<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1 TO QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30,
1996
Commission file number 1-11803
-------------------
AMERICAN PAD & PAPER COMPANY
(Exact name of registrant as specified in its charter)
Delaware 04-3164298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17304 Preston Road, Suite 700, Dallas, TX 75252-5613
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 733-6200
Commission file number 333-3006
-------------------
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 25-1512956
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17304 Preston Road, Suite 700, Dallas, TX 75252-5613
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 733-6200
Indicate by check mark whether each Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that each
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
American Pad & Paper Company Yes No X
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American Pad & Paper Company of Delaware, Inc. Yes No X
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As of August 10, 1996, American Pad & Paper Company had 27,399,809 shares
of Common Stock outstanding. As of August 10, 1996, American Pad & Paper Company
of Delaware, Inc. had 100 shares of Common Stock outstanding, all of which are
owned by American Pad & Paper Company.
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<PAGE>
AMERICAN PAD & PAPER COMPANY
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.
QUARTERLY PERIOD ENDED JUNE 30, 1996
INDEX
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Page No.
<S> <C> <C>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...................... 2
</TABLE>
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<PAGE>
PART II. OTHER INFORMATION
Item 6 of the Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1996 of American Pad & Paper Company and American Pad & Paper Company
of Delaware, Inc., as filed with the Securities and Exchange Commission on
August 14, 1996, hereby is amended by deleting such item in its entirety and
replacing it as follows:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. The following Exhibits are filed herewith and made a part
hereof:
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- - ----------- ----------------------
<C> <S>
3.1(i) Restated Certificate of Incorporation of the Company.
3.1(ii) Amended and Restated By-Laws of the Company.
4.1 Credit Agreement, dated as of July 8, 1996, among the Company, WR
Acquisition, Inc., American Pad & Paper Company of Delaware, Inc.,
various Lending Institutions, Bank of Tokyo-Mitsubishi Trust
Company, Bank One, Texas, N.A., The Bank of Nova Scotia and The
First National Bank of Boston, as Co-Agents and Bankers Trust
Company, as Agent./(1)/
4.2 Security Agreement, dated as of July 8, 1996, among the Company, WR
Acquisition, Inc., American Pad & Paper Company of Delaware, Inc.,
certain other subsidiaries of American Pad & Paper Company, and
Bankers Trust Company, as Collateral Agent./(1)/
4.3 Pledge Agreement, dated as of July 8, 1996, among the Company, WR
Acquisition, Inc., American Pad & Paper Company of Delaware, Inc.,
the lenders from time to time party thereto, and Bankers Trust
Company, as Agent./(1)/
4.4 Form of Revolving and Swingline Note of American Pad & Paper
Company of Delaware, Inc.
4.5 Subsidiary Guaranty, dated as of July 8, 1996, among each of the
Company's subsidiaries named therein and Bankers Trust Company, as
Agent for the Bank./(1)/
*4.6 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./(1)/
*4.7 Series 1996-1 Supplement to 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.
</TABLE>
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<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- - ----------- ----------------------
<C> <S>
*4.8 Certificate Purchase Agreement (Series 1996-1, Class A), dated as
of May 29, 1996, among Notepad Funding Corporation, American Pad &
Paper Company of Delaware, Inc., the Purchasers described therein
and ABN AMRO Bank N.V., as Agent.
*4.9 Certificate Purchase Agreement (Series 1996-1, Class B), dated as
of May 29, 1996, among Notepad Funding Corporation, American Pad &
Paper Company of Delaware, Inc. and Caisse Nationale de Credit
Agricole, as Purchaser.
*4.10 Amended and Restated Receivables Purchase Agreement, dated as of
May 29, 1996, between American Pad & Paper Company of Delaware,
Inc., certain of its Subsidiaries and Notepad Funding Corporation,
as Buyer.
*4.11 Amended and Restated Guaranty, dated as of May 29, 1996, issued by
American Pad & Paper Company of Delaware, Inc. for the benefit of
Notepad Funding Corporation.
10.1 1996 Key Employee Stock Incentive Plan of the Company.
10.2 1996 Non-Employee Director Stock Option Plan of the Company.
10.3 Management Stock Purchase Plan of the Company.
27.1 Financial Data Schedule.
</TABLE>
_______________
/(1)/ The Company agrees to furnish supplementally to the Commission a copy of
any omitted schedule or exhibit to such agreement upon request by the
Commission.
* Filed with this Amendment No. 1 to Quarterly Report on Form 10-Q.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the period
presented.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 15, 1996 AMERICAN PAD & PAPER COMPANY
AMERICAN PAD & PAPER COMPANY OF
DELAWARE, INC.
By /s/ Kevin W. McAleer
----------------------------------
Kevin W. McAleer
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- - ----------- ----------------------
<C> <S>
3.1(i) Restated Certificate of Incorporation of the Company.
3.1(ii) Amended and Restated By-Laws of the Company.
4.1 Credit Agreement, dated as of July 8, 1996, among the Company,
WR Acquisition, Inc., American Pad & Paper Company of Delaware,
Inc., various Lending Institutions, Bank of Tokyo-Mitsubishi Trust
Company, Bank One, Texas, N.A., The Bank of Nova Scotia and The
First National Bank of Boston, as Co-Agents and Bankers Trust
Company, as Agent./(1)/
4.2 Security Agreement, dated as of July 8, 1996, among the Company, WR
Acquisition, Inc., American Pad & Paper Company of Delaware, Inc.,
certain other subsidiaries of American Pad & Paper Company, and
Bankers Trust Company, as Collateral Agent./(1)/
4.3 Pledge Agreement, dated as of July 8, 1996, among the Company, WR
Acquisition, Inc., American Pad & Paper Company of Delaware, Inc.,
the lenders from time to time party thereto, and Bankers Trust
Company, as Agent./(1)/
4.4 Form of Revolving and Swingline Note of American Pad & Paper
Company of Delaware, Inc.
4.5 Subsidiary Guaranty, dated as of July 8, 1996, among each of the
Company's subsidiaries named therein and Bankers Trust Company, as
Agent for the Bank./(1)/
*4.6 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./(1)/
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
*4.7 Series 1996-1 Supplement to 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.
*4.8 Certificate Purchase Agreement (Series 1996-1, Class A), dated as
of May 29, 1996, among Notepad Funding Corporation, American Pad &
Paper Company of Delaware, Inc., the Purchasers described therein
and ABN AMRO Bank N.V., as Agent.
*4.9 Certificate Purchase Agreement (Series 1996-1, Class B), dated as
of May 29, 1996, among Notepad Funding Corporation, American Pad &
Paper Company of Delaware, Inc. and Caisse Nationale de Credit
Agricole, as Purchaser.
*4.10 Amended and Restated Receivables Purchase Agreement, dated as of
May 29, 1996, between American Pad & Paper Company of Delaware,
Inc., certain of its Subsidiaries and Notepad Funding Corporation,
as Buyer.
*4.11 Amended and Restated Guaranty, dated as of May 29, 1996, issued by
American Pad & Paper Company of Delaware, Inc. for the benefit of
Notepad Funding Corporation.
10.1 1996 Key Employee Stock Incentive Plan of the Company.
10.2 1996 Non-Employee Director Stock Option Plan of the Company.
10.3 Management Stock Purchase Plan of the Company.
27.1 Financial Data Schedule.
</TABLE>
- - ----------------
/(1)/ The Company agrees to furnish supplementally to the Commission a copy of
any omitted schedule or exhibit to such agreement upon request of the
Commission.
* Filed with this Amendment No. 1 to Quarterly Report on Form 10-Q.
<PAGE>
EXHIBIT 4.6
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SERIES 1996-1 SUPPLEMENT
TO 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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<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; INCORPORATION OF TERMS ........................... 1
SECTION 1.1 Definitions ........................................... 1
SECTION 1.2 Incorporation of Terms ................................ 25
ARTICLE II DESIGNATION .................................................. 25
SECTION 2.1 Designation ........................................... 25
SECTION 2.2 Group ................................................. 25
SECTION 2.3 Investor Ownership Percentage ......................... 26
ARTICLE III CONDITIONS TO ISSUANCE; USE OF PROCEEDS ..................... 26
SECTION 3.1 Conditions to Issuance ................................ 26
SECTION 3.2 Use of Proceeds ....................................... 26
ARTICLE IV PAYMENTS AND ALLOCATIONS ..................................... 26
SECTION 4.1 Interest; Additional Amounts .......................... 26
SECTION 4.2 Daily Calculations and Group Allocations .............. 28
SECTION 4.3 Allocations of Daily Group Collections (Other Than in
a Group Amortization Period) ........................ 28
SECTION 4.4 Allocations of Daily Group Collections During a Group
Amortization Period ................................. 30
SECTION 4.5 Withdrawals from the Equalization Account and
Principal Funding Account ........................... 32
SECTION 4.6 Available Subordinated Amount ......................... 32
SECTION 4.7 Write-Offs and Recoveries ............................. 33
SECTION 4.8 Certain Dilution in a Group Amortization Period ....... 34
SECTION 4.9 Optional Early Pay Out ................................ 34
SECTION 4.10 Calculation of Dilution ............................... 36
ARTICLE V DISTRIBUTIONS AND REPORTS ..................................... 36
SECTION 5.1 Distributions ......................................... 36
SECTION 5.2 Special Distributions on the Refinancing Date ......... 38
SECTION 5.3 Payments in Respect of Transferor Certificate ......... 38
SECTION 5.4 Daily Reports and Monthly Reports ..................... 38
SECTION 5.5 Annual Tax Information ................................ 39
SECTION 5.6 Periodic Perfection Certificate ....................... 39
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Page
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ARTICLE VI EARLY AMORTIZATION EVENTS .................................... 39
SECTION 6.1 Early Amortization Events ............................. 40
SECTION 6.2 Early Amortization Period ............................. 42
ARTICLE VII OPTIONAL REDEMPTION; TERMINATION; INDEMNITIES ............... 42
SECTION 7.1 Optional Redemption of Investor Interests ............. 42
SECTION 7.2 Termination ........................................... 43
SECTION 7.3 Indemnification by Transferor ......................... 43
SECTION 7.4 Indemnification by Servicer ........................... 45
ARTICLE VIII MISCELLANEOUS .............................................. 45
SECTION 8.1 Governing Law ......................................... 45
SECTION 8.2 Counterparts .......................................... 45
SECTION 8.3 Severability of Provisions ............................ 45
SECTION 8.4 Amendment, Waiver, Etc. ............................... 45
SECTION 8.5 Trustee ............................................... 46
SECTION 8.6 Instructions in Writing ............................... 46
SECTION 8.7 No Recourse ........................................... 46
EXHIBITS
EXHIBIT A Part 1. Form of Class A Certificate
Part 2. Form of Class B Certificate
EXHIBIT B Form of Daily Report
Part 1. For Use Prior to Group Amortization Period
Part 2. For Use in Group Amortization Period
EXHIBIT C Form of Monthly Report
Part 1. For Use Prior to Group Amortization Period
Part 2. For Use in Group Amortization Period
ii
<PAGE>
This SERIES 1996-1 SUPPLEMENT, dated as of May 29, 1996 (this
"Supplement"), is made among NOTEPAD FUNDING CORPORATION, a Delaware
corporation, as Transferor, AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC., a
Delaware corporation ("APP"), as Servicer, and MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York banking corporation, as Trustee.
Pursuant to the Amended and Restated Pooling and Servicing Agreement, dated
as of May 29, 1996 (as it may be amended, supplemented or otherwise modified
from time to time, and as supplemented hereby, the "Pooling Agreement"), among
Transferor, Servicer and Trustee, Transferor may from time to time direct
Trustee to issue and authenticate, on behalf of the Trust, one or more Series of
Certificates representing undivided interests in the Transferred Assets. Certain
terms applicable to a Series are to be set forth in a Supplement. This
Supplement is a "Supplement" as that term is defined in the Pooling Agreement.
Pursuant to this Supplement, Transferor and Trustee shall create a Series
of Certificates and specify certain of their terms.
ARTICLE I DEFINITIONS; INCORPORATION OF TERMS
SECTION 1.1 Definitions. (a) Capitalized terms used and not otherwise
defined herein are used as defined in Appendix A to the Pooling Agreement. This
Supplement shall be interpreted in accordance with the conventions set forth in
Part B of that Appendix A.
(b) Each reference in this Supplement to funds on deposit in the Carrying
Cost Account, the Equalization Account or the Principal Funding Account (or
similar phrase) refers only to funds in the administrative sub-accounts of those
Accounts that are allocated to Series in Group I. Unless the context otherwise
requires, in this Supplement: (i) each reference to a "Daily Report" or "Monthly
Report" refers to a Daily Report or Monthly Report for Group I; (ii) each
reference to the "Servicing Fee" refers to the Servicing Fee allocable to Group
I; (iii) each reference to the "Series Collection Allocation Percentage" or the
"Series Loss Allocation Percentage" refers to Group I's Series Collection
Allocation Percentage or Series Loss Allocation Percentage; (iv) each reference
to the Principal Funding Account or the Equalization Account refers to funds in
such account allocable to Group I; and (v) each reference to the Transaction
Documents shall include reference to the Certificate Purchase Agreements.
(c) Each capitalized term defined below relates only to the Series 1996-1
Certificates and to no other Series of Certificates (except to the extent that
certain of such terms are explicitly used as defined herein in any Supplement
relating to another Series in Group I). Whenever used in this Supplement, the
following words and phrases shall have the following meanings:
<PAGE>
"ABR Tranche" means, at any time and as the context shall indicate, (i) the
portion of the Series Class A Invested Amount that is designated by Transferor
in accordance with the Class A Certificate Purchase Agreement to accrue interest
based on the Alternate Base Rate, or (ii) if the Holders of Class B Certificates
shall have given notice under Section 3.3 of the Class B Certificate Purchase
Agreement (and until such notice is revoked), the Class B Invested Amount.
"Accrual Reserve" means on any day, the sum of (a) 1.1 times the Incentive
Payment Accrual, plus (b) the aggregate amount of obligations owed by the
Sellers in respect of Incentive Payment Dilution with respect to Participating
Obligors that accrued prior to the current calendar year and have not been paid,
plus (c) the Incentive Payment Liquidation Reserve.
"Acquisition Amount" is defined in Section 2.3.
"Additional Amounts" means (a) as to the Series 1996-1 Certificates, the
Prepayment Premium and other amounts payable pursuant to Sections 4.2, 4.3, 4.5,
4.6 and 10.5 of the Class A Certificate Purchase Agreement and amounts payable
pursuant to Sections 3.1, 3.2, 3.3 and 7.5 of the Class B Certificate Purchase
Agreement, and (b) as to any other Series in Group I, any amounts identified as
"Additional Amounts" in the related Supplement.
"Adjusted Eligible Receivables" means, on any Business Day, the result of
(a) the aggregate Unpaid Balance of Eligible Receivables held by the Trust on
that day, minus (b) Unapplied Cash held by the Trust on that day, plus (c) the
Aggregate Retained Balances, in each case as shown in the Daily Report for such
day, minus (d) the aggregate balance of all outstanding credit memos written off
during the three year period ending on the last day of such Calculation Period.
"Aged Receivables Ratio" means, as calculated in each Monthly Report as of
the Cut-Off Date for the related Calculation Period, a fraction (expressed as a
percentage) having (a) a numerator that is the sum of (i) the aggregate Unpaid
Balance of Receivables that remained outstanding 91 to 120 days after their
respective due dates, as determined as of the Cut-Off Date for such Calculation
Period, plus (ii) the aggregate Unpaid Balance of Receivables that were written
off as uncollectible during the most recently ended Calculation Period and that,
if not so written off, would have been outstanding not more than 120 days after
their respective due dates, as determined as of that Cut-Off Date, and (b) a
denominator that is the aggregate amount payable pursuant to invoices giving
rise to Receivables that were generated during the Calculation Period that
occurred four Calculation Periods prior to the most recently ended Calculation
Period, as determined as of the Cut-Off Date for such prior Calculation Period.
"Agent" means ABN AMRO Bank N.V., in its capacity as Agent under (and as
defined in) the Class A Certificate Purchase Agreement, together with its
respective
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<PAGE>
successors in that capacity. The Agent is an "Agent" for purposes of the Pooling
Agreement.
"Aggregate Retained Balances" means, on any Business Day, the
aggregate of the balances retained in Lockbox Accounts or Concentration Accounts
for items in the process of collection but for which funds have not been made
available by the related Lockbox Bank or Concentration Account Bank, provided
that (i) no notice of insufficient funds or similar situation shall exist with
respect thereto and (ii) the Unpaid Balance of receivables shall have been
reduced by an amount equal to such balances.
"Alternate Base Rate" means, on any day, a fluctuating rate of interest per
annum equal to the highest of:
(a) the rate of interest announced, from time to time, by Agent as its
prime commercial rate for United States dollar loans made in the United
States for any day, and
(b) the Federal Funds Rate, and
Any change in the interest rate resulting from a change in the prime commercial
rate announced by the Agent shall become effective without prior notice to
Transferor or the Servicer as of 12:01 a.m., New York City time, on the Business
Day on which each change in the prime commercial rate is announced by the Agent.
The prime commercial rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged by the Agent to any customer. The Agent
may make commercial loans or other loans at rates of interest at, above or below
the prime commercial rate.
"Amortization Period" means the period beginning on the first day of the
August 2000 Calculation Period and ending on the earlier of (a) the Expected
Final Payment Date and (b) the date, if any, on which an Early Amortization
Period begins, provided that there will be no Amortization Period if an Early
Amortization Period commences on or prior to the date specified above for the
beginning of the Amortization Period.
"Ampad Segment" means divisions or operating units of Sellers engaged in
lines of business that were, prior to the Closing Date, engaged in by Ampad
Corporation and its subsidiaries.
"Annualized Sales" means, at any time with respect to a Participating
Obligor, the result of multiplying Year-to-Date Sales by the then applicable
Time Factor.
"Applicable Ratings Factor" means the Class A Ratings Factor or the Class B
Ratings Factor, as specified in each calculation where the Applicable Ratings
Factor is used.
3
<PAGE>
"ASA Measuring Period" means, for any Cut-Off Date falling in a Group
Amortization Period, the Calculation Period ending on that Cut-Off Date (or the
portion thereof falling after the Group Amortization Calculation Date, in the
case of the first Cut-Off Date falling in the Group Amortization Period).
"Available Subordinated Amount" means, at any time during a Group
Amortization Period, the amount calculated pursuant to Section 4.6.
"Base Amount" means the result of the following formula:
[NER x SCAP x (100%-CBRR)]-CASD-CCRR
where:
CBRR = the Class B Reserve Ratio in effect for that Business Day;
NER = the Net Eligible Receivables as reported in the Daily Report
for that Business Day;
SCAP = the Series Collection Allocation Percentage for that Business Day;
CASD = the Class A Subordination Deficit for that Business Day; and
CCRR = the Carrying Cost Receivables Reserve as reported in the Daily
Report for such day.
"Carrying Cost Cash Required Amount" means, on any Business Day, an amount
equal to the Current Carrying Costs.
"Carrying Cost Receivables Reserve" means, on any Business Day, the result
of:
(a) the Current Carrying Costs; plus
(b) the product of (i) the Class A Invested Amount, multiplied by (ii)
1.5 times the weighted average of the interest rates on Class A
Certificates, multiplied by (iii) a fraction the numerator of which is the
product of two and the number of Turnover Days and the denominator of which
is 360; plus
(c) the product of (i) the Class B Invested Amount, multiplied by (ii)
1.5 times the weighted average of the interest rates on the Class B
Certificates, multiplied by (iii) a fraction the numerator of which is the
product of two and the number of Turnover Days and the denominator of which
is 360; plus
(d) the product of (i) the Series Collection Allocation Percentage on
the next preceding Distribution Date, multiplied by (ii) the aggregate
Unpaid Balance of Receivables on the next preceding Distribution Date,
multiplied by (iii) 1%, multiplied
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by (iv) a fraction the numerator of which is the product of two and the
number of Turnover Days and the denominator of which is 365 or 366, as
applicable; plus
(e) The Carrying Cost Receivables Reserve Increments for each other
Series in Group I (as defined, and calculated as provided, in the related
Supplement); minus
(f) the balance on deposit in the Carrying Cost Account at the
beginning of that Business Day.
"Certificate Purchase Agreements" means the Class A Certificate Purchase
Agreement and the Class B Certificate Purchase Agreement.
"Certificate Rate" means, at any time, the weighted average of the interest
rates on all outstanding Series 1996-1 Certificates.
"Certificate Spread" means with respect to any Eurodollar Tranche, 0.35%
per annum.
"Class A Certificate" is defined in Section 2.1. Each Class A Certificate
shall be substantially in the form of Part 1 of Exhibit A.
"Class A Certificate Purchase Agreement" means the Revolving Certificate
Purchase Agreement (Series 1996-1, Class A) dated as of May 29, 1996 among
Transferor, Servicer, the Purchasers of Class A Certificates and the Agent.
"Class A Concentration Factor" means, as of any Cut-Off Date, the greatest
of:
(i) the "Benchmark Percentage" for purposes of clause (2) of the
definition of "Class A Excess Concentration Balances,"
(ii) two times the "Benchmark Percentage" for purposes of clause (3)
of that definition,
(iii) three times the "Benchmark Percentage" for purposes of clause
(4) of that definition, and
(iv) the sum of (A) all Class A Special Concentration Limits, if any,
then in effect, plus (B) the product of (x) the "Benchmark Percentage" for
purposes of clause (5) of the definition of "Class A Excess Concentration
Balances" times (y) the excess of five over the number of Class A Special
Obligors.
"Class A Excess Concentration Balances" means, on any day and with respect
to a Reported Obligor (other than a Class A Special Obligor), the aggregate
outstanding balances
5
<PAGE>
of Eligible Receivables it owes that, expressed as a percentage of the Adjusted
Eligible Receivables, exceeds the following percentages for the following
Obligors (other than a Class A Special Obligor):
(1) 50% for any Tier-1 Obligor;
(2) 25% for any Tier-2 Obligor;
(3) 12.5% for any Tier-3 Obligor;
(4) 8.33% for any Tier-4 Obligor; and
(5) 3.75% for any Tier-5 Obligor.
For purposes of placing Obligors in each of the tiers specified above, if an
Obligor does not have either a commercial paper rating or a senior actual or
implied debt rating from the Specified Rating Agency, but is the wholly-owned
direct or indirect Subsidiary of a Person that has either such rating, such
Obligor shall be placed in the same tier as such rated Person would be placed if
it was an Obligor. Each of the percentages above is called a "Benchmark
Percentage." "Class A Excess Concentration Balances" means on any day and with
respect to any Class A Special Obligor, the aggregate outstanding balances of
Eligible Receivables it owes that, expressed as a percentage of Adjusted
Eligible Receivables, exceeds the Class A Special Concentration Limit for such
Class A Special Obligor. Class A Excess Concentration Balances will be measured
on each day during each Distribution Period with respect to Reported Obligors
for such period.
"Class A Incremental Concentration Balance" means at any time, the excess,
if any, of (i) the sum of the Class A Excess Concentration Balances with respect
to all Obligors over (ii) the sum of the Class B Excess Concentration Balances
with respect to all Obligors. The Class A Incremental Concentration Balance will
be measured on each day during each Distribution Period.
"Class A Invested Amount" means, at any time, the sum of the purchase
prices paid for Class A Purchases made pursuant to the Class A Certificate
Purchase Agreement at or prior to that time, reduced (but not below zero) by (a)
the aggregate amount of all distributions that have been made to the Holders of
the Class A Certificates on account of principal, and (b) the amount of all
Investor Write-Offs that have been applied to reduce the Class A Invested Amount
(net of Investor Allocable Recoveries and Investor Allocable Dilution
Adjustments that have been applied to reinstate the Class A Invested Amount).
"Class A Minimum Required Reserve Ratio" means the sum, as of any Cut-Off
Date, of (a) the Class A Concentration Factor for that Cut-Off Date plus (b) the
product of the
6
<PAGE>
average of the Dilution Ratios for the period of 12 preceding Calculation
Periods ending on that Cut-Off Date, multiplied by the Dilution Horizon Variable
for that Cut-Off Date.
"Class A Purchases" means Purchases made in respect of Class A
Certificates.
"Class A Ratings Factor" means 2.5.
"Class A Required Reserve Ratio" means, as calculated in each Monthly
Report, the Loss Reserve Ratio plus the Dilution Reserve Ratio, each calculated
using the Class A Ratings Factor.
"Class A Required Reserves" means, at any time, the product of (a) the
excess of the Net Eligible Receivables over the Class A Incremental
Concentration Balance multiplied by (b) the Class A Reserve Ratio multiplied by
(c) the Series Collection Allocation Percentage.
"Class A Reserve Ratio" means, during any Distribution Period, the greater
of (a) the Class A Minimum Required Reserve Ratio and (b) the Class A Required
Reserve Ratio, each as calculated in the Monthly Report required to be delivered
on the Report Date immediately prior to the start of that Distribution Period;
provided that during the period from the date hereof to the first Distribution
Date thereafter the Class A Reserve Ratio shall be 31.394%.
"Class A Special Concentration Limit" means, with respect to each Class A
Special Obligor identified in the most recent Monthly Report, the limit set
forth below for such Class A Special Obligor:
(i) with respect to the Tier-5 Obligor that owes (x) the highest
aggregate Unpaid Balance of Eligible Receivables owed by a Tier-5 Obligor
and (y) more than 3.75% of the Adjusted Eligible Receivables, 8.75%; and
(ii) with respect to the Tier-5 Obligor that owes (x) the second
highest aggregate Unpaid Balance of Eligible Receivables owed by a Tier-5
Obligor and (y) more than 3.75% of the Adjusted Eligible Receivables, the
greater of (1) 13.75% minus the percentage of Adjusted Eligible Receivables
owed by the Tier-5 Obligor referred to in clause (i) and (2) 5%.
"Class A Special Obligor" means, at any time, either or both of the two
Obligors that (i) has been designated in the most recent Monthly Report as a
"Class A Special Obligor" and (ii) is among the two Tier-5 Obligors that owe the
highest aggregate Unpaid Balances of Eligible Receivables; provided that such
Monthly Report shall have specified which of the Class A Special Concentration
Limits apply to such Obligor, and each Class A Special Concentration Limit shall
have been applied to only one Class A Special Obligor; and provided, further
that this definition may be modified as contemplated by Section 4.11.
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"Class A Subordination Deficit" means on any Business Day, the positive
result (if any) of
(a) the Class A Required Reserves, plus
(b) the Class A Incremental Concentration Balance, minus
(c) the sum of (i) the Class B Required Reserves plus (ii) the
outstanding principal amount of all Subordinated Classes
(all calculated as of the beginning of that Business Day); provided that at any
time when no Senior Class is outstanding the Class A Subordination Deficit shall
equal zero.
"Class B Certificate" is defined in Section 2.1. Each Class B Certificate
shall be substantially in the form of Part 2 of Exhibit A.
"Class B Certificate Purchase Agreement" means the Certificate Purchase
Agreement (Series 1996-1, Class B) dated as of May 29, 1996 among Transferor,
Servicer and Caisse Nationale de Credit Agricole, as Purchaser.
"Class B Concentration Factor" means, as of any Cut-Off Date, the greatest
of:
(i) the "Benchmark Percentage" for purposes of clause (d) of the
definition of "Class B Excess Concentration Balances", and
(ii) the sum of (A) the Class B Special Concentration Limit, if any,
then in effect, plus (B) the product of (x) the "Benchmark Percentage" for
purposes of clause (e) of the definition of "Class B Excess Concentration
Balances" times the excess (if any) of three over the number of Class B
Special Obligors.
"Class B Excess Concentration Balances" means, on any day and with respect
to a Reported Obligor (other than a Class B Special Obligor), the aggregate
outstanding balances of Eligible Receivables it owes that, expressed as a
percentage of the Adjusted Eligible Receivables, exceeds the following
percentages for the following Obligors (other than a Class B Special Obligor):
(a) 100% for any Tier-1 Obligor;
(b) 100% for any Tier-2 Obligor;
(c) 100% for any Tier-3 Obligor;
(d) 15% for any Tier-4 Obligor; and
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(e) 3.75% for any Tier-5 Obligor;
For purposes of placing Obligors in each of the tiers specified above, if an
Obligor does not have either a commercial paper rating or a senior actual or
implied debt rating from the Specified Rating Agency, but is the wholly-owned
direct or indirect Subsidiary of a Person that has either such rating, such
Obligor shall be placed in the same tier as such rated Person would be placed if
it was an Obligor. Each of the percentages above is called a "Benchmark
Percentage." "Class B Excess Concentration Balances" means on any day and with
respect to the Class B Special Obligor, the aggregate outstanding balances of
Eligible Receivables it owes that, expressed as a percentage of Adjusted
Eligible Receivables, exceeds the Class B Special Concentration Limit. Class B
Excess Concentration Balances will be measured on each day during each
Distribution Period with respect to Reported Obligors for such period.
"Class B Invested Amount" means, at any time, the sum of the purchase
prices paid for Class B Purchases made pursuant to (and as defined in) the Class
B Certificate Purchase Agreement at or prior to that time, reduced (but not
below zero) by (a) the aggregate amount of all distributions that have been made
to the Holders of the Class B Certificates on account of principal, and (b) the
amount of all Investor Write-Offs that have been applied to reduce the Class B
Invested Amount (net of Investor Allocable Recoveries and Investor Allocable
Dilution Adjustments that have been applied to reinstate the Class B Invested
Amount).
"Class B Minimum Required Reserve Ratio" means the sum, as of any Cut-Off
Date, of (a) the Class B Concentration Factor for that Cut-Off Date plus (b) the
product of the average of the Dilution Ratios for the period of 12 preceding
Calculation Periods ending on that Cut-Off Date, multiplied by the Dilution
Horizon Variable for that Cut-Off Date; provided that in no event shall the
Class B Minimum Required Reserve Ratio be less than 18.738%.
"Class B Purchases" means Purchases made in respect of Class B
Certificates.
"Class B Ratings Factor" means 1.5.
"Class B Required Reserve Ratio" means, as calculated in each Monthly
Report, the Loss Reserve Ratio plus the Dilution Reserve Ratio, each calculated
using the Class B Ratings Factor.
"Class B Required Reserves" means, at any time, the product of (a) the Net
Eligible Receivables multiplied by (b) the Class B Reserve Ratio multiplied by
(c) the Series Collection Allocation Percentage.
"Class B Reserve Ratio" means, during any Distribution Period, the greater
of (a) the Class B Minimum Required Reserve Ratio and (b) the Class B Required
Reserve Ratio, each as calculated in the Monthly Report required to be delivered
on the Report Date immediately
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<PAGE>
prior to the start of that Distribution Period, provided that during the period
from the date hereof to the first Distribution Date thereafter the Class B
Reserve Ratio shall be 19.566%.
"Class B Special Concentration Limit" means, with respect to the Tier-5
Obligor that owes (x) the highest aggregate Unpaid Balance of Eligible
Receivables owed by a Tier-5 Obligor and (y) more than 3.75% of the Adjusted
Eligible Receivables, 7.5%.
"Class B Special Obligor" means, at any time, the Tier-5 Obligor that (i)
has been designated in the most recent Monthly Report as the "Class B Special
Obligor" and (ii) is the Tier-5 Obligor that owes the highest aggregate Unpaid
Balance of Eligible Receivables; and provided, further that this definition may
be modified as contemplated by Section 4.11.
"Class Invested Amount" means (a) with respect to Class A, the Class A
Invested Amount, (b) with respect to Class B, the Class B Invested Amount and
(c) with respect to any other Senior Class or Subordinated Class, the amount
identified as its "Class Invested Amount" in the related Supplement.
"Closing Date" means October 31, 1995.
"Current Carrying Costs" means, during any Distribution Period, the sum of
(i) the amount of interest on the Series 1996-1 Certificates that will be
payable on or before the next Distribution Date, (ii) the amount of the
Servicing Fee that will be payable on or before the next Distribution Date plus
(iii) the Current Carrying Costs Increments for each other Series in Group I
(calculated as provided in the Supplement for each such Series).
"Daily Group Collections" is defined in Section 4.2.
"Deferred Portion" means, on any day the portion of the Acquisition Amount
as to which payment is deferred, which portion shall equal the sum of (A) (x)
the Series Collection Allocation Percentage times (y) sum of the following
amounts (as shown in the Daily Report for such day): (i) the sum of the Class B
Excess Concentration Balances with respect to all Obligors, plus (ii) the Excess
New Seller Reserve, plus (iii) the Accrual Reserve, plus (iv) the aggregate
unpaid balance of Receivables that are not Eligible Receivables; plus (B) the
Carrying Cost Receivables Reserve; plus (C) the Class B Reserve Ratio times the
Net Eligible Receivables; plus (D) the Class A Subordination Deficit (it being
understood that the Deferred Portion may vary from day to day); provided that
the Deferred Portion shall be fixed as of the Group Amortization Calculation
Date.
"Dilution Horizon Variable" means, at any time, a fraction having (a) a
numerator equal to 1.5 times the sum of the aggregate amounts payable pursuant
to invoices giving rise to Receivables and generated during the Calculation
Period ending on the most recent Cut-Off Date (as of that Cut-Off Date) and (b)
a denominator equal to the Net Eligible Receivables as of the most recent Cut-
Off Date.
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<PAGE>
"Dilution Ratio" means, as calculated in each Monthly Report as of the most
recent Cut-Off Date, a fraction (expressed as a percentage) having (a) a
numerator equal to the aggregate amount of Dilution on the Receivables occurring
during the Calculation Period ending on the most recent Cut-Off Date, and (b) a
denominator equal to the aggregate amounts payable pursuant to invoices giving
rise to Receivables that were generated during the preceding Calculation Period
(so that, for example, if the Calculation Period specified in clause (a)
corresponded to the March fiscal month, the Calculation Period in this clause
(b) would be the one corresponding to the February fiscal month).
"Dilution Reserve Ratio" means as calculated in each Monthly Report, the
result (expressed as a percentage) calculated in accordance with the following
formula:
{(ARF x ADR) + [(HDR-ADR) x (HDR/ADR)]} x DHV
where:
ADR = the average of the Dilution Ratios during the period of 12
consecutive
Calculation Periods ending on the related Cut-Off Date;
ARF = the Applicable Ratings Factor;
DHV = the Dilution Horizon Variable; and
HDR = the highest Dilution Ratio for any Calculation Period within the
12 consecutive Calculation Periods ending on the related Cut-Off
Date.
"Distribution Period" means a period from and including a Distribution Date
to but excluding the next Distribution Date.
"Early Amortization Period" means the period beginning on the date (if any)
specified in Section 6.2 and ending on the day on which the Series Invested
Amount has been reduced to zero. The term "early amortization period" means each
of the Early Amortization Period and any period identified as an "Early
Amortization Period" in the Supplement for any other Series in Group I.
"Eurodollar Rate" means, for any Interest Period, a rate per annum equal to
the arithmetic average (rounded upward to the nearest 1/100 of one percent) of
the offered quotation, if any, to first class banks in the interbank Eurodollar
market by the Reference Bank for U.S. dollar deposits of an amount in same day
funds comparable to the principal amount of the Certificate of the Reference
Bank with maturities comparable to such Interest Period as of approximately
10:00 a.m. (New York time) on the second Business Day prior to the first day of
that Interest Period.
"Eurodollar Tranche" means, during any Interest Period and as the context
shall indicate, (i) any portion of the Class A Invested Amount that is
designated by Transferor in accordance with the Class A Certificate Purchase
Agreement to accrue interest based on the
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<PAGE>
Eurodollar Rate, or (ii) unless the Holders of Class B Certificates have given
notice under Section 3.3 of the Class B Certificate Purchase Agreement (and such
notice continues in effect), the Class B Invested Amount.
"Excess New Seller Reserve" means, on any day, the sum of the following
amounts (if positive) calculated for each New Seller (other than any New Seller
as to which the Modification Condition has been satisfied):
(a) the aggregate Unpaid Balances of Eligible Receivables generated by
such New Seller (net of any Class B Excess Concentration Balances); minus
(b) 5% of the Adjusted Eligible Receivables.
"Expected Final Payment Date" means the October, 2000 Distribution Date.
"Federal Funds Rate" means (a) the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for the day (or, if the day is
not a Business Day, the immediately preceding Business Day) by the Federal
Reserve Bank of New York; provided that if the rate is not so published for any
Business Day, the rate for purposes of this clause will be the average of the
quotations for the day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it, plus (b) 100 basis
points.
"Final Scheduled Payment Date" means the October, 2001 Distribution Date.
"Fully Funded Date" means the first date falling in a Group Amortization
Period or when all Series in Group I are in a Series Amortization Period and on
which there are funds on deposit in the Carrying Cost Account and the Principal
Funding Account that, in the aggregate, equal or exceed the Investor Repayment
Amount and any Servicing Fee payable to anyone other than a APP Person on the
first Distribution Date falling after that date.
"Group Amortization Calculation Date" means the day before a Group
Amortization Period begins.
"Group Amortization Period" means the period (if any) commencing on the
first day on which all outstanding Series in Group I are in early amortization
periods.
"Group Initial Invested Amount" means, at any time, the sum of the Series
1996-1 Initial Invested Amount plus the aggregate of the Series Initial Invested
Amounts of each other Series in Group I, all determined at that time.
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<PAGE>
"Group Invested Amount" means, at any time, the sum of the Series 1996-1
Invested Amount plus the aggregate of the Series Invested Amounts of each other
Series in Group I, all determined at that time.
"Group I" means a group of Series, including Series 1996-1 and each other
Series that is identified in its Supplement as belonging to Group I.
"Guarantor" means APP, in its capacity as the guarantor under the Seller
Guaranty.
"Holdback Account Termination Date" is defined in Section 4.4.
"Holder" means a Holder (as defined in the Pooling Agreement) of a
Certificate in any Series in Group I.
"Incentive Maximum" means, at any time and with respect to any
Participating Obligor and any Incentive Target, the maximum possible liability
of the Sellers to such Participating Obligor with respect to purchasing
incentive programs, arising as a result of Year-to-Date Sales to such
Participating Obligor (assuming that such Participating Obligor's purchases from
the Sellers will meet or exceed such Incentive Target).
"Incentive Payment Accrual" means, at any time, the aggregate of all
Incentive Maximums calculated as follows:
(i) determine, with respect to each Incentive Target for each
Participating Obligor, the result of (a) Annualized Sales to such
Participating Obligor less (b) 75% of such Incentive Target;
(ii) determine the highest Incentive Target (if any) for which
clause (i) above yields a result greater than or equal to zero;
(iii) determine the Incentive Maximum for the Incentive Target
specified in clause (ii) above;
provided, however, that for purposes of the determination of clause (i) above,
Annualized Sales to any School Dating Obligor shall be deemed to always be at
least 75% of the Incentive Target applicable when sales to such School Dating
Obligor equal 100% of projected sales to such School Dating Obligor (determined
in good faith by the Sellers at the beginning of the then current fiscal year).
"Incentive Payment Adjustment Factor" means, at any time, the greater of
(a) 1.00 and (b) a fraction, the numerator of which is the aggregate amount of
Incentive Payment Dilution accrued by the Sellers with respect to Participating
Obligors during the immediately preceding calendar quarter and the denominator
of which is the portion of Year Earlier
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<PAGE>
Incentive Payments accrued with respect to Participating Obligors during the
corresponding quarter in the preceding calendar year.
"Incentive Payment Dilution" means the Sellers' liability for incentive
payments or discounts to Obligors under monthly, quarterly and annual purchasing
incentive programs (including volume rebate programs) for its customers.
"Incentive Payment Liquidation Reserve" means the product of (a) the
Incentive Payment Adjustment Factor, times (b) the Incentive Payment Per Diem,
times (c) a number equal to 2 times the number of Turnover Days.
"Incentive Payment Per Diem" at any time will equal the quotient of the
Year Earlier Incentive Payments divided by 365.
"Incentive Target" means, with respect to a Participating Obligor and a
fiscal year of APP, an aggregate amount of purchases required to be made by such
Participating Obligor during such fiscal year to be entitled to a specified
incentive payment or discount from the Sellers, as determined in good faith by
the Sellers (it being understood that a given Participating Obligor may have
more than one Incentive Target).
"Interest Payment Date" means (a) as to the Series 1996-1 Certificates, any
date upon which interest is payable with respect to the ABR Tranche, any
Eurodollar Tranche or the Class B Certificates, as specified in Section 4.1, and
(b) as to any other interest payable on any Series in Group I, the date
specified as the "Interest Payment Date" in the related Supplement.
"Interest Period" means
(a) for Class A Certificates, (i) as to the ABR Tranche (if any) from
time to time, (x) the period from the date hereof to, but excluding, the
first subsequent Distribution Date and (y) each Distribution Period
thereafter and (ii) as to each Eurodollar Tranche (if any) from time to
time, each period from the date upon which that Eurodollar Tranche was
first designated as such pursuant to the Class A Certificate Purchase
Agreement (or the end of the next preceding Interest Period for such
Eurodollar Tranche, if there has been one) to the date that is one, two,
three or six months, at the option of Transferor, thereafter; and if any
Interest Period for a Eurodollar Tranche would otherwise end on a day that
is not a Business Day, such Eurodollar Tranche shall instead end on the
next Business Day (or, if the next Business Day falls in the next calendar
month, then on the preceding Business Day); and
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<PAGE>
(b) for Class B Certificates, (i) the period from the date hereof to,
but excluding, the first subsequent Distribution Date and (ii) each
Distribution Period thereafter.
"Interim Interest Payment Date" means, with respect to any six month
Interest Period, the date that is three months after the date upon which the
related Eurodollar Tranche was first designated as such pursuant to the Class A
Certificate Purchase Agreement (or the end of the next preceding Interest Period
for such Eurodollar Tranche, if there has been one); provided that if such day
is not a Business Day, such Interim Interest Payment Date instead shall be the
next Business Day (or, if the next Business Day falls in the next calendar
month, then the preceding Business Day).
"Invested Amount" means, at any time:
(a) for purposes of calculating the Series Loss Allocation Percentage
for Group I, the Group Invested Amount; and
(b) for purposes of the application of Sections 6.13 and 12.4 of the
Pooling Agreement to the Series 1996-1 Certificates, the Series 1996-1
Invested Amount.
"Investor Allocable Dilution" means for any ASA Measuring Period, the
product of the aggregate amount of Dilution for that ASA Measuring Period as to
which neither the applicable Seller nor the Guarantor has made any payment
required by Section 3.1 of the Purchase Agreement or the Seller Guaranty on
account of Seller Dilution Adjustments multiplied by the Series Loss Allocation
Percentage as of the beginning of that ASA Measuring Period, multiplied by the
Investor Allocation Percentage as of the first Business Day of that ASA
Measuring Period.
"Investor Allocable Dilution Adjustments" is defined in Section 4.8.
"Investor Allocable Loss Amount" means, for any ASA Measuring Period, the
product of the Loss Amount for that ASA Measuring Period, multiplied by the
Series Loss Allocation Percentage as of the beginning of that ASA Measuring
Period, multiplied by the Investor Allocation Percentage as of the beginning of
that ASA Measuring Period.
"Investor Allocable Recoveries" means, for any ASA Measuring Period, the
product of the Net Recoveries for that ASA Measuring Period, multiplied by the
Series Loss Allocation Percentage as of the beginning of that ASA Measuring
Period, multiplied by the Investor Allocation Percentage as of the first
Business Day of that ASA Measuring Period.
"Investor Allocation Percentage" means:
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(x) on any Business Day that does not fall in a Series Amortization
Period, a fraction (expressed as a percentage, which in any event may not
exceed 100%) (a) the numerator of which is the Net Invested Amount as of
that Business Day, and (b) the denominator of which is the Base Amount as
of that Business Day;
(y) on any Business Day falling in any Series Amortization Period,
a fraction (expressed as a percentage, which in any event may not exceed
100%) (a) the numerator of which is the Net Invested Amount as of the
beginning of the Series Amortization Period, and (b) the denominator of
which is the Base Amount as of that Business Day; and
(z) on any Business Day falling in the Group Amortization Period, a
fraction (expressed as a percentage, which in any event may not exceed
100%) (a) the numerator of which is the Net Invested Amount as of the Group
Amortization Calculation Date, and (b) the denominator of which is the Base
Amount as of the Group Amortization Calculation Date.
"Investor Ownership Percentage" means, on any day, a fraction, (x) the
numerator of which is the Acquisition Amount on such day and (y) the denominator
of which is the excess of (i) the Unpaid Balance of Receivables on such day over
(ii) the Unapplied Cash on such day; provided that the Investor Ownership
Percentage shall be fixed as of the Group Amortization Calculation Date; and
provided further that if the Investor Ownership Percentage is being calculated
on any day when a Series in Group I is in an accumulation, amortization or early
amortization period, the Investor Ownership Percentage shall not be less than
the Investor Ownership Percentage immediately prior to the commencement of such
period.
"Investor Repayment Amount" means, on any Business Day, the sum of (a) the
outstanding principal amount of the Series 1996-1 Certificates and all other
Series in Group I, plus (b) the interest and any Additional Amounts known to be
payable on the Series 1996-1 Certificates and all other Series in Group I on or
before the first Distribution Date falling after that date.
"Investor Write-Offs" means, as calculated in any Monthly Report relating
to a Calculation Period falling completely or partially in a Group Amortization
Period:
(a) if the Available Subordinated Amount is greater than zero at the
end of the related ASA Measuring Period, zero; and
(b) if the Available Subordinated Amount is zero at the end of the
related ASA Measuring Period (taking into account any reduction in the
Available Subordinated Amount shown in such Monthly Report), the excess (if
any) of (x) the sum of the Investor Allocable Loss Amount and the Investor
Allocable Dilution minus
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Investor Allocable Recoveries for the related ASA Measuring Period, over
(y) the Available Subordinated Amount as of the beginning of that ASA
Measuring Period.
"LIBOR" means, for an Interest Period, the rate per annum equal to the
average of the rates at which deposits in Dollars having a one-month maturity
appear on Telerate Page 3750 as of 11:00 a.m., London time, two London Business
Days prior to the Distribution Date on which that Interest Period begins (the
amount determined in this subsection (i) being referred to herein as "LIBOR").
For purposes of the foregoing, "Telerate Page 3750" means the display page so
designated on the Dow Jones Telerate Service (or such other pages as may replace
that page on that service or such other service or services as may be nominated
by the British Banker's Association for the purpose of displaying London
interbank offered rates for Dollar deposits), and "London Business Day" means a
day upon which dealings in deposits in Dollars are transacted in the London
interbank market. Notwithstanding the foregoing, in the event that no rate for
one-month Dollar deposits appears on Telerate Page 3750 on the applicable date
for determining LIBOR with respect to any Distribution Date, then LIBOR shall be
determined as the arithmetic mean (rounded upwards to the nearest one-sixteenth
of 1%) of the rates at which one-month Dollar deposits are offered to prime
banks in the London interbank market by four major banks in that market selected
by the Trustee as of the determination date and time specified above. If fewer
than two quotations are provided by such banks, then LIBOR shall be determined
as the arithmetic mean (rounded upwards as above) of the rates at which one-
month loans in Dollars are offered to leading European banks by three major
banks in New York City selected by the Trustee as of 11:00 a.m. New York City
time on the determination date specified above.
"Loss Amount" means, with respect to any ASA Measuring Period, an amount
equal to the positive difference (if any) of (a) the amount of Receivables held
by Trust that became Write-Offs during that ASA Measuring Period, minus (b) the
amount of Recoveries received during that ASA Measuring Period.
"Loss Reserve Ratio" means, as calculated in each Monthly Report, the
result (expressed as a percentage) of (a) the Applicable Ratings Factor
multiplied by (b) the highest average of the Aged Receivables Ratio in any three
consecutive Calculation Periods that occurred during the preceding 12
consecutive Calculation Periods ending on the most recent Cut-Off Date
multiplied by (c) a fraction having (i) a numerator equal to the sum of the
aggregate amounts payable pursuant to invoices giving rise to Receivables
generated during the three Calculation Periods preceding or ending on the most
recent Cut-Off Date, and (ii) a denominator equal to the Net Eligible
Receivables, as of the most recent Cut-Off Date, multiplied by (d) the Payment
Term Multiplier.
"Maximum Exposure Amount" shall be calculated by the Servicer in each Daily
Report and shall equal the positive result (if any) of (a) the product of (i)
the Net Eligible Receivables plus the Accrual Reserve multiplied by (ii) the
result (expressed as a decimal) of 100% minus the Pro Forma Reserve minus (b)
the Net Invested Amount.
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"Net Eligible Receivables" means, at any time, (a) the Adjusted Eligible
Receivables, minus (b) the sum of the Class B Excess Concentration Balances with
respect to all Obligors, minus (c) the Excess New Seller Reserve, minus (d) the
Accrual Reserve, to the extent Incentive Payment Dilution is excluded from the
determination of "Dilution" in accordance with Section 4.10; it being understood
that the amounts referred to in the preceding clauses (b) through (d) shall be
calculated without duplication.
"Net Invested Amount" means, on any Business Day, the Group Invested
Amount, minus the balance on deposit in the Equalization Account and the
Principal Funding Account with respect to Series in Group I.
"Net Recoveries" means, with respect to any ASA Measuring Period, an amount
equal to the positive difference (if any) of (a) the amount of Recoveries
received in that ASA Measuring Period minus (b) the amount of Receivables that
became Write-Offs in that ASA Measuring Period.
"New Seller" means, on any day, any Seller that became a Seller during the
preceding twelve months (other than any Seller that became a Seller on the
Closing Date).
"Participating Obligor" means (i) an Obligor that participates in a
purchasing incentive program of Ampad Segment, or (ii) any other Obligor
designated by the Sellers as a participant in a purchasing incentive program,
subject in the case of this clause (ii) to satisfaction of the Modification
Condition.
"Payment Term" shall mean, with respect to any Receivable, the number of
days between its invoice date and its due date.
"Payment Term Multiplier" shall mean (a) 1.0, if the Payment Term Variable
is not more than 35, (b) 1.1, if the Payment Term Variable is 36 to 40, (c)
1.17, if the Payment Term Variable is 41 to 50, (d) 1.25, if the Payment Term
Variable is 51 to 60, and (e) 1.5, if the Payment Term Variable is 61 to 90;
provided, however, that if the Payment Term Variable exceeds 90, the Payment
Term Multiplier shall be determined by calculating the sum of (x) 1.5 and (y)
0.05, for each 5-day increment by which the Payment Term Variable exceeds 90, it
being understood that the same number shall apply for all Payment Term Variables
that fall within a five-day range.
"Payment Term Variable" shall mean, as calculated in each Monthly Report as
of the most recently ended Cut-Off Date, the quotient of:
(x) the sum of (1) the product of the Outstanding Balance of each
Receivable as of such Cut-Off Date times (2) the Payment Term with respect
to such Receivable; divided by
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(y) the aggregate Outstanding Balance of all Receivables as of such
Cut-Off Date.
"Prepayment Accumulation Period" means a period beginning on the day that
Transferor gives a Prepayment Notice to Trustee of a full or partial prepayment
of the Series 1996-1 Certificates pursuant to Section 4.9 (and does not notify
Trustee that it intends to cause the Series Interest to be conveyed as described
in subsection 4.9(b)) and ending on the earlier to occur of (a) the day when
amounts sufficient for that prepayment have been accumulated pursuant to Section
4.3 and (b) the end of the Revolving Period for the Series 1996-1 Certificates.
"Prepayment Notice" is defined in Section 4.9.
"Prepayment Premium" means, with respect to any prepayment (including
pursuant to Section 4.9, pursuant to Section 7.1 or as a result of an Early
Amortization Event) of the Class B Certificates, the net present value (as of
the date of such prepayment) of the amount of interest that would have accrued
on the amount of principal prepaid from the date of prepayment through the
Expected Final Payment Date at an interest rate equal to 0.825% per annum (the
spread over LIBOR included in the interest rate on the Class B Certificates),
discounted to such prepayment date at a rate per annum, compounded monthly,
equal to LIBOR in effect on the date on which notice of prepayment is given to
the Holders of Class B Certificates.
"Principal Deposit Amount" means, with respect to any Calculation Period
falling in a Series Amortization Period, the amount determined as such in
accordance with the Supplement for the applicable Series. The Principal Deposit
Amounts for the various Series Amortization Periods that may apply to Series
1996-1 are:
(a) for any Calculation Period falling in the Amortization Period or
the Early Amortization Period, the Series 1996-1 Invested Amount; and
(b) for any Calculation Period falling in a Prepayment Accumulation
Period, the amount of principal to be prepaid.
"Principal Payment Date" means (a) for the Series 1996-1 Certificates, (i)
any date on which the Invested Amount is to be reduced pursuant to Section 3.1
of the Class A Certificate Purchase Agreement, (ii) any date on which any
prepayment is to be made pursuant to Section 4.9, (iii) the end of each Interest
Period in respect of the next maturing Eurodollar Tranche and/or ABR Tranche,
(iv) each Distribution Date (beginning with the Distribution Date falling in the
Calculation Period after the Calculation Period in which the Early Amortization
Period begins) and (v) any Distribution Date falling on or after the Expected
Final Payment Date, and (b) for any other Series in Group I, each date specified
as
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a "Principal Payment Date" in the related Supplement. The Refinancing Date is
not a Principal Payment Date.
"Pro Forma Reserve" shall be calculated by the Servicer as of the preceding
Cut-Off Date in each Monthly Report, and shall be the greater of the amounts
determined pursuant to clauses (x) and (y) below:
(x) the Class B Concentration Factor; and
(y) the Loss Reserve Ratio (determined using the Class B Ratings
Factor) for such Cut-Off Date.
"Purchase" means any Purchase as defined in either of the Certificate
Purchase Agreements.
"Rating Agency" means S&P.
"Reference Bank" means ABN AMRO Bank N.V.
"Refinancing Date" is defined in subsection 4.9(b).
"Reported Obligor" means (i) the twenty Obligors that owe the highest
aggregate Unpaid Balance of Eligible Receivables as of the most recent Cut-Off
Date for which a Monthly Report has been delivered, and (ii) any other Obligor
that owes an aggregate Unpaid Balance of Eligible Receivables as of such Cut-Off
Date that is at least 1% of the aggregate Unpaid Balance of all Eligible
Receivables, in each case as identified in such Monthly Report.
"Required Purchasers" means:
(i) for the purposes of instructing the Trustee to declare that the
Early Amortization Period has commenced pursuant to Section 6.2, either (x)
Holders of Class A Certificates whose aggregate Class Percentages (as
defined in the Class A Certificate Purchase Agreement) exceed 50% or (y)
Holders of Class B Certificates whose aggregate Class Percentages (as
defined in the Class B Certificate Purchase Agreement) exceed 50%; and
(ii) for all other purposes, both (x) Holders of Class A Certificates
whose aggregate Class Percentages (as defined in the Class A Certificate
Purchase Agreement) exceed 66 2/3% and (y) Holders of Class B Certificates
whose aggregate Class Percentages (as defined in the Class B Certificate
Purchase Agreement) exceed 66 2/3%.
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"Required Receivables" means, on any Business Day, collectively for all
Series in Group I:
(a) So long as a Group Amortization Period has not commenced, the
result of the following formula:
GIIA + CCRR R
----------- x ---
(1 - CARR) NER
where:
CARR = the Class A Reserve Ratio in effect for that Business Day;
CCRR = the Carrying Cost Receivables Reserve as reported in the Daily
Report for that Business Day;
GIIA = the Group Initial Invested Amount;
NER = the Net Eligible Receivables minus the Class A Incremental
Concentration Balance, each as reported in the Daily Report for that
Business Day; and
R = the aggregate Unpaid Balance of Receivables held by Trustee as
reported in the Daily Report for that Business Day.
(b) If a Group Amortization Period has commenced, the result of the
following formula:
AGIIA + ASA + UCCRR
where:
AGIIA = the adjusted Group Initial Invested Amount on that Business Day
(which shall equal the Group Initial Invested Amount, reduced (but
not below zero) by the amount of all Investor Write-Offs (net of
Investor Allocable Recoveries and Investor Allocable Dilution
Adjustments that have been applied to reinstate the Group Invested
Amount));
UCCRR = the Unfunded Carrying Cost Receivables Reserve on that Business
Day; and
ASA = the Available Subordinated Amount on that Business Day.
"Required Series Holders" means the Required Purchasers.
"Revolving Period" means, with respect to any Series in Group I, the period
beginning on the Closing Date and ending on the day before the first day of an
accumulation period, an amortization period or an early amortization period for
such Series.
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"School Dating Obligor" means a Participating Obligor whose purchases (in
whole or in part) are subject to extended terms referred to for purposes of the
Sellers' management reporting as "School Dating" terms.
"Senior Class" means each of Class A and each class of any other Series in
Group I that is identified in its Supplement as a Senior Class.
"Series Allocable Dilution Adjustments" means, for any ASA Measuring
Period, the product of the aggregate amount of payments pursuant to Section 3.1
of the Purchase Agreement or pursuant to the Seller Guaranty on account of
Seller Dilution Adjustments received during that ASA Measuring Period relating
to Dilution that occurred prior to that ASA Measuring Period, multiplied by the
Series Loss Allocation Percentage as of the beginning of that ASA Measuring
Period.
"Series Amortization Period" means (a) as to Series 1996-1, the
Amortization Period, any Prepayment Accumulation Period and any Early
Amortization Period and (b) as to any other Series in Group I any period
identified in the related Supplement as a "Series Amortization Period."
"Series Invested Amount" means, with respect to any Series in Group I, the
amount determined as such in accordance with the Supplement for that Series.
"Series Initial Invested Amount" means, with respect to any Series in Group
I, the amount determined as such in accordance with the Supplement for that
Series, provided that from and after the date on which the Series Invested
Amount for any Series is reduced to zero, the Series Initial Invested Amount for
that Series will also equal zero.
"Series 1996-1 Certificates" means the Class A Certificates and the Class B
Certificates.
"Series 1996-1 Holder" means a Holder of a Series 1996-1 Certificate.
"Series 1996-1 Initial Invested Amount" means (i) during the Revolving
Period for the Series 1996-1 Certificates, the Series 1996-1 Invested Amount,
and (ii) thereafter, the Series 1996-1 Invested Amount as of the last day of the
Revolving Period.
"Series 1996-1 Invested Amount" means, at any time, the sum of the Class A
Invested Amount plus the Class B Invested Amount.
"Specified Rating Agency" means S&P.
"Stated Amount" means as to any Certificate, the maximum principal amount
that may be required to be funded by the Holder of such Certificate.
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"Structured Lender" shall mean any Holder of a Certificate whose principal
business consists of issuing commercial paper, medium term notes or other
securities to fund its acquisition and maintenance of receivables, accounts,
instruments, chattel paper, general intangibles and other similar assets or
interests therein and which is required by any nationally recognized rating
agency which is rating such securities to obtain from its principal debtors an
agreement such as that set forth in Section 13.9 of the Pooling Agreement in
order to maintain such rating.
"Subordinated Class" means each of Class B and each class of any other
Series in Group I that is identified in its Supplement as a Subordinated Class.
"Support Bank" shall mean any bank or other financial institution extending
or having a commitment to extend funds to or for the account of any Structured
Lender (including by agreement to purchase an assignment of, or participation in
the Certificate held by such Person) under the liquidity or credit support
agreement which relates to the Certificate purchased by such Structured Lender.
"Tier-1 Obligor" means any Obligor that has (a) a commercial paper rating
from the Specified Rating Agency of at least "A-1+" (or its equivalent) or (b) a
senior actual or implied debt rating from the Specified Rating Agency of at
least "AAA" (or its equivalent); provided that if such Obligor has both a
commercial paper rating from the Specified Rating Agency and a senior actual or
implied debt rating from the Specified Rating Agency, such Obligor must have a
commercial paper rating from the Specified Rating Agency of at least "A-1+" (or
its equivalent) and a senior actual or implied debt rating from the Specified
Rating Agency of at least "AAA" (or its equivalent) to be a Tier-1 Obligor.
"Tier-2 Obligor" means any Obligor (other than a Tier-1 Obligor) that has
(a) a commercial paper rating from the Specified Rating Agency of at least "A-1"
(or its equivalent) or (b) a senior actual or implied debt rating from the
Specified Rating Agency of at least "AA-" (or its equivalent), provided that if
such Obligor has both a commercial paper rating from the Specified Rating Agency
and a senior actual or implied debt rating from the Specified Rating Agency,
such Obligor must have a commercial paper rating from the Specified Rating
Agency of at least "A-1" (or its equivalent) and a senior actual or implied debt
rating from the Specified Rating Agency of at least "AA-" (or its equivalent) to
be a Tier-2 Obligor.
"Tier-3 Obligor" means any Obligor (other than a Tier-1 Obligor or a Tier-2
Obligor) that has (a) a commercial paper rating from the Specified Rating Agency
of at least "A-2" (or its equivalent) or (b) a senior actual or implied debt
rating from the Specified Rating Agency of at least "A-" (or its equivalent),
provided that if such Obligor has both a commercial paper rating from the
Specified Rating Agency and a senior actual or implied debt rating from the
Specified Rating Agency, such Obligor must have a commercial paper rating from
the Specified Rating Agency of at least "A-2" (or its equivalent) and a senior
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actual or implied debt rating from the Specified Rating Agency of at least "A-"
(or its equivalent) to be a Tier-3 Obligor.
"Tier-4 Obligor" means any Obligor (other than a Tier-1 Obligor, a Tier-2
Obligor or a Tier-3 Obligor) that has (a) a commercial paper rating from the
Specified Rating Agency of at least "A-3" (or its equivalent) or (b) a senior
actual or implied debt rating from the Specified Rating Agency of at least "BBB-
" (or its equivalent), provided that if such Obligor has both a commercial paper
rating from the Specified Rating Agency and a senior actual or implied debt
rating from the Specified Rating Agency, such Obligor must have a commercial
paper rating from the Specified Rating Agency of at least "A-3" (or its
equivalent) and a senior actual or implied debt rating from the Specified Rating
Agency of at least "BBB-" (or its equivalent) to be a Tier-4 Obligor.
"Tier-5 Obligor" means any Obligor other than a Tier-1 Obligor, a Tier-2
Obligor, a Tier-3 Obligor or a Tier-4 Obligor.
"Time Factor" means, at any time, a fraction, (x) the numerator of which is
365 and (y) the denominator of which is the number of days that have elapsed
during the current calendar year.
"Tranche" means each of the ABR Tranche and each Eurodollar Tranche.
"Transferor Indemnified Losses" is defined in Section 7.3.
"Transferor Indemnified Party" is defined in Section 7.3.
"Transferor Payment Percentage" means, on any Business Day, the difference
of 100% minus the Investor Allocation Percentage on that Business Day.
"Unapplied Cash" means, on any Business Day, available funds received in
the Master Collection Account and reflected in the Daily Report for that
Business Day that have not been applied as Collections on a particular
Receivable on or prior to the time as of which that Daily Report is prepared.
"Unfunded Carrying Cost Receivables Reserve" means, on any Business Day
falling in a Group Amortization Period, the difference (but not less than zero)
of (a) the Carrying Cost Receivables Reserve as of the Group Amortization
Calculation Date, minus (b) the aggregate Collections deposited into the
Carrying Cost Account during the portion of the Group Amortization Period up to
and including that Business Day.
"Unmatured Early Amortization Event" means an event that, with the giving
of notice or lapse of time (or both) will constitute an Early Amortization
Event.
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"Year Earlier Incentive Payments" means, at any time, the aggregate amount
of payments made (or to be made) or discounts given (or to be given) to
Participating Obligors by the Sellers on account of Incentive Payment Dilution
during the then most recently ended calendar year.
"Year-to-Date Sales" means, with respect to a Participating Obligor as of
any time, the aggregate amount of year-to-date purchases by such Participating
Obligor from the Sellers during the then-current fiscal year of APP, determined
as of the last Business Day of the most recently completed calendar week.
SECTION 1.2 Incorporation of Terms. The terms of the Pooling Agreement (as
modified hereby) are incorporated in this Supplement as if set forth in full
herein. As supplemented by this Supplement, the Pooling Agreement is in all
respects ratified and confirmed and both together shall be read, taken and
construed as one and the same agreement. If the terms of this Supplement and the
terms of the Pooling Agreement conflict, the terms of this Supplement shall
control with respect to the Series 1996-1 Certificates.
ARTICLE II DESIGNATION
SECTION 2.1 Designation. There is hereby created a Series to be known as
the "Series 1996-1 Certificates," consisting of two classes: the $50,000,000
Variable Rate Class A, Trade Receivables Backed Certificates, Series 1996-1 (the
"Class A Certificates), which shall be a Senior Class; and the $10,000,000
Variable Rate Class B, Trade Receivables Backed Certificates, Series 1996-1 (the
"Class B Certificates"), which shall be a Subordinated Class. Subject to the
conditions set forth in Article III, Trustee shall authenticate and deliver the
Class A Certificates and the Class B Certificates, to or upon the order of
Transferor in the aggregate principal amount indicated for each above.
Notwithstanding the terms of Section 6.1 of the Pooling Agreement, the Class A
Certificates will be issued in minimum denominations of $5,000,000 and in
integral multiples of $1,000,000 and the Class B Certificates will be issued in
minimum denominations of $1,000,000 and in integral multiples thereof.
SECTION 2.2 Group. The Series 1996-1 Certificates are included in Group I.
Consequently, the Series 1996-1 Certificates will share a single Series
Collection Allocation Percentage (determined using the Required Receivables as
defined herein), a single Series Loss Allocation Percentage (determined using
the Invested Amount as defined herein), and if a Group Amortization Period
occurs, a single Available Subordinated Amount (determined as provided herein)
with the other Series in Group I. Collections, Investor Allocable Dilution,
Investor Allocable Loss Amounts and Investor Write-Offs will be allocated
collectively to Group I in accordance with such shared Series Collection
Allocation Percentage and Series Loss Allocation Percentage, as applicable, and
will be further allocated among Series included in Group I (and the various
Senior Classes and Subordinated Classes) in accordance with this Supplement. The
Servicing Fee with respect to all Series in Group I shall be paid in
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accordance with this Supplement and shall be determined in accordance with
Section 3.4 of the Pooling Agreement using the collective Series Collection
Allocation Percentage for Group I. The Series in Group I share a collective
Series Interest, the amount of which equals the shared Series Collection
Allocation Percentage for Group I.
Subsection 12.1(b) of the Pooling Agreement shall not apply to any Series
in Group I and shall be superseded for all such Series by Section 7.2 of this
Supplement. All terms of this Supplement applying generally to Group I shall
survive the repayment in full or other termination of the Series 1996-1
Certificates until such time as all Series in Group I have been repaid in full
and any revolving purchase commitments made by the Holders relating to
Certificates in any such Series have been terminated (or, if earlier, on the
Final Scheduled Payment Date for the last Series in Group I). Such terms of
general applicability include all of Article IV (excluding Sections 4.1 and
4.9), Article V, Section 7.2 and Article VIII and all related definitions.
SECTION 2.3 Investor Ownership Percentage. The Investor Certificates in
Group I represent an undivided interest in the portion of the Transferred Assets
allocable to Group I, which undivided interest (expressed as a percentage) shall
equal the Investor Ownership Percentage. The amount payable on any day by the
Holders of such Investor Certificates for the acquisition of such undivided
interest (the "Acquisition Amount") shall equal the Group Invested Amount plus
the Deferred Portion (it being understood that the Acquisition Amount may vary
from day to day); provided that Acquisition Amount shall be fixed as of the
Group Amortization Calculation Date.
The Deferred Portion of the Acquisition Amount shall be subject to a
holdback and shall be paid to the extent (and only to the extent) Daily Group
Collections are not required to pay amounts described in clauses first through
fourth of Section 4.3 or Section 4.4 (as applicable), it being understood that
the Holders of Series 1996-1 Certificates shall not be liable to pay any portion
of the Deferred Portion not paid out of Daily Series Collections.
ARTICLE III CONDITIONS TO ISSUANCE; USE OF PROCEEDS
SECTION 3.1 Conditions to Issuance. Trustee will not authenticate the
Series 1996-1 Certificates unless all conditions to the issuance of the Series
1996-1 Certificates under Section 6.10 of the Pooling Agreement shall have been
satisfied.
SECTION 3.2 Use of Proceeds. The proceeds from the issuance of the Series
1996-1 Certificates shall be used first to repay the Series 1995-1 Certificates
in full and second for general corporate purposes of Transferor.
ARTICLE IV PAYMENTS AND ALLOCATIONS
SECTION 4.1 Interest; Additional Amounts.
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(a) Subject to Section 4.1 of the Class A Certificate Purchase Agreement,
Transferor may from time to time allocate the outstanding principal amount under
the Class A Certificates to an ABR Tranche and up to four Eurodollar Tranches.
Except under the circumstances described in Section 3.3 of the Class B
Certificate Purchase Agreement, the outstanding principal amount of the Class B
Certificates shall constitute a single Eurodollar Tranche. With respect to the
Class A Certificates, interest on the ABR Tranche and interest on a Eurodollar
Tranche shall be payable at the end of the applicable Interest Period, except
that (i) in the case of any six month Interest Period, interest shall also be
payable on the related Interim Interest Payment Date, and (ii) interest on the
amount of any principal repaid on any other date shall be payable on the date of
the repayment. With respect to the Class B Certificates, interest shall be
payable at the end of the applicable Interest Period, except that interest on
the amount of any principal repaid on any other date shall be payable on the
date of repayment. If any such day is not a Business Day, interest shall instead
be due on the next Business Day (or, if the next Business Day falls in the next
calendar month, then on the next preceding Business Day).
(b) Interest on a Eurodollar Tranche of the Class A Certificates shall
accrue during any Interest Period at a rate per annum equal to the Eurodollar
Rate plus the Certificate Spread and shall be calculated on the basis of actual
days over a year of 360 days.
(c) Interest on a ABR Tranche of the Class A Certificates shall accrue at
the Alternate Base Rate in effect from time to time and shall be calculated on
the basis of actual days over a year of 365 or 366 days, as the case may be.
(d) Interest on the Eurodollar Tranche of the Class B Certificates shall
accrue at a rate per annum equal to LIBOR in effect from time to time plus
0.825% and shall be calculated on the basis of actual days over a year of 360
days. Interest on the ABR Tranche of the Class B Certificate shall accrue at the
Alternate Base Rate in effect from time to time and shall be calculated on the
basis of actual days over a year of 365 or 366 days, as the case may be.
(e) Interest with respect to the Series 1996-1 Certificates due but not
paid on any Distribution Date or the last day of an Interest Period, as the case
may be, will be due on the next Distribution Date or last day of an Interest
Period with additional interest on the amount at 2% per annum above the
Alternate Base Rate to the extent permitted by law.
(f) Additional Amounts shall also be payable with respect to the Series
1996-1 Certificates as specified in the Certificate Purchase Agreements and to
the extent (but only to the extent) that funds become available for such
Additional Amounts in accordance with Sections 4.3 and 4.4.
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SECTION 4.2 Daily Calculations and Group Allocations. On each Business Day,
Servicer shall calculate the Series Collection Allocation Percentage for Group I
(and, if necessary for that calculation, the Required Receivables), the Carrying
Cost Cash Required Amount and, prior to the Group Amortization Period, the Base
Amount. On each Business Day prior to the Group Amortization Period, Servicer
shall also determine whether the Net Invested Amount is greater than, equal to
or less than the Base Amount.
Pursuant to Section 4.3 of the Pooling Agreement, Servicer shall allocate
the Series Collection Allocation Percentage of available funds received in the
Master Collection Account (other than any Shared Investor Collections) since the
preceding Business Day's allocation to the shared Series Interest of Group I.
The portion of funds so allocated, together with any funds released from the
Equalization Account or any Principal Funding Account in accordance with Section
4.5 on that Business Day, are called the "Daily Group Collections."
SECTION 4.3 Allocations of Daily Group Collections (Other Than in a Group
Amortization Period). On each Business Day (other than a Business Day falling in
a Group Amortization Period or after the Fully Funded Date), Servicer shall
allocate the Daily Group Collections (or, if less, the aggregate amount of Daily
Group Collections required to fund the items described in priorities first
through fourth below) to the following purposes, in the priority indicated (and
to the extent of Daily Group Collections available):
first, to the Carrying Cost Account until the balance of the Carrying
Cost Account equals the Carrying Cost Cash Required Amount;
second, if the Net Invested Amount is greater than the Base Amount, to
the Equalization Account in an amount sufficient to reduce the Net Invested
Amount to an amount equal to the Base Amount; provided that during any
Series Amortization Period, funds that would otherwise be required to be
deposited in the Equalization Account pursuant to this priority second
shall instead be deposited in the sub-account of the Principal Funding
Account for the related Series (and, if there is more than one such Series,
shall be divided ratably between such sub-accounts, on the basis of the
respective Principal Deposit Amounts of each such Series), but the amount
deposited in any such sub-account shall in no event cause the balance
therein to exceed the applicable Principal Deposit Amount (and any
remaining amount not deposited in any sub-account of the Principal Funding
Account because of this limitation shall be shared among the other sub-
accounts for such Series in Group I (ratably as described above), in each
case to the extent that it will not cause the balance therein to exceed the
applicable Principal Deposit Amount, and any remaining amount shall be
deposited in the Equalization Account); and provided further that no
deposit shall be made to a sub-account of the Principal Funding Account
pursuant to the immediately preceding proviso (and such proviso shall not
apply notwithstanding the existence of a Series Amortization Period)
unless, after giving effect thereto, the Net Invested Amount would equal
the Base Amount;
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third, during any Series Amortization Period, to the applicable sub-
account of the Principal Funding Account until the amount on deposit in
that sub-account equals the applicable Principal Deposit Amount; provided
that
(i) the amount allocated to all Investor Certificates in the
aggregate pursuant to this priority third on any Business Day shall
not exceed the product of (x) the Investor Ownership Percentage,
multiplied by (y) the excess of the Daily Group Collections over the
amounts allocated on that Business Day pursuant to priorities first
and second and
(ii) if more than one Series in Group I is in a Series
Amortization Period, the amount so allocated shall be divided among
the sub-accounts for each such Series in Group I as follows:
(1) first such amount shall be divided among the sub-
accounts for each Series in Group I in a Series Amortization
Period that has an outstanding Senior Class, on the basis of the
respective Principal Deposit Amounts allocable to each such
Senior Class, but the amount deposited in any such sub-account
shall in no event cause the balance therein to exceed the
applicable Principal Deposit Amount allocable to the related
Senior Class; and
(2) any remaining amount shall be divided among the sub-
accounts for each Series in Group I in a Series Amortization
Period that has an outstanding Subordinated Class, on the basis
of the respective Principal Deposit Amounts allocable to each
such Subordinated Class, but the amount deposited in any such
sub-account shall in no event cause the balance therein to exceed
the applicable Principal Deposit Amount allocable to the related
Subordinated Class; and
fourth, to hold in the Master Collection Account the amount necessary
to pay on the next Distribution Date any Additional Amounts payable to the
Holders.
On such Business Day, Servicer shall allocate the remainder of Daily Group
Collections to make current and/or deferred transfer payments to Transferor in
respect of the Transferor Certificate, provided that Transferor may, from time
to time, direct Servicer to direct Trustee to hold all or part of the funds to
be paid pursuant to this sentence in the Master Collection Account to be applied
as Daily Group Collections on the following Business Day.
If, on any day, the amount of Collections that is then allocated to the
Carrying Cost Account exceeds the amount of Collections that is then required to
be allocated to the Carrying Cost Account, the Servicer shall reallocate such
Collections on such day to one or
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more of the obligations described in the first paragraph of this Section in
priorities second through fourth, and in the preceding paragraph, in the order
of priority set forth therein.
In addition, if, on any day, funds on deposit in the Master Collection
Account and available (as described in the first paragraph of this Section) for
allocation under priority fourth are less than the amount of the obligations
described therein, then the available Collections shall be allocated by Servicer
to the holders of such obligations pro rata according to the respective amounts
of such obligations held by them.
On any Business Day falling after the Fully Funded Date, all Daily Group
Collections shall be paid to Transferor as current and/or deferred transfer
payments.
SECTION 4.4 Allocations of Daily Group Collections During a Group
Amortization Period. On each Business Day falling in a Group Amortization Period
and prior to or on the Fully Funded Date, Servicer shall allocate the Daily
Group Collections to the following purposes, in the priority indicated (and to
the extent of Daily Group Collections available):
first, to the Carrying Cost Account to the extent that the balance
therein is less than the amount of Current Carrying Costs (other than any
Servicing Fee payable to any APP Person) payable on the Distribution Date
relating to the Calculation Period during which such Business Day falls;
second, to the Principal Funding Account and to Transferor (or, prior
to the Holdback Account Termination Date, to the Holdback Account) in the
following amounts:
(a) the amount to be transferred to the Principal Funding
Account shall equal the product of (i) the Investor Allocation
Percentage, multiplied by (ii) the excess of the Daily Group
Collections over the amount allocated on that Business Day pursuant to
priority first, provided that the amount so transferred shall in no
event exceed the lesser of (x) the Group Invested Amount and (y) the
Investor Ownership Percentage times the aggregate Unpaid Balance of
Receivables as of the Group Amortization Calculation Date; and
(b) the amount to be transferred to Transferor (or, prior to the
Holdback Account Termination Date, to the Holdback Account) shall
equal the product of (i) the Transferor Payment Percentage, multiplied
by (ii) the excess of the Daily Group Collections over the amount
allocated on that Business Day pursuant to priority first;
the amount allocated to the Principal Funding Account pursuant to clause
(a) of this priority second shall be divided among the sub-accounts for
each Series of Group I as follows:
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(1) first such amount shall be divided among the sub-accounts
for each Series that has an outstanding Senior Class, on the basis of
the respective outstanding principal amounts of each such Senior
Class, but the amount deposited in any such sub-account shall in no
event cause the balance therein to exceed the portion of the relevant
Series Invested Amount attributable to the related Senior Class; and
(2) any remaining amount shall be divided among the sub-accounts
for each Series that has an outstanding Subordinated Class, on the
basis of the respective outstanding principal amounts of each such
Subordinated Class, but the amount deposited in any such sub-account
shall in no event cause the balance therein to exceed the portion of
the relevant Series Invested Amount attributable to the related
Subordinated Class;
third, to hold in the Master Collection Account the amount necessary
to pay on the next Distribution Date all Additional Amounts payable to the
Holders;
fourth, to pay any Servicing Fee payable to any APP Person on the
Distribution Date relating to the Calculation Period during which such
Business Day falls; and
fifth, the balance to Transferor, provided that prior to the Holdback
Account Termination Date, amounts payable to Transferor pursuant to this
priority fifth shall be deposited into the Holdback Account and held as
provided below.
The "Holdback Account Termination Date" shall be the earlier to occur of
(i) the date that falls twelve months after the beginning of the Group
Amortization Period and (ii) the Fully Funded Date. If at any time prior to the
Holdback Account Termination Date, the amount of funds on deposit in the
Holdback Account exceeds the difference of (1) the Investor Repayment Amount
minus (2) the amount of funds then held in the Carrying Cost Account and the
Principal Funding Account that are available to pay the Investor Repayment
Amount, then the amount of such excess funds shall be released from the Holdback
Account and paid to Transferor as current and/or deferred transfer payments. On
the Holdback Account Termination Date, Servicer shall calculate an amount equal
to (x) the aggregate amount of funds held in the Holdback Account, minus (y) the
aggregate Investor Allocable Dilution for the Group Amortization Period as to
which no Series Allocable Dilution Adjustments have been received. The amount of
such difference, if positive, will be paid to Transferor. The funds remaining in
the Holdback Account after the payment of such amount to Transferor shall be
transferred to the Master Collection Account and applied to the items listed in
the first paragraph of this Section as priorities first through fifth, in that
order (except that no such funds shall be allocated to Transferor or the
Holdback Account pursuant to priority second and the amount allocable to the
Principal Funding Account shall not be limited by application of the Investor
Allocation Percentage).
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If, on any day, funds on deposit in the Master Collection Account and
available (as described in the first paragraph of this Section, for allocation
under priority third are less than the amount of the obligations described
therein, then the available Collections shall be allocated by Servicer to the
holders of such obligations pro rata according to the respective amounts of such
obligations held by them.
On any Business Day falling after the Fully Funded Date, all Daily Group
Collections shall be paid to Transferor in respect of the Transferor
Certificate.
SECTION 4.5 Withdrawals from the Equalization Account and Principal
Funding Account. On any Business Day prior to the Group Amortization Period on
which no Early Amortization Event or Unmatured Early Amortization Event with
respect to any Series in Group I exists, Servicer may instruct Trustee in
writing to withdraw funds from the Equalization Account and apply such funds as
Daily Group Collections, so long as the Net Invested Amount would not exceed the
Base Amount after giving effect to such transfer and application. On the first
day of any Series Amortization Period or Group Amortization Period, Servicer
shall instruct Trustee to withdraw the entire balance in the Equalization
Account and apply the same as Daily Group Collections on that day. On the first
day of the Group Amortization Period, Servicer shall instruct Trustee likewise
to withdraw the entire balance in the Principal Funding Account and apply the
same as Daily Group Collections on that day.
SECTION 4.6 Available Subordinated Amount. (a) If a Group Amortization
Period begins, Servicer shall promptly calculate the Available Subordinated
Amount as of the Group Amortization Calculation Date and report such amount in
the Daily Report for the first day in the Group Amortization Period. Servicer
shall also calculate the Available Subordinated Amount as of each Cut-Off Date
falling in the Group Amortization Period, such calculation to be reflected in
the related Monthly Report.
(b) The Available Subordinated Amount as of the Group Amortization
Calculation Date shall equal the product of (x) the Investor Allocation
Percentage, multiplied by (y) the result of:
(i) the product of the Unpaid Balance of Receivables held by Trustee
at the opening of business on the Group Amortization Calculation Date,
multiplied by the Series Collection Allocation Percentage on that date;
minus
(ii) the lesser of the Base Amount and the Net Invested Amount at the
opening of business on the Group Amortization Calculation Date.
(c) The Available Subordinated Amount, as of any Cut-Off Date in the Group
Amortization Period, shall equal the result of:
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(i) the Available Subordinated Amount as of the preceding Cut-Off
Date (or as of the Group Amortization Calculation Date, in the case of the
first Cut-Off Date falling in the Group Amortization Period); minus
(ii) the Investor Allocable Loss Amount with respect to the ASA
Measuring Period ending on that Cut-Off Date; minus
(iii) any Investor Allocable Dilution with respect to the ASA
Measuring Period ending on that Cut-Off Date; plus
(iv) subject to Sections 4.7 and 4.8 of this Agreement, the Investor
Allocable Recoveries and Investor Allocable Dilution Adjustments with
respect to the ASA Measuring Period ending on that Cut-Off Date.
(d) Notwithstanding the foregoing, in no event shall the Available
Subordinated Amount at any time be less than zero or greater than the initial
Available Subordinated Amount calculated pursuant to subsection (b).
SECTION 4.7 Write-Offs and Recoveries. (a) In each Monthly Report
required to be delivered during the Group Amortization Period, Servicer shall
calculate the Investor Write-Offs and the Investor Allocable Recoveries for the
most recently ended ASA Measuring Period.
(b) If the Investor Write-Offs calculated in any Monthly Report exceed
zero, the Group Invested Amount shall be reduced by the amount of the Investor
Write-Offs with effect from the related Distribution Date. Any such reduction
shall be allocated to the Class Invested Amounts of all outstanding Subordinated
Classes (ratably in accordance with such Class Invested Amounts) until all such
Class Invested Amounts have been reduced to zero. Any remaining reduction shall
be allocated to the Class Invested Amounts of all outstanding Senior Classes
(ratably in accordance with such Class Invested Amounts).
(c) If the Group Invested Amount has been reduced on account of any
Investor Write-Offs, then any Investor Allocable Recoveries with respect to any
Calculation Period ending after the reduction takes place shall be applied to
reinstate the Group Invested Amount, to the extent of such prior reductions that
have not previously been reinstated, with effect from the related Distribution
Date. Any such reinstatement shall be allocated to the Class Invested Amounts of
all outstanding Senior Classes (ratably in accordance with such Class Invested
Amounts) until all prior reductions to such Class Invested Amounts on account of
Investor Write-Offs have been reinstated. Any remaining reinstatement shall be
allocated to the Class Invested Amounts of all outstanding Subordinated Classes
(ratably in accordance with such Class Invested Amounts).
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(d) If Investor Allocable Recoveries are applied pursuant to subsection
(c) to reinstate the Group Invested Amount on any Distribution Date, then
Investor Allocable Recoveries shall be applied to increase the Available
Subordinated Amount on the same Distribution Date only to the extent of the
excess, if any, of the Investor Allocable Recoveries, minus the amount of
Investor Allocable Recoveries previously applied.
(e) The outstanding principal amount of any Senior Class or Subordinated
Class shall be reduced by any reduction, and increased by any reinstatement, of
its Class Invested Amount pursuant to this Section 4.7 or Section 4.8, in the
amount of such reduction or reinstatement.
SECTION 4.8 Certain Dilution in a Group Amortization Period. (a) In each
Monthly Report required to be delivered during the Group Amortization Period,
Servicer shall calculate the Investor Allocable Dilution and the Series
Allocable Dilution Adjustments for the most recently ended ASA Measuring Period.
(b) If the Investor Allocable Dilution calculated in any Monthly Report is
greater than zero, and there are funds in the Holdback Account, then those funds
(up to an amount equal to the amount of the Investor Allocable Dilution), shall
be allocated (i) first, in accordance with priority first of the first paragraph
of Section 4.4, (ii) second, to the Principal Funding Account (in accordance
with clauses (1) and (2) of priority second of the first paragraph of Section
4.4) until the Net Invested Amount is reduced to zero and (iii) third, in
accordance with priorities third through fifth of the first paragraph of Section
4.4, in that priority.
(c) If the Available Subordinated Amount or the Group Invested Amount has
been reduced on account of any Investor Allocable Dilution, then (i) any Series
Allocable Dilution Adjustments with respect to any Calculation Period ending
after the reduction takes place and (ii) any additional funds deposited in the
Holdback Account (the "Investor Allocable Dilution Adjustments") shall be
allocated (x) first, to reinstate the Group Invested Amount (with the same
allocation among Senior Classes and Subordinated Classes as is described in
subsection 4.7(c)), and (y) second, to reinstate the Available Subordinated
Amount, in each case to the extent not previously reinstated. Any amount so
allocated on any day shall be allocated (i) first, in accordance with priority
first of the first paragraph of Section 4.4, (ii) second, to the Principal
Funding Account (in accordance with clauses (1) and (2) of priority second of
the first paragraph of Section 4.4) until the Net Invested Amount is reduced to
zero and (iii) third, in accordance with priorities third through fifth of the
first paragraph of Section 4.4, in that priority.
SECTION 4.9 Optional Early Pay Out. (a) On any Business Day falling in
the Revolving Period, Transferor may provide notice to Trustee of its intention
to accumulate funds to cause the Series 1996-1 Certificates to be prepaid in
full, or, for the Class A Certificates, in part in a minimum amount of
$1,000,000 or in higher integral multiples of
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$1,000,000 (or in an amount equal to the entire principal amount of the Class A
Certificates, if less). When amounts sufficient for such prepayment have been
accumulated, Transferor may provide notice to Trustee on any Distribution Date
falling in the Revolving Period (the "Prepayment Notice") of the date, at least
three business days after the date of such Prepayment Notice, when the
prepayment shall occur. Trustee shall notify the affected Holders promptly upon
receiving such Prepayment Notice. In the event of any such full prepayment of
the Class B Certificates, the Holders thereof shall be entitled to receive a
Prepayment Premium. No Class B Certificates may be prepaid until the Class A
Certificates have been prepaid in full. In the event of any partial prepayment
of the Class A Certificates, the Holders of those Class A Certificates will be
paid their pro rata share of such partial prepayment calculated in accordance
with the outstanding principal amount of each Class A Certificate as of the
related Record Date. The Class B Certificates may not be partially prepaid.
(b) Commencing upon the date specified in the notice to the Trustee
referred to in subsection (a) (until an amount equal to the amount to be prepaid
plus the related Prepayment Premium has been accumulated), amounts shall be set
aside for purposes of that prepayment in accordance with Section 4.3, except
that no such amounts shall be set aside if Transferor notifies Trustee that
Transferor intends to cause the Series 1996-1 Certificates to be prepaid in full
(but not in part) by causing the portion of the Series Interest for Group I
attributable to the Series 1996-1 Certificates to be conveyed to one or more
Persons (who may be the Holders of a new Series issued substantially
contemporaneously with such prepayment) for a cash purchase price in an amount
equal to the sum of (i) the Series 1996-1 Initial Invested Amount, plus (ii) to
the extent not available in the Carrying Cost Account, accrued and unpaid
interest on the Series 1996-1 Certificates through the day of such prepayment
(the "Refinancing Date"), plus (iii) to the extent not available from funds set
aside pursuant to priority fourth of Section 4.3, the Additional Amounts with
respect to the Series 1996-1 Certificates. No such conveyance shall, however, be
permitted if (i) the purchase price for such conveyance would be from funds of
the Sellers or (ii) as a result thereof Transferor, APP or any of their
Affiliates would acquire such portion of the Series Interest or the underlying
Receivables. In the case of any such conveyance, the purchase price shall be
deposited in the Principal Funding Account and shall be distributed to the
Agent, for further distribution to the Holders, on the Refinancing Date in
accordance with the terms of Section 5.2.
(c) Any prepayment pursuant to this Section 4.9 shall be made on the later
to occur of (i) the Distribution Date specified in the notice of prepayment and
(ii) the Distribution Date on which sufficient funds (including funds to cover
any related Additional Amounts) have been accumulated pursuant to Section 4.3 or
4.4 or obtained by a conveyance described in subsection 4.9(b).
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(d) In the event of any partial prepayment of the Class A Certificates,
the Holders of those Certificates shall be paid their pro rata share of the
partial prepayment calculated in accordance with the outstanding principal
amount of each Series 1996-1 Certificate.
(e) The Class B Certificates may not be prepaid until the Class A
Certificates have been repaid in full. In addition no Class B Certificates (or
Certificates in any other Subordinated Class) may be prepaid if any Senior Class
is outstanding and, after giving effect to that payment, the Net Invested Amount
would exceed the Base Amount.
(f) The ratings of the Series 1996-1 Certificates will not address the
likelihood of payment of any Additional Amounts.
SECTION 4.10 Calculation of Dilution. The Servicer may, in any Daily
Report or Monthly Report, calculate Dilution to exclude Incentive Payment
Dilution with respect to Participating Obligors if the Accrual Reserve is
deducted in the calculation of Net Eligible Receivables.
SECTION 4.11 Reset of Benchmark Percentages and Special Concentration
Limits. Transferor may from time to time, by notice in any Monthly Report, (i)
increase or decrease any Benchmark Percentage used in the calculation of the
Class A Excess Concentration Balances or Class B Excess Concentration Balances,
(ii) change the percentages specified in the definition of Class A Special
Concentration Limit or Class B Special Concentration Limit, and/or (iii)
increase the number or type of Class A Special Obligors and Class B Special
Obligors, in each case if the Modification Condition is satisfied. It is
understood and agreed that the actions described in the preceding sentence may
change the calculation of the Class A Concentration Factor, the Class B
Concentration Factor, the Class A Minimum Required Reserve Ratio and the Class B
Minimum Required Reserve Ratio.
ARTICLE V DISTRIBUTIONS AND REPORTS
SECTION 5.1 Distributions. On each Distribution Date and, with respect to
clause (b), on each Principal Payment Date, other than a Distribution Date that
is also a Refinancing Date, Trustee shall, in accordance with instructions set
out in the applicable Daily Report, distribute to the Holders, the following
amounts:
(a) accrued and unpaid interest on the ABR Tranche and the Class B
Certificates and any additional interest payable to the Series 1996-1
Holders pursuant to Section 4.1 or to the Holders of any other Series in
Group I, to the extent funds are available for such payment in the Carrying
Cost Account (and in the event of any shortfall, such interest shall be
paid first to each Senior Class, ratably in accordance with the total
amount of interest owed to each Senior Class, and second to each
Subordinated Class, ratably in accordance with the total amount of interest
owed to each Subordinated Class);
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(b) on each Principal Payment Date, all funds deposited in each sub-
account of the Principal Funding Account shall be distributed in reduction
of the related Series Invested Amounts; all such amounts on deposit in the
Series 1996-1 sub-account of the Principal Funding Account shall be paid to
the Holders of Class A Certificates until they have been paid or provided
for in full before any such amounts are paid to the Holders of Class B
Certificates, and no such amounts shall be paid to the Holders of any
Subordinated Certificates on any day if (i) any Senior Class will remain
outstanding after that date and (ii) the Net Invested Amount exceeds the
Base Amount on that day (after giving effect to all payments and
allocations made pursuant to Section 4.3 on that day);
(c) if, on the Expected Final Payment Date or any Distribution Date
falling in a Group Amortization Period, the funds on deposit in the
Carrying Cost Account (less any Servicing Fee payable on that day to anyone
other than a APP Person) will be equal to or greater than the Net Invested
Amount (after giving effect to all distributions required by subsections
(a) and (b)) and any then accrued and unpaid Additional Amounts, then an
amount equal to such remaining Net Invested Amount and such Additional
Amounts shall be withdrawn from the Carrying Cost Account and distributed
in reduction of the Net Invested Amount and such Additional Amounts; and
(d) any Additional Amounts payable with respect to Certificates in any
Series in Group I to the extent that funds have been allocated for those
Additional Amounts pursuant to priority fourth of Section 4.3 or priority
third of Section 4.4 (and in the event of any shortfall, Additional Amounts
shall be paid first to each Senior Class, ratably in accordance with the
total Additional Amounts owed to each Senior Class, and second to each
Subordinated Class, ratably in accordance with the total Additional Amounts
owed to each Subordinated Class).
On each Distribution Date, Trustee shall also, in accordance with
instructions set out in the applicable Daily Report, distribute the Servicing
Fee to the Servicer to the extent that funds are available for that purpose in
the Carrying Cost Account.
On each Interest Payment Date (other than any Distribution Date, which
shall be governed by subsection (a)), Trustee shall, in accordance with
instructions set out in the applicable Daily Report, distribute interest payable
on that date to the Holders of any Series in Group I, to the extent funds are
available for such payment in the Carrying Cost Account (and in the event of any
shortfall, any such interest shall be paid first to each Senior Class, ratably
in accordance with the total amount of interest owed to each Senior Class, and
second to each Subordinated Class, ratably in accordance with the total amount
of interest owed to each Subordinated Class).
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Any amounts payable to the Holders of Class A Certificates pursuant to this
Section shall be paid to the Agent, and the Agent shall distribute such amounts
to such Holders. Amounts payable to a Holder of Class B Certificates pursuant to
this Section shall be paid to such Holder.
SECTION 5.2 Special Distributions on the Refinancing Date. On the
Refinancing Date, Trustee shall, in accordance with instructions set out in the
applicable Daily Report, distribute to the Holders the following amounts:
(a) all interest accrued on the Certificates in any Series in Group I
through the Refinancing Date, to the extent funds are available for such
payment in the Carrying Cost Account or have been deposited in the
Principal Funding Account pursuant to Section 4.9;
(b) all funds deposited in the Principal Funding Account pursuant to
Section 4.9, provided that no such amounts shall be paid to the Holders of
the Class B Certificates on any day if (i) any Senior Class will remain
outstanding after that date and (ii) the Net Invested Amount exceeds the
Base Amount on that day (after giving effect to all payments and
allocations made pursuant to Section 4.3 on that day); and
(c) any Additional Amounts to the extent that funds for those
Additional Amounts have been allocated pursuant to priority fourth of
Section 4.3 or priority third of Section 4.4 or deposited in the Principal
Funding Account pursuant to Section 4.9.
Amounts payable to Holders of Class A Certificates pursuant to this Section
shall be paid to the Agent, and the Agent shall distribute such amounts to such
Holders. Amounts payable to a Holder of Class B Certificates pursuant to this
Section shall be paid to such Holder.
SECTION 5.3 Payments in Respect of Transferor Certificate. On each day on
which funds are allocated for this purpose pursuant to Sections 4.3 and 4.4 (and
subject to the terms of Section 4.4 relating to the Holdback Account), Trustee
shall, in accordance with instructions set out in the applicable Daily Report,
distribute to Transferor, in respect of the Transferor Certificate, all funds
allocated for that purpose in accordance with those Sections. In addition, after
the Group Invested Amount has been repaid in full and all interest and
Additional Amounts owed to the Holders have been paid, any additional funds on
deposit in the Carrying Cost Account, the Equalization Account or the Principal
Funding Account shall similarly be paid to Transferor, in respect of the
Transferor Certificate.
SECTION 5.4 Daily Reports and Monthly Reports. Each Daily Report and
Monthly Report shall be substantially in the applicable form set out in Exhibit
B or C or in such other form as may be required by any other Supplement relating
to a Series in Group I or
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otherwise satisfactory to Servicer and Trustee and consistent with the terms of
this Supplement, each such other Supplement and the Pooling Agreement. Copies
of each Monthly Report shall be provided free of charge by the Trustee to
purchasers of Series 1996-Certificates in connection with the initial
distribution thereof and may be obtained free of charge upon request from the
Trustee (and presentation of a confirmation evidencing the purchase of such
beneficial interest) by subsequent purchasers.
SECTION 5.5 Annual Tax Information. On or before February 15 of each
calendar year, beginning with calendar year 1996, Servicer, on behalf of
Trustee, shall furnish or cause to be furnished to each Person who at any time
during the preceding calendar year was a Holder the information for the
preceding calendar year, or the applicable portion thereof during which the
Person was a Holder, as is required to be provided by an issuer of indebtedness
under the Internal Revenue Code to the holders of the issuer's indebtedness and
such other customary information as is necessary to enable such Holders to
prepare their Federal income tax returns. Servicer's obligations under the
preceding sentence shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Paying Agent to
the specified Persons pursuant to the Pooling Agreement or any requirements of
the Internal Revenue Code as from time to time in effect. Notwithstanding
anything to the contrary contained in this Agreement, Trustee shall, to the
extent required by applicable law, from time to time furnish to the appropriate
Persons a Form 1099-INT within the period required by applicable law.
SECTION 5.6 Periodic Perfection Certificate. On or before April 15 of
each calendar year, beginning with calendar year 1996, Servicer, on behalf of
Trustee, shall furnish or cause to be furnished to Trustee an Officer's
Certificate setting forth a list of all changes in (a) the name, identity or
corporate structure of Transferor or any Seller and (b) the chief executive
office of Transferor or any Seller (or in the place of business of Transferor or
any Seller that has only one place of business) that have taken place since the
date of the Officer's Certificate most recently delivered pursuant to this
Section 5.6 (or since the Closing Date, in the case of the first such Officer's
Certificate to be delivered), or indicating that no such events have taken
place, and stating in each case what filings of UCC financing statements, or
amendments thereto, relating to the Transaction Documents have been made in
connection with each such event (identified the date and filing index numbers
for each). Any financing statement identified in such an Officer's Certificate
delivered to Trustee shall be deemed to have been identified to Trustee in
writing for purposes of subsection 11.1(c)(v) of the Pooling Agreement. If any
such new UCC financing statements are filed, Servicer shall cause Trustee to be
named as secured party (in the case of any filing against Transferor) or
assignee of the secured party (in the case of any filing against a Seller).
ARTICLE VI EARLY AMORTIZATION EVENTS
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SECTION 6.1 Early Amortization Events. Each of the following shall
constitute an "Early Amortization Event":
(a) any of the following shall occur:
(i) failure on the part of Transferor or Servicer to make any
payment of the principal amount of or any interest on the Series 1996-
1 Certificates when due, or to make any deposit required by the terms
of any Transaction Document within three Business Days after the date
the deposit is required to be made, or to make any other payment,
except any payment of the Servicing Fee to a APP Person, required by
the terms of any Transaction Document on or before ten Business Days
after the date such payment is required to be made; or
(ii) failure on the part of Servicer to deliver a Daily Report
within the time period required under Section 3.5(c) of the Pooling
Agreement and continuance of such failure for three Business Days;
provided that if the Servicer shall have estimated the Base Amount in
the Daily Report for one or more days due to adverse circumstances
beyond its control (as described in, and subject to the limitations
in, such Section 3.5(c)), then the three day grace period specified in
this clause (ii) shall be reduced by the number of days on which the
Base Amount was estimated (or, if such number of days exceeds three,
shall be reduced to zero); or
(iii) failure on the part of the Servicer to deliver a Monthly
Report within the time required under Section 3.5(d) of the Pooling
Agreement and the applicable Supplement or PI Agreement, and
continuance of such failure for five Business Days; or
(iv) failure on the part of Transferor, Guarantor, Servicer or
any Seller duly to observe or perform any covenant or agreement set
forth in any Transaction Document, which failure 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
Transferor by Trustee or to Transferor and Trustee by any Holder; or
(v) Guarantor gives notice of termination of the Seller Guaranty;
(b) any representation or warranty made by a Seller in Section
5.1(d), 5.1(i), 5.1(k), 5.1(o) or 5.1(r) of the Purchase Agreement or by
Transferor in Section 2.3(a)(i), 2.3(a)(iii) or 7.1(i) of the Pooling
Agreement shall prove to have been incorrect in any material respect when
made, and continues to be incorrect in any material respect for a period
of five Business Days after the date on which written
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notice of the breach, requiring the same to be remedied, shall have given
to Transferor by Trustee or to Transferor and Trustee by any Holder, or any
other representation or warranty made by Transferor, Servicer, Guarantor or
any Seller in any Transaction Document shall prove to have been incorrect
in any material respect when made, and continues to be incorrect in any
material respect for a period of 30 days after the date on which written
notice of the breach, requiring the same to be remedied, shall have been
given to Transferor by Trustee, or Transferor and to Trustee by any Holder;
provided that a mistake in representation of a Receivable as an Eligible
Receivable shall not constitute an Early Amortization Event unless and
until the applicable Seller has failed to make the cash payments (if any)
owed under Section 3.1 of the Purchase Agreement in respect of the
misrepresentation (it being understood that certain of such mistakes may
result in a non-cash adjustment under the Purchase Agreement);
(c) a Bankruptcy Event shall occur with respect to Transferor,
Servicer, Guarantor or any Seller, or Transferor shall become unable, for
any reason, to transfer Receivables or other Transferred Assets to the
Trust in accordance with the provisions of this Agreement and the Pooling
Agreement; provided that if, at the time any event that would, with the
passage of time, become a Bankruptcy Event occurs as a result of a
bankruptcy proceeding being filed against Transferor or any Seller, then,
on and after the day on which the bankruptcy proceeding is filed until the
earlier to occur of the dismissal of the proceeding and the Early
Amortization Commencement Date, Transferor shall not purchase Receivables
and Related Assets from the affected Seller or, if Transferor is the
subject of the proceeding, transfer Receivables and Related Transferred
Assets to the Trust;
(d) the Trust or Transferor shall become an "investment company"
within the meaning the Investment Company Act of 1940, as amended;
(e) the Net Invested Amount exceeds the Base Amount for a period of
five or more consecutive Business Days;
(f) a Servicer Default occurs;
(g) APP shall cease to own, directly or indirectly, 100% of the
issued and outstanding capital stock of Transferor;
(h) the Internal Revenue Service or the PBGC files one or more Tax or
ERISA Liens against the assets of Transferor or any Seller (including
Receivables);
(i) the cessation of, or the failure to create, a valid first-
priority perfected ownership or security interest in favor of Trustee in
the Receivables;
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(j) the Series 1996-1 Invested Amount is not paid in full on the
Expected Final Payment Date;
(k) any foreclosure or similar proceeding in respect of any adverse
claim on the Purchase Money Note or the Transferor's common stock shall
have been commenced; or title to the Purchase Money Note or Transferor's
common stock shall pass to the holders of such adverse claim, it being
understood that the grant of a security interest in the stock of Transferor
or the Purchase Money Note to a creditor of a Seller that is party to an
Intercreditor Agreement shall not be an Early Amortization Event;
(l) Transferor shall not be able to pay the purchase price for new
Receivables in cash or by increasing the principal amount of the Purchase
Money Notes and such condition continues for five consecutive Business
Days; or
(m) the Internal Revenue Service shall assert that the Trust should
be treated as an association (or publicly traded partnership) taxable as a
corporation.
SECTION 6.2 Early Amortization Period. Upon the occurrence and continuance
of any Early Amortization Event described in subsection 6.1(c), (d), (h), (i),
(j) or (k), an Early Amortization Period shall commence without any notice or
other action on the part of Trustee or the Series 1996-1 Holders, immediately
upon the occurrence of such Early Amortization Event. On the tenth day after
Transferor receives notice or otherwise becomes aware of the occurrence of any
Early Amortization Event described in subsection 6.1(a) or (e) an Early
Amortization Period shall commence without any notice or other action on the
part of Trustee or the Series 1996-1 Holders, unless waived by the Required
Series Holders. Upon the occurrence and continuance of any event described in
any subsection above (including subsection 6.1(a) and (e)), after the applicable
grace period, if any, set forth in such subsection, Trustee may (and, at the
direction of the Required Series Holders, shall) by notice then given in writing
to Transferor and Servicer, declare that an Early Amortization Period has
commenced as of the date of Transferor's receipt of the notice. In the event of
any prepayment of the Class B Certificates as a result of the occurrence of an
Early Amortization Event, the Holders thereof shall be entitled to receive a
Prepayment Premium.
ARTICLE VII OPTIONAL REDEMPTION; TERMINATION; INDEMNITIES
SECTION 7.1 Optional Redemption of Investor Interests. On any
Distribution Date occurring during an Early Amortization Period with respect
to the Series 1996-1 Certificates on or after the date that the Series 1996-1
Invested Amount is reduced to ten percent or less of the sum of the Stated
Amounts for the Series 1996-1 Certificates, Transferor shall have the option
to redeem the Series 1996-1 Certificates. The purchase price will be an amount
equal to (i) the Invested Amount plus (ii) accrued and unpaid interest (and
accrued and unpaid interest with respect to interest that was due but not paid
on any prior Distribution Date) through the day preceding the Distribution Date
at the applicable interest rate (as
42
<PAGE>
specified in Section 4.1) plus (iii) any accrued and unpaid Additional Amounts
(including any Prepayment Premium), plus (iv) the aggregate amount by which the
Invested Amount has been reduced on account of Investor Write-Offs and Investor
Allocable Dilution (and not subsequently reinstated). Upon the tender of the
outstanding Certificates of the Series by the Holders, Trustee shall distribute
the amounts, together with all funds on deposit in the Principal Funding Account
that are allocable to the Series 1996-1 Certificates, to the Holders of the
Series on the next Distribution Date in repayment of the principal amount and
accrued and unpaid interest owing to the Holders. Following any redemption, the
Holders of the Series shall have no further rights with respect to the
Receivables. In the event that Transferor fails for any reason to deposit in the
Principal Funding Account the aggregate purchase price for the Series 1996-1
Certificates, payments shall continue to be made to the Holders of the Series in
accordance with the terms of the Pooling Agreement and this Supplement.
SECTION 7.2 Termination. Notwithstanding Section 12.1 of the Pooling
Agreement, the last payment of the principal of and interest on the Certificates
of any Series in Group I 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 such Series, Servicer
determines that the Series 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 Receivables in an amount equal to the product of (i) the outstanding balance
of Receivables, times (ii) the Series Collection Allocation Percentage, times
(iii) the Investor Allocation Percentage, times (iv) a fraction the numerator of
which is the applicable Series Invested Amount and the denominator of which is
the Group Invested Amount. 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
for such Receivables 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 to the Holders. The priorities specified in Section 5.1 shall
apply to any such distribution.
SECTION 7.3 Indemnification by Transferor. Transferor hereby agrees to
indemnify the Trust, Trustee, the Agent, each Holder of a Series 1996-1
Certificate 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 a "Transferor Indemnified Party"), forthwith
on demand, from and against any and all damages, losses, claims (whether on
account of settlements or otherwise, and whether or not the relevant Transferor
Indemnified Party is a party to any action or proceeding that gives rise to any
Transferor Indemnified Losses (as defined below)), judgments, liabilities and
related reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) (all of the foregoing collectively being called "Transferor
Indemnified Losses") awarded against or incurred by any of them that arise out
of or relate to this Agreement, any other Transaction Document or any of the
43
<PAGE>
transactions contemplated herein or therein or the use of proceeds herefrom or
therefrom (including any Transferor Indemnified Losses relating to any Adverse
Claim, without regard to whether such Adverse Claim was a Permitted Adverse
Claim).
If any action, suit, proceeding or investigation is commenced, as to which
a Transferor Indemnified Party proposes to demand indemnification, it shall
notify Transferor with reasonable promptness; provided, however, that any
failure by such Transferor 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 Transferor Indemnified Party. The Transferor 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 Transferor Indemnified
Party unless the Transferor Indemnified Party shall have been advised by counsel
that there exists an actual or potential conflict of interests between
Transferor and such Transferor Indemnified Party, including situations in which
one or more legal defenses may be available to such Transferor 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 Transferor 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 Transferor indemnify any
Transferor Indemnified Party against any Transferor Indemnified Losses (a)
resulting from gross negligence or willful misconduct on the part of such
Transferor Indemnified Party (or the gross negligence or willful misconduct on
the part of any of its officers, directors, employees, affiliates or agents) or
the failure of such Transferor Indemnified Party to perform its obligations
under the Transaction Documents, (b) to the extent they include losses in
respect of Receivables and reimbursement therefor that would constitute credit
recourse to Transferor for the amount of any Receivable or Related Transferred
Asset not paid by the related Obligor, (c) except in the case of the Prepayment
Premium, to the extent they are or result from lost profits, (d) to the extent
they are or result from taxes (including interest and penalties thereon)
asserted with respect to (i) distributions on the Series 1996-1 Certificates,
(ii) franchise or withholding taxes imposed on any Transferor Indemnified Party
other than the Trust or the Trustee in its capacity as Trustee or (iii) Federal
or other taxes on or measured by the income of such Transferor Indemnified Party
and costs and expenses in defending against the same, or (e) except in the case
of the Prepayment Premium, to the extent that they constitute consequential,
special or punitive damages.
If for any reason the indemnification provided in this section is
unavailable to a Transferor Indemnified Party or is insufficient to hold a
Transferor Indemnified Party harmless, then Transferor shall contribute to the
amount paid by the Transferor Indemnified Party as a result of any loss, claim,
damage or liability in such proportion as is appropriate
44
<PAGE>
to reflect not only the relative benefits received by such Transferor
Indemnified Party on the one hand and Transferor on the other hand, but also the
relative fault of such Transferor Indemnified Party (if any) and Transferor and
any other relevant equitable considerations.
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
Article IV of this Supplement. 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 7.4 Indemnification by Servicer. Servicer agrees that each Agent
and each Holder of a Series 1996-1 Certificate shall be an "Indemnified Party"
for purposes of the Pooling Agreement.
ARTICLE VIII MISCELLANEOUS
SECTION 8.1 Governing Law. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.
SECTION 8.2 Counterparts. This Supplement 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 8.3 Severability of Provisions. If any one or more of the
provisions or terms of this Supplement shall for any reason whatsoever be held
invalid, then the unenforceable provision(s) or term(s) shall be deemed
severable from the remaining provisions or terms of this Supplement and shall in
no way affect the validity or enforceability of the other provisions or terms of
this Supplement.
SECTION 8.4 Amendment, Waiver, Etc. This Supplement may be amended, subject
to Section 13.1 of the Pooling Agreement, Section 10.1 of the Class A
Certificate Purchase Agreement and Section 7.1 of the Class B Purchase
Agreement, from time to time by Servicer, Transferor and Trustee by a written
instrument signed by each of them, without the consent of any Holder; provided
that such action shall not adversely affect in any material respect the
interests of any Holder; and provided further that for purposes of this
Supplement, any decrease in an applicable rate of interest on any Series 1996-1
Certificate or any postponement of the applicable Expected Final Payment Date
shall be deemed to materially adversely affect the interests of a Holder. This
Supplement also may be amended, modified or waived from time to time by
Servicer, Transferor and Trustee with the consent of the Required Series Holders
of each Series in Group I to the extent permitted by Section 13.1 of the Pooling
Agreement, Section 10.1 of the Class A Certificate Purchase Agreement
45
<PAGE>
and Section 7.1 of the Class B Certificate Purchase Agreement, and the terms of
that section shall apply to any such amendment, modification or waiver.
SECTION 8.5 Trustee. Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplement
or for or in respect of the recitals contained herein, all of which recitals are
made solely by Transferor and Servicer.
SECTION 8.6 Instructions in Writing. All instructions given by Servicer to
Trustee pursuant to this Supplement shall be in writing, and may be included in
a Daily Report or Monthly Report.
SECTION 8.7 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.
46
<PAGE>
IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused this
Supplement to be duly 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
-----------------------------------
AMERICAN PAD & PAPER COMPANY OF
DELAWARE, INC., as Servicer
By: /s/ Gregory M. Benson
--------------------------------------
Name: Gregory M. Benson
------------------------------------
Title: Executive Vice President
-----------------------------------
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By: /s/ Russell T. Whitley
--------------------------------------
Name: Russell T. Whitley
------------------------------------
Title: Assistant Vice President
-----------------------------------
47
<PAGE>
EXHIBIT A - Part 1
to the Series 1996-1 Supplement
FORM OF CLASS A, SERIES 1996-1 CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN CONTRAVENTION OF
THAT ACT. THIS CERTIFICATE WILL BE NOT ACCEPTED FOR REGISTRATION OF
TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY TO THE REGISTRAR
AND TRANSFER AGENT THAT THE RESTRICTIONS ON TRANSFER SET FORTH IN THE
POOLING AGREEMENT HAVE BEEN COMPLIED WITH.
NOTEPAD FUNDING TRADE RECEIVABLES BACKED CERTIFICATES
CLASS A, SERIES 1996-1 CERTIFICATE
Date: Maximum Principal Amounts
$________________
THIS CERTIFIES THAT _________________ is the registered owner of
a nonassessable, fully-paid, fractional undivided interest in the Notepad
Funding Receivables Master Trust (the "Trust") that was created pursuant to
(a) 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, a Delaware corporation, ("Transferor"), American Pad & Paper
Company of Delaware, Inc., a Delaware corporation, ("Servicer"), and
Manufacturers and Traders Trust Company, a New York banking corporation, as
trustee (together with its successors and assigns in such capacity,
"Trustee") and (b) the Supplement dated as of May 29, 1996 relating to the
Series 1996-1 Certificates (the "Supplement"). This Certificate is one of
the duly authorized Class A, Series 1996-1 Certificates designated and
issued under the Pooling Agreement and the Supplement. Except as otherwise
defined herein, capitalized terms have the meanings that the Supplement and
the Pooling Agreement assign to them. This Certificate is subject to the
terms, provisions and conditions of, and is entitled to the benefits
afforded by, the Pooling Agreement and the Supplement, 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.
1
<PAGE>
The Class A, Series 1996-1 Certificates are a Senior Class and are
therefore entitled to share in the benefits of the subordination of the Class B,
Series 1996-1 Certificates and Certificates in any other Subordinated Class that
may be issued from time to time to the extent set forth in the Supplement.
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
Transaction Documents or be valid for any purpose.
This Certificate does not represent a recourse obligation of, or an
interest in, Transferor, any Seller, Servicer, Trustee or any Affiliate of any
of them. This Certificate is limited in right of payment to the Transferred
Assets.
By its acceptance of this Certificate, each Holder hereof (a) acknowledges
that it is the intent of Transferor, and agrees that it is the intent of the
Holder that, for Federal, state and local income and franchise tax purposes
only, the Class A, Series 1996-1 Certificates (including this Certificate) will
be treated as evidence of indebtedness secured by the Transferred Assets and the
Trust not be characterized as an association taxable as a corporation, (b)
agrees to treat this Certificate for Federal, state and local income and
franchise tax purposes as indebtedness and (c) agrees that the provisions of the
Transaction Documents shall be construed to further these intentions of the
parties.
This Certificate shall be construed in accordance with the laws of the
State of New York, without regard 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 New
York.
2
<PAGE>
IN WITNESS WHEREOF, Transferor has caused this Certificate to be executed
by its officer thereunto duly authorized.
NOTEPAD FUNDING CORPORATION
By:
--------------------------
Title:
---------------------
3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A, Series 1996-1 Certificates referred to in the
Pooling Agreement, as supplemented by the Supplement.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
--------------------------------
Title:
---------------------------
Dated: ____________, 1996
4
<PAGE>
EXHIBIT A - Part 2
to the Series 1996-1 Supplement
FORM OF CLASS B, SERIES 1996-1 CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN CONTRAVENTION OF
THAT ACT. THIS CERTIFICATE WILL NOT BE ACCEPTED FOR REGISTRATION OF
TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY TO THE REGISTRAR
AND TRANSFER AGENT THAT THE RESTRICTIONS ON TRANSFER SET FORTH IN THE
POOLING AGREEMENT HAVE BEEN COMPLIED WITH.
THIS CERTIFICATE MAY NOT BE TRANSFERRED, ASSIGNED OR OTHERWISE CONVEYED
UNLESS THE PRINCIPAL AMOUNT OF CERTIFICATES TRANSFERRED PURSUANT TO SUCH
TRANSFER IS EQUAL TO AT LEAST $500,000. THIS CERTIFICATE MAY NOT BE
SUBDIVIDED INTO A PRINCIPAL AMOUNT LESS THAN $500,000.
THIS CERTIFICATE MAY NOT BE TRANSFERRED, ASSIGNED OR OTHERWISE CONVEYED
UNLESS THE PRINCIPAL AMOUNTS BALANCE OF CERTIFICATES TRANSFERRED PURSUANT
TO SUCH TRANSFER IS EQUAL TO AT LEAST 2.1% OF THE AGGREGATE PRINCIPAL
AMOUNTS BALANCE OF ALL OUTSTANDING CERTIFICATES. THIS CERTIFICATE MAY NOT
BE SUBDIVIDED INTO A PRINCIPAL AMOUNTS BALANCE LESS THAN 2.1% OF THE
AGGREGATE PRINCIPAL AMOUNTS BALANCE OF ALL OUTSTANDING CERTIFICATES./1/
NOTEPAD FUNDING TRADE RECEIVABLES BACKED CERTIFICATES
CLASS B, SERIES 1996-1 CERTIFICATE
Date: $_______________
THIS CERTIFIES THAT _________________ is the registered owner of
a nonassessable, fully-paid, fractional undivided interest in the Notepad
Funding Receivables Master Trust (the "Trust") that was created pursuant to
(a) the Amended and Restated Pooling and Servicing Agreement, dated as of
------------------------
/1/ Note that this legend may be revised in a future draft.
1
<PAGE>
May 29, 1996 (as the same may be amended, supplemented or otherwise modified
from time to time, the "Pooling Agreement"), among Notepad Funding Corporation,
a Delaware corporation, ("Transferor"), American Pad & Paper Company of
Delaware, Inc., a Delaware corporation, ("Servicer"), and Manufacturers and
Traders Trust Company, a New York banking corporation, as trustee (together with
its successors and assigns in such capacity, "Trustee") and (b) the Supplement
dated as of May 29, 1996 relating to the Series 1996-1 Certificates (the
"Supplement"). This Certificate is one of the duly authorized Class B, Series
1996-1 Certificates designated and issued under the Pooling Agreement and the
Supplement. Except as otherwise defined herein, capitalized terms have the
meanings that the Supplement and the Pooling Agreement assign to them. This
Certificate is subject to the terms, provisions and conditions of, and is
entitled to the benefits afforded by, the Pooling Agreement and the Supplement,
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.
The Class B, Series 1996-1 Certificates are a Subordinated Class and are
therefore subordinated to the Class A, Series 1996-1 Certificates, Series 1996-1
Certificates and Certificates in any other Senior Class that may be issued from
time to time to the extent set forth in the Supplement.
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
Transaction Documents or be valid for any purpose.
This Certificate does not represent a recourse obligation of, or an
interest in, Transferor, any Seller, Servicer, Trustee or any Affiliate of any
of them. This Certificate is limited in right of payment to the Transferred
Assets.
By its acceptance of this Certificate, each Holder hereof (a) acknowledges
that it is the intent of Transferor, and agrees that it is the intent of the
Holder that, for Federal, state and local income and franchise tax purposes
only, the Class B, Series 1996-1 Certificates (including this Certificate) will
be treated as evidence of indebtedness secured by the Transferred Assets and the
Trust not be characterized as an association taxable as a corporation, (b)
agrees to treat this Certificate for Federal, state and local income and
franchise tax purposes as indebtedness and (c) agrees that the provisions of the
Transaction Documents shall be construed to further these intentions of the
parties.
This Certificate shall be construed in accordance with the laws of the
State of New York, without regard to its conflict of laws principles, and all
obligations, rights and remedies under or arising in connection with this
2
<PAGE>
Certificate shall be determined in accordance with the laws of the State of
New York.
IN WITNESS WHEREOF, Transferor has caused this Certificate to be
executed by its officer thereunto duly authorized.
NOTEPAD FUNDING CORPORATION
By:
----------------------------
Title:
------------------------
3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B, Series 1996-1 Certificates referred to in the
Pooling Agreement, as supplemented by the Supplement.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
----------------------------
Title:
------------------------
Dated: ____________, 1996
4
<PAGE>
EXHIBIT 4.7
================================================================================
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
================================================================================
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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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
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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
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(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
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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
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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
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(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.
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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
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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
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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.
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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
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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
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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
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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,
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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
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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.
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(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
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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.
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(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.
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(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.
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(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
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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
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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
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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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
EXHIBIT A
to Pooling Agreement
FORM OF
LOCKBOX ACCOUNT LETTER AGREEMENT
--------------------------------
[To come]
<PAGE>
EXHIBIT B
to Pooling Agreement
FORM OF
CONCENTRATION ACCOUNT LETTER AGREEMENT
---------------------------------------
[To come]
<PAGE>
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:
----------------------
<PAGE>
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:
-------------
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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: _____________________
<PAGE>
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
<PAGE>
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
<PAGE>
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:
-------------------
<PAGE>
SCHEDULE 1
to Pooling Agreement
ACCOUNT BANKS - LOCKBOX BANKS
-----------------------------
Texas Commerce Bank National Association
ACCOUNT BANKS - CONCENTRATION ACCOUNT BANK
------------------------------------------
Fleet Bank
<PAGE>
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.
<PAGE>
"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.
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<PAGE>
"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.
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<PAGE>
"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.
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<PAGE>
"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
<PAGE>
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
<PAGE>
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:
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<PAGE>
(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;
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<PAGE>
(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
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<PAGE>
(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.
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<PAGE>
"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.
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<PAGE>
"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
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<PAGE>
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.
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<PAGE>
"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
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<PAGE>
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.
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<PAGE>
"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
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<PAGE>
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,
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<PAGE>
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.
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<PAGE>
"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.
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<PAGE>
"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.
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<PAGE>
"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
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<PAGE>
(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
<PAGE>
EXHIBIT 4.8
================================================================================
CERTIFICATE PURCHASE AGREEMENT
(SERIES 1996-1, CLASS A)
dated as of May 29, 1996
among
NOTEPAD FUNDING CORPORATION,
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.,
THE PURCHASERS DESCRIBED HEREIN,
and
ABN AMRO BANK N.V.,
as Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 DEFINITIONS
SECTION 1.1 Definitions....................................... 1
ARTICLE 2 PURCHASE AND SALE OF CERTIFICATES
SECTION 2.1 The Commitments; Percentages...................... 2
SECTION 2.2 Purchase Mechanics................................ 2
SECTION 2.3 Reduction of Stated Amounts....................... 4
SECTION 2.4 Certificates...................................... 4
ARTICLE 3 REDUCTIONS IN INVESTED AMOUNT
SECTION 3.1 Transferor's Right to Reduce Invested Amount...... 5
SECTION 3.2 Notice to Purchasers.............................. 5
ARTICLE 4 TRANCHES, INTEREST AND FEES
SECTION 4.1 Tranches.......................................... 5
SECTION 4.2 Fees.............................................. 6
SECTION 4.3 Yield Protection.................................. 7
SECTION 4.4 Illegality; Unavailability........................ 9
SECTION 4.5 Indemnity......................................... 10
SECTION 4.6 Taxes............................................. 10
ARTICLE 5 OTHER PAYMENT TERMS
SECTION 5.1 Time and Method of Payment........................ 11
SECTION 5.2 Pro Rata Treatment................................ 12
ARTICLE 6 REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Transferor........................................ 12
SECTION 6.2 APP............................................... 13
SECTION 6.3 Purchasers........................................ 14
ARTICLE 7 CONDITIONS
SECTION 7.1 Conditions to Initial Purchase.................... 14
SECTION 7.2 Conditions to Each Purchase....................... 18
</TABLE>
i
<PAGE>
ARTICLE 8 COVENANTS
SECTION 8.1 Covenants .......................................... 18
ARTICLE 9 AGENT
SECTION 9.1 Appointment ........................................ 20
SECTION 9.2 Nature of Duties ................................... 20
SECTION 9.3 Lack of Reliance on Agent and Financial Advisor .... 20
SECTION 9.4 Certain Rights of Agent ............................ 21
SECTION 9.5 Reliance ........................................... 21
SECTION 9.6 Indemnification .................................... 21
SECTION 9.7 Agent in its Individual Capacity ................... 22
SECTION 9.8 Resignation by Agent ............................... 22
ARTICLE 10 MISCELLANEOUS PROVISIONS
SECTION 10.1 Amendments ......................................... 23
SECTION 10.2 No Waiver; Remedies ................................ 23
SECTION 10.3 Successors and Assigns; Assignments ................ 23
SECTION 10.4 Survival of Agreement .............................. 26
SECTION 10.5 Expenses; Indemnification .......................... 26
SECTION 10.6 Entire Agreement ................................... 28
SECTION 10.7 Notices ............................................ 28
SECTION 10.8 No Third Party Beneficiaries ....................... 28
SECTION 10.9 Severability of Provisions ......................... 28
SECTION 10.10 Counterparts ....................................... 28
SECTION 10.11 Governing Law ...................................... 29
SECTION 10.12 Tax Characterization ............................... 29
SECTION 10.13 No Proceedings ..................................... 29
SECTION 10.14 Reference Banks .................................... 29
SECTION 10.15 No Recourse ........................................ 29
ii
<PAGE>
SCHEDULE I Stated Amounts and Percentages
EXHIBITS
EXHIBIT A Form of Pooling and Servicing Agreement
EXHIBIT B Form of Receivables Purchase Agreement
EXHIBIT C Form of Series 1996-1 Supplement
EXHIBIT D Form of Assignment Agreement
APPENDIX
APPENDIX X Index of Additional Defined Terms
iii
<PAGE>
This CERTIFICATE PURCHASE 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 ("Servicer" or "APP"), the purchasers named on the signatures pages
of this Agreement (together with their respective permitted assigns, the
"Purchasers"), and ABN AMRO BANK N.V. ("Agent").
BACKGROUND
1. Transferor (a) is party to an Amended and Restated Pooling and
Servicing Agreement substantially in the form of Exhibit A (the "Pooling
Agreement") with APP, as initial Servicer, and MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York banking corporation, as trustee (in that capacity, together
with any successors in that capacity, the "Trustee"), (b) is party to an Amended
and Restated Receivables Purchase Agreement substantially in the form of Exhibit
B and (c) will enter into a Series 1996-1 Supplement to the Pooling Agreement
substantially in the form of Exhibit C (the "Supplement"). Pursuant to the
Pooling Agreement and the Supplement, Transferor will obtain the Series 1996-1,
Class A Certificates (the "Certificates"), which will represent fractional
undivided beneficial interests in the assets of the Notepad Funding Receivables
Master Trust (the "Trust"), a trust organized pursuant to the Pooling Agreement.
2. Transferor wishes to sell the Certificates to the Purchasers and
obtain their commitment to purchase fractional undivided beneficial interests in
the assets of the Trust (each a "Trust Interest") that will be evidenced by the
Certificates. Subject to the terms and conditions of this Agreement, each
Purchaser is willing (a) to purchase a Certificate with an initial Stated Amount
in the amount set forth below its name on the signature pages to this Agreement
and (b) to agree to make purchases of Trust Interests. APP has joined in this
Agreement to confirm certain representations, warranties and covenants for the
benefit of the Purchasers and the Agent.
ARTICLE 1 DEFINITIONS
SECTION 1.1 Definitions. Capitalized terms used and not otherwise defined
herein have the meanings assigned to them in the Supplement or, if not defined
in the Supplement, in Appendix A to the Pooling Agreement. An index of terms
defined directly in this Agreement is attached as Appendix X.
<PAGE>
ARTICLE 2 PURCHASE AND SALE OF CERTIFICATES
SECTION 2.1 The Commitments; Percentages. Subject to the terms and
conditions of this Agreement, the Pooling Agreement and the Supplement, each
Purchaser agrees, severally and for itself alone, upon Transferor's request
(through Servicer), to make purchases (each a "Purchase") of Trust Interests
from time to time during the Revolving Period for the Series 1996-1
Certificates; provided, that no Purchaser will be required or permitted to make
a Purchase on any date if the funded principal amount of its Certificate, after
giving effect to the Purchase, would exceed the lesser of (a) the Stated Amount
of its Certificate and (b) its Class Percentage multiplied by the Class A
Invested Amount. In addition, no Purchaser will be required or permitted to make
a Purchase if, after giving effect thereto (and any corresponding reduction to
the Series Invested Amount pursuant to Section 3.1), the Net Invested Amount
would exceed the Base Amount. The Purchases by the Purchasers shall be made
ratably in accordance with their respective Class Percentages; provided, that
the failure of any Purchaser to make any Purchase shall not relieve any other
Purchaser of its obligation to make Purchases hereunder. No Purchaser shall,
however, be responsible for the failure of any other Purchaser to make any
Purchase. Subject to the terms of this Agreement, the aggregate principal amount
of a Purchaser's investment represented by its Certificate may be increased or
decreased from time to time.
For purposes of this Agreement, (i) "Class Percentage" means, with respect
to each Purchaser, the percentage equivalent (carried out to twelve decimal
places) of a fraction, the numerator of which is the Stated Amount of such
Purchaser's Certificate and the denominator of which is the sum of the Stated
Amounts of all of the Purchasers' Certificates, and (ii) "Series Percentage"
means, with respect to each Purchaser, the percentage equivalent (carried out to
twelve decimal places) of a fraction, the numerator of which is the Stated
Amount of such Purchaser's Certificate and the denominator of which is the sum
of the Stated Amounts for all of the Series 1996-1 Certificates. The initial
Class Percentages and Series Percentages of the initial Purchasers are set forth
opposite their names in Schedule I.
SECTION 2.2 Purchase Mechanics. (a) Whenever Transferor wishes the
Purchasers to make Purchases, it shall cause Servicer to notify the Agent if the
Trust Interests to be purchased initially will form a part of (i) the ABR
Tranche, not later than 10:00 a.m., New York City time, one Business Day prior
to the date of the proposed Purchase and (ii) a Eurodollar Tranche, not later
than 10:00 a.m., New York City time, three Business Days prior to the date of
the proposed Purchase. Each notice shall be irrevocable and shall in each case
refer to this Agreement and specify (w) the aggregate purchase price
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<PAGE>
for the requested Purchases (which shall be in a minimum amount of $5,000,000 or
a greater integral multiple of $1,000,000 (or in the total unutilized amount of
the various Purchasers' Stated Amounts)), (x) whether the Trust Interests to be
purchased will form a part of the ABR Tranche or a Eurodollar Tranche, (y) in
the case of Trust Interests forming a Eurodollar Tranche, the length of the
related Interest Period and (z) the date of the Purchase (which shall be a
Business Day) and the amount thereof. If no election required by clause (y) is
made in any notice, then the Trust Interests obtained in the Purchase shall form
a part of the ABR Tranche. The Agent shall promptly advise the Purchasers of any
notice given pursuant to this section and of the amount of each Purchaser's
respective Purchase amount.
(b) After receiving notice from the Agent of any notice given pursuant to
subsection (a) and subject to the conditions in Article VII, each Purchaser
shall make a Purchase in the amount of its pro rata portion of aggregate
Purchases requested to be made, ratably according to its Class Percentage, on
the proposed date thereof by wire transfer in Dollars of immediately available
funds to the Agent at the office designated from time to time by the Agent, not
later than 10:00 a. m., New York City time, and the Agent shall (unless notified
in writing that any condition precedent has not been satisfied), by noon, New
York City time, on the same day, make available to Transferor by wire transfer
of Dollars in immediately available funds the aggregate amount of the funds
received. Unless the Agent shall have received written notice from a Purchaser
prior to the date of any Purchase that the Purchaser will not make available to
the Agent its purchase price, the Agent may (but shall not be required to)
assume that the Purchaser has made that portion available to the Agent on the
date of the Purchase in accordance with this subsection, and the Agent may, in
reliance upon that assumption, make available to Transferor on that date a
corresponding amount.
(c) If and to the extent that any Purchaser shall not have made its
purchase price available to the Agent and the Agent has made available a
corresponding amount to Transferor, such Purchaser agrees to repay to the Agent
forthwith on demand a corresponding amount, together with interest thereon, for
each day from the date the amount is made available to Transferor until the date
the amount is repaid to the Agent (i) for the first three days following the
date the amount is made available, at a rate per annum equal to the Federal
Funds Rate and (ii) thereafter, at a rate per annum equal to the Federal Funds
Rate plus 1%. If such Purchaser shall repay to the Agent a corresponding amount,
the amount shall constitute its Purchase for purposes of this Agreement, and if
Transferor shall have already made the repayment (as provided below), such
Purchaser shall make a corresponding amount immediately available to Transferor.
At any time after the Agent learns that a
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<PAGE>
Purchaser has failed to make the purchase price for a Purchase available as
described above, the Agent may give notice to Transferor and Servicer of that
failure, and upon notice Transferor will be required to refund to the Agent an
amount equal to that purchase price, together with interest on the amount at the
rate applicable to the Purchase of which the defaulting Purchaser's Purchase was
to form a part. Nothing contained in this subsection shall, or shall be
construed to, relieve any Purchaser from its obligations hereunder to make
available to the Agent its purchase price for each Purchase.
SECTION 2.3 Reduction of Stated Amounts. Upon at least three Business Days'
prior irrevocable notice to the Agent in writing, Transferor may reduce the
Stated Amounts of the Certificates; provided that (a) each partial reduction of
the Stated Amounts shall be, in the aggregate for all Certificates, in an
integral multiple of $1,000,000 and in a minimum principal amount of $5,000,000
and (b) no partial reduction shall be made that would reduce the aggregate
Stated Amounts to an amount less than the Class A Invested Amount at the time of
the reduction. Each reduction in the Stated Amounts shall be made ratably among
the Purchasers in accordance with their respective Stated Amounts. The Agent
shall promptly advise the Purchasers of any notice given pursuant to this
section. Each reference in this Agreement to the "Stated Amount" of a
Certificate means the Stated Amount of the Certificate after giving effect to
any reductions made pursuant to this section.
SECTION 2.4 Certificates. The outstanding amounts of the Purchases made by
each Purchaser shall be evidenced by its Certificate, to be issued on the
Closing Date substantially in the form of Exhibit A (Part 1) to the Supplement.
Each Purchaser shall and is hereby authorized to record on the grid attached to
its Certificate (or at its option, in its internal books and records) the date
and amount of each Purchase made by it, the amount of each repayment of the
principal amount represented by its Certificate, the portions of its Purchases
that are from time to time allocated to the ABR Tranche and any Eurodollar
Tranche, and any reductions to the Stated Amount of its Certificate made
pursuant to Section 2.3 (which shall be conclusive absent manifest error);
provided, that failure to make any recordation on the grid or records or any
error in the grid or records shall not adversely affect the Purchaser's rights
with respect to its interest in the assets of the Trust and its right to receive
interest in respect of the outstanding principal amount of all Purchases made by
the Purchaser.
ARTICLE 3 REDUCTIONS IN INVESTED AMOUNT
SECTION 3.1 Transferor's Right to Reduce Invested Amount. Transferor may,
on at least one Business Day's prior notice by Transferor or
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Servicer to the Agent, reduce the Class A Invested Amount by causing an amount
of funds equal to the desired amount of the reduction (plus breakage costs, if
any, payable under Section 4.5 due to such reduction) that are available for
this purpose in accordance with the terms of the Supplement to be transferred to
the Agent, for the account of the Purchasers (and application to the respective
and ratable reduction of the funded principal amount of the Certificate of each
Purchaser), provided that any reduction to the aggregate funded principal
amounts represented by the Certificates must be in a minimum amount of
$5,000,000 (or the entire funded principal amount, if less) or a greater
integral multiple of $1,000,000.
SECTION 3.2 Notice to Purchasers. The Agent shall promptly advise the
Purchasers of any notice received by the Agent pursuant to Section 3.1.
ARTICLE 4 TRANCHES, INTEREST AND FEES
SECTION 4.1 Tranches. (a) Each time Transferor requests the Purchasers to
make Purchases hereunder, Transferor will notify the Agent in writing as to
whether the Trust Interests included in the Purchase shall, in whole or in part,
be deemed part of the ABR Tranche or (subject to subsections (b)(iii) and
(b)(iv) below) a Eurodollar Tranche.
(b) Subject to the terms and conditions set forth in this section and
Section 4.4, Transferor shall have the option: (x) on any Business Day, to
convert all or part of the ABR Tranche to a Eurodollar Tranche and (y) on the
last day of any Interest Period of a Eurodollar Tranche, to convert all or any
part of that Eurodollar Tranche to form a part of the ABR Tranche and/or to
continue all or any part of that Eurodollar Tranche as a new Eurodollar Tranche,
the Interest Period for which shall commence on the last day of the prior
Interest Period; provided, that:
(i) each conversion or continuation shall be made ratably among the
Purchasers in accordance with their respective amounts of the Purchases
comprising the converted or continued Tranche,
(ii) if less than all of the outstanding amount of any Tranche shall
be converted or continued, the aggregate amount of the Tranche converted or
continued shall be in an integral multiple of $1,000,000 and in a minimum
principal amount of $2,000,000,
(iii) no outstanding Eurodollar Tranche may be continued as a
Eurodollar Tranche, and no portion of the ABR Tranche may be converted into
a Eurodollar Tranche, at any time that an Early
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Amortization Event has occurred and is continuing; and any Interest Period
for a Eurodollar Tranche that commences after the commencement of the
Amortization Period must begin on a Distribution Date and end on the day
preceding the next Distribution Date, and
(iv) there shall not be more than four separate Eurodollar Tranches
for the Certificates outstanding at any one time.
(c) If Transferor wishes to convert and/or continue a Tranche under this
section, Transferor shall notify the Agent in writing (i) in the case of a
conversion to or continuation of a Eurodollar Tranche, not later than 10:00
a.m., New York City time, three Business Days prior to the date of the proposed
conversion or continuation date and (ii) otherwise, not later than 10:00 a.m.,
New York City time, one Business Day prior to the date of the proposed
conversion or continuation. Each notice shall be irrevocable and shall refer to
this Agreement and specify (x) the identity and amount of the Tranche that
Transferor wishes to convert or continue, (y) whether all or part of the Tranche
is to be converted into or continued as a Eurodollar Tranche (and if so, the
length of the related Interest Period) and (z) the date of the proposed
conversion or continuation (which shall be a Business Day). If Transferor shall
not have delivered a timely notice in accordance with this section with respect
to any Tranche, the Tranche shall, at the end of the Interest Period applicable
to it (unless repaid pursuant to the terms hereof), automatically be converted
into or continued as the ABR Tranche. The Agent shall promptly advise the
Purchasers of any notice given pursuant to this section and of each Purchaser's
portion of any converted or continued Tranche.
(d) In accordance with Section 4.1 of the Supplement, each Purchaser and
the Agent will be entitled to receive interest as stated therein and additional
interest (at the rate specified therein) on amounts that are not paid when due
under this Agreement or under its Certificate.
SECTION 4.2 Fees. (a) Each Purchaser shall be entitled to receive from
Collections a fee (a "Non-Usage Fee") for the period from and including the date
hereof, until the end of the Revolving Period, equal to 0.25% on the daily
average of (i) the Stated Amount of its Certificate minus (ii) the amount
represented by the Purchaser's Class Percentage of the Class A Invested Amount.
The Non-Usage Fee shall be payable in arrears on each Distribution Date.
The Non-Usage Fee for any Distribution Date shall be calculated on the basis of
the actual number of days elapsed since the preceding Distribution Date (or, if
prior to the first subsequent Distribution Date after the date
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hereof, during the period from the date hereof to such Distribution Date) over a
year of 365 or 366 days, as applicable.
(b) The Agent shall be entitled to receive from Collections such fees as
are described in the letter, of even date herewith, between the Agent,
Transferor and APP.
SECTION 4.3 Yield Protection. (a) Notwithstanding any other provision
herein, if, after the date hereof, either:
(i) any law, rule or regulation (including any imposition or increase
of reserve requirements) or any interpretation or administration of any
law, rule or regulation by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or
(ii) the compliance by a Purchaser with any guideline or request from
any central bank or other Governmental Authority or quasi-governmental
authority exercising control over banks or financial institutions generally
(whether or not having the force of law),
shall subject a Purchaser to the imposition or modification of any reserve
(including any imposed by the Federal Reserve Board), special deposit or similar
requirement (including a reserve, special deposit or similar requirement that
takes the form of a tax) against assets of, deposits with or for the account of,
or credit extended by, that Purchaser or the office from time to time that it
designates to the Agent as the office through which it makes and maintains its
Purchases comprising part of a Eurodollar Tranche (as to each Purchaser, its
"LIBOR Office") or impose any other condition on a Purchaser affecting its
Eurodollar Tranches or its obligations hereunder, and as a result of either of
the foregoing there shall be any increase in the cost to that Purchaser of
agreeing to make or making, funding or maintaining Purchases as Eurodollar
Tranches, or there shall be a reduction in the amount received or receivable by
any Purchaser or its LIBOR Office, then, upon written notice from that Purchaser
to Transferor and Servicer (with a copy to the Agent), signed by an officer of
such Purchaser with knowledge of and responsibility for such matters, and
setting forth in reasonable detail the calculation used to arrive at the
amounts, additional amounts sufficient to indemnify that Purchaser on an after-
tax basis against the increased cost or reduction in amounts received or
receivable shall constitute "Additional Amounts" for purposes of the Supplement,
and that Purchaser shall be entitled to receive these additional amounts, solely
from amounts allocated thereto and paid pursuant to the Supplement.
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(b) If a Purchaser shall reasonably determine that the adoption after the
date hereof of any law, rule or regulation regarding capital adequacy or capital
maintenance, or any change after the date hereof in any of the foregoing or in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by that Purchaser, any of its lending
offices or its holding company with any new or revised request or directive
regarding capital adequacy or capital maintenance (whether or not having the
force of law) of any such Governmental Authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on that
Purchaser's capital or the capital of its holding company as a consequence of
this Agreement, the commitment of that Purchaser to make Purchases or the
Purchases made by that Purchaser pursuant hereto to a level below what that
Purchaser or its holding company could have achieved but for the adoption,
change or compliance (taking into consideration the respective Purchaser's
policies, and the policies of its holding company, with respect to capital
adequacy), then, upon written notice from that Purchaser to Transferor and
Servicer (with a copy to the Agent), signed by an officer of that Purchaser with
knowledge of and responsibility for such matters, and setting forth in
reasonable detail the calculation used to arrive at the amounts, any additional
amounts as will compensate that Purchaser or its holding company on an after-tax
basis for the reduction shall constitute "Additional Amounts" for purposes of
the Supplement, and that Purchaser shall be entitled to receive these additional
amounts, solely from amounts allocated thereto and paid pursuant to the
Supplement.
(c) A Purchaser shall promptly notify Transferor, Servicer and the Agent
in writing of any event of which it has knowledge occurring after the date
hereof that will entitle it to compensation pursuant to this section. A
certificate of a Purchaser, signed by an officer of such Purchaser with
knowledge of and responsibility for such matters, and setting forth in
reasonable detail the calculation used to arrive at the amounts necessary to
compensate that Purchaser or its holding company as specified in subsection (a)
or (b), as the case may be, shall be delivered to Transferor, Servicer and the
Agent and shall be conclusive absent demonstrable error.
(d) Failure on the part of a Purchaser to demand compensation for any
amounts as specified in subsection (a) or (b) with respect to any period shall
not constitute a waiver of its right to demand compensation with respect to that
period or any other period. The protection of this section shall be available to
the Purchasers regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition that shall have occurred or been imposed.
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(e) Promptly after giving any notice to Transferor pursuant to this
section, a Purchaser will seek to designate one of its offices located at an
address other than that previously designated pursuant to this Agreement as the
office from which its Purchases will be made after the designation if it will
avoid the need for, or materially reduce the amount of, any payment to which
that Purchaser would otherwise be entitled pursuant to this section and will
not, in the sole discretion of that Purchaser, be otherwise disadvantageous to
such Purchaser.
SECTION 4.4 Illegality; Unavailability. (a) In the event that on any date
any Purchaser shall have determined (which determination shall be final and
conclusive and binding upon all parties) that the making or continuation of its
Purchases as Eurodollar Tranches has become unlawful by compliance by that
Purchaser in good faith with any law, governmental rule, regulation or order or
has become impossible as a result of a contingency occurring after the date
hereof that materially and adversely affects its interbank eurodollar market,
then, and in any such event, that Purchaser shall promptly give notice (by
telephone confirmed in writing) to Transferor, Servicer and the Agent (which
notice the Agent shall promptly transmit to each Purchaser) of that
determination. The obligation of the affected Purchaser to make or maintain its
Purchases as Eurodollar Tranches during any such period shall be terminated at
the earlier of the termination of the Interest Period then in effect for each
Eurodollar Tranche or when required by law, and Transferor shall, no later than
the time specified for the termination, convert any Purchases of the affected
Purchaser that constitute part of any Eurodollar Tranche into a part of the ABR
Tranche.
(b) If, prior to the beginning of any Interest Period, the Agent shall
have determined (which determination shall be final and conclusive and binding
upon all parties) that: (i) Dollar deposits in the relevant amount and for the
Interest Period are not available in the relevant interbank eurodollar market or
(ii) by reason of circumstances affecting the interbank eurodollar market, that
adequate and fair means do not exist for ascertaining the Eurodollar Rate
applicable to a Eurodollar Tranche, then the Agent shall promptly give notice of
this determination to Transferor, Servicer and each Purchaser. Thereafter, and
continuing until the Agent shall notify Transferor, Servicer and each Purchaser
that the circumstances giving rise to this determination no longer exist, (x)
each Eurodollar Tranche will, on the last day of the applicable Interest Period,
convert into a part of the ABR Tranche, (y) the right of Transferor to request
Eurodollar Tranches shall be suspended and (z) any Purchases requested to be
made as Eurodollar Tranches prior to such time but not yet made shall be made as
ABR Tranches.
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SECTION 4.5 Indemnity. If a Purchaser shall incur any losses, expenses or
liabilities (including any interest paid to lenders of funds borrowed by it to
fund any Purchase of a Certificate as a Eurodollar Tranche and any loss
sustained in connection with the re-deployment of such funds) as a result of (a)
the failure of a Purchase to be made on a date specified therefor in a notice
delivered pursuant to Section 2.2 (other than any such failure resulting from
the Purchaser's default in the performance of its obligations hereunder) or (b)
any payment, including under Section 3.1, of a Eurodollar Tranche on a date that
is not the last day of the Interest Period applicable thereto or on any date
specified in a notice of payment given by Servicer, then, upon written notice
(which notice shall be signed by an officer of such Purchaser with knowledge of
and responsibility for such matters and shall set forth in reasonable detail the
basis for requesting the amounts) from such Purchaser to Transferor and
Servicer, additional amounts sufficient to indemnify such Purchaser against the
losses, expenses and liabilities, but not for any lost profits associated
therewith, shall constitute "Additional Amounts" for purposes of the Supplement,
and the Purchaser shall be entitled to receive these additional amounts, solely
from amounts allocated thereto and paid pursuant to the Supplement.
SECTION 4.6 Taxes. (a) Any and all payments made to each Purchaser under
its Certificate shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, duties, charges, fees,
deductions or withholdings of any nature and whatever called, by whomsoever, on
whomsoever and wherever imposed, levied, collected, withheld or assessed,
excluding taxes imposed by the jurisdiction in which that Purchaser's principal
office (and/or the office where it books its investment in its Certificate) is
located on all or part of the net income, profits or gains of that Purchaser
(whether worldwide, or only insofar as such income, profits or gains are
considered to arise in or to relate to a particular jurisdiction, or otherwise)
(all the nonexcluded taxes, levies, imposts, charges, deductions, withholdings
and liabilities being hereinafter referred to as "Taxes"). If Trustee or the
Agent are required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under any Certificate to the Purchasers, then the sum
payable shall be increased by the amount necessary to yield to each Purchaser
(after payment of all Taxes) an amount equal to the sum it would have received
had no deductions been made, and the additional amount shall constitute
"Additional Amounts" for purposes of the Supplement, and such Purchaser shall be
entitled to receive these additional amounts, solely from amounts allocated
thereto and paid pursuant to the Supplement.
(b) Whenever any Taxes are paid by Trustee pursuant to subsection (a), as
promptly as possible thereafter, Servicer shall send to the relevant
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Purchaser the original or a certified copy of an original official receipt
showing payment thereof (if any) or any other evidence of the payment as may be
available to Servicer through the exercise of its reasonable efforts. If Trustee
fails to pay any Taxes when due to the appropriate taxing authority or fails to
remit to the Purchaser the required receipts or other required documentary
evidence, each Purchaser shall be entitled to receive, solely from amounts
allocated with respect thereto and paid pursuant to the Supplement, additional
amounts necessary to indemnify it for any incremental taxes, interest or
penalties that may become payable by such Purchaser as a result of any such
failure, and the amounts shall constitute "Additional Amounts" for purposes of
the Supplement, and such Purchaser shall be entitled to receive these additional
amounts, solely from amounts allocated thereto and paid pursuant to the
Supplement.
(c) On or before the date it becomes a party to this Agreement (and, so
long as it may properly do so, periodically thereafter, as requested by
Servicer, to keep forms up to date), each Purchaser that is organized under the
laws of a jurisdiction outside the United States of America shall deliver to
Trustee any certificates, documents or other evidence that shall be required by
the Internal Revenue Code or Treasury Regulations issued pursuant thereto to
establish that, assuming the Certificates are properly characterized as
indebtedness, it is exempt from existing United States Federal withholding
requirements, including (i) two original copies of Internal Revenue Service Form
1001 or Form 4224 or successor applicable form, properly completed and duly
executed by each such Purchaser certifying that it is entitled to receive
payments under this Agreement without deduction or withholding of any United
States Federal income taxes, and (ii) an original copy of Internal Revenue
Service Form W-8 or W-9 or applicable successor form, properly completed and
duly executed; provided, that if any Purchaser does not comply with this
subsection 4.6(c), amounts payable to such Purchaser under this Section 4.6
shall be limited to amounts that would have been payable under this section if
such Purchaser had so complied.
ARTICLE 5 OTHER PAYMENT TERMS
SECTION 5.1 Time and Method of Payment. (a) All amounts payable to any
Purchaser hereunder or with respect to its Certificate shall be made to the
Agent for the account of the Purchaser by wire transfer of immediately available
funds in Dollars not later than 2:00 p.m., New York City time, on the date due.
Any funds received after that time will be deemed to have been received on the
next Business Day. The Agent shall distribute all payments to the Purchasers,
in accordance with their respective interests, prior to the close of business on
the Business Day on which any payment is deemed received.
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(b) On any date on which a payment to one or more Purchasers hereunder or
under the Certificates is due and payable, the Agent may (but in no event shall
be required to) assume that the payment has been made available to the Agent on
the date of the payment in accordance with this section, and the Agent may (but
in no event shall be required to), in reliance upon this assumption, make
payment of a corresponding amount to the Purchasers. If and to the extent any
amounts shall not have so been made available to the Agent, each Purchaser
irrevocably and unconditionally agrees to repay to the Agent forthwith on demand
the amount of payment it received together with interest thereon, for each day
from the date payment is made by the Agent until the date the amount is repaid
to the Agent, (i) for the first three days following the date the payment is
made, at a rate per annum equal to the Federal Funds Rate and (ii) thereafter,
at a rate per annum equal to the Federal Funds Rate plus 1%.
SECTION 5.2 Pro Rata Treatment. Each repayment of the principal of the
Certificates (except as otherwise required by Section 2.2(c)), each payment of
interest thereon, each payment of the Non-Usage Fee, each reduction of the
Stated Amounts of the Certificates and each conversion or continuation of any
Tranche in respect of the Certificates (except as otherwise required by Sections
4.3(c) and 4.4(b) with respect to conversions) shall be allocated pro rata among
the Purchasers of the Certificates on the date of payment or reduction, in
accordance with their respective Class Percentages. Each Purchaser agrees that
in computing its portion of any Purchases to be made hereunder, the Agent may,
in its discretion, round each Purchaser's pro rata share of the Purchases to the
next higher or lower whole dollar amount.
ARTICLE 6 REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Transferor. As of the date hereof, Transferor represents and
warrants to the Purchasers that each of its representations and warranties in
the Pooling Agreement and Purchase Agreement is true and correct, as if made on
the date hereof, and further represents and warrants that:
(a) no Early Amortization Event or Unmatured Early Amortization Event
exists;
(b) assuming the accuracy of the Purchasers' representations set out
in Section 6.3 and that no Purchaser (and no Person acting on any Purchaser's
behalf) has made a general solicitation or general advertising within the
meaning of the Securities Act, the offer and sale of the Certificates in the
manner contemplated by this Agreement is a transaction exempt from the
registration requirements of the Securities
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Act, and the Pooling Agreement is not required to be qualified under the Trust
Indenture Act of 1939, as amended;
(c) except for BT Securities Corporation, in its capacity as
financial advisor for Transferor ("Financial Advisor"), Transferor has not dealt
with any financial advisor, or other Person who may be entitled to any
commission or compensation in connection with the sale of the Certificates, and
the fees of the Financial Advisor shall not be an obligation of the Purchasers
or the Agent;
(d) no information supplied by or on behalf of Transferor or APP to
the Agent or the Purchasers in connection with the Transaction Documents
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which they were made;
(e) the Certificates have been duly and validly authorized by
Transferor and, from and after the date on which the Certificates are executed
by Transferor and authenticated by the Trustee in accordance with the terms of
the Pooling Agreement and the Supplement and delivered to and paid for by the
Purchasers in accordance with the terms of this Agreement, will be validly
issued and outstanding and will constitute valid and legally binding obligations
of the Trust entitled to the benefits of the Pooling Agreement and the
Supplement and enforceable against the Trust in accordance with their terms; and
(f) the Certificates are not subject to any Adverse Claim and the
Transferor is conveying to the Purchasers all of its right, title and interest
in such Certificates.
SECTION 6.2 APP. As of the date hereof, APP represents and warrants to the
Purchasers that:
(a) each of its representations and warranties in the Pooling
Agreement (in its capacity as Servicer) and the Purchase Agreement (in its
capacity as a Seller) is true and correct, as if made on the date hereof with
the same effect as if made on that date (unless specifically stated to relate to
an earlier date);
(b) the Pro Forma Financial Data present fairly in all material
respects the pro forma financial position, results of operations and cash flows
of APP and its consolidated Subsidiaries at the dates specified
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therein and for the periods to which they relate and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis, except as otherwise stated therein;
(c) since September 30, 1995 through the date hereof (and except as
contemplated in the Pro Forma Financial Data) (i) there has been no material
adverse change in the condition, financial or otherwise, or the earnings,
business affairs or business prospects of Transferor or APP, whether or not
arising in the ordinary course of business, and (ii) there have been no
transactions entered into by Transferor or APP that are material with respect to
the condition, financial or otherwise, or the earnings, business affairs or
business prospects of Transferor or APP; and
(d) no information supplied by or on behalf of Transferor or APP to the
Agent or the Purchasers in connection with the Transaction Documents contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
SECTION 6.3 Purchasers. As of the date hereof (or such later date on which
it acquires its Certificate in accordance with Section 10.3), each Purchaser
represents and warrants that:
(a) it is an "accredited investor" as that term is defined in any of
paragraphs (1), (2), (3) or (7) of Rule 501(a) under the Securities Act and is
not purchasing its Certificate with a view to making a distribution thereof
(within the meaning of the Securities Act); and
(b) it is not a pension, profit sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the assets being used to purchase its Certificate do not
constitute the assets of any "benefit plan investor" (as defined under ERISA).
ARTICLE 7 CONDITIONS
SECTION 7.1 Conditions to Initial Purchase. The obligation of each
Purchaser to Purchase its Certificate shall be subject to the satisfaction of
the conditions precedent that:
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(i) the conditions precedent specified in Section 4.1 of the
Purchase Agreement and Sections 5.1 and 5.2 of the Class B Certificate
Purchase Agreement (other than those that relate to this Agreement) shall
be satisfied;
(ii) the Agent shall have received, for the account of such
Purchaser, a duly executed and authenticated Certificate registered in its
name and in a Stated Amount equal to the amount set out opposite its name
on the signature pages of this Agreement;
(iii) the Agent shall have received certain fees and reimbursement of
any expenses referred to in Section 10.5 for which invoices have been
presented; and
(iv) the Agent shall have received, for the account of such
Purchaser, an original (except as indicated below) counterpart of the
following (each of which, if not in a form attached to this Agreement,
shall be in form and substance satisfactory to the Agent):
(a) the Pooling Agreement, the Purchase Agreement and the
Guaranty, each of which shall be in full force and effect, and all
actions required to be taken under those documents in connection with
the issuance of the Certificates shall have been taken;
(b) photocopies of each Account Agreement;
(c) a certificate of the Secretary, or an Assistant Secretary,
of each of Transferor, Servicer, Guarantor and each Seller with
respect to:
(i) attached copies of resolutions of its Board of
Directors then in full force and effect authorizing the
execution, delivery and performance of the Transaction Documents,
(ii) the incumbency and signatures of those of its officers
authorized to act with respect to the Transaction Documents,
(iii) attached copies of its certificate of incorporation
and by-laws;
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(d) a certificate of an Authorized Officer of each of Servicer,
and each Seller as to the satisfaction of the conditions precedent set
forth in Section 7.2 and a certificate of Transferor that the
representations and warranties of the Transferor set out in this
Agreement are true and correct as of the date of such initial purchase
and that, to the best of Transferor's knowledge, no Early Amortization
Event or Unmatured Early Amortization Event exists;
(e) a certificate of an appropriate officer of Trustee stating
that the Pooling Agreement has been duly authorized, executed and
delivered by Trustee and the Certificates have been duly authenticated
by Trustee in accordance with the Pooling Agreement and an opinion of
counsel to Trustee as to related matters;
(f) the following opinions, in form and substance satisfactory
to the Agent:
(i) opinions of Kirkland & Ellis as to certain corporate
matters, Federal and state tax and UCC matters, true sale and
non-consolidation; and
(ii) opinions of Hirsch & Westheimer as to certain Texas
state tax and UCC matters;
(g) the Daily Report for the date hereof;
(h) evidence, reasonably satisfactory to the Agent and the
Purchasers, of the payment of all taxes, fees and other governmental
charges, if any, incidental to the issuance of the Certificates and to
the consummation of the transactions contemplated hereunder and under
the Pooling Agreement;
(i) evidence that S&P has rated the Certificates "AAA";
(j) agreed-upon procedures letters, in form and substance
satisfactory to the Agent, from Price Waterhouse LLP and KPMG Peat
Marwick, with respect to certain historical information provided by
APP relating to the Receivables;
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(k) copies of any management or other agreements with regard to
the administration of Transferor's business, certified by an
Authorized Officer of Transferor;
(l) a pro forma balance sheet of Transferor as of the date
hereof, after giving effect to the transactions contemplated by the
Supplement;
(m) a payout letter from the Holders of the Series 1995-1
Certificates, (i) specifying the aggregate amount required to be paid
to such Holders in order to pay all principal, accrued interest and
other currently existing claims of such Holders under such
Certificates, the related supplement to the Existing Pooling Agreement
and the related certificate purchase agreement, and (ii) subordinating
any contingent claims of such Holders under such documents to amounts
owed under the Supplement and the Series 1996-1 Certificates;
(n) results of recent searches of the UCC filing records and tax
and ERISA and judgment lien records in each jurisdiction referred to
below against each Seller (including any predecessors in interest to
any Seller going back five years) and Transferor, showing no filings
of record that cover any of the Receivables or the Related Transferred
Assets other than (i) filings in favor of parties to Intercreditor
Agreements and (ii) the following filings (which must be shown to be
on file):
(i) UCC financing statements naming each Seller, as
seller/debtor, and Transferor, as secured party/ purchaser, in
each office where the filing is necessary for the perfection of
the sales of Receivables by each Seller to Transferor;
(ii) assignments of such existing UCC financing statements
to Trustee, as assignee of the secured party, in each office
where the filing is necessary for the perfection of the sales of
Receivables by each Seller to Transferor; and
(iii) UCC financing statements naming Transferor, as
seller/debtor, and Trustee, as secured party/purchaser, in each
office where the filing is
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necessary for the perfection of the transfers of Receivables
by Transferor to Trustee; and
(o) any other information, certificates, opinions and
documents as the Agent may have reasonably requested.
If the conditions specified above have not been fulfilled on the date
hereof, any condition specified in this Agreement shall not have been fulfilled
when and as required in this Agreement or waived by the Purchasers, in each case
a Purchaser's obligations to purchase the Certificates pursuant to this
Agreement may be terminated by notice to Transferor, the Trustee and the Agent.
In addition, if, under the circumstances, it shall not be feasible for the
Purchasers to invest on the date the funds that are held available by the
Purchasers for the Purchase, Transferor shall pay the Purchasers interest on the
funds at the Alternate Base Rate from the date of the notice until the next
succeeding Business Day on which it is feasible for the Purchasers to invest the
funds. Nothing in this paragraph shall operate to relieve Transferor from any of
its obligations hereunder or otherwise waive any of the Purchasers' rights
against Transferor.
SECTION 7.2 Conditions to Each Purchase. The obligation of each Purchaser
to make any Purchase on any day (including those comprising the initial
Purchase) shall be subject to the Agent's receipt of the Daily Report for that
day and to the conditions precedent that on the date of the Purchase, before and
after giving effect thereto and to the application of any proceeds therefrom,
the following statements shall be true:
(a) the representations and warranties of Transferor and APP set out
in this Agreement are true and accurate as of that date with the same
effect as though made on that date (unless specifically stated to relate to
an earlier date); and
(b) no Early Amortization Event or Unmatured Early Amortization Event
has occurred and is continuing.
The giving of any notice pursuant to Section 2.2 shall constitute a
representation and warranty by Transferor and APP that the foregoing statements
(limited, in the case of subsection (a) to the representations and warranties of
the Person deemed to make the representation and warranty referred to in this
sentence) are true.
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ARTICLE 8 COVENANTS
SECTION 8.1 Covenants. Transferor and APP each severally covenant and agree
that, until the Certificates have been paid in full, it will:
(a) with reasonable promptness deliver to each Purchaser such
information, documents, records or reports respecting the Program or the
Receivables as such Purchaser may from time to time reasonably request (to
the extent that such items are reasonably accessible to Transferor);
(b) at the same time any report (including any Daily Report, Monthly
Report or annual auditors' report), notice or other document is provided,
or caused to be provided, by Transferor or Servicer to Trustee under the
Pooling Agreement, provide the Agent with a copy of the report; and
(c) during regular business hours and (so long as no Early
Amortization Event has occurred and is continuing) upon two Business Days
prior written notice, permit the Agent (or such other Person as Trustee or
the Agent may designate from time to time), or their respective agents or
representatives (including certified public accountants or other auditors),
as an expense of Servicer paid out of the Servicing Fee, (i) to examine and
make copies of and abstracts from, and to conduct accounting reviews of,
all Records in the possession or under the control of Servicer, Transferor
or any Seller, including the related Contracts and purchase orders,
invoices and other agreements related thereto, and (ii) to visit the
offices and properties of Servicer, Transferor or any Seller for the
purpose of examining such materials described in clause (i), and to discuss
matters relating to the Receivables or the Related Transferred Assets or
the performance by Servicer, Transferor or any Seller of their respective
obligations under any Transaction Document with any officer, employee or
representative of Servicer, Transferor or any Seller. The Agent may (but
shall not be obligated to) conduct, or cause their respective agents or
representatives to conduct, reviews of the types described in this
paragraph (each such review, a "Receivables Review") whenever the Agent, in
its reasonable judgment, deems any such review appropriate.
SECTION 8.2 Transfers. Each Purchaser agrees that it will not transfer
its Class A Certificate (or any portion thereof) to any Person unless such
Person shall have provided the Trustee, the Agent and Transferor with a
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certificate to the effect that such Person: (a) is an "accredited investor" as
that term is defined in any of paragraphs (1), (2), (3) or (7) of Rule 501(a)
under the Securities Act and is not purchasing its Certificate with a view to
making a distribution thereof (within the meaning of the Securities Act) and (b)
is not a pension, profit sharing or other employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended.
ARTICLE 9 AGENT
SECTION 9.1 Appointment. The Purchasers hereby designate ABN AMRO Bank
N.V. as Agent. Each Purchaser hereby irrevocably authorizes the Agent to take
action on its behalf under the provisions of the Transaction Documents and any
other instruments and agreements referred to therein and to exercise the powers
and perform the duties hereunder and thereunder that are specifically delegated
to or required of the Agent by the terms hereof and thereof, and any other
powers as are reasonably incidental thereto. The Agent may perform any of its
duties by or through its officers, directors, agents or employees.
SECTION 9.2 Nature of Duties. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement. Neither the
Agent nor any of its officers, directors, agents or employees shall be liable
for any action taken or omitted by it or them under any Transaction Document or
in connection herewith or therewith, unless caused by their gross negligence or
willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature, the Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Purchaser, and nothing in any
Transaction Document, expressed or implied, is intended to or shall be construed
as to impose upon the Agent any obligations in respect of any Transaction
Document except as expressly set forth herein. The Agent shall not be required
to take any action which exposes it to personal liability, or is contrary to
this Agreement or applicable law.
SECTION 9.3 Lack of Reliance on Agent and Financial Advisor. Independently
and without reliance upon the Agent or the Financial Advisor, each Purchaser, to
the extent it deems appropriate, has made and shall continue to make (a) its own
independent investigation of the financial condition and affairs of Transferor,
the Seller, Servicer and the Trust in connection with the making and the
continuation of each Purchase and the taking or not taking of any action in
connection herewith and (b) its own appraisal of the creditworthiness of
Transferor, the Seller and Servicer and the merits and risks of an investment in
the Certificates, and, except as expressly provided in this Agreement, the Agent
shall not have any duty or
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responsibility, either initially or on a continuing basis, to provide any
Purchaser with any credit or other information with respect thereto, whether
coming into its possession before the making of a Purchase or at any time or
times thereafter. The Agent shall not be responsible to any Purchaser for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of the Transaction Documents
or the financial condition of Transferor, the Sellers, Servicer or the Trust or
be required to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of any Transaction Document, or
the financial condition of Transferor, the Sellers, Servicer or the Trust or the
existence or possible existence of any Early Amortization Event or Unmatured
Early Amortization Event. The Agent shall not be deemed to have knowledge of any
Early Amortization Event or Unmatured Early Amortization Event unless the Agent
shall have received notice from a Purchaser, the Transferor, the Servicer or the
Trustee stating the same.
SECTION 9.4 Certain Rights of Agent. If the Agent shall request
instructions from the Purchasers whose aggregate Class Percentages exceed 50%
(the "Required Class A Purchasers") with respect to any act or action (including
failure to act) in connection with any Transaction Document, the Agent shall be
entitled to refrain from acting or taking the action unless and until the Agent
shall have received instructions from the Required Class A Purchasers, and the
Agent shall not incur liability to any person by reason of acting or so
refraining. Without limiting the foregoing, no Purchaser shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting under any Transaction Document in accordance with the
instructions of the Required Class A Purchasers or for refraining to act in the
absence of instruction.
SECTION 9.5 Reliance. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any person that the Agent believed to be the proper person. The Agent may
consult with legal counsel (including counsel for any APP Person), independent
public accountants and other experts selected by the Agent and shall not be
liable for any action taken or omitted to be taken in accordance with the advice
of such counsel, accountants or experts.
SECTION 9.6 Indemnification. To the extent the Agent is not reimbursed
and indemnified by Transferor or Servicer, the Purchasers will
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reimburse and indemnify the Agent ratably in accordance with their respective
Class Percentages from and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses or
disbursements of whatsoever kind or nature that may be imposed on, asserted
against or incurred or suffered by the Agent (including fees and expenses of
legal counsel, accountants and experts) in performing its duties or as a result
of any action taken or omitted to be taken by such Agent under any Transaction
Document or in any way relating to or arising out of any Transaction Document;
provided that no Purchaser shall be liable for any portion of these liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable order).
SECTION 9.7 Agent in its Individual Capacity. With respect to its
obligation to purchase a Certificate under this Agreement, the Agent shall have
the rights and powers specified herein for a Purchaser and may exercise the same
rights and powers as though it were not performing the duties of the "Agent"
specified herein, and the term "Purchasers," "Required Purchasers," "Required
Class A Purchasers" and "Holders" or "payees" of any Certificates or any similar
terms shall, unless the context clearly otherwise indicates, include the Agent
in its individual capacity. The Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust or other
business with Transferor or Servicer or any APP Person as if the Agent were not
performing the duties specified herein, and may accept fees and other
consideration from Transferor or Servicer for services in connection with this
Agreement and otherwise without having to account for the same to the
Purchasers.
SECTION 9.8 Resignation by Agent. (a) The Agent may resign at any time by
giving notice to Transferor and the Purchasers. Such resignation shall take
effect upon the appointment of a successor Agent pursuant to subsections (b) and
(c) below or as otherwise provided below.
(b) Upon any notice of resignation of the Agent, the Required Class A
Purchasers shall appoint a successor Agent hereunder who shall be a commercial
bank or trust company reasonably acceptable to Transferor (it being understood
and agreed that any Purchaser is deemed to be acceptable to Transferor).
(c) If a successor Agent is not appointed pursuant to subsection (b)
within 30 days after the delivery of the notice referred to in subsection (a),
the resigning Agent, with the consent of Transferor, shall then appoint a
successor
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Agent who shall serve as Agent hereunder until the time, if any, that the
Required Class A Purchasers appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to subsection (b) or
(c) above by the 60th day after the date notice of resignation was given by the
resigning Agent, such Agent's resignation shall become effective and the
Purchasers shall thereafter perform all the duties of the Agent under the
Transaction Documents until the time, if any, that the Required Class A
Purchasers appoint a successor Agent as provided above.
ARTICLE 10 MISCELLANEOUS PROVISIONS
SECTION 10.1 Amendments. Transferor and APP each severally covenant and
agree that, until the Certificates have been paid in full, it will not, except
as contemplated by Section 13.1 of the Pooling Agreement, amend or otherwise
modify any Transaction Document to which it is a party or grant any waiver or
consent thereunder, without the prior written consent of the Required Series
Holders; provided that no amendment shall (i) reduce in any manner the amount
of, or delay the timing of, allocations, payments or distributions in respect of
any Certificate without the prior written consent of the related Purchaser; (ii)
amend, modify or waive any provision of this Agreement that requires the
approval or consent of a specified percentage of Purchasers without the prior
written consent of that percentage of Purchasers; (iii) amend, modify or waive
the provisions of this section with respect to the rights of any Purchaser, or
the Class Percentage or Series Percentage of any Purchaser, without the prior
written consent of that Purchaser; or (iv) amend, modify or waive the rights or
duties of the Agent hereunder without the prior written consent of the Agent;
provided further that neither the execution and delivery of a Supplement
relating to a refinancing of the Certificates as contemplated by Section 4.9 of
the Supplement relating to the Certificates, nor any other amendment to the
Transaction Documents in connection with such a refinancing, shall require any
consent from any Purchaser, so long as the prior or contemporaneous repayment in
full of the Certificates in accordance with Section 5.2 of the Supplement
relating to the Certificates is a condition to the issuance of the refinancing
certificates, and of the effectiveness of such related amendment.
SECTION 10.2 No Waiver; Remedies. Any waiver, consent or approval given
by any party hereto shall be effective only in the specific instance and for the
specific purpose for which given, and no waiver by a party of any breach or
default under this Agreement shall be deemed a waiver of any other breach or
default. No failure on the part of any party hereto to exercise, and no delay in
exercising, any right hereunder shall operate as a
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waiver thereof; nor shall any single or partial exercise of any right hereunder,
or any abandonment or discontinuation of steps to enforce the right, power or
privilege, preclude any other or further exercise thereof or the exercise of any
other right. No notice to or demand on any party hereto in any case shall
entitle such party to any other or further notice or demand in the same, similar
or other circumstances. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 10.3 Successors and Assigns; Assignments. (a) This Agreement
shall be binding upon, and inure to the benefit of, Transferor, Servicer, the
Agent, the Purchasers and their respective successors and assigns; provided that
neither Transferor nor Servicer may assign its rights or obligations hereunder
(voluntarily, by operation of law or otherwise) without the prior written
consent of all the Purchasers, except that the Servicer may be terminated in
accordance with Sections 10.1 and 10.2 of the Pooling Agreement; and provided
further, that no Purchaser may transfer, pledge, assign, sell participations in
or otherwise encumber its rights or obligations hereunder or any interest herein
except as permitted under this section.
(b) Each Purchaser may at any time sell to one or more banks or other
entities ("Participants") participating interests in all or any portion of its
Certificate and its obligations hereunder (its "Credit Exposure"). In the event
of any sale by a Purchaser of participating interests to a Participant, that
Purchaser shall notify Transferor and the Agent of the identity of the
Participant upon a request by Transferor, that Purchaser's obligations under
this Agreement shall remain unchanged, that Purchaser shall remain solely
responsible for the performance thereof, and that Purchaser shall remain the
holder of its rights under its Certificate and this Agreement for all purposes
under this Agreement, and the other parties to the Transaction Documents shall
continue to deal solely and directly with the Purchaser in connection with such
rights and obligations under this Agreement. Transferor agrees that each
Participant shall be entitled to the benefits of Sections 4.3, 4.4, 4.5 and 4.6
with respect to its participation in the Certificate. The Purchasers agree that
any agreement between them and any Participant in respect of a participating
interest shall require the Participant to comply with the terms of Section 10.13
and (except in the case of a participation sold by a Structured Lender to its
Support Bank) shall not restrict the Purchasers' right to agree to any
amendment, supplement or modification of the Transaction Documents except to (i)
extend the final maturity of any obligation, (ii) reduce the rate or extend the
time of payment of interest thereon or any fees owed to the Purchasers under the
Transaction Documents, (iii) reduce the principal amount of any obligation, (iv)
release or direct the release of all or substantially all of the Transferred
Assets or Trustee's claim to the Transferred Assets, (v) reduce
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substantially the amount of any reserve included in the calculation of the Base
Amount, (vi) increase the amount of the participation from the amount thereof
then in effect, or (vii) permit assignment or transfer by Transferor or APP of
its rights or obligations under the Transaction Documents.
(c) Any Purchaser may at any time assign to one or more banks or other
financial institutions ("Assignees") all or any part of its Credit Exposure;
provided that (i) unless assigned to an Affiliate of the Purchaser or, in the
case of an assignment by a Structured Lender, to its Support Bank, it assigns
all of its Credit Exposure or a portion of its Credit Exposure in an amount not
less than $5,000,000, (ii) any Assignee (other than an existing Purchaser, an
Affiliate of the Purchaser or, in the case of an assignment by a Structured
Lender, its Support Bank) must be reasonably acceptable to the Agent and
Transferor, which acceptance shall not be delayed or withheld unreasonably,
(iii) if such Assignee is organized under the laws of a jurisdiction outside the
United States of America, such Assignee shall satisfy the requirements of
Section 4.6(c), or amounts payable to it under Section 4.6 shall be limited to
amounts that would be payable if such Assignee had complied with Section 4.6(c)
and (iv) such Assignee shall have made the representations and warranties in
Section 6.3 with respect to itself and shall have agreed to be bound by the
provisions hereof. In the event of any assignment, the respective Purchaser
shall comply with Article VI of the Pooling Agreement and also shall give notice
to Transferor and the Agent and shall deliver to the Agent, for acceptance and
recording in its records, an assignment agreement substantially in the form of
Exhibit D together with a processing and recordation fee of, in the case of
assignments to a Purchaser or an Affiliate of a Purchaser, $1,500 and, in cases
of any other assignment, $3,500. Within five Business Days of receipt thereof,
the Agent shall (if the assignment agreement has been fully executed by the
Assignee, the assignor Purchaser and Transferor, is completed and is in
substantially the form of Exhibit D) execute the assignment agreement and record
the information contained therein in its records. Upon the earlier of the
expiration of the five Business Day period after receipt by the Agent or the
date of the recording, the assignment will become effective. Transferor, the
Agent and the Purchasers agree to extend the rights and benefits under this
Agreement to any Assignee to the extent such Assignee would have had if it were
a Purchaser that was an original signatory to this Agreement; provided, that
Transferor shall be entitled to continue to deal solely and directly with the
assignor Purchaser in connection with the interests so assigned to the Assignee
until the assignment agreement and any required fee, as described above, shall
have been delivered to Transferor and the Agent by the assigning Purchaser and
the Assignee and the assignment shall have become effective. Upon the effective
assignment of its Credit
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Exposure, the assigning Purchaser shall be relieved of its obligations hereunder
to the extent of the assignment.
(d) The sale or assignment of any Credit Exposure to any Assignee or
Participant (each, a "Transferee") shall not be effective until it has agreed to
be bound by the provisions of Section 10.13. Transferor and APP each authorize
the Purchasers to disclose to any Transferee and any prospective Transferee any
and all information in their possession concerning Transferor and APP that has
been delivered to them by Transferor, APP or Trustee in connection with their
credit evaluation of the Program prior to entering into this Agreement.
(e) Notwithstanding any other provisions set forth in this Agreement, the
Purchasers may at any time create a security interest in all or any portion of
their rights under this Agreement and the Certificates in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
SECTION 10.4 Survival of Agreement. All covenants, agreements,
representations and warranties made herein and in the Certificates delivered
pursuant hereto shall survive the making and the repayment of the Purchases and
the execution and delivery of this Agreement and the Certificates and shall
continue in full force and effect until all obligations have been paid in full
and all commitments of the Purchasers hereunder have been terminated. In
addition, the obligations of Transferor under Sections 4.3, 4.4, 4.5, 4.6 and
10.5 and the obligations of the Purchasers under Section 9.6 shall survive the
termination of this Agreement.
SECTION 10.5 Expenses; Indemnification. Transferor and APP jointly and
severally shall pay on demand (a) all reasonable out-of-pocket fees and expenses
(including reasonable attorneys fees and expenses) of the Agent incurred in
connection with the preparation, execution, delivery, administration, amendment,
modification and waiver of the Transaction Documents and the making and
repayment of the Purchases, including any Servicer or collection agent fees paid
to any third party for services rendered to the Purchasers and the Agent in
collecting the Receivables and (b) all reasonable out-of-pocket fees and
expenses of the Purchasers and the Agent (including reasonable attorneys fees
and expenses of their counsel) incurred in connection with the enforcement of
the Transaction Documents against Transferor, Servicer and the Seller and in
connection with any workout or restructuring of the Transaction Documents. In
addition, Transferor will pay any and all stamp and other taxes and fees payable
or determined to be payable in connection with the execution, delivery, filing,
recording or
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enforcement of this Agreement or any payment made under the Transaction
Documents, and hereby indemnifies and saves the Agent and the Purchasers
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay the taxes and fees. Transferor and
APP jointly and severally agree to reimburse and indemnify the Agent and each
Purchaser and their respective officers, directors, shareholders, controlling
Persons, employees and agents (collectively, the "Indemnitees") from and against
any and all actions, judgments, costs, expenses or disbursements of whatsoever
kind or nature that may be imposed on, asserted against or incurred or suffered
by the Agent or the Purchasers (including fees and expenses of legal counsel,
accountants and experts) in any way relating to or arising out of any event or
circumstance described in the first sentence of this Section.
If any action, suit, proceeding or investigation is commenced, as to which
an Indemnitee proposes to demand indemnification, it shall notify Transferor and
APP with reasonable promptness; provided, however, that any failure by such
Indemnitee to notify Transferor and APP shall not relieve Transferor and APP
from their obligations hereunder (except to the extent that Transferor and APP
are prejudiced by such failure to promptly notify). Transferor and APP shall be
entitled to assume the defense of any such action, suit, proceeding or
investigation, including the employment of counsel reasonably satisfactory to
the Indemnitee. The Indemnitee 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 Indemnitee unless the Indemnitee shall have been advised by
counsel that there exists an actual or potential conflict of interests among
Transferor and APP and such Indemnitee, including situations in which one or
more legal defenses may be available to such Indemnitee that are inconsistent
with those available to Transferor and APP; provided, however, that Transferor
and APP 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 Indemnitees; and such counsel
shall, to the extent consistent with its professional responsibilities,
cooperate with Transferor and APP and any counsel designated by Transferor and
APP.
Notwithstanding the foregoing (and with respect to clause (w) below,
without prejudice to the rights that an Indemnitee may have pursuant to the
other provisions of the Transaction Documents), in no event shall any Indemnitee
be indemnified against any amounts (w) resulting from gross negligence or
willful misconduct on the part of such Indemnitee (or any of its officers,
directors, employees affiliates or agents) or the failure of such
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Indemnitee to perform its obligations under the Transaction Documents, (x) to
the extent they include amounts 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, (y)
to the extent they are or result from lost profits or (z) to the extent they
would constitute consequential, special or punitive damages.
If for any reason the indemnification provided in this section is
unavailable to an Indemnitee or is insufficient to hold it harmless, then
Transferor and APP jointly and severally shall contribute to the amount paid by
the Indemnitee as a result of any loss, claim, damage or liability in a
proportion that is appropriate to reflect not only the relative benefits
received by the Indemnitee on the one hand and Transferor and APP on the other
hand, but also the relative fault of the Indemnitee (if any), Transferor and APP
and any other relevant equitable considerations; provided that Transferor's
obligations under this section shall be paid by Transferor only to the extent
that funds are available to make the payments pursuant to Article IV of the
Supplement, and there shall be no recourse to Transferor for all or any part of
any amounts payable pursuant to this section if the funds are at any time
insufficient to make all or part of any such payments. 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 10.6 Entire Agreement. This Agreement, together with the documents
delivered pursuant to Section 7.1 and the other Transaction Documents, including
the exhibits and schedules thereto, contains a final and complete integration of
all prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire agreement among the parties hereto with
respect to the subject matter hereof, superseding all previous oral statements
and other writings with respect thereto.
SECTION 10.7 Notices. All communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered, sent by
overnight courier or mailed by registered mail, postage prepaid and return
receipt requested, or transmitted by facsimile transmission and confirmed by a
similar mailed writing to any party at the address for that party set forth (a)
on the signature page to this Agreement or (b) to another address as that party
may designate in writing to the Agent and Transferor.
SECTION 10.8 No Third Party Beneficiaries. Nothing expressed herein is
intended or shall be construed to give any Person (other than the
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Persons listed in Section 10.3) any legal or equitable right, remedy or claim
under or in respect of this Agreement.
SECTION 10.9 Severability of Provisions. Any covenant, provision,
agreement or term of this Agreement that is prohibited or is held to be void or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of the prohibition or unenforceability without invalidating the
remaining provisions of this Agreement.
SECTION 10.10 Counterparts. This Agreement may be executed in any number
of counterparts (which may include facsimile) 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 10.11 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.
SECTION 10.12 Tax Characterization. Each party to this Agreement (a)
acknowledges that it is the intent of the parties to this Agreement that, for
Federal, state and local income and franchise tax purposes, the Certificates
will be treated as evidence of indebtedness secured by the Transferred Assets
and the Trust will not be characterized as an association (or publicly traded
partnership) taxable as a corporation, (b) agrees to treat the Certificates for
Federal, state and local income and franchise tax purposes as indebtedness and
(c) agrees that the provisions of the Transaction Documents shall be construed
to further these intentions.
SECTION 10.13 No Proceedings. Each of Servicer, the Agent (solely in its
capacity as such) and each Purchaser (solely in its capacity as such) hereby
agrees that it will not institute against Transferor, or join any other Person
in instituting against Transferor, any insolvency proceeding (namely, any
proceeding of the type referred to in the definition of "Bankruptcy Event") so
long as any Series 1996-1 Certificates shall be outstanding or there shall not
have elapsed one year plus one day since the last day on which any Series 1996-1
Certificates shall have been outstanding. The foregoing shall not limit the
right of Servicer, any Agent or any Purchaser to file any claim in or otherwise
take any action with respect to any insolvency proceeding that was instituted
against Transferor by any other Person.
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SECTION 10.14 Reference Banks. By its execution of this Agreement, each
Purchaser identified as "Reference Bank" in the Supplement agrees to act as a
Reference Bank for purposes of the Supplement. The Agent shall notify Servicer
of the Eurodollar Rate applicable to each Interest Period and of each change in
the Alternate Base Rate.
SECTION 10.15 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.
page 30
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers and delivered as of the day and
year first above written.
NOTEPAD FUNDING
CORPORATION
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.
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
<PAGE>
ABN AMRO BANK N.V.
HOUSTON AGENCY,
as Agent and as a Purchaser
By: ABN AMRO NORTH AMERICA,
INC., as agent
By: /s/ Lila Jordan
----------------
Name: Lila Jordan
------------
Title: Vice President & Director
-------------------------
By: /s/ Ronald A. Mahle
--------------------
Name: Ronald A. Mahle
----------------
Title: Group Vice President & Director
-------------------------------
Address: ABN AMRO Bank N.V.
Houston Agency
3 Riverway
Suite 1700
Houston, TX 77056
Attention: Lila Jordan
Telephone: (713) 964-3312
Facsimile: (713) 629-7533
For all notices, a copy shall also
be sent to:
Address: ABN AMRO Bank N.V.
Attn: Structured Finance
135 South LaSalle Street
Chicago, IL 60603
Attention: Tom Educate
Telephone: (312) 904-2435
Facsimile: (312) 904-6376
Address: ABN AMRO Agency
Services
335 Madison Avenue
14th Floor
New York, NY 10002
Attention: Linda Boardman
Telephone: (212) 370-8509
Facsimile: (212) 682-0364
<PAGE>
BANK AUSTRIA, AG,
as a Purchaser
By: /s/ Christopher Best
---------------------
Name: Christopher Best
-------------------
Title: Senior Manager
------------------
Address: Bank Austria, AG
Bank Austria House
32/36 City Road
London, England EC1Y 2BD
Attention: Christopher Best
Telephone: 44-171-382-1020
Facsimile: 44-171-256-8589
<PAGE>
MARNIX ASSET FUNDING CORP.,
as a Purchaser
By: /s/ Dominick H. J. Vargaeuer
------------------------------
Name: Dominick H. J. Vargaeuer
----------------------------
Title: Vice President
---------------------------
Address: c/o Bank Brussels Lambert,
New York Branch,
as Portfolio Manager
630 Fifth Avenue
6th Floor
New York, NY 10111
Attention: Dave Harrington
Telephone: (212) 632-5348
Facsimile: (212) 333-5786
<PAGE>
BANK OF IRELAND,
as a Purchaser
By: /s/ Niamh O'Flynn
-------------------
Name: Niamh O'Flynn
-----------------
Title: Manager
----------------
Address: Bank of Ireland
La Touche House, IFSC
Custom House Quay
Dublin 1
Republic of Ireland
Attention: Niamh O'Flynn
Telephone: 00-353-1-609-3491
Facsimile: 00-353-1-829-0129
<PAGE>
BANQUE DEGROOF,
as a Purchaser
By: /s/ Marc Giboux
----------------
Name: Marc Giboux
--------------
Title: Gerant
-------------
Address: Banque Degroof
Rue L'Industrie, 44
1040 Brussels, Belgium
Attention: Edward Bolluijt
Telephone: 32-2-287-9258
Facsimile: 32-2-230-5761
<PAGE>
BANQUE ET CAISSE D'EPARGNE
DE L'ETAT, LUXEMBOURG, as a
Purchaser
By: /s/ Paul Guillaume
----------------------------
Name: Paul Guillaume
--------------------------
Title: Conseiller de Direction
-------------------------
Address: Banque Et Caisse D'Epargne
De L'Etat, Luxembourg
1+2 Place De Metz
L-2954 Luxembourg
Attention: Paul Guillaume
Telephone: 352-4015-4338
Facsimile: 352-4015-4284
<PAGE>
OESTERREICHISCHE
INVESTITIONSKREDIT, AG,
as a Purchaser
By: /s/ Peter Zach
---------------
Name: Peter Zach
-------------
Title: Manager
------------
Dated: 21st May 1996
Address: Oesterreichische
Investitionskredit, AG
Renngasse 10
A-1013 Vienna
Austria
Attention: Johannes Wundsam
Telephone: 43-1-53135577
Facsimile: 43-1-53135909
<PAGE>
SCHEDULE I
To Certificate Purchase Agreement
Series 1996-1, Class A
AMOUNT OF EACH INITIAL PURCHASER'S CERTIFICATE
----------------------------------------------
<TABLE>
<CAPTION>
Stated Amount of Certificate
- - ----------------------------
<S> <C>
ABN AMRO Bank N.V. $18,000,000.00
Bank Austria, AG $ 3,000,000.00
Marnix Asset Funding Corp. $10,000,000.00
Bank of Ireland $ 7,000,000.00
Banque Degroof $ 3,000,000.00
Banque Et Caisse D'Epargne
De L'Etat, Luxembourg $ 5,000,000.00
Oesterreichische Investitionskredit, AG $ 4,000,000.00
Class Percentage
- - ----------------
ABN AMRO Bank N.V. 36.0000000000%
Bank Austria, AG 6.0000000000%
Marnix Asset Funding Corp. 20.0000000000%
Bank of Ireland 14.0000000000%
Banque Degroof 6.0000000000%
Banque Et Caisse D'Epargne
De L'Etat, Luxembourg 10.0000000000%
Oesterreichische Investitionskredit, AG 8.0000000000%
Series Percentage
- - -----------------
ABN AMRO Bank N.V. 30.0000000000%
Bank Austria, AG 5.0000000000%
Marnix Asset Funding Corp. 16.6666666667%
Bank of Ireland 11.6666666667%
Banque Degroof 5.0000000000%
Banque Et Caisse D'Epargne
De L'Etat, Luxembourg 8.3333333333%
Oesterreichische Investitionskredit, AG 6.6666666667%
</TABLE>
<PAGE>
EXHIBIT A
to Certificate Purchase Agreement
(Series 1996-1, Class A)
FORM OF POOLING AND SERVICING AGREEMENT
---------------------------------------
<PAGE>
EXHIBIT B
to Certificate Purchase Agreement
(Series 1996-1, Class A)
FORM OF RECEIVABLES PURCHASE AGREEMENT
--------------------------------------
<PAGE>
EXHIBIT C
to Certificate Purchase Agreement
(Series 1996-1, Class A)
FORM OF SERIES 1996-1 SUPPLEMENT
--------------------------------
<PAGE>
EXHIBIT D
to Certificate Purchase Agreement
(Series 1996-1, Class A)
FORM OF ASSIGNMENT AGREEMENT
----------------------------
This ASSIGNMENT AGREEMENT, dated as of ____________ (this "Agreement"), is
made between ____________________ ("Assignor"), and _____________________
("Assignee"). Except as otherwise defined herein, capitalized terms have the
meanings assigned to them in the Certificate Purchase Agreement (as defined
below).
BACKGROUND
1. Assignor is a party to the Certificate Purchase Agreement (Series
1996-1, Class A), dated as of May 29, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Certificate Purchase Agreement"),
among Notepad Funding Corporation, a Delaware corporation ("Transferor"),
American Pad & Paper Company of Delaware, Inc., a Delaware corporation, the
Purchasers party thereto (including Assignor), and ABN AMRO Bank N.V., as Agent.
2. Assignor wishes to assign, and Assignee wishes to be so assigned,
Assignor's rights and obligations arising on and after the Effective Date (as
defined below) under the Certificate Purchase Agreement and its Certificate
including (a) its obligations to make Purchases (its "Credit Exposure") and (b)
its outstanding Purchases (the "Purchases").
3. Assignor and Assignee also wish (a) Assignee to assume the obligations
of Assignor under the Certificate Purchase Agreement with respect to Assignee's
Share (as defined below) to the extent of the rights assigned and (b) Assignor
to be released from the obligations assumed by Assignee.
4. Transferor and the Agent, by their execution hereof, are providing
their written consent to the assignment accomplished by this Agreement.
SECTION 1. Assignment. Effective on the Effective Date (as defined below)
and upon payment of the amount specified in Section 3(a), Assignor hereby
assigns and transfers to Assignee, without recourse, representation or
<PAGE>
warranty of any kind, express or implied (except as provided in Sections 6(a)
and (b)), and subject to Section 4(b), Assignee's Share (as specified in Annex I
hereto) (the "Assignee's Share") of all of Assignor's rights, title and interest
arising under (a) the Certificate Purchase Agreement relating to Assignor's
Credit Exposure including all rights and obligations with respect to the
Purchases attributable to Assignee's Share and (b) Assignor's Certificate with
respect to Assignee's Share as will result in Assignee having from and after the
Effective Date the Class Percentage ("Assignee's Percentage") specified in Annex
I.
SECTION 2. Assumption. Effective on the Effective Date, Assignee hereby
irrevocably purchases, assumes and takes from Assignor, and Assignor is hereby
expressly and absolutely released from, all of Assignor's obligations arising
under the Certificate Purchase Agreement relating to Assignee's Share and of any
outstanding Purchases attributable to Assignee's Share. Assignee hereby agrees
to be bound by the provisions of the Certificate Purchase Agreement.
SECTION 3. Payment. In consideration of the assignment by Assignor to
Assignee as set forth above, Assignee agrees to pay to Assignor, in Dollars and
in immediately available funds, (a) on or prior to the Effective Date, an amount
specified by Assignor in writing on or prior to the Effective Date that
represents Assignee's Share attributable to the principal amount of the
Purchases made pursuant to the Certificate Purchase Agreement and outstanding on
the Effective Date, and (b) from time to time thereafter, other amounts (if any)
that Assignee has agreed in writing to pay to Assignor after the Effective Date.
In consideration of the assumption by Assignee, Assignor agrees to pay to
Assignee within two Business Days of the Effective Date, an assignment fee (if
any) that previously has been agreed to in writing by both parties.
Notwithstanding anything to the contrary in this Agreement, if and when
Assignee receives or collects (x) any payment of principal or interest relating
to any Purchases or (y) any payment of fees that are required to be paid to
Assignor pursuant to this Agreement, then Assignee shall forward the payment to
Assignor.
To the extent payment of funds to Assignee or Assignor are not made within
two Business Days, each, as the case may be, shall be entitled to recover the
due amount, together with interest thereon at the Federal Funds Rate per annum
accruing from the date of payment or the date of receipt of the funds by the
other party.
Page 2
<PAGE>
SECTION 4. Effectiveness. (a)(i) This Agreement shall become effective on
the date (the "Effective Date") on which it shall have been duly executed by all
parties and the Agent shall have recorded the information contained herein in
its records (or automatically if not so recorded within five Business Days from
the Agent's receipt of this Agreement signed by Assignor, Assignee and
Transferor). Assignor hereby notifies the Agent, Transferor and Servicer of the
assignment, effective as of the Effective Date, of Assignee's Share and any
Purchases attributable to the Assignee's Share, and directs the Agent to pay
Assignee (A) any payment of principal of, or interest on, any Purchase
attributable to the Assignee's Share of any Purchases and (B) any Non-Usage Fees
attributable to the Assignee's Share of the Credit Exposure. No (x) failure of
either Assignee or Assignor to settle any amount owed to the other (except with
respect to the payment of the processing and recordation fee to the Agent and
the payment due under Section 3(a)), (y) dispute respecting any other
settlement, including in respect of Transferor, or (z) bankruptcy, insolvency or
other condition whatsoever respecting any Person, shall in any way impair,
reduce or otherwise affect the effectiveness of this Agreement.
(ii) Assignor, Assignee and the Agent each acknowledges and agrees that
from and after the Effective Date, the Agent shall make all payments under the
Certificate Purchase Agreement in respect of Assignee's Share (including all
payments of principal, interest and Non-Usage Fees with respect thereto, whether
or not the payments shall have accrued prior to or after the Effective Date) to
Assignee only. Assignor and Assignee hereby agree further to make all
appropriate adjustments in payments to either of them under the Certificate
Purchase Agreement for periods prior to the Effective Date directly between
themselves.
(b) With respect to any Purchase attributable to Assignee's Share, if and
when Assignor receives or collects any payment of principal, interest, Non-Usage
Fees or Additional Amounts with respect to Assignee's Share for any period
commencing on or after the Effective Date, Assignor shall distribute to Assignee
the portion attributable to Assignee's Share, but only to the extent it accrued
on or after the Effective Date and was not theretofore paid to Assignee by
Transferor or otherwise. Any principal, interest, Non-Usage Fees and Additional
Amounts paid prior to the Effective Date shall be retained by Assignor. Any
principal, interest, Non-Usage Fees and Additional Amounts received by Assignee
that accrued prior to the Effective Date shall be forwarded promptly, in the
form received, to Assignor. Assignee recognizes and agrees that (i) it shall
receive no payment on account of any Agent's fees or other amounts or expenses
(including counsel fees) payable to the Agent (in such capacities and for their
own account), (ii) this Agreement shall not operate to assign any rights or
delegate any obligations of the Agent (in such
Page 3
<PAGE>
capacities), and (iii) notwithstanding anything to the contrary in this
Agreement, Assignor shall retain all of its rights to indemnification under the
Certificate Purchase Agreement for any events, acts or omissions occurring prior
to the Effective Date.
(c) The Agent, by its execution hereof, acknowledges the assignment and
agrees to make payments in respect of principal, interest, fees and Additional
Amounts as described in clause (a).
SECTION 5. Rights as Purchaser under Certificate Purchase Agreement. In
accordance with Section 10.3 of the Certificate Purchase Agreement, (a) as of
the Effective Date, Assignee will be a Purchaser under, and party to, the
Certificate Purchase Agreement and shall have (i) all of the rights and
obligations of a Purchaser (to the extent of the assignment and assumption of
Assignee's Share effected by this Agreement) and (ii) the addresses for (A)
notice purposes and (B) LIBOR Office as set forth in items 2 and 3,
respectively, of Annex I hereto and (b) promptly on or after the Effective Date,
Transferor will execute and deliver any documents and instruments that Assignor
or Assignee reasonably may require.
SECTION 6. Representations and Warranties. (a) Each of Assignor and
Assignee represents and warrants to the other as follows:
(i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Agreement, to fulfill the
obligations hereunder and to consummate the transactions contemplated
hereby,
(ii) the making and performance of this Agreement and all documents
required to be executed and delivered hereunder do not and will not violate
any law or regulation of the jurisdiction of its incorporation or any other
applicable law or regulation,
(iii) this Agreement has been duly executed and delivered and
constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms, and
(iv) all approvals, authorizations or other actions by, or filing
with, any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been obtained.
Page 4
<PAGE>
(b) Assignor represents and warrants to Assignee that Assignee's Share and
the Purchases attributable to Assignee's Share are not subject to any liens or
security interests created by Assignor.
(c) Except as set forth in subsections (a) and (b), Assignor makes no
representations or warranties, express or implied, to Assignee and shall not be
responsible to Assignee for (i) the execution, effectiveness, genuineness,
legality, validity, enforceability, collectibility, regulatory status or
sufficiency of the Certificate Purchase Agreement or any of the other
Transaction Documents, (ii) the perfection, priority, value or adequacy of any
collateral security or guaranty, (iii) the taking of any action, or the failure
to take any action, with respect to any of the Transaction Documents, (iv) any
representations, warranties, recitals or statements made in any of the
Transaction Documents or in any written or oral financial or other statements,
instruments, reports, certificates or documents made or furnished by Assignor to
Assignee or by or on behalf of Transferor or any of its Affiliates to Assignor
or Assignee in connection with the Transaction Documents and the transactions
contemplated thereby, (v) the financial or other condition of Transferor or any
other Person or (vi) any other matter having any relation to any of the
foregoing. Assignor shall not be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Transaction Documents or the existence or
possible existence of any Unmatured Early Amortization Event, Early Amortization
Event or Servicer Default. Additionally, Assignor shall not have any duty or
responsibility either initially or on a continuing basis to make any
investigation or any appraisal on Assignee's behalf or to provide Assignee with
any credit or other information with respect thereto, whether coming into
Assignor's possession before the execution of the Certificate Purchase Agreement
or at any time thereafter. Assignor shall have no responsibility with respect to
the accuracy of, or the completeness of, any information provided to Assignee,
whether by Assignor or by or on behalf of Transferor or any other Person
obligated under the Certificate Purchase Agreement or any related instrument or
document.
(d) Assignee represents and warrants that (x) it has made its own
independent investigation of each of the foregoing matters, including the
financial condition and affairs of Transferor and its Affiliates, in connection
with the making of the Purchases and the execution of this Agreement (including
the solvency of Transferor and its Affiliates, their ability to pay their
respective debts as they mature and the capital of Transferor and its Affiliates
remaining after the closing under the Transaction Documents and the consummation
of the transactions contemplated thereby) and has made and shall continue to
make its own appraisal of the creditworthiness of Transferor
Page 5
<PAGE>
and its Affiliates, and (y) the representations and warranties set forth in
Section 6.3 of the Agreement are true and correct with respect to the Assignee.
Assignee (i) confirms that it has received copies of the Transaction Documents
together with copies of certain other closing documents delivered in connection
with the Certificate Purchase Agreement, financial statements and any other
documents and information that it has requested or deemed appropriate to make
its own credit analysis and decision to enter into this Agreement and (ii)
agrees that it will, independently and without reliance upon the Agent, Assignor
or any other Purchaser and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Transaction Documents.
SECTION 7. No Proceedings. Assignee hereby agrees to be bound by the
provisions of Section 10.13 of the Certificate Purchase Agreement.
SECTION 8. [Withholding Taxes. In accordance with Section 4.6 of the
Certificate Purchase Agreement, Assignee agrees to execute and deliver to the
Agent, for delivery to Transferor, on or before the Effective Date, (a) an
Internal Revenue Service Form 1001 or 4224 or successor applicable form,
properly completed and duly executed by the Purchaser certifying that it is
entitled to receive payments under the Certificate Purchase Agreement without
deduction or withholding of any United States Federal income taxes, and (b) an
original copy of Internal Revenue Service Form W-8 or W-9 or applicable
successor form, properly completed and duly executed. Assignee represents and
warrants to Transferor and Assignor that, as of the Effective Date, it shall be
entitled to receive payments of principal and interest under its Certificate and
hereunder without deduction for or on account of any taxes imposed by the United
States of America or any political subdivision thereof. In the event that, after
delivering the applicable form, Assignee shall cease to be exempt from
withholding and/or deduction of taxes, then the Agent may withhold and/or deduct
the applicable amount from any payments of principal, interest and any fees to
which Assignee otherwise would be entitled, and the Agent shall have no
liability whatsoever to Assignee for any such withholding or deduction. Assignee
shall indemnify Transferor and the Agent from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs or
expenses that result from Assignee's breach of such representation and
warranty./*/
SECTION 9. ]Miscellaneous. (a) Each of the parties hereto agrees to take
any action and execute and deliver any documents that any party hereto
- - --------------------------
/*/ If the Assignee is a foreign entity.
Page 6
<PAGE>
reasonably may request from time to time in order to implement more fully the
purposes of this Agreement. Without limiting the generality of the foregoing,
Assignor and Assignee will cooperate in obtaining for Assignee a Certificate (as
well as a replacement Certificate for Assignor representing any retained
interest of Assignor).
(b) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
(c) Except as otherwise set forth herein, this Agreement sets forth the
entire agreement between the parties relating to the subject matter hereof, and
no term or provision of this Agreement may be amended, changed, waived,
discharged or terminated orally or otherwise, except in a writing signed by
Assignor and Assignee.
(d) 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.
(e) Each of the parties hereto agrees that each party shall bear its own
expenses in connection with the preparation and execution of this Agreement and
the consummation of the Assignment described herein. Assignee further agrees
that it shall send a check in the amount of $[1,500] [3,500] to the Agent on or
prior to the Effective Date, as payment of the processing and recordation fee
described in Section 10.3(c) of the Certificate Purchase Agreement.
(f) All representations and warranties made, and indemnities provided for,
herein shall survive the consummation of the transactions contemplated hereby.
(g) Assignor may at any time or from time to time grant assignments and
participations in its rights and obligations under the Certificate Purchase
Agreement and its Certificate to other Persons, but not in the portions thereof
assigned to Assignee.
(h) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Neither Assignor nor
Assignee may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party. The preceding
Page 7
<PAGE>
sentence shall not limit the right of Assignee to assign all or part of
Assignee's Share in the manner contemplated by the Certificate Purchase
Agreement.
(i) Assignee acknowledges that all obligations of the Agent are subject to
Article IX of the Certificate Purchase Agreement.
Page 8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers and delivered as of the day and
year first above written.
---------------------------------,
as Assignor
By:
------------------------------
Title:
---------------------------
---------------------------------,
as Assignee
By:
------------------------------
Title:
---------------------------
The undersigned hereby acknowledges the terms and provisions of this
Agreement, and agrees to make payments in respect of principal, interest and
fees as described in Section 4(a).
ABN AMRO BANK N.V., as Agent
By:
-------------------------
Title:
--------------------
NOTEPAD FUNDING CORPORATION
By:
-------------------------
Title:
--------------------
Page 9
<PAGE>
ANNEX I
to Assignment Agreement
ITEM 1. ASSIGNEE'S SHARE:
(a) Assignee's Stated Amount $______________
(b) Assignee's Percentage _____________%
ITEM 2. ADDRESS OF ASSIGNEE FOR NOTICE PURPOSES:
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
Attention:
- - ----------------------------
Telephone:
- - ----------------------------
Facsimile:
- - ----------------------------
ITEM 3. LIBOR OFFICE OF ASSIGNEE:
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
<PAGE>
APPENDIX X
to Certificate Purchase Agreement
(Series 1996-1, Class A)
INDEX OF ADDITIONAL DEFINED TERMS
---------------------------------
<TABLE>
<CAPTION>
<S> <C>
Agents....................................................................... 1
Agreement.................................................................... 1
APP.......................................................................... 1
Certificates................................................................. 1
Class Percentage............................................................. 2
Credit Exposure.............................................................. 24
Designated Agent............................................................. 2
Financial Advisors........................................................... 13
Indemnitees.................................................................. 26
LIBOR Office................................................................. 7
Non-Usage Fee................................................................ 6
Participants................................................................. 24
Pooling Agreement............................................................ 1
Purchase..................................................................... 2
Purchasers................................................................... 1
Receivables Review........................................................... 19
Required Purchasers.......................................................... 23
Series Percentage............................................................ 2
Servicer..................................................................... 1
Stated Amount................................................................ 4
Supplement................................................................... 1
Taxes........................................................................ 10
Transferee................................................................... 25
Transferor................................................................... 1
Trust........................................................................ 1
Trust Interest............................................................... 1
Trustee...................................................................... 1
</TABLE>
<PAGE>
EXHIBIT 4.9
===============================================================================
CERTIFICATE PURCHASE AGREEMENT
(SERIES 1996-1, CLASS B)
dated as of May 29, 1996
among
NOTEPAD FUNDING CORPORATION,
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.,
and
CAISSE NATIONALE DE CREDIT AGRICOLE,
as Purchaser
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
SECTION 1.1 Definitions ........................................... 1
ARTICLE 2 PURCHASE AND SALE OF CERTIFICATE
SECTION 2.1 The Purchase; Percentages; Requisite Persons .......... 1
SECTION 2.2 Closing ............................................... 2
SECTION 2.3 Certificate ........................................... 2
ARTICLE 3 FEES AND YIELD PROTECTION
SECTION 3.1 Yield Protection ...................................... 2
SECTION 3.2 Indemnity ............................................. 4
SECTION 3.3 Illegality; Unavailability ............................ 5
SECTION 3.4 Taxes ................................................. 6
SECTION 3.5 Time and Method of Payment ............................ 7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Transferor ............................................ 7
SECTION 4.2 APP ................................................... 8
SECTION 4.3 Purchaser ............................................. 9
ARTICLE 5 CONDITIONS
SECTION 5.1 Conditions to Purchase ................................ 9
SECTION 5.2 Additional Conditions ................................. 13
ARTICLE 6 COVENANTS
SECTION 6.1 Covenants ............................................. 13
SECTION 6.2 Transfers ............................................. 14
ARTICLE 7 MISCELLANEOUS PROVISIONS
SECTION 7.1 Amendments ............................................ 14
SECTION 7.2 No Waiver; Remedies ................................... 15
i
<PAGE>
SECTION 7.3 Successors and Assigns; Assignments ................... 15
SECTION 7.4 Survival of Agreement ................................. 18
SECTION 7.5 Expenses; Indemnification ............................. 18
SECTION 7.6 Entire Agreement ...................................... 20
SECTION 7.7 Notices ............................................... 20
SECTION 7.8 No Third Party Beneficiaries .......................... 20
SECTION 7.9 Severability of Provisions ............................ 20
SECTION 7.10 Counterparts .......................................... 20
SECTION 7.11 Governing Law ......................................... 20
SECTION 7.12 Tax Characterization .................................. 21
SECTION 7.13 No Proceedings ........................................ 21
SECTION 7.14 No Recourse ........................................... 21
ii
<PAGE>
SCHEDULE I Stated Amounts and Percentages
EXHIBITS
EXHIBIT A Form of Pooling and Servicing Agreement
EXHIBIT B Form of Receivables Purchase Agreement
EXHIBIT C Form of Series 1996-1 Supplement
EXHIBIT D Form of Assignment Agreement
APPENDIX
APPENDIX X Index of Additional Defined Terms
iii
<PAGE>
This CERTIFICATE PURCHASE 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 ("Servicer" or "APP"), and CAISSE NATIONALE DE CREDIT AGRICOLE
("Purchaser").
BACKGROUND
1. Transferor (a) is party to an Amended and Restated Pooling and Servicing
Agreement substantially in the form of Exhibit A (the "Pooling Agreement") with
APP, as initial Servicer, and MANUFACTURERS AND TRADERS TRUST COMPANY, a New
York banking corporation, as trustee (in that capacity, together with any
successors in that capacity, the "Trustee"), (b) is party to an Amended and
Restated Receivables Purchase Agreement substantially in the form of Exhibit B
and (c) will enter into a Series 1996-1 Supplement to the Pooling Agreement
substantially in the form of Exhibit C (the "Supplement"). Pursuant to the
Pooling Agreement and the Supplement, Transferor will obtain the Series 1996-1,
Class B Certificate (the "Class B Certificate"), which will represent a
fractional undivided beneficial interest in the assets of the Notepad Funding
Receivables Master Trust (the "Trust"), a trust organized pursuant to the
Pooling Agreement.
2. Transferor wishes to sell the Certificate to the Purchaser and obtain
its commitment to purchase a fractional undivided beneficial interest in the
assets of the Trust (each a "Trust Interest") that will be evidenced by the
Certificate. Subject to the terms and conditions of this Agreement, the
Purchaser is willing to purchase a Class B Certificate in the principal amount
of $10,000,000 (the "Certificate"). APP has joined in this Agreement to confirm
certain representations, warranties and covenants for the benefit of the
Purchaser.
ARTICLE 1 DEFINITIONS
SECTION 1.1 Definitions. Capitalized terms used and not otherwise defined
herein have the meanings assigned to them in the Supplement or, if not defined
in the Supplement, in Appendix A to the Pooling Agreement. An index of terms
defined directly in this Agreement is attached as Appendix X.
ARTICLE 2 PURCHASE AND SALE OF CERTIFICATE
SECTION 2.1 The Purchase; Percentages; Requisite Persons. (a) The
Transferor will issue and sell to the Purchaser and, subject to the terms and
conditions of this Agreement, the Pooling Agreement and the Supplement, the
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Purchaser will purchase (such purchase being a "Purchase") from the Transferor,
at the time and place provided for in Section 2.2, the Certificate for a
purchase price equal to 100% of the principal amount of such Certificate.
(b) For purposes of this Agreement, (i) "Class Percentage" means the
percentage equivalent (carried out to twelve decimal places) of a fraction, the
numerator of which is the Stated Amount of the Purchaser's Certificate and the
denominator of which is the sum of the Stated Amounts of all Class B
Certificates, and (ii) "Series Percentage" means the percentage equivalent
(carried out to twelve decimal places) of a fraction, the numerator of which is
the Stated Amount of the Purchaser's Certificate and the denominator of which is
the sum of the Stated Amounts for all of the Series 1996-1 Certificates. The
Class Percentages and Series Percentages of the Purchaser are set forth opposite
its name in Schedule I.
(c) For so long as the Caisse Nationale de Credit Agricole holds a
Certificate, it shall be a "Requisite Person".
SECTION 2.2 Closing. The sale of the Certificate shall take place at the
offices of Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois
60603 at noon, Chicago time, on May 29, 1996 (the "Closing"). At the Closing,
the Transferor will deliver to the Purchaser the Certificate, dated the date of
such Closing and registered in the name of the Purchaser (or in the name of the
Purchaser's nominee, as indicated in writing by the Purchaser to the Transferor
prior to the Closing), against delivery by the Purchaser to the Transferor or
its order of immediately available funds in the amount of the purchase price
therefor to Manufacturers & Traders Trust Company, Corporate Trust Department,
One M&T Plaza, 7th Floor, Buffalo, New York 14203-2399, Attention: Russell
Whitley.
SECTION 2.3 Certificate. The Certificate shall be substantially in the form
of Exhibit A (Part 2) to the Supplement.
ARTICLE 3 FEES AND YIELD PROTECTION
SECTION 3.1 Yield Protection. (a) Notwithstanding any other provision
herein, if, after the date hereof, either:
(i) any law, rule or regulation (including any imposition or increase
of reserve requirements) or any interpretation or administration of any
law, rule or regulation by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or
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(ii) the compliance by the Purchaser with any guideline or request
from any central bank or other Governmental Authority or quasi-governmental
authority exercising control over banks or financial institutions generally
(whether or not having the force of law),
shall subject the Purchaser to the imposition or modification of any reserve
(including any imposed by the Federal Reserve Board), special deposit or similar
requirement (including a reserve, special deposit or similar requirement that
takes the form of a tax) against assets of, deposits with or for the account of,
or credit extended by, the Purchaser or the office from time to time that it
designates to the Transferor as the office through which it makes and maintains
its Purchases comprising the Certificate (its "LIBOR Office") or impose any
other condition on the Purchaser affecting the Certificate or its obligations
hereunder, and as a result of either of the foregoing there shall be any
increase in the cost to the Purchaser of agreeing to make or making, funding or
maintaining its Purchase, or there shall be a reduction in the amount received
or receivable by the Purchaser or its LIBOR Office, then, upon written notice
from the Purchaser to Transferor and Servicer, signed by an officer of the
Purchaser with knowledge of and responsibility for such matters, and setting
forth in reasonable detail the calculation used to arrive at the amounts,
additional amounts sufficient to indemnify the Purchaser on an after-tax basis
against the increased cost or reduction in amounts received or receivable shall
constitute "Additional Amounts" for purposes of the Supplement, and the
Purchaser shall be entitled to receive these additional amounts, solely from
amounts allocated thereto and paid pursuant to the Supplement.
(b) If the Purchaser shall reasonably determine that the adoption after the
date hereof of any law, rule or regulation regarding capital adequacy or capital
maintenance, or any change after the date hereof in any of the foregoing or in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Purchaser, any of its lending
offices or its holding company with any new or revised request or directive
regarding capital adequacy or capital maintenance (whether or not having the
force of law) of any such Governmental Authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
Purchaser's capital or the capital of its holding company as a consequence of
this Agreement or the Purchase made by the Purchaser pursuant hereto to a level
below what the Purchaser or its holding company could have achieved but for the
adoption, change or compliance (taking into consideration the Purchaser's
policies, and the policies of its holding company, with respect to capital
adequacy), then, upon written notice from the Purchaser to Transferor and
Servicer, signed by an officer of the Purchaser with
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knowledge of and responsibility for such matters, and setting forth in
reasonable detail the calculation used to arrive at the amounts, any additional
amounts as will compensate the Purchaser or its holding company on an after-tax
basis for the reduction shall constitute "Additional Amounts" for purposes of
the Supplement, and the Purchaser shall be entitled to receive these additional
amounts, solely from amounts allocated thereto and paid pursuant to the
Supplement.
(c) A Purchaser shall promptly notify Transferor and Servicer in writing of
any event of which it has knowledge occurring after the date hereof that will
entitle it to compensation pursuant to this section. A certificate of the
Purchaser, signed by an officer of the Purchaser with knowledge of and
responsibility for such matters, and setting forth in reasonable detail the
calculation used to arrive at the amounts necessary to compensate the Purchaser
or its holding company as specified in subsection (a) or (b), as the case may be
shall be delivered to Transferor and Servicer and shall be conclusive absent
demonstrable error.
(d) Failure on the part of the Purchaser to demand compensation for any
amounts as specified in subsection (a) or (b) with respect to any period shall
not constitute a waiver of its right to demand compensation with respect to that
period or any other period. The protection of this section shall be available to
the Purchaser regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition that shall have occurred or been imposed.
(e) Promptly after giving any notice to Transferor pursuant to this
section, the Purchaser will seek to designate one of its offices located at an
address other than that previously designated pursuant to this Agreement as the
office from which its Purchases will be made after the designation if it will
avoid the need for, or materially reduce the amount of, any payment to which the
Purchaser would otherwise be entitled pursuant to this section and will not, in
the sole discretion of the Purchaser, be otherwise disadvantageous to the
Purchaser.
SECTION 3.2 Indemnity. If the Purchaser shall incur any losses, expenses or
liabilities (including any interest paid to lenders of funds borrowed by it to
fund its Purchase of the Certificate and any loss sustained in connection with
the re-deployment of such funds) as a result of (a) the failure of the Purchase
to be made on the date specified for the Closing pursuant to Section 2.2 (other
than any such failure resulting from the Purchaser's default in the performance
of its obligations hereunder) or (b) any payment of the Certificate on a date
that is not the last day of the Interest Period applicable thereto or on any
date specified in a notice of payment given by Servicer,
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then, upon written notice (which notice shall be signed by an officer of the
Purchaser with knowledge of and responsibility for such matters and shall set
forth in reasonable detail the basis for requesting the amounts) from the
Purchaser to Transferor and Servicer, additional amounts sufficient to indemnify
the Purchaser against the losses, expenses and liabilities, but not for any lost
profits associated therewith, shall constitute "Additional Amounts" for purposes
of the Supplement, and the Purchaser shall be entitled to receive these
additional amounts, solely from amounts allocated thereto and paid pursuant to
the Supplement.
SECTION 3.3 Illegality; Unavailability. (a) In the event that on any date
the Purchaser shall have determined (which determination shall be final and
conclusive and binding upon all parties) that the making or continuation of its
Purchase as a Eurodollar Tranche has become unlawful by compliance by the
Purchaser in good faith with any law, governmental rule, regulation or order or
has become impossible as a result of a contingency occurring after the date
hereof that materially and adversely affects its interbank eurodollar market,
then, and in any such event, the Purchaser shall promptly give notice (by
telephone confirmed in writing) to Transferor and Servicer of that
determination. The obligation of the Purchaser to make or maintain its Purchase
as a Eurodollar Tranche during any such period shall be terminated at the
earlier of the termination of the Interest Period then in effect for the
Eurodollar Tranche or when required by law, and Transferor shall, no later than
the time specified for the termination, convert the Purchase into the ABR
Tranche.
(b) If, prior to the beginning of any Interest Period, the Purchaser shall
have determined (which determination shall be final and conclusive and binding
upon all parties) that: (i) Dollar deposits in the relevant amount and for the
Interest Period are not available in the relevant interbank eurodollar market;
or (ii) by reason of circumstances affecting the interbank eurodollar market,
that adequate and fair means do not exist for ascertaining the LIBOR rate
applicable to the Eurodollar Tranche, then the Purchaser shall promptly give
notice of this determination to Transferor and Servicer. Thereafter, and
continuing until the Purchaser shall notify Transferor and Servicer that the
circumstances giving rise to this determination no longer exist, (x) the
Eurodollar Tranche will, on the last day of the applicable Interest Period,
convert into the ABR Tranche, and (y) the right of Transferor to request a
Eurodollar Tranche shall be suspended.
SECTION 3.4 Taxes. (a) Any and all payments made to the Purchaser under its
Certificate shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, duties, charges, fees, deductions
or withholdings of any nature and whatever called, by whomsoever,
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on whomsoever and wherever imposed, levied, collected, withheld or assessed,
excluding taxes imposed by the jurisdiction in which the Purchaser's principal
office (and/or the office where it books its investment in its Certificate) is
located on all or part of the net income, profits or gains of the Purchaser
(whether worldwide, or only insofar as such income, profits or gains are
considered to arise in or to relate to a particular jurisdiction, or otherwise)
(all the nonexcluded taxes, levies, imposts, charges, deductions, withholdings
and liabilities being hereinafter referred to as "Taxes"). If Trustee is
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Certificate to the Purchaser, then the sum payable shall
be increased by the amount necessary to yield to the Purchaser (after payment of
all Taxes) an amount equal to the sum it would have received had no deductions
been made, and the additional amount shall constitute "Additional Amounts" for
purposes of the Supplement, and the Purchaser shall be entitled to receive these
additional amounts, solely from amounts allocated thereto and paid pursuant to
the Supplement.
(b) Whenever any Taxes are paid by Trustee pursuant to subsection (a), as
promptly as possible thereafter Servicer shall send to the Purchaser the
original or a certified copy of an original official receipt showing payment
thereof (if any) or any other evidence of the payment as may be available to
Servicer through the exercise of its reasonable efforts. If Trustee fails to pay
any Taxes when due to the appropriate taxing authority or fails to remit to the
Purchaser the required receipts or other required documentary evidence, the
Purchaser shall be entitled to receive, solely from amounts allocated with
respect thereto and paid pursuant to the Supplement, additional amounts
necessary to indemnify it for any incremental taxes, interest or penalties that
may become payable by the Purchaser as a result of any such failure, and the
amounts shall constitute "Additional Amounts" for purposes of the Supplement,
and the Purchaser shall be entitled to receive these additional amounts, solely
from amounts allocated thereto and paid pursuant to the Supplement.
(c) On or before the date it becomes a party to this Agreement (and, so
long as it may properly do so, periodically thereafter, as requested by
Servicer, to keep forms up to date), the Purchaser shall deliver to Trustee any
certificates, documents or other evidence that shall be required by the Internal
Revenue Code or Treasury Regulations issued pursuant thereto to establish that,
assuming the Certificates are properly characterized as indebtedness, it is
exempt from existing United States Federal withholding requirements, including
(i) two original copies of Internal Revenue Service Form 1001 or Form 4224 or
successor applicable form, properly completed and duly executed by the Purchaser
certifying that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States
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Federal income taxes, and (ii) an original copy of Internal Revenue Service Form
W-8 or W-9 or applicable successor form, properly completed and duly executed;
provided, that if the Purchaser does not comply with this subsection 3.4(c),
amounts payable to the Purchaser under this Section 3.4 shall be limited to
amounts that would have been payable under this section if the Purchaser had so
complied.
SECTION 3.5 Time and Method of Payment. All amounts payable to any
Purchaser hereunder or with respect to its Certificate shall be made to the
Purchaser by wire transfer of immediately available funds in Dollars not later
than 2:00 p.m., New York City time, on the date due. Any funds received after
that time will be deemed to have been received on the next Business Day.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Transferor. As of the date hereof, Transferor represents and
warrants to the Purchaser that each of its representations and warranties in the
Pooling Agreement and Purchase Agreement is true and correct, as if made on the
date hereof, and further represents and warrants that:
(a) no Early Amortization Event or Unmatured Early Amortization Event
exists;
(b) assuming the accuracy of the Purchaser's representations set out in
Section 4.3 and that the Purchaser (and no Person acting on the Purchaser's
behalf) has not made a general solicitation or general advertising within the
meaning of the Securities Act, the offer and sale of the Certificate in the
manner contemplated by this Agreement is a transaction exempt from the
registration requirements of the Securities Act, and the Pooling Agreement is
not required to be qualified under the Trust Indenture Act of 1939, as amended;
(c) except for BT Securities Corporation, in its capacity as financial
advisor for Transferor ("Financial Advisor"), Transferor has not dealt with any
financial advisor, or other Person who may be entitled to any commission or
compensation in connection with the sale of the Certificate, and the fees of the
Financial Advisor shall not be an obligation of the Purchaser;
(d) no information supplied by or on behalf of Transferor or APP to the
Purchaser in connection with the Transaction Documents contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or
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therein not misleading in light of the circumstances under which they were made;
(e) the Certificate has been duly and validly authorized by Transferor and,
from and after the date on which such Certificate is executed by Transferor and
authenticated by the Trustee in accordance with the terms of the Pooling
Agreement and the Supplement and delivered to and paid for by the Purchaser in
accordance with the terms of this Agreement, will be validly issued and
outstanding and will constitute valid and legally binding obligations of the
Trust entitled to the benefits of the Pooling Agreement and the Supplement and
enforceable against the Trust in accordance with its terms; and
(f) the Certificate is not subject to any Adverse Claim and the Transferor
is conveying to the Purchaser all of its right, title and interest in such
Certificate.
SECTION 4.2 APP. As of the date hereof, APP represents and warrants to the
Purchaser that:
(a) each of its representations and warranties in the Pooling Agreement (in
its capacity as Servicer) and the Purchase Agreement (in its capacity as a
Seller) is true and correct, as if made on the date hereof with the same effect
as if made on that date (unless specifically stated to relate to an earlier
date);
(b) the Pro Forma Financial Data present fairly in all material respects
the pro forma financial position, results of operations and cash flows of APP
and its consolidated Subsidiaries at the dates specified therein and for the
periods to which they relate and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, except as
otherwise stated therein;
(c) since September 30, 1995 through the date hereof (and except as
contemplated in the Pro Forma Financial Data) (i) there has been no material
adverse change in the condition, financial or otherwise, or the earnings,
business affairs or business prospects of Transferor or APP, whether or not
arising in the ordinary course of business, and (ii) there have been no
transactions entered into by Transferor or APP that are material with respect to
the condition, financial or otherwise, or the earnings, business affairs or
business prospects of Transferor or APP; and
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(d) no information supplied by or on behalf of Transferor or APP to
the Purchaser in connection with the Transaction Documents contains any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which they were made.
SECTION 4.3 Purchaser. As of the date hereof, the Purchaser represents and
warrants that:
(a) it is an "accredited investor" as that term is defined in any of
paragraphs (1), (2), (3) or (7) of Rule 501(a) under the Securities Act and
is not purchasing its Certificate with a view to making a distribution
thereof (within the meaning of the Securities Act); and
(b) it is not a pension, profit sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the assets being used to purchase its Certificate do not
constitute the assets of any "benefit plan investor" (as defined under
ERISA).
ARTICLE 5 CONDITIONS
SECTION 5.1 Conditions to Purchase. The obligation of the Purchaser to
Purchase its Certificate shall be subject to the satisfaction of the conditions
precedent that:
(i) the conditions precedent specified in Section 4.1 of the Purchase
Agreement and Sections 7.1 and 7.2 of the Class A Certificate Purchase
Agreement (other than those that relate to this Agreement) shall be
satisfied;
(ii) the Purchaser shall have received, a duly executed and
authenticated Class B Certificate registered in its name and in a principal
amount equal to $10,000,000,
(iii) the Purchaser shall have received certain fees and reimbursement
of any expenses referred to in Section 7.5 for which invoices have been
presented, and
(iv) the Purchaser shall have received an original (except as
indicated below) counterpart of the following (each of which, if not in a
form attached to this Agreement, shall be in form and substance
satisfactory to the Purchaser):
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(a) the Supplement, the Pooling Agreement, the Purchase Agreement and
the Guaranty, each of which shall be in full force and effect, and all
actions required to be taken under those documents in connection with the
issuance of the Certificate shall have been taken;
(b) photocopies of each Account Agreement;
(c) a certificate of the Secretary, or an Assistant Secretary, of each
of Transferor, Servicer, Guarantor and each Seller with respect to:
(i) attached copies of resolutions of its Board of Directors then
in full force and effect authorizing the execution, delivery and
performance of the Transaction Documents,
(ii) the incumbency and signatures of those of its officers
authorized to act with respect to the Transaction Documents,
(iii) attached copies of its certificate of incorporation and by-
laws;
(d) a certificate of an Authorized Officer of each of Servicer, and
each Seller as to the satisfaction of the conditions precedent set forth in
Section 5.2 and a certificate of Transferor that the representations and
warranties of the Transferor set out in this Agreement are true and correct
as of the date of such initial purchase and that, to the best of
Transferor's knowledge, no Early Amortization Event or Unmatured Early
Amortization Event exists;
(e) a certificate of an appropriate officer of Trustee stating that
the Pooling Agreement has been duly authorized, executed and delivered by
Trustee and the Certificate has been duly authenticated by Trustee in
accordance with the Pooling Agreement and an opinion of counsel to Trustee
as to related matters;
(f) the following opinions, in form and substance satisfactory to
Buyer:
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(i) opinions of Kirkland & Ellis as to certain corporate
matters, Federal and state tax and UCC matters, true sale and non-
consolidation; and
(ii) opinions of Hirsch & Westheimer as to certain Texas state
tax and UCC matters;
(g) the Daily Report for the date hereof;
(h) evidence, reasonably satisfactory to the Purchaser, of the
payment of all taxes, fees and other governmental charges, if any,
incidental to the issuance of the Certificate and to the consummation of
the transactions contemplated hereunder and under the Pooling Agreement;
(i) evidence that S&P has rated the Certificate "BBB";
(j) agreed-upon procedures letters, in form and substance
satisfactory to the Purchaser, from Price Waterhouse LLP and KPMG Peat
Marwick, with respect to certain historical information provided by APP
relating to the Receivables;
(k) copies of any management or other agreements with regard to the
administration of Transferor's business, certified by an Authorized Officer
of Transferor;
(l) a pro forma balance sheet of Transferor as of the date hereof,
after giving effect to the transactions contemplated by the Supplement;
(m) a payout letter from the Holders of the Series 1995-1
Certificates, (i) specifying the aggregate amount required to be paid to
such Holders in order to pay all principal, accrued interest and other
currently existing claims of such Holders under such Certificates, the
related supplement to the Existing Pooling Agreement and the related
certificate purchase agreement, and (ii) subordinating any contingent
claims of such Holders under such documents to amounts owed under the
Supplement and the Series 1996-1 Certificates; and
(n) results of recent searches of the UCC filing records and tax and
ERISA and judgment lien records in each jurisdiction referred to below
against each Seller (including any predecessors in interest to any Seller
going back five years) and
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Transferor, showing no filings of record that cover any of the Receivables
or the Related Transferred Assets other than (i) filings in favor of
parties to an Intercreditor Agreement and (ii) the following filings (which
must be shown to be on file):
(i) UCC financing statements naming each Seller, as
seller/debtor, and Transferor, as secured party/purchaser, in each
office where the filing is necessary for the perfection of the sales
of Receivables by each Seller to Transferor;
(ii) assignments of such existing UCC financing statements to
Trustee, as assignee of the secured party, in each office where the
filing is necessary for the perfection of the sales of Receivables by
each Seller to Transferor; and
(iii) UCC financing statements naming Transferor, as
seller/debtor, and Trustee, as secured party, in each office where the
filing is necessary for the perfection of the transfers of Receivables
by Transferor to Trustee;
(o) any other information, certificates, opinions and documents as
the Purchaser may have reasonably requested.
If the conditions specified above have not been fulfilled on the date
hereof, any condition specified in this Agreement shall not have been fulfilled
when and as required in this Agreement or waived by the Purchaser, in each case
the Purchaser's obligations to purchase the Certificate pursuant to this
Agreement may be terminated by notice to Transferor. In addition, if, under the
circumstances, it shall not be feasible for the Purchaser to invest on the date
the funds that are held available by the Purchaser for the Purchase, Transferor
shall pay the Purchaser interest on the funds at the Alternate Base Rate from
the date of the notice until the next succeeding Business Day on which it is
feasible for the Purchaser to invest the funds. Nothing in this paragraph shall
operate to relieve Transferor from any of its obligations hereunder or otherwise
waive any of the Purchaser's rights against Transferor.
SECTION 5.2 Additional Conditions. The obligation of the Purchaser to
Purchase the Certificate shall also be subject to the conditions precedent that
on the date of the Purchase, before and after giving effect thereto and to the
application of any proceeds therefrom, the following statements shall be true:
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(a) the representations and warranties of Transferor and APP set out
in this Agreement are true and accurate as of that date with the same
effect as though made on that date (unless specifically stated to relate to
an earlier date); and
(b) no Early Amortization Event or Unmatured Early Amortization Event
has occurred and is continuing.
ARTICLE 6 COVENANTS
SECTION 6.1 Covenants. Transferor and APP each severally covenant and
agree that, until the Certificates have been paid in full, it will:
(a) with reasonable promptness deliver to the Purchaser such
information, documents, records or reports respecting the Program or the
Receivables as the Purchaser may from time to time reasonably request (to
the extent that such items are reasonably accessible to Transferor);
(b) at the same time any report (including any Daily Report, Monthly
Report or annual auditors' report), notice or other document is provided,
or caused to be provided, by Transferor or Servicer to Trustee or any Agent
under the Pooling Agreement, provide the Purchaser with a copy of the
report;
(c) during regular business hours and (so long as no Early
Amortization Event has occurred and is continuing) upon two Business Days
prior written notice, permit the Purchaser (or such other Person as Trustee
or the Purchaser may designate from time to time), or their respective
agents or representatives (including certified public accountants or other
auditors), as an expense of Servicer paid out of the Servicing Fee, (i) to
examine and make copies of and abstracts from, and to conduct accounting
reviews of, all Records in the possession or under the control of Servicer,
Transferor or any Seller, including the related Contracts and purchase
orders, invoices and other agreements related thereto, and (ii) to visit
the offices and properties of Servicer, Transferor or any Seller for the
purpose of examining such materials described in clause (i), and to discuss
matters relating to the Receivables or the Related Transferred Assets or
the performance by Servicer, Transferor or any Seller of their respective
obligations under any Transaction Document with any officer, employee or
representative of Servicer, Transferor or any Seller. The Purchaser may
(but shall not be obligated to) conduct, or cause their respective agents
or representatives to conduct, reviews of the types described in this
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paragraph (each such review, a "Receivables Review") whenever the
Purchaser, in its reasonable judgment, deems any such review appropriate;
(d) not change (or permit the Sellers to change) collection policies
as contemplated by Section 6.3(b)(x) of the Purchase Agreement, if such
change would have a Material Adverse Effect, without the prior written
approval of holders of Class B Certificates whose Class Percentages exceed
50% (the "Majority Class B Holders");
(e) notwithstanding Section 7.2(g)(i) of the Pooling Agreement, not
enter into (or be a party to) any transaction contemplated by such Section
7.2(g)(i) unless the Majority Class B Holders shall have consented thereto
in writing; and
SECTION 6.2. Transfers. Purchaser agrees that it will not transfer its
Class B Certificate (or any portion thereof) to any Person unless such Person
shall have provided the Trustee and Transferor with a certificate to the effect
that such Person: (a) is an "accredited investor" as that term is defined in any
of paragraphs (1), (2), (3) or (7) of Rule 501(a) under the Securities Act and
is not purchasing its Certificate with a view to making a distribution thereof
(within the meaning of the Securities Act) and (b) is not a pension, profit
sharing or other employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended.
ARTICLE 7 MISCELLANEOUS PROVISIONS
SECTION 7.1 Amendments. (a) Transferor and APP each severally covenant
and agree that, until the Certificates have been paid in full, it will not,
except as contemplated by Section 13.1 of the Pooling Agreement, amend or
otherwise modify any Transaction Document to which it is a party or grant any
waiver or consent thereunder, without the prior written consent of the Required
Series Holders; provided that no amendment, modification, waiver or consent
shall, without the prior written consent of the Purchaser, (a) decrease the
outstanding amount of the Certificate, (b) forgive or waive or otherwise excuse
any repayment of the Class B Invested Amount, (c) waive any Early Amortization
arising from a Bankruptcy Event with respect to Transferor or a Seller, (d)
waive any requirement under the Pooling Agreement that the interest of the
Trustee and the Receivables and other Transferred Assets be perfected by
appropriate UCC filings, or (e) reduce in any manner the amount of, or delay the
timing of, allocations, payments or distributions in respect of the Certificate;
and provided, further that neither the execution and delivery of a Supplement
relating to a refinancing of the Certificates as contemplated by Section 4.9 of
the Supplement relating to the Certificates, nor any other
page 14
<PAGE>
amendment to the Transaction Documents in connection with such a refinancing,
shall require any consent from the Purchaser, so long as the prior or
contemporaneous repayment in full of the Certificates in accordance with Section
5.2 of the Supplement relating to the Certificates is a condition to the
issuance of the refinancing certificates, and of the effectiveness of such
related amendment.
SECTION 7.2 No Waiver; Remedies. Any waiver, consent or approval given by
any party hereto shall be effective only in the specific instance and for the
specific purpose for which given, and no waiver by a party of any breach or
default under this Agreement shall be deemed a waiver of any other breach or
default. No failure on the part of any party hereto to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder, or any abandonment or
discontinuation of steps to enforce the right, power or privilege, preclude any
other or further exercise thereof or the exercise of any other right. No notice
to or demand on any party hereto in any case shall entitle such party to any
other or further notice or demand in the same, similar or other circumstances.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 7.3 Successors and Assigns; Assignments. (a) This Agreement shall
be binding upon, and inure to the benefit of, Transferor, Servicer, the
Purchaser and their respective successors and assigns; provided that neither
Transferor nor Servicer may assign its rights or obligations hereunder
(voluntarily, by operation of law or otherwise) without the prior written
consent of the Purchaser, except that the Servicer may be terminated in
accordance with Sections 10.1 and 10.2 of the Pooling Agreement; and provided
further, that no Purchaser may transfer, pledge, assign, sell participations in
or otherwise encumber its rights or obligations hereunder or any interest herein
except as permitted under the Pooling Agreement and this section.
(b) The Purchaser may at any time sell to one or more banks or other
entities ("Participants") participating interests in all or any portion of its
Certificate and its obligations hereunder (its "Credit Exposure"). In the event
of any sale by a Purchaser of participating interests to a Participant, the
Purchaser shall notify Transferor of the identity of the Participant upon a
request by Transferor, the Purchaser's obligations under this Agreement shall
remain unchanged, the Purchaser shall remain solely responsible for the
performance thereof, and the Purchaser shall remain the holder of its rights
under its Certificate and this Agreement for all purposes under this Agreement,
and the other parties to the Transaction Documents shall continue to deal solely
and directly with the Purchaser in connection with such rights
page 15
<PAGE>
and obligations under this Agreement. Transferor agrees that each Participant
shall be entitled to the benefits of Sections 3.1, 3.2 and 3.4 and any
Prepayment Premium payable pursuant to the terms of the Supplement with respect
to its participation in the Certificate. The Purchasers agree that any agreement
between them and any Participant in respect of a participating interest shall
require the Participant to comply with the terms of Section 7.13 and shall not
restrict the Purchasers' right to agree to any amendment, supplement or
modification of the Transaction Documents except to (i) extend the final
maturity of any obligation, (ii) reduce the rate or extend the time of payment
of interest thereon or any fees owed to the Purchasers under the Transaction
Documents, (iii) reduce the principal amount of any obligation, (iv) release or
direct the release of all or substantially all of the Transferred Assets or
Trustee's claim to the Transferred Assets, (v) reduce substantially the amount
of any reserve included in the calculation of the Base Amount, (vi) increase the
amount of the participation from the amount thereof then in effect, or (vii)
permit assignment or transfer by Transferor or APP of its rights or obligations
under the Transaction Documents.
(c) The Purchaser may at any time assign to one or more banks or other
financial institutions ("Assignees") all or any part of its Credit Exposure;
provided that (i) unless assigned to an Affiliate of the Purchaser, it assigns
all of its Credit Exposure or a portion of its Credit Exposure in an amount not
less than $5,000,000, (ii) any Assignee, other than an Affiliate of the
Purchaser, must be reasonably acceptable to the Agent and Transferor, which
acceptance shall not be delayed or withheld unreasonably and (iii) if such
Assignee is organized under the laws of a jurisdiction outside the United States
of America, such Assignee shall satisfy the requirements of Section 3.4(c), or
amounts payable to it under Section 3.4 shall be limited to amounts that would
be payable if such Assignee had complied with Section 3.4(c). In the event of
any assignment, the Purchaser shall comply with Article VI of the Pooling
Agreement and also shall give notice to Transferor and the Agent and shall
deliver to the Agent, for acceptance and recording in its records, an assignment
agreement substantially in the form of Exhibit D together with a processing and
recordation fee of, in the case of assignments to an Affiliate of the Purchaser,
$1,500 and, in cases of any other assignment, $3,500. Within five Business Days
of receipt thereof, the Agent shall, if the assignment agreement has been fully
executed by the Assignee, the assignor Purchaser and Transferor, is completed
and is in substantially the form of Exhibit D, execute the assignment agreement
and record the information contained therein in its records. Upon the earlier of
the expiration of the five Business Day period or the date of the recording, the
assignment will become effective. Transferor, the Agent and the Purchaser agree
to extend the rights and benefits under this Agreement to the Assignee to the
extent the Assignee would have had if it were a Purchaser that was an original
signatory to this Agreement; provided,
page 16
<PAGE>
that Transferor shall be entitled to continue to deal solely and directly with
the assignor Purchaser in connection with the interests so assigned to the
Assignee until the assignment agreement and any required fee, as described
above, shall have been delivered to Transferor and the Agent by the Purchaser
and the Assignee and the assignment shall have become effective. Upon the
effective assignment of its Credit Exposure, the Purchaser shall be relieved of
its obligations hereunder to the extent of the assignment.
(d) The sale or assignment of any Credit Exposure to any Assignee or
Participant (each, a "Transferee") shall not be effective until it has agreed to
be bound by the provisions of Section 7.13. Transferor and APP each authorize
the Purchaser to disclose to any Transferee and any prospective Transferee any
and all information in their possession concerning Transferor and APP that has
been delivered to them by Transferor, APP or Trustee in connection with their
credit evaluation of the Program prior to entering into this Agreement.
(e) Notwithstanding any other provisions set forth in this Agreement, the
Purchaser may at any time create a security interest in all or any portion of
its rights under this Agreement and the Certificate in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
(f) No transfer, assignment or other conveyance of a Class B Certificate
shall be made unless the aggregate outstanding principal amount transferred
pursuant to such transfer is equal to at least 2.1% of the aggregate principal
amount of all outstanding Class B Certificates. No Class B Certificate may be
subdivided into an aggregate principal amount of less than 2.1% of the aggregate
principal amount of all outstanding Class B Certificates. Any attempted
transfer, assignment or conveyance in contravention of the preceding
restrictions shall be void ab initio and the purported transferor of such Class
B Certificate shall continue to be treated as the Certificateholder of any such
Class B Certificate for all purposes of this Agreement.
SECTION 7.4 Survival of Agreement. All covenants, agreements,
representations and warranties made herein and in the Certificates delivered
pursuant hereto shall survive the making and the repayment of the Purchases and
the execution and delivery of this Agreement and the Certificates and shall
continue in full force and effect until all obligations have been paid in full.
In addition, the obligations of Transferor under Sections 3.1, 3.2, 3.3, 3.4 and
7.5 shall survive the termination of this Agreement.
SECTION 7.5 Expenses; Indemnification. Transferor and APP jointly and
severally shall pay on demand (a) all reasonable out-of-pocket fees and
page 17
<PAGE>
expenses (including reasonable attorneys fees and expenses) of the Purchaser
incurred in connection with the preparation, execution, delivery,
administration, amendment, modification and waiver of the Transaction Documents
and the making and repayment of the Purchases, including any Servicer or
collection agent fees paid to any third party for services rendered to the
Purchaser in collecting the Receivables and (b) all reasonable out-of-pocket
fees and expenses of the Purchaser (including reasonable attorneys fees and
expenses of their counsel) incurred in connection with the enforcement of the
Transaction Documents against Transferor, Servicer and the Seller and in
connection with any workout or restructuring of the Transaction Documents. In
addition, Transferor will pay any and all stamp and other taxes and fees payable
or determined to be payable in connection with the execution, delivery, filing,
recording or enforcement of this Agreement or any payment made under the
Transaction Documents, and hereby indemnifies and saves the Purchaser harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay the taxes and fees. Transferor and APP
jointly and severally agree to reimburse and indemnify the Purchaser and their
respective officers, directors, shareholders, controlling Persons, employees and
agents (collectively, the "Indemnitees") from and against any and all actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature that
may be imposed on, asserted against or incurred or suffered by the Purchaser
(including fees and expenses of legal counsel, accountants and experts) in any
way relating to or arising out of any event or circumstance described in the
first sentence of this Section.
If any action, suit, proceeding or investigation is commenced, as to which
an Indemnitee proposes to demand indemnification, it shall notify Transferor and
APP with reasonable promptness; provided, however, that any failure by such
Indemnitee to notify Transferor and APP shall not relieve Transferor and APP
from their obligations hereunder (except to the extent that Transferor and APP
are prejudiced by such failure to promptly notify). Transferor and APP shall be
entitled to assume the defense of any such action, suit, proceeding or
investigation, including the employment of counsel reasonably satisfactory to
the Indemnitee. The Indemnitee 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 Indemnitee unless the Indemnitee shall have been advised by
counsel that there exists an actual or potential conflict of interests among
Transferor and APP and such Indemnitee, including situations in which one or
more legal defenses may be available to such Indemnitee that are inconsistent
with those available to Transferor and APP; provided, however, that Transferor
and APP 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
page 18
<PAGE>
Indemnitees; and such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with Transferor and APP and any counsel
designated by Transferor and APP.
Notwithstanding the foregoing (and with respect to clause (w) below,
without prejudice to the rights that an Indemnitee may have pursuant to the
other provisions of the Transaction Documents), in no event shall any Indemnitee
be indemnified against any amounts (w) resulting from gross negligence or
willful misconduct on the part of such Indemnitee (or any of its officers,
directors, employees, affiliates or agents) or the failure of such Indemnitee to
perform its obligations under the Transaction Documents), (x) to the extent they
include amounts 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, (y) except in the
case of the Prepayment Premium, to the extent they are or result from lost
profits or (z) to the extent they would constitute consequential, special or
punitive damages.
If for any reason the indemnification provided in this section is
unavailable to an Indemnitee or is insufficient to hold it harmless, then
Transferor and APP jointly and severally shall contribute to the amount paid by
the Indemnitee as a result of any loss, claim, damage or liability in a
proportion that is appropriate to reflect not only the relative benefits
received by the Indemnitee on the one hand and Transferor and APP on the other
hand, but also the relative fault of the Indemnitee (if any), Transferor and APP
and any other relevant equitable considerations; provided that Transferor's
obligations under this section shall be paid by Transferor only to the extent
that funds are available to make the payments pursuant to Article IV of the
Supplement, and there shall be no recourse to Transferor for all or any part of
any amounts payable pursuant to this section if the funds are at any time
insufficient to make all or part of any such payments. 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 7.6 Entire Agreement. This Agreement, together with the documents
delivered pursuant to Section 5.1 and the other Transaction Documents, including
the exhibits and schedules thereto, contains a final and complete integration of
all prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire agreement among the parties hereto with
respect to the subject matter hereof, superseding all previous oral statements
and other writings with respect thereto.
page 19
<PAGE>
SECTION 7.7 Notices. All communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered, sent by
overnight courier or mailed by registered mail, postage prepaid and return
receipt requested, or transmitted by facsimile transmission and confirmed by a
similar mailed writing to any party at the address for that party set forth (a)
on the signature page to this Agreement or (b) to another address as that party
may designate in writing to the Transferor.
SECTION 7.8 No Third Party Beneficiaries. Nothing expressed herein is
intended or shall be construed to give any Person (other than the Persons listed
in Section 7.3) any legal or equitable right, remedy or claim under or in
respect of this Agreement.
SECTION 7.9 Severability of Provisions. Any covenant, provision,
agreement or term of this Agreement that is prohibited or is held to be void or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of the prohibition or unenforceability without invalidating the
remaining provisions of this Agreement.
SECTION 7.10 Counterparts. This Agreement may be executed in any number of
counterparts (which may include facsimile) 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 7.11 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.
SECTION 7.12 Tax Characterization. Each party to this Agreement (a)
acknowledges that it is the intent of the parties to this Agreement that, for
Federal, state and local income and franchise tax purposes, the Certificate will
be treated as evidence of indebtedness secured by the Transferred Assets and the
Trust will not be characterized as an association (or publicly traded
partnership) taxable as a corporation, (b) agrees to treat the Certificate for
Federal, state and local income and franchise tax purposes as indebtedness and
(c) agrees that the provisions of the Transaction Documents shall be construed
to further these intentions.
SECTION 7.13 No Proceedings. Each of Servicer and the Purchaser (solely in
its capacity as such) hereby agrees that it will not institute against
Transferor, or join any other Person in instituting against Transferor, any
insolvency proceeding (namely, any proceeding of the type referred to in the
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<PAGE>
definition of "Bankruptcy Event") so long as any Series 1996-1 Certificates
shall be outstanding or there shall not have elapsed one year plus one day since
the last day on which any Series 1996-1 Certificates shall have been
outstanding. The foregoing shall not limit the right of Servicer or the
Purchaser to file any claim in or otherwise take any action with respect to any
insolvency proceeding that was instituted against Transferor by any other
Person.
SECTION 7.14 No Recourse. None of the directors, officers or employees of
Transferor shall have any liability to any Person, including, without
limitation, the Trustee or the 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.
page 21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers and delivered as of the day and
year first above written.
NOTEPAD FUNDING
CORPORATION
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.
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
<PAGE>
CAISSE NATIONALE DE CREDIT
AGRICOLE, as Purchaser
By: /s/ Katherine L. Abbott
-------------------------------------
Name: Katherine L. Abbott
------------------------------------
Title: First Vice President
-----------------------------------
Address: Caisse Nationale de Credit
Agricole
55 East Monroe Street
Suite 4700
Chicago, Illinois 60603-5702
Attention: Laurence Grant
Telephone: 312-917-7456
Facsimile: 312-372-3455
<PAGE>
SCHEDULE I
To Certificate Purchase Agreement
(Series 1996-1, Class B)
AMOUNT OF INITIAL PURCHASER'S CERTIFICATE
-----------------------------------------
Stated Amount of Certificate
- - ----------------------------
Caisse Nationale de Credit Agricole $10,000,000.00
Class Percentage
- - ----------------
Caisse Nationale de Credit Agricole 100.0000000000%
Series Percentage
- - -----------------
Caisse Nationale de Credit Agricole 16.6666666667%
<PAGE>
EXHIBIT A
to Certificate Purchase Agreement
(Series 1996-1, Class B)
FORM OF POOLING AND SERVICING AGREEMENT
---------------------------------------
<PAGE>
EXHIBIT B
to Certificate Purchase Agreement
(Series 1996-1, Class B)
FORM OF RECEIVABLES PURCHASE AGREEMENT
--------------------------------------
<PAGE>
EXHIBIT C
to Certificate Purchase Agreement
(Series 1996-1, Class B)
FORM OF SERIES 1996-1 SUPPLEMENT
--------------------------------
<PAGE>
EXHIBIT D
to Certificate Purchase Agreement
(Series 1996-1, Class B)
FORM OF ASSIGNMENT AGREEMENT
----------------------------
This ASSIGNMENT AGREEMENT, dated as of ____________ (this "Agreement"), is
made between ____________________ ("Assignor"), and _____________________
("Assignee"). Except as otherwise defined herein, capitalized terms have the
meanings assigned to them in the Certificate Purchase Agreement (as defined
below).
BACKGROUND
1. Assignor is a party to the Certificate Purchase Agreement (Series
1996-1, Class B), dated as of May 29, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Certificate Purchase Agreement"),
among Notepad Funding Corporation, a Delaware corporation ("Transferor"),
American Pad & Paper Company of Delaware, Inc., a Delaware corporation, and
Caisse Nationale de Credit Agricole.
2. Assignor wishes to assign, and Assignee wishes to be so assigned,
Assignor's rights and obligations arising on and after the Effective Date (as
defined below) under the Certificate Purchase Agreement and its Certificate
including (a) its obligations to make Purchases (its "Credit Exposure") and (b)
its outstanding Purchase (the "Purchase").
3. Assignor and Assignee also wish (a) Assignee to assume the obligations
of Assignor under the Certificate Purchase Agreement with respect to Assignee's
Share (as defined below) to the extent of the rights assigned and (b) Assignor
to be released from the obligations assumed by Assignee.
4. Transferor and Agent, by their execution hereof, are providing their
written consent to the assignment accomplished by this Agreement.
SECTION 1. Assignment. Effective on the Effective Date (as defined below)
and upon payment of the amount specified in Section 3(a), Assignor hereby
assigns and transfers to Assignee, without recourse, representation or warranty
of any kind, express or implied (except as provided in Sections 6(a)
<PAGE>
and (b)), and subject to Section 4(b), Assignee's Share (as specified in Annex I
hereto) (the "Assignee's Share") of all of Assignor's rights, title and interest
arising under (a) the Certificate Purchase Agreement relating to Assignor's
Credit Exposure including all rights and obligations with respect to the
Purchase attributable to Assignee's Share and (b) Assignor's Certificate with
respect to Assignee's Share as will result in Assignee having from and after the
Effective Date the Class Percentage ("Assignee's Percentage") specified in Annex
I.
SECTION 2. Assumption. Effective on the Effective Date, Assignee hereby
irrevocably purchases, assumes and takes from Assignor, and Assignor is hereby
expressly and absolutely released from, all of Assignor's obligations arising
under the Certificate Purchase Agreement relating to Assignee's Share and of any
outstanding Purchases attributable to Assignee's Share.
SECTION 3. Payment. In consideration of the assignment by Assignor to
Assignee as set forth above, Assignee agrees to pay to Assignor, in Dollars and
in immediately available funds, (a) on or prior to the Effective Date, an amount
specified by Assignor in writing on or prior to the Effective Date that
represents Assignee's Share attributable to the principal amount of the Purchase
made pursuant to the Certificate Purchase Agreement and outstanding on the
Effective Date, and (b) from time to time thereafter, other amounts (if any)
that Assignee has agreed in writing to pay to Assignor after the Effective Date.
In consideration of the assumption by Assignee, Assignor agrees to pay to
Assignee within two Business Days of the Effective Date, an assignment fee (if
any) that previously has been agreed to in writing by both parties.
Notwithstanding anything to the contrary in this Agreement, if and when
Assignee receives or collects (x) any payment of principal or interest relating
to the Purchase or (y) any payment of fees that are required to be paid to
Assignor pursuant to this Agreement, then Assignee shall forward the payment to
Assignor.
To the extent payment of funds to Assignee or Assignor are not made within
two Business Days, each, as the case may be, shall be entitled to recover the
due amount, together with interest thereon at the Federal Funds Rate per annum
accruing from the date of payment or the date of receipt of the funds by the
other party.
SECTION 4. Effectiveness. (a)(i) This Agreement shall become effective on
the date (the "Effective Date") on which it shall have been duly executed by all
parties and the Agent shall have recorded the information contained herein in
its records (or automatically if not so recorded within five Business Days from
the Agent's receipt of this Agreement signed by Assignor,
Page 2
<PAGE>
Assignee and Transferor). Assignor hereby notifies the Agent, Transferor and
Servicer of the assignment, effective as of the Effective Date, of Assignee's
Share and any Purchases attributable to the Assignee's Share, and directs
Servicer to pay Assignee any payment of principal of, or interest on, any
Purchase attributable to the Assignee's Share of any Purchases. No (x) failure
of either Assignee or Assignor to settle any amount owed to the other (except
with respect to the payment of the processing and recordation fee to the Agent
and the payment due under Section 3(a)), (y) dispute respecting any other
settlement, including in respect of Transferor, or (z) bankruptcy, insolvency or
other condition whatsoever respecting any Person, shall in any way impair,
reduce or otherwise affect the effectiveness of this Agreement.
(ii) Assignor, Assignee and Servicer each acknowledges and agrees that from
and after the Effective Date, Servicer shall make all payments under the
Certificate Purchase Agreement in respect of Assignee's Share (including all
payments of principal and interest with respect thereto, whether or not the
payments shall have accrued prior to or after the Effective Date) to Assignee
only. Assignor and Assignee hereby agree further to make all appropriate
adjustments in payments to either of them under the Certificate Purchase
Agreement for periods prior to the Effective Date directly between themselves.
(b) With respect to the portion of the Purchase attributable to Assignee's
Share, if and when Assignor receives or collects any payment of principal,
interest or Additional Amounts with respect to Assignee's Share for any period
commencing on or after the Effective Date, Assignor shall distribute to Assignee
the portion attributable to Assignee's Share, but only to the extent it accrued
on or after the Effective Date and was not theretofore paid to Assignee by
Transferor or otherwise. Any principal, interest and Additional Amounts paid
prior to the Effective Date shall be retained by Assignor. Any principal,
interest and Additional Amounts received by Assignee that accrued prior to the
Effective Date shall be forwarded promptly, in the form received, to Assignor.
Assignee recognizes and agrees that notwithstanding anything to the contrary in
this Agreement, Assignor shall retain all of its rights to indemnification under
the Certificate Purchase Agreement for any events, acts or omissions occurring
prior to the Effective Date.
(c) Servicer, by its execution hereof, acknowledges the assignment and
agrees to make payments in respect of principal, interest, fees and Additional
Amounts as described above.
SECTION 5. Rights as Purchaser under Certificate Purchase Agreement. In
accordance with Section 7.3 of the Certificate Purchase Agreement, (a) as of the
Effective Date, Assignee will be a Purchaser under,
Page 3
<PAGE>
and party to, the Certificate Purchase Agreement and shall have (i) all of the
rights and obligations of a Purchaser (to the extent of the assignment and
assumption of Assignee's Share effected by this Agreement) and (ii) the
addresses for (A) notice purposes and (B) LIBOR Office as set forth in items 2
and 3, respectively, of Annex I hereto and (b) promptly on or after the
Effective Date, Transferor will execute and deliver any documents and
instruments that Assignor or Assignee reasonably may require.
SECTION 6. Representations and Warranties. (a) Each of Assignor and
Assignee represents and warrants to the other as follows:
(i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Agreement, to fulfill the
obligations hereunder and to consummate the transactions contemplated
hereby,
(ii) the making and performance of this Agreement and all documents
required to be executed and delivered hereunder do not and will not violate
any law or regulation of the jurisdiction of its incorporation or any other
applicable law or regulation,
(iii) this Agreement has been duly executed and delivered and
constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms, and
(iv) all approvals, authorizations or other actions by, or filing
with, any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been obtained.
(b) Assignor represents and warrants to Assignee that Assignee's Share and
the Purchases attributable to Assignee's Share are not subject to any liens or
security interests created by Assignor.
(c) Except as set forth in subsections (a) and (b), Assignor makes no
representations or warranties, express or implied, to Assignee and shall not be
responsible to Assignee for (i) the execution, effectiveness, genuineness,
legality, validity, enforceability, collectibility, regulatory status or
sufficiency of the Certificate Purchase Agreement or any of the other
Transaction Documents, (ii) the perfection, priority, value or adequacy of any
collateral security or guaranty, (iii) the taking of any action, or the failure
to take any action, with respect to any of the Transaction Documents, (iv) any
representations, warranties, recitals or statements made in any of the
Transaction Documents or in any written or oral financial or other statements,
Page 4
<PAGE>
instruments, reports, certificates or documents made or furnished by Assignor to
Assignee or by or on behalf of Transferor or any of its Affiliates to Assignor
or Assignee in connection with the Transaction Documents and the transactions
contemplated thereby, (v) the financial or other condition of Transferor or any
other Person or (vi) any other matter having any relation to any of the
foregoing. Assignor shall not be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Transaction Documents or the existence or
possible existence of any Unmatured Early Amortization Event, Early Amortization
Event or Servicer Default. Additionally, Assignor shall not have any duty or
responsibility either initially or on a continuing basis to make any
investigation or any appraisal on Assignee's behalf or to provide Assignee with
any credit or other information with respect thereto, whether coming into
Assignor's possession before the execution of the Certificate Purchase Agreement
or at any time thereafter. Assignor shall have no responsibility with respect to
the accuracy of, or the completeness of, any information provided to Assignee,
whether by Assignor or by or on behalf of Transferor or any other Person
obligated under the Certificate Purchase Agreement or any related instrument or
document.
(d) Assignee represents and warrants that it has made its own independent
investigation of each of the foregoing matters, including the financial
condition and affairs of Transferor and its Affiliates, in connection with the
making of the Purchases and the execution of this Agreement (including the
solvency of Transferor and its Affiliates, their ability to pay their respective
debts as they mature and the capital of Transferor and its Affiliates remaining
after the closing under the Transaction Documents and the consummation of the
transactions contemplated thereby) and has made and shall continue to make its
own appraisal of the creditworthiness of Transferor and its Affiliates. Assignee
(i) confirms that it has received copies of the Transaction Documents together
with copies of certain other closing documents delivered in connection with the
Certificate Purchase Agreement, financial statements and any other documents and
information that it has requested or deemed appropriate to make its own credit
analysis and decision to enter into this Agreement and (ii) agrees that it will,
independently and without reliance upon the Agent, Assignor or any other
Purchaser and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Transaction Documents.
SECTION 7. No Proceedings. Assignee hereby agrees to be bound by the
provisions of Section 7.13 of the Certificate Purchase Agreement.
Page 5
<PAGE>
SECTION 8. [Withholding Taxes. In accordance with Section 3.4 of the
Certificate Purchase Agreement, Assignee agrees to execute and deliver to the
Agent, for delivery to Transferor, on or before the Effective Date, (a) an
Internal Revenue Service Form 1001 or 4224 or successor applicable form,
properly completed and duly executed by the Purchaser certifying that it is
entitled to receive payments under the Certificate Purchase Agreement without
deduction or withholding of any United States Federal income taxes, and (b) an
original copy of Internal Revenue Service Form W-8 or W-9 or applicable
successor form, properly completed and duly executed. Assignee represents and
warrants to Transferor and Assignor that, as of the Effective Date, it shall be
entitled to receive payments of principal and interest under its Certificate and
hereunder without deduction for or on account of any taxes imposed by the United
States of America or any political subdivision thereof. In the event that, after
delivering the applicable form, Assignee shall cease to be exempt from
withholding and/or deduction of taxes, then the Agent may withhold and/or deduct
the applicable amount from any payments of principal, interest and any fees to
which Assignee otherwise would be entitled, and the Agent shall have no
liability whatsoever to Assignee for any such withholding or deduction. Assignee
shall indemnify Transferor and the Agent from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs or
expenses that result from Assignee's breach of such representation and
warranty./*/
SECTION 9. ]Miscellaneous. (a) Each of the parties hereto agrees to take
any action and execute and deliver any documents that any party hereto
reasonably may request from time to time in order to implement more fully the
purposes of this Agreement. Without limiting the generality of the foregoing,
Assignor and Assignee will cooperate in obtaining for Assignee a Certificate (as
well as a replacement Certificate for Assignor representing any retained
interest of Assignor).
(b) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
(c) Except as otherwise set forth herein, this Agreement sets forth the
entire agreement between the parties relating to the subject matter hereof, and
no term or provision of this Agreement may be amended, changed, waived,
discharged or terminated orally or otherwise, except in a writing signed by
Assignor and Assignee.
- - -----------------------------
/*/ If the Assignee is a foreign entity.
Page 6
<PAGE>
(d) 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.
(e) Each of the parties hereto agrees that each party shall bear its own
expenses in connection with the preparation and execution of this Agreement and
the consummation of the Assignment described herein. Assignee further agrees
that it shall send a check in the amount of $[1,500] [3,500] to the Agent on or
prior to the Effective Date, as payment of the processing and recordation fee
described in Section 7.3(c) of the Certificate Purchase Agreement.
(f) All representations and warranties made, and indemnities provided for,
herein shall survive the consummation of the transactions contemplated hereby.
(g) Assignor may at any time or from time to time grant assignments and
participations in its rights and obligations under the Certificate Purchase
Agreement and its Certificate to other Persons, but not in the portions thereof
assigned to Assignee.
(h) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Neither Assignor nor
Assignee may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party. The preceding
sentence shall not limit the right of Assignee to assign all or part of
Assignee's Share in the manner contemplated by the Certificate Purchase
Agreement.
Page 7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers and delivered as of the day and
year first above written.
________________________,
as Assignor
By:_______________________
Title:__________________
________________________,
as Assignee
By:______________________
Title:_________________
The undersigned hereby acknowledges the terms and provisions of this
Agreement, and agrees to make payments in respect of principal, interest and
fees as described in Section 4(a).
ABN AMRO BANK N.V., as Agent
By:_________________________
Title:____________________
AMERICAN PAD & PAPER COMPANY OF
DELAWARE, INC., as Servicer
By:_________________________
Title:____________________
NOTEPAD FUNDING CORPORATION
By:_________________________
Title:____________________
Page 8
<PAGE>
ANNEX I
to Assignment Agreement
ITEM 1. ASSIGNEE'S SHARE:
(a) Assignee's Stated Amount $______________
(b) Assignee's Class Percentage _____________%
ITEM 2. ADDRESS OF ASSIGNEE FOR NOTICE PURPOSES:
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
Attention:
- - ----------------------------
Telephone:
- - ----------------------------
Facsimile:
- - ----------------------------
ITEM 3. LIBOR OFFICE OF ASSIGNEE:
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
- - ----------------------------
<PAGE>
APPENDIX X
to Certificate Purchase Agreement
(Series 1996-1, Class B)
INDEX OF ADDITIONAL DEFINED TERMS
---------------------------------
<TABLE>
<CAPTION>
<S> <C>
Agreement............................................................... 1
APP..................................................................... 1
Assignees............................................................... 16
Certificate............................................................. 1
Class B Certificate..................................................... 1
Class Percentage........................................................ 2
Closing................................................................. 2
Credit Exposure......................................................... 16
Financial Advisor....................................................... 7
Indemnitees............................................................. 18
LIBOR Office............................................................ 3
Participants............................................................ 16
Pooling Agreement....................................................... 1
Purchase................................................................ 2
Purchaser............................................................... 1
Receivables Review...................................................... 14
Series Percentage....................................................... 2
Servicer................................................................ 1
Supplement.............................................................. 1
Taxes................................................................... 6
Transferee.............................................................. 17
Transferor.............................................................. 1
Trust................................................................... 1
Trust Interest.......................................................... 1
Trustee................................................................. 1
</TABLE>
<PAGE>
Exhibit 4.10
================================================================================
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
dated as of May 29, 1996
between
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.
and
CERTAIN SUBSIDIARIES,
as Sellers
and
NOTEPAD FUNDING CORPORATION,
as Buyer
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1.1 Agreement to Purchase and Sell...................................... 1
SECTION 1.2 Timing of Purchases................................................. 2
SECTION 1.3 Consideration for Purchases......................................... 2
SECTION 1.4 No Recourse......................................................... 3
SECTION 1.5 No Assumption of Obligations Relating to Receivables, Related Assets
or Contracts........................................................ 3
SECTION 1.6 True Sales.......................................................... 3
SECTION 1.7 Addition of Sellers................................................. 3
SECTION 1.8 Termination of Status as a Seller................................... 4
ARTICLE II
CALCULATION OF PURCHASE PRICE
SECTION 2.1 Calculation of Purchase Price....................................... 6
SECTION 2.2 Definitions and Calculations Related to Purchase Price Percentage... 7
ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING, ETC.
SECTION 3.1 Purchase Price Payments............................................. 8
SECTION 3.2 The Purchase Money Note............................................. 10
SECTION 3.3 Application of Collections and Other Funds.......................... 10
SECTION 3.4 Servicing of Receivables and Related Assets......................... 11
SECTION 3.5 Adjustments for Noncomplying Receivables, Dilution and Cash
Discounts........................................................... 11
SECTION 3.6 Payments and Computations, Etc...................................... 12
ARTICLE IV
CONDITIONS TO PURCHASES
SECTION 4.1 Conditions Precedent to Initial Purchase............................ 12
SECTION 4.2 Certification as to Representations and Warranties.................. 14
SECTION 4.3 Effect of Payment of Purchase Price................................. 14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
<S> <C> <C>
SECTION 5.1 Representations and Warranties of the Sellers................ 14
SECTION 5.2 Representations and Warranties of Buyer...................... 20
ARTICLE VI
GENERAL COVENANTS OF THE SELLERS
SECTION 6.1 Affirmative Covenants........................................ 20
SECTION 6.2 Reporting Requirements....................................... 24
SECTION 6.3 Negative Covenants........................................... 25
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE SPECIFIED ASSETS
SECTION 7.1 Rights of Buyer.............................................. 28
SECTION 7.2 Responsibilities of the Sellers.............................. 28
SECTION 7.3 Further Action Evidencing Purchases.......................... 29
SECTION 7.4 Collection of Receivables; Rights of Buyer and Its Assignees. 30
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination by the Sellers................................... 31
SECTION 8.2 Automatic Termination........................................ 31
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Indemnities by the Sellers................................... 32
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments; Waivers, Etc...................................... 34
SECTION 10.2 Notices, Etc.................................................. 34
SECTION 10.3 Cumulative Remedies........................................... 35
SECTION 10.4 Binding Effect; Assignability; Survival of Provisions......... 35
SECTION 10.5 Governing Law................................................. 35
SECTION 10.6 Costs, Expenses and Taxes..................................... 35
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 10.7 Submission to Jurisdiction.................................. 36
SECTION 10.8 Waiver of Jury Trial........................................ 36
SECTION 10.9 Integration................................................. 37
SECTION 10.10 Counterparts................................................ 37
SECTION 10.11 Acknowledgment and Consent.................................. 37
SECTION 10.12 No Partnership or Joint Venture............................. 38
SECTION 10.13 No Proceedings.............................................. 38
SECTION 10.14 Severability of Provisions.................................. 38
SECTION 10.15 Recourse to Buyer........................................... 38
</TABLE>
iii
<PAGE>
EXHIBITS
EXHIBIT A Form of Purchase Money Note
EXHIBIT B Form of Seller Assignment Certificate
SCHEDULES
SCHEDULE 1 Litigation and Other Proceedings
SCHEDULE 2 Changes in Financial Condition
SCHEDULE 3 Offices of the Seller where Records are Maintained
SCHEDULE 4 Legal Names, Trade Names and Names Under Which the Companies Do
Business
APPENDIX
APPENDIX A Definitions
iv
<PAGE>
This AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, dated as of May
29, 1996 (this "Agreement"), is made between AMERICAN PAD & PAPER COMPANY OF
DELAWARE, INC., a Delaware corporation ("APP"), certain subsidiaries of APP
that are listed on the signature pages hereto or that become party hereto in
accordance with the terms hereof (together with APP, the "Sellers"), and NOTEPAD
FUNDING CORPORATION, a Delaware corporation ("Buyer"). Except as otherwise
defined herein, capitalized terms have the meanings that Appendix A assigns to
them, and this Agreement shall be interpreted in accordance with the conventions
set forth in Part B of Appendix A.
WHEREAS, the Sellers and Buyer entered into a Receivables Purchase
Agreement dated as of October 31, 1995 (the "Original Purchase Agreement"),
pursuant to which the Sellers agreed to sell Receivables that they owned on
October 31, 1995 and from time to time thereafter owned to Buyer, and Buyer
agreed to purchase such Receivables from the Sellers from time to time;
WHEREAS, (i) Buyer, APP and the Trustee entered into the Existing Pooling
and Servicing Agreement pursuant to which Buyer transferred its interest in the
Receivables to the Trust and (ii) the Pooling Agreement amends and restates the
Existing Pooling Agreement in its entirety;
WHEREAS, pursuant to the Pooling Agreement, Buyer intends to transfer its
interests in the Receivables sold pursuant hereto to the Trust in order to,
among other things, finance its purchases hereunder; and
WHEREAS, the Sellers and Buyer wish to amend and restate the Original
Purchase Agreement in its entirety effective upon the date hereof to read as set
forth in this Purchase Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 Agreement to Purchase and Sell. On the terms and subject to
the conditions set forth in this Agreement (including the conditions to
purchases set forth in Article IV), each Seller agrees to sell, transfer,
assign, set over and otherwise convey to Buyer and Buyer agrees to purchase from
each Seller, at the times set forth in Section 1.2, all of such Seller's right,
title and interest in, to and under:
<PAGE>
(a) each Receivable of such Seller that existed and was owing to such
Seller as at the closing of such Seller's business on the Initial Cut-Off
Date,
(b) each Receivable created by such Seller that arises during the
period from and including the closing of such Seller's business on the
Initial Cut-Off Date to but excluding the Purchase Termination Date,
(c) all Related Security with respect to all Receivables of such
Seller,
(d) all proceeds of the foregoing, including all funds received by
any Person in payment of any amounts owed (including invoice prices,
finance charges, interest and all other charges, if any) in respect of any
Receivable described above or Related Security with respect to any such
Receivable, or otherwise applied to repay or discharge any such Receivable
(including insurance payments that a Seller or the Servicer applies in the
ordinary course of its business to amounts owed in respect of any such
Receivable (it being understood that property insurance covering inventory
is not so applied and is not included in this grant) and net proceeds of
any sale or other disposition of repossessed goods that were the subject of
any such Receivable) or other collateral or property of any Obligor or any
other party directly or indirectly liable for payment of such Receivables,
and
(e) all Records relating to any of the foregoing.
If the transfer, assignment, set-over, grant and conveyance described in
Section 1.1 of the Original Purchase Agreement and this Section 1.1 are deemed
to have created a security interest in the property described in that Section
1.1 of the Original Purchase Agreement, as amended and restated herein, each
Seller has granted to the Buyer, a security interest in that property (which is
deemed to be a first perfected security interest), and agrees that the Original
Purchase Agreement, as amended and restated by this Agreement constitutes a
security agreement under applicable law.
As used herein, (i) "Purchased Receivables" means the items listed above in
clauses (a) and (b), (ii) "Related Assets" means the items listed above in
clauses (c), (d) and (e), and (iii) "Specified Assets" means the Purchased
Receivables and the Related Assets.
SECTION 1.2 Timing of Purchases.
-------------------
(a) Initial Closing Date Purchases. All of the Specified Assets of the
Sellers that existed at the closing of APP's business on the Initial Cut-Off
Date were sold automatically to Buyer on the Closing Date.
(b) Regular Purchases. Except to the extent otherwise provided in Section
8.2 or (with respect to any Seller) Section 1.8, after the closing of APP's
business on the Initial
page 2
<PAGE>
Cut-Off Date until the closing of APP's business on the Business Day immediately
preceding the Purchase Termination Date, all Receivables and the Related Assets
of the Sellers shall be deemed to have been sold to Buyer pursuant hereto
immediately (and without further action by any Person) upon the creation of the
Receivable.
SECTION 1.3 Consideration for Purchases. On the terms and subject to the
conditions set forth in this Agreement, Buyer agrees to make Purchase Price
payments to the Sellers in accordance with Article III.
SECTION 1.4 No Recourse. Except as specifically provided in this
Agreement, the sale and purchase of Specified Assets under this Agreement shall
be without recourse to the Sellers; it being understood that (i) each Seller
shall be liable to Buyer for all representations, warranties, covenants and
indemnities made by such Seller pursuant to the terms of this Agreement, all of
which obligations are limited so as not to constitute recourse to such Seller
for the credit risk of the Obligors, and (ii) APP shall be liable to Buyer to
the extent specified in the Seller Guaranty.
SECTION 1.5 No Assumption of Obligations Relating to Receivables, Related
Assets or Contracts. None of Buyer, the Servicer nor the Trustee shall have any
obligation or liability to any Obligor or other customer or client of a Seller
(including any obligation to perform any of the obligations of such Seller under
any Receivable, related Contracts or any other related purchase orders or other
agreements). No such obligation or liability is intended to be assumed by Buyer,
the Servicer or the Trustee hereunder, and any assumption is expressly
disclaimed.
SECTION 1.6 True Sales. The Sellers and Buyer intend the transfers of
Specified Assets hereunder to be true sales by the Sellers to Buyer that are
absolute and irrevocable and that provide Buyer with the full benefits of
ownership of the Receivables, and none of the Sellers nor Buyer intends the
transactions contemplated hereunder to be, or for any purpose to be
characterized as, loans from Buyer to any Seller. However, if such transfers are
deemed to constitute loans, each Seller hereby grants to Buyer (for the benefit
of itself and its successors and assigns) a security interest in the Specified
Assets (which shall be deemed to be a first perfected security interest), and
agrees that this Agreement shall constitute a security agreement under
applicable law.
SECTION 1.7 Addition of Sellers. Any Subsidiary of APP may become a
Seller hereunder and sell its accounts receivable and property of the types that
constitute Related Assets hereunder to Buyer if (x) the last sentence of this
Section applies or (y) the Modification Condition is satisfied with respect to
such addition. APP and its Subsidiary that is proposed to be added as a Seller
shall give to Buyer and the Trustee (and, if any outstanding Investor
Certificates are rated, the Rating Agencies) not less than 30 days' prior
written notice of the effective date of the addition of the Subsidiary as a
Seller. Once the notice has been given, any addition of a Subsidiary of APP as a
Seller pursuant to this
page 3
<PAGE>
section shall become effective on the first Business Day following the
expiration of the 30-day period (or such later date as may be specified in the
notice) on which (i) the Modification Condition has been satisfied, (ii) APP has
given the notice described in Section 3.5(e) of the Pooling Agreement to Buyer,
(iii) the Servicer shall have delivered to the Trustee a supplement to the
Settlement Statement then in effect as described in Section 3.5(e) of the
Pooling Agreement and APP shall have confirmed in writing to the Trustee that
the Seller Guaranty covers Obligations of such Seller, and (iv) the Subsidiary
and the parties hereto shall have executed and delivered the agreements,
instruments and other documents and the amendments or other modifications to the
Transaction Documents (including without limitation financing statements, lien
searches and opinions), in form and substance reasonably satisfactory to Buyer
and the Trustee, that Buyer or the Trustee reasonably determines are necessary
or appropriate to effect the addition. The Modification Condition need not be
satisfied as to any new Seller if (x) the new Seller is in the same line of
business as one or more existing Sellers or a related line of business, (y) the
aggregate Unpaid Balance of the new Seller's outstanding Receivables on the last
Cut-Off Date prior to the day that it becomes a Seller is less than 5% of the
aggregate Unpaid Balance of all Receivables (excluding such new Seller's
Receivables) on such Cut-Off Date and (z) after giving effect to the addition of
such new Seller, there shall be no more than three Exempt Persons during the
twelve month period ending on such day.
SECTION 1.8 Termination of Status as a Seller. (a) At any time when more
than one Person is a Seller, a Seller may terminate its obligation to sell all
of its Receivables and Related Assets or the Receivables and Related Assets
(collectively, the "Terminated Receivables Assets") of one or more lines of
business of such Seller (the "Terminated Business Line(s)") to Buyer if:
(i) such Seller (a "Terminating Seller") shall have given Buyer not
less than 30 days' prior written notice of its intention to terminate such
obligations, which notice shall be given by Buyer to the Trustee and the
Rating Agencies (the date on which such notice is given being the
"Terminating Seller Notice Date"); provided that such 30 day prior notice
period shall be shortened to a period of two Business Days in the case of
a termination of Regency;
(ii) an Authorized Officer of the Terminating Seller shall have
certified that the termination by the Terminating Seller of its status
as a Seller or its sale of the Terminated Receivables Assets will not
have a Material Adverse Effect;
(iii) both immediately before and after giving effect to such
termination by the Terminating Seller, no Early Amortization Event or
Unmatured Early Amortization Event shall have occurred and be continuing or
shall reasonably be expected to occur; and
page 4
<PAGE>
(iv) either, concurrent with the effectiveness of such termination,
(i) the Terminating Seller will cease to be an Affiliate of APP, (ii) all
or substantially all of the assets of the Terminating Seller have been sold
to a Person that is not an Affiliate of APP, (iii) the Terminated Business
Line(s) have been sold to a Person that is not an Affiliate of APP, or (iv)
such Terminating Seller is a Permitted Terminating Seller; provided that
this subclause (iv) may be waived by Trustee if the Modification Condition
is satisfied.
"Permitted Terminating Seller" means (i) Regency and (ii) any other
Terminating Seller that satisfies the following requirements:
(x) the aggregate Unpaid Balance of such Terminating Seller's
Receivables on the Cut-Off Date immediately preceding the Terminating
Seller Notice Date would not exceed 20% of the aggregate Unpaid Balance of
all Receivables originated, calculated as of such Cut-Off Date, and (y) the
aggregate Unpaid Balance of such Terminating Seller's Receivables on such
Cut-Off Date, together with the Previously Terminated Seller Amount, would
not exceed 33% of the sum of the Previously Terminated Seller Amount and
the aggregate Unpaid Balance of all Receivables.
"Previously Terminated Seller Amount" means, on any day, the aggregate
Unpaid Balance of Receivables originated by all Sellers (other than Regency)
previously terminated pursuant to this subsection 1.8(a), calculated with
respect to any Seller as of the Cut-Off Date immediately preceding its
Terminating Seller Notice Date.
(b) Any termination by a Seller shall become effective on the first
Business Day that follows the day on which the requirements of clause (a) shall
have been satisfied (or such later date specified in the notice or certificate
referred to in the clauses). Any termination by a Seller shall terminate its
rights and obligations hereunder to sell all of its Receivables and Related
Assets or to sell the Terminated Receivables Assets hereunder to Buyer and
Buyer's agreement, with respect to the Terminating Seller, to purchase the
Receivables and Related Assets or the Terminated Receivables Assets (as the case
may be); provided, however, that the termination shall not relieve the
Terminating Seller of any of its other Obligations, to the extent the
Obligations relate to Receivables (and Related Assets with respect thereto)
originated by the Terminating Seller prior to the effective date of the
termination.
(c) A Seller's rights and obligations to sell all of its Receivables and
Related Assets or to sell the Terminated Receivables Assets to Buyer shall
terminate immediately if (i) such Seller ceases to be a Subsidiary of APP, (ii)
all or substantially all of the assets of such Seller have been sold to a Person
that is not an Affiliate of APP, or (iii) the Terminated Business Line(s) have
been sold to a Person that is not an Affiliate of APP; provided, however, that
the termination shall not relieve such Seller of any of its other Obligations,
to the extent the Obligations relate to Receivables (and Related Assets with
respect thereto)
page 5
<PAGE>
originated by such Seller prior to the effective date of the termination. In
connection with a termination described in the preceding sentence, the
Terminating Seller may require Buyer to exercise its rights under Section 13.19
of the Pooling Agreement to cause the Trustee to 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 or all of the
Terminated Receivables Assets to a Person designated by the Terminating Seller
against receipt, 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 that the Buyer paid for such Receivables and
Related Assets with respect thereto and (ii) the aggregate Unpaid Balance of
such Receivables). No such release and conveyance shall, however, be permitted
if as a result thereof, any APP Person would acquire the Receivables.
ARTICLE II
CALCULATION OF PURCHASE PRICE
SECTION 2.1 Calculation of Purchase Price. (a) On each Business Day, the
Servicer shall deliver to Buyer, the Trustee and APP a Daily Report with respect
to Buyer's purchases of Receivables from the Sellers:
(i) that are to be made on the Closing Date (in the case of the Daily
Report to be delivered on the Closing Date) or
(ii) that were made on the immediately preceding Business Day (in the
case of each subsequent Daily Report).
(b) On each day when Receivables are purchased by Buyer from a Seller
pursuant to Article I, the "Purchase Price" to be paid to such Seller on such
day for the Purchased Receivables and Related Assets that are to be sold by such
Seller on such day shall be determined in accordance with the following formula:
PP = AUB x PPP
where:
PP = the aggregate Purchase Price for the Purchased Receivables and
Related Assets to be purchased from such Seller on such day;
AUB = the "Aggregate Unpaid Balance" of the Purchased Receivables that
are to be purchased from such Seller on such day. For purposes of
this calculation, "Aggregate Unpaid Balance" shall mean (i) for
purposes of calculating the Purchase Price to be paid to such
Seller on the Closing
page 6
<PAGE>
Date, the sum of the Unpaid Balance of each Receivable generated
by such Seller, as measured as at the closing of such Seller's
business on the Initial Cut-Off Date, and (ii) for purposes of
calculating the Purchase Price on each Business Day thereafter,
the sum of the Unpaid Balance of each Receivable to be purchased
from such Seller on such day, calculated at the time of the
Receivable's sale to Buyer; and
PPP = the Purchase Price Percentage applicable to the Receivables to be
purchased from such Seller on such day, as determined pursuant to
Section 2.2.
SECTION 2.2 Definitions and Calculations Related to Purchase Price
Percentage.
(a) "Purchase Price Percentage" for the Receivables to be sold by a Seller
on any day during a Settlement Period shall mean the percentage determined in
accordance with the following formula:
PPP = 100% - (LD + PDRR)
where:
PPP = the Purchase Price Percentage in effect during such Settlement
Period,
LD = the Loss Discount (expressed as a percentage) in effect during
such Settlement Period, as determined pursuant to subsection (b)
below, and
PDRR = the Purchase Discount Reserve Ratio (expressed as a percentage) in
effect during such Settlement Period, as determined on such day
pursuant to subsection (c) below, and
The Purchase Price Percentage, the Loss Discount and the Purchase Discount
Reserve Ratio shall be recomputed by the Servicer on each Report Date, in each
case as of the then most recent Cut-Off Date, and shall become effective on the
next Settlement Date and shall be effective for the Settlement Period beginning
on such Settlement Date.
(b) "Loss Discount" in effect during such Settlement Period means a
percentage equal to the Loss to Liquidation Ratio (expressed as a percentage) as
in effect during such Settlement Period (it being understood that the allocation
of certain miscellaneous items will be required to be estimated for this
purpose).
(c) "Purchase Discount Reserve Ratio" for the Receivables to be sold on
any day during a Settlement Period shall mean a percentage determined in
accordance with the following formula:
page 7
<PAGE>
PDRR = (TD/360 x DR) + PD
where:
PDRR = the Purchase Discount Reserve Ratio in effect during such
Settlement Period,
TD = the Turnover Days during the Calculation Period preceding the
first day of such Settlement Period,
DR = the Discount Rate (expressed as a percentage) in effect during
such Settlement Period as determined pursuant to subsection (d)
below, and
PD = a profit discount equal to 0.05%.
(d) "Discount Rate" for the Receivables to be sold on any day during a
Settlement Period shall mean a fraction (expressed as a percentage) having (i) a
numerator equal to 12, multiplied by an amount equal to the sum of (x) the
accrued Carrying Costs for the Calculation Period preceding the first day of
such Settlement Period and (y) the Current Purchase Money Note Carrying Costs,
and (ii) a denominator equal to the aggregate Unpaid Balance of the Receivables
as of the last day of the Calculation Period preceding the first day of such
Settlement Period.
ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING, ETC.
SECTION 3.1 Purchase Price Payments. (a) On the Closing Date and on the
Business Day following each day on which any Receivables are purchased from a
Seller by Buyer pursuant to Article I, on the terms and subject to the
conditions of this Agreement, Buyer shall pay to such Seller the Purchase Price
for the Receivables and Related Assets purchased on such day by Buyer from such
Seller by (i) making a cash payment (on the basis of the Purchase Price owing to
such Seller) to APP to the extent that Buyer has cash available to make the
payment pursuant to Section 3.3 and (ii) if the Purchase Price to be paid for
the Receivables and Related Assets exceeds the amount of any cash payment on
such day to such Seller pursuant to clause (i), by automatically increasing the
principal amount of the Purchase Money Note by the amount of the excess;
provided, however, that Buyer may not pay such portion of the Purchase Price by
increasing the principal amount of the Purchase Money Note if, after giving
effect thereto, the outstanding principal amount of the Purchase Money Note
would exceed the Maximum Exposure Amount.
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APP shall maintain a bookkeeping account for the benefit of the Sellers,
and shall evidence the obligation of Buyer to pay each Seller the portion of the
Purchase Price for such Seller's Receivables that has been deferred pursuant to
the preceding paragraph. APP shall be responsible for allocating cash payments
and amounts evidenced by the Purchase Money Note among the Sellers and shall
maintain sufficient records with respect to the Purchase Money Note such that,
on any day, it would be able to identify the amount owed by Buyer to each
Seller. APP and each other Seller agree that, prior to the Seller Maturity Date,
Buyer shall be required to make payments in respect of the payment obligations
evidenced by the Purchase Money Note only to the extent that it has cash
available, after taking into account amounts required to be established as
reserves pursuant to the Transaction Documents, amounts paid to Holders in
respect of interest, principal and other amounts owing to such Holders and
amounts paid in connection with the purchase of newly generated Receivables.
The "Maximum Exposure Amount" shall be the lowest amount specified in any
Supplement or PI Agreement as the "Maximum Exposure Amount."
(b) On each Business Day, the "Noncomplying Receivables and Dilution
Adjustment" for a Seller shall be equal to the difference (whether the
difference is positive or negative) between (i) the sum of (A) such Seller's
Seller Dilution Adjustment, if any, for the immediately preceding Business Day,
as shown in the Daily Report for such day, plus (B) such Seller's Seller
Noncomplying Receivables Adjustment, if any, for the immediately preceding
Business Day, as shown in the Daily Report for such day, in the case of each of
clauses (A) and (B), as the amounts are determined pursuant to Section 3.5,
minus (ii) the amount of any payments (if any) that Buyer shall have received on
the immediately preceding Business Day on account of a Seller Noncomplying
Receivable originated by such Seller that has been the subject of an earlier
Seller Noncomplying Receivables Adjustment. If such Seller's Noncomplying
Receivables and Dilution Adjustment is positive on any day, Buyer shall reduce
the Purchase Price payable to such Seller on such day by the absolute value of
such Noncomplying Receivables and Dilution Adjustment. If instead the
Noncomplying Receivables and Dilution Adjustment for such Seller is negative on
any day, Buyer shall increase the Purchase Price payable to such Seller on such
day by the absolute value of the Noncomplying Receivables and Dilution
Adjustment.
(c) If a positive Noncomplying Receivables and Dilution Adjustment for a
Seller on any day exceeds the Purchase Price payable by Buyer to such Seller on
such day, or if such day falls on or after the Purchase Termination Date, then
the principal amount of the Purchase Money Note shall be reduced automatically
by the amount of the excess and such Seller (if different than APP) shall owe
such amount to APP on open account.
(d) If, on any day prior to the Purchase Termination Date, the principal
amount of the Purchase Money Note is zero, then the amount of the excess of a
positive Noncomplying Receivables and Dilution Adjustment for such Seller on
such day over the Purchase Price payable by Buyer to such Seller on such day
(the "Purchase Price Credit") shall be credited
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against the Purchase Price payable by Buyer to such Seller for subsequent
Purchases of Receivables and Related Assets by Buyer. If any Purchase Price
Credit for such Seller has not been fully applied on or prior to the fifth
Business Day (or a mutually agreed upon earlier day) after the creation of the
Purchase Price Credit, then, on the Business Day that follows the end of the
five Business Day (or shorter) period, APP shall pay to Buyer in cash the
remaining unapplied amount of the Purchase Price Credit and such Seller (if
different than APP) shall owe such amount to APP on open account.
(e) If, on any day on or after the Purchase Termination Date, the
principal amount of the Purchase Money Note has been reduced to zero and there
is a positive Noncomplying Receivables and Dilution Adjustment for such Seller
for such day, then APP shall pay to Buyer in cash the amount of the Noncomplying
Receivables and Dilution Adjustment on the next succeeding Business Day and such
Seller (if different than APP) shall owe such amount to APP on open account.
(f) If, on any day on or after the Purchase Termination Date, there is a
negative Noncomplying Receivables and Dilution Adjustment for a Seller for such
day, then Buyer shall pay to such Seller in cash the amount of the Noncomplying
Receivables and Dilution Adjustment no later than the Final Maturity Date, and
the amount, until paid, shall bear interest at the rate of interest publicly
announced from time to time by the Trustee as its reference rate, which interest
shall also be paid no later than the Final Maturity Date.
SECTION 3.2 The Purchase Money Note. On the date hereof, Buyer will
deliver to APP a promissory note, substantially in the form of Exhibit A,
payable to the order of APP for the benefit of the Sellers (such promissory
note, as the same may be amended, supplemented, endorsed or otherwise modified
from time to time, together with any promissory note issued from time to time in
substitution therefor or renewal thereof in accordance with the Transaction
Documents, being herein called the "Purchase Money Note"). The Purchase Money
Note is payable in full on the date that is one year and one day after the date
(the "Seller Maturity Date") on which all Investor Certificates and Purchased
Interests have been repaid in full and the Revolving Periods for all Investor
Certificates and Purchased Interests have terminated. The Purchase Money Note
bears interest at a rate per annum equal to the rate publicly announced by the
Trustee from time to time as its "reference" rate, determined as of each Cut-Off
Date. Buyer may prepay all or part of the outstanding balance of the Purchase
Money Note from time to time without any premium or penalty, unless the
prepayment would result in a default in Buyer's payment of any other amount
required to be paid by it under any Transaction Document.
SECTION 3.3 Application of Collections and Other Funds. If, on any day,
Buyer receives proceeds of transfers pursuant to the Pooling Agreement, Buyer
shall apply the funds as follows:
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(a) first, to pay its existing expenses and to set aside funds for
the payment of expenses that are then accrued (in each case to the extent
such expenses are permitted to exist under Section 7.2(l) of the Pooling
Agreement).
(b) second, to pay the Purchase Price pursuant to Section 3.1 for
Receivables and Related Assets purchased by Buyer from the Sellers on such
day (in the case of the Closing Date) or the next preceding Business Day,
(c) third, to repay amounts owed by Buyer to APP or the other Sellers
under the Purchase Money Note,
(d) fourth, to pay amounts owed pursuant to Section 3.1(f), and
(e) fifth, if Seller shall elect, to declare and pay dividends to APP
to the extent permitted by law.
SECTION 3.4 Servicing of Receivables and Related Assets. Consistent with
Buyer's ownership of the Receivables and the Related Assets, as between the
parties to this Agreement, Buyer shall have the sole right to service,
administer and collect the Receivables, to assign the right and to delegate the
right to others. Without limiting the generality of Section 10.11, each Seller
hereby acknowledges and agrees that Buyer shall assign to the Trustee for the
benefit of the Investor Certificateholders the rights and interests granted by
the Sellers to Buyer hereunder and agrees to cooperate fully with the Servicer
and the Trustee in the exercise of the rights. As more fully described in
Section 7.4(b) and in the Pooling Agreement, the Trustee may exercise the rights
in the place of Buyer (as assignee or otherwise) only after the designation of a
Servicer other than APP pursuant to Section 10.2 of the Pooling Agreement. At
Trustee's request, each Seller will (A) assemble all of the Records that are
necessary or appropriate to collect the Receivables and Related Transferred
Assets, and shall make the same 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 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.
SECTION 3.5 Adjustments for Noncomplying Receivables, Dilution and Cash
Discounts. (a) If at any time any of Buyer, the Servicer, the Trustee or a
Seller shall determine that any Receivable identified by the Servicer as an
Eligible Receivable on the date of Purchase thereof by Buyer or the contribution
thereof to Buyer was in fact a Seller Noncomplying Receivable on such date, or
that any of the representations and warranties made by the related Seller in
Section 5.1(k) with respect to the Receivable was not true on
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such date, such Seller shall be deemed to have received on the date of such
determination a Collection of the Receivable in an amount equal to the Unpaid
Balance of the Receivable (the sum of all such amounts for such Seller on any
day being called the "Seller Noncomplying Receivables Adjustment" for such
Seller for such day), and such Seller shall pay the amount of the Seller
Noncomplying Receivables Adjustment to Buyer in the manner provided for in
Section 3.1.
(b) If on any day the aggregate Unpaid Balance of the Receivables sold or
contributed to Buyer on or before such date by a Seller is reduced in any manner
described in the definition of "Dilution" (the total of the reductions being
called the "Seller Dilution Adjustment" for the Seller for such day), then such
Seller shall be deemed to have received on such day a Collection of Receivables
in the amount of the Seller Dilution Adjustment and such Seller shall pay the
amount to Buyer in the manner provided in Section 3.1.
SECTION 3.6 Payments and Computations, Etc. (a) All amounts to be paid by
a Seller to Buyer hereunder shall be paid in accordance with the terms hereof no
later than 1:00 p. m., New York City time, on the day when due in Dollars in
immediately available funds to an account that Buyer shall from time to time
specify in writing. Payments received by Buyer after such time shall be deemed
to have been received on the next Business Day. In the event that any payment
becomes due on a day that is not a Business Day, then the payment shall be made
on the next Business Day. Each Seller shall, to the extent permitted by law, pay
to Buyer, on demand, interest on all amounts not paid when due hereunder at 2%
per annum above the interest rate on the Purchase Money Note in effect on the
date the payment was due; provided, however, that the interest rate shall not at
any time exceed the maximum rate permitted by applicable law. All computations
of interest payable hereunder shall be made on the basis of a year of 360 days
for the actual number of days (including the first but excluding the last day)
elapsed.
(b) All amounts to be paid by Buyer to a Seller hereunder shall be paid no
later than 2:00 p. m., New York City time, on the day when due in Dollars in
immediately available funds to an account that APP shall from time to time
specify in writing. Payments received by such Seller after such time shall be
deemed to have been received on the next Business Day. In the event that any
payment becomes due on a day that is not a Business Day, then such payment shall
be made on the next Business Day.
ARTICLE IV
CONDITIONS TO PURCHASES
SECTION 4.1 Conditions Precedent to Initial Purchase. The initial purchase
hereunder is subject to the conditions precedent that (i) each of the conditions
precedent to the execution, delivery and effectiveness of each other Transaction
Document (other than a
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condition precedent in any other Transaction Document relating to the
effectiveness of this Agreement) shall have been fulfilled to the satisfaction
of Buyer, and (ii) Buyer shall have received (or in the case of subsection (g)
below, shall have delivered) each of the following, on or before the date
hereof, each (unless otherwise indicated) dated the date hereof and each in form
and substance satisfactory to Buyer:
(a) Seller Assignment Certificates. A Seller Assignment Certificate
from each Seller in the form of Exhibit B, duly completed, executed and
delivered by such Seller,
(b) Resolutions. A copy of the resolutions of the Board of Directors
of each Seller approving this Agreement and the other Transaction Documents
to be delivered by it hereunder and the transactions contemplated hereby
and thereby and addressing such other matters as may be required by Buyer,
certified by its Secretary or Assistant Secretary, each as of a recent date
acceptable to Buyer,
(c) Good Standing Certificate of each Seller; Certificates as to
Foreign Qualification of each Seller. A good standing certificate for each
Seller, issued by the Secretary of State of the jurisdiction of its
incorporation and of each state in which such Seller transacts business, is
required to be in good standing and where the failure to be in good
standing could materially and adversely affect the condition (financial or
otherwise), properties, business or results of operations of such Seller,
each dated as of a recent date,
(d) Incumbency Certificate. A certificate of the Secretary or
Assistant Secretary of each Seller certifying, as of a recent date
reasonably acceptable to Buyer, the names and true signatures of the
officers authorized on such Seller's behalf to sign the Transaction
Documents to be delivered by such Seller (on which certificate Buyer, the
Trustee and the Servicer may conclusively rely until such time as Buyer
shall receive from such Seller (with a copy to the Trustee and the
Servicer), a revised certificate meeting the requirements of this
subsection),
(e) Other Transaction Documents. Original copies, executed by each of
the parties thereto in such reasonable number as shall be specified by
Buyer, of each of the other Transaction Documents to be executed and
delivered in connection herewith,
(f) Opinions of Counsel. The following opinions, in form and
substance satisfactory to Buyer:
(i) opinions of Kirkland & Ellis as to certain corporate matters,
Federal and state tax and UCC matters, true sale and non-consolidation; and
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(ii) opinions of Hirsch & Westheimer as to certain Texas state
tax and UCC matters,
(g) Purchase Money Note. The Purchase Money Note, executed by Buyer,
and
(h) License Agreement. Duly executed counterparts of a software
license agreement between APP and Buyer.
SECTION 4.2 Certification as to Representations and Warranties. Each
Seller, by accepting the Purchase Price paid for each Purchase, shall be deemed
to have certified, with respect to the Receivables and Related Assets to be sold
by it on such day, that its representations and warranties contained in Article
V (excluding, with respect to any day after the date hereof, Section 5.1(i)) are
true and correct on and as of such day, with the same effect as though made on
and as of such day.
SECTION 4.3 Effect of Payment of Purchase Price. Upon the payment of the
Purchase Price (whether in cash or by an increase in the Purchase Money Note
pursuant to Section 3.1) for any Purchase, title to the Receivables and the
Related Assets included in the Purchase shall rest in Buyer, whether or not the
conditions precedent to the Purchase were in fact satisfied; provided, however,
that Buyer shall not be deemed to have waived any claim it may have under this
Agreement for the failure by a Seller in fact to satisfy any such condition
precedent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Representations and Warranties of the Sellers. In order to
induce Buyer to enter into this Agreement and to make purchases hereunder, each
Seller hereby makes the representations and warranties set forth in this section
with respect to itself at the times and to the extent set forth in Section 4.2.
(a) Organization and Good Standing. Such Seller is a corporation duly
organized and validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has full power and authority to own
its properties and to conduct its business as the properties presently are
owned and the business presently is conducted. Such Seller had at all
relevant times, and now has, all necessary power, authority, and legal
right to own and sell its Receivables and the Related Assets.
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(b) Due Qualification. Such Seller 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.
(c) Power and Authority; Due Authorization. Such Seller has (i) all
necessary power and authority to (A) execute and deliver this Agreement and
the other Transaction Documents to which it is a party, (B) perform its
obligations under this Agreement and the other Transaction Documents to
which it is a party, and (C) sell and assign the Receivables and the
Related Assets on the terms and subject to the conditions herein and
therein provided and (ii) duly authorized by all necessary action the sale
and assignment and the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and
the consummation of the transactions provided for in this Agreement and the
other Transaction Documents to which it is a party.
(d) Valid Sale; Binding Obligations. Each sale made by such Seller
pursuant to this Agreement, and each contribution made to Buyer pursuant to
the Subscription Agreement, shall constitute a valid sale, transfer, and
assignment of all of such Seller's right, title and interest in, to and
under the Receivables and the Related Assets of such Seller to Buyer that
is perfected and of first priority under the UCC and otherwise, enforceable
against creditors of, and purchasers from, such Seller and free and clear
of any Adverse Claim (other than any Permitted Adverse Claim or any Adverse
Claim arising solely as a result of any action taken by Buyer hereunder or
by the Trustee under the Pooling Agreement); and this Agreement
constitutes, and each other Transaction Document to which such Seller is a
party when duly executed and delivered will constitute, a legal, valid and
binding obligation of such Seller, 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) 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 such Seller
and the fulfillment of the terms hereof and thereof 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 such Seller is a party or by which it or any of its
properties is
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bound, (ii) result in the creation or imposition of any Adverse Claim upon
any of the Receivables or Related Assets other than pursuant to 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. Except as described in Schedule
1, (i) there is no action, suit, proceeding or investigation pending or, to
the best knowledge of such Seller, 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 each of clauses
(i) and (ii), (A) asserts the invalidity of this Agreement or any other
Transaction Document, (B) seeks to prevent the sale of any Receivables or
Related Assets by such Seller to Buyer, the issuance of the applicable
Seller Assignment Certificate 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 such Seller 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 purchases
hereunder or the applicable Seller Assignment Certificate, in the case of
each of the foregoing whether 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 such Seller, and all notices to and filings
(except, in respect of enforceability against an Obligor that is the United
States government or any of its agencies or instrumentalities, any filings
under the Assignment of Claims Act and any consents required by states with
respect to any Receivables arising from any state or local governmental
agency or instrumentality, so long as such Receivables are not reported as
Eligible Receivables), 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 conveyance of Receivables and Related Assets or the due
execution, delivery and performance by such Seller of this Agreement, such
Seller's Seller Assignment Certificate or any other Transaction Document to
which it is a party and the consummation of the transactions contemplated
by this Agreement, have been
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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) 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.
(i) Financial Condition. The Pro Forma Financial Data, copies of
which have been furnished to Buyer and the Trustee, fairly present in all
material respects on a pro forma basis the consolidated financial position
and business of APP and its consolidated subsidiaries as at the dates
specified therein and the consolidated results of the operations of APP and
its consolidated Subsidiaries for the periods ended on such dates, all in
accordance with GAAP consistently applied throughout the periods reflected
therein, and, except as set forth in Schedule 2, since September 30, 1995
through the date hereof there has been no material adverse change in the
condition (financial or otherwise), business or operations of APP and its
consolidated subsidiaries. "Pro Forma Financial Data" means the pro forma
consolidated financial data included in the offering memorandum, dated
November 17, 1995, with respect to the proposed offering of Senior
Subordinated Notes due 2005 to be issued by APP.
(j) Margin Regulations. No use of any funds obtained by such Seller
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.
(k) Quality of Title.
(i) Immediately before each purchase to be made by Buyer
hereunder and each contribution to be made under the Subscription
Agreement to Buyer, each Receivable and Related Asset of such Seller
that is then to be transferred to Buyer thereunder, and the related
Contracts, shall be owned by such Seller free and clear of any Adverse
Claim (other than any Permitted Adverse Claim); provided that the
existence of an Adverse Claim that is released on the First Issuance
Date (upon application of the proceeds of the issuance of Certificates
on that date) shall not constitute a breach of this representation and
warranty; and such Seller shall have made all filings and shall have
taken all other action under applicable law in each relevant
jurisdiction in order to protect and perfect the ownership interest of
Buyer and its successors in the Receivables and Related Assets against
all creditors of, and purchasers from, such Seller.
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(ii) Whenever Buyer makes a purchase hereunder or accepts a
contribution under the Subscription Agreement from such Seller, it
shall have acquired a valid and perfected first priority ownership
interest in each Transferred Asset, free and clear of any Adverse
Claim (other than any Permitted Adverse Claim).
(iii) No effective financing statement or other instrument
similar in effect that covers all or part of any Receivable originated
by such Seller, any interest therein or any Related Asset with respect
thereto is on file in any recording office except (x) such as may be
filed (A) in favor of such Seller in accordance with the Contracts,
(B) in favor of Buyer pursuant to this Agreement or the Subscription
Agreement and (C) in favor of the Trustee, for the benefit of the
Certificateholders, in accordance with the Pooling Agreement and (y)
such as may have been identified to Buyer prior to the date hereof and
termination statements relating to which have been placed with LEXIS
Document Services for filing on the First Issuance Date or the first
Business Day thereafter. No effective financing statement or
instrument similar in effect relating to perfection that covers any
inventory of such Seller that might give rise to Receivables is on
file in any recording office except for (so long as an Intercreditor
Agreement is in effect) financing statements or instruments in favor
of creditors of such Seller bound by such Intercreditor Agreement.
(iv) No Purchase by Buyer from such Seller 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.
(v) Each Purchase by Buyer from such Seller constitutes a true
and valid sale of the Receivables and Related Assets under applicable
state law and true and valid assignments and transfers for
consideration (and not merely a pledge of the Receivables and Related
Assets for security purposes), enforceable against the creditors of
such Seller, and no Receivables or Related Assets transferred to Buyer
hereunder or under the Subscription Agreement shall constitute
property of such Seller.
(l) Eligible Receivables. (i) On the date of each purchase of
Receivables hereunder, each such Receivable, unless otherwise identified to
Buyer and the Trustee by the Servicer in the Daily Report for such date, is
an Eligible Receivable, and (ii) on the date of each Daily Report or
Settlement Statement that identifies a Receivable as an Eligible
Receivable, such Receivable is an Eligible Receivable.
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(m) Accuracy of Information. All written information furnished on and
after the Closing Date by such Seller or any other APP Person to Buyer, the
Servicer or the Trustee pursuant to or in connection with any Transaction
Document or any transaction contemplated herein or therein shall not
contain any untrue statement of a material fact or omit to state material
facts necessary to make the statements made not misleading, in each case on
the date the statement was made and in light of the circumstances under
which the statements were made or the information was furnished.
(n) Offices. The principal place of business and chief executive
office of such Seller is located at the address set forth under such
Seller's signature hereto, and any other location which has been such
Seller's principal place of business or chief executive office during the
past 4 months or in which such Seller keeps (or has kept during the past 4
months) Records, Contracts, purchase orders and agreements related to the
Receivables or Related Assets (and all original documents relating thereto)
is specified in Schedule 3 (or at such other locations, notified to the
Servicer and the Trustee in accordance with Section 6.1(f), in
jurisdictions where all action required pursuant to Section 7.3 has been
taken and completed).
(o) Account Banks and Payment Instructions. The names and addresses
of all the banks, together with the account numbers of the accounts at the
banks, into which Collections are paid as of the date hereof have been
accurately identified to Buyer in a letter from such Seller to Buyer dated
the date hereof or have been specified in the notices as shall have been
delivered thereafter pursuant to Section 6.3(c). Each Account Bank has
executed and delivered an Account Agreement to Buyer and the Trustee. Such
Seller has instructed all Obligors (other than Obligors in respect of,
prior to September 30, 1996, Regency Receivables and, prior to June 30,
1996, Card Receivables) to submit all payments on the Receivables and
Related Assets directly to one of the Lockbox Accounts or Concentration
Accounts. Any payments not made directly to the Account Banks will be
forwarded to the Account Banks on the next Business Day.
(p) Compliance with Applicable Laws. Such Seller is in compliance
with the requirements of all applicable laws, rules, regulations and orders
of all Governmental Authorities (federal, state, local or foreign, and
including 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.
(q) Legal Names. Except as set forth in Schedule 4, since October 31,
1989 such Seller has not been known by any legal name other than its
corporate name as of the date hereof, except to the extent permitted
otherwise pursuant to Section 6.3(e), nor has such Seller been the subject
of any merger or other corporate reorganization since October 31, 1989 that
resulted in a change of name, identity or corporate
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structure. Such Seller uses no trade names other than its actual corporate
name and the trade names set forth in Schedule 4.
(r) Investment Company Act. Such Seller 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.
(s) Taxes. Such Seller 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 Related Assets.
(t) Pension Plans. Each pension or employee benefit plan as to which
such Seller has liability complies in all material respects with applicable
laws and regulations (except where failure to comply would not give rise to
a Material Adverse Effect), and no contribution failure with respect
thereto sufficient to give rise to an Adverse Claim (other than a Permitted
Adverse Claim) in favor of the Pension Benefit Guaranty Corporation has
occurred.
SECTION 5.2 Representations and Warranties of Buyer. From the date hereof
until the Purchase Termination Date, Buyer hereby represents and warrants that
(a)(i) this Agreement has been duly executed and delivered by Buyer and (ii)
constitutes the legal, valid and binding obligation of Buyer, 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, and (b) the execution, delivery and performance of this Agreement does
not violate any applicable law or any agreement to which Buyer is a party or by
which its properties are bound.
ARTICLE VI
GENERAL COVENANTS OF THE SELLERS
SECTION 6.1 Affirmative Covenants. From the date hereof until the first
day following the Purchase Termination Date on which all Obligations of the
Sellers shall have been finally and fully paid and performed and the Invested
Amount for each Series or Purchased Interest shall have been reduced to zero,
unless Buyer shall otherwise give its
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prior written consent, each Seller hereby agrees that it will perform the
covenants and agreements set forth in this section.
(a) Compliance with Laws, Etc. Such Seller will comply in all
material respects with all applicable laws, rules, regulations, judgments,
decrees and orders (including those relating to the Receivables, the
Related Assets, the related Contracts of such Seller 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. Such Seller will 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) Receivables Reviews. Such Seller shall, during regular business
hours upon not less than five Business Days' prior notice, permit Buyer and
its agents or representatives, at the expense of such Seller, (i) to
examine and make copies of and abstracts from, and to conduct accounting
reviews of, all Records in the possession or under the control of such
Seller relating to the Receivables or Related Assets generated by such
Seller, and (ii) to visit the offices and properties of such Seller for the
purpose of examining the materials described in clause (i) above, and to
discuss matters relating to any Receivables or any Related Assets of such
Seller or such Seller's performance hereunder with any of the Authorized
Officers of such Seller or, with the prior consent of an Authorized Officer
of such Seller, with employees of such Seller having knowledge of such
matters (the examinations set forth in the foregoing clauses (i) and (ii)
being herein called a "Seller Receivables Review"). Buyer and its agents or
representatives shall be entitled to conduct Seller Receivables Reviews
whenever Buyer, in its reasonable judgment, deems it appropriate; provided,
that prior to the occurrence and continuance of an Early Amortization
Event, Buyer (or its agent or representative) shall give such Seller at
least five Business Days' prior notice of any Seller Receivables Review,
and Buyer shall have the right to request a Seller Receivables Review not
more than twice in any calendar year.
(d) Keeping of Records and Books of Account. Such Seller shall
maintain and implement administrative and operating procedures (including
an ability to recreate records evidencing its Receivables and Related
Assets in the event of the destruction of the originals thereof), and shall
keep and maintain all documents, books, records and other information that,
in the reasonable determination of Buyer and the Trustee, are necessary or
advisable in accordance with prudent industry practice and custom for
transactions of this type for the collection of all Receivables
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and the Related Assets. Upon the reasonable request of Buyer made at any
time after the occurrence and continuance of a Servicer Default, such
Seller will deliver copies of all books and records maintained pursuant to
this subsection to the Trustee. Such Seller shall maintain at all times
accurate and complete books, records and accounts relating to the
Receivables, Related Assets and Contracts and all Collections thereon in
which timely entries shall be made. Such books and records shall be marked
to indicate the sales of all Receivables and Related Assets hereunder and
shall include (i) all payments received and all credits and extensions
granted with respect to the Receivables and (ii) the return, rejection,
repossession, or stoppage in transit of any merchandise, the sale of which
has given rise to a Receivable that has been purchased by Buyer.
(e) Performance and Compliance with Receivables and Contracts. Such
Seller will, at its expense, timely and fully perform and comply with all
provisions, covenants and other promises required to be observed by it
under the Contracts of such Seller related to the Receivables and Related
Assets, the breach of which provisions, covenants or promises would have a
substantial likelihood of having a Material Adverse Effect.
(f) Location of Records and Offices. Such Seller will keep its
principal place of business and chief executive office, and the offices
where it keeps all Records related to the Receivables and the Related
Assets (and all original documents relating thereto), at the addresses
referred to in Schedule 3 or, upon not less than 30 days' prior written
notice given by such Seller to Buyer, the Trustee and the Rating Agencies,
at such other locations in jurisdictions where all action required by
Section 7.3 shall have been taken and completed.
(g) Credit and Collection Policies. Such Seller will comply in all
material respects with its Credit and Collection Policy in regard to each
Receivable of such Seller and the Related Assets and the Contracts related
to each such Receivable, where the failure so to comply, individually or in
the aggregate for all such failures, would have a substantial likelihood of
having a Material Adverse Effect.
(h) Separate Corporate Existence of Buyer. Such Seller hereby
acknowledges that the Trustee, on behalf of the Trust, is entering into the
transactions contemplated by the Transaction Documents in reliance upon
Buyer's identity as a legal entity separate from such Seller and the other
APP Persons. Therefore, from and after the date hereof until the first day
following the Purchase Termination Date on which all Obligations shall have
been fully paid and performed and the Invested Amount for each Series or
Purchased Interest shall have been reduced to zero, such Seller will, and
will cause each other APP Person to, take all reasonable steps to continue
their respective identities as separate legal entities and to make it
apparent to third Persons
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that each is an entity with assets and liabilities distinct from those of
Buyer and that Buyer is not a division of the Servicer, such Seller, APP or
any other Person.
(i) Payment Instructions to Obligors. Such Seller will instruct all
Obligors to submit all payments either (i) to one of the lockboxes
maintained at the Lockbox Banks for deposit in a Lockbox Account or to a
Concentration Account or (ii) directly to one of the Lockbox Accounts;
provided that the Sellers need not direct Obligors in respect of Regency
Receivables (prior to September 30, 1996) or Card Receivables (prior to
June 30, 1996) 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.
(j) Segregation of Collections. Such Seller shall use reasonable
efforts to minimize the deposit of any funds other than Collections into
any of the Lockbox Accounts and, to the extent that any such funds
nevertheless are deposited into any of the Lockbox Accounts, shall promptly
identify any such funds, or shall cause the funds to be so identified, to
Buyer, the Servicer and the Trustee (following which notice, Buyer shall
cause the Servicer to return all the funds to such Seller).
(k) Identification of Eligible Receivables. Such Seller 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 to be sold on that date that are not Eligible Receivables, and
(ii) except as permitted in Section 3.5(c) of the Pooling Agreement, notify
Buyer prior to the occurrence of a Purchase if a Receivable to be sold
hereunder will, to such Seller's knowledge, not be an Eligible Receivable
as of the date of Purchase.
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(l) Accuracy of Information. All written information furnished on
and after the Closing Date by such Seller or any other APP Person to Buyer,
the Servicer or the Trustee pursuant to or in connection with any
Transaction Document or any transaction contemplated herein or therein
shall not contain any untrue statement of a material fact or omit to state
material facts necessary to make the statements made not misleading, in
each case on the date the statement was made and in light of the
circumstances under which the statements were made or the information was
furnished.
(m) 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 taxes or assessments, (except only such taxes or assessments the
validity of which are being contested in good faith by appropriate
proceedings and with respect to which such Seller 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).
SECTION 6.2 Reporting Requirements. From the date hereof until the first
day following the Purchase Termination Date on which all Obligations of the
Sellers shall have been finally and fully paid and performed and the Invested
Amount for each Series or Purchased Interest shall have been reduced to zero,
such Seller agrees that it will, unless Buyer and the Trustee shall otherwise
give prior written consent, and (with respect to the notices described below in
subsections (c) and (d)) unless the Modification Condition has been satisfied),
furnish to Buyer and the Trustee and, in the case of the notices described below
in subsections (c), (d) and (f), to the Rating Agencies:
(a) Quarterly Financial Statements. Within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of APP, copies
of the unaudited consolidated balance sheets of APP and its consolidated
Subsidiaries as at the end of the fiscal quarter and the related unaudited
statements of earnings and cash flows, in each case for the fiscal quarter
and for the period from the beginning of the fiscal year through the end of
such fiscal quarter, prepared in accordance with GAAP consistently applied
throughout the periods reflected therein and certified (subject to year end
adjustments and the omission of footnotes) by the chief financial officer
or chief accounting officer of APP; provided, that if at any time APP shall
have more than one Non-Guarantor Subsidiary (as such term is used in the
financial statements prepared by APP prior to the date hereof), the
financial statements provided pursuant to this section shall be
supplemented by a schedule showing the information that would have been
presented in such financial statements if Buyer were the only Non-Guarantor
Subsidiary,
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(b) Annual Financial Statements. As soon as possible and in any
event within 90 days after the end of each fiscal year of APP, a copy of
the consolidated balance sheet of APP and its Consolidated Subsidiaries as
at the end of the fiscal year and the related statements of earnings,
stockholders' equity and cash flows of APP and its Consolidated
Subsidiaries for the fiscal year, setting forth in each case in comparative
form the corresponding figures for the preceding fiscal year and prepared
in accordance with GAAP consistently applied throughout the periods
reflected therein, certified, without Impermissible Qualification, by Price
Waterhouse LLC (or such other independent certified public accountants of a
nationally recognized standing in the United States of America as shall be
selected by APP); provided, that if at any time APP shall have more than
one Non-Guarantor Subsidiary (as such term is used in the financial
statements prepared by APP prior to the date hereof), the financial
statements provided pursuant to this section shall be supplemented by a
schedule showing the information that would have been presented in such
financial statements if Buyer were the only Non-Guarantor Subsidiary,
(c) Early Amortization Events. As soon as possible, and in any event
within five Business Days after an Authorized Officer of such Seller 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 such Seller describing the event and the action that such Seller
proposes to take with respect thereto, in each case in reasonable detail,
(d) Material Adverse Effect. As soon as possible and in any event
within five Business Days after an Authorized Officer of such Seller has
knowledge thereof, written notice that describes in reasonable detail any
event or occurrence that, individually or in the aggregate for all such
events or occurrences, has had, or that would have a substantial likelihood
of having, a Material Adverse Effect,
(e) Proceedings. As soon as possible and in any event within five
Business Days after an Authorized Officer of such Seller has knowledge
thereof, written notice of (i) any litigation, investigation or proceeding
of the type described in Section 5.1(f) not previously disclosed to Buyer
and (ii) any judgment, settlement or other final disposition with respect
to any such previously disclosed litigation, investigation or proceeding,
and
(f) Other. Promptly, from time to time, (i) such other information,
documents, records or reports respecting the Receivables or the Related
Assets or (ii) such other publicly available information respecting the
condition or operations, financial or otherwise, of such Seller, in each
case as Buyer may from time to time reasonably request in order to protect
the interests of Buyer, the Trustee or the Certificateholders under or as
contemplated by this Agreement.
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SECTION 6.3 Negative Covenants. From the date hereof until the first day
following the Purchase Termination Date on which all Obligations of the Sellers
shall have been finally and fully paid and performed and the Invested Amount for
each Series or Purchased Interest shall have been reduced to zero, unless Buyer
shall otherwise give its prior written consent, each Seller hereby agrees that
it will perform the covenants and agreements set forth in this section.
(a) Sales, Liens, Etc. Except as otherwise provided herein or in the
Pooling Agreement, such Seller will not (i)(A) sell, assign (by operation
of law or otherwise) or otherwise transfer to any Person, (B) pledge any
interest in, (C) grant, create, incur, assume or permit to exist any
Adverse Claim (other than Permitted Adverse Claims) to or in favor of any
Person upon or with respect to, or (D) cause to be filed any financing
statement or equivalent document relating to perfection with respect to any
Transferred Asset or any Contract related to any Receivable, or upon or
with respect to any lockbox or account to which any Collections of any such
Receivable or any Related Assets are sent or any interest therein, or (ii)
assign to any Person any right to receive income from or in respect of any
of the foregoing.
In the event that such Seller fails to keep any Specified Assets free
and clear of any Adverse Claim (other than a Permitted Adverse Claim),
Buyer may (without limiting its other rights with respect to such Seller's
breach of its obligations hereunder) make reasonable expenditures necessary
to release the Adverse Claim. Buyer shall be entitled to indemnification
for any such expenditures pursuant to the indemnification provisions of
Article IX. Alternatively, Buyer may deduct such expenditures as an offset
to the Purchase Price owed to such Seller hereunder.
Such Seller will not pledge or grant any security interest in its
inventory, the Purchase Money Note or the capital stock of Buyer unless
prior to any pledge or grant such Seller, Buyer, the Trustee and the person
for whose benefits the pledge or grant is being made have entered into an
Intercreditor Agreement.
(b) Extension or Amendment of Receivables; Change in Credit and
Collection Policy or Contracts. Such Seller will not, (i) without the
prior written consent of Buyer and the Trustee, which consent will not be
unreasonably withheld, extend, amend or otherwise modify the terms of any
Receivable or Contract in a manner that would have a substantial likelihood
of having Material Adverse Effect on the Investor Certificateholders or the
Buyer or (ii) change the terms and provisions of the Credit and Collection
Policy in any material respect unless (x) with respect to collection
policies, the change is made with the prior written approval of the
Trustee, Buyer and each Agent and the Modification Condition is satisfied
with respect thereto, (y) with respect to collection procedures, the change
is made with prior written notice to the Trustee, Buyer and each Agent and
no Material Adverse Effect on any Series or Purchased Interest would result
and (z) with respect to accounting policies relating to
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Receivables that have become Write-Offs, the change is made in accordance
with GAAP.
(c) Change in Payment Instructions to Obligors. Such Seller will not
(i) add or terminate any bank as an Account Bank from those listed in the
letter referred to in Section 5.1(o) unless, prior to any such addition or
termination, Buyer, the 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, Buyer and the 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 Buyer and the
Trustee, or (ii) make any change in its instructions to Obligors, given in
accordance with Section 5.1(o), 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.
(d) Mergers, Acquisitions, Sales, etc. Except for (i) mergers or
consolidations in which such Seller or another Seller is the surviving
Person, (ii) mergers or consolidations of a subsidiary of APP into such
Seller or (iii) mergers or consolidations in which the surviving Person
expressly assumes the performance of this Agreement and the Modification
Condition shall have been satisfied with respect to the consolidation or
merger, such Seller will not be a constituent corporation to any merger or
consolidation; provided, however, that satisfaction of the Modification
Condition will not be required for a merger or consolidation with a Person
referred to in this clause (iii) if (A) such Person is in the same line of
business as one or more of the existing Sellers or a related line of
business, (B) the aggregate Unpaid Balance of Receivables to be added to
the Trust as a result of such merger or consolidation (calculated as of the
last Cut-Off Date prior to the merger or consolidation) is less than 5% of
the aggregate Unpaid Balance of all Receivables on such Cut-Off Date, and
(C) after giving effect to such merger or consolidation, there shall be no
more than three Exempt Persons during the twelve month period ending on the
date of such merger or consolidation. Such Seller will give the Rating
Agencies and the Trustee notice of any such permitted merger or
consolidation promptly following completion thereof. Such Seller will not,
directly or indirectly, 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 Assets, in each case other than pursuant to this Agreement or the
Subscription Agreement.
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(e) Change in Name. Such Seller will not (i) change its corporate
name or (ii) change the name under or by which it does business in any
manner that would or may make any financing statement filed by such Seller
in accordance herewith seriously misleading within the meaning of Section
9-402(7) of an applicable enactment of the UCC, in each case unless such
Seller shall have given Buyer, the Servicer, the Trustee and the Rating
Agencies 30 days' prior written notice thereof and unless, prior to any
change in name, such Seller shall have taken and completed all action
required by Section 7.3.
(f) Certificate of Incorporation. Such Seller will not cause Buyer
to amend Article X, or XI of its Certificate of Incorporation without the
prior written consent of the Requisite Persons, which consent will not be
unreasonably withheld or delayed.
(g) Amendments to Transaction Documents. Such Seller will not amend
or otherwise modify or supplement any Transaction Document to which it is a
party, or permit to exist any amendment, modification or supplement to any
Intercreditor Agreement affecting Receivables originated by it, unless (i)
Buyer shall have given its prior written consent to each amendment,
modification or supplement and (ii) the Modification Condition shall have
been satisfied.
(h) Accounting for Purchases. Such Seller shall prepare its
financial statements in accordance with GAAP, and any financial statements
that are made publicly available and which are consolidated to include
Buyer will contain footnotes stating that such Seller has sold its
Receivables. Such Seller shall not prepare any financial statements that
account for the transactions contemplated in this Agreement in any manner
other than as a sale of the Specified Assets by such Seller to Buyer, or in
any other respect account for or treat the transactions contemplated in
this Agreement (including but not limited to accounting and, where taxes
are not consolidated, for tax reporting purposes) in any manner other than
as a sale of the Specified Assets by such Seller to Buyer.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE SPECIFIED ASSETS
SECTION 7.1 Rights of Buyer. (a) Subject to Section 7.4(b), each Seller
hereby authorizes Buyer, the Servicer and/or their respective designees to take
any and all steps in such Seller's name and on behalf of such Seller that Buyer,
the Servicer and/or their respective designees determine are reasonably
necessary or appropriate to collect all amounts due under any and all Specified
Assets, including endorsing the name of such Seller on
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checks and other instruments representing Collections and enforcing such
Seller's rights under such Specified Assets.
(b) Except as set forth in Section 3.5 with respect to Seller Noncomplying
Receivables, Buyer shall have no obligation to account for, to replace, to
substitute or to return any Specified Asset to any Seller. Buyer shall have no
obligation to account for, or to return Collections, or any interest or other
finance charge collected pursuant thereto, to any Seller, irrespective of
whether such Collections and charges are in excess of the Purchase Price for the
Specified Assets.
(c) Buyer shall have the unrestricted right to further assign, transfer,
deliver, hypothecate, subdivide or otherwise deal with the Specified Assets, and
all of Buyer's right, title and interest in, to and under this Agreement and the
Subscription Agreement, on whatever terms Buyer shall determine, pursuant to the
Pooling Agreement or otherwise.
(d) Buyer shall have the sole right to retain any gains or profits created
by buying, selling or holding the Specified Assets and shall have the sole risk
of and responsibility for losses or damages created by such buying, selling or
holding.
SECTION 7.2 Responsibilities of the Sellers. Anything herein to the
contrary notwithstanding, each Seller hereby agrees:
(a) to deliver directly to the Servicer (for Buyer's account), within
two Business Days after receipt thereof, any Collections that it receives,
in the form so received, and agrees that all such Collections shall be
deemed to be received in trust for Buyer and shall be maintained and
segregated separate and apart from all other funds and moneys of such
Seller until delivery of such Collections to the Servicer.
(b) to perform all of its obligations hereunder and under the
Contracts related to the Receivables and Related Assets to the same extent
as if the Receivables had not been sold hereunder, and the exercise by
Buyer or its designee or assignee of Buyer's rights hereunder or in
connection herewith shall not relieve such Seller from any of its
obligations under the Contracts or Related Assets related to the
Receivables.
(c) Such Seller hereby grants to Buyer an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to
take in the name of such Seller all steps necessary or advisable to
endorse, negotiate or otherwise realize on any writing or other right of
any kind held or transmitted by such Seller or transmitted or received by
Buyer (whether or not from such Seller) in connection with any Transferred
Asset.
(d) To the extent that such Seller does not own the computer software
that such Seller uses to account for Receivables, such Seller shall use
reasonable efforts to
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provide Buyer and the Trustee with such licenses, sublicenses and/or
assignments of contracts as Buyer or the Trustee shall require with regard
to all services and computer hardware or software used by such Seller that
relate to the servicing of the Specified Assets.
SECTION 7.3 Further Action Evidencing Purchases. Each Seller agrees that
from time to time, at its expense, it will promptly, upon reasonable request,
execute and deliver all further instruments and documents, and take all further
action, in order to perfect, protect or more fully evidence the purchase by
Buyer or contribution to Buyer of the Receivables and the Related Assets under
this Agreement or the Subscription Agreement (as applicable), or to enable Buyer
to exercise or enforce any of its rights under any Transaction Document. Each
Seller further agrees that from time to time, at its expense, it will promptly,
upon request, take all action that Buyer, the Servicer or the Trustee may
reasonably request in order to perfect, protect or more fully evidence the
purchase or contribution of the Receivables and the Related Assets or to enable
Buyer or the Trustee (as the assignee of Buyer) to exercise or enforce any of
its rights hereunder or under any other Transaction Document. Without limiting
the generality of the foregoing, upon the request of Buyer, each Seller will:
(a) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as Buyer or the Trustee may reasonably determine to be necessary
or appropriate, and
(b) 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 PAPER &
PAPER COMPANY OF DELAWARE, INC. ("APP"), CERTAIN OF ITS
SUBSIDIARIES AND NFC; 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 THE INITIAL
SERVICER, AND MANUFACTURERS AND TRADERS TRUST COMPANY, AS
TRUSTEE."
Each Seller hereby authorizes Buyer or its designee to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or
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any of the Receivables and Related Assets of such Seller, in each case whether
now existing or hereafter generated by such Seller. Except for material
performance obligations of such Seller to any Obligor hereunder or under any of
the Contracts, if (i) such Seller fails to perform any of its agreements or
obligations under this Agreement and does not remedy the failure within the
applicable cure period, if any, and (ii) Buyer in good faith reasonably believes
that the performance of such agreements and obligations is necessary or
appropriate to protect its interests under this Agreement, then Buyer or its
designee may (but shall not be required to) perform, or cause performance of,
such agreement or obligation and the reasonable expenses of Buyer or its
designee or assignee incurred in connection with such performance shall be
payable by such Seller as provided in Section 9.1.
SECTION 7.4 Collection of Receivables; Rights of Buyer and Its Assignees.
(a) Each Seller hereby transfers to the Trustee (as transferee of Buyer's
interest in the Specified Assets) the ownership of, and the exclusive dominion
and control over, each of the Bank Accounts and all related lockboxes owned by
such Seller, and such Seller hereby agrees to take any further action that Buyer
or the Trustee may reasonably request in order to effect or complete the
transfer. Each Seller further agrees to use reasonable efforts to prevent funds
other than proceeds of the Specified Assets from being deposited in any Bank
Account.
(b) Buyer may, at any time after an Early Amortization Event or Servicer
Default, direct the Obligors of Receivables, or any of them, to pay all amounts
payable under any Transferred Asset directly to the Trustee or its designees.
Furthermore, each Seller shall, at the request of Buyer and at such Seller's
expense, promptly give notice of the Trust's interest in the Receivables of the
Obligor and the Related Assets to each such Obligor and direct that payments be
made directly to the Trustee or its designee, which notice shall be acceptable
in form and substance to Buyer. In addition, each Seller hereby authorizes Buyer
to take any and all steps in such Seller's name and on its behalf that are
necessary or desirable, in the reasonable determination of Buyer, to collect all
amounts due under any and all Specified Assets, including endorsing such
Seller's name on checks and other instruments representing Collections and
enforcing the Specified Assets and the Contracts related to the Receivables. The
Trustee may exercise any of the foregoing rights in the place of Buyer (as
assignee or otherwise) at any time following the designation of a Servicer other
than APP pursuant to Section 10.2 of the Pooling Agreement.
(c) At any time when (i) an Early Amortization Event shall have occurred
and remain continuing or (ii) a Servicer other than APP has been designated
pursuant to Section 10.2 of the Pooling Agreement, each Seller shall, at Buyer's
request, assemble all of the Records that evidence the Receivables and Related
Assets originated by such Seller and the Contracts related to the Receivables,
or that are otherwise necessary or desirable to collect the Receivables or
Related Assets, and make the same available to Buyer or the Trustee at a place
selected by the Trustee or its designee.
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<PAGE>
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination by the Sellers. Prior to the commencement of a
Series Amortization Period or an Early Amortization Period in respect of any
Series or Purchased Interest, the Sellers may terminate all of their agreements
to sell Receivables hereunder to Buyer by giving Buyer and the Trustee not less
than ten Business Days' prior written notice of their election not to continue
to sell Receivables to Buyer; provided that such notice must be given as to all
Sellers and provided further, that such notice shall specify the effective date
of such termination. The Trustee shall notify the Certificateholders of all
Series within five Business Days of receiving any such termination notice.
SECTION 8.2 Automatic Termination. (a) The agreement of each Seller to
sell Receivables hereunder, and the agreement of Buyer to purchase Receivables
from such Seller hereunder, shall terminate automatically upon the first date on
which all Series and Purchased Interests are in accumulation, amortization or
early amortization periods; provided, however, that if, at any time prior to
such date, an event specified in the definition of Bankruptcy Event occurs
(without regard to the 60 day grace period specified in paragraph (a) of that
definition) as a result of a bankruptcy proceeding being filed against a Seller,
then on and after the date on which such bankruptcy proceeding is filed until
the dismissal of the proceeding Buyer shall not purchase Receivables and Related
Assets from such Seller.
(b) If the Internal Revenue Service or the PBGC files one or more Tax or
ERISA Liens against the assets of Transferor or any Seller (including
Receivables), then (unless the Modification Condition is satisfied) Buyer shall
not purchase any Receivables or Related Assets.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Indemnities by the Sellers. Without limiting any other rights
that any RPA Indemnified Party (as defined below) may have hereunder or under
applicable law, each Seller agrees to indemnify Buyer, each of its successors,
permitted transferees and assigns, and all officers, directors, shareholders,
controlling Persons, employees, affiliates and agents of any of the foregoing
(each of the foregoing Persons being individually called a "RPA Indemnified
Party"), forthwith on demand, from and against any and all damages, losses,
claims (whether on account of settlements or otherwise), judgments, liabilities
and related reasonable costs and expenses (including reasonable attorneys' fees
and disbursements) awarded against or incurred by any of them arising out of or
as a result of any of the following (all of the foregoing being collectively
called "RPA Indemnified Losses"):
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(a) any representation or warranty made in writing by such Seller (or
any of its Authorized Officers) under any of the Transaction Documents, any
Settlement Statement, any Daily Report or any other information or report
delivered by or on behalf of such Seller or the Servicer with respect to
such Seller or the Receivables or Related Assets originated by such Seller
(including without limitation any representation, warranty, information or
report relied upon by Buyer in connection with the offering or sale of any
Certificate or Purchased Interest), that contained any untrue statement of
a material fact or omitted to state material facts necessary to make the
statements not misleading when made,
(b) the failure by such Seller to comply with any applicable law,
rule or regulation with respect to any Receivable or any Related Asset or
to comply with any Contract related thereto, or the nonconformity of any
Receivable, the related Contract or any Related Assets with any such
applicable law, rule or regulation,
(c) the failure to vest and maintain vested in Buyer a first priority
perfected ownership interest in the Receivables originated by such Seller,
the Related Assets, the related Collections and the proceeds of each of the
foregoing, free and clear of any Adverse Claim (other than an Adverse Claim
created in favor of Buyer pursuant to this Agreement or in favor of the
Trustee pursuant to the Pooling Agreement), whether existing at the time of
the sale of such Receivable or at any time thereafter and without regard to
whether such Adverse Claim was a Permitted Adverse Claim,
(d) any failure of such Seller to perform its duties or obligations
in accordance with the provisions of the Transaction Documents,
(e) any products liability claim, personal injury or property damage
suit, environmental liability claim or any other claim or action by a party
other than Buyer of whatever sort, whether sounding in tort, contract or
any other legal theory, arising out of or in connection with the goods or
services that are the subject of any Specified Assets with respect thereto
or Collections thereof,
(f) the failure to file, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Specified Assets
or Collections, whether at the time of any sale or at any subsequent time,
(g) any dispute, claim, offset or defense (other than the discharge
in bankruptcy) of an Obligor to the payment of any Receivable originated by
such Seller or Related Asset, or purported Receivable or Related Asset,
including a defense based on such Receivable's or the related Contract's
not being a legal, valid and binding obligation of the Obligor enforceable
against it in accordance with its terms, and
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<PAGE>
(h) any tax or governmental fee or charge (other than franchise taxes
and taxes on or measured by the net income of Buyer or any of its
assignees), all interest and penalties thereon or with respect thereto, and
all reasonable out-of-pocket costs and expenses, including the reasonable
fees and expenses of counsel in defending against the same, that may arise
by reason of the purchase or ownership of the Receivables originated by
such Seller or any Related Asset connected with any such Receivables.
Notwithstanding the foregoing (and with respect to clause (ii) below, without
prejudice to the rights that Buyer may have pursuant to the other provisions of
this Agreement or the provisions of any of the other Transaction Documents), in
no event shall any RPA Indemnified Party be indemnified for any RPA Indemnified
Losses (i) resulting from gross negligence or willful misconduct on the part of
the RPA Indemnified Party (or gross negligence or wilful misconduct on the part
of its officers, directors, employees, affiliates or agents) or the failure of
such RPA Indemnified Party to perform its obligations under the Transaction
Documents, (ii) to the extent the same includes losses in respect of Receivables
and reimbursement therefor that would constitute credit recourse to such Seller
for the amount of any Receivable or Related Asset not paid by the related
Obligor, (iii) resulting from the action or omission of the Servicer (unless the
Servicer is a APP Person), (iv) to the extent the same are or result from lost
profits, (v) to the extent the same are or result from taxes on or measured by
the net income of the RPA Indemnified Party and (vi) to the extent the same
constitute consequential, special or punitive damages.
If for any reason the indemnification provided above in this section
is unavailable to a RPA Indemnified Party or is insufficient to hold a RPA
Indemnified Party harmless, then such Seller shall contribute to the maximum
amount payable or paid to the RPA Indemnified Party as a result of the loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the RPA Indemnified Party on the one hand
and such Seller on the other hand, but also the relative fault of the RPA
Indemnified Party (if any) and such Seller and any other relevant equitable
considerations.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments; Waivers, Etc. (a) The provisions of this
Agreement may from time to time be amended, modified or waived, if such
amendment, modification or waiver is in writing and signed by Buyer and each
Seller (with respect to an amendment) or by Buyer (with respect to a waiver or
consent by it) and, in the case of any amendment, modification or waiver, to the
extent provided in Section 7.2(j) of the Pooling Agreement, by the Trustee, and
then the waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. This Agreement shall not be amended
unless
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<PAGE>
Buyer shall have delivered the proposed amendment to 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.
(b) No failure or delay on the part of Buyer, any RPA Indemnified
Party, or the Trustee or any other third party beneficiary referred to in
Section 10.11(a) in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power or
right preclude any other or further exercise thereof or the exercise of any
other power or right. No notice to or demand on any Seller in any case shall
entitle it to any notice or demand in similar or other circumstances. No waiver
or approval by Buyer or the Trustee under this Agreement shall, except as may
otherwise be stated in the waiver or approval, be applicable to subsequent
transactions. No waiver or approval under this Agreement shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 10.2 Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
certified mail, postage prepaid, by facsimile or by overnight courier, to the
intended party at the address or facsimile number of such party set forth under
its name on the signature pages hereof or at such other address or facsimile
number as shall be designated by the party in a written notice to the other
parties hereto given in accordance with this section. Copies of all notices and
other communications provided for hereunder shall be delivered to the Trustee
and the Rating Agencies at their respective addresses for notices set forth in
the Pooling Agreement. All notices and communications provided for hereunder
shall be effective, (a) if personally delivered, when received, (b) if sent by
certified mail, four Business Days after having been deposited in the mail,
postage prepaid and properly addressed, (c) if transmitted by facsimile, when
sent, receipt confirmed by telephone or electronic means and (d) if sent by
overnight courier, two Business Days after having been given to the courier
unless sooner received by the addressee.
SECTION 10.3 Cumulative Remedies. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. Without limiting
the foregoing, each Seller hereby authorizes Buyer, at any time and from time to
time, to the fullest extent permitted by law, to set-off, against any
Obligations of any Seller to Buyer that are then due and payable or that are not
then due and payable from a Seller to Buyer but have then accrued, any and all
indebtedness or other obligations at any time owing to any Seller by Buyer to or
for the credit or the account of any Seller or that are not then due and payable
from Buyer to a Seller but have then accrued.
SECTION 10.4 Binding Effect; Assignability; Survival of Provisions.
This Agreement shall be binding upon and inure to the benefit of Buyer and the
Sellers and their
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<PAGE>
respective successors and permitted assigns. No Seller may assign any of its
rights hereunder or any interest herein without (i) the prior written consent of
Buyer and (ii) the satisfaction of the Modification Condition. 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
first date following the Purchase Termination Date, but not later than the date
on which the Trust is terminated pursuant to Section 12.1 of the Pooling
Agreement, on which all Obligations shall have been finally and fully paid and
performed or such other time as the parties hereto shall agree and as to which
the Trustee (at the direction of the Requisite Persons) shall have given its
prior written consent, which consent shall not be unreasonably withheld or
delayed. The rights and remedies with respect to any breach of any
representation and warranty made by a Seller pursuant to Article V and the
indemnification and payment provisions of Article IX and Section 10.6 shall be
continuing and shall survive any termination of this Agreement.
SECTION 10.5 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, EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE INTERESTS OF BUYER
IN THE RECEIVABLES AND THE RELATED ASSETS ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 10.6 Costs, Expenses and Taxes. In addition to the obligations of
the Sellers under Article IX, the Sellers agree jointly and severally to pay on
demand:
(a) all reasonable out-of-pocket and other costs and expenses in
connection with the enforcement of this Agreement, the Seller Assignment
Certificates or the other Transaction Documents by Buyer or any successor
in interest to Buyer, and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution and delivery, and the filing and
recording, of this Agreement or the other Transaction Documents, and agrees
to indemnify each RPA Indemnified Party against any liabilities with
respect to or resulting from any delay in paying or omission to pay the
taxes and fees; provided however, that in no event shall any Seller be
liable for or pay any taxes (or interest, penalties, or additions to tax
with respect thereto) imposed upon or measured by the income of any RPA
Indemnified Party or any taxes imposed in lieu of income taxes.
SECTION 10.7 Submission to Jurisdiction. EACH PARTY HERETO HEREBY
IRREVOCABLY 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, AND HEREBY (A) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF THE
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN THE STATE OR FEDERAL COURT,
(B) IRREVOCABLY WAIVES, TO THE FULLEST
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<PAGE>
EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF THE ACTION OR PROCEEDING, AND (C) BUYER, IRREVOCABLY APPOINTS
LEXIS DOCUMENT SERVICES (THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF
AT 194 WASHINGTON AVENUE, NEW YORK, NEW YORK 12210, 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 BUYER OR THE
APPLICABLE SELLER IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S ABOVE
ADDRESS, AND BUYER AND EACH SELLER HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE
PROCESS AGENT TO ACCEPT THE SERVICE ON ITS BEHALF.
AS AN ALTERNATIVE METHOD OF SERVICE, EACH OF BUYER AND THE SELLERS 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 BUYER OR A SELLER (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 THE OTHER PARTY OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY
OTHER JURISDICTION.
SECTION 10.8 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 EITHER 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 10.9 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 between the parties hereto with
respect to the subject matter hereof and thereof, superseding all prior oral or
written understandings.
SECTION 10.10 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
SECTION 10.11 Acknowledgment and Consent. (a) The Sellers acknowledge that,
contemporaneously herewith, Buyer is selling, transferring, assigning, setting
over and otherwise conveying to the Trust all of Buyer's right, title and
interest in, to and under the Specified Assets, this Agreement and all of the
other Transaction Documents pursuant to Sections 2.1 and 2.4 of the Pooling
Agreement. The Sellers hereby consent to the sale,
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<PAGE>
transfer, assignment, set over and conveyance to the Trust by Buyer of all
right, title and interest of Buyer in, to and under the Specified Assets and all
of Buyer's rights to receive payments and pursue remedies under the Transaction
Documents (whether arising pursuant to the terms of this Agreement or otherwise
available at law or in equity), including (i) the right of Buyer, at any time,
to enforce this Agreement against the Sellers and the obligations of the Sellers
hereunder, (ii) the right to appoint a successor to the Servicer at the times
and upon the conditions set forth in the Pooling Agreement, and (iii) the right,
at any time, to give or withhold any and all consents, requests, notices,
directions, approvals, demands, extensions or waivers under or with respect to
this Agreement, any other Transaction Document or the obligations in respect of
the Sellers thereunder to the same extent as Buyer may do. Each of the parties
hereto acknowledges and agrees that the Trustee and the Trust are third party
beneficiaries of the rights of Buyer arising hereunder and under the other
Transaction Documents to which any Seller is a party. Each Seller hereby
acknowledges and agrees that it has no claim to or interest in any of the Bank
Accounts or the Transaction Accounts.
(b) The Sellers hereby agree to execute all agreements, instruments and
documents, and to take all other action, that Buyer or the Trustee reasonably
determines is necessary or appropriate to evidence its consent described in
subsection (a) above. To the extent that Buyer, individually or through the
Servicer, has granted or grants powers of attorney to the Trustee under the
Pooling Agreement, the Sellers hereby grant a corresponding power of attorney on
the same terms to Buyer. The Sellers hereby acknowledge and agree that Buyer, in
all of its capacities, shall assign to the Trustee for the benefit of the
Certificateholders the powers of attorney and other rights and interests granted
by the Sellers to Buyer hereunder and agrees to cooperate fully with the Trustee
in the exercise of the rights.
SECTION 10.12 No Partnership or Joint Venture. Nothing contained in this
Agreement shall be deemed or construed by the parties hereto or by any third
person to create the relationship of principal and agent or of partnership or of
joint venture.
SECTION 10.13 No Proceedings. Each Seller hereby agrees that it will not
institute against Buyer or the Trust, or join any other Person in instituting
against Buyer or the Trust, any insolvency proceeding (namely, any proceeding of
the type referred to in the definition of Event of Bankruptcy) so long as any
Investor 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
Investor Certificates shall have been outstanding. The foregoing shall not limit
the right of a Seller to file any claim in or otherwise take any action with
respect to any insolvency proceeding that was instituted against Buyer or the
Trust by any Person other than a Seller or any other APP Person (provided that
no such action may be taken by a Seller until such proceeding has continued
undismissed, unstayed and in effect for a period of 10 days).
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SECTION 10.14 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
or any of the other Transaction Documents.
SECTION 10.15 Recourse to Buyer. Except to the extent expressly
provided otherwise in the Transaction Documents, the obligations of Buyer under
the Transaction Documents to which it is a party are solely the obligations of
Buyer, and no recourse shall be had for payment of any fee payable by or other
obligation of or claim against Buyer that arises out of any Transaction Document
to which Buyer is a party against any director, officer or employee of Buyer.
The provisions of this section shall survive the termination of this Agreement.
[Remainder of page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
AMERICAN PAD & PAPER COMPANY
OF DELAWARE, INC.,
as Seller
By: /s/ 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
THE PRECIOUS COLLECTION, INC.
as Seller
By: /s/ Gregory M. Benson
-------------------------------------
Title: President
---------------------------------
Address: 17304 Preston Road
Suite 700
Dallas, Texas 75252-5613
Attention: Chief Financial Officer
Telephone: (214) 733-6200
Facsimile: (214) 733-6260
REGENCY THERMOGRAPHERS, INC.
as Seller
By: /s/ Gregory M. Benson
-------------------------------------
Title: President
---------------------------------
Address: 17304 Preston Road
Suite 700
Dallas, Texas 75252-5613
Attention: Chief Financial Officer
Telephone: (214) 733-6200
Facsimile: (214) 733-6260
<PAGE>
REGENCY THERMOGRAPHERS OF CALIFORNIA,
INC., as Seller
By: /s/ Gregory M. Benson
----------------------
Title: President
------------------
Address: 17304 Preston Road
Suite 700
Dallas, Texas 75252-5613
Attention: Chief Financial Officer
Telephone: (214) 733-6200
Facsimile: (214) 733-6260
REGENCY THERMOGRAPHERS OF ILLINOIS,
INC., as Seller
By: /s/ Gregory M. Benson
----------------------
Title: President
------------------
Address: 17304 Preston Road
Suite 700
Dallas, Texas 75252-5613
Attention: Chief Financial Officer
Telephone: (214) 733-6200
Facsimile: (214) 733-6260
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<PAGE>
REGENCY THERMOGRAPHERS OF WASHINGTON,
INC., as Seller
By: /s/ Gregory M. Benson
----------------------
Title: President
-----------------
Address: 17304 Preston Road
Suite 700
Dallas, Texas 75252-5613
Attention: Chief Financial Officer
Telephone: (214) 733-6200
Facsimile: (214) 733-6260
REGENCY-SONNELL GREETINGS, INC.,
as Seller
By: /s/ Gregory M. Benson
----------------------
Title: President
-----------------
Address: 17304 Preston Road
Suite 700
Dallas, Texas 75252-5613
Attention: Chief Financial Officer
Telephone: (214) 733-6200
Facsimile: (214) 733-6260
STATIONERY HOUSE INC. VIP DIVISION,
as Seller
By: /s/ Gregory M. Benson
----------------------
Title: President
-----------------
Address: 17304 Preston Road
Suite 700
Dallas, Texas 75252-5613
Attention: Chief Financial Officer
Telephone: (214) 733-6200
Facsimile: (214) 733-6260
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<PAGE>
NOTEPAD FUNDING CORPORATION
as the Buyer
By: /s/ 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
page 43
<PAGE>
EXHIBIT A
FORM OF PURCHASE MONEY NOTE
---------------------------
May 29, 1996
FOR VALUE RECEIVED, the undersigned, NOTEPAD FUNDING CORPORATION, a
Delaware corporation ("Buyer"), promises to pay to AMERICAN PAD & PAPER COMPANY
OF DELAWARE, INC., a Delaware corporation ("APP" and together with its
successors and assigns, the "Holder"), on the terms and subject to the
conditions set forth in this promissory note (this "Note") and in the Amended
and Restated Receivables Purchase Agreement of even date herewith (the
"Agreement") between Buyer and APP, an amount equal to the aggregate unpaid
purchase price for Receivables owed by Buyer to the Sellers pursuant to Article
III of the Agreement. Such amount, as shown in the records of the Servicer,
will be rebuttable presumptive evidence of the principal amount and interest
owing under this Note. APP holds this note for the benefit of all Sellers.
1. Purchase Agreement. This Note is the Purchase Money Note described in,
and is subject to the terms and conditions set forth in, the Agreement.
Reference is hereby made to the Agreement for a statement of certain other
rights and obligations of Buyer and APP.
2. Rules of Construction; Definitions. Certain rules of construction
governing the interpretation of this Note are set forth in Appendix A to the
Agreement and, except as otherwise specifically provided herein, capitalized
terms used but not defined herein have the meanings ascribed to them in Appendix
A to the Agreement. In addition, as used herein, the following terms have the
following meanings:
"Final Maturity Date" means the date occurring one year and one day
after the Final Scheduled Payment Date of the latest maturing Series or
Purchased Interest from time to time outstanding.
"Highest Lawful Rate" has the meaning set forth in paragraph 9.
"Reference Rate" means, with respect to any day occurring in a
Calculation Period, the rate of interest publicly announced from time to
time by Bankers Trust Company as its "prime rate" and in effect on the
first day of such Calculation Period, as determined by the Servicer.
3. Interest. Buyer promises to pay interest on the aggregate unpaid
principal amount of this Note outstanding on each day at an adjustable rate per
annum equal to the Reference Rate in effect on such day.
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<PAGE>
4. Interest Payment Dates. (a) Buyer shall pay accrued interest on this
Note on each Settlement Date and on the Final Maturity Date. Buyer also shall
pay accrued interest on the principal amount of each prepayment hereof on the
last day of each calendar month.
(b) Notwithstanding the provisions of paragraph 4(a), in the event that on
the date an interest payment is due hereunder the amount of funds available
therefor pursuant to the Pooling Agreement is insufficient to pay any amount due
pursuant to paragraph 4(a), then interest shall be payable only to the extent
that funds are available therefor in accordance with the Pooling Agreement. All
interest on this Note that is not paid when due pursuant to this paragraph shall
be payable on the next date on which an interest payment on this Note is due and
on which funds are available therefor pursuant to the Pooling Agreement, and all
such unpaid interest shall accrue interest at the Reference Rate until paid in
full.
5. Basis of Computation. Interest accrued hereunder shall be computed for
the actual number of days elapsed on the basis of a 360-day year.
6. Principal Payment Dates. Any unpaid principal of this Note shall only
become due and payable on the Final Maturity Date. Subject to the Subordination
Provisions, the principal amount of and accrued interest on this Note may be
prepaid on any Business Day without premium or penalty; provided, that no
prepayment shall be made by Buyer to the extent that such prepayment would
result in a default in the payment of any other amount required to be paid by
Buyer under any Transaction Document.
7. General. No failure or delay on the part of the Holder in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Note shall in any event be effective unless (a) the same shall be in
writing and signed and delivered by Buyer and APP, and (b) all consents required
for such actions under the Transaction Documents shall have been received by the
appropriate Persons.
8. Limitation on Interest. Notwithstanding anything in this Note to the
contrary, Buyer shall never be required to pay unearned interest on any amount
outstanding hereunder, and shall never be required to pay interest on the
principal amount outstanding hereunder, at a rate in excess of the maximum non-
usurious interest rate that may be contracted for, charged or received under
applicable federal or state law (such maximum rate being herein called the
"Highest Lawful Rate"). If the effective rate of interest that would otherwise
be payable under this Note would exceed the Highest Lawful Rate, or the Holder
shall receive any unearned interest or shall receive monies that are deemed to
constitute interest that would increase the effective rate of interest payable
by Buyer under this Note to a rate in excess of the Highest Lawful Rate, then
(a) the amount of interest that would otherwise be payable by Buyer under this
Note shall be reduced to the amount allowed by applicable law, and (b) any
page 2
<PAGE>
unearned interest paid by Buyer or any interest paid by Buyer in excess of the
Highest Lawful Rate shall be refunded to Buyer. Without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received by the Holder under this Note that are made for the purpose of
determining whether such rate exceeds the Highest Lawful Rate shall be made, to
the extent permitted by applicable usury laws (now or hereafter enacted), by
amortizing, prorating and spreading in equal parts during the actual period
during which any amount has been outstanding hereunder all interest at any time
contracted for, charged or received by APP in connection herewith. If at any
time and from time to time (i) the amount of interest payable to the Holder on
any date shall be computed at the Highest Lawful Rate pursuant to the provisions
of the foregoing sentence, and (ii) in respect of any subsequent interest
computation period the amount of interest otherwise payable to the Holder would
be less than the amount of interest payable to the Holder computed at the
Highest Lawful Rate, then the amount of interest payable to the Holder in
respect of such subsequent interest computation period shall continue to be
computed at the Highest Lawful Rate until the total amount of interest payable
to the Holder shall equal the total amount of interest that would have been
payable to the Holder if the total amount of interest had been computed without
giving effect to the provisions of the foregoing sentence.
9. No Negotiation. This Note is not negotiable.
10. Governing Law. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
11. Security Interest. The Seller may grant a security interest in or
otherwise pledge this Note as security, and any Person to whom such security
interest is granted or to whom this Note is pledged shall be bound by, and for
all purposes takes this Note subject to, the restrictions and other provisions
set forth herein.
12. Captions. Paragraph captions used in this Note are provided solely
for convenience of reference and shall not affect the meaning or interpretation
of any provision of this Note.
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<PAGE>
13. Restatement. This Note amends and restates the Purchase Money Note
dated October 31, 1995 and issued pursuant to the Original Purchase Agreement.
NOTEPAD FUNDING CORPORATION
By:
--------------------------------
Title:
----------------------------
page 4
<PAGE>
EXHIBIT B
FORM OF
SELLER ASSIGNMENT CERTIFICATE
-----------------------------
Reference is made to the Amended and Restated Receivables Purchase
Agreement of even date herewith (as the same may be amended, supplemented,
amended and restated or otherwise modified from time to time, the "Agreement")
between American Pad & Paper Company of Delaware, Inc., certain of its
subsidiaries and Notepad Funding Corporation ("Buyer"). Unless otherwise
defined herein, capitalized terms used herein have the meanings provided in
Appendix A to the Agreement.
The undersigned (the "Seller") hereby sells, transfers, assigns, sets over
and conveys unto Buyer and its successors and assigns all right, title and
interest of the Seller in, to and under:
(a) each Receivable of the Seller that existed and was owing to the
Seller as at the closing of the Seller's business on the Initial Cut-Off
Date,
(b) each Receivable created by the Seller that arises during the
period from and including the closing of the Seller's business on the
Initial Cut-Off Date to but excluding the Purchase Termination Date,
(c) all Related Security with respect to all Receivables of the
Seller,
(d) all proceeds of the foregoing, including all funds received by
any Person in payment of any amounts owed (including invoice prices,
finance charges, interest and all other charges, if any) in respect of any
Receivable described above or Related Security with respect to any such
Receivable, or otherwise applied to repay or discharge any such Receivable
(including insurance payments that the Seller or the Servicer applies in
the ordinary course of its business to amounts owed in respect of any such
Receivable (it being understood that property insurance covering inventory
is not so applied and is not included in this grant) and net proceeds of
any sale or other disposition of repossessed goods that were the subject of
any such Receivable) or other collateral or property of any Obligor or any
other party directly or indirectly liable for payment of such Receivables),
and
(e) all Records relating to any of the foregoing.
This Seller Assignment Certificate is made without recourse but on the
terms and subject to the conditions set forth in the Transaction Documents to
which the Seller is a party. The Seller acknowledges and agrees that Buyer is
accepting this Seller Assignment
page 1
<PAGE>
Certificate in reliance on the representations, warranties and covenants of the
Seller contained in the Transaction Documents to which the Seller is a party.
THIS SELLER ASSIGNMENT CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE AGREEMENT AND THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES.
IN WITNESS WHEREOF, the undersigned has caused this Seller Assignment
Certificate to be duly executed and delivered by its duly Authorized Officer
this 29th day of May, 1996.
[SELLER FULL NAME]
By:
--------------------------------------
Title:
---------------------------------
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<PAGE>
SCHEDULE 1
to Purchase Agreement
LITIGATION AND OTHER PROCEEDINGS
--------------------------------
None.
<PAGE>
SCHEDULE 2
to Purchase Agreement
CHANGES IN FINANCIAL CONDITION
------------------------------
None.
<PAGE>
SCHEDULE 3
to Purchase Agreement
OFFICES OF THE SELLER WHERE
RECORDS ARE MAINTAINED
-------------------------------
Regency Thermographers, Inc.
725 Clayton Avenue
Waynesboro, PA 17268
<PAGE>
SCHEDULE 4
to Purchase Agreement
LEGAL NAMES, TRADE NAMES AND NAMES UNDER
WHICH THE COMPANIES DO BUSINESS
American Pad & Paper Company of Delaware, Inc.
AMPAD
C/C Sales
Century Engraving & Embossing Company
Century Grant Imprint Center
Century/Regency Greetings
Century Greetings
Cheerful House
Creative Greetings Cards
G.Y. Industries
Hays Printing
Holly Hills Studios
Karolton Envelope, Inc.
Millennium Paper Company
Regency Thermographers of Florida, Inc.
Williamhouse South
Williamhouse New England
Williamhouse
Williamhouse Central
Williamhouse of Tennessee
Williamhouse of Northwest
Williamhouse Sales Corporation
The Precious Collection, Inc.
Precious
Print U.S.A.
Wedding Invitations Direct
Wedding Treasures
Willow Tree Lane
Regency Thermographers, Inc.
Elite Personalized Creations
Foliomaster
Hays Printing
Howard's Invitations and Cards
Infolio
Isabella
Regency Engravers, Inc.
The House of Weddings
Web Graphics
World Engraving, Inc.
<PAGE>
Regency Thermographers of California, Inc.
Foliomaster
Holiday Magic
Professions, Ltd.
Queblo
Queblo Images
Sonnell-Western Thermographers
Streamliners
The Stationery House, Inc.
Watts
Regency Thermographers of Illinois, Inc.
Hays Printing
Regency-Sonnell Greetings, Inc.
Regency Greetings
Regency Thermographers of Washington, Inc.
None
Stationery House Inc. VIP Division
None
<PAGE>
APPENDIX A
[Same as Appendix A to Pooling Agreement]
<PAGE>
EXHIBIT 4.11
AMENDED AND RESTATED GUARANTY
-----------------------------
THIS AMENDED AND RESTATED GUARANTY, dated as of May 29, 1996 (this
"Guaranty"), is issued by AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC., a
Delaware corporation ("Guarantor"), for the benefit of NOTEPAD FUNDING
CORPORATION, a Delaware corporation ("Purchaser"), and its successors and
assigns.
Guarantor agrees as follows:
SECTION 1. Definitions. Capitalized terms used in this Guaranty, unless
otherwise defined herein, shall have the meaning set forth in Appendix A to the
Amended and Restated Pooling and Servicing Agreement, dated as of May 29, 1996
(as it may be amended, supplemented or otherwise modified from time to time, the
"Pooling Agreement") among Purchaser, Guarantor, as Servicer, and Manufacturers
and Traders Trust Company, as Trustee.
SECTION 2. Guaranty. FOR VALUE RECEIVED, Guarantor hereby unconditionally
guarantees the full and prompt payment when due, whether by acceleration or
otherwise, and at all times thereafter, and the full and prompt performance, of
each of the Sellers' (each, a "Guaranteed Party") obligations, howsoever
created, arising or evidenced, whether direct or indirect, primary or secondary,
absolute or contingent, joint or several, now or hereafter existing or due or to
become due, which arise out of or in connection with any Seller Transaction
Document (all of such obligations being hereinafter collectively called the
"Liabilities"); provided that nothing contained herein shall be deemed to
constitute recourse liability for the payment of any Receivable or of the
principal of, or interest on, any Certificate or Purchased Interest. Guarantor
further agrees to pay all expenses (including reasonable attorneys' fees and
legal expenses) paid or incurred by Purchaser or its assigns in endeavoring to
collect the Liabilities, or any part thereof, and in enforcing this Guaranty.
SECTION 3. Continuing Guaranty. This Guaranty shall in all respects be a
continuing, absolute and unconditional guaranty, and shall remain in full force
and effect (notwithstanding, without limitation, that at any time or from time
to time all Liabilities may have been paid in full), subject to discontinuance
only upon actual receipt by Trustee of written notice from Guarantor of the
discontinuance hereof; provided, however, that no such notice of discontinuance
hereof shall affect or impair any of the agreements and obligations of Guarantor
(i) hereunder with respect to any and all Liabilities existing prior to the time
of
<PAGE>
actual receipt of such notice by Trustee, any and all Liabilities created or
acquired thereafter pursuant to any commitments and agreements made by Purchaser
under and with respect to the Purchase Agreement, and any and all extensions or
renewals thereof, and (ii) any and all expenses paid or incurred by Purchaser or
its assigns in endeavoring to collect any of the foregoing and in enforcing this
Guaranty; and all of the agreements and obligations under this Guaranty shall,
notwithstanding any such notice of discontinuance, remain fully in effect until
all such Liabilities (including any extensions or renewals of any thereof) and
all such other obligations and expenses finally shall have been paid in full.
SECTION 4. Rescission. Guarantor further agrees that, if at any time all
or any part of any payment theretofore applied by Purchaser to any of the
Liabilities is or must be rescinded or returned by Purchaser for any reason
whatsoever, such Liabilities shall, for the purposes of this Guaranty, to the
extent that such payment is or must be rescinded or returned, be deemed to have
continued in existence, notwithstanding such application by Purchaser, and this
Guaranty shall continue to be effective or be reinstated, as the case may be, as
to such Liabilities, all as though such application by Purchaser had not been
made.
SECTION 5. Certain Actions. Purchaser may, from time to time at its sole
discretion and without notice to Guarantor, take any or all of the following
actions without affecting the obligations of Guarantor hereunder: (a) retain or
obtain a lien upon or a security interest in any property to secure any of the
Liabilities or any obligation hereunder; (b) retain or obtain the primary or
secondary obligation of any obligor or obligors, in addition to Guarantor, with
respect to any of the Liabilities or any obligation hereunder; (c) extend or
renew for one or more periods (regardless of whether longer than the original
period), alter or exchange any of the Liabilities, or release or compromise any
obligation of Guarantor hereunder or any obligation of any nature of any other
obligor (including any Guaranteed Party) with respect to any of the Liabilities;
(d) release or fail to perfect its lien upon or security interest in, or impair,
surrender, release or permit any substitution or exchange for, all or any part
of any property securing any of the Liabilities or any obligation hereunder, or
extend or renew for one or more periods (regardless of whether longer than the
original period) or release, compromise, alter or exchange any obligations of
any nature of any obligor with respect to any such property; and (e) resort to
Guarantor for payment of any of the Liabilities, regardless of whether Purchaser
shall have resorted to any property securing any of the Liabilities or any
obligation hereunder or shall have proceeded against any other obligor primarily
or secondarily obligated with respect to any of the Liabilities.
SECTION 6. Subrogation. Any amounts received by Purchaser from whatsoever
source on account of the Liabilities may be applied by it toward the payment of
such of the Liabilities, and in such order of application, as Purchaser or its
assigns may from time to time elect. Until such time as Purchaser shall have
received payment of the full amount of all Liabilities and performance of all of
Guarantor's obligations hereunder, no payment made by or for the account of
Guarantor pursuant to this Guaranty shall entitle Guarantor by subrogation,
indemnity or otherwise to any payment by any Guaranteed Party or from or out of
any property of any Guaranteed Party and Guarantor shall not exercise any right
or
2
<PAGE>
remedy against any Guaranteed Party or any property of any Guaranteed Party by
reason of any performance by Guarantor of this Guaranty.
SECTION 7. Waiver. Guarantor hereby expressly waives: (a) notice of
Purchaser's acceptance of this Guaranty; (b) notice of the existence or creation
or non-payment of all or any of the Liabilities; (c) presentment, demand, notice
of dishonor, protest, and all other notices whatsoever (provided that nothing
contained in this clause (c) shall affect any obligations to give notice or make
demand as set forth in the Purchase Agreement or the Pooling Agreement); and (d)
all diligence in collection or protection of or realization upon the Liabilities
or any thereof, any obligation hereunder, or any security for or guaranty of any
of the foregoing.
SECTION 8. Unconditional Nature of Guaranty. No delay on Purchaser's part
in the exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Purchaser of any right or remedy shall preclude
other or further exercise thereof or the exercise of any other right or remedy;
nor shall any modification or waiver of any of the provisions of this Guaranty
be binding upon Purchaser except as expressly set forth in a writing duly signed
by Purchaser. No action of Purchaser permitted hereunder shall in any way
affect or impair Purchaser's rights or Guarantor's obligations under this
Guaranty. For the purposes of this Guaranty, Liabilities shall include all of
each Guaranteed Party's obligations under the Transaction Documents,
notwithstanding any right or power of such Guaranteed Party or anyone else to
assert any claim or defense as to the invalidity or unenforceability of any such
obligation, and no such claim or defense shall affect or impair the obligations
of Guarantor hereunder. Guarantor's obligations under this Guaranty shall be
absolute and unconditional irrespective of any circumstance whatsoever which
might constitute a legal or equitable discharge or defense of Guarantor.
Guarantor hereby acknowledges that there are no conditions to the effectiveness
of this Guaranty.
SECTION 9. Information. Guarantor has and will continue to have
independent means of obtaining information concerning each Guaranteed Party's
affairs, financial condition and business. Purchaser shall not have any duty or
responsibility to provide Guarantor with any credit or other information
concerning any Guaranteed Party's affairs, financial condition or business which
may come into Purchaser's possession.
SECTION 10. Representations and Warranties. Guarantor represents and
warrants as follows:
(a) Organization and Good Standing. It has been duly organized and is
validly existing as a corporation in good standing under the laws of its
state of incorporation, with corporate power and authority to own its
properties and to conduct its business as such properties are presently
owned and such business is presently conducted.
3
<PAGE>
(b) Due Qualification. It is duly licensed or qualified to do business
as a foreign corporation in good standing in each jurisdiction in which (i)
the ownership or lease of its property or the conduct of its business
requires such licensing or qualification, and (ii) the failure to be so
licensed or qualified would be reasonably likely to have a Material Adverse
Effect.
(c) Power and Authority; Due Authorization. It has (i) all necessary
power, authority and legal right to execute, deliver and perform its
obligations under this Guaranty and (ii) duly authorized by all necessary
corporate action such execution, delivery and performance of this Guaranty.
(d) Binding Obligations. This Guaranty constitutes the legal, valid
and binding obligation of Guarantor, enforceable 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 such enforceability is considered in a proceeding in equity or
at law.
(e) No Violation. The execution, delivery and performance of this
Guaranty will not (i) conflict with, or 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) the certificate of incorporation or by-
laws of Guarantor or (B) any indenture, loan agreement, receivables
purchase agreement, mortgage, deed of trust, or other agreement or
instrument to which Guarantor is a party or by which it or its property is
bound, (ii) result in or require the creation or imposition of any Adverse
Claim (other than a Permitted Adverse Claim) upon any of its properties
pursuant to the terms of any such indenture, loan agreement, receivables
purchase agreement, mortgage, deed of trust, or other agreement or
instrument or (iii) violate any law or any order, rule, regulation
applicable to Guarantor of any court or of any federal, state or foreign
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Guarantor or any of its
properties.
SECTION 11. Successors and Assigns. (a) This Guaranty shall be binding
upon Guarantor and upon Guarantor's successors and assigns and all references
herein to Guarantor or any Guaranteed Party shall be deemed to include any
successor or successors, whether immediate or remote, to such person or entity.
Guarantor shall not assign any of its obligations hereunder without the prior
written consent of Purchaser and Trustee.
(b) This Guaranty shall inure to the benefit of Purchaser and its
successors and assigns. Guarantor acknowledges and agrees that Purchaser's
rights to receive payment and pursue remedies under this Guaranty are being
assigned to Trustee, for the benefit of the Certificateholders and the
Purchasers, pursuant to the Pooling Agreement, as supplemented from time to time
(including by the Series 1996-1 Supplement to the Pooling Agreement, of even
date with this Guaranty).
4
<PAGE>
SECTION 12. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES. Wherever possible each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 13. Consent to Jurisdiction; Waiver of Jury Trial. Purchaser may
enforce any claim arising out of this Guaranty in any state or federal court
having subject matter jurisdiction and located in New York, New York and with
respect to any such claim, Guarantor hereby irrevocably submits to the
jurisdiction of such courts. Guarantor irrevocably consents to the service of
process out of said courts by mailing a copy thereof, by registered mail,
postage prepaid, to Guarantor, and agrees that such service, to the fullest
extent permitted by law, (i) shall be deemed in every respect effective service
of process upon it in any such suit, action or proceeding and (ii) shall be
taken and held to be valid personal service upon and personal delivery to it.
Nothing herein contained shall preclude Purchaser from bringing an action or
proceeding in respect hereof in any other country, state or place having
jurisdiction over such action. Guarantor irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding brought in such a
court located in New York, New York and any claim that any such suit, action or
proceeding brought in such court has been brought in an inconvenient forum.
GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP
EXISTING IN CONNECTION WITH THIS GUARANTY, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 14. Notices. All notices hereunder shall be given in the manner
set forth in Section 13.6 of the Pooling Agreement.
5
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been executed and delivered by
Guarantor's duly authorized officer as of the date first written above.
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.
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) 733-6200
