AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
DATED AS OF DECEMBER 1, 2005
AMONG
BOWATER INCORPORATED AND BOWATER AMERICA INC.,
AS SELLERS,
AND
BOWATER FUNDING INC.,
AS BUYER
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I AMOUNTS AND TERMS OF
CONTRIBUTIONS AND PURCHASES....................2
Section 1.1 Contribution of
Certain Receivables............................2
Section 1.2 Purchases of Other
Receivables.................................2
Section 1.3 Payment for the
Purchases......................................5
Section 1.4 Purchase Price Credit
Adjustments..............................6
Section 1.5 Payments and
Computations, Etc.................................6
Section 1.6 License of
Software............................................7
Section 1.7
Characterization...............................................7
ARTICLE II REPRESENTATIONS AND
WARRANTIES.....................................8
Section 2.1 Representations and
Warranties of Each Seller..................8
(a) Existence and
Power..................................................8
(b) Power and Authority; Due
Authorization, Execution and Delivery.......9
(c) No
Conflict..........................................................9
(d) Governmental
Authorization...........................................9
(e) Actions,
Suits.......................................................9
(f) Binding
Effect.......................................................9
(g) Accuracy of
Information.............................................10
(h) Use of
Proceeds.....................................................10
(i) Good
Title..........................................................10
(j)
Perfection..........................................................10
(k) Chief Executive Office and
Locations of Records.....................11
(l) LockBoxes,
Etc......................................................11
(m) Seller Material Adverse
Effect......................................11
(n)
Names...............................................................11
(o)
Ownership...........................................................11
(p) Not a Holding Company or an
Investment Company......................11
(q) Compliance with
Law.................................................11
(r) Compliance with Credit and
Collection Policy........................12
(s) Payments to
Seller..................................................12
(t) Enforceability of
Contracts.........................................12
(u)
Accounting..........................................................12
(v)
Solvency............................................................12
ARTICLE III CONDITIONS OF
PURCHASE...........................................12
Section 3.1 Conditions Precedent
to Initial Purchase......................12
Section 3.2 Conditions Precedent
to Subsequent Payments...................12
<PAGE>
ARTICLE IV
COVENANTS.........................................................13
Section 4.1 Affirmative Covenants
of Each Seller..........................13
(a) Financial
Reporting.................................................13
(i)
Annual
Reporting.................................................13
(ii)
Quarterly
Reporting...........................................13
(iii)
Compliance
Certificate........................................14
(iv)
Change in Credit and Collection
Policy........................14
(v)
Other
Information................................................14
(b)
Notices.............................................................14
(i)
Termination
Events or Unmatured Termination Events...............14
(ii)
Judgment and
Proceedings......................................14
(iii)
Seller
Material Adverse Effect................................14
(c) Compliance with Laws and
Preservation of Existence..................14
(d)
Audits..............................................................15
(e) Keeping and Marking of
Records and Books............................15
(f) Compliance with Contracts and
Credit and Collection Policy..........16
(g)
Ownership...........................................................16
(h) Agents' and Lenders'
Reliance.......................................16
(i)
Collections.........................................................16
(j)
Taxes...............................................................17
Section 4.2 Negative Covenants of
Each Seller.............................17
(a) Name Change, Offices and
Records....................................17
(b) Change in Payment
Instructions to Obligors..........................17
(c) Modifications to Contracts
and Credit and Collection Policy.........17
(d) Sales, Adverse
Claims...............................................17
(e) Accounting for
Purchases............................................18
ARTICLE V TERMINATION
EVENTS.................................................18
Section 5.1 Termination
Events............................................18
Section 5.2
Remedies......................................................19
ARTICLE VI
INDEMNIFICATION...................................................20
Section 6.1 Indemnities by
Sellers........................................20
Section 6.2 Other Costs and
Expenses......................................22
Section 6.3
Taxes.........................................................22
ARTICLE VII
MISCELLANEOUS....................................................23
Section 7.1 Waivers and
Amendments........................................23
Section 7.2
Notices.......................................................23
Section 7.3 Protection of
Ownership Interests of Buyer....................23
Section 7.4
Confidentiality...............................................24
<PAGE>
Section 7.5 Bankruptcy
Petition...........................................25
Section 7.6 Return of Funds Not
Constituting Collections..................25
Section 7.7 CHOICE OF
LAW.................................................25
Section 7.8 CONSENT TO
JURISDICTION.......................................25
Section 7.9 WAIVER OF JURY
TRIAL..........................................26
Section 7.10
Integration; Binding Effect; Survival of Terms.............26
Section 7.11
Counterparts; Severability; Section References.............26
EXHIBITS AND SCHEDULES
Exhibit I
-
Definitions
Exhibit II
-
Jurisdictions of Organization; Chief
Executive Offices; Principal Places of
Business; Locations of
Records; Organizational Identification
Numbers; Other Names
Exhibit III
-
LockBoxes and LockBox Accounts
Exhibit IV
-
Form of Compliance Certificate
Exhibit V-1
-
Form of Purchase Price Loan Note
Exhibit V-2
-
Form of Subordinated Note
Exhibit VI
Form of Purchase Report
Exhibit VII
Credit and Collection Policy
Exhibit VIII .........
Form of Letter of Credit Request
Schedule A
List of Documents to Be Delivered to Buyer
Prior to the Initial Purchase
<PAGE>
AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
THIS AMENDED AND
RESTATED RECEIVABLES SALE AGREEMENT, dated as of December
1, 2005, is by and among Bowater
Incorporated, a
Delaware corporation (together
with its successors, "Bowater" or a "Seller"), Bowater
America Inc., a Delaware
corporation (together with its successors, "BAI" or a "Seller"), and Bowater
Funding Inc., a Delaware corporation (together with its successors,
"Buyer").
Unless defined elsewhere herein,
capitalized terms used
in this Agreement shall
have the meanings assigned to such terms in
Exhibit I hereto (or, if not defined
in Exhibit I hereto, the meaning assigned to such term in the Loan
Agreement).
This Agreement amends and restates in its
entirety that certain Receivables Sale
Agreement dated as of December 19, 2002 among the parties (the "Existing
Agreement").
PRELIMINARY STATEMENTS
Bowater now
owns, and from time to time hereafter will own,
Receivables.
Bowater wishes to sell to BAI, and BAI wishes to sell and
contribute
to Buyer (each of Buyer and BAI being sometimes hereinafter
referred to as a
"Transferee" with
respect any such sale or contribution),
all of their
respective right, title and interest in and to all Receivables
originated
by Bowater
from and after the
Initial Cutoff Date
through and
including the
Termination
Date, together with the Related Security and
Collections with
respect thereto.
In addition, BAI now
owns, and from time to
time hereafter will own,
Receivables.
BAI wishes to sell and
contribute to Buyer, all of its right,
title and
interest in and to all
Receivables
originated
by BAI from and
after the
Initial Cutoff Date through and including the Termination Date,
together with
the Related Security and Collections with respect thereto.
Each
of the parties
hereto intends the transactions contemplated
hereby to be
true sales or true
contributions by the applicable Seller to
the applicable Transferee of the Receivables originated or acquired (in
each case, as
applicable) by it,
providing the applicable Transferee with
the full
benefits of ownership of such Receivables, and none of the
parties
intends these
transactions
to be, or for any
purpose to be
characterized
as, loans from
any of the Transferees to any of the Sellers.
Buyer plans to finance
its purchases
of Receivables hereunder by
borrowing
under that certain
Amended and Restated
Loan Agreement dated as
of December 1, 2005 (as the same may from time to time hereafter be
amended,
supplemented,
restated
or otherwise modified, the "Loan
Agreement")
among (a) Buyer, as borrower, (b) Bowater, as initial servicer,
(c) Three
Pillars Funding LLC, Variable Funding Capital Company LLC,
SunTrust Bank
and Wachovia Bank, National Association, as lenders (together
with their
respective successors and assigns, the "Lenders"), (d) SunTrust
Bank and
Wachovia Bank, National Association, as "LC Issuers," (e)
SunTrust
Capital Markets, Inc. and Wachovia
<PAGE>
Bank,
National Association, as "Co-Agents," and (f) SunTrust Capital
Markets, Inc.,
as administrative agent (in such capacity, together with its
successor and
assigns in such
capacity, the
"Administrative
Agent" and,
together with
the Co-Agents, the "Agents").
NOW, THEREFORE,
in consideration of the premises and the mutual
agreements
herein contained and for other good and valuable consideration,
the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as
follows:
ARTICLE I
AMOUNTS AND TERMS OF CONTRIBUTIONS AND PURCHASES
Section 1.1
Contribution of Certain Receivables.
(a) Effective
on December 19, 2002, BAI contributed, assigned,
transferred,
set-over and otherwise
conveyed to Buyer, and
Buyer accepted
from BAI as a
contribution to Buyer's capital, all Receivables originated
by BAI
that could not be purchased with cash or the proceeds of a
Subordinated
Loan in accordance
with the limitation
specified in
Section
1.2(c)
of the Existing Agreement (such Receivables, the "Initial
Contributed
Receivables"),
together with all Related Security relating
thereto and all
Collections thereof.
The Initial
Contributed
Receivables
had an aggregate
Outstanding
Balance as of the
Initial Cutoff Date of not
less than
$100,000,000.
(b) Any Seller may from time to time, at its option, by notice to the
applicable
Transferee on or prior to the date of the proposed
contribution,
identify
Receivables which it
proposes to contribute to such Transferee as
a capital
contribution.
On the date of each
such contribution
and after
giving
effect thereto, such Transferee shall own the Receivables so
identified and
contributed (collectively, the "Contributed Receivables"),
together with
all Related Security
relating thereto and all Collections
thereof.
Section 1.2
Purchases of Other Receivables.
(a) Effective on December 19,
2002:
(i) in consideration
for the Purchase Price
paid to Bowater and upon
the terms and
subject to the conditions set forth herein: (A) Bowater sold,
assigned,
transferred,
set-over and
otherwise conveyed to BAI, without
recourse
(except to the extent
expressly provided herein), and (B) BAI
purchased from
Bowater, all of
Bowater's right, title
and interest in and
to all
Receivables
originated
by Bowater and
existing as of the close of
business on the
Initial Cutoff Date,
together with all Related Security
relating thereto
and all Collections thereof; and
(ii) in consideration
for the Purchase Price paid to BAI and upon the
terms
and subject to the conditions set forth herein: (A) BAI sold,
assigned,
transferred,
set-over and otherwise
conveyed to Buyer,
without
recourse (except
to the extent expressly provided herein), and (B) Buyer
purchased
from BAI, all of BAI's
right, title and interest in and to
all
Receivables (1)
originated by Bowater and (2) originated by BAI (other than
the Initial Contributed Receivables), and existing as of the close of
business
on the Initial Cutoff Date, in each case, together with all
Related Security
relating thereto and all Collections thereof.
(b) On each
Purchase Date after December 19, 2002:
(i) in consideration
for the Purchase Price
paid to Bowater and upon
the terms and
subject to the conditions set forth herein: (A) Bowater does
hereby
sell, assign, transfer, set-over and otherwise convey to BAI,
without recourse
(except to the extent expressly provided herein), and (B)
BAI shall
purchase from Bowater, all of Bowater's right, title and
interest
in and to all
Receivables
originated
by Bowater
and existing as of the
close of
business on the Business Day immediately prior to such Purchase
Date (other than
any Contributed
Receivables and
Receivables
previously
sold pursuant to
this Agreement), in
each case, together
with all Related
Security
relating thereto and all Collections thereof; and
(ii) in consideration
for the Purchase Price paid to BAI and upon the
terms and
subject to the conditions set forth herein: (A) BAI does hereby
sell,
assign, transfer, set-over and otherwise convey to
Buyer, without
recourse (except
to the extent expressly provided herein), and (B)
<PAGE>
Buyer does
hereby purchase from BAI, all of BAI's right, title and
interest
in and to all
Receivables
originated by either
Bowater or BAI (other than
the Initial Contributed Receivables, any Contributed Receivables and
Receivables
previously sold
pursuant to this Agreement) and existing as of
the close of business on the Business Day immediately prior to such
Purchase Date,
in each case, together
with all Related
Security relating
thereto and all
Collections thereof.
(c) Each
Transferee
shall be obligated to
pay the applicable
Seller the
Purchase Price for the Receivables
purchased by it hereunder:
(i) in immediately available funds,
(ii) if Bowater has
delivered a Letter of
Credit Request to BAI,
by
BAI's causing a Letter
of Credit to be
issued, and if BAI has
delivered
a Letter of Credit
Request to the
Buyer, by Buyer's
obtaining and delivery of a Letter of Credit pursuant to the
Loan
Agreement (in each
case, with the
issuance of such Letter of
Credit constituting
a payment of Purchase Price in an amount
equal to the sum of
(A) the LC Commission,
plus (B) the face
amount of such Letter of Credit),
<PAGE>
(iii) by delivery to
such Seller of the
proceeds of a loan from such
Seller to such
Transferee (each, a
"Purchase Price Loan") in an
amount not to
exceed the least of (A) the remaining unpaid
portion of such Purchase Price, (B) the maximum Purchase Price
Loan that could be borrowed without rendering the Net Worth less
than the Required
Capital Amount, and
(C) fifteen percent (15%)
of such Purchase Price, and/or
(iv) unless the
Termination
Date has occurred, by accepting a
contribution to its
capital in an amount equal to the remaining
unpaid balance of such Purchase Price.
Each Purchase Price Loan made by Bowater to BAI shall be a senior
loan,
and all such senior Purchase Price Loans shall be evidenced by a
grid
promissory note in the form of Exhibit V-1 hereto (the "Purchase
Price
Loan Note"). Each Purchase Price Loan made by BAI to the Buyer
shall be
a subordinated loan (each, a "Subordinated Loan"), and all such
Subordinated Loans shall be evidenced by a single grid promissory
note
in the form of Exhibit V-2 hereto (the "Subordinated Note").
Bowater is
hereby authorized by BAI to endorse on the schedule attached to
the
Purchase Price Loan Note an appropriate notation evidencing the
date
and amount of each advance thereunder, as well as the date of
each
payment with respect thereto, provided that the failure to make
such
notation shall not affect any obligation of BAI thereunder. BAI
is
hereby authorized by Buyer to endorse on the schedule attached to
the
Subordinated Note an appropriate notation evidencing the date
and
amount of each advance thereunder, as well as the date of each
payment
with respect thereto, provided that the failure to make such
notation
shall not affect any obligation of Buyer thereunder. On each
Reporting
Date, each Seller shall (or shall require Servicer to) deliver to
the
applicable Transferee (with a copy to the Administrative Agent,
as
Buyer's pledgee, if requested by the Administrative Agent) a report
in
substantially the form of Exhibit VI hereto (each such report
being
herein called a "Purchase Report") with respect to the Receivables
sold
or contributed by such Seller during the Calculation Period then
most
recently ended. In addition to, and not in limitation of, the
foregoing, in connection with the payment of the Purchase Price for
any
Receivables purchased hereunder, each applicable Transferee may
request
that the applicable Seller deliver, and such Seller shall deliver,
such
information or documents as such Transferee may reasonably
request.
(d) It is the intention of the parties hereto that each sale or
contribution of Receivables to a Transferee
pursuant to the
Existing Agreement
or this Agreement shall constitute a true
sale or contribution or other absolute
transfer and assignment, which sale, contribution, transfer or assignment is
absolute and irrevocable and provides the applicable
Transferee with the
full
benefits of ownership of the Receivables.
Except for the
Purchase Price Credits
owed to the applicable Seller pursuant to Section 1.4,
each sale of Receivables
under the Existing Agreement or hereunder by a Seller
is made without
recourse
to such Seller; provided, however, that (i) such Seller
shall be liable to the
applicable Transferee and each of its assigns for all representations,
warranties, covenants and indemnities made by
such Seller pursuant to the terms
of the Transaction Documents
<PAGE>
to which such Seller is a party, and (ii) no such sale constitutes, or is
intended to result in, an assumption by any
Transferee or any
assignee thereof
of any obligation of such Seller or any
other Person arising in connection with
the Receivables, the related Contracts and/or other Related Security or any
other obligations of such Seller. In view
of the intention of the parties hereto
that each sale or contribution of
Receivables made
hereunder shall constitute a
true sale or contribution of such Receivables rather than a loan secured
thereby, each Seller, in accordance with Section 4.1(e)(ii), has
------------------ marked 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" and to note
in its financial statements that its Receivables
have been sold or
contributed
to the applicable Transferee. Upon the request of any Transferee or the
Administrative Agent, each Seller will prepare and file such financing or
continuation statements, or amendments thereto or
assignments thereof, and such
other instruments or notices, as may be necessary or appropriate
to perfect and
maintain the perfection of its applicable
Transferee's (and ultimately, Buyer's)
ownership interest in the Receivables and
the Related Security
that is subject
to Article 9 of the UCC and Collections with respect thereto, or as any
Transferee or the Administrative Agent may
reasonably request.
Section 1.3
Payment for the Purchases.
(a) The Purchase
Price for each
Purchase occurring on December 19,
2002 was paid in
full by the applicable Transferee to the applicable Seller
on such date in
the manner
described in Section 1.2(c) of the Existing
Agreement.
The Purchase Price for each Receivable coming into
--------------
existence after the Initial Cutoff Date shall be due and
owing in full
(but not necessarily payable) by the applicable Transferee to
the applicable Seller or its designee on the Purchase
Date immediately
following the
Business Day on which such Receivable comes into existence
(except that
each Transferee may,
with respect to any such Purchase Price,
offset
against such Purchase
Price any amounts owed by such Seller to such
Transferee
hereunder and which have become due but remain unpaid) and
shall
be paid to such
Seller in the manner
provided in the following paragraphs
(b), (c) and
(d).
(b) With respect to each Receivable (other than a Contributed
Receivable)
coming into
existence after the Initial Cutoff Date, on
each
Settlement Date,
each applicable Transferee shall pay the applicable Seller
the Purchase
Price therefor, in accordance with Sections 1.2(c) and 1.3(d).
(c) From and after the Termination Date, no Seller shall be
obligated
to but may, at its option) sell or contribute Receivables to any
Transferee.
(d) Although
the Purchase Price for each Receivable coming into
existence
after the Initial
Cutoff Date shall be
due and owing in full by
the applicable Transferee to the applicable Seller on the Purchase Date
immediately
following the Business
Day on
<PAGE>
which
such Receivable comes into existence, to the extent that the
obligation
to pay Purchase
Price is not satisfied
through arranging the
issuance of a
Letter of Credit,
settlement of the
Purchase Price
between
each
Transferee and its
applicable
Seller shall be
effected on a monthly
basis on
Settlement Dates with respect to all Receivables originated
during
the same
Calculation Period and
based on the information contained in the
applicable
Purchase Report delivered by or on behalf of such Seller for
the
Calculation
Period then most recently ended. Although settlement shall be
effected on
Settlement Dates,
any contribution of capital by a
Seller to
its Transferee made pursuant to Section 1.3(b) shall be deemed to have
occurred
-------------- and
shall be effective as of the last Business Day
of the
Calculation Period to which such settlement relates.
Section 1.4 Purchase
Price Credit
Adjustments.
If on any day:
(a) the Outstanding
Balance of any Receivable purchased from a Seller
is:
(i) reduced as a
result of any
defective, rejected or
returned
goods or services,
any discount or
adjustment
or otherwise by
such
Seller (other than a reduction in such Outstanding Balance resulting
from (A) cash Collections received by the applicable Transferee or by
its assigns or Servicer, on such Transferee's behalf, on account of
such Receivable's
Outstanding Balance, or (B) any reserve established
against or
write-off of such Receivable that is made due to its
becoming a
Defaulted
Receivable
or otherwise based on the
uncollectibility of
such Receivable
on account
of the insolvency,
bankruptcy, lack of
creditworthiness or financial inability to pay of
the applicable
Obligor), or
(ii) reduced
(in whole or in part) as a result
of a setoff in
respect of any claim by any Person (whether such claim arises out of
the same or a related transaction or an unrelated transaction),
or
(b) any of such Seller's representations and warranties set forth in
Sections 2.1(i),
(j), (r), (s), (t),
the second sentence of Section 2.1(q)
hereof and the
last sentence
of Section
2.1(c) are not true
when made or
deemed made with
respect to any Receivable,
then, in such event, the applicable
Transferee shall be entitled to a credit
(each, a "Purchase Price Credit") against
the Purchase Price otherwise payable
to such Seller hereunder equal to (x) in
the case of a reduction under the
preceding clause (a)(i) or (ii), the amount
of such whole or partial reduction,
and (y) in the case of a misrepresentation
described in the preceding clause
(b), the full Outstanding Balance of such
Receivable. In any event described in
clause (a)(i) or (a)(ii), the applicable
Transferee shall deem this Receivable
collected. If such Purchase Price Credit
owing to a Transferee by its applicable
Seller exceeds the aggregate Original
Balance of the Receivables originated on
any day by such Seller, such Seller shall
pay the remaining amount of such
Purchase Price Credit in cash (i) if the
Termination Date has not occurred, not
later than the next Settlement Date, and
(ii) if the Termination Date has
occurred, immediately.
Section
1.5 Payments and Computations, Etc. All amounts to be paid or
deposited by a Transferee hereunder shall be paid or deposited in
accordance
with the terms
1
<PAGE>
hereof on the day when due in immediately
available funds to the
account of the
applicable Seller designated from time to time by such Seller
or as otherwise
directed by such Seller. In the event that any payment owed by any Person
hereunder becomes due on a day that is not a
Business Day,
then such payment
shall be made on the next succeeding Business Day. If any Person fails to
pay
any amount hereunder when due, such Person
agrees to pay, on demand, the Default
Fee in respect thereof until paid in full;
provided, however,
that such Default
Fee shall not at any time exceed the
maximum rate permitted
by applicable law.
All computations of interest payable hereunder shall be made on the
basis of a
year of 360 days for the actual number of days (including the first but
excluding the last day) elapsed.
Section 1.6
License of Software.
(a) To the extent that any software used by a Seller to account
for the Receivables transferred by it is non-transferable, each
Seller
hereby grants
to its Transferee, such Transferee's assigns, the
Administrative Agent
and Servicer an irrevocable, non-exclusive
license to use,
without royalty
or payment of any kind, all such
software used by such Seller to account for such Receivables, to the
extent necessary to administer such Receivables, whether such
software
is owned by such
Seller or is owned by others and used by such Seller
under license
agreements with respect thereto, provided that should
the consent of any licensor of such software be required for the
grant
of the license described herein, to be effective,
such Seller hereby
agrees that upon the request of its Transferee (or its assigns),
such
Seller will use its
reasonable efforts to
obtain the consent of such
third-party licensor.
The license granted hereby shall be irrevocable
until the later to occur of (i) indefeasible payment in full of the
Obligations (as defined in the Loan Agreement), and (ii) the date on
which each of this
Agreement and the Loan
Agreement terminates in
accordance with its terms.
(b) Upon the request to any Seller by its Transferee and/or the
Administrative Agent (as the ultimate assignee), such Seller (i)
shall
take such action that may be necessary or appropriate to ensure that
Buyer has an enforceable ownership interest in the records included
in
the Receivable Files relating to the Receivables, and (ii) shall use
its reasonable
efforts to ensure that each of the Buyer, the
Administrative Agent
and the Servicer has an enforceable right
(whether by license or
sublicense
or otherwise) to use all of the
computer software
used to account for such Receivables and/or to
recreate such records.
Section 1.7
Characterization.
If, notwithstanding the intention of the
parties expressed in Section 1.2(d), any sale or contribution by a Seller of
Receivables hereunder shall be
characterized as a secured loan and not a sale or
such sale shall for any reason be ineffective or unenforceable, then this
Agreement shall be deemed to constitute a
security agreement
under the UCC and
other applicable law. For this purpose and without
being in derogation of
the
parties' intention that each transfer of
Receivables by a Seller hereunder shall
constitute a true sale thereof: each Seller hereby grants to its applicable
Transferee and its assigns a valid and
continuing security
interest in all of
such Seller's right, title and interest in, to and under all Receivables
originated or acquired by such Seller which are now existing or hereafter
arising and are intended to be sold or contributed to such Transferee in
accordance with the terms of this
2
<PAGE>
Agreement, all Collections and Related
Security with respect thereto, all other
rights and payments relating to such Receivables and all proceeds of the
foregoing to secure the prompt and
complete payment of a loan deemed to have
been made in an amount equal to the
Purchase Price of the Receivables purchased
from such Seller together with all other
obligations of such
Seller hereunder,
which security interest shall be prior to all other
Adverse Claims
thereto.
Furthermore, to the extent that any Seller has
been granted a security interest
pursuant to this Section 1.7, such Seller
hereby grants a valid
and continuing
security interest in such security
interest to its
applicable
Transferee and
such Transferee's assigns. The applicable
Transferee and its assigns shall have,
in addition to the rights and remedies
which they may have under this Agreement,
all other rights and remedies provided to a secured creditor under the UCC and
other applicable law, which rights and
remedies shall be cumulative.
Section 1.8
Extensions of Letters of Credit. From time to time prior to the
Termination Date:
(a) Letters of Credit may be automatically extended by their terms,
whereupon each applicable Seller who originally requested the issuance of such
Letter of Credit shall pay to its applicable Transferee the applicable L/C
Commission (which payment may be made in cash,
by reduction of the Purchase
Price Loans owing to such Seller,
or through
reduction of the Purchase Price
otherwise payable to such Seller on such date by such
Transferee
pursuant to
this Agreement).
(b) In addition
to automatic
extensions described
in Section 1.8(a), each
Seller may request that its applicable
Transferee arrange for the extension of a
Letter of Credit with a fixed expiration
date, whereupon such Transferee
shall
arrange or, as applicable, shall request
the Buyer to arrange, for the extension
of the expiration date of such Letter of
Credit, and the Buyer
shall obtain and
deliver such extension. If the applicable
LC Issuer (with the consent of each of
the Co-Agents), agrees to such extension,
each applicable Seller
shall pay its
applicable Transferee the applicable LC
Commission (which payment may be made in
cash, by reduction of the Purchase Price
Loans owing to such Seller, or through
reduction of the Purchase Price otherwise
payable to such Seller on such date by
such Transferee pursuant to this
Agreement).
Section 1.9
Expiration of Letters
of Credit. In the
event that any Letter
of Credit expires without being fully drawn
or is surrendered for
cancellation
without being fully drawn, Buyer shall promptly pay to BAI
(and, if applicable,
BAI shall promptly pay to Bowater) an amount
equal to the undrawn
balance of
such Letter of Credit. The amount of such payment
shall be paid in cash
to the
extent of its available funds or, in case of a payment owing by Buyer, at
Buyer's election, by adding the amount to be paid to
the outstanding
balance
under the Subordinated Note provided the
aggregate outstanding principal balance
thereunder resulting from such addition does not exceed the maximum amount
permitted under Section 1.2(c).
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Each Seller. Each
Seller
hereby represents and warrants to its
applicable Transferee and its assigns on
December 19, 2002 and on each Purchase Date
thereafter as to such Seller and the
Receivables transferred by it that:
(a) Existence
and Power. Such Seller
is duly organized
under the laws of
its jurisdiction of organization
specified in Exhibit
II hereto. Such Seller is
validly existing and in good standing under the laws of its jurisdiction of
organization and is duly qualified to do business and is in
good standing as a
foreign corporation and has and holds all corporate or company 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 Seller Material Adverse Effect.
(b) Power and
Authority; Due
Authorization,
Execution and
Delivery. The
execution and delivery by such Seller of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder,
and such Seller's use
of the proceeds of
each Purchase made from it hereunder, are within its corporate powers and
authority and have been duly authorized by all necessary action on its part.
This Agreement and each other Transaction Document to which such Seller is
a
party has been duly executed and delivered
by such Seller.
(c) No
Conflict. The execution and delivery by such Seller 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 assets of such Seller or
its Subsidiaries
(except as
created hereunder)except, in any case set
forth in clause (ii)-(iv) above, where
such contravention or violation could not reasonably be expected to have a
Seller Material Adverse Effect. No transaction contemplated hereby requires
compliance with any bulk sales act or
similar law.
(d) 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 such Seller of this Agreement
and each other Transaction Document to which it is a party
and the performance
of its obligations hereunder and
thereunder.
(e) Actions, Suits. There is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or,
to the knowledge of any of its
Senior Executives, threatened against or affecting such Seller or any of its
Subsidiaries that, if adversely
4
<PAGE>
determined, would have a Seller Material Adverse Effect or which seeks to
prevent, enjoin or delay any Purchase.
(f) Binding
Effect. This Agreement
and each other Transaction Document to
which such Seller is a party constitute the
legal, valid and binding obligations
of such Seller enforceable against such Seller 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).
(g) Accuracy of Information.
(i) All written
representations, warranties, reports or certificates of any
Seller's Senior Executives heretofore
furnished by such Seller to its applicable
Transferee (or its assigns) 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 such Seller to
its
applicable Transferee (or its assigns)
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 written or verbal
information provided by such Seller's
Senior Executives as of such date,
not
misleading.
(ii)
To the best of such Seller's knowledge, all verbal information
furnished by any Senior Executive of such Seller to its
applicable
Transferee
(or its assigns) 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 verbal
information hereafter
furnished by any
Senior
Executive of such Seller to its applicable
Transferee (or its assigns) shall be,
complete and correct as of the date when
made 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 written
or verbal information provided by such Seller's
Senior Executives as of such
date, not misleading.
(h) Use of
Proceeds. No portion
of any Purchase Price
payment hereunder
will be used for a purpose that
violates, or would be inconsistent with, any
law, rule or regulation applicable to such
Seller.
(i) Good Title. Immediately prior to each Purchase from such Seller
hereunder and upon the creation of each
Receivable originated
after the Initial
Cut-Off Date, such Seller (i) is the legal and beneficial owner of such
Receivable and the Collections with respect thereto and (ii) is the legal
and
beneficial owner of 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
and the Loan
Agreement.
(j) Perfection.
This Agreement,
together with the
filing of the financing
statements contemplated hereby, is effective to transfer to such Seller's
applicable Transferee
5
<PAGE>
(and such Transferee shall acquire from such Seller):
(i) legal and
equitable
title to, with the right to sell and
encumber each Receivable originated or
acquired by such Seller, whether now existing and hereafter
arising, together
with the Collections with respect thereto,
and (ii) all of such
Seller's right,
title and interest in the Related Security
associated with each such Receivable,
in each case, free and clear of any Adverse Claim, except as created by the
Transactions Documents and the Loan
Agreement.
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
Buyer's ownership interest in such Receivables, the Related Security and the
Collections.
(k) Chief
Executive Office and Locations of Records.
The location of
the
chief executive office of such Seller and the
offices where it keeps all of its
Receivable Files are located at the address(es) listed on Exhibit II or such
other locations of which Buyer has been
notified in
accordance
with Section
4.2(a) in jurisdictions where all action required by Section 4.2(a) has been
taken and completed. Such Seller's Organizational Identification Number is
correctly set forth on Exhibit II.
(l) LockBoxes,
Etc. The addresses of all existing LockBoxes and the related
banks, account names and account numbers
for all existing
LockBox Accounts are
correctly listed on Exhibit III. Each of the LockBox Accounts has been
transferred into Buyer's name. Such Seller has not granted any
Person, other
than Buyer (and the Administrative Agent, as its pledgee) dominion
and control
of any LockBox or LockBox Account,
or the right to take
dominion and control of
any such LockBox or LockBox Account at a
future time or upon the occurrence of a
future event.
(m) Seller
Material Adverse
Effect. Since the last
day of the fiscal year
of such Seller as to which financial statements have most recently been
delivered pursuant to Section 4.1(a)(i), no
event has occurred and is continuing
that would have a Seller Material Adverse
Effect.
(n) Names.
The name in which such
Seller has executed
this Agreement is
identical to the name of such Seller as
indicated on the public record of its
jurisdiction of organization as listed on Exhibit II hereto.
In the past five
(5) years, such Seller has not used any legal
names, trade names or assumed
names other than the name in which it has
executed this
Agreement and as listed
on Exhibit II.
(o) Ownership. Bowater owns 100% of the issued and outstanding equity
interests of BAI, and BAI owns 100% of the issued and outstanding equity
interests of Buyer. All such equity
interests are validly issued, fully paid and
nonassessable, and there are no options,
warrants or other rights to acquire
securities of any Seller (other than
Bowater) or Buyer.
(p) Not a
Holding Company or an
Investment Company.
Such Seller is not
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
<PAGE>
statute. Such Seller is not an "investment
company" within the meaning of the
Investment Company Act of 1940, as amended,
or any successor statute.
(q) Compliance
with Law. Such Seller has complied with all applicable laws,
rules, regulations, orders, writs,
judgments,
injunctions, decrees or awards to
which it is subject, except where the failure to so comply would not have a
Seller Material Adverse Effect. Each Receivable transferred by such Seller,
together with the Contract related thereto,
does not contravene
any laws, rules
or regulations applicable thereto (including,
without limitation,
laws, rules
and regulations relating to truth in
lending, fair credit
billing, fair
credit
reporting, equal credit opportunity, fair debt collection practices and
privacy), and no part of such Contract is in
violation of any such law, rule or
regulation, except where such contravention
or violation could not reasonably be
expected to have a Seller Material Adverse
Effect.
(r) Compliance with Credit and Collection Policy. With regard to each
Receivable transferred by such Seller, such
Seller has complied in all material
respects with the Credit and Collection
Policy and the related
Contract. Such
Seller has not made any change in or amendment to the Credit and Collection
Policy, except (i) to the extent such change or amendment would not be
reasonably likely to materially and adversely affect the collectibility of
Receivables transferred by such Seller or to materially decrease the credit
quality of any newly created Receivables in any material
respect or (ii) to the
extent such change or amendment has been consented to by the Buyer and the
Co-Agents.
(s) Payments to
Seller. With regard to each Receivable sold by such Seller,
the Purchase Price received by such Seller
constitutes
reasonably
equivalent
value in consideration therefor. No transfer hereunder by such Seller of
any
Receivable is or may be voidable under any
section of the Bankruptcy Reform Act
of 1978 (11 U.S.C. ss.ss. 101 et seq.), as
amended.
(t)
Enforceability of Contracts. As of the Purchase Date of each
Receivable
transferred by such Seller, each Contract
with respect to such Receivable is, on
such date, effective to create, and has created, a legally valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued
interest thereon, enforceable
against the Obligor 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).
(u) Accounting. The manner in which such Seller accounts for the
transactions contemplated by this Agreement
in its financial statements does not
jeopardize the characterization of the
transactions contemplated herein as being
true sales.
(v) Solvency.
Such Seller is Solvent.
<PAGE>
ARTICLE III
CONDITIONS OF PURCHASE
Section 3.1
Conditions Precedent to Initial Purchase. The initial Purchase
under this Agreement is subject to the
conditions precedent that (a) Buyer shall
have been capitalized with the Initial
Contributed Receivables and not less than
$300,000 of cash, (b) Buyer shall have received on
or before December 19,
2002
those documents listed on Schedule A, and (c) all of the conditions to the
initial Loan under the Loan Agreement shall have been satisfied or waived in
accordance with the terms thereof.
Section 3.2
Conditions Precedent
to Subsequent
Payments. Each
applicable
Transferee's obligation to pay for Receivables
coming into existence
after the
Initial Cutoff Date shall be subject to the
further conditions
precedent that:
(a) the Commitment Termination Date shall not have occurred under the Loan
Agreement; (b) Buyer (and the Administrative Agent as its pledgee) shall not
have received written notice that the indebtedness under the Bowater Credit
Agreement has been accelerated (it being understood that this condition
precedent cannot be waived by Buyer or its
assigns); (c) Buyer
(or its assigns)
shall have received such other documents as
it may reasonably
request; and (d)
on the date such Receivable came into
existence, the
following statements shall
be true (and acceptance of the proceeds of
any payment for such Receivable shall
be deemed a representation and warranty by the applicable Seller that such
statements are then true):
(i) the
representations and
warranties of such
Seller set
forth in Article
II are true and
correct on and as of
the date
such Receivable
came into existence as
though made on and as of
such date; and
(ii) no event has occurred and is continuing that
constitutes a Termination Event.
Notwithstanding
the foregoing
conditions
precedent,
upon the
applicable
Purchase Date for a Receivable (prior to
the occurrence of a Termination Event),
title to such Receivable and the Related
Security and
Collections with
respect
thereto shall vest in the applicable
Transferee,
whether or not the
conditions
precedent to such Transferee's obligation to pay for such
Receivable
were in
fact satisfied and whether or not the
Purchase Price has
actually been paid as
of such date. If any Seller fails to satisfy any of the
foregoing conditions
precedent, however, Buyer, as the ultimate
Transferee, may
rescind the related
Purchase and direct BAI to pay to Buyer
(and BAI may, in turn direct Bowater to
pay to BAI) an amount equal to the Purchase
Price payment, if any, made with
respect to the Receivables included in such
Purchase.
ARTICLE IV
COVENANTS
Section 4.1
Affirmative Covenants
of Each Seller. Until
the date on which
this Agreement terminates in accordance with its terms, each Seller hereby
covenants as set forth below:
(a) Financial Reporting. Bowater will maintain, for itself and each
Consolidated Subsidiary, a system of accounting
established and administered in
accordance
<PAGE>
with GAAP, and furnish to Buyer and to the
Administrative
Agent (as Buyer's
pledgee) for distribution to the
Co-Agents:
(i) Annual Reporting.
Within 120 days after
the close of each of its
fiscal
years, an audit report (with all amounts stated in Dollars),
unqualified
as to scope or going
concern and 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.
(ii) Quarterly Reporting. Within 60 days after the close of
the first
three
quarterly periods of each of its fiscal
years, for Bowater and
the
Consolidated
Subsidiaries,
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 Seller's
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.
(iii) Compliance
Certificate. Together
with the financial statements
required
hereunder, a
compliance certificate
in substantially the form of
Exhibit IV
signed by a Financial
Officer of Bowater and
dated the date of
such annual
financial statement or such quarterly financial statement, as
the case may
be.
(iv) Change in Credit and Collection Policy. At least thirty (30)
days
prior to the
effectiveness of any
change in or amendment to the Credit and
Collection
Policy, a notice (A) indicating such proposed change or
amendment, and
(B) if such proposed change or amendment would be reasonably
likely
to materially and adversely affect the collectibility of the
Receivables
transferred by such Seller or to materially decrease the credit
quality
of any newly created Receivables in any material respect,
requesting
Buyer's (and the
Co-Agents')
consent thereto, which consent
shall not be
unreasonably withheld or delayed.
(v) Other Information. Promptly, from time to time, such other
information,
documents,
records or reports
relating to the Receivables
transferred
by such Seller or the
condition or
operations,
financial or
otherwise,
of such Seller as
Buyer (or its assigns)
may from time to time
reasonably
request in order to
protect the interests of Buyer (and its
assigns) under
or as contemplated by this Agreement.
<PAGE>
(b) Notices. As soon as practicable and in any event within one (1)
Business Day after learning of any of the
following,
such Seller will
notify
Buyer (or its assigns) in writing of any of
the following,
describing the
same
and, if applicable, the steps being taken
with respect thereto:
(i) Termination Events or Unmatured Termination Events. The
occurrence
of each
Termination Event and each Unmatured Termination Event.
(ii) Judgment and
Proceedings. The
institution
of any litigation,
arbitration
proceeding or
governmental
proceeding against
such Seller or
any of its
Subsidiaries, except
proceedings or disputes that, if adversely
determined,
would not have a Seller Material Adverse Effect.
(iii) Seller Material
Adverse Effect. The
occurrence of any event or
condition that
has had, or would have, a Seller Material Adverse Effect.
(c) Compliance
with Laws and
Preservation of
Existence. Such Seller
will
comply in all respects with all applicable
laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it is
then subject,
except where the failure to so comply could
not reasonably be expected to have a
Seller Material Adverse Effect. Such Seller
will preserve and maintain its legal
existence, rights, franchises and privileges in the jurisdiction of its
organization, and qualify and remain
qualified in good standing as a foreign
entity in each jurisdiction where its business is conducted,
except where the
failure to so qualify or remain in good standing could not reasonably be
expected to have a Seller Material Adverse
Effect.
(d) Audits. Such
Seller will furnish to Buyer and the Administrative Agent
(as Buyer's pledgee) from time to time such
information
with respect to
such
Seller and the Receivables transferred by it as Buyer or the Administrative
Agent may reasonably request. Such Seller
will, from time to time during regular
business hours as requested by Buyer (or the Administrative Agent), upon
reasonable notice and at the sole cost of
such Seller, permit an accounting firm
designated by the Administrative Agent (as Buyer's pledgee) and reasonably
acceptable to the Buyer: (i) to examine and make copies of
and abstracts
from
all Receivable Files in the possession or under
the control of such Seller and
other records relating to the Receivables, the Collections and the Related
Security, including, without limitation, the related Contracts,
and (ii) to
visit the offices and properties of such Seller for the purpose of
examining
such materials described in clause (i)
above, and to discuss matters relating to
such Seller's financial condition or the
Receivables and the Related Security or
such Seller's performance under any of the Transaction Documents or such
Seller's performance under the Contracts and, in each case, with any of the
officers or employees of such Seller having
knowledge of such matters; provided,
however, that, prior to a Bowater Downgrade
and in the absence of a Termination
Event, Sellers will only be required to
pay for up to one (1) such examination
in any calendar year, and provided further,
in the event of a Bowater Downgrade,
the Sellers shall only be required to pay
for up to two (2) such examinations in
any calendar year, and provided further,
that from and after the occurrence of a
Termination Event, the Sellers shall be responsible to pay for, and the
Administrative Agent (or its representatives) shall be entitled to
<PAGE>
conduct, as many examinations as Buyer or the Administrative Agent may deem
necessary or appropriate to protect the interests of the
Buyer and the Secured
Parties.
(e) Keeping and
Marking of Records and Books.
(i) Such Seller will
maintain and implement
administrative and
operating procedures
(including,
without limitation,
an ability to
recreate records
evidencing
Receivables
in the event of the
destruction of the
originals thereof), and keep and maintain all
documents, books,
records and other information reasonably necessary
or advisable for the collection of all Receivables (including,
without
limitation, records adequate to permit the immediate identification
of
each new Receivable
and all Collections
of and adjustments to each
existing Receivable).
Such Seller
will give Buyer (or
its assigns)
notice of any material
change in the
administrative
and operating
procedures referred to in the previous sentence.
(ii) Such Seller will (A) on or prior to December 19, 2002,
mark
its master
data processing records and other books and records
relating to the Receivables with a legend, acceptable to Buyer (or
its
assigns), describing
Buyer's ownership
interests in the
Receivables
and further describing
the security
interest of the
Administrative
Agent (on behalf of the Secured Parties) under the Loan Agreement
and
(B) upon the request
of Buyer (or its assigns) from and after the
occurrence of a Termination Event: (x) mark each invoice evidencing
any Receivable with a legend describing Buyer's ownership thereof and
further describing the security interest of the Administrative Agent
(on behalf of the Agents and the Lenders) and (y) at any time after
such Seller
(or one of its Affiliates) is no longer acting as
Servicer, deliver to
Buyer (or its assigns) all Contracts relating to
such Receivables.
(f) Compliance
with Contracts and Credit and Collection Policy. Such Seller
will timely and fully (i) perform and
comply in all material
respects with all
provisions, covenants and other promises
required to be observed by it under the
Contracts related to the Receivables
hereunder, and (ii)
comply in all material
respects with the Credit and Collection
Policy in regard to each such Receivable
and the related Contract.
(g) Ownership.
Such Seller will take
all necessary action to establish and
maintain, irrevocably in Buyer as ultimate
Transferee: (A) legal
and equitable
title to the Receivables transferred by it and the related
Collections and
(B)
all of such Seller's right, title and interest in the Related Security
associated with the Receivables
described in the
preceding clause (A),
in each
case, free and clear of any Adverse
Claims other than the Adverse Claims in
favor of Buyer (and its assigns)
(including, without
limitation, the filing
of
all financing statements or other similar
instruments
or documents
necessary
under the UCC (or any comparable law) of all appropriate jurisdictions to
perfect Buyer's interest in such
Receivables,
<PAGE>
Related Security and Collections
and such other action
to perfect, protect
or
more fully evidence the interest of Buyer as Buyer (or its assigns) may
reasonably request).
(h) Agents' and
Lenders' Reliance. Such Seller acknowledges that the Agents
and Lenders are entering into the transactions contemplated by the Loan
Agreement in reliance upon Buyer's identity as a legal entity that is
separate
from such Seller and any Affiliates
thereof. Therefore, such Seller will take
all reasonable steps within such Seller's
control to maintain
Buyer's identity
as a separate legal entity and to make it
manifest to third
parties that Buyer
is an entity with assets and liabilities
distinct from those of
such Seller and
any Affiliates thereof and not just a division of such Seller or any such
Affiliate. Without limiting the generality of the
foregoing and in addition to
the other covenants set forth herein,
such Seller (i) will
not hold itself out
to third parties as liable for the debts of
Buyer nor purport to own any of the
Receivables and other assets acquired by Buyer, (ii) will not take any action
that would cause Buyer to violate the "separateness covenants" set forth in
Section 9.1.7 of the Loan Agreement and (iii) will cause all tax
liabilities
arising in connection with the transactions
contemplated herein or
otherwise to
be allocated between such Seller and Buyer on
an arm's-length
basis and in a
manner consistent with the procedures set forth in
U.S. Treasury
Regulations
ss.ss.1.1502-33(d) and 1.1552-1.
(i) Collections. In the event any payments relating to Receivables
transferred by such Seller are remitted
directly to such Seller or any Affiliate
of such Seller, such Seller will remit (or will
cause all such
payments to be
remitted) directly to a Lockbox Account which is in Buyer's name
and listed on
Exhibit III hereto within three (3)
Business Days following receipt thereof and,
at all times prior to such remittance, such Seller will itself hold or, if
applicable, will cause such payments to be held in trust for the
exclusive
benefit of Buyer and its assigns. Such
Seller will transfer exclusive ownership,
dominion and control of each LockBox and
LockBox Account to
Buyer and, will not
grant the right to take dominion and control of any LockBox or any LockBox
Account at a future time or upon the
occurrence of a future event to any Person,
except to Buyer, as contemplated
by this Agreement,
and to the
Administrative
Agent, as contemplated by the Loan
Agreement.
(j) Taxes.
Such Seller
will file all tax
returns and reports
required by
law to be filed by it and promptly pay all Covered Taxes at any time owing,
except any such Covered Taxes which are not yet delinquent or are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books.
Section 4.2
Negative Covenants of Each Seller. Until the date on which this
Agreement terminates in accordance with its
terms, each Seller hereby covenants
that:
(a) Name Change,
Offices and Records.
Such Seller will not
change its (i)
state of organization, (ii) legal name, (iii) identity or
structure (within the
meaning of Article 9 of any applicable
enactment of the UCC) or any office where
Receivable Files are kept unless, in each
of the foregoing cases, it shall have:
(A) given Buyer (and the Administrative Agent as Buyer's pledgee) at least
ten
(10) Business Days' prior written notice thereof and (B) delivered to the
Administrative Agent (as Buyer's pledgee)
all financing statements, instruments
and other
<PAGE>
documents reasonably requested by Buyer (or
the Administrative Agent, as Buyer's
pledgee) in connection with such change or
relocation.
(b) Change in
Payment Instructions to Obligors. Such Seller will not add or
terminate any LockBox or LockBox Account,
or make any change in the instructions
to Obligors regarding payments to be made
to any LockBox or any LockBox Account,
unless Buyer and the Administrative Agent
shall have received, at least ten (10)
days before the proposed effective date therefor, (i) written notice of such
addition, termination or change and (ii) with respect to the addition of a
LockBox or LockBox Account, an executed LockBox Account
Agreement;
provided,
however, that Seller may make changes in instructions to Obligors regarding
payments if such new instructions require such Obligor to make payments to
another existing LockBox or LockBox
Account.
(c) Modifications to Contracts and Credit and Collection Policy. Such
Seller will not, without the consent of the Buyer
and the Co-Agents,
make any
change to the Credit and Collection
Policy that could
reasonably be expected to
materially and adversely affect the collectibility of the Receivables
transferred by it or materially
decrease the credit
quality of any of its newly
created Receivables. Except (i) in accordance
with the Credit and
Collection
Policy and (ii) as otherwise permitted hereunder and under the Loan
Agreement,
if such Seller is acting as Servicer
pursuant to the Loan Agreement, such Seller
will not extend, amend or otherwise modify the terms of any
Receivable or any
Contract related thereto.
(d) Sales,
Adverse Claims. Such
Seller will not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or grant any option
with respect
to, or create or suffer to exist any
Adverse Claim upon (including, without
limitation, the filing of any financing statement) or with respect to, any
Receivable, Related Security or Collections, or upon or with respect to any
Contract under which any Receivable arises, or any LockBox or any LockBox
Account, or assign any right to receive
income with respect thereto (other than,
in each case, the creation of the interests therein in favor of Buyer, as
provided for herein, and of Lenders, as
provided for in the Loan Agreement), and
such Seller will defend the right,
title and interest of
Buyer in, to and under
any of the foregoing property, against all claims of third
parties claiming
through or under such Seller.
(e) Accounting
for Purchases. Such Seller will not, and will not permit any
Affiliate to, account for the transactions
contemplated hereby in
any financial
statements in any manner other than the
sale (or other
outright conveyance)
by
such Seller to the applicable Transferee of the Receivables and the associated
Collections and Related Security except to
the extent that such transactions are
not recognized on account of consolidated
financial reporting in accordance with
generally accepted accounting
principles.
ARTICLE V
TERMINATION EVENTS
Section 5.1
Termination
Events. The occurrence of any one or more
of the
following events shall constitute a
Termination Event:
<PAGE>
(a) Any Seller
shall fail to make any
payment or deposit required
hereunder
when
due and such failure shall continue for three (3)
consecutive
Business Days.
(b) Any representation, warranty, certification or statement made
by
any Seller in
this Agreement,
any other Transaction Document 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 and provided further, that any such
incorre
