Exhibit 10.5
EXECUTION COPY
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USS RECEIVABLES COMPANY, LTD.
UNITED STATIONERS FINANCIAL SERVICES LLC,
as Servicer,
THE CHASE MANHATTAN BANK,
as Funding Agent,
PARK AVENUE RECEIVABLES CORPORATION,
as Initial Purchaser,
THE CHASE MANHATTAN BANK,
as an APA Bank
AND
THE CHASE MANHATTAN BANK,
as Trustee and as Securities Intermediary
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SECOND AMENDED AND RESTATED
SERIES 1998-1 SUPPLEMENT
Dated as of May 1, 2001
to
AMENDED AND RESTATED POOLING AGREEMENT
Dated as of May 1, 2001
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UNITED STATIONERS RECEIVABLES MASTER TRUST
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions......................................................2
ARTICLE II
DESIGNATION OF CERTIFICATES;
PURCHASE AND SALE OF THE VFC CERTIFICATES
SECTION 2.1. Designation.....................................................27
SECTION 2.2. The Series 1998-1 Interests.....................................27
SECTION 2.3. Purchases of Interests in the VFC Certificates..................27
SECTION 2.4. Delivery........................................................28
SECTION 2.5. Procedure for Increasing the Series 1998-1 Invested Amount......29
SECTION 2.6. Sales by the Initial Purchaser of its Series 1998-1 Purchaser
Invested Amount to the APA Banks................................31
SECTION 2.7. Procedure for Decreasing the Series 1998-1 Invested Amount;
Optional Termination............................................34
SECTION 2.8. Reductions of the Commitments...................................35
SECTION 2.9. Interest, Fees..................................................36
SECTION 2.10. Indemnification by the Company and the Servicer.................37
ARTICLE III
ARTICLE III OF THE AGREEMENT
SECTION 3A.2. Establishment of Trust Accounts.................................38
SECTION 3A.3. Allocations.....................................................41
SECTION 3A.4. Determination of Interest.......................................42
SECTION 3A.5. Determination of Series 1998-1 Monthly Principal................44
SECTION 3A.6. Applications....................................................45
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ARTICLE IV
DISTRIBUTIONS AND REPORTS
SECTION 4A.1. Distributions...................................................47
SECTION 4A.2. Reserved........................................................48
SECTION 4A.3. Statements and Notices..........................................48
ARTICLE V
ADDITIONAL EARLY AMORTIZATION EVENTS
SECTION 5.1. Additional Early Amortization Events............................49
ARTICLE VI
SERVICING FEE
SECTION 6.1. Servicing Compensation..........................................53
ARTICLE VII
CHANGE IN CIRCUMSTANCES
SECTION 7.1. Illegality......................................................53
SECTION 7.2. Increased Costs.................................................54
SECTION 7.3. Taxes...........................................................55
SECTION 7.4. Break Funding Payments..........................................57
SECTION 7.5. Alternate Rate of Interest......................................58
SECTION 7.6. Mitigation Obligations..........................................58
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES, COVENANTS
SECTION 8.1. Representations and Warranties of the
Company and the Servicer........................................59
SECTION 8.2. Covenants of the Company and the Servicer.......................60
SECTION 8.3. Covenants of the Servicer.......................................60
SECTION 8.4. Obligations Unaffected..........................................61
ARTICLE IX
CONDITIONS PRECEDENT
SECTION 9.1. Conditions Precedent to Effectiveness of Supplement.............61
ii
ARTICLE X
THE FUNDING AGENT
SECTION 10.1. Appointment.....................................................64
SECTION 10.2. Delegation of Duties............................................65
SECTION 10.3. Exculpatory Provisions..........................................65
SECTION 10.4. Reliance by Funding Agent.......................................66
SECTION 10.5. Notice of Servicer Default or Early Amortization Event or Close
Up Potential Early Amortization Event...........................66
SECTION 10.6. Non-Reliance on the Funding Agent and Other Purchasers..........67
SECTION 10.7. Indemnification.................................................67
SECTION 10.8. The Funding Agent in Its Individual Capacity....................68
SECTION 10.9. Successor Funding Agent.........................................68
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Ratification of Agreement.......................................68
SECTION 11.2. Governing Law...................................................69
SECTION 11.3. Further Assurances..............................................69
SECTION 11.4. Payments........................................................69
SECTION 11.5. Costs and Expenses..............................................69
SECTION 11.6. No Waiver, Cumulative Remedies..................................70
SECTION 11.7. Amendments......................................................70
SECTION 11.8. Severability....................................................71
SECTION 11.9. Notices.........................................................71
SECTION 11.10. Successors and Assigns..........................................72
SECTION 11.11. Securities Laws; Participations; Assignments....................73
SECTION 11.12. Adjustments; Set-off............................................75
SECTION 11.13. Counterparts....................................................76
SECTION 11.14. No Bankruptcy Petition..........................................76
5SECTION 11.15. Confidentiality.................................................77
SECTION 11.16. Limited Recourse................................................77
SECTION 11.17. Consents of Investor Certificateholders.........................78
ARTICLE XII
FINAL DISTRIBUTIONSs
SECTION 12.1. Certain Distributions...........................................79
iii
SCHEDULES
Schedule 1 Commitments
iv
This
SECOND AMENDED AND RESTATED SERIES 1998-1 SUPPLEMENT, dated as of
May 1, 2001 (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"), PARK AVENUE
RECEIVABLES 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"),
THE CHASE MANHATTAN BANK, a
New York banking corporation ("CHASE"), in its
capacity as Funding Agent (the "FUNDING AGENT"), and THE CHASE MANHATTAN BANK,
in its capacity as trustee (together with its successors and assigns in such
capacity, the "TRUSTEE") and as Securities Intermediary (together with its
successors and assigns in such capacity, the "SECURITIES INTERMEDIARY") 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
an Amended and Restated Pooling Agreement, dated as of May 1, 2001 (as amended,
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 Company, the Servicer, the Trustee, the Initial Purchaser
and the APA Banks have entered into an Amended and Restated Series 1998-1
Supplement dated as of April 3, 1998 (as amended, supplemented or otherwise
modified to the date hereof, the "ORIGINAL SUPPLEMENT");
WHEREAS, the Company, the Servicer, the Trustee, the Initial Purchaser
and the APA Banks desire to amend and restate the Original Supplement on the
terms and conditions set forth herein;
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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, the 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
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 1998-1 and the definitions of
such terms are applicable to the singular as well as the plural form of such
terms and to the masculine as well as the feminine and neuter genders of such
terms:
"ACCRUAL PERIOD" shall mean the period from and including a
Distribution Date, to but excluding the succeeding Distribution Date.
"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 Program Costs which have accrued since
the preceding Business Day.
"ACQUIRING APA BANK" shall have the meaning assigned in Section
11.11(c).
"ADDITIONAL INTEREST" shall have the meaning assigned in Section
3A.4(b).
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"ADJUSTED LIBO RATE" shall mean, with respect to each day during each
Eurodollar Period pertaining to a portion of the Series 1998-1 Invested Amount
allocated to a Eurodollar Tranche, an interest rate per annum (rounded upwards,
if necessary, to the nearest 1/16th of 1%) equal to the LIBO Rate for such
Eurodollar Period multiplied by the Statutory Reserve Rate.
"ADJUSTED LIQUIDITY PRICE" shall mean, in determining the Purchase
Price of the Purchase Amount on an APA Bank Purchase Date prior to the
occurrence of an Early Amortization Event, an amount equal to:
IP X [OC + NDR]
where:
IP = the Invested Percentage on such
APA Bank Purchase Date;
OC = the product of (i) the APA Bank
Purchase Percentage for such Purchase
Date MULTIPLIED by (ii) the sum of
(A) any and all amounts due and owing
to the Company or the Trust in
respect of Seller Repurchase Payments
and Seller Adjustment Payments
pursuant to the Transaction Documents
and any, (B) all amounts due and
owing to the Trust as Transfer
Deposit Amounts pursuant to
Section 2.5(b) of the Agreement on
such APA Bank Purchase Date and (C)
all collections received by the
Sellers, the Company or the Trust
which are due and owing to the
Initial Purchaser under the
Transaction Documents which have not
yet been remitted to the Initial
Purchaser; and
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NDR = the product of (i) the APA Bank
Purchase Percentage for such APA Bank
Purchase Date MULTIPLIED BY (ii)
aggregate outstanding Principal
Amount of all Receivables that are
not Defaulted Receivables as of such
APA Bank Purchase Date.
Each of the foregoing shall be determined as of the most recent Settlement
Report Date.
"AGED RECEIVABLES RATIO" shall mean, as of the last day of each
Settlement Period, the percentage equivalent of a fraction, the numerator of
which shall be the sum of (a) the aggregate unpaid balance of Receivables
originated by the Sellers that were 60 to 89 days past due and (b) the aggregate
amount of Receivables of such Sellers that were charged off as uncollectible
prior to the day that is 60 days after its original due date during such
Settlement Period, and the denominator of which shall be the aggregate Principal
Amount of Receivables originated by the Sellers during the third prior
Settlement Period (including the Settlement Period ended on such day).
"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.
"APA BANKS" shall have the meaning specified in the introductory
paragraph hereto.
"APA BANK PURCHASE DATE" shall mean the date of any Purchase.
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"APA BANK 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
the Series 1998-1 Invested Amount on such APA Bank Purchase Date.
"APPLICABLE MARGIN" shall mean on any date of determination (i) for
each Eurodollar Tranche, 1.50% per annum and (ii) for each Floating Tranche,
0.25% per annum; PROVIDED, HOWEVER that, after the Commitment Expiry Date or the
occurrence of an Early Amortization Event, the Applicable Margin shall mean on
any date of determination for each Eurodollar Tranche or the Floating Tranche,
the applicable rate per annum set forth below under the caption "Eurodollar
Spread" or "Floating Rate Spread," as the case may be, based upon the Pricing
Leverage Ratio (as defined in, and determined in accordance with, the Credit
Agreement under the definition of Letter of Credit Fee Rate, as in effect on the
date hereof) as of the most recent determination date:
LEVERAGE EURODOLLAR FLOATING RATE
CATEGORY RATIO SPREAD SPREAD
-------- -------- ---------- -------------
Category 1 greater than 4.50 to 1.00 2.00% 0.75%
Category 2 greater than 4.00 to 1.00 and less 1.75% 0.50%
than or equal to 4.50 to 1.00
Category 3 greater than 3.50 to 1.00 and less 1.50% 0.25%
than or equal to 4.00 to 1.00
Category 4 greater than 3.00 to 1.00 and less 1.25% 0.00%
than or equal to 3.50 to 1.00
Category 5 less than or equal to 3.00 to 1.00 1.00% 0.00%
"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.
"BOARD" shall mean the Board of Governors of the Federal Reserve
System of the United States.
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"CARRYING COST RESERVE RATIO" shall mean, as of any Settlement Report
Date and continuing until (but not including) the next Settlement Report Date,
an amount (expressed as a percentage) equal to (a) the product of (i) 2.0 times
Days Sales Outstanding as of such day and (ii) 1.30 times the Alternate Base
Rate in effect as of such day divided by (b) 365.
"CHANGE IN LAW" shall mean (a) the adoption of any law, rule or
regulation after the Issuance Date, (b) any change in law, rule or regulation or
in the interpretation or application thereof by any Governmental Authority after
the Issuance Date or (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 Issuance Date.
"CHASE" shall have the meaning specified in the introductory paragraph
hereto.
"CLAIM" shall have the meaning assigned in Section 2.10(a).
"COMMERCIAL PAPER" shall mean the short-term promissory notes of the
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 Certificate on and after the Issuance Date, to
acquire a PRO RATA share of the Initial Purchaser's VFC Certificate and to
maintain and, subject to certain conditions, increase, its Series 1998-1
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 EXPIRY DATE" shall mean March 29, 2002 (as may be extended
for an additional period of time up to 364 days from time to time in writing by
PARCO, 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.
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"COMMITMENT PERIOD" shall mean the period commencing on the Issuance
Date and terminating on the Commitment Termination Date.
"COMMITMENT REDUCTION" shall have the meaning assigned in Section
2.8(a).
"COMMITMENT TERMINATION DATE" shall mean the earlier to occur of (i)
the date on which the Aggregate Commitment Amount has been reduced to zero
pursuant to Section 2.8 of this Agreement and (ii) the Commitment Expiry Date.
"COMMITMENT TRANSFER SUPPLEMENT" shall have the meaning assigned in
Section 11.11(c).
"COMPANY" shall have the meaning specified in the introductory
paragraph hereto.
"COMPANY INDEMNIFIED PERSON" shall have the meaning assigned in
Section 2.10(a).
"CP RATE" shall mean for any day the weighted average of the interest
rates (or if issued at a discount, the weighted average of the rates, after
converting to interest-bearing equivalents) on all outstanding Commercial Paper
issued by the Initial Purchaser to fund the Initial Purchaser's Series 1998-1
Purchaser Invested Amount, together with related dealer fees and commissions.
"CP RATE PERIOD" shall mean the period from and including a
Distribution Date to but excluding the next succeeding Distribution Date.
"CP TRANCHE" shall mean a portion of the Series 1998-1 Invested Amount
for which the Series 1998-1 Monthly Interest is calculated by reference to a
particular Discount and a particular CP Rate Period.
"CREDIT AGREEMENT" shall mean that certain Third Amended and Restated
Credit Agreement, dated as of June 29, 2000, among USSC, as borrower, United
Stationers Inc., as guarantor, The Chase Manhattan Bank, as administrative
agent, and Chase Securities Inc., as arranger, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
7
"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 1998-1 Non-Principal Collection Sub-subaccount.
"DAILY COMMITMENT FEE EXPENSE" shall mean, for any day in any Accrual
Period, the product of (A) the excess of the Aggregate Commitment Amount over
the aggregate Series 1998-1 Purchaser Invested Amounts of the APA Banks 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 1998-1
Non-Principal Collection Sub-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
1998-1 Invested Amount held by the Initial Purchaser during an Accrual Period,
the product of (A) the Initial Purchaser's Series 1998-1 Purchaser Invested
Amount divided by 360 and (B) the CP Rate for such day and (ii) for any portion
of the Series 1998-1 Invested Amount held by the APA Banks during an Accrual
Period, the sum of (A) the product of (x) the sum of (a) the portion of the APA
Banks' Series 1998-1 Purchaser Invested Amount (calculated with respect to all
APA Banks without regard to clauses (d) and (e) of the definition of Series
1998-1 Purchaser Invested Amount) allocable to the Floating Tranche on such day
and (b) for any day during the period from and including an APA Bank Purchase
Date to but excluding the Distribution Date immediately succeeding an APA Bank
Purchase Date, the Unaccrued Discount divided by 365 (or 366, as the case may
be) and (y) the Alternate Base Rate plus the Applicable Margin in effect on such
day, (B) the product of (x) the portion of the Series 1998-1 Invested Amount
(calculated with respect to all APA Banks without regard to clauses (d) and (e)
of the definition of Series 1998-1 Purchaser Invested Amount) allocable to
Eurodollar Tranches on such day divided by 360 and (y) the weighted average
Adjusted LIBO Rate plus the Applicable Margin on such day in effect with respect
thereto and (C) on an APA Bank Purchase Date, the Unaccrued Discount; PROVIDED,
HOWEVER, that for any such day during the continuance of an Early Amortization
Period, the "Daily Interest Expense" for such day shall be equal to the greater
of (i) the sum of the amounts calculated pursuant to clause (ii) above and (ii)
the product of (x) the Series 1998-1
8
Invested Amount on such day divided by 365 (or 366, as the case may be) and (y)
the Alternate Base Rate plus the Applicable Margin in effect on such day plus
2.00%.
"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 1998-1 Non-Principal Collection Sub-subaccount.
"DAILY SERVICING FEE EXPENSE" shall mean, for any day in any Accrual
Period the Series 1998-1 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 1998-1
Non-Principal Collection Sub-subaccount.
"DAILY UTILIZATION FEE EXPENSE" shall mean, for any day in any Accrual
Period on which the Initial Purchaser holds a Series 1998-1 Purchaser Invested
Amount, the product of (A) such Series 1998-1 Purchaser Invested Amount on such
day multiplied by (B) the Utilization Fee Rate divided by 360.
"DAYS SALES OUTSTANDING" shall mean, as of any Settlement Report Date
and continuing until (but not including) the next Settlement Report Date, the
number of days equal to the product of (a) 91 and (b) the amount obtained by
dividing (i) the aggregate Principal Amount of Eligible Receivables by (ii) the
aggregate Principal Amount of Receivables generated by the Seller for the three
Settlement Periods immediately preceding such earlier Settlement Report Date.
"DECREASE" shall have the meaning assigned in Section 2.7(a).
"DEFAULTING APA BANK" shall have the meaning assigned in Section
2.6(c).
"DEFAULT RATIO" shall mean, for any Settlement 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
9
part for more than 91 days after their respective due dates on the last day of
such Settlement Period and (ii) the aggregate amount of Disputed Receivables;
and (b) the aggregate outstanding Principal Amount of all Receivables on such
last day.
"DILUTION PERIOD" shall mean, as of any Settlement Report Date and
continuing until (but not including) the next Settlement Report Date, the
quotient of (i) the product of (A) the aggregate Principal Amount of Receivables
that were originated by the Sellers during the Settlement Period preceding such
earlier Settlement Report Date and (B) the quotient of (1) Days Sales
Outstanding as of such Settlement Report Date and (2) 30 and (ii) the Aggregate
Receivables Amount as of the last day of the Settlement Period preceding such
earlier Settlement Report Date.
"DILUTION RATIO" shall mean, as of the last day of each Settlement
Period, an amount (expressed as a percentage) equal to (i) the difference
between (A) the aggregate amount of Dilution Adjustments made during such
Settlement Period and (B) the Dilution Reduction Amount divided by (ii) the
average aggregate Principal Amount of Receivables that were originated by the
Sellers during the last two Settlement Periods (including the Settlement Period
ending on such day).
"DILUTION RESERVE RATIO" shall mean, as of any Settlement Report Date
and continuing until (but not including) the next Settlement Report Date, an
amount (expressed as a percentage) that is calculated as follows:
DRR = [ (c * d) + (e-d) * (e/d) ] * f
Where:
DRR = Dilution Reserve Ratio;
c = 2.00;
d = the average of the Dilution Ratio that occurred during the period
of twelve consecutive Settlement Periods ending immediately prior to such
earlier Settlement Report Date;
e = the highest average of the Dilution Ratio that occurred during the
period of twelve consecutive Settlement Periods ending prior to such earlier
Settlement Report Date; and
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f = the Dilution Period.
"DISCOUNT" shall mean, for purposes of this Agreement, the amount of
interest or discount to accrue on or in respect of Commercial Paper allocated,
in whole or in part, by the Funding Agent to fund the purchase or maintenance of
the Initial Purchaser's Series 1998-1 Purchaser Invested Amount (including
related commercial paper placement agent costs and commissions and odd-lot
amounts).
"EARLY AMORTIZATION DATE BALANCE" shall mean, on the date of any
occurrence of an Early Amortization Event, an amount equal to:
IP X [OC + NDR]
where:
IP = the Invested Percentage on such date;
OC = the sum of (i) any and all amounts due and
owing to the Company or the Trust in respect
of Seller Repurchase Payments and Seller
Adjustment Payments pursuant to the
Transaction Documents, (ii) all amounts due
and owing to the Trust as Transfer Deposit
Amounts pursuant to Section 2.5(b) of the
Agreement on such date and (iii) all
collections received by the Sellers, the
Company and/or the Trust which are due and
owing to the Initial Purchaser under the
Transaction Documents which have not yet
been remitted to the Initial Purchaser;
NDR = the aggregate outstanding Principal Amount
of all Receivables that are not Defaulted
Receivables as of such date.
Each of the foregoing shall be determined from the Settlement Report
delivered to the Funding Agent on or immediately prior to the date of occurrence
of such Early Amortization Event.
"EARLY AMORTIZATION EVENT" shall have the meanings assigned in Section
5.1 of this Supplement and Section 7.1 of the Agreement.
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"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 Scheduled Revolving 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 a portion of the Series 1998-1
Invested Amount for which the Series 1998-1 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 increased obligation of the Company hereunder, (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 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 Agreement 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.
"FEE LETTER" shall mean, collectively, those certain Fee Letters,
dated as of the date hereof, among the Company, the Funding Agent and the
Initial Purchaser, as the same may from time to time be amended, supplemented or
otherwise modified and in effect.
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"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of
New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day of such
transactions received by the Funding Agent from three Federal funds brokers of
recognized standing selected by it.
"FLOATING TRANCHE" shall mean, for any portion of the Series 1998-1
Invested Amount that is held by the APA Banks, that portion of the Series 1998-1
Invested Amount not allocated to a Eurodollar Tranche for which the Series
1998-1 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 TAXES" shall mean Taxes other than Excluded Taxes.
"INITIAL PURCHASER" shall have the meaning specified in the
introductory paragraph hereto.
"INITIAL SERIES 1998-1 INVESTED AMOUNT" shall mean the initial
invested amount applicable to Series 1998-1.
"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 1998-1 Revolving Period, the percentage equivalent of a
fraction, the numerator of which is the Series 1998-1 Allocated Receivables
Amount
13
as of the end of the immediately preceding Business Day and the denominator of
which is the Aggregate Receivables Amount with respect to such Business Day and
(ii) during the Series 1998-1 Amortization Period, the percentage equivalent of
a fraction, the numerator of which is the Series 1998-1 Allocated Receivables
Amount as of the end of the last Business Day of the Series 1998-1 Revolving
Period (PROVIDED THAT if during the Series 1998-1 Amortization Period, the
amortization periods of all other Outstanding Series which were outstanding
prior to the commencement of the Series 1998-1 Amortization Period commence,
then, from and after the date the last of such Series commences its Amortization
Period, the numerator shall be the Series 1998-1 Allocated Receivables Amount as
of the end of the Business Day preceding such date) and the denominator of which
is the greater of (A) the Aggregate Receivables Amount with respect to such
Business Day and (B) the sum of the numerators used to calculate the Invested
Percentage for all Outstanding Series on the Business Day for which such
percentage is determined.
"ISSUANCE DATE" shall mean April 3, 1998.
"LIBO RATE" shall mean, with respect to each day during each
Eurodollar Period pertaining to a Eurodollar Tranche, the rate appearing on Page
3750 of the Telerate Service (or on any successor or substitute page of such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Funding Agent from time to time
for purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m. (London
time) on the second Business Day prior to the commencement of such Eurodollar
Period, as the rate for dollar deposits with a maturity comparable to the
Eurodollar Period applicable to such Eurodollar Tranche. In the event that such
rate is not available at such time for any reason, then the "LIBO RATE" with
respect to each day during such Eurodollar Period pertaining to such Eurodollar
Tranche shall be the rate at which dollar deposits of $5,000,000 and for a
maturity comparable to such Eurodollar Period are offered by the principal
London office of the Funding Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m. (London time) on the second
Business Day prior to the commencement of such Eurodollar Period.
"LOSS RESERVE RATIO" shall mean, as of any Settlement Report Date and
continuing until (but not including) the next Settlement Report Date, an amount
(expressed as a percentage) that is calculated as follows:
14
LRR = (a * b)/c * d * e
Where:
LRR = Loss Reserve Ratio;
a = the aggregate Principal Amount of Receivables originated by the
Sellers during the three Settlement Periods immediately preceding such earlier
Settlement Report Date;
b = the highest three-month rolling average of the Aged Receivables
Ratio that occurred during the period of twelve consecutive Settlement Periods
ending prior to such earlier Settlement Report Date;
c = the Aggregate Receivables Amount as of the last day of the
Settlement Period immediately preceding such earlier Settlement Report Date; and
d = 2.00.
e = Payment Terms Factor
"LOSS-TO-LIQUIDATION RATIO" shall mean, for any Settlement Period, a
ratio (expressed as a percentage) equal to the quotient of (a) the difference,
if any, between (i) the aggregate Principal Amount of Charged-Off Receivables
with respect to such Settlement Period and the immediately preceding two
Settlement Periods and (ii) the aggregate amount of Recoveries during such two
Settlement Periods, and (b) the aggregate amount of Collections during such two
Settlement Periods.
"MAJORITY PURCHASERS" shall mean (i) on any day on which the Initial
Purchaser shall hold an interest in the Series 1998-1 Certificates, the Initial
Purchaser and the Required APA Banks and (ii) on any day on which the Initial
Purchaser shall not hold an interest in the Series 1998-1 Certificates, the
Required APA Banks.
"MAXIMUM COMMITMENT AMOUNT" shall mean $81,600,000.
"MAXIMUM INVESTED AMOUNT" shall mean $80,000,000.
15
"MINIMUM RATIO" shall mean, as of any Settlement Report Date and
continuing until (but not including) the next Settlement Report Date, the sum of
(i) 10% and (ii) 2.5% for each customer designated as a Special Obligor.
"MONTHLY INTEREST PAYMENT" shall have the meaning assigned in Section
3A.6(a).
"NON-DEFAULTING APA BANK" shall have the meaning assigned in Section
2.6(c).
"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.
"PARCO" shall mean Park Avenue Receivables Corporation, a Delaware
corporation, and its permitted successors and assigns.
"PARCO INSOLVENCY EVENT" shall mean the occurrence of any one or more
of the following: (i) any proceeding shall have been instituted by the Initial
Purchaser seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of any
order for relief or the appointment of a receiver, trustee or other similar
official for it or any substantial part of its property, or (ii) any proceeding
of the type described in the foregoing clause (i) shall be instituted against
the Initial Purchaser and shall have remained undismissed for a period of sixty
(60) consecutive days, or an order granting relief requested in any such
proceeding shall be entered.
"PARCO INTEREST" shall mean all of the Initial Purchaser's right,
title and interest in the Series 1998-1 Purchaser Invested Amount.
16
"PARCO TERMINATION EVENT" shall mean that the providers of the Initial
Purchaser's program liquidity and/or letter of credit facilities shall have
given notice to the Initial Purchaser that an event of default has occurred and
is continuing under their respective agreements with the Initial Purchaser.
"PARTICIPANTS" shall have the meaning assigned in Section 11.11(b).
"PAYMENT TERMS FACTOR" shall mean 1.017.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PRIME RATE" shall mean the rate of interest per annum publicly
announced from time to time by the Funding Agent as its prime rate in effect at
its principal office in
New York,
New York; each change in the Prime Rate shall
be effective from and including the date such change is publicly announced as
being effective.
"PROGRAM COSTS" shall mean, for any Business Day, the sum of (i) all
expenses, indemnities and other amounts due and payable to the Purchasers and
the Funding Agent under the Agreement or this Supplement (including, without
limitation, any Article VII Costs) and (ii) the product of (A) all unpaid fees
and expenses due and payable to counsel to, and independent auditors of, the
Company (other than fees and expenses payable on or in connection with the
closing of the issuance of the Series 1998-1 Interests) and (B) a fraction, the
numerator of which is the Aggregate Commitment Amount on such Business Day and
the denominator of which is the sum of (x) the Aggregate Invested Amounts on
such Business Day (other than the Series 1998-1 Invested Amount and the Invested
Amount in respect of any variable funding certificate of any other Outstanding
Series) and (y) the Aggregate Commitment Amount on such Business Day plus the
Aggregate Commitment Amount for any variable funding certificate of any other
Outstanding Series; PROVIDED, HOWEVER, that the amount of Program Costs payable
pursuant to Section 3A.6(b)(iv) shall not exceed $75,000 in the aggregate in any
fiscal year of the Servicer.
"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
17
any date after the Commitment Expiry Date, the Pro Rata Share of any APA Bank
shall be such APA Bank's Pro Rata Share on the Commitment Expiry Date.
"PURCHASE" shall mean the assignment by the Initial Purchaser to the
APA Banks of any portion of the Initial Purchaser's Series 1998-1 Purchaser
Invested Amount pursuant to Section 2.6.
"PURCHASE AMOUNT" shall mean, for any APA Bank Purchase Date, the
amount of the Initial Purchaser's Series 1998-1 Purchaser Invested Amount
specified in the Sale Notice for such APA Bank Purchase Date.
"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 the
Initial Purchaser's Series 1998-1 Purchaser Invested Amount on such APA Bank
Purchase Date.
"PURCHASE PRICE" shall mean either:
(a) on any APA Bank Purchase Date on or prior to the occurrence
of an Early Amortization Event, an amount equal to the lesser of (i) the
Purchase Amount for such APA Bank Purchase Date and (ii) the Adjusted
Liquidity Price with respect to such Purchase Amount, as clauses (a)(i) and
(a)(ii) shall be increased by the sum of (A) the Purchase Percentage of all
accrued and unpaid Discount PLUS (B) the Unaccrued Discount; and
(b) on any APA Bank Purchase Date after the occurrence of an
Early Amortization Event, an amount equal to (i) the Purchase Amount for
such APA Bank Purchase Date PLUS (ii) the sum of (A) the Purchase
Percentage of all accrued and unpaid Discount PLUS (B) the Unaccrued
Discount with respect to such Purchase Amount; PROVIDED that, if on the
date of occurrence of such Early Amortization Event, the Series 1998-1
Invested Amount exceeded the Early Amortization Date Balance (the amount of
such excess, the "LOSS AMOUNT"), the amount in clause (b)(i) above on any
APA Bank Purchase Date occurring after the occurrence of such Early
Amortization Event shall be reduced by an amount equal to the APA Bank
Purchase Percentage of the Loss Amount for such APA Bank Purchase Date.
18
"PURCHASE PRICE DEFICIT" shall have the meaning assigned in Section
2.6(c).
"PURCHASER" shall mean, at any time, either the Initial Purchaser,
each APA Bank or each Acquiring APA Bank, as applicable.
"RATING AGENCY" and "RATING AGENCIES" shall mean Moody's, S&P or any
other nationally recognized statistical rating organization from which a rating
for the Commercial Paper was requested by the Initial Purchaser and is currently
in effect.
"RATING AGENCY CONDITION" shall mean, with respect to any action, that
(i) each Rating Agency shall have been given 10 days' (or such shorter period as
shall be acceptable to each Rating Agency) prior notice thereof and that each of
the Rating Agencies shall have notified the Initial Purchaser and the Funding
Agent in writing that such action will not result in a reduction or withdrawal
of the then current rating of the Commercial Paper and (ii) the Required APA
Banks shall have given their prior written consent to such action.
"RECORD DATE" shall mean the first Business Day prior to each
Distribution Date.
"REDUCTION PERCENTAGE" shall mean the percentage equivalent of a
fraction, the numerator of which is the PARCO Residual Amount and the
denominator of which is the sum of the PARCO Residual Amount and the Adjusted
Liquidity Price or the Early Amortization Date Balance, as applicable, on the
related APA Bank Purchase Date.
"REGISTER" shall mean a register maintained by the Funding Agent for
recording transfers of the Commitments.
"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 1998-1 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.
19
"REPORTED PERIOD" shall mean, with respect to Series 1998-1, each
Business Day.
"SALE NOTICE" shall mean an irrevocable written notice given by an
authorized signatory or authorized officer of the Initial Purchaser (or on
behalf of the Initial Purchaser by Chase, in its capacity as the Initial
Purchaser's administrative agent) to the Funding Agent committing to sell,
assign and transfer to the APA Banks, on the basis of their Pro Rata Shares, all
or a portion of the Initial Purchaser's Series 1998-1 Purchaser Invested Amount,
which notice shall designate (i) the APA Bank Purchase Date, (ii) the Series
1998-1 Invested Amount and the Initial Purchaser's Series ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, (▇▇▇) the Purchase Price (including details showing calculation
of the Purchase Price), (iv) the Purchase Amount, (v) the Purchase Percentage
and the APA Bank Purchase Percentage for such APA Bank Purchase Date, (vi) that
no PARCO Insolvency Event has occurred and (vii) wire transfer instructions
specifying the account(s) into which the proceeds of the Purchase Price shall be
deposited.
"SCHEDULED COMMITMENT EXPIRATION DATE" shall mean, with respect to the
obligation of the APA Banks to make Purchases from the Initial Purchaser, March
29, 2002 (as may be extended for an additional period of time up to 364 days
from time to time in writing by PARCO, the Funding Agent and the APA Banks).
"SCHEDULED REVOLVING TERMINATION DATE" shall mean the last day of the
Settlement Period ending on or immediately before the Commitment Expiry Date.
"SECURITIES INTERMEDIARY" shall have the meaning specified in the
introductory paragraph hereto.
"SERIES 1998-1" shall mean Series 1998-1, the Principal Terms of which
are set forth in this Supplement.
"SERIES 1998-1 ACCRUED INTEREST SUB-SUBACCOUNT" shall have the meaning
assigned in Section 3A.2(a).
"SERIES 1998-1 ADJUSTED INVESTED AMOUNT" shall mean, as of any date of
determination, (i) the Series 1998-1 Invested Amount on such date, MINUS (ii)
the amount on deposit in the Series 1998-1 Principal Collection Sub-subaccount
on such date.
20
"SERIES 1998-1 ALLOCABLE CHARGED-OFF AMOUNT" shall mean, with respect
to any Special Allocation Settlement Report Date, the "Allocable Charged-Off
Amount", if any, which has been allocated to Series 1998-1.
"SERIES 1998-1 ALLOCABLE RECOVERIES AMOUNT" shall mean, with respect
to any Special Allocation Settlement Report Date, the "Allocable Recoveries
Amount", if any, which has been allocated to Series 1998-1.
"SERIES 1998-1 ALLOCATED RECEIVABLES AMOUNT" shall mean, on any date
of determination, the lower of (i) the Series 1998-1 Target Receivables Amount
on such day and (ii) 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 1998-1 Target Receivables Amount on such day and the denominator of
which is the Aggregate Target Receivables Amount on such day.
"SERIES 1998-1 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 earlier of (i) the date when the Series 1998-1 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 and (ii) the Series 1998-1
Termination Date.
"SERIES 1998-1 COLLECTION SUBACCOUNT" shall have the meaning assigned
in Section 3A.2(a).
"SERIES 1998-1 INTERESTS" shall mean, collectively, the VFC
Certificates and the Series 1998-1 Subordinated Interest.
"SERIES 1998-1 INVESTED AMOUNT" shall mean, as of any date of
determination, the sum of the Series 1998-1 Purchaser Invested Amounts of all
Purchasers on such date.
"SERIES 1998-1 MONTHLY INTEREST" shall have the meaning assigned in
Section 3A.4(a).
"SERIES 1998-1 MONTHLY PRINCIPAL PAYMENT" shall have the meaning
assigned in Section 3A.5.
21
"SERIES 1998-1 NON-PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have the
meaning assigned in Section 3A.2(a).
"SERIES 1998-1 PERIODIC SERVICING FEE" shall have the meaning assigned
in Section 6.1.
"SERIES 1998-1 PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have the
meaning assigned in Section 3A.2(a).
"SERIES 1998-1 PURCHASER INVESTED AMOUNT" shall mean, with respect to
the Initial Purchaser or, in the aggregate, the APA Banks, in each case on any
date of determination, an amount equal to (a) the Initial Purchaser's or the APA
Banks' Series 1998-1 Purchaser Invested Amount, as applicable, on the
immediately preceding Business Day (or, with respect to the day as of which
another Purchaser acquires an interest in the Series 1998-1 Invested Amount,
whether pursuant to Section 2.6, by executing a counterpart hereof, a Commitment
Transfer Supplement or otherwise, the portion of the transferor's Series 1998-1
Purchaser Invested Amount being purchased), PLUS (b) the amount of any increases
in the Initial Purchaser's or the APA Banks' Series 1998-1 Purchaser Invested
Amount, as applicable, pursuant to Section 2.5 made on such day, MINUS (c) the
amount of any distributions to such Purchaser in respect of principal received
and applied on such day minus (d) the aggregate Series 1998-1 Allocable
Charged-Off Amount applied to such Purchaser on or prior to such date pursuant
to Section 3A.5(b)(ii) and PLUS (e) (but only to the extent of any unreimbursed
reductions made pursuant to clause (d) above) the aggregate Series 1998-1
Allocable Recoveries Amount applied to such Purchaser on or prior to such date
pursuant to Section 3A.5(c)(i).
"SERIES 1998-1 RATIO" shall mean, as of any Settlement Report Date and
continuing until (but not including) the next Settlement Report Date, the
greater of (i) the sum of the Loss Reserve Ratio and the Dilution Reserve Ratio
and (ii) the Minimum Ratio, in each case, then in effect.
"SERIES 1998-1 REQUIRED RESERVES" shall mean, (x) as of any date of
determination during the Series 1998-1 Revolving Period, an amount equal to the
sum of:
(a) an amount equal to the product of (i) the Series 1998-1
Adjusted Invested Amount on such day (after giving effect to any increase
or decrease thereof on such day) and (ii) the percentage equivalent of a
fraction,
22
the numerator of which is the Series 1998-1 Ratio and the denominator of
which is one MINUS the Series 1998-1 Ratio;
(b) the product of (i) the Series 1998-1 Invested Amount on such
day (after giving effect to any increase or decrease thereof on such day),
(ii) the Carrying Cost Reserve Ratio in effect on such day and (iii) the
percentage equivalent of a fraction, the numerator of which is one and the
denominator of which is one MINUS the Series 1998-1 Ratio; and
(c) the product of (i) the aggregate Principal Amount of
Receivables in the Trust on such day, (ii) the Series 1998-1 Invested
Amount on such day (after giving effect to any increase or decrease thereof
on such day) DIVIDED BY the Aggregate Invested Amount on such day, (iii)
the Servicing Reserve Ratio in effect on such day and (iv) the percentage
equivalent of a fraction, the numerator of which is one and the denominator
of which is one MINUS the Series 1998-1 Ratio;
and (y) on any date of determination during the Series 1998-1 Amortization
Period, an amount equal to the Series 1998-1 Required Reserves on the last
Business Day of the Series 1998-1 Revolving Period; PROVIDED, in each case, that
such amount shall be adjusted on each Special Allocation Settlement Report Date,
if any, to the extent required as set forth in Section 3A.5(b)(i) and Section
3A.5(c)(ii).
"SERIES 1998-1 REVOLVING PERIOD" shall mean the period commencing on
the Issuance Date and terminating on the earliest to occur of the close of
business on (i) the date on which an Early Amortization Period is declared to
commence or automatically commences, (ii) the Optional Termination Date and
(iii) the Commitment Termination Date.
"SERIES 1998-1 SUBORDINATED INTEREST" shall have the meaning assigned
in Section 2.2(b).
"SERIES 1998-1 SUBORDINATED INTEREST AMOUNT" shall mean, for any date
of determination, an amount equal to (i) the Series 1998-1 Allocated Receivables
Amount MINUS (ii) the Series 1998-1 Adjusted Invested Amount.
"SERIES 1998-1 SUBORDINATED INTEREST REDUCTION AMOUNT" shall have the
meaning assigned in Section 2.7(b).
23
"SERIES 1998-1 TARGET RECEIVABLES AMOUNT" shall mean, on any date of
determination, the greater of (i) the sum of (A) the Series 1998-1 Adjusted
Invested Amount on such day and (B) the Series 1998-1 Required Reserves for such
day and (ii) $350,000.
"SERIES 1998-1 TERMINATION DATE" shall mean the Distribution Date that
occurs on October 2, 2002.
"SERIES 1998-1 TRANSACTION DOCUMENTS" shall mean this Supplement, the
Receivables Sale Agreements, the Agreement and the Servicing Agreement.
"SERVICER" shall have the meaning specified in the introductory
paragraph hereto.
"SERVICER INDEMNIFIED PERSON" shall have the meaning assigned in
Section 2.10(b).
"SERVICING RESERVE RATIO" shall mean, as of any Settlement Report Date
and continuing until (but not including) the next Settlement Report Date, an
amount (expressed as a percentage) equal to (i) the product of (A) the Servicing
Fee Percentage and (B) 2.0 TIMES Days Sales Outstanding as of such earlier
Settlement Report Date, DIVIDED BY (ii) 360.
"STATUTORY RESERVE RATE" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Funding Agent is subject for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to Regulation D. Eurodollar Tranches shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Purchaser under such Regulation D or comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in the reserve percentage.
"SUPPLEMENT" shall have the meaning specified in the introductory
paragraph hereto.
24
"TAXES" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"THREE-MONTH SECONDARY CD RATE" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of
New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate is not so reported on such
day or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in
New York City received at approximately 10:00 A.M.,
New York City time, on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Funding Agent from three
New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
"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).
"TRUST ACCOUNTS" shall have the meaning assigned in Section 3A.2(a).
"TRUSTEE" shall have the meaning specified in the introductory
paragraph hereto.
"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 Discount that would have accrued on the
Commercial Paper allocated, in whole or in part, by the Funding Agent to fund
25
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 the
Initial Purchaser's Series 1998-1 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 1998-1 Purchaser Invested Amount, the
sum of (A) the portion of the Series 1998-1 Invested Amount for which interest
is then being calculated by reference to the Alternate Base Rate and (B) the
portion of the Series 1998-1 Invested Amount allocated to any Eurodollar Tranche
the Eurodollar Period in respect of which expires on such Business Day.
"USI CHANGE IN CONTROL" shall have the meaning assigned to the term
"Change of Control" in Section 1.01 of the Credit Agreement.
"USCC" shall mean
United Stationers Supply Co., an Illinois
corporation.
"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 1998-1,
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 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 1998-1 Interests and no other Series of Investor Certificates issued by
the Trust. All
26
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 1998-1" and (ii) an interest designated as the "Series
1998-1 Subordinated Interest."
SECTION 2.2. THE SERIES 1998-1 INTERESTS. (a) The VFC Certificates
shall represent fractional undivided interests in the Trust, including 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 Collection
Subaccounts and any subaccounts thereof (collectively, the "VFC
CERTIFICATEHOLDERS' INTEREST").
(b) The "SERIES 1998-1 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 1998-1 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.
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
27
Issuance Date, (A) the Initial Purchaser may, in its sole discretion, purchase a
VFC Certificate in an amount equal to the Initial Series 1998-1 Invested Amount
or (B) if the 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
Issuance Date, each APA Bank hereby severally agrees to purchase on the Issuance
Date a VFC Certificate in an amount equal to such APA Bank's Pro Rata Share of
the Initial Series 1998-1 Invested Amount and (ii) thereafter, (A) if the
Initial Purchaser shall have purchased a VFC Certificate on the Issuance Date,
the Initial Purchaser may, in its sole discretion, maintain its VFC Certificate,
subject to increase or decrease during the Series 1998-1 Revolving Period, in
accordance with the provisions of this Supplement and (B) if the APA Banks shall
have purchased VFC Certificates on the Issuance 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 1998-1 Revolving Period, in accordance with the provisions of
this Supplement. The Company hereby agrees to maintain ownership of the Series
1998-1 Subordinated Interest, subject to increase or decrease during the Series
1998-1 Revolving Period, in accordance with the provisions of this Supplement.
Payments by the 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 1998-1 Revolving
Period, in accordance with the provisions of this Supplement.
(c) MAXIMUM SERIES 1998-1 PURCHASER INVESTED AMOUNT. Notwithstanding
anything to the contrary contained in this Supplement, at no time shall the
Series 1998-1 Purchaser Invested Amount (calculated without regard to clauses
(d) and (e) of the definition thereof) of any APA Bank exceed such APA Bank's
Commitment at such time.
SECTION 2.4. DELIVERY. On the Issuance 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 the Initial Purchaser, or the APA Banks, as the case may be,
in accordance with such 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
28
shall ▇▇▇▇ on its books the actual Series 1998-1 Invested Amount and Series
1998-1 Subordinated Interest Amount outstanding on any date of determination,
which, absent manifest error, shall constitute PRIMA FACIE evidence of the
outstanding Series 1998-1 Invested Amount and Series 1998-1 Subordinated
Interest Amount from time to time.
SECTION 2.5. PROCEDURE FOR INCREASING THE SERIES 1998-1 INVESTED
AMOUNT. (a) Subject to Section 2.5(c), on any Business Day during the Commitment
Period, the Initial Purchaser may agree, in its sole discretion, and each APA
Bank hereby agrees that the Series 1998-1 Invested Amount may be increased by
increasing such Purchaser's Series 1998-1 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 1998-1 Invested Amount
occurs hereunder being herein referred to as the "INCREASE DATE" applicable to
such Increase); PROVIDED, HOWEVER, that 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 hereto, of such request no later than (i) 11:00 a.m.,
New York City
time, two Business Days prior to the Increase Date in the case of any Increase
to be priced by reference to the CP Rate or (ii) (x) if the Increase Amount is
to be priced with reference to the Alternate Base Rate, on or prior to 12:00
noon,
New York City time, on the Increase Date, or (y) if all or a portion of
the Initial Series 1998-1 Invested Amount or Increase Amount is to be allocated
to a Eurodollar Tranche, 1:00 p.m., New York City time, three Business Days
prior to the Increase Date; 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
allocated to Commercial Paper, a Eurodollar Tranche and a Floating Tranche.
(b) If the Initial Purchaser elects not to fund any portion of a
requested Increase, the Initial Purchaser shall notify the Funding Agent thereof
and deliver a Sale Notice in accordance with Section 2.6 and each APA Bank shall
purchase its Pro Rata Share of the Initial Purchaser's Series 1998-1 Purchaser
Invested Amount in accordance with Section 2.6 and fund such Increase in an
amount equal to its Pro Rata Share of such Increase; PROVIDED, HOWEVER that an
APA Bank shall not be obligated to fund any portion of an Increase that would
cause its Series 1998-1 Purchaser Invested Amount to exceed its unused
Commitment.
29
(c) On and after the Effective Date, the Purchasers shall not be
required to increase their respective Series 1998-1 Purchaser Invested Amounts
on any Increase Date hereunder unless:
(i) the related aggregate initial purchase amount or Increase
Amount is equal to $1,000,000 or an integral multiple of $100,000 in excess
thereof;
(ii) after giving effect to the Increase Amount, (A) the Series
1998-1 Invested Amount would not exceed either the Maximum Invested Amount
or the Maximum Commitment Amount on such Increase Date and (B) the Series
1998-1 Allocated Receivables Amount would not be less than the Series
1998-1 Target Receivables Amount on such Increase Date;
(iii) no Early Amortization Event or Potential Early Amortization
Event shall have occurred and be continuing;
(iv) in the case of a purchase by the Initial Purchaser, the
Initial Purchaser shall have consented to such purchase in its sole
discretion; and
(v) all of the representations and warranties made by each of the
Company, USFS, the Servicer and the 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 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 the Initial Purchaser
and, to the extent the Initial Purchaser elects in its sole discretion not to
fund a portion of the Increase, the
30
APA Banks, of the Increase Date and of the portion of the Increase Amount
allocable to the 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
the Initial Purchaser elects to fund an Increase, the Initial Purchaser agrees
to pay in immediately available funds the amount of such Increase on the related
Increase Date to the Funding Agent for payment to the Trust for deposit in the
Series 1998-1 Principal Collection Sub-subaccount. In the event the APA Banks
shall purchase a portion of the Series 1998-1 Invested Amount, each APA Bank
agrees to pay in immediately available funds such APA Bank's Pro Rata Share of
each Increase on the related Increase Date to the Funding Agent for payment to
the Trust for deposit in the Series 1998-1 Principal Collection Sub-subaccount.
SECTION 2.6. SALES BY THE INITIAL PURCHASER OF ITS SERIES 1998-1
PURCHASER INVESTED AMOUNT TO THE APA BANKS. (a) On any date during the
Commitment Period, the Initial Purchaser may, solely in its own discretion, and
the Initial Purchaser shall, on the Scheduled Commitment Expiration Date or upon
the occurrence of a PARCO Termination Event, in each case, by delivering a Sale
Notice to the Funding Agent, the Company and the Trustee, sell to the APA Banks
(in accordance with their respective Pro Rata Shares), and each APA Bank hereby
agrees to purchase its Pro Rata Share of the Purchase Percentage of the PARCO
Interest. The Purchase Amount set forth in the Sale Notice delivered by the
Initial Purchaser on the Scheduled Commitment Expiration Date or upon the
occurrence of a PARCO Termination Event shall equal 100% of the PARCO Interest.
Any Sale Notice shall be delivered by the Initial Purchaser to the Funding
Agent, the Company and the Trustee prior to 12:30 p.m., New York City time, on
the related APA Bank Purchase Date and shall constitute an irrevocable offer by
the Initial Purchaser to sell the Purchase Percentage of the PARCO Interest. Any
Sale Notice shall be deemed to be a representation and warranty by the Initial
Purchaser that no PARCO Insolvency Event shall have occurred and be continuing.
Each APA Bank hereby agrees to purchase from the Initial Purchaser such APA
Bank's Pro Rata Share of the PARCO Interest for a purchase price equal to such
APA Bank's Pro Rata Share of the Purchase Price on the related APA Bank Purchase
Date (which date, subject to Section 2.6(b), may be the same as the date of the
Sale Notice). Notwithstanding anything to the contrary set forth in this
Supplement, no APA Bank shall have any obligation to purchase all or any portion
of the PARCO Interest if, on such APA Bank Purchase Date, any PARCO Insolvency
Event shall have occurred and be continuing.
(b) If, at or prior to 12:30 p.m. New York City time, on any Business
Day, the Initial Purchaser delivers the Sale Notice to the Funding Agent
31
specifying that the related APA Bank Purchase Date shall be the same date as the
date of the Sale Notice, the Funding Agent shall, by no later than 1:00 p.m.,
New York City time, notify (by telecopy or by telephone call promptly confirmed
in writing by telecopy) each APA Bank of the receipt and content of the Sale
Notice. Each APA Bank shall purchase its Pro Rata Share of the Purchase
Percentage of the PARCO Interest by depositing its Pro Rata Share of the
Purchase Price in immediately available funds into the account(s) specified by
the Initial Purchaser in the Sale Notice no later than 2:00 p.m., New York City
time. If the Initial Purchaser delivers the Sale Notice to the Funding Agent
after 12:30 p.m., New York City time, on any Business Day or the Initial
Purchaser delivers the Sale Notice to the Funding Agent specifying that the
related APA Bank Purchase Date shall be a date other than the date of the Sale
Notice, the Funding Agent shall promptly advise (by telecopy or by telephone
call promptly confirmed in writing by telecopy) each APA Bank of the receipt and
content of the Sale Notice. Notwithstanding the fact that the APA Bank Purchase
Date may occur on a date which is later than the date on which the Sale Notice
is delivered to the Funding Agent, the several obligations of each APA Bank to
make such purchase and to make payment of the amounts required to be paid by it
pursuant to Section 2.6(a) shall arise immediately upon receipt by the Funding
Agent of the Sale Notice. Upon payment of the Purchase Price as provided herein
and delivery to the Trustee by the Funding Agent of the Initial Purchaser's VFC
Certificate, 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.
(c) If, by 2:00 p.m., New York City time, one or more APA Banks (each,
a "DEFAULTING APA BANK," and each APA Bank other than the Defaulting APA Bank(s)
being referred to as a "NON-DEFAULTING APA BANK") fails to make its Pro Rata
Share of the Purchase Price available to the Funding Agent pursuant to Section
2.6(b) (the aggregate amount not so made available to the Funding Agent being
herein called the "PURCHASE PRICE DEFICIT"), then the Funding Agent shall, by no
later than 2:30 p.m., New York City time, instruct each Non-Defaulting APA Bank
to pay, by no later than 3:00 p.m., New York City time, in immediately available
funds, to the account designated by the Funding Agent, 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 Purchase Price
Deficit and (y) its unused Commitment. A Defaulting APA Bank shall forthwith,
upon demand, pay to the Funding Agent for the ratable benefit of the
Non-Defaulting
32
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 sum of the Federal Funds Effective Rate plus 2%. In addition,
without prejudice to any other rights that the Initial Purchaser may have under
applicable law, each Defaulting APA Bank shall pay to the Initial Purchaser
forthwith upon demand, the difference between the Defaulting APA Bank's unpaid
Pro Rata Share of the Purchase Price 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 Pro Rata
Share of the Purchase Price pursuant to Section 2.6(b) until the date the
requisite amount is paid to the Initial Purchaser in full, at a rate per annum
equal to the sum of the Federal Funds Effective Rate plus 2%.
(d) The transfer of the Initial Purchaser's VFC Certificate pursuant
to this Section 2.6 shall be without recourse or warranty, express or implied,
except that such VFC Certificate is free and clear of adverse claims created by
or arising as a result of claims against the Initial Purchaser. By executing and
delivering a Sale Notice pursuant to Section 2.6(a), (i) the Initial Purchaser
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the VFC Certificate or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the VFC Certificate, or any other
agreement, instrument or other document furnished pursuant thereto or in
connection therewith, including without limitation any Transaction Document, and
(ii) the Initial Purchaser makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Trust, the
Trustee, the Seller, USFS, the Servicer or any Obligor (collectively, the
"TRANSACTION PARTIES") or the Funding Agent, or the performance or observance by
the Transaction Parties of any of their respective obligations under the VFC
Certificate or the Transaction Documents.
(e) If the Adjusted Liquidity Price or the Early Amortization Date
Balance, as applicable, on the APA Bank Purchase Date is less than the Series
1998-1 Invested Amount on the APA Bank Purchase Date (the amount of such
insufficiency, the "PARCO RESIDUAL AMOUNT"), each APA Bank agrees that (i) on
each Distribution Date after the APA Bank Purchase Date on which interest is
distributed to VFC Certificateholders pursuant to subsection 3A.6(a), the
Funding Agent shall distribute to the Initial Purchaser its Reduction Percentage
of such interest payments and (ii) on each Distribution Date after the APA Bank
Purchase
33
Date on which amounts in reduction of the Series 1998-1 Invested Amount are
distributed to VFC Certificateholders pursuant to Section 2.7 or subsection
3A.6(c), the Funding Agent shall distribute to the Initial Purchaser its
Reduction Percentage of such amounts only after the Series 1998-1 Invested
Amount has been paid in full.
SECTION 2.7. PROCEDURE FOR DECREASING THE SERIES 1998-1 INVESTED
AMOUNT; OPTIONAL TERMINATION. (a) On any Business Day during the Series 1998-1
Revolving Period or the Series 1998-1 Amortization Period (except for
Distribution Dates during the Series 1998-1 Amortization Period (which shall be
governed by Section 3A.6(c)), upon the written request of the Servicer or the
Company on behalf of the Trust to the Trustee, the Series 1998-1 Invested Amount
may be reduced (a "DECREASE") by the distribution by the Trustee to the Funding
Agent for the PRO RATA benefit of the Purchasers in accordance with their
respective Series 1998-1 Purchaser Invested Amount of funds on deposit in the
Series 1998-1 Principal Collection Sub-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., New
York City time, (i) on the second Business Day prior to such Decrease, in the
case of any Decrease occurring prior to an APA Bank Purchase Date and (ii) (A)
if the Decrease relates solely to a Floating Tranche, on the Business Day of
such Decrease or (B) if all or any portion of the Decrease relates to a
Eurodollar Tranche, on the Business Day that is three Business Days prior to
such Decrease, in the case of any Decrease occurring prior to an APA Bank
Purchase Date, and which notice shall state the amount of such Decrease;
PROVIDED, FURTHER, that (x) such Decrease shall be in an amount equal to
$1,000,000 and integral multiples of $100,000 in excess thereof and (y) prior to
an APA Bank Purchase Date, such Decrease shall be in an amount no greater than
the Unallocated Balance on such day.
(b) Simultaneously with any such Decrease during the Series 1998-1
Revolving Period, the Series 1998-1 Subordinated Interest Amount shall be
reduced by an amount (the "SERIES 1998-1 SUBORDINATED INTEREST REDUCTION
AMOUNT") such that the Series 1998-1 Subordinated Interest Amount shall equal
the Series 1998-1 Required Reserves after giving effect to such Decrease. During
the Series 1998-1 Revolving Period, after the distribution described in Section
(a) above has been made, and the Series 1998-1 Subordinated Interest Amount
shall have been reduced by the Series 1998-1 Subordinated Interest Reduction
Amount, a distribution shall be made to the owner of the Series 1998-1
Subordinated Interest out of remaining funds on deposit in the Series 1998-1
Principal Collection Sub-subaccount in an amount equal to the lesser of (x) the
Series 1998-1 Subordinated Interest
34
Reduction Amount and (y) the amount of such remaining funds on deposit in the
Series 1998-1 Principal Collection Sub-subaccount.
(c) On or after any APA Bank Purchase Date, any reduction in the
Series 1998-1 Invested Amount on any Business Day shall be allocated first to
reduce the Unallocated Balance and then to reduce the portion of the Series
1998-1 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, an Early Amortization Event or a Potential 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,
the Servicer and the Rating Agencies in which the Company declares that the
Series 1998-1 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 Settlement Period which is not less than 10 days from the date
on which such notice is delivered).
(ii) From and after the Optional Termination Date, the Series
1998-1 Amortization Period shall commence for all purposes under this
Agreement 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 1998-1 Revolving Period, the Company, on behalf of the Trust,
may, upon three Business Days prior written notice to the Funding Agent
(effective upon receipt) (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 1998-1 Invested Amount
on such date, the Series 1998-1 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) If an Early Amortization Period has commenced, 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 1998-1
35
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 Trustee (acting at the written direction of the Servicer upon
which the Trustee may conclusively rely) shall distribute pursuant to Section
3A.6(b), from amounts on deposit in the Series 1998-1 Non-Principal Collection
Sub-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 each Accrual Period ending on such date (the
"COMMITMENT FEE") (i) during the Series 1998-1 Revolving Period at the
Commitment Fee Rate of the average daily excess of the Aggregate Commitment
Amount OVER the average aggregate Series 1998-1 Purchaser Invested Amounts of
the APA Banks during such Accrual Period and (ii) during the Series 1998-1
Amortization Period at the Commitment Fee Rate of the average daily Series
1998-1 Invested Amount during such Accrual Period. The Commitment Fee shall be
payable (i) monthly in arrears on each Distribution Date and (ii) on the
Commitment Termination Date. To the extent that funds on deposit in the Series
1998-1 Non-Principal Collection Sub-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.
(c) The Trustee (acting at the written direction of the Servicer upon
which the Trustee may conclusively rely) shall distribute pursuant to Section
3A.6(b), from amounts on deposit in the Series 1998-1 Non-Principal Collection
Sub-subaccount, to the Funding Agent, for the account of the Initial Purchaser,
on each Distribution Date with respect to which the Initial Purchaser held a
portion of the Series 1998-1 Invested Amount during the Accrual Period ending on
such date, a utilization fee (the "UTILIZATION FEE") with respect to such
Accrual Period at the Utilization Fee Rate of the average Series 1998-1 Invested
Amount during such period. The Utilization Fee shall be payable monthly in
arrears on each Distribution
36
Date. To the extent that funds on deposit in the Series 1998-1 Non-Principal
Collection Sub-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. (a) The
Company agrees to indemnify and hold harmless the Trustee, the Funding Agent,
each APA Bank, each Purchaser and each of their respective officers, directors,
agents and employees (each, a "COMPANY INDEMNIFIED PERSON") from and against any
loss, liability, expense, damage or injury suffered or sustained by (a "CLAIM")
such Company indemnified person by reason of (i) any acts, omissions or alleged
acts or omissions arising out of, or relating to, activities of the Company
pursuant to any Pooling and Servicing Agreement or the other Transaction
Documents to which it is a party, (ii) a breach of any representation or
warranty made or deemed made by the Company (or any of its officers) in any
Pooling and Servicing Agreement or other Transaction Document or (iii) a failure
by the Company to comply with any applicable law or regulation or to perform its
covenants, agreements, duties or obligations required to be performed or
observed by it in accordance with the provisions of any Pooling and Servicing
Agreement or the other Transaction Documents, including, but not limited to, any
judgment, award, settlement, reasonable attorneys' fees and other reasonable
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim, except to the extent such loss,
liability, expense, damage or injury (A) resulted from the gross negligence, bad
faith or wilful misconduct of such Company indemnified person or its officers,
directors, agents, principals, employees or employers, (B) resulted solely from
a default by an Obligor with respect to any Receivable or (C) include any income
or franchise taxes imposed on (or measured by) any Company indemnified person's
net income; PROVIDED that any payments made by the Company pursuant to this
Section shall be made solely from funds available to the Company which are not
otherwise needed to be applied to the payment of any amounts (other than amounts
payable to the Company) pursuant to any Pooling and Servicing Agreements, shall
be non-recourse other than with respect to proceeds in excess of
37
the proceeds needed to make such payment, and shall not constitute a claim
against the Company to the extent that insufficient proceeds exist to make such
payment.
(b) The Servicer agrees to indemnify and hold harmless the Trustee,
the Funding Agent, each APA Bank, each Purchaser and each of their respective
officers, directors, agents and employees (each, a "SERVICER INDEMNIFIED
PERSON") from and against any Claim by reason of (i) any acts, omissions or
alleged acts or omissions arising out of, or relating to, activities of the
Servicer pursuant to any Pooling and Servicing Agreement or the other
Transaction Documents to which it is a party, (ii) a material breach of any
representation or warranty made or deemed made by the Servicer (or any of its
officers) in any Pooling and Servicing Agreement or other Transaction Document
or (iii) a failure by the Servicer to comply in any material respect with any
applicable law or regulation or to perform its covenants, agreements, duties or
obligations required to be performed or observed by it in accordance with the
provisions of any Pooling and Servicing Agreement or the other Transaction
Documents, including, but not limited to, any judgment, award, settlement,
reasonable attorneys' fees and other reasonable costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim, except to the extent such loss, liability, expense, damage or injury (A)
resulted from the gross negligence, bad faith or wilful misconduct of such
Servicer indemnified person or its officers, directors, agents, principals,
employees or employers, (B) resulted solely from a default by an Obligor with
respect to any Receivable or (C) include any income or franchise taxes imposed
on (or measured by) any Servicer indemnified person's net income.
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
1998-1 Interests:
SECTION 3A.2. ESTABLISHMENT OF TRUST ACCOUNTS. (a) The Trustee shall
cause to be established and maintained in the name of the Trustee, on behalf of
the Trust, (i) for the benefit of the Purchasers and (ii) in the case of clauses
(A) and (B) below, for the benefit, subject to the prior and senior interest of
the
38
Purchasers, of the owner of the Series 1998-1 Subordinated Interest, (A) a
subaccount of the Collection Account (the "SERIES 1998-1 COLLECTION
SUBACCOUNT"), which subaccount is the Series Collection Subaccount with respect
to Series 1998-1; (B) two subaccounts of the Series 1998-1 Collection
Subaccount: (1) the Series 1998-1 Principal Collection Sub-subaccount and (2)
the Series 1998-1 Non-Principal Collection Sub-subaccount (respectively, the
"SERIES 1998-1 PRINCIPAL COLLECTION SUB-SUBACCOUNT" and the "SERIES 1998-1
NON-PRINCIPAL COLLECTION SUB-SUBACCOUNT") and (C) a subaccount of the Series
1998-1 Non-Principal Collection Sub-subaccount (the "SERIES 1998-1 ACCRUED
INTEREST SUB-SUBACCOUNT"; all accounts established pursuant to this Section
3A.2(a), collectively, the "TRUST ACCOUNTS"), each Trust Account to 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 possess all right, title and interest in
all funds from time to time on deposit in, and all Eligible Investments credited
to, the Trust Accounts and in all proceeds thereof. The Trust Accounts shall be
under the sole dominion and control of the Trustee for the exclusive benefit of
the Persons (and, for each such Person, to the extent) set forth in clauses (i)
and (ii) above.
(b) All Eligible Investments in the Trust Accounts shall be delivered
to the Trustee in accordance with the definition of "Delivery" and shall be held
by the Trustee or its nominee (including the Securities Intermediary) for the
exclusive benefit of the Purchasers and, subject to the prior interest of the
Purchasers, the owner of the Series 1998-1 Subordinated Interest; PROVIDED,
HOWEVER, that funds on deposit in a Trust Account which is a sub-subaccount of a
Collection Account may, at the direction of the Servicer, be invested together
with funds held in other sub-subaccounts of the Collection Account. After giving
effect to any distribution to the Company pursuant to Section 3A.3(b), amounts
on deposit and available for investment in the Series 1998-1 Principal
Collection Sub-subaccount shall be invested by the Trustee at the written
direction of the Servicer in Eligible Investments that mature, or that are
payable or redeemable upon demand of the holder thereof, (i) in the case of any
such investment made during the Series 1998-1 Revolving Period, on or prior to
the next Business Day and (ii) in the case of any such investment made during
the Series 1998-1 Amortization Period, on or prior to the Business Day
immediately preceding the next Distribution Date. Amounts on deposit and
available for investment in the Series 1998-1 Non-Principal Collection
Sub-subaccount and the Series 1998-1 Accrued Interest Sub-subaccount shall be
invested by the Trustee at the written direction of the Servicer in Eligible
Investments that mature, or that are payable or redeemable upon demand of the
holder thereof, on or prior to the Business Day immediately preceding the next
Distribution Date. As of the Business Day immediately preceding such next
Distribution Date,
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(x) all interest and other investment earnings (net of losses and investment
expenses) on funds deposited in the Series 1998-1 Accrued Interest
Sub-subaccount shall be deposited in the Series 1998-1 Non-Principal Collection
Sub-subaccount and (y) all interest and investment earnings (net of losses and
investment expenses) on funds deposited in the Series 1998-1 Principal
Collection Sub-subaccount shall be deposited in the Series 1998-1 Non-Principal
Collection Sub-subaccount. If the Servicer fails to give the Trustee investment
instructions with respect to amounts on deposit in any Series 1998-1 Collection
Subaccount or any subaccount thereof, such amounts shall remain uninvested.
(c) Any securities intermediary maintaining a securities account for
the Trustee for the benefit of the Purchasers, and The Chase Manhattan Bank as
initial Securities Intermediary, hereby represents that it is as of the date
hereof and shall be for so long as it is the Securities Intermediary hereunder a
bank or broker-dealer that (i) in the ordinary course of its business maintains
securities accounts for others and is acting in that capacity hereunder and (ii)
maintains a Participant's Securities Account (as defined in the United States
Regulations) with a Federal Reserve Bank. The Securities Intermediary shall
agree (and The Chase Manhattan Bank as initial Securities Intermediary hereby
agrees) with the parties hereto that (x) the Collection Account (including any
sub-accounts thereof) is a securities account to which financial assets may be
credited, (y) the Trustee shall be entitled to exercise rights that comprise
such financial assets and to exercise the ordinary rights of an entitlement
holder, (z) the "securities intermediary's jurisdiction" as defined in the UCC
of the Securities Intermediary with respect to the Eligible Investments credited
to the Collection Account (including any sub-accounts thereof) shall be the
State of New York. The Securities Intermediary shall represent and covenant (and
The Chase Manhattan Bank hereby represents and covenants) that it is not and
will not be (as long as it is the Securities Intermediary hereunder) a party to
any agreement that is inconsistent with the provisions of this Agreement. The
Securities Intermediary shall covenant (and The Chase Manhattan Bank hereby
covenants) that it will not take any action inconsistent with the provisions of
this Agreement applicable to it. It is the intent of the Trustee, the Servicer
and the Company that the Collection Account (including any sub-accounts thereof)
shall be a securities account of the Trustee and not an account of the Company
or the Servicer. If despite such intent, the Collection Account (including any
sub-accounts thereof) is determined to be an account of the Company or the
Servicer, then the Securities Intermediary agrees to comply with entitlement
orders originated by the Trustee without further consent by the Company or the
Servicer.
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SECTION 3A.3. ALLOCATIONS. In accordance with the written direction of
the Servicer, upon which the Trustee may conclusively rely:
(a) The portion of the Aggregate Daily Collections allocated to the
Series 1998-1 Interests pursuant to Article III of the Agreement shall be
allocated and distributed as set forth in this Article III by the Trustee as
follows:
(i) on each Business Day, an amount equal to the Accrued Expense
Amount for such day (or, during the Series 1998-1 Revolving Period, such
greater amount as the Company may request in writing) shall be transferred
from the Series 1998-1 Collection Subaccount to the Series 1998-1
Non-Principal Collection Sub-subaccount; and
(ii) following the transfers pursuant to clause (i) above, any
remaining funds on deposit in the Series 1998-1 Collection Subaccount shall
be transferred by the Trustee to the Series 1998-1 Principal Collection
Sub-subaccount.
(b) (i) On each Business Day that is not a Distribution Date during
the Series 1998-1 Revolving Period, after giving effect to (x) all allocations
of Aggregate Daily Collections and (y) any deposit resulting from an Increase,
if any, pursuant to Section 2.5(c) on such Business Day, amounts on deposit in
the Series 19981 Principal Collection Sub-subaccount shall be distributed by the
Trustee 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, if after giving effect to such distribution, the Series 1998-1
Target Receivables Amount would not exceed the Series 1998-1 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 (effective upon receipt) (A) at least two Business Days prior to such
day, in the case of any notice given to the Initial Purchaser, (B) on such day,
in the case of any notice given to the APA Banks with respect to the Floating
Tranche, or (C) at least three Business Days prior to such day, in the case of
any notice given to the APA Banks with respect to a Eurodollar Tranche, the
Company or the Servicer may instruct the Trustee in writing (specifying the
related amount) to withdraw all or a portion of such amounts on deposit in the
Series 1998-1 Principal Collection Sub-subaccount and apply such withdrawn
41
amounts toward the reduction of the Series 1998-1 Invested Amount and the Series
1998-1 Subordinated Interest Amount in accordance with Section 2.6.
(ii) On each Business Day during the Series 1998-1 Amortization
Period (including Distribution Dates), funds deposited in the Series 1998-1
Principal Collection Sub-subaccount shall be invested in Eligible
Investments, at the written direction of the Servicer pursuant to Section
3A.2(b), that mature on or prior to the Business Day immediately preceding
the next Distribution Date and shall be distributed on such Distribution
Date in accordance with Section 3A.6(c). Except as set forth in Section
3A.6(c), no amounts on deposit in the Series 1998-1 Principal Collection
Sub-subaccount shall be distributed by the Trustee to the Company or the
owner of the Series 1998-1 Subordinated Interest during the Series 1998-1
Amortization Period.
(c) On each Business Day, an amount equal to the Daily Interest
Deposit for such day shall be transferred by the Trustee from the Series 1998-1
Non-Principal Collection Sub-subaccount to the Series 1998-1 Accrued Interest
Sub-subaccount.
(d) 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 1998-1
MONTHLY INTEREST") on each Distribution Date shall be the amount of Daily
Interest Expense accrued during the Accrual Period ending on such Distribution
Date as calculated by the Servicer.
(ii) If a change in the CP Rate, the weighted average Adjusted
LIBO Rate or the Alternate Base Rate on or after any Settlement Report Date
results in a change in Series 1998-1 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 1998-1 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. on the day preceding the next Distribution Date.
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(b) On each Distribution Date, the Servicer shall determine the
excess, if any (the "INTEREST SHORTFALL"), of (i) the Series 1998-1 Monthly
Interest for the Accrual Period ending on 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 Available Pricing Amount (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., New York City
time, two Business Days prior to such Business Day (PROVIDED that the selection
of CP Tranches in respect of which shall be at the sole discretion of the
Funding Agent) 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., New York City time, three
Business Days prior to such Business Day. Such notice shall specify (i) the
applicable Business Day, (ii) the Available Pricing Amount that shall be
allocable to Commercial Paper, if any and (iii) the Eurodollar Period and the
Available Pricing Amount for each Eurodollar Tranche to which a portion of the
Available Pricing Amount is to be allocated, if any. With respect to any
Eurodollar Tranche or portion of the Series 1998-1 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) Any reduction in the Series 1998-1 Invested Amount on any Business
Day shall be allocated in the following order of priority:
FIRST, to reduce the Unallocated Balance, as appropriate; and
43
SECOND, to reduce the portion of the Series 1998-1 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.
(e) Notwithstanding anything to the contrary contained in this Section
3A.4, (i) if the Initial Purchaser has a Series 1998-1 Purchaser Invested
Amount, the Initial Purchaser shall approve the portion of the Series 1998-1
Invested Amount allocated to Commercial Paper and (ii) if the APA Banks have a
Series 1998-1 Purchaser Invested Amount, (A) the portion of the Series 1998-1
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 Available Pricing Amount to a Eurodollar Tranche and (D) after
the end of the Series 1998-1 Revolving Period, the Company may not select any
Eurodollar Period that does not end on or prior to the next succeeding
Distribution Date.
SECTION 3A.5. DETERMINATION OF SERIES 1998-1 MONTHLY PRINCIPAL. (a)
PAYMENTS OF SERIES 1998-1 PRINCIPAL. The amount (the "SERIES 1998-1 MONTHLY
PRINCIPAL PAYMENT") distributable from the Series 1998-1 Principal Collection
Sub-subaccount on each Distribution Date during the Series 1998-1 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 1998-1 Monthly Principal Payment on any Distribution
Date shall not exceed the Series 1998-1 Invested Amount on such Distribution
Date after giving effect to the reductions and increases pursuant to paragraphs
(b) and (c) below. Further, on any other Business Day during the Series 1998-1
Amortization Period, funds may be distributed from the Series 1998-1 Principal
Collection Sub-subaccount to the Purchasers in accordance with Section 2.7 of
this Supplement.
(b) REDUCTIONS TO SERIES 1998-1 PRINCIPAL. If, on any Special
Allocation Settlement Report Date, the Series 1998-1 Allocable Charged-Off
Amount is greater than zero for the related Settlement Period, the Trustee shall
(in accordance with written directions from the Servicer, upon which the Trustee
may conclusively rely) make the following allocations of such amounts in the
following order of priority:
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(i) the Series 1998-1 Required Reserves shall be reduced (but not
below zero) by an amount equal to the Series 1998-1 Allocable Charged-Off
Amount (which shall also be reduced by the amount so applied);
(ii) then, to the extent that the Series 1998-1 Allocable
Charged-Off Amount is greater than zero following the application in clause
(i) above, the Series 1998-1 Invested Amount shall be reduced (but not
below zero) by such remaining Series 1998-1 Allocable Charged-Off Amount
(which shall also be reduced by the amount so applied).
(c) INCREASES TO SERIES 1998-1 PRINCIPAL. If, on any Special
Allocation Settlement Report Date, the Series 1998-1 Allocable Recoveries Amount
is greater than zero for the related Settlement Period, the Trustee shall (in
accordance with written directions from the Servicer upon which the Trustee may
conclusively rely) make the following allocations (after giving effect to the
applications in paragraph (b) of such amount in the following order of
priority):
(i) the Series 1998-1 Invested Amount shall be increased (but
only to the extent of any previous reductions of the Series 1998-1 Invested
Amount pursuant to Section 3A.5(b)(ii)) by the amount of the Series 1998-1
Allocable Recoveries Amount (which shall also be reduced by the amount so
applied);
(ii) then, to the extent that the Series 1998-1 Allocable
Recoveries Amount is greater than zero following the applications in clause
(i) above, the Series 1998-1 Required Reserves shall be increased (but only
to the extent of any previous reductions of the Series 1998-1 Required
Reserves pursuant to Section 3A.5(b)(i)) by such remaining Series 1998-1
Allocable Recoveries Amount (which shall also be reduced by the amount so
applied).
SECTION 3A.6. APPLICATIONS. (a) The Trustee (acting at the written
direction of the Servicer upon which the Trustee may conclusively rely) shall on
each Distribution Date distribute to the Purchasers, from amounts on deposit in
the Series 1998-1 Accrued Interest Sub-subaccount, an amount equal to the Series
1998-1 Monthly Interest payable on such Distribution Date (such amount, 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.
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(b) On each Distribution Date, the Trustee shall apply funds on
deposit in the Series 1998-1 Non-Principal Collection Sub-subaccount in the
following order of priority to the extent funds are available:
(i) an amount equal to the Commitment Fee for the Accrual Period
ending on such Distribution Date shall be withdrawn from the Series 1998-1
Non-Principal Collection Sub-subaccount by the Trustee and paid to the
Funding Agent, for the PRO RATA account of the APA Banks, in accordance
with their respective Pro Rata Shares;
(ii) an aggregate amount equal to the Utilization Fee for the
Accrual Period ending on such Distribution Date shall be withdrawn from the
Series 1998-1 Non-Principal Collection Sub-subaccount by the Trustee and
paid to the Funding Agent, for the account of the Initial Purchaser;
(iii) an amount equal to any amounts owing to the Trustee
pursuant to Section 8.5 of the Agreement, shall be withdrawn from the
Series 1998-1 Non-Principal Collection Sub-subaccount by the Trustee and
paid to itself;
(iv) an amount equal to the Series 1998-1 Periodic Servicing Fee
for the Accrual Period ending on such Distribution Date shall be withdrawn
from the Series 1998-1 Non-Principal Collection Sub-subaccount by the
Trustee and paid to the Servicer or, if USFS or any Affiliate thereof is
not the Servicer, an amount equal to the Series 1998-1 Periodic Servicing
Fee shall be paid to the Person acting as Successor Servicer (less, in each
case, any amounts payable to the Trustee pursuant to Section 8.5 of the
Agreement, which shall be paid to the Trustee); and
(v) an amount equal to any unpaid Program Costs due and payable
shall be withdrawn from the Series 1998-1 Non-Principal Collection
Sub-subaccount by the Trustee and paid to the Persons owed such amounts.
Any remaining amounts on deposit in the Series 1998-1 Non-Principal Collection
Sub-subaccount (in excess of the Accrued Expense Amount as of such day) not
allocated pursuant to clauses (i) through (v) above shall be paid to the owner
of the Series 1998-1 Subordinated Interest; PROVIDED, HOWEVER, that during the
Series 1998-1 Amortization Period, such remaining amounts shall be deposited in
the Series
46
1998-1 Principal Collection Sub-subaccount for distribution in accordance with
Section 3A.6(c).
(c) During the Series 1998-1 Amortization Period, the Trustee shall
apply, on each Distribution Date, amounts on deposit in the Series 1998-1
Principal Collection Sub-subaccount in the following order of priority:
(i) an amount equal to the Series 1998-1 Monthly Principal
Payment for such Distribution Date shall be distributed from the Series
1998-1 Principal Collection Sub-subaccount to the Purchasers;
(ii) if, following the repayment in full of the Series 1998-1
Invested Amount, any amounts are owed to the Trustee, the Purchasers or any
other Person hereunder, such amounts shall be transferred from the Series
1998-1 Principal Collection Sub-subaccount and paid to the Trustee, the
Purchasers or such other Person; and
(iii) following the repayment in full of the Series 1998-1
Invested Amount and of all of the amounts set forth in clause (ii), the
remaining amount on deposit in the Series 1998-1 Principal Collection
Sub-subaccount on such Distribution Date, if any, shall be distributed to
the owner of the Series 1998-1 Subordinated Interest.
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 1998-1 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
47
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 15, 1998) a Monthly Settlement Statement in the Form of
Exhibit F setting forth, among other things, the Loss Reserve Ratio, the
Dilution Reserve Ratio, the Minimum Ratio, the Carrying Cost Reserve Ratio, the
Servicing Reserve Ratio and the components of the calculation thereof, the
Series 1998-1 Monthly Interest, the Additional Interest, the Series 1998-1
Periodic Servicing Fee, the Commitment Fee and the Series 1998-1 Monthly
Principal Payment, each as recalculated for the period until the next succeeding
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.
(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
48
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 1998-1, 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 1998-1, 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 1998-1 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 1998-1
Revolving Period with respect to the Series 1998-1 Interests:
(a) (i) failure on the part of the Servicer to direct any payment or
deposit to be made or failure of any payment or deposit to be made in respect of
interest owing on any VFC Certificates or the Commitment Fee within two Business
Days of the date such interest or Commitment Fee is due or (ii) failure on the
part of the Servicer to direct any payment or deposit to be made or of the
Company to make any payment or deposit in respect of any other amounts owing by
the Company under any Pooling and Servicing Agreement within five Business Days
of the date such other amount is due or such deposit is required to be made;
(b) (i) failure on the part of the Company to duly observe or perform
in any material respect 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
49
Company duly to observe or perform in any material respect any other covenants
or agreements of the Company set forth in any Pooling and Servicing Agreement,
which failure continues unremedied until 30 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 written notice of such failure, requiring the same
to be remedied, shall have been given to the Company by the Trustee, or to the
Company and the Trustee by the Funding Agent or Purchasers representing 25% or
more of the Series 1998-1 Invested Amount;
(c) any representation or warranty made or deemed made by the Company
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 30 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 by the Trustee to the Company
or by Purchasers representing 25% or more of the Series 1998-1 Invested Amount
to the Company and the Trustee; PROVIDED, HOWEVER, that an Early Amortization
Event with respect to the Series 1998-1 Interests shall not be deemed to have
occurred under this paragraph if the incorrectness of such representation or
warranty gives rise to an obligation to repurchase the related Receivables and
the Company has repurchased the related Receivable or all such Receivables, if
applicable, in accordance with the provisions of the Pooling and Servicing
Agreements within ten Business Days of the day on which the Company was
obligated to do so;
(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;
(f) a USI Change in Control shall have occurred, or any Seller or the
Servicer shall cease to be a directly or indirectly wholly-owned, Subsidiary of
United Stationers Inc.;
(g) USFS, USI or any one of USI's wholly-owned direct or indirect
subsidiaries shall cease to own 100% of the ordinary shares of the Company;
PROVIDED, that 30% of the voting rights with respect to such shares shall be
held by the independent director as nominee.
50
(h) any of the Agreement, the Servicing Agreement, this Supplement or
the Receivables Sale Agreements shall cease, for any reason, to be in full force
and effect, or the Company, the Seller 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, as
a whole (subject to no other Liens other than Permitted Liens), or any of USSC,
USFS, the Company or any Affiliate of any one thereof shall so assert in
writing;
(j) there shall have been filed against USSC, USFS, the Company or the
Trust (i) a notice of federal tax Lien from the Internal Revenue Service, (ii) a
notice of Lien from the PBGC under Section 412(n) of the Internal Revenue Code
or Section 302(f) of ERISA for a failure to make a required installment or other
payment to a plan to which either of such sections applies or (iii) 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, in each case, 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;
(l) 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 the Servicer or any properties,
revenues or rights of either thereof which could reasonably be expected to have
a Material Adverse Effect with respect to such Person;
(m)(i) one or more judgments for the payment of money (to the extent
not bonded or covered by insurance to the reasonable satisfaction of the
Required APA Banks) shall be rendered against the Company (A) in an aggregate
amount greater than $50,000 or (B) that, individually or in the aggregate, have
resulted or could reasonably be expected to result in a Material Adverse Effect
or (ii) one or more judgments for the payment of money (to the extent not bonded
or covered by insurance to the reasonable satisfaction of the Funding Agent)
shall be rendered against the Servicer, any Seller or any combination thereof
(A) in an
51
aggregate amount greater than $7,500,000 or (B) that, individually or in the
aggregate, have resulted or could reasonably be expected to result in a Material
Adverse Effect and, in either case, the same shall remain undischarged for a
period of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to levy upon
assets or properties of the Company, the Servicer or any Seller to enforce any
such judgment;
(n) as at the end of any Settlement Period, the average
Loss-to-Liquidation Ratio for the two preceding Settlement Periods (including
such Settlement Period then ended) shall exceed 1.0%;
(o) as at the end of any Settlement Period, the average Default Ratio
for the two preceding Settlement Periods (including such Settlement Period then
ended) shall exceed 2.75%;
(p) as at the end of any Settlement Period, the average Dilution Ratio
for the two preceding Settlement Periods (including such Settlement Period then
ended) shall exceed 4.25%;
(q) for any Settlement Period, Days Sales Outstanding shall be more
than 40 days; or
(r) the Series 1998-1 Allocated Receivables Amount shall be less than
the Series 1998-1 Target Receivables Amount for a period of two consecutive
Business Days.
then, in the case of (x) any event described in Section 7.1 of the Agreement,
after the applicable grace period (if any) set forth in such Section, and
paragraphs (i) and (j) above 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, after the
expiration of the applicable grace period (if any) set forth in such Sections,
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 1998-1 (any such period under clause (x) or (y) above, an
"EARLY AMORTIZATION PERIOD"); PROVIDED that in the case of any waiver of the
Early Amortization Event specified in Section 5.1(r), the Funding Agent shall
provide prompt written notice of such waiver to the Rating Agencies.
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Notwithstanding the foregoing, a delay or failure in performance
referred to in clause (a) above for a period of five Business Days after the
expiration of the applicable grace period, or in clause (b) above for a period
of 30 Business Days after the expiration of the applicable grace period, will
not constitute an Early Amortization Event if such delay or failure could not
have been prevented by the exercise of reasonable diligence by the Company and
such delay or failure was caused by a Force Majeure Delay. The Company will
nevertheless be required to use its best efforts to perform its obligations in a
timely manner in accordance with the terms of the Transaction Documents, and the
Company shall promptly give the Trustee an Officer's Certificate notifying it of
any such delay or failure.
ARTICLE VI
SERVICING FEE
SECTION 6.1. SERVICING COMPENSATION. A periodic servicing fee (the
"SERIES 1998-1 PERIODIC SERVICING FEE") shall be payable to the Servicer on each
Distribution Date for the preceding Settlement 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 Aggregate Commitment Amount for such Settlement Period and the
denominator of which is the sum of (i) the Aggregate Invested Amounts (other
than the Series 1998-1 Invested Amount and the Invested Amount in respect of any
variable funding certificate of any other Outstanding Series) on the first day
of such Settlement Period and (ii) the Aggregate Commitment Amount on the first
day of such Settlement Period plus the aggregate Commitment amount for any
variable funding certificate of any other Outstanding Series; PROVIDED, HOWEVER,
that if an Early Amortization Event has occurred and is continuing and USFS or
any Affiliate thereof is Servicer, payment of the Series 1998-1 Periodic
Servicing Fee shall be deferred until the Series 1998-1 Invested Amount has been
paid in full.
ARTICLE VII
CHANGE IN CIRCUMSTANCES
SECTION 7.1. ILLEGALITY. Notwithstanding any other provision herein,
if any Change in Law shall make it unlawful for any APA Bank to make or maintain
its portion of the VFC Certificateholders' Interest in any Eurodollar Tranche
and such APA Bank shall notify in writing the Funding Agent, the Trustee and the
53
Company, 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:
(i) 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
(ii) impose on any APA Bank or the London interbank market any
other condition affecting the Transaction Documents or the funding of
Eurodollar Tranches by such APA Bank;
and the result of any of the foregoing shall be to increase the cost to such APA
Bank of making, converting into, continuing or maintaining Eurodollar Tranches
(or maintaining its obligation to do so) or to reduce any amount received or
receivable by such APA Bank hereunder (whether principal, interest or
otherwise), then the Company will pay to such APA Bank such additional amount or
amounts as will compensate such APA Bank for such additional costs incurred or
reduction suffered.
(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 from time to time, 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 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
provided
54
that such Certificate is delivered in good faith and in a manner generally
consistent with such APA Bank's standard practice. 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 for a period of nine
months.
(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.
SECTION 7.3. TAXES. (a) Any and all payments 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 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 reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified
55
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. Any payments made by the Company pursuant
to this Section shall be made solely from funds available to the Company which
are not otherwise needed to be applied to the payment of any amounts (other than
amounts payable to the Company) pursuant to any Pooling and Servicing
Agreements, shall be non-recourse other than with respect to proceeds in excess
of the proceeds to make such payment, and shall not constitute a claim against
the Company to the extent that insufficient proceeds exist to make such payment.
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 for a period of nine months.
(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.
(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.
(f) If the Funding Agent or an APA Bank (or a Transferee) receives a
refund solely in respect of 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 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
56
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
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue 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; PROVIDED that any
payments made by the Company pursuant to this Section shall be made solely from
funds available to the Company which are not otherwise needed to be applied to
the payment of any amounts (other than amounts payable to the Company) pursuant
to any Pooling and Servicing Agreements, shall be non-recourse other than with
respect to proceeds in excess of the proceeds to make such payment, and shall
not constitute a claim against the Company to the extent that insufficient
proceeds exist to make such payment. This covenant shall survive the termination
of this Supplement and the Agreement and the payment of all amounts payable
hereunder and thereunder for a period of nine months. 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.
57
Notwithstanding anything in this Agreement to the contrary, the
Company agrees to indemnify the Initial Purchaser and to hold the Initial
Purchaser harmless from any loss or expense which the Initial Purchaser may
sustain or incur as a consequence of (a) default by the Company in making a
borrowing of or conversion into a CP Tranche after the Company has given
irrevocable notice requesting the same in accordance with the provisions of this
Supplement or (b) the prepayment, whether in connection with a Decrease or
otherwise, of any portion of the Series 1998-1 Invested Amount held by the
Initial Purchaser.
SECTION 7.5. ALTERNATE RATE OF INTEREST. If prior to the commencement
of any Eurodollar Period:
(a) the Funding Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Eurodollar Period, or
(b) the Funding Agent is advised by the Majority Purchasers that the
Adjusted LIBO Rate for such Eurodollar Period will not adequately and fairly
reflect the cost to such Purchasers of making or maintaining the Eurodollar
Tranches during such Eurodollar Period,
then the Funding Agent shall forthwith give telecopy or telephonic notice
thereof to 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.
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
58
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 hereunder, 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 1998-1 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 1998-1 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 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).
59
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;
(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; and
(c) neither the Company nor the Servicer shall take any action, nor
permit the Seller to take any action, requiring the satisfaction of the Rating
Agency Condition pursuant to any Transaction Document without the prior written
consent of the Majority Purchasers.
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 and the Rating Agencies,
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
60
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 on the date (the "EFFECTIVE DATE") on which
the following conditions precedent have been satisfied:
(a) DOCUMENTS. The Funding Agent shall have received, with a copy for
the Initial Purchaser, true and complete copies of this Supplement, executed by
a duly authorized officer of each of the Company, the Servicer, the Trustee, the
Funding Agent, the Initial Purchaser and the APA Banks, together with all
documents related hereto.
(b) ORGANIZATIONAL DOCUMENTS, ORGANIZATIONAL PROCEEDINGS OF THE
COMPANY AND SERVICER. The Funding Agent shall have received from the Company,
the Seller and the Servicer, with a copy for the Initial Purchaser, true and
complete copies of:
(i) the articles of association, articles of incorporation or
other formation documents, including all amendments thereto, of such
61
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;
(ii) 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 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 authorizing the execution, delivery
and performance of the Series 1998-1 Transaction Documents to which it is a
party and the 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, article of incorporation
or other formation documents of each such Person has 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 1998-1 Transaction Documents or any other document delivered in
connection herewith or therewith on behalf of each such Person; and
(iii) 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 the 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 on the business, operations, properties or
condition (financial or otherwise) of the Company, the Servicer or the Seller,
as the case may be.
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(d) CONSENTS, LICENSES, APPROVALS, ETC. The Funding Agent shall have
received, with a copy for the Initial Purchaser, certificates dated the date
hereof of a Responsible Officer of the Company, the Servicer and the 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 the Seller, as the case may be, of this Supplement, and
the validity and enforceability of this Supplement and the Agreement against the
Company and the Servicer, 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 with respect to USSC and its Subsidiaries
taken as a whole.
(f) LIEN SEARCHES. The Funding Agent shall have received a written
search report listing all effective financing statements that name the 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
of the Seller, USFS and the Company a UCC Certificate, completed in a manner
satisfactory to the Funding Agent, duly executed by a Responsible Officer of the
Seller 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 the Seller to USFS and by USFS to the
Company pursuant to the applicable Receivables Sale Agreement, (ii) to perfect
the sale of Receivables by USSC to the Company under the Original Agreement (as
defined in the Amended and Restated Receivables Sale Agreement) and (iii) 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
63
may be perfected by a filing under the UCC or other comparable statute, shall,
in each case, have been properly prepared and executed 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
Original Agreement (as defined in the Amended and Restated Receivables Sale
Agreement), as appropriate, 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 the Initial Purchaser and the Trustee, opinions of counsel to
the Company and the Servicer, dated the Issuance Date, as to corporate, federal
tax (tax status of the VFC Certificates as debt), perfection and priority of
security and/or ownership interests 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 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, the Initial Purchaser or the APA Banks
on or before the Effective Date.
(k) MATERIAL ADVERSE CHANGE. No material adverse change shall have
occurred with respect to the business, operations, property or condition
(financial or otherwise) of USSC and its Subsidiaries taken as a whole since
December 31, 1998.
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,
64
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
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 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.
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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 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 CLOSE UP 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
66
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,
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 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. 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 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 1998-1
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
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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.
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. 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
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Agreement as so supplemented by this Supplement shall be read, taken and
construed as one and the same instrument.
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. 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 1998-1 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 pay all
reasonable out-of-pocket costs and expenses of the Funding Agent (including,
without limitation, reasonable fees and disbursements of one counsel to the
Funding Agent) in connection with (i) the preparation, execution and delivery of
this Supplement, the Agreement and the other Transaction Documents and
amendments or waivers of any such documents and (ii) the enforcement by the
Funding Agent of the obligations and liabilities of the Company and the Servicer
under the Agreement, this Supplement, the other Transaction Documents or any
related document; PROVIDED that any payments made by the Company pursuant to
this Section shall be made solely from funds available to the Company which are
not otherwise needed to be applied to the payment of any amounts (other than
amounts payable to the
69
Company) pursuant to any Pooling and Servicing Agreements, shall be non-recourse
other than with respect to proceeds in excess of the proceeds to make such
payment, and shall not constitute a claim against the Company to the extent that
insufficient proceeds exist to make such payment.
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
70
consented to in writing by all Purchasers and each APA Bank, (i) extend the time
for payment, 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 Series 1998-1
Termination 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
amount 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 (iv) change the tax characteristics of the VFC Certificates or of
the Trust.
(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.
(d) No amendment hereof shall be effective until the Rating Agency
Condition is satisfied with respect 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, the Rating Agencies, the
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 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, the Rating Agencies and the Initial Purchaser; or
to such other address as may be hereafter notified by the respective parties
hereto:
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Funding Agent: The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
S&P: Standard & Poor's Ratings Service
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Moody's: ▇▇▇▇▇'▇ Investors Service
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Initial Purchaser: Park Avenue Receivables Corporation
c/o Global Securitization Services, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
WITH A COPY TO:
Chase Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
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, the Initial Purchaser may not assign or transfer any of its
rights under this Supplement except as set forth in Section 2.6 and each APA
Bank may not assign or transfer any of its rights under this Supplement except
as set forth in Section 11.11.
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SECTION 11.11. SECURITIES LAWS; PARTICIPATIONS; ASSIGNMENTS. (a) Each
Purchaser 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
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 Article VII Costs but
only to the extent that
73
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
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), and delivered to the
Funding Agent for its acceptance and recording in the Register with notice
delivered to each Rating Agency. 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, 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
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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 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
the 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. ss. 2510.3-101.
SECTION 11.12. ADJUSTMENTS; SET-OFF. (a) If any Purchaser (a
"BENEFITTED PURCHASER") shall at any time receive in respect of its Series
1998-1 Invested Amount any distribution of principal, interest, Commitment Fees
or other
75
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 1998-1 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 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 1998-1
Amortization Period and (ii) the last day of the amortization period of any
other Outstanding
76
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 Commercial Paper, it
will not institute against, or join any other Person in instituting against, the
Initial Purchaser 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 Agreement.
SECTION 11.15. CONFIDENTIALITY. Each APA Bank agrees to keep
information obtained by it pursuant hereto and the other Transaction Documents
identified as confidential in writing at the time of delivery confidential in
accordance with such APA Bank's customary practices and agrees that it will only
use such information in connection with the transactions contemplated by the
Pooling and Servicing Agreements and not disclose any of such information other
than (a) to such APA Bank's employees, representatives, directors, attorneys,
auditors, agents, professional advisors, trustees or affiliates who are advised
of the confidential nature of such information, (b) to the extent such
information that is in the public domain at the time of disclosure, (c) to the
extent disclosure is required by law (including applicable securities laws),
regulation, subpoena or judicial order or process (PROVIDED that notice of such
requirement or order shall be promptly furnished to the Company or the Servicer
unless such notice is legally prohibited) or requested or required by bank,
securities, insurance or investment company regulations or auditors or any
administrative body or commission to whose jurisdiction such APA Bank may be
subject, (d) to any rating agency to the extent required in connection with any
rating to be assigned to such APA Bank, (e) to Transferees or prospective
Transferees who agree to be bound by the provisions of this Section 11.15, or
(f) with the Company's or the Servicer's prior written consent. 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. LIMITED RECOURSE. Notwithstanding anything to the
contrary contained herein, the obligations of the Initial Purchaser under this
Agreement are solely the corporate obligations of the Initial Purchaser and, in
the case of obligations of the Initial Purchaser other than Commercial Paper,
shall be
77
payable at such time as funds are received by or are available to the Initial
Purchaser in excess of funds necessary to pay in full all outstanding Commercial
Paper and, to the extent funds are not available to pay such obligations, the
claims relating thereto shall not constitute a claim against the Initial
Purchaser but shall continue to accrue. Each party hereto agrees that the
payment of any claim (as defined in ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code
(Bankruptcy)) of any such party shall be subordinated to the payment in full of
all Commercial Paper.
No recourse under any obligation, covenant or agreement of the Initial
Purchaser contained in this Agreement shall be had against any incorporator,
stockholder, officer, director, employee or agent of the Initial Purchaser, the
Initial Purchaser's administrative agent, the Funding Agent, Global
Securitization Services, LLC or any of their Affiliates (solely by virtue of
such capacity) by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise; it being expressly agreed and
understood that this Agreement is solely a corporate obligation of the Initial
Purchaser individually, and that no personal liability whatever shall attach to
or be incurred by any incorporator, stockholder, officer, director, member,
employee or agent of the Initial Purchaser, the Initial Purchaser's
administrative agent, the Funding Agent, Global Securitization Services, LLC or
any of their Affiliates (solely by virtue of such capacity) or any of them under
or by reason of any of the obligations, covenants or agreements of the Initial
Purchaser contained in this Agreement, or implied therefrom, and that any and
all personal liability for breaches by the Initial Purchaser of any of such
obligations, covenants or agreements, either at common law or at equity, or by
statute, rule or regulation, of every such incorporator, stockholder, officer,
director, employee or agent is hereby expressly waived as a condition of and in
consideration for the execution of this Agreement; PROVIDED that the foregoing
shall not relieve any such Person from any liability it might otherwise have as
a result of fraudulent actions taken or omissions made by them. The provisions
of this Section 11.16 shall survive termination of this Agreement.
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.
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ARTICLE XII
FINAL DISTRIBUTIONS
SECTION 12.1. CERTAIN DISTRIBUTIONS. (a) Not later than 2:00 p.m., New
York City time, on the Distribution Date following the date on which the
proceeds from the disposition of the Receivables pursuant to Section 7.2(b) of
the Agreement are deposited into the Series 1998-1 Non-Principal Collection
Sub-subaccount and the Series 1998-1 Principal Collection Sub-subaccount, the
Trustee shall distribute such amounts pursuant to Article III of this
Supplement.
(b) Notwithstanding anything to the contrary in this Supplement or the
Agreement, any distribution made pursuant to this Section shall be deemed to be
a final distribution pursuant to Section 9.3 of the Agreement with respect to
the VFC Certificates.
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IN WITNESS WHEREOF, the Company, the Servicer, the Trustee, the
Funding Agent, the Initial Purchaser and the APA Banks have caused this
Second
Amended and Restated Series 1998-1 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:
THE CHASE MANHATTAN BANK, not
in its individual capacity but
solely as Trustee and as
Securities Intermediary
By
-----------------------------
Name:
Title:
▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BANK,
as Funding Agent
By
-----------------------------
Name:
Title:
PARK AVENUE RECEIVABLES
CORPORATION, as Initial
Purchaser
By
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as an APA Bank
By
-----------------------------
Name:
Title:
THE NORTHERN TRUST COMPANY,
as an APA Bank
By
-----------------------------
Name:
Title:
▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, as
an APA Bank
By
-----------------------------
Name:
Title:
82
Consented to by:
UNITED STATIONERS SUPPLY CO.
By
--------------------------
Name:
Title:
83
SCHEDULE 1
LIST OF COMMITMENTS
NAME OF APA BANK COMMITMENT
The Chase Manhattan Bank $51,600,000
The Northern Trust Company $15,000,000
The Bank of New York $15,000,000
-----------
Total Commitment $81,600,000
84