EXHIBIT 10.40.4
EXECUTION COPY
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RS FUNDING INC.,
as Company,
US FOODSERVICE INC.,
as Servicer
and
THE CHASE MANHATTAN BANK,
as Trustee
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SERIES 1996-1 SUPPLEMENT
Dated as of November 15, 1996
to
POOLING AGREEMENT
Dated as of November 15, 1996
------------------
XXXXXX-XXXXXX RECEIVABLES MASTER TRUST
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1996-1 SUPPLEMENT
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II DESIGNATION OF CERTIFICATES AND INTERESTS; PURCHASE AND SALE OF
THE TERM CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.1. Designation . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.2. The Series 1996-1 Certificates. . . . . . . . . . . . . . 16
SECTION 2.3. Delivery. . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.4. Restrictions on Transfer. . . . . . . . . . . . . . . . . 17
SECTION 2.5. Application of Proceeds . . . . . . . . . . . . . . . . . 22
SECTION 2.6. Procedure for Decreasing the Series 1996-1 Invested
Amount; Optional Termination . . . . . . . . . . . . . 22
SECTION 2.7. Sale of Additional Term Certificates. . . . . . . . . . . 23
ARTICLE III OF THE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3A.2. Establishment of Trust Accounts. . . . . . . . . . . . . 25
SECTION 3A.3. Daily Allocations. . . . . . . . . . . . . . . . . . . . 26
SECTION 3A.4. Determination of Interest. . . . . . . . . . . . . . . . 29
SECTION 3A.5. Determination of Series 1996-1 Monthly Principal . . . . 31
SECTION 3A.6. Applications . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IV DISTRIBUTIONS AND REPORTS . . . . . . . . . . . . . . . . . . . . 34
SECTION 4A.1. Distributions. . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4A.2. Statements and Notices . . . . . . . . . . . . . . . . . 35
SECTION 4A.3. Notice Procedures. . . . . . . . . . . . . . . . . . . . 36
ARTICLE V ADDITIONAL EARLY AMORTIZATION EVENTS . . . . . . . . . . . . . . . 36
SECTION 5.1. Additional Early Amortization Events. . . . . . . . . . . 36
ARTICLE VI SERVICING FEE . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.1. Servicing Compensation. . . . . . . . . . . . . . . . . . 39
ARTICLE VII REPRESENTATIONS AND WARRANTIES, COVENANTS. . . . . . . . . . . . 39
SECTION 7.1. Representations and Warranties of the Company and
the Servicer. . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.2. Covenants of the Company and the Servicer . . . . . . . . 39
SECTION 7.3. Covenants of the Servicer . . . . . . . . . . . . . . . . 40
SECTION 7.4. Covenant of the Trustee . . . . . . . . . . . . . . . . . 40
ARTICLE VIII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.1. Ratification of Agreement . . . . . . . . . . . . . . . . 40
SECTION 8.2. Governing Law . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.3. Further Assurances. . . . . . . . . . . . . . . . . . . . 41
SECTION 8.4. No Waiver; Cumulative Remedies. . . . . . . . . . . . . . 41
SECTION 8.5. Amendments. . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.6. Severability. . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.8. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.9. Limitation on Addition and Termination of Sellers.. . . . 42
ARTICLE IX FINAL DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.1. Certain Distributions . . . . . . . . . . . . . . . . . . 44
EXHIBITS
Exhibit A Form of Class A Certificate, Series 1996-1
Exhibit B Form of Class B Certificate, Series 1996-1
Exhibit C Form of Daily Report
Exhibit D Form of Monthly Settlement Statement
Exhibit E Form of Purchaser Letter
Exhibit F Form of Class B Transferee Tax Letter
Exhibit G Form of Definitive Certificate Conversion Letter
SCHEDULES
Schedule 1 Trust Accounts
SERIES 1996-1 SUPPLEMENT, dated as of November 15, 1996 (as amended,
supplemented or otherwise modified from time to time, this "SUPPLEMENT"), among
RS Funding Inc., a Nevada corporation (the "COMPANY"), US Foodservice Inc.,
a Delaware corporation ("US FOODSERVICE"), as servicer (except where otherwise
noted) (in such capacity, the "SERVICER"), and The Chase Manhattan Bank, a New
York banking corporation, in its capacity as Trustee (the "TRUSTEE") under the
Agreement (as defined below).
W I T N E S S E T H :
WHEREAS, the Company, the Servicer and the Trustee have entered into a
Pooling Agreement, dated as of the date hereof (as amended, supplemented or
otherwise modified from time to time, the "AGREEMENT");
WHEREAS, the Agreement provides, among other things, that the Company,
the Servicer and the Trustee may at any time and from time to time enter into
supplements to the Agreement for the purpose of authorizing the issuance on
behalf of the Trust by the Company for execution and redelivery to the Trustee
for authentication of one or more Series of Investor Certificates; and
WHEREAS, the Company, the Servicer 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:
ARTICLE I
DEFINITIONS
SECTION 1.1.DEFINITIONS. (a) The following words and phrases shall
have the following meanings with respect to Series 1996-1 and the definitions of
such terms are applicable to the singular as well as the plural form of such
terms and to the masculine as well as the feminine and neuter genders of such
terms:
"ACCRUAL PERIOD" shall mean the period from and including a
Distribution Date, or, in the case of the initial Accrual Period, the
Issuance Date, to but excluding the immediately succeeding Distribution
Date.
"ACCRUED EXPENSE AMOUNT" shall mean, for each Business Day during an
Accrual Period, the sum of (i) the Series 1996-1 Daily Interest Expense for
such Business Day, (ii) for each of the first ten of such Business Days,
one-tenth of the Series 1996-1 Monthly Servicing Fee due and payable on the
immediately succeeding Distribution Date and zero on each Business Day
thereafter (until such immediately succeeding Distribution Date) and
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(iii) all Program Costs which have accrued since the preceding Business
Day; PROVIDED, HOWEVER, that if by the tenth Business Day of an Accrual
Period, the entire amount of (A) the Series 1996-1 Monthly Interest,
(B) the Series 1996-1 Monthly Servicing Fee and (C) all accrued Program
Costs, in each case for such Accrual Period, shall not have been
transferred to the applicable Series Collection Subaccount (or subaccount
thereof), the Accrued Expense Amount for such tenth Business Day (and each
Business Day thereafter until paid) shall also include the amount of such
shortfall.
"AGED RECEIVABLES RATIO" shall mean, as of the last day of each
Settlement Period, the percentage equivalent of a fraction, (i) the
numerator of which shall be the sum of (A) the aggregate unpaid balance of
Receivables that were 91-120 days past their respective original invoice
dates as of such last day and (B) the aggregate amount of Receivables of
the Sellers which were charged off as uncollectible prior to the day which
is 91 days after their respective original invoice dates during such
Settlement Period, and (ii) the denominator of which shall be the aggregate
Principal Amount of Receivables originated by the Sellers during the third
prior Settlement Period (including the Settlement Period ended on such
day).
"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 the product of (a)
2.00 TIMES Days Sales Outstanding as of such day and (b) (i) 1.50 TIMES a
rate per annum equal to the weighted average Class A Certificate Rate and
Class B Certificate Rate in effect with respect to the outstanding Class A
Certificates and Class B Certificates, respectively, as of the end of the
Settlement Period immediately preceding such earlier Settlement Report
Date, DIVIDED BY (ii) 360.
"CHANGE IN CONTROL" shall mean the occurrence of any event the result
of which causes the Company not to be a direct, wholly-owned Subsidiary of
RS.
"CLASS A ADDITIONAL INTEREST" shall have the meaning specified in
subsection 3A.4(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 1996-1 Principal Collection Sub-subaccount on such date (up to a
maximum of the Class A Invested Amount).
"CLASS A CERTIFICATE" shall mean a Class A Certificate, Series 1996-1,
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) in the case of the initial
Class A Certificates, with respect to (i) the initial Accrual Period,
5.575% per annum, and (ii) any
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Accrual Period thereafter, One-Month LIBOR for such Accrual Period PLUS
0.20% per annum, and (b) in the case of any additional Class A Certificates
issued pursuant to Section 2.7, the rate per annum set forth in the written
direction delivered by the Company to the Trustee pursuant to
subsection 2.7(c).
"CLASS A INITIAL INVESTED AMOUNT" shall mean $175,000,000.
"CLASS A INTEREST SHORTFALL" shall have the meaning specified in
subsection 3A.4(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 such date MINUS (iii) the aggregate Series 1996-1
Allocable Charged-Off Amount applied to the Class A Certificates on or
prior to such date pursuant to subsection 3A.5(b)(iii) PLUS (iv) (but only
to the extent of any unreimbursed reductions made pursuant to clause (iii)
above) the aggregate Series 1996-1 Allocable Recoveries Amount applied to
the Class A Certificates on or prior to such date pursuant to subsection
3A.5(c)(i).
"CLASS A MONTHLY INTEREST" shall have the meaning specified in
subsection 3A.4(a)(i).
"CLASS A RATIO" shall mean, on any date of determination with respect
to the Class A Certificates, the greatest of (a) the sum of the Loss
Reserve Ratio I and the Dilution Reserve Ratio I, (b) the sum of the Loss
Reserve Ratio II and the Dilution Reserve Ratio II and (c) the Minimum
Ratio, in each case applicable to the Class A Certificates.
"CLASS B ADDITIONAL INTEREST" shall have the meaning assigned in
subsection 3A.4(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 1996-1 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 1996-1,
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) in the case of the initial
Class B Certificates, with respect to (i) the initial Accrual Period,
5.975% per annum, and (ii) any
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Accrual Period thereafter, One-Month LIBOR for such Accrual Period PLUS
0.60% per annum, and (b) in the case of any additional Class B Certificates
issued pursuant to Section 2.7, the rate per annum set forth in the written
direction delivered by the Company to the Trustee pursuant to
subsection 2.7(c).
"CLASS B INITIAL INVESTED AMOUNT" shall mean $25,000,000.
"CLASS B INTEREST SHORTFALL" shall have the meaning assigned in
subsection 3A.4(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 1996-1
Allocable Charged-Off Amount applied to the Class B Certificates on or
prior to such date pursuant to subsection 3A.5(b)(ii) PLUS (iv) (but only
to the extent of any unreimbursed reductions made pursuant to clause (iii)
above) the aggregate Series 1996-1 Allocable Recoveries Amount applied to
the Class B Certificates on or prior to such date pursuant to subsection
3A.5(c)(ii).
"CLASS B MONTHLY INTEREST" shall have the meaning assigned in
subsection 3A.4(a)(ii).
"CLASS B RATIO" shall mean, on any date of determination with respect
to the Class B Certificates, the greatest of (a) the sum of the Loss
Reserve Ratio I and the Dilution Reserve Ratio I, (b) the sum of the Loss
Reserve Ratio II and the Dilution Reserve Ratio II and (c) the Minimum
Ratio, in each case applicable to the Class B Certificates.
"CLASS B TRANSFEREE TAX LETTER" shall mean a Class B Transferee Tax
Letter in substantially the form attached hereto as Exhibit F.
"CLEAN-UP CALL AMOUNT" shall mean the product of (i) the Clean-Up Call
Percentage and (ii) the Series 1996-1 Initial Invested Amount.
"CLEAN-UP CALL PERCENTAGE" shall mean 10%.
"DAILY REPORT" shall mean a report prepared by the Servicer on each
Business Day for the period specified therein, in substantially the form of
Exhibit C.
"DAYS SALES OUTSTANDING" shall mean, as of any Settlement Report Date
and continuing until (but not including) the next Settlement Report Date,
the number of days equal to the product of (a) 91 and (b) the amount
obtained by dividing (i) the aggregate Principal Amount of Eligible
Receivables as of the last day of the immediately preceding Settlement
Period by (ii) the aggregate Principal Amount of Receivables generated by
the
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Sellers for the three Settlement Periods immediately preceding such
earlier Settlement Report Date.
"DCR" shall mean Duff & Xxxxxx Credit Rating Co. or any successor
thereto.
"DEFINITIVE CERTIFICATE CONVERSION LETTER" shall mean a Definitive
Certificate Conversion Letter in substantially the form attached hereto as
Exhibit G.
"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, (i) for the period from the Issuance
Date until the sixth Settlement Report Date to occur thereafter, seven
days, and (ii) for each six-month period (beginning and ending on a
Settlement Report Date) to occur after such initial period, as determined
by the Servicer by selecting a random sample of approximately 1,000
Dilution Adjustment memos created during such period, the number of days
(expressed as a dollar weighted average based upon the Dilution Adjustments
for such period) from the occurrence of any event which gives rise to a
Dilution Adjustment until a Dilution Adjustment memo is issued by the
Servicer in accordance with the Policies; PROVIDED that in no event shall
the Dilution Horizon be less than 3.5 days.
"DILUTION HORIZON FACTOR" shall mean (a) for the period from the
Issuance Date until the sixth Settlement Report Date to occur thereafter,
0.233, and (b) for each six-month period (beginning and ending on a
Settlement Report Date) to occur after such initial period, a fraction, (i)
the numerator of which is the Dilution Horizon for such period and (ii) the
denominator of which is 30; PROVIDED, HOWEVER, that if the Dilution Horizon
Factor for any period would be less than the Dilution Horizon Factor for
the immediately preceding period, then the actual Dilution Horizon Factor
for such current period shall be recalculated to equal a fraction, the
numerator of which is equal to the average of the numerators used to
calculate the Dilution Horizon Factor for such immediately preceding period
and such current period and the denominator of which is 30.
"DILUTION PERIOD" shall mean, as of any Settlement Report Date and
continuing until (but not including) the next Settlement Report Date, the
quotient of (i) the product of (A) the aggregate Principal Amount of
Receivables which were originated by the Sellers during the Settlement
Period immediately preceding such earlier Settlement Report Date and (B)
the Dilution Horizon Factor then in effect and (ii) the Aggregate
Receivables Amount as of the last day of the Settlement Period preceding
such earlier Settlement Report Date.
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"DILUTION RATIO" shall mean, for 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 which were originated by the Sellers during
such Settlement Period.
"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) which is calculated for either
the Class A Certificates or the Class B 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 the Class A Certificates, 2.50, and with
respect to the Class B Certificates, 1.50;
d = the average of the Dilution Ratio during the period of twelve
consecutive Settlement Periods ending prior to such earlier
Settlement Report Date;
e = the highest Dilution Ratio for any Settlement Period during the
period of twelve consecutive Settlement Periods ending prior to
such earlier Settlement Report Date; and
f = the Dilution Period.
"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) which is calculated for either
the Class A Certificates or the Class B Certificates, as the case may be,
as follows:
DRR = [(c * d) + e] * f
Where:
DRR = Dilution Reserve Ratio II
c = with respect to the Class A Certificates, 2.50, and with
respect to the Class B Certificates, 1.50;
d = the average of the Dilution Ratio during the period of twelve
consecutive Settlement Periods ending prior to such earlier
Settlement Report Date;
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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) either (A) for
calculations with respect to Class A Certificates, 2.58, or (b)
for calculations with respect to Class B Certificates, 1.96;
and
f = the Dilution Period.
"EARLY AMORTIZATION EVENT" shall have the meanings assigned in Section
5.1 of this Supplement and Section 7.1 of the Agreement.
"EARLY AMORTIZATION PERIOD" shall have the meaning assigned in Section
5.1 of this Supplement and Section 7.1 of the Agreement.
"ELIGIBLE RECEIVABLES PERCENTAGE" shall mean a percentage equal to (a)
100 percent, MINUS (b) the Ineligible Receivables Percentage.
"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 of ERISA, (ii) any plan described in Section
4975(e)(1) of the Internal Revenue 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).
"INELIGIBLE RECEIVABLES PERCENTAGE" shall mean the percentage
equivalent of a fraction the numerator of which is the excess of the
aggregate Principal Amount of Receivables (excluding Charged-Off
Receivables) on the last Business Day of the Series 1996-1 Revolving Period
over the Aggregate Receivables Amount, as determined at the opening of
business of the first Business Day of the Series 1996-1 Amortization
Period, and the denominator of which is the aggregate Principal Amount of
Receivables (excluding Charged-Off Receivables) on the last Business Day of
the Series 1996-1 Revolving Period.
"INITIAL PURCHASERS" shall mean Chase Securities Inc. and BA
Securities, Inc., who are purchasing the Term Certificates on the Issuance
Date pursuant to the Purchase Agreement.
"INSTITUTIONAL ACCREDITED INVESTOR" shall mean an "accredited
investor" within the meaning of Rule 501(a)(1),(2),(3) or (7) of Regulation
D under the Securities Act.
"INVESTED PERCENTAGE" shall mean, with respect to any Business Day (i)
during the Series 1996-1 Revolving Period, the percentage equivalent of a
fraction, the numerator of which is the Series 1996-1 Allocated Receivables
Amount as of the end of the immediately preceding Business Day and the
denominator of which is the Aggregate Receivables Amount as of the end of
the immediately preceding Business Day and (ii) during the Series
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1996-1 Amortization Period, the percentage equivalent of a fraction, the
numerator of which is the Series 1996-1 Allocated Receivables Amount as of
the end of the last Business Day of the Series 1996-1 Revolving Period
(PROVIDED THAT if during the Series 1996-1 Amortization Period, the
amortization periods of all other Outstanding Series which were outstanding
prior to the commencement of the Series 1996-1 Amortization Period
commence, then, from and after the date the last of such Series commences
its Amortization Period, the numerator shall be the Series 1996-1 Allocated
Receivables Amount as of the end of the Business Day preceding such date)
and the denominator of which is the greater of (A) the Aggregate
Receivables Amount as of the end of the immediately preceding Business Day
and (B) the sum of the numerators used to calculate the Invested Percentage
for all Outstanding Series on the Business Day for which such percentage is
determined.
"ISSUANCE DATE" shall mean November 15, 1996.
"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) which is calculated for either the
Class A Certificates or the Class B Certificates, as the case may be, as
follows:
LRR = [(a * b)/c] * d
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 preceding such earlier Settlement Report Date;
c = for the period prior to the first Settlement Report Date, the
difference between (i) the aggregate outstanding Principal Amount
of all Receivables and (ii) the aggregate outstanding Principal
Amount of all Defaulted Receivables, in each case, originated by
the Sellers as of the last day of the Settlement Period preceding
such earlier Settlement Report Date; and thereafter, the
Aggregate Receivables Amount as of the last day of the Settlement
Period preceding such earlier Settlement Report Date; and
d = with respect to Class A Certificates, 2.50, and with respect to
Class B Certificates, 1.50.
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"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) which is calculated for either the
Class A Certificates or the Class B Certificates, as the case may be, as
follows:
LRR = [[(a * b)/c] * d] + e
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 = for the period prior to the first Settlement Report Date, the
difference between (i) the aggregate outstanding Principal
Amount of all Receivables and (ii) the aggregate outstanding
Principal Amount of all Defaulted Receivables, in each case,
originated by the Sellers as of the last day of the Settlement
Period preceding such earlier Settlement Report Date; and
thereafter, the Aggregate Receivables Amount as of the last day
of the Settlement Period preceding such earlier Settlement
Report Date;
d = with respect to Class A Certificates, 2.50, and with respect to
Class B Certificates, 1.50; and
e = 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) either (A) for calculations
with respect to Class A Certificates, 2.58, or (b) for
calculations with respect to Class B Certificates, 1.96.
"MAJORITY TERM CERTIFICATEHOLDERS" shall mean, on any day, Term
Certificateholders representing, in the aggregate, more than 50% of the
Series 1996-1 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) which is calculated for either the Class
A Certificates or the Class B Certificates, as the case may be, as follows:
10
MR = (a * b) + c
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; and
c = with respect to Class A Certificates, 16.75%, and with respect
to Class B Certificates, 9.25%.
"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 Dollar deposits having a maturity of one month commencing on the
first day of such Accrual Period that appears on the Telerate British
Bankers Assoc. Interest Settlement Rates Page (as defined below) at
approximately 11:00 a.m., London time, on the second full Business Day
prior to such date; PROVIDED, HOWEVER, that if there shall at any time no
longer exist a Telerate British Bankers Assoc. Interest Settlement Rates
Page, "One-Month LIBOR" shall mean with respect to each day during each
Accrual Period, the rate per annum equal to the rate at which The Chase
Manhattan Bank is offered Dollar deposits at or about 10:00 a.m., New York
City time, two Business Days prior to the beginning of such Accrual Period
in the London interbank eurodollar market for delivery on the first day of
such Accrual Period for one month and in a principal amount equal to an
amount of not less than $1,000,000. "TELERATE BRITISH BANKERS ASSOC.
INTEREST SETTLEMENT RATES PAGE" shall mean the display designated as Page
3750 on the Telerate System Incorporated Service (or such other page as may
replace such page on such service for the purpose of displaying the rates
at which Dollar deposits are offered by leading banks in the London
interbank deposit market).
"OPTIONAL TERMINATION DATE" shall have the meaning assigned in
subsection 2.6(b).
"OPTIONAL TERMINATION NOTICE" shall have the meaning assigned in
subsection 2.6(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PROGRAM COSTS" shall mean, for any Business Day, the sum of (a) the
product of (i) 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 any issuance of the Term
Certificates) on such Business Day and (ii) a fraction,
11
the numerator of which is the Series 1996-1 Invested Amount on such
Business Day and the denominator of which is the Aggregate Invested
Amount on such Business Day and (b) all unpaid fees and expenses due and
payable to Rating Agencies rating the Term Certificates; PROVIDED,
HOWEVER, that Program Costs shall not exceed $100,000 in the aggregate
in any fiscal year of the Company.
"PURCHASE AGREEMENT" shall mean the agreement to be entered into on
the Issuance Date among the Company, RS, US Foodservice and each Initial
Purchaser pursuant to which the Company agrees to sell, and the Initial
Purchasers agree to purchase, the principal amounts and Classes of Term
Certificates set forth therein.
"PURCHASER LETTER" shall mean a Purchaser Letter in substantially the
form attached hereto as Exhibit E.
"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 any Distribution Date, the
last Business Day of the immediately preceding Settlement Period.
"REDUCTION" shall have the meaning specified in subsection 2.6(a).
"REDUCTION AMOUNT" shall have the meaning specified in subsection
2.6(a).
"REDUCTION THRESHOLD" shall mean, at any date of determination,
$15,000,000.
"RS" shall mean Xxxxxx-Xxxxxx, Inc., a Delaware corporation.
"SCHEDULED REVOLVING TERMINATION DATE" shall mean the last day of the
Settlement Period ending in July 2001.
"SERIES 1996-1" shall mean Series 1996-1, the Principal Terms of which
are set forth in this Supplement.
"SERIES 1996-1 ACCRUED INTEREST SUB-SUBACCOUNT" shall have the meaning
assigned in subsection 3A.2(a).
"SERIES 1996-1 ADJUSTED INVESTED AMOUNT" shall mean, as of any date of
determination, (i) the Series 1996-1 Invested Amount on such date, MINUS
(ii) the amount on deposit in the Series 1996-1 Principal Collection Sub-
subaccount on such date.
12
"SERIES 1996-1 ALLOCABLE CHARGED-OFF AMOUNT" shall mean, with respect
to any Special Allocation Settlement Report Date, the "Allocable Charged-
Off Amount", if any, which has been allocated to Series 1996-1.
"SERIES 1996-1 ALLOCABLE RECOVERIES AMOUNT" shall mean, with respect
to any Special Allocation Settlement Report Date, the "Allocable Recoveries
Amount", if any, which has been allocated to Series 1996-1.
"SERIES 1996-1 ALLOCATED RECEIVABLES AMOUNT" shall mean, on any date
of determination, the lower of (i) the Series 1996-1 Target Receivables
Amount on such day and (ii) the product of (x) the Aggregate Receivables
Amount on such day and (y) the percentage equivalent of a fraction the
numerator of which is the Series 1996-1 Target Receivables Amount on such
day and the denominator of which is the Aggregate Target Receivables Amount
on such day.
"SERIES 1996-1 AMORTIZATION PERIOD" shall mean the period commencing
on the Business Day following the earliest to occur of (i) the date on
which an Early Amortization Period is declared to commence or automatically
commences, (ii) the Optional Termination Date and (iii) the Scheduled
Revolving Termination Date and ending on the earlier of (x) the date when
the Series 1996-1 Invested Amount shall have been reduced to zero and all
accrued interest on the Term Certificates shall have been paid in full and
(y) the Series 1996-1 Termination Date.
"SERIES 1996-1 CERTIFICATEHOLDERS' INTEREST" shall have the meaning
assigned in subsection 2.2(a).
"SERIES 1996-1 COLLECTIONS" shall mean, on any Business Day, an amount
equal to (i) the product of (a) the Aggregate Daily Collections on such
day, TIMES (b) the Invested Percentage on such day MINUS (ii) the amounts
transferred on such day from the Series 1996-1 Collection Subaccount
pursuant to Section 3A.3(a)(i).
"SERIES 1996-1 COLLECTION SUBACCOUNT" shall have the meaning assigned
in subsection 3A.2(a).
"SERIES 1996-1 COLLECTION SUBORDINATED SUB-SUBACCOUNT" shall have the
meaning assigned in subsection 3A.2(a).
"SERIES 1996-1 DAILY INTEREST EXPENSE" shall mean, for each Business
Day during an Accrual Period, the sum of (a) for each of the first ten of
such Business Days, one-tenth of the Series 1996-1 Monthly Interest due and
payable on the immediately succeeding Distribution Date and zero on each
Business Day thereafter (until such immediately succeeding Distribution
Date), (b) the aggregate amount of all previously accrued and unpaid Series
1996-1 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
13
Interest and Class B Additional Interest for each day since the preceding
Business Day (up to but not exceeding the full amount thereof).
"SERIES 1996-1 INITIAL INVESTED AMOUNT" shall mean, collectively, the
Class A Initial Invested Amount and the Class B Initial Invested Amount.
"SERIES 1996-1 INTERESTS" shall mean, collectively, the Class A
Certificates, the Class B Certificates and the Series 1996-1 Subordinated
Interest.
"SERIES 1996-1 INVESTED AMOUNT" shall mean, collectively, the Class A
Invested Amount and the Class B Invested Amount.
"SERIES 1996-1 MONTHLY INTEREST" shall mean, collectively, the Class A
Monthly Interest and the Class B Monthly Interest.
"SERIES 1996-1 MONTHLY PRINCIPAL PAYMENT" shall have the meaning
assigned in Section 3A.5.
"SERIES 1996-1 MONTHLY SERVICING FEE" shall have the meaning assigned
in Section 6.1.
"SERIES 1996-1 NON-PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have the
meaning assigned in subsection 3A.2(a).
"SERIES 1996-1 NON-SUBORDINATED PERCENTAGE" shall mean a percentage
equal to (a) 100 percent, MINUS (b) the Series 1996-1 Subordinated
Percentage.
"SERIES 1996-1 PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have the
meaning assigned in subsection 3A.2(a).
"SERIES 1996-1 REQUIRED RESERVES" shall mean, subject to Section 8.9,
(x) on any date of determination during the Series 1996-1 Revolving Period,
an amount equal to the sum of:
(a) an amount equal to the greater of (i) the difference between
(A) the product of (1) the Class A Adjusted Invested Amount on such
day and (2) the percentage equivalent of (x) a fraction, the numerator
of which is one, and the denominator of which is one MINUS the Class A
Ratio, MINUS (y) one and (B) the Class B Adjusted Invested Amount and
(ii) the product of (A) the Series 1996-1 Adjusted Invested Amount and
(B) the percentage equivalent of (1) a fraction, the numerator of
which is one, and the denominator of which is one MINUS the Class B
Ratio, MINUS (2) one; PROVIDED that whichever method of calculation
pursuant to clause (i) or (ii) results in the greater amount on any
Settlement Report Date shall continue to be used as the method for the
calculations to be made under this
14
paragraph (a) on each day from and after such Settlement Report Date
until (but not including) the immediately succeeding Settlement Report
Date; and
(b) the product of (i) the Series 1996-1 Invested Amount on such
day and (ii) 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
(c) the product of (i) the aggregate Principal Amount of
Receivables in the Trust on such day, (ii) a fraction, the numerator
of which is the Series 1996-1 Invested Amount on such day, and the
denominator of which is the Aggregate Invested Amount on such day, and
(iii) a fraction, the numerator of which is the Servicing Reserve
Ratio, and the denominator of which is one MINUS the Class A Ratio;
and
(d) the amount of any Accrued Expense Amount in respect of which
sufficient Aggregate Daily Collections have not been transferred to
the Series 1996-1 Non-Principal Collection Sub-subaccount;
and (y) on any date of determination during the Series 1996-1 Amortization
Period, an amount equal to the Series 1996-1 Required Reserves on the last
Business Day of the Series 1996-1 Revolving Period; PROVIDED, in the case
of this clause (y), that such amount shall be adjusted on each Special
Allocation Settlement Report Date, if any, to the extent required as set
forth in Section 3A.5(b)(i) and Section 3A.5(c)(iii).
"SERIES 1996-1 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 1996-1 SUBORDINATED INTEREST" shall have the meaning assigned
in subsection 2.2(b).
"SERIES 1996-1 SUBORDINATED PERCENTAGE" shall mean the percentage
equivalent of a fraction, the numerator of which is the Series 1996-1
Required Reserves on the last Business Day of the Series 1996-1 Revolving
Period, and the denominator of which is the sum of the Series 1996-1
Adjusted Invested Amount and the Series
1996-1 Required Reserves, in each case on the last Business Day of the
Series 1996-1 Revolving Period.
"SERIES 1996-1 TARGET RECEIVABLES AMOUNT" shall mean, on any date of
determination, the sum of (i) the Series 1996-1 Adjusted Invested Amount on
such day and (ii) the Series 1996-1 Required Reserves for such day.
15
"SERIES 1996-1 TERMINATION DATE" shall mean the Distribution Date that
occurs in May 2002.
"SERVICING RESERVE RATIO" shall mean, as of any Settlement Report Date
and continuing until (but not including) the next Settlement Report Date,
an amount (expressed as a percentage) equal to (i) the product of (A) the
Servicing Fee Percentage and (B) 2.0 TIMES Days Sales Outstanding as of
such earlier Settlement Report Date, DIVIDED BY (ii) 360.
"SPECIAL DISTRIBUTION DATE" shall have the meaning assigned in
subsection 2.6(a).
"SUBSEQUENT ISSUANCE DATE" shall mean each Distribution Date, if any,
on which the Trustee issues additional Class A Certificates and/or Class B
Certificates pursuant to Section 2.7.
"TERM CERTIFICATES" shall mean, collectively, those Certificates
designated as the Class A Certificates and Class B Certificates.
"TERM CERTIFICATEHOLDERS" shall mean, collectively, the Class A
Certificateholders and the Class B Certificateholders.
"TRUST ACCOUNTS" shall have the meaning specified in
subsection 3A.2(a).
"US FOODSERVICE" shall have the meaning specified in the preamble
hereto.
(b) If any term or provision contained herein conflicts with or is
inconsistent with any term, definition or provision contained in the Agreement,
the terms and provisions of this Supplement shall govern. All capitalized terms
not otherwise defined herein are defined in the Agreement. All Article, Section
or subsection references herein shall mean Article, Section or subsections of
this Supplement, except as otherwise provided herein. Unless otherwise stated
herein, the context otherwise requires or such term is otherwise defined in the
Agreement, each capitalized term used or defined herein shall relate only to the
Series 1996-1 Certificates and no other Series of Investor Certificates issued
by the Trust.
ARTICLE II
DESIGNATION OF CERTIFICATES AND INTERESTS; PURCHASE AND SALE
OF THE TERM CERTIFICATES
SECTION 2.1. DESIGNATION. The Certificates and interests created and
authorized pursuant to the Agreement and this Supplement shall be divided into
(i) two Classes, which shall be designated as the "Class A Certificates, Series
1996-1" and the "Class B Certificates, Series 1996-1", respectively, and (ii) an
interest designated as the "Series 1996-1 Subordinated Interest".
16
SECTION 2.2. THE SERIES 1996-1 CERTIFICATES. (a) The Term
Certificates shall represent fractional undivided interests in the Trust,
consisting of the right to receive (i) the Invested Percentage (expressed as a
decimal) of Collections received with respect to the Receivables and all other
funds on deposit in the Collection Account and (ii) all other funds on deposit
in the Series Collection Subaccounts and any subaccounts thereof (collectively,
the "SERIES 1996-1 CERTIFICATEHOLDERS' INTEREST").
(b) The "SERIES 1996-1 SUBORDINATED INTEREST" shall be a fractional
undivided interest in the Trust, consisting of the right to receive Collections
with respect to the Receivables allocated to the Series 1996-1
Certificateholders' Interest and not required to be distributed to or for the
benefit of the Term Certificateholders. The Exchangeable Company Interest and
any Series of Investor Certificates outstanding shall represent the ownership
interest in the remainder of the Trust not allocated pursuant hereto to the
Series 1996-1 Certificateholders' Interest or the Series 1996-1 Subordinated
Interest.
(c) The Class A Certificates and the Class B Certificates shall be
issued in registered form substantially in the forms of Exhibits A and B,
respectively, and shall, upon issue, be executed and delivered by the Company to
the Trustee for authentication and redelivery as provided in Section 2.4 hereof
and Section 5.2 of the Agreement.
SECTION 2.3. 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 5.2 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 2.3(b), the Class A Certificates in such names and such
denominations and deliver such Class A Certificates to the Initial Purchasers in
accordance with such written directions and (ii) the Class B Certificates in
such names and such denominations and deliver such Class B Certificates to the
Initial Purchasers in accordance with such written directions. The 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 purchased on the
Issuance Date by an entity described in subsection 2.4(a)(ii), which will be
issued in the form of Definitive Certificates, the Class A Certificates
initially shall be issued in the form of one or more global Certificates,
representing the Book-Entry Certificates, to be delivered to the Depository.
Except as provided in Section 5.13 of the Agreement or Section 2.4 of this
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 2.4; (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 Certificate Book-Entry Holders under the
Agreement and this Supplement, and requests and directions for and votes of such
representatives shall not be deemed to be
17
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 interest in Class A
Certificates shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing such Book-Entry
Certificate Holders and, notwithstanding any other provision herein to the
contrary, the Trustee shall have no responsibility with respect to any such
transfers (except as set forth in subsection 2.4(d) below). Each Depository
Participant shall only transfer Class A 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 B Certificates shall be issued only as Definitive
Certificates.
SECTION 2.4. RESTRICTIONS ON TRANSFER. (a) On the Issuance Date,
the Company shall sell the Term Certificates to the Initial Purchasers pursuant
to the Purchase Agreement and deliver the Term Certificates in the form
specified therein. Thereafter, the Term Certificates may not be transferred
except in accordance with any applicable state securities laws, in amounts of at
least U.S. $1,000,000 each and otherwise 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 deliver a Purchaser Letter to the Trustee or (C) to a person who is
taking delivery of such 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 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 Certificate and the
provisions of the Agreement and this Supplement.
18
(b) Each purchaser (other than the Initial Purchasers) 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 legend set forth in clause (v) below;
(ii) It is purchasing one or more Term Certificates in an amount of at
least U.S. $1,000,000 and it understands that such Term Certificates may be
resold, pledged or otherwise transferred only in an amount of at least U.S.
$1,000,000;
(iii) It is not an ERISA Entity and it is not acquiring or holding any
Term Certificate, directly or indirectly, for or on behalf of an ERISA
Entity;
(iv) It understands that the Term Certificates are being transferred to
it in a transaction not involving 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 legend set forth in
clause (v) below;
(v) 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 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
19
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, AS AMENDED).]
THIS TERM CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (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 U.S. $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 1996-1 SUPPLEMENT OR (B) WHO 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 SUCH 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 THEREOF, (2) ANY PLAN DESCRIBED IN
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, 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").
20
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 MAY NOT BE SOLD,
ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THE TRANSFEREE THEREOF
DELIVERS A LETTER, IN THE FORM ATTACHED TO THE SERIES 1996-1 SUPPLEMENT, TO
THE EFFECT THAT EITHER (i) SUCH TRANSFEREE IS NOT A TRUST, PARTNERSHIP OR
"S CORPORATION" (WITHIN THE MEANING OF SECTION 1361(A) OF THE CODE) FOR
UNITED STATES FEDERAL INCOME TAX PURPOSES OR (ii) SUCH TRANSFEREE IS A
TRUST, PARTNERSHIP OR "S CORPORATION" (WITHIN THE MEANING OF SECTION
1361(A) OF THE CODE) FOR UNITED STATES FEDERAL INCOME TAX PURPOSES, BUT
AFTER GIVING EFFECT TO SUCH TRANSFER OF CLASS B CERTIFICATES TO SUCH
TRANSFEREE, LESS THAN 50 PERCENT OF THE AGGREGATE VALUE OF SUCH
TRANSFEREE'S ASSETS WOULD CONSIST OF CLASS B CERTIFICATES.
THE CLASS B CERTIFICATES ARE SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS
A CERTIFICATES AS PROVIDED IN THE POOLING AGREEMENT AND THE SERIES 1996-1
SUPPLEMENT.
THE TRUSTEE INTENDS TO WITHHOLD PURSUANT TO SECTION 1446 OF THE CODE ON
PAYMENTS OF INTEREST ALLOCABLE TO CLASS B CERTIFICATEHOLDERS WHO ARE
FOREIGN INVESTORS. AS A RESULT, THE CASH RECEIVED ON A CURRENT BASIS BY
FOREIGN INVESTORS WHO OWN CLASS B 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.]
(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 or (ii) to a Person other than a Qualified
Institutional Buyer or an Institutional Accredited Investor, upon delivery of an
opinion of counsel (which counsel may include Xxxxxxxx & X'Xxxx, LLP),
satisfactory to the Trustee and the
21
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 and, in the case of a transfer of a Class
B Certificate to any Person, the transferee delivers to the Company and the
Trustee a completed Class B Transferee Tax Letter.
(d) If a Certificate Book-Entry Holder of Class A Certificates wishes
at any time to transfer its interest therein to one or more Institutional
Accredited Investors or persons described in subsection 2.4(a)(ii)(C) above,
such interest may be so transferred only if, in addition to satisfaction of any
other applicable requirements pursuant hereto and to the Agreement, the
transferor has delivered to the Trustee and the Transfer Agent and Registrar a
Definitive Certificate Conversion Letter. Upon (i) receipt by the Trustee and
the Transfer Agent and Registrar of (x) such Definitive Certificate Conversion
Letter and (y) instructions given in accordance with the Depository's procedures
therefor and (ii) satisfaction of any other applicable requirements pursuant
hereto and to the Agreement, the Transfer Agent and Registrar shall reflect on
the Certificate Register the date and a decrease in the principal amount of the
applicable Book-Entry Certificate in an amount equal to the principal amount of
the beneficial interest in such Book-Entry Certificate to be transferred, and
the Company shall sign, on behalf of the Trust, and shall direct the Trustee in
writing to duly authenticate, and the Trustee, upon receiving such direction,
shall so authenticate and deliver one or more Definitive Certificates of like
tenor and amount to the transferee or transferees indicated in the related
Definitive Certificate Conversion Letter.
SECTION 2.5. APPLICATION OF PROCEEDS. On the Issuance Date, the
Trustee shall remit to the Company the cash proceeds received by it upon the
issuance of the Term Certificates.
SECTION 2.6. PROCEDURE FOR DECREASING THE SERIES 1996-1 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 1996-1 Invested Amount over the Series 1996-1 Adjusted Invested
Amount equals or exceeds the Reduction Threshold, as of the last day of any
Settlement Period, the Company shall reduce the Class A Invested Amount and the
Class B Invested Amount (a "REDUCTION"), by causing the Trustee to distribute to
the Term Certificateholders in accordance with this subsection 2.6(a) an amount
(the "REDUCTION AMOUNT") at least equal to such Reduction Threshold, PROVIDED
that in no event shall a Reduction be made if it would cause the Series 1996-1
Invested Amount to be reduced below $100,000,000. The Company shall direct the
Trustee in writing to make such distribution and shall specify the amount of the
Reduction 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 the funds on deposit in the
Series 1996-1 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 Servicer on behalf of the Company shall have given the
Trustee written notice of such Reduction and the related Reduction Amount (which
amount shall not exceed the available funds on deposit in the Series 1996-1
Principal Collection Sub-subaccount as of the date of such notice) at least five
Business Days prior to the related Special Distribution Date setting forth the
amount of such Reduction and, in the case of such notice to the Trustee,
instructions not to distribute to
22
the Company any amounts pursuant to subsection 3A.3(b)(i) until the condition
set forth in the second proviso in such subsection is satisfied. The Trustee
shall send written notice of any proposed Reduction to the Term
Certificateholders and each Rating Agency as promptly as reasonably
practicable.
(b) (i) On any Business Day, the Company shall have the right to
deliver an irrevocable written notice (an "OPTIONAL TERMINATION NOTICE") to the
Trustee and the Servicer in which the Company declares that the Series 1996-1
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); PROVIDED that if the
Optional Termination Date occurs prior to the second anniversary of the Issuance
Date, the Company shall pay to the Term Certificateholders, in addition to the
Invested Amount (and interest accrued thereon) to which such holders are
entitled, an amount calculated by the Company equal to the present value of a
series of payments equal to the product of (i) the Series 1996-1 Invested Amount
and (ii) the spread over One-Month LIBOR applicable to the Certificate Rates for
each Class of Term Certificates, payable monthly on each Distribution Date in
arrears from the Optional Termination Date through the second anniversary of the
Issuance Date and discounted at a rate equal to One-Month LIBOR being used to
calculate the Certificate Rates on the Optional Termination Date (the
"PREPAYMENT PREMIUM"); PROVIDED FURTHER that the Prepayment Premium shall be
paid in accordance with the following sentence. On the Distribution Date on
which the Series 1996-1 Invested Amount has been repaid in full, the Company
shall pay, solely from funds available to the Company which are not otherwise
needed to be applied to the payment of any amounts by the Company pursuant to
any Pooling and Servicing Agreement, FIRST, to the Class A Certificateholders,
and SECOND, to the Class B Certificateholders, the applicable Prepayment
Premium.
(ii) From and after the Optional Termination Date, the Series 1996-1
Amortization Period shall commence for all purposes under this Agreement and the
other Transaction Documents. The Trustee shall give prompt written notice of
its receipt of an Optional Termination Notice to the Term Certificateholders and
each Rating Agency.
SECTION 2.7. SALE OF ADDITIONAL TERM CERTIFICATES. (a) The Company
may, upon written notice to the Trustee, the Servicer and the Term
Certificateholders and upon satisfaction of each of the conditions set forth in
subsection (b) of this Section 2.7, direct the Trustee in writing to issue on
the following Distribution Date (each such date a "SUBSEQUENT ISSUANCE DATE")
additional Class A Certificates and Class B Certificates, identical to the
existing Class A Certificates and Class B Certificates (except that the
Certificate Rate applicable to such additional Class A Certificates or Class B
Certificates, as the case may be, may differ from the Certificate Rate
applicable to such existing Class A Certificates or Class B Certificates, as the
case may be) (such issuance to be made PRO rata based on the Initial Invested
Amount of each such Class), in an aggregate principal amount and in such names
and denominations as specified by the Company in accordance with subsection
2.7(c) below; PROVIDED that the Series 1996-1 Target Receivables Amount shall
not exceed the Series 1996-1 Allocated Receivables Amount after giving effect to
any increase in the Invested Amount on such Subsequent Issuance Date.
23
The Company may arrange for the sale of such additional Class A
Certificates and Class B 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 and Class B Certificates on substantially the
same terms and conditions that such additional Certificates are to be offered to
other purchasers. If existing Class A Certificateholders or Class B
Certificateholders, as the case may be, elect not to purchase all such
additional Class A Certificates or Class B 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 or Class B
Certificates, as the case may be, to any other eligible purchasers. In the
event that the existing Class A Certificateholders or Class B
Certificateholders, as the case may be, subscribe to purchase more additional
Class A Certificates or Class B Certificates than are being offered by the
Company at such time, then each such existing Class A Certificateholder or Class
B Certificateholder shall be entitled to purchase a PRO RATA portion of such
additional Class A Certificates or Class B Certificates based on the aggregate
principal amount of Class A Certificates or Class B Certificates then held by
such holder. On each Subsequent Issuance Date, if any, the Series 1996-1
Invested Amount (and each other amount set forth herein, the calculation of
which is based on such amount) shall be recalculated by the Servicer to include
the additional Initial Invested Amounts with respect to the Class A Certificates
and Class B Certificates issued on such date.
(b) On any Subsequent Issuance Date, the Trustee shall only
authenticate and deliver any additional Class A Certificates and Class B
Certificates upon satisfaction of the following conditions 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 and Class B
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 and
Class B Certificates that is equivalent to that 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 with
respect to such issuance;
(ii) the Trustee shall have received from the Company an Officer's
Certificate certifying that no Early Amortization Event or Potential Early
Amortization Event has occurred and is continuing with respect to Series
1996-1 or would occur as a result of such issuance;
(iii) a Tax Opinion addressed to the Trust and the Trustee shall have
been delivered to the Trustee; 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 and Class B
Certificates shall have been satisfied (which opinion may, to the extent it
concerns questions of fact, rely on an Officer's Certificate with respect
to such questions of fact).
24
(c) On each Subsequent Issuance Date, the Company shall sign, on
behalf of the Trust, and shall direct the Trustee in a written communication
signed by a Responsible Officer to duly authenticate, and the Trustee, upon
receiving such direction, shall so authenticate and deliver (i) the related
additional Class A Certificates in such names and such denominations and deliver
such additional Class A Certificates in accordance with such written directions
and (ii) the related additional Class B Certificates in such names and such
denominations and deliver such additional Class B Certificates in accordance
with such written directions.
ARTICLE III
ARTICLE III OF THE AGREEMENT
Section 3.1 of the Agreement and each other section of Article III of
the Agreement relating to another Series shall read in their entirety as
provided in the Agreement. Article III of the Agreement (except for Section 3.1
thereof and any portion thereof relating to another Series) shall read in its
entirety as follows and shall be exclusively applicable to the Series 1996-1
Certificates:
SECTION 3A.2. ESTABLISHMENT OF TRUST ACCOUNTS. (a) The Trustee shall
cause to be established and maintained in the name of the Trustee, on behalf of
the Trust, (i) for the benefit of the Class A Certificateholders, (ii) for the
benefit, subject to the prior and senior interest of the Class A
Certificateholders, of the Class B Certificateholders and (iii) in the case of
clauses (A), (B) and (C) below, for the benefit, subject to the prior and senior
interest of the Term Certificateholders, of the owner of the Series 1996-1
Subordinated Interest, (A) a subaccount of the Collection Account (the "SERIES
1996-1 COLLECTION SUBACCOUNT"), which subaccount is the Series Collection
Subaccount with respect to Series 1996-1; (B) two subaccounts of the Series
1996-1 Collection Subaccount: (1) the Series 1996-1 Principal Collection Sub-
subaccount and (2) the Series 1996-1 Non-Principal Collection Sub-subaccount
(respectively, the "SERIES 1996-1 PRINCIPAL COLLECTION SUB-SUBACCOUNT" and the
"SERIES 1996-1 NON-PRINCIPAL COLLECTION SUB-SUBACCOUNT"), (C) a subaccount of
the Series 1996-1 Principal Collection Sub-subaccount (the "SERIES 1996-1
COLLECTION SUBORDINATED SUB-SUBACCOUNT"), and (D) a subaccount of the Series
1996-1 Non-Principal Collection Sub-subaccount (the "SERIES 1996-1 ACCRUED
INTEREST SUB-SUBACCOUNT"; all accounts established pursuant to this
subsection 3A.2(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) and (iii) 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) and (iii) above.
(b) All Eligible Investments in the Trust Accounts shall be held by
the Trustee, on behalf of the Holders, for the exclusive benefit of the Persons
(and, for each such Person, to the extent) set forth in clauses (A), (B), (C)
and (D) of subsection 3A.2(a) and, subject to the prior
25
interest of such Persons, the owner of the Series 1996-1 Subordinated
Interest; PROVIDED, HOWEVER, that funds on deposit in a Trust Account which
is a Sub-subaccount of a Collection Account may, at the direction of the
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.3(b), amounts on deposit and available for
investment in the Series 1996-1 Principal Collection Sub-subaccount and the
Series 1996-1 Collection Subordinated Sub-subaccount shall be invested by the
Trustee at the written direction of the Company in Eligible Investments that
mature, or that are payable or redeemable upon demand of the holder thereof,
(i) in the case of any such investment made during the Series 1996-1
Revolving Period, on or prior to the next Business Day and (ii) in the case
of any such investment made during the Series 1996-1 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 1996-1
Non-Principal Collection Sub-subaccount and the Series 1996-1 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 next Distribution Date. As of the
Business Day immediately preceding such next Distribution Date, (x) all
interest and other investment earnings (net of losses and investment
expenses) on funds deposited in the Series 1996-1 Accrued Interest
Sub-subaccount shall be deposited in the Series 1996-1 Non-Principal
Collection Sub-subaccount and (y) all interest and investment earnings (net
of losses and investment expenses) on funds deposited in the Series 1996-1
Principal Collection Sub-subaccount and the Series 1996-1 Collection
Subordinated Sub-subaccount shall be deposited in the Series 1996-1
Non-Principal Collection Sub-subaccount.
SECTION 3A.3. DAILY ALLOCATIONS. In accordance with the written
direction of the Servicer, upon which the Trustee may conclusively rely:
(a) The portion of the Aggregate Daily Collections allocated to the
Series 1996-1 Certificates pursuant to Article III of the Agreement shall be
allocated and distributed as set forth in this Article III by the Trustee as
follows:
(i) on each Business Day, an amount equal to the Accrued
Expense Amount for such day (or, during the Series 1996-1 Revolving
Period, such greater amount as the Company may request in writing) shall
be transferred from the Series 1996-1 Collection Subaccount to the Series
1996-1 Non-Principal Collection Sub-subaccount; PROVIDED, HOWEVER, that
during the Series 1996-1 Amortization Period, to the extent of funds on
deposit (after giving effect to deposits on such Business Day) in the
Series 1996-1 Collection Subordinated Sub-subaccount, such transfer shall
be made from funds on deposit in the Series 1996-1 Collection Subordinated
Sub-subaccount prior to any transfer from the Series 1996-1 Collection
Subaccount, in each case to the Series 1996-1 Non-Principal Collection
Sub-subaccount;
(ii) following the transfers pursuant to clause (i) above,
during the Series 1996-1 Revolving Period, any remaining funds on deposit
in the Series 1996-1 Collection
26
Subaccount shall be transferred by the Trustee to the Series 1996-1
Principal Collection Sub-subaccount;
(iii) if the Series 1996-1 Amortization Period commences prior
to March 31, 1997, then, during the Series 1996-1 Amortization Period,
following the transfers made pursuant to clause (i) above, any remaining
funds on deposit in the Series 1996-1 Collection Subaccount shall be
allocated and transferred by the Trustee as follows:
(A) an amount equal to the sum of (I) the product of (x)
the Series 1996-1 Collections, TIMES (y) the Ineligible Receivables
Percentage, PLUS (II) the product of (x) the Series 1996-1
Collections, TIMES (y) the Eligible Receivables Percentage, TIMES
(z) the Series 1996-1 Subordinated Percentage, shall be transferred
to the Series 1996-1 Collection Subordinated Sub-subaccount; and
(B) following the transfer made pursuant to clause (A)
above, any remaining funds on deposit in the Series 1996-1 Collection
Subaccount shall be transferred to the Series 1996-1 Principal
Collection Sub-subaccount; and
(iv) if the Series 1996-1 Amortization Period commences on or
after March 31, 1997, then, during the Series 1996-1 Amortization Period,
following the transfers pursuant to clause (i) above, any remaining funds
on deposit in the Series 1996-1 Collection Subaccount shall be transferred
by the Trustee to the Series 1996-1 Principal Collection Sub-subaccount.
(b)(i) On each Business Day during the Series 1996-1 Revolving Period
(including Distribution Dates), after giving effect to all allocations of
Aggregate Daily Collections on such Business Day, amounts on deposit in the
Series 1996-1 Principal Collection Sub-subaccount shall be distributed by the
Trustee to the Company (but only to the extent that the Trustee has received a
Daily Report which reflects the receipt of the Collections on deposit therein)
in accordance with directions contained in such Daily Report; PROVIDED that such
distribution shall be made only if no Potential Early Amortization Event or
Early Amortization Event, in each case pursuant to Section 7.1 of the Agreement
or subsections (a), (d) (but only with respect to a Servicer Default set forth
in subsection 6.1(e) of the Servicing Agreement), (g) or (i) of Section 5.1 of
this Supplement, has occurred and is continuing and only to the extent that,
after giving effect to such distribution, the Series 1996-1 Target Receivables
Amount would not exceed the Series 1996-1 Allocated Receivables Amount; PROVIDED
FURTHER that if the Company or the Servicer, on behalf of the Company, shall
have given a notice of a Reduction and the related Reduction Amount to the
Trustee and the Servicer pursuant to subsection 2.6(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 1996-1 Principal
Collection Sub-subaccount equal to the sum of the Reduction Amount in respect
thereof; PROVIDED STILL FURTHER that in the event that an amount less than the
Accrued Expense Amount for such day was transferred from the Series 1996-1
Collection Subaccount to the Series 1996-1 Non-Principal Collection Sub-
subaccount on such day pursuant to subsection 3A.3(a)(i), the amount on deposit
in the Series 1996-1 Principal Collection Sub-subaccount, up to the amount of
such deficiency, shall be transferred to the Series
27
1996-1 Non-Principal Collection Sub-subaccount. Amounts distributed to the
Company hereunder shall be deemed to be paid first from Collections received
directly by the Servicer and second from Collections received in the
Lockboxes.
(ii) On each Business Day during the Series 1996-1 Amortization
Period (including Distribution Dates), funds deposited in the Series 1996-1
Principal Collection Sub-subaccount and the Series 1996-1 Collection
Subordinated Sub-subaccount shall be invested in Eligible Investments that
mature on or prior to the Business Day immediately preceding the next
Distribution Date and shall be distributed on such Distribution Date in
accordance with subsection 3A.6(c). No amounts on deposit in the Series 1996-1
Principal Collection Sub-subaccount or the Series 1996-1 Collection Subordinated
Sub-subaccount shall be distributed by the Trustee to the Company or the owner
of the Series 1996-1 Subordinated Interest during the Series 1996-1 Amortization
Period.
(c) On each Business Day, an amount equal to the Series 1996-1 Daily
Interest Expense for such day shall be transferred by the Trustee from the
Series 1996-1 Non-Principal Collection Sub-subaccount to the Series 1996-1
Accrued Interest Sub-subaccount.
(d) On each Business Day during the Series 1996-1 Amortization Period
(including Distribution Dates), so long as there are any amounts on deposit in
the Series 1996-1 Collection Subordinated Sub-subaccount, after giving effect to
the transfers pursuant to subsection 3A.3(a), the Trustee shall also transfer
from the Series 1996-1 Collection Subordinated Sub-subaccount to the Series
1996-1 Principal Collection Sub-subaccount an amount equal to the lesser of (i)
the sum of (A) the product of (1) the Series 1996-1 Non-Subordinated Percentage,
TIMES (2) the Invested Percentage, TIMES (3) the Eligible Receivables
Percentage, TIMES (4) the excess of (x) the sum of Dilution Adjustments arising
or identified, and the outstanding Principal Amount of Ineligible Receivables
for which the Repurchase Obligation Date has occurred, in each case since the
preceding Business Day, OVER (y) the amount specified in the Daily Report as
having been deposited by the Company in respect of such Dilution Adjustments and
Ineligible Receivables (either from the deposit in the Collection Account of
cash payments made in respect thereof by the Sellers or from other cash
Collections in respect thereof) in the Series 1996-1 Principal Collection Sub-
subaccount since the preceding Business Day, (B) the product of (1) the Series
1996-1 Non-Subordinated Percentage, TIMES (2) the Invested Percentage, TIMES (3)
the Eligible Receivables Percentage, TIMES (4) the Principal Amount of
Receivables which became Defaulted Receivables since the preceding Business Day,
and (C) (x) the Series 1996-1 Unreimbursed Amount (as defined in the following
sentence) for the prior Business Day MINUS (y) the amount specified in the Daily
Report as having been deposited by the Company on such Business Day in respect
of such Series 1996-1 Unreimbursed Amount (either from the deposit in the
Collection Account of cash payments made in respect thereof by the Sellers or
from other cash Collections in respect thereof) in the Series 1996-1 Principal
Collection Sub-subaccount and (ii) the amount on deposit in the Series 1996-1
Collection Subordinated Sub-subaccount on such Business Day. If on any Business
Day the amount calculated pursuant to clause (i) exceeds the amount calculated
pursuant to clause (ii), such excess shall be referred to as the "SERIES 0000-0
XXXXXXXXXXXX XXXXXX" for such Business Day.
28
(e) In addition to the foregoing, on the Distribution Date during the
Series 1996-1 Amortization Period following the Settlement Report Date on which
(i) the Series 1996-1 Invested Amount has been reduced to an amount which is
equal to or less than the Clean-Up Call Amount and (ii) the sum of (x) the
amount on deposit in the Series 1996-1 Collection Subordinated Sub-subaccount,
if any, PLUS (y) the amount on deposit in the Series 1996-1 Principal Collection
Sub-subaccount, equals or exceeds the Clean-Up Call Repurchase Price, the
Trustee shall transfer from the Series 1996-1 Collection Subordinated Sub-
subaccount to the Series 1996-1 Principal Collection Sub-subaccount (which
amount shall be used to pay the Clean-Up Call Repurchase Price in full) the
lesser of (i) the Clean-Up Call Repurchase Price MINUS the amount on deposit in
the Series 1996-1 Principal Collection Sub-subaccount on such day and (ii) the
amount on deposit in the Series 1996-1 Collection Subordinated Sub-subaccount.
In addition, on the Distribution Date during the Series 1996-1 Amortization
Period on which the Company has exercised its clean-up option pursuant to
Section 9.2 of the Pooling Agreement to repurchase the Series 1996-1
Certificates, the Trustee shall, upon the written request of the Company,
transfer from the Series 1996-1 Collection Subordinated Sub-subaccount to the
Series 1996-1 Principal Collection Sub-subaccount (which amount shall be applied
towards payment of the Clean-Up Call Repurchase Price) the lesser of (i) the
Series 1996-1 Invested Amount MINUS the amount on deposit in the Series 1996-1
Principal Collection Sub-subaccount on such day and (ii) the amount on deposit
in the Series 1996-1 Collection Subordinated Sub-subaccount, if any. Further,
(i) if the Amortization Period has commenced with respect to all Outstanding
Series, then, on the date that is six months after the latest date on which the
last Amortization Period for an Outstanding Series commenced or (ii) if the
Receivables have been disposed of pursuant to subsection 7.2(b) of the
Agreement, on the Distribution Date following the date of such disposition, the
Trustee shall transfer from the Series 1996-1 Collection Subordinated Sub-
subaccount to the Series 1996-1 Principal Collection Sub-subaccount (which
amount shall be applied towards payment of the Series 1996-1 Invested Amount)
the remaining amount on deposit in the Series 1996-1 Collection Subordinated
Sub-subaccount, if any. The provisions of the foregoing paragraph (e) and this
paragraph (f) shall in no event be construed to affect any other financial
obligations of any Seller, any Servicing Party or the Company under any of the
Transaction Documents.
(f) The allocations to be made pursuant to this Section 3A.3 are
subject to the provisions of Sections 2.5, 2.6, 7.2 and 9.1 of the Agreement.
SECTION 3A.4. DETERMINATION OF INTEREST. (a) The amount of interest
distributable with respect to the Term Certificates on each Distribution Date
for the Accrual Period ending on such Distribution Date 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
29
(based on 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);
and
(iii) The 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) and (ii) above.
(b) (i) On each Distribution Date, the 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 which will be 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 sum of (x) the Class A Certificate Rate for the
next Accrual Period and (y) 1%, (B) such Class A Interest Shortfall (or the
portion thereof which has not been paid to the Class A Certificateholders)
and (C) the actual number of days in the next Accrual Period (or portion
thereof) 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 but excluding 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 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 which 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 sum of (x) the Class B
Certificate Rate for the next Accrual Period and (y) 1%, (B) such Class B
Interest Shortfall (or the portion thereof which has not been paid to the Class
B Certificateholders) and (C) the actual number of days in such Accrual Period
(or portion thereof) DIVIDED BY 360, shall be payable as provided herein with
respect to the Class B Certificates on each Distribution Date following such
Distribution Date, to but excluding the Distribution Date on which such Class B
Interest Shortfall is paid in full to the Class B Certificateholders.
30
SECTION 3A.5. DETERMINATION OF SERIES 1996-1 MONTHLY PRINCIPAL. (a)
PAYMENTS OF SERIES 1996-1 PRINCIPAL. The amount (the "SERIES 1996-1 MONTHLY
PRINCIPAL PAYMENT") distributable from the Series 1996-1 Principal Collection
Sub-subaccount on each Distribution Date during the Series 1996-1 Amortization
Period shall be equal to the amount on deposit in such account on the
immediately preceding Settlement Report Date; PROVIDED, HOWEVER, that the Series
1996-1 Monthly Principal Payment on any Distribution Date shall not exceed the
Series 1996-1 Invested Amount on such Distribution Date after giving effect to
the reductions and increases pursuant to paragraphs (b) and (c) below.
(b) REDUCTIONS TO SERIES 1996-1 PRINCIPAL. If, on any Special
Allocation Settlement Report Date, the Series 1996-1 Allocable Charged-Off
Amount is greater than zero for the related Settlement Period, the Trustee shall
(in accordance with written directions from the Servicer, upon which the Trustee
may conclusively rely) make the following applications of such amounts in the
following order of priority:
(i) the Series 1996-1 Required Reserves shall be reduced (but
not below zero) by an amount equal to the Series 1996-1 Allocable Charged-
Off Amount (which shall also be reduced by the amount so applied);
(ii) then, to the extent that the Series 1996-1 Allocable
Charged-Off Amount is greater than zero following the application in
clause (i) above, the Class B Invested Amount shall be reduced (but not
below zero) by an amount equal to such remaining Series 1996-1 Allocable
Charged-Off Amount (which shall also be reduced by the amount so
applied); and
(iii) then, to the extent that the Series 1996-1 Allocable
Charged-Off Amount is greater than zero following the applications in
clauses (i) and (ii) above, the Class A Invested Amount shall be reduced
(but not below zero) by an amount equal to such remaining Series 1996-1
Allocable Charged-Off Amount (which shall also be reduced by the amount
so applied).
(c) INCREASES TO SERIES 1996-1 PRINCIPAL. If, on any Special
Allocation Settlement Report Date, the Series 1996-1 Allocable Recoveries Amount
is greater than zero for the related Settlement Period, the Trustee shall (in
accordance with written directions from the Servicer upon which the Trustee may
conclusively rely) make the following 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.5(b)(iii)) by the amount of the Series 1996-1
Allocable Recoveries Amount (which shall also be reduced by the amount so
applied);
(ii) then, to the extent that the Series 1996-1 Allocable
Recoveries Amount is greater than zero following the applications in
clause (i) above, the Class B Invested Amount shall be increased (but
only to the extent of any previous reductions of the Class
31
B Invested Amount pursuant to subsection 3A.5(b)(ii)) by such remaining
Series 1996-1 Allocable Recoveries Amount (which shall also be reduced by
the amount so applied); and
(iii) then, to the extent that the Series 1996-1 Allocable
Recoveries Amount is greater than zero following the applications in
clauses (i) and (ii) above, the Series 1996-1 Required Reserves shall be
increased (but only to the extent of any previous reductions of the
Series 1996-1 Required Reserves pursuant to subsection 3A.5(b)(i)) by
such remaining Series 1996-1 Allocable Recoveries Amount (which shall
also be reduced by the amount so applied).
SECTION 3A.6. APPLICATIONS. (a) On each Distribution Date, the
Trustee shall distribute from amounts on deposit in the Series 1996-1 Accrued
Interest Sub-subaccount in the following order of priority to the extent funds
are available:
(i) to the Class A Certificateholders, 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; PROVIDED, HOWEVER, that
during the Series 1996-1 Amortization Period, no Class A Additional
Interest will be paid until repayment in full of the Series 1996-1 Invested
Amount and payment in full of all Class A Monthly Interest and Class B
Monthly Interest; and
(ii) to the Class B Certificateholders, 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 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; PROVIDED, HOWEVER, that
during the Series 1996-1 Amortization Period, no Class B Additional
Interest will be paid until repayment in full of the Series 1996-1 Invested
Amount and payment in full of all Class A Monthly Interest and Class B
Monthly Interest.
(b) On each Distribution Date, the Trustee shall apply funds on
deposit in the Series 1996-1 Non-Principal Collection Sub-subaccount in the
following order of priority to the extent funds are available:
(i) an amount equal to the Series 1996-1 Monthly Servicing Fee
for the Accrual Period ending on such Distribution Date shall be
withdrawn from the Series 1996-1 Non-Principal Collection Sub-subaccount
by the Trustee and paid to the Servicer or the Successor Servicer, as the
case may be (less any amounts payable to the Trustee pursuant to Section
8.5 of the Agreement, which shall be paid to the Trustee); and
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(ii) an amount equal to any unpaid Program Costs due and
payable shall be withdrawn from the Series 1996-1 Non-Principal
Collection Sub-subaccount by the Trustee and paid to the Persons owed
such amounts.
Any remaining amounts on deposit in the Series 1996-1 Non-Principal Collection
Sub-subaccount on any Distribution Date (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 owner of the Series 1996-1 Subordinated Interest; PROVIDED, HOWEVER,
that during the Series 1996-1 Amortization Period, such remaining amounts shall
be deposited in the Series 1996-1 Principal Collection Sub-subaccount for
distribution in accordance with subsection 3A.6(c).
(c) During the Series 1996-1 Amortization Period, the Trustee shall
apply, on each Distribution Date, amounts on deposit in the Series 1996-1
Principal Collection Sub-subaccount and, to the extent set forth in clauses (ii)
and (iii) below, in the Series 1996-1 Collection Subordinated Sub-subaccount in
the following order of priority:
(i) an amount equal to the Series 1996-1 Monthly Principal
Payment for such Distribution Date shall be distributed from the Series
1996-1 Principal Collection Sub-subaccount:
(A) first, PRO RATA to the Class A Certificateholders
until the repayment in full of the Class A Invested Amount; and
(B) second, PRO RATA to the Class B Certificateholders
until the repayment in full of the Class B Invested Amount; and
(ii) following the repayment in full of the Series 1996-1
Invested Amount, (x) if any amounts are owed to the Trustee or any other
Person, on account of its expenses, advances and disbursements incurred
in respect of the performance of its responsibilities hereunder or as
Successor Servicer, such amounts shall be transferred from the Series
1996-1 Principal Collection Sub-subaccount and, if applicable, the Series
1996-1 Collection Subordinated Sub-subaccount and paid to the Trustee or
such other Person and (y) if the Optional Termination Date has occurred
and any portion of the Prepayment Premium payable to the Term
Certificateholders pursuant to subsection 2.6(b) has not been paid, then
funds in an amount equal to the unpaid portion of such Prepayment Premium
shall be transferred from the Series 1996-1 Principal Collection Sub-
subaccount and, if applicable, the Series 1996-1 Collection Subordinated
Sub-subaccount and paid, FIRST, to the Class A Certificateholders and,
SECOND, to the Class B Certificateholders; and
(iii) following the repayment in full of the Series 1996-1
Invested Amount and of all of the amounts set forth in clause (ii), the
remaining amount on deposit in the Series 1996-1 Principal Collection Sub-
subaccount and the Series 1996-1 Collection Subordinated Sub-subaccount
on such Distribution Date, if any, shall be treated as follows: (x) upon
delivery by the Servicer to the Trustee of an Officer's Certificate
certifying that as of such date, no Seller has any obligations
outstanding to any Person that
33
may be entitled to make a claim for payment thereof pursuant to PACA,
such amount on deposit shall be distributed to the owner of the Series
1996-1 Subordinated Interest or (y) if any such obligations remain
outstanding on such date, the Servicer shall deliver to the Trustee an
Officer's Certificate setting forth the amount thereof (the "OUTSTANDING
PACA AMOUNT"), and upon receipt thereof the Trustee (A) shall
distribute any funds on deposit in the Series 1996-1 Principal Collection
Sub-subaccount and the Series 1996-1 Collection Subordinated Sub-
subaccount, as the case may be, in excess of the Outstanding PACA Amount
to the owner of the Series 1996-1 Subordinated Interest and (B) shall
maintain on deposit in the Series 1996-1 Principal Collection Sub-
subaccount and the Series 1996-1 Collection Subordinated Sub-subaccount,
as the case may be, funds in an aggregate amount equal to the Outstanding
PACA Amount until the Servicer has delivered an Officer's Certificate
certifying that such Outstanding PACA Amount has been paid in full, in
which case the Trustee shall distribute any remaining amount of such funds
pursuant to clause (x) above. In addition, the Trust shall not be
terminated pursuant to subsection 9.1(a)(ii) of the Pooling Agreement
except upon receipt by the Trustee of an Officer's Certificate delivered
by the Servicer certifying that as of the proposed Trust Termination Date,
no Seller has any obligations outstanding to any Person that may be
entitled to make a claim for payment thereof pursuant to PACA.
(d) On each Special Distribution Date occurring in respect of a
Reduction hereunder, the Trustee shall distribute to the Term Certificateholders
on such Special Distribution Date (PRO RATA based on the Initial Invested Amount
of each Class and PRO RATA within each Class), from amounts on deposit in the
Series 1996-1 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 exclusively applicable to the Term Certificates:
SECTION 4A.1. 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 Servicer to the Trustee containing
all information required for the Trustee's notice, upon which the Trustee may
conclusively rely) 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
34
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 Report and the Monthly Settlement Statement and
subject to subsection 3.1(h) of the Agreement.
SECTION 4A.2. STATEMENTS AND NOTICES. (a) MONTHLY SETTLEMENT
STATEMENTS. On each Settlement Report Date, the Servicer shall deliver to
the Trustee and each Rating Agency (commencing with the Settlement Report
Date occurring on December 16, 1996) a Monthly Settlement Statement in the
Form of Exhibit D 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 and the Class B Certificates, the
Carrying Cost Reserve Ratio and the Servicing Reserve Ratio and the
components of the calculation thereof, each as recalculated for the period
until the next succeeding Settlement Report Date. The Trustee shall forward a
copy of each Monthly Settlement Statement to any Term Certificateholder upon
request by such Term Certificateholder. The Company and the Servicer will
deliver copies of all notices, reports, statements and other documents
delivered by it pursuant to the Pooling and Servicing Agreements to each
Rating Agency. A copy of any such items may be obtained by any
Certificateholder upon a written request delivered to the Trustee at the
Corporate Trust Office.
(b) ANNUAL HOLDERS' TAX STATEMENT. On or before April 1 of each
calendar year (or such earlier date as required by applicable law), beginning
with calendar year 1997, the Company on behalf of the Trustee shall furnish, or
cause to be furnished, to each Person who at any time during the preceding
calendar year was a 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 Internal Revenue Code and such
other customary information as the Company deems necessary or desirable 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 prepared by the
Servicer and provided to the Trustee and to the Term Certificateholders, in each
case pursuant to any requirements of the Internal Revenue Code as from time to
time in effect.
(c) EARLY AMORTIZATION EVENT/DISTRIBUTION OF PRINCIPAL NOTICES. Upon
the occurrence of an Early Amortization Event with respect to Series 1996-1, the
Company or the Servicer, as the case may be, shall give prompt written notice
thereof to the Trustee. As promptly as reasonably practicable after its receipt
of notice of the occurrence of an Early Amortization Event with respect to
Series 1996-1, the Trustee shall give notice thereof (i) to each Rating Agency
(which notice shall be given in writing not later than the second Business Day
after such receipt) and (ii) each Term Certificateholder.
35
SECTION 4A.3. NOTICE PROCEDURES. Notices required to be given to the
Term Certificateholders hereunder will be delivered by first class mail to the
addresses of such holders as they appear in the Certificate Register. Each of
the Company and the Servicer will 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 5.1. ADDITIONAL EARLY AMORTIZATION EVENTS. If any one of the
events specified in Section 7.1 of the Agreement (after any grace periods or
consents applicable thereto) or any one of the following events (each, an "EARLY
AMORTIZATION EVENT") shall occur during the Series 1996-1 Revolving Period with
respect to the Series 1996-1 Certificates:
(a) (i) failure on the part of the Servicer to direct any payment or
deposit to be made or failure of any payment or deposit to be made in
respect of interest owing on any Term Certificates within two Business Days
of the date such interest is due or (ii) failure on the part of the
Servicer to direct any payment or deposit to be made or of the Company to
make any payment or deposit in respect of any other amounts owing by the
Company under any Pooling and Servicing Agreement within five Business Days
of the date such other amount is due or such deposit is required to be
made;
(b) (i) failure on the part of the Company duly to observe or perform
in any material respect any of the covenants or agreements of the Company
set forth in Section 2.8 of the Agreement or (ii) failure on the part of
the Company duly to observe or perform in any material respect any other
covenants or agreements of the Company set forth in any Pooling and
Servicing Agreement, which failure continues unremedied 30 days after the
earlier of the date on which a Responsible Officer of the Company or the
Servicer has knowledge thereof and the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Company by the Trustee, or to the Company and the Trustee by Term
Certificateholders representing 25% or more of the Series 1996-1 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 (i) proves to have been incorrect in any material
respect when made or when deemed made and (ii) continues to be incorrect 30
days after the earlier of the date on which a Responsible Officer of the
Company or the Servicer has knowledge thereof and the date on which notice
of such failure, requiring the same to be remedied, has been given by the
Trustee to the Company or by Term Certificateholders representing 25% or
more of the Series 1996-1 Invested Amount to the Company and the Trustee;
PROVIDED, HOWEVER, that an Early Amortization Event with respect to the
Series 1996-1 Certificates shall not be deemed to have occurred under this
paragraph if the incorrectness of such representation
36
or warranty gives rise to an obligation to repurchase the related
Receivables and the Company has repurchased the related Receivable or all
such Receivables, if applicable, in accordance with the provisions of any
Pooling and Servicing Agreement within ten Business Days of the day on
which the Company was obligated to do so;
(d) a Servicer Default with respect to the Servicer shall have
occurred and be continuing;
(e) a Purchase Termination Event (as defined in the Receivables Sale
Agreement) shall have occurred and be continuing under the Receivables Sale
Agreement;
(f) a Change in Control shall have occurred;
(g) the Series 1996-1 Allocated Receivables Amount shall be less than
the Series 1996-1 Target Receivables Amount for a period of five
consecutive Business Days;
(h) any of the Agreement, the Servicing Agreement, this Supplement,
the Receivables Sale Agreement or the Servicer Guarantee shall cease, for
any reason, to be in full force and effect, or the Company, any Seller, the
Servicer, any Sub-Servicer or any Affiliate of any thereof shall so assert
in writing;
(i) the Trust shall for any reason cease to have a valid and
perfected first priority undivided ownership or security interest in the
Trust Assets (subject to no other Liens other than Permitted Liens
described in clauses (i) and (v) of the definition thereof), or any of RS,
US Foodservice, the Company or any Affiliate of any thereof shall so
assert;
(j) there shall have been filed against RS, US Foodservice, the
Company or the Trust (i) a notice of federal tax Lien from the Internal
Revenue Service, (ii) a notice of Lien from the PBGC under Section 412(n)
of the Internal Revenue Code or Section 302(f) of ERISA for a failure to
make a required installment or other payment to a plan to which either of
such sections applies or (iii) a notice of any other Lien the existence of
which could reasonably be expected to have a material adverse effect on the
business, operations or financial condition of such Person, and, in each
case, 40 days shall have elapsed without such notice having been
effectively withdrawn or such Lien having been released or discharged;
(k) a Reduction shall have occurred and, as a result thereof, the
Series 1996-1 Invested Amount shall have been reduced to an amount below
$100,000,000; or
(l) any action, suit, investigation or proceeding at law or in equity
(including, without limitation, injunctions, writs or restraining orders)
shall be brought or commenced or filed by or before any arbitrator, court
or Governmental Authority against the Company or the Servicer or any
properties, revenues or rights of either thereof which could reasonably be
expected to have a Material Adverse Effect with respect to such Person;
37
then, in the case of (x) any event described in Section 7.1 of the Agreement,
after the applicable grace period (if any) set forth in such Section,
automatically without any notice or action on the part of the Trustee or the
Term Certificateholders, an early amortization period shall immediately commence
or (y) any other event described above, after the applicable grace period (if
any) set forth in such subsections, 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 Servicer, declare
that an early amortization period has commenced as of the date of such notice
with respect to Series 1996-1 (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 (g) above, if an Early Amortization Period has not been
declared within ten Business Days after the occurrence of such event, then an
Early Amortization Period shall occur automatically unless, (i) prior to the end
of such ten Business Day period, the Series 1996-1 Allocated Receivables Amount
shall no longer be less than the Series 1996-1 Target Receivables Amount and
(ii) so long as the Series 1996-1 Allocated Receivables Amount continues to be
equal to or greater than the Series 1996-1 Target Receivables Amount, Term
Certificateholders representing 66-2/3% or more of the Series 1996-1 Invested
Amount voting as a single class shall have waived the occurrence of such event.
Notwithstanding the foregoing, a delay or failure in performance
referred to in clause (a) or (b)(i) above for a period of up to five Business
Days after the applicable grace period, or in clause (b)(ii) above for a period
of up to 30 Business 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 nevertheless will
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 failure or delay by the Company.
ARTICLE VI
SERVICING FEE
SECTION 6.1. SERVICING COMPENSATION. A monthly servicing fee (the
"SERIES 1996-1 MONTHLY SERVICING FEE") shall be payable to the Servicer on each
Distribution Date for the immediately preceding Settlement Period in an amount
equal to the product of (a) the Servicing Fee and (b) a fraction the numerator
of which is the Series 1996-1 Invested Amount as of the end of such Settlement
Period and the denominator of which is the Aggregate Invested Amount as of the
end of such Settlement Period; PROVIDED, HOWEVER, that if an Early Amortization
Event has occurred and is continuing and US Foodservice or any Affiliate thereof
is acting as Servicer, payment of the Series 1996-1 Monthly Servicing Fee shall
be deferred until the Series 1996-1 Invested Amount has been paid in full.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES, COVENANTS
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SERVICER. The Company and the 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 the Agreement is true and
correct in all material respects as of the Issuance Date.
SECTION 7.2. COVENANTS OF THE COMPANY AND THE SERVICER. The Company
and the Servicer hereby agree, in addition to their obligations under the
Agreement and the Servicing Agreement, that:
(a) they shall not terminate the Agreement unless in strict
compliance with the terms of the Agreement and each Supplement relating to
an Outstanding Series;
(b) no later than 30 days after the date hereof, they will (i)
deliver to the Trustee executed copies of software licenses or sublicenses,
in a form reasonably acceptable to the Trustee, which grant to the Trustee
the right to utilize any of the software owned or licensed by the Servicer
that is necessary to perform the collection and administrative functions to
be performed by the Trustee under the Transaction Documents, (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 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, except to
the extent the Company or the Servicer, as the case may be, owns such
property and (iii) have taken all actions reasonably requested by the
Trustee in connection with, and to ensure completion of, each of the
Servicer Site Review and the Standby Liquidation System;
(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
Certificates and any prospective purchaser of Term Certificates or an
interest therein (which prospective purchaser is designated by any holder
of Term Certificates), 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; and
(d) they shall observe in all material respects each and every of
their respective covenants (both affirmative and negative) contained in the
Agreement, the Servicing Agreement, this Supplement and all other
Transaction Documents to which each is a party.
39
SECTION 7.3. COVENANTS OF THE SERVICER. The Servicer hereby agrees
that:
(a) it shall observe each and all of its respective covenants (both
affirmative and negative) contained in the Pooling and Servicing Agreements in
all material respects; and
(b) it shall operate in good faith to allow the Trustee to use the
Servicer's available facilities and expertise upon the Servicer's termination or
default.
SECTION 7.4. 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 B 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 B
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 8.1. RATIFICATION OF AGREEMENT. As supplemented by this
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Supplement shall be read, taken and
construed as one and the same instrument.
SECTION 8.2. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 8.3. FURTHER ASSURANCES. Each of the Company, the Servicer
and the Trustee agrees, from time to time, to do and perform any and all acts
and to execute any and all further instruments required or reasonably requested
by the 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 Servicer, the execution of any financing or registration
statements or similar documents or notices or continuation statements relating
to the Receivables and the other Trust Assets for filing or registration under
the provisions of the UCC or similar legislation of any applicable jurisdiction.
SECTION 8.4. 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,
40
powers and privileges herein provided are cumulative and not exhaustive of
any rights, remedies, powers and privileges provided by law.
SECTION 8.5. AMENDMENTS. (a) This Supplement may be amended,
supplemented or otherwise modified in writing from time to time only if such
amendment, supplement or modification is effected in accordance with the
provisions of Section 10.1 of the Agreement.
SECTION 8.6. SEVERABILITY. If any provision hereof is void or
unenforceable in any jurisdiction, such voidness or unenforceability shall not
affect the validity or enforceability of (i) such provision in any other
jurisdiction or (ii) any other provision hereof in such or any other
jurisdiction.
SECTION 8.7. NOTICES. All notices, requests and demands to or upon
any party hereto to be effective shall be given (i) in the case of the Company,
the Servicer and the Trustee, in the manner set forth in Section 10.5 of the
Agreement and (ii) 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
Any notice required or permitted to be mailed to a Term Certificateholder shall
be given as provided in Section 4A.3.
SECTION 8.8. COUNTERPARTS. This Supplement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original,
and all of which taken together shall constitute one and the same agreement.
41
SECTION 8.9. LIMITATION ON ADDITION AND TERMINATION OF SELLERS. (a)
Notwithstanding anything to the contrary contained in the Receivables Sale
Agreement, the Company shall not consent to the addition of a Seller or a Seller
Division thereunder unless (subject to the proviso contained in clause (iv)
below) each of the following conditions shall have been satisfied:
(i) (x) in the case of a proposed addition of a Seller, each of the
conditions set forth in Section 3.02 of the Receivables Sale Agreement, and
(y) in the case of a proposed addition of a Seller Division, the conditions
set forth in subsections 3.02(a)(ii), (e), (f), (g), (h), (j) and (k) (in
each case, applied to the applicable New Division as if it were a proposed
additional Seller) of the Receivables Sale Agreement, shall have been
satisfied.
(ii) The Company shall have received copies of the Policies of such
additional Seller (or such Seller Division, as the case may be, if
different from the Policies of the Seller of which it is a New Division),
which Policies shall be in form and substance satisfactory to the Company.
(iii) The Company shall have received confirmation (A) that there
is no pending or, to its knowledge after due inquiry, threatened action or
proceeding affecting such additional Seller (or such Seller Division, as
the case may be) before any Governmental Authority (I) that could
reasonably be expected to have a Material Adverse Effect with respect to
such additional Seller (or such Seller Division, as the case may be, as if
it were an additional Seller) or (II) that purports to affect the legality,
validity or enforceability of this Supplement, the Agreement or any other
Transaction Document or any of the transactions contemplated hereby or
thereby.
(iv) The Company and the Trustee shall have received evidence that the
Rating Agency Condition shall have been satisfied with respect to the
addition of such Seller (or addition of such Seller Division, as the case
may be); PROVIDED that such 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 Subsidiaries of RS (and/or New Divisions) as
Sellers (or Seller Divisions) during any calendar year, each of which
Subsidiaries (or New Divisions) meets the following criteria: (x) such
Subsidiary (or New Division) is 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 such date, immediately prior to
giving effect to such addition (the "MEASUREMENT DATE"), the ratio
(expressed as a percentage) of (I) (A) the aggregate Principal Amount of
what would constitute all Eligible Receivables of such Subsidiary (or New
Division) at the end of the Business Day immediately preceding the
Measurement Date if it were a Seller (or Seller Division) MINUS the amount
which would consitute the Overconcentration Amount applicable to such
Receivables on the Measurement Date if such Subsidiary (or New Division)
were a Seller (or Seller Division) MINUS (B) the product of the amount
calculated pursuant to the foregoing clause (A) and the PACA Percentage
which would be applicable on such date to such Subsidiary (or New Division)
if it were a Seller (or Seller Division), calculated solely
42
with respect to it, to (II) the Aggregate Receivables Amount on such
date (before giving effect to such addition), is less than five percent.
(v) The Company and the Trustee shall have received a certificate
prepared by a Responsible Officer of the Servicer certifying that after
giving effect to the addition of such Seller (or such Seller Division, as
the case may be), the Aggregate Target Receivables Amount shall equal the
Aggregate Allocated Receivables Amount on the related Seller Addition Date.
(b) Notwithstanding anything to the contrary contained in the
Receivables Sale Agreement, the Company shall not consent to any request made
pursuant to Section 9.14 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) will have
occurred and be continuing after giving effect to such termination and (ii) the
Trustee shall have received prior notice of such termination (which notice shall
be accompanied by a PRO FORMA Daily Report confirming that the Aggregate Target
Receivables Amount equals the Aggregate Allocated Receivables Amount, each
calculated after giving effect to such termination and excluding all Receivables
originated by the Seller to be terminated).
(c) Upon the termination of a Seller pursuant to Section 9.14 of the
Receivables Sale Agreement and the foregoing paragraph (b), the calculation
(including, without limitation, for purposes of the PRO FORMA calculations
pursuant to paragraph (b) above) of the Aggregate Target Receivables Amount, the
Aggregate Allocated Receivables Amount, the Series 1996-1 Required Reserves 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 9.1. CERTAIN DISTRIBUTIONS. (a) Not later than 2:00 p.m.,
New York City time, on the Distribution Date following the date on which the
proceeds from the disposition of the Receivables pursuant to subsection 7.2(b)
of the Agreement are deposited into the Series 1996-1 Non-Principal Collection
Sub-subaccount and the Series 1996-1 Principal Collection Sub-subaccount, the
Trustee shall distribute such amounts pursuant to Article III of this
Supplement.
(b) Notwithstanding anything to the contrary in this Supplement or
the Agreement, any distribution made pursuant to this Section 9.1 shall be
deemed to be a final distribution pursuant to Section 9.3 of the Agreement with
respect to the Term Certificates.
IN WITNESS WHEREOF, the Company, the Servicer and the Trustee have
caused this Series 1996-1 Supplement to be duly executed by their respective
officers as of the day and year first above written.
RS FUNDING INC.
By: /s/
_______________________________
Name:
Title:
US FOODSERVICE INC., in its individual
capacity and as Servicer
By: /s/
_______________________________
Name:
Title:
THE CHASE MANHATTAN BANK, not in its individual
capacity but solely as Trustee
By: /s/
________________________________
Name:
Title:
Schedule 1
TO SERIES 1996-1 SUPPLEMENT
[TO BE PROVIDED BY THE TRUSTEE]
TRUST ACCOUNTS
ACCOUNT ACCOUNT NUMBER
Series 1996-1 Collection Subaccount ----------
Series 1996-1 Principal Collection Sub-subaccount ----------
Series 1996-1 Non-Principal Collection Sub-subaccount ----------
Series 1996-1 Accrued Interest Sub-subaccount ----------
Series 1996-1 Collection Subordinated Sub-subaccount ----------
Exhibit C
TO SERIES 1996-1 SUPPLEMENT
[TO BE PROVIDED BY CHASE SECURITIES INC.]
FORM OF DAILY REPORT
Exhibit D
TO SERIES 1996-1 SUPPLEMENT
[TO BE PROVIDED BY CHASE SECURITIES INC.]
FORM OF MONTHLY SETTLEMENT STATEMENT
Exhibit F
TO SERIES 1996-1 SUPPLEMENT
FORM OF CLASS B TRANSFEREE TAX LETTER
We are delivering this letter in connection with the transfer of $----
of the Floating Rate Class B Trade Receivables Participation Certificates,
Series 1996-1 (the "CERTIFICATES") issued by the Xxxxxx-Xxxxxx Receivables
Master Trust (the "TRUST") created under the Pooling Agreement, dated as of
November --, 1996 (as amended, supplemented or otherwise modified from time to
time, the "POOLING AGREEMENT"), among RS Funding Inc., a Nevada corporation (the
"COMPANY"), US Foodservice Inc., a Delaware corporation, as servicer (the
"SERVICER"), and The Chase Manhattan Bank, a New York banking corporation, as
trustee (the "TRUSTEE"), and the Series 1996-1 Supplement thereto, dated as of
November --, 1996 (as amended, supplemented or otherwise modified from time to
time, the "SERIES 1996-1 SUPPLEMENT"), among the Company, the Servicer and the
Trustee. Capitalized terms used herein without definition shall have the
meanings given to them in the Pooling Agreement and the Series 1996-1
Supplement.
We hereby confirm and represent that [we are not a trust, partnership
or "S Corporation" (within the meaning of Section 1361(a) of the Code) for
United States federal income tax purposes] [we are a trust, partnership or "S
Corporation" (within the meaning of Section 1361(a) of the Code) for United
States federal income tax purposes, but after giving to the transfer referred to
above, less than 50 percent of the aggregate value of our assets would consist
of Certificates].
We acknowledge that the Transfer Agent, the Registrar and the Company
will rely upon our confirmation and representation set forth herein.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
________________________________
(Name of Purchaser)
By:______________________________
Name:
Title:
Address:
Exhibit G
TO SERIES 1996-1 SUPPLEMENT
FORM OF DEFINITIVE CERTIFICATE CONVERSION LETTER
Reference is made to the Xxxxxx-Xxxxxx Receivables Master Trust (the
"TRUST") created under the Pooling Agreement, dated as of November --, 1996 (the
"POOLING AGREEMENT"), among RS Funding Inc., a Nevada corporation (the
"COMPANY"), US Foodservice Inc., a Delaware corporation, as servicer (the
"SERVICER"), and The Chase Manhattan Bank, a New York banking corporation, as
trustee (the "TRUSTEE"), and the Series 1996-1 Supplement thereto, dated as of
November --, 1996 (the "SERIES 1996-1 SUPPLEMENT"), among the Company, the
Servicer and the Trustee. Capitalized terms used herein without definition
shall have the meanings given to them in the Pooling Agreement and the Series
1996-1 Supplement.
We are delivering this letter in connection with the transfer of
$--- of the Floating Rate Class A Trade Receivables Participation
Certificates, Series 1996-1 (the "CERTIFICATES") issued by the Trust pursuant
to the Series 1996-1 Supplement which are registered to CEDE & CO. and held
thereby in the name of [insert name of transferor] (the "TRANSFEROR"). The
Transferor hereby requests an exchange of its beneficial interest in the
Certificates for an aggregate amount of $----- in Definitive Certificate[s]
to be issued to [insert name(s) of transferee(s)], [[each of] which is an
Institutional Accredited Investor and has delivered a Purchaser Letter
pursuant to the Series 1996-1 Supplement] [[each of] which is a person who is
taking delivery of such Definitive Certificate pursuant to a transaction that
is exempt from the registration requirements of the Securities Act and has
delivered to the Trustee and the Company an Opinion of Counsel satisfactory
to the Trustee and the Company].
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
____________________________
(Name of Transferor)
By:__________________________
Name:
Title:
Address:
