EXHIBIT 10.71
EXECUTION COPY
SPECIALTY FOODS FINANCE CORPORATION,
SPECIALTY FOODS CORPORATION,
as Master Servicer,
THE CHASE MANHATTAN BANK,
as Trustee
SERIES 1998-1 SUPPLEMENT
Dated as of March 31, 1998
to
POOLING AGREEMENT
Dated as of November 16, 1994
SFC MASTER TRUST
TABLE OF CONTENTS
Section Page
ARTICLE IDEFINITIONS 1
SECTION 1.1. Definitions 1
ARTICLE IIDESIGNATION OF CERTIFICATES; PURCHASE AND SALEOF
THE VFC CERTIFICATES 18
SECTION 2.1. Designation 18
SECTION 2.2. The Series 1998-1 Certificates 18
SECTION 2.3. Delivery 18
SECTION 2.4. Procedure for Increasing the Invested
Amount 19
SECTION 2.5. Procedure for Decreasing the Invested
Amount 20
SECTION 2.6. Commitment Certification 21
SECTION 2.7. Interest; Certain Fees 22
SECTION 2.8. Interest Rate Indemnity 22
ARTICLE IIIARTICLE III OF THE AGREEMENT 23
SECTION 3C.2. Establishment of Series Accounts. 23
SECTION 3C.3. Daily Allocations. 24
SECTION 3C.4. Selection of Funding Periods;
Determination of Interest Rates 26
SECTION 3C.5. Determination of Series 1998-1
Amortization Principal Payments 27
SECTION 3C.6. Applications 27
ARTICLE IVDISTRIBUTIONS AND REPORTS 29
SECTION 4C.1. Distributions 29
SECTION 4C.2. Statements and Notices 29
SECTION 4C.3. Notices 31
ARTICLE VADDITIONAL EARLY AMORTIZATION EVENTS 31
SECTION 5.1. Additional Early Amortization Events 31
ARTICLE VISERVICING FEE 35
SECTION 6.1. Servicing Compensation 35
ARTICLE VII COVENANTS, REPRESENTATIONS AND WARRANTIES 35
SECTION 7.1. Representations and Warranties of the
Company and the
Master Servicer 35
SECTION 7.2. Covenants of the Company 35
SECTION 7.3. Covenants of the Master Servicer 36
SECTION 7.4. Additional Supplements 37
ARTICLE VIIIMISCELLANEOUS 39
SECTION 8.1. Ratification of Agreement 39
SECTION 8.2. Governing Law 39
SECTION 8.3. Further Assurances 39
SECTION 8.4. No Waiver; Cumulative Remedies 39
SECTION 8.5. Amendments 39
SECTION 8.6. Notices 39
SECTION 8.7. Successors and Assigns 40
SECTION 8.8. Counterparts 42
SECTION 8.9. No Bankruptcy Petition 42
SECTION 8.10. Costs and Expenses 42
ARTICLE IXFINAL DISTRIBUTIONS 43
SECTION 9.1. Certain Distributions 43
EXHIBITS
Exhibit A Form of VFC Certificate, Series 1998-1
Exhibit B Form of Subordinated Company
Certificate,
Series 1998-1
Exhibit C [Reserved]
Exhibit D Form of Daily Report
Exhibit E-1 Form of Monthly Settlement Statement
Exhibit E-2 Form of Funding Period Settlement
Statement
Exhibit F Form of Notice of Increase
Exhibit G Form of Commitment Certification
SCHEDULES
Schedule 1 Trust Accounts
Schedule 2 Cure Period Trigger Dates
Schedule 3 Reserve Requirement Adjustments
SERIES 1998-1 SUPPLEMENT, dated as of March 31, 1998
(this "Supplement"), among Specialty Foods Finance
Corporation, a Delaware corporation (the "Company"),
Specialty Foods Corporation, a Delaware corporation, as
master servicer (the "Master Servicer") and The Chase
Manhattan Bank, a New York banking corporation, in its
capacity as trustee (the "Trustee") under the Agreement (as
hereafter defined).
W I T N E S S E T H :
WHEREAS, the parties hereto have entered into a
Pooling Agreement, dated as of November 16, 1994 (as
amended, supplemented or otherwise modified from time to
time, the "Agreement");
WHEREAS, the Agreement provides, among other
things, that the Company, the Master Servicer and the
Trustee may at any time and from time to time enter into
supplements to the Agreement for the purpose of authorizing
the issuance on behalf of the Trust by the Company for
execution and redelivery to the Trustee for authentication
of one or more Series of Investor Certificates;
WHEREAS, the Company, the Master Servicer and the
Trustee wish to supplement the Agreement as hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are
hereby expressly acknowledged, the parties hereto agree as
follows:
I. ARTICLE
DEFINITIONS
a) SECTION Definitions. The following words
and phrases shall have the following meanings with respect
to Series 1998-1 and the definitions of such terms are
applicable to the singular as well as the plural form of
such terms and to the masculine as well as the feminine and
neuter genders of such terms:
"Accrued Expense Amount" shall mean, for each
Business Day, (i) 1/10 of the Series 1998-1 Monthly
Interest Amount as most recently computed or recomputed
for each Eurodollar Tranche outstanding and for the
Unallocated Balance up to but not exceeding the full
amount thereof plus (A) if such Business Day is prior
to the 20th day of an Accrual Period, 1/10 of each of
the Series 1998-1 Monthly Servicing Fee and the portion
of the Non-Usage Fees to be paid on the next succeeding
Settlement Date (in each case, up to but not exceeding
the full amount thereof) or (B) if such Business Day is
on or after the 20th day of an Accrual Period or within
ten (10) days of any Funding Period Settlement Date and
if the Agent notifies the Master Servicer and the
Trustee on such Business Day that Aggregate Daily
Collections previously transferred to the Series 1998-1
Non-Principal Collection Sub-account are insufficient
to pay the Series 1998-1 Monthly Interest Amount, the
Series 1998-1 Monthly Servicing Fee and the portion of
the Non-Usage Fees to be paid on the next succeeding
Settlement Date or Funding Period Settlement Date, as
applicable, an amount reasonably expected by the Agent
to be equal to such insufficiency, which amount shall
be specified in such notice to the Master Servicer and
the Trustee and (ii) the Program Costs for such
Business Day.
"Acquiring VFC Certificateholder" shall have the
meaning specified in subsection 8.7(c).
"Additional Interest" shall mean with respect to
any outstanding Past Due Interest, interest thereon,
until paid in full, at a per annum rate equal to the
sum of (i) the Applicable Base Rate as in effect from
day to day computed on the basis of a year of 360 days
and actual days elapsed and (ii) 2.00%.
"Additional Seller Supplement" shall have the
meaning specified in the Receivables Sale Agreement.
"Adjusted Eurodollar Rate" for any Eurodollar
Tranche for any Eurodollar Period shall mean the rate
obtained by dividing (i) an interest rate per annum
equal to the average (rounded upward to the nearest
whole multiple of one-sixteenth of one percent per
annum, if such rate is not such a multiple) of the
offered quotation, if any, to first class banks in the
New York interbank Eurodollar market by the Agent for
U.S. dollar deposits of amounts in immediately
available funds comparable to the principal amount of
the Eurodollar Tranche for which the Applicable
Eurodollar Rate is being determined with maturities
comparable to the Eurodollar Period for which such
Applicable Eurodollar Rate will apply as of
approximately 11:00 a.m. (New York City time) two
Business Days prior to the commencement of such
Eurodollar Period by (ii) a percentage equal to 100%
minus the stated maximum rate (stated as a decimal) of
all reserves, if any, required by the Board of
Governors of the Federal Reserve System to be
maintained by a member bank of the Federal Reserve
System in New York City with deposits in excess of five
billion dollars against "Eurocurrency liabilities" as
specified in Regulation D (or against any other
category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar
Tranches is determined or any category of extensions of
credit or other assets which includes loans by a non-
United States office of the Agent to United States
residents).
"Adjusted Invested Amount" shall mean, as of any
date of determination, the greater of (i) (A) the
Invested Amount on such date, minus (B) the amount on
deposit in the Series 1998-1 Principal Collection Sub-
subaccount on such date and (ii) $500,000.
"Aged Receivables Ratio" shall mean, as of the
last day of each Settlement Period, the percentage
equivalent of a fraction, (A) the numerator of which
shall be the sum of (i) the sum of the aggregate unpaid
balances of Receivables originated by each Seller or
each Seller Group that were past due by 61-90 days (as
determined without giving effect to any adjustments by
any credit memos offered to the Obligors thereunder),
(ii) the aggregate amounts of Receivables of each such
Seller or Seller Group which were charged off as
uncollectible prior to the day which is 91 days after
its original due date during the Settlement Period and
(iii) without duplication of any amounts described in
the preceding clause (ii), the aggregate amounts of
Receivables of each such Seller or Seller Group the
Obligors with respect to which shall be the subject of
any Insolvency Event and (B) the denominator of which
shall be the sum of the aggregate Principal Amounts of
Receivables originated by each such Seller or such
Seller Group during the third prior Settlement Period.
"Agent" shall mean Bankers Trust Company in its
capacity as agent for the VFC Certificateholders.
"Agent's Account" shall mean that certain account
in the name of the Agent, Account No. ▇▇▇▇▇▇▇▇
maintained at Bankers Trust Company, ABA No. 021-00-
41033, or such other account as the Agent may later
specify to the other parties hereto in writing.
"Aggregate Commitment" shall mean, with respect to
any date of determination, the aggregate amount of the
Commitments of all VFC Certificateholders on such date.
"Agreement" shall mean the Pooling Agreement,
dated as of November 16, 1994, among the Company, the
Master Servicer and the Trustee, as amended,
supplemented or otherwise modified from time to time.
"Allocated Receivables Amount" shall mean, on any
date of determination with respect to Series 1998-1,
the lower of (i) the Target Receivables Amount on such
day and (ii) the Aggregate Receivables Amount on such
day times the percentage equivalent of a fraction the
numerator of which is the Adjusted Invested Amount on
such day and the denominator of which is the Aggregate
Adjusted Invested Amounts on such day. Notwithstanding
the foregoing, in the event that with respect to any
Settlement Period the Company has elected to exclude
the Receivables owing by any one Obligor (including
Affiliates of such Obligor) for purposes of calculating
any of the Default Ratio, Delinquency Ratio or Loss-to-
Liquidation Ratio with respect to such Settlement
Period, all Receivables owing by such Obligor
(including Affiliates of such Obligor) shall for the
next succeeding Settlement Period be excluded from the
Aggregate Receivables Amount.
"Amortization Period" shall mean the period
following the Revolving Period and ending on the date
when the Invested Amount shall have been reduced to
zero and all accrued interest on and fees in respect of
the VFC Certificates shall have been paid.
"Applicable Base Rate" shall mean, at any time,
the sum of (x) the Base Rate at such time and (y) 1.0%.
"Applicable Eurodollar Rate" shall mean, at any
time, the sum of (x) the Adjusted Eurodollar Rate and
(y) the Applicable Margin.
"Applicable Margin" shall mean one and one-half of
one percent per annum (1.50%).
"Available Funds" shall mean, at any time, funds
then available to the Company that are not required,
pursuant to the terms of any of the Pooling and
Servicing Agreements, to be applied to the payment of
any amounts other than amounts specified as being
payable solely out of Available Funds, howsoever such
funds may be denominated in any such Pooling and
Servicing Agreement.
"Bankruptcy Action" shall have the meaning
specified in Section 5.1(l).
"Base Rate" shall mean a fluctuating interest rate
per annum equal to the higher of (i) the rate of
interest most recently designated by the Agent at its
principal office as its prime rate, whether or not such
rate is the lowest or best rate of interest actually
charged by the Agent to any of its customers in
connection with extensions of credit and (ii) 0.75% per
annum above the Federal Funds Rate. Any change in the
interest rate resulting from a change in the prime
lending rate announced by the Agent shall become
effective without prior notice to the Company or the
Master Servicer as of 12:01 a.m., New York City time,
on the Business Day on which each change in the prime
lending rate is designated by the Agent.
"Business Day" shall mean any day that is both a
Business Day under the Agreement and, if the term is
used in connection with respect to notices,
determinations, fundings and payments in connection
with any Funding Period during which the Funding Period
Rate is or will be determined by reference to the
Applicable Eurodollar Rate, a LIBO Business Day.
"Carrying Cost Reserve Ratio" shall mean, as of
any Settlement Date and continuing to, but excluding,
the next Settlement Date, an amount (expressed as a
percentage) equal to (i) the product of (A) the
greatest of (1) 2.00 times Days Sales Outstanding as of
such day, (2) 60 and (3) the weighted average length of
all then outstanding Funding Periods and (B) the
product of 1.5 times the Discount Rate as of such day;
divided by (ii) 360.
"Certificate Purchase Agreement" shall mean that
certain Certificate Purchase Agreement, dated the date
hereof, among the Company, SFC, the financial
institutions party thereto from time to time and the
Agent.
"Change in Control" shall mean the occurrence of
any of: (i) any "Change in Control" under the SFC Loan
Agreement (as such term is defined therein on the
Closing Date); (ii) except upon the exercise by the
administrative agent under the SFC Loan Agreement of
any of its remedies in accordance with the terms of the
SFC Pledge/Security Agreement (as in effect on the
Closing Date), the Company shall at any time not be
directly wholly-owned by SFC; or (iii) except as
permitted pursuant to Section 9.15 of the Receivables
Sale Agreement, any Seller shall at any time not be
wholly-owned, either directly or indirectly, by SFC.
"Closing Date" shall have the meaning specified in
the Certificate Purchase Agreement.
"Commitment" shall mean, as to any VFC
Certificateholder, its obligation to maintain and,
subject to certain conditions, increase, its investment
in the Invested Amount, in an aggregate amount not to
exceed at any one time outstanding the aggregate
maximum amount set forth in the Certificate Purchase
Agreement as such VFC Certificateholder's "Commitment,"
as such amount may be reduced or otherwise adjusted
from time to time as provided in the Certificate
Purchase Agreement.
"Commitment Certification" shall have the meaning
specified in Section 2.6.
"Control Party" shall mean, with respect to any
event, the Agent acting at the direction of holders of
VFC Certificates representing Fractional Undivided
Interests and/or Commitments aggregating more than 50%
of the Invested Amount adversely affected by such event
(or the Trustee acting on behalf of the Agent or such
holders).
"Cure Period Trigger Date" shall mean, with
respect to any of the representations, warranties and
covenants of the Company, any Servicing Party or any
Seller, as the case may be, that are contained in the
subsection of the applicable Transaction Document which
is cross referenced in Schedule 2 under the heading of
"Applicable Section", the breach or violation of which
would result (i) in the case of a breach or violation
by the Company, in a Potential Early Amortization Event
or a purchase obligation of the Company pursuant to
Section 2.5 or 2.6 of the Agreement, (ii) in the case
of any Servicing Party, a Potential Servicer Default or
(iii) in the case of any Seller, a Potential Purchase
Termination Event (as defined in the Receivables Sale
Agreement), the date occurring the number of days
specified for the applicable subsection in Schedule 2
under the heading "Cure Period Trigger Date" following
the occurrence of such breach or violation (or if the
number of days so specified is zero, the date of such
breach or violation). The foregoing provisions shall
apply to such breaches and violations notwithstanding
any other grace period or cure provisions stated to
apply thereto under the applicable Transaction
Documents. The Company shall, and the Control Party
may, give prompt written notice of each occurrence of a
Cure Period Trigger Date to the Trustee (and the Agent
if given by the Company).
"Daily Interest Deposit" shall mean, for any
Business Day, an amount equal to the sum of (i) the
aggregate accrued but unpaid Funding Period Interest on
the VFC Certificates for all outstanding Funding
Periods to the extent not previously deposited to the
Series 1998-1 Non-Principal Collection Sub-subaccount,
plus (ii) the aggregate amount of all previously
accrued and unpaid Daily Interest Deposits, plus (iii)
the aggregate amount of all accrued and unpaid
Additional Interest accrued since the previous Business
Day.
"Daily Report" shall mean a report prepared by the
Master Servicer on each Business Day for the period
specified therein, in substantially the form of Exhibit
D.
"Days Sales Outstanding" shall mean, as of any
Settlement Date and continuing to, but excluding, the
next Settlement Date, the number of days equal to the
product of (i) 91 and (ii) the amount obtained by
dividing (A) the difference between (1) the aggregate
Principal Amount of Receivables and (2) the aggregate
bad debt reserve of the Sellers, in each case as at the
last day of the Settlement Period immediately preceding
such earlier Settlement Date, by (B) aggregate net
sales of the Sellers for the three Settlement Periods
immediately preceding such earlier Settlement Date.
"Decrease" shall have the meaning specified in
subsection 2.5(a).
"Default Ratio" shall mean, as of the last
Business Day of any Settlement Period and continuing
to, but excluding, the last day of the next Settlement
Period, a ratio (expressed as a percentage) equal to
(i) the aggregate outstanding Principal Amount of all
Defaulted Receivables on the last day of such earlier
Settlement Period over (ii) the aggregate outstanding
Principal Amount of all Receivables on such last day;
provided, however, to the extent that 2% or more of the
Default Ratio at the end of any Settlement Period is
attributable to Receivables owing by any Obligor
(including Affiliates of such Obligor), then, upon the
election of the Company (such election to be made
separately in respect of each Settlement Period), the
Default Ratio shall be recalculated to exclude all
Receivables of any one such Obligor (including
Affiliates of such Obligor) that would otherwise have
been included in such calculation.
"Delinquency Ratio" shall mean, as of the last
Business Day of any Settlement Period and continuing
to, but excluding, the last day of the next Settlement
Period, a ratio (expressed as a percentage) equal to
(i) the aggregate outstanding Principal Amount of all
Delinquent Receivables on the last day of such earlier
Settlement Period over (ii) the aggregate outstanding
Principal Amount of all Receivables on such last day;
provided, however, to the extent that 2% or more of the
Delinquency Ratio at the end of any Settlement Period
is attributable to Receivables owing by any Obligor
(including Affiliates of such Obligor), then, upon the
election of the Company (such election to be made
separately in respect of each Settlement Period), the
Delinquency Ratio shall be recalculated to exclude all
Receivables of any one such Obligor (including
Affiliates of such Obligor) that would otherwise have
been included in such calculation.
"Dilution Horizon Factor" shall mean (i) with
respect to any Settlement Period consisting of four
calendar weeks, 0.725 and (ii) with respect to any
Settlement Period consisting of five calendar weeks,
0.58, or such lesser amounts agreed to in writing by
the Agent and the Rating Agency and notified to the
Trustee.
"Dilution Ratio" shall mean, as of the last day of
each Settlement Period, an amount (expressed as a
percentage) equal to the aggregate amount of Dilution
Adjustments in respect of all Sellers and Seller Groups
made during such Settlement Period divided by the sum
of the aggregate Principal Amounts of Receivables which
were originated by all such Sellers and Seller Groups
during such Settlement Period.
"Dilution Reserve Ratio" shall mean, as of any
Settlement Date and continuing to, but excluding, the
next Settlement Date, an amount (expressed as a
percentage) which is calculated as follows:
DRR = [(a * b) + [(c-b) * (c/b)]] * d
Where:
DRR = Dilution Reserve Ratio;
a = the Ratings Multiple;
b = the average of the Dilution Ratios
during the period of twelve consecutive
Settlement Periods ending prior to such
Settlement Date;
c = the highest Dilution Ratio for any
Settlement Period during the period of twelve
consecutive Settlement Periods ending prior
to such Settlement Date; and
d = a fraction (i) the numerator of
which equals the product of (A) the aggregate
Principal Amount of all Receivables which
were originated during the preceding
Settlement Period and (B) the Dilution
Horizon Factor with respect to such preceding
Settlement Period and (ii) the denominator of
which equals the Aggregate Receivables Amount
as of the last day of the Settlement Period
preceding such earlier Settlement Date.
"Discount Rate" shall mean, as of any date of
determination, the sum of (i) the weighted average of
the Funding Period Rates in effect with respect to the
outstanding VFC Certificates as of the end of the
Settlement Period immediately preceding the most recent
Settlement Date and (ii) an amount equal to (A) the sum
of (1) the aggregate amount of Non-Usage Fees accrued
with respect to the outstanding VFC Certificates during
the Settlement Period immediately preceding the most
recent Settlement Date and (2) the Monthly Allocable
Trustee's Fees for the Settlement Period immediately
preceding the most recent Settlement Date, divided by
(B) the average daily Adjusted Invested Amount during
such Settlement Period.
"Distribution Date" shall mean each Settlement
Date and each Funding Period Settlement Date.
"Early Amortization Event" shall have the meaning
specified in Section 5.1 of this Supplement and Section
7.1 of the Agreement.
"ERISA Entity" shall mean either an "employee
benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as
amended, (whether or not subject to the Employment
Retirement Income Security Act of 1974, as amended), a
"plan" as defined in Section 4975 of the Internal
Revenue Code of 1986, as amended, an entity deemed to
hold plan assets of any such employee benefit plan or
plans, or an entity otherwise using the assets of any
such employee benefit plan or plans to acquire VFC
Certificates.
"Eurodollar Period" shall mean with respect to any
Eurodollar Tranche:
(i) during the Syndication Period, any
one month Funding Period selected by the Master
Servicer pursuant to subsection 3C.4(b);
(ii) at any time after the Syndication
Period, the period commencing on the Business Day
that any portion of the Unallocated Balance is
allocated to a Funding Period pursuant to
subsection 3C.4(b), thereby giving rise to such
Eurodollar Tranche and ending one, two or three
months thereafter, as selected by the Master
Servicer pursuant to subsection 3C.4(b); and
(iii) thereafter, each period commencing on
the last day of the next preceding Eurodollar
Period applicable to such Eurodollar Tranche and
ending one, two or three months thereafter as
selected by the Master Servicer pursuant to
Subsection 3C.4(b);
provided, however, that all of the foregoing provisions
relating to Eurodollar Periods are subject to the
following:
(A) if any Eurodollar Period would otherwise
end on a day that is not a Business Day, such
Eurodollar Period shall be extended to the next
succeeding Business Day unless the result of such
extension would be to carry such Eurodollar Period
into another calendar month in which event such
Eurodollar Period shall end on the immediately
preceding Business Day;
(B) any Eurodollar Period that begins on a
day for which there is no numerically
corresponding day in the calendar month at the end
of such Eurodollar Period shall end on the last
Business Day of such later calendar month; and
(C) no Eurodollar Period may end on a day
which is later than the Scheduled Termination
Date.
"Eurodollar Tranche" shall mean a portion of the
Invested Amount for which Funding Period Interest is
the Applicable Eurodollar Rate for a particular
Eurodollar Period.
"Expected Final Distribution Date" shall mean the
first Distribution Date which occurs at least 45 days
after commencement of the Amortization Period.
"Federal Funds Rate" shall mean, for any day, a
fluctuating interest rate per annum equal to 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 such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the
average of the quotations for such day on such
transactions received by the Master Servicer from three
Federal funds brokers of recognized standing selected
by it.
"Fee Letter" shall mean that certain Fee Letter,
dated March 31, 1998 among the Company, SFC and the
Agent.
"Funding Period" shall mean a Eurodollar Period
for any portion of the Invested Amount allocated to a
Eurodollar Tranche, an Accrual Period for any portion
of the Invested Amount constituting a portion of the
Unallocated Balance and such other period as may be
agreed between the Company, the Master Servicer and the
Agent for any portion of the Invested Amount which
bears interest at a rate agreed among such parties with
notice thereof provided to the Trustee.
"Funding Period Determination Date" shall mean
with respect to any Funding Period Settlement Date, the
Business Day immediately preceding such Funding Period
Settlement Date.
"Funding Period Interest" shall mean (i) with
respect to that portion of the Invested Amount of the
VFC Certificates allocated to a Funding Period as
provided in Section 3C.4, the aggregate interest
accrued at the Funding Period Rate for such Funding
Period on such allocated portion of the Invested Amount
of the VFC Certificates, calculated on the basis
specified in subsection 2.7(f) and (ii) as of any
Funding Period Settlement Date with respect to the
Unallocated Balance outstanding from time to time, the
aggregate interest accrued thereon at the Applicable
Base Rate in effect from time to time from and
including the preceding Funding Period Settlement Date
with respect to the Unallocated Balance to but
excluding the current Funding Period Settlement Date
with respect to the Unallocated Balance, calculated on
the basis specified in subsection 2.7(f).
"Funding Period Rate" shall mean, for any Funding
Period and that portion of the Invested Amount
allocated to that Funding Period:
(i) with respect to any such portion which
constitutes the Unallocated Balance, the
Applicable Base Rate; and
(ii) with respect to any Eurodollar Tranche,
the Applicable Eurodollar Rate.
"Funding Period Settlement Date" shall mean (i)
with respect to any Funding Period, the last day of
such Funding Period and (ii) with respect to the
Unallocated Balance outstanding from time to time
during any Accrual Period, the Settlement Date
immediately following the end of such Accrual Period.
"Funding Period Settlement Statement" shall have
the meaning specified in Section 4C.2.
"Guaranty" shall mean that certain Guaranty of
even date herewith from SFC to the Company pursuant to
which SFC guaranties the obligations of each Seller to
the Company under the Receivables Sale Agreement.
"Increase" shall have the meaning specified in
subsection 2.4(a).
"Increase Amount" shall have the meaning specified
in subsection 2.4(a).
"Increase Date" shall have the meaning specified
in subsection 2.4(a).
"Initial Invested Amount" shall mean the Invested
Amount as of the Issuance Date.
"Initial Subordinated Certificate Amount" shall
mean the Subordinated Certificate Amount on the
Issuance Date.
"Invested Amount" shall mean, with respect to any
date of determination, an amount equal to the Initial
Invested Amount, plus the amount of all Increases
effected pursuant to Section 2.4 made on or prior to
such day, minus the amount of all distributions to the
VFC Certificateholders in reduction of the Invested
Amount pursuant to Section 2.5 or Section 3C.6 on or
prior to such day.
"Invested Percentage" shall mean, with respect to
any Business Day (i) during the Revolving Period, the
percentage equivalent of a fraction, the numerator of
which is the Allocated Receivables Amount as of the end
of the preceding Business Day and the denominator of
which is the Aggregate Receivables Amount as of the end
of the preceding Business Day and (ii) during the
Amortization Period, the percentage equivalent of a
fraction, the numerator of which is the Allocated
Receivables Amount as of the end of the last Business
Day of the Revolving Period and the denominator of
which is the greater of (A) the Aggregate Receivables
Amount as of the end of the preceding Business Day and
(B) the sum of the numerators used to calculate the
Invested Percentage for all Series of Investor
Certificates outstanding on the Business Day for which
such percentage is determined.
"Issuance Date" shall mean the last day of the
"Revolving Period" as defined in and with respect to
that certain Series 1994-1 Supplement among the
Company, the Master Servicer and the Trustee, which
such date shall be April 9, 1998, provided, however,
for purposes of determining the Non-Usage Fee, the
Issuance Date shall be deemed to be the Closing Date.
"LIBO Business Day" shall mean a day, other than a
Saturday or Sunday, on which banks are not required or
authorized to close in New York or London and on which
dealings are carried on in the London interbank market.
"Loss Horizon Period" shall mean three Settlement
Periods.
"Loss Reserve Ratio" shall mean, as of any
Settlement Date and continuing to, but excluding, the
next Settlement Date, an amount (expressed as a
percentage) which is calculated as follows:
LRR = [(a * b)] * c/d
where:
LRR = Loss Reserve Ratio;
a = the Ratings Multiple;
b = the highest three-month rolling
average of the Aged Receivables Ratio that
occurred during the period of twelve
consecutive Settlement Periods preceding such
earlier Settlement Date;
c = the product of (i) the sum of the
aggregate Principal Amounts of Receivables
originated by each Seller and Seller Group
during the most recent Loss Horizon Period
with respect to such Seller or such Seller
Group preceding such date times (ii) a
fraction, the numerator of which equals the
number of days in such Loss Horizon Period
plus seven and the denominator of which
equals the number of days in such Loss
Horizon Period; and
d = the Aggregate Receivables Amount as
of the last day of the Settlement Period
preceding such earlier Settlement Date.
"Loss-to-Liquidation Ratio" shall mean, as of the
last Business Day of any Settlement Period and
continuing to, but excluding, the last day of the next
Settlement Period, a ratio (expressed as a percentage)
equal to (i) the difference, if any, between (A) the
sum of (1) the aggregate reduction in the outstanding
Principal Amount of all Receivables as a result of
Charge-Offs and (2) the aggregate Principal Amount of
Receivables (other than Charge-Offs) that became more
than 90 days past due, in each case, during the
immediately preceding twelve Settlement Periods and (B)
the aggregate amount of Recoveries during such twelve
Settlement Periods over (ii) the aggregate amount of
Collections during such twelve Settlement Periods;
provided, however, to the extent that 2% or more of the
Loss-to-Liquidation Ratio at the end of any Settlement
Period is attributable to Receivables owing by any
Obligor (including Affiliates of such Obligor), then,
upon the election of the Company (which election shall
be made separately in respect of each Settlement
Period), the Loss-to-Liquidation Ratio shall be
recalculated for such Settlement Period to exclude all
Receivables of any one such Obligor (including any
Affiliates of such Obligor) that would otherwise have
been included in such calculation.
"▇▇▇▇ Seller Group" shall mean the collective
reference to each of the following Sellers: ▇▇▇▇ and
▇▇▇▇ Delaware.
"Minimum Subordinated Percentage" shall mean, as
of any Settlement Date and continuing to, but
excluding, the next Settlement Date, an amount
(expressed as a percentage) which is calculated as the
greater of (i) 15% and (ii) the sum of (x) the sum of
(i) three times the percentage used to compute the
Obligor Limit for Obligors which are not Special
Obligors, Obligors on Long Term Supply Contracts or
governmental entities or agencies, (ii) the percentage
used to compute the Obligor Limit for Obligors party to
Long Term Supply Contracts and (iii) the percentage
used to compute the aggregate Obligor Limit for
Obligors which are governmental entities or agencies
and (y) an amount calculated as the product of (1) the
average of the Dilution Ratios during the period of
twelve consecutive Settlement Periods ending prior to
such Settlement Date times (2) a fraction, the
numerator of which equals the product of (A) the
aggregate Principal Amount of all Receivables which
were originated during the preceding Settlement Period
and (B) the Dilution Horizon Factor with respect to
such preceding Settlement Period, and the denominator
of which equals the Aggregate Receivables Amount as of
the last day of the Settlement Period preceding such
earlier Settlement Date.
"Monthly Allocable Trustee's Fees" shall mean in
respect of any Settlement Period, the product of (i)
one-twelfth of the annual fees to be paid to the
Trustee by the Master Servicer pursuant to the first
sentence of Section 8.5 of the Agreement during the
fiscal year in which such Settlement Period falls and
(ii) the daily average Invested Percentage (expressed
as a decimal) during such Settlement Period.
"Net Worth" shall mean, at a particular date with
respect to the Company, all amounts which would, in
conformity with GAAP, be included under shareholder's
equity on a balance sheet of the Company.
"Non-Usage Fee Rate" shall mean one-half of one
percent per annum (0.50%).
"Non-Usage Fees" shall have the meaning specified
in subsection 2.7(b).
"Participant" shall have the meaning specified in
subsection 8.7(b)
"Past Due Interest" shall mean with reference to
any Funding Period Settlement Date, any portion of the
Funding Period Interest originally due on a previous
Funding Period Settlement Date that remains outstanding
on the current Funding Period Settlement Date.
"Pro Rata Share" shall have the meaning specified
in the Certificate Purchase Agreement.
"Program Costs" shall mean, for any Business Day,
the sum of (i) all expenses, indemnities and other
amounts then due and payable to the Agent or the VFC
Certificateholders under the Agreement, this Supplement
or the Certificate Purchase Agreement but excluding,
however, principal of and interest on the VFC
Certificates and Non-Usage Fees and (ii) the product of
(A) all unpaid fees and expenses then due and payable
to the Trustee or counsel to, and independent auditors
of, the Company (other than any Monthly Allocable
Trustee's Fees and Monthly Servicer's Fees payable to
the Trustee in its capacity as Master Servicer if it is
then so acting as Master Servicer and other than fees
and expenses payable on or in connection with the
closing of the issuance of the VFC Certificates) and
any corporate income or franchise taxes then due and
payable by the Company, and (B) the Invested Percentage
(expressed as a decimal) on such Business Day.
"Rating Agency" shall mean S&P.
"Ratings Multiple" shall mean 1.5; provided,
however, such Ratings Multiple shall be adjusted as set
forth in Schedule 3 attached hereto depending on SFC's
financial performance as set forth in such Schedule 3.
"Record Date" shall mean, with respect to any
Settlement Date, the last Business Day of the
immediately preceding Settlement Period.
"Required Reserves" shall mean, as of any date of
determination, an amount equal to the sum of (i) the
product of (A) the Adjusted Invested Amount on such day
and (B) the sum of (1) the Loss Reserve Ratio, (2) the
Dilution Reserve Ratio and (3) the Carrying Cost
Reserve Ratio, (ii) the product of (A) the face amount
of the Receivables in the Trust on such day, (B) the
Adjusted Invested Amount divided by the Aggregate
Adjusted Invested Amount and (C) the Servicing Reserve
Ratio, (iii) the amount of any Accrued Expense Amount
in respect of which sufficient Aggregate Daily
Collections have not been transferred to the Series
1998-1 Non-Principal Collection Sub-account and (iv)
the aggregate amount of accrued but unpaid Monthly
Allocable Trustee's Fees.
"Required Reserves Ratio" shall mean, as of any
date of determination, the quotient of (i) Required
Reserves on such day and (ii) the Adjusted Invested
Amount on such day.
"Required Subordinated Percentage" shall mean, as
of any date of determination, the greater of (i) the
Minimum Subordinated Percentage and (ii) the Required
Reserves Ratio as of such day.
"Revolving Period" shall mean the period
commencing on the Issuance Date and terminating on the
earliest to occur of (i) the close of business on the
date on which an Early Amortization Event occurs, (ii)
the date on which the Commitments of all VFC
Certificateholders shall have terminated and (iii) the
Scheduled Termination Date.
"Scheduled Termination Date" shall mean the
earliest of (a) December 15, 1999, (b) the date on
which the commitments of the lenders under the SFC Loan
Agreement shall have been terminated, unless, at or
prior to such date, SFC replaces the SFC Loan Agreement
with a replacement agreement providing SFC with working
capital which in the reasonable opinion of the Control
Party would be sufficient to operate SFC's businesses
at such date and (c) the date which is 45 days prior to
the scheduled maturity date of indebtedness of SFC
under the SFC Loan Agreement.
"Seller Group" shall mean the ▇▇▇▇ Seller Group,
provided that the Company may, with the consent of the
Agent, from time to time add one or more new Seller
Groups, or change the Sellers in any existing Seller
Group on terms and conditions satisfactory to the
Agent.
"Series Accounts" shall have the meaning specified
in subsection 3C.2(a).
"Series 1998-1" shall mean the Series 1998-1, the
Principal Terms of which are set forth in this
Supplement.
"Series 1998-1 Accrued Interest Sub-subaccount"
shall have the meaning specified in subsection 3C.2(a).
"Series 1998-1 Amortization Principal Payment"
shall have the meaning specified in Section 3C.5.
"Series 1998-1 Certificateholders' Interest" shall
have the meaning specified in subsection 2.2(a).
"Series 1998-1 Collection Subaccount" shall have
the meaning specified in subsection 3C.2(a).
"Series 1998-1 Monthly Interest Amount" shall
mean, at any time, (a) with respect to each Eurodollar
Tranche, the aggregate amount of Funding Period
Interest allocable thereto which is scheduled to be
paid on the Funding Period Settlement Date applicable
to such Eurodollar Tranche divided by the number of
months in the Eurodollar Period applicable to such
Eurodollar Tranche and (b) with respect to the
Unallocated Balance, the aggregate amount of Funding
Period Interest allocable thereto which is expected in
good faith by the Master Servicer to accrue on or prior
to the Settlement Date at the end of the then existing
Accrual Period. The Series 1998-1 Monthly Interest
Amount for any Eurodollar Tranche shall be computed on
the first day of the Eurodollar Period related thereto
and, if such Eurodollar Period is greater than one
month, the Series 1998-1 Monthly Interest Amount shall,
as of the corresponding calendar day in each succeeding
month during which such Eurodollar Tranche remains
outstanding (or, if such day is not a Business Day, on
the next succeeding Business Day) be recomputed for the
next succeeding month without giving effect to any
allocations previously made to the Series 1998-1 Non-
Principal Collection Sub-subaccount on account of any
such Series 1998-1 Monthly Interest.
"Series 1998-1 Monthly Servicing Fee" shall have
the meaning specified in Section 6.1.
"Series 1998-1 Non-Principal Collection Sub-
subaccount" shall have the meaning specified in
subsection 3C.2(a).
"Series 1998-1 Principal Collection Sub-
subaccount" shall have the meaning specified in
subsection 3C.2(a).
"Servicing Reserve Ratio" shall mean, as of any
Settlement Date and continuing to, but excluding, the
next Settlement Date, an amount (expressed as a
percentage) equal to (a) the product of (i) 1.00% and
(ii) the greater of (A) 2.00 times Days Sales
Outstanding as of such day and (B) 60 divided by (b)
360.
"SFC" shall mean Specialty Foods Corporation, a
Delaware corporation.
"SFC Group" shall mean collectively, SFC, the
Company and any Seller or Seller Group.
"SFC Loan Agreement" shall mean any extension of
credit made to SFC and/or its Affiliates to refinance
obligations of the SFC Group under the Term Loan
Agreement and/or the Revolving Credit Agreement, as
amended, restated or otherwise modified from time to
time. The parties expressly acknowledge and agree that
from and after the Closing Date, the term "Revolving
Credit Agreement," as used in the Agreement, shall mean
and include the SFC Loan Agreement.
"SFC Pledge/Security Agreement" shall mean any
pledge or security agreement delivered by SFC to
lenders to secure its obligations to such lenders under
the SFC Loan Agreement.
"Stated Final Distribution Date" shall mean that
Distribution Date which occurs not less than 365 days
after the commencement of the Amortization Period.
"Subordinated Certificate" shall mean the
Subordinated Company Certificate, Series 1998-1,
executed by the Company and authenticated by the
Trustee, substantially in the form of Exhibit B.
"Subordinated Certificate Amount" shall mean, for
any date of determination, an amount equal to the
Allocated Receivables Amount on such date minus the
Adjusted Invested Amount on such date.
"Subordinated Certificate Increase Amount" shall
have the meaning specified in subsection 2.4(a).
"Subordinated Certificate Reduction Amount" shall
have the meaning specified in subsection 2.5(c).
"Subordinated Interest" shall have the meaning
specified in subsection 2.2(b).
"Syndication Period" shall mean the period
beginning on the Closing Date and ending on the earlier
to occur of (i) the date which is 60 days following the
Closing Date or (ii) the date the Agent delivers
written notice to the Company and the Master Servicer
that it has completed syndication of the VFC
Certificates.
"Target Receivables Amount" shall mean, on any
date of determination, the product of (i) a fraction
(expressed as a decimal) the numerator of which is one
and the denominator of which is one minus the Required
Subordinated Percentage and (ii) the Adjusted Invested
Amount on such day.
"Transferee" shall have the meaning specified in
subsection 8.7(d).
"Trust Accounts" shall have the meaning specified
in subsection 3C.2(a).
"Unallocated Balance" shall have the meaning
specified in subsection 3C.4(b).
"Unreserved Interest" shall mean, as of any date
during the Amortization Period, any portion of the
Daily Interest Deposit during the Amortization Period
which is attributable to an increase in the percentage
described in clause (ii) of the definition of Adjusted
Eurodollar Rate above the percentage level which was in
effect as of the date the Amortization Period
commenced.
"VFC Certificate" shall mean a VFC Certificate,
Series 1998-1, executed by the Company and
authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A.
"VFC Certificateholder" shall mean each holder of
a VFC Certificate.
"Year 2000 Problem" shall have the meaning
specified in Section 7.2(g).
a) In the event that any term or provision
contained herein shall conflict with or be inconsistent with
any term or provision contained in the Agreement, the terms
and provisions of this Supplement shall govern. All
capitalized terms not otherwise defined herein are defined
in the Agreement. All Article, Section or
subsection references herein shall mean Article, Section or
subsections of the Supplement, except as otherwise provided
herein. Unless otherwise stated herein, as the context
otherwise requires or if such term is otherwise defined in
the Agreement, each capitalized term used or defined herein
shall relate only to the Series 1998-1 and no other Series
of Investor Certificates issued by the Trust.
I. ARTICLE
DESIGNATION OF CERTIFICATES; PURCHASE AND SALE
OF THE VFC CERTIFICATES
A. SECTION Designation. The Certificates
created and authorized pursuant to the Agreement and this
Supplement shall be divided into two classes, which shall be
designated respectively as (i) the "VFC Certificates,
Series 1998-1" and (ii) the "Subordinated Company
Certificate, Series 1998-1". The VFC Certificates shall be
issued in the form of Definitive Certificates, to be
delivered to the VFC Certificateholder(s) in accordance with
Section 2.3.
a) SECTION The Series 1998-1 Certificates.
The VFC Certificates shall represent fractional undivided
interests in the Trust, consisting of the right to receive
the Invested Percentage (expressed as a decimal) of (i)
Collections received with respect to the Receivables, (ii)
all other funds on deposit in the Collection Account and in
any subaccount thereof and (iii) all other Trust Assets
(the "Series 1998-1 Certificateholders' Interest").
a) The Subordinated Certificate shall
represent a fractional undivided interest in the Trust,
consisting of the right to receive Collections with respect
to the Receivables allocated to the Series 1998-1
Certificateholders' Interest and not required to be
distributed to or for the benefit of the VFC
Certificateholders (the "Subordinated Interest"). The
Exchangeable Company Certificate and any other Series of
Investor Certificates outstanding shall represent the
ownership interest in the remainder of the Trust not
allocated pursuant hereto to the Series 1998-1
Certificateholders' Interest or the Subordinated Interest.
a) The VFC Certificates and the Subordinated
Certificate shall be issued in registered form in
substantially the forms of Exhibits A and B, respectively,
and shall, upon issue, be executed and delivered by the
Company to the Trustee for authentication and redelivery as
provided in Section 2.3 hereof and Section 5.2 of the
Agreement.
A. SECTION Delivery. On the Issuance Date,
the Company shall sign on behalf of the Trust and shall
direct in writing pursuant to Section 5.2 of the Agreement
the Trustee to duly authenticate, and the Trustee, upon
receiving such direction, shall so authenticate (i) the VFC
Certificates in such names and such denominations and
deliver such VFC Certificates to each VFC Certificateholder
in accordance with such written directions and (ii) a
Subordinated Certificate and deliver such Subordinated
Certificate to the Company as holder thereof in accordance
with such written directions. The funds received from the
VFC Certificateholders on the Issuance Date shall be
transferred to the Series 1994-1 Collection Account in an
amount sufficient (after giving effect to other deposits
therein) to reduce the "Adjusted Invested Amount" thereof to
zero and to pay all interest payable thereon on the next
Distribution Date before being remitted to the Company. The
VFC Certificates shall be issued in minimum denominations of
$1,000,000 and in integral multiples of $100,000 in excess
thereof. The Trustee shall ▇▇▇▇ on its books the actual
Invested Amount allocated among the VFC Certificateholders
and Subordinated Certificate Amount outstanding on any date
of determination, which, absent manifest error, shall
constitute prima facie evidence of the outstanding Invested
Amount allocated among the VFC Certificateholders and
Subordinated Certificate Amount from time to time.
a) SECTION Procedure for Increasing the
Invested Amount. Subject to the terms and conditions of
subsection 2.4(b), on any Business Day during the Revolving
Period, the Invested Amount may be increased (an "Increase")
upon the request of the Master Servicer or the Company (each
date on which an increase in the Invested Amount occurs
hereunder being herein referred to as the "Increase Date"
applicable to such Increase) up to an amount equal to the
Aggregate Commitment on such day; provided, that the Master
Servicer or the Company, as the case may be, shall have
given the Trustee and the Agent irrevocable written notice
(effective upon receipt), substantially in the form of
Exhibit F hereto, of such request no later than the
applicable times specified in Section 3C.4 with respect to
the Funding Period or Periods to apply to such Increase.
Such notice shall state (w) the Increase Date and (x) the
proposed amount of such Increase (the "Increase Amount"),
which amount shall be allocated to each VFC
Certificateholder in accordance with its Pro Rata Share.
Upon satisfaction of the conditions precedent set forth in
subsection 2.4(b) of this Supplement, together with, in the
case of any participating VFC Certificateholder, any
additional conditions specified in the Certificate Purchase
Agreement, each VFC Certificateholder shall remit its Pro
Rata Share of the applicable Increase to the Agent at its
account maintained in the name of the Agent at Bankers Trust
Company, Account No. ▇▇▇▇▇▇▇▇, or such other account as the
Agent may specify in writing to the parties hereto and the
VFC Certificateholders, and the Agent shall remit such
amounts to the Trustee for deposit in the Series 1998-1
Collection Subaccount in immediately available funds by no
later than 4:00 p.m., New York City time, on the applicable
Increase Date, for remittance to the Company in accordance
with the written payment instructions of the Company. No
VFC Certificateholder shall be obligated to fund any
Increase, unless concurrently with any such Increase in the
Invested Amount, the Subordinated Certificate Amount shall
be increased by an amount (the "Subordinated Certificate
Increase Amount") such that after giving effect to such
increase, the sum of the Invested Amount plus the
Subordinated Certificate Amount equals or exceeds the Target
Receivables Amount.
a) No VFC Certificateholder shall be required
to fund its portion of any Increase Amount on any Increase
Date hereunder unless:
(1) the related Increase Amount is equal to
$1,000,000 or an integral multiple of $500,000 in excess
thereof;
(1) after giving effect to the Increase
Amount, (A) the Invested Amount would not exceed the
Aggregate Commitment, (B) the Pro Rata Share of the
aggregate Invested Amount allocated to the VFC Certificates
of each VFC Certificateholder participating in such Increase
would not exceed such VFC Certificateholder's Commitment,
and (C) the Allocated Receivables Amount would equal or
exceed the Target Receivables Amount on such Increase Date;
and
(2) no Early Amortization Event or Potential
Early Amortization Event shall have occurred and be
continuing or shall result from such Increase.
By accepting any Increase Amount, the Company
shall be deemed to have certified that as of such Increase
Date, (x) no Early Amortization Event or Potential Early
Amortization Event has occurred and is continuing and
(y) all of the representations and warranties of the
Company, and to its knowledge of the Sellers and the Master
Servicer set forth in the Agreement, this Supplement, the
Receivables Sale Agreement and the Certificate Purchase
Agreement (except for any representations and warranties
which are expressly made only as of an earlier date) are
true and correct in all material respects as though made on
and as of such Increase Date.
a) SECTION Procedure for Decreasing the
Invested Amount. On any Business Day during the Revolving
Period, upon the written request of the Master Servicer or
the Company, the Invested Amount may be reduced (a
"Decrease") by the distribution, ratably on the basis of
their Pro Rata Shares, to the VFC Certificateholders in
reduction of the Invested Amount allocated to such Funding
Period of some or all of the funds on deposit in the Series
1998-1 Principal Collection Sub-subaccount on such day;
provided that (i) the Master Servicer or the Company shall
have given the Trustee and the Agent irrevocable written
notice (effective upon receipt) thereof, prior to 1:00 p.m.,
New York City time, on the third Business Day preceding the
date of such Decrease (unless the Funding Period Rate with
respect to such Funding Period is the Applicable Base Rate,
in which case such notice need only be received prior to
1:00 p.m., New York City time, on the Business Day preceding
the date of such Decrease), which notice shall state the
amount of such Decrease; (ii) the minimum amount of such
Decrease shall be $500,000; and (iii) if such Business Day
is not a Funding Period Settlement Date or if the amount of
such Decrease exceeds the sum of the aggregate Invested
Amount allocated to Eurodollar Periods ending on such
Business Day, then no payment in reduction of the Invested
Amount allocated to any Eurodollar Periods shall be made in
connection with such Decrease unless, concurrently with such
payment, the Master Servicer or the Company shall have paid
to the VFC Certificateholders all amounts due and payable
pursuant to Section 2.8, if any. Funds in respect of any
Decrease shall be remitted by the Trustee to the Agent at
the Agent's Account for remittance to the applicable VFC
Certificateholders.
a) If on any day the Commitment of any VFC
Certificateholder is reduced or terminated (other than in
connection with the termination of the Revolving Period) and
after giving effect to such reduction or termination, the
aggregate portion of the Invested Amount allocated to the
VFC Certificates held by such VFC Certificateholder exceeds
the amount of such VFC Certificateholder's Commitment, then
the Company shall, on the next Funding Period Settlement
Date with respect to any portion of the Invested Amount
allocated to the VFC Certificates held by such VFC
Certificateholder, and on each such Funding Period
Settlement Date thereafter until the aggregate portion of
the Invested Amount allocated to the VFC Certificates held
by such VFC Certificateholder is equal to or less than the
amount of such VFC Certificateholder's Commitment, effect a
mandatory Decrease of the Invested Amount by distribution to
the applicable VFC Certificateholder of an amount equal to
the least of (i) the portion of the Invested Amount
allocated to the Funding Period then ending that is also
allocated to the VFC Certificates held by such VFC
Certificateholder, (ii) the excess of the aggregate portion
of the Invested Amount allocated to the VFC Certificates
held by such VFC Certificateholder over the amount of such
VFC Certificateholder's Commitment and (iii) the funds on
deposit in the Series 1998-1 Principal Collection Sub-
subaccount on such day. The Company or the Master Servicer
shall give the Trustee, the Agent and the applicable VFC
Certificateholder irrevocable written notice of such
Decrease (effective upon receipt), prior to 1:00 p.m., New
York City time, on the Business Day preceding the date of
such Decrease, which notice shall state the amount of such
Decrease.
a) Simultaneously with any such Decrease
during the Revolving Period, the Subordinated Certificate
Amount shall be reduced by an amount (the "Subordinated
Certificate Reduction Amount") such that after giving effect
to such Decrease, the Allocated Receivables Amount is not
less than the Target Receivables Amount. During the
Revolving Period, after the distribution described in
subsection (a) or (b) above, as applicable, has been made,
and the Subordinated Certificate Amount has been reduced by
the Subordinated Certificate Reduction Amount, a
distribution may be made to the holder of the Subordinated
Certificate out of remaining funds on deposit in the Series
1998-1 Principal Collection Sub-subaccount in an amount
equal to the lesser of (x) the Subordinated Certificate
Reduction Amount and (y) the amount of such remaining funds
on deposit in the Series 1998-1 Principal Collection Sub-
subaccount.
a) Any reduction in the Invested Amount on any
Business Day (except for that portion of a reduction on a
Funding Period Settlement Date in an amount not exceeding
the portion of the Invested Amount allocated by the Trustee
(based upon the instructions of the Master Servicer) to the
applicable Funding Period) shall be allocated by each
applicable VFC Certificateholder (with notice of such
allocation to the Master Servicer, the Trustee and the
Agent) among outstanding Funding Periods so as to minimize
amounts payable pursuant to Section 2.8, if any, so long as
such allocation is not, in the reasonable judgment of such
VFC Certificateholder, otherwise disadvantageous to such VFC
Certificateholder.
A. SECTION Commitment Certification. At such
time as any VFC Certificateholder shall extend, increase,
terminate or reduce its Commitment, whether pursuant to the
Certificate Purchase Agreement or any assignment thereunder,
such VFC Certificateholder and the Company shall certify to
the Trustee the amount of such VFC Certificateholder's
Commitment by delivery to the Trustee of a certificate in
substantially the form of Exhibit G hereto (a "Commitment
Certification"); provided, however, that in the case of any
voluntary reduction or termination by the Company of any
Commitment consistent with the terms of the Certificate
Purchase Agreement, such Commitment Certification need only
be signed by the Company. The Trustee shall be entitled to
rely on such Commitment Certification for all purposes
hereunder until such time as it shall have received from the
Company and the applicable VFC Certificateholder a revised
Commitment Certification. The Trustee shall maintain at its
address referred to in Section 8.6 a copy of each Commitment
Certification delivered to it.
a) SECTION Interest; Certain Fees. Interest
shall be payable on the VFC Certificates on each Funding
Period Settlement Date pursuant to subsection 3C.6(a).
a) A non-usage fee with respect to each
Accrual Period or portion thereof occurring in the Revolving
Period (the "Non-Usage Fees") shall be payable in arrears on
the related Settlement Date for the sole account of the VFC
Certificateholders pursuant to subsection 3C.6(b). The Non-
Usage Fees payable on each Settlement Date shall be
calculated by the Company (and notified by the Company to
the Master Servicer and the Agent on or before the
corresponding Determination Date) and shall be equal to the
product of (i) the Non-Usage Fee Rate and (ii) the average
daily excess during such Accrual Period of (A) the Aggregate
Commitment over (B) the Invested Amount and (iii) the actual
number of days in such Accrual Period divided by 360.
a) To the extent the Trustee determines
(based on the information set forth in the applicable report
prepared by the Master Servicer) that funds on deposit in
the Series 1998-1 Non-Principal Collection Sub-subaccount at
any Settlement Date are insufficient to pay the fee
described in the foregoing subsection, the Trustee shall so
notify the Company and the Company shall immediately pay the
Trustee the amount of any such deficiency; provided,
however, that any such deficiency shall be payable solely
out of Available Funds, shall be non-recourse other than
with respect to Available Funds, and shall not constitute a
claim against the Company to the extent that insufficient
Available Funds exist to make such payment.
(d) A non-refundable administrative fee in an
amount previously agreed to in writing by the Company and
the Agent shall be payable annually in advance for the sole
account of the Agent which fee shall be payable on the
Issuance Date and each anniversary thereafter.
(e) The Company shall pay to the Agent, for its
own account and the account of the VFC Certificateholders
such other amounts set forth in the Fee Letter at the times
and in the manner set forth therein.
(f) Calculations of interest and fees under
this Supplement shall be made on the basis of actual days
elapsed in the applicable period and a 360-day year. Any
determination of Program Costs or any other fees by the
Agent shall be conclusive and binding upon each of the
parties hereto in the absence of manifest error.
A. SECTION Interest Rate Indemnity. The
Company agrees to indemnify the Agent and each VFC
Certificateholder and to hold the Agent and each VFC
Certificateholder harmless from any loss or expense which
the Agent or such VFC Certificateholder may sustain or incur
as a consequence of (a) default by the Company in making an
Increase after the Company has given irrevocable notice
requesting the same in accordance with the provisions of
this Supplement, (b) default by the Company in making any
prepayment in connection with a Decrease after the Company
has given irrevocable notice thereof in accordance with the
provisions of Section 2.5 or (c) the making of a prepayment,
whether in connection with a Decrease or otherwise, in an
amount in excess of the portion of the Invested Amount
allocated to a Funding Period ending on the date of such
prepayment. Such indemnification shall include, without
limitation, any loss (including those of anticipated
profits, net of anticipated profits in respect of the
reemployment of such funds in the manner determined by such
VFC Certificateholder), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other
funds acquired by any VFC Certificateholder to fund or
maintain the applicable portion of the Invested Amount or
such requested Increase; provided, however, that any
payments made by the Company pursuant to this subsection
shall be made solely from Available Funds, shall be non-
recourse other than with respect to Available Funds, and
shall not constitute a claim against the Company to the
extent that insufficient Available Funds exist to make such
payment. This covenant shall survive the termination of
this Supplement and the payment of all amounts payable
hereunder. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by any
VFC Certificateholder to the Company and the Master Servicer
shall be conclusive absent manifest error.
I. ARTICLE
ARTICLE III OF THE AGREEMENT
Any provision of Article III of the Agreement
which distributes Collections to the Company on the basis of
the Company's Percentage shall continue to apply
irrespective of the issuance of the VFC Certificates.
Section 3.1 of the Agreement shall be read in its entirety
as provided in the Agreement. Article III of the Agreement
(except for Section 3.1 thereof and any portion thereof
relating to another Series) shall read in its entirety as
follows and shall be exclusively applicable to the VFC
Certificates and the Subordinated Certificate:
SECTION 3C.2. Establishment of Series Accounts.
(a) The Trustee shall cause to be established and
maintained in the name of the Trustee, on behalf of the
Trust, (i) for the benefit of the VFC Certificateholders and
for the benefit, subject to the prior interest of the VFC
Certificateholders, of the holder of the Subordinated
Certificate, a subaccount of the Collection Account (the
"Series 1998-1 Collection Subaccount"), which subaccount is
the Series Collection Subaccount with respect to Series
1998-1, bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the VFC
Certificateholders and for the benefit, subject to the prior
interest of the VFC Certificateholders, of the holder of the
Subordinated Certificate; (ii) for the benefit of the VFC
Certificateholders and for the benefit, subject to the prior
interest of the VFC Certificateholders, of the holder of the
Subordinated Certificate, two subaccounts of the Series
1998-1 Collection Subaccount: the Series 1998-1 Principal
Collection Sub-subaccount and the Series 1998-1
Non-Principal Collection Sub-subaccount (respectively, the
"Series 1998-1 Principal Collection Sub-subaccount" and the
"Series 1998-1 Non-Principal Collection Sub-subaccount"),
each bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the VFC
Certificateholders and for the benefit, subject to the prior
interest of the VFC Certificateholders, of the holder of the
Subordinated Certificate; and (iii) for the benefit of the
VFC Certificateholders, a subaccount of the Series 1998-1
Non-Principal Collection Sub-subaccount (the "Series 1998-1
Accrued Interest Sub-subaccount"; all accounts established
pursuant to this subsection 3C.2(a) being referred to herein
collectively as the "Series Accounts" and the accounts
listed on Schedule 1 being referred to herein, collectively
as the "Trust Accounts"). The Trustee shall possess all
right, title and interest in all funds from time to time on
deposit in, and all Eligible Investments credited to, the
Series Accounts and Trust Accounts and in all proceeds
thereof. The Trust Accounts and the Series Accounts shall
be under the sole dominion and control of the Trustee for,
in the case of the Series Accounts, the exclusive benefit of
the VFC Certificateholders and to the extent applicable,
subject to the prior interest of the VFC Certificateholders,
to the holder of the Subordinated Certificate.
(b) All Eligible Investments in the Series
Accounts shall be held by the Trustee for the exclusive
benefit of the VFC Certificateholders and, subject to the
prior interest of the VFC Certificateholders, of the holder
of the Subordinated Certificate; provided, however, that
funds on deposit in a Series Account may, at the direction
of the Master Servicer, be invested together with funds held
in sub-subaccounts of the Collection Account that are not
Series Accounts. After giving effect to any distribution to
the Company pursuant to subsection 3C.3(c), amounts on
deposit and available for investment in the Series 1998-1
Principal Collection Sub-subaccount shall be invested by the
Trustee at the written direction of the Company in Eligible
Investments that mature, or that are payable or redeemable
upon demand of the holder thereof, (i) in the case of any
such investment made during the Revolving Period, on or
prior to the next Business Day and (ii) in the case of any
such investment made during the Amortization Period, on or
prior to the next subsequent Funding Period Determination
Date. Amounts on deposit and available for investment in
the Series 1998-1 Non-Principal Collection Sub-subaccount
and the Series 1998-1 Accrued Interest Sub-subaccount shall
be invested by the Trustee at the written direction of the
Company in Eligible Investments that mature, or that are
payable or redeemable upon demand of the holder thereof, on
or prior to the next subsequent Determination Date or
Funding Period Determination Date, as the case may be. As
of the Determination Date or Funding Period Determination
Date, as the case may be, all interest and other investment
earnings (net of losses and investment expenses) on funds
deposited in the Series 1998-1 Accrued Interest Sub-
subaccount shall be deposited in the Series 1998-1 Non-
Principal Collection Sub-subaccount. All interest and
investment earnings (net of losses and investment expenses)
on funds deposited in the Series 1998-1 Principal Collection
Sub-subaccount shall be deposited in the Series 1998-1 Non-
Principal Collection Sub-subaccount. The Trustee shall not
in any way be held liable by reason of any insufficiency in
any Account held by the Trustee resulting from any
investment loss on any Eligible Investment included therein
(except to the extent that the Trustee is the obligor and
has defaulted thereon).
a) SECTION 3C.3. Daily Allocations. The
portion of Aggregate Daily Collections allocated to the VFC
Certificateholders pursuant to Article III of the Agreement
shall be allocated and distributed as set forth in this
Article III.
a) (i) On each Business Day, an amount equal to
the Accrued Expense Amount for such day shall be transferred
from the Series 1998-1 Collection Subaccount to the Series
1998-1 Non-Principal Collection Sub-subaccount; provided
that funds representing any portion of the Accrued Expense
Amount which constitute Program Costs or Unreserved Interest
shall only be transferred to the extent that, after giving
effect to the transfer of such amounts and the deposit of
any remaining Collections to the Series 1998-1 Principal
Collection Sub-subaccount, the Target Receivables Amount
would not exceed the Allocated Receivables Amount.
(ii) Following the transfers pursuant to clause
(i) above, any remaining funds on deposit in the Series
1998-1 Collection Subaccount shall be transferred to the
Series 1998-1 Principal Collection Sub-subaccount.
(1) On each Business Day during the Revolving
Period (including Distribution Dates), amounts on deposit in
the Series 1998-1 Principal Collection Sub-subaccount shall
be distributed by the Trustee to the Company (but only to
the extent that the Trustee has received a Daily Report
which reflects the receipt of the Collections on deposit
therein); provided that such distribution shall be made only
to the extent that, after giving effect to such
distribution, (i) the Target Receivables Amount would not
exceed the Allocated Receivables Amount, (ii) each VFC
Certificateholder's Commitment equals or exceeds its Pro
Rata Share of the aggregate portion of the Invested Amount
and (iii) there has been deposited to the Series 1998-1 Non-
Principal Collection Sub-subaccount funds sufficient to
eliminate any excess of the Accrued Expense Amounts for any
Business Day over the amounts transferred to the Series 1998-
1 Non-Principal Collection Sub-subaccount in respect
thereof; provided further that if the Company (or the Master
Servicer, on behalf of the Company) shall have given the
Trustee irrevocable written notice prior to the making of
any distribution to the Company pursuant to this
subsection 3C.3(c)(i) on any day, the Company or the Master
Servicer may instruct the Trustee in writing (specifying the
related amount) to retain or deposit, as applicable, all or
a portion of such amounts on deposit in the Series 1998-1
Principal Collection Sub-subaccount, the Series 1998-1 Non-
Principal Collection Sub-subaccount or the Series 1998-1
Collection Subaccount (together with, to the extent that the
Company so directs the Trustee, any other Available Funds
that the Company may elect from time to time to deposit into
the Series 1998-1 Principal Collection Sub-subaccount, the
Series 1998-1 Non-Principal Collection Sub-subaccount or the
Series 1998-1 Collection Subaccount, as the case may be) for
further application hereunder; and provided further that
such distribution to the Company shall not, in any event, be
made if either (i) a Cure Period Trigger Date has occurred
and is continuing (and the breach or violation giving rise
to such Cure Period Trigger Date has not been cured or
waived as of such date), (ii) any Bankruptcy Action shall
have been commenced against any member of the SFC Group and
shall remain undismissed, undischarged or unbonded, or (iii)
any case, proceeding or action described in clause (iii) of
Section 5.1(k) shall have been entered by a court of
competent jurisdiction and shall not have been vacated,
discharged, or stayed or bonded pending appeal. Amounts
distributed to the Company hereunder shall be deemed to be
paid first from Collections received directly by any
Servicing Party and second from Collections received in the
Lockboxes.
(1) On each Business Day during the
Amortization Period (including Distribution Dates), funds
deposited in the Series 1998-1 Principal Collection Sub-
subaccount shall be invested in Eligible Investments that
mature on or prior to the next Funding Period Determination
Date. No amounts on deposit in the Series 1998-1 Principal
Collection Sub-subaccount shall be distributed by the
Trustee to the Company during the Amortization Period. The
Trustee shall not in any way be liable by reason of any
insufficiency in any account held by the Trustee resulting
from any investment loss on any Eligible Investment included
therein (except to the extent that the Trustee is the
obligor and has defaulted thereon).
a) On each Business Day an amount equal to the
Daily Interest Deposit (less, during the Amortization
Period, any Unreserved Interest) for such day shall be
transferred from the Series 1998-1 Non-Principal Collection
Sub-subaccount to the Series 1998-1 Accrued Interest Sub-
subaccount.
a) The allocations to be made pursuant to this
Section 3C.3 are subject to the provisions of Sections 2.6,
7.2 and 9.1 of the Agreement and shall be based solely on
information provided to the Trustee by the Master Servicer
in the applicable Daily Report.
SECTION 3C.4. Selection of Funding Periods;
Determination of Interest Rates. (a) At all times
hereafter, the aggregate outstanding Invested Amount shall
be allocated to a Funding Period. The Master Servicer,
subject to the limitations described below, shall select
Funding Periods and the applicable Funding Period Rates for
such Funding Periods and shall allocate the outstanding
Invested Amount to such selected Funding Periods and Funding
Period Rates, except that the Unallocated Balance, if any,
outstanding from time to time, shall at all times be
allocated to a Funding Period coinciding with the Accrual
Period then in effect.
(b) The Master Servicer may select Funding
Periods and Funding Period Rates with respect to the VFC
Certificates by notice to the Trustee and the Agent
specifying the Business Day on which the applicable Funding
Period is to commence, the duration of the applicable
Funding Period and the portion of the Invested Amount
requested to be allocated to such Funding Period. Any such
notice must be received by the Trustee and the Agent (i) to
the extent that the applicable Funding Period Rate is the
Applicable Base Rate, no later than 1:00 p.m. New York City
time on the Business Day on which the applicable Funding
Period commences and (ii) to the extent that the applicable
Funding Period Rate is the Applicable Eurodollar Rate, no
later than 1:00 p.m. New York City time on the third
Business Day preceding the commencement of the applicable
Funding Period. Any portion of the Invested Amount with
respect to VFC Certificates held by any VFC
Certificateholder on any day that has not been allocated to
a Eurodollar Tranche shall accrue interest for such day at
the Applicable Base Rate (the aggregate amount of such
unallocated portions of such Invested Amount being referred
to herein as the "Unallocated Balance"). Any reduction in
the Invested Amount with respect to any VFC Certificate
shall be allocated first, to reduce the portion of the
Invested Amount thereof constituting Unallocated Balance,
and second, to reduce the portion of the Invested Amount
thereof allocated to other Funding Periods. Notwithstanding
anything to the contrary contained in this
subsection 3C.4(b), the portion of the Invested Amount with
respect to VFC Certificates allocated to Eurodollar Tranches
shall be subject to such other limitations as shall have
been specified in the Certificate Purchase Agreement, and
during the Syndication Period, shall be limited to two one-
month Eurodollar Periods.
(c) The amount of interest distributable with
respect to the VFC Certificates on any Funding Period
Settlement Date shall be an amount equal to the sum of (i)
the aggregate Funding Period Interest for such Funding
Period Settlement Date, plus (ii) all outstanding Past Due
Interest, plus (iii) the amount of any accrued but unpaid
Additional Interest.
SECTION 3C.5. Determination of Series 1998-1
Amortization Principal Payments. The amount (the "Series
1998-1 Amortization Principal Payment") distributable from
the Series 1998-1 Principal Collection Sub-subaccount on
each Funding Period Settlement Date during the Amortization
Period shall be equal to the lesser of (a) the aggregate
Invested Amount allocated to such Funding Period and (b) the
amount on deposit in such account on such Funding Period
Settlement Date.
SECTION 3C.6. Applications. (a) The Master
Servicer shall instruct the Trustee in writing (which
instruction shall specify the amounts to be distributed), on
each Funding Period Settlement Date, to distribute to the
Agent on behalf of the VFC Certificateholders from amounts
on deposit in the Series 1998-1 Accrued Interest Sub-
subaccount, an amount equal to the sum of (i) Funding Period
Interest on the VFC Certificates for such Funding Period,
(ii) all outstanding Past Due Interest and (iii) all accrued
but unpaid Additional Interest.
(b) On each Settlement Date, the Master Servicer
shall instruct the Trustee in writing (which instruction
shall specify the amounts to be applied or distributed, as
the case may be) to apply funds on deposit in the Series
1998-1 Non-Principal Collection Sub-subaccount (after taking
into consideration the distribution to the VFC
Certificateholders from the Series 1998-1 Non-Principal
Collection Sub-subaccount or any subaccount thereof pursuant
to subsection 3C.6(a)) in the following order of priority to
the extent funds are available:
(i) an amount equal to the Series 1998-1
Monthly Servicing Fee for the Accrual Period ending on
such Settlement Date shall be withdrawn from the Series
1998-1 Non-Principal Collection Sub-subaccount by the
Trustee and paid to the Master Servicer (or to the
Trustee, if on such date the Trustee is then acting as
Master Servicer in order to liquidate the Receivables
and the Related Property);
(ii) an amount equal to the Non-Usage Fees
for the Accrual Period ending on such Settlement Date
shall be withdrawn from the Series 1998-1 Non-Principal
Collection Sub-subaccount by the Trustee and paid to
the Agent on behalf of the VFC Certificateholders; and
(iii) an amount equal to any Program Costs or
Unreserved Interest due and payable shall be withdrawn
from the Series 1998-1 Non-Principal Collection Sub-
subaccount by the Trustee and paid to the Persons owed
such amounts, with respect to any such amounts owed to
any VFC Certificateholder, shall be paid to the Agent
for distribution to such VFC Certificateholder.
Any remaining amount on deposit in the Series 1998-1 Non-
Principal Collection Sub-subaccount not allocated pursuant
to clauses (i) through (iii) above shall (x) during the
Revolving Period, be transferred to the Series 1998-1
Principal Collection Sub-subaccount for application pursuant
to subsection 3C.3(c)(i) and (y) during the Amortization
Period, at the Agent's option, either (A) remain on deposit
in the Series 1998-1 Non-Principal Collection Sub-subaccount
for future application in accordance with the priorities set
forth in this subsection 3C.6(b) or (B) be transferred to
the Series 1998-1 Principal Collection Sub-subaccount for
application in accordance with the priorities set forth in
subsection 3C.6(d).
(c) During the Revolving Period, to the extent
that the Company has elected or is required to effect a
Decrease as described in Section 2.5, the Master Servicer
shall instruct the Trustee in writing to pay to Agent on
behalf of the VFC Certificateholders in reduction of the
Invested Amount on each applicable Decrease date, amounts on
deposit in the Series 1998-1 Principal Collection Sub-
subaccount, up to the amount of the applicable Decrease.
(d) During the Amortization Period, the Master
Servicer shall instruct the Trustee in writing (which
instruction shall specify the amounts to be applied or
distributed, as the case may be) to apply, on each Funding
Period Settlement Date, amounts on deposit in the Series
1998-1 Principal Collection Sub-subaccount in the following
order of priority:
(i) an amount equal to the Series 1998-1
Amortization Principal Payment for such Funding Period
Settlement Date shall be distributed from the Series
1998-1 Principal Collection Sub-subaccount to the Agent
on behalf of the VFC Certificateholders in reduction of
the Invested Amount allocated to such Funding Period,
and, unless after giving effect to such payment the
Invested Amount has been repaid in full, any amounts
remaining on deposit in the Series 1998-1 Principal
Collection Sub-subaccount shall be retained therein for
application in accordance with the terms of this
Supplement on the next succeeding Funding Period
Settlement Date;
(ii) If the Invested Amount has been repaid
in full after giving effect to clause (i) above and any
Program Costs or Unreserved Interest remain unpaid,
such unpaid amounts shall be transferred to the Series
1998-1 Non-Principal Collection Sub-subaccount for
application pursuant to subsection 3C.6(b);
(iii) if the Invested Amount has been repaid
in full after giving effect to clause (i) and no
transfers are required under clause (ii) above and any
amounts are owed to the Trustee or any other Person on
account of its expenses incurred in respect of the
performance of its responsibilities as Master Servicer
for the liquidation of the Receivables and the Related
Property, such amounts shall be transferred from the
Series 1998-1 Principal Collection Sub-subaccount and
paid to the Trustee or such other Person; and
(iv) if the Invested Amount has been repaid
in full after giving effect to clause (i) and all of
the amounts set forth in clauses (ii) and (iii) above
have been repaid or transferred to the 1998-1 Non-
Principal Collection Sub-subaccount, the remaining
amount on deposit in the Series 1998-1 Principal
Collection Sub-subaccount on such Funding Period
Settlement Date, if any, shall be distributed to the
holder of the Subordinated Certificate.
I. ARTICLE
DISTRIBUTIONS AND REPORTS
Article IV of the Agreement (except for any
portion thereof relating to another Series) shall read in
its entirety as follows and shall be exclusively applicable
to the VFC Certificates:
a) SECTION 4C.1. Distributions. On each
Distribution Date, the Trustee shall distribute (by wire
transfer) to the Agent at the Agent's Account for itself and
each VFC Certificateholder such Person's share, as
determined by the Master Servicer and reported to the
Trustee and the Agent on the preceding Determination Date or
Funding Period Determination Date, as applicable, of the
amounts to be distributed to the Agent pursuant to Article
III. The Trustee will endeavor to make all such payments by
3:00 p.m. (New York City time) on the applicable
Distribution Date, but shall incur no liability to any
Person in the event that it fails to make any such payment
by such time.
a) All allocations and distributions
hereunder by the Trustee shall (i) be in accordance with and
based solely upon the applicable Daily Reports and Monthly
Settlement Statement or Funding Period Settlement Statement
and subject to subsection 3.1(h) of the Agreement and (ii)
be accompanied by a statement to the Agent identifying what
portion of amounts distributed to the Agent's Account are
allocable to principal, interest, Non-Usage Fees and/or any
other Program Costs or fees, as applicable.
SECTION 4C.2. Statements and Notices. (a)
Settlement Statements. On each Determination Date, the
Master Servicer shall deliver to the Agent, the VFC
Certificateholders, the Trustee and the Rating Agency a
Monthly Settlement Statement substantially in the form
attached hereto as Exhibit E-1 setting forth, among other
things, the Loss Reserve Ratio, the Dilution Reserve Ratio,
the Carrying Cost Reserve Ratio and the Servicing Reserve
Ratio, each as recalculated for the next succeeding
Settlement Period. On each Funding Period Determination
Date and the date of any Decrease, the Master Servicer shall
deliver to the Agent, the Trustee and the Rating Agency a
completed settlement statement (a "Funding Period Settlement
Statement"), substantially in the form attached hereto as
Exhibit E-2.
(b) Annual Certificateholders' Tax Statement. On
or before April 1 of each calendar year (or such earlier
date as required by applicable law), beginning with calendar
year 1998, the Company on behalf of the Trustee shall
furnish, or cause to be furnished, to each Person who at any
time during the preceding calendar year was a VFC
Certificateholder, a statement prepared by the Company
containing the aggregate amount distributed to such Person
for such calendar year or the applicable portion thereof
during which such Person was a VFC Certificateholder,
together with such other information as is required to be
provided by an issuer of indebtedness under the Internal
Revenue Code and such other customary information as the
Trustee or the Company deems necessary or desirable to
enable the VFC Certificateholders to prepare their tax
returns. Such obligation of the Company shall be deemed to
have been satisfied to the extent that substantially
comparable information shall have been provided by the
Trustee pursuant to any requirements of the Internal Revenue
Code as from time to time in effect.
(c) Early Amortization Period Notices. Promptly
after the receipt by a Responsible Officer of the Trustee of
notice of the occurrence of an Early Amortization Event with
respect to Series 1998-1, the Trustee shall give notice
(which notice shall in any event be given (by telephone
confirmed promptly in writing or otherwise in writing) not
later than the second Business Day after such receipt) of
such occurrence to (i) the Agent and the Rating Agency and
(ii) each VFC Certificateholder.
(d) Principal Payment Notices. During the
Amortization Period, on each date which is three Business
Days prior to a Funding Period Settlement Date, the Trustee
shall deliver to the Agent a notice by fax, followed by a
hard copy delivered by overnight carrier, setting forth the
amount on deposit and available for distribution in the
Series 1998-1 Principal Collection Sub-subaccount as of the
opening of business on such date.
(e) Forwarding of Other Notices and Documents.
The Trustee shall promptly (but in any event within two
Business Days following receipt thereof) forward to the
Agent and each VFC Certificateholder copies of the following
documents and/or notices upon receipt thereof by a
Responsible Officer of the Trustee:
(1) Financial Statements of Company. All financial
statements delivered by the Company pursuant to subsection
2.7(a) of the Agreement.
(1) Early Amortization, Insolvency and
Lien Notices. Any notice delivered by the Company pursuant
to subsection 2.7(g) or 7.2(a) of the Agreement or any
notice delivered by the Master Servicer pursuant to Section
7.1 of the Agreement.
(1) Daily Reports. Upon request by the
Agent or any VFC Certificateholder, Daily Reports delivered
by the Master Servicer pursuant to subsection 4.2(a) of the
Servicing Agreement.
(1) Settlement Statements; Quarterly
Master Servicer Certificates. All Monthly Settlement
Statements, Funding Period Settlement Statements and
certificates delivered by the Master Servicer pursuant to
Sections 4.3 and 4.4 of the Servicing Agreement.
(1) Accountants' Letters. All letters delivered by
the Master Servicer's independent public accountants
pursuant to Section 4.5 of the Servicing Agreement.
(1) SEC Filings by Master Servicer.
All filings with the Securities and Exchange Commission
delivered by the Master Servicer pursuant to
subsection 4.14(d) of the Servicing Agreement.
(f) Termination of Sellers. The Master Servicer
shall promptly notify the Rating Agency, concurrently with
its notification of the Trustee and the Agent, of the
termination of any Seller pursuant to Section 9.14 of the
Receivables Sale Agreement.
SECTION 4C.3. Notices. Notices required to be
given to the VFC Certificateholders hereunder will be given
by first class mail to the address of such holders as they
appear in the Certificate Register, or, if expressly
required herein, by telephonic notice via a telephone or
telecopy number provided by each VFC Certificateholder to
the Trustee.
I. ARTICLE
ADDITIONAL EARLY AMORTIZATION EVENTS
A. SECTION Additional Early Amortization
Events. If any one of the events specified in Section 7.1
of the Agreement (after any grace periods or consents
applicable thereto) shall occur during the Revolving Period,
an Early Amortization Event shall occur as provided in such
Section 7.1 of the Agreement. If any one of the following
events shall occur during the Revolving Period with respect
to the VFC Certificates:
a) failure on the part of the Company to make
any payment (i) in respect of principal owing on any VFC
Certificates within one Business Day of the date such
principal is due, (ii) in respect of interest or fees owing
on any VFC Certificates within two Business Days of the date
such amount is due or (iii) in respect of any other amounts
owing by the Company to or for the benefit of the VFC
Certificateholders or the Agent within five Business Days of
the date such other amount is due;
a) failure on the part of the Master Servicer to
remit any amounts on behalf of the Company as required by
the Transaction Documents or to instruct the Trustee to make
the allocations and distributions set forth in Article III
which such failure shall result in the failure to pay (i)
any principal owing on any VFC Certificate within one
Business Day of the date such principal is due, (ii) any
interest or fees owing on any VFC Certificates within two
Business Days of the date such amount is due, or (iii) any
other amounts owing by the Company or the Master Servicer
under any Transaction Document or the Guaranty to or for the
benefit of the VFC Certificateholders or the Agent within
five Business Days of the date such other amount is due;
a) failure on the part of any member of the SFC
Group duly to observe or perform in any material respect any
covenants or agreements of such Person set forth in any
Transaction Document which has a material adverse effect on
the Agent or the VFC Certificateholders which continues
unremedied for 30 days from the earlier of (i) the date upon
which a Responsible Officer of such member of the SFC Group
obtains knowledge of such failure or (ii) the date on which
written notice of such failure, requiring the same to be
remedied, shall have been given to such member of the SFC
Group by the Trustee, or any such Person and the Trustee by
the Control Party;
a) any representation or warranty made by any
member of the SFC Group in any Transaction Document (i)
shall prove to have been incorrect in any material respect
when made or when delivered which continues to be incorrect
for a period of 30 days after the day on which notice of
such failure, requiring the same to be remedied, shall have
been given by the Trustee to such member of the SFC Group
(or by the Control Party to any such Person and the Trustee)
and (ii) as a result of such incorrectness, the interests of
the Agent or the VFC Certificateholders are materially and
adversely affected; provided, however, that an Early
Amortization Event with respect to Series 1998-1 shall not
be deemed to have occurred under this paragraph if the
incorrectness of such representation or warranty gives rise
to an obligation to repurchase the related Receivables and
the Company has repurchased the related Receivable or all
such Receivables, if applicable, in accordance with the
provisions of the Agreement within five Business Days of
when the Company was obligated to do so;
a) the Allocated Receivables Amount shall be less
than the Target Receivables Amount for a period of five
consecutive days;
a) a Purchase Termination Event (as defined in the
Receivables Sales Agreement) which allows the Company to
cease purchasing Receivables from all Sellers thereunder
shall have occurred and be continuing under the Receivables
Sale Agreement;
a) as at the end of any Settlement Period, the Loss-
to-Liquidation Ratio shall exceed 4.5%;
a) as at the end of any Settlement Period, the
Delinquency Ratio shall exceed 4%;
a) as at the end of any Settlement Period, the
Default Ratio shall exceed 6%;
a) for any Settlement Period, Days Sales
Outstanding shall be more than 40 days;
a) as at the last date of any fiscal quarter of the
Company, Net Worth shall be less than an amount equal to (i)
10% times (ii) the Invested Amount;
a) (i) any member of the SFC Group shall have
commenced any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization
or relief of debtors or shall have consented to the entry of
any order for relief entered with respect to it in an
involuntary case under any such law, or seeking to
adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its assets, or any
member of the SFC Group shall make a general assignment for
the benefit of its creditors (any such case, proceeding or
other action, a "Bankruptcy Action"); or (ii) there shall be
commenced against any member of the SFC Group any Bankruptcy
Action which (A) results in the entry of an order for relief
or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 30
days; or (iii) there shall be commenced against any member
of the SFC Group any case, proceeding or other action
seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial
part of its assets which results in the entry of an order
for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60
days from the entry thereof; or (iv) any member of the SFC
Group shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the
acts set forth in clauses (i), (ii) or (iii) above; or (v)
any member of the SFC Group shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay
its debts as they become due;
a) a Servicer Default with respect to the Master
Servicer or any Significant Servicer shall have occurred and
be continuing or at any time a Servicer Default with respect
to three or more Servicers shall have occurred and be
continuing;
a) a Change in Control shall have occurred;
a) the Trust shall for any reason cease to have a
valid and perfected first priority undivided ownership or
security interest in the Trust Assets free and clear of any
Liens other than Permitted Liens;
a) the Internal Revenue Service or the Pension
Benefit Guaranty Corporation (or any successor of either of
the foregoing) shall have a Lien against the assets of any
member of the SFC Group unless such Lien expressly does not
attach to any Receivables sold or purported to be sold to
the Company and does not otherwise (in the opinion of the
Agent) have a material adverse effect on the VFC
Certificateholders;
a) any of the Agreement, the Servicing Agreement,
this Supplement or the Receivables Sale Agreement shall
cease, for any reason, to be in full force and effect, or
the Company shall so assert in writing;
a) the "Commitments" under (and as defined in) the
SFC Loan Agreement shall have been terminated prior to their
stated term or the lenders thereunder shall have refused to
make any extensions of credit thereunder for a period of 90
consecutive days following notice of such refusal delivered
to the borrowers thereunder;
a) (i) any of SFC or the Sellers shall default in
the payment of principal of or interest on any indebtedness,
in an aggregate amount, with respect to such Person, at any
one time equal to or exceeding $5,000,000 which default
continues unremedied and unwaived beyond the applicable
grace period, if any, set forth in the document evidencing
such indebtedness, or (ii) indebtedness of SFC or any Seller
becomes due prior to its stated maturity in an aggregate
amount, with respect to such Person, equal to or exceeding
$5,000,000;
a) the aggregate principal amount of the VFC
Certificates is not paid in full on the Expected Final
Distribution Date;
a) any Lien or other claim against the Company
shall arise in favor of a Seller in connection with the
Subordinated Note under the Receivables Purchase Agreement
or any foreclosure or similar proceeding shall be commenced
in respect of the Company's stock in connection therewith;
a) the rating of the VFC Certificates as in effect
on the Issuance Date shall be (i) withdrawn by the Rating
Agency or (ii) reduced below BB+ by the Rating Agency; or
a) The Guaranty shall cease to be in full force
and effect, or SFC shall so assert in writing;
then, after the applicable grace period, if any, set forth
in such subsections (notice of which event shall be given by
the Trustee to the Rating Agency to the extent that a
Responsible Officer has actual knowledge thereof), the
Agent, on behalf of the Control Party, by notice then given
in writing to the Company, the Master Servicer and the
Trustee, may declare that an early amortization event (an
"Early Amortization Event") has occurred as of the date of
such notice with respect to Series 1998-1.
I. ARTICLE
SERVICING FEE
A. SECTION Servicing Compensation. A monthly
servicing fee (the "Series 1998-1 Monthly Servicing Fee")
shall be payable to the Master Servicer, on behalf of the
Servicing Parties, on each Settlement Date for the Accrual
Period then ending, in an amount equal to the product of (a)
the Servicing Fee and (b) a fraction the numerator of which
is the daily average Adjusted Invested Amount for such
Accrual Period and the denominator of which is the daily
average of the Aggregate Adjusted Invested Amount for such
Accrual Period; provided, however, that if an Early
Amortization Period has commenced and SFC is acting as
Master Servicer, the Series 1998-1 Monthly Servicing Fee
shall be deferred until all amounts due under the VFC
Certificates have been paid in full. The Series 1998-1
Monthly Servicing Fee is the Monthly Servicing Fee, referred
to in Section 2.5 of the Servicing Agreement, which is
allocable to Series 1998-1.
I. ARTICLE
COVENANTS, REPRESENTATIONS AND WARRANTIES
A. SECTION Representations and Warranties of
the Company and the Master Servicer. The Company and the
Master Servicer hereby represent and warrant to the Agent,
the Trustee and each of the VFC Certificateholders that each
and all of their respective representations and warranties
contained in each of the Pooling and Servicing Agreements is
true and correct in all material respects as of the date
hereof.
A. SECTION Covenants of the Company. The
Company hereby agrees that:
a) it shall observe each and all of its
respective covenants (both affirmative and negative)
contained in each Pooling and Servicing Agreement and the
Certificate Purchase Agreement in all material respects;
a) it shall not terminate the Agreement unless
in strict compliance with the terms of the Agreement;
a) it shall not change in any material respect
the terms or provisions of the Policies so as to adversely
affect the general quality of the Receivables without the
prior written consent of the Control Party;
a) it shall not make any change or modification
(or permit any change or modification to be made) in any
material respect to the Policies, except (i) if such changes
or modifications are necessary under any Requirement of Law
or (ii) if such changes or modifications are consented to by
the Agent;
(e) it shall cooperate with and assist the Agent
in any syndication efforts with respect to the VFC
Certificates, including without limitation, providing
all information and access to personnel reasonably
deemed necessary by the Agent and making available such
personnel for informational meetings with potential
purchasers of the VFC Certificates at such times and
places as the Agent may reasonably request;
(f) it shall not borrow under any "Subordinated
Notes" (as such term is defined in the Receivables Sale
Agreement) if, after giving effect thereto, the
aggregate outstanding principal amount of all such
Subordinated Notes would exceed the excess, if any, of
(i) the Aggregate Receivables Amount over (ii) the sum
of (A) the Adjusted Invested Amount plus (B) the
product of (1) the Loss Reserve Ratio times (2) the
Aggregate Receivables Amount (each as in effect at such
time but calculated without giving effect to any
increase of the Ratings Multiple above 1.5); and
(g) on or prior to September 30, 1998, it shall
complete and deliver to the Agent a comprehensive
written assessment of the nature and extent of its
"Year 2000 Problem" (that is, the risk that computer
applications used by the Company may be unable to
recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after
December 31, 1999) and on or prior to December 31,
1998, it shall deliver to the Agent a comprehensive
plan to eliminate its Year 2000 Problem on or before
August 31, 1999, including without limitation (i)
computer code enhancements or revisions, (ii) upgrades
or replacements of Year 2000 date-sensitive systems or
components, (iii) test and validation procedures, (iv)
an implementation time line and budget and (v)
designation of specific employees who will be
responsible for planning, coordinating and implementing
each phase or subpart of such comprehensive corrective
plan. On or prior to August 31, 1999, the Company shall
have completed all steps set forth in its comprehensive
plan and shall have eliminated its Year 2000 Problem,
except where the failure to correct the same could not
reasonably be expected to have a Material Adverse
Effect.
A. SECTION Covenants of the Master Servicer.
The Master Servicer hereby agrees that:
(a) it shall observe each and all of its
covenants (both affirmative and negative) contained in
each Pooling and Servicing Agreement and the
Certificate Purchase Agreement in all material
respects;
(b) it shall deliver to the Agent on each
Business Day a Daily Report, at the times specified and
in accordance with the provisions of Section 4.2 of the
Servicing Agreement;
(c) it shall deliver to the Agent and (b) it
shall deliver to each VFC Certificateholder which is an
Eligible Certificateholder by 11:00 a.m. (New York City
time) on the Determination Date or Funding Period
Determination Date prior to each Settlement Date or
Funding Period Settlement Date, a Monthly Settlement
Statement or Funding Period Settlement Statement, as
applicable;
(d) it shall, or shall cause the Company and any
other member of the SFC Group to, cooperate with and
assist the Agent in any syndication efforts with
respect to the VFC Certificates, including without
limitation, providing all information and access to
personnel reasonably deemed necessary by the Agent and
making available such personnel for informational
meetings with potential purchasers of the VFC
Certificates at such times and places as the Agent may
reasonably request;
(e) it shall not, and shall not allow any of the
Sellers or its other Subsidiaries to, create any Liens
encumbering any goods or merchandise the sale of which
may give rise to a Receivable without providing in the
security documentation therefor that any such Lien does
not attach to, and shall be released from, any of the
Receivables included in the Trust Assets;
(f) on or prior to September 30, 1998, it shall,
and shall cause each Seller to complete and deliver to
the Agent a comprehensive written assessment of the
nature and extent of its and each Seller's Year 2000
Problem and on or prior to December 31, 1998, it shall
and shall cause each Seller to deliver to the Agent a
comprehensive plan to eliminate such Year 2000 Problem
on or before August 31, 1999, including without
limitation (i) computer code enhancements or revisions,
(ii) upgrades or replacements of Year 2000 date-
sensitive systems or components, (iii) test and
validation procedures, (iv) an implementation time line
and budget and (v) designation of specific employees
who will be responsible for planning, coordinating and
implementing each phase or subpart of such
comprehensive corrective plan. On or prior to August
31, 1999, the Master Servicer shall have completed and
shall cause each Seller to complete all steps set forth
in its comprehensive plan and shall have eliminated its
Year 2000 Problem, except where the failure to correct
the same could not reasonably be expected to have a
Material Adverse Effect; and
(g) it shall not report any credit memo or
similar credit adjustment in the Aged Receivables Ratio
numerator for purposes of determining the aggregate
unpaid balances of Receivables by any Seller or Seller
Group.
A. SECTION Additional Supplements. The
Company and the Master Servicer each hereby agrees that no
additional Supplement shall be issued under the Agreement
unless the Control Party shall have consented to the form
and substance of the Principal Terms contained in such
Supplement, which consent shall not be unreasonably withheld
(it being understood that it is not unreasonable if the
Control Party withholds such consent because it determines
in its sole discretion that its rights would be diminished
or otherwise adversely affected under any of the Transaction
Documents as a result of the issuance of such Supplement).
I. ARTICLE
MISCELLANEOUS
A. SECTION Ratification of Agreement. As
supplemented by this Supplement, the Agreement is in all
respects ratified and confirmed and the Agreement as so
supplemented by this Supplement shall be read, taken and
construed as one and the same instrument.
A. SECTION Governing Law. THIS SUPPLEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAW.
A. SECTION Further Assurances. Each of the
Company and the Trustee agrees, from time to time, to do and
perform any and all acts and to execute any and all further
instruments required or reasonably requested by the Control
Party more fully to effect the purposes of this Supplement
and the sale of the VFC Certificates hereunder, including,
without limitation, in the case of the Company, the
execution of any financing statements or continuation
statements relating to the Receivables and the other Trust
Assets for filing under the provisions of the UCC of any
applicable jurisdiction.
A. SECTION No Waiver; Cumulative Remedies. No
failure to exercise and no delay in exercising, on the part
of the Agent, the Trustee or any VFC Certificateholder, any
right, remedy, power or privilege hereunder, shall operate
as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided
are cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
A. SECTION Amendments. This Supplement may
only be amended, supplemented or otherwise modified from
time to time if such amendment, supplement or modification
is effected in accordance with the provisions of Section
10.1 of the Agreement. The Master Servicer shall give each
VFC Certificateholder notice of any proposed amendment to
this Supplement or to the Agreement on or before the later
of (a) the date that is 10 days prior thereto and (b) the
date of any initial notice thereof is provided to the Agent.
A. SECTION Notices. All notices, requests and
demands to or upon any party hereto to be effective shall be
given in the manner set forth (i) in the case of the
Company, the Master Servicer and the Trustee, in Section
10.5 of the Agreement and (ii) in the case of the Agent, at
its address set forth below:
Bankers Trust Company
Fourteen ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice required or permitted to be mailed to a VFC
Certificateholder shall be given as provided in Section
4C.3.
a) SECTION Successors and Assigns. This
Supplement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and
assigns, except that the Company may not assign or transfer
any of its rights under this Supplement without the prior
written consent of the Required Certificateholders (as
defined in the Certificate Purchase Agreement).
a) Any VFC Certificateholder may, upon the
satisfaction of all applicable requirements under Section
5.3 of the Agreement, in the ordinary course of its business
and in accordance with applicable law, at any time sell to
one or more financial institutions or other entities
("Participants") participations in its VFC Certificate and
its rights hereunder pursuant to documentation in form and
substance satisfactory to such VFC Certificateholder and the
Participant. In the event of any such sale by a VFC
Certificateholder to a Participant, such VFC
Certificateholder's obligations under this Supplement shall
remain unchanged and such VFC Certificateholder shall remain
solely responsible for the performance thereof. The Company
agrees that each VFC Certificateholder is entitled, in its
own name, to enforce for the benefit of, or as agent for,
any Participant any and all rights, claims and interest of
such Participant in respect of the Trust and the Company's
obligations under this Supplement.
a) Any VFC Certificateholder may, in the
ordinary course of its business and in accordance with
applicable law, at any time sell all or any part of its
rights and obligations under this Supplement and the VFC
Certificates to (i) its Affiliates, or any other VFC
Certificateholder, and (ii) with the prior consent of the
Company, such consent not to be unreasonably withheld or
delayed, one or more banks or other entities (an "Acquiring
VFC Certificateholder"), but only to the extent that (i)
such Acquiring VFC Certificateholder shall have also either
acquired a corresponding share of such assigning VFC
Certificateholder's Commitment or otherwise extended a
Commitment to the Company on terms acceptable to the Company
and (ii) all requisite Commitment Certifications shall have
been delivered to the Trustee.
a) The Company and the Master Servicer each
authorizes each VFC Certificateholder to disclose to any
Participant or Acquiring VFC Certificateholder (each, a
"Transferee") and any prospective Transferee any and all
financial information in such VFC Certificateholder's
possession concerning the Company, any Servicing Party, any
Seller or the Receivables which has been delivered to such
VFC Certificateholder or the Agent by the Company or the
Master Servicer pursuant to this Supplement or which has
been delivered to such VFC Certificateholder or the Agent by
or on behalf of the Company in connection with such VFC
Certificateholder's credit evaluation of the Company, any
Servicing Party, any Seller, the Trust and the Trust Assets
prior to becoming a party to this Supplement; provided,
however, if any such information is subject to a
confidentiality agreement between such VFC Certificateholder
and the Company or the Master Servicer, the Transferee or
prospective Transferee shall have agreed to be bound by the
terms and conditions of such confidentiality agreement.
a) If, pursuant to this subsection, any
interest in this Supplement or the VFC Certificates is
transferred to any Transferee which is organized under the
laws of any jurisdiction other than the United States or any
State thereof, the transferor VFC Certificateholder shall
cause such Transferee, concurrently with the effectiveness
of such transfer, (i) to represent to the transferor VFC
Certificateholder (for the benefit of the transferor VFC
Certificateholder, the Agent, the Trustee, the Company and
the Master Servicer) that under applicable law and treaties
no taxes will be required to be withheld by the Trustee, the
Company, the Master Servicer or the transferor VFC
Certificateholder with respect to any payments to be made to
such Transferee in respect of the VFC Certificates, (ii) to
furnish to the transferor VFC Certificateholder (and, in the
case of any Acquiring VFC Certificateholder not registered
in the Certificate Register, the Trustee and the Company)
either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Transferee
claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and
(iii) to agree (for the benefit of the transferor VFC
Certificateholder, the Agent, the Trustee, the Company and
the Master Servicer) to provide the transferor VFC
Certificateholder (and, in the case of any Acquiring VFC
Certificateholder not registered in the Certificate
Register, the Agent, the Trustee, the Company and the Master
Servicer) a new Form 4224 or Form 1001 upon the expiration
or obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S.
laws and regulations and amendments duly executed and
completed by such Transferee, and to comply from time to
time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.
a) The Transfer Agent and Registrar shall not
register the transfer of any VFC Certificate unless:
(i) the person in whose name the VFC Certificate
is to be registered upon transfer represents and
warrants that it, and each of the accounts for which it
is purchasing, is a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act), and
acknowledges that it has received such information
regarding the Trust and the VFC Certificates as it has
requested and that it is aware that the transferor is
relying upon the foregoing certification to claim the
exemption from registration provided by Rule 144A; or
(ii) the Trustee has received transfer
documentation from the holder of such VFC Certificate
indicating, and a written opinion of counsel acceptable
to the Company and the Trustee confirming, that the
transfer is being made pursuant to an exemption from,
or a transaction not otherwise subject to, the
registration requirements of the Securities Act, and
such transaction has been approved by the Company;
and such transferee further represents and warrants to the
Trustee as to one of the following:
(x) such transferee is an ERISA Entity; or
(y) such transferee is not an ERISA Entity.
For purposes of this paragraph (f), any such advice to the
Trustee in writing may be in the form of a letter, notice or
other written document and, with respect to clauses (i),
(ii) and (iii) and (x) and (y) above, the requirements of
such clauses will be deemed to be satisfied by appropriate
notation on the transfer notice set forth on such VFC
Certificate or by other written advice to the Trustee
stating in substance one of the entries on such transfer
notice.
a) The Transfer Agent and Registrar shall not
register any transfer of any VFC Certificate to an ERISA
Entity unless the Trustee determined that after giving
effect to such transfer no more than 25% of the VFC
Certificates are held by ERISA Entities.
A. SECTION 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 taken together shall constitute one and the
same agreement.
A. SECTION No Bankruptcy Petition. Each VFC
Certificateholder, by its acquisition of a VFC Certificate,
agrees that, prior to the date that is one year and one day
after the later of (a) the last day of the Amortization
Period and (b) the last day of the Amortization Period of
any other Outstanding Series, it will not institute against,
or join any other Person in instituting against, the Company
any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other similar proceedings under
any federal or state bankruptcy or similar law.
A. SECTION Costs and Expenses. (a) The
Company agrees to pay all reasonable out-of-pocket expenses
of the Trustee, the Agent and solely with respect to those
amounts described in clause (i) herein, of each VFC
Certificateholder (including, without limitation, reasonable
fees and disbursements of any such Person's attorneys) in
connection with (i) the preparation, execution and delivery
of this Supplement, the Agreement and the other Transaction
Documents and amendments or waivers of any such documents,
(ii) all audit, accountant, environmental, collateral
evaluation and appraisal fees, costs and expenses incurred
by the Agent in connection with the negotiation,
preparation, execution and administration of this
Supplement, the Agreement, the Certificate Purchase
Agreement and the other Transaction Documents and (iii)
enforcement by the Trustee or the Agent of the obligations
and liabilities of the Company and the Master Servicer under
the Agreement, this Supplement and the related documents;
provided, however, that any payments made by the Company
pursuant to this Section shall be paid solely from Available
Funds, shall be non-recourse other than with respect to
Available Funds necessary to make such payments, and shall
not constitute a claim against the Company to the extent
that insufficient Available Funds exist to make such
payment.
(b) The Company agrees to pay, indemnify, and
hold each of the Agent and each VFC Certificateholder and
each director, officer, partner, agent, employee,
representative, control person and Affiliate thereof (each,
an "Indemnitee") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (i) which may at any time
be imposed on, incurred by or asserted against such
Indemnitee in any way relating to or arising out of this
Supplement or the transactions contemplated hereby or in
connection herewith or any action taken or omitted by the
Indemnitee under or in connection with any of the foregoing
(all such other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and
disbursements being herein called "Indemnified Liabilities")
or (ii) which would not have been imposed on, incurred by or
asserted against such Indemnitee but for its participation
in the transactions contemplated hereby, provided, that the
Company shall have no obligation under this Section 8.10(b)
to any Indemnitee with respect to Indemnified Liabilities
arising from (i) the gross negligence or willful misconduct
of such Indemnitee, (ii) any action taken, or omitted to be
taken, by a Servicer which is not an Affiliate of the
Sellers or Seller Groups, or (iii) any Receivable which
becomes a Charge-Off as a result of non-payment by, or being
uncollectible from, the Obligor with respect to such
Receivable. The Company's obligations in this subsection
shall survive the collection of all Receivables and the
termination of this Series 1998-1 Supplement and the
Agreement.
I. ARTICLE
FINAL DISTRIBUTIONS
a) SECTION Certain Distributions. Not later
than 2:00 p.m., New York City time, on the Distribution Date
following the date on which the proceeds are deposited into
the Series 1998-1 Non-Principal Collection Sub-subaccount
and the Series 1998-1 Principal Collection Sub-subaccount
pursuant to subsection 7.2(b) of the Agreement, the Trustee
shall distribute such amounts pursuant to Article III.
a) Notwithstanding anything to the contrary in
this Supplement or the Agreement, any distribution made
pursuant to this Section shall be deemed to be a final
distribution pursuant to Section 9.3 of the Agreement with
respect to the VFC Certificates.
IN WITNESS WHEREOF, the Company, the Master
Servicer and the Trustee have caused this Series 1998-1
Supplement to be duly executed by their respective officers
as of the day and year first above written.
SPECIALTY FOODS FINANCE CORPORATION
By:
Name:
Title: Vice President, Treasurer
and Assistant Secretary
SPECIALTY FOODS CORPORATION,
as Master Servicer
By:
Name:
Title: Vice President and Treasurer
THE CHASE
MANHATTAN BANK, not in its individual
capacity but solely as Trustee
By:
Name:
Title:
Schedule 1
TRUST ACCOUNTS
The Collection Account has been established by and
at The Chase Manhattan Bank, account number 323602762.
The Collection Account is for the account of The
Chase Manhattan Bank, as trustee for the SFC Master Trust.
Schedule 2
CURE PERIOD TRIGGER DATES
Cure Period
Trigger Date Applicable Subsection or event
10 days Pooling Agreement: Subsection 2.3(i)
0 days Pooling Agreement: Subsections
2.3(e) and (f) (second sentence)
5 days Pooling Agreement: Subsections
2.4(b) and (c)
10 days Pooling Agreement: Subsection 2.7(c)
5 days Pooling Agreement: Subsections
2.7(b) (second two sentences), (f), (g) and
(h)
10 days Pooling Agreement: Section 2.8
(all subsections thereunder)
10 days Servicing Agreement: Sections 3.3,
3.8
5 days Servicing Agreement: Section 3.7
0 days Servicing Agreement: Sections 3.5
and 3.6
10 days Servicing Agreement: Sections 4.6,
4.7, 4.9, 4.12
5 days Servicing Agreement: Sections
4.2(b), 4.3, 4.8, 4.10, 4.11, 4.14
1 day Servicing Agreement: Section
4.2(a)
0 days Servicing Agreement: Section 4.1
10 days Receivables Sale Agreement:
Subsections 4.1(i), (l), (m), (n) and (o)
0 days Receivables Sale Agreement:
Subsections 4.1(c), (e) and (f) (second
sentence)
10 days Receivables Sale Agreement:
Subsection 4.2(a)
5 days Receivables Sale Agreement:
Subsections 4.2(b) and (c)
10 days Receivables Sale Agreement:
Sections 5.5, 5.6, 5.7, 5.11 and 5.12
1 day Receivables Sale Agreement:
Sections 5.9, 5.10 and 5.14
10 days Receivables Sale Agreement:
Sections 6.4, 6.5, 6.6, 6.7, 6.8, 6.9 and
6.10
5 days Receivables Sale Agreement:
Sections 6.1, 6.2 and 6.3
5 days Occurrence of a Master
Servicer Consolidation Event
Schedule 3
RESERVE REQUIREMENT ADJUSTMENTS
Applicable
Applicable Period Leverage Ratio Ratings Multiple
Leverage
Ratio 3/13/98 - 9.50 1.50
12/31/98 9.75 1.75
10.00 2.00
1/1/99 - 3/31/99 9.25 1.50
9.50 1.75
9.75 2.00
4/1/99 - 6/30/99 9.00 1.50
9.25 1.75
9.50 2.00
7/1/99 - 8.75 1.50
thereafter 9.00 1.75
9.25 2.00
"Leverage Ratio" means, at the end of any Fiscal Quarter,
the ratio of
(a) Consolidated Total Debt of the Borrower
and its Subsidiaries outstanding at such time less
any cash maintained by the Borrower and its
Subsidiaries which is not restricted by the terms
of any account or agreement in its usage or
application, except as provided in Section 7.1.12
of the SFC Loan Agreement;
to
(b) Consolidated EBITDA of the Borrower and
its Subsidiaries for the period of four
consecutive Fiscal Quarters most recently ended on
prior to such date;
provided that if, during any such period, the Borrower or
any of its Subsidiaries shall have made one or more
Acquisitions, the Leverage Ratio for such period shall be
calculated on a Pro Forma Basis as if each such Acquisition
had been made on the first day of such period.
Applicable
Applicable Period Interest Coverage Ratings Multiple
Ratio
Interest
Coverage 3/13/98 - 6/30/98 0.70 1.50
Ratio 0.60 1.75
0.50 2.00
7/1/98 - 9/30-98 0.80 1.50
0.70 1.75
0.60 2.00
10/1/98 - 0.85 1.50
12/31/98 0.75 1.75
0.65 2.00
1/1/99 - 3/31/99 0.90 1.50
0.80 1.75
0.70 2.00
4/1/99 - 6/30/99 0.95 1.50
0.85 1.75
0.75 2.00
7/1/99 - 1.00 1.50
thereafter 0.90 1.75
0.80 2.00
"Interest Coverage Ratio" means, at the end of any Fiscal
Quarter, the ratio computed for the period consisting of
such Fiscal Quarter and each of the three immediately prior
Fiscal Quarters of:
(a) Consolidated EBITDA of the Borrower and
its Subsidiaries for all such Fiscal Quarters;
to
(b) the cash portion of Consolidated Interest
Expense of the Borrower and its Subsidiaries for
all such Fiscal Quarters;
provided that if, during any such period, the Borrower or
any of its Subsidiaries shall have made one or more
acquisitions, the Interest Coverage Ratio for such period
shall be calculated on a Pro Forma Basis as if each such
acquisition had been made on the first day of such period.
Note: all capitalized terms used herein without
definition shall have the meanings assigned to such terms in
the SFC Loan Agreement, as in effect on the Closing Date
without giving effect to any subsequent amendments thereto.
EXHIBIT A TO SERIES
1998-1 SUPPLEMENT
SFC MASTER TRUST
VFC CERTIFICATE, SERIES 1998-1
REGISTERED
NO. [_____] $[__________] (of
$ issued)
THIS VFC CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED.
NEITHER THIS VFC CERTIFICATE NOR ANY PORTION HEREOF MAY BE
OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM SUCH REGISTRATION PROVISIONS. THIS VFC CERTIFICATE IS
NOT PERMITTED TO BE TRANSFERRED, ASSIGNED, EXCHANGED OR
OTHERWISE SOLD OR CONVEYED EXCEPT IN COMPLIANCE WITH THE
TERMS OF THE POOLING AGREEMENT REFERRED TO HEREIN.
This VFC Certificate evidences a fractional
undivided interest in assets of the
SFC MASTER TRUST
the corpus of which consists of receivables representing
amounts payable for goods or services, which receivables
have been purchased by Specialty Foods Finance Corporation,
a Delaware corporation, which in turn transferred and
assigned such receivables to the SFC Master Trust.
(Not an interest in or obligation of
Specialty Foods Finance Corporation or any Affiliate
thereof)
This certifies that
[NAME OF CERTIFICATEHOLDER]
(the "VFC Certificateholder") is the registered owner of a
fractional undivided interest in the assets of SFC Master
Trust (the "Trust"), created pursuant to the Pooling
Agreement, dated as of November 16, 1994, (as the same may
from time to time be amended, restated, supplemented or
otherwise modified, the "Pooling Agreement"), by and among
Specialty Foods Finance Corporation, a Delaware corporation
(the "Company"), Specialty Foods Corporation, a Delaware
corporation (the "Master Servicer"), and The Chase Manhattan
Bank (as successor in interest to Chemical Bank), a New York
banking corporation, not in its individual capacity but
solely as trustee (in such capacity, the "Trustee") for the
Trust, as supplemented by the Series 1998-1 Supplement,
dated as of March 31, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Supplement",
collectively, with the Pooling Agreement, the "Agreement"),
by and among the Company, the Master Servicer and the
Trustee. The corpus of the Trust consists of receivables
(the "Receivables") representing amounts payable for goods
or services and all other Trust Assets referred to in the
Agreement. Although a summary of certain provisions of the
Agreement is set forth below, this VFC Certificate does not
purport to summarize the Agreement, is qualified in its
entirety by the terms and provisions of the Agreement and
reference is made to the Agreement for information with
respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties
and obligations of the Trustee. A copy of the Agreement may
be requested by writing to the Trustee at ▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn:
Advanced Structured Products Group. To the extent not
defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Agreement.
This VFC Certificate is issued under, is entitled
to the benefits of, and is subject to, the terms, provisions
and conditions of the Agreement, to which Agreement the VFC
Certificateholder, by virtue of the acceptance hereof,
assents and is bound.
The Company and each VFC Certificateholder intend,
for federal, state and local income and franchise tax
purposes only, the VFC Certificates to be evidence of
indebtedness of the Company secured by the Receivables. The
VFC Certificateholder, by the acceptance hereof, assents and
is bound by such intent.
This VFC Certificate is one in a Series of
Investor Certificates entitled "SFC Master Trust, VFC
Certificates, Series 1998-1" (the "VFC Certificates")
representing a fractional undivided interest in the assets
of the Trust consisting of the right to receive the Invested
Percentage of the Collections and all other funds on deposit
in the Trust Accounts (the "VFC Certificateholders'
Interest"). Concurrent with the issuance of the VFC
Certificates, the Trust shall also issue a Subordinated
Company Certificate entitled "SFC Master Trust, Subordinated
Company Certificate, Series 1998-1" (the "Subordinated
Certificate") representing a fractional undivided interest
in the assets of the Trust consisting of the right to
receive Collections allocated to the VFC Certificateholders'
Interest and not required to be distributed to or for the
benefit of the VFC Certificateholders. The Trust's assets
are allocated in part to the VFC Certificateholders and the
holder of the Subordinated Certificate with the remainder
allocated to the Certificateholders of other Series, if any,
and to the Company. In addition to the VFC Certificates and
the Subordinated Certificate, an Exchangeable Company
Certificate will be issued to the Company pursuant to the
Agreement which will represent the Company's interest (if
any) in the Trust. The Exchangeable Company Certificate
will represent the interest in the Trust Assets not
represented by the Certificates of each Series. The
Exchangeable Company Certificate may be exchanged by the
Company pursuant to the Agreement for one or more Series of
Investor Certificates and a reissued Exchangeable Company
Certificate upon the conditions set forth in the Agreement.
In addition, to the extent permitted for any Series of
Investor Certificates by the related Supplement, the
Investor Certificateholders of such Series may tender their
Investor Certificates and the Company may tender the
Exchangeable Company Certificate in exchange for one or more
Series of Investor Certificates, one or more Series of
Subordinated Company Certificates and a reissued
Exchangeable Company Certificate.
Distributions with respect to this VFC Certificate
shall be paid to the VFC Certificateholder in immediately
available funds in the manner directed, and at the times and
dates, set forth in the Agreement. Final payment of this
VFC Certificate shall be made only upon presentation and
surrender of this Certificate at the office or agency
specified in the notice of final distribution delivered by
the Trustee to the VFC Certificateholders in accordance with
the Agreement.
Distributions with respect to this VFC Certificate
shall be paid by the Trustee by check drawn on a bank in New
York City, or by transfer to an account maintained or
controlled by the VFC Certificateholder. Final payment of
this VFC Certificate shall be made after due notice of such
final distribution delivered by the Trustee to the VFC
Certificateholders in accordance with the Agreement.
This VFC Certificate does not represent an
obligation of, or an interest in, the Company, the Master
Servicer or any Affiliate of either of them.
Subject to the provisions of the Agreement, the
transfer of this VFC Certificate shall be registered in the
Certificate Register upon surrender of this VFC Certificate
for registration of transfer at any office or agency
maintained by the Transfer Agent and Registrar accompanied
by a written instrument of transfer, in a form satisfactory
to the Trustee and the Transfer Agent and Registrar, duly
executed by the VFC Certificateholder or the VFC
Certificateholder's attorney, and duly authorized in writing
with such signature guaranteed, and thereupon one or more
new VFC Certificates of authorized denominations and of the
same aggregate undivided interest will be issued to the
designated transferee or transferees.
The Trustee, the Company and any agent of either
of them, may treat the person in whose name this VFC
Certificate is registered as the owner hereof for all
purposes.
It is expressly understood and agreed by the
Company and the VFC Certificateholder that (a) the Agreement
is executed and delivered by the Trustee, not individually
or personally but solely as Trustee of the Trust, in the
exercise of the powers and authority conferred and vested in
it, (b) the representations, undertakings and agreements
made on the part of the Trust in the Agreement are made and
intended not as personal representations, undertakings and
agreements by the Trustee, but are made and intended for the
purpose of binding only the Trust, (c) nothing herein
contained shall be construed as creating any liability of
the Trustee, individually or personally, to perform any
covenant either expressed or implied made on the part of the
Trust in the Agreement, all such liability, if any, being
expressly waived by the parties who are signatories to the
Agreement and by any Person claiming by, through or under
such parties; provided, however, the Trustee shall be liable
in its individual capacity for its own willful misconduct or
gross negligence and for any tax assessed against the
Trustee based on or measured by any fees, commission or
compensation received by it for acting as Trustee and (d)
under no circumstances shall the Trustee be personally
liable for the payment of any indebtedness or expenses of
the Trust or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or
undertaken by the Trust under the Agreement.
The holder of this VFC Certificate is authorized
to record the date and amount of each increase and decrease
in the Invested Amount with respect to such holder on the
schedules annexed hereto and made a part hereof and any such
recordation shall constitute prima facie evidence of the
accuracy of the information so recorded, absent manifest
error (subject, in any event, to the records of the Trustee
for the Invested Amount for all VFC Certificateholders),
provided that the failure of the holder of this VFC
Certificate to make such recordation (or any error in such
recordation) shall not affect the obligations of the Trust,
the Company, the holder of the Subordinated Company
Certificate, the Master Servicer or the Trustee under the
Agreement.
This VFC Certificate shall be construed in
accordance with and governed by the law of the State of New
York.
The VFC Certificateholder hereby agrees that,
prior to the date which is one year and one day after the
date on which the principal of and all other amounts in
respect of this VFC Certificate have been repaid in full, it
will not institute against, or join any other Person in
instituting against, the Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state
bankruptcy or similar law.
Unless the certificate of authentication hereon
has been executed by or on behalf of the Trustee, by manual
signature, this VFC Certificate shall not be entitled to any
benefit under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Company has caused this
VFC Certificate to be duly executed.
Dated: ___________, ____
SPECIALTY FOODS FINANCE
CORPORATION,
as authorized pursuant to Section
5.1 of the Agreement
By:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the VFC Certificates described in
the within-mentioned Agreement.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely
as Trustee
By:________________________ OR
By:________________________
Authorized Officer Authenticating
Agent
By:________________________
Authorized Officer
Schedule 1
to VFC
Certificate
Date Increase in Decrease in Series 1998- Notation
Series 1998- Series 1998- 1 Made By
1 Invested 1 Invested
Amount Invested Amount
Amount
EXHIBIT B TO SERIES
1998-1 SUPPLEMENT
SFC MASTER TRUST
SUBORDINATED COMPANY CERTIFICATE, SERIES 1998-1
THIS SUBORDINATED CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED. NEITHER THIS SUBORDINATED CERTIFICATE NOR ANY
PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE
WITH THE REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS.
THIS SUBORDINATED CERTIFICATE IS NOT PERMITTED TO
BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR
CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE POOLING
AGREEMENT REFERRED TO HEREIN.
This Subordinated Certificate evidences a
fractional undivided interest in assets of the
SFC MASTER TRUST
the corpus of which consists of receivables representing
amounts payable for goods or services, which receivables
have been purchased by Specialty Foods Finance Corporation,
a Delaware corporation, which in turn transferred and
assigned such receivables to the SFC Master Trust.
(Not an interest in or obligation of
Specialty Foods Finance Corporation or any Affiliate
thereof)
This certifies that
SPECIALTY FOODS FINANCE CORPORATION
(the "Subordinated Certificateholder") is the registered
owner of a fractional undivided interest in the assets of
SFC Master Trust (the "Trust"), created pursuant to the
Pooling Agreement, dated as of November 16, 1994 (as the
same may from time to time be amended, restated,
supplemented or otherwise modified, the "Pooling
Agreement"), by and among Specialty Foods Finance
Corporation, a Delaware corporation (the "Company"),
Specialty Foods Corporation, a Delaware corporation (the
"Master Servicer"), and The Chase Manhattan Bank (as
successor in interest to Chemical Bank), a New York banking
corporation, not in its individual capacity but solely as
trustee (in such capacity, the "Trustee") for the Trust, as
supplemented by the Series 1998-1 Supplement, dated as of
March 31, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Supplement", collectively,
with the Pooling Agreement, the "Agreement"), by and among
the Company, the Master Servicer and the Trustee. The
corpus of the Trust consists of receivables (the
"Receivables") representing amounts payable for goods or
services and all other Trust Assets referred to in the
Agreement. Although a summary of certain provisions of the
Agreement is set forth below, this Subordinated Certificate
does not purport to summarize the Agreement, is qualified in
its entirety by the terms and provisions of the Agreement
and reference is made to the Agreement for information with
respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties
and obligations of the Trustee. A copy of the Agreement may
be requested by writing to the Trustee at ▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn:
Structured Finance Services (ABS). To the extent not
defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Agreement.
This Subordinated Certificate is issued under and
is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the holder of the Subordinated
Certificate, by virtue of the acceptance hereof, assents and
is bound.
This Subordinated Certificate is the Subordinated
Company Certificate entitled "SFC Master Trust, Subordinated
Certificate, Series 1998-1" (the "Subordinated Certificate")
representing a fractional undivided interest in the assets
of the Trust consisting of the right to receive Collections
allocated to the Subordinated Interest and not required to
be distributed to or for the benefit of the holders of the
VFC Certificates. Concurrently with the issuance of the
Subordinated Certificate, the Trust shall also issue a
Series of VFC Certificates entitled "SFC Master Trust, VFC
Certificates, Series 1998-1" (the "VFC Certificates")
representing a fractional undivided interest in the assets
of the Trust, consisting of the right to receive Collections
and all other funds on deposit in the Trust Accounts (the
"VFC Certificateholders' Interest"). The Trust's assets are
allocated in part to the VFC Certificateholders and the
Subordinated Certificateholder of Series 1998-1 with the
remainder allocated to Certificateholders of other Series,
if any, and to the Company. In addition to the VFC
Certificates and the Subordinated Certificate, an
Exchangeable Company Certificate will be issued to the
Company pursuant to the Agreement which will represent the
Company's further interest in the Trust. The Exchangeable
Company Certificate will represent the interest in the Trust
Assets not represented by the Investor Certificates and
Subordinated Certificates. The Exchangeable Company
Certificate may be exchanged by the Company pursuant to the
Agreement for one or more Series of Investor Certificates
and a reissued Exchangeable Company Certificate upon the
conditions set forth in the Agreement. In addition, to the
extent permitted for any Series of Investor Certificates by
the related Supplement, the Investor Certificateholders of
such Series may tender their Investor Certificates and the
Company may tender the Exchangeable Company Certificate in
exchange for one or more Series of Investor Certificates,
one or more Series of Subordinated Certificates and a
reissued Exchangeable Company Certificate.
The aggregate interest represented by the
Subordinated Certificate at any time in the assets of the
Trust shall not exceed an amount equal to the Subordinated
Certificate Amount at such time. The Subordinated
Certificate Amount on any date of determination shall be an
amount equal to the Allocated Receivables Amount on such
date minus the Adjusted Invested Amount on such date.
Distributions with respect to this Subordinated
Certificate shall be paid in accordance with the terms of
the Agreement, on the dates indicated therein, by the
Trustee, at the direction of the Master Servicer, in
immediately available funds to the Subordinated
Certificateholder. Final payment of this certificate shall
be made only upon presentation and surrender of this
Certificate at the office or agency specified in the notice
of final distribution delivered by the Trustee to the
Subordinated Certificateholder in accordance with the
Agreement.
This Subordinated Certificate does not represent
an obligation of, or an interest in, the Company, the Master
Servicer or any affiliate of either of them.
It is expressly understood and agreed by the
Company and the Subordinated Certificateholder that (a) the
Agreement is executed and delivered by the Trustee, not
individually or personally but solely as Trustee of the
Trust, in the exercise of the powers and authority conferred
and vested in it, (b) the representations, undertakings and
agreements made on the part of the Trust in the Agreement
are made and intended not as personal representations,
undertakings and agreements by the Trustee, but are made and
intended for the purpose of binding only the Trust, (c)
nothing herein contained shall be construed as creating any
liability of the Trustee, individually or personally, to
perform any covenant either expressed or implied made on the
part of the Trust in the Agreement, all such liability, if
any, being expressly waived by the parties who are
signatories to the Agreement and by any Person claiming by,
through or under such parties, provided, however, the
Trustee shall be liable in its individual capacity for its
own willful misconduct or gross negligence and for any tax
assessed against the Trustee based on or measured by any
fees, commission or compensation received by it for acting
as Trustee and (d) under no circumstances shall the Trustee
be personally liable for the payment of any indebtedness or
expenses of the Trust or be liable for the breach or failure
of any obligation, representation, warranty or covenant made
or undertaken by the Trust under the Agreement.
This Subordinated Certificate shall be construed
in accordance with and governed by the law of the State of
New York.
Unless the certificate of authentication hereon
has been executed by or on behalf of the Trustee, by manual
signature, this Subordinated Certificate shall not be
entitled to any benefit under the Agreement, or be valid for
any purpose.
IN WITNESS WHEREOF, the Company has caused this
Subordinated Certificate to be duly executed.
Dated: ___________, ____
SPECIALTY FOODS FINANCE
CORPORATION,
as authorized pursuant to Section
5.1 of the Agreement
By:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Company
Certificates described in the within-mentioned Agreement.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely
as Trustee
By:________________________ OR
By:________________________
Authorized Officer Authenticating
Agent
By:________________________
Authorized Officer
EXHIBIT C
to
Series 1998-1 Supplement
[Reserved]
EXHIBIT D
to
Series 1998-1 Supplement
Form of Daily Report
Attached.
EXHIBIT E-1
to
Series 1998-1 Supplement
Form of Monthly Settlement Statement
Attached.
EXHIBIT E-2
to
Series 1998-1 Supplement
Form of Funding Period Settlement Statement
Attached.
EXHIBIT F TO SERIES
1998-1 SUPPLEMENT
FORM OF INCREASE NOTICE
____________, ____
The Chase Manhattan Bank, as Trustee
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Attention:
Bankers Trust Company
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Ladies and Gentlemen:
Reference is hereby made to the Series 1998-1
Supplement, dated as of March 31, 1998 (as amended or
supplemented, the "Supplement"), among Specialty Foods
Finance Corporation (the "Company"), Specialty Foods
Corporation, as master servicer (the "Master Servicer"), and
The Chase Manhattan Bank, as Trustee. Capitalized terms
used in this Increase Notice and not otherwise defined
herein shall have the meanings assigned thereto in the
Supplement.
This letter constitutes the notice required in
connection with any Increase pursuant to subsection 2.4(a)
of the Supplement.
The Master Servicer and the Company hereby request an
Increase be made by ___________________ on ____________,
____ in the aggregate amount of $___________, such Increase
to be allocated to a Eurodollar Tranche with a Eurodollar
Period of [one] [two] [three] months.
The Master Servicer hereby represents and warrants as
of the date of such Increase after giving effect thereto,
the conditions set forth in subsections 2.4(a) and (b) of
the Supplement with respect to such Increase have been
satisfied.
IN WITNESS WHEREOF, the undersigned has caused this
Increase Notice to be executed by its duly authorized
officer as of the date first above written.
SPECIALTY FOODS CORPORATION, as
Master Servicer
By:
Name:
Title: EXHIBIT G TO SERIES
1998-1 SUPPLEMENT
FORM OF COMMITMENT CERTIFICATION
The Chase Manhattan Bank, as Trustee
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Bankers Trust Company
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Ladies and Gentlemen:
Reference is hereby made to the Series 1998-1
Supplement, dated as of March 31, 1998 (as amended or
supplemented, the "Supplement"), among Specialty Foods
Finance Corporation (the "Company"), Specialty Foods
Corporation, as master servicer (the "Master Servicer"), and
The Chase Manhattan Bank, as Trustee. Capitalized terms
used in this Commitment Certification and not otherwise
defined herein shall have the meanings assigned thereto in
the Supplement.
Each of the undersigned VFC Certificateholder and the
Company hereby certify that, effective as of the date
hereof, the undersigned VFC Certificateholder's Commitment
is $____________, and you shall be entitled to rely on such
certification until such time as the Company and the
undersigned VFC Certificateholder deliver a revised
Commitment Certification.
This letter constitutes the certification required with
respect to the undersigned VFC Certificateholder's
Commitment pursuant to subsection 2.6 of the Supplement.
IN WITNESS WHEREOF, the undersigned has caused this
Commitment Certification to be executed by its duly
authorized officer as of the date first above written.
SPECIALTY FOODS FINANCE CORPORATION
By:
Name:
Title:
[VFC CERTIFICATEHOLDER]
By:
Name:
Title: