collar, swaption, option or similar agreements, (viii)
all obligations arising in connection with a sale or other transfer of any of
such Person's financial assets which are, or are intended to be, classified as
loans for federal tax purposes, (ix) all Debt referred to in clauses (i) through
(viii) above guaranteed directly or indirectly by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (A) to pay
or purchase such Debt or to advance or supply funds for the payment or purchase
of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against loss
in respect of such Debt, (C) to supply funds to or in any other manner invest in
the debtor (including any agreement to pay for property or services irrespective
of whether such property is received or such services are rendered) or (D)
otherwise to assure a creditor against loss in respect of such Debt, and (x) all
Debt referred to in clauses (i) through (viii) above secured by (or for which
the holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any lien, security interest or other charge or encumbrance upon or
in property (including, without limitation, accounts and contract rights) owned
by such Person, even though such Person has not assumed or become liable for the
payment of such Debt.
"DEFAULT RATE" means the sum of (i) the Base Rate applicable
from time to time (but not less than the interest rate in effect for such Loan
as at the date of the Significant Event giving rise thereto), plus (ii) 2.00%
per annum.
"DEFAULT RATIO" means, on any date of determination, the ratio
(expressed as a percentage) computed as of the last day of most recent
Calculation Period by dividing (a) the sum (without double counting) of (i) the
Unpaid Balance of Receivables that became Defaulted Receivables during such
Calculation Period, plus (ii) the Unpaid Balance of Receivables that became
Charge-Offs during such Calculation Period by (b) Credit Sales for the
Calculation Period ending 4 months prior to beginning of such Calculation
Period.
"DEFAULTED RECEIVABLE" means, as of any date of determination,
any Receivable (i) which the Servicer has or should have charged-off or deemed
uncollectible in accordance with the Credit and Collection Policy after taking a
reasonable time to apply Collections received to
9
applicable invoices and reconcile the amount of such Receivable, (ii) as to
which, as of such date of determination, any payment, or part thereof, remains
unpaid for 91 days or more past the due date for such payment, determined by
reference to the original contractual payment terms of such Receivable or (iii)
unless each of the Agents in its sole discretion has otherwise agreed, as to
which the Obligor thereon has suffered an Event of Bankruptcy.
"DELINQUENCY RATIO" means, as of any date of determination,
the ratio (expressed as a percentage) computed as of the last day of the most
recent Calculation Period, by dividing (a) the Unpaid Balance of Receivables
that are Delinquent Receivables as of such date by (b) an amount equal to the
Aggregate Unpaid Balance as of such date minus the Aggregate Excess
Concentration Amounts as of such date.
"DELINQUENT RECEIVABLE" means, as of any date of
determination, any Receivable as to which, as of such date of determination, any
payment, or part thereof, remains unpaid for 61-90 days past the due date for
such payment, determined by reference to the original contractual payment terms
of such Receivable.
"DEMAND LOAN" means a loan made by Borrower to BAI or Bowater
at a market rate of interest that is payable on demand and is not evidenced by a
promissory note or other instrument.
"DILUTION HORIZON RATIO" means, on any date of determination,
the ratio (expressed as a percentage) computed as of the last day of the most
recent Calculation Period by dividing (a) an amount equal to the sum of (i)
Credit Sales for such Calculation Period plus (ii) 50% of the Credit Sales for
the Calculation Period immediately preceding the Calculation Period described in
clause (i) by (b) an amount equal to (i) the Aggregate Unpaid Balance as of such
last day minus (ii) the Aggregate Excess Concentration Amount as of such last
day.
"DILUTION RATIO" means, on any date of determination, the
ratio (expressed as a percentage) computed as of the last day of the most recent
Calculation Period by dividing (a) Dilutions for such Calculation Period by (b)
Credit Sales for the Calculation Period immediately preceding the Calculation
Period described in clause (a).
"DILUTION RESERVE" means, on any date of determination, the
product computed as of the last day of the most recent Calculation Period, of
(a) the sum of (i) the product of (x) the Stress Factor times (y) the Expected
Dilution Ratio plus (ii) the product of (x) the positive difference, if any,
between (1) the Dilution Spike Rate less (2) the Expected Dilution Ratio times
(y) a ratio computed by dividing (1) the Dilution Spike Rate by (2) the Expected
Dilution Ratio times (b) the Dilution Horizon Ratio.
"DILUTION SPIKE RATE" means, on any date of determination, the
highest Dilution Ratio over the 12-month period ending on the last day of the
most recent Calculation Period.
"DILUTIONS" means, for any period of determination, the
aggregate amount of returns, allowances, net credits and any other non-cash
reductions to the Credit Sales during such period; provided, that "Dilutions"
shall not include any write-down, reserve or other reduction due to a Receivable
subsequently becoming a Defaulted Receivable or otherwise bearing on the
10
uncollectability of such Receivable on account of the insolvency, bankruptcy,
lack of credit worthiness or financial inability to pay of the applicable
Obligor.
"DISTRIBUTION DATE" means the 14th day of each calendar month
after the Closing Date (or if any such day is not a Business Day, the next
succeeding Business Day).
"DOCUMENTS" means all documentation relating to the
Receivables including, without limitation, the Contracts, billing statements and
computer records and programs.
"DOLLAR(S)" and the sign "$" shall mean lawful money of the
United States of America.
"ELIGIBLE RECEIVABLE" means each Receivable that meets the
following criteria:
(a) that was created by Bowater or BAI (i) in compliance, in
all material respects, with its Credit and Collection Policy and (ii)
in the ordinary course of its business;
(b) that was documented in all material respects in compliance
with the applicable Seller's standard administration and documentation
policies and procedures;
(c) that is not a Delinquent Receivable or a Defaulted
Receivable;
(d) as to which, at the time of the sale or contribution of
such Receivable to Borrower, BAI was the sole owner thereof and had
good and marketable title thereto, free and clear of all Adverse
Claims, and which was sold or contributed to Borrower pursuant to the
Receivables Sale Agreement free and clear of all Adverse Claims other
than in favor of the Administrative Agent for the benefit of the
Secured Parties;
(e) the assignment of which by each applicable Seller to each
applicable Transferee pursuant to the Receivables Sale Agreement does
not contravene or conflict in any material respect with any applicable
law, rule or regulation or any contractual or other restriction,
limitation or encumbrance, and the sale or assignment of which does not
require the consent of the Obligor thereof;
(f) (i) which is denominated and payable in Dollars, or (ii)
which is denominated and payable in Canadian dollars or Pounds Sterling
and, in any event, is only payable in the United States of America or
to the LockBox at Wachovia Bank, National Association, in London,
England identified on Schedule 8.12 once the related LockBox Account is
subject to a perfected assignment for collateral purposes;
(g) the Obligor of which is a resident or organized under the
laws of the United States or an Approved Foreign Country;
11
(h) the Obligor of which is not an officer, director or
Affiliate of any Seller or Borrower;
(i) the Obligor of which is not a Governmental Authority;
(j) that is in full force and effect and constitutes the
legally valid and binding payment obligation of the Obligor with
respect thereto, enforceable against such Obligor in accordance with
its terms and is not subject to any dispute, right of rescission,
set-off, counterclaim or any other defense (including defenses arising
out of violations of usury laws) of the applicable Obligor against the
applicable Seller or any other Adverse Claim, and the Obligor thereon
holds no right as against such Seller to cause such Seller to
repurchase the goods the sale of which shall have given rise to such
Receivable (except with respect to sale discounts effected pursuant to
the Contract, or goods returned in accordance with the terms of the
Contract);
(k) that does not contravene in any material respect any
applicable requirements of law (including without limitation all laws,
rules and regulations relating to truth in lending, fair credit
billing, fair credit reporting, fair debt collection practices and
privacy) and which complies in all material respects with all
applicable requirements of law and with respect to which all consents,
licenses, approvals or authorizations of, or registrations or
declarations with, any governmental authority required to be obtained,
effected or given by the related Seller in connection with the creation
or the execution, delivery and performance of such Receivable, have
been duly obtained, effected or given and are in full force and effect;
(l) that complies with all applicable requirements of the
Credit and Collection Policy;
(m) as to which each of Borrower's ownership interest and the
Administrative Agent's (for the benefit of the Secured Parties) first
priority security interest in such Receivable has been perfected under
the applicable Uniform Commercial Code and other applicable laws;
(n) as to which the Servicer is in possession of the related
Receivable File;
(o) which provides for repayment in full of the Unpaid Balance
thereof within 90 days of the date of the creation thereof;
(p) the terms of which have not been modified or waived except
as permitted under the Credit and Collection Policy and this Agreement;
(q) which constitutes an "account" or a "payment intangible"
under and as defined in Article 9 of the Uniform Commercial Code of all
applicable jurisdictions; and
12
(r) as to which the applicable Seller has satisfied and fully
performed all obligations on its part with respect to such Receivable
required to be fulfilled by it, and no further action is required to be
performed by any Person with respect thereto other than payment thereon
by the applicable Obligor.
"EVENT OF BANKRUPTCY" shall be deemed to have occurred with
respect to a Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up,
or composition or readjustment of debts of such Person, the appointment
of a trustee, receiver, custodian, liquidator, assignee, sequestrator
or the like for such Person or all or substantially all of its assets,
or any similar action with respect to such Person under any law
relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts and, solely in the case of Borrower,
such case or proceeding shall continue undismissed, or unstayed and in
effect, for a period of 60 consecutive days; or an order for relief in
respect of such Person shall be entered in an involuntary case under
the federal bankruptcy laws or other similar laws now or hereafter in
effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) for such Person or for any substantial part of
its property, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay
its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to authorize any of the
foregoing.
"EVENT OF DEFAULT" means any of the events described in
Section 10.1.
"EXCESS CONCENTRATION AMOUNT" means, on any date of
determination, with respect to each Concentration Limit, the amount, if any, by
which the aggregate Unpaid Balance of Eligible Receivables for the applicable
group of Eligible Receivables covered by such Concentration Limit exceeds the
limit therefore set forth in the definition of "Concentration Limit".
"EXCLUDED TAXES" means, in the case of any Indemnified Party,
taxes imposed on its overall net income, and franchise taxes and branch profit
taxes based on net income, imposed on it by any jurisdiction.
"EXPECTED DILUTION RATIO" means, on any date of determination,
the rolling twelve-month average Dilution Ratio for the 12-month period ending
on the last day of the most recent Calculation Period.
"FACILITY LIMIT" means $200,000,000.
13
"FEDERAL FUNDS RATE" means, for any period, the per annum rate
set forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (including any
such successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)." If, at the time of calculation, such rate for any relevant day, is
not yet published in H.15(519), the rate for such day will be the rate set forth
in the daily statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor publications,
published by the Federal Reserve Bank of Atlanta (including any such successor,
the "COMPOSITE 3:30 P.M. QUOTATIONS") for such day under the caption "Federal
Funds Effective Rate." If, at the time of calculation, the appropriate rate for
any relevant day is not yet published in either H.15(519) or the Composite 3:30
p.m. Quotations, the rate for such day will be the arithmetic mean as determined
by Bank of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by the
applicable Co-Agent.
"FEE LETTERS" means (a) the Co-Agents' Fee Letter, and (b) the
Administrative Agent's Fee Letter.
"FEES" means all fees and other amounts payable by Borrower to
any of the Agents or the Lenders pursuant to a Fee Letter.
"FITCH" means Fitch, Inc., and any successor thereto.
"FOREIGN CURRENCY RESERVE" means, on any date of
determination, an amount equal to 7.5% of the spot market Dollar-equivalent of
all Eligible Receivables otherwise included in the Borrowing Base which are
denominated in Canadian dollars plus 25% of the spot market Dollar-equivalent of
all Eligible Receivables otherwise included in the Borrowing Base which are
denominated in Pounds Sterling.
"FUNDING AMOUNT" has the meaning set forth in Section 2.1(a).
"GAAP" has the meaning set forth in the Receivables Sale
Agreement.
"GOVERNMENTAL AUTHORITY" has the meaning set forth in the
Receivables Sale Agreement.
"GROUP" means any of (a) the Blue Ridge Group or (b) the Three
Pillars Group, as the case may be.
"GROUP PERCENTAGE" means, as to each Group, the ratio
(expressed as a percentage) which the aggregate Commitments of all Committed
Lenders in such Group bear to the aggregate Commitments of all Committed Lenders
in all Groups.
"INCIPIENT BANKRUPTCY" means that any of the Agents shall have
been informed by Borrower, Servicer or any of their Affiliates or shall have
otherwise reasonably determined that Borrower or Servicer is about to commence
or to become the subject of a case or proceeding of the type described in the
definition of "EVENT OF BANKRUPTCY."
14
"INDEMNIFIED AMOUNTS" has the meaning set forth in Section
14.1.
"INDEMNIFIED PARTY" has the meaning set forth in Section 14.1.
"INTEREST PERIOD" means:
(a) with respect to any CP Loan, its CP Tranche Period;
(b) with respect to any Alternative Rate Loan: (i) initially,
the period commencing on the date of the initial funding of such Loan
by a Committed Lender, Liquidity Bank or STB, as the case may be, and
ending on (but excluding) the Business Day immediately preceding the
next following Distribution Date, and (ii) thereafter, each period
commencing on (and including) the Business Day immediately preceding a
Distribution Date and ending on (but excluding) the Business Day
immediately preceding the next following Distribution Date;
PROVIDED, HOWEVER, that if any Interest Period for any Loan that commences
before the Commitment Termination Date would otherwise end on a date occurring
after such Commitment Termination Date, such Interest Period shall end on such
Commitment Termination Date and the duration of each such Interest Period that
commences on or after the Commitment Termination Date, if any, shall be of such
duration as shall be selected by the applicable Co-Agent.
"LENDERS" means, collectively, the Conduit Lenders and the
Committed Lenders and "LENDER" means anyone of them.
"LIBOR LOAN" means a Loan made by a Committed Lender at any
time it bears interest at a LIBOR Rate.
"LENDER NOTE" has the meaning set forth in Section 2.7.
"LIBOR MARGIN" means 0.75% per annum.
"LIBOR RATE" means, for any Interest Period, the rate per
annum on the Rate Setting Day of such Interest Period shown on page 3750 of
Telerate or any successor page as the composite offered rate for London
interbank deposits for one month, as shown under the heading "USD" as of 11:00
a.m. (London time); PROVIDED that in the event no such rate is shown, the LIBOR
Rate shall be the rate per annum (rounded upwards, if necessary, to the nearest
1/100th of one percent) based on the rates at which Dollar deposits for one
month are displayed on page "LIBOR" of the Reuters Screen as of 11:00 a.m.
(London time) on the Rate Setting Day (it being understood that if at least two
(2) such rates appear on such page, the rate will be the arithmetic mean of such
displayed rates); PROVIDED FURTHER, that in the event fewer than two (2) such
rates are displayed, or if no such rate is relevant, the LIBOR Rate shall be the
rate per annum equal to the average of the rates at which deposits in Dollars
are offered by the applicable Co-Agent at approximately 11:00 a.m. (London time)
on the Rate Setting Day to prime banks in the London interbank market for a one
month.
15
"LIQUIDITY AGREEMENT" means any of the Blue Ridge Liquidity
Agreement or the Three Pillars Liquidity Agreement.
"LIQUIDITY BANK" means any of the Blue Ridge Liquidity Banks
or the Three Pillars Liquidity Banks.
"LIQUIDITY TERMINATION DATE" means, with respect to each of
the Conduit Lenders, the earlier to occur of (a) December 18, 2003, as such date
may be extended from time to time by such Conduit Lender's Liquidity Banks in
accordance with its Liquidity Agreement, and (b) the occurrence of an Event of
Bankruptcy with respect to such Conduit Lender.
"LOAN" means each revolving loan made on a given date at a
given rate by a Lender to Borrower pursuant to this Agreement.
"LOCKBOX" means a postal box maintained on behalf of Borrower
or the Servicer for the purpose of receiving checks and money orders
constituting Collections of the Receivables.
"LOCKBOX ACCOUNT" means any of those bank accounts described
on Schedule 8.12 hereto and any additional or replacement account to which Mail
Payments, wire transfers, SWIFT, ACH or other electronic payments are deposited
for clearing.
"LOCKBOX ACCOUNT AGREEMENT" means an agreement among a Seller,
Borrower, the Administrative Agent and the bank holding any LockBox Account, in
a form reasonably acceptable to the Agents.
"LOSS HORIZON RATIO" means, on any date of determination:
(1) Except as provided in clauses (2) and (3) below, the ratio
(expressed as a percentage) computed as of the last day of the most
recent Calculation Period by dividing (a) the sum of (i) Credit Sales
for such Calculation Period, plus (ii) Credit Sales for the immediately
preceding Calculation Period, plus (iii) Credit Sales for the second
(2nd) immediately preceding Calculation Period plus (iv) Credit Sales
for the third (3rd) immediately preceding Calculation Period plus (v)
43% of Credit Sales for the fourth (4th) immediately preceding
Calculation Period, by (b) an amount equal to the Aggregate Unpaid
Balance as of the last day of the most recent Calculation Period, minus
the Aggregate Excess Concentration Amount as of such last day;
(2) At any time while Bowater's unsecured senior debt is
Split-Rated, the ratio (expressed as a percentage) computed as of the
last day of the most recent Calculation Period by dividing (a) the sum
of (i) Credit Sales for such Calculation Period, plus (ii) Credit Sales
for the immediately preceding Calculation Period plus (iii) Credit
Sales for the second (2nd) immediately preceding Calculation Period
plus (iv) 93% of Credit Sales for the third (3rd) immediately preceding
Calculation Period, by (b) an amount equal to the Aggregate Unpaid
Balance as of the last day of the most recent Calculation Period, minus
the Aggregate Excess Concentration Amount as of such last day; and
16
(3) At any time while Bowater's unsecured senior debt is rated
both "BB+" or less by S&P and "Ba1" or less by Moody's, the ratio
(expressed as a percentage) computed as of the last day of the most
recent Calculation Period by dividing (a) the sum of (i) Credit Sales
for such Calculation Period, plus (ii) Credit Sales for the immediately
preceding Calculation Period plus (iii) Credit Sales for the second
(2nd) immediately preceding Calculation Period plus (iv) 66% of Credit
Sales for the third (3rd) immediately preceding Calculation Period, by
(b) an amount equal to the Aggregate Unpaid Balance as of the last day
of the most recent Calculation Period, minus the Aggregate Excess
Concentration Amount as of such last day.
"LOSS RESERVE" means, on any date of determination, the
product of (i) the highest rolling 3-month average Default Ratio over the 12
months ending with the most recent Calculation Period, (ii) the Loss Horizon
Ratio as of the last day of the most recent Calculation Period, and (iii) the
Stress Factor.
"MAIL PAYMENTS" has the meaning specified in Section
11.2.3(a).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) on the business, property, condition (financial or otherwise) or results of
operations or prospects of (i) Bowater and its Subsidiaries taken as a whole, or
(ii) Borrower, (b) the ability of Borrower or Bowater to perform its respective
obligations under this Agreement or any other Transaction Document to which it
is a party, (c) the legality, validity or enforceability of the Agreement or any
other Transaction Document, (d) the existence, validity, perfection or priority
of (i) the Administrative Agent's (for the benefit of the Secured Parties)
security interest in the Collateral, or (ii) Borrower's ownership interest in
the Receivables; or (e) the validity, enforceability or collectibility of the
Receivables generally or of any material portion of the Receivables.
"MATERIAL DEBT" has the meaning specified in the Receivables
Sale Agreement.
"MONTHLY REPORT" means a report, substantially in the form of
Exhibit C or in such other form acceptable to the Co-Agents, prepared by
Servicer as of the last day of the most recent Calculation Period and signed by
an authorized Senior Executive of Servicer.
"MOODY'S" means Xxxxx'x Investors Service, Inc. and its
successors.
"NET WORTH" with respect to Borrower has the meaning specified
in the Receivables Sale Agreement.
"OBLIGATIONS" means all obligations (monetary or otherwise) of
Borrower to any of the Secured Parties and their respective successors,
permitted transferees and assigns arising under or in connection with this
Agreement, any Lender Note and each other Transaction Document, in each case,
however created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due.
"OBLIGOR" means, with respect to any Receivable, each Person
obligated to make payments with respect to such Receivable, including any
guarantor thereof.
17
"ORGANIZATIONAL DOCUMENTS" has the meaning specified in the
Receivables Sale Agreement.
"OUTSTANDING BALANCE" has the meaning specified in the
Receivables Sale Agreement.
"PERCENTAGE" means, as to any Committed Lender, the ratio
(expressed as a percentage) of such Committed Lender's Commitment to the
aggregate Commitments of all Committed Lenders in the same Group.
"PERFORMANCE GUARANTOR" means Bowater.
"PERFORMANCE UNDERTAKING" means a Performance Undertaking in
the form of Exhibit E hereto, duly executed by the Performance Guarantor in
favor of Borrower.
"PERMITTED INVESTMENT" means, at any time:
(a) marketable obligations issued by, or the full and timely
payment of which is directly and fully guaranteed or insured by, the
United States government or any other government with an equivalent
rating, or any agency or instrumentality thereof when such marketable
obligations are backed by the full faith and credit of the United
States government or such other equivalently rated government, as the
case may be, but excluding any securities which are derivatives of such
obligations;
(b) time deposits, bankers' acceptances and certificates of
deposit of any domestic commercial bank or any United States branch or
agency of a foreign commercial bank which (i) has capital, surplus and
undivided profits in excess of $100,000,000 and which has a commercial
paper or certificate of deposit rating meeting the requirements
specified in clause (c) below (or equivalent rating from the Rating
Agencies) or (ii) is set forth in a list (which may be updated from
time to time) (A) approved by the Agents and (B) with respect to which
a written statement has been obtained from each of the applicable
Rating Agencies to the effect that the rating of the Commercial Paper
Notes rated by them will not be downgraded or withdrawn solely as a
result of the acquisition of such investments;
(c) commercial paper which is (i) rated at least as high as
the Commercial Paper Notes by the Rating Agencies, or (ii) set forth in
a list (which may be updated from time to time) (A) approved by the
Agents and (B) with respect to which a written statement has been
obtained from each of the applicable Rating Agencies to the effect that
the rating of the Commercial Paper Notes rated by them will not be
downgraded or withdrawn solely as a result of the acquisition of such
investments;
(d) secured repurchase obligations for underlying securities
of the types described in clauses (a) and (b) above entered into with
any bank of the type described in clause (b) above; and
18
(e) freely redeemable shares in (i) money market or similar
funds which invest solely in obligations, bankers' acceptances, time
deposits, certificates of deposit, repurchase agreements and commercial
paper of the types described in clauses (a) through (d) above, without
regard to the limitations as to the maturity of such obligations,
bankers' acceptances, time deposits, certificates of deposit,
repurchase agreements or commercial paper set forth below, which are
rated at least "AAm" or "AAmg" or their equivalent by both S&P and
Moody's, provided that there is no "r-highlighter" affixed to such
rating, and (ii) the money market fund called Nations Cash Reserves, so
long as Nations Cash Reserves continues to buy only "first tier"
securities as defined by Rule 2a-7 of the Investment Company Act of
1940.
"PERSON" has the meaning set forth in the Receivables Sale
Agreement
"POOLED COMMERCIAL PAPER" means Commercial Paper Notes of Blue
Ridge subject to any particular pooling arrangement by such Conduit Lender, but
excluding Commercial Paper Notes issued by such Conduit Lender for a tenor and
in an amount specifically requested by any Person in connection with any
agreement effected by such Conduit Lender.
"PRIME RATE" means as of any date of determination, the rate
of interest most recently announced in the Wall Street Journal as the "prime
rate."
"PROCEDURES REVIEW" means a report of independent certified
public accountants selected by the Agents which satisfies the requirements set
forth on Schedule 9.1.5.
"PROGRAM DOCUMENTS" means, as to each of the Conduit Lenders,
its Support Agreements, the documents under which the applicable Co-Agent
performs its obligations with respect to such Conduit Lender's commercial paper
program and the other documents to be executed and delivered in connection
therewith, as amended, supplemented, restated or otherwise modified from time to
time.
"PURCHASE PRICE CREDIT" has the meaning set forth in the
Receivables Sale Agreement
"RATE SETTING DAY" means, for any Interest Period, two (2)
Business Days prior to the commencement of such Interest Period. In the event
such day is not a Business Day, then the Rate Setting Day shall be the
immediately preceding Business Day.
"RATING AGENCY" means (a) S&P, (b) Moody's, and (c) solely to
the extent it is rating any of the Commercial Paper Notes of any Conduit
Purchaser, Fitch.
"RECEIVABLE" has the meaning specified in the Receivables Sale
Agreement.
"RECEIVABLE FILE" means with respect to a Receivable, (a) the
Contract giving rise to the Receivable and other evidences of the Receivable
including, without limitation, electronic files, tapes, discs, punch cards and
related property and rights and (b) each UCC financing statement related
thereto, if any.
19
"RECEIVABLES SALE AGREEMENT" means the Receivables Sale
Agreement, dated as of December 19, 2002, by and among Sellers, as sellers, and
Borrower, as buyer, as such Receivables Sale Agreement may be amended,
supplemented, restated or otherwise modified from time to time with the prior
written consent of each of the Agents.
"REGULATORY CHANGE" means, relative to any Affected Party:
(a) any change in (or the adoption, implementation, change in
the phase-in or change in the commencement of effectiveness of) any:
(i) United States Federal or state law or foreign law applicable to
such Affected Party, (ii) regulation, interpretation, directive,
requirement or request (whether or not having the force of law)
applicable to such Affected Party of (A) any court or government
authority charged with the interpretation or administration of any law
referred to in clause (a)(i), or of (B) any fiscal, monetary or other
authority having jurisdiction over such Affected Party, or (iii) GAAP
or regulatory accounting principles applicable to such Affected Party
and affecting the application to such Affected Party of any law,
regulation, interpretation, directive, requirement or request referred
to in clause (a)(i) or (a)(ii) above or requiring the consolidation of
any Conduit Lender's assets and liabilities with those of its Co-Agent;
(b) any change in the application to such Affected Party of
any existing law, regulation, interpretation, directive, requirement,
request or accounting principles referred to in clause (a)(i), (a)(ii)
or (a)(iii) above;
(c) the issuance, publication or release of any regulation,
interpretation, directive, requirement or request of a type described
in clause (a)(ii) above to the effect that the obligations of any
Liquidity Bank under the Liquidity Agreement are not entitled to be
included in the zero percent category of off-balance sheet assets for
purposes of any risk-weighted capital guidelines applicable to such
Liquidity Bank or any related Affected Party; or
(d) any change in (or the adoption, implementation, change in
the phase-in or commencement of effectiveness of) any GAAP or
regulatory accounting principle applicable to such Affected Party
requiring the consolidation, in whole or in part, of any Conduit
Lender's assets and/or liabilities, with those of its Co-Agent or any
of its Liquidity Banks.
"RELATED COMMERCIAL PAPER" means, for any period with respect
to any Conduit Lender, any Commercial Paper Notes of such Conduit Lender issued
or deemed issued for purposes of financing or maintaining any Loan by such
Conduit Lender (including any discount, yield, or interest thereon) outstanding
on any day during such period.
"RELATED SECURITY" has the meaning specified in the
Receivables Sale Agreement.
"REQUIRED CAPITAL AMOUNT" has the meaning specified in the
Receivables Sale Agreement.
20
"REQUIREMENTS OF LAW" for any Person or any of its property
shall mean the Organizational Documents of such Person or any of its property,
and any statute, law, treaty, rule or regulation, or determination of an
arbitrator or Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or businesses or to which such Person or any
of its property or businesses is subject, whether federal, state or local.
"RESERVE FLOOR" means, for any Calculation Period, the greater
of (a) 15%, and (b) the sum of (i) 3% plus (ii) the percentage of the Aggregate
Unpaid Balance represented by the Top 4 Designated Balances as reflected on the
most recent Monthly Report delivered by Servicer
"RESERVE PERCENTAGE" means, for any Calculation Period, the
percentage equal to the greater of (a) the sum of (i) the Loss Reserve, (ii) the
Dilution Reserve, (iii) the Yield Reserve, and (iv) the Servicing Reserve, and
(b) the Reserve Floor.
"S&P" means Standard & Poor's Ratings Group, a division of The
XxXxxx-Xxxx Companies, Inc.
"SCHEDULED COMMITMENT TERMINATION DATE" means December 18,
2003, as extended from time to time by mutual agreement of the parties hereto.
"SECURED PARTIES" means the Lenders, the Agents and the
Indemnified Parties, and the successors and permitted assigns of each of the
foregoing.
"SELLERS" has the meaning specified in the Receivables Sale
Agreement.
"SENIOR EXECUTIVE" has the meaning specified in the
Receivables Sale Agreement.
"SERVICER" means Bowater or any successor Servicer appointed
as provided in Section 11.5.
"SERVICER EVENT OF DEFAULT" shall have the meaning specified
in Section 11.7.
"SERVICING FEE" means, as to any Calculation Period, the fee
payable to the Servicer which, so long as Bowater or one of its Affiliates is
the Servicer, shall be equal to the Servicing Fee Rate multiplied by the
Aggregate Unpaid Balance at the beginning of such Calculation Period. The
Servicing Fee for any successor Servicer shall be equal to the fee reasonably
agreed to by the Agents and such successor Servicer.
"SERVICING FEE RATE" means 1.80% per annum.
"SERVICING RESERVE" means, on any date of determination, the
product of: (a) the highest Day Sales Outstanding Ratio during the 12 months
ending with the most recent Calculation Period, (b) the Stress Factor, (c)
2.40%, and (d) 1/360.
"SIGNIFICANT EVENT" means any Amortization Event or Event of
Default.
21
"SPECIAL OBLIGOR" means any one of not more than two (2)
Obligors designated by Borrower from time to time, which is unrated or, if
rated, has a short term credit rating of less than A-2 by S&P or less than P-2
by Moody's, or a long term credit rating of less than BBB- by S&P and Baa3 by
Moody's, unless and until the Administrative Agent, at the direction of any
Co-Agent, gives not less than five (5) Business Days' notice to Borrower that it
is revoking such Person's special status.
"SPLIT-RATED" means that Bowater's unsecured senior debt is
either rated "BB+" or less by S&P or "Ba1" or less by Moody's, but not both.
"STB" has the meaning set forth in the preamble to this
Agreement.
"STCM" has the meaning set forth in the preamble to this
Agreement.
"STRESS FACTOR" means (a) at any time while Bowater's
unsecured senior debt is rated greater than or equal to both "BB" by S&P and
"Ba2" by Moody's, 2.00, (b) at any time while Bowater's unsecured senior debt is
rated greater than or equal to both "B+" by S&P and "B1" by Moody's but less
than the ratings in clause (a), 2.25, and (c) at any time while Bowater's
unsecured senior debt is rated less than either of the ratings described in
clause (b), 2.50.
"SUBSIDIARY" has the meaning specified in the Receivable Sale
Agreement.
"SUPPORT AGREEMENT" means and includes any credit agreement,
letter of credit, surety bond or other instrument or insurance policy pursuant
to which any Conduit Lender receives credit enhancement or liquidity enhancement
for the Related Commercial Paper or for its Commercial Paper Notes generally,
including, without limitation, as to each Conduit Lender, its Liquidity
Agreement.
"SUPPORT PROVIDER" means and includes any entity now or
hereafter extending credit or liquidity support or having a commitment to extend
credit or liquidity support to or for the account of, or to make loans to or
purchases from, a Conduit Lender or issuing a letter of credit, surety bond or
other instrument to support any obligations arising under or in connection with
the commercial paper program of a Conduit Lender, including, without limitation,
as to each Conduit Lender, its Liquidity Banks.
"TAXES" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings, and any and all
liabilities (including but not limited to interest and penalties) with respect
to the foregoing, imposed by any Governmental Authority.
"TELERATE PAGE 3750" shall mean the display designated as
"Page 3750" on the Telerate Service (or such other page as may replace "Page
3750" on that service or another service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
British Bankers' Association Interest Settlement Rate for Dollars).
"THREE PILLARS" has the meaning set forth in the preamble to
this Agreement.
22
"THREE PILLARS AGENT" has the meaning set forth in the
preamble to this Agreement.
"THREE PILLARS GROUP" means, collectively, (a) Three Pillars,
and (b) STB and its successors and permitted assigns as Committed Lenders or
Three Pillars Liquidity Banks.
"THREE PILLARS LIQUIDITY AGREEMENT" means (a) the Liquidity
Asset Purchase Agreement (regarding Bowater Funding Inc.), dated as of December
19, 2002, among Three Pillars, STB, as liquidity agent for the Three Pillars
Liquidity Banks, the Three Pillars Agent, and the Three Pillars Liquidity Banks,
or (b) any other agreement hereafter entered into by Three Pillars providing for
the sale by Three Pillars of its Loans (or portions thereof), or the making of
loans or other extensions of credit to Three Pillars secured by security
interests in Three Pillar's Loans (or portions thereof), to support all or part
of Three Pillar's payment obligations under the Commercial Paper Notes or to
provide an alternate means of funding Three Pillar's investments in accounts
receivable or other financial assets, in each case as amended, supplemented,
restated or otherwise modified from time to time.
"THREE PILLARS LIQUIDITY BANKS" means STB and its successors
and permitted assigns under the Three Pillars Liquidity Agreement.
"TOP 4 DESIGNATED BALANCES" means, on any date of
determination, the aggregate of the Outstanding Balance of all Eligible
Receivables owing from the Special Obligors and unrated Obligors with the four
highest Outstanding Balances of Eligible Receivables (after deducting any
portion thereof which is excluded from the Borrowing Base because such aggregate
Outstanding Balance exceeds the applicable Concentration Limit).
"TRANSACTION DOCUMENTS" means this Agreement, the Receivables
Sale Agreement, the Lender Notes, the Fee Letters, the Performance Undertaking
and the other instruments, certificates, agreements, reports and documents to be
executed and delivered under or in connection with this Agreement or the
Receivables Sale Agreement (except the Program Documents), as any of the
foregoing may be amended, supplemented, amended and restated, or otherwise
modified from time to time in accordance with this Agreement.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the applicable jurisdiction or jurisdictions.
"UNMATURED SERVICER EVENT OF DEFAULT" means any event that, if
it continues uncured, will, with lapse of time or notice or lapse of time and
notice, constitute a Servicer Event of Default.
"UNMATURED SIGNIFICANT EVENT" means any event that, if it
continues uncured, will, with lapse of time or notice or lapse of time and
notice, constitute a Significant Event.
"UNPAID BALANCE" means, with respect to any Receivable, the
sum of (a) the Outstanding Balance thereof, plus (without duplication), and (b)
the aggregate amount required to repay in full all interest, finance, prepayment
and other fees or charges of any kind payable in respect of, such Outstanding
Balance.
23
"WACHOVIA" has the meaning set forth in the preamble to this
Agreement.
"YIELD RESERVE" means, on any date of determination, the
product of (a) the highest Day Sales Outstanding Ratio during the 12 months
ending with the most recent Calculation Period, (b) the Stress Factor, (c) the
Prime Rate as in effect on the last day of such Calculation Period and (d)
1/360.
Section 1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in
this Agreement have the meanings as so defined herein when used in any
other Transaction Document, certificate, report or other document made
or delivered pursuant hereto.
(b) Each term defined in the singular form in Section 1.1 or
elsewhere in this Agreement shall mean the plural thereof when the
plural form of such term is used in this Agreement or any other
Transaction Document, certificate, report or other document made or
delivered pursuant hereto, and each term defined in the plural form in
Section 1.1 shall mean the singular thereof when the singular form of
such term is used herein or therein.
(c) The words "HEREOF," "HEREIN," "HEREUNDER" and similar
terms when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
article, section, subsection, schedule and exhibit references herein
are references to articles, sections, subsections, schedules and
exhibits to this Agreement unless otherwise specified.
Section 1.3 Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC and not specifically defined herein, are used herein as
defined in such Article 9.
Section 1.4 Computation of Time Periods. 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."
Section 1.5 Continuance of Significance Events. For the
avoidance of doubt, from and after the time, if any, when an event becomes a
Servicer Event of Default, an Amortization Event or an Event of Default, such
event shall be deemed to be continuing until waived in writing in accordance
with the provisions of this Agreement regardless of whether the circumstance
which gave rise thereto continues to exist.
ARTICLE II.
COMMITMENTS, BORROWING PROCEDURES AND LENDER NOTES
Section 2.1 Commitments. On the terms and subject to the
conditions set forth in this Agreement, from time to time prior to the
Commitment Termination Date, Borrower may request Advances from the Lenders in
accordance with Section 2.2. Upon receipt of each Borrowing Request:
24
(a) Each of the Conduit Lenders may, in its sole discretion,
make a Loan to Borrower in a principal amount equal to such Conduit
Lender's Group Percentage of the principal amount of the requested
Advance (such Conduit Lender's and its Group's "FUNDING AMOUNT"); and
(b) In the event that any Conduit Lender declines to make its
Loan to Borrower as part of any requested Advance, each of such Conduit
Lender's related Committed Lenders severally agrees to make a Loan to
Borrower in a principal amount equal to its Percentage of the
applicable Conduit Lender's Funding Amount;
PROVIDED, HOWEVER, that the aggregate principal amount of all Advances from time
to time outstanding hereunder shall not exceed the lesser of (x) the Facility
Limit and (y) the Borrowing Base, and PROVIDED, FURTHER, that the aggregate
principal amount of all Loans from time to time outstanding from any Group
hereunder shall not exceed its Group Percentage of the lesser of (x) the
Facility Limit and (y) the Borrowing Base. Within the limits of each Committed
Lender's Commitment and the Facility Limit, Borrower may borrow and (subject to
Section 4.1(a)) prepay and reborrow under this Section 2.1.
Section 2.2 Borrowing Procedures. Borrower (or the Servicer on
its behalf) may request an Advance hereunder by delivering a Borrowing Request
to the Co-Agents not later than 2:00 p.m. (New York City time), three (3)
Business Days prior to the proposed date of such borrowing; PROVIDED that
Borrower shall not request, and Lenders shall not make, Advances more than once
per calendar week. Each Borrowing Request given by Borrower (or the Servicer on
its behalf) pursuant to this Section 2.2 shall be irrevocable and binding on
Borrower. Any Borrowing Request may be delivered by facsimile transmission or by
electronic mail message attaching a portable data format or ".pdf" file
containing an image of the signed request, PROVIDED, HOWEVER, that no such
facsimile transmission or electronic mail message shall be deemed to be
delivered unless and until Borrower (or Servicer on its behalf) confirms the
Co-Agents' actual receipt thereof (not merely via voice mail) by telephone. Upon
the Co-Agents' receipt of each Borrowing Request, each of them shall promptly
determine whether its Conduit Lender or its Committed Lender(s) will participate
in funding the requested Advance.
Section 2.3 Funding. Subject to the satisfaction of the
conditions precedent set forth in Article VII with respect to such Advance and
the limitations set forth in Section 2.1, each Lender shall make the proceeds of
its Loan comprising a portion of such requested Advance available to its Group's
Co-Agent in immediately available funds on the proposed date of borrowing. Upon
receipt by a Co-Agent of such Loan proceeds, such Co-Agent will make such funds
available to Borrower's Account on such date. Each borrowing shall be on a
Business Day and shall be in an aggregate amount of at least $1,000,000 per
Group or in a larger integral multiple of $200,000 per Group.
Section 2.4 Representation and Warranty. Submission of each
Borrowing Request shall automatically constitute a representation and warranty
by Borrower to the Agents and the Lenders that on the date of such requested
borrowing: (a) the representations and warranties contained in Article VIII will
be true and correct as of such requested date as though made on such date, (b)
no Significant Event or Unmatured Significant Event has occurred and is
25
continuing or will result from such borrowing, and (c) after giving effect to
such requested borrowing, the aggregate principal balance of the outstanding
Advances hereunder will not exceed the lesser of the Borrowing Base and the
Facility Limit.
Section 2.5 Extension of the Committed Lenders' Commitments.
The Committed Lenders' several Commitments shall all terminate on the Commitment
Termination Date. Notwithstanding the foregoing:
(a) Not more than 60 days prior to any Group's Liquidity
Termination Date in effect from time to time, Borrower may request that
the applicable Co-Agent seek the applicable Liquidity Banks' consent to
extend the applicable Liquidity Termination Date for a period which,
when aggregated with the number of days remaining until the existing
Liquidity Termination Date would not cause such Liquidity Banks'
commitments under the Liquidity Agreement as so extended to exceed 364
days in toto unless such agreement to extend is made within the final
30 days prior to such Group's existing Liquidity Termination Date, in
which case the Liquidity Termination Date shall be extended for a
period of 364 days from such existing date, and
(b) Not more than 60 days prior to the Scheduled Commitment
Termination Date in effect from time to time, Borrower may request that
the Lenders unanimously consent to extend the Scheduled Commitment
Termination Date for a period which, when aggregated with the number of
days remaining until the existing Scheduled Commitment Termination Date
would not cause the Committed Lenders' Commitments hereunder as so
extended to exceed 364 days in toto unless such agreement to extend is
made within the final 30 days prior to the existing Scheduled
Commitment Termination Date, in which case the Liquidity Termination
Date shall be extended for a period of 364 days from such existing
date.
Each of the Co-Agents shall advise Borrower and the Administrative Agent in
writing whether each request made pursuant to clause (a) or clause (b) above has
been granted within 30 days after such request has been made and whether such
consent is subject to satisfaction of any conditions precedent. If any such
request is not granted within 30 days after such request has been made by each
of the Groups, the Liquidity Termination Date or Scheduled Commitment
Termination Date, as the case may be, for all Groups shall remain unchanged. If
any such request is granted by each of the Groups within 30 days after such
request has been made, the Liquidity Termination Date or Scheduled Commitment
Termination Date, as the case may be, shall be extended as provided in the
Administrative Agent's confirmatory written notice upon satisfaction of any
conditions precedent specified therein.
Section 2.6 Voluntary Termination of Committed Lenders'
Commitments; Reduction of Facility Limit. Borrower may, in its sole discretion
for any reason upon at least 10 Business Days' prior written irrevocable notice
to the Co-Agents, terminate the Committed Lenders' several Commitments in whole,
or, reduce the Facility Limit and the Commitments in part; PROVIDED, HOWEVER
that (a) each such partial reduction will be made ratably amongst the Groups and
will be in a minimum amount of $5,000,000 per Group or a higher integral
multiple
26
of $1,000,000, (b) no such partial reduction shall reduce any Group's Group
Percentage of the Facility Limit below $50,000,000, (c) any partial reduction of
the Facility Limit below the aggregate outstanding principal balance of the
Advances must be accompanied by a prepayment of the Advances in an amount
sufficient to eliminate such difference, (d) partial reductions may occur only
on Distribution Dates, and (e) in connection with any partial reduction,
Borrower, shall comply with Section 3.2(b) and Section 4.1(b).
Section 2.7 Notes. All Loans from the Lenders in a Group shall
be evidenced by a single promissory grid note (each, as amended, modified,
extended or replaced from time to time, a "LENDER NOTE") substantially in the
form set forth in Exhibit B, with appropriate insertions, payable to the order
of the applicable Co-Agent. Borrower hereby irrevocably authorizes each Co-Agent
in connection with its Group's Lender Note to make (or cause to be made)
appropriate notations on the grid attached to such Lender Note (or on any
continuation of such grid, or, in lieu of making notations on such grid or any
continuation thereof, at such Co-Agent's option, in its records), which
notations, if made, shall evidence, inter alia, the date of, the outstanding
principal of, and the interest rate and Interest Period applicable to the Loans
evidenced thereby. Such notations shall be rebuttably presumptive evidence of
the subject matter thereof, absent manifest error; PROVIDED, HOWEVER, that the
failure to make any such notations shall not limit or otherwise affect any
Obligations of Borrower.
ARTICLE III.
INTEREST, FEES, ETC.
Section 3.1 Interest Rates. Borrower hereby promises to pay
interest on the unpaid principal amount of each Loan for the period commencing
on the date such Loan is made until such Loan is paid in full (or, in the case
of a CP Loan, refinanced with an Alternative Rate Loan), as follows:
(a) during each Interest Period applicable to a CP Loan, at a
rate per annum equal to the sum of (i) the applicable Conduit Lender's
Commercial Paper Rate applicable to such Interest Period, plus (ii) the
Applicable Margin;
(b) during each Interest Period applicable to an Alternative
Rate Loan, at a rate per annum equal to the Alternative Rate applicable
to such Interest Period; and
(c) notwithstanding the provisions of the preceding clauses
(a) and (b), in the event that a Significant Event has occurred and is
continuing, at a rate per annum equal to the Default Rate. After the
date any principal amount of any Loan is due and payable (whether on
the Scheduled Commitment Termination Date, upon acceleration or
otherwise) or after any other monetary Obligation of Borrower arising
under this Agreement shall become due and payable, Borrower shall pay
(to the extent permitted by law, if in respect of any unpaid amounts
representing interest) interest (after as well as before judgment) on
such amounts at a rate per annum equal to the Default Rate.
27
No provision of this Agreement or any Lender Note shall require the payment or
permit the collection of interest in excess of the maximum permitted by
applicable law.
Section 3.2 Interest Payment Dates. Interest accrued on each
Loan shall be payable, without duplication:
(a) on each Distribution Date prior to the Commitment
Termination Date, for the period since the creation of such Loan (in
the case of the first Distribution Date thereafter) or since the prior
Distribution Date (in the case of any subsequent Distribution Date);
(b) on the date of any payment or prepayment (in whole or in
part) of principal outstanding in such Loan, on the amount paid or
prepaid (it being understood that any prepayment shall be accompanied
by any amounts owing under Section 6.2);
(c) in full, on the Scheduled Commitment Termination Date
(whether at scheduled maturity or upon acceleration thereof pursuant to
Section 10.3); and
(d) from and after the Commitment Termination Date, upon
demand.
Section 3.3 Applicable Interest Rates. Each Co-Agent shall
from time to time advise Borrower and Servicer whether a Loan is a CP Loan or an
Alternative Rate Loan, and of the interest rate applicable to each Interest
Period thereof.
Section 3.4 Fees. Borrower agrees to pay the Agents and the
Lenders certain Fees in the amounts and on the dates set forth in the Fee
Letters.
Section 3.5 Computation of Interest and Fees. All interest,
Fees and Servicing Fees shall be computed on the basis of the actual number of
days (including the first day but excluding the last day) occurring during the
period for which such interest, Fee or Servicing Fee is payable over a year
comprised of 360 days. Each Co-Agent shall provide Borrower with an invoice for
accrued and unpaid interest and fees due to such Co-Agent, for the benefit of
such Co-Agent's Group, on each Distribution Date not later than the 5th Business
Day prior to such Distribution Date.
ARTICLE IV.
REPAYMENTS AND PREPAYMENTS; DISTRIBUTION OF COLLECTIONS
Section 4.1 Repayments and Prepayments. Borrower shall repay
in full the unpaid principal amount of the Advances on the Commitment
Termination Date. Prior thereto, Borrower:
(a) may, from time to time on any Business Day, make a
prepayment, in whole or in part, of the outstanding principal amount of
the Advances, ratably amongst the Groups; PROVIDED, HOWEVER, that, (i)
unless otherwise consented to by each of the Co-Agents, all such
voluntary prepayments shall require at least two (2) Business Days'
(or, in the case of a voluntary prepayment of $10,000,000 or
28
more per Group, at least ten (10) Business Days') prior written notice
to the Co-Agents, and (ii) unless otherwise consented to by the
Co-Agents, all such voluntary partial prepayments shall be in a minimum
amount of $5,000,000 per Group or a larger integral multiple of
$500,000 per Group if in excess thereof;
(b) shall, on each date when any reduction in the Facility
Limit shall become effective pursuant to Section 2.6, make a prepayment
of the Advances, ratably amongst the Groups, in an amount equal to the
excess, if any, of the aggregate outstanding principal amount of the
Advances over the Facility Limit as so reduced;
(c) shall, immediately upon any acceleration of the Scheduled
Commitment Termination Date of any Advances pursuant to Section 10.3,
repay all Advances, unless, pursuant to Section 10.3.1, only a portion
of all Advances is so accelerated, in which event Borrower shall repay
the accelerated portion of the Advances, ratably amongst the Groups;
and
(d) shall, not later than the next Distribution Date and in
any event within two (2) Business Days after discovering that a
Borrowing Base Deficit exists, make a prepayment of the Advances,
ratably amongst the Groups, in an aggregate amount equal to such
Borrowing Base Deficit. Each such prepayment shall be subject to the
payment of any amounts required by Section 6.2.
Section 4.2 Application of Collections.
(a) All Collections shall be distributed by the Servicer at
such times and in the order of priority set forth in this Section 4.2 and shall
be paid to the Co-Agents for distribution to the members of each of their
respective Groups in accordance with Section 4.3.
(b) On each Distribution Date prior to the Commitment
Termination Date, the Servicer shall distribute from Collections received by
Borrower or the Servicer prior to such Distribution Date, the following amounts,
without duplication, in the following order of priority:
FIRST, to the Servicer, to the extent due and owing under this
Agreement or any other Transaction Document, the accrued Servicing Fee
payable for the prior Calculation Period (plus, if applicable, the
amount of Servicing Fee payable for any prior Calculation Period to the
extent such amount has not been distributed to Servicer);
SECOND, to the Co-Agents for distribution to the Lenders in
their respective Groups, interest accrued on the Loans made by their
respective Groups during the period from the most recent Distribution
Date to the current Distribution Date (plus, if applicable, the amount
of interest on the Loans made by their respective Groups accrued for
any prior period to the extent such amount has not been paid, and to
the extent permitted by law, interest thereon);
THIRD, to the Co-Agents for distribution to the Lenders in
their respective Groups, to the extent due and owing under any
Transaction Document, all Fees
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accrued during the prior Calculation Period (plus, if applicable, the
amount of Fees accrued for any prior Calculation Period to the extent
such amount has not been distributed to the Co-Agents);
FOURTH, to the Co-Agents for distribution to the Lenders in
their respective Groups, as a repayment of principal of the Advances,
ratably amongst the Groups, an aggregate amount equal to the Borrowing
Base Deficit, if any;
FIFTH, to the Co-Agents for distribution to the Lenders in
their respective Groups, to the extent due and owing under this
Agreement or any other Transaction Document on such Distribution Date,
all other Obligations owed to any Secured Party; and
SIXTH, the balance, if any, to Borrower.
(c) On each Distribution Date on or after the Commitment
Termination Date, the Servicer shall distribute from Collections received by
Borrower or the Servicer prior to such Distribution Date, the following amounts,
without duplication, in the following order of priority:
FIRST, to the Servicer, to the extent due and owing under this
Agreement or any other Transaction Document, the accrued Servicing Fee
payable for the prior Calculation Period (plus, if applicable, the
amount of Servicing Fee payable for any prior Calculation Period to the
extent such amount has not been distributed to Servicer);
SECOND, to the Co-Agents for distribution to the Lenders in
their respective Groups, all Obligations other than principal due and
owing on such Distribution Date;
THIRD, ratably to the Co-Agents for distribution to the
Lenders in their respective Groups, as a repayment of principal of the
Advances; and
FOURTH, once all amounts described in clauses FIRST, SECOND
and THIRD above have been paid in full, the balance, if any, to
Borrower.
Section 4.3 Application of Certain Payments. Each payment of
principal of the Advances shall be made ratably amongst the Groups and shall be
applied to such Loans made by the members of each Group as Servicer shall direct
or, in the absence of such notice or during the existence of a Significant Event
or after the Commitment Termination Date, as the applicable Co-Agent shall
determine in its discretion. All payments of interest, Fees and other
Obligations (other than principal) shall be made ratably amongst the Groups in
accordance with their respective pro rata shares thereof.
Section 4.4 Due Date Extension. If any payment of principal or
interest with respect to any Advance falls due on a day which is not a Business
Day, then such due date shall be extended to the next following Business Day,
and additional interest shall accrue at the applicable interest rate and be
payable for the period of such extension.
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Section 4.5 Timing of Payments. All payments of principal of,
or interest on, the Advances and of all Fees, and all amounts to be deposited by
Borrower or Servicer hereunder, shall be made by Borrower or Servicer, as
applicable, no later than 12:00 noon (New York City time), on the day when due
in lawful money of the United States of America in immediately available funds
to the Co-Agents. Funds received by the Co-Agents after 12:00 noon (New York
City time) on the date when due, will be deemed to have been received by them on
the next following Business Day.
ARTICLE V.
SECURITY INTEREST
Section 5.1 Grant of Security.
(a) Borrower hereby assigns and pledges to the Administrative
Agent (for the benefit of the Secured Parties), and hereby grants to the
Administrative Agent (for the benefit of the Secured Parties) a security
interest in all of Borrower's right, title and interest in and to the following,
whether now or hereafter existing and wherever located (the "COLLATERAL"):
(i) all Receivables, Related Security and Receivable Files;
(ii) all of Borrower's rights, remedies, powers and privileges
in respect of the Receivables Sale Agreement, including, without
limitation, its rights to receive Purchase Price Credits and indemnity
payments thereunder;
(iii) all of Borrower's rights, remedies, powers and
privileges in respect of the Performance Undertaking, including,
without limitation, its right to demand performance thereunder;
(iv) the LockBox Accounts and all funds on deposit therein,
together with all certificates and instruments, if any, from time to
time evidencing such accounts and funds on deposit; and
(v) all products and proceeds (including, without limitation,
insurance proceeds) of, and additions, improvements and accessions to,
and books and records describing or used in connection with, all and
any of the property described above.
(b) This grant of security secures the payment and performance
of all Obligations.
(c) This grant of security shall create a continuing security
interest in the Collateral and shall:
(i) remain in full force and effect until the Administrative
Agent's (for the benefit of the Secured Parties) interest in the
Collateral shall have been released in accordance with Section 5.4;
(ii) be binding upon Borrower, its successors, transferees and
assigns; and
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(iii) inure, together with the rights and remedies of the
Administrative Agent (for the benefit of the Secured Parties)
hereunder, to the benefit of the Administrative Agent and each Secured
Party and their respective successors, transferees and assigns.
Section 5.2 Administrative Agent Appointed Attorney-in-Fact.
Borrower hereby irrevocably appoints the Administrative Agent (for the benefit
of the Secured Parties) as Borrower's attorney-in-fact, with full authority in
the place and stead of Borrower and in the name of Borrower or otherwise, from
time to time in the Administrative Agent's discretion, after the occurrence and
during the continuation of a Significant Event to take any action and to execute
any instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of the Transaction Documents, including, without
limitation:
(a) to ask, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above;
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Administrative Agent (for the benefit of the
Secured Parties) with respect to any of the Collateral;
(d) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions
hereunder; and
(e) to perform the affirmative obligations of Borrower under
the Transaction Documents. The Administrative Agent agrees to give
Borrower, Servicer and the Co-Agents prior written notice of the taking
of any such action, but the failure to give such notice shall not
affect the rights, power or authority of the Administrative Agent with
respect thereto. Borrower hereby acknowledges, consents and agrees that
the power of attorney granted pursuant to this Section 5.2 is
irrevocable and coupled with an interest.
Section 5.3 Administrative Agent May Perform. If Borrower
fails to perform any agreement contained herein, the Administrative Agent (for
the benefit of the Secured Parties) may itself perform, or cause performance of
such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall be payable by Borrower.
Section 5.4 Release of Collateral. The Administrative Agent's
(for the benefit of the Secured Parties) right, title and interest in the
Collateral shall be released effective on the date occurring after the
Commitment Termination Date on which all Obligations shall have been finally and
fully paid and performed.
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ARTICLE VI.
INCREASED COSTS, ETC.
Section 6.1 Increased Costs. If any change in Regulation D of
the Board of Governors of the Federal Reserve System, or any Regulatory Change,
in each case occurring after the date hereof:
(a) shall subject any Affected Party to any tax, duty or other
charge with respect to any Loan made or funded by it, or shall change
the basis of taxation of payments to such Affected Party of the
principal of or interest on any Loan owed to or funded by it or any
other amounts due under this Agreement in respect of any Loan made or
funded by it (other than Excluded Taxes); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve
included in the determination of interest rates pursuant to Section
3.1), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any
Affected Party; or
(c) shall change the amount of capital maintained or required
or requested or directed to be maintained by any Affected Party
(including, without limitation, because the assets and liabilities of
any Conduit Lender are required to be consolidated with those of any
other Affected Party under applicable accounting principles); or
(d) shall impose on any Affected Party any other condition
affecting any Loan made or funded by any Affected Party;
and the result of any of the foregoing is to (i) increase the cost to or to
impose a cost on (A) an Affected Party funding or making or maintaining any Loan
(including extensions of credit under any Liquidity Agreement or any other
applicable Support Agreement, or any commitment of such Affected Party with
respect to any of the foregoing), or (B) any Co-Agent for continuing its or
Borrower's relationship with a Conduit Lender, (ii) to reduce the amount of any
sum received or receivable by an Affected Party under this Agreement, the
applicable Lender Note, the applicable Liquidity Agreement or other applicable
Support Agreement with respect thereto, or (iii) in the good faith determination
of such Affected Party, to reduce the rate of return on the capital of an
Affected Party as a consequence of its obligations hereunder, or under the
applicable Liquidity Agreement or other applicable Support Agreement, as
applicable, or arising in connection herewith or therewith to a level below that
which such Affected Party could otherwise have achieved, then after demand by
such Affected Party to Borrower (which demand shall be accompanied by a written
statement setting forth the basis of such demand), Borrower shall pay such
Affected Party such additional amount or amounts as will (in the reasonable
determination of such Affected Party) compensate such Affected Party for such
increased cost or such reduction. Such written statement (which shall include
calculations in reasonable detail) shall, in the absence of manifest error, be
conclusive evidence of the subject matter thereof.
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If the assets and liabilities of any Conduit Lender are
required to be consolidated with those of any other Affected Party under
applicable accounting principles or the capitalization of such Conduit Lender is
required to be increased in order to avoid such consolidation (either of the
foregoing Conduit Lenders, an "IMPACTED CONDUIT") and such Impacted Conduit's
Co-Agent administers another multi-seller commercial paper conduit which is not
required to be so consolidated or re-capitalized, such Co-Agent and such
Impacted Conduit will make all reasonable efforts to promptly substitute such
other multi-seller commercial paper conduit for the Impacted Conduit under this
Agreement, and each of the other parties hereto hereby agrees to execute such
amendments and consents as may be reasonably necessary to give effect to such
substitution. If there is only one Impacted Conduit, Borrower shall have the
right to require the members of the Group including such Impacted Conduit to
assign their respective positions to another multi-seller commercial paper
conduit that will not be an Impacted Conduit and its liquidity providers, and
such Impacted Conduit agrees to enter into such assignment. Lastly, in the event
that any of the Conduit Lenders becomes an Impacted Conduit, each of the Conduit
Lenders hereby agrees that in no event will the additional amounts payable under
this Section 6.1 as a result of such event cause the aggregate amount of
interest and Fees that would be payable to such Impacted Conduit to exceed the
amount of interest and Fees that would have been payable if such Impacted
Conduit's Loans had been funded by its Committed Lender at an Alternative Rate.
Section 6.2 Broken Funding Costs. Borrower hereby agrees that
upon demand by any Affected Party (which demand shall be accompanied by a
written statement setting forth in reasonable detail the basis for the
calculations of the amount being claimed), Borrower will indemnify such Affected
Party against any Broken Funding Costs. Such written statement shall, in the
absence of manifest error, be conclusive evidence of the subject matter thereof.
Section 6.3 Withholding Taxes.
(a) All payments made by Borrower hereunder (or by Servicer,
on behalf of Borrower, hereunder) shall be made free and clear of, and without
reduction or withholding for or on account of, any present or future Covered
Taxes, now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority or other taxing authority. If any Covered Taxes are
required to be withheld from any amounts payable to any of the Agents or
Lenders, the amounts so payable to such Agent or Lender shall be increased to
the extent necessary to yield to such Agent or Lender (after payment of all such
Covered Taxes) all such amounts payable hereunder at the rates or in the amounts
specified herein. Whenever any Covered Taxes are payable by Borrower, as
promptly as possible thereafter, Borrower shall send to the applicable Agent or
Lender a certified copy of an original official receipt received by Borrower
showing payment thereof. If Borrower fails to pay any Covered Taxes when due to
the appropriate taxing authority or fails to remit to the applicable Agent or
Lender the required documentary evidence, Borrower shall indemnify such Agent
and Lender for such Covered Taxes and any incremental taxes that may become
payable by such Agent or Lender as a result of any such failure.
(b) At least five (5) Business Days prior to the first date on
which any payments, including discount or Fees, are payable hereunder for the
account of any Lender, if a Lender is not incorporated under the laws of the
United States, such Lender agrees to deliver to
34
each of Borrower, the applicable Co-Agent and the Administrative Agent two (2)
duly completed copies of (i) United States Internal Revenue Service Form W-8BEN
or W-8ECI (or successor applicable form), or other forms or certifications
reasonably requested by Borrower, applicable Co-Agent or Administrative Agent,
pursuant to the regulations promulgated under Section 1441 of the Code or other
IRS publications, certifying that such Lender is entitled to receive payments
hereunder without deduction or withholding of any United States federal income
taxes or (ii) United States Internal Revenue Service Form W-8 or W-9 (or
successor applicable form) to establish an exemption from United States backup
withholding tax. Each applicable Lender shall replace or update such forms as is
necessary or appropriate to maintain any applicable exemption or as is requested
by any Agent or Borrower. If any Lender does not deliver the forms described in
this Section 6.3(b), Borrower shall have no obligations under Section 6.3(a)
with respect to United States federal income taxes on such payment, and Borrower
or the applicable Agent shall withhold United States federal income taxes from
any payments made hereunder at the statutory rate applicable to payments made to
Lender. Lender agrees to indemnify and hold Borrower and the Agents harmless for
any United States federal income taxes, penalties, interest and other costs and
losses incurred or payable by Borrower or any of the Agents as a result of
either (x) such Lender's failure to submit any form required to be provided
pursuant to this Section 6.3(b) or (y) Borrower's or such Agent's reliance on
any form that such Lender has provided pursuant to this Section 6.3(b).
ARTICLE VII.
CONDITIONS TO BORROWING
Section 7.1 Initial Loan. The making of the initial Advance
hereunder is subject to the conditions precedent that the Administrative Agent
shall have received all of the following, each duly executed and dated the date
of such Advance (or such earlier date as shall be satisfactory to the
Administrative Agent), in form and substance satisfactory to the Agents:
7.1.1 Resolutions. Certified copies of resolutions of the
Board of Directors of Borrower, the Performance Guarantor and each of
the Sellers authorizing or ratifying the execution, delivery and
performance, respectively, of the Transaction Documents to which it is
a party, together with a certified copy of its Organizational
Documents.
7.1.2 Consents, etc. Certified copies of all documents
evidencing any necessary consents and governmental approvals (if any)
with respect to the Transaction Documents.
7.1.3 Incumbency and Signatures. A certificate of the
Secretary or an Assistant Secretary of Borrower, Servicer, the
Performance Guarantor and each Seller certifying the names of its
officer or officers authorized to sign the Transaction Documents to
which it is a party.
7.1.4 Good Standing Certificates. Good standing certificates
for Borrower, Servicer, the Performance Guarantor and each Seller
issued as of a recent date acceptable to the Administrative Agent by
(a) the Secretary of State of the jurisdiction of such Person's
organization, and (b) the Secretary of State of the
35
jurisdiction where such Person's chief executive office and principal
place of business are located.
7.1.5 Financing Statements. (i) Proper financing statements
(Form UCC-1), filed on or prior to the date of the initial Loan, naming
Borrower as debtor and the Administrative Agent (for the benefit of the
Secured Parties) as the secured party as may be necessary or, in the
opinion of the Administrative Agent, desirable under the UCC to perfect
the Administrative Agent's (for the benefit of the Secured Parties)
security interest in the Collateral, (ii) proper financing statements,
filed on or prior to the date of the initial Advance, naming each
Seller, as seller/debtor, Borrower as purchaser/secured party and the
Administrative Agent as assignee as may be necessary or, in the opinion
of the Administrative Agent, desirable under the UCC to perfect
Borrower's ownership interest in the Receivables, and (iii) authorized
copies of proper Uniform Commercial Code Form UCC-3 termination
statements, if any, necessary to release all liens and other Adverse
Claims of any Person in the Collateral granted by Borrower or any
Seller.
7.1.6 Search Reports. A written search report provided to the
Administrative Agent by a search service acceptable to the
Administrative Agent listing all effective financing statements that
name Borrower or any Seller as debtor or assignor and that are filed in
the jurisdictions in which filings were made pursuant to Section 7.1.5
above and in such other jurisdictions that the Administrative Agent
shall reasonably request, together with copies of such financing
statements (none of which shall cover any Collateral or interests
therein or proceeds of any thereof), and tax and judgment lien search
reports from a Person satisfactory to the Administrative Agent showing
no evidence of such lien filed against Borrower or any Seller.
7.1.7 Fee Letters; Payment of Fees. The Fee Letters, together
with all outstanding Fees payable pursuant to the Fee Letters.
7.1.8 Receivables Sale Agreement. (i) Duly executed and
delivered counterparts of each of the Receivables Sale Agreement and
all documents, agreements and instruments contemplated thereby, and
(ii) evidence that each of the conditions precedent to the execution
and delivery of the Receivables Sale Agreement has been satisfied to
the Agents' satisfaction, and that the initial assignments and
transfers under the Receivables Sale Agreement have been consummated.
7.1.9 Opinions of Counsel. Opinions of counsel to Borrower,
Servicer, the Performance Guarantor and each Seller in form and
substance satisfactory to the Agents.
7.1.10 Lender Notes. Each of the Lender Notes, duly executed
by Borrower in favor of a Co-Agent.
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7.1.11 Borrowing Base Certificate. A Borrowing Base
Certificate, duly executed by an authorized Senior Executive of
Servicer on Borrower's behalf showing a calculation of the Borrowing
Base as of November 30, 2002.
7.1.12 Lock Box Account Agreements. The Lock Box Agreements
with respect to each of the LockBox Accounts in the United States, duly
executed by all of the parties thereto, and a letter agreement
regarding post-closing documentation of a charge on the LockBox Account
at Wachovia Bank, National Association, in London, England.
7.1.13 Releases. Releases and termination statements duly
executed by each Person, other than Borrower, that has an interest in
the Receivables.
7.1.14 Performance Undertaking. The Performance Undertaking,
duly executed by the Performance Guarantor.
7.1.15 Other. Such other documents, certificates and opinions
as any of the Agents may reasonably request.
Section 7.2 All Advances. The making of each Advance,
including without limitation, the initial Advance, is subject to the conditions
precedent that:
7.2.1 No Default, etc. (i) No Significant Event or Unmatured
Significant Event has occurred and is continuing or will result from
the making of such Advance, (ii) the representations and warranties of
Borrower contained in Article VIII are true and correct as of the date
of such requested Advance, with the same effect as though made on the
date of such Advance, and (iii) after giving effect to such Advance,
the aggregate unpaid balance of the Advances will not exceed the
Borrowing Base or the Facility Limit. By making a Borrowing Request,
Borrower shall be deemed to have represented and warranted that items
(i), (ii) and (iii) in the preceding sentence are true and correct.
7.2.2 Borrowing Request, etc. The Agents shall have received a
Borrowing Request for such Advance in accordance with Section 2.2,
together with all items required to be delivered in connection
therewith.
7.2.3 Commitment Termination Date. The Commitment Termination
Date shall not have occurred.
7.2.4 Accounts. Each of the LockBox Accounts shall have been
transferred into Borrower's name . The LockBox Accounts shall be
subject to valid and perfected first priority security interest in
favor of the Administrative Agent for the benefit of the Secured
Parties.
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ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agents to enter into
this Agreement and, in the case of Lender, to make Loans hereunder, Borrower
hereby represents and warrants to the Agents and the Lenders as to itself as
follows, and Bowater hereby represents and warrants to the Agents and the
Lenders as to itself as follows:
Section 8.1 Existence and Power. Each of Bowater and Borrower
is a corporation duly organized under the laws of the State of Delaware, and is
validly existing and in good standing under the laws of its state of
organization and is duly qualified to do business and is in good standing as a
foreign corporation, and has and holds all power and all governmental licenses,
authorizations, consents and approvals required to carry on its business in each
jurisdiction in which its business is conducted except where the failure to so
qualify or so hold could not reasonably be expected to have a Material Adverse
Effect.
Section 8.2 Power and Authority; Due Authorization, Execution
and Delivery. The execution and delivery by each of Bowater and Borrower of this
Agreement and each other Transaction Document to which it is a party, and the
performance of its obligations hereunder and thereunder, and Borrower's use of
the proceeds of the Loans made hereunder, are within its powers and authority
and have been duly authorized by all necessary corporate action on its part.
This Agreement and each other Transaction Document to which Bowater or Borrower
is a party has been duly executed and delivered by Bowater or Borrower, as the
case may be.
Section 8.3 No Conflict. The execution and delivery by each of
Borrower and Bowater of this Agreement and each other Transaction Document to
which it is a party, and the performance of its obligations hereunder and
thereunder do not contravene or violate (i) its Organizational Documents, (ii)
any law, rule or regulation applicable to it, (iii) any restrictions under any
agreement, contract or 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 its assets (except as created
under the Transaction Documents) except, in any case set forth in (i) - (iv)
above, where such contravention or violation could not reasonably be expected to
have a Material Adverse Effect. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
Section 8.4 Governmental Authorization. Other than the filing
of the financing statements required hereunder, no authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by Bowater or
Borrower of this Agreement and each other Transaction Document to which it is a
party and the performance of its obligations hereunder and thereunder.
Section 8.5 Actions, Suits. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of Bowater's or Borrower's Senior Executives, threatened
against or affecting Bowater or any of its Subsidiaries that, if adversely
determined, could reasonably be expected to have a Material Adverse Effect or
which seeks to prevent, enjoin or delay the making or repayment of any Loans.
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Section 8.6 Binding Effect. This Agreement and each other
Transaction Document to which Bowater or Borrower is a party constitute the
legal, valid and binding obligations of Bowater or Borrower, as the case may be,
enforceable against it in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization
or other similar laws relating to or limiting creditors' rights generally and by
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
Section 8.7 Accuracy of Information. All written
representations, warranties, reports or certificates of any of its Senior
Executives heretofore furnished by Bowater or Borrower for purposes of or in
connection with this Agreement, any of the other Transaction Documents or any
transaction contemplated hereby or thereby are, and all such written
representations, warranties, reports or certificates hereafter furnished by
Bowater or Borrower shall be, complete and correct and fairly present the
information contained therein as of the date such information is certified and
do not and will not contain any material misstatement of fact as of such date or
omit to state a material fact or any fact necessary to make the information
contained therein taken as a whole with all other verbal and written information
provided by Senior Executives as of such date, not misleading. To the best of
its knowledge, all verbal information heretofore furnished by any Senior
Executive of Bowater or Borrower for purposes of or in connection with this
Agreement, any of the other Transaction Documents or any transaction
contemplated hereby or thereby was, and all such verbal information hereafter
furnished by Bowater or Borrower shall be, complete and correct as of the date
such information is furnished and does not and will not contain any material
misstatement of fact as of such date or omit to state a material fact or any
fact necessary to make such information taken as a whole with all other verbal
and written information provided by Senior Executives as of such date, not
misleading.
Section 8.8 Margin Regulations; Use of Proceeds. Borrower is
not engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock, and no proceeds of any Loans, directly or indirectly,
will be used for a purpose that violates, or would be inconsistent with,
Regulations T, U and X promulgated by the Federal Reserve Board from time to
time. No portion of the proceeds of any Loan hereunder will be used for a
purpose that violates, or would be inconsistent with, any other law, rule or
regulation applicable to Borrower.
Section 8.9 Good Title. Borrower, upon each Transfer pursuant
to the Receivables Sale Agreement, is the legal and beneficial owner of the
Receivables and the Related Security with respect thereto, or possesses a valid
and perfected security interest therein, in each case, free and clear of any
Adverse Claim, except as created by the Transaction Documents. There have been
duly filed all financing statements or other similar instruments or documents
necessary under the UCC of all appropriate jurisdictions to perfect Borrower's
ownership interest in each such Receivable, its Collections and the Related
Security.
Section 8.10 Perfection. This Agreement is effective to create
a valid security interest in the Collateral in favor of the Administrative
Agent, for the benefit of the Secured Parties. There have been duly filed all
financing statements or other similar instruments or documents necessary under
the UCC (or any comparable law) of all appropriate jurisdictions to perfect the
Administrative Agent's security interest, for the benefit of the Secured
Parties, in the
39
Collateral. The Collateral is free of any Adverse Claim except as created under
the Transaction Documents.
Section 8.11 Places of Business and Locations of Records. The
principal place of business and chief executive office of each of Borrower and
Servicer is located at its address referred to on Schedule 15.3 to this
Agreement (or at such other locations, notified to the Administrative Agent in
jurisdictions where all action required to perfect or maintain the perfection of
the Administrative Agent's security interest in Collateral has been taken).
Borrower's Federal Employer Identification Number is 00-0000000, and its
Delaware organizational identification number is 3594632.
Section 8.12 Accounts. Borrower represents and warrants that
(a) Schedule 8.12 hereto is a complete and accurate listing, as of the Closing
Date, of the LockBoxes and LockBox Accounts, and (b) each of the LockBox
Accounts has been established in, or transferred into, Borrower's name. Neither
Servicer nor Borrower has granted any interest in any LockBox or LockBox Account
to any Person other than the Administrative Agent, and the Administrative Agent
has exclusive control of the LockBox Accounts, subject to the Servicer's right
of access to such accounts as provided herein and in the applicable LockBox
Agreements.
Section 8.13 No Material Adverse Effect. There has been no
Material Adverse Effect since the last day of its fiscal year as to which
financial statements have most recently been delivered pursuant to Section
9.1.5(a) (or, if no such financial statements have yet been delivered, since
September 30, 2002).
Section 8.14 Names. The name in which Borrower has executed
this Agreement is identical to the name of Borrower as indicated on the public
record of the State of Delaware. Borrower has not used any legal name, trade
name or assumed name other than the name in which it has executed this
Agreement.
Section 8.15 Ownership of Borrower; No Subsidiaries. All of
the issued and outstanding equity interests of Borrower are owned beneficially
and of record by BAI, free and clear of any Adverse Claim. Such equity interests
are validly issued, fully paid and nonassessable, and there are no options,
warrants or other rights to acquire securities of Borrower. Borrower has no
Subsidiaries.
Section 8.16 Not a Holding Company or an Investment Company.
Neither Borrower nor Servicer is a "holding company" or a "subsidiary holding
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or any successor statute. Neither Borrower nor
Servicer is an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, or any successor statute.
Section 8.17 Compliance with Credit and Collection Policy.
Each of Borrower and Bowater has complied in all material respects with the
Credit and Collection Policy with regard to each Receivable and the related
Contract. No change has been made in or amendment to the Credit and Collection
Policy, except (i) to the extent such change or amendment would not be
reasonably likely to materially and adversely affect the collectibility of
Receivables or to
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materially decrease the credit quality of any newly created Receivables or (ii)
to the extent such change or amendment has been consented to by Borrower and the
Co-Agents.
Section 8.18 Solvency. Both before and after giving effect to
each Advance, Borrower is Solvent.
Section 8.19 Eligible Receivables. Each Receivable included in
the Borrowing Base is an Eligible Receivable as of the date of (a) any Borrowing
Base Certificate, and (b) any Monthly Report.
Section 8.20 Sales by BAI. Each sale of Receivables by BAI to
Borrower shall have been effected under, and in accordance with the terms of,
the Receivables Sale Agreement, including the payment by Borrower to BAI of an
amount equal to the purchase price therefor as described in the Receivables Sale
Agreement, and each such sale shall have been made for "reasonably equivalent
value" (as such term is used under ss. 548 of the Bankruptcy Code) and not for
or on account of "antecedent debt" (as such term is used under ss. 547 of the
Bankruptcy Code) owed by Borrower to BAI.
ARTICLE IX.
COVENANTS OF BORROWER AND SERVICER
Section 9.1 Affirmative Covenants. From the date hereof until
the first day, following the Commitment Termination Date, on which all
Obligations shall have been finally and fully paid and performed, each of
Borrower and Servicer hereby covenants and agrees with the Agents and Lenders as
to itself, as follows:
9.1.1 Compliance with Laws, Etc. Each of Borrower and Servicer
will comply in all material respects with all applicable laws, rules,
regulations and orders of all governmental authorities (including those
which relate to the Receivables).
9.1.2 Preservation of Legal Existence. Each of Borrower and
Servicer will preserve and maintain its existence, rights, franchises
and privileges in the jurisdiction of its organization, and qualify and
remain qualified in good standing as a foreign entity in the
jurisdiction where its principal place of business and its chief
executive office are located and in each other jurisdiction where the
failure to preserve and maintain such existence, rights, franchises,
privileges and qualifications would have a Material Adverse Effect.
9.1.3 Performance and Compliance with Receivables. Each of
Borrower and Servicer will timely and fully perform and comply with all
provisions, covenants and other promises required to be observed by it
under the Receivables and all other agreements related to such
Receivables.
9.1.4 Credit and Collection Policy. Each of Borrower and
Servicer will comply in all material respects with the Credit and
Collection Policy.
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9.1.5 Reporting Requirements. Each of Borrower and Servicer
will furnish to the Co-Agents for distribution to the Lenders:
(a) Financial Statements.
(i) within 140 days after the close of each of its fiscal
years, (A) a copy of the unaudited balance sheet of Borrower, in each
case, as at the end of such year, together with the related statement
of earnings for such year, certified by the chief executive officer,
chief financial officer or controller of Borrower (which certification
shall state that such balance sheet and statement or earnings fairly
present the financial condition and results of operations for such year
in accordance with GAAP except for the absence of footnotes), and (B) a
certificate of such officer stating that such officer has obtained no
knowledge that a Significant Event or Unmatured Significant Event has
occurred and is continuing, or if, in the opinion of such officer, such
a Significant Event or Unmatured Significant Event has occurred and is
continuing, a statement as to the nature thereof;
(ii) within 120 days after the close of each of its fiscal
years, an audit report (with all amounts stated in Dollars), which is
unqualified as to scope and going concern, certified by independent
certified public accountants of recognized national standing or
otherwise reasonably acceptable to the Administrative Agent, prepared
in accordance with GAAP on a consolidated basis for Bowater and the
consolidated Subsidiaries, including a consolidated balance sheet and
the related consolidated statements of income, cash flows and
statements of changes in common shareholders' equity, setting forth in
each case in comparative form the figures for such fiscal year and the
previous fiscal year; provided that delivery of a copy of Bowater's
Forms 10-K filed with the Securities and Exchange Commission for such
fiscal year shall constitute compliance with this requirement; and
(iii) within 60 days after the close of the first three
quarterly periods of each of its fiscal years, for Bowater and the
Consolidated Subsidiaries, (A) an unaudited consolidated balance sheet
as at the close of each such period and a consolidated income statement
and a statement of cash flows for the period from the beginning of such
fiscal year to the end of such quarter, setting forth in the case of
such statements of income and cash flows in comparative form the
figures for the corresponding quarter and the corresponding portion of
Sellers previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, preparation in accordance
with GAAP and consistency by a Financial Officer of Bowater; provided
that delivery of a copy of Bowater's Forms 10-Q filed with the
Securities and Exchange Commission for such fiscal quarter shall
constitute compliance with this requirement, and (B) a certificate of
such Financial Officer of Bowater to the effect that no Significant
Event or Unmatured Significant Event has occurred and is continuing.
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(b) Monthly Reports and Borrowing Base Certificates.
(i) On or before the second Business Day preceding each
Distribution Date, Servicer shall prepare and deliver to the Co-Agents
for distribution to the Lenders a Monthly Report, as of the last day of
the most recent Calculation Period, signed by an authorized Senior
Executive of Servicer; and
(ii) At any time while Bowater's unsecured senior debt is
Split-Rated, on or before the 5th Business Day following the 15th day
of each month hereafter, Servicer shall prepare and deliver to the
Co-Agents for distribution to the Lenders, a Borrowing Base Certificate
as of the most recent Calculation Date, signed by an authorized Senior
Executive of Servicer.
(iii) At any time while Bowater's unsecured senior debt is
rated both "BB+" or less by S&P and "Ba1" or less by Xxxxx'x, on or
before Wednesday of each week thereafter (or if any such day is not a
Business Day, the next succeeding Business Day), Servicer shall prepare
and deliver to the Co-Agents for distribution to the Lenders, a
Borrowing Base Certificate as of the most recent Calculation Date,
signed by an authorized Senior Executive of Servicer.
(c) Significant Events. As soon as possible but in
any event within two (2) Business Days after any Senior Executive of
Borrower or Servicer becomes aware of the occurrence of a Significant
Event or an Unmatured Significant Event, Borrower or Servicer, as the
case may be, will deliver to the Agents for distribution to the Lenders
an officer's certificate of Borrower setting forth details of such
event and the action that Borrower or Servicer, as the case may be,
proposes to take with respect thereto.
(d) Servicing Certificate. Servicer shall deliver, or
cause to be delivered, to the Administrative Agent for distribution to
the Co-Agents, on or before the date that is 120 days after the end of
each year, a certificate signed by any Senior Executive of Servicer,
dated as of the last day of the preceding year, stating that (a) a
review of the activities of Servicer during the preceding 12-month
period and of its performance under this Agreement has been made under
such officer's supervision and (b) to the best of such officer's
knowledge, based on such review, Servicer has fulfilled its obligations
under the Agreement throughout such year and has complied in all
material respects with the Credit and Collection Policy, or, if there
has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and
status thereof.
(e) Procedures Review. In connection with an
inspection permitted under Section 9.1.11, within ten (10) Business
Days after receipt of written request therefor, information reasonably
required to generate a report which reasonably satisfies the
requirements set forth on Schedule 9.1.5 (each such report, a
"PROCEDURES REVIEW"), it being acknowledged and agreed that the
information provided in connection with the pre-closing review of
Bowater and
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its subsidiaries reasonably satisfied the requirements of such a
Procedures Review (except for those relating to corporate formality as
specified in part V(d) of Schedule 9.1.5).
(f) Other. Promptly, from time to time, such other
information, documents, records or reports respecting the Collateral,
the Receivables or the condition or operations, financial or otherwise,
of Borrower or any Seller as any of the Agents may from time to time
reasonably request in order to protect the interests of the
Administrative Agent, on behalf of the Secured Parties, under or as
contemplated by this Agreement or the other Transaction Documents.
9.1.6 Use of Proceeds. Borrower will use the proceeds of the
Loans made hereunder solely in connection with the acquisition or
funding of Receivables, to repay the Subordinated Loans, to make Demand
Loans and to make dividends in accordance with applicable corporate law
and this Agreement.
9.1.7 Separate Legal Entity. Borrower hereby acknowledges that
the Lenders and the Agents are entering into the transactions
contemplated by this Agreement and the other Transaction Documents in
reliance upon Borrower's identity as a legal entity separate from any
other Person. Therefore, from and after the date hereof, Borrower shall
take all reasonable steps to continue Borrower's identity as a separate
legal entity and to make it apparent to third Persons that Borrower is
an entity with assets and liabilities distinct from those of any other
Person, and is not a division of any Seller or other Person. Without
limiting the generality of the foregoing and in addition to and
consistent with the covenant set forth in Section 9.1.2, Borrower shall
take such actions as shall be required in order that:
(a) Borrower will be a limited purpose company whose primary
activities are restricted in its certificate of organization to owning
the Receivables and Related Security and financing the acquisition
thereof and conducting such other activities as it deems necessary or
appropriate to carry out its primary activities;
(b) Not less than one member of Borrower's Board of Directors
(each, an "INDEPENDENT DIRECTOR") shall be an individual who is not,
and during the past five (5) years has not been, a director, officer,
employee or 5% beneficial owner of the outstanding common stock of any
Person or entity beneficially owning any outstanding shares of common
stock of Bowater or any Affiliate thereof; PROVIDED, HOWEVER, that an
individual shall not be deemed to be ineligible to be an Independent
Director solely because such individual serves or has served in the
capacity of an "independent director" or similar capacity for special
purpose entities formed by Bowater or any of its Affiliates. The
certificate of organization of Borrower shall provide that (i) the
Board of Directors shall not approve, or take any other action to cause
the filing of, a voluntary bankruptcy petition with respect to Borrower
unless the Independent Directors shall approve the taking of such
action in writing prior to the taking of such action, and (ii) such
provision
44
cannot be amended without the prior written consent of the Independent
Directors;
(c) Any employee, consultant or agent of Borrower will be
compensated from funds of Borrower, as appropriate, for services
provided to Borrower;
(d) Borrower will allocate and charge fairly and reasonably
overhead expenses shared with any other Person. To the extent, if any,
that Borrower and any other Person share items of expenses such as
legal, auditing and other professional services, such expenses will be
allocated to the extent practical on the basis of actual use or the
value of services rendered, and otherwise on a basis reasonably related
to the actual use or the value of services rendered; Borrower's
operating expenses will not be paid by any other Person except as
permitted under the terms of this Agreement or otherwise consented to
by the Agents;
(e) Borrower's books and records will be maintained separately
from those of any other Person;
(f) All audited financial statements of any Person that are
consolidated to include Borrower will contain detailed notes clearly
stating that (A) all of Borrower's assets are owned by Borrower, and
(B) Borrower is a separate legal entity;
(g) Borrower's assets will be maintained in a manner that
facilitates their identification and segregation from those of any
other Person;
(h) Borrower will strictly observe corporate formalities in
its dealings with all other Persons, and funds or other assets of
Borrower will not be commingled with those of any other Person except
for such commingling as is permitted pursuant to Section 11.2.3(d);
(i) Borrower shall not, directly or indirectly, be named or
enter into an agreement to be named, as a direct or contingent
beneficiary or loss payee, under any insurance policy with respect to
any amounts payable due to occurrences or events related to any other
Person; and
(j) Any Person that renders or otherwise furnishes services to
Borrower will be compensated thereby at market rates for such services
it renders or otherwise furnishes thereto. Borrower will not hold
itself out to be responsible for the debts of any other Person or the
decisions or actions respecting the daily business and affairs of any
other Person.
9.1.8 Adverse Claims on Receivables. Each of Borrower and
Servicer will, and will require each Seller to, defend each Receivable
against all claims and demands of all Persons at any time claiming the
same or any interest therein adverse to the Administrative Agent's
security interest, on behalf of the Secured Parties.
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9.1.9 Further Assurances. At its expense, each of Borrower and
Servicer will perform all acts and execute all documents reasonably
requested by any of the Agents at any time to evidence, perfect,
maintain and enforce the title or the security interest of the
Administrative Agent, on behalf of the Secured Parties, in the
Receivables and the priority thereof. Each of Borrower and Servicer
will, at the reasonable request of any of the Agents, execute and
deliver financing statements relating to or covering the Collateral
and, where permitted by law, Borrower shall authorize the
Administrative Agent to file one or more financing statements without
Borrower's signature. Borrower shall, and shall cause each Seller to,
xxxx its master data processing records relating to the Receivables
with a legend stating that "The accounts receivable of Bowater
Incorporated and Bowater America Inc. reflected herein have been sold
or contributed, directly or indirectly, to Bowater Funding Inc.
(`SPC'), and a security interest in such receivables has been granted
by SPC to SunTrust Capital Markets, Inc., as administrative agent for
various parties".
9.1.10 Servicing. Servicer shall (a) take all commercially
reasonable steps to (i) prevent or minimize any loss being realized on
a Receivable and (ii) recover the full amount of such loss, and (b)
follow such practices and procedures for servicing the Receivables, in
accordance with the Credit and Collection Policy, as would be customary
and usual for a prudent servicer under similar circumstances, including
using reasonable efforts to realize upon any recourse to the Obligors.
9.1.11 Inspection. Each of Borrower and Servicer shall permit
the Agents, the Lenders and their duly authorized representatives,
attorneys or auditors to inspect the Receivables, the Receivable Files,
Documents and the related accounts, records and computer systems,
software and programs used or maintained by Borrower or Servicer at
such times as any Agent may reasonably request; PROVIDED, HOWEVER,
that, prior to a Bowater Downgrade and in the absence of a Significant
Event, Borrower and its Affiliates will only be required to pay for the
first such inspection by any or all of the Agents, the Lenders and
their duly authorized representatives, attorneys or auditors in any
calendar year, and PROVIDED FURTHER, in the event of a Bowater
Downgrade, Borrower and its Affiliates shall only be required to pay
for the first two (2) such examinations by any or all of the Agents,
the Lenders and their duly authorized representatives, attorneys or
auditors in any calendar year, and PROVIDED FURTHER, that from and
after the occurrence of a Significant Event, Borrower and its
Affiliates shall be responsible to pay for, and the Administrative
Agent (or its representatives) shall be entitled to conduct, as many
examinations as the Administrative Agent may deem necessary or
appropriate to protect the interests of the Secured Parties. Upon
instructions from any of the Agents, each of Borrower and Servicer
shall release any document in its possession related to any Receivable
(other than confidential financial information of the related Obligor
which Borrower and Servicer are not authorized to disclose) to such
Agent, as the case may be, or to the Servicer, if requested by any of
the Agents.
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9.1.12 Cooperation. Each of Borrower and Servicer shall
provide such cooperation, information and assistance, and prepare and
supply the Agents with such data regarding the performance by the
Obligors of their obligations under the Receivables and the performance
by Borrower and Servicer of their respective obligations under the
Transaction Documents, as may be reasonably requested by any of the
Agents from time to time.
9.1.13 Facility. Servicer shall maintain its facility from
which it services the Receivables in its present condition, ordinary
wear and tear excepted, or such other facility of similar quality,
security and safety as Servicer may select from time to time. Servicer
shall make all property tax payments, lease payments and all other
payments with respect to such facility. Servicer shall, in connection
with any inspection under Section 9.1.11 and at all times following the
occurrence and during the continuance of any Significant Event, (i)
ensure that the Agents shall have complete and unrestricted access, at
Servicer's expense, to such facility and all computers and other
systems relating to the servicing of the Receivables and all persons
employed at such facility, (ii) use its best efforts to retain
employees based at such facility to provide assistance to the
Administrative Agent and (iii) continue to store on a daily basis all
back-up files relating to the Receivables and the servicing of the
Receivables at Servicer's facilities, or such other storage facility of
similar quality, security and safety as Servicer may select from time
to time, in the case of each of clauses (i), (ii) and (iii) until the
receipt of all Collections in respect of all Receivables or all
Receivables have been written off in accordance with the Credit and
Collection Policy.
9.1.14 Accounts. Borrower shall not maintain any bank accounts
other than the accounts described on Schedule 8.12. Except as set forth
in the last sentence of Section 11.2.3(b), neither Borrower nor
Servicer shall make, nor will either of them permit any Seller to make,
any change in its instructions to Obligors regarding payments to be
made to a LockBox. Neither Borrower nor Servicer will, nor will either
of them permit any Seller to add any LockBox Account Bank or Lock Box
Account to those listed on Schedule 8.12 unless the Administrative
Agent shall have consented thereto and received a copy of any new duly
executed LockBox Account Agreement. Neither Borrower nor Servicer will,
nor will either of them permit any Seller to, change any LockBox
Account Bank or close any LockBox or LockBox Account unless the
Administrative Agent shall have received at least thirty (30) days'
prior notice of such termination and (i) in the case of a closed
LockBox, all applicable Obligors have been notified to make payments to
another LockBox that clears through a LockBox Account which is subject
to a LockBox Account Agreement, or (ii) in the case of termination of a
LockBox Bank or closing of a LockBox Account, a new LockBox Account
Agreement is entered into with respect to any new or replacement
LockBox Account or LockBox Account Bank.
Section 9.2 Negative Covenants. From the date hereof until the
first day, following the Commitment Termination Date, on which all Obligations
shall have been finally and fully paid and performed, each of Borrower and
Servicer hereby covenants and agrees as to itself as follows:
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9.2.1 Sales, Liens, Etc. Except pursuant to, or as
contemplated by, the Transaction Documents, Borrower shall not (and
shall not permit Servicer, acting on Borrower's behalf to) sell, assign
(by operation of law or otherwise) or otherwise dispose of, or create
or suffer to exist voluntarily or involuntarily any Adverse Claims upon
or with respect to any of Borrower's assets, including, without
limitation, the Collateral, any interest therein or any right to
receive any amount from or in respect thereof.
9.2.2 Mergers, Acquisitions, Sales, Subsidiaries, etc.
Borrower shall not:
(a) be a party to any merger or consolidation, or directly or
indirectly purchase or otherwise acquire all or substantially all of
the assets or any stock of any class of, or any partnership or joint
venture interest in, any other Person, except for Permitted
Investments, or sell, transfer, assign, convey or lease any of its
property and assets (or any interest therein) other than pursuant to,
or as contemplated by, this Agreement or the other Transaction
Documents;
(b) make, incur or suffer to exist an investment in, equity
contribution to, loan or advance to, or payment obligation in respect
of the deferred purchase price of property from, any other Person,
except for Permitted Investments or pursuant to the Transaction
Documents;
(c) create any direct or indirect Subsidiary or otherwise
acquire direct or indirect ownership of any equity interests in any
other Person other than pursuant to the Transaction Documents; or
(d) enter into any transaction with any Affiliate except for
the transactions contemplated by the Transaction Documents and other
transactions upon fair and reasonable terms materially no less
favorable to Borrower than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate.
9.2.3 Change in Business; Change in Credit and Collection
Policy. Borrower will not make any change in the character of its
business. Neither Borrower nor Bowater will make any change in the
Credit and Collection Policy except (i) to the extent such change or
amendment would not be reasonably likely to materially and adversely
affect the collectibility of Receivables or to materially decrease the
credit quality of any newly created Receivables or (ii) to the extent
such change or amendment has been consented to by Borrower and the
Co-Agents.
9.2.4 Other Debt. Borrower will not incur any Debt to any
Person other than pursuant to the Transaction Documents.
9.2.5 Organizational Documents. Borrower shall not amend its
Organizational Documents.
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9.2.6 Jurisdiction of Organization; Location of Records.
Borrower shall not change its jurisdiction of organization or permit
the documents and records evidencing the Receivables to be moved unless
(i) Borrower or Servicer, as the case may be, shall have given to the
Administrative Agent prior written notice thereof, clearly describing
the new location, and (ii) Borrower shall have taken such action,
satisfactory to the Administrative Agent, to maintain the title or
ownership of Borrower and any security interest of the Administrative
Agent, for the benefit of the Secured Parties) in the Collateral at all
times fully perfected and in full force and effect. Servicer shall not,
in any event, move the location where it conducts the servicing and
collection of the Receivables from the address referred to on Schedule
15.3 to this Agreement, without the prior written consent of the
Administrative Agent, which consent shall not be unreasonably withheld
or delayed.
9.2.7 Financing Statements. Borrower shall not execute any
effective financing statement (or similar statement or instrument of
registration under the laws of any jurisdiction) or statements relating
to any Receivables other than the financing statements described in
Section 7.1.5.
9.2.8 Business Restrictions. Borrower shall not (i) engage in
any business other than the acquisition, financing and collection of
Receivables and other Collateral, (ii) engage in any transactions or be
a party to any documents, agreements or instruments, other than the
Transaction Documents and those incidental to the purposes thereof, or
(iii) incur any trade payables (other than for professional fees
incurred in the ordinary course of business) or other liabilities not
constituting Debt permitted under Section 9.2.4 if the aggregate
outstanding balance of such trade payables and other liabilities would
at any time exceed $10,749, PROVIDED, HOWEVER, that the foregoing will
not restrict Borrower's ability to pay servicing compensation as
provided herein, and, PROVIDED, FURTHER, that so long as no Significant
Event or Unmatured Significant Event shall have occurred and be
continuing and Borrower's Net Worth, after giving effect thereto, is at
least $2,000,000, Borrower shall be permitted to (a) pay amounts due on
the Subordinated Note, (b) make distributions to its equity owners to
the extent permitted by applicable law and this Agreement, and (c) make
Demand Loans to Bowater and BAI.
9.2.9 Other Agreements; Performance Undertaking. Borrower will
not amend, restate, supplement, cancel, terminate or otherwise modify
the Receivables Sale Agreement or the Performance Undertaking, or give
any consent, waiver, directive or approval thereunder or waive any
default, action, omission or breach under any of the foregoing or
otherwise grant any indulgence thereunder, without (in each case) the
prior written consent of each of the Agents.
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ARTICLE X.
SIGNIFICANT EVENTS AND THEIR EFFECT
Section 10.1 Events of Default. Each of the following shall
constitute an "EVENT OF DEFAULT" under this Agreement:
10.1.1 Non-Payment of Loans, Etc. (a) Borrower shall fail to
make any payment of any principal of any Loan when due and such failure
shall continue for one (1) Business Day, or (b) Borrower shall fail to
make any payment of any interest on any other Obligation payable by
Borrower hereunder or under the other Transaction Documents, including,
without limitation, any interest, Fees and Indemnified Amounts, or
shall fail to make any deposit required to be made hereunder when due
and, in each of the foregoing cases in this clause (b), such failure
shall continue for three (3) Business Days.
10.1.2 Non-Compliance with Other Provisions. Borrower shall:
(a) fail to perform or observe any covenant contained in
Section 9.2 of this Agreement and such failure shall remain unremedied
(A) past the next Distribution Date, or, if earlier, (B) more than two
(2) Business Days after the earlier to occur of (i) any Senior
Executive of Borrower having knowledge thereof and (ii) any Senior
Executive of Borrower having knowledge thereof, or
(b) fail to perform or observe any other term, covenant or
agreement contained in this Agreement or any other Transaction Document
on its part to be performed or observed and, except as provided in
Section 10.2.2, any such failure shall remain unremedied for thirty
(30) days after any Senior Executive of Borrower having received
written notice thereof from any of the Agents.
10.1.3 Breach of Representations and Warranties. Any
representation, warranty, certification or statement made by Borrower
in this Agreement, any other Transaction Document to which Borrower is
a party or in any other document delivered pursuant hereto or thereto
shall prove to have been incorrect in any material respect when made or
deemed made; PROVIDED THAT the materiality threshold in the preceding
clause shall not be applicable with respect to any representation or
warranty which itself contains a materiality threshold.
10.1.4 Bankruptcy. An Event of Bankruptcy shall have occurred
and remained continuing with respect to Borrower, Servicer or
Performance Guarantor.
10.1.5 Tax and ERISA Liens. The Internal Revenue Service shall
file notice of a lien pursuant to ss. 6323 of the Internal Revenue Code
with regard to any of the assets of Borrower or the Pension Benefit
Guaranty Corporation shall file a notice of lien pursuant to ss. 4068
of ERISA, with regard to any assets of Borrower, and in either of the
foregoing cases, such lien shall not have been released within fifteen
(15) Business Days.
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Section 10.2 Amortization Events. Each of the following shall
constitute an "AMORTIZATION EVENT" under this Agreement:
10.2.1 Servicer Event of Default. A Servicer Event of Default
shall have occurred and remained continuing.
10.2.2 Collateral Reporting. Borrower and Servicer shall fail
to deliver any Borrowing Base Certificate or Monthly Report within 1
Business Day after the same is due and notification is provided by any
Co-Agent or in any event within 2 Business Days after the same is due.
10.2.3 Borrowing Base Deficit. A Borrowing Base Deficit shall
exist and such condition shall continue unremedied until the earlier to
occur of the next Distribution Date and the second Business Day after
such Borrowing Base Deficit arose.
10.2.4 Default Ratio. The Default Ratio shall equal or exceed
2.38% on a rolling three-month average basis.
10.2.5 Dilution Ratio. The Dilution Ratio shall equal or
exceed 4.12% on a rolling three-month average basis.
10.2.6 Delinquency Ratio. The Delinquency Ratio shall equal or
exceed 2.24% on a rolling three-month average basis.
10.2.7 Event of Default. An Event of Default shall have
occurred and be continuing.
10.2.8 Validity of Transaction Documents. (a) Any Transaction
Document, or any lien or security interest granted thereunder, shall
(except in accordance with its terms), in whole or in part, terminate,
cease to be effective or cease to be the legally valid, binding and
enforceable obligation of Borrower, Servicer or any Seller party to
such Transaction Document, (b) Borrower, any Seller or Servicer shall,
directly or indirectly, contest in any manner such effectiveness,
validity, binding nature or enforceability or (c) any security interest
securing any Obligation shall, in whole or in part, cease to be a
perfected first priority security interest.
10.2.9 Termination Date. The "Termination Date" under and as
defined in the Receivables Sale Agreement shall occur.
10.2.10 Performance Undertaking. Performance Guarantor shall
fail to perform or observe any term, covenant or agreement required to
be performed by it under the Performance Undertaking, or the
Performance Undertaking shall cease to be effective or to be the
legally valid, binding and enforceable obligation of Performance
Guarantor, or Performance Guarantor shall directly or indirectly
contest in any manner such effectiveness, validity, binding nature or
enforceability.
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10.2.11 Change of Control. Bowater shall cease to own,
directly or indirectly, 100% of the outstanding voting stock of BAI, or
BAI shall cease to own 100% of the outstanding voting stock of
Borrower.
Section 10.3 Effect of Significant Event.
10.3.1 Optional Termination. Upon the occurrence and during
the continuance of a Significant Event (other than an Event of Default
described in Section 10.1.4), the Administrative Agent may, and shall
at the direction of any Co-Agent, by notice to Borrower and the
Co-Agents (a copy of which shall be promptly forwarded by each of the
Co-Agents to each applicable Rating Agency), declare all or any portion
of the outstanding principal amount of the Advances and other
Obligations to be due and payable and/or the Commitments (if not
theretofore terminated) to be terminated by declaring the Commitment
Termination Date to have occurred, whereupon the full unpaid amount of
such Loans and other Obligations which shall be so declared due and
payable shall be and become immediately due and payable, without
further notice, demand or presentment, and/or, as the case may be, the
Commitments shall terminate.
10.3.2 Automatic Termination. Upon the occurrence of an Event
of Default described in Section 10.1.4, the Commitment Termination Date
shall be deemed to have occurred automatically, and all outstanding
Advances and all other Obligations shall become immediately and
automatically due and payable, all without presentment, demand,
protest, or notice of any kind.
10.3.3 Notice to Rating Agencies. Each Co-Agent shall notify
each applicable Rating Agency of the occurrence of any continuing
Significant Event, promptly following its actual knowledge thereof.
10.3.4 Italian Receivables. Upon the occurrence of a
Significant Event, the Administrative Agent may, in order to maximize
proceeds of the Collateral, notify Borrower and the Lenders that the
amount, if any, advanced against Receivables owing from Obligors
domiciled in Italy will be deemed to have been payment for such
Receivables, whereupon the Administrative Agent, on behalf of the
Secured Parties, is hereby subrogated to Borrower's rights against the
Obligors thereof.
ARTICLE XI.
THE SERVICER
Section 11.1 Bowater as Initial Servicer. The servicing,
administering and collection of the Receivables shall be conducted by the Person
designated from time to time as Servicer under this Agreement. Until such time
following the occurrence and during the continuance of a Servicer Event of
Default or an Amortization Event as the Administrative Agent, at the direction
of any Co-Agent, shall notify Bowater and Borrower in writing of the revocation
of such power and authority, Borrower, the Lenders and the Agents hereby appoint
Bowater to act as Servicer under the Transaction Documents.
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Section 11.2 Certain Duties of the Servicer.
11.2.1 Authorization to Act as Borrower's Agent. Borrower
hereby appoints Servicer as its agent for the following purposes: (i)
selecting the amount of each requested Loan and executing Borrowing
Requests on behalf of Borrower, (ii) making transfers among, deposits
to and withdrawals from all deposit accounts of Borrower for the
purposes described in the Transaction Documents, (iii) arranging
payment by Borrower of all Fees, expenses, other Obligations and other
amounts payable under the Transaction Documents, (iv) causing the
repayment and prepayment of the Loans as required and permitted
pursuant to Section 4.1 and (v) executing and preparing the Monthly
Reports and Borrowing Base Certificates; PROVIDED, HOWEVER, that
Servicer shall act in such capacity only as an agent of Borrower and
shall incur thereby no additional obligations with respect to any Loan,
and nothing herein shall be deemed to authorize Servicer to take any
action as Borrower's agent which Borrower is precluded from taking
itself. Borrower irrevocably agrees that (A) it shall be bound by all
proper actions taken by Servicer pursuant to the preceding sentence,
and (B) the Agents, the Lenders and the banks holding all deposit
accounts of Borrower are entitled to accept submissions,
determinations, selections, specifications, transfers, deposits and
withdrawal requests, and payments from Servicer on behalf of Borrower.
11.2.2 Servicer to Act as Servicer.
(a) Servicer shall service and administer the Receivables on
behalf of Borrower and the Administrative Agent (for the benefit of the
Secured Parties) and shall have full power and authority, acting alone
and/or through subservicers as provided in Section 11.2.2(c), to do any
and all things which it may deem reasonably necessary or desirable in
connection with such servicing and administration and which are
consistent with this Agreement. Consistent with the terms of this
Agreement, Servicer may waive, modify or vary any term of any
Receivable or consent to the postponement of strict compliance with any
such term or in any manner, grant indulgence to any Obligor if, in
Servicer's reasonable determination, such waiver, modification,
postponement or indulgence is not materially adverse to the interests
of Borrower or the Administrative Agent (for the benefit of the Secured
Parties); PROVIDED, HOWEVER, that Servicer may not permit any
modification with respect to any Receivable that would reduce the
Unpaid Balance (except for actual payments thereof), or extend the due
date thereof, except that Servicer may take such actions with respect
to Defaulted Receivables if such actions will, in Servicer's reasonable
business judgment, maximize the Collections thereof. Without limiting
the generality of the foregoing, Servicer in its own name or in the
name of Borrower is hereby authorized and empowered by Borrower when
Servicer believes it appropriate in its best judgment to execute and
deliver, on behalf of Borrower, 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.
53
(b) Servicer shall service and administer the Receivables by
employing such procedures (including collection procedures) and degree
of care, in each case consistent with applicable law, with the Credit
and Collection Policy and with prudent industry standards, as are
customarily employed by Servicer in servicing and administering
receivables owned or serviced by Servicer comparable to the
Receivables. Servicer shall not take any action to impair the
Administrative Agent's (for the benefit of the Secured Parties)
security interest in any Receivable, except to the extent allowed
pursuant to this Agreement or required by law.
(c) At any time while Bowater is acting as the Servicer
hereunder, Bowater may delegate, and Bowater hereby advises the Lenders
and the Agents that it has delegated, to BAI, as sub-servicer of the
Servicer, certain of its duties and responsibilities as Servicer
hereunder. Without the prior written consent of each of the Agents,
Bowater shall not be permitted to delegate any of its duties or
responsibilities as Servicer to any Person other than (i) Borrower,
(ii) BAI, and (iii) with respect to certain Defaulted Receivables,
outside collection agencies in accordance with its customary practices.
Neither Borrower nor BAI shall be permitted to further delegate to any
other Person any of the duties or responsibilities of the Servicer
delegated to it by Bowater. If at any time following the occurrence and
during the continuance of a Servicer Event of Default or Amortization
Event, the Administrative Agent shall designate as Servicer any Person
other than Bowater, all duties and responsibilities theretofore
delegated by Bowater to Borrower or BAI may, at the discretion of any
of the Agents, be terminated forthwith on notice given by the
Administrative Agent to Bowater and to Borrower and BAI.
Notwithstanding the foregoing: (i) Bowater shall be and remain
primarily liable to the Agents and the Lenders for the full and prompt
performance of all duties and responsibilities of the Servicer
hereunder and (ii) the Agents and the Lenders shall be entitled to deal
exclusively with Bowater in matters relating to the discharge by the
Servicer of its duties and responsibilities hereunder.
(d) Except as provided in the penultimate sentence of the
preceding clause (c), the Agents and the Lenders shall not be required
to give notice, demand or other communication to any Person other than
Bowater in order for communication to the Servicer and its sub-servicer
or other delegate with respect thereto to be accomplished. Bowater, at
all times that it is the Servicer, shall be responsible for providing
any sub-servicer or other delegate of the Servicer with any notice
given to the Servicer under this Agreement.
(e) Servicer may take such actions as are necessary to
discharge its duties as Servicer in accordance with this Agreement,
including the power to execute and deliver on behalf of Borrower such
instruments and documents as may be customary, necessary or desirable
in connection with the performance of Servicer's duties under this
Agreement (including consents, waivers and discharges relating to the
Receivables).
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(f) Servicer shall keep separate records covering the
transactions contemplated by this Agreement, including the identity and
collection status of each Receivable purchased by Borrower from any
Seller and the Purchase Price Credits.
11.2.3 Collections.
(a) On or prior to the Closing Date, Borrower and Servicer
shall have established and shall maintain thereafter the following
system of collecting and processing Collections of Receivables: The
Obligors shall be instructed to make payments of Receivables only (i)
by check, draft or money order mailed to a LockBox listed on Schedule
8.12 (such payments, upon receipt in such a LockBox, being referred to
herein as "MAIL PAYMENTS"), or (ii) by wire transfer, SWIFT, ACH or
other electronic payment to a LockBox Account.
(b) On or prior to the Closing Date, the Administrative Agent
shall have received a LockBox Agreement with respect to each LockBox
Account. Servicer's right of access to any LockBox Account shall be
revocable upon notice from the Administrative Agent, at the direction
of any of the Co-Agents, following the occurrence and during the
continuance of a Servicer Event of Default, an Event of Default or an
Incipient Bankruptcy for distribution to the Servicer and, on
Distribution Dates, application in accordance with Article IV (it being
understood that an Incipient Bankruptcy shall not, in and of itself,
lead to the Commitment Termination Date). In addition, after the
occurrence and during the continuance of any Servicer Event of Default
or an Event of Default, Servicer agrees that it shall, upon the written
request of all of the Agents, notify all Obligors under Receivables to
make payment thereof to (i) one or more bank accounts and/or
post-office boxes designated by the Administrative Agent and specified
in such notice or (ii) any successor Servicer appointed hereunder. No
Agent or Lender shall, inter alia, (x) take any action under LockBox
Agreement or (y) deliver any notice to any Obligor, absent the
existence of a Servicer Event of Default or an Event of Default.
(c) Servicer shall remove all Mail Payments, or cause all Mail
Payments to be removed, from each LockBox by the close of business on
each Business Day and deposited into a LockBox Account. Servicer shall
process all such Mail Payments, and all other payments received in any
form, within three (3) Business Days of the date such payment is
received by Bowater, by recording the amount of the payment received
from the Obligor and the applicable account or invoice number.
(d) All Collections received by any Seller or Servicer in
respect of Receivables will, pending remittance to a LockBox Account,
be held by such Seller or Servicer in trust for the exclusive benefit
of the Administrative Agent, on behalf of the Secured Parties, and
shall not be commingled with any other funds or property of any Seller
or Servicer; provided that it shall not constitute commingling in
violation of this Agreement or any Transaction Document if such
55
funds or property not representing Collections are deposited to the
same account to which Collections are deposited, so long as Servicer
maintains adequate books and records to properly identify such
respective funds, and such funds are so identified within three (3)
Business Days after deposit in such account.
(e) Borrower and Servicer hereby irrevocably waive any right
to set-off or otherwise deduct any amount owing by or to them from any
Collections received by them prior to remittance thereof in accordance
with this Agreement.
(f) In performing its duties and obligations hereunder,
Servicer (i) shall not impair the rights of Borrower or the
Administrative Agent, on behalf of the Secured Parties, in any
Receivable, (ii) shall not amend the terms of any Receivable other than
in accordance with the Credit and Collection Policy and this Agreement,
(iii) shall not release any goods securing a Receivable from the lien
created by such Receivable except as specifically provided for herein,
and (iv) shall be entitled to commence or settle any legal action to
enforce collection of any Receivable or to foreclose upon or repossess
any goods securing such Receivable. In the event that Servicer shall
breach any of its covenants set forth in clause (i), (ii) or (iii) of
this Section 11.2.3(f), Servicer shall pay the Unpaid Balance of each
Receivable affected thereby on the Distribution Date following the
Calculation Period in which such event occurs. For the purposes of
Section 11.7 hereof, Servicer shall not be deemed to have breached its
obligations under this Section 11.2.3(f) unless it shall fail to make
such payment with respect to any Receivable affected by Servicer's
noncompliance with clause (i), (ii) or (iii) of this Section 11.2.3(f)
on such Distribution Date.
(g) All payments or other amounts collected or received by
Servicer in respect of a Receivable shall be applied to the Unpaid
Balance of such Receivable.
11.2.4 Settlement. On each Distribution Date, Servicer shall
distribute the Collections in accordance with Article IV hereof.
Section 11.3 Servicing Compensation. Servicer, as compensation
for its activities hereunder, shall be entitled to receive the Servicing Fee,
which shall be payable by Borrower on each Distribution Date from Collections in
accordance with Section 4.2. Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder (including
payment of the fees and expenses of any subservicer) and shall not be entitled
to reimbursement therefor except as specifically provided herein.
Section 11.4 Agreement Not to Resign. Bowater acknowledges
that the Agents and the Lenders have relied on Bowater's agreement to act as
Servicer hereunder in their respective decisions to execute and deliver the
respective Transaction Documents to which they are parties. In recognition of
the foregoing, Bowater agrees not to resign as Servicer voluntarily, except as
required by law (as evidenced by the delivery of an outside opinion of counsel
to the Agents, in form and substance satisfactory to the Agents), without the
prior written consent of each of the Agents.
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Section 11.5 Designation of Servicer. Borrower agrees not to
designate any Person other than Bowater as Servicer without the prior written
consent of each of the Agents.
Section 11.6 Termination. The authorization of Servicer to act
on behalf of Borrower under this Agreement and the other Transaction Documents
shall terminate at the sole discretion of the Administrative Agent upon the
replacement of Servicer by a successor Servicer selected by at least two (2) of
the Co-Agents following a Servicer Event of Default or another Amortization
Event.
Section 11.7 Servicer Events of Default. Each of the following
shall constitute a "SERVICER EVENT OF DEFAULT" under this Agreement:
11.7.1 Failure to Make Payments and Deposits. Servicer shall
fail to make any payment or deposit required to be made by it hereunder
on the date when due and, in each of the foregoing cases, such failure
shall continue for one (1) Business Day in the case of principal and
three (3) Business Days in the case of any other Obligation.
11.7.2 Non-Compliance with Other Provisions. Servicer shall
fail to perform or observe any other term, covenant or agreement
contained in this Agreement or any other Transaction Document on its
part to be performed or observed and any such failure shall remain
unremedied for thirty (30) days.
11.7.3 Delegation. Servicer shall delegate any of its duties
hereunder, except as expressly permitted under Section 11.2.2(c) and
(d).
11.7.4 Breach of Representations and Warranties. Any
representation, warranty, certification or statement made by Servicer
in this Agreement, any other Transaction Document to which Servicer is
a party or in any Borrowing Base Certificate, Monthly Report or other
document delivered pursuant hereto or thereto shall prove to have been
incorrect in any material respect when made or deemed made; PROVIDED
THAT the materiality threshold in the preceding clause shall not be
applicable with respect to any representation or warranty which itself
contains a materiality threshold.
11.7.5 Bankruptcy. An Event of Bankruptcy shall have occurred
and remained continuing with respect to Servicer.
11.7.6 Judgments.
(a) A final judgment or judgments for the payment of money in
excess of $10,000,000 in the aggregate (exclusive of judgment amounts
fully covered by insurance where the insurer has admitted liability in
respect of such judgment) or in excess of $50,000,000 in the aggregate
(regardless of insurance coverage) shall be rendered by one or more
courts, administrative tribunals or other bodies having jurisdiction
against Bowater and the same shall not be discharged (or provision
shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within thirty (30) days from the date of entry
thereof and Bowater shall
57
not, within said period of thirty (30) days, or such longer period
during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such
appeal, or
(b) A final judgment or judgments for the payment of money in
excess of $10,749 in the aggregate (regardless of insurance coverage)
shall be rendered by one or more courts, administrative tribunals or
other bodies having jurisdiction against Borrower and the same shall
not be discharged (or provision shall not be made for such discharge),
or a stay of execution thereof shall not be procured, within thirty
(30) days from the date of entry thereof and Borrower shall not, within
said period of thirty (30) days, or such longer period during which
execution of the same shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal.
11.7.7 Cross-Default to Material Debt. Failure of Servicer or
any of its Subsidiaries to pay any Material Debt when due; or the
default by Servicer or any of its Subsidiaries in the performance of
any term, provision or condition contained in any agreement under which
any Material Debt was created or is governed, or any other event shall
occur or condition exist, the effect of which is to cause, or to permit
the holder or holders of such Material Debt to cause, such Indebtedness
to become due prior to its stated maturity; or any Material Debt of
Servicer or any of its Subsidiaries shall be declared to be due and
payable or required to be prepaid (other than by a regularly scheduled
payment or as a result of the sale of an asset securing such Material
Debt) prior to the stated maturity thereof.
At any time during the continuance of any Servicer Event of Default or an
Amortization Event, the Administrative Agent may, in its sole discretion, (and
shall, at the direction of any Co-Agent), notify Servicer in writing of the
revocation of its appointment as Servicer hereunder. Upon revocation of
Servicer's appointment hereunder, the Co-Agents shall appoint a successor
Servicer. Servicer agrees that upon receipt of written notification from the
Administrative Agent of the revocation of Servicer's appointment as Servicer
hereunder, Servicer shall upon the written request of the Administrative Agent
(which request may be contained in the notification of revocation) (i) notify
all Obligors under the Receivables to make payment thereof to a bank account(s)
or post office box designated by the Administrative Agent and specified in such
notice, and (ii) pay to the Administrative Agent (or its designee) immediately
all Collections then held or thereafter received by Servicer or the applicable
Seller of Receivables, together with all other payment obligations of the
Servicer hereunder owing to any of the Lenders or the Agents. Servicer shall, at
its sole cost and expense, cooperate with and assist the successor Servicer
(including, without limitation, providing access to, and transferring, all
Receivable Files and all records (including data-processing records) relating
thereto (which shall be held in trust for the benefit of the parties hereto in
accordance with their respective interests) and, to the extent permissible,
allowing the successor Servicer to use all licenses, hardware or software
necessary or desirable to collect the Receivables) (it being understood and
agreed that Bowater shall use its best efforts to obtain permission for such
successor Servicer's use of such software). Bowater irrevocably agrees to act
(if requested to do so) as the data-processing agent for the successor Servicer
(in substantially the same manner as Bowater conducted such data-processing
functions
58
while it acted as Servicer). All costs and expenses incurred by the Servicer,
successor Servicer, Lenders, Agents or their respective counsel in connection
with any transfer of servicing are for the account of Bowater and Borrower,
jointly and severally.
ARTICLE XII.
AGENTS
Section 12.1 Authorization and Action.
(a) Each of Three Pillars and STB hereby appoints SunTrust
Capital Markets, Inc. as its Co-Agent for purposes of the Transaction Documents
and authorizes SunTrust Capital Markets, Inc. in such capacity to take such
action on its behalf under each Transaction Document and to exercise such powers
hereunder and thereunder as are delegated to SunTrust Capital Markets, Inc., as
the Three Pillars Agent, by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. Each of Blue Ridge and Wachovia
hereby appoints Wachovia Bank, National Association as its Co-Agent for purposes
of the Transaction Documents and authorizes Wachovia Bank, National Association,
in such capacity to take such action on its behalf under each Transaction
Document and to exercise such powers hereunder and thereunder as are delegated
to Wachovia Bank, National Association, as Blue Ridge Agent, by the terms hereof
and thereof, together with such powers as are reasonably incidental thereto.
(b) Each of the Lenders and Co-Agents hereby appoints SunTrust
Capital Markets, Inc. as its Administrative Agent for purposes of the
Transaction Documents and authorizes SunTrust Capital Markets, Inc. in such
capacity to take such action on its behalf under each Transaction Document and
to exercise such powers hereunder and thereunder as are delegated to SunTrust
Capital Markets, Inc., as Administrative Agent, by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto.
(c) Notwithstanding any provision to the contrary elsewhere in
this Agreement, none of the Agents shall have any duties or responsibilities,
except those expressly set forth in the Transaction Documents to which it is a
party, or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities on the part of
such Agent shall be read into any Transaction Document or otherwise exist
against such Agent.
(d) The provisions of this Article XII are solely for the
benefit of the Agents and the Lenders, and neither of Borrower nor Servicer
shall have any rights as a third-party beneficiary or otherwise under any of the
provisions of this Article XII, except that this Article XII shall not affect
any obligations which any of the Agents or Lenders may have to either of
Borrower or Servicer under the other provisions of this Agreement.
(e) In performing its functions and duties hereunder, (i) the
Blue Ridge Agent shall act solely as the agent of the members of the Blue Ridge
Group and does not assume nor shall be deemed to have assumed any obligation or
relationship of trust or agency with or for either Borrower or Servicer or any
of their respective successors and assigns, (ii) the Three Pillars Agent shall
act solely as the agent of the members of the Three Pillars Group and does not
assume nor shall be deemed to have assumed any obligation or relationship of
trust or agency
59
with or for either Borrower or Servicer or any of their respective successors
and assigns, and (iii) the Administrative Agent shall act solely as the agent of
the Secured Parties and does not assume nor shall be deemed to have assumed any
obligation or relationship of trust or agency with or for either Borrower or
Servicer or any of their respective successors and assigns.
Section 12.2 Delegation of Duties. Each of the Agents may
execute any of its duties under the Transaction Documents to which it is a party
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. None of the Agents
shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
Section 12.3 Exculpatory Provisions. None of the Agents nor
any of its directors, officers, agents or employees shall be (i) liable for any
action lawfully taken or omitted to be taken by it or them or any Person
described in Section 12.2 under or in connection with this Agreement (except for
its, their or such Person's own bad faith, gross negligence or willful
misconduct), or (ii) responsible in any manner to any of the Lenders or other
Agents for any recitals, statements, representations or warranties made by
Borrower contained in this Agreement or in any certificate, report, statement or
other document referred to or provided for in, or received under or in
connection with, this Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
document furnished in connection herewith, or for any failure of either Borrower
or Servicer to perform its respective obligations hereunder, or for the
satisfaction of any condition specified in Article VII, except receipt of items
required to be delivered to such Agent. None of the Agents shall be under any
obligation to any other Agent or any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements or covenants contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
Borrower, Servicer or Sellers. This Section 12.3 is intended solely to govern
the relationship between the Agents, on the one hand, and the Lenders and their
respective Liquidity Banks, on the other.
Section 12.4 Reliance by Agents.
(a) Each of the Agents shall in all cases be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Loan Parties), independent
accountants and other experts selected by such Agent. Each of the Agents shall
in all cases be fully justified in failing or refusing to take any action under
this Agreement or any other document furnished in connection herewith unless it
shall first receive such advice or concurrence of such of its Lenders and
Liquidity Banks, as it shall determine to be appropriate under the relevant
circumstances, or it shall first be indemnified to its satisfaction by its
constituent Liquidity Banks against any and all liability, cost and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
(b) Any action taken by any of the Agents in accordance with
Section 12.4(a) shall be binding upon all of the Agents and the Lenders.
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Section 12.5 Notice of Significant Events. None of the Agents
shall be deemed to have knowledge or notice of the occurrence of any Significant
Event or Unmatured Significant Event unless such Agent has received notice from
another Agent, a Lender or a Loan Party referring to this Agreement, stating
that a Significant Event or Unmatured Significant Event has occurred hereunder
and describing such Significant Event or Unmatured Significant Event. In the
event that any of the Agents receives such a notice, it shall promptly give
notice thereof to the Lenders and the other Agents. The Administrative Agent
shall take such action with respect to such Significant Event or Unmatured
Significant Event as shall be directed by any of the Co-Agents PROVIDED THAT the
Administrative Agent is indemnified to its satisfaction by such Co-Agent and its
Constituent Liquidity Banks against any and all liability, cost and expense
which may be incurred by it by reason of taking any such action.
Section 12.6 Non-Reliance on Other Agents and Lenders. Each of
the Lenders expressly acknowledges that none of the Agents, nor any of the
Agents' respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
any of the Agents hereafter taken, including, without limitation, any review of
the affairs of the Loan Parties, shall be deemed to constitute any
representation or warranty by such Agent. Each of the Lenders also represents
and warrants to the Agents and the other Lenders that it has, independently and
without reliance upon any such Person (or any of their Affiliates) and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Loan
Parties and made its own decision to enter into this Agreement. Each of the
Lenders also represents that it will, independently and without reliance upon
the Agents or any other Liquidity Bank or Lender, 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 to make such investigation as it deems necessary to
inform itself as to the business, operations, property, prospects, financial and
other condition and creditworthiness of the Loan Parties. The Agents, the
Lenders and their respective Affiliates, shall have no duty or responsibility to
provide any party to this Agreement with any credit or other information
concerning the business, operations, property, prospects, financial and other
condition or creditworthiness of the Loan Parties which may come into the
possession of such Person or any of its respective officers, directors,
employees, agents, attorneys-in-fact or affiliates, except that each of the
Agents shall promptly distribute to the other Agents and the Lenders, copies of
financial and other information expressly provided to it by either Borrower or
Servicer pursuant to this Agreement.
Section 12.7 Indemnification of Agents. Each Liquidity Bank
agrees to indemnify (a) its applicable Co-Agent, (b) the Administrative Agent,
and (c) the officers, directors, employees, representatives and agents of each
of the foregoing (to the extent not reimbursed by the Loan Parties and without
limiting the obligation of the Loan Parties to do so), ratably in accordance
with their respective Loans, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for such Co-Agent,
the Administrative Agent or such Person in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
such Co-Agent or the Administrative Agent or such Person shall be
61
designated a party thereto) that may at any time be imposed on, incurred by or
asserted against such Co-Agent, the Administrative Agent or such Person as a
result of, or arising out of, or in any way related to or by reason of, any of
the transactions contemplated hereunder or the execution, delivery or
performance of this Agreement or any other document furnished in connection
herewith (but excluding any such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the bad faith, gross negligence or willful misconduct of such
Co-Agent, the Administrative Agent or such Person as finally determined by a
court of competent jurisdiction).
Section 12.8 Agents in their Individual Capacities. Each of
the Agents in its individual capacity and its affiliates may make loans to,
accept deposits from and generally engage in any kind of business with the Loan
Parties and their Affiliates as though such Agent were not an Agent hereunder.
With respect to its Loans, if any, pursuant to this Agreement, each of the
Agents shall have the same rights and powers under this Agreement as any Lender
and may exercise the same as though it were not an Agent, and the terms "Lender"
and "Lenders" shall include each of the Agents in their individual capacities.
Section 12.9 Conflict Waivers.
(a) STCM and/or STB act(s), or may in the future act: (i) as
administrator for Three Pillars, (ii) as issuing and paying agent for Three
Pillars' Commercial Paper Notes, (iii) to provide credit or liquidity
enhancement for the timely payment for Three Pillars' Commercial Paper Notes and
(iv) to provide other services from time to time for Three Pillars
(collectively, the "SUNTRUST ROLES"). Without limiting the generality of
Sections 12.1 and 12.8, each of the other Co-Agents and the Lenders hereby
acknowledges and consents to any and all SunTrust Roles and agrees that in
connection with any SunTrust Role, STCM and/or STB may take, or refrain from
taking, any action which it, in its discretion, deems appropriate, including,
without limitation, in STCM's role as administrator for Three Pillars, the
giving of notice to the Three Pillars Liquidity Banks of a mandatory purchase
pursuant to the Three Pillars Liquidity Agreement, and hereby acknowledges that
neither STCM, STB nor any of their Affiliates has any fiduciary duties hereunder
to any Lender (other than Three Pillars) arising out of any SunTrust Roles.
(b) Wachovia acts, or may in the future act: (i) as
administrative agent for Blue Ridge, (ii) as issuing and paying agent for Blue
Ridge's Commercial Paper Notes, (iii) to provide credit or liquidity enhancement
for the timely payment for Blue Ridge's Commercial Paper Notes and (iv) to
provide other services from time to time for Blue Ridge (collectively, the
"WACHOVIA ROLES"). Without limiting the generality of Sections 12.1 and 12.8,
each of the Administrative Agent and the Lenders hereby acknowledges and
consents to any and all Wachovia Roles and agrees that in connection with any
Wachovia Role, Wachovia may take, or refrain from taking, any action which it,
in its discretion, deems appropriate, including, without limitation, in its role
as administrative agent for Blue Ridge, the giving of notice to the Liquidity
Banks of a mandatory purchase pursuant to the Blue Ridge Liquidity Agreement,
and hereby acknowledges that neither Wachovia nor any of its Affiliates has any
fiduciary duties hereunder to any Lender (other than Blue Ridge) arising out of
any Wachovia Roles.
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Section 12.10 UCC Filings. Each of the Secured Parties hereby
expressly recognizes and agrees that the Administrative Agent may be listed as
the assignee or secured party of record on the various UCC filings required to
be made under the Transaction Documents in order to perfect their respective
interests in the Collateral, that such listing shall be for administrative
convenience only in creating a record or nominee holder to take certain actions
hereunder on behalf of the Secured Parties and that such listing will not affect
in any way the status of the Secured Parties as the true parties in interest
with respect to the Collateral. In addition, such listing shall impose no duties
on the Administrative Agent other than those expressly and specifically
undertaken in accordance with this Article XII.
ARTICLE XIII.
ASSIGNMENTS
Section 13.1 Restrictions on Assignments.
(a) Neither Borrower nor Bowater may assign its rights or
obligations under the Transaction Documents to which it is a party or any
interest therein without the prior written consent of each of the Agents, except
to the Administrative Agent for the benefit of the Secured Parties.
(b) Subject to the provisions of Sections 6.1 and 13.4,
nothing herein shall be deemed to preclude any Lender from pledging or assigning
all or any portion of its Loans to any Liquidity Bank or other Support Provider
(or any successor of any thereof by merger, consolidation or otherwise) or any
Affiliate of the foregoing (which may then assign all or any portion thereof so
assigned or any interest therein to such party or parties as it may choose).
Each Co-Agent shall promptly provide notice of any assignment by any member of
its Group to each applicable Rating Agency and Borrower. Subject to Section
13.2, all of the aforementioned assignments shall be upon such terms and
conditions as the applicable Lender and its assignee may mutually agree.
Section 13.2 Documentation. Each Lender shall deliver to each
assignee an assignment, in such form as such Lender and the related assignee may
agree, duly executed by such Lender, assigning any such Loan to the assignee,
and such Lender shall promptly execute and deliver all further instruments and
documents, and take all further action, that the assignee may reasonably
request, in order to perfect, protect or more fully evidence the assignee's
right, title and interest in and to such Loan, and to enable the assignee to
exercise or enforce any rights hereunder or under the applicable Lender Note
evidencing such Loan.
Section 13.3 Rights of Assignees. Subject to the provisions of
Section 13.4, upon the foreclosure of any assignment of any Loans made for
security purposes, or upon any other assignment of any Loan from a Lender
pursuant to this Article XIII, the respective assignee receiving such assignment
shall have all of the rights of a Lender hereunder to the extent of such
assignment with respect to such Loans and all references to a Lender in Section
6.1 shall be deemed to apply to such assignee to the extent of such assignment.
Section 13.4 Transfer and Maintenance of Register. Each
Co-Agent shall maintain a register (each, a "Register") on which it will record
the Loans made to Borrower by
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the member of its Group hereunder and each repayment in respect of the principal
amount of such Loans. Each Co-Agent shall, upon receipt of instruments
evidencing the transfer of the rights to the principal of, and interest on, any
Loan made by a member of its Group pursuant to this Agreement, record such
transfer in the Register and such transfer shall be effective upon recordation.
Failure to make any such recordation, or any error in such recordation shall not
affect the respective Borrower's obligations in respect of such Loans. If any
Lender sells participations in any Loan, it shall maintain (or cause its
co-Agent to maintain) a Register with respect to such participations and shall
permit the transfer of such participations only if and when the transfer is
recorded in the Register. Each Co-Agent will permit Borrower to review such
Register as reasonably needed for Borrowers to comply with its obligations under
this Agreement or under any applicable law or governmental regulation or
procedure.
ARTICLE XIV.
INDEMNIFICATION
Section 14.1 General Indemnity of Borrower. Without limiting
any other rights which any such Person may have hereunder or under applicable
law, Borrower hereby agrees to indemnify Servicer and each of the Agents,
Lenders, Support Providers and each of their respective Affiliates, successors,
transferees, participants and assigns and all officers, directors, shareholders,
controlling persons, employees and agents of any of the foregoing (each of the
foregoing Persons being individually called an "INDEMNIFIED PARTY"), forthwith
on demand, on an after-tax basis, from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
called "INDEMNIFIED AMOUNTS") awarded against or incurred by any of them arising
out of or relating to any Transaction Document or the transactions contemplated
thereby, any commingling of funds (whether or not permitted hereunder), or the
use of proceeds therefrom by Borrower, including (without limitation) in respect
of the funding of any Loan or in respect of any Receivable; EXCLUDING, HOWEVER,
(a) Indemnified Amounts to the extent a final judgment of a court of competent
jurisdiction holds that such Indemnified Amounts resulted from gross negligence
or willful misconduct on the part of the Indemnified Party seeking
indemnification or any member of its Group, and (b) Excluded Taxes.
Section 14.2 Indemnity of Servicer. Without limiting any other
rights which any such Person may have hereunder or under applicable law,
Servicer, hereby agrees to indemnify each Indemnified Party forthwith on demand,
on an after-tax basis, from and against any and all Indemnified Amounts awarded
against or incurred by any of them arising from, or related to, the negligence
or willful misconduct of Servicer, the inaccuracy of any representation or
warranty of Servicer, or the failure of Servicer to perform its obligations
under any Transaction Document; EXCLUDING, HOWEVER, (a) Indemnified Amounts to
the extent determined by a court of competent jurisdiction to have resulted from
gross negligence or willful misconduct on the part of any Indemnified Party, (b)
Indemnified Amounts to the extent solely due to non-payment by any Obligor of an
amount due and payable with respect to a Receivable for credit reasons, and (c)
Excluded Taxes. Anything contained in this Section 14.2 to the contrary
notwithstanding: (1) the foregoing indemnification is not intended to, and shall
not, constitute a guarantee of the collectibility or payment of the Receivables,
and (2) nothing in this Section 14.2 shall require the Servicer to indemnify any
Indemnified Party for Receivables which are not
64
collected, not paid or are otherwise uncollected on account of the insolvency,
bankruptcy, lack of creditworthiness or financial inability to pay of the
applicable Obligor.
ARTICLE XV.
MISCELLANEOUS
Section 15.1 No Waiver; Remedies. No failure on the part of
any of the Agents, Lenders, Indemnified Parties or Affected Parties to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by any of them of
any right, power or remedy hereunder preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law. Without limiting the foregoing, each of the Committed Lenders and Support
Providers is hereby authorized by Borrower at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Committed Lender or Support
Provider to or for the credit or the account of Borrower, now or hereafter
existing under this Agreement, to any of the Agents, Affected Parties,
Indemnified Parties or Lenders or their respective successors and assigns.
Section 15.2 Amendments, Etc. No amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement and any
Schedules hereto shall in any event be effective unless the same shall be in
writing and signed and delivered by (i) Borrower, Servicer, and each of the
Agents (with respect to an amendment), or (ii) each of the Agents (with respect
to a waiver or consent by the Agents and the Lenders) or Servicer or Borrower
(with respect to a waiver or consent by them), as the case may be, and then any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, HOWEVER, that no material
amendment of this Agreement (other than an amendment to extend the Scheduled
Commitment Termination Date) shall be effective unless each of the Co-Agents
shall have received written confirmation by the Rating Agencies that such
amendment shall not cause the rating on their respective Conduit Lender's then
outstanding Commercial Paper Notes to be downgraded or withdrawn. Each of the
Co-Agents shall provide each applicable Rating Agency with a copy of each
amendment to or consent or waiver under this Agreement promptly following the
effective date thereof.
Section 15.3 Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including facsimile communication) and shall be personally delivered
or sent by certified mail, postage prepaid, or by facsimile, to the intended
party at the address or facsimile number of such party set forth opposite its
name on Schedule 15.3 hereto or at such other address or facsimile number as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, (a) if
personally delivered, when received, (b) if sent by certified mail, three
Business Days after having been deposited in the mail, postage prepaid, (c) if
sent by overnight courier, one Business Day after having been given to such
courier, and (d) if transmitted by facsimile or e-mail, when sent, receipt
confirmed by telephone or electronic means, except that notices and
communications pursuant to Section 2.2 shall not be effective until received.
65
Section 15.4 Costs, Expenses and Taxes. In addition to its
obligations under Section 14.1, Borrower agrees to pay on demand:
(a) except to the extent limited by Section 9.1.11 and the Fee
Letters, all costs and expenses incurred by Agents, the Lenders, the
Liquidity Banks, the Support Providers and Servicer in connection with
(i) the preparation, execution, delivery, administration and
enforcement of, or any breach of, the Transaction Documents, the
Liquidity Agreements and, to the extent directly related to this
Agreement, the other Program Documents (including any amendments or
modifications of or supplements to the Program Documents directly
related to this Agreement), including, without limitation, the
reasonable fees and expenses of counsel to any of such Persons incurred
in connection therewith, (ii) the perfection of the Administrative
Agent's security interest in the Collateral, (iii) the maintenance of
the LockBoxes and the LockBox Accounts, (iv) the audit of the books,
records and procedures of Sellers, Servicer and Borrower by any Agent's
auditors (which may be employees of such Agent), and (v) Rating Agency
fees related to the transactions contemplated by this Agreement; and
(b) all stamp and other transactional or filing taxes and fees
payable or determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement, the Lender Note, the
other Transaction Documents, or (to the extent directly related to this
Agreement) the Program Documents, and agrees to indemnify each
Indemnified Party against any liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and fees.
Section 15.5 Binding Effect; Survival. This Agreement shall be
binding upon and inure to the benefit of Borrower, the Lenders, the Agents and
their respective successors and assigns, and the provisions of Article VI and
Article XIV shall inure to the benefit of the Affected Parties and the
Indemnified Parties, respectively, and their respective successors and assigns;
PROVIDED, HOWEVER, nothing in the foregoing shall be deemed to authorize any
assignment not permitted by Article XIII. 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 such time, after the
Commitment Termination Date, when all Obligations have been finally and fully
paid and performed. The rights and remedies with respect to any breach of any
representation and warranty made by Borrower or Servicer pursuant to Article
VIII and the indemnification and payment provisions of Article XIV and Article
VI, Sections 15.4, 15.11 and 15.12 shall be continuing and shall survive any
termination of this Agreement and any termination of Bowater's rights to act as
Servicer hereunder or under any other Transaction Document.
Section 15.6 Captions and Cross References. The various
captions (including, without limitation, the table of contents) in this
Agreement are provided solely for convenience of reference and shall not affect
the meaning or interpretation of any provision of this Agreement. Unless
otherwise indicated, references in this Agreement to any Section, Appendix,
Schedule or Exhibit are to such Section of or Appendix, Schedule or Exhibit to
this Agreement, as the case may be, and references in any Section, subsection,
or clause to any subsection, clause or subclause are to such subsection, clause
or subclause of such Section, subsection or clause.
66
Section 15.7 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 15.8 Governing Law. THIS AGREEMENT SHALL BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW) EXCEPT TO THE EXTENT THAT THE LAWS OF
ANOTHER JURISDICTION GOVERN THE PERFECTION, OR THE EFFECT OF PERFECTION OR
NONPERFECTION, OF THE SECURITY INTERESTS OF THE ADMINISTRATIVE AGENT, FOR THE
BENEFIT OF THE SECURED PARTIES.
Section 15.9 Counterparts. This Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original but all of which shall constitute together but one and the same
agreement.
Section 15.10 Submission to Jurisdiction; Waiver of Trial by
Jury.
(a) Each of Borrower and Servicer hereby submits to the
nonexclusive jurisdiction of any United States District Court for the
Southern District of New York and of any New York state court sitting
in New York, New York for purposes of all legal proceedings arising out
of, or relating to, the Transaction Documents or the transactions
contemplated thereby. Each of Borrower and Servicer hereby irrevocably
waives, to the fullest extent possible, any objection it may now or
hereafter have to the venue of any such proceeding and any claim that
any such proceeding has been brought in an inconvenient forum. Nothing
in this Section 15.10 shall affect the right of any of the Agents or
Lenders to bring any action or proceeding against Borrower or Servicer
or their respective properties in the courts of other jurisdictions.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY
HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, ANY
TRANSACTION DOCUMENT OR ANY MATTER ARISING THEREUNDER.
Section 15.11 No Recourse Against Conduit Lenders. The
obligations (if any) of the Conduit Lenders under this Agreement are solely the
corporate obligations of such Conduit Lender. No recourse shall be had for any
obligation, covenant or agreement (including, without limitation, the payment of
any amount owing in respect to this Agreement or the payment of any Fee
hereunder or for any other obligation or claim) arising out of or based upon
this Agreement or any other agreement, instrument or Transaction Document
entered into pursuant hereto or in connection herewith against any stockholder,
employee, officer, director, manager, administrator, partner or incorporator of
any Conduit Lender, as such, by the enforcement of any assessment or by any
legal or equitable proceeding, by virtue of any statute or otherwise.
67
Section 15.12 No Proceedings. Each of the parties hereto
hereby agree that it will not institute against any Conduit Lender, or join any
other Person in instituting against any Conduit Lender, any insolvency
proceeding (namely, any proceeding of the type referred to in the definition of
Event of Bankruptcy) so long as any Commercial Paper Notes issued by such
Conduit Lender shall be outstanding and there shall not have elapsed one year
plus one day since the last day on which any such Commercial Paper Notes shall
be outstanding. The provisions of this Section 15.12 shall survive the
termination hereof.
Section 15.13 Confidentiality. Each of the Agents and Lenders
will, and will cause its affiliates, directors, officers, employees and
representatives to, keep confidential, and not publish, disclose or otherwise
divulge and use only in connection with this Agreement any non-public
information furnished to it by Bowater, any Subsidiary or any of their
respective agents in respect of this Agreement that Bowater (or such other
Person) identifies as being confidential at the time it furnishes the same,
directly or indirectly (collectively, the "Information"), provided that nothing
herein shall limit the disclosure of the Information (1) after the Information
shall have become public (other than through a violation of this Section 15.13,
(ii) to the extent required by statute, rule, regulation or judicial process,
(iii) to counsel for any of the Lenders or Agents, (iv) to bank examiners (or
any other regulatory authority having jurisdiction over any Lender or Agent), or
to auditors or accountants, (v) to any other Agent or Lender, its Funding
Sources or Rating Agencies or Agent, (vi) in connection with any litigation to
which any one or more of the Lenders or Agent is a party, or in connection with
the enforcement of rights or remedies hereunder, or (vii) to a subsidiary or
affiliate of such Lender as provided in paragraph (a) above; provided, further,
that (x) unless specifically prohibited by applicable law or court order, each
Lender and Agent shall, prior to disclosure thereof, notify Bowater of any
request for disclosure of the Information (A) by any Governmental Authority or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Lender or such Agent by such
Governmental Authority) or (B) pursuant to legal process and (y) in no event
shall any Lender or Agent be obligated or required to return the Information
furnished by Bowater.
Section 15.14 Entire Agreement. This Agreement and the other
Transaction Documents executed and delivered herewith represent the final
agreement among the parties hereto and thereto and may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements of the parties.
There are no unwritten oral agreements among the parties.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.
Bowater Funding Inc., AS BORROWER
By: /s/ Xxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Treasurer
BOWATER INCORPORATED, AS INITIAL SERVICER
By: /s/ Xxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Treasurer
69
BLUE RIDGE ASSET FUNDING CORPORATION, AS A CONDUIT LENDER
BY: WACHOVIA BANK, NATIONAL ASSOCIATION, ITS ATTORNEY-IN-FACT
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
-----------------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION, AS A COMMITTED LENDER AND AS BLUE
RIDGE AGENT
By: /s/ Xxxx Xxxxx
-----------------------------------
Name: Xxxx Xxxxx
Title: Vice President
Commitment: $100,000,000
70
THREE PILLARS FUNDING CORPORATION, AS A CONDUIT LENDER
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
SUNTRUST BANK, AS A COMMITTED LENDER
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Director Senior Relationship Manager
Commitment: $100,000,000
SUNTRUST CAPITAL MARKETS, INC., AS THREE PILLARS AGENT AND AS ADMINISTRATIVE
AGENT
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name: Xxxxx X. Xxxx
Title: Managing Director
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EXHIBIT A
BORROWING REQUEST
[Date]
To: SunTrust Capital Markets, Inc. and
Wachovia Bank, National Association, as "CO-AGENTS"
From: Bowater Funding Inc. ("BORROWER")
Re: Loan Agreement dated as of December 19, 2002, among Borrower,
Bowater Incorporated as Servicer, various Lenders and
Co-Agents, and SunTrust Capital Markets, Inc., as
Administrative Agent (the "AGREEMENT")
A (i) Pursuant to Section 2.2 of the Agreement, the
undersigned hereby requests an Advance in an aggregate
amount equal to the following: $_________________
of which each Group's Funding Amount will be the
following (not less than $1,000,000
per Group or a larger integral multiple of $200,000): $_________________
(ii) The date such Advance is requested is: __________________
(iii) The requested maturity date of the Related Commercial
Paper issued to fund such Advance (other than Pooled
Commercial Paper) is: ------------------
(iv) The aggregate principal amount of Advances outstanding
under the Agreement, after giving effect to the
requested Advance under (i) above, will equal: $-----------------
(v) The amount in (iv) above does not exceed the Facility Limit
which equals: $200,000,000
B. As of the date hereof and the date of making of such Advance, each of
the representations and warranties contained in Article VIII of the
Agreement shall be true and correct on and as of the date hereof and,
if applicable, the date of such Advance, and no Significant Event or
Unmatured Significant Event has occurred and is continuing or shall
exist after giving effect to the Advance requested hereby.
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE MEANINGS
GIVEN TO THEM IN THE AGREEMENT.
The undersigned certifies to the accuracy of the foregoing.
Bowater Funding Inc.
Date: By:
------------------------ ----------------------
Title:
EXHIBIT B
LENDER NOTE
$___________ December 19, 2002
FOR VALUE RECEIVED, Bowater Funding Inc., a Delaware
corporation (the "BORROWER"), promises to pay __________________________, as
agent and/or administrator (the "CO-AGENT"), or its registered assigns, on or
before the Scheduled Commitment Termination Date, the principal sum of
_________________________ and no/100 Dollars ($_________) or, if less, the
aggregate unpaid principal amount of all Loans shown on the schedule attached
hereto (and/or any continuation thereof and/or in the records of the Lender)
made by the Lenders in the ___________ Group pursuant to that certain Loan
Agreement, dated as of December 19, 2002 (together with all amendments and other
modifications, if any, from time to time thereafter made thereto, the "LOAN
AGREEMENT"), among Borrower, Bowater Incorporated, as servicer, various Lenders
and Co-Agents, and SunTrust Capital Markets, Inc., as Administrative Agent.
Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Loan Agreement.
Payments of both principal and interest are to be made in
lawful money of the United States of America in immediately available funds to
the account designated by the Co-Agent pursuant to the Loan Agreement.
This promissory note is one of the "LENDER NOTES" referred to
in, and evidences indebtedness incurred under, the Loan Agreement, and the
holder hereof is entitled to the benefits of the Loan Agreement, to which
reference is made for a description of the security for this Lender Note and for
a statement of the terms and conditions on which Borrower is permitted and
required to make prepayments and repayments of principal of the indebtedness
evidenced hereby and on which such indebtedness may be declared to be
immediately due and payable. Unless otherwise defined, capitalized terms used
herein have the meanings provided in the Loan Agreement.
All parties hereto, whether as makers, endorsers, or
otherwise, severally waive presentment for payment, demand, protest and notice
of dishonor.
THIS LENDER NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW).
Bowater Funding Inc.
By
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SCHEDULE ATTACHED TO
LENDER NOTE DATED DECEMBER 19, 2002 OF
BOWATER FUNDING INC.
===============================================================================
PAYABLE TO THE ORDER OF __________________, AS CO-AGENT
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DATE OF AMOUNT OF AMOUNT OF
LOAN LOAN REPAYMENT
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EXHIBIT C
FORM OF MONTHLY REPORT
EXHIBIT D
FORM OF BORROWING BASE CERTIFICATE
EXHIBIT E
[FORM OF] PERFORMANCE UNDERTAKING
PERFORMANCE UNDERTAKING
THIS PERFORMANCE UNDERTAKING (this "UNDERTAKING"), dated as of
December 19, 2002, is executed by Bowater Incorporated, a Delaware corporation
("BOWATER" or the "PERFORMANCE GUARANTOR"), in favor of Bowater Funding Inc., a
Delaware corporation (together with its successors and assigns, "BENEFICIARY").
RECITALS
(a) Bowater America Inc., a Delaware corporation, Lake
Superior Holdings Incorporated, a Delaware corporation (each of the
foregoing, a "SUBSIDIARY SELLER" and together with Bowater, the
"SELLERS"), have entered into a Receivables Sale Agreement dated as of
December 19, 2002 (as amended, restated or otherwise modified from time
to time, the "RECEIVABLES SALE Agreement"), with Beneficiary, pursuant
to which the Sellers have agreed, among other things, to sell or
contribute to Beneficiary, their existing and future accounts
receivable and certain related rights.
(b) Performance Guarantor owns, directly or indirectly, one
hundred percent (100%) of the capital stock of the Subsidiary Sellers
and of Beneficiary, and each of the foregoing (and accordingly,
Performance Guarantor) is expected to receive substantial direct and
indirect benefits from the sale or contribution of receivables to
Beneficiary pursuant to the Receivable Sale Agreement (which benefits
are hereby acknowledged).
(c) As an inducement for Beneficiary to acquire accounts
receivable and related rights from the Subsidiary Sellers pursuant to
the Receivables Sale Agreement, Performance Guarantor has agreed to
guaranty the due and punctual performance by each of the Subsidiary
Sellers of its respective obligations under the Receivables Sale
Agreement.
AGREEMENT
NOW, THEREFORE, Performance Guarantor hereby agrees as
follows:
SECTION 1. DEFINITIONS.
1.1. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings assigned thereto in the Receivables
Sale Agreement or, if not defined therein, in the Loan Agreement (hereinafter
defined).
1.2. As used herein:
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11
U.S.C.ss.101, et seq., as amended.
"GUARANTEED OBLIGATIONS" means, collectively, all
representations, warranties, covenants, agreements, terms, conditions
and indemnities to be performed and observed by any Subsidiary Seller
under and pursuant to the Receivables Sale Agreement and each other
document executed and delivered by or on behalf of such Subsidiary
Seller pursuant thereto, including, without limitation, the due and
punctual payment of all sums which are or may become due and owing by
such Subsidiary Seller under the Receivables Sale Agreement, whether
for fees, expenses (including counsel fees), Seller Indemnified Amounts
or otherwise, whether upon any termination or for any other reason.
"LOAN AGREEMENT" means that certain Loan Agreement dated as of
December 19, 2002 by and among Beneficiary, as "BORROWER," Bowater, as
initial Servicer, various Lenders and Co-Agents, and SunTrust Capital
Markets, Inc., as "ADMINISTRATIVE AGENT," as the same may be amended,
restated or otherwise modified from time to time.
SECTION 2. GUARANTY OF PERFORMANCE OF GUARANTEED OBLIGATIONS.
2.1. Performance Guarantor hereby guarantees to Beneficiary,
the full and punctual payment and performance by the Subsidiary Sellers of their
respective Guaranteed Obligations. This Undertaking is an absolute,
unconditional and continuing guaranty of the full and punctual performance by
the Subsidiary Sellers of the Guaranteed Obligations and is in no way
conditioned upon any requirement that Beneficiary first attempt to collect any
amounts owing by any Subsidiary Seller to Beneficiary, any of the Agents or
Lenders from any other Person or resort to any collateral security, any balance
of any deposit account or credit on the books of Beneficiary, any of the Agents
or Lenders in favor of any Subsidiary Seller or any other Person or other means
of obtaining payment. Should any Subsidiary Seller default in the payment or
performance of any of its Guaranteed Obligations, Beneficiary (or its assigns)
may cause the immediate performance by Performance Guarantor of such Guaranteed
Obligations and cause any payment Guaranteed Obligations to become forthwith due
and payable to Beneficiary (or its assigns), without demand or notice of any
nature (other than as expressly provided herein), all of which are hereby
expressly waived by Performance Guarantor.
2.2. Notwithstanding the foregoing, this Undertaking is not a
guarantee of the collection of any of the Receivables and Performance Guarantor
shall not be responsible for any Guaranteed Obligations to the extent the
failure to perform such Guaranteed Obligations by the applicable Subsidiary
Seller results from Receivables being uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related Obligor;
provided that nothing herein shall relieve any Subsidiary Seller from performing
in full its Guaranteed Obligations under the Receivables Sale Agreement or
Performance Guarantor of its undertaking hereunder with respect to the full
performance of such duties.
SECTION 3. PERFORMANCE GUARANTOR'S FURTHER AGREEMENTS TO PAY.
Performance Guarantor further agrees, as the principal obligor and not as a
guarantor only, to pay to Beneficiary (and its assigns), forthwith upon demand
in funds immediately available to Beneficiary, all reasonable costs and expenses
(including court costs and reasonable legal expenses) incurred or expended by
Beneficiary in connection with enforcement of this
Undertaking, together with interest on amounts recoverable under this
Undertaking from the time when such amounts become due until payment, at a rate
of interest (computed for the actual number of days elapsed based on a 360-day
year) equal to the Default Rate (as defined in the Loan Agreement).
SECTION 4. WAIVERS BY PERFORMANCE GUARANTOR. Performance Guarantor
waives notice of acceptance of this Undertaking, notice of any action taken or
omitted by Beneficiary (or its assigns) in reliance on this Undertaking, and any
requirement that Beneficiary (or its assigns) be diligent or prompt in making
demands under this Undertaking, giving notice of any Termination Event or
Significant Event, other default or omission by any Subsidiary Seller or
asserting any other rights of Beneficiary under this Undertaking. Performance
Guarantor warrants that it has adequate means to obtain from each Subsidiary
Seller, on a continuing basis, information concerning the financial condition of
such Subsidiary Seller, and that it is not relying on Beneficiary to provide
such information, now or in the future. Performance Guarantor also irrevocably
waives all defenses that at any time may be available in respect of the
Guaranteed Obligations (i) by virtue of any statute of limitations, valuation,
stay, moratorium law or other similar law now or hereafter in effect or (ii)
that arise under the law of suretyship, including impairment of collateral.
Beneficiary (and its assigns) shall be at liberty, without giving notice to or
obtaining the assent of Performance Guarantor and without relieving Performance
Guarantor of any liability under this Undertaking, to deal with each Subsidiary
Seller and with each other party who now is or after the date hereof becomes
liable in any manner for any of the Guaranteed Obligations, in such manner as
Beneficiary in its sole discretion deems fit, and to this end Performance
Guarantor agrees that the validity and enforceability of this Undertaking,
including without limitation, the provisions of Section 7 hereof, shall not be
impaired or affected by any of the following: (a) any extension, modification or
renewal of, or indulgence with respect to, or substitutions for, the Guaranteed
Obligations or any part thereof or any agreement relating thereto at any time;
(b) any failure or omission to enforce any right, power or remedy with respect
to the Guaranteed Obligations or any part thereof or any agreement relating
thereto, or any collateral securing the Guaranteed Obligations or any part
thereof; (c) any waiver of any right, power or remedy or of any Termination
Event, Significant Event, or default with respect to the Guaranteed Obligations
or any part thereof or any agreement relating thereto; (d) any release,
surrender, compromise, settlement, waiver, subordination or modification, with
or without consideration, of any other obligation of any person or entity with
respect to the Guaranteed Obligations or any part thereof, other than release of
the Performance Guarantor; (e) the enforceability or validity of the Guaranteed
Obligations or any part thereof or the genuineness, enforceability or validity
of any agreement relating thereto or with respect to the Guaranteed Obligations
or any part thereof; (f) the application of payments received from any source to
the payment of any payment obligations of any Subsidiary Seller or any part
thereof or amounts which are not covered by this Undertaking even though
Beneficiary (or its assigns) might lawfully have elected to apply such payments
to any part or all of the payment obligations of such Subsidiary Seller or to
amounts which are not covered by this Undertaking; (g) the existence of any
claim, setoff or other rights which Performance Guarantor may have at any time
against any Subsidiary Seller in connection herewith or any unrelated
transaction; (h) any assignment or transfer of the Guaranteed Obligations or any
part thereof; or (i) any failure on the part of any Subsidiary Seller to perform
or comply with any term of the Receivables Sale Agreement or any other document
executed in connection therewith or delivered thereunder, all
whether or not Performance Guarantor shall have had notice or knowledge of any
act or omission referred to in the foregoing clauses (a) through (i) of this
Section 4.
SECTION 5. UNENFORCEABILITY OF GUARANTEED OBLIGATIONS AGAINST
SUBSIDIARY SELLER. Notwithstanding (a) any change in ownership of any Subsidiary
Seller or any Event of Bankruptcy with respect to any Subsidiary Seller or any
other change in the legal status of any Subsidiary Seller; (b) the change in or
the imposition of any law, decree, regulation or other governmental act which
does or might impair, delay or in any way affect the validity, enforceability or
the payment when due of the Guaranteed Obligations (unless the same shall be
applicable to the Performance Guarantor); (c) the failure of any Subsidiary
Seller or Performance Guarantor to maintain in full force, validity or effect or
to obtain or renew when required all governmental and other approvals, licenses
or consents required in connection with the Guaranteed Obligations or this
Undertaking, or to take any other action required in connection with the
performance of all obligations pursuant to the Guaranteed Obligations or this
Undertaking; or (d) if any of the moneys included in the Guaranteed Obligations
have become irrecoverable from any Subsidiary Seller for any other reason other
than final payment in full of the payment obligations in accordance with their
terms or lawful setoff of claims against the Purchasers, this Undertaking shall
nevertheless be binding on Performance Guarantor. This Undertaking shall be in
addition to any other guaranty or other security for the Guaranteed Obligations,
and it shall not be rendered unenforceable by the invalidity of any such other
guaranty or security. In the event that acceleration of the time for payment of
any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of any Subsidiary Seller or for any other reason with respect to
any Subsidiary Seller, all such amounts then due and owing with respect to the
Guaranteed Obligations under the terms of the Receivables Sale Agreement, or any
other agreement evidencing, securing or otherwise executed in connection with
the Guaranteed Obligations, shall be immediately due and payable by Performance
Guarantor.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Performance Guarantor hereby
represents and warrants to Beneficiary and its assigns that (a) each of the
representations and warranties made by Performance Guarantor in its capacity as
the initial Servicer under the Loan Agreement is true and correct as of the date
hereof, and (b) this Undertaking has been duly executed and delivered by
Performance Guarantor and constitutes its legally valid and binding obligation,
enforceable against Performance Guarantor in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).
SECTION 7. SUBROGATION; SUBORDINATION. Notwithstanding anything to the
contrary contained herein, until the Guaranteed Obligations are paid in full
Performance Guarantor: (a) will not enforce or otherwise exercise any right of
subrogation to any of the rights of Beneficiary, any of the Agents or Lenders
against any Subsidiary Seller, (b) hereby waives all rights of subrogation
(whether contractual, under ss.509 of the Bankruptcy Code, at law or in equity
or otherwise) to the claims of Beneficiary, any of the Agents or Lenders against
any Subsidiary Seller and all contractual, statutory or legal or equitable
rights of contribution, reimbursement, indemnification and similar rights and
"claims" (as that term is defined in the Bankruptcy Code) which Performance
Guarantor might now have or hereafter acquire against
any Subsidiary Seller that arise from the existence or performance of
Performance Guarantor's obligations hereunder, (c) will not claim any setoff,
recoupment or counterclaim against any Subsidiary Seller in respect of any
liability of Performance Guarantor to such Subsidiary Seller and (d) waives any
benefit of and any right to participate in any collateral security which may be
held by Beneficiary, any of the Agents or Lenders.
SECTION 8. TERMINATION OF UNDERTAKING. Performance Guarantor's
obligations hereunder shall continue in full force and effect until all
Obligations are finally paid and satisfied in full and the Loan Agreement is
terminated, PROVIDED THAT this Undertaking shall continue to be effective or
shall be reinstated, as the case may be, if at any time payment or other
satisfaction of any of the Guaranteed Obligations is rescinded or must otherwise
be restored or returned upon the occurrence of any Event of Bankruptcy with
respect to any Subsidiary Seller or otherwise, as though such payment had not
been made or other satisfaction occurred, whether or not Beneficiary (or its
assigns) is in possession of this Undertaking. No invalidity, irregularity or
unenforceability by reason of the Bankruptcy Code or any other federal or state
insolvency or other similar law, or any law or order of any Governmental
Authority thereof purporting to reduce, amend or otherwise affect the Guaranteed
Obligations shall impair, affect, be a defense to or claim against the
obligations of Performance Guarantor under this Undertaking.
SECTION 9. EFFECT OF BANKRUPTCY. This Undertaking shall survive the
insolvency of each of the Subsidiary Sellers and the commencement of any case or
proceeding of by or against either or both of the Subsidiary Sellers under the
Bankruptcy Code or other federal, state or other applicable bankruptcy,
insolvency or reorganization statutes. [No automatic stay under the Bankruptcy
Code with respect to any Subsidiary Seller or other federal, state or other
applicable bankruptcy, insolvency or reorganization statutes to which any
Subsidiary Seller is subject shall postpone the obligations of Performance
Guarantor under this Undertaking.]
SECTION 10. SETOFF. Regardless of the other means of obtaining payment
of any of the Guaranteed Obligations, Beneficiary (and each of its assigns) is
hereby authorized at any time and from time to time, without notice to
Performance Guarantor (any such notice being expressly waived by Performance
Guarantor) and to the fullest extent permitted by law, to set off and apply any
deposits and other sums against the obligations of Performance Guarantor under
this Undertaking, whether or not Beneficiary (or any such assign) shall have
made any demand under this Undertaking and although such obligations may be
contingent or unmatured.
SECTION 11. TAXES. All payments to be made by Performance Guarantor
hereunder shall be made free and clear of any deduction or withholding. If
Performance Guarantor is required by law to make any deduction or withholding on
account of any Taxes (other than Excluded Taxes) or otherwise from any such
payment, the sum due from it in respect of such payment shall be increased to
the extent necessary to ensure that, after the making of such deduction or
withholding, Beneficiary receive a net sum equal to the sum which they would
have received had no deduction or withholding been made.
SECTION 12. FURTHER ASSURANCES. Performance Guarantor agrees that it
will from time to time, at the request of Beneficiary (or its assigns), provide
information relating to the business and affairs of Performance Guarantor as
Beneficiary may reasonably request.
SECTION 13. SUCCESSORS AND ASSIGNS; PLEDGE TO ADMINISTRATIVE AGENT.
This Undertaking shall be binding upon Performance Guarantor, its successors and
permitted assigns, and shall inure to the benefit of and be enforceable by
Beneficiary and its successors and assigns. Performance Guarantor may not assign
or transfer any of its obligations hereunder without the prior written consent
of each of Beneficiary and the Agents. Performance Guarantor hereby acknowledges
that Beneficiary intends to pledge to the Administrative Agent for the benefit
of the Secured Parties as part of the Collateral for the Obligations under the
Loan Agreement, all of Beneficiary's existing and future right, title and
interest in, to and under the Receivables Sale Agreement and this Undertaking,
and hereby agrees that until the later to occur of payment in full of the
Obligations and the Commitment Termination Date, the Administrative Agent shall
have the non-exclusive right to enforce this Undertaking against Performance
Guarantor in Beneficiary's name, place and stead.
SECTION 14. AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Undertaking nor consent to any departure by Performance
Guarantor therefrom shall be effective unless the same shall be in writing and
signed by Beneficiary, the Agents and Performance Guarantor. No failure on the
part of Beneficiary to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.
SECTION 15. NOTICES. All notices and other communications provided for
hereunder shall be made in writing and shall be addressed as follows: if to
Performance Guarantor, at the address set forth beneath its signature hereto,
and if to Beneficiary, at the address specified in the Loan Agreement, or at
such other addresses as each of Performance Guarantor or Beneficiary may
designate in writing to the other. Each such notice or other communication shall
be effective (1) if given by facsimile, upon the receipt thereof, (2) if given
by mail, five (5) Business Days after the time such communication is deposited
in the mail with first class postage prepaid or (3) if given by any other means,
when received at the address specified in this Section 15.
SECTION 16. GOVERNING LAW. THIS UNDERTAKING SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
NEW YORK.
SECTION 17. CONSENT TO JURISDICTION. EACH OF PERFORMANCE GUARANTOR AND
BENEFICIARY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
UNDERTAKING, THE RECEIVABLES SALE AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION THEREWITH OR DELIVERED THEREUNDER AND EACH OF THE PERFORMANCE
GUARANTOR AND BENEFICIARY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM.
SECTION 18. BANKRUPTCY PETITION. Performance Guarantor hereby agrees
that it will not institute against any Conduit Lender, or join any other Person
in instituting against any Conduit Lender, any insolvency proceeding (namely,
any proceeding of the type referred to in the definition of Event of Bankruptcy)
so long as any Commercial Paper Notes issued by such Conduit Lender shall be
outstanding and there shall not have elapsed one year plus one day since the
last day on which any such Commercial Paper Notes shall be outstanding. The
provisions of this Section 18 shall survive the termination hereof.
SECTION 19. MISCELLANEOUS. This Undertaking constitutes the entire
agreement of Performance Guarantor with respect to the matters set forth herein.
The rights and remedies herein provided are cumulative and not exclusive of any
remedies provided by law or any other agreement, and this Undertaking shall be
in addition to any other guaranty of or collateral security for any of the
Guaranteed Obligations. The provisions of this Undertaking are severable, and in
any action or proceeding involving any state corporate law, the Bankruptcy Code
or any state bankruptcy, insolvency, reorganization or other law affecting the
rights of creditors generally, if the obligations of Performance Guarantor
hereunder would otherwise be held or determined to be avoidable, invalid or
unenforceable on account of the amount of Performance Guarantor's liability
under this Undertaking, then, notwithstanding any other provision of this
Undertaking to the contrary, the amount of such liability shall, without any
further action by Performance Guarantor or Beneficiary, be automatically limited
and reduced to the highest amount that is valid and enforceable as determined in
such action or proceeding. Any provisions of this Undertaking which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Unless otherwise
specified, references herein to "SECTION" shall mean a reference to sections of
this Undertaking.
(Signature page follows)
IN WITNESS WHEREOF, Performance Guarantor has caused this
Undertaking to be executed and delivered as of the date first above written.
BOWATER INCORPORATED
By: ________________________________
Name: ______________________________
Title: _____________________________
ADDRESS FOR NOTICES:
Bowater Incorporated
00 Xxxx Xxxxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attention: Treasurer
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
SCHEDULE 8.12
LOCKBOXES AND LOCKBOX ACCOUNTS
BANK OF AMERICA
Bowater Incorporated (being changed to Bowater Funding Inc.)
Account Number 3750202618
XX Xxx 000000
Xxxxxxx, XX 00000
XX Xxx 000000
Xx. Xxxxx, XX 00000
XX Xxx 000000
Xx. Xxxxx, XX 00000
WACHOVIA BANK
Bowater Incorporated (being changed to Bowater Funding Inc.)
Account Number 0000000000
XX Xxx 00000
Xxxxxxxxx, XX 00000
Bowater Incorporated (being changed to Bowater Funding Inc.)
Account Number 0000000
0 Xxxxxxxxxxx, Xxxxxx XX0X 0XX
JPMORGAN CHASE MANHATTAN BANK
Bowater Incorporated (being changed to Bowater Funding Inc.)
ABA 000000000
Account Number 9102524478 (electronic lockbox)
SCHEDULE 9.1.5
PROCEDURES REVIEW
Report of Independent Accountants
I. Shall be titled the "REPORT OF INDEPENDENT ACCOUNTANTS ON AGREED
UPON PROCEDURES";
II. Shall be addressed to Bowater Incorporated, as Servicer and to
SunTrust Capital Markets, Inc. as Administrator, at their respective addresses
set forth on Schedule 15.3 to the Loan Agreement;
III. The review and subsequent report shall be conducted by Commercial
Lending Consultants, Inc. (or such other firm as may be mutually acceptable to
the Co-Agents);
IV. The report shall be delivered within forty-five (45) days after an
inspection as permitted in Section 9.1.11 of the Loan Agreement; and
V. Select a sample of accounts included in the receivable schedule
delivered by Borrower pursuant to the initial funding and perform the following:
(a) Account Receivable
(i) reconciliation from the A/R aged trial balance to the
G/L to the financial statements as of most current
month end;
(ii) access to summary aged trial balance reports
September 2002 through most current month end and
hardcopy and electronic file (Lotus, Excel, Text, or
print files) of the most current month end summary
aged trial balance report, if possible;
(iii) summary schedule of A/R agings per the A/R trial
balance reports by month September 2002 through most
current month end;
(iv) summary schedule reconciling beginning A/R to ending
A/R per the A/R aging system by month for the period
September 2002 through most current month end by
major classification (i.e. gross sales, debit memos
issued, A/R cash received, returns & allowances, cash
discounts, bad debt write-offs, volume rebates,
credit memos, etc) and access to supporting
data/reports. Receivables balances should agree to
aging reports and credits must be segregated from
sales;
(v) schedule of receivables by selling terms as of most
current month end;
(vi) aged schedule of foreign receivables included in the
Trade Receivables Program including selling terms
(Letters of Credit, Site Draft, etc.) and country of
origin as of most current month end. Segregate the
schedule by eligible countries receivables and
ineligible country receivables. For eligible country
foreign receivables please also provide a breakdown
of the country balance by foreign currency invoiced;
(vii) aged schedule of inter-company receivables included
in the aged A/R trial balance(s) as of most current
month end, if any;
(viii) aged schedule of receivables from government agencies
as of most current month end, if any;
(ix) schedule of charge-backs and/or debit memos included
in the aged A/R trial balance as of most current
month end by aging category;
(x) aged schedule of bankrupt customer receivables
included in the aged A/R trial balance as of most
current month end, if any;
(xi) aged schedule of top twenty five customer A/R
balances per the aged trial balance at most current
month end (Customers should be grouped by ultimate
parent including multiple account numbers, ship to's
and subsidiaries, if necessary);
(xii) aged schedules of all customers with more than 35% of
their receivable balance more than 60 days past due
date as of most current month end;
(xiii) aged schedule of unapplied credit memos included in
the A/R aging as of most current month end;
(xiv) written description of the current status of
significant past due accounts (> $100,000 more than
60 days past invoice date) as of most current month
end;
(xv) schedule of monthly activity in all accounts
receivable bad debt reserve accounts for the period
September 2002 through most current month end.
Monthly activity should include reserve balances,
write-offs, provisions, recoveries and other reserve
adjustments;
(xvi) written description of policies and procedures for
the major accounts receivable functional areas such
as credit and collections, billing, order processing,
credit memo authorization, A/R systems, cash
management, etc. as available;
(xvii) completion of the CLC A/R questionnaire;
(b) General Ledger, Financial Statements
(i) copy of summary general ledger trial balance as of
most current month end;
(ii) copy of monthly financial statements for most current
month end and PYMTD 2002;
(iii) copy of audited year end 2002 and 2001 financial
statements;
(iv) copy of CPA Management Letters for 2002;
(c) Cash Receipts
(i) list of all bank accounts including bank name,
account number, and description of activity
(flowchart if available);
(ii) copy of bank reconciliations for all
lockbox/depository accounts as of most current month
end;
(iii) schedule of monthly cash receipts by location
received (lockbox(s), corporate offices, etc.) for
the last three months;
(d) Corporate Formality
(i) provide list of independent director(s) for the
receivables corporation (SPE) including name and
address-Also include the amount of compensation paid
or payable to the director(s) as well as evidence
that such amounts were paid from the receivables
corporation;
(ii) copies of the SPE entity's financial statements for
the last quarter and the prior year end;
(iii) copy of board of director's minutes from SPE board
meeting(s);
(iv) copy of SPE entity's corporate stationary, address
and telephone number; and
(v) evidence that the receivable aging reports clearly
indicate that the receivables included therein have
been sold to the SPE.
SCHEDULE 15.3
NOTICE ADDRESSES
BORROWER:
Bowater Funding Inc.
00 Xxxx Xxxxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attention: Treasurer
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
SERVICER:
Bowater Incorporated
00 Xxxx Xxxxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attention: Treasurer
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
ADMINISTRATIVE AGENT AND THREE PILLARS AGENT:
SunTrust Capital Markets, Inc.
00xx Xxxxx, XX0000
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
BLUE RIDGE AGENT:
Wachovia Bank, National Association
000 Xxxxxxxxx Xxxxxx, N.E., 22nd Floor
GA-8047
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
WITH A COPY TO:
Wachovia Bank, National Association
000 X. Xxxxxxx Xxxxxx
XXX XXX 0 XX00000
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
