EXHIBIT 4.7
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NOTEPAD FUNDING RECEIVABLES MASTER TRUST
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
dated as of May 29, 1996
among
NOTEPAD FUNDING CORPORATION,
as Transferor,
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.,
as Servicer,
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS
SECTION 1.1 Definitions............................................. 1
SECTION 1.2 Transitional Matters.................................... 1
ARTICLE II CONVEYANCE OF ASSETS
SECTION 2.1 Creation of the Trust; Conveyance of Certain Assets..... 1
SECTION 2.2 Acceptance by Trustee................................... 3
SECTION 2.3 Representations and Warranties of Transferor
Relating to the Transferred Assets.................... 5
SECTION 2.4 No Assumption of Obligations Relating to
Receivables, Related Transferred Assets or Contracts.. 5
SECTION 2.5 Conveyance of Receivables by the Trust.................. 5
ARTICLE III ADMINISTRATION AND SERVICING
SECTION 3.1 Acceptance of Appointment; Other Matters................ 6
SECTION 3.2 Duties of Servicer and Transferor....................... 7
SECTION 3.3 Lockbox, Concentration and Blocked Accounts............. 10
SECTION 3.4 Servicing Compensation.................................. 13
SECTION 3.5 Records of Servicer and Reports to be Prepared
by Servicer........................................... 14
SECTION 3.6 Monthly Servicer's Certificate.......................... 16
SECTION 3.7 Servicing Report of Independent Public
Accountants; Forms 10-Q and 10-K...................... 16
SECTION 3.8 Rights of Trustee....................................... 17
SECTION 3.9 Ongoing Responsibilities of APP......................... 19
SECTION 3.10 Further Action Evidencing Transfers..................... 20
ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS; ALLOCATIONS
SECTION 4.1 Rights of Certificateholders............................ 20
SECTION 4.2 Establishment of Transaction Accounts................... 21
SECTION 4.3 Trust-Level Calculations and Funds Allocations.......... 23
SECTION 4.4 Investment of Funds in Transaction Accounts............. 23
SECTION 4.5 Attachment of Transaction Accounts...................... 24
ARTICLE V DISTRIBUTIONS AND REPORTS
ARTICLE VI THE CERTIFICATES
SECTION 6.1 The Certificates........................................ 24
SECTION 6.2 Authentication of Certificates.......................... 25
SECTION 6.3 Registration of Transfer and Exchange of Certificates... 25
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates....... 27
SECTION 6.5 Persons Deemed Owners................................... 28
SECTION 6.6 Appointment of Paying Agent............................. 28
SECTION 6.7 Access to List of Certificateholders' Names and
Addresses............................................. 29
SECTION 6.8 Authenticating Agent.................................... 30
SECTION 6.9 Tax Treatment........................................... 31
SECTION 6.10 Issuance of Additional Series of Certificates and
Sales of Purchased Interests.......................... 32
SECTION 6.11 Book-Entry Certificates................................. 36
SECTION 6.12 Notices to Clearing Agency.............................. 41
SECTION 6.13 Definitive Certificates................................. 41
SECTION 6.14 Letter of Representations............................... 42
ARTICLE VII TRANSFEROR
SECTION 7.1 Representations and Warranties of Transferor
Relating to Transferor and the Transaction Documents.. 42
SECTION 7.2 Covenants of Transferor................................. 46
SECTION 7.3 Indemnification by Transferor........................... 53
ARTICLE VIII SERVICER
SECTION 8.1 Representations and Warranties of Servicer.............. 55
SECTION 8.2 Covenants of Servicer................................... 57
SECTION 8.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer.............................. 58
SECTION 8.4 Indemnification by Servicer............................. 59
SECTION 8.5 Servicer Liability...................................... 60
SECTION 8.6 Limitation on Liability of Servicer and Others.......... 60
ARTICLE IX EARLY AMORTIZATION EVENTS; TERMINATION BY SELLERS
SECTION 9.1 Early Amortization Events............................... 61
SECTION 9.2 Remedies................................................ 61
SECTION 9.3 Additional Rights Upon the Occurrence of Certain Events. 61
SECTION 9.4 Termination By Sellers.................................. 63
ARTICLE X SERVICER DEFAULTS
SECTION 10.1 Servicer Defaults....................................... 63
SECTION 10.2 Trustee to Act; Appointment of Successor................ 64
SECTION 10.3 Notification of Servicer Default; Notification of
Appointment of Successor Servicer..................... 67
ARTICLE XI TRUSTEE
SECTION 11.1 Duties of Trustee....................................... 67
SECTION 11.2 Certain Matters Affecting Trustee....................... 71
SECTION 11.3 Limitation on Liability of Trustee...................... 73
SECTION 11.4 Trustee May Deal with Other Parties..................... 74
SECTION 11.5 Servicer To Pay Trustee's Fees and Expenses............. 74
SECTION 11.6 Eligibility Requirements for Trustee.................... 75
SECTION 11.7 Resignation or Removal of Trustee....................... 75
SECTION 11.8 Successor Trustee....................................... 76
SECTION 11.9 Merger or Consolidation of Trustee...................... 77
SECTION 11.10 Appointment of Co-Trustee or Separate Trustee........... 77
SECTION 11.11 Tax Returns............................................. 79
SECTION 11.12 Trustee May Enforce Claims Without Possession of
Certificates.......................................... 79
SECTION 11.13 Suits for Enforcement................................... 79
SECTION 11.14 Rights of Required Investors To Direct Trustee.......... 80
SECTION 11.15 Representations and Warranties of Trustee............... 80
SECTION 11.16 Maintenance of Office or Agency......................... 81
ARTICLE XII TERMINATION
SECTION 12.1 Termination of Trust.................................... 81
SECTION 12.2 Final Distribution...................................... 82
SECTION 12.3 Rights Upon Termination of the Trust.................... 83
SECTION 12.4 Optional Repurchase of Investor Interests............... 83
ARTICLE XIII MISCELLANEOUS PROVISIONS
SECTION 13.1 Amendment, Waiver, Etc.................................. 84
SECTION 13.2 Actions by Certificateholders........................... 86
SECTION 13.3 Limitation on Rights of Certificateholders.............. 87
SECTION 13.4 Limitation on Rights of Purchasers...................... 88
SECTION 13.5 Governing Law........................................... 89
SECTION 13.6 Notices................................................. 89
SECTION 13.7 Severability of Provisions.............................. 90
SECTION 13.8 Certificates Nonassessable and Fully Paid............... 90
SECTION 13.9 Nonpetition Covenant.................................... 90
SECTION 13.10 No Waiver; Cumulative Remedies.......................... 91
SECTION 13.11 Counterparts............................................ 91
SECTION 13.12 Third-Party Beneficiaries............................... 91
SECTION 13.13 Integration............................................. 91
SECTION 13.14 Binding Effect; Assignability; Survival of
Provisions............................................ 91
SECTION 13.15 Recourse to Transferor.................................. 92
SECTION 13.16 Recourse to Transferred Assets.......................... 92
SECTION 13.17 Submission to Jurisdiction.............................. 92
SECTION 13.18 Waiver of Jury Trial.................................... 93
SECTION 13.19 Certain Partial Releases................................ 93
SECTION 13.20 No Recourse............................................. 94
EXHIBITS
EXHIBIT A-1 Form of Lockbox Account Letter Agreement
EXHIBIT A-2 Form of Blocked Account Letter Agreement
EXHIBIT B Form of Concentration Account Letter Agreement
EXHIBIT C Form of Monthly Servicer's Certificate
EXHIBIT D Annual Agreed-Upon Procedures
EXHIBIT E Form of Transferor Certificate
EXHIBIT F Form of Owner Regulation S Certification
EXHIBIT G Form of Depositary Regulation S Certification
EXHIBIT H Form of Transferee Regulation S Certification
EXHIBIT I Form of Transferor Regulation S Certification
EXHIBIT J Form of Placement Agent Exchange Instructions
SCHEDULES
SCHEDULE 1 Account Banks
APPENDIX
APPENDIX A Definitions
This AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of May 29,
1996 (this "Agreement"), is made among NOTEPAD FUNDING CORPORATION, a Delaware
corporation ("Transferor"), AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC., a
Delaware corporation ("APP"), and MANUFACTURERS AND TRADERS TRUST COMPANY, a New
York banking corporation, as Trustee.
ARTICLE I DEFINITIONS
SECTION 1.1 Definitions. Capitalized terms used in this Agreement have the
meanings that Appendix A assigns to them, and this Agreement shall be
interpreted in accordance with Part B of Appendix A.
SECTION 1.2 Transitional Matters. The Pooling and Servicing Agreement dated
as of October 31, 1995 (the "Existing Pooling and Servicing Agreement") among
the parties to this Agreement shall be amended and restated in its entirety to
read as set forth in this Agreement; each reference to the Existing Pooling and
Servicing Agreement in any document shall (unless the context otherwise
requires) be deemed to refer to the Existing Pooling and Servicing Agreement as
amended and restated by this Agreement.
ARTICLE II CONVEYANCE OF ASSETS
SECTION 2.1 Creation of the Trust; Conveyance of Certain Assets. (a)
Transferor confirms the transfer, assignment, set over, grant and conveyance to
Trustee under the Existing Pooling and Servicing Agreement, and hereby
transfers, assigns, sets over, grants and otherwise conveys to Trustee, without
recourse (except as expressly provided herein), all of its right, title and
interest in, to and under, (i) each Receivable that has been or is hereafter
transferred by the Sellers to Transferor, (ii) all Related Assets, (iii) all of
Transferor's rights to receive payment or pursue remedies under the Seller
Transaction Documents (the property described in clauses (ii) and (iii) being
called the "Related Transferred Assets"), (iv) all funds from time to time on
deposit in each of the Transaction Accounts (including funds deposited in a
Transaction Account in connection with the issuance of any prefunded Series) and
all funds from time to time on deposit in each of the Bank Accounts representing
Collections on, or other proceeds of, the foregoing and, in each case, all
certificates and instruments, if any, from time to time evidencing such funds,
all investments made with such funds, all claims thereunder or in connection
therewith and all interest, dividends, monies, instruments, securities and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the
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foregoing, (v) any Enhancements obtained for the benefit of any Series or
Purchased Interest and (vi) all moneys due or to become due and all amounts
received or receivable with respect to any of the foregoing and all proceeds of
the foregoing. Such property, whether now existing or hereafter acquired, shall
constitute the assets of the Trust (collectively, the "Transferred Assets"). The
foregoing transfer, assignment, setover, grant and conveyance to the Trust shall
be made to Trustee, on behalf of the Trust, and each reference in this Agreement
to such transfer, assignment, setover and conveyance shall be construed
accordingly.
(b) In connection with the transfer described in subsection (a), Transferor
and Servicer have recorded and filed or caused to be recorded and filed, as an
expense of Servicer paid out of the Servicing Fee, financing statements with
respect to the Transferred Assets meeting the requirements of applicable state
law in such manner and in such jurisdictions as are necessary to perfect the
transfer and assignment of the Transferred Assets to the Trust. In connection
with the transfer described in subsection (a), Transferor and Servicer further
agree to deliver to Trustee each Transferred Asset (including any original
documents or instruments included in the Transferred Assets as are necessary to
effect such transfer) in which the transfer of an interest is perfected under
the UCC or otherwise by possession. Transferor or Servicer shall deliver each
such Transferred Asset to Trustee, as an expense of Servicer paid out of the
Servicing Fee, immediately upon the transfer of any such Transferred Asset to
Trustee pursuant to subsection (a).
(c) In connection with the transfer described above in subsection (a),
Servicer shall, on behalf of Transferor, as an expense of Servicer paid out of
the Servicing Fee, on or prior to the date hereof, mark the master data
processing records evidencing the Receivables with the following legend:
"THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO NOTEPAD FUNDING
CORPORATION ("NFC") PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT, DATED AS OF
OCTOBER 31, 1995 AND AMENDED AND RESTATED AS OF MAY 29, 1996, AMONG AMERICAN
PAD & PAPER COMPANY OF DELAWARE, INC. ("APP") AND CERTAIN OF ITS SUBSIDIARIES,
AS SELLERS, AND NFC, AS BUYER; AND SUCH RECEIVABLES HAVE BEEN TRANSFERRED TO
THE NOTEPAD FUNDING RECEIVABLES MASTER TRUST PURSUANT TO A POOLING AND
SERVICING AGREEMENT, DATED AS OF OCTOBER 31, 1995 AND AMENDED AND RESTATED AS
OF MAY 29, 1996, AMONG NFC, AS TRANSFEROR, APP, AS
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SERVICER, AND MANUFACTURERS AND TRADERS TRUST COMPANY, AS TRUSTEE."
(d) Upon the request of Transferor, Trustee will cause Certificates in
authorized denominations evidencing the entire interest in the Trust to be duly
authenticated and delivered to or upon the order of Transferor pursuant to
Section 6.2. Pursuant to the Transferor Certificate, Transferor shall be
entitled to receive current and deferred transfer payments at the times and in
the amounts specified in the various Supplements and PI Agreements executed from
time to time.
(e) If the transfer, assignment, set-over, grant and conveyance described in
subsection (a) of Section 2.1 of the Existing Pooling and Servicing Agreement
and subsection (a) of this Section 2.1 are deemed to have created a security
interest in the property described in that Section of the Existing Pooling and
Servicing Agreement, as amended and restated herein, Transferor has granted to
the Trustee, for the benefit of the Certificateholders and the Purchasers, a
security interest in that property (which is deemed to be a first perfected
security interest), and agrees that the Existing Pooling and Servicing
Agreement, as amended and restated by this Agreement constitutes a security
agreement under applicable law.
SECTION 2.2 Acceptance by Trustee. Trustee hereby acknowledges its acceptance
on behalf of the Trust of all right, title and interest to the Transferred
Assets and declares that it shall maintain such right, title and interest, upon
the trust herein set forth, for the benefit of all Certificateholders and
Purchasers, on the terms and subject to the conditions hereinafter set forth.
SECTION 2.3 Representations and Warranties of Transferor Relating to the
Transferred Assets.
(a) Representations and Warranties. At the time that any Receivable or
Related Asset is transferred by Transferor to the Trust, Transferor hereby
represents and warrants that:
(i) Quality of Title. (A) Immediately before each transfer to be made by
Transferor hereunder, each Receivable and Related Transferred Asset that was
then to be transferred to the Trust hereunder was owned by Transferor free and
clear of any Adverse Claim (other than any Permitted Adverse Claim); and, in
connection with the First Issuance Date, Transferor and Servicer made, or
caused to be made, all filings and took all other action under applicable law
in each relevant
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jurisdiction in order to protect and perfect the Trust's interest in such
Receivables, such Related Transferred Assets and the funds in the Transaction
Accounts against all creditors of, and purchasers from, Transferor and the
Sellers.
(B) Each transfer of Receivables and other Transferred Assets by
Transferor to the Trust pursuant to this Agreement constitutes a valid
transfer and assignment to the Trust of all right, title and interest of
Transferor in the Receivables and the Related Transferred Assets, free and
clear of any Adverse Claim (other than any Permitted Adverse Claim), and
constitutes either an absolute transfer of such property to the Trust or a
grant of a first priority perfected security interest in such property to the
Trust. Whenever the Trust accepts a transfer of a Receivable or a Related
Transferred Asset hereunder, it shall have acquired a valid and perfected
first priority interest in such Receivable or Related Transferred Asset free
and clear of any Adverse Claim (other than any Permitted Adverse Claim).
(C) No effective financing statement or other instrument similar in effect
that covers all or part of any Transferred Asset or any interest in any
proceeds thereof is on file in any recording office.
(D) No acquisition of any Receivable or Related Transferred Asset by
Transferor or the Trust constitutes a fraudulent transfer or fraudulent
conveyance under the United States Bankruptcy Code or applicable state
bankruptcy or insolvency laws or is otherwise void or voidable or subject to
subordination under similar laws or principles or for any other reason.
(E) The transfer of the Receivables and Related Transferred Assets by the
Sellers to Transferor constitutes a true and valid assignment and transfer for
consideration of such Receivables and Related Transferred Assets under
applicable state law (and not merely a pledge of such Receivables and Related
Transferred Assets for security purposes), enforceable against the creditors
of the Sellers, and any Receivables and Related Transferred Assets so
transferred do not constitute property of the Sellers.
(ii) Governmental Approvals. With respect to each Receivable and Related
Transferred Asset, all consents, licenses, approvals or authorizations of, or
notices to or registrations, declarations or filings with, any Governmental
Authority required to be obtained, effected or made by the Sellers, Servicer
or Transferor in connection with the
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conveyance of the Receivable and Related Transferred Asset by the Sellers to
Transferor, or by Transferor to the Trust, have been duly obtained, effected
or given and are in full force and effect.
(iii) Eligible Receivables. (A) On the date on which the applicable Seller
transfers a Receivable to Transferor, and Transferor transfers such Receivable
to the Trust, unless otherwise identified by Servicer in the Daily Report for
such date, such Receivable is an Eligible Receivable, and (B) on the date of
each Daily Report or Monthly Report that identifies a Receivable as an
Eligible Receivable, such Receivable is an Eligible Receivable.
(b) Notice of Breach. The representations and warranties set forth in
subsection (a) shall survive the transfer of the Receivables and the Related
Transferred Assets to the Trust. Upon discovery by Transferor, Servicer or
Trustee of a breach of any of the representations and warranties set forth in
subsection (a), the party discovering the breach shall give written notice to
the others within four Business Days following the discovery. Trustee's
obligations in respect of discovering any breach are limited as provided in
Section 11.2(g).
SECTION 2.4 No Assumption of Obligations Relating to Receivables, Related
Transferred Assets or Contracts. The transfer, assignment, set over, grant and
conveyance described in Section 2.1 does not constitute and is not intended to
result in a creation or an assumption by the Trust, Trustee or any Investor
Certificateholder of any obligation of Servicer, Transferor, the applicable
Seller or any other Person in connection with the Receivables or the Related
Transferred Assets or under the related Contracts or any other agreement or
instrument relating thereto. None of Trustee, the Trust or any Investor
Certificateholder shall have any obligation or liability to any Obligor.
SECTION 2.5 Conveyance of Receivables by the Trust. Pursuant to the terms of
a PI Agreement, Trustee, on behalf of the Trust, from time to time may sell,
transfer, assign, set over and otherwise convey Purchased Interests to a
Purchaser or an Agent for the account of a Purchaser; and Trustee, on behalf of
the Trust, is authorized and directed (subject to the applicable terms of
Section 6.10), upon the written request of Transferor, to enter into one or more
PI Agreements in the form annexed to each such written request. Pursuant to a PI
Agreement, Collections allocated to Purchased Interests may be reinvested and
such Purchased Interests may be recomputed, each from time to time as provided
therein.
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ARTICLE III ADMINISTRATION AND SERVICING
SECTION 3.1 Acceptance of Appointment; Other Matters.
(a) Designation of Servicer. The servicing, administering and collection of
the Receivables and the Related Transferred Assets shall be conducted by the
Person designated as Servicer hereunder from time to time in accordance with
this section. Subject to clause (d) below, until Trustee gives a Termination
Notice to APP pursuant to Section 10.1, APP is designated (and agrees to act) as
Servicer.
(b) Delegation of Certain Servicing Activities. In the ordinary course of
business, Servicer may at any time delegate its duties hereunder with respect to
the Receivables and the Related Transferred Assets to any Person. Each Person to
whom any such duties are delegated in accordance with this Section is called a
"Sub-Servicer". Notwithstanding any such delegation, Servicer shall remain
liable for the performance of all duties and obligations of Servicer pursuant to
the terms of this Agreement and the other Transaction Documents. The fees and
expenses of any Sub-Servicers shall be as agreed between Servicer and the Sub-
Servicers from time to time and none of the Trust, Trustee or the
Certificateholders shall have any responsibility therefor. Upon any termination
of a Servicer pursuant to Section 10.1, all Sub-Servicers designated pursuant to
this subsection by such Servicer shall automatically also be terminated.
(c) Termination. The designation of Servicer (and each Sub-Servicer) under
this Agreement shall automatically terminate upon termination of the Trust
pursuant to Section 12.1.
(d) Resignation of Servicer. APP shall not resign as Servicer unless it
determines that (i) the performance of its duties is no longer permissible under
applicable law and (ii) there is no reasonable action that it could take to make
the performance of its duties permissible under applicable law. If APP
determines that it must resign for the reasons stated above, it shall, prior to
the tendering of its resignation, deliver to Trustee an Opinion of Counsel
confirming the satisfaction of the conditions set forth in clause (i) of the
preceding sentence. No resignation by APP shall become effective until Trustee
or another Successor Servicer shall have assumed the responsibilities and
obligations of Servicer in accordance with Section 10.2. Trustee shall give
prompt notice to the Rating Agencies of the appointment of any Successor
Servicer.
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SECTION 3.2 Duties of Servicer and Transferor.
(a) Duties of Servicer in General. Servicer shall service the Receivables and
the Related Transferred Assets and, subject to the terms and provisions of this
Agreement, shall have full power and authority, acting alone or through any Sub-
Servicer, to do any and all things in connection with such servicing that it may
deem necessary or appropriate. Trustee shall execute and deliver to Servicer any
powers of attorney or other instruments or documents that are prepared by
Servicer and stated in an Officer's Certificate to be, and shall furnish
Servicer with any documents in its possession, necessary or appropriate to
enable Servicer to carry out its servicing duties. Servicer shall exercise the
same care and apply the same policies with respect to the collection and
servicing of the Receivables and the Related Transferred Assets that it would
exercise and apply if it owned such Receivables and the Related Transferred
Assets, all in substantial compliance with applicable law and in accordance with
the Credit and Collection Policy.
Servicer shall take or cause to be taken (and shall cause each Sub-Servicer
(if any) to take or cause to be taken) all such actions as Servicer deems
necessary or appropriate to collect each Receivable and Related Transferred
Asset, all in accordance with applicable law and the Credit and Collection
Policy.
Without limiting the generality of the foregoing and subject to the next
preceding paragraph and Section 10.1, Servicer or its designee is hereby
authorized and empowered, unless such power and authority is revoked by Trustee
on account of the occurrence of a Servicer Default, (i) to instruct Trustee to
make withdrawals and payments from the Transaction Accounts as set forth in this
Agreement, (ii) to execute and deliver, on behalf of the Trust for the benefit
of the Certificateholders, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and the Related
Transferred Assets, (iii) to make any filings, reports, notices, applications
and registrations with, and to seek any consents or authorizations from, the
Securities and Exchange Commission and any state securities authority on behalf
of the Trust as may be necessary or appropriate to comply with any federal or
state securities laws or reporting requirements or other laws or regulations,
and (iv) to the extent permitted under and in compliance with the Credit and
Collection Policy and with all applicable laws, rules, regulations, judgments,
orders and decrees of courts and other governmental authorities (whether
federal, state, local or foreign) and all other tribunals, to commence or settle
collection proceedings with respect to such Receivable and otherwise
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to enforce the rights and interests of the Trust and the Certificateholders in,
to and under such Receivable or Related Transferred Asset (as applicable).
(b) Identification and Transfer of Collections. Servicer shall cause
Collections and all other Transferred Assets that consist of cash or cash
equivalents to be deposited into the Bank Accounts and the Transaction Accounts
pursuant to the terms and provisions of Section 3.3 and Article IV. Following
notification from any Seller to Servicer or discovery by Servicer that
collections of any receivable or other asset that is not a Collection of a
Receivable or a Related Transferred Asset have been deposited into a Bank
Account or the Master Collection Account, Servicer shall cause all such
collections to be segregated, apart and in different accounts, from the Bank
Accounts and the Transaction Accounts. Servicer and, to the extent applicable,
Trustee shall hold all such funds in trust, separate and apart from such
Person's other funds. On each Business Day, after such misapplied collections
have been reasonably identified by Servicer to Trustee, Servicer shall instruct
Trustee to, and Trustee shall, turn over to the appropriate Account Bank,
applicable Seller or other applicable APP Person (or their designees) all such
misapplied collections less all reasonable and appropriate out-of-pocket costs
and expenses, if any, incurred by Servicer in collecting such receivables.
All payments made by an Obligor that is obligated to make payments with
respect to both Receivables included in the Transferred Assets and Receivables
not included in the Transferred Assets shall be applied against the Receivables,
if any, that are designated by such Obligor by reference to the applicable
invoice as the Receivables with respect to which such payments should be
applied. In the absence of such designation, such payments shall be applied
first against the oldest outstanding Receivables owed by such Obligor.
Following notification from an Account Bank that any item has been returned or
is uncollected and that such Account Bank has not been otherwise reimbursed
pursuant to the terms of the applicable Account Agreement for any amounts it
credited to the relevant Account (and then transferred to the Master Collection
Account), Servicer shall instruct Trustee to, and Trustee shall, turn over to
such Account Bank Collections in such amount from Collections on deposit in the
Master Collection Account.
(c) Modification of Receivables, Etc. So long as no Servicer Default shall
have occurred and be continuing, Servicer may adjust, and may permit each Sub-
Servicer to adjust, in accordance with Section 3.2(a) and the Credit and
Collection Policy, the Unpaid Balance of any Receivable, or otherwise modify the
terms of any Receivable or amend, modify or waive any term or condition of any
Contract related thereto, all as it may determine to be
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appropriate to maximize collection thereof. Servicer shall, or shall cause the
applicable Sub-Servicer to, write off Receivables from time to time in
accordance with the Credit and Collection Policy.
(d) Documents and Records. At any time when APP is not Servicer, Transferor,
to the extent that it is entitled to do so under the Purchase Agreement, shall,
upon the request of the then-acting Servicer, cause the applicable Seller to
deliver to Servicer, and Servicer shall hold in trust for Transferor and Trustee
in accordance with their respective interests, all Records that evidence or
relate to the Receivables and Related Transferred Assets of the applicable
Seller.
(e) Certain Duties to the Sellers. Servicer, if other than APP, shall, as
soon as practicable after a demand by any Seller, deliver to the Seller all
documents, instruments and records in its possession that evidence or relate to
accounts receivable of the Seller or other APP Persons that are not Receivables
or Related Transferred Assets, and copies of all documents, instruments and
records in its possession that evidence or relate to Receivables and Related
Transferred Assets.
(f) Identification of Eligible Receivables. The initial Servicer will (i)
establish and maintain such procedures as are necessary for determining no less
frequently than each Business Day whether each Receivable qualifies as an
Eligible Receivable, and for identifying, on any Business Day, all Receivables
that are not Eligible Receivables, and (ii) include in each Daily Report
information that shows whether, and to what extent, the Receivables described in
such Daily Report are Eligible Receivables.
(g) Authorization to Act as Transferor's Agent. Without limiting the
generality of subsection (a), Transferor hereby appoints Servicer as its agent
for the following purposes: (i) specifying accounts to which payments are to be
made to Transferor, (ii) making transfers among, and deposits to and withdrawals
from, all deposit accounts of Transferor for the purposes described in the
Transaction Documents, and (iii) arranging payment by Transferor of all fees,
expenses and other amounts payable by Transferor pursuant to the Transaction
Documents. Transferor irrevocably agrees that (A) it shall be bound by all
actions taken by Servicer pursuant to the preceding sentence, and (B) Trustee
and the banks holding all deposit accounts of Transferor are entitled to accept
submissions, determinations, selections, specifications, transfers, deposits and
withdrawal requests, and payments from Servicer on behalf of Transferor.
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(h) Grant of Power of Attorney. Transferor and Trustee hereby each grant to
Servicer a power of attorney, with full power of substitution, to take in the
name of Transferor and Trustee all steps that are necessary or appropriate to
endorse, negotiate, deposit or otherwise realize on any writing of any kind held
or transmitted by Transferor or transmitted or received by Trustee (whether or
not from Transferor) in connection with any Receivable or Related Transferred
Asset. The power of attorney that Transferor and Trustee have granted to
Servicer may be revoked by Trustee, and shall be revoked by Transferor, on the
date on which Trustee shall be entitled to exercise the powers granted to
Trustee pursuant to Section 3.8(b). In exercising its power granted hereby,
Servicer shall take directions from Trustee, if any, arising out of the exercise
of the rights granted under Section 11.14.
(i) Turnover of Collections. If Servicer, Transferor or any of their
respective agents or representatives shall at any time receive any cash, checks
or other instruments constituting Collections, such recipient shall segregate
such payments and hold such payments in trust for Trustee and shall, promptly
upon receipt (and in any event within two Business Days following receipt),
remit all such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to a Bank Account or the Master Collection Account.
(j) Annual Statement as to Compliance. Servicer will deliver to Trustee and
each Rating Agency on or before March 31 of each year, beginning with March 31,
1996 an Officer's Certificate stating, as to each signer thereof, that (i) a
review of the activities of the Servicer during the preceding calendar year and
of performance under this Pooling Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Pooling
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and remedies therefor being pursued.
SECTION 3.3 Lockbox, Concentration and Blocked Accounts. (a) Each Lockbox
Account shall be subject to a Lockbox Agreement substantially in the form of
Exhibit A-1, and each Blocked Account shall be subject to a Blocked Account
Agreement substantially in the form of Exhibit A-2. Unless instructed otherwise
by Servicer (or, after the occurrence and continuance of an Early Amortization
Event, Trustee), each Lockbox Bank and Blocked Account Bank shall be instructed
by Servicer to remit, on a daily basis (but subject to such bank's customary
funds availability schedule), all amounts deposited in the Lockbox Accounts or
Blocked Accounts maintained with it to a Concentration Account or the Master
Collection Account. Any Concentration
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Account shall be maintained in the name of Trustee on behalf of the Trust
pursuant to a Concentration Account Agreement substantially in the form of
Exhibit B. Except as provided in this Agreement and the applicable Account
Agreements, none of any Seller, Transferor, Servicer, or any Person claiming by,
through or under any Seller, Transferor or Servicer shall have any control over
the use of, or any right to withdraw any item or amount from, any Lockbox
Account, Blocked Account or Concentration Account. Servicer and Trustee are each
hereby irrevocably authorized and empowered, as Transferor's attorney-in-fact,
to endorse any item deposited in a lockbox or presented for deposit in any
Lockbox Account, Blocked Account or Concentration Account requiring the
endorsement of Transferor, which authorization is coupled with an interest and
is irrevocable. Each Lockbox Account, Blocked Account and Concentration Account
shall be an Eligible Deposit Account.
(b) Servicer shall instruct (or shall cause the applicable Seller to
instruct) all Obligors to make all payments due to Transferor or the applicable
Seller relating to or constituting Collections (or any proceeds thereof) (i) to
lockboxes maintained at the Lockbox Banks for deposit in a Lockbox Account or a
Concentration Account or (ii) directly to a Lockbox Account; provided that prior
to September 30, 1996 (in respect of Regency Receivables) or June 30, 1996 (in
respect to Card Receivables) the Sellers need not direct Obligors in respect of
Regency Receivables or Card Receivables to make payments to a Lockbox Account or
a Concentration Account if the following conditions are satisfied: (x) on each
Business Day such Seller shall deposit all checks, money orders and other items
delivered in payment of such Receivables on the day such items are received (or
if such day is not a Business Day, on the next Business Day) in a Blocked
Account that contains no funds other than proceeds of Receivables; and prior to
such deposit, such Seller shall hold such items in trust for the benefit of the
Trustee in the form received; (y) each bank that maintains a Blocked Account for
such Seller shall have executed and delivered a Blocked Account Agreement to the
Trustee; and (z) all available funds in each Blocked Account for such Seller
shall be transferred (by wire transfer or other means reasonably acceptable to
the Trustee) on each Business Day to either a Concentration Account or the
Master Collection Account. If Transferor or the applicable Seller receives any
Collections or any other payment of proceeds of any other Related Transferred
Asset, Servicer shall cause such recipient to (x) segregate such payment and
hold it in trust for the benefit of Trustee, and (y) as soon as practicable, but
no later than the second Business Day following receipt of such item by such
Person, deposit such payment in a Bank Account or the Master Collection Account.
Servicer shall, and shall cause Transferor and the applicable Seller to, use
reasonable efforts to prevent the deposit of any amounts other than Collections
in any Bank
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Account. If Servicer is notified by the applicable Seller that any amount other
than Collections has been deposited in any Bank Account, Servicer shall promptly
instruct the appropriate Account Bank and Trustee to segregate such amount, and
shall direct such Account Bank or Trustee (as appropriate) to turn over such
amounts to the applicable Seller or other APP Person (or their designees) to
whom such amounts are owed.
(c)(i) Servicer may, from time to time after the First Issuance Date,
designate a new account as a Lockbox Account, Blocked Account or Concentration
Account, and such account shall become a Lockbox Account, Blocked Account or
Concentration Account (and the bank at which such account is maintained shall
become a Lockbox Bank, Blocked Account Bank or a Concentration Account Bank for
purposes of this Agreement); provided that Trustee shall have received not less
than 15 Business Days' prior written notice of the account and/or the bank that
are proposed to be added as a Bank Account or an Account Bank (as applicable)
and, not less than ten Business Days prior to the effective date of any such
proposed addition, Trustee shall have received (x) counterparts of a Lockbox
Agreement, Blocked Account Agreement or Concentration Account Agreement, as
applicable, with each new Account Bank, duly executed by such new Account Bank
and all other parties thereto and (y) copies of all other agreements and
documents signed by the new Account Bank or such other parties with respect to
any new Lockbox Account, Blocked Account or Concentration Account, as
applicable.
(ii) Servicer may, from time to time after the First Issuance Date, terminate
an account as a Lockbox Account, Blocked Account or a Concentration Account or a
bank as an Account Bank; provided that (x) no such termination shall occur
unless Trustee shall have received not less than five Business Days' prior
written notice of the account and/or the bank that are proposed to be terminated
as a Bank Account or an Account Bank (as applicable) and, not less than five
Business Days prior to the effective date of any such proposed termination,
Trustee shall have received counterparts of an agreement, duly executed by the
applicable Account Bank and reasonably satisfactory in form and substance to
Trustee, pursuant to which such Account Bank agrees that, if it receives any
funds or items that constitute Collections on or after the effective date of the
termination of the applicable Bank Account or the effective date of its
termination as an Account Bank (as the case may be), such Account Bank or former
Account Bank (as applicable) shall cause such funds and items to be delivered in
the form received to another lockbox or transferred to another Lockbox Account,
Blocked Account, Concentration Account or the Master Collection Account promptly
after such Account Bank or former Account Bank (as applicable) discovers that it
has received any such funds or items, and (y) notwithstanding clause (x),
Transferor and Servicer
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may at any time establish alternative collection procedures that do not require
the use of Lockbox Accounts or Blocked Accounts upon satisfaction of the
Modification Condition.
(d) Servicer shall instruct each Concentration Account Bank (if any), to
transfer on a daily basis in same day funds to the Master Collection Account all
collected funds on deposit in the Concentration Account maintained with such
Concentration Account Bank. All such transfers shall be made in accordance with
the relevant Concentration Account Agreement.
SECTION 3.4 Servicing Compensation. As full compensation for its servicing
activities hereunder and under any Supplement or PI Agreement, and as
reimbursement for any expense incurred by it in connection therewith, Servicer
shall be entitled to receive a monthly servicing fee (the "Servicing Fee") in
respect of each Series and Purchased Interest, payable in arrears on each
Distribution Date in respect of each Distribution Period (or portion thereof)
during which that Series or Purchased Interest is outstanding. The Servicing Fee
in respect of any Series or Purchased Interest shall be payable solely as
provided in the related Supplement or PI Agreement.
Unless otherwise provided in the applicable Supplement or PI Agreement, the
Servicing Fee payable with respect to any Series or Purchased Interest shall be
calculated as follows. At any time when APP or any of its Affiliates is
Servicer, the Servicing Fee for any Distribution Period shall be equal to one-
twelfth of the product of (a) 0.5%, multiplied by (b) the aggregate Unpaid
Balance of the Receivables as measured on the first Business Day of that
Distribution Period, multiplied by (c) the applicable Series Collection
Allocation Percentage. If APP ceases to be Servicer, the Servicing Fee for a
Successor Servicer that is not a APP Person shall be an amount equal to the
greater of (i) the amount calculated pursuant to the preceding sentence and (ii)
an alternative amount specified by such Servicer not exceeding the sum of (x)
110% of the aggregate reasonable costs and expenses incurred by such Servicer
during such Distribution Period in connection with the performance of its
obligations under this Agreement and the other Transaction Documents, and (y)
the other costs and expenses that are to be paid out of the Servicing Fee, as
described in the next sentence; provided that the amount provided for in clause
(ii) shall not exceed one-twelfth of 1% of the aggregate Unpaid Balance of the
Receivables as measured on the first Business Day of the Distribution Period.
The fees, costs and expenses of Trustee, the Paying Agent, any authenticating
agent, the Account Banks and the Transfer Agent and Registrar, and certain other
costs and expenses payable from the Servicing Fee pursuant to other provisions
of this Agreement, and all other fees and expenses that are not expressly stated
in this Agreement, any
page 13
Series Supplement or any PI Agreement to be payable by the Trust or Transferor,
other than Excluded Losses, shall be paid out of the Servicing Fee and shall be
paid by Servicer from the funds that constitute the Servicing Fee.
SECTION 3.5 Records of Servicer and Reports to be Prepared by Servicer.
(a) Keeping of Records and Books of Account. Servicer shall maintain at all
times accurate and complete books, records and accounts relating to the
Receivables, Related Transferred Assets and Contracts of each Seller and all
Collections thereon in which timely entries shall be made. Servicer shall
maintain and implement administrative and operating procedures (including an
ability to generate duplicates of Records evidencing Receivables and the Related
Transferred Assets in the event of the destruction of the originals thereof),
and shall keep and maintain all documents, books, records and other information
that Servicer deems reasonably necessary for the collection of all Receivables
and Related Transferred Assets.
(b) Receivables Reviews. Servicer shall provide Trustee access to the
documentation regarding the Receivables when Trustee is required, in connection
with the enforcement of the rights of Certificateholders or the Purchasers or by
applicable statutes or regulations, to review such documentation, such access
being afforded without charge but only (i) upon reasonable request, (ii) during
normal business hours, (iii) subject to Servicer's normal security and
confidentiality procedures, (iv) at reasonably accessible offices in the
continental United States of America designated by Servicer and (v) upon five
Business Days' prior notice; provided that no notice shall be required if an
Early Amortization Event shall have occurred and be continuing. Transferor shall
permit each Requisite Person to participate in, or (with the consent of Trustee)
initiate a Seller Receivables Review conducted pursuant to Section 6.1(c) of the
Purchase Agreement, and with respect to any such participation shall give such
Requisite Person reasonable notice of the time and place of each such review;
provided that nothing in this Section shall be deemed to increase the number of
Seller Receivables Reviews permitted under such Section of the Purchase
Agreement.
(c) Daily Reports. Prior to 11:00 a.m., New York City time, on each Business
Day, Servicer shall prepare and deliver to Trustee and any Agent a report
relating to each outstanding Series and Purchased Interest, substantially in the
form specified by the applicable Supplement or PI Agreement or in such other
form as is reasonably acceptable to Trustee and Servicer (each such report being
a "Daily Report") setting out, among other things, the Base
page 14
Amount and Series Collection Allocation Percentage for that Series or Purchased
Interest as of the end of business on the preceding Business Day; provided that
if, on any Business Day, Servicer is unable to prepare and deliver a Daily
Report to Trustee because of acts of God or the public enemy, riots, acts of
war, acts of terrorism, epidemics, fire, failure of communication lines,
equipment or power failure, computer systems failure, flood, embargoes, weather,
earthquakes or other unanticipated disruptions of Servicer's ability to monitor
the origination and/or preparation of Receivables, then (x) the Base Amount for
purposes of each outstanding Series and Purchased Interest shall be the lowest
Base Amount shown in the related Daily Reports delivered during the immediately
preceding month (such amount, an "Estimated Base Amount") and (y) the Series
Collection Allocation Percentage for that Series or Purchased Interest shall be
the one most recently reported. Servicer may use an Estimated Base Amount and
the most recently reported Series Collection Allocation Percentage to prepare
the Daily Report until the earlier to occur of (i) the day upon which disruption
no longer prevents Servicer from preparing the Daily Report using the actual
data required by the Daily Report and delivering it to Trustee, and (ii) the
sixth Business Day following the commencement of such disruption.
(d) Monthly Report. On each Report Date, Servicer shall prepare and deliver to
Trustee and the Rating Agencies a report relating to each outstanding Series and
Purchased Interest, substantially in the form specified by the applicable
Supplement or PI Agreement or in such other form as is reasonably acceptable to
Trustee and Servicer (each such report being a "Monthly Report").
(e) Notice of Seller Change Events; Supplements to Monthly Reports. Sections
1.7 and 1.8 of the Purchase Agreement describe circumstances under which (i)
additional Sellers may be added to the Program and (ii) a Seller may terminate
its status as Seller under the Program (each such event being a "Seller Change
Event"). Those Sections of the Purchase Agreement require APP to give written
notice to Transferor of the occurrence of a Seller Change Event not less than 30
days prior to the occurrence thereof, and Transferor hereby agrees to give
prompt written notice of its receipt of any such notice to Trustee and the
Rating Agencies. If the notice is given to Trustee, within five Business Days
after the receipt of the notice by Trustee (or such later date, as specified in
the notice, on which the applicable Seller Change Event shall become effective),
Servicer shall deliver to Trustee and the Rating Agencies a supplement to the
Monthly Report then in effect for each outstanding Series or Purchased Interest,
which supplement shall show the calculation (complete with the historical and/or
pro forma receivables data necessary to do such calculation) of (A) the Required
Receivables and the applicable reserve ratios
page 15
(as described in each Supplement or PI Agreement) to reflect the addition of
accounts receivable originated by any Person that is being added to the Program
as a Seller, and the exclusion of any Receivables originated by any such Person
that is terminating its status as a Seller (as applicable), and (B) the Loss
Discount and the Purchase Discount for any such Person that is being added to
the Program as a Seller. For purposes of all calculations hereunder and under
the Purchase Agreement, the Required Receivables, such reserve ratios and (if
applicable) the Loss Discount and the Purchase Discount Reserve Ratio for the
relevant Person shown in such supplement shall supersede and/or supplement the
calculation of such items in the then outstanding Monthly Report, effective as
of the fifth Business Day following Trustee's receipt of such notice (or such
later date, as specified in such notice, on which the applicable Seller Change
Event shall become effective).
SECTION 3.6 Monthly Servicer's Certificate. On each Report Date, Servicer
shall deliver to Trustee, the Paying Agent, Transferor and the Rating Agencies a
certificate of an Authorized Officer of Servicer substantially in the form of
Exhibit C, with such additions as may be required by any Supplement.
SECTION 3.7 Servicing Report of Independent Public Accountants; Forms 10-Q and
10-K. (a)(i) On or before 120 days after the end of each fiscal year of
Transferor (or, in the case of the 1995 fiscal year, 60 days after the end of
such year), Servicer shall, as an expense of Servicer paid out of the Servicing
Fee, cause Price Waterhouse or another firm of recognized independent public
accountants that is generally recognized as being among the "big six" (which may
also render other services to Servicer, the Sellers or Transferor) to furnish a
report to Trustee, Servicer, the Rating Agencies and Transferor (which report
shall be addressed to Trustee and shall relate to Transferor's most recently
ended fiscal year). The accountants' report shall set forth the results of their
performance of the procedures described in Exhibit D with respect to the Monthly
Reports and Daily Reports delivered to Trustee pursuant to Section 3.5 during
the prior fiscal year.
(ii) Each accountants' report shall state that the accountants have compared
the amounts contained in the Monthly Reports and a sample randomly selected from
all Daily Reports delivered to Trustee during the period covered by the report
with the records (including computer records) from which the amounts were
derived and that, on the basis of such comparison, the amounts are in agreement
with the documents and records, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in the report. Except
as provided otherwise in a Supplement, a copy of the report may be obtained by
any Investor
page 16
Certificateholder by a request in writing to Trustee addressed to the Corporate
Trust Office.
(b) Promptly after the filing of such reports with the Securities and Exchange
Commission, Servicer shall provide each of the Rating Agencies and Trustee with
copies of each Quarterly Report on Form 10-Q and each Annual Report on Form 10-K
of Servicer.
SECTION 3.8 Rights of Trustee.
(a) Trustee has the exclusive dominion and control over the Bank Accounts, and
Transferor shall take any action that Trustee may reasonably request to effect
or evidence such dominion and control. At any time following the occurrence of a
Servicer Default, Trustee is hereby authorized to give notice to the Account
Banks, as provided in the Account Agreements, of the revocation of Servicer's
authority to give instructions or take any other actions with respect to the
Bank Accounts that Servicer would otherwise be authorized to give or to take.
(b) At any time following the designation of a Servicer other than APP until a
Successor Servicer (if other than Trustee) has been appointed:
(i) Trustee may direct any Obligors of Receivables to pay all amounts
payable under any Receivable or any Related Transferred Assets directly to
Trustee or its designee; provided that Trustee shall provide the applicable
Seller with a copy of such notice at least one Business Day prior to sending
it to any Obligor and consult in good faith with the applicable Seller as to
the text of the notice.
(ii) Trustee may direct any Seller to make payment of all amounts payable
to Transferor under any Transaction Document to which the Seller is a party
directly to Trustee or its designee.
(iii) Transferor and Servicer shall, at Trustee's request and as an expense
of Servicer paid out of the Servicing Fee, give notice of the Trust's
ownership of the Receivables and the Related Transferred Assets to each
Obligor and direct that payments be made directly to Trustee or its designee.
(iv) Transferor shall, and shall instruct (in accordance with the Purchase
Agreement) the Sellers to, at Trustee's request, (A) assemble all of the
Records that are necessary or appropriate to collect the Receivables and
Related Transferred Assets, and shall make the same
page 17
available to Trustee at one or more places selected by Trustee or its
designee, (B) segregate all cash, checks and other instruments received by it
from time to time constituting Collections in a manner acceptable to Trustee
and shall, promptly upon receipt (and, subject to Section 3.2(i), in no event
later than the first Business Day following receipt), remit all such cash,
checks and instruments, duly endorsed or with duly executed instruments of
transfer, to a Bank Account or the Master Collection Account and (C) permit,
upon not less than two Business Days' prior written notice, any Successor
Servicer and its agents, employees and assignees access to their respective
facilities and their respective Records.
(c) Each of Transferor and Servicer hereby authorizes Trustee, from time to
time after the designation of a Servicer other than APP, to take any and all
steps in Transferor's name and on behalf of Transferor and Servicer that are
necessary or appropriate, in the reasonable determination of Trustee, to collect
all amounts due under any and all Receivables or Related Transferred Assets,
including endorsing the name of Transferor or the applicable Seller on checks
and other instruments representing Collections and enforcing such Receivables
and the Related Transferred Assets.
(d) Transferor hereby irrevocably appoints Trustee to act as Transferor's
attorney-in-fact, with full authority in the place and stead of Transferor and
in the name of Transferor or otherwise, from time to time after the designation
of a Servicer other than APP, to take (subject to Section 11.14 hereof) any
action and to execute any instrument or document that Trustee, in its reasonable
determination, may deem necessary to accomplish the purposes of this Agreement,
including:
(i) to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any Receivable or any Related Transferred Asset;
(ii) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (i);
(iii) to file any claims or take any action or institute any proceedings
that Trustee in its reasonable determination may deem necessary or appropriate
for the collection of any of the Receivables or any Related Transferred Asset
or otherwise to enforce the rights of Trustee and the Certificateholders with
respect to any of the Receivables or any Related Transferred Asset; and
page 18
(iv) to perform the affirmative obligations of Transferor under any
Transaction Document.
Transferor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 3.9 Ongoing Responsibilities of APP. Anything herein to the contrary
notwithstanding:
(a) If at any time APP shall not be Servicer, it shall deliver all
Collections received or deemed received by it or its Subsidiaries to Trustee
no later than two Business Days after receipt or deemed receipt thereof and
Trustee shall distribute such Collections to the same extent as if such
Collections had actually been received from the related Obligor on the
applicable dates. So long as APP or any of its Subsidiaries shall hold any
Collections or deemed Collections required to be paid to Trustee, each of them
shall hold such amounts in trust (and separate and apart from its own funds)
and shall clearly mark its records to reflect such trust. APP hereby grants to
Trustee an irrevocable power of attorney, with full power of substitution,
coupled with an interest, upon the occurrence of a Servicer Default, to take
in the name of APP all steps necessary or appropriate to endorse, negotiate or
otherwise realize on any writing or other right of any kind held or
transmitted by APP or transmitted and received by Trustee (whether or not from
APP) in connection with any Receivable or Related Transferred Asset.
(b) In addition, if at any time APP shall not be Servicer, it shall act (if
the Successor Servicer so requests) as the data processing agent of Servicer
and, in such capacity, APP shall conduct (and shall cause any other necessary
Persons to conduct) the data processing functions of the administration of the
Receivables, the Related Transferred Assets and the Collections thereon in
substantially the same way that APP (or its Sub-Servicers) conducted such data
processing functions while APP acted as Servicer. APP and each such other
Person shall be entitled to reasonable compensation for such service to be
paid from the Servicing Fee.
(c) Notwithstanding any termination of APP as Servicer hereunder, APP shall
continue to indemnify Trustee on the terms set out in Section 11.5 with
respect to circumstances existing, or actions taken or omitted, prior to such
termination.
page 19
SECTION 3.10 Further Action Evidencing Transfers. Servicer shall cause all
financing statements and continuation statements and any other necessary
documents relating to the right, title and interest of Trustee in and to the
Transferred Assets to be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, all in such manner and in such
places as may be required by law fully to preserve, maintain and protect the
right, title and interest of Trustee hereunder in and to all property comprising
the Transferred Assets. Servicer shall deliver to Trustee file-stamped copies
of, or filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following such recording, registration or
filing. Transferor shall cooperate fully with Servicer in connection with the
obligations set forth above and will execute any and all documents that are
reasonably required to fulfill the intent of this section.
If Transferor or Servicer fails to perform any of its agreements or
obligations under any Transaction Document and does not remedy such failure
within the applicable cure period, if any, then Trustee or its designee may (but
shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the reasonable expenses of Trustee or its designee
incurred in connection therewith shall be payable by Servicer as provided in
Section 11.5 and (if applicable) by Transferor as provided in Section 7.3.
ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS; ALLOCATIONS
SECTION 4.1 Rights of Certificateholders. Each Series of Investor Certificates
shall collectively represent a fractional undivided beneficial interest (as to
any Series, the "Series Interest") in the Trust, and the amount of that
undivided beneficial interest shall equal the Series Collection Allocation
Percentage for that Series from time to time. Each Certificate within a Series
shall represent a partial ownership interest in the related Series Interest,
representing the right to receive, to the extent necessary to make the required
payments with respect to that Certificate at the times and in the amounts
specified in this Article IV and in the related Supplement, the portion of
Collections allocable to Investor Certificateholders of such Series pursuant to
this Agreement and such Supplement, funds on deposit in the Transaction Accounts
allocable to Investor Certificateholders of such Series and funds available
pursuant to any related Enhancement. Unless the applicable Supplement or PI
Agreement provides otherwise, the Investor Certificates of any Series or class
shall not represent any interest in any funds allocable to, or Enhancement for
the benefit of, any other Series or Purchased Interest. The interest of the
Transferor in the Trust (the "Transferor Interest") shall be evidenced by a
certificate (the "Transferor Certificate") in the form of Exhibit E and shall
consist of the right to receive current and deferred transfer
page 20
payments in respect of the various Series and Purchased Interests outstanding
from time to time at the times and in the amounts specified in the related
Supplements and PI Agreements.
SECTION 4.2 Establishment of Transaction Accounts. (a) On or prior to the date
of this Agreement, Trustee has established, and until the Trust is terminated,
Trustee shall (except as expressly permitted or required below) maintain, in the
name of Trustee and for the benefit of the Certificateholders and Purchasers,
the following accounts:
(i) account no. 185-585767, which shall be called the "Master Collection
Account" and into which all Collections and all other Transferred Assets
consisting of cash or cash equivalents shall be transferred on a daily basis
from the Bank Accounts;
(ii) account no. 185-585858, which shall be called the "Carrying Cost
Account" and into which funds allocated to a particular Series or Purchased
Interest shall be allocated from time to time to cover carrying costs
allocable to that Series or Purchased Interest (including interest payable on,
and the Servicing Fee allocated to, that Series or Purchased Interest);
(iii) account no. 185-585940, which shall be called the "Equalization
Account" and into which funds will from time to time be transferred from the
Master Collection Account to compensate for fluctuations in the Base Amounts
for the various outstanding Series and Purchased Interests; and
(iv) account no. 185-586039, which shall be called the "Principal Funding
Account" and into which funds will from time to time be transferred in
anticipation of distributions to the Holders of Investor Certificates or
Purchasers on account of their respective principal investments.
(b) In addition, if an Early Amortization Period occurs with respect to any
Series or Purchased Interest, Trustee shall establish an additional account
which shall be called the "Holdback Account" and into which funds that would
otherwise be remitted by Trustee to the Transferor in respect of the Transferor
Certificate will be deposited to the extent so provided in the related
Supplement or PI Agreement.
(c) The Master Collection Account, the Carrying Cost Account, the Equalization
Account, the Principal Funding Account, any Holdback Account
page 21
and any additional accounts required by any Supplement or PI Agreement to be
established (unless otherwise indicated in such Supplement or PI Agreement) are
collectively called the "Transaction Accounts." Each of the Transaction Accounts
shall be established and maintained as an Eligible Deposit Account and shall
bear a designation clearly indicating that funds deposited therein are held for
the benefit of the Certificateholders and the Purchasers. If any Transaction
Account ceases to be an Eligible Deposit Account, Servicer shall cause Trustee
to open a substitute Transaction Account that is an Eligible Deposit Account and
transfer the funds in the existing Transaction Account to the substitute
Transaction Account, and thereafter all references in any Transaction Document
to the original Transaction Account shall be deemed instead to refer to the
substitute Transaction Account.
(d) The Master Collection Account, the Carrying Cost Account, the Equalization
Account, the Principal Funding Account and any Holdback Account shall be held by
Trustee for the benefit of all Certificateholders and Purchasers. However, there
shall be established within each of the Carrying Cost Account, the Equalization
Account, the Principal Funding Account and any Holdback Account an
administrative sub-account for each outstanding Series and Purchased Interest.
Funds allocated to the Carrying Cost Account, the Equalization Account, the
Principal Funding Account and any Holdback Account pursuant to any Supplement or
PI Agreement shall be allocated to the applicable Series' or Purchased
Interest's sub-account and shall be available solely to the holders of the
Certificates in that Series or the Purchaser of that Purchased Interest, as
applicable, except to the extent that such funds are subsequently reallocated to
another Series or Purchased Interest, or the Transferor, in accordance with the
terms of the applicable Supplement or Purchase Agreement and this Agreement. Any
additional Transaction Accounts established pursuant to any Supplement or PI
Agreement shall be held by Trustee for the benefit of only the related Series or
Purchased Interest.
(e) Trustee shall possess (for its benefit and for the benefit of the
Certificateholders and the Purchasers) all right, title and interest in and to
all funds on deposit from time to time in each of the Transaction Accounts and
in all proceeds thereof. The Transaction Accounts shall be under the sole
dominion and control of Trustee for the benefit of the applicable
Certificateholders and/or Purchasers. Each of Servicer and Trustee agrees that
it shall have no right of setoff against, and no right otherwise to deduct from,
any funds held in any of the Transaction Accounts or the Bank Accounts for any
amount owed to it by the Trust, any party hereto or any Certificateholder or
Purchaser.
page 22
SECTION 4.3 Trust-Level Calculations and Funds Allocations.
(a) Allocation of Daily Collections. On each Business Day, Servicer shall
determine the amount of collected funds received in the Master Collection
Account (other than funds that are required to be returned to APP Persons (or
their designees) pursuant to Sections 3.2(b) and 3.3(b)) since the preceding
Business Day and shall allocate to each outstanding Series and Purchased
Interest a share of such funds in an amount equal to the product of the
applicable Series Collection Allocation Percentage and the amount of such funds.
The portion of such funds allocated to any Series or Purchased Interest shall be
further allocated and otherwise dealt with in accordance with the terms of the
related Supplement or PI Agreement. In addition, funds initially allocated to a
Series or Purchased Interest on any Business Day that are designated as Shared
Investor Collections shall be reallocated to other Series or Purchased Interests
pro rata based upon the respective Shortfalls (if any) of the other Series and
Purchased Interests.
(b) Allocation of Charge-Offs and Dilution. In each Monthly Report relating to
a Series or Purchased Interest that is in an Early Amortization Period, Servicer
shall calculate the amount of (i) Write-Offs (net of Recoveries) and (ii)
Dilutions as to which no settlement payment has been made pursuant to Section
3.5 of the Purchase Agreement, in each case during the related Calculation
Period (or the portion of that Calculation Period falling in the Early
Amortization Period) and shall allocate to such Series or Purchased Interest a
portion of the amounts referred to in clauses (i) and (ii) equal to the product
of each such amount and the related Series Loss Allocation Percentage.
SECTION 4.4 Investment of Funds in Transaction Accounts. On any day when funds
on deposit in any Transaction Account exceed $10,000 (after giving effect to the
allocations of such funds required by this Article IV and the various
Supplements and PI Agreements), and at such other times as investment is
practicable, Trustee, at the direction of Servicer, shall invest and reinvest
monies on deposit in such Transaction Account (in the name of Trustee) in such
Eligible Investments as are specified in a notice from Servicer, subject to the
restrictions set forth hereinafter. All Eligible Investments made from funds in
any Transaction Account, and the interest, dividends and income received thereon
and therefrom and the net proceeds realized on the sale thereof, shall be
deposited in such Transaction Account. Trustee may liquidate an Eligible
Investment prior to maturity if such liquidation would not result in a loss of
all or part of the principal portion of such Eligible Investment or if, prior to
the maturity of such Eligible Investment, a default occurs in the payment of
principal, interest or any other
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amount with respect to such Eligible Investment. In the absence of negligence of
Trustee or willful misconduct by Trustee, Trustee shall have no liability in
connection with investment losses incurred on Eligible Investments. It is
intended for income tax purposes that the income earned through investment of
funds in the Transaction Accounts shall be treated as income of Transferor.
SECTION 4.5 Attachment of Transaction Accounts. If Trustee receives written
notice that any Transaction Account has or will become subject to any writ,
judgment, warrant of attachment, execution or similar process, Trustee shall
(notwithstanding any other provision of the Transaction Documents) promptly
notify Transferor, Servicer and the Certificateholders thereof, and shall not
deposit or transfer funds into such Transaction Account but shall cause funds
otherwise required to be deposited into such Transaction Account to be held in
another account pending distribution of such funds in the manner required by the
Transaction Documents.
ARTICLE V DISTRIBUTIONS AND REPORTS
DISTRIBUTIONS SHALL BE MADE, AND REPORTS SHALL BE PROVIDED, TO
CERTIFICATEHOLDERS AS SET FORTH IN THE APPLICABLE SUPPLEMENT.
ARTICLE VI THE CERTIFICATES
SECTION 6.1 The Certificates. The Investor Certificates in each Series shall
be substantially in the forms contemplated by the Supplements pursuant to which
the Investor Certificates are issued, and the Transferor Certificate shall be
substantially in the form of Exhibit E. Upon issuance, all Certificates shall be
executed and delivered by Transferor to Trustee for authentication and
redelivery as provided in Sections 6.2 and 6.10. Except to the extent provided
otherwise in an applicable Supplement, Investor Certificates shall be issued in
minimum denominations of $1,000,000 and in integral multiples of $100,000 and
shall not be subdivided for resale into Certificates smaller than a Certificate,
the initial offering price for which would have been at least $1,000,000.
Each Certificate issued as a Definitive Certificate shall be executed by
manual or facsimile signature on behalf of Transferor by its President or any
Vice President or by any attorney-in-fact duly authorized to execute the
Definitive Certificate on behalf of any such officer. The Definitive
Certificates shall be authenticated on behalf of the Trust by manual signature
of a duly authorized signatory of Trustee. Definitive Certificates bearing the
manual or facsimile signature of the individual who was, at the time when the
signature
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was affixed, authorized to sign on behalf of Transferor or the Trust (as
applicable) shall be valid and binding, notwithstanding that the individuals or
any of them ceased to be so authorized prior to the authentication and delivery
of the Definitive Certificates or does not hold such office on the date of
issuance of such Definitive Certificates. No Definitive Certificates shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on the Definitive Certificate a certificate of
authentication substantially in the form provided for herein executed by or on
behalf of Trustee by the manual signature of a duly authorized signatory, and
the certificate of authentication upon any Definitive Certificate shall be
conclusive evidence, and the only evidence, that the Definitive Certificate has
been duly authenticated and delivered hereunder and is entitled to the benefits
of this Agreement. Except as otherwise provided in the applicable Supplement,
all Definitive Certificates shall be dated the date of their authentication.
As provided in any Supplement, Investor Certificates of any Series may be
issued and sold pursuant to an exemption from the Securities Act. Any Series
sold pursuant to Rule 144A, Regulation S or another exemption under the
Securities Act may be delivered in book-entry form as provided in Sections 6.11
and 6.12.
SECTION 6.2 Authentication of Certificates. Contemporaneously with the
assignment and transfer of the Receivables and the other Transferred Assets to
the Trust, Trustee shall authenticate and deliver the Transferor Certificate to
Transferor. On each Issuance Date, upon the order of Transferor, Trustee shall
authenticate and deliver to Transferor the Series of Certificates that are to be
issued originally on such Issuance Date pursuant to the applicable Supplement.
SECTION 6.3 Registration of Transfer and Exchange of Certificates. (a)
Trustee, as agent for Transferor, shall keep, or shall cause to be kept, at the
office or agency to be maintained in accordance with the provisions of Section
11.16, a register in written form or capable of being converted into written
form within a reasonable time (the "Certificate Register") in which, subject to
such reasonable regulations as it may prescribe, a transfer agent and registrar
(which may be Trustee) (the "Transfer Agent and Registrar") shall provide for
the registration of the Certificates and of transfers and exchanges of the
Certificates as herein provided. Transferor hereby appoints Trustee as the
initial Transfer Agent and Registrar.
Transferor, or Trustee as agent for Transferor, may revoke the appointment as
Transfer Agent and Registrar and remove the then-acting Transfer Agent and
Registrar if Trustee or Transferor (as applicable)
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determines in its sole discretion that the then-acting Transfer Agent and
Registrar has failed to perform its obligations under this Agreement in any
material respect. The then-acting Transfer Agent and Registrar shall be
permitted to resign as Transfer Agent and Registrar upon 30 days' prior written
notice to Trustee, Transferor and Servicer; provided that such resignation shall
not be effective and the then-acting Transfer Agent and Registrar shall continue
to perform its duties as Transfer Agent and Registrar until Trustee has
appointed a successor Transfer Agent and Registrar reasonably acceptable to
Transferor and the Person so appointed has given Trustee written notice that it
accepts the appointment. The provisions of Sections 11.1 through 11.5 shall
apply to the Transfer Agent and Registrar as if all references to "Trustee" in
the applicable provisions of Sections 11.1 through 11.5 were references to the
Transfer Agent and Registrar.
It is intended that the registration of Certificates that is described in this
Section comply with the registration requirements contained in Section 163 of
the Internal Revenue Code.
(b) No transfer of all or any part of the Transferor Certificate shall be made
unless (i) Transferor shall have given the Rating Agencies and Trustee prior
written notice of the proposed transfer, (ii) the Modification Condition shall
have been satisfied in connection with the proposed transfer and (iii)
Transferor shall have delivered to Trustee a Tax Opinion with respect to such
transfer.
(c) Subject to the requirements of subsection (e), if applicable, having been
fulfilled, upon surrender for registration of transfer of any Certificate, and,
in the case of Investor Certificates, at any office or agency of the Transfer
Agent and Registrar maintained for such purpose, Transferor shall execute, and
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Certificates of the appropriate class and Series
that are in authorized denominations of like aggregate fractional interest in
the related Series Interest that bear numbers that are not contemporaneously
outstanding.
At the option of an Investor Certificateholder, its Investor Certificates may
be exchanged for other Investor Certificates of the same class and Series (and
bearing the same interest rate as the Investor Certificate surrendered for
registration of exchange) of authorized denominations of like aggregate
fractional interests in the related Series Interest and bearing numbers that are
not contemporaneously outstanding, upon surrender of the Investor Certificates
to be exchanged at any such office or agency. Whenever any Investor Certificates
are so surrendered for exchange, Transferor shall execute, and
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Trustee shall authenticate and deliver, the appropriate number of Investor
Certificates of the class and Series that the Investor Certificateholder making
the exchange is entitled to receive. Every Investor Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in a form satisfactory to Trustee or the Transfer
Agent and Registrar duly executed by the Certificateholder thereof or his
attorney-in-fact duly authorized in a writing delivered to the Transfer Agent
and Registrar.
No service charge shall be made for any registration of transfer or exchange
of Certificates, but the Transfer Agent and Registrar may require the
Certificateholder to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Investor Certificates.
All Certificates surrendered for registration of transfer and exchange shall
be cancelled and disposed of in a manner satisfactory to Trustee.
(d) Certificates may be surrendered for registration of transfer or exchange
at the office of the Transfer Agent and Registrar designated in Section 13.6.
(e) Unless otherwise provided in the applicable Supplement, Certificateholders
holding Definitive Certificates shall not sell, transfer or otherwise dispose of
the Certificates unless the sale, transfer or disposition is being made pursuant
to an exemption from the registration requirements of the Securities Act and
applicable state securities laws and, prior to the proposed sale, transfer or
disposition, the Certificateholder and the proposed transferee each provide
Trustee and Transferor with representations and, if requested by Trustee or
Transferor, an Opinion of Counsel concerning the proposed sale, transfer or
disposition and the availability of the exemption.
(f) The Investor Certificates shall bear such restrictive legends as shall be
set forth in the applicable Supplements.
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Certificate is surrendered to the Transfer Agent and Registrar, or the
Transfer Agent and Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there is delivered to the
Transfer Agent and Registrar and Trustee such security or indemnity as may be
required by them and Transferor to hold each of them, the Trust and Transferor
harmless, then, in the absence of notice to Trustee that such Certificate has
been acquired by a bona fide purchaser, Transferor shall execute and, upon the
request of Transferor, Trustee shall authenticate and
page 27
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like class, Series, tenor, terms and
principal amount and bearing a number that is not contemporaneously outstanding.
In connection with the issuance of any new Certificate under this section,
Trustee or the Transfer Agent and Registrar may require the payment by the
Certificateholder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the reasonable fees and expenses of Trustee and Transfer Agent and Registrar)
connected therewith. Any duplicate Certificate issued pursuant to this section
shall constitute conclusive and indefeasible evidence of ownership of an
interest in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be enforceable by anyone, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all Certificates of the same class and Series that are duly issued hereunder.
SECTION 6.5 Persons Deemed Owners. Prior to due presentation of a Certificate
for registration of transfer, Transferor, Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat the Person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Article V and for all other
purposes whatsoever, and none of Transferor, Trustee, the Paying Agent, the
Transfer Agent and Registrar or any agent of any of them shall be affected by
any notice to the contrary; provided that, in determining whether the required
number or type of Holders or other Persons have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Certificates and
Purchased Interests owned by Transferor, Servicer or any Affiliate thereof shall
be disregarded and deemed not to be outstanding, except that, in determining
whether Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Certificates and
Purchased Interests that Trustee knows to be so owned shall be so disregarded.
Certificates and Purchased Interests so owned that have been pledged in good
faith shall not be disregarded and may be regarded as outstanding if the pledgee
establishes to the satisfaction of Trustee the pledgee's right so to act with
respect to such Certificates or Purchased Interests and that the pledgee is not
Transferor, Servicer or an Affiliate thereof.
SECTION 6.6 Appointment of Paying Agent. The Paying Agent initially shall be
Trustee. Transferor hereby appoints the Paying Agent as its agent to make
distributions to Certificateholders pursuant to the applicable Supplements and
to report the amounts of the distributions to Trustee. Any Paying Agent shall
have the revocable power to withdraw funds from the
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Master Collection Account for the purpose of making the distributions. Trustee
or, at any time when Trustee is also the Paying Agent, Transferor may revoke
such power of the Paying Agent and remove the Paying Agent if Trustee or
Transferor (as applicable) determines in its sole discretion that the Paying
Agent shall have failed to perform its obligations under this Agreement in any
material respect. The Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' prior written notice to Trustee, Transferor, Servicer and the
Rating Agencies. Any resignation or removal of the Paying Agent, and appointment
of a successor Paying Agent, shall not become effective until the appointment
has been accepted by the successor Paying Agent. If no successor Paying Agent
shall have been appointed and shall have accepted appointment within 30 days
after the giving of the notice of resignation, the resigning Paying Agent may
petition any court of competent jurisdiction to appoint a successor Paying
Agent. In the event that Trustee shall no longer be the Paying Agent, Trustee
shall appoint a successor Paying Agent (which shall be a bank or trust company)
reasonably acceptable to Transferor, which appointment shall be effective on the
date on which the Person so appointed gives Trustee written notice that it
accepts the appointment. Trustee shall cause the successor Paying Agent or any
additional Paying Agent appointed by Trustee to execute and deliver to Trustee
an instrument in which it shall agree with Trustee that, as Paying Agent, it
will hold all sums, if any, held for payment to the Certificateholders and
Purchasers in trust for the benefit of the Certificateholders and Purchasers
entitled thereto until the sums shall be paid to the Certificateholders and
Purchasers. The Paying Agent shall return all unclaimed funds to Trustee, and
upon removal of a Paying Agent such Paying Agent shall also return all funds in
its possession to Trustee. The provisions of Sections 11.1 through 11.5 shall
apply to the Paying Agent as if all references in the applicable provisions
thereof to "Trustee" were references to the Paying Agent.
SECTION 6.7 Access to List of Certificateholders' Names and Addresses.
Trustee will furnish or cause to be furnished by the Transfer Agent and
Registrar to Transferor, Servicer, any Seller or the Paying Agent, within two
Business Days after receipt by Trustee of a written request therefor from
Servicer or the Paying Agent, a list in the form Servicer or the Paying Agent
may reasonably require of the names and addresses of the Certificateholders as
of the most recent Distribution Date. If any Holder or group of Holders of
Investor Certificates in any Series evidencing not less than 10% of the
aggregate unpaid principal amount of the Series (the "Applicant") applies in
writing to Trustee, and the application states that the Applicant desires to
communicate with other Certificateholders with respect to their rights under
this Agreement, any Supplement or the Certificates and is accompanied by a copy
of the communication that the Applicant proposes to transmit, then
page 29
Trustee, after having been adequately indemnified by the Applicant for its costs
and expenses, shall afford or shall cause the Transfer Agent and Registrar to
afford the Applicant access during normal business hours to the most recent list
of Certificateholders held by Trustee, within five Business Days after the
receipt of the application and indemnification. The list shall be as of a date
no more than 45 days prior to the date of receipt of the Applicant's request.
Every Certificateholder, by receiving and holding a Certificate, agrees with
Trustee that neither Trustee, the Transfer Agent and Registrar, Transferor,
Servicer, any Seller nor any of their respective agents shall be held
accountable by reason of the disclosure of any information as to the names and
addresses of the Certificateholders hereunder, regardless of the sources from
which the information was derived.
SECTION 6.8 Authenticating Agent. (a) Trustee may appoint one or more
authenticating agents with respect to the Certificates that shall be authorized
to act on behalf of Trustee in authenticating the Certificates in connection
with the issuance, delivery, registration of transfer, exchange or repayment of
the Certificates. Either Trustee or the authenticating agent, if any, then
appointed and acting on behalf of Trustee shall authenticate the Certificates.
Whenever reference is made in this Agreement to the authentication of
Certificates by Trustee or Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of Trustee by an
authenticating agent and a certificate of authentication executed on behalf of
Trustee by an authenticating agent. Each authenticating agent must be acceptable
to Transferor.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any document or any further act on the part of Trustee,
the authenticating agent or any other Person.
(c) An authenticating agent may at any time resign by giving written notice
of resignation to Trustee and Transferor. Trustee may at any time terminate the
agency of an authenticating agent by giving notice of termination to the
authenticating agent and Transferor. Upon receiving a notice of resignation or
upon a termination, or in case at any time an authenticating agent shall cease
to be acceptable to Trustee or Transferor, Trustee may promptly appoint a
successor authenticating agent. Any successor authenticating agent, upon
acceptance of its appointment, shall become vested with all the rights, powers
and duties of its predecessor, with like effect as if
page 30
originally named as an authenticating agent. No successor authenticating agent
shall be appointed unless acceptable to Trustee and Transferor.
(d) Servicer agrees to pay to each authenticating agent (if any), as an
expense of Servicer paid out of the Servicing Fee, reasonable compensation from
time to time for services performed under this section.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be applicable to any
authenticating agent as if the references in the applicable provisions thereof
to "Trustee" were references to the authenticating agent.
(f) Pursuant to an appointment made under this section, the Certificates may
have endorsed thereon, in lieu of Trustee's certificate of authentication, an
alternate certificate of authentication in substantially the following form:
"This is one of the Certificates described in the Supplement dated as of
__________ ___, 199_.
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------
as Authenticating Agent
for Trustee,
By:
-------------------------
Authorized Officer."
SECTION 6.9 Tax Treatment. It is the intent of Transferor and the Investor
Certificateholders that, for purposes of Federal, state, foreign and local
income and franchise taxes and other taxes measured by or imposed on income, the
Investor Certificates will be treated as evidence of indebtedness (or, if so
provided in the applicable Supplement, an interest in a partnership) secured by
the Transferred Assets and the Trust will not be characterized as an association
taxable as a corporation. Transferor, by entering into this Agreement, and each
Investor Certificateholder, by its acceptance of its Investor Certificate, agree
to treat the Investor Certificates as indebtedness (or,
page 31
if so provided in the applicable Supplement, an interest in a partnership) for
purposes of Federal, state, foreign and local income and franchise taxes and any
other taxes measured by or imposed on income. The provisions of this Agreement
and all related Transaction Documents shall be construed to further these
intentions of the parties. In accordance with the foregoing, Transferor agrees
that it will report its income for purposes of Federal, state and local income
or franchise taxes, and any other taxes measured by or imposed on income, on the
basis that it is the owner of the Receivables. Except as may be required,
Trustee hereby agrees to treat the Trust as a security device only, and shall
not file tax returns or obtain an employer identification number on behalf of
the Trust.
SECTION 6.10 Issuance of Additional Series of Certificates and Sales of
Purchased Interests. (a) Transferor may from time to time issue and direct
Trustee to authenticate one or more classes of any newly issued Series of
Investor Certificates (a "New Issuance"). In addition, to the extent permitted
for any Series of Investor Certificates as specified in the related Supplement,
the Investor Certificateholders of the Series may tender their Investor
Certificates to Trustee, and Transferor may allocate a portion of the Transferor
Amount pursuant to the terms and conditions set forth in the Supplement, in
exchange for one or more newly issued Series of Investor Certificates (an
"Investor Exchange"). New Issuances and Investor Exchanges collectively are
referred to as "Issuances".
(b) Transferor may direct Trustee to authenticate an Issuance by notifying
Trustee, in writing, at least five Business Days (or such shorter period as
shall be acceptable to Trustee) in advance (an "Issuance Notice") of the date
upon which the Issuance is to occur (an "Issuance Date"). Any Issuance Notice
shall state the designation of any Series to be issued on the Issuance Date and,
with respect to each class or Series: (i) its initial invested amount (or the
method for calculating the initial invested amount), (ii) its interest rate (or
the method for allocating interest payments or other cash flows to the Series),
if any, and (iii) the Enhancement Provider, if any, with respect to the Series.
(c) On the Issuance Date, Transferor shall deliver to Trustee for
authentication under Section 6.2, and Trustee shall authenticate and deliver any
such class or classes of Series of Investor Certificates only upon delivery to
it of the following:
(i) a Supplement satisfying the criteria set forth in subsection (d) and
in form reasonably satisfactory to Trustee executed by
page 32
Transferor and Servicer and specifying the principal terms of the Series;
(ii) the applicable Enhancement, if any;
(iii) the agreement, if any, pursuant to which the Enhancement Provider
agrees to provide the Enhancement, if any;
(iv) a Tax Opinion with respect to such Issuance;
(v) evidence that the Modification Condition has been satisfied with
respect to such Issuance;
(vi) an Officer's Certificate of Servicer that on the Issuance Date, after
giving effect to the Issuance (and the repayment, on the date of the Issuance
Date, of any existing Investor Certificates with funds (including proceeds of
sale of the new Series) on deposit in the Principal Funding Account), any
requirements set out in the Supplement with respect to any then-outstanding
Series with respect to the issuance of Certificates have been satisfied;
(vii) an Officer's Certificate of Servicer stating that no Early
Amortization Event or Unmatured Early Amortization Event has occurred and is
continuing and that the Issuance is not reasonably expected to result in an
Early Amortization Event at any time in the future;
(viii) in the case of an Investor Exchange, any Investor Certificates that
are being exchanged in connection therewith;
(ix) any other documents, certificates and Opinions of Counsel as may be
required by the applicable Supplement; and
(x) an Officer's Certificate of Servicer to the effect that all conditions
specified in clauses (i) through (ix) have been satisfied.
Upon satisfaction of the conditions, Trustee shall cancel any applicable
Investor Certificates and issue, as provided above, the new Series of Investor
Certificates dated the Issuance Date. Any such Series of Investor Certificates
shall be substantially in the form specified in the related Supplement and shall
bear, upon its face, the designation for the Series to which it belongs, as
selected by Transferor. There is no limit to the number of Issuances that may be
performed under this Agreement.
page 33
(d) In conjunction with an Issuance, the parties hereto shall execute a
Supplement, which shall specify the relevant terms with respect to any newly
issued Series of Investor Certificates, which may include: (i) its name or
designation, (ii) the initial invested amount or the method of calculating the
initial invested amount, (iii) the applicable interest rate (or formula for the
determination thereof), (iv) the Issuance Date, (v) the rating agency or
agencies rating the Series, (vi) the name of the Clearing Agency, if any, (vii)
the interest payment date or dates and the date or dates from which interest
shall accrue, (viii) the method of allocating Collections with respect to
Receivables for the Series and, if applicable, with respect to any paired Series
and the method by which the principal amount of Investor Certificates of the
Series shall amortize or accrete and the method for allocating write-offs, (ix)
the names of any accounts to be used by the Series and the terms governing the
operation of any such account, (x) the terms of any Enhancement with respect to
the Series, (xi) the Enhancement Provider, if applicable, (xii) the base rate
applicable to the Series, (xiii) the terms on which the Certificates of the
Series may be repurchased or remarketed to other investors, (xiv) any deposit
into any account provided for the Series, (xv) the number of classes of the
Series, and if more than one class, the rights and priorities of each class,
(xvi) whether any fees, breakage payments or early termination payments will be
included in the funds available to be paid for the Series, (xvii) the
subordination of the Series to any other Series, (xviii) whether the Series will
be a part of a group or subject to being paired with any other Series, (xix)
whether the Series will be prefunded and (xx) any other relevant terms of the
Series. The terms of the Supplement may modify or amend the terms of this
Agreement solely as applied to the new Series.
(e) Except as specified in any Supplement for the related Series, all
Investor Certificates of any Series shall rank pari passu and be equally and
ratably entitled as provided herein to the benefits hereof (except that the
Enhancement provided for any Series shall not be available for any other Series)
without preference, priority or distinction on account of the actual time or
times of authentication and delivery, all in accordance with the terms and
provisions of this Agreement and the related Supplement.
(f) Transferor may from time to time direct Trustee, on behalf of the Trust,
to sell one or more Purchased Interests pursuant to, and direct Trustee to enter
into, a PI Agreement. No Purchased Interest shall represent any interest in any
Enhancement for the benefit of any Series, any class of Investor Certificates or
any other Purchased Interest, any Transaction Account established pursuant to
any Supplement or the PI Agreement relating to any other Purchased Interest
except to the extent set forth in the PI Agreement with respect to such other
Purchased Interest. Each PI Agreement may provide
page 34
that no Investor Certificateholder, Purchaser under any other PI Agreement or
Enhancement Provider shall be a third-party beneficiary thereof or have any
benefit or any legal or equitable right, remedy or claim under the PI Agreement.
(g) On or before the date of the initial sale of a Purchased Interest
pursuant to a particular PI Agreement, the parties hereto and the related
Purchaser will execute and deliver a PI Agreement that will specify the terms of
the Purchased Interest. The terms of the PI Agreement may modify or amend the
terms of this Agreement solely as applied to the Purchased Interest. The
obligation of Trustee to execute and deliver the related PI Agreement is subject
to the satisfaction of the following conditions:
(i) on or before the tenth Business Day (or a shorter period as shall be
acceptable to the parties) immediately preceding the related Issuance Date,
Servicer shall have given Trustee, Transferor, each Rating Agency (if any
rated Investor Certificates are outstanding), each Purchaser and each
Enhancement Provider (if any) written notice of the sale of the Purchased
Interest and the Issuance Date;
(ii) Transferor shall have delivered to Trustee the related PI Agreement,
in form reasonably satisfactory to Trustee, each executed by each party
thereto other than Trustee;
(iii) the Modification Condition shall have been satisfied with respect to
the sale;
(iv) the sale will not (A) contravene any provision of this Agreement, any
Supplement, any agreement pursuant to which any Enhancement is provided or any
PI Agreement (or any agreement related thereto) or (B) constitute, or result
in (or reasonably be expected to result, at any time in the future, in) the
occurrence of, an Early Amortization Event or an Unmatured Early Amortization
Event;
(v) counsel to Transferor shall have delivered to Trustee, each Rating
Agency (if any rated Investor Certificates are outstanding), each Purchaser
and any Enhancement Provider, a Tax Opinion, dated the Issuance Date, with
respect to the sale; and
(vi) Servicer shall have delivered to Trustee an Officer's Certificate,
dated the Issuance Date for such Purchased Interest, to the effect that all
conditions set forth in clauses (i) and (iv) of this Section
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for the sale of the Purchased Interest and the execution and delivery of the
related PI Agreement has been satisfied.
Upon satisfaction of the above conditions, Trustee shall execute and, at the
written direction of Transferor, deliver the related PI Agreement and any
related documents that Transferor shall reasonably request.
(h) Transferor may from time to time direct Trustee to extend any PI
Agreement, subject to the satisfaction of the following conditions:
(i) on or before the tenth Business Day (or a shorter period as shall be
acceptable to the parties) immediately preceding the date of the extension,
Transferor shall have given Trustee, Servicer, the Rating Agency (if any rated
Investor Certificates are outstanding) and any Enhancement Provider written
notice of the extension and the date on which the extension shall occur;
(ii) Transferor shall have delivered to Trustee the required agreements,
certificates, documents and filings, in form satisfactory to Trustee, executed
by each party thereto other than Trustee;
(iii) the extension will not (A) contravene any provision of this
Agreement, any Supplement, any agreement pursuant to which any Enhancement is
provided or any PI Agreement (or any agreement related thereto) or (B)
constitute, or result in the occurrence of, an Early Amortization Event or an
Unmatured Early Amortization;
(iv) counsel for Transferor shall have delivered to the Trust, the Rating
Agency (if any rated Investor Certificates are outstanding) and any
Enhancement Provider a Tax Opinion, dated the date of the extension, with
respect to the extension;
(v) Servicer shall have delivered to Trustee an Officer's Certificate,
dated the date of the extension, to the effect that all conditions set forth
in clauses (i) and (iii) of this Section for the extension of such PI
Agreement and the execution and delivery of the related documents has been
satisfied; and
(vi) the Modification Condition shall have been satisfied.
SECTION 6.11 Book-Entry Certificates. (a) If provided in any Supplement, the
Investor Certificates of any Series, upon original issuance, will be issued in
the form of one or more Book-Entry Certificates, to be
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delivered to the applicable Clearing Agency, by, or on behalf of, Transferor.
The Investor Certificates of the Series initially shall be registered on the
Certificate Register in the name of the nominee of the Clearing Agency, and no
Certificate Owner will receive a Definitive Certificate representing such
Certificate Owner's interest in the Investor Certificates, except as provided in
Section 6.13. Unless and until Definitive Certificates have been issued to
Certificate Owners pursuant to Section 6.13:
(i) the provisions of this section shall be in full force and effect;
(ii) Transferor, Servicer, the Paying Agent, the Transfer Agent and
Registrar and Trustee may deal with the Clearing Agency and the Clearing
Agency Participants for all purposes (including the making of distributions on
the Investor Certificates) as the authorized representatives of the
Certificate Owners;
(iii) to the extent that the provisions of this section conflict with any
other provisions of this Agreement, the provisions of this section shall
control; and
(iv) the rights of Certificate Owners shall be exercised only through the
Clearing Agency and the Clearing Agency Participants and shall be limited to
those established by law and agreements between the Certificate Owners and the
Clearing Agency and/or the Clearing Agency Participants. Unless and until
Definitive Certificates are issued pursuant to Section 6.13, the initial
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal and interest
on the Investor Certificates to the Clearing Agency Participants.
(b) Certificates sold to Qualified Institutional Buyers in reliance on Rule
144A under the Securities Act shall be represented by one or more Book-Entry
Certificates (the "144A Book-Entry Certificates"), in registered form, without
coupons, which will be deposited upon the order of Transferor on the Issuance
Date with Trustee as custodian for and registered in the name of Cede & Co., as
nominee of the Clearing Agency.
(c) Certificates sold in offshore transactions in reliance on Regulation S
shall be represented initially by temporary Book-Entry Certificates (the
"Regulation S Temporary Book-Entry Certificates"). The Regulation S Temporary
Book-Entry Certificates shall be exchanged on the later of (i) 40 days after the
later of (A) the Issuance Date and (B) the completion of the
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distribution of the Certificates, as certified by the Lead Placement Agent and
(ii) the date on which the requisite certifications are due to and provided to
Trustee (the later of clauses (i) and (ii) is referred to as the "Exchange
Date") for permanent Book-Entry Certificates (the "Unrestricted Book-Entry
Certificates," and together with the Regulation S Temporary Book-Entry
Certificates, the "Regulation S Book-Entry Certificates"). The Regulation S
Book-Entry Certificates shall be issued in registered form, without coupons, and
deposited upon the order of Transferor with Trustee as custodian for and
registered in the name of a nominee of the Clearing Agency for credit to the
account of the depositaries for Euroclear and Cedel, which depositaries shall,
on behalf of Euroclear and Cedel, hold the interests on behalf of account
holders (each a "Member Organization"), which have rights in respect of the
Certificates credited to their securities accounts with Euroclear or Cedel from
time to time.
(d) A Certificate Owner holding an interest in a Regulation S Temporary Book-
Entry Certificate may receive payments in respect of the Certificates on the
Regulation S Temporary Book-Entry Certificate only after delivery to Euroclear
or Cedel, as the case may be, of a written certification substantially in the
form of a certification in the form set forth in Exhibit F, and upon delivery by
Euroclear or Cedel, as the case may be, to the Transfer Agent and Registrar of a
certification or certifications substantially in the form set forth in Exhibit
G. The delivery by a Certificate Owner of the certification referred to above
shall constitute its irrevocable instruction to Euroclear or Cedel, as the case
may be, to arrange for the exchange of the Certificate Owner's interest in the
Regulation S Temporary Book-Entry Certificate for a beneficial interest in the
Unrestricted Book-Entry Certificate after the Exchange Date in accordance with
the paragraph below.
After (i) the Exchange Date and (ii) receipt by the Transfer Agent and
Registrar of written instructions from Euroclear or Cedel, as the case may be,
directing the Transfer Agent and Registrar to credit or cause to be credited to
either Euroclear's or Cedel's, as the case may be, depositary's account a
beneficial interest in the Unrestricted Book-Entry Certificate in a principal
amount not greater than that of the beneficial interest in the Regulation S
Temporary Book-Entry Certificate, the Transfer Agent and Registrar shall
instruct the Clearing Agency to reduce the principal amount of the Regulation S
Book-Entry Certificate and increase the principal amount of the Unrestricted
Book-Entry Certificate, by the principal amount of the beneficial interest in
the Regulation S Temporary Book-Entry Certificate to be so transferred, and to
credit or cause to be credited to the account of Euroclear, Cedel or a Person
who has an account with the Clearing Agency (a "Clearing Agency Participant"),
as the case may be, a beneficial interest in the Unrestricted
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Book-Entry Certificate having a principal amount of the Regulation S Temporary
Book-Entry Certificate that was reduced upon the transfer.
Upon return of the entire principal amount of the Regulation S Temporary Book-
Entry Certificate to Trustee in exchange for beneficial interests in the
Unrestricted Book-Entry Certificate, Trustee shall cancel the Regulation S
Temporary Book-Entry Certificate by perforation and shall forthwith destroy it.
(e) Transfers within a single Series between different Book-Entry
Certificates shall be made in accordance with this Section.
(i) For transfer of an interest in an Unrestricted Book-Entry Certificate
for an interest in the 144A Book-Entry Certificate, if the Certificateholder
of a beneficial interest in an Unrestricted Book-Entry Certificate deposited
with the Clearing Agency wishes at any time to exchange its interest in the
Unrestricted Book-Entry Certificate, or to transfer its interest in the
Unrestricted Book-Entry Certificate to a Person who wishes to take delivery
thereof in the form of an interest in the 144A Book-Entry Certificate, the
Certificateholder may, subject to the rules and procedures of Euroclear or
Cedel and the Clearing Agency, as the case may be, give directions for the
Transfer Agent and Registrar to exchange or cause the exchange or transfer or
cause the transfer of the interest for an equivalent beneficial interest in
the 144A Book-Entry Certificate. Upon receipt by the Transfer Agent and
Registrar of instructions from Euroclear or Cedel (based on instructions from
a Member Organization) or from a Clearing Agency Participant, as applicable,
or the Clearing Agency, as the case may be, directing the Transfer Agent and
Registrar to credit or cause to be credited a beneficial interest in the 144A
Book-Entry Certificate equal to the beneficial interest in the Unrestricted
Book-Entry Certificate to be exchanged or transferred (such instructions to
contain information regarding the Clearing Agency Participant account to be
credited with the increase, and, with respect to an exchange or transfer of an
interest in the Unrestricted Book-Entry Certificate, information regarding the
Clearing Agency Participant account to be debited with the decrease), the
Transfer Agent and Registrar shall instruct the Clearing Agency to reduce the
Unrestricted Book-Entry Certificate by the aggregate principal amount of the
beneficial interest in the Unrestricted Book-Entry Certificate to be exchanged
or transferred, and the Transfer Agent shall instruct the Clearing Agency,
concurrently with the reduction, to increase the principal amount of the 144A
Book-Entry Certificate by the aggregate principal amount of the beneficial
interest
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in the Unrestricted Book-Entry Certificate to be so exchanged or transferred,
and to credit or cause to be credited to the account of the Person specified
in the instructions a beneficial interest in the 144A Book-Entry Certificate
equal to the reduction in the principal amount of the Unrestricted Book-Entry
Certificate.
(ii) For transfers of an interest in the 144A Book-Entry Certificate for
an interest in a Regulation S Book-Entry Certificate, if a Certificate Owner
holding a beneficial interest in the 144A Book-Entry Certificate wishes at any
time to exchange its interest in the 144A Book-Entry Certificate for an
interest in a Regulation S Book-Entry Certificate, or to transfer its interest
in the 144A Book-Entry Certificate to a Person who wishes to take delivery
thereof in the form of an interest in the Regulation S Book-Entry Certificate,
the Certificateholder may, subject to the rules and procedures of the Clearing
Agency, give directions for the Transfer Agent and Registrar to exchange or
cause the exchange or transfer or cause the transfer of the interest for an
equivalent beneficial interest in the Regulation S Book-Entry Certificate.
Upon receipt by the Transfer Agent and Registrar of (A) instructions given in
accordance with the Clearing Agency's procedures from a Clearing Agency
Participant directing the Transfer Agent and Registrar to credit or cause to
be credited a beneficial interest in the Regulation S Book-Entry Certificate
in an amount equal to the beneficial interest in the 144A Book-Entry
Certificate to be exchanged or transferred, (B) a written order given in
accordance with the Clearing Agency's procedures containing information
regarding the account of the depositaries for Euroclear or Cedel or another
Clearing Agency Participant, as the case may be, to be credited with the
increase and the name of the account and (C) certificates in the forms of
Exhibits H and I, respectively, given by the Certificate Owner and the
proposed transferee of the interest, the Transfer Agent and Registrar shall
instruct the Clearing Agency to reduce the 144A Book-Entry Certificate by the
aggregate principal amount of the beneficial interest in the 144A Book-Entry
Certificate to be so exchanged or transferred and the Transfer Agent and
Registrar shall instruct the Clearing Agency, concurrently with the reduction,
to increase the principal amount of the Regulation S Book-Entry Certificate by
the aggregate principal amount of the beneficial interest in the 144A Book-
Entry Certificate to be so exchanged or transferred, and to credit or cause to
be credited to the account of the Person specified in the instructions a
beneficial interest in the Regulation S Book-Entry Certificate equal to the
reduction in the principal amount of the 144A Book-Entry Certificate.
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(iii) Notwithstanding any other provisions of this section, a placement
agent for the Investor Certificates may exchange beneficial interests in the
Regulation S Temporary Book-Entry Certificate held by it for interests in the
144A Book-Entry Certificate only after delivery by the placement agent of
instructions for the exchange substantially in the form of Exhibit J. Upon
receipt of the instructions provided in the preceding sentence, the Transfer
Agent and Registrar shall instruct the Clearing Agency to reduce the principal
amount of the Regulation S Temporary Book-Entry Certificate to be so
transferred and shall instruct the Clearing Agency to increase the principal
amount of the 144A Book-Entry Certificate and credit or cause to be credited
to the account of the placement agent a beneficial interest in the 144A Book-
Entry Certificate having a principal amount equal to the amount by which the
principal amount of the Regulation S Temporary Book-Entry Certificate was
reduced upon the transfer pursuant to the instructions provided in the first
sentence of this subclause.
(iv) If Book-Entry Certificate is exchanged for a Definitive Certificate,
the Certificates may be exchanged or transferred for one another only in
accordance with such procedures as are substantially consistent with the
provisions of clauses (i) through (iii) above (including the certification
requirements intended to ensure that the exchanges or transfers comply with
Rule 144 or Regulation S under the Securities Act, as the case may be) and as
may be from time to time adopted by Trustee.
SECTION 6.12 Notices to Clearing Agency. Whenever notice or other
communication to the Investor Certificateholders of any Series represented by
Book-Entry Certificates is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate Owners pursuant to
Section 6.13, Trustee, Servicer and the Paying Agent shall give all such notices
and communications specified herein to be given to the Investor
Certificateholders of the Series to the Clearing Agency.
SECTION 6.13 Definitive Certificates. If (a)(i) Transferor advises Trustee in
writing that the Clearing Agency is no longer willing or able to discharge its
responsibilities under any Letter of Representations properly, and (ii)
Transferor is unable to locate a qualified successor, (b) Transferor, at its
option, advises Trustee in writing that, with respect to any Series, it elects
to terminate the Book-Entry system through the Clearing Agency or (c) after the
occurrence of a Servicer Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Invested Amount of the Series
advise Trustee and the Clearing Agency through the Clearing Agency
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Participants in writing that the continuation of a Book-Entry system through the
Clearing Agency is no longer in the best interests of the Certificate Owners of
the Series, Trustee shall notify the Clearing Agency of the occurrence of any
such event and of the availability of Definitive Certificates of the Series to
Certificate Owners of the Series requesting the same. Upon surrender to Trustee
of the Investor Certificates of the Series by the Clearing Agency accompanied by
registration instructions from the Clearing Agency for registration, Trustee
shall authenticate and deliver Definitive Certificates of the Series. Neither
Transferor, the Transfer Agent and Registrar nor Trustee shall be liable for any
delay in delivery of the instructions and may conclusively rely on, and shall be
protected in relying on, the instructions. Upon the issuance of Definitive
Certificates of any Series, all references herein to obligations with respect to
the Series imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by Trustee, to the extent applicable
with respect to the Definitive Certificates and Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
SECTION 6.14 Letter of Representations. Notwithstanding anything to the
contrary in this Agreement or any Supplement, the parties hereto shall comply
with the terms of each Letter of Representations.
ARTICLE VII TRANSFEROR
SECTION 7.1 Representations and Warranties of Transferor Relating to
Transferor and the Transaction Documents. On the date hereof and on each
Issuance Date, Transferor hereby represents and warrants that:
(a) Organization and Good Standing. Transferor is a corporation duly
organized and validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to acquire, own and transfer the Receivables and the Related
Transferred Assets.
(b) Due Qualification. Transferor is duly qualified to do business and is
in good standing as a foreign corporation (or is exempt from such
requirements), and has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of property or the conduct of
its business requires qualification, licenses or approvals and where the
failure so to qualify, to obtain the licenses and approvals or to preserve and
maintain the qualification, licenses or approvals would have a substantial
likelihood of having a Material Adverse Effect.
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(c) Power and Authority. Transferor has all necessary corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and the other Transaction Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes, and each other
Transaction Document to which Transferor is a party when executed and
delivered will constitute, a legal, valid and binding obligation of
Transferor, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity, regardless of whether enforceability is
considered in a proceeding in equity or at law.
(e) Authorization; No Conflict or Violation. The execution, delivery and
performance of, and the consummation of the transactions contemplated by, this
Agreement and the other Transaction Documents to be signed by Transferor and
the fulfillment of the terms hereof and thereof have been duly authorized by
all necessary action and will not (i) conflict with, violate, 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, (A) its Certificate of
Incorporation or Bylaws or (B) any indenture, loan agreement, mortgage, deed
of trust or other material agreement or instrument to which Transferor is a
party or by which it or any of its properties is bound, (ii) result in the
creation or imposition of any Adverse Claim 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) conflict with or
violate any federal, state, local or foreign law or any decision, decree,
order, rule or regulation applicable to it or any of its properties of any
court or of any federal, state, local or foreign regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over it or any of its properties, which conflict, violation,
breach, default or Adverse Claim, individually or in the aggregate, would have
a substantial likelihood of having a Material Adverse Effect.
(f) Litigation and Other Proceedings. (i) There is no action, suit,
proceeding or investigation pending or, to the best knowledge of Transferor,
threatened against it before any court, regulatory body, arbitrator,
administrative agency or other tribunal or governmental
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instrumentality and (ii) it is not subject to any order, judgment, decree,
injunction, stipulation or consent order of or with any court or other
government authority that, in the case of clauses (i) and (ii), (A) asserts
the invalidity of this Agreement or any other Transaction Document, (B) seeks
to prevent the transfer of any Receivables or Related Transferred Assets to
the Trust, the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Document,
(C) seeks any determination or ruling that would materially and adversely
affect the performance by Transferor of its obligations under this Agreement
or any other Transaction Document or the validity or enforceability of this
Agreement or any other Transaction Document, (D) seeks to affect adversely the
income tax attributes of the transfers hereunder or the Trust under the United
States Federal income tax system or any state income tax system or (E)
individually or in the aggregate for all such actions, suits, proceedings and
investigations would have a substantial likelihood of having a Material
Adverse Effect.
(g) Approvals. All authorizations, consents, orders and approvals of, or
other action by, any Governmental Authority or other Person that are required
to be obtained by Transferor, and all notices to and filings with any
Governmental Authority or other Person, that are required to be made by it, in
the case of each of the foregoing in connection with the transfer of
Receivables and Related Transferred Assets to the Trust or the execution,
delivery and performance by it of this Agreement and any other Transaction
Documents to which it is a party and the consummation of the transactions
contemplated by this Agreement, have been obtained or made and are in full
force and effect, except where the failure to obtain or make any such
authorization, consent, order, approval, notice or filing, individually or in
the aggregate for all such failures, would not reasonably be expected to have
a Material Adverse Effect.
(h) Offices. Transferor's principal place of business and chief executive
office is located at the address set forth under Transferor's signature hereto
(or at such other locations, notified to Servicer and Trustee in accordance
with Section 7.2(c), in jurisdictions where all action required by Section
7.2(c) has been taken and completed); and Transferor's principal place of
business and chief executive office has previously only been located at such
address and in Charlotte, North Carolina.
page 44
(i) Account Banks. The names and addresses of all the Account Banks are
specified in Schedule 1 or, after the date hereof, have been provided by
Servicer to Trustee pursuant to Section 3.3(c), and the account numbers of the
Bank Accounts at such Account Banks have been specified in a letter provided
on or prior to the date hereof to Trustee or, after the date hereof, have been
provided by Servicer to Trustee pursuant to Section 3.3(c). The Account
Agreements to which Transferor is a party constitute the legal, valid and
binding obligations of the parties thereto enforceable against such parties in
accordance with their respective terms subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally and general equitable principles.
(j) Investment Company Act. Transferor is not, and is not controlled by,
an "investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended.
(k) Bulk Sales Act. No transaction contemplated by this Agreement or any
other Transaction Document requires compliance with, or will be subject to
avoidance under, any bulk sales act or similar law.
(l) Margin Regulations. No use of any funds obtained by Transferor under
this Agreement will conflict with or contravene any of Regulations G, T, U and
X promulgated by the Federal Reserve Board from time to time.
(m) Compliance with Applicable Laws. Transferor 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
environmental laws), a violation of any of which, individually or in the
aggregate for all such violations, would have a substantial likelihood of
having a Material Adverse Effect.
(n) Taxes. Transferor has filed or caused to be filed all tax returns and
reports required by law to have been filed by it and has paid all taxes,
assessments and governmental charges thereby shown to be owing, except any
such taxes, assessments or charges (i) that are being contested in good faith,
(ii) for which adequate reserves in accordance with GAAP shall have been set
aside on its books and (iii) with respect to which no Adverse Claim, except
Permitted Adverse Claims, has been imposed upon any Receivables or Transferred
Assets.
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The representations and warranties set forth in this section shall survive the
transfer and assignment of the Receivables and the other Transferred Assets to
the Trust. Upon discovery by Transferor, Servicer or Trustee of a breach of any
of the foregoing representations and warranties, the party discovering the
breach shall give written notice to the other parties to this Agreement within
three Business Days following the discovery. Trustee's obligations in respect of
discovering any breach are limited as provided in Section 11.2(g).
SECTION 7.2 Covenants of Transferor. So long as any Investor Certificates or
Purchased Interests remain outstanding (other than any Investor Certificates or
Purchased Interests payment for which has been duly provided for in accordance
with this Agreement), Transferor shall:
(a) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations, judgments, decrees and orders (including
those relating to the Receivables, the Related Transferred Assets, the funds
in the Transaction Accounts and the related Contracts and any other agreements
related thereto), in each case to the extent the failure to comply,
individually or in the aggregate for all such failures, would have a
substantial likelihood of having a Material Adverse Effect.
(b) Preservation of Corporate Existence. Preserve and maintain 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 qualifications
would have a substantial likelihood of having a Material Adverse Effect.
(c) Location of Offices. Keep its principal place of business and chief
executive office at the address referred to in Section 7.1(h) or, upon not
less than 30 days' prior written notice given by Transferor to Servicer and
Trustee, at such other location in a jurisdiction where all action required
pursuant to Section 3.10 shall have been taken and completed. Transferor will
at all times maintain its chief executive offices within the United States of
America, and will cause Servicer to maintain at all times Servicer's chief
executive offices within the United States of America.
page 46
(d) Reporting Requirements of Transferor. Unless Trustee and the Requisite
Persons shall otherwise consent in writing, furnish to Trustee, the Investor
Certificateholders and the Rating Agencies:
(i) Early Amortization Events. Within five Business Days after an
Authorized Officer of Transferor has obtained knowledge of the occurrence
of any Early Amortization Event or any Unmatured Early Amortization Event,
a written statement of an Authorized Officer of Transferor describing the
event and the action that Transferor proposes to take with respect thereto,
in each case in reasonable detail,
(ii) Material Adverse Effect. Within five Business Days after an
Authorized Officer of Transferor has knowledge thereof, written notice that
describes in reasonable detail any Adverse Claim, other than any Permitted
Adverse Claim, against the Transferred Assets or any other event or
occurrence that, individually or in the aggregate for all such events or
occurrences, has had, or would have a substantial likelihood of having, in
the reasonable, good faith judgment of Transferor, a Material Adverse
Effect,
(iii) Proceedings. Within five Business Days after an Authorized
Officer of Transferor has knowledge thereof, written notice of (A) any
litigation, investigation or proceeding of the type described in Section
7.1(f) not previously disclosed to Trustee and (B) any material adverse
development that has occurred with respect to any such previously disclosed
litigation, investigation or proceeding,
(iv) Other. Promptly, from time to time, any other information,
documents, records or reports respecting the Receivables or the Related
Transferred Assets or any other information to which Transferor reasonably
has access respecting the condition or operations, financial or otherwise,
of Transferor, in each case as Trustee or a Requisite Person may from time
to time reasonably request in order to protect the interests of Trustee,
the Trust or the Investor Certificateholders under or as contemplated by
this Agreement.
(e) Adverse Claims. Except for any conveyances under the Transaction
Documents, not permit to exist any Adverse Claim (other than Permitted Adverse
Claims) to or in favor of any Person upon or
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with respect to, or cause to be filed any financing statement or equivalent
document relating to perfection that covers, any Transferred Asset, or any
interest therein. Transferor shall defend the right, title and interest of the
Trust in, to and under the Transferred Assets, whether now existing or
hereafter created, against all claims of third parties claiming through or
under Transferor.
(f) Extension or Amendment of Receivables; Change in Credit and Collection
Policy or Contracts. Not (i) extend, amend or otherwise modify the terms of
any Receivable or Contract (except as permitted by the Credit and Collection
Policy) in a manner that would have a material adverse effect on the Investor
Certificateholders or the Purchasers, or (ii) permit any Seller to make any
change in its Credit and Collection Policy that would have a material adverse
effect on the Investor Certificateholders or the Purchasers; provided that
Transferor or Servicer, as applicable, may change the terms and provisions of
the Credit and Collection Policy if (A) with respect to any material change of
collection policies, the change is made with the prior written approval of
each Agent and the Modification Condition is satisfied with respect thereto,
(B) with respect to any material change of collection procedures, the change
is made with prior written notice to each Agent and no material adverse effect
on any Series or Purchased Interest would result, and (C) with respect to any
material change in accounting policies relating to Write-Offs, the change is
made in accordance with GAAP.
(g) Mergers, Acquisitions, Sales, Etc. Not:
(i) except pursuant to the Transaction Documents (A) be a party to any
merger or consolidation, or directly or indirectly purchase or otherwise
acquire all or substantially all of the assets or any stock of any class
of, or any partnership or joint venture interest in, any other Person, or
(B) directly or indirectly, sell, transfer, assign, convey or lease,
whether in one transaction or in a series of transactions, all or
substantially all of its assets, or sell or assign with or without recourse
any Receivables or Related Transferred Assets (other than pursuant hereto)
unless:
(x)(1) the corporation formed by the consolidation or into which
Transferor is merged or the Person that acquires by conveyance or
transfer the properties and assets of Transferor substantially as an
entirety shall be,
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if Transferor is not the surviving entity, organized and existing under
the laws of the United States of America or any state thereof or the
District of Columbia, and shall expressly assume, by an agreement
supplemental hereto, executed and delivered to Trustee, in form
satisfactory to Trustee and each Agent, the performance of every
covenant and obligation of Transferor hereunder, including its
obligations under Section 7.3, under each Supplement and under each PI
Agreement, and (2) Transferor has delivered to Trustee an Officer's
Certificate stating that the consolidation, merger, conveyance or
transfer and the supplemental agreement comply with this section and an
Opinion of Counsel stating that the supplemental agreement is a valid
and binding obligation of the surviving entity enforceable against it in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally from time to
time in effect and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity), and
(y) the Modification Condition shall have been satisfied with respect to
the consolidation, merger, conveyance or transfer, and the Transferor's
independent director shall have approved such consolidation, merger,
conveyance or transfer, and
(z) counsel to the Transferor shall have delivered to Trustee, each
Rating Agency and each Enhancement Provider a Tax Opinion, dated the
date of the consolidation, merger, conveyance or transfer, with respect
thereto, or
(ii) except as contemplated in the Purchase Agreement in connection
with Transferor's purchases of Receivables and Related Assets from the
Sellers, (A) make, incur or suffer to exist an investment in, equity
contribution to, or payment obligation in respect of the deferred purchase
price of property or services from, any Person, or (B) make any loan or
advance to any Person other than for reasonable and customary operating
expenses.
page 49
(h) Change in Name. Not change its corporate name or the name under or by
which it does business, or permit any Seller to change its corporate name or
the name under or by which it does business, unless prior to the change in
name, Transferor shall have filed (or shall have caused to be filed) any
financing statements or amendments as Servicer or Trustee determines may be
necessary to continue the perfection of the Trust's interest in the
Receivables, the Related Transferred Assets and the proceeds thereof.
(i) Amendment of Certificate of Incorporation; Change in Business. Except
for the amendment to Article X of its Certificate of Incorporation being
effected contemporaneously with the execution of the Pooling Agreement, not
amend Articles III, VII, X or XI of its Certificate of Incorporation, or
engage in any business other than as contemplated by the Transaction
Documents, unless the Modification Condition has been satisfied in connection
with the amendment or change in Transferor's business.
(j) Amendments to Purchase Agreement. Except as expressly provided
otherwise in this Agreement, make no amendment to the Purchase Agreement that
would adversely affect in any material respect the interests of the Investor
Certificateholders, the Purchasers or any Enhancement Provider.
(k) Enforcement of Purchase Agreement. Perform all its obligations under
and otherwise comply with the Purchase Agreement in all material respects and,
if requested by Trustee, enforce, for the benefit of the Trust, the covenants
and agreements of any Seller in the Purchase Agreement.
(l) Other Indebtedness. Not (i) create, incur or permit to exist any
Indebtedness, Guaranty or liability or (ii) cause or permit to be issued for
its account any letters of credit or bankers' acceptances, except for (A)
Indebtedness incurred pursuant to the Purchase Money Note, and (B) other
liabilities for expenses that are owed to a APP Person, the payment of which
are subordinate to obligations of Transferor under the Transaction Documents
and which subordination is evidenced by a written agreement containing
provisions substantially similar to the provisions of the Purchase Money Note.
(m) Separate Corporate Existence. Hereby acknowledge that Trustee and the
Investor Certificateholders are, and will be, entering into the transactions
contemplated by the Transaction Documents in
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reliance upon Transferor's identity as a legal entity separate from any
Seller, Servicer and any other Person. Therefore, from and after the First
Issuance Date, Transferor shall take all reasonable steps to maintain its
existence as a corporation separate and apart from Servicer, each Seller and
any other APP Person. Without limiting the generality of the foregoing,
Transferor shall take such actions as shall be reasonably required in order
that:
(i) Transferor will not incur any material indirect or overhead
expenses for items shared between Transferor and any APP Person that are
not reflected in the Servicing Fee, other than shared items of expenses not
reflected in the Servicing Fee, such as legal, auditing and other
professional services, that will be allocated to the extent practical on
the basis of actual use or the value of services rendered, and otherwise on
a basis reasonably related to the actual use or the value of services
rendered, it being understood that APP will pay all expenses owing by
Transferor or any APP Person relating to the preparation, negotiation,
execution and delivery of the Transaction Documents, including, without
limitation, legal, commitment, agency and other fees.
(ii) Transferor will account for and manage its liabilities separately
from those of every other APP Person, including payment of all payroll and
administrative expenses and taxes from its own assets.
(iii) Transferor will conduct its business at an office segregated from
the offices of each APP Person, which office of Transferor may consist of
office space shared with a APP Person, a portion of which is allocated
solely to Transferor.
(iv) Transferor will maintain corporate records, books of account and
stationery separate from those of every APP Person.
(v) Transferor's assets will be maintained in a manner that facilitates
their identification and segregation from those of any APP Person.
(vi) Transferor shall not, directly or indirectly, be named and shall
not enter into an agreement to be named as a direct or contingent
beneficiary or loss payee on any insurance
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policy with respect to any loss relating to the property of a APP Person.
(vii) Any transaction between Transferor and any APP Person will be the
type of transaction which would be entered into by a prudent Person in the
position of Transferor with a APP Person, and will be on terms that are at
least as favorable as may be obtained from a Person that is not a APP
Person (it being understood and agreed that the transactions contemplated
in the Transaction Documents meet the requirements of this clause).
(viii) Neither Transferor nor any APP Person will be or will hold itself
out to be responsible for the debts of the other.
(ix) Transferor will strictly observe corporate formalities in its
dealings with each APP Person, and funds or other assets of Transferor will
not be commingled with those of any APP Person. Transferor shall not
maintain joint bank accounts or other depository accounts to which any APP
Person (other than APP in its capacity as Servicer) has independent access.
(x) The duly elected Board of Directors of Transferor and Transferor's
duly appointed officers shall at all times have sole authority to control
decisions and actions with respect to the daily business affairs of
Transferor, except to the extent that servicing and other functions have
been delegated to other Persons (including Servicer) pursuant to the
Transaction Documents, and shall at all times have at least one independent
Director pursuant to the terms of Article X, clause (b) of the Transferor's
Certificate of Incorporation as in effect on May 29, 1996.
(n) Taxes. File or cause to be filed all Federal, state and local tax
returns that are required to be filed by it, except where the failure to file
such returns could not reasonably be expected to have an adverse effect, and
pay or cause to be paid all taxes shown to be due and payable on such returns
or on any assessments received by it, other than any taxes or assessments, the
validity of which are being contested in good faith by appropriate proceedings
and with respect to which Transferor shall have set aside adequate reserves on
its books in accordance with GAAP and which proceedings could not reasonably
be expected to have a Material Adverse Effect.
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(o) Use of Funds. Apply all cash payments made to it hereunder to make
payments in the order of priority set out in Section 3.3 of the Purchase
Agreement.
(p) Change in Payment Instructions to Obligors. Not (i) add or terminate
any bank as an Account Bank from those listed in the letter referred to in
Section 5.1(o) of the Purchase Agreement unless, prior to any such addition or
termination, Trustee and the Rating Agencies shall have received not less than
five Business Days' prior written notice of the addition or termination and,
not less than five Business Days prior to the effective date of any such
proposed addition or termination, Trustee shall have received (a) counterparts
of the applicable type of Account Agreement with each new Account Bank, duly
executed by such new Account Bank and all other parties thereto and (B) copies
of all other agreements and documents signed by the Account Bank and such
other parties with respect to any new Bank Account, all of which agreements
and documents shall be reasonably satisfactory in form and substance to
Trustee, or (ii) make any change in its instructions to Obligors, given in
accordance with Section 5.1(o) of the Purchase Agreement, regarding payments
to be made to such Seller or payments to be made to any Account Bank, other
than changes in the instructions that direct Obligors to make payments to
another Bank Account at such Account Bank or another Account Bank or to the
Master Collection Account.
The covenants set forth in this section shall survive the transfer and
assignment of the Receivables and the other Transferred Assets to the Trust.
Upon discovery by Transferor, Servicer or Trustee of a breach of any of the
foregoing covenants, the party discovering the breach shall give written notice
to the other parties to this Agreement within three Business Days following such
discovery. Trustee's obligations in respect of discovering any breach are
limited as provided in Section 11.2(g).
SECTION 7.3 Indemnification by Transferor. (a) Transferor hereby agrees to
indemnify the Trust, Trustee and each of the successors, permitted transferees
and assigns of any such Person and all officers, directors, shareholders,
controlling Persons, employees, affiliates and agents of any of the foregoing
(each of the foregoing Persons individually being called an "Indemnified
Party"), forthwith on demand, from and against any and all damages, losses,
claims (whether on account of settlement or otherwise, and whether or not the
relevant Indemnified Party is a party to any action or proceeding that gives
rise to any Indemnified Losses (as defined below)), judgments, liabilities and
related reasonable costs and expenses (including
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reasonable attorneys' fees and disbursements) (all of the foregoing collectively
being called "Indemnified Losses") awarded against or incurred by any of them
that arise out of or relate to Transferor's performance of, or failure to
perform, any of its obligations under or in connection with any Transaction
Document.
If any action, suit, proceeding or investigation is commenced, as to which an
Indemnified Party proposes to demand indemnification, it shall notify Transferor
with reasonable promptness; provided, however, that any failure by such
Indemnified Party to notify Transferor shall not relieve Transferor from its
obligations hereunder (except to the extent that Transferor is prejudiced by
such failure to promptly notify). Transferor shall be entitled to assume the
defense of any such action, suit, proceeding or investigation, including the
employment of counsel reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall have the right to counsel of its own choice to represent
it; but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless the Indemnified Party shall have been advised by
counsel that there exists an actual or potential conflict of interests between
Transferor and such Indemnified Party, including situations in which one or more
legal defenses may be available to such Indemnified Party that are inconsistent
with those available to Transferor; provided, however, that Transferor shall
not, in connection with any one such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same general
allegations, be liable for fees and expenses of more than one separate firm of
attorneys at any time for all Indemnified Parties; and such counsel shall, to
the extent consistent with its professional responsibilities, cooperate with
Transferor and any counsel designated by Transferor.
Notwithstanding the foregoing, in no event shall any Indemnified Party be
indemnified against any Indemnified Losses that constitute Excluded Losses.
If, for any reason, the indemnification provided in this Section is
unavailable to an Indemnified Party or is insufficient to hold it harmless, then
Transferor shall contribute to the amount paid by the Indemnified Party as a
result of any loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnified Party on the one hand and Transferor on the other hand, but also the
relative fault of the Indemnified Party (if any) and Transferor and any other
relevant equitable consideration.
Notwithstanding any provisions contained in any Transaction Document to the
contrary, Transferor shall not, and shall not be obligated to, pay any
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amount pursuant to this Section unless funds are allocated for such payment
pursuant to the provisions of a Supplement or PI Agreement governing the
allocation of funds in the Master Collection Account. Any amount which
Transferor does not pay pursuant to the operation of the preceding sentence
shall not constitute a claim (as defined in (S)101 of the Bankruptcy Code)
against or corporate obligation of Transferor for any such insufficiency.
(b) Transferor shall be liable to all creditors of the Trust (but not to the
Trust, Trustee or Investor Certificateholders) for all liabilities of the Trust
to the same extent as it would be if the Trust constituted a partnership under
the Delaware Revised Uniform Limited Partnership Act and Transferor were a
general partner thereof (to the extent Transferred Assets remaining after
Investor Certificateholders have been paid in full are insufficient to pay such
losses, claims, damages or liabilities). Notwithstanding anything to the
contrary herein, any such creditor shall be a third party beneficiary of this
Section 7.3. Nothing in this provision shall be construed as waiving any rights
or claims (including rights of recoupment or subrogation) which the Transferor
may have against any third party under this Agreement or applicable laws.
ARTICLE VIII SERVICER
SECTION 8.1 Representations and Warranties of Servicer. On the date hereof
and on each Issuance Date, Servicer hereby makes, and any Successor Servicer
also shall be deemed to make by its acceptance of its appointment hereunder, the
following representations and warranties for the benefit of Trustee and the
Certificateholders and the Purchasers:
(a) Organization and Good Standing. Servicer is a corporation duly
organized and validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to own its properties and to conduct its business as the properties
presently are owned and as the business presently is conducted.
(b) Due Qualification. Servicer is duly qualified to do business and is in
good standing as a foreign corporation (or is exempt from such requirements),
and has obtained all necessary licenses and approvals, in all jurisdictions in
which the servicing of the Receivables and the Related Transferred Assets as
required by this Agreement requires qualification, licenses or approvals and
where the failure so to qualify, to obtain the licenses and approvals or to
preserve and maintain the qualification, licenses or approvals would have a
substantial likelihood of having a material adverse effect on its ability to
perform
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its obligations as Servicer under this Agreement or a Material Adverse Effect.
(c) Power and Authority. Servicer has all necessary corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and the other Transaction Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes, and each other
Transaction Document to which Servicer is a party when executed and delivered
will constitute, a legal, valid and binding obligation of Servicer,
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether enforceability is considered in a
proceeding in equity or at law.
(e) Authorization; No Conflict or Violation. The execution and delivery by
Servicer of this Agreement and the other Transaction Documents to which it is
a party, the performance by it of its obligations hereunder and thereunder and
the fulfillment by it of the terms hereof and thereof that are applicable to
it have been duly authorized by all necessary action and will not (i) conflict
with, violate, 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,
(A) its Certificate of Incorporation or Bylaws or (B) any indenture, loan
agreement, mortgage, deed of trust, or other material agreement or instrument
to which it is a party or by which it or any of its properties is bound
(excluding any such agreement that is terminated on or before the First
Issuance Date or under which Servicer has obtained all necessary consents) or
(ii) conflict with or violate any federal, state, local or foreign law or any
decision, decree, order, rule or regulation applicable to it or any of its
properties of any court or of any federal, state, local or foreign regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over it or any of its properties, which conflict, violation,
breach or default described, individually or in the aggregate, would have a
substantial likelihood of having a Material Adverse Effect.
(f) Approvals. All authorizations, consents, orders and approvals of, or
other action by, any Governmental Authority or other Person that are required
to be obtained by Servicer, and all notices to and filings with any
Governmental Authority or other Person that are
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required to be made by it, in the case of each of the foregoing in connection
with the execution, delivery and performance by it of this Agreement and any
other Transaction Documents to which it is a party and the consummation of the
transactions contemplated by this Agreement, have been obtained or made and
are in full force and effect, except where the failure to obtain or make such
authorization, consent, order, approval, notice or filing, individually or in
the aggregate for all such failures, would not reasonably be expected to have
a Material Adverse Effect.
(g) Litigation and Other Proceedings. (i) There is no action, suit,
proceeding or investigation pending or, to the best knowledge of Servicer,
threatened against it before any court, regulatory body, arbitrator,
administrative agency or other tribunal or governmental instrumentality and
(ii) it is not subject to any order, judgment, decree, injunction, stipulation
or consent order of or with any court or other government authority that, in
the case of clauses (i) and (ii), (A) seeks to affect adversely the income tax
attributes of the transfers hereunder or the Trust under the United States
federal income tax system or any state income tax system or (B) individually
or in the aggregate for all such actions, suits, proceedings and
investigations would have a substantial likelihood of having a Material
Adverse Effect.
(h) Business; Balance Sheet. Since its incorporation, Transferor has
conducted no business other than the purchase of Receivables and related
assets from the Sellers under the Original Purchase Agreement, the transfer of
such Receivables and related assets to the Trust (pursuant to the Existing
Pooling Agreement), the offering of Certificates and such other activities as
are incidental to the foregoing. The balance sheet of Transferor delivered to
the Trustee on the date hereof has been prepared in accordance with GAAP and
fairly presents the financial condition of the Transferor (after taking into
account on a pro forma basis the transactions occurring on such date). As of
the date hereof, (i) Transferor has no contingent liabilities other than
expense reimbursement and indemnity provisions of the Series 1995-1 Supplement
to the Existing Pooling Agreement which survive termination thereof; and (ii)
Transferor has not received notice from any party to such Supplement of any
claim, or of such party's intent to make a claim, under such provisions.
The representations and warranties set forth in this section shall survive the
transfer and assignment of the Receivables and the other Transferred Assets to
the Trust. Upon discovery by Transferor, Servicer or Trustee of a
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breach of any of the foregoing representations and warranties, the party
discovering the breach shall give written notice to the other parties to this
Agreement within three Business Days following the discovery. Trustee's
obligations in respect of discovering any breach are limited as provided in
Section 11.2(g).
SECTION 8.2 Covenants of Servicer. So long as any Investor Certificates or
Purchased Interests remain outstanding (other than any Investor Certificates or
Purchased Interests payment for which has been duly provided for in accordance
with this Agreement), Servicer shall:
(a) Compliance with Laws, Etc. Maintain in effect all qualifications
required under applicable law in order to service properly the Receivables and
shall comply in all material respects with all applicable laws, rules,
regulations, judgments, decrees and orders, in each case to the extent the
failure to comply, individually or in the aggregate for all such failures,
would have a substantial likelihood of having a Material Adverse Effect.
(b) Preservation of Corporate Existence. Preserve and maintain 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
would have a substantial likelihood of having a Material Adverse Effect.
(c) Rating Agency Notices. As soon as possible (and in any event within
five Business Days after an Authorized Officer has knowledge thereof), furnish
to Transferor, Trustee, the Investor Certificateholders and the Rating
Agencies notice of any of the events described in clauses (i), (ii) and (iii)
of Section 7.2(d).
(d) Performance of Transaction Documents. Perform all of its obligations
under the Transaction Documents.
The covenants set forth in this section shall survive the transfer and
assignment of the Transferred Assets to the Trust. Upon discovery by Transferor,
Servicer or Trustee of a breach of any of the foregoing covenants, the party
discovering the breach shall give written notice to the other parties to this
Agreement within three Business Days following the discovery. Trustee's
obligations in respect of discovering any breach are limited as provided in
Section 11.2(g).
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SECTION 8.3 Merger or Consolidation of, or Assumption of the Obligations of,
Servicer. Servicer shall not consolidate with or merge into any other Person or
convey, transfer or sell all or substantially all of its properties and assets
to any Person, unless (a) Servicer is the surviving entity or, if it is not the
surviving entity, the Person formed by the consolidation or into which Servicer
is merged or the Person that acquires by conveyance, transfer or sale all or
substantially all of the properties and assets of Servicer shall be a
corporation organized and existing under the laws of the United States of
America or any State thereof or the District of Columbia and such corporation
shall expressly assume, by an agreement supplemental hereto, executed and
delivered to Trustee and in form and substance satisfactory to Trustee, the
performance of every covenant and obligation of Servicer hereunder and under the
other Transaction Documents to which Servicer is a party, and (b) Servicer shall
have delivered to Trustee an Officer's Certificate stating that the
consolidation, merger, conveyance, transfer or sale and the supplemental
agreement comply with this Section and an Opinion of Counsel stating that the
supplemental agreement is a valid and binding obligation of the surviving entity
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity.
SECTION 8.4 Indemnification by Servicer. Servicer hereby agrees to indemnify
each Indemnified Party forthwith on demand, from and against any and all
Indemnified Losses awarded against or incurred by any of them that arise out of
or relate to Servicer's performance of, or failure to perform, any of its
obligations under or in connection with any Transaction Document.
If any action, suit, proceeding or investigation is commenced, as to which an
Indemnified Party proposes to demand indemnification, it shall notify Servicer
with reasonable promptness; provided, however, that any failure by such
Indemnified Party to notify Servicer shall not relieve Servicer from its
obligations hereunder (except to the extent that Servicer is prejudiced by such
failure to promptly notify). Servicer shall be entitled to assume the defense of
any such action, suit, proceeding or investigation, including the employment of
counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party
shall have the right to counsel of its own choice to represent it; but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
unless the Indemnified Party shall have been advised by counsel that there
exists an actual or potential conflict of interests between Servicer and such
Indemnified Party, including situations in which one or more legal defenses may
be available to such Indemnified Party that are inconsistent with those
available to Servicer; provided, however, that Servicer shall not, in
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connection with any one such action or proceeding or separate but substantially
similar actions or proceedings arising out of the same general allegations, be
liable for fees and expenses of more than one separate firm of attorneys at any
time for all Indemnified Parties; and such counsel shall, to the extent
consistent with its professional responsibilities, cooperate with Servicer and
any counsel designated by Servicer.
Notwithstanding the foregoing, in no event shall any Indemnified Party be
indemnified against any Indemnified Losses (a) resulting from gross negligence
or willful misconduct on the part of such Indemnified Party (or the gross
negligence or willful misconduct on the part of any of its officers, directors,
employees, affiliates or agents) or such Indemnified Party's failure to perform
its obligations under the Transaction Documents, (b) to the extent they include
Indemnified Losses in respect of Receivables and reimbursement therefore that
would constitute credit recourse to Servicer for the amount of any Receivable or
Related Transferred Asset not paid by the related Obligor, (c) to the extent
they are or result from lost profits (except to the extent of any prepayment
premium expressly provided for in a Supplement or PI Agreement), (d) to the
extent they are or result from taxes (including interest and penalties thereon)
asserted with respect to (i) distributions on the Investor Certificates, (ii)
franchise or withholding taxes imposed on any Indemnified Party other than the
Trust or Trustee in its capacity as Trustee or (iii) federal or other income
taxes on or measured by the net income of the Indemnified Party and costs and
expenses (including, without limitation, interest and additions to tax) in
defending against the same, or (e) to the extent that they constitute
consequential, special or punitive damage (collectively, "Excluded Losses").
If, for any reason, the indemnification provided in this section is
unavailable to an Indemnified Party or is insufficient to hold it harmless, then
Servicer shall contribute to the amount paid by the Indemnified Party as a
result of any loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnified Party on the one hand and Servicer on the other hand, but also the
relative fault of the Indemnified Party (if any) and Servicer and any other
relevant equitable consideration.
SECTION 8.5 Servicer Liability. Servicer shall be liable in accordance with
this Agreement only to the extent of the obligations specifically undertaken by
Servicer in such capacity herein and as set forth herein.
SECTION 8.6 Limitation on Liability of Servicer and Others. No recourse under
or upon any obligation or covenant of this Agreement, any
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Supplement, any Certificate or any other Transaction Document, or for any claim
based thereon or otherwise in respect thereof, shall be had against any
incorporator, shareholder, officer or director, as such, past, present or
future, of Servicer or of any successor corporation, either directly or through
Servicer, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Agreement, any Supplement, all other relevant Transaction
Documents and the obligations incurred hereunder or thereunder are solely
corporate obligations, and that no such personal liability whatsoever shall
attach to, or is or shall be incurred by the incorporators, shareholders,
officers or directors, as such, of Servicer or of any successor corporation, or
any of them, by reason of the obligations, covenants or agreements contained in
this Agreement, any Supplement, any of the Certificates or any other Transaction
Documents, or implied therefrom; and that any and all such personal liability
of, either at common law or in equity or by constitution or statute, and any and
all such rights and claims against, every such incorporator, shareholder,
officer or director, as such, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations or covenants contained in
this Agreement, any Supplement, any of the Certificates or any other Transaction
Documents, or implied therefrom, are hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Agreement and
any Supplement. Servicer and any director, officer, employee or agent of
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
Servicer shall not be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its duties to service the Receivables in
accordance with this Agreement or any Supplement that in its reasonable opinion
may involve it in any expense or liability. Servicer may, in its sole
discretion, undertake any legal action relating to the servicing, collection or
administration of Receivables and Related Transferred Assets that it may
reasonably deem necessary or appropriate for the benefit of the
Certificateholders and the Purchasers with respect to this Agreement and the
rights and duties of the parties hereto and the interests of the
Certificateholders hereunder.
ARTICLE IX EARLY AMORTIZATION EVENTS; TERMINATION BY SELLERS
SECTION 9.1 Early Amortization Events. The Early Amortization Events with
respect to each Series and Purchased Interest shall be specified in the related
Supplement or PI Agreement.
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SECTION 9.2 Remedies. Upon the occurrence of an Early Amortization Event,
Trustee shall have, in addition to all other rights and remedies available to
Trustee under this Agreement or otherwise, (a) the right to apply Collections to
the payment of the obligations of Transferor and Servicer under the Transaction
Documents, as provided herein, and (b) all rights and remedies provided under
all other applicable laws, which rights, in the case of each and all of the
foregoing, shall be cumulative. Trustee shall exercise the rights at the
direction of the Investor Certificateholders pursuant to (and subject to the
limitations specified in) Section 11.14.
SECTION 9.3 Additional Rights Upon the Occurrence of Certain Events. (a) If a
Bankruptcy Event shall occur with respect to Transferor, this Agreement (other
than this Section 9.3) and the Trust shall be deemed to have terminated on the
day of the Bankruptcy Event. Within seven Business Days of the date of written
notice to Trustee of the Bankruptcy Event, Trustee shall:
(i) publish a notice in an Authorized Newspaper that a Bankruptcy Event
has occurred with respect to Transferor, that the Trust has terminated, and
that Trustee intends to sell, dispose of or otherwise liquidate the
Receivables and the Related Transferred Assets pursuant to this Agreement in a
commercially reasonable manner and on commercially reasonable terms, which
shall include the solicitation of competitive bids (a "Disposition"), and
(ii) send written notice to the Investor Certificateholders and Purchasers
describing the provisions of this section and requesting each Investor
Certificateholder and Purchaser to advise Trustee in writing whether (A) it
wishes Trustee to instruct Servicer not to effectuate a Disposition, (B) it
refuses to advise Trustee as to the specific action Trustee shall instruct
Servicer to take or (C) it wishes Servicer to effect a Disposition.
If, after 60 days from the day notice pursuant to subsection (a)(i) is first
published (the "Publication Date"), Trustee shall not have received the written
instruction described in subsection (a)(ii)(A) from Holders representing in
excess of 50% of the outstanding principal amount of each Series of Investor
Certificates and Purchased Interests, Trustee shall instruct Servicer to
effectuate a Disposition, and Servicer shall proceed to consummate a
Disposition. If, however, Holders representing in excess of 50% of the
outstanding principal amount of each Series of Investor Certificates and
Purchased Interests instruct Trustee not to effectuate a Disposition, the Trust
shall be reconstituted and continue pursuant to the terms of this Agreement.
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(b) Notwithstanding the termination of this Agreement and the Trust pursuant
to subsection (a), the proceeds from any Disposition of the Receivables and the
Related Transferred Assets pursuant to subsection (a) shall be treated as
Collections on the Receivables and shall be allocated and deposited in
accordance with the provisions of Article IV.
(c) Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this section with respect to competitive bids.
(d) Transferor or any of its Affiliates shall be permitted to bid for the
Receivables and the Related Transferred Assets. Trustee may obtain a prior
determination from any bankruptcy Trustee, receiver or liquidator that the terms
and manner of any proposed Disposition are commercially reasonable.
(e) Notwithstanding the termination of this Agreement and the Trust pursuant
to subsection (a), Trustee shall continue to have the rights described in
Section 9.2 and Article XI, and be subject to direction on terms consistent with
those set out in Section 11.14, pending the completion of any Disposition and/or
the reconstitution of the Trust.
SECTION 9.4 Termination By Sellers. If the Sellers have notified the Trustee
in writing of their election to terminate their agreements to sell Receivables
under the Purchase Agreement (as provided in Section 8.1 of the Purchase
Agreement), (i) the Trustee shall notify the Certificateholders of all Series
within five Business Days of its receipt of such notice and (ii) Transferor
shall cause each Series of Certificates and Purchased Interest to be repaid out
of Collections as early as is practicable in accordance with the applicable
Series Supplement or PI Agreement.
ARTICLE X SERVICER DEFAULTS
SECTION 10.1 Servicer Defaults. Any of the following events shall constitute a
"Servicer Default":
(a) any failure by Servicer in its capacity as Servicer to make any
payment, transfer or deposit required by any Transaction Document to be made
by it or to give instructions or to give notice to Trustee to make such
payment, transfer or deposit, which failure continues unremedied for five
Business Days,
(b) failure on the part of Servicer in its capacity as Servicer duly to
observe or perform in any material respect any other covenants or agreements
of Servicer set forth in this Agreement or any other
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Transaction Document, which failure has a material adverse effect on the
Holders of any Series or Purchased Interest and continues unremedied for a
period of 30 days after the date on which written notice of the failure,
requiring the same to be remedied, shall have been given to Servicer by
Trustee, or to Servicer and Trustee by any Investor Certificateholder or
Purchaser,
(c) Servicer shall assign its duties under this Agreement, except as
permitted by Sections 3.1(b) and 8.3,
(d) any Daily Report or Monthly Report or any representation, warranty or
certification made by Servicer in any Transaction Document or in any
certificate or other document or instrument delivered pursuant to any
Transaction Document shall fail to have been correct in any material respect
when made or delivered, which failure has a materially adverse effect on the
Certificateholders or any Purchased Interest and which materially adverse
effect continues unremedied for a period of 15 Business Days after the date on
which written notice of failure, requiring the same to be remedied, shall have
been given to Servicer and Trustee by any Investor Certificateholder or
Purchaser, or
(e) any Bankruptcy Event shall occur with respect to Servicer.
In the event of any Servicer Default, so long as Servicer Default shall not have
been remedied, Trustee may (and, at the direction of the Required Investors,
shall), by notice then given in writing to Servicer (a "Termination Notice"),
terminate all (but not less than all) the rights and obligations of Servicer as
Servicer under this Agreement and in and to the Receivables, the Related
Transferred Assets and the proceeds thereof.
As soon as possible, and in any event within five Business Days, after an
Authorized Officer of Servicer has obtained knowledge of the occurrence of any
Servicer Default, Servicer shall furnish Trustee, each Agent and the Rating
Agencies, and Trustee shall promptly furnish each Investor Certificate holder,
notice of such Servicer Default.
Notwithstanding the foregoing, a delay in or failure in performance referred
to in subsection (a) for a period of ten Business Days after the applicable
grace period, or in subsection (b) or (d) for a period of 30 Business Days after
the applicable grace period, shall not constitute a Servicer Default if the
delay or failure could not have been prevented by the exercise of reasonable
diligence by Servicer and the delay or failure was caused by an act
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of God or the public enemy, riots, acts of war, acts of terrorism, epidemics,
flood, embargoes, weather, landslides, fire, earthquakes or similar causes. The
preceding sentence shall not relieve Servicer from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of the
Transaction Documents, and Servicer shall promptly give Trustee, each Agent and
Transferor an Officer's Certificate notifying them of its failure or delay.
SECTION 10.2 Trustee to Act; Appointment of Successor. (a) On and after
Servicer's receipt of a Termination Notice pursuant to Section 10.1, Servicer
shall continue to perform all servicing functions under this Agreement until the
date specified in the Termination Notice or otherwise specified by Trustee in
writing or, if no such date is specified in the Termination Notice, or otherwise
specified by Trustee, until a date mutually agreed upon by Servicer and Trustee.
Trustee shall, as promptly as possible after the giving of a Termination Notice,
nominate an Eligible Servicer as successor servicer (the "Successor Servicer");
provided that (a) in so appointing any Successor Servicer, Trustee shall give
due consideration to any Successor Servicer proposed by any Agent and (b) the
Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to Trustee and each Agent. Any Person who is nominated to be a
Successor Servicer shall accept its appointment by a written assumption in form
and substance acceptable to Trustee. In the event that a Successor Servicer has
not been appointed or has not accepted its appointment at the time when Servicer
ceases to act as Servicer, Trustee without further action shall automatically be
appointed the Successor Servicer. Trustee may delegate any of its servicing
obligations to an affiliate or agent in accordance with Section 3.1(b). If
Trustee is prohibited by applicable law from performing the duties of Servicer
hereunder, Trustee may appoint, or may petition a court of competent
jurisdiction to appoint, a Successor Servicer hereunder. Trustee shall give
prompt notice to the Rating Agencies and each Investor Certificateholder upon
the appointment of a Successor Servicer.
(b) After Servicer's receipt of a Termination Notice, and on the date that a
Successor Servicer shall have been appointed by Trustee and shall have accepted
the appointment pursuant to subsection (a), all authority and power of Servicer
under this Agreement shall pass to and be vested in the Successor Servicer (a
"Service Transfer"); and, without limitation, Trustee is hereby authorized and
empowered to execute and deliver, on behalf of Servicer, as attorney-in-fact or
otherwise, all documents and instruments, and to do and accomplish all other
acts or things that Trustee reasonably determines are necessary or appropriate
to effect the purposes of the Service Transfer. Upon the appointment of the
Successor Servicer and its acceptance thereof, Servicer agrees that it will
terminate its activities as Servicer hereunder in a manner
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that Trustee indicates will facilitate the transition of the performance of such
activities to the Successor Servicer. Servicer agrees that it shall use
reasonable efforts to assist the Successor Servicer in assuming the obligations
to service and administer the Receivables and the Related Transferred Assets, on
the terms and subject to the conditions set forth herein, and to effect the
termination of the responsibilities and rights of Servicer to conduct servicing
hereunder, including the transfer to such Successor Servicer of all authority of
Servicer to service the Receivables and Related Transferred Assets provided for
under this Agreement and all authority over all cash amounts that shall
thereafter be received with respect to the Receivables or the Related
Transferred Assets. Servicer shall, within five Business Days after the
designation of a Successor Servicer, transfer its electronic records (including
software) relating to the Receivables, the related Contracts and the Related
Transferred Assets to the Successor Servicer in such electronic form as the
Successor Servicer may reasonably request and shall promptly transfer to the
Successor Servicer all other records, correspondence and documents necessary for
the continued servicing of the Receivables and the Related Transferred Assets in
the manner and at such times as the Successor Servicer shall request. To the
extent that compliance with this Section shall require Servicer to disclose to
the Successor Servicer information of any kind that Servicer reasonably deems to
be confidential, prior to the transfer contemplated by the preceding sentence
the Successor Servicer shall be required to enter into such licensing and
confidentiality agreements as Servicer shall reasonably deem necessary to
protect its interest. All reasonable costs and expenses (including attorneys'
fees and disbursements) incurred in connection with transferring the
Receivables, the Related Transferred Assets and all related Records (including
the related Contracts) to the Successor Servicer and amending this Agreement and
the other Transaction Documents to reflect the succession as Servicer pursuant
to this Section shall be paid by the predecessor Servicer (or, if Trustee serves
as Successor Servicer on an interim basis, the initial Servicer) within 15 days
after presentation of reasonable documentation of the costs and expenses.
(c) Upon its appointment and acceptance thereof, the Successor Servicer shall
be the successor in all respects to Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities and duties
relating thereto placed on Servicer by the terms and provisions hereof (and
shall carry out such responsibilities and duties in accordance with standards of
reasonable commercial prudence), and all references in this Agreement to
Servicer shall be deemed to refer to the Successor Servicer.
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(d) All authority and power granted to Servicer or the Successor Servicer
under this Agreement shall automatically cease and terminate upon termination of
the Trust pursuant to Section 12.1, and shall pass to and be vested in
Transferor and, without limitation, Transferor is hereby authorized and
empowered, on and after the effective date of such termination, to execute and
deliver, on behalf of the Servicer or the Successor Servicer, as attorney-in-
fact or otherwise, all documents and other instruments and to do and accomplish
all other acts or things that Transferor reasonably determines are necessary or
appropriate to effect the purposes of such transfer of servicing rights. The
Successor Servicer agrees to cooperate with Transferor in effecting the
termination of the responsibilities and rights of the Successor Servicer to
conduct servicing of the Receivables and the Related Transferred Assets. The
Successor Servicer shall, within five Business Days after such termination,
transfer its electronic records relating to the Receivables and the Related
Transferred Assets to Transferor in such electronic form as Transferor may
reasonably request and shall transfer all other records, correspondence and
documents relating to the Receivables and the Related Transferred Assets to
Transferor in the manner and at such times as Transferor shall reasonably
request. To the extent that compliance with this Section shall require the
Successor Servicer to disclose to Transferor information of any kind that the
Successor Servicer deems to be confidential, Transferor shall be required to
enter into such customary licensing and confidentiality agreements as the
Successor Servicer shall reasonably deem necessary to protect its interests. All
reasonable costs and expenses (including attorneys' fees and disbursements)
incurred by Trustee, in its capacity as Successor Servicer, in connection with
the termination shall be paid by Transferor within 15 days after presentation of
reasonable documentation of the costs and expenses.
Notwithstanding any provisions contained in any Transaction Document to the
contrary, Transferor shall not, and shall not be obligated to, pay any amount
pursuant to this Section unless funds are allocated for such payment pursuant to
the provisions of a Supplement or PI Agreement governing the allocation of funds
in the Master Collection Account. Any amount which Transferor does not pay
pursuant to the operation of the preceding sentence shall not constitute a claim
(as defined in (S)101 of the Bankruptcy Code) against or corporate obligation of
Transferor for any such insufficiency.
SECTION 10.3 Notification of Servicer Default; Notification of Appointment of
Successor Servicer. Within four Business Days after an Authorized Officer of
Servicer becomes aware of any Servicer Default, Servicer shall give written
notice thereof to Trustee and the Rating Agencies, and Trustee shall, promptly
upon receipt of the written notice, give notice to the Investor
Certificateholders at their respective addresses appearing in the
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Certificate Register and to the Purchasers. Upon any termination or appointment
of a Successor Servicer pursuant to this Article X, Trustee shall give prompt
written notice thereof to the Investor Certificateholders at their respective
addresses appearing in the Certificate Register and to the Purchasers and the
Rating Agencies.
ARTICLE XI TRUSTEE
SECTION 11.1 Duties of Trustee. (a) Trustee undertakes to perform the duties
and only the duties as are specifically set forth in this Agreement. The
provisions of this Article XI shall apply to Trustee solely in its capacity as
Trustee, and not to Trustee in its capacity as Servicer if it is acting as
Servicer. Following the occurrence of a Servicer Default of which a Responsible
Officer has actual knowledge, Trustee shall exercise such of the rights and
powers vested in it by this Agreement and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs; provided that if Trustee
shall assume the duties of Servicer pursuant to Section 10.2, Trustee in
performing the duties shall use the degree of skill and attention customarily
exercised by a servicer with respect to trade receivables that it services for
itself or others. Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in, or incidental to the performance of its duties under, the
Transaction Documents.
(b) Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to Trustee
that are specifically required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they are substantially in the
form required by this Agreement. Trustee shall give written notice to the Person
who furnished any item of the type listed in the preceding sentence of any lack
of substantial conformity of any such item to the applicable requirements of
this Agreement. In addition, Trustee shall give prompt written notice to the
Investor Certificateholders and each Agent of any lack of substantial conformity
of any such instrument to the applicable requirements of this Agreement
discovered by Trustee that would entitle a specified percentage of the Investor
Certificateholders or the Holders of any Series of Certificates or Purchasers or
Agents to take any action pursuant to this Agreement. Within two Business Days
of its receipt of any Monthly Report, Trustee shall verify the mathematical
computations contained therein and shall notify Servicer and each of the Rating
Agencies of the accuracy of such computations or of any discrepancies therein
(provided that the rounding of numbers will not constitute a discrepancy)
whereupon Servicer shall deliver to the Rating Agencies within
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five Business Days thereafter a certificate describing the nature and cause of
such discrepancies and the action that Servicer proposes to take with respect
thereto. During the first week of each year, Trustee shall provide the Rating
Agencies with a certificate, signed by a Responsible Officer, to the effect that
Trustee is not aware of any Early Amortization Event (or, if it is aware of any
Early Amortization Event, specifying the nature of that event).
(c) Subject to subsection (a), no provision of this Agreement shall be
construed to relieve Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct; provided that:
(i) Trustee shall not be liable for an error of judgment made in good
faith by a Responsible Officer or Responsible Officers of Trustee, unless it
shall be proved that Trustee was negligent in ascertaining the pertinent
facts,
(ii) Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with the
direction (as applicable) of the Required Investors, all Investors, any Agent,
or the Required Series Holders relating to the time, method and place of
conducting any proceeding for any remedy available to Trustee, or exercising
any trust or power conferred upon Trustee, under this Agreement,
(iii) Trustee shall not be charged with knowledge of (A) any failure by
Servicer to comply with the obligations of Servicer referred to in subsections
(a), (b) or (c) of Section 10.1, (B) any breach of the representations and
warranties of Transferor set forth in Section 2.3 or 7.1 or the
representations and warranties of Servicer set forth in Section 8.1, (C) any
breach of the covenants of Transferor set forth in Section 7.2 or the
covenants of Servicer set forth in Section 8.2 or (D) the ownership of any
Certificate or Purchased Interest for purposes of Section 6.5, in each case
unless a Responsible Officer of Trustee obtains actual knowledge of the matter
or Trustee receives written notice of the matter from Servicer or from any
Holder,
(iv) the duties and obligations of Trustee shall be determined solely by
the express provisions of this Agreement, Trustee shall not be liable except
for the performance of the duties and obligations that specifically shall be
set forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against Trustee and, in the absence of bad faith on the
part of Trustee, Trustee may conclusively rely on the truth of the statements
and the correctness of
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the opinions expressed in any certificates or opinions that are furnished to
Trustee and that conform to the requirements of this Agreement, and
(v) without limiting the generality of this section or Section 11.2,
Trustee shall have no duty (A) to see to any recording, filing, or depositing
of this Agreement or any agreement referred to herein or any financing
statement evidencing a security interest in the Receivables or the Related
Transferred Assets, or to see to the maintenance of any such recording or
filing or depositing or to any rerecording, refiling or redepositing of any
thereof (except that Trustee (x) shall note in its records the date of filing
of each UCC financing statement identified to it in writing as having been
filed in connection with the Transaction Documents, or filed in connection
with a predecessor receivables securitization and amended and/or assigned in
connection with the Transaction Documents, and naming Trustee as secured party
or assignee of the secured party and (y) shall, unless it shall have received
an Opinion of Counsel to the effect that no such filing is necessary to
continue the perfection of Transferor's or Trustee's interests in the
Receivables and the Related Assets, cause continuation statements to be filed
with respect to each such financing statement not less than four years and six
months and not more than five years after (1) its filing date and (2) the date
of filing of any prior continuation statement), (B) to see to the payment or
discharge of any tax, assessment, or other governmental charge or any Adverse
Claim or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust, (C) to confirm or verify the contents of any
reports or certificates of Servicer delivered to Trustee pursuant to this
Agreement that are believed by Trustee to be genuine and to have been signed
or presented by the proper party or parties or (D) to ascertain or inquire as
to the performance or observance of any of Transferor's or Servicer's
representations, warranties or covenants or Servicer's duties and obligations
as Servicer.
(d) Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if Trustee
reasonably believes that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it, and none of the
provisions contained in this Agreement shall in any event require Trustee to
perform, or be responsible for the manner of performance of, any obligations of
Servicer under this Agreement except during the time, if any, that Trustee shall
be the successor to, and be vested with the rights, duties, powers and
privileges of, Servicer in accordance with the terms of this Agreement.
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(e) Except for actions expressly authorized by this Agreement, Trustee shall
take no action reasonably likely to impair the interests of the Trust in any
Transferred Asset now existing or hereafter created or to impair the value of
any Transferred Asset now existing or hereafter created.
(f) Except to the extent expressly provided otherwise in this Agreement,
Trustee shall have no power to vary the Transferred Assets.
(g) In the event that the Paying Agent or the Transfer Agent and Registrar
shall fail to perform any obligation, duty or agreement in the manner or on the
day on which such obligation, duty or agreement is required to be performed by
the Paying Agent or the Transfer Agent and Registrar, as the case may be, under
this Agreement, Trustee shall be obligated, promptly upon its actual knowledge
thereof, to perform the obligation, duty or agreement in the manner so required.
SECTION 11.2 Certain Matters Affecting Trustee. Except as otherwise provided
in Section 11.1:
(a) Trustee may rely on and shall be protected in acting on, or in
refraining from acting in accordance with, any resolution, Officer's
Certificate, opinion of counsel, certificate of auditors or any other
certificate, statement, instrument, instruction, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document and any
information contained therein believed by it to be genuine and to have been
signed or presented to it pursuant to this Agreement by the proper party or
parties including, but not limited to, reports and records required by Article
III,
(b) Trustee may consult with counsel and any opinion of counsel rendered
by counsel reasonably satisfactory to Transferor shall be full and complete
authorization and protection in respect of any action taken or permitted or
omitted by it hereunder in good faith and in accordance with such opinion of
counsel,
(c) Trustee (including in its role as Successor Servicer, if it ever acts
in that capacity) shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend
any litigation or other proceeding hereunder or in relation hereto, at the
request, order or direction of any of the Certificateholders, the Purchasers
or any Agent, pursuant to the provisions of this Agreement, unless such
Certificateholders, the Purchasers or Agent shall have offered to Trustee
reasonable security
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or indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; provided that nothing contained herein shall relieve
Trustee of the obligations, upon the occurrence and continuance of a Servicer
Default that has not been cured, to exercise such of the rights and powers
vested in it by this Agreement and to use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs,
(d) Trustee shall not be personally liable for any action taken, permitted
or omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement,
(e) Trustee shall not be bound to make any investigation into the facts of
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing to do so by the Required Investors;
provided that if the payment within a reasonable time to Trustee of the costs,
expenses, or liabilities likely to be incurred by it in connection with making
such investigation shall be, in the opinion of Trustee, not reasonably assured
to Trustee by the security afforded to it by the terms of this Agreement,
Trustee may require reasonable indemnity against such cost, expense, or
liability as a condition to proceeding with the investigation. The reasonable
expense of every examination shall be paid by Servicer or, if paid by Trustee,
shall be reimbursed by Servicer upon demand,
(f) Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents, representatives,
attorneys or a custodian, and Trustee shall not be responsible for any
misconduct or negligence on the part of any agent, representative, attorney or
custodian appointed with due care by it hereunder,
(g) except as may be required by Section 11.1(b) hereof, Trustee shall not
be required to make any initial or periodic examination of any documents or
records related to the Transferred Assets for the purpose of establishing the
presence or absence of defects or for any other purpose,
(h) whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the
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liability of or affording protection to Trustee shall be subject to the
provisions of this section,
(i) Trustee shall have no liability with respect to the acts or omissions
of Servicer (except and to the extent Servicer is Trustee), including, but not
limited to, acts or omissions in connection with: (A) the servicing,
management or administration of the Receivables or the Related Transferred
Assets, (B) calculations made by Servicer whether or not reported to Trustee,
and (C) deposits into or withdrawals from any Bank Accounts or Transaction
Accounts established pursuant to the terms of this Agreement, and
(j) in the event that Trustee is also acting as Paying Agent or Transfer
Agent and Registrar hereunder, the rights and protections afforded to Trustee
pursuant to this Article XI shall also be afforded to Trustee acting as Paying
Agent or as Transfer Agent and Registrar.
SECTION 11.3 Limitation on Liability of Trustee. Trustee shall at no time have
any responsibility or liability for or with respect to the correctness of the
recitals contained herein or in the Certificates (other than the certificate of
authentication on the Certificates) or the Purchased Interests. Except as set
forth in Section 11.15, Trustee makes no representations as to the validity or
sufficiency of this Agreement, any PI Agreement, any Supplement, the
Certificates (other than the certificate of authentication on the Certificates)
or the Purchased Interests, any other Transaction Document or any Transferred
Asset or related document. Trustee shall not be accountable for the use or
application by Transferor of any of the Certificates or the Purchased Interests
or of the proceeds of such Certificates or the Purchased Interests, or for the
use or application of any funds paid to Transferor or Servicer in respect of the
Transferred Assets or deposited by Servicer in or withdrawn by Servicer from the
Bank Accounts, the Transaction Accounts or any other accounts hereafter
established to effectuate the transactions contemplated herein or in the other
Transaction Documents and in accordance with the terms hereof or thereof.
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity, or enforceability of any ownership or
security interest in any Transferred Asset, or the perfection or priority of
such a security interest or the maintenance of any such perfection or priority,
or for the generation of the payments to be distributed to Certificateholders or
Purchasers under this Agreement, including: (a) the existence and substance of
any Transferred Asset or any related Record or any computer or other record
thereof, (b) the validity of the transfer of any Transferred Asset to the Trust
or of any preceding or intervening transfer, (c) the performance or enforcement
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of any Transferred Asset, (d) the compliance by Transferor or Servicer with any
warranty or representation made under this Agreement or in any other Transaction
Document and the accuracy of any such warranty or representation prior to
Trustee's receipt of actual notice of any noncompliance therewith or any breach
thereof, (e) any investment of monies pursuant to Section 4.4 or any loss
resulting therefrom, (f) the acts or omissions of Transferor, Servicer or any
Obligor, (g) any action of Servicer taken in the name of Trustee, or (h) any
action by Trustee taken at the instruction of Servicer; provided that the
foregoing shall not relieve Trustee of its obligation to perform its duties
under the Agreement in accordance with the terms hereof.
Except with respect to a claim based on the failure of Trustee to perform its
duties under this Agreement or based on Trustee's negligence or willful
misconduct, no recourse shall be had against Trustee in its individual capacity
for any claim based on any provision of this Agreement, any other Transaction
Document, the Certificates, the Purchased Interests, any Transferred Asset or
any assignment thereof. Trustee shall not have any personal obligation,
liability, or duty whatsoever to any Certificateholder, any Purchaser or any
other Person with respect to any such claim, and any such claim shall be
asserted solely against the Trust or any indemnitor who shall furnish indemnity
to the Trust or Trustee as provided in this Agreement.
SECTION 11.4 Trustee May Deal with Other Parties. Subject to any restrictions
that may otherwise be imposed by Section 406 of ERISA or Section 4975(e) of the
Internal Revenue Code, Trustee in its individual or any other capacity may deal
with the other parties hereto (other than Transferor) and their respective
affiliates, with the same rights as it would have if it were not Trustee.
SECTION 11.5 Servicer To Pay Trustee's Fees and Expenses. (a) To the extent
not paid by Servicer to Trustee from funds constituting the Servicing Fee,
Servicer covenants and agrees to pay to Trustee from time to time, and Trustee
shall be entitled to receive, such reasonable compensation as is agreed upon in
writing between Trustee and Servicer (which shall not be limited by any
provision of law in regard to the compensation of a Trustee of an express trust)
for all services rendered by it in connection with the Transaction Documents and
in the exercise and performance of any of the powers and duties hereunder of
Trustee, and Servicer will pay or reimburse Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by Trustee in
accordance with any of the provisions of the Transaction Documents to which it
is a party (including the reasonable fees and expenses of its agents, any co-
Trustee and counsel) except any expense, disbursement or advance that may arise
from Trustee's negligence or willful misconduct.
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(b) In addition, Servicer agrees to indemnify Trustee from, and hold it
harmless against, any and all losses, liabilities, damages, claims or expenses
incurred by Trustee in connection with the Transaction Documents or in the
exercise or performance of any of the powers or duties of Trustee hereunder,
other than those resulting from the negligence or willful misconduct of Trustee.
(c) If Trustee is appointed Successor Servicer pursuant to Section 10.2, the
provisions of this section shall not apply to expenses, disbursements and
advances made or incurred by Trustee in its capacity as Successor Servicer,
which shall be paid out of the Servicing Fee. Servicer's covenant to pay the
fees, expenses, disbursements and advances provided for in this section shall
survive the resignation or removal of Trustee and the termination of this
Agreement.
(d) Trustee shall look solely to Servicer for payment of amounts described in
this Section 11.5, and Trustee shall have no claim for payment of such amounts
against Transferor or the Transferred Assets.
SECTION 11.6 Eligibility Requirements for Trustee. Trustee hereunder shall at
all times: (a) be (i) a banking institution organized under the laws of the
United States, (ii) a member bank of the Federal Reserve System or (iii) any
other banking institution or trust company, incorporated and doing business
under the laws of any State or of the United States, a substantial portion of
the business of which consists of receiving deposits or exercising fiduciary
powers similar to those permitted to national banks under the authority of the
Comptroller of the Currency, and that is supervised and examined by a state or
federal authority having supervision over banks, (b) not be an Enhancement
Provider or an Affiliate of BT Securities Corporation, (c) have, in the case of
an entity that is subject to risk-based capital adequacy requirements, risk-
based capital of at least $250,000,000 or, in the case of an entity that is not
subject to risk-based capital adequacy requirements, a combined capital and
surplus of at least $250,000,000 and (d) have an unsecured long-term debt rating
of at least "A" or its equivalent from each Rating Agency. If such corporation
or association publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then, for the purpose of this section, the combined capital and surplus of the
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time Trustee shall cease to be eligible in accordance with the provisions of
this section, Trustee shall resign immediately in the manner and with the effect
specified in Section 11.7.
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SECTION 11.7 Resignation or Removal of Trustee. (a) Trustee may at any time
resign and be discharged from its obligations hereunder by giving 30 days' prior
written notice thereof to Transferor, Servicer, the Rating Agencies, the
Investor Certificateholders and the Agents. Upon receiving the notice of
resignation, Transferor shall promptly appoint, subject to satisfaction of the
Modification Condition, a successor Trustee who meets the eligibility
requirements set forth in Section 11.6 by written instrument, in duplicate, one
copy of which shall be delivered to the resigning Trustee and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed and
shall have accepted appointment within 30 days after the giving of the notice of
resignation, the resigning Trustee, upon notice to each Agent, may petition any
court of competent jurisdiction to appoint a successor Trustee.
(b) If at any time Trustee shall cease to be eligible to be Trustee hereunder
in accordance with the provisions of Section 11.6 hereof and shall fail to
resign promptly after its receipt of a written request therefor by Servicer, or
if at any time Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or if a receiver for Trustee or of its property shall be
appointed, or any public officer shall take charge or control of Trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then Servicer may remove Trustee and, subject to the consent of
each Agent (which consent shall not be unreasonably withheld or delayed) and
satisfaction of the Modification Condition, promptly appoint a successor Trustee
by written instrument, in duplicate, one copy of which shall be delivered to
Trustee so removed and one copy to the successor Trustee.
(c) Any resignation or removal of Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this section shall not become
effective until (i) acceptance of appointment by the successor Trustee as
provided in Section 11.8 hereof, and (ii) such successor Trustee shall have
agreed in writing to be bound by any Intercreditor Agreements then in effect.
SECTION 11.8 Successor Trustee. (a) Any successor Trustee appointed as
provided in Section 11.7 shall execute, acknowledge and deliver to Transferor,
Servicer, the Investor Certificateholders, the Purchasers and the predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall, upon payment of its
fees and expenses and other amounts owed to it pursuant to Section 11.5, become
effective and the successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the successor
Trustee, at the expense of Servicer, all documents or copies
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thereof and statements held by it hereunder; and Transferor and the predecessor
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully vesting and confirming in the successor
Trustee all such rights, powers, duties and obligations. Servicer shall promptly
give notice to the Rating Agencies upon the appointment of a successor Trustee.
(b) No successor Trustee shall accept appointment as provided in this section
unless at the time of the acceptance the successor Trustee shall be eligible to
become Trustee under the provisions of Section 11.6.
(c) Upon acceptance of appointment by a successor Trustee as provided in this
section, the successor Trustee shall mail notice of the succession hereunder to
all Investor Certificateholders at their addresses as shown in the Certificate
Register and to each Rating Agency.
SECTION 11.9 Merger or Consolidation of Trustee. Any Person into which
Trustee may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which Trustee
shall be a party, or any Person succeeding to all or substantially all of the
corporate trust business of Trustee, shall be the successor of Trustee
hereunder, if the Person meets the requirements of Section 11.6, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding. Servicer shall
promptly give notice to the Rating Agencies upon any merger or consolidation of
Trustee.
SECTION 11.10 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust may at the time be located, Trustee shall have the power and may
execute and deliver all instruments to appoint one or more Persons (who may be
an employee or employees of Trustee) to act as a co-Trustee or co-Trustees, or
separate Trustee or separate Trustees, with respect to all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders and the Purchasers, such title to the Trust,
or any part thereof, and, subject to the other provisions of this section, such
powers, duties, obligations, rights and trusts as Trustee may consider necessary
or appropriate; provided, that such appointment shall be subject to the prior
written consent of Transferor unless an Early Amortization Event or Servicer
Default is continuing; and provided further, that in any event Trustee will give
Transferor and Servicer prior written notice of such appointment. No co-Trustee
or separate Trustee shall be required to meet the
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terms of eligibility as a successor Trustee under Section 11.6 and no notice to
Certificateholders, Agents or Purchasers of the appointment of any co-Trustee or
separate Trustee shall be required under Section 11.8.
(b) Every separate Trustee and co-Trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed upon
Trustee shall be conferred or imposed upon and exercised or performed by
Trustee and the separate Trustee or co-Trustee jointly (it being understood
that the separate Trustee or co-Trustee is not authorized to act separately
without Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to Servicer hereunder), Trustee
shall be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate Trustee or co-Trustee, but
solely at the direction of Trustee,
(ii) no Trustee hereunder shall be personally liable by reason of any act
or omission of any other Trustee hereunder, and
(iii) Trustee may at any time accept the resignation of or remove any
separate Trustee or co-Trustee.
(c) Any notice, request or other writing given to Trustee shall be deemed to
have been given to each of the then separate Trustees and co-Trustees, as
effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Article XI. Each separate Trustee and co-Trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with Trustee or separately, as may
be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection or indemnity to,
Trustee. Every such instrument shall be filed with Trustee and a copy thereof
given to Servicer.
(d) Any separate Trustee or co-Trustee may at any time constitute Trustee,
its agent or attorney-in-fact with full power and authority, to the
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extent not prohibited by law, to do any lawful act under or in respect to this
Agreement or any other Transaction Document on its behalf and in its name. If
any separate Trustee or co-Trustee shall die, become incapable of acting, resign
or be removed, all its estates, properties, rights, remedies and trusts shall
vest in and be exercised by Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
SECTION 11.11 Tax Returns. No Federal, state, local or foreign income tax
return shall be filed on behalf of the Trust unless either (i) Trustee or
Servicer shall receive an Opinion of Counsel that there is no substantial
authority for not filing such return, or (ii) the Internal Revenue Service or
the applicable Governmental Authority shall determine that the Trust is required
to file such a return, or (iii) the Trust is required to file such a return by
order of a court of competent jurisdiction. In the event the Trust shall be
required to file tax returns, Servicer shall prepare or shall cause to be
prepared any tax returns required to be filed by the Trust and shall remit the
returns to Trustee for signature at least five Business Days before the returns
are due to be filed. Trustee shall promptly sign and deliver the returns to
Servicer and Servicer shall promptly file the returns. Subject to the
responsibilities of Trustee set forth in any Supplement, Servicer, in accordance
with that Supplement, shall also prepare or shall cause to be prepared all tax
information required by law to be made available to Certificateholders and
Purchasers and shall deliver the information to Trustee at least five Business
Days prior to the date it is required by law to be made available to the
Certificateholders and Purchasers. Trustee, upon request, will furnish Servicer
with all the information known to Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Trust and shall, upon
request, execute such returns as Trustee determines are appropriate.
SECTION 11.12 Trustee May Enforce Claims Without Possession of Certificates.
All rights of action and claims under this Agreement, the Certificates, the
Purchased Interests or the other Transaction Documents may be prosecuted and
enforced by Trustee without the possession of any of the Certificates or
Purchased Interests or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by Trustee shall be brought in its
own name as Trustee. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
Trustee, its agents and counsel, be distributed to the Certificateholders or
Purchasers in respect of which such judgment has been obtained in accordance
with the related Supplement or PI Agreement.
SECTION 11.13 Suits for Enforcement. If an Early Amortization Event or a
Servicer Default shall occur and be continuing, Trustee, in its
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discretion may, subject to the provisions of Sections 11.1 and 11.14, proceed to
protect and enforce its rights and the rights of the Certificateholders or
Purchasers under this Agreement by suit, action or proceeding in equity or at
law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Agreement or any other Transaction Document or in
aid of the execution of any power granted in this Agreement or any other
Transaction Document or for the enforcement of any other legal, equitable or
other remedy as Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of Trustee or the Certificateholders or
Purchasers. Nothing herein contained shall be deemed to authorize Trustee to
authorize or consent to or accept or adopt on behalf of any Certificateholder or
Purchaser any plan of reorganization, arrangement, adjustment or composition
affecting the Investor Certificates or the rights of any Holder thereof, or the
Purchasers, or to authorize Trustee to vote in respect of the claim of any
Investor Certificateholder or Purchaser in any such proceeding.
SECTION 11.14 Rights of Required Investors To Direct Trustee. The Required
Investors shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to Trustee, or exercising any
trust or power conferred on Trustee; provided that, subject to Section 11.1,
Trustee may decline to follow any such direction if Trustee, being advised by
counsel, determines that the action so directed may not be taken lawfully, or if
a Responsible Officer or Responsible Officers of Trustee shall determine, in
good faith, that the proceedings so directed would be illegal or involve Trustee
in personal liability or be unduly prejudicial to the rights of the Investor
Certificateholders not giving such direction; and provided further, that nothing
in this Agreement shall impair the right of Trustee to take any action deemed
proper by Trustee and that is not inconsistent with such direction of the
Required Investors.
SECTION 11.15 Representations and Warranties of Trustee. Trustee represents
and warrants that:
(a) it is a banking corporation organized, existing and in good standing
under the laws of the State of New York,
(b) it has full power, authority and right to execute, deliver and perform
the Transaction Documents to which it is a party, and has taken all necessary
action to authorize the execution, delivery and performance by it of the
Transaction Documents, and
(c) the Transaction Documents to which it is a party have been duly
executed and delivered by Trustee and, in the case of all such
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Transaction Documents, are legal, valid and binding obligations of Trustee,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
SECTION 11.16 Maintenance of Office or Agency. Trustee will maintain, at its
address designated pursuant to Section 13.6, an office, offices, agency or
agencies where notices and demands to or upon Trustee in respect of the
Certificates, the Purchased Interests and the Transaction Documents to which it
is a party may be served. Trustee will give prompt written notice to Servicer
and to the Certificateholders and Agents of any change in the location of the
Certificate Register or any such office or agency.
ARTICLE XII TERMINATION
SECTION 12.1 Termination of Trust. (a) If not earlier terminated pursuant to
Section 9.3, the Trust and the respective obligations and responsibilities of
Transferor, Servicer and Trustee created hereby (other than the obligation of
Trustee to make payments to Certificateholders or Purchasers as hereinafter set
forth and the obligations of Servicer contained in Sections 11.11) shall
terminate, except with respect to the duties and obligations described in
Sections 3.9(c), 7.3, 8.4, 11.5, 12.2(b), 13.9, 13.15 and 13.16 upon the
earliest to occur of (i) the day on which the Investor Certificateholders, the
Purchasers and Trustee shall have been paid all amounts required to be paid to
them pursuant to this Agreement and Trustee has disposed of all property held
hereunder (including pursuant to Section 12.3) and (ii) the day which is 21
years less one day after the death of the officers and the last survivor of all
the lineal descendants of every officer of the Trustee who are living on the
date hereof.
(b) Notwithstanding the foregoing, the last payment of the principal of and
interest on the Investor Certificates of any Series shall be due and payable no
later than the Final Scheduled Payment Date for that Series. If, on the
Distribution Date immediately prior to the Final Scheduled Payment Date for any
Series, Servicer determines that the Invested Amount for the Series on the
applicable Final Scheduled Payment Date (after giving effect to all changes
therein on such date) will exceed zero, Servicer shall solicit bids for the sale
of interests in the Transferred Assets in an amount equal to the sum of 110% of
the Base Amount for the Series on the Final Scheduled Payment Date for the
Series (after giving effect to all distributions required to be made on the
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Final Scheduled Payment Date for the Series), but in no event more than the
Series Collection Allocation Percentage for that Series of the Receivables held
by the Trust on that day. Transferor shall be entitled to participate in and to
receive notice of each bid submitted in connection with the bidding process.
Upon the expiration of the period, Servicer shall determine (x) the Highest Bid
and (y) the Available Final Distribution Amount for the Series. Servicer shall
sell the interests in the Transferred Assets on the Final Scheduled Payment Date
for the applicable Series to the bidder with the Highest Bid and shall deposit
the proceeds of such sale in the Master Collection Account for allocation
(together with the Available Final Distribution Amount for such Series) to the
Certificateholders of such Series.
SECTION 12.2 Final Distribution. (a) Servicer shall give Trustee at least ten
days' prior written notice of the date on which the Trust is expected to
terminate in accordance with Section 12.1(a). The notice shall be accompanied by
a certificate of an Authorized Officer of Servicer setting forth the information
specified in Section 3.6 covering the period during the then current calendar
year through the date of the notice. Upon receiving the notification from
Servicer, Trustee shall give the Certificateholders and/or the Agents (as
applicable) written notice as soon as practicable after Trustee's receipt of
notice from Servicer, which notice shall specify (i) the Distribution Date upon
which final payment with respect to the Certificates is expected to be made and
(ii) the amount of any such final payment. Trustee shall give the notice to the
Transfer Agent and Registrar and the Paying Agent at the time such notice is
given to Certificateholders. On the Distribution Date specified in the notice,
Trustee shall, based upon the Daily Report relating to such Distribution Date,
cause to be distributed to the Certificateholders the amounts distributable to
them on such Distribution Date pursuant to the applicable Supplement. Each
Certificateholder shall present its Certificate to Trustee and surrender its
Certificate for cancellation at the address of Trustee set forth in Section 13.6
not more than ten Business Days after the Distribution Date upon which final
payment with respect to the Certificates has been made.
(b) Notwithstanding the termination of the Trust pursuant to Section 12.1(a),
all funds then on deposit in the Master Collection Account shall continue to be
held in trust for the benefit of the Certificateholders and the Purchasers and
the Paying Agent or Trustee shall pay such funds to the Certificateholders and
the Purchasers at the time set forth in Section 12.1(a). In the event that any
of the Certificateholders shall not have received final payment with respect to
their Certificates within six months after the date specified in the above-
mentioned written notice from Trustee, Trustee shall give a second written
notice to the remaining Certificateholders concerning payment of the final
distribution with respect thereto and surrender of their
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Certificates for cancellation. If within one year after the second notice all
the Certificates shall not have been surrendered for cancellation, Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds in the Master
Collection Account held for the benefit of such Certificateholders. Trustee and
the Paying Agent shall pay to Transferor any monies held by them for the payment
of principal of or interest on the Certificates that remains unclaimed for two
years after the termination of the Trust pursuant to Section 12.1(a). After
payment of the monies to Transferor, Certificateholders entitled to the money
must look to Transferor for payment as general creditors unless an applicable
abandoned property law designates another Person.
SECTION 12.3 Rights Upon Termination of the Trust. Upon the termination of the
Trust pursuant to Section 12.1 and the surrender of the Transferor Certificate
by Transferor to Trustee, Trustee shall transfer, assign, set over and otherwise
convey to Transferor (without recourse, representation or warranty), all right,
title and interest of the Trust in the Receivables, whether then existing or
thereafter created, the Related Transferred Assets and all of the other property
and rights previously conveyed to Trustee hereunder, except for amounts held by
Trustee pursuant to Section 12.2(b) and except for the rights of RPA Indemnified
Parties (other than Transferor and its officers, directors, shareholders,
controlling Persons, employees and agents) to indemnification and contribution
under Section 9.1 of the Purchase Agreement. Trustee shall execute and deliver
the instruments of transfer and assignment (including any document necessary to
release the security interest in favor of Trustee (for the benefit of the
Certificateholders or the Purchasers) in such Receivables and Related
Transferred Assets, to release any filing evidencing or perfecting such security
interest and to terminate all powers of attorney created by the Transaction
Documents), in each case without recourse, representation or warranty, that
shall be reasonably requested by Transferor to vest in Transferor all right,
title and interest that Trustee had in the Transferred Assets.
SECTION 12.4 Optional Repurchase of Investor Interests. Any Supplement may
provide that on any Distribution Date occurring on or after the date that the
Invested Amount of the related Series is reduced to 10% or less of the initial
aggregate principal amount of the Investor Certificates of such Series,
Transferor shall have the option, upon the giving of ten days' prior written
notice by Transferor to Servicer, Trustee and the Rating Agencies, to repurchase
the undivided interest of the Series in the Trust by depositing into the
Principal Funding Account, on such Distribution Date, an amount equal to the
unpaid Invested Amount of the Series plus accrued and
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unpaid interest on the unpaid principal amount of the Series (and accrued and
unpaid interest with respect to interest amounts that were due but not paid on a
prior Distribution Date) through the day preceding the Distribution Date at the
Certificate Rate applicable to such Series. Upon tender of all outstanding
Certificates of the Series by the Certificateholders, Trustee shall then
distribute such amounts, together with all other amounts on deposit in the
Principal Funding Account and the Principal Funding Account with respect to that
Series to the Certificateholders of the Series on the next Distribution Date in
repayment of the principal amount and all accrued and unpaid interest owing to
the Certificateholders. Following any such repurchase, the Certificateholders of
the Series shall have no further rights with respect to the Receivables and
Trustee shall execute and deliver the instruments of transfer and assignment
(including any document necessary to release the security interest in favor of
Trustee (for the benefit of the Certificateholders) in the Receivables and
Related Transferred Assets and to release any filing evidencing or perfecting
the security interest), in each case without recourse, representation or
warranty, as shall be reasonably requested by Transferor to vest in Transferor
all right, title and interest that Trustee had in the Transferred Assets. In the
event that Transferor fails for any reason to deposit the aggregate purchase
price for the Invested Amount of any Series, payments shall continue to be made
to the Certificateholders of the Series in accordance with the terms of this
Agreement.
ARTICLE XIII MISCELLANEOUS PROVISIONS
SECTION 13.1 Amendment, Waiver, Etc. (a) This Agreement, any Supplement and
any Intercreditor Agreement may be amended from time to time by Servicer,
Transferor and Trustee by a written instrument signed by each of them, without
the consent of any of the Certificateholders, the Purchasers or the Agents;
provided that such action shall not adversely affect in any material respect the
interests of any Certificateholder or Purchaser; provided further, that any
amendment of this Agreement to effect any modification of the Bank Account
arrangements pursuant to Section 3.3(c)(ii)(y) shall not require the consent of
any of the Certificateholders or the Purchasers. None of this Agreement, any
Supplement or any Intercreditor Agreement may be amended unless Transferor shall
have delivered the proposed amendment to each Agent and the Rating Agencies at
least ten Business Days (or such shorter period as shall be acceptable to each
of them) prior to the execution and delivery thereof and the Modification
Condition has been satisfied with respect to such amendment; provided, however,
that the Modification Condition shall not apply to proposed amendments the
purpose of which is to correct any ambiguities or inconsistencies in this
Agreement or such Supplement.
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(b) Any PI Agreement with respect to a Purchased Interest may be amended from
time to time in accordance with the terms thereof without the consent of the
Investor Certificateholders; provided that any amendment will not adversely
affect in any material respect the interests of the Holders of any Series or
other Purchased Interest, as evidenced by an Officer's Certificate of Servicer.
No PI Agreement may be amended unless Transferor shall have delivered the
proposed amendment to each Agent and the Rating Agencies at least ten Business
Days (or such shorter period as shall be acceptable to each of them) prior to
the execution and delivery thereof and the Modification Condition has been
satisfied with respect to such amendment; provided, however, that the
Modification Condition shall not apply to proposed amendments the purpose of
which is to correct any ambiguities or inconsistencies in such PI Agreement.
(c) The provisions of this Agreement, any Supplement, any Intercreditor
Agreement and any PI Agreement may also be amended, modified or waived from time
to time by Servicer, Transferor and Trustee with the consent of (A) the Required
Series Holders of each affected Series and (B) if any Purchased Interest shall
or would be adversely affected, each Agent of a Purchaser; provided that no
amendment shall (w) reduce in any manner the amount of or delay the timing of
any distributions to be made to Investor Certificateholders or deposits of
amounts to be so distributed or the amount available under any Enhancement
without the consent of each affected Certificateholder, (x) change the
definition of or the manner of calculating the interest of any Investor
Certificateholder without the consent of each affected Investor
Certificateholder, (y) reduce the aforesaid percentage required to consent to
any amendment without the consent of each Investor Certificateholder or (z)
adversely affect the rating of any Series or class by any Rating Agency without
the consent of the Holders of Investor Certificates of the Series or class
evidencing not less than 66 2/3% of the aggregate unpaid principal amount of the
Investor Certificates of the Series or class.
Transferor or Trustee shall establish a record date for determining which
Certificateholders may give such waivers and consents. No waiver of any Early
Amortization Event or other default hereunder given at any time shall apply to
any other prior or subsequent Early Amortization Event or default.
(d) Promptly after the execution of any amendment, consent or waiver described
in subsection (b) or (c), Trustee shall furnish written notification of the
substance of the amendment or consent to each Investor Certificateholder, and
Servicer shall furnish written notification of the substance of the amendment or
consent to the Rating Agency and each Enhancement Provider.
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(e) It shall not be necessary for any waiver or consent given by the
Certificateholders under this section to approve the particular form of any
proposed amendment, but it shall be sufficient if the consent shall approve the
substance thereof. The manner of obtaining such waivers and consents and of
evidencing the authorization of the execution thereof by the Certificateholders
shall be subject to such reasonable requirements as Trustee may prescribe.
(f) Notwithstanding anything in this section to the contrary, no amendment may
be made to this Agreement, any Supplement or any PI Agreement that would
adversely affect in any material respect the interests of any Enhancement
Provider without the consent of the Enhancement Provider.
(g) Any Supplement or PI Agreement executed in accordance with the provisions
of Section 6.10 shall not be considered an amendment to this Agreement for the
purposes of this section.
(h) Prior to the execution of any amendment to this Agreement, Trustee shall
be entitled to receive and rely upon an Opinion of Counsel stating that the
execution of the amendment is authorized or permitted by this Agreement and that
all conditions precedent to the execution and delivery have been satisfied.
Trustee may, but shall not be obligated to, enter into any amendment that
affects Trustee's own rights, duties or immunities under this Agreement.
SECTION 13.2 Actions by Certificateholders and Purchasers. (a) By its
acceptance of Certificates pursuant to this Agreement and the applicable
Supplement, each Certificateholder (other than Transferor and any APP Person)
acknowledges and agrees that, wherever in this Agreement a provision states that
an action may be taken or a notice, demand or instruction given by any Series of
Investor Certificateholders, any class of Investor Certificateholders or the
Investor Certificateholders, the action, notice or instruction may be taken or
given by any Holder of an Investor Certificate of the Series or class or by any
Investor Certificateholder, respectively, unless the provision requires a
specific percentage of the Series or class of Investor Certificateholders or of
all Investor Certificateholders.
(b) By its acceptance of Certificates pursuant to this Agreement and the
applicable Supplement, each Certificateholder (other than Transferor and any APP
Person) acknowledges and agrees that any request, demand, authorization,
direction, notice, consent, waiver or other act by the Holder of a Certificate
shall bind the Holder and every subsequent Holder of the Certificate and of any
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done
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or omitted to be done by Trustee or Servicer in reliance thereon, whether or not
notation of the action is made upon such Certificate.
(c) Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Agreement, any Supplement or any PI Agreement to
be given or taken by Certificateholders or any Agent for a Purchaser may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by the Certificateholders or any Agent for a Purchaser in person or
by agent duly appointed in writing; and except as herein otherwise expressly
provided, the action shall become effective when the instrument or instruments
are delivered to Trustee and, when required, to Servicer. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement, any Supplement or any PI Agreement
and conclusive in favor of Trustee and Servicer, if made in the manner provided
in this section.
(d) The fact and date of the execution by any Certificateholder or any Agent
for a Purchaser of any such instrument or writing may be proved in any
reasonable manner that Trustee deems sufficient.
SECTION 13.3 Limitation on Rights of Certificateholders. (a) The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor shall the death or incapacity entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
(b) No Certificateholder shall have any right to vote (except as expressly
provided otherwise in this Agreement) or in any manner otherwise to control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association, nor shall any
Certificateholder be under any liability to any third Person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any provisions of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless the Certificateholder
previously shall have given to Trustee, and unless the Required Investors shall
have made, written request upon Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall
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have offered to Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and Trustee,
for 60 days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and Trustee, that no
one or more Certificateholders shall have any right in any manner whatever by
virtue of, or by availing itself or themselves of, any provisions of this
Agreement to affect, disturb or prejudice the rights of any other Investor
Certificateholder or any Holder of any other Series of Investor Certificates, or
to obtain or seek to obtain priority over or preference to any such other
Investor Certificateholder or any such Holder of any other Series of Investor
Certificates, or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of, in the case of
actions affecting the Investor Certificateholders as a class, all Investor
Certificateholders or, in the case of actions affecting the Holders of any
Series of Certificates, the Holders of Certificates of such Series, as
applicable. For the protection and enforcement of the provisions of this
section, each and every Certificateholder and Trustee shall be entitled to such
relief as can be given either at law or in equity.
(d) By their acceptance of Certificates pursuant to this Agreement and the
applicable Supplement, the Certificateholders (other than Transferor and any APP
Person) agree to the provisions of this section.
SECTION 13.4 Limitation on Rights of Purchasers. (a) Except as expressly
provided in this Agreement or a PI Agreement, neither any Purchaser nor any
Agent for a Purchaser shall have any right to vote, or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto.
(b) The Purchasers and any Agent for a Purchaser shall not have the right to
institute any suit, action or proceeding in equity or at law against Servicer or
Transferor for the enforcement of this Agreement, the Purchase Agreement or any
PI Agreement, except to the extent that such PI Agreement creates independent
and non-duplicative rights against Transferor or Servicer, unless any Agent for
a Purchaser previously shall have (i) made a request in writing to Trustee to
institute such action, suit or proceeding and (ii) offered to Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be incurred
by it in compliance with such request, and Trustee, shall either have refused to
institute any such suit, action or proceeding or, for 15 days after the request
and offer of security or indemnity, shall have neglected to institute any such
action, suit or proceeding.
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(c) It is understood and intended, and upon the purchase of each Purchased
Interest the related Agent and Purchaser shall be deemed to have expressly
covenanted and agreed with every other Purchaser and Investor Certificateholder
and Trustee, that neither such Agent nor any Purchaser shall have any right
hereunder or under a PI Agreement (i) to surrender, waiver, impair, disturb or
prejudice the rights of the holders of any other of the Purchased Interests or
the Investor Certificates, (ii) to obtain or seek to obtain priority over or
preference to any other such Purchaser or Investor Certificateholder or (iii) to
enforce any right under this Agreement or any PI Agreement against Servicer or
Transferor, except in the manner herein provided and for the equal, ratable and
common benefit of all Purchasers and Investor Certificateholders and except as
otherwise expressly provided in this Agreement or any PI Agreement. For the
protection and enforcement of the provisions of this section, each and every
Purchaser and Investor Certificateholder and Trustee shall be entitled to such
relief as can be given either at law or in equity.
SECTION 13.5 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 13.6 Notices. All demands, notices, instructions and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered, four Business Days after mailing if mailed by registered
mail, return receipt requested, or sent by facsimile transmission (a) in the
case of Transferor, to its address set forth below its signature hereto, (b) in
the case of APP, to its address set forth below its signature hereto, and (c) in
the case of Trustee, the Paying Agent or the Transfer Agent and Registrar, to
the address of Trustee set forth on the signature pages hereof; or, as to each
party, at such other address or facsimile number as shall be designated by it in
a written notice to each other party given in accordance with this section.
Except to the extent expressly provided otherwise in an applicable Supplement,
any notice required or permitted to be mailed to a Certificateholder shall be
sent by first-class mail, postage prepaid, to the address of the
Certificateholder as shown in the Certificate Register. Except to the extent
expressly provided otherwise in an applicable Supplement, any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given on the fourth Business Day after the notice is so mailed,
whether or not the Certificateholder receives the notice. Servicer shall deliver
or make available to the Rating Agencies each
page 89
certificate and report required to be prepared, forwarded or delivered pursuant
to Section 3.5 (excluding the Daily Reports) or 3.6 and a copy of any amendment,
consent or waiver to this Agreement, at the address of the Rating Agency set
forth above or at the other address as shall be designated by the Rating Agency
in a written notice to Servicer.
SECTION 13.7 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement or any of the other
Transaction Documents shall for any reason whatsoever be held invalid, then the
unenforceable covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this
Agreement or the other Transaction Documents (as applicable) and shall in no way
affect the validity or enforceability of the other provisions of this Agreement,
the Certificates, the Purchased Interests or any of the other Transaction
Documents or the rights of the Certificateholders or the Purchasers.
SECTION 13.8 Certificates Nonassessable and Fully Paid. Except to the extent
otherwise expressly provided in Section 7.3 with respect to Transferor, it is
the intention of the parties to this Agreement that the Certificateholders shall
not be personally liable for obligations of the Trust, that the interests in the
Trust represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever and that Certificates upon
authentication thereof by Trustee pursuant to Section 6.2 are and shall be
deemed fully paid.
SECTION 13.9 Nonpetition Covenant. Notwithstanding any prior termination of
this Agreement, each of Trustee, Servicer, Transferor, the Paying Agent, the
Authenticating Agent and the Transfer Agent and Registrar (and each Investor
Certificateholder or Purchaser by its acceptance of a Certificate or Purchased
Interest) agrees that it shall not, with respect to the Trust or Transferor,
institute or join any other Person in instituting any proceeding of the type
referred to in the definition of "Bankruptcy Event" so long as any Certificates
issued by the Trust shall be outstanding or there shall not have elapsed one
year plus one day since the last day on which any such Certificates shall have
been outstanding. The foregoing shall not limit the right of any such Person to
file any claim in or otherwise take any action with respect to any such
insolvency proceeding that was instituted against Transferor or the Trust by any
other Person. In addition, each of Servicer, the Paying Agent, the
Authenticating Agent, the Transfer Agent and Registrar (and each Investor
Certificateholder or Purchaser by its acceptance of a Certificate or Purchased
Interest) and (as to the Trust) Transferor agree that all amounts owed to them
by the Trust or Transferor shall be payable solely from
page 90
amounts that become available for such payment pursuant to this Agreement and
the Receivables Purchase Agreement, and no such amounts shall constitute a claim
against the Trust or Transferor to the extent that they are in excess of the
amounts available for their payment.
SECTION 13.10 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of Trustee, the Investor Certificateholders,
the Purchasers or the Holders of any Series of Investor Certificates, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and are not exhaustive of any rights,
remedies, powers and privileges provided by law.
SECTION 13.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
SECTION 13.12 Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto and the Certificateholders,
the Purchasers and their respective successors and permitted assigns. Except as
otherwise expressly provided in this Agreement, nothing contained in this
Agreement shall confer any rights upon any Person that is not a party to, or a
permitted assignee of a party to, this Agreement.
SECTION 13.13 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 13.14 Binding Effect; Assignability; Survival of Provisions. This
Agreement shall be binding upon and inure to the benefit of Transferor, Servicer
and Trustee and their respective successors and permitted assigns; provided,
that Transferor shall not delegate any of its obligations hereunder. This
Agreement shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and effect
until the termination of the Trust pursuant to Section 12.1. The rights and
remedies with respect to (a) any breach of any representation and warranty
page 91
made by Transferor in Section 2.3 or Section 7.1, (b) any breach of any
representation and warranty made by Servicer in Section 8.1 and (c) the
indemnification and payment provisions in Sections 3.9, 7.3, 8.4, 11.5 and
12.2(b) shall be continuing and shall survive any termination of this Agreement.
SECTION 13.15 Recourse to Transferor. Except to the extent expressly provided
otherwise in the Transaction Documents, the obligations of Transferor under the
Transaction Documents to which it is a party are solely the obligations of
Transferor, and no recourse shall be had for payment of any fee payable by or
other obligation of or claim against Transferor that arises out of any
Transaction Document to which Transferor is a party against any director,
officer or employee of Transferor. Payments to be made by Transferor pursuant to
this Agreement shall be paid to the extent that funds are available to make the
payments after all amounts to be paid to the Certificateholders and the
Purchasers pursuant to the applicable Supplement and PI Agreement shall have
been paid, and there shall be no recourse to Transferor for all or any part of
any amounts payable pursuant to this Agreement if the funds are at any time
insufficient to make all or part of any such payments. The provisions of this
section shall survive the termination of this Agreement.
SECTION 13.16 Recourse to Transferred Assets. The Certificates do not
represent an obligation of, or an interest in, Transferor, any Seller, Servicer,
Trustee or any Affiliate of any of them. Except as expressly provided otherwise
in this Agreement, the Certificates and Purchased Interests are limited in right
of payment to the Transferred Assets.
SECTION 13.17 Submission to Jurisdiction. EACH PARTY HERETO HEREBY IRREVOCABLY
(A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW YORK OVER
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE TRANSACTION
DOCUMENTS, (B) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN THE STATE OR FEDERAL COURT, (C)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF THE ACTION OR PROCEEDING, AND (D)
IN THE CASE OF TRANSFEROR AND APP, IRREVOCABLY APPOINTS THE PROCESS AGENT AS ITS
AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTY SERVICE OF COPIES OF THE
SUMMONS AND COMPLAINT AND ANY OTHER PROCESS THAT MAY BE SERVED IN ANY ACTION OR
PROCEEDING. THE SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF THE
PROCESS TO TRANSFEROR OR APP IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S
ADDRESS, AND TRANSFEROR HEREBY IRREVOCABLY AUTHORIZES
page 92
AND DIRECTS THE PROCESS AGENT TO ACCEPT THE SERVICE ON ITS BEHALF. AS AN
ALTERNATIVE METHOD OF SERVICE, EACH OF TRANSFEROR AND SERVICER ALSO IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY ACTION OR PROCEEDING BY
THE MAILING OF COPIES OF THE PROCESS TO TRANSFEROR OR SERVICER (AS APPLICABLE)
AT ITS ADDRESS SPECIFIED HEREIN. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT
OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR AFFECT THE RIGHT OF ANY PARTY HERETO TO BRING ANY ACTION OR PROCEEDING
AGAINST ANY OR ALL OF THE OTHER PARTIES HERETO OR ANY OF THEIR RESPECTIVE
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 13.18 Waiver of Jury Trial. 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 THE TRANSACTION DOCUMENTS, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION
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 THE TRANSACTION DOCUMENTS, AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
SECTION 13.19 Certain Partial Releases. If any Seller terminates its
obligation to sell all of its Receivables and Related Assets or the Receivables
and Related Assets of one or more lines of business of such Seller pursuant to
Section 1.8(a) or 1.8(c) of the Purchase Agreement, Trustee shall, upon the
request (and at the expense) of APP, execute and deliver to APP such statements
of termination, partial release and/or amendment relating to the UCC-1 financing
statements filed against such Seller pursuant to the Purchase Agreement as shall
be prepared by APP and provided to Trustee to evidence such termination;
provided that Trustee shall have received (i) an Officer's Certificate of
Servicer to the effect that all conditions to such termination specified in
subclauses (i), (ii) and (iii) of such Section 1.8(a) have been satisfied (and
shall not have received notice from any Investor Certificateholder or Agent to
the contrary), (ii) in the case of any such partial release and/or amendment, an
Opinion of Counsel to the effect that the filing of such statements of partial
release and/or amendment will not impair the validity, perfection or priority of
Transferor's or Trustee's rights in and to any Receivables or Related Assets
that remain in the Trust after giving effect to any related conveyance of
Receivables and Related Assets, and/or (iii) in the case of any termination of
filings against a Seller, an Officer's Certificate of Servicer to the effect
that Trustee no longer holds any right, title or interest in the Receivables
generated by such Seller; provided further, that the Trustee shall, upon the
reasonable request of APP, cooperate in the execution and
page 93
delivery of such statements of termination, partial release and/or amendment
into an escrow established to facilitate the transfer of any Receivables and
Related Assets or Terminated Receivables Assets to be transferred by the Trustee
pursuant to the following sentence. In connection with the foregoing, Trustee
shall, if demanded by Transferor, convey all of its right, title and interest in
all (but not less than all) of the Receivables (and Related Assets with respect
thereto) originated by the terminating Seller to a Person designated by the
terminating Seller, provided that such conveyance by Trustee shall be made only
against receipt by Trustee from the purchaser, in cash, of a release price
negotiated in good faith by the terminating Seller (but in no event shall such
release price be less than the lesser of (i) 102% of the price Transferor paid
for such Receivables and Related Assets with respect thereto and (ii) the
aggregate Unpaid Balance of such Receivables). No such release and conveyance by
Trustee shall, however, be permitted if as a result thereof any APP Person would
acquire the released Receivables.
SECTION 13.20 No Recourse. None of the directors, officers or employees of
Transferor shall have any liability to any Person, including, without
limitation, the Trustee or any Purchaser, for any action undertaken or any
certificate delivered or information delivered by such director, officer or
employee hereunder, except to the extent of the gross negligence or willful
misconduct of such director, officer or employee in connection therewith.
[Remainder of page intentionally left blank.]
page 94
IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
NOTEPAD FUNDING CORPORATION,
as Transferor
By: /s/ Gregory M. Benson
-----------------------
Name: Gregory M. Benson
-------------------
Title: President
----------
Address: c/o 17304 Preston Road
Suite 700
Dallas, Texas 75252-5613
Attention: Chief Financial Officer
Telephone: (214) 733-6200
Facsimile: (214) 733-6260
AMERICAN PAD & PAPER COMPANY
OF DELAWARE, INC.,
as initial Servicer
By: /s/ Gregory M. Benson
-----------------------
Name: Gregory M. Benson
------------------
Title: Executive Vice President
-------------------------
Address: 17304 Preston Road
Suite 700
Dallas, Texas 75252-5613
Attention: Chief Financial Officer
Telephone: (214) 733-6200
Facsimile: (214) 733-6260
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By: /s/ Russell Whitley
---------------------
Title: Assistant Vice President
-------------------------
Address: 1 M&T Plaza, 7th Floor
Buffalo, New York 14203-2399
Attention: Russell Whitley
Telephone: (716) 842-5602
Facsimile: (716) 842-4474
page 96
EXHIBIT A
to Pooling Agreement
FORM OF
LOCKBOX ACCOUNT LETTER AGREEMENT
--------------------------------
[To come]
EXHIBIT B
to Pooling Agreement
FORM OF
CONCENTRATION ACCOUNT LETTER AGREEMENT
---------------------------------------
[To come]
EXHIBIT C
to Pooling Agreement
FORM OF
MONTHLY SERVICER'S CERTIFICATE
-------------------------------
TO: MANUFACTURERS AND TRADERS TRUST COMPANY
[Paying Agent]
NOTEPAD FUNDING CORPORATION
[Name of Rating Agency]
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC. (the "Servicer") hereby
certifies that:
(A) This Certificate is being delivered pursuant to Section 3.6 of the
Amended and Restated Pooling and Servicing Agreement, dated as of May 29, 1996,
(as the same may be amended, supplemented or otherwise modified from time to
time, the "Pooling Agreement"), among NOTEPAD FUNDING CORPORATION, as
Transferor, Servicer, and MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee.
(B) As of the date of this Certificate, the Authorized Officer (as defined
in the Pooling Agreement) that is executing this Certificate is not aware of the
occurrence and continuance of any Early Amortization Event or Unmatured Early
Amortization Event (each as defined in the Pooling Agreement). [If an Early
Amortization Event or Unmatured Early Amortization Event has occurred and is
continuing, specify each such Early Amortization Event or Unmatured Early
Amortization Event (as applicable) of which the Authorized Officer executing
this Certificate is aware and the nature and status thereof and further certify
that such information is true and accurate in all material respects.]
IN WITNESS WHEREOF, Servicer has caused this Certificate to be executed by
its duly authorized officer this __ day of _______________, 19__.
AMERICAN PAD & PAPER COMPANY
OF DELAWARE, INC.
By:
-------------------------
Title:
----------------------
EXHIBIT D
to Pooling Agreement
ANNUAL AGREED-UPON PROCEDURES
MONTHLY REPORTS
---------------
Select at random four Monthly Reports prepared during the fiscal year and:
1. Compare/reconcile the following Monthly Report items with the
Servicer's original source documents noted below for five selected
operating units (letters refer to the applicable section of the Monthly
Report):
A. Monthly Receivable Activity:
---------------------------
1. Monthly Sales Journal
2. Cash Application Journal
3. Aged Trial Balance
4. Journal entries and related support affecting cash
application or receivables
5. Receivable Write-off Approval List
6. Account Bank Statements and PC generated Account Reports
7. Credit Memo Report
D. Loss Reserve Ratio:
------------------
1. Schedule A of the Monthly Report
2. Applicable Daily Report for Cutoff Date
3. Previous Monthly Reports
E. Dilution Reserve Ratio:
----------------------
1. Section A of the Monthly Report
2. Previous Monthly Reports
G. Carrying Cost Receivables Reserve:
---------------------------------
1. Section C of the Monthly Report
2. Carrying Cost Worksheet
H. Loss to Liquidation Ratio:
-------------------------
1. Receivable Write-off Approval List
2. Aged Trial Balance
3. Journal entries and related back-up on write-offs and
recoveries
4. Previous Monthly Reports
J. Discount Rate:
-------------
1. Carrying Cost Worksheet
Schedule A. Aged Receivables Ratio:
----------------------
1. Section A of the Monthly Report
2. Previous Monthly Reports
3. Aged Trial Balance Summary - invoices only, and
2. Recalculate the mathematical accuracy of Sections A,B,C,D,E,F,G,H,J and
K and Schedule A.
For each quarter end date that a Monthly Report is obtained, obtain the accounts
receivable Write-Off Report for five selected operating units and randomly
select a total of five write-offs greater than $1000 individually. Then obtain
the write-off documentation and verify that the write-offs had been approved and
were deleted from the Aged Trial Balance Report.
DAILY REPORTS
-------------
Select at random ten Daily Reports prepared during the fiscal year (of which not
more than two shall relate to any single fiscal month) and:
1. Compare/reconcile the following Daily Report items with the Servicer's
original source documents noted below for five selected operating units
(letters refer to the applicable section of the Daily Report):
A. Daily Receivable Activity:
-------------------------
1. Daily Sales Summary
2. Cash Application Journal
3. Aged Trial Balance
4. Journal entries and related support affecting cash
applications or receivables
5. Receivable Write-off Approval List
6. Account Bank Statement and PC generated Account Reports
B. Net Eligible Receivables Calculation (if not closing period):
------------------------------------------------------------
1. Ineligible Receivables Program Reports
C. Excess Concentration Balances:
-----------------------------
1. Ineligible Receivables Program Reports
Schedule A (if settlement date):
1. Most recent Monthly Report
2. Daily Report last day prior to settlement date, and
2
2. Recalculate the mathematical accuracy of sections A-C and Schedule A.
CREDIT DOCUMENTATION
--------------------
Select at random two fiscal month ends during the fiscal year and:
1. Direct the Servicer to prepare a Credit File Contents Schedule (the
"Credit Schedule") that summarizes the contents of the credit files for
each customer the accountants select for testing. The Credit Schedule
will include the following information as of the cut-off date selected:
customer name, customer account number, customer statement, approved
credit limit, date of credit limit approval, name and title of highest
authority that approved the credit limit and other supporting
documentation in support of extension of the credit limit (e. g., Dun &
Bradstreet report, customer financial statement and bank or trade
references), and
2. For each customer selected:
A. Compare the customer's account receivables balance with the
approved credit limit to verify that the balance is less than or
equal to the approved limit
B. Compare the customer's account balance per the Credit Schedule
with the balance per the Account Receivable Aged Trial Balance
C. Compare the date of the customer's most recent invoice indicated
on the customer's statement to the date of the credit approval to
verify that the date of the invoice is the date of or subsequent
to, but within one year of the date of, credit approval
D. Note that at least one of the following items is included with
the credit documentation: Dun & Bradstreet Credit Report or other
credit report, bank or trade reference, financial statements or a
memorandum or workpapers regarding credit
evaluation/justification.
For each of the ten Daily Reports selected:
1. Invoices: Obtain the detail Aged Trial Balance Report for five
selected operating units and randomly select a total of 15 different invoices
and
3
verify the invoice date, amount and customer name with a system generated copy
of the invoice;
2. Dilutions and Credits: Obtain the detail Aged Trial Balance Report for
five selected operating units and randomly select a total of 15 different credit
names and verify the credit memo date, amount and customer name with a system
generated copy of the credit memo;
3. Cash Application: Randomly select a total of 15 individual cash
receipts comprising the cash collection amount and verify the bank receipt date
with the receipt date and application amount on the Daily Report, adjusted for
available balances;
4. Ineligible Receivables: Obtain the Aged Trial Balance for five selected
operating units and randomly select a total of ten customers that have balances
over 90 days past due and calculate the customer balances over 90 days past due
as a percentage of the customer's total balance. If this calculated percentage
is more than 50%, determine if the customer is classified as part of the
Ineligible Receivables;
5. Aging Reports: Using the 15 invoices selected in paragraph 1 above,
find that the invoice is in the appropriate aging category on the Aged Trial
Balance; and
6. Purchase Options: Using the 15 invoices selected in paragraph 1 above,
verify the purchase order reference number on the invoice with the purchase
order (if available).
4
EXHIBIT E
to Pooling Agreement
FORM OF
TRANSFEROR CERTIFICATE
----------------------
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE
OR THE LAWS OF ANY FOREIGN COUNTRY. THIS CERTIFICATE MAY NOT BE RESOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH RESALE, TRANSFER OR DISPOSITION
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS AND FOREIGN LAWS. IN ADDITION TO THE
RESTRICTIONS SET FORTH ABOVE, RESALE, TRANSFER OR DISPOSITION OF THIS
CERTIFICATE IS PROHIBITED TO THE EXTENT SET FORTH IN THE POOLING AGREEMENT (AS
DEFINED BELOW).
NOTEPAD FUNDING RECEIVABLES MASTER TRUST
TRANSFEROR CERTIFICATE
THIS CERTIFIES THAT NOTEPAD FUNDING CORPORATION is the registered owner of
an interest in the Notepad Funding Receivables Master Trust (the "Trust"), which
was created pursuant to the Amended and Restated Pooling and Servicing
Agreement, dated as of May 29, 1996 (as the same may be amended, supplemented or
otherwise modified from time to time, the "Pooling Agreement"), by and among
NOTEPAD FUNDING CORPORATION, a Delaware corporation, as Transferor
("Transferor"), AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC., as initial
Servicer (in such capacity, the "Servicer"), and MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee (in such capacity, together with its successors and assigns
in such capacity, the "Trustee"). This Certificate is the duly authorized
Transferor Certificate designated and issued under the Pooling Agreement. To the
extent not otherwise defined herein, capitalized terms have the meanings
assigned to them in Appendix A to the Pooling Agreement. This Certificate is
subject to the terms, provisions and conditions of, and is entitled to the
benefits afforded by, the Pooling Agreement, to which terms, provisions and
conditions the holder of this Certificate by virtue of the acceptance hereof
assents and by which the holder is bound.
This Certificate shall not bear interest.
The Pooling Agreement may be amended and the rights and obligations of the
parties thereto and of the holder of this Certificate modified as set forth in
the Pooling Agreement.
Unless the certificate of authentication hereon shall have been executed by
or on behalf of Trustee by the manual signature of a duly authorized signatory,
this Certificate shall not entitle the holder hereof to any benefit under the
Pooling Agreement or under any other Transaction Document or be valid for any
purpose.
This Certificate is limited in right of payment to the Transferred Assets.
Transferor may not transfer, assign, exchange or otherwise convey or
pledge, hypothecate or otherwise grant a security interest in this Certificate
or any interest represented hereby except in compliance with the terms,
conditions and restrictions set forth in the Pooling Agreement.
This Certificate shall be construed in accordance with the laws of the
State of Illinois, without reference to its conflict of laws principles, and all
obligations, rights and remedies under, or arising in connection with, this
Certificate shall be determined in accordance with the laws of the State of
Illinois.
2
IN WITNESS WHEREOF, Transferor has caused this Certificate to be executed
by its officer thereunto duly authorized.
NOTEPAD FUNDING CORPORATION
By:
----------------------------
Title:
-----------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Transferor Certificate referred to in the Pooling Agreement.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
----------------------------
Title:
-----------------------
Dated: , 199
------------------- -
3
EXHIBIT F
to Pooling Agreement
FORM OF CERTIFICATE TO BE GIVEN BY CERTIFICATE OWNER
[Euroclear [Cedel, societe anonyme
151 Boulevard Jacqmain 67 Boulevard Grand-Duchesse Charlotte
B-1210 Brussels, Belgium] L-1331 Luxembourg]
Re: [Description of Certificates] issued pursuant to the Amended and
Restated Pooling and Servicing Agreement dated as of May 29, 1996,
among NOTEPAD FUNDING CORPORATION, AMERICAN PAD & PAPER COMPANY OF
DELAWARE, INC. and MANUFACTURERS AND TRADERS TRUST COMPANY, as
Trustee, (the "Certificates").
This is to certify that as of the date hereof, and except as set forth
below, the beneficial interest in the Certificates held by you for our account
is owned by persons that are not U.S. persons (as defined in Rule 901 under the
Securities Act of 1933, as amended).
The undersigned undertakes to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating to
the Certificates held by you in which the undersigned has acquired, or intends
to acquire, a beneficial interest in accordance with your operating procedures
if any applicable statement herein is not correct on such date. In the absence
of any such notification, it may be assumed that this certification applies as
of such date.
[This certification excepts beneficial interests in and does not relate to
U.S. $_________ principal amount of the Certificates appearing in your books as
being held for our account but that we have sold or as to which we are not yet
able to certify.]
We understand that this certification is required in connection with
certain securities laws in the United States of America. If administrative or
legal proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy thereof to any interested party in such
proceedings.
Dated: ___________________,* By: __________________,
Account Holder
* Certification must be dated on or after the 15th day before the date of the
Euroclear or Cedel certificate to which this certification relates.
EXHIBIT G
to Pooling Agreement
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR OR CEDEL
[Trustee and Transfer Agent and Registrar]
Re: [Description of Certificates] issued pursuant to the Amended and
Restated Pooling and Servicing Agreement dated as of May 29, 1996
among NOTEPAD FUNDING CORPORATION, AMERICAN PAD & PAPER COMPANY OF
DELAWARE, INC. and MANUFACTURERS AND TRADERS TRUST COMPANY, as
Trustee, (the "Certificates").
This is to certify that, based solely on certifications we have received in
writing, by tested telex or by electronic transmission from member organizations
appearing in our records as persons being entitled to a portion of the principal
amount set forth below (our "Member Organizations") as of the date hereof,
$__________ principal amount of the Certificates is owned by persons (a) that
are not U.S. persons (as defined in Rule 901 under the Securities Act of 1933,
as amended (the "Securities Act")) or (b) who purchased their Certificates (or
interests therein) in a transaction or transactions that did not require
registration under the Securities Act.
We further certify (a) that we are not making available herewith for
exchange any portion of the related Regulation S Temporary Book-Entry
Certificate excepted in such certifications and (b) that as of the date hereof
we have not received any notification from any of our Member Organizations to
the effect that the statements made by them with respect to any portion of the
part submitted herewith for exchange are no longer true and cannot be relied
upon as of the date hereof.
We understand that this certification is required in connection with
certain securities laws of the United States of America. If administrative or
legal proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy hereof to any interested party in such proceedings.
Date: _________________* Yours faithfully,
* To be dated no earlier By: ____________________________
than the Effective Date. [Morgan Guaranty Trust Company of New
York, Brussels Office, as Operator of
the Euroclear Clearance System]
[Cedel, societe anonyme]
2
EXHIBIT H
to Pooling Agreement
FORM OF CERTIFICATE TO BE GIVEN BY TRANSFEREE
OF BENEFICIAL INTEREST IN A REGULATION S TEMPORARY
BOOK-ENTRY CERTIFICATE
[Euroclear [Cedel, societe anonyme
151 Boulevard Jacqmain 67 Boulevard Grand-Duchesse Charlotte
B-1210 Brussels, Belgium] L-1331 Luxembourg]
Re: [Description of Certificates] issued pursuant to the Amended and
Restated Pooling and Servicing Agreement dated as of May 29, 1996
among NOTEPAD FUNDING CORPORATION, AMERICAN PAD & PAPER COMPANY OF
DELAWARE, INC. and MANUFACTURERS AND TRADERS TRUST COMPANY, as
Trustee, (the "Certificates").
This is to certify that as of the date hereof, and except as set forth
below, for purposes of acquiring a beneficial interest in the Certificates, the
undersigned certifies that it is not a U.S. person (as defined in Rule 901 under
the Securities Act of 1933, as amended).
The undersigned undertakes to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating to
the Certificates held by you in which the undersigned intends to acquire a
beneficial interest in accordance with your operating procedures if any
applicable statement herein is not correct on such date. In the absence of any
such notification, it may be assumed that this certification applies as of such
date.
We understand that this certification is required in connection with
certain securities laws in the United States of America. If administrative or
legal proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy thereof to any interested party in such
proceedings.
Dated: ___________________, By: _____________________
EXHIBIT I
to Pooling Agreement
FORM OF TRANSFER CERTIFICATE FOR EXCHANGE OR
TRANSFER FROM 144A BOOK-ENTRY CERTIFICATE TO
REGULATION S BOOK-ENTRY CERTIFICATE
[Trustee and Transfer Agent and Registrar]
Re: [Description of Certificates] issued pursuant to the Amended and
Restated Pooling and Servicing Agreement dated as of May 29, 1996 (the
"Agreement"), among NOTEPAD FUNDING CORPORATION, AMERICAN PAD & PAPER
COMPANY OF DELAWARE, INC. and MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee, (the "Certificates").
Capitalized terms used but not defined herein shall have the meanings given
to them in the Agreement.
This letter relates to U.S. $___________ principal amount of Certificates
that are held as a beneficial interest in the 144A Book-Entry Certificate (CUSIP
No. _______) with DTC in the name of [insert name of transferor] (the
"Transferor"). The Transferor has requested an exchange or transfer of the
beneficial interest for an interest in the Regulation S Book-Entry Certificate
(CUSIP No. _______) to be held with [Euroclear] [Cedel] through DTC.
In connection with the request and in receipt of the Certificates, the
Transferor does hereby certify that the exchange or transfer has been effected
in accordance with the transfer restrictions set forth in the Agreement and the
Certificates and:
(a) pursuant to and in accordance with Regulation S under the
Securities Act of 1933, as amended (the "Securities Act"), and accordingly
the Transferor does hereby certify that:
(i) the offer of the Certificates was not made to a person in
the United States of America,
[(ii) at the time the buy order was originated, the transferee
was outside the United States of America or the Transferor and any
person acting on its behalf reasonably
believed that the transferee was outside the United States of America,
(ii) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither the
Transferor nor any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the United States of
America,]*
(iii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable,
(iv) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act, and
(b) with respect to transfers made in reliance on Rule 144 under the
Securities Act, the Transferor does hereby certify that the Certificates
are being transferred in a transaction permitted by Rule 144 under the
Securities Act.
This certification and the statements contained herein are made for your
benefit and the benefit of the issuer and the [placement agent].
[Insert name of Transferor]
Dated: By:
------------------------- ------------------------
Title:
---------------------
* Insert one of these two provisions, which come from the definition of
"offshore transactions" in Regulation S.
2
EXHIBIT J
to Pooling Agreement
FORM OF PLACEMENT AGENT EXCHANGE INSTRUCTIONS
Depository Trust Company
55 Water Street
50th Floor
New York, New York 10041
Re: [Description of Certificates] issued pursuant to the Amended and
Restated Pooling and Servicing Agreement dated as of May 29, 1996 (the
"Agreement"), among NOTEPAD FUNDING CORPORATION, AMERICAN PAD & PAPER
COMPANY OF DELAWARE, INC. and MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee, (the "Certificates").
Pursuant to Section 6.11 of the Agreement, _______________________ (the
"Placement Agent") hereby requests that $____________ aggregate principal amount
of the Certificates held by you for our account and represented by the
Regulation S Temporary Book-Entry Certificate (CUSIP No. _______) (as defined in
the Agreement) be exchanged for an equal principal amount represented by the
144A Book-Entry Certificate (CUSIP No. _______) to be held by you for our
account.
Dated: [placement agent]
---------------------------
By:
----------------------
Title:
-------------------
SCHEDULE 1
to Pooling Agreement
ACCOUNT BANKS - LOCKBOX BANKS
-----------------------------
Texas Commerce Bank National Association
ACCOUNT BANKS - CONCENTRATION ACCOUNT BANK
------------------------------------------
Fleet Bank
APPENDIX A
DEFINITIONS
A. Defined Terms. As used in the Purchase Agreement, the Pooling Agreement
or any Supplement:
"Account Agreements" means the Concentration Account Agreements, the
Blocked Account Agreements and the Lockbox Agreements.
"Account Banks" means the Concentration Account Banks, the Blocked Account
Banks and the Lockbox Banks.
"Adverse Claim" means any claim of ownership interest or any mortgage, deed
of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other) or other security interest.
"Affiliate" means, with respect to a Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
"Agent" means, with respect to a Series or Purchased Interest, any
Person(s) designated as the agent(s) for the Certificateholders or the Purchaser
in the related Supplement or PI Agreement.
"Aggregate Unpaid Balance" is defined in Section 2.1(b) of the Purchase
Agreement.
"APP" means American Pad & Paper Company of Delaware, Inc., a Delaware
corporation (formerly named Williamhouse-Regency of Delaware, Inc.).
"APP Person" means APP and each of its Affiliates (other than Transferor).
"Applicant" is defined in Section 6.7 of the Pooling Agreement.
"Authorized Newspaper" means a newspaper of general circulation in the
Borough of Manhattan, The City of New York printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
"Authorized Officer" means, with respect to Transferor, Servicer or any
Seller, the Chief Executive Officer, the President, the Treasurer, the Chief
Financial Officer, any Vice President and any Assistant Treasurer.
"Available Final Distribution Amount" means, with respect to any Series,
the amount that would be available in the Master Collection Account on the Final
Scheduled Payment Date for the Series for distribution to the Certificateholders
of such Series.
"Bank Accounts" means the Lockbox Accounts, the Blocked Accounts and the
Concentration Accounts.
"Bankruptcy Event" means, for any Person, any of the following events:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up or
composition or readjustment of debts of such Person, the appointment of a
trustee, receiver, custodian, liquidator, assignee, sequestrator or the
like for such Person or any substantial part of its assets, or any similar
action with respect to such Person under any law relating to bankruptcy,
insolvency, reorganization, winding up or composition or adjustment of
debts, and such case or proceeding shall continue undismissed, or unstayed
and in effect, for a period of (i) in the case of any Person other than
Transferor, 60 days and (ii) in the case of Transferor, 10 days; or an
order for relief in respect of such Person shall be entered in an
involuntary case under the federal bankruptcy laws or other similar laws
now or hereafter in effect, or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect,
or shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or the like, for
such Person or any substantial part of its property, or shall make any
general assignment for the benefit of creditors, or shall fail to, or admit
in writing its inability to, pay its debts generally as they become due.
"Base Amount" is defined, for purposes of any Series or Purchased Interest,
in the applicable Supplement or PI Agreement.
"Blocked Account Agreement" means any of the letter agreements delivered in
connection with the Pooling Agreement and any other letter agreement,
substantially in the form of Exhibit A-2 to the Pooling Agreement (or such other
form as to which the Modification Condition is satisfied), among a Blocked
Account Bank, one or more Sellers, Servicer and Trustee that relates to one or
more Blocked Accounts, as they may be amended, supplemented or otherwise
modified from time to time.
"Blocked Account Bank" means any of the banks at which one or more Blocked
Accounts are maintained from time to time.
page A-2
"Blocked Accounts" means the bank accounts, maintained at those certain
locations described in Schedule I to the Pooling Agreement, into which
Collections from Receivables are deposited, and any bank account that is
hereafter created in accordance with, and to perform the functions contemplated
for "Blocked Accounts" in, Section 3.3 of the Pooling Agreement.
"Book-Entry Certificates" means certificates evidencing a beneficial
interest in the Investor Certificates, ownership and transfers of which shall be
made through book entries by a Clearing Agency as described in Section 6.11 of
the Pooling Agreement; provided that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer permitted and
Definitive Certificates are to be issued to the Certificate Owners, such
certificates shall no longer be "Book-Entry Certificates".
"Business Day" means a day (other than a Saturday or Sunday) (i) on which
commercial banks in New York, New York are not authorized or required to be
closed for business, and (ii) if such day relates to the funding or pricing of
any interest in the Eurodollar markets, on which commercial banks in London are
not authorized or required to be closed for business.
"Buyer" is defined in the preamble to the Purchase Agreement.
"Calculation Period" means a fiscal month of APP.
"Card Receivables" means Receivables originated by the divisions or
operating units of the Sellers identified, for APP's management reporting
purposes, as "Creative Card".
"Carrying Cost Account" is defined in Section 4.2 of the Pooling Agreement.
"Carrying Costs" means, for any period, (a) interest or yield payable with
respect to any Series or Purchased Interest for that period, (b) the aggregate
Servicing Fee for the period in the applicable amount provided for in Section
3.4 of the Pooling Agreement, (c) the operating expenses described in Section
7.2(m) of the Pooling Agreement for the period and (d) other fees, costs and
expenses incurred by Transferor and Trustee for the period and paid to Persons
other than APP Persons in connection with its duties under the Transaction
Documents (in the case of Trustee, to the extent not included in the Servicing
Fee).
"Certificate" means any Investor Certificate or the Transferor Certificate.
"Certificateholder" means the Person in whose name a Certificate is
registered in the Certificate Register.
page A-3
"Certificate Purchase Agreement" means an agreement pursuant to which a
Person agrees to purchase a Certificate, as the same may be amended,
supplemented or otherwise modified from time to time.
"Certificate Owner" means, with respect to a Book-Entry Certificate, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"Certificate Register" means the register maintained pursuant to Section
6.3 of the Pooling Agreement.
"Clearing Agency" means, with respect to any Book-Entry Certificate, any
Person designated as such by Transferor, which person must be registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934.
"Clearing Agency Participant" is defined in Section 6.11(d) of the Pooling
Agreement.
"Closing Date" means October 31, 1995.
"Collections" means all funds that are received by any Seller, Transferor,
Servicer or Trustee from or on behalf of any Obligor in payment of any amounts
owed (including invoice prices, finance charges, interest and all other charges,
if any) in respect of any Receivable or Related Asset, or otherwise applied to
repay or discharge any Receivable (including insurance payments that any Seller,
Transferor or Servicer applies in the ordinary course of its business to amounts
owed in respect of such Receivable and net proceeds of sale or other disposition
of repossessed goods that were the subject of such Receivable).
"Concentration Account" means any bank account that is maintained in
accordance with, and to perform the functions contemplated for Concentration
Accounts in, Section 3.3 of the Pooling Agreement.
"Concentration Account Agreement" means a letter agreement, substantially
in the form of Exhibit B to the Pooling Agreement (or such other form as to
which the Modification Condition has been satisfied), among Transferor,
Servicer, a Concentration Account Bank and Trustee that relates to one or more
Concentration Accounts, as it may be amended, supplemented or otherwise modified
from time to time.
"Concentration Account Banks" means any of the banks at which one or more
Concentration Accounts are maintained from time to time.
"Contract" means an agreement between a Seller and any Person pursuant to
which such Person is obligated to make payments in respect of any Receivable or
Related Asset.
page A-4
"Corporate Trust Office" means the principal office of Trustee in Buffalo,
New York or the principal office of any successor Trustee at which at any
particular time its corporate trust business shall be principally administered.
"Credit and Collection Policy" means (a) so long as no Successor Servicer
has been appointed, with respect to any Seller, its credit and collection
policies and practices relating to the Contracts and Receivables of such Seller
in existence on the First Issuance Date, as such credit and collection policies
may be modified without violating Section 6.3(b) of the Purchase Agreement or
Section 7.2(f) of the Pooling Agreement or (b) with respect to any Successor
Servicer, its collection policies and practices with respect to receivables like
the Receivables.
"Current Purchase Money Note Carrying Costs" means (i) the Purchase Money
Note balance on the immediately preceding Distribution Date multiplied by (ii)
the prime rate on such day multiplied by (iii) a fraction, the numerator of
which is 30 and the denominator of which is 360.
"Cut-Off Date" means the last day of any Calculation Period.
"Daily Report" is defined in Section 3.5(c) of the Pooling Agreement.
"Definitive Certificates" means any Certificate other than a Book-Entry
Certificate.
"Dilution" means any reduction in the balance of a Receivable or check
issued by any Seller to an Obligor on account of discounts, incorrect billings,
credits, rebates, allowances, chargebacks, returned or repossessed goods,
allowances for early payments or any other reduction in the balance of a
Receivable for any other reason unrelated to the inability of the Obligor to pay
the Receivable.
"Discount Rate" is defined in Section 2.2(d) of the Purchase Agreement.
"Disposition" is defined in Section 9.3 of the Pooling Agreement.
"Distribution Date" means the 15th day of each calendar month (or, if not a
Business Day, the next Business Day).
"Distribution Period" means each period from one Distribution Date to the
next Distribution Date.
"Dollars" means dollars in lawful money of the United States of America.
"Domestic Person" means any Person that has a place of business located in
the United States or Puerto Rico or otherwise is subject to the jurisdiction of
one or more civil
page A-5
courts of the United States (other than by reason of contractual submission to
such jurisdiction).
"Early Amortization Event" means, with respect to any Series or Purchased
Interest, any event identified as an Early Amortization Event in the related
Supplement or PI Agreement.
"Early Amortization Period" is defined, for purposes of any Series or
Purchased Interest, in the related Supplement or PI Agreement.
"Eligible Deposit Account" means (a) a segregated trust account maintained
at a national bank with a long-term debt rating of at least A (or, in the case
of a Bank Account, BBB) from S&P, (b) a deposit account maintained with a bank
that has an unsecured long-term debt rating of A, or a short-term rating of at
least A-1, from S&P or (c) another deposit account as to which the Modification
Condition has been satisfied.
"Eligible Investments" means any of the following:
(a) deposit accounts that are established and maintained at a
financial institution, the short-term debt securities or certificates of
deposit of which have at the time of investment the highest short-term debt
or certificate of deposit rating (as the case may be) available from the
Rating Agencies, and that are held in the name of Trustee in trust for the
benefit of the Certificateholders, subject to the exclusive custody and
control of Trustee and for which Trustee has sole signature authority;
provided that this clause shall not apply to the Bank Accounts or to the
Transaction Accounts;
(b) marketable obligations of the United States of America, the full
and timely payment of principal and interest on which is backed by the full
faith and credit of the United States of America, that have a maturity date
not later than the next succeeding Distribution Date;
(c) marketable obligations directly and fully guaranteed by the United
States of America, the full and timely payment of principal and interest on
which is backed by the full faith and credit of the United States of
America, that have a maturity date not later than the next succeeding
Distribution Date;
(d) banker's acceptances, certificates of deposit and other interest-
bearing obligations denominated in Dollars (subject to the proviso at the
end of this definition), that have a maturity date not later than the next
succeeding Distribution Date;
(e) repurchase agreements (i) that are entered into with any financial
institution having the ratings referred to in clause (a) and (ii) that are
secured by a
page A-6
perfected first priority security interest in an obligation of the type
described in clause (b) or (c); provided that such obligation may mature later
than the next succeeding Distribution Date if such bank is required to
repurchase such obligation not later than the next succeeding Distribution Date;
and provided further, that (i) the market value of the obligation with respect
to which such bank has a repurchase obligation, determined as of the date on
which such obligation is originally purchased, shall equal or exceed 102% of the
repurchase price to be paid by such bank and (ii) Trustee or a custodian acting
on its behalf shall have possession of the instruments or documents evidencing
such obligations;
(f) guaranteed investment contracts entered into with any financial
institution, the short-term debt securities of which have the highest short-term
debt rating available from the Rating Agencies that, in each case, have a
maturity date not later than the next succeeding Distribution Date;
(g) commercial paper (except for commercial paper issued by any APP
Person) rated at the time of investment not less than "A-1+" or the equivalent
thereof by the Rating Agencies and having a maturity date not later than the
next succeeding Distribution Date; and
(h) freely redeemable shares in open-end money market mutual funds
(including such mutual funds that are offered by the Person who is acting as
Trustee or by any agent of such Person) that (i) maintain a constant net-asset
value and (ii) at the time of such investment have been rated not less than
"AAA\\m\\" or the equivalent thereof by S&P;
provided that (A) Trustee shall only acquire banker's acceptances and
certificates of deposit of, and enter into repurchase agreements with,
institutions whose short-term obligations have been rated not less than "A-1+"
or the equivalent thereof by the Rating Agencies and whose long-term obligations
have been rated not less than "AA-" by S&P, (B) the securities, banker's
acceptances, certificates of deposit, other obligations and repurchase
agreements described above shall only constitute "Eligible Investments" if and
to the extent that Servicer is satisfied that Trustee will have a perfected
security interest therein for the benefit of the Certificateholders and (C)
notwithstanding anything to the contrary herein or in the other Transaction
Documents, the term "Rating Agency," whenever used in this definition of
"Eligible Investments", shall be deemed to not include DCR to the extent that an
investment is rated by S&P, but not by DCR.
"Eligible Obligor" means, for purposes of any Series (unless otherwise
specified in the related Supplement) at any time, an Obligor that satisfies the
following criteria:
page A-7
(a) it is a Domestic Person and is not (except as otherwise specified for any
Series in the related Supplement) (i) the United States government or any agency
or instrumentality thereof or (ii) a state or local government or any agency or
instrumentality thereof;
(b) it is not a direct or indirect Subsidiary of APP or any other
entity with respect to which APP or any of its Subsidiaries owns, directly
or indirectly, more than 50% of the entity's equity interests;
(c) with respect to which no Bankruptcy Event had occurred and was
continuing as of the end of the most recent Calculation Period and is
continuing; provided that this clause shall not apply if a bankruptcy court
has approved the Obligor's payment of its obligations on the Receivables;
(d) as of the end of the most recent Calculation Period, no more than
50% of all Receivables of the Obligor were (for reasons other than
disputes) aged more than 120 days past their respective invoice dates;
(e) as of the end of the most recent Calculation Period, none of the
Receivables of the Obligor were evidenced by promissory notes; and
(f) it is not an Obligor with whom the applicable Seller has a "cash
in advance" or "cash on account" arrangement (but may be an Obligor that
the applicable Seller bills in advance in accordance with that Seller's
customary practices, and not on account of concerns about the
creditworthiness of the Obligor).
"Eligible Receivable" means, for purposes of any Series (unless otherwise
specified in the related Supplement) at any time, a Receivable:
(a) that arises from the sale of goods or services by a Seller in the ordinary
course of its business;
(b) that represents a bona fide obligation resulting from a sale of
goods that have been shipped or services that have been performed and is
due and payable not more than 120 days after the date on which the invoice
for services or merchandise, the sale of which gave rise to such
Receivable, is provided or delivered;
(c) that, as of that time, is not aged more than 60 days past its due
date;
(d) that constitutes an account or a general intangible for the
payment of money and not an instrument or chattel paper;
(e) the Obligor of which is an Eligible Obligor;
page A-8
(f) with regard to which both the representation and warranty of
Transferor in Section 2.3(a)(i) of the Pooling Agreement and the
representation and warranty of the relevant Seller in Section 5.1(k) of the
Purchase Agreement are true and correct;
(g) the transfer of which (including the sale by the applicable
Seller to Transferor and the transfer by Transferor to the Trust) does not
contravene or conflict with any law, rule or regulation or any contractual
or other restriction, limitation or encumbrance that applies to the
applicable Seller, Transferor or the Trust, and the sale, assignment or
transfer of which, and the granting of a security interest in which, does
not require the consent of the Obligor thereof or any other Person, other
than any such consent that has been obtained;
(h) that is denominated and payable only in Dollars in the United
States of America and is non-interest bearing; provided that a Receivable
shall not be deemed to be interest-bearing solely as a result of the
applicable Seller's imposition of an interest or other charge on any such
Receivable that remains unpaid for some specified period (but such interest
charge or other charge shall not be included in the Unpaid Balance of a
Receivable for purposes of calculating the Base Amount);
(i) that arises under a Contract that has been duly authorized and
that, together with such Receivable, is in full force and effect and
constitutes the legal, valid and binding obligation of the Obligor of such
Receivable enforceable against such Obligor in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity, regardless
of whether such enforceability is considered in a proceeding in equity or
at law;
(j) that is not subject to any asserted reduction, cancellation, or
refund or any dispute, offset, counterclaim, lien or defense whatsoever
(including Permitted Adverse Claims, any potential reduction on account of
any offsetting account payable of Transferor or the applicable Seller to an
Obligor or funds of an Obligor held by Transferor or the Seller); provided
that a Receivable that is subject only in part to any of the foregoing
shall be an Eligible Receivable to the extent not subject to reduction,
cancellation, refund, dispute, offset, counterclaim, lien or other defense;
(k) that, together with the Contract related thereto, was created in
accordance with, and conforms in all material respects with, all applicable
laws, rules, regulations, orders, judgments, decrees and determinations of
all courts and other governmental authorities (whether Federal, state,
local or foreign and including usury laws);
(l) that satisfies all applicable requirements of the Credit and
Collection Policy of the applicable Seller; and
page A-9
(m) that has not been compromised, adjusted, satisfied, subordinated,
rescinded or modified (including by extension of time or payment or the
granting of any discounts, allowances or credits), except as permitted by
Section 7.2(f) of the Pooling Agreement.
"Eligible Servicer" means (a) APP, (b) Trustee or (c) an entity that, at
the time of its appointment as Servicer, (i) is servicing a portfolio of trade
receivables, (ii) is legally qualified and has the capacity to service the
Receivables, (iii) has demonstrated the ability to service professionally and
competently a portfolio of trade receivables similar to the Receivables in
accordance with high standards of skill and care, (iv) is qualified to use the
software that is then being used to service the Receivables or obtains the right
to use or has its own software that is adequate to perform its duties under the
Pooling Agreement and (v) as to which the Modification Condition has been
satisfied.
"Enhancement" means, with respect to any Series or Purchased Interest, any
surety bond, letter of credit, guaranteed rate agreement, maturity guaranty
facility, cash collateral account or guaranty, tax protection agreement,
interest rate swap or other contract or agreement for the benefit of
Certificateholders of the Series or Purchaser of the Purchased Interest.
"Enhancement Provider" means the Person providing any Enhancement, other
than any Certificateholders, the Certificates of which are subordinated to any
Series or class of Certificates.
"Equalization Account" is defined in Section 4.2 of the Pooling Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Estimated Base Amount" is defined in Section 3.5 of the Pooling Agreement.
"Exchange Date" is defined in Section 6.11(c) of the Pooling Agreement.
"Excluded Losses" is defined in Section 8.4 of the Pooling Agreement.
"Exempt Person" means (x) a Person that was added to the Purchase Agreement
as a Seller pursuant to the last sentence of Section 1.7 thereof without
satisfaction of the Modification Condition (or, if applicable, written approval
of the Trustee), or (y) a Person that merged with a Seller in accordance with
Section 6.3(d)(iii) of the Purchase Agreement without satisfaction of the
Modification Condition (or, if applicable, written approval of the Trustee).
"Existing Pooling and Servicing Agreement" is defined in Section 1.2 of the
Pooling Agreement.
page A-10
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any successor thereto or to the functions thereof.
"Final Scheduled Payment Date" is defined, for purposes of any Series, in
the applicable Supplement.
"First Issuance Date" means October 31, 1995.
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means the United States of America, any state or
other political subdivision thereof and any entity in the United States of
America or any applicable foreign jurisdiction that exercises executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranty" means any agreement or arrangement by which any Person directly
or indirectly guarantees, endorses, agrees to purchase or otherwise becomes
contingently liable upon any liability of any other Person (other than by
endorsements of instruments in the course of collection) or guarantees the
payment of distributions upon the shares of any other Person.
"Highest Bid" means the highest cash purchase offer for a Series received
by Servicer pursuant to Section 12.1 of the Pooling Agreement.
"Holdback Account" is defined in Section 4.2 of the Pooling Agreement.
"Holder" means the Person in whose name a Certificate is registered in the
Certificate Register or a Person who holds a Purchased Interest.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of APP, any qualification or exception to such opinion or certification (i) that
relates to the limited scope of examination of matters relevant to such
financial statement, or (ii) that relates to the treatment or classification of
any item in such financial statement and which, as a condition to its removal,
would require an adjustment to such item and the effect of such adjustment would
cause the outstanding principal amount of the Purchase Money Note to exceed the
Maximum Exposure Amount.
"Indebtedness" of any Person means all of that Person's obligations for
borrowed money, obligations evidenced by bonds, debentures, notes or other
similar instruments, obligations as lessee under leases that are required by
GAAP to be recorded as capitalized leases and obligations to pay the deferred
purchase price of property or services.
"Indemnified Losses" is defined in Section 7.3 of the Pooling Agreement.
page A-11
"Indemnified Party" is defined in Section 7.3 of the Pooling Agreement.
"Initial Cut-Off Date" means the Business Day immediately preceding the
First Issuance Date.
"Intercreditor Agreement" means an intercreditor agreement between the
Trustee and a secured creditor of a Seller (i) which is in form and substance
satisfactory to the Trustee and (ii) as to which the Modification Condition
shall have been satisfied, if such agreement was executed after the Closing
Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986.
"Invested Amount" is defined, with respect to any Series or Purchased
Interest, in the related Supplement or PI Agreement.
"Investor Certificateholder" means the Person in whose name an Investor
Certificate is registered in the Certificate Register.
"Investor Certificates" means the Certificates issued pursuant to any
Supplement.
"Investor Exchange" is defined in Section 6.10(a) of the Pooling Agreement.
"Issuance" is defined in Section 6.10(a) of the Pooling Agreement.
"Issuance Date" is defined in Section 6.10(b) of the Pooling Agreement.
"Issuance Notice" is defined in Section 6.10(b) of the Pooling Agreement.
"Lead Placement Agent" means any Person designated as such by Transferor in
connection with the issuance of any Investor Certificates.
"Letter of Representations" means the agreement among Transferor, Trustee
and the applicable Clearing Agency, with respect to any Book-Entry Certificates,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Lockbox Accounts" means the bank accounts, maintained at those certain
locations described in Schedule 1 to the Pooling Agreement, into which
Collections from Receivables are deposited, and any bank account that is
hereafter created in accordance with, and to perform the functions contemplated
for "Lockbox Accounts" in, Section 3.3 of the Pooling Agreement.
"Lockbox Agreement" means any of the letter agreements delivered in
connection with the Pooling Agreement and any other letter agreement,
substantially in the form of Exhibit
page A-12
A-1 to the Pooling Agreement (or such other form as to which the Modification
Condition is satisfied), among a Lockbox Bank, one or more Sellers, Servicer and
Trustee that relates to one or more Lockbox Accounts, as they may be amended,
supplemented or otherwise modified from time to time.
"Lockbox Bank" means any of the banks at which one or more Lockbox Accounts
are maintained from time to time.
"Loss Discount" is defined in Section 2.2(b) of the Purchase Agreement.
"Loss to Liquidation Ratio" means, as calculated in each Monthly Report, a
fraction (a) the numerator of which is the aggregate Unpaid Balance of
Receivables (net of recoveries) that were written off as uncollectible or
(without duplication) converted into promissory notes during the three preceding
Calculation Periods in accordance with the Credit and Collection Policy of the
applicable Seller, and (b) the denominator of which is the aggregate amount of
Collections on the Receivables received during such three Calculation Periods.
"Majority Investors" means Holders of Investor Certificates that
collectively evidence more than 50% of the outstanding principal amount of all
Investor Certificates.
"Master Collection Account" is defined in Section 4.2 of the Pooling
Agreement.
"Material Adverse Effect" means, with respect to any event or circumstance
at any time, a material adverse effect on (a) the ability of any Person to
perform its obligations under any Transaction Documents, (b) the validity,
enforceability or collectibility of any Transaction Documents or material
Receivables or Related Assets or (c) any Series or Purchased Interest; provided,
that for the purpose of determining whether any Adverse Claim or other event or
circumstance results (or has a likelihood of resulting) in a Material Adverse
Effect, the effect of such event or circumstance shall be considered in the
aggregate with the effect of all other Adverse Claims (including Permitted
Adverse Claims) or other events and circumstances occurring or existing at the
time of such determination.
"Maximum Exposure Amount" is defined in Section 3.1(a) of the Purchase
Agreement.
"Member Organization" is defined in Section 6.11(c) of the Pooling
Agreement.
"Modification Condition" means, with respect to any action, that (i) each
Rating Agency has confirmed in writing that such action will not result in a
reduction or withdrawal of the rating of any outstanding Series or Purchased
Interest that was rated by such Rating Agency, and (ii) if any Series has not
been rated, the Trustee and the Required Series Holders for that Series shall
have consented in writing to such action.
"Monthly Report" is defined in Section 3.5(d) of the Pooling Agreement.
page A-13
"Net Invested Amount" is defined, for purposes of any Series, in the
applicable Supplement.
"New Issuance" is defined in Section 6.10(a) of the Pooling Agreement.
"Noncomplying Receivables and Dilution Adjustment" is defined in Section
3.1(b) of the Purchase Agreement.
"Obligations" means (a) all obligations of Buyer, the Sellers and the
Servicer to the Trustee, the Trust, any other Indemnified Party, the Investor
Certificateholders and their respective successors, permitted transferees and
assigns, arising under or in connection with the Transaction Documents, and (b)
all obligations of a Seller to Buyer, any other RPA Indemnified Party and their
respective successors, transferees and assigns, arising under or in connection
with the Transaction Documents, in each case howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due.
"Obligor" means a Person obligated to make payments on a Receivable.
"Officer's Certificate" means, unless otherwise specified in the Pooling
Agreement or in any Supplement, a certificate signed by an Authorized Officer of
Transferor or the initial Servicer, as the case may be, or, in the case of a
Successor Servicer, a certificate signed by the President, any Vice President,
Assistant Treasurer or the financial controller (or an officer holding an office
with equivalent or more senior responsibilities) of such Successor Servicer,
that, in the case of any of the foregoing, is delivered to Trustee.
"Opinion of Counsel" means a written opinion of counsel, who shall be
reasonably acceptable to Trustee and, if the Rating Agencies are addressees, the
Rating Agencies.
"Original Purchase Agreement" is defined in the first recital to the
Purchase Agreement.
"Paying Agent" means any paying agent appointed pursuant to Section 6.6 of
the Pooling Agreement and shall initially be Trustee.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Adverse Claims" means (a) ownership or security interests
arising under the Transaction Documents, (b) liens for taxes, assessments or
charges of any governmental authority (other than Tax or ERISA Liens) and liens
of landlords, carriers, warehousemen, mechanics and materialmen imposed by law
in the ordinary course of business, in each case (i) for amounts not yet due or
(ii) which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP, provided that the aggregate amount secured
by
page A-14
all liens referred to in this clause (ii) does not exceed $1,000,000 (or for
purposes of any Series or Purchased Interest, any different amount that may be
specified in the applicable Supplement or PI Agreement), (c) security interests
in favor of creditors of the Sellers that are subject to valid and enforceable
Intercreditor Agreements, and (d) Adverse Claims arising solely as a result of
any action taken by Trustee under the Pooling Agreement.
"Permitted Terminating Seller" is defined in Section 1.8(a) of the Purchase
Agreement.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, government or any agency or political subdivision thereof or any other
entity.
"PI Agreement" means an agreement or agreements executed and delivered in
connection with the sale of a Purchased Interest, as amended, supplemented or
otherwise modified from time to time.
"Pooling Agreement" means the Amended and Restated Pooling and Servicing
Agreement, dated as of May 29, 1996 among Transferor, as transferor, APP, as
Servicer, and Trustee, as it may be amended, supplemented or otherwise modified
from time to time.
"Previously Terminated Seller Amount" is defined in Section 1.8 of the
Purchase Agreement.
"Principal Funding Account" is defined in Section 4.2 of the Pooling
Agreement.
"Process Agent" is defined in Section 10.7 of the Purchase Agreement.
"Pro Forma Financial Data" is defined in Section 5.1(i) of the Purchase
Agreement.
"Program" means the transactions contemplated in the Transaction Documents.
"Publication Date" is defined in Section 9.3(a) of the Pooling Agreement.
"Purchase" means each purchase of Receivables and Related Assets by
Transferor from a Seller under the Purchase Agreement.
"Purchase Agreement" means the Amended and Restated Receivables Purchase
Agreement, dated as of May 29, 1996, among the Sellers and Transferor, as it may
be amended, supplemented or otherwise modified from time to time.
"Purchase Money Note" is defined in Section 3.2 of the Purchase Agreement.
page A-15
"Purchased Interest" means a fluctuating undivided ownership interest in
the Transferred Assets, purchased pursuant to the PI Agreement related thereto,
that shall include the right to receive, to the extent necessary to make
required payments to Purchasers at the time and in the amounts specified in the
related PI Agreement, the portion of Collections allocable to such Purchased
Interest pursuant to the Pooling Agreement and the PI Agreement, funds on
deposit in the Master Collection Account allocable to the Purchased Interest
pursuant to the Pooling Agreement and the PI Agreement and funds available
pursuant to any related Enhancement.
"Purchase Discount Reserve Ratio" is defined in Section 2.2(c) of the
Purchase Agreement.
"Purchased Receivables" is defined in Section 1.1 of the Purchase
Agreement.
"Purchase Price" is defined in Section 2.1(b) of the Purchase Agreement.
"Purchase Price Credit" is defined in Section 3.1(d) of the Purchase
Agreement.
"Purchase Price Percentage" is defined in Section 2.2(a) of the Purchase
Agreement.
"Purchaser" means a purchaser, or any owner by permitted assignment, of a
Purchased Interest.
"Purchase Termination Date" means the earlier to occur of (a) the date
specified by the Sellers pursuant to Section 8.1 of the Purchase Agreement and
(b) any event referred to in Section 8.2 of the Purchase Agreement.
"Rating Agency" means each statistical rating agency that, at the request
of the Seller or Transferor, has rated any then-issued and outstanding Series of
Investor Certificates.
"Receivable" means any right of any Seller to payment, whether constituting
an account, chattel paper, instrument, general intangible or otherwise, arising
from the sale of goods, services or future services by such Seller and includes
the right to payment of any interest or finance charges and other obligations
with respect thereto.
"Receivables Pool" means at any time all Receivables then held by the
Trust.
"Record Date" means the Business Day that is three Business Days prior to a
Distribution Date.
"Records" means all Contracts, purchase orders, invoices and other
agreements, documents, books, records and other media for the storage of
information (including tapes, disks, punch cards, computer programs and
databases and related property) maintained by
page A-16
Transferor, the Sellers or Servicer with respect to the Transferred Assets
and/or the related Obligors.
"Recoveries" means all Collections received by the Trust in respect of any
Write-Off held by the Trust.
"Regency" means the divisions or operating units of the Sellers identified,
for APP's management reporting purposes, as "Personalizing" (including "Regency
East" and "Regency West").
"Regency Receivables" means Receivables originated by Regency.
"Regulation S Book-Entry Certificate" is defined in Section 6.11(c) of the
Pooling Agreement.
"Regulation S Temporary Book-Entry Certificate" is defined in Section
6.11(c) of the Pooling Agreement.
"Related Assets" is defined in Section 1.1 of the Purchase Agreement.
"Related Security" means, with respect to any Receivable, (a) all of the
applicable Seller's right, title and interest in and to the goods, if any,
relating to the sale that gave rise to the Receivable, (b) all other security
interests or liens and property subject thereto from time to time purporting to
secure payment of the Receivable, whether pursuant to the Contract related to
the Receivable, or otherwise, and (c) all letters of credit, guarantees and
other agreements or arrangements of whatever character from time to time
supporting or securing payment of the Receivable whether pursuant to the
Contract related to the Receivable or otherwise.
"Related Transferred Assets" is defined in Section 2.1(a) of the Pooling
Agreement.
"Report Date" means the Business Day that is three Business Days prior to a
Distribution Date.
"Required Investors" means Holders of Investor Certificates and Purchasers
that evidence at least 66-2/3% of the total outstanding principal amount of
Investor Certificates and Purchased Interests.
"Required Receivables" is defined, for purposes of any Series, in the
applicable Supplement.
"Required Series Holders" means with respect to any action to be taken by
Investor Certificateholders of any Series, unless otherwise specified in the
related Supplement,
page A-17
Investor Certificateholders that evidence at least 66-2/3% of the principal
amount of those Certificates.
"Requisite Persons" means (i) Trustee and (ii) any Investors or Agents
required to be included in this definition under the terms of any Supplement,
Certificate Purchase Agreement or PI Agreement.
"Responsible Officer" means, when used with respect to Trustee, (a) any
officer within the Corporate Trust Office (or any successor group of Trustee),
including any vice president, assistant vice president or any officer or
assistant trust officer of Trustee customarily performing functions similar to
those performed by the persons who hold the office of vice president, assistant
vice president, or assistant secretary and (b) any other officer within the
Corporate Trust Office with direct responsibility for the administration of the
Pooling Agreement or to whom any corporate trust matter is referred at Trustee's
Corporate Trust Office because of his knowledge of and familiarity with the
particular subject.
"Revolving Period" means, with respect to each Series, the period before
the commencement of the earliest of any applicable amortization period,
accumulation period or early amortization period.
"RPA Indemnified Losses" is defined in Section 9.1 of the Purchase
Agreement.
"RPA Indemnified Party" is defined in Section 9.1 of the Purchase
Agreement.
"S&P" means Standard & Poor's Ratings Services, a division of the McGraw-
Hill Companies, Inc.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means each Person from time to time party to the Purchase
Agreement as a "Seller."
"Seller Assignment Certificate" means an assignment by a Seller,
substantially in the form of Exhibit B to the Purchase Agreement, evidencing
Transferor's acquisition of the Receivables and Related Assets generated by the
Seller, as it may be amended, supplemented or otherwise modified from time to
time.
"Seller Change Event" is defined in Section 3.5(e) of the Pooling
Agreement.
"Seller Dilution Adjustment" is defined in Section 3.5(b) of the Purchase
Agreement.
page A-18
"Seller Guaranty" means the Amended and Restated Guaranty, dated as of May
29, 1996, by APP of the Obligations of the other Sellers, as it may be amended,
supplemented or otherwise modified from time to time.
"Seller Maturity Date" is defined in Section 3.2 of the Purchase Agreement.
"Seller Noncomplying Receivable" means a Receivable that does not meet the
criteria set forth in the definition of Eligible Receivables.
"Seller Noncomplying Receivables Adjustment" is defined in Section 3.5(a)
of the Purchase Agreement.
"Seller Receivables Review" is defined in Section 6.1(c) of the Purchase
Agreement.
"Seller Transaction Documents" means the Purchase Agreement, the Seller
Assignment Certificates and the Account Agreements.
"Senior Interest" is defined in the Purchase Money Note.
"Series" means any series of Investor Certificates issued pursuant to
Section 6.10 of the Pooling Agreement.
"Series Collection Allocation Percentage" means, for any Series or
Purchased Interest at any time, the percentage equivalent of a fraction the
numerator of which is the Required Receivables for that Series or Purchased
Interest and the denominator of which is the sum of the Required Receivables for
all then outstanding Series and Purchased Interests.
"Series Interest" is defined in Section 4.1 of the Pooling Agreement.
"Series Loss Allocation Percentage" means, for any Series or Purchased
Interest for purposes of any Monthly Report, the percentage equivalent of a
fraction the numerator of which is the Invested Amount of that Series or
Purchased Interest and the denominator of which is the sum of the Invested
Amounts of all then outstanding Series and Purchased Interests, in each case
determined as of the beginning of the related Calculation Period (or such other
date as may be specified in the related Supplement or PI Agreement).
"Servicer" means at any time the Person then authorized pursuant to Article
III of the Pooling Agreement to service, administer and collect Receivables and
Related Transferred Assets.
"Servicer Default" is defined in Section 10.1 of the Pooling Agreement.
"Service Transfer" is defined in Section 10.2(b) of the Pooling Agreement.
page A-19
"Servicing Fee" is defined in Section 3.4 of the Pooling Agreement.
"Settlement Period" means the period starting on one Distribution Date and
ending on the day prior to the next Distribution Date.
"Shared Investor Collections" means any funds identified as such in any
Supplement or PI Agreement.
"Shortfall" is defined, for any Series or Purchased Interest, in the
related Supplement or PI Agreement.
"Specified Assets" is defined in Section 1.1 of the Purchase Agreement.
"Subscription Agreement" means the Subscription and Stockholder Agreement,
dated as of October 31, 1995, between APP and Buyer, as it may be amended,
supplemented, amended and restated or otherwise modified from time to time in
accordance with the Purchase Agreement and the Pooling Agreement.
"Sub-Servicer" is defined in Section 3.1 of the Pooling Agreement.
"Subsidiary" means, with respect to any Person, any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person.
"Successor Servicer" is defined in Section 10.2(a) of the Pooling
Agreement.
"Supplement" means each supplement to the Pooling Agreement executed by
Transferor, Servicer and Trustee to specify the terms of a Series of
Certificates, as the same may be amended, supplemented or otherwise modified
from time to time.
"Tax Opinion" means, with respect to any action and any Seller, an Opinion
of Counsel to the effect that, for Federal tax purposes and state income and
franchise tax purposes in New York and Texas, (a) such action will not adversely
affect the characterization of the Investor Certificates of any outstanding
Series or Class or any Purchased Interest as debt or partnership interests, (b)
following such action the Trust will not be treated as an association (or
publicly traded partnership) taxable as a corporation, (c) such action will not
be treated as a taxable event to any Investor Certificateholder, Certificate
Owner or holder of a Purchased Interest and (d) in the case of the original
issuance of any Series or Class of Investor Certificates or any Purchased
Interest, the Investor Certificates of the new Series or any Purchased Interest
will properly be characterized as debt or partnership interests.
page A-20
"Tax or ERISA Lien" means a lien arising under Section 6321 of the Internal
Revenue Code or Section 302(f) or 4068 of ERISA.
"Terminated Business Line(s)" is defined in Section 1.8(a) of the Purchase
Agreement.
"Terminated Receivables Assets" is defined in Section 1.8(a) of the
Purchase Agreement.
"Terminating Seller" is defined in Section 1.8(a) of the Purchase
Agreement.
"Terminating Seller Notice Date" is defined in Section 1.8(a) of the
Purchase Agreement.
"Termination Notice" is defined in Section 10.1 of the Pooling Agreement.
"Transaction Accounts" is defined in Section 4.2 of the Pooling Agreement.
"Transaction Documents" means the Purchase Agreement, the Pooling
Agreement, the Seller Guaranty, each Supplement, each Certificate Purchase
Agreement, each Certificate, each PI Agreement, each Seller Transaction Document
and each other agreement designated as a Transaction Document in any Supplement
or PI Agreement.
"Transfer Agent and Registrar" means any transfer agent and registrar
appointed pursuant to Section 6.3 of the Pooling Agreement and shall initially
be Trustee.
"Transferor" means Notepad Funding Corporation, a Delaware corporation.
"Transferor Certificate" is defined in Section 4.1 of the Pooling
Agreement.
"Transferred Assets" is defined in Section 2.1 of the Pooling Agreement.
"Trust" means the trust created by the Pooling Agreement, which shall be
known as the Notepad Funding Receivables Master Trust.
"Trustee" means Manufacturers and Traders Trust Company, in its capacity as
agent for the Certificateholders, or its successor-in-interest, or any successor
trustee appointed as provided in the Pooling Agreement.
"Turnover Days" means, at any time, thirty multiplied by the quotient of:
(y) the sum of the Unpaid Balances of Receivables at the end of each
of the three immediately preceding Calculation Periods; divided by
page A-21
(z) the aggregate amount payable pursuant to invoices giving rise to
Receivables that were generated during the immediately preceding three
Calculation Periods.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the applicable jurisdiction or jurisdictions.
"Unmatured Early Amortization Event" means any event that, with the giving
of notice or lapse of time, or both, would become an Early Amortization Event.
"Unpaid Balance" of any Receivable means at any time the unpaid amount
thereof as shown in the books of Servicer at such time.
"Unrestricted Book-Entry Certificate" is defined in Section 6.11(c) of the
Pooling Agreement.
"Write-Off" means any Receivable that, consistent with the applicable
Credit and Collection Policy, has been written off as uncollectible.
"144A Book-Entry Certificate" is defined in Section 6.12(b) of the Pooling
Agreement.
B. Other Interpretative Matters. For purposes of any Transaction Document,
unless otherwise specified therein: (1) accounting terms used and not
specifically defined therein shall be construed in accordance with GAAP; (2)
terms used in Article 9 of the New York UCC, and not specifically defined in
that Transaction Document, are used therein as defined in such Article 9; (3)
the term "including" means "including without limitation," and other forms of
the verb "to include" have correlative meanings; (4) references to any Person
include such Person's permitted successors; (5) in the computation of a period
of time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each means "to but
excluding"; (6) the words "hereof", "herein" and "hereunder" and words of
similar import refer to such Transaction Document as a whole and not to any
particular provision of such Transaction Document; (7) references to "Section",
"Schedule" and "Exhibit" in such Transaction Document are references to
Sections, Schedules and Exhibits in or to such Transaction Document; (8) the
various captions (including any table of contents) are provided solely for
convenience of reference and shall not affect the meaning or interpretation of
such Transaction Document; and (9) references to any statute or regulation refer
to that statute or regulation as amended from time to time, and include any
successor statute or regulation of similar import.
page A-22