IP » Topics » SETTLEMENTS

This excerpt taken from the IP 10-Q filed May 9, 2008.

SETTLEMENTS

Section 3.1 Monthly Reporting. Not later than the Monthly Reporting Date in each calendar month hereafter, the Servicer shall deliver to each of the Co-Agents, a Monthly Report accompanied by an electronic file in a form reasonably satisfactory to each of the Co-Agents; provided, however, that if an Unmatured Amortization Event or an Amortization Event shall

 

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exist and be continuing, each of the Co-Agents may request that a computation of the Borrowing Base also be made on a date that is not a Monthly Reporting Date and, so long as such request is not made on or within 5 Business Days prior to the last day of any calendar month, the Servicer agrees to provide such computation within 5 Business Days after such request. At or before 1:00 p.m. (New York City time) on the Business Day before each Settlement Date, each of the Co-Agents shall notify Borrower and the Servicer of (i) the aggregate principal balance of all Loans that are then outstanding from its Constituents, and (ii) the aggregate amount of all principal, interest and fees that will be due and payable by Borrower to such Co-Agent for the account of such Co-Agent or its Constituents on such Settlement Date.

Section 3.2 Turnover of Collections. Without limiting any Agent’s or Lender’s recourse to Borrower for payment of any and all Obligations:

(a) If any Monthly Report reveals that a mandatory prepayment is required under Section 1.5(b), (c), (d), (e) or (f), not later than the 1:00 p.m. (New York City time) on the next succeeding Settlement Date, the Servicer shall turn over to each applicable Co-Agent, for distribution to its Constituents, a portion of the Collections equal to the amount of such required mandatory prepayment.

(b) If, on any Settlement Date, any Loans are to be voluntarily prepaid in accordance with Section 1.5(a), or if the aggregate principal amount of the Advances outstanding is to be reduced, the Servicer shall turn over to each of the Co-Agents, for distribution to its Constituents, a portion of the Collections equal to the Groups’ respective Percentages of the aggregate amount of such voluntary prepayment or reduction and any other amounts required to be paid in connection with such voluntary prepayment or reduction.

(c) In addition to, but without duplication of, the foregoing, on (i) each Settlement Date, (ii) on each Business Day from and after the occurrence of an Amortization Event and during the continuation thereof, and (iii) each other date on which any principal of or interest on any of the Loans becomes due (whether by acceleration or otherwise) and, in the case of principal, has not been reborrowed pursuant to Section 1.1, the Servicer shall turn over to each of the Co-Agents, for distribution to their respective Constituents, the Groups’ respective Percentages of a portion of the Collections equal to the aggregate amount of all other Obligations that are due and owing on such date. If the Collections and proceeds of new Loans are insufficient to make all payments required under clauses (a), (b) and (c) and to pay the Servicer’s Fees and, if applicable, all expenses due and owing to any replacement Servicer under Section 8.1(d) (all of the foregoing, collectively, the “Required Amounts”) and Borrower has made any Demand Advances, Borrower shall make demand upon International Paper for payment of the Demand Advances in an amount equal to the lesser of the Required Amounts or the aggregate outstanding principal balance of such Demand Advances (plus any accrued and unpaid interest thereon) and, upon receipt of any such amounts, Borrower shall pay them to each of the Co-Agents, ratably in accordance with their respective Groups’ Percentages, for distribution in accordance with this Section 3.2.

(d) If the aggregate amount of Collections and payments on Demand Advances received by the Co-Agents on any Settlement Date are insufficient to pay all Required Amounts,

 

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the aggregate amount received shall be applied to the items specified in the subclauses below, in the order of priority of such subclauses:

(i) to any accrued and unpaid interest on the Loans that is then due and owing, including any previously accrued interest which was not paid on its applicable due date;

(ii) if the Servicer is not Borrower or an Affiliate thereof, to any accrued and unpaid Servicer’s Fee that is then due and owing to such Servicer, together with any invoiced expenses of the Servicer due and owing pursuant to Section 8.1(d);

(iii) to the Facility Fee and the Usage Fee accrued during such Settlement Period, plus any previously accrued Facility Fee and Usage Fee not paid on a prior Settlement Date;

(iv) to the payment of the principal of any Loans that are then due and owing;

(v) to other Obligations that are then due and owing; and

(vi) if the Servicer is Borrower, International Paper or one of their respective Affiliates, to the accrued and unpaid Servicer’s Fee and Supplemental Servicer’s Fee that are then due and owing to such Servicer.

(e) In addition to, but without duplication of, the foregoing, on (i) each Settlement Date and (ii) each other date on which any principal of or interest on any of the Loans becomes due (whether by acceleration or otherwise), the Servicer shall turn over to each of the Co-Agents, for distribution to the Lenders, a portion of the Collections equal to the aggregate amount of all Obligations that are due and owing on such date.

Section 3.3 Non-Distribution of Servicer’s Fee. Each of the Agents and the other Secured Parties hereby consents to the retention by the Servicer of a portion of the Collections equal to the Servicer’s Fee so long as the Collections received by the Servicer are sufficient to pay all amounts pursuant to Section 3.2(d) of a higher priority as specified in such Section.

Section 3.4 Deemed Collections. If as of the last day of any Settlement Period:

(a) the outstanding aggregate balance of the Net Pool Balance as reflected in the preceding Monthly Report (net of any positive adjustments) has been reduced for any of the following reasons:

(i) as a result of any rejected services, any cash discount or any other adjustment by the Originator or any Affiliate thereof (regardless of whether the same is treated by the Originator or such Affiliate as a write-off), or as a result of any surcharge or other governmental or regulatory action, or

 

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(ii) as a result of any setoff or breach of the underlying agreement in respect of any claim by the Obligor thereof (whether such claim arises out of the same or a related or an unrelated transaction), or

(iii) on account of the obligation of the Originator or any Affiliate thereof to pay to the related Obligor any rebate or refund, or

(iv) the Outstanding Balance of any Receivable is less than the amount included in calculating the Net Pool Balance for purposes of any Monthly Report (for any reason other than such Receivable becoming a Defaulted Receivable), or

(b) any of the representations or warranties of Borrower set forth in Section 6.1(i), (j), (l), (q)(ii), (r), (s) or (t) was not true when made with respect to any Receivable, or any of the representations or warranties of Borrower set forth in Section 6.1(i) or (j) is no longer true with respect to any Receivable,

then, in such event, Borrower shall be deemed to have received a Collection in an amount equal to (A) the amount of such reduction, cancellation or overstatement, in the case of the preceding clauses (a)(i), (a)(ii), (a)(iii) and (a)(iv), and (B) in the full amount of the Outstanding Balance of such Receivable in the case of the preceding clause (b).

"SETTLEMENTS" elsewhere:

Meadwestvaco (MWV)
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