Exhibit 10.8
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LFI RECEIVABLES MASTER TRUST
SERIES 1997-1 SUPPLEMENT
Dated as of February 4, 1997
to
AMENDED AND RESTATED
POOLING AGREEMENT
Dated as of February 4, 1997
Among
LFI RECEIVABLES CORPORATION,
LFI SERVICING CORPORATION,
as Master Servicer
and
THE CHASE MANHATTAN BANK,
as Trustee
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TOC Series 1997-1 Supplement
TABLE OF CONTENTS
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ARTICLE I
Definitions
SECTION 1.01. Definitions.............................................. 2
ARTICLE II
Designation of Term Certificates; Purchase and Sale
of the Term Certificates
SECTION 2.01. Designation.............................................. 27
SECTION 2.02. The Term Certificates and
Series 1997-1 Subordinated
Interest............................................... 27
SECTION 2.03. Delivery................................................. 28
SECTION 2.04. Restrictions on Transfer................................. 30
SECTION 2.05. Application of Proceeds.................................. 36
SECTION 2.06. Procedure for Decreasing the
Invested Amount; Optional
Termination............................................ 37
SECTION 2.07. Sale of Additional Term Certificates..................... 38
ARTICLE III
Article III of the Agreement
SECTION 3A.02. Establishment of Trust Accounts.......................... 41
SECTION 3A.03. Daily Allocations........................................ 43
SECTION 3A.04. Determination of Interest................................ 46
SECTION 3A.05. Determination of Series 1997-1
Principal.............................................. 49
SECTION 3A.06. Applications............................................. 52
TOC Series 1997-1 Supplement 2
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ARTICLE IV
Distributions and Reports
SECTION 4A.01. Distributions............................................ 57
SECTION 4A.02. Statements and Notices................................... 57
SECTION 4A.03. Notices.................................................. 59
ARTICLE V
Additional Early Amortization Events
SECTION 5.01. Additional Early Amortization
Events................................................. 59
ARTICLE VI
Servicing Fee
SECTION 6.01. Servicing Compensation................................... 64
ARTICLE VII
Covenants, Representations and Warranties
SECTION 7.01. Representations and Warranties of
the Company and the Master
Servicer............................................... 65
SECTION 7.02. Covenants of the Company and the
Master Servicer........................................ 65
SECTION 7.03. Negative Covenant of the Company;
Covenants of the Master Servicer....................... 66
SECTION 7.04. Covenant of the Trustee.................................. 67
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ARTICLE VIII
Miscellaneous
SECTION 8.01. Ratification of Agreement................................ 67
SECTION 8.02. Governing Law............................................ 67
SECTION 8.03. Further Assurances....................................... 68
SECTION 8.04. No Waiver; Cumulative Remedies........................... 68
SECTION 8.05. Amendments............................................... 68
SECTION 8.06. Notices.................................................. 69
SECTION 8.07. Counterparts............................................. 70
SECTION 8.08. No Bankruptcy Petition................................... 70
SECTION 8.09. Limitation on Addition and
Termination of Sellers................................. 70
ARTICLE IX
Final Distributions
SECTION 9.01. Certain Distributions.................................... 72
EXHIBITS
Exhibit A Form of Class A Certificate, Series 1997-1
Exhibit B Form of Class B Certificate, Series 1997-1
Exhibit C Form of Class C Certificate, Series 1997-1
Exhibit D Form of Daily Report
Exhibit E Form of Monthly Settlement Statement
Exhibit F Form of Purchaser Letter
Exhibit G Form of Class C Transferee Tax Letter
SCHEDULES
Schedule 1 Trust Accounts
Series 1997-1 Supplement
SERIES 1997-1 SUPPLEMENT dated as of February 4, 1997
(this "Supplement"), 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, as trustee (the "Trustee") under the
Agreement.
W I T N E S S E T H :
WHEREAS, the parties hereto have entered into the Amended and
Restated Pooling Agreement, dated as of February 4, 1997 (the "Agreement");
WHEREAS, the Agreement provides, among other things, that the
Company, the Master Servicer and the Trustee may at any time and from time to
time enter into supplements to the Agreement for the purpose of authorizing the
issuance on behalf of the Trust by the Company for execution and redelivery to
the Trustee for authentication of one or more Series of Investor Certificates;
and
WHEREAS, the Company, the Master Servicer and the Trustee wish to
supplement the Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged, the parties
hereto agree as follows:
Series 1997-1 Supplement 2
ARTICLE I
Definitions
SECTION 1.01. Definitions. (a) The following words and phrases shall
have the following meanings with respect to Series 1997-1 and the definitions of
such terms are applicable to the singular as well as the plural form of such
terms and to the masculine as well as the feminine and neuter genders of such
terms:
"Accrual Period" shall mean, with respect to Series 1997-1, the
period from and including a Distribution Date to but excluding the succeeding
Distribution Date; provided that in the case of the initial Accrual Period, it
shall mean the period from and including the Issuance Date to but excluding
March 17, 1997.
"Accrued Expense Adjustment" shall mean, for any Business Day during
an Accrual Period, the amount, if any, which may be less than zero, equal to the
difference between (i) the entire amount of (A) the Series 1997-1 Monthly
Interest to be distributed on the next succeeding Distribution Date, (B) the
aggregate amount of all previously accrued, unpaid and unallocated Series 1997-1
Monthly Interest for prior Distribution Dates, (C) the aggregate amount of all
accrued, unpaid and unallocated Class A Additional Interest, Class B Additional
Interest and Class C Additional Interest, (D) the Series 1997-1 Monthly
Servicing Fee and (E) all accrued Program Costs, in each case for such Accrual
Period determined as of such day, and (ii) the aggregate of the amounts
transferred to the Series 1997-1 Non-Principal Collection Sub-subaccount on or
before such day in respect of such Accrual Period pursuant to subsection
3A.03(b)(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
Accrual Period, the sum of (a) the
Series 1997-1 Supplement 3
Series 1997-1 Daily Interest Expense determined as of such Business Day, (b) in
the case of each of the first ten Business Days in the Accrual Period, one-tenth
of the Series 1997-1 Monthly Servicing Fee (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(b)(i)) and (c) all Program Costs
that have accrued since the preceding Business Day.
"Aged Receivables Ratio" shall mean, as of the last day of each
Settlement Period, the percentage equivalent of a fraction, the numerator of
which shall be the sum of (a) the aggregate unpaid balance of Receivables
originated by the Sellers that were 91 to 120 days past due and (b) the
aggregate amount of Receivables of the 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
fourth prior Settlement Period (including the Settlement Period ended on such
day).
"Aggregate Commitment Amount" shall have the meaning set forth in
Section 1.01 of the Series 1997-2 Supplement.
"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.
"Change in Control" shall mean the occurrence of any event the
result of which causes Lifestyle Holdings Ltd. or the Company not to be a,
direct or indirect, wholly owned Subsidiary of Lifestyle Furnishings
International Ltd.
Series 1997-1 Supplement 4
"Class A Additional Interest" shall have the meaning assigned in
subsection 3A.04(b)(i).
"Class A Adjusted Invested Amount" shall mean, on any date of
determination, the Class A Invested Amount minus the amount on deposit in the
Series 1997-1 Principal Collection Sub-subaccount up to a maximum of the Class A
Invested Amount.
"Class A Certificate" shall mean a Class A Certificate, Series
1997-1, executed by the Company and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A.
"Class A Certificateholder" shall mean each holder of a Class A
Certificate.
"Class A Certificate Rate" shall mean, (a) with respect to (i) the
initial Accrual Period, 5.655% per annum, and (ii) any Accrual Period
thereafter, One-Month LIBOR for such Accrual Period plus 0.185% per annum and
(b) in the case of any additional Class A Certificates issued pursuant to
Section 2.07, the rate per annum set forth in the written direction delivered by
the Company to the Trustee pursuant to subsection 2.07(c).
"Class A Initial Invested Amount" shall mean $120,000,000.
"Class A Interest Shortfall" shall have the meaning assigned in
subsection 3A.04(b)(i).
"Class A Invested Amount" shall mean, with respect to any date of
determination, an amount equal to (i) the Class A Initial Invested Amount (plus
the initial invested amount of any Class A Certificate issued subsequent to the
Issuance Date) minus (ii) the aggregate amount of distributions to the Class A
Certificateholders (including the holders of any such subsequently issued Class
A Certificates) made in respect of principal on or prior to
Series 1997-1 Supplement 5
such date minus (iii) the aggregate Series 1997-1 Allocable Charged-Off Amount
applied to the Class A Certificates on or prior to such date pursuant to
subsection 3A.05(b)(iv) plus (iv) (but only to the extent of any unreimbursed
reductions made pursuant to clause (iii) above) the aggregate Series 1997-1
Allocable Recoveries Amount applied to the Class A Certificates on or prior to
such date pursuant to subsection 3A.05(c)(i).
"Class A Monthly Interest" shall have the meaning assigned in
subsection 3A.04(a)(i).
"Class A Ratio" shall mean, on any date of determination with
respect to the Class A Certificates, the greatest of (i) the sum of the Loss
Reserve Ratio I and the Dilution Reserve Ratio I, (ii) the sum of the Loss
Reserve Ratio II and the Dilution Reserve Ratio II and (iii) the Minimum Ratio,
in each case applicable to Class A Certificates.
"Class B Additional Interest" shall have the meaning assigned in
subsection 3A.04(b)(ii).
"Class B Adjusted Invested Amount" shall mean, on any date of
determination, the Class B Invested Amount minus the excess, if any, of the
amount on deposit on such date in the Series 1997-1 Principal Collection
Sub-subaccount over the Class A Invested Amount up to a maximum of the Class B
Invested Amount.
"Class B Certificate" shall mean a Class B Certificate, Series
1997-1, executed by the Company and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit B.
"Class B Certificateholder" shall mean each holder of a Class B
Certificate.
"Class B Certificate Rate" shall mean, (a) with respect to (i) the
initial Accrual Period, 5.850% per annum,
Series 1997-1 Supplement 6
and (ii) any Accrual Period thereafter, One-Month LIBOR for such Accrual Period
plus 0.38% per annum and (b) in the case of any additional Class B Certificates
issued pursuant to Section 2.07, the rate per annum set forth in the written
direction delivered by the Company to the Trustee pursuant to subsection
2.07(c).
"Class B Initial Invested Amount" shall mean $15,000,000.
"Class B Interest Shortfall" shall have the meaning assigned in
subsection 3A.04(b)(ii).
"Class B Invested Amount" shall mean, with respect to any date of
determination, an amount equal to (i) the Class B Initial Invested Amount (plus
the initial invested amount of any Class B Certificates issued subsequent to the
Issuance Date) minus (ii) the aggregate amount of distributions to the Class B
Certificateholders (including the holders of any such subsequently issued Class
B Certificates) made in respect of principal on or prior to such date minus
(iii) the aggregate Series 1997-1 Allocable Charged-Off Amount applied to the
Class B Certificates on or prior to such date pursuant to subsection
3A.05(b)(iii) plus (iv) (but only to the extent of any unreimbursed reductions
made pursuant to clause (iii) above) the aggregate Series 1997-1 Allocable
Recoveries Amount applied to the Class B Certificates on or prior to such date
pursuant to subsection 3A.05(c)(ii).
"Class B Monthly Interest" shall have the meaning assigned in
subsection 3A.04(a)(ii).
"Class B Ratio" shall mean, on any date of determination with
respect to the Class B Certificates, the greatest of (i) the sum of the Loss
Reserve Ratio I and the Dilution Reserve Ratio I, (ii) the sum of the Loss
Reserve Ratio II and the Dilution Reserve Ratio II and (iii) the Minimum Ratio,
in each case applicable to Class B Certificates.
Series 1997-1 Supplement 7
"Class C Additional Interest" shall have the meaning assigned in
subsection 3A.04(b)(iii).
"Class C Adjusted Invested Amount" shall mean, on any date of
determination, the Class C Invested Amount minus the excess, if any, of the
amount on deposit on such date in the Series 1997-1 Principal Collection
Sub-subaccount over the Class A Invested Amount and the Class B Invested Amount
up to a maximum of the Class C Invested Amount.
"Class C Certificate" shall mean a Class C Certificate, Series
1997-1, executed by the Company and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit C.
"Class C Certificateholder" shall mean each holder of a Class C
Certificate.
"Class C Certificate Rate" shall mean, (a) with respect to (i) the
initial Accrual Period, 6.095% per annum, and (ii) any Accrual Period
thereafter, One-Month LIBOR for such Accrual Period plus 0.625% per annum and
(b) in the case of any additional Class C Certificates issued pursuant to
Section 2.07, the rate per annum set forth in the written direction delivered by
the Company to the Trustee pursuant to subsection 2.07(c).
"Class C Initial Invested Amount" shall mean $15,000,000.
"Class C Interest Shortfall" shall have the meaning assigned in
subsection 3A.04(b)(iii).
"Class C Invested Amount" shall mean, with respect to any date of
determination, an amount equal to (i) the Class C Initial Invested Amount (plus
the initial invested amount of any Class C Certificates issued subsequent to the
Issuance Date) minus (ii) the aggregate amount of distributions to the Class C
Certificateholders (including the holders of any such subsequently issued Class
C
Series 1997-1 Supplement 8
Certificates) made in respect of principal on or prior to such date minus (iii)
the aggregate Series 1997-1 Allocable Charged-Off Amount applied to the Class C
Certificates on or prior to such date pursuant to subsection 3A.05(b)(ii) plus
(iv) (but only to the extent of any unreimbursed reductions made pursuant to
clause (iii) above) the aggregate Series 1997-1 Allocable Recoveries Amount
applied to the Class C Certificates on or prior to such date pursuant to
subsection 3A.05(c)(iii).
"Class C Monthly Interest" shall have the meaning assigned in
subsection 3A.04(a)(iii).
"Class C Ratio" shall mean, on any date of determination with
respect to the Class C Certificates, the greatest of (i) the sum of the Loss
Reserve Ratio I and the Dilution Reserve Ratio I, (ii) the sum of the Loss
Reserve Ratio II and the Dilution Reserve Ratio II and (iii) the Minimum Ratio,
in each case applicable to Class C Certificates.
"Class C Transferee Tax Letter" shall mean a Class C Transferee Tax
Letter in substantially the form attached hereto as Exhibit G.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Daily Report" shall mean a report prepared by the Master Servicer
on each Business Day for the period specified therein, in substantially the form
of Exhibit D.
"Days Sales Outstanding" shall mean, as of any Settlement Report
Date and continuing until the next Settlement Report Date, the number of days
equal to the product of (i) 91 and (ii) the amount obtained by dividing (A) the
aggregate Principal Amount of Eligible Receivables as at the last day of the
Settlement Period immediately preceding such earlier Settlement Report Date, by
(B) the aggregate Principal Amount of Receivables generated by the
Series 1997-1 Supplement 9
Sellers for the three Settlement Periods immediately preceding such earlier
Settlement Report Date.
"Depository" shall mean The Depository Trust Company, the nominee of
which is Cede & Co., or any successor thereto.
"Depository Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Dilution Horizon" shall mean the number of days from the invoicing
of a Receivable until a Dilution Adjustment with respect to such Receivable is
issued by the related Seller or the related Seller becomes aware of the fact
that a Dilution Adjustment will have to be issued in respect of such Receivable;
provided, however, that in no event shall the Dilution Horizon be less than 30
days.
"Dilution Horizon Factor" shall mean (a) for the period from the
Issuance Date until the sixth Settlement Report Date to occur thereafter, 3.167
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 the numerator used to
calculate the Dilution Horizon Factor shall in no event be less than 30;
provided, further, 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,
Series 1997-1 Supplement 10
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 (but not less than 30) 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 Period preceding such
earlier Settlement Report Date and (B) the Dilution Horizon Factor and (ii) the
Aggregate Receivables Amount as of the last day of the Settlement Period
preceding such earlier Settlement Report Date.
"Dilution Ratio" shall mean, as of the last day of each Settlement
Period, an amount (expressed as a percentage) equal to 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
second prior Settlement Period (including the Settlement Period ended on such
day).
"Dilution Reserve Ratio I" 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 for the Class A
Certificates, the Class B Certificates or the Class C Certificates, as the case
may be, as follows:
DRR = [(c * d) + [(e-d) * (e/d)]] * f
Where:
DRR = Dilution Reserve Ratio I;
c = with respect to Class A Certificates, 2.5, with respect to Class B
Certificates, 2.0 and with respect to the Class C Certificates, 1.5;
Series 1997-1 Supplement 11
d = the three-month rolling average of the Dilution
Ratio that occurred during the period of three
consecutive Settlement Periods ending immediately
prior to such earlier Settlement Report Date;
provided, however, that if the Dilution Horizon is
(i) at least two but less than three, "d" shall
equal the two-month rolling average of the
Dilution Ratio that occurred during the period of
two consecutive Settlement Periods ending
immediately prior to such earlier Settlement
Report Date or (ii) less than two, "d" shall equal
the Dilution Ratio for the Settlement Period
ending immediately prior to such earlier
Settlement Report Date;
e = the highest three-month rolling average of the Dilution Ratio
that occurred during the period of twelve consecutive Settlement
Periods ending prior to such earlier Settlement Report Date;
provided, however, that if the Dilution Horizon is (i) at least two
but less than three, "e" shall equal the highest two-month rolling
average of the Dilution Ratio that occurred during the period of
twelve consecutive Settlement Periods ending prior to such earlier
Settlement Report Date or (ii) less than two, "e" shall equal 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.
"Dilution Reserve Ratio II" 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 for the Class A
Certificates, the Class B Certificates or the Class C Certificates, as the case
may be, as follows:
DRR = [(c * d) + e] * f
Series 1997-1 Supplement 12
Where:
DRR = Dilution Reserve Ratio II;
c = with respect to Class A Certificates, 2.5, with respect to
Class B Certificates, 2.0 and with respect to the Class C
Certificates, 1.5;
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 product of (i) the twelve-month sample standard deviation
of the Dilution Ratio as of the end of each of the twelve
consecutive Settlement Periods immediately preceding such
earlier Settlement Report Date and (ii) (a) for calculations
with respect to Class A Certificates, 2.58, (b) for calculations
with respect to Class B Certificates, 1.96 or (c) for
calculations with respect to Class C Certificates, 1.96; and
f = the Dilution Period.
"Discount Rate" shall mean, as of any date of determination, the sum
of (a) the weighted average Class A Certificate Rate, Class B Certificate Rate
and Class C Certificate Rate in effect with respect to the outstanding Class A
Certificates, Class B Certificates and Class C Certificates, respectively, 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 outstanding Term Certificates during the Settlement Period immediately
preceding the most recent Settlement Report Date divided by (ii) the average
daily Series 1997-1 Invested Amount during such Settlement Period.
Series 1997-1 Supplement 13
"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.
"ERISA Entity" shall mean (i) an "employee benefit plan" within the
meaning of Section 3(3) of ERISA or other retirement arrangement, individual
retirement account or Xxxxx plan, whether or not it is subject to the provisions
of Title I thereto,(ii)any plan described in Section 4975 (e)(1) of the Code or
(iii) any other entity that would be deemed to be a "benefit plan investor"
within the meaning of Department of Labor Regulation Section 2510.3-101(f)(2).
"Excess" shall have the meaning assigned in subsection 2.06(a).
"Excess Program Costs" shall have the meaning assigned to such term
within the definition of "Program Costs".
"Foreign Investor" means any Term Certificateholder who is not a
"United States person".
"Government Obligor Factor" shall mean 2.5% for the three month
period from December through February of any year and 1.5% for the nine month
period from March through November of any year.
"Ineligibility Event" shall have the meaning set forth in Section
2.06 of the Receivables Sale Agreement.
"Initial Purchaser" shall mean Chase Securities Inc., who is
purchasing the Term Certificates on the Issuance Date pursuant to the Purchase
Agreement.
Series 1997-1 Supplement 14
"Institutional Accredited Investor" shall mean an institutional
accredited investor, within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act.
"Issuance Date" shall mean February 4, 1997.
"Loss Reserve Ratio I" 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 for the Class A
Certificates, the Class B Certificates or the Class C Certificates, as the case
may be, as follows:
LRR = [(a * b)/c] * d * e
Where:
LRR = Loss Reserve Ratio I;
a = the aggregate Principal Amount of Receivables originated by the
Sellers during the three Settlement Periods immediately preceding
such earlier Settlement Report Date;
b = the highest three-month rolling average of the Aged Receivables
Ratio that occurred during the period of twelve consecutive
Settlement Periods ending prior to such earlier Settlement Report
Date;
c = the Aggregate Receivables Amount as of the last day of the
Settlement Period immediately preceding such earlier Settlement
Report Date;
d = with respect to the Class A Certificates, 2.5, with respect to the
Class B Certificates, 2.0, and with respect to the Class C
Certificates, 1.5; and
e = the Payment Terms Factor.
Series 1997-1 Supplement 15
"Loss Reserve Ratio II" 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 for the Class A
Certificates, the Class B Certificates or the Class C Certificates, as the case
may be, as follows:
LRR = [(a * b)/c] * d * e + f
Where:
LRR = Loss Reserve Ratio II;
a = the aggregate Principal Amount of Receivables originated by
the Sellers during the three Settlement Periods immediately
preceding such earlier Settlement Report Date;
b = the highest three-month rolling average of the Aged
Receivables Ratio that occurred during the period of twelve
consecutive Settlement Periods preceding such earlier Settlement
Report Date;
c = the Aggregate Receivables Amount as of the last day of the
Settlement Period immediately preceding such earlier Settlement
Report Date;
d = with respect to Class A Certificates, 2.5, with respect to
Class B Certificates, 2.0, and with respect to the Class C
Certificates, 1.5;
e = the Payment Terms Factor; and
f = the product of (i) the twelve-month sample standard deviation
of the Aged Receivables Ratio as of the end of each of the
twelve consecutive Settlement Periods preceding such earlier
Settlement Report Date and (ii) (a) for calculations with
respect to Class A Certificates, 2.58, (b) for calculations with
respect to Class B
Series 1997-1 Supplement 16
Certificates, 1.96 or (c) for calculations with respect to the Class
C Certificates, 1.96.
"Majority Term Certificateholders" shall mean, on any day, Term
Certificateholders having, in the aggregate, more than 50% of the Series 1997-1
Invested Amount.
"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 for the Class A Certificates, the
Class B Certificates or the Class C Certificates, as the case may be, 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 = with respect to Class A Certificates, 15.0%, with respect to
Class B Certificates, 12.0%, and with respect to the Class C
Certificates, 9.0%; and
d = the Government Obligor Factor.
"One-Month LIBOR" shall mean for any Accrual Period after the
initial Accrual Period, the rate per annum, as recorded by the Trustee, which is
the arithmetic mean (rounded to the nearest 1/100th of 1%) of the offered rates
for U.S. Dollar deposits having a maturity of one month commencing on the first
day of such Accrual Period that appears on Page 3750 of the Telerate Service (or
on any
Series 1997-1 Supplement 17
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 Trustee for
purposes of providing interest rates applicable to U.S. Dollar deposits having a
maturity of one month in the London interbank market) at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such Accrual
Period. In the event that such rate is not so available at such time for any
reason, then "One-Month LIBOR" for such Accrual Period shall be the rate at
which U.S. Dollar deposits in a principal amount of not less than $1,000,000
maturing in one month are offered to the principal London office of the Trustee
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
Accrual Period.
"Optional Repurchase Percentage" shall mean 10% of the Series 1997-1
Initial Invested Amount at any time on or before the date of determination.
"Optional Termination Date" shall have the meaning assigned in
subsection 2.06(b)(i).
"Optional Termination Notice" shall have the meaning assigned in
subsection 2.06(b)(i).
"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
Series 1997-1 Supplement 18
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) the
product of (A) all unpaid fees and expenses due and payable to counsel to, and
independent auditors of, the Company (other than fees and expenses payable on or
in connection with the closing of the issuance of any Term Certificates) on such
Business Day and (B) a fraction, the numerator of which is the Series 1997-1
Invested Amount on such Business Day and the denominator of which is the sum of
(1) the Series 1997-1 Invested Amount on such Business Day and (2) the Aggregate
Commitment Amount with respect to the Series 1997-2 Certificates on such
Business Day, and (ii) all unpaid fees and expenses due and payable to Rating
Agencies rating the Term 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").
"Purchase Termination Event" shall have the meaning assigned in
Section 7.01 of the Receivables Sale Agreement.
"Purchase Agreement" shall mean each agreement to be entered into on
the Issuance Date between the Company and the Initial Purchaser pursuant to
which the Company agrees to sell, and the Initial Purchaser agrees to purchase,
the principal amount and Class of Term Certificates set forth therein.
"Purchaser Letter" shall mean a Purchaser Letter in substantially
the form attached hereto as Exhibit F.
Series 1997-1 Supplement 19
"Qualified Institutional Buyer" has the meaning ascribed to such
term in Rule 144A(a) under the Securities Act.
"Rating Agency" shall mean the collective reference to S&P and DCR.
"Record Date" shall mean, with respect to the initial Distribution
Date, the Business Day immediately preceding such Distribution Date and, with
respect to any other Distribution Date, the last Business Day of the immediately
preceding Settlement Period.
"Reduction" shall have the meaning assigned in subsection 2.06(a).
"Reduction Amount" shall have the meaning assigned in subsection
2.06(a).
"Reduction Threshold" shall mean, at any date of determination,
$15,000,000.
"Scheduled Revolving Termination Date" shall mean the last day of
the Settlement Period ending October, 2001.
"Seller Addition Date" shall have the meaning assigned in Section
3.05 of the Receivables Sale Agreement.
"Series 1997-1" shall mean the Series of Investor Certificates and
Subordinated Company Interest, the Principal Terms of which are set forth in
this Supplement.
"Series 1997-1 Accrued Interest Sub-subaccount" shall have the
meaning assigned in subsection 3A.02(a).
"Series 1997-1 Adjusted Invested Amount" shall mean, as of any date
of determination, (i) the Series 1997-1 Invested Amount on such date, minus (ii)
the amount on deposit in the Series 1997-1 Principal Collection Sub-subaccount
on such date.
Series 1997-1 Supplement 20
"Series 1997-1 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 1997-1.
"Series 1997-1 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 1997-1.
"Series 1997-1 Allocated Receivables Amount" shall mean, on any date
of determination, the lower of (i) the Series 1997-1 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 1997-1
Target Receivables Amount on such day and the denominator of which is the
Aggregate Target Receivables Amount on such day.
"Series 1997-1 Amortization Period" shall mean the period commencing
on the next Business Day following the earliest to occur of (i) the date on
which an Early Amortization Period is declared to commence or automatically
commences, (ii) the Optional Termination Date and (iii) the Scheduled Revolving
Termination Date and ending on the earlier of (i) the date when the Series
1997-1 Invested Amount shall have been reduced to zero and all accrued interest
on the Term Certificates shall have been paid and (ii) the Series 1997-1
Termination Date.
"Series 1997-1 Collections" shall mean, with respect to any Business
Day, an amount equal to the product of (i) the Series 1997-1 Invested Percentage
on such Business Day and (ii) Aggregate Daily Collections.
"Series 1997-1 Collection Subaccount" shall have the meaning
assigned in subsection 3A.02(a).
"Series 1997-1 Daily Interest Expense" shall mean, for any Business
Day during any Accrual Period, the sum of
Series 1997-1 Supplement 21
(a) in the case of each of the first ten Business Days in the Accrual Period,
one-tenth of the Series 1997-1 Monthly Interest to be distributed on the next
succeeding Distribution Date (up to but not exceeding the full amount thereof),
(b) the aggregate amount of all previously accrued and unpaid Series 1997-1
Daily Interest Expense (up to but not exceeding the full amount thereof) and (c)
the aggregate amount of all accrued and unpaid Class A Additional Interest,
Class B Additional Interest and Class C Additional Interest (up to but not
exceeding the full amount thereof).
"Series 1997-1 Initial Invested Amount" shall mean, collectively,
the Class A Initial Invested Amount, the Class B Initial Invested Amount and the
Class C Initial Invested Amount.
"Series 1997-1 Invested Amount" shall mean, collectively, the Class
A Invested Amount, the Class B Invested Amount and the Class C Invested Amount.
"Series 1997-1 Invested Percentage" shall mean, with respect to any
Business Day (i) during the Series 1997- 1 Revolving Period, the percentage
equivalent of a fraction, the numerator of which is the Series 1997-1 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 1997-1 Amortization Period, the percentage equivalent of a fraction, the
numerator of which is the Series 1997-1 Allocated Receivables Amount as of the
end of the last Business Day of the Series 1997-1 Revolving Period (provided
that if during the Series 1997-1 Amortization Period, the Amortization Periods
of all other Outstanding Series which were outstanding prior to the commencement
of the Series 1997-1 Amortization Period commence, then, from and after the date
the last of such Series commences its Amortization
Series 1997-1 Supplement 22
Period, the numerator shall be the Series 1997-1 Allocated Receivables Amount on
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.
"Series 1997-1 Monthly Interest" shall mean, collectively, the Class
A Monthly Interest, the Class B Monthly Interest and the Class C Monthly
Interest.
"Series 1997-1 Monthly Principal Payment" shall have the meaning
assigned in Section 3A.05.
"Series 1997-1 Monthly Servicing Fee" shall have the meaning
assigned in Section 6.01.
"Series 1997-1 Non-Principal Collection Sub-subaccount" shall have
the meaning assigned in subsection 3A.02(a).
"Series 1997-1 Principal Collection Sub-subaccount" shall have the
meaning assigned in subsection 3A.02(a).
"Series 1997-1 Required Subordinated Amount" shall mean, (a) on any
date of determination during the Series 1997-1 Revolving Period, an amount equal
to the sum of:
(i) an amount equal to the greater of (A) the difference between (I)
the product of (x) the Class A Adjusted Invested Amount on such day and
(y) a fraction, the numerator of which is the Class A Ratio and the
denominator of which is one minus the Class A Ratio and (II) the sum of
the Class B Adjusted Invested Amount and the Class C Adjusted Invested
Amount, (B) the difference between (I) the product of (x) the sum of the
Class A Adjusted Invested Amount and the
Series 1997-1 Supplement 23
Class B Adjusted Invested Amount on such day and (y) a fraction, the
numerator of which is the Class B Ratio and the denominator of which is
one minus the Class B Ratio and (II) the Class C Adjusted Invested Amount
and (C) the product of (I) the Series 1997-1 Adjusted Invested Amount and
(II) a fraction, the numerator of which is the Class C Ratio and the
denominator of which is one minus the Class C Ratio; provided that
whichever method of calculation pursuant to clauses (A), (B) or (C)
results in the greatest amount on any Settlement Report Date shall
continue to be used as the method for the calculations to be made under
this paragraph (i) on each day from and after such Settlement Report Date
until (but not including) the immediately succeeding Settlement Report
Date;
(ii) the product of (A) the Series 1997-1 Invested Amount on such day
and (B) a fraction, the numerator of which is the Carrying Cost Reserve
Ratio and the denominator of which is one minus the Class A Ratio; and
(iii) the product of (A) the Principal Amount of Receivables in the
Trust on such day, (B) a fraction, the numerator of which is the Series
1997-1 Invested Amount and the denominator of which is the Aggregate
Invested Amount on such day and (C) a fraction, the numerator of which is
the Servicing Reserve Ratio and the denominator of which is one minus the
Class A Ratio.
and (b) on any date of determination during the Series 1997-1 Amortization
Period, an amount equal to the Series 1997-1 Required Subordinated Amount on the
last Business Day of the Series 1997-1 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)(iv).
Series 1997-1 Supplement 24
"Series 1997-1 Revolving Period" shall mean the period commencing on
the Issuance Date and terminating on the earliest to occur of the close of
business on (i) the date on which an Early Amortization Period is declared to
commence or automatically commences, (ii) the Optional Termination Date and
(iii) the Scheduled Revolving Termination Date.
"Series 1997-1 Subordinated Interest" shall have the meaning
specified in subsection 2.02(b).
"Series 1997-1 Target Receivables Amount" shall mean, on any date of
determination, the sum of (i) the Series 1997-1 Adjusted Invested Amount on such
day and (ii) the Series 1997-1 Required Subordinated Amount on such day.
"Series 1997-1 Termination Date" shall mean the Distribution Date
that occurs in August 2002.
"Series 1997-2" shall mean Series 1997-2, the Principal Terms of
which are set forth in the Series 1997-2 Supplement.
"Series 1997-2 Principal Collection Sub-subaccount" shall mean the
Series Principal Collection Sub-subaccount established by the Trustee for the
benefit of the holders of the Series 1997-2 Certificates pursuant to the Series
1997-2 Supplement.
"Series 1997-2 Supplement" shall mean the Series 1997-2 Supplement,
among the Company, the Master Servicer, The Chase Manhattan Bank, as Agent and
the initial purchaser named therein, and the Trustee, relating to the issuance
of Variable Funding Certificates in the form agreed to by the parties thereto,
as amended, supplemented or otherwise modified from time to time.
"Servicing Reserve Ratio" shall mean, as of any Settlement Report
Date and continuing (but not including)
Series 1997-1 Supplement 25
until the next Settlement Report Date, an amount (expressed as a percentage)
equal to (i) the product of (A) the Servicing Fee Percentage and (B) 2.0 times
Days Sales Outstanding as of such earlier Settlement Report Date
divided by (ii) 360.
"Special Distribution Date" shall have the meaning
assigned in subsection 2.06(a).
"Subsequent Issuance Date" shall mean each Distribution Date, if
any, on which the Trustee issues additional Class A Certificates, Class B
Certificates and Class C Certificates pursuant to Section 2.07.
"Term Certificateholders" shall mean, collectively, the Class A
Certificateholders, the Class B Certificateholders and the Class C
Certificateholders.
"Term Certificateholders' Interest" shall have the meaning assigned
in subsection 2.02(a).
"Term Certificates" shall mean, collectively, those Investor
Certificates designated as the Class A Certificates, the Class B Certificates
and the Class C Certificates.
"Trust Accounts" shall have the meaning assigned in subsection
3A.02(a).
"United States person" means an individual who is a citizen or
resident of the United States, or a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust the income of which is subject to
U.S. federal income taxation regardless of its source.
(b) If any term, definition or provision contained herein conflicts
with or is inconsistent with any term, definition or provision contained in the
Agreement,
Series 1997-1 Supplement 26
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 Term Certificates and the
Series 1997-1 Subordinated Interest and to no other Series of Investor
Certificates or Subordinated Company Interest 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".
Series 1997-1 Supplement 27
ARTICLE II
Designation of Term Certificates; Purchase and Sale
of the Term Certificates
SECTION 2.01. Designation. The Investor Certificates created and
authorized pursuant to the Agreement and this Supplement shall be divided into
three classes, which shall be designated respectively as (a) the "Class A
Certificates, Series 1997-1", (b) the "Class B Certificates, Series 1997-1" and
(c) the "Class C Certificates, Series 1997-1".
SECTION 2.02. The Term Certificates and Series 1997-1 Subordinated
Interest. (a) The Term Certificates shall represent fractional undivided
interests in the Trust Assets, consisting of the right of the Term
Certificateholders to receive the distributions specified herein out of (i) the
Series 1997-1 Invested Percentage (expressed as a decimal) of 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 herein, all
other funds on deposit in the Series 1997-1 Collection Subaccount and any
subaccounts thereof (collectively, the "Term Certificateholders' Interest").
(b) The Company shall retain a fractional undivided interest in the
Trust Assets, consisting of the right to receive the distributions specified
herein out of (i) the Series 1997-1 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 1997-1 Collection Subaccount
and any subaccounts thereof, in each case to the extent not required to be
distributed to or for the benefit of the Term Certificateholders (the "Series
1997-1 Subordinated Interest"). The Exchangeable Company Interest and any other
Series of Investor Certificates or
Series 1997-1 Supplement 28
Subordinated Company Interest outstanding shall represent the fractional
undivided interests in the remainder of the Trust Assets not allocated pursuant
hereto to the Term 1997-1 Certificateholders' Interest or the Series 1997-1
Subordinated Interest.
(c) The Class A Certificates, the Class B Certificates and the Class
C Certificates shall be issued in registered form in substantially the form of
Exhibits A, B and C, respectively, and shall, upon issue, be executed and
delivered by the Company to the Trustee for authentication and redelivery as
provided in Section 2.03 hereof and Section 5.02 of the Agreement.
SECTION 2.03. Delivery. (a) 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) subject to the provisions
set forth in subsection (b) below, the Class A Certificates in such names and
such denominations in accordance with such directions of the Company, (ii)
subject to the provisions set forth in subsection (b) below, the Class B
Certificates in such names and such denominations in accordance with such
directions of the Company and (iii) the Class C Certificates in such names and
such denominations in accordance with such directions of the Company. Term
Certificates shall be issued in minimum denominations of $1,000,000 and in
integral multiples of $100,000 in excess thereof.
(b) Except with respect to any Class A Certificates or Class B
Certificates purchased on the Issuance Date by an entity described in
2.04(a)(ii), which will be issued in the form of Definitive Certificates, the
Class A Certificates and the Class B Certificates shall be initially issued in
the form of one or more global certificates, representing the Book-Entry
Certificate, to be delivered to the Depository. Except as provided in Section
5.13 of the Agreement or Section 2.04 of this
Series 1997-1 Supplement 29
Supplement, such Book-Entry Certificates shall at all times remain registered in
the name of the Depository or its nominee and at all times: (i) registration of
such Book-Entry Certificates may not be transferred by the Trustee except to a
successor to the Depository; (ii) ownership and transfers of registration of
such Book-Entry Certificates on the books of the Depository shall be governed by
applicable rules established by the Depository and by Section 2.04; (iii) the
Depository may collect its usual and customary fees, charges and expenses from
its Depository Participants; (iv) the Trustee shall deal with the Depository,
Depository Participants and indirect participating firms as representatives of
such Certificate Book-Entry Holders of such Book-Entry Certificates for purposes
of exercising the rights of such Book-Entry Certificateholders under the
Agreement and this Supplement, and requests and directions for and votes of such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Certificate Book-Entry Holders; and (v) the Trustee may
rely and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and Persons
shown on the books of such indirect participating firms as direct or indirect
Certificate Book-Entry Holders.
All transfers by Certificate Book-Entry Holders of Class A
Certificates and Class B Certificates shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing such Book-Entry Certificate- holders and the Trustee shall have no
responsibility with respect to any such transfers. Each Depository Participant
shall only transfer Class A Certificates and Class B Certificates of Certificate
Book-Entry Holders it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures and in accordance
with applicable law.
(c) The Class C Certificates shall be issued only
as Definitive Certificates.
Series 1997-1 Supplement 30
SECTION 2.04. Restrictions on Transfer. (a) On the Issuance Date,
the Company shall sell the Term Certificates to the Initial Purchaser pursuant
to the Purchase Agreement and deliver the Term Certificates in the form
specified therein. Thereafter, the Term Certificates may not be transferred
except as follows:
(i) with respect to Term Certificates evidenced by Book-Entry
Certificates, to Qualified Institutional Buyers in reliance on the
exemption from the registration requirements of the Securities Act
provided by Rule 144A promulgated thereunder ("Rule 144A"); and
(ii) with respect to Term Certificates evidenced by Definitive
Certificates, (A) to Qualified Institutional Buyers in reliance on the
exemption from the registration requirements of the Securities Act
provided by Rule 144A thereunder, (B) to other Institutional Accredited
Investors who take delivery of such Term Certificates in definitive form
and who deliver a Purchaser Letter to the Trustee in the form attached
hereto as Exhibit F or (C) to a person who takes delivery of such Term
Certificate in definitive form pursuant to a transaction that is otherwise
exempt from the registration requirements of the Securities Act, as
confirmed in an opinion of counsel addressed to the Trustee and the
Company, which counsel and opinion are satisfactory to the Trustee and the
Company.
The Trustee shall have no obligations or duties with respect to determining
whether any transfers of the Term Certificates are made in accordance with the
Securities Act or any other Requirements of Law; provided that with respect to
Definitive Certificates, the Trustee shall enforce such transfer restrictions in
accordance with the terms set forth on the related Term Certificate and the
provisions of the Agreement and this Supplement.
Series 1997-1 Supplement 31
(b) Each purchaser (other than the Initial Purchaser) of the Term
Certificates (including, without limitation, any purchaser of an interest in the
Book-Entry Certificates) will be deemed to have represented and agreed as
follows:
(i) it is (A) a Qualified Institutional Buyer as defined in Rule
144A(a) and is acquiring the Term Certificates for its own institutional
account or for the account or accounts of a Qualified Institutional Buyer
or (B) purchasing Term Certificates being delivered in the form of
Definitive Certificates in a transaction exempt from registration under
the Securities Act and in compliance with the provisions of the Agreement
and in compliance with the legends set forth in clause (vi) below;
(ii) it is purchasing one or more Term Certificates in an amount of
at least $1,000,000 and it understands that such Term Certificate may be
resold, pledged or otherwise transferred only in an amount of at least
$1,000,000;
(iii) (A) it is not an ERISA Entity and (B) it is not acquiring or
holding any Term Certificate, directly or indirectly, for or on behalf of
an ERISA Entity;
(iv) if it is acquiring Class C Certificates, (A) it is not, for
U.S. Federal income tax purposes, a partnership, trust, estate or "S
corporation" (as defined in the Code) or (B) it is, for U.S. Federal
income tax purposes, a partnership, trust, estate or "S Corporation" (as
defined in the Code), but after giving effect to such purchase of such
Class C Certificates by such purchaser, less than 50 percent of the
aggregate value of such purchaser's assets would consist of Class C
Certificates;
(v) it understands that the Term Certificates are being transferred
to it in a transaction not involving
Series 1997-1 Supplement 32
any public offering within the meaning of the Securities Act, and that, if
in the future it decides to resell, pledge or otherwise transfer any Term
Certificates, such Term Certificates may be resold, pledged or transferred
only (A) in a transaction meeting the requirements of Rule 144A to a
person who the seller reasonably believes is a Qualified Institutional
Buyer that purchases for its own account or for the account or accounts of
a Qualified Institutional Buyer to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A or (B) to
purchasers of Term Certificates being delivered in the form of Definitive
Certificates, pursuant to a transaction otherwise exempt from registration
under the Securities Act and in compliance with the provisions of the
Agreement and in compliance with the legends set forth in clause (vi)
below;
(vi) it understands that each Term Certificate will bear a legend
substantially to the following effect:
[For Book-Entry Certificates only: "UNLESS THIS TERM CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY TERM
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
Series 1997-1 Supplement 33
INTERESTS IN THIS TERM CERTIFICATE MAY ONLY BE HELD BY QUALIFIED
INSTITUTIONAL BUYERS (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT OF 1933).]
THIS TERM CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT"). THE HOLDER HEREOF, BY PURCHASING THIS TERM
CERTIFICATE, AGREES THAT SUCH TERM CERTIFICATE MAY BE RESOLD,
PLEDGED OR TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE STATE
SECURITIES LAWS IN AN AMOUNT OF AT LEAST $1,000,000 AND (1) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE ACT
("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OR ACCOUNTS OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A OR (2) TO A PERSON (A) WHO IS AN
"INSTITUTIONAL ACCREDITED INVESTOR", WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT, AND WHO
DELIVERS A PURCHASER LETTER TO THE TRUSTEE IN THE FORM ATTACHED TO
THE SERIES 1997-1 SUPPLEMENT OR (B) WHO IS TAKING DELIVERY OF SUCH
TERM CERTIFICATE PURSUANT TO A TRANSACTION THAT IS OTHERWISE EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE ACT, AS CONFIRMED IN AN
OPINION OF COUNSEL ADDRESSED TO THE TRUSTEE AND THE COMPANY, WHICH
COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY AND THE TRUSTEE.
THIS TERM CERTIFICATE MAY NOT BE ACQUIRED OR HELD BY OR ON BEHALF OF
(1) AN "EMPLOYEE BENEFIT PLAN" WITHIN THE MEANING OF SECTION 3(3) OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR
OTHER RETIREMENT ARRANGEMENT, INDIVIDUAL RETIREMENT ACCOUNT OR XXXXX
PLAN, WHETHER OR NOT IT IS SUBJECT TO THE PROVISIONS OF TITLE I
THERETO, (2) ANY PLAN DESCRIBED IN SECTION
Series 1997-1 Supplement 34
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") OR (3) ANY OTHER ENTITY THAT WOULD BE DEEMED TO BE A
"BENEFIT PLAN INVESTOR" WITHIN THE MEANING OF DEPARTMENT OF LABOR
REGULATION SECTION 2510.3-101(f)(2) (ANY OF THE FOREGOING, AN "ERISA
ENTITY").
THIS TERM CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY OTHER PERSON.
[For Class B Certificates only: THE CLASS B CERTIFICATES ARE
SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A CERTIFICATES AS
PROVIDED IN THE POOLING AGREEMENT AND THE SERIES 1997-1 SUPPLEMENT.]
[For Class C Certificates only: THE CLASS C CERTIFICATES MAY NOT BE
SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THE
TRANSFEREE THEREOF DELIVERS A LETTER, IN THE FORM ATTACHED TO THE
SERIES 1997-1 SUPPLEMENT, TO THE EFFECT THAT (I) SUCH TRANSFEREE IS
ACQUIRING SUCH CLASS C CERTIFICATES FOR ITS OWN ACCOUNT, IS THE SOLE
BENEFICIAL OWNER OF SUCH CLASS C CERTIFICATES AND WILL REMAIN THE
SOLE BENEFICIAL OWNER OF SUCH CLASS C CERTIFICATES UNTIL SUCH CLASS
C CERTIFICATES ARE TRANSFERRED AS PROVIDED IN THE SERIES 1997-1
SUPPLEMENT, (II)(A) SUCH TRANSFEREE IS NOT, FOR U.S. FEDERAL INCOME
TAX PURPOSES, A TRUST, ESTATE, PARTNERSHIP OR "S CORPORATION" (AS
DEFINED IN SECTION 1361(a)(1) OF THE CODE or (B) SUCH TRANSFEREE IS
A TRUST, ESTATE, PARTNERSHIP OR "S CORPORATION" (AS DEFINED IN
SECTION 1361(a)(1) OF THE CODE) FOR U.S. FEDERAL INCOME TAX
PURPOSES, BUT AFTER GIVING EFFECT TO SUCH TRANSFER OF CLASS C
CERTIFICATES TO SUCH TRANSFEREE, LESS THAN 50 PERCENT OF THE
AGGREGATE VALUE OF SUCH TRANSFEREE'S ASSETS WOULD CONSIST OF CLASS C
CERTIFICATES AND (III) SUCH CLASS C
Series 1997-1 Supplement 35
CERTIFICATES HAVE NOT BEEN TRANSFERRED THROUGH AN "ESTABLISHED
SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7704(b) OF THE
CODE.
THE CLASS C CERTIFICATES ARE SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES AND THE CLASS B CERTIFICATES AS PROVIDED IN THE
POOLING AGREEMENT AND THE SERIES 1997-1 SUPPLEMENT.
THE TRUSTEE WILL WITHHOLD PURSUANT TO SECTION 1446 OF THE CODE ON
PAYMENTS OF INTEREST ALLOCABLE TO CLASS C CERTIFICATEHOLDERS WHO ARE
FOREIGN INVESTORS UNLESS SUCH CLASS C CERTIFICATEHOLDERS PROVIDE THE
TRUSTEE WITH (I) A PROPERLY EXECUTED IRS FORM 4224 (OR SUCCESSOR
FORM) AND (II) UPON REQUEST BY THE TRUSTEE AND IN A FORM ACCEPTABLE
TO THE TRUSTEE, EVIDENCE DOCUMENTING THE INCLUSION IN GROSS INCOME
OF, AND THE PAYMENT OF APPROPRIATE U.S. TAXES, IF ANY, ON, THAT
PORTION OF THE TRUST'S NET INCOME ALLOCABLE TO SUCH CLASS C
CERTIFICATEHOLDERS. IF THE TRUSTEE DOES WITHHOLD ON A FOREIGN
INVESTOR PURSUANT TO SECTION 1446 OF THE CODE, THE CASH RECEIVED ON
A CURRENT BASIS BY FOREIGN INVESTORS WHO OWN CLASS C CERTIFICATES
WILL BE LESS THAN THE FULL INTEREST PAYMENTS. FOR THESE PURPOSES, A
FOREIGN INVESTOR IS A PERSON OR ENTITY OTHER THAN AN INDIVIDUAL WHO
IS A CITIZEN OR RESIDENT OF THE UNITED STATES, A CORPORATION,
PARTNERSHIP OR OTHER ENTITY CREATED OR ORGANIZED IN OR UNDER THE
LAWS OF THE UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF (A
"U.S. COMPANY"), OR AN ESTATE OR TRUST THE INCOME OF WHICH IS
SUBJECT TO U.S. FEDERAL INCOME TAXATION REGARDLESS OF ITS SOURCE. A
U.S. COMPANY WHICH IS A SUBSIDIARY OF A FOREIGN INVESTOR IS NOT
ITSELF CONSIDERED A FOREIGN INVESTOR BUT A U.S. BRANCH OF A FOREIGN
INVESTOR WOULD BE CONSIDERED A FOREIGN INVESTOR.]
Series 1997-1 Supplement 36
(c) The Transfer Agent and Registrar shall not permit the transfer
of any Term Certificates unless such transfer complies with the terms of the
foregoing legends and, in the case of a transfer (i) to an Institutional
Accredited Investor (other than a Qualified Institutional Buyer), the transferee
delivers a completed Purchaser Letter in the form attached to this supplement as
Exhibit F or (ii) to a person other than a Qualified Institutional Buyer or an
Institutional Accredited Investor, upon delivery of an opinion of counsel
selected by the Company, satisfactory to the Trustee and the Company, to the
effect that the transferee is taking delivery of the Term Certificates in a
transaction that is otherwise exempt from the registration requirements of the
Securities Act.
(d) In addition, the Class C Certificates may not be sold, assigned,
pledged or otherwise transferred (except by the Initial Purchaser) unless the
transferee thereof delivers a letter, in the form attached to this Supplement as
Exhibit G, to the effect that (i) such transferee is acquiring such Class C
Certificates for its own account, is the sole beneficial owner of such Class C
Certificates and will remain the sole beneficial owner of such Class C
Certificates until such Class C Certificates are transferred as provided in this
Supplement, (ii)(A) such transferee is not, for U.S. Federal income tax
purposes, a Trust, Estate, Partnership or "S Corporation" (as defined in Section
1361(a)(1) of the Code) or (B) such transferee is a Trust, Estate, Partnership
or "S Corporation" (as defined in section 1361(a)(1) of the Code) for U.S.
Federal income tax purposes, but after giving effect to such transfer of Class C
Certificates to such Transferee, less than 50 percent of the aggregate value of
such Transferee's assets would consist of Class C Certificates and (iii) such
Class C Certificates have not been transferred through an "established
securities market" within the meaning of Section 7704(b) of the Code.
SECTION 2.05. Application of Proceeds. On the Issuance Date, the
Trustee shall remit to the Company the
Series 1997-1 Supplement 37
cash proceeds received by it upon the issuance of the Term Certificates.
SECTION 2.06. Procedure for Decreasing the Invested Amount; Optional
Termination. (a) If, as of the last day of any period of three consecutive
Settlement Periods, the daily average excess during such period of the Series
1997-1 Invested Amount over the Series 1997-1 Adjusted Invested Amount (the
"Excess") equals or exceeds the Reduction Threshold, as of the last day of any
Settlement Period, the Company shall reduce the Class A Invested Amount, the
Class B Invested Amount and the Class C Invested Amount (a "Reduction"), by
causing the Trustee to distribute to the Term Certificateholders an amount (the
"Reduction Amount") equal to the Excess in accordance with subsection 3A.06(d).
The Company shall direct the Trustee in writing to make such distribution and
shall specify the Reduction Amount to be distributed as specified below. The
distribution of the Reduction Amount shall be made to the Term
Certificateholders pro rata based on the initial invested amount of each Class,
from funds on deposit in the Series 1997-1 Principal Collection Sub-subaccount
on the immediately succeeding Distribution Date (a "Special Distribution Date");
provided that no Early Amortization Event or Potential Early Amortization Event
has occurred and is continuing and the Master Servicer on behalf of the Company
shall have given the Trustee written notice of such Reduction and the related
Reduction Amount at least five days prior to the related Special Distribution
Date setting forth the Reduction Amount and, in the case of such notice to the
Trustee, instructions to not distribute to the Company any amounts pursuant to
subsection 3A.03(c)(i) until the condition set forth in the second proviso in
such subsection is satisfied. The Trustee shall provide written notice of any
proposed Reduction to the Term Certificateholders and each Rating Agency as
promptly as is reasonably practicable.
(b) (i) On any Business Day to occur following the second
anniversary of the Issuance Date and prior to the
Series 1997-1 Supplement 38
occurrence of the Scheduled Revolving Termination Date, an Early Amortization
Event which has not been cured or waived or a Potential Early Amortization Event
which has not been cured or waived, 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 1997-1 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 1997-1
Amortization Period shall commence for all purposes under this Supplement and
the other Transaction Documents. The Trustee shall give prompt written notice of
its receipt of an Optional Termination Notice to the Term Certificateholders and
each Rating Agency.
SECTION 2.07. Sale of Additional Term Certificates. (a) The Company
may, upon written notice to the Trustee, the Master Servicer and the Term
Certificateholders and upon satisfaction of each of the conditions set forth in
subsection (b) of this Section 2.07, direct the Trustee in writing to issue on
the following Distribution Date (each such date a "Subsequent Issuance Date")
additional Class A Certificates, Class B Certificates and Class C Certificates,
identical in all respects to the existing Class A Certificates, Class B
Certificates and Class C Certificates, in an aggregate principal amount
specified by the Company (pro rata based on the initial invested amount of each
Class) (except that the Certificate Rate applicable to such additional Class A
Certificates, Class B Certificates and Class C Certificates may differ from the
Certificate Rate applicable to existing Class A Certificates, Class B
Certificates and Class C Certificates); provided that the Series 1997-1 Target
Receivables Amount does not exceed the Series 1997-1 Allocated Receivables
Amount, after giving effect to any
Series 1997-1 Supplement 39
increase in the Invested Amount on such Subsequent Issuance Date.
The Company may arrange for the sale of such additional Class A
Certificates, Class B Certificates and Class C Certificates pursuant to a
private placement or any other sale arrangement; provided that the Company
agrees that it shall first offer to the existing Term Certificateholders the
opportunity to purchase such additional Class A Certificates, Class B
Certificates and Class C Certificates on substantially the same terms and
conditions that such additional Class A Certificates, Class B Certificates and
Class C Certificates are to be offered to other purchasers. If existing Class A
Certificateholders, Class B Certificateholders or Class C Certificateholders, as
the case may be, elect not to purchase all such additional Class A Certificates,
Class B Certificates or Class C Certificates within 10 Business Days following
their receipt of an offer therefor, the Company may proceed with its
arrangements to sell all such additional Class A Certificates, Class B
Certificates and Class C Certificates to any other eligible purchasers. In the
event that the existing Class A Certificateholders, Class B Certificateholders
or Class C Certificateholders, as the case may be, subscribe to purchase more
additional Class A Certificates, Class B Certificates or Class C Certificates
than are being offered by the Company at such time, then each such existing
Class A Certificateholder, Class B Certificateholder or Class C
Certificateholder shall be entitled to purchase a pro rata portion of such
additional Class A Certificates, Class B Certificates or Class C Certificates
based on the aggregate principal amount of Class A Certificates, Class B
Certificates or Class C Certificates then held by such holder. On each
Subsequent Issuance Date, if any, the Series 1997-1 Invested Amount (and each
other amount set forth herein, the calculation of which is based on such amount)
shall be recalculated by the Company to include the additional initial invested
amounts with respect to the Class A Certificates, Class B Certificates and Class
C Certificates issued on such date.
Series 1997-1 Supplement 40
(b) On the Subsequent Issuance Date, the Trustee shall only
authenticate and deliver any additional Class A Certificates, Class B
Certificates and Class C Certificates upon satisfaction of the following on or
prior to such Subsequent Issuance Date:
(i) the Rating Agencies shall have been notified by the
Company of the proposed issuance of additional Class A Certificates, Class
B Certificates and Class C Certificates at least 10 days prior to the
proposed Subsequent Issuance Date, each Rating Agency shall have issued a
rating (as confirmed in a letter delivered to the Trustee) on the
additional Class A Certificates, Class B Certificates and Class C
Certificates that is equivalent to the rating issued by such Rating Agency
on the Issuance Date and the Rating Agency Condition shall have been
satisfied on or prior to such Subsequent Issuance Date;
(ii) the Trustee shall have received an Officer's Certificate
certifying that no Early Amortization Event or Potential Early
Amortization Event shall have occurred and be continuing with respect to
Series 1997-1 or would occur as a result of such issuance upon which the
Trustee may conclusively rely;
(iii) a Tax Opinion (including the opinion set forth in clause
(a)(ii) of the definition thereof) addressed to the Trust and the Trustee
shall have been delivered to the Trustee (the costs and expenses
associated with such opinion shall constitute Program Costs); and
(iv) an Opinion of Counsel addressed to the Trust and the
Trustee shall have been delivered to the Trustee stating that all of the
conditions to the issuance of such additional Class A Certificates, Class
B Certificates and Class C Certificates shall have been
Series 1997-1 Supplement 41
satisfied (the costs and expenses associated with such opinion shall
constitute Program Costs).
(c) On each Subsequent Issuance Date, the Company in a written order
shall direct the Trustee to authenticate and deliver additional Class A
Certificates, Class B Certificates and Class C Certificates in accordance with
Section 2.03.
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 Term Certificates
and the Series 1997-1 Subordinated Interest:
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 Class A Certificateholders, (ii)
for the benefit, subject to the prior and senior interest of the Class A
Certificateholders, of the Class B Certificateholders, (iii) for the benefit,
subject to the prior and senior interests of the Class A Certificateholders and
the Class B Certificateholders, of the Class C Certificateholders and (iv) in
the case of clauses (A) and (B) below, for the benefit, subject to the prior and
senior interests of the Term Certificateholders, of the holder of the Series
1997-1 Subordinated Interest, (A) a subaccount of the Collection Account (the
"Series 1997-1 Collection Subaccount"), which subaccount is the Series
Collection Subaccount with respect to Series 1997-1; (B) two subaccounts of the
Series 1997-1 Collection
Series 1997-1 Supplement 42
Subaccount: (1) the Series 1997-1 Principal Collection Sub-subaccount and (2)
the Series 1997-1 Non-Principal Collection Sub-subaccount (respectively, the
"Series 1997-1 Principal Collection Sub-subaccount" and the "Series 1997-1
Non-Principal Collection Sub-subaccount"); and (C) a subaccount of the Series
1997-1 Non-Principal Collection Sub-subaccount (the "Series 1997-1 Accrued
Interest Sub-subaccount"; all accounts established pursuant to this subsection
3A.02(a) and listed on Schedule 1, 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), (ii), (iii) and (iv) above. The Trustee, on
behalf of the Holders, 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),
(ii), (iii) and (iv) above. In any case where 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 Holders, for the benefit of the Persons (and, for
each such Person, to the extent) set forth in clauses (i), (ii), (iii) and (iv)
of subsection (a) above. Funds on deposit in a Trust Account that is a
Sub-subaccount of the Collection Account shall, at the direction of the Company,
be invested together with funds held in other Sub-subaccounts of the Collection
Account. After giving effect to any distribution to the Company pursuant to
subsection 3A.03(c), amounts on deposit and available for investment in the
Series 1997-1 Principal Collection Sub-subaccount shall be invested by the
Trustee, at the written direction of the Company, in Eligible Investments that
mature, or that are payable or
Series 1997-1 Supplement 43
redeemable upon demand of the holder thereof, (i) in the case of any such
investment made during the Series 1997-1 Revolving Period, on or prior to the
next Business Day and (ii) in the case of any such investment made during the
Series 1997-1 Amortization Period, on or prior to the Business Day immediately
preceding the next Distribution Date. Amounts on deposit and available for
investment in the Series 1997-1 Non-Principal Collection Sub-subaccount and the
Series 1995-1 Accrued Interest Sub-subaccount shall be invested by the Trustee
at the written direction of the Company in Eligible Investments that mature, or
that are payable or redeemable upon demand of the holder thereof, on or prior to
the 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 1997-1 Accrued Interest Sub-subaccount shall be
deposited in the Series 1997-1 Non-Principal Collection Sub-subaccount and all
interest and investment earnings (net of losses and investment expenses) on
funds deposited in the Series 1997-1 Principal Collection Sub-subaccount shall
be deposited in the Series 1997-1 Non-Principal Collection Sub-subaccount.
SECTION 3A.03. Daily Allocations. (a) The portion of Aggregate Daily
Collections allocated to the Term Certificates and the Series 1997-1
Subordinated Interest 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, subject to its obligation to
perform the procedures set forth in the Internal Operating Procedures
Memorandum).
(b)(i) On each Business Day, an amount equal to the Accrued Expense
Amount for such day (or, during the Series 1997-1 Revolving Period, such
greater amount as the Company may request in writing) shall be transferred
by the Trustee from the Series 1997-1
Series 1997-1 Supplement 44
Collection Subaccount to the Series 1997-1 Non-Principal Collection
Sub-subaccount; provided, 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 Reduction and (C) 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
1997-1 Collection Subaccount to the Series 1997-1 Non-Principal Collection
Sub-subaccount or, if such adjustment is a negative amount, be transferred
from the Series 1997-1 Non-Principal Collection Sub-subaccount to the
Series 1997-1 Collection Subaccount (or deducted from the transfer in
respect of the Accrued Expense Amount for such day); and
(ii) on each Business Day (including Distribution Dates), following
the transfers pursuant to clause (i) above, any remaining funds on deposit
in the Series 1997-1 Collection Subaccount shall be transferred by the
Trustee to the Series 1997-1 Principal Collection Sub-subaccount.
(c)(i) On each Business Day during the Series 1997-1 Revolving
Period (including Distribution Dates), after giving effect to all
allocations of Aggregate Daily Collections referred to in subparagraphs
(b)(i) and (b)(ii) on such Business Day, amounts on deposit in the Series
1997-1 Principal Collection Sub-subaccount shall be distributed or
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), (A)
first, to pay Excess Program Costs and (B) second, (I) to the Company as
the holder of the Series 1997-1 Subordinated Interest in accordance with
the directions contained in
Series 1997-1 Supplement 45
the Daily Report, (II) at the election of the Company as the holder of the
Series 1997-1 Subordinated Interest, by written notice to the Master
Servicer and the Trustee, to such accounts or to 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) or (III) at the election of the Company
as the holder of the Series 1997-1 Subordinated Interest, by written
notice to the Master Servicer and the Trustee, to the Series 1997-2
Principal Collection Sub-subaccount; provided that such distributions or
transfers, as the case may be, 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) or (e), (j) or (k) of Section
5.01 of this Supplement has occurred and is continuing and only to the
extent that, if, after giving effect to such distributions or transfers,
the Series 1997-1 Target Receivables Amount would not exceed the Series
1997-1 Allocated Receivables Amount; provided further that if the Company
or the Master Servicer, on behalf of the Company, shall have given a
notice of a Reduction and the related Reduction Amount to the Trustee and
the Master Servicer pursuant to subsection 2.06(a) and the Trustee shall
have received such notice, the Trustee shall retain, until the related
Special Distribution Date, aggregate amounts on deposit in the Series
1997-1 Principal Collection Sub-subaccount equal to the sum of the
Reduction Amount in respect thereof. 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.
Series 1997-1 Supplement 46
(ii) During the Series 1997-1 Amortization Period, amounts on
deposit in the Series 1997-1 Principal Collection Subsubaccount 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 1997-1 Principal
Collection Sub-subaccount shall be distributed by the Trustee to the Company
during the Series 1997-1 Amortization Period.
(d) On each Business Day an amount equal to the Series 1997-1 Daily
Interest Expense 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 1997-1 Non-Principal Collection Sub-subaccount to
the Series 1997-1 Accrued Interest Sub-subaccount.
(e) The allocations to be made pursuant to this Section 3A.03 are
subject to the provisions of Sections 2.05, 2.06, 7.02, 9.01 and 9.03 of the
Agreement.
SECTION 3A.04. Determination of Interest. (a) The amount of interest
distributable with respect to the Term Certificates on each Distribution Date
for the Accrual Period then ending shall be determined as follows:
(i) for the Class A Certificates, an amount (the "Class A Monthly
Interest") equal to the product of (A) the Class A Certificate Rate for
such Accrual Period; (B) the Class A Invested Amount on the first day of
such Accrual Period (after giving effect to any distributions of principal
on such date); and (C) the actual number of days in such Accrual Period
divided by 360; provided that if any additional Class A Certificates have
been issued on any Subsequent Issuance Date, the Class A Monthly Interest
shall equal the sum of the monthly interest amount for each outstanding
tranche of Class A Certificates (based on
Series 1997-1 Supplement 47
the outstanding Invested Amount and the applicable Class A Certificate
Rate in respect of such tranche);
(ii) for the Class B Certificates, an amount (the "Class B Monthly
Interest") equal to the product of (A) the Class B Certificate Rate for
such Accrual Period; (B) the Class B Invested Amount on the first day of
such Accrual Period (after giving effect to any distributions of principal
on such date); and (C) the actual number of days in such Accrual Period
divided by 360; provided that if any additional Class B Certificates have
been issued on any Subsequent Issuance Date, the Class B Monthly Interest
shall equal the sum of the monthly interest amount for each outstanding
tranche of Class B Certificates (based on the outstanding Invested Amount
and the applicable Class B Certificate Rate in respect of such tranche);
(iii) for the Class C Certificates, an amount (the "Class C Monthly
Interest") equal to the product of (A) the Class C Certificate Rate for
such Accrual Period; (B) the Class C Invested Amount on the first day of
such Accrual Period (after giving effect to any distributions of principal
on such date); and (C) the actual number of days in such Accrual Period
divided by 360; provided that if any additional Class C Certificates have
been issued on any Subsequent Issuance Date, the Class C Monthly Interest
shall equal the sum of the monthly interest amount for each outstanding
tranche of Class C Certificates (based on the outstanding Invested Amount
and the applicable Class C Certificate Rate in respect of such tranche);
and
(iv) the Master Servicer shall notify the Trustee in writing (upon
which the Trustee may conclusively rely) on each Settlement Report Date of
the amounts calculated pursuant to clauses (i), (ii) and (iii) above.
Series 1997-1 Supplement 48
(b) (i) On each Distribution Date, the Master Servicer shall
determine the excess, if any (the "Class A Interest Shortfall"), of (A) the
Class A Monthly Interest for the Accrual Period ending on such Distribution Date
over (B) the amount that is available to be distributed to the Class A
Certificateholders on such Distribution Date in respect thereof pursuant to this
Supplement. If the Class A Interest Shortfall with respect to any Distribution
Date is greater than zero, an additional amount ("Class A Additional Interest")
equal to the product, for the next Accrual Period (or portion thereof) until
such Class A Interest Shortfall is repaid, of (A) a rate per annum equal to the
Class A Certificate Rate for the next Accrual Period; (B) such Class A Interest
Shortfall (or the portion thereof that has not been paid to the Class A
Certificateholders); and (C) the actual number of days in the next Accrual
Period divided by 360, shall be payable as provided herein with respect to the
Class A Certificates on each Distribution Date following such Distribution Date
to and including the Distribution Date on which such Class A Interest Shortfall
is paid in full to the Class A Certificateholders.
(ii) On each Distribution Date, the Master Servicer shall determine
the excess, if any (the "Class B Interest Shortfall"), of (A) the Class B
Monthly Interest for the Accrual Period ending on such Distribution Date over
(B) the amount that is available to be distributed to the Class B
Certificateholders on such Distribution Date in respect thereof pursuant to this
Supplement. If the Class B Interest Shortfall with respect to any Distribution
Date is greater than zero, an additional amount ("Class B Additional Interest")
equal to the product, for the next Accrual Period (or portion thereof) until
such Class B Interest Shortfall is repaid, of (A) a rate per annum equal to the
Class B Certificate Rate for the next Accrual Period; (B) such Class B Interest
Shortfall (or the portion thereof that has not been paid to the Class B
Certificateholders); and (C) the actual number of days in such Accrual Period
divided by 360, shall be payable as provided herein with respect to the Class B
Certificates on each Distribution Date following
Series 1997-1 Supplement 49
such Distribution Date to and including the Distribution Date on which such
Class B Interest Shortfall is paid in full to the Class B Certificateholders.
(iii) On each Distribution Date, the Master Servicer shall determine
the excess, if any (the "Class C Interest Shortfall"), of (A) the Class C
Monthly Interest for the Accrual Period ending on such Distribution Date over
(B) the amount that is available to be distributed to the Class C
Certificateholders on such Distribution Date in respect thereof pursuant to this
Supplement. If the Class C Interest Shortfall with respect to any Distribution
Date is greater than zero, an additional amount ("Class C Additional Interest")
equal to the product, for the next Accrual Period (or portion thereof) until
such Class C Interest Shortfall is repaid, of (A) a rate per annum equal to the
Class C Certificate Rate for the next Accrual Period; (B) such Class C Interest
Shortfall (or the portion thereof that has not been paid to the Class C
Certificateholders); and (C) the actual number of days in such Accrual Period
divided by 360, shall be payable as provided herein with respect to the Class C
Certificates on each Distribution Date following such Distribution Date to and
including the Distribution Date on which such Class C Interest Shortfall is paid
in full to the Class C Certificateholders.
SECTION 3A.05. Determination of Series 1997-1 Principal. (a)
Payments of Series 1997-1 Monthly Principal. The amount (the "Series 1997-1
Monthly Principal Payment") distributable from the Series 1997-1 Principal
Collection Sub-subaccount on each Distribution Date during the Series 1997-1
Amortization Period shall be equal to the amount on deposit in such account on
the immediately preceding Settlement Report Date; provided that the Series
1997-1 Monthly Principal Payment on any Distribution Date shall not exceed the
Series 1997-1 Invested Amount on such Distribution Date after giving effect to
the reductions and increases pursuant to paragraphs (b) and (c) below.
Series 1997-1 Supplement 50
(b) Reductions to Series 1997-1 Principal. If, on any Special
Allocation Settlement Report Date, the Series 1997-1 Allocable Charged-Off
Amount is greater than zero for the related Settlement Period, the Trustee shall
in accordance with the written directions of the Master Servicer (upon which the
Trustee may conclusively rely, subject to its obligation to perform the
procedures set forth in the Internal Operating Procedures Memorandum) make the
following applications of such amounts in the following order of priority:
(i) the Series 1997-1 Required Subordinated Amount shall be reduced
(but not below zero) by an amount equal to the Series 1997-1 Allocable
Charged-Off Amount (which shall also be reduced by the amount so applied);
(ii) then, to the extent that the Series 1997-1 Allocable
Charged-Off Amount is greater than zero following the application in
clause (i) above, the Class C Invested Amount shall be reduced (but not
below zero) by an amount equal to such remaining Series 1997-1 Allocable
Charged-Off Amount (which shall also be reduced by the amount so applied);
(iii) then, to the extent that the Series 1997-1 Allocable
Charged-Off Amount is greater than zero following the applications in
clause (i) and (ii) above, the Class B Invested Amount shall be reduced
(but not below zero) by an amount equal to such remaining Series 1997-1
Allocable Charged-Off Amount (which shall also be reduced by the amount so
applied); and
(iv) then, to the extent that the Series 1997-1 Allocable
Charged-Off Amount is greater than zero following the applications in
clause (i), (ii) and (iii) above, the Class A Invested Amount shall be
reduced (but not below zero) by an amount equal to such remaining Series
1997-1 Allocable Charged-Off Amount (which shall also be reduced by the
amount so applied).
Series 1997-1 Supplement 51
(c) Increases to Series 1997-1 Principal. If, on any Special
Allocation Settlement Report Date, the Series 1997-1 Allocable Recoveries Amount
is greater than zero for the related Settlement Period, the Trustee shall in
accordance with the written directions of the Master Servicer (upon which the
Trustee may conclusively rely, subject to its obligation to perform the
procedures set forth in the Internal Operating Procedures Memorandum) make the
following applications (after giving effect to the applications in paragraph (b)
of such amount in the following order of priority):
(i) the Class A Invested Amount shall be increased (but only to the
extent of any previous reductions of the Class A Invested Amount pursuant
to subsection 3A.05(b)(iv)) by the amount of the Series 1997-1 Allocable
Recoveries Amount (which shall also be reduced by the amount so applied);
(ii) then, to the extent that the Series 1997-1 Allocable Recoveries
Amount is greater than zero following the application in clause (i) above,
the Class B Invested Amount shall be increased (but only to the extent of
any previous reductions of the Class B Invested Amount pursuant to
subsection 3A.05(b)(iii)) by such remaining Series 1997-1 Allocable
Recoveries Amount (which shall also be reduced by the amount so applied);
(iii) then, to the extent that the Series 1997-1 Allocable Recoveries
Amount is greater than zero following the applications in clause (i) and
(ii) above, the Class C Invested Amount shall be increased (but only to
the extent of any previous reductions of the Class C Invested Amount
pursuant to subsection 3A.05(b)(ii)) by such remaining Series 1997- 1
Allocable Recoveries Amount (which shall also be reduced by the amount so
applied); and
Series 1997-1 Supplement 52
(iv) then, to the extent that the Series 1997-1 Allocable Recoveries
Amount is greater than zero following the applications in clause (i), (ii)
and (iii) above, the Series 1997-1 Required Subordinated Amount shall be
increased (but only to the extent of any previous reductions of the Series
1997-1 Required Subordinated Amount pursuant to subsection 3A.05(b)(i)) by
such remaining Series 1997-1 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
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), on each Distribution Date, from amounts on deposit in
the Series 1997-1 Accrued Interest Sub-subaccount in the following order of
priority to the extent funds are available:
(i) an amount equal to the Class A Monthly Interest payable on such
Distribution Date, plus the amount of any Class A Monthly Interest
previously due but not distributed to the Class A Certificateholders on a
prior Distribution Date, plus the amount of any Class A Additional
Interest for such Distribution Date and any Class A Additional Interest
previously due but not distributed to the Class A Certificateholders on a
prior Distribution Date, to the Class A Certificateholders; provided,
however, that during the Series 1997-1 Amortization Period, no Class A
Additional Interest will be paid until repayment in full of the Series
1997-1 Invested Amount and all Class A Monthly Interest, Class B Monthly
Interest and Class C Monthly Interest has been paid;
(ii) an amount equal to the Class B Monthly Interest payable on such
Distribution Date, plus the amount of any Class B Monthly Interest
previously due
Series 1997-1 Supplement 53
but not distributed to the Class B Certificateholders on a prior
Distribution Date, plus the amount of any Class B Additional Interest for
such Distribution Date and any Class B Additional Interest previously due
but not distributed to the Class B Certificateholders on a prior
Distribution Date, to the Class B Certificateholders; provided, however,
that during the Series 1997-1 Amortization Period, no Class B Additional
Interest will be paid until repayment in full of the Series 1997-1
Invested Amount and all Class A Monthly Interest, Class B Monthly Interest
and Class C Monthly Interest has been paid; and
(iii) an amount equal to the Class C Monthly Interest payable on
such Distribution Date, plus the amount of any Class C Monthly Interest
previously due but not distributed to the Class C Certificateholders on a
prior Distribution Date, plus the amount of any Class C Additional
Interest for such Distribution Date and any Class C Additional Interest
previously due but not distributed to the Class C Certificateholders on a
prior Distribution Date, to the Class C Certificateholders; provided,
however, that during the Series 1997-1 Amortization Period, no Class C
Additional Interest will be paid until repayment in full of the Series
1997-1 Invested Amount and all Class A Monthly Interest, Class B Monthly
Interest and Class C Monthly Interest has been paid. Unless otherwise
directed by the Company, the Trustee shall withhold in accordance with
Section 1446 of the Code on payments of interest allocable to Class C
Certificateholders who are Foreign Investors unless such Class C
Certificateholders provide the Trustee with (i) a properly executed
Internal Revenue Service Form 4224 (or successor form) and (ii) upon
request by the Trustee and in a form acceptable to the Trustee, evidence
documenting the inclusion in gross income of, and the payment of
appropriate U.S. taxes, if any, on, that portion of the Trust's net income
allocable to such Class C Certificateholders.
Series 1997-1 Supplement 54
(b) On each Distribution Date, the Trustee shall apply, 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), funds on deposit in the Series 1997-1 Non-Principal Collection
Sub-subaccount in the following order of priority to the extent funds are
available:
(i) an amount equal to the Series 1997-1 Monthly Servicing Fee for
the Accrual Period ending on such Distribution Date shall be withdrawn
from the Series 1997-1 Non-Principal Collection Sub-subaccount by the
Trustee and paid to the Master Servicer (less any amount payable to the
Trustee pursuant to Section 8.05 of the Agreement which shall be paid to
the Trustee); and
(ii) an amount equal to any Program Costs due and payable shall be
withdrawn from the Series 1997-1 Non-Principal Collection Sub-subaccount
by the Trustee and paid to the Persons owed such amounts.
Any remaining amount on deposit in the Series 1997-1 Non-Principal Collection
Sub-subaccount (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 1997-1 Subordinated Interest; provided, however, that during the
Series 1997-1 Amortization Period, such remaining amounts shall be deposited in
the Series 1997-1 Principal Collection Sub-subaccount for distribution in
accordance with subsection 3A.06(c).
(c) During the Series 1997-1 Amortization Period, the Trustee shall
apply, 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), on
Series 1997-1 Supplement 55
each Distribution Date, amounts on deposit in the Series 1997-1 Principal
Collection Sub-subaccount in the following order of priority:
(i) if any amounts are owed to the Trustee or any other Person, on
account of Servicing Fees incurred in respect of the performance of its
responsibilities as Successor Master Servicer or Successor Servicer, as
the case may be, an amount equal to the product of (a) the amount so owed
to such Successor Master Servicer or Successor Servicer, as the case may
be, and (b) a fraction, the numerator of which shall be equal to the
Series 1997-1 Invested Amount as of the end of the immediately preceding
Settlement Period and the denominator of which shall be equal to the
Aggregate Invested Amount as of the end of the immediately preceding
Settlement Period shall be transferred from the Series 1997-1 Principal
Collection Sub-subaccount to the Trustee or such other Person;
(ii) following the repayment in full of all amounts set forth in
clause (i) above, an amount equal to the Series 1997-1 Monthly Principal
Payment for such Distribution Date (rounded down to the nearest $1,000,000
unless such payment is less than $1,000,000) shall be distributed from the
Series 1997-1 Principal Collection Sub-subaccount:
(A) first, pro rata to the Class A Certificateholders until
repayment in full of the Class A Invested Amount;
(B) second, pro rata to the Class B Certificateholders until
repayment in full of the Class B Invested Amount; and
(C) third, pro rata to the Class C Certificateholders until
repayment in full of the Class C Invested Amount;
Series 1997-1 Supplement 56
(iii) if, following the repayment in full of all amounts set forth
in clauses (i) and (ii) above, 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 (other
than pursuant to clause (i) above), such amounts shall be transferred from
the Series 1997-1 Principal Collection Sub-subaccount and paid to the
Trustee or such other Person; and
(iv) following the repayment in full of all amounts set forth in
clauses (i) through (iii) above, the remaining amount on deposit in the
Series 1997-1 Principal Collection Sub-subaccount on such Distribution
Date, if any, shall be distributed to the holder of the Series 1997-1
Subordinated Interest.
(d) On each Special Distribution Date occurring in respect of a
Reduction hereunder, the Trustee shall, based solely on the written instructions
of the Master Servicer (upon which the Trustee may conclusively rely),
distribute to the Term Certificateholders on such Special Distribution Date (pro
rata based on the initial invested amount of each Class), from amounts on
deposit in the Series 1997-1 Principal Collection Sub-subaccount an amount equal
to the Reduction Amount to be made on such Special Distribution Date.
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
Series 1997-1 Supplement 57
exclusively applicable to the Term Certificates issued pursuant to this
Supplement:
SECTION 4A.0l. Distributions. (a) The final distribution of
principal in respect of the Term Certificates will be made after due notice by
the Trustee of the pendency of such distribution (subject to at least five
Business Days' prior written notice from the Master Servicer to the Trustee
containing all information required for the Trustee's notice, upon which the
Trustee may conclusively rely, subject to its obligation to perform the
procedures set forth in the Internal Operating Procedures Memorandum) and only
upon presentation and surrender of such Term Certificates at the office of the
Paying Agent or at the Corporate Trust Office of the Trustee, by check drawn on,
or by transfer to an account maintained by the holder with, a bank in New York
City. Any other distribution of principal in respect of the Term Certificates or
on account of interest or fees on the Term Certificates on each Distribution
Date will be made or caused to be made by the Paying Agent or the Trustee to the
persons in whose name the Term Certificates are registered at the close of
business on the related Record Date. Such payment will be made by a check mailed
to the Term Certificateholders at such Term Certificateholders' registered
addresses or, upon application by any Term Certificateholder of at least
$5,000,000 in original principal amount thereof to the Trustee not later than
five Business Days prior to the related Distribution Date, by transfer to an
account maintained by the Term Certificateholder with a bank in New York City.
(b) All allocations and distributions hereunder shall be in
accordance with the Daily Reports and the Monthly Settlement Statements and
subject to Section 3.01(h) of the Agreement.
SECTION 4A.02. Statements and Notices. (a) Monthly Settlement
Statements. On each Settlement Report Date (commencing with the Settlement
Report Date
Series 1997-1 Supplement 58
occurring in March 1997), the Master Servicer shall deliver to the Trustee and
each Rating Agency a Monthly Settlement Statement in the Form of Exhibit E
setting forth, among other things, the Loss Reserve Ratio I, the Loss Reserve
Ratio II, the Dilution Reserve Ratio I, the Dilution Reserve Ratio II, the
Minimum Ratio, in each case, where applicable, with respect to the Class A
Certificates, the Class B Certificates and the Class C Certificates, and the
Carrying Cost Reserve Ratio and the Servicing Reserve Ratio, each as
recalculated for the next succeeding Settlement Period. The Trustee shall
forward a copy of each Monthly Settlement Statement to any Term
Certificateholder upon request by such Term Certificateholder.
(b) Annual Certificateholders' Tax Statement. On or before April 1
of each calendar year (or such earlier date as required by applicable law),
beginning with calendar year 1998, the Company shall furnish, or cause to be
furnished, to each Person who at any time during the preceding calendar year was
a Term Certificateholder, a statement prepared by the Company containing the
aggregate amount distributed to such Person for such calendar year or the
applicable portion thereof during which such Person was a Term
Certificateholder, together with such other information as is required to be
provided by an issuer of indebtedness under the Code and such other customary
information as the Company deems necessary to enable the Term Certificateholders
to prepare their tax returns. Such obligation of the Company shall be deemed to
have been satisfied to the extent that substantially comparable information
shall have been provided by the Trustee pursuant to any requirements of the 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 Notices. As promptly as reasonably
practicable after its receipt of notice of the occurrence of an Early
Amortization Event with respect to Series 1997-1, the Trustee shall give notice
of such occurrence to (i) each Rating Agency (which notice
Series 1997-1 Supplement 59
shall in any event be given, by telephone or otherwise, not later than the
second Business Day after such receipt) and (ii) each Term Certificateholder.
SECTION 4A.03. Notices. Notices required to be given to the Holders
hereunder shall be given by first class mail to the address of such Holders as
they appear in the Certificate Register or the Subordinated Interest Register,
as applicable. The Company and the Master Servicer shall deliver copies of all
notices, reports, statements and other documents delivered by it pursuant to the
Pooling and Servicing Agreements to each Rating Agency.
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 (each, an
"Early Amortization Event") shall occur during the Series 1997-1 Revolving
Period:
(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 Term Certificates within two Business Days of the
date such interest 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 Term
Certificateholders 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
Series 1997-1 Supplement 60
and Servicing Agreement (including each covenant contained in Sections
2.07 and 2.08 of the Agreement) that continues unremedied 30 days after
the earlier of (i) the date on which a Responsible Officer of the Company
or, so long as the Master Servicer is an Affiliate of the Company, a
Responsible Officer of the Master Servicer has knowledge of such failure
and (ii) the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Company by the Trustee,
or to the Company and the Trustee by holders of the Term Certificates
evidencing 25% or more of the Series 1997-1 Invested Amount;
(c) any representation or warranty made or deemed made by the
Company in any Pooling and Servicing Agreement to or for the benefit of
the Term Certificateholders 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 earlier of (i) the date on which a Responsible
Officer of the Company or, so long as the Master Servicer is an Affiliate
of the Company, a Responsible Officer of the Master Servicer has knowledge
of such failure and (ii) 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 holders of the Term
Certificates evidencing 25% or more of the Series 1997-1 Invested Amount
and as a result of such incorrectness, the interests, rights or remedies
of the Term Certificateholders have been materially and adversely
affected; provided, however, that an Early Amortization Event with respect
to Series 1997-1 shall not be deemed to have occurred under this paragraph
if the incorrectness of such representation or warranty gives rise to an
obligation to repurchase or make an adjustment payment in respect of the
related Receivables and the Company has repurchased or made an adjustment
payment in respect of the related Receivable
Series 1997-1 Supplement 61
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; or
(e) the Series 1997-1 Allocated Receivables Amount shall be less
than the Series 1997-1 Target Receivables Amount for any period of five
consecutive Business Days;
(f) 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;
(g) a Change in Control shall have occurred;
(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, any Seller, any Servicer, the
Master Servicer or any Affiliate thereof shall so assert in writing;
(i) the Trust shall for any reason cease to have a valid and
perfected first priority undivided ownership or 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;
Series 1997-1 Supplement 62
(j) a Federal tax notice of Lien, in an amount equal to or greater
than $1,000,000 shall have been filed against the Company or the Trust
unless there shall have been delivered to the Trustee and the Rating
Agencies proof of release of such Lien;
(k) a notice of Lien shall have been filed by the Pension Benefit
Guaranty Corporation against the Company or the Trust under Section 412(n)
of the Code or Section 302(f) of ERISA for a failure to make a required
installment or other payment to a plan to which Section 412(n) of the Code
or Section 302(f) of ERISA applies unless there shall have been delivered
to the Trustee and the Rating Agencies proof of the release of such Lien;
(l) a Reduction shall have occurred and, as a result of such
Reduction, the Series 1997-1 Invested Amount shall have been reduced to an
amount below $75,000,000; or
(m) (i) one or more judgments for the payment of money (to the
extent not bonded or covered by insurance to the reasonable satisfaction
of the Trustee) 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 Trustee) 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
Series 1997-1 Supplement 63
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 the 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 the
holders of the Term Certificates, an early amortization period shall immediately
commence or (y) an 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 Term Certificateholders voting as a single class
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 Series 1997-1 (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 (e) 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 1997-1 Allocated Receivables Amount
shall no longer be less than the Series 1997-1 Target Receivables Amount and
(ii) so long as the Series 1997-1 Allocated Receivables Amount continues to be
equal to or greater than the Series 1997-1 Target Receivables Amount, Term
Certificateholders evidencing 66-2/3% or more of the Series 1997-1 Invested
Amount voting as a single class shall have waived the occurrence of such event.
Notwithstanding the foregoing, a delay in or failure in performance
referred to in clause (a) above for a period of five Business Days after the
applicable grace period, or in clause (b) above for a period of 30 Business
Series 1997-1 Supplement 64
Days after the applicable grace period, will not constitute an Early
Amortization Event if such delay or failure could not have been prevented by the
exercise of reasonable diligence by the Company and such delay or failure was
caused by a Force Majeure Delay. The Company will nevertheless be required to
use its best efforts to perform its obligations in a timely manner in accordance
with the terms of the Transaction Documents, and the Company shall promptly give
the Trustee an Officer's Certificate notifying it of any such delay or failure.
ARTICLE VI
Servicing Fee
SECTION 6.01. Servicing Compensation. A monthly servicing fee (the
"Series 1997-1 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 1997-1 Invested Amount as of the end of
the second preceding Settlement Period and the denominator of which shall be
equal to the Aggregate Invested Amount as of the end of such second preceding
Settlement Period; provided, however, that, for the purpose of calculating the
Accrued Expense Adjustment on the last Business Day of any Accrual Period, such
calculation shall be based on the Series 1997-1 Invested Amount and Aggregate
Invested Amount as of the end of the most recent Settlement Period that has
elapsed. To the extent that funds on deposit in the Series 1997-1 Non-Principal
Collection Sub-subaccount at any such date are insufficient to pay the Series
1997-1 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.
Series 1997-1 Supplement 65
ARTICLE VII
Covenants, Representations and Warranties
SECTION 7.01. Representations and Warranties of the Company and the
Master Servicer. The Company and the Master Servicer each hereby represents and
warrants to the Trustee and each of the Term Certificateholders that each and
every of their respective representations and warranties contained in each
Pooling and Servicing Agreement is true and correct as of the Issuance Date and
any Subsequent Issuance Date.
SECTION 7.02. Covenants of the Company and the Master Servicer. The
Company and the Master Servicer each 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 Trustee with evidence, satisfactory to
the Trustee, 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 and (ii) 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 be performed by the Trustee under the Transaction Documents;
(c) for so long as any Term Certificates are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, the Company will cause to be provided to any holder of
Term
Series 1997-1 Supplement 66
Certificates and any prospective purchaser of Term Certificates or an
interest therein, upon the request of such holder or prospective
purchaser, the information required to be provided to such holder or
prospective purchaser by Rule 144A(d)(4) under the Securities Act;
(d) they will not at any time participate in the listing of the
Class C Certificates on an "established securities market" within the
meaning of Section 7704(b)(1) of the Code;
(e) the Company will not cooperate in any way to facilitate, and the
Company will affirmatively take any reasonable action to prevent any of
the following of which a Responsible Officer of the Company has actual
knowledge, (i) the registration, listing or trading of the Class C
Certificates on any national, foreign, regional, local or other stock
exchange or PORTAL or (ii) the development or existence of an "over the
counter" market for the Class C Certificates (including an interdealer
quotation system that regularly disseminates firm buy or sell quotations
by identified brokers or dealers by electronic means or otherwise); and
(f) it shall observe in all material respects each and every of its
respective covenants (both affirmative and negative) contained in the
Agreement, the Servicing Agreement, this Supplement and all other
Transaction Documents to which it is a party.
SECTION 7.03. Negative Covenant of the Company; Covenants of the
Master Servicer. (a) The Company shall not make any Restricted Payment while
Series 1997-1 is an Outstanding Series, except (i) from amounts distributed to
the Company pursuant to subsection 3A.03(c), (ii) in compliance with all terms
of the Transaction Documents, including the Company's covenant as to net worth
set forth
Series 1997-1 Supplement 67
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) 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.
SECTION 7.04. Covenant of the Trustee. Neither the Trustee nor any
agent of the Trustee (including the Authenticating Agent and the Paying Agent)
will knowingly take any action with the intent of facilitating (i) the
registration, listing or trading of the Class C Certificates on any national,
foreign, regional, local or other stock exchange or PORTAL or (ii) the
development or existence of an "over the counter" market for the Class C
Certificates (including an interdealer quotation system that regularly
disseminates firm buy or sell quotations by identified brokers or dealers by
electronic means or otherwise).
ARTICLE VIII
Miscellaneous
SECTION 8.01. Ratification of Agreement. As modified and
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 8.02. Governing Law. THIS SUPPLEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ANY
Series 1997-1 Supplement 68
CONFLICT OF LAW PRINCIPLES, EXCEPT TO THE EXTENT ISSUES OF PERFECTION ARE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
SECTION 8.03. 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 other more fully to effect the purposes of this Supplement and
the sale of the Term 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 8.04. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Trustee or any Term
Certificateholder, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 8.05. Amendments. This Supplement may only be amended,
supplemented or otherwise modified from time to time if such amendment,
supplement or modification is effected in accordance with the provisions of
Section 10.01 of the Agreement; provided that any amendment,
Series 1997-1 Supplement 69
supplement or modification which is governed by Section 10.01(b) of the
Agreement and relates to an amendment, supplement or modification of Article
III, Article IV, the definition of the Class A Ratio, the Class B Ratio, the
Class C Ratio and Series 1997-1 Required Subordinated Amount and any defined
terms used therein shall require the consent of Term Certificateholders
evidencing more than 50% of the Invested Amount of each Class adversely affected
in any material respect by such amendment, supplement or modification.
SECTION 8.06. Notices. All notices, requests and demands to or upon
any party hereto to be effective shall be given in the manner set forth in the
case of the Company, the Master Servicer and the Trustee, in Section 10.05 of
the Agreement, and in the case of any other party, 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, addressed as follows in the case of the
Rating Agencies or to such other address as may be hereafter notified by the
respective parties hereto:
DCR: Duff & Xxxxxx Credit Rating Co.
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Asset-Backed Research and
Monitoring Group
Telecopier: (000) 000-0000
S&P: Standard & Poor's Ratings Services
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset-Backed Surveillance Group
Telecopier: (000) 000-0000
Series 1997-1 Supplement 70
Any notice required or permitted to be mailed to a Term Certificateholder shall
be given as provided in Section 4A.03.
SECTION 8.07. Counterparts. This Supplement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original,
and all of which taken together shall constitute one and the same agreement.
SECTION 8.08. No Bankruptcy Petition. Each Term Certificateholder
(and each Certificate Book-Entry Holder with respect to any Term Certificate)
shall be deemed to have agreed by its acceptance of a Term Certificate (or a
beneficial interest therein) that, prior to the date which is one year and one
day after the later of (i) the last day of the Series 1997-1 Amortization Period
and (ii) the date that all Investor Certificates of each other Outstanding
Series are repaid in full, it will not institute against, or join any other
Person in instituting against, the Company any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other similar proceedings
under any Federal or state bankruptcy or similar law.
SECTION 8.09. Limitation on Addition and Termination of Sellers. (a)
Notwithstanding anything to the 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 and the Trustee shall
have received evidence in the form of an appropriate Officer's
Certificate as to that fact.
(ii) The Company and the Trustee shall have received evidence that
the Rating Agency Condition shall have been satisfied with respect to the
addition
Series 1997-1 Supplement 71
of such Seller; provided that satisfaction of the Rating Agency Condition
(and such receipt of evidence thereof) shall not be required with respect
to the addition of up to three additional Sellers during any calendar
year, each of which meets the following criteria: (x) such proposed
additional Seller is, in the judgment of the Company as certified by the
Company to the Trustee in an Officer's Certificate, in the same line of
business as the existing Sellers as of the related Seller Addition Date
(as defined in the Receivables Sale Agreement) and (y) as of the Seller
Addition Date, immediately prior to giving effect to such addition, the
ratio (as determined by the Company and expressed as a percentage) of (I)
the aggregate Principal Amount of what would constitute all Eligible
Receivables of the proposed Seller if it were a Seller at the end of the
Business Day immediately preceding the Seller Addition Date minus the
amount which would constitute the Overconcentration Amount applicable to
such Receivables on the Seller Addition Date if the proposed Seller were a
Seller to (II) the Aggregate Receivables Amount on the Seller Addition
Date (before giving effect to such addition), is less than five percent.
(iii) The Company and the Trustee 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) The Trustee shall have notified the Company and each Rating
Agency that a Standby Liquidation System is in place for such proposed
additional Seller.
(c) Notwithstanding anything to the contrary contained in the
Receivables Sale Agreement, the Company shall not consent to any request made
pursuant to
Series 1997-1 Supplement 72
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 1997-1 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 IX
Final Distributions
SECTION 9.01. 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 subsection 7.02(b)
of the Agreement are deposited into the Series 1997-1 Non-Principal Collection
Sub-subaccount and the Series 1997-1 Principal Collection Sub-subaccount, the
Series 1997-1 Supplement 73
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 Term Certificates.
Series 1997-1 Supplement 74
IN WITNESS WHEREOF, the Company, the Master Servicer and the Trustee
have caused this Series 1997-1 Supplement to be duly executed by their
respective officers as of the day and year first above written.
LFI RECEIVABLES CORPORATION,
by
-------------------------------
Name:
Title:
LFI SERVICING CORPORATION, as
Master Servicer,
by
-------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, not in
its individual capacity but solely
as Trustee,
by
-------------------------------
Name:
Title:
EXHIBIT A TO
SERIES 1997-1 SUPPLEMENT
LFI RECEIVABLES MASTER TRUST
FORM OF CLASS A CERTIFICATE, SERIES 1997-1
REGISTERED
NO. $ (of
$ issued)
CUSIP No.
[For Book-Entry Certificates Only: UNLESS THIS TERM CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
INTERESTS IN THIS TERM CERTIFICATE MAY ONLY BE HELD BY QUALIFIED
INSTITUTIONAL BUYERS (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF
1933).]
THIS TERM CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT"). THE HOLDER HEREOF, BY PURCHASING THIS TERM CERTIFICATE,
AGREES THAT SUCH TERM CERTIFICATE MAY BE RESOLD, PLEDGED OR TRANSFERRED ONLY IN
ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS IN AN AMOUNT OF AT LEAST
$1,000,000 AND (1) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER
THE ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OR ACCOUNTS OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A
OR (2) TO A PERSON WHO (A) IS AN
2
INSTITUTIONAL "ACCREDITED INVESTOR", WITHIN THE MEANING OF RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE ACT, AND WHO DELIVERS A PURCHASER LETTER TO
THE TRUSTEE IN THE FORM ATTACHED TO THE SERIES 1997-1 SUPPLEMENT OR (B) IS
TAKING DELIVERY OF SUCH CERTIFICATE PURSUANT TO A TRANSACTION THAT IS OTHERWISE
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT, AS CONFIRMED IN AN OPINION
OF COUNSEL ADDRESSED TO THE TRUSTEE AND THE COMPANY WHICH OPINION AND COUNSEL
ARE SATISFACTORY TO THE COMPANY AND THE TRUSTEE.
THIS TERM CERTIFICATE MAY NOT BE ACQUIRED OR HELD BY OR ON BEHALF OF
(1) AN "EMPLOYEE BENEFIT PLAN" WITHIN THE MEANING OF SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR OTHER RETIREMENT
ARRANGEMENT, INDIVIDUAL RETIREMENT ACCOUNT OR XXXXX PLAN, WHETHER OR NOT IT IS
SUBJECT TO THE PROVISIONS OF TITLE I THERETO, (2) ANY PLAN DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OR (3)
ANY OTHER ENTITY THAT WOULD BE DEEMED TO BE A "BENEFIT PLAN INVESTOR" WITHIN THE
MEANING OF DEPARTMENT OF LABOR REGULATIONS SECTION 2510.3-101(f)(2) (ANY OF THE
FOREGOING, AN "ERISA ENTITY").
THIS TERM CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY OTHER PERSON.
Purchasers of this Term Certificate will be deemed to have made
certain representations and warranties set forth in the Supplement.
This Class A Certificate evidences a fractional undivided interest
in the 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
3
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
or any Affiliate thereof)
This certifies that
[NAME OF CERTIFICATEHOLDER]
(the "Class A 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
amended and restated on February 4, 1997 and as the same may from time to time
be amended, restated, supplemented or otherwise modified thereafter, 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
1997-1 Supplement, dated as of February 4, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Supplement", collectively with the
Pooling Agreement, the "Agreement"), by and among the Company, the Master
Servicer and the Trustee. The corpus of the Trust consists of receivables (the
"Receivables") representing amounts payable for goods or services and all other
Trust Assets referred to in the Agreement. Although a summary of certain
provisions of the Agreement is set forth below, this Class A 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
4
be requested by writing to the Trustee at The Chase Manhattan Bank, 000 X. 00xx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: 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 Class A Certificate is issued under, is entitled to the
benefits of, and is subject to, the terms, provisions and conditions of the
Agreement, to which Agreement the Class A Certificateholder by virtue of the
acceptance hereof assents and is bound.
The Master Servicer, the Servicers, the Company, each Class A
Certificateholder and the Trustee intend, for federal, state and local income
and franchise tax purposes only, that the Class A Certificates be evidence of
indebtedness of the Company secured by the Trust Assets and that the Trust not
be characterized as an association or publicly traded partnership taxable as a
corporation. The Class A Certificateholder, by the acceptance hereof, agrees to
treat the Class A Certificates for federal, state and local income and franchise
tax purposes as indebtedness of the Company.
This Class A Certificate is one of a Class of Investor Certificates
entitled "LFI Receivables Master Trust, Class A Certificates, Series 1997-1"
(the "Class A Certificates"). Concurrent with the issuance of the Class A
Certificates, the Trust will issue two other Classes of Investor Certificates
entitled "LFI Receivables Master Trust, Class B Certificates, Series 1997-1"
(the "Class B Certificates") and "LFI Receivables Master Trust, Class C
Certificates, Series 1997-1" (the "Class C Certificates", and together with the
Class A Certificates and the Class B Certificates, the "Term Certificates"). The
Term Certificates represent fractional undivided interests in the Trust Assets,
consisting of the right to receive distributions specified in the Supplement out
of (i) the Series 1997-1 Invested Percentage (expressed as a decimal)
5
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 Supplement, all other funds on deposit in the Series 1997-1
Collection Subaccount and any subaccounts thereof (the "Series 1997-1
Certificateholders' Interest"). Concurrent with the issuance of the Term
Certificates, the Trust shall also issue a Subordinated Company Interest to the
Company representing a fractional undivided interest in the Trust Assets,
consisting of the right to receive the distributions specified in the Supplement
out of (i) the Series 1997-1 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 Supplement, all other funds on deposit in the Series 1997-1 Collection
Subaccount and any subaccounts thereof, in each case to the extent not required
to be distributed to or for the benefit of the Term Certificateholders (the
"Series 1997-1 Subordinated Interest"). The Trust Assets are allocated in part
to the Term Certificateholders and the holders of the Series 1997-1 Subordinated
Interest with the remainder allocated to the Investor Certificateholders and the
holders of the Subordinated Company Interest of other Series and to the Company.
An Exchangeable Company Interest representing the Company's interest in the
Trust was issued to the Company pursuant to the Pooling Agreement on August 5,
1996. The Exchangeable Company Interest represents the interest in the Trust
Assets not represented by the Investor Certificates and Subordinated Company
Interest of each Outstanding Series. The Exchangeable Company Interest may be
decreased by the Company pursuant to the Pooling Agreement in exchange for an
increase in the Invested Amount of a Class of Investor Certificates of an
Outstanding Series and an increase in the related Series Subordinated Company
Interest, or one or more newly issued Series of Investor Certificates and the
related newly issued Series Subordinated Company Interest, upon the conditions
set forth in the Pooling Agreement.
6
Interest on the Class A Invested Amount will be distributed to the
Class A Certificateholders on each Distribution Date. The interest payable on
each Distribution Date shall be an amount equal to the product of (i) the Class
A Certificate Rate for the related Accrual Period, (ii) the Class A Invested
Amount on the first day of such Accrual Period (after giving effect to any
distributions of principal on such date) and (iii) the actual number of days in
such Accrual Period divided by 360. Interest due but not paid on any
Distribution Date (the "Class-A Interest Shortfall") will be due on the next
Distribution Date, together with interest on such amount equal to the product,
for the Accrual Period succeeding such Accrual Period (or portion thereof) until
such Class A Interest Shortfall is paid, of (i) a rate per annum equal to the
Class A Certificate Rate for the next Accrual Period, (ii) such Class A Interest
Shortfall (or the portion thereof which has not been paid to the Class A
Certificateholders) and (iii) the actual number of days in such succeeding
Accrual Period divided by 360.
On each Distribution Date during the Series 1997-1 Amortization
Period, a Series 1997-1 Monthly Principal Payment (rounded down to the nearest
$1,000,000 unless such payment is less than $1,000,000) shall be made from
amounts deposited into the Series 1997-1 Principal Collection Sub-subaccount
during the preceding Accrual Period (after the payment of any Servicing Fees due
to the Successor Master Servicer or a Successor Servicer), first, pro rata to
the Class A Certificateholders until repayment in full of the Class A Invested
Amount on such date, second, pro rata to the Class B Certificateholders until
repayment in full of the Class B Invested Amount on such date and third, pro
rata to the Class C Certificateholders until repayment in full of the Class C
Invested Amount on such date. The Class A Invested Amount may be otherwise
reduced by distributions to the Class A Certificateholders as set forth in the
Agreement.
7
Distributions with respect to this Class A Certificate shall be paid
by the Trustee or its agent in immediately available funds to the Class A
Certificateholder at the registered address of the Class A Certificateholder as
provided to the Trustee. Final payment of this Class A Certificate shall be made
after due notice of such final distribution delivered by the Trustee to the
Class A Certificateholders in accordance with the Agreement.
This Class A Certificate does not represent an obligation of, or an
interest in, the Company, the Master Servicer or any Affiliate of either of
them.
Subject to the provisions of the Agreement, the transfer of this
Class A Certificate shall be registered in the Certificate Register upon
surrender of this Class A Certificate for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer, in a form satisfactory to the Trustee and the
Transfer Agent and Registrar, duly executed by the Class A Certificateholder or
the Class A Certificateholder's attorney-in-fact duly authorized in writing, and
thereupon one or more Class A Certificates of authorized denominations and of
like Fractional Undivided Interests will be issued to the designated transferee
or transferees.
The Trustee, the Company, the Paying Agent, the Transfer Agent and
Registrar and any agent of either of them, may treat the person in whose name
this Class A Certificate is registered as the owner hereof for all purposes.
It is expressly understood and agreed by the Company and the Class A
Certificateholder that (i) 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, (ii) except
as set forth in the Agreement, the representations, undertakings and agreements
made on the
8
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, (iii) nothing herein
contained shall be construed as creating any liability of the Trustee,
individually or personally, to perform any covenant either expressed or implied
made on the part of the Trust in the Agreement, all such liability, if any,
being expressly waived by the parties who are signatories to the Agreement and
by any Person claiming by, through or under such parties; provided, however, the
Trustee shall be liable in its individual capacity for its own willful
misconduct or gross negligence and for any tax assessed against the Trustee
based on or measured by any fees, commission or compensation received by it for
acting as Trustee and (iv) 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 Class A 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 Class A 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
1997-1 Amortization Period and (ii) the date that any Investor Certificates of
any other Outstanding Series are paid in full, it will not institute against, or
join any other Person in instituting against, the Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
similar proceedings under any federal or state bankruptcy or similar law.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class A Certificate shall
not be entitled to any benefit under the Agreement, or be valid for any purpose.
9
IN WITNESS WHEREOF, the Company has caused this Class A Certificate
to be duly executed.
Dated: , 1997
LFI RECEIVABLES CORPORATION,as
authorized pursuant to
Section 5.01 of the Pooling
Agreement
by
----------------------------
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates described in the
within-mentioned Agreement.
The Chase Manhattan Bank,
not in its individual
capacity but solely as
Trustee,
By: OR By:
--------------------- ---------------------
Authorized Signatory Authenticating Agent
By:
---------------------
Authorized Signatory
10
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE(S)
--------------------------------------------------
--------------------------------------------------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the within certificate and all rights thereunder, and hereby
irrevocably constitutes and appoints
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
attorney, with full power of substitution in the premises, to transfer said
certificate on the books kept for registration thereof.
The undersigned certifies that:
(check one)
[ ] The undersigned is transferring this Term Certificate to a Person
it reasonably believes is a "Qualified Institutional Buyer" (as
defined in Rule 144A under the Act) who has been informed that the
sale is being made in reliance upon Rule 144A.
[ ] The undersigned is transferring this Term Certificate in
accordance with the other provisions of the legends set forth
herein.
Dated: ________________________________
11
. . . . . . . . . . . . . . . . . . . . . . .
Note: The signature(s) to this Assignment must
correspond with the name(s) as written on the face of
the within certificate in every particular, without
alteration or any change whatsoever.
EXHIBIT B TO
SERIES 1997-1 SUPPLEMENT
LFI RECEIVABLES MASTER TRUST
FORM OF CLASS B CERTIFICATE, SERIES 1997-1
REGISTERED
NO. $ of
$ issued)
CUSIP No.
[For Book-Entry Certificates Only: UNLESS THIS TERM CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
INTERESTS IN THIS TERM CERTIFICATE MAY ONLY BE HELD BY QUALIFIED
INSTITUTIONAL BUYERS (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF
1933).]
THE CLASS B CERTIFICATES ARE SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES AS PROVIDED IN THE POOLING AGREEMENT AND THE SERIES 1997-1
SUPPLEMENT.
THIS TERM CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT"). THE HOLDER HEREOF, BY PURCHASING THIS TERM CERTIFICATE,
AGREES THAT SUCH TERM CERTIFICATE MAY BE RESOLD, PLEDGED OR TRANSFERRED ONLY IN
ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS IN AN AMOUNT OF AT LEAST
$1,000,000 AND (1) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER
THE ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES
2
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OR ACCOUNTS OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A OR (2) TO A PERSON WHO (A) IS AN INSTITUTIONAL
"ACCREDITED INVESTOR", WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE ACT, AND WHO DELIVERS A PURCHASER LETTER TO THE TRUSTEE
IN THE FORM ATTACHED TO THE SERIES 1997-1 SUPPLEMENT OR (B) IS TAKING DELIVERY
OF SUCH CERTIFICATE PURSUANT TO A TRANSACTION THAT IS OTHERWISE EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT, AS CONFIRMED IN AN OPINION OF COUNSEL
ADDRESSED TO THE TRUSTEE AND THE COMPANY WHICH OPINION AND COUNSEL ARE
SATISFACTORY TO THE COMPANY AND THE TRUSTEE.
THIS TERM CERTIFICATE MAY NOT BE ACQUIRED OR HELD BY OR ON BEHALF OF
(1) AN "EMPLOYEE BENEFIT PLAN" WITHIN THE MEANING OF SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR OTHER RETIREMENT
ARRANGEMENT, INDIVIDUAL RETIREMENT ACCOUNT OR XXXXX PLAN, WHETHER OR NOT IT IS
SUBJECT TO THE PROVISIONS OF TITLE I THERETO, (2) ANY PLAN DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OR (3)
ANY OTHER ENTITY THAT WOULD BE DEEMED TO BE A "BENEFIT PLAN INVESTOR" WITHIN THE
MEANING OF DEPARTMENT OF LABOR REGULATIONS SECTION 2510.3-101(f)(2) (ANY OF THE
FOREGOING, AN "ERISA ENTITY").
THIS TERM CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY OTHER PERSON.
Purchasers of this Term Certificate will be deemed to have made
certain representations and warranties set forth in the Supplement.
This Class B Certificate evidences a fractional undivided interest
in the assets of the
3
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
or any Affiliate thereof)
This certifies that
[NAME OF CERTIFICATEHOLDER]
(the "Class B 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
amended and restated on February 4, 1997 and as the same may from time to time
be amended, restated, supplemented or otherwise modified thereafter, 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
1997-1 Supplement, dated as of February 4, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Supplement", collectively with the
Pooling Agreement, the "Agreement"), by and among the Company, the Master
Servicer and the Trustee. The corpus of the Trust consists of receivables (the
"Receivables") representing amounts payable for goods or services and all other
Trust Assets referred to in the Agreement. Although a summary of certain
provisions of the Agreement is set forth below, this Class B Certificate does
not purport to summarize the Agreement, is qualified in its
4
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, 000 X. 00xx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: 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 Class B Certificate is issued under, is entitled to the
benefits of, and is subject to, the terms, provisions and conditions of the
Agreement, to which Agreement the Class B Certificateholder by virtue of the
acceptance hereof assents and is bound.
The Master Servicer, the Servicers, the Company, each Class B
Certificateholder and the Trustee intend, for federal, state and local income
and franchise tax purposes only, that the Class B Certificates be evidence of
indebtedness of the Company secured by the Trust Assets and that the Trust not
be characterized as an association or publicly traded partnership taxable as a
corporation. The Class B Certificateholder, by the acceptance hereof, agrees to
treat the Class B Certificates for federal, state and local income and franchise
tax purposes as indebtedness of the Company.
This Class B Certificate is one of a Class of Investor Certificates
entitled "LFI Receivables Master Trust, Class B Certificates, Series 1997-1"
(the "Class B Certificates"). Concurrent with the issuance of the Class B
Certificates, the Trust will issue two other Classes of Investor Certificates
entitled "LFI Receivables Master Trust, Class A Certificates, Series 1997-1"
(the "Class A Certificates") and "LFI Receivables Master Trust, Class C
Certificates, Series 1997-1" (the "Class C Certificates", and together with the
Class A Certificates and the Class B
5
Certificates, the "Term Certificates"). The Term Certificates represent
fractional undivided interests in the Trust Assets, consisting of the right to
receive distributions specified in the Supplement out of (i) the Series 1997-1
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 Supplement, all
other funds on deposit in the Series 1997-1 Collection Subaccount and any
subaccounts thereof (the "Series 1997-1 Certificateholders' Interest").
Concurrent with the issuance of the Term Certificates, the Trust shall also
issue a Subordinated Company Interest to the Company representing a fractional
undivided interest in the Trust Assets, consisting of the right to receive the
distributions specified in the Supplement out of (i) the Series 1997-1 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 Supplement, all other funds on deposit
in the Series 1997-1 Collection Subaccount and any subaccounts thereof, in each
case to the extent not required to be distributed to or for the benefit of the
Term Certificateholders (the "Series 1997-1 Subordinated Interest"). The Trust
Assets are allocated in part to the Term Certificateholders and the holders of
the Series 1997-1 Subordinated Interest with the remainder allocated to the
Investor Certificateholders and the holders of the Subordinated Company Interest
of other Series and to the Company. An Exchangeable Company Interest
representing the Company's interest in the Trust was issued to the Company
pursuant to the Pooling Agreement on August 5, 1996. The Exchangeable Company
Interest represents the interest in the Trust Assets not represented by the
Investor Certificates and Subordinated Company Interest of each Outstanding
Series. The Exchangeable Company Interest may be decreased by the Company
pursuant to the Pooling Agreement in exchange for an increase in the Invested
Amount of a Class of Investor Certificates of an Outstanding Series and an
increase in the related Series Subordinated Company
6
Interest, or one or more newly issued Series of Investor Certificates and the
related newly issued Series Subordinated Company Interest, upon the conditions
set forth in the Pooling Agreement.
Interest on the Class B Invested Amount will be distributed to the
Class B Certificateholders on each Distribution Date. The interest payable on
each Distribution Date shall be an amount equal to the product of (i) the Class
B Certificate Rate for the related Accrual Period, (ii) the Class B Invested
Amount on the first day of such Accrual Period (after giving effect to any
distributions of principal on such date) and (iii) the actual number of days in
such Accrual Period divided by 360. Interest due but not paid on any
Distribution Date (the "Class B Interest Shortfall") will be due on the next
Distribution Date, together with interest on such amount equal to the product,
for the Accrual Period succeeding such Accrual Period (or portion thereof) until
such Class B Interest Shortfall is paid, of (i) a rate per annum equal to the
Class B Certificate Rate for the next Accrual Period, (ii) such Class B Interest
Shortfall (or the portion thereof which has not been paid to the Class B
Certificateholders) and (iii) the actual number of days in such succeeding
Accrual Period divided by 360.
On each Distribution Date during the Series 1997-1 Amortization
Period, a Series 1997-1 Monthly Principal Payment (rounded down to the nearest
$1,000,000 unless such payment is less than $1,000,000) shall be made from
amounts deposited into the Series 1997-1 Principal Collection Sub- subaccount
during the preceding Accrual Period (after the payment of any Servicing Fees due
to the Successor Master Servicer or a Successor Servicer), first, pro rata to
the Class A Certificateholders until repayment in full of the Class A Invested
Amount on such date, second, pro rata to the Class B Certificateholders until
repayment in full of the Class B Invested Amount on such date and, third, pro
rata to the Class C Certificateholders until repayment in full of the Class C
Invested Amount on such date. The
7
Class B Invested Amount may be otherwise reduced by distributions to the Class B
Certificateholders as set forth in the Agreement.
Distributions with respect to this Class B Certificate shall be paid
by the Trustee or its agent in immediately available funds to the Class B
Certificateholder at the registered address of the Class B Certificateholder as
provided to the Trustee. Final payment of this Class B Certificate shall be made
after due notice of such final distribution delivered by the Trustee to the
Class B Certificateholders in accordance with the Agreement.
This Class B Certificate does not represent an obligation of, or an
interest in, the Company, the Master Servicer or any Affiliate of either of
them.
Subject to the provisions of the Agreement, the transfer of this
Class B Certificate shall be registered in the Certificate Register upon
surrender of this Class B Certificate for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer, in a form satisfactory to the Trustee and the
Transfer Agent and Registrar, duly executed by the Class B Certificateholder or
the Class B Certificateholder's attorney-in-fact duly authorized in writing, and
thereupon one or more Class B Certificates of authorized denominations and of
like Fractional Undivided Interests will be issued to the designated transferee
or transferees.
The Trustee, the Company, the Paying Agent, the Transfer Agent and
Registrar and any agent of either of them, may treat the person in whose name
this Class B Certificate is registered as the owner hereof for all purposes.
It is expressly understood and agreed by the Company and the Class B
Certificateholder that (i) the Agreement is executed and delivered by the
Trustee, not
8
individually or personally but solely as Trustee of the Trust, in the exercise
of the powers and authority conferred and vested in it, (ii) except as set forth
in the Agreement, 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, (iii) nothing herein
contained shall be construed as creating any liability of the Trustee,
individually or personally, to perform any covenant either expressed or implied
made on the part of the Trust in the Agreement, all such liability, if any,
being expressly waived by the parties who are signatories to the Agreement and
by any Person claiming by, through or under such parties; provided, however, the
Trustee shall be liable in its individual capacity for its own willful
misconduct or gross negligence and for any tax assessed against the Trustee
based on or measured by any fees, commission or compensation received by it for
acting as Trustee and (iv) 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 Class B 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 Class B 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
1997-1 Amortization Period and (ii) the date that any Investor Certificates of
any other Outstanding Series are paid in full, it will not institute against, or
join any other Person in instituting against, the Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
similar proceedings under any federal or state bankruptcy or similar law.
9
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class B 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 Class B Certificate
to be duly executed.
Dated: _________, 1997
LFI RECEIVABLES CORPORATION,as
authorized pursuant to
Section 5.01 of the Pooling
Agreement
by ___________________________________
Title:
10
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates described in the
within-mentioned Agreement.
The Chase Manhattan Bank,
not in its individual
capacity but solely as
Trustee,
By: _________________________ OR By: ________________________________
Authorized Signatory Authenticating Agent
By: ________________________________
Authorized Signatory
11
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE(S)
--------------------------------------
--------------------------------------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
attorney, with full power of substitution in the premises, to transfer said
certificate on the books kept for registration thereof.
The undersigned certifies that:
(check one)
[ ] The undersigned is transferring this Term Certificate to a Person
it reasonably believes is a "Qualified Institutional Buyer" (as
defined in Rule 144A under the Act) who has been informed that the
sale is being made in reliance upon Rule 144A.
[ ] The undersigned is transferring this Term Certificate in
accordance with the other provisions of the legends set forth
herein.
Dated: ______________________
12
. . . . . . . . . . . . . . . .
Note: The signature(s) to this Assignment must
correspond with the name(s) as written on the
face of the within certificate in every
particular, without alteration or any change
whatsoever.
EXHIBIT C TO
SERIES 1997-1 SUPPLEMENT
LFI RECEIVABLES MASTER TRUST
FORM OF CLASS C CERTIFICATE, SERIES 1997-1
REGISTERED NO. $_________ (of
_____ $___________ issued)
CUSIP No.
THE CLASS C CERTIFICATES MAY NOT BE SOLD, ASSIGNED, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS THE TRANSFEREE THEREOF DELIVERS A LETTER, IN THE
FORM ATTACHED TO THE SERIES 1997-1 SUPPLEMENT, TO THE EFFECT THAT (I) SUCH
TRANSFEREE IS ACQUIRING SUCH CLASS C CERTIFICATES FOR ITS OWN ACCOUNT, IS THE
SOLE BENEFICIAL OWNER OF SUCH CLASS C CERTIFICATES AND WILL REMAIN THE SOLE
BENEFICIAL OWNER OF SUCH CLASS C CERTIFICATES UNTIL SUCH CLASS C CERTIFICATES
ARE TRANSFERRED AS PROVIDED IN THE SERIES 1997-1 SUPPLEMENT, (II) (A) SUCH
TRANSFEREE IS NOT, FOR U.S. FEDERAL INCOME TAX PURPOSES, A TRUST, ESTATE,
PARTNERSHIP OR "S CORPORATION" (AS DEFINED IN SECTION 1361(a)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE")) OR (B) SUCH TRANSFEREE IS A
TRUST, ESTATE, PARTNERSHIP OR "S CORPORATION" (AS DEFINED IN SECTION 1361(a)(1)
OF THE CODE) FOR U.S. FEDERAL INCOME TAX PURPOSES, BUT AFTER GIVING EFFECT TO
SUCH TRANSFER OF CLASS C CERTIFICATES TO SUCH TRANSFEREE, LESS THAN 50 PERCENT
OF THE AGGREGATE VALUE OF SUCH TRANSFEREE'S ASSETS WOULD CONSIST OF CLASS C
CERTIFICATES AND (III) SUCH CLASS C CERTIFICATES HAVE NOT BEEN TRANSFERRED
THROUGH AN "ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7704(b)
OF THE CODE.
THE CLASS C CERTIFICATES ARE SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES AND THE CLASS B CERTIFICATES AS PROVIDED IN THE POOLING
AGREEMENT AND THE SERIES 1997-1 SUPPLEMENT.
PURSUANT TO THE SERIES 1997-1 SUPPLEMENT, THE TRUSTEE WILL BE
REQUIRED TO WITHHOLD PURSUANT TO SECTION
2
1446 OF THE CODE ON PAYMENTS OF INTEREST ALLOCABLE TO CLASS C CERTIFICATEHOLDERS
WHO ARE FOREIGN INVESTORS UNLESS SUCH CLASS C CERTIFICATEHOLDERS PROVIDE THE
TRUSTEE WITH (I) A PROPERLY EXECUTED IRS FORM 4224 (OR SUCCESSOR FORM) AND (II)
UPON REQUEST BY THE TRUSTEE AND IN A FORM ACCEPTABLE TO THE TRUSTEE, EVIDENCE
DOCUMENTING THE INCLUSION IN GROSS INCOME OF, AND THE PAYMENT OF APPROPRIATE
U.S. TAXES, IF ANY, ON THAT PORTION OF THE TRUST'S NET INCOME ALLOCABLE TO SUCH
CLASS C CERTIFICATEHOLDERS. IF THE TRUSTEE DOES WITHHOLD ON A FOREIGN INVESTOR
PURSUANT TO SECTION 1446 OF THE CODE, THE CASH RECEIVED ON A CURRENT BASIS BY
FOREIGN INVESTORS WHO OWN CLASS C CERTIFICATES WILL BE LESS THAN THE FULL
INTEREST PAYMENTS. FOR THESE PURPOSES, A FOREIGN INVESTOR IS A PERSON OR ENTITY
OTHER THAN AN INDIVIDUAL WHO IS A CITIZEN OR RESIDENT OF THE UNITED STATES, A
CORPORATION, PARTNERSHIP OR OTHER ENTITY CREATED OR ORGANIZED IN OR UNDER THE
LAWS OF THE UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF (A "U.S.
COMPANY"), OR AN ESTATE OR TRUST THE INCOME OF WHICH IS SUBJECT TO U.S. FEDERAL
INCOME TAXATION REGARDLESS OF ITS SOURCE. A U.S. COMPANY WHICH IS A SUBSIDIARY
OF A FOREIGN INVESTOR IS NOT ITSELF CONSIDERED A FOREIGN INVESTOR BUT A U.S.
BRANCH OF A FOREIGN INVESTOR WOULD BE CONSIDERED A FOREIGN INVESTOR.
THIS TERM CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY TO A PERSON TAKING DELIVERY WITH RESPECT TO ANY SUCH RESALE,
PLEDGE OR TRANSFER OF A DEFINITIVE CERTIFICATE WHO DELIVERS A CLASS C TRANSFEREE
TAX LETTER TO THE TRUSTEE IN THE FORM ATTACHED TO THE SERIES 1997-1 SUPPLEMENT.
THIS TERM CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT"). THE HOLDER HEREOF, BY PURCHASING THIS TERM CERTIFICATE,
AGREES THAT SUCH TERM CERTIFICATE MAY BE RESOLD, PLEDGED OR TRANSFERRED ONLY IN
ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS IN AN AMOUNT OF AT LEAST
$1,000,000 AND (1) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER
THE ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN
3
ACCOUNT OR FOR THE ACCOUNT OR ACCOUNTS OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A OR (2) TO A PERSON WHO (A) IS AN INSTITUTIONAL "ACCREDITED
INVESTOR", WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE ACT, AND WHO DELIVERS A PURCHASER LETTER TO THE TRUSTEE IN THE FORM
ATTACHED TO THE SERIES 1997-1 SUPPLEMENT OR (B) IS TAKING DELIVERY OF SUCH
CERTIFICATE PURSUANT TO A TRANSACTION THAT IS OTHERWISE EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT, AS CONFIRMED IN AN OPINION OF COUNSEL
ADDRESSED TO THE TRUSTEE AND THE COMPANY, WHICH COUNSEL AND OPINION ARE
SATISFACTORY TO THE COMPANY AND THE TRUSTEE.
THIS TERM CERTIFICATE MAY NOT BE ACQUIRED OR HELD BY OR ON BEHALF OF
(1) AN "EMPLOYEE BENEFIT PLAN" WITHIN THE MEANING OF SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR OTHER RETIREMENT
ARRANGEMENT, INDIVIDUAL RETIREMENT ACCOUNT OR XXXXX PLAN, WHETHER OR NOT IT IS
SUBJECT TO THE PROVISIONS OF TITLE I THERETO, (2) ANY PLAN DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OR (3)
ANY OTHER ENTITY THAT WOULD BE DEEMED TO BE A "BENEFIT PLAN INVESTOR" WITHIN THE
MEANING OF DEPARTMENT OF LABOR REGULATIONS SECTION 2510.3-101(f)(2) (ANY OF THE
FOREGOING, AN "ERISA ENTITY").
THIS TERM CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY OTHER PERSON.
Purchasers of this Term Certificate will be deemed to have made
certain representations and warranties set forth in the Supplement.
This Class C Certificate evidences a fractional undivided interest
in the assets of the
LFI RECEIVABLES MASTER TRUST
4
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
or any Affiliate thereof)
This certifies that
[NAME OF CERTIFICATEHOLDER]
(the "Class C 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
amended and restated on February 4, 1997 and as the same may from time to time
be amended, restated, supplemented or otherwise modified thereafter, 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
1997-1 Supplement, dated as of February 4, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Supplement", collectively, with the
Pooling Agreement, the "Agreement"), by and among the Company, the Master
Servicer and the Trustee. The corpus of the Trust consists of receivables (the
"Receivables") representing amounts payable for goods or services and all other
Trust Assets referred to in the Agreement. Although a summary of certain
provisions of the Agreement is set forth below, this Class C Certificate does
not purport to summarize the Agreement, is qualified in its
5
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, 000 X. 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: 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 Class C Certificate is issued under, is entitled to the
benefits of, and is subject to, the terms, provisions and conditions of the
Agreement, to which Agreement the Class C Certificateholder by virtue of the
acceptance hereof assents and is bound.
The Master Servicer, the Servicers, the Company, each Class C
Certificateholder and the Trustee intend, for federal, state and local income
and franchise tax purposes only, that the Class C Certificates be evidence of
indebtedness of the Company secured by the Trust Assets and that the Trust not
be characterized as an association or publicly traded partnership taxable as a
corporation. The Class C Certificateholder, by the acceptance hereof, agrees to
treat the Class C Certificates for federal, state and local income and franchise
tax purposes as indebtedness of the Company.
This Class C Certificate is one of a Class of Investor Certificates
entitled "LFI Receivables Master Trust, Class C Certificates, Series 1997-1"
(the "Class C Certificates"). Concurrent with the issuance of the Class C
Certificates, the Trust will issue two other Classes of Investor Certificates
entitled "LFI Receivables Master Trust, Class A Certificates, Series 1997-1"
(the "Class A Certificates") and "LFI Receivables Master Trust, Class B
Certificates" (the "Class B Certificates", and together with the Class A
Certificates and the Class C Certificates, the "Term Certificates"). The Term
Certificates represent
6
fractional undivided interests in the Trust Assets, consisting of the right to
receive distributions specified in the Supplement out of (i) the Series 1997-1
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 Supplement, all
other funds on deposit in the Series 1997-1 Collection Subaccount and any
subaccounts thereof (the "Series 1997-1 Certificateholders' Interest").
Concurrent with the issuance of the Term Certificates, the Trust shall also
issue a Subordinated Company Interest to the Company representing a fractional
undivided interest in the Trust Assets, consisting of the right to receive the
distributions specified in the Supplement out of (i) the Series 1997-1 Invested
Percentage (expressed as a decimal) of Collections received with respect to the
Receivable and all other funds on deposit in the Collection Account and (ii) to
the extent such interests appear in the Supplement, all other funds on deposit
in the Series 1997-1 Collection Subaccount and any subaccounts thereof, in each
case to the extent not required to be distributed to or for the benefit of the
Term Certificateholders (the "Series 1997-1 Subordinated Interest"). The Trust
Assets are allocated in part to the Term Certificateholders and the holder of
the Series 1997-1 Subordinated Interest with the remainder allocated to the
Investor Certificateholders and the holders of the Subordinated Company Interest
of other Series and to the Company. An Exchangeable Company Interest
representing the Company's interest in the Trust was issued pursuant to the
Pooling Agreement on August 5, 1996. The Exchangeable Company Interest
represents the interest in the Trust Assets not represented by the Investor
Certificates or Subordinated Company Interest of each Outstanding Series. The
Exchangeable Company Interest may be decreased by the Company pursuant to the
Pooling Agreement in exchange for an increase in the Invested Amount of a Class
of Investor Certificates of an Outstanding Series and an increase in the related
Series Subordinated Company Interest, or one or more newly issued Series of
Investor Certificates and the related
7
newly issued Series Subordinated Company Interest, upon the conditions set forth
in the Pooling Agreement.
Interest on the Class C Invested Amount will be distributed to the
Class C Certificateholders on each Distribution Date. The interest payable on
each Distribution Date shall be an amount equal to the product of (i) the Class
C Certificate Rate for the related Accrual Period, (ii) the Class C Invested
Amount on the first day of such Accrual Period (after giving effect to any
distributions of principal on such date) and (iii) the actual number of days in
such Accrual Period divided by 360. Interest due but not paid on any
Distribution Date (the "Class C Interest Shortfall") will be due on the next
Distribution Date, together with interest on such amount equal to the product,
for the Accrual Period succeeding such Accrual Period (or portion thereof) until
such Class C Interest Shortfall is paid, of (i) a rate per annum equal to the
Class C Certificate Rate for the next Accrual Period, (ii) such Class C Interest
Shortfall (or the portion thereof which has not been paid to the Class C
Certificateholders) and (iii) the actual number of days in such succeeding
Accrual Period divided by 360.
On each Distribution Date during the Series 1997-1 Amortization
Period, a Series 1997-1 Monthly Principal Payment (rounded down to the nearest
$1,000,000 unless such payment is less than $1,000,000) shall be made from
amounts deposited into the Series 1997-1 Principal Collection Sub- subaccount
during the preceding Accrual Period (after the payment of any Servicing Fees due
to the Successor Master Servicer or a Successor Servicer), first, pro rata to
the Class A Certificateholders until repayment in full of the Class A Invested
Amount on such date, second, pro rata to the Class B Certificateholders until
repayment in full of the Class B Invested Amount on such date and, third, pro
rata to the Class C Certificateholders until repayment in full of the Class C
Invested Amount on such date. The Class C Invested Amount may be otherwise
reduced by
8
distributions to the Class C Certificateholders as set forth in the Agreement.
Distributions with respect to this Class C Certificate shall be paid
by the Trustee or its agent in immediately available funds to the Class C
Certificateholder at the registered address of the Class C Certificateholder as
provided to the Trustee. Final payment of this Class C Certificate shall be made
after due notice of such final distribution delivered by the Trustee to the
Class C Certificateholders in accordance with the Agreement.
This Class C Certificate does not represent an obligation of, or an
interest in, the Company, the Master Servicer or any Affiliate of either of
them.
Subject to the provisions of the Agreement, the transfer of this
Class C Certificate shall be registered in the Certificate Register upon
surrender of this Class C Certificate for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer, in a form satisfactory to the Trustee and the
Transfer Agent and Registrar, duly executed by the Class C Certificateholder or
the Class C Certificateholder's attorney-in-fact duly authorized in writing, and
thereupon one or more Class C Certificates of authorized denominations and of
like Fractional Undivided Interests will be issued to the designated transferee
or transferees.
The Trustee, the Company, the Paying Agent, the Transfer Agent and
Registrar and any agent of either of them, may treat the person in whose name
this Class C Certificate is registered as the owner hereof for all purposes.
It is expressly understood and agreed by the Company and the Class C
Certificateholder that (i) the Agreement is executed and delivered by the
Trustee, not individually or personally but solely as Trustee of the
9
Trust, in the exercise of the powers and authority conferred and vested in it,
(ii) except as set forth in the Agreement, 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, (iii) nothing
herein contained shall be construed as creating any liability of the Trustee,
individually or personally, to perform any covenant either expressed or implied
made on the part of the Trust in the Agreement, all such liability, if any,
being expressly waived by the parties who are signatories to the Agreement and
by any Person claiming by, through or under such parties; provided, however, the
Trustee shall be liable in its individual capacity for its own willful
misconduct or gross negligence and for any tax assessed against the Trustee
based on or measured by any fees, commission or compensation received by it for
acting as Trustee and (iv) 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 Class C 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 Class C 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
1997-1 Amortization Period and (ii) the date that any Investor Certificates of
any other Outstanding Series are repaid in full, it will not institute against,
or join any other Person in instituting against, the Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
similar proceedings under any federal or state bankruptcy or similar law.
10
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class C 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 Class C Certificate
to be duly executed.
Dated: ______________, 1997
LFI RECEIVABLES CORPORATION,
as authorized pursuant to
Section 5.01 of the Pooling
Agreement
By:__________________________________
Title:
11
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates described in the
within-mentioned Agreement.
The Chase Manhattan Bank,
not in its individual
capacity but solely as
Trustee
By: _________________________ OR By: ________________________________
Authorized Officer Authenticating Agent
By: ________________________________
Authorized Officer
12
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE(S)
--------------------------------------
--------------------------------------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
attorney, with full power of substitution in the premises, to transfer said
certificate on the books kept for registration thereof.
The undersigned certifies that:
(check one)
[ ] The undersigned is transferring this Term Certificate to a Person
it reasonably believes is a "Qualified Institutional Buyer" (as
defined in Rule 144A under the Act) who has been informed that the
sale is being made in reliance upon Rule 144A.
[ ] The undersigned is transferring this Term Certificate in
accordance with the other provisions of the legends set forth
herein.
Dated: __________________________
13
. . . . . . . . . . . . . . . .
Note: The signature(s) to this Assignment must
correspond with the name(s) as written on the
face of the within certificate in every
particular, without alteration or any change
whatsoever.
EXHIBIT F TO
SERIES 1997-1 SUPPLEMENT
FORM OF PURCHASER LETTER TO BE DELIVERED
BY INSTITUTIONAL ACCREDITED INVESTORS
We are delivering this letter in connection with the transfer of $
of the [Class A Certificates, Series 1997-1] [Class B Certificates, Series
1997-1] [Class C Certificates, Series 1997-1] (the "Certificates") issued by the
LFI Receivables Master Trust (the "Trust") created under the Pooling Agreement,
dated as of August 5, 1996 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, as trustee (the "Trustee") (as amended and restated on
February 4, 1997, and as amended, supplemented or otherwise modified from time
to time thereafter, the "Pooling Agreement") and the Series 1997-1 Supplement,
dated as of February 4, 1997 (as amended, supplemented or otherwise modified
from time to time, the "Series 1997-1 Supplement"), to the Pooling Agreement
among the Company, the Master Servicer and the Trustee. Capitalized terms used
herein without definition shall have the meanings given to them in the Pooling
Agreement or the Series 1997-1 Supplement.
We hereby confirm that:
(i) we are an institutional "accredited investor" (an "Institutional
Accredited Investor"), within the meaning of Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act of 1933 (the "Securities
Act");
(ii) we are purchasing the Certificates for our own account or for
the account of one or more other Institutional Accredited Investors;
2
(iii) we are taking delivery of Certificates in an amount of at
least U.S. $1,000,000 for our own account or for each separate account for
which we are acting;
(iv) we have such knowledge and experience in financial and business
matters, we are capable of evaluating the merits and risks of purchasing
Certificates and we, or the account for which we are purchasing
Certificates, can bear the economic risks of investing in the Certificates
for an indefinite period of time; and
(v) we are acquiring Certificates for investment and not with a view
to any distribution thereof in a transaction that would violate the
Securities Act or the securities laws of any state of the United States or
any other applicable jurisdiction; provided that the disposition of our
property and the property of any accounts for which we are acting as
fiduciary shall remain at all times within our control.
We understand that the Certificates are being offered in a
transaction not involving any public offering within the meaning of the
Securities Act and that the Certificates have not been registered under the
Securities Act, and we agree, on our own behalf and on behalf of each account
for which we acquire any Certificates, that such Certificates may be resold,
pledged or transferred only in accordance with any applicable state securities
laws and the restrictions set forth in the Pooling Agreement and the Series
1997-1 Supplement in amounts of at least U.S. $1,000,000 each and (i) in a
transaction meeting the requirements of Rule 144A ("Rule 144A") under the
Securities Act, to a person who we reasonably believe is a "qualified
institutional buyer" (as defined in Rule 144A) that purchases for its own
account or for the account or accounts of a qualified institutional buyer to
whom notice is given that the resale, pledge or other transfer is being made in
reliance on Rule 144A or (ii) to a person who (A) is an Institutional Accredited
Investor and delivers a Purchaser
3
Letter, in substantially the form of this letter or (B) is taking delivery of
such Certificates pursuant to a transaction that is otherwise exempt from the
registration requirements of the Securities Act, as confirmed in an opinion of
counsel addressed to the Trustee and the Company, which opinion and counsel are
satisfactory to the Trustee and the Company.
We understand that the Transfer Agent and Registrar will not be
required to accept for registration of transfer any Certificates, except upon
presentation of evidence satisfactory to the Company that the foregoing
restrictions on transfer have been complied with. We further understand that any
Certificates purchased by us will be in the form of definitive physical
certificates and that such Certificates will bear a legend reflecting the
substance of the foregoing restrictions on transfer.
We acknowledge that the Transfer Agent and Registrar and the Company
will rely upon our confirmation, acknowledgments and agreements set forth
herein.
THIS LETTER 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.
NAME OF PURCHASER,
by _________________________________
Name:
Title:
Address:
EXHIBIT G TO THE
SERIES 1997-1 SUPPLEMENT
FORM OF CLASS C TRANSFEREE TAX LETTER TO BE DELIVERED
IN CONNECTION WITH TRANSFERS OF CLASS C CERTIFICATES
[Name of Transferee] ("Transferee") is delivering this letter in
connection with a transfer of $____________ of the Class C Certificates, Series
1997-1 (the "Class C Certificates") issued by the LFI Receivables Master Trust
(the "Trust") created under the Pooling Agreement, dated as of August 5, 1996
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, as
trustee (the "Trustee") (as amended and restated on February 4, 1997, and as
amended, supplemented or otherwise modified from time to time, the "Pooling
Agreement"), and the Series 1997-1 Supplement, dated as of February 4, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Series
1997-1 Supplement"), to the Pooling Agreement among the Company, the Master
Servicer and the Trustee. Capitalized terms used herein without definition shall
have the meanings given to them in the Pooling Agreement and the Series 1997-1
Supplement.
Transferee hereby represents and warrants that:
(i) Transferee has acquired $__________ of Class C Certificates from
[Name of Transferor] ("Transferor") on __________ __, ______ for its own
account, Transferee is the sole beneficial owner of such Class C
Certificates and Transferee will remain the sole beneficial owner of such
Class C Certificates until such Class C Certificates are transferred
pursuant to the Pooling Agreement and the Series 1997-1 Supplement;
(ii) Transferee is not an ERISA Entity and it is not acquiring or
holding any Class C Certificates, directly or indirectly, for or on behalf
of an ERISA Entity;
2
(iii) Transferee is not a partnership, trust, estate or "S
Corporation" (within the meaning of Section 1361(a)(i) of the Internal
Revenue Code of 1986, as amended (the "Code")) for United States federal
income tax purposes or Transferee is, for United States federal income tax
purposes a partnership, trust, estate or "S Corporation" (within the
meaning of Section 1361(a)(i) of the Code, but after giving effect to the
transfer of such Class C Certificates to the Transferee, less than 50
percent of the aggregate value of Transferee's assets would consist of
Class C Certificates;
(iv) Transferee did not purchase the Class C Certificates described
herein through an "established securities exchange" within the meaning of
Section 7704(b) of the Code;
(v) [Please check appropriate option[s]]
___ Transferee is (a) an individual who is a citizen of the
United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States
or any political subdivision thereof, or (c) an estate or trust
the income of which is subject to U.S. federal income taxation
regardless of its source; or
___ Transferee is not (a) an individual who is a citizen of the
United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States
or any political subdivision thereof, or (c) an estate or trust
the income of which is subject to U.S. federal income taxation
regardless of its source.
___ If Transferee checked the immediately preceding box, then
Transferee will provide the
3
Trustee with (i) a properly executed IRS Form 4224 (or successor
form) and (ii) upon request by the Trustee and in a form
acceptable to the Trustee, evidence documenting the inclusion in
gross income of, and the payment of appropriate U.S. taxes, if
any, on that portion of the Trust's net income allocable to
Transferee; and
(vi) Transferee will not transfer the Class C Certificates described
herein to any person, except as permitted by the legends set forth on the
Class C Certificates.
In addition, by signing this Class C Transferee Tax Letter, Transferee
hereby acknowledges that the Transfer Agent and Registrar may refuse to register
Transferor's transfer of the Class C Certificates described herein to Transferee
and, consequently, such sale shall not be effective, if (x) the Company has
notified the Transfer Agent and Registrar that the Company either knows, or has
a reasonable, good faith belief, that either any required representation has not
been made or that any representation made herein was untrue or inaccurate as of
the date made and (y) the Transfer Agent and Registrar properly
4
notifies Transferor and Transferee of its refusal to record such transfer of the
Class C Certificates within the time allowed for providing such notification.
THIS LETTER 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.
------------------------------
(Name of Transferee)
By:___________________________
Name:
Title:
Address:
Schedule 1 to the
Series 1997-1 Supplement
Trust Accounts
Account Account Number
------- --------------
Series 1997-1 Collection Subaccount
Series 1997-1 Principal Collection Sub-
subaccount
Series 1997-1 Non-Principal Collection
Sub-subaccount
Series 1997-1 Accrued Interest Sub-
subaccount
