EXHIBIT 10.40.1
EXECUTION COPY
RECEIVABLES SALE AGREEMENT
RECEIVABLES SALE AGREEMENT, dated as of November 15, 1996 (this
"AGREEMENT"), among XXXXXX-XXXXXX, INC., a Delaware corporation ("RS"), XXXX
XXXXXX & CO., a Delaware corporation ("XXXXXX"), XXXXXXX BROTHERS, INC., a
Delaware corporation, WHITE SWAN, INC., a Delaware corporation, X.X XXXXXXXX
& COMPANY, INC., a Pennsylvania corporation, ROANOKE RESTAURANT SERVICE, INC.,
a Virginia corporation, KING'S FOODSERVICE, INC., a Kentucky corporation,
US FOODSERVICE OF FLORIDA, INC., a Delaware corporation, and US FOODSERVICE OF
ATLANTA, INC., a Delaware corporation (collectively and together with each
other Subsidiary of RS from time to time added as a seller hereunder pursuant
to Section 9.13, the "SELLERS"); RS FUNDING INC., a Nevada corporation (the
"COMPANY"); and US FOODSERVICE INC., a Delaware corporation ("US
FOODSERVICE"), in its capacity as servicer (the "SERVICER").
W I T N E S S E T H:
WHEREAS, the Sellers intend to sell Receivables and Receivables
Property (both as hereinafter defined) to the Company on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the Company desires to purchase Receivables and
Receivables Property from the Sellers on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the Sellers and the Company desire the sale of Receivables
and Receivables Property from the Sellers to the Company to be a true sale
providing the Company with the full benefits of ownership of the Receivables;
and
WHEREAS, to obtain a portion of the necessary funds to purchase
such Receivables and Receivables Property, the Company has entered into the
Pooling Agreement and the Series 1996-1 Supplement (both as hereinafter
defined).
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto agree as
follows:
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ARTICLE I
DEFINITIONS
Section 1.01 CERTAIN DEFINED TERMS. (a) As used in this
Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"ABR" means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "PRIME RATE"
shall mean, for any day, a rate of interest per annum equal to the rate
published in the WALL STREET JOURNAL on the immediately following Business
Day under the heading "Money Rates" and "FEDERAL FUNDS EFFECTIVE RATE"
shall mean, for any day, the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by The Chase Manhattan
Bank from three federal funds brokers of recognized standing selected by
it. Any change in the ABR due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective as of the opening of business on
the effective day of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"ADDITIONAL SELLER SUPPLEMENT" means an instrument substantially in
the form of Exhibit B hereto pursuant to which a Subsidiary of RS becomes a
Seller party hereto.
"AUTHORIZED OFFICERS" means those officers of the Sellers
designated in Schedule I hereto (or in such other Schedule as may be
delivered by the Sellers to the other parties hereto from time to time) as
duly authorized to execute and deliver this Agreement and any instruments or
documents in connection herewith on behalf of the Sellers and to take, from
time to time, all other actions on behalf of the Sellers in connection
herewith.
"CLOSING DATE" means the date of the initial issuance of the
Investor Certificates.
"CODE" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder or any successor statute and related regulations.
"CONTRACT" means a contract between any Seller and any Person
pursuant to or under which such Person shall be obligated to make payments to
such Seller.
"DISCOUNTED PERCENTAGE" has the meaning specified in Schedule VII
hereto.
"EARLY TERMINATION" has the meaning specified in Section 6.01.
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"EFFECTIVE DATE" means (i) with respect to each Seller on the date
hereof, November __, 1996 and (ii) with respect to each Subsidiary of RS
added as a Seller pursuant to Section 9.13 hereof, the Seller Addition Date
with respect to each such Subsidiary.
"ERISA AFFILIATE" means, with respect to any Person, any trade or
business (whether or not incorporated) that is a member of a group of which
such Person is a member and which is treated as a single employer under
Section 414 of the Internal Revenue Code.
"EXCLUDED RECEIVABLE" means, subject to Section 10.21 of the
Pooling Agreement, 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 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 any Excluded Receivable is included in a Daily Report, for the
purposes of Section 2.01 hereof, Section 2.1 of the Pooling Agreement and the
definition of "Collections", such receivable shall not be an Excluded
Receivable.
"EXISTING RYKOFF SUBORDINATED NOTE" means the Existing Rykoff
Subordinated Note (as defined in the SPC Receivables Sale Agreement).
"EXISTING RYKOFF SUBORDINATED NOTE AMOUNT" means the sum of (i) the
aggregate outstanding principal amount of the Existing Rykoff Subordinated
Note and (ii) the amount of accrued and unpaid interest thereon, in each case
as of the initial Effective Date.
"EXISTING USFAR SUBORDINATED NOTE" means the Existing USFAR
Subordinated Note (as defined in the SPC Receivables Sale Agreement).
"EXISTING USFAR SUBORDINATED NOTE AMOUNT" means the sum of (i) the
aggregate outstanding principal amount of the Existing USFAR Subordinated
Note and (ii) the amount of accrued and unpaid interest thereon, in each case
as of the initial Effective Date.
"LIEN" means, 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
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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.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (within the
meaning of Section 4001(a)(3) of ERISA) and to which such Person or any ERISA
Affiliate of such Person (other than one considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Section 414 of the Internal Revenue
Code) is making or accruing an obligation to make contributions, or has
within any of the preceding five years made or accrued an obligation to make
contributions.
"NEW DIVISION" has the meaning specified in Section 9.13.
"OUTSTANDING SALE PRICE AMOUNT" means, at any time with respect to
any Seller, the sum of (i) the aggregate purchase price received by Rykoff
Funding or USFAR, as the case may be, from the Company with respect to the
aggregate outstanding Principal Amount at such time of the Receivables of
such Seller sold to the Company by Rykoff Funding or USFAR, as the case may
be, on the initial Effective Date and (ii) the aggregate Purchase Price
received by such Seller from the Company with respect to the aggregate
outstanding Principal Amount at such time of the Purchased Receivables of
such Seller.
"PAYMENT DATE" has the meaning specified in subsection 2.03(a).
"PLAN" means, with respect to any Person, any pension plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Internal Revenue Code which is maintained for employees of
such Person or any ERISA Affiliate of such Person.
"POOLING AGREEMENT" means the Pooling Agreement, dated as of the
date hereof, among the Company, the Servicer and the Trustee on behalf of the
Holders, as such agreement may be amended, supplemented, waived, or otherwise
modified from time to time, including, without limitation, the Series 1996-1
Supplement.
"POTENTIAL PURCHASE TERMINATION EVENT" means any condition or act
specified in Section 6.01 that, with the giving of notice or the lapse of
time or both, would become a Purchase Termination Event.
"PURCHASED RECEIVABLE" means, at any time, any Receivable sold to
the Company by any Seller pursuant to, and in accordance with the terms of,
this Agreement and not theretofore resold to such Seller pursuant to
subsection 2.01(b) or Section 2.06.
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"PURCHASED RECEIVABLES PERCENTAGE" means, with respect to any
Seller as to which RS has submitted a Seller Termination Request, the
percentage equivalent of a fraction, the numerator of which is an amount
equal to the aggregate outstanding Principal Amount of Purchased Receivables
sold by such Seller as of the applicable Seller Termination Request Date, and
the denominator of which is an amount equal to the aggregate outstanding
Principal Amount of all Purchased Receivables as of such date.
"PURCHASE PRICE" has the meaning specified in Section 2.02.
"PURCHASE TERMINATION DATE" means, with respect to any Seller, the
date on which the Company's obligation to purchase Receivables from such
Seller shall terminate, which shall be the date on which an Early Termination
occurs with respect to such Seller.
"PURCHASE TERMINATION EVENT" has the meaning specified in
Section 6.01.
"RECEIVABLE" means 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 "RECEIVABLES"
shall not include Excluded Receivables.
"RECEIVABLES LIST" has the meaning specified in subsection 2.01(e).
"RECEIVABLES POOL" means at any time all then outstanding
Receivables and Receivables Property.
"RECEIVABLES PROPERTY" has the meaning specified in Section 2.01.
"RELATED PROPERTY" means, 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
(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;
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in the case of clauses (b) and (c), whether pursuant to the contract related
to such Receivable or otherwise or including without limitation, 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.
"RELEVANT UCC STATE" means each jurisdiction in which the filing of
a UCC financing statement is necessary or desirable to perfect the Company's
interest in the Receivables.
"REPORTABLE EVENT" means any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to
a Plan (other than a Plan maintained by an ERISA Affiliate which is considered
an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of
the Internal Revenue Code).
"RS PERSONS" means each Seller and each of its Affiliates other
than the Company.
"RS TRANSITION AGREEMENT" means the RS Transition Agreement (as
defined in the SPC Receivables Sale Agreement).
"SEC" means the United States Securities and Exchange Commission.
"SELLER ADDITION DATE" has the meaning specified in Section 3.02.
"SELLER ADJUSTMENT PAYMENT" has the meaning specified in Section 2.05.
"SELLER DIVISION" has the meaning specified in Section 9.13.
"SELLER REPURCHASE PAYMENT" has the meaning specified in Section 2.06.
"SELLER TERMINATION REQUEST" has the meaning specified in
subsection 9.14(b).
"SELLER TERMINATION REQUEST DATE" has the meaning specified in
subsection 9.14(b).
"SERIES 1996-1 SUPPLEMENT" means the Series 1996-1 Supplement,
dated as of the date hereof, among the Company, the Servicer and the Trustee,
to the Pooling Agreement, as each such agreement may be amended, supplemented
or otherwise modified from time to time.
"SUBORDINATED NOTE" has the meaning specified in Section 8.01.
"UCC CERTIFICATE" means a certificate substantially in the form of
Exhibit C hereto.
"USFAR TRANSITION AGREEMENT" means the USFAR Transition Agreement
(as defined in the SPC Receivables Sale Agreement).
"WITHDRAWAL LIABILITIES" means liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
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(b) All capitalized terms used herein and not otherwise defined
have the meanings assigned such terms in Section 1.1 of the Pooling Agreement.
Section 1.02. ACCOUNTING AND UCC TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP; and
all terms used in Article 9 of the UCC that are used but not specifically
defined herein are used herein as defined therein.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
Section 2.01. PURCHASE AND SALE OF RECEIVABLES. (a) Each of the
Sellers hereby sells, assigns, transfers and conveys to the Company, without
recourse (except to the limited extent provided herein), all its respective
right, title and interest in, to and under (i) all Receivables now existing
and hereafter arising from time to time, (ii) all payment and enforcement
rights (but none of the obligations) with respect to such Receivables, (iii)
all Related Property in respect of such Receivables and (iv) all Collections
with respect to the foregoing clauses (i), (ii) and (iii) (the payment and
enforcement rights, Related Property and Collections referred to in
clauses (ii), (iii) and (iv) above are hereinafter collectively referred to as
the "RECEIVABLES PROPERTY").
(b) On each applicable Effective Date and on the date of creation
of each newly created Receivable (but only so long as no Early Termination
with respect to the Seller which created such Receivable shall have occurred
and be continuing), all of the applicable Seller's right, title and interest
in, to and under (i) in the case of each such Effective Date, all then
existing Receivables and all Receivables Property in respect of such
Receivables and (ii) in the case of each such date of creation, all such
newly created Receivables and all Receivables Property in respect of such
Receivables shall be immediately and automatically sold, assigned,
transferred and conveyed to the Company pursuant to paragraph (a) above
without any further action by such Seller or any other Person. If any Seller
shall not have received payment from the Company of the Purchase Price for
any newly created Receivable and the related Receivables Property on the
Payment Date therefor in accordance with the terms of subsection 2.03(b),
such newly created Receivable and the Receivables Property with respect
thereto shall, upon receipt of notice from the applicable Seller of such
failure to receive payment, immediately and automatically be sold, assigned,
transferred and reconveyed by the Company to such Seller without any further
action by the Company or any other Person.
(c) The parties to this Agreement intend that the transactions
contemplated by subsections 2.01(a) and (b) hereby shall be, and shall be
treated as, a purchase by the Company and a sale by the applicable Seller of
the Purchased Receivables and the Receivables Property in respect thereof and
not a lending transaction. All sales of Receivables and Receivables Property
by any Seller hereunder shall be without recourse to, or representation or
warranty of any kind (express or implied) by, any Seller, except as otherwise
specifically provided herein. The foregoing sale, assignment, transfer and
conveyance does not constitute and is not intended to result in a creation or
assumption by the Company of any obligation of any Seller or any other Person
in connection with the Receivables, the Receivables Property or any agreement
or instrument relating thereto, including any obligation to any Obligor. If
this Agreement does not
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constitute a valid sale, assignment, transfer and conveyance of all right,
title and interest of each Seller in, to and under the Purchased Receivables
and the Receivables Property in respect thereof despite the intent of the
parties hereto, such Seller hereby grants a "security interest" (as defined
in the UCC as in effect in the State of New York) in the Purchased
Receivables, the Receivables Property in respect thereof and all proceeds
thereof to the Company and the parties agree that this Agreement shall
constitute a security agreement under the UCC in effect in New York.
(d) In connection with the foregoing conveyances, each Seller
agrees to record and file, at its own expense, financing statements (and
continuation statements with respect to such financing statements when
applicable) with respect to the Receivables and Receivables Property now
existing and hereafter acquired by the Company from the Sellers meeting the
requirements of applicable state law in such manner and in such jurisdictions
as are necessary to perfect the Company's ownership or security interest in
the Receivables and Receivables Property, and to deliver evidence of such
filings to the Company on or prior to the related Effective Date.
(e) In connection with the foregoing conveyances, each Seller
agrees at its own expense, as agent of the Company, (i) to indicate on the
computer files containing a master database of Receivables that all
Receivables included in such files and all Receivables Property have been
sold to the Company in accordance with this Agreement and (ii) to deliver to
the Company computer files, microfiche lists, a typed or printed list or
other tangible evidence reasonably acceptable to the Company (the
"RECEIVABLES LIST") containing true and complete lists, as of the Cut-Off
Date, of the Obligors whose Receivables are to be transferred to the Company
on the Effective Date and the balance of the Receivables originated by each
such Obligor as of the Cut-Off Date (including the Receivables transferred by
USFAR and Rykoff Funding to the Company pursuant to the SPC Receivables Sale
Agreement).
Section 2.02. PURCHASE PRICE. The amount payable by the Company
to a Seller (the "PURCHASE PRICE") for Receivables and Receivables Property
on any Payment Date under this Agreement shall be equal to the product of (a)
the aggregate outstanding Principal Amount of such Receivables as set forth
in the applicable Daily Report TIMES (b) the Discounted Percentage with
respect to such Seller.
Section 2.03. PAYMENT OF PURCHASE PRICE. (a) Upon the fulfillment
of the conditions set forth in Article III, the Purchase Price for
Receivables and the Receivables Property shall be paid or provided for by the
Company in the manner provided below on each day for which a Daily Report is
delivered to the Company (each such day, a "PAYMENT DATE") in respect of a
Reported Day (which Daily Report shall specify, by Seller, the Principal
Amount of Receivables being sold on such Payment Date, the aggregate Purchase
Price for such Receivables and the components of payment as provided in
paragraph (b) below). The Sellers hereby appoint the Servicer as their agent
to receive, for allocation by the Servicer to the Sellers, payments of the
Purchase Price of the Receivables and the Receivables Property sold to the
Company and hereby authorize the Company to make all such payments due to any
Seller directly to an account of, or as otherwise directed by, the Servicer.
The Servicer hereby accepts and agrees to such appointment. All payments
under this Agreement shall be made not later than 3:00 p.m (New York City
time) on the date specified therefor in Dollars in same day funds or by
check, as the
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Servicer shall elect, and to the bank account designated in writing by the
Servicer to the Company.
(b) The Purchase Price for Receivables and Receivables Property
shall be paid by the Company on each Payment Date as follows:
(i) by netting the amount of any Seller Adjustment Payments or Seller
Repurchase Payments pursuant to Section 2.05 or 2.06 against such Purchase
Price;
(ii) to the extent available for such purpose, in cash from
Collections released to the Company pursuant to the Pooling Agreement;
(iii) to the extent available for such purpose, in cash from the net
proceeds of a transfer of interests in Purchased Receivables by the Company
to other Persons;
(iv) at the option of the Company, by means of an addition to the
principal amount of the Subordinated Note in an aggregate amount equal to
the remaining portion of the Purchase Price; PROVIDED, HOWEVER, that with
respect to any Seller, the outstanding principal amount of such Seller's
interest in the Subordinated Note shall not at any time exceed 25% of the
Outstanding Sale Price Amount with respect to such Seller; PROVIDED FURTHER
that the Company may pay the Purchase Price by means of additions to the
principal amount of the Subordinated Note only if, at the time of such
payment and after giving effect thereto, the fair market value of the
Company's assets, including, without limitation, any beneficial interests
in or indebtedness of a trust and all Receivables and Receivables Property
the Company owns, is greater than the amount of its liabilities including
its liabilities on the Subordinated Note and all interest and other fees
due and payable under the Pooling Agreement and the other Transaction
Documents. Any such addition to the principal amount of the Subordinated
Note shall be allocated among the Sellers (PRO RATA according to the
Principal Amount of Receivables sold by each Seller) by the Servicer in
accordance with the provisions of this subsection 2.03(b)(iv) and
Section 8.01. The Servicer may evidence such additional principal amounts
by recording the date and amount thereof on the grid attached to such
Subordinated Note; PROVIDED that the failure to make any such recordation
or any error in such grid shall not adversely affect any Seller's rights;
and
(v) in cash from the proceeds of capital contributed by RS to the
Company, if any, in respect of its equity interest in the Company.
(c) The Servicer shall be responsible, in its sole discretion but
in accordance with the preceding subsection 2.03(b), for allocating among the
Sellers the payment of the Purchase Price for Receivables and any amounts
netted therefrom pursuant to subsection 2.03(b)(i), which allocation shall
be, subject to the first proviso contained in subsection 2.03(b)(iv), either
in the form of cash received from the Company or as an addition to the
principal amount of a Seller's interest in the Subordinated Note.
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(d) Whenever any payment to be made under this Agreement shall be
stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day. Amounts not paid when due in
accordance with the terms of this Agreement shall bear interest at a rate
equal at all times to the ABR PLUS 4%, payable on demand.
Section 2.04. NO REPURCHASE. Except to the extent expressly set
forth herein, no Seller shall have any right or obligation under this
Agreement, by implication or otherwise, to repurchase from the Company any
Purchased Receivables or Receivables Property or to rescind or otherwise
retroactively affect any purchase of any Purchased Receivables or Receivables
Property after the Payment Date relating thereto.
Section 2.05. REBATES, ADJUSTMENTS, RETURNS AND REDUCTIONS;
MODIFICATIONS. From time to time, a Seller may make Dilution Adjustments to
Receivables in accordance with this Section 2.05 and subsection 5.03(c). The
Sellers, jointly and severally, agree to pay to the Company in cash, on the
first Business Day immediately succeeding the date of the grant of any
Dilution Adjustment (regardless of which Seller shall have granted such
Dilution Adjustment), the amount of any such Dilution Adjustment (a "SELLER
ADJUSTMENT PAYMENT"); PROVIDED that, prior to the occurrence of any Early
Termination with respect to all Sellers, any such Seller Adjustment Payment
due to the Company on any Payment Date shall, on such Payment Date, be netted
against the Purchase Price of newly created Receivables in accordance with
subsection 2.03(b)(i) to the extent of such Purchase Price and the remaining
amount of such Seller Adjustment Payment due to the Company after such
netting, if any, shall be paid to the Company on such date in cash. The
amount of any Dilution Adjustment made on any Reported Day shall be set forth
on the Daily Report prepared with respect to such Reported Day.
Section 2.06. LIMITED REPURCHASE OBLIGATION. In the event that
(i) any representation or warranty contained in Section 4.02 in respect of
any Receivable transferred to the Company is not true and correct in any
material respect on the applicable Payment Date, or (ii) there is a breach of
any covenant contained in subsection 5.01(d), (g) or (h) or Section 5.03 with
respect to any Receivable and such breach has a material adverse effect on
the Company's interest in such Receivable or (iii) the Company'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, any Seller, then the Sellers, jointly and severally, agree to
pay to the Company in cash an amount equal to the Purchase Price of such
Receivable (whether the Company paid such Purchase Price in cash or
otherwise) less Collections received by the Company in respect of such
Receivable, regardless of which Seller shall have been responsible for such
incorrectness or breach, such payment to occur no later than the Payment Date
occurring on the 30th day (or, if such 30th day is not a Payment Date, on the
Payment Date immediately succeeding such 30th day) after the day such breach
or incorrectness becomes known (or should have become known with due
diligence) to any Seller (unless such breach or incorrectness shall have been
cured on or before such day); PROVIDED that, prior to any Early Termination
with respect to all Sellers, any such payment due and owing to the Company on
such Payment Date shall be netted against the Purchase Price of newly created
Receivables in accordance with subsection 2.03(b)(i) to the extent of such
Purchase Price and the remaining amount of such payment due to the Company
after such netting, if any, shall be paid to the Company in cash to the
extent still unpaid on such Payment Date. Any payment by any Seller pursuant
to this Section
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2.06 is referred to as a "SELLER REPURCHASE PAYMENT". The obligation to
reacquire any Receivable shall, upon satisfaction thereof, constitute the
sole remedy respecting the event giving rise to such obligation available to
the Company. Simultaneously with any Seller Repurchase Payment with respect
to any Receivable, such Receivable and the Receivables Property with respect
thereto shall immediately and automatically be sold, assigned, transferred
and conveyed by the Company to the applicable Seller without any further
action by the Company or any other Person.
Section 2.07. OBLIGATIONS UNAFFECTED. The obligations of the
Sellers to the Company under this Agreement shall not be affected by reason
of any invalidity, illegality or irregularity of any Receivable or any sale
of a Receivable.
Section 2.08. CERTAIN CHARGES. Each Seller and the Company agree
that late charge revenue, reversals of discounts, other fees and charges and
other similar items, whenever created, accrued in respect of Purchased
Receivables shall be the property of the Company notwithstanding the
occurrence of an Early Termination and all Collections with respect thereto
shall continue to be allocated and treated as Collections in respect of
Purchased Receivables.
Section 2.09. CERTAIN ALLOCATIONS. The Sellers hereby agree that,
following the occurrence of an Early Termination, all Collections and other
proceeds received in respect of Receivables generated by the Sellers shall be
applied, FIRST, to pay the outstanding Principal Amount of Purchased
Receivables (as of the date of such Early Termination) of the Obligor to whom
such Collections are attributable until such Purchased Receivables are paid
in full and, SECOND, to the related Seller to pay Receivables of such Obligor
not sold to the Company; PROVIDED, HOWEVER, that notwithstanding the
foregoing, if an Obligor indicates that a particular Collection be applied to
a specific Receivable of such Obligor, then such Collection shall be applied
to pay such Receivable.
Section 2.10. FURTHER ASSURANCES. From time to time at the
request of a Seller, the Company shall deliver to such Seller such documents,
assignments, releases and instruments of termination as such Seller may
reasonably request to evidence the reconveyance by the Company to such Seller
of a Receivable pursuant to the terms of Section 2.01(b) or 2.06, PROVIDED
that the Company shall have been paid all amounts due thereunder; and the
Company and the Servicer shall take such action as such Seller may reasonably
request, at the expense of such Seller, to assure that any such Receivable,
the Related Property and Collections with respect thereto do not remain
commingled with other Collections hereunder.
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Section 2.11. PURCHASE OF SELLERS' INTEREST IN RECEIVABLES AND
RECEIVABLES PROPERTY. (a) In the event of any breach of any of the
representations and warranties set forth in subsection 4.02(a), (b), (c),
(e), (f) or (g), as of the date made, which breach has a material adverse
effect on the interests of the Company in the Receivables or the Receivables
Property, then the Company, by notice then given in writing to the Sellers,
may direct the Sellers to purchase all Receivables and Receivables Property
and the Sellers, jointly and severally, 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 2.11(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 subsections 4.02(a), (b), (c), (e), (f) or (g) shall
be true and correct in all material respects, and any material adverse effect
on the Company caused thereby has been cured.
(b) The Sellers, jointly and severally, shall, as the purchase
price for the Receivables and Receivables Property to be purchased pursuant
to subsection 2.11(a) above, pay to the Company, on the Business Day
preceding such Distribution Date, an amount equal to the purchase price of
the Purchased Receivables, less Collections received by the Company in
respect of such Purchased Receivables, as of such Distribution Date. Upon
payment of such amount, in immediately available funds, to the Company, the
Company's rights with respect to the Purchased Receivables shall terminate
and such interest therein will be transferred to the Sellers and the Company
shall have no further rights with respect thereto. If the Company gives
notice directing the Sellers to purchase the Purchased Receivables as
provided above, the obligation of the Sellers to purchase the Purchased
Receivables pursuant to this Section 2.11 shall upon satisfaction thereof
constitute the sole remedy respecting an event of the type specified in the
first sentence of this Section 2.11 available to the Company.
ARTICLE III
CONDITIONS TO PURCHASES
Section 3.01. CONDITIONS PRECEDENT TO COMPANY'S INITIAL PURCHASE.
The obligation of the Company to purchase Receivables and Receivables
Property hereunder on the Effective Date from the Sellers is subject to the
conditions precedent that the Company shall have received on or before the
date of such purchase the following, each (unless otherwise indicated) dated
the day of such sale and in form and substance satisfactory to the Company:
(a) RESOLUTIONS. Copies of the resolutions of the Board of Directors
of each Seller approving this Agreement and the other Transaction Documents
to be delivered by such Seller and the transactions contemplated thereby,
certified by the Secretary or Assistant Secretary of such Seller;
(b) SECRETARY'S CERTIFICATE. A certificate of the Secretary or
Assistant Secretary of each Seller certifying the names and true signatures
of the officers authorized on behalf of such Seller to sign this Agreement
and the other Transaction Documents to be delivered by it (on which
certificates the Company may conclusively rely until such time as the
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Company shall receive from any such Seller a revised certificate with
respect to such Seller meeting the requirements of this subsection (b));
(c) CORPORATE DOCUMENTS. The certificate or articles of
incorporation of each Seller, duly certified by the secretary of state of
such Seller's jurisdiction of incorporation, as of a recent date acceptable
to the Company, together with a copy of the by-laws of such Seller, duly
certified by the Secretary or an Assistant Secretary of such Seller;
(d) UCC CERTIFICATE; UCC FINANCING STATEMENTS. (i) A UCC Certificate
duly executed by a Responsible Officer of the applicable Seller and dated
such date of purchase and (ii) executed copies of such proper financing
statements, filed prior to the Closing Date, naming the applicable Seller
as the seller and the Company as the purchaser of the Receivables and the
Receivables Property, in proper form for filing in each jurisdiction in
which the Company (or any of its assignees) deems it necessary or desirable
to perfect the Company's ownership interest in all Receivables and
Receivables Property under the UCC or any comparable law of such
jurisdiction;
(e) UCC SEARCHES. A written search report listing all effective
financing statements that name the applicable Seller as debtor or assignor
and that are filed in the jurisdictions in which filings were made pursuant
to subsection 3.01(d) and in any other jurisdictions that the Company
determines are necessary or appropriate, together with copies of such
financing statements (none of which, except for those described in
subsection 3.01(d) and those filed prior to the date hereof pursuant to the
Original Rykoff RSA or the USFAR RSA, shall cover any Receivables or
Receivables Property), and tax and judgment lien searches showing no such
liens that are not permitted by the Transaction Documents;
(f) OTHER TRANSACTION DOCUMENTS. Original copies, executed by each
of the parties thereto, of each of the other Transaction Documents to be
executed and delivered in connection herewith;
(g) BACK-UP SERVICING ARRANGEMENTS. Evidence that each Seller
maintains disaster recovery systems and back-up computer and other
information management systems that, in the Company's reasonable judgment,
are sufficient to protect such Seller's business against material
interruption or loss or destruction of its primary computer and information
management systems.
(h) CONSENTS. Copies of all consents, if any (including, without
limitation, consents under loan agreements and indentures to which any
Seller or its Affiliates are parties), necessary to consummate the
transactions contemplated by the Transaction Documents;
(i) LEGAL OPINIONS. (i) One or more legal opinions from counsel to
the Sellers and counsel to the Company to the effect that:
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(A) the sales of Receivables by each Seller to the Company
pursuant to this Agreement are true sales and that such Receivables
would not be property of such Seller's bankruptcy estate; and
(B) a court should not order the substantive consolidation of
the assets and liabilities of the Company with those of any Seller.
(ii) One or more legal opinions from counsel to the Sellers and
counsel to the Company:
(A) to the effect that each Seller and the Company, as
applicable, has all approvals, judicial, regulatory, legal or
otherwise, needed to execute, deliver and perform each Transaction
Document to which it is a party and that no conflict or default will
occur as a result of the execution, delivery and performance thereof;
(B) to the effect that the Company has a perfected, first
priority ownership or security interest in the Receivables and
Receivables Property; and
(C) addressing other customary matters.
All of the legal opinions referred to in this subsection 3.01(i) shall be
addressed to the Trustee and any other Person reasonably requested by the
Company.
(j) LOCKBOX AGREEMENT. With respect to each Lockbox Processor, a
Lockbox Agreement (or, in the case of the initial Effective Date, an
amendment to the applicable existing lockbox agreement) signed by the
Servicer, the Company, the Trustee and such Lockbox Processor, such Lockbox
Agreement (or amended lockbox agreement, as the case may be) to be in
substantially the form of Exhibit A-1, A-2A or A-2B to the Pooling
Agreement.
(k) LIST OF OBLIGORS. A Receivables List.
Section 3.02. CONDITIONS PRECEDENT TO THE ADDITION OF A SELLER. No
Subsidiary of RS approved by the Company as an additional Seller pursuant to
Section 9.13 shall be added as a Seller hereunder unless the conditions set
forth below shall have been satisfied on or before the date designated for the
addition of such Seller (the "SELLER ADDITION DATE"):
(a) ADDITIONAL SELLER SUPPLEMENT; UCC CERTIFICATE. The Company shall
have received (with a copy for the Trustee) (i) an Additional Seller
Supplement duly executed and delivered by such Seller and (ii) a UCC
Certificate duly executed by a Responsible Officer of such Seller and dated
the related Seller Addition Date.
(b) RESOLUTIONS. The Company shall have received copies of duly
adopted resolutions of the Board of Directors of such Seller as in effect
on the related Seller Addition Date and in form and substance reasonably
satisfactory to the Company, authorizing this Agreement, the documents to
be delivered by such Seller hereunder and
15
the transactions contemplated hereby, certified by the Secretary or
Assistant Secretary of such Seller.
(c) SECRETARY'S CERTIFICATE. The Company shall have received duly
executed certificates of the Secretary or an Assistant Secretary of such
Seller, dated the related Seller Addition Date and in form and substance
reasonably satisfactory to the Company, certifying the names and true
signatures of the officers authorized on behalf of such Seller to sign the
Additional Seller Supplement or any instruments or documents in connection
with this Agreement.
(d) CORPORATE DOCUMENTS. The Company shall have received the
certificate or articles of incorporation of such Seller, duly certified by
the secretary of state of such Seller's jurisdiction of incorporation, as
of a recent date acceptable to the Company, together with a copy of the by-
laws of such Seller, duly certified by the Secretary or an Assistant
Secretary of such Seller;
(e) LOCKBOX AGREEMENT. A Lockbox Account with respect to Receivables
to be sold by such Seller shall have been established in the name of the
Company, and the Servicer shall have delivered with respect to such Lockbox
Account a Lockbox Agreement signed by it, the Company and the Trustee to
the applicable Lockbox Processor, such Lockbox Agreement to be in
substantially the form of Exhibit A-1, A-2A or A-2B to the Pooling
Agreement.
(f) UCC SEARCHES. The Company shall have received reports of UCC and
other searches of such Seller with respect to the Receivables and the
Receivables Property reflecting the absence of Liens thereon, except Liens
created in connection with a transfer by the Company of such Purchased
Receivables and except for Liens as to which the Company has received UCC
termination statements to be filed on or prior to the related Seller
Addition Date.
(g) UCC FINANCING STATEMENTS. Such Seller shall have filed and
recorded, at its own expense, UCC-1 financing statements naming the Company
as purchaser and such Seller as seller with respect to the Receivables and
the Receivables Property (excluding returned merchandise) in such manner
and in such jurisdictions as are necessary or desirable to perfect the
Company's ownership or security interest therein under the UCC and
delivered evidence of such filings to the Company; and all other action
necessary or desirable, in the opinion of the Company, to perfect the
Company's ownership or security interest in the Receivables shall have been
duly taken.
(h) LIST OF OBLIGORS. Such Seller shall have delivered to the
Company a microfiche, a typed or printed list or other tangible evidence
reasonably acceptable to the Company showing as of a date acceptable to the
Company prior to the related Seller Addition Date the Obligors whose
Receivables are to be transferred to the Company and the balance of the
Receivables with respect to each such Obligor as of such date.
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(i) OPINIONS. The Company shall have received (i) legal opinions on
behalf of such Seller as to general corporate matters of such Seller
(including, without limitation, an opinion as to the perfection and
priority of the Company's interest in the Purchased Receivables) and
(ii) confirmation (A) as to the "true sale" nature of the sale of
Receivables of such Seller hereunder and (B) as to the absence of
substantive consolidation issues between such Seller, US Foodservice and RS
on the one hand and the Company on the other hand, all in form and
substance reasonably satisfactory to the Company. Such legal opinions and
confirmation shall be addressed to the Trustee and any other Person
reasonably requested by the Company.
(j) BACK-UP SERVICING ARRANGEMENTS. The Company shall have received
evidence that such Seller maintains disaster recovery systems and back-up
computer and other information management systems that, in the Company's
reasonable judgment, are sufficient to protect such Seller's business
against material interruption or loss or destruction of its primary
computer and information management systems.
(k) CONSENTS. The Company shall have received copies of all consents
with respect to such Seller, if any (including, without limitation,
consents under loan agreements and indentures to which such Seller or its
Affiliates are parties), necessary to consummate the transactions
contemplated by the Transaction Documents;
(l) PARTY TO SERVICING AGREEMENT. Such additional Seller shall have
become a party to the Servicing Agreement in its capacity as a Sub-Servicer
thereunder.
Section 3.03. CONDITIONS PRECEDENT TO ALL THE COMPANY'S PURCHASES OF
RECEIVABLES. The obligation of the Company to pay for any Receivable and the
Receivables Property with respect thereto on each Payment Date (including the
Effective Date) shall be subject to the further conditions precedent that, on
and as of such Payment Date:
(a) the following statements shall be true (and the acceptance by the
relevant Seller of the Purchase Price for such Receivable on such Payment
Date shall constitute a representation and warranty by such Seller that on
such Payment Date such statements are true):
(i) the representations and warranties of such Seller contained
in Section 4.02 shall be true and correct in all material respects on
and as of such Payment Date as though made on and as of such date
except to the extent any such representation or warranty is expressly
made only as of another date (in which case it shall be true and
correct in all material respects on and as of such other date);
(ii) after giving effect to such purchase, no (A) Early
Termination with respect to such Seller or (B) Potential Purchase
Termination Event with respect to a Purchase Termination Event set
forth in clause (g)(ii) of Section 6.01 shall have occurred and be
continuing; and
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(iii) there has been no material adverse change since the date of
this Agreement in the collectibility of the Receivables taken as a
whole (other than due to a change in the creditworthiness of the
Obligors);
(b) the Company and the Trustee shall be satisfied that such Seller's
systems, procedures and record keeping relating to the Purchased
Receivables remain in all material respects sufficient and satisfactory in
order to permit the purchase and administration of the Purchased
Receivables in accordance with the terms and intent of this Agreement;
(c) the Company shall have received payment in full of all amounts
for which payment is due from such Seller pursuant to Sections 2.05, 2.06
or 7.01;
(d) the Company shall have received such other approvals, opinions or
documents as the Company may reasonably request; and
(e) such Seller shall have complied with all of its covenants in all
material respects and satisfied all of its obligations in all material
respects under this Agreement required to be complied with or satisfied as
of such date;
PROVIDED, HOWEVER, that the failure of such Seller to satisfy any of the
foregoing conditions shall not prevent such Seller from subsequently selling
Receivables upon satisfaction of all such conditions or exercising its rights
under subsection 2.01(b).
Section 3.04. CONDITION PRECEDENT TO EACH SELLER'S OBLIGATIONS. The
obligation of a Seller on each Payment Date (including on the Effective Date)
shall be subject to the condition precedent that, on such date, the following
statement shall be true (and the payment by the Company of the Purchase Price
for such Receivable on such date shall constitute a representation and warranty
by the Company that on such Payment Date such statement is true): no Early
Amortization Event or Potential Early Amortization Event of a type, with respect
to the Company, set forth in subsection 7.1(a) of the Pooling Agreement shall
have occurred and be continuing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants as to itself for the benefit of the Sellers as
follows:
(a) It (i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, and
is duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material
Adverse Effect, (ii) has the requisite corporate power and authority to
effect the transactions contemplated hereby, and (iii) has all requisite
corporate power and authority and the legal right to own, pledge, mortgage
and operate its properties, and to conduct its business as now or currently
proposed to be conducted.
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(b) The execution, delivery and performance by it of this Agreement
and all instruments and documents to be delivered hereunder by it, and the
transactions contemplated hereby and thereby, (i) are within its corporate
powers, have been duly authorized by all necessary corporate action,
including the consent of shareholders where required, and do not
(A) contravene its charter or by-laws, (B) violate any law or regulation or
any order or decree of any court or governmental instrumentality,
(C) conflict with or result in the breach of, or constitute a default
under, any indenture, mortgage or deed of trust or any material lease,
agreement or other instrument binding on or affecting it or any of its
respective subsidiaries or any of its properties or (D) result in or
require the creation or imposition of any Lien EXCEPT as created or imposed
hereunder or under the Pooling Agreement, and no transaction contemplated
hereby requires compliance on its part with any bulk sales act or similar
law, and (ii) do not require the consent of, authorization by or approval
of or notice to or filing or registration with, any governmental body,
agency, authority, regulatory body or any other Person other than those
which have been obtained or made EXCEPT for the filing of the Financing
Statements referred to in ARTICLE III hereof, which filings the Sellers
hereby represent shall have been duly made prior to or substantially
contemporaneously with any purchases of Receivables and other Receivables
Property and shall at all times be in full force and effect (except as they
may be terminated by the Company). This Agreement has been duly executed
and delivered by the Company and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms except
(A) as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general, and (B) as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity).
Section 4.02. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each
Seller hereby represents and warrants for the benefit of the Company and its
assigns on the Closing Date and on each Payment Date, as follows:
(a) ORGANIZATION AND GOOD STANDING. Such Seller (i) is a corporation
duly organized and validly existing as a corporation in good standing under
the laws of the state of its incorporation, (ii) is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which
the failure to so qualify would have a Material Adverse Effect and (iii)
and has full corporate power, authority and legal right to own its
properties and conduct its business as such properties are presently owned
and such business is presently conducted, and to execute, deliver and
perform its obligations under this Agreement.
(b) DUE QUALIFICATION. Such Seller has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business requires such qualification,
licenses or approvals and where the failure to preserve and maintain such
qualification, licenses or approvals is reasonably likely to have a
Material Adverse Effect.
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(c) DUE AUTHORIZATION. The execution and delivery of this Agreement
and the other Transaction Documents to which it is a party and the
consummation of the transactions provided for therein have been duly
authorized by such Seller by all necessary corporate action on its part.
(d) NO DEFAULT. Such Seller is not in default under or with respect
to any of its Contractual Obligations in any respect which would be
reasonably likely to have a Material Adverse Effect with respect to such
Seller. No (i) Early Termination or (ii) Potential Purchase Termination
Event with respect to a Purchase Termination Event set forth in clause
(g)(ii) of Section 6.01, in each case with respect to such Seller, has
occurred and is continuing.
(e) VALID SALE; BINDING OBLIGATIONS. Each transfer of Receivables
and Receivables Property made pursuant to this Agreement shall constitute a
valid sale, transfer and assignment of the Receivables and the Receivables
Property to the Company which is perfected and of first priority under
applicable law, enforceable against creditors of, and purchasers from, such
Seller; and this Agreement constitutes, and each other Transaction Document
to be signed by such Seller when duly executed and delivered will
constitute, an enforceable obligation of such Seller in accordance with its
terms, except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect affecting the enforcement of creditors' rights
in general, and (B) as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity).
(f) NO VIOLATION. The execution, delivery and performance of, and
the consummation of the transactions contemplated by, this Agreement and
the other Transaction Documents and the fulfillment of the terms hereof and
thereof will not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default under, the articles or certificate of incorporation
or by-laws of such Seller or any contract, indenture, loan agreement,
mortgage, deed of trust, or other agreement or instrument to which such
Seller is a party or by which such Seller or any of its properties is
bound, (ii) result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such contract, indenture, loan
agreement, mortgage, deed of trust, or other agreement or instrument, other
than this Agreement and the other Transaction Documents, or (iii) violate
any law or any order, rule, or regulation of any court or of any federal,
state, local or other regulatory body, administrative agency, or other
governmental instrumentality of the United States of America having
jurisdiction over such Seller or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of such Seller, threatened against such Seller
before any court, regulatory body, administrative agency, or other tribunal
or governmental instrumentality (i) asserting the invalidity of this
Agreement or any other Transaction Document, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or
any other Transaction Document, (iii) seeking any determination or ruling
that, in the
20
reasonable judgment of such Seller, would materially and adversely
affect the performance by such Seller of its obligations under this
Agreement or any other Transaction Document or (iv) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement or any other Transaction
Document.
(h) BULK SALES ACT. No transaction contemplated by this Agreement or
any other Transaction Document with respect to such Seller requires
compliance with, or will be subject to avoidance under, any bulk sales act
or similar law.
(i) GOVERNMENT APPROVALS. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body in the United States of America is required for the due
execution, delivery and performance by such Seller of this Agreement or any
other Transaction Document to which it is a party EXCEPT for the filing of
the UCC financing statements referred to in Article III, all of which, at
the time required in Article III, shall have been duly made and shall be in
full force and effect.
(j) BONA FIDE RECEIVABLES. Each Receivable of such Seller is or will
be an account receivable arising out of such Seller's performance in
accordance with the terms of the Contract, if any, giving rise to such
Receivable. Such Seller has no knowledge of any fact which should have led
it to expect at the time of its classification of any Receivable as an
Eligible Receivable hereunder that such Eligible Receivable would not be
paid in full when due. Each Receivable sold by it hereunder and designated
on a Daily Report to be an Eligible Receivable will be, at its respective
Payment Date, an Eligible Receivable. The aggregate outstanding Principal
Amount of Receivables so sold by it on any Payment Date and so designated
as Eligible Receivables is correctly set forth on the Daily Report with
respect to such Payment Date.
(k) OFFICE. The principal place of business and the chief executive
office of such Seller are as indicated for such Seller on Schedule II
hereto and have not changed during the period of four consecutive months
ending on such date (unless otherwise indicated on the UCC Certificate
delivered by such Seller pursuant to subsection 3.01(d) or 3.02(a), as the
case may be), and the offices where such Seller keeps its records
concerning the Receivables and related Contracts and all purchase orders
and other agreements related to the Receivables are as indicated for such
Seller on Schedule II hereto (or at such other locations, notified to the
Company in accordance with Section 5.01(i), in jurisdictions where all
action required by subsection 5.01(p) has been taken and completed).
(l) MARGIN REGULATIONS. No use of any funds obtained by such Seller
under this Agreement or the other Transaction Documents will conflict with
or contravene any of Regulations G, T, U and X promulgated by the Board of
Governors of the Federal Reserve System from time to time.
(m) QUALITY OF TITLE. Each Seller is the legal and beneficial owner
of each Receivable and all Receivables Property which is to be transferred
to the Company by
21
such Seller, and such Receivables and Receivables Property shall be
transferred by such Seller free and clear of any Lien (other than any
Lien arising under any other Transaction Document, the Original Rykoff
RSA or the USFAR RSA, or arising solely as the result of any action
taken by the Company hereunder); prior to such transfer such Seller
shall have made all filings under applicable law in each relevant
jurisdiction in order to protect and perfect the Company's ownership or
security interest in all Receivables and Receivables Property against
all creditors of, and purchasers from, such Seller; and the Company
shall have acquired and shall continue to have maintained a valid and
perfected first priority ownership or security interest in each
Receivable and the Receivables Property free and clear of any Lien
(other than any Lien arising under the Original Rykoff RSA or the USFAR
RSA, or arising solely as the result of any action taken by the Company
hereunder or by the Trustee); and no effective financing statement or
other instrument similar in effect covering any Receivable, any interest
therein or any Receivables Property with respect thereto is on file in
any recording office except such as may be filed in favor of (i) such
Seller in accordance with the Contracts, (ii) Rykoff Funding pursuant to
the Original Rykoff RSA and the Trustee (as defined therein) pursuant to
the Pooling Agreement (as defined in the Original Rykoff RSA), (iii)
USFAR pursuant to the USFAR RSA and the Trustee (as defined therein)
pursuant to the Pooling Agreement (as defined in the USFAR RSA), (iv)
the Company pursuant to this Agreement and (v) the Trustee pursuant to
the Pooling Agreement.
(n) ACCURACY OF INFORMATION. All factual written information
heretofore or contemporaneously furnished by such Seller or its Affiliates
(other than the Company) to the Company for purposes of or in connection
with any Transaction Document or any transaction contemplated hereby or
thereby is, and all other such factual, written information hereafter
furnished (if prepared by such Seller or any Affiliate or, if not prepared
by such Seller or any Affiliate, to the extent that information contained
therein was supplied by such Seller or any Affiliate) by such Seller or any
Affiliate (other than the Company) to the Company pursuant to or in
connection with any Transaction Document shall be, true and accurate in
every material respect on the date as of which such information is or will
be furnished (unless such information relates to another date), and such
information is not, and shall not be (as the case may be) incomplete by
omitting to state a material fact or any fact necessary to make the
statements contained therein not misleading as of such date.
(o) PROCEEDS BANKS; PAYMENT INSTRUCTIONS. The names and addresses of
all the Lockbox Processors, together with the account numbers of the
Lockbox Accounts into which collections are deposited at such institutions,
are specified in Schedule III. The Sellers have transferred all of their
right, title and interest in each Lockbox Account to the Company. Each
Lockbox Processor has executed and delivered to the Company a Lockbox
Agreement. Each Seller, or the Servicer on its behalf, will instruct all
Obligors to make all payments in respect of the Receivables and Related
Property in accordance with subsection 2.3(a) of the Servicing Agreement.
(p) VALID TRANSFERS. No transfer of any Receivables or any
Receivables Property to the Company by such Seller constitutes a fraudulent
transfer or fraudulent
22
conveyance or is otherwise void or voidable under similar laws or
principles, the doctrine of equitable subordination or for any other
reason. The transfers of Receivables and Receivables Property by such
Seller to the Company pursuant to this Agreement, and all other
transactions between such Seller and the Company, have been and will be
made in good faith and without intent to hinder, delay or defraud
creditors of such Seller, and such Seller acknowledges that it has
received and will receive fair consideration and reasonably equivalent
value for the purchases by the Company of Receivables and Receivables
Property hereunder. The purchase of Receivables and Receivables Property
by the Company from such Seller constitutes a true sale of such
Receivables and Receivables Property under applicable state law.
(q) TRADE NAMES. Such Seller uses no trade name in the furnishing of
its products or services which generate Receivables other than its actual
corporate name and the trade names set forth for such Seller in Schedule II
and in the case of trade names, only in the jurisdictions indicated on
Schedule II. During the five years preceding the date hereof, except as
set forth in Schedule II and in the case of trade names, only in the
jurisdictions indicated on Schedule II, (i) such Seller has not been known
by any legal name or trade name other than its corporate name, (ii) nor has
such Seller been the subject of any merger or other corporate
reorganization within the last five years.
(r) COMPLIANCE WITH APPLICABLE LAWS. Such Seller is in compliance
with the requirements of all applicable laws, rules, regulations, and
orders of all governmental authorities (federal, state, local or foreign,
and including, without limitation, environmental laws), a breach of any of
which, individually or in the aggregate, would be reasonably likely either
(i) to have a material adverse effect on (A) the business, operations,
business prospects or condition (financial or other) of such Seller or (B)
the ability of such Seller to perform its obligations under this Agreement
and the other Transaction Documents, or (ii) to impair the collectibility
of any Receivables or any Receivables Property or the enforceability or
validity of any Contract.
(s) TAXES. Such Seller has filed all tax returns (federal, state and
local) required by law to be filed and has paid or made adequate provision
for the payment of all taxes, assessments and other governmental charges
due from such Seller or is contesting any such tax, assessment or other
governmental charge in good faith through appropriate proceedings. Such
Seller knows of no basis for any material additional tax assessment for any
fiscal year for which adequate reserves have not been established.
(t) ACCOUNTING TREATMENT. Such Seller will not prepare any financial
statements that shall account for the transactions contemplated hereby in a
manner which is, nor will it in any other respect (except for tax purposes)
account for the transactions contemplated hereby in a manner which is,
inconsistent with the Company's ownership interest in the Receivables and
Receivables Property.
(u) ERISA MATTERS.
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(i) Except as specifically disclosed in Schedule VIII hereto,
such Seller and each of its ERISA Affiliates are in compliance in all
material respects with the applicable provisions of ERISA and the
regulations and published interpretations thereunder with respect to
each Plan of such Seller or any of its ERISA Affiliates, except for
such noncompliance which could not reasonably be expected to result in
a Material Adverse Effect with respect to such Seller.
(ii) No Reportable Event has occurred as to which such Seller or
any of its ERISA Affiliates was required to file a report with the
PBGC, other than reports for which the 30-day notice requirement is
waived, reports that have been filed and reports the failure of which
to file would not reasonably be expected to result in a Material
Adverse Effect with respect to such Seller.
(iii) Except as specifically disclosed in Schedule VIII hereto,
as of the Effective Date, the present value of all benefit liabilities
under each Plan of such Seller or any of its ERISA Affiliates (on an
ongoing basis and based on those assumptions used to fund such Plan)
did not, as of the last valuation report applicable thereto, exceed
the value of the assets of such Plan, except to the extent that such
excess would not have a Material Adverse Effect with respect to such
Seller.
(iv) Neither such Seller nor any of its ERISA Affiliates has
incurred any Withdrawal Liability that could reasonably be expected to
result in a Material Adverse Effect with respect to such Seller.
(v) Neither such Seller nor any of its ERISA Affiliates has
received any notification that any Multiemployer Plan is in
reorganization or has been terminated within the meaning of Title IV
of ERISA, or that a reorganization or termination has resulted or
could reasonably be expected to result, through increases in the
contributions required to be made to such Plan or otherwise, in a
Material Adverse Effect with respect to such Seller.
(v) CREDIT AND COLLECTION POLICIES. Schedule IV accurately describes
such Seller's Policies relating to Contracts and Receivables in effect on
the Closing Date.
(w) SOLVENCY. Both prior to and after giving effect to the
transactions contemplated by the Transaction Documents, (i) the assets of
such Seller, at fair valuation, will exceed its liabilities (including
contingent liabilities), (ii) the capital of such Seller will not be
unreasonably small to conduct its business, and (iii) such Seller will not
have incurred debts, and does not intend to incur debts, beyond its ability
to pay such debts as they mature.
(x) INVESTMENT COMPANY ACT. Neither such Seller nor any of such
Seller's Subsidiaries is (i) an "investment company" registered or required
to be registered under the 1940 Act, or (ii) a "holding company", or a
"subsidiary company" or an "affiliate" of a
24
"holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(y) OWNERSHIP. All of the issued and outstanding capital stock of
such Seller (other than RS) is owned, directly or indirectly, by RS.
(z) INDEBTEDNESS TO COMPANY. Immediately prior to consummation of
the transactions contemplated hereby on the Effective Date, such Seller had
no outstanding Indebtedness to the Company other than amounts permitted by
this Agreement or amounts outstanding under the Subordinated Note.
(aa) RECEIVABLES DOCUMENTS. Upon the delivery, if any, by such
Seller to the Company of licenses, rights, computer programs, related
materials, computer tapes, disks, cassettes and data relating to the
administration of the Purchased Receivables pursuant to subsection 5.01(r),
the Company shall have been furnished with all materials and data necessary
to permit immediate collection of the Purchased Receivables without the
participation of such Seller in such collection.
(bb) RECEIVABLES LISTS. The Receivables Lists set forth in all
material respects an accurate and complete listing as of the Cut-Off Date
of all Receivables to be transferred to the Company on the Effective 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 respects as of the Cut-Off Date.
(cc) BUSINESS OF SELLERS. Such Seller (i) is not engaged in the
business of purchasing "livestock" in "cash sales" (each as defined in the
Packers and Stockyards Act of 1921, as amended) and (ii) is not a "live
poultry dealer" that obtains "poultry" by purchase in "cash sales" or by
"poultry growing arrangement" (each as defined in the Poultry Producers
Financial Protection Act of 1987).
The representations and warranties set forth in this Section 4.02
shall survive the transfer and assignment of the respective Receivables to the
Company pursuant to this Agreement. Each Seller hereby represents and warrants
to the Company, as of the Effective Date and each Payment Date, that the
representations and warranties of such Seller set forth in Section 4.02 are true
and correct as of such date. Upon discovery by any Seller or the Company of a
breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the other.
ARTICLE V
GENERAL COVENANTS
Section 5.01. AFFIRMATIVE COVENANTS OF THE SELLERS. Each Seller
covenants that, until the Purchase Termination Date shall have occurred with
respect to such Seller and there are no amounts outstanding with respect to the
Purchased Receivables previously sold by such Seller to the Company (other than
Charged-off Receivables):
25
(a) PRESERVATION OF CORPORATE EXISTENCE AND NAME. Such Seller will
preserve and maintain in all material respects its corporate existence,
rights, franchises and privileges in the jurisdiction of its incorporation,
and 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 could have a
Material Adverse Effect with respect to such Seller.
(b) MAINTENANCE OF PROPERTY. Such Seller will keep all property and
assets useful and necessary in its business in good working order and
condition (normal wear and tear excepted).
(c) DELIVERY OF COLLECTIONS. In the event that such Seller receives
Collections, such Seller agrees to pay to the applicable Lockbox Account,
the Collection Concentration Account or the Collection Account all payments
received by such Seller in respect of the Receivables as soon as
practicable after receipt thereof by such Seller.
(d) COMPLIANCE WITH LAWS, ETC. Such Seller shall comply in all
material respects with all applicable laws, rules, regulations and orders
applicable to the Receivables and the Receivables Property, including,
without limitation, rules and regulations relating to truth in lending,
fair credit billing, fair credit reporting, equal credit opportunity, fair
debt collection practices and privacy, where failure to so comply could
reasonably be expected to have a materially adverse impact on the amount of
Collections thereunder.
(e) VISITATION RIGHTS. At any reasonable time during normal business
hours and from time to time, such Seller shall permit (i) the Company, or
any of its agents or representatives, (A) to examine and make copies of and
abstracts from the records, books of account and documents (including,
without limitation, computer tapes and disks) of such Seller relating to
Receivables and Related Property owned or to be purchased by the Company
hereunder, including, without limitation, the related Contracts and
purchase orders and other agreements and (B) following the termination of
the appointment of US Foodservice as Servicer or of such Seller as a
Servicing Party with respect to the Receivables, to be present at the
offices and properties of such Seller to administer and control the
collection of amounts owing on the Purchased Receivables and (ii) the
Company, or any of its agents or representatives, or the Trustee (upon the
giving of appropriate notice to the Company) to visit the properties of
such Seller for the purpose of examining such records, books of account and
documents, and to discuss the affairs, finances and accounts of such Seller
relating to the Receivables or such Seller's performance hereunder with any
of its officers or directors and with its independent certified public
accountants.
(f) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Such Seller will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables
and the Receivables Property in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records and
other information which, in each case, in the reasonable discretion of
26
the Company, are necessary or advisable for the collection of all
Receivables and the Receivables Property (including, without limitation,
records adequate to permit the daily identification of each new
Receivable and all Collections of and adjustments to each existing
Receivable).
(g) PERFORMANCE AND COMPLIANCE WITH POLICIES, RECEIVABLES AND
CONTRACTS. Such Seller will (i) 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 and (ii) at its
expense, timely and fully perform and comply with all material provisions,
covenants and other promises required to be observed by it under the
Receivables and the Contracts related to the Receivables and Related
Property and all purchase orders and other agreements related to such
Receivables and Related Property.
(h) OBLIGATIONS. Such Seller shall pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case
may be, all its other obligations of whatever nature, except where (a) the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on its books, or (b) the failure to so pay,
discharge or satisfy all such obligations would not, in the aggregate, be
reasonably likely to have a Material Adverse Effect in respect of such
Seller and would not subject any of its properties to any Lien prohibited
by subsection 5.03(b).
(i) LOCATION OF RECORDS. Such Seller will keep its principal place
of business and chief executive office, and the offices where it keeps its
records concerning the Receivables, all Receivables Property, all Contracts
and purchase orders and other agreements related to such Receivables (and
all original documents relating thereto), at the address(es) of such Seller
referred to in Schedule II or, upon 30 days' prior written notice to the
Company, at such other locations in jurisdictions where all action required
by subsection 5.01(r) shall have been taken and completed; PROVIDED,
HOWEVER, that the Rating Agency Condition shall have been satisfied with
respect to any changes in location of such Seller's principal place of
business or chief executive office and such location is not in 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.
(j) FURNISHING COPIES, ETC. Such Seller shall furnish to the Company
(i) upon the Company's request, a certificate of the chief financial
officer of such Seller certifying, as of the date thereof, that no Purchase
Termination Event has occurred and is continuing and setting forth the
computations used by the chief financial officer of such Seller in making
such determination; (ii) as soon as possible and in any event within two
Business Days after a Responsible Officer of such Seller becomes aware of
the occurrence of any Purchase Termination Event or Potential Purchase
Termination Event, a statement of a Responsible Officer of such Seller
setting forth details of such Purchase Termination Event or Potential
Purchase Termination Event and the action that such Seller proposes to take
or has taken with respect thereto; (iii) promptly after obtaining knowledge
that a
27
Receivable was, at the time of the Company's purchase thereof, not an
Eligible Receivable, notice thereof; (iv) promptly after obtaining
knowledge of any threatened action or proceeding affecting such Seller or
its Subsidiaries before any court, governmental agency or arbitrator that
may reasonably be expected to materially and adversely affect the
enforceability of this Agreement and the other Transaction Documents,
notice of such action or proceeding; and (v) promptly following the
Company's request therefor, such other information, documents, records or
reports with respect to the Receivables or the related Contracts or the
conditions or operations, financial or otherwise, of such Seller, as the
Company may from time to time reasonably request.
(k) OBLIGATION TO RECORD AND REPORT. Such Seller shall, to the
fullest extent permitted by GAAP and by applicable law, record each
purchase of the Purchased Receivables as a sale on its books and records,
reflect each purchase of Purchased Receivables in its financial statements
and tax returns as a sale and recognize gain or loss, as the case may be,
on each purchase of Purchased Receivables.
(l) CONTINUING COMPLIANCE WITH THE UNIFORM COMMERCIAL CODE. Such
Seller shall, without limiting the requirements of subsection 5.01(r), at
its expense, preserve, continue, and maintain or cause to be preserved,
continued, and maintained the Company's valid and properly perfected title
to each Receivable and the Receivables Property purchased hereunder,
including, without limitation, filing or recording UCC financing statements
in each relevant jurisdiction.
(m) PROCEEDS OF RECEIVABLES. Such Seller shall use all reasonable
efforts to cause all payments made by Obligors in respect of Purchased
Receivables and Related Property to be made in accordance with subsection
2.3(a) of the Servicing Agreement.
(n) LOCKBOX AGREEMENTS. Such Seller shall, on or prior to the date
of this Agreement, deliver to the Company a Lockbox Agreement, duly
countersigned and agreed to by each bank holding a Lockbox Account of such
Seller or, if any such bank fails to agree to the terms thereof, by such
other bank as shall agree to become a Lockbox Processor for such Seller on
the terms and conditions set forth in such Lockbox Agreement.
(o) TAXES. Such Seller will file all tax returns and reports
required by law to be filed by it and will pay all taxes and governmental
charges thereby shown to be owing, except any such taxes or charges which
are being diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP have been set aside on
its books.
(p) SEPARATE CORPORATE EXISTENCE OF THE COMPANY. Such Seller hereby
acknowledges that the Trustee and the Investor Certificateholders are
entering into the transactions contemplated by the Transaction Documents in
reliance upon the Company's identity as a legal entity separate from the
Sellers and all other RS Persons and that the Trustee and the Investor
Certificateholders would be prejudiced by any substantive consolidation of
the Company with any Seller. Therefore, from and after the date hereof,
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such Seller will take (or refrain from taking, as the case may be) such
actions, and will cause each other RS Person it controls to take (or
refrain from taking, as the case may be) such actions, as shall be required
in order that:
(i) No RS Person will pay the Company's operating expenses and
liabilities, recognizing, however, that certain organizational
expenses of the Company and expenses relating to creation and initial
implementation of the securitization program contemplated by the
Transaction Documents have been or shall be paid by such Seller.
(ii) Each RS Person will conduct its business at offices
segregated from the Company's offices. If office space is leased from
any RS Person, a separate written lease on arm's-length terms will be
in effect at a market rental rate.
(iii) Each RS Person will maintain corporate records and books of
account separate from those of the Company and telephone numbers,
mailing addresses, stationery and other business forms that are
separate and distinct from those of the Company.
(iv) Any financial statements of any RS Person which are
consolidated to include the Company will contain a detailed note
substantially in the form, and to the effect, of the note set forth on
Annex 1.
(v) The Company's assets will be maintained in a manner that
facilitates their identification and segregation from those of such
Seller and the other RS Persons.
(vi) Each RS Person will strictly observe corporate formalities
in its dealings with the Company, and funds or other assets of the
Company will not be commingled or pooled with those of any RS Person.
No RS Person will maintain joint bank accounts with the Company or
other depository accounts with the Company to which any RS Person has
independent access.
(vii) Any transaction between the Company and any RS Person will
be fair and equitable to the Company, will be the type of transaction
which would be entered into by a prudent Person in the position of the
Company with an RS Person, and will be on terms which are at least as
favorable to the Company as may be obtained from a Person which is not
an RS Person, it being understood and agreed that the transactions
contemplated in the Transaction Documents meet the requirements of
this clause (vii).
(viii) No RS Person will hold itself out, or permit itself to be
held out, as having agreed to pay or be liable for the debts of the
Company.
29
(ix) The duly elected Board of Directors of the Company and the
Company's duly appointed officers shall at all times have sole
authority to control decisions and actions with respect to the daily
business affairs of the Company.
(x) such Seller shall comply with those procedures described in
the Specified Bankruptcy Opinion Provisions which are applicable to
such Seller, except, in each case above, for such failure to take
actions or refrain from taking actions that are, in the aggregate, not
material.
(q) DEPOSITS IN PROGRAM ACCOUNTS. Such Seller shall use all
reasonable efforts to minimize the deposit of any funds other than
Collections in any of the Lockbox Accounts, any of the Eligible Segregated
Accounts, the Collection Concentration Account and the Collection Account.
(r) FURTHER ACTION EVIDENCING PURCHASES.
(i) Such Seller agrees that from time to time, at its expense,
it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or
desirable or that the Company may reasonably request, to protect or
more fully evidence the Company's ownership, right, title and interest
in the Receivables and Receivables Property sold by such Seller and
its rights under the Contracts with respect thereto, or to enable the
Company to exercise or enforce any of its rights hereunder or under
any other Transaction Document. Without limiting the generality of
the foregoing, such Seller will upon the request of the Company
(A) execute and file, in accordance with the provisions of the UCC of
the applicable jurisdiction, continuation statements with respect to
all financing statements filed in connection with the transactions
contemplated hereby, as well as such financing or continuation
statements, or amendments thereto, and such other instruments or
notices, as may be necessary or, in the reasonable opinion of the
Company, desirable, (B) indicate on its books and records (including,
without limitation, master data processing records) that the
Receivables and Receivables Property have been sold and assigned to
the Company and, in turn, the Company has sold and assigned its
interest therein to the Trustee, and provide to the Company, upon
request, copies of any such records, (C) contact customers to confirm
and verify Receivables and (D) obtain the agreement of any Person
having a Lien on any Receivables owned by such Seller (other than any
Lien created or imposed hereunder or under the Pooling Agreement or
any Permitted Lien) to release such Lien upon the purchase of any such
Receivables by the Company.
(ii) Such Seller hereby irrevocably authorizes the Company and
the Trustee to file one or more financing or continuation statements,
and amendments thereto, relative to all or any part of the Receivables
and Receivables Property sold or to be sold by such Seller, without
the signature of such Seller where permitted by law.
30
(iii) If such Seller fails to perform any of its agreements or
obligations under this Agreement, the Company or its assignees may
(but shall not be required to) perform, or cause performance of, such
agreements or obligations, and the expenses of the Company incurred in
connection therewith shall be payable by such Seller as provided in
Section 9.06.
(iv) Such Seller agrees that, whether or not a Purchase
Termination Event has occurred:
(A) the Company (and its assignees) shall have the right
at any time to notify, or require that such Seller at its own
expense notify, the respective Obligors of the Company's
ownership of the Purchased Receivables and Receivables Property
and may direct that payment of all amounts due or to become due
under the Purchased Receivables be made directly to the Company
or its designee;
(B) such Seller shall, upon the Company's written request
and at such Seller's expense, (I) assemble all of such Seller's
documents, instruments and other records (including credit files
and computer tapes or disks) that (A) evidence or will evidence
or record Receivables sold by such Seller and (B) are otherwise
necessary or desirable to effect Collections of such Purchased
Receivables (collectively, the "DOCUMENTS") and (II) deliver the
Documents to the Company or its designee at a place designated by
the Company. In recognition of such Seller's need to have access
to any Documents which may be transferred to the Company
hereunder, whether as a result of its continuing business
relationship with any Obligor for Receivables purchased hereunder
or as a result of its responsibilities as a Sub-Servicer, the
Company hereby grants to such Seller an irrevocable license to
access the Documents transferred by such Seller to the Company
and to access any such transferred computer software in
connection with any activity arising in the ordinary course of
such Seller's business or in performance of such Seller's duties
as a Servicing Party, PROVIDED that such Seller shall not disrupt
or otherwise interfere with the Company's use of and access to
the Documents and its computer software during such license
period;
(C) such Seller hereby grants to the Company an
irrevocable power of attorney (coupled with an interest) to take
any and all steps in such Seller's name necessary or desirable,
in the reasonable opinion of the Company, to collect all amounts
due under the Purchased Receivables, including, without
limitation, endorsing such Seller's name on checks and other
instruments representing Collections, enforcing the Purchased
Receivables and exercising all rights and remedies in respect
thereof; and
(D) upon written request of the Company, such Seller will
(I) deliver to the Company or a party designated by the Company
all licenses,
31
rights, computer programs, related material, computer tapes,
disks, cassettes and data necessary to the immediate collection
of the Purchased Receivables by the Company, with or without
the participation of such Seller (excluding software licenses
which by their terms are not permitted to be so delivered,
PROVIDED that such Seller shall use reasonable efforts to
obtain consent of the relevant licensor to such delivery) and
(II) make such arrangements with respect to the collection of
the Purchased Receivables as may be reasonably required by the
Company.
(s) LEGEND REQUIREMENT FOR CHATTEL PAPER. Such Seller agrees (i) at
all times, with respect to chattel paper, to comply with the procedures set
forth in Schedule 3 to the Pooling Agreement and (ii) that any Receivable
that constitutes or is evidenced by "chattel paper" as defined in Article 9
of the UCC as in effect in the Relevant UCC State shall bear a legend
stating that such Receivable has been sold to the Company and conveyed to
the Trust.
(t) COMPUTER FILES. Such Seller shall, at its own cost and expense,
retain the ledger used by such Seller as a master record of the Obligors
and retain copies of all documents relating to each Obligor as custodian
and agent for the Company and other Persons with interests in the Purchased
Receivables and xxxx the computer tape or other physical records of the
Purchased Receivables to the effect that interests in the Purchased
Receivables existing with respect to the Obligors listed thereon have been
sold to the Company and that the Company has sold an interest therein and,
subsidiarily, has granted a security interest therein.
Section 5.02. REPORTING REQUIREMENTS. Each Seller shall furnish to
the Company and its assigns from the date hereof until the Purchase Termination
Date shall have occurred with respect to such Seller and until there are no
amounts outstanding with respect to Purchased Receivables previously sold by
such Seller to the Company:
(a) COMPLIANCE CERTIFICATE. Not later than 95 days after the end of
each fiscal year and not later than 50 days after the end of each of the
first three fiscal quarters of each fiscal year, a certificate of a
Responsible Officer of such Seller stating that, to the best of such
Responsible Officer's knowledge, such Seller during such period, has
observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in the Transaction Documents to which
it is a party to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Purchase Termination
Event or Potential Purchase Termination Event except as specified in such
certificate;
(b) ERISA. Promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any Reportable Event which such
Seller files under ERISA with the Internal Revenue Service, the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor or which such
Seller receives from the Pension Benefit Guaranty Corporation if, in each
case, such report or notice relates to an event or condition that
32
could reasonably be expected to give rise to a Termination Notice, an
Early Amortization Event or a Material Adverse Effect;
(c) TERMINATION EVENTS: OTHER MATERIAL EVENTS. As soon as possible
and in any event within two Business Days after a Responsible Officer of
such Seller obtains knowledge of each Purchase Termination Event, Potential
Purchase Termination Event, Servicer Default, Potential Servicer Default or
any other event that has a material likelihood of having a Material Adverse
Effect with respect to a Seller, a written statement of a Responsible
Officer of such Seller setting forth details of such event and the action
that such Seller proposes to take with respect thereto; and
(d) OTHER. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the condition
or operations, financial or otherwise, of such Seller as the Company may
from time to time reasonably request in order to protect the interests of
the Company under or as contemplated by the Transaction Documents.
Section 5.03. NEGATIVE COVENANTS. Each Seller covenants that, until
the Purchase Termination Date shall have occurred with respect to such Seller
and there are no amounts outstanding with respect to Purchased Receivables
previously sold by such Seller to the Company:
(a) RECEIVABLES TO BE ACCOUNTS, GENERAL INTANGIBLES OR CHATTEL
PAPER. Such Seller will take no action to cause any Receivable to be
evidenced by any "instrument" other than, provided that the procedures
set forth in Schedule 3 to the Pooling Agreement are fully implemented
with respect thereto, an instrument which together with a security
agreement constitutes "chattel paper" (each as defined in the UCC as in
effect in the Relevant UCC State). Such Seller will take no action to
cause any Receivable to be anything other than an "account", "general
intangible" or "chattel paper" (each as defined in the UCC as in effect
in the Relevant UCC State).
(b) SECURITY INTERESTS. Except for the conveyances hereunder and as
provided below, such Seller will not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any
other Lien on any Receivable or Receivables Property, whether now existing
or hereafter created, or any interest therein; such Seller will immediately
notify the Company of the existence of any other Lien on any Receivable or
Receivables Property; and such Seller shall defend the right, title and
interest of the Company in, to and under the Receivables or Receivables
Property, whether now existing or hereafter created, against all claims of
third parties claiming through or under such Seller; PROVIDED, HOWEVER,
that nothing in this subsection 5.03(b) shall prevent or be deemed to
prohibit such Seller from suffering to exist upon any of the Receivables
any Permitted Lien or any security interest granted prior to the date
hereof pursuant to the Original Rykoff RSA or the USFAR RSA.
(c) EXTENSION OR AMENDMENT OF RECEIVABLES; INELIGIBLE RECEIVABLES.
Such Seller will not extend, rescind, cancel, make any Dilution Adjustment
to, amend or
33
otherwise modify, or attempt or purport to extend, rescind, cancel, make
any Dilution Adjustment to, amend or otherwise modify, the terms of any
Purchased Receivables, or otherwise take any action to cause, or which
would permit, a Receivable that was designated as an Eligible Receivable
on the Payment Date relating to such Receivable to cease to be an
Eligible Receivable, except in any such case (a) in accordance with the
terms of the Policies, (b) as required by any Requirement of Law or (c) in
the case of Dilution Adjustments (whether or not permitted by any other
clause of this sentence), upon making a Seller Adjustment Payment pursuant
to Section 2.05.
(d) CHANGE IN CREDIT AND COLLECTION POLICIES. Such Seller will not
make or permit to be made any change in its Policies in any material
respect that is materially adverse to the interests of the Company or its
assigns (including the Trustee and the Investor Certificateholders).
(e) PLACE OF BUSINESS, ETC. Such Seller will not change its
principal place of business or chief executive office from the location
listed in subsection 4.02(k) or change the location of its records relating
to the Receivables and Receivables Property from those specified on
Schedule II, unless in any such event such Seller shall have given the
Company at least thirty days' prior written notice thereof fully in
accordance with the terms and provisions of subsection 5.01(i) and shall
have taken all action necessary or reasonably requested by the Company to
amend its existing financing statements and continuation statements so that
they are not misleading and to file additional financing statements in all
applicable jurisdictions to perfect the interests of the Company in all of
the Receivables and Receivables Property.
(f) CHANGE IN NAME. Such Seller will not 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)
relating to this Agreement seriously misleading within the meaning of
Section 9-402(7) of the UCC, or impair the perfection of the Company's
interest in any Receivable under any other similar law, without having (i)
delivered 30 days' prior written notice to the Company, the Servicer and
the Trustee and (ii) taken all action required by subsection 5.01(a).
(g) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. Such Seller shall
not instruct the Obligor on any Receivables to make payments with respect
to such Receivables and the Receivables Property with respect thereto other
than to the places listed in Schedule III (or to the Collection
Concentration Account or the Collection Account).
(h) ACCOUNTING CHANGES. Such Seller shall not make any material
change (i) in accounting treatment and reporting practices except as
permitted or required by GAAP, (ii) in tax reporting treatment except as
permitted or required by law, in any case, as disclosed in the notes to the
financial statements delivered pursuant to Section 5.02, or otherwise,
(iii) in the calculation or presentation of financial and other information
contained in other reports delivered hereunder, or (iv) in any financial
policy of such Seller if such change could have a material adverse effect
on the Receivables taken as a whole or the collection thereof.
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(i) BUSINESS OF SELLERS. Such Seller shall not fail to maintain and
operate the business currently conducted by such Seller and business
activities reasonably incidental or related thereto in substantially the
manner in which it is presently conducted and operated if such failure
would change in any material respect the character of its business and such
change would be adverse to the interest of the Company or its assigns
(including the Trustee and the Investor Certificateholders), except (x) if
such change is necessary under any Requirement of Law, (y) if such change
would not reasonably be expected to have a Material Adverse Effect with
respect to the Servicer or (z) the Rating Agency Condition is satisfied
with respect thereto. Without limiting the generality of the foregoing,
such Seller (A) shall not engage in the business of purchasing "livestock"
in "cash sales" (each as defined in the Packers and Stockyards Act of 1921,
as amended) and (B) shall not become a "live poultry dealer" that obtains
"poultry" by purchase in "cash sales" or by "poultry growing arrangement"
(each as defined in the Poultry Producers Financial Protection Act of
1987).
ARTICLE VI
PURCHASE TERMINATION EVENTS
Section 6.01. PURCHASE TERMINATION EVENTS. If, with respect to any
Seller, any of the following events (each, a "PURCHASE TERMINATION EVENT" with
respect to such Seller) shall have occurred and be continuing:
(a) The Seller shall fail to make any payment or deposit to be made
by it hereunder when due and such failure shall remain unremedied for two
Business Days; or
(b) There shall have occurred (i) an Early Amortization Event set
forth in Section 7.1 of the Pooling Agreement or (ii) the Amortization
Period with respect to all outstanding Series shall have occurred and be
continuing; or
(c) Any representation or warranty made or deemed to be made by such
Seller or any of its officers under or in connection with any Transaction
Document, Monthly Settlement Statement or other information, statement,
record, certificate, document or report delivered pursuant to a Transaction
Document shall prove to have been false or incorrect in any material
respect when made or deemed made (including in each case by omission of
material information necessary to make such representation, warranty,
certificate or statement not misleading); PROVIDED, that no such event
shall constitute a Purchase Termination Event unless such event shall
continue unremedied for a period of 30 days from the earlier of (A) the
date any Responsible Officer of such Seller obtains knowledge thereof and
(B) the date such Seller receives notice of the incorrectness of such
representation or warranty from the Company, the Servicer or the Trustee;
PROVIDED, FURTHER, that a Purchase Termination Event shall not be deemed to
have occurred under this paragraph (c) based upon a breach of any
representation or warranty set forth in Section 4.02 with respect to any
Receivable if the Sellers shall have complied with the provisions of
subsection 2.06, as the case may be, with respect to such Receivable; or
35
(d) Such Seller shall fail to perform or observe any other term,
covenant or agreement contained in subsection 5.01(d), (g) or (h) or
Section 5.03 of this Agreement on its part to be performed or observed and
any such failure shall remain unremedied for five Business Days; PROVIDED,
that a Purchase Termination Event shall not be deemed to have occurred
under this paragraph (d) based upon a breach of any covenant set forth in
subsection 5.01(d), (g) or (h) or Section 5.03 with respect to any
Receivable if the Sellers shall have complied with the provisions of
subsection 2.06, as the case may be, with respect to such Receivable; or
(e) Such Seller shall fail to perform or observe any other term,
covenant or agreement contained in any Transaction Document on its part to
be performed or observed and any such failure shall remain unremedied for a
period of 30 days from the earlier of (A) the date any Responsible Officer
of such Seller obtains knowledge of such failure and (B) the date such
Seller receives notice thereof from the Company, the Servicer or the
Trustee; or
(f) Any Transaction Document to which such Seller is a party shall
cease, for any reason, to be in full force and effect, or RS, US
Foodservice or such Seller shall so assert in writing, or the Company shall
fail to have a valid and perfected first priority ownership or security
interest in the Receivables and the Receivables Property; or
(g) (i) such Seller 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 such Seller shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against such Seller 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
such Seller or any of its Subsidiaries 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 days
from the entry thereof; or (iv) such Seller or any of its respective
Subsidiaries 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) such Seller shall generally not,
or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(h) US Foodservice has been terminated as Servicer following a
Servicer Default with respect to US Foodservice under the Servicing
Agreement; or
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(i) a Responsible Officer of RS receives notice or becomes aware that
a notice of Lien has been filed by the PBGC against any Seller, the Company
or the Trust under Section 412(n) of the Code or Section 302(f) of ERISA
for a failure to make a required installment or other payment to a plan to
which Section 412(n) of the Code or Section 302(f) of ERISA applies;
then, (x) in the case of any Purchase Termination Event with respect to any
Seller described in paragraph (b)(i), (g) and (i) above, the obligation of the
Company to purchase Receivables from such Seller shall thereupon automatically
terminate without further notice of any kind, which is hereby waived by such
Seller, (y) in the case of any Purchase Termination Event with respect to any
Seller described in paragraph (b)(ii) above, the obligation of the Company to
purchase Receivables from such Seller shall thereupon terminate without notice
of any kind, which is hereby waived by such Seller, unless both the Company and
such Seller agree in writing that such event shall not trigger an Early
Termination hereunder and (z) in the case of any other Purchase Termination
Event with respect to any Seller, so long as such Purchase Termination Event
shall be continuing, the Company may terminate its obligation to purchase
Receivables from such Seller by written notice to such Seller (any termination
with respect to any Seller pursuant to clause (x), (y) or (z) of this Article VI
is herein called an "EARLY TERMINATION" with respect to such Seller); PROVIDED,
HOWEVER, that in the event of an involuntary petition or proceeding as described
in paragraphs (g)(ii) and (g)(iii) above, the Company shall not purchase
Receivables from such Seller until such time, if any, as such involuntary
petition or proceeding has been dismissed, PROVIDED that such dismissal shall
have occurred within 60 days of the filing of such petition or the commencement
of such proceeding.
Section 6.02. ADDITIONAL REMEDIES. Upon the occurrence of any
Purchase Termination Event, the Company shall have, in addition to all other
rights and remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC of each applicable jurisdiction and other
applicable laws, which rights shall be cumulative. Without limiting the
foregoing, the occurrence of a Purchase Termination Event shall not deny to the
Company any remedy (in addition to termination of the Company's obligation to
purchase Receivables from any relevant Seller or Sellers) to which the Company
may be otherwise appropriately entitled, whether by statute or other applicable
law, at law or in equity.
ARTICLE VII
INDEMNIFICATION
Section 7.01. INDEMNITIES BY THE SELLERS. Without limiting any other
rights that the Company may have hereunder or under applicable law and subject
to Section 2.06, each Seller hereby agrees to pay, indemnify and hold the
Company harmless from and against any and all claims, losses, liabilities,
obligations, damages, penalties, actions, judgments, suits, costs (including
reasonable attorneys' fees), expenses and disbursements of any kind or nature
whatsoever (a) which may at any time be imposed on, incurred by or asserted
against the Company in any way relating to, arising out of or resulting from
this Agreement or any other Transaction Document or the transactions
contemplated hereby or thereby or any action taken or omitted by the Company
under or in connection with any of the foregoing or in respect of any
37
Receivable or (b) which would not have been imposed on, incurred by or
asserted against the Company but for its having purchased the Receivables
hereunder (all such claims, losses, liabilities, obligations, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements being
collectively referred to as "INDEMNIFIED AMOUNTS"), PROVIDED that the Sellers
shall have no obligation under this Section 7.01 to the Company with respect
to Indemnified Amounts (i) to the extent resulting from gross negligence or
willful misconduct on the part of the Company, its agents or its assignees or
(ii) resulting from any Obligor's inability to pay an amount due and payable
with respect to a Receivable for credit reasons (it being understood that
this clause (ii) shall not limit Section 2.05). Without limiting or being
limited by the foregoing and subject to Section 2.06, each Seller shall pay
on demand to the Company any and all amounts necessary to indemnify the
Company from and against any and all Indemnified Amounts relating to or
resulting from:
(a) the transfer by any Seller of any interest in any Receivable or
Receivables Property or proceeds thereof;
(b) reliance on any representation or warranty or statement made or
deemed made by any Seller (or any of its officers) under or in connection
with this Agreement or in any certificate or report delivered pursuant
hereto that, in either case, shall have been false or incorrect in any
material respect when made or deemed made;
(c) the failure by any Seller to comply with any applicable law, rule
or regulation of any governmental authority with respect to any Receivable
or Receivables Property, or the nonconformity of any Receivable or
Receivables Property with any such applicable law, rule or regulation;
(d) the failure to vest and maintain vested in the Company an
ownership interest in any Receivable or Receivables Property, free and
clear of any Lien, other than a Lien arising under the Transaction
Documents, whether existing at the time of the purchase of such Receivable
or Receivables Property or at any time thereafter;
(e) the failure to file, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Receivables or
Receivables Property of any Seller;
(f) any dispute, claim, offset or defense (other than discharge in
bankruptcy of a Seller) of the Obligor to the payment of any Receivable of
any Seller (including, without limitation, a defense based on such
Receivable or the related Contract not being fully enforceable against the
Obligor in accordance with its terms), or any other claim resulting from
the sale of the merchandise or services related to any such Receivable or
the furnishing or failure to furnish such merchandise or services;
(g) any failure of any Seller to perform its duties or obligations
under this Agreement or the Transaction Documents;
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(h) any products liability claim arising out of or in connection with
merchandise, insurance or services that are the subject of any Receivable
or Receivables Property;
(i) the commingling of Collections of Receivables at any time with
other funds of any Seller;
(j) any claim involving environmental liability that relates to any
property that has been, is now or hereafter will be owned, leased, operated
or otherwise used by any Seller;
(k) any tax or governmental fee or charge (but not including
franchise taxes and taxes upon or measured by net income of the Company),
all interest and penalties thereon or with respect thereto, and all out-of-
pocket costs and expenses, including the reasonable fees and expenses of
counsel in defending against the same, which may arise by reason of the
purchase or ownership of any Receivable or Receivables Property, or any
interest therein or in any goods which secure any such Receivables, any
Receivables Property or any other rights or assets transferred hereunder;
and
(l) any investigation, litigation or proceeding related to this
Agreement or in respect of any Receivable or Receivables Property of any
Seller.
Notwithstanding the foregoing, no Seller shall under any circumstances
be required to indemnify the Company for any Indemnified Amounts that result
from any delay in the collection of any Receivables or any default by an Obligor
with respect to any Receivables. The agreements set forth in this Section 7.01
shall survive the collection of all Receivables, the termination of this
Agreement and the payment of all amounts payable hereunder.
Section 7.02. INDEMNITIES BY THE COMPANY. Without limiting any other
rights that the Sellers may have hereunder or under applicable law, the Company
hereby agrees to indemnify each Seller from and against any and all claims,
losses and liabilities (including reasonable attorneys' fees) arising out of or
resulting from such Seller's reliance on any representation or warranty made by
the Company in this Agreement or in any certificate delivered pursuant hereto
that, in either case, shall have been false or incorrect in any material respect
when made or deemed made.
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ARTICLE VIII
SUBORDINATED NOTE
Section 8.01. SUBORDINATED NOTE. (a) On the initial Effective Date,
contemporaneously with the sale of Receivables by Rykoff Funding and USFAR to
the Company provided for in subsection 2.01 of the SPC Receivables Sale
Agreement and the assumption by the Company of Rykoff Funding's and USFAR's
obligations under the Existing Rykoff Subordinated Note and the Existing USFAR
Subordinated Note, respectively, pursuant to the RS Transition Agreement and the
USFAR Transition Agreement, respectively, the Company shall issue to the Sellers
a subordinated note substantially in the form of Exhibit A hereto (as amended,
supplemented or otherwise modified from time to time, the "SUBORDINATED NOTE").
(b) The initial aggregate principal amount of the Subordinated Note
(the "INITIAL SUBORDINATED NOTE AMOUNT") shall be equal to the sum of the
Existing Rykoff Subordinated Note Amount and the Existing USFAR Subordinated
Note Amount. The portion of the Subordinated Note representing the assumption
of the Existing Rykoff Subordinated Note Amount shall be allocated among the RS
Sellers in the same proportion that the aggregate outstanding principal amount
of the Existing Rykoff Subordinated Note had been allocated among such RS
Sellers immediately prior to the cancellation thereof pursuant to the RS
Transition Agreement, and the portion of the Subordinated Note representing the
assumption of the Existing USFAR Subordinated Note Amount shall be allocated
among the USFAR Sellers in the same proportion that the aggregate outstanding
principal amount of the Existing USFAR Subordinated Note had been allocated
among such USFAR Sellers immediately prior to the cancellation thereof pursuant
to the USFAR Transition Agreement, in each case by the Servicer. The Servicer
may evidence such allocations by recording the amount thereof on the grid
attached to the Subordinated Note; PROVIDED that the failure to make any such
recordation or any error in such grid shall not adversely affect any Seller's
rights thereunder.
(c) Following the initial Effective Date, the aggregate principal
amount of the Subordinated Note at any time shall be equal to the difference
between (i) the sum of the Initial Subordinated Note Amount and each addition to
the principal amount of the Subordinated Note with respect to each Seller
pursuant to Section 2.03 as of such time and (ii) the aggregate amount of all
payments made in respect of the principal of the Subordinated Note as of such
time. All payments made in respect of the Subordinated Note shall be allocated
among the Sellers by the Servicer and shall be allocated FIRST, to pay accrued
and unpaid interest thereon, and SECOND, to pay the outstanding principal amount
thereof.
(d) Each Seller's interest in the Subordinated Note shall be equal to
the sum of (i) the initial allocation to such Seller of the Existing Rykoff
Subordinated Note Amount or the Existing USFAR Subordinated Note Amount, as the
case may be, made by the Servicer in accordance with subsection 8.01(b) and (ii)
each addition to the Subordinated Note allocated to such Seller pursuant to
subsection 2.03(c), LESS (iii) the sum of each repayment thereof allocated to
such Seller by the Servicer in accordance with subsection 8.01(c). Interest on
the outstanding principal amount of the Subordinated Note shall accrue on the
last day of each Settlement Period at a rate per annum equal to the ABR plus 2%
from and including the initial Effective Date to but excluding the last day of
each Settlement Period and shall be paid (x) on each Distribution Date
40
with respect to the principal amount of the Subordinated Note outstanding
from time to time during the Settlement Period immediately preceding such
Distribution Date and/or (y) on the maturity date thereof. Principal
thereunder not paid or prepaid pursuant to the terms thereof shall be payable
on the maturity date of the Subordinated Note. Default in the payment of
principal or interest under the Subordinated Note shall not constitute a
Purchase Termination Event under this Agreement, a Servicer Default under any
Servicing Agreement or an Early Amortization Event under the Pooling
Agreement or any Supplement thereto.
Section 8.02. RESTRICTIONS ON TRANSFER OF SUBORDINATED NOTE. Neither
the Subordinated Note, nor any right of any Seller to receive payments
thereunder, shall be assigned, transferred, exchanged, pledged, hypothecated,
participated or otherwise conveyed.
ARTICLE IX
MISCELLANEOUS
Section 9.01. AMENDMENT. Neither this Agreement nor any of the terms
hereof may be amended, supplemented or modified except in a writing signed by
the Company and the Sellers. Any amendment, supplement or modification shall
not be effective until the Rating Agency Condition, if applicable, has been
satisfied.
Section 9.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
certified mail, postage-prepaid, by facsimile or by overnight courier, (a) in
the case of the Company, to it at the address or facsimile number set forth
under its name on the signature pages hereof and (b) in the case of all other
parties, to such party at the address or facsimile number of the Servicer set
forth under its name on the signature pages hereof, or, in the case of the
foregoing clause (a) or (b), at such other address or facsimile number as shall
be designated by the relevant party in a written notice to the other parties
hereto given in accordance with this Section 9.02. All notices and
communications provided for hereunder shall be effective, (a) if personally
delivered by express mail or courier, when received, (b) if sent by certified
mail, three Business Days after having been deposited in the mail, postage
prepaid and (c) if transmitted by facsimile, when sent, receipt confirmed by
telephone or electronic means.
Section 9.03. NO WAIVER; REMEDIES. No failure on the part of the
Company to exercise, and no delay in exercising, any right under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
Section 9.04. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the Sellers and the Company and their
respective successors (whether by merger, consolidation or otherwise) and
assigns. Each Seller agrees that it will not assign or transfer all or any
portion of its rights or obligations hereunder without the prior written consent
of the Company. The Sellers acknowledge that the Company shall assign all of
its rights
41
hereunder to the Trustee. Each Seller consents to such assignment and agrees
that the Trustee and the Holders, to the extent provided in the Pooling
Agreement, shall be entitled to enforce the terms of this Agreement and the
rights (including, without limitation, the right to grant or withhold any
consent or waiver) of the Company directly against such Seller, whether or
not a Purchase Termination Event or a Potential Purchase Termination Event
has occurred. Each Seller further agrees that, in respect of its obligations
hereunder, it will act at the direction of and in accordance with all
requests and instructions from the Trustee until all amounts due to the
Investor Certificateholders are paid in full. The Trustee, on behalf of the
Investor Certificateholders, shall have the rights of a third-party
beneficiary under this Agreement.
Section 9.05. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 9.06. COSTS, EXPENSES AND TAXES. In addition to the limited
rights of indemnification granted to the Company under Article VII hereof, each
Seller agrees to pay on demand all reasonable out-of-pocket costs and expenses
of the Company in connection with the negotiation, preparation, execution and
delivery of, and any amendment, supplement or other modification to, this
Agreement, the other Transaction Documents and any other documents prepared in
connection herewith and therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Company with
respect thereto and with respect to advising the Company as to its rights and
remedies under this Agreement, the other Transaction Documents and any such
other documents, and all costs and expenses (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Agreement, the other Transaction Documents and any such other documents. In
addition, each Seller agrees to pay any and all stamp and other taxes and
governmental fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement or the other
Transaction Documents to be delivered hereunder, and agree to hold the Company
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omitting to pay such taxes and fees.
Section 9.07. WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION;
OTHER WAIVERS. (a) EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF ANY OF THE
PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
42
(b) Each of the Company and the Sellers hereby irrevocably and
unconditionally:
(i) submits itself and its property in any legal action or proceeding
relating to this Agreement and the other Transaction Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Person at its address referred to in Section 9.02 or at such other address
of which the relevant Seller or the Company, as the case may be, shall have
been notified pursuant thereto;
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this subsection 9.07(b) any special, exemplary, punitive or
consequential damages.
Section 9.08. INTEGRATION. This Agreement and the other Transaction
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and thereof and
shall together constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof, superseding all prior oral or
written understandings.
Section 9.09. CAPTIONS AND CROSS REFERENCES. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise provided
herein, references in this Agreement to any "Section," "Exhibit," "Annex" or
"Schedule" are to such Section of or Exhibit or Annex or Schedule to this
Agreement, as the case may be.
Section 9.10. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.
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Section 9.11. ACKNOWLEDGMENT OF ASSIGNMENTS. Each Seller hereby
acknowledges and consents to the assignment by the Company of Receivables and
Receivables Property and the rights of the Company under this Agreement pursuant
to the Pooling and Servicing Agreements. Each Seller acknowledges that the
Company will grant a security interest in the Lockbox Accounts, the Eligible
Segregated Accounts, the Collection Concentration Account and the Collection
Account to the Trust for the benefit of the Holders. Each Seller agrees to take
any action that the Company or the Trust may reasonably request in connection
with such assignment or security interest.
Section 9.12. NO PETITION IN BANKRUPTCY. Each Seller covenants and
agrees that prior to the date which is one year and one day after the date of
termination of this Agreement pursuant to Section 9.15, 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 similar proceeding under the laws of the United States or any State of
the United States.
Section 9.13. ADDITION OF SELLERS AND SELLER DIVISIONS. Subject to
the terms and conditions hereof, from time to time (a) one or more wholly-owned
Subsidiaries of RS may become additional Sellers parties hereto and (b) one or
more divisions (each, a "NEW DIVISION") acquired by any Seller after the Closing
Date in a transaction with a Person which is not an Affiliate of such Seller may
become a division (a "SELLER DIVISION") the receivables originated by which may
constitute Eligible Receivables of such Seller. If any such Subsidiary or New
Division, as the case may be, wishes to become an additional Seller or a Seller
Division, as the case may be, it shall submit a request to such effect in
writing to the Company. The Company, in its sole and absolute discretion, may,
subject to the terms and provisions of the Pooling and Servicing Agreements,
agree to or deny any such request, PROVIDED that, if the Company shall have
failed to respond to any such request within 30 days after receipt thereof, such
request shall be deemed to have been denied. If the Company shall have agreed
to any such request, then (x) in the case of a wholly-owned Subsidiary of RS,
such wholly-owned Subsidiary shall become an additional Seller party hereto on
the related Seller Addition Date upon satisfaction of the conditions set forth
in Section 3.02 and the conditions, if any, set forth in the Pooling and
Servicing Agreements and (y) in the case of a New Division, such New Division
shall become a Seller Division upon satisfaction of the conditions set forth in
subsections 3.02(a)(ii), (e), (f), (g), (h), (j), (k) and (l) (in each case,
applied to such New Division as if it were an additional Seller) and the
conditions set forth in the Pooling and Servicing Agreements (including, without
limitation, those referred to in the definition of "Excluded Receivables"
contained herein).
Section 9.14. TREATMENT OF SELLERS OTHER THAN RS; TERMINATION
THEREOF. (a) RS hereby covenants and agrees with the Company that RS shall not
permit any Seller (other than RS) at any time to cease to be a wholly-owned
Subsidiary of RS, except as provided in the following paragraph (b).
(b) If RS wishes to permit any Seller (other than RS) to cease to be
a wholly-owned Subsidiary of RS, then RS shall submit a request (a "SELLER
TERMINATION REQUEST") to such effect in writing to the Company, which request
shall be accompanied by a certificate prepared by a Responsible Officer of the
Servicer indicating the Purchased Receivables Percentage applicable to such
Seller as of the date of submission of such request (the "SELLER TERMINATION
REQUEST
44
DATE"). The Company, in its sole and absolute discretion, may, subject to
the terms and provisions of the Pooling and Servicing Agreements, consent to
or deny any such Seller Termination Request, PROVIDED that, if the Company
shall have failed to respond to any such Seller Termination Request within 30
days after receipt thereof, such Seller Termination Request shall be deemed
to have been denied. If the Company shall have consented to any such Seller
Termination Request, and such consent shall not be in violation of any
applicable provision of the Pooling and Servicing Agreements, then the
relevant Seller shall be terminated as a Seller hereunder on the date of the
consummation of the transaction in connection with which such Seller ceases
to be a wholly-owned Subsidiary of RS or, if RS requests in writing that the
termination date be a date prior to the consummation of such transaction,
such earlier requested date (but in no event more than 30 days prior to the
consummation of such transaction); PROVIDED that if an earlier date is so
requested, RS or any Subsidiary of RS shall have entered into a valid and
legally binding agreement to effect such transaction on or before a date
certain; PROVIDED FURTHER that, if the Purchased Receivables Percentage
applicable to such Seller as of the relevant Seller Termination Request Date
is less than 10%, then the Company shall consent to such Seller Termination
Request unless such consent would violate the terms and provisions of the
Pooling and Servicing Agreements. From and after the date any such Seller is
terminated as a Seller pursuant to this subsection, the Company shall cease
buying Receivables and Receivables Property from such Seller. Each such
Seller shall be released as a Seller party hereto for all other purposes and
shall cease to be a party hereto on such termination date.
(c) A terminated Seller shall have no further obligation under any
Transaction Document, other than to repurchase Receivables previously sold by it
to the Company pursuant to Section 2.06.
Section 9.15. TERMINATION. This Agreement will terminate at such
time as (a) an Early Termination shall have occurred with respect to all Sellers
hereunder and (b) all Receivables purchased hereunder have been collected, and
the proceeds thereof turned over to the Company and all other amounts owing to
the Company hereunder shall have been paid in full or, if Receivables sold
hereunder have not been collected, such Receivables have become Defaulted
Receivables and the Company shall have completed its collection efforts with
respect thereto; PROVIDED, HOWEVER, that the indemnities of the Sellers to the
Company set forth in this Agreement shall survive such termination and PROVIDED
FURTHER that the Company shall remain entitled to receive any collections on
Receivables sold hereunder which have become Defaulted Receivables.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE SELLERS:
RYKOFF-SEXTION, INC.
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
XXXX XXXXXX & CO.
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
XXXXXXX BROTHERS, INC.
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
WHITE SWAN, INC.
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
X.X. XXXXXXXX & COMPANY, INC.
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
ROANOKE RESTAURANT SERVICE, INC.
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
KING'S FOODSERVICE, INC.
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
US FOODSERVICE OF FLORIDA, INC.
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
US FOODSERVICE OF ATLANTA, INC.
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
THE COMPANY:
RS FUNDING INC.
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address:
0000 Xxxxxx Xxxxxx Xxxxxxx
Xxxxx 000X
Xxx Xxxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
THE SERVICER:
US FOODSERVICE INC.
By: /s/
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address:
East Mountain Corporate Center
000 Xxxxxxxxx Xxxxx
Xxxxxx-Xxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
