EXHIBIT 10.40.3
EXECUTION COPY
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RS FUNDING INC.,
as Company,
US FOODSERVICE INC.,
as Servicer,
and
THE CHASE MANHATTAN BANK,
as Trustee
on behalf of the Holders
XXXXXX-XXXXXX RECEIVABLES MASTER TRUST
POOLING AGREEMENT
Dated as of November 15, 1996
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Other Definitional Provisions . . . . . . . . . . . . . . . . . . 25
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES . . . . . . . . . . . . 26
2.1. Conveyance of Receivables . . . . . . . . . . . . . . . . . . . . 26
2.2. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . 28
2.3. Representations and Warranties of the Company
Relating to the Company . . . . . . . . . . . . . . . . . . . 29
2.4. Representations and Warranties of the Company
Relating to the Receivables . . . . . . . . . . . . . . . . . 32
2.5. Repurchase of Ineligible Receivables. . . . . . . . . . . . . . . 33
2.6. Purchase of Investor Certificateholders'
Interest in Trust Portfolio . . . . . . . . . . . . . . . . . 34
2.7. Affirmative Covenants of the Company. . . . . . . . . . . . . . . 35
2.8. Negative Covenants of the Company . . . . . . . . . . . . . . . . 38
ARTICLE III
RIGHTS OF HOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS. . . . . . . . 42
3.1. Establishment of Collection Account and Collection
Concentration Account; Certain Allocations. . . . . . . . . . 42
ARTICLE IV
ARTICLE IV IS RESERVED
AND MAY BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO THE SERIES RELATING THERETO . . . . . . . 47
ARTICLE V
THE CERTIFICATES AND INTERESTS. . . . . . . . . . . 47
5.1. The Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 47
5.2. Authentication of Certificates. . . . . . . . . . . . . . . . . . 48
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5.3. Registration of Transfer and Exchange of
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 48
5.4. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . 51
5.5. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . 52
5.6. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . 52
5.7. Access to List of Investor Certificateholders'
Names and Addresses . . . . . . . . . . . . . . . . . . . . . 53
5.8. Authenticating Agent. . . . . . . . . . . . . . . . . . . . . . . 53
5.9. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.10. Company Exchanges . . . . . . . . . . . . . . . . . . . . . . . . 55
5.11. Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . 57
5.12. Notices to Clearing Agency. . . . . . . . . . . . . . . . . . . . 58
5.13. Definitive Certificates . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VI
OTHER MATTERS RELATING
TO THE COMPANY. . . . . . . . . . . . . . . 59
6.1. Liability of the Company. . . . . . . . . . . . . . . . . . . . . 59
6.2. Limitation on Liability of the Company. . . . . . . . . . . . . . 59
6.3. Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE VII
EARLY AMORTIZATION EVENTS. . . . . . . . . . . . 60
7.1. Early Amortization Events . . . . . . . . . . . . . . . . . . . . 60
7.2. Additional Rights Upon the Occurrence of Certain
Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE VIII
THE TRUSTEE . . . . . . . . . . . . . . . 62
8.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 62
8.2. Rights of the Trustee . . . . . . . . . . . . . . . . . . . . . . 64
8.3. Trustee Not Liable for Recitals in Certificates . . . . . . . . . 66
8.4. Trustee May Own Certificates. . . . . . . . . . . . . . . . . . . 66
8.5. Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . . . 66
8.6. Eligibility Requirements for Trustee. . . . . . . . . . . . . . . 67
8.7. Resignation or Removal of Trustee . . . . . . . . . . . . . . . . 67
8.8. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . 68
8.9. Merger or Consolidation of Trustee. . . . . . . . . . . . . . . . 69
8.10. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . 69
8.11. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.12. Trustee May Enforce Claims Without Possession
of Certificates . . . . . . . . . . . . . . . . . . . . . . . 70
8.13. Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . 71
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8.14. Rights of Investor Certificateholders to
Direct Trustee. . . . . . . . . . . . . . . . . . . . . . . . 71
8.15. Representations and Warranties of Trustee . . . . . . . . . . . . 71
8.16. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . 72
8.17. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE IX
TERMINATION . . . . . . . . . . . . . . . 72
9.1. Termination of Trust; Liquidation of
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.2. Clean-Up Call and Final Termination Date of
Investor Certificates of any Series . . . . . . . . . . . . . 73
9.3. Final Payment with Respect to Any Series. . . . . . . . . . . . . 74
9.4. Company's Termination Rights. . . . . . . . . . . . . . . . . . . 75
ARTICLE X
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . 75
10.1. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.2. Protection of Right, Title and Interest to
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.3. Limitation on Rights of Holders. . . . . . . . . . . . . . . . . 77
10.4. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.5. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.6. Severability of Provisions . . . . . . . . . . . . . . . . . . . 79
10.7. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.8. Certificates Nonassessable and Fully Paid. . . . . . . . . . . . 79
10.9. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 79
10.10. No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . 80
10.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.12. Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . 80
10.13. Actions by Holders . . . . . . . . . . . . . . . . . . . . . . . 80
10.14. Merger and Integration . . . . . . . . . . . . . . . . . . . . . 80
10.15. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.16. Construction of Agreement. . . . . . . . . . . . . . . . . . . . 80
10.17. No Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.18. No Bankruptcy Petition . . . . . . . . . . . . . . . . . . . . . 81
10.19. Limitation of Liability. . . . . . . . . . . . . . . . . . . . . 81
10.20. Certain Information. . . . . . . . . . . . . . . . . . . . . . . 82
10.21. Inclusion of Excluded Receivables. . . . . . . . . . . . . . . . 82
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EXHIBITS
Exhibit A-1 Form of Lockbox Agreement
Exhibit A-2 Alternative Form of Lockbox Agreement
Exhibit B Form of Annual Opinion of Counsel
Exhibit C Internal Operating Procedures Memorandum
Exhibit D Form of Eligible Segregated Account Bank
Acknowledgement
SCHEDULES
Schedule 1 Receivables
Schedule 2 Identification of the Trust Accounts
Schedule 3 Actions with respect to Chattel Paper
Schedule 4 Location of Chief Executive Office
Schedule 5 Contractual Obligations
APPENDICES
Appendix A Description of Servicer Site Review Procedures
Appendix B Description of Standby Liquidation System
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POOLING AGREEMENT, dated as of November 15, 1996, among RS
Funding Inc., a Nevada corporation (the "COMPANY"); US Foodservice Inc., a
Delaware corporation ("US FOODSERVICE"), in its capacity as servicer (the
"SERVICER"); and The Chase Manhattan Bank, a New York banking corporation, not
in its individual capacity, but solely as trustee (in such capacity, the
"TRUSTEE").
W I T N E S S E T H :
WHEREAS, as of the date hereof, (i) Xxxxxx-Xxxxxx Funding
Corporation, a Nevada corporation ("RYKOFF FUNDING"), USFAR Inc., a Nevada
corporation ("USFAR"), and the Company are entering into an SPC Receivables Sale
Agreement (as amended, supplemented or otherwise modified from time to time, the
"SPC RECEIVABLES SALE AGREEMENT"), (ii) the Company, the Servicer and the
Sellers (as hereinafter defined) are entering into a Receivables Sale Agreement
(as amended, supplemented or otherwise modified from time to time, the
"RECEIVABLES SALE AGREEMENT") and (iii) the Company, the Servicer, the Sellers,
in their capacities as servicers of the Receivables (in such capacities, the
"SUB-SERVICERS"), and the Trustee are entering into a Servicing Agreement (as
amended, supplemented or otherwise modified from time to time, the "SERVICING
AGREEMENT"); and
WHEREAS, the parties hereto wish to enter into this Agreement in
order to create a master trust to which the Company will transfer all of its
right, title and interest in, to and under the Receivables and other Trust
Assets now or hereafter owned by the Company and such master trust shall, from
time to time at the direction of the Company, issue one or more Series of
Investor Certificates which shall represent interests in the Receivables and
such other Trust Assets as specified herein and in the Supplement related to
such Series.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"ACCOUNTS" shall have the meaning specified in subsection
2.1(a)(v) of this Agreement.
"ADJUSTED INVESTED AMOUNT" shall have, with respect to any
Outstanding Series, the meaning assigned to such term in the related
Supplement for such Series.
POOLING AGREEMENT
2
"AFFILIATE" shall mean, with respect to any specified Person, any
other Person which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person; PROVIDED that a Person
shall not be deemed an Affiliate of another Person solely by reason of an
individual serving as an officer or director of such other Person. For
purposes of this definition, "control" of a Person means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership
of voting securities or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGENT" shall mean, with respect to any Series, the Person or
Persons, if any, so designated in the related Supplement.
"AGGREGATE ADJUSTED INVESTED AMOUNT" shall mean, with respect to
any date of determination, the sum of the Adjusted Invested Amounts with
respect to all Outstanding Series on such date of determination.
"AGGREGATE ALLOCATED RECEIVABLES AMOUNT" shall mean, with respect
to any date of determination, the sum of the Allocated Receivables Amounts
with respect to all Outstanding Series on such date of determination.
"AGGREGATE DAILY COLLECTIONS" shall mean, with respect to any
Business Day, the aggregate amount of all Collections deposited into the
Collection Account on such day.
"AGGREGATE INVESTED AMOUNT" shall mean, at any date of
determination, the sum of the Invested Amounts with respect to all
Outstanding Series on such date of determination.
"AGGREGATE OVERCONCENTRATION AMOUNT" shall mean, with respect to
any date of determination, the sum of the Overconcentration Amounts of all
Eligible Obligors at the end of the preceding Business Day.
"AGGREGATE RECEIVABLES AMOUNT" shall mean, with respect to any
date of determination, (i) the aggregate Principal Amount of all Eligible
Receivables in the Trust at the end of the Business Day immediately
preceding such date less the Aggregate Overconcentration Amount for such
date MINUS (ii) the product of the amount calculated pursuant to the
foregoing clause (i) and the PACA Percentage on such date.
"AGGREGATE TARGET RECEIVABLES AMOUNT" shall mean, with respect to
any date of determination, the sum of the Target Receivables Amounts with
respect to all Outstanding Series on such date of determination.
"AGREEMENT" shall mean this Pooling Agreement and all amendments
and modifications hereof and supplements hereto, and including, unless
expressly stated otherwise, each Supplement.
3
"ALLOCABLE CHARGED-OFF AMOUNT" shall have, with respect to any
Series, the meaning specified in subsection 3.1(e) and in any Supplement
for such Series.
"ALLOCABLE RECOVERIES AMOUNT" shall have, with respect to any
Series, the meaning specified in subsection 3.1(e) and in any Supplement
for such Series.
"ALLOCATED RECEIVABLES AMOUNT" shall mean, with respect to any
Outstanding Series, the meaning assigned to such term in the related
Supplement for such Series.
"AMORTIZATION PERIOD" shall mean, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
"BOOK-ENTRY CERTIFICATES" shall mean the Certificates issued to a
Clearing Agency to facilitate the use of book entries by such Clearing
Agency to evidence ownership of beneficial interests in the Certificates,
transfers of which beneficial interests shall be made through book entries
by such Clearing Agency, all as described in Section 5.11; PROVIDED,
HOWEVER, that after the occurrence of a condition whereupon book-entry
registration and transfer are no longer permitted and Definitive
Certificates are issued to the Certificate Book-Entry Holders, such
Certificates shall no longer be "Book-Entry Certificates".
"BUSINESS DAY" shall mean any day other than (i) a Saturday or a
Sunday or (ii) another day on which commercial banking institutions or
trust companies in the State of New York or in the city where the Corporate
Trust Office is located, are authorized or obligated by law, executive
order or governmental decree to be closed; PROVIDED that, when used in
connection with the calculation of Certificate Rates which are determined
by reference to LIBOR, "Business Day" shall mean any Business Day on which
dealings in Dollars between banks may be carried on in both London, England
and New York, New York.
"BUSINESS DAY RECEIVED" shall have the meaning specified in
subsection 2.3(e) of the Servicing Agreement.
"CASH DILUTION PAYMENT" shall have the meaning specified in
subsection 4.6(a) of the Servicing Agreement.
"CERTIFICATE" shall mean one of any Series of Investor
Certificates.
"CERTIFICATE BOOK-ENTRY HOLDER" shall mean, with respect to a
Book-Entry Certificate, the Person who is listed on the books of the
Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency, as the beneficial owner of such Book-Entry
Certificate (directly or as an indirect participant, in accordance with the
rules of such Clearing Agency).
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"CERTIFICATE RATE" shall mean, with respect to any Series and
Class of Certificates, the percentage interest rate (or formula on the
basis of which such interest rate shall be determined) stated in the
applicable Supplement.
"CERTIFICATE REGISTER" shall mean the register maintained
pursuant to Section 5.3, providing for the registration of the Certificates
and transfers and exchanges thereof.
"CERTIFICATEHOLDERS' INTEREST" shall have the meaning specified
in subsection 3.1(b).
"CHARGED-OFF RECEIVABLES" shall mean all Receivables (or portions
thereof) which, in accordance with the Policies of the applicable Seller,
have or should have been written off as uncollectible, including without
limitation the Receivables of any Obligor which becomes the subject of any
voluntary or involuntary bankruptcy proceeding.
"CLASS" shall mean, with respect to any Series, any one of the
classes of Certificates of that Series as specified in the related
Supplement.
"CLEAN-UP CALL PERCENTAGE" shall have, with respect to any
Series, the meaning specified in the related Supplement for such Series.
"CLEAN-UP CALL REPURCHASE PRICE" shall have the meaning specified
in Section 9.2.
"CLEARING AGENCY" shall mean each 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 such Clearing Agency.
"COLLECTION ACCOUNT" shall have the meaning specified in
subsection 3.1(a).
"COLLECTION CONCENTRATION ACCOUNT" shall have the meaning
specified in subsection 3.1(a).
"COLLECTIONS" shall mean all collections and all amounts received
in respect of the Receivables, including Recoveries, Seller Repurchase
Payments, Seller Adjustment Payments, Servicer Indemnification Amounts paid
by the Servicer and any other payments received in respect of Dilution
Adjustments, together with all collections received in respect of the
Related Property in the form of cash, checks, wire transfers or any other
form of cash payment, and all proceeds of Receivables and collections
thereof (including, without limitation, collections constituting an account
or general intangible or evidenced by a note, instrument, security,
contract, security agreement, chattel paper or other evidence of
indebtedness or security, whatever is received upon the sale, exchange,
collection or other disposition of, or any indemnity, warranty or guaranty
payable in
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respect of, the foregoing and all "proceeds", as defined in Section 9-306
of the UCC as in effect in the State of New York, of the foregoing).
"COLLECTOR" shall mean any employee employed by the Servicer or
any Sub-Servicer to collect payments in respect of Receivables in
accordance with the Policies of the Seller which generated such
Receivables.
"COMPANY" shall mean RS Funding Inc., a Nevada corporation.
"COMPANY COLLECTION SUBACCOUNT" shall have the meaning specified
in subsection 3.1(a).
"COMPANY EXCHANGE" shall have the meaning specified in subsection
5.10(a).
"COMPANY INTEREST" shall have the meaning specified in subsection
3.1(b).
"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or other undertaking to which such Person is a party or by which
it or any of its property is bound.
"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 this
Agreement is located at 000 Xxxx 00xx Xx., 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 (Attention: Advanced Structured Products).
"CREDIT AGREEMENT" shall mean the Credit Agreement, dated as of
May 17, 1996, among RS, the various financial institutions parties thereto,
Bank of America National Trust and Savings Association, as Administrative
Agent, Swing Line Lender and Issuing Bank and The Chase Manhattan Bank,
N.A., as Documentation Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"CREDIT ENHANCER" shall mean, with respect to any Outstanding
Series, that Person, if any, designated as such in the applicable
Supplement.
"CUT-OFF DATE" shall mean the close of business on November 7,
1996.
"DAILY COLLECTOR" shall mean any Collector who, in accordance
with the Policies of the Seller/Sub-Servicer employing such Collector,
remits Collections on a daily basis for deposit in a Lockbox Account.
"DAILY REPORT" shall have the meaning specified in subsection 4.1
of the Servicing Agreement.
"DCR" shall mean Duff & Xxxxxx Credit Rating Co. or any successor
thereto.
6
"DEFAULTED RECEIVABLE" shall mean, as of any date of
determination, any Receivable (a) which is unpaid in whole or in part for
more than 91 days after its original invoice date or (b) which is, as of
such date of determination, a Charged-Off Receivable.
"DEFINITIVE CERTIFICATES" shall have the meaning specified in
Section 5.11.
"DEPOSIT DATE" shall have the meaning specified in subsection
3.1(d).
"DEPOSITORY" shall mean, with respect to any Series, the Clearing
Agency designated as the "Depository" in the related Supplement.
"DEPOSITORY AGREEMENT" shall mean, with respect to any Series, an
agreement among the Company, the Trustee and a Clearing Agency, or a letter
of undertaking by the Company and the Trustee, in each case in a form
reasonably satisfactory to the Trustee and the Company.
"DILUTION ADJUSTMENTS" shall mean any rebates, discounts,
refunds, payments or other adjustments (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 (including, without limitation, as a result of the return of any
defective goods) or cancellations and the amount of any other reduction of
any payment under any Receivable, in each case granted or made by the
applicable Seller or the Servicer to the related Obligor, PROVIDED that a
"Dilution Adjustment" does not include any Charged-Off Receivable.
"DISTRIBUTION DATE" shall mean, except as otherwise set forth in
the applicable Supplement, the 20th day of each calendar month, beginning
on December 20, 1996, or if such 20th day is not a Business Day, the next
succeeding Business Day.
"DOLLARS," "U.S. DOLLARS", "U.S. $" and "$" shall mean dollars in
lawful currency of the United States of America.
"EARLY AMORTIZATION EVENT" shall have, with respect to any
Series, the meaning specified in Section 7.1 of this Agreement (without
taking into account any Supplements) and in any Supplement for such Series.
"EARLY AMORTIZATION PERIOD" shall have, with respect to any
Series, the definition assigned to such term in Section 7.1 of this
Agreement and in any Supplement for such Series.
"EARLY TERMINATION" shall have the meaning assigned to such term
in the Receivables Sale Agreement.
"ELIGIBLE INSTITUTION" shall mean a depositary institution or
trust company (which may include the Trustee and its affiliates) organized
under the laws of the United States of
7
America or any one of the states thereof or the District of Columbia;
PROVIDED, HOWEVER, that at all times (i) such depositary institution or
trust company is a member of the Federal Deposit Insurance Corporation,
the certificates of deposit or unsecured and uncollateralized debt
obligations of such depositary institution or trust company are rated
in one of the two highest long-term or highest short-term rating
category by each Rating Agency and (ii) such depositary institution
or trust company has a combined capital and surplus of at least
$100,000,000.
"ELIGIBLE INVESTMENTS" shall mean any deposit accounts, book-
entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(b) federal funds, demand deposits, time deposits or
certificates of deposit of any depository institution or trust company
incorporated under the laws of the United States of America or any state
thereof (or any domestic branch of a foreign bank) and subject to
supervision and examination by Federal or State banking or depository
institution authorities; PROVIDED, HOWEVER, that at the time of the
investment or contractual commitment to invest therein the commercial paper
or other short-term unsecured debt obligations (other than such obligations
the rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have a credit rating
from each of the Rating Agencies rating such investment in the highest
investment category granted thereby;
(c) commercial paper rated, at the time of the investment or
contractual commitment to invest therein, in the highest rating category by
each Rating Agency rating such commercial paper;
(d) investments in money market funds (including funds for which
the Trustee or any of its Affiliates is investment manager or adviser)
rated in the highest rating category by each Rating Agency rating such
money market fund (PROVIDED, that if such Rating Agency is S&P, such rating
shall be AAAm-G);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is
a direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of which
are backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (b) above; or
8
(g) any other investment upon satisfaction of the Rating Agency
Condition with respect thereto.
"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 a resident of the United States, its territories or possessions;
(b) if it is the United States federal government, or any subdivision
thereof, or any agency, department or instrumentality thereof (a "FEDERAL
GOVERNMENT OBLIGOR"), or if it is a state or local government, or any
subdivision thereof, or any agency, department, or instrumentality thereof (a
"STATE/LOCAL GOVERNMENT OBLIGOR"; each Federal Government Obligor and each
State/Local Government Obligor being a "GOVERNMENT OBLIGOR"), then such Obligor
shall be subject to the first proviso contained in the definition of
"Overconcentration Amount";
(c) it is not a Seller or an Affiliate of a Seller; and
(d) it is not the subject of any voluntary or involuntar bankruptcy
proceeding;
PROVIDED, HOWEVER, that if 35% or more of the Principal Amount of Receivables of
an Obligor (measured by the Principal Amount of Receivables of such Obligor in
the Trust) is reported as being aged 121 days or more after the respective
original invoice dates of such Receivables as at the end of the Settlement
Period immediately preceding the most recent Settlement Report Date (commencing
with the Settlement Report Date occurring on November 15, 1996), such Obligor
shall not be deemed an Eligible Obligor until such time as the Servicer
furnishes the Rating Agencies with a report (which may be part of a Daily Report
or a Monthly Settlement Statement) indicating that less than 35% of the
Principal Amount of Receivables of such Obligor then in the Trust are aged 121
days or more after the respective original invoice dates of such Receivables.
"ELIGIBLE RECEIVABLE" shall mean, as of any date of determination, each
Receivable owing by an Eligible Obligor that as of such date satisfies the
following eligibility criteria:
(a) it constitutes either (i) an account within the meaning of Section
9-106 of the UCC of the State the law of which governs the perfection of the
interest granted in it, (ii) chattel paper within the meaning of Section 9-105
of such UCC, subject, in the case of chattel paper, to compliance with the
procedures set forth in Schedule 3 hereto; or (iii) a general intangible
(including, without limitation, to the extent that such Receivable includes
interest, finance charges, returned check or late charges on sales or similar
taxes) within the meaning of Section 9-106 of such UCC;
(b) it is not a Defaulted Receivable;
9
(c) the goods related to it shall have been shipped or the services
related to it shall have been performed and such Receivable shall have been
billed to the related Obligor;
(d) it is denominated and payable only in U.S. Dollars in the United
States;
(e) it arose in the ordinary course of business from the sale of goods,
products or services of the relevant Seller and in accordance with the Policies
of such Seller and, at such date of determination, no Early Termination has
occurred with respect to such Seller;
(f) (i) it does not contravene any applicable law, rule or regulation and
the applicable Seller is not in violation of any law, rule or regulation in
connection with it, in each case which in any way renders such Receivable
unenforceable or would otherwise impair in any material respect the
collectibility of such Receivable and (ii) it is not subject to any
investigation or proceeding known by such Seller that would reasonably be
expected to adversely affect the payment or enforceability thereof;
(g) if the Company or the Trust is not excluded from the definition of
"investment company" pursuant to Rule 3a-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;
(h) it is not a Receivable purchased by a Seller from any Person and is
not an Excluded Receivable or a Receivable originated by a New Division which
has not become a Seller Division;
(i) it is not a Receivable for which the applicable Seller has established
an offsetting specific reserve; PROVIDED that a Receivable subject only in part
to the foregoing shall be an Eligible Receivable to the extent not so subject;
(j) it is not a Receivable with original payment terms in excess of 60
days from its original invoice date, or in respect of which the applicable
Seller has (i) entered into an arrangement with the Obligor pursuant to which
payment of any portion of the purchase price has been extended or deferred,
whether by means of a promissory note or by any other means, to a date more than
60 days from its original invoice date or (ii) altered the basis of the aging
from the initial due date for payment such that the final due date extends to a
date more than 60 days from its original invoice date or (iii) otherwise made
any modification except in the ordinary course of business and consistent with
the Policies of such Seller;
(k) all required consents, approvals or authorizations necessary for the
creation and enforceability of such Receivable and the effective assignment and
sale thereof by the applicable Seller (or by Rykoff Funding or USFAR, as the
case may be) to the Company and by the Company to the Trust shall have been
obtained with respect to such Receivable, PROVIDED that with respect to
Receivables owing by Federal Government Obligors or State/Local Government
Obligors, such Receivables shall constitute Eligible
10
Receivables notwithstanding the failure of such Receivables to satisfy this
clause (k) except to the extent such failure adversely affects the
collectibility of such Receivables by the Company or the Trust;
(l) the applicable Seller is not in default in any material respect under
the terms of the contract, if any, from which such Receivable arose;
(m) all right, title and interest in it has been validly sold to the
Company (i) by Rykoff Funding or USFAR, as the case may be, pursuant to the SPC
Receivables Sales Agreement or (ii) by the applicable Seller pursuant to the
Receivables Sales Agreement;
(n) the Company or the Trust will have legal and beneficial ownership
therein free and clear of all Liens other than such Liens described in clauses
(i) and (v) of the definition of Permitted Liens and such Receivable has been
the subject of either a valid transfer from the Company to the Trust or,
alternatively, the grant of a first priority perfected security interest therein
to the Trust free and clear of all Liens other than such Liens described in
clauses (i) and (v) of the definition of Permitted Liens;
(o) it is not subject to any dispute in whole or in part or to any offset,
counterclaim, defense, rescission, recoupment or subordination; PROVIDED that a
Receivable subject only in part to any of the foregoing shall be an Eligible
Receivable to the extent not so subject;
(p) it is at all times the legal, valid and binding obligation of the
Obligor thereon, enforceable against such Obligor to pay the full Principal
Amount thereof in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or law);
(q) as of the related Receivables Purchase Date, neither the Company nor
the applicable Seller has (i) taken any action that would impair the rights of
the Trustee or the Investor Certificateholders therein or (ii) failed to take
any action that was necessary to avoid impairing the rights therein of the
Trustee or Investor Certificateholders;
(r) each of the representations and warranties made in the Receivables
Sale Agreement by the applicable Seller with respect to such Receivable is true
and correct in all material respects; and
(s) at the time such Receivable was sold by the applicable Seller to the
Company under the Receivables Sale Agreement, no event described in subsection
6.01(g) of the Receivables Sale Agreement (without giving effect to any
requirement as to the passage of time) had occurred with respect to such Seller;
11
"ELIGIBLE SEGREGATED ACCOUNT" shall have the meaning specified in
subsection 2.3(b) of the Servicing Agreement.
"ELIGIBLE SEGREGATED ACCOUNT BANK" shall mean any bank or depositary
institution with which an Eligible Segregated Account has been established.
"ELIGIBLE SEGREGATED ACCOUNT BANK ACKNOWLEDGEMENT" shall have the meaning
specified in subsection 2.3(b)(ii) of the Servicing Agreement.
"ELIGIBLE SUCCESSOR SERVICER" shall mean a Person which, at the time of its
appointment as Servicer, (i) is legally qualified and has the corporate power
and authority to service the Receivables transferred to the Trust, (ii) has
demonstrated the ability to service a portfolio of similar receivables in
accordance with the standards set forth in subsection 6.2(c) of the Servicing
Agreement and (iii) has a combined capital and surplus of at least $5,000,000.
"ENHANCEMENT" shall mean, with respect to any Series, (i) the funds on
deposit in or credited to any bank account (or subaccount thereof) of the Trust,
(ii) any surety arrangement, any letter of credit, guaranteed rate agreement,
maturity guaranty facility, tax protection agreement, interest rate swap,
currency swap or other contract, agreement or arrangement, in each case for the
benefit of any Holders of such Series, as designated in the applicable
Supplement and (iii) the subordination of one Class of Certificates in a Series
to another class in such Series or the subordination of any Certificate held or
interest owned by the Company to the Investor Certificates of such Series.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGEABLE COMPANY INTEREST" shall have the meaning specified in
subsection 3.1(b) and shall be exchangeable as provided in Section 5.10.
"EXCHANGE DATE" shall have the meaning, with respect to any Series issued
pursuant to a Company Exchange, specified in Section 5.10.
"EXCHANGE NOTICE" shall have the meaning, with respect to any Series issued
pursuant to a Company Exchange, specified in Section 5.10.
"EXCLUDED RECEIVABLE" shall mean, subject to Section 10.21 hereof, the
indebtedness and payment obligations of any Person (i) to either RS or Xxxxxx
arising from a sale of merchandise or the provision of services by such Seller
from its contract and design business, (ii) to the manufacturing division of
either RS or Xxxxxx at the manufacturing facilities thereof located in Los
Angeles, California, Indianapolis, Indiana or Englewood, New Jersey arising from
the sale of products manufactured by such division directly to unaffiliated
third parties, (iii) to the Continental Foods operation of Xxxxxx, located in
Baltimore, Maryland, (iv) to the Lake Xxxxx, Wisconsin operation or the San
12
Francisco International Cheese Imports operation (located in San Francisco,
California) of the San Francisco International Cheese Imports division of RS
and (v) to the Olfisco Specialty Products division of Xxxxxx located in
Minneapolis, Minnesota; PROVIDED that in the event that any Excluded
Receivable is included in a Daily Report, for purposes of Section 2.1 hereof
and the definition of Collections, such receivable shall not be an Excluded
Receivable.
"FEDERAL GOVERNMENT OBLIGOR" shall have the meaning specified in the
definition of "Eligible Obligor" hereunder.
"FORCE MAJEURE DELAY" shall mean, with respect to any Servicing Party, any
cause or event which is beyond the control and not due to the negligence of such
Servicing Party which delays, prevents or prohibits the Servicer's delivery of
Daily Reports and/or Monthly Settlement Statements, including, without
limitation, acts of God or the elements and fire, but excluding strikes by any
Servicing Party's employees; PROVIDED that no such cause or event shall be
deemed to be a Force Majeure Delay unless the Servicer shall have given the
Company and the Trustee written notice promptly after the beginning of such
delay.
"FRACTIONAL UNDIVIDED INTEREST" shall mean the fractional undivided
interest in the Certificateholders' Interest evidenced by an Investor
Certificate.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time.
"GENERAL OPINION" shall mean, with respect to any action, an Opinion of
Counsel to the effect that (A) such action has been duly authorized by all
necessary corporate action on the part of the Servicer, the applicable Seller or
Sellers or the Company, as the case may be, (B) any agreement executed in
connection with such action constitutes a legal, valid and binding obligation of
the Servicer, the applicable Seller or Sellers or the Company, as the case may
be, enforceable in accordance with the terms thereof, 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 and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in equity)
and (C) any condition precedent to any such action specified in the applicable
agreement, if any, has been complied with, which opinion in the case of this
clause (C) may, to the extent that such opinion concerns questions of fact, rely
on an Officer's Certificate with respect to such questions of fact.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
13
"GOVERNMENT OBLIGOR" shall have the meaning specified in the definition of
"Eligible Obligor" hereunder.
"HOLDERS" shall mean the collective reference to (i) the Persons in whose
names the Certificates are registered in the Certificate Register, (ii) the
owner of the Exchangeable Company Interest and (iii) if applicable, the owner of
each Series Subordinated Interest.
"INDEBTEDNESS" shall mean, with respect to any Person at any date, (a) all
indebtedness of such Person for borrowed money, (b) any obligation owed for the
deferred purchase price of property or services which purchase price is
evidenced by a note or similar written instrument, (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money, (d) that portion of obligations of such Person
under capital leases which is properly classified as a liability on a balance
sheet in conformity with GAAP and (e) all Indebtedness referred to in clauses
(a) through (d) above of another Person secured by any Lien on any property
owned by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"INDEPENDENT PUBLIC ACCOUNTANTS" means any independent certified public
accountants of nationally recognized standing which constitute one of the
accounting firms commonly referred to as the "big six" accounting firms (or any
successor thereto); PROVIDED that such firm is independent with respect to the
Servicer within the meaning of Rule 2-01(b) of Regulation S-X under the
Securities Act.
"INELIGIBLE RECEIVABLE" shall have the meaning specified in Section 2.5.
"INITIAL CLOSING DATE" shall mean November 15, 1996.
"INITIAL INVESTED AMOUNT" shall mean, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for such
Series.
"INSOLVENCY EVENT" shall mean the occurrence of any one or more of the
Early Amortization Events specified in paragraph (a) of Section 7.1.
"INTERNAL OPERATING PROCEDURES MEMORANDUM" shall mean the internal
operating procedures memorandum prepared by the Trustee as set forth in Exhibit
C hereto.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"INVESTED AMOUNT" shall mean, with respect to any Outstanding Series, the
meaning assigned to such term in the related Supplement for such Series.
"INVESTED PERCENTAGE" shall mean, with respect to any Outstanding Series,
the meaning assigned to such term in the related Supplement for such Series.
14
"INVESTMENT EARNINGS" shall have the meaning specified in subsection
3.1(c).
"INVESTOR CERTIFICATEHOLDER" shall mean the holder of record of, or the
bearer of, an Investor Certificate.
"INVESTOR CERTIFICATES" shall mean the Certificates executed by the Company
and authenticated by or on behalf of the Trustee, substantially in the form
attached to the applicable Supplement, but shall not include any Certificate
held by the Company.
"ISSUANCE DATE" shall mean, with respect to any Series, the date of
issuance of such Series, or the date of any increase to the Invested Amount of
such Series, as specified in the related Supplement.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset (including, without limitation, any lien which may arise under PACA, the
Packers and Stockyards Act of 1921, as amended, or the Poultry Producers
Financial Protection Act of 1987, as amended), (b) the interest of a vendor or a
lessor under any conditional sale agreement, capital lease or title retention
agreement relating to such asset and (c) in the case of securities, any purchase
option, call or other similar right of a third party with respect to such
securities; PROVIDED, HOWEVER, that if a lien is imposed under Section 412(n) of
the Internal Revenue 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
Internal Revenue Code or Section 302(f) of ERISA applies, then such lien shall
not be treated as a "Lien" from and after the time any Person who is obligated
to make such payment pays to such plan the amount of such lien determined under
Section 412(n)(3) of the Internal Revenue Code or Section 302(f)(3) of ERISA, as
the case may be, and provides to the Trustee, any Agent and each Rating Agency
written evidence reasonably satisfactory to the Rating Agencies of the release
of such lien, or such lien expires pursuant to Section 412(n)(4)(B) of the
Internal Revenue Code or Section 302(f)(4)(B) of ERISA.
"LOCKBOX" shall mean the post office boxes listed on Schedule III to the
Receivables Sale Agreement to which the Obligors are instructed to remit
payments on the Receivables and/or such other post office boxes as may be
established pursuant to Section 2.3 of the Servicing Agreement.
"LOCKBOX ACCOUNT" shall mean the intervening account used by a Lockbox
Processor for deposit of funds received in a Lockbox prior to their transfer to
the Collection Concentration Account.
"LOCKBOX AGREEMENT" shall mean, with respect to each Lockbox Processor, a
lockbox agreement in either of the forms set forth as Exhibits A-1 and A-2
hereto.
15
"LOCKBOX PROCESSOR" shall mean the depositary institution or processing
company (which may be the Trustee) which processes payments on the Receivables
sent by the Obligors thereon forwarded to a Lockbox.
"MATERIAL ADVERSE EFFECT" shall mean (i) with respect to a Seller or a
Servicing Party, (a) a material impairment of the ability of such Seller or such
Servicing Party, as the case may be, to perform its obligations under the
Transaction Documents, (b) a material impairment of the validity or
enforceability of any of the Transaction Documents against such Seller or such
Servicing Party, (c) a material impairment of the collectibility of the
Receivables taken as a whole or (d) a material impairment of the interests,
rights or remedies of the Trustee or the Investor Certificateholders under or
with respect to the Transaction Documents or the Receivables taken as a whole
and (ii) with respect to the Company, (a) a material impairment of the ability
of the Company to perform its obligations under any Transaction Document to
which it is a party, (b) a material impairment of the validity or enforceability
of any of the Transaction Documents against the Company, (c) a material
impairment of the collectibility of the Receivables taken as a whole or (d) a
material impairment of the interests, rights or remedies of the Trustee or the
Investor Certificateholders under or with respect to the Transaction Documents
or the Receivables taken as a whole.
"MONTHLY SERVICING FEE" shall have the meaning specified in subsection
2.5(a) of the Servicing Agreement.
"MONTHLY SETTLEMENT STATEMENT" shall have the meaning specified in Section
4.2 of the Servicing Agreement.
"NEW DIVISION" shall have the meaning specified in Section 9.13 of the
Receivables Sale Agreement.
"1940 ACT" shall mean the Investment Company Act of 1940, as amended.
"OBLIGOR" shall mean, with respect to any Receivable, the party obligated
to make payments with respect to such Receivable, including any guarantor
thereof.
"OFFICER'S CERTIFICATE" shall mean, unless otherwise specified in this
Agreement, a certificate signed by the Chairman of the Board, Vice Chairman of
the Board, President, Chief Financial Officer, any Vice President, any Secretary
or any Treasurer of the Servicer or the Company, as the case may be, or, in the
case of a Successor Servicer, a certificate signed by a Vice President and the
financial controller (or an officer holding an office with equivalent or more
senior responsibilities) of such Successor Servicer.
"OPINION OF COUNSEL" shall mean a written opinion or opinions of one or
more counsel (who may be internal counsel) to the Company or the Servicer,
designated by the Company or the Servicer, as the case may be, which is
reasonably acceptable to the Trustee.
16
"OPTIONAL TERMINATION NOTICE" shall have, with respect to any Series, the
meaning specified in the related Supplement for such Series.
"ORIGINAL RYKOFF RSA" shall mean the Receivables Sale Agreement, dated as
of May 16, 1996, among RS, Xxxxxx, Rykoff Funding and RS, in its capacity as
servicer.
"OUTSTANDING SERIES" shall mean, at any time, a Series issued pursuant to
an effective Supplement for which the Series Termination Date for such Series
has not occurred.
"OVERCONCENTRATION AMOUNT" shall mean, at any date with respect to an
Eligible Obligor, the Principal Amount of Eligible Receivables due from such
Obligor at such date which, expressed as a percentage of the Principal Amount of
all Eligible Receivables in the Trust at such date, exceeds the percentage set
forth below for the applicable category of that Obligor at such date (or such
higher percentage after giving effect to which the Rating Agency Condition is
satisfied):
MINIMUM RATING
S&P DCR Percentage
--- --- ----------
A-1+ or AA- D-1+ or AA-
15.00%
A-1 or A+ D-1 or A+
7.50%
A-2 or BBB+ D-2 or BBB+
5.00%
A-3 or BBB- D-3 or BBB-
3.75%
Not rated/other Less than D-3 or BBB-
2.50%
/Not rated
; PROVIDED, HOWEVER, (i) that all Eligible Obligors that are Affiliates of
each other shall be deemed to be a single Eligible Obligor to the extent the
Servicer knows or has reason to know of the affiliation and in that case, the
applicable debt rating for such group of Obligors shall be the debt rating of
the ultimate parent of the group and (ii) with respect to all Eligible Obligors
that are Government Obligors, the Overconcentration Amount shall mean the
aggregate Principal Amount of Eligible Receivables due from all such Obligors
which exceeds 1.75% of the Principal Amount of all Eligible Receivables;
PROVIDED FURTHER that the debt ratings set forth under the column headed "DCR"
in the above table and the
17
references in the immediately succeeding paragraph to DCR shall apply only if
DCR is a Rating Agency under any Supplement for an Outstanding Series.
The percentage applicable to any Obligor (or the ultimate parent of the
affiliated group of which such Obligor is a member, as the case may be) will be
the percentage associated with the lower of such Obligor's (or such ultimate
parent's, as the case may be) short-term senior debt rating issued by S&P and
DCR; PROVIDED THAT: (i) if such short-term debt is rated only by S&P, the
applicable percentage will be the percentage associated with the rating issued
by S&P and (ii) if S&P issues no short-term rating with respect to such Obligor
(or such ultimate parent, as the case may be), then the percentage applicable to
such Obligor (or such ultimate parent, as the case may be) shall be the
percentage associated with the categories "Not rated/other" and "Less than D-3
or BBB-/Not rated." The ratings specified in the table are minimums for each
percentage category, so that a rating not shown in the table falls in the
category associated with the highest rating shown in the table that is lower
than that rating.
"PACA" shall mean the Federal Perishable Agricultural Commodities Act of
1930, as amended.
"PACA" PERCENTAGE" shall mean (i) initially, 2.57%, and (ii) as of any
Settlement Report Date (commencing with the April 15, 1997 Settlement Report
Date) and continuing until (but not including) the next Settlement Report Date,
the percentage equivalent (as determined by the Servicer and set forth on the
related Monthly Settlement Statement) of a fraction, the numerator of which is
the average monthly aggregate dollar amount of sales (other than sales resulting
in the generation of Excluded Receivables) by the Sellers to Obligors of
"perishable agricultural commodities" (as defined under PACA) during the period
of three consecutive Settlement Periods (excluding the most recently ended
Settlement Period) immediately preceding such earlier Settlement Report Date,
and the denominator of which is the average monthly aggregate dollar amount of
all sales (other than sales resulting in the generation of Excluded Receivables)
by the Sellers to Obligors during such period.
"PAYING AGENT" shall mean any paying agent and co-paying agent appointed
pursuant to Section 5.6 and, unless otherwise specified in the related
Supplement of any Outstanding Series and with respect to such Series, shall
initially be the Trustee.
"PERMITTED LIENS" shall mean, at any time, for any Person:
(i) Liens created pursuant to this Agreement or the Receivables
Sale Agreement;
(ii) Liens for taxes, assessments or other governmental charges
or levies not yet due and payable or if such Person shall currently be
contesting the validity thereof in good faith by appropriate proceedings
and with respect to which
18
reserves in conformity with GAAP have been provided on the books of such
Person;
(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;
(iv) Liens that may arise under PACA; and
(v) Any other Liens securing obligations not in excess of
$50,000 in the aggregate at any one time outstanding.
"PERSON" shall mean any individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"POLICIES" shall mean, with respect to each Seller, the credit and
collection policies of such Seller, copies of which have been delivered to the
Trustee, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the Transaction Documents.
"POOLING AND SERVICING AGREEMENTS" shall mean, collectively, this
Agreement, the Servicing Agreement and each Supplement for an Outstanding
Series.
"POTENTIAL EARLY AMORTIZATION EVENT" shall mean an event which, with the
giving of notice and/or the lapse of time, would constitute an Early
Amortization Event hereunder or under any Supplement.
"POTENTIAL SERVICER DEFAULT" shall mean an event which, with the giving of
notice and/or the lapse of time, would constitute a Servicer Default hereunder
or under any Supplement.
"PREPAYMENT REQUEST" shall have, with respect to any Series, the meaning
specified in the related Supplement.
"PRINCIPAL AMOUNT" shall mean, with respect to any Receivable, the amount
due thereunder.
"PRINCIPAL TERMS" shall have the meaning, with respect to any Series issued
pursuant to a Company Exchange, specified in subsection 5.10(c).
"RATING AGENCY" shall mean, with respect to each Outstanding Series, any
rating agency or agencies designated as such in the related Supplement; PROVIDED
that in the event that no Outstanding Series has been rated, then for purposes
of the definitions of
19
"Eligible Institution" and "Eligible Investments", "RATING AGENCY" shall mean
S&P and references to "each Rating Agency" shall refer solely to S&P.
"RATING AGENCY CONDITION" shall mean, subject to the applicable Supplement,
with respect to any action, that each Rating Agency shall have notified the
Company, the Servicer, any Agent and the Trustee in writing that such action
will not result in a reduction or withdrawal of the rating of any Outstanding
Series or any Class of any such Outstanding Series with respect to which it is a
Rating Agency.
"RECEIVABLE" shall mean the indebtedness and payment obligations of any
Person to a Seller (including, without limitation, obligations constituting an
account or general intangible or evidenced by a note, instrument, contract,
security agreement, chattel paper or other evidence of indebtedness or security)
arising from a sale of merchandise or the provision of services by such Seller,
including, without limitation, any right to payment for goods sold or for
services rendered, and including the right to payment of any interest, sales
taxes, finance charges, returned check or late charges and other obligations of
such Person with respect thereto; PROVIDED that, except as otherwise expressly
provided, for all purposes hereunder and under the other Transaction Documents,
"RECEIVABLES" shall not include Excluded Receivables.
"RECEIVABLES PURCHASE DATE" shall mean, with respect to any Receivable, the
Business Day on which the Company purchases such Receivable from the applicable
Seller and transfers such Receivable to the Trust.
"RECEIVABLES SALE AGREEMENT" shall have the meaning specified in the
recitals hereto.
"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 PROPERTY" shall mean, with respect to each Receivable:
(a) all of the applicable Seller's interest in 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 the applicable
Seller's interest in the property subject thereto, from time to time
purporting to secure payment of such Receivable, together with all
financing statements signed by an Obligor describing any collateral
securing such Receivable; and
20
(c) all guarantees, insurance, letters of credit and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable;
in the case of clauses (b) and (c), without limitation, whether pursuant to the
contract related to such Receivable or otherwise or pursuant to any obligations
evidenced by a note, instrument, contract, security agreement, chattel paper or
other evidence of indebtedness or security and the proceeds thereof.
"REMOTE COLLECTOR" shall mean any Collector other than a Daily Collector.
"REPORTED DAY" shall have the meaning specified in Section 4.1 of the
Servicing Agreement.
"REPURCHASE OBLIGATION DATE" shall have the meaning specified in subsection
2.5(a).
"REQUIREMENT OF LAW" for any Person shall mean the certificate or articles
of incorporation 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 a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"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 (ii) when
used with respect to any other Person, the Chairman or Vice Chairman of the
Board, President, Chief Financial Officer, any Vice President, Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary of such Person.
"REVOLVING PERIOD" shall mean, with respect to any Outstanding Series, the
meaning assigned to such term in the related Supplement for such Series.
"RS" shall mean Xxxxxx-Xxxxxx, Inc., a Delaware corporation.
"RS LOAN" shall mean the demand note issued by RS to the Company on the
Initial Closing Date in an aggregate principal amount of $7,500,000.
"RYKOFF FUNDING" shall have the meaning specified in the recitals hereto.
"S&P" shall mean Standard & Poor's Ratings Services, or any successor
thereto.
"SECURITIES ACT" shall mean the United States Securities Act of 1933, as
amended.
21
"SECURITY AGREEMENT" shall mean the Security Agreement, dated as of
the date hereof, among the Company, RS and Xxxxxx, as the same may be
amended, supplemented or otherwise modified from time to time.
"SELLERS" shall mean the collective reference to RS, in its capacity
as a Seller under the Receivables Sale Agreement, the wholly-owned
Subsidiaries of RS listed as Sellers on the signature pages thereof and any
wholly-owned Subsidiaries of RS which have been added as Sellers in
accordance with the provisions of the Receivables Sale Agreement and the
other Transaction Documents (but, in each case, excluding any such
Subsidiaries which have been terminated as Sellers in accordance with the
provisions thereof and of the other Transaction Documents), all of the
foregoing in their capacities as Sellers under the Receivables Sale
Agreement; each, individually, a "SELLER".
"SELLER ADJUSTMENT PAYMENTS" shall have the meaning specified in
Section 2.05 of the Receivables Sale Agreement.
"SELLER DIVISION" shall have the meaning specified in Section 9.13 of
the Receivables Sale Agreement.
"SELLER REPURCHASE PAYMENTS" shall have the meaning specified in
Section 2.06 of the Receivables Sale Agreement.
"SERIES" shall mean any series of Investor Certificates, the terms of
which are set forth in a Supplement.
"SERIES ACCOUNT" shall mean any deposit, trust, escrow, reserve or
similar account maintained for the benefit of the Investor
Certificateholders of any Series or Class, as specified in any Supplement.
"SERIES COLLECTION SUBACCOUNT" shall have the meaning specified in
subsection 3.1(a).
"SERIES COLLECTION SUB-SUBACCOUNT" shall have the meaning specified in
subsection 3.1(a).
"SERIES NON-PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have the
meaning specified in subsection 3.1(a).
"SERIES PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have the meaning
specified in subsection 3.1(a).
"SERIES SUBORDINATED INTEREST" shall mean, with respect to any Series,
the interest of the Company in the Trust Assets, if any, which is
subordinated to the Certificateholders' Interest of such Series, as set
forth in the Supplement for such Series.
22
"SERIES TERMINATION DATE" shall mean, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
"SERVICE TRANSFER" shall have the meaning specified in Section 6.1 of
the Servicing Agreement.
"SERVICER" shall initially mean US Foodservice in its capacity as
Servicer under the Transaction Documents and, after any Service Transfer,
the Successor Servicer.
"SERVICER DEFAULT" shall have, with respect to any Series, the meaning
specified in Section 6.1 of the Servicing Agreement and, if applicable, as
supplemented by the related Supplement for such Series.
"SERVICER GUARANTEE" shall mean the Servicer Guarantee, dated as of
the date hereof, made by RS in favor of the Trustee, for the benefit of the
Holders.
"SERVICER INDEMNIFICATION AMOUNTS" shall have the meaning specified in
Section 5.2(c) of the Servicing Agreement.
"SERVICER SITE REVIEW" shall mean a review performed by the Trustee of
the servicing operations of the Servicer at its offices, as described in
Appendix A.
"SERVICING AGREEMENT" shall have the meaning specified in the recitals
hereto.
"SERVICING FEE" shall have the meaning specified in subsection 2.5(a)
of the Servicing Agreement.
"SERVICING FEE PERCENTAGE" shall mean 1% per annum.
"SERVICING PARTY" shall mean the collective reference to the Servicer
and each Sub-Servicer.
"SETTLEMENT PERIOD" shall mean (i) initially, the period commencing
November 15, 1996 and ending on the last day of the November 1996 fiscal
month of the Servicer, and (ii) thereafter, each fiscal month of the
Servicer.
"SETTLEMENT REPORT DATE" shall mean, except as otherwise set forth in
the applicable Supplement, the 15th day of each calendar month (or if such
15th day is not a Business Day, the next succeeding Business Day).
"XXXXXX" shall mean Xxxx Xxxxxx & Co., a Delaware corporation.
"SPC RECEIVABLES SALE AGREEMENT" shall have the meaning specified in
the recitals hereto.
23
"SPECIAL ALLOCATION SETTLEMENT REPORT DATE" shall have the meaning
specified in subsection 3.1(e).
"SPECIFIED BANKRUPTCY OPINION PROVISIONS" shall mean the factual
assumptions and the actions to be taken by any Seller or the Company, in
each case as specified in the legal opinion of Xxxxxxxx & X'Xxxx, LLP
relating to certain bankruptcy matters and delivered on the Initial Closing
Date.
"STANDBY LIQUIDATION SYSTEM" shall mean a system by which the Trustee
will receive and store electronic information regarding Receivables from
the Servicer and each Sub-Servicer which may be utilized in the event of a
liquidation of the Receivables to be carried out by the Trustee, as
described in Appendix B.
"STATE/LOCAL GOVERNMENT OBLIGOR" shall have the meaning specified in
the definition of "Eligible Obligor" hereunder.
"SUBORDINATED NOTE" shall have the meaning specified in Section 8.01
of the Receivables Sale Agreement.
"SUB-SERVICER" shall have the meaning specified in the recitals
hereto.
"SUBSIDIARY" shall mean, as to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
"SUCCESSOR SERVICER" shall have the meaning specified in Section 6.2
of the Servicing Agreement.
"SUPPLEMENT" shall mean, with respect to any Series, a supplement to
this Agreement complying with the terms of Section 5.10(c), executed in
conjunction with the issuance of any Series.
"TARGET RECEIVABLES AMOUNT" shall mean, with respect to any
Outstanding Series, the meaning assigned to such term in the related
Supplement for such Series.
"TAX OPINION" shall mean, with respect to any action, an Opinion of
Counsel (a) to the effect that, for federal income tax purposes, (i) such
action will not adversely affect the characterization as debt or as an
interest in a partnership (other than a partnership taxable as a
corporation), as the case may be, of any Investor Certificates of any
Outstanding Series or Class not retained by the Company, (ii) following
such action, the Trust will not be classified as an association or a
publicly traded partnership taxable as a corporation,
24
(iii) such action will not cause or constitute a taxable event in which
gain or loss would be recognized by any Investor Certificateholder or the
Trust and (iv) in the case of Section 5.9, the Investor Certificates of the
new Series which are not retained by the Company will be characterized as
debt or as an interest in a partnership (other than a partnership taxable
as a corporation) and (b) with respect to state taxation issues, in
substantially the form delivered on the Initial Closing Date.
"TERMINATION NOTICE" shall have the meaning specified in Section 6.1
of the Servicing Agreement.
"TRANSACTION DOCUMENTS" shall mean the collective reference to this
Agreement, the Servicing Agreement, each Supplement with respect to any
Outstanding Series, the Receivables Sale Agreement, the SPC Receivables
Sale Agreement, the Lockbox Agreements, the Eligible Segregated Account
Bank Acknowledgements, the Certificates and any other documents delivered
pursuant to or in connection therewith.
"TRANSFER AGENT AND REGISTRAR" shall have the meaning specified in
Section 5.3 and shall initially be the Trustee.
"TRANSFER DEPOSIT AMOUNT" shall have the meaning specified in
subsection 2.5(b).
"TRANSFERRED AGREEMENTS" shall have the meaning specified in
subsection 2.1(b).
"TRUST" shall mean the Xxxxxx-Xxxxxx Receivables Master Trust created
by this Agreement.
"TRUST ACCOUNT" shall have the meaning, with respect to any Series,
specified in the applicable Supplement for such Series.
"TRUST ASSETS" shall have the meaning specified in Section 2.1.
"TRUST TERMINATION DATE" shall have the meaning specified in
subsection 9.1(a).
"TRUSTEE" shall mean the institution executing this Agreement as
trustee, or its successor in interest, or any successor trustee appointed
as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction or if no jurisdiction is
specified, as in effect in the State of New York.
"USFAR" shall have the meaning specified in the recitals hereto.
"USFAR RSA" shall mean the Amended and Restated Receivables Purchase
Agreement, dated as of October 27, 1994, as heretofore amended,
supplemented and otherwise modified, among the subsidiaries of US
Foodservice from time to time parties
25
thereto as sellers thereunder, USFAR and US Foodservice, in its capacity
as master servicer.
Section 1.2. OTHER DEFINITIONAL PROVISIONS. (a) All terms defined
in this Agreement, the Servicing Agreement or in any Supplement shall have such
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1, and accounting terms partly defined in Section 1.1 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 inconsistent with the
meanings of such terms under GAAP, the definitions contained herein shall
control.
(c) 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; 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.
(d) The definitions contained in Section 1.1 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 Section 1.1 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 (or include in its definition) 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 Principal Amount (as
such term is defined in Section 1.1) of such Receivables.
(g) Any reference herein or in any other Transaction Document to a
provision of the Internal Revenue Code or ERISA shall be deemed a reference to
any successor provision thereto.
(h) To the extent that any provision of this Agreement or any other
Transaction Document requires that a calculation be performed with respect to a
date occurring prior to the effective date of such Transaction Document, such
calculation shall be performed as provided therein as though such Transaction
Document had been effective on and as of such prior date.
26
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES
Section 2.1. CONVEYANCE OF RECEIVABLES.
(a) By execution and delivery of this Agreement, the Company does
hereby transfer, assign, set over and otherwise convey to the Trust for the
benefit of the Holders, without recourse (except as specifically provided
herein), all of its present and future right, title and interest in, to and
under:
(i) all Receivables, including those existing at the close
of business on the Initial Closing Date and all Receivables
thereafter arising from time to time until but not including the
Trust Termination Date;
(ii) the Related Property;
(iii) all Collections;
(iv) all rights (including rescission, replevin or reclamation)
relating to any Receivable or arising therefrom;
(v) the Collection Account, the Collection Concentration
Account, each Eligible Segregated Account, each Lockbox and each Lockbox
Account (collectively, the "ACCOUNTS"), including (A) all funds and other
evidences of payment held therein and all certificates and instruments, if
any, from time to time representing or evidencing any of such Accounts or
any funds and other evidences of payment held therein, (B) all investments
of such funds held in such Accounts and all certificates and instruments
from time to time representing or evidencing such investments, (C) all
notes, certificates of deposit and other instruments from time to time
hereafter delivered or transferred to, or otherwise possessed by, the
Trustee for and on behalf of the Company in substitution for any of the
then existing Accounts and (D) all interest, dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any and all of the then
existing Accounts; and
(vi) all monies due or to become due and all amounts received
with respect to the items listed in clauses (i) through (v) and all
proceeds (including, without limitation, whatever is received upon the
sale, exchange, collection or other disposition of the foregoing and all
"proceeds" as defined in Section 9-306 of the UCC as in effect in the State
of New York) thereof, including all Recoveries relating thereto;
(b) The Company hereby transfers, assigns, sets over and otherwise
conveys to the Trustee for the benefit of the Holders, and grants to the
Trustee, for the benefit of the Holders, a first priority perfected security
interest in, all its right, title and interest in, to and under
27
the following: each of the Receivables Sale Agreement, the SPC Receivables
Sale Agreement, the Servicing Agreement and the Security Agreement, including
in respect of each agreement, (A) all property assigned thereunder and all
rights of the Company to receive monies due and to become due under or
pursuant to such agreement, whether payable as fees, expenses, costs or
otherwise, (B) all rights of the Company to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to such agreement,
(C) claims of the Company for damages arising out of or for breach of or
default under such agreement, (D) the right of the Company to amend, waive or
terminate such agreement, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder, (E) all other rights, remedies,
powers, privileges and claims of the Company under or in connection with such
agreement (whether arising pursuant to such agreement or otherwise available
to the Company at law or in equity), including the rights of the Company to
enforce such agreement and to give or withhold any and all consents,
requests, notices, directions, approvals, extensions or waivers under or in
connection therewith and (F) all monies due or to become due and all amounts
received with respect to the items listed in clauses (A) through (F) and all
proceeds (including, without limitation, whatever is received upon the sale,
exchange, collection or other disposition of the foregoing and all "proceeds"
as defined in Section 9-306 of the UCC as in effect in the State of New York)
thereof, including all Recoveries relating thereto (all of the foregoing set
forth in subclauses (A)-(F), inclusive, the "TRANSFERRED AGREEMENTS");
Such property described in the foregoing paragraphs (a) and (b), together with
all investments and all monies on deposit in any other bank account or accounts
maintained for the benefit of any Holders for payment to Holders shall
constitute the assets of the Trust (the "TRUST ASSETS").
Subject to Section 5.9, although it is the intent of the parties to
this Agreement that the conveyance of the Company's right, title and interest
in, to and under the Receivables and the other Trust Assets described in
paragraph (a) pursuant to this Agreement shall constitute a purchase and sale
and not a loan, in the event that such conveyance is deemed to create a loan,
the Company hereby grants to the Trustee, for the benefit of the Holders, a
perfected first priority security interest in all of the Company's present and
future right, title and interest in, to and under the Receivables and such other
Trust Assets to secure the payment of the applicable Invested Amounts, interest
thereon and the other fees and expenses due to the Holders, and that this
Agreement shall constitute a security agreement under applicable law in favor of
the Trustee, for the benefit of the Holders.
(c) The assignment, set over and conveyance to the Trust pursuant to
Section 2.1(a) shall be made to the Trustee, on behalf of the Trust, and each
reference in this Agreement to such assignment, set over and conveyance shall be
construed accordingly. In connection with the foregoing assignment, except as
expressly provided otherwise in the Transaction Documents, the Company, the
Servicer and each Sub-Servicer agree to deliver to the Trustee each Trust Asset
(including any original documents or instruments included in the Trust Assets as
are necessary to effect such assignment) in which the transfer of an interest is
perfected under the UCC or otherwise solely by possession and not by filing a
financing statement or similar document.
28
Notwithstanding the assignment of the Transferred Agreements set forth
in Section 2.1(b), the Company does not hereby assign or delegate any of its
duties or obligations under the Receivables Sale Agreement to the Trust or the
Trustee and neither the Trust nor the Trustee accepts such duties or
obligations, and the Company shall continue to have the right and the obligation
to purchase Receivables from the Sellers thereunder from time to time. The
foregoing assignment, set-over and conveyance does not constitute and is not
intended to result in a creation or an assumption by the Trust, the Trustee, any
Investor Certificateholder or the Company, in its capacity as a Holder, of any
obligation of the Servicer, the Company, any Seller or any other Person in
connection with the Receivables or under any agreement or instrument relating
thereto, including, without limitation, any obligation to any Obligor.
In connection with such assignment, the Company agrees to record and
file, at its own expense, any financing statements (and continuation statements
with respect to such financing statements when applicable) or, where applicable,
registrations in the appropriate records, (i) with respect to the Receivables
now existing and hereafter created and (ii) with respect to any other Trust
Assets a security interest in which may be perfected under the relevant UCC,
legislation or similar statute by such filing or registration, as the case may
be, 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
assignment of the Receivables and such other Trust Assets (excluding returned
merchandise) to the Trust, and to deliver a file-stamped copy or certified
statement of such financing statement or registration or other evidence of such
filing or registration to the Trustee on or prior to the date of issuance of any
Certificates. The Trustee shall be under no obligation whatsoever to file such
financing statement, or a continuation statement to such financing statement, or
to make any other filing or other registration under the UCC, other relevant
legislation or similar statute in connection with such transfer. The Trustee
shall be entitled to conclusively rely on the filings or registrations made by
or on behalf of the Company without any independent investigation and the
Company's obligation to make such filings as evidence that such filings have
been made.
In connection with such assignment, the Company further agrees, at its
own expense, on or prior to the Initial Closing Date (a) to indicate, or to
cause to be indicated, in its computer files containing its master database of
Receivables and to cause each Seller to indicate in its records containing its
master database of Receivables that Receivables have been conveyed to the
Company or the Trust, as the case may be, pursuant to the Receivables Sale
Agreement or this Agreement, respectively, for the benefit of the Holders and
(b) to deliver, or cause to be delivered, to the Trustee computer tapes or disks
containing a true and complete list of all Receivables transferred to the Trust
specifying for each such Receivable, as of the Cut-Off Date, (i) the
identification or reference number assigned to such Receivables by the Company
and (ii) the Principal Amount of such Receivables. Such tapes or disks shall be
marked as Schedule 1 to this Agreement and are hereby incorporated into and made
a part of this Agreement.
Section 2.2. ACCEPTANCE BY TRUSTEE. (a) The Trustee hereby
acknowledges its acceptance on behalf of the Trust of all right, title and
interest to the property, now existing and hereafter created, assigned to the
Trust pursuant to Section 2.1 and declares that it shall maintain such right,
title and interest, upon the trust herein set forth, for the benefit of all
Holders.
29
(b) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
Section 2.3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY RELATING
TO THE COMPANY. The Company hereby represents and warrants to the Trustee and
the Trust, for the benefit of the holders of Certificates of each Outstanding
Series, as of the Issuance Date of such Series, that:
(a) CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Company (i) is a
corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its organization, (ii) has all requisite
corporate power and authority and all legal right to own and operate its
properties, to lease the properties it operates as lessee and to conduct
its business as now conducted, (iii) is duly qualified as a foreign
corporation to do business and in good standing under the laws of each
jurisdiction where such qualification is necessary and (iv) is in
compliance with all Requirements of Law. The Company does not engage in
activities prohibited by the Transaction Documents or its certificate of
incorporation.
(b) CORPORATE POWER; AUTHORIZATION. The Company has the corporate
power and authority, and the legal right, to execute, deliver and perform
this Agreement and the other Transaction Documents to which it is a party
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the other Transaction
Documents to which it is a party. No consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement and the
other Transaction Documents to which it is a party by or against the
Company other than (i) those which have duly been obtained or made and are
in full force and effect on the Initial Closing Date, (ii) any filings of
UCC-1 financing statements or similar documents necessary to perfect the
Company's or the Trust's interest in the Trust Assets and (iii) those that
may be required under the state securities or "blue sky" laws in connection
with the offering or sale of certificates. This Agreement and each other
Transaction Document to which the Company is a party have been duly
executed and delivered on behalf of the Company.
(c) ENFORCEABILITY. This Agreement and each of the other Transaction
Documents to which the Company is a party (i) constitute the legal, valid
and binding obligations of the Company enforceable against it in accordance
with their 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 generally and except as such enforceability may be
limited by general principles of equity (whether considered in a proceeding
at law or in equity) and (ii) are effective and all action has been taken
to cause compliance with paragraph (n) of the definition of Eligible
Receivables.
30
(d) NO LEGAL BAR. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Company is a
party will not violate any Requirement of Law, and will not result in, or
require, the creation or imposition of any Lien (other than Liens
contemplated or permitted hereby) on any of its properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation.
(e) NO MATERIAL LITIGATION. There are no actions, suits,
investigations or proceedings at law or in equity (including, without
limitation, injunctions, writs or restraining orders) by or before any
arbitrator, court or Governmental Authority now pending or, to the
knowledge of the Company, threatened against or affecting the Company or
any properties, revenues or rights of the Company which (i) involve this
Agreement or any of the other Transaction Documents or any of the
transactions contemplated hereby or thereby, or (ii) would be reasonably
likely to have a Material Adverse Effect with respect to the Company. The
transactions contemplated hereunder and the use of the proceeds thereof
will not violate any Requirement of Law.
(f) NO DEFAULT. The Company is not in default under or with respect
to any of its Contractual Obligations. No Early Amortization Event or
Potential Early Amortization Event has occurred and is continuing.
(g) TAX RETURNS. The Company has filed or caused to be filed all tax
returns which are required to have been filed by it and has paid or caused
to be paid all taxes shown thereon to be due and payable, and any
assessments made against it or any of its property. No tax Lien has been
filed, and, to the best knowledge of the Company, no claim is being
asserted, with respect to any taxes. For purposes of this paragraph,
"taxes" shall mean any present or future tax, levy, impost, duty, charge,
assessment or fee of any nature (including interest, penalties and
additions thereto) that is imposed by any Governmental Authority.
(h) LOCATION OF RECORDS; CHIEF EXECUTIVE OFFICE. The offices at
which the Company keeps its records concerning the Receivables either (x)
are located at the addresses set forth for the Sellers on Schedule II of
the Receivables Sale Agreement or (y) have been reported to the Trustee in
accordance with the provisions of subsection 2.8(l) of this Agreement. The
chief executive office of the Company is located at one of the addresses
set forth on Schedule 4 and is the place where the Company is "located" for
the purposes of Section 9-103(3)(d) of the UCC as in effect in the State of
New York. The state and county where the chief executive office of the
Company is "located" for the purposes of Section 9-103(3)(d) of the UCC as
in effect in the State of New York has not changed in the past four months.
(i) SOLVENCY. Both prior to and after giving effect to the
transactions occurring on each Issuance Date, (i) the fair value of the
assets of the Company at a fair valuation will exceed the debts and
liabilities, subordinated, contingent or otherwise, of the Company; (ii)
the present fair salable value of the property of the Company will be
greater than the amount that will be required to pay the probable liability
of the Company on its
31
debts and other liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; (iii) the Company
will be able to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and
(iv) the Company will not have unreasonably small capital with which to
conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted. For all purposes of clauses
(i) through (iv) above, the amount of contingent liabilities at any time
shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability. The
Company does not intend to, nor does it believe that it will, incur debts
beyond its ability to pay such debts as they mature, taking into account
the timing of and amounts of cash to be received by it and the timing of
and amounts of cash to be payable in respect of its Indebtedness.
(j) INVESTMENT COMPANY. Neither the Company nor the Trust is an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, or is exempt from all provisions of such act.
(k) OWNERSHIP; SUBSIDIARIES. All of the issued and outstanding
capital stock of the Company is owned, legally and beneficially, by RS.
The Company has no Subsidiaries.
(l) NAMES. The legal name of the Company is as set forth in this
Agreement. The Company has not had, nor has, any trade names, fictitious
names, assumed names or "doing business as" names.
(m) LIABILITIES. Other than, (i) the liabilities, commitments or
obligations (whether absolute, accrued, contingent or otherwise) arising
under or in respect of the Transaction Documents and (ii) immaterial
amounts due and payable in the ordinary course of business of a special-
purpose company, the Company does not have any liabilities, commitments or
obligations (whether absolute, accrued, contingent or otherwise), whether
due or to become due.
(n) USE OF PROCEEDS; FEDERAL RESERVE BOARD REGULATION. No proceeds
of the issuance of any Investor Certificates will be used by the Company to
purchase or carry any margin stock (as defined in Regulation U of the Board
of Governors of the Federal Reserve System, as in effect from time to
time). The Company is in compliance with all applicable regulations of the
Board of Governors of the Federal Reserve System (including, without
limitation, Regulations U and G with respect to "margin stock").
(o) COLLECTION PROCEDURES. The Company and each Seller have in place
procedures pursuant to the Transaction Documents which are either necessary
or advisable to ensure the timely collection of Receivables.
(p) LOCKBOX ACCOUNTS; ELIGIBLE SEGREGATED ACCOUNTS. Except to the
extent otherwise permitted under the terms of this Agreement, (i) each
Lockbox Agreement to which the Company is party is in full force and
effect, (ii) each Lockbox Account set forth
32
in Schedule III to the Receivables Sales Agreement is free and clear of
any Lien (other than any right of set-off expressly provided for in the
applicable Lockbox Agreement), (iii) each Eligible Segregated Account Bank
Acknowledgement to which the Company is party is in full force and effect
and (iv) each Eligible Segregated Account established pursuant to
subsection 2.3(b) of the Servicing Agreement is free and clear of any Lien.
(q) NO CONFLICT. The execution and delivery of this Agreement and
the Receivables Sale Agreement, the performance of the transactions
contemplated hereby and thereby and the fulfillment of the terms hereof and
thereof will not conflict with, 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 Company is a
party or by which it or any of its property is bound.
(r) ALL CONSENTS REQUIRED. All appraisals, authorizations, consents,
orders or other similar actions of any Person or of any governmental body
or official required in connection with the execution and delivery of this
Agreement, the Receivables Sale Agreement and the Certificates, the
performance of the transactions contemplated hereby and thereby, and the
fulfillment of or terms hereof and thereof, have been obtained.
(s) BULK SALES. The execution, delivery and performance of this
Agreement do not require compliance with any "bulk sales" law by the
Company.
The representations and warranties set forth in this Section 2.3 shall
survive after the date made and the transfer and assignment of the Trust Assets
to the Trust. Upon discovery by a Responsible Officer of the Company or the
Servicer or by a Responsible Officer of the Trustee of a breach of any of the
foregoing representations and warranties with respect to any Outstanding Series
as of the Issuance Date of such Series, the party discovering such breach shall
give prompt written notice to the other parties and to each Agent with respect
to all Outstanding Series. The Trustee's obligations in respect of any breach
are limited as provided in subsection 8.2(g).
Section 2.4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY RELATING
TO THE RECEIVABLES. The Company hereby represents and warrants to the Trustee
and the Trust, for the benefit of the holders of Certificates of each
Outstanding Series, (x) as of the Issuance Date of such Series, and (y) with
respect to each Receivable transferred to the Trust after such Issuance Date, as
of the related Receivables Purchase Date, unless, in either case, otherwise
stated in the applicable Supplement or unless such representation or warranty
expressly relates only to a prior date, that:
(a) Schedule 1 to this Agreement sets forth in all material respects
an accurate and complete listing as of the Cut-Off Date of all Receivables
to be transferred to the Trust as of the Initial Closing Date and the
information contained therein with respect to the identity and Principal
Amount of each such Receivable is true and correct in all material
33
respects as of the Cut-Off Date. As of the Cut-Off Date, the aggregate
amount of Receivables owned by the Company is accurately set forth in
Schedule 1 hereto.
(b) Each Receivable existing on the Initial Closing Date or, in the
case of Receivables transferred to the Trust after the Initial Closing
Date, on the date that each such Receivable shall have been transferred to
the Trust, has been conveyed to the Trust free and clear of any Lien,
except for Permitted Liens specified in clauses (i) and (v) of the
definition thereof.
(c) On the Initial Closing Date, each Receivable transferred to the
Trust that is included in the calculation of the initial Aggregate
Receivables Amount is an Eligible Receivable and, in the case of
Receivables transferred to the Trust after the Initial Closing Date, on the
date such Receivable shall have been transferred to the Trust, each such
Receivable that is included in the calculation of the Aggregate Receivables
Amount on such date is an Eligible Receivable. Each Receivable classified
as an "Eligible Receivable" by the Company in any document or report
delivered hereunder satisfies the requirements of eligibility contained in
the definition of Eligible Receivable.
The representations and warranties set forth in this Section 2.4 shall
survive after the date made and the transfer and assignment of the Trust Assets
to the Trust. Upon discovery by a Responsible Officer of the Company or the
Servicer or a Responsible Officer of the Trustee of a breach of any of the
representations and warranties with respect to each Outstanding Series as of the
Issuance Date of such Series, the party discovering such breach shall give
prompt written notice to the other parties and to each Agent with respect to all
Outstanding Series. The Trustee's obligations in respect of any breach are
limited as provided in Section 8.2(g).
Section 2.5. REPURCHASE OF INELIGIBLE RECEIVABLES. (a) REPURCHASE
OBLIGATION. If (i) any representation or warranty under subsections 2.4(a), (b)
or (c) is not true and correct in any material respect as of the date specified
therein with respect to any Receivable transferred to the Trust, (ii) there is a
breach of any covenant under subsection 2.8(c) with respect to any Receivable
and such breach has a material adverse effect on the Certificateholders'
Interest in such Receivable or (iii) the Trust's interest in any Receivable is
not a first priority perfected ownership or security interest at any time as a
result of any action taken by, or any failure to take action by, the Company
(any Receivable as to which the conditions specified in any of clauses (i), (ii)
or (iii) of this subsection 2.5(a) exists is referred to herein as an
"INELIGIBLE RECEIVABLE") then, upon the earlier (the date on which such earlier
event occurs, the "REPURCHASE OBLIGATION DATE") of the discovery by the Company
of any such event which continues unremedied or receipt by the Company of
written notice given by the Trustee or the Servicer of any such event which
continues unremedied, the Company shall become obligated to repurchase or cause
to be repurchased such Ineligible Receivable on the terms and conditions set
forth in subsection 2.5(b).
(b) REPURCHASE OF RECEIVABLES. Subject to the last sentence of this
subsection 2.5(b), the Company shall repurchase, or cause to be repurchased,
each Ineligible Receivable required to be repurchased pursuant to subsection
2.5(a) by depositing in the Collection Account in immediately available funds on
the Business Day following the related Repurchase Obligation
34
Date an amount equal to the lesser of (x) the amount by which the Aggregate
Target Receivables Amount exceeds the Aggregate Receivables Amount (after
giving effect to the reduction thereof by the Principal Amount of such
Ineligible Receivable) and (y) the aggregate outstanding Principal Amount of
each such Ineligible Receivable (the "TRANSFER DEPOSIT AMOUNT"). Upon
transfer or deposit of the Transfer Deposit Amount, the Trust shall
automatically and without further action be deemed to sell, transfer, assign,
set over and otherwise convey to the Company, without recourse,
representation or warranty, all the right, title and interest of the Trust in
and to such Ineligible Receivable, all monies due or to become due with
respect thereto and all proceeds thereof; and such repurchased Ineligible
Receivable shall be treated by the Trust as collected in full as of the date
on which it was transferred. The Trustee shall execute such documents and
instruments of transfer or assignment and take such other actions as shall
reasonably be requested by the Company to effect the conveyance of such
Receivables pursuant to this subsection. Except as otherwise specified in
any Supplement, the obligation of the Company to repurchase any Ineligible
Receivable shall constitute the sole remedy respecting the event giving rise
to such obligation available to Investor Certificateholders (or the Trustee
on behalf of Investor Certificateholders).
Section 2.6. PURCHASE OF INVESTOR CERTIFICATEHOLDERS' INTEREST IN
TRUST PORTFOLIO. (a) In the event of any breach of any of the representations
and warranties set forth in paragraphs (a), (b), (c), (d), (e)(i) or (q) of
Section 2.3, which breach has a material adverse effect on the interests of the
holders of an Outstanding Series (without giving effect to any Enhancement)
under or with respect to the Transaction Documents, then the Trustee, at the
written direction of holders evidencing more than 50% of the Invested Amount of
such Outstanding Series, subject to Section 8.2 hereof, shall notify the Company
to purchase such Outstanding Series and the Company shall be obligated to make
such purchase on the next Distribution Date occurring at least five Business
Days after receipt of such notice on the terms and conditions set forth in
subsection 2.6(b) below; PROVIDED, HOWEVER, that no such purchase shall be
required to be made if, by such Distribution Date, the representations and
warranties contained in Section 2.3 shall be satisfied in all material respects
and any material adverse effect on the holders of such Outstanding Series caused
thereby shall have been cured.
(b) As required under subsection 2.6(a) above, the Company shall
deposit into the Collection Account for credit to the applicable subaccount of
the Collection Account on the Business Day preceding such Distribution Date an
amount equal to the purchase price (as described in the next succeeding
sentence) for the Certificateholders' Interest for such Outstanding Series on
such day. The purchase price for any such purchase will be equal to (i) the
Adjusted Invested Amount of such Outstanding Series on the date on which the
purchase is made plus (ii) an amount equal to all interest accrued but unpaid on
such Series up to the Distribution Date on which the distribution of such
deposit is scheduled to be made pursuant to Section 9.2 plus (iii) any other
amount required to be paid in connection therewith pursuant to any Supplement.
Notwithstanding anything to the contrary in this Agreement, the entire amount of
the purchase price deposited in the Collection Account shall be distributed to
the related Investor Certificateholders on such Distribution Date pursuant to
Section 9.2. If the Trustee gives notice directing the Company to purchase the
Certificates of an Outstanding Series as provided above, except as otherwise
specified in any Supplement, the obligation of the Company to purchase such
35
Certificates pursuant to this Section 2.6 shall constitute the sole remedy
respecting an event of the type specified in the first sentence of this Section
2.6 available to the applicable Investor Certificateholders (or the Trustee on
behalf of such Investor Certificateholders).
Section 2.7. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company
hereby covenants that, until the Trust Termination Date occurs, the Company
shall:
(a) FINANCIAL STATEMENTS. Furnish to the Trustee, each Agent and the
Rating Agencies, as soon as available, but in any event within 95 days
after the end of each fiscal year of the Company, a copy of the audited
balance sheet and statement of operations of the Company as at the end of
such year, all in reasonable detail and certified by an appropriate
Responsible Officer as correct and fairly presenting the financial position
and results of operations of the Company.
(b) ANNUAL OPINION. Deliver to the Trustee an Opinion of Counsel,
substantially in the form of Exhibit B, by January 31st of each year, the
first such delivery hereunder to occur in January 1998.
(c) PAYMENT OF OBLIGATIONS; 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
(including, without limitation, all taxes, assessments, levies and other
governmental charges imposed on it), 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 the books of the Company. The Company shall defend the
right, title and interest of the Holders in, to and under the Receivables
and the other Trust Assets, whether now existing or hereafter created,
against all claims of third parties claiming through or under the Company,
any Seller, any Sub-Servicer or the Servicer. The Company will duly
fulfill all material obligations on its part to be fulfilled under or in
connection with each Receivable and will do nothing to impair the rights of
the Holders in such Receivable.
(d) INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and accounts in which full, true and correct
entries in conformity in all material respects with GAAP and all
Requirements of Law shall be made of all dealings and transactions in
relation to its business and activities; and permit representatives of the
Trustee upon reasonable advance notice to visit and inspect any of its
properties and examine and make abstracts from any of its books and records
during normal business hours on any Business Day and as often as may
reasonably be desired according to the Company's normal security and
confidentiality requirements and to discuss the business, operations,
properties and financial and other condition of the Company with officers
and employees of the Company and with its Independent Public Accountants;
PROVIDED, that the Trustee shall notify the Company prior to any contact
with such Independent Public Accountants and shall give the Company the
opportunity to participate in such discussions.
36
(e) COMPLIANCE WITH LAW AND POLICIES. (i) Comply in all material
respects with all Requirements of Law applicable to the Company.
(ii) Cause each Seller to perform its obligations in accordance
with, and comply in all material respects with, the Policies, as
amended from time to time in accordance with the Transaction
Documents, in regard to the Receivables and the Related Property.
(f) PURCHASE OF RECEIVABLES. Purchase Receivables solely pursuant to
(i) the SPC Receivables Sale Agreement (but only on the Initial Closing
Date), (ii) the Receivables Sale Agreement or (iii) this Agreement.
(g) DELIVERY OF COLLECTIONS. In the event that the Company receives
Collections directly from Obligors, deposit such Collections into the
applicable Lockbox Account, the Collection Concentration Account or the
Collection Account within one Business Day after receipt thereof by the
Company.
(h) NOTICES. Promptly (and, in any event, within five Business Days
after a Responsible Officer of the Company becomes aware of such event)
give written notice to the Trustee, each Rating Agency and each Agent for
any Outstanding Series of:
(i) the occurrence of any Early Amortization Event or
Potential Early Amortization Event; and
(ii) any Lien not permitted by subsection 2.8(c) on any
Receivable or any other Trust Assets.
(i) LOCKBOXES. (i) Maintain, and keep in full force and effect, each
Lockbox Agreement to which the Company is a party, except to the extent
otherwise permitted under the terms of this Agreement and the other
Transaction Documents and (ii) ensure that each related Lockbox Account
shall be free and clear of, and defend each such Lockbox Account against,
any writ, order, stay, judgment, warrant of attachment or execution or
similar process.
(j) SEPARATE CORPORATE EXISTENCE.
(i) Maintain its own deposit account or accounts, separate from
those of any Affiliate, with commercial banking institutions and
ensure that the funds of the Company will not be diverted to any other
Person or for other than corporate uses of the Company, nor will such
funds be commingled with the funds of any Seller or any other
Subsidiary or Affiliate of any Seller;
(ii) To the extent that it shares the same officers or other
employees as any of its stockholders or Affiliates, the salaries of
and the expenses related to providing benefits to such officers and
other employees shall be fairly allocated
37
among such entities, and each such entity shall bear its fair share
of the salary and benefit costs associated with all such common
officers and employees;
(iii) To the extent that it jointly contracts with any of its
stockholders or Affiliates to do business with vendors or service
providers or to share overhead expenses, the costs incurred in so
doing shall be allocated fairly among such entities, and each such
entity shall bear its fair share of such costs. To the extent that
the Company contracts or does business with vendors or service
providers where the goods and services provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefit the goods
or services are provided, and each such entity shall bear its fair
share of such costs. All material transactions between the Company
and any of its Affiliates, whether currently existing or hereafter
entered into, shall be only on an arm's-length basis, it being
understood and agreed that the transactions contemplated in the
Transaction Documents meet the requirements of this clause (iii);
(iv) Maintain a principal executive office at a separate address
from the address of RS and its Affiliates; PROVIDED that segregated
offices in the same building shall constitute separate addresses for
purposes of this clause (iv). To the extent that the Company and any
of its stockholders or Affiliates have offices in the same location,
there shall be a fair and appropriate allocation of overhead costs
among them, and each such entity shall bear its fair share of such
expenses;
(v) Issue separate financial statements prepared not less
frequently than quarterly and prepared in accordance with GAAP;
(vi) Conduct its affairs in its own name and strictly in
accordance with its articles of incorporation and observe all
necessary, appropriate and customary corporate formalities, including,
but not limited to, holding all regular and special stockholders' and
directors' meetings appropriate to authorize all corporate action,
keeping separate and accurate minutes of its meetings, passing all
resolutions or consents necessary to authorize actions taken or to be
taken, and maintaining accurate and separate books, records and
accounts, including, but not limited to, payroll and intercompany
transaction accounts;
(vii) Not assume or guarantee any of the liabilities of any
Seller, any Servicing Party or any Affiliate of any thereof; and
(viii) Take, or refrain from taking, as the case may be, all other
actions that are necessary to be taken or not to be taken in order to
(x) ensure that the assumptions and factual recitations set forth in
the Specified Bankruptcy Opinion Provisions remain true and correct in
all material respects with respect to the Company and (y) comply with
those procedures described in such provisions which are applicable to
the Company.
38
(k) 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
failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would, if not remedied within 30 days, be
reasonably likely to have a Material Adverse Effect with respect to the
Company.
(l) NET WORTH. Maintain at all times a consolidated net worth
(exclusive of the RS Loan), as determined in accordance with GAAP, of at
least $43,000,000.
(m) OPTIONAL TERMINATION. If the Company shall deliver an Optional
Termination Notice to the Trustee with respect to any Outstanding Series,
the Company shall deliver an Optional Termination Notice to the Trustee
with respect to all Outstanding Series.
(n) MAINTENANCE OF PROPERTY. Keep all material tangible property
useful and necessary in its business in good working order and condition
(normal wear and tear excepted), except to the extent that the failure to
do any of the foregoing with respect to any such property would not be
reasonably likely to have a Material Adverse Effect with respect to the
Company.
(o) FURTHER ASSURANCES. File, or cause to be filed, at the
applicable Seller's expense and in accordance with the provisions of the
UCC of the applicable jurisdiction, duly completed and executed
continuation statements with respect to all financing statements filed in
connection with the transactions contemplated by the Receivables Sale
Agreement.
Section 2.8. NEGATIVE COVENANTS OF THE COMPANY. The Company hereby
covenants that, until the Trust Termination Date occurs, it shall not directly
or indirectly:
(a) ACCOUNTING OF TRANSFERS. Prepare any financial statements which
shall account for the transactions contemplated hereby in any manner other
than as a sale of Receivables and the other Trust Assets by the Company to
the Trust or in any other respect account for or treat the transactions
under this Agreement (including for financial accounting purposes, except
as required by law) in any manner other than as transfers of Receivables
and the other Trust Assets by the Company to the Trust; PROVIDED, HOWEVER,
that this subsection shall not apply for any tax or tax accounting
purposes.
(b) LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except: (i) Indebtedness evidenced by the
Subordinated Note; (ii) Indebtedness representing fees, expenses and
indemnities payable pursuant to and in accordance with the Transaction
Documents; and (iii) Indebtedness for services supplied or furnished to the
Company in an amount not to exceed $10,000 at any one time outstanding;
PROVIDED that any Indebtedness permitted hereunder and described in clauses
(i) and (iii) shall be payable by the Company solely from funds available
to the Company which are not otherwise needed to be applied to the payment
of any amounts by the
39
Company pursuant to any Pooling and Servicing Agreements and shall be
non-recourse other than with respect to proceeds in excess of the
proceeds needed to be so applied.
(c) LIMITATION ON LIENS. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for Permitted Liens, it being understood that no
Permitted Lien under clause (ii) of the definition thereof shall cover any
of the Trust Assets (except to the limited extent permitted by clause (v)
of such definition).
(d) LIMITATION ON GUARANTEE OBLIGATIONS. Become or remain liable,
directly or contingently, in connection with any Indebtedness or other
liability of any other Person, whether by guarantee, endorsement (other
than endorsements of negotiable instruments for deposit or collection in
the ordinary course of business), agreement to purchase or repurchase,
agreement to supply or advance funds, or otherwise, except in connection
with indemnification obligations of the Company to the limited extent
provided in the Company's articles of incorporation and by-laws; PROVIDED
that any such indemnification shall be paid solely from funds available to
the Company which are not otherwise needed to be applied to the payment of
any amounts pursuant to any Pooling and Servicing Agreements, shall be non-
recourse other than with respect to proceeds in excess of the proceeds
necessary to make such payment, and shall not constitute a claim against
the Company to the extent that insufficient proceeds exist to make such
payment.
(e) LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or make any material change in its
present method of conducting business, or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets other than the assignments and transfers contemplated
hereby.
(f) LIMITATION ON DIVIDENDS AND OTHER PAYMENTS. Declare or pay any
dividend on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of capital
stock of the Company, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Company (any of the
foregoing, a "restricted payment"), unless (i) at the date such restricted
payment is made, the Company shall have made all payments in respect of its
repurchase obligations pursuant to this Agreement outstanding at such date
and (ii) such restricted payment is made no more frequently than on a
monthly basis and is effected in accordance with all corporate and legal
formalities applicable to the Company; PROVIDED, HOWEVER, that (A) no
restricted payment shall be made on any date if (x) a Potential Early
Amortization Event of a type referred to in clause (a)(ii) or (iii) of
Section 7.1 or (y) an Early Amortization Event has occurred and is
continuing (or would occur as a result of such payment) on such date and
(B) all restricted payments made on any date shall be payable by the
Company solely from funds available to the Company which are not otherwise
needed on such date to be applied
40
to the payment of any amounts by the Company pursuant to any Pooling and
Servicing Agreement.
(g) BUSINESS OF THE COMPANY. Engage at any time in any business or
business activity other than the acquisition of Receivables pursuant to the
Receivables Sale Agreement (or, on the Initial Closing Date, the SPC
Receivables Sale Agreement), the assignments and transfers hereunder and
the other transactions contemplated by the Transaction Documents, and any
activity incidental to the foregoing and necessary or convenient to
accomplish the foregoing, or enter into or be a party to any agreement or
instrument other than in connection with the foregoing, except those
agreements or instruments permitted under subsection 2.8(i) or set forth on
Schedule 5.
(h) LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any
Person, except for (i) any Exchangeable Company Interest, any Series
Subordinated Interest, the Receivables and the other Trust Assets, (ii) the
Subordinated Note and (iii) any other advance or loan made to any Seller,
PROVIDED, HOWEVER, that in the case of the preceding clause (iii), (A) no
(x) Potential Early Amortization Event of a type referred to in clause
(a)(ii) or (iii) of Section 7.1 or (y) Early Amortization Event has
occurred and is continuing at the time any such investment is made (or
would occur as a result of such investment), (B) no amounts are outstanding
under the Subordinated Note, (C) the loan made is a demand loan at a market
rate of interest and (D) any such investment shall be made by the Company
solely from funds available to the Company which are not otherwise needed
to be applied to the payment of any amounts by the Company pursuant to any
Pooling and Servicing Agreement.
(i) AGREEMENTS. (i) Become a party to, or permit any of its
properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, lease or other undertaking, except the Transaction Documents,
leases of office space, equipment or other facilities for use by the
Company in its ordinary course of business, employment agreements, service
agreements, agreements relating to shared employees and the other
Transaction Documents and agreements necessary to perform its obligations
under the Transaction Documents, (ii) issue any power of attorney (except
to the Trustee or the Servicer or except for the purpose of permitting any
Person to perform any ministerial functions on behalf of the Company that
are not prohibited by or inconsistent with the terms of the Transaction
Documents), or (iii) amend, supplement, modify or waive any of the
provisions of the Receivables Sale Agreement or any Lockbox Agreement or
request, consent or agree to or suffer to exist or permit any such
amendment, supplement, modification or waiver or exercise any consent
rights granted to it thereunder unless such amendment, supplement,
modification or waiver or such exercise of consent rights would not be
reasonably likely to have a Material Adverse Effect and, in the case of the
Receivables Sale Agreement, the Rating Agency Condition shall have been
satisfied with respect to any such amendments, supplements, modifications
or waivers.
41
(j) POLICIES. Make any change or modification (or permit any change
or modification to be made) in any material respect to the Policies, except
(i) if such changes or modifications are necessary under any Requirement of
Law, (ii) if such changes or modifications would not reasonably be likely
to have a Material Adverse Effect with respect to the Company or (iii) if
the Rating Agency Condition is satisfied with respect thereto; PROVIDED,
HOWEVER, that if any change or modification, other than a change or
modification permitted pursuant to clause (i) or (ii) above, would be
reasonably likely to have a Material Adverse Effect on the interests of the
Investor Certificateholders of a Series which is not rated by a Rating
Agency, the consent of the applicable Agent (or as specified in the related
Supplement) shall be required to effect such change or modification.
(k) RECEIVABLES NOT TO BE EVIDENCED BY PROMISSORY NOTES. Subject to
the delivery requirement set forth in subsection 2.1(c), take any action to
cause any Receivable to be evidenced by any "instrument" other than,
provided that the procedures set forth in Schedule 3 are fully implemented
with respect thereto, an instrument which alone or together with a security
agreement constitutes "chattel paper" (each as defined in the UCC as in
effect in any state in which the Company's or the applicable Seller's chief
executive office or books and records relating to such Receivable are
located), except in connection with its enforcement or collection of a
Defaulted Receivable.
(l) OFFICES. Move outside or within the state where such office is
now located the location of its chief executive office or of any of the
offices where it keeps its records with respect to the Receivables without
(i) in the case of moves outside such state, giving 30 days' prior written
notice to the Trustee and each Rating Agency, (ii) in the case of moves
within such state, giving the Trustee prompt notice of a change within the
state where such office is now located of the location of its chief
executive office or any office where it keeps its records with respect to
the Receivables and (iii) taking all actions reasonably requested by the
Trustee (including but not limited to all filings and other acts necessary
or advisable under the UCC or similar statute of each relevant
jurisdiction) in order to continue the Trust's first priority perfected
ownership or security interest in all Receivables now owned or hereafter
created; PROVIDED, HOWEVER, that the Company shall not change the location
of its chief executive office to outside of the United States, or to a
state which is within the Tenth Circuit unless it delivers an Opinion of
Counsel reasonably acceptable to the Rating Agencies to the effect that
OCTAGON GAS SYSTEMS, INC. X. XXXXXX, 995 F.2d 948 (10th Cir. 1993) is no
longer controlling precedent in the Tenth Circuit.
(m) CHANGE IN NAME. Change its name, identity or corporate structure
in any manner which would or might make any financing statement or
continuation statement (or other similar instrument) filed in accordance
with subsection 10.2(a) seriously misleading within the meaning of
Section 9-402(7) of the UCC as in effect in any applicable jurisdiction in
which UCC filings have been made in respect of the Trust Assets without 30
days' prior written notice to the Trustee and each Rating Agency.
42
(n) CHARTER. Amend or make any change or modification to its
certificate of incorporation or by-laws without first satisfying the Rating
Agency Condition (other than an amendment, change or modification made
pursuant to changes in law of the state of its incorporation or amendments
to change the Company's name (subject to compliance with clause (m) above),
resident agent or address of resident agent).
(o) ADDITION OF SELLERS. Agree to the addition of any Subsidiary of
RS as an additional Seller pursuant to Section 9.13 of the Receivables Sale
Agreement without such Subsidiary's being simultaneously added as a Sub-
Servicer (or without another Subsidiary's simultaneously agreeing to act as
a Sub-Servicer in respect of such additional Seller) under the Transaction
Documents pursuant to Section 2.6 of the Servicing Agreement.
ARTICLE III
RIGHTS OF HOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
THE FOLLOWING PORTION OF THIS ARTICLE III
IS APPLICABLE TO ALL SERIES.
Section 3.1. ESTABLISHMENT OF COLLECTION ACCOUNT AND COLLECTION
CONCENTRATION ACCOUNT; CERTAIN ALLOCATIONS. (a)(i) The Trustee, for the
benefit of the Holders as their interests appear in this Agreement, shall cause
to be established and maintained in the name of the Trust with an Eligible
Institution or with the corporate trust department of the Trustee or an
affiliate of the Trustee, a segregated trust account (the "COLLECTION ACCOUNT"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Holders. Schedule 2, which is hereby incorporated
into and made a part of this Agreement, identifies the Collection Account by
setting forth the account number of such account, the account designation of
such account and the name of the institution with which such account has been
established. The Collection Account shall be divided into individual
subaccounts for each Outstanding Series (each, respectively, a "SERIES
COLLECTION SUBACCOUNT" and, collectively, the "SERIES COLLECTION SUBACCOUNTS")
and for the Company (the "COMPANY COLLECTION SUBACCOUNT"). For administrative
purposes only, the Trustee shall establish or cause to be established for each
Series, so long as such Series is an Outstanding Series, sub-subaccounts of the
Series Collection Subaccounts with respect to such Series (respectively, the
"SERIES PRINCIPAL COLLECTION SUB-SUBACCOUNT" and "SERIES NON-PRINCIPAL
COLLECTION SUB-SUBACCOUNT" and, collectively, the "SERIES COLLECTION SUB-
SUBACCOUNTS").
(ii) The Trustee also shall establish, for the benefit of the Holders
as their interests appear in this Agreement, an intervening deposit account
with an Eligible Institution or with the corporate trust department of the
Trustee or an affiliate of the Trustee (the "COLLECTION CONCENTRATION
ACCOUNT") in the name of the Trust, which account shall be used for the
receipt of Collections transferred from the Lockbox Accounts and the
Eligible
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Segregated Accounts (to the extent so provided in the Servicing
Agreement) prior to the deposit of such Collections into the Collection
Account.
(b) AUTHORITY OF THE TRUSTEE IN RESPECT OF THE COLLECTION ACCOUNT AND
THE COLLECTION CONCENTRATION ACCOUNT AND HOLDERS' INTERESTS THEREIN. (i) The
Trustee, on behalf of the Holders, shall possess all right, title and interest
in all funds on deposit from time to time in the Collection Account and the
Collection Concentration Account and in all proceeds thereof. The Collection
Account and the Collection Concentration Account shall be under the sole
dominion and control of the Trustee for the benefit of the Investor
Certificateholders and, to the extent set forth in any Supplement, any owner of
any Series Subordinated Interest. If, at any time, the Servicer has actual
notice or knowledge that any institution holding the Collection Account is other
than the corporate trust department of the Trustee or an affiliate of the
Trustee, or that the institution holding the Collection Account or the
Collection Concentration Account has ceased to be an Eligible Institution, the
Servicer shall direct the Trustee in writing to establish within 30 days a
substitute account therefor with an Eligible Institution, transfer any cash
and/or any Eligible Investments to such new account and from the date any such
substitute accounts are established, such account shall be the Collection
Account (or the Collection Concentration Account, as the case may be). Neither
the Company nor the Servicer, nor any person or entity claiming by, through or
under the Company or Servicer, shall have any right, title or interest in,
except to the extent expressly provided under the Transaction Documents, or any
right to withdraw any amount from, the Collection Account or the Collection
Concentration Account. Pursuant to the authority granted to the Servicer in
subsection 2.2(a) of the Servicing Agreement, the Servicer shall have the power,
revocable by the Trustee, to instruct the Trustee in writing to make withdrawals
from and payments to the Collection Account and/or the Collection Concentration
Account for the purposes of carrying out the Servicer's or the Trustee's duties
hereunder.
(ii) Each Series of Investor Certificates shall represent Fractional
Undivided Interests in the Trust as indicated in the Supplement (including any
Enhancement applicable to such Series as specified in the related Supplement)
relating to such Series and the right to receive Collections and other amounts
at the times and in the amounts specified in this Article III (as supplemented
by the Supplement related to such Series) to be deposited in the Collection
Account and any other accounts maintained for the benefit of the Investor
Certificateholders or paid to the Investor Certificateholders (with respect to
each outstanding Series, the "CERTIFICATEHOLDERS' INTEREST"). The "EXCHANGEABLE
COMPANY INTEREST" shall be the interest in the Trust not represented by any
Series of Investor Certificates then outstanding or Series Subordinated
Interests then in existence, including the right to receive Collections and
other amounts at the times and in the amounts specified in this Article III to
be paid to the Company (the "COMPANY INTEREST"), and each Series Subordinated
Interest, if any, shall be the interest specified as such pursuant to the
related Supplement; PROVIDED, HOWEVER, that no such Exchangeable Company
Interest or Series Subordinated Interest shall include any interest in any Trust
Account or any other accounts maintained for the benefit of the Investor
Certificateholders, except as specifically provided in Article III.
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(c) ADMINISTRATION OF THE COLLECTION ACCOUNT. At the written
direction of the Servicer, funds on deposit in the Collection Account available
for investment shall be invested by the Trustee in Eligible Investments selected
by the Company. All such Eligible Investments shall be held by the Trustee for
the benefit of the Investor Certificateholders. Amounts on deposit in each
Series Non-Principal Collection Sub-subaccount shall, if applicable, be invested
in Eligible Investments that will mature, or that are payable or redeemable upon
demand of the holder thereof, so that such funds will be available on or before
the Business Day immediately preceding the next Distribution Date. None of such
Eligible Investments shall be disposed of prior to the maturity date with
respect thereto unless such disposition is reasonably necessary to prevent a
loss. All interest and investment earnings (net of losses and investment
expenses) (the "INVESTMENT EARNINGS") on funds deposited in a Series Non-
Principal Collection Sub-subaccount shall be deposited in such sub-subaccount.
Amounts on deposit in the Series Principal Collection Sub-subaccounts and any
other sub-subaccounts as specified in the related Supplement shall be invested
in Eligible Investments that mature, or that are payable or redeemable upon
demand of the holder thereof, so that such funds will be available not later
than the date which is specified in any Supplement. The Trustee, or its nominee
or custodian, shall maintain possession of the instruments or securities, if
any, evidencing any Eligible Investments from the time of purchase thereof until
the time of sale or maturity. Any Investment Earnings on such invested funds in
a Series Principal Collection Sub-subaccount and any other sub-subaccounts as
specified in the related Supplement will be deposited in the related Series Non-
Principal Collection Sub-subaccount.
(d) DAILY COLLECTIONS. (i) Promptly following its receipt of
Collections in the form of available funds in the Lockbox Accounts, but in no
event later than the Business Day following such receipt, the Servicer shall
transfer, or cause to be transferred, all Collections on deposit (less the
aggregate amount of set-offs permitted to be retained pursuant to any applicable
Lockbox Agreement) in the form of available funds in the Lockbox Accounts
directly to the Collection Concentration Account. In addition, in accordance
with subsection 2.3(a) of the Servicing Agreement, funds on deposit in certain
Eligible Segregated Accounts and certain funds received directly by a Servicing
Party from an Obligor may be transferred to the Collection Concentration
Account.
(ii) Promptly, but in no event later than the date of deposit (unless
received after 3:00 p.m., New York City time, on such date, then on the next
Business Day) (the "DEPOSIT DATE"), the Trustee shall transfer amounts on
deposit in the Collection Concentration Account into the Collection Account.
(iii) Until an Early Termination has occurred with respect to all
Sellers, no later than the Business Day following each Deposit Date, the Trustee
shall (in accordance with the written directions received from the Servicer
pursuant to subsection (h) below, upon which the Trustee may conclusively rely)
transfer from Aggregate Daily Collections deposited into the Collection Account
pursuant to subsection (d)(ii) above on such Deposit Date, to the Company
Collection Subaccount, an amount equal to the product of (x) the PACA Percentage
on such date and (y) such Aggregate Daily Collections.
45
(iv) No later than the Business Day following each Deposit Date,
following the transfer, if any, made pursuant to Subsection (d)(iii) above, the
Trustee shall (in accordance with the written directions received from the
Servicer pursuant to subsection (h) below, upon which the Trustee may
conclusively rely) transfer from Aggregate Daily Collections deposited into the
Collection Account pursuant to subsection (d)(ii) above on such Deposit Date, to
the respective Series Collection Subaccount, an amount equal to the product of
(x) the applicable Invested Percentage for such Outstanding Series and (y) such
Aggregate Daily Collections (after giving effect to the transfer, if any, made
pursuant to subsection (d)(iii) above).
(v) No later than the Business Day following each Deposit Date, the
Trustee shall (in accordance with the written directions received from the
Servicer pursuant to subsection (h) below, upon which the Trustee may
conclusively rely) allocate funds transferred to the Series Collection
Subaccount for each Outstanding Series pursuant to subsection (d)(iv) above to
the Series Non-Principal Collection Sub-subaccount, the Series Principal
Collection Sub-subaccount and such other Sub-subaccounts of each such Series in
accordance with the related Supplement for such Series.
(vi) No later than the Business Day following each Deposit Date,
except as otherwise provided in a Supplement, the Trustee shall (in accordance
with the written directions received from the Servicer pursuant to subsection
(h) below, upon which the Trustee may conclusively rely) transfer to the Company
Collection Subaccount from Aggregate Daily Collections deposited into the
Collection Account pursuant to subsection (d)(ii) above on such Deposit Date,
the remaining funds (less an amount equal to the costs and expenses, if any,
incurred by the Trustee with respect to the sale of the Receivables pursuant to
subsection 7.2(a) or 9.1(b) and reimbursable to the Trustee as provided in
Section 8.5), if any, on deposit in the Collection Account on such date after
giving effect to transfers to be made pursuant to subsections (d)(iii) and
(d)(iv) above.
(e) CERTAIN ALLOCATIONS FOLLOWING AN AMORTIZATION PERIOD. (i) If,
on any Settlement Report Date, an Amortization Period has occurred and is
continuing with respect to any Outstanding Series and at such Settlement Report
Date, a Revolving Period is still in effect with respect to any other
Outstanding Series (a "SPECIAL ALLOCATION SETTLEMENT REPORT DATE"), then the
Servicer shall make the following calculations:
(A) the amount (the "ALLOCABLE CHARGED-OFF AMOUNT") equal to the
excess, if any, of (I) the aggregate Principal Amount of Charged-Off
Receivables for the related Settlement Period over (II) the aggregate
Principal Amount of Recoveries received during the related Settlement
Period;
(B) the amount (the "ALLOCABLE RECOVERIES AMOUNT") equal to the
excess, if any, of (I) the aggregate Principal Amount of Recoveries
received during the related Settlement Period over (II) the aggregate
Principal Amount of Charged-Off Receivables for the related Settlement
Period; and
46
(ii) If, on any Special Allocation Settlement Report Date, any of
the Allocable Charged-Off Amount or the Allocable Recoveries Amount is
greater than zero for the related Settlement Period, the Trustee shall (in
accordance with written directions received pursuant to subsection (b)(i)
above, upon which the Trustee may conclusively rely) make (A) a pro rata
allocation to each Outstanding Series (based on the Invested Percentage for
such Series) of a portion (as determined in clause (iii) below) of each such
positive amount and (B) an allocation to the Exchangeable Company Interest of
the remaining portion of each such positive amount.
(iii) With respect to each portion of the Allocable Charged-Off
Amount and the Allocable Recoveries Amount which is allocated to an
Outstanding Series pursuant to subsection 3.1(e)(ii), the Trustee shall apply
each such amount to such Series in accordance with the related Supplement for
such Series.
(f) DAILY PACA-RELATED TRANSFER; ALLOCATIONS FOR THE EXCHANGEABLE
COMPANY INTEREST. (i) If, on any Business Day, funds have been deposited in
the Company Collection Subaccount pursuant to subsection 3.1(d)(iii), then
after making all allocations required pursuant to subsection 3.1(d), the
Trustee shall (in accordance with the written direction of the Servicer, upon
which the Trustee may conclusively rely) transfer to the Company from funds
on deposit in the Company Collection Subaccount the amount calculated
pursuant to subsection 3.1(d)(iii).
(ii) In addition, until the occurrence and continuance of an Early
Amortization Period, on each Business Day and, after the occurrence and
continuance of an Early Amortization Period and until the Trust Termination
Date, on each Distribution Date, after making all allocations required
pursuant to subsection 3.1(d), the Trustee shall (in accordance with the
written direction of the Servicer, upon which the Trustee may conclusively
rely) transfer to the owner of the Exchangeable Company Interest the
remaining amount on deposit in the Company Collection Subaccount.
(g) SET-OFF. (i) In addition to the provisions of Section 8.5,
if the Company shall fail to make a payment as provided in this Agreement or
any Supplement, the Servicer or the Trustee may set off and apply any amounts
otherwise payable to the Company under any Pooling and Servicing Agreement.
The Company hereby waives demand, notice or declaration of such set-off and
application; PROVIDED that notice will promptly be given to the Company of
such set-off; PROVIDED FURTHER that failure to give such notice shall not
affect the validity of such set-off.
(ii) In addition to the provisions of Section 8.5, in the event the
Servicer shall fail to make a payment as provided in any Pooling and
Servicing Agreement, the Trustee may set off and apply any amounts otherwise
payable to the Servicer in its capacity as Servicer under the Transaction
Documents on account of such obligation. The Servicer hereby waives demand,
notice or declaration of such set-off and application; PROVIDED that notice
will promptly be given to the Servicer of such set-off; PROVIDED FURTHER that
failure to give such notice shall not affect the validity of such set-off.
(h) ALLOCATION AND APPLICATION OF FUNDS. The Servicer shall direct
the Trustee in writing in a timely manner to apply all Collections with respect
to the Receivables as described
47
in this Article III and in the Supplement with respect to each Outstanding
Series. The Servicer shall direct the Trustee in writing to pay Collections
to the owner of the Exchangeable Company Interest to the extent such
Collections are allocated to the Exchangeable Company Interest under
subsection 3.1(f) and as otherwise provided in Article III. Notwithstanding
anything in this Agreement, any Supplement or any other Transaction Document
to the contrary, to the extent that the Trustee receives any Daily Report
prior to 2:00 p.m., New York City time, on any Business Day, the Trustee
shall make any applications of funds required thereby on the same Business
Day and otherwise on the next succeeding Business Day.
THE REMAINDER OF ARTICLE III 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.
ARTICLE IV
ARTICLE IV IS RESERVED
AND MAY BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO THE SERIES RELATING THERETO
ARTICLE V
THE CERTIFICATES AND INTERESTS
Section 5.1. THE CERTIFICATES. The Investor Certificates of each
Series and any Class thereof shall be in fully registered form and shall be
substantially in the form of the exhibits with respect thereto attached to
the applicable Supplement. The Certificates shall, upon issue, be executed
and delivered by the Company to the Trustee for authentication and redelivery
as provided in Section 5.2. Except as otherwise set forth in the related
Supplement, the Investor Certificates shall be issued in minimum
denominations of $1,000,000 and in integral multiples of $100,000 in excess
thereof unless otherwise specified in any Supplement for any Series and
Class. 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 Company is hereby
authorized to execute and deliver each Certificate on behalf of the Trust.
Each Certificate shall be executed by manual or facsimile signature on behalf
of the Company by a Responsible Officer. 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 Company or the
Trustee shall not be rendered invalid, notwithstanding that such individual
has ceased to be so authorized prior to or on the date of 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,
48
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form provided for herein
executed by or on behalf of the Trustee by the manual signature of a duly
authorized signatory, and such certificate of authentication 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 5.2. AUTHENTICATION OF CERTIFICATES. The Trustee shall
authenticate and deliver the initial Series of the Investor Certificates that
is issued upon original issuance, upon the written order of the Company in a
form reasonably satisfactory to the Trustee, to the holders of the initial
Series of Investor Certificates, against payment to the Company of the
Initial Invested Amount. The Investor Certificates shall be duly
authenticated by or on behalf of the Trustee in authorized denominations
equal to (in the aggregate) the Initial Invested Amount and the interests
evidenced thereby, together with any Series Subordinated Interest and the
Exchangeable Company Interest, shall constitute the entire ownership of the
Trust. Upon a Company Exchange as provided in Section 5.10 and the
satisfaction of certain other conditions specified therein, the Trustee shall
authenticate and deliver the Certificates of additional Series (with the
designation provided in the applicable Supplement) (or, if provided in any
Supplement, the additional Investor Certificates of an existing Series), upon
the written order of the Company, to the Persons designated in such
Supplement. Upon the order of the Company, the Investor Certificates of any
Series shall be duly authenticated by or on behalf of the Trustee, in
authorized denominations equal to (in the aggregate) the Initial Invested
Amount of such Series of Investor Certificates.
Section 5.3. 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
Section 8.16 a register (the "CERTIFICATE REGISTER") in which, subject to
such reasonable regulations as the Trustee may prescribe, the Transfer Agent
and Registrar shall provide for the registration of the Investor Certificates
and of transfers and exchanges of the Investor Certificates as herein
provided. The Company hereby appoints the Trustee as Transfer Agent and
Registrar for the purpose of registering the Investor Certificates and
transfers and exchanges of the Investor Certificates as herein provided. The
Trustee shall be permitted to resign as Transfer Agent and Registrar upon 30
days' written notice to the Company 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 Trustee has
appointed a successor Transfer Agent and Registrar reasonably acceptable to
the Company and such successor Transfer Agent and Registrar has accepted such
appointment. The provisions of Sections 8.1, 8.2, 8.3, 8.5 and 10.19 shall
apply to the Trustee also in its role as Transfer Agent or Registrar, as the
case may be, for so long as the Trustee shall act as Transfer Agent or
Registrar, as the case may be.
The Company hereby agrees to provide the Trustee from time to time
sufficient funds, on a timely basis and in accordance with and subject to
Section 8.5, for the payment of any reasonable compensation payable to the
Transfer Agent and Registrar for their services under this
49
Section 5.3. The Trustee hereby agrees that, upon the receipt of such funds
from the Company, it shall pay the Transfer Agent and Registrar such amounts.
Upon surrender for registration of transfer of any Investor
Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, the Company shall execute, and, upon the written
request of the Company, the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Investor
Certificates in authorized denominations of the same Series representing like
aggregate Fractional Undivided Interests and which bear numbers that are not
contemporaneously outstanding.
At the option of an Investor Certificateholder, Investor
Certificates may be exchanged for other Investor Certificates of the same
Series in authorized denominations of like aggregate Fractional Undivided
Interests, bearing numbers that are not contemporaneously outstanding, upon
surrender of the Investor Certificates to be exchanged at any such office or
agency of the Transfer Agent and Registrar maintained for such purpose.
Whenever any Investor Certificates of any Series are so surrendered
for exchange, the Company shall execute, and, upon the written request of the
Company, the Trustee shall authenticate and (unless the Transfer Agent and
Registrar is different from the Trustee, in which case the Transfer Agent and
Registrar shall) deliver, the Investor Certificates of such Series 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
substantially in the form attached to the form of such Investor Certificate
and duly executed by the holder thereof or his attorney-in-fact duly
authorized in writing delivered to the Trustee (unless the Transfer Agent and
Registrar is different from the Trustee, in which case to the Transfer Agent
and Registrar) and complying with any requirements set forth in the
applicable Supplement.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require any Investor Certificateholder that is transferring or exchanging one
or more Certificates to pay 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
and exchange shall be cancelled and disposed of in a customary manner
satisfactory to the Trustee.
The Company shall execute and deliver 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
Certificates.
(b) The Transfer Agent and Registrar will maintain at its expense in
the Borough of Manhattan, The City of New York and, subject to subsection
5.3(a), if specified in the related Supplement for any Series, any other city
designated in such Supplement, an office or offices or
50
agency or agencies where Investor Certificates may be surrendered for
registration or transfer or exchange.
(c) Unless otherwise stated in any related Supplements,
registration of transfer of Certificates containing a legend relating to
restrictions on transfer of such 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.
Certificates issued upon registration or transfer of, or in
exchange for, Certificates bearing the legend referred to above shall also
bear such legend unless the Company, 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.
(d) (i) The Company may not transfer, assign, exchange or
otherwise pledge or convey the Series Subordinated Interest of any Series or
the Exchangeable Company Interest except, with respect to the Exchangeable
Company Interest, pursuant to Section 5.10.
(ii) Neither the Company nor the Servicer shall at any time
participate in the listing of any Targeted Investor Certificate (as defined
below) on an "established securities market" within the meaning of Section
7704(b)(1) of the Internal Revenue Code and any proposed, temporary or
final treasury regulation thereunder as of the date hereof, including,
without limitation, an over-the-counter or interdealer quotation system
that regularly disseminates firm buy or sell quotations. "TARGETED
INVESTOR CERTIFICATE" shall mean any Certificate representing a right to
receive interest or principal with respect to any Class or Series of
Investor Certificates with respect to which an Opinion of Counsel has not
been rendered that such Certificates will be treated as debt for federal
income tax purposes (it being understood that any Certificate with respect
to which an Opinion of Counsel has been rendered that such Certificate will
be treated either as debt or as an interest in a partnership for federal
income tax purposes shall be a Targeted Investor Certificate).
(e)(i) No transfer of a Targeted Investor Certificate or grant of
a participation therein shall be permitted if (A) such transfer or grant
would cause the number of Targeted Holders (as defined below) to exceed 75 or
(B) the transferee or grantee, as the case may be, is a trust, partnership or
"S corporation" (within the meaning of Section 1361(a) of the Code) (a
"FLOW-THROUGH ENTITY"), unless such flow-through entity represents that less
than 50% of the aggregate value of such flow-through entity's assets consist
of Targeted Investor Certificates. "TARGETED HOLDER" shall mean each holder
of a Targeted Investor Certificate; PROVIDED, HOWEVER, that any Person
holding more than one interest with respect to the Investor Certificates or
the Trust, each of which separately would cause such Person to be a Targeted
Holder, shall be treated as a single Targeted Holder.
(ii) The Company and the Servicer hereby jointly and severally agree
not to permit the sum of (x) the number of Persons holding a right to receive
any amount in respect of the
51
Exchangeable Company Interest or any Series Subordinated Interest and (y) the
number of Servicing Parties that receive any portion of the Servicing Fee to
exceed 25.
(iii) Any determination by the Transfer Agent and Registrar (in
accordance with the information contained in the Certificate Register and the
certifications made by each transferee and participant pursuant to the
applicable Supplement, upon which information the Transfer Agent and
Registrar may conclusively rely) that the event described in either clause
(i)(A) or (i)(B) of this subsection 5.3(e) would occur as the result of a
transfer of a Targeted Investor Certificate or the grant of a participation
therein shall be (X) communicated in writing to the transferring or granting
Investor Certificateholder prior to the effective date set out in the notice
of transfer or participation required by, or otherwise provided for under,
the related Supplement and (Y) binding upon the parties absent manifest error.
Section 5.4. 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 in the form
of a certification by the holder thereof of the destruction, loss or theft of
any Certificate and (b) there is delivered to the Transfer Agent and
Registrar and the Trustee such security or indemnity as may be required by
them to save the Trust and each of them harmless, then, in the absence of
actual notice to the Trustee or Transfer Agent and Registrar that such
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and, upon the written request of the Company, 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 Fractional Undivided Interest and bearing a number that is not
contemporaneously outstanding. In connection with the issuance of any new
Certificate under this Section 5.4, the Trustee or the Transfer Agent and
Registrar may require the payment by the Holder of a sum sufficient to cover
any tax or other governmental expenses (including the fees and expenses of
the Trustee and Transfer Agent and Registrar) connected therewith. Any
duplicate Certificate issued pursuant to this Section 5.4 shall constitute
complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.5. PERSONS DEEMED OWNERS. At all times prior to due
presentation of a Certificate for registration of transfer, the Company, the
Trustee, the Paying Agent, the Transfer Agent and Registrar, any Agent 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 Article IV of the related Supplement and for all other
purposes whatsoever, and neither the Trustee, the Paying Agent, the Transfer
Agent and Registrar, any Agent nor any agent of any of them shall be affected by
any notice to the contrary. Notwithstanding the foregoing provisions of this
Section 5.5, in determining whether the holders of the requisite Fractional
Undivided Interests have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Certificates owned by the Company, the
Servicer or any Affiliate thereof shall be disregarded and 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
actually knows to be so owned shall be so disregarded. Certificates so owned by
52
the Company, the Servicer or any Affiliate thereof 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
Company, the Servicer or an Affiliate thereof.
Section 5.6. APPOINTMENT OF PAYING AGENT. The Paying Agent shall
make distributions to Investor Certificateholders from the Collection Account
(and/or any other account or accounts maintained for the benefit of Holders
as specified in the related Supplement for any Series) pursuant to Articles
III and IV. The Trustee may revoke such power and remove the 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. Unless otherwise specified in the related Supplement for any Series
and with respect to such Series, the Paying Agent shall initially be the
Trustee and, if the Trustee so chooses, any co-paying agent chosen by the
Trustee. Each Paying Agent shall have a combined capital and surplus of at
least $50,000,000. The Paying Agent shall be permitted to resign upon 30
days' written notice to the Trustee. In the event that the Paying Agent
shall so resign, the Trustee shall appoint a successor to act as Paying Agent
(which shall be a depositary institution or trust company) reasonably
acceptable to the Company which appointment shall be effective on the date on
which the Person so appointed gives the Trustee written notice that it
accepts the appointment. Any resignation or removal of the Paying Agent and
appointment of successor Paying Agent pursuant to this Section 5.6 shall not
become effective until acceptance of appointment by the successor Paying
Agent, as provided in this Section 5.6. The Trustee shall cause such
successor Paying Agent or any additional Paying Agent appointed by the
Trustee to execute and deliver to the Trustee an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with the
Trustee that as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Investor Certificateholders in trust for the benefit of the Investor
Certificateholders entitled thereto until such sums shall be paid to such
Holders. The Paying Agent shall return all unclaimed funds to the Trustee
and upon removal of a Paying Agent such Paying Agent shall also return all
funds in its possession to the Trustee. The provisions of Sections 8.1, 8.2,
8.3, 8.5 and 10.19 shall apply to the Trustee also in its role as Paying
Agent, for so long as the Trustee shall act as Paying Agent. Any reference
in this Agreement to the Paying Agent shall include any co-paying agent, if
any, unless the context requires otherwise.
The Company hereby agrees to provide the Trustee from time to time
sufficient funds, on a timely basis and in accordance with and subject to
Section 8.5, for the payment of any reasonable compensation payable to the
Paying Agent for its services under this Section 5.6. The Trustee hereby
agrees that, upon the receipt of such funds from the Company, it shall pay
the Paying Agent such amounts.
Section 5.7. ACCESS TO LIST OF INVESTOR CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Company, the Servicer or the Paying Agent, within ten
Business Days after receipt by the Trustee of a request therefor from the
Company, the Servicer or the Paying Agent, respectively, in writing, a list of
the names and addresses of the Investor Certificateholders as then recorded by
or on behalf of the Trustee. If three or more Investor Certificateholders of
record or any Investor
53
Certificateholder of any Series or a group of Investor Certificateholders of
record representing Fractional Undivided Interests aggregating not less than
10% of the Invested Amount of the related Outstanding Series (the
"APPLICANTS") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Investor
Certificateholders of any Series with respect to their rights under this
Agreement or under the Investor Certificates and is accompanied by a copy of
the communication which such Applicants propose to transmit, then the
Trustee, after having been adequately indemnified by such Applicants for its
costs and expenses, shall transmit or shall cause the Transfer Agent and
Registrar to transmit, such communication to the Investor Certificateholders
reasonably promptly after the receipt of such application.
Every Investor Certificateholder, by receiving and holding an
Investor Certificate, agrees with the Trustee that neither the Trustee, the
Transfer Agent and Registrar, nor any of their respective agents, officers,
directors or employees shall be held accountable by reason of the disclosure
or mailing of any such information as to the names and addresses of the
Investor Certificateholders hereunder, regardless of the sources from which
such information was derived.
As soon as practicable following each Record Date, the Trustee
shall provide to the Paying Agent or its designee, a list of Investor
Certificateholders in such form as the Paying Agent may reasonably request.
Section 5.8. 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 Company.
(b) Any institution succeeding to 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. Upon the receipt by the Trustee of any
such notice of resignation and upon the giving of any such notice of termination
by the Trustee, the Trustee shall immediately give notice of such resignation or
termination to the Company. Any resignation of an authenticating agent shall
not become effective until acceptance of appointment by the successor
authenticating agent as provided in this Section 5.8. 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, 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
54
predecessor hereunder, with like effect as if originally named as an
authenticating agent. No successor authenticating agent (other than an
Affiliate of the Trustee) shall be appointed unless reasonably acceptable to
the Trustee and the Company.
(d) The Company hereby agrees to provide the Trustee from time to
time sufficient funds, on a timely basis and in accordance with and subject
to Section 8.5, for the payment of any reasonable compensation payable to
each authenticating agent for its services under this Section 5.8. The
Trustee hereby agrees that, upon the receipt of such funds from the Company
it shall pay each authenticating agent such amounts.
(e) The provisions of Sections 8.1, 8.2, 8.3 and 8.5 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 5.8, 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 Agreement
dated as of November 15, 1996, among RS Funding Inc., US Foodservice Inc.,
as Servicer, and The Chase Manhattan Bank, as Trustee.
_________________________
as Authenticating Agent
for the Trustee
By
------------
Authorized Signatory"
Section 5.9. TAX TREATMENT. It is the intent of the Servicer, the
Company, the Investor Certificateholders and the Trustee that, for federal,
state and local income and franchise tax purposes, the Investor Certificates
be treated as evidence of indebtedness secured by the Trust Assets and the
Trust not be characterized as an association taxable as a corporation. The
Company and the Trustee, by entering into this Agreement, and each Investor
Certificateholder, by its acceptance of its Investor Certificate, agree to
treat the Investor Certificates for federal, state and local income and
franchise tax purposes as indebtedness. The provisions of this Agreement and
all related Transaction Documents shall be construed to further these
intentions of the parties. This Section 5.9 shall survive the termination of
this Agreement and shall be binding on all transferees of any of the
foregoing persons.
Section 5.10. COMPANY EXCHANGES. (a) The Company may, in accordance
with the procedures set forth below, call for an adjustment of the Exchangeable
Company Interest in exchange for (i) an increase in the Invested Amount of a
Class of Investor Certificates of an
55
Outstanding Series and an increase in the related Series Subordinated
Interest or (ii) one or more newly issued Series of Investor Certificates and
the related newly created Series Subordinated Interest (a "NEW SERIES") (any
such exchange, a "COMPANY EXCHANGE"). The Company may perform a Company
Exchange by notifying the Trustee, in writing at least six days in advance
(an "EXCHANGE NOTICE") of the date upon which the Company Exchange is to
occur (an "EXCHANGE DATE"). Any Exchange Notice shall state the designation
of any Series (and/or Class, if applicable) to be issued (or supplemented) on
the Exchange Date and, with respect to each such Series (and/or Class, if
applicable): (a) its additional or Initial Invested Amount, as the case may
be, if any, which in the aggregate at any time may not be greater than the
current value of the Exchangeable Company Interest, if any, at such time, (b)
its Certificate Rate (or the method for allocating interest payments or other
cash flow to such Series), if any, and (c) whether such New Series will be a
companion series to an Outstanding Series (an "EXISTING COMPANION SERIES";
and together with the New Series, a "COMPANION SERIES"). On the Exchange
Date, the Trustee shall, upon the written order of the Company, authenticate
and deliver any Certificates evidencing an increase in the Invested Amount of
a Class of Investor Certificates or a newly issued Series only upon delivery
by the Company to the Trustee of the following (together with the delivery by
the Company to the Trustee of any additional agreements, instruments or other
documents as are specified in the related Supplement): (a) a Supplement
executed by the Company and specifying the Principal Terms of such Series
(provided that no such Supplement shall be required for any increase in the
Invested Amount of a Class of Investor Certificates unless it is so required
by the related Supplement), (b) a Tax Opinion addressed to the Trustee and
the Trust, (c) a General Opinion addressed to the Trustee and the Trust and
(d) written confirmation from each Rating Agency that the Company Exchange
will not result in the Rating Agency's reducing or withdrawing its rating on
any then Outstanding Series rated by it. Upon the delivery of the items
listed in clauses (a) through (d) above, the existing Exchangeable Company
Interest and the applicable Series Subordinated Interests, as the case may
be, shall be deemed cancelled, the Trustee shall issue the applicable Series
of Investor Certificates, dated the Exchange Date, and the applicable Series
Subordinated Interests and the new Exchangeable Company Interest shall be
deemed duly created, in each case as provided above. There is no limit to the
number of Company Exchanges that the Company may perform under this
Agreement. If the Company shall, on any Exchange Date, retain any Investor
Certificates issued on such Exchange Date, it shall, prior to transferring
any such Certificates to another Person, obtain a Tax Opinion. Additional
restrictions relating to a Company Exchange may be set forth in any
Supplement.
(b) Upon any Company Exchange, the Trustee, in accordance with the
written directions of the Company, shall issue to the Company under Section
5.1, for execution and redelivery to the Trustee for authentication under
Section 5.2, (i) one or more Certificates representing an increase in the
Invested Amount of an Outstanding Series or (ii) one or more new Series of
Investor Certificates. Any such Certificates shall be substantially in the
form specified in the applicable Supplement and each shall bear, upon its
face, the designation for such Series to which each such certificate belongs
so selected by the Company.
(c) In conjunction with a Company Exchange, the parties hereto shall,
except as otherwise provided in subsection (a) above, execute a supplement to
this Agreement, which shall define, with respect to any additional Investor
Certificates or newly issued Series, as the case may
56
be: (i) its name or designation, (ii) its additional or initial principal
amount, as the case may be (or method for calculating such amount), (iii) its
coupon rate (or formula for the determination thereof), (iv) the interest
payment date or dates and the date or dates from which interest shall accrue,
(v) the method for allocating Collections to Holders, including the
applicable Investor Percentage, (vi) the names of any accounts to be used by
such Series and the terms governing the operation of any such accounts, (vii)
the issue and terms of a letter of credit or other form of Enhancement, if
any, with respect thereto, (viii) the terms, if any, on which the
Certificates of such Series may be repurchased by the Company or may be
remarketed to other investors, (ix) the Series Termination Date, (x) any
deposit account maintained for the benefit of Holders, (xi) the number of
Classes of such Series, and if more than one Class, the rights and priorities
of each such Class, (xii) the rights of the owner of the Exchangeable Company
Interest that have been transferred to the holders of such Series, (xiii) the
designation of any Series Accounts and the terms governing the operation of
any such Series Accounts, (xiv) provisions acceptable to the Trustee
concerning the payment of the Trustee's fees and expenses and (xv) other
relevant terms (all such terms, the "PRINCIPAL TERMS" of such Series). The
Supplement executed in connection with the Company Exchange shall contain
administrative provisions which are reasonably acceptable to the Trustee.
(d) In order for a New Series to be part of a Companion Series,
the Supplement for the related Existing Companion Series must provide for or
permit the Amortization Period to commence on the Issuance Date for such New
Series, and on or prior to the Issuance Date for the New Series the Servicer
and the Company shall take all actions, if any, necessary to cause the
Amortization Period for such Existing Companion Series to commence on such
Issuance Date. The proceeds from the issuance of the New Series shall be
deposited in the applicable Series Principal Collection Sub-subaccount and
the Company shall, on the Issuance Date for such New Series, deposit into the
applicable Series Non-Principal Sub-subaccount the amount of interest that
will accrue on the New Series over a period specified in the related
Supplement for such New Series. On each day on which principal is paid to the
holders of the Existing Companion Series, the Trustee shall distribute to the
Company from the applicable Series Principal Collection Sub-subaccount of the
New Series an amount (up to the amount of available funds in such account)
equal to the amount distributed on such day to the Investor
Certificateholders of any Existing Companion Series; PROVIDED that, after
giving effect to such distributions, the Aggregate Receivables Amount shall
equal or exceed the sum of (i) the Target Receivables Amount with respect to
such Existing Companion Series on such day, PLUS (ii) the Target Receivables
Amount with respect to the New Series on such day, PLUS (iii) the Target
Receivables Amount with respect to any other Outstanding Series on such day;
PROVIDED FURTHER that the Trustee may conclusively rely on the calculations
of the Servicer of such amounts.
(e) Except as specified in any Supplement for a related Series,
all Investor Certificates of any Series shall be equally and ratably entitled
as provided herein to the benefits hereof 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 the applicable Supplement.
57
Section 5.11. BOOK-ENTRY CERTIFICATES. If specified in any
related Supplement, the Investor Certificates, or any portion thereof, upon
original issuance, shall be issued in the form of one or more typewritten
Certificates representing the Book-Entry Certificates, to be delivered to the
depository specified in such Supplement (the "DEPOSITORY") which shall be the
Clearing Agency, specified by, or on behalf of, the Company for such Series.
The Investor Certificates shall initially be registered on the Certificate
Register in the name of the nominee of such Clearing Agency, and no
Certificate Book-Entry Holder will receive a definitive certificate
representing such Certificate Book-Entry Holder's interest in the Investor
Certificates, except as provided in Section 5.13. Unless and until
definitive, fully registered Investor Certificates ("DEFINITIVE
CERTIFICATES") have been issued to Holders pursuant to Section 5.13 or the
related Supplement:
(a) the provisions of this Section 5.11 shall be in full force and
effect;
(b) the Company, the Servicer and the Trustee may deal with each
Clearing Agency for all purposes (including the making of distributions on
the Investor Certificates) as the Holder without respect to whether there
has been any actual authorization of such actions by the Certificate Book-
Entry Holders with respect to such actions;
(c) to the extent that the provisions of this Section 5.11 conflict
with any other provisions of this Agreement, the provisions of this Section
5.11 shall control; and
(d) the rights of Certificate Book-Entry Holders shall be exercised
only through the Clearing Agency and the related Clearing Agency
Participants and shall be limited to those established by law and
agreements between such related Certificate Book-Entry Holders and the
Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
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.
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 Company and the Trustee receive an opinion of independent counsel
that the Certificates of such Class or Series will be treated as indebtedness
for federal income tax purposes.
Section 5.12. NOTICES TO CLEARING AGENCY. Whenever notice or
other communication to the Holders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate
Book-Entry Holders pursuant to Section 5.13, the Trustee shall give all such
notices and communications specified herein to be given to the Investor
Certificateholders to the Clearing Agencies.
Section 5.13. DEFINITIVE CERTIFICATES. If (a)(i) the Company
advises the Trustee in writing that any Clearing Agency is no longer willing
or able to properly discharge its responsibilities under the applicable
Depository Agreement, and (ii) the Company is unable to locate a qualified
successor, (b) the Company, at its option, advises the Trustee in writing
that it
58
elects to terminate the book-entry system through the Clearing Agency or (c)
after the occurrence of a Servicer Default, Certificate Book-Entry Holders
representing Fractional Undivided Interests aggregating more than 50% of the
Invested Amount held by such Certificate Book-Entry Holders of each affected
Series then issued and outstanding advise the Clearing Agency through the
Clearing Agency Participants in writing, and the Clearing Agency shall so
notify the Trustee, that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interests of the Certificate
Book-Entry Holders, the Trustee shall notify the Clearing Agency, which shall
be responsible to notify the Certificate Book-Entry Holders, of the
occurrence of any such event and of the availability of Definitive
Certificates to Certificate Book-Entry Holders requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Clearing
Agency, accompanied by registration instructions from the Clearing Agency for
registration, the Trustee shall issue the Definitive Certificates. Neither
the Company 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.
ARTICLE VI
OTHER MATTERS RELATING
TO THE COMPANY
Section 6.1. LIABILITY OF THE COMPANY. The Company shall be liable
for all obligations, covenants, representations and warranties of the Company
arising under or related to this Agreement or any Supplement. Except as
provided in the preceding sentence and otherwise herein, the Company shall be
liable only to the extent of the obligations specifically undertaken by it
hereunder.
Section 6.2. LIMITATION ON LIABILITY OF THE COMPANY. Except as
provided in Sections 6.1 and 6.3 or otherwise provided herein, neither the
Company nor any of its directors or officers or employees or agents, in their
capacity as transferor of, or in connection with the transfer of, Receivables
and Related Property hereunder, shall be under any liability to the Trust, the
Trustee, the Holders or any other Person for any action taken or for refraining
from the taking of any action pursuant to this Agreement, whether or not such
action or inaction arises from express or implied duties under this Agreement;
PROVIDED, HOWEVER, that this provision shall not protect the Company against any
liability which would otherwise be imposed by reason of wilful misconduct, bad
faith or negligence in the performance of any duties or by reason of reckless
disregard of any obligations and duties hereunder; PROVIDED, FURTHER, that this
provision shall not protect any such director, officer, employee or agent
against any liability which would otherwise be imposed on such Person by reason
of wilful misconduct, bad faith or gross negligence in the performance of such
Person's duties or by reason of reckless disregard of such Person's obligations
and duties hereunder. The Company and any director or officer or employee or
agent of the Company may rely in good faith on any document of any kind PRIMA
FACIE properly executed and submitted by any Person (other than, in the case of
the Company, the Company or the Servicer) respecting any matters arising
hereunder.
59
Section 6.3. LIABILITIES. By entering into this Agreement, the
Company agrees to be liable, directly to the injured party, for the entire
amount of any losses, claims, damages or liabilities, arising out of or based
on the arrangement created by any Pooling and Servicing Agreement or the
actions of the Servicer taken pursuant hereto or thereto (except those
losses, claims, damages or liabilities incurred by an Investor
Certificateholder in the capacity of an investor in the Investor Certificates
as a result of the performance of the Receivables, market fluctuations or
other similar market or investment risks) as though the Pooling and Servicing
Agreements created a partnership under the New York Uniform Limited
Partnership Act with the Company as a general partner thereof. The Company
agrees to pay, indemnify and hold harmless each Investor Certificateholder
against and from any and all such losses, claims, damages and liabilities,
except to the extent they arise from any action or omission by such Investor
Certificateholder. In the event of a Service Transfer, the Successor
Servicer (except for the Trustee in its capacity as Successor Servicer) will
indemnify and hold harmless the Company for any losses, claims, damages and
liabilities of the Company arising under this Section 6.3 from the actions or
omissions of such Successor Servicer.
ARTICLE VII
EARLY AMORTIZATION EVENTS
Section 7.1. EARLY AMORTIZATION EVENTS. Unless modified with
respect to any Series of Investor Certificates by any related Supplement, if
any one of the following events (each, an "EARLY AMORTIZATION EVENT") shall
occur:
(a) (i) the Company shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets,
or the Company shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Company any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Company any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 such days from the entry thereof;
or (iv) the Company shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth
in clause (i), (ii), or (iii) above; or (v) the Company shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay
its debts as they become due;
60
(b) the Trust or the Company shall become an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(c) the Trust is characterized for federal income tax purposes as a
"publicly traded partnership" or as an association taxable as a
corporation; or
(d) the Trustee shall be appointed as Successor Servicer pursuant to
subsection 6.2(b) of the Servicing Agreement;
then, an "EARLY AMORTIZATION PERIOD" with respect to all Outstanding Series
shall commence without any notice or other action on the part of the Trustee
or any Investor Certificateholder immediately upon the occurrence of such
event. The Servicer shall notify each Rating Agency and the Trustee in
writing of the occurrence of any Early Amortization Period, specifying the
cause thereof. Further, upon the commencement against the Company of a case,
proceeding or other action described in clause (a)(ii) or (iii) above, the
Company shall not purchase Receivables from any Seller, or transfer
Receivables to the Trust, until such time, if any, as such case, proceeding
or other action is vacated, discharged, or stayed or bonded pending appeal.
Additional Early Amortization Events and the consequences thereof
may be set forth in each Supplement with respect to the Series relating
thereto.
Section 7.2. ADDITIONAL RIGHTS UPON THE OCCURRENCE OF CERTAIN
EVENTS. (a) If an Insolvency Event with respect to the Company occurs, the
Company shall immediately cease to transfer Receivables to the Trust and
shall promptly give notice to the Trustee of such occurrence.
Notwithstanding any cessation of the transfer to the Trust of additional
Receivables, Receivables transferred to the Trust prior to the occurrence of
such Insolvency Event and Collections in respect of such Receivables and
interest, whenever created, accrued in respect of such Receivables, shall
continue to be a part of the Trust. Within 15 days of the Trustee's receipt
of notice of the occurrence of an Insolvency Event in accordance with Section
7.1, if the Aggregate Invested Amount and all accrued and unpaid interest
thereon have not been paid to the Investor Certificateholders, then the
Trustee shall (i) publish a notice in a newspaper with a national circulation
(an "AUTHORIZED NEWSPAPER") that an Insolvency Event has occurred and that
the Trustee intends to sell, dispose of or otherwise liquidate the
Receivables and the other Trust Assets in a commercially reasonable manner
and (ii) send written notice to the Investor Certificateholders and request
instructions from such holders, which notice shall request each Investor
Certificateholder to advise the Trustee in writing that it elects one of the
following options: (A) the Investor Certificateholder wishes the Trustee to
instruct the Servicer not to sell, dispose of or otherwise liquidate the
Receivables and the other Trust Assets, or (B) the Investor Certificateholder
wishes the Trustee to instruct the Servicer to sell, dispose of or otherwise
liquidate the Receivables and the other Trust Assets and to instruct the
Servicer to reconstitute the Trust upon the same terms and conditions set
forth herein, or (C) the Investor Certificateholder refuses to advise the
Trustee as to the specific action the Trustee shall instruct the Servicer to
take. If after 60 days from the day notice pursuant to clause (i) above is
first published (the "PUBLICATION DATE"), the Trustee shall not have received
written instructions of (x) holders of Certificates representing undivided
interests in the Trust aggregating in excess of 50%
61
of the related Invested Amount of each Series (or in the case of a series
having more than one Class of Investor Certificates, each Class of such
series) selecting option (A) above and (y) if the owners of the Exchangeable
Company Interest do not include the Company (and following the delivery of
written notice in the form referred to above by the Company to such owners),
the owners thereof representing undivided interests in the Trust aggregating
in excess of 50% of the Company Interest, the Trustee shall instruct the
Servicer to proceed to sell, dispose of, or otherwise liquidate the
Receivables and the other Trust Assets in a commercially reasonable manner
and on commercially reasonable terms, which shall include the solicitation of
competitive bids, and the Servicer shall proceed to consummate the sale,
liquidation or disposition of the Receivables and the other Trust Assets as
provided above with the highest bidder therefor; PROVIDED, HOWEVER, that if
the allocable sale price, less all reasonable fees, expenses and other
amounts due hereunder to the Trustee, its agents and counsel to the Trustee,
to be realized from such sale, liquidation or disposition would be less than
the Aggregate Invested Amount plus accrued and unpaid interest thereon
through the Distribution Date next succeeding the date of such sale, the
Trustee must receive the prior unanimous consent of all the Investor
Certificateholders to such sale, liquidation or disposition. The Company or
any of its Affiliates shall be permitted to bid for the Receivables and the
other Trust Assets. In addition, the Company or any of its Affiliates shall
have the right to match any bid by a third person and be granted the right to
purchase the Receivables and the other Trust Assets at such matched bid
price. The Trustee may obtain a prior determination from any such
conservator, receiver or liquidator that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable. The provisions
of Sections 7.1 and 7.2 shall be cumulative. The costs and expenses incurred
by the Trustee in such sale shall be reimbursable to the Trustee as provided
in Section 8.5.
(b) The proceeds from the sale, liquidation or disposition of the
Receivables and the other Trust Assets pursuant to subsection (a) above shall
be treated as Collections on the Receivables and such proceeds will be
distributed to holders of each Series after immediately being deposited in
the Collection Account, in accordance with the provisions of subsection
3.1(d) and the related Supplement for such Series. After giving effect to
all such deposits, the remaining funds, if any, shall be (i) paid to the
Trustee in an amount equal to the amount of any expenses incurred by the
Trustee acting in its capacity either as Trustee or as liquidating agent
pursuant to subsection 7.2(a) above which have not otherwise been reimbursed
prior thereto and (ii) after giving effect to the transfer to be made
pursuant to the preceding clause (i), if applicable, the remainder, if any,
shall be allocated to the Company Interest and shall be released to the owner
of the Exchangeable Company Interest upon cancellation thereof.
ARTICLE VIII
THE TRUSTEE
Section 8.1. DUTIES OF TRUSTEE. (a) The Trustee, prior to the
occurrence of a Servicer Default or Early Amortization Event of which a
Responsible Officer of the Trustee has actual knowledge and after the curing of
all Servicer Defaults and Early Amortization Events
62
which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in the Pooling and Servicing Agreements
or any Supplement and no implied covenants or obligations shall be read into
such Pooling and Servicing Agreements against the Trustee. If a Servicer
Default or Early Amortization Event to the actual knowledge of a Responsible
Officer of the Trustee has occurred (which has not been cured or waived), the
Trustee shall exercise the rights and powers vested in it in its capacity as
Trustee by any Pooling and Servicing Agreement and any Supplement and shall
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 person's
own affairs. The provisions of this Section shall be applicable to the
Trustee in its capacity as Trustee hereunder. If the Trustee shall have
succeeded to the obligations of the Servicer, the provisions of the Servicing
Agreement shall govern the actions of the Trustee as Successor Servicer.
(b) The Trustee may conclusively rely as to the truth of the
statements and the correctness of the opinions expressed therein upon
resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments furnished to the Trustee and believed by it to be
genuine and to have been signed or presented to it pursuant to any Pooling
and Servicing Agreement by the proper party or parties; but in the case of
any of the above which are specifically required to be furnished to the
Trustee pursuant to any provision of the Pooling and Servicing Agreements,
the Trustee shall, subject to Section 8.2, examine them to determine whether
they substantially conform to the requirements of this Agreement.
(c) Subject to subsection 8.1(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
misconduct; PROVIDED, HOWEVER, that:
(i) The Trustee shall not be liable for an error of judgment unless
it shall be proved that the Trustee was negligent, or acted in bad faith,
in ascertaining the pertinent facts;
(ii) The Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with the
direction of the Servicer or the holders of Investor Certificates
evidencing in excess of 50% (or such lesser percentage as set forth in any
applicable provision) of the Aggregate Invested Amount;
(iii) The Trustee shall not be charged with knowledge of any failure by
the Servicer to comply with any of its obligations, unless a Responsible
Officer of the Trustee obtains actual knowledge of such failure or the
Trustee receives written notice of such failure from the Servicer, any
Agent or any Investor Certificateholder;
(iv) The Trustee shall not be charged with knowledge of a Servicer
Default or Early Amortization Event unless a Responsible Officer obtains
actual knowledge of such event or the Trustee receives written notice of
such default or event from the Servicer, any Agent or any Investor
Certificateholder;
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(v) The Trustee shall not be liable for any investment losses
resulting from any investments of funds on deposit in the Accounts or any
subaccounts thereof; and
(vi) The Trustee shall have no duty to monitor the performance of the
Servicer, nor shall it have any liability in connection with malfeasance or
nonfeasance by the Servicer. The Trustee shall have no liability in
connection with compliance of the Servicer or the Company with statutory or
regulatory requirements related to the Receivables.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties under any Pooling and Servicing Agreement 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 reasonably assured to it, and none of the provisions
contained in any Pooling and Servicing Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any obligations of the Servicer under such Agreement 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 such Agreement.
(e) Except as expressly provided in any Pooling and Servicing
Agreement, the Trustee shall have no power to vary the corpus of the Trust.
(f) Provided that the Servicer and the Company shall have provided
to the Trustee promptly upon request all books, records and other information
reasonably requested by the Trustee and shall have provided the Trustee with
all necessary access to the properties, books and records of the Servicer and
the Company which the Trustee may reasonably require, then within 90 days
following the Initial Closing Date, the Trustee shall have (i) completed the
Servicer Site Review and (ii) established the Standby Liquidation System, and
shall have notified the Servicer, each Rating Agency and each Investor
Certificateholder of such events.
(g) The Trustee shall deliver the Internal Operating Procedures
Memorandum to the Company and the Servicer on the Initial Closing Date. From
and after such date, the Trustee shall take such actions as are set forth in
the Internal Operating Procedures Memorandum unless prevented from doing so
through no fault of the Trustee.
Section 8.2. RIGHTS OF THE TRUSTEE. Except as otherwise provided in
Section 8.1:
(a) The Trustee may conclusively rely on and shall be protected in
acting on, or in refraining from acting in accord with, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, appraisal, bond, note or other paper or document believed
by it to be genuine and to have been signed or presented to it pursuant to
any Pooling and Servicing Agreement by the proper party or parties;
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(b) The Trustee may consult with counsel (at the Company's expense)
and any Opinion of Counsel or any advice of such counsel shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance with
such Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by any Pooling and Servicing Agreement, or to
institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the Holders, pursuant
to the provisions of any Pooling and Servicing Agreement, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein
or thereby; PROVIDED, HOWEVER, that nothing contained herein shall relieve
the Trustee of the obligations, upon the occurrence of a Servicer Default
or Early Amortization Event (which has not been cured), to exercise such of
the rights and powers vested in it by any Pooling and Servicing Agreement,
and to 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
person's own affairs. The right of the Trustee to perform any
discretionary act enumerated in this Agreement shall not be construed as a
duty, and the Trustee shall not be answerable for other than its negligence
or wilful misconduct in the performance of any such act;
(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 any
Pooling and Servicing Agreement; PROVIDED that the Trustee shall be liable
for its negligence or willful misconduct;
(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, direction, order,
approval, bond, note or other paper or document, or to recompute the amount
of any allocations or distributions contained in any direction from the
Servicer provided for under the Agreement, unless requested in writing so
to do by the holders of Investor Certificates evidencing Fractional
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 such holders of Investor Certificates
shall reimburse the Trustee for any expense resulting from any such
investigation requested by them; PROVIDED, FURTHER, that the Trustee shall
be entitled to make such further inquiry or investigation into such facts
or matters as it may reasonably see fit, and if the Trustee shall determine
to make such further inquiry or investigation, it shall be entitled to
examine the books and records of the Company, personally or by agent or
attorney, at the sole cost and expense of the Company;
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through affiliates,
agents or attorneys or a custodian or nominee, and the Trustee shall not be
responsible for any misconduct or
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negligence on the part of, or for the supervision of, any such
affiliate, agent, attorney, custodian or nominee appointed with due care
by it hereunder;
(g) The Trustee shall not be required to make any initial or periodic
examination of any documents or records related to the Receivables or the
Accounts for the purpose of establishing the presence or absence of
defects, the compliance by the Company with its representations and
warranties or for any other purpose; and
(h) In the event that the Trustee is also acting as Paying Agent or
Transfer Agent and Registrar hereunder, the rights and protections afforded
to the Trustee pursuant to this Article VIII shall also be afforded to such
Paying Agent or Transfer Agent and Registrar.
Section 8.3. 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 8.15, the Trustee makes no
representations as to the validity or sufficiency of any Pooling and Servicing
Agreement 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 Company of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Company in respect of the Receivables or
deposited in or withdrawn from the Accounts or other accounts hereafter
established to effectuate the transactions contemplated herein and in accordance
with the terms of any Pooling and Servicing Agreement.
The Trustee shall not be accountable for the use or application by the
Servicer of any of the Certificates or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Servicer or any Sub-Servicer
in respect of the Receivables or deposited in or withdrawn from the Accounts or
any Lockbox by or at the direction of the Servicer, any Sub-Servicer or the
Lockbox Processor, in each case unless the Trustee, acting in its capacity as
Successor Servicer, itself makes such use or application. The Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Receivable.
Section 8.4. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity (a) may become the owner or pledgee of Investor
Certificates with the same rights as it would have if it were not the Trustee
and (b) may transact any banking and trust business with the Company, the
Servicer, any Sub-Servicer or any Seller as it would were it not the Trustee.
Section 8.5. TRUSTEE'S FEES AND EXPENSES. The Servicer covenants and
agrees to pay, but only from funds available to it as the Servicing Fee paid
under the Servicing Agreement, to the Trustee an annual fee agreed upon in
writing between the Servicer and the Trustee, payable in advance on the Initial
Closing Date and on each one-year anniversary thereof. The Trustee also shall
be entitled to reimbursement from the Servicer or the Company upon the Trustee's
request
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for all reasonable expenses (including, without limitation, expenses incurred
in connection with notices, requests for documentation or other
communications to or directions from Holders), disbursements, losses,
liabilities, damages and advances incurred or made by the Trustee in
accordance with any of the provisions of any Pooling and Servicing Agreement
or by reason of its status as Trustee under any Pooling and Servicing
Agreement (including the reasonable fees and expenses of its agents, any
co-trustee and counsel) except any such expense, disbursement, loss,
liability, damage or advance as may arise from its negligence or bad faith or
willful misconduct; PROVIDED that any payments made by the Company in respect
of any of the foregoing items shall be made solely from funds available to
the Company which are not otherwise needed to be applied to the payment of
any amounts pursuant to any Pooling and Servicing Agreements, shall be
non-recourse other than with respect to proceeds in excess of the proceeds
necessary to make such payment, and shall not constitute a claim against the
Company to the extent that insufficient proceeds exist to make such payment.
To the extent that the Trustee has not been paid for any of the foregoing
items (including pursuant to the first sentence of this Section 8.5), the
Trustee shall be entitled to be paid for such items from amounts which
otherwise would be distributable to the Company under Article III of this
Agreement. The Trustee shall be entitled to reimbursement for any reasonable
out-of-pocket costs or expenses incurred in connection with the review,
negotiation, preparation, execution and delivery of any of the Transaction
Documents or in connection with the issuance of any Certificates on the
Initial Closing Date. If the Trustee is appointed Successor Servicer in
accordance with the Servicing Agreement, the Trustee, in its capacity as
Successor Servicer, shall also be entitled to be paid the Servicing Fee and
any other compensation to which the Servicer is expressly entitled hereunder.
The provisions of this Section 8.5 shall apply to the reasonable expenses,
disbursements and advances made or incurred by the Trustee, or any other
Person, in its capacity as liquidating agent, to the extent not otherwise
paid. The covenants and agreements contained in this Section 8.5 (including,
without limitation, the covenants to pay the expenses, disbursements, losses,
liabilities, damages and advances provided for in this Section 8.5) shall
survive the termination of any Pooling and Servicing Agreement and shall be
binding, as applicable, on (i) the Servicer and any Successor Servicer and
(ii) the Company.
Section 8.6. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States of America or any state thereof and
authorized under such laws to exercise corporate trust powers, having (or
having a holding company parent with) a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by Federal or
State authority. If such corporation 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 8.6, 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 8.6, the Trustee
shall resign immediately in the manner and with the effect specified in
Section 8.7.
Section 8.7. RESIGNATION OR REMOVAL OF TRUSTEE. (a) Subject to
paragraph (c) below, the Trustee may at any time resign and be discharged from
the trust hereby created by
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giving written notice thereof to the Company, the Servicer and the Rating
Agencies. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. 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.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.6 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
Company 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.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.7 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 8.8.
(d) The obligations of the Company described in Sections 6.3 and 8.5
hereof and the obligations of the Servicer described in Section 8.5 hereof and
Section 5.1 of the Servicing Agreement shall survive the removal or resignation
of the Trustee as provided in this Agreement.
(e) No Trustee under this Agreement shall be personally liable for
any action or omission of any successor trustee.
Section 8.8. SUCCESSOR TRUSTEE. (a) Any successor trustee appointed
as provided in Section 8.7 shall execute, acknowledge and deliver to the Company
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 act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the successor
trustee all documents or copies thereof, at the expense of the Servicer, and
statements held by it hereunder; and the Company 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, power, duties and obligations. The Servicer
shall immediately and, in any event, no less than ten days prior to any such
resignation or removal, give notice to each Rating Agency upon the appointment
of a successor trustee.
(b) No successor trustee shall accept appointment as provided in this
Section 8.8 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.6.
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(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 8.8, such successor trustee shall mail notice of
such succession hereunder to all Holders at their addresses as shown in the
Certificate Register.
Section 8.9. 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
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 8.6, 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. The Trustee shall promptly give notice (except to the
extent prohibited under any Requirement of Law or Contractual Obligation), but
in no event less than ten days prior to any such merger or consolidation, to the
Company, the Servicer and the Rating Agencies upon any such merger or
consolidation of the Trustee.
Section 8.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of any Pooling and Servicing Agreement, at
any time, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint 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, and to vest in such Person
or Persons, in such capacity and for the benefit of the Holders, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 8.6 and no notice to Holders of the appointment of any co-
trustee or separate trustee shall be required under Section 8.8. The Trustee
shall promptly notify each Rating Agency of the appointment of any co-trustee.
(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 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 statute 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 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;
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(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 VIII. 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 any Pooling and Servicing Agreement, specifically
including every provision of any Pooling and Servicing Agreement 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 Company.
(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
any Pooling and Servicing Agreement 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 8.11. TAX RETURNS. In the event the Trust shall be
required to file tax returns, the Company shall prepare and file or shall
cause to be prepared and filed (including, without limitation, by the
Servicer) any tax returns required to be filed by the Trust and shall remit
such returns to the Trustee for signature at least five Business Days before
such returns are due to be filed. The Trustee is hereby authorized to sign
any such return on behalf of the Trust. The Company shall also prepare or
shall cause to be prepared (including, without limitation, by the Servicer)
all tax information required by law to be distributed to Holders and shall
deliver such information to the Trustee at least five Business Days prior to
the date it is required by law to be distributed to the Holders. The
Trustee, upon written request, will furnish the Company, or the Company's
designee, 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. In no event shall the Trustee
in its individual capacity be liable for any liabilities, costs or expenses
of the Trust, the Holders, the Company or the Servicer arising under any tax
law or regulation, including, without limitation, federal, state or local
income or excise taxes or any other tax imposed on or measured by income (or
any interest or penalty with respect thereto or arising from any failure to
comply therewith).
Section 8.12. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under any Pooling and
Servicing Agreement or the Certificates may be prosecuted and enforced by the
Trustee without the possession of any of the Certificates or the
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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 Holders in
respect of which such judgment has been obtained.
Section 8.13. SUITS FOR ENFORCEMENT. If a Servicer Default shall
occur and be continuing, the Trustee may, as provided in Section 6.1 of the
Servicing Agreement, proceed to protect and enforce its rights and the rights
of the Holders under this Agreement or any other Transaction Document 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 other Transaction Document or in aid of the execution of any power
granted in this Agreement or any other Transaction Document 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 Holders. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Investor 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 Investor Certificateholder in any such
proceeding.
Section 8.14. RIGHTS OF INVESTOR CERTIFICATEHOLDERS TO DIRECT
TRUSTEE. Investor Certificateholders evidencing more than 50% of the
Invested Amount of any Series affected by the conduct of any proceeding or
the exercise of any right conferred on the Trustee shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; PROVIDED, HOWEVER, that, subject to Section 8.1, 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 in good faith shall, by a Responsible Officer or
Responsible Officers of the Trustee, determine that the proceedings so
directed would be illegal or expose it to personal liability or be unduly
prejudicial to the rights of Investor Certificateholders not party to such
direction; and PROVIDED, FURTHER, that nothing in any Pooling and Servicing
Agreement 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 Investor Certificateholders.
Section 8.15. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The
Trustee represents and warrants that:
(a) the Trustee is a banking corporation organized, existing and in
good standing under the laws of the United States or any of its fifty
states and is duly authorized and empowered to exercise trust powers under
applicable law;
(b) the Trustee has the power and authority to enter into this
Agreement and any Supplement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement
and any Supplement; and
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(c) each Pooling and Servicing Agreement and each of the Transaction
Documents executed by it have been duly executed and delivered by the
Trustee and, in the case of all such Transaction Documents, are legal,
valid and binding obligations of the Trustee, enforceable in accordance
with their respective 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 generally and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity).
Section 8.16. MAINTENANCE OF OFFICE OR AGENCY. The Trustee will
maintain at its expense in the Borough of Manhattan, The City of 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 the Pooling and Servicing
Agreements may be served. The Trustee will give prompt written notice to the
Company, the Servicer and the Holders of any change in the location of the
Certificate Register or any such office or agency.
Section 8.17. LIMITATION OF LIABILITY. The Certificates are
executed by the Trustee, not in its individual capacity but solely as Trustee
of the Trust, in the exercise of the powers and authority conferred and
vested in it by this Agreement. Each of the undertaking and agreements made
on the part of the Trustee in the Certificates is made and intended not as a
personal undertaking or agreement by the Trustee but is made and intended for
the purpose of binding only the Trust.
ARTICLE IX
TERMINATION
Section 9.1. TERMINATION OF TRUST; LIQUIDATION OF RECEIVABLES.
(a) The Trust and the respective obligations and responsibilities of the
Company, the Servicer, the Sub-Servicers and the Trustee created hereby
(other than the obligation of the Trustee to make payments to Holders as
hereafter set forth) shall terminate, except with respect to any such
obligations or responsibilities expressly stated to survive such termination,
on the earliest of (i) September 1, 2014, (ii) at the option of the Company,
at any time where the Aggregate Invested Amount is zero (unless an Early
Amortization Event as specified in Section 7.1 of this Agreement shall have
occurred and be continuing, in which case the Company shall be deemed to
elect to terminate the Trust pursuant to this clause (ii)) and (iii) upon
completion of distribution of the amounts referred to in subsection 7.2(b)
(the "TRUST TERMINATION DATE").
(b) If on the Distribution Date in the month immediately preceding
the month in which the 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 Certificates to be made on the
related Distribution Date pursuant to Article III) the Invested Amount of any
Series would be greater than zero, the Trustee, at the written direction of
the Servicer, shall sell within 30 days of such Distribution Date all of the
Receivables and other Trust Assets. The
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proceeds of such sale shall be treated as Collections on the Receivables and
shall be allocated in accordance with Article III. During such 30-day
period, the Servicer shall continue to collect Collections on the Receivables
and allocate Collections in accordance with the provisions of Article III.
The costs and expenses incurred by the Trustee in such sale shall be
reimbursable to the Trustee as provided in Section 8.5.
Section 9.2. CLEAN-UP CALL AND FINAL TERMINATION DATE OF INVESTOR
CERTIFICATES OF ANY SERIES. (a) On the Distribution Date during the
Amortization Period with respect to any Series on which the Invested Amount
(or such other amount as may be set forth in the related Supplement) of such
Series is reduced to an amount equal to or less than the Clean-Up Call
Percentage of the Invested Amount for such Series as of the day preceding the
beginning of such Amortization Period (or such other amount as may be set
forth in the related Supplement), the Company shall have the option to
repurchase, and to the extent set forth in the related Supplement, shall
repurchase, the entire Certificateholders' Interest of such Series, at a
purchase price equal to (i) the outstanding Invested Amount of the Investor
Certificates of such Series PLUS (ii) accrued and unpaid interest through the
date of such purchase (after giving effect to any payment of principal and
monthly interest on such date of purchase) PLUS (iii) all other amounts
payable to all Investor Certificateholders of such Series under the related
Supplement (such purchase price, the "CLEAN-UP CALL REPURCHASE PRICE"). The
amount of the Clean-Up Call Repurchase Price will be deposited into the
Collection Account for credit to the Series Collection Subaccount for such
Series on the Business Day prior to such Distribution Date in immediately
available funds and will be passed through in full to the applicable Investor
Certificateholders. Following any such repurchase, such Certificateholders'
Interest in the Trust Assets shall terminate and such interest therein will
be allocated to the Company Interest and such Holders will have no further
rights with respect thereto. In the event that the Company fails for any
reason to deposit the Clean-Up Call Repurchase Price for such Receivables,
the Certificateholders' Interest in the Receivables and the other Trust
Assets will continue and monthly payments will continue to be made to the
Holders.
(b) The amount deposited pursuant to subsection 9.2(a) shall be
paid to the Investor Certificateholders of the related Series pursuant to
Article III on the Distribution Date following the date of such deposit. All
Certificates of a Series which are purchased by the Company pursuant to
subsection 9.2(a) shall be delivered by the Company upon such purchase to,
and be canceled by (in accordance with the written directions of the
Company), the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee and the Company.
(c) All principal or interest with respect to any Series of
Investor Certificates shall be due and payable no later than 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 its Series Termination Date (after
giving effect to all transfers, withdrawals, deposits and drawings to occur
on such date and the payment of principal to be made on such Series on such
date), the Trustee will sell or cause to be sold, in accordance with the
directions of Investor Certificateholders representing more than 50% of the
Invested Amount of such Series, and pay the proceeds to all Holders of such
Series PRO RATA (except that unless expressly provided to the contrary in the
related Supplement, no payment shall be made to
73
Holders of any Class of any Series that is by its terms subordinated to any
other Class until such senior Class of Certificates has been paid in full) in
final payment of all principal of and accrued interest on such Series of
Certificates, an amount of Receivables or interests in Receivables up to the
Invested Amount of such Series at the close of business on such date. Absent
such direction from Investor Certificateholders representing more than 50% of
the Invested Amount of such Series, the Trustee shall continue to hold the
Trust Assets in respect of such Series in accordance with the terms of the
Pooling and Servicing Agreements until the Trust Termination Date (or until
Investor Certificateholders representing more than 50% of the Invested Amount
of such Series shall otherwise direct the Trustee); PROVIDED that the terms
of this Agreement, the related Supplement and the Servicing Agreement shall
be deemed to remain in full force and effect, except that no additional
Receivables shall be allocated with respect to such Series. The reasonable
costs and expenses incurred by the Trustee in such sale shall be reimbursable
to the Trustee as provided in Section 8.5. Any proceeds of such sale in
excess of such principal and interest paid shall be paid to the owner of the
Exchangeable Company Interest, unless and to the extent otherwise specified
in any applicable Supplement. Upon such Series Termination Date 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 this Section 9.2.
Section 9.3. FINAL PAYMENT WITH RESPECT TO ANY SERIES. (a)
Written notice of any termination, specifying the Distribution Date upon
which the Investor Certificateholders of any Series may surrender their
Investor Certificates for payment of the final distribution with respect to
such Series and cancellation, shall be given (subject to at least 30 days'
(or such shorter period as is acceptable to the Trustee) prior written notice
from the Servicer to the Trustee containing all information required for the
Trustee's notice) by the Trustee to Investor Certificateholders of such
Series, mailed not later than the fifth day of the month of such final
distribution and specifying (i) the Distribution Date upon which final
payment of the Investor Certificates will be made upon presentation and
surrender of Investor Certificates 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 Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Investor
Certificates at the office or offices therein specified. 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 4.3 of the Servicing Agreement covering the period
during the then current calendar year through the date of such notice. 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 Investor
Certificateholders.
(b) Notwithstanding the termination of the Trust pursuant to
subsection 9.1(a) or the occurrence of the Series Termination Date with
respect to any Series pursuant to Section 9.2, all funds then on deposit in
the Collection Account (but only to the extent necessary to pay all
outstanding and unpaid amounts to Holders) shall continue to be held in trust
for the benefit of the Holders, and the Paying Agent or the Trustee shall pay
such funds to the Holders upon surrender of their Certificates in accordance
with the terms hereof. Any Certificate not surrendered on the date specified
in subsection 9.3(a)(i) shall cease to accrue any interest provided for such
Certificate from and after such date. In the event that all of the Investor
Certificateholders shall not surrender their Certificates for cancellation
within six months after the
74
date specified in the above-mentioned written notice, the Trustee shall give
a second written notice to the remaining Investor Certificateholders of such
Series to surrender their Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second
notice all the 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 of such Series 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. The Trustee and
the Paying Agent shall pay to the Company upon request any monies held by
them for the payment of principal or interest that remains unclaimed for two
years. After payment to the Company, Holders entitled to the money must look
to the Company for payment as general creditors unless an applicable
abandoned property law designates another Person.
(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation shall be
canceled by the Transfer Agent and Registrar and be disposed of in a
customary manner satisfactory to the Trustee.
Section 9.4. COMPANY'S TERMINATION RIGHTS. Upon the termination
of the Trust pursuant to Section 9.1 and the surrender of the Exchangeable
Company Interest and payment to the Trustee (in its capacity as such and/or
in its capacity as Successor Servicer) of all amounts owed to it under any
Pooling and Servicing Agreement, the Trustee shall assign and convey to the
Company (without recourse, representation or warranty) in exchange for the
Exchangeable Company Interest all right, title and interest of the Trust in
the Trust Assets, whether then existing or thereafter created, and all
proceeds thereof except for amounts held by the Trustee pursuant to
subsection 9.3(b). The Trustee shall execute and deliver such instruments of
transfer and assignment, in each case without recourse, representation or
warranty, as shall be reasonably requested by the Company to vest in the
Company all right, title and interest which the Trust had in the Trust
Assets.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. AMENDMENT. (a) Any Pooling and Servicing
Agreement, including any schedule or exhibit thereto, may be amended in
writing from time to time by the Servicer, the Company and the Trustee,
without the consent of any holder of any outstanding Certificate, to cure any
ambiguity, to correct or supplement any provisions herein or therein which
may be inconsistent with any other provisions herein or therein or to add any
other provisions hereto to change in any manner or eliminate any of the
provisions with respect to matters or questions raised under any Pooling and
Servicing Agreement which shall not be inconsistent with the provisions of
any Pooling and Servicing Agreement; PROVIDED, HOWEVER, that such action
shall not, as evidenced by an Officer's Certificate from the Company and, to
the extent, in the reasonable view of the Company, a question of law exists,
supported by an Opinion of Counsel delivered to the Trustee, adversely affect
in any material respect the interests of the Investor
75
Certificateholders. The Trustee may, but shall not be obligated to, enter
into any such amendment pursuant to this paragraph or paragraph (b) below
which affects the Trustee's rights, duties or immunities under any Pooling
and Servicing Agreement or otherwise.
(b) Any Pooling and Servicing Agreement and any schedule or
exhibit thereto may also be amended in writing from time to time by the
Servicer, the Company and the Trustee with the consent of Investor
Certificateholders evidencing more than 50% of the Invested Amount of any
Series adversely affected by the amendment (or, if any such Series shall have
more than one Class of Investor Certificates adversely affected by the
amendment, 50% or more of the Invested Amount of each such Class) for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of such Pooling and Servicing Agreement or of modifying
in any manner the rights of holders of any Series then issued and
outstanding; PROVIDED, HOWEVER, that no such amendment shall (i) reduce in
any manner the amount of, or delay the timing of, distributions which are
required to be made on any Investor Certificate of such Series without the
consent of such Investor Certificateholder of such Series; (ii) change the
definition of or the manner of calculating the interest of any Investor
Certificateholder of such Series without the consent of such Investor
Certificateholder; or (iii) reduce the aforesaid percentage of Fractional
Undivided Interests the holders of which are required to consent to any such
amendment, in each case without the consent of all Holders of each Series
adversely affected in any material respect.
(c) Notwithstanding anything in this Section 10.1 to the contrary,
the Supplement with respect to any Series may be amended on the terms and
with the procedures provided in such Supplement.
(d) The Company or the Servicer shall deliver any proposed
amendment to each Agent at least five days prior to the execution and
delivery thereof.
(e) Promptly after the execution of any such amendment or consent
the Trustee shall furnish written notification of the substance of such
amendment to each Holder of each Outstanding Series (or with respect to an
amendment of a Supplement, of the applicable Series), and the Servicer shall
furnish written notification of the substance of such amendment to each
Rating Agency. No such amendment (including, without limitation, the
amendment of any Supplement, notwithstanding anything to the contrary
contained in any Supplement) shall be effective until the Rating Agency
Condition has been satisfied with respect thereto.
(f) It shall not be necessary for the consent of Investor
Certificateholders under this Section 10.1 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 Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
(g) In executing or accepting any amendment pursuant to this
Section 10.1, the Trustee shall, upon request, be entitled to receive and
rely upon (i) an Opinion of Counsel (A) stating that such amendment is
authorized pursuant to a specific provision of a Pooling and
76
Servicing Agreement and complies with such provision, and (B) stating that
all conditions precedent to the execution and delivery of such amendment
shall have been satisfied in full, which opinion in the case of this clause
(B) may, to the extent that such opinion concerns questions of fact, rely on
an Officer's Certificate with respect to such questions of fact, (ii) a
certificate from a Responsible Officer of the Company stating that such
amendment shall not adversely affect the interests of the holders of any
outstanding Certificates in any material respect except for holders of the
Series whose consent to such amendment has been obtained in accordance with
clause (b) of this Section 10.1 and (iii) a Tax Opinion.
Section 10.2. PROTECTION OF RIGHT, TITLE AND INTEREST TO TRUST.
(a) The Servicer shall cause this Agreement, any Supplement, all amendments
hereto and/or all financing statements and continuation statements and any
other necessary documents covering the Certificateholders' and the Trustee's
right, title and interest to the Trust 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 the right, title and interest of the Trustee hereunder to all
property comprising the Trust. 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 Company 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
subsection 10.2(a).
(b) With respect to any prospective change in its name, identity
or corporate structure, the Company shall comply fully with subsection 2.8(m)
hereof and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof. If the Company determines that no
refiling is required, it shall provide to the Trustee an Opinion of Counsel
so stating.
Section 10.3. LIMITATION ON RIGHTS OF HOLDERS. (a) The death or
incapacity of any Holder shall not operate to terminate this Agreement or the
Trust, nor shall such death or incapacity entitle such Holder'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) Except with respect to the Investor Certificateholders as
expressly provided in any Pooling and Servicing Agreement, no Investor
Certificateholder shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto. 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 to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Investor Certificateholder previously shall have given
to the Trustee written request to institute such action, suit or proceeding
in its own name as
77
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt
of such notice, 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 Investor
Certificateholder with every other Investor Certificateholder and the
Trustee, that no one or more Holders shall have any right in any manner
whatever by virtue of or by availing itself or themselves of any provisions
of the Pooling and Servicing Agreements to affect, disturb or prejudice the
rights of any other of the Investor Certificateholders, or to obtain or seek
to obtain priority over or preference to any other such Investor
Certificateholder, or to enforce any right under this Agreement, except in
the manner herein provided and for the equal, ratable and common benefit of
all Investor Certificateholders. For the protection and enforcement of the
provisions of this Section 10.3, each and every Investor Certificateholder
and the Trustee shall be entitled to such relief as can be given either at
law or in equity.
(d) By their acceptance of Certificates pursuant to this Agreement
and the applicable Supplement, the Holders agree to the provisions of this
Section 10.3.
Section 10.4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
Section 10.5. NOTICES. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing
(including by facsimile), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or
three days after being deposited in the mail, postage prepaid, or, in the
case of facsimile notice, when received, (i) addressed as follows in the case
of the Company, the Servicer and the Trustee and (ii) in the case of the
Sub-Servicers, as set forth under their signatures in the Receivables Sale
Agreement, or, in either case, to such other address as may be hereafter
notified by the respective parties hereto:
The Company: RS Funding Inc.
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000X
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
78
with a copy to the Servicer:
The Servicer: US Foodservice Inc.
East Mountain Corporate Center
000 Xxxxxxxxx Xxxxx
Xxxxxx-Xxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
The Trustee: The Chase Manhattan Bank
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Advanced Structured Products
Facsimile: 000-000-0000
Any notice required or permitted to be mailed to an Investor
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Investor Certificateholder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in any Pooling and
Servicing Agreement shall be conclusively presumed to have been duly given,
whether or not the Investor Certificateholder receives such notice.
Section 10.6. SEVERABILITY OF PROVISIONS. If any one or more of
the covenants, agreements, provisions or terms of any Pooling and Servicing
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 such Pooling and
Servicing Agreement and shall in no way affect the validity or enforceability
of the other provisions of any Pooling and Servicing Agreement or of the
Certificates or rights of the Holders.
Section 10.7. ASSIGNMENT. Notwithstanding anything to the
contrary contained herein, except as provided in Section 5.3 of the Servicing
Agreement, no Pooling and Servicing Agreement may be assigned by the Company
or the Servicer without the prior written consent of the Trustee acting at
the direction of the holders of 66-2/3% of the Invested Amount of each
Outstanding Series and without the Rating Agency Condition's having been
satisfied with respect to such assignment.
Section 10.8. CERTIFICATES NONASSESSABLE AND FULLY PAID. It is
the intention of the parties to each Pooling and Servicing Agreement that the
Investor Certificateholders shall not be personally liable for obligations of
the Trust, that the interests in the Trust represented by the Investor
Certificates shall be nonassessable for any losses or expenses of the Trust
or for any reason whatsoever and that Investor Certificates upon
authentication thereof by the Trustee pursuant to Section 5.2 are and shall
be deemed fully paid.
Section 10.9. FURTHER ASSURANCES. The Company and the Servicer
agree to do and perform, from time to time, any and all acts and to execute
any and all further instruments required or reasonably requested by the
Trustee more fully to effect the purposes of each Pooling
79
and Servicing Agreement, including, without limitation, the execution of any
financing statements or continuation statements relating to the Receivables
for filing under the provisions of the UCC of any applicable jurisdiction.
Section 10.10. NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of the Trustee or the
Investor 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 10.11. COUNTERPARTS. This Agreement 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 10.12. THIRD-PARTY BENEFICIARIES. This Agreement will
inure to the benefit of and be binding upon the parties hereto, the Holders
and their respective successors and permitted assigns. Except as otherwise
provided in Section 6.3 and this Article X, no other Person will have any
right or obligation hereunder.
Section 10.13. ACTIONS BY HOLDERS. (a) Wherever in any Pooling
and Servicing Agreement 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
Certificateholders 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 act by a Investor Certificateholder shall bind such
Investor 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, the Company or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Certificate.
Section 10.14. 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 and the
Servicing Agreement. This Agreement and the Servicing Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
Section 10.15. HEADINGS. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
Section 10.16. CONSTRUCTION OF AGREEMENT. (a) The Company hereby
grants to the Trustee, for the benefit of the Holders, a perfected first
priority security interest in all of the
80
Company's right, title and interest in, to and under the Receivables and the
other Trust Assets now existing and hereafter created, all monies due or to
become due and all amounts received with respect thereto and all "proceeds"
thereof (including Recoveries), to secure all of the Company's and the
Servicer's obligations hereunder, including, without limitation, the
Company's obligation to sell or transfer Receivables hereafter created to the
Trust.
(b) This Agreement shall constitute a security agreement under
applicable law.
Section 10.17. NO SET-OFF. Except as expressly provided in this
Agreement, the Trustee agrees that it shall have no right of set-off or
banker's lien against, and no right to otherwise deduct from, any funds held
in the Collection Concentration Account or the Collection Account for any
amount owed to it by the Company, the Servicer or any Investor
Certificateholder.
Section 10.18. NO BANKRUPTCY PETITION. Each of the Trustee and
the Servicer hereby covenants and agrees that, prior to the date which is one
year and one day after the date of the end of the Amortization Period with
respect to all Outstanding Series, 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.
Section 10.19. LIMITATION OF LIABILITY. It is expressly
understood and agreed by the parties hereto that (a) each Pooling and
Servicing Agreement is executed and delivered by the Trustee, not
individually or personally but solely as Trustee of the Trust, in the
exercise of the powers and authority conferred and vested in it, (b) except
with respect to Section 8.15 hereof the representations, undertakings and
agreements herein made on the part of the Trust are made and intended not as
personal representations, undertakings and agreements by the Trustee, but are
made and intended for the purpose of binding only the Trust, (c) nothing
herein contained shall be construed as creating any liability of the Trustee,
individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived
by the parties who are signatories to this Agreement and by any Person
claiming by, through or under such parties; PROVIDED, HOWEVER, the Trustee
shall be liable in its individual capacity for its own willful misconduct or
negligence and (d) under no circumstances shall the Trustee be personally
liable for the payment of any indebtedness or expenses of the Trust or be
liable for the breach or failure of any obligation, representation, warranty
or covenant made or undertaken by the Trust under any Pooling and Servicing
Agreement; PROVIDED FURTHER, that the foregoing clauses (a) through (d) shall
survive the resignation or removal of the Trustee.
The Company hereby agrees to indemnify and hold harmless the
Trustee and the Trust for the benefit of the Holders (each, an "INDEMNIFIED
PERSON") 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, or relating to, activities of the Company pursuant
to any Pooling and Servicing Agreement to which it is a party, 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 actual or threatened action, proceeding or claim, except to
the
81
extent such loss, liability, expense, damage or injury resulted from the
negligence, bad faith or wilful misconduct of an indemnified person; PROVIDED
that any payments made by the Company pursuant to this subsection shall be
made solely from funds available to the Company which are not otherwise
needed to be applied to the payment of any amounts pursuant to any Pooling
and Servicing Agreements, shall be non-recourse other than with respect to
proceeds in excess of the proceeds to make such payment, and shall not
constitute a claim against the Company to the extent that insufficient
proceeds exist to make such payment.
Section 10.20. CERTAIN INFORMATION. The Servicer and the Company
shall promptly provide to the Trustee such information in computer tape, hard
copy or other form regarding the Receivables as the Trustee may reasonably
request to perform its obligations hereunder.
Section 10.21. INCLUSION OF EXCLUDED RECEIVABLES. If any Seller
shall satisfy the Servicer that a particular class of Excluded Receivables
originated by such Seller can be properly accounted for so as to permit a
complete and accurate determination of the Principal Amount thereof (and
Collections with respect thereto) which may be set forth on each Daily Report
of the Servicer, then such Seller and the Servicer shall deliver a written
notification to the Company, the Trustee and each Rating Agency to that
effect requesting that such Excluded Receivables be included as Receivables
from and after a date specified therein, which date shall be no earlier than
30 days after the date such notification is sent (such later date, the
"RECEIVABLES INCLUSION DATE"). From and after the related Receivables
Inclusion Date, the Receivables shall be deemed to include such Excluded
Receivables for all purposes hereunder and under the other Transaction
Documents; PROVIDED that, except as otherwise provided in any Supplement, no
such inclusion shall occur unless the Rating Agency Condition has been
satisfied with respect thereto.
IN WITNESS WHEREOF, the Company, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers as of
the day and year first above written.
RS FUNDING INC., as Company
By: /s/
___________________________
Name:
Title:
US FOODSERVICE INC., as Servicer
By: /s/
___________________________
Name:
Title:
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Trustee
By: /s/
___________________________
Name:
Title:
SCHEDULE 1
TO POOLING AGREEMENT
RECEIVABLES
Tape to be delivered by the Company to the Trustee.
SCHEDULE 2
TO POOLING AGREEMENT
[TO BE PROVIDED BY THE TRUSTEE]
IDENTIFICATION OF TRUST ACCOUNTS
The following accounts have been established by and at The Chase Manhattan Bank:
Name Number
---- ------
RS Funding Inc. Collection Account _________
RS Funding Inc. Company
Collection Subaccount _________
RS Funding Inc. Series 1996-1
Collection Subaccount _________
RS Funding Inc. Series 1996-1
Principal Collection Sub-subaccount _________
RS Funding Inc. Series 1996-1
Non-Principal Collection Sub-subaccount _________
RS Funding Inc. Series 1996-1
Accrued Interest Sub-subaccount _________
RS Funding Inc. Series 1996-1
Collection Subordinated Sub-subaccount _________
SCHEDULE 3
TO POOLING AGREEMENT
ACTIONS WITH RESPECT TO CHATTEL PAPER
Each Seller and the Servicer, in each case acting as custodian for
the Company, and the Company, shall immediately take all of the following
actions (in addition to all other actions set forth or reasonably requested
as described in the Transaction Documents and in all documents executed in
connection with the sale of an interest in the Receivables and the grant of a
security interest therein to other Persons) to protect or more fully evidence
the security interest granted by the Company in chattel paper evidencing
Receivables pursuant to agreements and documents entered into after the
initial Issuance Date (such chattel paper being the "CHATTEL PAPER"):
(a) Wherever it is located, maintain all Chattel Paper in segregated
storage cabinets, which cabinets will contain no other documents;
(b) Conspicuously xxxx each such storage cabinet to indicate that the
documents contained therein are Chattel Paper evidencing Receivables of
the Company;
(c) Stamp in red the original of the each document constituting
Chattel Paper with a legend to read as follows:
"THIS DOCUMENT AND ALL RIGHTS HEREUNDER HAVE BEEN SOLD TO RS
FUNDING INC. AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF
THE CHASE MANHATTAN BANK, AS TRUSTEE."
or such other legend that is reasonably acceptable to the Trustee;
PROVIDED that at any time that an Early Amortization Event has occurred
and is continuing, such Seller or the Servicer shall, at the request of
the Trustee, stamp any Chattel Paper with the above legend prior to
sending it to other parties for execution.
SCHEDULE 4
TO POOLING AGREEMENT
[TO BE PROVIDED BY XXXXXXXX & X'XXXX]
LOCATION OF CHIEF EXECUTIVE OFFICE OF THE COMPANY
SCHEDULE 5
TO POOLING AGREEMENT
CONTRACTUAL OBLIGATIONS
None
