Table of Contents

 

Article I Definitions
Section 1.1	Certain Defined Terms
Section 1.2	Other Terms
Section 1.3	Computation of Time Periods
Article II Purchases and Settlements
Section 2.1	Transfer of Affected Assets; Intended Characterization
Section 2.2	Purchase Price
Section 2.3	Investment Procedures
Section 2.4	[IS RESERVED AND IS SPECIFIED IN SCHEDULE I.]
Section 2.5	Yield, Fees and Other Costs and Expenses
Section 2.6	Deemed Collections
Section 2.7	Payments and Computations, Etc.
Section 2.8	Reports
Section 2.9	Collection Account
Section 2.10	Sharing of Payments, Etc.
Section 2.11	Right of Setoff
Article III Additional Alternate Investor Provisions
Section 3.1	Assignment to Alternate Investors
Section 3.2	Downgrade of Alternate Investor
Section 3.3	Non-Renewing Alternate Investors
Article IV Representations and Warranties
Section 4.1	Representations and Warranties of the SPV and the Servicer
Section 4.2	Additional Representations and Warranties of the Servicer
Article V Conditions Precedent
Section 5.1	Conditions Precedent to Closing
Section 5.2	Conditions Precedent to All Investments and Reinvestments
Article VI Covenants
Section 6.1	Affirmative Covenants of the SPV, the Originators, the Receivables Seller and the Servicer
Section 6.2	Negative Covenants of the SPV, the Originator, the Receivables Seller and Servicer
Section 6.3	Delivery of Audit Related Materials
Article VII Administration and Collections
Section 7.1	Appointment of Servicer
Section 7.2	Duties of Servicer
Section 7.3	Blocked Account Arrangements
Section 7.4	Enforcement Rights After Designation of New Servicer
Section 7.5	Servicer Default
Section 7.6	Servicing Fee
Section 7.7	Protection of Ownership Interest of the Investors
Article VIII Termination Events
Section 8.1	Termination Events
Section 8.2	Termination

 

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Article IX Indemnification; Expenses; Related Matters
Section 9.1	Indemnities by the SPV, the Receivables Seller and each Originator
Section 9.2	Indemnity for Taxes, Reserves and Expenses
Section 9.3	Taxes
Section 9.4	Other Costs and Expenses; Breakage Costs
Section 9.5	Reconveyance Under Certain Circumstances
Section 9.6	Indemnities by the Servicer
Article X The Agent
Section 10.1	Appointment and Authorization of Agent
Section 10.2	Delegation of Duties
Section 10.3	Reliance by Agent
Section 10.4	Notice of Termination Event, Potential Termination Event or Servicer Default
Section 10.5	Credit Decision; Disclosure of Information by the Agent
Section 10.6	Indemnification of the Agent
Section 10.7	Agent in Individual Capacity
Section 10.8	Resignation of Agent
Section 10.9	Payments by the Agent
Section 10.10	Appointment and Authorization of Class Agents
Section 10.11	Delegation of Duties
Section 10.12	Reliance by Class Agents
Section 10.13	Notice of Termination Event, Potential Termination Event or Servicer Default
Section 10.14	Credit Decision; Disclosure of Information by the Class Agents
Section 10.15	Indemnification of the Class Agent
Section 10.16	Class Agent in Individual Capacity
Section 10.17	Resignation of Class Agent
Section 10.18	Liability of Agent and the Class Agents
Article XI Miscellaneous
Section 11.1	Term of Agreement
Section 11.2	Waivers; Amendments
Section 11.3	Notices; Payment Information
Section 11.4	Governing Law; Submission to Jurisdiction; Appointment of Service Agent
Section 11.5	Integration
Section 11.6	Severability of Provisions
Section 11.7	Counterparts; Facsimile Delivery
Section 11.8	Successors and Assigns; Binding Effect
Section 11.9	Waiver of Confidentiality
Section 11.10	Confidentiality Agreement
Section 11.11	No Bankruptcy Petition Against the Conduit Investors
Section 11.12	No Recourse Against Conduit Investor
Section 11.13	Tax Treatment

 

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Schedules

 

Schedule I		Yield and Rate Periods
Schedule II		Calculation of Required Reserves
Schedule III		Settlement Procedures
Schedule 4.1(e)		List of Actions and Suits
Schedule 4.1(g)		Names, Jurisdictions of Formation, Type of Entity and Locations of Certain Offices and Records
Schedule 4.1(h)		List of Subsidiaries, Divisions and Tradenames; FEIN
Schedule 4.1(q)		List of Blocked Account Banks and Blocked Accounts
Schedule 11.3		Address and Payment Information

 

Exhibits

 

Exhibit A		Form of Assignment and Assumption Agreement
Exhibit B		[Reserved.]
Exhibit C		Credit and Collection Policies and Practices
Exhibit D		Form of Investment Request
Exhibit E		Form of Blocked Account Agreement
Exhibit F		Form of Servicer Report
Exhibit G		Form of SPV Secretary’s Certificate
Exhibit H		Forms of Originator/Servicer Secretary’s Certificate
Exhibit I		Form of Opinion of Counsel for the Originators, the Servicer and the SPV
Exhibit J		Form of Accountants’ Report

 

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TRANSFER AND ADMINISTRATION AGREEMENT

 

This TRANSFER AND ADMINISTRATION AGREEMENT (this “ Agreement ”), dated as of October 26, 2005, by and among BIRCH CREEK INVESTMENTS, L.L.C., a Delaware limited liability company (the “ SPV ”), BOISE CASCADE, L.L.C. (“ Boise Cascade ”), a Delaware limited liability company, as seller under the Second Tier Agreement (as defined below) (in such capacity the “ Receivables Seller ”) as initial Servicer (in such capacity, the “ Servicer ”), BOISE WHITE PAPER, L.L.C. (“ Boise Paper ”), a Delaware limited liability company, BOISE PACKAGING & NEWSPRINT, L.L.C. (“ Boise Packaging ”), a Delaware limited liability company, BOISE BUILDING SOLUTIONS MANUFACTURING, L.L.C., a Delaware limited liability company (“ Boise Manufacturing ”), BOISE BUILDING SOLUTIONS DISTRIBUTION, L.L.C., a Delaware limited liability company (“ Boise Distribution ” and together with Boise Paper, Boise Manufacturing and Boise Packaging each an “ Originator ” and collectively, the “ Originators ”), YC SUSI TRUST, (“ Yorktown ”), as a Conduit Investor, ATLANTIC ASSET SECURITIZATION LLC, a Delaware limited liability company (“ Atlantic ”, each of Yorktown and Atlantic a “ Conduit Investor ” and, collectively, the “ Conduit Investors ”), BANK OF AMERICA, NATIONAL ASSOCIATION, a national banking association (“ Bank of America ”), as the Agent for the Investors, as a Class Agent and as an Alternate Investor, CALYON NEW YORK BRANCH (“ Calyon ”), a branch of a French banking corporation, as a Class Agent and as an Alternate Investor, and the financial institutions from time to time parties hereto as Alternate Investors.

 

Article I

 

Definitions

 

Section 1.1             Certain Defined Terms .

 

As used in this Agreement, the following terms shall have the following meanings:

 

Additional Costs :  As defined in Section 9.2(d) .

 

Administrative Trustee :  Bank of America, National Association, as Administrative Trustee for Yorktown.

 

Adverse Claim :  A lien, security interest, charge or encumbrance, or other right or claim in, of or on any Person’s assets or properties in favor of any other Person (including any UCC financing statement or any similar instrument filed against such Person’s assets or properties).

 

Affected Assets :  Collectively, (i) the Receivables, (ii) the Related Security, (iii) all right, title and interest and all remedies of (A) the Receivables Seller under the First Tier Agreement and (B) the SPV under the Second Tier Agreement, together with all financing statements filed naming Boise Cascade as secured party/purchaser and the related Originators as debtor/seller and all financing statements naming the SPV as secured party/purchaser and Boise Cascade as debtor/seller, (iv) all Blocked Accounts and all funds and investments therein and all Blocked Account Agreements and (v) all proceeds of the foregoing.

 

 

Affiliate :  As to any Person, any other Person which, directly or indirectly, owns, is in control of, is controlled by, or is under common control with, such Person, in each case whether beneficially, or as a trustee, guardian or other fiduciary.  A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the other Person through the ownership of more than 20% of the voting securities or membership interests of such Person, by contract, or otherwise.

 

Agent :  Bank of America, in its capacity as agent for the Investors, and any successor thereto appointed pursuant to Article X .

 

Agents :  The Agent and the Class Agents.

 

Agent-Related Persons :  The Agent, or any Class Agent, as the case may be, together with its respective Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and their respective Affiliates.

 

Aggregate Facility Limit :  As of any date, the sum of the Class Facility Limits as of such date, which amount shall not exceed $255,000,000.

 

Aggregate Net Investment :  As of any date, the sum of the Class Net Investments as of such date.

 

Aggregate Unpaids :  At any time, an amount equal to the sum of (i) the aggregate unpaid Yield accrued and to accrue to maturity with respect to all Rate Periods at such time, (ii) the Aggregate Net Investment at such time and (iii) all other amounts owed (whether or not then due and payable) hereunder and under the other Transaction Documents by the SPV and each Originator to the Agent, the Class Agents, the Investors or the Indemnified Parties at such time.

 

Agreement :  As defined in the Preamble .

 

Alternate Investor Percentage :  With respect to any Class, at any time, a fraction, expressed as a percentage, the numerator of which is the portion of the related Class Net Investment funded by the related Alternate Investors and the denominator of which is the related Class Net Investment at such time;  provided that at all times on and after the first Assignment Date occurring on or after the Conduit Investment Termination Date, the Alternate Investor Percentage means 100%.

 

Alternate Investors :  Bank of America, Calyon and each other financial institution identified as such on the signature pages hereof and any other financial institution that shall become a party to this Agreement pursuant to Section 11.8 .

 

Alternate Rate :  As defined in Section 2.4(e) .

 

Asset Interest :  As defined in Section 2.1(b) .

 

Assignment Amount :  With respect to an Alternate Investor at the time of any assignment pursuant to Section 3.1 , an amount equal to the least of (i) such Alternate Investor’s Pro Rata Share of the related Class Net Investment requested by the related Conduit Investor to be assigned at such time; (ii) such Alternate Investor’s unused Commitment (minus the unrecovered

 

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principal amount of such Alternate Investor’s investments in the Asset Interest pursuant to the Program Support Agreement to which it is a party); and (iii) in the case of an assignment on or after the Conduit Investment Termination Date, the sum of such Alternate Investor’s Pro Rata Share of the related Conduit Investor Percentage of (A) the aggregate Unpaid Balances of the Receivables (other than Defaulted Receivables), plus (B) all Collections received by the Servicer but not yet remitted by the Servicer to the Agent, plus (C) any amounts in respect of Deemed Collections required to be paid by the SPV at such time.

 

Assignment and Assumption Agreement :  An Assignment and Assumption Agreement substantially in the form of Exhibit A .

 

Assignment Date :  As defined in Section 3.1(a) .

 

Atlantic :  As defined in the Preamble .

 

Atlantic Fee Letter :  The confidential letter agreement, dated October 26, 2005, among the SPV, the Servicer and Atlantic with respect to the fees to be paid by the SPV and the Servicer, together with all amendments, modifications, restatements and/or supplements thereto.

 

Audit Report :  Any report prepared by Protiviti or another nationally recognized consultant, which summarizes the conclusions of such auditor’s assessment of the practices of the Servicer against the best practices of the industry.

 

Bank of America :  As defined in the Preamble .

 

Bankruptcy Code :  The Bankruptcy Reform Act of 1978, 11 U.S.C. §§ 101 et seq.

 

Base Rate :  As defined in Section 2.4(e) .

 

BCC:        Boise Cascade Company.

 

Blocked Account :  An account maintained by the Servicer at a Blocked Account Bank for the purpose of receiving Collections, set forth in Schedule 4.1(q) or any account added as a Blocked Account pursuant to and in accordance with Section 4.1(q) and which, if not maintained at and in the name of the Agent, is subject to a Blocked Account Agreement.

 

Blocked Account Agreement :  An agreement among the Servicer, the Agent and a Blocked Account Bank in substantially the form of Exhibit E .

 

Blocked Account Bank :  Each of the banks set forth in Schedule 4.1(q) , as such Schedule 4.1(q) may be modified pursuant to Section 4.1(q) .

 

Boise Cascade :  Boise Cascade, L.L.C.

 

Boise Land :  Boise Land & Timber Corp.

 

Business Day :  Any day excluding Saturday, Sunday and any day on which banks in New York, New York or Charlotte, North Carolina are authorized or required by law to close, and, when

 

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used with respect to the determination of any Offshore Rate or any notice with respect thereto, any such day which is also a day for trading by and between banks in United States dollar deposits in the London interbank market.

 

Calculation Period :  As defined in Schedule II .

 

Calyon :  As defined in the Preamble .

 

Capitalized Lease :  Of a Person means any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP.

 

Change of Control : The acquisition by one or more Persons of beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the Securities Exchange Act of 1934) of any equity interest in the SPV or of 35% or more of the equity interest in any Originator, the Receivables Seller or the Servicer; provided that a Change of Control shall not occur if a Person acquires beneficial ownership of any equity interest in any Originator, the Receivables Seller or the Servicer in connection with, or as a result of, an initial public offering of such Originator, the Receivables Seller or the Servicer.

 

Class :  Each group of investors consisting of a Conduit Investor and the related Alternate Investors, and their respective successors and permitted assigns and the related Class Agent.

 

Class Agent :  (i) With respect to the Class of which Yorktown is a member, Bank of America and its successors and permitted assigns and (ii) with respect to the Class of which Atlantic is a member, Calyon and its successors and permitted assigns, and (iv) with respect to any other Class, the Person specified in any supplement to this Agreement as the class agent for such Class and such Person’s successors and permitted assigns.

 

Class Facility Limit :  (i) With respect to the Class of which Yorktown is a member, $150,000,000, (ii) with respect to the Class of which Atlantic is a member, $100,000,000 and (iii) with respect to any other Class, the amount specified in any supplement to this Agreement as the facility limit for such Class; provided , however , that the Class Facility Limit with respect to any Class shall not at any time exceed the aggregate Commitments for the related Alternate Investors.

 

Class Net Investment :  As of any date, with respect to any Class the aggregate of the amounts paid to the SPV minus the aggregate amount of Collections received and applied by the related Class Agent on or before such date to reduce such Class Net Investment; provided that the Class Net Investment shall be restored and reinstated in the amount of any Collections so received and applied if at any time the distribution of such Collections is rescinded or must otherwise be returned for any reason; and provided further , that the Class Net Investment for the related Class shall be increased by the amount described in Section 3.1(b) as described therein.

 

Class Pro Rata Share :  With respect to any Class as of any date, the percentage equivalent of a fraction, the numerator of which is the related Class Facility Limit as of such date and the denominator of which is the Aggregate Facility Limit as of such date.

 

Closing Date :  October 26, 2005.

 

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Code :  The Internal Revenue Code of 1986, as amended.

 

Collateral Agent :  Any Person who acts as collateral agent for any Program Support Provider, the holders of Commercial Paper issued by any Conduit Investor and certain other parties.

 

Collection Account :  As defined in Section 2.9 .

 

Collections :  With respect to the Receivables, all cash collections and other cash proceeds of the Receivables, including all finance charges, if any, and cash proceeds of Related Security and all Deemed Collections.

 

Commercial Paper :  The promissory notes issued or to be issued by any Conduit Investor (or its related commercial paper issuer if the Conduit Investor does not itself issue commercial paper) in the commercial paper market.

 

Commitment :  With respect to each Alternate Investor, as the context requires, (i) the commitment of such Alternate Investor to make Investments and to pay Assignment Amounts in accordance herewith in an amount not to exceed the amount described in the following clause (ii) , and (ii) the dollar amount set forth opposite such Alternate Investor’s signature on the signature pages hereof under the heading “Commitment” (or in the case of an Alternate Investor which becomes a party hereto pursuant to an Assignment and Assumption Agreement, as set forth in such Assignment and Assumption Agreement), minus the dollar amount of any Commitment or portion thereof assigned by such Alternate Investor pursuant to an Assignment and Assumption Agreement, plus the dollar amount of any increase to such Alternate Investor’s Commitment consented to by such Alternate Investor prior to the time of determination; provided , however , that, except as otherwise provided in Section 3.3(b), in the event that the Aggregate Facility Limit is reduced, the aggregate of the Commitments of all the Alternate Investors shall be reduced in a like amount and the Commitment of each Alternate Investor shall be reduced in proportion to such reduction.

 

Commitment Termination Date :  The earliest to occur of (i) October 26, 2008 or such later date to which the Commitment Termination Date may be extended by the SPV, the Agent, the Class Agents and some or all of the Alternate Investors (in their sole discretion) and (ii) the Termination Date.

 

Conduit Assignee :  With respect to any Class, any special purpose entity that finances its activities directly or indirectly through asset backed commercial paper and is administered by the related Class Agent or any Affiliate thereof and designated by such Class Agent from time to time to accept an assignment from the related Conduit Investor of all or a portion of the related Class Net Investment and the related Class Facility Limit.

 

Conduit Investment Termination Date :  With respect to any Conduit Investor, the earliest to occur of (i) the Commitment Termination Date, (ii) unless the related Class Agent elects otherwise, the date of termination of the commitment of any Program Support Provider under a Program Support Agreement, (iii) the date on which the Commercial Paper issued by any Conduit Investor shall not be rated at least “A-1” by S&P and at least “P-1” by Moody’s and in the case of any Conduit Investor rated by Fitch, at least “F1” by Fitch and (iv) the date of the delivery by such Conduit Investor to the SPV of written notice that such Conduit Investor elects,

 

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in its sole discretion, to commence the amortization of the related Class Net Investment funded by it or otherwise liquidate its interest in the Asset Interest.

 

Conduit Investors :  Yorktown, Atlantic and any Conduit Assignee thereof, respectively.

 

Conduit Investor Percentage :  For any Class, at any time, 100%, less the related Alternate Investor Percentage at such time.

 

Confidential Information :  As defined in Section 11.10 .

 

Contract :  In relation to any Receivable, any and all contracts, instruments, agreements, leases, invoices, notes, purchase orders or other writings pursuant to which such Receivable arises or which evidence such Receivable or under which an Obligor becomes or is obligated to make payment in respect of such Receivable.

 

Control , Controlling or Controlled :  The possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person through the right to exercise voting power or by contract.

 

CP Rate :  As defined in Section 2.4(e) .

 

Credit Agreement :  The Amended and Restated Credit Agreement, dated as of April 18, 2005, by and among, BCC, Timber Holdings, Boise Cascade, Boise Land, JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc., Lehman Brothers Inc., Lehman Commercial Paper Inc., CoBank, ACB, Deutsche Bank AG Cayman Islands Branch and Goldman Sachs Credit Partners L.P., as in effect on April 18, 2005, without giving effect to any amendments, modifications, waivers, restatements, supplements or replacements of any or all of such Credit Agreement without the prior consent of the Agents.

 

Credit and Collection Policy :  Each Originator’s credit and collection policy or policies and practices, relating to Contracts and Receivables as in effect on the Closing Date and set forth in Exhibit C , as modified, from time to time, in compliance with Sections 6.1(a)(vii) and 6.2(c) .

 

Deemed Collections :  Any Collections on any Receivable deemed to have been received pursuant to Section 2.6 .

 

Default Ratio :  On any day, the ratio of (i) the aggregate Unpaid Balances of the Receivables that have become Defaulted Receivables during the Calculation Period immediately preceding the date of determination over (ii) the aggregate sales of the Originators giving rise to Receivables during the fourth (4 ^th ) Calculation Period immediately preceding the date of determination.

 

Defaulted Receivable :  A Receivable (i) as to which any payment, or part thereof, remains unpaid for more than sixty (60) days from the original due date for such Receivable; (ii) as to which an Event of Bankruptcy has occurred and is continuing with respect to the Obligor thereof; (iii) which has been identified by the SPV, the related Originator or the Servicer as uncollectible; or (iv) which, consistent with the Credit and Collection Policy, have been or should have been written off as uncollectible.

 

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Defaulting Alternate Investor :  As defined in Section 2.3(f) .

 

Delinquency Ratio :  The ratio (expressed as a percentage) computed as of the last day of each calendar month by dividing (i) the aggregate Unpaid Balances of all Delinquent Receivables as of such date, by (ii) the aggregate Unpaid Balances of all Receivables as of such date.

 

Delinquent Receivable :  A Receivable:  (i) as to which any payment, or part thereof, remains unpaid for more than 30 days from the original due date for such Receivable and (ii) which is not a Defaulted Receivable.

 

Dilution :  A reduction in the Unpaid Balance of any Receivable attributable to any non-cash items including credits, rebates, billing errors, sales or similar taxes, cash discounts, volume discounts, allowances, disputes (it being understood that a Receivable is “subject to dispute” only if and to the extent that, in the reasonable good faith judgment of the related Originator (which shall be exercised in the ordinary course of business) the Obligor’s obligation in respect of such Receivable is reduced on account of any performance failure on the part of such Originator), set-offs, counterclaims, chargebacks, returned or repossessed goods, sales and marketing discounts, warranties, any unapplied credit memos and other adjustments that are made in respect of Obligors; provided , that write-offs related to an Obligor’s bad credit shall not constitute Dilution.

 

Dilution Ratio :  As defined in Schedule II .

 

Dollar or $ :  The lawful currency of the United States.

 

Downgrade Collateral Account :  As defined in Section 3.2(a) .

 

Downgrade Draw :  As defined in Section 3.2(a) .

 

Eligible Investments :  Highly rated short-term debt or the other highly rated liquid investments in which a Conduit Investor is permitted to invest cash pursuant to its commercial paper program documents.

 

Eligible Receivable :  At any time, any Receivable:

 

(i)             which was originated by the Seller or an Originator in the ordinary course of its business;

 

(ii)            (A) which, arises pursuant to a Contract with respect to which each of the Seller or the related Originator and the SPV has performed all obligations required to be performed by it thereunder, including shipment of the merchandise and/or the performance of the services purchased thereunder; (B) which has been billed to the related Obligor; and (C) which according to the Contract related thereto, is required to be paid in full within 60 days of the original billing date therefor; provided that at any time up to 10% (by aggregate Unpaid Balance) of the Eligible Receivables may permit the related Obligor to pay such Receivable on a date that is within a period of 60 to 120 days of the original billing date therefor;

 

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(iii)           which (A) satisfies all applicable requirements of the Credit and Collection Policy and (B) at the time of the purchase by the Agent, on behalf of the Investors thereof hereunder, satisfies such other criteria and requirements as the Agent may from time to time reasonably specify to the SPV;

 

(iv)           (A) which has been sold to the Receivables Seller pursuant to (and in accordance with) the First Tier Agreement and sold or contributed to the SPV pursuant to (and in accordance with) the Second Tier Agreement, (B) which does not arise from the sale of any inventory the proceeds of which are subject to any Adverse Claim (when Adverse Claim is not released in full upon the sale, transfer and assignment thereof to the SPV) and (C) to which the applicable Originator and the Receivables Seller had (except with respect to any Originator or the Receivables Seller, any Adverse Claim that is released in full upon the sale, transfer and assignment thereof to the SPV) (prior to its sale of such Receivable to the Receivables Seller or the SPV, as applicable), and the SPV has, good and marketable title, free and clear of all Adverse Claims;

 

(v)            the Obligor of which is a United States resident, is not an Affiliate (other than OfficeMax) or employee of any of the parties hereto, and is not an Official Body;

 

(vi)           unless such Receivable is a Permitted Non-Lockbox Receivable, the Obligor of which has been directed to make all payments to a lockbox or a Blocked Account, as the case may be;

 

(vii)          which under the related Contract and applicable Law is assignable without the consent of, or notice to, the Obligor thereunder unless such consent has been obtained and is in effect or such notice has been given;

 

(viii)         which , together with the related Contract, is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms and is not subject to any litigation, dispute, offset, counterclaim or other defense;

 

(ix)            which is denominated and payable only in Dollars in the United States;

 

(x)             which is not a Defaulted Receivable;

 

(xi)            which is not due from an Obligor that is past due more than sixty (60) days from the original due date on more than twenty-five percent (25%) of the aggregate Unpaid Balances of Receivables of which it is the Obligor;

 

(xii)           which has not been compromised, adjusted or modified (including by the extension of time for payment or the granting of any discounts, allowances or credits); provided , however , that only such portion of such Receivable that is the subject of such compromise, adjustment or modification shall be deemed to be ineligible pursuant to the terms of this clause (xii) ;

 

(xiii)          which is an “account” and is not evidenced by an instrument within the meaning of Article 9 of the UCC of all applicable jurisdictions;

 

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(xiv)         which is an “eligible asset” as defined in Rule 3a-7 under the Investment Company Act of 1940;

 

(xv)          which , together with the Contract related thereto, does not contravene in any material respect any Laws applicable thereto (including Laws relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such Law in any material respect;

 

(xvi)         the assignment of which under the First Tier Agreement by the related Originator to the Receivables Seller, under the Second Tier Agreement by the Receivables Seller to the SPV and hereunder by the SPV to the Agent does not violate, conflict or contravene any applicable Law or any contractual or other restriction, limitation or encumbrance; and

 

(xvii)        which (together with the Related Security related thereto) has been the subject of either a valid transfer and assignment from, or the grant of a first priority perfected security interest therein by, the SPV to the Agent, on behalf of the Investors, of all of the SPV’s right, title and interest therein, effective until the Final Payout Date (unless repurchased by the SPV at an earlier date pursuant to this Agreement).

 

ERISA :  The U.S. Employee Retirement Income Security Act of 1974, as amended, and any regulations promulgated and rulings issued thereunder.

 

ERISA Affiliate :  With respect to any Person, any corporation, partnership, trust, sole proprietorship or trade or business which, together with such Person, is treated as a single employer under Section 414(b) or (c) of the Code or, with respect to any liability for contributions under Section 302(c) of ERISA, Section 414(m) or Section 414(o) of the Code.

 

Eurodollar Reserved Percentage :  As defined Section 2.4(e) .

 

Event of Bankruptcy :  With respect to any Person, (i) that such Person (A) shall generally not pay its debts as such debts become due or (B) shall admit in writing its inability to pay its debts generally or (C) shall make a general assignment for the benefit of creditors; (ii) any proceeding shall be instituted by or against such Person seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property, provided that, with respect to any such proceeding instituted against (and not by) such Person, such proceeding shall not be dismissed within forty-five (45) days from the date it was filed; or (iii) such Person shall take any corporate, partnership or other similar appropriate action to authorize any of the actions set forth in the preceding clauses (i) or (ii) .

 

Excluded Taxes :  As defined specified in Section 9.3 .

 

Facility Fee :  (i) With respect to the Class of which Yorktown is a member, the fee payable by the SPV to Bank of America, the terms of which are set forth in the Yorktown Fee Letter; (ii)

 

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with respect to the Class of which Atlantic is a member, the fee payable by the SPV to Calyon, the terms of which are set forth in the Atlantic Fee Letter; and (iii) with respect to any other Class, the fee specified in any supplement to this Agreement or the related fee letter as the facility fee payable by the SPV to the related Class Agent.

 

Facility Pro Rata Share :  As of any date, (i) with respect to any Alternate Investor, the percentage equivalent of a fraction, the numerator of which is the Commitment of such Alternate Investor as of such date and the denominator of which is the sum of the Commitments of all Alternate Investors as of such date and (ii) with respect to any Class, the percentage equivalent of a fraction, the numerator of which is the related Class Net Investment as of such date and the denominator of which is the Aggregate Net Investment as of such date.

 

Federal Funds Rate :  As defined in Section 2.4(e) .

 

Fee Letters :  The Atlantic Fee Letter and the Yorktown Fee Letter, collectively.

 

Final Payout Date :  The date, after the Termination Date, on which the Aggregate Net Investment has been reduced to zero, all accrued Servicing Fees have been paid in full and all other Aggregate Unpaids have been paid in full in cash.

 

First Tier Agreement :  The Receivables Purchase Agreement, dated as of October 26, 2005, by and among the Originators and the Receivables Seller, as such agreement may be amended, modified or supplemented from time to time.

 

Fitch :  Fitch, Inc. or any successor that is a nationally recognized statistical rating organization.

 

GAAP :  Generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such accounting profession, in effect from time to time.

 

Guaranty :  With respect to any Person, any agreement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes liable upon, the obligation of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person or otherwise assures any other creditor of such other Person against loss, including any comfort letter, operating agreement or take-or-pay contract and shall include the contingent liability of such Person in connection with any application for a letter of credit.

 

Holding Companies :  BCC and Timber Holdings.

 

Indebtedness :  Without duplication, with respect to any Person such Person’s (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of property other than accounts payable arising in the ordinary course of such Person’s business on terms customary in the trade, (iii) obligations, whether or not assumed, secured by liens or payable out of the proceeds or products of property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances (including bankers acceptances), or other instruments, (v) Capitalized Lease obligations, (vi) obligations for which such Person is

 

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obligated pursuant to a Guaranty, (vii) reimbursement obligations with respect to any letters of credit and (viii) any other liabilities which would be treated as indebtedness in accordance with GAAP.

 

Indemnified Amounts :  As defined specified in Section 9.1 .

 

Indemnified Parties :  As defined in Section 9.1 .

 

Intercreditor Agreement :  The Intercreditor Agreement, dated as of October 26, 2005, by and between JPMorgan Chase and the Agent.

 

Interest Component :  At any time of determination, the aggregate for all Related Commercial Paper at such time of (a) with respect to any Commercial Paper issued on an interest-bearing basis, the interest payable on such Commercial Paper at its maturity (including any dealer commissions) and (b) with respect to any Commercial Paper issued on a discount basis, the portion of the face amount of such Commercial Paper representing the discount incurred in respect thereof (including any dealer commissions).

 

Investment :  As defined in Section 2.2(a) .

 

Investment Date :  As defined in Section 2.3(a) .

 

Investment Deficit :  As defined in Section 2.3(f) .

 

Investment Request :  Each request substantially in the form of Exhibit D .

 

Investor(s) :  The Conduit Investors and/or the Alternate Investors, as the context may require.

 

JPMorgan :  JPMorgan Chase Bank, N.A. and its affiliates.

 

Law :  Any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree, judgment or award of any Official Body.

 

Majority Investors :  At any time, the Agent and those related Alternate Investors which hold Commitments aggregating in excess of 66 ² / ₃ % of the Facility Limit as of such date (or, if the Commitments shall have been terminated, the Agent and one or more Alternate Investors whose aggregate pro rata shares of the Aggregate Net Investment exceed 66 ² / ₃ % of the Alternate Investor Percentage of the Aggregate Net Investment).

 

Material Adverse Effect :  Any event or condition which would have a material adverse effect on (i) the collectibility of the Receivables, (ii) the condition (financial or otherwise), businesses or properties of the SPV, or collectively the Servicer and the Originators, (iii) the ability of the SPV, the Servicer or any Originator to perform its respective obligations under the Transaction Documents to which it is a party, or (iv) the interests of the Agent, any Class Agent, or any Investor under the Transaction Documents.

 

Maximum Net Investment :  For any Class at any time, an amount equal to the Class Facility Limit, divided by 1.02.

 

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Moody’s :  Moody’s Investors Service, Inc., or any successor that is a nationally recognized statistical rating organization.

 

Multiemployer Plan :  As defined in Section 4001(a)(3) of ERISA.

 

Net Pool Balance :  At any time, (i) the aggregate Unpaid Balances of Eligible Receivables at such time, minus (ii) the aggregate, for all Obligors, of the amount by which the Unpaid Balances of such Eligible Receivables of each Obligor exceeds the product of (1) the Concentration Limit applicable to such Obligor, multiplied by (2) the aggregate Unpaid Balances of all of the Eligible Receivables.

 

Non-Defaulting Alternate Investor :  As defined in Section 2.3(f) .

 

Non-Lockbox Receivable :  Any Receivable that any payment in respect of which has not been made to a lockbox or a Blocked Account, as the case may be.

 

Notice of Obligors :  As defined in Section 2.8(b) .

 

Obligor :  With respect to any Receivable, the Person obligated to make payments in respect of such Receivable pursuant to a Contract.

 

Official Body :  Any government or political subdivision or any agency, authority, bureau, central bank, commission, department or instrumentality of any such government or political subdivision, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

 

Offshore Base Rate :  As defined in Section 2.4(e) .

 

Offshore Rate :  As defined in Section 2.4(e) .

 

Original Effective Date :  October 29, 2004.

 

Originator :  As defined in the Preamble .

 

Other SPV :  Any Person other than the SPV that has entered into a receivables purchase agreement, loan and security agreement, note purchase agreement, transfer and administration agreement or any other similar agreement with the Conduit Investors.

 

Pension Plan :  An employee pension benefit plan as defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer Plan) and to which any Originator, the SPV or an ERISA Affiliate of either may have any liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.

 

Permitted Investment Date :  Any Business Day, on at least three (3) Business Days’ prior notice to the Agent.

 

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Permitted Non-Lockbox Receivable :  Any Non-Lockbox Receivable that is otherwise an Eligible Receivable, the Obligor of which is a Permitted Non-Lockbox Receivable Obligor.

 

Permitted Non-Lockbox Receivable Obligor :  Any Obligor designated as such in the Notice of Obligors provided by the Receivables Seller to the Agent pursuant to Section 2.8(b) .

 

Person :  An individual, partnership, limited liability company, corporation, joint stock company, trust (including a business trust), unincorporated association, joint venture, firm, enterprise, Official Body or any other entity.

 

Portion of Investment :  As defined in Section 2.4(a) .

 

Potential Termination Event :  An event which but for the lapse of time or the giving of notice, or both, would constitute a Termination Event.

 

Pro Rata Share :  For any Alternate Investor, the Commitment of such Alternate Investor, divided by the sum of the Commitments of all Alternate Investors that are members of the same Class (or, if the Commitments shall have been terminated, its pro rata share of the Alternate Investor Percentage of the related Class Net Investment).

 

Program Support Agreement :  Includes any agreement entered into by any Program Support Provider providing for the issuance of one or more letters of credit for the account of a Conduit Investor (or any related commercial paper issuer that finances the Conduit Investor), the issuance of one or more surety bonds for which any Conduit Investor (or such related issuer) is obligated to reimburse the applicable Program Support Provider for any drawings thereunder, the sale by any Conduit Investor (or such related issuer) to any Program Support Provider of the Asset Interest (or portions thereof or participations therein) and/or the making of loans and/or other extensions of credit to any Conduit Investor (or such related issuer) in connection with its commercial paper program, together with any letter of credit, surety bond or other instrument issued thereunder.

 

Program Support Provider :  Includes any Person now or hereafter extending credit or having a commitment to extend credit to or for the account of, or to make purchases from, any Conduit Investor (or any related commercial paper issuer that finances the Conduit Investor) or issuing a letter of credit, surety bond or other instrument to support any obligations arising under or in connection with such Conduit Investor’s (or such related issuer’s) commercial paper program.

 

Purchase Termination Date :  As defined in Section 8.1 of the Second Tier Agreement.

 

Rate Period :  As defined in Section 2.4(e) .

 

Rate Type :  As defined in Section 2.4(e) .

 

Receivable :  Any indebtedness and other obligations owed by any Obligor to the related Originator (without giving effect to any transfer under the First Tier Agreement or the Second Tier Agreement) under a Contract or any right of the Receivables Seller or the SPV to payment from or on behalf of an Obligor, whether constituting an account, chattel paper, instrument, payment intangible, note, contract, right or general intangible, arising in connection with the sale

 

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or lease of goods or the rendering of services by the Originator, the Receivables Seller or the SPV and includes the obligation to pay any finance charges, fees and other charges with respect thereto.

 

Receivables Seller :  As defined in the Preamble .

 

Recipient :  As defined in Section 2.10 .

 

Records :  All Contracts and other documents, purchase orders, invoices, agreements, books, records and any other media, materials or devices for the storage of information (including tapes, disks, punch cards, computer programs and databases and related property) maintained by the SPV, any Originator or the Servicer with respect to the Receivables, any other Affected Assets or the Obligors.

 

Reinvestment :  As defined in Section 2.2(b) .

 

Reinvestment Period :  The period commencing on the Closing Date and ending on the Termination Date.

 

Related Commercial Paper :  At any time of determination, Commercial Paper the proceeds of which are then allocated by the related Class Agent as the source of funding the acquisition or maintenance of, the Asset Interest.

 

Related Security :  With respect to any Receivable, all of the related Originator’s (without giving effect to any transfer under the First Tier Agreement), the Receivables Seller’s (without giving effect to any transfer under the Second Tier Agreement) or the SPV’s rights, title and interest in, to and under:

 

(i)             any goods (including returned or repossessed goods) and documentation or title evidencing the shipment or storage of any goods relating to any sale giving rise to such Receivable;

 

(ii)            all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and other filings signed by an Obligor relating thereto;

 

(iii)           the Contract and all guarantees, indemnities, warranties, insurance (and proceeds and premium refunds thereof) or other agreements or arrangements of any kind from time to time supporting or securing payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise;

 

(iv)           all Records related to such Receivable; and

 

(v)            all of the rights, but none of the obligations, of (i) the Receivables Seller, under the First Tier Agreement and (ii) the SPV, under the Second Tier Agreement.

 

(vi)           all Collections on and other proceeds of any of the foregoing.

 

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Reportable Event :  Any event, transaction or circumstance which is required to be reported with respect to any Pension Plan under Section 4043 of ERISA and the applicable regulations thereunder.

 

Reporting Date :  As defined in Section 2.8 .

 

Required Downgrade Assignment Period :  As defined in Section 3.2(a) .

 

Required Reserves :  As defined in Schedule II .

 

Restricted Payments :  As defined in Section 6.2(k) .

 

SEC :  The United States Securities and Exchange Commission.

 

Second Tier Agreement :  The Receivables Sale Agreement, dated October 26, 2005, by and between the Receivables Seller and the SPV, as such agreement may be amended, modified or supplemented from time to time.

 

Servicer :  As defined in Section 7.1(a) .

 

Servicer Default :  As defined in Section 7.5 .

 

Servicer Report :  A report, in substantially the form attached hereto as Exhibit F or in such other form as is mutually agreed to by the SPV, the Servicer and the Agent, furnished by the Servicer pursuant to Section 2.8 .

 

Servicing Fee :  The fees payable to the Servicer from Collections, in an amount equal to either (i) at any time when the Servicer is Boise Cascade or any of its Affiliates, 0.50% per annum on the weighted daily average of the aggregate Unpaid Balances of the Receivables, or (ii) at any time when the Servicer is not Boise Cascade or any of its Affiliates, the amount determined upon the agreement of such Person and the Class Agents, payable in arrears on each Settlement Date from Collections pursuant to, and subject to the priority of payments set forth in, Section 2.12 .  With respect to any Portion of Investment, the Servicing Fee allocable thereto shall be equal to the Servicing Fee determined as set forth above, times a fraction, the numerator of which is the amount of such Portion of Investment and the denominator of which is the related Class Net Investment.

 

Settlement Date :  (i) Prior to the Termination Date, the twenty-second (22 ^nd ) day of each calendar month (or, if such day is not a Business Day, the immediately succeeding Business Day) or such other day as the SPV and the Agent may from time to time mutually agree, and (ii) for any Portion of Investment on and after the Termination Date, each day selected from time to time by the Agent (it being understood that the Agent may select such Settlement Date to occur as frequently as daily) or, in the absence of any such selection, the date which would be the Settlement Date for such Portion of Investment pursuant to clause (i) of this definition.

 

Settlement Period :  Prior to any Termination Date, each calendar month; provided that the initial Settlement Period will begin on the Closing Date and end on the last day of the next immediately succeeding calendar month.

 

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S&P :  Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor that is a nationally recognized statistical rating organization.

 

SPV :  Birch Creek Investments, L.L.C., a Delaware limited liability company.

 

Sub-Servicer :  As defined in Section 7.1(d) .

 

Subsidiary :  With respect to any Person, any corporation or other Person (i) of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by such Person or (ii) that is directly or indirectly controlled by such Person within the meaning of control under Section 15 of the Securities Act of 1933.

 

Taxes :  As defined in Section 9.3 .

 

Termination Date :  The earliest to occur of (i) the day on which the Termination Date is declared or automatically occurs pursuant to Section 8.2 , (ii) the day which is five (5) Business Days prior to the Commitment Termination Date, and (iii) the Purchase Termination Date.

 

Termination Event :  As defined in Section 8.1 .

 

Timber Holdings :  Boise Land & Timber Holdings Corp.

 

Transaction Costs :  As defined in Section 9.4(a) .

 

Transaction Documents :  Collectively, this Agreement, the First Tier Agreement, the Second Tier Agreement, the Fee Letters, the Blocked Account Agreements, and all of the other instruments, documents and other agreements executed and delivered by the Servicer, any Originator or the SPV in connection with any of the foregoing.

 

UCC :  The Uniform Commercial Code as in effect in the applicable jurisdiction or jurisdictions.

 

Unpaid Balance :  Of any Receivable means at any time the unpaid principal amount thereof.

 

U.S. or United States :  The United States of America.

 

Yield :  As defined in Section 2.4(e) .

 

Yield Payment Date :  The last day of each Rate Period.

 

Yorktown :  As defined in the Preamble .

 

Yorktown Fee Letter :  The confidential letter agreement, dated October 26, 2005, among the SPV, the Servicer and Yorktown with respect to the fees to be paid by the SPV and the Servicer, together with all amendments, modifications, restatements and/or supplements thereto.

 

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Section 1.2             Other Terms .

 

All terms defined directly or by incorporation herein shall have the defined meanings when used in any certificate or other document delivered pursuant thereto unless otherwise defined therein.  For purposes of this Agreement and all such certificates and other documents, unless the context otherwise requires:  (a) accounting terms not otherwise defined herein, and accounting terms partly defined herein to the extent not defined, shall have the respective meanings given to them under, and shall be construed in accordance with, GAAP; (b) terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9; (c) references to any amount as on deposit or outstanding on any particular date means such amount at the close of business on such day; (d) the words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement (or the certificate or other document in which they are used) as a whole and not to any particular provision of this Agreement (or such certificate or document); (e) references to any Section, Schedule or Exhibit are references to Sections, Schedules and Exhibits in or to this Agreement (or the certificate or other document in which the reference is made) and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (f) the term “including” means “including without limitation”; (g) references to any Law refer to that Law as amended from time to time and include any successor Law; (h) references to any agreement refer to that agreement as from time to time amended or supplemented or as the terms of such agreement are waived or modified in accordance with its terms; (i) references to any Person include that Person’s successors and permitted assigns; and (j) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.

 

Section 1.3             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”, the words “to” and “until” each means “to but excluding”, and the word “within” means “from and excluding a specified date and to and including a later specified date”.

 

Article II

 

Purchases and Settlements

 

Section 2.1             Transfer of Affected Assets; Intended Characterization .

 

(a)            Sale of Asset Interest .  In consideration of the payment by the Class Agents (on behalf of the related Conduit Investor or the related Alternate Investors as determined pursuant to Section 2.3 ) of the amount of the initial Class Net Investments on the Closing Date and the Class Agents’ several (and not joint) agreements (on behalf of the related Conduit Investor or the related Alternate Investors as determined below) to make payments to the SPV from time to time in accordance with Section 2.2 , effective upon the SPV’s receipt of payment for such initial Class Net Investments on the Closing Date, the SPV hereby sells, conveys, transfers and assigns to the Agent, on behalf of the Conduit Investors or the related Alternate Investors, as applicable,

 

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(i) all Receivables existing on the Closing Date or thereafter arising or acquired by the SPV from time to time prior to the Final Payout Date, and (ii) all other Affected Assets, whether existing on the Closing Date or thereafter arising at any time.

 

(b)            Purchase of Asset Interest .  Subject to the terms and conditions hereof, the Agent (on behalf of the Conduit Investors or the related Alternate Investors, as applicable) hereby purchases and accepts from the SPV the Receivables and all other Affected Assets sold, assigned and transferred pursuant to subsection (a) .  The Agent’s right, title and interest in and to the Receivables and all other Affected Assets hereunder is herein called the “ Asset Interest ”.  The Agent shall hold the Asset Interest on behalf of the Conduit Investors or the Alternate Investors, as applicable in accordance with the Conduit Investor Percentage and the Alternate Investor Percentage, respectively, from time to time.  Except as otherwise provided herein, the Agent shall hold the Conduit Investor Percentage and/or the Alternate Investor Percentage of the Asset Interest on behalf of the Conduit Investors and/or the Alternate Investors, as applicable pro rata in accordance with their respective outstanding portions of the related Class Net Investment funded by them.

 

(c)            Obligations Not Assumed .  The foregoing sale, assignment and transfer does not constitute and is not intended to result in the creation, or an assumption by the Agent, any Class Agent or any Investor, of any obligation of the SPV, any Originator, or any other Person under or in connection with the Receivables or any other Affected Asset, all of which shall remain the obligations and liabilities of the SPV and the Originators.

 

(d)            Intended Characterization; Grant of Security Interest .

 

(i)             The SPV, the Agent, the Class Agents and the Investors intend that the sale, assignment and transfer of the Affected Assets to the Agent (on behalf of the Conduit Investors and/or the Alternate Investors as applicable) hereunder shall be treated as a sale for all purposes, other than accounting and federal and state income tax purposes.  If notwithstanding the intent of the parties, the sale, assignment and transfer of the Affected Assets to the Agent is not treated as a sale for all purposes, other than accounting and federal and state income tax purposes, the sale, assignment and transfer of the Affected Assets shall be treated as the grant of, and the SPV hereby does grant, a security interest in the Affected Assets to secure the payment and performance of the SPV’s obligations to the Agent (on behalf of the Conduit Investors and/or the Alternate Investors as applicable) hereunder and under the other Transaction Documents or as may be determined in connection therewith by applicable Law.

 

(ii)            Each of the parties hereto further expressly acknowledges and agrees that the Commitments of the Alternate Investors hereunder, regardless of the intended true sale nature of the overall transaction, are financial accommodations (within the meaning of Section 365(c)(2) of the Bankruptcy Code) to or for the benefit of SPV.

 

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Section 2.2             Purchase Price .

 

Subject to the terms and conditions hereof, including Article V , in consideration for the sale, assignment and transfer of the Affected Assets by the SPV to the Agent (on behalf of the Conduit Investors and/or the Alternate Investors, as applicable) hereunder:

 

(a)            Investments .  On the Closing Date, and thereafter from time to time during the Reinvestment Period, on request of the SPV in accordance with Section 2.3 , each Class Agent (on behalf of the related Conduit Investors or the related Alternate Investors as determined pursuant to Section 2.3 ) shall pay to the SPV an amount equal in each instance to the lesser of (i) the related Class Pro Rata Share of the amount requested by the SPV under Section 2.3(a) , and (ii) the largest amount that will not cause (A) the related Class Net Investment for such Class to exceed the Maximum Net Investment and (B) the sum of the Aggregate Net Investment and Required Reserves to exceed the Net Pool Balance.  Each such payment is herein called an “ Investment ”.

 

(b)            Reinvestments .  On each Business Day during the Reinvestment Period the Servicer, on behalf of the each Class Agent (for the benefit of the related Conduit Investors and/or the related Alternate Investors, as applicable), shall pay to the SPV, out of Collections of Receivables, the amount available for Reinvestment in accordance with Section 2.12(a)(iii) .  Each such payment is hereinafter called a “ Reinvestment ”.  All Reinvestments with respect to the Alternate Investors of a Class shall be made ratably on behalf of the Alternate Investors pro rata in accordance with their respective outstanding portions of the Alternate Investor Percentage of the related Class Net Investment funded by them and all Reinvestments with respect to the Conduit Investors of a Class shall be made ratably on behalf of the Conduit Investors pro rata in accordance with their respective outstanding portions of the Conduit Investor Percentage of the related Class Net Investment funded by them.

 

(c)            Deferred Purchase Price .  On each Business Day on and after the Final Payout Date the Servicer, on behalf of the Agent, shall pay to the SPV an amount equal to the Collections of Receivables received by the SPV less the accrued and unpaid Servicing Fee (and the SPV (or the Servicer on its behalf) shall apply such Collections in the manner described in Section 2.14 ).

 

(d)            SPV Payments Limited to Collections .  Notwithstanding any provision contained in this Agreement to the contrary, the Agent, the Class Agents and the Investors shall not, and shall not be obligated (whether on behalf of the related Conduit Investors or the related Alternate Investors), to pay any amount to the SPV as the purchase price of Receivables pursuant to subsections (b) and (c) above except to the extent of Collections of Receivables available for distribution to the SPV in accordance with this Agreement.  Any amount which any Class Agent (whether on behalf of the related Conduit Investors or the related Alternate Investors) or Investor does not pay pursuant to the preceding sentence shall not constitute a claim (as defined in § 101 of the Bankruptcy Code) against, or corporate obligation of, the Agent, such Class Agent or any Investor for any such insufficiency.

 

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Section 2.3             Investment Procedures .

 

(a)            Notice .  The SPV shall request an Investment hereunder, by request to the Agent and each Class Agent given by facsimile in the form of an Investment Request at least three (3) Business Days prior to the proposed date of any Investment (including the initial Investment).  Each such Investment Request shall specify (i) the desired amount of such Investment (which shall be at least $5,000,000 or an integral multiple of $250,000 in excess thereof or, to the extent that the then available unused portion of the Maximum Net Investment is less than such amount, such lesser amount equal to such available unused portion of the Maximum Net Investment), (ii) the desired date of such Investment (the “ Investment Date ”) which shall be a Permitted Investment Date and (iii) the desired Rate Period(s) and allocations of such Investment thereto as required by Section 2.4 .

 

(b)            Conduit Investor Acceptance or Rejection; Investment Request Irrevocable .

 

(i)             Each Class Agent will promptly notify the related Investors of its receipt of any Investment Request with respect to its Class.  If the Investment Request is received prior to the Conduit Investment Termination Date, each Conduit Investor shall instruct the related Class Agent to accept or reject such Investment Request by notice given to the related Class Agent by telephone or facsimile by no later than the close of its business on the Business Day following its receipt of any such Investment Request.

 

(ii)            Each Investment Request shall be irrevocable and binding on the SPV, and the SPV shall indemnify each Investor against any loss or expense incurred by such Investor, either directly or indirectly (including, in the case of any Conduit Investor, through a Program Support Agreement) as a result of any failure by the SPV to complete such Investment, including any loss (including loss of profit) or expense incurred by the Agent, any Class Agent and any related Investor, either directly or indirectly (including, in the case of any Conduit Investor, pursuant to a Program Support Agreement) by reason of the liquidation or reemployment of funds acquired by such Investor (or the applicable Program Support Provider(s)) (including funds obtained by issuing commercial paper or promissory notes or obtaining deposits or loans from third parties) in order to fund such Investment.

 

(c)            Alternate Investors’ Commitments .  Subject to Section 2.2(b) concerning Reinvestments, at no time will any Conduit Investor have any obligation to fund an Investment or Reinvestment.  At all times on and after the Conduit Investment Termination Date, all Investments and Reinvestments shall be made by the related Class Agent on behalf of the related Alternate Investors.  At any time when a Conduit Investor has rejected a request for Investment, the related Class Agent shall so notify the related Alternate Investors and such Alternate Investors shall make such Investment, on a pro rata basis, in accordance with their respective Pro Rata Shares.  Notwithstanding anything contained in this Section 2.3(c) or elsewhere in this Agreement to the contrary, no Alternate Investor shall be obligated to provide the related Class Agent or the SPV with funds in connection with an Investment in an amount that would result in the portion of the Class Net Investment then funded by it exceeding its Commitment then in effect ( minus the unrecovered principal amount of such Alternate Investor’s investments in the Asset Interest pursuant to the Program Support Agreement to which it is a party).  The obligation

 

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of each Alternate Investor to remit its Pro Rata Share of its related Class Pro Rata Share of any Investment shall be several from that of each other Alternate Investor, and the failure of any Alternate Investor to so make such amount available to the related Class Agent shall not relieve any other related Alternate Investor of its obligation hereunder.

 

(d)            Payment of Investment .  On any Investment Date, each Conduit Investor or the related Alternate Investor, as the case may be, shall remit its share of the aggregate amount of such Investment (determined pursuant to Section 2.2(a) ) to the account of the related Class Agent specified therefor from time to time by such Class Agent by notice to such Persons by wire transfer of same day funds.  Following each such Class Agent’s receipt of funds from the related Investors as aforesaid, such Class Agent shall remit such funds received to the SPV’s account at the location indicated in Section 11.3 , by wire transfer of same day funds.

 

(e)            Class Agent May Advance Funds .  Unless a Class Agent shall have received notice from any related Investor that such Person will not make its share of any Investment available on the applicable Investment Date therefor, such Class Agent may (but shall have no obligation to) make any such Investor’s share of any such Investment available to the SPV in anticipation of the receipt by the Agent of such amount from the applicable Investor.  To the extent any such Investor fails to remit any such amount to such Class Agent after any such advance by such Class Agent on such Investment Date, such Investor, on the one hand, and the SPV, on the other hand, shall be required to pay such amount to such Class Agent for its own account, together with interest thereon at a per annum rate equal to the Federal Funds Rate, in the case of such Investor, or the Base Rate, in the case of the SPV, to such Class Agent upon its demand therefor ( provided that no Conduit Investor shall have any obligation to pay such interest amounts except to the extent that it shall have sufficient funds to pay the face amount of its respective Commercial Paper in full).  Until such amount shall be repaid, such amount shall be deemed to be Class Net Investment paid by the related Class Agent and such Class Agent shall be deemed to be the owner of an interest in the Asset Interest hereunder to the extent of such Investment.  Upon the payment of such amount to the related Class Agent (i) by the SPV, the amount of the Aggregate Net Investment shall be reduced by such amount or (ii) by such Investor, such payment shall constitute such Person’s payment of its share of the applicable Investment.

 

(f)             Defaulting Alternate Investor .  If, by 2:00 p.m. (New York City time), whether or not the related Class Agent has advanced the amount of the applicable Investment, one or more Alternate Investors with respect to a Class (each, a “ Defaulting Alternate Investor ”, and each Alternate Investor with respect to such Class other than any Defaulting Alternate Investor being referred to as a “ Non-Defaulting Alternate Investor ”) fails to make its Pro Rata Share of any Investment available to the Agent pursuant to Section 2.3(d) or any Assignment Amount payable by it pursuant to Section 3.1 (the aggregate amount not so made available to the Agent being herein called in either case the “ Investment Deficit ”), then the related Class Agent shall, by no later than 2:30 p.m. (New York City time) on the applicable Investment Date or the applicable Assignment Date, as the case may be, instruct each related Non-Defaulting Alternate Investor to pay, by no later than 3:00 p.m. (New York City time), in immediately available funds, to the account designated by the related Class Agent, an amount equal to the lesser of (i) such related Non-Defaulting Alternate Investor’s proportionate share (based upon the relative Commitments of the related Non-Defaulting Alternate Investors) of the Investment Deficit and (ii) its unused

 

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Commitment.  A Defaulting Alternate Investor shall forthwith, upon demand, pay to the related Class Agent for the ratable benefit of the related Non-Defaulting Alternate Investors all amounts paid by each related Non-Defaulting Alternate Investor on behalf of such Defaulting Alternate Investor, together with interest thereon, for each day from the date a payment was made by a related Non-Defaulting Alternate Investor until the date such Non-Defaulting Alternate Investor has been paid such amounts in full, at a rate per annum equal to the sum of the Base Rate, plus 2.00% per annum .  In addition, if, after giving effect to the provisions of the immediately preceding sentence, any Investment Deficit with respect to any Assignment Amount continues to exist, each Defaulting Alternate Investor in the related Class shall pay interest to the related Class Agent, for the account of the related Conduit Investor, on such Defaulting Alternate Investor’s portion of such remaining Investment Deficit, at a rate per annum , equal to the sum of the Base Rate, plus 2.00% per annum , for each day from the applicable Assignment Date until the date such Defaulting Alternate Investor shall pay its portion of such remaining Investment Deficit in full to such Conduit Investor.

 

Section 2.4             [IS RESERVED AND IS SPECIFIED IN SCHEDULE I.]

 

Section 2.5             Yield, Fees and Other Costs and Expenses .

 

Notwithstanding any limitation on recourse herein, the SPV shall pay, as and when due in accordance with this Agreement, all fees hereunder and under the Fee Letters, Yield, all amounts payable pursuant to Article IX , if any, and the Servicing Fees.  Nothing in this Agreement shall limit in any way the obligations of the SPV to pay the amounts set forth in this Section 2.5 .

 

Section 2.6             Deemed Collections .

 

(a)            Dilutions .  If on any day the Unpaid Balance of a Receivable is reduced or such Receivable is canceled as a result of any Dilution, the SPV shall be deemed to have received on such day a Collection of such Receivable in the amount of the Unpaid Balance (as determined immediately prior to such Dilution) of such Receivable (if such Receivable is canceled) or, otherwise in the amount of such reduction, and the SPV shall pay to the Servicer an amount equal to such Deemed Collection and such amount shall be applied by the Servicer as a Collection in accordance with Section 2.12 .

 

(b)            Breach of Representation or Warranty .  If on any day any of the representations or warranties in Article IV was or becomes untrue with respect to a Receivable (whether on or after the date of transfer thereof to the Agent, for the benefit of the Investors, as contemplated hereunder), the SPV shall be deemed to have received on such day a Collection of such Receivable in full and the SPV shall on such day pay to the Servicer an amount equal to the Unpaid Balance of such Receivable and such amount shall be allocated and applied by the Servicer as a Collection in accordance with Section 2.12 .

 

Section 2.7             Payments and Computations, Etc .

 

All amounts to be paid or deposited by the SPV or the Servicer hereunder shall be paid or deposited in accordance with the terms hereof no later than 11:00 a.m. (New York City time) on the day when due in immediately available funds; if such amounts are payable to the Agent (whether on behalf of any Investor or otherwise) they shall be paid or deposited in the account

 

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indicated under the heading “Payment Information” in Section 11.3 , until otherwise notified by the Agent.  The SPV shall, to the extent permitted by Law, pay to the Agent, for the benefit of the Investors, upon demand, interest on all amounts not paid or deposited when due hereunder at a rate equal to 2.00% per annum , plus the Base Rate.  All computations of Yield and all per annum fees 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.  Any computations by the Agent of amounts payable by the SPV hereunder shall be binding upon the SPV absent manifest error.

 

Section 2.8             Reports .

 

(a)            By no later than 4:00 p.m. (New York City time) on the second (2 ^nd ) Business Day prior to each Settlement Date, or if such day is not a Business Day then on the next succeeding Business Day (and, after the occurrence of a Termination Event, within two (2) Business Days after a request from the Agent or any Class Agent) (each, a “ Reporting Date ”), Servicer shall prepare and forward to the Agent and each Class Agent a Servicer Report, certified by each of the Originators and the Servicer.

 

(b)            On or before the Closing Date, the Receivables Seller shall provide to each of the Agents written notification containing the list of all Obligors, including the Permitted Non-Lockbox Receivable Obligors (the “ Notice of Obligors ”).  The Notice of Obligors may be amended by written agreement between the SPV and each of the Agents.

 

Section 2.9             Collection Account .

 

The Agent shall establish in its name on the day of the initial Investment hereunder and shall maintain a segregated account (the “ Collection Account ”), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Agent, on behalf of the Investors.  The Agent shall have exclusive dominion and control over the Collection Account and all monies, instruments and other property from time to time in the Collection Account.  On and after the occurrence of a Termination Event or a Potential Termination Event, the Servicer shall remit daily within forty-eight (48) hours of receipt to the Collection Account all Collections received.  Funds on deposit in the Collection Account (other than investment earnings) shall be invested by the Agent, in the name of the Agent, in Eligible Investments that will mature so that such funds will be available so as to permit amounts in the Collection Account to be paid and applied on the next Yield Payment Date and otherwise in accordance with the provisions of Section 2.12 ; provided that such funds shall not reduce the Aggregate Net Investment, any Class Net Investment or accrued Yield hereunder until so applied under Section 2.12 .  On each Yield Payment Date, all interest and earnings (net of losses and investment expenses) on funds on deposit in the Collection Account shall be applied as Collections set aside for the Agent in accordance with Section 2.12 .  On the Final Payout Date, any funds remaining on deposit in the Collection Account shall be paid to the SPV.

 

Section 2.10          Sharing of Payments, Etc .

 

If any Investor (for purposes of this Section only, being a “ Recipient ”) shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of the portion of the Asset Interest owned by it (other than pursuant to the

 

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Fee Letters, Section 3.3(b) or Article IX and other than as a result of the differences in the timing of the applications of Collections pursuant to Section 2.12 and other than a result of the different methods for calculating Yield) in excess of its ratable share of payments on account of the Asset Interest obtained by the Investors entitled thereto, such Recipient shall forthwith purchase from the Investors entitled to a share of such amount participations in the portions of the Asset Interest owned by such Persons as shall be necessary to cause such Recipient to share the excess payment ratably with each such other Person entitled thereto; provided , however , that if all or any portion of such excess payment is thereafter recovered from such Recipient, such purchase from each such other Person shall be rescinded and each such other Person shall repay to the Recipient the purchase price paid by such Recipient for such participation to the extent of such recovery, together with an amount equal to such other Person’s ratable share (according to the proportion of (a) the amount of such other Person’s required payment to (b) the total amount so recovered from the Recipient) of any interest or other amount paid or payable by the Recipient in respect of the total amount so recovered.

 

Section 2.11          Right of Setoff .

 

Without in any way limiting the provisions of Section 2.10 , each Class Agent and each Investor is hereby authorized (in addition to any other rights it may have) at any time after the occurrence of the Termination Date due to the occurrence of a Termination Event or during the continuance of a Potential Termination Event to set-off, appropriate and apply (without presentment, demand, protest or other notice which are hereby expressly waived) any deposits and any other indebtedness held or owing by such Class Agent or such Investor to, or for the account of, the SPV against the amount of the Aggregate Unpaids owing by the SPV to such Person or to the Agent on behalf of such Person (even if contingent or unmatured).

 

[THE REMAINDER OF ARTICLE II IS RESERVED AND IS SPECIFIED IN  SCHEDULE III (SETTLEMENT PROCEDURES).]

 

Article III

 

Additional Alternate Investor Provisions

 

Section 3.1             Assignment to Alternate Investors .

 

(a)            Assignment Amounts .  At any time on or prior to the Commitment Termination Date, if any Class Agent on behalf of the related Conduit Investor so elects, the SPV hereby irrevocably requests and directs that such Conduit Investor assign (the date of such assignment being the “ Assignment Date ” for such Class), and such Conduit Investor does hereby assign effective on the Assignment Date referred to below, all or such portions as may be elected by such Conduit Investor of, the related Class Net Investment and the Asset Interest at such time to the related Alternate Investors pursuant to this Section 3.1 and the SPV hereby agrees to pay the amounts described in Section 3.1(b) ; provided , however , that unless such assignment is an assignment of all of the Conduit Investor’s interest in such Class Net Investment and the Asset Interest in whole on or after the Conduit Investment Termination Date, no such assignment shall take place pursuant to this Section 3.1 if any event described in clause (iii) of the definition of “Conduit Investment Termination Date” shall then exist; and provided , further , that no such

 

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assignment shall take place pursuant to this Section 3.1 at a time when an Event of Bankruptcy with respect to such Conduit Investor exists.  No further documentation or action on the part of a Conduit Investor or the SPV shall be required to exercise the rights set forth in the immediately preceding sentence.  Each Alternate Investor hereby agrees, unconditionally and irrevocably and under all circumstances, without setoff, counterclaim or defense of any kind, to pay the full amount of its Assignment Amount on the related Assignment Date to the related Conduit Investor in immediately available funds to an account designated by the related Class Agent.  Upon payment of its Assignment Amount, such Alternate Investor shall acquire an interest in the Class Net Investment and the Asset Interest equal to its pro rata share (based on the outstanding portions of such Class Net Investment funded by it) of the Alternate Investor Percentage thereof.  Upon any assignment in whole by any Conduit Investor to the related Alternate Investors on or after the Conduit Investment Termination Date as contemplated hereunder, such Conduit Investor shall cease to make any additional Investments or Reinvestments hereunder.  At all times prior to the Conduit Investment Termination Date, nothing herein shall prevent any Conduit Investor from making a subsequent Investment or Reinvestment hereunder, in its sole discretion, following any assignment pursuant to this Section 3.1 or from making more than one assignment pursuant to this Section 3.1 .

 

(b)            SPV’s Obligation to Pay Certain Amounts; Additional Assignment Amount .  The SPV shall pay to the related Class Agent, for the account of the related Conduit Investor, in connection with any assignment by such Conduit Investor to the related Alternate Investors pursuant to this Section 3.1 , an aggregate amount equal to all related Yield to accrue through the end of each outstanding Rate Period to the extent attributable to the portion of the Class Net Investment so assigned to the related Alternate Investors (as determined immediately prior to giving effect to such assignment), plus all other Aggregate Unpaids owed to such Class (other than the Class Net Investment and other than any related Yield not described above).  If the SPV fails to make payment of such amounts at or prior to the time of assignment by a Conduit Investor to the related Alternate Investors, such amount shall be paid by the related Alternate Investors (in accordance with their respective Class Pro Rata Shares) to such Conduit Investor as additional consideration for the interests assigned to such Alternate Investors and the amount of the Class Net Investment hereunder held by related Alternate Investors shall be increased by an amount equal to the additional amount so paid by the Alternate Investors.

 

(c)            Administration of Agreement after Assignment from Conduit Investor to Alternate Investors following the Conduit Investment Termination Date .  After any assignment in whole by a Conduit Investor to the related Alternate Investors pursuant to this Section 3.1 at any time on or after the Conduit Investment Termination Date (and the payment of all amounts owing to such Conduit Investor in connection therewith), all rights of the related Class Agents or any related Collateral Agent set forth herein shall be given to the related Class Agent on behalf of the Alternate Investors instead of either such party.

 

(d)            Payments to Class Agent’s Account .  After any assignment in whole by a Conduit Investor to the related Alternate Investors pursuant to this Section 3.1 at any time on or after the Conduit Investment Termination Date, all payments to be made hereunder by the SPV or the Servicer to such Conduit Investor shall be made to the related Class Agent’s account as such account shall have been notified to the SPV and the Servicer.

 

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(e)            Recovery of Net Investment .  In the event that the aggregate of the Assignment Amounts paid by Alternate Investors pursuant to this Section 3.1 on any Assignment Date occurring on or after the Conduit Investment Termination Date is less than the Class Net Investment of the related Conduit Investor on such Assignment Date, then to the extent Collections thereafter received by the related Class Agent hereunder in respect of such Class Net Investment exceed the aggregate of the unrecovered Assignment Amounts and Class Net Investment funded by the related Alternate Investors, such excess shall be remitted by such Class Agent to the related Collateral Agent, if applicable.

 

Section 3.2             Downgrade of Alternate Investor .

 

(a)            Downgrades Generally .  If at any time on or prior to the Commitment Termination Date, the short term debt rating of any Alternate Investor shall be “A-2” or “P-2” from S&P or Moody’s, respectively, with negative credit implications, such Alternate Investor, upon request of the related Class Agent, shall, within thirty (30) days of such request, assign its rights and obligations hereunder to another financial institution (which institution’s short term debt shall be rated at least “A-2” or “P-2” from S&P or Moody’s, respectively, and which shall not be so rated with negative credit implications and which is acceptable to the related Conduit Investor and the related Class Agent).  If the short term debt rating of an Alternate Investor shall be “A-3” or “P-3”, or lower, from S&P or Moody’s, respectively (or such rating shall have been withdrawn by S&P or Moody’s), such Alternate Investor, upon request of the related Class Agent, shall, within five (5) Business Days of such request, assign its rights and obligations hereunder to another financial institution (which institution’s short term debt shall be rated at least “A-2” or “P-2”, from S&P or Moody’s, respectively, and which shall not be so rated with negative credit implications and which is acceptable to the related Conduit Investor and the related Class Agent).  In either such case, if any such Alternate Investor shall not have assigned its rights and obligations under this Agreement within the applicable time period described above (in either such case, the “ Required Downgrade Assignment Period ”), the related Class Agent on behalf of the related Conduit Investor shall have the right to require such Alternate Investor to pay upon one (1) Business Day’s notice at any time after the Required Downgrade Assignment Period (and each such Alternate Investor hereby agrees in such event to pay within such time) to such Class Agent an amount equal to such Alternate Investor’s unused Commitment (a “ Downgrade Draw ”) for deposit by such Class Agent into an account, in the name of the Class Agent (a “ Downgrade Collateral Account ”), which shall be in satisfaction of such Alternate Investor’s obligations to make Investments and to pay its Assignment Amount upon an assignment from such Conduit Investor in accordance with Section 3.1 ; provided , however , that if, during the Required Downgrade Assignment Period, such Alternate Investor delivers a written notice to such Class Agent of its intent to deliver a direct pay irrevocable letter of credit pursuant to this proviso in lieu of the payment required to fund the Downgrade Draw, then such Alternate Investor will not be required to fund such Downgrade Draw.  If any Alternate Investor gives the related Class Agent such notice, then such Alternate Investor shall, within one (1) Business Day after the Required Downgrade Assignment Period, deliver to such Class Agent a direct pay irrevocable letter of credit in favor of such Class Agent in an amount equal to the unused portion of such Alternate Investor’s Commitment, which letter of credit shall be issued through an United States office of a bank or other financial institution (i) whose short-term debt ratings by S&P and Moody’s are at least equal to the ratings assigned by such statistical rating organization to the Commercial Paper and (ii) that is acceptable to such Conduit Investor and such Class

 

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Agent.  Such letter of credit shall provide that the related Class Agent may draw thereon for payment of any Investment or Assignment Amount payable by such Alternate Investor which is not paid hereunder when required, shall expire no earlier than the Commitment Termination Date and shall otherwise be in form and substance acceptable to such Class Agent.

 

(b)            Application of Funds in Downgrade Collateral Account .  If any Alternate Investor shall be required pursuant to Section 3.2(a) to fund a Downgrade Draw, then the related Class Agent shall apply the monies in the Downgrade Collateral Account applicable to such Alternate Investor’s Class Pro Rata Share of Investments required to be made by the Alternate Investors, to any Assignment Amount payable by such Alternate Investor pursuant to Section 3.1 and to any purchase price payable by such Alternate Investor pursuant to Section 3.3(b) at the times, in the manner and subject to the conditions precedent set forth in this Agreement.  The deposit of monies in such Downgrade Collateral Account by such Alternate Investor shall not constitute an Investment or the payment of any Assignment Amount (and such Alternate Investor shall not be entitled to interest on such monies except as provided below in this Section 3.2(b) , unless and until (and then only to the extent that) such monies are used to fund Investments or to pay any Assignment Amount or purchase price pursuant to Section 3.3(b) pursuant to the first sentence of this Section 3.2(b) .  The amount on deposit in such Downgrade Collateral Account shall be invested by the related Class Agent in Eligible Investments and such Eligible Investments shall be selected by such Class Agent in its sole discretion.  Such Class Agent shall remit to such Alternate Investor, on the last Business Day of each month, the income actually received thereon.  Unless required to be released as provided below in this subsection, Collections received by such Class Agent in respect of such Alternate Investor’s portion of the related Class Net Investment shall be deposited in the Downgrade Collateral Account for such Alternate Investor.  Amounts on deposit in such Downgrade Collateral Account shall be released to such Alternate Investor (or the stated amount of the letter of credit delivered by such Alternate Investor pursuant to subsection (a) above may be reduced) within one (1) Business Day after each Settlement Date following the Termination Date to the extent that, after giving effect to the distributions made and received by the related Investors on such Settlement Date, the amount on deposit in such Downgrade Collateral Account would exceed such Alternate Investor’s Pro Rata Share (determined as of the day prior to the Termination Date) of the sum of the related Class Net Investment then funded by the related Conduit Investor, plus the Interest Component.  All amounts remaining in such Downgrade Collateral Account shall be released to such Alternate Investor no later than the Business Day immediately following the earliest of (i) the effective date of any replacement of such Alternate Investor or removal of such Alternate Investor as a party to this Agreement, (ii) the date on which such Alternate Investor shall furnish the related Class Agent with confirmation that such Alternate Investor shall have short-term debt ratings of at least “A-2” or “P-2” from S&P and Moody’s, respectively, without negative credit implications, and (iii) the Commitment Termination Date (or if earlier, the Commitment Termination Date in effect prior to any renewal pursuant to Section 3.3 to which such Alternate Investor does not consent, but only after giving effect to any required purchase pursuant to Section 3.3(b) ).  Nothing in this Section 3.2 shall affect or diminish in any way any such downgraded Alternate Investor’s Commitment to the SPV or the related Conduit Investor or such downgraded Alternate Investor’s other obligations and liabilities hereunder and under the other Transaction Documents.

 

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(c)            Program Support Agreement Downgrade Provisions .  Notwithstanding the other provisions of this Section 3.2 , an Alternate Investor shall not be required to make a Downgrade Draw (or provide for the issuance of a letter of credit in lieu thereof) pursuant to Section 3.2(a) at a time when such Alternate Investor has a downgrade collateral account (or letter of credit in lieu thereof) established pursuant to the Program Support Agreement relating to the transactions contemplated by this Agreement to which it is a party in an amount at least equal to its unused Commitment, and the related Class Agent may apply monies in such downgrade collateral account in the manner described in Section 3.3(b) as if such downgrade collateral account were a Downgrade Collateral Account.

 

Section 3.3             Non-Renewing Alternate Investors .

 

(a)            If at any time the SPV requests that the Alternate Investors renew their Commitments hereunder and some but less than all the Alternate Investors of a Class consent to such renewal within thirty (30) days of the SPV’s request, the SPV may arrange for an assignment to one or more financial institutions of all the rights and obligations hereunder of each such non-consenting Alternate Investor in accordance with Section 11.8 .  Any such assignment shall become effective on the then-current Commitment Termination Date.  Each Alternate Investor which does not so consent to any renewal shall cooperate fully with the SPV in effectuating any such assignment.

 

(b)            If at any time the SPV requests that the Alternate Investors extend the Commitment Termination Date hereunder and some but less than all the Alternate Investors of a Class consent to such extension within thirty (30) days after the SPV’s request, and if none or less than all the Commitments of the non-renewing Alternate Investors of a Class are assigned as provided in Section 3.3(a) , then (without limiting the obligations of all the Alternate Investors to make Investments and pay any Assignment Amount prior to the Commitment Termination Date in accordance with the terms hereof) the related Conduit Investor may sell an interest in the related Class Net Investment and the Asset Interest hereunder for an aggregate purchase price equal to the lesser of (i) the maximum aggregate Assignment Amounts which would be payable if such Conduit Investor assigned its entire interest in the Asset Interest at that time under Section 3.1 , and (ii) the aggregate available Commitments of the non-renewing Alternate Investors of such Class, which purchase price shall be paid solely by the non-renewing Alternate Investors of such Class, pro rata according to their respective Commitments.  Following the payment of such purchase price, (i) the extended Commitment Termination Date shall be effective with respect to the renewing Alternate Investors of such Class, (ii) the related Class Facility Limit shall automatically be reduced by the aggregate of the Commitments of all non-renewing Alternate Investors, and (iii) this Agreement and the Commitments of the renewing Alternate Investors of such Class shall remain in effect in accordance with their terms notwithstanding the expiration of the Commitments of the non-renewing Alternate Investors of such Class.  Prior to the Termination Date, all amounts which, under Section 2.12 are to be applied in reduction of the related Class Net Investment, up to the aggregate Class Net Investment sold to the non-renewing Alternate Investors of such Class as described above in this subsection, shall be distributed to the non-renewing Alternate Investors of such Class ratably according to the aggregate Investments held by them, in reduction of such Investments.  On and after the Termination Date, each non-renewing Alternate Investor of a Class shall be entitled to receive distributions as otherwise provided in Section 2.12 , such that all distributions of

 

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Collections pursuant to Section 2.12 thereafter shall be allocated among the non-renewing Alternate Investors of a Class and the other Alternate Investors in such Class in accordance with each such Alternate Investor’s Pro Rata Share of the related Class Net Investment.  When (after the expiration of the Commitments of the non-renewing Alternate Investors of a Class) the aggregate of the Investments described above in this subsection shall have been reduced to zero and all accrued Yield allocable thereto and all other Aggregate Unpaids owing to such Alternate Investors shall have been paid to such Alternate Investors in full, then such Investors shall cease to be parties to this Agreement for any purpose.

 

Article IV

 

Representations and Warranties

 

Section 4.1             Representations and Warranties of the SPV and the Servicer .

 

Each of the SPV and the Servicer represents and warrants to the Agent, the Class Agents and the Investors, as to itself, that, on the Closing Date and on each Investment Date and Reinvestment Date:

 

(a)            Corporate Existence; Authorization; Contravention; Binding Effect .  (i) It is duly organized and validly existing and in good standing under the laws of the jurisdiction of its organization (and is not organized under the laws of any other jurisdiction) with the corporate power and authority to carry on its activities as now conducted and as contemplated under this Agreement, and to execute, deliver, perform and secure its obligations under this Agreement in accordance with its terms; (ii) the execution, delivery and performance by it of this Agreement (A) have been duly authorized by all necessary action, and (B) do not and will not conflict with, or result in a violation of, any applicable provision of existing law, rule or regulation applicable to it, any judgment, order or decree applicable to or binding on it, its charter or bylaws or any indenture, contract, agreement, mortgage, deed of trust or other instruments to which it is a party or by which it or its property is bound; (iii) this Agreement has been duly authorized, executed and delivered by it, and is a legal, valid and binding obligation of it enforceable against it in accordance with its terms, except to the extent, if any, that the enforceability thereof may be limited by (A) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, debt adjustment or other similar law or enactment now or hereafter enacted affecting the enforcement of creditors’ rights generally and (B) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (iv) all authorizations, permits, consents, approvals, licenses or exemptions from, registrations or filings with, or reports to, any official body or other party or entity necessary for it to enter into this Agreement and to perform its obligations hereunder have been obtained and remain in full force and effect, and no other such authorizations, permits, consents, approvals, licenses, exemptions, registrations, filings or reports are necessary for the due execution, delivery and performance by it of this Agreement; (v) no agreement exists between it and any Obligor that could interfere with such Obligor’s payment of and performance under the Receivables in accordance with the relevant invoices.

 

(b)            Perfection .  In the case of the SPV, it is the owner of all of the Receivables and other Affected Assets, free and clear of all Adverse Claims (other than any Adverse Claim

 

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arising hereunder) and upon the making of the initial Investment on the Closing Date and at all times thereafter until the Final Payout Date, all financing statements and other documents required to be recorded or filed in order to perfect and protect the interest of the Agent on behalf of the Investors in the Asset Interest against all creditors of and purchasers from the SPV and the Originators will have been duly filed in each filing office necessary for such purpose and all filing fees and taxes, if any, payable in connection with such filings shall have been paid in full.

 

(c)            Accuracy of Information .  All information heretofore furnished by it (including the Servicer Reports and its financial statements) to any Investor, any Class Agent or the Agent for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by it to any Investor, any Class Agent or the Agent will be, true and correct in all material respects, on the date such information is stated or certified, and no such item contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

 

(d)            Tax Status .  It has (i) timely filed all tax returns (federal, state and local) required to be filed, (ii) paid or made adequate provision for the payment of all taxes, assessments and other governmental charges and (iii) in the case of the SPV, accounted for the sale of the Asset Interest hereunder, in its books and financial statements as a secured loan, consistent with GAAP.

 

(e)            Action, Suits .  It is not in violation of any order of Official Body or arbitrator.  Except as set forth in Schedule 4.1(e) , (i) in the case of the SPV, there are no actions, suits, litigation or proceedings pending, or to its knowledge, threatened, against or affecting it or any of its Affiliates or their respective properties, in or before any Official Body or arbitrator, and (ii) in the case of the Servicer, there are no actions, suits, litigation or proceedings pending, or to its knowledge, threatened, against or affecting it or any of its Affiliate or their respective properties, in or before any Official body or arbitrator that are likely to cause, or could result in, a Material Adverse Effect on the Servicer.

 

(f)             Use of Proceeds .  In the case of the SPV, no proceeds of any Investment or Reinvestment will be used by it (i) to acquire any security in any transaction which is subject to Section 13 or 14 of the Securities Exchange Act of 1934, (ii) to acquire any equity security of a class which is registered pursuant to Section 12 of such act or (iii) for any other purpose that violates applicable Law, including Regulations G or U of the Federal Reserve Board.

 

(g)            Name, Jurisdiction of Formation, Type of Entity, Principal Place of Business; Chief Executive Office; Location of Records .  Its name (as indicated on the public record of its jurisdiction of formation), jurisdiction of formation, type of entity, principal place of business (currently and for the five (5) year period ending on the Closing Date), chief executive office (currently and for the five (5) year period ending on the Closing Date) and the offices where it keeps all its Records, are set forth on Schedule 4.1(g) or, in the case of principal place of business, chief executive office and the offices where it keeps all its Records, such other locations regarding which the Class Agents and Conduit Investors have been notified in accordance with Section 7.7 in jurisdictions where all action required by Section 7.7 has been taken and completed.

 

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(h)            Subsidiaries; Tradenames, Etc.   As of the Closing Date:  (i) it has only the Subsidiaries and divisions listed on Schedule 4.1(h) ; and (ii) it has, within the last five (5) years, operated only under the tradenames identified in Schedule 4.1(h) , and, within the last five (5) years, has not changed its name, merged with or into or consolidated with any other Person or been the subject of any proceeding under the Bankruptcy Code, except as disclosed in Schedule 4.1(h) .  Schedule 4.1(h) also lists the correct Federal Employer Identification Number.

 

(i)             Good Title .  In the case of the SPV, upon each Investment and Reinvestment, the Agent shall acquire a valid and enforceable perfected first priority ownership interest or a first priority perfected security interest in each Receivable and all other Affected Assets that exist on the date of such Investment or Reinvestment, with respect thereto, free and clear of any Adverse Claim.

 

(j)             Nature of Receivables .  Each Receivable (i) represented by it to be an Eligible Receivable in any Servicer Report or (ii) included in the calculation of the Net Pool Balance in fact satisfies at such time the definition of “Eligible Receivable” set forth herein.  It has no knowledge of any fact (including any defaults by the Obligor thereunder on any other Receivable) that would cause it, or should have caused it, to expect any payments on such Receivable not to be paid in full when due or that is reasonably likely to cause or result in any other Material Adverse Effect with respect to such Receivable.

 

(k)            Coverage Requirement .  In the case of the SPV, the sum of the Aggregate Net Investment, plus the Required Reserves does not exceed the Net Pool Balance.

 

(l)             Credit and Collection Policy .  Since December 31, 2004, there have been no material changes in the Credit and Collection Policy other than in accordance with this Agreement.  Since such date, no material adverse change has occurred in the overall rate of collection of the Receivables.  It has at all times complied with the Credit and Collection Policy with regard to each Receivable.

 

(m)           Material Adverse Change .  Since December 31, 2004, there has been no change or effect that would reasonably be expected to have a Material Adverse Effect.

 

(n)            No Termination Event .  In the case of the SPV, no event has occurred and is continuing and no condition exists, or would result from any Investment or Reinvestment or from the application of the proceeds therefrom, which constitutes or may be reasonable be expected to constitute a Termination Event or a Potential Termination Event.

 

(o)            Not an Investment Company or Holding Company .  It is not, and is not controlled by, an “investment company” within the meaning of the Investment Company Act of 1940, or is exempt from all provisions of such act.  It is not a “holding company,” or a subsidiary or affiliate of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935.

 

(p)            ERISA .  No steps have been taken by any Person to terminate any Pension Plan the assets of which are not sufficient to satisfy all of its benefit liabilities (as determined under Title IV of ERISA), no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a lien under Section 302(f) of ERISA, and each Pension Plan has been

 

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administered in all material respects in compliance with its terms and applicable provision of ERISA and the Code.

 

(q)            Blocked Accounts .  The names and addresses of all the Blocked Account Banks, together with the account numbers of the Blocked Accounts at such Blocked Account Banks, are specified in Schedule 4.1(q) (or at such other Blocked Account Banks and/or with such other Blocked Accounts as have been notified to the Agent and any Collateral Agent and for which Blocked Account Agreements have been executed in accordance with Section 7.3 and delivered to the Servicer).  All Blocked Accounts are subject to Blocked Account Agreements.  All Obligors, except Obligors of Non-Lockbox Receivables, have been instructed to make payment to a Blocked Account and only Collections are deposited into the Blocked Accounts.

 

(r)             Bulk Sales .  In the case of the SPV, no transaction contemplated hereby or by the Second Tier Agreement requires compliance with any bulk sales act or similar law.

 

(s)            Transfers Under Second Tier Agreement .  In the case of the SPV, each Receivable has been purchased by it from, or contributed to it by, the Receivables Seller pursuant to, and in accordance with, the terms of the Second Tier Agreement.

 

(t)             Preference; Voidability .  In the case of the SPV, it shall have given reasonably equivalent value to the related Originator in consideration for the transfer to it of the Affected Assets from such Originator, and each such transfer shall not have been made for or on account of an antecedent debt owed by such Originator to it and no such transfer is or may be voidable under any section of the Bankruptcy Code.

 

(u)            Nonconsolidation .  The SPV is operated in such a manner that the separate corporate existence of the SPV, on the one hand, and each Originator or any Affiliate thereof, on the other, would not be disregarded in the event of the bankruptcy or insolvency of such Originator or any Affiliate thereof and, without limiting the generality of the foregoing:

 

(i)             the SPV is a limited purpose corporation whose activities are restricted in its operating agreement to activities related to purchasing or otherwise acquiring receivables (including the Receivables) and related assets and rights and conducting any related or incidental business or activities it deems necessary or appropriate to carry out its primary purpose, including entering into agreements like the Transaction Documents;

 

(ii)            the SPV has not engaged, and does not presently engage, in any activity other than those activities expressly permitted hereunder and under the other Transaction Documents, nor has the SPV entered into any agreement other than this Agreement, the other Transaction Documents to which it is a party, and with the prior written consent of the Investors and the Agent, any other agreement necessary to carry out more effectively the provisions and purposes hereof or thereof;

 

(iii)           (A) the SPV maintains its own deposit account or accounts, separate from those of any of its Affiliates, with commercial banking institutions, (B) the funds of the SPV are not and have not been diverted to any other Person or for other than the corporate use of the SPV and (C) except as may be expressly permitted by this

 

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Agreement, the funds of the SPV are not and have not been commingled with those of any of its Affiliates;

 

(iv)           to the extent that the SPV contracts or does business with vendors or service providers where the goods and services provided are partially for the benefit of any other Person, the costs incurred in so doing are fairly allocated to or among the SPV and such entities for whose benefit the goods and services are provided, and each of the SPV and each such entity bears its fair share of such costs; and all material transactions between the SPV and any of its Affiliates shall be only on an arm’s-length basis;

 

(v)            the SPV maintains an office through which its business is conducted and stationery through which all business correspondence and communication are conducted, in each case separate from those of each Originator;

 

(vi)           the SPV conducts its affairs strictly in accordance with its certificate of formation and observes all necessary, appropriate and customary corporate formalities, including (A) holding all regular and special members’ meetings appropriate to authorize all corporate action (which, in the case of regular members’ meetings, are held at least annually), (B) keeping separate and accurate minutes of such meetings, (C) passing all resolutions or consents necessary to authorize actions taken or to be taken, and (D) maintaining accurate and separate books, records and accounts, including intercompany transaction accounts;

 

(vii)          all decisions with respect to its business and daily operations are independently made by the SPV (although the officer making any particular decision may also be an employee, officer or director of an Affiliate of the SPV) and are not dictated by any Affiliate of the SPV (it being understood that the Servicer, which is an Affiliate of the SPV, will undertake and perform all of the operations, functions and obligations of it set forth herein and it may appoint Sub-Servicers, which may be Affiliates of the SPV, to perform certain of such operations, functions and obligations);

 

(viii)         the SPV acts solely in its own corporate name and through its own authorized officers and agents, and no Affiliate of the SPV shall be appointed to act as its agent, except as expressly contemplated by this Agreement;

 

(ix)            no Affiliate of the SPV advances funds to the SPV, other than as is otherwise provided herein or in the other Transaction Documents, and no Affiliate of the SPV otherwise supplies funds to, or guaranties debts of, the SPV; provided , however , that an Affiliate of the SPV may provide funds to the SPV in connection with the capitalization of the SPV;

 

(x)             other than organizational expenses and as expressly provided herein, the SPV pays all expenses, indebtedness and other obligations incurred by it;

 

(xi)            the SPV does not guarantee, and is not otherwise liable, with respect to any obligation of any of its Affiliates;

 

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(xii)           any financial reports required of the SPV comply with generally accepted accounting principles and are issued separately from, but may be consolidated with, any reports prepared for any of its Affiliates;

 

(xiii)          at all times the SPV is adequately capitalized to engage in the transactions contemplated in its certificate of incorporation;

 

(xiv)         the financial statements and books and records of the SPV and each Originator reflect the separate corporate existence of the SPV;

 

(xv)          the SPV does not act as agent for any Originator or any Affiliate thereof, but instead presents itself to the public as a corporation separate from each such member and independently engaged in the business of purchasing and financing Receivables;

 

(xvi)         the SPV maintains a three-person board of manager, including at least one independent manager, who has never been, and shall at no time be a member, manager, director, officer, employee or associate, or any relative of the foregoing, of any Originator or any Affiliate thereof (other than the SPV and any other bankruptcy-remote special purpose entity formed for the sole purpose of securitizing, or facilitating the securitization of, financial assets of any Originator or any Affiliate thereof), all as provided in its certificate or articles of incorporation, and is otherwise reasonably acceptable to the Investors and the Agent; and

 

(xvii)        the operating agreement of the SPV requires the affirmative vote of the independent manager before a voluntary petition under Section 301 of the Bankruptcy Code may be filed by the SPV, and the SPV to maintain correct and complete books and records of account and minutes of the meetings and other proceedings of its members and board of managers.

 

(v)            Representations and Warranties in other Related Documents .  In the case of the SPV, each of the representations and warranties made by it contained in the Transaction Documents (other than this Agreement) is true, complete and correct in all respects and it hereby makes each such representation and warranty to, and for the benefit of, the Agent, the Class Agents and the Investors as if the same were set forth in full herein.

 

(w)           No Servicer Default .  In the case of the Servicer, no event has occurred and is continuing and no condition exists, or would result from a purchase in respect of, or Reinvestment in respect of the Asset Interest, any Investment or from the application of the proceeds therefrom, which constitutes or may reasonably be expected to constitute a Servicer Default.

 

Section 4.2             Additional Representations and Warranties of the Servicer .

 

The Servicer represents and warrants on the Closing Date and on each Investment Date and Reinvestment Date to the Agent, the Class Agents and the Investors, which representation and warranty shall survive the execution and delivery of this Agreement, that each of the representations and warranties of the Servicer contained in any Transaction Document is true, complete and correct and the Servicer hereby makes each such representation and warranty to,

 

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and for the benefit of, the Agent, the Class Agents and the Investors as if the same were set forth in full herein.

 

Article V

 

Conditions Precedent

 

Section 5.1             Conditions Precedent to Closing .

 

The occurrence of the Closing Date and the effectiveness of the Commitments hereunder shall be subject to the conditions precedent that (i) the SPV, the Receivables Seller or the Originators shall have paid in full (A) all amounts required to be paid by any of them on or prior to the Closing Date pursuant to the Fee Letters and (B) the fees and expenses described in clause (i) of Section 9.4 and invoiced prior to the Closing Date, and (ii) the Agent shall have received, for itself and each of the Investors and the Agent’s counsel, an original (unless otherwise indicated) of each of the following documents, each in form and substance satisfactory to the Agent:

 

(a)            A duly executed counterpart of this Agreement, the First Tier Agreement, the Second Tier Agreement, the Fee Letters and each of the other Transaction Documents executed by the Originators, the SPV, the Receivables Seller, the Blocked Account Banks and the Servicer, as applicable.

 

(b)            A certificate, substantially in the form of Exhibit G , of the secretary or assistant secretary of the SPV, certifying and (in the case of clauses (i) through (iii) ) attaching as exhibits thereto, among other things:

 

(i)             the certificate of formation of the SPV (certified by the Secretary of State or other similar official of the SPV’s jurisdiction of organization, as applicable, as of a recent date);

 

(ii)            the operating agreement of the SPV;

 

(iii)           resolutions of the board of managers of the SPV authorizing the execution, delivery and performance by the SPV of this Agreement, Second Tier Agreement and the other Transaction Documents to be delivered by the SPV hereunder or thereunder and all other documents evidencing necessary corporate action (including shareholder consents) and government approvals, if any; and

 

(iv)           the incumbency, authority and signature of each officer of the SPV executing the Transaction Documents or any certificates or other documents delivered hereunder or thereunder on behalf of the SPV.

 

(c)            A certificate, substantially in the form of Exhibit H of the secretary or assistant secretary of each Originator, the Receivables Seller and the Servicer certifying and (in the case of clauses (i) through (iii) ) attaching as exhibits thereto, among other things:

 

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(i)             the certificate of formation and limited liability company agreements of such Originator and the Servicer (certified by the Secretary of State or other similar official of its jurisdiction of incorporation or organization, as applicable, as of a recent date);

 

(ii)            the operating agreement of such Originator and the Servicer;

 

(iii)           resolutions of the board of managers or other governing body of such Originator, the Receivables Seller and the Servicer authorizing the execution, delivery and performance by it of the Transaction Documents to which it is a party and all other documents evidencing necessary corporate action (including shareholder consents) and government approvals, if any; and

 

(iv)           the incumbency, authority and signature of each officer of such Originator and the Servicer executing the Transaction Documents or any certificates or other documents delivered hereunder or thereunder on its behalf.

 

(d)            A good standing certificate for the SPV issued by the Secretary of State or a similar official of the SPV’s jurisdiction of organization and certificates of qualification as a foreign corporation issued by the Secretaries of State or other similar officials of each jurisdiction where such qualification is material to the transactions contemplated by this Agreement and the other Transaction Documents, in each case, dated as of a recent date.

 

(e)            A good standing certificate for each Originator, the Receivables Seller and the Servicer issued by the Secretary of State or a similar official of its jurisdiction of organization and certificates of qualification as a foreign corporation issued by the Secretaries of State or other similar officials of each jurisdiction where such qualification is material to the transactions contemplated by this Agreement and the other Transaction Documents, in each case, dated as of a recent date.

 

(f)             Acknowledgment copies or other evidence of filing acceptable to the Agent of proper financing statements (Form UCC-1), filed on or before the initial Investment Date naming the SPV, as debtor, in favor of the Agent, as secured party, for the benefit of the Investors or other similar instruments or documents as may be necessary or in the reasonable opinion of the Agent desirable under the UCC of all appropriate jurisdictions or any comparable law to perfect the Agent’s ownership or security interest in all Receivables and the other Affected Assets.

 

(g)            Acknowledgment copies or other evidence of filing acceptable to the Agent of proper financing statements (Form UCC-1), filed on or before the initial Investment naming each Originator, as the debtor, in favor of Boise Cascade, as secured party/assignor, and the Agent, for the benefit of the Investors, as assignee, or other similar instruments or documents as may be necessary or in the reasonable opinion of the Agent desirable under the UCC of all appropriate jurisdictions or any comparable law to perfect Boise Cascade’s ownership interest in all Receivables and the other Affected Assets acquired from such Originators.

 

(h)            Acknowledgment copies or other evidence of filing acceptable to the Agent of proper financing statements (Form UCC-1), filed on or before the initial Investment naming the Receivables Seller, as the debtor, in favor of the SPV, as secured party/assignor, and the Agent,

 

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for the benefit of the Investors, as assignee, or other similar instruments or documents as may be necessary or in the reasonable opinion of the Agent desirable under the UCC of all appropriate jurisdictions or any comparable law to perfect the SPV’s ownership interest in all Receivables and the other Affected Assets acquired by the SPV from Boise Cascade.

 

(i)             Copies of proper financing statements (Form UCC-3), if any, filed on or before the initial Investment Date necessary to terminate all security interests and other rights of any Person in Receivables or the other Affected Assets previously granted by SPV.

 

(j)             Copies of proper financing statements (Form UCC-3), if any, filed on or before the initial Investment Date necessary to terminate all security interests and other rights of any Person in Receivables or the other Affected Assets previously granted by any Originator.

 

(k)            Copies of proper financing statements (Form UCC-3), if any, filed on or before the initial Investment Date necessary to terminate all security interests and other rights of any Person in Receivables or the other Affected Assets previously granted by the Receivables Seller.

 

(l)             Certified copies of requests for information or copies (Form UCC-11) (or a similar search report certified by parties acceptable to the Agent) dated a date reasonably near the date of the initial Investment listing all effective financing statements which name the SPV or any Originator (under their respective present names and any previous names) as debtor and which are filed in jurisdictions in which the filings were made pursuant to clauses (f) , (g) or (h) above and such other jurisdictions where the Agent may reasonably request together with copies of such financing statements (none of which shall cover any Receivables, other Affected Assets or Contracts), and similar search reports with respect to federal tax liens and liens of the Pension Benefit Guaranty Corporation in such jurisdictions, showing no such liens on any of the Receivables, other Affected Assets or Contracts.

 

(m)           Executed copies of the Blocked Account Agreements relating to each of the Blocked Accounts.

 

(n)            A favorable opinion of Karen E. Gowland, Vice President and General Counsel to the SPV, the Servicer and each Originator, covering paragraphs 1 , 2 , 3 , 5 , 6 , 7 and 8 of Exhibit I , and as to such other matters as the Agent may reasonably request, in form and substance satisfactory to the Agent and Agent’s counsel.

 

(o)            A favorable opinion of Heller Ehrman LLP, special counsel to the SPV and each Originator, covering paragraphs 4 , 9 , 10 , 11 and 12 of Exhibit I , including the time period over which UCC financing statements filed in all appropriate jurisdictions remain effective, as well as certain bankruptcy and insolvency matters, in form and substance satisfactory to the Agent and Agent’s counsel.

 

(p)            A favorable opinion of Kirkland & Ellis LLP, special counsel to the SPV, each Originator and the Servicer, covering paragraphs 5 and 13 of Exhibit I , in form and substance satisfactory to the Agent and Agent’s counsel.

 

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(q)            A CD Rom or other electronic format acceptable to the Agent identifying all Receivables and the Unpaid Balances thereon and such other information as the Agent may reasonably request.

 

(r)             Satisfactory results of a review and audit of each Originator’s collection, operating and reporting systems, Credit and Collection Policy, historical receivables data and accounts, including satisfactory results of a review of each Originator’s operating location(s) and satisfactory review and approval of the Eligible Receivables in existence on the date of the initial purchase under the First Tier Agreement and the Second Tier Agreement and a written outside Audit Report of Protiviti as to such matters.

 

(s)            A Servicer Report as of October 26, 2005 showing the calculation of the Aggregate Net Investment, each Class Net Investment and Required Reserves after giving effect to the initial Investment.

 

(t)             Evidence of the appointment of CT Corporation System as agent for process as required by Section 11.4 .

 

(u)            Evidence that the Collection Account required to be established hereunder has been established.

 

(v)            A copy of the Notice of Obligors.

 

(w)           Such other approvals, documents, instruments, certificates and opinions as the Agent, any Class Agent or any Investor, may reasonably request.

 

Section 5.2             Conditions Precedent to All Investments and Reinvestments .

 

Each Investment and Reinvestment hereunder (including the initial Investment) shall be subject to the conditions precedent that (a) the Closing Date shall have occurred, (b) the Agent shall have received such approvals, documents, instruments, certificates and opinions as the Agent, any Class Agent or any Investor, may reasonably request, and (c) on the date of such Investment and Reinvestment the following statements shall be true (and the SPV by accepting the amount of such Investment and Reinvestment shall be deemed to have certified that):

 

(i)             The representations and warranties contained in Sections 4.1 and 4.2 (except, with respect to any Reinvestment, Section 4.1(m) ) are true, complete and correct on and as of such day as though made on and as of such day and shall be deemed to have been made on such day,

 

(ii)            In the case of a Reinvestment, the amount of the Reinvestment will not exceed the amount available therefor under Section 2.12 , and in the case of an Investment, the amount of such Investment will not exceed the amount available therefor under Section 2.2 and after giving effect thereto, the sum of the Aggregate Net Investment plus Required Reserves will not exceed the Net Pool Balance,

 

(iii)           In the case of an Investment, the Agent shall have received an Investment Request, appropriately completed, within the time period required by Section 2.3 ,

 

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(iv)           In the case of an Investment, the Agent shall have received the most recent Servicer Report required to be delivered pursuant to the provisions of Section 2.8 , and

 

(v)            The Termination Date has not occurred.

 

Article VI

 

Covenants

 

Section 6.1             Affirmative Covenants of the SPV, the Originators, the Receivables Seller and the Servicer .

 

At all times from the date hereof to the Final Payout Date, unless the Agent shall otherwise consent in writing:

 

(a)            Reporting Requirements .  Each of the SPV, each Originator and the Receivables Seller shall maintain, for itself and each of its respective Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish to the Agent:

 

(i)             Annual Reporting .  As soon as available, but not later than ninety (90) days after the end of each fiscal year, a copy of the audited consolidated balance sheet of Boise Cascade and the SPV, respectively, as at the end of such year and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by the opinion of KPMG, in the case of Boise Cascade and the SPV, or another accounting firm of national reputation, or with the prior consent of the Agent (which consent shall not be unreasonably withheld), another independent public accounting firm, which opinion shall state that such consolidated financial statements present fairly, in all material respects, the financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except for changes agreed upon by Boise Cascade or the SPV, as applicable, and such auditors which are disclosed and described in such statements).  Such opinion shall not be qualified or limited because of a restricted or limited examination by such accountant of any material portion of the records of Boise Cascade or the SPV, as applicable.

 

(ii)            Quarterly Reporting .  As soon as available, but not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year, a copy of the unaudited consolidated balance sheets of Boise Cascade and the SPV, respectively, as of the end of such quarter and the related consolidated statements of income, shareholders’ equity and cash flows, if any, for the period commencing on the first (1 ^st ) day and ending on the last day of such quarter, and certified by any responsible financial officer of Boise Cascade or the SPV, as applicable, as being complete and correct and fairly presenting in all material respects, in accordance with GAAP (subject to normal year end adjustments), the financial position and the results of the operations of Boise Cascade or the SPV, as applicable.

 

(iii)           Compliance Certificate .  Together with the financial statements required hereunder, a compliance certificate signed by Boise Cascade’s or the SPV’s chief

 

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financial officer or treasurer, as applicable, stating that (A) the attached financial statements have been prepared in accordance with GAAP and accurately reflect the financial condition of the Originators and their Subsidiaries or the SPV, as applicable, and (B) to the best of such Person’s knowledge, no Termination Event or Potential Termination Event exists, or if any Termination Event or Potential Termination Event exists, stating the nature and status thereof.

 

(iv)           SEC Filings .  Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which any Originator or any Subsidiary of an Originator or such Person files with the SEC; provided that, so long as such reports are publicly available on the SEC’s Internet site or any successor thereto, physical delivery of such copies shall not be required.

 

(v)            Notice of Termination Events or Potential Termination Events; Etc .  (A) as soon as possible and in any event within two (2) Business Days after the occurrence of each Termination Event or Potential Termination Event, a statement of the chief financial officer or chief accounting officer of the SPV setting forth details of such Termination Event or Potential Termination Event and the action which the SPV proposes to take with respect thereto, which information shall be updated promptly from time to time; (B) promptly after the SPV obtains knowledge thereof, notice of any litigation, investigation or proceeding that may exist at any time between the SPV and any Person that may result in a Material Adverse Effect or any litigation or proceeding relating to any Transaction Document; and (C) promptly after the occurrence thereof, notice of a Material Adverse Effect.

 

(vi)           Change in Credit and Collection Policy and Debt Ratings .  Within ten (10) Business Days after the date any change in or amendment to the Credit and Collection Policy is made, a copy of the Credit and Collection Policy then in effect indicating such change or amendment.  Within five (5) days after the date of any change in Boise Cascade’s public or private debt ratings, if any, a written certification of Boise Cascade’s public or private debt ratings after giving effect to any such change.

 

(vii)          Credit and Collection Policy .  Within ninety (90) days after the close of each Originator’s and the SPV’s fiscal years, a complete copy of the Credit and Collection Policy then in effect, if requested by the Agent.

 

(viii)         ERISA .  Promptly after the filing, giving or receiving thereof, copies of all reports and notices with respect to any Reportable Event pertaining to any Pension Plan and copies of any notice by any Person of its intent to terminate any Pension Plan, and promptly upon the occurrence thereof, written notice of any contribution failure with respect to any Pension Plan sufficient to give rise to a lien under Section 302(f) of ERISA.

 

(ix)            Change in Auditors or Accounting Policy .  Promptly, notice of any change in the auditors or, if material to the transactions provided for herein, accounting policy of any of the SPV, the Servicer, any Originator or the Receivables Seller.

 

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(x)             Other Information .  Such other information (including non-financial information) as the Agent or any Class Agent may from time to time reasonably request with respect to each Originator, the SPV or any Subsidiary of an Originator.

 

(b)            Conduct of Business; Ownership .  Each of the SPV, each Originator, the Receivables Seller and the Servicer shall, and the Servicer shall cause each of its Subsidiaries to, carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and do all things necessary to remain duly organized, validly existing and in good standing as a domestic corporation or limited liability company, as applicable, in its jurisdiction of incorporation or formation and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted.  The SPV shall at all times be a wholly-owned Subsidiary of Boise Cascade.

 

(c)            Compliance with Laws, Etc .  The SPV shall comply, and each Originator, the Receivables Seller and the Servicer shall, and the Servicer shall cause each of its Subsidiaries to, comply (except to the extent any such non-compliance could have a Material Adverse Effect), with all Laws to which it or its respective properties may be subject and do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights and privileges as a corporation or limited liability company, as the case may be under the laws of its state of organization.

 

(d)            Furnishing of Information and Inspection of Records .  Each of the SPV, each Originator, the Receivables Seller and the Servicer shall furnish to the Agent from time to time such information with respect to the Affected Assets as the Agent may reasonably request, including listings identifying the Obligor and the Unpaid Balance for each Receivable.  Each of the SPV, each Originator, the Receivables Seller and the Servicer shall, at any time and from time to time during regular business hours, as requested by the Agent or any Class Agent, permit the Agent, or its agents or representatives, (i) to examine and make copies of and take abstracts from all books, records and documents (including computer tapes and disks) relating to the Receivables or other Affected Assets, including the related Contracts and (ii) to visit the offices and properties of the SPV, each Originator, the Receivables Seller or the Servicer, as applicable, for the purpose of examining such materials described in clause (i) , and to discuss matters relating to the Affected Assets or the SPV’s, such Originator’s, the Receivables Seller’s or the Servicer’s performance hereunder, under the Contracts and under the other Transaction Documents to which such Person is a party with any of the officers, directors, employees or independent public accountants of the SPV, such Originator, the Receivables Seller or the Servicer, as applicable, having knowledge of such matters.

 

(e)            Keeping of Records and Books of Account .  Each of the SPV, each Originator, the Receivables Seller and the Servicer shall maintain and implement administrative and operating procedures (including an ability to recreate records evidencing Receivables and related Contracts in the event of the destruction of the originals thereof), and keep and maintain, all documents, books, computer tapes, disks, records and other information reasonably necessary or advisable for the collection of all Receivables (including records adequate to permit the daily identification of each new Receivable and all Collections of and adjustments to each existing Receivable).  Each of the SPV, each Originator, the Receivables Seller and the Servicer shall

 

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give the Agent prompt notice of any material change in its administrative and operating procedures referred to in the previous sentence.

 

(f)             Performance and Compliance with Receivables and Contracts and Credit and Collection Policy .  Each of the SPV, each Originator, the Receivables Seller and the Servicer shall, (i) at its own expense, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables; and (ii) timely and fully comply in all material respects with the Credit and Collection Policy in regard to each Receivable and the related Contract.

 

(g)            Notice of Agent’s Interest .  In the event that the SPV, the Receivables Seller or any Originator shall sell or otherwise transfer any interest in accounts receivable or any other financial assets (other than as contemplated by the Transaction Documents), any computer tapes or files or other documents or instruments provided by the Servicer in connection with any such sale or transfer shall disclose the SPV’s ownership of the Receivables and the Agent’s interest therein.

 

(h)            Collections .  Each of the SPV, each Originator, the Receivables Seller and the Servicer shall instruct the Obligors of the Receivables, other than Obligors of Non-Lockbox Receivables, to cause all Collections to be deposited directly to related Blocked Accounts or to post office boxes to which only Blocked Account Banks have access and shall cause all items and amounts relating to such Collections received in such post office boxes to be removed and deposited into a Blocked Account on a daily basis.

 

(i)             Collections Received .  Each of the SPV, each Originator, the Receivables Seller and the Servicer shall hold in trust, and deposit, immediately, but in any event not later than forty-eight (48) hours of its receipt thereof, to a Blocked Account or, if required by Section 2.9 , to the Collection Account, all Collections of Receivables (including Non-Lockbox Receivables) received by it from time to time.

 

(j)             Blocked Accounts .  Each Blocked Account shall at all times be subject to a Blocked Account Agreement.

 

(k)            Sale Treatment .  None of the SPV, any Originator or the Receivables Seller shall (i) treat the transactions contemplated by the First Tier Agreement in any manner other than as a sale of Receivables by the Originators to the Receivables Seller; provided , however that in any such case, if due to the consolidation requirements of GAAP, the transactions contemplated by the Transaction Documents are reflected as secured lending transactions, this covenant shall not be breached, (ii) treat the transactions contemplated by the Second Tier Agreement in any manner other than as a sale of Receivables by the Receivables Seller to the SPV; provided , however that in any such case, if due to the consolidation requirements of GAAP, the transactions contemplated by the Transaction Documents are reflected as secured lending transactions, this covenant shall not be breached, or (iii) treat the transactions contemplated hereby in any manner other than as a sale of the Asset Interest by the SPV to the Agent on behalf of the Investors; provided , however that in any such case, if due to the requirements of GAAP, the transactions contemplated by the Transaction Documents are reflected as secured lending transactions, this covenant shall not be breached.  In addition, the SPV shall (to the extent

 

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permitted by GAAP) disclose (in a footnote or otherwise) in all of its financial statements (including any such financial statements consolidated with any other Persons’ financial statements), all relevant books, records, tax returns and other applicable documents the existence and nature of the transaction contemplated hereby and by the Second Tier Agreement as a sale the interest of the SPV (in the case of Boise Cascade’s financial statements) and the Agent, on behalf of the Investors, in the Affected Assets.

 

(l)                                      Separate Business; Nonconsolidation .  The SPV shall not (i) engage in any business not permitted by its limited liability company agreement or operating agreement as in effect on the Closing Date or (ii) conduct its business or act in any other manner which is inconsistent with Section 4.1(u) .  The officers and managers of the SPV (as appropriate) shall make decisions with respect to the business and daily operations of the SPV independent of and not dictated by Boise Cascade or any other controlling Person.

 

(m)                                Corporate Documents .  The SPV shall only amend, alter, change or repeal its certificate of formation or limited liability company agreement with the prior written consent of the Agent.

 

(n)                                  Ownership Interest, Etc.   The SPV shall, at its expense, take all action necessary or desirable to establish and maintain a valid and enforceable ownership or security interest in the Receivables, the Related Security and proceeds with respect thereto, and a first priority perfected security interest in the Affected Assets, in each case free and clear of any Adverse Claim, in favor of the Agent for the benefit of the Investors, including taking such action to perfect, protect or more fully evidence the interest of the Agent, as the Agent may reasonably request.

 

(o)                                  Enforcement of the First Tier Agreement .  The SPV, on its own behalf and on behalf of the Agent and each Investor, shall direct Boise Cascade to promptly enforce all covenants and obligations of Boise Cascade contained in the First Tier Agreement.  The SPV shall deliver consents, approvals, directions, notices, waivers and take other actions under the First Tier Agreement as may be required for Boise Cascade to act in accordance therewith or as may be directed by the Agent.

 

(p)                                  Enforcement of the Second Tier Agreement .  The SPV, on its own behalf and on behalf of the Agent and each Investor, shall promptly enforce all covenants and obligations of the Receivables Seller contained in the Second Tier Agreement.  The SPV shall deliver consents, approvals, directions, notices, waivers and take other actions under the Second Tier Agreement as may be required for the Receivables Seller to act in accordance therewith or as may be directed by the Agent.

 

(q)                                  Non-Lockbox Receivable Reporting .  Boise Cascade shall, beginning on December 31, 2005, provide to the Agents (i) reports (in form and substance satisfactory to the Agents) setting forth the amount of Collections received from Non-Lockbox Receivables for each Calculation Period beginning with the first Calculation Period ending on or after December 31, 2005, and (ii) upon receipt of written request from any Agent, copies of all bank account statements for each Blocked Account for the period from the Closing Date to the most recent month or for the period specified in the written request.

 

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Section 6.2                                    Negative Covenants of the SPV, the Originator, the Receivables Seller and Servicer .

 

At all times from the date hereof to the Final Payout Date, unless the Agent shall otherwise consent in writing:

 

(a)                                   No Sales, Liens, Etc.   (i) None of the SPV, any Originator, the Receivables Seller or the Servicer shall, nor shall any of them permit any of its Subsidiaries to, sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse Claim (except with respect to any Originator or the Receivables Seller, any Adverse Claim that is released in full upon the sale, transfer and assignment thereof to the SPV) upon (or the filing of any financing statement) or with respect to (A) any of the Affected Assets, or (B) the proceeds of any inventory or goods, the sale of which may give rise to a Receivable, or assign any right to receive income in respect thereof (provided that liens on inventory and/or goods permitted if not on proceeds thereof) and (ii) the SPV shall not issue any security to, or sell, transfer or otherwise dispose of any of its property or other assets (including the property sold to it by the Receivables Seller under Section 2.1 of the Second Tier Agreement) to, any Person other than an Affiliate (which Affiliate is not a special purpose entity organized for the sole purpose of issuing asset backed securities) or as otherwise expressly provided for in the Transaction Documents.

 

(b)                                  No Extension or Amendment of Receivables .  Except as otherwise permitted in Section 7.2 , neither the SPV nor the Servicer shall amend, modify or waive any term or condition of any Contract, which amendment, modification or waiver would adversely affect the validity, enforceability or collectibility of such Receivable; provided that the foregoing restriction shall not prohibit (i) any compromise or settlement of Receivables for credit rea