Exhibit 10.7
EXECUTION COPY
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LFI RECEIVABLES MASTER TRUST
SERIES 1996-A SUPPLEMENT
Dated as of August 5, 1996
to
POOLING AGREEMENT
Dated as of August 5, 1996
Among
LFI RECEIVABLES CORPORATION,
LFI SERVICING CORPORATION,
as Master Servicer,
THE CHASE MANHATTAN BANK,
as Agent and as Initial Purchaser
and
THE CHASE MANHATTAN BANK,
as Trustee
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
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SECTION 1.01. Definitions . . . . . . . . . . . . . . 2
ARTICLE II
Designation of Certificates; Purchase and Sale
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of the VFC Certificates
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SECTION 2.01. Designation . . . . . . . . . . . . . . 24
SECTION 2.02. The Series 1996-A Certificates . . . . 24
SECTION 2.03. Purchases of Interests in the VFC
Certificates . . . . . . . . . . . . 25
SECTION 2.04. Delivery . . . . . . . . . . . . . . . 26
SECTION 2.05. Procedure for Initial Issuance and for
Increasing the Series 1996-A
Invested Amount . . . . . . . . . . 26
SECTION 2.06. Procedure for Decreasing the Series
1996-A Invested Amount; Optional
Termination . . . . . . . . . . . . 28
SECTION 2.07. Reductions of the Commitments . . . . . 29
SECTION 2.08. Interest; Commitment Fee . . . . . . . 30
SECTION 2.09. Indemnification by the Company and the
Master Servicer . . . . . . . . . . 30
ARTICLE III
Article III of the Agreement
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SECTION 3A.02. Establishment of Trust Accounts . . . . 32
SECTION 3A.03. Daily Allocations . . . . . . . . . . . 34
SECTION 3A.04. Determination of Interest . . . . . . . 39
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SECTION 3A.05. Determination of Series 1996-A Monthly
Principal . . . . . . . . . . . . . 41
SECTION 3A.06. Applications . . . . . . . . . . . . . 43
SECTION 3A.07. Refinancing . . . . . . . . . . . . . . 44
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ARTICLE IV
Distributions and Reports
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SECTION 4A.01. Distributions . . . . . . . . . . . . . 45
SECTION 4A.02. Daily Reports . . . . . . . . . . . . . 46
SECTION 4A.03. Statements and Notices . . . . . . . . 46
ARTICLE V
Additional Early Amortization Events
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SECTION 5.01. Additional Early Amortization Events . 47
ARTICLE VI
Servicing Fee
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SECTION 6.01. Servicing Compensation . . . . . . . . 51
ARTICLE VII
Change in Circumstances
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SECTION 7.01. Reserve Requirements; Change in
Circumstances . . . . . . . . . . . . 51
SECTION 7.02. Change in Legality . . . . . . . . . . 53
SECTION 7.03. Indemnity . . . . . . . . . . . . . . . 54
SECTION 7.04. Taxes . . . . . . . . . . . . . . . . . 55
SECTION 7.05. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate . . . 59
SECTION 7.06. Limitation . . . . . . . . . . . . . . 60
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Page
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ARTICLE VIII
Covenants, Representations and Warranties
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SECTION 8.01. Representations and Warranties of the
Company and the Master Servicer . . 61
SECTION 8.02. Covenants of the Company and the Master
Servicer . . . . . . . . . . . . . . 61
SECTION 8.03. Negative Covenant of the Company;
Covenants of the Master Servicer . . 62
SECTION 8.04. Obligations Unaffected . . . . . . . . 63
SECTION 8.05. Representations and Warranties of the
Initial Purchasers and Acquiring
Purchasers . . . . . . . . . . . . . 63
ARTICLE IX
Conditions Precedent
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SECTION 9.01. Conditions Precedent to Effectiveness
of Supplement . . . . . . . . . . . 65
ARTICLE X
The Agent
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SECTION 10.01. Appointment . . . . . . . . . . . . . . 69
SECTION 10.02. Delegation of Duties . . . . . . . . . 69
SECTION 10.03. Exculpatory Provisions . . . . . . . . 70
SECTION 10.04. Reliance by Agent . . . . . . . . . . . 70
SECTION 10.05. Notice of Master Servicer Default or
Early Amortization Event or
Potential Early Amortization Event . 71
SECTION 10.06. Non-Reliance on Agent and Other
Purchasers . . . . . . . . . . . . . 71
SECTION 10.07. Indemnification . . . . . . . . . . . . 72
SECTION 10.08. Agent in Its Individual Capacity . . . 73
SECTION 10.09. Successor Agent . . . . . . . . . . . . 73
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ARTICLE XI
Miscellaneous
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SECTION 11.01. Ratification of Agreement . . . . . . . 73
SECTION 11.02. Governing Law . . . . . . . . . . . . . 73
SECTION 11.03. Further Assurances . . . . . . . . . . 74
SECTION 11.04. Payments . . . . . . . . . . . . . . . 74
SECTION 11.05. Costs and Expenses . . . . . . . . . . 74
SECTION 11.06. No Waiver; Cumulative Remedies . . . . 75
SECTION 11.07. Amendments . . . . . . . . . . . . . . 75
SECTION 11.08. Severability . . . . . . . . . . . . . 76
SECTION 11.09. Notices . . . . . . . . . . . . . . . . 76
SECTION 11.10. Successors and Assigns . . . . . . . . 77
SECTION 11.11. Counterparts . . . . . . . . . . . . . 82
SECTION 11.12. Adjustments; Setoff . . . . . . . . . . 82
SECTION 11.13. Limitation of Payments by Company . . . 83
SECTION 11.14. No Bankruptcy Petition . . . . . . . . 83
SECTION 11.15 Rating of VFC Certificates . . . . . . 83
SECTION 11.16. Limitation on Addition and Termination
of Sellers . . . . . . . . . . . . . . 84
ARTICLE XII
Final Distributions
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SECTION 12.01. Certain Distributions . . . . . . . . . 85
EXHIBITS
Exhibit A Form of VFC Certificate, Series 1996-A
Exhibit B Form of Subordinated Company
Certificate, Series 1996-A
Exhibit C Form of Commitment Transfer Supplement
Exhibit D Form of Administrative Questionnaire
Exhibit E Form of Daily Report
Exhibit F Form of Monthly Settlement Statement
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Exhibit G Form of Notice of Issuance/Increase
Exhibit H Form of Confidentiality Agreement
SCHEDULES
Schedule 1 Commitments
Schedule 2 Trust Accounts
Schedule 3 Timetable for Establishment of Disaster
Recovery Plan, Computer Back-Up Systems
and Operational Readiness of Off-Site
Disaster Recovery Facility
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EXHIBIT A TO SERIES
1996-A SUPPLEMENT
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LFI RECEIVABLES MASTER TRUST
FORM OF VFC CERTIFICATE, SERIES 1996-A
REGISTERED UP TO $_____________.00 SERIES
NO. VFC-[ ] 1996-A PURCHASER INVESTED AMOUNT*
(OF UP TO $_____________.00 SERIES
1996-A INVESTED AMOUNT ISSUED)
*THE SERIES 1996-A PURCHASER INVESTED AMOUNT OF THIS VFC CERTIFICATE
IS SUBJECT TO CHANGE AS DESCRIBED HEREIN.
THIS VFC CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "SECURITIES ACT"). NEITHER THIS VFC CERTIFICATE NOR ANY PORTION
HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION PROVISIONS.
THIS VFC CERTIFICATE IS NOT PERMITTED TO BE TRANSFERRED, ASSIGNED,
EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS
OF THE POOLING AGREEMENT REFERRED TO HEREIN.
This VFC Certificate evidences a fractional undivided interest in
assets of the
LFI RECEIVABLES MASTER TRUST
the corpus of which consists of receivables representing amounts payable for
goods or services, which receivables have been purchased by LFI Receivables
Corporation, a Delaware corporation, which in turn transferred and assigned such
receivables to the LFI Receivables Master Trust.
(Not an interest in or obligation of
LFI Receivables Corporation, the Sellers listed on
Schedule 1 to the Receivables Sale Agreement
2
or any Affiliate thereof)
This certifies that
[NAME OF CERTIFICATEHOLDER]
(the "VFC Certificateholder") is the registered owner of a fractional undivided
interest in the assets of LFI Receivables Master Trust (the "Trust"), created
pursuant to the Pooling Agreement, dated as of August 5, 1996 (as the same has
been and may from time to time be amended, restated, supplemented or otherwise
modified, the "Pooling Agreement"), by and among LFI Receivables Corporation, a
Delaware corporation (the "Company"), LFI Servicing Corporation, a Delaware
corporation, as master servicer (the "Master Servicer"), and The Chase Manhattan
Bank, a New York banking corporation, not in its individual capacity but solely
as trustee (in such capacity, the "Trustee") for the Trust, as supplemented by
the Series 1996-A Supplement, dated as of August 5, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Supplement",
collectively, with the Pooling Agreement, the "Agreement"), by and among the
Company, the Master Servicer, the Trustee, the purchasers named therein and from
time to time parties thereto (the "Purchasers") and The Chase Manhattan Bank, a
New York banking corporation, as initial purchaser and agent for the Purchasers
(in such capacity, the "Agent"). The corpus of the Trust consists of
receivables (the "Receivables") representing amounts payable for goods or
services and all other Trust Assets referred to in the Agreement. Although a
summary of certain provisions of the Agreement is set forth below, this VFC
Certificate does not purport to summarize the Agreement, is qualified in its
entirety by the terms and provisions of the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Trustee. A copy of the Agreement may be requested by a
holder hereof by writing to the Trustee at The Chase Manhattan Bank, 450 W. 33rd
Street, 15th Floor,
3
New York, New York 10011, Attention of Advanced Structured Products Group. To
the extent not defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Agreement.
This VFC Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the VFC
Certificateholder, by virtue of the acceptance hereof, assents and is bound.
The Master Servicer, the Company, each VFC Certificateholder and the
Trustee intend, for federal, state and local income and franchise tax purposes
only, that the VFC Certificates be evidence of indebtedness of the Company
secured by the Receivables. The VFC Certificateholder, by the acceptance
hereof, assents to and is bound by such intent.
This VFC Certificate is one in a Series of Investor Certificates
entitled "LFI Receivables Master Trust, VFC Certificates, Series 1996-A" (the
"VFC Certificates") representing a fractional undivided interest in the assets
of the Trust consisting of the right to receive (i) the Invested Percentage
(expressed as a decimal) of Collections received with respect to the Receivables
and all other funds on deposit in the Collection Account and (ii) to the extent
such interests appear in the Series 1996-A Supplement, all other funds on
deposit in the Series 1996-A Collection Subaccount and any subaccounts thereof
(collectively, the "VFC Certificateholders' Interest"). Concurrent with the
issuance of the VFC Certificates, the Trust shall also issue a Subordinated
Company Certificate entitled "LFI Receivables Master Trust, Subordinated Company
Certificate, Series 1996-A" (the "Series 1996-A Subordinated Company
Certificate") representing a fractional undivided interest in the assets of the
Trust consisting of the right to receive Collections allocated to the VFC
Certificateholders' Interest and not required to be distributed to or for the
benefit of the Purchasers (the "Series 1996-A Subordinated Interest"). The
Trust's assets
4
are allocated in part to the VFC Certificateholders and the holder of the Series
1996-A Subordinated Company Certificate with the remainder allocated to the
Certificateholders of other Series (if any) and to the Company. In addition to
the VFC Certificates and the Series 1996-A Subordinated Company Certificate, an
Exchangeable Company Certificate will be issued to the Company pursuant to the
Agreement which will represent the Company's interest (if any) in the Trust.
The Exchangeable Company Certificate will represent the interest in the Trust
Assets not represented by the Certificates of each Outstanding Series. The
Exchangeable Company Certificate may be exchanged by the Company pursuant to the
Agreement for an increase in the Invested Amount of a Class of Investor
Certificates of an Outstanding Series and an increase in the related Series
1996-A Subordinated Company Certificate, or one or more newly issued Series of
Investor Certificates and the related newly issued Series 1996-A Subordinated
Company Certificate, and a reissued Exchangeable Company Certificate upon the
conditions set forth in the Agreement.
Distributions with respect to this VFC Certificate shall be paid by
the Agent in immediately available funds to the VFC Certificateholder at the
office of the Agent set forth in the Agreement. Final payment of this VFC
Certificate shall be made only upon presentation and surrender of this
Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the VFC Certificateholders in
accordance with the Agreement.
This VFC Certificate does not represent an obligation of, or an
interest in, the Company, the Master Servicer or any Affiliate of either of
them.
The transfer of this VFC Certificate shall be registered in the
Certificate Register upon surrender of this VFC Certificate for registration of
transfer at any office or agency maintained by the Transfer Agent and Registrar
accompanied by a written instrument of transfer,
5
in a form satisfactory to the Trustee and the Transfer Agent and Registrar, duly
executed by the VFC Certificateholder or the VFC Certificateholder's attorney,
and duly authorized in writing with such signature guaranteed, and thereupon one
or more new VFC Certificates of authorized denominations and of like aggregate
Fractional Undivided Interests will be issued to the designated transferee or
transferees.
The Company, the Trustee, the Paying Agent, the Transfer Agent and
Registrar and any agent of any of them, may treat the person in whose name this
VFC Certificate is registered as the owner hereof for all purposes.
It is expressly understood and agreed by the Company and the VFC
Certificateholder that (a) the Agreement is executed and delivered by the
Trustee, not individually or personally but solely as Trustee of the Trust, in
the exercise of the powers and authority conferred and vested in it, (b) the
representations, undertakings and agreements made on the part of the Trust in
the Agreement are made and intended not as personal representations,
undertakings and agreements by the Trustee, but are made and intended for the
purpose of binding only the Trust, (c) nothing herein contained shall be
construed as creating any liability of the Trustee, individually or personally,
to perform any covenant either expressed or implied made on the part of the
Trust in the Agreement, all such liability, if any, being expressly waived by
the parties who are signatories to the Agreement and by any Person claiming by,
through or under such parties; provided, however, the Trustee shall be liable in
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its individual capacity for its own wilful misconduct or gross negligence and
for any tax assessed against the Trustee based on or measured by any fees,
commission or compensation received by it for acting as Trustee and (d) under no
circumstances shall the Trustee be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under the Agreement.
6
The holder of this VFC Certificate is authorized to record the date
and amount of each increase and decrease in the Series 1996-A Purchaser Invested
Amount with respect to such holder on the schedules annexed hereto and made a
part hereof and any such recordation shall constitute prima facie evidence of
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the accuracy of the information so recorded, absent manifest error, provided
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that the failure of the holder of this VFC Certificate to make such recordation
(or any error in such recordation) shall not affect the obligations of the
Company, the holder of the Series 1996-A Subordinated Company Certificate, the
Master Servicer or the Trustee under the Agreement.
This VFC Certificate shall be construed in accordance with and
governed by the laws of the State of New York without reference to any conflict
of law principles.
The VFC Certificateholder hereby agrees that, prior to the date which
is one year and one day after the later of (i) the last day of the Series 1996-A
Amortization Period and (ii) the last day of the amortization period of any
other Outstanding Series, it will not institute against, or join any other
Person in instituting against, the Company any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any federal or state bankruptcy or similar law.
7
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this VFC Certificate shall not
be entitled to any benefit under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Company has caused this VFC Certificate to be
duly executed.
Dated: , 1996
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LFI RECEIVABLES CORPORATION,
as authorized pursuant to
Section 5.01 of the Agreement,
by
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Title
8
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the VFC Certificates described in the within-mentioned
Agreement.
THE CHASE MANHATTAN BANK, not
in its individual capacity but
solely as Trustee,
by
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Authorized Signatory
OR
by
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Authenticating Agent
by
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Authorized Signatory
Schedule 1
to VFC Certificate
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Increase Decrease
in Series in Series
1996-A 1996-A Series 1996-
Invested Invested A Invested Notation
Date Amount Amount Amount Made By
EXECUTION COPY
SERIES 1996-A SUPPLEMENT dated as of August 5,
1996 (this "Supplement"), among LFI RECEIVABLES
CORPORATION, a Delaware corporation (the "Company"),
LFI SERVICING CORPORATION, a Delaware corporation, as
master servicer (the "Master Servicer"), THE CHASE
MANHATTAN BANK, as the initial purchaser (the "Initial
Purchaser"), the other financial institutions from time
to time parties hereto as purchasers pursuant to
Section 11.10, THE CHASE MANHATTAN BANK, a New York
banking corporation, as agent (the "Agent") for the
Purchasers (as hereinafter defined) and THE CHASE
MANHATTAN BANK, in its capacity as Trustee (the
"Trustee") under the Agreement.
W I T N E S S E T H :
WHEREAS, the Company, the Master Servicer and the Trustee have entered
into a Pooling Agreement, dated as of August 5, 1996 (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 Certificates; and
WHEREAS, the Company, the Master Servicer, the Trustee and the Initial
Purchaser wish to supplement the Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of
2
which are hereby expressly acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
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SECTION 1.01. Definitions. (a) The following words and phrases
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shall have the following meanings with respect to Series 1996-A 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:
"ABR" shall mean, for any day, a per annum alternate base rate
---
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate or both for any
reason, including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms of the definition thereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the immediately preceding sentence, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Base CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
The term "Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Agent as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced
3
as being effective. The term "Base CD Rate" shall mean the sum of (a) the
product of (i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves and
(b) the Assessment Rate. The term "Three-Month Secondary CD Rate" shall mean,
for any day, the secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not be a Business
Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the secondary market quotations for three-month certificates of
deposit of major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Agent from three New
York City negotiable certificate of deposit dealers of recognized standing
selected by it. The term "Federal Funds Effective Rate" shall mean, for any
day, 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 on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for the day for such transactions received by
the Agent from three Federal funds brokers of recognized standing selected by
it.
"Accrued Expense Adjustment" shall mean, for any Business Day in any
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Accrual Period, the amount, if any, which may be less than zero, equal to the
difference between (a) the entire amount of (A) the Commitment Fee, if any, due
and payable on such succeeding Distribution Date, (B) the Series 1996-A Monthly
Interest, (C) the Series 1996-A Monthly Servicing Fee and (D) all accrued
Program Costs, in each case for such Accrual Period determined as of such day,
and (b) the aggregate of the amounts transferred to the
4
Series 1996-A Non-Principal Collection Sub-subaccount on or before such day in
respect of such Accrual Period pursuant to subsection 3A.03(a)(i), before giving
effect to any transfer made in respect of the Accrued Expense Adjustment on such
day pursuant to the further proviso to such subsection.
"Accrued Expense Amount" shall mean, for each Business Day during an
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Accrual Period, the sum of (a) one-tenth of the Series 1996-A Monthly Interest
determined as of such Business Day, (b) one-tenth of the Commitment Fee payable
to the VFC Certificateholders on the next succeeding Distribution Date,
(c) one-tenth of the Series 1996-A Monthly Servicing Fee (in the case of each of
the foregoing clauses (a) through (c), up to the amount thereof due and payable
on the succeeding Distribution Date, but subject to Accrued Expense Adjustments
as provided in subsection 3A.03(a)(i)) and (d) all Program Costs that have
accrued since the preceding Business Day.
"Acquiring Purchaser" shall have the meaning assigned in
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subsection 11.10(b).
"Additional Amount" shall have the meaning assigned in
-----------------
subsection 7.04(a).
"Additional Interest" shall have the meaning assigned in
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subsection 3A.04(b).
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
------------------
Borrowing for any Eurodollar Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the product of (a) the
LIBO Rate in effect for such Eurodollar Period and (b) Statutory Reserves.
"Aged Receivables Ratio" shall mean, as of the last day of each
----------------------
Settlement Period, the percentage equivalent of a fraction, the numerator of
which shall be the sum of (a) the aggregate unpaid balance of Receivables
5
originated by the Sellers that were 91 to 120 days past due and (b) the
aggregate amount of Receivables of such Sellers that were charged off as
uncollectible prior to the day that is 91 days after its original due date
during such Settlement Period, and the denominator of which shall be the
aggregate Principal Amount of Receivables originated by the Sellers during the
third prior Settlement Period.
"Agent" shall have the meaning specified in the recitals hereto.
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"Aggregate Commitment Amount" shall mean, with respect to any Business
---------------------------
Day, the aggregate amount of the Commitments of all Purchasers on such date, as
reduced from time to time pursuant to Section 2.07.
"Applicable Margin" shall mean (a) at any date of determination before
-----------------
the 180th day following the Issuance Date, for each Eurodollar Tranche, 1.00%
per annum and, for the Floating Tranche, 0% per annum and (b) at any date of
determination on or after the 180th day following the Issuance Date, for each
Eurodollar Tranche, 2.50% per annum (or, if less, the "Applicable Percentage"
with respect to "Eurodollar Loans" (as each such term is defined in the Credit
Agreement")) and, for the Floating Tranche, 1.50% per annum (or, if less, the
"Applicable Percentage" with respect to "ABR Loans" (as each such term is
defined in the Credit Agreement)).
"Article VII Costs" shall mean any amounts due pursuant to
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Article VII.
"Assessment Rate" shall mean, for any date, the annual rate (rounded
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upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Agent as the then current net annual assessment rate that will be employed in
determining amounts payable by the Agent to the Federal Deposit Insurance
Corporation (or any successor) for insurance by such Corporation (or such
successor) of time
6
deposits made in U.S. Dollars at the Agent's domestic offices.
"Available Commitment" shall mean, with respect to any Business Day,
--------------------
the (i) Aggregate Commitment Amount on such Business Day minus (ii) the
Series 1996-A Invested Amount.
"Available Pricing Amount" shall mean, on any Business Day, the sum of
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(i) the Unallocated Balance plus (ii) the Increase, if any, on such date.
"Benefitted Purchaser" shall have the meaning assigned in
--------------------
Section 11.12.
"Board" shall mean the Board of Governors of the Federal Reserve
-----
System of the United States.
"Carrying Cost Reserve Ratio" shall mean, as of any Settlement Report
---------------------------
Date and continuing until (but not including) the next Settlement Report Date,
an amount (expressed as a percentage) equal to (a) the product of (i) 2.0 times
Days Sales Outstanding as of such day and (ii) 1.50 times the Discount Rate as
of such day divided by (b) 360; provided, however, that for any day during the
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continuation of an Early Amortization Period, the "Carrying Cost Reserve Ratio"
for such day shall mean an amount (expressed as a percentage) equal to (a) the
product of (i) 2.0 times Days Sales Outstanding as of such day and (ii) 1.20
times a rate equal to the ABR in effect on such day plus 2.00% per annum divided
by (b) 365.
"Certificate Rate" shall mean on any date of determination, the
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average (weighted based on the respective outstanding amounts of the Floating
Tranche and each Eurodollar Tranche) of the ABR in effect on such day and the
Adjusted LIBO Rates in effect on such day plus, in each case, the Applicable
Margin.
7
"Change in Control" shall mean the occurrence of any event the result
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of which causes Lifestyle Furnishings International Ltd., Lifestyle Holdings
Ltd. or the Company not to be a direct or indirect, wholly owned Subsidiary of
Furnishings International, Inc.
"Claim" shall have the meaning specified in subsection 2.09(a).
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"Clean-Up Call Amount" shall mean the Clean-Up Call Percentage of the
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largest Series 1996-A Invested Amount at any time during the Series 1996-A
Revolving Period.
"Clean-Up Call Percentage" shall mean 10%.
------------------------
"Commitment" shall mean, as to any Purchaser, its obligation to
----------
maintain and, subject to certain conditions, increase, its Series 1996-A
Purchaser Invested Amount, in an aggregate amount not to exceed at any one time
outstanding the amount set forth opposite such Purchaser's name on Schedule 1
under the caption "Commitment", as such amount may be reduced from time to time
as provided herein; collectively, as to all Purchasers, the "Commitments".
"Commitment Fee" shall have the meaning assigned in
--------------
subsection 2.08(b).
"Commitment Percentage" shall mean, as to any Purchaser and as of any
---------------------
date, the percentage equivalent of a fraction, the numerator of which is such
Purchaser's Commitment as set forth on Schedule 1 and the denominator of which
is the Aggregate Commitment Amount as of such date.
"Commitment Period" shall mean the period commencing on the Issuance
-----------------
Date and terminating on the date that the Series 1996-A Amortization Period
commences.
"Commitment Reduction" shall have the meaning assigned in
--------------------
subsection 2.07(a).
8
"Commitment Termination Date" shall mean the earlier of (a) the
---------------------------
Scheduled Revolving Termination Date and (b) the date on which the Commitments
are terminated in whole pursuant to Section 2.07.
"Commitment Transfer Supplement" shall have the meaning assigned in
------------------------------
subsection 11.10(c).
"Company Indemnified Person" shall have the meaning assigned in
--------------------------
subsection 2.09(a).
"Credit Agreement" shall mean the Credit Agreement dated as of
----------------
August 5, 1996, among: Lifestyle Furnishings International Ltd.; each subsidiary
of Lifestyle Furnishings International Ltd. listed on Schedule 1 thereto;
Furnishings International Inc.; the lenders identified therein; The Chase
Manhattan Bank, as a lender and as administrative agent and collateral agent for
the lenders; and Chase Manhattan Bank Delaware, as a letter of credit issuer
thereunder (including any amendments or modifications thereto or refinancings
thereof).
"Daily Interest Adjustment" shall mean, for any Business Day in any
-------------------------
Accrual Period, the amount, if any, which may be less than zero, equal to the
difference between (i) Series 1996-A Monthly Interest determined as of such day
and (ii) the amount on deposit in the Series 1996-A Accrued Interest Sub-
subaccount on such day after making any deposit thereto pursuant to subsection
3A.03(c), before giving effect to any transfer made in respect of the Daily
Interest Adjustment on such day pursuant to the proviso to such subsection.
"Daily Interest Deposit" shall mean, for any Business Day, an amount
----------------------
equal to (i) the amount of accrued and unpaid Daily Interest Expense in respect
of such day plus (ii) the aggregate amount of all previously accrued and unpaid
Daily Interest Expense plus (iii) the aggregate amount of all accrued and unpaid
Additional Interest.
9
"Daily Interest Expense" for any day in any Accrual Period, shall mean
----------------------
the sum of (A) the product of (i) the portion of the Series 1996-A Invested
Amount (calculated without regard to clauses (d) and (e) of the definition of
Series 1996-A Purchaser Invested Amount) allocable to the Floating Tranche on
such day divided by 365 and (ii) the ABR plus the Applicable Margin in effect on
such day, and (B) the product of (i) the portion of the Series 1996-A Invested
Amount (calculated without regard to clauses (d) and (e) of the definition of
Series 1996-A Purchaser Invested Amount) allocable to Eurodollar Tranches on
such day divided by 360 and (ii) the weighted average Adjusted LIBO Rate plus
the Applicable Margin on such day in effect with respect thereto; provided,
--------
however, that for the purposes of calculating Series 1996-A Monthly Interest,
- -------
the "Daily Interest Expense" for any day following the date of determination
shall be based on the allocable portions of the Series 1996-A Invested Amount,
the ABR, the weighted average Adjusted LIBO Rate and the Applicable Margins as
of or in effect on such date of determination; provided, further, that for any
-------- -------
such day during the continuation of an Early Amortization Period, the "Daily
Interest Expense" for such day shall be equal to the greater of (i) the sum of
the amounts calculated pursuant to clauses (A) and (B) above and (ii) the
product of (x) the Series 1996-A Invested Amount on such day divided by 365 and
(y) the ABR in effect on such day plus 2.00% per annum.
"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 E.
"Days Sales Outstanding" shall mean, as of any Settlement Report Date
----------------------
and continuing until the next Settlement Report Date, the number of days equal
to the product of (a) 91 and (b) the amount obtained by dividing (i) the
aggregate Principal Amount of Eligible Receivables as at the last day of the
Settlement Period immediately preceding such earlier Settlement Report Date, by
(ii) the aggregate Principal Amount of Receivables generated by the
10
Sellers for the three Settlement Periods immediately preceding such earlier
Settlement Report Date.
"Decrease" shall have the meaning assigned in Section 2.06.
--------
"Dilution Horizon" shall mean the number of days from the occurrence
----------------
of any event that gives rise to a Dilution Adjustment with respect to a
Receivable until a Dilution Adjustment with respect to such Receivable is issued
by the related Servicer in accordance with its Policies.
"Dilution Horizon Factor" shall mean (a) for the period from the
-----------------------
Issuance Date until the sixth Settlement Report Date to occur thereafter, 2.37
and (b) for each six-month period to occur after such initial period, a
fraction, the numerator of which is the dollar weighted average Dilution Horizon
of the Sellers (based upon the Dilution Adjustment of the selected Receivables)
for such period (which shall be calculated by the related Servicer, in
accordance with its past procedures for such calculations, selecting a random
sample of approximately 200 Dilution Adjustment memos from each Seller created
during such period and determining the Dilution Horizon therefrom) and the
denominator of which is 30; provided, however, that if the Dilution Horizon
-------- -------
Factor for any period is less than the Dilution Horizon Factor for the
immediately preceding period, then the actual Dilution Horizon Factor for such
current period shall be recalculated to equal a fraction, the numerator of which
is equal to the average of the numerators used to calculate the Dilution Horizon
Factor for such immediately preceding period and such current period and the
denominator of which is 30.
"Dilution Period" shall mean as of any Settlement Report Date and
---------------
continuing until (but not including) the next Settlement Report Date), the
quotient of (i) the product of (A) the aggregate Principal Amount of Receivables
that were originated by the Sellers during the Settlement
11
Period preceding such earlier Settlement Report Date and (B) the Dilution
Horizon Factor and (ii) the aggregate Principal Amount of Eligible Receivables
as of the last day of the Settlement Period preceding such earlier Settlement
Report Date.
"Dilution Ratio" shall mean, as of the last day of each Settlement
--------------
Period, an amount (expressed as a percentage) equal to the aggregate amount of
Dilution Adjustments made during such Settlement Period divided by the aggregate
Principal Amount of Receivables that were originated by the Sellers during the
immediately preceding Settlement Period.
"Dilution Reserve Ratio" shall mean, as of any Settlement Report Date
----------------------
and continuing until (but not including) the next Settlement Report Date, an
amount (expressed as a percentage) that is calculated as follows:
DRR = [(c * d) + [(e-d) * (e/d)]] * f
Where:
DRR = Dilution Reserve Ratio;
c = 2.00;
d = the average of the Dilution Ratio during the period of twelve
consecutive Settlement Periods ending prior to such earlier Settlement
Report Date;
e = the highest Dilution Ratio for any Settlement Period during the period
of twelve consecutive Settlement Periods ending prior to such earlier
Settlement Report Date; and
f = the Dilution Period.
12
"Discount Rate" shall mean, as of any date of determination, the sum
-------------
of (a) the weighted average interest rate in effect with respect to the VFC
Certificates as of the end of the Settlement Period immediately preceding the
most recent Settlement Report Date and (b) an amount equal to (i) the aggregate
amount of fees (other than the Servicing Fee and Program Costs) accrued with
respect to the VFC Certificates during the Settlement Period immediately
preceding the most recent Settlement Report Date divided by (ii) the average
daily Series 1996-A Invested Amount during such Settlement Period.
"Early Amortization Event" shall have the meanings assigned in
------------------------
Section 5.01 of this Supplement and Section 7.01 of the Agreement.
"Early Amortization Period" shall have the meaning assigned in
-------------------------
Section 5.01 of this Supplement and Section 7.01 of the Agreement.
"Effective Date" shall have the meaning assigned in Section 9.01.
--------------
"Eligible Receivables Percentage" shall mean a percentage equal to
-------------------------------
(a) 100 percent minus (b) the Ineligible Receivables Percentage.
-----
"Eurodollar Period" shall mean, with respect to any Eurodollar
-----------------
Tranche:
(a) initially, the period commencing on the Issuance Date or
conversion date, as the case may be, with respect to such Eurodollar
Tranche and ending one, two or three months thereafter, as selected by the
Company in its notice of issuance or notice of conversion, as the case may
be, given with respect thereto; and
13
(b) thereafter, each period commencing on the last day of the next
preceding Eurodollar Period applicable to such Eurodollar Tranche and
ending one, two or three months thereafter, as selected by the Company by
irrevocable notice to the Agent not less than three Business Days prior to
the last day of the then current Eurodollar Period with respect thereto;
provided that, all of the foregoing provisions relating to Eurodollar Periods
- --------
are subject to the following:
(1) 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;
(2) any Eurodollar Period that would otherwise extend beyond the
Scheduled Revolving Termination Date shall end on the Scheduled Revolving
Termination Date; and
(3) any Eurodollar Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Eurodollar Period) shall end
on the last Business Day of a calendar month.
"Eurodollar Tranche" shall mean a portion of the Series 1996-A
------------------
Invested Amount for which the Series 1996-A Monthly Interest is calculated by
reference to an Adjusted LIBO Rate determined by reference to a particular
Eurodollar Period.
"Excess Program Costs" shall have the meaning assigned to such term
--------------------
within the definition of "Program Costs".
14
"Excluded Taxes" shall have the meaning assigned in subsection
--------------
7.04(a).
"Floating Tranche" shall mean that portion of the Series 1996-A
----------------
Invested Amount not allocated to a Eurodollar Tranche for which the
Series 1996-A Monthly Interest is calculated by reference to the ABR.
"Government Obligor Factor" shall mean 2.5% for the six month period
-------------------------
from November through April of any year and 1.5% for the six month period from
May through October of any year.
"HFG Companies" shall have the meaning assigned in the Credit
-------------
Agreement.
"Increase" shall have the meaning assigned in subsection 2.05(a).
--------
"Increase Amount" shall have the meaning assigned in
---------------
subsection 2.05(a).
"Increase Date" shall have the meaning assigned in subsection 2.05(a).
-------------
"Ineligible Receivables Percentage" shall mean the percentage
---------------------------------
equivalent of a fraction the numerator of which is the excess of the aggregate
Principal Amount of Receivables over the Aggregate Receivables Amount, in each
case on the last Business Day of the Series 1996-A Revolving Period, and the
denominator of which is the aggregate Principal Amount of Receivables on the
last Business Day of the Series 1996-A Revolving Period.
"Initial Purchasers" shall have the meaning specified in the recitals
------------------
hereto.
"Initial Series 1996-A Invested Amount" shall mean $155,000,000.
-------------------------------------
15
"Initial Series 1996-A Subordinated Certificate Amount" shall mean the
-----------------------------------------------------
Series 1996-A Subordinated Certificate Amount in respect of the Issuance Date.
"Interest Shortfall" shall have the meaning assigned in
------------------
subsection 3A.04(b).
"Invested Amount" shall mean, with respect to Series 1996-A, the
---------------
Series 1996-A Invested Amount.
"Invested Percentage" shall mean, with respect to any Business Day
-------------------
(i) during the Series 1996-A Revolving Period, the percentage equivalent of a
fraction, the numerator of which is the Series 1996-A Allocated Receivables
Amount as of the end of the immediately preceding Business Day and the
denominator of which is the greater of (A) the Aggregate Receivables Amount as
of the end of the immediately preceding Business Day and (B) the sum of the
numerators used to calculate the Invested Percentage for all Outstanding Series
on the Business Day for which such percentage is determined and (ii) during the
Series 1996-A Amortization Period, the percentage equivalent of a fraction, the
numerator of which is the Series 1996-A Allocated Receivables Amount as of the
end of the last Business Day of the Series 1996-A Revolving Period (provided
--------
that if during the Series 1996-A Amortization Period, the amortization periods
of all other Outstanding Series which were outstanding prior to the commencement
of the Series 1996-A Amortization Period commence, then, from and after the date
the last of such series commences its Amortization Period, the numerator shall
be the Series 1996-A Allocated Receivables Amount as of the end of the Business
Day preceding such date) and the denominator of which is the greater of (A) the
Aggregate Receivables Amount as of the end of the immediately preceding Business
Day and (B) the sum of the numerators used to calculate the Invested Percentage
for all Outstanding Series on the Business Day for which such percentage is
determined.
"Issuance Date" shall mean August 5, 1996.
-------------
16
"LIBO Rate" shall mean, with respect to any Eurodollar Tranche for any
---------
Eurodollar Period, the rate appearing on Page 3750 of the Telerate Service (or
on any successor or substitute page of such service, or any successor to or
substitute for such service, providing rate quotations comparable to those
currently provided on such page of the Telerate Service, as determined by the
Agent from time to time for purposes of providing quotations of interest rates
applicable to U.S. Dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Eurodollar Period, as the rate for U.S. Dollar deposits
with a maturity comparable to such Eurodollar Period. In the event that such
rate is not so available at such time for any reason, then the "LIBO Rate" with
respect to such Eurodollar Tranche for such Eurodollar Period shall be the rate
at which U.S. Dollar deposits approximately equal in principal amount to the
Agent's portion of such Eurodollar Tranche and for a maturity comparable to such
Eurodollar Period are offered to the principal London office of the Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Eurodollar Period.
"Loss Reserve Ratio" shall mean, as of any Settlement Report Date and
------------------
continuing until (but not including) the next Settlement Report Date, an amount
(expressed as a percentage) that is calculated as follows:
LRR = [(a * b)/c] * d * e
Where:
LRR = Loss Reserve Ratio;
a = the aggregate Principal Amount of Receivables originated by the
Sellers during the three Settlement Periods immediately preceding such
earlier Settlement Report Date;
17
b = the highest three-month rolling average of the Aged Receivables Ratio
that occurred during the period of twelve consecutive Settlement
Periods ending prior to such earlier Settlement Report Date;
c = the aggregate Principal Amount of Eligible Receivables as of the last
day of the Settlement Period immediately preceding such earlier
Settlement Report Date;
d = 2.00; and
e = the Payment Terms Factor.
"Majority Purchasers" shall mean, on any day, Purchasers having, in
-------------------
the aggregate, more than 50% of the Aggregate Commitment Amount.
"Master Servicer Indemnified Person" shall have the meaning specified
----------------------------------
in subsection 2.09(b).
"Maximum Commitment Amount" shall mean $175,000,000.
-------------------------
"Maximum Invested Amount" shall mean, as of any day, the lesser of
-----------------------
(a) the Maximum Commitment Amount as of such day and (b) the Aggregate
Receivables Amount as of such day minus the Series 1996-A Required Subordinated
Amount as of such day.
18
"Minimum Ratio" shall mean, as of any Settlement Report Date and
-------------
continuing until (but not including) the next Settlement Report Date, an amount
(expressed as a percentage) that is calculated as follows:
MR = (a * b) + c + d
Where:
MR = Minimum Ratio;
a = the average of the Dilution Ratio during the period of the twelve
consecutive Settlement Periods ending prior to such earlier Settlement
Report Date;
b = the Dilution Period;
c = 10.0%; and
d = Government Obligor Factor.
"Monthly Interest Payment" shall have the meaning assigned in
------------------------
subsection 3A.06(b).
"New Lending Office" shall have the meaning assigned in subsection
------------------
7.04(e).
"Non-U.S. Purchaser" shall have the meaning assigned under
------------------
subsection 7.04(b).
"Optional Repurchase Percentage" shall mean 10% of the largest
------------------------------
Series 1996-A Invested Amount at any time on or before the date of
determination.
"Optional Termination Date" shall have the meaning assigned in
-------------------------
subsection 2.06(d).
"Optional Termination Notice" shall have the meaning assigned in
---------------------------
subsection 2.06(d).
19
"Other Taxes" shall have the meaning assigned under
-----------
subsection 7.04(b).
"Participants" shall have the meaning assigned in subsection 11.10(f).
------------
"Payment Terms Factor" shall mean (a) for the period from the Issuance
--------------------
Date until the third Settlement Report Date to occur thereafter, 1.14 and
(b) for each three-month period to occur after such initial period, a fraction,
the numerator of which is the sum of (i) the weighted average payment terms
(based upon the Principal Amount of the Receivables and expressed as a number of
days) for the Receivables originated during such period and (ii) 60 and the
denominator of which is 90; provided, however, that if the Payment Terms Factor
-------- -------
for any period is less than the Payment Terms Factor for the immediately
preceding period, then the actual Payment Terms Factor for such current period
shall be recalculated to equal a fraction, the numerator of which is equal to
the average of the numerators used to calculate the Payment Terms Factor for
such current period and the three immediately preceding periods and the
denominator of which is 90.
"Program Costs" shall mean, for any Business Day, the sum of (i) all
-------------
expenses, indemnities and other amounts due and payable to the Purchasers and
the Agent under the Agreement or this Supplement (including, without limitation,
any Article VII Costs), (ii) all unpaid fees and expenses due and payable to
counsel to, and independent auditors of, the Company (other than fees and
expenses payable on or in connection with the closing of the issuance of the
Series 1996-A Certificates) and (iii) all unpaid fees and expenses due and
payable to Rating Agencies rating the VFC Certificates; provided, however, that
-------- -------
Program Costs shall not exceed $50,000 in the aggregate in any fiscal year of
the Master Servicer (any amount of the foregoing expenses, indemnities and fees
in excess of $50,000 shall be referred to herein as "Excess Program Costs").
--------------------
20
"Purchase Termination Event" shall have the meaning assigned in
--------------------------
Section 7.01 of the Receivables Sale Agreement.
"Purchaser" shall mean each purchaser of a VFC Certificate, including
---------
each Initial Purchaser and each Acquiring Purchaser.
"Rating Agency" shall mean, in the event that Series 1996-A has been
-------------
rated, S&P, D&P or any such other rating agency that has rated the VFC
Certificates at the request of the Agent for a rating pursuant to Section 11.15,
as applicable; provided that in the event that Series 1996-A has not been rated,
--------
any reference to "Rating Agency" or the "Rating Agencies" shall be deemed to
have been deleted herefrom and from the Agreement; provided that, in the case of
--------
the term "Rating Agency Condition" and in the event that Series 1996-A has not
been rated, references to such term shall not be deemed deleted but shall be
modified as set forth under the definition of such term.
"Rating Agency Condition" shall, with respect to any action, have the
-----------------------
meaning assigned in Section 1.01 of the Agreement; provided that in the event
--------
that Series 1996-A has not been rated, any reference to a "Rating Agency
Condition" shall be deemed to be a reference to the prior written consent of the
Agent with respect to such action.
"Record Date" shall mean, with respect to any Distribution Date, the
-----------
Business Day immediately preceding such date.
"Register" shall have the meaning assigned in subsection 11.10(d).
--------
"Scheduled Revolving Termination Date" shall mean the last day of the
------------------------------------
Settlement Period ending in January 2002.
21
"Seller Addition Date" shall have the meaning assigned in Section 3.05
--------------------
of the Receivables Sale Agreement.
"Series 1996-A" shall mean the Series of Certificates the Principal
-------------
Terms of which are set forth in this Supplement.
"Series 1996-A Accrued Interest Sub-subaccount" shall have the meaning
---------------------------------------------
assigned in subsection 3A.02(a).
"Series 1996-A Adjusted Invested Amount" shall mean, as of any date of
--------------------------------------
determination, (i) the Series 1996-A Invested Amount on such date, minus
(ii) the amount on deposit in the Series 1996-A Principal Collection Sub-
subaccount on such date.
"Series 1996-A Allocable Charged-Off Amount" shall mean, with respect
------------------------------------------
to any Special Allocation Settlement Report Date, the "Allocable Charged-Off
Amount", if any, that has been allocated to Series 1996-A.
"Series 1996-A Allocable Recoveries Amount" shall mean, with respect
-----------------------------------------
to any Special Allocation Settlement Report Date, the "Allocable Recoveries
Amount", if any, that has been allocated to Series 1996-A.
"Series 1996-A Allocated Receivables Amount" shall mean, on any date
------------------------------------------
of determination, the lower of (i) the Series 1996-A 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 Series 1996-A
Target Receivables Amount on such day and the denominator of which is the
Aggregate Target Receivables Amount on such day.
"Series 1996-A Amortization Period" shall mean the period commencing
---------------------------------
on the Business Day following the earliest to occur of (i) the date on which an
Early Amortization Period is declared to commence or automatically commences,
(ii) the Optional Termination Date and (iii) the Scheduled
22
Revolving Termination Date and ending on the earlier of (i) the date when the
Series 1996-A Invested Amount shall have been reduced to zero and all accrued
interest and other amounts owing on the VFC Certificates and to the Agent and
the Purchasers hereunder shall have been paid and (ii) the Series 1996-A
Termination Date.
"Series 1996-A Certificates" shall mean, collectively, those
--------------------------
Certificates designated as the VFC Certificates and the Series 1996-A
Subordinated Certificate.
"Series 1996-A Collection Subaccount" shall have the meaning assigned
-----------------------------------
in subsection 3A.02(a).
"Series 1996-A Invested Amount" shall mean, as of any date of
-----------------------------
determination, the sum of the Series 1996-A Purchaser Invested Amounts of all
Purchasers on such date.
"Series 1996-A Monthly Interest" shall mean, with respect to any
------------------------------
Accrual Period, the sum of the Daily Interest Expense for each day in such
Accrual Period.
"Series 1996-A Monthly Interest Distribution" shall have the meaning
-------------------------------------------
assigned in subsection 3A.04(a).
"Series 1996-A Monthly Principal Payment" shall have the meaning
---------------------------------------
assigned in Section 3A.05.
"Series 1996-A Monthly Servicing Fee" shall have the meaning assigned
-----------------------------------
in Section 6.01.
"Series 1996-A Non-Principal Collection Sub-subaccount" shall have the
-----------------------------------------------------
meaning assigned in subsection 3A.02(a).
"Series 1996-A Non-Subordinated Percentage" shall mean an amount equal
-----------------------------------------
to 100 percent minus the Series 1996-A Subordinated Percentage.
23
"Series 1996-A Principal Collection Sub-subaccount" shall have the
-------------------------------------------------
meaning assigned in subsection 3A.02(a).
"Series 1996-A Principal Collection Subordinated Sub-subaccount" shall
--------------------------------------------------------------
have the meaning assigned in subsection 3A.02(a).
"Series 1996-A Purchaser Invested Amount" shall mean, with respect to
---------------------------------------
any Purchaser on the Issuance Date, an amount equal to the product of such
Purchaser's Commitment Percentage on such date and the Initial Series 1996-A
Invested Amount, and with respect to such Purchaser on any date of determination
thereafter, an amount equal to (a) such Purchaser's Series 1996-A Invested
Amount on the immediately preceding Business Day (or, with respect to the day as
of which such Purchaser becomes a party to this Supplement, whether by executing
a counterpart hereof, a Commitment Transfer Supplement or otherwise, the portion
of the transferor's Series 1996-A Purchaser Invested Amount being purchased, in
the case of an Acquiring Purchaser), plus (b) the amount of any increases in
such Purchaser's Series 1996-A Invested Amount pursuant to Section 2.05 made on
such day, minus (c) the amount of any distributions to such Purchaser pursuant
to Section 2.06 on such day minus (d) the aggregate Series 1996-A Allocable
Charged-Off Amount applied to such Purchaser on or prior to such date pursuant
to subsection 3A.05(b)(ii) plus (e) (but only to the extent of any unreimbursed
reductions made pursuant to clause (d) above) the aggregate Series 1996-A
Allocable Recoveries Amount applied to such Purchaser on or prior to such date
pursuant to subsection 3A.05(c)(i).
"Series 1996-A Required Reserves" shall mean, as of any date of
-------------------------------
determination, an amount equal to the sum of:
(a) an amount equal to the product of (i) the Series 1996-A Adjusted
Invested Amount on such day and (ii) a fraction the numerator of which is
the Series 1996-A Required Reserves Ratio and the
24
denominator of which is one minus the Series 1996-A Required Reserves
Ratio;
(b) the product of (i) the Series 1996-A Invested Amount and (ii) a
fraction the numerator of which is the Carrying Cost Reserve Ratio and the
denominator of which is one minus the Series 1996-A Required Reserves
Ratio; and
(c) the product of (i) the Principal Amount of Receivables in the
Trust on such day, (ii) a fraction the numerator of which is the
Series 1996-A Adjusted Invested Amount and the denominator of which is the
Aggregate Adjusted Invested Amount on such day and (iii) a fraction the
numerator of which is the Servicing Reserve Ratio and the denominator of
which is one minus the Series 1996-A Required Reserves Ratio.
"Series 1996-A Required Reserves Ratio" shall mean, the greater of
-------------------------------------
(i) the sum of the Dilution Reserve Ratio and the Loss Reserve Ratio and
(ii) the Minimum Ratio.
"Series 1996-A Required Subordinated Amount" shall mean, (a) on any
------------------------------------------
date of determination during the Series 1996-A Revolving Period, the
Series 1996-A Required Reserves and (b) on any date of determination during the
Series 1996-A Amortization Period, an amount equal to the Series 1996-A Required
Subordinated Amount on the last Business Day of the Series 1996-A Revolving
Period; provided that such amount shall be adjusted on each Special Allocation
--------
Settlement Report Date, if any, as set forth in Section 3A.05(b)(i) and
Section 3A.05(c)(ii).
"Series 1996-A Revolving Period" shall mean the period commencing on
------------------------------
the Issuance Date and terminating on the earliest to occur of the close of
business on (i) the date on which an Early Amortization Period is declared to
commence or automatically commences, (ii) the Optional Termination Date and
(iii) the Commitment Termination Date.
25
"Series 1996-A Subordinated Certificate" shall mean the Subordinated
--------------------------------------
Company Certificate, Series 1996-A, executed by the Company and authenticated by
or on behalf of the Trustee, substantially in the form of Exhibit B.
"Series 1996-A Subordinated Certificate Amount" shall mean, for any
---------------------------------------------
date of determination, an amount equal to (i) the Series 1996-A Allocated
Receivables Amount minus (ii) the Series 1996-A Adjusted Invested Amount.
"Series 1996-A Subordinated Certificate Increase Amount" shall have
------------------------------------------------------
the meaning assigned in subsection 2.05(a).
"Series 1996-A Subordinated Certificate Reduction Amount" shall have
-------------------------------------------------------
the meaning assigned in subsection 2.06(b).
"Series 1996-A Subordinated Interest" shall have the meaning assigned
-----------------------------------
in subsection 2.02(b).
"Series 1996-A Subordinated Percentage" shall mean the percentage
-------------------------------------
equivalent of a fraction the numerator of which is the Series 1996-A Required
Subordinated Amount on the last Business Day of the Series 1996-A Revolving
Period and the denominator of which is the sum of the Series 1996-A Adjusted
Invested Amount and the Series 1996-A Required Subordinated Amount, in each
case, on the last Business Day of the Series 1996-A Revolving Period.
"Series 1996-A Target Receivables Amount" shall mean, on any date of
---------------------------------------
determination, the sum of (i) the Series 1996-A Adjusted Invested Amount on such
day and (ii) the Series 1996-A Required Subordinated Amount for such day.
"Series 1996-A Termination Date" shall mean the Distribution Date that
------------------------------
occurs in April 2003.
26
"Series 1996-A Unreimbursed Amount" shall have the meaning assigned in
---------------------------------
subsection 3A.03(d).
"Servicing Reserve Ratio" shall mean, as of any Settlement Report Date
-----------------------
and continuing until (but not including) the next Settlement Report Date, an
amount (expressed as a percentage) equal to (i) the product of (A) the Servicing
Fee Percentage and (B) 2.0 times Days Sales Outstanding as of such earlier
Settlement Report Date divided by (c) 360.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Agent or any Purchaser (including any branch, Affiliate, or other
fronting office making or holding a Loan) is subject (a) with respect to the
Base CD Rate, for new negotiable nonpersonal time deposits in dollars of over
$100,000 with maturities approximately equal to three months, and (b) with
respect to the Adjusted LIBO Rate, for Eurocurrency Liabilities (as defined in
Regulation D of the Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Tranches shall be deemed to
constitute Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Purchaser under such
Regulation D. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
"Taxes" shall have the meaning assigned in subsection 7.04(a).
-----
"Transfer Issuance Date" shall mean the date on which a Commitment
----------------------
Transfer Supplement becomes effective pursuant to the terms of such Commitment
Transfer Supplement.
27
"Transferee" shall have the meaning assigned in subsection 11.10(f).
----------
"Trust Accounts" shall have the meaning assigned in
--------------
subsection 3A.02(a).
"Unallocated Balance" shall mean, as of any Business Day, the sum of
-------------------
(i) the portion of the Series 1996-A Invested Amount for which interest is then
being calculated by reference to the ABR and (ii) the portion of the
Series 1996-A Invested Amount allocated to any Eurodollar Tranche that expires
on such Business Day.
"VFC Certificate" shall mean a VFC Certificate, Series 1996-A,
---------------
executed by the Company and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A.
"VFC Certificateholders" shall mean the Purchasers.
----------------------
"VFC Certificateholders' Interest" shall have the meaning assigned in
--------------------------------
subsection 2.02(a).
(b) If any term or provision contained herein conflicts with or is
inconsistent with any term, definition or provision contained in the Agreement,
the terms and provisions of this Supplement shall govern. All capitalized terms
not otherwise defined herein are defined in the Agreement. All Article,
Section, subsection, Exhibit and Schedule references herein shall mean Article,
Section or subsection of or Exhibit or Schedule to this 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
28
Series 1996-A Certificates and no other Series of Certificates issued by the
Trust.
(c) Any reference herein to a Schedule or Exhibit to this Supplement
shall be deemed to be a reference to such Schedule or Exhibit as it may be
amended, modified or supplemented from time to time to the extent that such
Schedule or Exhibit may be amended, modified or supplemented (or any term or
provision of any Transaction Document may be amended that would have the effect
of amending, modifying or supplementing information contained in such Schedule
or Exhibit) in compliance with the terms of the Transaction Documents.
(d) Any reference in this Supplement to any representation, warranty
or covenant "deemed" to have been made is intended to encompass only
representations, warranties or covenants that are expressly stated to be
repeated on or as of dates following the execution and delivery of this
Supplement, and no such reference shall be interpreted as a reference to any
implicit, inferred, tacit or otherwise unexpressed representation, warranty or
covenant.
(e) The words "include", "includes" or "including" shall be
interpreted as if followed, in each case, by the phrase "without limitation".
ARTICLE II
Designation of Certificates; Purchase and
-----------------------------------------
Sale of the VFC Certificates
----------------------------
SECTION 2.01. 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 1996-A", and (ii) the "Subordinated Company Certificate, Series 1996-A."
29
SECTION 2.02. The Series 1996-A Certificates. (a) The VFC
-------------------------------
Certificates shall represent fractional undivided interests in the Trust Assets,
consisting of the right of the VFC Certificateholders to receive the
distributions specified herein out of (i) the Invested Percentage (expressed as
a decimal) of Collections received with respect to the Receivables and all other
funds on deposit in the Collection Account and (ii) to the extent such interests
appear herein, all other funds on deposit in the Series Collection Subaccounts
and any subaccounts thereof (collectively, the "VFC Certificateholders'
Interest").
(b) The Series 1996-A Subordinated Certificate shall represent a
fractional undivided interest in the Trust Assets, consisting of the right to
receive the distributions specified herein out of (i) the Invested Percentage
(expressed as a decimal) of Collections received with respect to the Receivables
and all other funds on deposit in the Collection Account and (ii) to the extent
such interests appear herein, all other funds on the Series Collection
Sub-accounts and any Sub-accounts thereof in each case to the extent not
required to be distributed to or for the benefit of the VFC Certificateholders
(the "Series 1996-A 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 VFC Certificateholders' Interest or the Series 1996-A
Subordinated Interest.
(c) The VFC Certificates and the Series 1996-A Subordinated
Certificate shall be substantially in 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 2.04 hereof
and Section 5.02 of the Agreement. The VFC Certificates shall not be issued in
the form of a single global certificate as provided for in Section 5.01 of the
Agreement, but shall instead be issued in the form of one or
30
more definitive certificates, each registered in the name of a Purchaser as the
holder thereof.
SECTION 2.03. Purchases of Interests in the VFC Certificates.
-----------------------------------------------
(a) Initial Purchase. Subject to the terms and conditions of this Supplement,
-----------------
including delivery of notice in accordance with Section 2.04, (i) each Initial
Purchaser hereby severally agrees (A) to purchase on the Issuance Date a VFC
Certificate in an amount equal to such Initial Purchaser's Commitment Percentage
of the Initial Series 1996-A Invested Amount and (B) to maintain its VFC
Certificate, subject to increase or decrease during the Series 1996-A Revolving
Period, in accordance with the provisions of this Supplement and (ii) the
Company hereby agrees (A) to purchase from the Trust on the Issuance Date the
Series 1996-A Subordinated Certificate in an amount equal to the Initial
Series 1996-A Subordinated Certificate Amount and (B) to maintain such interest
in the Series 1996-A Subordinated Certificate, subject to increase or decrease
during the Series 1996-A Revolving Period, in accordance with the provisions of
this Supplement. Payments by the Initial Purchasers in respect of the VFC
Certificates shall be made in immediately available funds on the Issuance Date
to the Agent for payment to the Trust.
(b) Subsequent Purchases. Subject to the terms and conditions of
---------------------
this Supplement, each Acquiring Purchaser shall be deemed to have severally
agreed, by its acceptance of its VFC Certificate, to maintain its VFC
Certificate, subject to increase or decrease during the Series 1996-A Revolving
Period, in accordance with the provisions of this Supplement.
(c) Maximum Series 1996-A Purchaser Invested Amount. Notwithstanding
------------------------------------------------
anything to the contrary contained in this Supplement, at no time shall the
Series 1996-A Purchaser Invested Amount (calculated without regard to
clauses (d) and (e) of the definition thereof) of any Purchaser exceed such
Purchaser's Commitment at such time.
31
SECTION 2.04. Delivery. On the Issuance Date, the Company shall sign
---------
on behalf of the Trust and shall direct the Trustee in writing pursuant to
Section 5.02 of the Agreement 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 the Initial
Purchasers in accordance with such written directions and (ii) a Series 1996-A
Subordinated Certificate and deliver such Series 1996-A Subordinated Certificate
to the Company as holder thereof in accordance with such written directions.
The Trustee shall mark on its books the actual Series 1996-A Invested Amount and
Series 1996-A Subordinated Certificate Amount outstanding on any date of
determination, which, absent manifest error, shall constitute prima facie
evidence of the outstanding Series 1996-A Invested Amount and Series 1996-A
Subordinated Certificate Amount from time to time.
SECTION 2.05. Procedure for Initial Issuance and for Increasing the
-----------------------------------------------------
Series 1996-A Invested Amount. (a) Subject to subsection 2.05(b), on any
- ------------------------------
Business Day during the Commitment Period, each Purchaser agrees that the
Series 1996-A Invested Amount may be increased by increasing each Purchaser's
Series 1996-A Invested Amount (an "Increase"), up to an amount not exceeding
each Purchaser's Commitment, upon the request of the Master Servicer or the
Company on behalf of the Trust (each date on which an increase in the
Series 1996-A Invested Amount occurs hereunder being herein referred to as the
"Increase Date" applicable to such Increase); provided, however, that the Master
-------- -------
Servicer or the Company, as the case may be, shall have given the Agent
irrevocable written notice (effective upon receipt), substantially in the form
of Exhibit G hereto, of such request no later than (i) if the Initial
Series 1996-A Invested Amount or Increase Amount is to be priced solely with
reference to the ABR, 1:00 p.m., New York City time, on the Issuance Date or
such Increase Date, as the case may be, or (ii) if all or a portion of the
Initial Series 1996-A Invested Amount or Increase Amount is to be
32
allocated to a Eurodollar Tranche, 1:00 p.m., New York City time, three Business
Days prior to the Issuance Date or such Increase Date, as the case may be;
provided further that the provisions of this subsection shall not restrict the
- -------- -------
allocations of Collections pursuant to Article III. Such notice shall state
(x) the Issuance Date or the Increase Date, as the case may be; (y) the Initial
Series 1996-A Invested Amount or the proposed amount of such Increase (the
"Increase Amount"), as the case may be; (y) what portions thereof will be
allocated to a Eurodollar Tranche and the Floating Tranche; and (z) if any
portions thereof are to be allocated to a Eurodollar Tranche, the length of the
Eurodollar Period with respect thereto. No Purchaser shall be obligated to fund
any such Increase, unless concurrently with any such Increase in the
Series 1996-A Invested Amount, the Series 1996-A Subordinated Certificate Amount
shall be increased by an amount (the "Series 1996-A Subordinated Certificate
Increase Amount") such that after giving effect to such increase, the
Series 1996-A Adjusted Invested Amount plus the Series 1996-A Subordinated
Certificate Amount equals the Series 1996-A Target Receivables Amount.
(b) The Purchasers shall not be required to make the initial purchase
of VFC Certificates on the Issuance Date or to increase their respective
Series 1996-A Invested Amounts on any Increase Date hereunder unless:
(i) the related aggregate initial purchase amount or Increase Amount
is equal to (A) in the case of a Floating Tranche, $100,000 or an integral
multiple of $100,000 in excess thereof and (B) in the case of a Eurodollar
Tranche, $500,000 or an integral multiple of $500,000 in excess thereof;
(ii) after giving effect to the initial purchase amount or Increase
Amount, (A) the Series 1996-A Invested Amount (calculated without regard to
clauses (d) and (e) of the definition of Series 1996-A Purchaser Invested
Amount) would not exceed the Maximum Commitment Amount on the Issuance Date
or such Increase
33
Date, as the case may be, and (B) the Series 1996-A Allocated Receivables
Amount would not be less than the Series 1996-A Target Receivables Amount
on the Issuance Date or such Increase Date, as the case may be; and
(iii) no Early Amortization Event or Potential Early Amortization Event
shall have occurred and be continuing.
(c) After receipt by the Agent of the notice required by
subsection 2.05(a) from the Master Servicer or the Company on behalf of the
Trust, the Agent shall, so long as the conditions set forth in subsections
2.05(a) and (b) are satisfied, promptly provide telephonic notice to each
Purchaser of the Increase Date and of the portion of the Increase Amount
allocable to such Purchaser (which shall equal such Purchaser's Commitment
Percentage of the Increase Amount). The Master Servicer shall promptly notify
the Company of the Increase Date and the amount of the Series 1996-A
Subordinated Certificate Increase Amount. Each Purchaser agrees to pay in
immediately available funds such Purchaser's Commitment Percentage of each
Increase on the related Increase Date to the Agent for payment to the Trust.
SECTION 2.06. Procedure for Decreasing the Series 1996-A Invested
---------------------------------------------------
Amount; Optional Termination. (a) On any Business Day during the Series 1996-A
- -----------------------------
Revolving Period or the Series 1996-A Amortization Period (except for
Distribution Dates during the Series 1996-A Amortization Period (which shall be
governed by subsection 3A.06(c))), upon the written request of the Master
Servicer or the Company on behalf of the Trust, the portion of the Series 1996-A
Invested Amount not allocated to a Eurodollar Tranche may be reduced (a
"Decrease") by the distribution by the Trustee to the Agent for the pro rata
benefit of the Purchasers in accordance with their Commitment Percentages of
some or all of the funds on deposit in the Series 1996-A Principal Collection
Sub-subaccount on such day; provided that the Master Servicer shall have given
--------
the Agent and the
34
Trustee irrevocable written notice (effective upon receipt), prior to 1:00 p.m.,
New York City time, on the Business Day of such Decrease and which notice shall
state the amount of such Decrease; provided further that such Decrease shall be
-------- -------
in an amount equal to $100,000 and integral multiples of $100,000 in excess
thereof; provided further, however, that no prepayment of any Eurodollar Tranche
-------- -------
prior to the termination of a Eurodollar Period may occur unless, concurrently
with such prepayment, the Sellers shall have paid to the Purchasers any amounts
due and payable pursuant to Section 7.03.
(b) Simultaneously with any such Decrease during the Series 1996-A
Revolving Period, the Series 1996-A Subordinated Certificate Amount shall be
reduced by an amount (the "Series 1996-A Subordinated Certificate Reduction
Amount") such that the Series 1996-A Subordinated Certificate Amount shall equal
the Series 1996-A Required Subordinated Amount after giving effect to such
Decrease. During the Series 1996-A Revolving Period, after the distribution
described in subsection (a) above has been made, and the Series 1996-A
Subordinated Certificate Amount shall have been reduced by the Series 1996-A
Subordinated Certificate Reduction Amount, a distribution shall be made to the
holder of the Series 1996-A Subordinated Certificate out of remaining funds on
deposit in the Series 1996-A Principal Collection Sub-subaccount in an amount
equal to the lesser of (x) the Series 1996-A Subordinated Certificate Reduction
Amount and (y) the amount of such remaining funds on deposit in the
Series 1996-A Principal Collection Sub-subaccount.
(c) Any reduction in the Series 1996-A Invested Amount on any
Business Day shall be allocated first to reduce the Available Pricing Amount.
(d) (i) On any Business Day to occur following the six month
anniversary of the Issuance Date and prior to the occurrence of the Scheduled
Revolving Termination Date, an Early Amortization Event or Potential Early
Amortization
35
Event, the Company shall have the right to deliver an irrevocable notice (an
"Optional Termination Notice") to the Trustee and the Master Servicer in which
the Company declares that the Series 1996-A Revolving Period shall terminate on
the date (the "Optional Termination Date") set forth in such notice (which date,
in any event, shall not be less than 10 days from the date on which such notice
is delivered).
(ii) From and after the Optional Termination Date, the Series 1996-A
Amortization Period shall commence for all purposes under this Agreement and the
other Transaction Documents. The Trustee shall give prompt written notice of
its receipt of an Optional Termination Notice to the Purchasers and each Rating
Agency.
SECTION 2.07. Reductions of the Commitments. (a) On any Business
------------------------------
Day during the Series 1996-A Revolving Period, the Company, on behalf of the
Trust, may, upon three Business Days prior written notice (effective upon
receipt) reduce or terminate the Commitments (a "Commitment Reduction") in an
aggregate amount equal to $5,000,000 or a whole multiple of $1,000,000 in excess
thereof; provided that no such termination or reduction shall be permitted if,
--------
after giving effect thereto and to any reduction in the Series 1996-A Invested
Amount (calculated without regard to clauses (d) and (e) of the definition of
Series 1996-A Purchaser Invested Amount) on such date, the Series 1996-A
Invested Amount would exceed the Commitment Amount then in effect. Each
Purchaser's Commitment shall be reduced by such Purchaser's Commitment
Percentage of the amount of such Commitment Reduction.
(b) Once reduced, the Commitments may not be subsequently reinstated.
Upon effectiveness of any such reduction, the Agent shall prepare a revised
Schedule 1 to reflect the reduced Commitment of each Purchaser and Schedule 1 of
this Supplement shall be deemed to be
36
automatically superseded by such revised Schedule 1. The Agent shall distribute
such revised Schedule 1 to the Company, the Master Servicer, the Trustee and
each Purchaser.
SECTION 2.08. Interest; Commitment Fee. (a) Interest shall be
-------------------------
payable on the VFC Certificates on each Distribution Date pursuant to
subsection 3A.06(a).
(b) The Company shall pay to the Agent, for the pro rata account of
the Purchasers in accordance with their Commitment Percentages, on the Issuance
Date an initial commitment fee at a rate equal to 0.5% per annum of the
Aggregate Commitment Amount for the period from March 29, 1996 to the Issuance
Date. The Trustee (acting at the written direction of the Master Servicer)
shall pay to the Agent, for the pro rata account of the Purchasers in accordance
with their Commitment Percentages, on the last Business Day of March, June,
September and December in each year and on each date on which any Commitment of
any Purchaser shall expire or terminate (the "Commitment Fee") equal to 0.5% per
annum of the average daily excess of the Aggregate Commitment Amount over the
average Series 1996-A Invested Amount during the preceding quarterly period (or
other applicable period in the case of a termination or expiration.) To the
extent that funds on deposit in the Series 1996-A Accrued Interest Sub-
subaccount and the Series 1996-A Non-Principal Collection Sub-subaccount at any
such date are insufficient to pay the Commitment Fee due on such date, the
Trustee shall so notify the Company and the Company shall immediately pay the
Agent the amount of any such deficiency.
(c) Calculations of per annum rates and fees under this Supplement
shall be made on the basis of a 365-day year with respect to Commitment Fees,
other fees, and, except with respect to Eurodollar Tranches, interest rates.
Each determination of an Adjusted LIBO Rate by the Agent shall be conclusive and
binding upon each of the parties hereto in the absence of manifest error.
37
SECTION 2.09. Indemnification by the Company and the Master Servicer.
-------------------------------------------------------
(a) The Company agrees to indemnify and hold harmless the Agent, each Purchaser
and each of their respective officers, directors, agents and employees (each, a
"Company Indemnified Person") from and against any loss, liability, expense,
damage or injury (a "Claim") suffered or sustained by such Company Indemnified
Person by reason of (i) any acts, omissions or alleged acts or omissions arising
out of, or relating to, activities of the Company pursuant to any Pooling and
Servicing Agreement or the other Transaction Documents to which it is a party,
(ii) in the case of a Claim brought by a third party, a breach of any
representation or warranty made or deemed made by the Company (or any of its
officers), except to the extent that such Company Indemnified Person would be
indemnified and held harmless by the repurchase of Ineligible Receivables
pursuant to Section 2.05 of the Agreement or (iii) in the case of Claim brought
by a third party, a failure by the Company to comply with any applicable law or
regulation or to perform its covenants, agreements, duties or obligations
required to be performed or observed by it in accordance with the provisions of
any Pooling and Servicing Agreement or the other Transaction Documents including
but not limited to any judgment, award settlement, reasonable attorneys' fees
and other reasonable costs or expenses incurred in connection with the defense
of any actual or threatened action, proceeding or claim, except to the extent
such loss, liability, expense, damage or injury resulted from the negligence,
bad faith or wilful misconduct of such Company Indemnified Person or its
officers, directors, agents, principals, employees or employers; provided,
--------
however, that any payments made by the Company pursuant to this subsection shall
- -------
be Company Subordinated Obligations.
(b) The Master Servicer agrees to indemnify and hold harmless the
Agent, each Purchaser and each of their respective officers, directors, agents
and employees (each, a "Master Servicer Indemnified Person") from and against
any Claim by reason of (i) any acts, omissions or alleged acts
38
or omissions arising out of, or relating to, activities of the Master Servicer
pursuant to any Pooling and Servicing Agreement or the other Transaction
Documents to which it is a party, (ii) in the case of a Claim brought by a third
party, a breach of any representation or warranty made or deemed made by the
Master Servicer or any Servicer (or any of their respective officers) or (c) in
the case of Claim brought by a third party, a failure by the Master Servicer or
any Servicer to comply with any applicable law or regulation or to perform its
covenants, agreements, duties or obligations required to be performed or
observed by it in accordance with the provisions of any Pooling and Servicing
Agreement or the other Transaction Documents including but not limited to any
judgment, award, settlement, reasonable attorneys, fees and other reasonable
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim, except to the extent such loss,
liability, expense, damage or injury resulted from the negligence, bad faith or
wilful misconduct of such Master Servicer Indemnified Person or its officers,
directors, agents, principals, employees or employers.
ARTICLE III
Article III of the Agreement
----------------------------
SECTION 3.01 of the Agreement and each other section of Article III of
the Agreement relating to another Series shall be read in its entirety as
provided in the Agreement. Article III of the Agreement (except for
Section 3.01 thereof and any portion thereof relating to another Series) shall
read in its entirety as follows and shall be exclusively applicable to the
Series 1996-A Certificates:
SECTION 3A.02. Establishment of Trust Accounts. (a) The Trustee
--------------------------------
shall cause to be established and maintained in the name of the Trustee, on
behalf of the Trust, (i) for the benefit of the Purchasers and (ii) in the
39
case of clauses (A), (B) and (C) below, for the benefit, subject to the prior
and senior interest of the Purchasers, of the holder of the Series 1996-A
Subordinated Certificate, (A) a subaccount of the Collection Account (the
"Series 1996-A Collection Subaccount"), which subaccount is the Series
Collection Subaccount with respect to Series 1996-A; (B) two subaccounts of the
Series 1996-A Collection Subaccount: (1) the Series 1996-A Principal Collection
Sub-subaccount and (2) the Series 1996-A Non-Principal Collection Sub-subaccount
(respectively, the "Series 1996-A Principal Collection Sub-subaccount" and the
"Series 1996-A Non-Principal Collection Sub-subaccount"), (C) a subaccount of
the Series 1996-A Principal Collection Sub-subaccount (the "Series 1996-A
Principal Collection Subordinated Sub-subaccount"), and (D) a subaccount of the
Series 1996-A Non-Principal Collection Sub-subaccount (the "Series 1996-A
Accrued Interest Sub-subaccount"; all accounts established pursuant to this
subsection 3A.02(a) and listed on Schedule 2, collectively, the "Trust
Accounts"), each Trust Account to bear a designation indicating that the funds
deposited therein are held for the benefit of the Persons (and, for each such
Person, to the extent) set forth in clauses (i) and (ii) above. The Trustee, on
behalf of the Certificateholders, shall possess all right, title and interest in
all funds from time to time on deposit in, and all Eligible Investments credited
to, the Trust Accounts and in all proceeds thereof. The Trust Accounts shall be
under the sole dominion and control of the Trustee for the exclusive benefit of
the Persons (and, for each such Person, to the extent) set forth in clauses (i)
and (ii) above. In any case that the Company has not provided applicable
written direction as to Eligible Investments to the Trustee, the Trustee shall
invest in demand deposits or money market funds that constitute Eligible
Investments.
(b) All Eligible Investments in the Trust Accounts shall be held by
the Trustee, on behalf of the Certificateholders, for the benefit of the
Purchasers and, subject to the prior interest of the Purchasers, of the
40
holder of the Series 1996-A Subordinated Certificate; provided, however, that
-------- -------
funds on deposit in a Trust Account that is a Sub-subaccount of a Collection
Account shall, at the direction of the Company, be invested together with funds
held in other Sub-subaccounts of a Collection Account. After giving effect to
any distribution to the Company pursuant to subsection 3A.03(b)(i), amounts on
deposit and available for investment in the Series 1996-A Principal Collection
Sub-subaccount and the Series 1996-A Principal Collection Subordinated 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 Series 1996-A Revolving Period, on or prior to the next Business Day
and (ii) in the case of any such investment made during the Series 1996-A
Amortization Period, on or prior to the Business Day immediately preceding the
next Distribution Date. Amounts on deposit and available for investment in the
Series 1996-A Non-Principal Collection Sub-subaccount and the Series 1996-A
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
Business Day immediately preceding the subsequent Distribution Date. As of the
Business Day immediately preceding the Settlement Report Date, all interest and
other investment earnings (net of losses and investment expenses) on funds
deposited in the Series 1996-A Accrued Interest Sub-subaccount shall be
deposited in the Series 1996-A Non-Principal Collection Sub-subaccount. All
interest and investment earnings (net of losses and investment expenses) on
funds deposited in the Series 1996-A Principal Collection Sub-subaccount and the
Series 1996-A Principal Collection Subordinated Sub-subaccount shall be
deposited in the Series 1996-A Non-Principal Collection Sub-subaccount.
SECTION 3A.03. Daily Allocations. (a) The portion of the Aggregate
------------------
Daily Collections allocated to the
41
Series 1996-A Certificates pursuant to Article III of the Agreement shall be
allocated and distributed as set forth in this Article III by the Trustee based
solely on the information provided it by the Master Servicer in the Daily Report
(upon which the Trustee may conclusively rely):
(i) on each Business Day, an amount equal to the Accrued Expense
Amount for such day (or, during the Series 1996-A Revolving Period, such
greater amount as the Company may request in writing) shall be transferred
from the Series 1996-A Collection Subaccount to the Series 1996-A Non-
Principal Collection Sub-subaccount; provided that during the Series 1996-A
--------
Amortization Period to the extent of funds on deposit (after giving effect
to deposits on such Business Day) in the Series 1996-A Principal Collection
Subordinated Sub-subaccount, such transfer shall be made from funds on
deposit in the Series 1996-A Principal Collection Subordinated Sub-
subaccount; provided further, that (A) on the tenth Business Day of each
----------------
Accrual Period (and each Business Day thereafter, if necessary, until the
full amount of any positive Accrued Expense Adjustment is transferred),
(B) on the day of any Increase (and each Business Day thereafter, if
necessary, until the full amount of any positive Accrued Expense Adjustment
is transferred), (C) on the day of any Decrease and (D) on the last
Business Day of each Accrual Period, an amount equal to the Accrued Expense
Adjustment shall, if such adjustment is a positive amount, be transferred
from the Series 1996-A Collection Subaccount to the Series 1996-A Non-
Principal Collection Sub-subaccount or, if such adjustment is a negative
amount, be transferred from the Series 1996-A Non-Principal Collection Sub-
subaccount to the Series 1996-A Collection Subaccount (or deducted from the
transfer in respect of the Accrued Expense Amount for such day);
(ii) on each Business Day during the Series 1996-A Revolving Period
(including Distribution Dates),
42
following the transfers pursuant to clause (i) above, any remaining funds
on deposit in the Series 1996-A Collection Subaccount shall be transferred
by the Trustee to the Series 1996-A Principal Collection Sub-subaccount;
and
(iii) on each Business Day during the Series 1996-A Amortization Period
(including Distribution Dates), following the transfers pursuant to
clause (i) above, any remaining funds on deposit in the Series 1996-A
Collection Subaccount shall be transferred by the Trustee as follows:
(A) an amount equal to the sum of (I) the product of (x) the
Series 1996-A Collections and (y) the Ineligible Receivables
Percentage and (II) the product of (x) the Series 1996-A Collections
and (y) the Eligible Receivables Percentage and (z) the Series 1996-A
Subordinated Percentage shall be transferred to the Series 1996-A
Principal Collection Subordinated Sub-subaccount; and
(B) following the transfers pursuant to clause (A) above, any
remaining funds on deposit in the Series 1996-A Collection Subaccount
shall be transferred to the Series 1996-A Principal Collection Sub-
subaccount.
(b) (i) On each Business Day during the Series 1996-A Revolving
Period (including Distribution Dates), after giving effect to all allocations of
Aggregate Daily Collections referred to in subparagraphs (a)(i) and (a)(ii) on
such Business Day, amounts on deposit in the Series 1996-A Principal Collection
Sub-subaccount shall be distributed by the Trustee, based solely on the
information provided to the Trustee by the Master Servicer in the Daily Report
(upon which the Trustee may conclusively rely, subject to its obligation to
perform the procedures set forth in the Internal Operating Procedures
Memorandum),
43
(A) first, to pay Excess Program Costs and (B) second, 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) in accordance with directions
contained in the Daily Report or to such accounts or such persons as the Company
may direct in writing (which directions may consist of standing instructions
provided by the Company that shall remain in effect until changed by the Company
in writing); provided that such distribution shall be made only if no Early
--------
Amortization Event or Potential Early Amortization Event relating to an Early
Amortization Event set forth in subsections (a), (d) (but only with respect to a
Servicer Default set forth in subsection 6.01(e) of the Servicing Agreement
relating to the Master Servicer or to one or more Servicers that are responsible
for servicing Receivables representing 15% or more of the Aggregate Receivables
Amount), (g) or (j) of Section 5.01 of this Supplement has occurred and is
continuing and only to the extent that if, after giving effect to such
distribution, the Series 1996-A Target Receivables Amount would not exceed the
Series 1996-A Allocated Receivables Amount; provided further that if the Company
----------------
or the Master Servicer, on behalf of the Company, shall have given the Agent and
the Trustee irrevocable written notice (effective upon receipt) at least one
Business Day prior to such day (or, in the case of the Floating Tranche, notice
may be given on such day), the Company or the Master Servicer may instruct the
Trustee in writing (specifying the related amount) to withdraw all or a portion
of such amounts on deposit in the Series 1996-A Principal Collection Sub-
subaccount and apply such withdrawn amounts toward the reduction of the
Series 1996-A Invested Amount and the Series 1996-A Subordinated Certificate
Amount in accordance with Section 2.06. Amounts distributed to the Company
hereunder shall be deemed to be paid first from Collections received directly by
the Master Servicer and second from Collections received in the Lockboxes.
(ii) During the Series 1996-A Amortization Period, amounts on deposit
in the Series 1996-A Principal Collection
44
Sub-subaccount and the Series 1996-A Principal Collection Subordinated Sub-
subaccount on each Distribution Date shall be distributed on such Distribution
Date in accordance with subsection 3A.06(c). No amounts on deposit in the
Series 1996-A Principal Collection Sub-subaccount or the Series 1996-A Principal
Collection Subordinated Sub-subaccount shall be distributed by the Trustee to
the Company or the holder of the Series 1996-A Subordinated Certificate during
the Series 1996-A Amortization Period.
(c) On each Business Day, an amount equal to the Daily Interest
Deposit for such day shall be transferred by the Trustee, based solely on the
information provided to the Trustee by the Master Servicer in the Daily Report
(upon which the Trustee may conclusively rely, subject to its obligation to
perform the procedures set forth in the Internal Operating Procedures
Memorandum), from the Series 1996-A Non-Principal Sub-subaccount to the
Series 1996-A Accrued Interest Sub-subaccount provided, that, on each Business
--------
Day that a transfer of funds is required to be made in respect of an Accrued
Expense Adjustment pursuant to the further proviso to subsection 3A.03(a)(i), an
amount equal to the Daily Interest Adjustment shall, if such adjustment is a
positive amount, be transferred from the Series 1996-A Non-Principal Collection
Sub-subaccount to the Series 1996-A Accrued Interest Sub-subaccount or, if such
adjustment is a negative amount, be transferred from the Series 1996-A Accrued
Interest Sub-subaccount to the Series 1996-A Non-Principal Collection Sub-
subaccount (or deducted from the transfer in respect of the Daily Interest
Deposit for such day);
(d) On each Business Day during the Series 1996-A Amortization Period
(including Distribution Dates), after giving effect to the transfers pursuant to
subsection 3A.03(a) the Trustee shall also transfer, based solely on the
information provided to the Trustee by the Master Servicer in the Daily Report
(upon which the Trustee may conclusively rely, subject to its obligation to
perform the procedures set forth in the Internal Operating
45
Procedures Memorandum), from the Series 1996-A Principal Collection Subordinated
Sub-subaccount to the Series 1996-A Principal Collection Sub-subaccount an
amount equal to the lesser of (i) the sum of (A) the product of (1) the Series
1996-A Non-Subordinated Percentage, times (2) the Invested Percentage, times
----- -----
(3) the Eligible Receivables Percentage, times (4) the excess of (x) the sum of
-----
Dilution Adjustments arising or identified, and the outstanding Principal Amount
of Ineligible Receivables with respect to which a Repurchase Event has occurred,
in each case since the preceding Business Day, over (y) the amount specified in
----
the Daily Report as having been deposited by the Company in respect of such
Dilution Adjustments and Ineligible Receivables (either from the deposit in the
Collection Account of cash payments made in respect thereof by the Sellers or
from other cash Collections in respect thereof) in the Series 1996-A Principal
Collection Sub-subaccount since the preceding Business Day, (B) the product of
(1) the Series 1996-A Non-Subordinated Percentage, times (2) the Invested
-----
Percentage, times (3) the Eligible Receivables Percentage, times (4) the
----- -----
Principal Amount of Receivables that became Defaulted Receivables since the
preceding Business Day, and (C)(x) the Series 1996-A Unreimbursed Amount (as
defined in the following sentence) for the prior Business Day minus (y) the
-----
amount specified in the Daily Report as having been deposited by the Company on
such Business Day in respect of such Series 1996-A Unreimbursed Amount (either
from the deposit in the Collection Account of cash payments made in respect
thereof by the Sellers or from other cash Collections in respect thereof) in the
Series 1996-A Principal Collection Sub-subaccount and (ii) the amount on deposit
in the Series 1996-A Principal Collection Subordinated Sub-subaccount on such
Business Day. If on any Business Day the amount calculated pursuant to clause
(i) exceeds the amount calculated pursuant to clause (ii), such excess shall be
referred to as the "Series 1996-A Unreimbursed Amount" for such Business Day.
(e) In addition to the foregoing, on any Distribution Date during the
Series 1996-A Amortization
46
Period following the Settlement Report Date on which (i) the Series 1996-A
Invested Amount has been reduced to an amount that is equal to or less than the
Clean-Up Call Amount, and (ii) the sum of (x) the amount on deposit in the
Series 1996-A Principal Collection Subordinated Sub-subaccount, plus (y) the
----
amount on deposit in the Series 1996-A Principal Collection Sub-subaccount,
equals or exceeds the Clean-Up Call Repurchase Price, the Trustee shall
transfer, based solely on the information provided to the Trustee by the Master
Servicer in the Daily Report (upon which the Trustee may conclusively rely,
subject to its obligation to perform the procedures set forth in the Internal
Operating Procedures Memorandum), from the Series 1996-A Principal Collection
Subordinated Sub-subaccount to the Series 1996-A Principal Collection
Sub-subaccount (which amount shall be used to pay the Clean-Up Call Repurchase
Price in full) the lesser of (i) the Clean-Up Call Repurchase Price minus the
-----
amount on deposit in the Series 1996-A Principal Collection Sub-subaccount on
such day and (ii) the amount on deposit in the Series 1996-A Principal
Collection Subordinated Sub-subaccount. In addition, on the Distribution Date
during the Series 1996-A Amortization Period on which the Company has exercised
its clean-up option pursuant to Section 9.02 of the Agreement to repurchase the
Series 1996-A Certificates, the Trustee shall, upon the written request of the
Company, transfer from the Series 1996-1 Principal Collection Subordinated
Sub-subaccount to the Series 1996-A Principal Collection Sub-account (which
amount shall be applied towards payment of the Clean-Up Call Repurchase Price)
the lesser of (i) the Series 1996-A Invested Amount minus the amount on deposit
-----
in the Series 1996-A Principal Collection Sub-subaccount on such day and
(ii) the amount on deposit in the Series 1996-A Principal Collection
Subordinated Sub-subaccount. Further, (i) if the Amortization Period has
commenced with respect to all Outstanding Series, then, on the date that is six
months after the latest date on which the last Amortization Period for an
Outstanding Series commenced and (ii) if the Receivables have been disposed of
pursuant to subsection 7.02(b) of the Agreement, on the Distribution Date
following
47
the date of such disposition, the Trustee shall transfer from the Series 1996-A
Principal Collection Subordinated Sub-subaccount to the Series 1996-A Principal
Collection Sub-subaccount (which amount shall be applied towards payment of the
Series 1996-A Invested Amount) the remaining amount on deposit in the Series
1996-A Principal Collection Subordinated Sub-subaccount. The provisions of the
foregoing paragraph (d) and this paragraph (e) shall in no event be construed to
affect any other obligations of any Seller, any Servicer, the Master Servicer or
the Company under any of the Transaction Documents.
(f) The allocations to be made pursuant to this Section 3A.03 are
subject to the provisions of Sections 2.05, 2.06, 7.02, 9.01 and 9.04 of the
Agreement.
SECTION 3A.04. Determination of Interest. (a) (i) The amount of
--------------------------
interest distributable with respect to the VFC Certificates ("Series 1996-A
Monthly Interest Distribution") on each Distribution Date shall be the aggregate
amount of Daily Interest Expense accrued during the immediately preceding
Accrual Period.
(ii) Following any change in the amount of any Eurodollar Tranche or
Floating Tranche during an Accrual Period, the Series 1996-A Monthly Interest
shall be calculated with respect to such changed amount for the number of days
in the Accrual Period during which such changed amount is outstanding.
(iii) If the Certificate Rate changes during any Accrual Period, the
Master Servicer shall amend the Monthly Settlement Statement to reflect the
adjustment in the Series 1996-A Monthly Interest for such Accrual Period caused
by such change and any consequent adjustments and the Master Servicer shall also
provide written notification to the Trustee of any such change in the
Certificate Rate. Any amendment to the Monthly Settlement Statement pursuant to
this subsection 3A.04(a)(iii) shall be completed by
48
1:00 p.m. on the day preceding the next Settlement Report Date.
(b) On each Distribution Date, the Master Servicer shall determine
the excess, if any (the "Interest Shortfall"), of (i) the aggregate
Series 1996-A Monthly Interest Distribution for the Accrual Period ending on
such Distribution Date over (ii) the amount that will be available to be
distributed to the Purchasers on such Distribution Date in respect thereof
pursuant to this Supplement. If the Interest Shortfall with respect to any
Distribution Date is greater than zero, an additional amount ("Additional
Interest") equal to the product of (A) the number of days until such Interest
Shortfall shall be repaid divided by 365, (B) the ABR plus 2.0% per annum and
(C) such Interest Shortfall (or the portion thereof that has not been paid to
the Purchasers) shall be payable as provided herein with respect to the VFC
Certificates on each Distribution Date following such Distribution Date to and
including the Distribution Date on which such Interest Shortfall is paid to the
VFC Certificateholders.
(c) On any Business Day, the Company may, subject to
subsection 3A.04(e), elect to allocate all or any portion of the Available
Pricing Amount to one or more Eurodollar Tranches with Eurodollar Periods
commencing on such Business Day by giving the Agent irrevocable written or
telephonic (confirmed in writing) notice thereof, which notice must be received
by the Agent prior to 1:00 p.m., New York City time, three Business Days prior
to such Business Day. Such notice shall specify (i) the applicable Business
Day, (ii) the Eurodollar Period for each Eurodollar Tranche to which a portion
of the Available Pricing Amount is to be allocated and (iii) the portion of the
Available Pricing Amount being allocated to each such Eurodollar Tranche.
Promptly upon receipt of each such notice the Agent shall notify each Purchaser
of the contents thereof. If the Agent shall not have received timely notice as
aforesaid with respect to all or any portion of the Available Pricing
49
Amount, the Monthly Interest Payment on such amount shall be calculated by
reference to the ABR.
(d) Any reduction in the Series 1996-A Invested Amount on any
Business Day shall be allocated in the following order of priority:
first, to reduce the Unallocated Balance, as appropriate; and
-----
second, to reduce the portion of the Series 1996-A Invested Amount
------
allocated to Eurodollar Tranches in such order as the Company may select in
order to minimize costs payable pursuant to Section 7.04.
(e) Notwithstanding anything to the contrary contained in this
Section 3A.04, (i) the portion of the Series 1996-A Invested Amount allocable to
each Eurodollar Tranche must be in an amount equal to $500,000 or an integral
multiple of $500,000 in excess thereof; (ii) no more than five Eurodollar
Tranches shall be outstanding at any one time; (iii) after the occurrence and
during the continuance of any Early Amortization Event or Potential Early
Amortization Event relating to an Early Amortization Event set forth in
subsections (a), (d) (but only with respect to a Servicer Default set forth in
subsection 6.01(e) of the Servicing Agreement), (e), (g) or (j) of Section 5.01
of this Supplement, the Company, may not elect to allocate any portion of the
Available Pricing Amount to a Eurodollar Tranche; and (iv) after the end of the
Series 1996-A Revolving Period, the Company may not select any Eurodollar Period
that exceeds one month or that does not end on or prior to the next succeeding
Distribution Date.
SECTION 3A.05. Determination of Series 1996-A Monthly Principal.
-------------------------------------------------
(a) Payments of Series 1996-A Principal. The amount (the "Series 1996-A
------------------------------------
Monthly Principal Payment") distributable from the Series 1996-A Principal
Collection Sub-subaccount on each Distribution Date during
50
the Series 1996-A Amortization Period shall be equal to the amount on deposit in
such account on the immediately preceding Settlement Report Date; provided,
--------
however, that the Series 1996-A Monthly Principal Payment on any Distribution
- -------
Date shall not exceed the Series 1996-A Invested Amount on such Distribution
Date after giving effect to the reductions and increases pursuant to
paragraphs (b) and (c) below. Further, on any other Business Day during the
Series 1996-A Amortization Period, funds may be distributed from the
Series 1996-A Principal Collection Sub-subaccount to the Purchasers in
accordance with Section 2.06 of this Supplement.
(b) Reductions to Series 1996-A Principal. If, on any Special
--------------------------------------
Allocation Settlement Report Date, the Series 1996-A Allocable Charged-Off
Amount is greater than zero for the related Settlement Period, the Trustee shall
(in accordance with written directions from the Master Servicer upon which the
Trustee may conclusively rely) make the following applications of such amounts
in the following order of priority:
(i) the Series 1996-A Required Subordinated Amount shall be reduced
(but not below zero) by an amount equal to the Series 1996-A Allocable
Charged-Off Amount (which shall also be reduced by the amount so applied);
(ii) then, to the extent that the Series 1996-A Allocable Charged-Off
Amount is greater than zero following the application in clause (i) above,
the Series 1996-A Invested Amount shall be reduced (but not below zero) by
such remaining Series 1996-A Allocable Charged-Off Amount (which shall also
be reduced by the amount so applied).
(c) Increases to Series 1996-A Principal. If, on any Special
-------------------------------------
Allocation Settlement Report Date, the Series 1996-A Allocable Recoveries Amount
is greater than zero for the related Settlement Period, the Trustee shall (in
accordance with written directions from the Master
51
Servicer upon which the Trustee may conclusively rely) make the following
applications (after giving effect to the applications in paragraph (b) of such
amount in the following order of priority):
(i) the Series 1996-A Invested Amount shall be increased (but only to
the extent of any previous reductions of the Series 1996-A Invested Amount
pursuant to subsection 3A.05(b)(ii)) by the amount of the Series 1996-A
Allocable Recoveries Amount (which shall also be reduced by the amount so
applied);
(ii) then, to the extent that the Series 1996-A Allocable Recoveries
Amount is greater than zero following the applications in clause (i) above,
the Series 1996-A Required Subordinated Amount shall be increased (but only
to the extent of any previous reductions of the Series 1996-A Required
Subordinated Amount pursuant to subsection 3A.05(b)(i)) by such remaining
Series 1996-A Allocable Recoveries Amount (which shall also be reduced by
the amount so applied).
SECTION 3A.06. Applications. (a) The Trustee shall distribute,
-------------
based solely on the information provided to the Trustee by the Master Servicer
in the Monthly Settlement Statement (upon which the Trustee may conclusively
rely, subject to its obligation to perform the procedures set forth in the
Internal Operating Procedures Memorandum), on each Distribution Date, from
amounts on deposit in the Series 1996-A Accrued Interest Sub-subaccount, an
amount equal to the Series 1996-A Monthly Interest Distribution payable on such
Distribution Date (such amount, the "Monthly Interest Payment"), plus the amount
of any Monthly Interest Payment previously due but not distributed to the
Purchasers on a prior Distribution Date, plus the amount of any Additional
Interest for such Distribution Date and any Additional Interest previously due
but not distributed to the Purchasers on a prior Distribution Date, to the
Purchasers.
52
(b) On each Distribution Date, the Trustee shall apply funds on
deposit in the Series 1996-A Non-Principal Collection Sub-subaccount in the
following order of priority to the extent funds are available:
(i) an amount equal to the Series 1996-A Monthly Servicing Fee for the
Accrual Period ending on such Distribution Date shall be withdrawn from the
Series 1996-A Non-Principal Collection Sub-subaccount by the Trustee and
paid to the Master Servicer (less any amounts payable to the Trustee
pursuant to Section 8.05 of the Agreement which shall be paid to the
Trustee); provided that if an Early Amortization Event shall have occurred
--------
and is continuing and LFI Servicing Corporation or any Affiliate thereof is
a Servicer, the Trustee shall deposit the Series 1996-A Monthly Servicing
Fee, up to the Expense Account Limit, into the Expense Account; and
(ii) an amount equal to any Program Costs due and payable shall be
withdrawn from the Series 1996-A Non-Principal Collection Sub-subaccount by
the Trustee and paid to the Persons owed such amounts.
Any remaining amounts on deposit in the Series 1996-A Non-Principal Collection
Sub-subaccount (in excess of the Accrued Expense Amount as of such day) not
allocated pursuant to clauses (i) and (ii) above shall be paid to the holder of
the Series 1996-A Subordinated Certificate; provided, however, that during the
-------- -------
Series 1996-A Amortization Period, such remaining amounts shall be deposited in
the Series 1996-A Principal Collection Sub-subaccount for distribution in
accordance with subsection 3A.06(c).
(c) During the Series 1996-A Amortization Period, the Trustee shall
apply, on each Distribution Date, amounts
53
on deposit in the Series 1996-A Principal Collection Sub-subaccount in the
following order of priority:
(i) an amount equal to the Series 1996-A Monthly Principal Payment for
such Distribution Date shall be distributed from the Series 1996-A
Principal Collection Sub-subaccount to the Purchasers in reduction of the
Series 1996-A Invested Amount; and
(ii) if, following the repayment in full of the Series 1996-A Invested
Amount, any amounts are owed to the Trustee or any other Person, on account
of its fees, expenses and disbursements incurred in respect of the
performance of its responsibilities hereunder or as Successor Master
Servicer, such amounts shall be transferred from the Series 1996-A
Principal Collection Sub-subaccount and paid to the Trustee or such other
Person; and
(iii) following the repayment in full of the Series 1996-A Invested
Amount and of all of the amounts set forth in clause (ii), the remaining
amount on deposit in the Series 1996-A Principal Collection Sub-subaccount
on such Distribution Date, if any, shall be distributed to the holder of
the Series 1996-A Subordinated Certificate.
SECTION 3A.07. Refinancing. On any Distribution Date, the Company
------------
may, with 30 days' prior written notice to the Agent, the Trustee and the Master
Servicer, refinance all or a portion of the Series 1996-A Invested Amount. The
Series 1996-A Invested Amount may be refinanced in full or in part, but the
VFC Certificates and all other amounts (if any) then owed to the Purchasers by
the Trust, the Company, the Master Servicer, any Servicer or any Seller pursuant
to the Transaction Documents must, at the time of such refinancing, be paid in
full from the proceeds of such refinancing together with any other funds made
available by the Company as may be necessary for such payment in full. The
Company shall, to effect such refinancing, deposit no
54
later than 11:00 a.m. on such Distribution Date either (i) (A) an amount equal
to the Monthly Interest Payment, plus the amount of any Monthly Interest Payment
previously due but not distributed to the Purchasers on a prior Distribution
Date, plus the amount of any Additional Interest for such Distribution Date and
any Additional Interest previously due but not distributed to the Purchasers on
a prior Distribution Date, to the Series 1996-A Accrued Interest Sub-subaccount,
(B) the Series 1996-A Adjusted Invested Amount to the Series 1996-A Principal
Collection Sub-subaccount and (C) all other amounts then owing to the Purchasers
pursuant to the Transaction Documents to the Series 1996-A Non-Principal
Collection Sub-subaccount, in each case, for distribution to the Purchasers by
the Trustee in accordance with subsection 4A.01(a) or (ii) funds in the same
aggregate amount as specified in the foregoing clause (i) to such accounts of
the Agent or the Purchasers and in such amounts as may be specified by the
Agent. In either case (i) or (ii), the Master Servicer's Daily Report and
Monthly Settlement Statement delivered pursuant to subsection 4A.01(b) shall
reflect such deposits in connection with the refinancing.
ARTICLE IV
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 the following shall
be exclusively applicable to the VFC Certificates issued pursuant to this
Supplement:
SECTION 4A.01. Distributions. (a) On each Distribution Date, the
--------------
Trustee shall distribute to each Purchaser from the account indicated in
Article III an amount equal to the product of (i) the amount to be distributed
to the Purchasers pursuant to Article III and (ii) such Purchaser's Commitment
Percentage.
55
(b) All allocations and distributions hereunder shall be in
accordance with the Daily Report and the Monthly Settlement Statement and shall
be made in accordance with the provisions of Section 11.04 hereof and subject to
Section 3.01(h) of the Agreement.
SECTION 4A.02. Daily Reports. The Master Servicer shall provide the
--------------
Agent and the Trustee with a Daily Report in accordance with subsection 4.02(a)
of the Servicing Agreement. The Agent shall make copies of the Daily Report
available to the Purchasers at their reasonable request at the Agent's office in
The City of New York.
SECTION 4A.03. Statements and Notices. (a) Monthly Settlement
----------------------- ------------------
Statements. On each Settlement Report Date (commencing with the Settlement
- -----------
Report Date occurring in September 1996), the Master Servicer shall deliver to
the Trustee and the Agent a Monthly Settlement Statement in the Form of
Exhibit F setting forth, among other things, the Loss Reserve Ratio, the
Dilution Reserve Ratio, the Minimum Ratio, the Carrying Cost Reserve Ratio and
the Servicing Reserve Ratio, each as recalculated for the next succeeding
Settlement Period. The Agent shall forward a copy of each Monthly Settlement
Statement to any Purchaser upon request by such Purchaser. The Company and the
Master Servicer will deliver copies of all notices, reports (other than Daily
Reports), statements and other documents delivered by it pursuant to the Pooling
and Servicing Agreements to each Rating Agency.
(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 Purchaser, a statement prepared by the Company
containing the aggregate amount distributed to such Person for such calendar
year or the applicable portion thereof during which such Person was a Purchaser,
together with such other information as is
56
required to be provided by an issuer of indebtedness under the Internal Revenue
Code and such other customary information as the Company deems necessary to
enable the Purchasers to prepare their tax returns. Such obligation of the
Company shall be deemed to have been satisfied to the extent that substantially
comparable information shall have been provided by the Trustee or the Agent
pursuant to any requirements of the Internal Revenue Code as from time to time
in effect. The Trustee shall be under no obligation to prepare tax returns for
the Trust.
(c) Early Amortization Event/Distribution of Principal Notices. Upon
-----------------------------------------------------------
the occurrence of an Early Amortization Event with respect to the Series 1996-A,
the Company or the Master Servicer, as the case may be, shall give prompt
written notice thereof to the Trustee and the Agent. As promptly as reasonably
practicable after its receipt of notice of the occurrence of an Early
Amortization Event with respect to Series 1996-A, the Trustee shall give notice
(i) to each Rating Agency (which notice shall be given, by telephone or
otherwise, not later than the second Business Day after such receipt) and
(ii) to the Agent, who in turn shall give notice to each Purchaser. In
addition, on the Business Day preceding each day on which a distribution of
principal is to be made during the Series 1996-A Amortization Period, the Master
Servicer shall direct the Agent to send notice to each Purchaser, which notice
shall set forth the amount of principal to be distributed on the related date to
the Purchasers with respect to the outstanding VFC Certificates.
ARTICLE V
Additional Early Amortization Events
------------------------------------
SECTION 5.01. Additional Early Amortization Events. If any one of
-------------------------------------
the events specified in Section 7.01 of the Agreement (after any grace periods
or consents applicable thereto) or any one of the following events
57
(each, an "Early Amortization Event") shall occur during the Series 1996-A
Revolving Period with respect to the Series 1996-A Certificates:
(a) (i) failure on the part of the Master Servicer to direct any
payment to be made, or failure of any payment to be made, in respect of
interest owing on any VFC Certificate or the Commitment Fee within five
Business Days of the date such interest or Commitment Fee is due or
(ii) failure on the part of the Master Servicer to direct any payment to be
made, or of the Company to make any payment in respect of any other amounts
owing by the Company, under any Pooling and Servicing Agreement to or for
the benefit of the Purchasers 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 covenant or agreement of the Company set forth in
any Pooling and Servicing Agreement that continues unremedied 30 days
after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Company by the Trustee, or to
the Company and the Trustee by the Agent or Purchasers evidencing 25% or
more of the Series 1996-A Invested Amount;
(c) any representation or warranty made or deemed made by the Company
in any Pooling and Servicing Agreement to or for the benefit of the
Purchasers shall prove to have been incorrect in any material respect when
made or when deemed made that continues to be incorrect 30 days after the
date on which notice of such failure, requiring the same to be remedied,
shall have been given to the Company by the Trustee or to the Company and
the Trustee by the Agent or Purchasers evidencing 25% or more of the
Series 1996-A Invested Amount and as a result of such incorrectness, the
interests, rights or remedies of the Purchasers have
58
been materially and adversely affected; provided, however, that an Early
-------- -------
Amortization Event with respect to the Series 1996-A Certificates 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 any Pooling and Servicing Agreement within 10 Business Days
of when the Company was obligated to do so;
(d) a Servicer Default with respect to (i) the Master Servicer, other
than any Servicer Default that is within subsection 5.01(a) above, or
(ii) one or more Servicers that are responsible for servicing Receivables
representing 15% or more of the Aggregate Receivables Amount shall have
occurred and be continuing;
(e) a Purchase Termination Event with respect to one or more Sellers
that are responsible for originating Receivables representing 5% or more of
the Aggregate Receivables Amount shall have occurred and be continuing;
(f) a Change in Control shall have occurred;
(g) the Series 1996-A Allocated Receivables Amount shall be less than
the Series 1996-A Target Receivables Amount for a period of five
consecutive Business Days;
(h) any of the Agreement, the Servicing Agreement, this Supplement or
the Receivables Sale Agreement shall cease, for any reason, to be in full
force and effect, or the Company, Master Servicer, any Servicer, any Seller
or any Affiliate thereof shall so assert in writing;
59
(i) the Trust shall for any reason cease to have a valid and perfected
first priority undivided ownership or first priority security interest in
any of the Trust Assets (subject to no other Liens other than any Permitted
Liens) and such cessation would individually, or together with other
cessations, have a Material Adverse Effect;
(j) a Federal tax notice of lien that affects the Company shall have
been filed and 40 days shall have elapsed without such notice having been
effectively withdrawn or such lien having been released or discharged;
(k) any "Event of Default", as such term is defined in the Credit
Agreement as in effect on the Effective Date, after giving effect to any
grace period applicable thereto under the Credit Agreement as in effect on
the Effective Date, shall have occurred and be continuing; or
(l) (i) one or more judgments for the payment of money (to the extent
not bonded or covered by insurance to the reasonable satisfaction of the
Agent) shall be rendered against the Company (A) in an aggregate amount
greater than $50,000 or (B) that, individually or in the aggregate, have
resulted or could reasonably be expected to result in a Company Material
Adverse Effect or (ii) one or more judgments for the payment of money (to
the extent not bonded or covered by insurance to the reasonable
satisfaction of the Agent) shall be rendered against the Master Servicer,
any Servicer, any Seller or any combination thereof (A) in an aggregate
amount greater than $7,500,000 or (B) that, individually or in the
aggregate, have resulted or could reasonably be expected to result in a
Servicer Material Adverse Effect or a Seller Material Adverse Effect, as
applicable, with respect to one or more Servicers or Sellers, as
applicable, that are responsible for servicing or originating, as the case
60
may be, 5% or more of the Aggregate Receivables Amount and, in either case,
the same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to levy upon assets or properties
of the Company, the Master Servicer, any Servicer or any Seller to enforce
any such judgment;
then, in the case of (x) any event described in Section 7.01 of the Agreement,
automatically without any notice or action on the part of the Trustee or
Purchasers, an early amortization period shall immediately commence or (y) any
event described above, after the applicable grace period (if any) set forth in
the applicable subsection, the Trustee may, and at the written direction of the
Majority Purchasers shall, by written notice then given to the Company and the
Master Servicer, declare that an early amortization period has commenced as of
the date of such notice with respect to the Series 1996-A (any such period under
clause (x) or (y) above, an "Early Amortization Period; provided, however, that
-------- -------
in the case of the event described in clause (g) above, if an Early Amortization
Period has not been declared within 10 Business Days from the occurrence of such
event, then an Early Amortization Period shall occur automatically unless,
(i) prior to the end of such 10 Business Day period, the Series 1996-A Allocated
Receivables Amount shall no longer be less than the Series 1996-A Target
Receivables Amount and (ii) so long as the Series 1996-A Allocated Receivables
Amount continues to be equal to or greater than the Series 1996-A Target
Receivables Amount, VFC Certificateholders evidencing 66-2/3% or more of the
Series 1996-A Invested Amount shall have waived the occurrence of such event.
Notwithstanding the foregoing, a delay or failure in performance
referred to in clause (a) above for a period of 10 Business Days after the
applicable grace period, or in clause (b) above for a period of 30 Business Days
after the applicable grace period, will not constitute an Early
61
Amortization Event if such delay or failure could not have been prevented by the
exercise of reasonable diligence by the Company and such delay or failure was
caused by a Force Majeure Delay. The Company will nevertheless be required to
use its best efforts to perform its obligations in a timely manner in accordance
with the terms of the Transaction Documents, and the Company shall promptly give
the Trustee an Officer's Certificate notifying it of any such delay or failure.
ARTICLE VI
Servicing Fee
-------------
SECTION 6.01. Servicing Compensation. A monthly servicing fee (the
-----------------------
"Series 1996-A Monthly Servicing Fee") shall be payable to the Master Servicer
on each Distribution Date for the preceding Settlement Period, in an amount
equal to the product of (a) the Servicing Fee and (b) a fraction, the numerator
of which shall be equal to the Series 1996-A Target Receivables Amount as of the
end of the preceding Settlement Period and the denominator of which shall be
equal to the Principal Amount of all Receivables in the Trust as of the end of
such preceding Settlement Period; provided, however, that, for the purposes of
-------- -------
calculating the Accrued Expense Adjustment on the last Business Day of any
Accrual Period, such calculation shall be based on the Series 1996-A Target
Receivables Amount and Principal Amount of all Receivables in the Trust as of
the end of the most recent Settlement Period that has elapsed. To the extent
that funds on deposit in the Series 1996-A Non-Principal Collection
Sub-subaccount at any such date are insufficient to pay the Series 1996-A
Monthly Servicing Fee due on such date as set forth in the Monthly Settlement
Statement delivered by the Master Servicer to the Trustee, the Trustee shall so
notify the Company and the Company shall immediately pay the Master Servicer the
amount of any such deficiency.
62
ARTICLE VII
Change in Circumstances
-----------------------
SECTION 7.01. Reserve Requirements; Change in Circumstances.
----------------------------------------------
(a) Notwithstanding any other provision of this Supplement, if after the
Issuance Date any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Purchaser in
respect of any Eurodollar Tranche or any fees or other amounts payable hereunder
(other than changes in respect of Excluded Taxes and taxes described in
Section 7.04) or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of or credit extended by any Purchaser (except any such reserve
requirement that is reflected in the Adjusted LIBO Rate) or shall impose on such
Purchaser or the London interbank market any other condition affecting the
Supplement or any Eurodollar Tranche or participation therein, and the result of
any of the foregoing shall be to increase the cost to such Purchaser of
purchasing or holding a portion thereof or to reduce the amount of any sum
received or receivable by such Purchaser hereunder (whether of principal,
interest or otherwise) in each case by an amount deemed by such Purchaser to be
material, then the Company agrees to pay to such Purchaser upon demand such
additional amount or amounts as will compensate such Purchaser for such
additional costs incurred or reduction suffered.
(b) If any Purchaser shall have determined that the adoption after the
Issuance Date of any law, rule, regulation or guideline regarding capital
adequacy, or any change after the Issuance Date in any such law, rule,
regulation or guideline (whether such law, rule, regulation or guideline has
been adopted) or in the interpretation or administration thereof by any
Governmental Authority charged
63
with the interpretation or administration thereof, or compliance by any
Purchaser (or any lending office of such Purchaser) or any Purchaser's holding
company with any request or directive regarding capital adequacy issued or
adopted after the Issuance Date (whether or not having the force of law) of any
Governmental Authority has or would have the effect of reducing the rate of
return on such Purchaser's capital or on the capital of such Purchaser's holding
company, if any, as a consequence of this Supplement or purchasing or holding
VFC Certificates or maintaining such Purchaser's Commitment pursuant hereto to a
level below that which such Purchaser or such Purchaser's holding company could
have achieved but for such applicability, adoption, change or compliance (taking
into consideration such Purchaser's policies and the policies of such
Purchaser's holding company with respect to capital adequacy) by an amount
deemed by such Purchaser to be material, then from time to time the Company
agrees to pay to such Purchaser such additional amount or amounts as will
compensate such Purchaser or such Purchaser's holding company for any such
reduction suffered.
(c) A certificate of a Purchaser setting forth (i) the amount or amounts
necessary to compensate such Purchaser or its holding company, as applicable, as
specified in subsection 7.01(a) or 7.01(b) above and (ii) a reasonably detailed
explanation of the calculation of such amount or amounts shall be delivered to
the Company and shall be conclusive absent manifest error. The Company shall
pay such Purchaser the amount shown as due on any such certificate delivered by
it within 10 days after its receipt of the same.
(d) Failure or delay on the part of any Purchaser to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital shall not constitute a waiver of such Purchaser's
right to demand such compensation. The protection of this Section shall be
available to each Purchaser regardless of any possible contention of the
invalidity or inapplicability
64
of the law, rule, regulation, agreement, guideline or other change or condition
that shall have occurred or been imposed.
SECTION 7.02. Change in Legality. (a) Notwithstanding any other
-------------------
provision of the Agreement or this Supplement, if, after the Issuance Date, any
change in any law or regulation or in the interpretation thereof by any Gov-
ernmental Authority charged with the administration or interpretation thereof
shall make it unlawful for any Purchaser to purchase or hold a portion of any
Eurodollar Tranche or to give effect to its obligations as contemplated hereby
with respect to any Eurodollar Tranche, then, by written notice to the Company,
the Trustee and the Agent:
(i) such Purchaser may declare that Eurodollar Tranches will not
thereafter, for the duration of such unlawfulness, be funded by such
Purchaser hereunder (or be continued for additional Eurodollar Periods) and
the portion of any Available Pricing Amount in respect of such Purchaser's
Commitment Percentage will not thereafter, for the duration of such
unlawfulness, be allocated to Eurodollar Tranches, whereupon any request
for a Eurodollar Tranche (or to continue a Eurodollar Tranche for an
additional Eurodollar Period or to allocate any Available Pricing Amount to
a Eurodollar Tranche) shall, as to such Purchaser only, be deemed a request
to fund a portion of a Floating Tranche in an amount equal to such
Purchaser's Commitment Percentage of such Eurodollar Tranche, with interest
on such amount to be calculated on the basis of the ABR (or a request to
continue a portion of such Eurodollar Tranche or to allocate a portion of
such Available Pricing Amount, in an amount equal to such Purchaser's
Commitment Percentage of such Eurodollar Tranche, with interest on such
amount to be calculated on the basis of the ABR for the specified
Eurodollar Period), unless such declaration shall be subsequently
withdrawn; and
65
(ii) such Purchaser may require that interest on the portion of all
outstanding Eurodollar Tranches funded by such Purchaser shall be
calculated on the basis of the ABR as of the effective date of such notice
as provided in subsection 7.02(b) below.
(b) For purposes of this Section 7.02, a notice to the Company by any
Purchaser shall be effective as to the portion of each Eurodollar Tranche held
by such Purchaser, if lawful, on the last day of the Eurodollar Period currently
applicable to such Eurodollar Tranche; in all other cases such notice shall be
effective on the date of receipt by the Company.
SECTION 7.03. Indemnity. The Company and the Master Servicer,
----------
jointly and severally, shall indemnify each Purchaser against any loss or
expense that such Purchaser may sustain or incur as a consequence of (a) any
event, other than a default by such Purchaser in the performance of its
obligations hereunder, that results in (i) such Purchaser receiving or being
deemed to receive any amount on account of the portion of the Series 1996-A
Invested Amount in respect of any Eurodollar Tranche prior to the end of the
Eurodollar Period in effect therefor, (ii) such Purchaser receiving interest
with respect to any portion of any Eurodollar Tranche calculated on the basis of
the ABR for any period before the last day of the Eurodollar Period in effect
therefor, or (iii) any Eurodollar Tranche to be funded by such Purchaser
(whether pursuant to an Increase under Section 2.05 or an allocation of the
Available Pricing Amount under subsection 3A.04(c)) not being funded after the
applicable notice with respect to such Eurodollar Tranche shall have been given
by the Master Servicer or the Company to the Agent hereunder (any of the events
referred to in this clause (a) being called a "Breakage Event") or (b) any
default in the making of any payment required to be made hereunder. In the case
of any Breakage Event, such loss shall include an amount equal to the excess, as
reasonably determined by such Purchaser, of (i) its cost of obtaining funds for
the Eurodollar Tranche that is the subject of such
66
Breakage Event for the period from the date of such Breakage Event to the last
day of the Eurodollar Period in effect (or that would have been in effect) for
such Eurodollar Tranche over (ii) the amount of interest likely to be realized
by such Purchaser in redeploying the funds released or not utilized by reason of
such Breakage Event for such period; provided, however, that any payments made
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by the Company pursuant to this Section shall be Company Subordinated
Obligations. This covenant shall survive the termination of this Supplement and
the payment of all amounts payable hereunder. A certificate of any Purchaser
setting forth (i) any amount or amounts that such Purchaser is entitled to
receive pursuant to this Section 7.03 and (ii) a reasonably detailed explanation
of the calculation of such amount or amounts shall be delivered to the Company
and shall be conclusive absent manifest error.
SECTION 7.04. Taxes. (a) Any and all payments by or on behalf of
------
the Company hereunder and under any other Transaction Document shall be made, in
accordance with the terms of this Supplement, free and clear of and without
deduction for any and all current or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding
(i) taxes imposed on the net income of the Agent or any Purchaser (or any
transferee or assignee thereof, including a participation holder (any such
entity a "Transferee")), however denominated, and (ii) franchise taxes imposed
on the net income or in lieu of net income of the Agent or any Purchaser (or
Transferee) (the taxes referred to in the foregoing clauses (i) and (ii)
individually or collectively being called "Excluded Taxes"), in each case
imposed: (a) by the U.S. or any political subdivision or taxing authority
thereof or therein; (b) by any jurisdiction under the laws of which the Agent or
such Purchaser (or Transferee) or lending office is organized or in which its
lending office or office is located, managed or controlled or in which its
principal office is located or any political subdivision or taxing authority
thereof or therein; or (c) by reason of any connection between the jurisdiction
imposing such tax and
67
the Agent, such Purchaser, such Transferee or such lending office or office
other than a connection arising solely from the Agreement or this Supplement or
any transaction thereunder or hereunder (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities, collectively or
individually, being called "Taxes"). If the Company shall be required to deduct
any Taxes from or in respect of any sum payable on the VFC Certificates or any
other sum payable hereunder or under any other Transaction Document to the Agent
any Purchaser (or any Transferee), (i) the sum payable shall be increased by the
amount (an "Additional Amount") necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 7.04) the Agent or such Purchaser (or Transferee), as the case may
be, shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions and (iii) the
Company shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Company agrees to pay to the relevant Governmental
Authority in accordance with applicable law any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies (including mortgage recording taxes and similar fees) that arise from any
payment made hereunder or under any other Transaction Document or from the
execution, delivery or registration of, or otherwise solely with respect to, the
Agreement, this Supplement or any other Transaction Document ("Other Taxes").
(c) The Company shall indemnify the Agent and each Purchaser (or
Transferee) for the full amount of Taxes and Other Taxes paid by the Agent or
such Purchaser (or Transferee), as the case may be, and any liability (including
penalties, interest and expenses (including reasonable attorney's fees and
expenses)), other than those resulting solely from a failure by the Agent or
such Purchaser (or Transferee), as the case may be, to pay any
68
Taxes or Other Taxes which it is required to pay and for which it received an
indemnity payment, arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability prepared by the Agent or a Purchaser (or Transferee), absent manifest
error, shall be final, conclusive and binding for all purposes. Such
indemnification shall be made within 30 days after the date the Agent or any
Purchaser (or Transferee), as the case may be, makes written demand therefor.
If the Agent or any Purchaser (or any Transferee) shall become aware that it is
entitled to receive a refund or other tax credit or benefit in respect of any
Taxes or Other Taxes, it shall promptly notify the Company thereof and, in the
case of a refund, shall within 30 days after receipt of a request by the
Company, apply for such refund at the Company's expense. If the Agent or any
Purchaser (or any Transferee) receives a refund or other tax credit or benefit
in respect of any Taxes or Other Taxes for which the Agent or such Purchaser (or
such Transferee) has received payment from the Company hereunder, it shall
promptly notify the Company thereof and shall promptly repay such refund or, in
the case of a tax credit or other benefit shall repay the amount of the tax
credit or benefit received promptly following the date on which such tax credit
or other benefit is offset against such party's tax liability, in each case to
the Company without interest and net of any expenses incurred, except to the
extent interest shall have explicitly accompanied such refund or other tax
credit or benefit, provided that the Company, upon the request of such Purchaser
--------
or the Agent, agrees to return the amount of such refund or other tax benefit or
credit (plus any penalties, interest or other charges required to be paid) to
such Purchaser or the Agent in the event such Purchaser or the Agent is required
to repay such amount to the relevant taxing authority.
(d) As soon as practicable after the date of any payment of Taxes or Other
Taxes by the Company to the relevant Governmental Authority, the Company will
deliver to
69
the Agent and the Trustee, at their respective addresses referred to in
Section 11.09, the original or a certified copy of any receipt issued by such
Governmental Authority or other proof reasonably acceptable to the indemnified
party evidencing payment thereof.
(e) Each Purchaser (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "Non-U.S. Purchaser") shall deliver to the Company and the Agent two
copies of either United States Internal Revenue Service Form 1001 or Form 4224,
or, in the case of a Non-U.S. Purchaser claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions thereof
or successors thereto (and, if such Non-U.S. Purchaser delivers a Form W-8, a
certificate representing that such Non-U.S. Purchaser is not a bank for purposes
of Section 881(c) of the Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Company and is not a
controlled foreign corporation related to the Company (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Purchaser claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments of interest by the Company on the VFC
Certificates and other amounts payable under the Agreement, this Supplement and
the other Transaction Documents; provided, that if such Non-U.S. Purchaser is a
--------
bank for purposes of Section 881(c) of the Code, such Non-U.S. Purchaser shall
make whole the Company for reliance on such certificate. Such forms shall be
delivered by each Non-U.S. Purchaser on or before the date it becomes a
Purchaser (or, in the case of a Transferee that is a participation holder, on or
before the date such participation holder becomes a Transferee hereunder) and on
or before the date, if any, such Non-U.S. Purchaser changes its applicable
lending office by designating a different lending office (a "New Lending
Office"). In addition, each Non-U.S. Purchaser shall deliver such forms
promptly upon
70
the obsolescence or invalidity of any form previously delivered by such Non-U.S.
Purchaser. Notwithstanding any other provision of this subsection 7.04(e), a
Non-U.S. Purchaser shall not be required to deliver any form pursuant to this
subsection 7.04(e) that such Non-U.S. Purchaser is not legally able to deliver.
(f) The Company shall not be required to indemnify any Non-U.S. Purchaser
or to pay any additional amounts to any Non-U.S. Purchaser, in respect of United
States Federal withholding tax pursuant to subsection 7.04(a) or 7.04(c) above
to the extent that (i) the obligation to withhold amounts with respect to United
States Federal withholding tax existed on the date such Non-U.S. Purchaser
became a Purchaser (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S.
Purchaser designated such New Lending Office; provided, however, that this
-------- -------
subsection 7.04(f) shall not apply (x) to any Transferee or New Lending Office
that becomes a Transferee or New Lending Office as a result of an assignment,
participation, transfer or designation made at the request of the Company and
(y) to the extent the indemnity payment or additional amounts any Transferee or
any Purchaser, acting through a New Lending Office, would be entitled to receive
(without regard to this subsection 7.04(f)) do not exceed the indemnity payment
or additional amounts that the Person making the assignment, participation or
transfer to such Transferee or Purchaser making the designation of such New
Lending Office, would have been entitled to receive in the absence of such
assignment, participation, transfer or designation or (ii) the obligation to pay
such additional amounts would not have arisen but for a failure by such Non-U.S.
Purchaser to comply with the provisions of subsection 7.04(e) above (taking into
account the last sentence thereof).
(g) Nothing contained in this Section 7.04 shall require any Purchaser (or
any Transferee) or the Agent to
71
make available any of its tax returns (or any other information that it deems to
be confidential or proprietary).
SECTION 7.05. Assignment of Commitments Under Certain Circumstances;
------------------------------------------------------
Duty to Mitigate. (a) In the event (i) any Purchaser delivers a certificate
- -----------------
requesting compensation pursuant to Section 7.01, (ii) any Purchaser delivers a
notice described in Section 7.02 or (iii) the Company is required to pay any
additional amount or indemnification payment to any Purchaser or any
Governmental Authority on account of any Purchaser pursuant to Section 7.04, the
Company may, at its sole expense and effort (including with respect to the
processing and recordation fee referred to in subsection 11.10(b)), upon notice
to such Purchaser and the Agent, require such Purchaser to transfer and assign,
without recourse (in accordance with and subject to the restrictions contained
in Section 11.10), all of its interests, rights and obligations under this
Agreement to an assignee that shall assume such assigned obligations (which
assignee may be another Purchaser, if another Purchaser accepts such
assignment); provided that (A) such assignment shall not conflict with any law,
--------
rule or regulation or order of any court or other Governmental Authority having
jurisdiction, (B) the Company shall have received the prior written consent of
the Agent, which consent shall not unreasonably be withheld, and (C) the Company
or such assignee shall have paid to the affected Purchaser in immediately
available funds an amount equal to the sum of the principal of, and interest
accrued to the date of such payment on, the outstanding VFC Certificates of such
Purchaser plus all fees and other amounts accrued for the account of such
Purchaser hereunder (including any amounts under Section 7.01 and Section 7.03);
and provided further that, if prior to any such transfer and assignment the
-------- -------
circumstances or event that resulted in such Purchaser's claim for compensation
under Section 7.01 or notice under Section 7.02 or the amounts paid pursuant to
Section 7.04, as the case may be, cease to cause such Purchaser to suffer
increased costs or reductions in amounts received or
72
receivable or reduction in return on capital, or cease to have the consequences
specified in Section 7.02, or cease to result in amounts being payable under
Section 7.04, as the case may be (including as a result of any action taken by
such Purchaser pursuant to subsection 7.05(b) below), or if such Purchaser shall
waive its right to claim further compensation under Section 7.01 in respect of
such circumstances or event or shall withdraw its notice under Section 7.02 or
shall waive its right to further payments under Section 7.04 in respect of such
circumstances or event, as the case may be, then such Purchaser shall not
thereafter be required to make any such transfer and assignment hereunder.
(b) If (i) any Purchaser shall request compensation under Section 7.01,
(ii) any Purchaser delivers a notice described in Section 7.02 or (iii) the
Company is required to pay any additional amount to any Purchaser (or
Transferee) or any Governmental Authority on account of any Purchaser (or
Transferee), pursuant to Section 7.04, then such Purchaser shall use reasonable
efforts (which shall not require such Purchaser to incur an unreimbursed loss or
unreimbursed cost or expense or otherwise take any action inconsistent with its
internal policies or legal or regulatory restrictions or suffer any disadvantage
or burden reasonably deemed by it to be significant) (A) to file any certificate
or document reasonably requested in writing by the Company or (B) to assign its
rights and delegate and transfer its obligations hereunder to another of its
offices, branches or affiliates, if such filing or assignment would reduce its
claims for compensation under Section 7.01 or enable it to withdraw its notice
pursuant to Section 7.02 or would reduce amounts payable pursuant to Section
7.04, as the case may be, in the future. The Company hereby agrees to pay all
reasonable costs and expenses incurred by any Purchaser in connection with any
such filing or assignment, delegation and transfer.
73
SECTION 7.06. Limitation. The obligations of the Company under this
-----------
Article VII shall be limited by Section 11.13.
ARTICLE VIII
Covenants, Representations and Warranties
-----------------------------------------
SECTION 8.01. Representations and Warranties of the Company and the
-----------------------------------------------------
Master Servicer. The Company and the Master Servicer each hereby represents and
- ----------------
warrants to the Trustee, the Agent and each of the Purchasers that each and
every of their respective representations and warranties contained in the
Agreement and the Servicing Agreement is true and correct as of the Issuance
Date and as of the date of each Increase.
SECTION 8.02. Covenants of the Company and the Master Servicer. The
-------------------------------------------------
Company and the Master Servicer hereby agree, in addition to their obligations
under the Agreement and the Servicing Agreement, that:
(a) they shall not terminate the Agreement unless in compliance with
the terms of the Agreement and the supplements relating to each Outstanding
Series;
(b) they will (i) provide the Agent with evidence, satisfactory to the
Agent, of (A) the establishment of a disaster recovery plan, (B) the
establishment of computer back-up systems and (C) the operational readiness
of an off-site disaster recovery facility (all in accordance with the
time limits set forth in Schedule 3), and (ii) within 90 days of the
Issuance Date, deliver to the Trustee executed copies of any landlord
waivers, in a form reasonably acceptable to the Trustee, that may be
necessary to grant to the Trustee access to any leased premises of the
Master Servicer for which the Trustee may require access to perform the
collection and administrative functions to
74
be performed by the Trustee under the Transaction Documents;
(c) they shall observe in all material respects each and every of
their respective covenants (both affirmative and negative) contained in the
Agreement, the Servicing Agreement, this Supplement and all other
Transaction Documents to which each is a party;
(d) they shall afford the Agent or any representative of the Agent
access to all records relating to the Receivables at any reasonable time
during regular business hours, upon reasonable prior notice, for purposes
of inspection and shall permit the Agent or any representative of the Agent
to visit any of the Company's or the Master Servicer's, as the case may be,
offices or properties during regular business hours and as often as may
reasonably be requested, subject to the Company's or the Master Servicer's,
as the case may be, normal security and confidentiality requirements and to
discuss the business, operations, properties, financial and other
conditions of the Company or the Master Servicer with their respective
officers and employees and with their Independent Public Accountants;
provided that the Agent shall notify the Company or the Master Servicer, as
--------
the case may be, prior to any contact with such accountants and shall give
the Company or the Master Servicer the opportunity to participate in such
discussions; and
(e) they shall not waive the provisions of subsections 7.01(d),
(e)(i), (g) and (h) of the Receivables Sale Agreement without the consent
of the Agent.
SECTION 8.03. Negative Covenant of the Company; Covenants of the
--------------------------------------------------
Master Servicer. (a) The Company shall not make any Restricted Payment while
- ----------------
Series 1996-A is an Outstanding Series, except (i) from amounts distributed to
the Company pursuant to subsection 3A.03(b), (ii) in
75
compliance with all terms of the Transaction Documents, including the Company's
covenant as to net worth set forth in subsection 2.07(m) of the Agreement and
(iii) such Restricted Payment is made no more frequently than on a monthly basis
and such Restricted Payment is made in accordance with all corporate and legal
formalities applicable to the Company; provided that no Restricted Payment shall
--------
be made if an Early Amortization Event has occurred and is continuing (or would
occur as a result of making such Restricted Payment).
(b) (i) The Master Servicer hereby agrees that it shall observe each and
all of its respective covenants (both affirmative and negative) contained in
each Pooling and Servicing Agreement in all material respects;
(ii) It shall provide to the Agent, simultaneously with delivery to
the Trustee or the Rating Agencies, all reports, notices, certificates,
statements and other documents required to be delivered to the Trustee or the
Rating Agencies pursuant to the Agreement, the Servicing Agreement and the other
Transaction Documents and furnish to the Agent promptly after receipt thereof a
copy of each material notice, material demand or other material communication
(excluding routine communications) received by or on behalf of the Company or
the Master Servicer with respect to the Transaction Documents; and
(iii) It shall provide notice to the Agent of the appointment of a
Successor Master Servicer pursuant to Section 6.02 of the Servicing Agreement.
SECTION 8.04. Obligations Unaffected. The obligations of the Company
-----------------------
and the Master Servicer to the Agent and the Purchasers under this Supplement
shall not be affected by reason of any invalidity, illegality or irregularity of
any of the Receivables or any sale of any of the Receivables.
76
SECTION 8.05. Representations and Warranties of the Initial
---------------------------------------------
Purchasers and Acquiring Purchasers. Each Initial Purchaser and Acquiring
- ------------------------------------
Purchaser represents, warrants and covenants to the Company, as of the Issuance
Date (or, in the case of each Acquiring Purchaser, as of the effective date of
the applicable Assignment and Assumption), that:
(a) It acknowledges that the VFC Certificates have not been and will
not be registered under the Securities Act and are being offered and sold to the
it in reliance upon the exemption provided in Section 4(2) of the Securities
Act, and have not and will not be registered or qualified under the securities
or "blue sky" laws of any jurisdiction, and may not be resold or otherwise
transferred unless so registered or qualified or unless any exemption from such
requirements is available.
(b) It is purchasing the VFC Certificates in the ordinary course of
its business and for investment only solely for its own account or accounts for
which it exercises sole investment discretion and not as nominee or agent for
any other Person and not with a view to, or for offer or sale in connection
with, any distribution thereof (within to meaning of the Securities Act) that
would be in violation of the securities laws of the United States of America or
any state thereof.
(c) It is an institutional investor that is an "Accredited Investor"
(as defined under Rule 501(a)(1), (2), (3) or (7), of the Securities Act) or, if
the VFC Certificates are to be purchased for one or more institutional accounts
("investor accounts") for which it is acting as a fiduciary or agent, each such
investor account is an institutional investor that is an Accredited Investor.
(d) It invests in or has such knowledge and experience in business
and financial matters and with respect to investments in securities so as to
enable it to understand and evaluate the risks of such investments and
77
form an investment decision with respect thereto and is able to bear the risk of
such investment for an indefinite period and to afford a complete loss thereof.
(e) It has been afforded access to information (including the
financial condition) about the Company, and the Sellers to enable it to evaluate
its investment in the VFC Certificates (the "Information") and acknowledges that
it has been afforded the opportunity (i) to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company, the
Sellers or Persons acting on their behalf concerning the terms and conditions of
the offering of the VFC Certificates and the merits and risks of investing in
the VFC Certificates, (ii) to obtain such additional information that the
Company possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy and completeness of the Information and
(iii) to review the filings of the Sellers with the Securities and Exchange
Commission and all of the public disclosure of the Sellers.
(f) It acknowledges that it is the expressed intent of the Company
that the VFC Certificates are being issued only in transactions not involving
any public offering within the meaning of the Securities Act and that the VFC
Certificates will bear a legend substantially as set forth in the form of the
VFC Certificates included in this Supplement and will be subject to certain
limitations on transfer and exchange specified in the Agreement, this Supplement
and the other Transaction Documents.
78
ARTICLE IX
Conditions Precedent
--------------------
SECTION 9.01. Conditions Precedent to Effectiveness of Supplement.
----------------------------------------------------
This Supplement will become effective on the date (the "Effective Date") on
which the following conditions precedent have been satisfied:
(a) Transaction Documents. The Agent shall have received an original
----------------------
copy for itself and photocopies for each Purchaser, each executed and delivered
in form and substance satisfactory to the Agent, of (i) the Agreement executed
by a duly authorized officer of each of the Company, the Master Servicer and the
Trustee, (ii) this Supplement executed by a duly authorized officer of each of
the Company, the Master Servicer, the Trustee, the Agent and the Initial
Purchasers and (iii) the other Transaction Documents duly executed by the
parties thereto.
(b) Corporate Documents; Corporate Proceedings of the Company and
-------------------------------------------------------------
Master Servicer. The Agent shall have received, with a copy for each Purchaser,
- ----------------
from the Company, each Seller and the Master Servicer, complete copies of:
(i) the certificate of incorporation including all amendments thereto,
of such Person, certified as of a recent date by the Secretary of State or
other appropriate authority of the state of incorporation, as the case may
be, and a certificate of compliance, of status or of good standing, as and
to the extent applicable, of each such Person as of a recent date, from the
Secretary of State or other appropriate authority of such jurisdiction;
(ii) a certificate of the Secretary or Assistant Secretary of such
Person dated the Effective Date and certifying (A) that attached thereto is
a true and complete copy of the By-laws of such Person, as in
79
effect on the Effective Date and at all times since a date prior to the
date of the resolutions described in clause (B) below, (B) that attached
thereto is a true and complete copy of the resolutions of the Board of
Directors of such Person or committees thereof authorizing the execution,
delivery and performance of the Transaction Documents to which it is a
party and the transactions contemplated thereby, and that such resolutions
have not been amended, modified, revoked or rescinded and are in full force
and effect, (C) that the certificate of incorporation of such Person has
not been amended since the date of the last amendment thereto shown on the
certificate of good standing (or its equivalent) furnished pursuant to
clause (i) above and (D) as to the incumbency and specimen signature of
each officer executing any Transaction Documents or any other document
delivered in connection herewith or therewith on behalf of such Person; and
(iii) a certificate of another officer as the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the certificate
pursuant to clause (ii) above.
(c) Good Standing Certificates. The Agent shall have received copies
---------------------------
of certificates of compliance, of status or of good standing, dated as of a
recent date from the Secretary of State or other appropriate authority of such
jurisdiction, with respect to the Company, the Master Servicer, each Servicer
and each Seller, in each State where the ownership, lease or operation of
property or the conduct of business requires it to qualify as a foreign
corporation, except where the failure to so qualify would not have a material
adverse effect on the business, operations, properties or condition (financial
or otherwise) of the Company, the Master Servicer, such Servicer or such Seller,
as the case may be.
80
(d) Consents, Licenses, Approvals, Etc. The Agent shall have
-----------------------------------
received, with a photocopy for each Purchaser, certificates dated the date
hereof of the President, Vice Chairman, Chief Financial Officer or any Vice
President of the Company, the Master Servicer, each Servicer and each Seller
either (i) attaching copies of all material consents, licenses and approvals
required in connection with the execution, delivery and performance by the
Company, the Master Servicer, such Servicer or such Seller, as the case may be,
of the Agreement, this Supplement, the Receivables Sale Agreement and/or the
Servicing Agreement, as the case may be, and the validity and enforceability of
the Agreement, this Supplement, the Receivables Sale Agreement and/or the
Servicing Agreement against the Company, the Master Servicer, such Servicer or
such Seller, as the case may be, and such consents, licenses and approvals shall
be in full force and effect or (ii) stating that no such consents, licenses or
approvals are so required, except those that may be required under state
securities or "blue sky" laws.
(e) Filings, Registrations and Recordings. Any documents (including,
--------------------------------------
without limitation, financing statements) required to be filed in order (i) to
perfect the sale of the Receivables by each Seller to the Company pursuant to
the Receivables Sale Agreement and (ii) to create, in favor of the Trustee, a
perfected ownership/perfected first security interest in the Trust Assets under
the Agreement with respect to which an ownership/security interest may be
perfected by a filing under the UCC or other comparable statute shall, in each
case, have been properly prepared and executed for immediate filing in each
office in each jurisdiction listed in the Agreement or the Receivables Sale
Agreement, as the case may be, and such filings are the only filings required in
order to perfect the sale of the Receivables to the Company under the
Receivables Sale Agreement or to the Trust, under the Agreement, as the case may
be, in the jurisdictions listed
81
therein. The Agent shall have received photocopies of each such filing,
registration or recordation made or to be made.
(f) Lien Searches. The Agent and the Trustee shall have received the
--------------
results of a recent search satisfactory to the Agent of any UCC filings (or
equivalent filings) made with respect to the Company (and with respect to such
other Persons as the Agent deems necessary) in the states (or other
jurisdictions) in which the chief executive office of the Company and each such
other Person is located, any offices of the Company and each such other Person
in which records have been kept relating to the Receivables and the other
jurisdictions in which UCC filings (or equivalent filings) are to be made
pursuant to the preceding subsection, together with copies of the financing
statements (or similar documents) disclosed by such search, and accompanied by
evidence satisfactory to the Agent that any Liens disclosed by such search would
be Permitted Liens or have been released.
(g) Legal Opinions. The Agent and the Trustee shall have received,
---------------
with a counterpart for each Purchaser, opinions of counsel to the Company and
the Master Servicer, dated the Issuance Date, as to corporate, tax, bankruptcy,
perfection and other matters in form and substance acceptable to the Agent and
its counsel.
(h) Arrangement Fee. The Agent, each Initial Purchaser and the
----------------
Trustee shall have received payment of all fees and other amounts due and
payable to any of them on or before the Effective Date.
(i) Funding Under Credit Agreement. The initial funding under the
-------------------------------
Credit Agreement shall have occurred or shall occur simultaneously with the
Effective Date.
(j) Conditions Under the Receivables Sale Agreement. A Responsible
------------------------------------------------
Officer of the Company shall have certified that all conditions to the
obligations of the Company and each of the Sellers under the Receivables Sale
82
Agreement shall have been satisfied in all material respects.
(k) Copies of Written Policies. The Agent and the Trustee shall have
---------------------------
received, as certified by a Responsible Officer of the Company, copies of the
written Policies or, to the extent that the credit and collection policies of
any of the Sellers are not in written form at the Effective Date, a written
description of the historical credit and collection practices of each such
Seller, in each case in form and substance acceptable to the Agent.
(l) Insurance. The Agent and the Trustee shall have received
----------
evidence satisfactory to the Agent of each Servicer's fidelity bond or other
coverage insuring against losses through wrongdoing of its officers and
employees who are involved in the servicing of Receivables, including coverage
of depositor's forgery, in an amount and breadth of coverage satisfactory to the
Rating Agencies and the Agent.
(m) Company's Board of Directors. The composition of the Company's
-----------------------------
Board of Directors (including two independent directors) shall be reasonably
acceptable to the Agent.
(n) Financial Statements. The Agent and the Trustee shall have
---------------------
received a pro forma balance sheet for the Company giving effect to all
transactions occurring on or before the Issuance Date. The Agent shall have
received the consolidated balance sheets and statements of income, stockholders'
equity and cash flows of the HFG Companies and their respective subsidiaries on
a consolidated basis (i) as of and for the fiscal year ended December 31, 1995,
audited by and accompanied by the opinion of Coopers & Lybrand LLP, independent
public accountants, and (ii) as of and for the fiscal quarter ended March 31,
1996, certified by its chief financial officer.
(o) Solvency Certificate. The Agent and the Trustee shall have
---------------------
received a certificate dated the
83
Effective Date and signed by a Responsible Officer of the Company, in form
satisfactory to the Agent, to the effect that the Company will be solvent after
giving effect to the transactions occurring on or before the Issuance Date.
(p) Representations and Warranties. The representations and
-------------------------------
warranties of the Company and the Master Servicer in the Agreement and this
Supplement shall be true and correct in all material respects.
ARTICLE X
The Agent
---------
SECTION 10.01. Appointment. Each Purchaser hereby irrevocably
------------
designates and appoints the Agent as the agent of such Purchaser under this
Supplement and each such Purchaser irrevocably authorizes the Agent, in such
capacity, to take such action on its behalf under the provisions of this
Supplement and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Supplement, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Supplement, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Purchaser, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Supplement or otherwise exist against the Agent.
SECTION 10.02. Delegation of Duties. The Agent may execute any of
---------------------
its duties under this Supplement by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel (who may be counsel for the Company or
the Master Servicer), independent public accountants and other experts selected
by it concerning all matters pertaining to such duties. The Agent shall not be
responsible for the
84
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
SECTION 10.03. Exculpatory Provisions. Neither the Agent nor any of
-----------------------
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with the Agreement or this Supplement
(x) with the consent or at the request of the Majority Purchasers or (y) in the
absence of its own gross negligence or wilful misconduct or (ii) responsible in
any manner to any of the Purchasers for any recitals, statements,
representations or warranties made by the Company or any officer thereof
contained in this Supplement or any other Transaction Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Supplement or any
other Transaction Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Supplement or any other
Transaction Document or for any failure of the Company to perform its
obligations hereunder or thereunder. The Agent shall not be under any
obligation to any Purchaser to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Supplement or any other Transaction Document, or to inspect the properties,
books or records of the Company.
SECTION 10.04. Reliance by Agent. The Agent shall be entitled to
------------------
rely, and shall be fully protected in relying, upon any Certificate, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other documents or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company or the Master Servicer),
independent accountants and other experts selected by the Agent and shall not be
liable for any action taken or omitted to be taken by it in good faith
85
in accordance with the advice of such counsel, accountants or experts. The
Agent may deem and treat the payee of any Certificate as the owner thereof for
all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Supplement or any
other Transaction Document unless it shall first receive such advice or
concurrence of the Majority Purchasers as it deems appropriate and it shall
first be indemnified to its satisfaction by the Purchasers against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Supplement and the
other Transaction Documents in accordance with a request of the Majority
Purchasers, and such request and any action taken or failure to act pursuant
thereto shall be binding.
SECTION 10.05. Notice of Master Servicer Default or Early
------------------------------------------
Amortization Event or Potential Early Amortization Event. The Agent shall not
- ---------------------------------------------------------
be deemed to have knowledge or notice of the occurrence of any Master Servicer
Default with respect to the Master Servicer or any Early Amortization Event or
Potential Early Amortization Event hereunder unless the Agent has received
written notice from a Purchaser, the Company or the Master Servicer referring to
the Agreement or this Supplement, describing such Master Servicer Default or
Early Amortization Event or Potential Early Amortization Event and stating that
such notice is a "notice of a Master Servicer Default with respect to the Master
Servicer" or a "notice of an Early Amortization Event or Potential Early
Amortization Event", as the case may be. In the event that the Agent receives
such a notice, the Agent shall give notice thereof to the Purchasers, the
Trustee, the Company and the Master Servicer. The Agent shall take such action
with respect to such Master Servicer Default or Early Amortization Event or
Potential Early Amortization Event as shall be reasonably directed by the
Majority Purchasers; provided that unless and until the Agent shall have
--------
received
86
such directions and indemnification satisfactory to the Agent from the
Purchasers, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Master Servicer Default or
Early Amortization Event or Potential Early Amortization Event as it shall deem
advisable in the best interests of the Purchasers.
SECTION 10.06. Non-Reliance on Agent and Other Purchasers. Each
-------------------------------------------
Purchaser expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Company, shall be deemed to
constitute any representation or warranty by the Agent to any Purchaser. Each
Purchaser represents to the Agent that it has, independently and without
reliance upon the Agent or any other Purchaser, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Company and made its own decision to enter
into this Supplement. Each Purchaser also represents that it will,
independently and without reliance upon the Agent or any other Purchaser, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Supplement and the other Transaction
Documents, and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other
documents expressly required to be furnished to the Purchasers by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Purchaser with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Borrower which may come into the possession of the Agent
87
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
SECTION 10.07. Indemnification. The Purchasers agree to indemnify
----------------
the Agent in its capacity as such (to the extent not reimbursed by the Company
and the Master Servicer and without limiting the obligation of the Company and
the Master Servicer to do so), ratably according to their respective Commitment
Percentages in effect on the date on which indemnification is sought (or, if
indemnification is sought after the Commitment Termination Date, ratably in
accordance with their Commitment Percentages immediately prior to such date),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time be imposed or, incurred by or asserted
against the Agent in any way relating to or arising out of, the Commitments,
this Supplement any of the other Transaction Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Purchaser shall be
--------
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or wilful misconduct. The
agreements in this Section shall survive the payment of all amounts payable
hereunder.
SECTION 10.08. Agent in Its Individual Capacity. The Agent and its
---------------------------------
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Company, the Master Servicer or any of their
Affiliates as though the Agent were not the Agent hereunder. With respect to
any VFC Certificate held by the Agent, the Agent shall have the same rights and
powers under this Supplement and the other Transaction Documents as any
Purchaser and may exercise the same as though it were not
88
the Agent, and the terms "Purchaser" and "Purchasers" shall include the Agent in
its individual capacity.
SECTION 10.09. Successor Agent. The Agent may resign as Agent upon
----------------
10 days' notice to the Purchasers. If the Agent shall resign as Agent under
this Supplement, then the Majority Purchasers shall appoint from among the
Purchasers a successor agent for the Purchasers, which successor agent shall be
approved by the Company and the Master Servicer (which approval shall not be
unreasonably withheld), whereupon such successor agent shall succeed to the
rights, powers and duties of the Agent, and the term "Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Agent's rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent or any of the
parties to this Supplement. After any retiring Agent's resignation as Agent,
the provisions of this Article X shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Supplement.
ARTICLE XI
Miscellaneous
-------------
SECTION 11.01. 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.
SECTION 11.02. Governing Law. THIS SUPPLEMENT SHALL BE GOVERNED BY
--------------
AND, CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ANY CONFLICT OF LAW PRINCIPLES, EXCEPT TO THE EXTENT ISSUES OF
PERFECTION ARE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
89
SECTION 11.03. Further Assurances. Each of the Company, the Master
-------------------
Servicer and the Trustee agrees, from time to time, to do and perform any and
all acts and to execute any and all further instruments required or reasonably
requested by the Agent or Majority Purchasers more fully to effect the purposes
of this Supplement and the sale of the VFC Certificates hereunder, including,
without limitation, in the case of the Company and the Master Servicer, the
execution of any financing or registration statements or similar documents or
notices or continuation statements relating to the Receivables and the other
Trust Assets for filing or registration under the provisions of the UCC or
similar legislation of any applicable jurisdiction, provided that, in the case
--------
of the Trustee, in furtherance and without limiting the generality of subsection
8.01(d) of the Agreement, the Trustee shall have received reasonable assurance
of adequate reimbursement and indemnity in connection with taking such action
before the Trustee shall be required to take any such action.
SECTION 11.04. Payments. Each payment to be made hereunder shall be
---------
made on the required payment date in lawful money of the United States and in
immediately available funds, if to the Purchasers, at the office of the Agent
set forth below its signature hereto. On each Distribution Date, the Agent
shall remit in like funds to each Purchaser its applicable pro rata share (based
--- ----
on each such Purchaser's Series 1996-A Invested Amount) of each such payment
received by the Agent for the account of the Purchasers.
SECTION 11.05. Costs and Expenses. The Company agrees to pay all
-------------------
reasonable fees, out-of-pocket costs and expenses of the Agent (including,
without limitation, reasonable fees and disbursements of one counsel to the
Agent) in connection with (i) the preparation, execution and delivery of this
Supplement, the Agreement and the other Transaction Documents and amendments or
waivers of any such documents and (ii) the enforcement by the Agent of the
obligations and liabilities of the Company and the Master
90
Servicer under the Agreement, this Supplement or any related document; provided,
--------
however, that any payments made by the Company pursuant to this Section shall be
- -------
Company Subordinated Obligations.
SECTION 11.06. No Waiver; Cumulative Remedies. No failure to
-------------------------------
exercise and no delay in exercising, on the part of the Trustee, the Agent or
any Purchaser, any right, remedy, power or privilege hereunder, shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 11.07. Amendments. (a) Subject to subsection (c) of this
-----------
Section 11.07, this Supplement may be amended in writing from time to time by
the Master Servicer, the Company and the Trustee, with the consent of the Agent
but without the consent of any holder of any outstanding VFC Certificate, to
cure any ambiguity, to correct or supplement any provisions herein or therein
which may be inconsistent with any other provisions herein or therein or to add
any other provisions to or changing in any manner or eliminating any of the
provisions with respect to matters or questions raised under this Supplement
which shall not be inconsistent with the provisions of any Pooling and Servicing
Agreement; provided, however, that such action shall not, as evidenced by an
-------- -------
Officer's Certificate delivered to the trustee, have a Material Adverse Effect
or a Company Material Adverse Effect (but, to the extent that the determination
of whether such action would have a Material Adverse Effect or a Company
Material Adverse Effect requires a conclusion as to a question of law, an
Opinion of Counsel shall be delivered to the Trustee in addition to such
Officer's Certificate); provided, further, that (i) any amendment made to
-------- -------
conform to a deletion or modification of the first sentence of Section 6.03 of
the Agreement or the language of Section 7.02 of the
91
Agreement that the Company elects to make that conforms to a change in the
Internal Revenue Code related to partnerships occurring after the execution and
delivery of the Agreement or (ii) any amendment that is entered into to provide
additional Enhancement for any Outstanding Series shall, to the extent that such
amendment is entered into for the purposes set forth in the foregoing clause (i)
or (ii), as applicable, be deemed to have no Material Adverse Effect or Company
Material Adverse Effect. If the Agent requests that the VFC Certificates be
rated in accordance with Section 11.15, any amendment in connection therewith
shall be deemed to have no Material Adverse Effect or Company Material Adverse
Effect. The Trustee may, but shall not be obligated to, enter into any such
amendment pursuant to this paragraph or paragraph (b) below that affects the
Trustee's rights, duties or immunities under any Pooling and Servicing Agreement
or otherwise.
(b) Subject to subsection (c) of this Section 11.07, this Supplement
may also be amended (other than in the circumstances referred to in subsection
(a)) in writing from time to time by the Master Servicer, the Company and the
Trustee with the consent of the Majority Purchasers for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Supplement or of modifying in any manner the rights of the VFC
Certificateholders; provided, however, that no such amendment shall, unless
-------- -------
signed or consented to in writing by all Purchasers, (i) extend the time for
payment, or reduce the amount, of any amount on money payable to or for the
account of any Purchaser under any provision of this Supplement, (ii) subject
any Purchaser to any additional obligation (including, without limitation, any
change in the determination of any amount payable by any Purchaser) or
(iii) change the Aggregate Commitment Amount or the number of Purchasers which
shall be required for any action under this subsection or any other provision of
this Supplement.
(c) Any amendment hereof can be affected without the Agent being a
party thereto; provided, however, that no
-------- -------
92
such amendment, modification or waiver of this Supplement that affects rights or
duties of the Agent shall be effective unless the Agent shall have given its
prior written consent thereto.
(d) No such amendment shall be effective until the Rating Agency
Condition is satisfied.
SECTION 11.08. Severability. If any provision hereof is void or
-------------
unenforceable in any jurisdiction, such voidness or unenforceability shall not
affect the validity or enforceability of (i) such provision in any other
jurisdiction or (ii) any other provision hereof in such or any other
jurisdiction.
SECTION 11.09. Notices. All notices, requests and demands to or upon
--------
any party hereto to be effective shall be given (i) in the case of the Company,
the Master Servicer and the Trustee, in the manner set forth in Section 10.05 of
the Agreement and (ii) in the case of the Agent, each Purchaser and the Rating
Agencies, in writing (including a confirmed transmission by telecopy), and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered by hand or three days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when received, (A) in
the case of the Agent and each Purchaser, at their respective addresses set
forth below their names on Schedule 1 hereto and (B) in the case of the Rating
Agencies, at the addresses notified by such Rating Agencies; or to such other
address as may be hereafter notified by the respective parties hereto.
SECTION 11.10. Successors and Assigns. (a) This Supplement shall be
-----------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
(b) Any Purchaser may assign to one or more assignees (any such
assignee shall be referred to herein as
93
an "Acquiring Purchaser") all or a portion of its interests, rights and
obligations under this Supplement and the Transaction Documents; provided,
--------
however, that (i) except in the case of an assignment to a Purchaser or an
- -------
Affiliate, the amount of the Commitment of the assigning Purchaser subject to
each such assignment (determined as of the date the Commitment Transfer
Supplement with respect to such assignment is delivered to the Agent) shall not
be less than $5,000,000 (or, if less, the entire remaining amount of such
Purchaser's Commitment), (ii) the parties to each such assignment shall execute
and deliver to the Agent the Commitment Transfer Supplement, substantially in
the form of Exhibit C, together with a processing and recordation fee of $3,500
and (iii) the Acquiring Purchaser, if it shall not be a Purchaser, shall deliver
to the Agent an Administrative Questionnaire, substantially in the form of
Exhibit D. Upon acceptance and recording pursuant to paragraph (e) of this
Section 11.10, from and after the effective date specified in each Commitment
Transfer Supplement, which effective date shall be at least five Business Days
after the execution thereof, (A) the Acquiring Purchaser thereunder shall be a
party hereto and, to the extent of the interest assigned by such Commitment
Transfer Supplement, have the rights and obligations of a Purchaser under this
Supplement and (B) the assigning Purchaser thereunder shall, to the extent of
the interest assigned by such Commitment Transfer Supplement, be released from
its obligations under this Supplement and the other Transaction Documents (and,
in the case of an Commitment Transfer Supplement covering all or the remaining
portion of an assigning Purchaser's rights and obligations under this Supplement
and the other Transaction Documents, such Purchaser shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 7.01, 7.03,
7.04 and 11.05, as well as to any fees accrued for its account and not yet
paid).
(c) By executing and delivering an Commitment Transfer Supplement,
the assigning Purchaser thereunder and the Acquiring Purchaser thereunder shall
be deemed to confirm to and agree with each other and the other parties
94
hereto as follows: (i) such assigning Purchaser warrants that it is the legal
and beneficial owner of the interest being assigned thereby free and clear of
any adverse claim and that its Commitment, and the outstanding balances of its
VFC Certificates, in each case without giving effect to assignments thereof
which have not become effective, are as set forth in such Commitment Transfer
Supplement; (ii) except as set forth in (i) above, such assigning Purchaser
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Supplement, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Supplement, any other Transaction
Document or any other instrument or document furnished pursuant hereto or
thereto, or the financial condition of any Seller, any Servicer, the Company or
the Master Servicer, or the performance or observance by any Seller, any
Servicer, the Company or the Master Servicer of any of its obligations under
this Supplement, any other Transaction Document or any other instrument or
document furnished pursuant hereto or thereto; (iii) such Acquiring Purchaser
represents and warrants that it is legally authorized to enter into such
Commitment Transfer Supplement; (iv) such Acquiring Purchaser confirms that it
has received a copy of this Supplement and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such Commitment Transfer Supplement; (v) such Acquiring Purchaser
will independently and without reliance upon the Agent, the Trustee, the
assigning Purchaser or any other Purchaser and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Supplement or any
other Transaction Document; (vi) such Acquiring Purchaser appoints and
authorizes the Agent and the Trustee to take such action as agent on its behalf
and to exercise such powers under this Supplement as are delegated to the Agent
and the Trustee, respectively, by the terms hereof, together with such powers as
are reasonably incidental thereto; and (vii) such Acquiring Purchaser
95
agrees that it will perform in accordance with their terms all the obligations
which by the terms of this Supplement are required to be performed by it as a
Purchaser.
(d) Notwithstanding the provisions of Section 5.03 of the Agreement
(which shall not apply to the Series 1996-A Certificates) the Agent shall
maintain at one of its offices in The City of New York a copy of each Commitment
Transfer Supplement delivered to it and a register for the recordation of the
names and addresses of the Purchasers, and the Commitments of, and the principal
amount of the VFC Certificates issued to, each Purchaser pursuant to the terms
hereof from time to time (the "Register"). Notwithstanding the provisions of
--------
Section 5.05 of the Agreement, the entries in the Register as provided in this
subsection 11.10(d) shall be conclusive and the Company, the Master Servicer,
the Purchasers, the Agent and the Trustee shall treat each person whose name is
recorded in the Register pursuant to the terms hereof as a Purchaser hereunder
for all purposes of this Supplement, notwithstanding notice to the contrary.
However, in accordance with Section 5.05 of the Agreement, in determining
whether the holders of the requisite Fractional Undivided Interests have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, VFC Certificates owned by the Company, the Master Servicer or any
Servicer or any Affiliate thereof, shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only VFC Certificates which a Responsible Officer of the
Trustee actually knows to be so owned shall be so disregarded. VFC Certificates
so owned by the Company, the Master Servicer or any Servicer or any Affiliate
thereof which have been pledged in good faith shall not be disregarded and may
be regarded as outstanding if the pledgee establishes to the satisfaction of the
trustee the pledgee's right so to act with respect to such VFC Certificates and
that the pledgee is not the Company, the Master Servicer or any Servicer or any
Affiliate
96
thereof. The Register shall be available for inspection by the Company, the
Master Servicer, the Purchasers and the Trustee, at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Commitment Transfer
Supplement executed by an assigning Purchaser and an Acquiring Purchaser, an
Administrative Questionnaire completed in respect of the Acquiring Purchaser
(unless the Acquiring Purchaser shall already be a Purchaser hereunder) and the
processing and recordation fee referred to in paragraph (b) above, the Agent
shall (i) accept such Commitment Transfer Supplement, (ii) record the
information contained therein in the Register and (iii) give prompt written
notice thereof to the Purchasers, the Company, the Master Servicer and the
Trustee. No assignment shall be effective unless and until it has been recorded
in the Register as provided in this paragraph (e).
(f) Any Purchaser may sell participations to one or more banks or
other entities (the "Participants") in all or a portion of its rights and
obligations under this Supplement and the other Transaction Documents (including
all or a portion of its Commitment and VFC Certificates); provided, however,
-------- -------
that (i) such Purchaser's obligations under this Agreement shall remain
unchanged, (ii) such Purchaser shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the Participants
shall be entitled to the benefit of the cost protection provisions contained in
Sections 7.01, 7.03 and 7.04 to the same extent as if they were Purchasers,
provided that no such Participant shall be entitled to receive any greater
- --------
amount pursuant to such Sections than a Purchaser would have been entitled to
receive in respect of the amount of participation sold by such Purchaser to such
Participant had no sale occurred, (iv) the Company, the Master Servicer, the
other Purchasers, the Agent and the Trustee, shall continue to deal solely and
directly with such Purchaser in connection with such Purchaser's rights and
obligations under this Supplement, and such Purchaser
97
shall retain the sole right to enforce its rights under VFC Certificates and to
approve any amendment, modification or waiver of any provision of this
Supplement (other than amendments, modifications or waivers decreasing any fees
payable hereunder or the amount of principal of or the rate at which interest is
payable on the VFC Certificates, extending any scheduled principal payment date
or date fixed for the payment of interest on the VFC Certificates or increasing
or extending the Commitments) and (v) the sum of the aggregate amount of any
Commitment or portion thereof subject to each such participation plus the
portion of the Series 1996-A Invested Amount represented by any VFC Certificates
subject to such participation shall not be less than $5,000,000.
(g) Any Purchaser may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 11.10, disclose to the Acquiring Purchaser or Participant or proposed
Acquiring Purchaser or Participant any information relating to the Sellers, the
Servicers, the Master Servicer, the Trust or the Company furnished to such
Purchaser by or on behalf of such entities, provided that, prior to any such
--------
disclosure of information, each such Acquiring Purchaser or Participant or
proposed Acquiring Purchaser or Participant shall execute a confidentiality
agreement in the form of Exhibit H.
(h) Neither the Company nor the Master Servicer shall assign or
delegate any of its rights or duties hereunder without the prior written consent
of the Agent, the Trustee and each Purchaser, and any attempted assignment
without such consent shall be null and void.
(i) Notwithstanding any other provisions herein, no transfer or
assignment of any interests or obligations of any Purchaser hereunder or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would result in a prohibited transaction under Section 4975 of the
Internal Revenue Code or Section 406 of ERISA or cause the Trust Assets to be
regarded as "plan
98
assets" pursuant to 29 C.F.R. Sec. 2510.3-101, or require the Company or any
Seller to file a registration statement with the Securities and Exchange
Commission or to qualify under the "blue sky" laws of any state.
(j) In the event that S&P, Moody's and Thompson's BankWatch (or
InsuranceWatch Ratings Service, in the case of any Purchaser that is an
insurance company (or Best's Insurance Reports, if such insurance company is not
rated by InsuranceWatch Ratings Service)) shall, after the date that any
Purchaser becomes a Purchaser, downgrade the long-term certificate deposit
ratings of such Purchaser, and the resulting ratings shall be below BBB-, Baa3
and C (or BB, in the case of a Purchaser that is an insurance company (or B, in
the case of such insurance company not rated by InsuranceWatch Ratings
Service)), then the Trustee shall have the right, but not the obligation, at the
Trust's expense, upon notice to such Purchaser and the Agent, to replace (or to
request the Agent to use its reasonable efforts to replace) such Purchaser with
an assignee (in accordance with and subject to the restrictions contained in
paragraphs (b) and (g) above), and such Purchaser hereby agrees to transfer and
assign without recourse (in accordance with and subject to the restrictions
contained in paragraphs (b) and (g) above) all its interests, rights and
obligations in respect of its Commitment to such assignee; provided, however,
-------- -------
that (i) no such assignment shall conflict with any law, rule and regulation or
order of any Governmental Authority and (ii) the Trustee or such assignee, as
the case may be, shall pay to such Purchaser in immediately available funds on
the date of such assignment the principal of and interest accrued to the date of
payment on the VFC Certificates held by such Purchaser and all other amounts
accrued for such Purchaser's account or owed to it hereunder.
SECTION 11.11. 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,
99
and all of which taken together shall constitute one and the same agreement.
SECTION 11.12. Adjustments; Setoff. (a) If any Purchaser (a
--------------------
"Benefitted Purchaser") shall at any time receive in respect of its
Series 1996-A Purchaser Invested Amount any distribution of principal, interest,
Commitment Fees or other fees, or any interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by setoff,
or otherwise) in a greater proportion than any such distribution received by any
other Purchaser, if any, in respect of such other Purchaser's Series 1996-A
Purchaser Invested Amount, or interest thereon, such Benefitted Purchaser shall
purchase for cash from the other Purchasers such portion of each such other
Purchaser's interest in the VFC Certificates, or shall provide such other
Purchasers with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefitted Purchaser to share the excess
payment or benefits of such collateral or proceeds ratably with each of the
Purchasers; provided, however, that if all or any portion of such excess payment
-------- -------
or benefits is thereafter recovered from such Benefitted Purchaser, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. The Company agrees that each
Purchaser so purchasing a portion of the VFC Certificateholders' Interest may
exercise all rights of payment (including, without limitation, rights of setoff)
with respect to such portion as fully as if such Purchaser were the direct
holder of such portion.
(b) In addition to any rights and remedies of the Purchasers provided
by law, each Purchaser shall have the right, without prior notice to the
Company, any such notice being expressly waived by the Company to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Company hereunder or under the VFC Certificates to setoff and appropriate and
apply against any and all deposits (general or special, time or demand,
100
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Purchaser to
or for the credit or the account of the Company. Each Purchaser agrees promptly
to notify the Company and the Agent after any such setoff and application made
by such Purchaser; provided that the failure to give such notice shall not
--------
affect the validity of such setoff and application.
SECTION 11.13. Limitation of Payments by Company. The Company's
----------------------------------
obligations under Article VII shall be limited to the funds available to the
Company which have been properly distributed to the Company pursuant to the
Agreement and any Supplement and neither the Agent nor any Purchaser shall have
any actionable claim against the Company for failure to satisfy such obligation
because it does not have funds available therefor from amounts properly
distributed.
SECTION 11.14. No Bankruptcy Petition. Each Purchaser hereby
-----------------------
covenants and agrees that, prior to the date which is one year and one day after
the later of (i) the last day of the Series 1996-A Amortization Period and
(ii) the last day of the amortization period of any other Outstanding Series, it
will not institute against, or join any other Person in instituting against, the
Company any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other similar proceedings under any Federal or state bankruptcy
or similar law.
SECTION 11.15 Rating of VFC Certificates. If Series 1996-A is
---------------------------
outstanding six months from the Issuance Date, then, at the request of the
Agent, the Company shall, at its own expense, cause the VFC Certificates to be
rated by up to two Rating Agencies designated by the Agent.
SECTION 11.16 Limitation on Addition and Termination of Sellers.
--------------------------------------------------
(a) Notwithstanding anything to the
101
contrary contained in the Receivables Sale Agreement or the Agreement, the
Company shall not consent to the addition of a Seller thereunder unless each of
the following conditions shall have been satisfied:
(i) Each of the conditions set forth in Section 3.05 of the
Receivables Sale Agreement shall have been satisfied.
(ii) The Company, the Trustee and the Agent shall have received
evidence that the Rating Agency Condition shall have been satisfied with
respect to the addition of such Seller.
(iii) The Company, the Trustee and the Agent shall have received a
certificate prepared by a Responsible Officer of each Servicer certifying
that after giving effect to the addition of such Seller, the Aggregate
Target Receivables Amount shall equal or exceed the Aggregate Allocated
Receivables Amount on the related Seller Addition Date.
(iv) Each Purchaser shall have given its prior written consent to the
addition of such Seller, which shall not be unreasonably withheld.
(b) Following the addition of a Seller pursuant to the Receivables
Sale Agreement, the Agreement and the foregoing paragraph (a), the Agent may in
its discretion require that for a period of up to six months commencing on the
related Seller Addition Date, for purposes of the calculation of the
Series 1996-A Required Reserves, the Series 1996-A Required Reserves Ratio shall
be equal to the greater of (i) the Series 1996-A Ratio calculated on the basis
that the Receivables shall be deemed not to include any Receivable originated by
such additional Seller and (ii) the Series 1996-A Required Reserves Ratio
calculated without regard to this paragraph (b).
102
(c) Notwithstanding anything to the contrary contained in the
Receivables Sale Agreement, the Company shall not consent to any request made
pursuant to Section 9.14(b) thereof, nor shall any Seller which is the subject
of such request be terminated under the Receivables Sale Agreement, in each case
unless (i) no Early Amortization Event, Potential Early Amortization Event or
Potential Purchase Termination Event (as defined in the Receivables Sale
Agreement) (other than with respect to the Seller to be so terminated) has
occurred and is continuing (both before and after giving effect to such
termination) and (ii) the Trustee shall have received prior written notice of
such termination (which notice shall be accompanied by a pro forma Daily Report
--- -----
confirming that the Aggregate Target Receivables Amount equals or exceeds the
Aggregate Allocated Receivables Amount, each calculated after giving effect to
such termination and excluding all Receivables originated by the Seller to be
terminated).
(d) Upon the termination of a Seller pursuant to Section 9.14(b) of
the Receivables Sale Agreement and the foregoing paragraph (c), the calculation
(including, without limitation, for purposes of the pro forma calculations
--- -----
pursuant to paragraph (c) above) of the Aggregate Target Receivables Amount, the
Aggregate Allocated Receivables Amount, the Series 1996-A Required Subordinated
Amount and all other amounts from which each such amount is directly or
indirectly derived shall exclude in each case the Receivables originated by such
terminated Seller.
ARTICLE XII
Final Distributions
-------------------
SECTION 12.01. Certain Distributions. (a) Not later than 2:00 p.m.,
----------------------
New York City time, on the Distribution Date following the date on which the
proceeds from the disposition of the Receivables pursuant to
103
subsection 7.02(b) of the Agreement are deposited into the Series 1996-A Non-
Principal Collection Sub-subaccount and the Series 1996-A Principal Collection
Sub-subaccount, the Trustee shall distribute such amounts pursuant to
Article III of this Supplement.
(b) Notwithstanding anything to the contrary in this Supplement or
the Agreement, any distribution made pursuant to this Section shall be deemed to
be a final distribution pursuant to Section 9.03 of the Agreement with respect
to the VFC Certificates.
IN WITNESS WHEREOF, the Company, the Master Servicer, the Trustee, the
Agent and the Initial Purchasers have caused this Series 1996-A Supplement to be
duly executed by their respective officers as of the day and year first above
written.
LFI RECEIVABLES CORPORATION,
by
--------------------------
Name:
Title:
LFI SERVICING CORPORATION, as
Master Servicer,
by
--------------------------
Name:
Title:
104
THE CHASE MANHATTAN BANK, not
in its individual capacity but
solely as Trustee,
by
--------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Agent,
by
--------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Initial Purchaser,
by
--------------------------
Name:
Title:
EXHIBIT B TO SERIES
1996-A SUPPLEMENT
-----------------
LFI RECEIVABLES MASTER TRUST
FORM OF SUBORDINATED COMPANY CERTIFICATE, SERIES 1996-A
THIS SUBORDINATED CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"). NEITHER THIS SUBORDINATED CERTIFICATE NOR
ANY PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION PROVISIONS.
THIS SUBORDINATED CERTIFICATE IS NOT PERMITTED TO BE TRANSFERRED,
ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH
THE TERMS OF THE POOLING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN
CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
This Subordinated Certificate evidences a fractional undivided
interest in assets of the
LFI RECEIVABLES MASTER TRUST
the corpus of which consists of receivables representing amounts payable for
goods or services, which receivables have been purchased by LFI Receivables
Corporation, a Delaware corporation, which in turn transferred and assigned such
receivables to the LFI Receivables Master Trust,
(Not an interest in or obligation of
LFI Receivables Corporation,
the Sellers listed on Schedule 1
of the Receivables Sales Agreement
or any Affiliate thereof)
This certifies that
2
LFI Receivables Corporation
(the "Subordinated Certificateholder") is the registered owner of a fractional
undivided interest in the assets of the LFI Receivables Master Trust (the
"Trust"), created pursuant to the Pooling Agreement, dated as of August 5, 1996
(as the same may from time to time be amended, restated, supplemented or
otherwise modified, the "Pooling Agreement"), by and among LFI Receivables
Corporation, a Delaware Corporation (the "Company"), LFI Servicing Corporation,
a Delaware corporation, as master servicer (the "Master Servicer"), and The
Chase Manhattan Bank not in its individual capacity but solely as trustee (in
such capacity, the "Trustee") for the Trust, as supplemented by the Series 1996-
A Supplement, dated as of August 5, 1996 (as amended, supplemented or otherwise
modified from time to time, the "Supplement", collectively, with the Pooling
Agreement, the "Agreement"), by and among the Company, the Master Servicer, The
Chase Manhattan Bank, as agent and initial Purchaser and the Trustee. The
corpus of the Trust consists of receivables (the "Receivables") representing
amounts payable for goods or services and all other Trust Assets referred to in
the Agreement. Although a summary of certain provisions of the Agreement is set
forth below, this Subordinated Certificate does not purport to summarize the
Agreement, is qualified in its entirety by the terms and provisions of the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. A copy of the
Agreement may be requested by writing to the Trustee at The Chase Manhattan
Bank, 450 W. 33rd Street, 15th Floor, New York, New York 10011, Attention of
Advanced Structured Products Group. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement.
This Subordinated Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the holder
of the Subordinated
3
Certificate, by virtue of the acceptance hereof, assents and is bound.
This Subordinated Certificate is the Subordinated Company Certificate
entitled "Series 1996-A Subordinated Company Certificate", representing a
fractional undivided interest in the assets of the Trust consisting of the right
to receive Collections allocated to the Series 1996-A Certificateholders'
Interest (as hereinafter defined) and not required to be distributed to or for
the benefit of the holders of the VFC Certificates (as hereinafter defined).
Concurrently with the issuance of the Subordinated Certificate, the Trust shall
also issue a Class of Investor Certificates entitled "LFI Receivables Master
Trust, VFC Certificates, Series 1996-A" (the "VFC Certificates"). The VFC
Certificates represent a fractional undivided interest in the assets of the
Trust, consisting of the right to receive the sum of (i) the Invested Percentage
(expressed as a decimal) of the Collections received with respect to the
Receivables and of all other funds on deposit in the Collection Account and (ii)
to the extent such interests appear in the Series 1996-A Supplement, all other
funds on deposit in the Series 1996-A Collection Subaccount and any subaccounts
thereof (the "Series 1996-A Certificateholders' Interest"). The Trust's assets
are allocated in part to the holder of VFC Certificates and the holder of the
Series 1996-A Subordinated Company Certificate with the remainder allocated to
Certificateholders of the other Series, if any, and to the Company. In addition
to the VFC Certificates and the Series 1996-A Subordinated Company Certificate,
an Exchangeable Company Certificate will be issued to the Company pursuant to
the Agreement which will represent the Company's interest (if any) in the Trust.
The Exchangeable Company Certificate will represent the interest in the Trust
Assets not represented by the Investor or Subordinated Company Certificate of
each Outstanding Series. The Exchangeable Company Certificates may be exchanged
by the Company pursuant to the Agreement for an increase in the Invested Amount
of a Class of Investor Certificates of an Outstanding Series and an increase in
the related
4
Subordinated Company Certificate, or one or more newly issued Series of Investor
Certificates and the related newly issued Subordinate Company Certificate, and a
reissued Exchangeable Company Certificate upon the conditions set forth in the
Agreement.
The aggregate interest represented by the Series 1996-A Subordinated
Company Certificate at any time in the assets of the Trust shall not exceed an
amount equal to the Series 1996-A Subordinated Company Certificate Amount at the
time. The Initial Series 1996-A Subordinated Certificate Amount shall mean the
Series 1996-A Subordinated Certificate Amount in respect of the Issuance Date.
Thereafter, the Series 1996-A Subordinated Company Certificate Amount on any
date of determination shall be an amount equal to the Series 1996-A Allocated
Receivables Amount minus the Series 1996-A Adjusted Invested Amount.
-----
Distributions with respect to this Series 1996-A Subordinated Company
Certificate shall be paid monthly, but only to the extent provided under the
Agreement, on each Distribution Date by the Trustee, to the holder of the Series
1996-A Subordinated Company Certificate. Final payment of this Series 1996-A
Subordinated Certificate shall be made only upon presentation and surrender of
this Series 1996-A Subordinated Company Certificate at the office or agency
specified in the notice of the final distribution delivered by the Trustee to
the holder of the Series 1996-A Subordinated Company Certificate in accordance
with the Agreement.
This Series 1996-A Subordinated Company Certificate does not represent
an obligation of, or an interest in, the Company, the Master Servicer or any
Affiliate of either of them.
It is expressly understood and agreed by the Company and the holder of
the Series 1996-A Subordinated Company Certificate that (a) the Agreement is
executed and delivered by the Trustee, not individually or personally but
5
solely as Trustee of the Trust, in the exercise of the powers and authority
conferred and vested in it, (b) the representations, undertakings and agreements
made on the part of the Trust in the agreement are made and intended not as
personal representations, undertakings, and agreements by the Trustee, but are
made and intended for the purpose of binding only the Trust, (c) nothing herein
contained shall be construed as creating any liability of the Trustee,
individually or personally, to perform any covenant either expressed or implied
made on the part of the Trust in the Agreement, all such liability, if any,
being expressly waived by the parties who are signatories to the Agreement and
by any Person claiming by, through or under such parties; provided, however, the
-------- -------
Trustee shall be liable in its individual capacity for its own wilful misconduct
or gross negligence and for any tax assessed against the Trustee based on or
measured by any fees, commission or compensation received by it for acting as
Trustee and (d) under no circumstances shall the Trustee be personally liable
for the payment of any indebtedness or expenses of the Trust or be liable for
the breach or failure of any obligation, representation, warranty or covenant
made or undertaken by the Trust under the Agreement.
THIS SERIES 1996-A SUBORDINATED COMPANY CERTIFICATE SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ANY CONFLICT OF LAW PRINCIPLES.
6
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Series 1996-A
Subordinated Company Certificate shall not be entitled to any benefit under the
Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Company has caused this Series 1996-A
Subordinated Company Certificate to be duly executed.
Dated: , 1996
----------------- ----
LFI RECEIVABLES CORPORATION
as authorized pursuant to
Section 5.01 of the Agreement,
by
------------------------------
Name
Title
7
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Company Certificates described in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, not in
its individual capacity but
solely as Trustee,
by
------------------------------
Authorized Signatory
OR
by
------------------------------
Authenticating Agent
by
------------------------------
Authorized Signatory
EXHIBIT C
TO SERIES 1996-A
SUPPLEMENT
----------
[FORM OF COMMITMENT TRANSFER SUPPLEMENT]
COMMITMENT TRANSFER SUPPLEMENT, dated as of [ , ]
among [ ] (the "Transferor"), each purchaser listed as an
Acquiring Purchaser on the signature pages hereof (each, an "Acquiring
Purchaser") and THE CHASE MANHATTAN BANK, a New York banking corporation as
Agent for the Purchasers under the Pooling Agreement described below (in such
capacity, the "Agent").
W I T N E S S E T H:
WHEREAS this Commitment Transfer Supplement is being executed and
delivered in accordance with subsection 11.10(b) of the Series 1996-A
Supplement, dated as of August 5, 1996 (as from time to time amended,
supplemented or otherwise modified in accordance with the terms thereof, the
"Supplement"; terms defined therein being used herein as therein defined), among
the Company, the Master Servicer, the Transferor, the other Purchasers from time
to time parties thereto, the Trustee and the Agent, to the Pooling Agreement,
dated as of August 5, 1996 (as the same may be from time to time amended,
supplemented or otherwise modified, the "Pooling Agreement"), among the Company,
the Master Servicer and the Trustee;
WHEREAS each Acquiring Purchaser (if it is not already a Purchaser
party to the Supplement) wishes to become a Purchaser party to the Supplement;
and
WHEREAS the Transferor is selling and assigning to each Acquiring
Purchaser, rights, obligations and commitments under the Supplement.
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NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Upon the execution and delivery of this Commitment Transfer
Supplement by each Acquiring Purchaser, the Transferor and the Agent (the
date of such execution and delivery, the "Transfer Issuance Date"), each
Acquiring Purchaser shall be a Purchaser party to the Supplement for all
purposes thereof.
2. This Commitment Transfer Supplement is being delivered to the
Agent together with (i) if the Acquiring Purchaser is organized under the
laws of a jurisdiction outside the United States, the forms specified in
Section 7.04(e) of the Supplement, duly completed and executed by such
Acquiring Purchaser, (ii) if the Acquiring Purchaser is not already a
Purchaser under the Supplement, an Administrative Questionnaire in the form
of Exhibit D to the Supplement and (iii) a processing and recordation fee
of $3,500.
3. The Transferor acknowledges receipt from each Acquiring Purchaser
of an amount equal to the purchase price, as agreed between the Transferor
and such Acquiring Purchaser (the "Purchase Price"), of the portion being
purchased by such Acquiring Purchaser (such Acquiring Purchaser's
"Purchased Percentage") of the undivided interest in the VFC Certificate
owned by, and other amounts owing to, the Transferor under the Supplement.
The Transferor hereby irrevocably sells, assigns and transfers to each
Acquiring Purchaser, without recourse, representation or warranty (except
as set forth in paragraph 8(i) below), and each Acquiring Purchaser hereby
irrevocably purchases, takes and assumes from the Transferor, such
Acquiring Purchaser's Purchased Percentage of the commitment of the
Transferor to increase its VFC Invested Amount under, and the portion of
the undivided interest in, the VFC
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Certificate, Series 1996-A owned by, and other amounts owing to, the
Transferor, in each case under the Supplement together with all
instruments, documents and collateral security pertaining thereto.
4. The Transferor has made arrangements with each Acquiring Purchaser
with respect to (i) the portion, if any, to be paid, and the date or dates
for payment, by the Transferor to such Acquiring Purchaser of any
Commitment Fees heretofore received by the Transferor pursuant to the
Supplement prior to the Transfer Issuance Date and (ii) the portion, if
any, to be paid, and the date or dates for payment, by such Acquiring
Purchaser to the Transferor of Commitment Fees or Series 1996-A Monthly
Interest received by such Acquiring Purchaser pursuant to the Supplement
from and after the Transfer Issuance Date.
5. From and after the Transfer Issuance Date, amounts that would
otherwise by payable to or for the account of the Transferor pursuant to
the Supplement shall, instead, be payable to or for the account of the
Transferor and the Acquiring Purchasers, as the case may be, in accordance
with their respective interests as reflected in this Commitment Transfer
Supplement, whether such amounts have accrued prior to the Transfer
Issuance Date or accrue subsequent to the Transfer Issuance Date.
6. Prior to or concurrently with the execution and delivery hereof,
the Agent will, at the expense of the Transferor, provide to each Acquiring
Purchaser (if it is not already a Purchaser party to the Supplement)
photocopies of all documents delivered to the Agent on the Issuance Date in
satisfaction of the conditions precedent set forth in the Supplement.
7. Each of the parties to this Commitment Transfer Supplement agrees
that at any time and from time to time upon the written request of any
other
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party, it will execute and deliver such further documents and do such
further acts and things as such other party may reasonably request in order
to effect the purposes of this Commitment Transfer Supplement.
8. By executing and delivering this Commitment Transfer Supplement,
the Transferor and each Acquiring Purchaser confirm to and agree with each
other and the Purchasers as follows: (i) the Transferor warrants that it
is the legal and beneficial owner of the interest being assigned hereby
free and clear of any adverse claim and that its Commitment, and the
outstanding balances of its VFC Certificates, in each case without giving
effect to assignments thereof which have not become effective, are
[ ] and [ ], respectively; (ii) except as set forth in
(i) above, the Transferor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with the Supplement, or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Supplement, any other Transaction Document or any other
instrument or document furnished pursuant hereto or thereto, or the
financial condition of any Seller, any Servicer, the Company or the Master
Servicer, or the performance or observance by any Seller, any Servicer, the
Company or the Master Servicer of any of its obligations under the
Supplement, any other Transaction Document or any other instrument or
document furnished pursuant hereto or thereto; (iii) the Acquiring
Purchaser represents and warrants that it is legally authorized to enter
into this Commitment Transfer Supplement; (iv) the Acquiring Purchaser
confirms that it has received a copy of the Supplement and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Commitment Transfer
Supplement; (v) the Acquiring Purchaser will independently and without
reliance upon the Agent, the Trustee, the assigning Purchaser or any other
Purchaser
5
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under the Supplement or any other Transaction Document; (vi) the
Acquiring Purchaser appoints and authorizes the Agent and the Trustee to
take such action as agent on its behalf and to exercise such powers under
the Supplement as are delegated to the Agent and the Trustee, respectively,
by the terms hereof, together with such powers as are reasonably incidental
thereto; and (vii) the Acquiring Purchaser agrees that it will perform in
accordance with their terms all the obligations which by the terms of the
Supplement are required to be performed by it as a Purchaser.
9. Schedule I hereto sets forth the revised Commitment Percentages of
the Transferor and each Acquiring Purchaser as well as administrative
information with respect to each Acquiring Purchaser.
10. This Commitment Transfer Supplement shall be governed by, and
construed in accordance with, the laws of the State of New York, without
giving effect to principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment
Transfer Supplement to be executed by their respective duly authorized officers
as of the date first set forth above.
[NAME OF SELLING PURCHASER],
as Transferor,
by
------------------------------
Title
6
[NAME OF PURCHASING
PURCHASER], as Acquiring
Purchaser,
by
------------------------------
Title
THE CHASE MANHATTAN BANK, as
Agent,
by
-------------------------
Title
SCHEDULE I
TO EXHIBIT C
TO SERIES 1996-A
SUPPLEMENT
----------------
LIST OF ADDRESSES FOR NOTICES
AND OF COMMITMENT PERCENTAGES
THE CHASE MANHATTAN BANK, as Agent
Address: 270 Park Avenue
New York, New York 10017
Attention of
Telecopier:
[TRANSFEROR]
Address:
Prior Commitment Percentage:
Revised Commitment Percentage:
[ACQUIRING PURCHASER]
Address:
[Prior] Commitment Percentage:
[Revised Commitment Percentage:]
Schedule 1 to the
Series 1996-A Supplement
------------------------
Commitments
-----------
Purchaser Commitment
--------- ----------
The Chase Manhattan Bank $175,000,000
Address: 270 Park Avenue
New York, New York 10017
Attention of
Telecopier:
Schedule 2 to the
Series 1996-A Supplement
------------------------
Trust Accounts
--------------
Account Account Number
------- --------------
Series 1996-A Collection Subaccount
Series 1996-A Principal Collection Sub-
subaccount
Series 1996-A Non-Principal Collection
Sub-subaccount
Series 1996-A Principal Collection
Subordinated Sub-subaccount
Series 1996-A Accrued Interest Sub-
subaccount
EXHIBIT D
to Series 1996-A
Supplement
----------
[Form of]
[ ]
ADMINISTRATIVE QUESTIONNAIRE
Please accurately complete the following information and return via Telecopy to
the attention of [ ] at Chase Securities Inc. as soon as possible, at
Telecopy No. (212) [ ].
PURCHASER LEGAL NAME TO APPEAR IN DOCUMENTATION:
- ------------------------------------------------
- --------------------------------------------------------------------------------
GENERAL INFORMATION:
- --------------------
Institution Name:
-------------------------------------------------------------
Street Address:
---------------------------------------------------------------
City, State, Zip Code:
--------------------------------------------------------
POST-CLOSING, ONGOING CREDIT CONTACTS/NOTIFICATION METHODS:
- -----------------------------------------------------------
CREDIT CONTACTS:
Primary Contact:
--------------------------------------------------------------
Street Address:
---------------------------------------------------------------
City, State, Zip Code:
--------------------------------------------------------
Phone Number:
-----------------------------------------------------------------
Telecopy Number:
--------------------------------------------------------------
2
Backup Contact:
---------------------------------------------------------------
Street Address:
---------------------------------------------------------------
City, State, Zip Code:
--------------------------------------------------------
Phone Number:
-----------------------------------------------------------------
Telecopy Number:
--------------------------------------------------------------
TAX WITHHOLDING:
- ----------------
Nonresident Alien Y* N
------- -------
* Form 4224 Enclosed
Tax ID Number _________________________
POST-CLOSING, ONGOING ADMINISTRATIVE CONTACTS/NOTIFICATION METHODS:
- -------------------------------------------------------------------
ADMINISTRATIVE CONTACTS - PAYMENTS, FEES, ETC.
Contact:
----------------------------------------------------------------------
Street Address:
---------------------------------------------------------------
City, State, Zip Code:
--------------------------------------------------------
Phone Number:
-----------------------------------------------------------------
Telecopy Number:
--------------------------------------------------------------
PAYMENT INSTRUCTIONS:
- ---------------------
Name of Bank to which funds are to be transferred:
- --------------------------------------------------------------------------------
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Routing Transit/ABA number of Bank to which funds are to be transferred:
- --------------------------------------------------------------------------------
Name of Account, if applicable:
- --------------------------------------------------------------------------------
Account Number:
---------------------------------------------------------------
Additional information:
-------------------------------------------------------
- --------------------------------------------------------------------------------
It is very important that all the above information be accurately completed and
---
that this questionnaire be returned to the person specified in the introductory
paragraph of this questionnaire as soon as possible. If there is someone other
than yourself who should receive this questionnaire, please notify us of that
person's name and telecopy number and we will telecopy a copy of the
questionnaire. If you have any questions about this form, please call
[ ] at (212) [ ].
Schedule 3 to the
Series 1996-A Supplement
------------------------
Timetable
---------
SELLER DISASTER RECOVERY COMPUTER BACK-UP OPERATIONAL READINESS
PLAN SYSTEMS OF OFF-SITE DISASTER
RECOVERY FACILITY
Ametex Fabrics, Inc.
Operational
Completed Initial Closing Date Hot-Site with IBM
Drexel Heritage Furnishings, Inc.
12-1-96 Initial Closing Date By End of Year
Drexel Heritage Home Inspirations, Inc.
12-1-96 Initial Closing Date By End of Year
Furnishings International Inc.
2-1-97 Initial Closing Date By End of Year
Henredon Furniture Industries, Inc.
Operational
12-1-96 Initial Closing Date Hot-Site with IBM
LaBarge, Inc. 2-1-97 Initial Closing Date By End of Year
Lexington Furniture Industries, Inc.
Operational
12-1-96 Initial Closing Date Have own Hot-Site
Maitland-Smith, Inc. 2-1-97 Initial Closing Date By End of Year
Robert Allen Fabrics, Inc.
Operational
Completed Initial Closing Date Hot-Site with IBM
The Berkline Corporation
12-1-96 Initial Closing Date By End of Year
Universal Furniture Industries, Inc.
12-1-96 Initial Closing Date By End of Year
EXHIBIT H TO SERIES
1996-A SUPPLEMENT
-----------------
Form of Confidentiality Agreement
(Telecopy to [ ] at 212- )
[Name of assignee purchaser]
Ladies and Gentlemen:
You are prepared to furnish to the undersigned [describe information
to be provided]. The [described information] and any other materials, documents
and information which you, the Sellers, the Servicers, the Master Servicer, the
Company and the Trustee, on behalf of the Trust, or any of your or their
respective affiliates may furnish to us in connection with our evaluation of a
possible assignment or participation are collectively called the "Information".
Terms used herein that are not otherwise defined herein shall have the meaning
ascribed to such terms in the Pooling Agreement, dated as of August 5, 1996
among LFI Receivables Corporation, LFI Servicing Corporation and The Chase
Manhattan Bank.
We agree to keep confidential, and to not publish, disclose or
otherwise divulge, the Information (and to cause our officers, directors,
employees, agents and representatives to keep confidential, and to not publish,
disclose or otherwise divulge, the Information) and, at your, the Sellers', the
Servicers', the Master Servicer's, the Company's or the Trustee's, request
(except as provided below), promptly to return to you, the Sellers, the
Servicers, the Master Servicer, the Company or the Trustee (as applicable), or
destroy, the Information and all copies thereof, extracts therefrom and analyses
or other materials based thereon, except that we shall be permitted to disclose
2
Information (i) to such of our officers, directors, employees, agents and
representatives as need to know such Information in connection with our
evaluation of a possible assignment or participation (who will be informed of
the confidential nature of the Information); (ii) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, or
requested by any bank regulatory authority (in any which event we will notify
you, the Sellers, the Servicers, the Master Servicer, the Company or the Trustee
to the extent not prohibited by applicable law); (iii) to the extent such
Information (A) becomes publicly available other than as a result of a breach of
this agreement, (B) becomes available to us on a non-confidential basis from a
source other than you, the Sellers, the Servicers, the Master Servicer, the
Company or the Trustee or any of your affiliates or (C) was available to us on a
non-confidential basis prior to its disclosure to us by you; (iv) to the extent
you, the Sellers, the Servicers, the Master Servicer, the Company and the
Trustee shall have consented to such disclosure in writing; or (v) pursuant to
the last paragraph of this letter.
We further agree that we will use the Information (except to the
extent the conditions referred to in subclauses (A), (B) and (C) of clause (iii)
above have been met and as provided in the last paragraph of this letter) only
to evaluate a possible assignment or participation.
We further agree, in the event we participate in an assignment or
participation, that we will not disclose any of the Information to any assignee
or participant or proposed assignee or participant unless and until such
assignee or participant or proposed assignee or participant first executes and
delivers to you a letter substantially in the form hereof.
Our obligations under this letter are for the benefit of you, the
Sellers, the Servicers, the Master Servicer, the Company and the Trustee and
your and their affiliates and you and each of them may pursue remedies
3
against us for the breach hereof, either in equity or at law.
Notwithstanding anything to the contrary contained above if we
participate in an assignment or participation, we will be entitled to retain all
information and to use it in monitoring our investment and in exercising our
rights with respect thereto. This agreement shall be governed by the laws of
the State of New York.
Name of Recipient:
by:
_____________________________
Authorized Officer
______________________________
[Name of Assignee/Participant/
Proposed Assignee/Proposed
Participant]
EXHIBIT G
TO SERIES 1996-A
SUPPLEMENT
----------
FORM OF ISSUANCE/INCREASE NOTICE
________, 199__
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Telecopier:
Attention:
Ladies and Gentlemen:
Reference is hereby made to the Series 1996-A Supplement, dated as of
August 5, 1996 (as amended or supplemented, the "Supplement"), among LFI
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Receivables Corporation (the "Company"), LFI Servicing Corporation (the "Master
Servicer"), The Chase Manhattan Bank, as Agent and Initial Purchaser, and The
Chase Manhattan Bank, as Trustee. Capitalized terms used in this Notice and not
otherwise defined herein shall have the meanings assigned thereto in the
Supplement.
This Notice constitutes the notice required in connection with [the
initial issuance] [any Increase] pursuant to subsection 2.05(a) of the
Supplement.
The [Master Servicer] [Company] hereby requests [a purchase in respect
of the initial issuance of Investor Certificates] [an Increase] be made by the
Purchasers on ______, ___ in the aggregate amount of $_______, such [purchase]
[Increase] to be allocated to a [Floating Tranche] [Eurodollar Tranche with a
Eurodollar Period of [one] [two] [three] months].
The [Master Servicer] [Company] hereby represents and warrants, as of
the date of such [purchase] [Increase]
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after giving effect thereto, that the conditions set forth in
subsections 2.05(a) and (b) of the Supplement with respect to such [purchase]
[Increase] have been satisfied.
IN WITNESS WHEREOF, the undersigned has caused this Notice to be
executed by its duly authorized officer as of the date first above written.
[LFI SERVICING CORPORATION, as
Master Servicer] [LFI
RECEIVABLES CORPORATION]
By:___________________________
Name:
Title: