<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For Quarter Ended September 30, 1999
Commission File Number 1-3439
STONE CONTAINER CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 36-2041256
------------------------------ -------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
</TABLE>
150 North Michigan Avenue, Chicago, Illinois 60601
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(Address of principal executive offices) (Zip Code)
(312) 346-6600
--------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
--------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
All outstanding shares of the Registrant's common stock are owned by
Smurfit-Stone Container Corporation.
<PAGE>
PART 1 -- FINANCIAL INFORMATION
Item 1. Financial Statements
STONE CONTAINER CORPORATION
CONSOLIDATIND STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
Predecessor Predecessor
(In millions, except per share data) 1999 1998 1999 1998
=======================================================================================================
<S> <C> <C> <C> <C>
Net sales......................................... $ 1,085 $ 1,178 $ 3,191 $ 3,639
Costs and expenses
Cost of goods sold........................... 922 1,085 2,800 3,292
Selling and administrative expenses.......... 92 118 298 348
-------------------------------------------------
Income (loss) from operations........... 71 (25) 93 (1)
Other income (expense)
Interest expense, net........................ (81) (115) (260) (346)
Equity income (loss) of affiliates........... 3 (40) 8 (76)
Other, net................................... 1 (69) 52 (123)
-------------------------------------------------
Loss before income taxes and extraordinary item... (6) (249) (107) (546)
Benefit from (provision for) income taxes......... (4) (26) 20 45
-------------------------------------------------
Loss before extraordinary item............... (10) (275) (87) (501)
Extraordinary item
Loss from early extinguishment of debt, net
of income tax benefit of $1 and $1......... (1) (2)
-------------------------------------------------
Net loss................................ (11) (275) (89) (501)
Preferred stock dividends......................... (2) (2) (6) (6)
-------------------------------------------------
Net loss applicable to common shares......... $ (13) $ (277) $ (95) $ (507)
-------------------------------------------------
Basic earnings per common share
Net loss applicable to common shares......... $ (2.66) $ (5.01)
-------------------------------------------------
Weighted average shares outstanding............... 104 101
-------------------------------------------------
Diluted earnings per common share
Net loss applicable to common shares......... $ (2.66) $ (5.01)
-------------------------------------------------
Weighted average shares outstanding............... 104 101
====================================================================================================
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
STONE CONTAINER CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
(In millions, except share data) 1999 1998
===================================================================================================================
(Unaudited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents ........................................................ $ 65 $ 137
Receivables, less allowances of $59 in 1999 and $61 in 1998 ...................... 580 462
Inventories
Work-in-process and finished goods ......................................... 142 123
Materials and supplies ..................................................... 351 422
-----------------
493 545
Refundable income taxes .......................................................... 1
Deferred income taxes ............................................................ 32 38
Prepaid expenses and other current assets ........................................ 52 119
-----------------
Total current assets .................................................... 1,223 1,301
Net property, plant and equipment ..................................................... 3,834 3,997
Timberland, less timber depletion ..................................................... 22 15
Goodwill, less accumulated amortization of
$58 in 1999 and $8 in 1998 ....................................................... 2,602 2,643
Investment in equity of non-consolidated affiliates ................................... 184 632
Other assets .......................................................................... 165 205
-----------------
$8,030 $8,793
===================================================================================================================
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt ............................................. $ 259 $ 161
Accounts payable ................................................................. 377 270
Accrued compensation and payroll taxes ........................................... 133 106
Interest payable ................................................................. 88 98
Other current liabilities ........................................................ 140 178
-----------------
Total current liabilities ............................................... 997 813
Long-term debt, less current maturities ............................................... 3,152 3,902
Other long-term liabilities ........................................................... 680 734
Deferred income taxes ................................................................. 705 754
Stockholders' equity
Series E preferred stock, par value $.01 per share; 10,000,000 shares
authorized; 4,599,300 issued and outstanding
in 1999 and 1998 ........................................................... 78 78
Common stock, par value $.01 per share; 110,000,000 shares
authorized, issued and outstanding in 1999 and 1998 ........................ 2,545 2,545
Retained earnings (deficit) ...................................................... (125) (36)
Accumulated other comprehensive income (loss) .................................... (2) 3
-----------------
Total stockholders' equity .............................................. 2,496 2,590
-----------------
$8,030 $8,793
===================================================================================================================
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
STONE CONTAINER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Predecessor
Nine Months Ended September 30, (In millions) ................................ 1999 1998
================================================================================================================
<S> <C> <C>
Cash flows from operating activities
Net loss ..................................................................... $ (89) $(501)
Adjustments to reconcile net loss to net cash provided by
(used for) operating activities:
Extraordinary loss from early extinguishment of debt ................. 3
Depreciation and amortization ........................................ 227 204
Amortization of deferred debt issuance costs ......................... 3 17
Deferred income taxes ................................................ (46) (62)
Non-cash employee benefits ........................................... 2 2
Foreign currency transaction (gains) losses .......................... (5) 20
Equity (income) loss of affiliates ................................... (8) 76
Change in current assets and liabilities, net of
effects from acquisitions and dispositions
Receivables .................................................... (136) 13
Inventories .................................................... 37 13
Prepaid expenses and other current assets ...................... 52 24
Accounts payable and other current liabilities ................. 118 (28)
Interest payable ............................................... (11) 6
Income taxes ................................................... (3) (3)
Other, net ........................................................... (78) 170
---------------------------
Net cash provided by (used for) operating activities .................... 66 (49)
---------------------------
Cash flows from investing activities
Property additions ...................................................... (53) (109)
Investments in and advances to affiliates, net .......................... (73)
Proceeds from sales of assets and investments ........................... 544 3
Other, net .............................................................. (1)
---------------------------
Net cash provided by (used for) investing activities..................... 491 (180)
---------------------------
Cash flows from financing activities
Borrowings under bank credit facility ................................... 435
Payments of debt ........................................................ (630) (223)
Proceeds from issuance of stock ......................................... 2
---------------------------
Net cash provided by (used for) financing activities .................... (630) 214
---------------------------
Effect of exchange rate changes on cash ...................................... 1 (2)
---------------------------
Decrease in cash and cash equivalents ........................................ (72) (17)
Cash and cash equivalents
Beginning of period ..................................................... 137 113
---------------------------
End of period ........................................................... $ 65 $ 96
=================================================================================================================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
STONE CONTAINER CORPORATION
Notes to Consolidated Financial Statements
(Tabular amounts in millions, except per share data)
1. Significant Accounting Policies
The accompanying consolidated financial statements and notes thereto of Stone
Container Corporation ("Stone" or the "Company") have been prepared in
accordance with the instructions to Form 10-Q and reflect all adjustments which
management believes necessary (which include only normal recurring accruals) to
present fairly the financial position, results of operations and cash flows.
These statements, however, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles. Interim results may not necessarily be indicative of results which
may be expected for any other interim period or for the year as a whole. These
financial statements should be read in conjunction with the audited consolidated
financial statements and footnotes included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 (the "Stone 1998 10-K"), filed
March 31, 1999, with the Securities Exchange Commission.
The Company is a wholly-owned subsidiary of Smurfit-Stone Container Corporation
("SSCC"), which was formerly known as Jefferson Smurfit Corporation ("JSC"). On
November 18, 1998, Stone was merged with a wholly-owned subsidiary of SSCC (the
"Merger"). The Merger was accounted for as a purchase business combination and,
accordingly, purchase accounting adjustments, including goodwill, were pushed
down and are reflected in the financial statements for the current year. The
financial statements for periods ended September 30, 1998, were prepared using
Stone's historical basis of accounting and are designated as "Predecessor". The
comparability of operating results for the Predecessor period is affected by the
purchase accounting adjustments.
2. Reclassifications
Certain prior year amounts have been reclassified to conform with the current
year presentation.
3. Merger and Restructuring
The Merger was accounted for as a purchase business combination and,
accordingly, the cost to acquire the Company was preliminarily allocated to the
assets acquired and liabilities assumed according to their estimated fair values
and is subject to adjustment when additional information concerning asset and
liability valuations is finalized in the fourth quarter of 1999. The allocation
is expected to be impacted by the settlement of the pre-acquisition
contingencies relating to the Company's investment in Florida Coast Paper
Company, L.L.C. (See Note 9).
The litigation related to Stone's purchase of the common stock of Stone Savannah
River Pulp and Paper Company was settled during the third quarter of 1999 for
cash payments of approximately $32 million. The purchase price allocation has
been adjusted to reflect the settlement.
4. Other, Net
On January 21, 1999, the Company sold 16% (approximately 7.8 million shares) of
its interest in Abitibi-Consolidated Inc., a Canadian-based manufacturer and
marketer of publication paper ("Abitibi") for approximately $80 million. On
April 23, 1999, the Company sold its remaining interest (approximately 41
million shares) to an unaffiliated third party for net proceeds of approximately
$414 million. The proceeds have been applied to debt reduction. The Company
recorded a $39 million gain during the second quarter of 1999.
4
<PAGE>
Due to the continued operating losses and deteriorating financial liquidity
conditions experienced during 1998, the Company recorded impairment charges of
$30 million and $6 million during the third quarter of 1998 related to its
investments in Venepal S.A.C.A. ("Venepal") and Financiere Carton Papier
("FCP"), respectively. Venepal is a publicly traded, Venezuelan based,
manufacturer of paperboard and paper packaging products in which the Company
owns a 20% interest. FCP is a privately held folding carton converting operation
based in France that is 50% owned by the Company.
Also, in the third quarter of 1998, the Company determined that it would sell or
liquidate its remaining non-core wood product assets. Accordingly, the Company
recorded a pretax charge of $19 million to write down the assets to estimated
fair value less cost to sell. As of September 30, 1999, such assets held for
sale are included in the "other current assets" section of the Consolidated
Balance Sheet with an approximate value of $14 million.
On July 23, 1998, Stone Venepal (Celgar) Pulp, Inc. ("SVCPI"), a
non-consolidated Canadian affiliate of the Company, filed for bankruptcy
protection. The Company and its partners, after evaluating SVCPI's losses and
cash flow under current market conditions, decided to end their relationship
with SVCPI. As a result, the Company recorded a one-time write-down of $54
million during the second quarter of 1998. The lenders to SVCPI and any other
SVCPI creditors do not have recourse against the Company.
5. Non-Consolidated Affiliates
The Company has several non-consolidated affiliates that are engaged in paper
and packaging operations in North America, South America, Europe and Asia.
Investments in majority-owned affiliates where control does not exist and non
majority-owned affiliates are accounted for under the equity method.
The Company's significant non-consolidated affiliate at September 30, 1999, is
Smurfit-MBI (formerly MacMillan Bathurst, Inc.), a Canadian corrugated container
company, in which the Company owns a 50% interest. The remaining 50% interest is
owned by an affiliate of Jefferson Smurfit Group plc. Smurfit-MBI had net sales
of $100 million and $89 million for the three months, and $282 million and $266
million for the nine months ended September 30, 1999 and 1998, respectively.
Combined summarized financial information for all of the Company's
non-consolidated affiliates that are accounted for under the equity method of
accounting is presented below:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------
1999 1998 1999 1998
-------- ------- ----- ------
<S> <C> <C> <C> <C>
Results of operations (a)
Net sales.................................................$ 196 $ 699 $ 1,218 $ 2,811
Cost of sales.............................................. 164 614 991 2,255
Income (loss) before income taxes, minority interest and
extraordinary charges.................................... 5 (221) (60) (278)
Net income (loss).......................................... 5 (173) (44) (230)
</TABLE>
(a) Includes results of operations for each of the Company's affiliates for the
period it was accounted for under the equity method.
5
<PAGE>
6. Comprehensive Income (Loss)
Comprehensive income (loss) is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ---------------------
Predecessor Predecessor
1999 1998 1999 1998
------ ------ ------ -----
<S> <C> <C> <C> <C>
Net...................................................... $ (11) $(275) $(89) $(501)
Other comprehensive income (loss), net of tax:
Foreign currency translation.......................... 4 (21) (5) (62)
----- ------- ----- -------
Comprehensive loss....................................... $ (7) $ (296) $ (94) $ (563)
===== ======= ===== =======
</TABLE>
7. Earnings Per Share
Subsequent to the Merger, earnings per share information is no longer presented
because the Company is a wholly-owned subsidiary of SSCC.
The following table sets forth the computation of basic and diluted earnings per
share for the Predecessor period:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1998 1998
---- ----
<S> <C> <C>
Numerator:
Loss from operations..................................................... $ (275) $ (501)
Less: Preferred stock dividends (2) (6)
------ -------
Loss applicable to common stockholders................................... $ (277) $ (507)
====== =======
Denominator:
Denominator for basic earnings per share -
Weighted average shares................................................ 104 101
Denominator for diluted earnings per share -
Adjusted weighted average shares....................................... 104 101
Basic earnings (loss) per share............................................ $ (2.66) $ (5.01)
======= =======
Diluted earnings (loss) per share.......................................... $ (2.66) $ (5.01)
======= =======
</TABLE>
For the three and nine month periods ended September 30, 1998, (1) convertible
debt effects of $1 million (2 million shares) and $3 million (5 million shares),
respectively, and (2) exchangeable preferred stock to acquire three million
shares of common stock with an earnings effect of $2 million and $6 million,
respectively, are excluded from the diluted earnings per share computation
because they are antidilutive.
8. Business Segment Information
The Company has three reportable segments: (1) Containerboard and Corrugated
Containers, (2) Industrial Bags, and (3) International. The Containerboard and
Corrugated Containers segment is highly integrated. It includes a system of
mills and plants that produces a full line of containerboard that is converted
into corrugated containers. Corrugated containers are used to transport such
diverse products as home appliances, electric motors, small machinery, grocery
products, produce, books, tobacco and furniture. The Industrial Bag segment
converts kraft and specialty paper into multi-wall bags, consumer bags and
intermediate bulk containers. These bags and containers are designed to ship and
protect a wide range of industrial and consumer products including fertilizers,
chemicals, concrete and pet and food products. The international segment is
primarily composed of the Company's containerboard mills and corrugating
facilities located in Europe and Central and South America.
6
<PAGE>
Other includes corporate related items which include income and expense not
allocated to reportable segments, goodwill amortization, interest expense, the
adjustment to record inventory at LIFO, and the elimination of intercompany
profit.
A summary by business segment follows:
<TABLE>
<CAPTION>
Container-
Board &
Corrugated Industrial Inter-
Containers Bags national Other Total
------------ ---------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Three Months Ended
September 30,
1999
Revenues from external
Customers............................. $ 824 $126 $135 $ $1,085
Intersegment revenues................... 39 39
Segment profit (loss)................... 110 6 6 (128) (6)
1998 (Predecessor)
Revenues from external
Customers............................. $ 899 $131 $145 $ 3 $1,778
Intersegment revenues................... 46 46
Segment profit (loss)................... (9) 9 7 (256) (249)
Nine Months Ended
September 30,
1999
Revenues from external
Customers............................. $2,376 $383 $430 $ 2 $3,191
Intersegment revenues................... 116 116
Segment profit (loss)................... 186 22 21 (336) (107)
1998 (Predecessor)
Revenues from external
Customers............................. $2,819 $377 $434 $ 9 $ 3,639
Intersegment revenues................... 146 146
Segment profit (loss)................... 40 27 23 (636) (546)
</TABLE>
9. Contingencies
The Company's past and present operations include activities which are subject
to federal, state and local environmental requirements, particularly relating to
air and water quality. The Company faces potential environmental liability as a
result of violations of permit terms and similar authorizations that have
occurred from time to time at its facilities.
The Company faces potential liability for response costs at various off-site
disposal sites which the Company has received notice that it may be a
potentially responsible party ("PRP"), as well as for certain hazardous
substance contamination of certain Company-owned properties. In estimating its
reserves for environmental remediation and future costs, the Company's estimated
liability reflects only the Company's expected share. In determining the
liability, the estimate takes into consideration the number of other PRP's at
each site, the identity and financial condition of such parties and experience
regarding similar matters.
Stone is a party to an Output Purchase Agreement (the "OPA") with Four M
Corporation ("Four M") and Florida Coast Paper Company, L.L.C. ("FCPC"), a joint
venture owned 50% by each of Stone and Four M. The OPA requires that Stone and
Four M each purchase one-half of the linerboard produced at FCPC's mill in Port
St. Joe, FL (the "FCPC Mill") at a minimum price sufficient to cover certain
obligations of FCPC. The OPA also requires Stone and Four M to use their best
efforts to cause the FCPC Mill to operate at a production rate not less than the
reported average capacity utilization of the U.S. linerboard industry. FCPC
7
<PAGE>
indefinitely discontinued production at the FCPC Mill in August 1998. On April
2, 1999, FCPC and three related companies (the "FCPC Companies") filed a Chapter
11 bankruptcy petition in United States Bankruptcy Court in Wilmington,
Delaware. All of the obligations of the FCPC Companies are non-recourse to the
Company, and the bankruptcy filing has no effect on any of the indebtedness of
the Company or any other subsidiaries of SSCC. On May 10, 1999, the Indenture
Trustee with respect to the first mortgage notes of FCPC (the "FCPC Notes")
commenced an adversary proceeding in the FCPC bankruptcy case against the
Company and certain other parties, including two former officers of the Company,
which has been stayed indefinitely by the Court. The complaint contains
allegations that the Company violated the provisions of the OPA and a
subordinated credit agreement with FCPC, breached certain fiduciary duties owed
to the holders of the FCPC Notes, and negligently discharged certain additional
duties owed to the holders of the FCPC Notes. On October 20, 1999, the FCPC
Companies and a committee representing the holders of the FCPC Notes filed a
reorganization plan (the "Plan") that is intended to resolve all matters
relating to the bankruptcies of the FCPC Companies. The Plan, which is supported
by Stone and Four M, provides for the settlement of all outstanding claims in
the bankruptcies in exchange for cash payments. The Plan also provides for the
transfer of all of the assets of the FCPC Companies, including the FCPC Mill, to
Stone, as well as the release of the pending adverse proceeding and all other
claims relating to the bankruptcies of the FCPC Companies against Stone, Four M
and their affiliates, officers and directors. Although the amount of the cash
payments is subject to final determination, the cash cost of the Plan to the
Company is anticipated to be in the range of $120 to $125 million and the
Company will receive $25 million in value of convertible preferred stock to be
issued by Four M in satisfaction of its share of the liabilities. The purchase
price allocation will be adjusted in the fourth quarter of 1999 to reflect this
settlement. Confirmation of the Plan is anticipated to occur in early 2000.
The Company is a defendant in a number of lawsuits and claims arising out of the
conduct of its business, including those related to environmental matters. While
the ultimate results of such suits or other proceedings against the Company
cannot be predicted with certainty, the management of the Company believes that
the resolution of these matters will not have a material adverse effect on its
consolidated financial condition or results of operations.
10. Subsequent Events
On October 15, 1999, the Company entered into a new accounts receivable
securitization program (the "Securitization Program"). The new $250 million
Securitization Program provides for certain trade accounts receivable (the
"Receivables") to be sold to Stone Receivables Corporation, a bankruptcy remote
special purpose entity. The Receivables purchases were financed through the
issuance of $200 million of Trade Receivables-Backed Certificates, Series 1999-1
($176 million Class A certificates at 0.5% plus LIBOR; $12 million Class B
certificates at .85% plus LIBOR and $12 million Class C certificates at 1.8%
plus LIBOR) and up to $50 million of Variable Funding Certificates, Series
1999-2 (daily commercial paper rate). The Securitization Program has a final
maturity of November 15, 2005. This transaction will be accounted for under
Statement of Financial Accounting Standards No. 125 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities."
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
As discussed in the Stone 1998 10-K, a wholly-owned subsidiary of SSCC merged
with the Company as of November 18, 1998 and the Company became a wholly-owned
subsidiary of SSCC. The comparability of operating results for the Predecessor
period and the period encompassing push down accounting are affected by the
purchase accounting adjustments.
<TABLE>
<CAPTION>
(In millions) Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------
1999 1998 1999 1998
-------- ------ ------ ------
<S> <C> <C> <C> <C>
Net sales
Containerboard and corrugated containers......... $ 824 $ 899 $ 2,376 $ 2,819
Industrial bag................................... 126 131 383 377
International.................................... 135 145 430 434
Other operations................................. 3 2 9
-------- -------- -------- --------
Total ........................................... $ 1,085 $ 1,178 $ 3,191 $ 3,639
======== ======== ======== ========
Profit (loss)
Containerboard and corrugated containers......... $ 110 $ (9) $ 186 $ 40
Industrial bag................................... 6 9 22 27
International ................................... 6 7 21 23
Other operations.................................
--------- --------- --------- --------
Total operations................................. $ 122 $ 7 $ 229 $ 90
Other, net....................................... (128) (256) (336) (636)
--------- --------- --------- ---------
Income (loss) from continuing operations
before income taxes, extraordinary item
and cumulative effect of accounting change..... $ (6) $ (249) $ (107) $ (546)
========= ========= ========= =========
</TABLE>
For the three months ended September 30, 1999, net sales for the Company were
$1,085 million, a decrease of 8% compared to the same period last year. As shown
in the chart below, the decrease in net sales compared to last year was due to
lower sales volume and the closure or sale of operating facilities. Higher
average sales prices for the Company's primary products in 1999 partially offset
the effect of the lower sales volume and closures. Operating profits of $122
million for the three months ended September 30, 1999 were $115 million higher
than the comparable period last year. Operating profits were favorably impacted
by higher average prices for the Company's primary products, reduced mill
downtime and other improvements in operating performance of the Company's paper
mills. Other, net includes corporate revenues and expenses and net interest
expense. Other, net cost for the three months ended September 30, 1999 was lower
in the 1999 period due primarily to lower interest cost, a reduction in
administrative costs, an improvement in equity earnings of affiliates, a $30
million write-down in 1998 of the Company's interest in Venepal, and a $19
million write-down in 1998 of the Company's remaining non-core wood products
assets. Increases in LIFO expense, depreciation and amortization charges
partially offset the improvements in Other, net cost.
For the nine months ended September 30, 1999, net sales for the Company were
$3,191 million, a decrease of 12% compared to the same period last year. As
shown in the chart below, the decrease in net sales compared to last year was
due to lower average sales prices for the Company's primary products, lower
sales volume and the closure or sale of operating facilities. Operating profits
of $229 million for the nine months ended September 30, 1999 were $139 million
higher than the comparable period last year. The effect of the lower sales
prices on operating profits were offset by a number of factors, including
reduced mill downtime and other improvements in operating performance of the
Company's paper mills. Other, net cost
9
<PAGE>
was lower in the 1999 period due to lower interest cost, a reduction in
administrative costs, a $39 million gain in 1999 on the sale of the shares of
Abitibi, an improvement in equity earnings of affiliates, a $54 million
write-down in 1998 of the Company's interest in SVCPI and the other
write-downs mentioned above. Increases in LIFO expense, depreciation
and amortization charges partially offset the improvements in Other, net cost.
<TABLE>
<CAPTION>
(In millions)
Container-
board &
Increase (Decrease) Corrugated Industrial Inter- Other
in Net Sales Due to: Containers Bag national Operations Total
- -------------------- ----------- ---------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Three Months Ended September 30,
1999 Compared to 1998
Sales price and product mix........ $ 71 $ (3) $ (5) $ (1) $ 62
Sales volume....................... (60) (2) 3 (59)
Closed or sold facilities.......... (86) (8) (2) (96)
----- ------- ------- ------ -----
Total increase (decrease)....... $ (75) $ (5) $ (10) $ (3) $ (93)
===== ======= ======= ====== =====
Nine Months Ended September 30,
1999 Compared to 1998
Sales price and product mix........ $ (11) $ 4 $ (10) $ (2) $ (19)
Sales volume....................... (186) 2 22 (162)
Closed or sold facilities.......... (246) (16) (5) (267)
----- ------- ------- ------ -----
Total increase (decrease)....... $ (443) $ 6 $ (4) $ (7) $ (448)
===== ======= ======= ====== =====
</TABLE>
Containerboard and Corrugated Containers Segment
Net sales of $824 million for the three months ended September 30, 1999
decreased 8% compared to last year and profits increased by $119 million to $110
million. The decline in net sales was due primarily to the permanent closure of
linerboard and pulp operations in December 1998, the sale of the Company's
newsprint operation located in Snowflake, AZ (the "Snowflake Mill") in October
1998, and the closure of two corrugated container plants in 1999. Net sales and
operating profits were favorably impacted by higher prices for containerboard
and corrugated containers. As a result of the mill closures, the Company's other
paper mills were able to perform at higher operating rates, thereby improving
their operating performance. Reclaimed fiber cost was higher in the third
quarter of 1999 compared to last year. Cost of goods sold as a percent of net
sales decreased to 81% for the three months ended September 30, 1999 compared to
91% for the same period last year due to higher average sales prices, the
shutdown of high cost mill operations, and reduced downtime.
The Company implemented price increases of $40 and $70 per ton for linerboard
and medium, respectively in July 1999, with a corresponding increase for
corrugated containers beginning August 1. On average linerboard prices in the
third quarter of 1999 were higher than last year by 15% and the average price of
corrugated containers was higher by 5% compared to last year. Containerboard
shipments for the third quarter of 1999 decreased 25% compared to last year due
to the mill closures. Shipments of corrugated containers were unchanged from
last year. The average prices of kraft paper and pulp in the third quarter of
1999 increased 3% and 53%, respectively, compared to last year. Production and
sales of kraft paper declined compared to last year due to the Company's efforts
to reconfigure its mill production. Sales volume for pulp declined 8% compared
to last year due primarily to mill closures. The Company's sales of wood
products also declined compared to last year.
Net sales of $2,376 million for the nine months ended September 30, 1999
decreased 16% compared to last year and profits increased by $146 million to
$186 million. The decline in net sales was due to lower average sales prices,
lower sales volume for containerboard and the permanent closures mentioned
above.
10
<PAGE>
Profits were higher due primarily to the improvement in performance of
the Company's paper mills and lower external sales of containerboard. Cost of
goods sold as a percent of net sales decreased to 83% for the nine months ended
September 30, 1999 compared to 90% for the same period last year due primarily
to the shutdown of high cost mill operations and reduced downtime. Linerboard
prices for the year to date period were higher than last year by 2% and the
average price of corrugated containers was lower by 1%. Containerboard shipments
for the nine months ended September 30, 1999, decreased 29% compared to last
year due to the mill closures and shipments of corrugated containers increased
approximately 1%. The average prices of kraft paper decreased 3% and pulp
increased 8% for the nine months ended September 30, 1999 compared to last year.
Sales volumes for kraft and pulp both declined 12% compared to last year. The
sales volume decrease for pulp was due primarily to the mill closures.
Industrial Bag Segment
Net sales for the three months ended September 30, 1999 were $126 million, a
decrease of 4%, compared to last year and profit decreased $3 million to $6
million. The decrease in net sales and profits was due primarily to lower
average sales prices and product mix.
Net sales for the nine months ended September 30, 1999 were $383 million, an
increase of 2%, compared to last year and profit decreased $5 million to $22
million. The increase in net sales was due to higher average sales prices and
product mix and higher sales volume. The decline in profits was due primarily to
higher administrative cost.
International Segment
Net sales for the three months ended September 30, 1999 were $135 million, a
decrease of 7%, compared to last year and profit decreased $1 million to $6
million. The decrease in net sales was due to lower average sales prices and the
sale of the Company's corrugated container operations located in Australia. The
decrease in profits was due primarily to the lower average sales prices.
Exclusive of the Australia operations, shipments of corrugated containers
increased 2% compared to the third quarter of last year.
Net sales for the nine months ended September 30, 1999 were $430 million, a
decrease of 1%, compared to last year and profit decreased $2 million to $21
million. The decrease in net sales was due to lower average sales prices and the
sale of the Australia operations. The decrease in profits was due primarily to
the lower average sales prices. Exclusive of the Australia operations, shipments
of corrugated containers increased 9% compared to last year.
Costs and Expenses
The decreases in costs and expenses compared to last year in the Company's
Consolidated Statements of Operations resulted from the shutdown of certain
containerboard mill capacity, the sale of the Snowflake Mill, and reduced
overhead costs. Such decreases were partially offset by higher LIFO expense and
higher depreciation and amortization charges encompassing push down accounting
adjustments related to the Merger. The decreases in the Company's overall cost
of goods sold as a percent of net sales for the three months ended September 30,
from 92% in 1998 to 85% in 1999, and for the nine months ended September 30 from
91% in 1998 to 88% in 1999, were due primarily to the shutdown of high cost mill
operations, reductions in mill downtime and, for the three months ended
September 30, 1999, higher average sales prices. Selling and administrative
expenses as a percent of net sales for the three months and nine months ended
September 30 decreased from 10% in 1998 to 9% in 1999 due primarily to the
reductions in administrative cost since the Merger.
Interest expense for the three months and nine months ended September 30, 1999
were lower than 1998 by $34 million and $86 million, respectively, due primarily
to lower average debt levels outstanding and lower average interest rates in
1999 compared to 1998.
11
<PAGE>
Equity income (loss) of affiliates for the three months and nine months ended
September 30, 1999 improved compared to last year due primarily to elimination
of losses related to certain investments that were divested during 1998
and 1999.
Other, net improved compared to last year for the three and nine month periods
ended September 30,1999 due primarily to a write-down of $30 million of the
Company's interest in Venepal and a $19 million write-down of the Company's
non-core wood assets taken in the third quarter of 1998 and, for the nine months
ended September 30,1998, a $54 million write-down of the Company's interest in
SVCPI. In addition, the Company recorded foreign exchange gains in the 1999
periods compared to foreign exchange losses in the 1998 periods. Other, net for
the nine months ended September 30, 1999 included a gain of $39 million on the
sale of shares of Abitibi.
The Company recorded an income tax benefit of $20 million on a pretax loss of
$107 million for the nine months ended September 30, 1999. The effective tax
rate for the period differed from the Federal statutory tax rate due to several
factors, the most significant of which were state income taxes and the effect of
permanent differences from applying purchase accounting.
STATISTICAL DATA
<TABLE>
<CAPTION>
(In thousands of tons, except as noted) Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Mill production:
Containerboard......................... 1,126 1,123 3,278 3,442
Kraft paper............................ 99 114 327 327
Market pulp............................ 142 163 434 635
Corrugated shipments (billion sq. ft.).... 16.0 16.0 47.0 46.9
Industrial bag shipments.................. 129 128 386 375
</TABLE>
RESTRUCTURING
As explained in the Stone 1998 10-K, in connection with the Merger, certain
operations of SSCC were restructured. The preliminary allocation of the cost to
acquire the Company included an adjustment to fair value of property, plant and
equipment associated with the permanent shutdown of certain facilities owned by
the Company in 1998, liabilities for the termination of employees and
liabilities for long-term commitments. Such exit liabilities amounted to $117
million, including (1) facility closure costs of $9 million, (2) severance
related costs of $14 million, (3) lease commitments of $38 million and (4) other
commitments of $56 million. The Company is continuing to evaluate all areas of
its business in connection with its Merger integration, including the
identification of corrugated container facilities that might be closed. In this
regard, the Company has discontinued operations at two of its corrugated
container facilities. As part of the Company's evaluation, exit liabilities as
of September 30, 1999 have been increased by $20 million for the plant closures
and other commitments. To date, through September 30, 1999, approximately $38
million (28%) of the exit liabilities were incurred, the majority of which
related to severance and other commitments. The remaining cash expenditures will
continue to be funded through operations as originally planned. The cost to
acquire the Company was preliminarily allocated to the assets acquired and
liabilities assumed according to their estimated fair values and is subject to
adjustment when additional information concerning asset and liability valuations
are finalized in the fourth quarter of 1999.
On October 20, 1999, the FCPC Companies and a committee representing the holders
of the FCPC Notes filed a reorganization plan (the "Plan") that is intended, to
resolve all matters relating to the bankruptcies of the FCPC Companies (see Part
II - Other Information, Item 1. Legal Proceedings). Although the amount of cash
payments is subject to final determination, the cash cost of the Plan to the
Company is anticipated to be in the range of $120 to $125 million and the
Company will receive $25 million in value of convertible
12
<PAGE>
preferred stock to be issued in satisfaction of its share of the liabilities.
The purchase price allocation will be adjusted in the fourth quarter of 1999 to
reflect this settlement.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the nine months ended September
30, 1999 of $66 million, proceeds from the sale of assets of $544 million and
available cash of $72 million were used to fund property additions of $53
million and net debt payments of $630 million.
On January 21, 1999, the Company sold 7.8 million shares of its interest in
Abitibi for approximately $80 million, and on April 23, 1999, the Company sold
its remaining interest in Abitibi for approximately $414 million and recorded a
$39 million gain during the second quarter. Proceeds were applied to reduce the
Company's debt. The proceeds were sufficient to prepay the entire outstanding
balance of the Tranche B term loan and, in accordance with the Credit Agreement
(as defined below), the revolving credit maturity date was extended from April
30, 2000 to December 31, 2000.
On October 15, 1999 the Company entered into a new accounts receivable
securitization program (the "Securitization Program"). The new $250 million
Securitization Program provides for certain trade accounts receivable
(the "Receivables") to be sold to Stone Receivables Corporation, a
bankruptcy remote special purpose subsidiary. The Receivables purchases were
financed through the issuance of $200 million of series 1999-1 certificates and
up to $50 million of the series 1999-2 variable-funding certificate. The 1999-1
certificates and the series 1999-2 variable funding certificate have a final
maturity of November 15, 2005.
The Company's bank credit agreement (the "Credit Agreement") contains various
covenants and restrictions including, among other things, (i) limitations on
dividends, redemptions and repurchases of capital stock, (ii) limitations on the
incurrence of indebtedness, liens, leases and sale-leaseback transactions, (iii)
limitations on capital expenditures, and (iv) maintenance of certain financial
covenants. The Credit Agreement also requires prepayments of the term loans if
the Company has excess cash flows, as defined, or receives proceeds from certain
asset sales, insurance, issuance of equity securities or incurrence of certain
indebtedness. Any prepayments are allocated against the term loan amortization
in inverse order of maturity. The obligations under the Credit Agreement are
secured by a security interest in substantially all of the assets of the
Company. Such restrictions, together with the highly leveraged position of the
Company, could restrict corporate activities, including the Company's ability to
respond to market conditions, to provide for unanticipated capital expenditures
or to take advantage of business opportunities.
On January 22, 1999, the Company obtained a waiver from its bank group for
non-compliance with certain financial covenant requirements under the Credit
Agreement as of December 31, 1998. Subsequently, on March 23, 1999, the Company
and its bank group amended the Credit Agreement to further ease certain
quarterly financial covenant requirements for 1999.
As mentioned above, the declaration of dividends by the Board of Directors is
subject to, among other things, certain restrictive provisions contained in the
Credit Agreement and certain note indentures. At September 30, 1999, the Company
had accumulated dividend arrearages of approximately $20 million related to a
series of its preferred stock.
Based upon covenants in the Stone Indentures, the Company is required to
maintain certain levels of equity. If the minimum equity levels are not
maintained for two consecutive quarters, the applicable interest rates on the
Indentures are increased by 50 basis points per semiannual interest period (up
to a maximum of 200 basis points) until the minimum equity level is attained.
the Company's equity level was below the minimum equity level during most of
1998. As a result, the interest rates increased. The interest rates on the
Indentures returned to the original interest rates on April 1, 1999 due to the
Company's equity levels exceeding the minimum on December 31, 1998.
13
<PAGE>
As of September 30, 1999, the Company had $453 million of unused borrowing
capacity under its Credit Agreement and $29 million of unused borrowing capacity
under the previous Securitization Program. The Company believes that cash
provided by operating activities, proceeds from asset divestitures, refinancing
activities, and existing financing resources will be sufficient for the next
several years to meet its obligations, including debt service, restructuring
payments, settlement of the FCPC reorganization plan, expenditures under the
Cluster Rule (as discussed in the Stone 1998 10-K) and capital expenditures.
YEAR 2000
The Year 2000 problem concerns the inability of computer systems and devices to
properly recognize and process date-sensitive information when the year changes
to 2000. The Company depends upon its information technology ("IT") and non-IT
systems (used to run manufacturing equipment that contain embedded hardware or
software that must handle dates) to conduct and manage the Company's business.
The Company believes that, by replacing, repairing or upgrading the systems, the
Year 2000 issue can be resolved without material operational difficulties. The
Company expects to spend approximately $12 million through 1999 to correct the
Year 2000 problem, of which approximately $10 million has been incurred through
September 30, 1999. A large portion of these costs relate to enhancements that
will enable the Company to reduce or avoid costs and operate many of its
production facilities more efficiently. Some of these projects have been
accelerated in order to replace existing systems that cannot be brought into
compliance by the year 2000. The Company has utilized both internal and external
resources to evaluate the potential impact of the Year 2000 problem. The Company
is funding its Year 2000 effort with cash from operations and borrowings under
the Credit Agreement.
The Company's Year 2000 Program Management Office is responsible for guiding and
coordinating operating units in developing and executing their Year 2000 plans,
enabling the Company to share knowledge and work across operating units,
developing standard planning and formats for internal and external reporting,
consistent customer and vendor communications and where appropriate, the
development of contingency plans. The Company's Year 2000 program consists of
the following seven phases:
Phase 1: Planning/Awareness: The planning and awareness phase includes the
identification of critical business processes and components.
Phase 2: Inventory: During the inventory phase, Company personnel identified
systems that could potentially have a Year 2000 problem and categorized the
system as compliant, non-compliant, obsolete or unknown.
Phase 3: Triage: In the triage phase, every system is assigned a business risk
as high, medium, or low.
Phase 4: Detailed Assessment: The detailed assessment provides for a planned
schedule of remediation and estimated cost.
Phase 5: Remediation: Remediation involves what corrective action to take if
there is a Year 2000 problem, such as replacing, repairing or upgrading the
system, and concludes with the execution of system test.
Phase 6: Fallout: In the Fallout phase, the inventory will be kept up to date
and no new Year 2000 problems will be introduced.
Phase 7: Contingency Planning: The Company is developing contingency plans for
the most reasonable worst case scenarios.
The Company has completed the planning, inventory, triage, and detailed
assessment of its IT systems and is taking corrective action and testing the
new, upgraded or repaired systems. The Company identified two
14
<PAGE>
high-risk IT systems, of which one has been remediated and the remaining one is
scheduled for completion in the fourth quarter of 1999.
The Company's operating facilities rely on control systems, which control and
monitor production, power, emissions and safety. The inventory, triage and
detailed assessment phases for all operating facilities were completed by the
end of the second quarter of 1999. The Company has substantially completed all
phases of its Year 2000 program for non-IT systems. At the end of the third
quarter of 1999, 96% of the total inventoried systems were compliant.
The Year 2000 Program Management Office has compiled a list of mission critical
vendors. A mission critical vendor is a provider of goods or services without
which a facility could not function. Each of the mission critical vendors was
surveyed to insure that they are Year 2000 compliant or have a plan in place.
The status of mission critical vendors is being continually monitored and
updated.
The Company currently believes that it will be able to replace, repair or
upgrade all of its remaining non-compliant IT and non-IT systems affected by the
Year 2000 problem on a timely basis. In the event the Company does not complete
its plan to bring these systems into compliance before the year 2000, there
could be severe disruption in the operation of its process control and other
manufacturing systems, financial systems and administrative systems. Production
problems and delayed product deliveries could result in a loss of customers. The
production impact of a Year 2000 related failure varies significantly among the
facilities and any such failure could cause manufacturing delays, possible
environmental contamination or safety hazards. The most reasonably likely worst
case scenario is the occurrence of a Year 2000 related failure at one or more of
the Company's paper mills, which could include multiple paper machines. The
Company has the capability to produce and ship products from multiple geographic
locations should disruptions occur. Delays in invoicing customer shipments could
cause a slowdown in cash receipts, which could affect the Company's ability to
meet its financial obligations. To the extent customers experience Year 2000
problems that are not remediated on a timely basis, the Company may experience
material fluctuations in the demand for its products. The amount of any
potential liability and/or lost revenue cannot be reasonably estimated at this
time; however, such amounts could be material.
While the Company currently expects no material adverse consequences on its
financial condition or results of operations due to Year 2000 issues, the
Company's beliefs and expectations are based on certain assumptions that
ultimately may prove to be inaccurate. Each of the Company's operating
facilities is developing a specific contingency plan for their most reasonably
likely worst case scenarios. These plans were substantially completed as of the
end of the third quarter of 1999. The Contingency plans provide for appropriate
actions to mitigate the effects of the Company's or significant vendors' failure
to remediate the Year 2000 problem in a timely manner including reacting to
utility outages, providing for alternate transportation, the continuation of
normal payroll cycles, arrangements for alternate vendors and business and
process control system disruption.
There is a risk that the Company's plans for achieving Year 2000 compliance may
not be completed on time. Critical items are on schedule and, for non-critical
items, the Company's plans would provide advance notice, and steps would be
taken to prevent potential injuries to employees and others, and to prevent
potential environmental contamination. Customers and suppliers would also
receive advance notice allowing them to implement alternate plans.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For a discussion of certain market risks related to the Company, See Part II,
Item 7A, "Quantitative and Qualitative Disclosures About Market Risk", in the
Stone 1998 10-K.
15
<PAGE>
Foreign Currency Risk
During the nine months ended September 30, 1999 the exchange rates for the
Canadian dollar and the German Mark strengthened/(weakened) against the U.S.
dollar as follows:
<TABLE>
<S> <C>
Rate at September 30, 1999 vs. December 31, 1998
Canadian dollar 4.0 %
German Mark (9.7)%
Average Rate for the nine months ended September 30, 1999 vs. 1998
Canadian dollar (1.8)%
German Mark (1.7)%
</TABLE>
The Company has experienced foreign currency transaction gains and losses on the
translation of U.S. dollar denominated obligations of certain of its Canadian
subsidiaries, non-consolidated affiliates and a German Mark obligation. The
Company recognized foreign currency transaction gains of $5 million for the nine
months ended September 30, 1999 compared to a loss of $20 million for the same
period last year.
Interest Rate Risk
The Company's earnings and cash flows are significantly affected by the amount
of interest on its indebtedness. No significant change has occurred in the
Company's exposure to such risk for the nine months ended September 30, 1999.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In April 1999, the FCPC Companies filed a Chapter 11 bankruptcy petition in
United states Bankruptcy Court in Wilmington, Delaware. The FCPC Companies are
50% owned by each of Stone and Four M. All of the obligations of the FCPC
Companies are non-recourse to Stone, and the bankruptcy filing has no effect on
any of the indebtedness of Stone or any other subsidiaries of SSCC. On May 10,
1999, the Indenture Trustee with respect to FCPC Notes commenced an adversary
proceeding in the FCPC bankruptcy case against Stone and certain other parties,
including two former officers of Stone, which has been stayed indefinitely by
the Court. The Complaint contains allegations that Stone violated the provisions
of an output purchase agreement and a subordinated credit agreement with FCPC,
breached certain fiduciary duties owed to the holders of the FCPC Notes, and
negligently discharged certain additional duties owed to the holders of the FCPC
Notes. On October 20, 1999, the FCPC Companies and a committee representing the
holders of the FCPC Notes filed the Plan that is intended to resolve all matters
relating to the bankruptcies of the FCPC Companies. The Plan, which is supported
by Stone and Four M, provides for the settlement of all outstanding claims in
the bankruptcies in exchange for cash payments. The Plan also provides for the
transfer of all of the assets of the FCPC Companies, including the FCPC Mill, to
Stone, as well as the release of the pending adverse proceeding and all other
claims relating to the bankruptcies of the FCPC Companies against Stone, Four M
and their affiliates, officers and directors. Although the amount of the cash
payments are subject to final determination, the cash cost of the Plan to Stone
is anticipated to be in the range of $120 to $125 million, and Stone will
receive $25 million in value of convertible preferred stock to be issued by Four
M in satisfaction of its share of the liabilities. The purchase price allocation
will be adjusted in the fourth quarter of 1999 to reflect this settlement.
Confirmation of the Plan is anticipated to occur in early 2000.
In September 1999, the Delaware Court of Chancery approved the terms of the
settlement of the consolidated class actions brought on behalf of all former
holders of Stone common stock in connection with the Merger, which has now
become final.
16
<PAGE>
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
As of September 30, 1999, the Company had accumulated dividend arrearages of
approximately $20 million related to a series of its preferred stock.
Declaration of dividends in respect of such stock is currently prohibited by
the terms of the Credit Agreement and certain note indentures.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) The following exhibits are included in this Form 10-Q.
10.1(a) Pooling and Servicing Agreement, dated October 1, 1999 by and among
Stone Receivables Corporation, as Transferor, Stone, as Securer,
and The Chase Manhattan Bank, as Trustee.
10.1(b) Series 1999-1 Supplement, dated as of October 15, 1999, among Stone
Receivables Corporation, as Transferor, Stone as Servicer, and The
Chase Manhattan Bank, as Trustee, under the Pooling and Servicing
Agreement.
10.1(c) Series 1999-2 Supplement, dated as of October 15, 1999, among Stone
Receivables Corporation, as Transferor, Stone as Servicer, and The
Chase Manhattan Bank, as Trustee, under the Pooling and Servicing
Agreement.
10.1(d) Receivables Purchase Agreement, dated October 15, 1999, between
Stone, the Seller and Stone Receivables Corporation, the Purchaser.
10.2 Amendment of the 1995 Long-Term Incentive Plan of Stone
10.3 Amendment of the Stone 1993 Stock Option Plan.
27.1 Financial Data Schedule
b) Reports on Form 8-K
None
17
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STONE CONTAINER CORPORATION
----------------------------
(Registrant)
Date: November 12, 1999 /s/ Paul K. Kaufmann
----------------- ------------------------------
Paul K. Kaufmann
Vice President and
Corporate Controller
(Principal Accounting Officer)
18
<PAGE>
Exhibit 10.1(a)
- --------------------------------------------------------------------------------
STONE RECEIVABLES CORPORATION
Transferor,
STONE CONTAINER CORPORATION
Servicer,
and
THE CHASE MANHATTAN BANK,
Trustee
on behalf of the Certificateholders
----------------------------
STONE RECEIVABLES CORPORATION MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 1999
-----------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C> <C> <C>
ARTICLE I
DEFINITIONS.......................................................................................................1
Section 1.1 Definitions.................................................................................1
Section 1.2 Other Definitional Provisions...............................................................1
Section 1.3 Calculations and Payments...................................................................2
ARTICLE II
CONVEYANCE OF RECEIVABLES; ISSUANCE OF CERTIFICATES...............................................................2
Section 2.1 Conveyance of Receivables...................................................................2
Section 2.2 Declaration of Trust; Acceptance by Trustee.................................................4
Section 2.3 Representations and Warranties of the Transferor Relating to the Transferor.................5
Section 2.4 Representations and Warranties of the Transferor Relating to the Agreement, any
Supplement and the Receivables..............................................................8
Section 2.5 [Reserved].................................................................................11
Section 2.6 Covenants of the Transferor................................................................11
Section 2.7 Authentication of Certificates.............................................................16
Section 2.8 Tax Treatment..............................................................................16
Section 2.9 Cancellation of the Certificates of any Series.............................................16
Section 2.10 Separate Corporate Existence...............................................................16
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES......................................................................19
Section 3.1 Acceptance of Appointment and Other Matters Relating to the Servicer.......................19
Section 3.2 Servicing Compensation.....................................................................21
Section 3.3 Representations, Warranties and Covenants of the Servicer..................................21
Section 3.4 Reports and Records for the Trustee; Bank Account Statements...............................24
Section 3.5 [Reserved].................................................................................25
Section 3.6 Annual Independent Public Accountants' Servicing Report....................................25
Section 3.7 [Reserved].................................................................................26
Section 3.8 Notices to the Transferor, Trustee and Rating Agencies.....................................26
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION AND APPLICATION OF COLLECTIONS.......................................26
Section 4.1 Rights of Certificateholders...............................................................27
Section 4.2 Establishment of Collection Account and Excess Funding Account.............................27
Section 4.3 Collections and Allocations................................................................30
Section 4.4 Determinations of Interest With Respect to Investor Certificates...........................31
Section 4.5 Payments of Principal to Investor Certificateholders.......................................31
Section 4.6 [Reserved].................................................................................31
Section 4.7 Misdirected Payments.......................................................................31
ARTICLE V
DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS..................................................................32
Section 5.1 Distributions..............................................................................32
Section 5.2 Annual Tax Statement.......................................................................32
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C> <C>
ARTICLE VI
THE CERTIFICATES.................................................................................................32
Section 6.1 The Certificates...........................................................................32
Section 6.2 Authentication of Certificates.............................................................33
Section 6.3 Registration of Transfer and Exchange of Certificates......................................33
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates..........................................35
Section 6.5 Persons Deemed Owners......................................................................35
Section 6.6 Appointment of Paying Agent................................................................36
Section 6.7 Authenticating Agent.......................................................................36
Section 6.8 Delivery of Additional Series of Investor Certificates.....................................38
Section 6.9 [Reserved].................................................................................39
Section 6.10 Book-Entry Certificates....................................................................39
Section 6.11 Notices to Clearing Agency.................................................................40
Section 6.12 Definitive Certificates....................................................................40
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR.........................................................................41
Section 7.1 Liability of the Transferor................................................................41
Section 7.2 Merger or Consolidation of, or Assumption of the Obligations of, the Transferor............41
Section 7.3 Limitation on Liability of the Transferor..................................................42
Section 7.4 Liabilities................................................................................42
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER...........................................................................43
Section 8.1 Liability of the Servicer..................................................................43
Section 8.2 Merger or Consolidation of, or Assumption of the Obligations of, Stone
Container as Servicer......................................................................43
Section 8.3 Limitation on Liability of the Servicer and Others.........................................44
Section 8.4 Servicer Indemnification of the Trust and the Trustee......................................44
Section 8.5 The Servicer Not to Resign.................................................................44
Section 8.6 Access to Certain Documentation and Information Regarding the Receivables..................45
Section 8.7 Delegation of Duties.......................................................................45
Section 8.8 Examination of Records.....................................................................45
ARTICLE IX
EVENTS OF TERMINATION............................................................................................45
Section 9.1 Events of Termination with Respect to any Series...........................................46
Section 9.2 [Reserved].................................................................................47
Section 9.3 Additional Rights Upon the Occurrence of Certain Events....................................47
ARTICLE X
SERVICER DEFAULTS 49
Section 10.1 Servicer Defaults..........................................................................49
Section 10.2 Trustee to Act; Appointment of Successor...................................................51
Section 10.3 Notification to Certificateholders.........................................................52
Section 10.4 Waiver of Past Defaults....................................................................52
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C> <C>
ARTICLE XI
THE TRUSTEE......................................................................................................53
Section 11.1 Duties of Trustee..........................................................................53
Section 11.2 Certain Matters Affecting the Trustee......................................................55
Section 11.3 Trustee Not Liable for Recitals in Certificates............................................56
Section 11.4 Trustee May Own Certificates...............................................................57
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses............................................57
Section 11.6 Eligibility Requirements for Trustee.......................................................57
Section 11.7 Resignation or Removal of Trustee..........................................................58
Section 11.8 Successor Trustee..........................................................................58
Section 11.9 Merger or Consolidation of Trustee.........................................................59
Section 11.10 Appointment of Co-Trustee or Separate Trustee..............................................59
Section 11.11 Tax Returns................................................................................60
Section 11.12 Trustee May Enforce Claims Without Possession of Certificates..............................61
Section 11.13 Suits for Enforcement......................................................................61
Section 11.14 Rights of Certificateholders to Direct Trustee.............................................61
Section 11.15 Representations and Warranties of Trustee..................................................61
Section 11.16 Maintenance of Office or Agency............................................................62
Section 11.17 Notices....................................................................................62
Section 11.18 Compliance Certificates and Opinions.......................................................62
ARTICLE XII
TERMINATION......................................................................................................64
Section 12.1 Termination of Trust.......................................................................64
Section 12.2 Optional Purchase and Series Termination Date of Investor Certificates of any Series.......64
Section 12.3 Final Payment..............................................................................65
Section 12.4 Transferor's Termination Rights............................................................66
ARTICLE XIII
MISCELLANEOUS PROVISIONS.........................................................................................67
Section 13.1 Amendment..................................................................................67
Section 13.2 Protection of Right, Title and Interest....................................................68
Section 13.3 Limitation on Rights of Certificateholders.................................................69
Section 13.4 GOVERNING LAW..............................................................................69
Section 13.5 Notices....................................................................................70
Section 13.6 Severability of Provisions.................................................................70
Section 13.7 Assignment.................................................................................70
Section 13.8 Certificates Nonassessable and Full Paid...................................................70
Section 13.9 Further Assurances.........................................................................70
Section 13.10 No Waiver; Cumulative Remedies.............................................................71
Section 13.11 Counterparts...............................................................................71
Section 13.12 Third-Party Beneficiaries..................................................................71
Section 13.13 Actions by Certificateholders..............................................................71
Section 13.14 Merger and Integration.....................................................................72
Section 13.15 Headings...................................................................................72
Section 13.16 No Bankruptcy. Petition Against the Transferor.............................................72
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
Section 13.17 Rule 144A Information......................................................................72
</TABLE>
<TABLE>
<S> <C>
Exhibit A: Form of Transferor Certificate (Section 6.1)
Exhibit B: Form of Daily Report (Section 3.4(b)(i))
Exhibit C: Credit and Collection Policies of Stone Container (Section 3.3(k))
Exhibit D: Form of Settlement Statement
(Section 3.4(c))
Exhibit E: Form of Lock-Box Agreement (Section 2.6(i))
Exhibit F: List of Lock-Box Banks and Lock-Box Accounts (Section 2.6(i))
</TABLE>
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule 1. Identification of the Collection Account and
Excess Funding Account (Section 4.2(d))
Schedule 2. Location of Records Related to the Receivables; Location of Chief
Executive Office and Principal Place of Business
</TABLE>
<TABLE>
<CAPTION>
ANNEX
<S> <C>
Annex X Definitions
</TABLE>
iv
<PAGE>
POOLING AND SERVICING AGREEMENT, dated as of October 1, 1999, by
and among STONE RECEIVABLES CORPORATION, a corporation organized under the laws
of the State of Delaware, as Transferor, STONE CONTAINER CORPORATION, a Delaware
corporation, as Servicer, and THE CHASE MANHATTAN BANK, a New York banking
corporation, as Trustee.
This Pooling and Servicing Agreement shall be applicable to the
formation of the Trust and the issuance of the Transferor Certificate and, upon
the execution of any Supplement, shall apply also to the issuance of any Series
of Certificates issued thereby.
In consideration of the mutual agreements herein contained, each
party agrees as follows for the benefit of the other parties, for the benefit of
the Certificateholders and for the benefit of any Enhancement Provider with
respect to any Series to the extent provided herein:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Definitions attached hereto as Annex X, which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
"Agreement" shall mean this Pooling and Servicing Agreement as it
may from time to time be amended, supplemented or otherwise modified in
accordance with the terms hereof, including by any Supplement.
Section 1.2 Other Definitional Provisions.
(a) All terms defined in any Supplement or this Agreement
shall have the defined meanings as set forth therein or herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.
(b) The agreements, representations and warranties of
Stone Container in this Agreement in its capacity as Servicer shall be deemed to
be the agreements, representations and warranties of Stone Container solely in
such capacity.
The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, as the case may be; and
Section, Subsection, Schedule and Exhibit references contained in this Agreement
are references to Sections, Subsections, Schedules and Exhibits in or to this
Agreement unless otherwise specified.
(c) As used herein and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in Annex X, and accounting terms partly defined in Annex X to the extent
not defined, shall have the respective meanings given to them under GAAP. To the
extent that the definitions of accounting terms herein are
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inconsistent with the meanings of such terms under GAAP, the definitions
contained herein shall control.
(d) The definitions contained in Annex X are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(e) Where a definition contained in Annex X specifies that
such term shall have the meaning set forth in the related Supplement, the
definition of such term set forth in the related Supplement may be preceded by a
prefix indicating the specific Series or Class to which such definition shall
apply.
(f) Where reference is made in this Agreement or any
related Supplement to the principal amount of Receivables, such reference shall,
unless explicitly stated otherwise, be deemed a reference to the Unpaid Balance
(as such term is defined in Annex X) of such Receivables.
(g) Any reference herein or in any other Transaction
Document to a provision of the Bankruptcy Code, the Internal Revenue Code or
ERISA shall be deemed a reference to any successor provision thereto.
(h) Any reference herein to a Schedule, Exhibit or
Appendix to this Agreement shall be deemed to be a reference to such Schedule,
Exhibit or Appendix as it may be amended, modified or supplemented from time to
time.
(i) Any reference herein to any representation, warranty
or covenant "deemed" to have been made is intended to encompass only
representations, warranties or covenants that are expressly stated to be
repeated on or as of dates following the execution and delivery of this
Agreement, and no such reference shall be interpreted as a reference to any
implicit, inferred, tacit or otherwise unexpressed representation, warranty or
covenant.
(j) The words "include", "includes" or "including" shall
be interpreted as if followed, in each case, by the phrase "without limitation".
Section 1.3 Calculations and Payments. Unless otherwise specified
herein, expressions of a time of day refer to such time in St. Louis, Missouri.
All amounts payable hereunder shall be paid in immediately available funds in
Dollars, unless otherwise specified.
[END OF ARTICLE I]
ARTICLE II
CONVEYANCE OF RECEIVABLES; ISSUANCE OF CERTIFICATES
Section 2.1 Conveyance of Receivables.
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<PAGE>
(a) By execution of this Agreement, the Transferor does
hereby transfer, grant, assign, set-over and otherwise convey, to the Trustee on
behalf of the Trust, from time to time, without recourse (except as specifically
provided herein), and without any formal or other instrument of assignment, all
its right, title and interest, whether now or hereafter existing or acquired,
in, to and under (i) all Receivables in each case sold or otherwise transferred
to the Transferor pursuant to the Receivables Purchase Agreement prior to the
Final Trust Termination Date and all accounts and general intangibles (each, as
defined in the UCC), and all rights (but not the obligations thereunder),
relating thereto, (ii) the Receivables Purchase Agreement (but not the
obligations thereunder) (including any rights relating thereto), (iii) all
monies due or to become due with respect to any of the foregoing (including all
Collections thereon), (iv) all proceeds and investments thereof of any of the
foregoing, (v) all remittances, deposits and payments made into, and on deposit
in, any of the trust accounts subject to Section 4.9 of this Agreement and all
funds collected from any issued Enhancement. Such property, together with all
monies on deposit in the Lock-Box Accounts, the Collection Account, the Excess
Funding Account, any Principal Funding Account or any other account established
pursuant to any Supplement (and including any investments thereof), (but
excluding investment earnings in excess of those amounts necessary to make all
payments or deposits required under this Agreement or any Supplement with
respect to each such account other than the Excess Funding Account), shall
constitute the assets of the Trust (the "Trust Assets").
(b) The foregoing grant, transfer, assignment and
conveyance does not constitute and is not intended to result in the creation, or
an assumption by the Trust, the Trustee, any Investor Certificateholder or
Enhancement Provider, of any obligation of Stone Container, any other Seller,
the Transferor or any other Person in connection with the Receivables or under
any agreement or instrument relating thereto, including, without limitation, any
obligation to any Obligors.
(c) In connection with such grant and transfer, the
Transferor agrees to record and file on or prior to the Initial Closing Date, at
its own expense, all financing statements (and the Transferor agrees to direct
the Trustee to file continuation statements with respect to such financing
statements when applicable after the Initial Closing Date) required to be filed
with respect to the Receivables now existing and hereafter created and the other
Trust Assets meeting the requirements of applicable state law in such manner and
in such jurisdictions as are necessary under the applicable UCC to perfect the
first priority interest of the Trustee in the Receivables and the other Trust
Assets, and to deliver a file-stamped copy of such financing statements or other
evidence of such filings to the Trustee as soon as is reasonably practicable
after the Initial Closing Date (excluding such continuation statements, which
shall be delivered promptly after filing). Upon direction and at the expense of
the Transferor or the Servicer, the Trustee shall file any further continuation
or financing statements as required under the applicable UCC to maintain the
perfection of the interest of the Trustee in the Trust Assets transferred and
assigned hereunder. Except as otherwise provided herein or in any Supplement, or
if so directed by Investor Certificateholders aggregating 66 2/3% or more of the
Aggregate Invested Amount, the Trustee shall not be under any obligation to file
any such financing statements or make any other filings under the UCC in
connection with such grant, transfer and assignment.
3
<PAGE>
(d) In connection with the assignments and conveyances of
Receivables hereunder, the Transferor further agrees, at its own expense, on or
prior to each Closing Date, to indicate, and to cause each Originator to
indicate, in its books and records, computer files, tapes or disks (in the case
of Stone Container, as required by the Receivables Purchase Agreement), that the
Receivables have been conveyed, and will continue to be conveyed, to the Trust
pursuant to this Agreement for the benefit of the Certificateholders.
(e) To the extent that the conveyance of Receivables and
other Trust Assets hereunder is characterized by a court or other Governmental
Authority of competent jurisdiction as a financing, it is intended by the
parties hereto that the assignment, conveyance and transfer by the Transferor of
its right, title and interest in the Receivables and other Trust Assets to the
Trustee hereunder constitute the grant of a security interest under Section
1-201 of the UCC. The Transferor hereby grants to the Trustee on the terms and
conditions of this Agreement a first priority security interest in and against
all of the Transferor's right, title and interest in the Receivables and the
other Trust Assets, whether now or hereafter existing or acquired, for the
purpose of (i) securing the rights of the Trustee for the benefit of the
Certificateholders under this Agreement and (ii) securing the payment and
performance of the Transferor's obligations hereunder and the right, ability and
obligation of the Trust to make all payments required to be made in accordance
with the terms and conditions of this Agreement (the "Secured Obligations"). To
the extent that the conveyance of Receivables hereunder is characterized by a
court or other Governmental Authority of competent jurisdiction as a financing,
the parties agree that this Agreement constitutes a "security agreement" under
applicable laws.
Section 2.2 Declaration of Trust; Acceptance by Trustee.
(a) There is hereby created the Stone Receivables
Corporation Master Trust. The Trustee hereby declares that it holds and will
hold as trustee in trust under this Agreement all of its right, title and
interest in, to and under, and hereby acknowledges its acceptance on behalf of
the Certificateholders of all right, title and interest in, to and under, the
property, now or hereafter existing or acquired, conveyed to the Trustee
pursuant to Section 2.1; to have and hold such property unto the Trustee and its
successors in trust, under this Agreement; in trust, nevertheless, under and
subject to the terms and conditions hereof for the benefit of all
Certificateholders.
(b) The Trustee shall have no power to create, assume or
incur indebtedness or other liabilities in the name of the Trust or to transfer
or place Liens on Trust Assets, other than as contemplated in this Agreement.
(c) None of the Trustee, the Trust or any Investor
Certificateholder shall have any obligation or liability to any Obligor or other
customer or client of any originator (including, without limitation, any
obligation to perform any of the obligations of any originator to any Obligor
under any such Receivables, related Contracts or any other related purchase
orders, invoices or other agreements or otherwise). No such obligation or
liability is intended to be assumed by the Trustee, the Trust or any Investor
Certificateholder hereunder, and any such assumption is hereby expressly
disclaimed.
4
<PAGE>
Section 2.3 Representations and Warranties of the Transferor
Relating to the Transferor. The Transferor hereby represents and warrants, as of
the Initial Closing Date and, with respect to any Series, as of the date of any
Supplement and the related Closing Date, unless otherwise stated in such
Supplement, that:
(a) Organization and Good Standing. The Transferor is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has the full corporate power, authority and legal
right to execute, deliver and perform its obligations under each of the
Transaction Documents to which it is a party, and to execute and deliver to the
Trustee pursuant thereto the Certificates of any outstanding Series, and, in all
material respects, to own its property and conduct its businesses as such
properties are presently owned and such businesses are presently conducted.
(b) Due Qualification. The Transferor is duly qualified to
do business and is in good standing as a foreign corporation (or is exempt from
such requirements), and has obtained all necessary licenses and approvals with
respect to the Transferor, in each jurisdiction in which the conduct of its
business requires such qualification, except where the failure to so qualify, to
be in good standing or to obtain such licenses and approvals would not render
any Contract or Receivable unenforceable by the Transferor or the Trustee and
would not have a material adverse effect on the Investor Certificateholders.
(c) Due Authorization. The execution, delivery and
performance by the Transferor of the Transaction Documents to which it is a
party, and the execution and delivery to the Trustee of the Certificates of any
Series by the Transferor and the consummation by the Transferor of the
transactions provided for therein, have been duly authorized by all necessary
corporate action on the part of the Transferor.
(d) Binding Obligation. Each of the Transaction Documents
to which the Transferor is a party constitutes the legal, valid and binding
obligation of the Transferor, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereinafter
in effect, affecting the enforcement of creditors, rights in general and except
as such enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(e) No Conflicts. The execution, delivery and performance
of the Transaction Documents to which it is a party, the performance of the
transactions contemplated by such agreements and the fulfillment of the terms
thereof by the Transferor, do not (a) contravene the Transferor's certificate of
incorporation or By-Laws, (b) violate any provision of, or require any filing
(except for certain filings required by the UCC), registration, consent or
approval under, any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect, having applicability to the
Transferor, except for such filings, registrations, consents or approvals as
have already been obtained and are in full force and effect and except for such
violations which would not materially and adversely affect the performance by
the Transferor of such transactions and the fulfillment by the Transferor of
such terms, and except that the Transferor makes no representation or warranty
regarding state securities or "blue sky" laws, (c) result in a breach of or
constitute a default or require any consent under any
5
<PAGE>
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Transferor is a party or by which it or its properties
are bound or affected except those to which a consent or waiver has been
obtained and is in full force and effect, (d) result in, or require, the
creation or imposition of any lien upon or with respect to any of the properties
now owned or hereafter acquired by the Transferor other than as specifically
contemplated by this Agreement or (e) render any Contract or Receivable
unenforceable.
(f) Taxes. The Transferor has filed all tax returns
(Federal, state and local) that are required to be filed and has paid or made
adequate provision for the payment of all taxes, assessments and other
governmental charges due from the Transferor or is contesting any such tax,
assessment or other charge in good faith through appropriate proceedings. The
Transferor knows of no basis for any material additional tax assessment for any
fiscal year for which adequate reserves have not been established.
(g) No Proceedings. There are no proceedings,
investigations, injunctions, writs, restraining orders or other orders of any
nature pending or, to the best knowledge of the Transferor, threatened against
the Transferor, before any court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality (a) asserting the invalidity of
any Transaction Document, (b) seeking to prevent the issuance of any
Certificates or the consummation of any of the transactions contemplated by the
Transaction Documents, (c) seeking any determination or ruling that, in the
reasonable judgment of the Transferor, would materially and adversely affect the
performance by the Transferor of its obligations under such agreements, (d)
seeking any determination or ruling that would materially and adversely affect
the validity or enforceability of such agreements or Certificates, or (e)
seeking to assert any tax liability against the Trust under the United States
Federal income tax system.
(h) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person required to be obtained by the
Transferor in connection with the execution and delivery by the Transferor of
the Transaction Documents to which it is a party, the performance by the
Transferor of the transactions contemplated hereunder and thereunder and the
fulfillment by the Transferor of the terms hereof and thereof, have been
obtained and are in full force and effect except where the failure to obtain
such approvals, authorizations, consents, orders or other actions or the failure
of the same to be in full force and effect would not materially and adversely
affect the performance by the Transferor of such transactions and the
fulfillment by the Transferor of such terms, and except that the Transferor
makes no representation or warranty regarding state securities or "blue sky"
laws.
(i) Place of Business. The offices at which the Transferor
keeps its records concerning the Receivables either (x) are located at the
addresses set forth for the Sellers on Schedule 1 of the Receivables Purchase
Agreement or (y) the Transferor has notified the Trustee of the location thereof
in accordance with the provisions of Section 2.6 (d) of this Agreement. The
chief executive office and principal place of business of the Transferor is
located at the address set forth on Schedule 2 and is the place where the
Transferor is "located" for the purposes of Section 9-103(3) (d) of the UCC. As
of the Initial Closing Date, the state and county where the chief executive
office of the Transferor is "located" for the purposes of Section 9-103 (3) (d)
of the UCC has not changed in the past four months, other than one move from
Chicago, Illinois to St. Louis, Missouri in the past four months.
6
<PAGE>
(j) Lock-Box Banks and Accounts. The Lock-Box Banks are
the only institutions holding any Lock-Box Accounts for receipt of payments from
Obligors in respect of the Receivables and all Obligors, and only such Obligors,
have been instructed to make payments to such Lock-Box Accounts and such
instructions are in full force and effect and all of such Lock-Box Accounts are
listed on Exhibit F hereto (as the same may be amended pursuant to Section
2.6(i) hereof).
(k) Event of Termination. No Event of Termination and no
condition that with the giving of notice and/or the passage of time would
constitute, an Event of Termination (a "Prospective Event of Termination") has
occurred and is continuing.
(l) Not an Investment Company. The Transferor is not an
"investment company" or a company controlled by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or is exempt from
all provisions of such Act.
(m) ERISA. No Plan maintained by the Transferor or any of
its ERISA Affiliates and subject to ERISA has any "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived, that reasonably could be expected to result,
directly or indirectly, in any lien being imposed on the property of the
Transferor or the payment by the Transferor of any amount to avoid such lien.
During the preceding five years neither the Transferor nor any ERISA Affiliate
has failed to make any contribution required to be made by it to any Plan or any
Multiemployer Plan where such failure could reasonably be expected to result,
directly or indirectly, in any Lien being imposed on the property of the
Transferor or the payment by the Transferor of any amount to avoid such lien. No
event requiring notice to the PBGC under Section 302(f) of ERISA has occurred
and is continuing or could reasonably be expected to occur with respect to any
such Plan, in any case, that could reasonably be expected to result, directly or
indirectly, in any lien being imposed on the property of the Transferor or the
payment by the Transferor of any amount to avoid such lien. No Plan Event with
respect to the Transferor or any of its ERISA Affiliates has occurred or could
reasonably be expected to occur that could reasonably be expected to result,
directly or indirectly, in any lien being imposed on the property of the
Transferor or the payment by the Transferor of any amount to avoid such lien.
(n) No Claim or Interest. Other than the Transferor
Interest, neither the Transferor nor any Person claiming through or under the
Transferor has any claim or interest in any Lock-Box Account other than the
Lock-Box Bank.
(o) Receivables Purchase Agreement. The Receivables
Purchase Agreement creates a valid contribution or sale, transfer and assignment
to the Transferor of all right, title and interest of Stone Container or any
other Series thereunder in and to the Receivables transferred during the term
thereof, and all required actions and filing have been made (or are to be made
as contemplated in the Receivables Purchase Agreement) which are necessary under
applicable law to perfect the interest of the Transferor in such Receivables.
The representations and warranties set forth in this Section 2.3
shall survive the transfer and assignment of the Receivables to the Trust. Upon
discovery by the Transferor, the Servicer or a Responsible Officer of the
Trustee of a material breach of any of the foregoing
7
<PAGE>
representations and warranties, the party discovering such breach shall give
written notice thereof to the others and to the Rating Agencies within three
Business Days of such discovery.
Section 2.4 Representations and Warranties of the Transferor
Relating to the Agreement, any Supplement and the Receivables.
(a) Representations and Warranties. The Transferor (x)
hereby represents and warrants as of the Initial Closing Date, with respect to
the Receivables created on or prior to, and outstanding on, such date and (y)
shall be deemed to represent and warrant as of the date of the creation and
transfer to the Trustee of any additional Receivables, with respect to all
outstanding Receivables, that, among other things:
(i) The Transferor is not insolvent and, upon the
transfer of the Receivables to the Trustee, will not be rendered
insolvent and will have adequate capital to conduct its business.
(ii) The Transferor is the legal and beneficial owner
of all right, title and interest in and to each such Receivable, and
each such Receivable has been or will be transferred to the Trustee
free and clear of any Lien. No effective financing statement or other
similar instrument that covers all or part of any Receivable conveyed
to the Trustee, any other Trust Assets, or any interest therein is on
file in any recording office except such as may be filed (A) in favor
of the Transferor pursuant to the Receivables Purchase Agreement and
(B) in favor of the Trustee, for the benefit of the
Certificateholders, in accordance with this Agreement or otherwise
filed by or at the direction of the Trustee.
(iii) All consents, licenses, approvals or
authorizations of, registrations or declarations with or notice to any
Governmental Authority or Person required to be obtained, effected or
given by the Transferor in connection with the transfer by the
Transferor of its interest in the Trust Assets to the Trust have been
duly obtained, effected or given, and are in full force and effect and
such transfers do not violate any provision of, or require any filing
(except for certain filings required by the UCC which have or will be
made), registration, consent or approval under, any law, rule,
regulation, order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to the Transferor,
except for such filings, registrations, consents or approvals as have
already been obtained and are in full force and effect and except that
the Transferor makes no representation or warranty regarding state
securities or "blue sky" laws.
(iv) There are no proceedings or investigations pending
or, to the best knowledge of the Transferor, threatened that might
adversely affect the payment or enforceability of a material portion
of the Receivables.
(v) The Transferor has clearly and unambiguously marked
all its books and records, computer records, files, tapes and disks
and microfiche files, if any, regarding such Receivables as the
property of the Trustee and shall maintain such
8
<PAGE>
records in a manner such that the Trustee shall have a first priority
perfected interest in the Receivables.
(vi) This Agreement constitutes either (a) a valid
grant, transfer and assignment to the Trustee of all right, title and
interest of the Transferor in the Trust Assets, or (b) a grant of a
first priority "security interest" (as defined in the Uniform
Commercial Code) in such property to the Trustee, which in the case of
existing Receivables and Collections with respect thereto and the
proceeds thereof, is enforceable with respect to such Receivables upon
execution and delivery of this Agreement, and which will be
enforceable with respect to such Receivables hereafter created and the
proceeds thereof upon such creation.
(vii) Each such Receivable and Collections with respect
thereto has been or will be transferred to the Trustee free and clear
of any Adverse Claim of any Person not holding through the Trustee.
(viii) Each obligation of an Obligor conveyed pursuant
to Section 2.1 of this Agreement is, on the date of the creation of
such obligation, a Receivable (and does not constitute "chattel paper"
within the meaning of the UCC) and each Receivable classified as an
"Eligible Receivable" by the Transferor or Servicer in any document or
report delivered hereunder will satisfy the requirements contained in
the definition of Eligible Receivable at such time.
(ix) Each Receivable is or will be at the time of
transfer to the Trustee an obligation arising out of the performance
of Stone Container or another Originator in accordance with the terms
of the Contract giving rise to such Receivable and neither the
Receivable nor the related Contract has been subordinated, satisfied
or rescinded. The Transferor has no knowledge of any fact that should
have led it to expect at the time of the initial creation of an
interest hereunder in any Receivable that such Receivable would not be
paid in full when due except with respect to any sales and marketing
discount then available to Obligors.
(x) Each such Receivable was sold or contributed by the
Seller to the Transferor in accordance with the Receivables Purchase
Agreement, which is in full force and effect.
(xi) The legal name of the Transferor is Stone
Receivables Corporation and the Transferor has no trade names,
fictitious names, assumed names or "doing business as" names.
(xii) (A) On the date on which Stone Container or any
other Seller assigns and transfers any Receivable to the Transferor
(whereupon concurrently pursuant hereto the Transferor transfers such
Receivable to the Trustee), unless otherwise identified by the
Servicer in the Daily Report for such date, such Receivable is an
Eligible Receivable, and (B) on the date of each Daily Report or
Settlement Statement which identifies a Receivable as an Eligible
Receivable, such Receivable is an Eligible Receivable.
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(xiii) No acquisition of any Receivable by the
Transferor or the Trustee constitutes a fraudulent transfer or
fraudulent conveyance under the United States Bankruptcy Code or
applicable state bankruptcy or insolvency laws or is otherwise void or
voidable or subject to subordination under similar laws or principles
or for any other reason.
(xiv) The transfer of Receivables by the applicable
Seller to the Transferor pursuant to the Receivables Purchase
Agreement constitutes a true and valid assignment and transfer of
ownership for consideration of such Receivables under the applicable
state law (and not merely a pledge or assignment of such Receivables
for security purposes), enforceable against the creditors of such
Seller, and any Receivables so transferred will not constitute
property of such Seller under applicable state law.
(xv) No transaction contemplated by this Agreement or
by any other Transaction Document requires compliance with, or will be
subject to avoidance under, any bulk sales act or similar law.
(xvi) No use of any funds obtained by the Transferor
under this Agreement will conflict with or contravene any of
Regulations G, T, U and X promulgated by the Federal Reserve Board
from time to time.
(b) Notice of Breach. The representations and warranties
set forth in this Section 2.4 shall survive the transfer and assignment of the
Trust Assets to the Trust. Upon discovery by the Transferor, the Servicer or a
Responsible Officer of the Trustee of a material breach of any of the
representations and warranties set forth in this Section 2.4(a)(i) through
(xvi), the party discovering such breach shall give written notice to the others
and to the Rating Agencies within three Business Days of such discovery.
(c) Designation of Ineligible Receivables. In the event of
a breach with respect to a Receivable of any of the representations and
warranties set forth in Section 2.4(a)(i) through (xvi) above, or in the event
that any Receivable encompassed by the representation in Section 2.4(a)(viii)
above, is determined not to have been an Eligible Receivable as of the date of
its transfer to the Trust, such Receivable (an "Ineligible Receivable") will be
no longer considered an Eligible Receivable and will be redesignated as an
Ineligible Receivable in any subsequent report or notice delivered hereunder
which so categorizes the Receivables. On and after the date of such designation,
each Ineligible Receivable will not be included in the calculation of Aggregate
Eligible Receivables, Net Eligible Receivables, any Invested Percentage, any
Invested Amount or the Transferor Amount. To the extent that the exclusion of an
Ineligible Receivable from the calculation of the Transferor Amount would cause
the Transferor Amount to be reduced below the Minimum Transferor Amount, the
Transferor shall make or cause to be made a deposit in the Excess Funding
Account in immediately available funds. The amount of such deposit shall be
equal to the difference between the Minimum Transferor Amount and the Transferor
Amount after the designation of such Receivable as an Ineligible Receivable. The
obligation of the Transferor set forth in this Section shall constitute the sole
remedy respecting any breach of the representations and warranties set forth in
the above-referenced Section or failure to meet the conditions set forth in the
definition of Eligible Receivable with respect to such Receivable available to
the Certificateholders of any
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Series, the Trustee on behalf of such Certificateholders, or any other Person,
provided, that neither this sentence nor any other provisions of this Agreement
shall operate to affect any rights which the Trustee may have, as assignee
pursuant to Section 2.1 above, under the Receivables Purchase Agreement.
Section 2.5 [Reserved].
Section 2.6 Covenants of the Transferor. During the term of this
Agreement, and until (i) the Aggregate Invested Amount is reduced to zero, (ii)
the Investor Certificateholders shall have received all accrued interest on the
applicable Certificates, and (iii) all amounts owed by the Transferor or payable
or distributable to any party pursuant to this Agreement have been paid, the
Transferor covenants and agrees as follows:
(a) Compliance with Laws, etc. The Transferor shall (i)
duly satisfy all obligations on its part to be fulfilled under or in connection
with the Receivables, (ii) maintain in effect all qualifications required under
Requirements of Law in order to properly purchase and convey the Receivables and
other Trust Assets and (iii) comply with all Requirements of Law in connection
with purchasing and conveying the Receivables, in each instance where the
failure to so satisfy, maintain or comply would have a material adverse effect
on the Investor Certificateholders.
(b) Preservation of Corporate Existence. The Transferor
shall (i) preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation and (ii) qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction where
the failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would, if not remedied, either (A) materially
adversely affect the interests of the Investor Certificateholders hereunder, or
(B) materially adversely affect the ability of the Transferor or the Servicer to
perform its obligations hereunder.
(c) Audits. At any time and from time to time during the
Transferor's regular business hours, on reasonable prior notice and for a
purpose reasonably related to this Agreement, the Transferor shall, in response
to any reasonable request of the Trustee, permit the Trustee, or its agents or
representatives, (i) to examine and make copies of and abstracts from all books,
records and documents (including, without limitation, computer tapes and disks)
in the possession or under the control of the Transferor relating to the
Receivables, and (ii) to visit the offices and properties of the Transferor for
the purpose of examining such materials and to discuss matters relating to the
Receivables or the Transferor's performance hereunder with any of the officers
or employees of the Transferor having knowledge thereof. Any such examination or
visit made pursuant to this Section 2.6(c) shall be at the cost and expense of
the party or parties making such examination or visit.
(d) Continuous Perfection. The Transferor shall not change
its name, identity or structure in any manner which might make any financing or
continuation statement filed hereunder misleading within the meaning of Section
9-402(7) of the UCC (or any other then applicable provision of the UCC) unless
the Transferor shall have given the Trustee, the Servicer, and the Rating
Agencies at least 90 days' prior written notice thereof and shall have taken all
action not later than 5 days after making such change necessary or advisable to
amend
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such financing statement or continuation statement so that it is not misleading.
The Transferor shall not change its principal place of business or chief
executive office (within the meaning of Article 9 of the UCC, or change the
location of its principal records concerning the Receivables, or the Collections
from the locations specified in Section 2.3(i) unless it has given the Trustee,
the Servicer and the Rating Agencies at least 90 days, prior written notice of
its intention to do so and has taken such action as is necessary or advisable to
cause the interest of the Trustee in the Receivables and the other Trust Assets
to continue to be perfected with the priority required by this Agreement. The
Transferor will at all times maintain its principal executive office and any
other office at which it maintains records relating to the Receivables within
the United States of America. The Transferor shall provide notice to the
Trustee, the Servicer and the Rating Agencies confirming that UCC-1 financing
statements have been filed on or before the Initial Closing Date.
(e) Extension or Amendment of Receivables. The Transferor
shall not extend, amend or otherwise modify (or consent or fail to object to
such extension, amendment or modification by the Servicer or relevant
Originator) the terms of any Receivable, or amend, modify or waive any term or
condition of any Contracts related thereto in any manner which would have a
substantial likelihood of having a material adverse effect on the interests of
the Investor Certificateholders.
(f) Reports. The Transferor shall furnish to the Trustee
and to each Rating Agency immediately after it has actual knowledge of the
occurrence of each Event of Termination or the Transferor's knowledge of a
Prospective Event of Termination, an Officer's Certificate of the Transferor
setting forth the details of such Event of Termination or Prospective Event of
Termination and the action taken, or which the Transferor proposes to take, with
respect thereto.
(g) Certain Documentation. The Transferor shall cause the
Servicer to hold for the account of the Trustee (to the extent of its interest
therein) any document evidencing a Receivable and the related Contract.
(h) Assessments. The Transferor will promptly pay and
discharge all taxes, assessments, levies and other governmental charges imposed
on it, the failure of which to pay and discharge may materially adversely affect
any of the Eligible Receivables or the Trustee's rights with respect thereto or
will establish reserves sufficient for the payment of any such tax, assessment
or other governmental charge which it is contesting in good faith through
appropriate proceedings.
(i) Lock-Box Banks and Accounts. The Transferor may,
provided that the conditions of this Section 2.6(i) are satisfied, add or
terminate any bank as a Lock-Box Bank or add or terminate any Lock-Box Account
from those listed in Exhibit F hereto, or make any reasonable change in the
Lock-Box Agreements, substantially in the form attached as Exhibit E or in any
existing instructions to Obligors regarding payments to be made to any Lock-Box
Account which would not (i) have an adverse impact on the Servicer's ability to
collect payments or (ii) cause a withdrawal or downgrade of the then current
rating of the Certificates of any Series (so long as an Obligor remains
instructed to make payments on a Receivable to a Lock-Box Account), but in each
case only upon prior written notice from the
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Servicer to the Trustee. The Transferor shall give notice to the Trustee and the
Servicer of the number of each account to be added or terminated as a Lock-Box
Account and the name and address of each bank to be added or terminated as a
Lock-Box Bank and, subject to the proviso to the preceding sentence, upon giving
of such notice, Exhibit F shall be deemed to be amended accordingly without
further action by any Person. The Transferor will be under the obligation to
promptly procure the execution of the Lockbox Agreement by all parties thereto.
(j) Further Action. The Transferor shall, from time to
time, execute and deliver to the Trustee any instruments, financing or
continuation statements or other writings necessary to maintain the perfection
or priority of the Trustee's ownership or security interest in the Receivables,
the Collections and other Trust Assets under the UCC or other applicable law.
The Transferor shall, from time to time, execute and deliver to the Obligors any
bills, statements and letters or other writings necessary, or that the Trustee
may reasonably request, to carry out the terms and provisions of this Agreement
and to facilitate the collection of the Receivables. The Transferor will defend
the right, title and interest of the Trust in, to and under the Receivables,
whether now existing or hereafter created, against all claims of third parties
claiming through or under the Transferor.
(k) Additional Indebtedness. The Transferor shall not
create, incur, assume or suffer to exist any indebtedness (including, without
limitation, any guaranty) or expense (whether or not accounted for as a
liability) except (i) indebtedness hereunder (including, without limitation,
operating expenses incurred by the Transferor in connection with the performance
of its obligations hereunder) and any taxes incurred by the Transferor), under
the Receivables Purchase Agreement (including any Transferor Promissory Note),
the Investor Certificates, or any agreements, contracts or instruments which
relate thereto, (ii) indebtedness or other operating expenses incurred in the
performance of its obligations under this Agreement (including the expense to
its professional advisers and its counsel), where that Person to whom such
indebtedness or expense will be owing has delivered to the Transferor an
undertaking (which is assignable and shall concurrently be assigned to the
Trustee) that it will not institute against, or join any other Person in
instituting against, the Transferor any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any Federal or
state bankruptcy or similar law, for one year and a day after all Investor
Certificates are paid in full, and (iii) other indebtedness in the ordinary
course of business not exceeding in the aggregate $200,000 per annum on account
of incidentals or services supplied or furnished to the Transferor; provided,
that the obligations of the Transferor to Certificateholders hereunder, solely
with respect to the payment of interest and the repayment of principal under
such Certificate, shall be payable solely from the Trust Assets in accordance
herewith and the Certificateholders shall not look to any other property or
assets of the Transferor or any other Person in respect of such obligations, and
such obligations shall not constitute a claim against the Transferor or any
other Person in the event that the Trust Assets are insufficient to pay in full
such interest and principal; provided, further, that the obligations of the
Transferor to Certificateholders hereunder with respect to amounts other than
interest and principal under the Certificates shall (subject to the proviso in
the last sentence of Section 2.4(c) above), be payable from the Trust Assets or
any other assets of the Transferor, except that all such obligations of the
Transferor to Certificateholders shall (again subject to the above-described
proviso) be suspended at any time that, and for so long as, the Transferor's
assets are insufficient to pay in full such obligations, and that all such
obligations are fully subordinated to the Transferor's
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obligations with respect to the payment of interest and principal under the
Investor Certificates and the security interest of the Trustee in the Trust
Assets with respect to such interest and principal obligations.
(l) No Transfer. The Transferor agrees that it shall not
sell, assign, pledge, convey or otherwise transfer any Trust Asset, except for
the transfer of the Trust Assets to the Trustee as provided herein, and shall
defend and hold harmless the Trustee from any Adverse Claim in or to any
Eligible Receivable transferred to the Trustee hereunder.
(m) No Other Business. The Transferor agrees to engage in
no business other than the business contemplated hereunder and under the
Receivables Purchase Agreement.
(n) Enforcement and No Modification of the Receivables
Purchase Agreement. The Transferor agrees to take all action necessary and
appropriate to enforce its rights and claims under the Receivables Purchase
Agreement. The Transferor agrees not to amend or modify the Receivables Purchase
Agreement unless the Transferor receives written confirmation from each Rating
Agency that such amendment or modification will not result in a downgrade or
withdrawal of the current ratings of the Certificates.
(o) Separate Business. The Transferor shall at all times
(a) to the extent the Transferor's office is located in the offices of Stone
Container or any Affiliate of Stone Container, pay fair market rent, for its
office space located in the offices of Stone Container or any Affiliate of Stone
Container, (b) maintain the Transferor's books, financial statements, accounting
records and other corporate documents and records separate from those of Stone
Container or any other entity, (c) not commingle the Transferor's assets with
those of Stone Container or any other entity, (d) act solely in its corporate
name and through its own authorized officers and agents, (e) make investments
directly or by brokers engaged and paid by the Transferor or its agents
(provided that if any such agent is an Affiliate of the Transferor it shall be
compensated at a fair market rate for its services), (f) separately manage the
Transferor's liabilities from those of Stone Container or any Affiliates of
Stone Container and pay its own liabilities, including all administrative
expenses, from its own separate assets, except that Stone Container may pay the
organizational expenses of the Transferor, and (g) pay from the Transferor's
assets all obligations and indebtedness of any kind incurred by the Transferor.
The Transferor shall abide by all corporate formalities, including the
maintenance of current minute books, and the Transferor shall cause its
financial statements to be prepared in accordance with generally accepted
accounting principles in a manner that indicates the separate existence of the
Transferor and its assets and liabilities. The Transferor shall pay (i) all its
liabilities, (ii) not assume the liabilities of Stone Container or any Affiliate
of Stone Container, and (iii) not guarantee the liabilities of Stone Container
or any Affiliates of Stone Container. The officers and directors of the
Transferor (as appropriate) shall make decisions with respect to the business
and daily operations of the Transferor independent of and not dictated by any
controlling entity.
(p) Corporate Documents. The Transferor shall not amend,
alter, change or repeal its Certificate of Incorporation without the prior
written confirmation by each Rating Agency that such amendment, alteration,
change or repeal will not result in such Rating Agency reducing or withdrawing
its rating on any outstanding Series. The Transferor shall
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promptly provide to the Trustee a copy of such written confirmation together
with a copy of the Certificate of Incorporation as so amended, altered, changed
or repealed.
(q) ERISA. The Transferor shall promptly give the Trustee
written notice of the following events, as soon as possible and in any event
within 30 days after the Transferor or any of its ERISA Affiliates knows or has
reason to know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan to which the Transferor or any of its
ERISA Affiliates contributes, or any withdrawal by the Transferor or any of its
ERISA Affiliates from, or the termination, Reorganization or Insolvency of any
Multiemployer Plan to which the Transferor or any of its ERISA Affiliates
contributes or to which contributions have been required to be made by the
Transferor or such ERISA Affiliate during the preceding five years or (ii) the
institution of proceedings or the taking of any other action by the PBGC or the
Transferor or any of its ERISA Affiliates or any such Multiemployer Plan with
respect to the withdrawal by the Transferor or any ERISA Affiliates from, or the
termination of any such Plan or Multiemployer Plan or the Reorganization or
Insolvency of, any such Multiemployer Plan.
(r) Keeping of Records and Books of Account. The
Transferor will keep proper books of record and account in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Transferor in accordance with generally accepted accounting
principles consistently applied. The Transferor will (or will cause the Servicer
to) implement and maintain administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing the Receivables in
the event of the destruction of any original records) to keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each new Receivable and
Collections of and adjustments to each existing Receivable).
(s) Accuracy of Information. All written information
furnished on and after the Initial Closing Date by the Transferor to the
Servicer or the Trustee pursuant to or in connection with any Transaction
Document or any transaction contemplated herein or therein shall not contain any
untrue statement of a material fact or omit to state material facts necessary to
make the statements made not misleading, in each case in light of the
circumstances under which such statements were made or such information was
furnished.
(t) Location of Records and Offices. The Transferor shall
keep its principal place of business and chief executive office, and the
Transferor shall cause the Servicer to keep substantially all records, and other
agreements related to the Receivables and the related Contracts (and all
original documents relating thereto), at the addresses referred to in Schedule 2
or, upon not less than 30 days' prior written notice given by the Transferor to
the Servicer and the Trustee at such other locations in jurisdictions where all
action required pursuant to Section 2.1(b) shall have been taken and completed
(except that purchase orders may be located at the specific plants where the
goods giving rise to any Receivables were manufactured and/or processed). The
Transferor shall at all times maintain its chief executive offices within the
United States of America, and will cause the Servicer to maintain at all times
each office from which the Servicer services, collects or administers
Receivables and related Contracts and the Servicer's chief executive offices
within the United States of America in any of the states thereof other than the
states of Colorado, Kansas, New Mexico, Oklahoma, Utah or Wyoming.
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(u) No Liens. Except for the transfers hereunder and the
security interest granted pursuant to Section 2.01(d), the Transferor will not
sell, pledge, assign or transfer to any other Person, or grant, create, incur,
assume or suffer to exist any Lien on, any Trust Asset or any other property or
asset of the Transferor, whether now existing or hereafter created, or any
interest therein, and the Transferor shall defend the right, title and interest
of the Trust in and to the Trust Assets, whether now existing or hereafter
created, against all claims of third parties claiming through or under the
Transferor.
Section 2.7 Authentication of Certificates. Pursuant to the
request of the Transferor, the Trustee shall cause Certificates in authorized
denominations evidencing the entire beneficial ownership of the Trust to be duly
authenticated and delivered to or upon the order of the Transferor, which
authentication and delivery shall occur in accordance with Sections 6.2 and 6.8.
Section 2.8 Tax Treatment. The Transferor has entered into this
Agreement, and the Investor Certificates have been (or will be) issued, with the
intention that such Investor Certificates will qualify under applicable tax law
as indebtedness. The Transferor, the Trustee and the Servicer and each Investor
Certificateholder by acceptance of its Investor Certificate and each Certificate
Owner by acquiring an interest in an Investor Certificate agrees to treat the
Investor Certificates (other than any Investor Certificate held by the
Transferor) as indebtedness, for purposes of Federal, state and local income or
franchise taxes and for any other tax imposed on or measured by income. In
accordance with the foregoing, except as otherwise required by law the
Transferor agrees that it will report its income for such Federal, state, and
local income or franchise taxes, or for other taxes on or measured by income, on
the basis that it is the owner of the Receivables. Furthermore, unless otherwise
required by law, the Trustee hereby agrees to treat the Trust as a security
device only, and shall not file tax returns or obtain an employer identification
number on behalf of the Trust.
Section 2.9 Cancellation of the Certificates of any Series. The
Transferor or any of its Affiliates may (with the consent of the Holders of the
Certificates being acquired) acquire any Certificate of any Series and deliver
it to the Trustee for cancellation under this Section. Upon such delivery, the
Trustee shall cause the Transfer Agent and Registrar to cancel such Investor
Certificate and such Investor Certificate shall be disposed of in a manner
satisfactory to the Trustee. As a result of such delivery and cancellation, the
Transferor Amount shall be increased by the principal amount of such Investor
Certificate and the Invested Percentages with respect to such Series, and any
other defined term herein (including in the applicable Supplement), the
definition of which depends upon an assumption that such Investor Certificate
had been issued as a part of such Series, shall be recomputed on the basis of
the assumption that such Investor Certificate had not been issued as part of
such Series. Upon such delivery, such Certificate shall be accompanied by an
Officer's Certificate of the Transferor stating the recomputed amounts of the
defined terms referred to in the preceding sentence.
Section 2.10 Separate Corporate Existence. The Transferor hereby
acknowledges that the Trustee and the Investor Certificateholders are, and will
be, entering into the transactions contemplated by the Transaction Documents in
reliance upon the Transferor's identity as a legal entity separate from Stone
Container and any other Person. Therefore, from and after the Initial Closing
Date, the Transferor shall take all reasonable steps to continue its
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identity as a separate legal entity and to make it apparent to third Persons
that the Transferor is an entity with assets and liabilities distinct from those
of Stone Container and any other Person, and that the Transferor is not a
division of Stone Container or any other Person. Without limiting the generality
of the foregoing, the Transferor shall take such actions as shall be required in
order that:
(i) The Transferor will maintain its own board of
directors;
(ii) Not less than one member of the Transferor's board
of directors will be an Independent Director. The Transferor's board
of directors will not approve, or take any other action to cause the
filing of, a voluntary bankruptcy petition with respect to the
Transferor unless the Independent Director and all other members of
the Transferor's board of directors unanimously approve the taking of
such action in writing prior to the taking of such action;
(iii) The Transferor will restrict its Independent
Director from at any time serving as a trustee in bankruptcy for any
Affiliate;
(iv) The Transferor will compensate each of its
employees, consultants and agents from the Transferor's own funds for
services provided to the Transferor, it being understood that this
clause (iv) shall not limit payments of the Servicing Fee. The
Transferor will not act as agent for the Servicer and will engage no
agents other than a Servicer for the Receivables, which Servicer will
be fully compensated for its services hereunder by payment of the
Servicing Fee, placement agents for the placement of Certificates and
accountants and attorneys who, except to the extent provided otherwise
below in clause (v), will be compensated by the Transferor for their
fees and other charges as agreed to by the Transferor and such
placement agents, accountants or attorneys (as applicable);
(v) The Transferor will not incur any material indirect
or overhead expenses for items shared between the Transferor and any
Affiliate, other than shared items of expenses not reflected in the
Servicing Fee, such as legal, auditing and other professional
services, that will be allocated on a basis reasonably related to the
actual use or the value of services rendered, it being understood that
Stone Container may pay all expenses relating to the preparation,
negotiation, execution and delivery of the Transaction Documents,
including, without limitation, legal, commitment, agency and other
fees; provided, further, that other than pursuant to this Agreement,
the Transferor will not engage in any other transactions with the
Servicer;
(vi) The Transferor's operating expenses or liabilities
will not be paid by any Affiliate, including guarantees or
advancements of funds from the Servicer, recognizing that certain
organizational expenses of the Transferor and expenses relating to
creation and initial implementation of the transactions contemplated
by the Transaction Documents, however, have been or shall be paid by
Stone Container;
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(vii) The Transferor will conduct its business at an
office separate from the offices of each Affiliate, which office of
the Transferor may consist of office space shared with an Affiliate.
(viii) The Transferor will maintain corporate records
and books of account separate from those of every Affiliate, and
stationery and other business forms that are separate and distinct
from those of every Affiliate and will only conduct business under its
own name;
(ix) Any financial statements of any Affiliate which
are consolidated to include the Transferor will contain detailed notes
clearly stating that the Transferor is a separate corporate entity and
that its assets will be available first and foremost to satisfy the
claims of its own creditors;
(x) The Transferor's assets and liabilities will be
maintained in a manner that facilitates their identification and
segregation from those of any Affiliate and, in a manner such that it
will not be difficult or costly to segregate or ascertain, and
otherwise identify the individual assets and liabilities of the
Transferor on the one hand, from those of Stone Container or any
Affiliate on the other hand;
(xi) The Transferor will strictly observe corporate
formalities in its dealings with each Affiliate, and funds or other
assets of the Transferor will not be commingled with those of any
Affiliates (other than funds in the Collection Account payable to the
Transferor as Holder of the Transferor Certificate). The Transferor
shall not maintain joint bank accounts or other depository accounts to
which any Affiliate (other than Stone Container in its capacity as
Servicer) has independent access;
(xii) The Transferor shall not, directly or indirectly,
be named and shall not enter into an agreement to be named as a direct
or contingent beneficiary or loss payee on any insurance policy with
respect to any loss relating to the property of an Affiliate;
(xiii) Any transaction between the Transferor and an
Affiliate will be fair and equitable to the Transferor, will be the
type of transaction which would be entered into by a prudent Person in
the position of the Transferor with an Affiliate, and will be on terms
which are at least as favorable as may be obtained from a Person which
is not an Affiliate;
(xiv) Any Affiliate that renders or otherwise furnishes
services to the Transferor will be compensated by the Transferor at
market rates for such services;
(xv) Neither the Transferor nor any Affiliate will be
or will hold itself out to be responsible for the debts of the other;
and
(xvi) The duly elected Board of Directors of the
Transferor and the Transferor's duly appointed officers shall at all
times have sole authority to control decisions and actions with
respect to the daily business affairs of the Transferor.
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The covenants set forth in this Section 2.10 shall survive the
transfer and assignment of the Receivables to the Trustee. Upon discovery by the
Transferor or the Servicer or the Trustee of a breach of any of the foregoing
covenants, the party discovering such breach shall give written notice to the
other parties to this Agreement immediately following such discovery.
[END OF ARTICLE II]
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters Relating
to the Servicer.
(a) Stone Container agrees to act, and is hereby appointed
by the Transferor and the Trustee to act, as the Servicer under this Agreement,
and all Certificateholders, including the Transferor, by their acceptance of the
Certificates consent to Stone Container's acting as Servicer. The Servicer shall
supervise the servicing and administration of the Receivables and shall
supervise the collection of payments due under the Receivables in accordance
with (i) prudent standards and its customary and usual servicing procedures for
servicing receivables owned by it and comparable to the Receivables and in
accordance with the Credit and Collection Policy and (ii) the standard set forth
in clause (ii) of the definition of "Eligible Servicer" in Annex X hereto (which
standard the Servicer represents is not inconsistent with the standard set forth
in clause (i) above) and shall have full power and authority to do any and all
things in connection with such servicing and administration which it may deem
necessary or desirable; provided, however, that if Stone Container is no longer
the Servicer, the Servicer shall service the Receivables in accordance with the
standards that would be employed by a prudent institution in servicing
comparable receivables for its own account. The Servicer will be responsible on
a daily basis for servicing, managing and accepting or collecting payments on
the Receivables; provided, however, that the Servicer will hold such collections
in trust for the benefit of the Certificateholders. Servicing activities
performed by the Servicer with respect to the Receivables shall include
collecting and recording payments, communicating with obligors, investigating
payment delinquencies, providing billing records to Obligors and maintaining
internal records. Managerial and custodial services performed by the Servicer
shall include providing assistance in any inspections of the documents and
records relating to the Receivables by the Trustee to the extent provided in
this Agreement, maintaining the agreements, documents and files relating to the
Receivables as custodian and providing related data processing and reporting
services for Certificateholders and on behalf of the Trustee to the extent
provided in this Agreement. Without limiting the generality of the foregoing and
subject to Article X, the Servicer is hereby authorized and empowered (i) to
instruct the Trustee to make withdrawals and payments from the Collection
Account and Excess Funding Account and any other applicable account established
pursuant to this Agreement (including any Supplement) as set forth in this
Agreement (including any Supplement), (ii) to execute and
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deliver, on behalf of the Trustee for the benefit of the Certificateholders, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Receivables and, after the delinquency of any Receivable and to the extent
permitted under and in compliance with applicable law and regulations, to
commence enforcement proceedings with respect to such Receivable, and (iii) to
make any filings, reports, notices, applications, registrations with, and to
seek any consent or authorizations from, the Securities and Exchange Commission
and any state securities authority on behalf of the Trust as may be necessary or
advisable to comply with any Federal or state securities or reporting
requirements or laws.
(b) The Servicer shall not, and no Successor Servicer
shall, be obligated to use separate servicing procedures (except as may be
specified herein), offices or employees for servicing the Receivables from the
procedures, offices or employees used by the Servicer or such Successor
Servicer, as the case may be, in connection with servicing other receivables of
the same type.
(c) The Servicer shall, on behalf of the Transferor, the
Trustee and the Investor Certificateholders, enforce their respective rights and
interest in and under the Receivables and the related Contracts. If Stone
Container is not the Servicer, Stone Container shall promptly deliver to the
Servicer, at Stone Container's expense, and the Servicer shall hold in trust for
the Transferor, the Trustee and the Investor Certificateholders in accordance
with their respective interests, all books and records, files, documents,
instruments and records (including, without limitation, computer tapes or disks
and microfiche lists) that evidence or relate to Receivables.
(d) In the event that the Transferor is unable for any
reason to transfer Receivables to the Trustee in accordance with the provisions
of this Agreement (including, without limitation, by reason of any court of
competent jurisdiction ordering that the Transferor not transfer any additional
Receivables to the Trustee) then, in any such event, (A) the Servicer agrees to
allocate and pay to the Trustee, after the date of such inability, all
Collections with respect to Receivables transferred to the Trustee prior to the
occurrence of such event; and (B) the Servicer agrees to have such amounts
applied as Collections in accordance with Section 4.3.
(e) Obligors shall be instructed by the Transferor or the
Servicer to make all payments on the Receivables to Lock-Box Accounts maintained
by Lock-Box Banks pursuant to Lock-Box Agreements; provided, however, that if,
notwithstanding instructions to the contrary given to any Obligor, Collections
from such Obligor are received by the Servicer, such Collections shall be
deposited in the Collection Account by the Servicer immediately upon receipt of
such funds; provided further, that the Servicer shall not be considered in
breach of the obligation set forth in this sentence to the extent that a payment
received by the Servicer is not so deposited because such payment relates to a
Disputed Item.
(f) The Servicer or, in the event that there is a
Successor Servicer, Stone Container shall have the power revocable by the
Trustee to instruct each Lock-Box Bank to make withdrawals from the Lock-Box
Accounts in accordance with this Agreement. All Collections on Receivables of
amounts due and owing will, pending instructions by the Servicer for transfer to
the Collection Account, be deposited in or held in the Lock-Box Account by the
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Servicer in the name of the Trustee and shall be remitted to the Collection
Account not later than one Business Day after such deposits become available
funds; provided, however, that the Servicer shall not be considered in breach of
the obligation set forth in this sentence to the extent that a payment received
by the Servicer is not so deposited because such payment relates to a Disputed
Item.
(g) The Servicer shall take all reasonable action
necessary to assure that its computer based systems are able to operate and
effectively process data including dates on or after January 1, 2000.
Section 3.2 Servicing Compensation. As compensation for its
servicing activities hereunder and reimbursement for its expenses as set forth
in the immediately following paragraph, the Servicer shall be entitled to
receive a servicing fee in respect of each day prior to the Final Trust
Termination Date (the "Servicing Fee"), equal to the product of (i) one-twelfth,
(ii) the Servicing Fee Percentage and (iii) the Unpaid Balances of the
Receivables as of the first day of the immediately preceding Settlement Period.
The share of the Servicing Fee allocable to each Series with
respect to any date of payment shall be equal to the product of (i) the
Servicing Fee and (ii) the fraction where the numerator is the Invested Amount
for the Series and the denominator is the Aggregate Invested Amount as of the
first day of the immediately preceding Settlement Period. Any Servicing Fees
shall be payable to the Servicer solely pursuant to the terms of, and to the
extent amounts are available for payment as provided in, the Supplement relating
to any Series.
The Servicer's expenses include the amounts due to the Trustee
pursuant to Section 11.5, the reasonable fees and disbursements of independent
accountants, all other expenses incurred by the Servicer in connection with its
activities hereunder, and all other fees and expenses of the Trust not expressly
stated herein to be for the account of the Certificateholders; provided that in
no event shall the Servicer be liable for any Federal, state or local tax, or
any interest or penalties with respect thereto, assessed on the Trust, the
Trustee or the Certificateholders except as expressly provided herein. In the
event that the Servicer fails to pay the amounts due to the Trustee pursuant to
Section 11.5, the Trustee shall be entitled to deduct and receive such amounts
from the Servicing Fee, prior to the payment thereof to the Servicer. The
Servicer shall be required to pay expenses for its own account and shall not be
entitled to any payment or reimbursement therefor other than the Servicing Fee.
Section 3.3 Representations, Warranties and Covenants of the
Servicer. Stone Container, as initial Servicer, and any Successor Servicer by
its appointment hereunder, hereby represent and warrant, in the case of the
initial Servicer, as of the Initial Closing Date and, with respect to any Series
as of the date of any Supplement and the related Closing Date, and in the case
of any Successor Servicer, as of the date of its appointment and, with respect
to any Series issued after such date, as of the date of the related Supplement
and the related Closing Date, in each case unless otherwise stated in such
Supplement, and covenant until (i) the Aggregate Invested Amount is reduced to
zero, (ii) the Investor Certificateholders shall have received all accrued
interest on the applicable Certificates, and (iii) all obligations of the
Transferor and the Servicer to the Investor Certificateholders or payable or
distributable to any Secured Party under this Agreement shall have been finally
and fully paid and performed.
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(a) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation, and has full power, authority and legal right to
execute, deliver and perform its obligations under this Agreement and any
Supplement and, in all material respects, to own its property and conduct its
business as such properties are presently owned and as such business is
presently conducted.
(b) Due Qualification. The Servicer is duly qualified to
do business and is in good standing as a foreign corporation (or is exempt from
such requirements), and has obtained all necessary licenses and approvals in
each jurisdiction in which the failure to obtain such license, approval or
qualification would have a material adverse affect upon the Certificateholders
or upon the ability of the Servicer to perform its obligations under this
Agreement.
(c) Due Authorization. The execution, delivery and
performance by the Servicer of this Agreement and any Supplement, and the
consummation by the Servicer of the transactions provided in this Agreement and
any Supplement, have been duly authorized by all necessary corporate action on
the part of the Servicer.
(d) Binding Obligation. Each of this Agreement and any
Supplement constitute legal, valid and binding obligation of the Servicer,
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereinafter in effect, relating to the enforcement
of creditors' rights in general and, with respect to any Successor Servicer
which is a national banking association, the rights of creditors of national
banks under Federal law and except as such enforceability may be limited by
general principles of equity (whether considered in a proceeding at law or in
equity).
(e) No Violation. The execution and delivery of this
Agreement and any Supplement by the Servicer, and the performance by the
Servicer of the transactions contemplated by this Agreement and any Supplement
and the fulfillment by the Servicer of the terms hereof applicable to the
Servicer, will not conflict with, violate any provision of, require any filing
(except for certain filings required by the UCC), registration, consent or
approval under, any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to the
Servicer, or the Certificate of Incorporation or Bylaws of the Servicer, except
for such filings, registrations, consents or approvals as have already been
obtained and are in full force and effect and except for such violations which
would not materially and adversely affect the performance by the Servicer of
such transactions and the fulfillment by the Servicer of such terms (and except
that the Servicer makes no representation or warranty regarding state securities
or "blue sky" laws), or result in any breach of any of the material terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Servicer is a party or by which it is bound.
(f) No Proceeding. There are no proceedings or
investigations pending or, to the best knowledge of the Servicer, threatened
against the Servicer before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality (i) seeking to prevent the
issuance of the Certificates or the consummation of any of the
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transactions contemplated by this Agreement or any Supplement, (ii) seeking any
determination or ruling that, in the reasonable judgment of the Servicer, would
materially and adversely affect the performance by the Servicer of its
obligations under this Agreement or any Supplement, or (iii) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement or any Supplement.
(g) Compliance with Requirements of Law. The Servicer
shall duly satisfy all obligations on its part be fulfilled under or in
connection with the Receivables, will maintain in effect all qualifications
required under requirements of law in order to service properly the Receivables
and will comply in all material respects with all requirements of law in
connection with servicing the Receivables, the failure to maintain or to comply
with which would have a material adverse effect on the holders of any Series of
Investor Certificates.
(h) No Rescission or Cancellation. The Servicer shall not
permit any rescission or cancellation of a Receivable or a related Contract,
except as ordered by a court of competent jurisdiction or other governmental
authority and except in the ordinary course of business and in accordance with
the Credit and Collection Policies of the Servicer.
(i) Protection of Certificateholders' Rights. The Servicer
shall take no action which, nor omit to take any action the omission of which,
would materially impair the rights of Investor Certificateholders in any
Receivable, except, if no Event of Termination shall have occurred and be
continuing, to (a) extend the maturity of a Receivable to 60 days or more from
the Processing Date or (b) adjust the Unpaid Balance of any Receivable as it may
deem appropriate to maximize Collections thereof and to adjust the Unpaid
Balance of any Receivable to reflect Dilutive Credits, both in accordance with
the applicable Credit and Collection Policy.
(j) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any Governmental Authority
required in connection with the execution and delivery by the Servicer of this
Agreement and any Supplement, the performance by the Servicer of the
transactions contemplated by this Agreement and any Supplement and the
fulfillment by the Servicer of the terms hereof and thereof have been obtained,
where the failure to obtain the same would have a material adverse effect on the
holders of any Series of investor certificates; provided, however, that the
Servicer makes no representation or warranty regarding state securities or "blue
sky" laws.
(k) Extension or Amendment of Receivables; Change in
Credit and Collection Policy or Contracts. The Servicer will not, without
written confirmation from each Rating Agency that the rating on any Series of
Certificates will not be adversely affected (i) permit the Transferor to make
any material changes in the Credit and Collection Policy (including the
Servicer's written Credit and Collection Policy in effect as of the Initial
Closing Date and attached hereto as Exhibit C) or (ii) amend, modify or waive,
or permit the Transferor to amend, modify or waive, any term or condition of any
related Contract, which extension, amendment, modification, waiver or change,
would, individually or in the aggregate (A) materially change the credit
standing required of the Obligors, (B) have a substantial likelihood of having a
material adverse effect on any Investor Certificateholders, or (C) cause a
Receivable that would otherwise not be an Eligible Receivable to continue to be
or to become an Eligible Receivable.
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(l) No Change in Ability to Service. With respect to the
initial Servicer only, since the Initial Closing Date, there has been no
material adverse change in the ability of the Servicer to service and collect
the Receivables.
(m) Lock-Box Banks. The Servicer and any Successor
Servicer shall direct each Lock-Box Bank to make payments to the Collection
Account.
(n) Keeping of Records and Books of Account. The Servicer
shall maintain and implement administrative and operating procedures (including,
without limitation, the ability to create records evidencing the Receivables in
the event of the destruction of the originals thereof), and keep and maintain
all documents, books, microfiche, computer records and other information
reasonably necessary or advisable for the collection of all the Receivables.
Such documents, books and records, microfiche lists, computer files, tapes or
disks shall reflect all payments and credits with respect to the Receivables and
the computer records shall be clearly marked to show the interests of the
Trustee in the Receivables.
(o) Performance and Compliance with Sellers' Contracts.
The Servicer shall or, if Stone Container is no longer the Servicer, each Seller
shall 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.
(p) No Servicer Default. No Servicer Default has occurred
and is continuing.
(q) No Event of Termination. No Event of Termination has
occurred and is continuing.
(r) Maintenance of Privileges. The Servicer shall maintain
all of its rights, powers and privileges material to the collectibility of the
Receivables.
(s) Accuracy of Information. All written information
furnished on and after the Initial Closing Date by the Servicer to the
Transferor or the Trustee pursuant to or in connection with any Transaction
Document or any transaction contemplated herein or therein shall not contain any
untrue statement of a material fact or omit to state material facts necessary to
make the statements made not misleading, in each case in light of the
circumstances under which such statements were made or such information was
furnished.
Section 3.4 Reports and Records for the Trustee; Bank Account
Statements.
(a) Daily Records. Upon reasonable prior notice by the
Trustee, the Servicer shall make available at an office of the Servicer,
selected by the Servicer for inspection by the Trustee or its agent on a
Business Day during the Servicer's normal business hours a record setting forth
(i) the Collections on each Receivable and (ii) the Unpaid Balance of
Receivables for the Business Day preceding the date of the inspection. The
Servicer shall, at all times, maintain its computer files with respect to the
Receivables in such a manner so that the Receivables will be specifically
identified and, upon reasonable prior request of the Trustee, shall make
available to the Trustee, at an office of the Servicer selected by the Servicer,
on any
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Business Day during the Servicer's normal business hours any computer programs
necessary to make such identification.
(b) Daily Report.
(i) On each Business Day, the Servicer shall prepare,
or, if Stone Container is not the Servicer, Stone Container and the
Successor Servicer shall prepare, a completed Daily Report
substantially in the form attached hereto as Exhibit B.
(ii) The Servicer (or if Stone Container is not the
Servicer, Stone Container and the Successor Servicer) shall deliver to
the Trustee the Daily Report by 10:00 a.m., St. Louis City time, on
each Business Day with respect to activity in the Receivables for the
prior Business Day (or, in the case of a Daily Report delivered on the
second Business Day following a Saturday, Sunday or other non-Business
Day, the aggregate activity for the preceding Business Day and such
non-Business Days).
(c) Settlement Statement. By each Determination Date, the
Servicer shall, or if Stone Container is not the Servicer, Stone Container and
the Successor Servicer shall, with information provided by Stone Container,
which Stone Container agrees to provide, perform the calculations to be made on
such Determination Date and reported on the related Settlement Statement and,
prior to 10:00 a.m., St. Louis City time, on, the Determination Date, deliver to
the Trustee, the Rating Agencies, each Investor Certificateholder and Stone
Container (if prepared by a Successor Servicer), the Settlement Statement
substantially in the form attached hereto as Exhibit D for the related
Settlement Period in accordance with the provisions of Section 5.2(a).
Section 3.5 [Reserved]
Section 3.6 Annual Independent Public Accountants' Servicing
Report. The Servicer shall deliver to the Trustee:
(a) As soon as available and in any event within
one-hundred five (105) days after the end of each fiscal year of the Servicer, a
copy of the annual statements of income and cash flows for the Servicer for such
fiscal year and the related balance sheet as at the end of such fiscal year,
setting forth in each case in comparative form the corresponding figures for the
preceding fiscal year and prepared in accordance with GAAP consistently applied
(except for such changes in application which are approved by the Servicer's
independent public accountants and disclosed therein), accompanied by an opinion
of Ernst & Young or other independent public accountants selected by the
Servicer, together with a certificate from the Servicer's independent public
accountants confirming that, in conducting such audit, nothing came to their
attention which caused them to believe that the Servicer was not in compliance
with this Agreement insofar as it relates to accounting matters, with the
understanding that such audit was not directed primarily toward obtaining
knowledge of such noncompliance;
(b) As soon as available and in any event within sixty
(60) days after the end of the first three fiscal quarters of each fiscal year
of the Servicer, a copy of (A) the unaudited statement of income and cash flows
of the Servicer for such fiscal quarter and for the period from the beginning of
the respective fiscal year to the end of such fiscal quarter, and (B)
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an unaudited balance sheet of the Servicer as at the end of such fiscal quarter;
setting forth in each case in comparative form the corresponding figures for the
preceding fiscal year and all of the foregoing prepared in accordance with GAAP
consistently applied (except for such changes in application which are approved
by the Servicer's financial officer preparing such statements and disclosed
therein);
(c) Within one hundred five (105) days after the end of
each fiscal year of the Transferor, a report with respect to the Transaction
Documents by Ernst & Young or any other firm of independent public accountants.
Each such report shall state that the accountants have compared the amounts
contained in a sample of Daily Reports and Settlement Statements randomly
selected from all Daily Reports and Settlement Statements delivered to the
Trustee during the period covered by such report with the records (including
computer records) from which such amounts were derived and that, on the basis of
such comparison, such accountants are of the opinion that the amounts are in
agreement with such documents and records, except for such exceptions as they
believe to be immaterial and such other exceptions as shall be set forth in such
report; and
(d) Contemporaneously with the furnishing of a copy of
each annual and quarterly report provided for in Sections 3.6(a) and 3.6(b),
respectively, a certificate dated the date of delivery and signed by a
Responsible Officer of the Servicer, which certificate shall state that said
financial statements fairly present the financial position and results of
operations of the Servicer in accordance with GAAP consistently applied (except
for such changes in application identified in such certificate which are
approved by the Transferor's independent public accountants or, in the case of
the quarterly reports, by such officer and further subject to normal year-end
adjustments) and that such Responsible Officer has reviewed the relevant terms
of the Agreement and has made, or caused to be made under such Responsible
Officer's supervision, a review of the Transferor's activities during the period
covered by the statements then being furnished, and that the review has not
disclosed the existence of an Event of Termination, or if there is such an
event, describing it and the steps, if any, taken or being taken to cure it.
Section 3.7 [Reserved]
Section 3.8 Notices to the Transferor, Trustee and Rating
Agencies. The Servicer shall deliver or make available to the Transferor each
certificate and report required to be prepared, forwarded or delivered pursuant
to Sections 3.4 and 3.6. The Servicer shall also deliver and make available to
the Trustee and the Rating Agencies each certificate and report required to be
prepared, forwarded or delivered pursuant to Section 3.6.
[END OF ARTICLE III]
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION AND APPLICATION OF
COLLECTIONS
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Section 4.1 Rights of Certificateholders. Each Series shall
represent an Undivided Interest in the Trust Assets, and the right to receive
Collections and other amounts at the times and in the amounts specified in this
Article IV to be deposited in the Collection Account, transferred to the
applicable Series Collection Subaccount, and pursuant to the applicable
Supplement, to be paid to or on behalf of the Investor Certificateholders (the
"Investor Interest"). The Transferor Certificate shall represent the remaining
interest in the Trust Assets, including the right to receive Collections and
other amounts at the times and in the amounts specified in this Article IV (as
supplemented by any Supplement) to be paid to or on behalf of the Holder of the
Transferor Certificate (the "Transferor Interest"); provided, however, that such
certificate shall not represent any interest in the Collection Account (except
to the extent provided in this Agreement and any applicable Supplement) and
neither the Transferor nor the Servicer shall have the right to withdraw funds
from the Collection Account or to receive funds on deposit therein except as and
when provided by this Agreement, including any Supplement.
Section 4.2 Establishment of Collection Account and Excess
Funding Account.
(a) The Collection Account. The Trustee, for the benefit
of the Investor Certificateholders of each Series and the holder of the
Transferor Certificate, shall establish or shall cause to be established and
maintained, in the name of the Trustee, on behalf of the Trust, a fully
segregated trust account (which may include one or more subaccounts) with an
Eligible Institution (the "Collection Account"). The Collection Account shall
bear a designation clearly indicating that the funds deposited therein are held
for the benefit of the Certificateholders. An "Eligible Institution" means a
depositary institution, which may include the Trustee or any of its affiliates,
organized under the laws of the United States or any one of the States thereof
including the District of Columbia (or any domestic branches of foreign banks),
which either (i) at all times has a long-term unsecured debt rating of at least
"AAA" or its equivalent by the applicable Rating Agency and which is a member of
the Federal Deposit Insurance Corporation (the "FDIC") or (ii) maintains the
applicable account as a fully segregated trust account with the trust department
of such institution and is rated the equivalent of "BBB-" or "A-3" or higher by
the applicable Rating Agency. Except as provided in this Agreement, the
Collection Account shall be under the sole dominion and control of the Trustee
for the benefit of the Investor Certificateholders of each Series and the holder
of the Transferor Certificate. If, at any time, a Responsible Officer of the
Trustee has actual knowledge that the institution holding the Collection Account
ceases to be an Eligible Institution, the Trustee shall within 30 days of a
Responsible Officer of the Trustee's learning of such event, establish a new
Collection Account meeting the conditions specified above with an Eligible
Institution, transfer any cash and/or any investments to such new Collection
Account and from the date such new Collection Account is established, it shall
be the "Collection Account." Funds on deposit in the Collection Account (other
than certain amounts specified by the Agreement) shall at the direction of the
Servicer as agent for the Transferor be invested by the Trustee solely in
Permitted Investments. "Permitted Investments" mean (a) negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence (1) obligations fully guaranteed as to timely payment by the United
States of America; (2) certificates of deposits of, or bankers, acceptances
(having original maturities of no more than 180 days) issued by, any depositary
institution or trust company, subject to supervision or examination by Federal
or state banking or depositary institution authorities; provided, however, that
at the time of the Trust's investment or contractual commitment to invest
therein, such depositary institution or trust company shall have a credit
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rating with respect to commercial paper of at least "A-1+" by S&P and in the
highest available rating category applicable to commercial paper if rated by any
other applicable Rating Agency, and a rating of not lower than "AAA" or its
equivalent by the applicable Rating Agency, in the case of long-term unsecured
debt obligations, or such deposits are fully insured by the FDIC; (3) commercial
paper (having original maturities of not more than 180 days) having, at the time
of the Trust's investment or contractual commitment to invest therein, a rating
of at least "A-1+" by S&P and in the highest available rating category
applicable to money market funds if rated by any other applicable Rating Agency;
(4) investments in money market funds having a rating of at least "AAAm" by S&P
and in the highest available rating category applicable to money market funds if
rated by any other applicable Rating Agency; (5) any "institution funds" or
"bank funds" that are comprised of assets listed in clauses (1) - (4) above; and
(6) any other investment, if the Rating Agencies confirm in writing that such
investment will not adversely affect any ratings with respect to any Series of
investor certificates, and which shall be acceptable to the Trustee and (b)
demand deposits or time deposits in the name of the Trust or the Trustee in any
depositary institution or trust company referred to in (a)(2) above.
(b) The Excess Funding Account. The Trustee, for the
benefit of the holders of each Series of Investor Certificates and the
Transferor Certificate, shall establish or shall cause to be established and
maintained with the same Eligible Institution maintaining the Collection Account
in accordance with subparagraph (a), in the name of the Trustee, on behalf of
the Certificateholders, a fully segregated trust account with the trust
department of such institution (the "Excess Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Certificateholders of each Series of Investor Certificates and
the Transferor Certificate. Except as provided in this Agreement, the Excess
Funding Account shall be under the sole dominion and control of the Trustee for
the benefit of the Investor Certificateholders of each Series, and the
Transferor. If, at any time, a Responsible Officer of the Trustee has actual
knowledge that the institution holding the Excess Funding Account ceases to be
an Eligible Institution, the Trustee shall, concurrently with the establishment
of a new Collection Account in accordance with subparagraph (a), establish a new
Excess Funding Account meeting the conditions specified above with the same
Eligible Institution, transfer any cash and/or any investments to such new
Excess Funding Account and from the date such new Excess Funding Account is
established, it shall be the "Excess Funding Account." All interests and
earnings (net of losses and investment expenses) on funds on deposit in the
Excess Funding Account shall constitute Trust Assets and shall be included in
determining compliance with the Minimum Transferor Amount. Pursuant to the
authority granted to the Servicer pursuant to the Agreement, the Servicer shall
have the power revocable by the Trustee to instruct the Trustee to make
withdrawals and payments from the Excess Funding Account for the purposes of
carrying out the Servicer's duties thereunder. Neither the Transferor nor the
Servicer, nor any Person claiming by, through or under the Transferor or the
Servicer, shall have any right, title or interest in, or any right to withdraw
any amount from, the Excess Funding Account except to the extent provided in
this Agreement. In the event that a series has entered into its Amortization
Period (or the terms of the related Supplement otherwise provide for a repayment
of principal prior to commencement of the actual Amortization Period), a pro
rata amount of the balance on deposit in the Excess Funding Account, based on
the Invested Percentage of such Series on the Amortization Period Commencement
Date relating to such Series adjusted for any Series that has already received
its pro rata position, shall be deposited in the related Series Principal
Collection Sub-subaccount to be distributed as Principal Collection
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in respect of such Series in amortization or with respect to which such other
repayment of principal is occurring, in each case as provided in the related
Supplement.
(c) Administration of the Collection Account and the
Excess Funding Account. Funds on deposit in the Collection Account (other than
investment earnings and amounts deposited pursuant to Section 9.3 or Article
XII) shall at the direction of the Servicer, as agent for the Transferor, be
invested by the Trustee in Permitted Investments that will mature so that such
funds will be available prior to the Payment Date following such investment.
Funds on deposit in the Excess Funding Account shall at the direction of the
Servicer, as agent for the Transferor, be invested by the Trustee solely in
Permitted Investments that will mature so that such funds will be available on
the Business Day prior to the date on which the Transferor is expected to be
entitled to release of such amounts by which the Transferor Amount exceeds the
Minimum Transferor Amount, in accordance with the provisions of the applicable
Supplement; provided, that once invested, no amounts may be released pursuant to
the provisions of such applicable Supplement or otherwise until such Permitted
Investments mature; provided however, that the Trustee may sell, liquidate or
dispose of a Permitted Investment before its maturity at the written direction
of the Servicer if such sale, liquidation or disposal would not result in a loss
of all or part of the principal portion of such Permitted Investment or default
occurs in the payment of principal, interest or any other amount with respect to
such Eligible Investment. Subject to the proviso contained in the immediately
preceding sentence, on any Payment Date on which the amount on deposit in the
Excess Funding Account (after any deposits and withdrawals on such date) exceeds
the Minimum Transferor Amount for such date (as indicated in the Settlement
Statement), such excess shall be paid to the Transferor. Any funds on deposit in
the Collection Account or the Excess Funding Account to be so invested shall be
invested solely in Permitted Investments. Funds on deposit in the Collection
Account or the Excess Funding Account shall be invested pursuant to the written
instructions of the Servicer, which instructions shall certify that the funds
requested to be invested may be so invested pursuant to the terms of this
Agreement, and that the requested investment is a Permitted Investment which
matures at or prior to the time required hereby. If not otherwise directed by
the Servicer, the Trustee shall invest funds on deposit in the Collection
Account or the Excess Funding Account in a money market fund sponsored by the
Trustee that qualifies as a Permitted Investment. The Trustee shall not be
liable, except in the case of any negligence, willful misconduct or bad faith of
the Trustee, by reason of any insufficiency in the Collection Account or the
Excess Funding Account resulting from any loss on any investment made in
accordance with this Section 4.2. The Trustee shall maintain possession of the
negotiable instruments or securities, if any, evidencing the Permitted
Investments described in clause (a) of the definition thereof from the time of
purchase thereof until maturity. All interest and earnings (net of losses and
investment expenses) on funds on deposit in the Collection Account shall be paid
by the Trustee to the Transferor on each Payment Date. Neither the Transferor
nor the Servicer shall deposit any of their funds in the Collection Account or
the Excess Funding Account at any time except for funds unconditionally required
to be paid on account of the purchase price of Certificates or amounts otherwise
deposited therein for the purpose of increasing the Transferor Amount; provided,
however, that the Transferor shall be permitted to transfer funds to the Trust
to repay any Series to the extent permitted by the terms of the related
Supplement, including under Section 12.2, in connection with which the
applicable Invested Amount shall be reduced and the Transferor Amount shall be
increased accordingly.
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(d) Identification of Collection Account and Excess
Funding Account. Schedule 1, which is hereby incorporated into and made part of
this Agreement, identifies the Collection Account and the Excess Funding Account
by setting forth the account number of each such account, the account
designation of each such account and the name and location of the institution
with which each such account has been established.
Section 4.3 Collections and Allocations.
(a) Collections. The Servicer will allocate, pay or
deposit all Collections with respect to the Receivables (all of which
Collections, subject to Section 4.9, shall be deemed to relate to, and to be
received with respect to Net Eligible Receivables) for each Business Day as
described in this Article IV. The Servicer shall allocate and, as indicated in
Section 4.3(b), deposit such Collections into the Collection Account (or in
certain circumstances specified in Section 4.3(b) transfer Collections directly
to the Transferor), as indicated in Section 4.3(b).
(b) Payments and Allocations. On each Business Day, the
Servicer shall deposit or cause to be deposited the aggregate amount of
Collections processed on such Business Day in available funds to the Collection
Account. On each such Business Day, the Servicer shall determine with respect to
each Series whether an Amortization Period has commenced on or prior to such
Business Day, and based upon such determination, shall allocate such Collections
to or among each Series (by transferring or instructing the Trustee in writing
to transfer the same to the applicable Series Collection Subaccount) and the
Transferor, based on the applicable Invested Percentage for such Series (and the
related Transferor Percentage), as provided in the applicable Supplement and
herein. Notwithstanding the foregoing, provided the Transferor Amount is not
less than the Required Transferor Amount, Collections allocable to the
Transferor with respect to any Series during the Revolving Period for that
Series need not be deposited into the Collection Account but instead may be paid
directly to the Transferor or as otherwise provided in the applicable
Supplement.
For the Transferor Certificate, the Servicer shall allocate, and
pay to the Transferor an amount equal to the product of the Transferor
Percentage on such Business Day and the aggregate amount of Collections for such
Business Day; provided, however except as otherwise provided in Section 4.9: (i)
if as of the close of the preceding Business Day, the Transferor Amount was less
than the Minimum Transferor Amount, such Collections otherwise allocable to the
Transferor shall instead be deposited in the Excess Funding Account up to an
amount equal to such deficiency; and then (ii) the Servicer shall retain from
such amounts on each Business Day an amount equal to the Transferor Percentage
multiplied by the Servicing Fee accrued to such Business Day and not previously
paid to or retained by the Servicer.
The Servicer shall allocate, and the Trustee, acting in
accordance with written instructions from the Servicer pursuant to the terms of
this Agreement, shall immediately pay, or cause to be paid, to the Transferor
(or, if a Supplement so provides, to the Collection Account, or any other
account maintained pursuant to the terms of such Supplement), amounts held in
the Excess Funding Account to the extent the Transferor Amount exceeds the
Minimum Transferor Amount for such day.
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(c) In the event an Amortization Period has commenced for
any Series due to an Event of Termination and the allocation of Collections
based on the determination of the Invested Percentage specified in the
Supplement of the applicable Series results in Collections from Receivables not
being allocable to any Series, such unallocated Collections will be deposited
into the Series Principal Collection Sub-subaccount for all outstanding Series
on a pro rata basis based on the Invested Percentage as defined in the
Supplement of each Series.
Section 4.4 Determinations of Interest With Respect to Investor
Certificates. Interest payable to Investor Certificateholders shall be
determined in the manner set forth in the related Supplement.
Section 4.5 Payments of Principal to Investor Certificateholders.
Payments of Principal Collections with respect to any Series shall be made in
the manner set forth in the related Supplement.
Section 4.6 [Reserved]
Section 4.7 Misdirected Payments. In the event that the Servicer
notifies the Trustee in writing that the Trustee or any Lock-Box Account, the
Collection Account, the Excess Funding Account or any other account maintained
for the benefit of Certificateholders has received amounts in respect of
payments made by any Person on an account receivable or other obligation which
has not been transferred to the Trust, the Trustee shall, as soon as practicable
and as instructed in the most recently delivered Daily Report or Settlement
Statement, forward such amounts, in the manner specified in writing by Stone
Container, to Stone Container or such other Person as Stone Container designates
and, pending the forwarding of such amounts, hold such amounts in trust for
Stone Container or such other Person designated by Stone Container. The Trustee
will, if requested in writing by Stone Container, acknowledge and confirm the
foregoing to any Person designated by Stone Container. In the absence of such
instructions, all such payments shall be deemed to relate to, and be received
with respect to, Receivables. Upon each outstanding Series having entered into
its respective Amortization Period, Receivables shall no longer be transferred
by Stone Container to the Transferor or the Transferor to the Trustee, and any
Collections received on any Receivables originated during the continuance of
such Event of Termination, (i) shall not belong to the Trustee or any Investor
Certificateholder or the Transferor, (ii) if received by the Trustee or any
account which it controls shall be held in trust for the originator or other
party entitled thereto, and (iii) shall be paid to the originator or other party
entitled thereto as soon as is practicable.
THE REMAINDER OF ARTICLE IV SHALL BE SPECIFIED
IN THE SUPPLEMENT WITH RESPECT TO EACH SERIES.
SUCH REMAINDER SHALL BE APPLICABLE ONLY TO THE
SERIES RELATING TO THE SUPPLEMENT IN WHICH
SUCH REMAINDER APPEARS.
[END OF ARTICLE IV]
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ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Section 5.1 Distributions. On each Payment Date, the Paying Agent
shall distribute (in accordance with the Settlement Statement delivered by the
Servicer to the Trustee on the preceding Determination Date pursuant to Section
3.4(c)) to each Investor Certificateholder of record of any Series on the
preceding Record Date (other than as provided in Section 12.3(b) hereof
respecting a final distribution) such Certificateholder's pro rata share (based
on the aggregate Undivided Interests represented by Investor Certificates of
such Series held by such Certificateholder) of amounts on deposit in the
Collection Account as are payable to the Investor Certificateholders of such
Series pursuant to Sections 4.4 and 4.5. Such distribution shall be made by
check mailed to each Certificateholder or, if so stated in any Supplement, by
wire transfer to each Certificateholder so qualified as stated therein, except
that if all Investor Certificates are registered in the name of CEDE & Co., the
nominee registrar for The Depository Trust Company, such distribution to
Investor Certificateholders shall be made in immediately available funds to The
Depository Trust Company. All payments on account of principal and interest to
Certificateholders shall be made from amounts on deposit in the Collection
Account.
Section 5.2 Annual Tax Statement.
On or before the date required by law, beginning with calendar
year 2000, the Paying Agent, on behalf of the Trustee and the Transferor shall
furnish or cause to be furnished to each Person who at any time during the
preceding calendar year was a Certificateholder, a statement prepared by the
Servicer containing the information contained in each Settlement Statement,
aggregated for such calendar year, together with such other information as is
required to be provided by an issuer of indebtedness under the Code for such
calendar year, together with such other customary information as the Servicer
deems necessary or desirable to enable the Certificateholders to prepare their
tax returns. Such obligation of the Paying Agent shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Paying Agent pursuant to this Agreement or to any requirements
of the Code as from time to time in effect.
[END OF ARTICLE V]
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates. The Investor Certificates of each
Series shall be substantially in the form of the exhibits with respect thereto
attached to the related Supplement. The Transferor Certificate shall be
substantially in the form of Exhibit A hereto. The Transferor Certificate and
any Investor Certificates shall, upon issuance pursuant to this Article VI be
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executed and delivered by the Transferor to the Trustee for authentication and
redelivery as provided in Section 6.2. Investor Certificates shall be issued in
the minimum denominations indicated in the related Supplement. The Transferor
Certificate shall initially be issued to the Transferor. Unless otherwise
specified in any Supplement for any Series, the Investor Certificates shall be
issued upon initial issuance as a single global certificate in an original
principal amount equal to the Initial Invested Amount with respect to such
Series. The Transferor is hereby authorized by the Trustee to execute and
deliver each Investor Certificate and any documents related thereto on behalf of
the Trust. In so doing, the Transferor acts as agent of the Trustee and shall
incur no personal liability in respect of the Investor Certificates. Each
Certificate shall be executed by manual or facsimile signature on behalf of the
Transferor by any of its Chairman of the Board, its Vice Chairman of the Board,
its President or any Vice President. Certificates bearing the manual or
facsimile signature of the individual who was, at the time when such signature
was affixed, authorized to sign on behalf of the Transferor or the Trustee shall
not be rendered invalid, notwithstanding that such individual has ceased to be
so authorized prior to the authentication and delivery of such Certificates or
does not hold such office at the date of such Certificates. No Certificate shall
be entitled to any benefit under this Agreement or any applicable Supplement, or
be valid for any purpose, unless there appears on such Certificate a certificate
of authentication substantially in the form provided for in a form of
Certificate attached as an exhibit to the applicable Supplement or in the form
provided for in Section 6.7 executed by or on behalf of the Trustee by the
manual or facsimile signature of a duly authorized signatory, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication but
failure to do so shall not render them invalid.
Section 6.2 Authentication of Certificates. Contemporaneously
with the assignment and transfer of the Receivables to the Trustee on a Closing
Date and upon receipt of an authentication request from the Transferor, the
Trustee shall authenticate and deliver the Transferor Certificate to the
Transferor and, upon the execution of any Supplement and the satisfaction of the
conditions provided in Section 6.8, shall authenticate and deliver the Series of
Investor Certificates to be issued thereunder as provided in Section 6.8. The
Certificates of each Series shall be duly authenticated by or on behalf of the
Trustee as provided for herein and in the applicable Supplement, in authorized
denominations equal to (in the aggregate) the Initial Invested Amount of such
Series specified in such Supplement.
Section 6.3 Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at the office or
agency to be maintained by a transfer agent and registrar (which may be the
Trustee) (the "Transfer Agent and Registrar") in accordance with the provisions
of subsection 6.3(d) a register (the "Certificate Register") in which, subject
to such regulations as it may reasonably prescribe, the Transfer Agent and
Registrar shall provide for the registration of each Series of the Investor
Certificates and the Transferor Certificate and of transfers and exchanges of
such Certificates as herein provided. The Trustee is hereby initially appointed
Transfer Agent and Registrar for the purpose of registering each Series of
Investor Certificates and the Transferor Certificate and of registering
transfers and exchanges of the Investor Certificates and the Transferor
Certificate as herein provided. The Trustee shall be permitted to resign as
Transfer Agent and Registrar upon
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30 days' written notice to the Transferor and the Servicer; provided, however,
that such resignation shall not be effective and the Trustee shall continue to
perform its duties as Transfer Agent and Registrar until the Servicer has
appointed a successor Transfer Agent and Registrar acceptable to the Transferor.
Unless a successor Transfer Agent and Registrar shall have been so appointed and
have accepted appointment within 60 days after the giving of such notice of
resignation, the resigning Transfer Agent and Registrar may petition any court
of competent jurisdiction for the appointment of a successor Transfer Agent and
Registrar. The Trustee shall initially register the Transferor Certificate in
the name of the Transferor.
Upon surrender for registration of transfer of any Investor
Certificate of a Series at any office or agency of the Transfer Agent and
Registrar maintained for such purpose, the Transferor shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Investor Certificates of such Series in
authorized denominations of like aggregate Undivided Interests and which bear
numbers that are not contemporaneously outstanding.
At the option of an Investor Certificateholder, Investor
Certificates of a Series may be exchanged for other Investor Certificates of
such Series of authorized denominations of like aggregate Undivided Interests,
bearing numbers that are not contemporaneously outstanding upon surrender of the
Investor Certificates to be exchanged at any office or agency of the Transfer
Agent and Registrar maintained for such purpose. Whenever any Investor
Certificates are so surrendered for exchange, the Transferor shall execute, and
the Trustee shall authenticate and deliver, the Investor Certificates which the
Investor Certificateholder making the exchange is entitled to receive. Every
Investor Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar and complying
with any requirements set forth in the applicable Supplement duly executed by
the Certificateholder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Investor Certificates, but the Transfer Agent and Registrar may
require from the applicable Investor Certificateholder payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Investor Certificates.
All Investor Certificates surrendered for registration of
transfer or exchange shall be cancelled by the Transfer Agent and Registrar and
disposed of in a manner satisfactory to the Trustee.
(b) The Transferor shall, as agent of the Trustee and
without incurring personal liability with respect to the Investor Certificates,
execute and deliver Investor Certificates to the Trustee or the Transfer Agent
and Registrar in such amounts and at such times as are necessary to enable the
Trustee and the Transfer Agent and Registrar to fulfill their respective
responsibilities under this Agreement and the Investor Certificates.
(c) [Reserved]
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(d) The Transfer Agent and Registrar will maintain at its
expense in New York, New York or such other location as may be specified in any
Supplement, an office or offices or agency or agencies where Certificates may be
surrendered for registration of transfer or exchange.
(e) Unless otherwise stated in any related Supplement,
registration of transfer of Investor Certificates containing a legend relating
to restrictions on transfer of such Investor Certificates (which legend shall be
set forth in the Supplement relating to such Investor Certificates) shall be
effected only if the conditions set forth in the related Supplement are complied
with by the respective parties. Investor Certificates issued upon registration
or transfer of, or in exchange for, Investor Certificates bearing the legend
referred to above shall also bear such legend unless Stone Container, the
Servicer, the Trustee and the Transfer Agent and Registrar receive an Opinion of
Counsel satisfactory to each of them, to the effect that such legend may be
removed.
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate is surrendered to the Transfer Agent and
Registrar, or the Transfer Agent and Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any such Certificate and (b)
there is delivered to the Transfer Agent and Registrar, the Trustee and the
Transferor such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Transferor shall
execute and the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and aggregate Undivided Interest, if applicable. In
connection with the issuance of any new Certificate under this Section 6.4, the
Trustee or the Transfer Agent and Registrar may require the payment by the
Certificateholder of a sum sufficient to cover any tax or other expenses
connected therewith. Any duplicate Certificate issued pursuant to this Section
6.4 shall constitute complete and indefeasible evidence of ownership in the
Trust Assets, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
Section 6.5 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat the Person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 5.1 and for all other
purposes whatsoever, and neither the Trustee, the Paying Agent, the Transfer
Agent and Registrar nor any agent of any of them shall be affected by any notice
to the contrary; provided, however, that in determining whether the Holders of
the requisite Undivided Interests have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Certificates owned by the
Transferor, the Servicer or any affiliate (as defined in Rule 405 under the
Securities Act) deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Certificates which a
Responsible Officer of the Trustee knows to be so owned shall be so disregarded.
Certificates so owned which have been pledged in good faith shall not be
disregarded and may be regarded as outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Transferor, the Servicer or an
affiliate (as defined above) thereof.
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Section 6.6 Appointment of Paying Agent. The Paying Agent shall
have a combined capital and surplus of $50,000,000, and, in any case, shall be a
depositary institution organized under the laws of the United States or any one
of the states thereof, including the District of Columbia. The Paying Agent
shall make distributions to Certificateholders from the Collection Account
pursuant to Section 5.1. Any Paying Agent shall have the revocable power to
withdraw funds from the Collection Account for the purpose of making
distributions referred to above. The Trustee may revoke such power and remove
any Paying Agent if the Trustee determines in its sole discretion that the
Paying Agent shall have failed to perform its obligations under this Agreement
in any material respect. The Paying Agent shall initially be the Trustee. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Trustee, provided however, that such resignation shall not be
effective and the Paying Agent shall continue to perform its duties until the
Trustee has appointed, and such appointment has been accepted by, a successor
Paying Agent. The Trustee shall cause the resigning Paying Agent and each
successor Paying Agent to execute and deliver to the Trustee an instrument in
which such resigning or successor Paying Agent shall agree with the Trustee
that, as Paying Agent, such resigning or successor Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders. The Paying Agent shall return all unclaimed funds
relating to this Agreement to the Trustee and upon removal shall also return all
funds relating to this Agreement in its possession to the Trustee. The
provisions of Sections 11.1, 11.2 and 11.3 shall apply to the Trustee in its
role as Paying Agent.
Section 6.7 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating
agents with respect to the Certificates which shall be authorized to act on
behalf of the Trustee in authenticating the Certificates in connection with the
issuance, delivery, registration of transfer, exchange or repayment of the
Certificates. Whenever reference is made in this Agreement to the authentication
of Certificates by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication on behalf of the
Trustee by an authenticating agent and a certificate of authentication executed
on behalf of the Trustee by an authenticating agent. Each authenticating agent
must be acceptable to the Transferor.
(b) Any institution succeeding to all or substantially all
of the corporate trust business of an authenticating agent shall continue to be
an authenticating agent without the execution or filing of any paper or any
further act on the part of the Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by
giving written notice of resignation to the Trustee. The Trustee may at any time
terminate the agency of an authenticating agent by giving notice of termination
to such authenticating agent. Upon receiving such a notice of resignation or
upon such a termination, or in case at any time an authenticating agent shall
cease to be acceptable to the Trustee or the Transferor, the Trustee promptly
may appoint a successor authenticating agent. Any successor authenticating agent
upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an
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authenticating agent. No successor authenticating agent shall be appointed
unless acceptable to the Trustee and the Transferor.
(d) The Servicer agrees to pay, on behalf of the Trust, to
each authenticating agent from time to time reasonable compensation for its
services under this Section 6.7.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall
be applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section
6.7, the Certificates may have endorsed thereon, in lieu of the Trustee's
certificate of authentication, an alternate certificate of authentication in
substantially the following form:
"This is one of the Certificates described in the Pooling and
Servicing Agreement dated as of October 1, 1999, among Stone Receivables
Corporation as Transferor, Stone Container Corporation as Servicer and The Chase
Manhattan Bank as Trustee."
The Chase Manhattan Bank, as Trustee
by
-----------------------------------,
as Authenticating Agent for the Trustee
by
------------------------------------
Authorized Officer
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Section 6.8 Delivery of Additional Series of Investor
Certificates.
(a) Upon delivery to the Trustee of an Officer's
Certificate of the Transferor (a) requesting the authentication of a new Series
of Investor Certificates and (b) stating the date upon which such Series is to
be issued (such date, the "Issuance Date" and such notice, the "Issuance
Notice") and certifying the satisfaction of the conditions stated in this
Section and Section 6.1, the Trustee shall, subject to Section 6.8(b),
authenticate pursuant to Section 6.2 and deliver to or upon the order of the
Transferor on such Issuance Date such new Series of Investor Certificates;
provided, however, that each Rating Agency shall have confirmed in writing that
the issuance of such new Series of Investor Certificates will not result in such
Rating Agency reducing or withdrawing its original rating on any outstanding
Series or class of Certificates. Any such Series of Investor Certificates shall
be substantially in the form of the exhibit attached to the applicable
Supplement and shall bear, upon its face, the designation for such Series to
which it belongs so selected by the Transferor and set forth in the related
Supplement. Any restrictions relating to a new Series of Certificates shall be
specified in the related Supplement. All Investor Certificates of any Series
shall be identical in all respects except for the denominations thereof and
shall be equally and ratably entitled among themselves as provided herein to the
benefits of this Agreement and any Supplement thereof without preference,
priority or distinction on account of the actual time or times of authentication
and delivery, all in accordance with the terms and provisions of this Agreement
and such Supplement. No new Series of Investor Certificates issued pursuant to
the provisions of this Section shall adversely affect the method of allocating
Collections of any other Series of Certificates for any period over which such
Series shall be outstanding.
(b) On the Issuance Date, the Trustee shall authenticate
and deliver any such new Series upon delivery to it of the following: (i) a
Supplement executed by the Transferor and specifying the items provided in
Section 6.8(c) (the "Principal Terms"), (ii) an Opinion of Counsel to the effect
(x) that the newly issued Series will be treated as debt for Federal and
applicable state income tax purposes under existing law and will not adversely
affect the status of any Series of Investor Certificates as debt for Federal and
applicable state income tax purposes, and (y) will not cause the Trust to be
taxable as a corporation or as a separate entity under Federal or applicable
state tax laws, (iii) except with respect to the issuance of the 1999-1 Series
issued pursuant to the 1999-1 Supplement and the Series 1999-2 issued pursuant
to the Series 1999-2 Supplement, written confirmation from each Rating Agency
that the issuance of such new Series will not result in the Rating Agency's
reducing or withdrawing its original rating on any then outstanding Series or
class of Certificates rated by it and (iv) such other closing documents,
certificates and Opinions of Counsel as may be required by the applicable
Supplement. Notwithstanding the foregoing, the Trustee shall not authenticate
and deliver any new Series hereunder unless it also receives on or prior to the
Issuance Date, an Officer's Certificate of the Transferor stating: (a) the size
of the Transferor Amount prior to such issuance, (b) the Initial Invested Amount
of the new Series, which, except with respect to the 1999-1 Series issued
pursuant to the 1999-1 Supplement, shall be less than the amount given in clause
(a), and (c) the size of the Transferor Amount and the Minimum Transferor Amount
after giving effect to such issuance.
(c) The Principal Terms of any Series shall consist of:
(i) with respect to any Series, the name or designation of the Series, (ii) the
Initial Invested Amount thereof, (iii)
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the Certificate Rate of such Series (or the formula for the determination
thereof, which may provide that such rate is a floating rate) in the case of the
issuance of a Series of Investor Certificates, (iv) the method of allocating
Collections (i.e. the applicable Invested Percentage) with respect to
Receivables for such Series, (v) if applicable, the Series Termination Date,
(vi) the Repurchase Terms, if any, and (vii) the scheduled Amortization Period
Commencement Date.
(d) Any Supplement relating to an additional Series may
define or make provision with respect to the Series to be issued pursuant
thereto for: (i) the establishment of one or more accounts held at an Eligible
Institution for holding Collections on the Receivables as specified in the
Supplement or for other purposes specified therein, (ii) the deposit of funds
into any such accounts, (iii) the use of a guaranteed investment contract,
surety bond, interest rate protection, swap or other similar agreement with
respect to the Series (an "Enhancement"), (iv) any evergreen or other extension
feature with respect to the Series, (v) any amendments or modifications of any
Events of Termination relating to such Series, and (vi) such other provisions
which the Transferor may, in its sole discretion, wish to incorporate which do
not affect or alter the provisions of this Agreement, or any Supplement,
applicable to any other then outstanding Series or class of Certificates and
which shall be acceptable to the Trustee insofar as they affect the rights,
duties and obligations of the Trustee hereunder or under any such Supplement.
(e) Compliance with the provisions of this Section 6.8
shall not be necessary in connection with an increase in the Invested Amount of
any Investor Certificates issued in a Series with an Invested Amount that may
increase or decrease from time to time. Such Investor Certificates may be
designated as "Variable Funding Certificates" or "VFC Certificates".
Section 6.9 [Reserved]
Section 6.10 Book-Entry Certificates. If provided in any
Supplement, the Investor Certificates of any Series, upon original issuance,
will be issued in the form of one or more typewritten Certificates representing
the Book-Entry Certificates, to be delivered to The Depository Trust Company,
the initial Clearing Agency, by, or on behalf of, the Transferor. The Investor
Certificates of such Series shall initially be registered on the Certificate
Register in the name of CEDE & Co., the nominee of The Depository Trust Company,
which shall be the initial Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Investor Certificates, except as provided in Section 6.12. Unless and
until definitive, fully registered Investor Certificates (the "Definitive
Certificates") have been issued to Certificate Owners in respect of a particular
Series pursuant to Section 6.12 or the related Supplement:
(i) the Transferor, the Servicer, and the Trustee may
deal with the Clearing Agency and the Clearing Agency Participants for
all purposes (including the making of distributions on the Investor
Certificates) as the authorized representatives of such Certificate
Owners;
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(ii) to the extent that the provisions of this Section
6.10 conflict with any other provisions of this Agreement, the
provisions of this Section 6.10 shall control; and
(iii) the rights of such Certificate Owners shall be
exercised only through
the Clearing Agency and the Clearing Agency Participants and shall be
limited to those established by law and agreements between such
Certificate Owners and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to a depository agreement, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal and
interest on the Investor Certificates to such Clearing Agency
Participants.
(iv) Notwithstanding the foregoing, no Class or Series
of Investor Certificates may be issued as Book-Entry Certificates
(but, instead, shall be issued as Definitive Certificates) unless at
the time of issuance of such Class or Series, the Transferor and the
Trustee receive a Tax Opinion.
Section 6.11 Notices to Clearing Agency. Whenever notice or
other communication to the Investor Certificateholders of any Series is required
under this Agreement, unless and until Definitive Certificates shall have been
issued to Certificate Owners pursuant to Section 6.12, the Trustee, shall give
all such notices and communications specified herein to be given to Holders of
the Investor Certificates of such Series to the Clearing Agency.
Section 6.12 Definitive Certificates. If (i)(A) the Transferor
advises the Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities under an applicable depository
agreement, and (B) the Transferor is unable to locate a qualified successor,
(ii) the Transferor, at its option, advises the Trustee in writing that, with
respect to any Series, it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of a Servicer Default or an Event
of Termination representing Undivided Interests aggregating not less than 51% of
the Invested Amount of such Series advise the Trustee and the Clearing Agency
through the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Certificate Owners of such Series, the Trustee shall notify the Clearing
Agency of the occurrence of any such event and of the availability of Definitive
Certificates of such Series to Certificate Owners of such Series requesting the
same. Upon surrender to the Trustee of the Investor Certificates of such Series
by the Clearing Agency, accompanied by registration instructions from such
Clearing Agency for registration, the Trustee shall authenticate and deliver
Definitive Certificates of such Series to the applicable Investor
Certificateholders named in such registration instructions. Neither the
Transferor, and Registrar nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates of any Series, all references herein to obligations with respect to
such Series imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
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[END OF ARTICLE VI]
ARTICLE VII
OTHER MATTERS RELATING
TO THE TRANSFEROR
Section 7.1 Liability of the Transferor. The Transferor shall
be liable for each obligation, covenant, representation and warranty of the
Transferor arising under or related to this Agreement or any Supplement and
shall be liable only to such extent.
Section 7.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Transferor.
(a) The Transferor shall not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person unless:
(i) the corporation formed by such consolidation or
into which the Transferor is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Transferor
substantially as an entirety shall be, if the Transferor is not the
surviving entity, organized and existing under the laws of the United
States of America or any state or the District of Columbia, and, if
the Transferor is not the surviving entity, shall expressly assume, by
an agreement supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the performance of every
covenant and obligation of the Transferor in this Agreement, any
Supplement, the Receivables Purchase Agreement and such entity's
articles or certificate of incorporation shall limit its business
activities to activities substantially similar to the business
activities of the Transferor; and the Transferor shall have delivered
to the Trustee an officer's Certificate of the Transferor and an
Opinion of Counsel, each stating that such consolidation, merger,
conveyance or transfer and such supplemental agreement comply with
this Section 7.2 and that all conditions precedent herein provided for
relating to such transaction have been complied with and, in the case
of the Opinion of Counsel, that such supplemental agreement is the
legal, valid and binding obligation of the parties (other than the
Trustee) thereto; and
(ii) each Rating Agency shall have confirmed in writing
that the rating of any outstanding Series by such Rating Agency will
not be reduced or withdrawn.
(b) The obligations of the Transferor hereunder shall not
be assignable nor shall any Person succeed to the obligations of the Transferor
hereunder except in each case in accordance with the provisions of Section
7.2(a).
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Section 7.3 Limitation on Liability of the Transferor. Subject to
Sections 7.1 and 7.4 with respect to the Transferor, and except as specifically
provided herein or in any Supplement, neither the Transferor nor any of the
directors or officers or employees or (subject to the proviso in the last
sentence of Section 2.4(c) above) Affiliates or agents of the Transferor shall
be under any liability to the Trust, the Trustee, the Certificateholders or any
other Person for taking any action or for refraining from taking any action
pursuant to this Agreement (including any Supplement) whether arising from
express or implied duties under this Agreement (including any Supplement) or
otherwise; provided, however, that this provision shall not protect the
Transferor or any such Person against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Transferor and any director or officer or employee or
Affiliate or agent of the Transferor may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. Each of the Trustee and the Servicer agrees that
the obligations of the Transferor to the Trustee, the Servicer, the
Certificateholders and the Trust hereunder, including without limitation the
obligation of the Transferor in respect of indemnities pursuant to Section 7.4
hereof, shall (subject to the proviso in the last sentence of Section 2.4(c)
above) be payable from the Trust Assets (and, solely with respect to the payment
of interest and repayment of principal under the Certificates, solely from the
Trust Assets) in accordance with the provisions of this Agreement and any
Supplement or such other assets of the Transferor as may be available; provided
that such obligations (other than in respect of principal and interest on the
Certificates) shall be suspended at any time solely to the extent that, and for
so long as, the Transferor's assets are insufficient to pay in full such
obligations; and provided, further, that such obligations (other than in respect
of principal and interest on the Certificates) are fully subordinated to the
Transferor's obligations with respect to the payment of interest and principal
under the Certificates, and the security interest of the Trustee in the Trust
Assets with respect to such interest and principal obligations and provided
further, that such obligations are non-recourse obligations of the Transferor
and if unpaid, do not represent a claim against the Transferor. The provisions
of this Section shall survive termination of this Agreement and termination of
the Trust.
Section 7.4 Liabilities. By entering into this Agreement, the
Transferor as holder of the Transferor Certificate, which may not be transferred
except as provided in Section 6.3(b), Section 6.9 or Section 7.2, agrees to pay,
indemnify and hold harmless (a) each Investor Certificateholder, in accordance
with the provisions of this Agreement and any Supplement or from such other
assets of the Transferor as may be available, (and, solely with respect to the
payment of interest and the repayment of principal under the Certificates,
solely from the Trust Assets) and (b) any other injured party against and from
any and all losses, claims, damages or liabilities (other than those incurred by
a Certificateholder in the Investor Certificates of any Series as a result of
defaults or other losses (including, without limitation, Defaulted Receivables)
suffered by such Certificateholders or other party arising out of or based on
the arrangements created by this Agreement or any Supplement as though this
Agreement and each Supplement created a partnership among the Transferor and the
Certificateholders under the Uniform Partnership Act in effect in the State of
Illinois in which the Transferor is a general partner, except to the extent that
such losses, claims, damages or liabilities arise from any action by such
Investor Certificateholder causing such losses, claims, damages or liabilities;
provided, however, that such obligations under this Section 7.4 other than in
respect of principal and
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interest on the Certificates are fully subordinated to the Transferor's
obligations with respect to the payment of interest and principal under the
Certificates and to the security interest of the Trustee in the Trust Assets
with respect to such interest and principal obligations, and provided, further,
that the obligations under this Section 7.4 shall be payable only from the
assets of the Transferor at the time such liability is asserted and at any time
thereafter and not from the assets of any director, officer, employee, agent or
Affiliate of the Transferor. All obligations of the Transferor hereunder are
non-recourse obligations of the Transferor and if remain unpaid, do not
represent a claim against the Transferor.
[END OF ARTICLE VII]
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
Section 8.1 Liability of the Servicer. The Servicer shall be
liable under this Agreement only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.
Section 8.2 Merger or Consolidation of, or Assumption of the
Obligations of, Stone Container as Servicer. Stone Container, for so long as it
is the Servicer, shall not consolidate with or merge into any other corporation
(other than an Affiliate) or convey or transfer its properties and assets
substantially as an entirety to any Person (other than an Affiliate), unless:
(i) the corporation formed by such consolidation or
into which Stone Container is merged or the Person which acquires by
conveyance or transfer the properties and assets of Stone Container
substantially as an entirety shall be a corporation organized and
existing under the laws of the United States of America or any State
or the District of Columbia, and, if Stone Container is not the
surviving entity, such corporation shall qualify as an Eligible
Servicer and shall expressly assume, by an agreement supplemental
hereto executed and delivered to the Trustee in a form satisfactory to
the Trustee, the performance of every covenant and obligation of Stone
Container as Servicer in this Agreement, any Supplement and the
Receivables Purchase Agreement;
(ii) Stone Container has delivered notice of such
consolidation, merger, transfer or conveyance to the Rating Agencies
and received written confirmation from each Rating Agency that such
action will not result in the withdrawal or downgrade of the original
rating of any outstanding Series; and
(iii) the Servicer has delivered to the Trustee (A) an
Officer's Certificate of the Servicer stating that such consolidation,
merger, conveyance or transfer and such supplemental agreement comply
with this Section 8.2 and that all conditions precedent herein
provided for relating to such transaction have been complied with and
(B) an Opinion of Counsel stating that such supplemental agreement is
the legal, valid and binding obligations of the parties (other than
the Trustee) thereto.
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Section 8.3 Limitation on Liability of the Servicer and Others.
Subject to Section 8.4 with respect to the Servicer, except as otherwise
specifically provided herein or in any Supplement, neither the Servicer nor any
of the directors or officers or employees or Affiliates or agents of the
Servicer shall be under any liability to the Trust, the Trustee, the
Certificateholders or any other Person for taking any action or for refraining
from taking any action pursuant to this Agreement (including any Supplement),
whether arising from express or implied duties under this Agreement (including
any Supplement) or otherwise; provided, however, that this provision shall not
protect the Servicer or any such Person against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Servicer and any director or officer or employee or
Affiliate or agent of the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Servicer shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
duties to service the Receivables in accordance with this Agreement or any
Supplement which in its reasonable opinion may involve it in any expense or
liability. The provisions of this Section shall survive termination of this
Agreement and termination of the Trust.
Section 8.4 Servicer Indemnification of the Trust and the
Trustee. The Servicer shall indemnify and hold harmless the Trustee (and each of
its directors, officers, employees and agents) and the Trust, individually and
for the benefit of the Certificateholders, from and against any loss, liability,
expense, damage or injury suffered or sustained by reason of any acts, omissions
or alleged acts or omissions arising out of activities of the Trustee or the
Trust pursuant to this Agreement, including those arising from acts or omissions
of the Servicer pursuant to this Agreement, or otherwise arising out of this
Agreement, including but not limited to any judgment, award, settlement,
reasonable attorneys' fees and other reasonable costs or expenses incurred in
connection with the defense of any action, proceeding or claim; provided,
however, that the Servicer shall not indemnify the Trustee or the Trust,
individually or for the benefit of the Certificateholders, if such acts,
omissions or alleged acts or omissions constitute or result from fraud,
negligence, breach of fiduciary duty or willful misconduct by the Trustee; and
provided, further, that the Servicer shall not indemnify the Trust or the
Certificateholders, with respect to (x) any losses, liabilities, expenses,
damages or injuries of the Trust with respect to any action taken by the Trustee
at the request of any Certificateholder of any Series, (y) any Federal, state or
local taxes (or any interest or penalties or additions with respect thereto), or
(z) any losses, liabilities, expenses, damages or injuries incurred by any
Investor Certificateholder as a result of defaults or other losses (including,
without limitation, losses incurred as a result of Defaulted Receivables) with
respect to the Receivables arising out of or based on the arrangement created by
this Agreement or any Supplement. Any indemnification pursuant to this Section
shall not be payable from the Trust Assets. The provisions of such indemnity
shall run directly to and be enforceable by an injured party subject to the
limitations hereof. The provisions of this Section shall survive the resignation
or removal of the Servicer and the termination of this Agreement.
Section 8.5 The Servicer Not to Resign. The Servicer shall not
resign from the obligations and duties hereby imposed on it except upon its
determination (and notification to the Trustee) that (i) the performance
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of its duties hereunder is no longer permissible under applicable law and (ii)
there is no reasonable action which the Servicer could take to make the
performance of its duties hereunder permissible under applicable law. Any such
determination permitting the resignation of the Servicer shall be evidenced as
to clause (i) above by an Opinion of Counsel (which Opinion of Counsel may not
be provided by in-house counsel to the Servicer) to such effect delivered to the
Trustee. No such resignation shall become effective until the Trustee or a
Successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 10.2 hereof; provided, that if within
one hundred twenty (120) days of the date that the Servicer notifies the Trustee
of its determination described in the first sentence of this Section 8.5 and
delivers to the Trustee the Opinion of Counsel referred to above the Trustee
does not appoint an Eligible Servicer in accordance with Section 10.2(c) to act
as Successor Servicer, then the Trustee shall automatically be appointed
Successor Servicer in accordance with Section 10.2 (but shall have the continued
authority to appoint another Person as Successor Servicer).
Section 8.6 Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Trustee and its
representatives access to personnel having knowledge about the Receivables and
copies of the documents, books, files, microfiche lists, computer records, disks
or tapes and other information regarding the Receivables and the other Trust
Assets where required in connection with the Trustee's enforcement of the rights
of the Certificateholders, or required by applicable statutes or regulations, to
review such documentation, such access and copies, if any, being afforded
without charge but only (i) upon prior written request, (ii) during normal
business hours and (iii) subject to the Servicer's normal security and
confidentiality procedures.
Section 8.7 Delegation of Duties. In the ordinary course of
business, the Servicer may at any time delegate any duties hereunder to any
Person who agrees to conduct such duties in accordance with the Credit and
Collection Policy and this Agreement or any Supplement; provided, however, with
respect to any proposed delegation of a material function relating to the
servicing of the Receivables to a Person other than a Subsidiary or Affiliate,
written notice shall be given to each Rating Agency and the Trustee of such
delegation. Any delegation shall not relieve the Servicer of its liability and
responsibility with respect to such duties and shall not constitute a
resignation within the meaning of Section 8.5 hereof.
Section 8.8 Examination of Records. The Transferor and the
Servicer shall, prior to the sale or transfer to a third party of any
receivable, contract or invoice held in its custody, examine its computer and
other records to determine that such receivable, contract or invoice is not part
of the Trust Assets.
[END OF ARTICLE VIII]
ARTICLE IX
EVENTS OF TERMINATION
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Section 9.1 Events of Termination with Respect to any Series. If
any one of the following events or an event specified in an applicable
Supplement shall occur at such time as there shall be at least one outstanding
Investor Certificate:
(i) failure (A) on the part of the Transferor or the
Servicer to make (i) any payment or deposit of principal or interest
required by the terms of the Agreement on or before three Business
Days after the date such payment or deposit is required to be made or
(ii) any other payment or deposit required by the Agreement on or
before five Business Days after the date such other payment or deposit
is required to be made; or (B) on the part of the Transferor to duly
observe or perform in any material respect the covenant of the
Transferor to preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation and
to qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to preserve and
maintain such existence would, if not remedied, materially adversely
affect the interests of the Certificateholders in the Receivables, or
the ability of the Transferor or the Servicer to perform its
obligations under this Agreement, if such failure is not remedied
within 60 days of receipt of notice of such failure by the Trustee or
the Transferor; or (C) on the part of the Transferor to duly observe
or perform in any material respect any other covenants or agreements
of the Transferor set forth in this Agreement or any Supplement; or
(D) on the part of the Servicer to deliver the Daily Report required
on any Business Day pursuant to this Agreement or any Settlement
Statement required pursuant to this Agreement; which failure with
respect to clauses (B), (C) and (D) continues unremedied for 30 days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Transferor or the
Servicer by the Trustee, or to the Transferor and the Trustee by the
Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Invested Amount of the applicable
Series; provided, however, that with respect to clause (D) above, the
Transferor shall have five days after the date of receipt of notice
to cure any such failure;
(ii) any representation or warranty made by the
Transferor in this Agreement or any Supplement, or any information
contained in a computer file, microfiche list or hard copy list
required to be delivered by the Transferor pursuant to this Agreement
shall prove to have been incorrect in any material respect when made
or when delivered, which continues to be incorrect in any material
respect for a period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been
given to the Transferor by the Trustee, or to the Transferor by the
Trustee after receipt of notice from Certificateholders evidencing
Undivided Interests aggregating not less than 51% of the Invested
Amount of the related Series and as a result of which the interests of
the Certificateholders are materially and adversely affected;
(iii) Stone Container or the Transferor voluntarily
seeks, consents to or acquiesces in the benefit or benefits of the
Bankruptcy Code or becomes a party to (or is made the subject of) any
proceeding provided for by the Bankruptcy Code, other than as creditor
or claimant, and in the event such proceeding is involuntary, the
petition instituting same is not dismissed within 60 days of its
filing; or Stone Container or the Transferor admits its inability to
pay its debts when due; or the Transferor shall
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become unable for any reason to transfer Receivables to the Trust in
accordance with the provisions of the Agreement, or Stone Container
shall become unable for any reason to sell Receivables to the
Transferor in accordance with the provisions of the Receivables
Purchase Agreement;
(iv) the Trust becomes or becomes controlled by an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended; or
(v) the Trustee has not accepted a bid from an Eligible
Servicer to service the Receivables within 60 days after any Servicer
Default with respect to which a Termination Notice has been issued;
then, (a) in the case of any event described in clause (C) or clause (D) of
subparagraph (i) or in subparagraphs (ii) and (v) after any applicable grace
period set forth in such subparagraphs, the Trustee may, and at the direction of
Investor Certificateholders evidencing Undivided Interests aggregating 66 2/3%
or more of the Invested Amount of any series, shall by notice then given in
writing to the Transferor and the Servicer (and to the Trustee if given by the
Certificateholders) may declare that an Event of Termination has occurred (A)
with respect to all Series of Certificates (in the case of notice given by the
Trustee) or (B) such Series (in the case of notice given by Investor
Certificateholders) as of the date of such notice; (b) in the case of any event
described in clause (B) or subparagraph (i), subparagraphs (iii) or (iv) an
Event of Termination with respect to all Series shall occur without any notice
or other action on the part of the Trustee or any Certificateholder immediately
upon the occurrence of such event; or (c) in the case of any event described in
clause (A) of subparagraph (i), unless within fifteen days of any such event
(after any applicable grace period) Certificateholders aggregating 51% or more
of the Invested Amount waive such event, an Event of Termination shall occur
without any notice on the part of the Certificateholders or the Trustee.
In addition to the consequences of an Event of Termination
discussed above, if the Transferor voluntarily files a bankruptcy petition or
consents to the filing of such petition, and in the event that the resulting
proceeding is involuntary, the petition instituting the same is not dismissed
within 60 days of its filing, or the Transferor goes into liquidation or any
Person is appointed a receiver or bankruptcy trustee of the Transferor, on the
day of such event the Transferor will immediately cease to transfer Receivables
to the Trustee under this Agreement and will promptly give notice to the Trustee
of such event.
Section 9.2 [Reserved]
Section 9.3 Additional Rights Upon the Occurrence of Certain
Events.
(a) If the Transferor (i) voluntarily or involuntarily
seeks, consents to or acquiesces in the benefit or benefits of the Bankruptcy
Code or becomes a party to (or is made the subject of) any proceeding provided
for by the Bankruptcy Code, other than as creditor or claimant, and in the event
such proceeding is involuntary, the petition instituting the same is not
dismissed within 90 days of its filing or (ii) goes into liquidation or any
other Person shall be appointed as a bankruptcy trustee or receiver or
conservator of the Transferor, then the Transferor shall on the day of such
event (the "Appointment Date") immediately cease to transfer
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Receivables to the Trustee and shall promptly give notice to the Trustee of such
event. Notwithstanding any cessation of the transfer to the Trustee of
additional Receivables, Receivables transferred to the Trustee prior to the
occurrence of such voluntary or involuntary event and Collections in respect of
such Receivables whenever created, accrued in respect of such Receivables, shall
continue to be a part of the Trust Assets. Within 15 days of the day on which a
Responsible Officer of the Trustee first receives written notice of the
occurrence of the Appointment Date, the Trustee shall (x) publish a notice in an
Authorized Newspaper that (i) the Transferor has sought, consented or acquiesced
in the benefit of the Bankruptcy Code or has become a party to (or made the
subject of) a proceeding as described in clause (i) of this Section 9.3(a) or
(ii) a bankruptcy trustee, receiver or conservator of the Transferor has been
appointed or that a voluntary liquidation of the Transferor has occurred, and
that the Trustee intends to sell, dispose of or otherwise liquidate the
Receivables on commercially reasonable terms and in a commercially reasonable
manner and (y) send written notice to the Investor Certificateholders describing
the provisions of this Section 9.3 and requesting instructions from such
Holders. Unless within 60 days from the day written notice pursuant to clause
(y) above is first sent, the Trustee shall have received written instructions of
the Holders of Investor Certificates representing Undivided Interests
aggregating more than 50% of the Invested Amount of each Series and in the case
of a Series having more than one Class, more than 50% of the Invested Amount of
each Class of such Series, to the effect that such Certificateholders disapprove
of the liquidation of the Receivables and wish to continue receiving Receivables
under the Trust as before such appointment, or unless the Trustee shall have
received an Opinion of Counsel addressed to the Trustee to the effect that any
such sale, disposition or liquidation is prohibited by law, the Trustee shall
proceed to sell, dispose of, or otherwise liquidate the Receivables on
commercially reasonable terms and in a commercially reasonable manner, which
shall include the solicitation of competitive bids. The Trustee may obtain, and
shall be fully protected in relying on, a prior determination from such
bankruptcy trustee or receiver or conservator that the terms and manner of any
proposed sale, disposition or liquidation hereunder are commercially reasonable.
The provisions of Sections 9.1 and 9.3 shall not be deemed to be mutually
exclusive.
(b) The proceeds from the sale, disposition or liquidation
of the Receivables pursuant to subsection (a) above, net of all reasonable
expenses incurred by the Trustee in connection with such sale, liquidation or
other disposition, which shall be paid to the Trustee from such proceeds, shall
be treated as Collections of the Receivables and shall be allocated in
accordance with the provisions of Section 4.3. On the day following the Payment
Date on which such proceeds are distributed to the Investor Certificateholders,
the Trust shall terminate.
(c) Upon the occurrence of an event specified in Section
9.3(a), if the Trustee has not sold, disposed of or otherwise liquidated the
Receivables as provided therein within 120 days after the Appointment Date, the
Trustee, upon the written instructions of all of the Holders of Investor
Certificates of any Series shall sell, dispose of or otherwise liquidate
Receivables on a best efforts basis, selected on a random basis from all
Receivables in the Trust, in an amount equal to the product of the Aggregate
Eligible Receivables and the aggregate percentage of Undivided Interests in the
Trust Assets represented by all Series so instructing the Trustee; provided that
such sale shall not result in the reduction or withdrawal of any rating assigned
by the Rating Agency to any Series not so instructing the Trustee. The proceeds
from such sale, disposition or liquidation, net of all reasonable expenses
incurred by the Trustee in
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connection with such sale, disposition or liquidation, which shall be paid to
the Trustee, shall be deposited in the Collection Account by the Trustee and
shall be treated as Collections of Receivables allocable to the Series so
instructing the Transferor and shall be allocated in accordance with Section
4.3. Upon distribution of such proceeds in accordance with Article IV, such
Series shall be deemed paid in full and no further amounts shall be allocated to
such Series.
[END OF ARTICLE IX]
ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults. If any one of the following
events (a "Servicer Default") shall occur and be continuing:
(a) failure by the Servicer to make any payment, transfer
or deposit or to give instructions or to give notice to the Trustee to make such
payment, transfer or deposit on the date such payment, transfer or deposit or
such instruction or notice is required to be made or given, as the case may be,
under the terms of this Agreement or any Supplement on or before three Business
Days after the date such payment, transfer or deposit is required to be made;
(b) failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in this
Agreement or any Supplement that has a material adverse effect on the holder of
the Transferor Certificate or the Certificates of any Series, which failure
continues unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Trustee, or by the holders of Investor Certificates of
any Series evidencing Undivided Interests in the Trust Assets aggregating more
than 50% of the Invested Amount of any Series materially adversely affected
thereby; or the Servicer shall assign its duties under this Agreement, except as
permitted by Sections 8.2, 8.5 and 8.7;
(c) any representation, warranty or certification made by
the Servicer in this Agreement, any Supplement or in any certificate or report
delivered pursuant to this Agreement or any Supplement shall prove to have been
incorrect when made, which has a material adverse effect on the rights of the
holder of the Transferor Certificate or the Investor Certificates of any Series
and which failure continues unremedied for a period of 60 days after the date on
which written notice thereof, requiring the same to be remedied, shall have been
given to the Servicer by the Trustee, or by the holders of Investor Certificates
of any Series evidencing Undivided Interests in the Trust Assets aggregating not
less than 51% of the Invested Amount of any Series materially adversely affected
thereby; or
(d) the Servicer shall voluntarily seek, consent to or
acquiesce in the benefit or benefits of the Bankruptcy Code or, voluntarily or
involuntarily, become a party to (or be made the subject of) any proceeding
provided for under the Bankruptcy Code, other than as creditor or claimant, and
in the event such proceeding is involuntary, the petition instituting same is
not dismissed within 90 days of its filing;
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then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, the Trustee may, and at the direction of the
holders of Investor Certificates evidencing Undivided Interests aggregating more
than 51% of the Invested Amount of any Series materially and adversely affected
thereby, shall by notice then given in writing to the Servicer and the
Transferor (with a copy thereof to each Rating Agency and to the Trustee if
given by a Person other than the Trustee (a "Termination Notice"), may terminate
the rights and obligations of the Servicer as Servicer under this Agreement and
in and to the Receivables and the proceeds thereof.
After receipt by the Servicer of a Termination Notice, and on the
date that a Successor Servicer shall have been appointed pursuant to Section
10.2, all authority and power of the Servicer under this Agreement and each
Supplement shall pass to and be vested in a Successor Servicer (a "Service
Transfer"); and, without limitation, the Trustee is hereby authorized and
empowered (upon the failure of the Servicer to cooperate) to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, which
grant of authority is irrevocable and coupled with an interest, all documents
and other instruments upon the failure of the Servicer to execute or deliver
such documents or instruments, and to do and accomplish all other acts or things
necessary or appropriate to effect the purposes of such Service Transfer. The
Servicer agrees to cooperate with the Trustee, the Transferor and such Successor
Servicer in effecting the termination of the responsibilities and rights of the
Servicer to conduct servicing hereunder, including, without limitation, the
transfer to such Successor Servicer of all authority of the Servicer to service
the Receivables provided for under this Agreement, including, without
limitation, all authority over all Collections which shall on the date of
transfer be held by the Servicer for deposit, or which have been deposited by
the Servicer in the Collection Account, or which shall thereafter be received
with respect to the Receivables, and in assisting the Successor Servicer. The
Servicer shall at its expense promptly transfer, to the extent it is permitted
by applicable law to do so, its electronic records relating to the Receivables
to the Successor Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly transfer, to the extent it is permitted by
applicable law to do so, to the Successor Servicer all other records,
correspondence and documents necessary for the continued servicing of the
Receivables in the manner and at such times as the Successor Servicer shall
reasonably request and shall, to the extent not prohibited by licensing
restrictions, provide access to or copies of computer software, including by
means of sublicensing arrangements if applicable, to the extent necessary for
the continued servicing of the Receivables; provided, however, that the Servicer
shall not be required, to the extent it has an ownership interest in any
electronic records, computer software or licenses, to transfer, assign, set-over
or otherwise convey such ownership interest(s) to the Successor Servicer. The
Servicer at its expense shall provide the Successor Servicer with access to any
computer hardware in its possession for a reasonable time after the Servicer's
termination to the extent necessary for the uninterrupted servicing of the
Receivables. Notwithstanding the foregoing, the Servicer shall not be required
to provide such access, whether with respect to computer hardware or software,
if to provide such access would violate applicable contractual restrictions
(including pursuant to any licensing arrangements to which Stone Container is a
party); provided, however, that Stone Container shall use its reasonable best
efforts in seeking consents or waivers necessary to permit the Successor
Servicer to have such access. To the extent that compliance with this Section
10.1 shall require the Servicer to disclose to the Successor Servicer
information of any kind which the Servicer reasonably deems to be
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confidential, the Successor Servicer shall be required to enter into such
confidentiality agreements as the Servicer shall reasonably deem necessary to
protect its interest.
Notwithstanding the foregoing, a delay in or failure of
performance under Section 10.1(a) shall not constitute a Servicer Default if
such delay or failure was caused by an Act of God, the public enemy, acts of
declared or undeclared war, public disorder, rebellion or sabotage, epidemics,
landslides, lightning, fire, hurricanes, earthquakes, floods or similar causes
and no funds have been remitted to Stone Container or the Transferor. The
preceding sentence shall not relieve the Servicer from using reasonable efforts
to perform its obligations in a timely manner in accordance with the terms of
this Agreement and each Supplement, and the Servicer shall provide the Trustee,
the Rating Agencies, the Transferor and the Investor Certificateholders with an
Officer's Certificate giving prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations. The
Servicer shall immediately notify the Trustee in writing of any Servicer
Default. In connection with any Service Transfer, all reasonable costs and
expenses (including attorneys, fees) incurred by the Trustee in connection with
transferring the Receivables to the Successor Servicer and entering into a
written assumption and agreement with the Successor Servicer pursuant to this
Section 10.1 and Section 10.2 shall be paid by the Servicer upon presentation of
reasonable documentation of such costs and expenses and if not paid by the
Servicer shall be payable up to an amount not to exceed $100,000 from amounts
held in the Collection Account.
Section 10.2 Trustee to Act; Appointment of Successor.
(a) On and after the receipt by the Servicer of a
Termination Notice pursuant to Section 10.1, the Servicer shall continue to
perform all servicing functions under this Agreement and any Supplement until
the date specified in the Termination Notice or, if no such date is specified in
such Termination Notice, until a date specified by the Trustee. The Trustee
shall as promptly as possible after the giving of a Termination Notice appoint
an Eligible Servicer as a successor servicer (the "Successor Servicer") and such
Successor Servicer shall have obtained written confirmation from each Rating
Agency that the then current rating on any outstanding Series will not be
reduced or withdrawn as a result of such appointment and shall accept its
appointment by a written assumption and agreement to perform all of the duties,
obligations and liabilities of the Servicer hereunder in a form acceptable to
the Trustee. In the event that a Successor Servicer has not been appointed or
has not accepted its appoint when the Servicer ceases to act as Servicer, or
upon the occurrence of the events specified in Section 8.5, the Trustee without
further action shall automatically be appointed the Successor Servicer. The
Trustee may delegate any of its servicing obligations to an Affiliate or agent
of the Servicer or the Trustee; provided, however, that any such delegation
shall not relieve the Trustee as Successor Servicer of its liabilities and
responsibilities with respect to its duties as Successor Servicer.
Notwithstanding the above, the Trustee shall, if it is unwilling or legally
unable so to act, petition a court of competent jurisdiction to appoint as
Successor Servicer a Person that is an Eligible Servicer. The Trustee shall
promptly give notice to each Rating Agency of the appointment of a Successor
Servicer upon such appointment.
(b) Upon its appointment, the Successor Servicer shall be
the successor in all respects to the Servicer with respect to servicing
functions under this Agreement and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the
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Servicer by the terms and provisions hereof, and all references in this
Agreement and any Supplement to the Servicer shall be deemed to refer to the
Successor Servicer.
(c) In connection with any Termination Notice, the Trustee
shall be permitted to appoint any Eligible Servicer as a Successor Servicer and
Stone Container shall be responsible for payment of all servicing compensation,
if any, in excess of the Servicing Fee. No such monthly compensation of a
Successor Servicer paid out of Collections shall be in excess of the Servicing
Fee permitted to a Successor Servicer pursuant to Section 3.2.
(d) All authority and power granted to the Successor
Servicer under this Agreement shall automatically cease and terminate upon
termination of the Trust pursuant to Section 12.1, and shall pass to and be
vested in the Transferor and, without limitation, the Transferor is hereby
authorized and empowered to execute and deliver, on behalf of the Successor
Servicer, as attorney-in-fact or otherwise, which grant of authority is
irrevocable and coupled with an interest, all documents and other instruments,
and to do and accomplish all other acts or things necessary or appropriate to
effect the purposes of such transfer of servicing rights. The Successor Servicer
shall agree to cooperate with the Transferor in effecting the termination of the
responsibilities and rights of the Successor Servicer to conduct servicing of
the Receivables, including, without limitation, all authority over Collections
then held by the Successor Servicer or which shall thereafter be received by the
Successor Servicer. The Successor Servicer shall promptly transfer its
electronic records relating to the Receivables to the Transferor in such
electronic form as the Transferor may reasonably request and shall promptly
transfer all other records, correspondence and documents to the Transferor in
the manner and at such times as the Transferor shall reasonably request. To the
extent that compliance with this Section 10.2 shall require the Successor
Servicer to disclose to the Transferor information of any kind which the
Successor Servicer deems to be confidential, the Transferor shall be required to
enter into such licensing and confidentiality agreements as the Successor
Servicer shall reasonably deem necessary to protect its interests.
Section 10.3 Notification to Certificateholders. Upon the
occurrence of any Servicer Default, the Servicer shall give prompt written
notice thereof to the Trustee and, upon receipt of such written notice, the
Trustee shall give notice to each Rating Agency, and the Investor
Certificateholders at their respective addresses appearing in the Certificate
Register. Upon any termination or appointment of a Successor Servicer pursuant
to this Article X, the Trustee shall give prompt written notice thereof to the
Investor Certificateholders at their respective addresses appearing in the
Certificate Register.
Section 10.4 Waiver of Past Defaults. The Holders of Investor
Certificates evidencing Undivided Interests aggregating more than 50% of the
Invested Amount of any Series materially adversely affected by any default by
the Servicer or Transferor may, on behalf of all Certificateholders of such
affected Series, waive any default by the Servicer or the Transferor in the
performance of their obligations hereunder and its consequences, except a
default in the failure to make any required deposits or payments of interest or
principal with respect to any Series of Certificates. Upon any such waiver of a
past default, such default shall cease to exist, and any default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
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[END OF ARTICLE X]
ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee. (a) If to the actual knowledge of
a Responsible Officer of the Trustee a Servicer Default or Event of Termination
has occurred (which has not been cured or waived), the Trustee shall exercise
such of the rights and powers vested in it by this Agreement or any Supplement,
as the case may be, and use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of such prudent person's own affairs.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement or any Supplement, shall
examine them to determine whether they substantially conform to the requirements
of this Agreement or any Supplement; provided however, that the Trustee shall
not be responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by the
Servicer or the Transferor hereunder. If any such instrument is found not to
conform in any material respect to the requirements of this Agreement, the
Trustee shall notify the Certificateholders of such instrument in the event that
the Trustee, after so requesting, does not receive a satisfactorily corrected
instrument.
(c) Subject to section 11.1(a), no provision of this
Agreement or any Supplement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or its
own willful misconduct; provided, however, that:
(i) The Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
(ii) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with, unless otherwise specified herein, the
direction of the Holders of Investor Certificates evidencing Undivided
Interests in the Trust aggregating more than 50% of the Invested
Amount of any Series relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement or any Supplement;
(iii) The Trustee shall not be charged with knowledge
of the occurrence of any Servicer Default or any Event of Termination,
unless a Responsible Officer of the Trustee obtains actual knowledge
of such occurrence or the Trustee receives written notice of such
occurrence from the Servicer or any Holders of Investor
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Certificates evidencing Undivided Interests aggregating not less than
10% of the Invested Amount of any Series adversely affected
thereby; and
(iv) Prior to the occurrence of a Servicer Default or
Event of Termination of which a Responsible Officer has actual
knowledge, and after the curing or waiver of such Servicer Defaults
that may have occurred, the duties and obligations of the Trustee
shall be determined solely by the express provisions of this Agreement
and any Supplements, the Trustee shall not be liable except for the
performance of such duties and obligations as shall be specifically
set forth in this Agreement and any Supplement, no implied covenants
or obligations shall be read into this Agreement or any Supplement
against the Trustee and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Trustee and, if
specifically required to be furnished pursuant to any provision of
this Agreement or any Supplement, conforming to the requirements of
this Agreement or such Supplement.
(d) The Trustee shall not be required to expend or risk
its own funds or otherwise incur financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers, if
there is reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not assured to it, and none
of the provisions contained in this Agreement or any Supplement shall in any
event require the Trustee to perform, or be responsible for the manner of
performance of, any obligations of the Servicer under this Agreement or any
Supplement except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement or any Supplement.
(e) Except for actions expressly authorized by this
Agreement or any Supplement, the Trustee shall take no action reasonably likely
to impair the interests of the Trust in any Receivable now existing or hereafter
created or to impair the value of any Receivable now existing or hereafter
created.
(f) Except as specifically provided in this Agreement or
any Supplement, the Trustee shall have no power to vary the corpus of the Trust.
(g) If, to the knowledge of a Responsible officer of the
Trustee, the Paying Agent or the Transfer Agent and Registrar shall fail to
perform any obligation, duty or agreement in the manner or on the day required
to be performed by the Paying Agent or the Transfer Agent and Registrar, as the
case may be, under this Agreement, the Trustee shall be obligated as soon as
possible after such Responsible Officer obtains knowledge thereof and receives
appropriate records and access to funds, if any, to perform such obligation,
duty or agreement in the manner so required.
(h) If the Transferor or Stone Container has agreed to
transfer any of its receivables (other than the Receivables transferred to the
Trust hereunder) to another Person, upon the written request of the Transferor,
the Trustee will enter into such intercreditor agreements with the transferee of
such receivables as are customary and necessary to identify
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separately the rights of the Trust and such other Person in the Receivables and
such other receivables; provided that the Trustee shall not be required to enter
into any intercreditor agreement which could reasonably be expected to adversely
affect the interests of the Certificateholders or the Trustee and, upon the
request of the Trustee, the Transferor or Stone Container will deliver at its
expense an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee relating to such intercreditor agreement and shall deliver written
notice to the Rating Agencies.
(i) Except as specifically otherwise provided in this
Agreement, any action, suit or proceeding brought in respect of one or more
particular Series shall have no effect on the Trustee's rights, duties and
obligations hereunder with respect to any one or more Series not the subject of
such action, suit or proceeding.
(j) The Trustee shall have no duty (A) to see to any
recording, filing or depositing of this Agreement or any agreement referred to
herein or any financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such recording or filing
or depositing or to any rerecording, refiling or redepositing of any thereof,
(B) to see to any insurance or (C) to see to the payment or discharge of any
tax, assessment or other governmental charge or any lien or encumbrance of any
kind owing with respect to, assessed or levied against, any part of the Trust.
Section 11.2 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.1:
(a) The Trustee may rely on and shall be protected in
acting on, or in refraining from acting in accordance with, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to be
genuine and to have been signed or presented to it pursuant to this Agreement or
any Supplement by the proper party or parties;
(b) The Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action reasonably taken or suffered or omitted by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in-it by this Agreement or any Supplement, or
to institute, conduct or defend any litigation hereunder or in relation hereto
or any Supplement, at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement or any
Supplement, unless such Certificateholders shall have offered to the Trustee
security or indemnity satisfactory to the Trustee against the costs, expenses
and liabilities which may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of a Servicer Default (which has not been cured or waived) of which a
Responsible Officer has knowledge, to exercise such of the rights and powers
vested in it by this Agreement or any Supplement, and to use the same degree of
care and skill in their
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exercise as a prudent person would exercise or use under the circumstances in
the conduct of such prudent person's own affairs;
(d) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement or any Supplement;
(e) The Trustee shall not be bound to make any
investigation into the facts of matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing so to do
by the Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Invested Amount of any Series which could be
adversely affected if the Trustee does not perform such acts; provided, however,
that if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation shall be, in the reasonable opinion of the Trustee, not assured to
the Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require indemnity satisfactory to the Trustee against such cost,
expense or liability as a condition to so proceeding. The reasonable expense of
every such examination shall be paid by the Servicer (or, if Stone Container is
no longer the Servicer, by Stone Container) or, if paid by the Trustee, shall be
reimbursed by the Servicer (or if Stone Container is no longer the Servicer, by
Stone Container) upon demand;
(f) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or custodians, and the Trustee shall not be responsible for
any misconduct or negligence on the part of any such agent, attorney or
custodian appointed with due care by it hereunder;
(g) Except as may be required by Section 11.1(a) or
Section 11.2(e) hereof, the Trustee shall not be required to make any initial or
periodic examination of any documents or records related to the Receivables for
the purpose of establishing the presence or absence of defects, the compliance
by the Transferor or the Servicer with their representations and warranties or
for any other purpose;
(h) The right of the Trustee to perform any discretionary
act enumerated in this Agreement or any Supplement shall not be construed as a
duty, and the Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of any such act;
(i) Whenever the administration of this Agreement or any
Supplement the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence he herein specifically prescribed) may reasonably
rely upon an Officer's Certificate.
Section 11.3 Trustee Not Liable for Recitals in Certificates. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates (other than the certificate of authentication on
the Certificates). Except as set forth in Section makes no representations as to
the validity or sufficiency of this Agreement or any
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Supplement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee shall
not be accountable for the use or application by the Transferor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Transferor in respect of the Receivables
or, subject to the other provisions of this Article XI, deposited in the
Collection Account or other accounts now or hereafter established to effectuate
the transactions contemplated herein and in accordance with the terms hereof.
The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Receivable by the Transferor or the Servicer pursuant to this Agreement or
any Supplement or the eligibility of any Receivable for purposes of this
Agreement or any Supplement. The Trustee shall have no responsibility for filing
any financing or continuation statement in any public office at any time or
otherwise to perfect or maintain the perfection of any security interest or lien
granted to it hereunder (unless the Trustee shall have become the Successor
Servicer) or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement or any Supplement.
Section 11.4 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Investor
Certificates and may deal with Stone Container, the Transferor, the Servicer and
any of their respective Affiliates in banking and other transactions with the
same rights as it would have if it were not the Trustee.
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses. The
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties hereunder or under any Supplement of the Trustee, and, subject to Section
8.4, the Servicer will pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement or any Supplement
(including the reasonable fees and expenses of its agents and counsel and all
reasonable fees and expenses incurred in connection with the appointment of the
Trustee or an Affiliate of the Trustee as Successor Servicer) except any such
expense, disbursement or advance as may arise from its negligence or bad faith
and except as provided in the following sentence. If the Trustee is appointed
Successor Servicer pursuant to Section 10.2, the provisions of this Section 11.5
shall not apply to expenses, disbursements and advances made or incurred by the
Trustee in its capacity as Successor Servicer, which shall be paid out of the
Servicing Fee. The provisions of this Section and Section 8.4 shall survive the
termination of this Agreement, the termination of the Trust and the resignation
or removal of the Trustee.
Section 11.6 Eligibility Requirements for Trustee. The Trustee
hereunder shall (i) at all times be a bank organized and doing business under
the laws of the United States or any state thereof, including the District of
Columbia, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least $50,000,000, subject to supervision
or examination by Federal or state authority, and (ii) except for the initial
Trustee, either be an Eligible Servicer or have an Affiliate which is an
Eligible Servicer. If such bank
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publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section 11.6, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 11.6, the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.7.
Section 11.7 Resignation or Removal of Trustee.
(a) The Certificateholders evidencing in the aggregate 51%
of the Aggregate Invested Amount may at any time remove the Trustee for cause
and appoint a successor trustee by written instrument or instruments, signed by
such Holders or their attorneys-in-fact duly authorized, one complete set of
such instruments shall be delivered to each of the Transferor, the Servicer, the
Rating Agencies, the Trustee so removed and the successor trustee so appointed.
(b) Subject to Section 11.7(d), the Trustee may at any
time resign and be discharged from the trust hereby created by giving written
notice thereof to the Transferor, the Servicer and the Rating Agencies. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor trustee by written instrument, copies of which instrument shall be
delivered to the resigning Trustee, the successor trustee, the Transferor and
the Rating Agencies. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(c) If at any time the Trustee shall cease to be eligible
in accordance with the provisions of Section 11.6 hereof and shall fail to
resign after written request therefor by the Servicer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or if a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer may remove the Trustee and promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
(d) Any resignation or removal of the Trustee pursuant to
any of the provisions of this Section 11.7 shall not become effective until
either (i) the Trust has been completely liquidated in accordance with Article
XII of this Agreement and all proceeds of such liquidation have been distributed
pursuant to the terms of this Agreement or (ii) acceptance of appointment by a
successor trustee having the qualifications set forth in Section 26(a)(1) of the
Investment Company Act of 1940 and Section 11.6 as provided in Section 11.8
hereof.
Section 11.8 Successor Trustee.
(a) Any successor trustee appointed as provided in Section
11.7 hereof shall execute, acknowledge and deliver to the Transferor and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further
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act, deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder and under any Supplement
with like effect as if originally named as Trustee herein. The predecessor
Trustee thereof, and statements held by it hereunder at the expense of the
Servicer; and the Transferor and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations. The Servicer shall immediately
give notice to the Rating Agencies upon the appointment of a successor trustee.
(b) No successor trustee shall accept appointment as
provided in this Section 11.8 unless at the time of such acceptance such
successor trustee shall be eligible under the provisions of Section 11.6 hereof.
(c) Upon acceptance of appointment by a successor trustee
as provided in this Section 11.8 hereof, such successor trustee shall mail
notice of such succession hereunder to all Certificateholders at their addresses
as shown in the Certificate Register.
Section 11.9 Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, provided such Person shall be
eligible under the provisions of Section 11.6 hereof, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 11.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement
or any Supplement, at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the Trust Assets may at
the time be located, the Trustee shall have the power and may execute and
deliver all instruments to appoint, with the prior written consent of the
Servicer, one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust Assets, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust Assets, or any part thereof, and,
subject to the other provisions of this Section 11.10, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable. With the consent of Investor Certificateholders evidencing more than
50% of the Invested Amount of each Series, any such co-trustee or separate
trustee hereunder shall not be required to meet the terms of eligibility as a
successor trustee under Section 11.6. Any such appointment of a co-trustee shall
not relieve the Trustee of its obligations under this Agreement.
(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) All rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that
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such separate trustee or co-trustee is not authorized to act
separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular
act or acts are to be performed (whether as Trustee hereunder or as
successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title
to the Trust Assets or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement or any Supplement, specifically including every provision of
this Agreement or any Supplement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee and a copy thereof given to the Servicer and the
Transferor.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect to this Agreement or any Supplement on its behalf and in its name. If
any separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 11.11 Tax Returns. In the event the Trust shall be
required to file tax returns, the Servicer shall prepare or shall cause to be
prepared any tax returns required to be filed by the Trust and shall remit such
returns to the Trustee for signature at least five days before such returns are
due to be filed; the Trustee shall promptly sign such returns and deliver such
returns after signature to or at the direction of the Servicer and such returns
shall be filed by or at the direction of the Servicer. The Servicer shall also
prepare or shall cause to be prepared all tax information based solely on
information in the Trustee's actual possession relating thereto and provided by
the Trustee to the Servicer, required by law to be distributed to Investor
Certificateholders. The Trustee, upon request, will furnish the Servicer with
all such information known to the Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Trust, and shall, upon
request, execute such returns. Notwithstanding anything to the contrary in this
Agreement, in no event shall the Trustee or the Servicer be liable for any
liabilities, costs or expenses of the Trust, the Investor Certificateholders or
the Certificate
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Owners arising out of the application of any tax law, including without
limitation Federal, state or local income or excise taxes or any other tax
imposed on or measured by income (or any interest, penalty or addition with
respect thereto or arising from a failure to comply therewith).
Section 11.12 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or any
Supplement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee. Any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default of
which a Responsible Officer has knowledge shall occur and be continuing, the
Trustee in its discretion may, subject to the provisions of Section 10.1,
proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement or any Supplement by suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or any
Supplement or in aid of the execution of any power granted in this Agreement or
any Supplement or for the enforcement of any other legal, equitable or other
remedy as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee or the Certificateholders.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Certificateholder any plan of
reorganization, arrangement, adjustment or composition affecting the
Certificates or the rights of any holder thereof, or authorize the Trustee to
vote in respect of the claim of any Certificateholder in any such proceeding.
Section 11.14 Rights of Certificateholders to Direct Trustee. The
Holders of Investor Certificates evidencing Undivided Interests aggregating more
than 50% of the Invested Amount of any Series with respect to matters affecting
the related Series, shall have the right to direct the time, method and place at
or by which the Trustee conducts any proceeding for any remedy available to the
Trustee, or exercises any such trust or power conferred upon the Trustee;
provided, however, that, subject to Section 11.1, the Trustee shall have the
right to decline to follow any such direction if the Trustee being advised by
counsel determines that the action so directed may not lawfully be taken, or if
the Trustee shall, by a Responsible Officer or Responsible Officers of the
Trustee, reasonably determine that the proceedings so directed would be illegal
or involve it in personal liability or be unduly prejudicial to the rights of
Certificateholders not parties to such direction; and provided, further, that
nothing in this Agreement or any Supplement shall impair the right of the
Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction of the Certificateholders.
Section 11.15 Representations and Warranties of Trustee. The
Trustee represents and warrants, as of the Initial Closing Date and, with
respect to any Series, as of the related Closing Date, that:
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(i) The Trustee is a banking corporation organized,
existing and in good standing under the laws of New York thereof;
(ii) The Trustee has full power, authority and right to
execute, deliver and perform this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance
by it of this Agreement; and
(iii) This Agreement has been duly executed and
delivered by the Trustee.
Section 11.16 Maintenance of Office or Agency. The Trustee will
maintain at its expense in New York, New York an office or offices or agency or
agencies where notices and demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served. The Trustee initially appoints
the Corporate Trust Office as its office for such purposes. The Trustee will
give prompt written notice to the Servicer and to Certificateholders of any
change in the location of the Certificate Register or any such office or agency.
Section 11.17 Notices. The Trustee shall promptly deliver to
the Transferor and the Servicer any notices it receives in connection with this
Agreement or any Supplement which are not otherwise delivered to such parties
unless a Responsible Officer of the Trustee reasonably believes that a copy of
such notice has previously been so delivered.
Section 11.18 Compliance Certificates and Opinions. Upon any
application or request by the Transferor to the Trustee to take any action under
any provision of this Agreement, the Transferor shall furnish to the Trustee an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Agreement (including any covenant compliance with constitutes a
condition precedent) relating to the proposed action have been complied with and
an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual, he or she has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
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(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.
[END OF ARTICLE XI]
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ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust. (a) The respective obligations
and responsibilities of the Transferor, the Servicer and the Trustee created
hereby (other than the obligation of the Trustee to make payments to
Certificateholders as hereafter set forth) shall terminate, except with respect
to the duties described in Sections 8.4, 11.5 and 12.3(b), on the Business Day
after the day on which funds shall have been deposited in the Collection Account
or Excess Funding Account at the times and in the amounts provided for in this
Agreement (including, without limitation, pursuant to Sections 2.4, 12.1(b),
12.2 and Article IV hereof) sufficient to pay the Aggregate Invested Amount plus
interest accrued at the applicable Certificate Rates through the last day of the
month preceding the next Payment Date in full with respect to each Series of
Certificates; provided, however, that in no event shall the Trust continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants, living on the date of this Agreement, of George Herbert Walker
Bush, former President of the United States of America (the "Final Trust
Termination Date"). The Servicer shall notify the Trustee of any prospective
termination pursuant to this Section 12.1(a) not less than ten days in advance
thereof.
(b) If on the Transfer Date in the month immediately
preceding the month in which the Final Trust Termination Date occurs (after
giving effect to all transfers, withdrawals, deposits and drawings to occur on
such date and the payment of principal on any Series of Investor Certificates to
be made on the related Payment Date pursuant to Section 4.5) the Invested Amount
of any Series would be greater than zero, the Servicer on behalf of the Trustee
shall sell in a commercially reasonable manner not later than 30 days after such
Transfer Date all of the Receivables. The proceeds of such sale, net of all
reasonable expenses of the Servicer incurred in connection with such sale, which
shall be paid to the Servicer from such proceeds, shall be treated as
Collections of the Receivables and shall be allocated in accordance with Section
4.3. During such 30-day period, the Servicer shall continue to collect
Collections on the Receivables and allocate such payments in accordance with the
provisions of Section 4.3.
Section 12.2 Optional Purchase and Series Termination Date of
Investor Certificates of any Series.
(a) If provided in any Supplement, on a Payment Date
the Transferor may, but shall not be obligated to, purchase any Certificates or
Series of Investor Certificates by depositing into the Collection Account, on
the preceding Transfer Date, an amount equal to the initial principal balance of
such Certificates or Series of Certificates minus the amount of principal
payments made with respect to such Certificates prior to such Payment Date
thereof plus interest accrued and unpaid thereon at the applicable Certificate
Rate through the Record Date preceding the Payment Date on which the purchase
will be made; provided, however that no such purchase of any Certificates shall
occur unless the Transferor shall deliver to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee to the effect that such purchase of any
Certificates would not constitute a fraudulent conveyance of the Transferor.
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(b) The amount deposited pursuant to Section 12.2(a)
shall be paid to the Investor Certificateholders of the related Certificates or
Series, pursuant to Article IV on the Payment Date following the date of such
deposit. All Certificates which are purchased by the Transferor pursuant to
Section 12.2(a) shall be delivered by the Transferor upon such purchase to, and
be cancelled by, the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee and the Transferor.
(c) All principal or interest with respect to any
Series of Investor Certificates shall be due and payable no later than the Legal
Final Maturity or, if applicable, the Series Termination Date with respect to
such Series. Unless otherwise provided in a Supplement, in the event that the
Invested Amount of any Series of Certificates is greater than zero on the Legal
Final Maturity Date or, if applicable, its Series Termination Date, the Trustee
shall sell or cause to be sold in a commercially reasonable manner, and pay the
proceeds (net of all reasonable expenses of the Trustee incurred in connection
with such sale, which shall be paid to the Trustee from such proceeds), to the
extent necessary, to all Certificateholders of such Series pro rata based on
their respective Undivided Interests in final payment of all principal of and
accrued interest on such Series of Certificates, an amount of Receivables up to
110% of the Invested Amount of such Series as of the close of business on the
Legal Final Maturity or, if applicable, such Series Termination Date; provided,
however, that no selection procedures believed by the Trustee to be adverse to
Certificateholders of any Series shall be used in selecting such Receivables and
in no event shall the amount of Receivables sold cause the Transferor Amount to
be less than or equal to zero. Any proceeds of such sale in excess of such
principal and interest paid and the expenses of the Trustee shall be paid to the
Transferor. Upon payment of the proceeds of such sale as provided in this
Section 12.2(c), all principal of and accrued interest on such Series shall be
deemed for all purposes to have been paid in full. Upon the Legal Final Maturity
or, if applicable, such Series Termination Date, or (if applicable) on the first
Payment Date following the sale of Receivables called for above in this Section
12.2 (c), with respect to the applicable Series of Certificates, final payment
of all amounts allocable to any Investor Certificates of such Series shall be
made in the manner provided in Section 12.3.
Section 12.3 Final Payment.
(a) Written notice of any termination, specifying the
Payment Date upon which the Investor Certificateholders of any Series may
surrender their Certificates for payment of the final distribution with respect
to such Series and cancellation, shall be given (subject to at least ten
Business Days, prior notice from the Servicer to the Trustee) by the Trustee to
the Investor Certificateholders of such Series mailed not later than three
Business Days after such notice specifying (i) the Payment Date (which shall be
the Payment Date in the month in which the deposit is made pursuant to Section
2.4 or 12.2(a)) upon which final payment of such Investor Certificates will be
made upon presentation and surrender of such Investor Certificates, in
accordance with the payment instructions of such Investor Certificateholders, at
the office or offices therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such Payment Date
is not applicable, payments being made only upon presentation and surrender of
the Investor Certificates at the office or offices therein specified; provided,
that notwithstanding the failure of any Investor Certificateholder to surrender
an Investor Certificate for final payment as contemplated herein, payment shall
be made in accordance with the payment instructions of such Investor
Certificateholder upon receipt
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from such Investor Certificateholder of a satisfactory written indemnification
of the Trustee or the Paying Agent with respect to the failure to deliver such
Investor Certificate. The Servicer's notice to the Trustee in accordance with
the preceding sentence shall be accompanied by an Officer's Certificate setting
forth the information specified in Section 5.2(a), as applicable, covering the
period during the then current calendar year through the date of such notice and
setting forth the date of such final distribution. The Trustee shall give such
notice to the Transfer Agent and Registrar and the Paying Agent at the time such
notice is given to such Certificateholders.
(b) Notwithstanding the termination of the Trust
pursuant to Section 12.1(a) or the occurrence of the Legal Final Maturity or, if
applicable, the Series Termination Date with respect to any Series, all funds
then on deposit in the Collection Account shall continue to be held in trust for
the benefit of the Certificateholders and the Paying Agent or the Trustee shall
pay such funds to the Certificateholders upon surrender of their Certificates.
In the event that all of the Investor Certificateholders of all, or the
applicable, Series, shall not surrender their Certificates for cancellation
within six months after the date specified in the written notice referred to in
the first sentence of Section 12.3(a), the Trustee shall give a second written
notice to the remaining Investor Certificateholders, upon receipt of the
appropriate records from the Transfer Agent and Registrar, to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all, or the applicable
Investor Certificates of such Series shall not have been surrendered for
cancellation, the Trustee may take appropriate steps, or may appoint an agent to
take appropriate steps, to contact the remaining Investor Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds in the Collection Account held for the benefit of such Investor
Certificateholders.
(c) All Certificates surrendered for payment of the
final distribution with respect to such Certificates and cancellation, shall be
cancelled by the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee. Upon the termination of the Trust, the Transferor
shall return the Transferor Certificate to the Trustee, and the Trustee shall
dispose of such Certificate in a manner satisfactory to the Trustee.
Section 12.4 Transferor's Termination Rights. Upon the
termination of the Trust pursuant to Section 12.1 and the surrender of the
Transferor Certificate, the Trustee shall return to the Transferor (without
recourse, representation or warranty) all right, title and interest of the
Trustee in the Receivables and the other Trust Assets, whether then existing or
thereafter created, all moneys due or to become due with respect thereto, and
all proceeds thereof except for amounts held by the Trustee pursuant to Section
12.3(b). The Trustee shall execute and deliver such instruments of release,
transfer and assignment, in each case prepared by and at the expense of the
Transferor and without recourse, representation or warranty, as shall be
reasonably requested by the Transferor to vest in the Transferor all right,
title and interest which the Trustee had in the Receivables and other Trust
Assets.
[END OF ARTICLE XII]
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment.
(a) This Agreement or any Supplement may be amended
from time to time by the Servicer, the Transferor and the Trustee, without the
consent of any of the holders of the Investor Certificates of any Series, to
cure any ambiguity, to correct or supplement any provisions herein, to correct
or supplement any provisions herein to maintain a Rating Agency's rating with
respect to any outstanding Series which may be inconsistent with any other
provisions therein or to add any other provisions with respect to matters or
questions raised under this Agreement which shall not be inconsistent with the
provisions of this Agreement, or to amend or add any provision so that for the
purposes of Federal or applicable state tax the Investor Certificates will be
considered to be indebtedness or that the Trust will not be taxed as a
corporation or a separate entity; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel delivered to the Trustee, adversely affect
in any material respect the interests of the holders of the Investor
Certificates of any Series, cause the Trust to be subject to Federal or
applicable state tax at the entity level or adversely affect the Federal or
applicable state tax characterization of any outstanding Series of Certificates.
No provision of this Section 13.1 shall limit the amendments to Exhibit F hereto
contemplated by Section 2.6(i).
(b) This Agreement and any Supplement may also be
amended from time to time by the Servicer, the Transferor and the Trustee with
the prior consent of the holders of investor certificates evidencing Undivided
Interests aggregating not less than 51% of the aggregate of the Invested Amounts
of all Series adversely affected thereby (or in the case of a Series having more
than one class of Investor Certificates, each class of such Series materially
adversely affected thereby), for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Certificateholders of any Series
then issued and outstanding; provided, however, that no such amendment under
this subsection (b) shall (i) reduce in any manner the amount of, or delay the
timing of distributions that are required to be made on any Certificate of such
Series without the consent of the related Investor Certificateholder; (ii)
change the definition of or the manner of calculating the interest of any
Investor Certificate without the consent of all such Investor
Certificateholders; (iii) reduce the aforesaid percentage required to consent to
any such amendment by the Investor certificateholders of any Series, in each
case without the consent of all such Investor Certificateholders of any Series;
(iv) be effective unless each Rating Agency first shall have confirmed in
writing that such amendment will not result in such Rating Agency reducing or
withdrawing its then current rating on any outstanding Series of Certificates;
provided, further, that clauses (i), (ii), (iii) and (iv) of the immediately
preceding provision shall not apply to any amendment or modification for which
consent is obtained from Investor Certificateholders representing 100% of the
Invested Amount of each Series adversely affected thereby.
(c) Promptly following the execution of any amendment
pursuant to subsection (b) above the Trustee shall furnish written notification
of the substance of such
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amendment to each Certificateholder of all Series and each Rating Agency (or
with respect to an amendment of a Supplement, to the applicable Series).
(d) It shall not be necessary for the consent of the
Investor Certificateholders under this Section 13.1 to approve the particular
form of any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by the Persons required to
consent under Section 13.1 shall be subject to such reasonable requirements as
the Trustee may prescribe.
(e) Prior to the execution of any amendment to this
Agreement or any Supplement, the Trustee shall be to receive and rely upon an
Opinion of Counsel stating execution of such amendment is authorized or
permitted Agreement and that all conditions precedent to the execution and
delivery of such amendment have been satisfied. The Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Trustee's own
rights, duties or immunities under this Agreement, any Supplement or otherwise.
Section 13.2 Protection of Right, Title and Interest.
(a) The Servicer shall cause this Agreement, any
Supplement, all amendments hereto or thereto and/or all financing statements and
continuation statements and any other necessary documents covering the right,
title and interest of the Certificateholders and the Trustee to the Trust Assets
to be promptly recorded, registered and filed, and at all times to be kept
recorded, registered and filed, all in such manner and in such places as may be
required by law fully to preserve and protect such right, title and interest.
The Servicer shall deliver to the Trustee file-stamped copies of, or filing
receipts for, any document recorded, registered or filed as provided above, as
soon as available following such recording, registration or filing. The
Transferor shall cooperate fully with the Servicer in connection with the
obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this Section 13.2(a).
(b) The Servicer will give the Trustee prompt written
notice of any relocation of any office from which it services Receivables or
keeps records concerning the Receivables or of its principal place of business
or chief executive office and whether, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to perfect or to continue the perfection of the Trustee's security
interest in the Receivables and the other Trust Assets. The Servicer will at all
times maintain each office from which it services Receivables and its principal
executive office within the United States of America.
(c) The Servicer will deliver to the Trustee upon the
execution hereto and delivery of each amendment of Articles I, II, III or IV
hereof other than amendments pursuant to Section 13.1(a) an Opinion of Counsel
(which may be in-house counsel), reasonably acceptable to the Trustee.
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(d) If at any time the Servicer is no longer Stone
Container, the Transferor shall deliver to the Successor Servicer
powers-of-attorney such that such Successor Servicer may perform the obligations
set forth in Sections 13.2(a), 13.2(b) and 13.2(c).
Section 13.3 Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Investor
Certificateholder shall not operate to terminate this Agreement or the Trust,
nor shall such death or incapacity entitle such Investor Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
(b) No Certificateholder shall have any right to vote
(except as specifically provided in this Agreement or any Supplement) or in any
manner otherwise control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Certificates, be construed so as to constitute the
Investor Certificateholders from time to time as general partners or members of
an association; nor shall any Investor Certificateholder be under any liability
to any third person by reason of any action taken by the parties to this
Agreement pursuant to any provision hereof.
(c) No Investor Certificateholder shall have any right
by virtue of any provisions of this Agreement or any Supplement to institute any
suit, action or proceeding in equity or at law upon or under or with respect to
this Agreement, unless the Investor Certificateholders evidencing Undivided
Interests aggregating more than 33% of the Invested Amount of any Series which
may be materially adversely affected shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered tot he Trustee such reasonable indemnity as its
may require again the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after its receipt of such request and
offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Certificateholders of a
Series shall have any right in any by virtue or by availing itself or themselves
of this Agreement or any Supplement to affect, judice the rights of the
Certificateholders of any other Series or to obtain or seek to obtain priority
over or preference to any other such Certificateholder, or to enforce any
Agreement or any Supplement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 13.3, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 13.4 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. FOR PURPOSES
OF THE TAX CLASSIFICATION OF THE TRUST AND THE TAX CHARACTERIZATION OF ANY
CERTIFICATES ISSUED PURSUANT TO THIS AGREEMENT, THE TRUST
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SHALL BE CONSTRUED AS ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO ITS CONFLICTS OF LAWS PROVISIONS.
Section 13.5 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at, or two days after mailing by certified or registered
mail, return receipt requested, or one day after dispatching by overnight
delivery service for which a receipt is available, or upon dispatch in the case
of facsimile transmission, (a) in the case of the Servicer to 8182 Maryland
Avenue, St. Louis, Missouri 63105, Attention: Treasurer, Facsimile No.:
314-746-1281, (b) in the case of the Trustee, to the Corporate Trust Office,
Facsimile No.: (212)-946-8302; (c) in the case of the Transferor to 8182
Maryland Avenue, St. Louis, Missouri 63105, Attention: Treasurer, Facsimile No.:
314-746-1281, or, as to each party, at such other address as shall be designated
by such party in a written notice to each other party. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first-class
mail, postage prepaid, at the address of such Certificateholder as shown in the
Certificate Register. Notwithstanding any other provision hereof, any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
Copies of all notices, reports, certificates and amendments
required to be delivered to the Rating Agencies hereunder shall be mailed to the
Rating Agencies as follows: Moody's Investors Service, Inc., 99 Church Street,
New York, New York 10007, Attention: ABS Monitoring Department, 4th Floor; and
Standard & Poor's, 55 Water Street, New York, New York 10041, Attention:
Asset-Backed Surveillance Group.
Section 13.6 Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions and terms of this
Agreement or of the Certificates or rights of the Certificateholders thereof.
Section 13.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 8.2 or 8.5, this Agreement,
including any Supplement, may not be assigned by the Servicer without the prior
consent of the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 66 2/3% of the Invested Amount of the Investor
Certificates of each Series and without notice to the Rating Agencies.
Section 13.8 Certificates Nonassessable and Full Paid. It is the
intention of the parties to this Agreement that the Investor Certificateholders
shall not be personally liable for obligations of the Trust, that the interests
in the Trust Assets represented by the Investor Certificates shall be
nonassessable for any losses or expenses of the Trust or for any reason
whatsoever, and that Certificates upon authentication thereof by the Trustee
pursuant to Sections 2.7 and 6.2 are and shall be deemed fully paid.
Section 13.9 Further Assurances. The Transferor and the Servicer
agree to do and perform, from time to time, any and all acts and to execute any
and all further instruments
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reasonably requested by the Trustee to effect more fully the purposes of this
Agreement, including, without limitation, the execution of any financing
statements or continuation statements relating to the Receivables and the other
Trust Assets for filing under the provisions of the UCC.
Section 13.10 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of any party hereto or the
Certificateholders, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
Section 13.11 Counterparts. This Agreement and any Supplement may
be executed in two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which together
shall constitute one and the same instrument.
Section 13.12 Third-Party Beneficiaries. This Agreement and any
Supplement will inure to the benefit of and be binding upon the parties hereto,
the Certificateholders, and their respective permitted successors and assigns.
Except as otherwise provided in this Agreement, no other Person will have any
right or obligation hereunder.
Section 13.13 Actions by Certificateholders.
(a) Wherever in this Agreement or any Supplement, a
provision is made that an action may be taken or a notice, demand or instruction
given by Investor Certificateholders, such action, notice or instruction may be
taken or given by any Investor Certificateholder of any Series, unless such
provision requires a specific percentage of Investor Certificateholders of a
certain Series or all Series.
(b) Any request, demand, authorization, direction,
notice, consent, waiver or other action by a Certificateholder shall bind such
Certificateholder and every subsequent holder of such Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or omitted to be done by the Trustee or the Servicer
in reliance thereon, whether or not notation of such action is made upon such
Certificate.
(c) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Agreement or any
Supplement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments which are substantially similar and are
signed by such Certificateholders in person or by agent duly appointed in
writing; and except as herein otherwise expressly provided, such request,
demand, authorization, direction, notice, consent, waiver or other action shall
become effective when such instrument or instruments are delivered to the
Trustee and, when required, to the Transferor or the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement or any Supplement and conclusive
in
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favor of the Trustee, the Transferor and the Servicer, if made in the manner
provided in this Section.
(d) The fact and date of the execution by any
Certificateholder of any such instrument or writing may be proved in any manner
which the Trustee reasonably deems sufficient.
(e) The Trustee may require such additional proof of
any matter referred to in this Section as it reasonably shall deem necessary.
Section 13.14 Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding of
the parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 13.15 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 13.16 No Bankruptcy. Petition Against the Transferor. The
Trustee (solely as Trustee, Paying Agent, Transfer Agent, Registrar and
Successor Servicer, if applicable) and each Investor Certificateholder, by
acquiring an interest in an Investor Certificate or Book-Entry Certificate, the
Servicer, any Authenticating Agent and any Paying Agent and Transfer Agent and
Registrar other than the Trustee and the Servicer, severally and not jointly,
each hereby covenants, and agrees that, prior to the date which is one year and
one day after the payment in full of all Invested Amounts, it will not institute
against, or join any other Person in instituting against, the Transferor any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the Bankruptcy Code.
Section 13.17 Rule 144A Information. For so long as any
Certificates of any Series or Class are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, the Servicer agrees to
provide any Certificateholders of such Series or Class and to any prospective
purchaser of Certificates designated by such Certificateholder, upon the request
of such Certificateholder or prospective purchaser, any information required to
be provided to such holder or prospective purchaser to satisfy the condition set
forth in Rule 144A(d)(4) under the Securities Act, if at the time of the
request, the Trust is not a reporting company under Section 13 or Section 15(d)
of the 1940 Act.
[END OF ARTICLE XIV]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
STONE RECEIVABLES CORPORATION,
as the Transferor
By:__________________________________________
Name:
Title:
STONE CONTAINER CORPORATION,
as Servicer
By:__________________________________________
Name:
Title:
1
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THE CHASE MANHATTAN BANK,
as the Trustee
By:__________________________________________
Name:
Title:
2
<PAGE>
Annex X
-------
STONE RECEIVABLES CORPORATION MASTER TRUST
DEFINITIONS
As used herein the following terms shall include in the
singular number the plural and in the plural number the singular:
"Adjusted Invested Amount" for any Series shall mean, the
Invested Amount for such Series, less the amounts (if any) on deposit in the
applicable Series subaccount for Collections applicable to principal, and the
amounts (if any) on deposit in the Excess Funding Account allocable to such
Series, as provided for in the related Supplement.
"Adverse Claim" shall mean any Lien, claim, security interest,
UCC Financing Statement, mortgage, deed of trust, priority, pledge, charge,
conditional sale, title retention agreement, financing lease, encumbrance,
option, interest or similar right of any other Person or any agreement to give
any of the foregoing other than as expressly permitted pursuant to the Pooling
and Servicing Agreement or the Receivables Purchase Agreement.
"Affiliate" of any Person shall mean any other Person
controlling, controlled by or under common control with such Person or, in any
event, a Person which has the power to vote 51% or more of the securities having
ordinary voting power for the election of directors of the specified Person. As
used herein, "control" of a specified Person shall mean the ability to direct or
cause the direction of the management and policies of the specified Person,
whether through the direct or indirect ownership of the voting securities of
such specified Person, by contract or otherwise.
"Agent" shall mean, with respect to any Series, the Person or
Persons designated in the related Supplement.
"Aggregate Adjusted Invested Amount" shall mean the aggregate
of the Adjusted Invested Amounts for all Outstanding Series.
"Aggregate Eligible Receivables" shall mean, for any Business
Day, the aggregate Unpaid Balances of the Receivables held in the Trust that
were Eligible Receivables at the end of the prior Business Day.
"Aggregate Invested Amount" shall mean the sum of the Invested
Amounts with respect to all Series of Investor Certificates then issued and
outstanding.
"Aggregate Invested Percentage" shall mean the sum of the
Invested Percentages with respect to all Series of Investor Certificates then
issued and outstanding.
"Aggregate Required Transferor Amount" shall mean the sum of
Required Transferor Amounts for all Outstanding Series.
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"Aggregate Target Receivables Amount" shall mean the sum of
Target Receivables Amounts for all Outstanding Series.
"Amortization Period" shall mean with respect to any Series,
the period following the Revolving Period, which may be an Accumulation Period,
a Controlled Amortization Period, an Early Amortization Period, a Rapid
Amortization Period (each as defined in any related Supplement, if applicable)
or as otherwise defined in any related Supplement.
"Amortization Period Commencement Date" shall mean with
respect to any Series the day on which the Amortization Period with respect
thereto commences.
"Applicable Reserve Ratio" shall mean for each Class of
Certificate the greater of (a) the sum of the Loss Reserve Ratio and the
Dilution Reserve Ratio and (b) the Minimum Reserve Ratio.
"Appointment Date" shall have the meaning specified in
Section 9.3 of the Pooling and Servicing Agreement.
"Authorized Newspaper" shall mean The Wall Street Journal, The
New York Times or if neither of the above is published any newspaper of general
circulation in the Borough of Manhattan, The City of New York, New York, and
printed in the English language and customarily published on each Business Day,
whether or not published on Saturdays, Sundays and holidays.
"Average Dilution Ratio" shall mean, as of any Determination
Date and continuing until (but not including) the next Determination Date, the
average of the Dilution Ratios for the twelve (12) consecutive Settlement
Periods ending immediately prior to such Determination Date.
"Bag Division" shall mean the division of Stone Container
which generates sales of Receivables from three product lines: multi-wall sacks,
consumer bags and intermediate bulk containers.
"Bankruptcy Code" shall mean the Bankruptcy Code of the United
States of America and all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments, readjustment of debt, marshaling of assets or similar
debtor relief laws of the United States, any state or any foreign country from
time to time in effect affecting the rights of creditors generally.
"Book-Entry Certificates" shall mean certificates evidencing a
beneficial interest in the Investor Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 6.10 of the Pooling and Servicing Agreement; provided, however, that
after the occurrence of a condition whereupon book-entry registration and
transfer are no longer permitted and Investor Certificates are to be issued to
the Certificate owners, such certificates shall no longer be "Book-Entry
Certificates".
2
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"Business Day" shall mean any day other than (a) a Saturday or
a Sunday, (b) any other day on which banking institutions or trust companies in
the State of New York generally or The City of New York, New York, or the States
of Illinois and Delaware are not authorized or required by law to close and, for
the purposes of determining LIBOR only, shall mean a day for dealings by and
between banks in U.S. dollar deposits in the London interbank eurodollar
markets.
"Certificate" shall mean one of any Series of Investor
Certificates or the Transferor Certificate.
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules of such Clearing Agency).
"Certificateholder" shall mean the Person in whose name a
Certificate is registered in the Certificate Register.
"Certificate Purchase Agreement" shall mean, with respect to
any Series, the "Certificate Purchase Agreement" or "Purchase Agreement" for
such Series as defined in the related Supplement.
"Certificate Rate" shall mean, with respect to any Series of
Certificates, the percentage (or formula on the basis of which such rate shall
be determined) stated in the applicable Supplement, which rate shall be
calculated on the basis stated in such Supplement.
"Certificate Register" shall mean the register maintained
pursuant to Section 6.3 of the Pooling and Servicing Agreement.
"Charged-Off Receivables" shall mean, with respect to any
Settlement Period, all Receivables which, in accordance with the Credit and
Collection Policy of the applicable Originator, have been written off during
such Settlement Period as uncollectible.
"Class" shall mean, with respect to any Series, any one of the
classes of Investor Certificates of that Series as specified in the related
Supplement.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
"Clearing Agency Participant" shall mean a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" shall mean, when used with respect to any
Series, the date of issuance of such Series.
"Code" shall mean the Internal Revenue Code as amended, and
regulations promulgated thereunder.
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"Collection Account" shall have the meaning specified in
Section 4.2(a) of the Pooling and Servicing Agreement.
"Collections" with respect to the Receivables in the Trust on
any Business Day, all amounts received by the Servicer or paid to or deposited
in Lock-Box Accounts on the prior Business Day in payment of or in respect of
the Receivables, including, without limitation, all cash proceeds (as such term
is defined in the UCC) thereof, all recoveries related to Receivables written
off by the applicable Originator and all amounts to be deposited into the
Collection Account as proceeds of the sale of Receivables.
"Concentration Limit" shall mean at any time (i) for any
single Obligor the short-term deposits or commercial paper of which are rated at
least "A-2" or its equivalent by the applicable Rating Agency, or, if the
Obligor does not have a short-term rating by the applicable Rating Agency, then
the Obligor's long-term unsecured senior debt rating is at least "BBB" by the
applicable Rating Agency, 5.00% of the Aggregate Eligible Receivables; and (ii)
for any other single Obligor, 2.00% of the Aggregate Eligible Receivables.
"Container Division" shall mean the division of Stone
Container which generates Receivables of corrugated shipping containers.
"Contract" shall mean either a written agreement between an
Originator and a Person, or an invoice pursuant to an open account or written
agreement of a Person in favor of an Originator, pursuant to which such Person
is obligated to pay (or to cause payment to be made) in respect of a Receivable.
"Corporate Trust Office" shall mean the principal office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of the Pooling and
Servicing Agreement is located at 450 West 33rd Street, 14th Floor, New York,
New York, Attention: Capital Markets Fiduciary Services, Stone Receivables
Corporation.
"Credit and Collection Policy" shall mean the credit extension
policies and procedures and collection practices of the Originators relating to
Receivables and Contracts as in effect on the Initial Closing Date, as set forth
in Exhibit C to the Pooling and Servicing Agreement, and as the same may be
modified from time to time in accordance with Section 3.3(k) of the Pooling and
Servicing Agreement.
"Daily Report" shall mean a report substantially in the form
of Exhibit B to the Pooling and Servicing Agreement and delivered pursuant to
Section 3.4(b) of the Pooling and Servicing Agreement.
"Days Sales Outstanding" shall mean, as of any Determination
Date and continuing until the next Determination Date, a number of days equal to
the product of (a) 30 multiplied by (b) the amount obtained by dividing (i) the
aggregate Unpaid Balance of Receivables as of the last day of the Settlement
Period immediately preceding such earlier Determination Date, by (ii) the Unpaid
Balances of Receivables originated by the Originators during the most recently
ended Settlement Period immediately preceding such earlier Determination Date.
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"Default Ratio" shall mean, with respect to any Settlement
Period, the percentage equivalent of a fraction, the numerator of which is the
Defaulted Amount and the denominator of which is the aggregate Unpaid Balance of
Receivables originated during the fourth Settlement Period prior to the Payment
Date with respect to the most recently ended Settlement Period.
"Default Ratio Average" shall mean, with respect to any
Settlement Period, the average of the Default Ratios applicable to such
Settlement Period and the two immediately preceding Settlement Periods.
"Defaulted Amount" shall mean, with respect to any Settlement
Period, the sum of the amount of Net Eligible Receivables which were (i) 91 to
120 days past due as of the last Business Day of the current Settlement Period
or (ii) became Charged-Off Receivables prior to becoming 91 days past due after
the Original Due Date for the respective Receivable.
"Defaulted Receivable" shall mean, with respect to any
Settlement Period, a Receivable, which when transferred to the Trust was an
Eligible Receivable, that as of the end of any Business Day remained unpaid 91
days after the Original Due Date for such Receivable.
"Definitive Certificates" shall have the meaning specified in
Section 6.12 of the Pooling and Servicing Agreement.
"Delinquent Receivable" shall mean, with respect to any
Business Day, any Eligible Receivable as to which all or any part of the
outstanding balance remains unpaid more than 60 days past its Original Due Date.
"Determination Date" shall mean the Business Day prior to a
Payment Date.
"Dilution Adjustment" means, with respect to Receivables sold
by any Seller, and as of any Payment Date, an amount equal to (i) Dilutive
Credits during the applicable Settlement Period with respect to such
Receivables, minus (ii) the Forecasted Dilution Amounts for all purchases of
such Receivables during that Settlement Period, it being understood that such
Forecasted Dilution Amount shall equal zero for any Settlement Period during
which no purchases occurred.
"Dilution Horizon Period" for each Originator shall be 60
days; provided however, such period shall be adjusted upon review by the Rating
Agencies of a credit memo sampling provided by each Originator to the Rating
Agencies within six months of the Closing Date, and thereafter, on an annual
basis.
"Dilution Horizon Ratio" shall mean as of any Determination
Date and continuing until (but not including) the next Determination Date, the
quotient (expressed as a percentage) of (i) the aggregate Unpaid Balances of
Receivables that were originated by the Originators during the Dilution Horizon
Period preceding the last day of the Settlement Period immediately prior to such
earlier Determination Date, divided by (ii) the Net Eligible Receivables as of
the last day of the Settlement Period immediately prior to such earlier
Determination Date.
"Dilution Ratio" shall mean, an amount reflected in the most
recent Settlement Statement (expressed as a percentage) equal to the aggregate
amount of Dilutive Credits made
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during such current Settlement Period, divided by the aggregate Unpaid Balances
of Receivables that were originated by the Originators during the Settlement
Period immediately preceding such Settlement Period.
"Dilutive Credits" shall mean an amount equal to the sum,
without duplication, of (a) the aggregate reduction effected on any date of
determination in the Unpaid Balances of any Receivables attributable to any
defective, rejected or returned goods, merchandise or services, any other
non-cash discount, or any adjustment or dispute granted with respect thereto by
the Servicer (but not including a Charged-Off Receivable), (b) the aggregate
reduction effected on such date in the Unpaid Balances of any Receivables
resulting from any setoff in respect of any claim by any Obligor thereunder
against Stone Container or the applicable Originator of the Receivable (whether
or not such claim is related to the transaction giving rise to the related
Receivable), but not to the extent that any Receivable so reduced would, on the
date of such Dilutive Credit, constitute a Defaulted Receivable, and (c) all
offsets, non-cash discounts, other non-cash charges and any volume rebate
amounts to any Receivable resulting from sales and marketing activities of any
Originator and the Obligor, including, without limitation, coupon collection,
display allowances or cooperative advertising.
"Disputed Item" shall, mean a Receivable with respect to which
the deposit of the payment received for such Receivable might adversely affect
the right to collect the full Unpaid Balance of such Receivable.
"Dollars", "U.S. Dollars" and "$" shall mean dollars in
lawful currency of the United States of America.
"Eligible Institution" shall have the meaning set forth in
Section 4.2(a) of the Pooling and Servicing Agreement.
"Eligible Obligor" shall mean, as of any date of
determination, each Obligor in respect of a Receivable that satisfies the
following eligibility criteria:
(a) it is "located" (within the meaning of Section 9-103(3)(d)
of the UCC) in the United States;
(b) it is not the subject of any voluntary or involuntary
bankruptcy proceeding;
(c) it is not an Affiliate of any of the Sellers or the
Servicer; and
(d) is not the United States federal government or any United
States state or local governmental entity.
provided, however, that, if more than 50% of the Unpaid
Balances of Receivables of an Obligor (measured by the Unpaid Balances of
Receivables in the Trust) are reported as Delinquent Receivables on a Daily
Report, such Obligor shall not be deemed an Eligible Obligor until such time as
the Servicer furnishes a subsequent Daily Report indicating that not more than
50% of the Unpaid Balances of Receivables of such Obligor then in the Trust are
Delinquent Receivables.
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"Eligible Receivable" shall mean, as of any date of
determination, a Receivable which satisfies the following eligibility criteria:
(i) it was created in the ordinary course of business
from the sale by an Originator of goods, merchandise or services;
(ii) the Obligor's obligation to pay is evidenced by
a Contract which provides for full payment of the amount thereof in
accordance with the Credit and Collection Policy (subject to any
applicable advertising allowance, sales and marketing discount and
customary return policy), the delivery of the goods or merchandise or
the rendering of the services giving rise to such Receivable has been
completed and such goods or merchandise or such services have not been
rejected by the obligor;
(iii) it is not, as of the date of its transfer to the
Trust or any time thereafter, a Delinquent Receivable (i.e., all or
any part past due more than 60 days as provided in the definition of
such term herein);
(iv) it was created in compliance, in all material
respects, with the Credit and Collection Policy and all Requirements
of Law applicable to the Originator and pursuant to a Contract that
complied, in all material respects, with the Credit and Collection
Policy and all Requirements of Law applicable to the Originator and it
was purchased or acquired by the Transferor in accordance with the
Receivables Purchase Agreement, and, as of the date of purchase or
acquisition under the Receivables Purchase Agreement and the
subsequent transfer to the Trust pursuant to the Pooling and Servicing
Agreement, its terms had not been extended or modified except in
accordance with the Credit and Collection Policy;
(v) all consents, licenses, approvals or authorizations
of, or registrations or declarations with, any Governmental Authority
required to be obtained, effected or given by the Originator in
connection with the creation of such Receivable or the execution,
delivery and performance by the Originator of the related Contract,
have been duly obtained, effected or given and are in full force and
effect as of such date of creation;
(vi) at the time of the creation and contribution or
sale to the Transferor of such Receivable, the Originator had good and
marketable title thereto free and clear of all Liens and Adverse
Claims except as contemplated by the Receivables Purchase Agreement;
(vii) it arises under a Contract which has been duly
authorized and which, together with such Receivable, is in full force
and effect and such Contract, together with such Receivable,
constitutes the legal, valid and binding payment obligation of the
Obligor with respect thereto, enforceable against such Obligor in
accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors, rights in general and
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except as such enforceability may be limited by general principles
of equity (whether considered in a suit at law or in equity);
(viii) at the date of its creation or at any time
thereafter, it is not, and does not arise under a Contract which is or
becomes, subject to any dispute, offset, defense, recision, set-off,
recoupment or counterclaim (other than the Originator's or Servicer's
advertising allowances, sales and marketing discount and customary
return policy) which has been communicated to the Originator or about
which the Originator has knowledge;
(ix) if the Transferor and the Trust are not excluded
from the definition of "investment company" pursuant to Rule 3(a)(7)
under the 1940 Act, it is an account receivable representing all or
part of the sales price of merchandise, insurance or services (within
the meaning of Section 3(c)(5) of the 1940 Act);
(x) it is denominated and payable only in Dollars in
the United States;
(xi) it is owing by an Eligible Obligor in existence as
of such date of determination;
(xii) it constitutes an "account" or a "general
intangible" under and as defined in Section 9-106 of the UCC as then
in effect ;
(xiii) it arises out of any business or related
business in which the Originator is engaged, the products or services
of which are distributed through substantially the same distribution
channels as those used with respect to products of such businesses;
and
(ix) is not a Receivable purchased by the Originator
from any Person.
"Eligible Servicer" shall mean Stone Container or an entity
which, at the time of its appointment as Servicer, (i) is legally qualified and
has the capacity to service the Receivables, (ii) has demonstrated the ability
to service professionally and completely a portfolio of similar accounts in
accordance with high standards of skill and care, (iii) is qualified and, if
required, licensed to use the software that the Servicer is then currently using
to service the Receivables or obtains the right to use or has software which is
adequate to perform its duties under the Pooling and Servicing Agreement
(including pursuant to a license from or other agreement with Stone Container or
any of its Affiliates) and (iv) is not in a business which is a competitor of
the Servicer.
"Enhancement" means, for any Series, any surety bond, letter
of credit, guaranteed rate agreement, maturity guaranty facility, cash
collateral account or guaranty, tax protection agreement, interest rate swap or
other contract or agreement for the benefit of Certificateholders of such
Series. The drawing on or payment of any Enhancement for the benefit of a Series
or Class of Certificates shall not be available to the Certificateholders of any
other Series or Class.
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"Enhancement Provider" shall mean the Person providing any
Enhancement, other than any Holders of Certificates of which are subordinated to
any other Series or Class of Certificates.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated
thereunder.
"ERISA Affiliate" shall mean with respect to any Person, at
any time, each trade or business (whether or not incorporated) that would, at
the time, be treated together with such Person as a single employer under
Section 4001 of ERISA or Sections 414(b), (c), W or (o) of the Code.
"Event of Termination" shall have, with respect to any Series,
the meaning specified in Section 9.1 of the Pooling and Servicing Agreement and
any Supplement.
"Excess Funding Account" shall have the meaning set forth in
Section 4.2(b) of the Pooling and Servicing Agreement.
"Excess Funding Account Deposit Amount" shall mean, with
reference to any day on which the Transferor Amount is, or would be, less than
the Minimum Transferor Amount, an amount equal to the difference between the
Minimum Transferor Amount and the Transferor Amount.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor entity thereto.
"Final Trust Termination Date" shall have the meaning
specified in Section 12.1(a) of the Pooling and Servicing Agreement.
"Forecasted Dilution Amount" means, for any purchase or series
of purchases during a Settlement Period, the Dilution Ratio(s) utilized in
calculation of the applicable Purchase Price for such purchase or purchases
multiplied by the aggregate original Unpaid Balances of the Receivables included
in such purchase or purchases.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authority" shall mean the United States of
America, any state or other political subdivision thereof, or any agency,
instrumentality, or subdivision of any of the foregoing and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Holder" shall mean, in the case of the Certificates, the
Person in whose name a Certificate is registered as owner in the Certificate
Register.
"Indebtedness" of a Person shall mean 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
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production from property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances or other instruments, (v)
obligations for which such Person is obligated pursuant to a guaranty, keepwell,
capital requirement, take-or-pay, "put" or similar agreement and (vi)
obligations in respect of a lease of property which is required to be
capitalized in accordance with GAAP.
"Indemnified Liabilities" shall have the meaning set forth in
Section 9.3 of the Receivables Purchase Agreement.
"Independent Director" shall mean a member of the board of
directors of the Transferor who is not, and never was, (A) a stockholder,
director, officer, employee, affiliate, associate, customer or supplier of, or
any person that has received any benefit (excluding, however, any compensation
received by such director, in such person's capacity as a director for the
Transferor) in any form whatever from, or any person that has provided any
service (excluding however, any service provided by such director, in such
person's capacity as a director for the Transferor) in any form whatever to, the
Transferor or any of its affiliates or associates, or (B) any person owning
beneficially, directly or indirectly, any outstanding shares of common stock of
the Transferor, or a stockholder, director, officer, employee, affiliate,
associate, customer or supplier of, or any person that has received any benefit
(excluding, however, any compensation received by such director, in such
person's capacity as a director for the Transferor) in any form whatever from,
or any person that has provided any service (excluding, however, any service
provided by such director, in such person's capacity as a director for the
Transferor) in any form whatever to, such beneficial owner or any of such
beneficial owner's affiliates or associates. An "Independent Director" cannot be
a trustee in bankruptcy for Stone Container or any Affiliate of Stone Container.
In addition, "Independent Director" shall be (A) a tenured professor at a
business or law school, (B) a retired judge or (C) another established,
independent member of the business community, having a sound reputation and
experience relevant to the duties to be performed by such director.
"Ineligible Receivable" shall have the meaning specified in
Section 2.4(c) of the Pooling and Servicing Agreement.
"Initial Closing Date" shall mean October 15, 1999.
"Initial Invested Amount" shall mean, with respect to any
Series, the amount specified in the applicable Supplement.
"Insolvency" or "Insolvent" shall mean, with respect to any
Multiemployer Plan, the condition that such Plan is insolvent within the meaning
of Section 4245 of ERISA.
"Interest Funding Account" shall mean, for any Series, the
account, if any, established pursuant to the related Supplement in which amounts
representing interest payable on the Investor Certificates of such Series will
be deposited and held until paid to Certificateholders.
"Invested Amount" shall have the meaning with respect to any
Series as set forth in the applicable Supplement.
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"Invested Percentage" shall have, with respect to any Series,
the meaning set forth in the applicable Supplement.
"Investor Certificate" shall mean a certificate issued
pursuant to Section 6.1 or Section 6.8 of the Pooling and Servicing Agreement by
the Transferor and authenticated by or on behalf of the Trustee, substantially
in the form of an exhibit to the related Supplement.
"Investor Certificateholder" shall mean the Holder of record
of an Investor Certificate as indicated in the Certificate Register.
"Investor Interest" shall have the meaning specified in
Section 4.1 of the Pooling and Servicing Agreement.
"Issuance Date" shall have the meaning, with respect to any
Series issued pursuant to Section 6.8 of the Pooling and Servicing Agreement,
stated in such Section.
"Issuance Notice" shall have the meaning, with respect to any
Series issued pursuant to Section 6.8 of the Pooling and Servicing Agreement,
stated in such Section.
"Letter of Representations" shall have the meaning set forth
in Section 6.9 of the Pooling and Servicing Agreement.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, UCC Financing Statement priority or other security agreement
or preferential arrangement of any kind or nature whatsoever, including, without
limitation, is any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC or comparable
law of any jurisdiction to evidence any of the foregoing; provided, however,
that any assignment permitted by Section 6.3(b), 7.2, or 7.4 of the Pooling and
Servicing Agreement shall not be deemed to constitute a Lien; provided, further,
however, that any lien created by the Pooling and Servicing Agreement or
Receivables Purchase Agreement shall not be deemed to constitute a Lien.
"Lock-Box Account" shall mean a bank account in the name of
the Trustee, on behalf of Certificateholders, maintained with a Lock-Box Bank.
"Lock-Box Agreements" shall mean the collective reference to
each agreement between Stone Container and a Lock-Box Bank, substantially in the
form of Exhibit E to the Pooling and Servicing Agreement.
"Lock-Box Banks" shall mean any of the banks listed in Exhibit
F to the Pooling and Servicing Agreement (including their successors) and any
other bank which becomes a Lock-Box Bank pursuant to Section 2.6(i) of the
Pooling and Servicing Agreement and which is a party to a Lock-Box Agreement.
"Material Adverse Effect" means, as to any Seller, the
Transferor or the Servicer and/or to any event or circumstance and at any time,
a material adverse effect on (a) the ability of such Person to perform its
obligations under any Transaction Document to which it is a party or
11
<PAGE>
(b) the validity, enforceability, or collectibility of any Receivables, Secured
Obligations or Contracts.
"Minimum Transferor Amount" shall mean, with respect to any
Business Day, an amount equal to the Aggregate Required Transferor Amounts for
such Business Day.
"Moody's" shall mean Moody's Investors Service, Inc., or
its successor.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which contributions are or have been
made during the preceding five (5) years by any Person or any ERISA Affiliate of
such Person.
"Net Eligible Receivables" shall mean, for any Business Day,
the Aggregate Eligible Receivables at the end of the prior Business Day, minus
the sum of the aggregate Unpaid Balance of Eligible Receivables for any Obligor
at the end of the prior Business Day in excess of the applicable Concentration
Limit for such Obligor at the end of such prior Business Day.
"1940 Act" shall mean the Investment Company Act of 1940, as
amended.
"Obligor" shall mean, with respect to any Receivable, the
Person or Persons obligated to make payments with respect to such Receivable
under a Contract.
"Officer's Certificate" shall mean a certificate signed by the
Chairman of the Board, President, Treasurer, Assistant Treasurer, Controller or
any Vice President of the Transferor or the Servicer or, in the case of a
Successor Servicer, a certificate signed by a Vice President (or an officer
holding an office with equivalent or more senior responsibilities) of such
Successor Servicer.
"Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality thereof, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be an employee of the Transferor or the Servicer, designated by the
Servicer and who shall be reasonably acceptable to the Trustee.
"Original Due Date" shall mean, for each Eligible Receivable,
the last day of the stated term allowed to the related Obligor for payment of
such Eligible Receivable.
"Originator" shall mean Stone Container or a Subsidiary or
Affiliate of Stone Container designated by Stone Container as an Originator by
written notice to the Trustee which generates Receivables arising from goods or
services provided by such Subsidiary or Affiliate.
"Outstanding Series" shall mean, at any time, a Series issued
pursuant to an effective Supplement for which the Legal Final Maturity or, if
applicable, the Series Termination Date for such Series has not occurred.
12
<PAGE>
"Paying Agent" shall mean any paying agent appointed pursuant
to Section 6.6 of the Pooling and Servicing Agreement and shall initially be the
Trustee.
"Payment Date" shall mean with respect to any Series the date
specified as such in the applicable Supplement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation as
established under the provisions of Section 4002 of ERISA.
"Permitted Investments" shall have the meaning set forth in
Section 4.2(a) of the Pooling and Servicing Agreement.
"Permitted Liens" shall mean, at any time, for any Person:
(i) Liens created pursuant to this Agreement or the
Receivables Purchase Agreement;
(ii) Liens for taxes, assessments or other governmental
charges or levies not yet due and with respect to which reserves in
conformity with GAAP have been provided on the books of such Person;
and
(iii) Liens on a Receivable arising as a result of
offsetting specific reserves and rights of set-off, counterclaim or
other defenses with respect to such Receivable.
"Person" shall mean any legal person, including any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, governmental entity or other entity
of similar nature.
"Plan" shall mean, with respect to any Person, any employee
pension benefit plan that (a) is maintained by such Person or any ERISA
Affiliate of such Person, or to which contributions by any such Person are
required to be made or under which such Person has or could have any liability,
(b) is subject to the provisions of Title IV of ERISA and (c) is not a
Multiemployer Plan.
"Plan Event" shall mean, with respect to the Transferor and
any ERISA Affiliate, (a) the provision of a notice of intent to terminate any
Plan under Section 4041 of ERISA other than in a "standard termination", (b) the
receipt of any notice by any Plan to the effect that the PBGC intends to apply
for the appointment of a trustee to administer any Plan, (c) the termination of
any Plan which results in any material liability of the Transferor, (d) the
withdrawal of the Transferor or any ERISA Affiliate from any Plan described in
Section 4063 of ERISA which could be reasonably expected to result in a material
liability of the Transferor, (e) the complete or partial withdrawal of the
Transferor or any ERISA Affiliate from any Multiemployer Plan which could be
reasonably anticipated to result in a material liability of the Transferor, (f)
a Reportable Event or an event described in Section 4068(f) of ERISA which could
be reasonably anticipated to result in a material liability of the Transferor,
and (g) any other event or condition which under ERISA or the Code could be
reasonably expected to constitute grounds for the imposition of a material Lien
on the assets of the Transferor in respect of any Plan or Multiemployer Plan,
except for contributions not exceeding the limit for
13
<PAGE>
contributions deductible for Federal income tax purposes and the payment of
benefits in accordance with the terms of the Plan or the Multiemployer Plan.
"Pooling and Servicing Agreement" shall mean the Pooling and
Servicing Agreement, dated as of October 1, 1999, by and among the Transferor,
the Servicer, and the Trustee and all amendments thereof and supplements
thereto, including any Supplement.
"Portfolio Yield" with respect to any Series shall have the
meaning (if any) specified in the applicable Supplement.
"Principal Funding Account" shall mean, for any Series, the
account, if any, established pursuant to the related Supplement in which amounts
representing principal payable on the Investor Certificates of such Series will
be deposited and held until paid to Certificateholders.
"Principal Terms" shall have the meaning specified in Section
6.8(b) of the Pooling and Servicing Agreement.
"Private Placement Exemption" shall have the meaning specified
in Section 6.2 of the Pooling and Servicing Agreement.
"Processing Date" shall mean, with respect to any transaction
by an Originator which generates a Receivable, the date that such transaction
has been or should have been first recorded on the computer master file of
Receivables maintained by the Originator or the Servicer (without regard to the
effective date of such recordation).
"Program Costs" shall have, with respect to any Series, the
meaning specified in the related Supplement for such Series.
"Prospective Event of Termination" shall have the meaning
specified in Section 2.3(k) of the Pooling and Servicing Agreement.
"Purchase Date" is defined in Section 2.3(a) of the
Receivables Purchase Agreement.
"Purchase Price" is defined in Section 2.2 of the Receivables
Purchase Agreement.
"Purchase Termination Date" means the earlier to occur of (i)
date upon which all of the Sellers have ceased to sell Receivables to the
Transferor in accordance with the provisions of Article VIII of the Receivables
Purchase Agreement and (ii) the date upon which the Event of Termination or
Appointment Date is declared or automatically occurs pursuant to Sections 9.1 or
9.3 of the Pooling and Servicing Agreement.
"Rating Agency" shall mean, with respect to each Series, the
rating agency or rating agencies that rated the Series, at the request of the
Servicer, as designated in the related Supplement.
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<PAGE>
"Receivable" shall mean each account receivable or general
intangible that is owing upon creation to an Originator by a Person under a
contract, invoice or purchase order arising from the sale of goods or services
rendered by an Originator in connection with its businesses, including all
obligations of such Person with respect thereto, including, without limitation,
all proceeds of the foregoing. A Receivable shall be deemed to have been created
at the end of the day on the Processing Date of such Receivable.
"Receivables Purchase Agreement" shall mean the Receivables
Purchase Agreement, dated as of October 15, 1999 by and between the Transferor,
as purchaser, and Stone Container as seller and originator, as the same may be
amended and supplemented from time to time.
"Record Date", shall mean, with respect to any Series, the
date specified as such in the applicable Supplement.
"Recoveries" shall mean all amounts collected (net of
out-of-pocket costs of collection) in respect of Charged-Off Receivables.
"Related Security" shall mean with respect to any Receivable:
(a) all of the applicable Seller's right, title and interest in and to the goods
(including returned goods), if any, relating to the sale which gave rise to such
Receivable; (b) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise; (c)
all letters of credit, guarantees and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise; and (d) all proceeds of any of the foregoing.
"Reorganization" shall mean, with respect to any Multiemployer
Plan, the condition that such Plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in
Section 4043(b) of ERISA, other than those events as to which the thirty-day
notice period is waived under subsections 13, 14, 16, 18, 19 or 20 of PBGC
Regulation Section 2615.
"Repurchase Amount" shall have the meaning specified in
Section 3.3 of the Receivables Purchase Agreement.
"Repurchase Event" shall have the meaning specified in Section
2.6 of the Receivables Purchase Agreement.
"Repurchase Terms" shall mean, with respect to any Series, the
terms and conditions, if any, under which the Transferor may repurchase such
Series pursuant to Section 12.2 of the Pooling and Servicing Agreement as stated
as such in the applicable Supplement.
"Required Transferor Amount" shall mean, with respect to any
Series, the amount of required subordinated Transferor Amount specified as such
in the applicable Supplement.
15
<PAGE>
"Requirements of Law" for any Person shall mean the
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation, or determination of an arbitrator or Governmental Authority, in
each case applicable to or binding upon such Person or to which such Person is
subject, whether Federal, state or local (including, without limitation, usury
laws, the Federal Truth in Lending Act and Regulation Z and Regulation B of the
Board of Governors of the Federal Reserve).
"Responsible Officer" shall mean (i) when used with respect to
the Trustee, any officer within the Corporate Trust Office of the Trustee
including any vice president, any assistant vice president, trust officer or
assistant trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and in each case having direct responsibility for the administration of
the Pooling and Servicing Agreement and (ii) when used with respect to any other
Person, the Chairman of the Board, any Vice Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Treasurer or the Assistant Treasurer of such Person.
"Revolving Period" shall mean, with respect to each Series,
the period from and including the Closing Date for such Series, up to and
including the day prior to the Amortization Period Commencement Date for such
Series, as described in the applicable Supplement.
"Rule 144A" shall mean Rule 144A as promulgated under the
Securities Act or any successor rules.
"S&P" shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. or any successor thereto.
"Secured Obligations" shall have the meaning specified in
Section 2.1(e) of the Pooling and Servicing Agreement.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Seller" shall mean each of the "Sellers" party to the
Receivables Purchase Agreement; provided, however, that such term shall also
include any Subsidiary or Affiliate of Stone Container that becomes a party to
the Receivables Purchase Agreement pursuant to Section 9.14 thereof and shall
exclude any Person that is terminated as a Seller pursuant to Section 9.15 of
the Receivables Purchase Agreement.
"Seller Addition Date" shall have the meaning specified in
Section 3.3 of the Receivables Purchase Agreement.
"Seller Repurchase Payment" shall have the meaning specified
in Section 2.6 of the Receivables Purchase Agreement.
"Series" shall mean any series of Investor Certificates
issued under Section 6.8 of the Pooling and Servicing Agreement.
16
<PAGE>
"Series Collection Subaccount" shall have the meaning
specified in Section 4.2(a) of the Agreement.
"Series Collection Sub-subaccount" shall have the meaning
specified in Section 4.2(a) of the Agreement.
"Series Non-Principal Collection Sub-subaccount" shall have
the meaning specified in Section 4.2(a).
"Series Principal Collection Sub-subaccount" shall have the
meaning specified in Section 4.2(a).
"Series Termination Date" shall mean, with respect to any
Series, if applicable, the date stated as such in the applicable Supplement.
"Service Transfer" shall have the meaning specified in Section
10.1 of the Pooling and Servicing Agreement.
"Servicer" shall initially mean Stone Container and thereafter
any Person appointed as Successor Servicer as provided in the Pooling and
Servicing Agreement.
"Servicer Default" shall have the meaning specified in Section
10.1 of the Pooling and Servicing Agreement.
"Servicing Fee" shall have the meaning specified in Section
3.2 of the Pooling and Servicing Agreement.
"Servicing Fee Percentage" shall mean 1.0% per annum.
"Servicing Officer" shall mean any officer or employee of the
Servicer involved in, or responsible for, the administration and servicing of
the Receivables whose name appears on a list furnished to the Trustee by the
Servicer, as such list may from time to time be amended.
"Servicing Reserve Ratio" shall mean, an amount reflected in
the most recent Settlement Statement (expressed as a percentage) equal to (i)
the product of (A) 1.00%, (B) 2.00, and (C) the Days Sales Outstanding, divided
by (ii) 360.
"Settlement Period" shall mean each fiscal month of Stone
Container ending on the last day of the month; provided, however, that, in the
case of the initial Settlement Period, "Settlement Period" shall mean the period
from and including the Initial Closing Date to and including the last day of the
month in which the Initial Closing Date occurs.
"Settlement Statement" shall mean a report substantially in
the form of Exhibit D to the Pooling and Servicing Agreement and delivered
pursuant to Section 3.4(c) of the Pooling and Servicing Agreement.
"Short-Term Note" shall mean the note from the Transferor in
favor of the Seller substantially in the form attached as Exhibit A to the
Receivables Purchase Agreement.
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<PAGE>
"Standard & Poor's" shall mean S&P or its successor.
"Stone Container" shall mean Stone Container Corporation, a
Delaware corporation.
"Subsidiary" shall mean any corporation of which more than 50%
of the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by Stone Container and/or by one or more
Subsidiaries, or any similar business organization which is so owned or
controlled.
"Successor Servicer" shall have the meaning specified in
Section 10.2 of the Pooling and Servicing Agreement.
"Supplement" shall mean, with respect to any Series, the
supplement to the Pooling and Servicing Agreement related thereto complying with
the terms of Section 6.8 thereof.
"Target Receivables Amount" shall have, with respect to any
Outstanding Series, the meaning specified in the related Supplement for such
Outstanding Series.
"Tax Opinion" shall mean, unless otherwise specified in the
Supplement for any Series with respect to such Series or any Class within such
Series, with respect to any action, an opinion of counsel (a) to the effect
that, for United States federal income tax purposes, (i) such action will not
adversely affect the characterization as debt of any Investor Certificates of
any Outstanding Series or Class not retained by the Transferor, (ii) in the case
of Section 6.8 of the Pooling Agreement, the Investor Certificates of the new
Series that are not retained by the Transferor will be characterized as debt or
should be characterized as debt and (iii) following such action, the Trust will
not be an association (or publicly traded partnership) taxable as a corporation
and (b) with respect to state taxation issues regarding the taxation of the
Trust, in substantially the form delivered (if any) at the Initial Closing Date.
"Termination Notice" shall have the meaning specified in
Section 10.1 of the Pooling and Servicing Agreement.
"Transaction Documents" shall mean the collective reference to
this Pooling and Servicing Agreement, each Supplement with respect to any
Outstanding Series, the Receivables Purchase Agreement, the Lock-box Agreements,
the Investor Certificates, any Certificate Purchase Agreement, and any other
documents delivered pursuant to or in connection therewith.
"Transfer Agent and Registrar" shall have the meaning
specified in Section 6.3 of the Pooling and Servicing Agreement.
"Transfer Date" shall mean, with respect to any Payment Date,
the Business Day immediately preceding such Payment Date.
"Transferor" shall mean Stone Receivables Corporation, a
Delaware corporation.
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<PAGE>
"Transferor Amount" shall mean for any day, the result of the
Net Eligible Receivables at the end of the prior Business Day, minus the
Aggregate Adjusted Invested Amount at the end of such Business Day.
"Transferor Certificate" shall mean the certificate executed
by the Transferor and authenticated by the Trustee, substantially in the form of
Exhibit A to the Pooling and Servicing Agreement.
"Transferor Interest" shall have the meaning specified in
Section 4.1 of the Pooling and Servicing Agreement.
"Transferor Percentage" shall mean, with respect to the
Transferor Certificate for any day, the excess on such day, if any, of (a) 100%
over (b) the Aggregate Invested Percentage.
"Transferred Assets" is defined in Section 2.1 of the
Receivables Purchase Agreement.
"Trust" shall mean the trust created by the Pooling and
Servicing Agreement; such trust may be referred to as the "Stone Receivables
Corporation Master Trust".
"Trust Assets" shall have the meaning specified in Section
2.1(a) of the Pooling and Servicing Agreement.
"Trustee" shall mean the institution executing the Pooling and
Servicing Agreement as trustee, or its successor in interest, or any successor
trustee appointed as provided in the Pooling and Servicing Agreement.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any specified or applicable jurisdiction.
"Undivided Interest" shall mean the undivided interest of any
Investor Certificateholder in the Trust Assets. Such Undivided Interest is to be
measured, in the case of any Investor Certificateholder, by such Holder's pro
rata share of the Invested Amount of the related Series or the Aggregate
Invested Amount, as the context may require.
"Unpaid Balance" shall mean with respect to a Receivable, the
outstanding amount of the indebtedness of the related Obligor under or evidenced
by the related Contract or Contracts, exclusive of any sales or other tax, if
any, included or payable with respect to such purchase.
"Variable Funding Certificates" or VFC Certificates" shall
have the meaning specified in Section 6.8(e) of the Agreement.
"Vice President" when used with respect to the Transferor or
the Servicer shall mean any vice president whether or not designated by a number
or word or words added before or after the title "vice president".
19
<PAGE>
"Written" or "In Writing" shall mean any form of written
communication, including, without limitation, by means of telex, telecopier
device, telegraph or cable.
20
<PAGE>
Exhibit 10.1(b)
- ------------------------------------------------------------------------------
STONE RECEIVABLES CORPORATION,
Transferor,
STONE CONTAINER CORPORATION,
Servicer,
and
THE CHASE MANHATTAN BANK,
Trustee
on behalf of the Certificateholders
--------------------
SERIES 1999-1 SUPPLEMENT
Dated as of October 15, 1999
to
STONE RECEIVABLES CORPORATION MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 1999
--------------------
FLOATING RATE TRADE RECEIVABLES-BACKED CERTIFICATES,
SERIES 1999-1, CLASS A
FLOATING RATE TRADE RECEIVABLES-BACKED CERTIFICATES,
SERIES 1999-1, CLASS B
FLOATING RATE TRADE RECEIVABLES-BACKED CERTIFICATES,
SERIES 1999-1, CLASS C
------------------------------------------------------------------------------
<PAGE>
SERIES 1999-1 SUPPLEMENT, dated as of October 15, 1999 (this
"Supplement") among STONE RECEIVABLES CORPORATION, a Delaware corporation, as
Transferor (the "Transferor"), STONE CONTAINER CORPORATION, a Delaware
corporation, as Servicer (the "Servicer"), and THE CHASE MANHATTAN BANK, a New
York banking corporation, as trustee (together with its successors in trust
thereunder as provided in the Pooling and Servicing Agreement referred to below,
the "Trustee"), under the Pooling and Servicing Agreement, dated as of October
1, 1999 (the "Agreement") among the Transferor, the Servicer and the Trustee.
PRELIMINARY STATEMENT
Section 6.9 of the Agreement provides, among other things,
that the Transferor and the Trustee may enter into a supplement to the Agreement
for the purpose of authorizing the issuance of Investor Certificates. The
Transferor hereby enters into this Supplement with the Servicer and the Trustee
as required by Section 6.9(b) of the Agreement to provide for the issuance,
authentication and delivery of the Floating Rate Trade Receivables-Backed
Certificates, Series 1999-1, Class A (the "Class A Certificates"), the Floating
Rate Trade Receivables-Backed Certificates, Series 1999-1, Class B (the "Class B
Certificates"), and, the Floating Rate Trade Receivables-Backed Certificates,
Series 1999-1, Class C (the "Class C Certificates" and, together with the Class
A Certificates and the Class B Certificates, the "Series 1999-1 Certificates").
In the event that any term or provision contained herein shall conflict with or
be inconsistent with any term or provision contained in the Agreement, the terms
and provisions of this Supplement shall govern.
All capitalized terms not otherwise defined herein are defined
in Annex X to the Agreement or the Series 1999-2 Supplement. All Article,
Section, Subsection, Schedule or Exhibit references herein shall mean Articles,
Sections, Subsections, Schedules or Exhibits of the Agreement, as amended and
supplemented by this Supplement, except as otherwise provided herein.
Unless otherwise stated herein, as the context otherwise
requires, or if such term is otherwise defined in the Agreement (including in
Annex X thereto), each capitalized term used or defined herein shall relate only
to the Series 1999-1 Certificates and to no other Series of Investor
Certificates issued by the Trust. Any reference to the Early Amortization
Period, the Series 1999-1 Amortization Period, or the Revolving Period in this
Supplement shall refer only to such periods as they relate to the Series 1999-1
Certificates.
1
<PAGE>
SECTION 1. Designation and Definitions.
(a) The Class A Certificates shall be designated generally as
Floating Rate Trade Receivables-Backed Certificates, Series 1999-1, Class A or
the Class A Certificates. The Class B Certificates shall be designated generally
as Floating Rate Trade Receivables-Backed Certificates, Series 1999-1, Class B
or the Class B Certificates. The Class C Certificates shall be designated
generally as Floating Rate Trade Receivables-Backed Certificates, Series 1999-1,
Class C or the Class C Certificates. The Class A Certificates, the Class B
Certificates and the Class C Certificates together shall be designated generally
as the Series 1999-1 Certificates.
(b) For the purposes of the Agreement and this Supplement, the
following capitalized terms shall be defined as follows with respect to the
Series 1999-1 Certificates:
"Accrual Period" shall mean, with respect to Series 1999-1,
the period from and including a Payment Date to but excluding the succeeding
Payment Date; provided that in the case of the initial Accrual Period, it shall
mean the period from and including the Issuance Date to but excluding November
15, 1999.
"Average Dilution Ratio" is defined in Annex X to the
Agreement.
"Carrying Cost Reserve Ratio" shall mean, an amount reflected
in the most recent Settlement Statement (expressed as a percentage) equal to (a)
the product of (i) 1.50, (ii) the Discount Rate, (iii) 2.00, and (iv) the Days
Sales Outstanding divided by (b) 360.
"Class A Adjusted Invested Amount" shall mean, on any date of
determination, (i) the Class A Invested Amount on such date, minus (ii) the sum
of (A) the amount on deposit on such date in the Series 1999-1 Principal
Collection Sub-subaccount up to a maximum of the Class A Invested Amount, plus
(B) the Series 1999-1 Invested Percentage of the amounts on deposit on such date
in the Excess Funding Account, up to a maximum of the Class A Invested Amount.
"Class A Applicable Reserve Ratio" shall mean, on any date of
determination with respect to the Class A Certificates, the greater of (i) the
sum of the Loss Reserve Ratio and the Dilution Reserve Ratio, and (ii) the
Minimum Reserve Ratio, in each case applicable to Class A Certificates.
"Class A Certificate" shall mean a Certificate designated as
"Class A" on the face thereof.
"Class A Certificateholder" shall mean each Holder of a Class
A Certificate.
2
<PAGE>
"Class A Certificate Rate" shall mean (a) with respect to (i)
the initial Accrual Period, 5.90625% per annum, and (ii) any Accrual Period
thereafter, as set forth in Section 4 of this Supplement.
"Class A Initial Invested Amount" is as set forth in Section 2
of this Supplement.
"Class A Invested Amount" shall mean, with respect to any date
of determination, an amount equal to (i) the Class A Initial Invested Amount,
minus (ii) the aggregate amount of distributions to the Class A
Certificateholders made in respect of principal on or prior to such date.
"Class A Monthly Interest" shall have the meaning assigned in
subsection (a)(i) of Section 4.4 of the Agreement as supplemented by this
Supplement (which provisions are set forth in Section 1 of this Supplement
below).
"Class B Adjusted Invested Amount" shall mean, on any date of
determination, (i) the Class B Invested Amount on such date, minus (ii) the sum
of (A) the excess, if any, of the amount on deposit on such date in the Series
1999-1 Principal Collection Sub-subaccount over the Class A Invested Amount up
to a maximum of the Class B Invested Amount, plus (B) the excess, if any, of the
Series 1999-1 Invested Percentage of the amounts on deposit on such date in the
Excess Funding Account, over the Class A Invested Amount and up to a maximum of
the Class B Invested Amount.
"Class B Applicable Reserve Ratio" shall mean, on any date of
determination with respect to the Class B Certificates, the greater of (i) the
sum of the Loss Reserve Ratio and the Dilution Reserve Ratio, and (ii) the
Minimum Reserve Ratio, in each case applicable to Class B Certificates.
"Class B Certificate" shall mean a Certificate designated as
"Class B" on the face thereof.
"Class B Certificateholder" shall mean each Holder of a Class
B Certificate.
"Class B Certificate Rate" shall mean (a) with respect to (i)
the initial Accrual Period, 6.25625% per annum, and (ii) any Accrual Period
thereafter, as set forth in Section 4 of this Supplement.
"Class B Initial Invested Amount" is as set forth in Section 2
of this Supplement.
"Class B Invested Amount" shall mean, with respect to any date
of determination, an amount equal to (i) the Class B Initial Invested Amount,
minus (ii) the aggregate amount of distributions to the Class B
Certificateholders made in respect of principal on or prior to such date.
"Class B Monthly Interest" shall have the meaning assigned in
subsection (a)(ii) of Section 4.4 of the Agreement as supplemented by this
Supplement (which provisions are set forth in Section 1 of this Supplement
below).
"Class C Adjusted Invested Amount" shall mean, on any date of
determination, (i) the Class C Invested Amount on such date, minus (ii) the sum
of (A) the excess, if any, of the amount on deposit on such date in the Series
1999-1 Principal Collection Sub-subaccount over the Class A Invested Amount and
the Class B Invested Amount up to a maximum of the Class C Invested Amount, plus
(B) the excess, if any, of the Series 1999-1 Invested Percentage of the amounts
on deposit on such date in the Excess Funding Account, over the Class A Invested
Amount and the Class B Invested Amount and up to a maximum of the Class C
Invested Amount.
"Class C Applicable Reserve Ratio" shall mean, on any date of
determination with respect to the Class C Certificates, the greater of (i) the
sum of the Loss Reserve Ratio and the Dilution Reserve Ratio, and (ii) the
Minimum Reserve Ratio, in each case applicable to Class C Certificates.
"Class C Certificate" shall mean a Certificate designated as
"Class C" on the face thereof.
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"Class C Certificateholder" shall mean each Holder of a Class
C Certificate.
"Class C Certificate Rate" shall mean (a) with respect to (i)
the initial Accrual Period, 7.20625% per annum, and (ii) any Accrual Period
thereafter, as set forth in Section 4 of this Supplement.
"Class C Initial Invested Amount" is as set forth in Section 2
of this Supplement.
"Class C Invested Amount" shall mean, with respect to any date
of determination, an amount equal to (i) the Class C Initial Invested Amount,
minus (ii) the aggregate amount of distributions to the Class C
Certificateholders made in respect of principal on or prior to such date.
"Class C Monthly Interest" shall have the meaning assigned in
subsection (a)(iii) of Section 4.4 of the Agreement as supplemented by this
Supplement (which provisions are set forth in Section 1 of this Supplement
below).
"Daily Report" is defined in Annex X to the Agreement.
"Dilution Horizon Ratio" is defined in Annex X to the
Agreement.
"Dilution Reserve Ratio" shall mean, an amount reflected on
the most recent Settlement Statement (expressed as a percentage) that is
calculated for the Class A Certificates, the Class B Certificates or the Class C
Certificates, as the case may be, as follows:
DRR = [(c * d) + [(e-d) * (e/d)]] * f
Where:
DRR = Dilution Reserve Ratio;
c = with respect to Class A Certificates, 2.5, with respect to
Class B Certificates, 2.0 and with respect to the Class C
Certificates, 1.5;
d = the Average Dilution Ratio for the Settlement Period
immediately preceding such earlier Determination Date;
e = the highest Dilution Ratio over the past twelve Settlement
Periods immediately preceding such earlier Determination Date;
and
f = the Dilution Horizon Ratio.
"Discount Rate" shall mean, as of any date of determination,
the sum of (a) the weighted average Class A Certificate Rate, Class B
Certificate Rate and Class C Certificate Rate in effect with respect to the
outstanding Class A Certificates, Class B Certificates and Class C Certificates,
respectively, as of the end of the Settlement Period immediately preceding the
most recent Determination Date and (b) an amount equal to (i) the aggregate
amount of fees (other than the Servicing Fee and Program Costs) accrued with
respect to the outstanding Series 1999-1
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<PAGE>
Certificates during the Settlement Period immediately preceding the most recent
Determination Date, divided by (ii) the average daily Series 1999-1 Invested
Amount during such Settlement Period.
"DTC" shall mean The Depository Trust Company.
"Early Amortization Period" shall mean with respect to the
Class A Certificates, the Class B Certificates and the Class C Certificates, the
period commencing on the date when an Event of Termination has occurred and has
not been otherwise waived, and continuing to and including the earlier of (i)
the payment in full to the Class A Certificateholders of the Class A Invested
Amount, the payment in full to the Class B Certificateholders of the Class B
Invested Amount and the payment in full to the Class C Certificateholders of the
Class C Invested Amount, and (ii) the Legal Final Maturity.
"Excess Program Costs" shall have the meaning assigned to such
term within the definition of "Program Costs".
"Initial Purchaser" shall mean, each of Banc One Capital
Markets, Inc. and Chase Securities Inc., who is purchasing the Series 1999-1
Certificates on the Issuance Date pursuant to the Purchase Agreement.
"Invested Amount" shall mean, with respect to any Business Day
and Series 1999-1, the sum of the Class A Invested Amount, the Class B Invested
Amount, and the Class C Invested Amount.
"Invested Percentage" shall mean, with respect to any Business
Day and Series 1999-1, the Series 1999-1 Invested Percentage as defined below.
"Issuance Date" shall mean, with respect to Series 1999-1,
October 15, 1999.
"Legal Final Maturity" shall mean November 15, 2005.
"LIBOR" shall have the meaning set forth in Section 4.4 of the
Agreement as supplemented by this Supplement (which provisions are set forth in
Section 1 of this Supplement below).
"LIBOR Determination Date" shall mean with respect to interest
payable on the Series 1999-1 Certificates on any Payment Date, the second
Business Day prior to the immediately preceding Payment Date.
"Loss Reserve Ratio" shall mean, an amount reflected on the
most recent Settlement Statement (expressed as a percentage) that is calculated
for the Class A Certificates, the Class B Certificates or the Class C
Certificates, as the case may be, as follows:
LRR = d * b * (a/c) * PTM
Where:
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<PAGE>
LRR = Loss Reserve Ratio;
a = the aggregate Unpaid Balances of Receivables originated by
the Originators during the three Settlement Periods
immediately preceding such earlier Determination Date;
b = the highest Default Ratio Average that occurred during the
period of twelve consecutive Settlement Periods ending prior
to such earlier Determination Date;
c = the Aggregate Eligible Receivables as of the last day of the
Settlement Period immediately preceding such earlier
Determination Date;
d = with respect to the Class A Certificates, 2.5, with respect
to the Class B Certificates, 2.0, and with respect to the
Class C Certificates, 1.5; and.
PTM= the Payment Term Multiplier.
"Minimum Reserve Ratio" shall mean, an amount reflected on the
most recent Settlement Statement (expressed as a percentage) that is calculated
for the Class A Certificates, the Class B Certificates or the Class C
Certificates, as the case may be, as follows:
MRR= (a * b) + c
Where:
MRR= Minimum Reserve Ratio;
a = the Average Dilution Ratio for the Settlement Period
immediately preceding such earlier Determination Date;
b = the Dilution Horizon Ratio; and
c = with respect to Class A Certificates, 10.0%, with respect to
Class B Certificates, 8.0%, and with respect to the Class C
Certificates, 6.0%.
"Payment Date" shall mean the 15th day of each month (or if
such day is not a Business Day, the next succeeding Business Day), commencing
November 15, 1999.
"Payment Term" shall mean with respect to any Receivable, the
number of days between its invoice date and its due date.
"Payment Term Multiplier" shall mean with respect to each
Determination Date, (a) 1.0, if the Payment Term Variable is not more than 36,
(b) 1.1, if the Payment Term Variable is 37 to 39, (c) 1.17, if the Payment Term
Variable is 40 to 45, (d) 1.22, if the Payment Term Variable is 46 to 50 (e)
1.28, if the Payment Term Variable is 51 to 55, (f) 1.33, if the Payment Term
Variable is 56 to 60, and (g) 1.38, if the Payment Term Variable is 61 to 65;
provided however, that, if the Payment Term Variable exceeds 65, the Payment
Term Multiplier for such Receivable on such Determination Date shall be
determined by calculating the sum of (x) 1.38
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<PAGE>
and (y) 0.05, for each 5-day increment by which the Payment Term Variable
exceeds 65, it being understood that the same number shall apply for all Payment
Term Variables that fall within a five-day range.
"Payment Term Variable" shall mean, as calculated in each
Settlement Statement as of the most recently ended Settlement Period, the
weighted average of the Payment Terms of all Receivables with an Unpaid Balance
as the last day of such Settlement Period.
"Program Costs" shall mean, for any Business Day, the sum of
(i) the product of (A) all unpaid fees and expenses due and payable to counsel
to, and independent auditors of, the Transferor (other than fees and expenses
payable on or in connection with the closing of the issuance of any Investor
Certificates) on such Business Day and (B) a fraction, the numerator of which is
the Series 1999-1 Invested Amount on such Business Day and the denominator of
which is the Series 1999-1 Invested Amount on such Business Day and (ii) all
unpaid fees and expenses due and payable to Rating Agencies rating the Series
1999-1 Certificates; provided, however, that Program Costs shall not exceed
$50,000 in the aggregate in any fiscal year of the Servicer (any amount of the
foregoing expenses, indemnities and fees in excess of $50,000 shall be referred
to herein as "Excess Program Costs").
"Purchase Agreement" shall mean each agreement to be entered
into on the Issuance Date between the Transferor and the Initial Purchaser
pursuant to which the Transferor agrees to sell, and the Initial Purchaser
agrees to purchase, the principal amount and Class of Series 1999-1 Certificates
set forth therein.
"Qualified Institutional Buyer" shall have the meaning
ascribed to such term in Rule 144A under the Securities Act.
"Rating Agencies" shall mean, with respect to Series 1999-1,
S&P and Moody's.
"Record Date" shall mean, with respect to any Payment Date,
one Business Day preceding such Payment Date, or if Definitive Certificates are
issued, the last day of the immediately preceding calendar month.
"Reference Banks" shall be the major banks operating in the
interbank eurodollar market.
"Required Amount" shall mean, as calculated on each Business
Day during an Accrual Period with respect to the next Payment Date, the sum of
(i) the Series 1999-1 Monthly Interest to be distributed on the next Payment
Date, (ii) the aggregate amount of all previously accrued, unpaid and
unallocated Series 1999-1 Monthly Interest for prior Payment Dates, (iii) the
Series 1999-1 Servicing Fee, and (iv) all accrued Program Costs, in each case
for such Accrual Period determined as of such day.
"Reuters Screen LIBOR Page" shall mean the display page
designated as "LIB" on the Reuters Monitor Money Rates Service.
"Series 1999-1" shall mean the Series of Investor
Certificates, the Principal Terms of which are set forth in this Supplement.
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<PAGE>
"Series 1999-1 Adjusted Invested Amount" shall mean, as of any
date of determination, (i) the Series 1999-1 Invested Amount on such date, minus
(ii) the sum of (A) the amount on deposit in the Series 1999-1 Principal
Collection Sub-subaccount on such date, plus (B) the Series 1999-1 Invested
Percentage of the amounts on deposit in the Excess Funding Account on such date.
"Series 1999-1 Allocated Receivables Amount" shall mean, on
any date of determination, the product of (A) the Net Eligible Receivables on
such day, times (B) the percentage equivalent of a fraction, the numerator of
which is the Series 1999-1 Target Receivables Amount on such day and the
denominator of which is the Aggregate Target Receivables Amount (as defined in
Annex X) on such day.
"Series 1999-1 Amortization Period" shall mean the period
beginning on the Series 1999-1 Amortization Period Commencement Date and ending
upon payment in full of the Series 1999-1 Invested Amount, all accrued and
unpaid interest thereon and all other amounts owed to the Investor
Certificateholders hereunder.
"Series 1999-1 Amortization Period Commencement Date" shall
mean November 15, 2004.
"Series 1999-1 Collections" shall mean, with respect to any
Business Day, an amount equal to the product of (i) the Series 1999-1 Invested
Percentage on such Business Day and (ii) all Collections received and processed
by the Servicer or on deposit in available funds in any Lock-Box Account as of
the close of the prior Business Day.
"Series 1999-1 Collection Subaccount" shall have the meaning
assigned in subsection (e)(i) of Section 4.2 of the Agreement as supplemented by
this Supplement (which provisions are set forth in Section 1 of this Supplement
below).
"Series 1999-1 ERISA Entity" shall mean (a) "an employee
benefit plan" (as described in Section 3(3) of ERISA) or other retirement
arrangement, individual retirement account or Keogh plan, whether or not it is
subject to the provisions of Title I of ERISA, (b) a plan described in Section
4975(e)(1) of the Code or (c) any entity whose underlying assets include plan
assets by reason of a plan's investment in such entity or by the application of
United States Department of Labor ("DOL") Regulation 2510.3-101.
"Series 1999-1 Initial Invested Amount" shall mean,
collectively, the Class A Initial Invested Amount, the Class B Initial Invested
Amount and the Class C Initial Invested Amount.
"Series 1999-1 Invested Amount" shall mean, collectively, the
Class A Invested Amount, the Class B Invested Amount and the Class C Invested
Amount.
"Series 1999-1 Invested Percentage" shall mean, with respect
to any Business Day (i) during the Series 1999-1 Revolving Period, the
percentage equivalent of a fraction, the numerator of which is the lesser of the
Series 1999-1 Allocated Receivables Amount and the Series 1999-1 Target
Receivables Amount, as of the end of the immediately preceding Business Day and
the denominator of which is the greater of (A) the Net Eligible Receivables as
of the
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<PAGE>
end of the immediately preceding Business Day and (B) the sum of the
numerators used to calculate the Invested Percentage for all Outstanding Series
on the Business Day for which such percentage is determined and (ii) during the
Series 1999-1 Amortization Period, the percentage equivalent of a fraction, the
numerator of which is the lesser of the Series 1999-1 Allocated Receivables
Amount and the Series 1999-1 Target Receivables Amount, as of the end of the
last Business Day of the Series 1999-1 Revolving Period (provided that if during
the Series 1999-1 Amortization Period, the Amortization Periods of all other
Outstanding Series which were outstanding prior to the commencement of the
Series 1999-1 Amortization Period commence, then, from and after the date the
last of such Series commences its Amortization Period, the numerator shall be
the lesser of the Series 1999-1 Allocated Receivables Amount and the Series
1999-1 Target Receivables Amount on such date) and the denominator of which is
the greater of (A) the Net Eligible Receivables as of the end of the immediately
preceding Business Day and (B) the sum of the numerators used to calculate the
Invested Percentage for all Outstanding Series on the Business Day for which
such percentage is determined.
"Series 1999-1 Monthly Interest" shall mean, collectively, the
Class A Monthly Interest, the Class B Monthly Interest and the Class C Monthly
Interest.
"Series 1999-1 Monthly Principal Payment" means the aggregate
of the Class A Monthly Principal, Class B Monthly Principal and Class C Monthly
Principal distributable as provided in Section 4.5 of the Agreement as
supplemented by this Supplement (which provisions are set forth in Section 1 of
this Supplement below).
"Series 1999-1 Non-Principal Collection Sub-subaccount" shall
have the meaning assigned in subsection (e) of Section 4.2 of the Agreement as
supplemented by this Supplement (which provisions are set forth in Section 1 of
this Supplement below).
"Series 1999-1 Principal Collection Sub-subaccount" shall have
the meaning assigned in subsection (e) of Section 4.2 of the Agreement as
supplemented by this Supplement (which provisions are set forth in Section 1 of
this Supplement below).
"Series 1999-1 Regulation S Certificate" shall mean the
Certificate representing a Class A Certificate, a Class B Certificate or a Class
C Certificate sold outside of the United States in reliance on Regulation S
issued in exchange for a Series 1999-1 Temporary Regulation S Certificate after
the expiration of the "40-day restricted period" (within the meaning of Rule
903(c)(3) of Regulation S) in substantially the form set forth in Exhibit C-1,
Exhibit C-2 or Exhibit C-3 attached to the Series 1999-1 Supplement.
"Series 1999-1 Required Transferor Amount" shall mean:
(a) on any date of determination during the Series 1999-1
Revolving Period, an amount equal to the sum of:
(i) an amount equal to the greater of: (A) the
difference between (I) the product of (x) the Class A Adjusted
Invested Amount on such day and (y) a fraction, the numerator
of which is the Class A Applicable Reserve Ratio and the
denominator of which is one minus the Class A Applicable
Reserve Ratio and (II) the sum of the Class B Adjusted
Invested Amount and the Class C Adjusted
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<PAGE>
Invested Amount; (B) the difference between (I) the product of
(x) the sum of the Class A Adjusted Invested Amount and the
Class B Adjusted Invested Amount on such day and (y) a
fraction, the numerator of which is the Class B Applicable
Reserve Ratio and the denominator of which is one minus the
Class B Applicable Reserve Ratio and (II) the Class C Adjusted
Invested Amount; and (C) the product of (I) the Series 1999-1
Adjusted Invested Amount and (II) a fraction, the numerator of
which is the Class C Applicable Reserve Ratio and the
denominator of which is one minus the Class C Applicable
Reserve Ratio; provided that whichever method of calculation
pursuant to clauses (A), (B) or (C) results in the greatest
amount on any Determination Date shall continue to be used as
the method for the calculations to be made under this
paragraph (i) on each day from and after such Determination
Date until (but not including) the immediately succeeding
Determination Date;
(ii) the product of (A) the Series 1999-1 Invested
Amount on such day and (B) a fraction, the numerator of which
is the Carrying Cost Reserve Ratio and the denominator of
which is one minus the Class A Applicable Reserve Ratio; and
(iii) the product of (A) the Unpaid Balances of
Receivables in the Trust on such day, (B) a fraction, the
numerator of which is the Series 1999-1 Invested Amount and
the denominator of which is the Aggregate Invested Amount on
such day and (C) a fraction, the numerator of which is the
Servicing Reserve Ratio and the denominator of which is one
minus the Class A Applicable Reserve Ratio; and
(b) on any date of determination during the Series 1999-1
Amortization Period, an amount equal to the Series 1999-1 Required Transferor
Amount on the last Business Day of the Series 1999-1 Revolving Period.
"Series 1999-1 Revolving Period" shall mean the period
commencing on the Issuance Date and terminating on the earliest to occur of the
close of business on (i) the date on which an Event of Termination is declared
to commence or automatically commences, and (ii) the Series 1999-1 Amortization
Period Commencement Date.
"Series 1999-1 Servicing Fee" shall mean the portion of the
Servicing Fee allocable to the Holders of the Series 1999-1 Certificates
pursuant to Section 3.2 of the Agreement.
"Series 1999-1 Target Receivables Amount" shall mean, on any
date of determination, the sum of (i) the Series 1999-1 Adjusted Invested Amount
on such day and (ii) the Series 1999-1 Required Transferor Amount on such day.
"Series 1999-1 Temporary Regulation S Certificate" shall mean
the temporary Certificate initially representing the Class A Certificates, the
Class B Certificates or the Class C Certificates sold outside the United States
in reliance on Regulation S in substantially the form set forth in Exhibit B-1,
Exhibit B-2 or Exhibit B-3 attached to the Series 1999-1 Supplement.
"Series 1999-1 U.S. Certificate" shall mean the Certificate
representing the Series 1999-1 Class A Certificates, Series 1999-1 Class B
Certificates and Series 1999-1 Class C
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<PAGE>
Certificates sold within the United States in substantially the form set forth
in Exhibit A-1, Exhibit A-2 or Exhibit A-3 attached to the Series 1999-1
Supplement.
"Series 1999-2" shall mean the Investor Certificates in the
form of Variable Funding Certificates, designated Series 1999-2, the Principal
Terms of which are set forth in the Series 1999-2 Supplement.
"Series 1999-2 Principal Collection Sub-subaccount" shall mean
the Series Principal Collection Sub-subaccount established by the Trustee for
the benefit of the holders of the Series 1999-2 Certificates pursuant to the
Series 1999-2 Supplement.
"Series 1999-2 Supplement" shall mean the Series 1999-2
Supplement, among the Transferor, the Servicer, Banc One Capital Markets, Inc.
as Agent, the initial purchaser named therein, and the Trustee, relating to the
issuance of Variable Funding Certificates in the form agreed to by the parties
thereto, as amended, supplemented or otherwise modified from time to time.
"Servicing Fee Percentage" is defined in Annex X to the
Agreement.
"Servicing Reserve Ratio" is defined in Annex X to the
Agreement.
"Special Payment Date" shall mean each Payment Date during any
Early Amortization Period.
"Trust Accounts" shall have the meaning assigned in subsection
(e) of Section 4.2 of the Agreement as supplemented by this Supplement (which
provisions are set forth in Section 1 of this Supplement below).
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Supplement shall refer to this Series
Supplement or the Agreement as a whole and not to any particular provision of
this Supplement or the Agreement, as the case may be.
(d) Any reference herein to a Schedule or Exhibit to this
Supplement shall be deemed to be a reference to such Schedule or Exhibit as it
may be amended, modified or supplemented from time to time.
(e) Any reference in this Supplement to any representation,
warranty or covenant "deemed" to have been made is intended to encompass only
representations, warranties or covenants that are expressly stated to be
repeated on or as of dates following the execution and delivery of this
Supplement, and no such reference shall be interpreted as a reference to any
implicit, inferred, tacit or otherwise unexpressed representation, warranty or
covenant.
(f) The words "include", "includes" or "including" shall be
interpreted as if followed, in each case, by the phrase "without limitation".
SECTION 2. Agreement Modifications.
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<PAGE>
The following terms of the Agreement are hereby supplemented
with respect to the Series 1999-1 Certificates issued pursuant to this
Supplement as follows:
Section 3.3 of the Agreement is supplemented by adding the following
subsection (t) thereto applicable solely to Series 1999-1:
(t) Confidentiality. Each Series 1999-1 Certificateholder
shall be deemed to have agreed, by acceptance of such Investor Certificate, to
hold in confidence all non-public information regarding the Receivables, the
related Contracts, the Trust Assets, the Transferor, Stone Container, the
Servicer, any obligors and any Affiliate of the Transferor, Stone Container or
the Servicer (collectively, the "Stone Information") or provided by or on behalf
of the Trustee or another Certificateholder to such Certificateholder; provided
that nothing herein shall prevent any Series 1999-1 Certificateholder from
delivering copies of any financial statements and other documents whether or not
constituting confidential information, and disclosing other information, whether
or not confidential information, to (i) any of its directors, officers,
employees, agents and professional consultants to the extent necessary to
evaluate the Trust Assets or the Receivables in connection with such Series
1999-1 Certificateholder's investment hereunder, (ii) any other Series 1999-1
Certificateholder, (iii) any prospective transferee in connection with the
contemplated transfer of an Investor Certificate or any part thereof or
participation therein, (iv) any Governmental Authority only to the extent
required by such Governmental Authority, (v) each of the Rating Agencies in
connection with its rating on the Series 1999-1 Certificates, (vi) in response
to any subpoena or other legal process, (vii) in connection with any litigation
to which Stone Container, the Transferor, the Servicer or any Subsidiary is a
party or (viii) any other Person if such information does not name Stone
Container or any Subsidiary as the subject of such information or indicate that
such information relates to Stone Container or any Subsidiary.
In the event that any Series 1999-1 Certificateholder or any
of its directors, officers, employees, agents or professional consultants is
requested or becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil or criminal investigative demand or
similar process) to disclose any of the Stone Information, such Series 1999-1
Certificateholder shall (or shall cause its directors, officers, employees,
agents and professional consultants to):
(i) provide Stone Container with prompt written notice so that
(A) Stone Container may seek a protective order or other appropriate remedy, or
(B) Stone Container may, if it so chooses, agree that such Series 1999-1
Certificateholder (or its directors, officers, employees, agents and
professional consultants) may disclose such Stone Information pursuant to such
request or legal compulsion;
(ii) unless Stone Container agrees that such Stone Information
may be disclosed, make (or permit Stone Container to make on its behalf and with
its consent) a timely objection to the request or compulsion to provide such
Stone Information on the basis that such Stone Information is confidential and
subject to the agreements contained in this Section 3.3(t);
(iii) take (or permit Stone Container to take on its behalf
and with its consent) any action as Stone Container may reasonably request to
seek a protective order or other
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<PAGE>
appropriate remedy; provided that, in connection therewith, such Series 1999-1
Certificateholder shall have first received such assurances as it may reasonably
request that Stone Container shall reimburse its reasonable costs and expenses
(including attorneys' fees and expenses) or provide such other assistance as it
may reasonably require; and
(iv) in the event that such protective order or other remedy
is not obtained, or Stone Container agrees that such Stone Information may be
disclosed, furnish only that portion of the Stone Information which is required
to be furnished pursuant to such process or processes described above, and,
provided such Series 1999-1 Certificateholder is reimbursed or assisted as
referred to in clause (iii) above, exercise its best efforts to obtain reliable
assurance that confidential treatment will be accorded the Stone Information.
Notwithstanding the foregoing, to the extent that applicable law
prohibits disclosure to Stone Container of the existence of any information
described above, or the taking of any action contemplated above, the Series
1999-1 Certificateholders shall be under no obligation to disclose such
information or take such action.
This Section 3.3(t) shall survive termination of this Agreement.
Section 4.2 of the Agreement is supplemented by adding the following
subsections (e) and (f) applicable solely to Series 1999-1:
(e) The Trustee shall cause to be established and maintained
in the name of the Trustee, on behalf of the Trust, (i) for the benefit of the
Class A Certificateholders, (ii) for the benefit, subject to the prior and
senior interest of the Class A Certificateholders, of the Class B
Certificateholders, (iii) for the benefit, subject to the prior and senior
interests of the Class A Certificateholders and the Class B Certificateholders,
of the Class C Certificateholders and (iv) in the case of clauses (A) and (B)
below, for the benefit, subject to the prior and senior interests of the Series
1999-1 Certificateholders, of the Holder of the Transferor Certificate, (A) a
subaccount of the Collection Account (the "Series 1999-1 Collection
Subaccount"), which subaccount is the Series Collection Subaccount with respect
to Series 1999-1; and (B) two subaccounts of the Series 1999-1 Collection
Subaccount: (1) the Series 1999-1 Principal Collection Sub-subaccount and (2)
the Series 1999-1 Non-Principal Collection Sub-subaccount (respectively, the
"Series 1999-1 Principal Collection Sub-subaccount" and the "Series 1999-1
Non-Principal Collection Sub-subaccount"; all accounts established pursuant to
this subsection (e), collectively, the "Trust Accounts"), each Trust Account to
bear a designation indicating that the funds deposited therein are held for the
benefit of the Persons (and, for each such Person, to the extent) set forth in
clauses (i), (ii), (iii) and (iv) above. The Trustee, on behalf of the Holders,
shall possess all right, title and interest in all funds from time to time on
deposit in, and all Permitted Investments credited to, the Trust Accounts and in
all proceeds thereof. The Trust Accounts shall be under the sole dominion and
control of the Trustee for the exclusive benefit of the Persons (and, for each
such Person to the extent) set forth in clauses (i), (ii), (iii) and (iv) above.
In any case where the Transferor (including through the Servicer) has not
provided applicable written direction as to Permitted Investments to the
Trustee, the Trustee shall invest in money market funds that constitute
Permitted Investments.
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<PAGE>
(f) All Permitted Investments in the Trust Accounts shall be
held by the Trustee, on behalf of the Holders, for the benefit of the Persons
(and, for each such Person, to the extent) set forth in clauses (i), (ii), (iii)
and (iv) of subsection (e) above. Funds on deposit in a Trust Account that is a
Sub-subaccount of the Collection Account shall, at the direction of the
Transferor (including through the Servicer), be invested together with funds
held in other Sub-subaccounts of the Collection Account. After giving effect to
any distribution to the Transferor pursuant to Section 4.3 of the Agreement as
supplemented in this Supplement below, amounts on deposit and available for
investment in the Series 1999-1 Principal Collection Sub-subaccount shall be
invested by the Trustee, at the written direction of the Transferor (including
through the Servicer), in Permitted Investments that mature, or that are payable
or redeemable upon demand of the holder thereof, (i) in the case of any such
investment made during the Series 1999-1 Revolving Period, on or prior to the
next Business Day and (ii) in the case of any such investment made during the
Series 1999-1 Amortization Period, on or prior to the Business Day immediately
preceding the next Payment Date. Amounts on deposit and available for investment
in the Series 1999-1 Non-Principal Collection Sub-subaccount shall be invested
by the Trustee at the written direction of the Transferor (including through the
Servicer) in Permitted Investments that mature, or that are payable or
redeemable upon demand of the holder thereof, on or prior to the Business Day
immediately preceding the subsequent Payment Date. As of the Business Day
immediately preceding the Determination Date, all interest and other investment
earnings (net of losses and investment expenses) on funds deposited in the
Series 1999-1 Principal Collection Sub-subaccount shall be deposited in the
Series 1999-1 Non-Principal Collection Sub-subaccount.
Section 4.3 of the Agreement is supplemented by adding the following
subsections applicable solely to Series 1999-1:
(c) Daily Series 1999-1 Allocations.
(i) On each Business Day, Series 1999-1 Collections allocated
to Series 1999-1 pursuant to the requirements of Section 4.3(a) and (b) of the
Agreement shall be further allocated and distributed as set forth below by the
Trustee based solely on the information provided it by the Servicer in the Daily
Report (upon which the Trustee may conclusively rely).
(ii)(A) On each Business Day (including Payment
Dates), an amount of Series 1999-1 Collections for such Business Day up
to the amount necessary to cause the Required Amount for such day to be
on deposit therein, shall be transferred by the Trustee from the Series
1999-1 Collection Subaccount to the Series 1999-1 Non-Principal
Collection Sub-subaccount; and
(B) on each Business Day (including Payment Dates),
following the transfers pursuant to clause (A) above, any remaining
funds on deposit in the Series 1999-1 Collection Subaccount shall be
transferred by the Trustee to the Series 1999-1 Principal Collection
Sub-subaccount.
(iii)(A) On each Business Day during the Series
1999-1 Revolving Period (including Payment Dates), after giving effect
to all allocations of aggregate daily Collections referred to in
subparagraphs (ii)(A) and (ii)(B) above on such Business Day,
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amounts on deposit in the Series 1999-1 Principal Collection
Sub-subaccount shall be distributed or transferred by the Trustee,
based solely on the information provided to the Trustee by the Servicer
in the Daily Report (upon which the Trustee may conclusively rely), (1)
first, to the Excess Funding Account, to the extent of the Excess
Funding Account Deposit Amount, if any, (2) second, to pay Excess
Program Costs, and (3) third, (i) to the Transferor as the holder of
the Transferor Interest in accordance with the directions contained in
the Daily Report (which may be for the purpose of funding additional
purchases of Receivables, if available from Originator), (ii) at the
election of the Transferor as the holder of the Transferor Interest, by
written notice to the Servicer and the Trustee, to such accounts or to
such Persons as the Transferor may direct in writing (which directions
may consist of standing instructions provided by the Transferor that
shall remain in effect until changed by the Transferor in writing) or
(iii) at the election of the Transferor as the holder of the Transferor
Interest, by written notice to the Servicer and the Trustee, to the
Series 1999-2 Principal Collection Sub-subaccount. Amounts distributed
to the Transferor hereunder shall be deemed to be paid first from
Collections received directly by the Servicer (if any) and second from
Collections received in the Lock-Boxes.
(B) During the Series 1999-1 Amortization Period,
amounts on deposit in the Series 1999-1 Principal Collection
Sub-subaccount on each Payment Date shall be distributed on such
Payment Date in accordance with Section 4.5 of the Agreement as
supplemented by the provisions of this Supplement below.
Section 4.4 of the Agreement is supplemented by adding the following
subsections applicable solely to Series 1999-1:
Section 4.4 Determination of Interest With Respect to the Series 1999-1
Certificates.
(a) The amount of interest distributable with respect to the
Series 1999-1 Certificates on each Payment Date for the Accrual Period then
ending shall be determined by the Servicer as follows:
(i) for the Class A Certificates, an amount (the
"Class A Monthly Interest") equal to the product of (A) the
Class A Certificate Rate for such Accrual Period; (B) the
Class A Invested Amount on the first day of such Accrual
Period (after giving effect to any distributions of principal
on such date); and (C) the actual number of days in such
Accrual Period divided by 360;
(ii) for the Class B Certificates, an amount (the
"Class B Monthly Interest") equal to the product of (A) the
Class B Certificate Rate for such Accrual Period; (B) the
Class B Invested Amount on the first day of such Accrual
Period (after giving effect to any distributions of principal
on such date); and (C) the actual number of days in such
Accrual Period divided by 360;
(iii) for the Class C Certificates, an amount (the
"Class C Monthly Interest") equal to the product of (A) the
Class C Certificate Rate for such Accrual Period; (B) the
Class C Invested Amount on the first day of such Accrual
Period
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<PAGE>
(after giving effect to any distributions of principal on such
date); and (C) the actual number of days in such Accrual
Period divided by 360.
(b) Commencing on the second Business Day prior to the Initial
Closing Date and thereafter on each LIBOR Determination Date until the principal
amount of the Certificates has been paid, in full, the Trustee will establish
LIBOR as the rate obtained from the one-month rate described on the Dow Jones
Telerate System, page 3750, as of 11:00 a.m. London time on the LIBOR
Determination Date; provided, however, in the event such rate shall not be
provided, "LIBOR" shall mean the one-month rate provided on the Reuters Screen
LIBOR Page (or, in the event such rate shall not be provided, the arithmetic
average (rounded upwards to the nearest 1/16th of 1%) of the rates at which
deposits in United States dollars are offered to four reference banks (each, a
"Reference Bank") selected by the Trustee at approximately 11:00 a.m. (London
time)).
If on any LIBOR Determination Date only one or none of the Reference
Banks provides such offered quotations, LIBOR for the next interest accrual
period shall be the rate per annum which the Trustee determines to be either (i)
the arithmetic mean (rounded upwards if necessary to the nearest whole multiple
of 1/32%) of the one-month United States dollar lending rates that New York City
banks selected by the Trustee are quoting, on the relevant LIBOR Determination
Date, to the principal London offices of at least two of the Reference Banks to
which such quotations are, in the opinion of the Trustee, being so made, or (ii)
in the event that the Trustee, being so made, or (ii) in the event that the
Trustee can determine no such arithmetic mean, the lowest one-month United
States dollar lending rate which New York City banks selected by the Trustee are
quoting on such LIBOR Determination Date to leading European banks.
If, on any LIBOR Determination Date, the Trustee is required but is
unable to determine LIBOR in the manner provided in this paragraph (c), LIBOR
shall be LIBOR as determined on the previous LIBOR Determination Date.
The establishment of LIBOR on each LIBOR Determination Date by the
Trustee and the Trustee's calculation of the rate of interest applicable to the
Certificates will (in the absence of manifest error) be final and binding.
Section 4.5 of the Agreement is supplemented by adding the following
subsections applicable solely to Series 1999-1:
Section 4.5. Determination of Principal to be Distributed with respect
to the Series 1999-1 Certificates. The amount of principal distributable with
respect to the Series 1999-1 Certificates shall be determined by the Servicer
and set forth on the Settlement Statement.
(a) The amount of monthly principal (the "Class A Monthly
Principal") distributable from the Series 1999-1 Principal Collection
Sub-subaccount with respect to the Class A Certificates on each Payment Date
beginning with the earlier to occur of (x) the first Special Payment Date of the
Class A Certificates and (y) the first Payment Date to occur with respect to the
Series 1999-1 Amortization Period, shall be equal to the amount on deposit in
such account in the immediately preceding Determination Date; provided, however,
that with respect to any Payment Date, the aggregate Class A Monthly Principal
paid and payable to the Class A
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<PAGE>
Certificateholders may not exceed the Class A Invested Amount, and provided
further, distributions of such principal shall be in accordance with Section
4.6(b) of the Agreement as supplemented by this Supplement below.
(b) The amount of monthly principal (the "Class B Monthly
Principal") distributable from the Series 1999-1 Principal Collection
Sub-subaccount with respect to the Class B Certificates on each Payment Date
beginning with the Payment Date on which the Class A Certificates are paid in
full, shall be equal to the amount on deposit in such account on the immediately
preceding Determination Date (net of any amounts therein to be applied on such
Payment Date to Class A Invested Amount); provided, however, that with respect
to any Payment Date, the aggregate Class B Monthly Principal paid and payable to
the Class B Certificateholders may not exceed the Class B Invested Amount, and
provided further, distributions of such principal shall be in accordance with
Section 4.6(b) of the Agreement as supplemented by this Supplement below.
(c) The amount of monthly principal (the "Class C Monthly
Principal") distributable from the Series 1999-1 Principal Collection
Sub-subaccount with respect to the Class C Certificates on each Payment Date
beginning with the Payment Date on which both the Class A Certificates and Class
B Certificates are paid in full, shall be equal to the amount on deposit in such
account on the immediately preceding Determination Date (net of any amounts
therein to be applied on such Payment Date to Class A Invested Amount or Class B
Invested Amount); provided, however, that with respect to any Payment Date, the
aggregate Class C Monthly Principal paid and payable to the Class C
Certificateholders may not exceed the Class C Invested Amount, and provided
further, distributions of such principal shall be in accordance with Section
4.6(b) of the Agreement as supplemented by this Supplement below.
Section 4.6 of the Agreement shall be modified by adding the
following provisions, applicable solely to Series 1999-1:
Section 4.6. Application and Payment On Payment Dates of Funds
on Deposit in the Trust Accounts for the Series 1999-1 Certificates.
(a) The Trustee shall distribute, based solely on the
information provided to the Trustee by the Servicer in the Settlement Statement
(upon which the Trustee may conclusively rely), on each Payment Date, from
amounts on deposit in the Series 1999-1 Non-Principal Collection Sub-subaccount
in the following order of priority to the extent funds are available:
(i) an amount equal to the Series 1999-1 Servicing Fee for the
Accrual Period ending on such Payment Date shall be withdrawn from the
Series 1999-1 Non-Principal Collection Sub-subaccount by the Trustee
and paid to the Servicer (less any amount payable to the Trustee
pursuant to Section 10.1 and 11.5 of the Agreement which shall be paid
to the Trustee);
(ii) an amount equal to the Class A Monthly Interest payable
on such Payment Date, plus the amount of any Class A Monthly Interest
previously due but not distributed to the Class A Certificateholders on
a prior Payment Date, to the Class A Certificateholders;
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<PAGE>
(iii) an amount equal to the Class B Monthly Interest payable
on such Payment Date, plus the amount of any Class B Monthly Interest
previously due but not distributed to the Class B Certificateholders on
a prior Payment Date, to the Class B Certificateholders;
(iv) an amount equal to the Class C Monthly Interest payable
on such Payment Date, plus the amount of any Class C Monthly Interest
previously due but not distributed to the Class C Certificateholders on
a prior Distribution Date, to the Class C Certificateholders; and
(v) an amount equal to any Program Costs due and payable shall
be withdrawn from the Series 1999-1 Non-Principal Collection
Sub-subaccount by the Trustee and paid to the Persons owed such
amounts.
Any remaining amount on deposit on any Payment Date in the Series 1999-1
Non-Principal Collection Sub-subaccount (in excess of any current Required
Amount as of such day) not allocated pursuant to clauses (i) through (v) above
shall be paid to the holder of Transferor Interest; provided, however, that
during the Series 1999-1 Amortization Period, such remaining amounts shall
instead be deposited in the Series 1999-1 Principal Collection Sub-subaccount
for distribution in accordance with subsection (b) of this Section below.
(b) During the Series 1999-1 Amortization Period and any Early
Amortization Period, the Trustee shall apply, based solely on the information
provided to the Trustee by the Servicer in the Settlement Statement (upon which
the Trustee may conclusively rely), on each Payment Date, amounts on deposit in
the Series 1999-1 Principal Collection Sub-subaccount in the following order of
priority:
(i) if any amounts are owed to the Trustee or any other
Person, on account of expenses incurred in connection with the transfer
of servicing to the Trustee or such Person, an amount not to exceed
$100,000 in total.
(ii) following the repayment in full of all amounts set forth
in clause (i) above, an amount equal to the Series 1999-1 Monthly
Principal Payment for such Payment Date (rounded down to the nearest
$1,000,000 unless such payment is less than $1,000,000) shall be
distributed from the Series 1999-1 Principal Collection Sub-subaccount:
(A) first, pro rata to the Class A Certificateholders
until repayment in full of the Class A Invested Amount;
(B) second, pro rata to the Class B
Certificateholders until repayment in full of the Class B
Invested Amount; and
(C) third, pro rata to the Class C Certificateholders
until repayment in full of the Class C Invested Amount;
(iii) if, following the repayment in full of all amounts set
forth in clauses (i) and (ii) above, any amounts are owed to the
Trustee or any other Person, on account of its fees, expenses and
disbursements incurred in respect of the performance of its
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<PAGE>
responsibilities hereunder (other than pursuant to clause (i) above),
such amounts shall be transferred from the Series 1999-1 Principal
Collection Sub-subaccount and paid to the Trustee or such other Person;
and
(iv) following the repayment in full of all amounts set forth
in clauses (i) through (iii) above, the remaining amount on deposit in
the Series 1999-1 Principal Collection Sub-subaccount on such Payment
Date, if any, shall be distributed to the holder of the Transferor
Certificate.
Section 6.8 of the Agreement is supplemented by adding the following
subsection (f) thereto applicable solely to Series 1999-1:
(f) In addition to the other requirements of this
Section 6.8, the Trustee will not authenticate any Class A,
Class B or Class C Certificates to be issued hereunder unless
each of the following conditions have been satisfied or waived
at the direction of all of the initial purchasers of the Class
A, Class B and Class C Certificates:
(i) The Trustee shall have received written notification from
S&P and Moody's that (i) the Class A Certificates, the Class B
Certificates and the Class C Certificates, shall each be rated "AAA"
and "Aaa", "A" and "A2" and "BBB" and "Baa2" respectively;
(ii) The Servicer as agent of the Trustee shall have received,
and shall be holding in trust pursuant to the Agreement, the Trust
Assets and all documents, instruments and other assets required by the
Agreement to be delivered to the Trustee with respect thereto as of the
Closing Date;
(iii) The Initial Purchasers shall have received a comfort
letter of Ernst & Young with respect to Eligible Receivables sold to
the Trust;
(iv) The Trustee shall have received an Opinion of Counsel
stating that upon the filing of certain financing statements the
Trustee will have a first priority perfected security interest in the
Trust Assets;
(v) The Trustee shall have received certified copies of the
certificate of incorporation and by-laws of the Transferor and the
Servicer, and of all documents evidencing corporate action taken by the
Servicer and the Transferor approving the execution and delivery of the
Transaction Documents to which they are parties contemplated thereby;
(vi) The Trustee shall have received signature and incumbency
certificates executed by the authorized officers of the Servicer and
the Transferor certifying the identities and signatures of those
officers who executed the Transaction Documents to which they are
parties; and
(vii) As evidenced by a certificate of the Transferor, the
Transferor shall have paid or shall have made arrangements for payment
of all taxes, fees and governmental
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charges, if any, due in connection with the execution and delivery of
this Supplement and the Agreement, the issuance and sale of the
Certificates and the assignment and pledge of the Trust Assets to the
Trustee under the Agreement.
Section 6.9 of the Agreement is supplemented by adding the following
subsections:
Section 6.9 Restrictions on Transfer.
(a) After the Issuance Date of the Series 1999-1 Certificates,
the Series 1999-1 Certificates may not be transferred unless (i) the
registration requirements of the Securities Act and any applicable
state securities or "blue sky" laws are complied with, (ii) such
transfer is made to a Person (A) that the transferor reasonably
believes after due inquiry is a Qualified Institutional Buyer that is
acting for its own account (and not for the account of others) or as a
fiduciary or an agent for others (which others are Qualified
Institutional Buyers) to whom notice is given that the transfer is
being made in reliance on Rule 144A under the Securities Act or (B) in
an offshore transaction in accordance with Rule 904 under the
Securities Act, or (iii) such transfer is made pursuant to an exemption
from the registration requirements under the Securities Act (other than
in reliance on Rule 144A or Rule 904 under the Securities Act) and
applicable state securities or "blue sky" laws.
The Trustee shall have no obligations or duties with respect
to determining whether any transfers of the Series 1999-1 Certificates are made
in accordance with the Securities Act or any other Requirements of Law; provided
that with respect to Definitive Certificates, the Trustee shall enforce such
transfer restrictions in accordance with the terms set forth on the related
Series 1999-1 Certificate and the provisions of the Agreement and this
Supplement.
(b) Series 1999-1 U.S. Certificate to Series 1999-1 Temporary
Regulation S Certificate. Prior to the expiration of the "40-day restricted
period" (within the meaning of Rule 903(c)(3) of Regulation S), if a Certificate
Book-Entry Holder of a Series 1999-1 U.S. Certificate deposited with the
Clearing Agency wishes at any time to exchange its interest in such Series
1999-1 U.S. Certificate for an interest in a Series 1999-1 Temporary Regulation
S Certificate, or to transfer its interest in such Series 1999-1 U.S.
Certificate to a Person who wishes to take delivery thereof in the form of an
interest in such Series 1999-1 Temporary Regulation S Certificate, such
Certificate Book-Entry Holder may, subject to the rules and procedures of the
Clearing Agency and to the requirements set forth in the following sentence,
exchange or cause the exchange or transfer or cause the transfer of such
interest for an equivalent interest in such Series 1999-1 Temporary Regulation S
Certificate. Upon receipt by the Trustee, as transfer agent, at the Corporate
Trust Office of (1) instructions given in accordance with the Clearing Agency's
procedures from an agent member directing the Trustee to credit or cause to be
credited such Series 1999-1 Temporary Regulation S Certificate in an amount
equal to the interest in the Series 1999-1 U.S. Certificate to be exchanged or
transferred, (2) a written order given in accordance with the Clearing Agency's
procedures containing information regarding the Euroclear or Cedel account to be
credited with such increase and the name of such account, and (3) a certificate
substantially in the form of Exhibit D given by the transferor (upon which the
Trustee may conclusively rely), the Trustee, as transfer agent, shall instruct
the Clearing Agency,
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its nominee, or the custodian for the Clearing Agency, as the case may be, to
reduce or reflect on its records a reduction of such Series 1999-1 U.S.
Certificate by the aggregate principal of the interest in such Series 1999-1
U.S. Certificate to be so exchanged or transferred and the Trustee, as transfer
agent, shall instruct the Clearing Agency, its nominee, or the custodian for the
Clearing Agency, as the case may be, concurrently with such reduction, to
increase or reflect on its records an increase of the principal amount of such
Series 1999-1 Temporary Regulation S Certificate by the aggregate principal
amount of the interest in such Series 1999-1 U.S. Certificate to be so exchanged
or transferred, and to credit or cause to be credited to the account of the
Person specified in such instructions (who shall be the agent member of
Euroclear or Cedel, or both, as the case may be) an interest in such Series
1999-1 Temporary Regulation S Certificate equal to the reduction in the
principal amount of such Series 1999-1 U.S. Certificate.
(c) Series 1999-1 U.S. Certificate to Series 1999-1 Regulation
S Certificate. After the expiration of the "40-day restricted period" (within
the meaning of Rule 903(c)(3) of Regulation S), if a Certificate Book-Entry
Holder of a Series 1999-1 U.S. Certificate deposited with the Clearing Agency
wishes at any time to exchange its interest in such Series 1999-1 U.S.
Certificate for an interest in a Series 1999-1 Regulation S Certificate, or to
transfer its interest in such Series 1999-1 Regulation S Certificate to a Person
who wishes to take delivery thereof in the form of an interest in such Series
1999-1 Regulation S Certificate, such Certificate Book-Entry Holder may, subject
to the rules and procedures of the Clearing Agency and to the requirements set
forth in the following sentence, exchange or cause the exchange or transfer or
cause the transfer of such interest for an equivalent interest in such Series
1999-1 Regulation S Certificate. Upon receipt by the Trustee, as transfer agent,
at the Corporate Trust Office of (1) instructions given in accordance with the
Clearing Agency's procedures from an agent member directing the Trustee to
credit or cause to be credited such Series 1999-1 Regulation S Certificate in an
amount equal to the interest in the Series 1999-1 U.S. Certificate to be
exchanged or transferred, (2) a written order given in accordance with the
Clearing Agency's procedures containing information regarding the participant
account of the Clearing Agency and such order to contain information regarding
the agent member's account with the Clearing Agency or Euroclear or Cedel to be
credited with such increase and (3) a certificate substantially in the form of
Exhibit E given by the transferor (upon which the Trustee may conclusively
rely), the Trustee, as transfer agent, shall instruct the Clearing Agency, its
nominee, or the custodian for the Clearing Agency, as the case may be, to reduce
or reflect on its records a reduction of such Series 1999-1 U.S. Certificate by
the aggregate principal amount of the interest in such Series 1999-1 U.S.
Certificate to be so exchanged or transferred and the Trustee, as transfer
agent, shall instruct the Clearing Agency, its nominee, or the custodian for the
Clearing Agency, as the case may be, concurrently with such reduction, to
increase or reflect on its records an increase of the principal amount of such
Series 1999-1 Regulation S Certificate by the aggregate principal amount of the
interest in such Series 1999-1 U.S. Certificate to be so exchanged or
transferred, and to credit or cause to be credited to the account of the Person
specified in such instructions an interest in such Series 1999-1 Regulation S
Certificate equal to the reduction in the principal amount of such Series 1999-1
U.S. Certificate.
(d) Series 1999-1 Regulation S Certificate to Series 1999-1
U.S. Certificate. If a Certificate Book-Entry Holder of a Series 1999-1
Regulation S Certificate that is deposited with the Clearing Agency wishes at
any time to exchange its interest for an interest in a Series 1999-1 U.S.
Certificate, or to transfer its interest in such Series 1999-1 Regulation S
Certificate
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to a Person who wishes to take delivery thereof in the form of an
interest in such Series 1999-1 U.S. Certificate, such Certificate Book-Entry
Holder may, subject to the rules and procedures of Euroclear or Cedel and the
Clearing Agency, as the case may be, and to the requirements set forth in the
following sentence, exchange or cause the exchange or transfer or cause the
transfer of such interest for an equivalent interest in such Series 1999-1 U.S.
Certificate. Upon receipt by the Trustee, as transfer agent, at the Corporate
Trust Office of (1) instructions from Euroclear or Cedel or the Clearing Agency,
as the case may be, directing the Trustee, as transfer agent, to credit or cause
to be credited such Series 1999-1 U.S. Certificate in an amount equal to the
interest in the Series 1999-1 Regulation S Certificate to be exchanged or
transferred, such instructions to contain information regarding the agent
member's account with the Clearing Agency to be credited with such increase, and
(2) a certificate substantially in the form of Exhibit F given by the transferor
(upon which the Trustee may conclusively rely), the Trustee, as transfer agent,
shall instruct the Clearing Agency, its nominee, or the custodian for the
Clearing Agency, as the case may be, to reduce or reflect on its records a
reduction of such Series 1999-1 Regulation S Certificate by the aggregate
principal amount of the interest in such Regulation S Certification to be
exchanged or transferred, and the Trustee, as transfer agent, shall instruct the
Clearing Agency, its nominee, or the custodian for the Clearing Agency, as the
case may be, concurrently with such reduction, to increase or reflect on its
records an increase of the principal amount of such Series 1999-1 U.S.
Certificate by the aggregate principal amount of the interest in such Regulation
Certificate to be so exchanged or transferred, and to credit or cause to be
credited to the account of the Person specified in such instructions an interest
in such Series 1999-1 U.S. Certificate equal to the reduction in the principal
amount of such Series 1999-1 Regulation S Certificate.
(e) Series 1999-1 Temporary Regulation S Certificate to Series
1999-1 Regulation S Certificate. After the expiration of the "40-day restricted
period" (within the meaning of Rule 903(c)(3) of Regulation S), interests in a
Series 1999-1 Temporary Regulation S Certificate, as to which the Trustee has
received from Euroclear or Cedel, as the case may be, a certificate
substantially in the form of Exhibit G (upon which the Trustee may conclusively
rely) to the effect that Euroclear or Cedel, as applicable, has received a
certificate substantially in the form of Exhibit H from the Certificate
Book-Entry Holder of a Series 1999-1 Temporary Regulation S Certificate, will be
exchanged on and after such "40-day restricted period" for interests in a Series
1999-1 Regulation S Certificate. The Trustee shall effect such exchange by
delivering to the Clearing Agency or its agent for credit to the respective
Certificate Book-Entry Holder accounts, a duly executed and authenticated Series
1999-1 Regulation S Certificate, representing the principal amount of interests
in such Series 1999-1 Temporary Regulation S Certificate initially exchanged for
interests in such Series 1999-1 Regulation S Certificate. The delivery to the
Trustee by Euroclear or Cedel of the certificate or certificates referred to
above may be relied upon by the Company and the Trustee as conclusive evidence
that the certificate or certificates referred to therein has or have been
delivered to Euroclear or Cedel pursuant to the terms of this Supplement and
such Series 1999-1 Temporary Regulation S Certificate. Upon any exchange of
interests in a Series 1999-1 Temporary Regulation S Certificate for interests in
a Series 1999-1 Regulation S Certificate, the Trustee shall endorse such Series
1999-1 Temporary Regulation S Certificate to reflect the reduction in the
principal amount represented thereby by the amount so exchanged and shall
endorse such Series 1999-1 Regulation S Certificate to reflect the corresponding
increase in the amount represented thereby.
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(f) Each purchaser of the Series 1999-1 Certificates
(including, without limitation, any purchaser of an interest in the Book-Entry
Certificates) will be deemed to have represented and agreed in a letter of
representations (the "Letter of Representations") as follows:
(i) it is (A) a Qualified Institutional Buyer as
defined in Rule 144A(a) and is acquiring the Series 1999-1 Certificates for its
own institutional account or for the account or accounts of a Qualified
Institutional Buyer, (B) a foreign purchaser that is outside the United States
(a "foreign purchaser" shall include a dealer or other professional fiduciary in
the United States acting on a discretionary basis for foreign beneficial owners
(other than an estate or trust), or (C) purchasing Series 1999-1 Certificates
being delivered in the form of Definitive Certificates in a transaction exempt
from registration under the Securities Act and in compliance with the provisions
of the Agreement and in compliance with the legends set forth in clause (v)
below;
(ii) it is purchasing one or more Series 1999-1
Certificates in an amount of at least $500,000 and it understands that such Term
Certificate may be resold, pledged or otherwise transferred only in an amount of
at least $500,000;
(iii) (A) it is not a Series 1999-1 ERISA Entity and
(B) it is not acquiring or holding any Series 1999-1 Certificate, directly or
indirectly, for or on behalf of a Series 1999-1 ERISA Entity;
(iv) it understands that the Series 1999-1
Certificates are being transferred to it in a transaction not involving any
public offering within the meaning of the Securities Act, and that, if in the
future it decides to resell, pledge or otherwise transfer any Series 1999-1
Certificates, such Series 1999-1 Certificates may be resold, pledged or
transferred only (A)(1) in a transaction meeting the requirements of Rule 144A
to a person who the seller reasonably believes is a Qualified Institutional
Buyer that purchases for its own account or for the account or accounts of a
Qualified Institutional Buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (2) in an offshore
transaction in accordance with Rule 904 under the Securities Act, or (B) to
purchasers of Series 1999-1 Certificates being delivered in the form of
Definitive Certificates, pursuant to a transaction otherwise exempt from
registration under the Securities Act and in compliance with the provisions of
the Agreement and in compliance with the legends set forth in clause (v) below;
and
(v) it understands that each Series 1999-1
Certificate will bear a legend substantially to the following effect:
[FOR BOOK-ENTRY CERTIFICATES ONLY: UNLESS THIS
SERIES 1999-1 CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SERIES 1999-1
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO.
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OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR UNDER THE SECURITIES OR
BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY
PURCHASING THIS CERTIFICATE, AGREES THAT THIS
CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (A) IN COMPLIANCE WITH
THE 1933 ACT AND ANY OTHER APPLICABLE LAWS,
INCLUDING STATE SECURITIES OR BLUE SKY LAWS, (B) (1)
PURSUANT TO RULE 144A UNDER THE 1933 ACT ("RULE
144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A (a "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT
OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH
CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2)
IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE
903 AND 904 OF REGULATIONS, (3) IN A TRANSACTION
OTHERWISE EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE ACT, AS CONFIRMED BY AN OPINION OF COUNSEL
ADDRESSED TO THE TRUSTEE AND THE COMPANY WHICH
OPINION AND COUNSEL ARE SATISFACTORY TO THE TRUSTEE
AND THE COMPANY, OR (4) PURSUANT TO A VALID
REGISTRATION STATEMENT, AND (C) IN AMOUNTS OF AT
LEAST $500,000.
THIS SERIES 1999-1 CERTIFICATE MAY NOT BE ACQUIRED
OR HELD BY OR ON BEHALF OF (A) AN "EMPLOYEE BENEFIT
PLAN" (AS DESCRIBED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974 (AS AMENDED,
"ERISA")), OR OTHER RETIREMENT ARRANGEMENT,
24
<PAGE>
INDIVIDUAL RETIREMENT ACCOUNT OR KEOGH PLAN, WHETHER
OR NOT IT IS SUBJECT TO THE PROVISIONS OF TITLE I OF
ERISA, (B) A PLAN DESCRIBED IN SECTION 4975(E)(1) OF
THE INTERNAL REVENUE CODE OF 1986 (AS AMENDED, THE
"CODE") OR (C) ANY ENTITY WHOSE UNDERLYING ASSETS
INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT
IN SUCH ENTITY OR BY THE APPLICATION OF UNITED
STATES DEPARTMENT OF LABOR ("DOL") REGULATION
2510.3-101 (EACH PLAN OR ENTITY DESCRIBED IN THE
PRECEDING CLAUSES (A) THROUGH (C) IS REFERRED TO
HEREIN AS AN "ERISA ENTITY").
THIS SERIES 1999-1 CERTIFICATE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
[FOR SERIES 1999-1 CLASS B CERTIFICATES AND SERIES
1999-1 CLASS C CERTIFICATES ONLY: THE [SERIES 1999-1
CLASS B CERTIFICATES/SERIES 1999-1 CLASS C
CERTIFICATES] ARE SUBORDINATED IN RIGHT OF PAYMENT
TO THE SERIES 1999-1 CLASS A CERTIFICATES [AND
SERIES 1999-1 CLASS B CERTIFICATES] AS PROVIDED IN
THE POOLING AGREEMENT AND THE SERIES 1999-1
SUPPLEMENT.]
(g) The Transfer Agent and Registrar shall not permit the
transfer of any Series 1999-1 Certificates unless such transfer complies with
the terms of the foregoing legends and, in the case of a transfer (i) to a
"foreign purchaser" (including a dealer or other professional fiduciary in the
United States acting on a discretionary basis for foreign beneficial owners
(other than an estate or trust)) outside the United States, the transfer and
transferee deliver any certifications and opinions of counsel requested by the
Trustee pursuant to Section 6.9 hereof, or (ii) to a person other than a
Qualified Institutional Buyer, upon delivery of an opinion of counsel,
satisfactory to the Trustee, to the effect that the transferee is taking
delivery of the Series 1999-1 Certificates in a transaction that is otherwise
exempt from the registration requirements of the Securities Act.
SECTION 3. Initial Invested Amount of the Series 1999-1 Certificates.
The "Initial Invested Amount" of the Series 1999-1
Certificates shall be $200,000,000. The Initial Invested Amount of the Class A
Certificates shall be $176,000,000 (the "Class A Initial Invested Amount"). The
Initial Invested Amount of the Class B Certificates shall be $12,000,000 (the
"Class B Initial Invested Amount"). The Initial Invested Amount of the Class C
Certificates shall be $12,000,000 (the "Class C Initial Invested Amount").
25
<PAGE>
SECTION 4. Series 1999-1 Certificate Rates.
The Class A Certificate Rate shall be 0.50% per annum in
excess of LIBOR. The Class B Certificate Rate shall be 0.85% per annum in excess
of LIBOR. The Class C Certificate Rate shall be 1.80% per annum in excess of
LIBOR.
SECTION 5. Series 1999-1 Events of Termination.
Section 9.1 is modified (as applicable solely to Series
1999-1) by the addition of the following provisions at the end thereof:
The following shall constitute an additional Event of
Termination for Series 1999-1: The Series 1999-1 Allocated Receivables Amount
shall be less than the Series 1999-1 Target Receivables Amount for any period of
five (5) consecutive Business Days.
If the additional Event of Termination occurs but such
deficiency in the Series 1999-1 Allocated Receivables Amount is cured within
five (5) Business Days after the five (5) Business Day period, the Early
Amortization Period shall commence at the end of such additional five Business
Day period unless the Series 1999-1 Certificateholders evidencing undivided
interests aggregating 66 2/3% of the Series 1999-1 Invested Amount agree in
writing to waive such deficiency; provided, however, notwithstanding the
foregoing, an Event of Termination shall occur if declared in writing during the
five (5) Business Days after the (5) Business Days there was a deficiency by
Series 1999-1 Certificateholders evidencing undivided interests aggregating more
than 50% of the Series 1999-1 Invested Amount; provided, further, that if the
deficiency in the Series 1999-1 Allocated Receivable Amount is not cured within
the five (5) Business Days after such five (5) Business Day period, an Event of
Termination, shall automatically occur without any action taken by the Series
1999-1 Certificateholders.
SECTION 6. Repurchase Terms.
Pursuant to Article XII of the Agreement, the Series 1999-1
Certificates may be repurchased by the Transferor on any Payment Date on or
after the day on which the Series 1999-1 Invested Amount is reduced to an amount
less than or equal to 10% of the sum of the Series 1999-1 Initial Invested
Amount upon the satisfaction of the conditions described in Section 12.2(a) of
the Agreement. In connection with any such repurchase, the repurchase price
shall be equal to the aggregate initial principal balance of such Certificates
minus the amount of principal payments made to such Certificates prior to such
Payment Date plus accrued and unpaid interest through the day preceding the
Payment Date on which the repurchase occurs plus any other unpaid amounts.
SECTION 7. Delivery and Payment for the Series 1999-1 Certificates.
The Trustee shall deliver the Series 1999-1 Certificates to
the Transferor when authenticated upon the written direction of the Transferor.
SECTION 8. Refinancing Option.
26
<PAGE>
Subject to satisfaction of the conditions set forth herein,
the Transferor shall have the right to prepay in whole the Series 1999-1
Certificates, commencing May 15, 2004; provided, such prepayment may only occur
on a Payment Date.
SECTION 9. Accrual of Interest on the Series 1999-1 Certificates.
Interest shall accrue on the Series 1999-1 Certificates from
the Issuance Date.
SECTION 10. Ratification of Agreement.
As supplemented by this Supplement, the Agreement is in all
respects ratified and confirmed and the Agreement as so supplemented by this
Supplement shall be read, taken, and construed as one and the same instrument.
SECTION 11. The Trustee.
The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this Supplement or for or in
respect of the Preliminary Statement contained herein, all of which recitals are
made solely by the Transferor.
SECTION 12. Instructions in Writing.
All instructions given by the Servicer to the Trustee pursuant
to this Supplement shall be in writing, and may be included in a Daily Report or
Settlement Statement.
SECTION 13. Counterparts.
This Supplement may be executed in any number of counterparts,
which may include facsimile counterparts, each of which so executed shall be
deemed to be an original, but all of such counterparts shall together constitute
but one and the same instrument.
SECTION 14. Governing Law.
THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS. FOR PURPOSES OF THE TAX CLASSIFICATION
OF THE TRUST AND THE TAX CHARACTERIZATION OF ANY CERTIFICATES ISSUED PURSUANT TO
THIS AGREEMENT, THE TRUST SHALL BE CONSTRUED AS ORGANIZED AND EXISTING UNDER THE
LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO ITS CONFLICT OF LAW PROVISIONS.
27
<PAGE>
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Series 1999-1 Supplement to be duly executed by their
respective officers thereunto duly authorized as of the date first above
written.
STONE RECEIVABLES CORPORATION,
as Transferor
By ____________________________________
Name:
Title:
STONE CONTAINER CORPORATION,
as Servicer
By _____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By _____________________________________
Name:
Title:
<PAGE>
Table of Contents
<TABLE>
<S> <C>
SECTION 1. DESIGNATION AND DEFINITIONS...................... 1
SECTION 2. AGREEMENT MODIFICATIONS.......................... 12
SECTION 3. ADDITIONAL INVESTED AMOUNTS...................... 21
SECTION 4. SERIES 1999-2 CERTIFICATE RATE................... 22
SECTION 5. SERIES 1999-2 EVENTS OF TERMINATION.............. 22
SECTION 6. REPURCHASE TERMS................................. 23
SECTION 7. DELIVERY AND PAYMENT FOR THE SERIES 1999-2
CERTIFICATE............................................... 23
SECTION 8. SPECIAL RULE ON TRANSFER AND EXCHANGE............ 23
SECTION 9. ACCRUAL OF INTEREST ON THE SERIES 1999-2
CERTIFICATE............................................... 24
SECTION 10. DISTRIBUTIONS................................... 24
SECTION 11. RATIFICATION OF AGREEMENT....................... 24
SECTION 12. THE TRUSTEE..................................... 24
SECTION 13. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR
AND THE SERVICER.......................................... 24
SECTION 14. COVENANTS OF THE TRANSFEROR..................... 24
SECTION 15. COVENANTS OF THE SERVICER....................... 25
SECTION 16. INSTRUCTIONS IN WRITING......................... 25
SECTION 17. COUNTERPARTS.................................... 25
SECTION 18. GOVERNING LAW................................... 25
SECTION 19. MODIFICATIONS TO REMITTANCE PROCEDURES.......... 25
SECTION 20. NOTICES......................................... 25
SECTION 21. CONSENTS AND NOTICES WITH RESPECT TO POOLING
AGREEMENT................................................. 26
</TABLE>
-i-
<PAGE>
Exhibit 10.1(c)
STONE RECEIVABLES CORPORATION,
Transferor,
STONE CONTAINER CORPORATION,
Servicer,
and
THE CHASE MANHATTAN BANK
Trustee
on behalf of the Certificateholders
---------------------------
SERIES 1999-2 SUPPLEMENT
Dated as of October 15, 1999
to
STONE RECEIVABLES CORPORATION MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 1999
--------------------------
FLOATING RATE TRADE RECEIVABLES-BACKED CERTIFICATES,
VARIABLE FUNDING CERTIFICATE SERIES 1999-2
<PAGE>
Exhibits
Exhibit A Form of Series 1999-2 Certificate
Exhibit B Investment Letter
Exhibit C Form of Reduction Notice
-ii-
<PAGE>
SERIES 1999-2 SUPPLEMENT, dated as of October 15, 1999 (this
"Supplement") among STONE RECEIVABLES CORPORATION, a Delaware corporation, as
Transferor (the "Transferor"), STONE CONTAINER CORPORATION, a Delaware
corporation, as Servicer (the "Servicer"), and THE CHASE MANHATTAN BANK, a New
York banking corporation, as trustee (together with its successors in trust
thereunder as provided in the Pooling and Servicing Agreement referred to below,
the "Trustee"), under the Pooling and Servicing Agreement, dated as of October
1, 1999 (the "Pooling Agreement" and, as supplemented by this Supplement, the
"Agreement") among the Transferor, the Servicer and the Trustee.
PRELIMINARY STATEMENT
Section 6.8 of the Agreement provides, among other things,
that the Transferor and the Trustee may enter into a supplement to the Agreement
for the purpose of authorizing the issuance of Investor Certificates. The
Transferor hereby enters into this Supplement with the Servicer and the Trustee
as required by Section 6.8(b) of the Agreement to provide for the issuance,
authentication and delivery of the Floating Rate Trade Receivables-Backed
Certificate, Variable Funding Certificate Series 1999-2 (the "Variable Funding
Certificate" or the "Series 1999-2 Certificate"). In the event that any term or
provision contained herein shall conflict with or be inconsistent with any term
or provision contained in the Agreement, the terms and provisions of this
Supplement shall govern.
All capitalized terms not otherwise defined herein are defined
in Annex X to the Agreement, the Certificate Purchase Agreement (hereinafter
defined) or any other Supplement. All Article, Section, Subsection, Schedule or
Exhibit references herein shall mean Articles, Sections, Subsections, Schedules
or Exhibits of the Agreement, as amended and supplemented by this Supplement,
except as otherwise provided herein.
Unless otherwise stated herein, as the context otherwise
requires, or if such term is otherwise defined in the Agreement (including in
Annex X thereto), each capitalized term used or defined herein shall relate only
to the Series 1999-2 Certificates and to no other Series of Investor
Certificates issued by the Trust. Any reference to the Series 1999-2 Early
Amortization Period, the Series 1999-2 Amortization Period, or the Series 1999-2
Revolving Period in this Supplement shall refer only to such periods as they
relate to the Series 1999-2 Certificate.
SECTION 1. DESIGNATION AND DEFINITIONS.
(a) The Variable Funding Certificate shall be designated
generally as a Floating Rate Trade Receivables-Backed Certificate, Series
1999-2, or the Series 1999-2 Certificate. The Series 1999-2 Certificate shall
represent a fractional undivided interest in the Trust, consisting of the right
to receive the sum of (i) the Series 1999-2 Invested Percentage (expressed as a
decimal) of the Collections received with respect to the Receivables and of all
other funds on deposit in the Collection Account and (ii) to the extent such
interests appear herein, all other funds on deposit in the Series 1999-2
Collection Subaccount and any subaccounts thereof (collectively, the "Series
1999-2 Certificateholders' Interest"). The Floating Rate Trade
Receivables-Backed Certificates, Series 1999-1, Class A, Class B and Class C
Certificates, issued pursuant to the Series 1999-1 Supplement, dated as of
October 15, 1999 among the Transferor, the Servicer, and the Trustee (as may be
amended or otherwise modified from time to time, the "Series 1999-1
Supplement"), together shall be designated generally as the Series 1999-1
Certificates or individually as the Class A, Class B and Class C Certificates.
For the purposes of the Agreement and this Supplement, the
following capitalized terms shall be defined as follows with respect to the
Series 1999-2 Certificate:
"Accrual Period" shall mean, initially, the period from and including
the Issuance Date to but excluding November 15, 1999. Thereafter, the Accrual
Period shall mean the period from and including a Payment Date to but excluding
the succeeding Payment Date.
<PAGE>
"Additional Invested Amounts" shall have the meaning specified in
Section 3 of this Supplement.
"Agent" shall mean the Certificate Agent as defined in the Certificate
Purchase Agreement.
"Average Dilution Ratio" is defined in Annex X to the Agreement.
"Bank Rate" shall mean with respect to each Bank Rate Tranche (i) with
respect to a LIBO Rate Tranche, the LIBO Rate or (ii) with respect to a Base
Rate Tranche, the Base Rate.
"Bank Rate Tranche" shall mean a portion of the Series 1999-2 Principal
Balance held by a Series 1999-2 Certificateholder which is a Committed Series
1999-2 Purchaser pursuant to the Certificate Purchase Agreement.
"Bank Rate Tranche Period" shall have the meaning specified in the
Certificate Purchase Agreement.
"Base Rate" shall mean a rate per annum equal to the corporate base
rate, prime rate or base rate of interest, as applicable, announced by Bank One
or such other bank as the Certificate Agent shall designate with the consent of
the Transferor from time to time, changing when and as such rate changes.
"Base Rate Tranche" shall mean any Bank Rate Tranche that bears
interest at the Base Rate.
"Carrying Cost Reserve Ratio" shall mean, as of any Determination Date
and continuing until the next Determination Date, an amount (expressed as a
percentage) equal to the quotient of (i) the product of (A) 2.0 times Days Sales
Outstanding as of such day and (B) 1.50 times the Interest and Fee Accrual Rate
in effect as of such day divided by (ii) 360.
"Certificate Agent" shall have the meaning specified in the preamble of
the Certificate Purchase Agreement.
"Certificate Purchase Agreement" shall mean the Certificate Purchase
Agreement, dated as of October 15, 1999 by and among Stone
Container Corporation, as the Servicer, Stone Receivables
Corporation, as the Transferor, Bank One, NA, as the
Certificate Agent and the Series 1999-2 Purchasers.
"Committed Series 1999-2 Purchaser" shall have the meaning specified in
Section 1.1 of the Certificate Purchase Agreement.
"Commitment" shall have the meaning specified in Section 1.1 of the
Certificate Purchase Agreement, which means, in general, a commitment to
purchase a portion of the Series 1999-2 Invested Amount pursuant to the
provisions of the Certificate Purchase Agreement.
"Commitment Provider" shall mean the party or parties to the
Certificate Purchase Agreement obligated therein in respect of the Commitments.
"CP Rate" shall have the meaning specified in the Certificate Purchase
Agreement.
"CP Rate Tranche" shall mean a portion of the Series 1999-2 Principal
Balance held by a Series 1999-2 Certificateholder which is a Noncommitted Series
1999-2 Purchaser pursuant to the Certificate Purchase Agreement that bears
interest at a CP Rate.
"CP Rate Tranche Period" shall have the meaning specified in the
Certificate Purchase Agreement.
"Credit Agreement" shall mean the Amended and Restated Credit
Agreement, dated as of November 18, 1998, among Stone Container Corporation,
Bankers Trust Company, as Agent, and the Co-Agents and Lenders party thereto, as
amended, supplemented or otherwise modified from time to time.
-2-
<PAGE>
"Daily Report" is defined in Annex X to the Agreement.
"Dilution Reserve Ratio" shall mean an amount (expressed as a
percentage) that is for the Series 1999-2 Certificate calculated as follows:
DRR = [(c * d) + [(e-d) * (e/d)]] * f
Where:
DRR = Dilution Reserve Ratio;
c = 2.25;
d = the Average Dilution Ratio for the Settlement
Period immediately preceding such earlier
Determination Date;
e = the highest Dilution Ratio over the past twelve
Settlement Periods immediately preceding such earlier
Determination Date; and
f = the Dilution Horizon Ratio
"ERISA Entity" shall mean (i) an employee benefit plan, retirement
arrangement, individual retirement account or Keogh plan subject to either Title
I of ERISA or Section 4975 of the Internal Revenue Code, or (ii) an entity whose
source of funds to be used for the purchase of a Series 1999-2 Certificate
includes the assets of any such plan, arrangement or account.
"Eurocurrency Reserve Requirements" means, for any day as applied to a
LIBO Rate Tranche, the average (rounded upward, if necessary, to the nearest
whole multiple of 1/16 of 1%) of the aggregate (without duplication) of reserve
requirements in effect with respect to such Commitment Provider on such day
(including, without limitation, basic supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of such Board)
maintained by a member bank of such System.
"Event of Termination" shall have the meanings assigned in Section 5 of
this Supplement and Section 9.1 of the Agreement.
"Excess Program Costs" shall have the meaning assigned to such term
within the definition of "Series 1999-2 Program Costs."
"Facility Account" means Account No. 08-00260 at the Certificate Agent
or an account designated as such at any other financial institution selected by
the Transferor.
"Fee Letter" shall mean the letter agreement dated as of October 15,
1999 among the Certificate Agent, the Servicer and the Transferor, as amended
from time to time pursuant to the Certificate Purchase Agreement.
"Interest and Fee Accrual Rate" shall mean, with respect to an Accrual
Period, a rate equal to the LIBO Base Rate plus 0.75%.
"Issuance Date" shall mean October 15, 1999.
"Legal Final Maturity" shall mean November 15, 2005.
-3-
<PAGE>
"LIBO Base Rate" shall mean, for any Accrual Period, the rate
established by the Trustee obtained from the one-month rate described on the Dow
Jones Telerate System, page 3750, as of 11:00 a.m. London time on the LIBOR
Determination Date; provided, however, in the event such rate shall not be
provided, "LIBO Base Rate" shall mean the one-month rate provided on the Reuters
Screen LIBOR Page (or, in the event such rate shall not be provided, the
arithmetic average (rounded upwards to the nearest 1/16th of 1%) of the rates at
which deposits in United States dollars are offered to four reference banks
(each, a "Reference Bank") selected by the Trustee at approximately 11:00 a.m.
(London time)). If on any LIBOR Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBO Base Rate for the next
interest accrual period shall be the rate per annum which the Trustee determines
to be either (i) the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of 1/32%) of the one-month United States dollar lending
rates that New York City banks selected by the Trustee are quoting, on the
relevant LIBOR Determination Date, to the principal London offices of at least
two of the Reference Banks to which such quotations are, in the opinion of the
Trustee, being so made, or (ii) in the event that the Trustee, being so made, or
(ii) in the event that the Trustee can determine no such arithmetic mean, the
lowest one-month United States dollar lending rate which New York City banks
selected by the Trustee are quoting on such LIBOR Determination Date to leading
European banks. If, on any LIBOR Determination Date, the Trustee is required but
is unable to determine the LIBO Base Rate in the manner provided, LIBO Base Rate
shall be LIBO Base Rate as determined on the previous LIBO Rate Determination
Date. The establishment of LIBO Base Rate on each LIBOR Determination Date by
the Trustee and the Trustee's calculation of the rate of interest applicable to
the Series 1999-2 Certificates will (in the absence of manifest error) be final
and binding.
"LIBO Rate" shall mean a rate per annum determined for such day equal
to the sum of (a) 3.75% (or, if the use of the LIBO Tranche is solely the result
of the inability of the Noncommitted Purchaser to issue Commercial Paper, 0.75%)
plus (b) an amount determined in accordance with the following formula (rounded
upward to the nearest 1/100th of 1%):
LIBO Base Rate
-------------------------------------
1.00 - Eurocurrency Reserve Requirements
Eurocurrency Reserve Requirements, for purposes of calculating the LIBO
Rate, shall be equal to the amount of Eurocurrency Reserve Requirements as of
the preceding Determination Date.
During the Series 1999-2 Amortization Period, Eurocurrency Reserve
Requirements shall be equal to the amount of Eurocurrency Reserve Requirement as
of the most recent Determination Date preceding the commencement of the Series
1999-2 Amortization Period.
"LIBO Rate Tranche" shall mean any Bank Rate Tranche that bears
interest at the LIBO Rate.
"LIBOR Determination Date" shall mean, for any Accrual Period, the
second Business Day prior to the immediately preceding Payment Date.
"Loss Reserve Ratio" shall mean an amount (expressed as a percentage)
that is calculated for the Series 1999-2 Certificate as follows:
LRR = d * b * (a/c) * PTM
Where:
LRR = Loss Reserve Ratio;
a = the aggregate Unpaid Balances of Receivables
originated by the Originators during the three
Settlement Periods immediately preceding such earlier
Determination Date;
b = the highest Default Ratio Average that occurred
during the period of twelve consecutive Settlement
Periods ending prior to such earlier Determination
Date;
-4-
<PAGE>
c = the Aggregate Eligible Receivables as of the last
day of the Settlement Period immediately preceding
such earlier Determination Date;
d = 2.25; and
PTM = Payment Term Multiplier
"Minimum Reserve Ratio" shall mean an amount (expressed as a
percentage) that is calculated for the Series 1999-2 Certificate as follows:
MRR = (a * b) + c
Where:
MRR = Minimum Reserve Ratio;
a = the Average Dilution Ratio for the Settlement Period
immediately preceding such earlier Determination
Date;
b = the Dilution Horizon Ratio; and
c = 10%.
"Monthly Additional Amounts" shall mean, for any Accrual Period, all
amounts owing to the Certificate Agent or any Series 1999-2 Purchaser under the
Certificate Purchase Agreement in respect of indemnities, reimbursement of
expenses or any other obligation (other than amounts included in clauses (A),
(B) and (C) of the definition of Series 1999-2 Monthly Interest and Fees and
Series 1999-2 Principal Balance).
"Monthly Facility Fee" shall mean, on any Payment Date, the amount of
Facility Fees specified in the Fee Letter as accruing in the related Accrual
Period.
"Monthly Program Fees" shall mean, on any Payment Date, the amount of
Program Fees specified in the Fee Letter as accruing during the related Accrual
Period.
"Monthly VFC Fees" shall mean, on any Payment Date, the sum of (i) the
Monthly Facility Fee and (ii) the Monthly Program Fees arising during the
related Accrual Period.
"Noncommitted Series 1999-2 Purchaser" shall have the meaning specified
in Section 1.1 of the Certificate Purchase Agreement.
"Optional Termination Date" shall have the meaning assigned in Section
4.5(c)(i) of the Agreement as supplemented by this Supplement.
"Optional Termination Notice" shall have the meaning assigned in
Section 4.5(c)(i) of the Agreement as supplemented by this Supplement.
"Payment Date" shall mean, the 15th day of the month (or if such 15th
day is not a Business Day, the next succeeding Business Day) commencing November
15, 1999.
"Payment Term" means with respect any Receivable, the number of days
between its invoice date and its due date.
"Payment Term Multiplier" means with respect to each Settlement Period,
(a) 1.0, if the Payment Term Variable is not more than 36, (b) 1.1, if the
Payment Term Variable is 37 to 39, (c) 1.17, if the Payment Term
-5-
<PAGE>
Variable is 40 to 45, (d) 1.22, if the Payment Term Variable is 46 to 50, (e)
1.28, if the Payment Term Variable is 51 to 55, (f) 1.33, if the Payment Term
Variable is 56 to 60, and (g) 1.38, if the Payment Term Variable is 61 to 65;
provided however, that, if the Payment Term Variable exceeds 65, the Payment
Term Multiplier for such Settlement Period shall be determined by calculating
the sum of (x) 1.38 and (y) 0.05, for each 5-day increment by which the Payment
Term Variable exceeds 65, it being understood that the same number shall apply
for all Payment Term Variables that fall within a five-day range.
"Payment Term Variable" means as calculated in each Settlement
Statement as of the most recently ended Settlement Period, the weighted average
of the Payment Terms of all Receivables with an Unpaid Balance as of the last
day of such Settlement Period.
"Rating Agencies" shall mean, with respect to Series 1999-2, S&P and
Moody's.
"Record Date" shall mean with respect to any Payment Date, the Business
Day immediately preceding such Payment Date.
"Reduction Date" shall mean the date on which the Transferor reduces
the Series 1999-2 Invested Amount in accordance with Section 4.5 of the
Agreement as supplemented by this Supplement.
"Required Amount" shall mean, as calculated on each Business Day during
an Accrual Period with respect to the next Payment Date, the sum of (i) the
Series 1999-2 Estimated Monthly Interest and Fee Expense estimated to be
distributed on the next Payment Date, (ii) the aggregate amount of all
previously accrued, unpaid and unallocated Series 1999-2 Monthly Interest and
Fees for prior Payment Dates, (iii) the Series 1999-2 Monthly Servicing Fee, and
(iv) the Series 1999-2 Program Costs.
"Reuters Screen LIBO Page" shall mean the display page designated as
"LIBO" on the Reuters Monitor Money Rates Service.
"Scheduled Amortization Period Commencement Date" shall mean November
15, 2004 or, if otherwise extended by the Certificate Agent on behalf of the
Series 1999-2 Purchasers, the date to which so extended.
"Series 1999-2" shall mean Series 1999-2, the Principal Terms of which
are set forth in this Supplement.
"Series 1999-2 Additional Interest" shall have the meaning assigned in
Section 4.4(b) of the Agreement as supplemented by this Supplement.
"Series 1999-2 Adjusted Invested Amount" shall mean, on any date of
determination, (i) the Series 1999-2 Invested Amount minus (ii) the sum of (A)
the amount on deposit in the Series 1999-2 Principal Collection Sub-subaccount
on such date, plus (B) the Series 1999-2 Invested Percentage of the amounts on
deposit in the Excess Funding Account on such date.
"Series 1999-2 Allocated Receivables Amount" shall mean, on any date of
determination, the Net Eligible Receivables on such date multiplied by the
percentage equivalent of a fraction the numerator of which is the Series 1999-2
Target Receivables Amount on such day and the denominator of which is the
Aggregate Target Receivables Amount on such date.
"Series 1999-2 Amortization Period" shall mean the period (i)
commencing as a result of the earlier to occur of (a) the Scheduled Amortization
Period Commencement Date, (b) the Optional Termination Date and (c) the
commencement of a Series 1999-2 Early Amortization Period and (ii) ending on the
earliest to occur of (x) the payment if full of the Series 1999-2 Invested
Amount, all accrued interest thereon and all other amounts owing under the
Certificate Purchase Agreement and (y) the Legal Final Maturity.
-6-
<PAGE>
"Series 1999-2 Applicable Reserve Ratio" shall mean, on any date of
determination, the greatest of (i) the sum of the Loss Reserve Ratio and the
Dilution Reserve Ratio and (ii) the Minimum Reserve Ratio.
"Series 1999-2 Certificate" shall mean a Variable Funding Certificate
issued pursuant to this Supplement, substantially in the form of Exhibit A.
"Series 1999-2 Certificateholder" shall mean each Certificateholder of
a Series 1999-2 Certificate.
"Series 1999-2 Certificateholders' Interest" shall have the meaning
assigned in Section of 1 of this Supplement.
"Series 1999-2 Certificate Rate" shall mean (i) for each CP Rate
Tranche, the applicable CP Rate and (ii) for each Bank Rate Tranche, the
applicable Bank Rate.
"Series 1999-2 Closing Date" shall mean October 15, 1999.
"Series 1999-2 Collection Subaccount" shall have the meaning assigned
in subsection (e)(i)(A) of Section 4.2 of the Agreement as supplemented by this
Supplement.
"Series 1999-2 Collections" shall mean an amount equal to the product
of (i) the Series 1999-2 Invested Percentage and (ii) all Collections received
and processed by the Servicer or on deposit in available funds in any Lock-Box
Account as of the close of the prior Business Day.
"Series 1999-2 Early Amortization Period" shall mean, with respect to
the Series 1999-2 Certificates, the period commencing on the date when an Event
of Termination has occurred and has not been otherwise waived, and continuing to
and including the earlier of (i) the payment in full of the Series 1999-2
Invested Amount, all accrued interest thereon and all other amounts owing under
the Certificate Purchase Agreement and (ii) the Legal Final Maturity.
"Series 1999-2 Estimated Monthly Interest and Fee Expense" shall mean,
for an Accrual Period, an amount equal to the product of (A) the Interest and
Fee Accrual Rate and (B) the highest Series 1999-2 Principal Balance during such
Accrual Period.
"Series 1999-2 Initial Invested Amount" shall mean $34.5 million.
"Series 1999-2 Interest Shortfall" shall have the meaning assigned in
Section 4.4(b) of the Agreement as supplemented by this Supplement.
"Series 1999-2 Invested Amount" shall mean with respect to any date of
determination, an amount equal to (i) the Series 1999-2 Initial Invested Amount
plus (ii) the aggregate principal amount of any Additional Invested Amounts
purchased by the Series 1999-2 Certificateholders through the end of the
preceding Business Day minus (iii) the aggregate amount of distributions to the
Series 1999-2 Certificateholders made in respect of principal on or prior to
such date.
"Series 1999-2 Invested Percentage" shall mean, with respect to any
Business Day (i) during the Series 1999-2 Revolving Period, the percentage
equivalent of a fraction, the numerator of which is the lesser of the Series
1999-2 Allocated Receivables Amount and the Series 1999-2 Target Receivables
Amount, as of the end of the immediately preceding Business Day and the
denominator of which is the greater of (A) the Net Eligible Receivables as of
the end of the immediately preceding Business Day and (B) the sum of the
numerators used to calculate the Invested Percentage for all Outstanding Series
on the Business Day for which such percentage is determined and (ii) during the
Series 1999-2 Amortization Period, the percentage equivalent of a fraction, the
numerator of which is the lesser of the Series 1999-2 Allocated Receivables
Amount and the Series 1999-2 Target Receivables Amount, as of the end of the
last Business Day of the Series 1999-2 Revolving Period (provided that if during
the Series 1999-2 Amortization Period, the amortization periods of all other
Outstanding Series which were outstanding prior to the commencement of the
Series 1999-2 Amortization Period
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commence, then, from and after the date the last of such Series commences its
amortization period, the numerator shall be the lesser of the Series 1999-2
Allocated Receivables Amount and the Series 1999-2 Target Receivables Amount on
such date) and the denominator of which is the greater of (A) the Net Eligible
Receivables as of the end of the immediately preceding Business Day and (B) the
sum of the numerators used to calculate the Invested Percentage for all
Outstanding Series on the Business Day for which such percentage is determined.
"Series 1999-2 Monthly Interest" shall mean, for any Payment Date, the
sum of the amounts specified in clauses (A) and (B) of Section 4.4(a)(i) of the
Agreement as supplemented by this Supplement.
"Series 1999-2 Monthly Interest and Fees" shall have the meaning
assigned in Section 4.4(a)(i) of the Agreement as supplemented by this
Supplement.
"Series 1999-2 Monthly Principal" shall have the meaning assigned in
Section 4.5(a) of the Agreement as supplemented by this Supplement.
"Series 1999-2 Monthly Servicing Fee" shall mean the portion of the
Servicing Fee allocable to the Series 1999-2 Certificates pursuant to Section
3.2 of the Agreement.
"Series 1999-2 Non-Principal Collection Sub-subaccount" shall have the
meaning assigned in Section 4.2(e)(B)(2) of the Agreement as supplemented by
this Supplement.
"Series 1999-2 Principal Balance" shall mean, when used with respect to
any Business Day, an amount equal to (a) the Series 1999-2 Initial Invested
Amount, plus (b) the aggregate principal amount of any Additional Invested
Amounts purchased by the Series 1999-2 Certificateholders through the end of the
preceding Business Day, minus (c) the aggregate amount of principal payments
made to Series 1999-2 Certificateholders prior to such Business Day.
"Series 1999-2 Principal Collection Sub-subaccount" shall have the
meaning assigned in Section 4.2(e)(B)(1) of the Agreement as supplemented by
this Supplement.
"Series 1999-2 Program Costs" shall mean, for any Business Day, the sum
of (i) the product of (A) all unpaid fees and expenses due and payable to
counsel to, and independent auditors of, the Transferor (other than fees and
expenses payable on or in connection with the closing of any issuance of any
Investor Certificates) on such Business Day and (B) a fraction, the numerator of
which is the Series 1999-2 Invested Amount on such Business Day and the
denominator of which is the Aggregate Invested Amount on such Business Day and
(ii) all unpaid fees and expenses due and payable to the Rating Agencies rating
the Series 1999-2 Certificates; provided, however, that Series 1999-2 Program
Costs shall not exceed $10,000 in the aggregate in any fiscal year of the
Servicer (any amount of the foregoing in excess of $10,000 shall be referred to
herein as "Excess Program Costs").
"Series 1999-2 Purchase Limit" shall mean $50,000,000.
"Series 1999-2 Purchasers" shall have the meaning specified in Section
1.1 of the Certificate Purchase Agreement.
"Series 1999-2 Required Transferor Amount" shall mean:
(a) on any date of determination during the Series 1999-2
Revolving Period, an amount equal to the sum of:
(i) an amount equal to the product of (A) the Series
1999-2 Adjusted Invested Amount on such day and (B) a
fraction, the numerator of which is the Series 1999-2
Applicable Reserve Ratio and the denominator of which is one
minus the Series 1999-2 Applicable Reserve Ratio;
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(ii) the product of (A) the Series 1999-2 Invested
Amount on such day and (B) a fraction, the numerator of which
is the Carrying Cost Reserve Ratio and the denominator of
which is one minus the Series 1999-2 Applicable Reserve Ratio;
and
(iii) the product of (A) the Unpaid Balances of
Receivables in the Trust on such day, (B) a fraction, the
numerator of which is the Series 1999-2 Invested Amount and
the denominator of which is the Aggregate Invested Amount on
such day and (C) a fraction, the numerator of which is the
Servicing Reserve Ratio and the denominator of which is one
minus the Series 1999-2 Applicable Reserve Ratio; and
(b) on any date of determination during the Series 1999-2
Amortization Period, an amount equal to the Series 1999-2 Required Transferor
Amount on the last Business Day of the Series 1999-2 Revolving Period.
"Series 1999-2 Revolving Period" shall mean the period commencing on
the Issuance Date and terminating on the earliest to occur of the close of
business on (i) the date on which a Series 1999-2 Early Amortization Period is
declared to commence or automatically commences, (ii) the Optional Termination
Date and (iii) the commencement of the Series 1999-2 Amortization Period.
"Series 1999-2 Servicer Default" shall mean, in addition to the
Servicer Defaults set forth in the Agreement, any default or acceleration of any
indebtedness under the Credit Agreement.
"Series 1999-2 Target Receivables Amount" shall mean, on any date of
determination, the sum of (i) the Series 1999-2 Adjusted Invested Amount on such
date and (ii) the Series 1999-2 Required Transferor Amount on such date.
"Trust Accounts" shall have the meaning assigned in Section 4.2(e) of
the Agreement as supplemented by this Supplement.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Supplement shall refer to this Supplement or
the Agreement as a whole and not to any particular provision of this Supplement
or the Agreement, as the case may be.
(c) Any reference herein to a Schedule or Exhibit to this
Supplement shall be deemed to be a reference to such Schedule or Exhibit as it
may be amended, modified or supplemented from time to time.
(d) Any reference in this Supplement to any representation,
warranty or covenant "deemed" to have been made is intended to encompass only
representations, warranties or covenants that are expressly stated to be
repeated on or as of dates following the execution and delivery of this
Supplement, and no such reference shall be interpreted as a reference to any
implicit, inferred, tacit or otherwise unexpressed representation, warranty or
covenant.
(e) The words "include," "includes" or "including" shall be
interpreted as if followed, in each case, by the phrase "without limitation."
SECTION 2. AGREEMENT MODIFICATIONS.
The following terms of the Agreement are hereby supplemented
with respect to the Series 1999-2 Certificate issued pursuant to this Supplement
as follows:
Section 3.3 of the Agreement is supplemented by adding the
following subsection (t) thereto applicable solely to Series 1999-2:
(t) Confidentiality. The Series 1999-2 Certificateholder shall
be deemed to have agreed,
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by acceptance of such Investor Certificate, and each other Commitment Provider
shall be deemed to have agreed, by its execution of an Assignment and Acceptance
(as defined in the Certificate Purchase Agreement) pursuant to the Certificate
Purchase Agreement, to hold in confidence all nonpublic information regarding
the Receivables, the Trust Assets, the Transferor, Stone Container, the
Servicer, any obligors and any Affiliate of the Transferor, Stone Container or
the Servicer (collectively, the "Stone Information") including, without
limitation, non-public information provided by or on behalf of the Trustee or
another Certificateholder to such Certificateholder or other Commitment
Provider; provided that nothing herein shall prevent the Series 1999-2
Certificateholder or other Commitment Provider from delivering copies of any
financial statements and other documents whether or not constituting
confidential information, and disclosing other information, whether or not
confidential information, to (i) any of its directors, officers, employees,
agents and professional consultants, to the extent necessary to evaluate the
Trust Assets or the Receivables in connection with such Series 1999-2
Certificateholder's investment hereunder, (ii) any prospective transferee in
connection with the contemplated transfer of an Investor Certificate or any part
thereof or participation therein, (iii) any Governmental Authority only to the
extent required by such Governmental Authority, (iv) each of the Rating Agencies
in connection with its rating of the Series 1999-2 Certificate, (v) in response
to any subpoena or other legal process, (vi) in connection with any litigation
to which Stone Container, the Transferor or the Servicer is a party or (vii) any
other Person if such information does not name Stone Container as the subject of
such information or indicate that such information relates to Stone Container.
In the event that the Series 1999-2 Certificateholder, any
other Commitment Provider or any of their respective directors, officers,
employees, agents or professional consultants is requested or becomes legally
compelled (by interrogatories, requests for information or documents, subpoena,
civil or criminal investigative demand or similar process) to disclose any of
the Stone Information, the Series 1999-2 Certificateholder or other Commitment
Provider, as the case may be, shall (or shall cause its directors, officers,
employees, agents and professional consultants to):
(a) provide Stone Container with prompt written notice so that
(A) Stone Container may seek a protective order or other appropriate
remedy, or (B) Stone Container may, if it so chooses, agree that the
Series 1999-2 Certificateholder or other Commitment Provider, as the
case may be, (or their respective directors, officers, employees,
agents and professional consultants) may disclose such Stone
Information pursuant to such request or legal compulsion;
(b) unless Stone Container agrees that such Stone Information
may be disclosed, make (or permit Stone Container to make on its behalf
and with its consent) a timely objection to the request or compulsion
to provide such Stone Information on the basis that such Stone
Information is confidential and subject to the agreements contained in
this Section 3.3(t);
(c) take (or permit Stone Container to take on its behalf and
with its consent) any action as Stone Container may reasonably request
to seek a protective order or other appropriate remedy; provided that,
in connection therewith, the Series 1999-2 Certificateholder or other
Commitment Provider, as the case may be, shall have first received such
assurances as it may reasonably request that Stone Container shall
reimburse its reasonable costs and expenses (including attorneys fees'
and expenses) or provide such other assistance as it may reasonably
require; and
(d) in the event that such protective order or other remedy is
not obtained, or Stone Container agrees that such Stone Information may
be disclosed, furnish only that portion of the Stone Information which
is required to be furnished pursuant to such process or processes
described above, and, provided the Series 1999-2 Certificateholder or
other Commitment Provider, as the case may be, is reimbursed or
assisted as referred to in clause (iii) above, exercise its best
efforts to obtain reliable assurance that confidential treatment will
be accorded the Stone Information.
Notwithstanding the foregoing, to the extent that applicable
law prohibits disclosure to Stone Container of the existence of any information
described above, or the taking of any action contemplated above, the Series
1999-2 Certificateholder or other Commitment Provider, as the case may be, shall
lie under no obligation to disclose such information or take such action.
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This Section 3.3(t) shall survive termination of this
Agreement and the Certificate Purchase Agreement.
Section 4.2 of the Agreement is supplemented by adding the
following subsections (e) and (f) applicable solely to Series 1999-2:
(e) The Trustee shall cause to be established and maintained
in the name of the Trustee, on behalf of the Trust, (i) for the benefit of the
Series 1999-2 Certificateholders, and (ii) in the case of clauses (A) and (B)
below, for the benefit, subject to the prior and senior interests of the Series
1999-2 Certificateholders, of the Holder of the Transferor Certificate, (A) a
subaccount of the Collection Account (the "Series 1999-2 Collection
Subaccount"), which subaccount is the Series Collection Subaccount with respect
to Series 1999-2; and (B) two subaccounts of the Series 1999-2 Collection
Subaccount: (1) the Series 1999-2 Principal Collection Sub-subaccount and (2)
the Series 1999-2 Non-Principal Collection Sub-subaccount (respectively, the
"Series 1999-2 Principal Collection Sub-subaccount" and the "Series 1999-2
Non-Principal Collection Sub-subaccount"; all accounts established pursuant to
this subsection (e), collectively, the "Trust Accounts"), each Trust Account to
bear a designation indicating that the funds deposited therein are held for the
benefit of the Persons (and, for each such Person, to the extent) set forth in
clauses (i) and (ii) above. The Trustee, on behalf of the Holders, for the
benefit of the Persons (and, for each such Person to the extent) set forth in
clauses (i) and (ii) above, shall possess all right, title and interest in all
funds from time to time on deposit in, and all Permitted Investments credited
to, the Trust Accounts and in all proceeds thereof. The Trust Accounts shall be
under the sole dominion and control of the Trustee for the exclusive benefit of
the Persons (and, for each such Person to the extent) set forth in clauses (i)
and (ii) above. In any case where the Transferor (including through the
Servicer) has not provided applicable written direction as to Permitted
Investments to the Trustee, the Trustee shall invest in money market funds that
constitute Permitted Investments.
(f) All Permitted Investments in the Trust Accounts shall be
held by the Trustee, on behalf of the Holders, for the benefit of the Persons
(and, for each such Person, to the extent) set forth in clauses (i) and (ii) of
subsection (e) above. Funds on deposit in a Trust Account that is a
Sub-subaccount of the Collection Account shall, at the direction of the
Transferor (including through the Servicer), be invested together with funds
held in other Sub-subaccounts of the Collection Account. After giving effect to
any distribution to the Transferor pursuant to Section 4.3 of the Agreement as
supplemented in this Supplement below, amounts on deposit and available for
investment in the Series 1999-2 Principal Collection Sub-subaccount shall be
invested by the Trustee, at the written direction of the Transferor (including
through the Servicer), in Permitted Investments that mature, or that are payable
or redeemable upon demand of the holder thereof, (i) in the case of any such
investment made during the Series 1999-2 Revolving Period, on or prior to the
next Business Day and (ii) in the case of any such investment made during the
Series 1999-2 Amortization Period, on or prior to the Business Day immediately
preceding the next Payment Date. Amounts on deposit and available for investment
in the Series 1999-2 Non-Principal Collection Sub-subaccount shall be invested
by the Trustee at the written direction of the Transferor (including through the
Servicer) in Permitted Investments that mature, or that are payable or
redeemable upon demand of the holder thereof, on or prior to the Business Day
immediately preceding the subsequent Payment Date. As of the Business Day
immediately preceding the Determination Date, all interest and other investment
earnings (net of losses and investment expenses) on funds deposited in the
Series 1999-2 Principal Collection Sub-subaccount shall be deposited in the
Series 1999-2 Non-Principal Collection Sub-subaccount.
Section 4.3 of the Agreement is supplemented by adding the
following subsections applicable solely to Series 1999-2:
(d) Daily Series 1999-2 Allocations.
(i) On each Business Day, Series 1999-2 Collections allocated
to Series 1999-2 and deposited in the Series 1999-2 Collection
Subaccount pursuant to the requirements of Section 4.3(a) and (b) of
the Agreement, shall be further allocated and distributed as set forth
below by the Trustee
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based solely on the information provided it by the
Servicer in the Daily Report (upon which the Trustee may conclusively
rely).
(ii)(A) On each Business Day (including Payment Dates), an
amount of Series 1999-2 Collections for such Business Day necessary to
cause the Required Amount for such day (or, such higher amount as the
Servicer shall reasonably deem necessary in order to make the payments
specified in Section 4.4 of the Agreement) to be on deposit therein,
shall be transferred by the Trustee from the Series 1999-2 Collection
Subaccount to the Series 1999-2 Non-Principal Collection
Sub-subaccount; and
(B) on each Business Day (including Payment Dates), following
the transfer pursuant to clause (A) above, any remaining Series 1999-2
Collections for such Business Day shall be transferred by the Trustee
to the Series 1999-2 Principal Collection Sub-subaccount.
(iii)(A) On each Business Day during the Series 1999-2
Revolving Period (including Payment Dates), after giving effect to all
allocations of aggregate daily Collections referred to in subparagraphs
(ii)(A) and (ii)(B) above on such Business Day, amounts on deposit in
the Series 1999-2 Principal Collection Sub-subaccount shall be
distributed or transferred by the Trustee, based solely on the
information provided to the Trustee by the Servicer in the Daily Report
(upon which the Trustee may conclusively rely), (1) first, to the
Excess Funding Account, to the extent of the Excess Funding Account
Deposit Amount, if any, (2) second, to pay Excess Program Costs, and
(3) third, (I) to the Transferor as the holder of the Transferor
Interest in accordance with the directions contained in the Daily
Report (which may be for the purpose of funding additional purchases of
Receivables, if available from Originators), or (II) at the election of
the Transferor as the holder of the Transferor Interest, by written
notice to the Servicer and the Trustee, to such accounts or to such
Persons as the Transferor may direct in writing (which directions may
consist of standing instructions provided by the Transferor that shall
remain in effect until changed by the Transferor in writing); provided,
that if the Transferor or the Servicer, on behalf of the Transferor,
shall have given the Certificate Agent and the Trustee irrevocable
written notice (effective upon receipt) on or prior to 9:30 a.m.
(Chicago time) on such day, the Transferor or the Servicer may instruct
the Trustee in writing (specifying the related amount) to withdraw all
or a portion of such amounts on deposit in the Series 1999-2 Principal
Collection Sub-subaccount (including any amounts transferred thereto
pursuant to Section 4.3(d)(iii)(A) of the Agreement as supplemented by
the supplementing provisions thereof set forth in Section 2 of the
Series 1999-1 Supplement) and apply such withdrawn amounts toward the
reduction of the Series 1999-2 Invested Amount in accordance with
Section 4.6(c) of the Agreement as supplemented with respect to Series
1999-2 by this Supplement (which supplementing provisions are set forth
below). Amounts distributed to the Transferor hereunder shall be deemed
to be paid first from Collections received directly by the Servicer (if
any) and second from Collections received in the Lock-Boxes.
(B) During the Series 1999-2 Amortization Period, amounts on
deposit in the Series 1999-2 Principal Collection Sub-subaccount shall
be invested in accordance with Section 4.2(f) of the Agreement as
supplemented by the provisions of this supplement and on each Payment
Date shall be distributed in accordance with Section 4.5 of the
Agreement as supplemented by the provisions of this Supplement below.
Section 4.4 of the Agreement is supplemented by adding the
following subsections applicable solely to Series 1999-2:
Section 4.4 Determination of Interest With Respect to the
Series 1999-2 Certificates.
(a) The amount of interest, fees and other non-principal
obligations distributable with respect to the Series 1999-2 Certificates on each
Payment Date for the Accrual Period then ending shall be as determined as
follows:
(i) The sum of (A) an amount equal to the Discount accrued on
each CP Rate Tranche
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at the applicable CP Rate for the period of time such CP Rate Tranche
was outstanding during the Accrual Period with respect to such Payment
Date determined in accordance with Article IV of the Certificate
Purchase Agreement, and (B) an amount equal to the interest accrued on
each Bank Rate Tranche at the applicable Bank Rate for the period of
time such Bank Rate Tranche was outstanding during the Accrual Period
with respect to the Payment Date determined in accordance with Article
V of the Certificate Purchase Agreement and (C) the Monthly VFC Fees
and (D) the Monthly Additional Amounts shall be the "Series 1999-2
Monthly Interest and Fees"; and
(ii) The Servicer shall notify the Trustee in writing (upon
which the Trustee may conclusively rely) on each Determination Date of
the amounts calculated pursuant to clause (i) above.
(b) On each Payment Date, the Servicer shall determine the
excess, if any (the "Series 1999-2 Interest Shortfall"), of (A) the Series
1999-2 Monthly Interest and Fees for the Accrual Period ending prior to such
Payment Date over (B) the amount which will be available to be distributed to
the Series 1999-2 Certificateholders on such Payment Date in respect thereof
pursuant to this Supplement. If the Series 1999-2 Interest Shortfall with
respect to any Payment Date is greater than zero, an additional amount ("Series
1999-2 Additional Interest") equal to the product, for such Accrual Period (or
portion thereof) until such Series 1999-2 Interest Shortfall is paid, of (A) the
Base Rate plus 2.0% for such Accrual Period, (B) such Series 1999-2 Interest
Shortfall (or the portion thereof which has not been paid to the Series 1999-2
Certificateholders) and (C) the actual number of days in such Accrual Period
divided by 360, shall be payable as provided herein with respect to the Series
1999-2 Certificates on each Payment Date following such Payment Date to and
including the Payment Date on which such Series 1999-2 Interest Shortfall is
paid in full to the Series 1999-2 Certificateholders.
Section 4.5 of the Agreement is supplemented by adding the
following subsections applicable solely to Series 1999-2:
Section 4.5. Determination of Principal to be Distributed with
respect to the Series 1999-2 Certificates; Optional Decreases in Series 1999-2
Invested Amount; Optional Termination.
(a) Payments of Series 1999-2 Monthly Principal. The amount of monthly
principal (the "Series 1999-2 Monthly Principal") distributable from the Series
1999-2 Principal Collection Sub-subaccount on each Payment Date during the
Series 1999-2 Amortization Period with respect to the Series 1999-2
Certificates, shall be equal to the amount on deposit in such account on the
immediately preceding Determination Date; provided, however, that with respect
to any Payment Date, the aggregate Series 1999-2 Monthly Principal paid and
payable to the Series 1999-2 Certificateholders may not exceed the Series 1999-2
Invested Amount on such Payment Date; and provided further, distributions of
such principal shall be in accordance with Section 4.6(b) of the Agreement as
supplemented by this Supplement below.
(b) On any Business Day during the Series 1999-2 Revolving Period, the
Transferor may reduce the Series 1999-2 Invested Amount (a "Reduction") by
causing the Trustee to distribute funds to the Series 1999-2 Certificateholders
pursuant to Section 4.6(c) of the Agreement as supplemented by this Supplement.
Such Reduction shall only be made in the event that the Servicer shall have
given the Certificate Agent and the Trustee irrevocable written notice in a form
set forth in Exhibit C hereto (effective upon receipt), on or prior to 9:30 a.m.
(Chicago time) on the Reduction Date, and which notice shall state the amount of
such Reduction; provided that such Reduction shall be in an amount equal to
$500,000 and integral multiples of $100,000 in excess thereof.
(c)(i) On any Business Day during the Series 1999-2 Revolving Period,
the Transferor shall have the right to deliver an irrevocable notice (an
"Optional Termination Notice") to the Trustee and the Servicer in which the
Transferor declares that the Series 1999-2 Revolving Period shall terminate on
the date (the "Optional Termination Date") set forth in such notice, which date,
in any event, shall not be less than 30 days from the date on which such notice
is delivered.
(ii) From and after the Optional Termination Date, the Series
1999-2 Amortization Period
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shall commence for all purposes under this Supplement and the other Transaction
Documents. The Trustee shall give prompt written notice of its receipt of an
Optional Termination Notice to the Series 1999-2 Certificateholders and the
Rating Agencies.
Section 4.6 of the Agreement shall be modified by adding the
following provisions, applicable solely to Series 1999-2:
Section 4.6. Application and Payment on Payment Dates of Funds
on Deposit in the Trust Accounts for the Series 1999-2 Certificates.
(a) The Trustee shall distribute, based solely on the information
provided to the Trustee by the Servicer in the Settlement Statement (upon which
the Trustee may conclusively rely), on each Payment Date, from amounts on
deposit in the Series 1999-2 Non-Principal Collection Sub-subaccount in the
following order of priority to the extent funds are available:
(i) an amount equal to the Series 1999-2 Monthly Servicing Fee
for the Accrual Period ending prior to such Payment Date shall be
withdrawn from the Series 1999-2 Non-Principal Collection
Sub-subaccount by the Trustee and paid to the Servicer (less amounts
payable to the Trustee pursuant to Sections 10.1 and 11.5 of the
Agreement which shall be paid to the Trustee);
(ii) an amount equal to the Series 1999-2 Monthly Interest
payable on such Payment Date, plus the amount of any Series 1999-2
Monthly Interest previously due but not distributed to the Series
1999-2 Certificateholders on a prior Payment Date, plus the amount of
any Series 1999-2 Additional Interest for such Payment Date and any
Series 1999-2 Additional Interest previously due but not distributed to
the Series 1999-2 Certificateholders on a prior Payment Date, to the
Series 1999-2 Certificateholders; provided, however, that during the
Series 1999-2 Amortization Period, no Series 1999-2 Additional Interest
will be paid until repayment in full of the Series 1999-2 Invested
Amount and all Series 1999-2 Monthly Interest has been paid and all
payments pursuant to clauses (iii) and (iv) of Section 4.6(a) of the
Agreement as supplemented by this Supplement have been paid;
(iii) an amount equal to any Monthly VFC Fees due and payable
shall be withdrawn from the Series 1999-2 Non-Principal Collection
Sub-subaccount by the Trustee and paid to the Persons owed such
amounts; provided, however, that during the Series 1999-2 Amortization
Period, no Monthly VFC Fees will be paid until repayment in full of the
Series 1999-2 Invested Amount and all Series 1999-2 Monthly Interest
has been paid; provided, further, that prior to the Series 1999-2
Amortization Period, Monthly VFC Fees will be paid only if and to the
extent that the payment thereof will not result in an amount less than
the Excess Funding Account Deposit Amount being made to the Excess
Funding Account pursuant to Section 4.3(b)(iii);
(iv) an amount equal to any Monthly Additional Amounts for the
Accrual Period ending prior to such Payment Date shall be withdrawn
from the Series 1999-2 Non-Principal Collection Sub-subaccount and paid
to the Persons owed such amounts; provided, however, that during the
Series 1999-2 Amortization Period, no Monthly Additional Amounts will
be paid until repayment in full of the Series 1999-2 Invested Amount
and all Series 1999-2 Monthly Interest has been paid; provided,
further, that prior to the Series 1999-2 Amortization Period, Monthly
Additional Amounts will be paid only if and to the extent that the
payment thereof will not result in an amount less than the Excess
Funding Account Deposit Amount being made to the Excess Funding Account
pursuant to Section 4.3(b)(iii);
(v) an amount equal to the Series 1999-2 Program Costs due and
payable shall be withdrawn from the Series 1999-2 Non-Principal
Collection Sub-subaccount by the Trustee and paid to the Persons owed
such amounts; and
(vi) any remaining amount on deposit in the Series 1999-2
Non-Principal Collection Sub-subaccount not allocated pursuant to
clauses (i) through (v) above shall be deposited in the Series 1999-2
Principal Collection Sub-subaccount for distribution in accordance with
Section 4.6(b) of the
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<PAGE>
Agreement as supplemented by this Supplement.
(b) During the Series 1999-2 Amortization Period and any Series 1999-2
Early Amortization Period, the Trustee shall apply, based solely on the
information provided to the Trustee by the Servicer in the Settlement Statement
(upon which the Trustee may conclusively rely), on each Payment Date, amounts on
deposit in the Series 1999-2 Principal Collection Sub-subaccount in the
following order of priority:
(i) an amount equal to the Series 1999-2 Monthly Principal for
such Payment Date (rounded down to the nearest $100,000 unless such
payment is less than $100,000) shall be distributed from the Series
1999-2 Principal Collection Sub-subaccount pro rata to the Series
1999-2 Certificateholders until the repayment in full of the Series
1999-2 Invested Amount on such date.
(ii) if, following the repayment in full of the Series 1999-2
Invested Amount, any amounts are owed to the Trustee, the Certificate
Agent (including any unpaid Monthly VFC Fees and Monthly Additional
Amounts) or any other Person, on account of its expenses, advances and
disbursements incurred in respect of the performance of its
responsibilities hereunder or as Successor Servicer, such amounts shall
be transferred from the Series 1999-2 Principal Collection
Sub-subaccount and paid to the Trustee or such other Person; and
(iii) if, following the repayment of all of the amounts set
forth in clauses (i) and (ii) above, the remaining amount on deposit in
the Series 1999-2 Principal Collection Sub-subaccount on such Payment
Date, if any, shall be distributed to the Holder of the Transferor
Certificate.
(c) The Transferor shall provide written notice to the Trustee and the
Certificate Agent of the amount of principal to be repaid on or prior to 9:30
a.m. (Chicago time) on the corresponding Reduction Date, and on each Reduction
Date on which principal will be repaid during the Series 1999-2 Revolving
Period, the Trustee shall pay such amounts from funds in the Series 1999-2
Principal Sub-subaccount, pro rata to the Series 1999-2 Certificateholders, in
accordance with instructions of the Transferor, as set forth by the Servicer on
its behalf in the Daily Report for such Business Day (on which the Trustee may
conclusively rely), which instructions provide that the Trustee shall apply all
such funds to the reduction of the Series 1999-2 Invested Amount.
Section 4.9 of the Agreement shall read as follows applicable
solely to Series 1999-2:
Section 4.9. Taxes. In the event any tax is required under
applicable law to be withheld or deducted from any payment to a Series 1999-2
Certificateholder hereunder or under any Series 1999-2 Certificate, such tax
shall reduce the amount otherwise distributable to the Series 1999-2
Certificateholder hereunder or under any Series 1999-2 Certificate. The Trustee
(or Paying Agent) is hereby authorized and directed to retain from amounts
otherwise distributable to a Series 1999-2 Certificateholder sufficient funds
for the payment of any tax that is so required to be withheld or deducted (but
such authorization shall not prevent the Trustee (or Paying Agent) from
contesting any such tax in appropriate proceedings, and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings). The
amount of any tax so withheld or deducted with respect to a Series 1999-2
Certificateholder shall be treated as cash distributed to such Series 1999-2
Certificateholder at the time it is withheld by the Trustee (or Paying Agent).
If there is a possibility that any tax is required to be withheld or deducted on
a payment to a Series 1999-2 Certificateholder, the Servicer shall seek advice
from its counsel or accountants regarding its obligation to so withhold or
deduct and shall so instruct the Trustee in writing. Each Series 1999-2
Certificateholder shall indemnify and hold harmless the Trust, the Trustee and
the Transferor for any claims, liabilities and expenses of whatever nature
relating to the Trust's, the Trustee's or the Transferor's obligation to
withhold and to pay over, or otherwise pay, any withholding or other taxes
payable as a result of such Series 1999-2 Certificateholder's interest in the
Trust, except that such Series 1999-2 Certificateholder shall not be liable for
any interest or penalties owed by the Trust, the Trustee or the Transferor for
failure to withhold or pay any such tax.
Section 6.9 of the Agreement shall read as follows applicable
solely to Series 1999-2:
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<PAGE>
Section 6.9 Limitation on Transfer. (a) Each Series 1999-2
Certificateholder represents and warrants, for U.S. federal income tax purposes,
that it is the beneficial owner of the Series 1999-2 Certificates registered
under its name in the Certificate Register and is not, and will not become, a
partnership, Subchapter S corporation, or grantor trust.
(b) No Series 1999-2 Certificate (or any interest therein)
shall be sold, transferred, assigned, participated, pledged or otherwise
disposed of (any such act, a "Transfer") to any Person except in accordance with
the provisions of this Section 6.9(b), and any attempted Transfer in violation
of this Section 6.9(b) shall be null and void. Each Series 1999-2
Certificateholder (i) will not Transfer any Series 1999-2 Certificate (or any
interest therein) or cause any Series 1999-2 Certificate (or any interest
therein) to be marketed, on or through an "established securities market" within
the meaning of Section 7704(b) of the Code (including, without limitation, an
over-the-counter-market or an interdealer quotation system that regularly
disseminates firm buy or sell quotations) and (ii) agrees that no Transfer of
any Series 1999-2 Certificate (or any interest therein) is permitted unless (A)
such Transfer is of a Series 1999-2 Certificate (or any interest therein) in a
minimum denomination of $5 million and (B) the Trustee has received from the
proposed transferee an Investment Letter in the form set forth in Exhibit B
hereto.
SECTION 3. ADDITIONAL INVESTED AMOUNTS.
(a) Each Series 1999-2 Certificateholder agrees, by acceptance
of its Series 1999-2 Certificate, that the Transferor may, from time to time
prior to the Facility Termination Date (as defined in the Certificate Purchase
Agreement) for such Series 1999-2 Certificate, upon satisfaction of the
conditions set forth in Section 2.2 of the Certificate Purchase Agreement,
request that each Noncommitted Series 1999-2 Purchaser acquire, and (if a
Noncommitted Series 1999-2 Purchaser decides in its sole discretion not to so
acquire) require that the related Committed Series 1999-2 Purchaser acquire, as
of any Purchase Date, additional undivided interests in the Trust in specified
amounts (such amounts, the "Additional Invested Amount"); provided, that the
Series 1999-2 Target Receivables Amount does not exceed the Series 1999-2
Allocated Receivables Amount, after giving effect to any increase in the Series
1999-2 Invested Amount and the Series 1999-2 Required Transferor Amount on such
Purchase Date. On each Purchase Date, the Series 1999-2 Invested Amount (and
each other amount set forth herein, the calculation of which is based on such
amount) shall be recalculated to include the Additional Invested Amounts with
respect to the Series 1999-2 Certificates. The aggregate Additional Invested
Amounts to be purchased shall have a minimum aggregate amount of $500,000 or
more, and shall be in integral multiples of $100,000.
(b) The Transferor shall give to the Certificate Agent written
notice of the sale of Additional Invested Amounts on or prior to 9:30 a.m.
(Chicago time) on the Purchase Date (or, in the case of a LIBO Rate Tranche,
three Business Days prior to such date) specifying (i) the aggregate amount of
requested Additional Invested Amounts and (ii) the applicable date (the
"Purchase Date") on which the Transferor wishes such purchase to occur (which
date shall be a Business Day). On the Business Day immediately after the
Purchase Date, the Certificate Agent shall report to the Transferor, the
Servicer and the Trustee (i) the amount of the Additional Invested Amounts
purchased by the Noncommitted Series 1999-2 Purchasers and (ii) the amount of
the Additional Invested Amounts purchased by the Series 1999-2 Committed Series
1999-2 Purchasers.
(c) Each Noncommitted Series 1999-2 Purchaser may, but shall
not be obligated to, purchase its Noncommitted Series 1999-2 Purchaser
Percentage (as defined in the Certificate Purchase Agreement) of any Additional
Invested Amounts offered by the Transferor pursuant to subsection (a) above.
Each Committed Series 1999-2 Purchaser shall purchase its share of the
Additional Invested Amounts not so purchased by the Noncommitted Series 1999-2
Purchasers pursuant to the immediately previous sentence in accordance with the
applicable Certificate Purchase Agreement. In no event shall any Additional
Invested Amounts be purchased if and to the extent that the Series 1999-2
Invested Amount on the applicable Purchase Date (after giving effect to those
purchases which are made on the applicable Purchase Date) would exceed the
Series 1999-2 Purchase Limit. The Certificate Agent, on behalf of the Series
1999-2 Purchasers, shall wire transfer the purchase price for such Additional
Invested Amounts to the Facility Account no later than 12:00
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<PAGE>
noon (Chicago time) on the Purchase Date.
(d) If the Series 1999-2 Certificateholders acquire such
additional interest, then in consideration of such Series 1999-2
Certificateholders' payments of the Additional Invested Amount, the Servicer
shall appropriately note such Additional Invested Amount on the related Daily
Report, and the Series 1999-2 Invested Amount of the Series 1999-2 Certificates
will be increased by the amount of such Additional Invested Amount.
(e) Subject to the provisions of subsections (c) and (d), the
failure of any Committed Series 1999-2 Purchaser to purchase any Additional
Invested Amounts in accordance with this Section 3 and the Certificate Purchase
Agreement shall not in itself relieve any other Committed Series 1999-2
Purchaser of its obligation to purchase any Additional Invested Amounts.
Notwithstanding any provision to the contrary contained in this Section 3, no
Noncommitted Series 1999-2 Purchaser or Committed Series 1999-2 Purchaser shall
be required to purchase any Additional Invested Amounts unless the conditions to
such purchase contained in the Certificate Purchase Agreement (including,
without limitation, Section 2.2 thereof) have been satisfied.
(f) Each Series 1999-2 Certificateholder shall and is hereby
authorized to record on the grid attached to its Series 1999-2 Certificate (or
at such Series 1999-2 Certificateholder's option, in its internal books and
records) the date and amount of any Additional Invested Amount purchased by it,
and each repayment thereof; provided that failure to make any such recordation
on such grid or any error in such grid shall not adversely affect such Series
1999-2 Certificateholder's rights with respect to its Series 1999-2 Invested
Amount and its right to receive interest payments in respect of the Series
1999-2 Invested Amount held by such Series 1999-2 Certificateholder.
SECTION 4. SERIES 1999-2 CERTIFICATE RATE.
Principal amounts outstanding under the Series 1999-2
Certificate will bear interest at the applicable Series 1999-2 Certificate Rate.
SECTION 5. SERIES 1999-2 EVENTS OF TERMINATION.
Section 9.1 is modified by the addition of the following
clauses:
Section 9.1 is modified (as applicable solely to Series
1999-2) by the addition of the following provisions at the end thereof:
The following shall constitute additional Events of
Termination for Series 1999-2:
(a) The Series 1999-2 Allocated Receivables Amount shall be
less than the Series 1999-2 Target Receivables Amount for any period of five (5)
consecutive Business Days. If the additional Event of Termination occurs but
such deficiency in the Series 1999-2 Allocated Receivables Amount is cured
within five (5) Business Days after the five (5) Business Day period, the Series
1999-2 Early Amortization Period shall commence at the end of such additional
five Business Day period unless the Series 1999-2 Certificateholders evidencing
undivided interests aggregating 66 2/3% of the Series 1999-2 Invested Amount
agree in writing to waive such deficiency; provided, however, notwithstanding
the foregoing, an Event of Termination shall occur if declared in writing during
the five Business Days after the five (5) Business Days there was a deficiency
by Series 1999-2 Certificateholders evidencing undivided interests aggregating
more than 50% of the Series 1999-2 Invested Amount provided, further, that if
the deficiency in the Series 1999-2 Allocated Receivable Amount is not cured
within the five (5) Business Days after such five Business Day period, an Event
of Termination, shall automatically occur without any action taken by the Series
1999-2 Certificateholders.
(b) a Series 1999-2 Servicer Default shall have occurred; or
(c) any Event of Termination for any other Outstanding Series.
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<PAGE>
SECTION 6. REPURCHASE TERMS.
Pursuant to Article XII of the Agreement, the Series 1999-2
Certificate may be repurchased by the Transferor on any Payment Date upon the
satisfaction of the conditions described in Section 12.2(a) of the Agreement. In
connection with any such repurchase, the repurchase price shall be equal to the
Series 1999-2 Invested Amount plus accrued and unpaid interest through the day
preceding the Payment Date on which the repurchase occurs plus any other amounts
owing to the Series 1999-2 Certificateholders, the Certificate Agent or the
Commitment Providers.
SECTION 7. DELIVERY AND PAYMENT FOR THE SERIES 1999-2CERTIFICATE.
The Trustee shall deliver the Series 1999-2 Certificate to the
Transferor when authenticated upon the written direction of the Transferor.
SECTION 8. SPECIAL RULE ON TRANSFER AND EXCHANGE.
(a) Subject to Article XII of the Certificate Purchase
Agreement, the Series 1999-2 Certificate may not be subdivided for resale.
(b) Notwithstanding any other provision in this Supplement or
the Certificate Purchase Agreement, no Series 1999-2 Purchaser shall sell or
transfer all or any portion of its Series 1999-2 Certificateholders' Interest
(other than to another Series 1999-2 Purchaser) without the prior written notice
to the Rating Agencies and then only to a transferee that is rated "P-1" by
Moody's.
SECTION 9. ACCRUAL OF INTEREST ON THE SERIES 1999-2 CERTIFICATE.
Interest shall accrue on the Series 1999-2 Certificate from
the Issuance Date.
SECTION 10. DISTRIBUTIONS.
The Trustee shall send distributions to the Series 1999-2
Certificateholder under Section 5.1 of the Agreement to the Certificate Agent
for the benefit of the Commitment Providers or other parties entitled thereto
under the Certificate Purchase Agreement by 3:00 p.m. (Chicago time) on each
Payment Date or Reduction Date by wire transfer of immediately available funds
to an account or accounts designated by the Certificate Agent by written notice
to the Trustee and the Paying Agent given at least three Business Days prior to
such date (such notice to remain effective with respect to the Certificate Agent
until different instructions from the Certificate Agent are received by the
Trustee), or if no such notice is given, by check mailed as provided in Section
5.1 of the Agreement.
SECTION 11. RATIFICATION OF AGREEMENT
As supplemented by this Supplement, the Agreement is in all
respects ratified and confirmed and the Agreement as so supplemented by this
Supplement shall be read, taken, and construed as one and the same instrument.
SECTION 12. THE TRUSTEE.
The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this Supplement or for or in
respect of the Preliminary Statement contained herein, all of which recitals are
made solely by the Transferor.
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<PAGE>
SECTION 13. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR AND THE
SERVICER.
The Transferor and the Servicer hereby represent and warrant
to the Trustee and each of the Series 1999-2 Certificateholders and Committed
Series 1999-2 Purchasers that each and all of their respective representations
and warranties contained in the Agreement is true and correct in all material
respects as of the Issuance Date.
SECTION 14. COVENANTS OF THE TRANSFEROR.
The Transferor hereby agrees that:
(a) it shall observe each and all of its respective covenants
(both affirmative and negative) contained in the Agreement in all material
respects; and
(b) it shall not terminate the Agreement unless in strict
compliance with the terms of the Agreement.
SECTION 15. COVENANTS OF THE SERVICER.
The Servicer hereby agrees that it shall observe each and all
of its covenants (both affirmative and negative) contained in the Agreement in
all material respects.
SECTION 16. INSTRUCTIONS IN WRITING.
All instructions given by the Servicer to the Trustee pursuant
to this Supplement shall be in writing, and may be included in a Daily Report or
Settlement Statement.
SECTION 17. COUNTERPARTS.
This Supplement may be executed in any number of counterparts,
which may include facsimile counterparts, each of which so executed shall be
deemed to be an original, but all of such counterparts shall together constitute
but one and the same instrument.
SECTION 18. GOVERNING LAW.
THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS. FOR PURPOSES OF THE TAX CLASSIFICATION
OF THE TRUST AND THE TAX CHARACTERIZATION OF ANY CERTIFICATES ISSUED PURSUANT TO
THIS AGREEMENT, THE TRUST SHALL BE CONSTRUED AS ORGANIZED AND EXISTING UNDER THE
LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO ITS CONFLICT OF LAW PROVISIONS.
SECTION 19. MODIFICATIONS TO REMITTANCE PROCEDURES.
In lieu of the procedures for daily remittance of Collections
provided for in the Agreement, the Servicer may propose and adopt procedures for
the remittance of Collections on a less frequent basis, subject to the consent
of the Certificate Agent and all Commitment Providers and the obtaining of
written confirmation from each Rating Agency that the adoption of such
procedures will not result in the reduction or withdrawal of the then rating on
the Series 1999-2 Certificate.
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<PAGE>
SECTION 20. NOTICES.
Notices required to be given to the Series 1999-2
Certificateholders hereunder will be given by overnight courier or mailed by
registered mail, postage prepaid and return receipt requested, or transmitted by
facsimile transmission and confirmed by a similar mailed writing to the address
of such holders as they appear on the Certificate Register.
SECTION 21. CONSENTS AND NOTICES WITH RESPECT TO POOLING AGREEMENT.
The parties hereto agree that whenever any party is required
to deliver any notice, information or data to any Rating Agency pursuant to the
terms of the Pooling Agreement, a copy of such notice, information and data
shall concurrently be given to the Certificate Agent, and any action requiring,
under the terms of the Pooling Agreement, the prior written confirmation by any
Rating Agency that such action will not result in a reduction or withdrawal of
its rating on the Series 1999-2 Certificates shall also require the prior
written consent of the Certificate Agent on behalf of the Series 1999-2
Purchasers.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Series 1999-2 Supplement to be duly executed by their
respective officers thereunto duly authorized as of the date first above
written.
STONE RECEIVABLES CORPORATION,
as Transferor
By_________________________ Name:
Title:
STONE RECEIVABLES CORPORATION,
as Servicer
By_________________________
Name:
Title:
THE CHASE MANHATTAN BANK
as Trustee
By_________________________
Name:
Title:
<PAGE>
EXHIBIT A
TO SERIES 1999-2 INVESTOR CERTIFICATE
STONE RECEIVABLES CORPORATION
MASTER TRUST
FORM OF SERIES 1999-2 INVESTOR CERTIFICATE
Maximum Principal Amount:
$50,000,000.00
First Distribution Date: ______________, 1999
THE SERIES 1999-2 CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SERIES 1999-2 CERTIFICATE, AGREES THAT THIS SERIES 1999-2
CERTIFICATE MAY BE RESOLD, PLEDGED OR TRANSFERRED ONLY IN ACCORDANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS AND (1) IN AN AMOUNT OF AT LEAST U.S.
$5,000,000 AND (2)(A) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
UNDER THE ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OR FOR THE ACCOUNTS OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A OR (B) TO A PERSON WHO (i) IS AN INSTITUTIONAL ACCREDITED INVESTOR,
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
ACT, IS TAKING DELIVERY OF SUCH CERTIFICATE AND DELIVERS A PURCHASER LETTER TO
THE TRUSTEE IN THE FORM ATTACHED TO THE SERIES 1999-2 SUPPLEMENT OR (ii) IS
TAKING DELIVERY OF SUCH CERTIFICATE PURSUANT TO A TRANSACTION THAT IS OTHERWISE
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT, AS CONFIRMED IN AN OPINION
OF COUNSEL ADDRESSED TO THE TRUSTEE AND THE TRANSFEROR WHICH OPINION AND COUNSEL
ARE SATISFACTORY TO THE TRUSTEE AND THE TRANSFEROR.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF
A BENEFIT PLAN. AS USED HEREIN, "BENEFIT PLAN" SHALL MEAN ANY EMPLOYEE BENEFIT
PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF
ERISA, A PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF A PLAN'S INVESTMENT IN SUCH ENTITY. BY ACCEPTING AND HOLDING THIS
CERTIFICATE, THE HOLDER HEREOF REPRESENTS AND WARRANTS THAT IT IS NOT A BENEFIT
PLAN. BY ACQUIRING ANY INTEREST IN THIS CERTIFICATE, THE APPLICABLE CERTIFICATE
OWNER OR OWNERS SHALL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT OR
THEY ARE NOT BENEFIT PLANS.
THIS SERIES 1999-2 CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENT OR BY ANY OTHER PERSON.
Purchasers of this Series 1999-2 Certificate will be deemed to have
made certain representations and warranties set forth in the Certificate
Purchase Agreement.
This Series 1999-2 Certificate evidences a fractional undivided
interest in the assets of the
STONE RECEIVABLES CORPORATION MASTER TRUST
the corpus of which consists of receivables representing amounts payable for
goods or services, which receivables have been purchased by Stone Receivables
Corporation, a Delaware corporation, which in turn transferred and assigned such
receivables to the Stone Receivables Corporation Master Trust.
(Not an interest in or obligation of
1
<PAGE>
Stone Receivables Corporation, Stone Container Corporation
or any Affiliate thereof)
This certifies that
[NAME OF CERTIIFCATEHOLDER]
(the "Certificateholder") is the registered owner of an undivided interest in
certain assets of a trust (the "Trust"), created pursuant to the Pooling and
Servicing Agreement, dated as of October 1, 1999, as supplemented by the Series
1999-2 Supplement, dated as of October 15, 1999 and as further amended or
supplemented from time to time (collectively referred to herein as the
"Agreement") by and among Stone Receivables Corporation, a Delaware corporation,
as transferor (the "Transferor"), Stone Container Corporation, a Delaware
corporation, as Servicer (the "Servicer"), and The Chase Manhattan Bank, as
trustee (the "Trustee"). Although a summary of certain provisions of the
Agreement is set forth below, this Certificate does not purport to summarize the
Agreement and is qualified in its entirety by the terms and provisions of the
Agreement and any Supplement thereto. Reference is made to the Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Agreement may be requested from the Trustee by
writing to the Trustee at 450 West 33rd Street, 14th Floor, New York, New York
10001, Attention: Capital Markets Fiduciary Services. To the extent not defined
herein, capitalized terms used herein have the meanings ascribed to them in the
Agreement.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement as amended from
time to time, the Holder hereof by virtue of the acceptance hereof assents and
by which the Holder hereof is bound. In the event of a conflict between the
provisions of this Certificate and the Agreement, the terms of the Agreement
shall be controlling.
The corpus of the Trust consists of receivables (the
"Receivables") representing amounts payable for goods and services and all other
the Trust Assets referred to in the Agreement.
It is the intent of the Transferor, the Servicer, the Trustee,
the Investor Certificateholders and the holder of this Series 1999-2 Certificate
that, for federal, state and local income and franchise tax purposes, the
Investor Certificates and this Series 1999-2 Certificate will evidence
indebtedness secured by the Receivables. The Holder of this Certificate, by the
acceptance of this Certificate, agrees to treat this Certificate for federal,
state and local income and franchise tax purposes as evidence of indebtedness.
Subject to the terms of the Agreement, payments of principal
are limited to the unpaid Series 1999-2 Invested Amount, which may be less than
the unpaid balance of this Certificate pursuant to the terms of the Agreement.
All principal of and interest on this Certificate is due and payable no later
than November 15, 2005.
The Trust's assets are allocated in part to the Holder of the
Series 1999-2 Certificate with the remainder allocated to the Holders of the
Floating Rate Trade Receivables-Backed Certificates, Series 1999-1, Class A,
Class B and Class C, and the holders of any other Series of Investor
Certificates issued by the Trust after the date hereof and to the Transferor.
Certain assets may be for the benefit of only one or more Series. The Transferor
Certificate will represent the interest in the Trust not represented by the
Series 1999-2 Certificate, the Series 1999-1 Certificates or any other Series of
the Trust.
Principal and interest on this Series 1999-2 Certificate will
be payable as and to the extent provided in the Agreement and the Series 1999-2
Supplement.
The Holder of this Certificate, by the acceptance of this
Certificate, agrees that, prior to the date which is one year and one day after
the payment in full of all Invested Amounts, it will not institute against, or
join any other Person in instituting against, the Transferor any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the Bankruptcy Code.
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<PAGE>
This Series 1999-2 Certificate may be transferred or exchanged
only upon the satisfaction of the conditions set forth in Sections 6.3 and 6.9
of the Agreement as supplemented by the Series 1999-2 Supplement.
The Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar, and any agent of any of them, may treat the person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Servicer, nor the Trustee, the Paying Agent, the Transfer Agent and
Registrar, nor any agent of any of them shall be affected by notice to the
contrary except in certain circumstances described in the Agreement.
FINAL PAYMENT ON THIS CERTIFICATE MAY BE MADE WITHOUT DELIVERY
HEREOF TO THE TRUSTEE OR ANY PAYING AGENT. EACH HOLDER AND PROSPECTIVE HOLDER
HEREOF IS HEREBY PLACED ON NOTICE THAT THIS CERTIFICATE MAY REMAIN OUTSTANDING
ALTHOUGH FINAL PAYMENT HEREON HAS BEEN MADE. FINAL PAYMENT HEREON MAY, UNDER
CERTAIN CIRCUMSTANCES, BE MADE EARLIER THAN NOVEMBER 15, 2005.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS WITHOUT REFERENCE TO ITS CONFLICT
OF LAW PROVISIONS.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
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<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Series
1999-2 Certificate to be duly executed.
Dated: _____________, 1999
STONE RECEIVABLES CORPORATION,
By: ________________________
Title: _____________________
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<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Series 1999-2 Certificate described in the
within-mentioned Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK,
in its individual capacity but
solely as Trustee
By:_______________________ OR By:______________________
Authorized Signatory as Authenticating Agent for the
Trustee
By:___________________________________
Authorized Signatory
-5-
<PAGE>
PURCHASES AND REPAYMENT
<TABLE>
<CAPTION>
Principal Outstanding
Amount of Principal Invested
Amount Purchased Repurchase Made Balance Amount
- ---------------- ---------------- ------- ------
<S> <C> <C> <C>
</TABLE>
-6-
<PAGE>
EXHIBIT B
TO SERIES 1999-2 SUPPLEMENT
FORM OF INVESTMENT LETTER
The Chase Manhattan Bank
450 West 33rd Street
14th Floor
New York, New York 10001
Attention: Capital Markets Fiduciary Services,
Stone Receivables Corporation
Ladies and Gentlemen:
In connection with our proposed purchase of a one or more
Floating Rate Trade Receivables-Backed Certificates, Series 1999-2 (the "Series
1999-2 Certificates"), representing a fractional undivided interest in the Stone
Receivables Corporation Master Trust, issued under the Series 1999-2 Supplement,
dated as of October 15, 1999 (the "Supplement"), among Stone Receivables
Corporation, as Transferor, Stone Container Corporation, as Servicer and The
Chase Manhattan Bank, as Trustee, we confirm that:
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<PAGE>
1. We understand that the Series 1999-2 Certificate has not
been registered under the United States Securities Act of
1933, as amended (the "U.S. Securities Act"), and may not be
sold except as permitted in the following sentence. We agree,
on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that such Series 1999-2
Certificates (or an interest therein) may be resold, pledged
or transferred only (i) to the Transferor, (ii) if such Series
1999-2 Certificates are eligible for resale pursuant to Rule
144A under the U.S. Securities Act ("Rule 144A"), to a person
whom the transferor reasonably believes after due inquiry to
be a "qualified institutional buyer" as defined in Rule 144A
acting for its own account (and not for the account of others)
or as a fiduciary or agent for others (which others also are
"qualified institutional buyers") to whom notice is given that
the resale, pledge or transfer is being made in reliance on
Rule 144A, or (iii) in a sale, pledge or other transfer made
in a transaction otherwise exempt from the registration
requirements of the U.S. Securities Act, in which case (A) the
Trustee shall require that both the prospective transferor and
the prospective transferee certify to the Trustee and the
Transferor in writing the facts surrounding such transfer,
which certification shall be in form and substance
satisfactory to the Trustee and the Transferor, and (B) the
Trustee shall require a written opinion of counsel (which will
not be at the expense of the Transferor or the Trustee)
satisfactory to the Transferor and the Trustee to the effect
that such transfer will not violate the U.S. Securities Act,
in each case in accordance with any applicable securities laws
of any state of the United States. We will notify any
purchaser of the Series 1999-2 Certificates (or an interest
therein) from us of the above resale restrictions, if then
applicable. We further understand that in connection with any
transfer of the Series 1999-2 Certificates (or interest
therein) by us that the Transferor and the Trustee may
request, and if so requested we will furnish, such
certification and other information as they may reasonably
require to confirm that any such transfer complies with the
foregoing restrictions. We understand that no sale, pledge or
other transfer may be made to any one person for Series 1999-2
Certificates (or an interest therein) with a face amount of
less than $5,000,000 (or such other amount as the Transferor
may determine in order to prevent the Trust from being treated
as a "publicly traded partnership" under Section 7704 of the
United States Internal Revenue Code of 1986, as amended, but
in no event less than $500,000) and, in the case of any person
acting on behalf of one or more third parties (other than a
bank (as defined in Section 3(a)(2) of the U.S. Securities
Act) acting in its fiduciary capacity), for Series 1999-2
Certificates with a face amount of less than such amount for
each such third party. Any attempted transfer will be void ab
initio and the purported transferor will continue to be
treated as the owner of the Series 1999-2 Certificates for all
purposes.
2. We are a "qualified institutional buyer" as defined under
Rule 144A under the U.S. Securities Act and are acquiring the
Series 1999-2 Certificates (or an interest therein) for our
own account (and not for the account of others) or as a
fiduciary or agent for others (which others also are
"qualified institutional buyers"). We are familiar with Rule
144A under the U.S. Securities Act and are aware that the
transferor of the Series 1999-2 Certificates (or an interest
therein) and other
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parties intend to rely on the statements made herein and the
exemption from the registration requirements of the U.S.
Securities Act provided by Rule 144A.
3. You are entitled to rely upon this letter and you are
irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters
covered hereby.
Very truly yours,
(Name of Purchaser)
By:
Date:
-9-
<PAGE>
EXHIBIT 10.1(d)
================================================================================
STONE RECEIVABLES CORPORATION
AND
STONE CONTAINER CORPORATION,
as the Seller
---------------
RECEIVABLES PURCHASE AGREEMENT
----------------
Dated as of October 15, 1999
================================================================================
<PAGE>
RECEIVABLES PURCHASE AGREEMENT, dated as of October 15, 1999,
between Stone Container Corporation, a Delaware corporation (the "Seller") and
Stone Receivables Corporation, a Delaware corporation (the "Company" or the
"Purchaser").
W I T N E S S E T H :
WHEREAS, in the ordinary course of business, the Seller generates
receivables from the sale of corrugated containers from the Seller's container
division (the "Container Division") and from the sale of multi-wall bags,
consumer bags and intermediate bulk containers from the Seller's bag division
(the "Bag Division"); and
WHEREAS, the Seller desires to sell to the Company, and the
Company is willing to purchase from such Seller, all of such Seller's right,
title and interest in, to and under the receivables generated by the Container
Division and the Bag Division (the "Receivables") now existing or hereafter
created and the rights of such Seller in, to and under all Transferred Assets
(as so defined) related thereto;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. Capitalized terms used in this Agreement shall have
the respective meanings assigned to such terms in Annex X hereto unless
otherwise defined herein.
1.2 Terms Generally. The definitions of terms herein shall apply equally
to the singular and plural form of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation." The word "will" shall be
construed to have the same meaning and effect as the word "shall." Unless the
context requires otherwise (a) any definition of or reference to any agreement
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder," and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
subsections, Exhibits and Schedules shall be construed to refer to Articles and
subsections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
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1.3 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables. (a) The Seller hereby sells,
transfers, assigns and conveys, without recourse (except as expressly provided
herein), to the Purchaser, all its present and future right, title and interest
in, to and under:
(i) all Receivables reflected in the initial Daily Report provided on
the Closing Date and all such Receivables thereafter arising from time to
time until but not including the date an Early Termination occurs with
respect to the Seller;
(ii) the Related Security in respect of such Receivables;
(iii) all Collections in respect of such Receivables;
(iv) all rights (including rescission, replevin or reclamation, but
none of the obligations) relating to such Receivables or arising therefrom;
(v) all proceeds of or payments in respect of any and all of the
foregoing clauses (i) through (iv).
Such property described in the foregoing clauses (i) through (v) shall be
referred to herein as the "Transferred Assets." Subject to the terms and
conditions set forth herein, the Purchaser hereby agrees to purchase the
Transferred Assets of the Seller.
(b) On the date of creation of each newly created Receivable (but only
so long as no Early Termination shall have occurred and be continuing with
respect to such Seller), all of such Seller's right, title and interest in and
to, all such newly created Receivables and all other Transferred Assets in
respect of such Receivables shall be considered to be part of the assets that
have been sold, transferred, assigned, set over and otherwise conveyed to the
Purchaser pursuant to paragraph (a) above without any further action by any
Seller or any other Person. Anything herein to the contrary notwithstanding, to
the extent any Seller shall not have received payment from the Purchaser of the
Purchase Price for any Receivable and other related Transferred Assets in
accordance with the terms of subsection 2.3, such Receivable and Transferred
Assets shall, upon receipt by the Purchaser of notice from such Seller of such
failure to receive payment, immediately and automatically be sold, assigned,
transferred and reconveyed by the Purchaser to such Seller without any further
action by the Purchaser or any other Person.
(c) The parties to this Agreement intend that, for accounting and
commercial purposes, the transactions contemplated by this subsection 2.1 hereby
shall be, and shall be treated as, a purchase by the Purchaser and a sale by the
Seller of the Transferred Assets and not a lending transaction. All sales of
Receivables and other Transferred Assets by the Seller hereunder shall be
without recourse to, or representation or warranty of any kind (express or
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implied) by, the Seller, except as otherwise specifically provided herein. The
foregoing sale, assignment, transfer and conveyance does not constitute and is
not intended to result in the creation or assumption by the Purchaser of any
obligation of any Seller or any other Person in connection with the Receivables,
the other Transferred Assets or any agreement or instrument relating thereto,
including any obligation to any Obligor.
(d) In connection with the foregoing conveyances, the Seller agrees to
record and file, or cause to be recorded and filed, at its own expense,
financing statements (and continuation statements with respect to such financing
statements when applicable) with respect to the Receivables and the Transferred
Assets now existing and hereafter acquired pursuant to this Agreement by the
Purchaser from the Seller and in each case meeting the requirements of
applicable law in such manner and in such jurisdictions as are necessary to
perfect and maintain perfection of the Purchaser's purchase of such Receivables
and any other Transferred Assets and to deliver to the Trustee, a file-stamped
copy of such financing statement.
(e) In connection with the foregoing sales, transfers, assignments and
conveyances, the Seller agrees at its own expense, that it will, as agent of the
Purchaser indicate or cause to be indicated on the computer files (but not on
individual invoices or individual collection files) relating to the Receivables
of such Seller that, unless otherwise specifically identified on such screen,
list or print-out as a receivable not so sold, transferred, assigned and
conveyed, all Receivables included in such screen, list or print-out and all
other Transferred Assets (and any other similar related property) have been
sold, transferred, assigned and conveyed to the Purchaser in accordance with
this Agreement.
(f) As further confirmation of the sale of the Receivables, it is
understood and agreed that the Purchaser shall have the following rights:
(i) the Seller shall, upon the Purchaser's written request and at such
Seller's expense, (A) assemble all of such Seller's documents, instruments
and other records (including credit files and computer tapes or disks) that
(1) evidence or will evidence or record Receivables sold by the Seller and
(2) are otherwise necessary or desirable to effect Collections of such
Receivables (collectively, the "Documents") and (B) deliver the Documents
to the Purchaser or its designee at a place designated by the Purchaser. In
recognition of such Seller's need to have access to any Documents which may
be transferred to the Purchaser hereunder, whether as a result of its
continuing business relationship with any Obligor for Receivables purchased
hereunder, the Purchaser hereby grants to the Seller an irrevocable license
to access the Documents transferred by such Seller to the Purchaser and to
access any such transferred computer software in connection with any
activity arising in the ordinary course of such Seller's business; provided
that such Seller shall not disrupt or otherwise interfere with the
Purchaser's use of and access to the Documents and its computer software
during such license period; and
(ii) promptly upon written request of the Purchaser, after the
occurrence of a Servicer Default, the Seller will (A) deliver to the
Purchaser all licenses, rights, computer programs, related material,
computer tapes, disks, cassettes and data necessary for the immediate
collection of the Receivables by the Purchaser, with or
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without the participation of such Seller (excluding software licenses which
by their terms are not permitted to be so delivered; provided that such
Seller shall use reasonable efforts to obtain the consent of the relevant
licensor to such delivery) and (B) make such arrangements with respect to
the collection of the Receivables as may be reasonably required by the
Purchaser.
2.2 Purchase Price. The amount payable by the Company to the Seller (the
"Purchase Price") for Receivables and Transferred Assets existing on the
Processing Date with respect to the Seller and for newly created Receivables and
other Transferred Assets on any Purchase Date under this Agreement shall be
equal to the product of the Purchase Price Percentage and the Unpaid Balance of
Receivables transferred on such date.
2.3 Payment of Purchase Price. (a) Upon fulfillment of the conditions
set forth in Article III, the Purchase Price for Receivables and other
Transferred Assets shall be paid or provided for in the manner provided below on
each day for which a Daily Report is prepared and delivered to the Company (each
such day, a "Purchase Date"). The Company shall remit the Purchase Price to the
Seller.
(b) The "Purchase Price Percentage" shall mean a percentage figure that
shall be agreed upon from time to time (but no less frequently than once each
calendar quarter) by the Company and the Seller which reflects a fair market
discounted net present value of the Unpaid Balance of Receivables transferred to
the Company by the Seller, expressed as a percentage of such Unpaid Balance.
Such percentage may be greater or less than 100%. The calculation of such
discounted net present value shall take into account:
(i) the expected yield on the Receivables reduced by costs to the
Company of financing the Receivables and paying the Servicing Fee;
(ii) the expected losses on the Receivables (based upon historical
losses on the Receivables and such other factors as shall be agreed between
the Company and the Seller), net of the expected benefits to the Company
generated as a result of the Seller's obligation to pay Dilution
Adjustments and Repurchase Amounts to the Company pursuant to Sections 2.5
and 2.6;
(iii) a reasonable expected rate of return on capital of the Company
from its purchase of Receivables; and
(iv) such other factors as may be mutually agreed between the Company
and the Seller and as are customarily reflected in an arm's-length purchase
and sale of comparable receivables.
The Purchase Price Percentage shall be calculated prospectively with
respect to Receivables transferred on and after the date of such calculation. In
no event shall the Purchase Price Percentage (i) be adjusted retroactively to
account for the actual performance of previously purchased Receivables or for
the Company's actual rate of return on previously purchased Receivables or (ii)
be increased from and after the occurrence of, and during the continuation of
any Event of Termination or any event which would, upon the giving of notice or
the passage of time or both, constitute a Event of Termination.
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<PAGE>
(c) If, on any day, the Purchaser has insufficient funds to pay in full
the Purchase Price owed on such day, or if the Seller otherwise consents, the
Purchaser may pay all or part of the applicable Purchase Price to be made on
such day by borrowing under its Short-Term Note, substantially in the form of
Exhibit A and issued in favor of the Seller, and the Seller shall have
irrevocably agreed to advance, and shall be deemed to have advanced, a revolving
loan in the amount so specified by the Purchaser; provided, however, that the
Purchaser may not make payments of Purchase Prices through the use of such
revolving loans in excess of ten percent of the aggregate Unpaid Balance of
Eligible Receivables. Each such revolving loan shall be payable in accordance
with the terms and provisions of the Short-Term Note and this Agreement. The
Seller may evidence the making of each revolving loan by recording the date and
amount thereof on the grid attached to its Short Term Note; provided, that
failure to make any such recordation on such grid or any error in such grid
shall not adversely affect the Seller's rights to recover the outstanding unpaid
principal amount of the revolving loans made under its Short-Term Note.
(d) The Company shall be entitled to pay all amounts in respect of any
purchase. All payments under this Agreement (i) shall be made on the date
specified therefor in Dollars in same day funds or by check, as the Seller shall
elect, (ii) shall be made not later than 2:00 p.m (St. Louis City time) on the
date specified therefor and (iii) shall be made to the bank account for such
Seller designated in writing by the Seller to the Company.
(e) Whenever any payment to be made under this Agreement shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day. Amounts not paid when due in accordance with the
terms of this Agreement shall bear interest at a rate equal at all times to 2%
per annum above the Discount Rate in effect on the date such payment was due,
provided, however, that such interest shall not at any time exceed the maximum
rate permitted by applicable law.
2.4 No Repurchase. Except to the extent expressly set forth herein, the
Seller shall not have any right or obligation under this Agreement, by
implication or otherwise, to repurchase from the Company any Transferred Assets
or to rescind or otherwise retroactively effect any purchase of any Transferred
Assets after the Purchase Date relating thereto.
2.5 Rebates, Adjustments, Returns and Reductions, Modifications. From
time to time the Seller may apply Dilutive Credits to Receivables in accordance
with this subsection 2.5. The Seller agrees to pay to the Company the amount of
any such Dilutive Credit (a "Dilution Adjustment") as follows: (i) prior to an
Early Termination with respect to such Seller, the amount of any such Dilution
Adjustment shall be paid by (x) effectively netting the product of such Dilutive
Credit and the Purchase Price Percentage then in effect against the Purchase
Price of Receivables created after the grant of such Dilutive Credit in
accordance with subsection 2.3(b)(ii) and paying the remainder of such Dilution
Adjustment in cash on the first Settlement Date to occur after the grant of such
Dilutive Credit and (y) after an Early Termination with respect to such Seller,
the amount of any such Dilution Adjustment shall be paid in cash no later than
five Business Days after the grant of such Dilutive Credit. A "Dilutive Credit"
shall mean any rebate, administrative fee, discount, credit memo, refund,
non-cash payment or adjustment (including, without limitation, as a result of
the application of any special or other discounts or any reconciliations) in
respect of any Receivable, the amount owing for any returns or
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cancellations and the amount of any other reduction of any payment under any
Receivable in each case granted or made by the Seller to the related Obligor;
provided that a "Dilutive Credit" does not include any Defaulted Receivables.
The amount of any Dilutive Credit shall be set forth on the first Daily Report
prepared after the date the Dilutive Credit is first recorded on the computer
records of the Servicer, which for purposes of this subsection 2.5 shall
constitute the date of "grant" thereof. The Seller agrees to promptly record
Dilutive Credits in accordance with its historical practices.
2.6 Limited Repurchase Obligation. In the event that any of the
representations or warranties contained in subsection 4.2 in respect of any
Receivable shall be or have been incorrect in any material respect as of the
date made or deemed made, or any Receivable shall become subject to any defense,
dispute, offset or counterclaim of any kind (other than as expressly permitted
by this Agreement) or the Seller shall breach any covenant contained in
subsection 5.2, 5.10, 5.14 5.15 or Article VI with respect to any Receivable
(each of the foregoing events or circumstances, a "Repurchase Event"), such
Receivable shall cease to be an Eligible Receivable on the date on which such
Repurchase Event occurs. In addition, if any Repurchase Event shall occur with
respect to any Receivable, then the Seller agrees to pay to the Company an
amount (the "Repurchase Amount") in cash equal to the Purchase Price of such
Receivable (whether the Company paid such Purchase Price in cash or otherwise)
less Collections received by the Company in respect of such Receivable,
regardless of which Seller shall have been responsible for such Repurchase
Event, such payment to occur no later than the 30th day after the day such
Repurchase Event becomes known (or should have become known with due diligence)
to the Seller (except that if such day is not a Business Day, such payment shall
be made on the Business Day immediately succeeding such day) unless such
Repurchase Event shall have been cured on or before such day; provided that,
prior to the occurrence of an Early Termination with respect to such Seller, any
such payments to the Company shall be netted against the Purchase Price of newly
created Receivables in accordance with subsection 2.3(b)(ii) to the extent of
such Purchase Price and the remaining amount of such Seller Repurchase Payment
due to the Company after such netting, if any, shall be paid to the Company on
such date in cash. Any payment by the Seller pursuant to this subsection 2.6 is
referred to as a "Seller Repurchase Payment." If, on or prior to such 30th day
(or the Business Day immediately succeeding such 30th day, as applicable), the
Seller shall so reacquire any such Receivable, then the Company shall have no
further remedy against the Seller in respect of the Repurchase Event with
respect to such reacquired Receivable. Upon a Seller Repurchase Payment, the
Company shall automatically and without further action be deemed to sell,
transfer, assign, set over and otherwise convey to the Seller, without recourse,
representation or warranty, all the right, title and interest of the Company in,
to and under such Receivable and the other Transferred Assets with respect
thereto. The Company shall execute such documents and instruments of transfer or
assignment and take such other actions as shall reasonably be requested by such
Seller to effect the conveyance of such Receivable pursuant to this subsection
2.6.
2.7 Obligations Unaffected. The obligations of the Seller to the Company
under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Receivable or any sale of a Receivable.
2.8 Certain Charges. The Seller and the Company agrees that late charge
revenue, reversals of discounts, other fees and charges and other similar items,
whenever created,
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accrued in respect of Purchased Receivables shall be the property of the Company
notwithstanding the occurrence of an Early Termination, and all Collections with
respect thereto shall continue to be allocated and treated as Collections in
respect of Transferred Receivables.
2.9 Certain Allocations. The Seller hereby agrees that, following the
occurrence of an Early Termination in respect of any Seller, all Collections and
other proceeds received in respect of Receivables generated by such Seller shall
be applied first, to pay the outstanding Unpaid Balance of Receivables sold to
the Company (as of the date of such Early Termination) of the Obligor to whom
such Collections are attributable until such Receivables are paid in full and
second to such Seller to pay Receivables of such Obligor not sold to the
Company; provided, however that notwithstanding the foregoing, if the Seller can
attribute a Collection to a specific Obligor and a specific Receivable, then
such Collection shall be applied to pay such Receivable of such Obligor.
ARTICLE III
CONDITIONS TO PURCHASE AND SALE
3.1 Conditions Precedent to the Company's Initial Purchase of
Receivables. The obligation of the Company to purchase the Receivables and the
other Transferred Assets hereunder on the Initial Closing Date from the Seller
is subject to the conditions precedent, which may be waived by the Company, that
(a) each of the Transaction Documents shall be in full force and effect and (b)
the conditions set forth below shall have been satisfied on or before the
Initial Closing Date:
(i) the Company shall have received copies of duly adopted resolutions
of the board of directors of the Seller as in effect on the Initial Closing
Date and in form and substance reasonably satisfactory to the Company,
authorizing this Agreement, the documents to be delivered by such Seller
hereunder and the transactions contemplated hereby, certified by the
Secretary or Assistant Secretary of such Seller;
(ii) the Company shall have received duly executed certificates of the
Secretary or an Assistant Secretary of the Seller, dated the Initial
Closing Date and in form and substance reasonably satisfactory to the
Company, certifying the names and true signatures of the officers (or such
other person) authorized on behalf of such Seller to sign this Agreement
and any instruments or documents in connection with this Agreement (on
which certificates the Company may conclusively rely until such time as the
Company shall receive from such Seller a revised certificate with respect
to such Seller meeting the requirements of this subsection (ii));
(iii) the Company shall have received a "short-form" good standing
certificate with respect to the Seller;
(iv) the Seller shall have filed and recorded, at its own expense,
UCC-1 financing statements (and other similar instruments) with respect to
the Receivables and the other Transferred Assets in such manner and in such
jurisdictions as are necessary or desirable to perfect the Company's
ownership interest thereof under the Uniform
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Commercial Code (or any other similar law), and all other action necessary,
in the reasonable judgment of the Company, to perfect the Company's
ownership of the Receivables and the other Transferred Assets shall have
been duly taken;
(v) the Company shall have received a certificate from the Seller,
dated the Initial Closing Date and signed by one of its Responsible
Officers, in form satisfactory to the Company, confirming compliance with
the conditions precedent set forth in this subsection 3.1 and stating that
the information systems utilized by the Seller to process the Receivables
are able to perform date sensitive functions on and after January 1, 2000;
and
(vi) the Company shall have received certified copies of the
certificate of incorporation and bylaws of the Seller.
The Company may only purchase the Receivables and other Transferred
Assets on the Initial Closing Date if, as of such date the Company has a minimum
amount of equity equal to the sum of: (i) the product of the Net Eligible
Receivables and the Loss Reserve Ratio for the "BBB" rated Certificates; (ii)
the amount in excess of the Concentration Limit for the top three Obligors in
the trust pool; and (iii) the dollar amount of Receivables in the trust pool 151
days or more past the invoice date.
3.2 Conditions Precedent to All the Company's Purchases of Receivables.
The obligation of the Company to pay a Seller for any Receivable and other
Transferred Assets with respect thereto on each Purchase Date shall be subject
to the further conditions precedent, which may be waived by the Company, that on
such Purchase Date:
(a) the following statements shall be true (and the acceptance by such
Seller of the Purchase Price for any Receivables on any Purchase Date shall
constitute a representation and warranty by such Seller that on such Purchase
Date the statements in clauses (i) and (ii) below are true):
(i) the representations and warranties of such Seller contained in
subsections 4.1 and 4.2 shall be true and correct in all material respects
on and as of such Purchase Date as though made on and as of such date,
except insofar as such representations and warranties are expressly made
only as of another date (in which case they shall be true and correct in
all material respects as of such other date); and
(ii) after giving effect to such purchase, no Purchase Termination
Event of the type specified in paragraph (e), (g) or (h) of Article VII
with respect to such Seller shall have occurred and be continuing.
(b) the Company shall have received payment in full of all amounts for
which payment is due from such Seller pursuant to subsection 2.5, 2.6 or 8.3;
(c) the Company shall have received such other approvals, opinions or
documents as the Company may reasonably request; and
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(d) such Seller shall have complied with all of its covenants in all
material respects and satisfied all of its obligations in all material respects
under this Agreement required to be complied with or satisfied as of such date;
provided, however, that the failure of any Seller to satisfy any of the
foregoing conditions shall not prevent such Seller from subsequently selling
Receivables upon satisfaction of all such conditions or exercising its rights
under subsection 2.1(b).
The acceptance of the Purchase Price for any Receivable and other Transferred
Assets on each Purchase Date by each Seller shall constitute a representation
and warranty by such Seller that the conditions to the sale thereof on such
Purchase Date shall have been satisfied.
3.3 Conditions Precedent to the Addition of a Seller. No Subsidiary or
Affiliate of Stone Container Corporation approved by the Company as an
additional Seller pursuant to subsection 8.14 shall be added as a Seller
hereunder unless the conditions set forth below shall have been satisfied on or
before the date designated for the addition of such Seller (the "Seller Addition
Date"):
(i) the Company shall have received a receivables sale agreement to
substantially the same effect as this Agreement, duly executed and
delivered by such Seller;
(ii) the Company shall have received copies of duly adopted
resolutions of the board of directors of such Seller as in effect on the
related Seller Addition Date and in form and substance reasonably
satisfactory to the Company, authorizing this Agreement, the documents to
be delivered by such Seller hereunder and the transactions contemplated
hereby, certified by the Secretary or an Assistant Secretary of such
Seller;
(iii) the Company shall have received the certificate or articles of
incorporation and by-laws of such Seller, duly certified by the Secretary
or an Assistant Secretary of such Seller;
(iv) the Company shall have received a "short-form" good standing
certificate with respect to each Seller;
(v) the Company shall have received duly executed certificates of the
Secretary or an Assistant Secretary of such Seller dated the related Seller
Addition Date and in form and substance reasonably satisfactory to the
Company, certifying the names and true signatures of the officers
authorized on behalf of such Seller to sign the Additional Seller
Supplement or any instruments or documents in connection with this
Agreement (on which certificates the Company may conclusively rely until
such time as the Company shall receive from such Seller a revised
certificate with respect to such Seller meeting the requirements of this
subsection (v));
(vi) such Seller shall have filed and recorded, at its own expense,
UCC-1 financing statements (and other similar instruments) with respect to
the Receivables and the other Transferred Assets in such manner and in such
jurisdictions as
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are necessary or desirable to perfect the Company's ownership interest
thereof under the Uniform Commercial Code (or any other similar law), and
all other action necessary, in the opinion of the Company, to perfect the
Company's ownership of the Receivables and the other Transferred Assets
shall have been duly taken;
(vii) the Company shall have received a certificate from each Seller,
dated the Seller Addition Date and signed by one of its Responsible
Officers, in form satisfactory to the Company, confirming compliance with
the conditions precedent set forth in this subsection 3.3;
(viii) the Company shall have received written confirmation from the
Rating Agencies that the addition of the Seller will not result in a
downgrade or withdrawal of the current ratings on the outstanding
Certificates and consent from each Agent which shall not be unreasonably
withheld; provided, however, three Sellers may be added annually without
obtaining written confirmation from the Rating Agencies if (a) the added
Sellers are in the same line of business as the current Sellers; (b) the
Eligible Receivables of each added Seller do not represent more than five
percent of the current Net Eligible Receivables; and (c) the reserves for
losses and dilutions are restated before each Seller is added to include
the historical performance of the Receivables contributed by the added
Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Seller Relating to the Seller.
Each Seller hereby represents and warrants to the Company on the Initial Closing
Date and on each Purchase Date that:
(a) Organization, Corporate Powers. It is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite corporate power and authority to carry on its
business as now conducted and, except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required and has the corporate
power and authority to execute, deliver and perform each of the Transaction
Documents and each agreement or instrument contemplated hereby or thereby to
which it is or will be a party.
(b) Authorization. The transactions contemplated herein are within its
corporate powers and has been duly authorized by all requisite corporate and, if
required, stockholder action.
(c) Enforceability. Each of this Agreement and the other Transaction
Documents to which it is a party has been duly executed and delivered by it and
constitutes a legal, valid and binding obligation of it enforceable against it
in accordance with its terms, except as enforceability may be
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limited by bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting creditors' rights generally and except as enforceability may be
limited by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(d) Governmental Approvals; No Conflicts. The execution, delivery and
performance by it of this Agreement and each of the other Transaction Documents
to which it is a party, the sale of Receivables by it hereunder and the
consummation of the other transactions contemplated by any of the foregoing (a)
do not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect, (b) will not violate any applicable
law or regulation or the charter, by-laws or other organizational documents of
it or any order of any Governmental Authority, (c) will not violate or result in
a default under any indenture, agreement or other instrument binding upon such
Seller or its assets, or give rise to a right thereunder to require any payment
to be made by such Seller, and (d) will not result in the creation or imposition
of any Lien on any asset of such Seller.
(e) Litigation; Compliance with Laws. There are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to its knowledge, threatened against or affecting such Seller (i)
that could reasonably be expected, individually or in the aggregate, to result
in a Material Adverse Effect or (ii) that involve this Agreement or the
transactions contemplated herein.
(f) Compliance with Laws and Agreements. It is in compliance with all
laws, regulations and orders of any Governmental Authority applicable to it or
its property and all indentures, agreements and other instruments binding upon
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(g) Taxes. It has timely filed or caused to be filed all federal, state
and local tax returns which are required to have been filed and has paid or
caused to be paid all taxes required to have been paid by it, except (i) taxes
that are being contested in good faith by appropriate proceedings and for which
it has set aside on its books adequate reserves or (ii) to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
(h) Accuracy and Completeness of Information. It has disclosed to the
Company all agreements, instruments and corporate or other restrictions to which
it is subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
(i) Employee Benefit Plans. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.
(j) Absence of Certain Restrictions. No indenture, certificate of
designation for preferred stock, agreement or other instrument to which it or
any of its Subsidiaries is a party
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will prohibit or materially restrain, or have the effect of prohibiting or
materially restraining, or imposing materially adverse conditions upon, the sale
and assignment of Transferred Assets.
(k) Lock-box Accounts. Set forth in Schedule 2 is a complete and
accurate description as of the Initial Closing Date of each Lock-box Account
currently maintained by such Seller. Such Lock-box Account will only be used for
the collection of Receivables. The Seller has instructed all Obligors on the
Receivables to be sold or contributed by it hereunder to submit all payments on
the Receivables and Related Assets directly to one of the Lock-box Accounts.
(l) Filings. All filings and other acts (including but not limited to
all filings and other acts necessary or advisable under the Uniform Commercial
Code of each relevant jurisdiction) shall have been made or performed such that
the Company has a first priority perfected ownership interest in respect of all
Receivables.
(m) Offices. The offices at which the Seller keeps its records
concerning the Receivables are located at the addresses specified on Schedule 1
or have been reported to the Company in accordance with the provisions of
subsection 5.7 of this Agreement. The chief executive office and principal place
of business of such Seller is located at the address set forth on Schedule 1 (as
such location may be changed from time to time in accordance with subsection 5.7
of this Agreement) and has not changed in the past four months. The Seller is
duly qualified to do business in each state set forth opposite its name on
Schedule 1 hereto and is not qualified to do business in any other state.
(n) Investment Company Act. It is not controlled by or is not an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended.
(o) Bulk Sales Act. No transaction contemplated hereby with respect to
any Seller requires compliance with, or will be subject to avoidance under, any
bulk sales act or similar law.
(p) Names. The legal name of the Seller is as set forth on Schedule 3 to
this Agreement. During the past five years, it has no trade names, fictitious
names, assumed names "doing business as" names, or any other names under which
it has done or is doing business.
(q) No Purchase Termination Event. As of the Initial Closing Date, no
Purchase Termination Event or with respect to such Seller has occurred and is
continuing.
(r) No Fraudulent Transfer. Such Seller is not entering into this
Agreement with the intent (whether actual or constructive) to hinder, delay, or
defraud its present or future creditors and is receiving reasonably equivalent
value and fair consideration for the Receivables originated by it being
transferred hereunder.
4.2 Representations and Warranties of the Seller Relating to the
Agreement and the Receivables. The Seller hereby represents and warrants to the
Company on the Initial Closing Date and on each Purchase Date that with respect
to the Receivables being sold as of such date:
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(a) Eligible Receivable. Other than with respect to Receivables which
such Seller states in writing (in the applicable Daily Report) are not Eligible
Receivables on such date, each Receivable is, as of its Purchase Date, an
Eligible Receivable.
(b) Title; No Liens. Such Seller is the sole legal and beneficial owner
of such Receivables, and upon the sale of each Receivable of such Seller, the
Company will become the sole legal and beneficial owner of such Receivable, free
and clear of any Liens (except for Permitted Liens) and no effective financing
statement or other instrument similar in effect covering all or any part of such
Receivable or Related Security with respect thereto will at such time be on file
against such Seller in any filing or recording office except such as have been
filed in favor of the Company in accordance with this Agreement.
4.3 Representations and Warranties of the Company. The Company hereby
represents and warrants to itself as follows:
(a) Organization, Corporate Powers. It is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite corporate power and authority to carry on its
business as now conducted and, except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required and has the corporate
power and authority to execute, deliver and perform each of the Transaction
Documents and each other agreement or instrument contemplated hereby or thereby
to which it is or will be a party.
(b) Authorization. The transactions contemplated herein are within the
corporate powers of the Company and have been duly authorized by all requisite
corporate and, if required, stockholder action.
(c) Enforceability. Each of this Agreement and each of the other
Transaction Documents to which it is a party has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights generally and
except as enforceability may be limited by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(d) Governmental Approvals; No Conflicts. The execution, delivery and
performance by it of this Agreement and each of the other Transaction Documents
to which it is a party, the sale of Receivables by it hereunder and the
consummation of the other transactions contemplated by any of the foregoing (a)
do not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect, (b) will not violate any applicable
law or regulation or the charter, by-laws or other organizational documents of
it or any order of any Governmental Authority, (c) will not violate or result in
a default under any indenture, agreement or other instrument binding upon the
Company or its assets, or give rise to a right thereunder to require any payment
to be made by the Company, and (d) will not result in the creation or imposition
of any Lien on any asset of the Company.
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ARTICLE V
AFFIRMATIVE COVENANTS
The Seller hereby agrees that, so long as there are any amounts
outstanding with respect to Receivables previously sold by such Seller to the
Company or until an Early Termination with respect to such Seller, whichever is
later, such Seller shall:
5.1 Certificates, Other Information. Furnish to the Company:
(a) not later than 90 days after the end of each fiscal year and not
later than 45 days after the end of each of the first three fiscal quarters of
each fiscal year, a certificate of a Responsible Officer of the Seller stating
that, to such officer's knowledge (after due inquiry), such Seller during such
period has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in the Transaction Documents to which it is
a party to be observed, performed or satisfied by it, and that such officer has
obtained no knowledge of any Purchase Termination Event except as specified in
such certificate; and
(b) promptly, such additional financial and other information as the
Company may from time to time reasonably request.
5.2 Compliance with Laws, etc. Comply in all material respects with its
certificate of incorporation and by-laws and all laws, rules, regulations and
orders of any Governmental Authority, whether now in effect or hereafter
enacted, applicable to the Receivables, except to the extent that failure to
comply therewith could not have a Material Adverse Effect. The Seller will
comply, in all material respects, with its obligations under contracts with
Obligors relating to the Receivables, except to the extent such compliance would
result in a violation of the laws, rules, regulations or orders of any
Governmental Authority.
5.3 Preservation of Corporate Existence. (i) Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation and (ii) qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the nature of its business so
requires, except where the failure so to qualify would not, individually or in
the aggregate with other such failures, have a Material Adverse Effect shall be
given; provide that notwithstanding the foregoing, any Seller may be
consolidated or merged with or into or dissolved into any other Seller so long
as written notice of such consolidation or merger shall be given to the Company
at least one day prior to the date thereof.
5.4 Preservation of Separate Existence. Take all actions reasonably
required to maintain the Company's status as a separate legal entity, including,
without limitation, (i) not misleading third parties as to the Company's
identity as an entity with assets and liabilities distinct from the Seller and
Seller's other Subsidiaries or Affiliates; (ii) not holding itself out to be
responsible for the debts or decisions or actions relating to the business and
affairs of the Company; (iii) taking such other actions as are necessary on its
part to ensure that the covenants made by the Company in Section 2.10 of the
Pooling and Servicing Agreement are true and correct at all times; and (iv)
taking such other actions as are necessary on its part to ensure that
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the Company's corporate procedures required by its certificate of incorporation
and by-laws are duly and validly taken.
5.5 Visitation Rights. At any reasonable time during normal business
hours and from time to time, in each case upon reasonable notice to such Seller
permit (i) the Company or any of its respective agents or representatives to
examine and make copies of and abstracts from the records, books of account and
documents (including computer tapes and disks) of the Seller relating to the
Receivables hereunder and (ii) the Company or any of its respective agents or
representatives, to visit the properties of such Seller for the purpose of
examining such records, books of account and documents, and to discuss the
affairs, finances and accounts of such Seller relating to the Receivables or
such Seller's performance hereunder with any of its officers or directors and
with its independent certified public accountants (subject to any requirements
of confidentiality imposed by law or contract).
5.6 Keeping of Records and Books of Account. Maintain and implement, or
cause to be maintained or implemented, administrative and operating procedures
reasonably necessary or advisable for the collection of amounts owing on all
Receivables, and, until any delivery to the Company, keep and maintain, or cause
to be kept and maintained, all documents, books, records and other information
reasonably necessary or advisable for the collection of amounts owing on all
such Receivables and other Transferred Assets with respect thereto.
5.7 Location of Records. Keep its principal place of business and chief
executive office at the locations referred to for it on Schedule 1 hereto and
keep the offices where it keeps the records concerning the Receivables (and all
original documents relating thereto) at the locations referred to in subsection
4.1 (m) or, upon 30 days prior written notice to the Company, at such other
locations in a jurisdiction where all action required by subsection 5.16(a)
shall have been taken and completed and be in full force and effect
5.8 Computer Files. At its own cost and expense, retain the ledger used
by such Seller as a master record of the Obligors and retain copies of all
documents relating to each Obligor as custodian and agent for the Company and
other Persons with interests in the Receivables and mark the computer tape or
other physical records of the Receivables (other than individual invoices or
individual collection files) to the effect that interests in the Receivables
existing with respect to the Obligors listed thereon have been sold to the
Company.
5.9 Payment of and Compliance with Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all its obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on its books or except where the failure to so pay, discharge or
otherwise satisfy such obligations would not have a Material Adverse Effect in
respect of such Seller. Such Seller shall defend the right, title and interest
of the Company in, to and under the Receivables originated by it and the other
Transferred Assets, whether now existing or hereafter created, against all
claims of third parties claiming through such Seller. Such Seller will duly
fulfill all obligations on its part to be fulfilled under or in connection with
each Receivable originated by it and will do nothing to impair the rights of the
Company in such Receivable.
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5.10 Policies. Perform its obligations in accordance with and comply in
all material respects with the Credit and Collection Policies as amended from
time to time in accordance with the Transaction Documents, in regard to the
Receivables originated by it and the other Transferred Assets.
5.11 Taxes. Pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property, before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such properties or
any part thereof, provided, however that such payment and discharge shall not be
required with respect to any such tax, assessment, charge, levy or claim so long
as (i) the validity or amount thereof shall be contested in good faith by
appropriate proceedings and such Seller shall set aside on its books adequate
reserves as required by GAAP with respect thereto, (ii) such tax, assessment,
charge, levy or claim is in respect of property taxes for property that such
Seller has determined to abandon and the sole recourse for such tax, assessment,
charge, levy or claim is to such property and (iii) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
5.12 Collections. Instruct each Obligor to make payments in respect of
its Receivables in accordance with its current practices with respect to such
Obligor to the Lock-box Account and to comply in all material respects with
procedures with respect to Collections reasonably specified from time to time by
the Company. With respect to payments in respect of any Receivables that are
made directly to such Seller (including, without limitation, any employees
thereof or independent contractors employed thereby), such Seller shall promptly
deliver (which may be via regular mail) or deposit such amount to the Lock-box
Account and, prior to forwarding such amounts, such Seller shall hold such
payments in trust as custodian for the Company.
5.13 Furnishing Copies, etc. Furnish to the Company:
(a) within five Business Days after the Company's request, a certificate
of a Responsible Officer of such Seller certifying, as of the date thereof, to
the knowledge of such officer, that no Purchase Termination Event has occurred
and is continuing, and setting forth the computations used by the Financial
Officer of such Seller in making such determination or if one has so occurred
specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto;
(b) promptly upon obtaining knowledge of the occurrence of any Purchase
Termination Event or potential Purchase Termination Event written notice thereof
specifying the nature and extent thereof and the corrective action (if any)
proposed to be taken with respect thereto;
(c) promptly following request therefor, such other information,
documents, records or reports regarding or with respect to the Receivables of
the applicable Seller, as the Company may from time to time reasonably request;
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(d) promptly upon obtaining knowledge of the occurrence thereof, written
notice of any event of default or default under any other Transaction Document;
and
(e) promptly upon obtaining knowledge of the occurrence thereof, written
notice of any development that has resulted in, or could reasonably be expected
to result in, a Material Adverse Effect; and
(f) promptly upon determining that any Receivable designated as an
Eligible Receivable on the applicable Daily Report or Settlement Statement was
not an Eligible Receivable as of the date provided therefor, written notice of
such determination.
5.14 Obligations with Respect to Obligors and Receivables. (i) Take all
actions on its part reasonably necessary to maintain in full force and effect
its material rights under all contracts relating to each Receivable originated
by it, and (ii) perform all services relating to, or which give rise to, each
Receivable originated by it.
5.15 Responsibilities of the Sellers. Notwithstanding anything herein to
the contrary, (i) the Seller shall perform or cause to be performed all its
obligations under the Credit and Collection Policies related to the Receivables
to the same extent as if such Receivables had not been transferred to the
Company hereunder, (ii) the exercise by the Company of any of its rights
hereunder shall not relieve any Seller of its obligations with respect to such
Receivables and (iii) except as provided by law, the Company shall not have any
obligation or liability with respect to any Receivables, nor shall the Company
be obligated to perform any of the obligations or duties of any Seller
thereunder.
5.16 Further Action. In addition to the foregoing:
(a) The Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable in such Seller's reasonable
judgment or that the Company may reasonably request, in order to more fully
effect the purposes of this Agreement and the transfer of the Receivables
hereunder, to protect or more fully evidence the Company's right, title and
interest in the Receivables, or to enable the Company to exercise or enforce any
of its rights in respect thereof.
(b) The Seller hereby irrevocably authorizes the Company to file one or
more financing or continuation statements (and other similar instruments), and
amendments thereto, relative to all or any part of the Receivables and the other
Transferred Assets sold or to be sold by such Seller without the signature of
such Seller to the extent permitted by applicable law.
(c) If any Seller fails to perform any of its agreements or obligations
under this Agreement, the Company may (but shall not be required to) perform, or
cause performance of, such agreements or obligations, and the expenses of the
Company incurred in connection therewith shall be payable by such Seller as
provided in subsection 9.3. The Company agrees promptly to notify such Seller
after any such performance; provided however that the failure to give such
notice shall not affect the validity of any such performance.
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5.17 Sale of Receivables. Sell Receivables solely in accordance with the
terms of this Agreement.
ARTICLE VI
NEGATIVE COVENANTS
The Seller hereby agrees that, so long as there are any amounts
outstanding with respect to Receivables previously sold by such Seller to the
Company or until an Early Termination with respect to such Seller, whichever is
later, such Seller shall not, directly or indirectly:
6.1 Liens. Except as otherwise expressly herein provided, sell, assign
(by operation of law or otherwise), transfer or otherwise dispose of, or create
or suffer to exist any Lien upon or with respect to, any Receivables or other
Transferred Assets, or assign any right to receive proceeds in respect thereof
except for Permitted Liens.
6.2 Ineligible Receivables. Take any action to cause, or which would
permit, an Eligible Receivable to cease to be an Eligible Receivable, except as
otherwise expressly provided by this Agreement; provided that in no event shall
an Eligible Receivable becoming a Defaulted Receivable constitute a breach of
this subsection 6.2.
6.3 Change in Payment Instructions to Obligors. Instruct any Obligor of
any Purchased Receivables to make any payments with respect to any Receivables
other than in accordance with its current practices with respect to such Obligor
or to the Lock-box Account.
6.4 Changes in Name. Change its name, use an additional name or change
its identity or corporate structure in any manner which would or might make any
financing statement or continuation statement (or other similar instrument)
relating to this Agreement seriously misleading within the meaning of Section
9-402(7) of the Uniform Commercial Code (or any other similar law) or impair the
perfection of the Company's interest in any Receivable under any similar law,
without 30 days prior written notice to the Company and it takes all actions
required by subsection 5.16(a); provided that notwithstanding the foregoing, any
Seller may be consolidated or merged with or into or dissolved into any other
Seller so long as written notice of such consolidation or merger shall be given
to the Company at least one day prior to the date thereof.
6.5 Policies. Make any change or modification (or permit any change or
modification to be made) to the Credit and Collection Policies, except (i) if
such changes or modifications are necessary under any Requirement of Law or (ii)
if such changes or modifications would not reasonably be likely to have a
Material Adverse Effect.
6.6 Modification of Ledger. Delete or otherwise modify the marking on
the ledger referred to in subsection 5.8.
6.7 Accounting of Purchases. Prepare any financial statements which
shall account for the transactions contemplated hereby in any manner other than
as sales of the Receivables by such Seller to the Company or in any other
respect account for or treat the
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transactions contemplated hereby (including for accounting purposes, except as
required by law) in any manner other than as sales of the Receivables by such
Seller to the Company; provided however that this subsection shall not apply for
any tax or tax accounting purposes.
6.8 Instruments. Take any action to cause any Receivable to be evidenced
by any instrument (as defined in the Uniform Commercial Code as in effect in the
State of Missouri) except in connection with the enforcement or collection of a
Receivable.
ARTICLE VII
PURCHASE TERMINATION EVENTS
If any of the following events (herein called "Purchase Termination
Events") shall have occurred and be continuing:
(a) the Seller shall fail (i) to pay any amount due pursuant to
subsection 2.5, 2.6 or 8.3 in accordance with the provisions thereof and such
failure shall continue unremedied for a period of five days from the earlier of
(A) the date any officer of such Seller obtains knowledge of such default and
(B) the date such Seller receives notice of such default from the Company or
(ii) to pay any other amount required to be paid by such Seller hereunder within
five Business Days of the date when due; or
(b) the Seller shall fail to observe or perform any covenant or
agreement applicable to it contained in subsection 5.2. 5.7, 5.8, 5.13(b), 5.14
or 5.16(a) or Article VI; provided that a Purchase Termination Event shall not
be deemed to have occurred under this paragraph (b) based upon a failure to
observe a covenant giving rise to a Repurchase Event if the Seller shall have
complied with the provisions of subsection 2.6 in respect thereof; or
(c) the Seller shall fail to observe or perform any covenant or
agreement applicable to it contained herein (other than as specified in
paragraph (a) or (b) of this Article VII); provided that no such failure shall
constitute a Purchase Termination Event under this paragraph (c) unless such
default shall continue unremedied for a period of 60 consecutive days from the
earlier of (A) the date any Responsible Officer of such Seller obtains knowledge
of such default and (B) the date such Seller receives notice of such default
from the Company; or
(d) any representation, warranty, certification or statement made or
deemed made by the Seller to this Agreement or in any statement, record,
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been false or misleading in any material respect
on or as of the date made or deemed made; provided that a Purchase Termination
Event shall not be deemed to have occurred under this paragraph (d) based upon a
breach of any representation or warranty set forth in subsection 4.2 if the
Sellers shall have complied with the provisions of subsection 2.6 in respect
thereof; or
(e) (i) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (x) relief
in respect of the Seller or of a substantial part of the property or assets of
the Seller under the Bankruptcy Code, (y) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the Seller
or for a substantial part of the property or assets of the Seller or (z) the
winding-up
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or liquidation of the Seller; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered; or (ii) the Seller shall (t) voluntarily commence
any proceeding or file any petition seeking relief under the Bankruptcy Code,
(u) consent to the institution of, or fail to contest in a timely and
appropriate manner, to any proceeding or the filing of any petition described in
clause (e)(i) above, (v) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for such
Seller or for a substantial part of the property or assets of such Seller, (w)
file an answer admitting the material allegations of a petition filed against it
in any such proceeding, (x) make a general assignment for the benefit of
creditors, (y) become unable, admit in writing its inability or fail generally
to pay its debts as they become due or (z) take any action for the purpose of
effecting any of the foregoing; or
(f) there shall have occurred an Event of Termination under the Pooling
and Servicing Agreement; or
(g) a notice of Lien shall have been filed by the PBGC against the
Seller under Section 412(n) of the Code or Section 302(f) of ERISA for a failure
to make a required installment or other payment to a plan to which Section
412(n) of the Code or Section 302(f) of ERISA applies unless there shall have
been delivered to the Trustee proof of release of such Lien; or
(h) a federal tax notice of Lien shall have been filed against Seller
unless there shall have been delivered to the Trustee proof of release of such
Lien;
then, (aa) in the case of any Purchase Termination Event described in paragraph
(e) (other than clause (ii)(y) thereof) or paragraph (g) above with respect to
any Seller, automatically the obligation of the Company to purchase Receivables
from such Seller shall thereupon automatically terminate without notice of any
kind, which is hereby waived by the Seller; (bb) in the case of any Purchase
Termination Event described in paragraph (f)(ii), automatically the obligation
of the Company to purchase Receivables from all Sellers shall thereupon
automatically terminate without notice of any kind which is hereby waived by the
Seller; (cc) in the case of any Purchase Termination Event relating to any
Seller, so long as such Purchase Termination Event shall be continuing, the
Company may (subject to subsection 8.4) terminate its obligation to purchase
Receivables from such Seller by written notice to such Seller and (dd) in the
case of the occurrence of one or more Purchase Termination Events relating to
Sellers that generated more than 10% of the aggregate sales of all Sellers
during the most recently ended calendar month, so long as such Purchase
Termination Events shall be continuing, the Company may (subject to subsection
8.4) terminate its obligation to purchase Receivables from all Sellers by
written notice to the Sellers (any termination pursuant to clause (aa), (bb),
(cc) or (dd) of this Article VII which affects a Seller is herein called an
"Early Termination" with respect to such Seller); provided, however that in the
event of an involuntary petition or proceeding as described in paragraphs (e)(i)
above, the Company shall not purchase Receivables from such Seller until such
time, if any, as such involuntary petition or proceeding has been dismissed;
provided, that such dismissal shall have occurred within 60 days of the filing
of such petition or the commencement of such proceeding.
20
<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.1 Further Assurances. (a) The Seller agrees, from time to time, to do
and perform any and all acts and to execute any and all further instruments
reasonably required or requested by the Company more fully to effect the
purposes of this Agreement and the sales of the Receivables hereunder,
including, without limitation, the execution of any financing statements or
continuation statements (and other similar instruments) relating to the
Receivables for filing under the provisions of the Uniform Commercial Code, or
any similar law, of any applicable jurisdiction.
(b) From time to time at the request of a Seller, the Company shall
deliver to such Seller such documents, assignments, releases and instruments of
termination as such Seller may reasonably request to evidence the reconveyance
by the Company to such Seller of a Receivable pursuant to the terms of
subsection 2.1(b) or 2.6; provided that the Company shall have been paid all
amounts due thereunder; and the Company shall take such action as such Seller
may reasonably request, at the expense of such Seller, to assure that any such
Receivable, the other Transferred Assets with respect thereto and the proceeds
thereof do not remain commingled with Collections hereunder.
8.2 Payments. Each cash payment to be made by any of the Company or the
Seller hereunder shall be made on the required Purchase Date and in immediately
available funds at the office of the payee set forth below its signature hereto
or to such other office as may be specified by either party in a notice to the
other party hereto in Dollars.
8.3 Costs and Expenses. The Seller agrees (a) to pay or reimburse the
Company for all its out-of-pocket costs and expenses incurred in connection with
the preparation and execution of, and any amendment, supplement or modification
to, this Agreement, the other Transaction Documents and any other documents
prepared in connection herewith and therewith, the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, all reasonable and documented fees and disbursements of
counsel, (b) to pay or reimburse the Company for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement and any of the other Transaction Documents, including, without
limitation, the reasonable fees and disbursements of counsel to the Company, (c)
to pay, indemnify and hold the Company harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement and any such other documents
and (d) to pay, indemnify and hold the Company harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (i) which may at any time be imposed on, incurred by or asserted
against the Company in any way relating to or arising out of this Agreement or
the Transaction Documents or the transactions contemplated hereby and thereby or
in connection herewith or any action taken or omitted by the Company under or in
connection
21
<PAGE>
with any of the foregoing (all such other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
being herein called "Indemnified Liabilities") or (ii) which would not have been
imposed on, incurred by or asserted against the Company but for its having
purchased the Receivables hereunder; provided, that such indemnity shall not be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of the Company; and provided further that the Seller shall have no
obligation under this subsection 8.3 to the Company with respect to Indemnified
Liabilities arising from (i) any action taken, or omitted to be taken, by a
Servicer which is not an Affiliate of the Seller, (ii) any action taken by the
Company at the direction of the Trustee in collecting from an Obligor or (iii) a
delay in payment, or a default, by an Obligor with respect to any Receivable
(other than arising out of (x) any discharge, claim, offset or defense (other
than discharge in bankruptcy of the Obligor) of the Obligor to the payment of
any Receivable (including, without limitation, a defense based on such
Receivable not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms) or any other claim
resulting from the sale of the merchandise or services related to any such
Receivable or the furnishing or failure to furnish such merchandise or services,
(y) a failure by the Seller to perform its duties or obligations under this
Agreement or (z) the sale of any Receivable that is designated on the applicable
Daily Report to be an Eligible Receivable and is determined to have been at the
date of such sale not an Eligible Receivable). The agreements in this subsection
shall survive the collection of all Receivables, the termination of this
Agreement and the payment of all amounts payable hereunder.
8.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Seller and the Company and their respective
successors (whether by merger, consolidation or otherwise) and assigns. The
Seller agrees that it will not assign or transfer all or any portion of its
rights or obligations hereunder without the prior written consent of the
Company. The Seller acknowledges that the Company shall assign all of its rights
hereunder to a trust pursuant to the Pooling and Servicing Agreement. The Seller
consents to such assignment and agrees that the Trustee shall be entitled to
enforce the terms of this Agreement and the rights (including, without
limitation, the right to grant or withhold any consent or waiver or give any
notice) of the Company directly against such Seller, whether or not a Purchase
Termination Event or an Event of Termination has occurred and that no consent,
waiver or notice given hereunder by the Company shall be effective unless the
Trustee has given its written consent thereto. The Seller further agrees that,
in respect of its obligations hereunder, it will act at the direction of and in
accordance with all requests and instructions from the Trustee (including,
without limitation, pursuant to subsection 2.1(f)) until the Investor
Certificateholders are paid in full. The Company and the Trustee on behalf of
the Investor Certificateholders shall have the rights of third-party
beneficiaries under this Agreement.
8.5 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS.
8.6 No Waiver, Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Company, any right, remedy, power or privilege
hereunder, shall
22
<PAGE>
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
8.7 Amendments and Waivers. Neither this Agreement nor any terms hereof
may be amended, supplemented or modified except in a writing signed by the
Company and any affected Seller and upon receipt by the Company of written
confirmation from the Rating Agencies that the amendment or waiver will not
cause a downgrade or withdrawal of the current ratings of the outstanding
Certificates and the written consent of each Agent, not to be unreasonably
withheld.
8.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction, shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.9 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy), and,
unless expressly provided herein, shall be deemed to have been duly given or
made when by hand, or three days after being deposited in the mail, postage
prepaid, or, in the telecopy notice, when received, addressed as follows in the
case of the Company and the Seller, or to such other address as may be
designated by such party in a written notice to the other parties hereto:
<TABLE>
<S> <C>
The Company: Stone Receivables Corporation
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Treasurer
Telephone: 314-746-1395
Telecopy: 314-746-1281
The Seller: Stone Container Corporation
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Treasurer
Telephone: 314-746-1215
Telecopy: 314-746-1281
</TABLE>
8.10 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Company.
8.11 Construction of Agreement as Security Agreement. This Agreement
shall constitute a security agreement under applicable law.
23
<PAGE>
8.12 WAIVERS OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, TN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS,
AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SUBSECTION 8.12.
8.13 Jurisdiction, Consent to Service of Process. (a) Each party hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any Illinois state court or federal court of
the United States of America sitting in Chicago, Illinois, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or the other Transaction Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such Illinois state or, to the extent
permitted by law, in such federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Company may otherwise have to bring any action or proceeding relating to this
Agreement or the other Transaction Documents against any Seller or its
properties in the courts of any jurisdiction.
(b) Each party hereto hereby irrevocably and unconditionally waives, to
the fullest extent they may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Transaction
Documents in any Illinois state or federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in subsection 8.9. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
8.14 Addition of Sellers. Subject to subsection 3.3 hereof, any
applicable provisions in any Supplement and the terms and conditions of this
subsection 8.14, from time to time one or more additional, direct or indirect
Subsidiaries or Affiliates of Stone Container Corporation may become Sellers
hereunder and parties hereto. If any such Subsidiary or Affiliate wishes to
become an additional Seller, it shall submit a request to such effect in writing
to the Company. The Company, in its sole and absolute discretion, may agree to
or deny any such request; provided that if the Company shall have failed to
respond to any such request within 30
24
<PAGE>
days after receipt thereof, such request shall be deemed to have been denied.
If the Company shall have agreed to any such request, such Subsidiary or
Affiliate shall become an additional Seller hereunder and a party hereto on the
related Seller Addition Date upon satisfaction of the conditions set forth in
subsection 3.3.
8.15 Termination of Sellers. (a) From and after the date that any Seller
notifies the Company, the Company shall cease buying Receivables and other
Transferred Assets from such Seller. Each such Seller shall be released as a
Seller party hereto for all purposes and shall cease to be a party hereto on the
date on which there are no amounts outstanding with respect to Receivables
previously sold by such Seller to the Company, whether such amounts have been
repurchased, collected or written off in accordance with the Credit and
Collection Policies. The Rating Agencies and each Agent shall be notified of
such termination. Prior to such date, such Seller shall be obligated to perform
its servicing and other obligations hereunder and under the Transaction
Documents to which it is a party with respect to Receivables previously sold by
such Seller to the Company, including, without limitation, its obligation to
deposit Collections into the appropriate Lock-box Accounts.
(b) A terminated Seller shall have no obligation to repurchase any
Receivables other than Receivables sold by any Seller to the Company prior to
such Seller's termination which are subject to a Repurchase Event.
(c) Upon termination of a Seller, the reserves related to losses and
dilutions shall be recalculated to exclude the historical performance of the
terminated Seller.
8.16 No Bankruptcy Petition. The Seller by entering into this Agreement,
and any present or future holder of the Short-Term Note, by its acceptance
thereof, covenants and agrees that, prior to the date which is one year and one
day after the date of termination of this Agreement pursuant to subsection 8.17,
it will not institute against, or join any other Person in instituting against,
the Company any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law.
8.17 Termination. This Agreement will terminate at such time as (a) the
commitment of the Company to purchase Receivables from all Sellers hereunder
shall have terminated and (b) all Receivables purchased hereunder have been
collected, and the proceeds thereof turned over to the Company, and all other
amounts owing to the Company hereunder shall have been paid in full or, if
Receivables sold hereunder have not been collected such Receivables have become
Defaulted Receivables and the Company shall have completed its collection
efforts in respect thereto; provided, however that the indemnities of the Seller
to the Company set forth in this Agreement shall survive such termination; and
provided, however, that, to the extent any amounts remain due and owing to the
Company hereunder, the Company shall remain entitled to receive any collections
on Receivables sold hereunder which have become Defaulted Receivables after it
shall have completed its collection efforts in respect thereof.
25
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed all as of the day and year first above written.
STONE CONTAINER CORPORATION,
as Seller
By:
-------------------------------
Name:
Title:
STONE RECEIVABLES CORPORATION
By:
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.2
AMENDMENT
OF THE
1995 LONG-TERM INCENTIVE PLAN OF STONE CONTAINER CORPORATION
WHEREAS, Smurfit-Stone Container Corporation (the "Company")
maintains the 1995 Long-Term Incentive Plan of Stone Container Corporation (the
"Plan"); and
WHEREAS, the Company now considers it desirable to amend the
Plan;
NOW, THEREFORE, pursuant to the power reserved to the Company by
Section 6.2 of the Plan, and by virtue of the authority delegated to the
undersigned officer by resolution of the Company's Board of Directors, the Plan
is hereby amended, effective as of July 1, 1999, in the following particulars:
1. By substituting the following for Section 2.1(c) of the Plan:
"(c) METHOD OF EXERCISE. An option may be exercised (i) by
giving written notice to the Company specifying the number of whole
shares of Common Stock to be purchased and accompanied by payment
therefor in full (or arrangement made for such payment to the
Company's satisfaction) either (A) in cash, (B) in Mature Shares
having a Fair Market Value, determined as of the date of exercise,
equal to the aggregate purchase price payable by reason of such
exercise, (C) by providing irrevocable written instructions
authorizing (I) a broker-dealer acceptable to the Company to withhold
and sell whole shares of Common Stock which would otherwise be
delivered upon exercise of the option having a Fair Market Value,
determined as of the date of such exercise, equal to the aggregate
purchase price payable by reason of such exercise and to remit such
sum to the Company, and (II) to the Company to deliver the
certificates for the necessary shares of Common Stock directly to
such broker-dealer in order to complete the sale, (D) in cash by a
broker-dealer acceptable to the Company to whom the optionee has
submitted an irrevocable notice of exercise, or (E) a combination of
(A) and (B), in each case to the extent set forth in the Agreement
relating to the option, (ii) if applicable, by surrendering to the
Company any Tandem SARs which are cancelled by reason of the exercise
of the option and (iii) by executing such documents as the Company
may reasonably request. The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (B) through (E)
and in the case of an optionee who is subject to Section 16 of the
Exchange Act, the Company may require that the
-1-
<PAGE>
method of making such payment be in compliance with Section 16 and
the rules and regulations thereunder. Any fraction of a share of
Common Stock which would be required to pay such purchase price shall
be disregarded and the remaining amount due shall be paid in cash by
the holder. No certificate representing Common Stock shall be
delivered until the full purchase price therefor has been paid."
2. By deleting the following sentence from Section 6.5 of the Plan:
"An Agreement may provide for shares of Common Stock to be delivered
or withheld having an aggregate Fair Market Value in excess of the
minimum amount required to be withheld, but not in excess of the
amount determined by applying the holder's maximum marginal tax
rate."
* * *
IN WITNESS WHEREOF, on behalf of the Company, the undersigned officer
has executed this amendment this 1st day of July, 1999.
SMURFIT-STONE CONTAINER CORPORATION
By: /s/ Craig A. Hunt
Its: Vice President
-2-
<PAGE>
EXHIBIT 10.3
AMENDMENT
OF THE
STONE CONTAINER CORPORATION 1993 STOCK OPTION PLAN
(Effective March 23, 1992)
WHEREAS, Smurfit-Stone Container Corporation (the "Company") is
the successor corporation to Stone Container Corporation, which established the
Stone Container Corporation 1993 Stock Option Plan (the "Plan"); and
WHEREAS, the Company now considers it desirable to amend the
Plan;
NOW, THEREFORE, pursuant to the power reserved to the Company by
Section 17 of the Plan, and by virtue of the authority delegated to the
undersigned officer by resolution of the Company's Board of Directors, the Plan
is hereby amended, effective as of July 1, 1999, by inserting the following
paragraph at the end of Section 8 of the Plan:
"Notwithstanding the foregoing, the following restrictions
shall apply to any 'cashless exercise' procedure made available
by the Board of Directors under the Plan. The Board of Directors
may make available, in its sole discretion, a special sale and
remittance procedure pursuant to which an Optionee exercising an
option concurrently provides irrevocable written instructions (i)
to a brokerage firm designated by the Board of Directors to
effect the immediate sale of a portion of the shares of common
stock to be received pursuant to the option, and remit to the
Company, out of the sale proceeds available on the settlement
date, the minimum amount of funds required to cover the aggregate
exercise price payable for such shares, plus all applicable
federal, state and local income and employment taxes required to
be withheld by the Company by reason of such exercise, and (ii)
to the Company to deliver the certificates for the necessary
shares of common stock directly to such brokerage firm in order
to complete the sale. If the Board of Directors makes such a
special sale and remittance procedure available, an Optionee
exercising an option may pay the exercise price of the option
with shares of common stock issuable upon exercise of the option
(a 'cashless exercise'). In all other events, an Optionee
exercising an option may not pay the exercise price of the option
with shares of common stock issuable upon the option's exercise."
* * *
-1-
<PAGE>
IN WITNESS WHEREOF, on behalf of the Company, the undersigned officer
has executed this amendment this 1st day of July, 1999.
SMURFIT-STONE CONTAINER CORPORATION
By: /s/ Craig A. Hunt
Its: Vice President
-2-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CIK> 0000094610
<NAME> STONE CONTAINER CORPORATION
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 65
<SECURITIES> 0
<RECEIVABLES> 639
<ALLOWANCES> 59
<INVENTORY> 493
<CURRENT-ASSETS> 1,223
<PP&E> 4,005
<DEPRECIATION> 171
<TOTAL-ASSETS> 8,030
<CURRENT-LIABILITIES> 997
<BONDS> 3,152
<COMMON> 2,545
0
78
<OTHER-SE> (127)
<TOTAL-LIABILITY-AND-EQUITY> 8,030
<SALES> 3,191
<TOTAL-REVENUES> 3,191
<CGS> 2,800
<TOTAL-COSTS> 2,800
<OTHER-EXPENSES> 298
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 260
<INCOME-PRETAX> (107)
<INCOME-TAX> 20
<INCOME-CONTINUING> (87)
<DISCONTINUED> 0
<EXTRAORDINARY> (2)
<CHANGES> 0
<NET-INCOME> (89)
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
