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AMENDED AND RESTATED LOAN AGREEMENT
DATED AS OF DECEMBER 1, 2005
AMONG
BOWATER FUNDING INC., AS BORROWER,
BOWATER INCORPORATED, AS INITIAL SERVICER,
THE LENDERS FROM TIME TO TIME PARTY HERETO,
SUNTRUST BANK AND WACHOVIA BANK, NATIONAL ASSOCIATION,
AS LC ISSUERS,
SUNTRUST CAPITAL MARKETS, INC. AND WACHOVIA BANK, NATIONAL
ASSOCIATION, AS CO-AGENTS,
AND
SUNTRUST CAPITAL MARKETS, INC., AS ADMINISTRATIVE AGENT
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS........................................................2
Section 1.1 Defined Terms...............................................2
Section 1.2 Other Definitional Provisions..............................26
Section 1.3 Other Terms................................................26
Section 1.4 Computation of Time Periods................................26
Section 1.5 Continuance of Significance Events.........................26
ARTICLE II. COMMITMENTS, BORROWING AND LETTER OF CREDIT
PROCEDURES AND LENDER NOTES..............................26
Section 2.1 Commitments................................................26
(a) Advances.................................26
(b) Issuance of Letters of Credit............27
Section 2.2 Borrowing Procedures.......................................27
Section 2.3 Funding....................................................27
Section 2.4 Letters of Credit..........................................28
(a) Letter of Credit Requests................28
(b) Reimbursement by Borrower................28
(c) Obligations Absolute.....................29
(d) Actions of LC Issuers....................30
(e) Participations...........................30
(f) LC Issuer Agreements.....................30
Section 2.5 Representation and Warranty................................31
Section 2.6 Extension of the Committed Lenders' Commitments............31
Section 2.7 Voluntary Termination of Committed Lenders' Commitments;
Reduction of Facility Limit..........32
Section 2.8 Notes......................................................32
ARTICLE III. INTEREST, FEES, ETC.............................................32
Section 3.1 Interest Rates.............................................32
Section 3.2 Interest Payment Dates.....................................33
Section 3.3 Applicable Interest Rates..................................33
Section 3.4 Fees.......................................................33
Section 3.5 Computation of Interest and Fees...........................33
ARTICLE IV. REPAYMENTS AND PREPAYMENTS; DISTRIBUTION OF COLLECTIONS..........34
Section 4.1 Repayments and Prepayments.................................34
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Section 4.2 Application of Collections.................................34
Section 4.3 Application of Certain Payments............................36
Section 4.4 Due Date Extension.........................................36
Section 4.5 Timing of Payments.........................................36
Section 4.6 Release of Excess Cash Collateral..........................36
Section 4.7 Payments Rescission........................................36
ARTICLE V. SECURITY INTEREST.................................................37
Section 5.1 Grant of Security..........................................37
Section 5.2 Administrative Agent Appointed Attorney-in-Fact............38
Section 5.3 Administrative Agent May Perform...........................38
Section 5.4 Release of Collateral......................................38
ARTICLE VI. INCREASED COSTS, ETC.............................................39
Section 6.1 Increased Costs............................................39
Section 6.2 Broken Funding Costs.......................................40
Section 6.3 Withholding Taxes..........................................40
ARTICLE VII. CONDITIONS TO BORROWING.........................................41
Section 7.1 Initial Loan...............................................41
7.1.1 Resolutions.......................................41
7.1.2 Consents, etc.....................................41
7.1.3 Incumbency and Signatures.........................41
7.1.4 Good Standing Certificates........................41
7.1.5 Financing Statements..............................42
7.1.6 Search Reports....................................42
7.1.7 Fee Letters; Payment of Fees......................42
7.1.8 Receivables Sale Agreement........................42
7.1.9 Opinions of Counsel...............................42
7.1.10 Lender Notes......................................43
7.1.11 Borrowing Base Certificate........................43
7.1.12 Lock Box Account Agreements.......................43
7.1.13 Releases 43
7.1.14 Performance Undertaking...........................43
7.1.15 Other .........................................43
Section 7.2 All Advances...............................................43
7.2.1 No Default, etc...................................43
7.2.2 Borrowing Request, etc............................43
7.2.3 Commitment Termination Date.......................43
7.2.4 Accounts 43
ARTICLE VIII. REPRESENTATIONS AND WARRANTIES.................................44
Section 8.1 Existence and Power........................................44
Section 8.2 Power and Authority; Due Authorization, Execution
and Delivery.................................44
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Section 8.3 No Conflict................................................44
Section 8.4 Governmental Authorization.................................44
Section 8.5 Actions, Suits.............................................44
Section 8.6 Binding Effect.............................................45
Section 8.7 Accuracy of Information....................................45
Section 8.8 Margin Regulations; Use of Proceeds........................45
Section 8.9 Good Title.................................................45
Section 8.10 Perfection.................................................45
Section 8.11 Places of Business and Locations of Records................46
Section 8.12 Accounts...................................................46
Section 8.13 No Material Adverse Effect.................................46
Section 8.14 Names......................................................46
Section 8.15 Ownership of Borrower; No Subsidiaries.....................46
Section 8.16 Not a Holding Company or an Investment Company.............46
Section 8.17 Compliance with Credit and Collection Policy...............46
Section 8.18 Solvency...................................................47
Section 8.19 Eligible Receivables.......................................47
Section 8.20 Sales by BAI...............................................47
ARTICLE IX. COVENANTS OF BORROWER AND SERVICER...............................47
Section 9.1 Affirmative Covenants......................................47
9.1.1 Compliance with Laws, Etc.........................47
9.1.2 Preservation of Legal Existence...................47
9.1.3 Performance and Compliance with Receivables.......47
9.1.4 Credit and Collection Policy......................47
9.1.5 Reporting Requirements............................48
(a) Financial Statements.....................48
(b) Monthly Reports and Borrowing Base
Certificates.........................49
(c) Significant Events.......................49
(d) Servicing Certificate....................49
(e) Procedures Review........................49
(f) Other....................................50
9.1.6 Use of Proceeds...................................50
9.1.7 Separate Legal Entity.............................50
9.1.8 Adverse Claims on Receivables.....................51
9.1.9 Further Assurances................................52
9.1.10 Servicing.........................................52
9.1.11 Inspection........................................52
9.1.12 Cooperation.......................................53
9.1.13 Facility 53
9.1.14 Accounts 53
Section 9.2 Negative Covenants.........................................53
9.2.1 Sales, Liens, Etc.................................54
9.2.2 Mergers, Acquisitions, Sales, Subsidiaries, etc...54
9.2.3 Change in Business; Change in Credit and
Collection Policy............................54
9.2.4 Other Debt........................................54
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9.2.5 Organizational Documents..........................55
9.2.6 Jurisdiction of Organization; Location of Records.55
9.2.7 Financing Statements..............................55
9.2.8 Business Restrictions.............................55
9.2.9 Other Agreements; Performance Undertaking.........55
ARTICLE X. SIGNIFICANT EVENTS AND THEIR EFFECT...............................56
Section 10.1 Events of Default..........................................56
10.1.1 Non-Payment of Loans, Etc.........................56
10.1.2 Non-Compliance with Other Provisions..............56
10.1.3 Breach of Representations and Warranties..........56
10.1.4 Bankruptcy........................................56
10.1.5 Tax and ERISA Liens...............................56
Section 10.2 Amortization Events........................................57
10.2.1 Servicer Event of Default.........................57
10.2.2 Collateral Reporting. ...........................57
10.2.3 Borrowing Base Deficit............................57
10.2.4 Default Ratio.....................................57
10.2.5 Dilution Ratio....................................57
10.2.6 Delinquency Ratio.................................57
10.2.7 Event of Default..................................57
10.2.8 Validity of Transaction Documents.................57
10.2.9 Termination Date..................................57
10.2.10 Performance Undertaking...........................57
10.2.11 Change of Control.................................58
Section 10.3 Effect of Significant Event................................58
10.3.1 Optional Termination..............................58
10.3.2 Automatic Termination.............................58
10.3.3 Notice to Rating Agencies.........................58
10.3.4 Cash-Collateralization of LC Obligations..........58
10.3.5 Additional Remedies...............................58
10.3.6 Italian Receivables...............................59
ARTICLE XI. THE SERVICER.....................................................59
Section 11.1 Bowater as Initial Servicer................................59
Section 11.2 Certain Duties of the Servicer.............................59
11.2.1 Authorization to Act as Borrower's Agent..........59
11.2.2 Servicer to Act as Servicer.......................59
11.2.3 Collections.......................................61
11.2.4 Settlement........................................63
Section 11.3 Servicing Compensation.....................................63
Section 11.4 Agreement Not to Resign....................................63
Section 11.5 Designation of Servicer....................................63
Section 11.6 Termination................................................63
Section 11.7 Servicer Events of Default.................................63
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11.7.1 Failure to Make Payments and Deposits.............63
11.7.2 Non-Compliance with Other Provisions..............63
11.7.3 Delegation........................................63
11.7.4 Breach of Representations and Warranties..........64
11.7.5 Bankruptcy........................................64
11.7.6 Judgments.........................................64
11.7.7 Cross-Default to Material Debt....................64
ARTICLE XII. AGENTS..........................................................65
Section 12.1 Authorization and Action...................................65
Section 12.2 Delegation of Duties.......................................66
Section 12.3 Exculpatory Provisions.....................................66
Section 12.4 Reliance by Agents.........................................67
Section 12.5 Notice of Significant Events...............................67
Section 12.6 Non-Reliance on Other Agents and Lenders...................67
Section 12.7 Indemnification of Agents..................................68
Section 12.8 Agents in their Individual Capacities......................68
Section 12.9 Conflict Waivers...........................................68
Section 12.10 UCC Filings................................................69
ARTICLE XIII. ASSIGNMENTS....................................................69
Section 13.1 Restrictions on Assignments................................69
Section 13.2 Documentation..............................................70
Section 13.3 Rights of Assignees........................................70
Section 13.4 Transfer and Maintenance of Register.......................70
ARTICLE XIV. INDEMNIFICATION.................................................71
Section 14.1 General Indemnity of Borrower..............................71
Section 14.2 Indemnity of Servicer......................................71
ARTICLE XV. MISCELLANEOUS....................................................71
Section 15.1 No Waiver; Remedies........................................71
Section 15.2 Amendments, Etc............................................72
Section 15.3 Notices, Etc...............................................72
Section 15.4 Costs, Expenses and Taxes..................................72
Section 15.5 Binding Effect; Survival...................................73
Section 15.6 Captions and Cross References..............................73
Section 15.7 Severability...............................................73
Section 15.8 Governing Law..............................................73
Section 15.9 Counterparts...............................................74
Section 15.10 Submission to Jurisdiction; Waiver of Trial by Jury........74
Section 15.11 No Recourse Against Conduit Lenders........................74
Section 15.12 No Proceedings.............................................74
Section 15.13 Confidentiality............................................75
vi
Section 15.14 Entire Agreement...........................................75
vii
EXHIBITS AND SCHEDULES
EXHIBIT A Form of Borrowing Request
EXHIBIT B Form of Lender Note
EXHIBIT C Form of Monthly Report
EXHIBIT D Form of Borrowing Base Certificate
EXHIBIT E Form of Performance Undertaking
EXHIBIT F Form of Letter of Credit Request Transmittal Letter
SCHEDULE 8.12 LockBoxes and LockBox Accounts
SCHEDULE 9.1.5 Procedures Review Requirements
SCHEDULE 15.3 Notice Addresses
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT is made and entered into as of
December 1, 2005, among:
(a) BOWATER FUNDING INC., a Delaware corporation ("Borrower"),
(b) BOWATER INCORPORATED, a Delaware corporation (together with its
successors, "Bowater"), in its capacity as the initial servicer (in such
capacity, together with its successors and permitted assigns in such capacity,
the "Servicer"),
(c) THREE PILLARS FUNDING LLC (F/K/A THREE PILLARS FUNDING CORPORATION)
("Three Pillars") and VARIABLE FUNDING CAPITAL COMPANY LLC ("VFCC" and together
with Three Pillars, the "Conduit Lenders"),
(d) SUNTRUST BANK ("STB") and WACHOVIA BANK, NATIONAL ASSOCIATION
("Wachovia" and, together with STB, the "Committed Lenders"),
(e) STB and WACHOVIA in their capacities as issuers of certain letters of
credit (each, in such capacity, an "LC Issuer" and, collectively, the "LC
Issuers"),
(f) SUNTRUST CAPITAL MARKETS, INC. ("STCM"), as agent and administrator for
Three Pillars, STB and their respective successors and permitted assigns (in
such capacity, together with its successors and assigns in such capacity, the
"Three Pillars Agent"), and WACHOVIA BANK, NATIONAL ASSOCIATION, as agent and
administrator for VFCC, Wachovia and their respective successors and permitted
assigns (in such capacity, together with its successors and assigns in such
capacity, the "VFCC Agent" and, together with the Three Pillars Agent, the
"Co-Agents"), and
(g) SUNTRUST CAPITAL MARKETS, INC., as administrative agent for the Conduit
Lenders, the Committed Lenders and the Co-Agents (in such capacity, together
with its successors and assigns in such capacity, the "Administrative Agent"),
and amends and restates in its entirety that certain Loan Agreement dated as of
December 19, 2002 among the parties hereto other than the LC Issuers (the
"Existing Agreement").
BACKGROUND
1. Borrower desires that the Lenders (hereinafter defined) extend
financing to Borrower. In addition, Borrower may from time to time request
one of the LC Issuers to issue a Letters of Credit upon application of
Borrower.
2. Each of the Lenders is willing to extend such financing, and each
of the LC Issuers is willing to issue such Letters of Credit, on the terms
and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
1
ARTICLE I.
DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, (a) capitalized terms
used and not otherwise defined herein are used with the meanings attributed
thereto in the Receivables Sale Agreement (hereinafter defined), and (b) the
following terms have the following meanings:
"Accounts Receivable Turnover Ratio" means, on any date of determination,
the ratio computed as of the last day of the most recent Calculation Period by
dividing (a) the aggregate amount of Credit Sales entered into during the 12
months ending on with such Calculation Period by (b) the average month-end
amount of the aggregate Unpaid Balance of Receivables during the 12 months
ending with such Calculation Period.
"Administrative Agent" has the meaning set forth in the preamble to this
Agreement.
"Administrative Agent's Fee Letter" means that certain fee letter dated as
of December 19, 2002 by and among Bowater, Borrower and STCM, as the same may be
amended, restated and/or otherwise modified from time to time.
"Advance" means the Loans made on any given date.
"Advance Rate" means the percentage equal to (a) 100% minus (b) the Reserve
Percentage.
"Adverse Claim" has the meaning specified in the Receivables Sale
Agreement.
"Affected Party" means each of the Agents, the Lenders, the LC Issuers, the
Support Providers, any permitted assignee of any of the foregoing, any holder of
a participation interest in the rights and obligations of any of the foregoing,
and any holding company of any Committed Lender or LC Issuer.
"Affiliate" of any Person means any other Person that (a) directly or
indirectly controls, is controlled by or is under common control with such
Person or (b) is an officer or director of such Person. A Person shall be deemed
to be "controlled by" another Person if such other Person possesses, directly or
indirectly, power (i) to vote 5% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managing
partners of such other Person, or (ii) to direct or cause the direction of the
management and policies of such other Person whether by contract or otherwise.
The word "Affiliated" has a correlative meaning.
"Agents" means, collectively, the Administrative Agent and the
Co-Agents.
"Aggregate Excess Concentration Amount" means, on any date of
determination, the aggregate of all Excess Concentration Amounts, without
double-counting any Receivable that would be excluded by virtue of more than one
clause in the definition of "Concentration Limit."
2
"Aggregate Face Amount Outstanding" means, on any date of
determination, the aggregate undrawn amount of Letters of Credit then
outstanding.
"Aggregate Unpaid Balance" means, on any date of determination, the
aggregate Unpaid Balance of all Eligible Receivables at such time.
"Agreement" means this Loan Agreement, as it may be amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
hereof.
"Alternative Rate" means:
(a) for any Interest Period while the LIBOR Rate is unavailable, an
interest rate per annum equal to the sum of (i) the Base Rate, plus (ii)
the Applicable Margin,
(b) for any Interest Period until the applicable Lender has received
not less than three (3) Business Days' prior notice that Borrower wishes to
select a LIBOR Rate, an interest rate per annum equal to the sum of (i) the
Base Rate, plus (ii) the Applicable Margin, and
(c) at all other times, an interest rate per annum equal to the sum of
(i) the LIBOR Rate applicable to such Interest Period, plus (ii) the LIBOR
Margin.
"Alternative Rate Loan" means any Loan that is not funded with Commercial
Paper Notes, including, without limitation, any Loan from and after the time, if
any, when the applicable Conduit Lender transfers such Loan, or borrows to
finance such Loan, under its Liquidity Agreement.
"Amortization Event" means any of the events described in Section 10.2.
"Applicable Margin" has the meaning specified in the Co-Agents' Fee Letter.
"Approved Foreign Country" means each country (other than the United States
of America) that has sovereign debt rated at least "AA-" or better by S&P and
"Aa3" or better by ▇▇▇▇▇'▇; provided, however, that either of the Co-Agents may
revoke the "approved" status of any such country (other than Canada and the
United Kingdom) upon 5 Business Days' notice to the Borrower.
"BAI" has the meaning set forth in the Receivables Sale Agreement.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. ss.
101 et seq., as amended.
"Base Rate" means, on any date of determination, a fluctuating rate of
interest per annum equal to the higher of (a) the Prime Rate, or (b) the Federal
Funds Rate most recently determined by the applicable Co-Agent plus 0.50% per
annum.
"Borrower" has the meaning set forth in the preamble to this Agreement.
3
"Borrower's Account" means account no. 9102524478 at ▇▇ ▇▇▇▇▇▇ Chase Bank,
N.A. in New York, New York.
"Borrowing Base" means, on any date, an amount equal to (a) the product of
(i) the Advance Rate, calculated as of the last day of the most recent
Calculation Period, times (ii) the excess, if any, as of the most recent
Calculation Date for which a Borrowing Base Certificate has been (or is required
to have been) delivered of (A) the Aggregate Unpaid Balance, minus (B) the sum
of (i) the accrued reserve for contractual discounts and allowances, and (ii)
the aggregate Excess Concentration Amount minus (b) the Foreign Currency Reserve
as of the Calculation Date referred to in "(a)(ii)" above.
"Borrowing Base Certificate" means a certificate, substantially in the form
of Exhibit D hereto, duly executed by an authorized Senior Executive of
Servicer.
"Borrowing Base Deficit" means, on any date of determination, an amount
equal to the excess, if any, of (a) the aggregate Credit Exposure at such time
over (b) the Borrowing Base.
"Borrowing Request" means a notice in the form of Exhibit A (or, if
acceptable to the Co-Agents, the information required therein may be given by
telephone and promptly confirmed via fax) specifying the date and amount of the
requested Advance, each Group's Funding Amount and, in the case of Three
Pillars, the duration of the requested CP Tranche Period.
"Bowater" has the meaning set forth in the preamble to this Agreement.
"Bowater Downgrade" has the meaning set forth in the Receivables Sale
Agreement.
"Broken Funding Costs" means:
(a) for any CP Loan (i) of VFCC which has its principal reduced
without compliance by Borrower with the notice requirements hereunder, (ii)
of Three Pillars which has its principal reduced on any date other than the
last day of the applicable CP Tranche Period and (iii) which is assigned by
the applicable Conduit Lender to its Liquidity Banks under its Liquidity
Agreement or any other applicable Support Agreement, an amount equal to the
excess, if any, of (A) the amount of interest that would have accrued at
the Commercial Paper Rate during the remainder of the applicable Interest
Periods or CP Tranche Periods for the Related Commercial Paper subsequent
to the date of such reduction or assignment of the principal of such Loan
if such reduction or assignment had not occurred, over (B) the sum of (1)
to the extent all or a portion of such principal is allocated to another
Loan, the amount of interest actually accrued during the remainder of such
period on such principal for the new Loan, and (2) to the extent such
principal is not allocated to another Loan, the income, if any, actually
received during the remainder of such period by the holder of such Loan
from investing the portion of such principal not so allocated,
4
(b) for any CP Loan or LIBOR Loan not prepaid following delivery of
any prepayment notice, the reasonable expenses, if any, actually incurred
by the applicable Lenders following receipt of such prepayment notice and
in connection therewith, and
(c) for any LIBOR Loan that is prepaid on a date other than the last
day of its Interest Period, the excess, if any, of (A) the amount of
interest that would have accrued at the LIBOR Rate during the remainder of
the applicable Interest Periods subsequent to the date of such prepayment
if such prepayment had not occurred, over (B) the sum of (1) to the extent
all or a portion of such principal is allocated to another Loan, the amount
of interest actually accrued during the remainder of such period on such
principal for the new Loan, and (2) to the extent such principal is not
allocated to another Loan, the income, if any, actually received during the
remainder of such period by the holder of such Loan from investing the
portion of such principal not so allocated
All Broken Funding Costs shall be due and payable hereunder upon demand.
"Business Day" means any day on which (a) commercial banks in New York, New
York, and Atlanta, Georgia, are not authorized or required to be closed and The
Depository Trust Company of New York is open for business, and (b) in the case
of a Rate Setting Date for Loans bearing interest by reference to the LIBOR
Rate, banks are open for business in London, England.
"Calculation Date" means:
(a) at any time while Bowater's unsecured senior debt is rated at
least BBB- by S&P and Baa3 by ▇▇▇▇▇'▇, the last Business Day of each
Calculation Period unless the Borrower elects to report weekly, in which
case clause (c) shall govern;
(b) at any time while Bowater's unsecured senior debt is rated BB+, BB
or BB- by S&P and/or Ba1, Ba2 or Ba3 by ▇▇▇▇▇'▇, the fifteenth (15th) day
of a calendar month and last Business Day of each Calculation Period unless
the Borrower elects to report weekly, in which case clause (c) shall
govern; and
(c) at any time while Bowater's unsecured senior debt is rated B+ or
lower by S&P or B1 or lower by ▇▇▇▇▇'▇, the last Business Day of each week.
Nothing herein shall be deemed to preclude the provision of a Borrowing Base
Certificate on a more frequent basis than would otherwise be required by the
terms of this definition.
"Calculation Period" means a calendar month.
"Cash-Collateralize" means to pledge and deposit immediately available
funds into the Letter of Credit Collateral Account at the applicable LC Issuer,
as collateral for the LC Obligations owing to that LC Issuer, pursuant to
documentation in form and substance satisfactory to the Administrative Agent and
that LC Issuer.
5
"Charge-Off" means a Receivable not previously deemed a Defaulted
Receivable that is written-off by the Servicer or should, in accordance with the
Credit and Collection Policy, be written-off.
"Closing Date" means December 1, 2005.
"Co-Agents" has the meaning set forth in the preamble to this Agreement.
"Co-Agents' Fee Letter" means that certain amended and restated Co-Agents'
fee letter dated as of December 1, 2005 by and among Bowater, Borrower, the LC
Issuers and the Co-Agents, as the same may be amended, restated and/or otherwise
modified from time to time.
"Collateral" has the meaning set forth in Section 5.1(a).
"Collections" has the meaning set forth in the Receivables Sale Agreement.
"Commercial Paper Notes" means short-term promissory notes issued by any of
the Conduit Lenders to fund its Loans or investments in receivables or other
financial assets.
"Commercial Paper Rate" means:
(a) For any CP Tranche Period of Three Pillars, a rate per annum equal to
the sum of (i) the rate or, if more than one rate, the weighted average of the
rates, determined by converting to an interest-bearing equivalent rate per annum
the discount rate (or rates) at which Three Pillars' Related Commercial Paper
outstanding during such CP Tranche Period has been or may be sold by any
placement agent or commercial paper dealer selected by the Three Pillars Agent,
plus (ii) the commissions and charges charged by such placement agent or
commercial paper dealer with respect to such Related Commercial Paper, expressed
as a percentage of the face amount thereof and converted to an interest-bearing
equivalent rate per annum;
(b) For any CP Tranche Period of VFCC, the rate per annum that, when
applied to the outstanding principal balance of VFCC's Loans during such CP
Tranche Period for the actual number of days elapsed on a 360-day year basis
would equate to VFCC's CP Costs for such CP Tranche Period; and
"Commitment" means, as to each Committed Lender, its commitment to make
Loans to Borrower in an aggregate principal amount at any one time outstanding
not exceeding the amount set forth below its signature to this Agreement.
"Commitment Termination Date" means, with respect to the Committed Lenders,
the earliest to occur of (i) the Scheduled Commitment
Termination Date, (ii) the date of any termination of the Committed Lenders'
Commitments pursuant to Section 2.6, (iii) the effective date on which the
Committed Lenders' Commitments are terminated pursuant to Section 10.3, and (iv)
the Liquidity Termination Date of any Conduit Lender.
"Committed Lenders" has the meaning set forth in the preamble to this
Agreement.
6
"Concentration Limit" means, as to the applicable group of Eligible
Receivables:
(a) for each Obligor whose short term unsecured debt ratings are (i)
equal to A-1+ by S&P and P-1 by Moody's, 12% of the Aggregate Unpaid
Balance; (ii) greater than or equal to A-1 by S&P and P-1 by Moody's, 10%
of the Aggregate Unpaid Balance; (iii) greater than or equal to A-2 by S&P
and P-2 by Moody's but less than the ratings in clause (ii) 6% of the
Aggregate Unpaid Balance; or (iv) less than A-2 by S&P or P-2 by Moody's,
3% of the Aggregate Unpaid Balance; or
(b) for each Obligor who does not have short term unsecured debt
ratings from both S&P and Moody's of at least the levels set forth in
clause (a)(i), (ii) or (iii) above but who has long term unsecured debt
ratings from both S&P and Moody's which are (i) greater than or equal to
both AA by S&P and Aa2 by Moody's, 12% of the Aggregate Unpaid Balance;
(ii) greater than or equal to both A- by S&P and A3 by Moody's but less
than the ratings in clause (i), 10% of the Aggregate Unpaid Balance; or
(iii) greater than or equal to BBB- by S&P and Baa3 by Moody's but less
than the ratings in clause (ii), 6% of the Aggregate Unpaid Balance;
(c) for each Obligor who does not have short term unsecured debt
ratings or long term unsecured debt ratings from both S&P and Moody's and
is not a Special Obligor, 3% of the Aggregate Unpaid Balance;
(d) for each Special Obligor, 6% of the Aggregate Unpaid Balance;
(e) for all Obligors domiciled in Italy considered in the aggregate,
4.0% of the Aggregate Unpaid Balance;
(f) for all Obligors domiciled in Approved Foreign Countries
(including Italy) considered in the aggregate, 15% of the Aggregate Unpaid
Balance of which 15% up to two-thirds (2/3) may be denominated in Canadian
dollars or Pounds Sterling;
(g) for all Eligible Receivables with payment terms of 31-45 days, 40%
of the Aggregate Unpaid Balance; and
(h) for all Eligible Receivables with payment terms of 46-90 days, 20%
of the Aggregate Unpaid Balance,
provided that (1) the limitations set forth in the foregoing clauses
(a)-(d) above shall apply to each specified Obligor and its Affiliates,
considered as if they were one and the same Person, (2) in the event that
any Obligor has both long-term and short-term unsecured debt ratings from
both S&P and Moody's that are covered under the foregoing clauses (a) and
(b), the short-term debt ratings under clause (a) above shall control, and
(3) for purposes of determining compliance with clauses (g) and (h) above,
"payment terms" shall be computed in accordance with the Prox Rules.
7
"Conduit Lenders" has the meaning set forth in the preamble to this
Agreement.
"Contract" has the meaning set forth in the Receivables Sale Agreement.
"Covered Taxes" means Taxes other than Excluded Taxes.
"CP Costs" means, for VFCC for each day, the sum of (i) discount or
interest accrued on its Pooled Commercial Paper on such day, plus (ii) any and
all accrued commissions in respect of its placement agents and Commercial Paper
Note dealers, and issuing and paying agent fees incurred, in respect of such
Pooled Commercial Paper for such day, plus (iii) other costs associated with
funding small or odd-lot amounts with respect to all receivable purchase or
financing facilities which are funded by its Pooled Commercial Paper for such
day, minus (iv) any accrual of income net of expenses received on such day from
investment of collections received under all receivable purchase or financing
facilities funded substantially with its Pooled Commercial Paper, minus (v) any
payment received on such day net of expenses in respect of Broken Funding Costs
related to the prepayment of any investment of VFCC pursuant to the terms of any
receivable purchase or financing facilities funded substantially with Pooled
Commercial Paper. In addition to the foregoing net costs, if Borrower shall
request any Loan during any period of time determined by the VFCC Agent in its
sole discretion to result in incrementally higher CP Costs applicable to such
Loan, the principal associated with any such Loan shall, during such period, be
deemed to be funded by VFCC in a special pool (which may include capital
associated with other receivable purchase or financing facilities) for purposes
of determining CP Costs applicable to such Loan.
"CP Loan" means a Loan made by a Conduit Lender at any time it is funded or
maintained with the proceeds of Commercial Paper Notes.
"CP Tranche Period" means:
(a) with respect to Three Pillars' CP Loans, a period of days from 1
Business Day up to the number of days necessary to extend such period to
include the next Distribution Date, commencing on a Business Day which
period is either (i) requested by Borrower and agreed to by such Conduit
Lender or its Co-Agent or (ii) in the absence of such request and
agreement, selected by such Conduit Lender or its Co-Agent (it being
understood that the goal shall be to select a period which ends on or as
close to the next Distribution Date as possible), and
(b) with respect to VFCC, each month (or portion thereof) ending on a
Distribution Date, during which VFCC has any outstanding CP Loan hereunder.
"Credit and Collection Policy" has the meaning set forth in the Receivables
Sale Agreement.
"Credit Event" means the issuance of Letter of Credit or the
making of an Advance under this Agreement.
"Credit Exposure" means, at any time as to any Purchaser or Group, the sum
of its outstanding Capital plus the principal amount of its interest in the LC
Obligations. In
8
computing the amount of Credit Exposure, (i) Borrower shall
exclude the amount of any LC Obligations that are fully Cash-Collateralized, and
(ii) in connection with an Advance, the proceeds of which will be used to
refinance a draw under a Letter of Credit, Borrower need not count both the
Reimbursement Obligation and the amount that the Lenders will pay to Borrower on
account of such Advance.
"Credit Sales" means, for any period of determination, the aggregate amount
of all Receivables originated by any Seller during such period.
"Days Sales Outstanding Ratio" means, on any date of determination, the
ratio computed as of the last day of the most recent Calculation Period by
dividing (a) 360 by (b) the Accounts Receivable Turnover Ratio for the most
recent Calculation Period.
"Debt" of any Person means, without duplication, (i) all indebtedness of
such Person for borrowed money, (ii) all indebtedness of such Person for the
deferred purchase price of property or services (other than property and
services purchased, and expense accruals and deferred compensation items
arising, in the ordinary course of business), (iii) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments (other
than performance, surety and appeal bonds arising in the ordinary course of
business), (iv) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (v) all obligations of such Person under leases which
have been or should be, in accordance with GAAP, recorded as capital leases, to
the extent required to be so recorded, (vi) all reimbursement, payment or
similar obligations of such Person, contingent or otherwise, under acceptance,
letter of credit or similar facilities (other than letters of credit in support
of trade obligations or in connection with workers' compensation, unemployment
insurance, old-age pensions and other social security benefits in the ordinary
course of business), (vii) all net obligations of such Person in respect of
interest rate swap, cap, collar, swaption, option or similar agreements, (viii)
all obligations arising in connection with a sale or other transfer of any of
such Person's financial assets which are, or are intended to be, classified as
loans for federal tax purposes, (ix) all Debt referred to in clauses (i) through
(viii) above guaranteed directly or indirectly by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (A) to pay
or purchase such Debt or to advance or supply funds for the payment or purchase
of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against loss
in respect of such Debt, (C) to supply funds to or in any other manner invest in
the debtor (including any agreement to pay for property or services irrespective
of whether such property is received or such services are rendered) or (D)
otherwise to assure a creditor against loss in respect of such Debt, and (x) all
Debt referred to in clauses (i) through (viii) above secured by (or for which
the holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any lien, security interest or other charge or encumbrance upon or
in property (including, without limitation, accounts and contract rights) owned
by such Person, even though such Person has not assumed or become liable for the
payment of such Debt.
9
"Default Rate" means the sum of (i) the Base Rate applicable from time to
time (but not less than the interest rate in effect for such Loan as at the date
of the Significant Event giving rise thereto), plus (ii) 2.00% per annum.
"Default Ratio" means, on any date of determination, the ratio (expressed
as a percentage) computed as of the last day of most recent Calculation Period
by dividing (a) the sum (without double counting) of (i) the Unpaid Balance of
Receivables that became Defaulted Receivables during such Calculation Period,
plus (ii) the Unpaid Balance of Receivables that became Charge-Offs during such
Calculation Period by (b) Credit Sales for the Calculation Period ending 4
months prior to beginning of such Calculation Period.
"Defaulted Receivable" means, as of any date of determination, any
Receivable (i) which the Servicer has or should have charged-off or deemed
uncollectible in accordance with the Credit and Collection Policy after taking a
reasonable time to apply Collections received to applicable invoices and
reconcile the amount of such Receivable, (ii) as to which, as of such date of
determination, any payment, or part thereof, remains unpaid for 91 days or more
past the due date for such payment, determined by reference to the original
contractual payment terms of such Receivable or (iii) unless each of the Agents
in its sole discretion has otherwise agreed, as to which the Obligor thereon has
suffered an Event of Bankruptcy.
"Delinquency Ratio" means, as of any date of determination,
the ratio (expressed as a percentage) computed as of the last day of the most
recent Calculation Period, by dividing (a) the Unpaid Balance of Receivables
that are Delinquent Receivables as of such date by (b) an amount equal to the
Aggregate Unpaid Balance as of such date minus the Aggregate Excess
Concentration Amounts as of such date.
"Delinquent Receivable" means, as of any date of determination, any
Receivable as to which, as of such date of determination, any payment, or part
thereof, remains unpaid for 61-90 days past the due date for such payment,
determined by reference to the original contractual payment terms of such
Receivable.
"Demand Loan" means a loan made by Borrower to BAI or Bowater at a market
rate of interest that is payable on demand and is not evidenced by a promissory
note or other instrument.
"Dilution Horizon Ratio" means, on any date of determination, the ratio
(expressed as a percentage) computed as of the last day of the most recent
Calculation Period by dividing (a) an amount equal to the sum of (i) Credit
Sales for such Calculation Period plus (ii) 50% of the Credit Sales for the
Calculation Period immediately preceding the Calculation Period described in
clause (i) by (b) an amount equal to (i) the Aggregate Unpaid Balance as of such
last day minus (ii) the Aggregate Excess Concentration Amount as of such last
day.
"Dilution Ratio" means, on any date of determination, the ratio (expressed
as a percentage) computed as of the last day of the most recent Calculation
Period by dividing (a) Dilutions for such Calculation Period by (b) Credit Sales
for the Calculation Period immediately preceding the Calculation Period
described in clause (a).
10
"Dilution Reserve" means, on any date of determination, the product
computed as of the last day of the most recent Calculation Period, of (a) the
sum of (i) the product of (x) the Stress Factor times (y) the Expected Dilution
Ratio plus (ii) the product of (x) the positive difference, if any, between (1)
the Dilution Spike Rate less (2) the Expected Dilution Ratio times (y) a ratio
computed by dividing (1) the Dilution Spike Rate by (2) the Expected Dilution
Ratio times (b) the Dilution Horizon Ratio.
"Dilution Spike Rate" means, on any date of determination, the highest
Dilution Ratio over the 12-month period ending on the last day of the most
recent Calculation Period.
"Dilutions" means, for any period of determination, the aggregate amount of
returns, allowances, net credits and any other non-cash reductions to the Credit
Sales during such period; provided, that "Dilutions" shall not include any
write-down, reserve or other reduction due to a Receivable subsequently becoming
a Defaulted Receivable or otherwise bearing on the uncollectability of such
Receivable on account of the insolvency, bankruptcy, lack of credit worthiness
or financial inability to pay of the applicable Obligor.
"Distribution Date" means the 14th day of each calendar month after the
Closing Date (or if any such day is not a Business Day, the next succeeding
Business Day).
"Documents" means all documentation relating to the Receivables including,
without limitation, the Contracts, billing statements and computer records and
programs.
"Dollar(s)" and the sign "$" shall mean lawful money of the United States
of America.
"Eligible Receivable" means each Receivable that meets the following
criteria:
(a) that was created by Bowater or BAI (i) in compliance, in all
material respects, with its Credit and Collection Policy and (ii) in the
ordinary course of its business;
(b) that was documented in all material respects in compliance with
the applicable Seller's standard administration and documentation policies
and procedures;
(c) that is not a Delinquent Receivable or a Defaulted Receivable;
(d) as to which, at the time of the sale or contribution of such
Receivable to Borrower, BAI was the sole owner thereof and had good and
marketable title thereto, free and clear of all Adverse Claims, and which
was sold or contributed to Borrower pursuant to the Receivables Sale
Agreement free and clear of all Adverse Claims other than in favor of the
Administrative Agent for the benefit of the Secured Parties;
(e) the assignment of which by each applicable Seller to each
applicable Transferee pursuant to the Receivables Sale Agreement does not
contravene or conflict in any material respect with any applicable law,
rule or
11
regulation or any contractual or other restriction, limitation or
encumbrance, and the sale or assignment of which does not require the
consent of the Obligor thereof;
(f) (i) which is denominated and payable in Dollars, or (ii) which is
denominated and payable in Canadian dollars or Pounds Sterling and, in any
event, is only payable in the United States of America or to the LockBox at
Wachovia Bank, National Association, in London, England identified on
Schedule 8.12 once the related LockBox Account is subject to a perfected
assignment for collateral purposes;
(g) the Obligor of which is a resident or organized under the laws of
the United States or an Approved Foreign Country;
(h) the Obligor of which is not an officer, director or Affiliate of
any Seller or Borrower;
(i) the Obligor of which is not a Governmental Authority;
(j) that is in full force and effect and constitutes the legally valid
and binding payment obligation of the Obligor with respect thereto,
enforceable against such Obligor in accordance with its terms and is not
subject to any dispute, right of rescission, set-off, counterclaim or any
other defense (including defenses arising out of violations of usury laws)
of the applicable Obligor against the applicable Seller or any other
Adverse Claim, and the Obligor thereon holds no right as against such
Seller to cause such Seller to repurchase the goods the sale of which shall
have given rise to such Receivable (except with respect to sale discounts
effected pursuant to the Contract, or goods returned in accordance with the
terms of the Contract);
(k) that does not contravene in any material respect any applicable
requirements of law (including without limitation all laws, rules and
regulations relating to truth in lending, fair credit billing, fair credit
reporting, fair debt collection practices and privacy) and which complies
in all material respects with all applicable requirements of law and with
respect to which all consents, licenses, approvals or authorizations of, or
registrations or declarations with, any governmental authority required to
be obtained, effected or given by the related Seller in connection with the
creation or the execution, delivery and performance of such Receivable,
have been duly obtained, effected or given and are in full force and
effect;
(l) that complies with all applicable requirements of the Credit and
Collection Policy;
(m) as to which each of Borrower's ownership interest and the
Administrative Agent's (for the benefit of the Secured Parties) first
priority security interest in such Receivable has been perfected under the
applicable Uniform Commercial Code and other applicable laws;
12
(n) as to which the Servicer is in possession of the related
Receivable File;
(o) which provides for repayment in full of the Unpaid Balance thereof
within 90 days of the date of the creation thereof;
(p) the terms of which have not been modified or waived except as
permitted under the Credit and Collection Policy and this Agreement;
(q) which constitutes an "account" or a "payment intangible" under and
as defined in Article 9 of the Uniform Commercial Code of all applicable
jurisdictions; and
(r) as to which the applicable Seller has satisfied and fully
performed all obligations on its part with respect to such Receivable
required to be fulfilled by it, and no further action is required to be
performed by any Person with respect thereto other than payment thereon by
the applicable Obligor.
"Event of Bankruptcy" shall be deemed to have occurred with respect to a
Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up, or
composition or readjustment of debts of such Person, the appointment of a
trustee, receiver, custodian, liquidator, assignee, sequestrator or the
like for such Person or all or substantially all of its assets, or any
similar action with respect to such Person under any law relating to
bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts and, solely in the case of Borrower, such case or
proceeding shall continue undismissed, or unstayed and in effect, for a
period of 60 consecutive days; or an order for relief in respect of such
Person shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect,
or shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for such Person or for any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall
fail to, or admit in writing its inability to, pay its debts generally as
they become due, or, if a corporation or similar entity, its board of
directors shall vote to authorize any of the foregoing.
"Event of Default" means any of the events described in Section 10.1.
"Excess Concentration Amount" means, on any date of determination, with
respect to each Concentration Limit, the amount, if any, by which the aggregate
Unpaid Balance
13
of Eligible Receivables for the applicable group of Eligible Receivables covered
by such Concentration Limit exceeds the limit therefore set forth in the
definition of "Concentration Limit".
"Excluded Taxes" means, in the case of any Indemnified Party, taxes imposed
on its overall net income, and franchise taxes and branch profit taxes based on
net income, imposed on it by any jurisdiction.
"Existing Agreement" has the meaning set forth in the preamble to this
Agreement.
"Expected Dilution Ratio" means, on any date of determination, the rolling
twelve-month average Dilution Ratio for the 12-month period ending on the last
day of the most recent Calculation Period.
"Facility Limit" means $200,000,000.
"Federal Funds Rate" means, for any period, the per annum rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)." If, at the time of calculation, such rate for any relevant day, is
not yet published in H.15(519), the rate for such day will be the rate set forth
in the daily statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor publications,
published by the Federal Reserve Bank of Atlanta (including any such successor,
the "Composite 3:30 p.m. Quotations") for such day under the caption "Federal
Funds Effective Rate." If, at the time of calculation, the appropriate rate for
any relevant day is not yet published in either H.15(519) or the Composite 3:30
p.m. Quotations, the rate for such day will be the arithmetic mean as determined
by Bank of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by the
applicable Co-Agent.
"Fee Letters" means (a) the Co-Agents' Fee Letter, and (b) the
Administrative Agent's Fee Letter.
"Fees" means all LC Fees, other fees and other amounts payable by Borrower
to any of the Agents, LC Issuers or Lenders pursuant to a Fee Letter.
"Fitch" means Fitch, Inc., and any successor thereto.
"Foreign Currency Reserve" means, on any date of determination, an amount
equal to 7.5% of the spot market Dollar-equivalent of all Eligible Receivables
otherwise included in the Borrowing Base which are denominated in Canadian
dollars plus 25% of the spot market Dollar-equivalent of all Eligible
Receivables otherwise included in the Borrowing Base which are denominated in
Pounds Sterling.
"Funding Amount" has the meaning set forth in Section 2.1(a).
14
"GAAP" has the meaning set forth in the Receivables Sale Agreement.
"Governmental Authority" has the meaning set forth in the Receivables Sale
Agreement.
"Group" means any of (a) the VFCC Group or (b) the Three Pillars Group, as
the case may be.
"Group Percentage" means, as to each Group, the ratio (expressed as a
percentage) which the aggregate Commitments of all Committed Lenders in such
Group bear to the aggregate Commitments of all Committed Lenders in all Groups.
"Incipient Bankruptcy" means that any of the Agents shall have been
informed by Borrower, Servicer or any of their Affiliates or shall have
otherwise reasonably determined that Borrower or Servicer is about to commence
or to become the subject of a case or proceeding of the type described in the
definition of "Event of Bankruptcy."
"Indemnified Amounts" has the meaning set forth in Section 14.1.
"Indemnified Party" has the meaning set forth in Section 14.1.
"Interest Period" means:
(a) with respect to any CP Loan, its CP Tranche Period;
(b) with respect to any Alternative Rate Loan: (i) initially, the
period commencing on the date of the initial funding of such Loan by a
Committed Lender, Liquidity Bank or STB, as the case may be, and ending on
(but excluding) the Business Day immediately preceding the next following
Distribution Date, and (ii) thereafter, each period commencing on (and
including) the Business Day immediately preceding a Distribution Date and
ending on (but excluding) the Business Day immediately preceding the next
following Distribution Date;
provided, however, that if any Interest Period for any Loan that commences
before the Commitment Termination Date would otherwise end on a date occurring
after such Commitment Termination Date, such Interest Period shall end on such
Commitment Termination Date and the duration of each such Interest Period that
commences on or after the Commitment Termination Date, if any, shall be of such
duration as shall be selected by the applicable Co-Agent.
"LC Application" has the meaning set forth in Section 2.4(a).
"LC Fee" has the meaning set forth in the Co-Agents' Fee Letter.
"LC Issuer" means STB or Wachovia in its capacity as the
issuer of a Letter of Credit.
15
"LC Obligations" means, at any time, the sum, without duplication, of (a)
the Aggregate Face Amount Outstanding at such time plus (b) the aggregate unpaid
amount at such time of all Reimbursement Obligations.
"LC Payment Date" is defined in Section 2.4(b).
"LC Percentage" means, on any date of determination, the ratio (expressed
as a percentage) of (a) the sum of (i) the Aggregate Face Amount Outstanding,
plus (ii) any outstanding Reimbursement Obligations, to (b) the Facility Limit.
"LC Sublimit" means, at any time, the lesser of (a) $100,000,000, and (b)
the aggregate of the Commitments.
"Lenders" means, collectively, the Conduit Lenders and the Committed
Lenders and "Lender" means anyone of them.
"Letter of Credit" means a stand-by letter of credit issued by STB or
Wachovia in United States Dollars for the account of Borrower at the request of
a Seller, as extended from time to time in accordance with this Agreement.
"Letter of Credit Collateral Account" means a segregated cash collateral
account at each LC Issuer in such LC Issuer's name established at any time after
the date of this Agreement at such LC Issuer's request that is under the
exclusive control of such LC Issuer (for the benefit of such LC Issuer and the
Lenders).
"LIBOR Loan" means a Loan made by a Committed Lender at any time it bears
interest at a LIBOR Rate.
"Lender Note" has the meaning set forth in Section 2.7.
"LIBOR Margin" means 0.75% per annum.
"LIBOR Rate" means, for any Interest Period, the rate per annum on the Rate
Setting Day of such Interest Period shown on page 3750 of Telerate or any
successor page as the composite offered rate for London interbank deposits for
one month, as shown under the heading "USD" as of 11:00 a.m. (London time);
provided that in the event no such rate is shown, the LIBOR Rate shall be the
rate per annum (rounded upwards, if necessary, to the nearest 1/100th of one
percent) based on the rates at which Dollar deposits for one month are displayed
on page "LIBOR" of the Reuters Screen as of 11:00 a.m. (London time) on the Rate
Setting Day (it being understood that if at least two (2) such rates appear on
such page, the rate will be the arithmetic mean of such displayed rates);
provided further, that in the event fewer than two (2) such rates are displayed,
or if no such rate is relevant, the LIBOR Rate shall be the rate per annum equal
to the average of the rates at which deposits in Dollars are offered by the
applicable Co-Agent at approximately 11:00 a.m. (London time) on the Rate
Setting Day to prime banks in the London interbank market for a one month.
"Liquidity Agreement" means any of the VFCC Liquidity Agreement or the
Three Pillars Liquidity Agreement.
16
"Liquidity Bank" means any of the VFCC Liquidity Banks or the Three Pillars
Liquidity Banks.
"Liquidity Termination Date" means, with respect to each of the Conduit
Lenders, the earlier to occur of (a) November 30, 2006, as such date may be
extended from time to time by such Conduit Lender's Liquidity Banks in
accordance with its Liquidity Agreement, and (b) the occurrence of an Event of
Bankruptcy with respect to such Conduit Lender.
"Loan" means each revolving loan made on a given date at a given rate by a
Lender to Borrower pursuant to this Agreement.
"LockBox" means a postal box maintained on behalf of Borrower
or the Servicer for the purpose of receiving checks and money orders
constituting Collections of the Receivables.
"LockBox Account" means any of those bank accounts described
on Schedule 8.12 hereto and any additional or replacement account to which Mail
Payments, wire transfers, SWIFT, ACH or other electronic payments are deposited
for clearing.
"LockBox Account Agreement" means an agreement among a Seller, Borrower,
the Administrative Agent and the bank holding any LockBox Account, in a form
reasonably acceptable to the Agents.
"Loss Horizon Ratio" means, on any date of determination:
(1) Except as provided in clauses (2) and (3) below, the ratio
(expressed as a percentage) computed as of the last day of the most
recent Calculation Period by dividing (a) the sum of (i) Credit Sales
for such Calculation Period, plus (ii) Credit Sales for the
immediately preceding Calculation Period, plus (iii) Credit Sales for
the second (2nd) immediately preceding Calculation Period, plus (iv)
Credit Sales for the third (3rd) immediately preceding Calculation
Period, plus (v) 53% of Credit Sales for the fourth (4th) immediately
preceding Calculation Period, by (b) an amount equal to the Aggregate
Unpaid Balance as of the last day of the most recent Calculation
Period, minus the Aggregate Excess Concentration Amount as of such
last day;
(2) At any time while Bowater's unsecured senior debt is
Split-Rated, the ratio (expressed as a percentage) computed as of the
last day of the most recent Calculation Period by dividing (a) the sum
of (i) Credit Sales for such Calculation Period, plus (ii) Credit
Sales for the immediately preceding Calculation Period plus (iii)
Credit Sales for the second (2nd) immediately preceding Calculation
Period, plus (iv) Credit Sales for the third (3rd) immediately
preceding Calculation Period, plus (v) 3% of Credit Sales for the
fourth (4th) immediately preceding Calculation Period, by (b) an
amount equal to the Aggregate Unpaid Balance as of the last day of the
most recent Calculation Period, minus the Aggregate Excess
Concentration Amount as of such last day; and
17
(3) At any time while Bowater's unsecured senior debt is rated
both "BB+" or less by S&P and "Ba1" or less by Moody's, the ratio
(expressed as a percentage) computed as of the last day of the most
recent Calculation Period by dividing (a) the sum of (i) Credit Sales
for such Calculation Period, plus (ii) Credit Sales for the immediately
preceding Calculation Period plus (iii) Credit Sales for the second
(2nd) immediately preceding Calculation Period plus (iv) Credit Sales
for the third (3rd) immediately preceding Calculation Period, by (b) an
amount equal to the Aggregate Unpaid Balance as of the last day of the
most recent Calculation Period, minus the Aggregate Excess
Concentration Amount as of such last day.
"Loss Reserve" means, on any date of determination, the product of (i) the
highest rolling 3-month average Default Ratio over the 12 months ending with the
most recent Calculation Period, (ii) the Loss Horizon Ratio as of the last day
of the most recent Calculation Period, and (iii) the Stress Factor.
"Mail Payments" has the meaning specified in Section
11.2.3(a).
"Material Adverse Effect" means a material adverse effect on (a) on the
business, property, condition (financial or otherwise) or results of operations
or prospects of (i) Bowater and its Subsidiaries taken as a whole, or (ii)
Borrower, (b) the ability of Borrower or Bowater to perform its respective
obligations under this Agreement or any other Transaction Document to which it
is a party, (c) the legality, validity or enforceability of the Agreement or any
other Transaction Document, (d) the existence, validity, perfection or priority
of (i) the Administrative Agent's (for the benefit of the Secured Parties)
security interest in the Collateral, or (ii) Borrower's ownership interest in
the Receivables; or (e) the validity, enforceability or collectibility of the
Receivables generally or of any material portion of the Receivables.
"Material Debt" has the meaning specified in the Receivables Sale
Agreement.
"Monthly Report" means a report, substantially in the form of Exhibit C or
in such other form acceptable to the Co-Agents, prepared by Servicer as of the
last day of the most recent Calculation Period and signed by an authorized
Senior Executive of Servicer.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and its successors.
"Net Worth" with respect to Borrower has the meaning specified in the
Receivables Sale Agreement.
"Obligations" means all obligations (monetary or otherwise) of Borrower to
any of the Secured Parties and their respective successors, permitted
transferees and assigns arising under or in connection with this Agreement, any
LC Application, any Lender Note and each other Transaction Document, in each
case, however created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due
(including, without limitation, the LC Obligations).
"Obligor" means, with respect to any Receivable, each Person obligated to
make payments with respect to such Receivable, including any guarantor thereof.
18
"Organizational Documents" has the meaning specified in the Receivables
Sale Agreement.
"Outstanding Balance" has the meaning specified in the Receivables Sale
Agreement.
"Percentage" means, as to any Committed Lender, the ratio (expressed as a
percentage) of such Committed Lender's Commitment to the aggregate Commitments
of all Committed Lenders in the same Group.
"Performance Guarantor" means Bowater.
"Performance Undertaking" means a Performance Undertaking in the form of
Exhibit E hereto, duly executed by the Performance Guarantor in favor of
Borrower.
"Permitted Investment" means, at any time:
(a) marketable obligations issued by, or the full and timely payment
of which is directly and fully guaranteed or insured by, the United States
government or any other government with an equivalent rating, or any agency
or instrumentality thereof when such marketable obligations are backed by
the full faith and credit of the United States government or such other
equivalently rated government, as the case may be, but excluding any
securities which are derivatives of such obligations;
(b) time deposits, bankers' acceptances and certificates of deposit of
any domestic commercial bank or any United States branch or agency of a
foreign commercial bank which (i) has capital, surplus and undivided
profits in excess of $100,000,000 and which has a commercial paper or
certificate of deposit rating meeting the requirements specified in clause
(c) below (or equivalent rating from the Rating Agencies) or (ii) is set
forth in a list (which may be updated from time to time) (A) approved by
the Agents and (B) with respect to which a written statement has been
obtained from each of the applicable Rating Agencies to the effect that the
rating of the Commercial Paper Notes rated by them will not be downgraded
or withdrawn solely as a result of the acquisition of such investments;
(c) commercial paper which is (i) rated at least as high as the
Commercial Paper Notes by the Rating Agencies, or (ii) set forth in a list
(which may be updated from time to time) (A) approved by the Agents and (B)
with respect to which a written statement has been obtained from each of
the applicable Rating Agencies to the effect that the rating of the
Commercial Paper Notes rated by them will not be downgraded or withdrawn
solely as a result of the acquisition of such investments;
(d) secured repurchase obligations for underlying securities of the
types described in clauses (a) and (b) above entered into with any bank of
the type described in clause (b) above; and
19
(e) freely redeemable shares in (i) money market or similar funds
which invest solely in obligations, bankers' acceptances, time deposits,
certificates of deposit, repurchase agreements and commercial paper of the
types described in clauses (a) through (d) above, without regard to the
limitations as to the maturity of such obligations, bankers' acceptances,
time deposits, certificates of deposit, repurchase agreements or commercial
paper set forth below, which are rated at least "AAm" or "AAmg" or their
equivalent by both S&P and Moody's, provided that there is no
"r-highlighter" affixed to such rating, and (ii) the money market fund
called Nations Cash Reserves, so long as Nations Cash Reserves continues to
buy only "first tier" securities as defined by Rule 2a-7 of the Investment
Company Act of 1940.
"Person" has the meaning set forth in the Receivables Sale Agreement
"Pooled Commercial Paper" means Commercial Paper Notes of VFCC subject to
any particular pooling arrangement by such Conduit Lender, but excluding
Commercial Paper Notes issued by such Conduit Lender for a tenor and in an
amount specifically requested by any Person in connection with any agreement
effected by such Conduit Lender.
"Prime Rate" means as of any date of determination, the rate of interest
most recently announced in the Wall Street Journal as the "prime rate."
"Procedures Review" means a report of independent certified public
accountants selected by the Agents which satisfies the requirements set forth on
Schedule 9.1.5.
"Program Documents" means, as to each of the Conduit Lenders, its Support
Agreements, the documents under which the applicable Co-Agent performs its
obligations with respect to such Conduit Lender's commercial paper program and
the other documents to be executed and delivered in connection therewith, as
amended, supplemented, restated or otherwise modified from time to time.
"Prox Receivable" means a Receivable for which the applicable
invoice has "prox terms", i.e., requires payment to be made by a specified
numerical day in the month following the date on which such invoice is issued.
"Prox Rules" means that the terms of any Receivable shall be a number of
days determined as follows: (a) for any Prox Receivable, the sum of (i) the
numerical day of the month on which such Receivable becomes due and payable,
plus (ii) 15 days, and (b) for any other Receivable, the actual number of days
after the invoice date until such Receivable becomes due.
"Purchase Price Credit" has the meaning set forth in the Receivables Sale
Agreement
"Rate Setting Day" means, for any Interest Period, two (2) Business Days
prior to the commencement of such Interest Period. In the event such day is not
a Business Day, then the Rate Setting Day shall be the immediately preceding
Business Day.
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"Rating Agency" means (a) S&P, (b) Moody's, and (c) solely to the extent it
is rating any of the Commercial Paper Notes of any Conduit Purchaser, Fitch.
"Receivable" has the meaning specified in the Receivables Sale Agreement.
"Receivable File" means with respect to a Receivable, (a) the Contract
giving rise to the Receivable and other evidences of the Receivable including,
without limitation, electronic files, tapes, discs, punch cards and related
property and rights and (b) each UCC financing statement related thereto, if
any.
"Receivables Sale Agreement" means the Amended and Restated Receivables
Sale Agreement, dated as of December 1, 2005, by and among Sellers, as sellers,
and Borrower, as buyer, as such agreement may be amended, supplemented, restated
or otherwise modified from time to time with the prior written consent of each
of the Agents.
"Regulatory Change" means, relative to any Affected Party:
(a) any change in (or the adoption, implementation, change in the
phase-in or change in the commencement of effectiveness of) any: (i) United
States Federal or state law or foreign law applicable to such Affected
Party, (ii) regulation, interpretation, directive, requirement or request
(whether or not having the force of law) applicable to such Affected Party
of (A) any court or government authority charged with the interpretation or
administration of any law referred to in clause (a)(i), or of (B) any
fiscal, monetary or other authority having jurisdiction over such Affected
Party, or (iii) GAAP or regulatory accounting principles applicable to such
Affected Party and affecting the application to such Affected Party of any
law, regulation, interpretation, directive, requirement or request referred
to in clause (a)(i) or (a)(ii) above or requiring the consolidation of any
Conduit Lender's assets and liabilities with those of its Co-Agent;
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement, request
or accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii)
above;
(c) the issuance, publication or release of any regulation,
interpretation, directive, requirement or request of a type described in
clause (a)(ii) above to the effect that the obligations of any Liquidity
Bank under the Liquidity Agreement are not entitled to be included in the
zero percent category of off-balance sheet assets for purposes of any
risk-weighted capital guidelines applicable to such Liquidity Bank or any
related Affected Party; or
(d) any change in (or the adoption, implementation, change in the
phase-in or commencement of effectiveness of) any GAAP or regulatory
accounting principle applicable to such Affected Party requiring the
consolidation, in whole or in part, of any Conduit Lender's assets and/or
liabilities, with those of its Co-Agent or any of its Liquidity Banks.
21
"Reimbursement Obligations" means, at any time, the aggregate
of all obligations of Borrower then outstanding under Section 2.4(c) to
reimburse the LC Issuers for amounts paid by the LC Issuers in respect of any
one or more drawings under the Letters of Credit.
"Related Commercial Paper" means, for any period with respect to any
Conduit Lender, any Commercial Paper Notes of such Conduit Lender issued or
deemed issued for purposes of financing or maintaining any Loan by such Conduit
Lender (including any discount, yield, or interest thereon) outstanding on any
day during such period.
"Related Security" has the meaning specified in the Receivables Sale
Agreement.
"Required Capital Amount" has the meaning specified in the Receivables Sale
Agreement.
"Requirements of Law" for any Person or any of its property shall mean the
Organizational Documents of such Person or any of its property, and any statute,
law, treaty, rule or regulation, or determination of an arbitrator or
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or businesses or to which such Person or any of its
property or businesses is subject, whether federal, state or local.
"Reserve Floor" means, for any Calculation Period, the greater of (a) 15%,
and (b) the sum of (i) 3% plus (ii) the percentage of the Aggregate Unpaid
Balance represented by the Top 4 Designated Balances as reflected on the most
recent Monthly Report delivered by Servicer
"Reserve Percentage" means, for any Calculation Period, the percentage
equal to the greater of (a) the sum of (i) the Loss Reserve, (ii) the Dilution
Reserve, (iii) the Yield Reserve, and (iv) the Servicing Reserve, and (b) the
Reserve Floor.
"S&P" means Standard & Poor's Ratings Group, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc.
"Scheduled Commitment Termination Date" means November 30, 2006, as
extended from time to time by mutual agreement of the parties hereto.
"Secured Parties" means the Lenders, the LC Issuers, the Agents and the
Indemnified Parties, and the successors and permitted assigns of each of the
foregoing.
"Sellers" has the meaning specified in the Receivables Sale Agreement.
"Senior Executive" has the meaning specified in the
Receivables Sale Agreement.
"Servicer" means Bowater or any successor Servicer appointed as provided in
Section 11.5.
"Servicer Event of Default" shall have the meaning specified in Section
11.7.
22
"Servicing Fee" means, as to any Calculation Period, the fee payable to the
Servicer which, so long as Bowater or one of its Affiliates is the Servicer,
shall be equal to the Servicing Fee Rate multiplied by the Aggregate Unpaid
Balance at the beginning of such Calculation Period. The Servicing Fee for any
successor Servicer shall be equal to the fee reasonably agreed to by the Agents
and such successor Servicer.
"Servicing Fee Rate" means 1.80% per annum.
"Servicing Reserve" means, on any date of determination, the product of:
(a) the highest Day Sales Outstanding Ratio during the 12 months ending with the
most recent Calculation Period, (b) the Stress Factor, (c) 2.40%, and (d) 1/360.
"Significant Event" means any Amortization Event or Event of Default.
"Special Obligor" means any one of not more than two (2) Obligors
designated by Borrower from time to time, which is unrated or, if rated, has a
short term credit rating of less than A-2 by S&P or less than P-2 by Moody's, or
a long term credit rating of less than BBB- by S&P and Baa3 by Moody's, unless
and until the Administrative Agent, at the direction of any Co-Agent, gives not
less than five (5) Business Days' notice to Borrower that it is revoking such
Person's special status.
"Split-Rated" means that Bowater's unsecured senior debt is either rated
"BB+" or less by S&P or "Ba1" or less by Moody's, but not both.
"Standby Letter of Credit" means an irrevocable standby letter of credit
for the account of Borrower at the request of a Seller and for the benefit of
any holder of obligations of a Seller or its Affiliates.
"STB" has the meaning set forth in the preamble to this Agreement.
"STCM" has the meaning set forth in the preamble to this Agreement.
"Stress Factor" means (a) at any time while Bowater's unsecured senior debt
is rated greater than or equal to both "BB" by S&P and "Ba2" by Moody's, 2.00,
(b) at any time while Bowater's unsecured senior debt is rated greater than or
equal to both "B+" by S&P and "B1" by Moody's but less than the ratings in
clause (a), 2.25, and (c) at any time while Bowater's unsecured senior debt is
rated less than either of the ratings described in clause (b), 2.50.
"Subsidiary" has the meaning specified in the Receivable Sale Agreement.
"Support Agreement" means and includes any credit agreement,
letter of credit, surety bond or other instrument or insurance policy pursuant
to which any Conduit Lender receives credit enhancement or liquidity enhancement
for the Related Commercial Paper or for its Commercial Paper Notes generally,
including, without limitation, as to each Conduit Lender, its Liquidity
Agreement.
23
"Support Provider" means and includes any entity now or hereafter extending
credit or liquidity support or having a commitment to extend credit or liquidity
support to or for the account of, or to make loans to or purchases from, a
Conduit Lender or issuing a letter of credit, surety bond or other instrument to
support any obligations arising under or in connection with the commercial paper
program of a Conduit Lender, including, without limitation, as to each Conduit
Lender, its Liquidity Banks.
"Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities (including but
not limited to interest and penalties) with respect to the foregoing, imposed by
any Governmental Authority.
"Telerate Page 3750" shall mean the display designated as "Page 3750" on
the Telerate Service (or such other page as may replace "Page 3750" on that
service or another service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rate for Dollars).
"Three Pillars" has the meaning set forth in the preamble to this
Agreement.
"Three Pillars Agent" has the meaning set forth in the
preamble to this Agreement.
"Three Pillars Group" means, collectively, (a) Three Pillars, (b) STB and
its successors and permitted assigns as Committed Lenders or Three Pillars
Liquidity Banks, and (c) STB in its capacity as an LC Issuer.
"Three Pillars Liquidity Agreement" means (a) the Liquidity Asset Purchase
Agreement (regarding Bowater Funding Inc.), dated as of December 19, 2002, among
Three Pillars, STB, as liquidity agent for the Three Pillars Liquidity Banks,
the Three Pillars Agent, and the Three Pillars Liquidity Banks, or (b) any other
agreement hereafter entered into by Three Pillars providing for the sale by
Three Pillars of its Loans (or portions thereof), or the making of loans or
other extensions of credit to Three Pillars secured by security interests in
Three Pillar's Loans (or portions thereof), to support all or part of Three
Pillar's payment obligations under the Commercial Paper Notes or to provide an
alternate means of funding Three Pillar's investments in accounts receivable or
other financial assets, in each case as amended, supplemented, restated or
otherwise modified from time to time.
"Three Pillars Liquidity Banks" means STB and its successors and permitted
assigns under the Three Pillars Liquidity Agreement.
"Top 4 Designated Balances" means, on any date of determination, the
aggregate of the Outstanding Balance of all Eligible Receivables owing from the
Special Obligors and unrated Obligors with the four highest Outstanding Balances
of Eligible Receivables (after deducting any portion thereof which is excluded
from the Borrowing Base because such aggregate Outstanding Balance exceeds the
applicable Concentration Limit).
"Transaction Documents" means this Agreement, the Receivables Sale
Agreement, the Lender Notes, the Fee Letters, the LC Applications, the
Performance Undertaking and the other instruments, certificates, agreements,
reports and documents to be
24
executed and delivered under or in connection with
this Agreement or the Receivables Sale Agreement (except the Program Documents),
as any of the foregoing may be amended, supplemented, amended and restated, or
otherwise modified from time to time in accordance with this Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the applicable jurisdiction or jurisdictions.
"Unmatured Servicer Event of Default" means any event that, if it continues
uncured, will, with lapse of time or notice or lapse of time and notice,
constitute a Servicer Event of Default.
"Unmatured Significant Event" means any event that, if it continues
uncured, will, with lapse of time or notice or lapse of time and notice,
constitute a Significant Event.
"Unpaid Balance" means, with respect to any Receivable, the sum of (a) the
Outstanding Balance thereof, plus (without duplication), and (b) the aggregate
amount required to repay in full all interest, finance, prepayment and other
fees or charges of any kind payable in respect of, such Outstanding Balance.
"VFCC" has the meaning set forth in the preamble to this Agreement.
"VFCC Agent" has the meaning set forth in the preamble to this Agreement.
"VFCC Group" means, collectively, (a) VFCC, (b) Wachovia and its successors
and permitted assigns as Committed Lenders or VFCC Liquidity Banks, and (c)
Wachovia in its capacity as an LC Issuer.
"VFCC Liquidity Agreement" means (a) that certain liquidity
purchase agreement dated as of December 1, 2005 by and among VFCC, the VFCC
Liquidity Banks and Wachovia, as VFCC Agent and liquidity agent or (b) any other
agreement hereafter entered into by any Conduit Lender that is an assignee of
VFCC providing for the sale by such Conduit Lender of its Loans (or portions
thereof), or the making of loans or other extensions of credit to such Conduit
Lender secured by security interests in such Conduit Lender's Loans (or portions
thereof), to support all or part of such Conduit Lender's payment obligations
under the Commercial Paper Notes or to provide an alternate means of funding
such Conduit Lender's investments in accounts receivable or other financial
assets.
"VFCC Liquidity Banks" means Wachovia and its successors and
permitted assigns under the VFCC Liquidity Agreement.
"Wachovia" has the meaning set forth in the preamble to this Agreement.
"Yield Reserve" means, on any date of determination, the product of (a) the
highest Day Sales Outstanding Ratio during the 12 months ending with the most
recent Calculation Period, (b) the Stress Factor, (c) the Prime Rate as in
effect on the last day of such Calculation Period and (d) 1/360.
25
Section 1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this
Agreement have the meanings as so defined herein when used in any other
Transaction Document, certificate, report or other document made or
delivered pursuant hereto.
(b) Each term defined in the singular form in Section 1.1 or elsewhere
in this Agreement shall mean the plural thereof when the plural form of
such term is used in this Agreement or any other Transaction Document,
certificate, report or other document made or delivered pursuant hereto,
and each term defined in the plural form in Section 1.1 shall mean the
singular thereof when the singular form of such term is used herein or
therein.
(c) The words "hereof," "herein," "hereunder" and similar terms when
used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and article, section,
subsection, schedule and exhibit references herein are references to
articles, sections, subsections, schedules and exhibits to this Agreement
unless otherwise specified.
Section 1.3 Other Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. All terms used in Article 9
of the UCC and not specifically defined herein, are used herein as defined in
such Article 9.
Section 1.4 Computation of Time Periods. Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
Section 1.5 Continuance of Significance Events. For the avoidance of doubt,
from and after the time, if any, when an event becomes a Servicer Event of
Default, an Amortization Event or an Event of Default, such event shall be
deemed to be continuing until waived in writing in accordance with the
provisions of this Agreement regardless of whether the circumstance which gave
rise thereto continues to exist.
ARTICLE II.
COMMITMENTS, BORROWING AND LETTER OF CREDIT PROCEDURES AND
LENDER NOTES
Section 2.1 Commitments. On the terms and subject to the conditions set
forth in this Agreement, from time to time prior to the Commitment Termination
Date:
(a) Advances. Borrower may request Advances from the Lenders in
accordance with Section 2.2. Upon receipt of each Borrowing Request:
(i) Each of the Conduit Lenders may, in its sole discretion, make a
Loan to Borrower in a principal amount equal to such Conduit Lender's Group
Percentage of the principal amount of the requested Advance (such Conduit
Lender's and its Group's "Funding Amount"); and
26
(ii) In the event that any Conduit Lender declines to make its Loan to
Borrower as part of any requested Advance, each of such Conduit Lender's
related Committed Lenders severally agrees to make a Loan to Borrower in a
principal amount equal to its Percentage of the applicable Conduit Lender's
Funding Amount;
provided, however, that the aggregate Credit Exposure from time to time
outstanding hereunder shall not exceed the lesser of (x) the Facility Limit and
(y) the Borrowing Base, and provided, further, that the aggregate principal
amount of all Loans from time to time outstanding from any Group hereunder shall
not exceed its Group Percentage of the lesser of (x) the Facility Limit and (y)
the Borrowing Base. Within the limits of each Committed Lender's Commitment and
the Facility Limit, Borrower may borrow and (subject to Section 4.1(a)) prepay
and reborrow under this Section 2.1(a).
(b) Issuance of Letters of Credit. Borrower may request that an LC
Issuer issue Letters of Credit, and the applicable LC Issuer hereby agrees to
issue each requested Letter of Credit and to renew, extend, increase, decrease
or otherwise modify each Letter of Credit issued by it ("Modify," and each such
action, including, without limitation, an automatic extension pursuant to an
evergreen feature, a "Modification"), from time to time upon the request of
Borrower; provided that no Letter of Credit shall be issued or Modified by an LC
Issuer if, after giving effect thereto, (i) the aggregate Credit Exposure would
exceed the Facility Limit, or (ii) the LC Obligations would exceed the LC
Sublimit; and provided, further, that each Letter of Credit issued pursuant to
this Section 2.1(b) shall have a face amount of not less than $1,000,000. No
Letter of Credit shall have a stated expiry date later than 1 year from the date
of issuance or Modification, although it may contain an evergreen feature.
Section 2.2 Borrowing Procedures. Borrower (or the Servicer on its behalf)
may request an Advance hereunder by delivering a Borrowing Request to the
Co-Agents not later than 2:00 p.m. (New York City time), three (3) Business Days
prior to the proposed date of such borrowing; provided that Borrower shall not
request, and Lenders shall not make, Advances more than once per calendar week
and provided, further, that such 3-Business Day notice period shall be shortened
to a 2-Business Day notice period to the extent necessary to permit funding by
the applicable LC Payment Date of a drawing under a Letter of Credit with the
proceeds of an Advance. Each Borrowing Request given by Borrower (or the
Servicer on its behalf) pursuant to this Section 2.2 shall be irrevocable and
binding on Borrower. Any Borrowing Request may be delivered by facsimile
transmission or by electronic mail message attaching a portable data format or
".pdf" file containing an image of the signed request, provided, however, that
no such facsimile transmission or electronic mail message shall be deemed to be
delivered unless and until Borrower (or Servicer on its behalf) confirms the
Co-Agents' actual receipt thereof (not merely via voice mail) by telephone. Upon
the Co-Agents' receipt of each Borrowing Request, each of them shall promptly
determine whether its Conduit Lender or its Committed Lender(s) will participate
in funding the requested Advance.
Section 2.3 Funding. Subject to the satisfaction of the conditions
precedent set forth in Article VII with respect to such Advance and the
limitations set forth in Section 2.1(a), each Lender shall make the proceeds of
its Loan comprising a portion of such requested Advance available to its Group's
Co-Agent in immediately available funds on the proposed date of
27
borrowing. Upon receipt by a Co-Agent of such Loan proceeds, such Co-Agent will
make such funds available to Borrower's Account on such date. Each borrowing
shall be on a Business Day and shall be in an aggregate amount of at least
$1,000,000 per Group or in a larger integral multiple of $200,000 per Group.
Section 2.4 Letters of Credit.
(a) Letter of Credit Requests. Subject to Section 2.1, Borrower shall
give the applicable LC Issuer and each Co-Agent reasonable prior notice of the
proposed date of issuance or Modification of each Letter of Credit (and in no
event shall such notice be given later than 12:00 noon (New York time) three
Business Days prior to such issuance or Modification), by delivering a copy of
the Letter of Credit Request provided to it under the Sale Agreement, together
with a transmittal letter in substantially the form of Exhibit F hereto, duly
completed by Borrower. The issuance or Modification by an LC Issuer of any
Letter of Credit shall, in addition to the conditions precedent set forth in
Article VII, be subject to the conditions precedent that such Letter of Credit
shall be reasonably satisfactory to the applicable LC Issuer and that Borrower
shall have executed and delivered such application agreement and/or such other
instruments and agreements relating to such Letter of Credit as the applicable
LC Issuer shall have reasonably requested (each, an "LC Application"). In no
event shall an LC Issuer be obligated to issue a Modification if, on the
proposed date of such Modification, such LC Issuer would not be obligated to
issue new Letters of Credit if requested or if the beneficiary does not consent
to the proposed terms of the Modification. In the event of any conflict between
the terms of this Agreement and the terms of any LC Application, the terms of
this Agreement shall control.
(b) Reimbursement by Borrower. Upon receipt from the beneficiary of
any Letter of Credit of any demand for payment under such Letter of Credit, the
applicable LC Issuer shall notify the Co-Agents and Borrower as to the amount to
be paid by such LC Issuer as a result of such demand and the proposed payment
date which, except to the extent otherwise required by applicable law, shall not
be less than two (2) Business Days after receipt of such demand (the "LC Payment
Date" ). The responsibility of the applicable LC Issuer to Borrower shall be
only to determine that the documents (including each demand for payment)
delivered under each Letter of Credit issued by such LC Issuer in connection
with such presentment shall be in conformity in all material respects with such
Letter of Credit. Borrower shall be irrevocably and unconditionally obligated to
reimburse the applicable LC Issuer on or before the applicable LC Payment Date
for any amounts to be paid by such LC Issuer upon any drawing under any Letter
of Credit issued by it, without presentment, demand, protest or other
formalities of any kind, either from cash on hand or, subject to the terms and
conditions hereof, with the proceeds of an Advance; provided that Borrower shall
not hereby be precluded from asserting any claim for direct (but not
consequential) damages suffered by Borrower to the extent, but only to the
extent, caused by (i) the willful misconduct or gross negligence of such LC
Issuer or (ii) such LC Issuer's failure to pay under any Letter of Credit issued
by it after the presentation to it of a request strictly complying with the
terms and conditions of such Letter of Credit. All such amounts paid by the
applicable LC Issuer and remaining unpaid by Borrower (whether from cash on hand
or with the proceeds of an Advance made in accordance with this Agreement) shall
bear interest, payable on each Distribution Date in arrears, for each day until
paid at a rate per annum equal to the Default Rate. Regardless of whether the
applicable LC Payment Date has occurred,
28
the Co-Agents are hereby irrevocably directed to pay the proceeds of each
Advance made while any Reimbursement Obligation remains outstanding directly to
the LC Issuers (ratably in accordance with their respective Reimbursement
Obligations) until all such Reimbursement Obligations, together with all accrued
and unpaid interest and LC Fees thereon, are paid in full. Borrower's
Reimbursement Obligations and obligation to pay Interest pursuant to this
Section 2.4(b) shall be secured by the Collateral.
(c) Obligations Absolute. Borrower's obligations under this Section
2.4 shall be absolute and unconditional under any and all circumstances and
irrespective of (i) any lack of validity or enforceability of such Letter of
Credit, this Agreement, or any other agreement or instrument relating thereto;
(ii) the existence of any claim, counterclaim, set-off, defense or other right
that Borrower or any Seller may have at any time against any beneficiary or any
transferee of such Letter of Credit (or any Person for whom any such beneficiary
or any such transferee may be acting), the applicable LC Issuer or any other
person, whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating
thereto, or any unrelated transaction; (iii) any draft, demand, certificate or
other document presented under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect (provided that such draft,
demand, certificate or other document presented pursuant to such Letter of
Credit appears on its face to comply with the terms thereof) or any statement
therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under such Letter of Credit; (iv) any payment by the applicable LC Issuer under
such Letter of Credit against presentation of a draft or certificate that does
not strictly comply with the terms of such Letter of Credit (provided that such
draft, demand, certificate or other document presented pursuant to such Letter
of Credit appears on its face to comply with the terms thereof); or any payment
made by the applicable LC Issuer under such Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of such Letter of Credit,
including any arising in connection with any proceeding under the Bankruptcy
Code of the United States, or any other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief laws of the
United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally; (v) any exchange, release or
non-perfection of any collateral, or any release or amendment or waiver of or
consent to the departure from any guarantee, for all or any of the obligations
of Borrower or any Seller in respect of any Letter of Credit; or (vi) any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Borrower of the applicable Seller,
provided that Borrower shall not hereby be precluded from asserting any claim
for direct (but not consequential) damages suffered by Borrower to the extent,
but only to the extent, caused by (i) the willful misconduct or gross negligence
of the applicable LC Issuer or (ii) the applicable LC Issuer's failure to pay
under any Letter of Credit issued by it after the presentation to it of a
request strictly complying with the terms and conditions of such Letter of
Credit. Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it, and, in the event of any claim of
noncompliance with Borrower's instructions or other irregularity, Borrower will
immediately (and in any event within 5 Business Days) notify the applicable LC
Issuer. Borrower shall
29
be conclusively deemed to have waived any such claim against the LC Issuer and
its correspondents unless such notice is given as aforesaid.
(d) Actions of LC Issuers. With respect to any actions taken or
omitted in the absence of gross negligence or willful misconduct, the applicable
LC Issuer shall be entitled to rely, and shall be fully protected in relying,
upon any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by such LC Issuer.
(e) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable LC Issuer or the Committed Lenders,
each LC Issuer hereby grants to each Committed Lender, and each Committed Lender
hereby acquires from such LC Issuer, a participation in such Letter of Credit
equal to such Committed Lender's Percentage of the aggregate amount available to
be drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Committed Lender hereby absolutely and unconditionally agrees to
pay to the applicable LC Issuer, such Committed Lender's Percentage of each draw
honored by such LC Issuer pursuant to a Letter of Credit and not reimbursed by
Borrower on the date due as provided in this Section 2.4(e), or of any
reimbursement payment required to be refunded to Borrower for any reason. Each
Committed Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Significant Event or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. The Committed
Lenders shall be entitled to receive their ratable shares of any LC Fees and
interest actually collected by the LC Issuers, but in no event shall they be
entitled to share in any other fees, commissions, charges or expenses payable to
the LC Issuers.
(f) LC Issuer Agreements. At any time while any Letter of Credit or
Reimbursement Obligation remains outstanding, (i) not later than the fifth
Business Day of each month, each LC Issuer shall deliver a written report to the
Co-Agents summarizing the daily activity (set forth by day) in respect of
Letters of Credit during the immediately preceding month, including all
issuances, extensions, amendments and renewals, all expirations and
cancellations and all disbursements and reimbursements, (ii) on or prior to each
Business Day on which an LC Issuer expects to issue, amend, renew or extend any
Letter of Credit (including, without limitation, renewals and extensions
pursuant to evergreen clauses), each LC Issuer shall advise the Co-Agents in
writing of the date of such issuance, amendment, renewal or extension, and the
aggregate face amount of the Letters of Credit to be issued, amended, renewed or
extended by it and outstanding after giving effect to such issuance, amendment,
renewal or extension occurred (and whether the amount thereof changed), (iii) on
each Business Day on which such LC Issuer makes any payment to a beneficiary
pursuant to a Letter of Credit, such LC Issuer shall advise the Co-Agents in
writing of the date and amount of such payment, (iv) on any Business Day on
which Borrower fails to reimburse a Reimbursement Obligation required to
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be reimbursed to such LC Issuer on such day, such LC Issuer shall advise the
Co-Agents in writing of the date and amount of such failure, and (v) on any
other Business Day, such LC Issuer shall provide the Co-Agents with such other
information relevant to the Letters of Credit as any of the Co-Agents may
reasonably request. Each LC Issuer shall invoice Borrower for LC Fees no later
than the 5th Business Day immediately preceding each Distribution Date (which
invoice may be combined with the invoice described in Section 3.5) and shall
disburse each Committed Lender's share of LC Fees and interest received by such
LC Issuer within one Business Day after such LC Issuer's receipt thereof.
Section 2.5 Representation and Warranty. Submission of each Borrowing
Request or LC Application shall automatically constitute a representation and
warranty by Borrower to the Agents, the LC Issuers and the Lenders that on the
date of such requested Credit Event: (a) the representations and warranties
contained in Article VIII will be true and correct as of such requested date as
though made on such date, (b) no Significant Event or Unmatured Significant
Event has occurred and is continuing or will result from such Credit Event, and
(c) after giving effect to such requested Credit Event, the aggregate Credit
Exposure will not exceed the lesser of the Borrowing Base and the Facility
Limit.
Section 2.6 Extension of the Committed Lenders' Commitments. The Committed
Lenders' several Commitments shall all terminate on the Commitment Termination
Date. Notwithstanding the foregoing:
(a) Not more than 60 days prior to any Group's Liquidity Termination
Date in effect from time to time, Borrower may request that the applicable
Co-Agent seek the applicable Liquidity Banks' consent to extend the
applicable Liquidity Termination Date for a period which, when aggregated
with the number of days remaining until the existing Liquidity Termination
Date would not cause such Liquidity Banks' commitments under the Liquidity
Agreement as so extended to exceed 364 days in toto unless such agreement
to extend is made within the final 30 days prior to such Group's existing
Liquidity Termination Date, in which case the Liquidity Termination Date
shall be extended for a period of 364 days from such existing date, and
(b) Not more than 60 days prior to the Scheduled Commitment
Termination Date in effect from time to time, Borrower may request that the
Lenders unanimously consent to extend the Scheduled Commitment Termination
Date for a period which, when aggregated with the number of days remaining
until the existing Scheduled Commitment Termination Date would not cause
the Committed Lenders' Commitments hereunder as so extended to exceed 364
days in toto unless such agreement to extend is made within the final 30
days prior to the existing Scheduled Commitment Termination Date, in which
case the Liquidity Termination Date shall be extended for a period of 364
days from such existing date.
Each of the Co-Agents shall advise Borrower and the Administrative Agent in
writing whether each request made pursuant to clause (a) or clause (b) above has
been granted within 30 days after such request has been made and whether such
consent is subject to satisfaction of any
31
conditions precedent. If any such request is not granted within 30 days after
such request has been made by each of the Groups, the Liquidity Termination Date
or Scheduled Commitment Termination Date, as the case may be, for all Groups
shall remain unchanged. If any such request is granted by each of the Groups
within 30 days after such request has been made, the Liquidity Termination Date
or Scheduled Commitment Termination Date, as the case may be, shall be extended
as provided in the Administrative Agent's confirmatory written notice upon
satisfaction of any conditions precedent specified therein.
Section 2.7 Voluntary Termination of Committed Lenders' Commitments;
Reduction of Facility Limit. Borrower may, in its sole discretion for any reason
upon at least 10 Business Days' prior written irrevocable notice to the
Co-Agents, terminate the Committed Lenders' several Commitments in whole, or,
reduce the Facility Limit and the Commitments in part; provided, however that
(a) each such partial reduction will be made ratably amongst the Groups and will
be in a minimum amount of $5,000,000 per Group or a higher integral multiple of
$1,000,000, (b) no such partial reduction shall reduce any Group's Group
Percentage of the Facility Limit below $50,000,000, (c) any partial reduction of
the Facility Limit below the aggregate Credit Exposure must be accompanied by a
prepayment of the Advances and/or a pledge of cash collateral for the LC
Obligations, in an aggregate amount sufficient to eliminate such difference, (d)
partial reductions may occur only on Distribution Dates, and (e) in connection
with any partial reduction, Borrower, shall comply with Section 3.2(b) and
Section 4.1(b).
Section 2.8 Notes. All Loans from the Lenders in a Group shall be evidenced by a
single promissory grid note (each, as amended, modified, extended or replaced
from time to time, a "Lender Note") substantially in the form set forth in
Exhibit B, with appropriate insertions, payable to the order of the applicable
Co-Agent. Borrower hereby irrevocably authorizes each Co-Agent in connection
with its Group's Lender Note to make (or cause to be made) appropriate notations
on the grid attached to such Lender Note (or on any continuation of such grid,
or, in lieu of making notations on such grid or any continuation thereof, at
such Co-Agent's option, in its records), which notations, if made, shall
evidence, inter alia, the date of, the outstanding principal of, and the
interest rate and Interest Period applicable to the Loans evidenced thereby.
Such notations shall be rebuttably presumptive evidence of the subject matter
thereof, absent manifest error; provided, however, that the failure to make any
such notations shall not limit or otherwise affect any Obligations of Borrower.
ARTICLE III.
INTEREST, FEES, ETC.
Section 3.1 Interest Rates. Borrower hereby promises to pay interest on the
unpaid principal amount of each Loan for the period commencing on the date such
Loan is made until such Loan is paid in full (or, in the case of a CP Loan,
refinanced with an Alternative Rate Loan), as follows:
(a) during each Interest Period applicable to a CP Loan, at a rate per
annum equal to the sum of (i) the applicable Conduit Lender's Commercial
Paper Rate applicable to such Interest Period, plus (ii) the Applicable
Margin;
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(b) during each Interest Period applicable to an Alternative Rate
Loan, at a rate per annum equal to the Alternative Rate applicable to such
Interest Period; and
(c) notwithstanding the provisions of the preceding clauses (a) and
(b), in the event that a Significant Event has occurred and is continuing,
at a rate per annum equal to the Default Rate. After the date any principal
amount of any Loan is due and payable (whether on the Scheduled Commitment
Termination Date, upon acceleration or otherwise) or after any other
monetary Obligation of Borrower arising under this Agreement shall become
due and payable, Borrower shall pay (to the extent permitted by law, if in
respect of any unpaid amounts representing interest) interest (after as
well as before judgment) on such amounts at a rate per annum equal to the
Default Rate.
No provision of this Agreement or any Lender Note shall require the payment or
permit the collection of interest in excess of the maximum permitted by
applicable law.
Section 3.2 Interest Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on each Distribution Date prior to the Commitment Termination
Date, for the period since the creation of such Loan (in the case of the
first Distribution Date thereafter) or since the prior Distribution Date
(in the case of any subsequent Distribution Date);
(b) on the date of any payment or prepayment (in whole or in part) of
principal outstanding in such Loan, on the amount paid or prepaid (it being
understood that any prepayment shall be accompanied by any amounts owing
under Section 6.2);
(c) in full, on the Scheduled Commitment Termination Date (whether at
scheduled maturity or upon acceleration thereof pursuant to Section 10.3);
and
(d) from and after the Commitment Termination Date, upon demand.
Section 3.3 Applicable Interest Rates. Each Co-Agent shall from time to
time advise Borrower and Servicer whether a Loan is a CP Loan or an Alternative
Rate Loan, and of the interest rate applicable to each Interest Period thereof.
Section 3.4 Fees. Borrower agrees to pay the Agents and the Lenders certain
Fees in the amounts and on the dates set forth in the Fee Letters.
Section 3.5 Computation of Interest and Fees. All interest, Fees and
Servicing Fees shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) occurring during the period
for which such interest, Fee or Servicing Fee is payable over a year comprised
of 360 days. Each Co-Agent shall provide Borrower with an invoice for accrued
and unpaid interest and fees due to such Co-Agent, for the benefit of such
33
Co-Agent's Group, on each Distribution Date not later than the 5th Business Day
prior to such Distribution Date.
ARTICLE IV.
REPAYMENTS AND PREPAYMENTS; DISTRIBUTION OF COLLECTIONS
Section 4.1 Repayments and Prepayments. On the Commitment Termination Date,
Borrower shall repay in full the unpaid principal amount of the Advances and
Cash-Collateralize the LC Obligations in full. Prior thereto, Borrower:
(a) may, from time to time on any Business Day, make a prepayment, in
whole or in part, of the outstanding principal amount of the Advances,
ratably amongst the Groups; provided, however, that, (i) unless otherwise
consented to by each of the Co-Agents, all such voluntary prepayments shall
require at least two (2) Business Days' (or, in the case of a voluntary
prepayment of $10,000,000 or more per Group, at least ten (10) Business
Days') prior written notice to the Co-Agents, and (ii) unless otherwise
consented to by the Co-Agents, all such voluntary partial prepayments shall
be in a minimum amount of $5,000,000 per Group or a larger integral
multiple of $500,000 per Group if in excess thereof;
(b) shall, on each date when any reduction in the Facility Limit
becomes effective pursuant to Section 2.6, make a prepayment of the
Advances ratably amongst the Groups and/or Cash-Collateralize the LC
Obligations, in an aggregate amount equal to the excess, if any, of the
Credit Exposure over the Facility Limit as so reduced;
(c) shall, immediately upon any acceleration of the Scheduled
Commitment Termination Date pursuant to Section 10.3, repay all Advances
and Cash-Collateralize the LC Obligations, unless, pursuant to Section
10.3.1, only a portion of the Credit Exposure is so accelerated, in which
event Borrower shall repay the accelerated portion of the Advances, ratably
amongst the Groups and Cash-Collateralize the accelerated portion of the LC
Obligations; and
(d) shall, not later than the next Distribution Date and in any event
within two (2) Business Days after discovering that a Borrowing Base
Deficit exists, make a prepayment of the Advances, ratably amongst the
Groups, and/or Cash-Collateralize the LC Obligations, in an aggregate
amount equal to such Borrowing Base Deficit. Each such prepayment of
Advances shall be subject to the payment of any amounts required by Section
6.2.
Section 4.2 Application of Collections.
(a) All Collections shall be distributed by the Servicer at such times
and in the order of priority set forth in this Section 4.2 and shall be paid to
the Co-Agents for distribution to the members of each of their respective Groups
in accordance with Section 4.3.
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(b) On each Distribution Date prior to the Commitment Termination
Date, the Servicer shall distribute from Collections received by Borrower or the
Servicer prior to such Distribution Date, the following amounts, without
duplication, in the following order of priority:
first, to the Servicer, to the extent due and owing under this
Agreement or any other Transaction Document, the accrued Servicing Fee
payable for the prior Calculation Period (plus, if applicable, the amount
of Servicing Fee payable for any prior Calculation Period to the extent
such amount has not been distributed to Servicer);
second, to the Co-Agents for distribution to the Lenders in their
respective Groups, interest accrued on the Loans made by their respective
Groups during the period from the most recent Distribution Date to the
current Distribution Date (plus, if applicable, the amount of interest on
the Loans made by their respective Groups accrued for any prior period to
the extent such amount has not been paid, and to the extent permitted by
law, interest thereon);
third, to the Co-Agents for distribution to the members of their
respective Groups, to the extent due and owing under any Transaction
Document, all Fees accrued during the prior Calculation Period (plus, if
applicable, the amount of Fees accrued for any prior Calculation Period to
the extent such amount has not been distributed to the Co-Agents);
fourth, to the Co-Agents for distribution to the Lenders in their
respective Groups, as a repayment of principal of the Advances, ratably
amongst the Groups, an aggregate amount equal to the Borrowing Base
Deficit, if any;
fifth, to the Co-Agents for distribution to the members of their
respective Groups, to the extent due and owing under this Agreement or any
other Transaction Document on such Distribution Date, all other Obligations
owed to any Secured Party; and
sixth, the balance, if any, to Borrower.
(c) On each Distribution Date on or after the Commitment Termination
Date, the Servicer shall distribute from Collections received by Borrower or the
Servicer prior to such Distribution Date, the following amounts, without
duplication, in the following order of priority:
first, to the Servicer, to the extent due and owing under this
Agreement or any other Transaction Document, the accrued Servicing Fee
payable for the prior Calculation Period (plus, if applicable, the amount
of Servicing Fee payable for any prior Calculation Period to the extent
such amount has not been distributed to Servicer);
second, to the Co-Agents for distribution to members of their
respective Groups, all Obligations other than LC Obligations and other than
principal due and owing on the Advances on such Distribution Date;
35
third, ratably to the Co-Agents for distribution to the members of
their respective Groups, as a repayment of Reimbursement Obligations and
principal of the Advances; and
fourth, to the LC Issuers, ratably in accordance with the Aggregate
Face Amount Outstanding of the Letters of Credit issued by them, to
Cash-Collateralize the LC Obligations; and
fifth, once all amounts described in clauses first, second, third and
fourth above have been paid in full, the balance, if any, to Borrower.
Section 4.3 Application of Certain Payments. Each payment of principal of
the Advances shall be made ratably amongst the Groups and shall be applied to
such Loans made by the members of each Group as Servicer shall direct or, in the
absence of such notice or during the existence of a Significant Event or after
the Commitment Termination Date, as the applicable Co-Agent shall determine in
its discretion. All payments of interest, Fees and other Obligations (other than
principal) shall be made ratably amongst the Groups in accordance with their
respective pro rata shares thereof.
Section 4.4 Due Date Extension. If any payment of principal or interest
with respect to any Advance or Reimbursement Obligation falls due on a day which
is not a Business Day, then such due date shall be extended to the next
following Business Day, and additional interest shall accrue at the applicable
interest rate and be payable for the period of such extension.
Section 4.5 Timing of Payments. All payments of principal of, or interest
on, the Advances and of all Fees, and all amounts to be deposited by Borrower or
Servicer hereunder, shall be made by Borrower or Servicer, as applicable, no
later than 12:00 noon (New York City time), on the day when due in lawful money
of the United States of America in immediately available funds to the Co-Agents.
Funds received by the Co-Agents after 12:00 noon (New York City time) on the
date when due, will be deemed to have been received by them on the next
following Business Day.
Section 4.6 Release of Excess Cash Collateral. If on any Distribution Date
prior to the Commitment Termination Date, the balances in the Letter of Credit
Collateral Accounts exceed the amount required by this Agreement, unless a
Significant Event or Potential Significant Event shall exist and be continuing,
the LC Issuers shall release the excess cash collateral to Borrower.
Section 4.7 Payments Rescission. No payment of any of the Obligations shall
be considered paid or applied hereunder to the extent that, at any time, all or
any portion of such payment or application is rescinded by application of law or
judicial authority, or must otherwise be returned or refunded for any reason.
Borrower shall remain obligated for the amount of any payment or application so
rescinded, returned or refunded, and shall promptly pay to each applicable
Co-Agent (for application to the Person or Persons who suffered such rescission,
return or refund) or the applicable LC Issuer, as applicable, the full amount
thereof, plus, if such
36
amount represented a refund of principal, interest, fees or otherwise, as
applicable, with respect thereto from the date of any such rescission, return or
refunding.
ARTICLE V.
SECURITY INTEREST
Section 5.1 Grant of Security.
(a) Borrower hereby assigns and pledges to the Administrative Agent
(for the benefit of the Secured Parties), and hereby grants to the
Administrative Agent (for the benefit of the Secured Parties) a security
interest in all of Borrower's right, title and interest in and to the following,
whether now or hereafter existing and wherever located (the "Collateral"):
(i) all Receivables, Related Security and Receivable Files;
(ii) all of Borrower's rights, remedies, powers and privileges in
respect of the Receivables Sale Agreement, including, without limitation,
its rights to receive Purchase Price Credits and indemnity payments
thereunder;
(iii) all of Borrower's rights, remedies, powers and privileges in
respect of the Performance Undertaking, including, without limitation, its
right to demand performance thereunder;
(iv) the LockBox Accounts and all funds on deposit therein, together
with all certificates and instruments, if any, from time to time evidencing
such accounts and funds on deposit; and
(v) all products and proceeds (including, without limitation,
insurance proceeds) of, and additions, improvements and accessions to, and
books and records describing or used in connection with, all and any of the
property described above.
(b) This grant of security secures the payment and performance of all
Obligations.
(c) This grant of security shall create a continuing security interest
in the Collateral and shall:
(i) remain in full force and effect until the Administrative Agent's
(for the benefit of the Secured Parties) interest in the Collateral shall
have been released in accordance with Section 5.4;
(ii) be binding upon Borrower, its successors, transferees and
assigns; and
(iii) inure, together with the rights and remedies of the
Administrative Agent (for the benefit of the Secured Parties) hereunder, to
the benefit of the Administrative Agent and each Secured Party and their
respective successors, transferees and assigns.
37
Section 5.2 Administrative Agent Appointed Attorney-in-Fact. Borrower
hereby irrevocably appoints the Administrative Agent (for the benefit of the
Secured Parties) as Borrower's attorney-in-fact, with full authority in the
place and stead of Borrower and in the name of Borrower or otherwise, from time
to time in the Administrative Agent's discretion, after the occurrence and
during the continuation of a Significant Event to take any action and to execute
any instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of the Transaction Documents, including, without
limitation:
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above;
(c) to file any claims or take any action or institute any proceedings
which the Administrative Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Administrative Agent (for the benefit of the Secured Parties) with
respect to any of the Collateral;
(d) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions
hereunder; and
(e) to perform the affirmative obligations of Borrower under the
Transaction Documents. The Administrative Agent agrees to give Borrower,
Servicer and the Co-Agents prior written notice of the taking of any such
action, but the failure to give such notice shall not affect the rights,
power or authority of the Administrative Agent with respect thereto.
Borrower hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section 5.2 is irrevocable and coupled
with an interest.
Section 5.3 Administrative Agent May Perform. If Borrower fails to perform
any agreement contained herein, the Administrative Agent (for the benefit of the
Secured Parties) may itself perform, or cause performance of such agreement, and
the expenses of the Administrative Agent incurred in connection therewith shall
be payable by Borrower.
Section 5.4 Release of Collateral. The Administrative Agent's (for the
benefit of the Secured Parties) right, title and interest in the Collateral
shall be released effective on the date occurring after the Commitment
Termination Date on which all Obligations shall have been finally and fully paid
and performed.
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ARTICLE VI.
INCREASED COSTS, ETC.
Section 6.1 Increased Costs. If any change in Regulation D of the Board of
Governors of the Federal Reserve System, or any Regulatory Change, in each case
occurring after the date hereof:
(a) shall subject any Affected Party to any tax, duty or other charge
with respect to any Loan made or funded by it, or shall change the basis of
taxation of payments to such Affected Party of the principal of or interest
on any Loan owed to or funded by it or any other amounts due under this
Agreement in respect of any Loan made or funded by it (other than Excluded
Taxes); or
(b) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Board of Governors of the
Federal Reserve System, but excluding any reserve included in the
determination of interest rates pursuant to Section 3.1), special deposit
or similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Affected Party; or
(c) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party (including,
without limitation, because the assets and liabilities of any Conduit
Lender are required to be consolidated with those of any other Affected
Party under applicable accounting principles); or
(d) shall impose on any Affected Party any other condition affecting
any Loan made or funded, or Letter of Credit issued, by any Affected Party;
and the result of any of the foregoing is to (i) increase the cost to or to
impose a cost on (A) an Affected Party issuing, funding, making or maintaining
any Letter of Credit or Loan (including extensions of credit under any Liquidity
Agreement or any other applicable Support Agreement, or any commitment of such
Affected Party with respect to any of the foregoing), or (B) any Co-Agent for
continuing its or Borrower's relationship with a Conduit Lender, (ii) to reduce
the amount of any sum received or receivable by an Affected Party under this
Agreement, the applicable Lender Note, the applicable Liquidity Agreement or
other applicable Support Agreement with respect thereto, or (iii) in the good
faith determination of such Affected Party, to reduce the rate of return on the
capital of an Affected Party as a consequence of its obligations hereunder, or
under the applicable Liquidity Agreement or other applicable Support Agreement,
as applicable, or arising in connection herewith or therewith to a level below
that which such Affected Party could otherwise have achieved, then after demand
by such Affected Party to Borrower (which demand shall be accompanied by a
written statement setting forth the basis of such demand), Borrower shall pay
such Affected Party such additional amount or amounts as will (in the reasonable
determination of such Affected Party) compensate such Affected Party for such
increased cost or such reduction. Such written statement (which shall include
calculations in reasonable detail) shall, in the absence of manifest error, be
conclusive evidence of the subject matter thereof.
39
If the assets and liabilities of any Conduit Lender are required to be
consolidated with those of any other Affected Party under applicable accounting
principles or the capitalization of such Conduit Lender is required to be
increased in order to avoid such consolidation (either of the foregoing Conduit
Lenders, an "Impacted Conduit") and such Impacted Conduit's Co-Agent administers
another multi-seller commercial paper conduit which is not required to be so
consolidated or re-capitalized, such Co-Agent and such Impacted Conduit will
make all reasonable efforts to promptly substitute such other multi-seller
commercial paper conduit for the Impacted Conduit under this Agreement, and each
of the other parties hereto hereby agrees to execute such amendments and
consents as may be reasonably necessary to give effect to such substitution. If
there is only one Impacted Conduit, Borrower shall have the right to require the
members of the Group including such Impacted Conduit to assign their respective
positions to another multi-seller commercial paper conduit that will not be an
Impacted Conduit and its liquidity providers, and such Impacted Conduit agrees
to enter into such assignment. Lastly, in the event that any of the Conduit
Lenders becomes an Impacted Conduit, each of the Conduit Lenders hereby agrees
that in no event will the additional amounts payable under this Section 6.1 as a
result of such event cause the aggregate amount of interest and Fees that would
be payable to such Impacted Conduit to exceed the amount of interest and Fees
that would have been payable if such Impacted Conduit's Loans had been funded by
its Committed Lender at an Alternative Rate.
Section 6.2 Broken Funding Costs. Borrower hereby agrees that upon demand
by any Affected Party (which demand shall be accompanied by a written statement
setting forth in reasonable detail the basis for the calculations of the amount
being claimed), Borrower will indemnify such Affected Party against any Broken
Funding Costs. Such written statement shall, in the absence of manifest error,
be conclusive evidence of the subject matter thereof.
Section 6.3 Withholding Taxes.
(a) All payments made by Borrower hereunder (or by Servicer, on behalf
of Borrower, hereunder) shall be made free and clear of, and without reduction
or withholding for or on account of, any present or future Covered Taxes, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority or other taxing authority. If any Covered Taxes are required to be
withheld from any amounts payable to any of the Agents, LC Issuers or Lenders,
the amounts so payable to such Agent, LC Issuer or Lender shall be increased to
the extent necessary to yield to such Agent, LC Issuer or Lender (after payment
of all such Covered Taxes) all such amounts payable hereunder at the rates or in
the amounts specified herein. Whenever any Covered Taxes are payable by
Borrower, as promptly as possible thereafter, Borrower shall send to the
applicable Agent, LC Issuer or Lender a certified copy of an original official
receipt received by Borrower showing payment thereof. If Borrower fails to pay
any Covered Taxes when due to the appropriate taxing authority or fails to remit
to the applicable Agent, LC Issuer or Lender the required documentary evidence,
Borrower shall indemnify such Agent, LC Issuer and Lender for such Covered Taxes
and any incremental taxes that may become payable by such Agent, LC Issuer or
Lender as a result of any such failure.
(b) At least five (5) Business Days prior to the first date on which
any payments, including discount or Fees, are payable hereunder for the account
of any LC Issuer or Lender, if an LC Issuer or a Lender is not incorporated
under the laws of the United States, such
40
LC Issuer or Lender agrees to deliver to each of Borrower, the applicable
Co-Agent and the Administrative Agent two (2) duly completed copies of (i)
United States Internal Revenue Service Form W-8BEN or W-8ECI (or successor
applicable form), or other forms or certifications reasonably requested by
Borrower, applicable Co-Agent or Administrative Agent, pursuant to the
regulations promulgated under Section 1441 of the Code or other IRS
publications, certifying that such LC Issuer or Lender is entitled to receive
payments hereunder without deduction or withholding of any United States federal
income taxes or (ii) United States Internal Revenue Service Form W-8 or W-9 (or
successor applicable form) to establish an exemption from United States backup
withholding tax. Each applicable LC Issuer or Lender shall replace or update
such forms as is necessary or appropriate to maintain any applicable exemption
or as is requested by any Agent or Borrower. If any LC Issuer or Lender does not
deliver the forms described in this Section 6.3(b), Borrower shall have no
obligations under Section 6.3(a) with respect to United States federal income
taxes on such payment, and Borrower or the applicable Agent shall withhold
United States federal income taxes from any payments made hereunder at the
statutory rate applicable to payments made to LC Issuer or Lender. Each Lender
and LC Issuer agrees to indemnify and hold Borrower and the Agents harmless for
any United States federal income taxes, penalties, interest and other costs and
losses incurred or payable by Borrower or any of the Agents as a result of
either (x) such Lender's or LC Issuer's failure to submit any form required to
be provided pursuant to this Section 6.3(b) or (y) Borrower's or such Agent's
reliance on any form that such Lender or LC Issuer has provided pursuant to this
Section 6.3(b).
ARTICLE VII.
CONDITIONS TO BORROWING
Section 7.1 Initial Loan. The making of the initial Advance hereunder is
subject to the conditions precedent that the Administrative Agent shall have
received all of the following, each duly executed and dated the date of such
Advance (or such earlier date as shall be satisfactory to the Administrative
Agent), in form and substance satisfactory to the Agents:
7.1.1 Resolutions. Certified copies of resolutions of the Board of
Directors of Borrower, the Performance Guarantor and each of the Sellers
authorizing or ratifying the execution, delivery and performance,
respectively, of the Transaction Documents to which it is a party, together
with a certified copy of its Organizational Documents.
7.1.2 Consents, etc. Certified copies of all documents evidencing any
necessary consents and governmental approvals (if any) with respect to the
Transaction Documents.
7.1.3 Incumbency and Signatures. A certificate of the Secretary or an
Assistant Secretary of Borrower, Servicer, the Performance Guarantor and
each Seller certifying the names of its officer or officers authorized to
sign the Transaction Documents to which it is a party.
7.1.4 Good Standing Certificates. Good standing certificates for
Borrower, Servicer, the Performance Guarantor and each Seller issued as of
a
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recent date acceptable to the Administrative Agent by (a) the Secretary of
State of the jurisdiction of such Person's organization, and (b) the
Secretary of State of the jurisdiction where such Person's chief executive
office and principal place of business are located.
7.1.5 Financing Statements. (i) Proper financing statements (Form
UCC-1), filed on or prior to the date of the initial Loan,
naming Borrower as debtor and the Administrative Agent
(for the benefit of the Secured Parties) as the secured party as may be
necessary or, in the opinion of the Administrative Agent, desirable under
the UCC to perfect the Administrative Agent's (for the benefit of the
Secured Parties) security interest in the Collateral, (ii) proper financing
statements, filed on or prior to the date of the initial Advance, naming
each Seller, as seller/debtor, Borrower as purchaser/secured party and the
Administrative Agent as assignee as may be necessary or, in the opinion of
the Administrative Agent, desirable under the UCC to perfect Borrower's
ownership interest in the Receivables, and (iii) authorized copies of
proper Uniform Commercial Code Form UCC-3 termination statements, if any,
necessary to release all liens and other Adverse Claims of any Person in
the Collateral granted by Borrower or any Seller.
7.1.6 Search Reports. A written search report provided to the
Administrative Agent by a search service acceptable to the
Administrative Agent listing all effective financing statements that
name Borrower or any Seller as debtor or assignor and that are filed
in the jurisdictions in which filings were made pursuant to Section
7.1.5 above and in such other jurisdictions that the Administrative
Agent shall reasonably request, together with copies of such financing
statements (none of which shall cover any Collateral or interests
therein or proceeds of any thereof), and tax and judgment lien search
reports from a Person satisfactory to the Administrative Agent showing
no evidence of such lien filed against Borrower or any Seller.
7.1.7 Fee Letters; Payment of Fees. The Fee Letters, together
with all outstanding Fees payable pursuant to the Fee Letters.
7.1.8 Receivables Sale Agreement. (i) Duly executed and delivered
counterparts of each of the Receivables Sale Agreement and all
documents, agreements and instruments contemplated thereby, and (ii)
evidence that each of the conditions precedent to the execution and
delivery of the Receivables Sale Agreement has been satisfied to the
Agents' satisfaction, and that the initial assignments and transfers
under the Receivables Sale Agreement have been consummated.
7.1.9 Opinions of Counsel. Opinions of counsel to Borrower,
Servicer, the Performance Guarantor and each Seller in form and
substance satisfactory to the Agents.
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7.1.10 Lender Notes. Each of the Lender Notes, duly executed
by Borrower in favor of a Co-Agent.
7.1.11 Borrowing Base Certificate. A Borrowing Base Certificate,
duly executed by an authorized Senior Executive of Servicer on
Borrower's behalf showing a calculation of the Borrowing Base as of
November 30, 2002.
7.1.12 Lock Box Account Agreements. The Lock Box Agreements with
respect to each of the LockBox Accounts in the United States, duly
executed by all of the parties thereto, and a letter agreement
regarding post-closing documentation of a charge on the LockBox
Account at Wachovia Bank, National Association, in London, England.
7.1.13 Releases. Releases and termination statements duly
executed by each Person, other than Borrower, that has an interest in
the Receivables.
7.1.14 Performance Undertaking. The Performance Undertaking, duly
executed by the Performance Guarantor.
7.1.15 Other. Such other documents, certificates and opinions as
any of the Agents may reasonably request.
Section 7.2 All Advances. The making of each Advance, including without
limitation, the initial Advance, is subject to them conditions precedent that:
7.2.1 No Default, etc. (i) No Significant Event or Unmatured
Significant Event has occurred and is continuing or will result from
the making of such Advance, (ii) the representations and warranties of
Borrower contained in Article VIII are true and correct as of the date
of such requested Advance, with the same effect as though made on the
date of such Advance, and (iii) after giving effect to such Advance,
the aggregate unpaid balance of the Advances will not exceed the
Borrowing Base or the Facility Limit. By making a Borrowing Request,
Borrower shall be deemed to have represented and warranted that items
(i), (ii) and (iii) in the preceding sentence are true and correct.
7.2.2 Borrowing Request, etc. The Agents shall have received a
Borrowing Request for such Advance in accordance with Section 2.2,
together with all items required to be delivered in connection
therewith.
7.2.3 Commitment Termination Date. The Commitment Termination
Date shall not have occurred.
7.2.4 Accounts. Each of the LockBox Accounts shall have been
transferred into Borrower's name . The LockBox Accounts shall be
subject to valid and perfected first priority security interest in
favor of the Administrative Agent for the benefit of the Secured
Parties.
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ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, the LC Issuers and the Agents to enter into
this Agreement and, in the case of a Lender or LC Issuer, to make Loans or issue
Letters of Credit hereunder, Borrower hereby represents and warrants to the
Agents, the LC Issuers and the Lenders as to itself as follows, and Bowater
hereby represents and warrants to the Agents, the LC Issuers and the Lenders as
to itself as follows:
Section 8.1 Existence and Power. Each of Bowater and Borrower is a
corporation duly organized under the laws of the State of Delaware, and is
validly existing and in good standing under the laws of its state of
organization and is duly qualified to do business and is in good standing as a
foreign corporation, and has and holds all power and all governmental licenses,
authorizations, consents and approvals required to carry on its business in each
jurisdiction in which its business is conducted except where the failure to so
qualify or so hold could not reasonably be expected to have a Material Adverse
Effect.
Section 8.2 Power and Authority; Due Authorization, Execution and Delivery.
The execution and delivery by each of Bowater and Borrower of this Agreement and
each other Transaction Document to which it is a party, and the performance of
its obligations hereunder and thereunder, and Borrower's use of the proceeds of
the Loans made hereunder, are within its powers and authority and have been duly
authorized by all necessary corporate action on its part. This Agreement and
each other Transaction Document to which Bowater or Borrower is a party has been
duly executed and delivered by Bowater or Borrower, as the case may be.
Section 8.3 No Conflict. The execution and delivery by each of Borrower and
Bowater of this Agreement and each other Transaction Document to which it is a
party, and the performance of its obligations hereunder and thereunder do not
contravene or violate (i) its Organizational Documents, (ii) any law, rule or
regulation applicable to it, (iii) any restrictions under any agreement,
contract or instrument to which it is a party or by which it or any of its
property is bound, or (iv) any order, writ, judgment, award, injunction or
decree binding on or affecting it or its property, and do not result in the
creation or imposition of any Adverse Claim on its assets (except as created
under the Transaction Documents) except, in any case set forth in (i) - (iv)
above, where such contravention or violation could not reasonably be expected to
have a Material Adverse Effect. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
Section 8.4 Governmental Authorization. Other than the filing of the
financing statements required hereunder, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by Bowater or
Borrower of this Agreement and each other Transaction Document to which it is a
party and the performance of its obligations hereunder and thereunder.
Section 8.5 Actions, Suits. There is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to the knowledge
of any of Bowater's or Borrower's Senior Executives, threatened against or
affecting Bowater or any of its Subsidiaries
44
that, if adversely determined, could reasonably be expected to have a Material
Adverse Effect or which seeks to prevent, enjoin or delay the making or
repayment of any Loans.
Section 8.6 Binding Effect. This Agreement and each other Transaction
Document to which Bowater or Borrower is a party constitute the legal, valid and
binding obligations of Bowater or Borrower, as the case may be, enforceable
against it in accordance with their respective terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
Section 8.7 Accuracy of Information. All written representations,
warranties, reports or certificates of any of its Senior Executives heretofore
furnished by Bowater or Borrower for purposes of or in connection with this
Agreement, any of the other Transaction Documents or any transaction
contemplated hereby or thereby are, and all such written representations,
warranties, reports or certificates hereafter furnished by Bowater or Borrower
shall be, complete and correct and fairly present the information contained
therein as of the date such information is certified and do not and will not
contain any material misstatement of fact as of such date or omit to state a
material fact or any fact necessary to make the information contained therein
taken as a whole with all other verbal and written information provided by
Senior Executives as of such date, not misleading. To the best of its knowledge,
all verbal information heretofore furnished by any Senior Executive of Bowater
or Borrower for purposes of or in connection with this Agreement, any of the
other Transaction Documents or any transaction contemplated hereby or thereby
was, and all such verbal information hereafter furnished by Bowater or Borrower
shall be, complete and correct as of the date such information is furnished and
does not and will not contain any material misstatement of fact as of such date
or omit to state a material fact or any fact necessary to make such information
taken as a whole with all other verbal and written information provided by
Senior Executives as of such date, not misleading.
Section 8.8 Margin Regulations; Use of Proceeds. Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans, directly or indirectly, will be used for a
purpose that violates, or would be inconsistent with, Regulations T, U and X
promulgated by the Federal Reserve Board from time to time. No portion of the
proceeds of any Loan hereunder will be used for a purpose that violates, or
would be inconsistent with, any other law, rule or regulation applicable to
Borrower.
Section 8.9 Good Title. Borrower, upon each Transfer pursuant to the
Receivables Sale Agreement, is the legal and beneficial owner of the Receivables
and the Related Security with respect thereto, or possesses a valid and
perfected security interest therein, in each case, free and clear of any Adverse
Claim, except as created by the Transaction Documents. There have been duly
filed all financing statements or other similar instruments or documents
necessary under the UCC of all appropriate jurisdictions to perfect Borrower's
ownership interest in each such Receivable, its Collections and the Related
Security.
Section 8.10 Perfection. This Agreement is effective to create a valid
security interest in the Collateral in favor of the Administrative Agent, for
the benefit of the Secured
45
Parties. There have been duly filed all financing statements or other similar
instruments or documents necessary under the UCC (or any comparable law) of all
appropriate jurisdictions to perfect the Administrative Agent's security
interest, for the benefit of the Secured Parties, in the Collateral. The
Collateral is free of any Adverse Claim except as created under the Transaction
Documents.
Section 8.11 Places of Business and Locations of Records. The principal
place of business and chief executive office of each of Borrower and Servicer is
located at its address referred to on Schedule 15.3 to this Agreement (or at
such other locations, notified to the Administrative Agent in jurisdictions
where all action required to perfect or maintain the perfection of the
Administrative Agent's security interest in Collateral has been taken).
Borrower's Federal Employer Identification Number is ▇▇-▇▇▇▇▇▇▇, and its
Delaware organizational identification number is 3594632.
Section 8.12 Accounts. Borrower represents and warrants that (a) Schedule
8.12 hereto is a complete and accurate listing, as of the Closing Date, of the
LockBoxes and LockBox Accounts, and (b) each of the LockBox Accounts has been
established in, or transferred into, Borrower's name. Neither Servicer nor
Borrower has granted any interest in any LockBox or LockBox Account to any
Person other than the Administrative Agent, and the Administrative Agent has
exclusive control of the LockBox Accounts, subject to the Servicer's right of
access to such accounts as provided herein and in the applicable LockBox
Agreements.
Section 8.13 No Material Adverse Effect. There has been no Material Adverse
Effect since the last day of its fiscal year as to which financial statements
have most recently been delivered pursuant to Section 9.1.5(a).
Section 8.14 Names. The name in which Borrower has executed this Agreement
is identical to the name of Borrower as indicated on the public record of the
State of Delaware. Borrower has not used any legal name, trade name or assumed
name other than the name in which it has executed this Agreement.
Section 8.15 Ownership of Borrower; No Subsidiaries. All of the issued and
outstanding equity interests of Borrower are owned beneficially and of record by
BAI, free and clear of any Adverse Claim. Such equity interests are validly
issued, fully paid and nonassessable, and there are no options, warrants or
other rights to acquire securities of Borrower. Borrower has no Subsidiaries.
Section 8.16 Not a Holding Company or an Investment Company. Neither
Borrower nor Servicer is a "holding company" or a "subsidiary holding company"
of a "holding company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or any successor statute. Neither Borrower nor Servicer
is an "investment company" within the meaning of the Investment Company Act of
1940, as amended, or any successor statute.
Section 8.17 Compliance with Credit and Collection Policy. Each of Borrower
and Bowater has complied in all material respects with the Credit and Collection
Policy with regard to each Receivable and the related Contract. No change has
been made in or amendment to the Credit and Collection Policy, except (i) to the
extent such change or amendment would not
46
be reasonably likely to materially and adversely affect the collectibility of
Receivables or to materially decrease the credit quality of any newly created
Receivables or (ii) to the extent such change or amendment has been consented to
by Borrower and the Co-Agents.
Section 8.18 Solvency. Both before and after giving effect to each Advance,
Borrower is Solvent.
Section 8.19 Eligible Receivables. Each Receivable included in the
Borrowing Base is an Eligible Receivable as of the date of (a) any Borrowing
Base Certificate, and (b) any Monthly Report.
Section 8.20 Sales by BAI. Each sale of Receivables by BAI to Borrower
shall have been effected under, and in accordance with the terms of, the
Receivables Sale Agreement, including the payment by Borrower to BAI of an
amount equal to the purchase price therefor as described in the Receivables Sale
Agreement, and each such sale shall have been made for "reasonably equivalent
value" (as such term is used under ss. 548 of the Bankruptcy Code) and not for
or on account of "antecedent debt" (as such term is used under ss. 547 of the
Bankruptcy Code) owed by Borrower to BAI.
ARTICLE IX.
COVENANTS OF BORROWER AND SERVICER
Section 9.1 Affirmative Covenants. From the date hereof until the first
day, following the Commitment Termination Date, on which all Obligations shall
have been finally and fully paid and performed, each of Borrower and Servicer
hereby covenants and agrees with the Agents, the LC Issuers and the Lenders as
to itself, as follows:
9.1.1 Compliance with Laws, Etc. Each of Borrower and Servicer will
comply in all material respects with all applicable laws, rules,
regulations and orders of all governmental authorities (including those
which relate to the Receivables).
9.1.2 Preservation of Legal Existence. Each of Borrower and Servicer
will preserve and maintain its existence, rights, franchises and privileges
in the jurisdiction of its organization, and qualify and remain qualified
in good standing as a foreign entity in the jurisdiction where its
principal place of business and its chief executive office are located and
in each other jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualifications would have a
Material Adverse Effect.
9.1.3 Performance and Compliance with Receivables. Each of Borrower
and Servicer will timely and fully perform and comply with all provisions,
covenants and other promises required to be observed by it under the
Receivables and all other agreements related to such Receivables.
9.1.4 Credit and Collection Policy. Each of Borrower and Servicer will
comply in all material respects with the Credit and
Collection Policy.
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9.1.5 Reporting Requirements. Each of Borrower and Servicer will
furnish to the Co-Agents for distribution to the members of its Group:
(a) Financial Statements.
(i) within 140 days after the close of each of its fiscal years, (A) a
copy of the unaudited balance sheet of Borrower, in each case, as at the
end of such year, together with the related statement of earnings for such
year, certified by the chief executive officer, chief financial officer or
controller of Borrower (which certification shall state that such balance
sheet and statement or earnings fairly present the financial condition and
results of operations for such year in accordance with GAAP except for the
absence of footnotes), and (B) a certificate of such officer stating that
such officer has obtained no knowledge that a Significant Event or
Unmatured Significant Event has occurred and is continuing, or if, in the
opinion of such officer, such a Significant Event or Unmatured Significant
Event has occurred and is continuing, a statement as to the nature thereof;
(ii) within 120 days after the close of each of its fiscal years, an
audit report (with all amounts stated in Dollars), which is unqualified as
to scope and going concern, certified by independent certified public
accountants of recognized national standing or otherwise reasonably
acceptable to the Administrative Agent, prepared in accordance with GAAP on
a consolidated basis for Bowater and the consolidated Subsidiaries,
including a consolidated balance sheet and the related consolidated
statements of income, cash flows and statements of changes in common
shareholders' equity, setting forth in each case in comparative form the
figures for such fiscal year and the previous fiscal year; provided that
delivery of a copy of Bowater's Forms 10-K filed with the Securities and
Exchange Commission for such fiscal year shall constitute compliance with
this requirement; and
(iii) within 60 days after the close of the first three quarterly
periods of each of its fiscal years, for Bowater and the Consolidated
Subsidiaries, (A) an unaudited consolidated balance sheet as at the close
of each such period and a consolidated income statement and a statement of
cash flows for the period from the beginning of such fiscal year to the end
of such quarter, setting forth in the case of such statements of income and
cash flows in comparative form the figures for the corresponding quarter
and the corresponding portion of Sellers previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, preparation in accordance with GAAP and consistency by a
Financial Officer of Bowater; provided that delivery of a copy of Bowater's
Forms 10-Q filed with the Securities and Exchange Commission for such
fiscal quarter shall constitute compliance with this requirement, and (B) a
certificate of such Financial Officer of Bowater to the effect that no
Significant Event or Unmatured Significant Event has occurred and is
continuing.
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(b) Monthly Reports and Borrowing Base Certificates.
(i) On or before the second Business Day preceding each Distribution
Date, Servicer shall prepare and deliver to each of the Co-Agents for
distribution to the members of its Group a Monthly Report, as of the last
day of the most recent Calculation Period, signed by an authorized Senior
Executive of Servicer; and
(ii) At any time while Bowater's unsecured senior debt is Split-Rated
(unless Servicer provides such Borrowing Base Certificate weekly as
provided in clause (iii) below, which it may do at its election), on or
before the 5th Business Day following the 15th day of each month hereafter,
Servicer shall prepare and deliver to each of the Co-Agents for
distribution to the members of its Group, a Borrowing Base Certificate as
of the most recent Calculation Date, signed by an authorized Senior
Executive of Servicer.
(iii) At any time while Bowater's unsecured senior debt is rated both
"B+" or less by S&P and "B1" or less by ▇▇▇▇▇'▇, or Servicer elects to
provide weekly Borrowing Base Certificates as provided in clause (ii)
above, on or before Wednesday of each week thereafter (or if any such day
is not a Business Day, the next succeeding Business Day), Servicer shall
prepare and deliver to each of the Co-Agents for distribution to the
members of its Group, a Borrowing Base Certificate as of the most recent
Calculation Date, signed by an authorized Senior Executive of Servicer.
(c) Significant Events As soon as possible but in any event
within two (2) Business Days after any Senior Executive of Borrower or Servicer
becomes aware of the occurrence of a Significant Event or an Unmatured
Significant Event, Borrower or Servicer, as the case may be, will deliver to the
Agents for distribution to the Lenders and LC Issuers an officer's certificate
of Borrower setting forth details of such event and the action that Borrower or
Servicer, as the case may be, proposes to take with respect thereto.
(d) Servicing Certificate Servicer shall deliver, or cause to be
delivered, to the Administrative Agent for distribution to the Co-Agents, on or
before the date that is 120 days after the end of each year, a certificate
signed by any Senior Executive of Servicer, dated as of the last day of the
preceding year, stating that (a) a review of the activities of Servicer during
the preceding 12-month period and of its performance under this Agreement has
been made under such officer's supervision and (b) to the best of such officer's
knowledge, based on such review, Servicer has fulfilled its obligations under
the Agreement throughout such year and has complied in all material respects
with the Credit and Collection Policy, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
(e) Procedures Review. In connection with an inspection permitted
under Section 9.1.11, within ten (10) Business Days after receipt of written
request therefor, information reasonably required to generate a report which
reasonably satisfies the requirements set forth on Schedule 9.1.5 (each such
report, a "Procedures Review"), it being
49
acknowledged and agreed that the information provided in connection with the
pre-closing review of Bowater and its subsidiaries reasonably satisfied the
requirements of such a Procedures Review (except for those relating to corporate
formality as specified in part V(d) of Schedule 9.1.5).
(f) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Collateral, the Receivables or the
condition or operations, financial or otherwise, of Borrower or any Seller as
any of the Agents may from time to time reasonably request in order to protect
the interests of the Administrative Agent, on behalf of the Secured Parties,
under or as contemplated by this Agreement or the other Transaction Documents.
9.1.6 Use of Proceeds. Borrower will use the proceeds of the Loans
made hereunder solely in connection with the acquisition or funding of
Receivables, to repay the Subordinated Loans, to make Demand Loans and to
make dividends in accordance with applicable corporate law and this
Agreement.
9.1.7 Separate Legal Entity. Borrower hereby acknowledges that the
Lenders, the LC Issuers and the Agents are entering into the transactions
contemplated by this Agreement and the other Transaction Documents in
reliance upon Borrower's identity as a legal entity separate from any other
Person. Therefore, from and after the date hereof, Borrower shall take all
reasonable steps to continue Borrower's identity as a separate legal entity
and to make it apparent to third Persons that Borrower is an entity with
assets and liabilities distinct from those of any other Person, and is not
a division of any Seller or other Person. Without limiting the generality
of the foregoing and in addition to and consistent with the covenant set
forth in Section 9.1.2, Borrower shall take such actions as shall be
required in order that:
(a) Borrower will be a limited purpose company whose primary
activities are restricted in its certificate of organization to owning the
Receivables and Related Security and financing the acquisition thereof and
conducting such other activities as it deems necessary or appropriate to
carry out its primary activities;
(b) Not less than one member of Borrower's Board of Directors (each,
an "Independent Director") shall be an individual who is not, and during
the past five (5) years has not been, a director, officer, employee or 5%
beneficial owner of the outstanding common stock of any Person or entity
beneficially owning any outstanding shares of common stock of Bowater or
any Affiliate thereof; provided, however, that an individual shall not be
deemed to be ineligible to be an Independent Director solely because such
individual serves or has served in the capacity of an "independent
director" or similar capacity for special purpose entities formed by
Bowater or any of its Affiliates. The certificate of organization of
Borrower shall provide that (i) the Board of Directors shall not approve,
or take any other action to cause the filing of, a voluntary bankruptcy
petition with respect to Borrower unless the Independent Directors shall
approve the taking of
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such action in writing prior to the taking of such action, and (ii) such
provision cannot be amended without the prior written consent of the
Independent Directors;
(c) Any employee, consultant or agent of Borrower will be compensated
from funds of Borrower, as appropriate, for services provided to Borrower;
(d) Borrower will allocate and charge fairly and reasonably overhead
expenses shared with any other Person. To the extent, if any, that Borrower
and any other Person share items of expenses such as legal, auditing and
other professional services, such expenses will be allocated to the extent
practical on the basis of actual use or the value of services rendered, and
otherwise on a basis reasonably related to the actual use or the value of
services rendered; Borrower's operating expenses will not be paid by any
other Person except as permitted under the terms of this Agreement or
otherwise consented to by the Agents;
(e) Borrower's books and records will be maintained separately from
those of any other Person;
(f) All audited financial statements of any Person that are
consolidated to include Borrower will contain detailed notes clearly
stating that (A) all of Borrower's assets are owned by Borrower, and (B)
Borrower is a separate legal entity;
(g) Borrower's assets will be maintained in a manner that facilitates
their identification and segregation from those of any other Person;
(h) Borrower will strictly observe corporate formalities in its
dealings with all other Persons, and funds or other assets of Borrower will
not be commingled with those of any other Person except for such
commingling as is permitted pursuant to Section 11.2.3(d);
(i) Borrower shall not, directly or indirectly, be named or enter into
an agreement to be named, as a direct or contingent beneficiary or loss
payee, under any insurance policy with respect to any amounts payable due
to occurrences or events related to any other Person; and
(j) Any Person that renders or otherwise furnishes services to
Borrower will be compensated thereby at market rates for such services it
renders or otherwise furnishes thereto. Borrower will not hold itself out
to be responsible for the debts of any other Person or the decisions or
actions respecting the daily business and affairs of any other Person.
9.1.8 Adverse Claims on Receivables. Each of Borrower and Servicer will,
and will require each Seller to, defend each Receivable against all claims and
demands of all Persons at any time claiming the same or any interest therein
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adverse to the Administrative Agent's security interest, on behalf of the
Secured Parties.
9.1.9 Further Assurances. At its expense, each of Borrower and Servicer
will perform all acts and execute all documents reasonably requested by any of
the Agents at any time to evidence, perfect, maintain and enforce the title or
the security interest of the Administrative Agent, on behalf of the Secured
Parties, in the Receivables and the priority thereof. Each of Borrower and
Servicer will, at the reasonable request of any of the Agents, execute and
deliver financing statements relating to or covering the Collateral and, where
permitted by law, Borrower shall authorize the Administrative Agent to file one
or more financing statements without Borrower's signature. Borrower shall, and
shall cause each Seller to, ▇▇▇▇ its master data processing records relating to
the Receivables with a legend stating that "The accounts receivable of Bowater
Incorporated and Bowater America Inc. reflected herein have been sold or
contributed, directly or indirectly, to Bowater Funding Inc. (`SPC'), and a
security interest in such receivables has been granted by SPC to SunTrust
Capital Markets, Inc., as administrative agent for various parties".
9.1.10 Servicing. Servicer shall (a) take all commercially reasonable steps
to (i) prevent or minimize any loss being realized on a Receivable and (ii)
recover the full amount of such loss, and (b) follow such practices and
procedures for servicing the Receivables, in accordance with the Credit and
Collection Policy, as would be customary and usual for a prudent servicer under
similar circumstances, including using reasonable efforts to realize upon any
recourse to the Obligors.
9.1.11 Inspection. Each of Borrower and Servicer shall permit the Agents,
the LC Issuers, the Lenders and their duly authorized representatives, attorneys
or auditors to inspect the Receivables, the Receivable Files, Documents and the
related accounts, records and computer systems, software and programs used or
maintained by Borrower or Servicer at such times as any Agent may reasonably
request; provided, however, that, prior to a Bowater Downgrade and in the
absence of a Significant Event, Borrower and its Affiliates will only be
required to pay for the first such inspection by any or all of the Agents, the
LC Issuers, the Lenders and their duly authorized representatives, attorneys or
auditors in any calendar year, and provided further, in the event of a Bowater
Downgrade, Borrower and its Affiliates shall only be required to pay for the
first two (2) such examinations by any or all of the Agents, the LC Issuers, the
Lenders and their duly authorized representatives, attorneys or auditors in any
calendar year, and provided further, that from and after the occurrence of a
Significant Event, Borrower and its Affiliates shall be responsible to pay for,
and the Administrative Agent (or its representatives) shall be entitled to
conduct, as many examinations as the Administrative Agent may deem necessary or
appropriate to protect the interests of the Secured Parties. Upon instructions
from any of the Agents, each of Borrower and Servicer shall release any document
in its possession related to any Receivable (other than confidential financial
52
information of the related Obligor which Borrower and Servicer are not
authorized to disclose) to such Agent, as the case may be, or to the Servicer,
if requested by any of the Agents.
9.1.12 Cooperation. Each of Borrower and Servicer shall provide such
cooperation, information and assistance, and prepare and supply the Agents with
such data regarding the performance by the Obligors of their obligations under
the Receivables and the performance by Borrower and Servicer of their respective
obligations under the Transaction Documents, as may be reasonably requested by
any of the Agents from time to time.
9.1.13 Facility. Servicer shall maintain its facility from which it
services the Receivables in its present condition, ordinary wear and tear
excepted, or such other facility of similar quality, security and safety as
Servicer may select from time to time. Servicer shall make all property tax
payments, lease payments and all other payments with respect to such facility.
Servicer shall, in connection with any inspection under Section 9.1.11 and at
all times following the occurrence and during the continuance of any Significant
Event, (i) ensure that the Agents shall have complete and unrestricted access,
at Servicer's expense, to such facility and all computers and other systems
relating to the servicing of the Receivables and all persons employed at such
facility, (ii) use its best efforts to retain employees based at such facility
to provide assistance to the Administrative Agent and (iii) continue to store on
a daily basis all back-up files relating to the Receivables and the servicing of
the Receivables at Servicer's facilities, or such other storage facility of
similar quality, security and safety as Servicer may select from time to time,
in the case of each of clauses (i), (ii) and (iii) until the receipt of all
Collections in respect of all Receivables or all Receivables have been written
off in accordance with the Credit and Collection Policy.
9.1.14 Accounts. Borrower shall not maintain any bank accounts other than
the accounts described on Schedule 8.12. Except as set forth in the last
sentence of Section 11.2.3(b), neither Borrower nor Servicer shall make, nor
will either of them permit any Seller to make, any change in its instructions to
Obligors regarding payments to be made to a LockBox. Neither Borrower nor
Servicer will, nor will either of them permit any Seller to add any LockBox
Account Bank or Lock Box Account to those listed on Schedule 8.12 unless the
Administrative Agent shall have consented thereto and received a copy of any new
duly executed LockBox Account Agreement. Neither Borrower nor Servicer will, nor
will either of them permit any Seller to, change any LockBox Account Bank or
close any LockBox or LockBox Account unless the Administrative Agent shall have
received at least thirty (30) days' prior notice of such termination and (i) in
the case of a closed LockBox, all applicable Obligors have been notified to make
payments to another LockBox that clears through a LockBox Account which is
subject to a LockBox Account Agreement, or (ii) in the case of termination of a
LockBox Bank or closing of a LockBox Account, a new LockBox Account Agreement is
entered into with respect to any new or replacement LockBox Account or LockBox
Account Bank.
Section 9.2 Negative Covenants. From the date hereof until the first day,
following the Commitment Termination Date, on which all Obligations shall have
been finally
53
and fully paid and performed, each of Borrower and Servicer hereby
covenants and agrees as to itself as follows:
9.2.1 Sales, Liens, Etc. Except pursuant to, or as contemplated by,
the Transaction Documents, Borrower shall not (and shall not permit Servicer,
acting on Borrower's behalf to) sell, assign (by operation of law or otherwise)
or otherwise dispose of, or create or suffer to exist voluntarily or
involuntarily any Adverse Claims upon or with respect to any of Borrower's
assets, including, without limitation, the Collateral, any interest therein or
any right to receive any amount from or in respect thereof.
9.2.2 Mergers, Acquisitions, Sales, Subsidiaries, etc. Borrower shall
not:
(a) be a party to any merger or consolidation, or directly or
indirectly purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person, except for Permitted Investments, or sell,
transfer, assign, convey or lease any of its property and assets (or any
interest therein) other than pursuant to, or as contemplated by, this
Agreement or the other Transaction Documents;
(b) make, incur or suffer to exist an investment in, equity
contribution to, loan or advance to, or payment obligation in respect of
the deferred purchase price of property from, any other Person, except for
Permitted Investments or pursuant to the Transaction Documents;
(c) create any direct or indirect Subsidiary or otherwise acquire
direct or indirect ownership of any equity interests in any other Person
other than pursuant to the Transaction Documents; or
(d) enter into any transaction with any Affiliate except for the
transactions contemplated by the Transaction Documents and other
transactions upon fair and reasonable terms materially no less favorable to
Borrower than would be obtained in a comparable arm's length transaction
with a Person not an Affiliate.
9.2.3 Change in Business; Change in Credit and Collection Policy.
Borrower will not make any change in the character of its business. Neither
Borrower nor Bowater will make any change in the Credit and Collection
Policy except (i) to the extent such change or amendment would not be
reasonably likely to materially and adversely affect the collectibility of
Receivables or to materially decrease the credit quality of any newly
created Receivables or (ii) to the extent such change or amendment has been
consented to by Borrower and the Co-Agents.
9.2.4 Other Debt. Borrower will not incur any Debt to any Person other
than pursuant to the Transaction Documents.
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9.2.5 Organizational Documents. Borrower shall not amend its
Organizational Documents.
9.2.6 Jurisdiction of Organization; Location of Records. Borrower
shall not change its jurisdiction of organization or permit the documents
and records evidencing the Receivables to be moved unless (i) Borrower or
Servicer, as the case may be, shall have given to the Administrative Agent
prior written notice thereof, clearly describing the new location, and (ii)
Borrower shall have taken such action, satisfactory to the Administrative
Agent, to maintain the title or ownership of Borrower and any security
interest of the Administrative Agent, for the benefit of the Secured
Parties) in the Collateral at all times fully perfected and in full force
and effect. Servicer shall not, in any event, move the location where it
conducts the servicing and collection of the Receivables from the address
referred to on Schedule 15.3 to this Agreement, without the prior written
consent of the Administrative Agent, which consent shall not be
unreasonably withheld or delayed.
9.2.7 Financing Statements. Borrower shall not execute any effective
financing statement (or similar statement or instrument of registration
under the laws of any jurisdiction) or statements relating to any
Receivables other than the financing statements described in Section 7.1.5.
9.2.8 Business Restrictions. Borrower shall not (i) engage in any
business other than the acquisition, financing and collection of
Receivables and other Collateral, (ii) engage in any transactions or be a
party to any documents, agreements or instruments, other than the
Transaction Documents and those incidental to the purposes thereof, or
(iii) incur any trade payables (other than for professional fees incurred
in the ordinary course of business) or other liabilities not constituting
Debt permitted under Section 9.2.4 if the aggregate outstanding balance of
such trade payables and other liabilities would at any time exceed $10,749,
provided, however, that the foregoing will not restrict Borrower's ability
to pay servicing compensation as provided herein, and, provided, further,
that so long as no Significant Event or Unmatured Significant Event shall
have occurred and be continuing and Borrower's Net Worth, after giving
effect thereto, is at least $2,000,000, Borrower shall be permitted to (a)
pay amounts due on the Subordinated Note, (b) make distributions to its
equity owners to the extent permitted by applicable law and this Agreement,
and (c) make Demand Loans to Bowater and BAI.
9.2.9 Other Agreements; Performance Undertaking. Borrower will not
amend, restate, supplement, cancel, terminate or otherwise modify the
Receivables Sale Agreement or the Performance Undertaking, or give any
consent, waiver, directive or approval thereunder or waive any default,
action, omission or breach under any of the foregoing or otherwise grant
any indulgence thereunder, without (in each case) the prior written consent
of each of the Agents.
ARTICLE X.
SIGNIFICANT EVENTS AND THEIR EFFECT
Section 10.1 Events of Default. Each of the following shall constitute an
"Event of Default" under this Agreement:
10.1.1 Non-Payment of Loans, Etc. (a) Borrower shall fail to make any
payment of any principal of any Loan when due and such failure shall
continue for one (1) Business Day, or (b) Borrower shall fail to make any
payment of any interest on any other Obligation payable by Borrower
hereunder or under the other Transaction Documents, including, without
limitation, any interest, Fees and Indemnified Amounts, or shall fail to
make any deposit required to be made hereunder when due and, in each of the
foregoing cases in this clause (b), such failure shall continue for three
(3) Business Days.
10.1.2 Non-Compliance with Other Provisions. Borrower shall:
(a) fail to perform or observe any covenant contained in Section 9.2
of this Agreement and such failure shall remain unremedied (A) past the
next Distribution Date, or, if earlier, (B) more than two (2) Business Days
after the earlier to occur of (i) any Senior Executive of Borrower having
knowledge thereof and (ii) any Senior Executive of Borrower having
knowledge thereof, or
(b) fail to perform or observe any other term, covenant or agreement
contained in this Agreement or any other Transaction Document on its part
to be performed or observed and, except as provided in Section 10.2.2, any
such failure shall remain unremedied for thirty (30) days after any Senior
Executive of Borrower having received written notice thereof from any of
the Agents.
10.1.3 Breach of Representations and Warranties. Any representation,
warranty, certification or statement made by Borrower in this Agreement,
any other Transaction Document to which Borrower is a party or in any other
document delivered pursuant hereto or thereto shall prove to have been
incorrect in any material respect when made or deemed made; provided that
the materiality threshold in the preceding clause shall not be applicable
with respect to any representation or warranty which itself contains a
materiality threshold.
10.1.4 Bankruptcy. An Event of Bankruptcy shall have occurred and
remained continuing with respect to Borrower, Servicer or Performance
Guarantor.
10.1.5 Tax and ERISA Liens. The Internal Revenue Service shall file
notice of a lien pursuant to ss. 6323 of the Internal Revenue Code with
regard to any of the assets of Borrower or the Pension Benefit Guaranty
Corporation shall file a notice of lien pursuant to ss. 4068 of ERISA, with
regard to any assets of Borrower, and in either of the foregoing cases,
such lien shall not have been released within fifteen (15) Business Days.
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Section 10.2 Amortization Events. Each of the following shall
constitute an "Amortization Event" under this Agreement:
10.2.1 Servicer Event of Default. A Servicer Event of Default shall
have occurred and remained continuing.
10.2.2 Collateral Reporting. Borrower and Servicer shall fail to
deliver any Borrowing Base Certificate or Monthly Report within 1 Business
Day after the same is due and notification is provided by any Co-Agent or
in any event within 2 Business Days after the same is due.
10.2.3 Borrowing Base Deficit. A Borrowing Base Deficit shall exist
and such condition shall continue unremedied until the earlier to occur of
the next Distribution Date and the second Business Day after such Borrowing
Base Deficit arose.
10.2.4 Default Ratio. The Default Ratio shall equal or exceed 2.38% on
a rolling three-month average basis.
10.2.5 Dilution Ratio. The Dilution Ratio shall equal or exceed 4.12%
on a rolling three-month average basis.
10.2.6 Delinquency Ratio. The Delinquency Ratio shall equal or exceed
2.24% on a rolling three-month average basis.
10.2.7 Event of Default. An Event of Default shall have occurred and
be continuing.
10.2.8 Validity of Transaction Documents. (a) Any Transaction
Document, or any lien or security interest granted thereunder, shall
(except in accordance with its terms), in whole or in part, terminate,
cease to be effective or cease to be the legally valid, binding and
enforceable obligation of Borrower, Servicer or any Seller party to such
Transaction Document, (b) Borrower, any Seller or Servicer shall, directly
or indirectly, contest in any manner such effectiveness, validity, binding
nature or enforceability or (c) any security interest securing any
Obligation shall, in whole or in part, cease to be a perfected first
priority security interest.
10.2.9 Termination Date. The "Termination Date" under and as defined
in the Receivables Sale Agreement shall occur. -
10.2.10 Performance Undertaking. Performance Guarantor shall fail to
perform or observe any term, covenant or agreement required to be performed
by it under the Performance Undertaking, or the Performance Undertaking
shall cease to be effective or to be the legally valid, binding and
enforceable obligation of Performance Guarantor, or Performance Guarantor
shall directly or indirectly contest in any manner such effectiveness,
validity, binding nature or enforceability.
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10.2.11 Change of Control. Bowater shall cease to own, directly or
indirectly, 100% of the outstanding voting stock of BAI, or BAI shall cease
to own 100% of the outstanding voting stock of Borrower.
Section 10.3 Effect of Significant Event.
10.3.1 Optional Termination. Upon the occurrence and during the
continuance of a Significant Event (other than an Event of Default
described in Section 10.1.4), the Administrative Agent may, and shall at
the direction of any Co-Agent, by notice to Borrower and the Co-Agents (a
copy of which shall be promptly forwarded by each of the Co-Agents to each
applicable Rating Agency), declare all or any portion of the Obligations to
be due and payable, the LC Issuers' several obligations to issue Letter of
Credit to be terminated and/or the Commitments of the Committed Lenders to
make Loans (if not theretofore terminated) to be terminated by declaring
the Commitment Termination Date to have occurred, whereupon the full unpaid
amount of such Loans and other Obligations which shall be so declared due
and payable shall be and become immediately due and payable, without
further notice, demand or presentment, and/or, as the case may be, the
Commitments shall terminate.
10.3.2 Automatic Termination. Upon the occurrence of an Event of
Default described in Section 10.1.4, the Commitment Termination Date shall
be deemed to have occurred automatically, and all Obligations shall become
immediately and automatically due and payable, all without presentment,
demand, protest, or notice of any kind.
10.3.3 Notice to Rating Agencies. Each Co-Agent shall notify each
applicable Rating Agency of the occurrence of any continuing Significant
Event, promptly following its actual knowledge thereof.
10.3.4 Cash-Collateralization of LC Obligations. Upon acceleration of
the LC Obligations pursuant to Section 10.3.1 or Section 10.3.2, Borrower
shall be and become thereby unconditionally obligated, without any further
notice, act or demand, to pay to the LC Issuers, an amount equal to all
Reimbursement Obligations then outstanding, together with accrued and
unpaid interest and L/C Fees thereon, and to deposit into the Letter of
Credit Collateral Accounts an aggregate amount equal to the Aggregate Face
Amount Outstanding, together with an amount equal to the L/C Fees that will
accrue thereon through the expiry date of each Letter of Credit. Each LC
Issuer may at any time or from time to time after funds are deposited in
its Letter of Credit Collateral Account, apply such funds to the payment of
draws under outstanding Letters of Credit issued by it and any other
amounts as shall from time to time have become due and payable by Borrower
to such LC Issuer under the Transaction Documents. After all of the LC
Obligations have been indefeasibly paid in full and the several obligations
of the LC Issuers to issue Letters of Credit has been terminated, any funds
remaining in the Letter of Credit Collateral Accounts shall be returned by
the LC Issuers to Borrower or paid to whomever may be legally entitled
thereto at such time.
10.3.5 Additional Remedies. Upon the occurrence of the Commitment
Termination Date pursuant to this Section 10.3, no Advances will be made,
no Letters of Credit will be issued, and the Administrative Agent, on
behalf of the Secured Parties, shall have, in addition to all other rights
58
and remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC of each applicable jurisdiction and other
applicable laws, which rights shall be cumulative.
10.3.6 Italian Receivables. Upon the occurrence of a Significant
Event, the Administrative Agent may, in order to maximize proceeds of the
Collateral, notify Borrower and the Co-Agents that the amount, if any,
advanced against Receivables owing from Obligors domiciled in Italy will be
deemed to have been payment for such Receivables, whereupon the
Administrative Agent, on behalf of the Secured Parties, is hereby
subrogated to Borrower's rights against the Obligors thereof.
ARTICLE XI.
THE SERVICER
Section 11.1 Bowater as Initial Servicer. The servicing, administering and
collection of the Receivables shall be conducted by the Person designated from
time to time as Servicer under this Agreement. Until such time following the
occurrence and during the continuance of a Servicer Event of Default or an
Amortization Event as the Administrative Agent, at the direction of any
Co-Agent, shall notify Bowater and Borrower in writing of the revocation of such
power and authority, Borrower, the Lenders, the LC Issuers and the Agents hereby
appoint Bowater to act as Servicer under the Transaction Documents.
Section 11.2 Certain Duties of the Servicer.
11.2.1 Authorization to Act as Borrower's Agent. Borrower hereby
appoints Servicer as its agent for the following purposes: (i) selecting
the amount of each requested Loan and executing Borrowing Requests on
behalf of Borrower, (ii) making transfers among, deposits to and
withdrawals from all deposit accounts of Borrower for the purposes
described in the Transaction Documents, (iii) arranging payment by Borrower
of all Fees, expenses, other Obligations and other amounts payable under
the Transaction Documents, (iv) causing the repayment and prepayment of the
Loans as required and permitted pursuant to Section 4.1 and (v) executing
and preparing the Monthly Reports and Borrowing Base -----------
Certificates; provided, however, that Servicer shall act in such capacity
only as an agent of Borrower and shall incur thereby no additional
obligations with respect to any Loan, and nothing herein shall be deemed to
authorize Servicer to take any action as Borrower's agent which Borrower is
precluded from taking itself. Borrower irrevocably agrees that (A) it shall
be bound by all proper actions taken by Servicer pursuant to the preceding
sentence, and (B) the Agents, the LC Issuers, the Lenders and the banks
holding all deposit accounts of Borrower are entitled to accept
submissions, determinations, selections, specifications, transfers,
deposits and withdrawal requests, and payments from Servicer on behalf of
Borrower.
11.2.2 Servicer to Act as Servicer.
(a) Servicer shall service and administer the Receivables on behalf of
Borrower and the Administrative Agent (for the benefit of the Secured
Parties)
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and shall have full power and authority, acting alone and/or through
subservicers as provided in Section 11.2.2(c), to do any and all things
which it may deem reasonably necessary or desirable in connection with such
servicing and administration and which are consistent with this Agreement.
Consistent with the terms of this Agreement, Servicer may waive, modify or
vary any term of any Receivable or consent to the postponement of strict
compliance with any such term or in any manner, grant indulgence to any
Obligor if, in Servicer's reasonable determination, such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of Borrower or the Administrative Agent (for the benefit of the
Secured Parties); provided, however, that Servicer may not permit any
modification with respect to any Receivable that would reduce the Unpaid
Balance (except for actual payments thereof), or extend the due date
thereof, except that Servicer may take such actions with respect to
Defaulted Receivables if such actions will, in Servicer's reasonable
business judgment, maximize the Collections thereof. Without limiting the
generality of the foregoing, Servicer in its own name or in the name of
Borrower is hereby authorized and empowered by Borrower when Servicer
believes it appropriate in its best judgment to execute and deliver, on
behalf of Borrower, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Receivables.
(b) Servicer shall service and administer the Receivables by employing
such procedures (including collection procedures) and degree of care, in
each case consistent with applicable law, with the Credit and Collection
Policy and with prudent industry standards, as are customarily employed by
Servicer in servicing and administering receivables owned or serviced by
Servicer comparable to the Receivables. Servicer shall not take any action
to impair the Administrative Agent's (for the benefit of the Secured
Parties) security interest in any Receivable, except to the extent allowed
pursuant to this Agreement or required by law.
(c) At any time while Bowater is acting as the Servicer hereunder,
Bowater may delegate, and Bowater hereby advises the Lenders, the LC
Issuers and the Agents that it has delegated, to BAI, as sub-servicer of
the Servicer, certain of its duties and responsibilities as Servicer
hereunder. Without the prior written consent of each of the Agents, Bowater
shall not be permitted to delegate any of its duties or responsibilities as
Servicer to any Person other than (i) Borrower, (ii) BAI, and (iii) with
respect to certain Defaulted Receivables, outside collection agencies in
accordance with its customary practices. Neither Borrower nor BAI shall be
permitted to further delegate to any other Person any of the duties or
responsibilities of the Servicer delegated to it by Bowater. If at any time
following the occurrence and during the continuance of a Servicer Event of
Default or Amortization Event, the Administrative Agent shall designate as
Servicer any Person other than Bowater, all duties and responsibilities
theretofore delegated by Bowater to Borrower or BAI may, at the discretion
of any of the Agents, be terminated forthwith on notice given by the
Administrative Agent to Bowater and to Borrower and BAI. Notwithstanding
the foregoing: (i) Bowater
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shall be and remain primarily liable to the Agents, the LC Issuers and the
Lenders for the full and prompt performance of all duties and
responsibilities of the Servicer hereunder and (ii) the Agents, the LC
Issuers and the Lenders shall be entitled to deal exclusively with Bowater
in matters relating to the discharge by the Servicer of its duties and
responsibilities hereunder.
(d) Except as provided in the penultimate sentence of the preceding
clause (c), the Agents, the LC Issuers and the Lenders shall not be
required to give notice, demand or other communication to any Person other
than Bowater in order for communication to the Servicer and its
sub-servicer or other delegate with respect thereto to be accomplished.
Bowater, at all times that it is the Servicer, shall be responsible for
providing any sub-servicer or other delegate of the Servicer with any
notice given to the Servicer under this Agreement.
(e) Servicer may take such actions as are necessary to discharge its
duties as Servicer in accordance with this Agreement, including the power
to execute and deliver on behalf of Borrower such instruments and documents
as may be customary, necessary or desirable in connection with the
performance of Servicer's duties under this Agreement (including consents,
waivers and discharges relating to the Receivables).
(f) Servicer shall keep separate records covering the transactions
contemplated by this Agreement, including the identity and collection
status of each Receivable purchased by Borrower from any Seller and the
Purchase Price Credits.
11.2.3 Collections.
(a) On or prior to the Closing Date, Borrower and Servicer shall have
established and shall maintain thereafter the following system of
collecting and processing Collections of Receivables: The Obligors shall be
instructed to make payments of Receivables only (i) by check, draft or
money order mailed to a LockBox listed on Schedule 8.12 (such payments,
upon receipt in such a LockBox, being referred to herein as "Mail
Payments"), or (ii) by wire transfer, SWIFT, ACH or other electronic
payment to a LockBox Account.
(b) On or prior to the Closing Date, the Administrative Agent shall
have received a LockBox Agreement with respect to each LockBox Account.
Servicer's right of access to any LockBox Account shall be revocable upon
notice from the Administrative Agent, at the direction of any of the
Co-Agents, following the occurrence and during the continuance of a
Servicer Event of Default, an Event of Default or an Incipient Bankruptcy
for distribution to the Servicer and, on Distribution Dates, application in
accordance with Article IV (it being understood that an Incipient
Bankruptcy shall not, in and of itself, lead to the Commitment Termination
Date). In addition, after the occurrence and during the continuance of any
Servicer Event of Default or an Event of Default, Servicer agrees that it
shall, upon the written request of all of the Agents, notify all
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Obligors under Receivables to make payment thereof to (i) one or more bank
accounts and/or post-office boxes designated by the Administrative Agent
and specified in such notice or (ii) any successor Servicer appointed
hereunder. No Agent, LC Issuer or Lender shall, inter alia, (x) take any
action under LockBox Agreement or (y) deliver any notice to any Obligor,
absent the existence of a Servicer Event of Default or an Event of Default.
(c) Servicer shall remove all Mail Payments, or cause all Mail
Payments to be removed, from each LockBox by the close of business on each
Business Day and deposited into a LockBox Account. Servicer shall process
all such Mail Payments, and all other payments received in any form, within
three (3) Business Days of the date such payment is received by Bowater, by
recording the amount of the payment received from the Obligor and the
applicable account or invoice number.
(d) All Collections received by any Seller or Servicer in respect of
Receivables will, pending remittance to a LockBox Account, be held by such
Seller or Servicer in trust for the exclusive benefit of the Administrative
Agent, on behalf of the Secured Parties, and shall not be commingled with
any other funds or property of any Seller or Servicer; provided that it
shall not constitute commingling in violation of this Agreement or any
Transaction Document if such funds or property not representing Collections
are deposited to the same account to which Collections are deposited, so
long as Servicer maintains adequate books and records to properly identify
such respective funds, and such funds are so identified within three (3)
Business Days after deposit in such account.
(e) Borrower and Servicer hereby irrevocably waive any right to
set-off or otherwise deduct any amount owing by or to them from any
Collections received by them prior to remittance thereof in accordance with
this Agreement.
(f) In performing its duties and obligations hereunder, Servicer (i)
shall not impair the rights of Borrower or the Administrative Agent, on
behalf of the Secured Parties, in any Receivable, (ii) shall not amend the
terms of any Receivable other than in accordance with the Credit and
Collection Policy and this Agreement, (iii) shall not release any goods
securing a Receivable from the lien created by such Receivable except as
specifically provided for herein, and (iv) shall be entitled to commence or
settle any legal action to enforce collection of any Receivable or to
foreclose upon or repossess any goods securing such Receivable. In the
event that Servicer shall breach any of its covenants set forth in clause
(i), (ii) or (iii) of this Section 11.2.3(f), Servicer shall pay the Unpaid
Balance of each Receivable affected thereby on the Distribution Date
following the Calculation Period in which such event occurs. For the
purposes of Section 11.7 hereof, Servicer shall not be deemed to have
breached its obligations under this Section 11.2.3(f) unless it shall fail
to make such payment with respect to any Receivable affected by Servicer's
noncompliance with clause (i), (ii) or (iii) of this Section 11.2.3(f) on
such Distribution Date.
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(g) All payments or other amounts collected or received by Servicer in
respect of a Receivable shall be applied to the Unpaid Balance of such
Receivable.
11.2.4 Settlement. On each Distribution Date, Servicer shall
distribute the Collections in accordance with Article IV hereof.
Section 11.3 Servicing Compensation. Servicer, as compensation for its
activities hereunder, shall be entitled to receive the Servicing Fee, which
shall be payable by Borrower on each Distribution Date from Collections in
accordance with Section 4.2. Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder (including
payment of the fees and expenses of any subservicer) and shall not be entitled
to reimbursement therefor except as specifically provided herein.
Section 11.4 Agreement Not to Resign. Bowater acknowledges that the Agents,
the LC Issuers and the Lenders have relied on Bowater's agreement to act as
Servicer hereunder in their respective decisions to execute and deliver the
respective Transaction Documents to which they are parties. In recognition of
the foregoing, Bowater agrees not to resign as Servicer voluntarily, except as
required by law (as evidenced by the delivery of an outside opinion of counsel
to the Agents, in form and substance satisfactory to the Agents), without the
prior written consent of each of the Agents.
Section 11.5 Designation of Servicer. Borrower agrees not to designate any
Person other than Bowater as Servicer without the prior written consent of each
of the Agents.
Section 11.6 Termination. The authorization of Servicer to act on behalf of
Borrower under this Agreement and the other Transaction Documents shall
terminate at the sole discretion of the Administrative Agent upon the
replacement of Servicer by a successor Servicer selected by at least two (2) of
the Co-Agents following a Servicer Event of Default or another Amortization
Event.
Section 11.7 Servicer Events of Default. Each of the following shall
constitute a "Servicer Event of Default" under this Agreement:
11.7.1 Failure to Make Payments and Deposits. Servicer shall fail to
make any payment or deposit required to be made by it hereunder on the date
when due and, in each of the foregoing cases, such failure shall continue
for one (1) Business Day in the case of principal and three (3) Business
Days in the case of any other Obligation.
11.7.2 Non-Compliance with Other Provisions. Servicer shall fail to
perform or observe any other term, covenant or agreement contained in this
Agreement or any other Transaction Document on its part to be performed or
observed and any such failure shall remain unremedied for thirty (30) days.
11.7.3 Delegation. Servicer shall delegate any of its duties
hereunder, except as expressly permitted under Section 11.2.2(c) and (d).
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11.7.4 Breach of Representations and Warranties. Any representation,
warranty, certification or statement made by Servicer in this Agreement,
any other Transaction Document to which Servicer is a party or in any
Borrowing Base Certificate, Monthly Report or other document delivered
pursuant hereto or thereto shall prove to have been incorrect in any
material respect when made or deemed made; provided that the materiality
threshold in the preceding clause shall not be applicable with respect to
any representation or warranty which itself contains a materiality
threshold.
11.7.5 Bankruptcy. An Event of Bankruptcy shall have occurred and
remained continuing with respect to Servicer.
11.7.6 Judgments.
(a) A final judgment or judgments for the payment of money in excess
of $10,000,000 in the aggregate (exclusive of judgment amounts fully
covered by insurance where the insurer has admitted liability in respect of
such judgment) or in excess of $50,000,000 in the aggregate (regardless of
insurance coverage) shall be rendered by one or more courts, administrative
tribunals or other bodies having jurisdiction against Bowater and the same
shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within
thirty (30) days from the date of entry thereof and Bowater shall not,
within said period of thirty (30) days, or such longer period during which
execution of the same shall have been stayed, appeal therefrom and cause
the execution thereof to be stayed during such appeal, or
(b) A final judgment or judgments for the payment of money in excess
of $10,749 in the aggregate (regardless of insurance coverage) shall be
rendered by one or more courts, administrative tribunals or other bodies
having jurisdiction against Borrower and the same shall not be discharged
(or provision shall not be made for such discharge), or a stay of execution
thereof shall not be procured, within thirty (30) days from the date of
entry thereof and Borrower shall not, within said period of thirty (30)
days, or such longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal.
11.7.7 Cross-Default to Material Debt. Failure of Servicer or any of
its Subsidiaries to pay any Material Debt when due; or the default by
Servicer or any of its Subsidiaries in the performance of any term,
provision or condition contained in any agreement under which any Material
Debt was created or is governed, or any other event shall occur or
condition exist, the effect of which is to cause, or to permit the holder
or holders of such Material Debt to cause, such Indebtedness to become due
prior to its stated maturity; or any Material Debt of Servicer or any of
its Subsidiaries shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled payment or as a result of the
sale of an asset securing such Material Debt) prior to the stated maturity
thereof.
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At any time during the continuance of any Servicer Event of Default or an
Amortization Event, the Administrative Agent may, in its sole discretion, (and
shall, at the direction of any Co-Agent), notify Servicer in writing of the
revocation of its appointment as Servicer hereunder. Upon revocation of
Servicer's appointment hereunder, the Co-Agents shall appoint a successor
Servicer. Servicer agrees that upon receipt of written notification from the
Administrative Agent of the revocation of Servicer's appointment as Servicer
hereunder, Servicer shall upon the written request of the Administrative Agent
(which request may be contained in the notification of revocation) (i) notify
all Obligors under the Receivables to make payment thereof to a bank account(s)
or post office box designated by the Administrative Agent and specified in such
notice, and (ii) pay to the Administrative Agent (or its designee) immediately
all Collections then held or thereafter received by Servicer or the applicable
Seller of Receivables, together with all other payment obligations of the
Servicer hereunder owing to any of the Lenders, the LC Issuers or the Agents.
Servicer shall, at its sole cost and expense, cooperate with and assist the
successor Servicer (including, without limitation, providing access to, and
transferring, all Receivable Files and all records (including data-processing
records) relating thereto (which shall be held in trust for the benefit of the
parties hereto in accordance with their respective interests) and, to the extent
permissible, allowing the successor Servicer to use all licenses, hardware or
software necessary or desirable to collect the Receivables) (it being understood
and agreed that Bowater shall use its best efforts to obtain permission for such
successor Servicer's use of such software). Bowater irrevocably agrees to act
(if requested to do so) as the data-processing agent for the successor Servicer
(in substantially the same manner as Bowater conducted such data-processing
functions while it acted as Servicer). All costs and expenses incurred by the
Servicer, successor Servicer, the LC Issuers, the Lenders, the Agents or their
respective counsel in connection with any transfer of servicing are for the
account of Bowater and Borrower, jointly and severally.
ARTICLE XII.
AGENTS
Section 12.1 Authorization and Action.
(a) Each of Three Pillars and STB hereby appoints SunTrust Capital Markets,
Inc. as its Co-Agent for purposes of the Transaction Documents and authorizes
SunTrust Capital Markets, Inc. in such capacity to take such action on its
behalf under each Transaction Document and to exercise such powers hereunder and
thereunder as are delegated to SunTrust Capital Markets, Inc., as the Three
Pillars Agent, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Each of VFCC and Wachovia hereby appoints
Wachovia Bank, National Association as its Co-Agent for purposes of the
Transaction Documents and authorizes Wachovia Bank, National Association, in
such capacity to take such action on its behalf under each Transaction Document
and to exercise such powers hereunder and thereunder as are delegated to
Wachovia Bank, National Association, as VFCC Agent, by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto.
(b) Each of the Lenders, the LC Issuers and the Co-Agents hereby appoints
SunTrust Capital Markets, Inc. as its Administrative Agent for purposes of the
Transaction Documents and authorizes SunTrust Capital Markets, Inc. in such
capacity to take such action on its behalf under each Transaction Document and
to exercise such powers hereunder and
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thereunder as are delegated to SunTrust Capital Markets, Inc., as Administrative
Agent, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto.
(c) Notwithstanding any provision to the contrary elsewhere in this
Agreement, none of the Agents shall have any duties or responsibilities, except
those expressly set forth in the Transaction Documents to which it is a party,
or any fiduciary relationship with any Lender or LC Issuer, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities on
the part of such Agent shall be read into any Transaction Document or otherwise
exist against such Agent.
(d) The provisions of this Article XII are solely for the benefit of the
Agents, the LC Issuers and the Lenders, and neither of Borrower nor Servicer
shall have any rights as a third-party beneficiary or otherwise under any of the
provisions of this Article XII, except that this Article XII shall not affect
any obligations which any of the Agents, the LC Issuers or the Lenders may have
to either of Borrower or Servicer under the other provisions of this Agreement.
(e) In performing its functions and duties hereunder, (i) the VFCC Agent
shall act solely as the agent of the members of the VFCC Group and does not
assume nor shall be deemed to have assumed any obligation or relationship of
trust or agency with or for either Borrower or Servicer or any of their
respective successors and assigns, (ii) the Three Pillars Agent shall act solely
as the agent of the members of the Three Pillars Group and does not assume nor
shall be deemed to have assumed any obligation or relationship of trust or
agency with or for either Borrower or Servicer or any of their respective
successors and assigns, and (iii) the Administrative Agent shall act solely as
the agent of the Secured Parties and does not assume nor shall be deemed to have
assumed any obligation or relationship of trust or agency with or for either
Borrower or Servicer or any of their respective successors and assigns.
Section 12.2 Delegation of Duties. Each of the Agents may execute any of
its duties under the Transaction Documents to which it is a party by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. None of the Agents shall be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
Section 12.3 Exculpatory Provisions. None of the Agents nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them or any Person described in
Section 12.2 under or in connection with this Agreement (except for its, their
or such Person's own bad faith, gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Lenders, the LC Issuers or other Agents
for any recitals, statements, representations or warranties made by Borrower
contained in this Agreement or in any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other document furnished
in connection herewith, or for any failure of either Borrower or Servicer to
perform its respective obligations hereunder, or for the satisfaction of any
condition specified in Article VII, except receipt of items required to be
delivered to such Agent. None of the Agents shall be under any obligation to any
other Agent or any Lender or LC Issuer to ascertain or to
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inquire as to the observance or performance of any of the agreements or
covenants contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of Borrower, Servicer or Sellers. This Section 12.3
is intended solely to govern the relationship between the Agents, on the one
hand, and the LC Issuers and the Lenders, on the other.
Section 12.4 Reliance by Agents.
(a) Each of the Agents shall in all cases be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Loan Parties), independent accountants and other
experts selected by such Agent. Each of the Agents shall in all cases be fully
justified in failing or refusing to take any action under this Agreement or any
other document furnished in connection herewith unless it shall first receive
such advice or concurrence of such of the members of its Group as it shall
determine to be appropriate under the relevant circumstances, or it shall first
be indemnified to its satisfaction by its constituent Liquidity Banks against
any and all liability, cost and expense which may be incurred by it by reason of
taking or continuing to take any such action.
(b) Any action taken by any of the Agents in accordance with Section
12.4(a) shall be binding upon all of the Agents, the LC Issuers and the Lenders.
Section 12.5 Notice of Significant Events. None of the Agents shall be
deemed to have knowledge or notice of the occurrence of any Significant Event or
Unmatured Significant Event unless such Agent has received notice from another
Agent, a Lender, an LC Issuer or a Loan Party referring to this Agreement,
stating that a Significant Event or Unmatured Significant Event has occurred
hereunder and describing such Significant Event or Unmatured Significant Event.
In the event that any of the Agents receives such a notice, it shall promptly
give notice thereof to the Lenders, the LC Issuers and the other Agents. The
Administrative Agent shall take such action with respect to such Significant
Event or Unmatured Significant Event as shall be directed by any of the
Co-Agents provided that the Administrative Agent is indemnified to its
satisfaction by such Co-Agent and its Constituent Liquidity Banks against any
and all liability, cost and expense which may be incurred by it by reason of
taking any such action.
Section 12.6 Non-Reliance on Other Agents and Lenders. Each of the Lenders
and LC Issuers expressly acknowledges that none of the Agents, nor any of the
Agents' respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
any of the Agents hereafter taken, including, without limitation, any review of
the affairs of the Loan Parties, shall be deemed to constitute any
representation or warranty by such Agent. Each of the Lenders and LC Issuers
also represents and warrants to the Agents and the other LC Issuers and Lenders
that it has, independently and without reliance upon any such Person (or any of
their Affiliates) and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of the Loan Parties and made its own decision to enter into
this Agreement.
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Each of the Lenders and LC Issuers also represents that it will, independently
and without reliance upon the Agents or any other LC Issuer or Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
prospects, financial and other condition and creditworthiness of the Loan
Parties. The Agents, the LC Issuers, the Lenders and their respective
Affiliates, shall have no duty or responsibility to provide any party to this
Agreement with any credit or other information concerning the business,
operations, property, prospects, financial and other condition or
creditworthiness of the Loan Parties which may come into the possession of such
Person or any of its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates, except that each of the Agents shall promptly
distribute to the other Agents, the LC Issuers and the Lenders, copies of
financial and other information expressly provided to it by either Borrower or
Servicer pursuant to this Agreement.
Section 12.7 Indemnification of Agents. Each Liquidity Bank agrees to
indemnify (a) its applicable Co-Agent, (b) the Administrative Agent, and (c) the
officers, directors, employees, representatives and agents of each of the
foregoing (to the extent not reimbursed by the Loan Parties and without limiting
the obligation of the Loan Parties to do so), ratably in accordance with their
respective Loans, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for such Co-Agent, the Administrative Agent or
such Person in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Co-Agent or the
Administrative Agent or such Person shall be designated a party thereto) that
may at any time be imposed on, incurred by or asserted against such Co-Agent,
the Administrative Agent or such Person as a result of, or arising out of, or in
any way related to or by reason of, any of the transactions contemplated
hereunder or the execution, delivery or performance of this Agreement or any
other document furnished in connection herewith (but excluding any such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the bad faith, gross
negligence or willful misconduct of such Co-Agent, the Administrative Agent or
such Person as finally determined by a court of competent jurisdiction).
Section 12.8 Agents in their Individual Capacities. Each of the Agents in
its individual capacity and its affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Loan Parties and
their Affiliates as though such Agent were not an Agent hereunder. With respect
to its Loans or, solely in the case of Wachovia, its Letters of Credit, if any,
pursuant to this Agreement, each of the Agents shall have the same rights and
powers under this Agreement as any Lender or LC Issuer and may exercise the same
as though it were not an Agent, and the terms "Lender" and "Lenders" shall
include each of the Agents in their individual capacities.
Section 12.9 Conflict Waivers.
(a) STCM and/or STB act(s), or may in the future act: (i) as administrator
for Three Pillars, (ii) an LC Issuer, (iii) as issuing and paying agent for
Three Pillars' Commercial
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Paper Notes, (iv) to provide credit or liquidity enhancement for the timely
payment for Three Pillars' Commercial Paper Notes and (iv) to provide other
services from time to time for Three Pillars (collectively, the "SunTrust
Roles"). Without limiting the generality of Sections 12.1 and 12.8, each of the
other Co-Agents, the LC Issuers and the Lenders hereby acknowledges and consents
to any and all SunTrust Roles and agrees that in connection with any SunTrust
Role, STCM and/or STB may take, or refrain from taking, any action which it, in
its discretion, deems appropriate, including, without limitation, in STCM's role
as administrator for Three Pillars, the giving of notice to the Three Pillars
Liquidity Banks of a mandatory purchase pursuant to the Three Pillars Liquidity
Agreement, and hereby acknowledges that neither STCM, STB nor any of their
Affiliates has any fiduciary duties hereunder to any Lender (other than Three
Pillars) or LC Issuer arising out of any SunTrust Roles.
(b) Wachovia acts, or may in the future act: (i) as
administrative agent for VFCC, (ii) an LC Issuer, (iii) as issuing and paying
agent for VFCC's Commercial Paper Notes, (iv) to provide credit or liquidity
enhancement for the timely payment for VFCC's Commercial Paper Notes and (v) to
provide other services from time to time for VFCC (collectively, the "Wachovia
Roles"). Without limiting the generality of Sections 12.1 and 12.8, each of the
Administrative Agent, the LC Issuers and the Lenders hereby acknowledges and
consents to any and all Wachovia Roles and agrees that in connection with any
Wachovia Role, Wachovia may take, or refrain from taking, any action which it,
in its discretion, deems appropriate, including, without limitation, in its role
as administrative agent for VFCC, the giving of notice to the VFCC Liquidity
Banks of a mandatory purchase pursuant to the VFCC Liquidity Agreement, and
hereby acknowledges that neither Wachovia nor any of its Affiliates has any
fiduciary duties hereunder to any Lender (other than VFCC) or other LC Issuer
arising out of any Wachovia Roles.
Section 12.10 UCC Filings. Each of the Secured Parties hereby expressly
recognizes and agrees that the Administrative Agent may be listed as the
assignee or secured party of record on the various UCC filings required to be
made under the Transaction Documents in order to perfect their respective
interests in the Collateral, that such listing shall be for administrative
convenience only in creating a record or nominee holder to take certain actions
hereunder on behalf of the Secured Parties and that such listing will not affect
in any way the status of the Secured Parties as the true parties in interest
with respect to the Collateral. In addition, such listing shall impose no duties
on the Administrative Agent other than those expressly and specifically
undertaken in accordance with this Article XII.
ARTICLE XIII.
ASSIGNMENTS
Section 13.1 Restrictions on Assignments.
(a) Neither Borrower nor Bowater may assign its rights or obligations under
the Transaction Documents to which it is a party or any interest therein without
the prior written consent of each of the Agents, except to the Administrative
Agent for the benefit of the Secured Parties.
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(b) Subject to the provisions of Sections 6.1 and 13.4, nothing herein
shall be deemed to preclude any Lender from pledging or assigning all or any
portion of its Loans to (i) any multi-seller commercial paper conduit
administered by a Co-Agent or one of its Affiliates whose commercial paper is
rated at least A-1 by S&P and P-1 by ▇▇▇▇▇'▇, or (ii) any Liquidity Bank or
other Support Provider (or any successor of any thereof by merger, consolidation
or otherwise) or any Affiliate of the foregoing, in each of the foregoing cases,
which may then assign all or any portion thereof so assigned or any interest
therein to such party or parties as it may choose. Each Co-Agent shall promptly
provide notice of any assignment by any member of its Group to each applicable
Rating Agency and Borrower. Subject to Section 13.2, all of the aforementioned
assignments shall be upon such terms and conditions as the applicable Lender and
its assignee may mutually agree. Upon any assignment described in clause (i) of
this Section 13.1(b) by a Conduit Lender of all its right, title and interest in
and to the Transaction Documents, all references in the Transaction Documents to
the assigning Conduit Lender or its Co-Agent shall be deemed to have been
replaced with references to the assignee Conduit Lender and its Co-Agent, and CP
Costs for the assignee's Group shall be computed with reference to the assignee
Conduit Lender's Commercial Paper Notes.
Section 13.2 Documentation. Each Lender shall deliver to each assignee an
assignment, in such form as such Lender and the related assignee may agree, duly
executed by such Lender, assigning any such Loan to the assignee, and such
Lender shall promptly execute and deliver all further instruments and documents,
and take all further action, that the assignee may reasonably request, in order
to perfect, protect or more fully evidence the assignee's right, title and
interest in and to such Loan, and to enable the assignee to exercise or enforce
any rights hereunder or under the applicable Lender Note evidencing such Loan.
Section 13.3 Rights of Assignees. Subject to the provisions of Section
13.4, upon the foreclosure of any assignment of any Loans made for security
purposes, or upon any other assignment of any Loan from a Lender pursuant to
this Article XIII, the respective assignee receiving such assignment shall have
all of the rights of a Lender hereunder to the extent of such assignment with
respect to such Loans and all references to a Lender in Section 6.1 shall be
deemed to apply to such assignee to the extent of such assignment.
Section 13.4 Transfer and Maintenance of Register. Each Co-Agent shall
maintain a register (each, a "Register") on which it will record the Loans made
to Borrower by the member of its Group hereunder and each repayment in respect
of the principal amount of such Loans. Each Co-Agent shall, upon receipt of
instruments evidencing the transfer of the rights to the principal of, and
interest on, any Loan made by a member of its Group pursuant to this Agreement,
record such transfer in the Register and such transfer shall be effective upon
recordation. Failure to make any such recordation, or any error in such
recordation shall not affect the respective Borrower's obligations in respect of
such Loans. If any Lender sells participations in any Loan, it shall maintain
(or cause its Co-Agent to maintain) a Register with respect to such
participations and shall permit the transfer of such participations only if and
when the transfer is recorded in the Register. Each Co-Agent will permit
Borrower to review such Register as reasonably needed for Borrower to comply
with its obligations under this Agreement or under any applicable law or
governmental regulation or procedure.
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ARTICLE XIV.
INDEMNIFICATION
Section 14.1 General Indemnity of Borrower. Without limiting any other
rights which any such Person may have hereunder or under applicable law,
Borrower hereby agrees to indemnify Servicer and each of the Agents, Lenders, LC
Issuers, Support Providers and each of their respective Affiliates, successors,
transferees, participants and assigns and all officers, directors, shareholders,
controlling persons, employees and agents of any of the foregoing (each of the
foregoing Persons being individually called an "Indemnified Party"), forthwith
on demand, on an after-tax basis, from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
called "Indemnified Amounts") awarded against or incurred by any of them arising
out of or relating to any Transaction Document or the transactions contemplated
thereby, any commingling of funds (whether or not permitted hereunder), or the
use of proceeds therefrom by Borrower, including (without limitation) in respect
of the funding of any Loan, the issuance of any Letter of Credit or in respect
of any Receivable; excluding, however, (a) Indemnified Amounts to the extent a
final judgment of a court of competent jurisdiction holds that such Indemnified
Amounts resulted from gross negligence or willful misconduct on the part of the
Indemnified Party seeking indemnification or any member of its Group, (b)
Excluded Taxes, and (c) Indemnified Amounts arising from an LC Issuer's failure
to pay under any Letter of Credit after the presentation to it of a request
strictly complying with the terms of such Letter of Credit.
Section 14.2 Indemnity of Servicer. Without limiting any other rights which
any such Person may have hereunder or under applicable law, Servicer, hereby
agrees to indemnify each Indemnified Party forthwith on demand, on an after-tax
basis, from and against any and all Indemnified Amounts awarded against or
incurred by any of them arising from, or related to, the negligence or willful
misconduct of Servicer, the inaccuracy of any representation or warranty of
Servicer, or the failure of Servicer to perform its obligations under any
Transaction Document; excluding, however, (a) Indemnified Amounts to the extent
determined by a court of competent jurisdiction to have resulted from gross
negligence or willful misconduct on the part of any Indemnified Party, (b)
Indemnified Amounts to the extent solely due to non-payment by any Obligor of an
amount due and payable with respect to a Receivable for credit reasons, and (c)
Excluded Taxes. Anything contained in this Section 14.2 to the contrary
notwithstanding: (1) the foregoing indemnification is not intended to, and shall
not, constitute a guarantee of the collectibility or payment of the Receivables,
and (2) nothing in this Section 14.2 shall require the Servicer to indemnify any
Indemnified Party for Receivables which are not collected, not paid or are
otherwise uncollected on account of the insolvency, bankruptcy, lack of
creditworthiness or financial inability to pay of the applicable Obligor.
ARTICLE XV.
MISCELLANEOUS
Section 15.1 No Waiver; Remedies. No failure on the part of any of the
Indemnified Parties or Affected Parties to exercise, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by any of them of any right, power or
remedy hereunder preclude any other or further exercise
71
thereof, or the exercise of any other right, power or remedy. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law. Without limiting the foregoing, each of the Committed Lenders, the LC
Issuers and the Support Providers is hereby authorized by Borrower at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such
Committed Lender, LC Issuer or Support Provider to or for the credit or the
account of Borrower, now or hereafter existing under this Agreement, to any of
the Agents, Affected Parties, Indemnified Parties or Lenders or their respective
successors and assigns.
Section 15.2 Amendments, Etc. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement and any Schedules
hereto shall in any event be effective unless the same shall be in writing and
signed and delivered by (i) Borrower, Servicer, and each of the Agents (with
respect to an amendment), or (ii) each of the Agents (with respect to a waiver
or consent by the Agents, the LC Issuers and the Lenders) or Servicer or
Borrower (with respect to a waiver or consent by them), as the case may be, and
then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. Each of the Co-Agents shall
provide each applicable Rating Agency with a copy of each amendment to or
consent or waiver under this Agreement promptly following the effective date
thereof if required under the terms of such Co-Agent's respective Conduit
Lender's program documents.
Section 15.3 Notices, Etc. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by certified
mail, postage prepaid, or by facsimile, to the intended party at the address or
facsimile number of such party set forth opposite its name on Schedule 15.3
hereto or at such other address or facsimile number as shall be designated by
such party in a written notice to the other parties hereto. All such notices and
communications shall be effective, (a) if personally delivered, when received,
(b) if sent by certified mail, three Business Days after having been deposited
in the mail, postage prepaid, (c) if sent by overnight courier, one Business Day
after having been given to such courier, and (d) if transmitted by facsimile or
e-mail, when sent, receipt confirmed by telephone or electronic means, except
that notices and communications pursuant to Section 2.2 shall not be effective
until received.
Section 15.4 Costs, Expenses and Taxes. In addition to its obligations
under Section 14.1, Borrower agrees to pay on demand:
(a) except to the extent limited by Section 9.1.11 and the Fee
Letters, all costs and expenses incurred by the Agents, the LC Issuers, the
Lenders, the Liquidity Banks, the Support Providers and Servicer in
connection with (i) the preparation, execution, delivery, administration
and enforcement of, or any breach of, the Transaction Documents, the
Liquidity Agreements and, to the extent directly related to this Agreement,
the other Program Documents (including any amendments or modifications of
or supplements to the Program Documents directly related to this
Agreement), including, without limitation, the reasonable fees and expenses
of counsel to any of such Persons incurred in connection
72
therewith, (ii) the perfection of the Administrative Agent's security
interest in the Collateral, (iii) the maintenance of the LockBoxes and the
LockBox Accounts, (iv) the audit of the books, records and procedures of
Sellers, Servicer and Borrower by any Agent's auditors (which may be
employees of such Agent), and (v) Rating Agency fees related to the
transactions contemplated by this Agreement; and
(b) all stamp and other transactional or filing taxes and fees payable
or determined to be payable in connection with the execution, delivery,
filing and recording of this Agreement, the Lender Note, the other
Transaction Documents, or (to the extent directly related to this
Agreement) the Program Documents, and agrees to indemnify each Indemnified
Party against any liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes and fees.
Section 15.5 Binding Effect; Survival. This Agreement shall be binding upon
and inure to the benefit of Borrower, the Lenders, the LC Issuers, the Agents
and their respective successors and assigns, and the provisions of Article VI
and Article XIV shall inure to the benefit of the Affected Parties and the
Indemnified Parties, respectively, and their respective successors and assigns;
provided, however, nothing in the foregoing shall be deemed to authorize any
assignment not permitted by Article XIII. This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms, and shall remain in full force and effect until such time, after the
Commitment Termination Date, when all Obligations have been finally and fully
paid and performed. The rights and remedies with respect to any breach of any
representation and warranty made by Borrower or Servicer pursuant to Article
VIII and the indemnification and payment provisions of Article XIV and Article
VI, Sections 15.4, 15.11 and 15.12 shall be continuing and shall survive any
termination of this Agreement and any termination of Bowater's rights to act as
Servicer hereunder or under any other Transaction Document.
Section 15.6 Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
Section 15.7 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 15.8 Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW) EXCEPT TO THE EXTENT THAT THE LAWS OF
73
ANOTHER JURISDICTION GOVERN THE PERFECTION, OR THE EFFECT OF PERFECTION OR
NONPERFECTION, OF THE SECURITY INTERESTS OF THE ADMINISTRATIVE AGENT, FOR
THE BENEFIT OF THE SECURED PARTIES.
Section 15.9 Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
but all of which shall constitute together but one and the same agreement.
Section 15.10 Submission to Jurisdiction; Waiver of Trial by Jury.
(a) Each of Borrower and Servicer hereby submits to the nonexclusive
jurisdiction of any United States District Court for the Southern District
of New York and of any New York state court sitting in New York, New York
for purposes of all legal proceedings arising out of, or relating to, the
Transaction Documents or the transactions contemplated thereby. Each of
Borrower and Servicer hereby irrevocably waives, to the fullest extent
possible, any objection it may now or hereafter have to the venue of any
such proceeding and any claim that any such proceeding has been brought in
an inconvenient forum. Nothing in this Section 15.10 shall affect the right
of any of the Agents, the LC Issuers or Lenders to bring any action or
proceeding against Borrower or Servicer or their respective properties in
the courts of other jurisdictions.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, ANY TRANSACTION
DOCUMENT OR ANY MATTER ARISING THEREUNDER.
Section 15.11 No Recourse Against Conduit Lenders. The obligations (if any)
of the Conduit Lenders under this Agreement are solely the corporate obligations
of such Conduit Lender. No recourse shall be had for any obligation, covenant or
agreement (including, without limitation, the payment of any amount owing in
respect to this Agreement or the payment of any Fee hereunder or for any other
obligation or claim) arising out of or based upon this Agreement or any other
agreement, instrument or Transaction Document entered into pursuant hereto or in
connection herewith against any stockholder, employee, officer, director,
manager, administrator, partner or incorporator of any Conduit Lender, as such,
by the enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise.
Section 15.12 No Proceedings. Each of the parties hereto hereby agree that
it will not institute against any Conduit Lender, or join any other Person in
instituting against any Conduit Lender, any insolvency proceeding (namely, any
proceeding of the type referred to in the definition of Event of Bankruptcy) so
long as any Commercial Paper Notes issued by such Conduit Lender shall be
outstanding and there shall not have elapsed one year plus one day since the
last day on which any such Commercial Paper Notes shall be outstanding. The
provisions of this Section 15.12 shall survive the termination hereof.
74
Section 15.13 Confidentiality. Each of the Agents, the LC Issuers and the
Lenders will, and will cause its affiliates, directors, officers, employees and
representatives to, keep confidential, and not publish, disclose or otherwise
divulge and use only in connection with this Agreement any non-public
information furnished to it by Bowater, any Subsidiary or any of their
respective agents in respect of this Agreement that Bowater (or such other
Person) identifies as being confidential at the time it furnishes the same,
directly or indirectly (collectively, the "Information"), provided that nothing
herein shall limit the disclosure of the Information (i) after the Information
shall have become public (other than through a violation of this Section 15.13,
(ii) to the extent required by statute, rule, regulation or judicial process,
(iii) to counsel for any of the Lenders, the LC Issuers or the Agents, (iv) to
bank examiners (or any other regulatory authority having jurisdiction over any
Lender, LC Issuer or Agent), or to auditors or accountants, (v) to any other
Agent, LC Issuer or Lender, its Support Providers or Rating Agencies, (vi) in
connection with any litigation to which any one or more of the LC Issuers, the
Lenders or the Agents is a party, or in connection with the enforcement of
rights or remedies hereunder, or (vii) to a subsidiary or affiliate of such
Agent, LC Issuer or Lender; provided, further, that (x) unless specifically
prohibited by applicable law or court order, each Lender, LC Issuer and Agent
shall, prior to disclosure thereof, notify Bowater of any request for disclosure
of the Information (A) by any Governmental Authority or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Lender, such LC Issuer or such Agent by such Governmental
Authority) or (B) pursuant to legal process and (y) in no event shall any
Lender, LC Issuer or Agent be obligated or required to return the Information
furnished by Bowater.
Section 15.14 Entire Agreement. This Agreement and the other Transaction
Documents executed and delivered herewith represent the final agreement among
the parties hereto and thereto and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements among the parties.
[signature pages begin on next page]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the day and year
first above written.
BOWATER FUNDING INC., AS BORROWER
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
BOWATER INCORPORATED, AS INITIAL SERVICER
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and Chief Financial Officer
VARIABLE FUNDING CAPITAL COMPANY LLC, AS A CONDUIT LENDER
BY: WACHOVIA BANK, NATIONAL ASSOCIATION, ITS ATTORNEY-IN-FACT
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION, AS A COMMITTED LENDER, AS AN LC ISSUER
AND AS VFCC AGENT
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Director
Commitment: $100,000,000
THREE PILLARS FUNDING LLC (F/K/A THREE PILLARS FUNDING CORPORATION),
AS A CONDUIT LENDER
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
SUNTRUST BANK, AS A COMMITTED LENDER AND AS AN LC ISSUER
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Commitment: $100,000,000
SUNTRUST CAPITAL MARKETS, INC., AS THREE PILLARS AGENT AND AS ADMINISTRATIVE
AGENT
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Director
Exhibit A
BORROWING REQUEST
[Date]
To: SunTrust Capital Markets, Inc. and
Wachovia Bank, National Association, as "Co-Agents"
From: Bowater Funding Inc. ("Borrower")
Re: Amended and Restated Loan Agreement dated as of December 1, 2005, among
Borrower, Bowater Incorporated as Servicer,
various Lenders and Co-Agents, and SunTrust Capital Markets, Inc., as
Administrative Agent (the "Agreement")
---------------------------------------------------------------------------
A (i) Pursuant to Section 2.2 of the Agreement, the
undersigned hereby requests an Advance in an aggregate
amount equal to the following:
of which each Group's Funding Amount will be the
following (not less than $1,000,000
per Group or a larger integral multiple of $200,000):
$-----------------
(ii) The date such Advance is requested is: __________________
(iii) The requested maturity date of the Related Commercial
Paper issued to fund such Advance (other than Pooled
Commercial Paper) is:
------------------
(iv) The Credit Exposure under the Agreement, after giving
effect to the requested Advance under (i) above, will
equal: $-----------------
(v) The amount in (iv) above does not exceed the Facility Limit
which equals: $_________________
B. As of the date hereof and the date of making of such Advance, each of
the representations and warranties contained in Article VIII of the
Agreement shall be true and correct on and as of the date hereof and,
if applicable, the date of such Advance, and no Significant Event or
Unmatured Significant Event has occurred and is continuing or shall
exist after giving effect to the Advance requested hereby.
Capitalized terms used but not defined herein shall have the meanings given
to them in the Agreement.
The undersigned certifies to the accuracy of the foregoing.
BOWATER FUNDING INC.
Date: By:-----------------------------------
Title:
Exhibit B
LENDER NOTE
$___________ December 1, 2005
FOR VALUE RECEIVED, Bowater Funding Inc., a Delaware corporation (the
"Borrower"), promises to pay __________________________, as agent and/or
administrator (the "Co-Agent"), or its registered assigns, on or before the
Scheduled Commitment Termination Date, the principal sum of
_________________________ and no/100 Dollars ($_________) or, if less, the
aggregate unpaid principal amount of all Loans shown on the schedule attached
hereto (and/or any continuation thereof and/or in the records of the Lender)
made by the Lenders in the ___________ Group pursuant to that certain Amended
and Restated Loan Agreement, dated as of December 1, 2005 (together with all
amendments thereto and restatements and other modifications, if any, thereof
from time to time thereafter made, the "Loan Agreement"), among Borrower,
Bowater Incorporated, as servicer, various Lenders, LC Issuers and Co-Agents,
and SunTrust Capital Markets, Inc., as Administrative Agent.
Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Loan Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in immediately available funds to the account
designated by the Co-Agent pursuant to the Loan Agreement.
This promissory note is one of the "Lender Notes" referred to in, and
evidences indebtedness incurred under, the Loan Agreement, and the holder hereof
is entitled to the benefits of the Loan Agreement, to which reference is made
for a description of the security for this Lender Note and for a statement of
the terms and conditions on which Borrower is permitted and required to make
prepayments and repayments of principal of the indebtedness evidenced hereby and
on which such indebtedness may be declared to be immediately due and payable.
Unless otherwise defined, capitalized terms used herein have the meanings
provided in the Loan Agreement. This promissory note amends and restates in its
entirety that certain Lender Note dated December 19, 2002 made by Borrower in
favor of the Co-Agent.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS LENDER NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW).
BOWATER FUNDING INC.
By
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SCHEDULE ATTACHED TO
LENDER NOTE DATED DECEMBER 1, 2005 OF
BOWATER FUNDING INC.
===============================================================================
PAYABLE TO THE ORDER OF __________________, AS CO-AGENT
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DATE OF AMOUNT OF AMOUNT OF
LOAN LOAN REPAYMENT
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EXHIBIT C
FORM OF MONTHLY REPORT
EXHIBIT D
FORM OF BORROWING BASE CERTIFICATE
EXHIBIT E
[FORM OF] PERFORMANCE UNDERTAKING
PERFORMANCE UNDERTAKING
THIS PERFORMANCE UNDERTAKING (this "Undertaking"), dated as of
December 1, 2005, is executed by Bowater Incorporated, a Delaware corporation
("Bowater" or the "Performance Guarantor"), in favor of Bowater Funding Inc., a
Delaware corporation (together with its successors and assigns, "Beneficiary").
RECITALS
(a) Bowater America Inc., a Delaware corporation ("BAI" and
together with Bowater, the "Sellers"), have entered into an Amended and
Restated Receivables Sale Agreement dated as of December 1, 2005 (as
amended, restated or otherwise modified from time to time, the
"Receivables Sale Agreement"), with Beneficiary, pursuant to which the
Sellers have agreed, among other things, to sell or contribute to
Beneficiary, their existing and future accounts receivable and certain
related rights.
(b) Performance Guarantor owns, directly or indirectly, one
hundred percent (100%) of the capital stock of BAI and of Beneficiary,
and each of the foregoing (and accordingly, Performance Guarantor) is
expected to receive substantial direct and indirect benefits from the
sale or contribution of receivables to Beneficiary pursuant to the
Receivable Sale Agreement (which benefits are hereby acknowledged).
(c) As an inducement for Beneficiary to acquire accounts
receivable and related rights from BAI pursuant to the Receivables Sale
Agreement, Performance Guarantor has agreed to guaranty the due and
punctual performance by BAI of its respective obligations under the
Receivables Sale Agreement.
AGREEMENT
NOW, THEREFORE, Performance Guarantor hereby agrees as follows:
Section 1. Definitions.
1.1. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings assigned thereto in the Receivables Sale Agreement
or, if not defined therein, in the Loan Agreement (hereinafter defined).
1.2. As used herein:
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
ss.101, et seq., as amended.
"Guaranteed Obligations" means, collectively, all representations,
warranties, covenants, agreements, terms, conditions and indemnities to be
performed and observed by BAI under and pursuant to the Receivables Sale
Agreement and each other document executed and delivered by or on behalf of BAI
pursuant thereto, including, without limitation, the due and punctual payment of
all sums which are or may become due and owing by BAI under the Receivables Sale
Agreement, whether for fees, expenses (including counsel fees), Seller
Indemnified Amounts or otherwise, whether upon any termination or for any other
reason.
"Loan Agreement" means that certain Amended and Restated Loan Agreement
dated as of December 1, 2005 by and among Beneficiary, as "Borrower," Bowater,
as initial Servicer, various Lenders, LC Issuers and Co-Agents, and SunTrust
Capital Markets, Inc., as "Administrative Agent," as the same may be amended,
restated or otherwise modified from time to time.
Section 2. Guaranty of Performance of Guaranteed Obligations.
2.1. Performance Guarantor hereby guarantees to Beneficiary, the full and
punctual payment and performance by BAI of the Guaranteed Obligations. This
Undertaking is an absolute, unconditional and continuing guaranty of the full
and punctual performance by BAI of the Guaranteed Obligations and is in no way
conditioned upon any requirement that Beneficiary first attempt to collect any
amounts owing by BAI to Beneficiary, any of the Agents, LC Issuers or Lenders
from any other Person or resort to any collateral security, any balance of any
deposit account or credit on the books of Beneficiary, any of the Agents, LC
Issuers or Lenders in favor of BAI or any other Person or other means of
obtaining payment. Should BAI default in the payment or performance of any of
its Guaranteed Obligations, Beneficiary (or its assigns) may cause the immediate
performance by Performance Guarantor of such Guaranteed Obligations and cause
any payment Guaranteed Obligations to become forthwith due and payable to
Beneficiary (or its assigns), without demand or notice of any nature (other than
as expressly provided herein), all of which are hereby expressly waived by
Performance Guarantor.
2.2. Notwithstanding the foregoing, this Undertaking is not a guarantee of
the collection of any of the Receivables and Performance Guarantor shall not be
responsible for any Guaranteed Obligations to the extent the failure to perform
such Guaranteed Obligations by BAI results from Receivables being uncollectible
on account of the insolvency, bankruptcy or lack of creditworthiness of the
related Obligor; provided that nothing herein shall relieve BAI from performing
in full its Guaranteed Obligations under the Receivables Sale Agreement or
Performance Guarantor of its undertaking hereunder with respect to the full
performance of such duties.
Section 3. Performance Guarantor's Further Agreements to Pay. Performance
Guarantor further agrees, as the principal obligor and not as a guarantor only,
to pay to Beneficiary (and its assigns), forthwith upon demand in funds
immediately available to Beneficiary, all reasonable costs and expenses
(including court costs and reasonable legal expenses) incurred or expended by
Beneficiary in connection with enforcement of this Undertaking, together with
interest on amounts recoverable under this Undertaking from the time
when such amounts become due until payment, at a rate of interest (computed for
the actual number of days elapsed based on a 360-day year) equal to the Default
Rate (as defined in the Loan Agreement).
Section 4. Waivers by Performance Guarantor. Performance Guarantor
waives notice of acceptance of this Undertaking, notice of any action taken or
omitted by Beneficiary (or its assigns) in reliance on this Undertaking, and any
requirement that Beneficiary (or its assigns) be diligent or prompt in making
demands under this Undertaking, giving notice of any Termination Event or
Significant Event, other default or omission by BAI or asserting any other
rights of Beneficiary under this Undertaking. Performance Guarantor warrants
that it has adequate means to obtain from BAI, on a continuing basis,
information concerning the financial condition of BAI, and that it is not
relying on Beneficiary to provide such information, now or in the future.
Performance Guarantor also irrevocably waives all defenses that at any time may
be available in respect of the Guaranteed Obligations (i) by virtue of any
statute of limitations, valuation, stay, moratorium law or other similar law now
or hereafter in effect or (ii) that arise under the law of suretyship, including
impairment of collateral. Beneficiary (and its assigns) shall be at liberty,
without giving notice to or obtaining the assent of Performance Guarantor and
without relieving Performance Guarantor of any liability under this Undertaking,
to deal with BAI and with each other party who now is or after the date hereof
becomes liable in any manner for any of the Guaranteed Obligations, in such
manner as Beneficiary in its sole discretion deems fit, and to this end
Performance Guarantor agrees that the validity and enforceability of this
Undertaking, including without limitation, the provisions of Section 7 hereof,
shall not be impaired or affected by any of the following: (a) any extension,
modification or renewal of, or indulgence with respect to, or substitutions for,
the Guaranteed Obligations or any part thereof or any agreement relating thereto
at any time; (b) any failure or omission to enforce any right, power or remedy
with respect to the Guaranteed Obligations or any part thereof or any agreement
relating thereto, or any collateral securing the Guaranteed Obligations or any
part thereof; (c) any waiver of any right, power or remedy or of any Termination
Event, Significant Event, or default with respect to the Guaranteed Obligations
or any part thereof or any agreement relating thereto; (d) any release,
surrender, compromise, settlement, waiver, subordination or modification, with
or without consideration, of any other obligation of any person or entity with
respect to the Guaranteed Obligations or any part thereof, other than release of
the Performance Guarantor; (e) the enforceability or validity of the Guaranteed
Obligations or any part thereof or the genuineness, enforceability or validity
of any agreement relating thereto or with respect to the Guaranteed Obligations
or any part thereof; (f) the application of payments received from any source to
the payment of any payment obligations of BAI or any part thereof or amounts
which are not covered by this Undertaking even though Beneficiary (or its
assigns) might lawfully have elected to apply such payments to any part or all
of the payment obligations of BAI or to amounts which are not covered by this
Undertaking; (g) the existence of any claim, setoff or other rights which
Performance Guarantor may have at any time against BAI in connection herewith or
any unrelated transaction; (h) any assignment or transfer of the Guaranteed
Obligations or any part thereof; or (i) any failure on the part of BAI to
perform or comply with any term of the Receivables Sale Agreement or any other
document executed in connection therewith or delivered thereunder, all whether
or not Performance Guarantor shall have had notice or knowledge of any act or
omission referred to in the foregoing clauses (a) through (i) of this Section 4.
Section 5. Unenforceability of Guaranteed Obligations Against BAI.
Notwithstanding (a) any change in ownership of BAI or any Event of Bankruptcy
with respect to BAI or any other change in the legal status of BAI; (b) the
change in or the imposition of any law, decree, regulation or other governmental
act which does or might impair, delay or in any way affect the validity,
enforceability or the payment when due of the Guaranteed Obligations (unless the
same shall be applicable to the Performance Guarantor); (c) the failure of BAI
or Performance Guarantor to maintain in full force, validity or effect or to
obtain or renew when required all governmental and other approvals, licenses or
consents required in connection with the Guaranteed Obligations or this
Undertaking, or to take any other action required in connection with the
performance of all obligations pursuant to the Guaranteed Obligations or this
Undertaking; or (d) if any of the moneys included in the Guaranteed Obligations
have become irrecoverable from BAI for any other reason other than final payment
in full of the payment obligations in accordance with their terms or lawful
setoff of claims against the Purchasers, this Undertaking shall nevertheless be
binding on Performance Guarantor. This Undertaking shall be in addition to any
other guaranty or other security for the Guaranteed Obligations, and it shall
not be rendered unenforceable by the invalidity of any such other guaranty or
security. In the event that acceleration of the time for payment of any of the
Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of BAI or for any other reason with respect to BAI, all such
amounts then due and owing with respect to the Guaranteed Obligations under the
terms of the Receivables Sale Agreement, or any other agreement evidencing,
securing or otherwise executed in connection with the Guaranteed Obligations,
shall be immediately due and payable by Performance Guarantor.
Section 6. Representations and Warranties. Performance Guarantor hereby
represents and warrants to Beneficiary and its assigns that (a) each of the
representations and warranties made by Performance Guarantor in its capacity as
the initial Servicer under the Loan Agreement is true and correct as of the date
hereof, and (b) this Undertaking has been duly executed and delivered by
Performance Guarantor and constitutes its legally valid and binding obligation,
enforceable against Performance Guarantor in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).
Section 7. Subrogation; Subordination. Notwithstanding anything to the
contrary contained herein, until the Guaranteed Obligations are paid in full
Performance Guarantor: (a) will not enforce or otherwise exercise any right of
subrogation to any of the rights of Beneficiary, any of the Agents, LC Issuers
or Lenders against BAI, (b) hereby waives all rights of subrogation (whether
contractual, under ss.509 of the Bankruptcy Code, at law or in equity or
otherwise) to the claims of Beneficiary, any of the Agents, LC Issuers or
Lenders against BAI and all contractual, statutory or legal or equitable rights
of contribution, reimbursement, indemnification and similar rights and "claims"
(as that term is defined in the Bankruptcy Code) which Performance Guarantor
might now have or hereafter acquire against BAI that arise from the existence or
performance of Performance Guarantor's obligations hereunder, (c) will not claim
any setoff, recoupment or counterclaim against BAI in respect of any liability
of Performance Guarantor to BAI and (d) waives any benefit of and any right to
participate in any collateral security which may be held by Beneficiary, any of
the Agents, LC Issuers or Lenders.
Section 8. Termination of Undertaking. Performance Guarantor's obligations
hereunder shall continue in full force and effect until all Obligations are
finally paid and satisfied in full and the Loan Agreement is terminated,
provided that this Undertaking shall continue to be effective or shall be
reinstated, as the case may be, if at any time payment or other satisfaction of
any of the Guaranteed Obligations is rescinded or must otherwise be restored or
returned upon the occurrence of any Event of Bankruptcy with respect to BAI or
otherwise, as though such payment had not been made or other satisfaction
occurred, whether or not Beneficiary (or its assigns) is in possession of this
Undertaking. No invalidity, irregularity or unenforceability by reason of the
Bankruptcy Code or any other federal or state insolvency or other similar law,
or any law or order of any Governmental Authority thereof purporting to reduce,
amend or otherwise affect the Guaranteed Obligations shall impair, affect, be a
defense to or claim against the obligations of Performance Guarantor under this
Undertaking.
Section 9. Effect of Bankruptcy. This Undertaking shall survive the
insolvency of BAI and the commencement of any case or proceeding of by or
against either or both of BAI under the Bankruptcy Code or other federal, state
or other applicable bankruptcy, insolvency or reorganization statutes. [No
automatic stay under the Bankruptcy Code with respect to BAI or other federal,
state or other applicable bankruptcy, insolvency or reorganization statutes to
which BAI is subject shall postpone the obligations of Performance Guarantor
under this Undertaking.]
Section 10. Setoff. Regardless of the other means of obtaining payment of
any of the Guaranteed Obligations, Beneficiary (and each of its assigns) is
hereby authorized at any time and from time to time, without notice to
Performance Guarantor (any such notice being expressly waived by Performance
Guarantor) and to the fullest extent permitted by law, to set off and apply any
deposits and other sums against the obligations of Performance Guarantor under
this Undertaking, whether or not Beneficiary (or any such assign) shall have
made any demand under this Undertaking and although such obligations may be
contingent or unmatured.
Section 11. Taxes. All payments to be made by Performance Guarantor
hereunder shall be made free and clear of any deduction or withholding. If
Performance Guarantor is required by law to make any deduction or withholding on
account of any Taxes (other than Excluded Taxes) or otherwise from any such
payment, the sum due from it in respect of such payment shall be increased to
the extent necessary to ensure that, after the making of such deduction or
withholding, Beneficiary receive a net sum equal to the sum which they would
have received had no deduction or withholding been made.
Section 12. Further Assurances. Performance Guarantor agrees that it
will from time to time, at the request of Beneficiary (or its assigns), provide
information relating to the business and affairs of Performance Guarantor as
Beneficiary may reasonably request.
Section 13. Successors and Assigns; Pledge to Administrative Agent. This
Undertaking shall be binding upon Performance Guarantor, its successors and
permitted assigns, and shall inure to the benefit of and be enforceable by
Beneficiary and its successors and assigns. Performance Guarantor may not assign
or transfer any of its obligations hereunder without the prior written consent
of each of Beneficiary and the Agents. Performance Guarantor hereby acknowledges
that Beneficiary intends to pledge to the Administrative Agent for the benefit
of the Secured Parties as part of the Collateral for the Obligations under the
Loan Agreement, all of
Beneficiary's existing and future right, title and interest in, to and under the
Receivables Sale Agreement and this Undertaking, and hereby agrees that until
the later to occur of payment in full of the Obligations and the Commitment
Termination Date, the Administrative Agent shall have the non-exclusive right to
enforce this Undertaking against Performance Guarantor in Beneficiary's name,
place and stead.
Section 14. Amendments and Waivers. No amendment or waiver of any
provision of this Undertaking nor consent to any departure by Performance
Guarantor therefrom shall be effective unless the same shall be in writing and
signed by Beneficiary, the Agents and Performance Guarantor. No failure on the
part of Beneficiary to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.
Section 15. Notices. All notices and other communications provided for
hereunder shall be made in writing and shall be addressed as follows: if to
Performance Guarantor, at the address set forth beneath its signature hereto,
and if to Beneficiary, at the address specified in the Loan Agreement, or at
such other addresses as each of Performance Guarantor or Beneficiary may
designate in writing to the other. Each such notice or other communication shall
be effective (1) if given by facsimile, upon the receipt thereof, (2) if given
by mail, five (5) Business Days after the time such communication is deposited
in the mail with first class postage prepaid or (3) if given by any other means,
when received at the address specified in this Section 15.
Section 16. GOVERNING LAW. THIS UNDERTAKING SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
NEW YORK.
Section 17. CONSENT TO JURISDICTION. EACH OF PERFORMANCE GUARANTOR AND
BENEFICIARY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
UNDERTAKING, THE RECEIVABLES SALE AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION THEREWITH OR DELIVERED THEREUNDER AND EACH OF THE PERFORMANCE
GUARANTOR AND BENEFICIARY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM.
Section 18. Bankruptcy Petition. Performance Guarantor hereby agrees that
it will not institute against any Conduit Lender, or join any other Person in
instituting against any Conduit Lender, any insolvency proceeding (namely, any
proceeding of the type referred to in the definition of Event of Bankruptcy) so
long as any Commercial Paper Notes issued by such Conduit Lender shall be
outstanding and there shall not have elapsed one year plus one day since
the last day on which any such Commercial Paper Notes shall be outstanding. The
provisions of this Section 18 shall survive the termination hereof.
Section 19. Miscellaneous. This Undertaking constitutes the entire
agreement of Performance Guarantor with respect to the matters set forth herein.
The rights and remedies herein provided are cumulative and not exclusive of any
remedies provided by law or any other agreement, and this Undertaking shall be
in addition to any other guaranty of or collateral security for any of the
Guaranteed Obligations. The provisions of this Undertaking are severable, and in
any action or proceeding involving any state corporate law, the Bankruptcy Code
or any state bankruptcy, insolvency, reorganization or other law affecting the
rights of creditors generally, if the obligations of Performance Guarantor
hereunder would otherwise be held or determined to be avoidable, invalid or
unenforceable on account of the amount of Performance Guarantor's liability
under this Undertaking, then, notwithstanding any other provision of this
Undertaking to the contrary, the amount of such liability shall, without any
further action by Performance Guarantor or Beneficiary, be automatically limited
and reduced to the highest amount that is valid and enforceable as determined in
such action or proceeding. Any provisions of this Undertaking which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Unless otherwise
specified, references herein to "Section" shall mean a reference to sections of
this Undertaking. This Undertaking amends and restates in its entirety the
Performance Undertaking by Performance Guarantor dated as of December 19, 2002.
(Signature pages to follow)
IN WITNESS WHEREOF, Performance Guarantor has caused this Undertaking to be
executed and delivered as of the date first above written.
BOWATER INCORPORATED
By: ______________________________
Name: ____________________________
Title: _____________________________
Address for Notices:
Bowater Incorporated
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Attention: Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT F
[FORM OF] LETTER OF CREDIT REQUEST TRANSMITTAL LETTER
[Date]
To: [Insert Name and Address of applicable LC Issuer]
Cc: [Insert Co-Agents' Names and Addresses]
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated Loan Agreement, dated
as of December 1, 2005 (as amended, restated or otherwise modified from time to
time, the "Loan Agreement", the terms defined therein being used herein as
therein defined), among Bowater Funding Inc., a Delaware corporation
("Borrower"), Bowater Incorporated, as initial Servicer, the Lenders and LC
Issuers from time to time party thereto, Wachovia Bank, National Association, as
VFCC Agent, and SunTrust Capital Markets, Inc., as Three Pillars Agent and
Administrative Agent.
Pursuant to Section 2.4(a) of the Loan Agreement:
[Borrower hereby requests that ________________ (the "LC Issuer") issue the
Letter of Credit described in the enclosed Letter of Credit Request received by
Borrower from [insert applicable Seller name] under the Receivables Sale
Agreement on _____________, 20__. In connection therewith, enclosed please find
a duly completed LC Application executed by Borrower].
[Borrower hereby requests that that ________________ (the "LC Issuer")
Modify standby letter of credit no. __________ dated ________ and issued for the
benefit of [insert beneficiary's name] as follows: _________________].
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the requested
[issuance/Modification] (both before and after giving effect thereto):
(A) the representations and warranties contained in Article VIII of the
Loan Agreement will be true and correct as of such requested date as though made
on such date,
(B) no Significant Event or Unmatured Significant Event has occurred and is
continuing or will result from such Credit Event, and
(C) after giving effect to such requested Credit Event, the aggregate
Credit Exposure will not exceed the lesser of the Borrowing Base and the
Facility Limit.
Very truly yours,
BOWATER FUNDING INC.
By:____________________________________
Title:
[Enclosures]
SCHEDULE 8.12
LOCKBOXES AND LOCKBOX ACCOUNTS
Bank of America
Bowater Funding Inc.
Account Number 3750202618
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Wachovia Bank
Bowater Funding Inc.
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Bowater Funding Inc.
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JPMorgan Chase Manhattan Bank
Bowater Funding Inc.
ABA ▇▇▇▇▇▇▇▇▇
Account Number 9102524478 (electronic lockbox)
PROCEDURES REVIEW
Report of Independent Accountants
I. Shall be titled the "Report of Independent Accountants on Agreed
Upon Procedures";
II. Shall be addressed to Bowater Incorporated, as Servicer and to
SunTrust Capital Markets, Inc. as Administrator, at their respective addresses
set forth on Schedule 15.3 to the Loan Agreement;
III. The review and subsequent report shall be conducted by Commercial
Lending Consultants, Inc. (or such other firm as may be mutually acceptable to
the Co-Agents);
IV. The report shall be delivered within forty-five (45) days after an
inspection as permitted in Section 9.1.11 of the Loan Agreement; and
V. Select a sample of accounts included in the receivable schedule
delivered by Borrower pursuant to the initial funding and perform the following:
(a) Account Receivable
(i) reconciliation from the A/R aged trial balance to the G/L to the financial
statements as of most current month end;
(ii) access to summary aged trial balance reports September 2002 through most
current month end and hardcopy and electronic file (Lotus, Excel, Text, or
print files) of the most current month end summary aged trial balance
report, if possible;
(iii) summary schedule of A/R agings per the A/R trial balance reports by month
September 2002 through most current month end;
(iv) summary schedule reconciling beginning A/R to ending A/R per the A/R aging
system by month for the period September 2002 through most current month
end by major classification (i.e. gross sales, debit memos issued, A/R cash
received, returns & allowances, cash discounts, bad debt write-offs, volume
rebates, credit memos, etc) and access to supporting data/reports.
Receivables balances should agree to aging reports and credits must be
segregated from sales;
(v) schedule of receivables by selling terms as of most current month end;
(vi) aged schedule of foreign receivables included in the Trade Receivables
Program including selling terms (Letters of Credit, Site Draft, etc.) and
country of origin as of most current month end. Segregate the schedule by
eligible countries receivables and ineligible country receivables. For
eligible country foreign receivables please also provide a breakdown of the
country balance by foreign currency invoiced;
(vii) aged schedule of inter-company receivables included in the aged A/R trial
balance(s) as of most current month end, if any;
(viii) aged schedule of receivables from government agencies as of most current
month end, if any;
(ix) schedule of charge-backs and/or debit memos included in the aged A/R trial
balance as of most current month end by aging category;
(x) aged schedule of bankrupt customer receivables included in the aged A/R
trial balance as of most current month end, if any;
(xi) aged schedule of top twenty five customer A/R balances per the aged trial
balance at most current month end (Customers should be grouped by ultimate
parent including multiple account numbers, ship to's and subsidiaries, if
necessary);
(xii) aged schedules of all customers with more than 35% of their receivable
balance more than 60 days past due date as of most current month end;
(xiii) aged schedule of unapplied credit memos included in the A/R aging as of
most current month end;
(xiv) written description of the current status of significant past due accounts
(> $100,000 more than 60 days past invoice date) as of most current month
end;
(xv) schedule of monthly activity in all accounts receivable bad debt reserve
accounts for the period September 2002 through most current month end.
Monthly activity should include reserve balances, write-offs, provisions,
recoveries and other reserve adjustments;
(xvi) written description of policies and procedures for the major accounts
receivable functional areas such as credit and collections, billing, order
processing, credit memo authorization, A/R systems, cash management, etc.
as available;
(xvii) completion of the CLC A/R questionnaire;
(b) General Ledger, Financial Statements
(i) copy of summary general ledger trial balance as of most current month end;
(ii) copy of monthly financial statements for most current month end and PYMTD
2002;
(iii) copy of audited year end 2002 and 2001 financial statements;
(iv) copy of CPA Management Letters for 2002;
(c) Cash Receipts
(i) list of all bank accounts including bank name, account number, and
description of activity (flowchart if available);
(ii) copy of bank reconciliations for all lockbox/depository accounts as of most
current month end;
(iii) schedule of monthly cash receipts by location received (lockbox(s),
corporate offices, etc.) for the last three months;
(d) Corporate Formality
(i) provide list of independent director(s) for the receivables corporation
(SPE) including name and address-Also include the amount of compensation
paid or payable to the director(s) as well as evidence that such amounts
were paid from the receivables corporation;
(ii) copies of the SPE entity's financial statements for the last quarter and
the prior year end;
(iii) copy of board of director's minutes from SPE board meeting(s);
(iv) copy of SPE entity's corporate stationary, address and telephone number;
and
(v) evidence that the receivable aging reports clearly indicate that the
receivables included therein have been sold to the SPE.
SCHEDULE 15.3
NOTICE ADDRESSES
Borrower:
Bowater Funding Inc.
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Attention: Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Servicer:
Bowater Incorporated
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Attention: Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Administrative Agent and Three Pillars Agent:
SunTrust Capital Markets, Inc.
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Attention: _________________
Facsimile: (404) ____________
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
SunTrust Bank as LC Issuer:
SunTrust Bank
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Attention: _________________
Facsimile: (404) ____________
Telephone: (404) ______________
VFCC Agent:
Wachovia Bank, National Association
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GA-8047
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachovia Bank, National Association
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (in the case of any matter relating to a Letter of Credit
issued by Wachovia) to:
Wachovia Bank, National Association
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6th Floor, Mail Code NC 0601
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Phone: (▇▇▇) ▇▇▇-▇▇▇▇