EXHIBIT 10.27
### Document last closed 10:29:28 AM January 31, 1997 ### [Execution Copy]
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SPECIALTY FOODS FINANCE CORPORATION,
SPECIALTY FOODS CORPORATION,
as Master Servicer,
and
THE CHASE MANHATTAN BANK,
as Trustee
SERIES 1997-1 SUPPLEMENT
Dated as of January 31, 1997
to
POOLING AGREEMENT
Dated as of November 16, 1994
SFC MASTER TRUST
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TABLE OF CONTENTS
Page
Section
ARTICLE I DEFINITIONS 1
SECTION 1.1. Definitions 1
ARTICLE II DESIGNATION OF CERTIFICATES; PURCHASE AND
SALE OF THE VFC CERTIFICATES 26
SECTION 2.1. Designation 26
SECTION 2.2. The Series 1997-1 Certificates 26
SECTION 2.3. Delivery 27
SECTION 2.4. Procedure for Increasing the Invested
Amount 27
SECTION 2.5. Procedure for Decreasing the Invested Amount
29
SECTION 2.6. Commitment Certification 31
SECTION 2.7. Interest; Certain Fees 31
SECTION 2.8. Interest Rate Indemnity 33
ARTICLE III ARTICLE III OF THE AGREEMENT 34
SECTION 3C.2. Establishment of Series Accounts. 34
SECTION 3C.3. Daily Allocations. 36
SECTION 3C.4. Selection of Funding Periods; Determination
of Interest Rates 37
SECTION 3C.5. Determination of Series 1997-1 Amortization
Principal Payments 40
SECTION 3C.6. Applications 40
SECTION 3C.7. The Principal/Interest Surety Bond. 43
ARTICLE IV DISTRIBUTIONS AND REPORTS 45
SECTION 4C.1. Distributions 45
SECTION 4C.2. Statements and Notices 45
SECTION 4C.3. Notices 47
ARTICLE V ADDITIONAL EARLY AMORTIZATION EVENTS 48
SECTION 5.1. Additional Early Amortization Events 48
ARTICLE VI SERVICING FEE 50
SECTION 6.1. Servicing Compensation 50
ARTICLE VII COVENANTS, REPRESENTATIONS AND WARRANTIES
51
SECTION 7.1. Representations and Warranties of the
Company and the Master Servicer 51
SECTION 7.2. Covenants of the Company 51
SECTION 7.3. Covenants of the Master Servicer 51
SECTION 7.4. Additional Supplements 52
ARTICLE VIII MISCELLANEOUS 52
SECTION 8.1. Ratification of Agreement 52
SECTION 8.2. Governing Law 52
SECTION 8.3. Further Assurances 52
SECTION 8.4. No Waiver; Cumulative Remedies 52
SECTION 8.5. Amendments 53
SECTION 8.6. Notices 53
SECTION 8.7. Successors and Assigns 53
SECTION 8.8. Counterparts 56
SECTION 8.9. Enhancement Provider 56
SECTION 8.10. Administrative Agent for the Issuer 56
SECTION 8.11. No Bankruptcy Petition 56
SECTION 8.12. Costs and Expenses 56
ARTICLE IX FINAL DISTRIBUTIONS 57
SECTION 9.1. Certain Distributions 57
EXHIBITS
Exhibit A Form of VFC Certificate, Series 1997-1
Exhibit B Form of Subordinated Company
Certificate,
Series 1997-1
Exhibit C [Reserved]
Exhibit D Form of Daily Report
Exhibit E-1 Form of Monthly Settlement Statement
Exhibit E-2 Form of Funding Period Settlement Statement
Exhibit F Form of Notice of Increase
Exhibit G Form of Commitment Certification
SCHEDULES
Schedule 1 Trust Accounts
Schedule 2 Cure Period Trigger Dates
SERIES 1997-1 SUPPLEMENT, dated as of January 31,
1997 (this "Supplement"), among Specialty Foods Finance
Corporation, a Delaware corporation (the "Company"),
Specialty Foods Corporation, a Delaware corporation, as
master servicer (the "Master Servicer"), and The Chase
Manhattan Bank, a New York banking corporation, in its
capacity as trustee (the "Trustee") under the Agreement (as
hereafter defined).
W I T N E S S E T H :
WHEREAS, the parties hereto entered into a Pooling
Agreement, dated as of November 16, 1994 (as amended,
supplemented or otherwise modified from time to time, the
"Agreement");
WHEREAS, the Agreement provides, among other
things, that the Company, the Master Servicer and the
Trustee may at any time and from time to time enter into
supplements to the Agreement for the purpose of authorizing
the issuance on behalf of the Trust by the Company for
execution and redelivery to the Trustee for authentication
of one or more Series of Investor Certificates;
WHEREAS, the parties hereto entered into a Series
1994-1 Supplement to the Agreement, dated as of November 16,
1994;
WHEREAS, the parties hereto entered into a Series
1996-1 Supplement to the Agreement, dated as of August 1,
1996; and
WHEREAS, the Company, the Master Servicer and the
Trustee wish to supplement the Agreement as hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are
hereby expressly acknowledged, the parties hereto agree as
follows:
I. ARTICLE
DEFINITIONS
a) SECTION Definitions. The following words
and phrases shall have the following meanings with respect
to Series 1997-1 and the definitions of such terms are
applicable to the singular as well as the plural form of
such terms and to the masculine as well as the feminine and
neuter genders of such terms:
"Accrued Expense Amount" shall mean, for each
Business Day during an Accrual Period, the sum of (i) the
Daily Interest Deposit for such Business Day, (ii) (A) if
such Business Day is prior to the 20th day of such Accrual
Period, 1/10 of each of the Series 1997-1 Monthly
Servicing Fee and the portion of each of the Issuer Usage
Fees, the Liquidity Usage Fees, the Liquidity Non-Usage
Fees, the Issuer Administrative Fees, the Alternate Fees
and the Surety Bond Fees to be paid on the next succeeding
Settlement Date (up to but not exceeding, in each case,
the full amount thereof), assuming that the aggregate Face
Amount of Issuer CP on each day is the same as the
aggregate Face Amount of Issuer CP on the first day of
such Accrual Period or (B) if such Business Day is on or
after the 20th day of such Accrual Period and if the
Issuer notifies the Master Servicer and the Trustee on
such Business Day that Aggregate Daily Collections
previously transferred to the Series 1997-1 Non-Principal
Collection Sub-account are insufficient to pay the Series
1997-1 Monthly Servicing Fee and the portion of each of
the Issuer Usage Fees, the Liquidity Usage Fees, the
Liquidity Non-Usage Fees, the Issuer Administrative Fees,
the Alternate Fees and the Surety Bond Fees to be paid on
the next succeeding Settlement Date, an amount reasonably
expected by the Issuer to be equal to such insufficiency,
which amount shall be specified in such notice to the
Master Servicer and the Trustee, and (iii) the Program
Costs for such Business Day.
"Acquiring VFC Certificateholder" shall have the
meaning specified in subsection 8.7(c).
"Additional Interest" shall mean with respect to
any outstanding Past Due Interest, interest thereon, until
paid in full, at a per annum rate equal to the sum of (i)
Base Rate as in effect from day to day computed on the
basis of a year of 360 days and actual days elapsed and
(ii) 2.00%.
"Adjusted Eurodollar Rate" for any Eurodollar
Tranche for any Eurodollar Period shall mean an interest
rate per annum equal to (i) (A) the rate (rounded upward,
if necessary, to the nearest whole multiple of 1/16 of 1%
per annum) for deposits in U.S. Dollars, in a principal
amount of not less than $1,000,000 for a period
approximating such Eurodollar Period, which appears on the
Reuters Screen LIBO Page as of 11:00 a.m. London time on
the second LIBO Business Day before (and for value on) the
first day of that Eurodollar Period, divided by (B) (1)
one, minus (2) the Eurodollar Reserve Requirements
(expressed as a decimal) applicable during that Eurodollar
Period) or (ii) if no applicable rate appears on the
Reuters Screen LIBO Page on the second LIBO Business Day
before the first day of that Eurodollar Period, (A) the
rate at which deposits in U.S. Dollars, in a principal
amount of not less than $1,000,000 for a period
approximating such Eurodollar Period, are offered by The
Chase Manhattan Bank at approximately 11:00 a.m. London
time on such LIBO Business Day (for value on the first day
of such Eurodollar Period), divided by (B) (1) one, minus
(2) the Eurodollar Reserve Requirements (expressed as a
decimal) applicable during that Eurodollar Period.
"Adjusted Invested Amount" shall mean, as of any
date of determination, the greater of (i) (A) the Invested
Amount on such date, minus (B) the amount on deposit in
the Series 1997-1 Principal Collection Sub-subaccount on
such date and (ii) $500,000.
"Aged Receivables Denominator" shall mean, with
respect to each Seller or Seller Group, as the case may
be, the prior Settlement Period which is set forth
opposite such Seller or such Seller Group (and, with
respect to any Seller or Seller Group added after the
Issuance Date, the "Aged Receivables Denominator" set
forth on the Additional Seller Supplement for such Seller
or such Seller Group):
Seller Aged Receivables
Denominator
Gai's Seller Group 3rd prior Settlement
Period
H&M 3rd prior Settlement
Period
▇▇▇▇ Seller Group 3rd prior Settlement
Period
Mother's 4th prior Settlement
Period
SFSB 3rd prior Settlement
Period
Stella Seller Group 3rd prior Settlement
Period
TBP 3rd prior Settlement
Period.
"Aged Receivables Numerator" shall mean, with
respect to each Seller or Seller Group, as the case may
be, the number of days past due which is set forth
opposite such Seller or such Seller Group (and, with
respect to any Seller or Seller Group added after the
Issuance Date, the "Aged Receivables Numerator" set forth
on the Additional Seller Supplement for such Seller or
such Seller Group):
Seller Aged Receivables
Numerator
Gai's Seller Group 61-90 days
H&M 61-90 days
▇▇▇▇ Seller Group 61-90 days
Mother's 91-120 days
SFSB 61-90 days
Stella Seller Group 61-90 days
TBP 61-90 days.
"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 (i) the aggregate unpaid balance of Receivables
originated by each Seller or each Seller Group that were
past due by the number of days in the related Aged
Receivables Numerator with respect to such Seller or such
Seller Group and (ii) the aggregate amount of Receivables
of such Seller or Seller Group which were charged off as
uncollectible prior to the day which is, in the case of
all Sellers other than Mother's, 91 days after its
original due date and, in the case of Mother's, 121 days
after its original due date, in each case, during the
Settlement Period, and the denominator of which shall be
the aggregate Principal Amount of Receivables originated
by such Seller or such Seller Group during the prior
Settlement Period that is the related Aged Receivables
Denominator with respect to such Seller or such Seller
Group.
"Aggregate Commitment Amount" shall mean, with
respect to any date of determination, the aggregate amount
of the Commitments of all VFC Certificateholders on such
date.
"Aggregate Dilution Reserve Ratio" shall mean, as
of any Settlement Date and continuing to, but excluding,
the next Settlement Date, an amount equal to (i) the sum
of the products, with respect to each Seller or each
Seller Group, of the Dilution Reserve Ratio for such
Seller or such Seller Group at the last day of the
Settlement Period immediately preceding such earlier
Settlement Date times the aggregate outstanding Principal
Amount of Eligible Receivables of such Seller or such
Seller Group at such last day divided by (ii) the
aggregate outstanding Principal Amount of Eligible
Receivables of all Sellers at such last day.
"Aggregate Loss Reserve Ratio" shall mean, as of
any Settlement Date and continuing to, but excluding, the
next Settlement Date, an amount equal to (i) the sum of
the products, with respect to each Seller or each Seller
Group, of the Loss Reserve Ratio for such Seller or such
Seller Group at the last day of the Settlement Period
immediately preceding such earlier Settlement Date times
the aggregate outstanding Principal Amount of Eligible
Receivables of such Seller or such Seller Group at such
last day divided by (ii) the aggregate outstanding
Principal Amount of Eligible Receivables of all Sellers at
such last day.
"Agreement" shall mean the Pooling Agreement,
dated as of November 16, 1994, among the Company, the
Master Servicer and the Trustee, as amended, supplemented
or otherwise modified from time to time.
"Allocated Receivables Amount" shall mean, on any
date of determination with respect to Series 1997-1, the
lower of (i) the Target Receivables Amount on such day and
(ii) the Aggregate Receivables Amount on such day times
the percentage equivalent of a fraction the numerator of
which is the Adjusted Invested Amount on such day and the
denominator of which is the Aggregate Adjusted Invested
Amounts on such day. Notwithstanding the foregoing, in
the event that with respect to any Settlement Period the
Company has elected to exclude the Receivables owing by
any one Obligor (including Affiliates of such Obligor) for
purposes of calculating any of the Default Ratio,
Delinquency Ratio or Loss-to-Liquidation Ratio with
respect to such Settlement Period, all Receivables owing
by such Obligor (including Affiliates of such Obligor)
shall for the next succeeding Settlement Period be
excluded from the Aggregate Receivables Amount.
"Alternate Fees" shall have the meaning specified
in subsection 2.7(e).
"Amortization Period" shall mean the period
following the Revolving Period and ending on the earlier
to occur of (i) the date when the Invested Amount shall
have been reduced to zero and all accrued interest on and
fees in respect of the VFC Certificates shall have been
paid and all amounts owing to the Enhancement Provider
under the Insurance Agreement have been paid in full and
(ii) the Series Termination Date.
"Applicable Margin" shall mean with respect to any
VFC Certificateholder other than the Issuer a percentage
rate per annum as agreed in writing between such VFC
Certificateholder and the Company, notice of which shall
have been given to the Trustee.
"Available Funds" shall mean, at any time, funds
then available to the Company that are not required,
pursuant to the terms of any of the Pooling and Servicing
Agreements, to be applied to the payment of any amounts
other than amounts specified as being payable solely out
of Available Funds, howsoever such funds may be
denominated in any such Pooling and Servicing Agreement.
"Avoidance Event" shall have the meaning specified
in subsection 3C.7(b)(iv).
"Avoided Payment" shall have the meaning specified
in subsection 3C.7(b)(iv).
"Base Rate" means a fluctuating interest rate
per annum equal to the higher of (i) the rate of
interest published in the Wall Street Journal as the
prime rate, or, in the event that no such rate is
published, the rate of interest announced publicly by
The Chase Manhattan Bank in New York, New York, as its
prime or reference rate, whether or not such rate is the
lowest rate offered by such institution to its corporate
borrowers and (ii) 0.50% per annum above the Federal
Funds Rate.
"Business Day" shall mean any day that is both a
Business Day under the Agreement and, if the term is used
in connection with respect to notices, determinations,
fundings and payments in connection with any Funding
Period during which the Funding Period Rate is the
Adjusted Eurodollar Rate or the Liquidity Rate determined
in whole or in part by reference to the "Eurodollar Rate,"
as defined in the Liquidity Agreement, a LIBO Business
Day.
"Carrying Cost Reserve Ratio" shall mean, as of
any Settlement Date and continuing to, but excluding, the
next Settlement Date, an amount (expressed as a
percentage) equal to (i) the product of (A) the greatest
of (1) 2.00 times Days Sales Outstanding as of such day,
(2) 60 and (3) the weighted average length of all then
outstanding Funding Periods and (B) the Discount Rate as
of such day divided by (ii) 360.
"Certificate Maximum" shall mean, as of any date
of determination, an amount equal to the least of (i) the
Aggregate Commitment Amount as of such date, (ii) the
excess, if any, of $125,000,000 over the aggregate
"Invested Amount" of the "Term Certificates" issued
pursuant to the Series 1994-1 Supplement outstanding on
such day and (iii) $44,000,000.
"Certificate Purchase Agreement" shall mean any
agreement or agreements pursuant to which a VFC
Certificateholder has acquired one or more VFC
Certificates and extended a Commitment to the Company, a
copy of which shall have been delivered to and approved by
the Enhancement Provider (such approval not be
unreasonably withheld).
"Change in Control" shall mean the occurrence of
any of: (i) any Change in Control under the Term Loan
Agreement (as such term is defined therein on the Issuance
Date); (ii) except upon the exercise by the administrative
agent under the Term Loan Agreement of any of its remedies
in accordance with the terms of the SFC Pledge Agreement
(as in effect on the Issuance Date), the Company shall at
any time not be directly wholly-owned by Specialty Foods
Corporation; or (iii) except as permitted pursuant to
Section 9.15 of the Receivables Sale Agreement, any Seller
shall at any time not be wholly-owned, either directly or
indirectly, by Specialty Foods Corporation.
"Commitment" shall mean, as to any VFC
Certificateholder, its obligation to maintain and, subject
to certain conditions, increase, its investment in the
Invested Amount, in an aggregate amount not to exceed at
any one time outstanding the aggregate maximum amount set
forth in a Certificate Purchase Agreement as such VFC
Certificateholder's "Commitment," as such amount may be
reduced from time to time as provided in such Certificate
Purchase Agreement.
"Commitment Certification" shall have the meaning
specified in Section 2.6.
"Control Party" shall mean, with respect to any
event, (i) the Enhancement Provider, or (ii) if a Surety
Default has occurred and is continuing, then "Control
Party" shall mean the holders of VFC Certificates
representing Fractional Undivided Interests aggregating
more than 50% of the Invested Amount adversely affected by
such event (or the Trustee acting on behalf of such
holders).
"CP Disruption" means the inability of the Issuer,
at any time, whether as a result of a prohibition or any
other event or circumstance whatsoever, to raise funds
through the issuance of its commercial paper notes
(whether or not constituting Issuer CP, as defined below)
in the United States commercial paper market.
"Cure Period Trigger Date" shall mean, with
respect to any of the representations, warranties and
covenants of the Company, any Servicing Party or any
Seller, as the case may be, that are contained in the
subsection of the applicable Transaction Document which is
cross referenced in Schedule 2 under the heading of
"Applicable Section", the breach or violation of which
would result (i) in the case of a breach or violation by
the Company, in a Potential Early Amortization or a
purchase obligation of the Company pursuant to Section 2.5
or 2.6 of the Agreement, (ii) in the case of any Servicing
Party, a Potential Servicer Default or (iii) in the case
of any Seller, a Potential Purchase Termination Event (as
defined in the Receivables Sale Agreement), the date
occurring the number of days specified for the applicable
subsection in Schedule 2 under the heading "Cure Period
Trigger Date" following the occurrence of such breach or
violation (or if the number of days so specified is zero,
the date of such breach or violation). The foregoing
provisions shall apply to such breaches and violations
notwithstanding any other grace period or cure provisions
stated to apply thereto under the applicable Transaction
Documents. The Company shall, and the Control Party may,
give prompt written notice of each occurrence of a Cure
Period Trigger Date to the Trustee (and the Enhancement
Provider if given by the Control Party).
"Daily Interest Deposit" shall mean, for any
Business Day, an amount equal to the sum of (i) the
aggregate accrued but unpaid Funding Period Interest on
the VFC Certificates for all outstanding Funding Periods
to the extent not previously deposited to the Series
1997-1 Non-Principal Collection Sub-subaccount; provided,
however, that if such Business Day is the first, second or
third Business Day preceding the Funding Period Settlement
Date for any Funding Period the accrued Funding Period
Interest for such Funding Period shall be deemed to be the
full amount of Funding Period Interest scheduled (or in
the case of the Unallocated Balance, expected in good
faith by the Master Servicer) to be due and payable on
such Funding Period Settlement Date, plus (ii) the
aggregate amount of all previously accrued and unpaid
Daily Interest Deposits, plus (iii) the aggregate amount
of all accrued and unpaid Additional Interest accrued
since the previous Business Day.
"Daily Report" shall mean a report prepared by the
Master Servicer on each Business Day for the period
specified therein, in substantially the form of Exhibit D.
"Days Sales Outstanding" shall mean, as of any
Settlement Date and continuing to, but excluding, the next
Settlement Date, the number of days equal to the product
of (i) 91 and (ii) the amount obtained by dividing (A) the
difference between (1) the aggregate Principal Amount of
Receivables and (2) the aggregate bad debt reserve of the
Sellers, in each case as at the last day of the Settlement
Period immediately preceding such earlier Settlement Date,
by (B) aggregate net sales of the Sellers for the three
Settlement Periods immediately preceding such earlier
Settlement Date.
"Decrease" shall have the meaning specified in
subsection 2.5(a).
"Dealer Fees" shall mean commercial paper dealer
fees and commissions incurred by the Issuer in connection
with the issuance of Issuer CP.
"Default Ratio" shall mean, as of the last
Business Day of any Settlement Period and continuing to,
but excluding, the last day of the next Settlement Period,
a ratio (expressed as a percentage) equal to (i) the
aggregate outstanding Principal Amount of all Defaulted
Receivables on the last day of such earlier Settlement
Period over (ii) the aggregate outstanding Principal
Amount of all Receivables on such last day; provided,
however, to the extent that 2% or more of the Default
Ratio at the end of any Settlement Period is attributable
to Receivables owing by any Obligor (including Affiliates
of such Obligor), then, upon the election of the Company
(such election to be made separately in respect of each
Settlement Period), the Default Ratio shall be
recalculated to exclude all Receivables of any one such
Obligor (including Affiliates of such Obligor) that would
otherwise have been included in such calculation.
"Delinquency Ratio" shall mean, as of the last
Business Day of any Settlement Period and continuing to,
but excluding, the last day of the next Settlement Period,
a ratio (expressed as a percentage) equal to (i) the
aggregate outstanding Principal Amount of all Delinquent
Receivables on the last day of such earlier Settlement
Period over (ii) the aggregate outstanding Principal
Amount of all Receivables on such last day; provided,
however, to the extent that 2% or more of the Delinquency
Ratio at the end of any Settlement Period is attributable
to Receivables owing by any Obligor (including Affiliates
of such Obligor), then, upon the election of the Company
(such election to be made separately in respect of each
Settlement Period), the Delinquency Ratio shall be
recalculated to exclude all Receivables of any one such
Obligor (including Affiliates of such Obligor) that would
otherwise have been included in such calculation.
"Dilution Horizon Factor" with respect to each
Seller or each Seller Group, as the case may be, shall
mean, the factor set forth opposite such Seller or such
Seller Group (and, with respect to any Seller or Seller
Group added after the Issuance Date, the "Dilution Horizon
Factor" set forth on the Additional Seller Supplement for
such Seller or such Seller Group):
Seller Dilution Horizon Factor
Gai's Seller Group .1
H&M one
▇▇▇▇ Seller Group .1
Mother's 1.5
SFSB .1
Stella Seller Group 1.5
TBP .5;
provided that (i) in the case of H&M, the Dilution Horizon
Factor in respect of all Receivables for which Foodmaker,
Inc. is the Obligor shall be 0.25, (ii) in the case of
Gai's Seller Group, ▇▇▇▇ Seller Group, SFSB and TBP, the
Dilution Horizon Factor in respect of Dilution Adjustments
for Receivables originated by such Seller or such Seller
Group, as the case may be, which are made for reasons
other than sales shall be one and (iii) in the case of
Mother's, the Dilution Horizon Factor in respect of
Dilution Adjustments for Receivables originated by
Mother's with payment terms of 2% 10 or Net 30 days shall
be one.
"Dilution Ratio" with respect to each Seller or
each Seller Group, shall mean, as of the last day of each
Settlement Period, an amount (expressed as a percentage)
equal to the aggregate amount of Dilution Adjustments in
respect of such Seller or such Seller Group made during
such Settlement Period divided by the aggregate Principal
Amount of Receivables which were originated by such Seller
or such Seller Group during such Settlement Period.
"Dilution Reserve Ratio" with respect to each
Seller or each Seller Group, shall mean, as of any
Settlement Date and continuing to, but excluding, the next
Settlement Date, an amount (expressed as a percentage)
which is calculated as follows:
DRR = [(c * d) + [(e-d) * (e/d)]] * f
Where:
DRR = Dilution Reserve Ratio;
c = the Ratings Multiple;
d = the average of the Dilution Ratio
with respect to such Seller or such Seller
Group during the period of twelve consecutive
Settlement Periods ending prior to such
Settlement Date;
e = the highest Dilution Ratio with
respect to such Seller or such Seller Group
for any Settlement Period during the period
of twelve consecutive Settlement Periods
ending prior to such Settlement Date; and
f = the quotient of (i) the product of
(A) the aggregate Principal Amount of
Receivables which were originated by such
Seller or such Seller Group during the
preceding Settlement Period and (B) the
Dilution Horizon Factor with respect to such
Seller or such Seller Group and (ii) the
difference between (A) the aggregate
outstanding Principal Amount of all
Receivables and (B) the aggregate outstanding
Principal Amount of all Delinquent
Receivables and Defaulted Receivables, in
each case, originated by such Seller or such
Seller Group as of the last day of the
Settlement Period preceding such earlier
Settlement Date;
provided that, in the case of any Seller or Seller Group
for which two separate Dilution Horizon Factors are
designated in respect of such Seller or Seller Group, the
Dilution Reserve Ratio shall be calculated as set forth
above, except that two separate ratios shall be calculated
(each based upon the applicable Dilution Horizon Factor,
and the Receivables related to such Dilution Horizon
Factor, for such Seller or Seller Group) and the actual
Dilution Reserve Ratio for such Seller or Seller Group
will be equal to the sum of the two ratios so calculated.
"Discount Rate" shall mean, as of any date of
determination, the sum of (i) the product of (A) the
weighted average of the Funding Period Rates in effect
with respect to the outstanding VFC Certificates as of the
end of the Settlement Period immediately preceding the
most recent Settlement Date and (B) 1.25 and (ii) an
amount equal to (A) the sum of (1) the aggregate amount of
Issuer Usage Fees, Liquidity Usage Fees, Liquidity Non-
Usage Fees, Issuer Administrative Fees, Alternate Fees and
Surety Bond Fees accrued with respect to the outstanding
VFC Certificates during the Settlement Period immediately
preceding the most recent Settlement Date and (2) the
Monthly Allocable Trustee's Fees for the Settlement Period
immediately preceding the most recent Settlement Date,
divided by (B) the average daily Adjusted Invested Amount
during such Settlement Period.
"Distribution Date" shall mean each Settlement
Date and each Funding Period Settlement Date.
"Early Amortization Event" shall have the meaning
specified in Section 5.1 of this Supplement and Section
7.1 of the Agreement.
"Enhancement Provider" shall mean, with respect to
Series 1997-1, Capital Markets Assurance Corporation, a
New York stock insurance company, or any successor
thereto.
"ERISA Entity" shall mean either an "employee
benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended,
(whether or not subject to the Employment Retirement
Income Security Act of 1974, as amended), a "plan" as
defined in Section 4975 of the Internal Revenue Code of
1986, as amended, an entity deemed to hold plan assets of
any such employee benefit plan or plans, or an entity
otherwise using the assets of any such employee benefit
plan or plans to acquire VFC Certificates.
"Eurodollar Period" shall mean with respect to any
Eurodollar Tranche:
(i) initially, the period commencing on the
Business Day that any portion of the Unallocated
Balance is allocated to a Funding Period pursuant
to subsection 3C.4(c), thereby giving rise to such
Eurodollar Tranche and ending one, two or three
months thereafter, as selected by the Master
Servicer pursuant to subsection 3C.4(c); and
(ii) thereafter, each period commencing on
the last day of the next preceding Eurodollar
Period applicable to such Eurodollar Tranche and
ending one, two or three months thereafter;
provided, however, that all of the foregoing provisions
relating to Eurodollar Periods are subject to the
following:
(A) if any Eurodollar Period would otherwise
end on a day that is not a Business Day, such
Eurodollar Period shall be extended to the next
succeeding Business Day unless the result of such
extension would be to carry such Eurodollar Period
into another calendar month in which event such
Eurodollar Period shall end on the immediately
preceding Business Day; and
(B) any Eurodollar Period that begins on the
last Business Day of a calendar month (or a day
for which there is no numerically corresponding
day in the calendar month at the end of such
Eurodollar Period) shall end on the last Business
Day of a calendar month.
"Eurodollar Tranche" shall mean a portion of the
Invested Amount allocable to VFC Certificates held by a
Person other than the Issuer for which Funding Period
Interest is calculated by reference to an Adjusted
Eurodollar Rate for a particular Eurodollar Period.
"Eurodollar Reserve Requirements" shall mean for
any Eurodollar Period, the daily average (rounded upward,
if necessary, to the nearest whole multiple of 1/16 of 1%
per annum) of the aggregate (without duplication) of the
rates (expressed as a decimal fraction) of reserve
requirements in effect on each day during such Eurodollar
Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal
Reserve System or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency liabilities" in
Regulation D of such Board) maintained by a member bank of
such System.
"Face Amount" shall mean in relation to any Issuer
CP (i) if issued on a discount basis, the face amount
stated therein and (ii) if issued on an interest-bearing
basis, the principal amount stated therein plus the amount
of all interest stated to accrue thereon to its stated
maturity date.
"Federal Funds Rate" means, for any day, a
fluctuating interest rate per annum equal to the
weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any
day which is a Business Day, the average of the
quotations for such day on such transactions received by
the Master Servicer from three Federal funds brokers of
recognized standing selected by it.
"Final Order" shall have the meaning specified in
subsection 3C.7(b)(iv).
"Funding Period" shall mean (i) with reference to
any portion of the Invested Amount allocable to VFC
Certificates held by the Issuer, (A) in the case of any
Funding Period with respect to which the Issuer has funded
its investment in the VFC Certificates for such Funding
Period by issuing Issuer CP, (1) initially, a period of 1
to 90 days, commencing on a Business Day and otherwise
determined in accordance with the requirements of
subsection 3C.4(b), commencing on the Issuance Date, and
(2) thereafter, a period of 1 to 90 days, determined in
accordance with the requirements of subsection 3C.4(b),
commencing on the last day of the immediately preceding
Funding Period for such portion of the Invested Amount,
and (B) in the case of any Funding Period with respect to
which the Issuer has funded its investment in the VFC
Certificates for such Funding Period with proceeds of
loans under the Liquidity Agreement, the applicable
Liquidity Interest Period, determined in accordance with
the requirements of subsection 3C.4(b); provided, however,
that the Funding Period applicable to the amount of any
Increase allocated to the Issuer subsequent to the
Issuance Date shall be a period of 1 to 90 days or a
Liquidity Interest Period, as applicable, determined in
accordance with the requirements of subsection 3C.4(b),
commencing on the applicable Increase Date and (ii) with
reference to any portion of the Invested Amount allocable
to VFC Certificates held by any Person other than the
Issuer, a Eurodollar Period (to the extent such portion of
the Invested Amount is allocated to a Eurodollar Tranche),
an Accrual Period (to the extent such portion of the
Invested Amount constitutes a portion of the Unallocated
Balance) and such other period as may be agreed between
the Company, the Master Servicer and such other Person (to
the extent such portion of the Invested Amount bears
interest at a rate agreed among such parties) with notice
thereof provided to the Trustee.
"Funding Period Determination Date" shall mean
with respect to any Funding Period Settlement Date, the
Business Day immediately preceding such Funding Period
Settlement Date.
"Funding Period Interest" shall mean (i) with
respect to that portion of the Invested Amount of the VFC
Certificates allocated to a Funding Period as provided in
Section 3C.4, the aggregate interest accrued at the
Funding Period Rate for such Funding Period on such
allocated portion of the Invested Amount of the VFC
Certificates, calculated on the basis specified in
subsection 2.7(g) and (ii) as of any Funding Period
Settlement Date with respect to the Unallocated Balance
outstanding from time to time, the aggregate interest
accrued thereon at the Base Rate in effect from time to
time from and including the preceding Funding Period
Settlement Date with respect to the Unallocated Balance to
but excluding the current Funding Period Settlement Date
with respect to the Unallocated Balance, calculated on the
basis specified in subsection 2.7(g).
"Funding Period Rate" shall mean, for any Funding
Period and that portion of the Invested Amount allocated
to that Funding Period:
(i) to the extent that the VFC Certificates
evidencing such Invested Amount are held by the
Issuer, (A) the rate equivalent to the rate (or if
more than one rate, the weighted average of the
rates), adjusted to include all applicable Dealer
Fees, at which commercial paper notes of the
Issuer having a term equal to such Funding Period
and issued to fund the Issuer's investment in such
VFC Certificates, were sold by any placement agent
or commercial paper dealer selected by the Issuer,
as agreed between each such agent or dealer and
the Issuer and notified by the Issuer to the
Master Servicer; provided, however, if the rate
(or rates) as agreed between any such agent or
dealer and the Issuer with regard to any Funding
Period is a discount rate (or rates), the "Funding
Period Rate" for such Funding Period shall be the
rate (or if more than one rate, the weighted
average of the rates) resulting from converting
such discount rate (or rates) to an interest-
bearing equivalent rate (or rates) per annum; or
(B) to the extent that the Issuer does not fund
such portion of its investment in such VFC
Certificates for such Funding Period by issuing
Issuer CP, a rate equal to (1) the applicable
Liquidity Rate or (2) such other rate as the
Issuer and the Company shall agree to in writing;
or
(ii) to the extent that the VFC Certificates
evidencing such Invested Amount are held by a
Person other than the Issuer, either (A) (1) the
Base Rate in effect from time to time during such
Funding Period or (2) the sum of (x) the Adjusted
Eurodollar Rate for such Funding Period and (y)
the Applicable Margin, as the Company shall select
in accordance with the provisions of
subsection 3C.4(a) or (B) such other rate as such
Person and the Company shall agree to in writing.
"Funding Period Settlement Date" shall mean (i)
with respect to any Funding Period, the last day of such
Funding Period and (ii) with respect to the Unallocated
Balance outstanding from time to time during any Accrual
Period, the Settlement Date immediately following the end
of such Accrual Period.
"Funding Period Settlement Statement" shall have
the meaning specified in Section 4C.2.
"Gai's Seller Group" shall mean the collective
reference to each of the following Sellers: Gai's and
▇▇▇▇▇▇▇▇▇▇.
"Increase" shall have the meaning specified in
subsection 2.4(a).
"Increase Amount" shall have the meaning specified
in subsection 2.4(a).
"Increase Date" shall have the meaning specified
in subsection 2.4(a).
"Initial Invested Amount" shall mean
$3,500,380.32.
"Initial Subordinated Certificate Amount" shall
mean the Subordinated Certificate Amount on the Issuance
Date.
"Insurance Agreement" shall mean the Insurance and
Reimbursement Agreement dated as of the date hereof among
the Enhancement Provider, the Company, the Master Servicer
and the Trustee, as the same may be amended, supplemented
or otherwise modified from time to time.
"Invested Amount" shall mean, with respect to any
date of determination, an amount equal to the Initial
Invested Amount, plus the amount of all Increases effected
pursuant to Section 2.4 made on or prior to such day,
minus the amount of all distributions to the VFC
Certificateholders in reduction of the Invested Amount
pursuant to Section 2.5 or Section 3C.6 on or prior to
such day.
"Invested Percentage" shall mean, with respect to
any Business Day (i) during the Revolving Period, the
percentage equivalent of a fraction, the numerator of
which is the Allocated Receivables Amount as of the end of
the preceding Business Day and the denominator of which is
the Aggregate Receivables Amount as of the end of the
preceding Business Day and (ii) during the Amortization
Period, the percentage equivalent of a fraction, the
numerator of which is the Allocated Receivables Amount as
of the end of the last Business Day of the Revolving
Period and the denominator of which is the greater of (A)
the Aggregate Receivables Amount as of the end of the
preceding Business Day and (B) the sum of the numerators
used to calculate the Invested Percentage for all Series
of Investor Certificates outstanding on the Business Day
for which such percentage is determined.
"Issuance Date" shall mean January 31, 1997.
"Issuer" shall mean Triple-A One Funding
Corporation, a Delaware corporation.
"Issuer Administrative Fees" shall have the
meaning specified in subsection 2.7(f).
"Issuer Administrative Fee Rate" shall mean 0.05%
per annum.
"Issuer CP" shall mean commercial paper notes of
the Issuer issued to fund the Issuer's investment in the
VFC Certificates.
"Issuer Usage Fees" shall have the meaning
specified in subsection 2.7(b).
"Issuer Usage Fee Rate" shall mean 0.16% per
annum.
"LIBO Business Day" shall mean a day, other than a
Saturday or Sunday, on which banks are not required or
authorized to close in New York or London and on which
dealings are carried on in the London interbank market.
"Liquidity Agent" shall mean at any time, the
financial institution then serving as the "Liquidity
Agent" under and as defined in the Liquidity Agreement.
"Liquidity Agreement" shall mean that certain
Liquidity Agreement dated as of January 31, 1997, among
the Issuer, the financial institutions party thereto from
time to time as "Liquidity Banks", Kredietbank N.V., as
agent for the Liquidity Banks, as amended, restated or
otherwise modified from time to time.
"Liquidity Bank" shall have the meaning specified
in the Liquidity Agreement.
"Liquidity Commitment" shall have the meaning with
reference to any Liquidity Bank specified in the Liquidity
Agreement; provided, however, that the aggregate Liquidity
Commitments at any time shall not exceed the Issuer's
Commitment at such time.
"Liquidity Interest Period" shall have the meaning
specified in the Liquidity Agreement.
"Liquidity Nonrenewal Date" shall mean the date on
which the aggregate Liquidity Commitments under the
Liquidity Agreement are less than the Issuer's Commitment.
"Liquidity Non-Usage Fee Rate" shall have the
meaning specified in the Liquidity Agreement.
"Liquidity Non-Usage Fees" shall have the meaning
specified in subsection 2.7(d).
"Liquidity Rate" shall mean with respect to any
loan (or loans) made to the Issuer under the Liquidity
Agreement to fund its investment in any portion of the
Invested Amount of the VFC Certificates held by it for any
Funding Period, the rate equivalent to the rate per annum
(or if more than one rate, the weighted average of the
rates per annum) at which interest accrues under the
Liquidity Agreement on the principal balance of such
loans.
"Liquidity Rate Disruption Event" shall mean
either (i) receipt by the Issuer of notice from the
Liquidity Agent that the introduction of, or any change
in, or in the interpretation of, any law or regulation
makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for
any Liquidity Bank or its applicable lending office to
perform its obligations under the Liquidity Agreement to
make "Eurodollar Rate Advances" or to fund or maintain
"Eurodollar Rate Advances" under and as defined in the
Liquidity Agreement or (ii) a determination by the Issuer
that as a result of any Decrease or otherwise, the
aggregate Invested Amount allocated to VFC Certificates
held by the Issuer and to a Funding Period with respect to
which the Funding Period Rate is a Liquidity Rate
determined in whole or in part by reference to the
"Eurodollar Rate," as defined in the Liquidity Agreement,
less than $1,000,000.
"Liquidity Usage Fees" shall have the meaning
specified in subsection 2.7(e).
"Liquidity Usage Fee Rate" shall have the meaning
specified in the Liquidity Agreement.
"Loss Horizon Period" with respect to each Seller
or each Seller Group, as the case may be, shall mean the
number of Settlement Periods set forth opposite such
Seller or such Seller Group (and, with respect to any
Seller or Seller Group added after the Issuance Date, the
"Loss Horizon Period" set forth on the Additional Seller
Supplement for such Seller or such Seller Group):
Seller Loss Horizon Period
Gai's Seller Group 3 Settlement Periods
H&M 3 Settlement Periods
▇▇▇▇ Seller Group 3 Settlement Periods
Mother's 4 Settlement Periods
SFSB 3 Settlement Periods
Stella Seller Group 3 Settlement Periods
▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
"Loss Reserve Ratio" with respect to each Seller
or each Seller Group, as the case may be, shall mean, as
of any Settlement Date and continuing to, but excluding,
the next Settlement Date, an amount (expressed as a
percentage) which is calculated as follows:
LRR = [(a * b)/c] * d
where:
LRR = Loss Reserve Ratio;
a = the sum of the aggregate Principal
Amount of Receivables originated by such
Seller or such Seller Group during the most
recent Loss Horizon Period with respect to
such Seller or such Seller Group preceding
such date;
b = the greater of (i) the highest
three-month rolling average of the Aged
Receivables Ratio with respect to such Seller
or such Seller Group that occurred during the
period of twelve consecutive Settlement
Periods preceding such earlier Settlement
Date and (ii) the Aged Receivables Ratio with
respect to such Seller or such Seller Group
as of the last day of the Settlement Period
preceding such earlier Settlement Date;
c = the difference between (i) the
aggregate outstanding Principal Amount of all
Receivables and (ii) the aggregate
outstanding Principal Amount of all
Delinquent Receivables and Defaulted
Receivables, in each case, originated by such
Seller or such Seller Group as of the last
day of the Settlement Period preceding such
earlier Settlement Date; and
d = the Ratings Multiple;
provided that if the sum of the Loss Reserve Ratio with
respect to a Seller or Seller Group plus the Dilution
Reserve Ratio with respect to such Seller or Seller Group
shall exceed 100%, the Loss Reserve Ratio with respect to
such Seller or Seller Group shall be the percentage which
is equal to 100% minus the Dilution Reserve Ratio with
respect to such Seller or Seller Group.
"Loss-to-Liquidation Ratio" shall mean, as of the
last Business Day of any Settlement Period and continuing
to, but excluding, the last day of the next Settlement
Period, a ratio (expressed as a percentage) equal to (i)
the difference, if any, between (A) the sum of (1) the
aggregate reduction in the outstanding Principal Amount of
all Receivables as a result of Charge-Offs and (2) the
aggregate Principal Amount of Receivables (other than
Charge-Offs) that became more than 90 days past due, in
each case, during the immediately preceding twelve
Settlement Periods and (B) the aggregate amount of
Recoveries during such twelve Settlement Periods over (ii)
the aggregate amount of Collections during such twelve
Settlement Periods; provided, however, to the extent that
2% or more of the Loss-to-Liquidation Ratio at the end of
any Settlement Period is attributable to Receivables owing
by any Obligor (including Affiliates of such Obligor),
then, upon the election of the Company (which election
shall be made separately in respect of each Settlement
Period), the Loss-to-Liquidation Ratio shall be
recalculated for such Settlement Period to exclude all
Receivables of any one such Obligor (including any
Affiliates of such Obligor) that would otherwise have been
included in such calculation.
"▇▇▇▇ Seller Group" shall mean the collective
reference to each of the following Sellers: ▇▇▇▇ and ▇▇▇▇
Delaware.
"Monthly Allocable Trustee's Fees" shall mean in
respect of any Settlement Period, the product of (i) one-
twelfth of the annual fees to be paid to the Trustee by
the Master Servicer pursuant to the first sentence of
Section 8.5 of the Agreement during the fiscal year in
which such Settlement Period falls and (ii) the daily
average Invested Percentage (expressed as a decimal)
during such Settlement Period.
"Net Worth" shall mean, at a particular date with
respect to the Company, all amounts which would, in
conformity with GAAP, be included under shareholder's
equity on a balance sheet of the Company.
"Participant" shall have the meaning specified in
subsection 8.7(b)
"Past Due Interest" shall mean with reference to
any Funding Period Settlement Date, any portion of the
Funding Period Interest originally due on a previous
Funding Period Settlement Date that remains outstanding on
the current Funding Period Settlement Date.
"Principal/Interest Surety Bond" shall mean the
surety bond issued by the Enhancement Provider in favor of
the Trustee pursuant to the Insurance Agreement.
"Program Costs" shall mean, for any Business Day,
the sum of (i) all expenses, indemnities and other amounts
then due and payable to the VFC Certificateholders under
the Agreement, this Supplement or any Certificate Purchase
Agreement (excluding, however, the principal of and
interest on the VFC Certificates, Issuer Usage Fees,
Liquidity Usage Fees, Liquidity Non-Usage Fees, Issuer
Administrative Fees, Alternate Fees and Surety Bond Fees)
and (ii) the product of (A) all unpaid fees and expenses
then due and payable to the Trustee or counsel to, and
independent auditors of, the Company (other than any
Monthly Allocable Trustee's Fees and fees and expenses
payable on or in connection with the closing of the
issuance of the VFC Certificates) and any corporate income
or franchise taxes then due and payable by the Company,
and (B) the Invested Percentage (expressed as a decimal)
on such Business Day.
"Rating Agency" shall mean the collective
reference to S&P and Moody's.
"Ratings Multiple" shall mean 2.00.
"Record Date" shall mean, with respect to any
Settlement Date, the last Business Day of the immediately
preceding Settlement Period.
"Required Reserves" shall mean, as of any date of
determination, an amount equal to the sum of (i) the
product of (A) the Adjusted Invested Amount on such day
and (B) the sum of (1) the Aggregate Loss Reserve Ratio,
(2) the Aggregate Dilution Reserve Ratio and (3) the
Carrying Cost Reserve Ratio, (ii) the product of (A) the
face amount of the Receivables in the Trust on such day,
(B) the Adjusted Invested Amount divided by the Aggregate
Adjusted Invested Amount and (C) the Servicing Reserve
Ratio, (iii) the amount of any Accrued Expense Amount in
respect of which sufficient Aggregate Daily Collections
have not been transferred to the Series 1997-1 Non-
Principal Collection Sub-account and (iv) the aggregate
amount of accrued but unpaid Monthly Allocable Trustee's
Fees.
"Required Reserves Ratio" shall mean, as of any
date of determination, the quotient of (i) Required
Reserves on such day and (ii) the Adjusted Invested Amount
on such day.
"Required Subordinated Percentage" shall mean, as
of any date of determination, the greater of (i) 15% and
(ii) the Required Reserves Ratio as of such day; provided,
however, that, during any period during which the
Revolving Credit Lenders (or the administrative agent
under the Revolving Credit Agreement on their behalf) have
given notice to the Revolving Credit Borrowers that the
Revolving Credit Lenders are refusing to lend to such
Borrowers under the Revolving Credit Agreement, then the
Enhancement Provider may, in its sole discretion, require
the Required Subordinated Percentage to equal the sum of
(A) the Required Subordinated Percentage computed as
described above and (B) 8%.
"Reuters Screen LIBO Page" shall mean the display
designated as page "LIBO" on the Reuters Monitor Money
Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London
interbank offered rates of major banks).
"Revolving Period" shall mean the period
commencing on the Issuance Date and terminating on the
earliest to occur of (i) the close of business on the date
on which an Early Amortization Event occurs, (ii) the date
on which the Commitments of all VFC Certificateholders
shall have terminated, (iii) the Scheduled Termination
Date and (iv) if the Issuer is the sole VFC
Certificateholder, the Liquidity Nonrenewal Date.
"Responsible Officer" shall mean, when used with
respect to the Trustee, any officer assigned to the Global
Trust Services Division (or any successor thereto),
including any Vice President, Assistant Vice President,
Trust Officer, any Assistant Secretary, any trust officer
or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above
designated officers and having direct responsibility for
the administration of this Agreement.
"Scheduled Termination Date" shall mean the
earlier of (a) November 20, 1999 and (b) the date on which
the commitments of the Revolving Credit Lenders under the
Revolving Credit Agreement shall have been terminated,
unless, at or prior to such date, SFC replaces the
Revolving Credit Agreement with a replacement agreement
providing SFC with working capital which in the reasonable
opinion of the Control Party would be sufficient to
operate SFC's businesses at such date.
"Seller Group" shall mean any of Gai's Seller
Group ▇▇▇▇ Seller Group or Stella Seller Group, as the
context requires, provided that the Company may, with the
consent of the Control Party, from time to time add one or
more new Seller Groups, or change the Sellers in any
existing Seller Group, so long as, concurrently with such
addition or change, the Company provides new or changed
definitions for the Aged Receivables Denominator, the Aged
Receivables Numerator, the Dilution Horizon Factor and the
Loss Horizon Period with respect to such added or changed
Seller Groups (and such definitions will be deemed to be
automatically amended to the extent of such additions or
changes).
"Series Accounts" shall have the meaning specified
in subsection 3C.2(a).
"Series 1994-1 Supplement" shall mean the Series
1994-1 Supplement, dated as of November 16, 1994, among
the Company, the Master Servicer and the Trustee, as
amended, supplemented or otherwise modified from time to
time.
"Series 1997-1" shall mean the Series 1997-1, the
Principal Terms of which are set forth in this Supplement.
"Series 1997-1 Accrued Interest Sub-subaccount"
shall have the meaning specified in subsection 3C.2(a).
"Series 1997-1 Amortization Principal Payment"
shall have the meaning specified in Section 3C.5.
"Series 1997-1 Certificateholders' Interest" shall
have the meaning specified in subsection 2.2(a).
"Series 1997-1 Collection Subaccount" shall have
the meaning specified in subsection 3C.2(a).
"Series 1997-1 Monthly Servicing Fee" shall have
the meaning specified in Section 6.1.
"Series 1997-1 Non-Principal Collection Sub-
subaccount" shall have the meaning specified in
subsection 3C.2(a).
"Series 1997-1 Principal Collection Sub-
subaccount" shall have the meaning specified in
subsection 3C.2(a).
"Series Termination Date" shall mean one Business
Day after the second Settlement Date following the Surety
Draw Date, provided that, so long as no Surety Default
shall have occurred and is outstanding on such date, the
Series Termination Date shall be any Business Day
occurring after such Settlement Date and prior to the
Trust Termination Date, as selected by the Enhancement
Provider upon ten days' prior written notice to the
Trustee.
"Servicing Reserve Ratio" shall mean, as of any
Settlement Date and continuing to, but excluding, the next
Settlement Date, an amount (expressed as a percentage)
equal to (a) the product of (i) 1.00% and (ii) the greater
of (A) 2.00 times Days Sales Outstanding as of such day
and (B) 60 divided by (b) 360.
"Stella Seller Group" shall mean the collective
reference to each of the following Sellers: Stella and
Stella East.
"Subordinated Certificate" shall mean the
Subordinated Company Certificate, Series 1997-1, executed
by the Company and authenticated by the Trustee,
substantially in the form of Exhibit B.
"Subordinated Certificate Amount" shall mean, for
any date of determination, an amount equal to the
Allocated Receivables Amount on such date minus the
Adjusted Invested Amount on such date.
"Subordinated Certificate Increase Amount" shall
have the meaning specified in subsection 2.4(a).
"Subordinated Certificate Reduction Amount" shall
have the meaning specified in subsection 2.5(d).
"Subordinated Interest" shall have the meaning
specified in subsection 2.2(b).
"Surety Bond Fees" shall have the meaning
specified in the Insurance Agreement.
"Surety Default" shall mean any of the following
events (notice of each of which (other than the event in
clause (i) below) shall be promptly given by the
Enhancement Provider to the Trustee, the Master Servicer
and the Company):
(i) the Enhancement Provider fails to pay
when, as and in the amounts required, any amount
payable under the Principal/Interest Surety Bond
and such failure continues unremedied for two
Business Days;
(ii) default is made by the Enhancement
Provider in the payment when due of any amount due
under any other surety bond or financial guarantee
insurance policy issued by the Enhancement
Provider in support of any obligation rated by
S&P, Moody's or any other nationally or
internationally recognized rating agency and such
default shall continue unremedied for ten calendar
days; provided that, for the purposes of this
clause (ii), default shall not include any failure
to make payment under a surety bond or other
financial guarantee insurance policy on the basis
that all conditions to and defenses against
payment have not been duly satisfied or waived and
with respect to which the obligation to make
payment is being contested in good faith by
appropriate proceedings which shall not be limited
to legal proceedings;
(iii) (A) the Superintendent of Insurance of
the State of New York (or any Person succeeding to
the duties of such Superintendent) shall apply for
an order (1) pursuant to Section 7402 of the New
York Insurance Law (or any successor provisions
thereto), directing him to rehabilitate the
Enhancement Provider, (2) pursuant to Section 7404
of the New York Insurance Law (or any successor
provision thereto), directing him to liquidate the
business of the Enhancement Provider or (3)
pursuant to Section 7416 of the New York Insurance
Law (or any successor provision thereto),
dissolving the corporate existence of the
Enhancement Provider and such application shall
not be dismissed or withdrawn during a period of
60 consecutive days or a court of competent
jurisdiction enters an order granting the relief
sought; (B) the above-referenced Superintendent of
Insurance (or any successor) shall determine that
the Enhancement Provider is insolvent within the
meaning of Section 1309 of the New York Insurance
Law; (C) the Enhancement Provider shall commence a
voluntary case or other proceeding seeking
rehabilitation, liquidation, reorganization or
other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the
appointment or a trustee, receiver, liquidator,
custodian or other similar official of it or any
substantial part of its property, or shall consent
to any such relief or to the appointment of or
taking possession by any such official in an
involuntary case or other proceeding commenced
against it, or shall make a general assignment for
the benefit of creditors; or (D) an involuntary
case or other proceeding shall be commenced
against the Enhancement Provider seeking
rehabilitation, liquidation, reorganization or
other relief with respect to it or its debts under
a bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial
part of its property, such case or proceeding is
not dismissed or otherwise terminated within a
period of 60 consecutive days or a court of
competent jurisdiction enters an order granting
the relief sought in such case or proceeding; or
(iv) a court of competent jurisdiction shall
have determined in a final order that the
Principal/Interest Surety Bond is no longer in
full force and effect.
"Surety Draw Date" shall mean, the date which is
180 days after the expected end of the Amortization
Period, but in any event no later than the date which is
270 days after the commencement of the Amortization
Period. The "expected end of the Amortization Period"
shall be the date, following the commencement of the
Amortization Period, which is 1.5 times Days Sales
Outstanding (as of such commencement date).
"Surety Purchase Demand" shall have the meaning
specified in subsection 3C.7(b)(iii).
"Target Receivables Amount" shall mean, on any
date of determination, the product of (i) a fraction
(expressed as a decimal) the numerator of which is one and
the denominator of which is one minus the Required
Subordinated Percentage and (ii) the Adjusted Invested
Amount on such day.
"Transferee" shall have the meaning specified in
subsection 8.7(d).
"Trust Accounts" shall have the meaning specified
in subsection 3C.2(a).
"Unallocated Balance" shall have the meaning
specified in subsection 3C.4(c).
"VFC Certificate" shall mean a VFC Certificate,
Series 1997-1, executed by the Company and authenticated
by or on behalf of the Trustee, substantially in the form
of Exhibit A.
"VFC Certificateholder" shall mean each holder of
a VFC Certificate.
"VFC Certificateholder Percentage" shall mean, as
to any VFC Certificateholder and as of any date, the
percentage equivalent of a fraction, the numerator of
which is the aggregate Invested Amount allocated to all
VFC Certificates held by such VFC Certificateholder as of
such date and the denominator of which is the aggregate
Invested Amount as of such date.
"Waiver Percentage" shall mean 50%.
a) In the event that any term or provision
contained herein shall conflict with or be inconsistent with
any term or provision contained in the Agreement, the terms
and provisions of this Supplement shall govern. All
capitalized terms not otherwise defined herein are defined
in the Agreement. All Article, Section or
subsection references herein shall mean Article, Section or
subsections of the Supplement, except as otherwise provided
herein. Unless otherwise stated herein, as the context
otherwise requires or if such term is otherwise defined in
the Agreement, each capitalized term used or defined herein
shall relate only to the Series 1997-1 and no other Series
of Investor Certificates issued by the Trust.
II. ARTICLE
DESIGNATION OF CERTIFICATES; PURCHASE AND SALE
OF THE VFC CERTIFICATES
A. SECTION 2.1 Designation. The Certificates
created and authorized pursuant to the Agreement and this
Supplement shall be divided into two classes, which shall be
designated respectively as (i) the "VFC Certificates,
Series 1997-1" and (ii) the "Subordinated Company
Certificate, Series 1997-1". The VFC Certificates shall be
issued in the form of Definitive Certificates, to be
delivered to the VFC Certificateholder(s) in accordance with
Section 2.3.
a) SECTION 2.2 The Series 1997-1 Certificates.
The VFC Certificates shall represent fractional undivided
interests in the Trust, consisting of the right to receive
the Invested Percentage (expressed as a decimal) of (i)
Collections received with respect to the Receivables and
(ii) all other funds on deposit in the Collection Account
and in any subaccount thereof (the "Series 1997-1
Certificateholders' Interest").
a) The Subordinated Certificate shall
represent a fractional undivided interest in the Trust,
consisting of the right to receive Collections with respect
to the Receivables allocated to the Series 1997-1
Certificateholders' Interest and not required to be
distributed to or for the benefit of the VFC
Certificateholders (the "Subordinated Interest"). The
Exchangeable Company Certificate and any other Series of
Investor Certificates outstanding shall represent the
ownership interest in the remainder of the Trust not
allocated pursuant hereto to the Series 1997-1
Certificateholders' Interest or the Subordinated Interest.
c) The VFC Certificates and the
Subordinated Certificate shall be issued in registered form
in substantially the forms of Exhibits A and B,
respectively, and shall, upon issue, be executed and
delivered by the Company to the Trustee for authentication
and redelivery as provided in Section 2.3 hereof and Section
5.2 of the Agreement.
A. SECTION 2.3 Delivery. On the Issuance Date,
the Company shall sign on behalf of the Trust and shall
direct in writing pursuant to Section 5.2 of the Agreement
the Trustee to duly authenticate, and the Trustee, upon
receiving such direction, shall so authenticate (i) the VFC
Certificates in such names and such denominations and
deliver such VFC Certificates to each VFC Certificateholder
in accordance with such written directions and (ii) a
Subordinated Certificate and deliver such Subordinated
Certificate to the Company as holder thereof in accordance
with such written directions. The VFC Certificates shall be
issued in minimum denominations of $1,000,000 and in
integral multiples of $100,000 in excess thereof. The
Trustee shall ▇▇▇▇ on its books the actual Invested Amount
allocated among the VFC Certificateholders and Subordinated
Certificate Amount outstanding on any date of determination,
which, absent manifest error, shall constitute prima facie
evidence of the outstanding Invested Amount allocated among
the VFC Certificateholders and Subordinated Certificate
Amount from time to time.
a) SECTION 2.4 Procedure for Increasing the
Invested Amount. Subject to the terms and conditions of
subsection 2.4(b), on any Business Day during the Revolving
Period, the Invested Amount may be increased (an "Increase")
upon the request of the Master Servicer or the Company (each
date on which an increase in the Invested Amount occurs
hereunder being herein referred to as the "Increase Date"
applicable to such Increase) up to an amount equal to the
Certificate Maximum on such day; provided, that the Master
Servicer or the Company, as the case may be, shall have
given the Trustee and each VFC Certificateholder requested
to participate in such Increase irrevocable written notice
(effective upon receipt), substantially in the form of
Exhibit F hereto, of such request no later than the
applicable times specified in Section 3C.4 with respect to
the Funding Period or Periods to apply to such Increase.
Such notice shall state (w) the Increase Date, (x) the
proposed amount of such Increase (the "Increase Amount"),
(y) the VFC Certificateholders designated to participate in
such Increase and (z) the amount of such Increase to be
allocated to each such participating VFC Certificateholder.
Upon satisfaction of the conditions precedent set forth in
subsection 2.4(b) of this Supplement, together with, in the
case of any participating VFC Certificateholder, any
additional conditions specified in the applicable
Certificate Purchase Agreement, each participating VFC
Certificateholder shall remit its share of the applicable
Increase to the Trustee for deposit in the Series 1997-1
Collection Subaccount in immediately available funds by no
later than 2:00 p.m., New York City time, on the applicable
Increase Date, for remittance to the Company in accordance
with the written payment instructions of the Company; it
being understood, however, that the failure to satisfy any
condition precedent applicable with respect to a particular
participating VFC Certificateholder under the applicable
Certificate Purchase Agreement, will not relieve any other
participating VFC Certificateholder from its obligation to
fund its share of any Increase on the applicable Increase
Date. No VFC Certificateholder shall be obligated to fund
any Increase, unless concurrently with any such Increase in
the Invested Amount, the Subordinated Certificate Amount
shall be increased by an amount (the "Subordinated
Certificate Increase Amount") such that after giving effect
to such increase, the sum of the Adjusted Invested Amount
plus the Subordinated Certificate Amount equals the Target
Receivables Amount.
b) No VFC Certificateholder shall be required
to fund its portion of any Increase Amount on any Increase
Date hereunder unless:
(i) the related Increase Amount is equal to
$1,000,000 or an integral multiple of $500,000 in excess
thereof;
(ii) after giving effect to the Increase
Amount, (A) the Invested Amount would not exceed the
Certificate Maximum, (B) the portion of the aggregate
Invested Amount allocated to the VFC Certificates of each
VFC Certificateholder participating in such Increase would
not exceed such VFC Certificateholder's Commitment, and (C)
the Allocated Receivables Amount would equal or exceed the
Target Receivables Amount on such Increase Date; and
(iii) no Early Amortization Event or Potential
Early Amortization Event shall have occurred and be
continuing or shall result from such Increase.
By accepting any Increase Amount, the Company
shall be deemed to have certified that as of such Increase
Date, (x) no Early Amortization Event or Potential Early
Amortization Event has occurred and is continuing and
(y) all of the representations and warranties of the
Company, the Sellers and the Master Servicer set forth in
the Agreement, this Supplement, the Receivables Sale
Agreement, the Insurance Agreement and each Certificate
Purchase Agreement are true and correct as though made on
and as of such Increase Date.
a) SECTION 2.5 Procedure for Decreasing the
Invested Amount. On any Funding Period Settlement Date
during the Revolving Period, upon the written request of the
Master Servicer or the Company, the Invested Amount may be
reduced (a "Decrease") by the pro rata distribution to the
applicable VFC Certificateholders in reduction of the
Invested Amount allocated to such Funding Period of some or
all of the funds on deposit in the Series 1997-1 Principal
Collection Sub-subaccount on such day; provided that (i) the
Master Servicer or the Company shall have given the Trustee,
the Enhancement Provider and each applicable VFC
Certificateholder irrevocable written notice (effective upon
receipt) thereof, prior to 11:00 a.m., New York City time,
on the Business Day preceding the date of such Decrease
(unless the Funding Period Rate with respect to such Funding
Period is determined by reference to the "Eurodollar Rate,"
as defined in the Liquidity Agreement, in which case such
notice must be received prior to 11:00 a.m., New York City
time, on the third Business Day preceding the date of such
Decrease), which notice shall state the amount of such
Decrease and how such amount is to be allocated among the
VFC Certificateholders holding VFC Certificates the Invested
Amount of which has been allocated to such Funding Period;
and (ii) the amount of such Decrease shall not exceed either
the aggregate Invested Amount allocated to such Funding
Period or, with respect to any VFC Certificateholder, the
aggregate portion of the Invested Amount allocated to VFC
Certificates held by such VFC Certificateholder and to such
Funding Period.
b) On any Business Day during the Revolving
Period, upon the written request of the Master Servicer or
the Company on behalf of the Trust, the Invested Amount may
be reduced by the pro rata distribution to the VFC
Certificateholders in accordance with their VFC
Certificateholder Percentages of some or all of the funds on
deposit in the Series 1997-1 Principal Collection Sub-
subaccount on such day; provided, however, that (i) the
Master Servicer or the Company shall have given the Trustee,
the Enhancement Provider and each VFC Certificateholder
irrevocable written notice (effective upon receipt), prior
to 11:00 a.m., New York City time, on the Business Day
preceding the date of such Decrease and which notice shall
state the amount of such Decrease; (ii) the minimum amount
of such Decrease shall be $100,000; (iii) no payment in
reduction of the Invested Amount allocated to any VFC
Certificate shall be made in connection with such Decrease
unless, concurrently with such payment, the Master Servicer
or the Company shall have paid to the VFC Certificateholders
all amounts due and payable pursuant to Section 2.8, if any,
and (iv) the Master Servicer shall have specified the amount
by which the Invested Amount allocated to each VFC
Certificate shall be reduced.
c) If on any day the Commitment of any VFC
Certificateholder is reduced or terminated (other than in
connection with the termination of the Revolving Period) and
after giving effect to such reduction or termination, the
aggregate portion of the Invested Amount allocated to the
VFC Certificates held by such VFC Certificateholder exceeds
the amount of such VFC Certificateholder's Commitment, then
the Company shall, on the next Funding Period Settlement
Date with respect to any portion of the Invested Amount
allocated to the VFC Certificates held by such VFC
Certificateholder, and on each such Funding Period
Settlement Date thereafter until the aggregate portion of
the Invested Amount allocated to the VFC Certificates held
by such VFC Certificateholder is equal to or less than the
amount of such VFC Certificateholder's Commitment, effect a
mandatory Decrease of the Invested Amount by distribution to
the applicable VFC Certificateholder of an amount equal to
the least of (i) the portion of the Invested Amount
allocated to the Funding Period then ending that is also
allocated to the VFC Certificates held by such VFC
Certificateholder, (ii) the excess of the aggregate portion
of the Invested Amount allocated to the VFC Certificates
held by such VFC Certificateholder over the amount of such
VFC Certificateholder's Commitment and (iii) the funds on
deposit in the Series 1997-1 Principal Collection Sub-
subaccount on such day. The Company or the Master Servicer
shall give the Trustee, the Enhancement Provider and the
applicable VFC Certificateholder irrevocable written notice
of such Decrease (effective upon receipt), prior to 11:00
a.m., New York City time, on the Business Day preceding the
date of such Decrease, which notice shall state the amount
of such Decrease.
d) Simultaneously with any such Decrease
during the Revolving Period, the Subordinated Certificate
Amount shall be reduced by an amount (the "Subordinated
Certificate Reduction Amount") such that after giving effect
to such Decrease, the Allocated Receivables Amount is not
less than the Targeted Receivables Amount. During the
Revolving Period, after the distribution described in
subsection (a), (b) or (c) above, as applicable, has been
made, and the Subordinated Certificate Amount shall have
been reduced by the Subordinated Certificate Reduction
Amount, a distribution may be made to the holder of the
Subordinated Certificate out of remaining funds on deposit
in the Series 1997-1 Principal Collection Sub-subaccount in
an amount equal to the lesser of (x) the Subordinated
Certificate Reduction Amount and (y) the amount of such
remaining funds on deposit in the Series 1997-1 Principal
Collection Sub-subaccount.
e) Any reduction in the Invested Amount on any
Business Day (except for that portion of a reduction on a
Funding Period Settlement Date in an amount not exceeding
the portion of the Invested Amount allocated by the Trustee
(based upon the instructions of the Master Servicer) to the
applicable Funding Period) shall be allocated by each
applicable VFC Certificateholder (with notice of such
allocation to the Master Servicer and the Trustee) among
outstanding Funding Periods so as to minimize amounts
payable pursuant to Section 2.8, if any, so long as such
allocation is not, in the reasonable judgment of such VFC
Certificateholder, otherwise disadvantageous to such VFC
Certificateholder.
A. SECTION 2.6 Commitment Certification. At such
time as any VFC Certificateholder shall extend, increase,
terminate or reduce its Commitment, whether pursuant to any
applicable Certificate Purchase Agreement or any assignment
thereunder, such VFC Certificateholder and the Company shall
certify to the Trustee the amount of such VFC
Certificateholder's Commitment by delivery to the Trustee of
a certificate in substantially the form of Exhibit G hereto
(a "Commitment Certification"); provided, however, that in
the case of any voluntary reduction or termination by the
Company of any Commitment consistent with the terms of the
applicable Certificate Purchase Agreement, such Commitment
Certification need only be signed by the Company. The
Trustee shall be entitled to rely on such Commitment
Certification for all purposes hereunder until such time as
it shall have received from the Company and the applicable
VFC Certificateholder a revised Commitment Certification.
The Trustee shall maintain at its address referred to in
Section 8.6 a copy of each Commitment Certification
delivered to it.
a) SECTION 2.7 Interest; Certain Fees. Interest
shall be payable on the VFC Certificates on each Funding
Period Settlement Date pursuant to subsection 3C.6(a).
b) So long as the Issuer is a VFC
Certificateholder, a facility usage fee with respect to each
Accrual Period or portion thereof (the "Issuer Usage Fees")
shall be payable in arrears on the related Settlement Date
for the sole account of the Issuer pursuant to subsection
3C.6(b). The Issuer Usage Fees payable on each Settlement
Date shall be calculated by the Issuer (and notified by the
Issuer to the Master Servicer on or before the corresponding
Determination Date) and shall equal the product of (i) the
Issuer Usage Fee Rate, (ii) the average daily sum of (A) the
Face Amount of Issuer CP during the preceding Accrual Period
and (B) the average daily principal balance of loans
outstanding under the Liquidity Agreement and (iii) the
actual number of days in such Accrual Period divided by 360.
c) So long as the Issuer is a VFC
Certificateholder, a liquidity usage fee with respect to
each Accrual Period or portion thereof (the "Liquidity Usage
Fees") shall be payable in arrears on the related Settlement
Date for the sole account of the Issuer pursuant to
subsection 3C.6(b). The Liquidity Usage Fees payable on
each Settlement Date shall be calculated by the Issuer (and
notified by the Issuer to the Master Servicer on or before
the corresponding Determination Date) and shall be equal to
the product of (i) the Liquidity Usage Fee Rate, (ii) the
average daily Face Amount of Issuer CP during the preceding
Accrual Period and (iii) the actual number of days in such
Accrual Period divided by 360.
d) So long as the Issuer is a VFC
Certificateholder, a liquidity non-usage fee with respect to
each Accrual Period or portion thereof (the "Liquidity Non-
Usage Fees") shall be payable in arrears on the related
Settlement Date for the sole account of Issuer pursuant to
subsection 3C.6(b). The Liquidity Non-Usage Fees payable on
each Settlement Date shall be calculated by the Issuer (and
notified by the Issuer to the Master Servicer on or before
the corresponding Determination Date) and shall be equal to
the product of (i) the Liquidity Non-Usage Fee Rate and
(ii) the average daily excess during such Accrual Period of
(A) the aggregate undrawn Liquidity Commitments over (B) the
Face Amount of Issuer CP and (iii) the actual number of days
in such Accrual Period divided by 360.
e) With respect to each VFC
Certificateholder other than the Issuer, such fees as shall
be specified in the applicable Certificate Purchase
Agreement ("Alternate Fees") shall be payable as specified
in such Receivables Purchase Agreement and notified to the
Trustee and the Enhancement Provider. The Alternate Fees
payable hereunder shall be calculated by the Master Servicer
and reported to the Trustee and the Enhancement Provider.
f) So long as the Issuer is a VFC
Certificateholder, an administrative fee with respect to
each Accrual Period or portion thereof (the "Issuer
Administrative Fees") shall be payable in arrears on the
related Settlement Date for the sole account of the Issuer
pursuant to subsection 3C.6(b). The Issuer Administrative
Fees payable on each Settlement Date shall be calculated by
the Master Servicer and shall be equal to the product of (i)
the Issuer Administrative Fee Rate, (ii) the average daily
Commitment of the Issuer, whether used or unused, during
such Accrual Period and (iii) the actual number of days in
such Accrual Period divided by 360.
g) To the extent the Trustee determines (based
on the information set forth in the applicable report
prepared by the Master Servicer) that funds on deposit in
the Series 1997-1 Non-Principal Collection Sub-subaccount at
any Settlement Date are insufficient to pay any of the fees
described in the foregoing subsections (b), (c), (d), (e)
and (f), the Trustee shall so notify the Company and the
Company shall immediately pay the Trustee the amount of any
such deficiency; provided, however, that any such deficiency
shall be payable solely out of Available Funds, shall be non-
recourse other than with respect to Available Funds, and
shall not constitute a claim against the Company to the
extent that insufficient Available Funds exist to make such
payment.
h) Calculations of interest (at per annum
rates other than the Base Rate) and fees under this
Supplement shall be made on the basis of actual days elapsed
in the applicable period and a 360-day year. Calculations
of interest at the Base Rate under this Supplement shall be
made on the basis of actual days elapsed in the applicable
period and a 365-day year. Each determination of the
Adjusted Eurodollar Rate, the Funding Period Rate, the
Issuer Usage Fees, the Liquidity Usage Fees, the Issuer
Administrative Fees and the Liquidity Non-Usage Fees by the
Issuer shall be conclusive and binding upon each of the
parties hereto in the absence of manifest error.
A. SECTION 2.8 Interest Rate Indemnity. The
Company agrees to indemnify the Enhancement Provider and
each VFC Certificateholder and to hold the Enhancement
Provider and each VFC Certificateholder harmless from any
loss or expense which the Enhancement Provider or such VFC
Certificateholder may sustain or incur as a consequence of
(a) default by the Company in making an Increase after the
Company has given irrevocable notice requesting the same in
accordance with the provisions of this Supplement, (b)
default by the Company in making any prepayment in
connection with a Decrease after the Company has given
irrevocable notice thereof in accordance with the provisions
of Section 2.5 or (c) the making of a prepayment, whether in
connection with a Decrease or otherwise, in an amount in
excess of the portion of the Invested Amount allocated to a
Funding Period ending on the date of such prepayment. Such
indemnification shall include, without limitation, any loss
(including those of anticipated profits, net of anticipated
profits in respect of the reemployment of such funds in the
manner determined by such VFC Certificateholder), cost or
expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any VFC
Certificateholder to fund or maintain the applicable portion
of the Invested Amount or such requested Increase; provided,
however, that any payments made by the Company pursuant to
this subsection shall be made solely from Available Funds,
shall be non-recourse other than with respect to Available
Funds, and shall not constitute a claim against the Company
to the extent that insufficient Available Funds exist to
make such payment. This covenant shall survive the
termination of this Supplement and the payment of all
amounts payable hereunder. A certificate as to any
additional amounts payable pursuant to the foregoing
sentence submitted by any VFC Certificateholder to the
Company and the Master Servicer shall be conclusive absent
manifest error.
III. ARTICLE
ARTICLE III OF THE AGREEMENT
Any provision of Article III of the Agreement
which distributes Collections to the Company on the basis of
the Company's Percentage shall continue to apply
irrespective of the issuance of the VFC Certificates.
Section 3.1 of the Agreement shall be read in its entirety
as provided in the Agreement. Article III of the Agreement
(except for Section 3.1 thereof and any portion thereof
relating to another Series) shall read in its entirety as
follows and shall be exclusively applicable to the VFC
Certificates and the Subordinated Certificate:
SECTION 3C.2. Establishment of Series Accounts.
(a) The Trustee shall cause to be established and
maintained in the name of the Trustee, on behalf of the
Trust, (i) for the benefit of the VFC Certificateholders and
for the benefit, subject to the prior interest of the VFC
Certificateholders, of the holder of the Subordinated
Certificate, a subaccount of the Collection Account (the
"Series 1997-1 Collection Subaccount"), which subaccount is
the Series Collection Subaccount with respect to Series
1997-1, bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the VFC
Certificateholders and for the benefit, subject to the prior
interest of the VFC Certificateholders, of the holder of the
Subordinated Certificate; (ii) for the benefit of the VFC
Certificateholders and for the benefit, subject to the prior
interest of the VFC Certificateholders, of the holder of the
Subordinated Certificate, two subaccounts of the Series
1997-1 Collection Subaccount: the Series 1997-1 Principal
Collection Sub-subaccount and the Series 1997-1
Non-Principal Collection Sub-subaccount (respectively, the
"Series 1997-1 Principal Collection Sub-subaccount" and the
"Series 1997-1 Non-Principal Collection Sub-subaccount"),
each bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the VFC
Certificateholders and for the benefit, subject to the prior
interest of the VFC Certificateholders, of the holder of the
Subordinated Certificate; and (iii) for the benefit of the
VFC Certificateholders, a subaccount of the Series 1997-1
Non-Principal Collection Sub-subaccount (the "Series 1997-1
Accrued Interest Sub-subaccount"; all accounts established
pursuant to this subsection 3C.2(a) being referred to herein
collectively as the "Series Accounts" and the accounts
listed on Schedule 1 being referred to herein, collectively
as the "Trust Accounts"). The Trustee shall possess all
right, title and interest in all funds from time to time on
deposit in, and all Eligible Investments credited to, the
Series Accounts and Trust Accounts and in all proceeds
thereof. The Trust Accounts and the Series Accounts shall
be under the sole dominion and control of the Trustee for,
in the case of the Series Accounts, the exclusive benefit of
the VFC Certificateholders and to the extent applicable,
subject to the prior interest of the VFC Certificateholders,
to the holder of the Subordinated Certificate.
(b) All Eligible Investments in the Series
Accounts shall be held by the Trustee for the exclusive
benefit of the VFC Certificateholders and, subject to the
prior interest of the VFC Certificateholders, of the holder
of the Subordinated Certificate; provided, however, that
funds on deposit in a Series Account may, at the direction
of the Master Servicer, be invested together with funds held
in sub-subaccounts of the Collection Account that are not
Series Accounts. After giving effect to any distribution to
the Company pursuant to subsection 3C.3(c), amounts on
deposit and available for investment in the Series 1997-1
Principal Collection Sub-subaccount shall be invested by the
Trustee at the written direction of the Company in Eligible
Investments that mature, or that are payable or redeemable
upon demand of the holder thereof, (i) in the case of any
such investment made during the Revolving Period, on or
prior to the next Business Day and (ii) in the case of any
such investment made during the Amortization Period, on or
prior to the next subsequent Funding Period Determination
Date. Amounts on deposit and available for investment in
the Series 1997-1 Non-Principal Collection Sub-subaccount
and the Series 1997-1 Accrued Interest Sub-subaccount shall
be invested by the Trustee at the written direction of the
Company in Eligible Investments that mature, or that are
payable or redeemable upon demand of the holder thereof, on
or prior to the next subsequent Determination Date or
Funding Period Determination Date, as the case may be. As
of the Determination Date or Funding Period Determination
Date, as the case may be, all interest and other investment
earnings (net of losses and investment expenses) on funds
deposited in the Series 1997-1 Accrued Interest Sub-
subaccount shall be deposited in the Series 1997-1 Non-
Principal Collection Sub-subaccount. All interest and
investment earnings (net of losses and investment expenses)
on funds deposited in the Series 1997-1 Principal Collection
Sub-subaccount shall be deposited in the Series 1997-1 Non-
Principal Collection Sub-subaccount. The Trustee shall not
in any way be held liable by reason of any insufficiency in
any Account held by the Trustee resulting from any
investment loss on any Eligible Investment included therein
(except to the extent that the Trustee is the obligor and
has defaulted thereon).
a) SECTION 3C.3. Daily Allocations. The
portion of Aggregate Daily Collections allocated to the VFC
Certificateholders pursuant to Article III of the Agreement
shall be allocated and distributed as set forth in this
Article III.
b) (i) On each Business Day, an amount equal to
the Accrued Expense Amount for such day shall be transferred
from the Series 1997-1 Collection Subaccount to the Series
1997-1 Non-Principal Collection Sub-subaccount.
(ii) If, on any Business Day during the Revolving
Period, the Enhancement Provider has not been reimbursed
pursuant to the Insurance Agreement for any interest
payments made under the Principal/Interest Surety Bond, an
amount equal to the lesser of (A) the remaining amount on
deposit in the Series 1997-1 Collection Subaccount on such
day and (B) the amount of such reimbursement then due to the
Enhancement Provider for interest payments made under the
Principal/Interest Surety Bond plus accrued and unpaid
interest thereon at the rate stated in respect thereof in
the Insurance Agreement shall be transferred from the Series
1997-1 Collection Subaccount and paid to the Enhancement
Provider.
(iii) Following the transfers pursuant to clauses
(i) and (ii) above, any remaining funds on deposit in the
Series 1997-1 Collection Subaccount shall be transferred to
the Series 1997-1 Principal Collection Sub-subaccount.
(c) On each Business Day during the Revolving
Period (including Distribution Dates), amounts on deposit in
the Series 1997-1 Principal Collection Sub-subaccount shall
be distributed by the Trustee to the Company (but only to
the extent that the Trustee has received a Daily Report
which reflects the receipt of the Collections on deposit
therein); provided that such distribution shall be made only
to the extent that, after giving effect to such
distribution, (i) the Target Receivables Amount would not
exceed the Allocated Receivables Amount and (ii) each VFC
Certificateholder's Commitment equals or exceeds the
aggregate portion of the Invested Amount allocated to such
VFC Certificateholder; provided further that if the Company
(or the Master Servicer, on behalf of the Company) shall
have given the Trustee irrevocable written notice prior to
the making of any distribution to the Company pursuant to
this subsection 3C.3(c)(i) on any day, the Company or the
Master Servicer may instruct the Trustee in writing
(specifying the related amount) to retain or deposit, as
applicable, all or a portion of such amounts on deposit in
the Series 1997-1 Principal Collection Sub-subaccount, the
Series 1997-1 Non-Principal Collection Sub-subaccount or the
Series 1997-1 Collection Subaccount (together with, to the
extent that the Company so directs the Trustee, any amounts
which the Company is otherwise entitled to receive as a
result of its ownership of Investor Certificates issued
pursuant to the Series 1994-1 Supplement and any other
Available Funds that the Company may elect from time to time
to deposit into the Series 1997-1 Principal Collection Sub-
subaccount, the Series 1997-1 Non-Principal Collection Sub-
subaccount or the Series 1997-1 Collection Subaccount, as
the case may be) for further application hereunder; and
provided further that such distribution to the Company shall
not, in any event, be made if a Cure Period Trigger Date has
occurred and is continuing (and the breach or violation
giving rise to such Cure Period Trigger Date has not been
cured or waived as of such date). Amounts distributed to
the Company hereunder shall be deemed to be paid first from
Collections received directly by any Servicing Party and
second from Collections received in the Lockboxes.
(ii) On each Business Day during the
Amortization Period (including Distribution Dates), funds
deposited in the Series 1997-1 Principal Collection Sub-
subaccount shall be invested in Eligible Investments that
mature on or prior to the next Funding Period Determination
Date. No amounts on deposit in the Series 1997-1 Principal
Collection Sub-subaccount shall be distributed by the
Trustee to the Company during the Amortization Period. The
Trustee shall not in any way be liable by reason of any
insufficiency in any account held by the Trustee resulting
from any investment loss on any Eligible Investment included
therein (except to the extent that the Trustee is the
obligor and has defaulted thereon).
d) On each Business Day an amount equal to the
Daily Interest Deposit for such day shall be transferred
from the Series 1997-1 Non-Principal Collection Sub-
subaccount to the Series 1997-1 Accrued Interest Sub-
subaccount.
e) The allocations to be made pursuant to this
Section 3C.3 are subject to the provisions of Sections 2.6,
7.2 and 9.1 of the Agreement and shall be based solely on
information provided to the Trustee by the Master Servicer
in the applicable Daily Report.
SECTION 3C.4. Selection of Funding Periods;
Determination of Interest Rates. (a) At all times
hereafter, the aggregate outstanding Invested Amount
allocable to each VFC Certificate shall be allocated to a
Funding Period. The Master Servicer, subject to the
limitations described below, shall select Funding Periods
and the applicable Funding Period Rates for such Funding
Periods for each VFC Certificate and shall allocate the
outstanding Invested Amount allocable to such VFC
Certificate to such selected Funding Periods and Funding
Period Rates, except that the Unallocated Balance, if any,
outstanding from time to time, shall at all times be
allocated to a Funding Period coinciding with the Accrual
Period then in effect.
(b) Notwithstanding anything herein to the
contrary, the selection by the Master Servicer of Funding
Periods and Funding Period Rates with respect to VFC
Certificates held by the Issuer shall be subject to the
Issuer's prior approval. The Master Servicer shall specify
its preferences with respect to such Funding Periods and
Funding Period Rates by notice to the Issuer (which may be
telephonic notice confirmed promptly in writing), specifying
the Business Day on which the applicable Funding Period or
Periods are requested to commence, the requested duration of
the applicable Funding Period or Periods, the requested
Funding Period Rate or Rates and the portions of the
Invested Amount requested to be allocated to each such
requested Funding Period. Any such notice must be received
by the Issuer no later than 11:00 a.m. New York City time on
the Business Day preceding the commencement of the
applicable Funding Period (or so long as the Liquidity Rate
is applicable to all Funding Periods with respect to VFC
Certificates held by the Issuer, no later than 12:00 p.m.
New York City time on the Business Day on which the
applicable Funding Period commences if interest is to accrue
for such Funding Period at the "Base Rate" (as defined in
the Liquidity Agreement); provided, however, that (x) if the
Issuer shall not have received notice from the Master
Servicer or shall not have approved the Master Servicer's
selection before the applicable time specified in this
subsection 3C.4(b) with respect to any Funding Period, such
Funding Period and the applicable Funding Period Rate shall
be selected by the Issuer and (y) if interest on the portion
of the Invested Amount allocated to such Funding Period is
requested to accrue at a Liquidity Rate determined in whole
or in part by reference to the "Eurodollar Rate," as defined
in the Liquidity Agreement, the Issuer must receive notice
from the Master Servicer with regard thereto by 1:00 p.m.
New York City time on the third LIBO Business Day preceding
the first day of such Funding Period. In addition, Funding
Periods and Funding Period Rates with respect to VFC
Certificates held by the Issuer shall be subject to the
following additional restrictions: (i) no more than five
such Funding Periods shall be outstanding at any time, (ii)
any such Funding Period that commences before the
commencement of the Amortization Period and would otherwise
end on a date occurring after the commencement of the
Amortization Period shall if the Issuer so elects by notice
to the Company end on the date of the commencement of the
Amortization Period, (iii) from and after the commencement
of the Amortization Period, all such Funding Periods and
Funding Period Rates shall be selected by the Issuer (and
the Issuer shall provide notice to the Master Servicer of
such selections), (iv) if a CP Disruption shall have
occurred and be continuing, the Issuer may, upon notice to
the Master Servicer, terminate any such Funding Period then
in effect if the Issuer has funded its investment in the
relevant VFC Certificate for such Funding Period by issuing
Issuer CP, (v) if a Liquidity Rate Disruption Event shall
have occurred and be continuing, and as a result thereof it
shall be unlawful for any Liquidity Bank or its applicable
lending office to maintain outstanding any existing
"Eurodollar Rate Advance" under and as defined in the
Liquidity Agreement, the Issuer may, upon notice to the
Master Servicer, terminate any such Funding Period then in
effect if the Issuer has funded its investment in the
relevant VFC Certificate for such Funding Period with any
such "Eurodollar Rate Advance," and (vi) any such Funding
Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding
Business Day, unless (A) the Funding Period Rate with
respect to such Funding Period is a Liquidity Rate
determined in whole or in part by reference to the
"Eurodollar Rate," as defined in the Liquidity Agreement,
and (B) such next succeeding Business Day would be in the
following calendar month, in which case such Funding Period
shall end on the next preceding Business Day. On or before
the first day of each Funding Period with respect to VFC
Certificates held by the Issuer, the Master Servicer shall
notify the Trustee of the duration of such Funding Period
and the applicable Funding Period Rate.
(c) The Master Servicer may select Funding
Periods and Funding Period Rates with respect to VFC
Certificates held by a Person other than the Issuer by
notice to the Trustee and the related VFC Certificateholders
specifying the Business Day on which the applicable Funding
Period is to commence, the duration of the applicable
Funding Period and the portion of the Invested Amount
requested to be allocated to such Funding Period. Any such
notice must be received by the Trustee (i) to the extent
that the applicable Funding Period Rate is the Base Rate no
later than 12:30 p.m. New York City time on the Business Day
on which the applicable Funding Period commences, (ii) to
the extent that the applicable Funding Period Rate is the
Adjusted Eurodollar Rate, no later than 1:00 p.m. New York
City time on the third Business Day preceding the
commencement of the applicable Funding Period and (iii) to
the extent that the applicable Funding Rate is another rate
agreed among the Master Servicer, the Company and such
Person other than the Issuer holding VFC Certificates, such
other time as shall have been agreed among such parties and
notified to the Trustee, which notice must be received by
the Trustee by 11:00 a.m. New York City time. Any portion
of the Invested Amount with respect to VFC Certificates held
by a Person other than the Issuer on any day that has not
been allocated to a Eurodollar Tranche or as to which
another rate has not been agreed among the Master Servicer,
the Company and such Person other than the Issuer, shall
accrue interest for such day at the Base Rate (the aggregate
amount of such unallocated portions of such Invested Amount
being referred to herein as the "Unallocated Balance"). Any
reduction in the Invested Amount with respect to any VFC
Certificate held by a Person other than the Issuer shall be
allocated first, to reduce the portion of the Invested
Amount thereof constituting Unallocated Balance, and second,
to reduce the portion of the Invested Amount thereof
allocated to other Funding Periods. Notwithstanding
anything to the contrary contained in this
subsection 3C.4(c), the portion of the Invested Amount with
respect to VFC Certificates held by a Person other than the
Issuer allocated to Eurodollar Tranches or as to which
another rate has been agreed among the Master Servicer, the
Company and such Person other than the Issuer shall be
subject to such other limitations as such Person shall
specify in the applicable Certificate Purchase Agreement.
(d) The amount of interest distributable with
respect to the VFC Certificates on any Funding Period
Settlement Date shall be an amount equal to the sum of (i)
the aggregate Funding Period Interest for such Funding
Period Settlement Date, plus (ii) all outstanding Past Due
Interest, plus (iii) the amount of any accrued but unpaid
Additional Interest.
SECTION 3C.5. Determination of Series 1997-1
Amortization Principal Payments. The amount (the "Series
1997-1 Amortization Principal Payment") distributable from
the Series 1997-1 Principal Collection Sub-subaccount on
each Funding Period Settlement Date during the Amortization
Period shall be equal to the lesser of (a) the aggregate
Invested Amount allocated to such Funding Period and (b) the
amount on deposit in such account on such Funding Period
Settlement Date.
SECTION 3C.6. Applications. (a) The Master
Servicer shall instruct the Trustee in writing (which
instruction shall specify the amounts to be distributed), on
each Funding Period Settlement Date, to distribute to the
applicable VFC Certificateholders from amounts on deposit in
the Series 1997-1 Accrued Interest Sub-subaccount (including
any amounts deposited therein pursuant to subsection
3C.7(b)(i)), an amount equal to the sum of (i) Funding
Period Interest on the VFC Certificates for such Funding
Period, (ii) all outstanding Past Due Interest and (iii) all
accrued but unpaid Additional Interest.
(b) On each Settlement Date, the Master Servicer
shall instruct the Trustee in writing (which instruction
shall specify the amounts to be applied or distributed, as
the case may be) to apply funds on deposit in the Series
1997-1 Non-Principal Collection Sub-subaccount (after taking
into consideration the distribution to the VFC
Certificateholders from the Series 1997-1 Non-Principal
Collection Sub-subaccount or any subaccount thereof pursuant
to subsection 3C.6(a)) in the following order of priority to
the extent funds are available:
(i) an amount equal to the Series 1997-1
Monthly Servicing Fee for the Accrual Period ending on
such Settlement Date shall be withdrawn from the Series
1997-1 Non-Principal Collection Sub-subaccount by the
Trustee and paid to the Master Servicer (or to the
Trustee, if on such date the Trustee is then acting as
Master Servicer in order to liquidate the Receivables and
the Related Property);
(ii) an amount equal to the Surety Bond Fees
for the Accrual Period ending on such Settlement Date
shall be withdrawn from the Series 1997-1 Non-Principal
Collection Sub-subaccount by the Trustee and paid to the
Enhancement Provider, provided that, if the Enhancement
Provider shall have failed to make a payment in respect of
a principal or interest drawing under the
Principal/Interest Surety Bond and such failure shall be
continuing after the stated date on which such payment was
to be made, the Enhancement Provider shall not receive
such Surety Bond Fees (which shall be held in the Series
1997-1 Non-Principal Collection Sub-subaccount) until such
payment is made;
(iii) an amount equal to the Liquidity Usage
Fees, the Liquidity Non-Usage Fees, the Issuer Usage Fees,
the Issuer Administrative Fees and the Alternate Fees, if
any, for the Accrual Period ending on such Settlement Date
shall be withdrawn from the Series 1997-1 Non-Principal
Collection Sub-subaccount by the Trustee and paid, in the
case of the Liquidity Usage Fees, the Liquidity Non-Usage
Fees, the Issuer Usage Fees and the Issuer Administrative
Fees to the Issuer or as the Issuer shall direct, and in
the case of the Alternate Fees to the VFC
Certificateholders other than the Issuer; and
(iv) an amount equal to any Program Costs due
and payable shall be withdrawn from the Series 1997-1 Non-
Principal Collection Sub-subaccount by the Trustee and
paid to the Persons owed such amounts.
Any remaining amount on deposit in the Series 1997-1 Non-
Principal Collection Sub-subaccount not allocated pursuant
to clauses (i) through (v) above shall be paid to the holder
of the Subordinated Certificate.
(c) During the Revolving Period, to the extent
that the Company has elected or is required to effect a
Decrease as described in Section 2.5, the Master Servicer
shall cause the Trustee to pay to the VFC Certificateholders
in reduction of the Invested Amount on each applicable
Decrease date, amounts on deposit in the Series 1997-1
Principal Collection Sub-subaccount, up to the amount of the
applicable Decrease.
(d) During the Amortization Period, the Master
Servicer shall instruct the Trustee in writing (which
instruction shall specify the amounts to be applied or
distributed, as the case may be) to apply, on each Funding
Period Settlement Date, amounts on deposit in the Series
1997-1 Principal Collection Sub-subaccount (including any
amounts deposited therein pursuant to subsection
3C.7(b)(ii)) in the following order of priority:
(i) an amount equal to the Series 1997-1
Amortization Principal Payment for such Funding Period
Settlement Date shall be distributed from the Series
1997-1 Principal Collection Sub-subaccount to the
applicable VFC Certificateholders in reduction of the
Invested Amount allocated to such Funding Period, and,
unless after giving effect to such payment the Invested
Amount has been repaid in full, any amounts remaining on
deposit in the Series 1997-1 Principal Collection
Sub-subaccount shall be retained therein for application
in accordance with the terms of this Supplement on the
next succeeding Funding Period Settlement Date;
(ii) if the Invested Amount has been repaid
in full after giving effect to clause (i) and the
Enhancement Provider has not been reimbursed pursuant to
the Insurance Agreement for principal and interest
payments made under the Principal/Interest Surety Bond, an
amount equal to the lesser of (A) the remaining amount on
deposit in the Series 1997-1 Principal Collection Sub-
subaccount on such day and (B) the amount of such
reimbursement then due to the Enhancement Provider for
principal payments made under the Principal/Interest
Surety Bond plus accrued and unpaid interest thereon at
the rate stated in respect thereof in the Insurance
Agreement shall be transferred from the Series 1997-1
Principal Collection Sub-subaccount and paid to the
Enhancement Provider;
(iii) if the Invested Amount has been repaid
in full after giving effect to clause (i), all amounts
owing to the Enhancement Provider pursuant to the
Insurance Agreement have been repaid in full and any
amounts are owed to the Trustee or any other Person, on
account of its expenses incurred in respect of the
performance of its responsibilities as Master Servicer for
the liquidation of the Receivables and the Related
Property, such amounts shall be transferred from the
Series 1997-1 Principal Collection Sub-subaccount and paid
to the Trustee or such other Person; and
(iv) if the Invested Amount has been repaid
in full after giving effect to clause (i) and all of the
amounts set forth in clauses (ii) and (iii) above have
been repaid, the remaining amount on deposit in the Series
1997-1 Principal Collection Sub-subaccount on such Funding
Period Settlement Date, if any, shall be distributed to
the holder of the Subordinated Certificate.
SECTION 3C.7. The Principal/Interest Surety Bond.
(a) Issuance of Principal/Interest Surety Bond. On or prior
to the Issuance Date, the Enhancement Provider shall have
issued the Principal/Interest Surety Bond in favor of the
Trustee for the benefit of the holders of the VFC
Certificates.
(b) Draws on the Principal/Interest Surety Bond.
(i) If, on any Funding Period Determination Date, the amount
on deposit in the Series 1997-1 Accrued Interest Sub-
subaccount (and available to be distributed) is less than
the accrued and unpaid interest that is due and payable on
the related Funding Period Settlement Date, then the Trustee
by delivering a notice to the Enhancement Provider pursuant
to the Principal/Interest Surety Bond shall, not later than
2:00 p.m., New York City time, on such Funding Period
Determination Date, demand payment under the
Principal/Interest Surety Bond in an amount equal to such
insufficiency in accordance with the Principal/Interest
Surety Bond. The Enhancement Provider shall pay or cause to
be paid such amount to the Trustee for deposit, on the
related Funding Period Settlement Date, to the Series 1997-1
Accrued Interest Sub-subaccount in accordance with the
Principal/Interest Surety Bond. In the event that such
amount shall be paid by the Enhancement Provider after such
Funding Period Settlement Date, the Trustee shall pay such
amount, promptly following receipt thereof, to the extent
necessary to complete payment of the accrued but unpaid
interest in respect of the VFC Certificates to have been
made on such Funding Period Settlement Date plus any
interest in respect thereof, to the VFC Certificateholders
as their respective interests then appear, and deposit the
remainder in the Series 1997-1 Accrued Interest Sub-
subaccount.
(ii) If, on any Funding Period Determination Date
to occur on or after the Surety Draw Date, the outstanding
Invested Amount is greater than zero, then the Trustee by
delivering a notice to the Enhancement Provider pursuant to
the Principal/Interest Surety Bond shall, not later than
2:00 p.m., New York City time, on such Funding Period
Determination Date, demand payment under the
Principal/Interest Surety Bond in an amount equal to such
Invested Amount in accordance with the Principal/Interest
Surety Bond. The Enhancement Provider shall pay or cause to
be paid such amount to the Trustee for payment, on the
related Funding Period Settlement Date, to the VFC
Certificateholders as their respective interests then
appear. In the event that such amount shall be paid by the
Enhancement Provider after such Funding Period Settlement
Date, the Trustee shall pay such amount, promptly following
receipt thereof, to the extent necessary to complete payment
of the Invested Amount, to the VFC Certificateholders as
their respective interests then appear, and deposit the
remainder in the Series 1997-1 Principal Collection Sub-
subaccount.
(iii) If, on any Funding Period Determination
Date to occur during the Amortization Period, the
Enhancement Provider elects to purchase (a "Surety Purchase
Demand") all of the then outstanding VFC Certificates in
accordance with the provisions set forth in Section 2.7 of
the Insurance Agreement, then the Enhancement Provider shall
so purchase the VFC Certificates for an amount equal to the
Invested Amount and all accrued and unpaid interest thereon
as of such date. The Enhancement Provider shall pay or
cause to be paid such amount to the Trustee for payment to
the VFC Certificateholders as their respective interests
then appear in accordance with the Insurance Agreement on
the related Funding Period Settlement Date.
(iv) If the payment of any amount which is
guaranteed pursuant to the Principal/Interest Surety Bond is
voided (an "Avoidance Event") under any applicable
Insolvency Proceeding (as defined in the Principal/Investor
Surety Bond), and, as a result of such an Avoidance Event,
any VFC Certificateholder is required to return such voided
payment, or any portion of such voided payment (an "Avoided
Payment"), upon payment by such VFC Certificateholder of
such Avoided Payment and receipt by the Trustee on behalf of
such VFC Certificateholder of (A) a certified copy of a
final order of a court exercising jurisdiction in such
Insolvency Proceeding to the effect that such VFC
Certificateholder is required to return any such payment or
portion thereof during the term of the Principal/Interest
Surety Bond because such payment was voided under applicable
law, with respect to which order the appeal period has
expired without an appeal having been filed (the "Final
Order"), and (B) an assignment, substantially in the form
attached as Exhibit B to the Principal/Interest Surety Bond,
properly completed and executed by such VFC
Certificateholder irrevocably assigning to the Enhancement
Provider all rights and claims of such VFC Certificateholder
relating to or arising under such Avoided Payment, then the
Trustee shall deliver to the Enhancement Provider a Notice
for Payment in the form of Exhibit A to the
Principal/Interest Surety Bond appropriately completed and
executed by the Trustee.
(c) Following any payment by the Enhancement
Provider pursuant to this Section 3C.7 and the application
of such payment in accordance with the terms hereof, the
Enhancement Provider shall be subrogated to the rights of
the VFC Certificateholders under the Pooling and Servicing
Agreements, to the extent of any payments made by the
Enhancement Provider to such VFC Certificateholders pursuant
to the Principal/Interest Surety Bond; provided, however,
that the Enhancement Provider shall not be entitled to be
subrogated to any of the rights of the VFC
Certificateholders under the Pooling and Servicing
Agreements until the VFC Certificateholders have received
payment of all accrued but unpaid interest in respect of the
VFC Certificates and repayment in full of the Invested
Amount. Nothing in this subsection 3C.7(c) shall affect in
any way the rights of the Enhancement Provider to receive
distributions from the Series Accounts or the Trust Accounts
pursuant to the express provisions of this Article III.
(d) Each VFC Certificateholder by accepting any
VFC Certificate shall be deemed to acknowledge and agree to
the terms of Section 2.7 of the Insurance Agreement and to
agree that it will, if so requested by the Enhancement
Provider, transfer its VFC Certificates to the Enhancement
Provider as contemplated in such Section 2.7.
IV. ARTICLE
DISTRIBUTIONS AND REPORTS
Article IV of the Agreement (except for any
portion thereof relating to another Series) shall read in
its entirety as follows and shall be exclusively applicable
to the VFC Certificates:
a) SECTION 4C.1. Distributions. On each
Distribution Date, the Trustee shall distribute (by wire
transfer) to each VFC Certificateholder and the Enhancement
Provider such Person's share, as determined by the Master
Servicer and reported to the Trustee on the preceding
Determination Date or Funding Period Determination Date, as
applicable, of the amounts to be distributed to the VFC
Certificateholders and the Enhancement Provider pursuant to
Article III. The Trustee will endeavor to make all such
payments to the applicable parties by 3:00 p.m. (New York
City time) on the applicable Distribution Date, but shall
incur no liability to any Person in the event that it fails
to make any such payment by such time.
b) All allocations and distributions
hereunder by the Trustee shall be in accordance with and
based solely upon the applicable Daily Reports and Monthly
Settlement Statement or Funding Period Settlement Statement
and subject to subsection 3.1(h) of the Agreement.
SECTION 4C.2. Statements and Notices. (a)
Settlement Statements. On each Determination Date, the
Master Servicer shall deliver to the Enhancement Provider,
the Trustee and each Rating Agency a Monthly Settlement
Statement substantially in the form attached hereto as
Exhibit E-1 setting forth, among other things, the Loss
Reserve Ratio, the Dilution Reserve Ratio, the Carrying Cost
Reserve Ratio and the Servicing Reserve Ratio, each as
recalculated for the next succeeding Settlement Period. On
each Funding Period Determination Date, the Master Servicer
shall deliver to the Enhancement Provider, the Trustee and
each Rating Agency a completed settlement statement (a
"Funding Period Settlement Statement"), substantially in the
form attached hereto as Exhibit E-2.
(b) Annual Certificateholders' Tax Statement. On
or before April 1 of each calendar year (or such earlier
date as required by applicable law), beginning with calendar
year 1997, the Company on behalf of the Trustee shall
furnish, or cause to be furnished, to each Person who at any
time during the preceding calendar year was a VFC
Certificateholder, a statement prepared by the Company
containing the aggregate amount distributed to such Person
for such calendar year or the applicable portion thereof
during which such Person was a VFC Certificateholder,
together with such other information as is required to be
provided by an issuer of indebtedness under the Internal
Revenue Code and such other customary information as the
Trustee or the Company deems necessary or desirable to
enable the VFC Certificateholders to prepare their tax
returns. Such obligation of the Company shall be deemed to
have been satisfied to the extent that substantially
comparable information shall have been provided by the
Trustee pursuant to any requirements of the Internal Revenue
Code as from time to time in effect.
(c) Early Amortization Period Notices. Promptly
after the receipt by a Responsible Officer of the Trustee of
notice of the occurrence of an Early Amortization Event with
respect to Series 1997-1, the Trustee shall give notice
(which notice shall in any event be given (by telephone or
otherwise) not later than the second Business Day after such
receipt) of such occurrence to (i) the Enhancement Provider
and each Rating Agency and (ii) each VFC Certificateholder.
(d) Surety Default Notices. Promptly after the
receipt by a Responsible Officer of the Trustee of notice of
the occurrence of a Surety Default, the Trustee shall give
notice of such occurrence to each VFC Certificateholder and
each Rating Agency.
(e) Principal Payment Notices. During the
Amortization Period, on each date which is three Business
Days prior to a Funding Period Settlement Date, the Trustee
shall deliver to each VFC Certificateholder a notice by fax,
followed by a hard copy delivered by overnight carrier,
setting forth the amount on deposit and available for
distribution in the Series 1997-1 Principal Collection Sub-
subaccount as of the opening of business on such date.
(f) Forwarding of Other Notices and Documents.
The Trustee shall promptly (but in any event within two
Business Days following receipt thereof) forward to each VFC
Certificateholder copies of the following documents and/or
notices upon receipt thereof by a Responsible Officer of the
Trustee:
(1) Financial Statements of Company. All financial
statements delivered by the Company pursuant to subsection
2.7(a) of the Agreement.
(ii) Early Amortization, Insolvency and Lien
Notices. Any notice delivered by the Company pursuant to
subsection 2.7(g) or 7.2(a) of the Agreement or any notice
delivered by the Master Servicer pursuant to Section 7.1 of
the Agreement.
(iii) Daily Reports. Upon request by a VFC
Certificateholder, Daily Reports delivered by the Master
Servicer pursuant to subsection 4.2(a) of the Servicing
Agreement.
(iv) Settlement Statements; Quarterly Master
Servicer Certificates. All Monthly Settlement Statements,
Funding Period Settlement Statements and certificates
delivered by the Master Servicer pursuant to Sections 4.3
and 4.4 of the Servicing Agreement.
(v) Accountants' Letters. All letters delivered by
the Master Servicer's independent public accountants
pursuant to Section 4.5 of the Servicing Agreement.
(vi) SEC Filings by Master Servicer. All filings
with the Securities and Exchange Commission delivered by the
Master Servicer pursuant to subsection 4.14(d) of the
Servicing Agreement.
(g) Termination of Sellers. The Master Servicer
shall promptly notify each Rating Agency, concurrently with
its notification of the Trustee and the Enhancement
Provider, of the termination of any Seller pursuant to
Section 9.14 of the Receivables Sale Agreement.
SECTION 4C.3. Notices. Notices required to be
given to the VFC Certificateholders hereunder will be given
by first class mail to the address of such holders as they
appear in the Certificate Register, or, if expressly
required herein, by telephonic notice via a telephone or
telecopy number provided by each VFC Certificateholder to
the Trustee.
V. ARTICLE
ADDITIONAL EARLY AMORTIZATION EVENTS
A. SECTION 5.1 Additional Early Amortization
Events. If any one of the events specified in Section 7.1
of the Agreement (after any grace periods or consents
applicable thereto) shall occur during the Revolving Period,
an Early Amortization Event shall occur as provided in such
Section 7.1 of the Agreement if any one of the following
events shall occur during the Revolving Period with respect
to the VFC Certificates:
a) failure on the part of the Company to make
any payment (i) in respect of principal owing on any VFC
Certificates within one Business Day of the date such
principal is due, (ii) in respect of interest or fees owing
on any VFC Certificates within two Business Days of the date
such amount is due or (iii) in respect of any other amounts
owing by the Company under any Pooling and Servicing
Agreement or the Insurance Agreement to or for the benefit
of the VFC Certificateholders or the Enhancement Provider
within five Business Days of the date such other amount is
due;
b) failure on the part of the Company duly to
observe or perform in any material respect any covenants or
agreements of the Company set forth in any Pooling and
Servicing Agreement, the Insurance Agreement or any
Certificate Purchase Agreement which has a material adverse
effect on the Enhancement Provider or the VFC
Certificateholders (which determination shall be made
without regard to whether any Enhancement is then available
from any Enhancement Provider) which continues unremedied
for 30 days from the earlier of (i) the date upon which a
Responsible Officer of the Company obtains knowledge of such
failure or (ii) the date on which written notice of such
failure, requiring the same to be remedied, shall have been
given to the Company by the Trustee, or the Company and the
Trustee by the Control Party;
c) any representation or warranty made by the
Company in any Pooling and Servicing Agreement to or for the
benefit of the VFC Certificateholders or the Enhancement
Provider or in the Insurance Agreement or in any Certificate
Purchase Agreement (i) shall prove to have been incorrect in
any material respect when made or when delivered which
continues to be incorrect for a period of 30 days after the
day on which notice of such failure, requiring the same to
be remedied, shall have been given by the Trustee to the
Company (or the Control Party to the Company and the
Trustee) and (ii) as a result of such incorrectness, the
interests of the VFC Certificateholders (without giving
effect to the availability of any Enhancement) or the
Enhancement Provider are materially and adversely affected;
provided, however, that an Early Amortization Event with
respect to Series 1997-1 shall not be deemed to have
occurred under this paragraph if the incorrectness of such
representation or warranty gives rise to an obligation to
repurchase the related Receivables and the Company has
repurchased the related Receivable or all such Receivables,
if applicable, in accordance with the provisions of the
Pooling Agreement within five Business Days of when the
Company was obligated to do so;
d) the Allocated Receivables Amount shall be less
than the Target Receivables Amount for a period of five
consecutive days;
e) a Purchase Termination Event (as defined in the
Receivables Sales Agreement) which allows the Company to
cease purchasing Receivables from all Sellers thereunder
shall have occurred and be continuing under the Receivables
Sale Agreement;
f) as at the end of any Settlement Period, the Loss-
to-Liquidation Ratio shall exceed 4.5%;
g) as at the end of any Settlement Period, the
Delinquency Ratio shall exceed 5.0%;
h) as at the end of any Settlement Period, the
Default Ratio shall exceed 6.0%;
i) for any Settlement Period, Days Sales
Outstanding shall be more than 40 days;
j) as at the last date of any fiscal quarter of the
Company, Net Worth shall be less than an amount equal to (i)
10% times (ii) the Invested Amount;
k) a Servicer Default with respect to the Master
Servicer or any Significant Servicer shall have occurred and
be continuing or at any time a Servicer Default with respect
to three or more Servicers shall have occurred and be
continuing;
l) a Change in Control shall have occurred;
a) the Trust shall for any reason cease to have a
valid and perfected first priority undivided ownership or
security interest in the Trust Assets (subject to any
Permitted Liens);
m) any of the Pooling Agreement, the Servicing
Agreement, this Supplement or the Receivables Sale Agreement
shall cease, for any reason, to be in full force and effect,
or the Company shall so assert in writing;
n) the "Commitments" under (and as defined in) the
Revolving Credit Agreement of the Revolving Credit Lenders
thereunder shall have been terminated by the Revolving
Credit Lenders prior to their stated term or such Revolving
Credit Lenders shall have refused to make any extensions of
credit under the Revolving Credit Agreement for a period of
150 consecutive days following notice of such refusal
delivered to the borrowers thereunder; or
o) (i) any of Specialty Foods Corporation or the
Sellers shall default in the payment of principal of or
interest on any indebtedness in an aggregate amount, with
respect to such Person, at any one time equal to or
exceeding $10,000,000, which default continues unremedied
and unwaived for a period in excess of 60 days, or (ii)
indebtedness of SFC or any Seller becomes due prior to its
stated maturity in an aggregate amount, with respect to such
Person, equal to or exceeding $10,000,000;
then, after the applicable grace period, if any, set forth
in such subsections (notice of which event shall be given by
the Trustee to each Rating Agency to the extent that a
Responsible Officer has actual knowledge thereof) the
Control Party, by notice then given in writing to the
Company, the Master Servicer and the Trustee, may declare
that an early amortization event (an "Early Amortization
Event") has occurred as of the date of such notice with
respect to Series 1997-1.
VI. ARTICLE
SERVICING FEE
A. SECTION 6.1 Servicing Compensation. A monthly
servicing fee (the "Series 1997-1 Monthly Servicing Fee")
shall be payable to the Master Servicer, on behalf of the
Servicing Parties, on each Settlement Date for the Accrual
Period then ending, in an amount equal to the product of (a)
the Servicing Fee and (b) a fraction the numerator of which
is the daily average Adjusted Invested Amount for such
Accrual Period and the denominator of which is the daily
average of the Aggregate Adjusted Invested Amount for such
Accrual Period; provided, however, that if an Early
Amortization Period has commenced and Specialty Foods
Corporation is acting as Master Servicer, the Series 1997-1
Monthly Servicing Fee shall be deferred until all amounts
due under the VFC Certificates have been paid in full. The
Series 1997-1 Monthly Servicing Fee is the Monthly Servicing
Fee, referred to in Section 2.5 of the Servicing Agreement,
which is allocable to Series 1997-1.
ARTICLE VII
COVENANTS, REPRESENTATIONS AND WARRANTIES
A. SECTION 7.1 Representations and Warranties of
the Company and the Master Servicer. The Company and the
Master Servicer hereby represent and warrant to the
Enhancement Provider, the Trustee and each of the VFC
Certificateholders that each and all of their respective
representations and warranties contained in each of the
Pooling and Servicing Agreements is true and correct in all
material respects as of the date hereof.
A. SECTION 7.2 Covenants of the Company. The
Company hereby agrees that:
a) it shall observe each and all of its respective
covenants (both affirmative and negative) contained in each
Pooling and Servicing Agreement and Certificate Purchase
Agreement in all material respects;
a) it shall not terminate the Agreement unless in
strict compliance with the terms of the Agreement;
a) it shall not change in any material respect
the terms or provisions of the Policies so as to adversely
affect the general quality of the Receivables without the
prior written consent of the Control Party; and
a) it shall not make any change or modification (or
permit any change or modification to be made) in any
material respect to the Policies, except (i) if such changes
or modifications are necessary under any Requirement of Law
or (ii) if such changes or modifications are consented to by
the Enhancement Provider.
A. SECTION 7.3 Covenants of the Master Servicer.
The Master Servicer hereby agrees that: (a) it shall
observe each and all of its covenants (both affirmative and
negative) contained in each Pooling and Servicing Agreement
in all material respects; and (b) it shall deliver to each
VFC Certificateholder which is an Eligible Certificateholder
by 11:00 a.m. (New York City time) on the Determination Date
or Funding Period Determination Date prior to each
Settlement Date or Funding Period Settlement Date, a Monthly
Settlement Statement or Funding Period Settlement Statement,
as applicable.
A. SECTION 7.4 Additional Supplements. The
Company and the Master Servicer each hereby agrees that, so
long as the Enhancement Provider is the Control Party in
respect of the Series 1997-1, then no additional Supplement
shall be issued under the Agreement unless the Control Party
shall have consented to the form and substance of the
Principal Terms contained in such Supplement, which consent
shall not be unreasonably withheld (it being understood that
it is not unreasonable if the Control Party withholds such
consent because it determines in its sole discretion that
its rights would be diminished or otherwise adversely
affected under any of the Transaction Documents as a result
of the issuance of such Supplement).
ARTICLE VIII
MISCELLANEOUS
A. SECTION 8.1 Ratification of Agreement. As
supplemented by this Supplement, the Agreement is in all
respects ratified and confirmed and the Agreement as so
supplemented by this Supplement shall be read, taken and
construed as one and the same instrument.
A. SECTION 8.2 Governing Law. THIS SUPPLEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAW.
A. SECTION 8.3 Further Assurances. Each of the
Company and the Trustee agrees, from time to time, to do and
perform any and all acts and to execute any and all further
instruments required or reasonably requested by the Control
Party more fully to effect the purposes of this Supplement
and the sale of the VFC Certificates hereunder, including,
without limitation, in the case of the Company, the
execution of any financing statements or continuation
statements relating to the Receivables and the other Trust
Assets for filing under the provisions of the UCC of any
applicable jurisdiction.
A. SECTION 8.4 No Waiver; Cumulative Remedies. No
failure to exercise and no delay in exercising, on the part
of the Enhancement Provider, the Trustee or any VFC
Certificateholder, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.
B. SECTION Amendments. This Supplement may
only be amended, supplemented or otherwise modified from
time to time if such amendment, supplement or modification
is effected in accordance with the provisions of Section
10.1 of the Agreement. The Master Servicer shall give each
VFC Certificateholder notice of any proposed amendment to
this Supplement or to the Agreement on or before the later
of (a) the date that is 10 days prior thereto and (b) the
date of any initial notice thereof is provided to the
Enhancement Provider.
A. SECTION 8.5 Notices. All notices, requests and
demands to or upon any party hereto to be effective shall be
given in the manner set forth (i) in the case of the
Company, the Master Servicer and the Trustee, in Section
10.5 of the Agreement and (ii) in the case of the
Enhancement Provider, at its address set forth below:
The Enhancement
Provider: Capital Markets Assurance Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Head of Exposure
Management
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice required or permitted to be mailed to a VFC
Certificateholder shall be given as provided in Section
4C.3.
a) SECTION 8.7 Successors and Assigns. This
Supplement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and
assigns, except that the Company may not assign or transfer
any of its rights under this Supplement without the prior
written consent of the VFC Certificateholders.
b) Any VFC Certificateholder may, upon the
satisfaction of all applicable requirements under Section
5.3 of the Agreement, in the ordinary course of its business
and in accordance with applicable law, at any time sell to
one or more financial institutions or other entities
("Participants") participations in its VFC Certificate and
its rights hereunder pursuant to documentation in form and
substance satisfactory to such VFC Certificateholder and the
Participant. In the event of any such sale by a VFC
Certificateholder to a Participant, such VFC
Certificateholder's obligations under this Supplement shall
remain unchanged and such VFC Certificateholder shall remain
solely responsible for the performance thereof. The Company
agrees that each VFC Certificateholder is entitled, in its
own name, to enforce for the benefit of, or as agent for,
any Participant any and all rights, claims and interest of
such Participant in respect of the Trust and the Company's
obligations under this Supplement.
c) Any VFC Certificateholder may, in the
ordinary course of its business and in accordance with
applicable law, at any time sell all or any part of its
rights and obligations under this Supplement and the VFC
Certificates to (i) its Affiliates, any other VFC
Certificateholder, the Liquidity Agent or any Liquidity Bank
and (ii) with the prior consent of the Company, such consent
not to be unreasonably withheld, one or more banks or other
entities (an "Acquiring VFC Certificateholder"), but only to
the extent that (i) such Acquiring VFC Certificateholder
shall have also either acquired a corresponding share of
such assigning VFC Certificateholder's Commitment or
otherwise extended a Commitment to the Company on terms
acceptable to the Company and (ii) all requisite Commitment
Certifications shall have been delivered to the Trustee.
d) The Company and the Master Servicer each
authorizes each VFC Certificateholder to disclose to any
Participant or Acquiring VFC Certificateholder (each, a
"Transferee") and any prospective Transferee any and all
financial information in such VFC Certificateholder's
possession concerning the Company, any Servicing Party, any
Seller or the Receivables which has been delivered to such
VFC Certificateholder by the Company or the Master Servicer
pursuant to this Supplement or which has been delivered to
such VFC Certificateholder by or on behalf of the Company in
connection with such VFC Certificateholder's credit
evaluation of the Company, any Servicing Party, any Seller,
the Trust and the Trust Assets prior to becoming a party to
this Supplement; provided, however, if any such information
is subject to a confidentiality agreement between such VFC
Certificateholder and the Company or the Master Servicer,
the Transferee or prospective Transferee shall have agreed
to be bound by the terms and conditions of such
confidentiality agreement.
e) If, pursuant to this subsection, any
interest in this Supplement or the VFC Certificates is
transferred to any Transferee which is organized under the
laws of any jurisdiction other than the United States or any
State thereof, the transferor VFC Certificateholder shall
cause such Transferee, concurrently with the effectiveness
of such transfer, (i) to represent to the transferor VFC
Certificateholder (for the benefit of the transferor VFC
Certificateholder, the Trustee, the Company and the Master
Servicer) that under applicable law and treaties no taxes
will be required to be withheld by the Trustee, the Company,
the Master Servicer or the transferor VFC Certificateholder
with respect to any payments to be made to such Transferee
in respect of the VFC Certificates, (ii) to furnish to the
transferor VFC Certificateholder (and, in the case of any
Acquiring VFC Certificateholder not registered in the
Certificate Register, the Trustee and the Company) either
U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein such Transferee claims
entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and
(iii) to agree (for the benefit of the transferor VFC
Certificateholder, the Trustee, the Company and the Master
Servicer) to provide the transferor VFC Certificateholder
(and, in the case of any Acquiring VFC Certificateholder not
registered in the Certificate Register, the Trustee, the
Company and the Master Servicer) a new Form 4224 or Form
1001 upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly
executed and completed by such Transferee, and to comply
from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
f) The Transfer Agent and Registrar shall
not register the transfer of any VFC Certificate unless:
(i) the person in whose name the VFC Certificate
is to be registered upon transfer represents and warrants
that it, and each of the accounts for which it is
purchasing, is a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act), and
acknowledges that it has received such information
regarding the Trust and the VFC Certificates as it has
requested and that it is aware that the transferor is
relying upon the foregoing certification to claim the
exemption from registration provided by Rule 144A; or
(ii) the Trustee has received transfer
documentation from the holder of such VFC Certificate
indicating, and a written opinion of counsel acceptable to
the Company and the Trustee confirming, that the transfer
is being made pursuant to an exemption from, or a
transaction not otherwise subject to, the registration
requirements of the Securities Act, and such transaction
has been approved by the Company;
and such transferee further represents and warrants to the
Trustee as to one of the following:
(x) such transferee is an ERISA Entity; or
(y) such transferee is not an ERISA Entity.
For purposes of this paragraph (f), any such advice to the
Trustee in writing may be in the form of a letter, notice or
other written document and, with respect to clauses (i),
(ii) and (iii) and (x) and (y) above, the requirements of
such clauses will be deemed to be satisfied by appropriate
notation on the transfer notice set forth on such VFC
Certificate or by other written advice to the Trustee
stating in substance one of the entries on such transfer
notice.
g) The Transfer Agent and Registrar shall
not register any transfer of any VFC Certificate to an ERISA
Entity unless the Trustee determined that after giving
effect to such transfer no more than 25% of the VFC
Certificates are held by ERISA Entities.
A. SECTION 8.8 Counterparts. This Supplement may
be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original,
and all of which taken together shall constitute one and the
same agreement.
A. SECTION 8.9 Enhancement Provider. The
Enhancement Provider shall have rights under the Agreement,
the Servicing Agreement and this Supplement (including the
right to withhold consents) only (a) if either (i) the
Enhancement Provider is then providing Enhancement for
Series 1997-1 or (ii) the Enhancement Provider is owed any
amounts in respect of the Principal/Interest Surety Bond and
(b) no Surety Default has occurred and is continuing.
A. SECTION 8.10 Administrative Agent for the
Issuer. The parties hereto acknowledge that Capital Markets
Assurance Corporation acts as Administrative Agent (the
"Administrative Agent") for the Issuer and that the
Administrative Agent may act on behalf of the Issuer under
this Supplement. To the extent the Administrative Agent so
acts, the Administrative Agent's performance of any
obligation of the Issuer under this Supplement will be
deemed to be performance of such obligation by the Issuer.
A. SECTION 8.11 No Bankruptcy Petition. Each VFC
Certificateholder, by its acquisition of a VFC Certificate,
agrees that, prior to the date that is one year and one day
after the later of (a) the last day of the Amortization
Period and (b) the last day of the Amortization Period of
any other Outstanding Series, it will not institute against,
or join any other Person in instituting against, the Company
any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other similar proceedings under
any federal or state bankruptcy or similar law.
A. SECTION 8.12 Costs and Expenses. The Company
agrees to pay all reasonable out-of-pocket expenses of the
Trustee (including, without limitation, reasonable fees and
disbursements of the Trustee's attorneys) in connection with
(i) the preparation, execution and delivery of this
Supplement, the Agreements and the other Transaction
Documents and amendments or waivers of any such documents
and (ii) enforcement by the Trustee of the obligations and
liabilities of the Company and the Master Servicer under the
Agreement, this Supplement and the related documents;
provided, however, that any payments made by the Company
pursuant to this Section shall be paid solely from Available
Funds, shall be non-recourse other than with respect to
Available Funds necessary to make such payments, and shall
not constitute a claim against the Company to the extent
that insufficient Available Funds exist to make such
payment.
ARTICLE IX
FINAL DISTRIBUTIONS
a) SECTION 9.1 Certain Distributions. Not later
than 2:00 p.m., New York City time, on the Distribution Date
following the date on which the proceeds are deposited into
the Series 1997-1 Non-Principal Collection Sub-subaccount
and the Series 1997-1 Principal Collection Sub-subaccount
pursuant to subsection 7.2(b) of the Agreement, the Trustee
shall distribute such amounts pursuant to Article III.
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.
IN WITNESS WHEREOF, the Company, the Master
Servicer and the Trustee have caused this Series 1997-1
Supplement to be duly executed by their respective officers
as of the day and year first above written.
SPECIALTY FOODS FINANCE CORPORATION, as Company
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President, Treasurer
and Assistant Secretary
SPECIALTY FOODS CORPORATION
as Master Servicer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and
Treasurer
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Trustee
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Trust Officer
Schedule 1
Trust Accounts
The Collection Account has been established by and
at The Chase Manhattan Bank, account number 323602762.
The Collection Account is for the account of The
Chase Manhattan Bank, as trustee for the SFC Master Trust.
Schedule 2
Cure Period
Trigger Date Applicable Subsection or event
30 days Pooling Agreement: Subsections
2.3(a), (b), (d), (e), (f) (first sentence),
(g) and (h)
10 days Pooling Agreement: Subsection 2.3(i)
0 days Pooling Agreement: Subsections
2.3(e) and (f) (second sentence)
10 days Pooling Agreement: Subsection
2.4(a)
5 days Pooling Agreement: Subsections
2.4(b) and (c)
30 days Pooling Agreement: Subsections
2.7(a), (b) (first sentence), (d), (i)
10 days Pooling Agreement: Subsection 2.7(c)
5 days Pooling Agreement: Subsections
2.7(b) (second two sentences), (f), (g) and
(h)
10 days Pooling Agreement: Section 2.8
(all subsections thereunder)
30 days Servicing Agreement: Sections 3.1,
3.2, 3.4, 3.5, 3.6 (first sentence)
10 days Servicing Agreement: Sections 3.3,
3.8, 3.9
5 days Servicing Agreement: Section 3.7
0 days Servicing Agreement: Section 3.6
(second sentence)
30 days Servicing Agreement: Sections 4.4,
4.5, 4.13, 5.1, 5.2
10 days Servicing Agreement: Sections 4.6,
4.7, 4.9, 4.12
5 days Servicing Agreement: Sections
4.2(b), 4.3, 4.8, 4.10, 4.11, 4.14, 5.3, 5.4
1 day Servicing Agreement: Section
4.2(a)
0 days Servicing Agreement: Section 4.1
30 days Receivables Sale Agreement:
Subsections 4.1(a), (b), (d), (e), (f) (first
sentence), (g), (h), (j) and (k)
10 days Receivables Sale Agreement:
Subsections 4.1(i), (l), (m), (n) and (o)
0 days Receivables Sale Agreement:
Subsections 4.1(c) and (f) (second sentence)
10 days Receivables Sale Agreement:
Subsection 4.2(a)
5 days Receivables Sale Agreement:
Subsections 4.2(b) and (c)
30 days Receivables Sale Agreement:
Sections 5.1, 5.2, 5.3, 5.4, 5.8 and 5.13
10 days Receivables Sale Agreement:
Sections 5.5, 5.6, 5.7, 5.11 and 5.12
1 day Receivables Sale Agreement:
Sections 5.9, 5.10 and 5.14
10 days Receivables Sale Agreement:
Sections 6.4, 6.5, 6.6, 6.7, 6.8, 6.9 and
6.10
5 days Receivables Sale Agreement:
Sections 6.1, 6.2 and 6.3
30 days Insurance Agreement: Section 3.1
(all subsections except (c) and (g))
10 days Insurance Agreement: Subsection
3.1(g)
0 days Insurance Agreement: Subsection
3.1(c)
10 days Insurance Agreement: Section 4.1
(all subsections except (c))
5 days Insurance Agreement: Subsection
4.1(c)
5 days Occurrence of a Master
Servicer Consolidation Event
196014.05 03/24/97 8:23 AM
