EXHIBIT 10.9
EXECUTION COPY
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USS RECEIVABLES COMPANY, LTD.
UNITED STATIONERS FINANCIAL SERVICES LLC,
as Servicer,
BANK ONE, NA (MAIN OFFICE CHICAGO),
as Funding Agent,
FALCON ASSET SECURITIZATION CORPORATION,
as Initial Purchaser,
THE APA BANKS
FROM TIME TO TIME PARTIES HERETO
AND
BANK ONE, NA (MAIN OFFICE CHICAGO),
as Trustee
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SERIES 2003-1 SUPPLEMENT
Dated as of March 28, 2003
to
SECOND AMENDED AND RESTATED POOLING AGREEMENT
Dated as of March 28, 2003
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UNITED STATIONERS RECEIVABLES MASTER TRUST
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS..............................................................................2
SECTION 1.1 Definitions.....................................................................2
ARTICLE II DESIGNATION OF CERTIFICATES; PURCHASE AND SALE OF THE VFC CERTIFICATES.................25
SECTION 2.1 Designation....................................................................25
SECTION 2.2 The Series 2003-1 Interests....................................................25
SECTION 2.3 Purchases of Interests in the VFC Certificates.................................26
SECTION 2.4 Delivery.......................................................................26
SECTION 2.5 Procedure for Increasing the Series 2003-1 Invested Amount.....................27
SECTION 2.6 Sales by Initial Purchaser of its Series 2003-1 Purchaser
Invested Amount to the APA Banks...............................................30
SECTION 2.7 Procedure for Decreasing the Series 2003-1 Invested Amount;
Optional Termination...........................................................33
SECTION 2.8 Reductions of the Commitments..................................................34
SECTION 2.9 Interest, Fees.................................................................35
SECTION 2.10 Indemnification by the Company and the Servicer................................36
ARTICLE III ARTICLE III OF THE AGREEMENT..........................................................40
ARTICLE IV DISTRIBUTIONS AND REPORTS..............................................................46
ARTICLE V ADDITIONAL EARLY AMORTIZATION EVENTS....................................................47
SECTION 5.1 Additional Early Amortization Events...........................................47
ARTICLE VI SERVICING FEE..........................................................................51
SECTION 6.1 Servicing Compensation.........................................................51
ARTICLE VII CHANGE IN CIRCUMSTANCES...............................................................52
SECTION 7.1 Illegality.....................................................................52
SECTION 7.2 Increased Costs................................................................52
SECTION 7.3 Taxes..........................................................................54
SECTION 7.4 Break Funding Payments.........................................................55
SECTION 7.5 Alternative Rate of Interest...................................................56
SECTION 7.6 Mitigation Obligations.........................................................57
ARTICLE VIII REPRESENTATIONS AND WARRANTIES, COVENANTS............................................58
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SECTION 8.1 Representations and Warranties of the Company and the Servicer.................58
SECTION 8.2 Covenants of the Company and the Servicer......................................59
SECTION 8.3 Covenants of the Servicer......................................................59
SECTION 8.4 Obligations Unaffected.........................................................59
ARTICLE IX CONDITIONS PRECEDENT...................................................................59
SECTION 9.1 Conditions Precedent to Effectiveness of Supplement............................59
ARTICLE X THE FUNDING AGENT.......................................................................63
SECTION 10.1 Appointment....................................................................63
SECTION 10.2 Delegation of Duties...........................................................64
SECTION 10.3 Exculpatory Provisions.........................................................64
SECTION 10.4 Reliance by Funding Agent......................................................64
SECTION 10.5 Notice of Servicer Default or Early Amortization Event or
Potential Early Amortization Event.............................................65
SECTION 10.6 Non-Reliance on the Funding Agent and Other Purchasers.........................65
SECTION 10.7 Indemnification................................................................66
SECTION 10.8 The Funding Agent in Its Individual Capacity...................................67
SECTION 10.9 Successor Funding Agent........................................................67
ARTICLE XI MISCELLANEOUS..........................................................................67
SECTION 11.1 Ratification of Agreement......................................................67
SECTION 11.2 Governing Law..................................................................68
SECTION 11.3 Further Assurances.............................................................68
SECTION 11.4 Payments.......................................................................68
SECTION 11.5 Costs and Expenses.............................................................68
SECTION 11.6 No Waiver, Cumulative Remedies.................................................69
SECTION 11.7 Amendments.....................................................................69
SECTION 11.8 Severability...................................................................70
SECTION 11.9 Notices........................................................................70
SECTION 11.10 Successors and Assigns.........................................................71
SECTION 11.11 Securities Laws; Participations; Assignments...................................71
SECTION 11.12 Adjustments; Set-off...........................................................75
SECTION 11.13 Counterparts...................................................................76
SECTION 11.14 No Bankruptcy Petition.........................................................76
SECTION 11.15 Confidentiality................................................................76
SECTION 11.16 Limitation of Liability........................................................78
SECTION 11.17 Consents of Investor Certificateholders........................................78
SECTION 11.18 Recourse to the Company........................................................78
SECTION 11.19 CONSENT TO JURISDICTION........................................................79
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SECTION 11.20 WAIVER OF JURY TRIAL...........................................................79
SECTION 11.21 Bank One Roles.................................................................79
SECTION 11.22 Rating Agency Condition........................................................80
SECTION 11.23 Companion Series...............................................................80
SCHEDULES
Schedule 1 Commitments
Schedule 2 Lockbox Agreements
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SERIES 2003-1 SUPPLEMENT
This SERIES 2003-1 SUPPLEMENT, dated as of March 28, 2003 (as further
amended, supplemented or otherwise modified from time to time, this
"SUPPLEMENT"), is by and among USS RECEIVABLES COMPANY, LTD., a Cayman Islands
limited liability company (together with its permitted successors and assigns,
the "COMPANY"), UNITED STATIONERS FINANCIAL SERVICES LLC, an Illinois limited
liability company (together with its successors and assigns, "USFS"), as
servicer (except where otherwise noted) (together with its successors and
assigns in such capacity, the "SERVICER"), FALCON ASSET SECURITIZATION
CORPORATION, a Delaware corporation (including its successors and assigns but
excluding the APA Banks as assignees pursuant to SECTION 2.6, the "INITIAL
Purchaser"), the several banks or financial institutions parties to this
Supplement as of the Effective Date (as defined below) and the other banks or
financial institutions from time to time parties hereto pursuant to SECTION
11.11(c) (collectively, the "APA BANKS"; each, individually, an "APA BANK"),
BANK ONE, NA (MAIN OFFICE CHICAGO), a national banking association ("BANK ONE"),
in its capacity as Funding Agent (the "FUNDING AGENT"), and BANK ONE, NA (MAIN
OFFICE CHICAGO), in its capacity as trustee (together with its successors and
assigns in such capacity, the "TRUSTEE") under the Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Company, the Servicer and the Trustee have entered into a
Second Amended and Restated
Pooling Agreement, dated as of March 28, 2003 (as
amended, restated supplemented or otherwise modified from time to time, the
"AGREEMENT"; capitalized terms used herein and not otherwise defined are used as
defined in the Agreement);
WHEREAS, the Agreement provides, among other things, that the Company,
the 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; and
WHEREAS, the Company, the Servicer, the Trustee, Initial Purchaser and
the APA Banks wish to supplement the Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and other good and valuable consideration, the
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receipt and sufficiency of which are hereby expressly acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. (a) The following words and phrases shall
have the following meanings with respect to Series 2003-1 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:
"ACCRUAL PERIOD" shall mean (i) in respect of any calculation of
interest relating to a Eurodollar Tranche, the relevant Eurodollar Period and
(ii) for all other purposes, each calendar month, provided that the initial
Accrual Period pursuant to this clause (ii) hereunder means the period from (and
including) the Effective Date to (and including) the last day of the calendar
month thereafter.
"ACCRUED EXPENSE AMOUNT" shall mean, for each Business Day during an
Accrual Period, the sum of (i) the Daily Interest Deposit for such Business Day,
(ii) the Daily Commitment Fee Deposit for such Business Day, (iii) the Daily
Utilization Fee Deposit for such Business Day, (iv) the Daily Servicing Fee
Deposit for such Business Day and (v) all other Recourse Obligations which have
accrued since the preceding Business Day.
"ACQUIRING APA BANK" shall have the meaning assigned in SECTION
11.11(c).
"ACQUISITION" shall mean any transaction, or any series of related
transactions, consummated on or after March 21, 2003, by which USI or any of its
Subsidiaries (i) acquires any going business or all or substantially all of the
assets of any Person, or division thereof, whether through the purchase of
assets, merger or otherwise or (ii) directly or indirectly acquires from one or
more Person (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage of voting powers) of the outstanding
ownership interests of any Person.
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"ACQUISITION AMOUNT" shall mean, on any APA Bank Purchase Date, (a)
with respect to any APA Bank other than Bank One, the lesser of (i) such APA
Bank's Pro Rata Share of the sum of (A) the lesser of (1) the applicable
Adjusted Liquidity Price and (2) the Purchase Amount for such APA Bank Purchase
Date and (B) the Purchase Percentage of all accrued and unpaid CP Costs and (ii)
such APA Bank's unused Commitment and (b) with respect to Bank One solely in the
instance of a purchase from Initial Purchaser by all of the APA Banks, the
difference between (a) the Conduit Transfer Price and (b) the aggregate amount
payable by all other APA Banks on such date pursuant to clause (a) above.
"ADDITIONAL INTEREST" shall have the meaning assigned in
SECTION 3A.4(b).
"ADJUSTED FUNDED AMOUNT" shall mean in determining the Conduit
Transfer Price for any Purchaser, an amount equal to the Adjusted Liquidity
Price for such Purchase.
"ADJUSTED LIBO RATE" shall mean, with respect to each day during each
Eurodollar Period pertaining to a portion of the Series 2003-1 Invested Amount
allocated to a Eurodollar Tranche, an interest rate per annum (rounded upwards,
if necessary, to the nearest 1/100th of 1%) equal to the equal to the sum of (i)
(a) the applicable British Bankers' Association Interest Settlement Rate for
deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m.
(London time) two Business Days prior to the first day of the relevant
Eurodollar Period, and having a maturity equal to such Eurodollar Period,
provided that, (i) if Reuters Screen FRBD is not available to the Funding Agent
for any reason, the applicable Adjusted LIBO Rate for the relevant Eurodollar
Period shall instead be the applicable British Bankers' Association Interest
Settlement Rate for deposits in U.S. dollars as reported by any other generally
recognized financial information service as of 11:00 a.m. (London time) two
Business Days prior to the first day of such Eurodollar Period, and having a
maturity equal to such Eurodollar Period, and (ii) if no such British Bankers'
Association Interest Settlement Rate is available to the Funding Agent, the
applicable Adjusted LIBO Rate for the relevant Eurodollar Period shall instead
be the rate determined by the Funding Agent to be the rate at which Bank One
offers to place deposits in U.S. dollars with first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Eurodollar Period, in the approximate amount to
be funded at the Adjusted LIBO Rate and having a maturity equal to such
Eurodollar Period, divided by (b) one minus the maximum aggregate reserve
requirement (including all basic, supplemental, marginal or other reserves)
which is imposed against the Funding Agent in respect of Eurocurrency
liabilities, as defined in Regulation D of the Board
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of Governors of the Federal Reserve System as in effect from time to time
(expressed as a decimal), applicable to such Eurodollar Period.
"ADJUSTED LIQUIDITY PRICE" shall mean:
IP [(i) DC + (ii) [ NDR ]]
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1 + (.50 x LRF)
IP = the Invested Percentage.
DC = sum of Cash Dilution Payments, Transfer Deposit Amounts ,
Seller Adjustment Payments and Seller Repurchase Payments.
LRF = Loss Reserve Floor.
NDR = the Outstanding Balance of all Receivables as to which any
payment, or part thereof, has not remained unpaid for 60 days or more from the
original due date for such payment.
Each of the foregoing shall be determined from the most recent Monthly
Settlement Report received from the Servicer.
"AFFECTED APA BANK" shall have the meaning set forth in
SECTION 11.11(h).
"AGGREGATE COMMITMENT AMOUNT" shall mean the aggregate amount of the
Commitments of all APA Banks, as reduced from time to time pursuant to Section
2.8; PROVIDED that at all times the Aggregate Commitment Amount shall be no less
than 102% of the Maximum Invested Amount.
"AGREEMENT" shall have the meaning specified in the recitals hereto.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum equal
to the greatest of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective day of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
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"APA BANKS" shall have the meaning specified in the introductory
paragraph hereto.
"APA BANK PURCHASE DATE" shall mean the date of any Purchase.
"APPLICABLE MARGIN" shall mean on any date of determination, for each
Eurodollar Tranche, the sum of (i) the "Applicable Margin" (as defined in the
Credit Agreement) then in effect for "Eurodollar Advances" (as defined in the
Credit Agreement), plus (ii) .25% per annum.
"ASSIGNMENT/PARTICIPATION CERTIFICATION" shall mean an assignment or
participation certification, as the case may be, in substantially the form of
Exhibit B hereto.
"AVAILABLE PRICING AMOUNT" shall mean, on any Business Day, the sum of
(i) the Unallocated Balance PLUS (ii) the Increase, if any, on such date.
"BENEFITTED PURCHASER" shall have the meaning assigned in
SECTION 11.12.
"BANK ONE" shall have the meaning specified in the introductory
paragraph hereto.
"BOARD" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"CHANGE IN LAW" shall mean (a) the adoption of any law, rule or
regulation (including any law, rule or regulation regarding capital adequacy)
after the Effective Date, (b) any change in law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
Effective Date, (c) compliance by any Purchaser with any request, guideline or
directive (whether or not having the force of law) of any Governmental Authority
made or issued after the Effective Date or (d) any adoption of any accounting
principles or any change therein or in the interpretation or application thereof
by the Financial Accounting Standards Board.
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"COMMERCIAL PAPER" shall mean the short-term promissory notes of
Initial Purchaser issued in the United States commercial paper market.
"COMMITMENT" shall mean, as to any APA Bank, its obligation to
purchase an interest in the VFC Certificates on and after the Effective Date, to
acquire a PRO RATA share of Initial Purchaser's VFC Certificate and to maintain
and, subject to certain conditions, increase, its Series 2003-1 Purchaser
Invested Amount, in each case, in an aggregate amount not to exceed at any one
time outstanding the amount set forth opposite such APA Bank's name on Schedule
1 under the caption "COMMITMENT", as such amount may be reduced from time to
time as provided herein; collectively, as to all APA Banks, the "COMMITMENTS".
"COMMITMENT AVAILABILITY" shall mean at any time the positive
difference (if any) between (a) an amount equal to the Aggregate Commitment
Amount minus an amount equal to 2% of such Aggregate Commitment Amount at such
time minus (b) the Series 2003-1 Invested Amount at such time.
"COMMITMENT EXPIRY DATE" shall mean March 26, 2004 (as may be extended
for an additional period of time up to 364 days from time to time in writing by
Initial Purchaser, the Funding Agent and the APA Banks).
"COMMITMENT FEE" shall have the meaning assigned in SECTION 2.9(b).
"COMMITMENT FEE RATE" shall have the meaning assigned in the Fee
Letter.
"COMMITMENT REDUCTION" shall have the meaning assigned in
SECTION 2.8(a).
"COMMITMENT TERMINATION DATE" shall mean the earliest to occur of (i)
the date on which the Aggregate Commitment Amount has been reduced to zero
pursuant to Section 2.7 of this Supplement, (ii) the Commitment Expiry Date,
(iii) the Optional Termination Date, (iv) the date on which the Early
Amortization Period is declared to commence or automatically commences and (v)
March 28, 2008.
"COMMITMENT TRANSFER SUPPLEMENT" shall have the meaning assigned in
SECTION 11.11(c).
"COMPANY" shall have the meaning specified in the introductory
paragraph hereto.
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"CONDUIT INTEREST" shall mean all of Initial Purchaser's right, title
and interest in its Series 2003-1 Purchaser Invested Amount as of any day.
"CONDUIT TRANSFER PRICE DEFICIT" shall have the meaning assigned in
SECTION 2.6(e).
"CONDUIT REDUCTION PERCENTAGE" shall mean for any portion of the
Conduit Interest acquired by the APA Banks from Initial Purchaser for less than
the portion of the Series 2003-1 Purchaser Invested Amount of Initial Purchaser
applicable thereto (the "APPLICABLE PORTION"), a percentage equal to a fraction
the numerator of which is the Conduit Transfer Price Reduction for the related
Purchase and the denominator of which is the Applicable Portion.
"CONDUIT RESIDUAL" shall mean the sum of the Conduit Transfer Price
Reductions.
"CONDUIT TRANSFER PRICE" shall mean with respect to the assignment by
Initial Purchaser of all or a portion of the Conduit Interest to the Funding
Agent for the benefit of one or more of the APA Banks pursuant to SECTION 2.6,
the sum of (i) the lesser of (a) the portion of Initial Purchaser's Series
2003-1 Purchaser Invested Amount related to such assignment and (b) the Adjusted
Funded Amount for such Purchaser and (ii) the Purchase Percentage of all accrued
and unpaid CP Costs.
"CONDUIT TRANSFER PRICE REDUCTIONS" shall mean in connection with any
Purchase, the positive difference (if any) between (i) the portion of Initial
Purchaser's Series 2003-1 Purchaser Invested Amount related to such assignment
Capital of such Purchaser Interest and (ii) the Adjusted Funded Amount for such
Purchase.
"CONSOLIDATED CAPITAL EXPENDITURES" shall mean for USI and its
Subsidiaries (other than TOPCO), with reference to any period, calculated on a
consolidated basis for such period and without duplication, any expenditures for
any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of USI and its
Subsidiaries prepared in accordance with GAAP, excluding (i) expenditures of
insurance proceeds to rebuild or replace any asset after a casualty loss, (ii)
leasehold improvement expenditures for which USI or a Subsidiary is reimbursed
by the lessor, sublessor or sublessee, (iii) expenditures of Net Cash Proceeds
of any asset sale permitted under Section 6.12 of the Credit Agreement, and (iv)
with respect to any Permitted Acquisition, (a) the Purchase Price thereof and
(b) any Capital Expenditures expended by the seller or entity to be acquired in
any Permitted Acquisition prior to
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the date of such Permitted Acquisition and not in contemplation of such
Permitted Acquisition.
"CONSOLIDATED EBITDA" means, with respect to any period, Consolidated
Net Income for such period plus, to the extent deducted from revenues in
determining Consolidated Net Income for such period, (i) Consolidated Interest
Expense, (ii) expense for taxes paid or accrued, (iii) depreciation, (iv)
amortization, (v) losses attributable to equity in Affiliates, (vi) non-cash
charges related to employee compensation and (vii) any extraordinary non-cash or
nonrecurring non-cash charges or losses incurred other than in the ordinary
course of business, minus, to the extent included in Consolidated Net Income for
such period, any extraordinary non-cash or nonrecurring non-cash gains realized
other than in the ordinary course of business, all calculated for USI and its
Subsidiaries (other than TOPCO) on a consolidated basis.
"CONSOLIDATED FUNDED INDEBTEDNESS" means, at any time, with respect to
any Person, without duplication, the sum of (i) the aggregate dollar amount of
Consolidated Indebtedness for borrowed money owing by such Person or for which
such Person is liable which has actually been funded and is outstanding at such
time, whether or not such amount is due or payable at such time, plus (ii) the
aggregate undrawn amount of all standby letters of credit at such time for which
such Person or any of its Subsidiaries is the account party or is otherwise
liable (other than standby letters of credit in an amount up to $10,000,000
issued to support worker's compensation obligations of the Credit Parties (as
defined in the Credit Agreement) and other than letters of credit supporting any
other component of this definition), plus (iii) the aggregate principal
component of Capitalized Lease Obligations owing by such Person and its
Subsidiaries on a consolidated basis or for which such Person or any of its
Subsidiaries is otherwise liable, plus (iv) all Off-Balance Sheet Liabilities of
such Person and its Subsidiaries on a consolidated basis, plus (v) all
Disqualified Stock of such Person and its Subsidiaries on a consolidated basis.
"CONSOLIDATED INDEBTEDNESS" means at any time, with respect to any
Person, the Indebtedness of such Person and its Subsidiaries calculated on a
consolidated basis as of such time.
"CONSOLIDATED INTEREST EXPENSE" means, with reference to any period,
the interest expense of USI and its Subsidiaries calculated on a consolidated
basis for such period (net of interest income), including, without limitation,
yield or any other financing costs resembling interest which are payable under
any Receivables Purchase Facility.
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"CONSOLIDATED NET INCOME" means, with reference to any period, the net
income (or loss) of USI and its Subsidiaries (other than TOPCO) calculated on a
consolidated basis for such period and on a FIFO basis of inventory valuation.
"CONSOLIDATED NET WORTH" means at any time, with respect to any
Person, the consolidated stockholders' equity of such Person and its
Subsidiaries calculated on a consolidated basis and on a FIFO basis of inventory
valuation as of such time.
"CONSOLIDATED RENTALS" means, with reference to any period, the rental
expense (net of rental income) of USI and its Subsidiaries in respect of
Operating Leases, but excluding rental expense for any extension thereof for a
period shorter than twelve months, calculated on a consolidated basis for such
period; PROVIDED that rental expense in respect of all non-real property rentals
shall be the amount as set forth on the compliance certificate most recently
delivered to the administrative agent under the Credit Agreement pursuant to
Section 6.1.3 of the Credit Agreement in connection with the most recent annual
financial statements of USI delivered pursuant to Section 6.1.1 of the Credit
Agreement (and for the period prior to the delivery of the first such compliance
certificate, the amount set forth on the compliance certificate delivered
pursuant to Section 4.1.5 of the Credit Agreement).
"CONTROLLED GROUP" shall mean all members of a controlled group of
corporations or other business entities and all trades or businesses (whether or
not incorporated) under common control which, together with USI or any of its
Subsidiaries, are treated as a single employer under Section 414(b) or (c) of
the Internal Revenue Code.
"CP COSTS" means, for each day, the sum of (i) discount or yield
accrued on Pooled Commercial Paper on such day, plus (ii) any and all accrued
commissions in respect of placement agents and Commercial Paper dealers (in
amounts reasonably determined and on a competitive basis), and issuing and
paying agent fees incurred, in respect of such Pooled Commercial Paper for such
day, plus (iii) other costs associated with funding small or odd-lot amounts
with respect to all receivable purchase facilities which are funded by Pooled
Commercial Paper for such day, minus (iv) any accrual of income net of expenses
received on such day from investment of collections received under all
receivable purchase facilities funded substantially with Pooled Commercial
Paper, minus (v) any payment received on such day net of expenses in respect of
broken funding costs related to the prepayment of Initial Purchaser's invested
principal amount pursuant to the terms of any receivable purchase facilities
funded substantially with Pooled Commercial
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Paper. In addition to the foregoing costs, if the Company shall request any
Increase (i) during any period of time determined by the Funding Agent in its
sole discretion to result in incrementally higher CP Costs applicable to such
Increase or (ii) for which the Company requests a specific maturity of
Commercial Paper that shall result in CP Costs related solely to such Commercial
Paper, the Series 2003-1 Invested Amount associated with any such Increase
shall, during such period, be deemed to be funded by Initial Purchaser in a
special pool (which may include capital associated with other receivable
purchase facilities) for purposes of determining such additional CP Costs
applicable only to such special pool and charged each day during such period
against such Series 2003-1 Invested Amount, provided that, during the term of
this Supplement, there may be only one special pool outstanding at any one time.
"DAILY COMMITMENT FEE DEPOSIT" shall mean, for any Business Day, an
amount equal to (i) the amount of Daily Commitment Fee Expense for each day
since the preceding Business Day plus (ii) the aggregate amount of all
previously accrued Daily Commitment Fee Expense that has not yet been deposited
in the Series 2003-1 Collection Subaccount.
"DAILY COMMITMENT FEE EXPENSE" shall mean, for any day in any Accrual
Period, the product of (A) Aggregate Commitment Amount on such day multiplied by
(B) the Commitment Fee Rate divided by 360.
"DAILY INTEREST DEPOSIT" shall mean, for any Business Day, an amount
equal to (i) the amount of Daily Interest Expense for each day since the
preceding Business Day plus (ii) the aggregate amount of a previously accrued
Daily Interest Expense that has not yet been deposited in the Series 2003-1
Collection Subaccount plus (iii) the aggregate amount of all Additional Interest
for each day since the preceding Business Day.
"DAILY INTEREST EXPENSE" shall mean:
(i) for any portion of the Series 2003-1 Invested Amount held by
Initial Purchaser during an Accrual Period, the CP Costs accrued during such
Accrual Period in respect of such portion; and
(ii) for any portion of the Series 2003-1 Invested Amount held by the
APA Banks during an Accrual Period, the sum of (A) the product of (x) the
portion of the APA Banks' Series 2003-1 Purchaser Invested Amount allocable to
the Floating Tranche on each day during such Accrual Period divided by 365 (or
366, as the case may be) and (y) the Alternate Base Rate in effect on such day
and, (B) the
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product of (x) the portion of the Series 2003-1 Invested Amount allocable to
Eurodollar Tranches on each day during such Eurodollar Period divided by 360 and
(y) the weighted average Adjusted LIBO Rate plus the Applicable Margin on such
day in effect with respect thereto.
"DAILY SERVICING FEE DEPOSIT" shall mean, for any Business Day, an
amount equal to (i) the amount of Daily Servicing Fee Expense for each day since
the preceding Business Day plus (ii) the aggregate amount of all previously
accrued Daily Servicing Fee Expense that has not yet been deposited in the
Series 2003-1 Collection Subaccount.
"DAILY SERVICING FEE EXPENSE" shall mean, for any day in any Accrual
Period the Series 2003-1 Interests' pro rata portion (determined in accordance
WITH SECTION 6.1) of the Servicing Fee accruing for such day.
"DAILY UTILIZATION FEE DEPOSIT" shall mean an amount equal to (i) the
amount of Daily Utilization Fee Expense for each day since the preceding
Business Day plus (ii) the aggregate amount of all previously accrued Daily
Utilization Fee Expense that has not yet been deposited in the Series 2003-1
Collection Subaccount.
"DAILY UTILIZATION FEE EXPENSE" shall mean, for any day in any Accrual
Period, the product of (A) the Series 2003-1 Invested Amount on such day
multiplied by (B) the Utilization Fee Rate divided by 360.
"DECREASE" shall have the meaning assigned IN SECTION 2.7(a).
"DEFAULTING APA BANK" shall have the meaning assigned in
SECTION 2.6(e).
"DEFAULT FEE" shall mean, for any day occurring after the occurrence
of an Early Amortization Event described in SECTION 5.1(a) (after giving effect
to any grace period set forth in such Section) to but excluding the day on which
such Early Amortization Event is cured or waived in accordance with the terms
hereof, an amount equal to the product of (x) the Alternate Base Rate plus 2%,
multiplied by (y) the aggregate of all amounts outstanding hereunder and payable
by the Company or the Servicer, divided by (z) 365 (or 366, as the case may be).
"DEFAULT RATIO" shall mean, as of the last day of any Accrual Period,
a ratio (expressed as a percentage) equal to the quotient of (a) the sum of,
without duplication, (i) the aggregate outstanding Principal Amount of all
Receivables which are unpaid in whole or in part for more than 60 days but less
than 91 days after their
11
respective due dates on such day and (ii) the aggregate amount of Receivables
that became Charged-Off Receivables during such Accrual Period; and (b) the
aggregate sales of the Sellers during the Accrual Period that ended three months
prior to such Accrual Period.
"DELINQUENCY RATIO" shall mean, as of the last day of any Accrual
Period, a ratio (expressed as a percentage) equal to the quotient of (a) the sum
of (i) the aggregate outstanding Principal Amount of all Receivables which are
unpaid in whole or in part for more than 60 days after their respective due
dates on such day and (ii) the aggregate outstanding Principal Amount of all
Disputed Receivables on such day, divided by (b) the aggregate outstanding
Principal Amount of all Receivables on such day.
"DILUTION HORIZON RATIO" shall mean, as of the last day of any
calendar month, a ratio equal to (i) the aggregate gross sales of the Sellers
during the calendar month then most recently ended divided by (ii) the Aggregate
Receivables Amount plus the Aggregate Overconcentration Amount.
"DILUTION PERCENTAGE" shall mean as of the last day of any calendar
month, a percentage equal to:
[[2.0 X ED]+[(DS-ED) X DS DIVIDED BY ED]] X DHR
where:
ED = the Expected Dilution Ratio at such time
DS = the Dilution Spike Ratio at such time
DHR = the Dilution Horizon Ratio at such time
"DILUTION SPIKE RATIO" shall mean, as of the last day of any calendar
month, the highest monthly Dilution Ratio calculated as of the last day of each
of the twelve calendar months then most recently ended.
"DILUTION RATIO" shall mean, as of the last day of each Accrual
Period, an amount (expressed as a percentage) equal to (i) the aggregate amount
of Dilution Adjustments (excluding the sum of all VCD rebates applicable to any
Receivable) made during such Accrual Period, DIVIDED BY (ii) the aggregate gross
sales of the Sellers during such Accrual Period.
12
"DILUTION RESERVE" shall mean, on any date, an amount equal to the
Dilution Percentage multiplied by the Aggregate Receivables Amount as of the
close of business of the Servicer on such date.
"DISTRIBUTION DATE" shall mean, (A) for purposes of payments of
interest in respect of any Eurodollar Tranche, the last day of the relevant
Eurodollar Period, and (B) for all other purposes, the 20th day of each calendar
month, or if such day is not a Business Day, the next occurring Business Day.
"EARLY AMORTIZATION EVENT" shall have the meanings assigned in SECTION
5.1 of this Supplement and Section 7.1 of the Agreement.
"EARLY AMORTIZATION PERIOD" shall have the meaning assigned in SECTION
5.1 of this Supplement and Section 7.1 of the Agreement.
"EFFECTIVE DATE" shall have the meaning assigned in SECTION 9.1.
"ELIGIBLE ASSIGNEE" shall mean any financial institution that is a
United States Person (within the meaning of Section 7701(a)(30) of the Internal
Revenue Code) and that has a short-term debt rating of at least A-1 from S&P and
P-1 from Moody's.
"EURODOLLAR PERIOD" shall mean, with respect to any Eurodollar
Tranche, prior to the Commitment Termination Date, a period of one, two, three,
four, five or six months requested by the Company commencing on a Business Day
requested by the Company and agreed to by the Funding Agent; provided, however,
that each such Eurodollar Period shall expire on a Distribution Date.
"EURODOLLAR TRANCHE" shall mean, for any portion of the Series 2003-1
Invested Amount that is held by the APA Banks, that portion of the Series 2003-1
Invested Amount for which the Series 2003-1 Monthly Interest is calculated by
reference to an Adjusted LIBO Rate determined by reference to a particular
Eurodollar Period.
"EXCLUDED TAXES" shall mean, with respect to the Funding Agent, any
Purchaser or any other recipient of any payment to be made by or on account of
any obligation of the Company hereunder or any interest in the VFC Certificates,
(a) income or franchise taxes imposed on (or measured by) its net income (i) by
the United States of America, or (ii) by the jurisdiction under the laws of
which such recipient is organized or in which its principal office is located,
managed or controlled, or, in the case of any APA Bank, in which its applicable
lending office is
13
located, or (iii) by reason of any connection between the jurisdiction imposing
such tax and the Funding Agent, such recipient or such office other than a
connection arising solely from this Supplement or any other Transaction Document
or any transaction hereunder or thereunder, and (b) any branch profits imposed
by the United States of America or any similar tax imposed by any other
jurisdiction in which the Company is located.
"EXISTING CREDIT AGREEMENT" means that certain Third Amended and
Restated Credit Agreement, dated as of June 29, 2000, by and among USSC, USI,
the lenders parties thereto, and JPMorgan Chase Bank (formerly known as The
Chase Manhattan Bank), as agent, as the same has been amended, restated,
supplemented or otherwise modified from time to time.
"EXPECTED DILUTION RATIO" shall mean, as of the last day of any
calendar month, the average Dilution Ratio in respect of the twelve months then
most recently ended.
"FEE LETTER" shall mean that certain Fee Letter, dated as of March 28,
2003, among the Company, the Funding Agent and Initial Purchaser, as the same
may from time to time be amended, supplemented or otherwise modified and in
effect.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, for any
period, a fluctuating interest rate per annum for each day during such period
equal to (a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the preceding Business Day) by the Federal Reserve Bank of
New York in the
Composite Closing Quotations for U.S. Government Securities; or (b) if such rate
is not so published for any day which is a Business Day, the average of the
quotations at approximately 10:30 a.m. (Chicago time) for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"FINANCING" shall mean, with respect to any Person, the issuance,
assumption, incurrence or sale by such Person of any Indebtedness (other than
Indebtedness described in Section 6.14.1 through 6.14.10 of the Credit
Agreement, any Indebtedness incurred under Section 6.14.11 of the Credit
Agreement and described in clauses (a) or (b) of the first parenthetical
thereof, and any Indebtedness incurred under Section 6.14.12 of the Credit
Agreement and described in the first parenthetical thereof).
14
"FIXED CHARGE COVERAGE RATIO" shall mean, with respect to any fiscal
quarter of USI for the then most recently ended four fiscal quarters, the ratio
of (i) Consolidated EBITDA during such period plus Consolidated Rentals during
such period minus Consolidated Capital Expenditures during such period (PROVIDED
that Capitalized Lease Obligations shall be deducted only to the extent of
payments actually made during such period) to (ii) Consolidated Interest Expense
paid in cash during such period plus scheduled amortization of the principal
portion of Consolidated Indebtedness during such period (other than (i) amounts
owing in connection with Receivables Purchase Facilities permitted under the
Credit Agreement and (ii) scheduled term loan payments under the Existing Credit
Agreement and scheduled principal payments in respect of any industrial
development/revenue bonds of USI or any of its Subsidiaries in each case paid
prior to March 21, 2003) plus Consolidated Rentals for such period plus income
taxes paid in cash during such period plus all dividends and distributions paid
by USI during such period (other than the "Permitted Share Repurchase Amount"
for such period), all calculated for USI and its Subsidiaries (other than TOPCO)
on a consolidated basis; PROVIDED that the Fixed Charge Coverage Ratio shall be
calculated, with respect to Permitted Acquisitions, on a pro forma basis
reasonably satisfactory to the administrative agent under the Credit Agreement,
broken down by fiscal quarter in USI's reasonable judgment.
"FLOATING TRANCHE" shall mean, for any portion of the Series 2003-1
Invested Amount that is held by the APA Banks, that portion of the Series 2003-1
Invested Amount not allocated to a Eurodollar Tranche for which the Series
2003-1 Monthly Interest is calculated by reference to the Alternate Base Rate.
"FUNDING AGENT" shall have the meaning specified in the introductory
paragraph hereto.
"INCREASE" shall have the meaning assigned in SECTION 2.5(a).
"INCREASE AMOUNT" shall have the meaning assigned in SECTION 2.5(a).
"INCREASE DATE" shall have the meaning assigned in SECTION 2.5(a).
"INDEMNIFIED AMOUNT" shall have the meaning set forth in SECTION
2.10(a).
"INDEMNIFIED PARTY" shall have the meaning assigned in SECTION
2.10(a).
15
"INDEMNIFIED TAXES" shall mean Taxes other than Excluded Taxes.
"INITIAL PURCHASER" shall have the meaning specified in the
introductory paragraph hereto.
"INITIAL SERIES 2003-1 INVESTED AMOUNT" shall mean the initial
invested amount applicable to Series 2003-1.
"INTEREST SHORTFALL" shall have the meaning assigned in SECTION
3A.4(b).
"INVESTED PERCENTAGE" shall mean, with respect to any Business Day (i)
during the Series 2003-1 Revolving Period, the percentage equivalent of a
fraction, the numerator of which is the Series 2003-1 Invested Amount as of the
end of the immediately preceding Business Day and the denominator of which is
the difference between (x) the Aggregate Receivables Amount with respect to such
Business Day and (y) the Aggregate Target Receivables Amount with respect to
such Business Day and (ii) during the Series 2003-1 Amortization Period, the
percentage equivalent of a fraction, the numerator of which is the Series 2003-1
Invested Amount as of the end of the last Business Day of the Series 2003-1
Revolving Period and the denominator of which is the difference between (x) the
Aggregate Receivables Amount with respect to such Business Day and (y) Aggregate
Target Receivables Amount with respect to such Business Day.
"LEVERAGE RATIO" shall mean, the ratio of (i) Consolidated Funded
Indebtedness to (ii) Consolidated EBITDA for the then most-recently ended four
fiscal quarters. The Leverage Ratio shall be calculated as of the last day of
each fiscal quarter of USI based upon (a) for Consolidated Funded Indebtedness,
Consolidated Funded Indebtedness as of the last day of each such fiscal quarter
and (b) for Consolidated EBITDA, the actual amount as of the last day of each
fiscal quarter for the most recently ended four consecutive fiscal quarters;
PROVIDED that the Leverage Ratio shall be calculated, with respect to Permitted
Acquisitions, on a pro forma basis reasonably satisfactory to the administrative
agent under the Credit Agreement, broken down by fiscal quarter in USI's
reasonable judgment.
"LOSS HORIZON RATIO" shall mean, as of any date, a ratio equal to (i)
the aggregate gross sales of the Sellers during the three most recently ended
calendar months divided by (ii) the Aggregate Receivables Amount as of such
date, plus the Aggregate Overconcentration Amount as of such date.
16
"LOSS PERCENTAGE" shall mean, at any time, a percentage equal to the
greater of (i) 2.00 multiplied by the Loss Ratio multiplied by the Loss Horizon
Ratio and (ii) the Loss Reserve Floor.
"LOSS RATIO" shall mean, on any date, the greatest three-month average
Default Ratio as calculated for each of the twelve most recently ended calendar
months.
"LOSS RESERVE" shall mean, on any date, an amount equal to the Loss
Percentage multiplied by the Aggregate Receivables Amount as of the close of
business of the Servicer on such date.
"LOSS RESERVE FLOOR" shall mean 10%.
"MAJORITY PURCHASERS" shall mean (i) on any day on which Initial
Purchaser shall hold an interest in the Series 2003-1 Certificates, Initial
Purchaser and the Required APA Banks and (ii) on any day on which Initial
Purchaser shall not hold an interest in the Series 2003-1 Certificates, the
Required APA Banks.
"MAXIMUM COMMITMENT AMOUNT" shall mean $153,000,000.
"MAXIMUM INVESTED AMOUNT" shall mean $150,000,000.
"MONTHLY INTEREST PAYMENT" shall have the meaning assigned in SECTION
3A.6(a).
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, which is covered by Title IV of ERISA and to which
USI or any member of the Controlled Group is obligated to make contributions.
"NET CASH PROCEEDS" means, with respect to any sale of property or any
Financing by any Person, (a) cash (freely convertible into Dollars) received by
such Person or any Subsidiary of such Person from such sale of property or
Financing, after (i) provision for all income or other taxes measured by or
resulting from such sale of property, (ii) payment of all reasonable brokerage
commissions and other fees and expenses related to such sale of property or
Financing, and (iii) all amounts used to repay Indebtedness secured by a Lien on
any asset disposed of in such sale of property which is or may be required (by
the express terms of the instrument governing such Indebtedness or by the
purchaser of such property) to be repaid in connection with such sale of
property (including payments made to obtain or avoid the need for the consent of
any holder of such Indebtedness).
17
"NON-DEFAULTING APA BANK" shall have the meaning assigned in SECTION
2.6(e).
"NON-RENEWING APA BANK" shall have the meaning set forth in SECTION
2.6(f).
"OFF-BALANCE SHEET LIABILITY" of a Person means, without duplication,
the principal component of (i) any Receivables Purchase Facility or any other
repurchase obligation or liability of such Person with respect to accounts or
notes receivable sold by such Person (other than the sale or disposition in the
ordinary course of business of accounts or notes receivable in connection with
the compromise or collection thereof consistent with customary industry practice
(and not as part of any bulk sale or financing of receivables)) or (ii) any
liability under any so-called "synthetic lease" or "tax ownership operating
lease" transaction entered into by such Person; PROVIDED that "Off-Balance Sheet
Liabilities" shall not include the principal component of the foregoing if such
principal component (a) is otherwise reflected as a liability on such Person's
consolidated balance sheet or (b) is deducted from revenues in determining such
Person's consolidated net income but is not thereafter added back in calculating
such Person's Consolidated EBITDA.
"OPERATING LEASE" of a Person means any lease of property (other than
a Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.
"OPTIONAL TERMINATION DATE" shall have the meaning assigned in SECTION
2.7(d).
"OPTIONAL TERMINATION NOTICE" shall have the meaning assigned in
SECTION 2.7(d).
"OTHER TAXES" shall mean any and all current or future stamp or
documentary taxes or other excise or property taxes, charges or similar levies
arising from any payment made under the Transaction Documents or from the
execution, delivery or enforcement of, or otherwise with respect to, any
Transaction Document.
"PARTICIPANTS" shall have the meaning assigned in SECTION 11.11(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
18
"PERMITTED ACQUISITION" shall mean an Acquisition permitted by Section
6.13.5 of the Credit Agreement.
"PERMITTED SHARE REPURCHASE AMOUNT" shall mean the aggregate amount of
all distributions made by USSC to USI and the aggregate amount of all capital
stock of USI redeemed, repurchased, acquired or retired by USI, from and after
March 21, 2003, calculated as of the date such distribution is made, up to the
greater of (a) $50,000,000 and (b) an amount equal to (x) $50,000,000, plus (y)
25% of Consolidated Net Income (or minus 25% of any loss) in each fiscal quarter
beginning with the fiscal quarter ending June 30, 2003.
"PLAN" means an employee pension benefit plan, excluding any
Multiemployer Plan, which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code as to which USI or any
member of the Controlled Group may have any liability.
"POOLED COMMERCIAL PAPER" means Commercial Paper notes of Initial
Purchaser subject to any particular pooling arrangement by Initial Purchaser,
but excluding Commercial Paper issued by Initial Purchaser for a tenor and in an
amount specifically requested by any Person in connection with any agreement
effected by Initial Purchaser.
"PRIME RATE" shall mean a rate per annum equal to the prime rate of
interest announced from time to time by Bank One or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
prime rate changes.
"PRO RATA SHARE" shall mean, on any date of determination, with
respect to any APA Bank, the ratio (expressed as a percentage) of such APA
Bank's Commitment to the Aggregate Commitment Amount at such time; provided
that, on any date after the Commitment Termination Date, the Pro Rata Share of
any APA Bank shall be such APA Bank's Pro Rata Share on the Commitment
Termination Date.
"PURCHASE" shall mean the assignment by Initial Purchaser to the APA
Banks of any portion of Initial Purchaser's Series 2003-1 Purchaser Invested
Amount pursuant to Section 2.6.
"PURCHASE AMOUNT" shall mean, for any APA Bank Purchase Date, the
amount of Initial Purchaser's Series 2003-1 Purchaser Invested Amount designated
by Initial Purchaser to be assigned on such APA Bank Purchase Date.
19
"PURCHASE PERCENTAGE" shall mean, for any APA Bank Purchase Date, the
percentage equivalent of a fraction, the numerator of which is the Purchase
Amount for such APA Bank Purchase Date and the denominator of which is Initial
Purchaser's Series 2003-1 Purchaser Invested Amount on such APA Bank Purchase
Date.
"PURCHASE PRICE" means the total consideration and other amounts
payable in connection with any Acquisition, including, without limitation, any
portion of the consideration payable in cash, all Indebtedness incurred or
assumed in connection with such Acquisition, but exclusive of the value of any
capital stock or other equity interests of USI, USSC or any Subsidiary issued as
consideration for such Acquisition.
"PURCHASER" shall mean, at any time, either Initial Purchaser, each
APA Bank or each Acquiring APA Bank, as applicable.
"RECOURSE OBLIGATIONS" shall have the meaning set forth in SECTION
11.18.
"REGISTER" shall mean a register maintained by the Funding Agent for
recording transfers of the Commitments.
"REINVESTMENT AMOUNT" shall have the meaning set forth in SECTION
3A.3(a).
"REQUIRED APA BANKS" shall mean APA Banks having Pro Rata Shares in
the aggregate at least equal to 66-2/3% or, if the Commitments have been
terminated, holding at least 66-2/3% of the outstanding Series 2003-1 Invested
Amount; provided that the Commitment of any Defaulting APA Bank that has not
paid all amounts due and owing by it in respect of the purchase it was obligated
to make shall not be included in the Aggregate Commitment Amount for purposes of
this definition.
"REQUIRED NOTICE PERIOD" means the number of days required notice set
forth below applicable to the Decrease indicated below:
Decrease Required Notice Period
-------- ----------------------
LESS THAN $100,000,000 two Business Days
GREATER THAN $100,000,000 five Business Days
20
"SCHEDULED REVOLVING TERMINATION DATE" shall mean the last day of the
Accrual Period ending on or immediately before the Commitment Expiry Date.
"SERIES 2003-1" shall mean Series 2003-1, the Principal Terms of which
are set forth in this Supplement.
"SERIES 2003-1 ADJUSTED INVESTED AMOUNT" shall mean, as of any date of
determination, (i) the Series 2003-1 Invested Amount on such date, minus (ii)
the amount on deposit in the Series 2003-1 Collection Sub-account on such date.
"SERIES 2003-1 ALLOCATED RECEIVABLES AMOUNT" shall mean, on any date
of determination, the product of (x) the Aggregate Receivables Amount on such
day and (y) the percentage equivalent of a fraction the numerator of which is
the Series 2003-1 Target Receivables Amount on such day and the denominator of
which is the Aggregate Target Receivables Amount on such day.
"SERIES 2003-1 AMORTIZATION PERIOD" shall mean the period commencing
on the Business Day following the earliest to occur of (i) the date on which an
Early Amortization Period is declared to commence or automatically commences,
(ii) the Optional Termination Date and (iii) the Scheduled Revolving Termination
Date and ending on the date when the Series 2003-1 Invested Amount shall have
been reduced to zero and all accrued interest and other amounts owing on the VFC
Certificates and to the Funding Agent and the Purchasers hereunder shall have
been paid in full.
"SERIES 2003-1 COLLECTION SUBACCOUNT" shall have the meaning assigned
in SECTION 3A.2.
"SERIES 2003-1 INTERESTS" shall mean, collectively, the VFC
Certificates and the Series 2003-1 Subordinated Interest.
"SERIES 2003-1 INVESTED AMOUNT" shall mean, as of any date of
determination, the sum of the Series 2003-1 Purchaser Invested Amounts of all
Purchasers on such date.
"SERIES 2003-1 MONTHLY INTEREST" shall have the meaning assigned in
SECTION 3A.4(a).
"SERIES 2003-1 MONTHLY PRINCIPAL PAYMENT" shall have the meaning
assigned in SECTION 3A.5.
21
"SERIES 2003-1 PERIODIC SERVICING FEE" shall have the meaning assigned
in SECTION 6.1.
"SERIES 2003-1 PURCHASER INVESTED AMOUNT" shall mean, with respect to
any Purchaser, in each case on any date of determination, an amount equal to,
without duplication, (a) the aggregate initial amount paid by such Purchaser for
its interest in any VFC Certificate pursuant to SECTION 2.3, plus (b) solely in
the case of any APA Bank, the aggregate of all Purchase Amounts of such APA Bank
with respect to all previous APA Bank Purchase Dates, if any, (c) the amount of
any Increases funded by such Purchaser, pursuant to SECTION 2.5, minus (d) the
aggregate amount of any Collections, Purchase Amounts and other distributions to
such Purchaser which are applied to reduce the amounts funded by such Purchaser
under the foregoing clauses (a), (b) and (c).
"SERIES 2003-1 RATIO" shall mean, as of any Settlement Report Date and
continuing until (but not including) the next Settlement Report Date, the sum of
the Loss Reserve Ratio, the Dilution Reserve Ratio, the Servicing and Discount
Ratio, in each case, then in effect.
"SERIES 2003-1 REQUIRED RESERVES" shall mean, as of any date of
determination, an amount equal to the product of (i) the Series 2003-1 Ratio,
multiplied by (ii) the Aggregate Receivables Amount at such time.
"SERIES 2003-1 REVOLVING PERIOD" shall mean the period commencing on
the Effective Date and terminating on the Commitment Termination Date.
"SERIES 2003-1 SUBORDINATED INTEREST" shall have the meaning assigned
in SECTION 2.1(ii).
"SERIES 2003-1 SUBORDINATED INTEREST AMOUNT" shall mean, for any date
of determination, an amount equal to (i) the Series 2003-1 Allocated Receivables
Amount minus (ii) the Series 2003-1 Adjusted Invested Amount.
"SERIES 2003-1 SUBORDINATED INTEREST REDUCTION AMOUNT" shall have the
meaning assigned in SECTION 2.7(b).
"SERIES 2003-1 TARGET RECEIVABLES AMOUNT" shall mean, on any date of
determination, the sum of (A) the Series 2003-1 Adjusted Invested Amount on such
day and (B) the Series 2003-1 Required Reserves for such day.
22
"SERIES 2003-1 TRANSACTION DOCUMENTS" shall mean this Supplement, the
Receivables Sale Agreements, the Agreement, the Intercreditor Agreement and the
Servicing Agreement.
"SERVICER" shall have the meaning specified in the introductory
paragraph hereto.
"SERVICING AND DISCOUNT RESERVE RATIO" shall mean 2%.
"SUPPLEMENT" shall have the meaning specified in the introductory
paragraph hereto.
"TAXES" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERMINATING APA BANK" shall have the meaning set forth in SECTION
2.6(f).
"TERMINATION PERCENTAGE" shall mean, with respect to any Terminating
APA Bank, a percentage (determined as of the date of any assignment by Initial
Purchaser pursuant to SECTION 2.6(f)), equal to (i) the Series 2003-1 Purchaser
Invested Amount of such Terminating APA Bank outstanding on such date, divided
by (ii) the Series 2003-1 Invested Amount outstanding on such date.
"TOPCO" means The Order People Company, a Delaware corporation.
"TRANSACTION PARTIES" shall have the meaning assigned in SECTION
2.6(d).
"TRANSFER ISSUANCE DATE" shall mean the date on which a Commitment
Transfer Supplement becomes effective pursuant to the terms of such Commitment
Transfer Supplement.
"TRANSFEREE" shall have the meaning assigned in SECTION 11.11(f).
"TRUSTEE" shall have the meaning specified in the introductory
paragraph hereto.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of
New York.
23
"UCC CERTIFICATE" shall mean a certificate substantially in the form
of Exhibit D to this Supplement.
"UNACCRUED DISCOUNT" shall mean, on any APA Bank Purchase Date with
respect to any Purchase Amount, the CP Costs that would have accrued on the
Commercial Paper allocated, in whole or in part, by the Funding Agent to fund
the purchase or maintenance of such Purchase Amount subsequent to such APA Bank
Purchase Date to the maturity date thereof if the related reduction in Initial
Purchaser's Series 2003-1 Purchaser Invested Amount had not occurred.
"UNALLOCATED BALANCE" shall mean, on any Business Day with respect to
the APA Banks and the APA Banks' Series 2003-1 Purchaser Invested Amount, the
sum of (A) the portion of the Series 2003-1 Invested Amount for which interest
is then being calculated by reference to the Alternate Base Rate and (B) the
portion of the Series 2003-1 Invested Amount allocated to any Eurodollar Tranche
the Eurodollar Period in respect of which expires on such Business Day.
"USI" shall mean United Stationers, Inc., a Delaware corporation.
"USSC" shall mean
United Stationers Supply Co., an Illinois
corporation.
"USSC CHANGE IN CONTROL" shall mean USI shall cease to own, directly
or indirectly, 100% of the outstanding capital stock of USSC.
"UTILIZATION FEE" shall have the meaning assigned in SECTION 2.9(c).
"UTILIZATION FEE RATE" shall have the meaning assigned in the Fee
Letter.
"VFC CERTIFICATE" shall mean a VFC Certificate, Series 2003-1,
executed by the Company and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A.
"VFC CERTIFICATEHOLDERS" shall mean the Purchasers.
"VFC CERTIFICATEHOLDERS' INTEREST" shall have the meaning assigned in
SECTION 2.2(a).
(b) If any term or provision contained herein conflicts with or
is inconsistent with any term, definition or provision contained in the
Agreement, the terms and provisions of this Supplement shall govern. All
Article, Section or
24
subsection references herein shall mean Article, Section or subsections of this
Supplement, except as otherwise provided herein. Unless otherwise stated herein,
the context otherwise requires or such term is otherwise defined in the
Agreement, each capitalized term used or defined herein shall relate only to the
Series 2003-1 Interests and no other Series of Investor Certificates issued by
the Trust. All capitalized terms used herein and not otherwise defined have the
meanings assigned to such terms in SECTION 1.1 of the Agreement.
ARTICLE II
DESIGNATION OF CERTIFICATES; PURCHASE AND SALE
OF THE VFC CERTIFICATES
SECTION 2.1 DESIGNATION. The Certificates and interests 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 2003-1" and (ii) an interest designated as the "SERIES
2003-1 SUBORDINATED INTEREST."
SECTION 2.2 THE SERIES 2003-1 INTERESTS. (a) The VFC Certificates
shall represent fractional undivided interests in the Trust, including, without
limitation, the right to receive (i) the Invested Percentage (expressed as a
decimal) of Collections received with respect to the Receivables and all other
funds on deposit in the Collection Account and (ii) all other funds on deposit
in the Series 2003-1 Collection Subaccounts and any subaccounts thereof
(collectively, the "VFC CERTIFICATEHOLDERS' INTEREST").
(b) The "SERIES 2003-1 SUBORDINATED INTEREST" shall be a
fractional undivided interest in the Trust retained by the Company, consisting
of the right to receive Collections with respect to the Receivables allocated to
the VFC Certificateholders' Interest and not required to be distributed to or
for the benefit of the Purchasers. The Exchangeable Company Interest 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 VFC
Certificateholders' Interest or the Series 2003-1 Subordinated Interest.
(c) The VFC Certificates shall be substantially in the form of
Exhibit A and shall, upon issue, be executed and delivered by the Company to the
Trustee for authentication and redelivery as provided in SECTION 2.4 hereof and
Section 5.2 of the Agreement.
25
SECTION 2.3 PURCHASES OF INTERESTS IN THE VFC CERTIFICATES. (a)
INITIAL PURCHASE. Subject to the terms and conditions of this Supplement,
including delivery of notice in accordance with SECTION 2.4 and 2.5, (i) on and
after the Effective Date, (A) Initial Purchaser may, in its sole discretion,
purchase a VFC Certificate in an amount equal to the Initial Series 2003-1
Invested Amount or (B) if Initial Purchaser shall have notified the Funding
Agent that it has elected not to purchase all or a portion of a VFC Certificate
on the Effective Date, each APA Bank hereby severally agrees to purchase on the
Effective Date a VFC Certificate in an amount equal to such APA Bank's Pro Rata
Share of the Initial Series 2003-1 Invested Amount after giving effect to the
requested Increase and (ii) thereafter, (A) if Initial Purchaser shall have
purchased a VFC Certificate on the Effective Date, Initial Purchaser may, in its
sole discretion, maintain its VFC Certificate, subject to increase or decrease
during the Series 2003-1 Revolving Period, in accordance with the provisions of
this Supplement and (B) if the APA Banks shall have purchased VFC Certificates
on the Effective Date or, in any case, on or after the APA Bank Purchase Date,
the APA Banks hereby severally agree to maintain their respective VFC
Certificates, subject to increase or decrease during the Series 2003-1 Revolving
Period, in accordance with the provisions of this Supplement. The Company hereby
agrees to maintain ownership of the Series 2003-1 Subordinated Interest, subject
to increase or decrease during the Series 2003-1 Revolving Period, in accordance
with the provisions of this Supplement. Payments by Initial Purchaser or the APA
Banks, as the case may be, in respect of the VFC Certificates shall be made in
immediately available funds on the applicable Business Day to the Funding Agent
for payment to the Company.
(b) SUBSEQUENT PURCHASES. Subject to the terms and conditions of
this Supplement, each Acquiring APA Bank hereby severally agrees to maintain its
VFC Certificate, subject to increase or decrease during the Series 2003-1
Revolving Period, in accordance with the provisions of this Supplement.
(c) MAXIMUM SERIES 2003-1 PURCHASER INVESTED AMOUNT.
Notwithstanding anything to the contrary contained in this Supplement, at no
time shall the Series 2003-1 Purchaser Invested Amount of any APA Bank exceed
such APA Bank's Commitment at such time.
SECTION 2.4 DELIVERY. On the Effective Date, the Company shall
sign, on behalf of the Trust, and shall direct the Trustee in writing pursuant
to Section 5.2 of the Agreement to duly authenticate, and the Trustee, upon
receiving such direction, shall so authenticate the VFC Certificates in such
names and such denominations and deliver such VFC Certificates to the Funding
Agent, on behalf of Initial Purchaser, or the APA Banks, as the case may be, in
accordance with such
26
written directions. 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 Series 2003-1 Invested
Amount and Series 2003-1 Subordinated Interest Amount outstanding on any date of
determination, which, absent manifest error, shall constitute PRIMA FACIE
evidence of the outstanding Series 2003-1 Invested Amount and Series 2003-1
Subordinated Interest Amount from time to time.
SECTION 2.5 PROCEDURE FOR INCREASING THE SERIES 2003-1 INVESTED
AMOUNT. (a) Subject to Section 2.5(c), on any Business Day during the Series
2003-1 Revolving Period, up to eight times per calendar month, Initial Purchaser
may agree, in its sole discretion, and each APA Bank hereby agrees that the
Series 2003-1 Invested Amount may be increased by increasing such Purchaser's
Series 2003-1 Purchaser Invested Amount (an "INCREASE"), upon the request of the
Servicer or the Company on behalf of the Trust (each date on which an increase
in the Series 2003-1 Invested Amount occurs hereunder being herein referred to
as the "INCREASE DATE" applicable to such Increase), PROVIDED, HOWEVER, that (i)
the Servicer or the Company, as the case may be, shall have given the Funding
Agent (with a copy to the Trustee) irrevocable written notice (effective upon
receipt), substantially in the form of Exhibit E-1 hereto, of such request no
later than (i) 1:00 p.m., Chicago time, two Business Days prior to the Increase
Date in the case of any Increase Amount to be funded by Pooled Commercial Paper
or (ii) (x) if all or a portion of the Increase Amount is to be allocated to the
Floating Tranche, on or prior to 1:00 p.m., Chicago time, on the Increase Date,
or (y) if all or a portion of the Increase Amount is to be allocated to a
Eurodollar Tranche, 1:00 p.m., Chicago time, three Business Days prior to the
Increase Date; and (ii) no portion of any Increase Amount shall be allocated to
the Floating Tranche or Eurodollar Tranche unless Initial Purchaser shall have
declined to fund such portion by Pooled Commercial Paper, PROVIDED, FURTHER,
that the provisions of this Section shall not restrict the allocations of
Collections pursuant to Article III. Such notice shall state (x) the Increase
Date, (y) the proposed amount of such Increase (the "INCREASE AMOUNT") and (z)
what portions thereof will be funded by Pooled Commercial Paper, or allocated to
a Eurodollar Tranche (and the corresponding initial Eurodollar Period) or the
Floating Tranche; PROVIDED, that any portion funded by Initial Purchaser shall
be funded only by Commercial Paper.
(b) If Initial Purchaser elects not to fund any portion of a
requested Increase, each APA Bank shall purchase its Pro Rata Share of the
proposed Increase Amount PROVIDED, HOWEVER that an APA Bank shall not be
obligated to fund any portion of an Increase that would cause its Series 2003-1
Purchaser Invested Amount to exceed its unused Commitment.
27
(c) On and after the Effective Date, the Purchasers shall not be
required to increase their respective Series 2003-1 Purchaser Invested Amounts
on any Increase Date hereunder unless:
the related aggregate Increase Amount is equal to $1,000,000
or an integral multiple of $100,000 in excess thereof;
after giving effect to the Increase Amount, (A) the Series
2003-1 Invested Amount would not exceed either the Maximum Invested Amount
or the Maximum Commitment Amount on such Increase Date and (B) the Series
2003-1 Allocated Receivables Amount would not be less than the Series
2003-1 Target Receivables Amount on such Increase Date;
no Early Amortization Event or Potential Early Amortization
Event shall have occurred and be continuing and no Early Amortization Event
or Potential Early Amortization Event would occur as a result of such
Increase;
in the case of a purchase by Initial Purchaser, Initial
Purchaser shall have consented to such purchase in its sole discretion;
all of the representations and warranties made by each of
the Company, USFS, the Servicer and each Seller in each Transaction
Document to which it is a party are true and correct in all material
respects on and as of such Increase Date as if made on and as of such date
(except to the extent such representations and warranties are expressly
made as of another date);
the Servicer shall have delivered to the Funding Agent on or
prior to such Increase Date, in form and substance satisfactory to the
Funding Agent, all Monthly Settlement Statements as and when due under
SECTION 4.2 of the Servicing Agreement, and upon the Funding Agent's
request, the Servicer shall have delivered to the Funding Agent at least
three days prior to such Increase, an interim Monthly Settlement Statement
showing the amount of Eligible Receivables;
the Commitment Termination Date shall not have occurred; and
28
the Funding Agent shall have received such other approvals,
opinions or documents as it may reasonably request as a result of changes
in circumstances or new credit information.
The Company's acceptance of funds in connection with each Increase occurring on
any Increase Date shall constitute a representation and warranty by the Company
to the Purchasers as of such Increase Date (except to the extent such
representations and warranties are expressly made as of another date), as the
case may be, that all of the conditions contained in this Section 2.5(c) have
been satisfied.
(d) After receipt by the Funding Agent of the notice required by
Section 2.5(a) from the Servicer or the Company on behalf of the Trust, the
Funding Agent shall, so long as the conditions set forth in SECTIONS 2.5(a) AND
(c) are satisfied, promptly provide telephonic notice to Initial Purchaser and,
to the extent Initial Purchaser elects in its sole discretion not to fund a
portion of the Increase, the APA Banks, of the Increase Date and of the portion
of the Increase Amount allocable to Initial Purchaser and each such APA Bank
(which shall equal each such APA Bank's Pro Rata Share of the Increase Amount),
as applicable. If Initial Purchaser elects to fund an Increase, Initial
Purchaser agrees to pay in immediately available funds, no later than 1:00 p.m.
Chicago time, the amount of such Increase on the related Increase Date to the
Funding Agent for payment to the Trust for deposit in the Series 2003-1
Collection Subaccount. In the event the APA Banks shall fund the Increase, each
APA Bank agrees to pay in immediately available funds, no later than 1:00 p.m.
Chicago time, such APA Bank's Pro Rata Share of such Increase on the related
Increase Date to the Funding Agent for payment to the Trust for deposit in the
Series 2003-1 Collection Subaccount.
(e) Notwithstanding anything to the contrary contained in this
Section 3A.4, (i), Initial Purchaser shall approve any portion of the Series
2003-1 Invested Amount allocated (or to be allocated) to Commercial Paper and
(ii) if the APA Banks have a Series 2003-1 Purchaser Invested Amount, (A) the
portion of the Series 2003-1 Invested Amount allocable to each Eurodollar
Tranche must be in an amount equal to $500,000 or an integral multiple of
$500,000 in excess thereof, (B) no more than five Eurodollar Tranches shall be
outstanding at any one time, (C) after the occurrence and during the continuance
of any Early Amortization Event or Potential Early Amortization Event, the
Company may not elect to allocate any portion of the Increase to a Eurodollar
Tranche and (D) after the end of the Series 2003-1 Revolving Period, the Company
may not select any Eurodollar Period that does not end on or prior to the next
succeeding Distribution Date and the duration of any such Eurodollar Period
shall be subject to the approval of the Funding Agent.
29
SECTION 2.6 SALES BY INITIAL PURCHASER OF ITS SERIES 2003-1
PURCHASER INVESTED AMOUNT TO THE APA BANKS.
(a) Each APA Bank hereby agrees, subject to SECTION 2.6(d), that
immediately upon written notice from Initial Purchaser (or the Funding Agent on
behalf of Initial Purchaser) delivered on or prior to the Commitment Expiry
Date, it shall acquire by assignment from Initial Purchaser, without recourse or
warranty, its Pro Rata Share of the Purchase Percentage of the Conduit Interest.
Each such assignment by Initial Purchaser shall be made pro rata among all of
the APA Banks, except for pro rata assignments to one or more Terminating APA
Banks pursuant to SECTION 2.6(f). Each such APA Bank shall, no later than 1:00
p.m. (Chicago time) on the date of such assignment, pay in immediately available
funds (unless another form of payment is otherwise agreed between Initial
Purchaser and any APA Bank) to the Funding Agent at an account designated by the
Funding Agent, for the benefit of Initial Purchaser, its Acquisition Amount.
Unless an APA Bank has notified the Funding Agent that it does not intend to pay
its Acquisition Amount, the Funding Agent may assume that such payment has been
made and may, but shall not be obligated to, make the amount of such payment
available to Initial Purchaser in reliance upon such assumption. The Initial
Purchaser hereby sells and assigns to the Funding Agent for the ratable benefit
of the APA Banks, and the Funding Agent hereby purchases and assumes from
Initial Purchaser, effective upon the receipt by Initial Purchaser of the
Conduit Transfer Price, the Purchase Percentage of the Conduit Interest which is
the subject of any transfer pursuant to this SECTION 2.6. Upon payment of the
Conduit Transfer Price as provided herein and delivery to the Trustee by the
Funding Agent of Initial Purchaser's VFC Certificate, (i) the Company shall
sign, on behalf of the Trust, and shall direct the Trustee in writing to duly
authenticate, and the Trustee, upon receiving such direction, shall so
authenticate, a new VFC Certificate in the name of each APA Bank and in a
denomination equal to such APA Bank's Pro Rata Share as set forth in such
written direction and shall deliver such VFC Certificate to each such APA Bank
in accordance with such written direction and (ii) to the extent Initial
Purchaser's assignment pursuant to this Section 2.6 was for less than 100% of
its Series 2003-1 Purchaser Invested Amount, the Company shall sign, on behalf
of the Trust, and shall direct the Trustee in writing to duly authenticate, and
the Trustee, upon receiving such direction, shall so authenticate, a new VFC
Certificate in the name of Initial Purchaser and in a denomination equal to the
amount of Initial Purchaser's Series 2003-1 Purchaser Invested Amount retained
as set forth in such written direction and shall deliver such VFC Certificate to
Initial Purchaser in accordance with such written direction.
30
(b) TRANSFER PRICE REDUCTION YIELD. If the Adjusted Funded
Amount is included in the calculation of the Conduit Transfer Price for any
Purchase, each APA Bank agrees that the Funding Agent shall pay to Initial
Purchaser the Conduit Reduction Percentage of any Monthly Interest Payment
received by the Funding Agent with respect to the interest assigned in such
Purchase.
(c) PAYMENTS TO INITIAL PURCHASER. In consideration for the
reduction of the Conduit Transfer Prices by the Conduit Transfer Price
Reductions, effective only at such time as the aggregate amount of the Series
2003-1 Purchaser Invested Amounts of the APA Banks equals the Conduit Residual,
each APA Bank hereby agrees that the Funding Agent shall not distribute to the
APA Banks and shall immediately remit to Initial Purchaser any Monthly Interest
Payments, Collections or other payments received by it to be applied pursuant to
the terms hereof or otherwise to reduce the Series 2003-1 Purchaser Invested
Amounts of the APA Banks.
(d) LIMITATION ON COMMITMENT TO PURCHASE FROM INITIAL PURCHASER.
Notwithstanding anything to the contrary in this Supplement, no APA Bank shall
have any obligation to purchase any interest in the Conduit Interest from
Initial Purchaser, pursuant to SECTION 2.6(a) or otherwise, if:
Initial Purchaser shall have voluntarily commenced any
proceeding or filed any petition under any bankruptcy, insolvency or
similar law seeking the dissolution, liquidation or reorganization of
Initial Purchaser or taken any corporate action for the purpose of
effectuating any of the foregoing; or
involuntary proceedings or an involuntary petition shall
have been commenced or filed against Initial Purchaser by any Person under
any bankruptcy, insolvency or similar law seeking the dissolution,
liquidation or reorganization of Initial Purchaser and such proceeding or
petition shall have not been dismissed.
(e) DEFAULTING APA BANKS. If one or more APA Banks defaults in
its obligation to pay its Acquisition Amount pursuant to SECTION 2.5(b) or
SECTION 2.6(a) (each such APA Bank shall be called a "DEFAULTING APA BANK" and
the aggregate amount of such defaulted obligations pursuant to Section 2.5(b)
being herein called the "FUNDING DEFICIT" and the aggregate amount of such
defaulted obligations pursuant to Section 2.6(a) being herein called the
"CONDUIT TRANSFER PRICE DEFICIT"), then upon notice from the Funding Agent, each
APA Bank other
31
than the Defaulting APA Banks (a "NON-DEFAULTING APA BANK") shall promptly pay
to the Funding Agent, in immediately available funds, an amount equal to the
lesser of (x) such Non-Defaulting APA Bank's proportionate share (based upon the
relative Commitments of the Non-Defaulting APA Banks) of the Funding Deficit or
the Conduit Transfer Price Deficit (as applicable) and (y) the unused portion of
such Non-Defaulting APA Bank's Commitment. A Defaulting APA Bank shall forthwith
upon demand pay to the Funding Agent for the account of the Non-Defaulting APA
Banks all amounts paid by each Non-Defaulting APA Bank on behalf of such
Defaulting APA Bank, together with interest thereon, for each day from the date
a payment was made by a Non-Defaulting APA Bank until the date such
Non-Defaulting APA Bank has been paid such amounts in full, at a rate per annum
equal to the Federal Funds Effective Rate plus two percent (2%). In addition,
without prejudice to any other rights that Initial Purchaser may have under
applicable law, each Defaulting APA Bank shall pay to Initial Purchaser
forthwith upon demand, the difference between such Defaulting APA Bank's unpaid
Acquisition Amount and the amount paid with respect thereto by the
Non-Defaulting APA Banks, together with interest thereon, for each day from the
date of the Funding Agent's request for such Defaulting APA Bank's Acquisition
Amount pursuant to SUBSECTION 2.6(a) until the date the requisite amount is paid
to Initial Purchaser in full, at a rate per annum equal to the Federal Funds
Effective Rate plus two percent (2%).
(f) TERMINATING APA BANKS.
Each APA Bank hereby agrees to deliver written notice to the
Funding Agent not more than 30 Business Days and not less than 5 Business
Days prior to the Commitment Expiry Date indicating whether such APA Bank
intends to renew its Commitment hereunder. If any APA Bank fails to deliver
such notice on or prior to the date that is 5 Business Days prior to the
Commitment Expiry Date, such APA Bank will be deemed to have declined to
renew its Commitment (each APA Bank which has declined or has been deemed
to have declined to renew its Commitment hereunder, a "NON-RENEWING APA
BANK"). The Funding Agent shall promptly notify Initial Purchaser of each
Non-Renewing APA Bank and Initial Purchaser, in its sole discretion, may
(A) to the extent of Commitment Availability, declare that such
Non-Renewing APA Bank's Commitment shall, to such extent, automatically
terminate on a date specified by Initial Purchaser on or before the
Commitment Expiry Date or (B) upon one (1) Business Days' notice to such
Non-Renewing APA Bank assign to such Non-Renewing APA Bank on a date
specified by Initial Purchaser its Pro
32
Rata Share of the outstanding Conduit Interest, subject to, and in
accordance with, SUBSECTION 2.6(a). In addition, Initial Purchaser may, in
its sole discretion, at any time (x) to the extent of Commitment
Availability, declare that any Affected APA Bank's Commitment shall
automatically terminate on a date specified by Initial Purchaser or (y)
assign to any Affected APA Bank on a date specified by Initial Purchaser
its Pro Rata Share of the outstanding Conduit Interest, subject to, and in
accordance with, SUBSECTION 2.6(a) (each Affected APA Bank or each
Non-Renewing APA Bank is hereinafter referred to as a "TERMINATING APA
BANK"). The parties hereto expressly acknowledge that any declaration of
the termination of any Commitment, any assignment pursuant to this
subsection (f) and the order of priority of any such termination or
assignment among Terminating APA Banks shall be made by Initial Purchaser
in its sole and absolute discretion.
Upon any assignment to a Terminating APA Bank as provided in
this subsection (f), any remaining Commitment of such Terminating APA Bank
shall automatically terminate. Upon reduction to zero of such Terminating
APA Bank's Series 2003-1 Purchaser Invested Amount (after application of
Collections thereto pursuant to Article III) all rights and obligations of
such Terminating APA Bank hereunder shall be terminated and such
Terminating APA Bank shall no longer be an "APA BANK" hereunder; provided,
however, that the provisions of Section 2.9 and Article VII shall continue
in effect for its benefit with respect to the portion of the VFC
Certificateholders' Interest held by such Terminating APA Bank prior to its
termination as a APA Bank.
SECTION 2.7 PROCEDURE FOR DECREASING THE SERIES 2003-1 INVESTED
AMOUNT; OPTIONAL TERMINATION. (a) On any Business Day during the Series 2003-1
Revolving Period or the Series 2003-1 Amortization Period, upon the written
request of the Servicer or the Company on behalf of the Trust to the Funding
Agent substantially in the form of Exhibit E-2 hereto, the Series 2003-1
Invested Amount may be reduced (a "DECREASE") by the distribution by the
Servicer to the Funding Agent for the PRO RATA benefit of the Purchasers in
accordance with their respective Series 2003-1 Purchaser Invested Amount of
funds on deposit in the Series 2003-1 Collection Subaccount on such day in an
amount not to exceed the amount of such funds on deposit on such day; PROVIDED
that the Servicer shall have given the Funding Agent (with a copy to the
Trustee) irrevocable written notice (effective upon receipt), prior to 1:00
p.m., Chicago time in accordance with the Required
33
Notice Period, and which notice shall state the amount of such Decrease;
PROVIDED, FURTHER, that such Decrease shall be in an amount equal to $1,000,000
and integral multiples of $100,000 in excess thereof.
(b) Simultaneously with any such Decrease during the Series
2003-1 Revolving Period, the Series 2003-1 Subordinated Interest Amount shall be
reduced by an amount (the "SERIES 2003-1 SUBORDINATED INTEREST REDUCTION
AMOUNT") such that the Series 2003-1 Subordinated Interest Amount shall equal
the Series 2003-1 Required Reserves after giving effect to such Decrease. During
the Series 2003-1 Revolving Period, after the distribution described in Section
(a) above has been made, and the Series 2003-1 Subordinated Interest Amount
shall have been reduced by the Series 2003-1 Subordinated Interest Reduction
Amount, a distribution shall be made to the owner of the Series 2003-1
Subordinated Interest out of remaining funds on deposit in the Series 2003-1
Collection Subaccount in an amount equal to the lesser of (x) the Series 2003-1
Subordinated Interest Reduction Amount and (y) the amount of such remaining
funds on deposit in the Series 2003-1 Collection Subaccount.
(c) Any reduction in the Series 2003-1 Invested Amount held by
the APA Banks on any Business Day shall be allocated first to reduce the
Unallocated Balance and then to reduce the portion of the Series 2003-1 Invested
Amount allocated to Eurodollar Tranches in such order as the Company may select
in order to minimize costs payable pursuant to SECTION 7.4.
(d) (i) On any Business Day unless the Scheduled Revolving
Termination Date, or an Early Amortization Event shall have occurred and be
continuing, the Company shall have the right to deliver an irrevocable written
notice (an "OPTIONAL TERMINATION NOTICE") to the Trustee, Funding Agent and the
Servicer in which the Company declares that the Series 2003-1 Revolving Period
shall terminate on the date (the "OPTIONAL TERMINATION DATE") set forth in such
notice (which date, in any event, shall be the last day of a Accrual Period
which is not less than 10 Business Days from the date on which such notice is
delivered).
From and after the Optional Termination Date, the Series
2003-1 Amortization Period shall commence for all purposes under this
Supplement and the other Transaction Documents. The Trustee shall give
prompt written notice of its receipt of an Optional Termination Notice to
the Purchasers.
SECTION 2.8 REDUCTIONS OF THE COMMITMENTS. (a) On any Business Day
during the Series 2003-1 Revolving Period, the Company, on behalf of
34
the Trust, may, upon ten Business Days' prior written notice to the Funding
Agent (with copies to the Servicer and the Trustee) reduce or terminate the
Commitments (a "COMMITMENT REDUCTION") in a minimum aggregate amount equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof; PROVIDED that no
such termination or reduction shall be permitted if, after giving effect thereto
and to any reduction in the Series 2003-1 Invested Amount on such date, the
Series 2003-1 Invested Amount would exceed the Maximum Invested Amount then in
effect. Each APA Bank's Commitment shall be reduced by such APA Bank's Pro Rata
Share of the amount of such Commitment Reduction.
(b) Upon commencement of the Series 2003-1 Amortization Period,
the Aggregate Commitment Amount shall be reduced to 102% of the Maximum Invested
Amount, and the Maximum Invested Amount shall be reduced to the Series 2003-1
Invested Amount. Each APA Bank's commitment shall be reduced by such APA Bank's
Pro Rata Share of the amount of such reduction.
(c) Once reduced, the Commitments may not be subsequently
reinstated. Upon effectiveness of any such reduction, the Funding Agent shall
prepare a revised Schedule 1 to reflect the reduced Commitment of each APA Bank
and Schedule 1 of this Supplement shall be deemed to be automatically superseded
by such revised Schedule 1. The Funding Agent shall distribute such revised
Schedule 1 to the Company, the Servicer, the Trustee and each APA Bank.
SECTION 2.9 INTEREST, FEES. (a) Interest shall be payable on the
VFC Certificates on each Distribution Date pursuant to Section 3A.6(a).
(b) The Servicer shall distribute pursuant to Section 3A.6(b),
from amounts on deposit in the Series 2003-1 Collection Subaccount, to the
Funding Agent, for the PRO RATA account of the APA Banks in accordance with
their respective Pro Rata Shares, on each Distribution Date, a commitment fee
with respect to the Accrual Period ending immediately prior to such date (the
"COMMITMENT FEE") equal to the Commitment Fee Rate multiplied by the average
daily Aggregate Commitment Amount during such Accrual Period. The Commitment Fee
shall be payable (i) monthly in arrears on each Distribution Date (including
during the Series 2003-1 Amortization Period) and (ii) on the Commitment
Termination Date. To the extent that funds on deposit in the Series 2003-1
Collection Subaccount at any such date are insufficient to pay the Commitment
Fee due on such date, the Servicer shall so notify the Company and the Company
shall immediately pay the Funding Agent the amount of any such deficiency.
35
(c) The Servicer shall distribute pursuant to SECTION 3A.6(b),
from amounts on deposit in the Series 2003-1 Collection Subaccount, to the
Funding Agent, for the account of Initial Purchaser, on each Distribution Date
with respect to which Initial Purchaser held a portion of the Series 2003-1
Invested Amount during the Accrual Period ending immediately prior to such date,
a utilization fee (the "UTILIZATION FEE") with respect to such Accrual Period at
the Utilization Fee Rate of the average Series 2003-1 Invested Amount during
such period. The Utilization Fee shall be payable monthly in arrears on each
Distribution Date. To the extent that funds on deposit in the Series 2003-1
Collection Subaccount at any such date are insufficient to pay the Utilization
Fee due on such date, the Servicer shall so notify the Company and the Company
shall immediately pay the Funding Agent the amount of any such deficiency.
(d) Calculations of per annum rates and fees under this
Supplement shall be made on the basis of a 360- (or 365-/366-, in the case of
interest on the Floating Tranche based on the Prime Rate) day year with respect
to Commitment Fees, Utilization Fees and interest rates. Each determination of
the Adjusted LIBO Rate by the Funding Agent shall be conclusive and binding upon
each of the parties hereto in the absence of manifest error.
SECTION 2.10 INDEMNIFICATION BY THE COMPANY AND THE SERVICER.
Without limiting any other rights that the Funding Agent or any Purchaser may
have hereunder or under applicable law, (A) the Company hereby agrees to
indemnify (and pay upon demand to) the Trustee, the Funding Agent and each
Purchaser and their respective assigns, officers, directors, agents and
employees (each an "INDEMNIFIED PARTY") from and against any and all damages,
losses, claims, taxes, liabilities, costs, expenses and for all other amounts
payable, including reasonable attorneys' fees (which attorneys may be employees
of the Indemnified Party, provided that such fees of attorneys that are
employees of any Indemnified Party shall not be duplicative of the fees of any
third-party attorneys retained by such Indemnified Party) and disbursements (all
of the foregoing being collectively referred to as "INDEMNIFIED AMOUNTS")
awarded against or incurred by any of them arising out of or as a result of any
Pooling and Servicing Agreement or any other Transaction Document or the
acquisition, either directly or indirectly, by a Purchaser of an interest in the
Trust or Trust Assets, and (B) the Servicer hereby agrees to indemnify (and pay
upon demand to) each Indemnified Party for Indemnified Amounts awarded against
or incurred by any of them arising out of the Servicer's activities as Servicer
hereunder excluding, however, in all of the foregoing instances under the
preceding clauses (A) and (B):
(i) Indemnified Amounts to the extent a final judgment of
36
a court of competent jurisdiction holds that such Indemnified Amounts resulted
from gross negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(ii) Indemnified Amounts to the extent the same includes
losses in respect of Receivables that are uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or
(iii) Excluded Taxes to the extent that the computation of such
taxes is consistent with the intended characterization for income tax purposes
of the acquisition by the Purchasers of the VFC Certificates (or any interest
therein) as a loan or loans by the Purchasers to the Company secured by the
Receivables, and other Trust Assets;
PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the
liability of the Company or the Servicer or limit the recourse of the Funding
Agent or the Purchasers to the Company or the Servicer for amounts otherwise
specifically provided to be paid by the Company or the Servicer, as applicable,
under the terms of any Pooling and Servicing Agreement. Without limiting the
generality of the foregoing indemnification, the Company shall indemnify each
Indemnified Party for Indemnified Amounts (including, without limitation, losses
in respect of uncollectible receivables, regardless of whether reimbursement
therefor would constitute recourse to the Company or the Servicer) relating to
or resulting from:
(i) any representation or warranty made by the Company, the
Servicer, the Support Provider or any Seller (or any officers of any such
Person) under or in connection with any Pooling and Servicing Agreement or any
other Transaction Document or any other information or report delivered by any
such Person pursuant hereto or thereto, which shall have been false or incorrect
when made or deemed made;
(ii) the failure by the Company, the Servicer, the Support
Provider or any Seller to comply with any applicable law, rule or regulation
with respect to any Receivable or Contract related thereto, or the nonconformity
of any Receivable or Contract included therein with any such applicable law,
rule or regulation or any failure of any Seller to keep or perform any of its
obligations, express or implied, with respect to any Contract;
(iii) any failure of the Company, the Servicer, the Support
Provider or any Seller to perform its duties, covenants or other obligations in
accordance with the provisions of any Pooling and Servicing Agreement or any
other
37
Transaction Document;
(iv) any products liability, personal injury or damage suit,
or other similar claim arising out of or in connection with merchandise,
insurance or services that are the subject of any Contract or any Receivable;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such Receivable or
the related Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or service related to such Receivable
or the furnishing or failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables at any time
with other funds;
(vii) any investigation, litigation or proceeding related to or
arising from any Pooling and Servicing Agreement or any other Transaction
Document, the transactions contemplated hereby, the use of the proceeds of an
Increase, the ownership of the VFC Certificates (or any interest therein) or any
other investigation, litigation or proceeding relating to the Company, the
Servicer, the Support Provider or any Seller in which any Indemnified Party
becomes involved as a result of any of the transactions contemplated hereby;
(viii) any inability to litigate any claim against any Obligor
in respect of any Receivable as a result of such Obligor being immune from civil
and commercial law and suit on the grounds of sovereignty or otherwise from any
legal action, suit or proceeding;
(ix) any Bankruptcy Event relating to the Company, the
Servicer, the Support Provider, any Seller or any of their respective
Subsidiaries;
(x) any failure of the Company to acquire and maintain legal
and equitable title to, and ownership of any Receivable and the Related Property
and Collections with respect thereto from USFS, free and clear of any Lien
(other than as created hereunder); or any failure of the Company to give
reasonably equivalent value to USFS under the USFS Receivables Sale Agreement in
consideration of the transfer by USFS of any Receivable, or any attempt by any
Person to void such transfer under statutory provisions or common law or
equitable action;
38
(xi) any failure of USFS to acquire and maintain legal and
equitable title to, and ownership of any Receivable and the Related Property and
Collections with respect thereto from any Seller, free and clear of any Lien
(other than as created hereunder); or any failure USFS to give reasonably
equivalent value to any Seller under the USSC Receivables Sale Agreement in
consideration of the transfer by such Seller of any Receivable, or any attempt
by any Person to void such transfer under statutory provisions or common law or
equitable action;
(xii) any failure to vest and maintain vested in the Trustee
for the benefit of the Trust and the Purchasers, or to transfer to the Trustee
for the benefit of the Trust and the Purchasers, legal and equitable title to,
and ownership of, a first priority perfected undivided percentage ownership
interest (to the extent of the Invested Percentage contemplated hereunder) or
security interest in the Receivables, the Related Property and the Collections,
free and clear of any Lien (except as created by the Transaction Documents);
(xiii) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any
Receivable, the Related Property and Collections with respect thereto, and the
proceeds of any thereof, whether at the time of any Increase or at any
subsequent time;
(xiv) any action or omission by the Company, the Servicer, the
Support Provider or any Seller which reduces or impairs the rights of the
Trustee or the Purchasers with respect to any Receivable or the value of any
such Receivable;
(xv) any attempt by any Person to void any Increase hereunder
or the purchase of any VFC Certificate under statutory provisions or common law
or equitable action; and
(xvi) the failure of any Receivable included in the calculation
of the Series 2003-1 Allocated Receivables Amount as an Eligible Receivable to
be an Eligible Receivable at the time so included.
The foregoing provisions shall survive the termination of this Supplement and
the Agreement, resignation or removal of any Indemnified Party and satisfaction
and discharge of the Trust
39
ARTICLE III
ARTICLE III OF THE AGREEMENT
SECTION 3.1 of the Agreement and each other section of Article III of
the Agreement relating to another Series shall read in their entirety herein 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 herein as follows and shall be exclusively applicable to the Series
2003-1 Interests:
Section 3A.2. ESTABLISHMENT OF SERIES 2003-1 COLLECTION SUBACCOUNT.
The Servicer shall cause to be established and maintained in the name of the
Company, (i) for the benefit of the Purchasers and (ii) in the case of clauses
(A) and (B) below, for the benefit, subject to the prior and senior interest of
the Purchasers, of the owner of the Series 2003-1 Subordinated Interest, a
subaccount of the Collection Account (the "SERIES 2003-1 COLLECTION
SUBACCOUNT"), which subaccount is the Series Collection Subaccount with respect
to Series 2003-1 and shall bear a designation indicating that the funds
deposited therein are held for the benefit of the Persons (and, for each such
Person, to the extent) set forth in clauses (i) and (ii) above. The Trustee
shall have the right to take sole dominion and control of the Collection Account
and the Series 2003-1 Collection Subaccount pursuant to the terms of a Lockbox
Agreement and to direct the disposition of funds from time to time on deposit in
the Series 2003-1 Collection Subaccount and in all proceeds thereof.
Section 3A.3. ALLOCATIONS. The Servicer shall apply and distribute the
portion of the Aggregate Daily Collections allocated to the Series 2003-1
Interests pursuant to Article III of the Agreement (the "SERIES 2003-1
COLLECTIONS"):
(a) On each Business Day during the Series 2003-1 Revolving
Period, an amount equal to the Termination Percentage of each Terminating APA
Bank shall be set aside for distribution to such Terminating APA Bank on the
next Distribution Date and an amount equal to the Accrued Interest Expense shall
be set aside for distribution in accordance with Section 3A.6(a) on the next
occurring Distribution Date. The balance of such Series 2003-1 Collections (the
"REINVESTMENT AMOUNT" shall be distributed by the Servicer to such accounts or
such persons as the Company may direct in writing (which directions may consist
of standing instructions provided by the Company that shall remain in effect
until changed by the Company in writing); PROVIDED that such distribution shall
be made only if no Early Amortization Event or Potential Early Amortization
Event has occurred and is continuing and only to the extent that, after giving
effect to such
40
distribution, the Series 2003-1 Target Receivables Amount would not exceed the
Series 2003-1 Allocated Receivables Amount; PROVIDED FURTHER that if the Company
or the Servicer, on behalf of the Company, shall have given the Funding Agent
irrevocable written notice in accordance with SECTION 2.7, the Servicer may
withdraw all or a portion of such amounts on deposit in the Series 2003-1
Collection Subaccount and apply such withdrawn amounts toward the reduction of
the Series 2003-1 Invested Amount and the Series 2003-1 Subordinated Interest
Amount in accordance with SECTION 2.7.
(b) On each Business Day during the Series 2003-1 Amortization
Period (including Distribution Dates), funds deposited in the Series 2003-1
Collection Subaccount shall be set aside for distribution in accordance with
SECTION 3A.6(b). Except as set forth in SECTION 3A.6(b), no amounts on deposit
in the Series 2003-1 Collection Subaccount shall be distributed by the Servicer
to the Company or the owner of the Series 2003-1 Subordinated Interest during
the Series 2003-1 Amortization Period.
(c) The allocations to be made pursuant to this Section 3A.3 are
subject to the provisions of Sections 2.5, 2.6, 7.2, 9.1 and 9.4 of the
Agreement.
SECTION 3A.4. DETERMINATION OF INTEREST. (a)(i) The amount of interest
distributable with respect to the VFC Certificates ("SERIES 2003-1 MONTHLY
INTEREST") on each Distribution Date shall be the amount of Daily Interest
Expense accrued during the Accrual Period ending on or immediately prior to such
Distribution Date as calculated by the Funding Agent.
(ii) If a change in the weighted average Adjusted LIBO
Rate or the Alternate Base Rate on or after any Settlement Report Date
results in a change in Series 2003-1 Monthly Interest for the Accrual
Period ending on the Distribution Date immediately succeeding such
Settlement Report Date, the Servicer shall amend the Monthly Settlement
Statement to reflect the adjustment in the Series 2003-1 Monthly Interest
for such Accrual Period caused by such change and any consequent
adjustments and the Servicer shall also provide written notification to the
Trustee of any such change. Any amendment to the Monthly Settlement
Statement pursuant to this SECTION 3A.4(a)(ii) shall be completed by 1:00
p.m. Chicago time on the day preceding the next Distribution Date.
41
(b) On each Distribution Date, the Servicer shall determine the
excess, if any (the "INTEREST SHORTFALL"), of (i) the Series 2003-1 Monthly
Interest for the Accrual Period ending on or immediately prior to such
Distribution Date OVER (ii) the amount which will be available to be distributed
to the Purchasers on such Distribution Date in respect thereof pursuant to this
Supplement. If the Interest Shortfall with respect to any Distribution Date is
greater than zero, an additional amount ("ADDITIONAL INTEREST") equal to the
product of (A) the number of days until such Interest Shortfall shall be repaid
DIVIDED BY 365 (or 366, as the case may be), (B) the Alternate Base Rate PLUS
2.0% and (C) such Interest Shortfall (or the portion thereof which has not been
paid to the Purchasers) shall be payable as provided herein with respect to the
VFC Certificates on each Distribution Date following such Distribution Date, to
but excluding the Distribution Date on which such Interest Shortfall is paid to
the VFC Certificateholders.
(c) On any Business Day, the Company may, subject to Section
3A.4(e), elect to allocate all or any portion of the Unallocated Balance (i) to
Commercial Paper commencing on such Business Day by giving the Funding Agent
irrevocable written or telephonic (confirmed in writing) notice thereof, which
notice must be received by the Funding Agent prior to 1:00 p.m., Chicago time,
two Business Days prior to such Business Day or (ii) to one or more Eurodollar
Tranches with Eurodollar Periods commencing on such Business Day by giving the
Funding Agent irrevocable written or telephonic (confirmed in writing) notice
thereof, which notice must be received by the Funding Agent prior to 1:00 p.m.,
Chicago time, three Business Days prior to such Business Day. Such notice shall
specify (i) the applicable Business Day, (ii) the Unallocated Balance that shall
be allocable to Commercial Paper, if any and (iii) the Eurodollar Period and the
Unallocated Balance for each Eurodollar Tranche to which a portion of the
Unallocated Balance is to be allocated, if any. With respect to any Eurodollar
Tranche or portion of the Series 2003-1 Invested Amount held by the APA Banks at
the Alternate Base Rate, the Funding Agent shall notify each APA Bank of the
contents of each such notice promptly upon receipt thereof.
(d) [Intentionally Omitted].
(e) Notwithstanding anything to the contrary contained in this
Section 3A.4, (i), Initial Purchaser shall approve any portion of the Series
2003-1 Invested Amount allocated (or to be allocated) to Commercial Paper and
(ii) if the APA Banks have a Series 2003-1 Purchaser Invested Amount, (A) the
portion of the Series 2003-1 Invested Amount allocable to each Eurodollar
Tranche must be in an amount equal to $500,000 or an integral multiple of
$500,000 in excess thereof, (B) no more than five Eurodollar Tranches shall be
outstanding at any one time, (C)
42
after the occurrence and during the continuance of any Early Amortization Event
or Potential Early Amortization Event, the Company may not elect to allocate any
portion of the Unallocated Balance to a Eurodollar Tranche and (D) after the end
of the Series 2003-1 Revolving Period, the Company may not select any Eurodollar
Period that does not end on or prior to the next succeeding Distribution Date
and the duration of any such Eurodollar Period shall be subject to the approval
of the Funding Agent.
SECTION 3A.5. DETERMINATION OF SERIES 2003-1 MONTHLY PRINCIPAL.
PAYMENTS OF SERIES 2003-1 PRINCIPAL. The amount (the "SERIES 2003-1 MONTHLY
PRINCIPAL PAYMENT") distributable from the Series 2003-1 Collection Subaccount
on each Distribution Date during the Series 2003-1 Amortization Period, as
determined by the Servicer, shall be equal to the amount on deposit in such
account on the immediately preceding Settlement Report Date; PROVIDED, HOWEVER,
that the Series 2003-1 Monthly Principal Payment on any Distribution Date shall
not exceed the Series 2003-1 Invested Amount on such Distribution Date.
SECTION 3A.6. APPLICATIONS. (a) During the Series 2003-1 Revolving
Period the Servicer shall on each Distribution Date apply funds on deposit in
the Series 2003-1 Collection Subaccount in the following order of priority to
the extent funds are available:
(i) to the payment of the Series 2003-1 Periodic
Servicing Fee if the Company or one of its Affiliates is not then acting as
the Servicer;
(ii) to the reimbursement of the Funding Agent's costs of
collection and enforcement of this Supplement;
(iii) ratably, to the payment of all accrued and unpaid
Series 2003-1 Monthly Interest payable on such Distribution Date (the
"MONTHLY INTEREST PAYMENT"), PLUS the amount of any Monthly Interest
Payment previously due but not distributed to the Purchasers on a prior
Distribution Date, PLUS the amount of any Additional Interest for such
Distribution Date and any Additional Interest previously due but not
distributed to the Purchasers on a prior Distribution Date, PLUS all
accrued and unpaid fees under the Fee Letter (including the Commitment Fee
and the Utilization Fee);
43
(iv) to the extent applicable, to the ratable reduction
of Series 2003-1 Invested Amount held by all Terminating APA Banks;
(v) to the extent applicable, to fund any Decrease in
accordance with SECTION 2.7;
(vi) to the payment of any amounts owing to the Trustee
pursuant to Section 8.5 of the Agreement;
(vii) to the payment of all other accrued and unpaid
Recourse Obligations; and
(viii) to the payment of the Series 2003-1 Periodic
Servicing Fee if the Company or any Affiliate thereof is then acting as the
Servicer.
Any remaining amounts on deposit in the Series 2003-1 Collection Subaccount not
allocated pursuant to clauses (i) through (viii) above shall be paid to the
owner of the Series 2003-1 Subordinated Interest; PROVIDED, HOWEVER, that during
the Series 2003-1 Amortization Period, such remaining amounts shall be
distributed in accordance with SECTION 3A.6(b).
(b) During the Series 2003-1 Amortization Period, the Servicer
shall apply, on each Distribution Date (or any other Business Day specified by
the Funding Agent), amounts on deposit in the Series 2003-1 Collection
Subaccount in the following order of priority:
(i) to the payment of the Series 2003-1 Periodic
Servicing Fee if the Company or one of its Affiliates is not then acting as
the Servicer;
(ii) to the reimbursement of the Funding Agent's costs of
collection and enforcement of this Supplement;
(iii) ratably, to the payment of all accrued and unpaid
Monthly Interest Payment payable on such Distribution Date, PLUS the amount
of any Monthly Interest Payment previously due but not distributed to the
Purchasers on a prior Distribution Date, PLUS the amount of any Additional
Interest for such Distribution Date and any Additional Interest previously
due but not distributed to the Purchasers on a prior Distribution Date,
PLUS all accrued and unpaid
44
fees under the Fee Letter (including the Commitment Fee and the Utilization
Fee);
to the payment of any amounts owing to the Trustee pursuant
to SECTION 8.5 of the Agreement;
to the payment of all other accrued and unpaid Recourse
Obligations (other than the Series 2003-1 Periodic Servicing Fee if the
Company or any of its Affiliates is then acting as the Servicer);
to the ratable reduction of Series 2003-1 Invested Amount of
all Purchasers;
to the payment of the Series 2003-1 Periodic Servicing Fee
if the Company or any Affiliate thereof is then acting as the Servicer; and
following the repayment in full of the Series 2003-1
Invested Amount, the remaining amount on deposit in the Series 2003-1
Collection Subaccount on such Distribution Date, if any, shall be
distributed to the owner of the Series 2003-1 Subordinated Interest.
Section 3A.7 ELIGIBLE INVESTMENTS. All amounts from time to time held
in, deposited in or credited to, the Series 2003-1 Collection Subaccount may be
invested by the Servicer (as agent for the Funding Agent) in Eligible
Investments. All such investments shall at all times be and remain credited to
an account, which if applicable, may be a subaccount of the Series 2003-1
Collection Subaccount (the "SERIES 2003-1 SECURITIES ACCOUNT") subject to a
securities control agreement in form and substance satisfactory to the Funding
Agent. All income or other gain from investment of monies deposited in or
credited to the Series 2003-1 Securities Account shall be deposited in or
credited to the Series 2003-1 Securities Account immediately upon receipt, and
any loss resulting from such investment shall be charged to the Series 2003-1
Securities Account. Funds on deposit in the Series 2003-1 Securities Account
shall be invested in Eligible Investments that will mature no later than the
Business Day immediately preceding the next Distribution Date. None of the
Funding Agent or any Purchaser shall be held liable in any way by reason of any
insufficiency in the Series 2003-1 Securities Account resulting from any
investment loss on any Eligible Investments.
45
ARTICLE IV
DISTRIBUTIONS AND REPORTS
Article IV of the Agreement (except for any portion thereof relating
to another Series) shall read in its entirety herein as follows and the
following shall be exclusively applicable to the VFC Certificates:
SECTION 4A.1. DISTRIBUTIONS. (a) on each Distribution Date, the
Trustee shall distribute to each Purchaser its applicable PRO RATA share (based
on each such Purchaser's Series 2003-1 Invested Amount) of the amount to be
distributed to the Purchasers pursuant to Article III.
(b) All allocations and distributions hereunder shall be in
accordance with the Monthly Settlement Statement, upon which the Trustee may
conclusively rely, and shall be made in accordance with the provisions of
Section 11.4 hereof and subject to Section 3.1(h) of the Agreement.
SECTION 4A.2. RESERVED.
SECTION 4A.3. STATEMENTS AND NOTICES. (a) MONTHLY SETTLEMENT
STATEMENTS. On each Settlement Report Date, the Servicer shall deliver to the
Trustee and the Funding Agent (commencing with the Settlement Report Date
occurring on April 17, 2003) a Monthly Settlement Statement in the Form of
Exhibit F setting forth, among other things, the Default Ratio, Delinquency
Ratio and Dilution Ratio and the components of the calculation thereof, and the
Series 2003-1 Monthly Principal Payment, each as calculated for the Accrual
Period ending immediately prior to such Settlement Report Date. The Funding
Agent shall forward a copy of each Monthly Settlement Statement to any Purchaser
upon request by such Purchaser. The Trustee shall have no obligation whatsoever
to verify the accuracy of any information contained within the Monthly
Settlement Statement, including any calculations contained therein. A copy of
any such items may be obtained by any holder of a Certificate upon a written
request delivered to the Trustee at the Corporate Trust Office.
Where the Servicer is required to provide written instructions to the
Trustee in respect of the distributions and allocations to be made on a
Distribution Date, the delivery by the Servicer to the Trustee of the Monthly
Settlement Statement with all such instructions contained therein on the
Settlement Report Date shall satisfy the Servicer's obligation to provide
written instructions.
46
(b) ANNUAL CERTIFICATEHOLDERS' TAX STATEMENT. On or before
January 31 of each calendar year (or such earlier date as required by applicable
law), beginning with calendar year 2001, 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 Purchaser, 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 Purchaser,
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 Company deems necessary or desirable to enable the Purchasers
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 prepared by the Servicer and provided to the Trustee or the
Funding Agent and to the Purchasers, in each case pursuant to any requirements
of the Internal Revenue Code as from time to time in effect.
(c) EARLY AMORTIZATION EVENT/DISTRIBUTION OF PRINCIPAL NOTICES.
Upon the occurrence of an Early Amortization Event with respect to Series
2003-1, the Company or the Servicer, as the case may be, shall give prompt
written notice thereof to the Trustee and the Funding Agent. As promptly as
reasonably practicable after its receipt of notice of the occurrence of an Early
Amortization Event with respect to Series 2003-1, the Trustee shall give notice
to the Funding Agent, who in turn shall give notice to each Purchaser. In
addition, on the Business Day preceding each day on which a distribution of
principal is to be made during the Series 2003-1 Amortization Period, the
Servicer shall direct the Funding Agent to send notice to each Purchaser, which
notice shall set forth the amount of principal to be distributed on the related
date to the Purchasers with respect to the outstanding VFC Certificates.
ARTICLE V
ADDITIONAL EARLY AMORTIZATION EVENTS
SECTION 5.1 ADDITIONAL EARLY AMORTIZATION EVENTS. If any one of the
events specified in SECTION 7.1 of the Agreement (after the expiration of any
grace periods or consents applicable thereto) or any one of the following events
(each, an "EARLY AMORTIZATION EVENT") shall occur during the Series 2003-1
Revolving Period with respect to the Series 2003-1 Interests:
47
(a) (i) failure on the part of the Servicer to make or direct
any payment or deposit under any Pooling and Servicing Agreement required to be
made or directed by it or failure by the Company to make any payment or deposit
required to be made by it under any Pooling and Servicing Agreement which
failure continues, in either case, for two Business Days after the date such
payment, deposit or amount is required to be made or directed;
(b) (i) failure on the part of the Company to duly observe or
perform any of the covenants or agreements of the Company set forth in SECTION
2.7 AND 2.8 of the Agreement or (ii) failure on the part of the Company or the
Support Provider duly to observe or perform any (other than as described in any
other paragraph of this SECTION 5.1) other covenants or agreements of the
Company or the Support Provider (as applicable) set forth in any Pooling and
Servicing Agreement, which failure continues unremedied until 10 Business Days
after the earlier of the date on which a Responsible Officer of the Company or
the Support Provider has knowledge thereof and the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Company or the Support Provider (as applicable) by the Trustee, or to the
Company or the Support Provider (as applicable) and the Trustee by the Funding
Agent or Purchasers representing 25% or more of the Series 2003-1 Invested
Amount;
(c) any representation or warranty made or deemed made by the
Company or the Support Provider in any Pooling and Servicing Agreement to or for
the benefit of the Purchasers (i) proves to have been incorrect in any material
respect when made or when deemed made and (ii) continues to be materially
incorrect until 10 Business Days after the earlier of the date on which a
Responsible Officer of the Company or the Servicer has knowledge thereof and the
date on which notice of such failure, requiring the same to be remedied, has
been given to the Company or the Support Provider (as applicable) by the
Trustee, or to the Company or the Support Provider (as applicable) and the
Trustee by the Funding Agent or Purchasers representing 25% or more of the
Series 2003-1 Invested Amount;
(d) a Servicer Default with respect to the Servicer shall have
occurred and be continuing or the Servicer shall have resigned;
(e) a Purchase Termination Event (as defined in any Receivables
Sale Agreement) shall have occurred and be continuing under such Receivables
Sale Agreement or any Seller shall for any reason cease to transfer (other than
in accordance with the terms of the applicable Receivables Sale Agreement), or
cease to have the legal capacity to transfer, or otherwise be incapable of
transferring Receivables pursuant to the applicable Receivables Sale Agreement;
48
(f) a USSC Change in Control shall have occurred, or any Seller
or the Servicer shall cease to be a directly or indirectly wholly-owned,
Subsidiary of USSC;
(g) USFS, USSC or any one of USSC's wholly-owned direct or
indirect subsidiaries shall cease to own 100% of the ordinary shares of the
Company, free and clear of any Lien, other than any Lien in favor of the
administrative agent under the Credit Agreement; PROVIDED, that 30% of the
voting rights with respect to such shares shall be held by the independent
director as nominee.
(h) any of the Agreement, the Servicing Agreement, this
Supplement or the Receivables Sale Agreements or any material provision of any
of the foregoing shall cease, for any reason, to be in full force and effect, or
to be the legally valid, binding and enforceable obligation of the Company, the
Servicer, the Support Provider or any Seller or the Company, any Seller, the
Support Provider or the Servicer or any Affiliate of any thereof shall so assert
in writing;
(i) the Trust shall for any reason cease to have a valid and
perfected first priority undivided ownership or security interest in the Trust
Assets (subject to no other Liens), or any of USSC, USFS, the Company or any
Affiliate of any one thereof shall so assert in writing;
(j) (i) there shall have been filed against the Company or the
Trust a notice of federal tax Lien from the Internal Revenue Service and 40 days
shall have elapsed without such notice having been effectively withdrawn or such
Lien having been released or discharged; (ii) any formal step is taken to
terminate any Plan, other than a standard termination under Section 4041(b) of
ERISA, or a contribution failure has occurred with respect to any Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA; or (iii) there
shall have been filed against USSC, USFS, the Company, any Seller or the Trust a
notice of any other Lien the existence of which could reasonably be expected to
have a Material Adverse Effect on the business, operations or financial
condition of such Person, and 40 days shall have elapsed without such notice
having been effectively withdrawn or such Lien having been released or
discharged;
(k) an event of default under the Credit Agreement shall have
occurred and the lender parties thereto shall have caused the indebtedness
thereunder to come due prior to its stated maturity;
49
(l) (i) default by the Company in the payment of an Indebtedness
when due or the performance of any term, provision or condition contained in any
agreement under which any such Indebtedness was created or is governed, the
effect of which is to cause, or to permit the holder or holders of such
Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any such Indebtedness of the Company shall be declared to be due
and payable or required to be prepaid (other than by a regularly scheduled
payment) prior to the date of maturity thereof; or (ii) default by USSC or USFS
in the payment of an Indebtedness equal to or in excess of $25,000,000 or the
performance of any term, provision or condition contained in any agreement under
which any such Indebtedness was created or is governed and the lender parties
thereto shall have caused such Indebtedness to come due prior to its stated
maturity;
(m) any action, suit, investigation or proceeding at law or in
equity (including, without limitation, injunctions, writs or restraining orders)
shall be brought or commenced or filed by or before any arbitrator, court or
Governmental Authority against the Company or any of its properties, revenues or
rights which could reasonably be expected to have a Material Adverse Effect;
(n) (i) one or more judgments for the payment of money shall be
rendered against the Company;
(o) as at the end of any Accrual Period, the average Delinquency
Ratio for the three preceding Accrual Periods (including such Accrual Period
then ended) shall exceed (i) 4.8% for any Accrual Period ending on or prior to
August 31, 2003 and (ii) thereafter, the greater of (x)125% of the highest
three-month rolling average Delinquency Ratio for the period from September 1,
2002 through August 31, 2003 and (y) 150% of the average of the three-month
rolling average Delinquency Ratio for the period from September 1, 2002 through
August 31, 2003;
(p) as at the end of any Accrual Period, the average Default
Ratio for the three preceding Accrual Periods (including such Accrual Period
then ended) shall exceed 1.10%;
(q) as at the end of any Accrual Period, the average Dilution
Ratio for the three preceding Accrual Periods (including such Accrual Period
then ended) shall exceed 8.75%;
(r) as at the end of any fiscal quarter of USSC or USI, the
Leverage Ratio shall exceed 3.0 to 1.0;
50
(s) as of any day, Consolidated Net Worth shall be less than (i)
$450,000,000 minus (ii) amounts permitted to be expended by USI in connection
with repurchases or redemptions of its capital stock under Section 6.10 of the
Credit Agreement, plus (iii) 50% of Consolidated Net Income (if positive) earned
in each fiscal quarter beginning with the fiscal quarter ending June 30, 2003,
plus (iv) 50% of the Net Cash Proceeds resulting from issuances of the capital
stock of USI or any Subsidiary of USI;
(t) as of the end of any fiscal quarter of USSC or USI, the
Fixed Charge Coverage Ratio shall be less than (i) 1.20 to 1.00 as of March 31,
2003, June 30, 2003 and September 30, 2003 and (ii) 1.25 to 1.00 as of the end
of each fiscal quarter thereafter;
(u) the Series 2003-1 Allocated Receivables Amount shall be less
than the Series 2003-1 Target Receivables Amount for more than two consecutive
Business Days; or
(v) any Bankruptcy Event shall occur with respect to the Support
Provider, and in the case of any such event arising from the commencement of an
involuntary proceeding, case or action, such event remains undismissed,
undischarged or unbonded for a period of 30 days;
then, in the case of (x) any event described in Section 7.1(a) of the Agreement,
Section 6.1(g) of any Receivables Sale Agreement or Section 6.1(e) of the
Servicing Agreement, after the applicable grace period (if any) set forth in
such Section, automatically without any notice or action on the part of the
Trustee or Purchasers, an early amortization period shall immediately commence
or (y) any other event described above or in Section 7.1 of the Agreement, after
the expiration of the applicable grace period (if any) set forth in such
paragraphs, the Funding Agent may, and at the written direction of the Required
APA Banks shall, by written notice then given to the Company and the Servicer,
declare that an early amortization period has commenced as of the date of such
notice with respect to Series 2003-1 (any such period under clause (x) or (y)
above, an "EARLY AMORTIZATION PERIOD").
ARTICLE VI
SERVICING FEE
SECTION 6.1 SERVICING COMPENSATION. A periodic servicing fee (the
"SERIES 2003-1 PERIODIC SERVICING FEE") shall be payable to the Servicer on
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each Distribution Date for the preceding Accrual Period in an amount equal to
the product of (a) the Servicing Fee and (b) a fraction the numerator of which
is the daily average Series 2003-1 Invested Amount for such Accrual Period and
the denominator of which is the daily average Aggregate Invested Amounts.
ARTICLE VII
CHANGE IN CIRCUMSTANCES
SECTION 7.1 ILLEGALITY. Notwithstanding any other provision herein,
if any APA Bank shall notify the Funding Agent, the Trustee and the Company in
writing that making or maintaining its portion of the VFC Certificateholders'
Interest in any Eurodollar Tranche would violate any applicable law, rule,
regulation, or directive of any Governmental Authority as a result of a Change
in Law, then the portion of each Eurodollar Tranche applicable to such APA Bank
shall thereafter be calculated by reference to the Alternate Base Rate. If any
such change in the method of calculating interest occurs on a day which is not
the last day of the Eurodollar Period with respect to any Eurodollar Tranche,
the Company shall pay to the Funding Agent for the account of such APA Bank the
amounts, if any, as may be required pursuant to SECTION 7.4.
SECTION 7.2 INCREASED COSTS.
(a) If any Change in Law (except with respect to Taxes which
shall be governed by Section 7.3) shall:
impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any APA Bank (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
impose on any Purchaser or the London interbank market any
other condition in respect of its interest in the VFC Certificates or under
the Transaction Documents;
and the result of any of the foregoing shall be to increase the cost to such
Purchaser of making, converting into, continuing or maintaining its portion of
the VFC Certificateholders' Interest (or maintaining its obligation to do so) or
to reduce any amount received or receivable by such Purchaser hereunder (whether
principal,
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interest or otherwise) or to require any payment calculated by reference to the
amount of interests or loans held or interest received by such Purchaser, then
upon demand by the Funding Agent the Company will pay to such Purchaser such
additional amount or amounts as will compensate such Purchaser for such
additional costs incurred or reduction suffered. For the avoidance of doubt, if
the FASB Interpretation No. 46, or any other change in accounting standards or
the issuance of any other pronouncement, release or interpretation, causes or
requires the consolidation of all or a portion of the assets and liabilities of
Initial Purchaser, the Trust or the Company with the assets and liabilities of
the Funding Agent or any APA Bank, such event shall constitute a circumstance on
which a Purchaser may base a claim for reimbursement under this SECTION 7.2.
(b) If any APA Bank determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such APA Bank's capital or the capital of any corporation controlling such
APA Bank as a consequence of its obligations hereunder to a level below that
which such APA Bank or such corporation could have achieved but for such Change
in Law (taking into consideration such APA Bank's or such corporation's policies
with respect to capital adequacy), then upon demand by the Funding Agent, the
Company shall pay to such APA Bank such additional amount or amounts as will
compensate such APA Bank for any such reduction suffered.
(c) A certificate of an APA Bank prepared in good faith and in a
manner generally consistent with such APA Bank's customary practice (if any) and
setting forth in reasonable detail the amount or amounts necessary to compensate
such APA Bank as specified in Sections (a) and (b) of this SECTION 7.2 shall be
delivered to the Company (with a copy to the Funding Agent) and shall be
conclusive absent manifest error. The agreements in this Section shall survive
the termination of this Supplement and the Agreement and the payment of all
amounts payable hereunder and thereunder.
(d) Failure or delay on the part of any APA Bank to demand
compensation pursuant to this Section 7.2 shall not constitute a waiver of such
APA Bank's right to demand such compensation; PROVIDED that the Company shall
not be required to compensate an APA Bank pursuant to this Section 7.2 for any
increased costs or reductions incurred more than 270 days prior to the date that
such APA Bank notifies the Company of the Change in Law giving rise to such
increased costs or reductions and of such APA Bank's intention to claim
compensation therefor; PROVIDED FURTHER that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
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SECTION 7.3 TAXES. (a) Any and all payments with respect to the
Purchaser's interests in the VFC Certificates or by or on account of any
obligation of the Company hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; PROVIDED that if the Company
shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 7.3) the Funding Agent or such APA Bank receives
an amount equal to the sum that it would have received had no such deductions
been made, (ii) the Company shall make such deductions and (iii) the Company
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Company shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Subject to paragraph (e) of this Section 7.3, the Company
shall indemnify the Funding Agent and each APA Bank within the later of 10 days
after written demand therefor and the Distribution Date next following such
demand for the full amount of any Indemnified Taxes or Other Taxes paid by the
Funding Agent or such APA Bank on or with respect to any payment in respect of
the Purchaser's interests in the VFC Certificates or by or on account of any
obligation of the Company hereunder or under any other Transaction Document
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section 7.3) and any penalties,
interest and expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Company by the Funding Agent or an
APA Bank shall be conclusive absent manifest error. The agreements in this
Section shall survive the termination of this Supplement and the Agreement and
the payment of all amounts payable hereunder and thereunder.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Company to a Governmental Authority, the Company
shall deliver to the Funding Agent the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment, a copy of the
return reporting such payment or other evidence of such payment reasonably
satisfactory to the Funding Agent.
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(e) The Funding Agent and each APA Bank shall (but with respect
to any Indemnified Tax or Other Tax arising from a Change in Law, only to the
extent the Funding Agent or such APA Bank is legally able to do so) deliver to
the Company (with a copy to the Funding Agent) such properly completed and
executed documentation prescribed by applicable law and reasonably requested by
the Company on the later of (i) 30 Business Days after such request is made and
the applicable forms are provided to such APA Bank or (ii) 30 Business Days
before prescribed by applicable law as will permit such payments to be made
without withholding or with an exemption from or reduction of Indemnified Taxes
or Other Taxes. Failure to timely provide such documentation to the Company
shall relieve the Company of any indemnification responsibility under this
SECTION 7.3 to such APA Bank or the Funding Agent (as applicable), but only to
the extent having provided such documentation would have mitigated such
Indemnified Tax or Other Tax.
(f) If the Funding Agent or an APA Bank (or a Transferee)
receives a refund solely in respect of Indemnified Taxes or Other Taxes, it
shall pay over such refund to the Company to the extent that such Funding Agent
or APA Bank (or Transferee) has already received indemnity payments or
additional amounts pursuant to this Section 7.3 with respect to such Indemnified
Taxes or Other Taxes giving rise to the refund, net of all out-of-pocket
expenses and without interest (other than interest paid by the relevant
Governmental Authority with respect to such refund); PROVIDED, HOWEVER, that the
Company shall, upon request of the Funding Agent or such APA Bank (or
Transferee), repay such refund (plus interest or other charges imposed by the
relevant Governmental Authority) to the Funding Agent or such APA Bank (or
Transferee) if the Funding Agent or such APA Bank (or Transferee) is required to
repay such refund to such Governmental Authority. Nothing contained herein shall
require the Funding Agent or an APA Bank (or Transferee) to make its tax returns
(or any other information relating to its taxes which it deems confidential)
available to the Company or any other Person.
SECTION 7.4 BREAK FUNDING PAYMENTS. The Company agrees to indemnify
each APA Bank and to hold each APA Bank harmless from any loss or expense which
such APA Bank may sustain or incur as a consequence of (a) default by the
Company in making a borrowing of, conversion into or continuation of a
Eurodollar Tranche after the Company has given irrevocable notice requesting the
same in accordance with the provisions of this Supplement, or (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 2.7, or (c) the making of a prepayment of a Eurodollar Tranche prior to
the termination of the Eurodollar Period for such Eurodollar Tranche. Such
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indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount not so borrowed,
converted or continued (or, in the case of clause (b), the amount not prepaid)
or the amount so prepaid, for the period from the date of such failure to
borrow, convert, continue or decrease or such prepayment to the last day of the
Eurodollar Period (or in the case of a failure to borrow, convert or continue,
the Eurodollar Period that would have commenced on the date of such prepayment
or of such failure) in each case at the Adjusted LIBO Rate for such Eurodollar
Tranche provided for herein over (ii) the amount of interest (as reasonably
determined by such APA Bank) which would have accrued to such APA Bank on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank eurodollar market. This covenant shall survive the
termination of this Supplement and the Agreement and the payment of all amounts
payable hereunder and thereunder. A certificate as to any additional amounts
payable pursuant to the foregoing sentence, showing in reasonable detail the
calculation thereof, submitted by any APA Bank to the Company shall be
conclusive absent manifest error.
Notwithstanding anything in this Supplement to the contrary, the
Company agrees to indemnify Initial Purchaser and to hold Initial Purchaser
harmless from any loss or expense which Initial Purchaser may sustain or incur
as a consequence of (a) default by the Company in making a borrowing or
conversion to be funded by Commercial Paper after the Company has given
irrevocable notice requesting the same in accordance with the provisions of this
Supplement, (b) the prepayment without satisfaction of the notice requirements
set forth in SECTION 2.7, whether in connection with a Decrease or otherwise, of
any portion of the Series 2003-1 Invested Amount held by Initial Purchaser or
(c) assignment by Initial Purchaser of its interest in the VFC Certificates
pursuant to SECTION 2.6.
SECTION 7.5 ALTERNATIVE RATE OF INTEREST. If any APA Bank
determines (which determination shall be conclusive absent manifest error) that:
(a) deposits of a type and maturity appropriate to match fund
its Pro Rata Share of any Eurodollar Tranche at the Adjusted LIBO Rate are not
available or adequate and reasonable means do not exist for ascertaining the
Adjusted LIBO Rate for such Eurodollar Period, or
(b) the Adjusted LIBO Rate for such Eurodollar Period will not
adequately and fairly reflect the cost to such APA Bank of making or maintaining
the Eurodollar Tranches during such Eurodollar Period,
then the Funding Agent shall forthwith give telecopy or telephonic notice
thereof to
56
the Company, the Trustee and the Purchasers, whereupon until the Funding Agent
notifies the Company and the Trustee that the circumstances giving rise to such
notice no longer exist, the Available Pricing Amount shall not be allocated to
any Eurodollar Tranche and the portion of each Eurodollar Tranche applicable to
such APA Bank shall thereafter be calculated by reference to the Alternate Base
Rate.
SECTION 7.6 MITIGATION OBLIGATIONS. (a) If any APA Bank requests
compensation under Section 7.2, or if the Company is required to pay any
additional amount to any APA Bank or any Governmental Authority for the account
of any APA Bank pursuant to Section 7.3, then such APA Bank shall use reasonable
efforts to designate a different lending office for funding or booking its
obligations under this Supplement and the Agreement or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such APA Bank, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 7.2 or 7.3, as the case
may be, in the future and (ii) would not subject such APA Bank to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
APA Bank. The Company hereby agrees to pay all reasonable costs and expenses
incurred by any APA Bank in connection with any such designation or assignment.
(b) If any APA Bank requests compensation under Section 7.2, or
if the Company is required to pay any additional amount to any APA Bank or any
Governmental Authority for the account of any APA Bank pursuant to Section 7.3,
or if any APA Bank defaults in its obligations under SECTION 2.3, then the
Company may, at its sole expense and effort, upon notice to such APA Bank and
the Funding Agent require such APA Bank to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in SECTION 11.11),
all its interests, rights and obligations under this Supplement to an assignee
that shall assume such obligations (which assignee may be another APA Bank, if
an APA Bank accepts such assignment); PROVIDED that (i) the Company shall have
received the prior written consent of the Funding Agent, which consent shall not
unreasonably be withheld, (ii) such APA Bank shall have received payment of an
amount equal to its Series 2003-1 Purchaser Invested Amount, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such Series 2003-1 Purchaser Invested Amount and
accrued interest and fees) or the Company (in the case of all other amounts) and
(iii) in the case of any such assignment resulting from a claim for compensation
under Section 7.2 or payments required to be made pursuant to Section 7.3, such
assignment will result in a reduction in such compensation or payments. An APA
Bank shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by
57
such APA Bank or otherwise, the circumstances entitling the Company to require
such assignment and delegation cease to apply.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES, COVENANTS
SECTION 8.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SERVICER. The Company and the Servicer each hereby represents and warrants to
the Trustee, the Funding Agent and each of the Purchasers that each and every of
their respective representations and warranties contained in the Agreement is
true and correct in all material respects as of the Effective Date and as of the
date of each Increase (except to the extent that any such representation or
warranty is expressly made as of another date).
SECTION 8.2 COVENANTS OF THE COMPANY AND THE SERVICER. The Company
and the Servicer hereby agree, in addition to their obligations under the
Agreement and the Servicing Agreement, that:
(a) they shall observe in all material respects each and every
of their respective covenants (both affirmative and negative) contained in the
Agreement, the Servicing Agreement, this Supplement and all other Transaction
Documents to which each is a party; and
(b) they shall afford the Trustee, Funding Agent or any
representatives of the Trustee or the Funding Agent access to all records
relating to the Receivables at any reasonable time during regular business
hours, upon reasonable prior notice (and without prior notice if an Early
Amortization Event has occurred), for purposes of inspection and shall permit
the Trustee, Funding Agent or any representative of the Trustee or the Funding
Agent to visit any of the Company's or the Servicer's, as the case may be,
offices or properties during regular business hours and as often as may
reasonably be desired to discuss the business, operations, properties, financial
and other conditions of the Company or the Servicer with their respective
officers and employees and with their independent certified public accountants;
PROVIDED that the Funding Agent shall provide the Company or the Servicer, as
the case may be, with reasonable notice prior to any such contact and shall give
the Company or the Servicer the reasonable opportunity to participate in such
discussions.
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SECTION 8.3 COVENANTS OF THE SERVICER. The Servicer hereby agrees
that:
(a) it shall observe each and all of its respective covenants
(both affirmative and negative) contained in the Pooling and Servicing
Agreements in all material respects;
(b) it shall provide to the Funding Agent, simultaneously with
delivery to the Trustee, all reports, notices, certificates, statements and
other documents required to be delivered to the Trustee pursuant to the
Agreement, the Servicing Agreement and the other Transaction Documents and
furnish to the Funding Agent promptly after receipt thereof a copy of each
material notice, material demand or other material communication (excluding
routine communications) received by or on behalf of the Company or the Servicer
with respect to the Transaction Documents;
(c) it shall provide notice to the Funding Agent of the
appointment of a Successor Servicer pursuant to Section 6.2 of the Servicing
Agreement; and
(d) it shall operate in good faith to allow the Trustee to use
the Servicer's available facilities, equipment, leasehold agreements, data
systems, records, files and expertise upon the Servicer's termination or
default.
SECTION 8.4 OBLIGATIONS UNAFFECTED. The obligations of the Company
and the Servicer to the Funding Agent and the Purchasers under this Supplement
shall not be affected by reason of any invalidity, illegality or irregularity of
any of the Receivables or any sale of any of the Receivables.
ARTICLE IX
CONDITIONS PRECEDENT
SECTION 9.1 CONDITIONS PRECEDENT TO EFFECTIVENESS OF SUPPLEMENT.
This Supplement shall become effective as of the date hereof (the "EFFECTIVE
DATE"), subject to the satisfaction of the following conditions precedent:
(a) DOCUMENTS. The Funding Agent shall have received, with a
copy for Initial Purchaser, true and complete copies of (i) this Supplement,
executed by a duly authorized officer of each of the Company, the Servicer, the
Trustee, the Funding Agent, Initial Purchaser and the APA Banks, (ii) each of
the
59
Agreement, the Servicing Agreement and each of the Receivables Sale Agreements,
duly executed by each of the parties thereto, (iii) all documents required to be
delivered in connection with the foregoing, (iv) a VFC Certificate Series 2003-1
in the original principal amount of $150,000,000 issued in favor of Initial
Purchaser and duly executed and delivered by the Company and duly authenticated
by the Trustee, (v) evidence satisfactory to the Funding Agent of the payment in
full of any amounts owed to JPMorgan Chase Bank under its Series 1998-1 Investor
Certificates and the termination of its interests in the Trust, (vi) evidence
satisfactory to the Funding Agent of the resignation of JPMorgan Chase Bank, as
trustee under the Agreement, the appointment of Bank One as Successor Trustee
and the assignment by JPMorgan Chase Bank to Bank One, as Successor Trustee of
the security interests created under the
Pooling Agreement and (vii) evidence
satisfactory the Funding Agent of the designation of this Series as a Companion
Series in compliance with Section 5.10 of
Pooling Agreement.
(b) ORGANIZATIONAL DOCUMENTS, ORGANIZATIONAL PROCEEDINGS. The
Funding Agent shall have received from the Company, each Seller and the
Servicer, with a copy for Initial Purchaser, true and complete copies of:
the articles of association, articles of incorporation or
other formation documents, including all amendments thereto, of such
Person, certified as of a recent date by the Secretary of State or other
appropriate authority of the state of formation or incorporation, as the
case may be, and a certificate of compliance, of status or of good
standing, as and to the extent applicable, of each such Person as of a
recent date, from the Secretary of State or other appropriate authority of
such jurisdiction;
a certificate of the Secretary or an Assistant Secretary of
each such Person, dated the Effective Date and certifying (A) that attached
thereto is a true and complete copy of the bylaws and articles of
incorporation or articles of association (or equivalent organization
documents) of each such Person, as in effect on the Effective Date and at
all times since a date prior to the date of the resolutions described in
clause (B) below, (B) that attached thereto is a true and complete copy of
the resolutions, in form and substance reasonably satisfactory to the
Funding Agent, of the Board of Directors of each such Person or committees
thereof (and corresponding resolutions of authority for any such committee)
authorizing the execution, delivery and performance of the Series 2003-1
Transaction Documents to which it is a party and the
60
transactions contemplated thereby, and that such resolutions have not been
amended, modified, revoked or rescinded and are in full force and effect,
(C) that the articles of association, articles of incorporation or other
formation documents of each such Person have not been amended since the
date of the last amendment thereto shown on the certificate of good
standing (or its equivalent) furnished pursuant to clause (i) above and (D)
as to the incumbency and specimen signature of each officer executing any
Series 2003-1 Transaction Documents or any other document delivered in
connection herewith or therewith on behalf of each such Person; and
a certificate of another officer as to the incumbency and
specimen signature of the Secretary or Assistant Secretary executing the
certificate pursuant to clause (ii) above.
(c) GOOD STANDING CERTIFICATES. The Funding Agent shall have
received copies of certificates of compliance, of status or of good standing,
dated as of a recent date, from the Secretary of State or other appropriate
authority of such jurisdiction, with respect to the Company, the Servicer and
each Seller, in each State where the ownership, lease or operation of property
or the conduct of business requires it to qualify as a foreign corporation or
limited liability company, except where the failure to so qualify would not
reasonably be expected to have a Material Adverse Effect.
(d) CONSENTS, LICENSES, APPROVALS, ETC. The Funding Agent shall
have received, with a copy for Initial Purchaser, certificates dated the date
hereof of a Responsible Officer of the Company, the Servicer and each Seller
either (i) attaching copies of all material consents, licenses and approvals
required in connection with the execution, delivery and performance by the
Company, the Servicer or any Seller, as the case may be, of the Series 2003-1
Transaction Documents to which it is a party, and the validity and
enforceability of the Series 2003-1 Transaction Documents to which it is a party
against such Person, and such consents, licenses and approvals shall be in full
force and effect or (ii) stating that no such consents, licenses or approvals
are so required.
(e) NO LITIGATION. The Funding Agent shall have received
confirmation that there is no pending or, to their knowledge after due inquiry,
threatened action or proceeding affecting USSC, USFS or any of their respective
Subsidiaries before any Governmental Authority that could reasonably be expected
to have a Material Adverse Effect.
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(f) LIEN SEARCHES. The Funding Agent shall have received a
written search report listing all effective financing statements that name any
Seller, USFS or the Company as debtor or assignor and that are filed in the
jurisdictions in which filings were made pursuant to paragraph (h) below and in
any other jurisdictions that the Funding Agent determines are reasonably
necessary or appropriate, together with copies of such financing statements
(none of which, except for those described in paragraph (h) below shall cover
any Receivables), and tax and judgment lien searches showing no such liens that
are not permitted by the Transaction Documents.
(g) UCC CERTIFICATE. The Funding Agent shall have received from
each Seller, USFS and the Company a UCC Certificate, completed in a manner
satisfactory to the Funding Agent, duly executed by a Responsible Officer of
such Seller, USFS or the Company, as the case may be, and dated the Effective
Date.
(h) FILINGS, REGISTRATIONS AND RECORDINGS. Any documents
(including, without limitation, financing statements) required to be filed in
order (i) to perfect the sale of the Receivables by USSC to USFS and by USFS to
the Company pursuant to the applicable Receivables Sale Agreement and (ii) to
create, in favor of the Trustee, a perfected ownership/security interest in the
Trust Assets under the Agreement with respect to which an ownership/security
interest may be perfected by a filing under the UCC or other comparable statute,
shall, in each case, have been properly prepared and authorized for immediate
filing in each office in each jurisdiction listed in the Agreement or the
applicable Receivables Sale Agreement, as the case may be, and such filings are
the only filings required in order to perfect the sale of the Receivables to
USFS or the Company, as the case may be, under the applicable Receivables Sale
Agreement, or to the Trust, under the Agreement, as the case may be, in the
jurisdictions listed therein. The Funding Agent shall have received evidence
reasonably satisfactory to it of each such filing, registration or recordation
and reasonably satisfactory evidence of the payment of any necessary fee, tax or
expense relating thereto.
(i) LEGAL OPINIONS. The Funding Agent shall have received, with
a counterpart for Initial Purchaser and the Trustee, opinions of counsel to the
Company, the Sellers and the Servicer, dated the Effective Date, as to
corporate, federal tax (tax status of the VFC Certificates as debt), validity
and perfection of security and/or ownership interests, true sale, substantive
consolidation and other matters in form and substance reasonably acceptable to
the Funding Agent and their counsel. On the Effective Date, the Funding Agent
shall have received copies of, and reliance letters upon, all other opinions of
counsel to the Company, the
62
Sellers and the Servicer delivered to the certificateholders of any other Series
of the Trust issued on the Effective Date.
(j) FEES. The Funding Agent shall have received payment of all
fees and other amounts due and payable to it, Initial Purchaser or the APA Banks
on or before the Effective Date, including without limitation, the legal fees
and expense of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), special counsel
to the Funding Agent accrued to date to the extent then invoiced.
(k) MATERIAL ADVERSE CHANGE. No material adverse change shall
have occurred with respect to the business, operations, or condition (financial
or otherwise) of USSC and its Subsidiaries taken as a whole since September 30,
2002, except as set forth in the Current Report of United Stationers, Inc. on
Form 8-K and filed on January 31, 2003 with the SEC or as otherwise disclosed to
the Funding Agent in writing prior to the Effective Date.
(l) LOCKBOX AGREEMENTS. The Funding Agent shall have received
Lockbox Agreements for each of the Lockbox Accounts identified on Schedule 2 in
form and substance reasonably satisfactory to the Funding Agent, duly executed
by the respective parties thereto.
(m) FEE LETTER. The Funding Agent shall have received the Fee
Letter, duly executed by the parties thereto.
(n) MONTHLY SETTLEMENT REPORT. The Funding Agent shall have
received a Monthly Settlement Report as of February 28, 2003.
ARTICLE X
THE FUNDING AGENT
SECTION 10.1 APPOINTMENT. Each Purchaser and APA Bank hereby
irrevocably designates and appoints the Funding Agent as the agent of such
Purchaser and APA Bank, respectively, under this Supplement and each such
Purchaser and APA Bank irrevocably authorizes the Funding Agent, in such
capacity, to take such action on its behalf under the provisions of this
Supplement and to exercise such powers and perform such duties as are expressly
delegated to the Funding Agent by the terms of this Supplement, together with
such other powers as are reasonably incidental thereto. In its capacity as agent
of each Purchaser and APA Bank, the Funding Agent shall act with the same due
care as it does with
63
respect to its own investments. Subject to the foregoing sentence or any
provision to the contrary elsewhere in this Supplement, the Funding Agent shall
not have any duties or responsibilities except those expressly set forth herein,
or any fiduciary relationship with any Purchaser or APA Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Supplement or otherwise exist against the Funding Agent.
SECTION 10.2 DELEGATION OF DUTIES. The Funding Agent may execute
any of its duties under this Supplement by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel (who may be counsel
for the Company or the Servicer), independent public accountants and other
experts selected by it concerning all matters pertaining to such duties. The
Funding Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
SECTION 10.3 EXCULPATORY PROVISIONS. Neither the Funding Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with the Agreement or this
Supplement (x) with the consent or at the request of the Majority Purchasers or
(y) in the absence of its own gross negligence or willful misconduct or (ii)
responsible in any manner to any of the Purchasers for any recitals, statements,
representations or warranties made by the Company or any officer thereof
contained in this Supplement or any other Transaction Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Funding Agent under or in connection with, this Supplement or
any other Transaction Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Supplement or any other
Transaction Document or for any failure of the Company or the Servicer to
perform its obligations hereunder or thereunder. The Funding Agent shall not be
under any obligation to any Purchaser to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Supplement or any other Transaction Document, or to inspect the
properties, books or records of the Company or the Servicer.
SECTION 10.4 RELIANCE BY FUNDING AGENT. The Funding Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Certificate,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company or the Servicer),
independent accountants and
64
other experts selected by the Funding Agent and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts. The Funding Agent may deem and
treat the payee of any Certificate as the owner thereof for all purposes unless
a written notice of assignment, negotiation or transfer thereof shall have been
filed with the Funding Agent. The Funding Agent shall be fully justified in
failing or refusing to take any action under this Supplement or any other
Transaction Document unless it shall first receive such advice or concurrence of
the Majority Purchasers as it deems appropriate or it shall first be indemnified
to its satisfaction by the Purchasers against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Funding Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Supplement and the other Transaction
Documents in accordance with a request of the Majority Purchasers, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Purchasers.
SECTION 10.5 NOTICE OF SERVICER DEFAULT OR EARLY AMORTIZATION EVENT
OR POTENTIAL EARLY AMORTIZATION EVENT. The Funding Agent shall not be deemed to
have knowledge or notice of the occurrence of any Servicer Default with respect
to the Servicer or any Early Amortization Event or Potential Early Amortization
Event hereunder unless the Funding Agent has received notice from a Purchaser,
the Company or the Servicer referring to the Agreement or this Supplement,
describing such Servicer Default or Early Amortization Event or Potential Early
Amortization Event and stating that such notice is a "notice of a Servicer
Default with respect to the Servicer" or a "notice of an Early Amortization
Event or Potential Early Amortization Event", as the case may be. In the event
that the Funding Agent receives such a notice, the Funding Agent shall give
notice thereof to the Purchasers, the Trustee, the Company and the Servicer. The
Funding Agent shall take such action with respect to such Servicer Default or
Early Amortization Event or Potential Early Amortization Event as shall be
reasonably directed by the Majority Purchasers, PROVIDED that unless and until
the Funding Agent shall have received such directions, the Funding Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Servicer Default or Early Amortization Event or
Potential Early Amortization Event as it shall deem advisable in the best
interests of the Purchasers.
SECTION 10.6 NON-RELIANCE ON THE FUNDING AGENT AND OTHER PURCHASERS.
Each Purchaser expressly acknowledges that neither the Funding Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the Funding
Agent hereinafter taken, including any review of the affairs of the Company or
the Servicer,
65
shall be deemed to constitute any representation or warranty by the Funding
Agent to any Purchaser. Each Purchaser represents to the Funding Agent that it
has, independently and without reliance upon the Funding Agent or any other
Purchaser, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Company or the Servicer and made its own decision to enter into this Supplement.
Each Purchaser also represents that it will, independently and without reliance
upon the Funding Agent or any other Purchaser, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Supplement and the other Transaction Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Company and the Servicer. Except for notices, reports and other documents
expressly required to be furnished to the Purchasers by the Funding Agent
hereunder, the Funding Agent shall have no duty or responsibility to provide any
Purchaser with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Company or the Servicer which may come into the
possession of the Funding Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
SECTION 10.7 INDEMNIFICATION. The Purchasers agree to indemnify the
Funding Agent in its capacity as such (to the extent not reimbursed by the
Company and the Servicer and without limiting the obligation of the Company and
the Servicer to do so), ratably according to their respective Series 2003-1
Purchaser Invested Amounts on the date on which indemnification is sought, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time be imposed on, incurred by or asserted against
the Funding Agent in any way relating to or arising out of the Commitments, this
Supplement, any of the other Transaction Documents or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Funding Agent under or in
connection with any of the foregoing; PROVIDED that no Purchaser shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Funding Agent's gross negligence or willful
misconduct. The agreements in this Section shall survive the payment of all
amounts payable hereunder.
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SECTION 10.8 THE FUNDING AGENT IN ITS INDIVIDUAL CAPACITY. The
Funding Agent and its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Company, the Servicer or any
of their Affiliates as though the Funding Agent were not the Funding Agent
hereunder. With respect to any VFC Certificate held by the Funding Agent, the
Funding Agent shall have the same rights and powers under this Supplement and
the other Transaction Documents as any Purchaser and may exercise the same as
though it were not the Funding Agent, and the terms "APA Bank" and "Purchaser"
shall include the Funding Agent in its individual capacity.
SECTION 10.9 SUCCESSOR FUNDING AGENT. The Funding Agent may resign
as Funding Agent upon 10 days' written notice to the Purchasers (with a copy to
the Company). If the Funding Agent shall resign as Funding Agent under this
Supplement, then the Majority Purchasers shall appoint from among the Purchasers
a successor administrative agent for the Purchasers, which successor
administrative agent shall be approved by the Company and the Servicer (which
approval shall not be unreasonably withheld), whereupon such successor
administrative agent shall succeed to the rights, powers and duties of the
Funding Agent, and the term "Funding Agent" shall mean such successor
administrative agent effective upon such appointment and approval, and the
former Funding Agent's rights, powers and duties as Funding Agent shall be
terminated, without any other or further act or deed on the part of such former
Funding Agent or any of the parties to this Supplement. If no successor
administrative agent has accepted appointment as "Funding Agent" by the date
that is 10 days following a retiring Funding Agent's notice of resignation, the
retiring Funding Agent's resignation shall nevertheless thereupon become
effective and the Purchasers shall perform all of the duties of the Funding
Agent hereunder until such time, if any, as the Majority Purchasers appoint a
successor agent as provided for above. After any retiring Funding Agent's
resignation as Funding Agent, the provisions of this Article 10 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Funding Agent under this Supplement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 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.
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SECTION 11.2 GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.3 FURTHER ASSURANCES. Each of the Company, the Servicer
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 Funding Agent or the Majority Purchasers 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 and the Servicer, the
execution of any financing or registration statements or similar documents or
notices or continuation statements relating to the Receivables and the other
Trust Assets for filing or registration under the provisions of the UCC or
similar legislation of any applicable jurisdiction.
SECTION 11.4 PAYMENTS. To the extent proper payment instructions are
provided, each payment to be made hereunder shall be made on the required
payment date in lawful money of the United States and in immediately available
funds, if to the Purchasers, at the office of the Funding Agent set forth in
SECTION 11.9 no later than 11:00 a.m. Chicago time on the day when due, and if
not received before 11:00 a.m. Chicago time shall be deemed to be received on
the next succeeding Business Day. Except as provided in SECTION 2.6(e), on each
Distribution Date, the Funding Agent shall remit in like funds to each Purchaser
its applicable PRO RATA share (based on each such Purchaser's Series 2003-1
Purchaser Invested Amount) of each such payment received by the Funding Agent
for the account of the Purchasers.
SECTION 11.5 COSTS AND EXPENSES. The Company agrees to reimburse the
Funding Agent, the Purchasers and Banc One Capital Markets for (i) all
reasonable out-of-pocket costs and expenses (including without limitation, and
to the extent reasonable, legal fees, due diligence and audit fees) incurred in
the negotiation, arrangement, and administration of this Supplement, the
Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby and (ii) all out-of-pocket costs and expenses (including ,
without limitation, legal fees) incurred in the enforcement of this Supplement,
the Agreement and the other Transaction Documents. Legal fees and expenses
included under this provision may include fees and expenses of internal counsel
of the applicable party, provided that such fees and expenses are not for
services that are duplicative of the services of any third-party attorneys
retained by such applicable party.
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SECTION 11.6 NO WAIVER, CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising, on the part of the Trustee, the Funding Agent or any
Purchaser, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 11.7 AMENDMENTS. (a) Subject to Section (c) of this SECTION
11.7, this Supplement may be amended in writing from time to time by the
Servicer, the Company and the Trustee, with the consent of the Funding Agent but
without the consent of any holder of any outstanding VFC Certificate, to cure
any ambiguity, to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein or to add any other provisions to
or change in any manner or eliminate any of the provisions with respect to
matters or questions raised under this Supplement which shall not be
inconsistent with the provisions of any Pooling and Servicing Agreement;
PROVIDED, HOWEVER, that such action shall not, as evidenced by an Officer's
Certificate or, to the extent in the reasonable view of the Company, a question
of law exists, an Opinion of Counsel delivered to the Trustee, adversely affect
in any material respect the interests of the VFC Certificateholders, including
without limitation the tax status of the VFC Certificates or of the Trust, or
the APA Banks. The Trustee may, but shall not be obligated to, enter into any
such amendment pursuant to this paragraph or paragraph (b) below which affects
the Trustee's rights, duties or immunities under any Pooling and Servicing
Agreement or otherwise.
(b) Subject to Section (c) of this SECTION 11.7, this Supplement
may also be amended in writing from time to time by the Servicer, the Company
and the Trustee with the consent of the Majority Purchasers for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Supplement or of modifying in any manner the rights of the
VFC Certificateholders (including, without limitation, the acceleration of the
payment of sums payable to or for the account of the Purchasers under any
provision of this Supplement); PROVIDED, HOWEVER, that no such amendment shall,
unless signed or consented to in writing by all Purchasers and each APA Bank,
(i) extend the time for payment or deposit, or reduce the amount, of any sum
payable to or for the account of any Purchaser under any provision of this
Supplement or extend the Commitment Expiry Date, (ii) subject any Purchaser to
any additional obligation (including, without limitation, any change in the
determination of any amount payable by any Purchaser), (iii) change the
Aggregate Commitment Amount, the
69
amount of (or rate of) any interest or fees or the percentage of Purchasers
which shall be required for any action under this Section or any other provision
of this Supplement or this SUBSECTION 11.7(b), (iv) change the tax
characteristics of the VFC Certificates or of the Trust; (v) consent to or
permit the assignment or transfer by the Company of any of its rights or
obligations under this Supplement or the Agreement; (vi) change the definition
of "Eligible Receivable," "Default Ratio," "Delinquency Ratio," or "Dilution
Ratio" or "Aggregate Receivables Amount"; or (vii) amend or modify any defined
term (or any defined term used directly or indirectly in such defined term) used
in the foregoing clauses (i) through (vi) in a manner that would circumvent the
intention of the restrictions set forth in such clauses; and PROVIDED, FURTHER,
that no such amendment shall, unless signed or consented to in writing by the
affected APA Bank, increase any APA Bank's Commitment.
(c) Any amendment hereof can be effected without the Funding
Agent's being party thereto; PROVIDED, HOWEVER, that no such amendment,
modification or waiver of this Supplement that affects rights or duties of the
Funding Agent shall be effective unless the Funding Agent shall have given its
prior written consent thereto.
SECTION 11.8 SEVERABILITY. If any provision hereof is void or
unenforceable in any jurisdiction, such voidness or unenforceability shall not
affect the validity or enforceability of (i) such provision in any other
jurisdiction or (ii) any other provision hereof in such or any other
jurisdiction.
SECTION 11.9 NOTICES. All notices, requests and demands to or upon
any party hereto to be effective shall be given (i) in the case of the Company,
the Servicer and the Trustee, in the manner set forth in SECTION 10.4 of the
Agreement and (ii) in the case of the Funding Agent, Initial Purchaser and each
APA Bank, in writing, and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand or three Business
Days after being deposited in the mail, postage prepaid, or, in the case of
facsimile notice, when received, (A) in the case of each APA Bank, at its
address set forth on Schedule 1 hereto and (B) addressed as follows in the case
of the Funding Agent, and Initial Purchaser; or to such other address as may be
hereafter notified by the respective parties hereto:
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Funding Agent: Bank One, NA (Main Office Chicago)
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇-▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Asset Backed Finance
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Initial Purchaser: Falcon Asset Securitization Corporation
c/o Bank One, NA (Main Office Chicago), as Agent
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇-▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Asset Backed Finance
Fax: ▇▇▇-▇▇▇-▇▇▇▇
SECTION 11.10 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 all of
the Purchasers and each APA Bank may not assign or transfer any of its rights
under this Supplement except as set forth in SECTION 11.11. The Company, the
Servicer, the Funding Agent and each APA Bank hereby agrees and consents to the
complete or partial assignment by Initial Purchaser of all or any portion of its
rights under, interest in, title to and obligations under this Supplement to the
APA Banks pursuant to SECTION 2.6 or to any other Person, and upon such
assignment, Initial Purchaser shall be released from its obligations so
assigned. Further, the Company, the Servicer, the Funding Agent and each APA
Bank hereby agrees that any assignee of Initial Purchaser of this Supplement
shall have all of the rights and benefits under this Supplement as if the term
"Initial Purchaser" explicitly referred to such party, and no such assignment
shall in any way impair the rights and benefits of Initial Purchaser hereunder,
provided that the Series 2003-1 Purchaser Invested Amount of any such assignee
shall accrue Daily Interest Expense pursuant to clause (ii) of the definition
thereof as if such assignee were an APA Bank hereunder.
SECTION 11.11 SECURITIES LAWS; PARTICIPATIONS; ASSIGNMENTS. (a) Each
Purchaser represents and warrants to the Company that it is a "qualified
institutional buyer" within the meaning of Rule 144A promulgated under the
Securities Act and agrees that its VFC Certificate will be acquired for
investment only and not with a view to any public distribution thereof, and that
such Purchaser
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will not offer to sell or otherwise dispose of its VFC Certificate (or any
interest therein) in violation of any of the registration requirements of the
Securities Act or any applicable state or other securities laws. Each Purchaser
acknowledges that it has no right to require the Company to register its VFC
Certificate under the Securities Act or any other securities law. Each Purchaser
hereby confirms and agrees that in connection with any transfer by it of an
interest in the VFC Certificate, such Purchaser has not engaged and will not
engage in a general solicitation or general advertising including
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over radio or television, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(b) Any APA Bank may, 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 APA Bank and the Participant; PROVIDED, HOWEVER,
that (i) in the event of any such sale by an APA Bank to a Participant, (A) such
APA Bank's obligations under this Supplement shall remain unchanged, (B) such
APA Bank shall remain solely responsible for the performance thereof and (C) the
Company shall continue to deal solely and directly with such APA Bank in
connection with its rights and obligations under the Pooling and Servicing
Agreements, (ii) no APA Bank shall sell any participating interest under which
the Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to, any Pooling and Servicing Agreement, except to the
extent that the approval of such amendment, consent or waiver otherwise would
require the unanimous consent of all APA Banks hereunder, (iii) no sale by an
APA Bank to a Participant shall be given effect if such sale would result in
there being more than 20 Targeted Holders with respect to the VFC Certificates
or is not otherwise permitted under Section 5.3(e) of the Agreement, and (iv)
each Participant shall, prior to becoming a Participant, execute and deliver to
the Funding Agent an Assignment/Participation Certification. The Company agrees
that each APA Bank 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 Participant shall have the right to receive payments under Article
VII in respect of its participation but only to the extent that the related
selling APA Bank would have had such right absent the sale of the related
participation.
(c) Any APA Bank 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 all or any part
72
of its rights and obligations under this Supplement and the VFC Certificate to
(i) its Affiliates and to any other APA Bank and (ii) upon prior written notice
to the Funding Agent, one or more banks or other entities (an "ACQUIRING APA
BANK"), in each case pursuant to a commitment transfer supplement, substantially
in the form of Exhibit G (the "COMMITMENT TRANSFER SUPPLEMENT"), executed by
such Acquiring APA Bank, such assigning APA Bank and the Funding Agent (and, in
the case of an Acquiring APA Bank that is not then an existing APA Bank or an
Affiliate thereof, by the Company and the Servicer, provided that no execution
by the Company and the Servicer shall be required in the case of SECTION
11.11(h) or if an Early Amortization Event has occurred and is continuing), and
delivered to the Funding Agent for its acceptance and recording in the Register.
Notwithstanding the foregoing, no APA Bank shall so sell its rights hereunder
(other than to its Affiliate or any other APA Bank) without the prior written
consent of the Company, which consent shall not be unreasonably withheld
(provided, that no such consent shall be required in the case of SECTION
11.11(h) or if an Early Amortization Event has occurred and is continuing), and
no APA Bank shall sell its rights hereunder (w) if such sale would result in
there being more than 20 Targeted Holders with respect to the VFC Certificates
or more than 20 beneficial owners of the VFC Certificates for the purposes of
the 1940 Act or is not otherwise permitted under Section 5.3(e) of the
Agreement, (x) if such Acquiring APA Bank is not an Eligible Assignee, (y)
unless such APA Bank reasonably believes that such Acquiring APA Bank is a
"qualified institutional buyer" within the meaning of Rule 144A promulgated
under the Securities Act and (z) unless, prior to such sale, the purchaser of
such rights shall have executed and delivered to the Funding Agent and the
Transfer Agent and Registrar an Assignment/Participation Certification. Upon
such execution, delivery, acceptance and recording, (A) the Company shall sign,
on behalf of the Trust, and shall direct the Trustee in writing to duly
authenticate, and the Trustee, upon receiving such direction, shall so
authenticate, a new VFC Certificate in the name and the denomination determined
pursuant to the related Commitment Transfer Supplement and set forth in such
written direction and shall deliver such VFC Certificate to the Acquiring APA
Bank in accordance with such written direction, and (B) from and after the
Transfer Issuance Date determined pursuant to such Commitment Transfer
Supplement, (1) the Acquiring APA Bank thereunder shall be a party hereto and,
to the extent provided in such Commitment Transfer Supplement, have the rights
and obligations of an APA Bank hereunder with a Commitment as set forth therein
and (2) the transferor APA Bank thereunder shall, to the extent provided in such
Commitment Transfer Supplement, be released from its obligations under this
Supplement. Such Commitment Transfer Supplement shall be deemed to amend this
Supplement (including the Schedules attached hereto) to the extent, and only to
the extent, necessary to reflect the addition of such Acquiring APA Bank as
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an "APA Bank" and the resulting adjustment of Pro Rata Shares arising from the
purchase by such Acquiring APA Bank of all or a portion of the rights and
obligations of such transferor APA Bank under this Supplement and the VFC
Certificates.
(d) The Funding Agent shall maintain at its address referred to
in SECTION 11.9 a copy of each Commitment Transfer Supplement delivered to it.
(e) Upon its receipt of a Commitment Transfer Supplement
executed by a transferor APA Bank and an Acquiring APA Bank (and, in the case of
a Transferee that is not then an existing APA Bank or an Affiliate thereof, by
the Company and the Servicer) and a processing fee of $3,500, the Funding Agent
shall (i) promptly accept such Commitment Transfer Supplement and (ii) on the
Transfer Issuance Date determined pursuant thereto record the information
contained therein in the Register and give notice of such acceptance and
recordation to Initial Purchaser, the APA Banks, the Servicer and the Company.
(f) The Company and the Servicer each authorizes each APA Bank
to disclose to any Participant or Acquiring APA Bank (each, a "TRANSFEREE") and
any prospective Transferee any and all financial information in such APA Bank's
possession concerning the Company, the Servicer or the Receivables which has
been delivered to such APA Bank by the Company or the Servicer pursuant to this
Supplement or which has been delivered to such APA Bank by or on behalf of the
Company in connection with such APA Bank's credit evaluation of the Company, the
Servicer, the Trust and the Trust Assets prior to becoming a party to this
Supplement; PROVIDED, HOWEVER, the Transferee or prospective Transferee shall
have agreed to be bound by the terms and conditions of Section 11.15.
(g) Notwithstanding any other provisions herein, no transfer or
assignment of any interests or obligations of any APA Bank hereunder or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would result in a prohibited transaction under Section 4975 of the
Internal Revenue Code or Section 406 of ERISA or cause the Trust Assets to be
regarded as plan assets pursuant to 29 C.F.R. Section 2510.3-101.
(h) Each of the APA Banks agrees that in the event that it shall
cease to have a short-term debt rating of A-1 or better by S&P and P-1 by
▇▇▇▇▇'▇ (an "AFFECTED APA BANK"), such Affected APA Bank shall be obliged, at
the request of Initial Purchaser or the Funding Agent, to assign all of its
rights and
74
obligations hereunder to (x) another APA Bank or (y) another funding entity
nominated by the Funding Agent and acceptable to Initial Purchaser, and willing
to participate in this Supplement through the Commitment Expiry Date in the
place of such Affected APA Bank; PROVIDED that the Affected APA Bank receives an
amount equal to its Series 2003-1 Purchaser Invested Amount, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder from the
assignee (to the extent of such Series 2003-1 Purchaser Invested Amount and
accrued interest and fees) or the Company (in the case of all other amounts).
SECTION 11.12 ADJUSTMENTS; SET-OFF. (a) If any Purchaser (a
"BENEFITTED PURCHASER") shall at any time receive in respect of its Series
2003-1 Invested Amount any distribution of principal, interest, Commitment Fees
or other fees, or any interest thereon, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off or otherwise) in a
greater proportion than any such distribution received by any other Purchaser,
if any, in respect of such other Purchaser's Series 2003-1 Invested Amount, or
interest thereon, such Benefitted Purchaser shall purchase for cash from the
other Purchasers such portion of each such other Purchaser's interest in the VFC
Certificates, or shall provide such other Purchasers with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Purchaser to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Purchasers; PROVIDED, HOWEVER, that if all
or any portion of such excess payment or benefits is thereafter recovered from
such Benefitted Purchaser, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. The Company agrees that each Purchaser so purchasing a portion of the
VFC Certificateholders' Interest may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such portion as fully as
if such Purchaser were the direct holder of such portion.
(b) In addition to any rights and remedies of the Purchasers
provided by law, each Purchaser shall have the right, without prior notice to
the Company, any such notice being expressly waived by the Company to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Company hereunder or under the VFC Certificates to set-off and appropriate and
apply against any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Purchaser to
or for the credit or the account of the Company. Each Purchaser agrees promptly
to notify the Company and the Funding Agent after any such set-off and
application made by such
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Purchaser, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application.
SECTION 11.13 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.
SECTION 11.14 NO BANKRUPTCY PETITION. (a) The Funding Agent and each
Purchaser hereby covenants and agrees that, prior to the date which is one year
and one day after the later of (i) the last day of the Series 2003-1
Amortization Period and (ii) 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.
(b) The Company, the Servicer, the Trustee, the Funding Agent
and each APA Bank hereby covenants and agrees that, prior to the date which is
one year and one day after the payment in full of all outstanding senior
indebtedness of Initial Purchaser, it will not institute against, or join any
other Person in instituting against, Initial Purchaser or any such entity any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other similar proceedings under any federal or state bankruptcy or similar
law. The provisions of this Section 11.14(b) shall survive termination of this
Supplement.
SECTION 11.15 CONFIDENTIALITY.
(a) The Company, the Servicer and each APA Bank shall maintain
and shall cause each of its employees and officers to maintain the
confidentiality of this Supplement and the other confidential or proprietary
information with respect to the Funding Agent and Initial Purchaser and their
respective businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein, except that
the Company, the Servicer and each APA Bank may disclose such information (i) to
its employees, affiliates, attorneys and financial advisors, and then only in
connection with the transactions contemplated hereby and by the other
Transaction Documents and on a confidential basis, (ii) where, in such Person's
reasonable judgment, disclosure is required by law or compelled pursuant to any
judicial, administrative or regulatory proceeding in respect of which, to the
extent permitted by applicable law, such Person shall use commercially
reasonable efforts to give the Funding Agent
76
reasonable prior notice and the opportunity to contest such disclosure or seek,
at such Person's cost, appropriate protective orders, or (iii) to the extent the
Agent or Initial Purchaser consents to the proposed disclosure.
(b) The Funding Agent and each APA Bank will maintain the
confidentiality of all nonpublic information about the Company and its business
that is provided to it by the Company in connection with the investigation,
structuring, syndication and closing of the transactions contemplated by this
Supplement and the other Transaction Documents shall use such information only
in connection with such transactions contemplated hereby and in any other
financing for the Company or any of its affiliates in which the Agent, Initial
Purchaser, such APA Bank or any of their affiliates is a participant, and shall
not disclose any such information to any person except (i) to each other, (ii)
to prospective assignees or participants of a Purchasers who have agreed to
maintain the confidentiality of such information in accordance with these
confidentiality provisions, (iii) on a confidential basis to any rating agency,
or any commercial paper dealer or provider of a surety, guaranty or credit or
liquidity enhancement to Initial Purchaser or any entity organized for the
purpose of purchasing or making loans secured by, financial assets for which the
Funding Agent acts as the administrative agent, (iv) to their respective
officers, directors, employees, affiliates, outside accountants and attorneys,
and then only in connection with the transactions contemplated hereby and on a
confidential basis, (v) to the extent, in such Person's reasonable judgment,
such disclosure is required by law or compelled pursuant to any judicial,
administrative or regulatory proceeding in respect of which, to the extent
permitted by applicable law, such Person shall use commercially reasonable
efforts to give the Company reasonable prior notice and the opportunity to
contest such disclosure or seek, at the Company's cost, appropriate protective
orders, (vi) to the extent such disclosure is requested or required by any
regulatory authority or auditor and (vii) to the extent that the Company
consents to the proposed disclosure.
(c) Notwithstanding anything to the contrary contained in this
SECTION 11.15, the obligations relating to confidentiality described in this
Section (the "CONFIDENTIALITY OBLIGATIONS") shall not apply to the "tax
structure" or "tax treatment" of the transactions contemplated hereby (as these
terms are defined in Section 1.6011-4(b) (3), or any successor provision, of the
Treasury Regulations promulgated under Section 6011 of the Internal Revenue Code
of 1986, as amended (the "CONFIDENTIALITY REGULATION")) of the transactions
contemplated hereby; and each party hereto (and any officer, director, employee,
affiliate, outside accountant and attorney of any party hereto) may disclose to
any and all persons, without limitation of any kind, the "tax structure" and
"tax treatment" of the transactions contemplated hereby (as these terms are
defined in the Confidentiality Regulation).
77
In addition, each party hereto acknowledges that it has no proprietary or
exclusive right to any tax matter or tax idea related to the transactions
contemplated hereby.
(d) The agreements in this SECTION 11.15 shall survive the
termination of this Supplement and the Agreement and the payment of all amounts
payable hereunder and thereunder.
SECTION 11.16 LIMITATION OF LIABILITY. Except with respect to any
claim arising out of the willful misconduct or gross negligence of Initial
Purchaser, the Funding Agent or any APA Bank, no claim may be made by the
Company, the Servicer or any other Person against Initial Purchaser, the Funding
the Agent or any APA Bank or their respective Affiliates, directors, officers,
employees, attorneys or agents for any special, indirect, consequential or
punitive damages in respect of any claim for breach of contract or any other
theory of liability arising out of or related to the transactions contemplated
by any Pooling and Servicing Agreement, or any act, omission or event occurring
in connection therewith; and each of the Company and the Servicer hereby waives,
releases, and agrees not to ▇▇▇ upon any claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor. The
provisions of this Section 11.16 shall survive termination of this Supplement.
SECTION 11.17 CONSENTS OF INVESTOR CERTIFICATEHOLDERS. Each of the
Investor Certificateholders party hereto consents to the execution and delivery
of the Agreement and the Servicing Agreement.
SECTION 11.18 RECOURSE TO THE COMPANY. Notwithstanding any limitation
on recourse contained in this Supplement, the Company shall immediately pay to
the Funding Agent when due, for the account of the relevant Purchaser or
Purchasers on a full recourse basis, (i) such fees as set forth in the Fee
Letter (which fees shall be sufficient to pay all fees owing to the APA Banks),
(ii) all amounts payable as Series 2003-1 Monthly Interest, (iii) all amounts
payable as Dilution Adjustments, Transfer Deposit Amounts, or payable pursuant
to Section 2.6 of the Agreement (which shall be immediately due and payable by
the Company and applied to reduce outstanding Series 2003-1 Invested Amount),
(iv) all amounts payable pursuant to Article VII and SECTION 2.10, if any, (v)
all Servicer costs and expenses, including the Servicing Fee, in connection with
servicing, administering and collecting the Receivables, and (vi) all Default
Fees (collectively, the "RECOURSE OBLIGATIONS"). If any Person fails to pay any
of the Recourse Obligations when due, such Person agrees to pay, on demand, the
Default Fee in respect thereof until paid. Notwithstanding the foregoing, no
provision of this Supplement, the Fee Letter or
78
any other Transaction Document shall require the payment or permit the
collection of any amounts hereunder in excess of the maximum permitted by
applicable law.
SECTION 11.19 CONSENT TO JURISDICTION. EACH OF THE COMPANY AND THE
SERVICER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENT OR ANY
DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS SUPPLEMENT AND EACH OF THE
COMPANY AND THE SERVICER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE FUNDING
AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST THE COMPANY OR THE SERVICER
IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE COMPANY
OR THE SERVICER AGAINST THE FUNDING AGENT OR ANY PURCHASER OR ANY AFFILIATE OF
THE FUNDING AGENT OR ANY PURCHASER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SUPPLEMENT OR ANY
DOCUMENT EXECUTED BY THE COMPANY OR THE SERVICER PURSUANT TO THIS SUPPLEMENT
SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS OR
NEW YORK,
NEW YORK.
SECTION 11.20 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS SUPPLEMENT, ANY DOCUMENT EXECUTED BY THE
COMPANY OR THE SERVICER PURSUANT TO THIS SUPPLEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER OR THEREUNDER.
SECTION 11.21 BANK ONE ROLES. Each of the APA Banks acknowledges that
Bank One acts, or may in the future act, (i) as administrative agent for Initial
Purchaser or any APA Bank, (ii) as issuing and paying agent for the Commercial
Paper, (iii) to provide credit or liquidity enhancement for the timely
79
payment for the Commercial Paper and (iv) to provide other services from time to
time for Initial Purchaser or any APA Bank (collectively, the "BANK ONE ROLES").
Without limiting the generality of this SECTION 11.21, each APA Bank hereby
acknowledges and consents to any and all Bank One Roles and agrees that in
connection with any Bank One Role, Bank One may take, or refrain from taking,
any action that it, in its discretion, deems appropriate, including, without
limitation, in its role as administrative agent for Initial Purchaser, and the
giving of notice to the Funding Agent of a mandatory purchase pursuant to
SECTION 2.6.
SECTION 11.22 RATING AGENCY CONDITION. Unless and until the VFC
Certificates shall be rated by an applicable rating agency, no action permitted
to be taken hereunder by any party shall be subject to satisfaction of the
Rating Agency Condition.
SECTION 11.23 COMPANION SERIES. In accordance with Section 5.10 of
the Agreement, the Company hereby designates this Series 2003-1 as a Companion
Series to the Series 1998-1 issued under the Agreement on May 1, 2001.
80
IN WITNESS WHEREOF, the Company, the Servicer, the Trustee, the
Funding Agent, Initial Purchaser and the APA Banks have caused this Second
Amended and Restated Series 2003-1 Supplement to be duly executed by their
respective officers as of the day and year first above written.
USS RECEIVABLES COMPANY, LTD.
By
---------------------------------------
Name:
Title:
UNITED STATIONERS FINANCIAL
SERVICES LLC, as Servicer
By
---------------------------------------
Name:
Title:
BANK ONE, NA (MAIN OFFICE
CHICAGO), not in its individual capacity
but solely as Trustee
By
---------------------------------------
Name:
Title:
1
BANK ONE, NA (MAIN OFFICE CHICAGO),
individually as an APA Bank and as
Funding Agent
By
---------------------------------------
Name:
Title:
FALCON ASSET SECURITIZATION CORPORATION,
as Initial Purchaser
By
---------------------------------------
Name:
Title:
2
Schedule 1
LIST OF COMMITMENTS
Name of APA Bank Commitment
---------------- -------------
Bank One, NA $ 153,000,000
1
Schedule 2
LOCKBOX AGREEMENTS
PNC BANK
Lockbox Number 7780-1274 Philadelphia, Pennsylvania
Lockbox Number 31001-0284 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Lockbox Number 676502 Dallas, Texas
Lockbox Account Number ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Lockbox Account Number 152302004717
1