EXHIBIT 10.2(a)
RECEIVABLES PURCHASE AGREEMENT
AMONG
MBI LIMITED/LIMITEE
IN ITS CAPACITY AS GENERAL PARTNER OF
SMURFIT-MBI,
AN ONTARIO LIMITED PARTNERSHIP
AND
COMPUTERSHARE TRUST COMPANY OF CANADA
IN ITS CAPACITY AS TRUSTEE OF
KING STREET FUNDING TRUST
AND
SCOTIA CAPITAL INC.
TABLE OF CONTENTS
PAGE
ARTICLE 1 AMOUNTS AND TERMS OF THE PURCHASES .................................. 1
Section 1.1 Purchase Facility ......................................... 1
Section 1.2 Purchase of Receivables; Payment of the Purchase Price .... 2
Section 1.3 Conveyance and Identification of Purchased Receivables .... 3
Section 1.4 Settlement Procedures ..................................... 6
Section 1.5 Fees ......................................................12
Section 1.6 Payments and Computations, Etc ............................12
Section 1.7 Dividing or Combining Portions of Capital .................13
Section 1.8 Increased Costs ...........................................13
Section 1.9 Requirements of Law .......................................14
Section 1.10 Assignment ................................................15
Section 1.11 Optional Purchase .........................................16
ARTICLE 2 REPRESENTATIONS AND WARRANTIES; COVENANTS; ..........................16
Section 2.1 Representations and Warranties; Covenants .................16
Section 2.2 Termination Events ........................................17
ARTICLE 3 INDEMNIFICATION .....................................................17
Section 3.1 Indemnities by the Seller .................................17
ARTICLE 4 ADMINISTRATION AND COLLECTIONS ......................................20
Section 4.1 Appointment of Servicer ...................................20
Section 4.2 Duties of Servicer ........................................21
Section 4.3 Enforcement Rights ........................................22
Section 4.4 Responsibilities of the Seller ............................23
Section 4.5 Servicing Fee .............................................24
Section 4.6 Obligations of Administrator ..............................24
ARTICLE 5 MISCELLANEOUS .......................................................25
Section 5.1 Amendments, Etc ...........................................25
Section 5.2 Notices, Etc ..............................................25
Section 5.3 Assignability .............................................25
Section 5.4 Legal Costs and Taxes .....................................26
Section 5.5 No Proceedings; Limitation on Payments ....................27
Section 5.6 Confidentiality ...........................................27
Section 5.7 Governing Law and Jurisdiction ............................28
Section 5.8 Execution in Counterparts .................................28
Section 5.9 Survival of Termination ...................................28
Section 5.10 Entire Agreement ..........................................28
Section 5.11 Headings ..................................................29
Section 5.12 Issuer's Liabilities ......................................29
RECEIVABLES PURCHASE AGREEMENT
THIS
RECEIVABLES PURCHASE AGREEMENT is made as of the 30th day of March,
2004 between MBI LIMITED/LIMITEE, in its capacity as General Partner of
SMURFIT-MBI, an
Ontario limited partnership, as seller (the "SELLER") and as
initial servicer (the "SERVICER"), COMPUTERSHARE TRUST COMPANY OF CANADA, a
trust company carrying on business in the Province of
Ontario, in its capacity
as trustee (in such capacity, together with its successors and permitted assigns
in such capacity, the "ISSUER"), of KING STREET FUNDING TRUST, a trust
established under the laws of the Province of
Ontario (the "TRUST") and SCOTIA
CAPITAL INC., an
Ontario corporation, ("SCOTIA CAPITAL"), as administrator of
the Issuer (in such capacity, together with its successors and permitted assigns
in such capacity, the "ADMINISTRATOR").
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in EXHIBIT I to this Agreement. References
in the Exhibits hereto to "the Agreement" refer to this Agreement, as amended,
modified or supplemented from time to time.
The Seller desires to sell, transfer and assign Receivables, and the Issuer
desires to acquire such Receivables from time to time, on and subject to the
terms and conditions of this Agreement.
The Servicer has agreed to carry out the duties and responsibilities of the
Servicer under this Agreement.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
ARTICLE 1
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 1.1 PURCHASE FACILITY
(a) On the terms and conditions hereinafter set forth, the Issuer
hereby agrees to purchase and the Seller hereby agrees to sell
Eligible Receivables and the Related Security pursuant to SECTION
1.2(a) PROVIDED, that nothing herein shall be deemed or construed
as a commitment by the Issuer to fund a purchase or a Cash Purchase
Price payment in respect of the Purchased Interest solely through
the issuance of Notes, it being acknowledged and agreed that such
funding through the issuance of Notes rather than through other
means is, and shall continue to be, wholly discretionary on the
part of the Issuer. Under no circumstances shall the Issuer make
any payment in respect of a purchase or a payment of the Cash
Purchase Price of the Purchased Interest if, after giving effect
thereto (i) the aggregate outstanding Capital would exceed the
Facility Limit or (ii) the Required Amount
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would exceed the Net Receivables Pool Balance, in each case, after
giving effect to such payment.
(b) The Seller may, upon at least 45 days' notice to the Administrator,
terminate the purchase facility provided in this SECTION 1.1 in
whole (but not in part).
SECTION 1.2 PURCHASE OF RECEIVABLES; PAYMENT OF THE PURCHASE PRICE
(a) The purchase of Eligible Receivables and the Related Security shall
be made upon the Seller's irrevocable written notice, in
substantially the form of Annex B, delivered to the Administrator
in accordance with SECTION 5.2 (which notice must be received by
the Administrator prior to 11:00 a.m., Toronto time) on or before
the requested purchase date, which notice shall specify (A) the
amount requested to be paid to the Seller (such amount being the
initial "CASH PURCHASE PRICE" of the Purchased Interest) and (B)
the date of such purchase (which shall be a Business Day).
(b) Prior to the Termination Date, the Seller may, on the last day of
any Settlement Period following the date of purchase under SECTION
1.2(a), request the Issuer to pay an additional amount to the
Seller in respect of the Cash Purchase Price of the Purchased
Interest; PROVIDED, HOWEVER that the amount of any additional Cash
Purchase Price requested by the Seller shall not (i) be greater
than the excess of the Facility Limit over the then outstanding
Capital or (ii) result in the Required Amount (after giving effect
to payment of the requested additional Cash Purchase Price) being
greater than the Net Receivables Pool Balance as of the close of
business on the Business Day immediately preceding the requested
date of payment. Each request by the Seller for payment of an
additional Cash Purchase Price shall be made upon the Seller's
irrevocable written notice, in substantially the form of Annex B,
delivered to the Administrator in accordance with SECTION 5.2
(which notice must be received by the Administrator prior to 11:00
a.m., Toronto time) at least four Business Days prior to the
requested payment date, which notice shall specify (A) the amount
of the additional Cash Purchase Price requested to be paid to the
Seller (which shall not be less than $1,000,000 and shall be in an
integral multiple of $500,000) and (B) the date of such payment
(which shall be a Business Day).
(c) On the date of purchase or payment with respect to the Cash
Purchase Price of the Purchased Interest under SECTION 1.2(a) or
SECTION 1.2(b), the Issuer shall, upon satisfaction of the
applicable conditions set forth in EXHIBIT II hereto, make
available to the Seller in same day funds, at the account of the
Seller at Royal Bank of Canada, Account #▇▇▇▇▇▇▇, Transit Number
▇▇▇▇▇, an amount equal to the Cash Purchase Price then to be paid
by the Issuer to the Seller.
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(d) The purchase price for any portion of the Purchased Interest will
be equal to the Outstanding Balance of the Purchased Receivables
included in such portion of the Purchased Interest less a discount
equal to the amount of the Discount allocable to such portion of
the Purchased Interest. Such purchase price will be paid or
satisfied by (i) payment by the Issuer of the Capital payable to
the Seller on the date of any Cash Purchase Price payment pursuant
to SECTION 1.2(a) or SECTION 1.2(b), (ii) payment by the Issuer to
the Seller pursuant to SECTION 1.4(b)(iii)(B), of the Collections
allocable to the Capital of the Purchased Interest PLUS, in each
case, (iii) payment or satisfaction, as provided in this Agreement,
of a deferred amount (the "DEFERRED PURCHASE PRICE") equal at any
time to the sum at such time of (v) the Loss Reserve, (w) the
Dilution Reserve, (x) the excess of the Yield Reserve over the
accrued and unpaid Discount and (y) the Servicing Fee Reserve
(after giving effect to all payments therefrom in respect of
accrued and unpaid Servicing Fees, if any, under SECTION 1.4(d)(i))
and (z) the Unfinanced Interest.
The Issuer may allocate on a reasonable basis, but in its sole
discretion, the amount of the Discount and the Deferred Purchase
Price among all Purchased Receivables outstanding based upon the
length of time a Purchased Receivable is outstanding and the amount
of the Discount.
(e) Subject to SECTION 1.2(f), SECTION 1.3(b) and SECTION 1.4(d)(iii),
on and after the Termination Date, the Deferred Purchase Price
shall be payable from Collections of or with respect to the
Purchased Interest only after receipt by the Issuer of payment in
full of the outstanding Capital, any accrued and unpaid Discount or
Servicing Fees and any other amounts payable by the Seller to the
Issuer, the Administrator or any other Indemnified Party or
Affected Person hereunder.
(f) On the earlier of the Final Collection Date and the date on which
the outstanding Capital, any accrued and unpaid Discount or
Servicing Fees and any other amounts payable by the Seller to the
Issuer, the Administrator or any other Indemnified Party or
Affected Person hereunder has been reduced to zero or paid in full,
the Issuer shall satisfy its obligation to pay the outstanding
Deferred Purchase Price due to the Seller by assigning, selling and
transferring to the Seller all of the Issuer's right, title and
interest, if any, in and to the remaining portion of the Purchased
Interest acquired by the Issuer from the Seller without any
representation or warranty (whether express, implied, statutory, or
otherwise), save and except that the Issuer has the power to sell
and transfer such Purchased Interest to the Seller and such
Purchased Interest is free and clear of any Adverse Claim created
by the Issuer.
SECTION 1.3 CONVEYANCE AND IDENTIFICATION OF PURCHASED RECEIVABLES
(a) Effective immediately at the time that the Issuer pays the initial
Cash Purchase Price for the Purchased Interest to the Seller, the
Seller hereby sells, assigns and
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transfers to the Issuer all of the Seller's right, title and
interest in and to (i) all Eligible Receivables then existing and
all Eligible Receivables created thereafter, (ii) all Related
Security with respect to such Eligible Receivables, and (iii) all
Collections with respect to, and other proceeds of, such Eligible
Receivables and Related Security, all without the need of any
instrument or assignment. Notwithstanding the foregoing, all
transfers and assignments of Receivables and Related Security shall
be deemed to cease on and effective as of the Termination Date if
the Seller and the Servicer comply with the provisions of SECTION
1.3(b).
(b) On the Termination Date, the Servicer shall, in accordance with the
procedures specified in this SECTION 1.3(b), identify from amongst
the Purchased Receivables existing as of the close of business on
the Business Day immediately preceding the Termination Date,
Eligible Receivables which, together with all Related Security with
respect to such Eligible Receivables, and all Collections with
respect to, and other proceeds of, such Eligible Receivables and
Related Security, shall, subject to compliance with the provisions
of this SECTION 1.3(b), constitute the Purchased Interest on and
after the Termination Date. The Eligible Receivables which are to
constitute the Purchased Receivables on and after the Termination
Date shall be determined by reference to the Trial Balance as of
the close of business on the Business Day immediately preceding the
Termination Date in accordance with the procedure described in this
SECTION 1.3(b). The Eligible Receivables which shall constitute
Purchased Receivables on and as of the Termination Date shall be
identified by proceeding through the Eligible Receivables, (i)
first, through the Eligible Receivables for which the Obligors are
residents of Canada, and (ii) second, through the Eligible
Receivables for which the Obligors are residents of the United
States of America, in each case in descending order (highest to
lowest) by aggregate Outstanding Balance of such Eligible
Receivables, until the Outstanding Balance of Purchased Receivables
equals the Required Purchase Amount. Only that portion of the last
Eligible Receivable identified as a Purchased Receivable, pursuant
to the foregoing procedure, necessary to make the aggregate
Outstanding Balance of the Purchased Receivables equal the Required
Amount shall constitute a Purchased Receivable. All Eligible
Receivables which are identified as Purchased Receivables in
accordance with the foregoing procedure, together with all Related
Security with respect to such Eligible Receivables, and all
Collections with respect to, and other proceeds of, such Eligible
Receivables and Related Security, shall, subject to compliance with
the provisions of this SECTION 1.3(b), constitute the Purchased
Interest on and after the Termination Date. Within six (6) Business
Days following the Termination Date (A) the Servicer shall deliver
to the Issuer (or its designee) (i) a listing by Obligor setting
forth the amount, invoice number, invoice date and due date of each
Eligible Receivable identified under this SECTION 1.3(b) (which may
be in the form of a computer disk or tape) which Eligible
Receivables shall have an Outstanding Balance equal to the Required
Amount,
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and (ii) such additional information as may reasonably be requested
by the Administrator and (B) the Seller and, if Smurfit-MBI is the
Servicer, the Servicer shall comply with CLAUSE 1(i) of EXHIBIT IV
with respect to the Eligible Receivables identified under this
SECTION 1.3(b). Upon compliance with the provisions of this SECTION
1.3(b) (to the satisfaction of the Administrator, acting
reasonably), the Issuer will (x) satisfy its obligation to pay the
outstanding Deferred Purchase Price allocable to the Unfinanced
Interest by assigning, selling and transferring to the Seller all
of the Issuer's right, title and interest, if any, in and to the
Unfinanced Interest existing on the Termination Date, and (y)
selling, assigning and transferring to the Seller all of the
Issuer's right, title and interest in and to all Eligible
Receivables and the Related Security (other than the Purchased
Interest identified under this SECTION 1.3(b)) arising on and after
the Termination Date, in each case, without any representation or
warranty (whether express, implied, statutory, or otherwise) save
and except that the Issuer has the power to sell and transfer such
Unfinanced Interest and such Receivables and Related Security to
the Seller and such Unfinanced Interest is free and clear of any
Adverse Claim created by the Issuer.
(c) On and as of the Termination Date and at all times thereafter, the
Purchased Interest, if any, that is identified according to and in
compliance with the provisions of SECTION 1.3(b) shall be the total
Purchased Interest for all purposes of this Agreement, except as
required pursuant to SECTION 1.3(d).
(d) The Seller acknowledges and agrees that if:
(i) the Seller or the Servicer (if it is Smurfit-MBI) do not
comply with the provisions of SECTION 1.3(b) or the Eligible
Receivables identified by the Servicer pursuant to SECTION
1.3(b) shall fail to have an Outstanding Balance greater
than or equal to the Required Amount, the Purchased Interest
shall continue to include the Unfinanced Interest, the whole
of which shall be dealt with in accordance with SECTION 1.4
and without prejudice to any other right or remedy which the
Issuer may have against the Seller arising from such
non-compliance or failure; and
(ii) if the Seller and the Servicer (if it is Smurfit-MBI) shall
have complied with the provisions of SECTION 1.3(b), and at
any time thereafter, the Administrator, the Issuer or the
Servicer determines that, as of the Termination Date, the
aggregate Outstanding Balance of the Purchased Receivables
was, in fact, (through error or otherwise) less than the
Required Amount on such date, the Seller shall forthwith pay
to the Issuer on demand the amount of the deficiency to be
applied as Collections under this Agreement or, with the
prior written consent of the Issuer, transfer and assign to
the Issuer (i) additional Eligible Receivables, identified
from the
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Trial Balance according to the procedure described in
SECTION 1.3(b) as at a date satisfactory to the
Administrator and having an aggregate Outstanding Balance in
the amount of such deficiency, (ii) the Related Security
with respect to such Eligible Receivables and (iii) all
Collections with respect to, and other proceeds of, such
Eligible Receivables and Related Security.
SECTION 1.4 SETTLEMENT PROCEDURES
(a) The Servicer in accordance with the terms of this Agreement shall
administer collection of the Purchased Receivables. The Seller
shall provide to the Servicer (if other than the Seller) on a
timely basis all information needed for such administration,
including notice of the occurrence of any Termination Day and
current lists or records of and computations with respect to the
Purchased Interest.
(b) The Servicer shall, on each day on which Collections of or with
respect to the Purchased Interest are received (or deemed received)
by the Seller or Servicer:
(i) retain for payment to the Issuer, (or at the request of the
Administrator, deposit in the Administration Account) out of
such Collections, FIRST an amount equal to the Collections
allocable to the Yield Reserve and which have not previously
been set aside or paid to the Issuer and SECOND, if the
Seller is not the Servicer, an amount equal to the unpaid
Servicing Fee accrued through such day for the Purchased
Interest and which has not previously been paid to the
Servicer;
(ii) subject to SECTION 1.4(f), if such day is not a Termination
Day, pay and remit to the Seller in part payment of the
Deferred Purchase Price allocable to the Unfinanced Interest
portion of the Purchased Interest giving rise to such
Collections a portion of such Collections in an amount equal
to the portion of the Collections allocable to the
Unfinanced Interest;
(iii) subject to SECTION 1.4(f) and satisfaction of the applicable
conditions set forth in Exhibit II, if such day is not a
Termination Day, pay and remit to the Seller, on behalf of
the Issuer, (A) in part payment of the Deferred Purchase
Price allocable to the portion of the Purchased Interest
giving rise to such Collections in an amount equal to the
sum of (x) the portion of Collections allocable to the
Servicing Fee Reserve after giving effect to the payments or
allocations made under SECTION 1.4(b)(i) above and (y) the
portion of the Collections allocable to the Loss Reserve and
the Dilution Reserve, and (B) the balance of such
Collections, to the extent allocable to the Capital of the
Purchased Interest, in part payment of the purchase price of
the portion of the Purchased Interest created since the last
day on which Collections were paid by the Issuer (or the
Servicer on its behalf) to the
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Seller pursuant to this SECTION 1.4(b)(iii)(B); PROVIDED,
HOWEVER that if, at the time of any payment pursuant to this
SECTION 1.4(b)(iii)(B), the Net Receivables Pool Balance is
less than the Required Amount, (i) the Servicer shall pay
and remit to the Administration Account (to be applied by
the Issuer in reduction of the Capital of the Purchased
Interest), first, from Collections described in clause (A)
above and, second, from Collections described in clause (B)
above, an amount of such Collections as would, after giving
effect to such payment and reduction of Capital, result in
the Net Receivables Pool Balance being greater than or equal
to the Required Amount at such time and any remaining
portions of such Collections shall be remitted by the
Servicer to the Seller as provided under clauses (A) and (B)
above, and (ii) if after giving effect to any such reduction
in the Capital of the Purchased Interest under clause (x)
above, the Net Receivables Pool Balance is less than the
Required Amount, the Seller shall forthwith pay and remit to
the Administration Account a cash payment in reduction of
the Capital of the Purchased Interest in an amount equal to
the amount which when applied in reduction of the Capital of
the Purchased Interest will result in the Net Receivables
Pool Balance of the Purchased Receivables being greater than
or equal to the Required Amount; and
(iv) if such day is a Termination Day, deposit to the
Administration Account the aggregate of the Collections of
or with respect to the Purchased Interest (after giving
effect to all payments or allocations thereof under SECTION
1.4(b)(i)); PROVIDED that if the Seller is the Servicer, the
portion of such Collections allocable to the Servicing Fee
Reserve shall be paid to the Seller, and PROVIDED, FURTHER
that if such Termination Day is prior to the Termination
Date, the portion of Collections allocable to the Unfinanced
Interest shall be paid to the Seller and PROVIDED, FURTHER
that if amounts are held in or deposited to the
Administration Account on any Termination Day and,
thereafter, the conditions set forth in SECTION 2 of EXHIBIT
II are satisfied or are waived by the Administrator, such
amounts shall, to the extent representing Collections
allocable to the Capital of the Purchased Interest and to
the extent not yet applied to reduce the Capital of the
Purchased Interest, be paid in accordance with the preceding
PARAGRAPH (iii)(B) on the day of such subsequent
satisfaction or waiver of conditions and the balance (other
than the portion of such Collections allocable to the
accrued and unpaid Discount and Servicing Fees, if any)
shall be released to the Seller pursuant to PARAGRAPH
(iii)(A).
(c) The Servicer shall deposit into the Administration Account (or such
other account designated by the Administrator) on each Settlement
Date the sum of:
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(i) if such day is not a Termination Day, an amount equal to the
lesser of (x) the Collections for the related Collection
Period then held for the Issuer pursuant to SECTION
1.4(b)(i) and (y) the sum of (A) the accrued and unpaid
Discount and Servicing Fees, if any, for such Settlement
Date and (B) any outstanding Negative Carry Amount; plus
(ii) the Collections held or received by the Servicer for the
Issuer pursuant to SECTIONS 1.4(f) AND SECTION 1.11.
On each Settlement Date (if such day is not a Termination Day), the
balance of the Collections held for the Issuer pursuant to SECTION
1.4(b)(i) shall, after giving effect to SECTION 1.4(c)(i), be paid
to the Seller in part payment of the Deferred Purchase Price.
(d) Upon receipt of funds deposited into the Administration Account
pursuant to SECTION 1.4(b) or SECTION 1.4(c) with respect to the
Purchased Interest, the Administrator shall cause such funds to be
distributed or applied as follows:
(i) on each day that is not a Termination Day, FIRST to the
Issuer in payment in full of all accrued and unpaid Discount
and SECOND, to the Servicer (payable in arrears on each
Settlement Date) in payment of accrued and unpaid Servicing
Fees, if any, and THIRD, to the Issuer in reduction of the
then outstanding Capital; and
(ii) on each day that is a Termination Day:
(A) all Dilution Collections deposited to the
Administration Account shall be set aside in a separate
sub-account of the Administration Account and, unless
released to the Seller pursuant to SECTION 1.4(b)(iv),
distributed as provided in SECTION 1.4(d)(iii); and
(B) the remainder of the Collections deposited in the
Administration Account shall be distributed, FIRST to
the Issuer in payment of all accrued and unpaid
Discount, SECOND, if the Seller is not the Servicer, to
the Servicer in payment of all accrued and unpaid
Servicing Fees, THIRD, to the Issuer in reduction of
the outstanding Capital, FOURTH, if the Capital and
accrued Discount have been reduced to zero, and all
accrued Servicing Fees payable to the Servicer (if
other than the Seller) have been paid in full, to the
Issuer, the Administrator and any other Indemnified
Party or Affected Person in payment of any other
amounts owed thereto by the Seller or the Servicer (if
the Servicer is the Seller) under this Agreement; and
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(iii) on and after the Termination Date, all Dilution Collections
on deposit in the Administration Account shall be
distributed as follows:
(A) on each Settlement Date after the Termination Date and
on or before the Final Collection Date an amount equal
to the lesser of:
(x) the Dilution Collections then on deposit in the
Administration Account (after giving effect to all
deposits of Dilution Collections to the Administration
Account on such date);
(y) the excess of (1) the aggregate amount of Dilutions
for all Collection Periods ended after the Termination
Date over (2) the aggregate amount of Dilution
Collections paid to the Issuer pursuant to this SECTION
1.4(d)(iii) on all prior Settlement Dates, and
(z) the sum of the then unpaid Capital, the accrued and
unpaid Discount or Servicing Fees and the other amounts
payable or owing by the Seller or the Servicer (if it
is Smurfit-MBI or an Affiliate of the Seller) under
this Agreement to the Issuer, the Administrator or any
other Indemnified Party or Affected Person (after
giving effect to all distributions in respect thereof
on such date pursuant to SECTION 1.4(d)(ii)),
shall be distributed to and applied in the order
specified in SECTION 1.4(d)(ii)(B); and
(B) on the Final Collection Date the balance of the
Dilution Collections, if any, on deposit in the
Administration Account (after giving effect to all
payments thereof to the Issuer on such date) shall be
paid to the Seller in part payment of the outstanding
Deferred Purchase Price; PROVIDED, HOWEVER, that if the
Issuer or any Indemnified Party has any outstanding or
unsatisfied claims for indemnification from or against
the Seller (in its capacity as Seller or Servicer)
under this Agreement, the remaining Dilution
Collections shall be paid to the Issuer in an amount
not exceeding the amount of such claims and thereafter
the balance of the Dilution Collections, if any, shall
be paid to the Seller.
After the Capital and Discount and Servicing Fees with respect to
the Purchased Interest, and any other amounts payable by the Seller
to the Issuer, the Administrator or any other Indemnified Party or
Affected Person hereunder, have been paid in full, all additional
Collections with respect to the Purchased Interest
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shall be paid to the Seller for its own account in part payment of
the outstanding Deferred Purchase Price.
(e) For the purposes of this SECTION 1.4:
(i) if on any day the Outstanding Balance of any Purchased
Receivable is subject to a Dilution, the Seller shall be
deemed to have received on such day a Collection of such
Purchased Receivable in the amount of such Dilution;
(ii) if on any day any of the representations or warranties in
PARAGRAPHS (g) or (k) of EXHIBIT III is not true with
respect to any Purchased Receivable, the Seller shall be
deemed to have received on such day a Collection of such
Purchased Receivable in full;
(iii) except as provided in PARAGRAPH (i) or (ii) of this SECTION
1.4(e), or as otherwise required by applicable law or the
relevant Contract, all Collections received from an Obligor
of any Receivable shall, unless such Obligor designates in
writing its payment for application to specific Receivables
or other indebtedness, be applied as follows: (i) first, as
Collections and to payment of Purchased Receivables owing by
such Person and, second, to payment of Receivables other
than Purchased Receivables and, (ii) then, to the Purchased
Receivables of such Obligor in the order of the age of such
Purchased Receivables, starting with the oldest such
Receivable, and (iii) if any such Collections of or with
respect to Purchased Receivables includes any payment of
interest, late payment, finance or similar charges, such
Collections will be applied first in payment of the
Outstanding Balance of the Purchased Receivables and second
in payment of such interest or other charges;
(iv) if and to the extent the Administrator or the Issuer shall
be required for any reason to pay over to an Obligor (or any
trustee, receiver, custodian or similar official in any
Insolvency Proceeding relating to the Obligor) any amount
received by it hereunder, such amount shall be deemed not to
have been so received but rather to have been retained by
the Seller and, accordingly, the Administrator or the
Issuer, as the case may be, shall have a claim against the
Seller for such amount, payable when and to the extent that
any distribution from or on behalf of such Obligor is made
in respect thereof; and
(v) on each Business Day which is not a Termination Day and for
so long as the Seller is the Servicer, on each date on which
Collections are received by the Seller (as Servicer or
otherwise), all Collections, including Deemed Collections,
to be paid (x) by the Seller (as Servicer) to the Issuer (or
the
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Servicer on its behalf) pursuant to this Agreement and (y)
by the Issuer (or the Servicer on behalf of the Issuer) to
the Seller pursuant to SECTION 1.4(b)(iii) shall be deemed
to have been paid by the Seller to the Issuer (or the
Servicer on its behalf) and by the Servicer (on behalf of
the Issuer) to the Seller pursuant to SECTION 1.4(b)(iii),
as the case may be, as of the close of business on the day
such Collections are received, are deemed to have been
received or are Deemed Collections.
(f) If at any time the Seller shall wish to cause the reduction of a
Portion of Capital (but not to commence the liquidation, or
reduction to zero, of the entire Capital), the Seller may do so as
follows:
(i) the Seller shall cause the Servicer to give the
Administrator at least ten Business Days' prior written
notice thereof (including the amount of such proposed
reduction and the proposed date on which such reduction will
commence),
(ii) on the proposed date of commencement of such reduction and
on each day thereafter, the Servicer shall not pay to the
Seller the Collections allocable to the Capital of the
Purchased Interest for each day during the period of
reduction with respect to such Capital otherwise payable to
the Seller pursuant to SECTION 1.4(b)(iii)(B) until the
aggregate amount of such Collections shall equal the desired
amount of reduction, and
(iii) the Servicer shall hold such Collections in trust for the
Issuer, for payment to the Administrator on the last day of
the Settlement Period during which the reduction commenced
and the Capital shall be deemed reduced in the amount to be
paid to the Administrator only when in fact finally so paid;
provided that,
A. the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $500,000, and the
entire Capital (after giving effect to such reduction) shall be not
less than $40,000,000 and shall be in an integral multiple of
$500,000,
B. the Seller shall choose a reduction amount, and the date of
commencement thereof, so that to the extent practicable such
reduction shall commence and conclude in the same Settlement
Period, and
C. if two or more Portions of Capital shall be outstanding at the
time of any proposed reduction of Capital, such proposed reduction
shall be applied, unless the Seller shall otherwise specify in the
notice given pursuant to SECTION 1.4(f)(i),
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to the Portion of Capital, if any, in respect of which the Discount
Rate is calculated by reference to the Alternate Rate.
(g) For the purposes of:
(i) clause (ii) of Section 1.4(f) of this Agreement and any
reduction of Capital contemplated thereby, the "Collections
allocable to the Capital of the Purchased Interest" for each
day during the period over which such reduction of Capital
is to occur means a portion of the collections and other
proceeds of the Receivables (including, without duplication,
Collections of Purchased Receivables) for each day during
such period in an amount equal to the product of such
collections and a fraction, the numerator of which is the
Capital of the Purchased Interest and the denominator of
which is the Outstanding Balance of the Receivables, in each
case, as of the first day of the period over which such
reduction of Capital is to occur; and
(ii) any other section or clause of this Agreement and any day,
the "Collections allocable" to the Capital of the Purchased
Interest, the Loss Reserve, the Yield Reserve, the Dilution
Reserve, the Servicing Fee Reserve or the Unfinanced
Interest on or for such day means an amount or portion of
the Collections of the Purchased Receivables for such day
equal to the product of such amount or portion of
Collections and a fraction, the numerator of which is the
Capital of the Purchased Interest, the Loss Reserve, the
Yield Reserve, the Dilution Reserve, the Servicing Fee
Reserve or the Unfinanced Interest, as the case may be, and
the denominator of which is the Outstanding Balance of the
Receivables, in each case, as of the close of business on
the Business Day preceding such day.
SECTION 1.5 FEES
The Seller shall pay to the Administrator certain fees in the amounts and on the
dates set forth in a letter between the Seller and the Administrator delivered
pursuant to SECTION 1 of EXHIBIT II, as such letter agreement may be amended,
supplemented or otherwise modified from time to time.
SECTION 1.6 PAYMENTS AND COMPUTATIONS, ETC.
(a) All amounts to be paid or deposited by the Seller or the Servicer
hereunder to the Issuer or to the Administration Account shall be
paid or deposited no later than 11:00 a.m. (Toronto time) on the
day when due in same day funds. Deposits and payments of
Collections shall be deposited to the Administration Account under
SECTION 1.4(b) by the close of business on the date of receipt of
such Collections by the Seller or the Servicer. All amounts
received by the Issuer from, or
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deposited to the Administration Account by, the Seller or the
Servicer after 11:00 a.m. (Toronto time) will be deemed to have
been received on the immediately succeeding Business Day.
(b) The Seller shall pay interest on any amount not paid or deposited
by the Seller (whether as Servicer or otherwise) when due
hereunder, at an interest rate equal to the Prime Rate plus 2.0%
PER ANNUM payable on demand.
(c) All computations of interest under SUBSECTION (b) above and all
computations of Discount, fees, and other amounts hereunder shall
be made on the basis of a year of 365 days for the actual number of
days elapsed. Whenever any payment or deposit to be made hereunder
shall be due on a day other than a Business Day, such payment or
deposit shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of such
payment or deposit.
(d) The Seller will remit all Collections with respect to the Purchased
Interest (including deemed Collections) to the Servicer on the same
day such Collections are received or deemed received, and the
Servicer shall apply the Collections as provided in this Agreement.
(e) Each of the Seller and the Servicer shall make all payments
required to be made by it hereunder, without deduction, regardless
of any defence or counterclaim (whether based on any law, rule or
policy now or hereafter issued or enacted by any government
authority or regulatory body).
SECTION 1.7 DIVIDING OR COMBINING PORTIONS OF CAPITAL
The Capital invested in the Purchased Interest shall be divided into one or more
portions (each, a "PORTION OF CAPITAL") equal, in the aggregate, to the then
outstanding Capital. Each Portion of Capital and the amount thereof shall be
determined by reference to its source of funding, through the issuance of Notes,
or otherwise than through the issuance of Notes. To the extent that the Capital
is funded through the issuance of Notes, such Portion of Capital will accrue
Discount calculated at the CP Rate and, to the extent that the Issuer is not
funding any Portion of Capital as aforesaid, in whole or in part, such Portion
of Capital or part thereof will, to the extent available, be funded under the
Liquidity Agreement as a separate Portion of Capital accruing or generating
Discount at a rate based on the Alternate Rate for such Portion of Capital which
Portion of Capital shall be created on the day the Issuer ceases funding any
Portion of Capital, in whole or in part, with the proceeds of Notes. Any Portion
of Capital reacquired from the Purchasers by the Issuer with the proceeds of
Notes will be added to or combined with or a Portion of Capital bearing Discount
calculated at the CP Rate.
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SECTION 1.8 INCREASED COSTS
(a) If the Administrator, the Issuer, any Purchaser or any of their
respective Affiliates (each an "AFFECTED PERSON") determines that
the existence of or compliance with (i) any law or regulation of
any Governmental Authority or any change therein or any change in
the interpretation or application thereof by any Governmental
Authority, in each case adopted, issued or occurring after the date
hereof or, (ii) the introduction of any change in Canadian
generally accepted accounting principles relating to consolidation
of variable interest entities similar to those principles
enunciated by the United States Financial Accounting Standards
Board in FASB Interpretation No. 46 of Accounting Research Bulletin
No. 51 which is applicable to any Affected Person, (iii) any
request, guideline or directive from any Governmental Authority
(whether or not having the force of law) issued or occurring after
the date of this Agreement affects the amount of capital required
to be maintained by such Affected Person and such Affected Person
reasonably determines that the amount of such capital is increased
by or based upon the existence of any commitment to make purchases
of or otherwise to maintain an investment in the Purchased Interest
related to this Agreement or any related liquidity facility or
credit enhancement facility and other commitments of the same type,
then, upon demand by such Affected Person (with a copy to the
Administrator), the Seller shall immediately pay to the
Administrator, for the account of such Affected Person, from time
to time as specified by such Affected Person, additional amounts
sufficient to compensate such Affected Person in light of such
circumstances, to the extent that such Affected Person reasonably
determines such increase in capital to be allocable to the
existence of any of such commitments. A certificate from such
Affected Person to the Seller certifying, in reasonably specific
detail, the basis for, calculation of, and amount of such amounts
shall, absent manifest error, be conclusive and binding evidence of
the amount payable to the Affected Person for all purposes.
(b) If, due to either (i) the introduction of, or any change in or in
the interpretation of, any law or regulation by any Governmental
Authority (ii) the introduction of any change in Canadian generally
accepted accounting principles relating to consolidation of
variable interest entities similar to those principles enunciated
by the United States Financial Accounting Standards Board in FASB
Interpretation No. 46 of Accounting Research Bulletin No. 51 which
is applicable to any Affected Person, or (iii) compliance with any
guideline or request from any Governmental Authority (whether or
not having the force of law), there shall be any increase in the
cost to any Affected Person of agreeing to purchase or purchasing,
or maintaining the ownership of the Purchased Interest, then, upon
demand by such Affected Person, the Seller shall immediately pay to
such Affected Person, from time to time as specified, additional
amounts sufficient to compensate such Affected Person for such
increased costs. A certificate from
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such Affected Person to the Seller certifying, in reasonably
specific detail, the basis for, calculation of, and amount of such
amounts shall, absent manifest error, be conclusive and binding
evidence of the amount payable to the Affected Person for all
purposes.
(c) Notwithstanding the foregoing, an Affected Person shall not be
entitled to claim any additional amounts under this SECTION 1.8 if
such amounts relate to a period prior to the date which is sixty
days prior to the date such Affected Person makes a claim for
payment of such additional amounts pursuant to this SECTION 1.8
unless (i) such additional amounts arise from an assessment or
reassessment made against or with respect to the Affected Person by
any Governmental Authority in respect of a period prior to such
sixty day period and (ii) the Administrator or the Affected Person
shall have notified the Seller of such assessment or reassessment
within sixty days of receipt of same by the Affected Person.
SECTION 1.9 REQUIREMENTS OF LAW
In the event that any Affected Person reasonably determines that the existence
of or compliance with (i) any law or regulation, or any change therein or in the
interpretation or application thereof, of or by any Governmental Authority, in
each case adopted, issued or occurring after the date hereof or (ii) any
request, guideline or directive from any Governmental Authority (whether or not
having the force of law) issued or occurring after the date of this Agreement:
(a) does or shall subject such Affected Person to any tax of any kind
whatsoever with respect to this Agreement, any increase in the
aggregate Outstanding Balance of the Purchased Receivables or in
the amount of Capital relating thereto, or does or shall change the
basis of taxation of payments to such Affected Person on account of
Collections, Discount or any other amounts payable hereunder
(excluding taxes imposed on the overall net income of such Affected
Person, and franchise taxes imposed on such Affected Person, by the
jurisdiction under the laws of which such Affected Person is
organized or a political subdivision thereof);
(b) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in or for the
account of, purchases, advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of
such Affected Person which are not otherwise included in the
determination of the BA Rate or the Prime Rate hereunder; or
(c) does or shall impose on such Affected Person any other condition;
and the result of any of the foregoing is (x) to increase the cost to such
Affected Person of acting as Administrator, or of agreeing to purchase or
purchasing or maintaining the ownership of the Purchased Interest (or interests
therein) or any Portion of Capital in respect of which Discount is
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computed by reference to the BA Rate or the Prime Rate or (y) to reduce any
amount receivable hereunder (whether directly or indirectly) funded or
maintained by reference to the BA Rate or the Prime Rate, then, in any such
case, upon demand by such Affected Person the Seller shall pay such Affected
Person any additional amounts necessary to compensate such Affected Person for
such additional cost or reduced amount receivable. All such amounts shall be
payable as incurred. A certificate from such Affected Person to the Seller
certifying, in reasonably specific detail, the basis for, calculation of, and
amount of such additional costs or reduced amount receivable shall be
conclusive, in the absence of manifest error, of the amount payable to the
Affected Person.
Notwithstanding the foregoing, an Affected Person shall not be entitled to claim
any additional amounts under this SECTION 1.9 if such amounts relate to a period
prior to the date which is sixty days prior to the date such Affected Person
makes a claim for payment of such additional amounts pursuant to this SECTION
1.9 unless (i) such additional amounts arise from an assessment or reassessment
made against or with respect to the Affected Person by any Governmental
Authority in respect of a period prior to such sixty day period and (ii) the
Administrator or the Affected Person shall have notified the Seller of such
assessment or reassessment within sixty days of receipt of same by the Affected
Person.
SECTION 1.10 ASSIGNMENT
In order to preserve, protect and perfect the sale, transfer and assignment of
the Purchased Interest pursuant to SECTION 1.3, the Seller shall, prior to the
date of the initial purchase under SECTION 1.2(a), execute and deliver to the
Issuer and file or register in all appropriate offices or registration systems
under any applicable PPSA, an assignment of the Purchased Receivables and
Related Security in substantially the form of Annex A to this Agreement (the
"ASSIGNMENT") and all Financing Statements contemplated by PARAGRAPH 1(d) of
EXHIBIT IV.
SECTION 1.11 OPTIONAL PURCHASE
(a) Prior to the earlier of the Termination Date or the designation of
a successor Servicer pursuant to SECTION 4.1(a), the Seller shall
have the right (but not the obligation) to repurchase on any
Settlement Date any Purchased Receivables sold by it to the Issuer
which became Defaulted Receivables during the immediately preceding
Collection Period at a purchase price equal to the Outstanding
Balance of such Purchased Receivables as of the Cut-Off Date for
the immediately preceding Collection Period (the "OPTION PRICE").
The Seller shall exercise its option by (i) giving the
Administrator written notice of the Seller's exercise of such
option on or before the fifth Business Day prior to the Settlement
Date upon which the Seller intends to repurchase any Defaulted
Receivables under this SECTION 1.11(a) specifying by invoice number
the Defaulted Receivables to be repurchased, the names of the
related Obligors and the Outstanding Balance of such Defaulted
Receivables as of the Cut-Off Date for the immediately preceding
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Collection Period and (ii) paying to the Servicer for deposit to
the Administration Account on such Settlement Date an amount equal
to the Option Price.
(b) Upon payment or deposit of any Option Price to the Servicer or to
the Administration Account pursuant to SECTIONS 1.11(a), the Issuer
shall be deemed to have assigned, sold and transferred to the
Seller all of the Issuer's right, title and interest in and to the
related Receivables, an interest in all Related Security with
respect to such Receivables (to the extent that the Seller requires
an interest in such Related Security to collect or enforce payment
of such Receivables), and all Collections with respect to, and
other proceeds of, such Receivables and such interest in such
Related Security (each, a "RE-ASSIGNED PURCHASED INTEREST"), all
without the need of any instrument or assignment, and without any
representation or warranty (whether express, implied, statutory, or
otherwise) save and except that the Issuer has the power to sell
and transfer such Re-assigned Purchased Interest to the Seller and
such Re-assigned Purchased Interest is free and clear of any
Adverse Claim created by the Issuer, the Administrator or any
Servicer other than the Seller.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
SECTION 2.1 REPRESENTATIONS AND WARRANTIES; COVENANTS
The Seller hereby makes the representations and warranties, and hereby agrees to
perform and observe the covenants, made or given by it and set forth in EXHIBITS
III and IV, respectively hereto.
The Servicer hereby agrees to perform and observe the covenants made or given by
it and set forth in EXHIBIT IV hereto.
The Issuer hereby makes the representations and warranties made or given by it
and set forth in EXHIBIT III HERETO.
SECTION 2.2 TERMINATION EVENTS
If any of the Termination Events set forth in EXHIBIT V hereto shall occur, the
Administrator may, by notice to the Seller, declare the Facility Termination
Date to have occurred (in which case the Facility Termination Date shall be
deemed to have occurred); PROVIDED that, automatically upon the commencement or
occurrence of any Insolvency Proceeding with respect to the Seller (without any
requirement for the passage of time or the giving of notice), the Facility
Termination Date shall occur. Upon any such declaration, occurrence or deemed
occurrence of the Facility Termination Date, the Issuer and the Administrator
shall have, in addition to the rights and remedies which they may have under
this Agreement, all other rights and remedies
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provided after default under the applicable PPSA and under other applicable law,
which rights and remedies shall be cumulative. Notwithstanding the foregoing,
the Administrator may, in its sole discretion, waive any Termination Event.
ARTICLE 3
INDEMNIFICATION
SECTION 3.1 INDEMNITIES BY THE SELLER
Without limiting any other rights that the Administrator or the Issuer or any of
their respective Affiliates, employees, agents, successors, transferees or
assigns (each, an "INDEMNIFIED PARTY") may have hereunder or under applicable
law, the Seller hereby agrees to indemnify each Indemnified Party from and
against any and all claims, damages, expenses, losses and liabilities (including
Legal Costs) (all of the foregoing being collectively referred to as
"INDEMNIFIED AMOUNTS") arising out of, relating to or resulting from (whether
directly or indirectly), and the Seller shall pay on demand to each Indemnified
Party any and all amounts necessary to indemnify such Indemnified Party from and
against any and all Indemnified Amounts relating to or resulting from, any of
the following:
(a) the failure of (i) any Receivable included in the calculation of
the Net Receivables Pool Balance as an Eligible Receivable to be an
Eligible Receivable, (ii) any Receivable identified as a Purchased
Receivable pursuant to SECTION 1.3(b) to be an Eligible Receivable
as of the date of such identification, (iii) any information
contained in a Portfolio Report to be true and correct, or (iv) any
other information provided to the Issuer or the Administrator with
respect to Receivables or this Agreement to be true and correct;
(b) the failure of any representation or warranty or written statement
made or deemed made by the Seller, as Servicer or otherwise, under
or in connection with this Agreement to have been true and correct
in all respects when made or deemed to be made;
(c) the failure by the Seller, as Servicer or otherwise, to comply with
any applicable law, rule or regulation with respect to any
Purchased Receivable or the related Contract; or the failure of any
Purchased Receivable or the related Contract to conform to any such
applicable law, rule or regulation;
(d) the failure to vest in the Issuer a valid and enforceable ownership
interest in the Purchased Interest, free and clear of any Adverse
Claim (other than an Adverse Claim created or granted by the
Issuer) including, without limitation, any claim by any
Governmental Authority that any part of the Purchased Interest
consisting of amounts payable by the related Obligors in respect of
goods and services, sales or other taxes constitute the property of
or are otherwise subject to the ownership, control or an Adverse
Claim of or in favour of such Governmental Authority;
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(e) the failure to have filed, or any delay in filing, Financing
Statements or other similar instruments or documents under the PPSA
of any applicable jurisdiction or other applicable laws with
respect to the Purchased Interest or any part thereof, whether at
the time of any purchase or purchase price payment or at any
subsequent time, necessary or desirable to vest in the Issuer a
first priority perfected security interest in the Purchased
Interest free and clear of any Adverse Claim (other than any
Adverse Claim created or granted by the Issuer);
(f) any Dilution or other dispute, claim, offset or defence (other than
discharge in bankruptcy of the Obligor) of the Obligor to the
payment of any Purchased Receivable (including, without limitation,
a defence based on such Receivable or the related Contract not
being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other
claim resulting from the sale of the goods or services related to
such Purchased Receivable or the furnishing or failure to furnish
such goods or services or relating to collection activities with
respect to such Purchased Receivable (if such collection activities
were performed by the Seller or any of its Affiliates acting as
Servicer or by any agent or independent contractor retained by the
Seller or any of its Affiliates);
(g) any failure of the Seller, as Servicer or otherwise, to perform its
duties or obligations in accordance with the provisions hereof or
to perform its duties or obligations under the Contracts;
(h) any products liability or other claim, investigation, litigation or
proceeding arising out of or in connection with merchandise,
insurance or services which are the subject of any Contract;
(i) the commingling of Collections of or with respect to the Purchased
Interest at any time with other funds;
(j) any Canadian, foreign, federal, provincial, state, municipal, local
or other tax of any kind or nature whatsoever that may be imposed
on the Administrator or the Issuer on account of any payment made
under this Article 3;
(k) any Canadian, foreign, federal, provincial, state, municipal, local
or other tax of any kind or nature whatsoever that may be imposed
on the Issuer or the Purchased Interest (except for Taxes on the
net income or profits of the Issuer and any additional taxes that
result solely by virtue of an assignment to or the exercise of any
rights hereunder by a non-resident of Canada) with respect to, or
resulting from any delay in paying or any omission to pay, any
taxes required to be paid, deducted or withheld and remitted, in
connection with the execution, delivery, filing, recording and
enforcement hereof and of the Transaction Documents or in
connection with the consummation of the transactions (including any
purchase by
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the Issuer of Purchased Interest or performance of the obligations
contemplated hereby and thereby or under the Transaction Documents,
provided that the Issuer shall first provide the Seller with
reasonable documentary evidence that such taxes or payments are due
and owing by the Issuer and further provided that any such gross-up
shall be reduced to the extent of any benefit, deduction, credit or
other reduction in taxes otherwise payable by the Issuer received
by or otherwise to the Issuer in respect of any such payment, as
determined in the sole discretion of the Issuer;
(l) any remittance from Collections which may be required by the
Minister of National Revenue pursuant to the EXCISE TAX ACT
(Canada);
(m) any reduction in Capital as a result of the distribution of
Collections pursuant to SECTION 1.4(d), in the event that all or a
portion of such distributions shall thereafter be rescinded or
otherwise must be returned for any reason; or
(n) the failure of (i) the Net Receivables Pool Balance to be greater
than or equal to the Required Amount, (ii) the Seller (if it is the
Servicer) to identify on the Termination Date Eligible Receivables
having an aggregate Outstanding Balance at least equal to the
Required Amount, or (iii) the aggregate Outstanding Balance of the
Purchased Receivables to be equal to the Required Amount on the
Termination Date;
excluding, however, in each case (a) Indemnified Amounts to the extent resulting
from gross negligence, wilful misfeasance or wilful misconduct on the part of
such Indemnified Party, (b) recourse (except as otherwise specifically provided
in this Agreement) for uncollectible Receivables, (c) any overall net income
taxes or franchise taxes imposed on such Indemnified Party by the jurisdiction
under the laws of which such Indemnified Party is organized or any political
subdivision thereof or (d) any consequential, punitive or exemplary damages.
At the request of the Issuer, the Seller will, at its expense, co-operate with
the Issuer in any action, suit or proceeding brought by or against the Issuer
relating to any of the transactions contemplated by this Agreement, any
Receivable or any Contract (other than an action, suit or proceeding by the
Seller against the Issuer or by the Issuer against the Seller). In addition, the
Seller agrees to notify the Issuer and the Issuer agrees to notify the Seller
promptly upon learning of any pending or threatened action, suit or proceeding,
if the judgment or expenses of defending such action, suit or proceeding would
be covered by this Section 3.1 and (except as aforesaid) to consult with the
Issuer concerning the defence and prior to settlement; provided, however, that
if (i) the Seller shall have acknowledged that this Section 3.1 would cover any
judgment or expenses in any action, suit or proceeding, and (ii) the Seller has
the financial ability to satisfy such judgment or expenses, then the Seller
shall have the right, at its expense, on behalf of the Issuer or otherwise, to
defend such action, suit or proceeding with counsel selected by it, and shall
have reasonable discretion as to whether to litigate, appeal or enter into an
exclusively monetary settlement.
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ARTICLE 4
ADMINISTRATION AND COLLECTIONS
SECTION 4.1 APPOINTMENT OF SERVICER
(a) The Person so designated from time to time as Servicer in
accordance with this Section 4.1 shall conduct the servicing,
administering and collection of the Purchased Receivables. Until
the Administrator gives notice to the Seller (in accordance with
this SECTION 4.1) of the designation of a new Servicer, Smurfit-MBI
is hereby designated as, and hereby agrees to perform the duties
and obligations of, the Servicer pursuant to the terms hereof, it
being understood and agreed that the Issuer has agreed to purchase
the Purchased Receivables from the Seller on a fully serviced basis
and that, so long as the Seller is the Servicer, payment of the
purchase price for the Purchased Receivables in the amounts, at the
times and in the manner provided for in this Agreement shall
constitute the full compensation and remuneration of Smurfit-MBI
for acting as Servicer hereunder. Upon the occurrence of a
Termination Event, the Administrator may, on ten (10) days' written
notice to the Servicer, designate as Servicer any Person (including
itself) to succeed or any successor Servicer, on the condition that
any such Person so designated shall agree to perform and be bound
by the duties and obligations of the Servicer pursuant to the terms
hereof.
(b) Upon the designation of a successor Servicer as set forth in
SECTION 4.1(a) hereof, Smurfit-MBI agrees that it will terminate
its activities as Servicer hereunder in a manner which the
Administrator reasonably determines will facilitate the transition
of the performance of such activities to the new Servicer, and
Smurfit-MBI shall cooperate with and assist such new Servicer. Such
co-operation shall include (without limitation) access to and
transfer of Records and use by the new Servicer of all licenses,
hardware or software necessary or desirable to collect the
Purchased Interest.
(c) The Seller acknowledges that, in making its decision to execute and
deliver this Agreement, the Administrator and the Issuer have
relied on Smurfit-MBI's agreement to act as Servicer hereunder.
Accordingly, Smurfit-MBI agrees that it will not voluntarily resign
as Servicer.
(d) The Servicer may delegate its duties and obligations hereunder to
any subservicer (each, a "SUB-SERVICER"); provided that, in each
such delegation, (i) such Sub-Servicer shall agree in writing to
perform the duties and obligations of the Servicer pursuant to the
terms hereof, (ii) the Servicer shall remain primarily liable to
the Issuer for the performance of the duties and obligations so
delegated, (iii) the Seller, the Administrator and the Issuer shall
have the right to look solely to the Servicer for performance and
(iv) the terms of any agreement with any Sub-Servicer shall provide
that the Administrator may terminate such agreement upon
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the termination of the Servicer hereunder by giving notice of its
desire to terminate such agreement to the Servicer (and the
Servicer shall provide appropriate notice to such Sub-Servicer).
SECTION 4.2 DUTIES OF SERVICER
(a) The Servicer shall take or cause to be taken all such action as may
be necessary or advisable to collect each Purchased Receivable from
time to time, all in accordance with this Agreement and all
applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy.
The Servicer may, in accordance with the Credit and Collection
Policy, extend the maturity of any Purchased Receivable (but not
beyond thirty (30) days) and extend the maturity or adjust the
Outstanding Balance of any Defaulted Receivable as the Servicer may
determine to be appropriate to maximize Collections thereof;
PROVIDED, HOWEVER, that (i) such extension or adjustment shall not
alter the status of such Purchased Receivable as a Delinquent
Receivable or a Defaulted Receivable or limit the rights of the
Issuer or the Administrator under this Agreement and (ii) if a
Termination Event has occurred and the Seller is still serving as
Servicer, the Seller, may make such extension or adjustment with
respect to a Purchased Receivable only upon the prior written
approval of the Administrator. The Seller shall deliver to the
Servicer and the Servicer shall hold for the benefit of the Seller
and the Administrator (for the benefit of the Issuer and
individually) in accordance with their respective interests, all
Records and documents (including without limitation computer tapes
or disks) with respect to each Purchased Receivable.
Notwithstanding anything to the contrary contained herein, the
Administrator may direct the Servicer and any Sub-Servicer (whether
the Servicer is the Seller or any other Person) to commence or
settle any legal action to enforce collection of any Purchased
Receivable or to foreclose upon or repossess any Related Security;
PROVIDED, HOWEVER, that no such direction may be given unless
either (i) a Termination Event has occurred or (ii) the
Administrator believes in good faith that failure to commence,
settle, or effect such legal action, foreclosure or repossession
could adversely affect Receivables constituting a material portion
of the Purchased Receivables.
(b) The Servicer shall as soon as practicable following actual receipt
of collected funds turn over to the Seller the collections of any
Receivable that is not a Purchased Receivable, less, in the event
the Seller is not the Servicer, all reasonable and appropriate
out-of-pocket costs and expenses of such Servicer of servicing,
collecting and administering such collections; PROVIDED, HOWEVER,
if the Seller is not the Servicer, the Servicer shall not be under
any obligation to remit any such funds to the Seller unless and
until the Servicer has received from the Seller evidence
satisfactory to the Administrator and the Servicer, in both cases
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acting reasonably, that the Seller is entitled to such funds
hereunder and under applicable law. Upon the Servicer receiving
such evidence, the Servicer shall forthwith remit such funds to the
Seller.
(c) Notwithstanding anything to the contrary contained in this ARTICLE
4, the Servicer, if not the Seller, shall have no obligation to
collect, enforce or take any other action described in this ARTICLE
4 with respect to any indebtedness that is not a Purchased
Receivable. It is expressly understood and agreed by the parties
that such Servicer's duties in respect of any indebtedness that is
not a Purchased Receivable are set forth in this SECTION 4.2 in
their entirety. Upon delivery by such Servicer of funds or records
relating to any Receivables that is not a Purchased Receivable to
the Seller, such Servicer shall have discharged in full all of its
responsibilities to make any such delivery.
(d) The Servicer's obligations hereunder shall terminate on the later
of (i) the Facility Termination Date and (ii) the date on which all
amounts required to be paid to the Issuer, the Administrator and
any other Indemnified Party or Affected Person hereunder shall have
been paid in full.
After such termination, if the Seller was not the Servicer on the
date of such termination, the Servicer shall promptly deliver to
the Seller all Records and related materials that the Seller
previously provided to the Servicer in connection with this
Agreement.
SECTION 4.3 ENFORCEMENT RIGHTS
(a) At any time following the occurrence of a Termination Event or
following the designation of a Servicer (other than the Seller)
pursuant to SECTION 4.1 hereof:
(i) the Administrator may direct the Obligors that payment of
all amounts payable under any Purchased Receivable be made
directly to the Administrator or its designee;
(ii) the Administrator may instruct the Seller to give notice of
the Issuer's ownership interest in Purchased Receivables to
each Obligor, which notice shall direct that payments be
made directly to the Administrator or its designee, and upon
such instruction from the Administrator the Seller shall
give such notice at the expense of the Seller; provided,
that if the Seller fails to so notify each Obligor, the
Administrator may so notify the Obligors; and
(iii) the Administrator may request the Seller to, and upon such
request the Seller shall, (A) assemble all of the records
necessary or desirable to collect the Purchased Receivables
and the Related Security, and transfer or
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license to the new Servicer, to the extent the Seller has
the power to do so, the use of all software necessary or
desirable to collect the Purchased Receivables and the
Related Security, and, to the extent it is legally able,
make the same available to the Administrator or its designee
at a place selected by the Administrator, and (B) segregate
all cash, cheques and other instruments received by it from
time to time constituting Collections with respect to the
Purchased Receivables in a manner acceptable to the
Administrator, acting reasonably, and, promptly upon
receipt, remit all such cash, cheques and instruments, duly
endorsed or with duly executed instruments of transfer, to
the Administrator or its designee.
(b) The Seller hereby authorises the Administrator, and irrevocably
appoints the Administrator as its attorney-in-fact with full power
of substitution and with full authority in the place and stead of
the Seller, which appointment is coupled with an interest, to take
any and all steps in the name of the Seller and on behalf of the
Seller necessary or desirable, in the determination of the
Administrator, to collect on or after the Termination Date any and
all amounts or portions thereof due under any and all Purchased
Receivables or Related Security, including, without limitation,
endorsing the name of the Seller on cheques and other instruments
representing Collections and enforcing such Purchased Receivables,
Related Security and the related Contracts. Notwithstanding
anything to the contrary contained in this SUBSECTION (b), none of
the powers conferred upon such attorney-in-fact pursuant to the
immediately preceding sentence shall subject such attorney-in-fact
to any liability if any action taken by it shall prove to be
inadequate or invalid, nor shall they confer any obligations upon
such attorney-in-fact in any manner whatsoever.
SECTION 4.4 RESPONSIBILITIES OF THE SELLER
(a) Anything herein to the contrary notwithstanding, the Seller shall
(i) perform all of its obligations under the Contracts related to
the Purchased Receivables to the same extent as if interests in
such Purchased Receivables had not been transferred hereunder, and
the exercise by the Administrator or the Issuer of its rights
hereunder shall not relieve the Seller from such obligations and
(ii) pay when due any taxes, including, without limitation, any
goods and services, excise or sales taxes arising, forming part of
or payable in connection with the Purchased Receivables and their
creation and satisfaction. The Administrator and the Issuer shall
not have any obligation or liability with respect to any Purchased
Receivable, any Related Security or any related Contract, nor shall
any of them be obligated to perform any of the obligations of the
Seller under any of the foregoing.
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(b) The Seller hereby irrevocably agrees that if at any time it shall
cease to be the Servicer hereunder, it shall act (if the
then-current Servicer so requests) as the data-processing agent of
the Servicer and, in such capacity, the Seller shall conduct the
data-processing functions of the administration of the Receivables
and the Collections thereon in substantially the same way that the
Seller conducted such data-processing functions while it acted as
the Servicer or Sub-Servicer, as applicable.
SECTION 4.5 SERVICING FEE
The Servicer, if it is not the Seller or an Affiliate of the Seller, shall be
paid a monthly fee in respect of each Collection Period, through distributions
contemplated by SECTION 1.4(d), in an amount mutually agreed upon by the
Servicer and the Issuer.
SECTION 4.6 OBLIGATIONS OF ADMINISTRATOR
(a) On or before 10:00 a.m. (Toronto time) on the second Business Day
preceding each Settlement Date, the Administrator shall (i)
calculate the Discount for such Settlement Date and the related
Settlement Period and (ii) provide the Seller and the Servicer with
written notice of such Discount (including the calculation of the
Discount Rate for such Settlement Date). Such Discount shall be
calculated using an estimate of the Discount Rate, if necessary,
for the remaining days in such Settlement Period based on the
weighted average of the CP Rates and the Alternate Rates applicable
to the Portions of Capital outstanding during the related
Settlement Period determined as of the close of business on the
Business Day preceding such second Business Day; PROVIDED, HOWEVER,
that each calculation of Discount shall be adjusted as provided in
SECTION 4.6 (b) hereof.
(b) On or before 10:00 a.m. (Toronto time) on the second Business Day
preceding each Settlement Date, the Administrator shall, if the
Administrator shall have used an estimate of the Discount for the
Capital of the Purchased Interest pursuant to SECTION 4.6 (a) with
respect to the immediately preceding Settlement Period, compute the
actual Discount for such Settlement Period, and (i) if the actual
Discount so computed are greater than the estimated Discount for
such immediately preceding Settlement Period, the Discount
calculated pursuant to SECTION 4.6 (a) for the current Settlement
Period shall be increased by the amount of such difference, and
(ii) if the actual Discount so computed are less than the estimated
Discount for such immediately preceding Settlement Period, the
Discount calculated pursuant to SECTION 4.6(a) for the current
Settlement Period shall be decreased by the amount of such
difference.
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ARTICLE 5
MISCELLANEOUS
SECTION 5.1 AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement or consent to any
departure by the Seller or Servicer therefrom shall be effective unless in a
writing signed by the Administrator, and, in the case of any amendment, by the
Seller and the Servicer and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Issuer or Administrator 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 5.2 NOTICES, ETC
(a) All notices and other communications hereunder shall, unless
otherwise stated herein, be in writing (which shall include
facsimile communication) and sent or delivered, to each party
hereto, at its address set forth under its name on the signature
pages hereof or at such other address as shall be designated by
such party in a written notice to the other parties hereto. Notices
and communications sent by facsimile shall be effective when sent
(and shall be followed by hard copy sent by first class mail), and
notices and communications sent by other means shall be effective
when received.
(b) The Rating Agency shall be provided with notice of (i) any waiver
by the Administrator of the conditions set forth in Section 2 of
Exhibit II, (ii) the designation of a new Servicer pursuant to
Section 4.1(a), (iii) any assignment made pursuant to Section 5.3,
and (iv) any amendment, waiver or consent as contemplated by
Section 5.1.
SECTION 5.3 ASSIGNABILITY
(a) This Agreement and the Issuer's rights and obligations herein
(including ownership of the Purchased Interest) shall be
assignable, in whole or in part, by the Issuer and its successors
and assigns; provided, however, that prior to the Termination Date
the Issuer will not assign the Issuer's rights and obligations
herein (including ownership of the Purchased Interest), in whole or
in part, to any Person other than a Purchaser.
Each assignor may, in connection with the assignment disclose to
the applicable assignee any information relating to the Seller or
the Purchased Receivables furnished to such assignor by or on
behalf of the Seller, the Issuer or the Administrator.
- 27 -
(b) The Issuer may at any time grant to one or more banks or other
institutions (each a "PURCHASER") party to the Liquidity Agreement
participating interests in this Agreement and the Purchased
Interest. In the event of any such grant by the Issuer of a
participating interest to a Purchaser, the Issuer shall remain
responsible for the performance of its obligations hereunder. The
Seller agrees that each Purchaser shall be entitled to the benefits
of all representations, warranties, covenants, agreements and
indemnities of the Seller made or contained in this Agreement, all
of which may be enforced by the Issuer for the benefit of itself
and such participants.
(c) This Agreement and the rights and obligations of the Administrator
hereunder shall be assignable, in whole or in part, by the
Administrator and its successors and assigns; PROVIDED, HOWEVER
that the Administrator shall give the Seller and the Servicer prior
notice thereof and the Administrator shall not assign its rights
and obligations hereunder to a competitor of the Seller.
(d) Except as provided in SECTION 4.1(d), neither the Seller nor the
Servicer may assign its rights or delegate its obligations
hereunder or any interest herein without the prior written consent
of the Administrator.
(e) Without limiting any other rights that may be available under
applicable law, the rights of the Issuer may be enforced through it
or by its agents. The Seller acknowledges and agrees that the
Administrator is the agent of the Issuer for all purposes of this
Agreement and that the Administrator shall be entitled to exercise
all rights, powers, privileges and remedies of the Issuer hereunder
for, on behalf and in the name of the Issuer. Each of the Seller
and the Servicer shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex
or telephone message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed,
sent or made by the Administrator or its officers or employees for
and on behalf of the Issuer or by any other proper Person or
Persons, and upon advice and statements of legal counsel (including
counsel to the Issuer), independent accountants and other experts
selected by the Administrator.
SECTION 5.4 LEGAL COSTS AND TAXES
(a) In addition to the rights of indemnification granted under SECTION
3.1 hereof, the Seller agrees to pay on demand all Legal Costs for
the Administrator, the Issuer and their respective Affiliates and
agents.
(b) In addition, the Seller shall pay on demand any and all stamp and
other taxes and fees payable in connection with the execution,
delivery, filing and recording of this Agreement or the other
documents or agreements to be delivered hereunder
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and agrees to save each Indemnified Party hereunder harmless from
and against any liabilities with respect to or resulting from any
delay in paying, or omission to pay, such taxes and fees.
SECTION 5.5 NO PROCEEDINGS; LIMITATION ON PAYMENTS
Each of the Seller, the Servicer, the Administrator, each assignee of the
Purchased Interest or any interest therein, and each Person which enters into a
commitment to purchase the Purchased Interest or interests therein, hereby
covenants and agrees that it will not institute against, or join any other
Person in instituting against, the Issuer any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under any
federal or provincial bankruptcy, insolvency or similar law, for one year and
one day after the latest maturing Note issued by the Issuer is paid in full.
SECTION 5.6 CONFIDENTIALITY
(a) Unless otherwise required by applicable law, the Seller agrees to
maintain the confidentiality of this Agreement and the other
Transaction Documents (and all drafts thereof) in communications
with third parties and otherwise; PROVIDED that this Agreement and,
in the case of (i) and (iii) below, the other Transaction
Documents, may be disclosed to (i) any Governmental Authority
pursuant to legal process or any Person when required under
applicable law; PROVIDED, HOWEVER, that the Seller shall give the
Administrator advance written notice of its intention to make such
disclosure, (ii) third parties to the extent such disclosure is
made pursuant to a written agreement of confidentiality in form and
substance reasonably satisfactory to the Administrator, or (iii)
the Seller's bankers, auditors, accountants or legal counsel if
they agree to hold them confidential.
(b) Prior to the occurrence of an Insolvency Proceeding with respect to
the Seller or any of its Affiliates, the Issuer, the Administrator
and any successor Servicer or assignee of the Issuer shall maintain
the confidentiality of all information (financial or otherwise),
data, opinions, appraisals, evaluations and other information and
material of whatsoever nature or kind and representations relating
to this Agreement and the related Transaction Documents, the
business of the Seller and its Affiliates, the Obligors, the
Purchased Receivables and the related Contracts and Related
Security (collectively, "CONFIDENTIAL INFORMATION") and shall not
disclose any Confidential Information to any Person unless required
by any Governmental Authority pursuant to legal process or
applicable law; PROVIDED, HOWEVER that the Issuer, the
Administrator and any such assignee or Servicer shall be entitled
to provide or disclose any Confidential Information to (i) the
Rating Agency or any Purchaser, (ii) any potential rating agency,
Purchaser or Servicer, or (iii) any other Person with the prior
consent of the Seller, such consent not to be unreasonably
withheld, and if, in the case of (i) or (ii), such Person agrees to
be bound by the provisions of this SECTION 5.6(b).
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SECTION 5.7 GOVERNING LAW AND JURISDICTION
(a) This Agreement shall be governed by, and construed in accordance
with, the law of the Province of
Ontario.
(b) Any legal action or proceeding with respect to this Agreement may
be brought in the courts of the Province of
Ontario and by
execution and delivery of this Agreement, each of the Issuer, the
Seller, the Servicer and the Administrator consents, for itself and
in respect of its property, to the non-exclusive jurisdiction of
those courts. Each of the Issuer, the Seller, the Servicer and the
Administrator irrevocably waives, to the maximum extent permitted
by law, any objection, including any objection to the laying of
venue or based on the grounds of FORUM NON CONVENIENS, which it may
now or hereafter have to the bringing of any action or proceeding
in such jurisdiction in respect of this Agreement or any document
related hereto. The Issuer, the Seller, the Servicer and the
Administrator each waive personal service of any claim, notice of
motion or application, summons, complaint or other process, which
may be made by any other means permitted by
Ontario law.
SECTION 5.8 EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which when
so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement.
SECTION 5.9 SURVIVAL OF TERMINATION
The provisions of SECTIONS 1.8, 1.9, 3.1, 5.4, 5.5, 5.6, 5.7 and 5.12 shall
survive any termination of this Agreement.
SECTION 5.10 ENTIRE AGREEMENT
This Agreement embodies the entire agreement and understanding between the
Issuer, the Seller, the Servicer and the Administrator, and supersedes all prior
or contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof, except for any prior
arrangements made with respect to the payment by the Issuer of (or any
indemnification for) any fees, costs or expenses payable to or incurred (or to
be incurred) by or on behalf of the Seller, the Servicer and the Administrator.
SECTION 5.11 HEADINGS
The captions and headings of this Agreement and in any Exhibit or Schedule
hereto are for convenience of reference only and shall not affect the
interpretation hereof or thereof.
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SECTION 5.12 ISSUER'S LIABILITIES
The debts, liabilities and obligations of the Issuer under this Agreement are
solely trust obligations of the Issuer. All recourse for payment or satisfaction
of the obligations and liabilities of, or claims against, the Issuer under this
Agreement shall be limited to the Purchased Interest and no recourse or
execution shall be had for the payment of any amount owing by the Issuer under
this Agreement, or for the payment by the Issuer of any fee in respect hereof or
any other debt, liability, obligation or claim of or against the Issuer arising
out of or based on this Agreement against Computershare Trust Company of Canada
(or any successor to Computershare Trust Company of Canada as trustee of the
Trust), in its personal capacity, or against its properties, assets or
undertakings or against any stockholder, employee, officer, director, agent or
incorporator of Computershare Trust Company of Canada (or any successor as
trustee of the Trust); PROVIDED, HOWEVER, that nothing in this section shall
relieve any of the foregoing Persons from any liability which such Person may
otherwise have in such capacity for his/her or its gross negligence or wilful
misconduct.
[Signature Pages follow]
- 31 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
MBI LIMITED/LIMITEE, Address:
IN ITS CAPACITY AS GENERAL PARTNER OF
SMURFIT-MBI ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇ Attention: Director of Finance
Title: Canadian Counsel & Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Assistant Secretary Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
COMPUTERSHARE TRUST Address:
COMPANY OF CANADA,
IN ITS CAPACITY AS TRUSTEE OF c/o SCOTIA CAPITAL INC., as
KING STREET FUNDING TRUST, Administrator
BY ITS ADMINISTRATOR, Scotia Plaza
SCOTIA CAPITAL INC. ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
By: /s/ D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
Attention: Structured Finance
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.(▇▇▇) ▇▇▇-▇▇▇▇
- 32-
SCOTIA CAPITAL INC., AS Address:
ADMINISTRATOR
SCOTIA CAPITAL INC.
Scotia Plaza
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
By: /s/ D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
-------------------------------- ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Name: D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Title: Director
Attention: Structured Finance
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.(▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined). Unless otherwise indicated, all
Section, Annex, Exhibit and Schedule references in this Exhibit are to Sections
of and Annexes, Exhibits and Schedules to the Agreement.
"ADMINISTRATION ACCOUNT" means the special account (Transit #80002, account
number 07917-14) of the Issuer maintained at the main branch of Scotiabank at
Scotia Plaza, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, or such other account as
may be so designated in writing by the Administrator to the Seller and the
Servicer.
"ADMINISTRATOR" has the meaning set forth in the preamble to the Agreement.
"ADVERSE CLAIM" means any prior claim, hypothec, lien, security interest or
other charge or encumbrance, or any other type of preferential arrangement.
"AFFECTED PERSON" has the meaning set forth in SECTION 1.8.
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person.
"AFFILIATED OBLIGOR" means any Obligor that is an Affiliate of another Obligor.
"AGRICULTURAL RECEIVABLES" means Receivables owing by Obligors that are engaged
in the agricultural industry and which are required by the related Contract to
be paid in full within no more than 180 days of the original billing date under
the Contract.
"ALTERNATE RATE" means, for any Settlement Period for any Portion of Capital
being funded otherwise than through the issuance of Notes, an interest rate per
annum equal to the BA Rate for such Settlement Period plus 1.25%, PROVIDED,
HOWEVER, that in the case of:
(a) any Settlement Period on or prior to the first day on which the
Administrator shall have been notified by the Issuer or a Purchaser
that the introduction of or any change in or in the interpretation
of any law or regulation makes it unlawful, or any central bank or
other Governmental Authority asserts that it is unlawful, for the
Issuer or such Purchaser to fund any Portion of Capital (based on
the BA Rate) set forth above (and the Issuer or such Purchaser
shall not have subsequently notified the Administrator that such
circumstances no longer exist),
(b) any Settlement Period of less than one month, or
- 2 -
(c) any Settlement Period relating to any Portion of Capital which is
less than $250,000,
the "ALTERNATE RATE" for each such Settlement Period and each Portion of Capital
shall be an interest rate per annum equal to the Prime Rate in effect on each
day of such Settlement Period.
"ASSIGNMENT" has the meaning specified in SECTION 1.10.
"AVERAGE MATURITY" means at any time that period of days equal to the product of
(i) the number of days in the three immediately preceding Collection Periods,
and (ii) a fraction, the numerator of which is equal to the aggregate
Outstanding Balance of the Receivables as of the Cut-Off Date for the
immediately preceding Collection Period, and the denominator equal to the
aggregate amount payable pursuant to invoices giving rise to Receivables that
were generated by the Seller during the three immediately preceding Collection
Periods, all as calculated by the Servicer in the then most recent Portfolio
Report.
"BA RATE" means, for any Settlement Period and any Portion of Capital, a rate
per annum equal to the discount rate (expressed as a percentage calculated on
the basis of a year of 365 or 366 days, as the case may be) equal to the CDOR
Rate at 10:00 A.M. (Toronto time) on the first day of such Settlement Period.
The Administrator shall advise the Seller, either in writing or verbally, by
11:00 A.M. (Toronto time) on the first day of the Settlement Period as to the
applicable BA Rate for such Settlement Period and Portion of Capital. Any rate
or quotation to be calculated hereunder shall be rounded, if necessary, to the
nearest 1/100 of one per cent (.01%), with five one thousandths of a percentage
point rounded upwards. All dollar amounts used or resulting from any calculation
based on the BA Rate will be rounded to the nearest cent (with one-half of one
cent rounded upwards).
"BUSINESS DAY" means any day, other than a Saturday, Sunday or public holiday,
on which Scotiabank is open for business in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"CANADIAN DOLLARS" or "$" means the lawful currency of Canada.
"CAPITAL" means, at any time, the aggregate Cash Purchase Price paid to the
Seller by the Issuer prior to such time, or such amount divided or combined in
accordance with SECTION 1.7, in each case reduced from time to time by
Collections or other amounts (i) deposited to the Administration Account
pursuant to SECTION 1.4(b)(iii) or (ii) distributed and applied on account of
such Capital pursuant to SECTION 1.4(d); PROVIDED, HOWEVER that if such Capital
shall have been reduced by any distribution and thereafter all or a portion of
such distribution is rescinded or must otherwise be returned for any reason,
such Capital shall be increased by the amount of such rescinded or returned
distribution, as though it had not been made.
"CASH PURCHASE PRICE" means each amount paid to the Seller by the Issuer in
respect of the purchase price of the Purchased Interest pursuant to SECTION
1.2(a) and SECTION 1.2(b) of the Agreement.
- 3 -
"CDOR RATE" means that annual rate of interest equal to the average "BA 1 Month"
interest rates for Canadian dollar denominated bankers' acceptances displayed
and identified as such on the "Reuters Screen CDOR Page" (as defined in the
International Swap and Derivatives Association, Inc. definitions, as modified
and amended from time to time) as of 10:00 A.M. Toronto,
Ontario local time on
any particular day and, if such day is not a Business Day, then on the
immediately preceding Business Day (as adjusted by the Administrator after 10:00
A.M. Toronto,
Ontario local time to reflect any error in a posted rate of
interest or in the posted average annual rate of interest). If such rates are
not available on the Reuters Screen CDOR Page on any particular day, then the
CDOR Rate on that day shall be calculated as the arithmetic mean of the 30 day
rates applicable to Canadian dollar denominated banker's acceptances quoted by
four major Canadian Schedule I chartered banks as of 10:00 A.M. Toronto, Ontario
local time on such day, or if such day is not a Business Day, then on the
immediately preceding Business Day. The four major Canadian Schedule I chartered
banks shall, unless the Seller and the Issuer otherwise agree, be The Bank of
Nova Scotia, The Toronto-Dominion Bank, Royal Bank of Canada and Canadian
Imperial Bank of Commerce. The arithmetic average of any rates or quotations to
be calculated hereunder shall be rounded, if necessary, to the nearest 1/100 of
one per cent (.01%), with five one thousandths of a percentage point rounded
upwards. All dollar amounts used in or resulting from any calculation based on
the CDOR Rate will be rounded to the nearest cent (with one-half of one cent
rounded upwards).
"COLLECTION DELAY PERIOD" means, prior to the occurrence of a Termination Event,
zero and, on or after the occurrence of a Termination Event, such number of days
(not exceeding thirty days) as the Administrator may from time to time select
upon notice to the Seller.
"COLLECTION PERIOD" means a calendar month and, on or after the Termination
Date, shall mean such period (including without limitation a period of one day)
as shall be selected from time to time by the Administrator.
"COLLECTIONS" means, with respect to any Purchased Receivable, (a) all funds
which are received by the Seller or the Servicer in payment of any amounts owed
in respect of such Receivable (including, without limitation, purchase price,
finance charges, interest and all other charges), or applied to amounts owed in
respect of such Receivable (including, without limitation, insurance payments
and net proceeds of the sale or other disposition of repossessed goods or other
collateral or property of the related Obligor or any other Person directly or
indirectly liable for the payment of such Purchased Receivable and available to
be applied thereon), (b) all Deemed Collections, (c) all amounts paid or deemed
paid by the Seller to the Issuer pursuant to SECTION 1.4(e)(v), and (d) all
other proceeds of such Receivable (including any Option Price paid to the Issuer
or any other proceeds of sale or other disposition thereof by the Issuer).
"CONCENTRATION LIMIT" means, for an Obligor at any time:
(a) an amount equal to 12.5% of the Capital at such time provided that
(i) the long term or short term public senior debt securities of
the Obligor ("the Obligor's debt securities") have been assigned a
credit rating by the Rating Agency that is
- 4 -
greater than or equal to AA or the equivalent, or (ii) if the
Obligor's debt securities are not rated by the Rating Agency, the
Obligor's debt securities have been assigned a credit rating
greater than or equal to AA or the equivalent by each NRSO (as
defined below) that then rates the Obligor's debt securities;
(b) an amount equal to 8.33% of the Capital at such time provided that
(i) the Obligor's debt securities have been assigned a credit
rating by the Rating Agency that is greater than or equal to A or
the equivalent but less than AA or the equivalent, or (ii) if the
Obligor's debt securities are not rated by the Rating Agency, the
Obligor's debt securities have been assigned a credit rating
greater than or equal to A or the equivalent but less than AA or
the equivalent by each NRSO (as defined below) that then rates the
Obligor's debt securities; and
(c) an amount equal to 6.25% of the Capital at such time provided that
(i) the Obligor's debt securities have been assigned a credit
rating by the Rating Agency that is greater than or equal to BBB or
the equivalent but less than A- or the equivalent, or (ii) if the
Obligor's debt securities are not rated by the Rating Agency, the
Obligor's debt securities have been assigned a credit rating
greater than or equal to BBB or the equivalent but less than A or
the equivalent by each NRSO (as defined below) that then rates the
Obligor's debt securities; and
(d) in any other case, an amount equal to 4.17% of the Capital at such
time;
PROVIDED, HOWEVER, that (i) notwithstanding the foregoing, so long as Molson
Inc.'s debt securities have been assigned a credit rating by the Rating Agency
that is greater than or equal to A or the equivalent, the Concentration Limit
for Molson Canada shall be an amount equal to 12.5% of the Capital, (ii) any
Concentration Limit for any Obligor may from time to time be changed by the
Issuer with the approval or at the request of the Rating Agency upon five
Business Days' notice to the Seller, and (iii) in the case of an Obligor and any
Affiliated Obligors, the Concentration Limit shall be calculated as if such
Obligor and such one or more Affiliated Obligors were one Obligor. For the
purposes of this definition, "NRSO" means each of DBRS, ▇▇▇▇▇'▇ and S&P.
"CONFIDENTIAL INFORMATION" has the meaning set forth in SECTION 5.6.
"CONTRACT" means, with respect to any Receivable, any and all contracts,
understandings, instruments, agreements, invoices, invoice summaries or other
writings pursuant to which such Receivable arises or which evidences such
Receivable or under which an Obligor becomes or is obligated to make payment in
respect of such Receivable.
"CP RATE" means, for any Settlement Period and any Portion of Capital, to the
extent the Issuer funds such Portion of Capital for such Settlement Period by
issuing Notes, a rate per annum (expressed as a percentage and an interest yield
equivalent and calculated on the basis of a 365-day year and the actual days
elapsed) equal to the weighted average of the interest rates or
- 5 -
discount rates (converted to interest bearing equivalent rates per annum) for
the Notes of the Issuer outstanding during such Settlement Period, in each case,
rounded to the nearest one hundredth of one percent (with 0.005 per cent being
rounded upward).
"CREDIT AND COLLECTION POLICY" means those receivables credit and collection
policies and practices of the Seller in effect on the date of the Agreement and
described in SCHEDULE I hereto, as modified in compliance with the Agreement.
"CUT-OFF DATE" means the close of business on the last day of a Collection
Period.
"DBRS" means Dominion Bond Rating Service Limited and any successor thereto
which is a nationally recognised statistical rating organisation.
"DEBT" means (i) indebtedness for borrowed money, (ii) obligations evidenced by
bonds, debentures, notes or other similar instruments, (iii) obligations to pay
the deferred purchase price of property or services, (iv) obligations as lessee
under leases which shall have been or should be, in accordance with generally
accepted accounting principles, recorded as capital leases, and (v) obligations
under direct or indirect guarantees in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others of
kinds referred to in CLAUSES (i) through (iv) above.
"DEEMED COLLECTIONS" means those amounts deemed to have been received as
Collections by the Seller pursuant to SUBSECTIONS 1.4(e)(i) AND (ii).
"DEFAULT RATIO" means, as calculated in the Portfolio Report as of the Cut-Off
Date for any Collection Period, a fraction (expressed as a percentage) having
(a) a numerator which is equal to (i) the aggregate Outstanding Balance of
Receivables that became Defaulted Receivables during such Collection Period,
minus (ii) the aggregate amount of recoveries or Collections during such
Collection Period of or in respect of the Outstanding Balance of Receivables
that became Defaulted Receivables during any prior Collection Period, and (b) a
denominator which is the aggregate amount payable pursuant to invoices giving
rise to Receivables that were generated by the Seller during the Collection
Period ended on such Cut-Off Date.
"DEFAULTED RECEIVABLE" means a Receivable:
(a) to which any payment, or part thereof, remains unpaid for at least
90 days from the original due date for such payment under the
related Contract;
(b) as to which the Obligor thereof or any other Person obligated
thereon or owning any Related Security in respect thereof has
become subject to an Insolvency Proceeding; or
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(c) which, consistent with the Credit and Collection Policy, would be
written off the Seller's books as uncollectible.
"DEFERRED PURCHASE PRICE" has the meaning ascribed thereto in SECTION 1.2(d).
"DELINQUENCY RATIO" means, as calculated in the Portfolio Report as of the
Cut-Off Date for the related Collection Period, a fraction (expressed as a
percentage) having (a) a numerator which is the aggregate Outstanding Balance of
all Receivables that were Delinquent Receivables on such Cut-Off Date and (b) a
denominator which is the aggregate Outstanding Balance of all Receivables on
such Cut-Off Date.
"DELINQUENT RECEIVABLE" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid for at
least 60 days from the original due date for such payment under the
related Contract; or
(b) which, consistent with the Credit and Collection Policy, the Seller
would classify as delinquent.
"DILUTION" means, with respect to any Receivable, the aggregate reduction or
adjustment in the paid or unpaid Outstanding Balance of such Receivable on
account of disputes, set-offs, discounts, incorrect ▇▇▇▇▇▇▇▇, credits, rebates,
allowances, chargebacks, returned, repossessed or foreclosed goods, allowances
for early payments, reductions due to foreign currency exchange or other such
reductions or adjustments granted in the ordinary course of business that are
unrelated to the inability of the Obligor of such Receivables to pay such
Receivables.
"DILUTION COLLECTIONS" means, for any day or period on or after the Termination
Date and any Purchased Receivables, an amount equal to the Dilution Reserve as
of the close of business on the Business Day preceding the Termination Date
multiplied by the fraction A/B where:
A= the sum of (1) the Collections and (2) the aggregate Outstanding Balance
of the Purchased Receivables which were written off as uncollectible, in
each case, during such day or period, and
B= the aggregate Outstanding Balance of the Purchased Receivables as of the
close of business on the Business Day preceding the Termination Date.
"DILUTION PERCENTAGE" means, at any time, a percentage equal to the greater of
(a) 3.0%, and (b) the product of (i) 2.0 and (ii) as calculated in the most
recent Portfolio Report as of the most recent Cut-Off Date (or the date of the
initial purchase under SECTION 1.2(a), in the case of the initial Cut-Off-Date)
(w) at any time on or after the date of the initial purchase under SECTION
1.2(a), and prior to the Cut-Off Date for the third consecutive Collection
Period following the date of the initial purchase under SECTION 1.2(a), the
highest Dilution Ratio for the Cut-Off Date for any such Collection Period, (x)
on the Cut-Off Date for the third consecutive Collection
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Period following the date of the initial purchase under SECTION 1.2(a), the
average of the Dilution Ratios for the three consecutive Collection Periods
ending on such Cut-Off Date; (y) on or after the Cut-Off Date for the fourth
consecutive Collection Period following the date of the initial purchase under
SECTION 1.2(a) and prior to the twelfth Cut-Off Date following such date of
initial purchase, the highest average of the Dilution Ratios for the Cut-Off
Dates for any three consecutive Collection Periods that occurred during such
period, and (z) on or after the Cut-Off Date for the twelfth Collection Period
following the date of the initial purchase under SECTION 1.2(a), the highest
average of the Dilution Ratios for the Cut-Off Dates for any three consecutive
Collection Periods during the preceding twelve consecutive Collection Periods.
"DILUTION RATIO" means, as calculated in each Portfolio Report as of the most
recent Cut-Off Date, a fraction (expressed as a percentage) having (i) a
numerator equal to the aggregate amount of Dilution on the Receivables during
the Collection Period ending on the most recent Cut-Off Date, and (ii) a
denominator equal to the aggregate amounts payable pursuant to invoices giving
rise to Receivables that were generated by the Seller during the Collection
Period ending on such most recent Cut-off Date.
"DILUTION RESERVE" means, for the Purchased Interest and at any time, an amount
equal to the product of (a) the Dilution Percentage at such time and (b) the
Capital at such time.
"DISCOUNT" means, for any Settlement Period, an amount (as adjusted pursuant to
SECTION 4.6 of the Agreement) equal to:
DR X C X ED + TF
---
365
where:
C = the daily weighted average Capital for such Settlement Period
DR = the Discount Rate for such Settlement Period
ED = the actual number of days during such Settlement Period
(other than the related Settlement Date)
TF = the Termination Fee, if any, for the Capital for such
Settlement Period,
PROVIDED, that Discount for the Portion of Capital shall not be considered paid
by any distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason.
"DISCOUNT RATE" means, for any Settlement Period, an annual rate equal to the
weighted average (based on the Portions of Capital being funded through the
issuance of Notes and the Portions of Capital being funded otherwise than
through the issuance of such Notes during such Settlement
- 8 -
Period and on the number of days each such Portion of Capital is outstanding
during such Settlement Period and being so funded) of the CP Rate for such
Settlement Period and the Alternate Rates for such Settlement Period.
"ELIGIBLE RECEIVABLE" means:
(i) at any time (A) on and after the Termination Date, and (B) for purposes of
the definition or calculation of the "Net Receivables Pool Balance", each
Receivable:
(a) the Obligor of which is a resident of Canada or the United States
of America, is not an Affiliate of the Seller, and is not a
government or a governmental subdivision, crown corporation,
authority, board, agency or other entity;
(b) the Obligor of which is not subject to any Insolvency Proceeding,
and is not an Excluded Obligor;
(c) which is denominated and payable only in Canadian Dollars or in
lawful currency of the United States of America;
(d) which arises under a Contract and which (i) is required by the
related Contract to be paid in full within 60 days of the original
billing date under the Contract, or (ii) is an Agricultural
Receivable;
(e) other than a Receivable the Outstanding Balance of which, if added
to the outstanding Balance of all Purchased Receivables, would
result in the Outstanding Balance of all Purchased Receivables
which are required by the related Contracts to be paid in full
within more than 30 days of the original billing date under the
related Contracts exceeding 30% of the Required Amount;
(f) which arises in the ordinary course of the Seller's business;
(g) which is not a Defaulted Receivable or a Delinquent Receivable;
(h) (i) with respect to Specified Obligors, for which Delinquent
Receivables of the related Specified Obligor do not exceed 25% of
all such Specified Obligor's Receivables, and (ii) with respect to
any Obligors other than Specified Obligors, for which Delinquent
Receivables of the related Obligor do not exceed 10% of all such
Obligor's Receivables;
(i) other than a Receivable the Outstanding Balance of which, if added
to the outstanding Balance of all Purchased Receivables, would
result in (i) the aggregate Outstanding Balance of all Purchased
Receivables owing by the same Obligor and by all Affiliated
Obligors exceeding the Concentration Limit for such
- 9 -
Obligor, (ii) the aggregate Outstanding Balance of all Purchased
Receivables that are Agricultural Receivables owing by all Obligors
and their Affiliated Obligors exceeding 5% of the Required Amount,
or (iii) the aggregate Outstanding Balance of all Purchased
Receivables denominated and payable in lawful currency of the
United States of America exceeding 6% of the Required Amount;
(j) which arises under a Contract which, together with the related
Receivable, is in full force and effect and which is a legal, valid
and binding obligation of the related Obligor, enforceable against
such Obligor in accordance with its terms;
(k) which complies with all applicable laws, rulings and regulations in
effect;
(l) which is not the subject of any asserted dispute, offset, hold
back, defence or other claim by the Obligor;
(m) which is not the subject of any Adverse Claim (other than any
Adverse Claim created or granted by the Issuer) and which does not
arise from the sale of inventory which is subject to any Adverse
Claim (other than any Adverse Claim created or granted by the
Issuer);
(n) which complies with the requirements of the Credit and Collection
Policy;
(o) which is not subject to any contingent performance requirements of
the Seller unless such requirements are guaranteed or insured by
third parties acceptable to the Administrator or the Rating Agency;
(p) which does not require the consent of the related Obligor to be
sold or assigned;
(q) which has not been modified or restructured since its creation,
except as permitted pursuant to SECTION 4.2 of the Agreement;
(r) in which the Seller owns good and marketable title and which is
freely assignable by the Seller;
(s) for which the Issuer shall, upon such Receivable becoming a
Purchased Receivable, have a valid and enforceable first priority
perfected ownership interest together with the Related Security and
Collections with respect thereto, in each case, free and clear of
any Adverse Claim (other than any Adverse Claim created or granted
by the Issuer);
(t) for which the Seller has established no offset arrangements with
the related Obligor; and
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(u) which constitutes (i) a claim under the Quebec Civil Code and (ii)
an account or chattel paper as defined in the PPSA of Ontario which
is not evidenced by an instrument, and
(ii) at any other time or for any other purpose, including without limitation
for the purposes of SECTION 1.3(a), each Receivable:
(a) the Obligor of which is a resident of Canada or of the United
States of America, is not an Affiliate of the Seller, and is not a
government or a governmental subdivision, crown corporation,
authority, board, agency or other entity;
(b) which is denominated and payable only in Canadian Dollars or in
lawful currency of the United States of America;
(c) which arises under a Contract and which (i) is required by the
related Contract to be paid in full within 60 days of the original
billing date under the Contract, or (ii) is an Agricultural
Receivable;
(d) which arises in the ordinary course of the Seller's business;
(e) which is not the subject of any Adverse Claim (other than any
Adverse Claim created or granted by the Issuer) and which does not
arise from the sale of inventory which is subject to any Adverse
Claim (other than any Adverse Claim created or granted by the
Issuer);
(f) which does not require the consent of the related Obligor to be
sold or assigned;
(g) in which the Seller owns good and marketable title and which is
freely assignable by the Seller; and
(h) which constitutes (i) a claim under the Quebec Civil Code and (ii)
an account or chattel paper as defined in the PPSA of Ontario which
is not evidenced by an instrument.
"EXCLUDED OBLIGOR" means an Obligor, so designated in writing as such by the
Administrator to the Seller, it being understood that from time to time the
Administrator may revoke its designation of one or more Obligors as Excluded
Obligors by written notice to the Seller.
"FACILITY LIMIT" means $70,000,000. References to the unused portion of the
Facility Limit shall mean, at any time, the Facility Limit minus the then
outstanding Capital under the Agreement.
"FACILITY TERMINATION DATE" means the earliest to occur of (a) ▇▇▇▇▇ ▇▇, ▇▇▇▇,
(▇) the Purchase Termination Date, as defined in the Liquidity Agreement, and
(c) the date determined pursuant to SECTION 2.2.
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"FINAL COLLECTION DATE" means the first Settlement Date following the
Termination Date on which (a) the Purchased Interest has been collected,
liquidated or written off as uncollectible or (b) the Capital, Discount and
Servicing Fees with respect to the Purchased Interest, and any other amounts
payable by the Seller to the Issuer, the Administrator or any other Indemnified
Party or Affected Person have been paid in full.
"FINANCING STATEMENTS" means the Assignment and all financing statements,
financing change statements, assignments and other documents necessary or
desirable under any applicable PPSA to fully perfect, preserve, maintain, and
protect the interest of the Issuer under the Agreement.
"GOVERNMENTAL AUTHORITY" means any nation or government, any province, state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation any court, and any Person owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"INDEMNIFIED AMOUNTS" has the meaning set forth in Section 3.1.
"INDEMNIFIED PARTY" has the meaning set forth in Section 3.1.
"INSOLVENCY PROCEEDING" means, with respect to a Person, any of the following:
(a) (i) the commencement or filing of an application, petition, action,
case or other proceeding (including a notice of intention to file a
proposal) before any court or Governmental Authority, with or
without the application or consent of such Person, under any
applicable law (foreign or domestic) relating to bankruptcy,
insolvency, receivership, reorganization, debt arrangement,
dissolution, liquidation, winding up or composition or adjustment
of it or its debts, (ii) the appointment of a trustee, receiver,
manager, receiver and manager, custodian, liquidator, assignee,
sequestrator or the like for such Person or any substantial part of
its property or assets, or (iii) the granting of any similar relief
with respect to such Person under any law (foreign or domestic)
relating to bankruptcy, insolvency, receivership, reorganization,
debt arrangement, dissolution, liquidation, winding up or
composition or adjustment of it or its debts; or
(b) a general assignment for the benefit of creditors, or becoming
insolvent, or failing to, or admitting in writing its inability to,
pay its debts generally as they become due; or
(c) taking any corporate or other action to authorise any of the
actions described in paragraphs (a) or (b) above.
"ISSUER" means Computershare Trust Company of Canada, in its capacity as trustee
of King Street Funding Trust, and its successors and permitted assigns in such
capacity.
- 12 -
"LEGAL COSTS" means all reasonable fees and disbursements of any law firm or
other external counsel incurred by (i) the Issuer, the Administrator on its
behalf or their respective Affiliates and agents in connection with this
Agreement, or (ii) the Liquidity Agent, the Purchaser or their respective
Affiliates and agents in connection with the Liquidity Agreement.
"LIQUIDITY AGENT" means Scotiabank in its capacity as liquidity agent pursuant
to the Liquidity Agreement.
"LIQUIDITY AGREEMENT" means that certain Liquidity Asset Purchase Agreement
dated as March 30, 2004 among The Bank of Nova Scotia, as Purchaser, The Bank of
Nova Scotia, as Liquidity Agent, the Issuer and the Administrator, as amended,
supplemented or otherwise modified from time to time.
"LOSS PERCENTAGE" means, at any time, the greater of (i) 25% and (ii) the
percentage equal to the product of (x) 15.0, and (y) the Default Ratio at such
time.
"LOSS RESERVE" means, for the Purchased Interest and any date, an amount equal
to the product of the Loss Percentage for such date and the Capital of the
Purchased Interest at the close of business on such date.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the business,
operations, property or condition (financial or otherwise) of the Seller and its
Subsidiaries taken as a whole, (b) the ability of the Seller or the Servicer (or
any of its Sub-Servicers) to perform their respective obligations under the
Agreement or any of the other Transaction Documents, or (c) the rights or
remedies of the Issuer or the Administrator hereunder or thereunder.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc. or any successor thereto.
"NET RECEIVABLES POOL BALANCE" means on any date of determination, the aggregate
Outstanding Balance of the Eligible Receivables then included in the Purchased
Interest determined on such date of determination in accordance with the
procedures described in Section 1.3(b) as if the date of determination were the
Termination Date; PROVIDED, HOWEVER that, subject to compliance with the
provisions of SECTION 1.3(b), at any time on or after the Termination Date, the
Net Receivables Pool Balance means the aggregate Outstanding Balance of the
Purchased Receivables at such time.
"NEGATIVE CARRY AMOUNT" means, with respect to any Settlement Period and any
reduction in any Portion of Capital pursuant to SECTION 1.4(b)(iii) or SECTION
1.4(f), the amount, if any, by which (i) the additional Discount which would
have accrued during such Settlement Period on such Portion of Capital had no
reduction in such Portion of Capital occurred pursuant to such Section from and
including the date of deposit thereof to the Administration Account to and
including the date of application thereof by the Issuer to the repayment of
Notes over (ii) the income, if any, received or expected to be received by the
Issuer from the Issuer investing the proceeds of such reduction in such Portion
of Capital from and including the date of deposit
- 13 -
thereof to the Administration Account to and including the final date of
application thereof by the Issuer to the repayment of Notes, as determined by
the Administrator, which determination shall be binding and conclusive for all
purposes, absent manifest error (and which determination may be based on
reasonable estimates of income to be earned by the Issuer from and after the
date of any such deposit to the Administration Account).
"NOTES" means short-term promissory notes issued or to be issued by the Issuer
to fund its investments in accounts receivable or other financial assets.
"OBLIGOR" means, with respect to any Receivable, the Person obligated to make
payments pursuant to the Contract relating to such Receivable.
"OPTION PRICE" has the meaning set forth in SECTION 1.11(a).
"OUTSTANDING BALANCE" of any Receivable at any time means the then outstanding
principal balance thereof.
"PARENT" means
Stone Container Corporation.
"PERSON" means an individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture,
limited liability company or other entity, or a government or any political
subdivision or agency thereof.
"PORTFOLIO REPORT" means a report, in substantially the form of Annex C hereto,
furnished by the Servicer to the Administrator pursuant to the Agreement.
"PORTION OF CAPITAL" has the meaning set forth in SECTION 1.7. In addition, at
any time when the Capital is not divided into two or more portions, "Portion of
Capital" means 100% of the Capital.
"PPSA" means (a) the personal property security legislation, as amended,
supplemented or replaced from time to time, as in effect in each Province of
Canada (other than Quebec), and (b) the Civil Code of Quebec, as amended,
supplemented or replaced from time to time, as in effect in Quebec.
"PRIME RATE" means, for any day, the greater on such day of (i) the rate per
annum designated by Scotiabank from time to time (and in effect on such day) as
its prime rate for Canadian Dollar commercial loans made in Canada and (ii) a
rate per annum equal to one-half of one percent (1/2%) plus the CDOR Rate from
time to time (and in effect on such day), in each case, as advised by the
Administrator to the Seller from time to time pursuant to the Agreement.
"PURCHASED INTEREST" means, at any time, an undivided one hundred percent
ownership interest in (i) the Purchased Receivables at such time, (ii) all
Related Security with respect to such Purchased Receivables, and (iii) all
Collections with respect to, and other proceeds of, such Purchased Receivables
and Related Security.
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"PURCHASED RECEIVABLE" means, at any time, (a) each Receivable sold, assigned
and transferred to the Issuer pursuant to SECTION 1.3(a) and (b) on and after
the Termination Date and subject to compliance with the terms and conditions of
SECTION 1.3(b), any Receivable which, pursuant to the procedure described in
SECTION 1.3(b), is identified as a Purchased Receivable on or as of the
Termination Date.
"PURCHASER" has the meaning set forth in SECTION 5.3(b).
"RATING AGENCY" means DBRS.
"RE-ASSIGNED PURCHASED INTEREST" has the meaning set forth in SECTION 1.11(b).
"RECEIVABLE" means any indebtedness and other obligations owed to the Seller by,
or any right of the Seller to payment from or on behalf of, an Obligor, whether
constituting an account, chattel paper, instrument or intangible, arising from,
in connection with, or which are incidental to, the sale, manufacture and
disposition of corrugated products including industrial, commercial and
specialty packaging, and includes, without limitation, the obligation to pay any
finance charges, fees and other charges with respect thereto and any goods and
services tax, harmonised sales tax or Quebec sales tax payable or exigible by or
upon an Obligor or the transaction giving rise to such Receivable but excludes
any other provincial sales tax so payable or exigible; and which indebtedness
and other obligations are recorded on or included from time to time in the Trial
Balances owned by the Seller and which are identified in Schedule III to the
Agreement. Indebtedness and other obligations arising from any one transaction,
including, without limitation, indebtedness and other obligations represented by
an individual invoice or agreement, shall constitute a Receivable separate from
a Receivable consisting of the indebtedness and other obligations arising from
any other transaction.
"RECORDS" means all Contracts, invoices, books, records, shipping documents and
other documents and information maintained with respect to the Purchased
Receivables, the Purchased Interest and the related Obligors.
"RELATED SECURITY" means, with respect to any Receivable:
(a) all of the Seller's interest in any goods (including returned
goods), and documents of title evidencing the shipment or storage
of any goods (including returned goods), relating to any sale
giving rise to such Receivable; PROVIDED, HOWEVER that any
returned, repossessed or foreclosed goods shall not constitute
Related Security if the Seller pays to the Servicer the amount of
the Dilution that gave rise to the returned goods or repurchases
the Defaulted Receivable relating to such repossessed or foreclosed
goods in accordance with the terms and provisions of the Agreement;
(b) all other hypothecs, security interests or liens and property
subject thereto from time to time purporting to secure payment of
such Receivable, whether pursuant
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to the Contract related to such Receivable or otherwise, together
with all PPSA financing statements or other filings relating
thereto;
(c) all guarantees, indemnities, insurance and other agreements
(including the related Contract) or arrangements of whatever
character from time to time supporting or securing payment of such
Receivable or otherwise relating to such Receivable whether
pursuant to the Contract related to such Receivable or otherwise;
(d) all Records related to such Receivable; and
(e) all proceeds of the foregoing.
"REQUIRED AMOUNT" means, at any time, an amount equal to the sum at such time of
the Capital, the Loss Reserve, the Dilution Reserve, the Yield Reserve and the
Servicing Fee Reserve.
"SCOTIABANK" means The Bank of Nova Scotia and its successors and assigns.
"SERVICING FEE" shall mean the fee referred to in SECTION 4.5.
"SERVICING FEE PERCENTAGE" for the Purchased Interest at any time means the
product (expressed as a percentage) of (x) the Servicing Fee Rate and (y) a
fraction, the numerator of which is the sum of (x) four times the Average
Maturity plus (y) the Collection Delay Period (each as in effect at such date)
and the denominator of which is 365.
"SERVICING FEE RATE" means, prior to the Termination Date, 0.00% per annum and,
on and after the Termination Date, 1.00% per annum.
"SERVICING FEE RESERVE" for the Purchased Interest at any time means an amount
equal to the product of the Servicing Fee Percentage and the Capital at such
time.
"SETTLEMENT DATE" means the last day of each Settlement Period.
"SETTLEMENT PERIOD" means, with respect to each Portion of Capital, initially
the period commencing on the date of payment pursuant to SECTION 1.2(a) or
SECTION 1.2(b) on which such Portion of Capital is paid to the Seller in
satisfaction of the related portion of the Cash Purchase Price of the Purchased
Interest or, in the case of a Portion of Capital not funded with the proceeds of
Notes, the date such Portion of Capital is created as contemplated by SECTION
1.7 and ending on the fifteenth (15th) day in the calendar month following the
month in which such payment or creation occurs and thereafter each period
commencing on the last day of the immediately preceding Settlement Period for
such Portion of Capital and ending on the fifteenth (15th) day of the following
calendar month; PROVIDED, that:
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(a) any Settlement Period (other than of one day) which would otherwise
end on a day which is not a Business Day shall be extended to the
next succeeding Business Day;
(b) the last day of a Settlement Period (other than of one day) for a
Portion of Capital shall be the first day of the next Settlement
Period for such Portion of Capital;
(c) in the case of any Settlement Period of one day, (A) if the
immediately preceding Settlement Period is more than one day, be
the last day of such immediately preceding Settlement Period, and,
if the immediately preceding Settlement Period is one day, be the
day next following such immediately preceding Settlement Period;
and (B) if such Settlement Period occurs on a day immediately
preceding a day which is not a Business Day, such Settlement Period
shall be extended to the next succeeding Business Day;
(d) in the case of any Settlement Period for any Portion of Capital
which commences before the Termination Date and would otherwise end
on a date occurring after the Termination Date, such Settlement
Period shall end on such Termination Date and the duration of each
Settlement Period which commences on or after the Termination Date
shall be of such duration (including, without limitation, a period
of one day) as shall be selected by the Administrator; and
(e) the initial Settlement Period shall be the period commencing on the
date of the initial payment pursuant to SECTION 1.2(a) and ending
on May 15, 2004.
"S&P" means Standard & Poor's Ratings Group or any successor thereto.
"SPECIFIED OBLIGOR" means any of Altria Group Inc., ▇▇ ▇▇▇▇▇▇ Company, Dare
Foods Limited, Hershey Canada Inc., Pepsi-Cola Canada Ltd., SC ▇▇▇▇▇▇▇ & Son
Ltd. or Pfizer Canada Inc.
"SUBSIDIARY" means, with respect to any Person, any corporation of which shares
having ordinary voting power to elect at least a majority of its board of
directors (regardless of the existence at the time of a right of the holders of
any class or classes of securities of such corporation to exercise such voting
power by reason of the happening of any contingency) are beneficially owned by
such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries of such Person.
"SUPPORT AGREEMENT" means the support agreement dated March 30, 2004 between the
Parent and the Issuer.
"TANGIBLE NET WORTH" means, at any time, the aggregate of the Seller's partners'
equity at such time less any amount on account of goodwill or other similar
intangible assets, all as determined in accordance with Canadian generally
accepted accounting principles.
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"TERMINATION DATE" means the earlier of (i) the Business Day which the Seller so
designates by notice to the Administrator pursuant to SECTION 1.1 (b), (ii) the
Business Day which the Issuer so designates by notice to the Servicer and the
Seller at least 45 days in advance, and (iii) the Facility Termination Date.
"TERMINATION DAY" means (i) each day on which the conditions set forth in
SECTION 2 of EXHIBIT II are not satisfied and (ii) each day which occurs on or
after the Termination Date.
"TERMINATION EVENT" has the meaning specified in EXHIBIT V.
"TERMINATION FEE" means, for any Settlement Period during which a Termination
Day occurs, the amount, if any, by which (i) the additional Discount (calculated
without taking into account any Termination Fee or any shortened duration of
such Settlement Period pursuant to CLAUSE (d) of the definition thereof) which
would have accrued during such Settlement Period on the related Portion of
Capital had no reduction in such Capital occurred after the Termination Date,
exceeds (ii) the income, if any, received by the Issuer from the Issuer
investing the proceeds of all reductions in such Portion of Capital which occur
after the Termination Date, as determined by the Administrator, which
determination shall be binding and conclusive for all purposes, absent manifest
error.
"TRANSACTION DOCUMENTS" means the Agreement, the Assignment, the Liquidity
Agreement, the Support Agreement and all other certificates, instruments,
Financing Statements, reports, notices, agreements and documents executed or
delivered under or in connection with the Agreement, in each case as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the Agreement.
"TRIAL BALANCE" mean the Seller's accounts receivable trial balances described
in SCHEDULE III as such Schedule may be amended, supplemented or replaced from
time to time and "Trial Balance" shall mean each such accounts receivable trial
balance (whether in the form of a computer printout, magnetic tape or disc or
like device, and if contained on magnetic tape, disc or like device, shall
include all software, programming manuals and such other material as may be
necessary to access and interpret the information contained therein) listing
Obligors, the Receivables owed by them, the aged Outstanding Balances of such
Receivables and such other information as the Issuer may require.
"UNFINANCED INTEREST" means (a) at any time prior to the Termination Date, the
excess, if any, of the aggregate Outstanding Balance of the Purchased
Receivables over the Required Amount and (b) subject to compliance by the Seller
and the Servicer with the provisions of SECTION 1.3(b), all Purchased
Receivables existing as of the close of business on the Business Day immediately
preceding the Termination Date which are not identified in accordance with the
procedures described in SECTION 1.3(b), together with all Related Security with
respect to such Receivables or, in the case of Related Security securing
Eligible Receivables identified in accordance with the procedures described in
SECTION 1.3(b) in addition to such Receivables, a participation interest in all
Related Security with respect to such Receivables to the extent
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necessary to enforce payment of, or realise upon the Related Security for, such
Receivables, and all Collections with respect to, and other proceeds of, such
Receivables and Related Security.
"YIELD RESERVE" for the Purchased Interest at any time means an amount equal to
the product of (i) the Capital, (ii) the Prime Rate at such time plus 1.00% and
(iii) a fraction, the numerator of which is the sum of (x) two times the Average
Maturity plus (y) the number of days in the Collection Delay Period, and the
denominator of which is 365.
"OTHER TERMS". All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All terms
used in the PPSA of Ontario, and not specifically defined herein, are used
herein as defined in such PPSA. Unless the context otherwise requires and
"including" (and with correlative meaning "include" and "includes") means
including without limiting the generality of any description preceding such
term.
EXHIBIT II
CONDITIONS OF PURCHASES, PAYMENTS
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase from a
Seller under the Agreement is subject to the conditions precedent that (i)
the Notes shall be rated R-1 (high) by the Rating Agency on the date of
such purchase, and the Rating Agency shall not have informed the
Administrator that such purchase would result in the Rating Agency
withdrawing or reducing such rating, and (ii) the Administrator shall have
received on or before the date of such purchase the following, each in form
and substance (including the date thereof) satisfactory to the
Administrator:
(a) Executed copies of this Agreement and the other Transaction
Documents including, without limitation, a true and complete copy
of the Credit and Collection Policy;
(b) Certified copies of (i) the resolutions of the Board of Directors
of the Seller authorising the execution, delivery, and performance
by the Seller of the Agreement and the other Transaction Documents
which it is a party, and (ii) all documents evidencing other
necessary corporate action and governmental approvals, if any, with
respect to the Agreement and the other Transaction Documents.
(c) A certificate of the Secretary or Assistant Secretary of the Seller
certifying the names and true signatures of the officers of the
Seller authorised to sign the Agreement and the other Transaction
Documents on behalf of such Seller. Until the Administrator
receives a subsequent incumbency certificate from the Seller in
form and substance satisfactory to the Administrator, the
Administrator shall be entitled to rely on the last such
certificate delivered to it by the Seller.
(d) Acknowledgement or duplicate registration or verification copies of
proper Assignments, Financing Statements and other similar
documents or instruments, with registration particulars stamped
thereon, naming the Seller as seller, assignor or debtor and the
Issuer as purchaser, assignee or secured party, and duly filed on
or before the date of such initial purchase under the PPSA of all
jurisdictions (other than Quebec) that the Administrator may deem
necessary or desirable in order to perfect the interests of the
Issuer contemplated by the Agreement.
(e) Executed copies of all financing statements, financing change
statements, discharges and releases, if any, necessary to discharge
or release all security interests and other rights or interests of
any Person in the Purchased Interest previously granted by the
Seller, together with copies of the relevant financing change
statements or other discharge statements or releases with the
registration particulars stamped thereon or other assurance
satisfactory to the Issuer.
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(f) Completed PPSA search results, dated on or before the date of the
initial purchase, listing the financing statements referred to in
SUBSECTION (d) above and all other effective financing statements
filed in the jurisdictions referred to in SUBSECTION (d) above that
name each Seller as debtor, together with copies of such other
financing statements (none of which shall cover any Receivables,
Contracts or Related Security), showing no such liens on any of the
Receivables, Contracts or Related Security.
(g) Favourable opinions of counsel for the Seller, substantially in the
form of Annex D hereto.
(h) A report representing the performance of the Seller's portfolios of
Receivables for the Collection Period prior to closing.
(i) Evidence of payment by the Seller of all accrued and unpaid fees
(including those contemplated by the letter agreement referred to
in SECTION 1.5), costs and expenses to the extent then due and
payable on the date thereof, together with Legal Costs of the
Administrator to the extent invoiced prior to or on such date.
(j) A letter agreement between the Seller and the Administrator
contemplated by SECTION 1.5.
(k) A certificate of status, of good standing or of compliance, as
appropriate, with respect to the Seller issued by its jurisdiction
of incorporation and by each jurisdiction where registrations have
been, or are to be, effected in respect of the Issuer's ownership
interest in the Purchased Receivables, the Contracts, the Related
Security and Collections thereon or other proceeds thereof if
licensing or registration by the Seller as an extra-provincial or
foreign corporation in such jurisdiction is required as a condition
precedent to (i) the effectiveness or enforceability of such
interest or interests or (ii) the ability of the Seller to perform
in all material respects its duties and obligations under this
Agreement (including the duties and obligations of the Servicer, if
applicable).
(l) Such other approvals, opinions or documents as the Administrator or
Purchasers may reasonably request.
2. CONDITIONS PRECEDENT TO ALL PURCHASE PRICE PAYMENTS. Each purchase price
payment (including the initial Cash Purchase Price payment) shall be
subject to the further conditions precedent that:
(a) on the date of such purchase price payment the following statements
shall be true (and acceptance of the portion of the purchase price
payable by the Issuer to the Seller on such date shall be deemed a
representation and warranty by the Seller that such statements are
then true):
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(i) the representations and warranties contained in EXHIBIT III
are true and correct on and as of the date of such purchase
or payment as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result
from such purchase or payment, that constitutes a
Termination Event or that would constitute a Termination
Event but for the requirement that notice be given or time
elapse or both;
(b) the Seller has delivered to the Administrator a Portfolio Report
(setting forth Receivables activity and transaction compliance)
dated as of the date of payment of such purchase price payment if
such purchase results in a increase in Capital; and
(c) the Purchasers or the Administrator shall have received such other
approvals, opinions or documents as the Administrator or Purchasers
may reasonably request.
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants as follows:
(a) The Seller is a limited partnership the sole general partner of
which is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation
and is duly qualified to do business, and is in good standing, in
every jurisdiction where the nature of its business requires it to
be so qualified, except where the failure to be so qualified would
not have a Material Adverse Effect.
(b) The execution, delivery and performance by the Seller of the
Agreement and the other Transaction Documents to which it is a
party (i) are within the Seller's powers, (ii) have been duly
authorized by all necessary action, (iii) do not contravene or
result in a default under or conflict with (1) the Seller's limited
partnership agreement, constating documents or by-laws, (2) any
law, rule or regulation applicable to the Seller, (3) any
contractual restriction binding on or affecting the Seller or its
property or (4) any order, writ, judgement, award, injunction or
decree binding on or, to the knowledge of the Seller, affecting the
Seller or its property, and (iv) do not result in or require the
creation of any Adverse Claim upon or with respect to any of its
properties. The Agreement and the other Transaction Documents to
which it is a party have been duly executed and delivered by the
Seller.
(c) No authorisation or approval or other action by, and no notice to
or filing with, any Governmental Authority or other Person is
required for the due execution, delivery and performance by the
Seller of the Agreement or any other Transaction Document to which
it is a party.
(d) Each of the Agreement and the other Transaction Documents to which
it is a party constitutes the legal, valid and binding obligation
of the Seller enforceable against the Seller in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by
general principles of equity.
(e) The financial statements of Smurfit-MBI and its Subsidiaries as at
December 31, 2003, and the related statements of income and
retained earnings of Smurfit-MBI and its Subsidiaries for the
fiscal year then ended, copies of which have been furnished to the
Administrator, fairly present the financial condition of
Smurfit-MBI and its Subsidiaries as at such date and the results of
the operations of Smurfit-MBI and its subsidiaries for the period
ended on such date, all in accordance with Canadian generally
accepted accounting principles consistently
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applied, and since December 31, 2003, there has been no material
adverse change in the business, operations, property or financial
or other condition or operations of Smurfit-MBI and its
Subsidiaries, taken as a whole, the ability of the Seller to
perform its obligations under the Agreement or the other
Transaction Documents or the collectibility of the Receivables, or
which affects the legality, validity or enforceability of the
Agreement or the other Transaction Documents.
(f) There is no pending or, to the Seller's knowledge, threatened
action or proceeding affecting the Seller or any of its
Subsidiaries before any Governmental Authority or arbitrator which
could reasonably be expected to have a Material Adverse Effect.
(g) Immediately prior to the sale, transfer and assignment thereof to
the Issuer, the Seller is the legal and beneficial owner of the
Purchased Receivables and Related Security, free and clear of any
Adverse Claim; upon the sale, transfer and assignment of the
Purchased Interest to the Issuer pursuant to SECTION 1.3(a), the
Issuer shall acquire a valid and enforceable first priority
perfected ownership interest in each Purchased Receivable then
existing or thereafter arising and in the Related Security and
Collections and other proceeds, with respect thereto, free and
clear of any Adverse Claim. No effective financing statement or
other instrument similar in effect covering any Purchased
Receivable or the Related Security or Collections with respect
thereto is on file in any recording office, except those filed in
favour of the Issuer relating to the Agreement.
(h) Each Portfolio Report (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is
supplied by the Seller or an Affiliate), information, exhibit,
financial statement, document, book, record or report furnished or
to be furnished at any time by or on behalf of the Seller to the
Administrator in connection with the Agreement is or will be
accurate in all material respects as of its date or (except as
otherwise disclosed to the Administrator at such time) as of the
date so furnished, and no such item contains or will contain any
untrue statement of a material fact or omits or will omit to state
a material fact necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading in any
material respect.
(i) The chief or principal place of business and chief executive office
(as such terms are used in the PPSA) of the Seller and the office
where the Seller keeps its records concerning the Receivables are
located at the address referred to in Schedule II.
(j) The Seller is not in violation of any order of any court,
arbitrator or Governmental Authority which could reasonably be
expected to have a Material Adverse Effect.
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(k) Each Purchased Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance is an Eligible
Receivable and each Purchased Receivable is or will be, as of the
date of its transfer to the Issuer pursuant to SECTION 1.3(a), an
Eligible Receivable:
(i) which complies with the requirements of the Credit and
Collection Policy;
(ii) which is not subject to any contingent performance
requirements of the Seller unless such requirements are
guaranteed or insured by third parties acceptable to the
Administrator;
(iii) which has not been modified or restructured since its
creation, except as permitted pursuant to SECTION 4.2 of the
Agreement; and
(iv) for which the Seller has established no offset arrangements
with the related Obligor.
(l) No event has occurred and is continuing, or would result from a
purchase or a purchase price payment or from the application of the
proceeds therefrom, which constitutes a Termination Event.
(m) The Seller has accounted for the sale of the Purchased Interest in
its books and financial statements as a sale, consistent with
generally accepted accounting principles.
(n) The Seller has complied in all material respects with the Credit
and Collection Policy with regard to each Receivable.
(o) The Seller, as Servicer or otherwise, is in compliance with all of
the terms, covenants and agreements contained in the Agreement and
the other Transaction Documents and applicable to it.
(p) The Seller's complete corporate name is set forth in the preamble
to the Agreement, and the Seller does not use and has not during
the last six years used any other corporate name, except as set
forth on SCHEDULE II and except for names first used after the date
of the Agreement and set forth in a notice delivered to the
Administrator pursuant to PARAGRAPH 1(j)(v) of EXHIBIT IV.
(q) All Obligors listed on each Trial Balance are and will be at all
times listed in the order and manner specified therefor in SCHEDULE
III.
(r) No default has occurred and is continuing and no event has occurred
which, but for the giving of notice or the lapse of time, or both,
would constitute a default under any indenture, loan or credit
agreement, lease, mortgage, security
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agreement, bond, note or other agreement or instrument to which the
Seller is a party and which default would result in a Material
Adverse Effect.
The representations and warranties of the Seller made on the date of any payment
of the purchase price of any Receivables hereunder shall survive the payment
made on such date.
The Issuer represents and warrants to the Seller that:
(a) the Issuer is a corporation duly incorporated, validly existing and
in good standing under the laws of Canada, and is duly qualified to
do business and is in good standing in every jurisdiction where the
nature of its business requires it to be so qualified, except where
the failure to so qualify would not have a material adverse effect
on its business, condition or operations;
(b) the execution, delivery and performance by the Issuer of this
Agreement and the other Transaction Documents are within the
Issuer's corporate powers and the powers granted to the Issuer
pursuant to the Transaction Documents, have been duly authorized by
all necessary corporate action, and do not contravene (A) the
Issuer's charter or by-laws, (B) any law, rule or regulation
applicable to the Issuer, (C) any contractual restriction binding
on the Issuer or its property or the Trust or the property of the
Trust or, to the best knowledge of the Issuer, affecting the Issuer
or its property or the Trust or the property of the Trust or (D)
any order, writ, judgment award, injunction or decree binding on
the Issuer or its property or the Trust or the property of the
Trust or, to the best knowledge of the Issuer, affecting the Issuer
or its property or the Trust or the property of the Trust ;
(c) there is no pending or, to the best knowledge of the Issuer,
threatened action or proceeding affecting the Issuer before any
court, governmental agency or arbitrator which would materially
adversely affect the financial condition or operations of the
Issuer or the ability of the Issuer to perform its obligations
under this Agreement or the other Transaction Documents, or which
purports to affect the legality, validity or enforceability of this
Agreement or the other Transaction Documents;
(d) this Agreement has been duly executed and delivered on behalf of
the Issuer; and
(e) this Agreement constitutes a legal, valid and binding obligation of
the Issuer enforceable against the Issuer in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by
general principles of equity.
EXHIBIT IV
COVENANTS
1. COVENANTS OF THE SELLER. Until the Final Collection Date:
(a) COMPLIANCE WITH LAWS, ETC. The Seller shall comply in all material
respects with all applicable laws, rules, regulations and orders,
and preserve and maintain its corporate existence, rights,
franchises, qualifications and privileges except to the extent that
the failure so to comply with such laws, rules, regulations or
orders or the failure so to preserve and maintain such existence,
rights, franchises, qualifications or privileges would not
reasonably be expected to have a Material Adverse Effect.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT, ETC. The Seller (i) shall
keep its chief or principal place of business and chief executive
office (as such terms are used in the PPSA) and the office where it
keeps its records concerning the Receivables at the address of the
Seller set forth in Schedule II or, upon at least 30 days' prior
written notice of a proposed change to the Administrator, at any
other locations in jurisdictions where all actions reasonably
requested by the Administrator to protect and perfect the interest
of the Issuer in the Purchased Interest have been taken and
completed and (ii) shall provide the Administrator with at least 30
days' written notice prior to making any change in the Seller's
name or making any other change in the Seller's identity or
corporate structure (including a merger) which could render any
PPSA Financing Statement filed in connection with this Agreement
ineffective to perfect, preserve or protect the interests of the
Issuer under this Agreement or the Assignment; each notice to the
Administrator pursuant to this sentence shall set forth the
applicable change and the effective date thereof. The Seller also
will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records
evidencing Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain all
documents, books, records, computer tapes and disks and other
information reasonably necessary or advisable for the collection of
all Receivables (including, without limitation, records adequate to
permit the daily identification of each Purchased Receivable and
all Collections of and adjustments to each existing Receivable).
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION
POLICY. The Seller shall, at its expense, timely and fully perform
and comply with all material provisions, covenants and other
promises required to be observed by it under the Contracts related
to the Receivables, and timely and fully comply in all material
respects with the Credit and Collection Policy with regard to each
Receivable and the related Contract.
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(d) OWNERSHIP INTEREST, ETC. The Seller shall, at its expense, take all
action necessary or desirable to establish and maintain a valid and
enforceable first priority perfected ownership interest in the
Purchased Interest, free and clear of any Adverse Claim (other than
an Adverse Claim created or granted by the Issuer), in favour of
the Issuer, including, without limitation, executing, delivering
and registering all Financing Statements and taking such other
action to perfect, protect or more fully evidence the interest of
the Issuer under the Agreement as the Issuer, through the
Administrator, may reasonably request.
(e) SALES, LIENS, ETC. The Seller shall not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer
to exist any Adverse Claim (other than any Adverse Claim created or
granted by the Issuer) upon or with respect to, any or all of its
right, title or interest in, to or under any Receivable, Related
Security or Collections or proceeds thereof (including without
limitation upon or with respect to any account to which any
Collections of any Receivables are sent), or assign any right to
receive income in respect of any items contemplated by this
PARAGRAPH (e).
(f) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as provided in the
Agreement, the Seller shall not extend the maturity or adjust the
Outstanding Balance or otherwise modify the terms of any Purchased
Receivable, or amend, modify or waive any term or condition of any
related Contract.
(g) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. The Seller
shall not make any material change in the character of its business
or in the Credit and Collection Policy, or any change in the Credit
and Collection Policy that would adversely affect the
collectibility of the Purchased Receivables or the enforceability
of any related Contract or the ability of the Seller to perform its
obligations under any related Contract or under the Agreement
without the prior written consent of the Administrator, which
consent shall not be unreasonably withheld.
(h) AUDITS. The Seller shall during regular business hours upon
reasonable prior notice from the Administrator, permit the
Administrator, or its agents or representatives, acting reasonably,
(i) to examine and make copies of and abstracts from all books,
Records and documents (including, without limitation, computer
tapes and disks) in the possession or under the control of the
Seller relating to Receivables and the Related Security, including,
without limitation, the related Contracts, (ii) to visit the
offices and properties of the Seller for the purpose of examining
such materials described in clause (i) above, and (iii) to discuss
matters relating to Receivables and the Related Security or the
Seller's performance hereunder or under the Contracts with any of
the officers, employees, agents or contractors of the Seller having
knowledge of such matters in the context of any such audit or
examination. In addition, the Seller shall direct
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and require its auditors to assist the Issuer's auditors to the
extent and in such manner as is required for the Issuer's auditors
to report on the status of Purchased Interest hereunder. Any audit
or examination conducted or performed under this SECTION (h) shall
be at the expense of the Administrator; PROVIDED, HOWEVER, that (i)
one such yearly audit or examination pursuant to this SECTION (h),
or (ii) any additional audits or examinations pursuant to this
SECTION (h) requested or required by any Person having a right to
do so other than the Administrator to be conducted or performed,
shall each be at the expense of the Seller.
(i) MARKING OF RECORDS. At its expense, the Seller shall ▇▇▇▇ its
master data processing records relating to Purchased Receivables,
including with a legend, evidencing that the Purchased Receivables
have been sold in accordance with the Agreement.
(j) REPORTING REQUIREMENTS. The Seller will provide to the
Administrator and the Rating Agency (in multiple copies, if
requested by the Administrator or the Rating Agency) the following:
(i) as soon as available and in any event within 60 days after
the end of the first three quarters of each fiscal year of
the Seller, balance sheet of the Seller as of the end of
such quarter and consolidated statements of income and
retained earnings of the Seller for the period commencing at
the end of the previous fiscal year and ending with the end
of such quarter, certified by the chief financial officer of
the Seller;
(ii) as soon as available and in any event within 120 days after
the end of each fiscal year of the Seller, a copy of the
consolidated balance sheet of and consolidated statements of
income and retained earnings of the Seller and its
Subsidiaries for such year reviewed by Ernst & Young LLP or
other independent chartered accountants of the Seller;
(iii) as soon as available and in any event not later than the
second Business Day prior to each Settlement Date (or, on or
after the Termination Date upon written notice from the
Servicer to the Administrator, not later than the Business
Day following such Settlement Date), a Portfolio Report as
of the Cut-Off Date for the Collection Period ended
immediately prior to such Settlement Date and, if requested
by the Administrator, an ageing report for the Purchased
Receivables as of the Cut-Off Date for such Collection
Period;
(iv) as soon as possible and in any event within five days after
the occurrence of each Termination Event or each event
which, with the giving of notice or lapse of time, or both,
would constitute a Termination Event, a statement of the
chief financial officer of the Seller setting forth details
of
- 4 -
such Termination Event or event and the action that the
Seller has taken and proposes to take with respect thereto;
(v) at least thirty days prior to any change in the Seller's
name or any other change requiring the amendment of PPSA
Financing Statements, a notice setting forth such changes
and the effective date thereof;
(vi) such other information respecting the Receivables or the
condition or operations, financial or otherwise, of the
Seller or any of its Affiliates as the Administrator or the
Rating Agency may from time to time reasonably request;
(vii) promptly after the Seller obtains knowledge thereof, notice
of any litigation, investigation or proceeding which may
exist at any time between the Seller and any Person which,
if not cured or if adversely determined, as the case may be,
would have a Material Adverse Effect; and
(viii) promptly after the occurrence thereof, notice of a Material
Adverse Effect.
(k) SELLER TO PAY TAXES. The Seller shall (i) make all payments to all
applicable Governmental Authorities or others where the failure to
make such payments would give rise to a statutory lien or deemed
trust having priority over the Issuer's interest in the Purchased
Interest and (ii) remit to the appropriate taxation authority, as
and when required by applicable law, the amounts of federal or
provincial goods and services or sales taxes exigible from the
Obligors upon the creation of the Receivables and which form part
of the Outstanding Balances of the Receivables.
(l) CREATION OF TRIAL BALANCE. If at any time the Seller (or the
Servicer) fails or otherwise ceases to identify the Purchased
Receivables in accordance with SECTION 1.3(b) or a request from the
Issuer pursuant to PARAGRAPH 2(d) of this EXHIBIT IV or fails to
generate the Trial Balance, the Administrator shall have the right
(but not the obligation) to reconstruct the Trial Balance in order
to identify the Purchased Receivables in accordance with the
procedure described in SECTION 1.3(b), which identification by the
Administrator shall be conclusive and binding absent manifest
error. The Seller agrees to cooperate with such reconstruction,
including, without limitation, the delivery to the Administrator,
upon its request, of copies of all Records. The Seller shall
reimburse the Administrative Agent for all costs and expenses
incurred by it or paid by it to other Persons in connection with
any such reconstruction or identification.
(m) NO MODIFICATION OF TRIAL BALANCE. The Seller shall not amend,
modify or alter the ordering or listing of the Obligors in the
Trial Balance if, as a result thereof, the
- 5 -
Servicer, the Seller or the Administrator would be unable to
identify the Purchased Receivables in accordance with the terms and
provisions of the Agreement.
(n) IDENTIFICATION OF PURCHASED RECEIVABLES. The Seller shall notify
the Administrator and the Servicer of any change in or
modifications to, computer, automation or other operating systems
(in respect of hardware or software) used to provide the Servicer's
services or to make any calculation or reports under this Agreement
or in connection with servicing the Purchased Receivables,
recreating records with respect to or identifying the Purchased
Receivables which would have a Material Adverse Effect.
(o) SUCCESSOR SERVICER. The Seller agrees to co-operate in the transfer
of all records, software and any and all other documents in both
written and computer readable form to any successor Servicer.
(p) MINIMUM UNFINANCED INTEREST. The Seller shall not permit the
Unfinanced Interest to be less than 5% of the Capital.
2. COVENANTS OF THE SERVICER. Until the Final Collection Date:
(a) PORTFOLIO REPORTS. The Servicer shall ensure that each Portfolio
Report and any other information furnished or to be furnished at
any time by or on behalf of the Servicer to the Administrator or
the Issuer in connection with the Agreement is or will be accurate
in all material respects as of its date or (except as otherwise
disclosed to the Administrator at such time) as of the date so
furnished, and shall not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they
were made, not misleading in any material respect.
(b) MAINTENANCE OF SYSTEMS. The Servicer shall maintain systems,
procedures and records (including software and back-up system,
procedures and records) sufficient to permit daily identification
or determination of the Purchased Receivables, Collections thereon,
Dilutions and credit losses in respect thereof
(c) POSTING OF RECEIVABLES AND COLLECTIONS. The Servicer shall apply
all Collections to the applicable Receivables and modify the Trial
Balances to reflect such Collections, in each case as promptly as
practicable, but in any event not later than 2 Business Days
following receipt thereof by the Servicer, and accurately post all
new Receivables on the Trial Balances as promptly as practicable,
but in any event not before an invoice in respect of such
Receivable has been issued and not later than 2 Business Days after
such Receivable is generated.
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(d) RECEIVABLES LISTS. From time to time, promptly following a request
by the Administrator, and in any event within ten Business Days
following such request or within six Business Days following the
Termination Date, the Servicer shall deliver to the Administrator
(i) a listing (on magnetic tape or disc) by Obligor of all
Purchased Receivables as at the day specified in such request or as
at the Seller's close of business on the day immediately preceding
the Termination Date, as the case may be, (ii) a copy of the Trial
Balances as at such day, and (iii) such Records as the
Administrator may reasonably require to verify such list of
Purchased Receivables and the Trial Balance.
(e) COMPLIANCE WITH LAWS, ETC. The Servicer shall comply with any
applicable law, rule or regulation with respect to any Purchased
Receivable or the related Contract except to the extent that the
failure so to comply with such laws, rules or regulations would not
reasonably be expected to have a Material Adverse Effect.
(f) COMMINGLING. The Servicer shall not commingle the Collections of or
with respect to the Purchased Interest at any time with other funds
except as permitted pursuant to this Agreement.
(g) SUCCESSOR SERVICER. The Servicer agrees to co-operate in the
transfer of all records, software and any and all other documents
in both written and computer readable form to any successor
Servicer.
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a) the Seller or the Servicer (if Smurfit-MBI) shall fail to make any
payment or deposit to be made by it under the Agreement when due
and such failure shall continue for three Business Days; or
(b) any representation or warranty made or deemed made by the Seller or
the Servicer (or any of their respective officers) under or in
connection with the Agreement or any written information or report
delivered by the Seller or the Servicer pursuant to the Agreement
or the other Transaction Documents shall prove to have been
incorrect or untrue in any material respect when made or deemed
made or delivered and such breach of representation or warranty, if
capable of being rectified, is not rectified within six Business
Days of the date the Seller or the Servicer first becomes aware of
such breach; or
(c) the Seller or the Servicer (if Smurfit-MBI) shall fail to perform
or observe any material term, covenant or agreement contained in
the Agreement or any other Transaction Document on its part to be
performed or observed (other than as specified in CLAUSE (a) above)
and any such failure shall remain unremedied for 10 days after the
Seller becomes aware of such failure (or, with respect to a failure
to deliver any Portfolio Report pursuant to the Agreement, such
failure shall remain unremedied for five days after such Portfolio
Report was due); or
(d) the Seller shall fail to pay any principal of or premium or
interest on any of its Debt which is outstanding in a principal
amount of at least $10,000,000 (or the United States dollar
equivalent thereof) in the aggregate when the same becomes due and
payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the
agreement, mortgage, indenture or instrument relating to such Debt;
or any other event shall occur or condition shall exist under any
agreement, mortgage, indenture or instrument relating to any such
Debt and shall continue after the applicable grace period, if any,
specified in such agreement, mortgage, indenture or instrument, if
the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such
Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment),
redeemed, purchased or defeased, or an offer to repay, redeem,
purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
- 2 -
(e) the Agreement or any purchase pursuant to the Agreement shall for
any reason (other than pursuant to the terms hereof) cease to
create, or the Purchased Interest shall for any reason cease to be,
a valid and enforceable perfected ownership interest to the extent
of the Purchased Interest in each Purchased Receivable and the
Related Security and Collections and other proceeds with respect
thereto, free and clear of any Adverse Claim (other than any
Adverse Claims created or granted by the Issuer); or
(f) either the Seller or the Parent shall generally not pay its debts
as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding or notice of intention
to file a proceeding or proposal shall be instituted by or against
either the Seller or the Parent seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial
part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 30
days, or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or
the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall
occur; or either the Seller or the Parent shall take any corporate
action to authorise any of the actions set forth above in this
PARAGRAPH (f); or
(g) the aggregate Outstanding Balance of the Purchased Receivables
shall at any time be less than the Required Amount or the Net
Receivables Pool Balance shall at any time be less than the
Required Amount, in either case for a period of six consecutive
Business Days or more; or
(h) as of the Cut-Off Date for any Collection Period, the Default Ratio
shall exceed 2.0%; or
(i) as of the Cut-Off Date for any Collection Period, the Delinquency
Ratio shall exceed 5.0%; or
(j) the Average Maturity shall at any time exceed 60 days;
(k) the Tangible Net Worth of the Seller shall be less than
$50,000,000;
(l) any representation or warranty made or deemed made by the Parent
under the Support Agreement shall prove to have been incorrect or
untrue in any material respect when made or deemed made and such
breach of representation or
- 3 -
warranty, if capable of being rectified, is not rectified within
six Business Days of the date the Parent first becomes aware of
such breach; or
(m) the Parent shall fail to perform or observe any material term,
covenant or agreement contained in the Support Agreement on its
part to be performed or observed and any such failure shall remain
unremedied for 10 days after the Parent becomes aware of such
failure.
SCHEDULE I
CREDIT AND COLLECTION POLICY
SCHEDULE II
LOCATIONS OF OFFICES AND RECORDS
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
SCHEDULE III
FORM OF TRIAL BALANCE
SCHEDULE IV
TRIAL BALANCE SEQUENCE
The Eligible Receivables which shall constitute Purchased Receivables on and as
of the Termination Date shall be identified by proceeding through the Eligible
Receivables, in the following order, until the Outstanding Balance of Purchased
Receivables equals the Required Purchase Amount:
(i) first, through the Eligible Receivables for which the Obligors are
residents of Canada, in descending order (highest to lowest) by
aggregate Outstanding Balance of such Eligible Receivables, and
(ii) second, through the Eligible Receivables for which the Obligors are
residents of the United States of America, in descending order
(highest to lowest) by aggregate Outstanding Balance of such
Eligible Receivables.
ANNEX A
FORM OF ASSIGNMENT
THIS INDENTURE made in duplicate as of the 30th day of March, 2004.
BETWEEN:
MBI LIMITED/LIMITEE in its capacity as General Partner of
SMURFIT-MBI, an Ontario limited partnership, having its chief
executive office and chief place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇,
(hereinafter called the "Seller")
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company incorporated
under the laws of Canada and having its chief place of business in
Ontario at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, in its capacity
as trustee of King Street Funding Trust,
(hereinafter called the "Purchaser")
WHEREAS the Seller is the legal and beneficial owner of Receivables;
AND WHEREAS the Seller, Scotia Capital Inc. and the Purchaser are parties
to a
receivables purchase agreement dated as of March 30, 2004 (as
modified, amended or supplemented from time to time, the "
RECEIVABLES
PURCHASE AGREEMENT");
AND WHEREAS, pursuant to and on the terms and conditions of the
Receivables
Purchase Agreement, the Seller has agreed to transfer and assign to the
Purchaser all of the Seller's Eligible Receivables (as defined below),
present or future;
NOW THEREFORE THIS INDENTURE WITNESSETH that in consideration of the sum of
One Dollar ($1.00) of lawful money of Canada now paid by the Purchaser to
the Seller and other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged) the Seller does hereby sell,
assign, transfer and convey to the Purchaser absolutely (and without
recourse, except as otherwise provided in the
Receivables Purchase
Agreement) all of the Seller's right, title and interest in, to and under
(i) all Eligible Receivables now existing and all Eligible Receivables
created thereafter (collectively, the "PURCHASED RECEIVABLES"), (ii) all
Related Security with
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respect to such Purchased Receivables, and (iii) all Collections with
respect to, and other proceeds of, such Purchased Receivables and Related
Security (collectively the "TRANSFERRED ASSETS").
To have and to hold the Transferred Assets to the use of the Purchaser, its
successors and assigns, forever.
COVENANTS AND AGREEMENTS
3. In this Assignment Agreement and the recitals hereto, all terms having
initial capital or upper case letters shall have the respective meanings
assigned thereto unless the context otherwise requires or unless otherwise
defined herein and the following terms shall have the following meanings:
"ADVERSE CLAIM" means any prior claim, hypothec, lien, security interest or
other charge or encumbrance, or any other type of preferential arrangement.
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person.
"AGRICULTURAL RECEIVABLES" means Receivables owing by Obligors that are
engaged in the agricultural industry and which are required by the related
Contract to be paid in full within no more than 180 days of the original
billing date under the Contract.
"COLLECTIONS" means, with respect to any Purchased Receivable, (a) all
funds which are received by the Seller or the Servicer in payment of any
amounts owed in respect of such Receivable (including, without limitation,
purchase price, finance charges, interest and all other charges), or
applied to amounts owed in respect of such Receivable (including, without
limitation, insurance payments and net proceeds of the sale or other
disposition of repossessed goods or other collateral or property of the
related Obligor or any other Person directly or indirectly liable for the
payment of such Purchased Receivable and available to be applied thereon),
(b) all Collections deemed to have been received by the Seller or the
Servicer in respect thereof pursuant to the
Receivables Purchase Agreement,
(c) all amounts paid or deemed paid by the Seller to the Purchaser pursuant
to the
Receivables Purchase Agreement and (d) all other proceeds of such
Receivable (including any proceeds of sale or other disposition thereof by
the Purchaser).
"CONTRACT" means, with respect to any Receivable, any and all contracts,
understandings, instruments, agreements, invoices, invoice summaries or
other writings pursuant to which such Receivable arises or which evidences
such Receivable or under which an Obligor becomes or is obligated to make
payment in respect of such Receivable.
- 3 -
"CREDIT AND COLLECTION POLICY" means those receivables credit and
collection policies and practices of the Seller in effect on the date of
the Agreement and described in SCHEDULE I of the
Receivables Purchase
Agreement, as modified in compliance with the Receivables Purchase
Agreement.
"DEFAULTED RECEIVABLE" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid for at
least 90 days from the original due date for such payment under the
related Contract;
(b) as to which the Obligor thereof or any other Person obligated
thereon or owning any Related Security in respect thereof has
become subject to an Insolvency Proceeding; or
(c) which, consistent with the Credit and Collection Policy, would be
written off the Seller's books as uncollectible.
"DELINQUENT RECEIVABLE" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid for at
least 60 days from the original due date for such payment under the
related Contract; or
(b) which, consistent with the Credit and Collection Policy, the Seller
would classify as delinquent.
"DILUTION" means, with respect to any Receivable, the aggregate reduction
or adjustment in the paid or unpaid outstanding balance of such Receivable
on account of disputes, set-offs, discounts, incorrect ▇▇▇▇▇▇▇▇, credits,
rebates, allowances, chargebacks, returned, repossessed or foreclosed
goods, allowances for early payments, foreign currency exchange reductions
or other such reductions or adjustments granted in the ordinary course of
business that are unrelated to the inability of the Obligor of such
Receivables to pay such Receivables.
"ELIGIBLE RECEIVABLE" means each Receivable:
(a) the Obligor of which is a resident of Canada or the United States
of America, is not an Affiliate of the Seller, and is not a
government or a governmental subdivision, crown corporation,
authority, board, agency or other entity;
(b) which is denominated and payable only in Canadian Dollars or in
lawful currency of the United States of America;
(c) which arises under a Contract and which is (i) required by the
related Contract to be paid in full within 60 days of the original
billing date under the Contract, or (ii) is an Agricultural
Receivable;
- 4 -
(d) which arises in the ordinary course of the Seller's business;
(e) which is not the subject of any Adverse Claim (other than any
Adverse Claim created or granted by the Purchaser) and which does
not arise from the sale of inventory which is subject to any
Adverse Claim (other than any Adverse Claim created or granted by
the Purchaser);
(f) which does not require the consent of the related Obligor to be
sold or assigned;
(g) in which the Seller owns good and marketable title and which is
freely assignable by the Seller; and
(h) which constitutes (i) a claim under the Quebec Civil Code and (ii)
an account or chattel paper as defined in the PERSONAL PROPERTY
SECURITY ACT (Ontario) which is not evidenced by an instrument.
"GOVERNMENTAL AUTHORITY" means any nation or government, any province,
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any body or entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government, including without limitation any court, and
any Person owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"INSOLVENCY PROCEEDING" means, with respect to a Person, any of the
following:
(a) (i) the commencement or filing of an application, petition, action,
case or other proceeding (including a notice of intention to file a
proposal) before any court or Governmental Authority, with or
without the application or consent of such Person, under any
applicable law (foreign or domestic) relating to bankruptcy,
insolvency, receivership, reorganization, debt arrangement,
dissolution, liquidation, winding up or composition or adjustment
of it or its debts, (ii) the appointment of a trustee, receiver,
manager, receiver and manager, custodian, liquidator, assignee,
sequestrator or the like for such Person or any substantial part of
its property or assets, or (iii) the granting of any similar relief
with respect to such Person under any law (foreign or domestic)
relating to bankruptcy, insolvency, receivership, reorganization,
debt arrangement, dissolution, liquidation, winding up or
composition or adjustment of it or its debts; or
(b) a general assignment for the benefit of creditors, or becoming
insolvent, or failing to, or admitting in writing its inability to,
pay its debts generally as they become due; or
(c) taking any corporate or other action to authorise any of the
actions described in paragraphs (a) or (b) above.
- 5 -
"OBLIGOR" means, with respect to any Receivable, the Person obligated to
make payments pursuant to the Contract relating to such Receivable.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture, limited liability company or other entity, or a government
or any political subdivision or agency thereof.
"PPSA" means (a) the personal property security legislation, as amended,
supplemented or replaced from time to time, as in effect in each Province
of Canada (other than Quebec), and (b) the Civil Code of Quebec, as
amended, supplemented or replaced from time to time, as in effect in
Quebec.
"RECEIVABLE" means any indebtedness and other obligations owed to the
Seller by, or any right of the Seller to payment from or on behalf of, an
Obligor, whether constituting an account, chattel paper, instrument or
intangible, arising from, in connection with, or which are incidental to,
the sale, manufacture and disposition of corrugated products including
industrial, commercial and specialty packaging, and includes, without
limitation, the obligation to pay any finance charges, fees and other
charges with respect thereto and any goods and services tax, harmonised
sales tax or Quebec sales tax payable or exigible by or upon an Obligor or
the transaction giving rise to such Receivable but excludes any other
provincial sales tax so payable or exigible; and which indebtedness and
other obligations are recorded on or included from time to time in the
trial balances owned by the Seller and which are identified in Schedule III
to the Receivables Purchase Agreement. Indebtedness and other obligations
arising from any one transaction, including, without limitation,
indebtedness and other obligations represented by an individual invoice or
agreement, shall constitute a Receivable separate from a Receivable
consisting of the indebtedness and other obligations arising from any other
transaction.
"RECORDS" means all Contracts, invoices, books, records, shipping documents
and other documents and information maintained with respect to the
Purchased Receivables, the other Transferred Assets and the related
Obligors.
"RELATED SECURITY" means, with respect to any Receivable:
(a) all of the Seller's interest in any goods (including returned
goods), and documents of title evidencing the shipment or storage
of any goods (including returned goods), relating to any sale
giving rise to such Receivable; PROVIDED, HOWEVER that any
returned, repossessed or foreclosed goods shall not constitute
Related Security if the Seller pays to the Servicer the amount of
the Dilution that gave rise to the returned goods or repurchases
the Defaulted Receivable relating to such repossessed or foreclosed
goods in accordance with the terms and provisions of the Agreement;
- 6 -
(b) all other security interests or liens and property subject thereto
from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements or other filings
relating thereto;
(c) all guarantees, indemnities, insurance and other agreements
(including the related Contract) or arrangements of whatever
character from time to time supporting or securing payment of such
Receivable or otherwise relating to such Receivable whether
pursuant to the Contract related to such Receivable or otherwise;
(d) all Records related to such Receivable; and
(e) all proceeds of the foregoing.
"SERVICER" means the Seller, in its capacity as servicer of the Purchased
Receivables and other Transferred Assets under the Receivables Purchase
Agreement, together with its successors and permitted assigns in such
capacity.
4. This Assignment is executed and delivered by the Seller to the Purchaser
pursuant to the Receivables Purchase Agreement.
5. This Assignment is made by the Seller to the Purchaser without any
representation, warranty, covenant, agreement or recourse (express or
implied) except as provided otherwise in the Receivables Purchase Agreement
or herein.
6. The Seller agrees to do and perform, from time to time, any and all acts
and to execute any and all further instruments required or reasonably
requested by the Purchaser to more fully effect the purposes of this
Agreement.
7. This Assignment Agreement shall be construed in accordance with the laws of
the Province of Ontario and the laws of Canada applicable therein.
8. This Assignment shall be binding upon and shall enure to the benefit of the
Seller and the Purchaser and their respective successors and assigns.
[Signature page follows]
- 7 -
IN WITNESS WHEREOF the Seller has executed this Assignment as of the date first
written above.
MBI LIMITED/LIMITEE,
IN ITS CAPACITY AS GENERAL PARTNER OF
SMURFIT-MBI
By:
---------------------------------------
Authorized Officer
Accepted by:
COMPUTERSHARE TRUST COMPANY OF CANADA,
in its capacity as trustee of
King Street Funding Trust,
by its Administrator, Scotia Capital Inc.
By: --------------------------------
Authorized Officer
ANNEX B
FORM OF PURCHASE PRICE PAYMENT NOTICE
TO: Computershare Trust Company of Canada in its capacity as trustee of
King Street Funding Trust
c/o Scotia Capital Inc.
Scotia Plaza, 68th Floor
40 King Street West
P.O. Box 4085, Station "A"
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
This Purchase Price Payment Notice is delivered to you pursuant to
Section 1.2 of the receivables purchase agreement made as of March 30, 2004 (the
"Receivables Purchase Agreement") between MBI Limited/Limitee, in its capacity
as General Partner of Smurfit-MBI, as Seller, Computershare Trust Company of
Canada, a trust company carrying on business in the Province of Ontario, in its
capacity as trustee (in such capacity, together with its successors and
permitted assigns in such capacity, the "Issuer") of King Street Funding Trust,
a trust established under the laws of the Province of Ontario and Scotia Capital
Inc., an Ontario Corporation as administrator of the Issuer.
The Seller hereby gives notice to the Issuer and the Administrator
that the Seller requests a Cash Purchase Price payment under the Receivables
Purchase Agreement, all in accordance with the terms of Section 1.2 of the
Receivables Purchase Agreement as follows:
Settlement Date [CLOSING DATE]: *, 200-
Cash Purchase Price: Cdn. $*
Required Amount
on the Settlement Date (after payment): Cdn. $*
Net Receivables Pool Balance for Settlement Date $*
Each of the undersigned certifies that as of the Settlement Date all conditions
precedent
contained in the Receivables Purchase Agreement to the payment of the Cash
Purchase Price requested herein have been satisfied or complied with.
DATED the * day of *, 200-.
MBI LIMITED/LIMITEE, IN ITS CAPACITY AS
GENERAL PARTNER OF SMURFIT-MBI, AN
ONTARIO LIMITED PARTNERSHIP
By:
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(Authorized Officer)
By:
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(Authorized Officer)
ANNEX C
FORM OF PORTFOLIO REPORT
ANNEX D
FORM OF SELLER COUNSEL OPINIONS