SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1998 Commission File Number 33-68958
Specialty Foods Acquisition Corporation
(Exact name of registrant as specified in its charter)
State of Delaware 75-2488183
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
520 Lake Cook Road, Suite 550, Deerfield, IL 60015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 405-5300
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of the Registrant's common stock
as of May 15, 1998 was 62,920,885 shares of common stock.
<PAGE> 1
SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION Page No.
--------
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
as of March 31, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Operations for
the three months ended March 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1998 and 1997 5
Notes to Financial Statements 6-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8-10
PART II - OTHER INFORMATION 11
SIGNATURE 11
This Report on Form 10-Q contains forward-looking statements
within the meaning of the federal securities laws which reflect
the Company's expectations and are based on currently available
information. Actual results, performance, achievements or other
information may vary materially from such statements and are
subject to future known and unknown risks, uncertainties and
events, including, among other factors, weather, economic and
market conditions, cost and availability of raw materials,
competitive activities or other business conditions.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL INFORMATION
<TABLE>
SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
<CAPTION>
March 31, December 31,
1998 1997
---------- ----------
Assets (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 184,635 $ 235,034
Accounts receivable, net 22,327 19,163
Inventories 40,186 35,577
Other current assets 7,920 7,400
---------- ----------
Total current assets 255,068 297,174
Property, plant, and equipment, net 189,488 187,874
Intangible assets, net 19,864 19,434
Other noncurrent assets 36,110 28,334
---------- ----------
Total assets $ 500,530 $ 532,816
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 2,880 $ 2,847
Accounts payable 47,898 51,983
Accrued expenses 75,972 85,344
---------- ----------
Total current liabilities 126,750 140,174
Long-term debt 1,145,957 1,134,882
Other noncurrent liabilities 30,786 30,645
---------- ----------
Total liabilities 1,303,493 1,305,701
Redeemable preferred stock 19,500 19,500
Stockholders' equity (822,463) (792,385)
---------- ----------
Total liabilities and
stockholders' equity $ 500,530 $ 532,816
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
<TABLE>
SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share data)
<CAPTION>
Three months ended March 31,
---------------------------
1998 1997
----- -----
<S> <C> <C>
Net sales $ 216,687 $ 213,950
Cost of sales 117,846 121,237
--------- ---------
Gross profit 98,841 92,713
Operating expenses:
Selling, distribution, general and
administrative 96,126 90,386
Amortization of intangibles 342 345
--------- ---------
Total operating expenses 96,468 90,731
--------- ---------
Operating profit 2,373 1,982
Other expenses:
Interest expense, net 31,413 33,238
Other expense, net 990 1,295
--------- ---------
Loss before income taxes (30,030) (32,551)
Provision for income taxes 47 208
--------- ---------
Loss from continuing operations (30,077) (32,759)
Discontinued operations:
Net income - 2,684
Gain (loss) on disposal, net - 331
--------- ---------
- 3,015
--------- ---------
Net loss $ (30,077) $ (29,744)
========= =========
Earnings (loss) per share:
From continuing operations $ (.47) $ (.52)
From discontinued operations - .05
--------- ---------
Net loss $ (.47) $ (.47)
========= =========
Weighted average shares outstanding 62,769 63,278
========= =========
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE> 4
SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES
<TABLE>
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
<CAPTION>
Three months ended March 31,
---------------------------
1998 1997
----- -----
<S> <C> <C>
Cash flows from operating activities:
Loss from continuing operations $ (30,077) $ (32,759)
Adjustments to reconcile to net cash
from continuing operating activities
Depreciation and amortization 6,467 5,863
Debt issuance cost amortization 1,469 1,530
Accretion of interest 11,617 10,402
Changes in operating assets and
liabilities, net of effects from
businesses acquired or sold: (21,505) (22,388)
--------- ---------
Net cash used by
continuing operations (32,029) (37,352)
Cash flows from investing activities:
Proceeds from divestiture of businesses - 51,592
Capital expenditures (7,822) (5,697)
Other (797) (701)
--------- ---------
Net cash (used) provided by
investing activities (8,619) 45,194
Cash flows from financing activities:
Increase (decrease) in revolving credit - (21,400)
Refinancing costs (9,267) -
Other (484) (47)
---------- ----------
Net cash used by
financing activities (9,751) (21,447)
Decrease in cash and cash equivalent (50,399) (13,605)
Cash - beginning of period 235,034 49,146
---------- ----------
Cash - end of period $ 184,635 $ 35,541
========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE> 5
NOTE 1 - Interim Financial Information
In the opinion of management, the accompanying unaudited
interim condensed financial information of Specialty
Foods Acquisition Corporation (SFAC) and its subsidiaries
(collectively, the Company) contains all adjustments,
consisting only of those of a recurring nature, necessary
to present fairly the Company's financial position and
results of operations. All significant intercompany
accounts, transactions and profits have been eliminated.
These financial statements are for interim periods and do
not include all information normally provided in annual
financial statements and should be read in conjunction
with the financial statements of the Company for the year
ended December 31, 1997 included in the annual report
filed on Form 10-K and any reports on Form 8-K filed
during the quarter. The results of operations for
interim periods are not necessarily indicative of the
results that may be expected for the full year.
Certain amounts in the 1997 financial statements have
been reclassified to conform to the manner in which the
1998 financial statements have been presented.
NOTE 2 - Inventories
The components of inventories are as follows:
March 31, December 31,
1998 1997
--------- ---------
(In thousands)
Raw materials and packaging $ 14,382 $ 14,026
Work in progress 1,810 1,857
Finished goods 21,792 17,340
Other 2,202 2,354
--------- ---------
$ 40,186 $ 35,577
========= =========
Inventories are stated at the lower of cost or market.
Cost is determined principally by the first-in first-out
("FIFO") method.
<PAGE> 6
NOTE 3 - Revolving Credit, Term Loan, and Accounts Receivable
Facilities
During March 1998, the Company refinanced its Revolving
Credit Facility ("Revolver") and Term Loan Facility
("Term Loan") with a new syndicate of financial
institutions. Both facilities mature on January 31,
2000. The amount available under these facilities is the
same as the previous facilities which totaled $125
million for the Revolver and $174 million for the Term
Loan. Proceeds from these facilities can be used to
finance working capital requirements and are available
for other purposes, including acquisitions.
Additionally, the Company refinanced its Accounts
Receivable Facility on March 31, 1998. Under the terms
of the new facility, the maximum amount of eligible
receivables that would be sold to the facility is $75
million. The amount outstanding under this facility
varies based upon the level of eligible receivables and
advance rate factors. This Accounts Receivable Facility has
a final maturity date of January 31, 2000 and begins to amortize
on December 15, 1999.
NOTE 4 - Discontinued Operations
Discontinued operations relate to the divestiture of
certain operating companies during 1997.
These divestitures have been reported as discontinued
operations in the accompanying financial statements in
accordance with Accounting Principles Board Opinion No.
30. Operating results for these businesses, including
revenues of $222 million for the quarter ended March 31,
1997, have been classified as discontinued operations in
the Consolidated Statement of Operations. No interest
expense has been allocated to discontinued operations.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Seasonality
The Company's businesses are moderately seasonal with lower
sales, operating profit, and cash flows generally occurring in
the first quarter of the year. This seasonality is due primarily
to higher bread and cookie sales in the summer and fall months,
as well as the holiday season.
Results of Operations
COMPARISON OF FIRST QUARTER 1998 TO FIRST QUARTER 1997
Consolidated net sales from continuing operations increased 2% to
$217 million in 1998 compared to $214 million in 1997. Net sales
of the Bakery Operations increased $7 million (5%) to $171
million in 1998. The increase was primarily due to volume
increases at Metz and Mother's, partially offset by lower cafe
sales at Boudin Bakeries. Net sales of the Meat Operations
decreased $4 million (8%) to $46 million due to lower sales
volume and market driven price decreases on its formula priced
products reflecting a decrease in beef and pork commodity prices.
The Company's gross profit margin increased to 45.6% in 1998 from
43.3% in 1997 primarily due to increased volume, production
efficiencies, and a favorable sales mix shift at Mother's.
Selling, distribution, and general and administrative expenses
increased $6 million (6%) in 1998 to $96 million. Selling and
distribution expense increased due to costs associated with the
increased volume at Metz and Mother's and contractual wage and
fringe benefit increases.
Interest expense, net in 1998 decreased $2 million to $31 million
from $33 million in 1997. The decrease is primarily due to the
paydown of the Revolver and interest earned on cash equivalents.
Other expense, net was $1 million of expense in 1998 and 1997 and
consists principally of discount expense on the Company's
Accounts Receivable Facility.
As a result of the above factors, net loss from continuing
operations decreased to $30 million in 1998 compared to $33
million in 1997.
The Company reports minimal state income tax and no federal
income tax due to its net operating loss position for tax
purposes.
<PAGE> 8
Because of the highly leveraged status of the Company, earnings
before interest, taxes, depreciation, and amortization ("EBITDA")
is an important performance measure used by the Company and its
stakeholders. The Company believes that EBITDA provides
additional information for determining its ability to meet future
debt service requirements. However, EBITDA is not indicative of
operating income or cash flow from operations as determined under
generally accepted accounting principles. The Company's EBITDA
from continuing operations for the three months ended March 31,
1998 and 1997 is calculated as follows:
Three months ended March 31,
1998 1997
----- -----
(In thousands)
Operating Profit $ 2,373 $ 1,982
Depreciation and amortization 6,467 5,863
-------- --------
$ 8,840 $ 7,845
======== ========
Liquidity and Capital Resources
The Company's Revolving Credit Facility ("Revolver") and Term
Loan Facility ("Term Loan") were refinanced in March 1998 with a
new syndicate of financial institutions. The amount available
under these facilities is the same as the previous facilities,
which totaled $125 million for the Revolver and $174 million for
the Term Loan. Both facilities mature on January 31, 2000.
Additionally, the Company refinanced its Accounts Receivable
Facility on March 31, 1998. Under the terms of the new facility,
the maximum amount of eligible receivables that would be sold to
the facility is $75 million. The amount outstanding under this
facility varies based upon the level of eligible receivables and
advance rate factors.
Net cash used in operating activities during the three months
ended March 31, 1998 totaled $32 million compared to $37 million
during the same period in 1997. The decrease in net cash used in
operating activities in 1998 was primarily attributable to
improved operating results and decreased working capital
requirements.
Net cash used by investing activities totaled $9 million in 1998
and was principally due to capital expenditures. In 1997, net
cash provided by investing activities of $45 million was
primarily attributable to the net proceeds from the sale of
divested businesses, offset by capital expenditures.
Net cash used in financing activities amounted to $10 million in
1998 and was principally due to payments of debt refinancing
costs and normal payments on long-term debt. In 1997, cash used
by financing activities of $21 million was primarily attributable
to a decrease in revolving credit borrowings.
Based upon the above, the net decrease in cash in 1998 and 1997
was $50 million and $14 million, respectively.
<PAGE> 9
During 1998, the Company currently anticipates purchasing certain of its
leased fleet and production equipment which is currently subject
to off-balance-sheet lease financing. The cost of purchasing
these leased assets is approximately $35 million. This
transaction will restore the assets to the Company's balance
sheet and relieve the Company of the corresponding obligation.
On May 1, 1998, the Company purchased the initial tranche of
leased assets totaling $15 million.
As of March 31, 1998, the Company had a cash balance of $185
million and has no borrowings under its $125 million Revolving
Credit Facility. Outstanding letters of credit of $8 million as
of March 31, 1998 reduce available funds under the facility.
Management believes that these funds along with operating cash
flows should be adequate to fund the Company's short term
obligations, as well as fund a level of capital expenditures, lease
repurchases, and acquisitions necessary to satisfy on or before
the date due any remaining portion of the Company's existing asset sale
reinvestment obligations under its debt instruments. However, there
can be no assurances that available funds will be adequate to meet
such needs. Additionally, the Company will also consider
refinancing and additional asset sales to address future
liquidity and capital structure issues. The
Company expects that by the year 2000 it will be required to
refinance a significant portion of its indebtedness.
<PAGE> 10
PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) See Exhibit Index filed herewith.
(b) The Company filed Report on Form 8-K Announcing the
Commitment of the New Senior Credit Facility on February 16,
1998.
Item 8: Submission of Matters to a Vote of Security Holders
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SPECIALTY FOODS ACQUISITION CORPORATION
(Registrant)
By:
Date: May 15, 1998 /s/ Robert L. Fishbune
Robert L. Fishbune
Vice President and Chief
Financial Officer
EXHIBIT INDEX
Exhibit
Number Description of Document
- ------ ------------------------
10.78* Series 1998-1 Certificate Purchase Agreement, dated as
of March 31, 1998, by and among SFFC, SFC, as Master
Servicer and Bankers Trust Company, as Agent.
10.79* Series 1998-1 Supplement, dated as March 31, 1998, to the Pooling
Agreement, dated as of November 16, 1994, by and among SFFC, SFC, as
Master Servicer, and Chase Manhattan Bank, as Trustee.
<PAGE> 11
10.80* SFC Master Trust Amendment No. 5 to each of the Pooling
Agreement and Receivables Sale Agreement and Amendment
No. 1 to the Servicing Agreement.
10.81* Amendment to Series 1998-1 Supplement, Dated as of
March 31, 1998, by and among SFFC, SFC, as Master
Servicer, Chase Manhattan Bank, as Trustee, and Bankers
Trust, as the sole VFC Certificateholder under that
certain Certificate Purchase Agreement.
10.82* Performance Guaranty, dated as of March 31, 1998, by
and among SFC, as Master Servicer in favor of SFFC.
27* Financial Data Schedule
*Filed Herewith.
EXHIBIT 10.78
EXECUTION COPY
SERIES 1998-1
CERTIFICATE PURCHASE AGREEMENT
Dated as of March 31, 1998
Among
SPECIALTY FOODS FINANCE CORPORATION
as Company,
SPECIALTY FOODS CORPORATION
as Master Servicer,
THE FINANCIAL INSTITUTIONS PARTY HERETO
FROM TIME TO TIME,
as Purchasers,
and
BANKERS TRUST COMPANY,
as Agent
TABLE OF CONTENTS
Section
Page
ARTICLE IDEFINITIONS 1
SECTION 1.01. Certain Defined Terms 1
SECTION 1.02. Other Terms 2
SECTION 1.03. Computation of Time Periods 3
ARTICLE IIPURCHASE AND SALE 3
SECTION 2.01. Purchase and Sale of the VFC Certificates 3
SECTION 2.02. Funding Mechanics 3
SECTION 2.03. Closing 3
SECTION 2.04. Increases in the Invested Amount of the VFC
Certificates 3
SECTION 2.05. Termination or Reduction of the Commitment. 4
SECTION 2.06. Interest and Principal Payments; Fees; Pro Rata
Treatment 4
SECTION 2.07. Increased Costs; Increased Capital 4
SECTION 2.08. Illegality; Unavailability 6
SECTION 2.09. Taxes 7
ARTICLE IIICONDITIONS PRECEDENT 10
SECTION 3.01. Conditions Precedent to the Purchase 10
SECTION 3.02. Conditions Precedent to Increase 11
ARTICLE IVREPRESENTATIONS AND WARRANTIES 11
SECTION 4.01. Representations and Warranties of the Company 11
SECTION 4.02. Representations and Warranties of the Master
Servicer. 13
ARTICLE VTHE AGENT 14
SECTION 5.01. Authorization and Action 14
SECTION 5.02. The Agent's Reliance, Etc. 15
SECTION 5.03. The Agent and Affiliates 16
SECTION 5.04. Purchase Decision 16
SECTION 5.05. Indemnification 16
SECTION 5.06. Resignation by the Agent 17
ARTICLE VI MISCELLANEOUS 17
SECTION 6.01. Amendments, Waivers and Consents, Etc. 17
SECTION 6.02. Notices 18
SECTION 6.03. No Waiver; Remedies; Rights of Purchaser, Etc 18
SECTION 6.04. Binding Effect; Assignability 18
SECTION 6.05. Securities Laws; Certificates as Evidence of
Indebtedness 20
SECTION 6.06. GOVERNING LAW; WAIVER OF JURY TRIAL 22
SECTION 6.07. Costs and Expenses 22
SECTION 6.08. No Proceedings 22
SECTION 6.09. Execution in Counterparts; Severability 22
SECTION 6.10. Liabilities of the Company. 23
SCHEDULES AND EXHIBITS
SCHEDULE 1 -- Conditions Precedent Documents
EXHIBIT A -- Form of Assignment Agreement
SERIES 1998-1
CERTIFICATE PURCHASE AGREEMENT
Dated as of March 31, 1998
SPECIALTY FOODS FINANCE CORPORATION, a Delaware
corporation (the "Company"), SPECIALTY FOODS CORPORATION, a
Delaware corporation, as servicer (the "Master Servicer"), THE
FINANCIAL INSTITUTIONS PARTY HERETO FROM TIME TO TIME
(collectively, the "Purchasers" and each, a "Purchaser"), and
BANKERS TRUST COMPANY, a New York banking corporation ("Bankers
Trust"), as agent for the Purchasers (in such capacity, the
"Agent"), agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. Unless otherwise
defined herein, capitalized terms used in this Agreement (including
the Exhibits hereto) have the meanings set forth in the Pooling
Agreement (as defined below) or the Supplement (as defined below),
as applicable. If a term used herein is defined in both the
Pooling Agreement and the Supplement, it shall have the meaning set
forth in the Supplement. Additionally, the terms defined in the
preamble to this Agreement shall have the meanings set forth
therein and the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Affected Person" means each of the Purchasers and the
Agent and each of their respective Affiliates, successors and
assigns.
"Aggregate Commitment" means the aggregate Commitments of
all Purchasers hereunder.
"Agreement" means this Series 1998-1 Certificate Purchase
Agreement.
"Closing" has the meaning assigned to that term in
Section 2.03.
"Closing Date" has the meaning assigned to that term in
Section 2.03.
"Commitment" means with respect to any Purchaser, the
amount set forth opposite such Purchaser's name on the signature
pages hereof or on Annex I attached to the assignment agreement
attached hereto as Exhibit A, as such amount may be reduced from
time to time in accordance with Section 2.05.
"Commitment Termination Date" means the earliest of (a)
the Business Day preceding the day on which the Amortization Period
commences, (b) the date of the occurrence of any Early Amortization
Event described in Section 7.1 of the Pooling Agreement, (c) the
date specified by the Agent following the occurrence of any other
Early Amortization Event and (d) the Scheduled Termination Date.
"Other Taxes" has the meaning assigned to that term in
Section 2.09(b).
"Pooling Agreement" means the Pooling Agreement dated as
of November 16, 1994, among the Company, the Master Servicer and
The Chase Manhattan Bank, as Trustee, as amended, restated,
supplemented or otherwise modified from time to time.
"Pooling and Servicing Agreement" means, collectively,
the Pooling Agreement, the Servicing Agreement and the Supplement.
"Pro Rata Share" means, on any date of determination,
with respect to any Purchaser, the ratio (expressed as a
percentage) of such Purchaser's Commitment to the Aggregate
Commitment at such time.
"Purchase" means the purchase and sale of the Series
1998-1 Certificates by the Company to the Purchasers pursuant to
this Agreement.
"Required Certificateholders" means those VFC
Certificateholders holding VFC Certificates in an aggregate face
amount equal to or in excess of 50% of the Aggregate Commitment.
"Securities Act" means the Securities Act of 1933, as
amended.
"Supplement" means the Series 1998-1 Supplement dated as
of March 31, 1998, among the Company, the Master Servicer, the
Trustee and the Agent, supplementing the Pooling Agreement, as
amended, restated, supplemented or otherwise modified from time to
time.
"Taxes" has the meaning assigned to that term in Section
2.09(a).
"UCC" means the Uniform Commercial Code as from time to
time in effect in the applicable jurisdiction.
SECTION 1.02. Other Terms. All accounting terms not
defined in this Agreement, and accounting terms partly defined in
this Agreement to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting
principles or regulatory accounting principles, as applicable. All
terms used in Article 9 of the UCC in the State of New York, and
not specifically defined herein, are used herein as defined in such
Article 9. The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement; and Section, Schedule and Exhibit references contained
in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and
the term "including" means "including without limitation".
SECTION 1.03. Computation of Time Periods. Unless
otherwise stated in this Agreement, in the computation of a period
of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until"
each mean "to but excluding."
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the VFC Certificates.
On the terms and subject to the conditions set forth in this
Agreement, and in reliance on the covenants, representations,
warranties and agreements herein set forth, the Company agrees to
sell, transfer and deliver to the Purchasers, and the Purchasers
agree to purchase, at the Closing, VFC Certificates in an aggregate
maximum face amount equal to the Aggregate Commitment and
constituting all of the VFC Certificates issued pursuant to the
Supplement. Notwithstanding the foregoing, no Purchaser will be
required to purchase VFC Certificates in an aggregate face amount
in excess of such Purchaser's Commitment.
SECTION 2.02. Funding Mechanics. The VFC Certificates
are to be purchased by each Purchaser on the Closing Date in
exchange for the extension by such Purchaser to the Company of its
Commitment hereunder. On the Issuance Date, each Purchaser shall
pay to the Company its Pro Rata Share of the Initial Invested
Amount.
SECTION 2.03. Closing. (a) The closing (the "Closing")
shall take place at 10:00 a.m. at the offices of Sidley & Austin,
One First National Plaza, Chicago, Illinois 60603 on March 31, 1998
(the "Closing Date"), or, if the conditions to closing set forth in
Article III of this Agreement shall not have been satisfied or
waived by such date, as soon as practicable after such conditions
have been satisfied or waived, or at such other time, date and
place as the parties shall agree upon.
(b) At the Closing (i) the Purchasers will deliver to
the Company a fully executed copy of this Agreement and (ii) the
Company shall deliver the VFC Certificates to the Agent for
delivery to the applicable Purchasers hereunder.
SECTION 2.04. Increases in the Invested Amount of the
VFC Certificates. (a) Subject to the terms and conditions of this
Agreement, the Supplement and the VFC Certificates, in each case,
with respect to the applicable Increase, each Purchaser hereby
agrees from the Closing Date to the Commitment Termination Date to
fund from time to time in accordance with the provisions specified
in the Supplement, its Pro Rata Share of any Increase requested by
the Company from the Purchasers in accordance with the procedures
described in Section 2.4 of the Supplement; provided, however, that
the aggregate outstanding Invested Amount of the VFC Certificates
held by the Purchasers after giving effect to such Increase shall
not exceed the amount of the Aggregate Commitment and each
Purchaser's Pro Rata Share of the aggregate outstanding Invested
Amount after giving effect to such Increase shall not exceed the
amount of such Purchaser's Commitment.
(b) Subject to the terms and conditions of this
Agreement, on the Increase Date for an Increase, each Purchaser's
Pro Rata Share of such Increase shall be remitted in accordance
with the procedures set forth in Section 2.4 of the Supplement, and
upon such remittance the aggregate Invested Amount of the VFC
Certificates owned by the Purchasers shall be increased by the
amount of such remittance.
SECTION 2.05. Termination or Reduction of the
Commitment. The Company may, at any time upon notice to the Agent
delivered at least 10 days prior to any Settlement Date, terminate
in whole or reduce in part the unused portion of the Aggregate
Commitment; provided however, that (i) each such partial reduction
must be in an amount not less than $5,000,000 (and in increments of
$1,000,000 in excess thereof), (ii) if the Company seeks to reduce
the Aggregate Commitment to an amount less than $50,000,000, then
the Aggregate Commitment shall be reduced to zero, the Commitment
Termination Date shall be deemed to have occurred and this
Agreement shall be terminated, (iii) if the Company terminates the
Aggregate Commitment in connection with a termination of the
facility prior to the first anniversary of the Closing Date, the
Company shall pay the prepayment fee described in Section 2.7(e) of
the Supplement, (iv) once reduced, the amount of any such reduction
of the Aggregate Commitment may not be reinstated, (v) any
reduction in the Aggregate Commitment shall reduce the Commitments
of the Purchasers hereunder ratably in accordance with their
respective Pro Rata Shares and (vi) such termination or reduction
shall otherwise be on the terms and conditions set forth in Section
2.5 of the Supplement.
SECTION 2.06. Interest and Principal Payments; Fees; Pro
Rata Treatment. In accordance with Section 3C.4 and 3C.5 of the
Pooling and Servicing Agreement, each VFC Certificateholder shall
be entitled to the payment of interest, fees and principal on its
VFC Certificates. Each payment of interest, fees and principal by
the Company hereunder or under the Pooling and Servicing Agreement,
as well as any Decrease in the Invested Amount shall be allocated
pro rata among the VFC Certificateholders on the date of payment or
Decrease, in accordance with their respective Pro Rata Shares.
Each VFC Certificateholder agrees that the Agent may in its
discretion, in connection with computing its portion of any amounts
owed by the Company to such VFC Certificateholder, round each VFC
Certificateholder's Pro Rata Share of such amount to the next
higher or lower whole dollar amount.
SECTION 2.07. Increased Costs; Increased Capital.
(a) If, after the date hereof due to either (i) the introduction
of or any change in or to the interpretation of any law, rule or
regulation by the governmental authority that promulgated or
administers compliance with such law, rule or regulation (other
than laws, rules or regulations with respect to income taxes or any
change by way of imposition or increase of reserve requirements
included in the Eurodollar Reserve Requirements) or (ii) the
compliance with any guideline or request from any central bank or
other fiscal, monetary or governmental authority, rating agency or
similar agency (whether or not having the force of law), and
otherwise in connection with any Purchaser's asset-supported
financing business, any reserve or deposit or similar requirement
shall be imposed, modified or deemed applicable or, any basis of
taxation shall be changed or any other condition shall be imposed,
and as a result thereof, there shall be any increase in the cost to
any Affected Person (whether incurred directly or indirectly) of
making, funding, or maintaining the Invested Amount outstanding
under, the VFC Certificates or in the cost to any Affected Person
of agreeing to make, fund, or maintain any Invested Amount
outstanding under, the VFC Certificates, then, in any such case,
the Company shall from time to time, upon demand by any such
Affected Person, by the submission of the certificate described
below, pay to such Affected Person (as a third-party beneficiary,
in the case of an Affected Person which is not a party hereto or an
assignee thereof), additional amounts sufficient to compensate such
Affected Person for such increased cost. In determining such
amount, such Affected Person may use any reasonable averaging and
attribution methods, consistent with the averaging and attribution
methods generally used by such Affected Person in determining
amounts of this type. A certificate submitted to the Company and
the Agent by the relevant Affected Person (or by the Agent on
behalf of any Purchaser), setting forth in reasonable detail the
calculation of the amount of such increased cost and describing the
averaging and attribution methods used in determining such amount,
shall be conclusive and binding for all purposes, absent manifest
error.
(b) If any Affected Person determines that compliance
with any law or regulation or any guideline or request or any
written interpretation from any central bank or other fiscal,
monetary or governmental authority, rating agency or similar agency
(whether or not having the force of law) which is introduced,
implemented or received by such Affected Person after the date
hereof, affects or would affect capital adequacy or the amount of
capital required or expected to be maintained by such Affected
Person or any corporation controlling such Affected Person and that
the amount of such capital is increased by or based upon the VFC
Certificates or the existence of this Agreement, the Pooling and
Servicing Agreement, or the commitments to lend hereunder, or has
or would have the effect of reducing such Affected Person's rate of
return on capital, then, upon demand by any such Affected Person,
by the submission of the certificate described below, the Company
shall pay to such Affected Person (as a third-party beneficiary, in
the case of an Affected Person which is not a party hereto or an
assignee thereof), from time to time, as specified by such Affected
Person, additional amounts sufficient on an after-tax basis to
compensate such Affected Person in light of such circumstances, to
the extent that such Affected Person reasonably determines such
increase in capital to be allocable to the VFC Certificates or the
existence of this Agreement, the Pooling and Servicing Agreement,
or any commitment to lend hereunder. In determining such amounts,
such Affected Person may use any reasonable averaging and
attribution methods, consistent with the averaging and attribution
methods generally used by such Affected Person in determining
amounts of this type. A certificate submitted to the Company and
the Agent by the relevant Affected Person (or by the Agent on
behalf of any Purchaser), setting forth in reasonable detail the
calculation of any such amounts and describing the averaging and
attribution methods used in determining such amounts, shall be
conclusive and binding for all purposes, absent manifest error.
(c) Promptly after giving any notice to the Company
pursuant to this section, a VFC Certificateholder will use its best
efforts to designate one of its offices located at an address other
than that previously designated pursuant to this Agreement as the
office from which its Commitment to fund Increases will be made
after the designation if it will avoid the need for, or materially
reduce the amount of, any payment to which the VFC
Certificateholder would otherwise be entitled pursuant to this
section and will not, in the sole discretion of the VFC
Certificateholder, be otherwise disadvantageous to the VFC
Certificateholder.
SECTION 2.08. Illegality; Unavailability. (a) In the
event that on any date any VFC Certificateholder shall have
determined (which determination, absent manifest error, shall be
final and conclusive and binding upon all parties) that the
continuation of its interest in the Invested Amount or its
Commitment to fund Increases in such Invested Amount as Eurodollar
Tranches has become unlawful by compliance by the VFC
Certificateholder in good faith with any law, governmental rule,
regulation or order or has become impossible as a result of a
contingency occurring after the date hereof that materially and
adversely affects its interbank eurodollar market, then, and in any
such event, that VFC Certificateholder shall promptly give notice
(by telephone confirmed in writing) to the Company, the Trustee and
the Agent (which notice the Agent shall promptly transmit to each
VFC Certificateholder) of that determination. The obligation of
the affected VFC Certificateholder to maintain its interest in the
Invested Amount or its Commitment to fund Increases to such
Invested Amount as Eurodollar Tranches during any such period shall
be terminated at the earlier of the termination of the Funding
Period then in effect for each Eurodollar Tranche or when required
by law, and the Company shall, no later than the time specified for
the termination, convert such affected VFC Certificateholder's Pro
Rata Portion of the Invested Amount that constitute part of any
Eurodollar Tranche into a part of the Unallocated Balance.
(b) If, prior to the beginning of any Funding Period,
the Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties) that: (i) dollar
deposits in the relevant amount and for the Funding Period are not
available in the relevant interbank eurodollar market or (ii) by
reason of circumstances affecting the interbank eurodollar market,
that adequate and fair means do not exist for ascertaining the
Applicable Eurodollar Rate for a Eurodollar Tranche or (iii) by
reason of any change since the date of this Agreement in any
applicable law, governmental rule regulation or order, the
Applicable Eurodollar Rate does not adequately reflect the costs to
the VFC Certificateholders of funding or maintaining such
Eurodollar Tranche, then the Agent shall promptly give notice of
this determination to the Company and to each VFC
Certificateholder. Thereafter, and continuing until the Agent
shall notify the Company that the circumstances giving rise to this
determination no longer exist, (x) each Eurodollar Tranche will, on
the last day of the applicable Funding Period, convert into a part
of the Unallocated Balance, (y) the right of the Company or the
Master Servicer to request Eurodollar Tranches shall be suspended
and (z) any portion of the Invested Amount requested to be made as
Eurodollar Tranches prior to such time but not yet made shall be
made as part of the Unallocated Balance.
(c) If circumstances subsequently change so that any
affected VFC Certificateholder shall determine that it is no longer
affected by any of the items described in this Section 2.08, the
VFC Certificateholder shall promptly notify the Company and the
Agent, and upon receipt of the notice, the obligations of the VFC
Certificateholder to maintain its interest in the Invested Amount
or its Commitment to fund Increases to such Invested Amount as
parts of Eurodollar Tranches shall be reinstated.
SECTION 2.09. Taxes. (a) All payments made by the
Company under this Agreement, the Pooling and Servicing Agreement
and the VFC Certificates shall be made free and clear of, and
without deduction or withholding for or on account of, any present
or future taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any governmental authority having taxing
authority, excluding net income taxes and franchise taxes (imposed
in lieu of income taxes) imposed on any Affected Person as a result
of any present or former connection between the jurisdiction of the
government or taxing authority imposing such tax or any political
subdivision or taxing authority thereof or therein and such
Affected Person (excluding a connection arising solely from such
Affected Person having executed, delivered or performed its
obligations or received a payment under, or enforced, this
Agreement, the Pooling and Servicing Agreement or the VFC
Certificates or any other related document to which such Affected
Person is a party) (all such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions and withholdings being
hereinafter called "Taxes"). If any Taxes are required to be
withheld from any amounts payable to or under the VFC Certificates,
(i) the sum payable shall be increased as may be necessary so that,
after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.09), the
relevant Affected Person receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the
Company shall make such deductions, and (iii) the Company shall pay
the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law ; provided,
however, that if any Affected Person organized under the laws of
any jurisdiction outside the United States fails to provide forms
or other documents to the Company or the Agent as required by
subsection 2.09(e) and the Company, in accordance with such
paragraph is required to and does withhold Taxes from a payment
hereunder in an amount greater than it would have been required to
withhold if such Affected Person had provided the required forms or
other documents, any additional sum payable under clause (i) of
this sentence shall be computed as if the Company had withheld such
lesser amount. In the event that Taxes consisting of a withholding
tax of the United States or any political subdivision thereof shall
after the date hereof be or become applicable to any payments by
the Company to an Affected Person holding an interest in the VFC
Certificates, such Affected Person, if a party hereto, shall use
its best efforts to transfer such interest to another lending
office of such Affected Person if such transfer would avoid or
reduce such Taxes and would not in the sole opinion of such
Affected Person be otherwise disadvantageous to such Affected
Person. To the extent that Taxes consisting of a withholding tax
of the United States or any political subdivision thereof shall
after the date hereof be or become applicable to any payments by
the Company to an Affected Person not a party hereto holding a
direct or indirect interest in VFC Certificates held by an Affected
Person party hereto, such Affected Person party hereto will
endeavor to cause such Affected Person not party hereto to use its
best efforts to transfer such interest to another lending office of
such Affected Person not party hereto if such transfer would avoid
or reduce such Taxes and would not in the sole opinion of such
Affected Person not party hereto be otherwise disadvantageous to
such Affected Person not party hereto.
(b) In addition, the Company agrees to pay any present
or future stamp or documentary taxes or any other excise or
property taxes, charges, or similar levies that arise from any
payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement, the
Supplement, the Pooling Agreement, the Servicing Agreement or any
related documents or instruments (hereinafter "Other Taxes").
(c) The Company will indemnify each Affected Person for
the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.09 and any amounts required to
be paid by any Purchaser in respect of Taxes or Other Taxes to any
other Affected Person, whether by way of gross-up, indemnity or
otherwise paid by such Affected Person and, except to the extent
resulting from the gross negligence or willful misconduct of the
applicable Affected Person, any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto.
Whenever any Taxes are payable by the Company, as promptly as
possible thereafter the Company shall send to each Affected Person
a certified copy of an original official receipt received by the
Company showing payment thereof. If the Company fails to pay any
Taxes when due to the appropriate taxing authority or fails to
remit to the relevant Affected Person the required receipts or
other required documentary evidence, the Company shall indemnify
such Affected Person for any incremental Taxes, interest or
penalties that such Affected Person is legally required to pay as a
result of any such failure. The agreements in this subsection
shall survive the termination of this Agreement and the Supplement
and the payment of the VFC Certificates.
(d) Each Affected Person that is a party hereto agrees
to use its best efforts to inform the Company if any Taxes or Other
Taxes are imposed by any jurisdiction promptly after such Affected
Person becomes aware of any such Taxes or Other Taxes. Each
Affected Person shall cooperate with the Company, at the Company's
expense, in contesting any Taxes or Other Taxes the Company is
required to bear under this Section 2.09. Each Affected Person
that is a party hereto shall honor all reasonable requests from the
Company to file, or to provide the Company with, such returns,
statements or other documentation as shall enable such Affected
Person, or the Company on behalf thereof, to claim a reduced rate,
or exemption from, any Taxes or Other Taxes required to be borne by
the Company under this Section 2.09. Each Affected Person that is
a party hereto further agrees that to the extent that any Affected
Person not party hereto holds a direct or indirect interest in VFC
Certificates held by an Affected Person party hereto, such Affected
Person party hereto will inform the Company, on behalf of such
Affected Person not party hereto, of the imposition of any Taxes or
Other Taxes, and will endeavor to cause such Affected Person not
party hereto to otherwise cooperate with the Company as provided in
this subsection 2.09(d).
(e) Each Affected Person that is also a VFC
Certificateholder and that is not created or organized under the
laws of the United States or a political subdivision thereof shall,
to the extent that it may then do so under applicable laws and
regulations, deliver to the Company (i) on or prior to the date
hereof, or, if later, the date on which such Affected Person
becomes an Affected Person, two (or such other number as may from
time to time be prescribed by applicable laws or regulations) duly
completed copies of IRS From 4224 or From 1001 (or any successor
forms or other certificates or statements which may be required
from time to time by the relevant United States taxing authorities
or applicable laws or regulations), as appropriate, to permit the
Company to make payments hereunder for the account of such Affected
Person without deduction or withholding of the United States
federal income or similar taxes and (ii) upon the obsolescence of
or after the occurrence of any event requiring a change in, any
form or certificate previously delivered pursuant to this
subsection 2.09(e), copies (in such numbers as may be from time to
time be prescribed by applicable laws or regulations) of such
additional, amended, or successor forms, certificates or statements
as may be required under applicable laws or regulations to permit
the Company to make payments hereunder for the account of such
Affected Person without deduction or withholding of United States
federal income or similar taxes. To the extent that any Affected
Person not party hereto holds a direct or indirect interest in any
VFC Certificate held by an Affected Person party hereto, and such
Affected Person not party hereto is not created or organized under
the laws of the United States or a political subdivision thereof,
such Affected Person party hereto will endeavor to cause such
Affected Person not party hereto, to the extent that such Affected
Person not party hereto may then do so under applicable laws and
regulations, to deliver to such Affected Person party hereto (who
shall promptly deliver copies thereof to the Company and the
Agent), on or before the date hereof, or, if later, the date on
which such Affected Person not party hereto becomes an Affected
Person, two (or such other number as may from time to time be
prescribed by applicable laws or regulations) duly completed copies
of IRS From 4224 or From 1001 (or any successor forms or other
certificates or statements which may be required from time to time
by the relevant United States taxing authorities or applicable laws
or regulations), as appropriate, to permit such Affected Person not
party hereto to receive payments in respect of its interest in the
VFC Certificates and the related transactions without deduction or
withholding of United States federal income or similar taxes and
(ii) upon the obsolescence of or after the occurrence of any event
requiring a change in, any form or certificate previously delivered
pursuant to this subsection 2.09(e), copies (in such numbers as may
be from time to time be prescribed by applicable laws or
regulations) of such additional, amended, or successor forms,
certificates or statements as may to permit such Affected Person
not party hereto to receive payments in respect of its interest in
the VFC Certificates and the related transactions without deduction
or withholding of United States federal income or similar taxes.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Purchase. The
Purchase is subject to the satisfaction at the time of the Closing
of the conditions precedent set forth below in this Section 3.01.
(a) The Agent shall have received on or before the
Closing Date each of the items listed on Schedule I hereto, each
(unless otherwise indicated) dated the Closing Date, in form and
substance satisfactory to the Agent.
(b) Each of this Agreement and the Pooling and Servicing
Agreement shall have become effective in accordance with their
respective terms, and all conditions to the issuance of the VFC
Certificates under the Pooling and Servicing Agreement shall have
been satisfied.
(c) All of the terms, covenants, agreements and
conditions of this Agreement and the Pooling and Servicing
Agreement to be complied with and performed by the respective
parties to such agreements by the Closing shall have been complied
with and performed.
(d) Each of the representations and warranties contained
in this Agreement and the Pooling and Servicing Agreement made by
each of the parties to such agreements shall be true and correct in
all material respects as of the time of the Closing as though made
as of such time.
(e) No Early Amortization Event or Potential Early
Amortization Event shall have occurred and be continuing.
(f) The Agent shall have received evidence satisfactory
in form and substance to the Agent that concurrently with the
Closing, the repayment of all "Term Certificates" under and as
defined in the Series 1994-1 Supplement dated as of November 16,
1994, among the Company, the Master Servicer and the Trustee shall
have been provided for which such evidence may include an
irrevocable notice from the Company to the holders of such Term
Certificates terminating the "Revolving Period" as defined in such
Series 1994-1 Supplement.
(g) The SFC Loan Agreement shall have become effective
in accordance with its terms, such SFC Loan Agreement shall be in
form and substance satisfactory to the Agent, and the initial
funding thereunder shall have been made in an amount sufficient to
repay in full all outstanding indebtedness under the Term Loan
Agreement and the Revolving Loan Agreement as in effect prior to
the Closing Date.
(h) The Pooling Agreement shall have been amended in a
manner satisfactory to the Agent such that, among other things, the
calculation of Overconcentration Amounts is based on Eligible
Receivables and on Obligor Limits as shall have been agreed among
the Company, SFC and the Agent.
SECTION 3.02. Conditions Precedent to Increase. The
funding of any Increase pursuant to Section 2.04 hereof is subject
to the satisfaction, as of the applicable Increase Date, of the
following conditions:
(a) Each of the representations and warranties of each
of the SFC Group members contained in this Agreement, the Pooling
and Servicing Agreement and any other Transaction Document shall be
true and correct in all material respects as of the applicable
Increase Date as though made as of such time except to the extent
that any such representations and warranties expressly relate to an
earlier time; and
(b) No Early Amortization Event or Potential Early
Amortization Event shall have occurred and be continuing.
(c) If such Increase is made on the Issuance Date, the
Company shall have paid all fees under the Fee Letter which are
payable at or before such Issuance Date and shall have complied
with and performed all other terms, covenants and agreements
thereunder to be complied with or performed prior to the Issuance
Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Company. Each of the representations and warranties made by the
Company as of the Closing Date pursuant to the Pooling and
Servicing Agreement is incorporated herein by reference for the
benefit of each Purchaser and the Agent. In addition, the Company
hereby represents and warrants to each Purchaser and the Agent as
of the Closing Date and each Increase Date that:
(a) The Company has full power and authority to own its
properties and conduct its business as such properties are
presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement.
(b) The Company is duly qualified to do business and is
in good standing and has obtained all necessary licenses and
approvals, in each jurisdiction in which failure to so qualify or
to obtain such licenses and approvals could reasonably be expected
to have a material adverse effect either on the Company's ability
to perform its obligations hereunder or on the interests of any
Purchaser or the Agent under this Agreement.
(c) The execution and delivery of this Agreement by the
Company and the consummation of the transactions provided for in
this Agreement have been duly authorized by the Company by all
necessary corporate action on the part of the Company.
(d) The execution and delivery of this Agreement, the
performance of the transactions contemplated by this Agreement, and
the fulfillment of the terms hereof, do not and will not conflict
with or violate any Requirement of Law applicable to the Company or
conflict with, result in any breach of any of the material terms
and provisions of, or constitute (with or without notice or lapse
of time or both) a material default under, any indenture, contract,
instrument, mortgage, deed of trust or other agreement to which the
Company is a party or by which it or its properties are bound.
(e) There are no proceedings or, to the best knowledge
of the Company, investigations, pending or threatened against the
Company before any Governmental Authority (i) asserting the
illegality, validity or unenforceability, or seeking any
determination or ruling that would affect the legality, binding
effect, validity or enforceability, of this Agreement, (ii) seeking
to prevent the consummation of any of the transactions contemplated
by this Agreement, or (iii) seeking any determination or ruling
that is reasonably likely to materially and adversely affect the
financial condition or operations of the Company or the performance
by the Company of its obligations under this Agreement. The
Company is not in default with respect to any order of any
Governmental Authority, except for such defaults that are not
reasonably likely to materially and adversely affect the financial
condition or operations of the Company or the performance by the
Company of its obligations under this Agreement.
(f) All authorizations, consents, orders and approvals
of, or registrations or declarations with, any Governmental
Authority required to be obtained, given or made by the Company in
connection with the execution and delivery by the Company of this
Agreement and the performance by the Company of the transactions
contemplated by this Agreement have been obtained, given or made
and are in full force and effect.
(g) This Agreement constitutes the legal, valid and
binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally from time to time in effect or general principles of
equity.
(h) No proceeds of the Purchase hereunder will be used
by the Company (i) for a purpose that violates or would be
inconsistent with Regulations G, U or X promulgated by the Board of
Governors of the Federal Reserve System from time to time or (ii)
to acquire any security in any transaction that is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as
amended.
(i) No certificate, information, exhibit, financial or
other statement, document, book, record or report furnished or to
be furnished by the Company, any of its Affiliates, the Master
Servicer or their respective agents or representatives in connec
tion with this Agreement or the VFC Certificates and relating to
the Company, any of its Affiliates, the Master Servicer, the
Receivables or the transactions contemplated by this Agreement, the
VFC Certificates and the other instruments and agreements related
thereto is or shall be inaccurate in any material respect, or
contains or shall contain any material misstatement of fact, or
omits or shall omit to state a material fact or any fact necessary
to make the statements contained therein not materially misleading,
in each case, as of the date it is or shall be dated or (except as
otherwise disclosed in writing to the Agent or any Purchaser, as
the case may be, at such time) as of the date so furnished.
(j) The VFC Certificates have been duly and validly
authorized, and, when executed and authenticated in accordance with
the terms of the Pooling and Servicing Agreement and delivered to
and paid for by the Purchasers in accordance with this Agreement,
will be duly and validly issued and outstanding, and will be
entitled to the benefits of the Pooling and Servicing Agreement and
this Agreement.
(k) The Pooling and Servicing Agreement is in full force
and effect and no default or other event or circumstance has
occurred thereunder or in connection therewith that could
reasonably be expected to result in the termination of any such
agreement or any other interruption of the ongoing performance by
the parties to each such agreement of their respective obligations
thereunder.
(l) The Company is not required to register as an
"investment company" nor is the Company controlled by an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(m) No Early Amortization Event or Potential Early
Amortization Event has occurred and is continuing.
(n) Assuming the accuracy of the representations and
warranties of the Purchasers and their respective assignees in
Section 6.05 and assuming the Purchasers are not purchasing with a
view toward further distribution and there has been no general
solicitation or general advertising within the meaning of the
Securities Act, the offer and sale of the VFC Certificates in the
manner contemplated by this Agreement and the Pooling and Servicing
Agreement is a transaction exempt from the registration
requirements of the Securities Act.
SECTION 4.02. Representations and Warranties of the
Master Servicer. Each of the representations and warranties made
by the Master Servicer as of the Closing Date pursuant to the
Pooling and Servicing Agreement and any other Transaction Document
is incorporated herein by reference and made for the benefit of
each Purchaser and the Agent. In addition, the Master Servicer
hereby represents and warrants to each Purchaser and the Agent as
of the Closing Date and each Increase Date that:
(a) The audited financial statements and schedules of
SFC and its Subsidiaries for the period ended December 31, 1997 and
the unaudited financial statements of SFC and its Subsidiaries for
the period ended September 30, 1997, each as, or as will be, filed
with the Securities Exchange Commission on Forms 10-K and 10-Q,
respectively, (the "Financial Statements"), present fairly in all
material respects the financial position, results of operations and
cash flows of SFC at the dates and for the periods to which they
relate and have been prepared in accordance with generally
acceptance accounting principles applied on a consistent bases,
except as otherwise stated therein (subject, in the case of
unaudited statements, to normal and recurring audit adjustments);
(b) Except as disclosed in writing to the Agent and as
described on Exhibit 4.02 hereto, since the date of the Financial
Statements (i) there has been no material adverse change in the
condition, financial or otherwise, or the earnings or business
affairs of SFC or any Subsidiary, wether or not arising in the
ordinary course of business, and (ii) there have been no
transactions entered into by SFC or any Subsidiary that are
materially adverse with respect to the condition, financial or
otherwise, or the earnings or business affairs of SFC or any
Subsidiary.
(c) None of the Sellers have granted any Liens (other
than Permitted Liens) with respect to their inventory the sale of
which will give rise to a Receivable included in the Trust Assets
except pursuant to documentation, in form and substance which has
been approved by the Agent, which confirms that such Liens do not
attach to and are automatically released from, any Receivables and
Related Property sold to the Company.
(d) Notwithstanding anything to the contrary contained
in any Transaction Document, to the extent the Master Servicer
delegates or assigns any of its obligations under the Servicing
Agreement to a Seller or Seller Group, the Master Servicer's
obligations under such Servicing Agreement shall continue in full
force and effect despite such delegation or assignment.
ARTICLE V
THE AGENT
SECTION 5.01. Authorization and Action. (a) The
Purchasers hereby designate and appoint Bankers Trust Company as
Agent and each Purchaser hereby authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under
this Agreement and any related agreement, instrument and document
as are delegated to the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto.
The Agent reserves the right, in its sole discretion, but subject
to such restrictions as may be set forth with respect to the
Purchasers in this Agreement or any related agreement, instrument
or document, to exercise any rights and remedies under this
Agreement or any related agreement, instrument or document executed
and delivered pursuant hereto, or pursuant to applicable law, and
also to agree to any amendment, modification or waiver of this
Agreement or any related agreement, instrument and document, in
each instance, on behalf of the Purchasers. Notwithstanding
anything herein or elsewhere to the contrary, the Agent shall not
be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or applicable law.
The appointment and authority of the Agent hereunder shall
terminate on the date after the Commitment Termination Date on
which the Invested Amount of the VFC Certificates has been reduced
to zero.
(b) Without limiting the authorization of and delegation
to the Agent set forth in the foregoing subsection 5.01(a), it is
hereby acknowledged and agreed that all payments in respect of the
VFC Certificates and in respect of fees and other amounts owing to
the Purchasers or any other Person under this Agreement shall,
except as otherwise expressly provided herein, be remitted by the
applicable payor to the Agent, and the Agent shall distribute all
such amounts, promptly following receipt thereof, to the applicable
parties in interest according to their respective interests
therein, determined by reference to the terms of the Pooling and
Servicing Agreement, this Agreement and the Agent's books and
records relating to the VFC Certificates, the Pooling and Servicing
Agreement and this Agreement (it being agreed that the entries made
in such books and records of the Agent shall be conclusive and
binding for all purposes absent manifest error).
SECTION 5.02. The Agent's Reliance, Etc. The Agent
shall not have any duties or responsibilities except those
expressly set forth in this Agreement or in the Supplement.
Neither the Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be
taken by it or them as the Agent under or in connection with this
Agreement or any related agreement, instrument or document except
for its or their own gross negligence or willful misconduct.
Without limiting the foregoing, the Agent: (a) may consult with
legal counsel (including counsel for the Company, the Master
Servicer, any Seller or the Trustee), independent public
accountants, consultants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel,
accountants or experts; (b) makes no warranty or representation to
any Purchaser and shall not be responsible to any Purchaser for any
statements, warranties or representations made in or in connection
with this Agreement or in connection with any related agreement,
instrument or document; (c) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or any related agreement,
instrument or document on the part of the Company, the Trustee, the
Master Servicer or any Seller or to inspect the property (including
the books and records) of the Company, any Seller, the Trustee or
the Master Servicer; (d) shall not be responsible to any Purchaser
for the due execution, legality, validity, enforceability, genuine
ness or sufficiency of value of this Agreement or any related
agreement, instrument or document; (e) shall not be deemed to be
acting as any Purchaser's trustee or otherwise in a fiduciary
capacity hereunder or in connection with any related agreement,
instrument or document; and (f) shall incur no liability under or
in respect of this Agreement or any related agreement, instrument
or document by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing
(which may be by telex or facsimile) believed by it to be genuine
and signed or sent by the proper party or parties.
SECTION 5.03. The Agent and Affiliates. To the extent
that the Agent or any of its Affiliates shall become a VFC
Certificateholder, the Agent or such Affiliate, in such capacity,
shall have the same rights and powers under this Agreement and each
related agreement, instrument and document as would any Purchaser
and may exercise the same as though it were not the Agent. The
Agent and its Affiliates may generally engage in any kind of
business with any Seller, the Company, the Master Servicer, the
Trustee or any Obligor or any of their respective Affiliates and
any Person who may do business with or own securities of any of the
foregoing, all as if it were not the Agent and without any duty to
account therefor to any Purchaser.
SECTION 5.04. Purchase Decision. Each Purchaser
acknowledges that it has, independently and without reliance upon
the Agent or any of its Affiliates, and based on such documents and
information as it has deemed appropriate, made its own evaluation
and decision to enter into this Agreement and to purchase the VFC
Certificates including as to the financial condition and affairs of
the Company, each Seller, the Master Servicer and the Receivables.
Each Purchaser also acknowledges that it will, independently and
without reliance upon the Agent or any of its Affiliates, and based
on such documents and information as it shall deem appropriate at
the time, continue to make its own decisions in taking or not
taking action under this Agreement or any related agreement,
instrument or other document. The Agent shall not have any
responsibility or duty, either initially or on a continuing basis,
to provide any Purchaser with any credit or other information with
respect thereto, whether coming into its possession before the
Closing Date or any Increase Date or at any time or times
thereafter.
SECTION 5.05. Indemnification. Each Purchaser agrees,
on the basis of its Pro Rata Share, to indemnify the Agent (to the
extent not reimbursed by the Company or the Master Servicer) from
and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent in any way relating
to or arising out of this Agreement or any related agreement,
instrument or document, or any action taken or omitted by the Agent
under this Agreement, or any related agreement, instrument or
document; provided, however, that no Purchaser shall be liable for
any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the generality of the
foregoing, each Purchaser agrees, on the basis of its Pro Rata
Share, to reimburse the Agent, promptly upon demand, for any out-of-
pocket expenses (including reasonable counsel fees) incurred by the
Agent in connection with the administration, modification,
amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights
or responsibilities under this Agreement or any related agreement,
instrument or document.
SECTION 5.06. Resignation by the Agent. (a) The Agent
may resign at any time by giving notice to the Company and the
Purchasers. The resignation shall take effect upon the appointment
of a successor Agent pursuant to subsections (b) and (c) below or
as otherwise provided below.
(b) Upon any notice of resignation, the Control Party
shall appoint a successor Agent hereunder who shall be a commercial
bank or trust company reasonably acceptable to the Company (it
being understood and agreed that any Purchaser is deemed to be
acceptable to the Company).
(c) If a successor Agent shall not have been appointed
within 30 days after the delivery of the notice referred to in
subsection (a), the Agent, with the consent of the Company, shall
then appoint a successor Agent who shall serve as Agent hereunder
until the time, if any, that the Control Party appoints a successor
Agent as provided above.
(d) If no successor Agent has been appointed pursuant to
subsection (b) or (c) above by the 60th day after the date notice
of resignation was given by the Agent, the Agent's resignation
shall become effective and the Purchasers shall thereafter perform
all the duties of the Agent under this Agreement and the Supplement
until the time, if any, that the Purchasers appoint a successor
Agent as provided above.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendments, Waivers and Consents, Etc. No
amendment to or waiver of any provision of this Agreement or the
Pooling and Servicing Agreement, nor consent to any departure by
the Company or the Master Servicer therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Company, the Master Servicer and the Agent acting on behalf of the
Required Certificateholders; provided, however, that no amendment
shall (a) decrease the outstanding amount of, or extend the
repayment of or any scheduled payment date for the payment of, any
interest in respect of the VFC Certificates or any fees owed to a
VFC Certificateholder without its prior written consent, (b)
forgive or waive or otherwise excuse any repayment of the Invested
Amount without the prior written consent of each VFC
Certificateholder affected thereby, (c) increase the Commitment of
any VFC Certificateholder without its prior written consent, (d)
waive any of the requirements hereunder that the security interest
of the Trustee in the Receivables and the other Trust Assets be
perfected by appropriate UCC filings without the prior written
consent of each VFC Certificateholder or (e) amend, modify or
otherwise affect the rights or duties of the Agent hereunder
without the prior written consent of the Agent; provided, however,
that this Agreement may not be amended unless the Company shall
have delivered the proposed amendment to the Rating Agency at least
ten Business Days (or a shorter period that shall be acceptable to
them) prior to the execution and delivery thereof and the Rating
Agency shall not as a result of such amendment, have downgraded the
rating assigned to the VFC Certificates immediately prior to such
amendment. Each VFC Certificateholder shall be bound by any
modification, waiver or consent authorized by this section, whether
or not its VFC Certificate shall have been marked to indicate the
modification, waiver or consent. This Agreement and the other
agreements, instruments and documents executed and delivered
pursuant hereto contain a final and complete integration of all
prior expressions by the parties hereto and thereto with respect to
the subject matter hereof and thereof and shall constitute the
entire agreement among the parties hereto and thereto with respect
to the subject matter hereof and thereof, superseding all prior
oral or written understandings.
SECTION 6.02. Notices. All notices and other
communications provided for hereunder shall, unless otherwise
stated herein, be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted
or delivered, as to each party hereto, at its address set forth
under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to
the other parties hereto. All such notices and communications
shall be effective, upon receipt, or in the case of delivery by
mail, five days after being deposited in the United States mails,
or, in the case of notice by telex, when telexed against receipt of
answer back, or in the case of notice by facsimile copy, when
verbal communication of receipt is obtained.
SECTION 6.03. No Waiver; Remedies; Rights of Purchaser,
Etc. Any waiver, consent or approval given by any party hereto
shall be effective only in the specific instance and for the
specific purpose for which given, and no waiver by a party of any
breach or default under this Agreement shall be deemed a waiver of
any other breach or default. No failure on the part of any party
hereto to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder, or any abandonment or
discontinuation of steps to enforce the right, power or privilege,
preclude any other or further exercise thereof or the exercise of
any other right. No notice to or demand on any party hereto in any
case shall entitle such party to any other or further notice or
demand in the same, similar or other circumstances. The remedies
herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 6.04. Binding Effect; Assignability.
(a) This Agreement shall be binding upon each of and
inure to the benefit of the Company, the Master Servicer, the
Agent, each Purchaser and their respective successors and permitted
assigns.
(b) The Company shall not assign any of its rights and
obligations hereunder or any interest herein without the prior
written consent of the Agent and each Purchaser. Without the prior
written consent of the Agent and each Purchaser, the Master
Servicer shall not assign any of its rights and obligations
hereunder or any interest herein to any Person other than a
Successor Servicer.
(c) Each VFC Certificateholder may, in accordance with
Sections 2.6 and 8.7 of the Supplement, at any time sell to one or
more banks or other entities ("Participants") participating
interests in all or any portion of its VFC Certificates and its
Commitment. In the event of any sale by a VFC Certificateholder of
participating interests to a Participant, the VFC
Certificateholder's obligations under this Agreement shall remain
unchanged, the VFC Certificateholder shall remain solely
responsible for the performance thereof, and the VFC
Certificateholder shall remain the holder of its rights under its
VFC Certificate and this Agreement for all purposes hereunder, and
the other parties hereunder shall continue to deal solely and
directly with the VFC Certificateholder in connection with such
rights and obligations under this Agreement. The Company agrees
that each Participant shall be entitled to the benefits of Sections
2.07, 2.08 and 2.09 with respect to its participation in the VFC
Certificate (it being understood that amounts payable to any
Participant under Section 2.09 will be limited as provided in
Section 2.09 absent compliance by such participant with such
Section).
(d) Any VFC Certificateholder may, in accordance with
Sections 2.6 and 8.7 of the Supplement, at any time assign to one
or more banks or financial institutions ("Assignees") all or any
part of its Commitment; provided, however, that (i) unless assigned
to an Affiliate of the VFC Certificateholder, it assigns all of its
Commitment or a portion of its Commitment in an amount not less
than $5,000,000, (ii) after the assignment, the VFC
Certificateholder and its Affiliates continue to hold at least
$5,000,000 of Commitment or have reduced their Commitment to $0,
(iii) any Assignee, other than an Affiliate of the VFC
Certificateholder, must be reasonably acceptable to the Company and
the Agent, (iv) if such Assignee is organized under the laws of a
jurisdiction outside the United States of America, such Assignee
shall satisfy the requirements of Section 2.09, or amounts payable
to it under Section 2.09 shall be limited to amounts that would be
payable such Assignee had complied with Section 2.09, and (v) any
such assignment shall be subject to the prior written consent of
the Company, which consent shall not be unreasonably delayed or
withheld. In the event of any assignment, the VFC
Certificateholder shall give notice to the Company and the Agent
and shall deliver to the Agent, for acceptance and recording in its
records, an assignment agreement substantially in the form of
Exhibit A together with a processing and recordation fee of $3,500.
Within five Business Days of receipt thereof, the Agent shall, if
the assignment agreement has been fully executed by the Assignee,
the assignor VFC Certificateholder and the Company, is completed
and is in substantially the form of Exhibit A, execute the
assignment agreement and record the information contained therein
in its records. Upon the earlier of the expiration of the fifth
Business Day after receipt or the date of such recording, the
assignment will become effective. The Company, the Agent and the
assignor VFC Certificateholder agree to extend the rights and
benefits with respect to the Company under this Agreement to the
Assignee to the extent the Assignee would have had if it were a VFC
Certificateholder that was an original signatory to this Agreement;
provided, that the Company shall be entitled to continue to deal
solely and directly with the assignor VFC Certificateholder in
connection with the interests so assigned to the Assignee until the
assignment agreement and any required fee, as described above,
shall have been delivered to the Company and the Agent by the VFC
Certificateholder and the Assignee and the assignment shall have
become effective. Upon the effective assignment of any Commitment,
the VFC Certificateholder assigning such Commitment shall be
relieved of its obligations hereunder to the extent of the
assignment.
(e) The sale or assignment of any Commitment to any
Assignee or Participant (each, a "Transferee") shall not be
effective until it has agreed to be bound by the provisions of
Section 6.08. The Company and SFC each authorize the VFC
Certificateholders to disclose to any Transferee and any
prospective Transferee any and all information in their possession
concerning the Company and SFC that has been delivered to them by
the Company, Aggregate Commitment, the Trustee and/or the Agent in
connection with their credit evaluation of the Trust Assets prior
to entering into this Agreement.
(f) Notwithstanding any other provisions set forth in
this Agreement, the VFC Certificateholders may at any time create a
security interest in all or any portion of their rights under this
Agreement and the VFC Certificates in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of
the Federal Reserve System.
(g) This Agreement shall create and constitute the con
tinuing obligations of the parties hereto in accordance with its
terms, and shall remain in full force and effect until the date on
which the Invested Amount of the VFC Certificates has been paid in
full; provided, however, that the rights and remedies with respect
to any breach of any representation and warranty made by the
Company or the Master Servicer pursuant to Article IV and, the
rights and remedies described in Sections 2.07, 2.08, 2.09 and 6.07
shall be continuing and shall survive any termination of this Agree
ment.
SECTION 6.05. Securities Laws; Certificates as Evidence
of Indebtedness.
(a) Each Purchaser acknowledges, represents, warrants
and covenants, as applicable, to the Company as of the Closing Date
that:
(i) the VFC Certificates have not been and will not be
registered under the Securities Act and are being offered and
sold to the Purchaser in reliance upon the exemption provided
in Section 4(2) of the Securities Act, and have not and will
not be registered or qualified under the securities or "blue
sky" laws of any jurisdiction, and may not be resold or
otherwise transferred unless so registered or qualified or
unless any exemption from such requirements is available;
(ii) the Purchaser is purchasing the VFC Certificates in
the ordinary course of its business and for investment only
solely for its own account or accounts for which it exercises
sole investment discretion and not as nominee or agent for any
other Person and not with a view to, or for offer or sale in
connection with, any distribution thereof (within the meaning
of the Securities Act) that would be in violation of the
securities laws of the United States of America or any state
thereof;
(iii) the Purchaser is an "Accredited Investor" (as
defined under Rule 5.01(a)(1), (2), (3) or (7), of the
Securities Act) or a sophisticated institutional investor, or,
if the VFC Certificates are to be purchased for one or more
institutional accounts ("investor accounts") for which it is
acting as a fiduciary or agent, each such investor account is
an Accredited Investor or a sophisticated institutional
investor;
(iv) the Purchaser invests in or has such knowledge and
experience in business and financial matters and with respect
to investments in securities so as to enable it to understand
and evaluate the risks of such investments and form an
investment decision with respect thereto and is able to bear
the risk of such investment for an indefinite period and to
afford a complete loss thereof;
(v) the Purchaser has been afforded access to
information (including the financial condition) about the
Company, the Master Servicer and the Sellers to enable it to
evaluate its investment in the VFC Certificates, acknowledges
receipt of such information and further acknowledges that it
has been afforded the opportunity (A) to ask such questions as
it has deemed necessary of, and to receive answers from,
representatives of the Company, the Master Servicer and the
Sellers concerning the terms and conditions of the offering of
the VFC Certificates and the merits and risks of investing in
the VFC Certificates and (B) to obtain such additional
information which the Company, the Master Servicer or any of
the Sellers, as the case may be, possess or can acquire
without unreasonable effort and expense that is necessary to
verify the accuracy and completeness of the information
described above in this clause (v);
(vi) the Purchaser acknowledges that the expressed
intent of the Company is that the VFC Certificates are being
issued only in transactions not involving any public offering
within the meaning of the Securities Act and that the VFC
Certificates will bear a legend substantially as set forth in
the form of the VFC Certificates included in the Supplement
and will be subject to certain limitations on transfer and
exchange specified in the Agreement, the Supplement and the
other Transaction Documents;
(vii) the Purchaser is not an ERISA Entity; and
(viii) the execution, delivery, and performance of this
Agreement has been duly authorized by all necessary corporate
action on the part of the Purchaser; this Agreement has been
duly executed and delivered by the Purchaser and this
Agreement constitutes the legal, valid and binding obligations
of the Purchaser, enforceable in accordance with its terms,
except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereinafter in effect, affecting the
enforcement of creditors' rights and except as such
enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(b) It is the intent of the Company and each Purchaser
that, for federal, state and local income and franchise tax
purposes, the VFC Certificates will be evidence of indebtedness of
the Company. The Company and each Purchaser agree to treat the VFC
Certificates for federal, state and local income and franchise tax
purposes as indebtedness of the Company secured by the Series
Collateral and the other Pledged Assets.
SECTION 6.06. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAWS BUT OTHERWISE WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES. TO THE EXTENT PERMITTED BY LAW, EACH OF THE
PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE
IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE, BETWEEN THE COMPANY OR THE MASTER SERVICER AND THE
PURCHASER OR THE AGENT ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 6.07. Costs and Expenses. The Company agrees to
pay on demand to (i) the Agent all reasonable costs and expenses in
connection with the preparation, execution, delivery and adminis
tration (including periodic auditing and rating agency fees, costs
and expenses) of this Agreement, the Pooling and Servicing
Agreement and the other documents to be delivered in connection
herewith and therewith, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agent
with respect thereto and with respect to advising the Agent, as to
its rights and remedies and the rights and remedies of the
Purchasers under this Agreement and the other documents delivered
hereunder or in connection herewith and (ii) the Agent and any
Affected Person, all reasonable costs and expenses, if any
(including reasonable counsel fees and expenses), in connection
with the enforcement of this Agreement, and the other documents
delivered hereunder or in connection herewith.
SECTION 6.08. No Proceedings. SFC, the Agent and each
Purchaser hereby agrees that it will not institute against, or join
any other Person in instituting against, the Company any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any federal or state bankruptcy or similar law for
one year and a day after the last day on which the VFC Certificates
shall have been outstanding. The foregoing shall not limit the
right of SFC, the Agent or any VFC Certificateholder to file any
claim in or otherwise take any action with respect to any
insolvency proceeding that was instituted against the Company by
any other Person.
SECTION 6.09. Execution in Counterparts; Severability.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement.
In case any provision in or obligation under this Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions
or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 6.10. Liabilities of the Company.
Notwithstanding any provision to the contrary in this Agreement,
amounts payable by the Company hereunder pursuant to Section 2.07,
2.08, 2.09 or 6.07 shall be payable solely from Available Funds,
shall be non-recourse to the Company other than with respect to
Available Funds necessary to make such payment, and, until the
earliest date on which proceedings of the type described in
subsection 7.1(a) of the Pooling Agreement either are or pursuant
to the terms of the Pooling Agreement, could be initiated against
the Company, shall not constitute a claim against the Company to
the extent that insufficient Available Funds exist to make such
payment.
IN WITNESS WHEREOF, the parties have caused this Agree
ment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
COMPANY: SPECIALTY FOODS FINANCE CORPORATION
By:______________________________
Name:
Title: Vice President, Treasurer
and Assistant Secretary
c/o H&M Food Systems
3709 East First Street
Fort Worth, Texas 76111
Attention: Chief Financial Officer
Telephone: (817) 831-0981
Facsimile: (817) 838-4468
MASTER SERVICER: SPECIALTY FOODS CORPORATION
By:______________________________
Name:
Title: Vice President and Treasurer
520 Lake Cook Road
Suite 520
Deerfield, Illinois 60015
Attention: Chief Financial Officer
Telephone: (847) 405-5303
Facsimile: (847) 405-5310
PURCHASERS: BANKERS TRUST COMPANY
Commitment
$75,000,000
By:______________________________
Name:
Title:
14 Wall Street, 3rd Floor
New York, New York 10006
Attention: Karen Minissale
Telephone No.: (212) 618-2608
Facsimile No.: (212) 618-2639
AGENT: BANKERS TRUST COMPANY, as Agent
By:______________________________
Name:
Title:
14 Wall Street, 3rd Floor
New York, New York 10006
Attention: Karen Minnisale
Telephone No.: (212) 618-2608
Facsimile No.: (212) 618-2639
SCHEDULE I
CONDITIONS PRECEDENT DOCUMENTS
(a) A fully executed copy of the Receivables Sale
Agreement together with all amendments thereto in effect as
of the Closing Date, and copies of the other instruments,
agreements and documents required to be delivered
thereunder.
(b) Fully executed copies of each of the Pooling
Agreement and the Servicing Agreement with all amendments
thereto in effect as of the Closing Date and copies of the
other instruments, agreements and documents required to be
delivered thereunder.
(c) A fully executed copy of the Supplement and
copies of the other instruments, agreements and documents
required to be delivered thereunder.
(d) A fully executed copy of Amendment No. 5 to
each of the Pooling Agreement and Receivables Sale Agreement
and Amendment No. 1 to the Servicing Agreement.
(e) A fully executed copy of the Consent from
Capital Markets Assurance Corporation and the Control Party
for the Term Certificates, Series 1994-1, and from Bankers
Trust Company, as Agent on behalf of the VFC
Certificateholders.
(f) Letter from Standard & Poor Ratings Group
assigning a rating of BBB for the VFC Certificates issued
pursuant to the Supplement.
(g) A fully executed copy of the Guaranty.
(h) Evidence that, on or before the Closing Date,
proper financing statements (Form UCC-1) or other, similar
instruments or documents have been filed, in each case as
may be necessary or, in the opinion of the Agent, desirable
under the UCC or any comparable law to perfect in first
priority position the security interest and Lien of the
Trustee in the Trust Assets.
(i) A certificate of the Secretary or Assistant
Secretary of the Company dated the date of this Agreement,
certifying (i) the names and true signatures of the
incumbent officers of the Company authorized to sign this
Agreement and the Supplement on behalf of the Company and
the other documents to be delivered by it hereunder and
thereunder (on which certificate the Agent and each
Purchaser may conclusively rely until such time as the Agent
shall receive from the Company a revised certificate meeting
the requirements of this paragraph (f)), (ii) that the copy
of the certificate of incorporation of the Company attached
thereto is a complete and correct copy and that such
certificate has not been amended, modified or supplemented
and is in full force and effect, (iii) that the copy of the
by-laws attached thereto is a complete and correct copy and
that such by-laws have not been amended, modified or
supplemented and is in full force and effect, and (iv) that
the authorizing resolutions of the board of directors of the
Company attached thereto approving and authorizing the
execution, delivery and performance by the Company of this
Agreement, the Supplement and the documents related thereto
is a complete and correct copy
and that such resolutions have not been amended, modified or
supplemented and are in full force and effect.
(j) A certificate of an Officer of the Company
certifying (a) the accuracy of the representations and
warranties of the Company made under the Program Documents,
(b) the satisfaction of all the conditions precedent
required under Section 5.10(b) of the Pooling Agreement, and
(c) that the Amendment shall not adversely affect in any
material respect the interest of the Series 1994-1 Term
Certificateholders or the Series 1998-1 VFC
Certificateholders.
(k) A certificate of the Secretary or Assistant
Secretary of the Master Servicer dated the date of this
Agreement, certifying (i) the names and true signatures of
the incumbent officers of the Master Servicer authorized to
sign this Agreement and the Supplement on behalf of the
Master Servicer and the other documents to be delivered by
it hereunder and thereunder (on which certificate the Agent
and each Purchaser may conclusively rely until such time as
the Agent shall receive from the Master Servicer a revised
certificate meeting the requirements of this paragraph (g)),
(ii) that the copy of the certificate of incorporation of
the Master Servicer attached thereto is a complete and
correct copy and that such certificate has not been amended,
modified or supplemented and is in full force and effect,
(iii) that the copy of the by-laws attached thereto is a
complete and correct copy and that such by-laws have not
been amended, modified or supplemented and is in full force
and effect, and (iv) that the authorizing resolutions of the
board of directors of the Master Servicer attached thereto
approving and authorizing the execution, delivery and
performance by the Master Servicer of this Agreement, the
Supplement and the documents related thereto is a complete
and correct copy and that such resolutions have not been
amended, modified or supplemented and are in full force and
effect.
(l) A certificate of the Secretary or Assistant
Secretary of each of the Sellers under and as defined by the
Receivables Sale Agreement, dated the date of this
Agreement, certifying (i) the names and true signatures of
the incumbent officers of each Seller authorized to sign the
Amendment on behalf of each respective Seller and the other
documents to be delivered by each Seller thereunder, and
(ii) that the authorizing resolutions of the board of
directors of each of the Sellers attached thereto approving
and authorizing the execution, delivery and performance by
each Seller of the Amendment and the documents related
thereto is a complete and correct copy and that such
resolutions have not been amended, modified or supplemented
and are in full force and effect.
(m) Good standing certificates for each of the
Company and the Master Servicer issued by the Secretaries of
State of Delaware, Illinois and Texas dated as of a date no
earlier than ten days prior to the date of the Closing.
(n) Opinions of (i) Paul, Weiss, Rifkind &
Garrison, (ii) Foley & Lardner, (iii) Dorsey & Whitney, LLP
(iv) Kelley, Hart & Hallman, and (v) Robert Aiken, counsel
for the Company, the Master Servicer and each applicable
Seller, regarding, as applicable, due authorization and
execution, enforceability, true sale and non-consolidation,
perfection and priority of security interests and federal
and state tax matters; provided, however, that with respect
to issues of true sale and non-consolidation, such counsel,
as applicable, may issue letters entitling the Agent and
Purchasers to rely on their prior opinions on such subjects
given in connection with the initial closing under the
Pooling Agreement.
(o) Opinion of Thacher, Proffitt & Wood, counsel
for the Trustee.
(p) UCC, tax lien and judgment search reports
listing filings against the Company and each Seller under
and as defined in the Receivables Sale Agreement in all
applicable jurisdictions.
EXHIBIT A
FORM OF ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT, dated as of ____________
(this "Agreement"), is made between ____________________
(the "Assignor"), and _____________________ (the
"Assignee"). Except as otherwise defined herein,
capitalized terms have the meanings assigned to them in the
Certificate Purchase Agreement (as defined below).
BACKGROUND
1. The Assignor is a party to the Certificate Purchase
Agreement, dated as of March ___, 1998 (as amended,
supplemented or otherwise modified from time to time, the
"Certificate Purchase Agreement"), among Specialty Foods
Finance Corporation, a Delaware corporation (the "Company"),
Specialty Foods Corporation, a Delaware corporation, the VFC
Certificateholders party thereto (including the Assignor),
and Bankers Trust Company, as the Agent.
2. The Assignor wishes to assign, and the Assignee
wishes to be so assigned, the Assignor's rights and
obligations arising on and after the Effective Date (as
defined below) under the Certificate Purchase Agreement and
its VFC Certificate, including (a) its Commitment and (b)
its Pro Rata Share of the Invested Amount.
3. The Assignor and the Assignee also wish (a) the
Assignee to assume the obligations of the Assignor under the
Certificate Purchase Agreement with respect to the
Assignee's Share (as defined below) to the extent of the
rights assigned and (b) the Assignor to be released from the
obligations assumed by Assignee.
4. The Company, by its execution hereof, is providing
its written consent to the assignment accomplished by this
Agreement.
SECTION 1. Assignment. Effective on the Effective
Date (as defined below) and upon payment of the amount
specified in Section 3(a), the Assignor hereby assigns and
transfers to the Assignee, without recourse, representation
or warranty of any kind, express or implied (except as
provided in Sections 6(a) and (b)), and subject to Section
4(b), the Assignee's Share (as specified in Annex I hereto)
(the "Assignee's Share") of all of the Assignor's rights,
title and interest arising under (a) the Certificate
Purchase Agreement relating to the Assignor's Commitment
including all rights and obligations with respect to the
Invested Amount attributable to the Assignee's Share and (b)
the Assignor's VFC Certificate with respect to the
Assignee's Share as will result in the Assignee having from
and after the Effective Date the Commitment ("Assignee's
Commitment") specified in Annex I which shall be the face
amount of such Assignee's VFC Certificate.
SECTION 2. Assumption. Effective on the Effective
Date, the Assignee hereby irrevocably purchases, assumes and
takes from the Assignor, and the Assignor is hereby
expressly and absolutely released from, all of the
Assignor's obligations arising under the Certificate
Purchase Agreement relating to the Assignee's Share and of
any outstanding Invested Amount attributable to the
Assignee's Share.
SECTION 3. Payment. In consideration of the
assignment by the Assignor to the Assignee as set forth
above, the Assignee agrees to pay to the Assignor, in
Dollars and in immediately available funds, (a) on or prior
to the Effective Date, an amount specified by the Assignor
in writing on or prior to the Effective Date that represents
the Assignee's Share attributable to the Assignor's Pro Rata
Share of the Invested Amount made pursuant to the
Certificate Purchase Agreement and outstanding on the
Effective Date, and (b) from time to time thereafter, other
amounts (if any) that the Assignee has agreed in writing to
pay to the Assignor after the Effective Date.
Notwithstanding anything to the contrary in this
Agreement, if and when the Assignee receives or collects (x)
any payment of principal or interest relating to any VFC
Certificate that is not attributable to Assignee's Share or
(y) any payment of fees that are required to be paid to the
Assignor pursuant to this Agreement, then the Assignee shall
forward the payment to the Assignor.
To the extent payment of funds to the Assignee or the
Assignor are not made within two Business Days, each, as the
case may be, shall be entitled to recover the due amount,
together with interest thereon at the Federal Funds Rate (as
defined in the Supplement) per annum accruing from the date
of payment or the date of receipt of the funds by the other
party.
SECTION 4. Effectiveness. (a)(i) This Agreement
shall become effective on the date (the "Effective Date") on
which it shall have been duly executed by all parties, the
parties hereto have paid the processing and recording fee
required by Section 6.04(d) of the Certificate Purchase
Agreement and the Agent shall have recorded the information
contained herein in its records. The Assignor hereby
notifies the Agent of the assignment, effective as of the
Effective Date, of the Assignee's Share of Assignor's Pro
Rata Share of the Invested Amount attributable to the
Assignee's Share, and directs the Agent to pay the Assignee,
(A) any payment of principal of, or interest on, any VFC
Certificate attributable to the Assignee's Share and (B) any
Non-Usage Fees attributable to the Assignee's Share of the
Commitment. No (x) failure of either the Assignee or the
Assignor to settle any amount owed to the other (except with
respect to the payment of the processing and recordation fee
to the Agent and the payment due under Section 3(a)), (y)
dispute respecting any other settlement, including in
respect of the Company, or (z) bankruptcy, insolvency or
other condition whatsoever respecting any Person, shall in
any way impair, reduce or otherwise affect the effectiveness
of this Agreement.
(ii) The Assignor, the Assignee and the Agent
each acknowledges and agrees that from and after the
Effective Date, the Agent shall make all payments under
the Certificate Purchase Agreement in respect of the
Assignee's Share (including all payments of principal,
interest and Non-Usage Fees with respect thereto,
whether or not the payments shall have accrued prior to
or after the Effective Date) to the Assignee only. The
Assignor and the Assignee hereby agree further to make
all appropriate adjustments in payments to either of
them under the Certificate Purchase Agreement for
periods prior to the Effective Date directly between
themselves.
(b) With respect to any portion of the Assignor's Pro
Rata Share of the Invested Amount attributable to the
Assignee's Share, if and when the Assignor receives or
collects any payment of principal, interest, Non-Usage Fees
or other fees with respect to the Assignee's Share for any
period commencing on or after the Effective Date, the
Assignor shall distribute to the Assignee the portion
attributable to the Assignee's Share, but only to the extent
it accrued on or after the Effective Date and was not
theretofore paid to the Assignee by the Company or
otherwise. Any principal, interest and Non-Usage Fees paid
prior to the Effective Date shall be retained by the
Assignor. Any principal, interest or Non-Usage Fees
received by the Assignee that accrued prior to the Effective
Date shall be forwarded promptly, in the form received, to
the Assignor. The Assignee recognizes and agrees that (i)
it shall receive no payment on account of any Agent's fees
or other amounts or expenses (including counsel fees)
payable to the Agent (in such capacities and for its own
account), (ii) this Agreement shall not operate to assign
any rights or delegate any obligations of the Agent (in such
capacities), and (iii) notwithstanding anything to the
contrary in this Agreement, the Assignor shall retain all of
its rights to indemnification under the Certificate Purchase
Agreement for any events, acts or omissions occurring prior
to the Effective Date.
(c) The Agent, by its execution hereof, acknowledges
the assignment and agrees to make payments in respect of
interest, reimbursements and fees as described in clause
(a).
SECTION 5. Rights as VFC Certificateholder under
Certificate Purchase Agreement. In accordance with Section
6.04 of the Certificate Purchase Agreement, (a) as of the
Effective Date, the Assignee will be a VFC Certificateholder
under, and party to, the Certificate Purchase Agreement and
shall have (i) all of the rights and obligations of a VFC
Certificateholder (to the extent of the assignment and
assumption of the Assignee's Share effected by this
Agreement) and (ii) the addresses for notice purposes of
Annex I hereto and (b) promptly on or after the Effective
Date, the Company will execute and deliver any documents and
instruments that the Assignor or the Assignee reasonably may
require.
SECTION 6. Representations and Warranties. (a) Each
of the Assignor and the Assignee represents and warrants to
the other as follows:
(i) it has full power and authority, and has
taken all action necessary, to execute and deliver this
Agreement, to fulfill the obligations hereunder and to
consummate the transactions contemplated hereby,
(ii) the making and performance of this Agreement
and all documents required to be executed and delivered
hereunder do not and will not violate any law or
regulation of the jurisdiction of its incorporation or
any other applicable law or regulation,
(iii) this Agreement has been duly executed and
delivered and constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms,
and
(iv) all approvals, authorizations or other
actions by, or filing with, any Governmental Authority
necessary for the validity or enforceability of its
obligations under this Agreement have been obtained.
(b) The Assignor represents and warrants to the
Assignee that the Assignee's Share and the Assignor's Pro
Rata Share of the Invested Amount attributable to the
Assignee's Share are not subject to any Liens or security
interests created by the Assignor.
(c) Except as set forth in subsections (a) and (b),
the Assignor makes no representations or warranties, express
or implied, to the Assignee and shall not be responsible to
the Assignee for (i) the execution, effectiveness,
genuineness, legality, validity, enforceability,
collectibility, regulatory status or sufficiency of the
Certificate Purchase Agreement or any of the other
Transaction Documents, (ii) the perfection, priority, value
or adequacy of any collateral security or guaranty, (iii)
the taking of any action, or the failure to take any action,
with respect to any of the Transaction Documents, (iv) any
representations, warranties, recitals or statements made in
any of the Transaction Documents or in any written or oral
financial or other statements, instruments, reports,
certificates or documents made or furnished by the Assignor
to the Assignee or by or on behalf of the Company or any of
its Affiliates to the Assignor or the Assignee in connection
with the Transaction Documents and the transactions
contemplated thereby, (v) the financial or other condition
of the Company or any other Person or (vi) any other matter
having any relation to any of the foregoing. The Assignor
shall not be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the
Transaction Documents or the existence or possible existence
of any Early Amortization Event or Potential Early
Amortization Event. Additionally, the Assignor shall not
have any duty or responsibility either initially or on a
continuing basis to make any investigation or any appraisal
on the Assignee's behalf or to provide the Assignee with any
credit or other information with respect thereto, whether
coming into the Assignor's possession before the execution
of the Certificate Purchase Agreement or at any time
thereafter. The Assignor shall have no responsibility with
respect to the accuracy of, or the completeness of, any
information provided to the Assignee, whether by the
Assignor or by or on behalf of the Company or any other
Person obligated under the Certificate Purchase Agreement or
any related instrument or document.
(d) Each of the representations and warranties made by
the Assignor as a Purchaser under Section 6.05 of the
Certificate Purchase Agreement is hereby repeated by the
Assignee and incorporated herein. Furthermore, the Assignee
represents and warrants that it has made its own independent
investigation of each of the foregoing matters, including
the financial condition and affairs of the Company and its
Affiliates, in connection with the execution of this
Agreement (including the solvency of the Company and its
Affiliates, their ability to pay their respective debts as
they mature and the capital of the Company and its
Affiliates remaining after the closing under the Pooling and
Servicing Agreement and the consummation of the transactions
contemplated thereby) and has made and shall continue to
make its own appraisal of the creditworthiness of the
Company and its Affiliates. The Assignee (i) confirms that
it has received copies of the Pooling and Servicing
Agreement, together with copies of certain other closing
documents delivered in connection with the Certificate
Purchase Agreement, financial statements and any other
documents and information that it has requested or deemed
appropriate to make its own credit analysis and decision to
enter into this Agreement and (ii) agrees that it will,
independently and without reliance upon the Agent, the
Assignor or any other VFC Certificateholder and based on
such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in
taking or not taking action under the Pooling and Servicing
Agreement.
SECTION 7. No Proceedings. The Assignee hereby agrees
to be bound by the provisions of Section 6.08 of the
Certificate Purchase Agreement.
SECTION 8. [ Withholding Taxes. In accordance with
Section 2.09 of the Certificate Purchase Agreement, the
Assignee agrees to execute and deliver to the Agent, for
delivery to the Company, on or before the Effective Date an
Internal Revenue Service Form 1001 or 4224 or successor
applicable form, properly completed and duly executed by the
Certificateholder certifying that it is entitled to receive
payments under the Certificate Purchase Agreement without
deduction or withholding of any United States Federal income
taxes. The Assignee represents and warrants to the Company
and the Assignor that, as of the Effective Date, it shall be
entitled to receive payments of principal and interest
hereunder without deduction for or on account of any taxes
imposed by the United States of America or any political
subdivision thereof. In the event that, after delivering
the applicable form, the Assignee shall cease to be exempt
from withholding and/or deduction of taxes, then the Agent
may withhold and/or deduct the applicable amount from any
payments of principal, interest and any fees to which the
Assignee otherwise would be entitled, and the Agent shall
have no liability whatsoever to the Assignee for any such
withholding or deduction. The Assignee shall indemnify the
Company and the Agent from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs or expenses that result from the Assignee's
breach of such representation and warranty.*
SECTION 9.] Miscellaneous. (a) Each of the parties
hereto agrees to take any action and execute and deliver any
documents that any party hereto reasonably may request from
time to time in order to implement more fully the purposes
of this Agreement. Without limiting the generality of the
foregoing, the Assignor and the Assignee will cooperate in
obtaining for the Assignee a VFC Certificate (as well as a
replacement VFC Certificate for the Assignor representing
any retained interest of the Assignor).
(b) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES EXCEPT AS
OTHERWISE CONTEMPLATED IN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK.
(c) Except as otherwise set forth herein, this
Agreement sets forth the entire agreement between the
parties relating to the subject matter hereof, and no term
or provision of this Agreement may be amended, changed,
waived, discharged or terminated orally or otherwise, except
in a writing signed by the Assignor and the Assignee.
(d) This Agreement 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 together shall constitute
one and the same instrument.
(e) Each of the parties hereto agrees that each party
shall bear its own expenses in connection with the
preparation and execution of this Agreement and the
consummation of the Assignment described herein. The
Assignee further agrees that it shall send a check in the
amount of $3,500 to the Agent on or prior to the Effective
Date, as payment of the processing and recordation fee
described in Section 6.04(d) of the Certificate Purchase
Agreement.
(f) All representations and warranties made, and
indemnities provided for, herein shall survive the
consummation of the transactions contemplated hereby.
(g) The Assignor may at any time or from time to time
grant assignments and participations in its rights and
obligations under the Certificate Purchase Agreement and its
VFC Certificate to other Persons, but not in the portions
thereof assigned to the Assignee.
(h) This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective
successors and assigns. Neither the Assignor nor the
Assignee may assign or transfer any of its rights or
obligations under this Agreement without the prior written
consent of the other party and if required pursuant to
Section 6.04(d) of the Certificate Purchase Agreement, of
the Company. The preceding sentence shall not limit the
right of the Assignee to assign all or part of the
Assignee's Share in the manner contemplated by the
Certificate Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized
officers and delivered as of the day and year first above
written.
________________________________,
as Assignor
By:
Title: _________________________
_______________________________,
as Assignee
By:
___________________________
Title:
__________________________
The undersigned hereby acknowledges, agrees and
consents to the terms and provisions of this Agreement.
SPECIALTY FOODS FINANCE CORPORATION
By: ____________________________________
Title: __________________________________
The undersigned hereby acknowledges the terms and
provisions of this Agreement, and agrees to make payments in
respect of principal, interest and fees as described in
Section 4(a).
BANKERS TRUST COMPANY, as the Agent
By: ____________________________________
Title: __________________________________
ANNEX I
to the Assignment Agreement
1. Item Assignee's Share:
Assignee's Commitment $______________
Percentage of Assignor's Commitment __________%
1. Item Address of Assignee for notice purposes:
_________________________________
_________________________________
_________________________________
Attention: ________________________
Telephone: _______________________
Facsimile: ________________________
_______________________________
* If the Assignee is a foreign entity.
EXHIBIT 10.79
EXECUTION COPY
SPECIALTY FOODS FINANCE CORPORATION,
SPECIALTY FOODS CORPORATION,
as Master Servicer,
THE CHASE MANHATTAN BANK,
as Trustee
SERIES 1998-1 SUPPLEMENT
Dated as of March 31, 1998
to
POOLING AGREEMENT
Dated as of November 16, 1994
SFC MASTER TRUST
TABLE OF CONTENTS
Section Page
ARTICLE IDEFINITIONS 1
SECTION 1.1. Definitions 1
ARTICLE IIDESIGNATION OF CERTIFICATES; PURCHASE AND SALEOF
THE VFC CERTIFICATES 18
SECTION 2.1. Designation 18
SECTION 2.2. The Series 1998-1 Certificates 18
SECTION 2.3. Delivery 18
SECTION 2.4. Procedure for Increasing the Invested
Amount 19
SECTION 2.5. Procedure for Decreasing the Invested
Amount 20
SECTION 2.6. Commitment Certification 21
SECTION 2.7. Interest; Certain Fees 22
SECTION 2.8. Interest Rate Indemnity 22
ARTICLE IIIARTICLE III OF THE AGREEMENT 23
SECTION 3C.2. Establishment of Series Accounts. 23
SECTION 3C.3. Daily Allocations. 24
SECTION 3C.4. Selection of Funding Periods;
Determination of Interest Rates 26
SECTION 3C.5. Determination of Series 1998-1
Amortization Principal Payments 27
SECTION 3C.6. Applications 27
ARTICLE IVDISTRIBUTIONS AND REPORTS 29
SECTION 4C.1. Distributions 29
SECTION 4C.2. Statements and Notices 29
SECTION 4C.3. Notices 31
ARTICLE VADDITIONAL EARLY AMORTIZATION EVENTS 31
SECTION 5.1. Additional Early Amortization Events 31
ARTICLE VISERVICING FEE 35
SECTION 6.1. Servicing Compensation 35
ARTICLE VII COVENANTS, REPRESENTATIONS AND WARRANTIES 35
SECTION 7.1. Representations and Warranties of the
Company and the
Master Servicer 35
SECTION 7.2. Covenants of the Company 35
SECTION 7.3. Covenants of the Master Servicer 36
SECTION 7.4. Additional Supplements 37
ARTICLE VIIIMISCELLANEOUS 39
SECTION 8.1. Ratification of Agreement 39
SECTION 8.2. Governing Law 39
SECTION 8.3. Further Assurances 39
SECTION 8.4. No Waiver; Cumulative Remedies 39
SECTION 8.5. Amendments 39
SECTION 8.6. Notices 39
SECTION 8.7. Successors and Assigns 40
SECTION 8.8. Counterparts 42
SECTION 8.9. No Bankruptcy Petition 42
SECTION 8.10. Costs and Expenses 42
ARTICLE IXFINAL DISTRIBUTIONS 43
SECTION 9.1. Certain Distributions 43
EXHIBITS
Exhibit A Form of VFC Certificate, Series 1998-1
Exhibit B Form of Subordinated Company
Certificate,
Series 1998-1
Exhibit C [Reserved]
Exhibit D Form of Daily Report
Exhibit E-1 Form of Monthly Settlement Statement
Exhibit E-2 Form of Funding Period Settlement
Statement
Exhibit F Form of Notice of Increase
Exhibit G Form of Commitment Certification
SCHEDULES
Schedule 1 Trust Accounts
Schedule 2 Cure Period Trigger Dates
Schedule 3 Reserve Requirement Adjustments
SERIES 1998-1 SUPPLEMENT, dated as of March 31, 1998
(this "Supplement"), among Specialty Foods Finance
Corporation, a Delaware corporation (the "Company"),
Specialty Foods Corporation, a Delaware corporation, as
master servicer (the "Master Servicer") and The Chase
Manhattan Bank, a New York banking corporation, in its
capacity as trustee (the "Trustee") under the Agreement (as
hereafter defined).
W I T N E S S E T H :
WHEREAS, the parties hereto have entered into a
Pooling Agreement, dated as of November 16, 1994 (as
amended, supplemented or otherwise modified from time to
time, the "Agreement");
WHEREAS, the Agreement provides, among other
things, that the Company, the Master Servicer and the
Trustee may at any time and from time to time enter into
supplements to the Agreement for the purpose of authorizing
the issuance on behalf of the Trust by the Company for
execution and redelivery to the Trustee for authentication
of one or more Series of Investor Certificates;
WHEREAS, the Company, the Master Servicer and the
Trustee wish to supplement the Agreement as hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are
hereby expressly acknowledged, the parties hereto agree as
follows:
I. ARTICLE
DEFINITIONS
a) SECTION Definitions. The following words
and phrases shall have the following meanings with respect
to Series 1998-1 and the definitions of such terms are
applicable to the singular as well as the plural form of
such terms and to the masculine as well as the feminine and
neuter genders of such terms:
"Accrued Expense Amount" shall mean, for each
Business Day, (i) 1/10 of the Series 1998-1 Monthly
Interest Amount as most recently computed or recomputed
for each Eurodollar Tranche outstanding and for the
Unallocated Balance up to but not exceeding the full
amount thereof plus (A) if such Business Day is prior
to the 20th day of an Accrual Period, 1/10 of each of
the Series 1998-1 Monthly Servicing Fee and the portion
of the Non-Usage Fees to be paid on the next succeeding
Settlement Date (in each case, up to but not exceeding
the full amount thereof) or (B) if such Business Day is
on or after the 20th day of an Accrual Period or within
ten (10) days of any Funding Period Settlement Date and
if the Agent notifies the Master Servicer and the
Trustee on such Business Day that Aggregate Daily
Collections previously transferred to the Series 1998-1
Non-Principal Collection Sub-account are insufficient
to pay the Series 1998-1 Monthly Interest Amount, the
Series 1998-1 Monthly Servicing Fee and the portion of
the Non-Usage Fees to be paid on the next succeeding
Settlement Date or Funding Period Settlement Date, as
applicable, an amount reasonably expected by the Agent
to be equal to such insufficiency, which amount shall
be specified in such notice to the Master Servicer and
the Trustee and (ii) the Program Costs for such
Business Day.
"Acquiring VFC Certificateholder" shall have the
meaning specified in subsection 8.7(c).
"Additional Interest" shall mean with respect to
any outstanding Past Due Interest, interest thereon,
until paid in full, at a per annum rate equal to the
sum of (i) the Applicable Base Rate as in effect from
day to day computed on the basis of a year of 360 days
and actual days elapsed and (ii) 2.00%.
"Additional Seller Supplement" shall have the
meaning specified in the Receivables Sale Agreement.
"Adjusted Eurodollar Rate" for any Eurodollar
Tranche for any Eurodollar Period shall mean the rate
obtained by dividing (i) an interest rate per annum
equal to the average (rounded upward to the nearest
whole multiple of one-sixteenth of one percent per
annum, if such rate is not such a multiple) of the
offered quotation, if any, to first class banks in the
New York interbank Eurodollar market by the Agent for
U.S. dollar deposits of amounts in immediately
available funds comparable to the principal amount of
the Eurodollar Tranche for which the Applicable
Eurodollar Rate is being determined with maturities
comparable to the Eurodollar Period for which such
Applicable Eurodollar Rate will apply as of
approximately 11:00 a.m. (New York City time) two
Business Days prior to the commencement of such
Eurodollar Period by (ii) a percentage equal to 100%
minus the stated maximum rate (stated as a decimal) of
all reserves, if any, required by the Board of
Governors of the Federal Reserve System to be
maintained by a member bank of the Federal Reserve
System in New York City with deposits in excess of five
billion dollars against "Eurocurrency liabilities" as
specified in Regulation D (or against any other
category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar
Tranches is determined or any category of extensions of
credit or other assets which includes loans by a non-
United States office of the Agent to United States
residents).
"Adjusted Invested Amount" shall mean, as of any
date of determination, the greater of (i) (A) the
Invested Amount on such date, minus (B) the amount on
deposit in the Series 1998-1 Principal Collection Sub-
subaccount on such date and (ii) $500,000.
"Aged Receivables Ratio" shall mean, as of the
last day of each Settlement Period, the percentage
equivalent of a fraction, (A) the numerator of which
shall be the sum of (i) the sum of the aggregate unpaid
balances of Receivables originated by each Seller or
each Seller Group that were past due by 61-90 days (as
determined without giving effect to any adjustments by
any credit memos offered to the Obligors thereunder),
(ii) the aggregate amounts of Receivables of each such
Seller or Seller Group which were charged off as
uncollectible prior to the day which is 91 days after
its original due date during the Settlement Period and
(iii) without duplication of any amounts described in
the preceding clause (ii), the aggregate amounts of
Receivables of each such Seller or Seller Group the
Obligors with respect to which shall be the subject of
any Insolvency Event and (B) the denominator of which
shall be the sum of the aggregate Principal Amounts of
Receivables originated by each such Seller or such
Seller Group during the third prior Settlement Period.
"Agent" shall mean Bankers Trust Company in its
capacity as agent for the VFC Certificateholders.
"Agent's Account" shall mean that certain account
in the name of the Agent, Account No. 00371397
maintained at Bankers Trust Company, ABA No. 021-00-
41033, or such other account as the Agent may later
specify to the other parties hereto in writing.
"Aggregate Commitment" shall mean, with respect to
any date of determination, the aggregate amount of the
Commitments of all VFC Certificateholders on such date.
"Agreement" shall mean the Pooling Agreement,
dated as of November 16, 1994, among the Company, the
Master Servicer and the Trustee, as amended,
supplemented or otherwise modified from time to time.
"Allocated Receivables Amount" shall mean, on any
date of determination with respect to Series 1998-1,
the lower of (i) the Target Receivables Amount on such
day and (ii) the Aggregate Receivables Amount on such
day times the percentage equivalent of a fraction the
numerator of which is the Adjusted Invested Amount on
such day and the denominator of which is the Aggregate
Adjusted Invested Amounts on such day. Notwithstanding
the foregoing, in the event that with respect to any
Settlement Period the Company has elected to exclude
the Receivables owing by any one Obligor (including
Affiliates of such Obligor) for purposes of calculating
any of the Default Ratio, Delinquency Ratio or Loss-to-
Liquidation Ratio with respect to such Settlement
Period, all Receivables owing by such Obligor
(including Affiliates of such Obligor) shall for the
next succeeding Settlement Period be excluded from the
Aggregate Receivables Amount.
"Amortization Period" shall mean the period
following the Revolving Period and ending on the date
when the Invested Amount shall have been reduced to
zero and all accrued interest on and fees in respect of
the VFC Certificates shall have been paid.
"Applicable Base Rate" shall mean, at any time,
the sum of (x) the Base Rate at such time and (y) 1.0%.
"Applicable Eurodollar Rate" shall mean, at any
time, the sum of (x) the Adjusted Eurodollar Rate and
(y) the Applicable Margin.
"Applicable Margin" shall mean one and one-half of
one percent per annum (1.50%).
"Available Funds" shall mean, at any time, funds
then available to the Company that are not required,
pursuant to the terms of any of the Pooling and
Servicing Agreements, to be applied to the payment of
any amounts other than amounts specified as being
payable solely out of Available Funds, howsoever such
funds may be denominated in any such Pooling and
Servicing Agreement.
"Bankruptcy Action" shall have the meaning
specified in Section 5.1(l).
"Base Rate" shall mean a fluctuating interest rate
per annum equal to the higher of (i) the rate of
interest most recently designated by the Agent at its
principal office as its prime rate, whether or not such
rate is the lowest or best rate of interest actually
charged by the Agent to any of its customers in
connection with extensions of credit and (ii) 0.75% per
annum above the Federal Funds Rate. Any change in the
interest rate resulting from a change in the prime
lending rate announced by the Agent shall become
effective without prior notice to the Company or the
Master Servicer as of 12:01 a.m., New York City time,
on the Business Day on which each change in the prime
lending rate is designated by the Agent.
"Business Day" shall mean any day that is both a
Business Day under the Agreement and, if the term is
used in connection with respect to notices,
determinations, fundings and payments in connection
with any Funding Period during which the Funding Period
Rate is or will be determined by reference to the
Applicable Eurodollar Rate, a LIBO Business Day.
"Carrying Cost Reserve Ratio" shall mean, as of
any Settlement Date and continuing to, but excluding,
the next Settlement Date, an amount (expressed as a
percentage) equal to (i) the product of (A) the
greatest of (1) 2.00 times Days Sales Outstanding as of
such day, (2) 60 and (3) the weighted average length of
all then outstanding Funding Periods and (B) the
product of 1.5 times the Discount Rate as of such day;
divided by (ii) 360.
"Certificate Purchase Agreement" shall mean that
certain Certificate Purchase Agreement, dated the date
hereof, among the Company, SFC, the financial
institutions party thereto from time to time and the
Agent.
"Change in Control" shall mean the occurrence of
any of: (i) any "Change in Control" under the SFC Loan
Agreement (as such term is defined therein on the
Closing Date); (ii) except upon the exercise by the
administrative agent under the SFC Loan Agreement of
any of its remedies in accordance with the terms of the
SFC Pledge/Security Agreement (as in effect on the
Closing Date), the Company shall at any time not be
directly wholly-owned by SFC; or (iii) except as
permitted pursuant to Section 9.15 of the Receivables
Sale Agreement, any Seller shall at any time not be
wholly-owned, either directly or indirectly, by SFC.
"Closing Date" shall have the meaning specified in
the Certificate Purchase Agreement.
"Commitment" shall mean, as to any VFC
Certificateholder, its obligation to maintain and,
subject to certain conditions, increase, its investment
in the Invested Amount, in an aggregate amount not to
exceed at any one time outstanding the aggregate
maximum amount set forth in the Certificate Purchase
Agreement as such VFC Certificateholder's "Commitment,"
as such amount may be reduced or otherwise adjusted
from time to time as provided in the Certificate
Purchase Agreement.
"Commitment Certification" shall have the meaning
specified in Section 2.6.
"Control Party" shall mean, with respect to any
event, the Agent acting at the direction of holders of
VFC Certificates representing Fractional Undivided
Interests and/or Commitments aggregating more than 50%
of the Invested Amount adversely affected by such event
(or the Trustee acting on behalf of the Agent or such
holders).
"Cure Period Trigger Date" shall mean, with
respect to any of the representations, warranties and
covenants of the Company, any Servicing Party or any
Seller, as the case may be, that are contained in the
subsection of the applicable Transaction Document which
is cross referenced in Schedule 2 under the heading of
"Applicable Section", the breach or violation of which
would result (i) in the case of a breach or violation
by the Company, in a Potential Early Amortization Event
or a purchase obligation of the Company pursuant to
Section 2.5 or 2.6 of the Agreement, (ii) in the case
of any Servicing Party, a Potential Servicer Default or
(iii) in the case of any Seller, a Potential Purchase
Termination Event (as defined in the Receivables Sale
Agreement), the date occurring the number of days
specified for the applicable subsection in Schedule 2
under the heading "Cure Period Trigger Date" following
the occurrence of such breach or violation (or if the
number of days so specified is zero, the date of such
breach or violation). The foregoing provisions shall
apply to such breaches and violations notwithstanding
any other grace period or cure provisions stated to
apply thereto under the applicable Transaction
Documents. The Company shall, and the Control Party
may, give prompt written notice of each occurrence of a
Cure Period Trigger Date to the Trustee (and the Agent
if given by the Company).
"Daily Interest Deposit" shall mean, for any
Business Day, an amount equal to the sum of (i) the
aggregate accrued but unpaid Funding Period Interest on
the VFC Certificates for all outstanding Funding
Periods to the extent not previously deposited to the
Series 1998-1 Non-Principal Collection Sub-subaccount,
plus (ii) the aggregate amount of all previously
accrued and unpaid Daily Interest Deposits, plus (iii)
the aggregate amount of all accrued and unpaid
Additional Interest accrued since the previous Business
Day.
"Daily Report" shall mean a report prepared by the
Master Servicer on each Business Day for the period
specified therein, in substantially the form of Exhibit
D.
"Days Sales Outstanding" shall mean, as of any
Settlement Date and continuing to, but excluding, the
next Settlement Date, the number of days equal to the
product of (i) 91 and (ii) the amount obtained by
dividing (A) the difference between (1) the aggregate
Principal Amount of Receivables and (2) the aggregate
bad debt reserve of the Sellers, in each case as at the
last day of the Settlement Period immediately preceding
such earlier Settlement Date, by (B) aggregate net
sales of the Sellers for the three Settlement Periods
immediately preceding such earlier Settlement Date.
"Decrease" shall have the meaning specified in
subsection 2.5(a).
"Default Ratio" shall mean, as of the last
Business Day of any Settlement Period and continuing
to, but excluding, the last day of the next Settlement
Period, a ratio (expressed as a percentage) equal to
(i) the aggregate outstanding Principal Amount of all
Defaulted Receivables on the last day of such earlier
Settlement Period over (ii) the aggregate outstanding
Principal Amount of all Receivables on such last day;
provided, however, to the extent that 2% or more of the
Default Ratio at the end of any Settlement Period is
attributable to Receivables owing by any Obligor
(including Affiliates of such Obligor), then, upon the
election of the Company (such election to be made
separately in respect of each Settlement Period), the
Default Ratio shall be recalculated to exclude all
Receivables of any one such Obligor (including
Affiliates of such Obligor) that would otherwise have
been included in such calculation.
"Delinquency Ratio" shall mean, as of the last
Business Day of any Settlement Period and continuing
to, but excluding, the last day of the next Settlement
Period, a ratio (expressed as a percentage) equal to
(i) the aggregate outstanding Principal Amount of all
Delinquent Receivables on the last day of such earlier
Settlement Period over (ii) the aggregate outstanding
Principal Amount of all Receivables on such last day;
provided, however, to the extent that 2% or more of the
Delinquency Ratio at the end of any Settlement Period
is attributable to Receivables owing by any Obligor
(including Affiliates of such Obligor), then, upon the
election of the Company (such election to be made
separately in respect of each Settlement Period), the
Delinquency Ratio shall be recalculated to exclude all
Receivables of any one such Obligor (including
Affiliates of such Obligor) that would otherwise have
been included in such calculation.
"Dilution Horizon Factor" shall mean (i) with
respect to any Settlement Period consisting of four
calendar weeks, 0.725 and (ii) with respect to any
Settlement Period consisting of five calendar weeks,
0.58, or such lesser amounts agreed to in writing by
the Agent and the Rating Agency and notified to the
Trustee.
"Dilution Ratio" shall mean, as of the last day of
each Settlement Period, an amount (expressed as a
percentage) equal to the aggregate amount of Dilution
Adjustments in respect of all Sellers and Seller Groups
made during such Settlement Period divided by the sum
of the aggregate Principal Amounts of Receivables which
were originated by all such Sellers and Seller Groups
during such Settlement Period.
"Dilution Reserve Ratio" shall mean, as of any
Settlement Date and continuing to, but excluding, the
next Settlement Date, an amount (expressed as a
percentage) which is calculated as follows:
DRR = [(a * b) + [(c-b) * (c/b)]] * d
Where:
DRR = Dilution Reserve Ratio;
a = the Ratings Multiple;
b = the average of the Dilution Ratios
during the period of twelve consecutive
Settlement Periods ending prior to such
Settlement Date;
c = the highest Dilution Ratio for any
Settlement Period during the period of twelve
consecutive Settlement Periods ending prior
to such Settlement Date; and
d = a fraction (i) the numerator of
which equals the product of (A) the aggregate
Principal Amount of all Receivables which
were originated during the preceding
Settlement Period and (B) the Dilution
Horizon Factor with respect to such preceding
Settlement Period and (ii) the denominator of
which equals the Aggregate Receivables Amount
as of the last day of the Settlement Period
preceding such earlier Settlement Date.
"Discount Rate" shall mean, as of any date of
determination, the sum of (i) the weighted average of
the Funding Period Rates in effect with respect to the
outstanding VFC Certificates as of the end of the
Settlement Period immediately preceding the most recent
Settlement Date and (ii) an amount equal to (A) the sum
of (1) the aggregate amount of Non-Usage Fees accrued
with respect to the outstanding VFC Certificates during
the Settlement Period immediately preceding the most
recent Settlement Date and (2) the Monthly Allocable
Trustee's Fees for the Settlement Period immediately
preceding the most recent Settlement Date, divided by
(B) the average daily Adjusted Invested Amount during
such Settlement Period.
"Distribution Date" shall mean each Settlement
Date and each Funding Period Settlement Date.
"Early Amortization Event" shall have the meaning
specified in Section 5.1 of this Supplement and Section
7.1 of the Agreement.
"ERISA Entity" shall mean either an "employee
benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as
amended, (whether or not subject to the Employment
Retirement Income Security Act of 1974, as amended), a
"plan" as defined in Section 4975 of the Internal
Revenue Code of 1986, as amended, an entity deemed to
hold plan assets of any such employee benefit plan or
plans, or an entity otherwise using the assets of any
such employee benefit plan or plans to acquire VFC
Certificates.
"Eurodollar Period" shall mean with respect to any
Eurodollar Tranche:
(i) during the Syndication Period, any
one month Funding Period selected by the Master
Servicer pursuant to subsection 3C.4(b);
(ii) at any time after the Syndication
Period, the period commencing on the Business Day
that any portion of the Unallocated Balance is
allocated to a Funding Period pursuant to
subsection 3C.4(b), thereby giving rise to such
Eurodollar Tranche and ending one, two or three
months thereafter, as selected by the Master
Servicer pursuant to subsection 3C.4(b); and
(iii) thereafter, each period commencing on
the last day of the next preceding Eurodollar
Period applicable to such Eurodollar Tranche and
ending one, two or three months thereafter as
selected by the Master Servicer pursuant to
Subsection 3C.4(b);
provided, however, that all of the foregoing provisions
relating to Eurodollar Periods are subject to the
following:
(A) if any Eurodollar Period would otherwise
end on a day that is not a Business Day, such
Eurodollar Period shall be extended to the next
succeeding Business Day unless the result of such
extension would be to carry such Eurodollar Period
into another calendar month in which event such
Eurodollar Period shall end on the immediately
preceding Business Day;
(B) any Eurodollar Period that begins on a
day for which there is no numerically
corresponding day in the calendar month at the end
of such Eurodollar Period shall end on the last
Business Day of such later calendar month; and
(C) no Eurodollar Period may end on a day
which is later than the Scheduled Termination
Date.
"Eurodollar Tranche" shall mean a portion of the
Invested Amount for which Funding Period Interest is
the Applicable Eurodollar Rate for a particular
Eurodollar Period.
"Expected Final Distribution Date" shall mean the
first Distribution Date which occurs at least 45 days
after commencement of the Amortization Period.
"Federal Funds Rate" shall mean, for any day, a
fluctuating interest rate per annum equal to the
weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published
for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the
average of the quotations for such day on such
transactions received by the Master Servicer from three
Federal funds brokers of recognized standing selected
by it.
"Fee Letter" shall mean that certain Fee Letter,
dated March 31, 1998 among the Company, SFC and the
Agent.
"Funding Period" shall mean a Eurodollar Period
for any portion of the Invested Amount allocated to a
Eurodollar Tranche, an Accrual Period for any portion
of the Invested Amount constituting a portion of the
Unallocated Balance and such other period as may be
agreed between the Company, the Master Servicer and the
Agent for any portion of the Invested Amount which
bears interest at a rate agreed among such parties with
notice thereof provided to the Trustee.
"Funding Period Determination Date" shall mean
with respect to any Funding Period Settlement Date, the
Business Day immediately preceding such Funding Period
Settlement Date.
"Funding Period Interest" shall mean (i) with
respect to that portion of the Invested Amount of the
VFC Certificates allocated to a Funding Period as
provided in Section 3C.4, the aggregate interest
accrued at the Funding Period Rate for such Funding
Period on such allocated portion of the Invested Amount
of the VFC Certificates, calculated on the basis
specified in subsection 2.7(f) and (ii) as of any
Funding Period Settlement Date with respect to the
Unallocated Balance outstanding from time to time, the
aggregate interest accrued thereon at the Applicable
Base Rate in effect from time to time from and
including the preceding Funding Period Settlement Date
with respect to the Unallocated Balance to but
excluding the current Funding Period Settlement Date
with respect to the Unallocated Balance, calculated on
the basis specified in subsection 2.7(f).
"Funding Period Rate" shall mean, for any Funding
Period and that portion of the Invested Amount
allocated to that Funding Period:
(i) with respect to any such portion which
constitutes the Unallocated Balance, the
Applicable Base Rate; and
(ii) with respect to any Eurodollar Tranche,
the Applicable Eurodollar Rate.
"Funding Period Settlement Date" shall mean (i)
with respect to any Funding Period, the last day of
such Funding Period and (ii) with respect to the
Unallocated Balance outstanding from time to time
during any Accrual Period, the Settlement Date
immediately following the end of such Accrual Period.
"Funding Period Settlement Statement" shall have
the meaning specified in Section 4C.2.
"Guaranty" shall mean that certain Guaranty of
even date herewith from SFC to the Company pursuant to
which SFC guaranties the obligations of each Seller to
the Company under the Receivables Sale Agreement.
"Increase" shall have the meaning specified in
subsection 2.4(a).
"Increase Amount" shall have the meaning specified
in subsection 2.4(a).
"Increase Date" shall have the meaning specified
in subsection 2.4(a).
"Initial Invested Amount" shall mean the Invested
Amount as of the Issuance Date.
"Initial Subordinated Certificate Amount" shall
mean the Subordinated Certificate Amount on the
Issuance Date.
"Invested Amount" shall mean, with respect to any
date of determination, an amount equal to the Initial
Invested Amount, plus the amount of all Increases
effected pursuant to Section 2.4 made on or prior to
such day, minus the amount of all distributions to the
VFC Certificateholders in reduction of the Invested
Amount pursuant to Section 2.5 or Section 3C.6 on or
prior to such day.
"Invested Percentage" shall mean, with respect to
any Business Day (i) during the Revolving Period, the
percentage equivalent of a fraction, the numerator of
which is the Allocated Receivables Amount as of the end
of the preceding Business Day and the denominator of
which is the Aggregate Receivables Amount as of the end
of the preceding Business Day and (ii) during the
Amortization Period, the percentage equivalent of a
fraction, the numerator of which is the Allocated
Receivables Amount as of the end of the last Business
Day of the Revolving Period and the denominator of
which is the greater of (A) the Aggregate Receivables
Amount as of the end of the preceding Business Day and
(B) the sum of the numerators used to calculate the
Invested Percentage for all Series of Investor
Certificates outstanding on the Business Day for which
such percentage is determined.
"Issuance Date" shall mean the last day of the
"Revolving Period" as defined in and with respect to
that certain Series 1994-1 Supplement among the
Company, the Master Servicer and the Trustee, which
such date shall be April 9, 1998, provided, however,
for purposes of determining the Non-Usage Fee, the
Issuance Date shall be deemed to be the Closing Date.
"LIBO Business Day" shall mean a day, other than a
Saturday or Sunday, on which banks are not required or
authorized to close in New York or London and on which
dealings are carried on in the London interbank market.
"Loss Horizon Period" shall mean three Settlement
Periods.
"Loss Reserve Ratio" shall mean, as of any
Settlement Date and continuing to, but excluding, the
next Settlement Date, an amount (expressed as a
percentage) which is calculated as follows:
LRR = [(a * b)] * c/d
where:
LRR = Loss Reserve Ratio;
a = the Ratings Multiple;
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 Date;
c = the product of (i) the sum of the
aggregate Principal Amounts of Receivables
originated by each Seller and Seller Group
during the most recent Loss Horizon Period
with respect to such Seller or such Seller
Group preceding such date times (ii) a
fraction, the numerator of which equals the
number of days in such Loss Horizon Period
plus seven and the denominator of which
equals the number of days in such Loss
Horizon Period; and
d = the Aggregate Receivables Amount as
of the last day of the Settlement Period
preceding such earlier Settlement Date.
"Loss-to-Liquidation Ratio" shall mean, as of the
last Business Day of any Settlement Period and
continuing to, but excluding, the last day of the next
Settlement Period, a ratio (expressed as a percentage)
equal to (i) the difference, if any, between (A) the
sum of (1) the aggregate reduction in the outstanding
Principal Amount of all Receivables as a result of
Charge-Offs and (2) the aggregate Principal Amount of
Receivables (other than Charge-Offs) that became more
than 90 days past due, in each case, during the
immediately preceding twelve Settlement Periods and (B)
the aggregate amount of Recoveries during such twelve
Settlement Periods over (ii) the aggregate amount of
Collections during such twelve Settlement Periods;
provided, however, to the extent that 2% or more of the
Loss-to-Liquidation Ratio at the end of any Settlement
Period is attributable to Receivables owing by any
Obligor (including Affiliates of such Obligor), then,
upon the election of the Company (which election shall
be made separately in respect of each Settlement
Period), the Loss-to-Liquidation Ratio shall be
recalculated for such Settlement Period to exclude all
Receivables of any one such Obligor (including any
Affiliates of such Obligor) that would otherwise have
been included in such calculation.
"Metz Seller Group" shall mean the collective
reference to each of the following Sellers: Metz and
Metz Delaware.
"Minimum Subordinated Percentage" shall mean, as
of any Settlement Date and continuing to, but
excluding, the next Settlement Date, an amount
(expressed as a percentage) which is calculated as the
greater of (i) 15% and (ii) the sum of (x) the sum of
(i) three times the percentage used to compute the
Obligor Limit for Obligors which are not Special
Obligors, Obligors on Long Term Supply Contracts or
governmental entities or agencies, (ii) the percentage
used to compute the Obligor Limit for Obligors party to
Long Term Supply Contracts and (iii) the percentage
used to compute the aggregate Obligor Limit for
Obligors which are governmental entities or agencies
and (y) an amount calculated as the product of (1) the
average of the Dilution Ratios during the period of
twelve consecutive Settlement Periods ending prior to
such Settlement Date times (2) a fraction, the
numerator of which equals the product of (A) the
aggregate Principal Amount of all Receivables which
were originated during the preceding Settlement Period
and (B) the Dilution Horizon Factor with respect to
such preceding Settlement Period, and the denominator
of which equals the Aggregate Receivables Amount as of
the last day of the Settlement Period preceding such
earlier Settlement Date.
"Monthly Allocable Trustee's Fees" shall mean in
respect of any Settlement Period, the product of (i)
one-twelfth of the annual fees to be paid to the
Trustee by the Master Servicer pursuant to the first
sentence of Section 8.5 of the Agreement during the
fiscal year in which such Settlement Period falls and
(ii) the daily average Invested Percentage (expressed
as a decimal) during such Settlement Period.
"Net Worth" shall mean, at a particular date with
respect to the Company, all amounts which would, in
conformity with GAAP, be included under shareholder's
equity on a balance sheet of the Company.
"Non-Usage Fee Rate" shall mean one-half of one
percent per annum (0.50%).
"Non-Usage Fees" shall have the meaning specified
in subsection 2.7(b).
"Participant" shall have the meaning specified in
subsection 8.7(b)
"Past Due Interest" shall mean with reference to
any Funding Period Settlement Date, any portion of the
Funding Period Interest originally due on a previous
Funding Period Settlement Date that remains outstanding
on the current Funding Period Settlement Date.
"Pro Rata Share" shall have the meaning specified
in the Certificate Purchase Agreement.
"Program Costs" shall mean, for any Business Day,
the sum of (i) all expenses, indemnities and other
amounts then due and payable to the Agent or the VFC
Certificateholders under the Agreement, this Supplement
or the Certificate Purchase Agreement but excluding,
however, principal of and interest on the VFC
Certificates and Non-Usage Fees and (ii) the product of
(A) all unpaid fees and expenses then due and payable
to the Trustee or counsel to, and independent auditors
of, the Company (other than any Monthly Allocable
Trustee's Fees and Monthly Servicer's Fees payable to
the Trustee in its capacity as Master Servicer if it is
then so acting as Master Servicer and other than fees
and expenses payable on or in connection with the
closing of the issuance of the VFC Certificates) and
any corporate income or franchise taxes then due and
payable by the Company, and (B) the Invested Percentage
(expressed as a decimal) on such Business Day.
"Rating Agency" shall mean S&P.
"Ratings Multiple" shall mean 1.5; provided,
however, such Ratings Multiple shall be adjusted as set
forth in Schedule 3 attached hereto depending on SFC's
financial performance as set forth in such Schedule 3.
"Record Date" shall mean, with respect to any
Settlement Date, the last Business Day of the
immediately preceding Settlement Period.
"Required Reserves" shall mean, as of any date of
determination, an amount equal to the sum of (i) the
product of (A) the Adjusted Invested Amount on such day
and (B) the sum of (1) the Loss Reserve Ratio, (2) the
Dilution Reserve Ratio and (3) the Carrying Cost
Reserve Ratio, (ii) the product of (A) the face amount
of the Receivables in the Trust on such day, (B) the
Adjusted Invested Amount divided by the Aggregate
Adjusted Invested Amount and (C) the Servicing Reserve
Ratio, (iii) the amount of any Accrued Expense Amount
in respect of which sufficient Aggregate Daily
Collections have not been transferred to the Series
1998-1 Non-Principal Collection Sub-account and (iv)
the aggregate amount of accrued but unpaid Monthly
Allocable Trustee's Fees.
"Required Reserves Ratio" shall mean, as of any
date of determination, the quotient of (i) Required
Reserves on such day and (ii) the Adjusted Invested
Amount on such day.
"Required Subordinated Percentage" shall mean, as
of any date of determination, the greater of (i) the
Minimum Subordinated Percentage and (ii) the Required
Reserves Ratio as of such day.
"Revolving Period" shall mean the period
commencing on the Issuance Date and terminating on the
earliest to occur of (i) the close of business on the
date on which an Early Amortization Event occurs, (ii)
the date on which the Commitments of all VFC
Certificateholders shall have terminated and (iii) the
Scheduled Termination Date.
"Scheduled Termination Date" shall mean the
earliest of (a) December 15, 1999, (b) the date on
which the commitments of the lenders under the SFC Loan
Agreement shall have been terminated, unless, at or
prior to such date, SFC replaces the SFC Loan Agreement
with a replacement agreement providing SFC with working
capital which in the reasonable opinion of the Control
Party would be sufficient to operate SFC's businesses
at such date and (c) the date which is 45 days prior to
the scheduled maturity date of indebtedness of SFC
under the SFC Loan Agreement.
"Seller Group" shall mean the Metz Seller Group,
provided that the Company may, with the consent of the
Agent, from time to time add one or more new Seller
Groups, or change the Sellers in any existing Seller
Group on terms and conditions satisfactory to the
Agent.
"Series Accounts" shall have the meaning specified
in subsection 3C.2(a).
"Series 1998-1" shall mean the Series 1998-1, the
Principal Terms of which are set forth in this
Supplement.
"Series 1998-1 Accrued Interest Sub-subaccount"
shall have the meaning specified in subsection 3C.2(a).
"Series 1998-1 Amortization Principal Payment"
shall have the meaning specified in Section 3C.5.
"Series 1998-1 Certificateholders' Interest" shall
have the meaning specified in subsection 2.2(a).
"Series 1998-1 Collection Subaccount" shall have
the meaning specified in subsection 3C.2(a).
"Series 1998-1 Monthly Interest Amount" shall
mean, at any time, (a) with respect to each Eurodollar
Tranche, the aggregate amount of Funding Period
Interest allocable thereto which is scheduled to be
paid on the Funding Period Settlement Date applicable
to such Eurodollar Tranche divided by the number of
months in the Eurodollar Period applicable to such
Eurodollar Tranche and (b) with respect to the
Unallocated Balance, the aggregate amount of Funding
Period Interest allocable thereto which is expected in
good faith by the Master Servicer to accrue on or prior
to the Settlement Date at the end of the then existing
Accrual Period. The Series 1998-1 Monthly Interest
Amount for any Eurodollar Tranche shall be computed on
the first day of the Eurodollar Period related thereto
and, if such Eurodollar Period is greater than one
month, the Series 1998-1 Monthly Interest Amount shall,
as of the corresponding calendar day in each succeeding
month during which such Eurodollar Tranche remains
outstanding (or, if such day is not a Business Day, on
the next succeeding Business Day) be recomputed for the
next succeeding month without giving effect to any
allocations previously made to the Series 1998-1 Non-
Principal Collection Sub-subaccount on account of any
such Series 1998-1 Monthly Interest.
"Series 1998-1 Monthly Servicing Fee" shall have
the meaning specified in Section 6.1.
"Series 1998-1 Non-Principal Collection Sub-
subaccount" shall have the meaning specified in
subsection 3C.2(a).
"Series 1998-1 Principal Collection Sub-
subaccount" shall have the meaning specified in
subsection 3C.2(a).
"Servicing Reserve Ratio" shall mean, as of any
Settlement Date and continuing to, but excluding, the
next Settlement Date, an amount (expressed as a
percentage) equal to (a) the product of (i) 1.00% and
(ii) the greater of (A) 2.00 times Days Sales
Outstanding as of such day and (B) 60 divided by (b)
360.
"SFC" shall mean Specialty Foods Corporation, a
Delaware corporation.
"SFC Group" shall mean collectively, SFC, the
Company and any Seller or Seller Group.
"SFC Loan Agreement" shall mean any extension of
credit made to SFC and/or its Affiliates to refinance
obligations of the SFC Group under the Term Loan
Agreement and/or the Revolving Credit Agreement, as
amended, restated or otherwise modified from time to
time. The parties expressly acknowledge and agree that
from and after the Closing Date, the term "Revolving
Credit Agreement," as used in the Agreement, shall mean
and include the SFC Loan Agreement.
"SFC Pledge/Security Agreement" shall mean any
pledge or security agreement delivered by SFC to
lenders to secure its obligations to such lenders under
the SFC Loan Agreement.
"Stated Final Distribution Date" shall mean that
Distribution Date which occurs not less than 365 days
after the commencement of the Amortization Period.
"Subordinated Certificate" shall mean the
Subordinated Company Certificate, Series 1998-1,
executed by the Company and authenticated by the
Trustee, substantially in the form of Exhibit B.
"Subordinated Certificate Amount" shall mean, for
any date of determination, an amount equal to the
Allocated Receivables Amount on such date minus the
Adjusted Invested Amount on such date.
"Subordinated Certificate Increase Amount" shall
have the meaning specified in subsection 2.4(a).
"Subordinated Certificate Reduction Amount" shall
have the meaning specified in subsection 2.5(c).
"Subordinated Interest" shall have the meaning
specified in subsection 2.2(b).
"Syndication Period" shall mean the period
beginning on the Closing Date and ending on the earlier
to occur of (i) the date which is 60 days following the
Closing Date or (ii) the date the Agent delivers
written notice to the Company and the Master Servicer
that it has completed syndication of the VFC
Certificates.
"Target Receivables Amount" shall mean, on any
date of determination, the product of (i) a fraction
(expressed as a decimal) the numerator of which is one
and the denominator of which is one minus the Required
Subordinated Percentage and (ii) the Adjusted Invested
Amount on such day.
"Transferee" shall have the meaning specified in
subsection 8.7(d).
"Trust Accounts" shall have the meaning specified
in subsection 3C.2(a).
"Unallocated Balance" shall have the meaning
specified in subsection 3C.4(b).
"Unreserved Interest" shall mean, as of any date
during the Amortization Period, any portion of the
Daily Interest Deposit during the Amortization Period
which is attributable to an increase in the percentage
described in clause (ii) of the definition of Adjusted
Eurodollar Rate above the percentage level which was in
effect as of the date the Amortization Period
commenced.
"VFC Certificate" shall mean a VFC Certificate,
Series 1998-1, executed by the Company and
authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A.
"VFC Certificateholder" shall mean each holder of
a VFC Certificate.
"Year 2000 Problem" shall have the meaning
specified in Section 7.2(g).
a) In the event that any term or provision
contained herein shall conflict with or be inconsistent with
any term or provision contained in the Agreement, the terms
and provisions of this Supplement shall govern. All
capitalized terms not otherwise defined herein are defined
in the Agreement. All Article, Section or
subsection references herein shall mean Article, Section or
subsections of the Supplement, except as otherwise provided
herein. Unless otherwise stated herein, as the context
otherwise requires or if such term is otherwise defined in
the Agreement, each capitalized term used or defined herein
shall relate only to the Series 1998-1 and no other Series
of Investor Certificates issued by the Trust.
I. ARTICLE
DESIGNATION OF CERTIFICATES; PURCHASE AND SALE
OF THE VFC CERTIFICATES
A. SECTION Designation. The Certificates
created and authorized pursuant to the Agreement and this
Supplement shall be divided into two classes, which shall be
designated respectively as (i) the "VFC Certificates,
Series 1998-1" and (ii) the "Subordinated Company
Certificate, Series 1998-1". The VFC Certificates shall be
issued in the form of Definitive Certificates, to be
delivered to the VFC Certificateholder(s) in accordance with
Section 2.3.
a) SECTION The Series 1998-1 Certificates.
The VFC Certificates shall represent fractional undivided
interests in the Trust, consisting of the right to receive
the Invested Percentage (expressed as a decimal) of (i)
Collections received with respect to the Receivables, (ii)
all other funds on deposit in the Collection Account and in
any subaccount thereof and (iii) all other Trust Assets
(the "Series 1998-1 Certificateholders' Interest").
a) The Subordinated Certificate shall
represent a fractional undivided interest in the Trust,
consisting of the right to receive Collections with respect
to the Receivables allocated to the Series 1998-1
Certificateholders' Interest and not required to be
distributed to or for the benefit of the VFC
Certificateholders (the "Subordinated Interest"). The
Exchangeable Company Certificate and any other Series of
Investor Certificates outstanding shall represent the
ownership interest in the remainder of the Trust not
allocated pursuant hereto to the Series 1998-1
Certificateholders' Interest or the Subordinated Interest.
a) The VFC Certificates and the Subordinated
Certificate shall be issued in registered form in
substantially the forms of Exhibits A and B, respectively,
and shall, upon issue, be executed and delivered by the
Company to the Trustee for authentication and redelivery as
provided in Section 2.3 hereof and Section 5.2 of the
Agreement.
A. SECTION Delivery. On the Issuance Date,
the Company shall sign on behalf of the Trust and shall
direct in writing pursuant to Section 5.2 of the Agreement
the Trustee to duly authenticate, and the Trustee, upon
receiving such direction, shall so authenticate (i) the VFC
Certificates in such names and such denominations and
deliver such VFC Certificates to each VFC Certificateholder
in accordance with such written directions and (ii) a
Subordinated Certificate and deliver such Subordinated
Certificate to the Company as holder thereof in accordance
with such written directions. The funds received from the
VFC Certificateholders on the Issuance Date shall be
transferred to the Series 1994-1 Collection Account in an
amount sufficient (after giving effect to other deposits
therein) to reduce the "Adjusted Invested Amount" thereof to
zero and to pay all interest payable thereon on the next
Distribution Date before being remitted to the Company. The
VFC Certificates shall be issued in minimum denominations of
$1,000,000 and in integral multiples of $100,000 in excess
thereof. The Trustee shall mark on its books the actual
Invested Amount allocated among the VFC Certificateholders
and Subordinated Certificate Amount outstanding on any date
of determination, which, absent manifest error, shall
constitute prima facie evidence of the outstanding Invested
Amount allocated among the VFC Certificateholders and
Subordinated Certificate Amount from time to time.
a) SECTION Procedure for Increasing the
Invested Amount. Subject to the terms and conditions of
subsection 2.4(b), on any Business Day during the Revolving
Period, the Invested Amount may be increased (an "Increase")
upon the request of the Master Servicer or the Company (each
date on which an increase in the Invested Amount occurs
hereunder being herein referred to as the "Increase Date"
applicable to such Increase) up to an amount equal to the
Aggregate Commitment on such day; provided, that the Master
Servicer or the Company, as the case may be, shall have
given the Trustee and the Agent irrevocable written notice
(effective upon receipt), substantially in the form of
Exhibit F hereto, of such request no later than the
applicable times specified in Section 3C.4 with respect to
the Funding Period or Periods to apply to such Increase.
Such notice shall state (w) the Increase Date and (x) the
proposed amount of such Increase (the "Increase Amount"),
which amount shall be allocated to each VFC
Certificateholder in accordance with its Pro Rata Share.
Upon satisfaction of the conditions precedent set forth in
subsection 2.4(b) of this Supplement, together with, in the
case of any participating VFC Certificateholder, any
additional conditions specified in the Certificate Purchase
Agreement, each VFC Certificateholder shall remit its Pro
Rata Share of the applicable Increase to the Agent at its
account maintained in the name of the Agent at Bankers Trust
Company, Account No. 00371389, or such other account as the
Agent may specify in writing to the parties hereto and the
VFC Certificateholders, and the Agent shall remit such
amounts to the Trustee for deposit in the Series 1998-1
Collection Subaccount in immediately available funds by no
later than 4:00 p.m., New York City time, on the applicable
Increase Date, for remittance to the Company in accordance
with the written payment instructions of the Company. No
VFC Certificateholder shall be obligated to fund any
Increase, unless concurrently with any such Increase in the
Invested Amount, the Subordinated Certificate Amount shall
be increased by an amount (the "Subordinated Certificate
Increase Amount") such that after giving effect to such
increase, the sum of the Invested Amount plus the
Subordinated Certificate Amount equals or exceeds the Target
Receivables Amount.
a) No VFC Certificateholder shall be required
to fund its portion of any Increase Amount on any Increase
Date hereunder unless:
(1) the related Increase Amount is equal to
$1,000,000 or an integral multiple of $500,000 in excess
thereof;
(1) after giving effect to the Increase
Amount, (A) the Invested Amount would not exceed the
Aggregate Commitment, (B) the Pro Rata Share of the
aggregate Invested Amount allocated to the VFC Certificates
of each VFC Certificateholder participating in such Increase
would not exceed such VFC Certificateholder's Commitment,
and (C) the Allocated Receivables Amount would equal or
exceed the Target Receivables Amount on such Increase Date;
and
(2) no Early Amortization Event or Potential
Early Amortization Event shall have occurred and be
continuing or shall result from such Increase.
By accepting any Increase Amount, the Company
shall be deemed to have certified that as of such Increase
Date, (x) no Early Amortization Event or Potential Early
Amortization Event has occurred and is continuing and
(y) all of the representations and warranties of the
Company, and to its knowledge of the Sellers and the Master
Servicer set forth in the Agreement, this Supplement, the
Receivables Sale Agreement and the Certificate Purchase
Agreement (except for any representations and warranties
which are expressly made only as of an earlier date) are
true and correct in all material respects as though made on
and as of such Increase Date.
a) SECTION Procedure for Decreasing the
Invested Amount. On any Business Day during the Revolving
Period, upon the written request of the Master Servicer or
the Company, the Invested Amount may be reduced (a
"Decrease") by the distribution, ratably on the basis of
their Pro Rata Shares, to the VFC Certificateholders in
reduction of the Invested Amount allocated to such Funding
Period of some or all of the funds on deposit in the Series
1998-1 Principal Collection Sub-subaccount on such day;
provided that (i) the Master Servicer or the Company shall
have given the Trustee and the Agent irrevocable written
notice (effective upon receipt) thereof, prior to 1:00 p.m.,
New York City time, on the third Business Day preceding the
date of such Decrease (unless the Funding Period Rate with
respect to such Funding Period is the Applicable Base Rate,
in which case such notice need only be received prior to
1:00 p.m., New York City time, on the Business Day preceding
the date of such Decrease), which notice shall state the
amount of such Decrease; (ii) the minimum amount of such
Decrease shall be $500,000; and (iii) if such Business Day
is not a Funding Period Settlement Date or if the amount of
such Decrease exceeds the sum of the aggregate Invested
Amount allocated to Eurodollar Periods ending on such
Business Day, then no payment in reduction of the Invested
Amount allocated to any Eurodollar Periods shall be made in
connection with such Decrease unless, concurrently with such
payment, the Master Servicer or the Company shall have paid
to the VFC Certificateholders all amounts due and payable
pursuant to Section 2.8, if any. Funds in respect of any
Decrease shall be remitted by the Trustee to the Agent at
the Agent's Account for remittance to the applicable VFC
Certificateholders.
a) If on any day the Commitment of any VFC
Certificateholder is reduced or terminated (other than in
connection with the termination of the Revolving Period) and
after giving effect to such reduction or termination, the
aggregate portion of the Invested Amount allocated to the
VFC Certificates held by such VFC Certificateholder exceeds
the amount of such VFC Certificateholder's Commitment, then
the Company shall, on the next Funding Period Settlement
Date with respect to any portion of the Invested Amount
allocated to the VFC Certificates held by such VFC
Certificateholder, and on each such Funding Period
Settlement Date thereafter until the aggregate portion of
the Invested Amount allocated to the VFC Certificates held
by such VFC Certificateholder is equal to or less than the
amount of such VFC Certificateholder's Commitment, effect a
mandatory Decrease of the Invested Amount by distribution to
the applicable VFC Certificateholder of an amount equal to
the least of (i) the portion of the Invested Amount
allocated to the Funding Period then ending that is also
allocated to the VFC Certificates held by such VFC
Certificateholder, (ii) the excess of the aggregate portion
of the Invested Amount allocated to the VFC Certificates
held by such VFC Certificateholder over the amount of such
VFC Certificateholder's Commitment and (iii) the funds on
deposit in the Series 1998-1 Principal Collection Sub-
subaccount on such day. The Company or the Master Servicer
shall give the Trustee, the Agent and the applicable VFC
Certificateholder irrevocable written notice of such
Decrease (effective upon receipt), prior to 1:00 p.m., New
York City time, on the Business Day preceding the date of
such Decrease, which notice shall state the amount of such
Decrease.
a) Simultaneously with any such Decrease
during the Revolving Period, the Subordinated Certificate
Amount shall be reduced by an amount (the "Subordinated
Certificate Reduction Amount") such that after giving effect
to such Decrease, the Allocated Receivables Amount is not
less than the Target Receivables Amount. During the
Revolving Period, after the distribution described in
subsection (a) or (b) above, as applicable, has been made,
and the Subordinated Certificate Amount has been reduced by
the Subordinated Certificate Reduction Amount, a
distribution may be made to the holder of the Subordinated
Certificate out of remaining funds on deposit in the Series
1998-1 Principal Collection Sub-subaccount in an amount
equal to the lesser of (x) the Subordinated Certificate
Reduction Amount and (y) the amount of such remaining funds
on deposit in the Series 1998-1 Principal Collection Sub-
subaccount.
a) Any reduction in the Invested Amount on any
Business Day (except for that portion of a reduction on a
Funding Period Settlement Date in an amount not exceeding
the portion of the Invested Amount allocated by the Trustee
(based upon the instructions of the Master Servicer) to the
applicable Funding Period) shall be allocated by each
applicable VFC Certificateholder (with notice of such
allocation to the Master Servicer, the Trustee and the
Agent) among outstanding Funding Periods so as to minimize
amounts payable pursuant to Section 2.8, if any, so long as
such allocation is not, in the reasonable judgment of such
VFC Certificateholder, otherwise disadvantageous to such VFC
Certificateholder.
A. SECTION Commitment Certification. At such
time as any VFC Certificateholder shall extend, increase,
terminate or reduce its Commitment, whether pursuant to the
Certificate Purchase Agreement or any assignment thereunder,
such VFC Certificateholder and the Company shall certify to
the Trustee the amount of such VFC Certificateholder's
Commitment by delivery to the Trustee of a certificate in
substantially the form of Exhibit G hereto (a "Commitment
Certification"); provided, however, that in the case of any
voluntary reduction or termination by the Company of any
Commitment consistent with the terms of the Certificate
Purchase Agreement, such Commitment Certification need only
be signed by the Company. The Trustee shall be entitled to
rely on such Commitment Certification for all purposes
hereunder until such time as it shall have received from the
Company and the applicable VFC Certificateholder a revised
Commitment Certification. The Trustee shall maintain at its
address referred to in Section 8.6 a copy of each Commitment
Certification delivered to it.
a) SECTION Interest; Certain Fees. Interest
shall be payable on the VFC Certificates on each Funding
Period Settlement Date pursuant to subsection 3C.6(a).
a) A non-usage fee with respect to each
Accrual Period or portion thereof occurring in the Revolving
Period (the "Non-Usage Fees") shall be payable in arrears on
the related Settlement Date for the sole account of the VFC
Certificateholders pursuant to subsection 3C.6(b). The Non-
Usage Fees payable on each Settlement Date shall be
calculated by the Company (and notified by the Company to
the Master Servicer and the Agent on or before the
corresponding Determination Date) and shall be equal to the
product of (i) the Non-Usage Fee Rate and (ii) the average
daily excess during such Accrual Period of (A) the Aggregate
Commitment over (B) the Invested Amount and (iii) the actual
number of days in such Accrual Period divided by 360.
a) To the extent the Trustee determines
(based on the information set forth in the applicable report
prepared by the Master Servicer) that funds on deposit in
the Series 1998-1 Non-Principal Collection Sub-subaccount at
any Settlement Date are insufficient to pay the fee
described in the foregoing subsection, the Trustee shall so
notify the Company and the Company shall immediately pay the
Trustee the amount of any such deficiency; provided,
however, that any such deficiency shall be payable solely
out of Available Funds, shall be non-recourse other than
with respect to Available Funds, and shall not constitute a
claim against the Company to the extent that insufficient
Available Funds exist to make such payment.
(d) A non-refundable administrative fee in an
amount previously agreed to in writing by the Company and
the Agent shall be payable annually in advance for the sole
account of the Agent which fee shall be payable on the
Issuance Date and each anniversary thereafter.
(e) The Company shall pay to the Agent, for its
own account and the account of the VFC Certificateholders
such other amounts set forth in the Fee Letter at the times
and in the manner set forth therein.
(f) Calculations of interest and fees under
this Supplement shall be made on the basis of actual days
elapsed in the applicable period and a 360-day year. Any
determination of Program Costs or any other fees by the
Agent shall be conclusive and binding upon each of the
parties hereto in the absence of manifest error.
A. SECTION Interest Rate Indemnity. The
Company agrees to indemnify the Agent and each VFC
Certificateholder and to hold the Agent and each VFC
Certificateholder harmless from any loss or expense which
the Agent or such VFC Certificateholder may sustain or incur
as a consequence of (a) default by the Company in making an
Increase after the Company has given irrevocable notice
requesting the same in accordance with the provisions of
this Supplement, (b) default by the Company in making any
prepayment in connection with a Decrease after the Company
has given irrevocable notice thereof in accordance with the
provisions of Section 2.5 or (c) the making of a prepayment,
whether in connection with a Decrease or otherwise, in an
amount in excess of the portion of the Invested Amount
allocated to a Funding Period ending on the date of such
prepayment. Such indemnification shall include, without
limitation, any loss (including those of anticipated
profits, net of anticipated profits in respect of the
reemployment of such funds in the manner determined by such
VFC Certificateholder), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other
funds acquired by any VFC Certificateholder to fund or
maintain the applicable portion of the Invested Amount or
such requested Increase; provided, however, that any
payments made by the Company pursuant to this subsection
shall be made solely from Available Funds, shall be non-
recourse other than with respect to Available Funds, and
shall not constitute a claim against the Company to the
extent that insufficient Available Funds exist to make such
payment. This covenant shall survive the termination of
this Supplement and the payment of all amounts payable
hereunder. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by any
VFC Certificateholder to the Company and the Master Servicer
shall be conclusive absent manifest error.
I. ARTICLE
ARTICLE III OF THE AGREEMENT
Any provision of Article III of the Agreement
which distributes Collections to the Company on the basis of
the Company's Percentage shall continue to apply
irrespective of the issuance of the VFC Certificates.
Section 3.1 of the Agreement shall be read in its entirety
as provided in the Agreement. Article III of the Agreement
(except for Section 3.1 thereof and any portion thereof
relating to another Series) shall read in its entirety as
follows and shall be exclusively applicable to the VFC
Certificates and the Subordinated Certificate:
SECTION 3C.2. Establishment of Series Accounts.
(a) The Trustee shall cause to be established and
maintained in the name of the Trustee, on behalf of the
Trust, (i) for the benefit of the VFC Certificateholders and
for the benefit, subject to the prior interest of the VFC
Certificateholders, of the holder of the Subordinated
Certificate, a subaccount of the Collection Account (the
"Series 1998-1 Collection Subaccount"), which subaccount is
the Series Collection Subaccount with respect to Series
1998-1, bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the VFC
Certificateholders and for the benefit, subject to the prior
interest of the VFC Certificateholders, of the holder of the
Subordinated Certificate; (ii) for the benefit of the VFC
Certificateholders and for the benefit, subject to the prior
interest of the VFC Certificateholders, of the holder of the
Subordinated Certificate, two subaccounts of the Series
1998-1 Collection Subaccount: the Series 1998-1 Principal
Collection Sub-subaccount and the Series 1998-1
Non-Principal Collection Sub-subaccount (respectively, the
"Series 1998-1 Principal Collection Sub-subaccount" and the
"Series 1998-1 Non-Principal Collection Sub-subaccount"),
each bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the VFC
Certificateholders and for the benefit, subject to the prior
interest of the VFC Certificateholders, of the holder of the
Subordinated Certificate; and (iii) for the benefit of the
VFC Certificateholders, a subaccount of the Series 1998-1
Non-Principal Collection Sub-subaccount (the "Series 1998-1
Accrued Interest Sub-subaccount"; all accounts established
pursuant to this subsection 3C.2(a) being referred to herein
collectively as the "Series Accounts" and the accounts
listed on Schedule 1 being referred to herein, collectively
as the "Trust Accounts"). The Trustee shall possess all
right, title and interest in all funds from time to time on
deposit in, and all Eligible Investments credited to, the
Series Accounts and Trust Accounts and in all proceeds
thereof. The Trust Accounts and the Series Accounts shall
be under the sole dominion and control of the Trustee for,
in the case of the Series Accounts, the exclusive benefit of
the VFC Certificateholders and to the extent applicable,
subject to the prior interest of the VFC Certificateholders,
to the holder of the Subordinated Certificate.
(b) All Eligible Investments in the Series
Accounts shall be held by the Trustee for the exclusive
benefit of the VFC Certificateholders and, subject to the
prior interest of the VFC Certificateholders, of the holder
of the Subordinated Certificate; provided, however, that
funds on deposit in a Series Account may, at the direction
of the Master Servicer, be invested together with funds held
in sub-subaccounts of the Collection Account that are not
Series Accounts. After giving effect to any distribution to
the Company pursuant to subsection 3C.3(c), amounts on
deposit and available for investment in the Series 1998-1
Principal Collection Sub-subaccount shall be invested by the
Trustee at the written direction of the Company in Eligible
Investments that mature, or that are payable or redeemable
upon demand of the holder thereof, (i) in the case of any
such investment made during the Revolving Period, on or
prior to the next Business Day and (ii) in the case of any
such investment made during the Amortization Period, on or
prior to the next subsequent Funding Period Determination
Date. Amounts on deposit and available for investment in
the Series 1998-1 Non-Principal Collection Sub-subaccount
and the Series 1998-1 Accrued Interest Sub-subaccount shall
be invested by the Trustee at the written direction of the
Company in Eligible Investments that mature, or that are
payable or redeemable upon demand of the holder thereof, on
or prior to the next subsequent Determination Date or
Funding Period Determination Date, as the case may be. As
of the Determination Date or Funding Period Determination
Date, as the case may be, all interest and other investment
earnings (net of losses and investment expenses) on funds
deposited in the Series 1998-1 Accrued Interest Sub-
subaccount shall be deposited in the Series 1998-1 Non-
Principal Collection Sub-subaccount. All interest and
investment earnings (net of losses and investment expenses)
on funds deposited in the Series 1998-1 Principal Collection
Sub-subaccount shall be deposited in the Series 1998-1 Non-
Principal Collection Sub-subaccount. The Trustee shall not
in any way be held liable by reason of any insufficiency in
any Account held by the Trustee resulting from any
investment loss on any Eligible Investment included therein
(except to the extent that the Trustee is the obligor and
has defaulted thereon).
a) SECTION 3C.3. Daily Allocations. The
portion of Aggregate Daily Collections allocated to the VFC
Certificateholders pursuant to Article III of the Agreement
shall be allocated and distributed as set forth in this
Article III.
a) (i) On each Business Day, an amount equal to
the Accrued Expense Amount for such day shall be transferred
from the Series 1998-1 Collection Subaccount to the Series
1998-1 Non-Principal Collection Sub-subaccount; provided
that funds representing any portion of the Accrued Expense
Amount which constitute Program Costs or Unreserved Interest
shall only be transferred to the extent that, after giving
effect to the transfer of such amounts and the deposit of
any remaining Collections to the Series 1998-1 Principal
Collection Sub-subaccount, the Target Receivables Amount
would not exceed the Allocated Receivables Amount.
(ii) Following the transfers pursuant to clause
(i) above, any remaining funds on deposit in the Series
1998-1 Collection Subaccount shall be transferred to the
Series 1998-1 Principal Collection Sub-subaccount.
(1) On each Business Day during the Revolving
Period (including Distribution Dates), amounts on deposit in
the Series 1998-1 Principal Collection Sub-subaccount shall
be distributed by the Trustee to the Company (but only to
the extent that the Trustee has received a Daily Report
which reflects the receipt of the Collections on deposit
therein); provided that such distribution shall be made only
to the extent that, after giving effect to such
distribution, (i) the Target Receivables Amount would not
exceed the Allocated Receivables Amount, (ii) each VFC
Certificateholder's Commitment equals or exceeds its Pro
Rata Share of the aggregate portion of the Invested Amount
and (iii) there has been deposited to the Series 1998-1 Non-
Principal Collection Sub-subaccount funds sufficient to
eliminate any excess of the Accrued Expense Amounts for any
Business Day over the amounts transferred to the Series 1998-
1 Non-Principal Collection Sub-subaccount in respect
thereof; provided further that if the Company (or the Master
Servicer, on behalf of the Company) shall have given the
Trustee irrevocable written notice prior to the making of
any distribution to the Company pursuant to this
subsection 3C.3(c)(i) on any day, the Company or the Master
Servicer may instruct the Trustee in writing (specifying the
related amount) to retain or deposit, as applicable, all or
a portion of such amounts on deposit in the Series 1998-1
Principal Collection Sub-subaccount, the Series 1998-1 Non-
Principal Collection Sub-subaccount or the Series 1998-1
Collection Subaccount (together with, to the extent that the
Company so directs the Trustee, any other Available Funds
that the Company may elect from time to time to deposit into
the Series 1998-1 Principal Collection Sub-subaccount, the
Series 1998-1 Non-Principal Collection Sub-subaccount or the
Series 1998-1 Collection Subaccount, as the case may be) for
further application hereunder; and provided further that
such distribution to the Company shall not, in any event, be
made if either (i) a Cure Period Trigger Date has occurred
and is continuing (and the breach or violation giving rise
to such Cure Period Trigger Date has not been cured or
waived as of such date), (ii) any Bankruptcy Action shall
have been commenced against any member of the SFC Group and
shall remain undismissed, undischarged or unbonded, or (iii)
any case, proceeding or action described in clause (iii) of
Section 5.1(k) shall have been entered by a court of
competent jurisdiction and shall not have been vacated,
discharged, or stayed or bonded pending appeal. Amounts
distributed to the Company hereunder shall be deemed to be
paid first from Collections received directly by any
Servicing Party and second from Collections received in the
Lockboxes.
(1) On each Business Day during the
Amortization Period (including Distribution Dates), funds
deposited in the Series 1998-1 Principal Collection Sub-
subaccount shall be invested in Eligible Investments that
mature on or prior to the next Funding Period Determination
Date. No amounts on deposit in the Series 1998-1 Principal
Collection Sub-subaccount shall be distributed by the
Trustee to the Company during the Amortization Period. The
Trustee shall not in any way be liable by reason of any
insufficiency in any account held by the Trustee resulting
from any investment loss on any Eligible Investment included
therein (except to the extent that the Trustee is the
obligor and has defaulted thereon).
a) On each Business Day an amount equal to the
Daily Interest Deposit (less, during the Amortization
Period, any Unreserved Interest) for such day shall be
transferred from the Series 1998-1 Non-Principal Collection
Sub-subaccount to the Series 1998-1 Accrued Interest Sub-
subaccount.
a) The allocations to be made pursuant to this
Section 3C.3 are subject to the provisions of Sections 2.6,
7.2 and 9.1 of the Agreement and shall be based solely on
information provided to the Trustee by the Master Servicer
in the applicable Daily Report.
SECTION 3C.4. Selection of Funding Periods;
Determination of Interest Rates. (a) At all times
hereafter, the aggregate outstanding Invested Amount shall
be allocated to a Funding Period. The Master Servicer,
subject to the limitations described below, shall select
Funding Periods and the applicable Funding Period Rates for
such Funding Periods and shall allocate the outstanding
Invested Amount to such selected Funding Periods and Funding
Period Rates, except that the Unallocated Balance, if any,
outstanding from time to time, shall at all times be
allocated to a Funding Period coinciding with the Accrual
Period then in effect.
(b) The Master Servicer may select Funding
Periods and Funding Period Rates with respect to the VFC
Certificates by notice to the Trustee and the Agent
specifying the Business Day on which the applicable Funding
Period is to commence, the duration of the applicable
Funding Period and the portion of the Invested Amount
requested to be allocated to such Funding Period. Any such
notice must be received by the Trustee and the Agent (i) to
the extent that the applicable Funding Period Rate is the
Applicable Base Rate, no later than 1:00 p.m. New York City
time on the Business Day on which the applicable Funding
Period commences and (ii) to the extent that the applicable
Funding Period Rate is the Applicable Eurodollar Rate, no
later than 1:00 p.m. New York City time on the third
Business Day preceding the commencement of the applicable
Funding Period. Any portion of the Invested Amount with
respect to VFC Certificates held by any VFC
Certificateholder on any day that has not been allocated to
a Eurodollar Tranche shall accrue interest for such day at
the Applicable Base Rate (the aggregate amount of such
unallocated portions of such Invested Amount being referred
to herein as the "Unallocated Balance"). Any reduction in
the Invested Amount with respect to any VFC Certificate
shall be allocated first, to reduce the portion of the
Invested Amount thereof constituting Unallocated Balance,
and second, to reduce the portion of the Invested Amount
thereof allocated to other Funding Periods. Notwithstanding
anything to the contrary contained in this
subsection 3C.4(b), the portion of the Invested Amount with
respect to VFC Certificates allocated to Eurodollar Tranches
shall be subject to such other limitations as shall have
been specified in the Certificate Purchase Agreement, and
during the Syndication Period, shall be limited to two one-
month Eurodollar Periods.
(c) The amount of interest distributable with
respect to the VFC Certificates on any Funding Period
Settlement Date shall be an amount equal to the sum of (i)
the aggregate Funding Period Interest for such Funding
Period Settlement Date, plus (ii) all outstanding Past Due
Interest, plus (iii) the amount of any accrued but unpaid
Additional Interest.
SECTION 3C.5. Determination of Series 1998-1
Amortization Principal Payments. The amount (the "Series
1998-1 Amortization Principal Payment") distributable from
the Series 1998-1 Principal Collection Sub-subaccount on
each Funding Period Settlement Date during the Amortization
Period shall be equal to the lesser of (a) the aggregate
Invested Amount allocated to such Funding Period and (b) the
amount on deposit in such account on such Funding Period
Settlement Date.
SECTION 3C.6. Applications. (a) The Master
Servicer shall instruct the Trustee in writing (which
instruction shall specify the amounts to be distributed), on
each Funding Period Settlement Date, to distribute to the
Agent on behalf of the VFC Certificateholders from amounts
on deposit in the Series 1998-1 Accrued Interest Sub-
subaccount, an amount equal to the sum of (i) Funding Period
Interest on the VFC Certificates for such Funding Period,
(ii) all outstanding Past Due Interest and (iii) all accrued
but unpaid Additional Interest.
(b) On each Settlement Date, the Master Servicer
shall instruct the Trustee in writing (which instruction
shall specify the amounts to be applied or distributed, as
the case may be) to apply funds on deposit in the Series
1998-1 Non-Principal Collection Sub-subaccount (after taking
into consideration the distribution to the VFC
Certificateholders from the Series 1998-1 Non-Principal
Collection Sub-subaccount or any subaccount thereof pursuant
to subsection 3C.6(a)) in the following order of priority to
the extent funds are available:
(i) an amount equal to the Series 1998-1
Monthly Servicing Fee for the Accrual Period ending on
such Settlement Date shall be withdrawn from the Series
1998-1 Non-Principal Collection Sub-subaccount by the
Trustee and paid to the Master Servicer (or to the
Trustee, if on such date the Trustee is then acting as
Master Servicer in order to liquidate the Receivables
and the Related Property);
(ii) an amount equal to the Non-Usage Fees
for the Accrual Period ending on such Settlement Date
shall be withdrawn from the Series 1998-1 Non-Principal
Collection Sub-subaccount by the Trustee and paid to
the Agent on behalf of the VFC Certificateholders; and
(iii) an amount equal to any Program Costs or
Unreserved Interest due and payable shall be withdrawn
from the Series 1998-1 Non-Principal Collection Sub-
subaccount by the Trustee and paid to the Persons owed
such amounts, with respect to any such amounts owed to
any VFC Certificateholder, shall be paid to the Agent
for distribution to such VFC Certificateholder.
Any remaining amount on deposit in the Series 1998-1 Non-
Principal Collection Sub-subaccount not allocated pursuant
to clauses (i) through (iii) above shall (x) during the
Revolving Period, be transferred to the Series 1998-1
Principal Collection Sub-subaccount for application pursuant
to subsection 3C.3(c)(i) and (y) during the Amortization
Period, at the Agent's option, either (A) remain on deposit
in the Series 1998-1 Non-Principal Collection Sub-subaccount
for future application in accordance with the priorities set
forth in this subsection 3C.6(b) or (B) be transferred to
the Series 1998-1 Principal Collection Sub-subaccount for
application in accordance with the priorities set forth in
subsection 3C.6(d).
(c) During the Revolving Period, to the extent
that the Company has elected or is required to effect a
Decrease as described in Section 2.5, the Master Servicer
shall instruct the Trustee in writing to pay to Agent on
behalf of the VFC Certificateholders in reduction of the
Invested Amount on each applicable Decrease date, amounts on
deposit in the Series 1998-1 Principal Collection Sub-
subaccount, up to the amount of the applicable Decrease.
(d) During the Amortization Period, the Master
Servicer shall instruct the Trustee in writing (which
instruction shall specify the amounts to be applied or
distributed, as the case may be) to apply, on each Funding
Period Settlement Date, amounts on deposit in the Series
1998-1 Principal Collection Sub-subaccount in the following
order of priority:
(i) an amount equal to the Series 1998-1
Amortization Principal Payment for such Funding Period
Settlement Date shall be distributed from the Series
1998-1 Principal Collection Sub-subaccount to the Agent
on behalf of the VFC Certificateholders in reduction of
the Invested Amount allocated to such Funding Period,
and, unless after giving effect to such payment the
Invested Amount has been repaid in full, any amounts
remaining on deposit in the Series 1998-1 Principal
Collection Sub-subaccount shall be retained therein for
application in accordance with the terms of this
Supplement on the next succeeding Funding Period
Settlement Date;
(ii) If the Invested Amount has been repaid
in full after giving effect to clause (i) above and any
Program Costs or Unreserved Interest remain unpaid,
such unpaid amounts shall be transferred to the Series
1998-1 Non-Principal Collection Sub-subaccount for
application pursuant to subsection 3C.6(b);
(iii) if the Invested Amount has been repaid
in full after giving effect to clause (i) and no
transfers are required under clause (ii) above and any
amounts are owed to the Trustee or any other Person on
account of its expenses incurred in respect of the
performance of its responsibilities as Master Servicer
for the liquidation of the Receivables and the Related
Property, such amounts shall be transferred from the
Series 1998-1 Principal Collection Sub-subaccount and
paid to the Trustee or such other Person; and
(iv) if the Invested Amount has been repaid
in full after giving effect to clause (i) and all of
the amounts set forth in clauses (ii) and (iii) above
have been repaid or transferred to the 1998-1 Non-
Principal Collection Sub-subaccount, the remaining
amount on deposit in the Series 1998-1 Principal
Collection Sub-subaccount on such Funding Period
Settlement Date, if any, shall be distributed to the
holder of the Subordinated Certificate.
I. ARTICLE
DISTRIBUTIONS AND REPORTS
Article IV of the Agreement (except for any
portion thereof relating to another Series) shall read in
its entirety as follows and shall be exclusively applicable
to the VFC Certificates:
a) SECTION 4C.1. Distributions. On each
Distribution Date, the Trustee shall distribute (by wire
transfer) to the Agent at the Agent's Account for itself and
each VFC Certificateholder such Person's share, as
determined by the Master Servicer and reported to the
Trustee and the Agent on the preceding Determination Date or
Funding Period Determination Date, as applicable, of the
amounts to be distributed to the Agent pursuant to Article
III. The Trustee will endeavor to make all such payments by
3:00 p.m. (New York City time) on the applicable
Distribution Date, but shall incur no liability to any
Person in the event that it fails to make any such payment
by such time.
a) All allocations and distributions
hereunder by the Trustee shall (i) be in accordance with and
based solely upon the applicable Daily Reports and Monthly
Settlement Statement or Funding Period Settlement Statement
and subject to subsection 3.1(h) of the Agreement and (ii)
be accompanied by a statement to the Agent identifying what
portion of amounts distributed to the Agent's Account are
allocable to principal, interest, Non-Usage Fees and/or any
other Program Costs or fees, as applicable.
SECTION 4C.2. Statements and Notices. (a)
Settlement Statements. On each Determination Date, the
Master Servicer shall deliver to the Agent, the VFC
Certificateholders, the Trustee and the Rating Agency a
Monthly Settlement Statement substantially in the form
attached hereto as Exhibit E-1 setting forth, among other
things, the Loss Reserve Ratio, the Dilution Reserve Ratio,
the Carrying Cost Reserve Ratio and the Servicing Reserve
Ratio, each as recalculated for the next succeeding
Settlement Period. On each Funding Period Determination
Date and the date of any Decrease, the Master Servicer shall
deliver to the Agent, the Trustee and the Rating Agency a
completed settlement statement (a "Funding Period Settlement
Statement"), substantially in the form attached hereto as
Exhibit E-2.
(b) Annual Certificateholders' Tax Statement. On
or before April 1 of each calendar year (or such earlier
date as required by applicable law), beginning with calendar
year 1998, the Company on behalf of the Trustee shall
furnish, or cause to be furnished, to each Person who at any
time during the preceding calendar year was a VFC
Certificateholder, a statement prepared by the Company
containing the aggregate amount distributed to such Person
for such calendar year or the applicable portion thereof
during which such Person was a VFC Certificateholder,
together with such other information as is required to be
provided by an issuer of indebtedness under the Internal
Revenue Code and such other customary information as the
Trustee or the Company deems necessary or desirable to
enable the VFC Certificateholders to prepare their tax
returns. Such obligation of the Company shall be deemed to
have been satisfied to the extent that substantially
comparable information shall have been provided by the
Trustee pursuant to any requirements of the Internal Revenue
Code as from time to time in effect.
(c) Early Amortization Period Notices. Promptly
after the receipt by a Responsible Officer of the Trustee of
notice of the occurrence of an Early Amortization Event with
respect to Series 1998-1, the Trustee shall give notice
(which notice shall in any event be given (by telephone
confirmed promptly in writing or otherwise in writing) not
later than the second Business Day after such receipt) of
such occurrence to (i) the Agent and the Rating Agency and
(ii) each VFC Certificateholder.
(d) Principal Payment Notices. During the
Amortization Period, on each date which is three Business
Days prior to a Funding Period Settlement Date, the Trustee
shall deliver to the Agent a notice by fax, followed by a
hard copy delivered by overnight carrier, setting forth the
amount on deposit and available for distribution in the
Series 1998-1 Principal Collection Sub-subaccount as of the
opening of business on such date.
(e) Forwarding of Other Notices and Documents.
The Trustee shall promptly (but in any event within two
Business Days following receipt thereof) forward to the
Agent and each VFC Certificateholder copies of the following
documents and/or notices upon receipt thereof by a
Responsible Officer of the Trustee:
(1) Financial Statements of Company. All financial
statements delivered by the Company pursuant to subsection
2.7(a) of the Agreement.
(1) Early Amortization, Insolvency and
Lien Notices. Any notice delivered by the Company pursuant
to subsection 2.7(g) or 7.2(a) of the Agreement or any
notice delivered by the Master Servicer pursuant to Section
7.1 of the Agreement.
(1) Daily Reports. Upon request by the
Agent or any VFC Certificateholder, Daily Reports delivered
by the Master Servicer pursuant to subsection 4.2(a) of the
Servicing Agreement.
(1) Settlement Statements; Quarterly
Master Servicer Certificates. All Monthly Settlement
Statements, Funding Period Settlement Statements and
certificates delivered by the Master Servicer pursuant to
Sections 4.3 and 4.4 of the Servicing Agreement.
(1) Accountants' Letters. All letters delivered by
the Master Servicer's independent public accountants
pursuant to Section 4.5 of the Servicing Agreement.
(1) SEC Filings by Master Servicer.
All filings with the Securities and Exchange Commission
delivered by the Master Servicer pursuant to
subsection 4.14(d) of the Servicing Agreement.
(f) Termination of Sellers. The Master Servicer
shall promptly notify the Rating Agency, concurrently with
its notification of the Trustee and the Agent, of the
termination of any Seller pursuant to Section 9.14 of the
Receivables Sale Agreement.
SECTION 4C.3. Notices. Notices required to be
given to the VFC Certificateholders hereunder will be given
by first class mail to the address of such holders as they
appear in the Certificate Register, or, if expressly
required herein, by telephonic notice via a telephone or
telecopy number provided by each VFC Certificateholder to
the Trustee.
I. ARTICLE
ADDITIONAL EARLY AMORTIZATION EVENTS
A. SECTION Additional Early Amortization
Events. If any one of the events specified in Section 7.1
of the Agreement (after any grace periods or consents
applicable thereto) shall occur during the Revolving Period,
an Early Amortization Event shall occur as provided in such
Section 7.1 of the Agreement. If any one of the following
events shall occur during the Revolving Period with respect
to the VFC Certificates:
a) failure on the part of the Company to make
any payment (i) in respect of principal owing on any VFC
Certificates within one Business Day of the date such
principal is due, (ii) in respect of interest or fees owing
on any VFC Certificates within two Business Days of the date
such amount is due or (iii) in respect of any other amounts
owing by the Company to or for the benefit of the VFC
Certificateholders or the Agent within five Business Days of
the date such other amount is due;
a) failure on the part of the Master Servicer to
remit any amounts on behalf of the Company as required by
the Transaction Documents or to instruct the Trustee to make
the allocations and distributions set forth in Article III
which such failure shall result in the failure to pay (i)
any principal owing on any VFC Certificate within one
Business Day of the date such principal is due, (ii) any
interest or fees owing on any VFC Certificates within two
Business Days of the date such amount is due, or (iii) any
other amounts owing by the Company or the Master Servicer
under any Transaction Document or the Guaranty to or for the
benefit of the VFC Certificateholders or the Agent within
five Business Days of the date such other amount is due;
a) failure on the part of any member of the SFC
Group duly to observe or perform in any material respect any
covenants or agreements of such Person set forth in any
Transaction Document which has a material adverse effect on
the Agent or the VFC Certificateholders which continues
unremedied for 30 days from the earlier of (i) the date upon
which a Responsible Officer of such member of the SFC Group
obtains knowledge of such failure or (ii) the date on which
written notice of such failure, requiring the same to be
remedied, shall have been given to such member of the SFC
Group by the Trustee, or any such Person and the Trustee by
the Control Party;
a) any representation or warranty made by any
member of the SFC Group in any Transaction Document (i)
shall prove to have been incorrect in any material respect
when made or when delivered which continues to be incorrect
for a period of 30 days after the day on which notice of
such failure, requiring the same to be remedied, shall have
been given by the Trustee to such member of the SFC Group
(or by the Control Party to any such Person and the Trustee)
and (ii) as a result of such incorrectness, the interests of
the Agent or the VFC Certificateholders are materially and
adversely affected; provided, however, that an Early
Amortization Event with respect to Series 1998-1 shall not
be deemed to have occurred under this paragraph if the
incorrectness of such representation or warranty gives rise
to an obligation to repurchase the related Receivables and
the Company has repurchased the related Receivable or all
such Receivables, if applicable, in accordance with the
provisions of the Agreement within five Business Days of
when the Company was obligated to do so;
a) the Allocated Receivables Amount shall be less
than the Target Receivables Amount for a period of five
consecutive days;
a) a Purchase Termination Event (as defined in the
Receivables Sales Agreement) which allows the Company to
cease purchasing Receivables from all Sellers thereunder
shall have occurred and be continuing under the Receivables
Sale Agreement;
a) as at the end of any Settlement Period, the Loss-
to-Liquidation Ratio shall exceed 4.5%;
a) as at the end of any Settlement Period, the
Delinquency Ratio shall exceed 4%;
a) as at the end of any Settlement Period, the
Default Ratio shall exceed 6%;
a) for any Settlement Period, Days Sales
Outstanding shall be more than 40 days;
a) as at the last date of any fiscal quarter of the
Company, Net Worth shall be less than an amount equal to (i)
10% times (ii) the Invested Amount;
a) (i) any member of the SFC Group shall have
commenced any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization
or relief of debtors or shall have consented to the entry of
any order for relief entered with respect to it in an
involuntary case under any such law, or seeking to
adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its assets, or any
member of the SFC Group shall make a general assignment for
the benefit of its creditors (any such case, proceeding or
other action, a "Bankruptcy Action"); or (ii) there shall be
commenced against any member of the SFC Group any Bankruptcy
Action which (A) results in the entry of an order for relief
or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 30
days; or (iii) there shall be commenced against any member
of the SFC Group any case, proceeding or other action
seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial
part of its assets which results in the entry of an order
for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60
days from the entry thereof; or (iv) any member of the SFC
Group shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the
acts set forth in clauses (i), (ii) or (iii) above; or (v)
any member of the SFC Group shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay
its debts as they become due;
a) a Servicer Default with respect to the Master
Servicer or any Significant Servicer shall have occurred and
be continuing or at any time a Servicer Default with respect
to three or more Servicers shall have occurred and be
continuing;
a) a Change in Control shall have occurred;
a) the Trust shall for any reason cease to have a
valid and perfected first priority undivided ownership or
security interest in the Trust Assets free and clear of any
Liens other than Permitted Liens;
a) the Internal Revenue Service or the Pension
Benefit Guaranty Corporation (or any successor of either of
the foregoing) shall have a Lien against the assets of any
member of the SFC Group unless such Lien expressly does not
attach to any Receivables sold or purported to be sold to
the Company and does not otherwise (in the opinion of the
Agent) have a material adverse effect on the VFC
Certificateholders;
a) any of the Agreement, the Servicing Agreement,
this Supplement or the Receivables Sale Agreement shall
cease, for any reason, to be in full force and effect, or
the Company shall so assert in writing;
a) the "Commitments" under (and as defined in) the
SFC Loan Agreement shall have been terminated prior to their
stated term or the lenders thereunder shall have refused to
make any extensions of credit thereunder for a period of 90
consecutive days following notice of such refusal delivered
to the borrowers thereunder;
a) (i) any of SFC or the Sellers shall default in
the payment of principal of or interest on any indebtedness,
in an aggregate amount, with respect to such Person, at any
one time equal to or exceeding $5,000,000 which default
continues unremedied and unwaived beyond the applicable
grace period, if any, set forth in the document evidencing
such indebtedness, or (ii) indebtedness of SFC or any Seller
becomes due prior to its stated maturity in an aggregate
amount, with respect to such Person, equal to or exceeding
$5,000,000;
a) the aggregate principal amount of the VFC
Certificates is not paid in full on the Expected Final
Distribution Date;
a) any Lien or other claim against the Company
shall arise in favor of a Seller in connection with the
Subordinated Note under the Receivables Purchase Agreement
or any foreclosure or similar proceeding shall be commenced
in respect of the Company's stock in connection therewith;
a) the rating of the VFC Certificates as in effect
on the Issuance Date shall be (i) withdrawn by the Rating
Agency or (ii) reduced below BB+ by the Rating Agency; or
a) The Guaranty shall cease to be in full force
and effect, or SFC shall so assert in writing;
then, after the applicable grace period, if any, set forth
in such subsections (notice of which event shall be given by
the Trustee to the Rating Agency to the extent that a
Responsible Officer has actual knowledge thereof), the
Agent, on behalf of the Control Party, by notice then given
in writing to the Company, the Master Servicer and the
Trustee, may declare that an early amortization event (an
"Early Amortization Event") has occurred as of the date of
such notice with respect to Series 1998-1.
I. ARTICLE
SERVICING FEE
A. SECTION Servicing Compensation. A monthly
servicing fee (the "Series 1998-1 Monthly Servicing Fee")
shall be payable to the Master Servicer, on behalf of the
Servicing Parties, on each Settlement Date for the Accrual
Period then ending, in an amount equal to the product of (a)
the Servicing Fee and (b) a fraction the numerator of which
is the daily average Adjusted Invested Amount for such
Accrual Period and the denominator of which is the daily
average of the Aggregate Adjusted Invested Amount for such
Accrual Period; provided, however, that if an Early
Amortization Period has commenced and SFC is acting as
Master Servicer, the Series 1998-1 Monthly Servicing Fee
shall be deferred until all amounts due under the VFC
Certificates have been paid in full. The Series 1998-1
Monthly Servicing Fee is the Monthly Servicing Fee, referred
to in Section 2.5 of the Servicing Agreement, which is
allocable to Series 1998-1.
I. ARTICLE
COVENANTS, REPRESENTATIONS AND WARRANTIES
A. SECTION Representations and Warranties of
the Company and the Master Servicer. The Company and the
Master Servicer hereby represent and warrant to the Agent,
the Trustee and each of the VFC Certificateholders that each
and all of their respective representations and warranties
contained in each of the Pooling and Servicing Agreements is
true and correct in all material respects as of the date
hereof.
A. SECTION Covenants of the Company. The
Company hereby agrees that:
a) it shall observe each and all of its
respective covenants (both affirmative and negative)
contained in each Pooling and Servicing Agreement and the
Certificate Purchase Agreement in all material respects;
a) it shall not terminate the Agreement unless
in strict compliance with the terms of the Agreement;
a) it shall not change in any material respect
the terms or provisions of the Policies so as to adversely
affect the general quality of the Receivables without the
prior written consent of the Control Party;
a) it shall not make any change or modification
(or permit any change or modification to be made) in any
material respect to the Policies, except (i) if such changes
or modifications are necessary under any Requirement of Law
or (ii) if such changes or modifications are consented to by
the Agent;
(e) it shall cooperate with and assist the Agent
in any syndication efforts with respect to the VFC
Certificates, including without limitation, providing
all information and access to personnel reasonably
deemed necessary by the Agent and making available such
personnel for informational meetings with potential
purchasers of the VFC Certificates at such times and
places as the Agent may reasonably request;
(f) it shall not borrow under any "Subordinated
Notes" (as such term is defined in the Receivables Sale
Agreement) if, after giving effect thereto, the
aggregate outstanding principal amount of all such
Subordinated Notes would exceed the excess, if any, of
(i) the Aggregate Receivables Amount over (ii) the sum
of (A) the Adjusted Invested Amount plus (B) the
product of (1) the Loss Reserve Ratio times (2) the
Aggregate Receivables Amount (each as in effect at such
time but calculated without giving effect to any
increase of the Ratings Multiple above 1.5); and
(g) on or prior to September 30, 1998, it shall
complete and deliver to the Agent a comprehensive
written assessment of the nature and extent of its
"Year 2000 Problem" (that is, the risk that computer
applications used by the Company may be unable to
recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after
December 31, 1999) and on or prior to December 31,
1998, it shall deliver to the Agent a comprehensive
plan to eliminate its Year 2000 Problem on or before
August 31, 1999, including without limitation (i)
computer code enhancements or revisions, (ii) upgrades
or replacements of Year 2000 date-sensitive systems or
components, (iii) test and validation procedures, (iv)
an implementation time line and budget and (v)
designation of specific employees who will be
responsible for planning, coordinating and implementing
each phase or subpart of such comprehensive corrective
plan. On or prior to August 31, 1999, the Company shall
have completed all steps set forth in its comprehensive
plan and shall have eliminated its Year 2000 Problem,
except where the failure to correct the same could not
reasonably be expected to have a Material Adverse
Effect.
A. SECTION Covenants of the Master Servicer.
The Master Servicer hereby agrees that:
(a) it shall observe each and all of its
covenants (both affirmative and negative) contained in
each Pooling and Servicing Agreement and the
Certificate Purchase Agreement in all material
respects;
(b) it shall deliver to the Agent on each
Business Day a Daily Report, at the times specified and
in accordance with the provisions of Section 4.2 of the
Servicing Agreement;
(c) it shall deliver to the Agent and (b) it
shall deliver to each VFC Certificateholder which is an
Eligible Certificateholder by 11:00 a.m. (New York City
time) on the Determination Date or Funding Period
Determination Date prior to each Settlement Date or
Funding Period Settlement Date, a Monthly Settlement
Statement or Funding Period Settlement Statement, as
applicable;
(d) it shall, or shall cause the Company and any
other member of the SFC Group to, cooperate with and
assist the Agent in any syndication efforts with
respect to the VFC Certificates, including without
limitation, providing all information and access to
personnel reasonably deemed necessary by the Agent and
making available such personnel for informational
meetings with potential purchasers of the VFC
Certificates at such times and places as the Agent may
reasonably request;
(e) it shall not, and shall not allow any of the
Sellers or its other Subsidiaries to, create any Liens
encumbering any goods or merchandise the sale of which
may give rise to a Receivable without providing in the
security documentation therefor that any such Lien does
not attach to, and shall be released from, any of the
Receivables included in the Trust Assets;
(f) on or prior to September 30, 1998, it shall,
and shall cause each Seller to complete and deliver to
the Agent a comprehensive written assessment of the
nature and extent of its and each Seller's Year 2000
Problem and on or prior to December 31, 1998, it shall
and shall cause each Seller to deliver to the Agent a
comprehensive plan to eliminate such Year 2000 Problem
on or before August 31, 1999, including without
limitation (i) computer code enhancements or revisions,
(ii) upgrades or replacements of Year 2000 date-
sensitive systems or components, (iii) test and
validation procedures, (iv) an implementation time line
and budget and (v) designation of specific employees
who will be responsible for planning, coordinating and
implementing each phase or subpart of such
comprehensive corrective plan. On or prior to August
31, 1999, the Master Servicer shall have completed and
shall cause each Seller to complete all steps set forth
in its comprehensive plan and shall have eliminated its
Year 2000 Problem, except where the failure to correct
the same could not reasonably be expected to have a
Material Adverse Effect; and
(g) it shall not report any credit memo or
similar credit adjustment in the Aged Receivables Ratio
numerator for purposes of determining the aggregate
unpaid balances of Receivables by any Seller or Seller
Group.
A. SECTION Additional Supplements. The
Company and the Master Servicer each hereby agrees that no
additional Supplement shall be issued under the Agreement
unless the Control Party shall have consented to the form
and substance of the Principal Terms contained in such
Supplement, which consent shall not be unreasonably withheld
(it being understood that it is not unreasonable if the
Control Party withholds such consent because it determines
in its sole discretion that its rights would be diminished
or otherwise adversely affected under any of the Transaction
Documents as a result of the issuance of such Supplement).
I. ARTICLE
MISCELLANEOUS
A. SECTION Ratification of Agreement. As
supplemented by this Supplement, the Agreement is in all
respects ratified and confirmed and the Agreement as so
supplemented by this Supplement shall be read, taken and
construed as one and the same instrument.
A. SECTION Governing Law. THIS SUPPLEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAW.
A. SECTION Further Assurances. Each of the
Company and the Trustee agrees, from time to time, to do and
perform any and all acts and to execute any and all further
instruments required or reasonably requested by the Control
Party more fully to effect the purposes of this Supplement
and the sale of the VFC Certificates hereunder, including,
without limitation, in the case of the Company, the
execution of any financing statements or continuation
statements relating to the Receivables and the other Trust
Assets for filing under the provisions of the UCC of any
applicable jurisdiction.
A. SECTION No Waiver; Cumulative Remedies. No
failure to exercise and no delay in exercising, on the part
of the Agent, the Trustee or any VFC Certificateholder, any
right, remedy, power or privilege hereunder, shall operate
as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided
are cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
A. SECTION Amendments. This Supplement may
only be amended, supplemented or otherwise modified from
time to time if such amendment, supplement or modification
is effected in accordance with the provisions of Section
10.1 of the Agreement. The Master Servicer shall give each
VFC Certificateholder notice of any proposed amendment to
this Supplement or to the Agreement on or before the later
of (a) the date that is 10 days prior thereto and (b) the
date of any initial notice thereof is provided to the Agent.
A. SECTION Notices. All notices, requests and
demands to or upon any party hereto to be effective shall be
given in the manner set forth (i) in the case of the
Company, the Master Servicer and the Trustee, in Section
10.5 of the Agreement and (ii) in the case of the Agent, at
its address set forth below:
Bankers Trust Company
Fourteen Wall Street
3rd Floor
New York, New York 10006
Attention: Karen Minissale
Telecopy: (212) 618-2639
Any notice required or permitted to be mailed to a VFC
Certificateholder shall be given as provided in Section
4C.3.
a) SECTION Successors and Assigns. This
Supplement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and
assigns, except that the Company may not assign or transfer
any of its rights under this Supplement without the prior
written consent of the Required Certificateholders (as
defined in the Certificate Purchase Agreement).
a) Any VFC Certificateholder may, upon the
satisfaction of all applicable requirements under Section
5.3 of the Agreement, in the ordinary course of its business
and in accordance with applicable law, at any time sell to
one or more financial institutions or other entities
("Participants") participations in its VFC Certificate and
its rights hereunder pursuant to documentation in form and
substance satisfactory to such VFC Certificateholder and the
Participant. In the event of any such sale by a VFC
Certificateholder to a Participant, such VFC
Certificateholder's obligations under this Supplement shall
remain unchanged and such VFC Certificateholder shall remain
solely responsible for the performance thereof. The Company
agrees that each VFC Certificateholder is entitled, in its
own name, to enforce for the benefit of, or as agent for,
any Participant any and all rights, claims and interest of
such Participant in respect of the Trust and the Company's
obligations under this Supplement.
a) Any VFC Certificateholder may, in the
ordinary course of its business and in accordance with
applicable law, at any time sell all or any part of its
rights and obligations under this Supplement and the VFC
Certificates to (i) its Affiliates, or any other VFC
Certificateholder, and (ii) with the prior consent of the
Company, such consent not to be unreasonably withheld or
delayed, one or more banks or other entities (an "Acquiring
VFC Certificateholder"), but only to the extent that (i)
such Acquiring VFC Certificateholder shall have also either
acquired a corresponding share of such assigning VFC
Certificateholder's Commitment or otherwise extended a
Commitment to the Company on terms acceptable to the Company
and (ii) all requisite Commitment Certifications shall have
been delivered to the Trustee.
a) The Company and the Master Servicer each
authorizes each VFC Certificateholder to disclose to any
Participant or Acquiring VFC Certificateholder (each, a
"Transferee") and any prospective Transferee any and all
financial information in such VFC Certificateholder's
possession concerning the Company, any Servicing Party, any
Seller or the Receivables which has been delivered to such
VFC Certificateholder or the Agent by the Company or the
Master Servicer pursuant to this Supplement or which has
been delivered to such VFC Certificateholder or the Agent by
or on behalf of the Company in connection with such VFC
Certificateholder's credit evaluation of the Company, any
Servicing Party, any Seller, the Trust and the Trust Assets
prior to becoming a party to this Supplement; provided,
however, if any such information is subject to a
confidentiality agreement between such VFC Certificateholder
and the Company or the Master Servicer, the Transferee or
prospective Transferee shall have agreed to be bound by the
terms and conditions of such confidentiality agreement.
a) If, pursuant to this subsection, any
interest in this Supplement or the VFC Certificates is
transferred to any Transferee which is organized under the
laws of any jurisdiction other than the United States or any
State thereof, the transferor VFC Certificateholder shall
cause such Transferee, concurrently with the effectiveness
of such transfer, (i) to represent to the transferor VFC
Certificateholder (for the benefit of the transferor VFC
Certificateholder, the Agent, the Trustee, the Company and
the Master Servicer) that under applicable law and treaties
no taxes will be required to be withheld by the Trustee, the
Company, the Master Servicer or the transferor VFC
Certificateholder with respect to any payments to be made to
such Transferee in respect of the VFC Certificates, (ii) to
furnish to the transferor VFC Certificateholder (and, in the
case of any Acquiring VFC Certificateholder not registered
in the Certificate Register, the Trustee and the Company)
either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Transferee
claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and
(iii) to agree (for the benefit of the transferor VFC
Certificateholder, the Agent, the Trustee, the Company and
the Master Servicer) to provide the transferor VFC
Certificateholder (and, in the case of any Acquiring VFC
Certificateholder not registered in the Certificate
Register, the Agent, the Trustee, the Company and the Master
Servicer) a new Form 4224 or Form 1001 upon the expiration
or obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S.
laws and regulations and amendments duly executed and
completed by such Transferee, and to comply from time to
time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.
a) The Transfer Agent and Registrar shall not
register the transfer of any VFC Certificate unless:
(i) the person in whose name the VFC Certificate
is to be registered upon transfer represents and
warrants that it, and each of the accounts for which it
is purchasing, is a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act), and
acknowledges that it has received such information
regarding the Trust and the VFC Certificates as it has
requested and that it is aware that the transferor is
relying upon the foregoing certification to claim the
exemption from registration provided by Rule 144A; or
(ii) the Trustee has received transfer
documentation from the holder of such VFC Certificate
indicating, and a written opinion of counsel acceptable
to the Company and the Trustee confirming, that the
transfer is being made pursuant to an exemption from,
or a transaction not otherwise subject to, the
registration requirements of the Securities Act, and
such transaction has been approved by the Company;
and such transferee further represents and warrants to the
Trustee as to one of the following:
(x) such transferee is an ERISA Entity; or
(y) such transferee is not an ERISA Entity.
For purposes of this paragraph (f), any such advice to the
Trustee in writing may be in the form of a letter, notice or
other written document and, with respect to clauses (i),
(ii) and (iii) and (x) and (y) above, the requirements of
such clauses will be deemed to be satisfied by appropriate
notation on the transfer notice set forth on such VFC
Certificate or by other written advice to the Trustee
stating in substance one of the entries on such transfer
notice.
a) The Transfer Agent and Registrar shall not
register any transfer of any VFC Certificate to an ERISA
Entity unless the Trustee determined that after giving
effect to such transfer no more than 25% of the VFC
Certificates are held by ERISA Entities.
A. SECTION Counterparts. This Supplement may
be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original,
and all of which taken together shall constitute one and the
same agreement.
A. SECTION No Bankruptcy Petition. Each VFC
Certificateholder, by its acquisition of a VFC Certificate,
agrees that, prior to the date that is one year and one day
after the later of (a) the last day of the Amortization
Period and (b) the last day of the Amortization Period of
any other Outstanding Series, it will not institute against,
or join any other Person in instituting against, the Company
any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other similar proceedings under
any federal or state bankruptcy or similar law.
A. SECTION Costs and Expenses. (a) The
Company agrees to pay all reasonable out-of-pocket expenses
of the Trustee, the Agent and solely with respect to those
amounts described in clause (i) herein, of each VFC
Certificateholder (including, without limitation, reasonable
fees and disbursements of any such Person's attorneys) in
connection with (i) the preparation, execution and delivery
of this Supplement, the Agreement and the other Transaction
Documents and amendments or waivers of any such documents,
(ii) all audit, accountant, environmental, collateral
evaluation and appraisal fees, costs and expenses incurred
by the Agent in connection with the negotiation,
preparation, execution and administration of this
Supplement, the Agreement, the Certificate Purchase
Agreement and the other Transaction Documents and (iii)
enforcement by the Trustee or the Agent of the obligations
and liabilities of the Company and the Master Servicer under
the Agreement, this Supplement and the related documents;
provided, however, that any payments made by the Company
pursuant to this Section shall be paid solely from Available
Funds, shall be non-recourse other than with respect to
Available Funds necessary to make such payments, and shall
not constitute a claim against the Company to the extent
that insufficient Available Funds exist to make such
payment.
(b) The Company agrees to pay, indemnify, and
hold each of the Agent and each VFC Certificateholder and
each director, officer, partner, agent, employee,
representative, control person and Affiliate thereof (each,
an "Indemnitee") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (i) which may at any time
be imposed on, incurred by or asserted against such
Indemnitee in any way relating to or arising out of this
Supplement or the transactions contemplated hereby or in
connection herewith or any action taken or omitted by the
Indemnitee under or in connection with any of the foregoing
(all such other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and
disbursements being herein called "Indemnified Liabilities")
or (ii) which would not have been imposed on, incurred by or
asserted against such Indemnitee but for its participation
in the transactions contemplated hereby, provided, that the
Company shall have no obligation under this Section 8.10(b)
to any Indemnitee with respect to Indemnified Liabilities
arising from (i) the gross negligence or willful misconduct
of such Indemnitee, (ii) any action taken, or omitted to be
taken, by a Servicer which is not an Affiliate of the
Sellers or Seller Groups, or (iii) any Receivable which
becomes a Charge-Off as a result of non-payment by, or being
uncollectible from, the Obligor with respect to such
Receivable. The Company's obligations in this subsection
shall survive the collection of all Receivables and the
termination of this Series 1998-1 Supplement and the
Agreement.
I. ARTICLE
FINAL DISTRIBUTIONS
a) SECTION Certain Distributions. Not later
than 2:00 p.m., New York City time, on the Distribution Date
following the date on which the proceeds are deposited into
the Series 1998-1 Non-Principal Collection Sub-subaccount
and the Series 1998-1 Principal Collection Sub-subaccount
pursuant to subsection 7.2(b) of the Agreement, the Trustee
shall distribute such amounts pursuant to Article III.
a) Notwithstanding anything to the contrary in
this Supplement or the Agreement, any distribution made
pursuant to this Section shall be deemed to be a final
distribution pursuant to Section 9.3 of the Agreement with
respect to the VFC Certificates.
IN WITNESS WHEREOF, the Company, the Master
Servicer and the Trustee have caused this Series 1998-1
Supplement to be duly executed by their respective officers
as of the day and year first above written.
SPECIALTY FOODS FINANCE CORPORATION
By:
Name:
Title: Vice President, Treasurer
and Assistant Secretary
SPECIALTY FOODS CORPORATION,
as Master Servicer
By:
Name:
Title: Vice President and Treasurer
THE CHASE
MANHATTAN BANK, not in its individual
capacity but solely as Trustee
By:
Name:
Title:
Schedule 1
TRUST ACCOUNTS
The Collection Account has been established by and
at The Chase Manhattan Bank, account number 323602762.
The Collection Account is for the account of The
Chase Manhattan Bank, as trustee for the SFC Master Trust.
Schedule 2
CURE PERIOD TRIGGER DATES
Cure Period
Trigger Date Applicable Subsection or event
10 days Pooling Agreement: Subsection 2.3(i)
0 days Pooling Agreement: Subsections
2.3(e) and (f) (second sentence)
5 days Pooling Agreement: Subsections
2.4(b) and (c)
10 days Pooling Agreement: Subsection 2.7(c)
5 days Pooling Agreement: Subsections
2.7(b) (second two sentences), (f), (g) and
(h)
10 days Pooling Agreement: Section 2.8
(all subsections thereunder)
10 days Servicing Agreement: Sections 3.3,
3.8
5 days Servicing Agreement: Section 3.7
0 days Servicing Agreement: Sections 3.5
and 3.6
10 days Servicing Agreement: Sections 4.6,
4.7, 4.9, 4.12
5 days Servicing Agreement: Sections
4.2(b), 4.3, 4.8, 4.10, 4.11, 4.14
1 day Servicing Agreement: Section
4.2(a)
0 days Servicing Agreement: Section 4.1
10 days Receivables Sale Agreement:
Subsections 4.1(i), (l), (m), (n) and (o)
0 days Receivables Sale Agreement:
Subsections 4.1(c), (e) and (f) (second
sentence)
10 days Receivables Sale Agreement:
Subsection 4.2(a)
5 days Receivables Sale Agreement:
Subsections 4.2(b) and (c)
10 days Receivables Sale Agreement:
Sections 5.5, 5.6, 5.7, 5.11 and 5.12
1 day Receivables Sale Agreement:
Sections 5.9, 5.10 and 5.14
10 days Receivables Sale Agreement:
Sections 6.4, 6.5, 6.6, 6.7, 6.8, 6.9 and
6.10
5 days Receivables Sale Agreement:
Sections 6.1, 6.2 and 6.3
5 days Occurrence of a Master
Servicer Consolidation Event
Schedule 3
<TABLE>
RESERVE REQUIREMENT ADJUSTMENTS
<S> Applicable
Applicable Period Leverage Ratio Ratings Multiple
Leverage <C> <C> <C>
Ratio 3/13/98 - 9.50 1.50
12/31/98 9.75 1.75
10.00 2.00
1/1/99 - 3/31/99 9.25 1.50
9.50 1.75
9.75 2.00
4/1/99 - 6/30/99 9.00 1.50
9.25 1.75
9.50 2.00
7/1/99 - 8.75 1.50
thereafter 9.00 1.75
9.25 2.00
</TABLE>
"Leverage Ratio" means, at the end of any Fiscal Quarter,
the ratio of
(a) Consolidated Total Debt of the Borrower
and its Subsidiaries outstanding at such time less
any cash maintained by the Borrower and its
Subsidiaries which is not restricted by the terms
of any account or agreement in its usage or
application, except as provided in Section 7.1.12
of the SFC Loan Agreement;
to
(b) Consolidated EBITDA of the Borrower and
its Subsidiaries for the period of four
consecutive Fiscal Quarters most recently ended on
prior to such date;
provided that if, during any such period, the Borrower or
any of its Subsidiaries shall have made one or more
Acquisitions, the Leverage Ratio for such period shall be
calculated on a Pro Forma Basis as if each such Acquisition
had been made on the first day of such period.
Applicable
Applicable Period Interest Coverage Ratings Multiple
Ratio
Interest
Coverage 3/13/98 - 6/30/98 0.70 1.50
Ratio 0.60 1.75
0.50 2.00
7/1/98 - 9/30-98 0.80 1.50
0.70 1.75
0.60 2.00
10/1/98 - 0.85 1.50
12/31/98 0.75 1.75
0.65 2.00
1/1/99 - 3/31/99 0.90 1.50
0.80 1.75
0.70 2.00
4/1/99 - 6/30/99 0.95 1.50
0.85 1.75
0.75 2.00
7/1/99 - 1.00 1.50
thereafter 0.90 1.75
0.80 2.00
"Interest Coverage Ratio" means, at the end of any Fiscal
Quarter, the ratio computed for the period consisting of
such Fiscal Quarter and each of the three immediately prior
Fiscal Quarters of:
(a) Consolidated EBITDA of the Borrower and
its Subsidiaries for all such Fiscal Quarters;
to
(b) the cash portion of Consolidated Interest
Expense of the Borrower and its Subsidiaries for
all such Fiscal Quarters;
provided that if, during any such period, the Borrower or
any of its Subsidiaries shall have made one or more
acquisitions, the Interest Coverage Ratio for such period
shall be calculated on a Pro Forma Basis as if each such
acquisition had been made on the first day of such period.
Note: all capitalized terms used herein without
definition shall have the meanings assigned to such terms in
the SFC Loan Agreement, as in effect on the Closing Date
without giving effect to any subsequent amendments thereto.
EXHIBIT A TO SERIES
1998-1 SUPPLEMENT
SFC MASTER TRUST
VFC CERTIFICATE, SERIES 1998-1
REGISTERED
NO. [_____] $[__________] (of
$ issued)
THIS VFC CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED.
NEITHER THIS VFC CERTIFICATE NOR ANY PORTION HEREOF MAY BE
OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM SUCH REGISTRATION PROVISIONS. THIS VFC CERTIFICATE IS
NOT PERMITTED TO BE TRANSFERRED, ASSIGNED, EXCHANGED OR
OTHERWISE SOLD OR CONVEYED EXCEPT IN COMPLIANCE WITH THE
TERMS OF THE POOLING AGREEMENT REFERRED TO HEREIN.
This VFC Certificate evidences a fractional
undivided interest in assets of the
SFC MASTER TRUST
the corpus of which consists of receivables representing
amounts payable for goods or services, which receivables
have been purchased by Specialty Foods Finance Corporation,
a Delaware corporation, which in turn transferred and
assigned such receivables to the SFC Master Trust.
(Not an interest in or obligation of
Specialty Foods Finance Corporation or any Affiliate
thereof)
This certifies that
[NAME OF CERTIFICATEHOLDER]
(the "VFC Certificateholder") is the registered owner of a
fractional undivided interest in the assets of SFC Master
Trust (the "Trust"), created pursuant to the Pooling
Agreement, dated as of November 16, 1994, (as the same may
from time to time be amended, restated, supplemented or
otherwise modified, the "Pooling Agreement"), by and among
Specialty Foods Finance Corporation, a Delaware corporation
(the "Company"), Specialty Foods Corporation, a Delaware
corporation (the "Master Servicer"), and The Chase Manhattan
Bank (as successor in interest to Chemical Bank), a New York
banking corporation, not in its individual capacity but
solely as trustee (in such capacity, the "Trustee") for the
Trust, as supplemented by the Series 1998-1 Supplement,
dated as of March 31, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Supplement",
collectively, with the Pooling Agreement, the "Agreement"),
by and among the Company, the Master Servicer and the
Trustee. The corpus of the Trust consists of receivables
(the "Receivables") representing amounts payable for goods
or services and all other Trust Assets referred to in the
Agreement. Although a summary of certain provisions of the
Agreement is set forth below, this VFC Certificate does not
purport to summarize the Agreement, is qualified in its
entirety by the terms and provisions of the Agreement and
reference is made to the Agreement for information with
respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties
and obligations of the Trustee. A copy of the Agreement may
be requested by writing to the Trustee at 450 W. 33rd
Street, 15th Floor, New York, New York 10001, Attn:
Advanced Structured Products Group. To the extent not
defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Agreement.
This VFC Certificate is issued under, is entitled
to the benefits of, and is subject to, the terms, provisions
and conditions of the Agreement, to which Agreement the VFC
Certificateholder, by virtue of the acceptance hereof,
assents and is bound.
The Company and each VFC Certificateholder intend,
for federal, state and local income and franchise tax
purposes only, the VFC Certificates to be evidence of
indebtedness of the Company secured by the Receivables. The
VFC Certificateholder, by the acceptance hereof, assents and
is bound by such intent.
This VFC Certificate is one in a Series of
Investor Certificates entitled "SFC Master Trust, VFC
Certificates, Series 1998-1" (the "VFC Certificates")
representing a fractional undivided interest in the assets
of the Trust consisting of the right to receive the Invested
Percentage of the Collections and all other funds on deposit
in the Trust Accounts (the "VFC Certificateholders'
Interest"). Concurrent with the issuance of the VFC
Certificates, the Trust shall also issue a Subordinated
Company Certificate entitled "SFC Master Trust, Subordinated
Company Certificate, Series 1998-1" (the "Subordinated
Certificate") representing a fractional undivided interest
in the assets of the Trust consisting of the right to
receive Collections allocated to the VFC Certificateholders'
Interest and not required to be distributed to or for the
benefit of the VFC Certificateholders. The Trust's assets
are allocated in part to the VFC Certificateholders and the
holder of the Subordinated Certificate with the remainder
allocated to the Certificateholders of other Series, if any,
and to the Company. In addition to the VFC Certificates and
the Subordinated Certificate, an Exchangeable Company
Certificate will be issued to the Company pursuant to the
Agreement which will represent the Company's interest (if
any) in the Trust. The Exchangeable Company Certificate
will represent the interest in the Trust Assets not
represented by the Certificates of each Series. The
Exchangeable Company Certificate may be exchanged by the
Company pursuant to the Agreement for one or more Series of
Investor Certificates and a reissued Exchangeable Company
Certificate upon the conditions set forth in the Agreement.
In addition, to the extent permitted for any Series of
Investor Certificates by the related Supplement, the
Investor Certificateholders of such Series may tender their
Investor Certificates and the Company may tender the
Exchangeable Company Certificate in exchange for one or more
Series of Investor Certificates, one or more Series of
Subordinated Company Certificates and a reissued
Exchangeable Company Certificate.
Distributions with respect to this VFC Certificate
shall be paid to the VFC Certificateholder in immediately
available funds in the manner directed, and at the times and
dates, set forth in the Agreement. Final payment of this
VFC Certificate shall be made only upon presentation and
surrender of this Certificate at the office or agency
specified in the notice of final distribution delivered by
the Trustee to the VFC Certificateholders in accordance with
the Agreement.
Distributions with respect to this VFC Certificate
shall be paid by the Trustee by check drawn on a bank in New
York City, or by transfer to an account maintained or
controlled by the VFC Certificateholder. Final payment of
this VFC Certificate shall be made after due notice of such
final distribution delivered by the Trustee to the VFC
Certificateholders in accordance with the Agreement.
This VFC Certificate does not represent an
obligation of, or an interest in, the Company, the Master
Servicer or any Affiliate of either of them.
Subject to the provisions of the Agreement, the
transfer of this VFC Certificate shall be registered in the
Certificate Register upon surrender of this VFC Certificate
for registration of transfer at any office or agency
maintained by the Transfer Agent and Registrar accompanied
by a written instrument of transfer, in a form satisfactory
to the Trustee and the Transfer Agent and Registrar, duly
executed by the VFC Certificateholder or the VFC
Certificateholder's attorney, and duly authorized in writing
with such signature guaranteed, and thereupon one or more
new VFC Certificates of authorized denominations and of the
same aggregate undivided interest will be issued to the
designated transferee or transferees.
The Trustee, the Company and any agent of either
of them, may treat the person in whose name this VFC
Certificate is registered as the owner hereof for all
purposes.
It is expressly understood and agreed by the
Company and the VFC Certificateholder that (a) the Agreement
is executed and delivered by the Trustee, not individually
or personally but solely as Trustee of the Trust, in the
exercise of the powers and authority conferred and vested in
it, (b) the representations, undertakings and agreements
made on the part of the Trust in the Agreement are made and
intended not as personal representations, undertakings and
agreements by the Trustee, but are made and intended for the
purpose of binding only the Trust, (c) nothing herein
contained shall be construed as creating any liability of
the Trustee, individually or personally, to perform any
covenant either expressed or implied made on the part of the
Trust in the Agreement, all such liability, if any, being
expressly waived by the parties who are signatories to the
Agreement and by any Person claiming by, through or under
such parties; provided, however, the Trustee shall be liable
in its individual capacity for its own willful misconduct or
gross negligence and for any tax assessed against the
Trustee based on or measured by any fees, commission or
compensation received by it for acting as Trustee and (d)
under no circumstances shall the Trustee be personally
liable for the payment of any indebtedness or expenses of
the Trust or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or
undertaken by the Trust under the Agreement.
The holder of this VFC Certificate is authorized
to record the date and amount of each increase and decrease
in the Invested Amount with respect to such holder on the
schedules annexed hereto and made a part hereof and any such
recordation shall constitute prima facie evidence of the
accuracy of the information so recorded, absent manifest
error (subject, in any event, to the records of the Trustee
for the Invested Amount for all VFC Certificateholders),
provided that the failure of the holder of this VFC
Certificate to make such recordation (or any error in such
recordation) shall not affect the obligations of the Trust,
the Company, the holder of the Subordinated Company
Certificate, the Master Servicer or the Trustee under the
Agreement.
This VFC Certificate shall be construed in
accordance with and governed by the law of the State of New
York.
The VFC Certificateholder hereby agrees that,
prior to the date which is one year and one day after the
date on which the principal of and all other amounts in
respect of this VFC Certificate have been repaid in full, it
will not institute against, or join any other Person in
instituting against, the Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state
bankruptcy or similar law.
Unless the certificate of authentication hereon
has been executed by or on behalf of the Trustee, by manual
signature, this VFC Certificate shall not be entitled to any
benefit under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Company has caused this
VFC Certificate to be duly executed.
Dated: ___________, ____
SPECIALTY FOODS FINANCE
CORPORATION,
as authorized pursuant to Section
5.1 of the Agreement
By:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the VFC Certificates described in
the within-mentioned Agreement.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely
as Trustee
By:________________________ OR
By:________________________
Authorized Officer Authenticating
Agent
By:________________________
Authorized Officer
Schedule 1
to VFC
Certificate
Date Increase in Decrease in Series 1998- Notation
Series 1998- Series 1998- 1 Made By
1 Invested 1 Invested
Amount Invested Amount
Amount
EXHIBIT B TO SERIES
1998-1 SUPPLEMENT
SFC MASTER TRUST
SUBORDINATED COMPANY CERTIFICATE, SERIES 1998-1
THIS SUBORDINATED CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED. NEITHER THIS SUBORDINATED CERTIFICATE NOR ANY
PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE
WITH THE REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS.
THIS SUBORDINATED CERTIFICATE IS NOT PERMITTED TO
BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR
CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE POOLING
AGREEMENT REFERRED TO HEREIN.
This Subordinated Certificate evidences a
fractional undivided interest in assets of the
SFC MASTER TRUST
the corpus of which consists of receivables representing
amounts payable for goods or services, which receivables
have been purchased by Specialty Foods Finance Corporation,
a Delaware corporation, which in turn transferred and
assigned such receivables to the SFC Master Trust.
(Not an interest in or obligation of
Specialty Foods Finance Corporation or any Affiliate
thereof)
This certifies that
SPECIALTY FOODS FINANCE CORPORATION
(the "Subordinated Certificateholder") is the registered
owner of a fractional undivided interest in the assets of
SFC Master Trust (the "Trust"), created pursuant to the
Pooling Agreement, dated as of November 16, 1994 (as the
same may from time to time be amended, restated,
supplemented or otherwise modified, the "Pooling
Agreement"), by and among Specialty Foods Finance
Corporation, a Delaware corporation (the "Company"),
Specialty Foods Corporation, a Delaware corporation (the
"Master Servicer"), and The Chase Manhattan Bank (as
successor in interest to Chemical Bank), a New York banking
corporation, not in its individual capacity but solely as
trustee (in such capacity, the "Trustee") for the Trust, as
supplemented by the Series 1998-1 Supplement, dated as of
March 31, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Supplement", collectively,
with the Pooling Agreement, the "Agreement"), by and among
the Company, the Master Servicer and the Trustee. The
corpus of the Trust consists of receivables (the
"Receivables") representing amounts payable for goods or
services and all other Trust Assets referred to in the
Agreement. Although a summary of certain provisions of the
Agreement is set forth below, this Subordinated Certificate
does not purport to summarize the Agreement, is qualified in
its entirety by the terms and provisions of the Agreement
and reference is made to the Agreement for information with
respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties
and obligations of the Trustee. A copy of the Agreement may
be requested by writing to the Trustee at 450 W. 33rd
Street, 15th Floor, New York, New York 10001, Attn:
Structured Finance Services (ABS). To the extent not
defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Agreement.
This Subordinated Certificate is issued under and
is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the holder of the Subordinated
Certificate, by virtue of the acceptance hereof, assents and
is bound.
This Subordinated Certificate is the Subordinated
Company Certificate entitled "SFC Master Trust, Subordinated
Certificate, Series 1998-1" (the "Subordinated Certificate")
representing a fractional undivided interest in the assets
of the Trust consisting of the right to receive Collections
allocated to the Subordinated Interest and not required to
be distributed to or for the benefit of the holders of the
VFC Certificates. Concurrently with the issuance of the
Subordinated Certificate, the Trust shall also issue a
Series of VFC Certificates entitled "SFC Master Trust, VFC
Certificates, Series 1998-1" (the "VFC Certificates")
representing a fractional undivided interest in the assets
of the Trust, consisting of the right to receive Collections
and all other funds on deposit in the Trust Accounts (the
"VFC Certificateholders' Interest"). The Trust's assets are
allocated in part to the VFC Certificateholders and the
Subordinated Certificateholder of Series 1998-1 with the
remainder allocated to Certificateholders of other Series,
if any, and to the Company. In addition to the VFC
Certificates and the Subordinated Certificate, an
Exchangeable Company Certificate will be issued to the
Company pursuant to the Agreement which will represent the
Company's further interest in the Trust. The Exchangeable
Company Certificate will represent the interest in the Trust
Assets not represented by the Investor Certificates and
Subordinated Certificates. The Exchangeable Company
Certificate may be exchanged by the Company pursuant to the
Agreement for one or more Series of Investor Certificates
and a reissued Exchangeable Company Certificate upon the
conditions set forth in the Agreement. In addition, to the
extent permitted for any Series of Investor Certificates by
the related Supplement, the Investor Certificateholders of
such Series may tender their Investor Certificates and the
Company may tender the Exchangeable Company Certificate in
exchange for one or more Series of Investor Certificates,
one or more Series of Subordinated Certificates and a
reissued Exchangeable Company Certificate.
The aggregate interest represented by the
Subordinated Certificate at any time in the assets of the
Trust shall not exceed an amount equal to the Subordinated
Certificate Amount at such time. The Subordinated
Certificate Amount on any date of determination shall be an
amount equal to the Allocated Receivables Amount on such
date minus the Adjusted Invested Amount on such date.
Distributions with respect to this Subordinated
Certificate shall be paid in accordance with the terms of
the Agreement, on the dates indicated therein, by the
Trustee, at the direction of the Master Servicer, in
immediately available funds to the Subordinated
Certificateholder. Final payment of this certificate shall
be made only upon presentation and surrender of this
Certificate at the office or agency specified in the notice
of final distribution delivered by the Trustee to the
Subordinated Certificateholder in accordance with the
Agreement.
This Subordinated Certificate does not represent
an obligation of, or an interest in, the Company, the Master
Servicer or any affiliate of either of them.
It is expressly understood and agreed by the
Company and the Subordinated Certificateholder that (a) the
Agreement is executed and delivered by the Trustee, not
individually or personally but solely as Trustee of the
Trust, in the exercise of the powers and authority conferred
and vested in it, (b) the representations, undertakings and
agreements made on the part of the Trust in the Agreement
are made and intended not as personal representations,
undertakings and agreements by the Trustee, but are made and
intended for the purpose of binding only the Trust, (c)
nothing herein contained shall be construed as creating any
liability of the Trustee, individually or personally, to
perform any covenant either expressed or implied made on the
part of the Trust in the Agreement, all such liability, if
any, being expressly waived by the parties who are
signatories to the Agreement and by any Person claiming by,
through or under such parties, provided, however, the
Trustee shall be liable in its individual capacity for its
own willful misconduct or gross negligence and for any tax
assessed against the Trustee based on or measured by any
fees, commission or compensation received by it for acting
as Trustee and (d) under no circumstances shall the Trustee
be personally liable for the payment of any indebtedness or
expenses of the Trust or be liable for the breach or failure
of any obligation, representation, warranty or covenant made
or undertaken by the Trust under the Agreement.
This Subordinated Certificate shall be construed
in accordance with and governed by the law of the State of
New York.
Unless the certificate of authentication hereon
has been executed by or on behalf of the Trustee, by manual
signature, this Subordinated Certificate shall not be
entitled to any benefit under the Agreement, or be valid for
any purpose.
IN WITNESS WHEREOF, the Company has caused this
Subordinated Certificate to be duly executed.
Dated: ___________, ____
SPECIALTY FOODS FINANCE
CORPORATION,
as authorized pursuant to Section
5.1 of the Agreement
By:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Company
Certificates described in the within-mentioned Agreement.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely
as Trustee
By:________________________ OR
By:________________________
Authorized Officer Authenticating
Agent
By:________________________
Authorized Officer
EXHIBIT C
to
Series 1998-1 Supplement
[Reserved]
EXHIBIT D
to
Series 1998-1 Supplement
Form of Daily Report
Attached.
EXHIBIT E-1
to
Series 1998-1 Supplement
Form of Monthly Settlement Statement
Attached.
EXHIBIT E-2
to
Series 1998-1 Supplement
Form of Funding Period Settlement Statement
Attached.
EXHIBIT F TO SERIES
1998-1 SUPPLEMENT
FORM OF INCREASE NOTICE
____________, ____
The Chase Manhattan Bank, as Trustee
450 West 33rd Street, 15th Floor
New York, New York 100017
Attention:
Bankers Trust Company
14 Wall Street, 3rd Floor
New York, New York 10005
Attention:
Ladies and Gentlemen:
Reference is hereby made to the Series 1998-1
Supplement, dated as of March 31, 1998 (as amended or
supplemented, the "Supplement"), among Specialty Foods
Finance Corporation (the "Company"), Specialty Foods
Corporation, as master servicer (the "Master Servicer"), and
The Chase Manhattan Bank, as Trustee. Capitalized terms
used in this Increase Notice and not otherwise defined
herein shall have the meanings assigned thereto in the
Supplement.
This letter constitutes the notice required in
connection with any Increase pursuant to subsection 2.4(a)
of the Supplement.
The Master Servicer and the Company hereby request an
Increase be made by ___________________ on ____________,
____ in the aggregate amount of $___________, such Increase
to be allocated to a Eurodollar Tranche with a Eurodollar
Period of [one] [two] [three] months.
The Master Servicer hereby represents and warrants as
of the date of such Increase after giving effect thereto,
the conditions set forth in subsections 2.4(a) and (b) of
the Supplement with respect to such Increase have been
satisfied.
IN WITNESS WHEREOF, the undersigned has caused this
Increase Notice to be executed by its duly authorized
officer as of the date first above written.
SPECIALTY FOODS CORPORATION, as
Master Servicer
By:
Name:
Title: EXHIBIT G TO SERIES
1998-1 SUPPLEMENT
FORM OF COMMITMENT CERTIFICATION
The Chase Manhattan Bank, as Trustee
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention:
Bankers Trust Company
14 Wall Street, 3rd Floor
New York, New York 10005
Attention:
Ladies and Gentlemen:
Reference is hereby made to the Series 1998-1
Supplement, dated as of March 31, 1998 (as amended or
supplemented, the "Supplement"), among Specialty Foods
Finance Corporation (the "Company"), Specialty Foods
Corporation, as master servicer (the "Master Servicer"), and
The Chase Manhattan Bank, as Trustee. Capitalized terms
used in this Commitment Certification and not otherwise
defined herein shall have the meanings assigned thereto in
the Supplement.
Each of the undersigned VFC Certificateholder and the
Company hereby certify that, effective as of the date
hereof, the undersigned VFC Certificateholder's Commitment
is $____________, and you shall be entitled to rely on such
certification until such time as the Company and the
undersigned VFC Certificateholder deliver a revised
Commitment Certification.
This letter constitutes the certification required with
respect to the undersigned VFC Certificateholder's
Commitment pursuant to subsection 2.6 of the Supplement.
IN WITNESS WHEREOF, the undersigned has caused this
Commitment Certification to be executed by its duly
authorized officer as of the date first above written.
SPECIALTY FOODS FINANCE CORPORATION
By:
Name:
Title:
[VFC CERTIFICATEHOLDER]
By:
Name:
Title:
EXHIBIT 10.80
EXECUTION COPY
SFC MASTER TRUST
AMENDMENT NO. 5 TO EACH OF THE POOLING AGREEMENT AND
THE RECEIVABLES SALE AGREEMENT
AND AMENDMENT NO. 1 TO THE
SERVICING AGREEMENT
This Amendment, dated as of March 31, 1998 (this
"Amendment") is entered into by each of Specialty Foods
Finance Corporation, a Delaware corporation (the "Company"),
Specialty Foods Corporation, a Delaware corporation, as
master servicer (the "Master Servicer"), The Chase Manhattan
Bank (formerly known as Chemical Bank) ("Chase"), as trustee
(in such capacity, the "Trustee") and each of the
undersigned wholly owned subsidiaries of the Master Servicer
(the "Sellers"), with respect to each of: (a) the Pooling
Agreement, dated as of November 16, 1994 (as previously
amended, the "Pooling Agreement"), among the Company, the
Master Servicer, and Chase (formerly known as Chemical
Bank), as Trustee; (b) the Servicing Agreement, dated as of
November 16, 1994 (as previously amended, the "Servicing
Agreement"), among the Company, the Master Servicer, each of
the Sellers from time to time party thereto (each a
"Servicer") and Chase, as Trustee and (c) the Amended and
Restated Receivables Sale Agreement, dated as of November
16, 1994 (as previously amended, the "Receivables Sale
Agreement") among the Company, the Master Servicer and the
Sellers party thereto from time to time.
W I T N E S S E T H :
WHEREAS, the parties hereto wish to amend the
Pooling Agreement, the Servicing Agreement and the
Receivables Sale Agreement in the manner provided for in
this Amendment in order to reflect certain amendments
requested in connection with the execution and delivery of
that certain Series 1998-1 Supplement.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
I. Defined Terms. Unless otherwise defined
herein, terms defined in the Pooling Agreement or the
Servicing Agreement shall have their defined meanings when
used herein, as the context requires.
I. Amendment of the Pooling Agreement. The
Pooling Agreement is hereby amended as follows:
A. The definition of "Defaulted Receivable" is
hereby amended to delete therefrom the phrase "more than, in
the case of all Sellers other than Mothers, 90 days after
its original due date and, in the case of Mother's 120 days
after its original due date" and to substitute therefor the
phrase "more than 90 days after its original due date".
A. The definition of "Delinquent Receivable"
is hereby amended to delete therefrom the phrase "more than,
in the case of all Sellers other than Mothers, 60 days after
its original due date and, in the case of Mother's 90 days
after its original due date" and to substitute therefor the
phrase "more than 60 days after its original due date".
A. The definition of "Eligible Receivable" is
hereby amended (i) to delete from clause (p) thereof the
word "and" which appears at the end thereof; (ii) to delete
the period (".") at the end of clause (q) thereof and to
substitute therefor a semi-colon (";"), and (iii) to add
immediately after such clause (q) new clauses (r), (s) and
(t) which read as follows:
"(r) the sale of goods, merchandise or
services giving rise to such Receivable was not
extended on terms requiring payment in advance
prior to shipment of such goods or merchandise or
performance of such services nor has any such
Receivable otherwise been secured by any such
advance payment;
(s) to the extent such Receivables are
generated under either of that certain Supply
Agreement, dated as of January 22, 1998 between
The Pillsbury Company and H&M (the "Pillsbury
Contract") or that certain Taco Production
Agreement, dated as of June 25, 1997 between
Foodmaker, Inc. and H&M (the "Foodmaker Contract"
and together with the Pillsbury Contract, the
"Long Term Supply Contracts"), such Receivables do
not exceed six percent (6%) of the Principal
Amount of all Eligible Receivables in the Trust;
and
(t) to the extent any such Receivables are
generated under any contract substantially similar
to the Long Term Supply Contracts and to the
extent the Obligor thereunder has not explicitly
waived any offset rights it may have in connection
with such contract, the Rating Agency has reviewed
such contract and the Rating Agency Condition
shall have been satisfied after such review."
A. The definition of "Obligor Limit" is hereby
amended (i) to delete therefrom the phrase "3% of the
Principal Amount of all Receivables in the Trust" and to
substitute therefor the phrase "4% of the Principal Amount
of all Eligible Receivables in the Trust" and (ii) by adding
thereto at the conclusion thereof the following:
"Notwithstanding the foregoing, the Obligor Limit for all
Obligors who are governmental entities or agencies shall be
2.2% (treating all such Obligors as a single Obligor), the
Obligor Limit for the Obligors under a Long Term Supply
Contract shall be a fraction, expressed as a percentage, the
numerator of which is the aggregate outstanding Principal
Amount of all Eligible Receivables of such Obligors and the
denominator of which is the aggregate Principal Amount of
all Eligible Receivables in the Trust. It is expressly
understood and agreed that where a Seller sells goods or
merchandise to an Obligor for resale to various other
parties who may or may not remit or be required to make
payments on the Receivable, the initial Obligor to whom such
goods or merchandise are sold shall be deemed to be the sole
Obligor of such Receivable for purposes of computing the
applicable Obligor Limit."
2.5 Section 1.1 is hereby amended to add, in
alphabetical order, the following definitions:
"'Long Term Supply Contracts' shall
have the meaning specified in clause (s)
of the definition of 'Eligible Receivable'.
'SFSB Termination Date' shall mean March
31, 1998.
2.6 Article X of the Pooling Agreement is hereby
amended by adding the following paragraph after Section
10.24:
"10.25 Termination of Certain Sellers. In
accordance with Section 2.8(g) hereof, and the
procedure set forth in Section 10.1 hereof, the
Trustee acknowledges that as of the SFSB
Termination Date (as defined herein), San
Francisco Sourdough Bakeries, Inc. (the "SFSB
Terminated Seller") will be terminated as a Seller
pursuant to Section 9.14(b) of the Receivables
Sale Agreement and as a Servicer under the
Servicing Agreement.
On the SFSB Termination Date, the Trustee shall
(i) notify Wells Fargo, the lockbox bank, of the
termination of the Lockbox Account with Wells
Fargo - Account no. 4518073366, which account
relates to Receivables generated solely by the
SFSB Terminated Seller, and (ii) sign and deliver
to the Company for filing the necessary UCC
financing statements releasing the liens of the
Trustee against the SFSB Terminated Seller and any
of its properties."
I. Amendments to Servicing Agreement.
A. Section 2.3(a) of the Servicing Agreement
is hereby amended (i) to delete from the first sentence
thereof the phrase "Except as otherwise permitted pursuant
to Section 5.9 of the Receivables Sale Agreement, the",
(ii) inserting in lieu thereof the word "The", and (iii)
deleting the phrase ", except to the minimum extent that any
of the Servicers as of the date hereof, in the normal course
of their business and consistent with past practices, have
directed such Obligors to remit payments by delivering cash,
a check or other instrument to or in care of the person
delivering goods to such Obligor or to the business offices,
agents or officers of such Servicer".
I. Amendments to Receivables Sale Agreement.
A. Section 5.9 of the Receivables Sale
Agreement is hereby amended to delete therefrom the phrase
", except to the extent that any of the Sellers as of the
date hereof, in the normal course of their business and
consistent with past practices, have directed such Obligors
to remit payments by delivering cash, a check or other
instrument to or in care of the person delivering goods to
such Obligor or to the business offices, agents or officers
of such Seller; provided, that for Metz and Metz Delaware,
checks may be remitted to the relevant Seller and thereafter
shall be deposited into a Deposit Account".
A. Section 5.14 of the Receivables Sale
Agreement is hereby amended (i) to delete from clause (iv)
thereof the word "and" which appears at the end thereof;
(ii) to delete the period (".") at the end of clause (v)
thereof and to substitute therefor a semi-colon (";"), and
(iii) to add immediately after such clause (v) a new clause
(vi) which read as follows:
"(vi) Each of the Sellers hereby agrees
to comply with the requirements set forth in
Section 7.3(f) of that certain Series 1998-1
Supplement among the Company, the Master Servicer
and the Trustee with respect to any "Year 2000
Problem", as such term is defined in such
Supplement."
4.3 Article IX of the Receivables Sale
Agreement is hereby amended by adding the
following phrase to Section 9.14(b)(i) after the
phrase "(i) each of":
"San Francisco Sourdough Bakeries, Inc."
I. Conditions to Effectiveness. This
Amendment shall become effective upon receipt by the Trustee
of:
A. a counterpart hereof, duly executed and
delivered by each of the Company, the Sellers, the Master
Servicer and the Trustee;
A. a consent to this Amendment, in the form of
Annex A, from Capital Markets Assurance Corporation, as the
Enhancement Provider and the Control Party for the Term
Certificates, Series 1994-1 and, from Bankers Trust Company,
as Agent on behalf of the Control Party for the VFC
Certificates, Series 1998-1;
A. an officer's certificate of a Responsible
Officer of the Company certifying that this Amendment shall
not adversely affect in any material respect the interests
of the Series 1994-1 Term Certificateholders or the Series
1998-1 VFC Certificateholders;
A. a secretary's certificate from each of the
Company, each Seller and the Master Servicer certifying (i)
board resolutions authorizing the execution and delivery of
this Amendment, (ii) the incumbency of the natural persons
authorized to execute and deliver this Amendment, (iii) the
charter and bylaws of the Company, such Seller or the Master
Servicer, as the case may be, being correct and in full
force and effect and (iv) copies of "good standing"
certificates issued by the Secretary of State of the State
of Delaware, certifying that each of the Company, each
Seller and the Master Servicer, as the case may be, is in
good standing and has paid all taxes due to the State of
Delaware, and including as annexes thereto the certificate
of incorporation of the Company, each Seller or the Master
Servicer, as the case may be;
B. an opinion of counsel of Paul, Weiss, Rifkind,
Wharton & Garrison, counsel to the Company and the Master
Servicer, opining as to (i) this Amendment being authorized
pursuant to the Pooling Agreement and the Series 1994-1
Supplement and (ii) all conditions precedent to the
execution, delivery and performance of this Amendment being
satisfied in full; and
A. written confirmation from each of Standard &
Poor's Corporation and Moody's Investors Service Inc.
stating that the execution and delivery of this Amendment
will not result in a reduction or withdrawal of the rating
of the Term Certificates or the VFC Certificates, Series
1998-1.
6. Termination of Certain Sellers. The Company,
pursuant to Section 9.14(b) of the Receivables Sale
Agreement and Section 9.4(b) of the Pooling Agreement,
hereby terminates as of the SFSB Termination Date, all
obligations of San Francisco Sourdough Bakeries, Inc. (the
"SFSB Terminated Sellers") under the Receivables Sale
Agreement.
7. Continuing Effect of the Pooling Agreement,
Servicing Agreement and Receivables Sale Agreement. Except
as expressly amended, modified and supplemented hereby, the
provisions of the Pooling Agreement, Servicing Agreement and
Receivables Sale Agreement are and shall remain in full
force and effect.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE
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 LAW.
9. Counterparts. This Amendment may be executed
in two or more counterparts (and by different parties on
separate counterparts), each of which shall be an original,
but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this
Amendment to be duly executed by their respective officers
as of the day and year first above written.
SPECIALTY FOODS FINANCE CORPORATION
BY:
Name:
Title:
SPECIALTY FOODS CORPORATION,
as Master Servicer
BY:
Name:
Title:
METZ BAKING COMPANY, as a Seller
BY:
Name:
Title:
MOTHER'S CAKE AND COOKIE CO., as Seller
BY:
Name:
Title:
H&M FOODS SYSTEMS COMPANY, INC., as Seller
BY:
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee
BY:
Name:
Title:
ANNEX A
[FORM OF CONSENT]
The Chase Manhattan Bank
as Trustee
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Structured Finance Services (ABS)
Ladies and Gentlemen:
We refer to the Amendment, dated as of March ___,
1998 (the "Amendment") to each of (a) the Pooling Agreement,
dated as of November 16, 1994 (as previously amended, the
"Pooling Agreement"), among Specialty Foods Finance
Corporation, a Delaware corporation (the "Company"),
Specialty Foods Corporation, a Delaware corporation, as
master servicer (the "Master Servicer"), and The Chase
Manhattan Bank (formerly known as Chemical Bank) ("Chase"),
as trustee (in such capacity, the "Trustee"), (b) the
Servicing Agreement, dated as of November 16, 1994 (as
previously amended, the "Servicing Agreement"), among the
Company, the Master Servicer, each of the subsidiaries of
the Master Servicer from time to time party thereto and
Chase, as Trustee and (c) the Amended and Restated
Receivables Sale Agreement, dated as of November 16, 1994
(as previously amended, the "Receivables Sale Agreement")
among the Company, the Master Servicer and the Sellers party
thereto from time to time. We each hereby certify that we
have been given or have duly waived adequate notice of the
Amendment pursuant to Section 10.1 of the Pooling Agreement
and Capital Markets Assurance Corporation further certifies
that it has been given or has duly waived adequate notice of
the Amendment pursuant to Section 8.5 of the Series 1994-1
Supplement, dated November 16, 1994 by and among the
Company, the Master Servicer and the Trustee.
Each of the undersigned hereby consents to the
execution and delivery of the Amendment in the form
presented to us as the final execution copy.
Sincerely,
CAPITAL MARKETS ASSURANCE CORPORATION
By: _____________________________
Title: ____________________________
BANKERS TRUST COMPANY
By: _____________________________
Title: ____________________________
EXHIBIT 10.81
AMENDMENT
to
SERIES 1998-1 SUPPLEMENT
Dated as of March 31, 1998
THIS AMENDMENT ("Amendment") dated as of April 9,
1998 is entered into between SPECIALTY FOODS FINANCE
CORPORATION (the "Company"), SPECIALTY FOODS CORPORATION, as
master servicer (the "Master Servicer"), THE CHASE MANHATTAN
BANK, as trustee (the "Trustee") and BANKERS TRUST COMPANY
("Bankers Trust"), as the sole VFC Certificateholder under that
certain Certificate Purchase Agreement, dated as of March 31,
1998 among the Company, the Master Servicer, certain financial
institutions party thereto from time to time and Bankers Trust
as Agent.
Reference is made to that certain Series 1998-1
Supplement, dated as of March 31, 1998 (the "Supplement"),
among the Company, the Master Servicer and the Trustee to the
Pooling Agreement, as amended (the "Pooling Agreement") dated
as of November 16, 1994 among the Company, the Master Servicer
and the Trustee. Capitalized terms used herein and not defined
herein shall have the meanings set forth in the Supplement.
SECTION 1. Amendment to the Supplement. The
Supplement is, effective the date hereof, hereby amended as
follows:
1.1 The definition of "Applicable Base Rate"
set forth in Section 1.1 of the Supplement is hereby
amended to delete the percentage "1.0%" which appears
in clause (y) therein and to substitute therefor the
percentage, "0.5%".
SECTION 2. Covenants, Representations and Warranties
of the Borrowers.
2.l Upon the effectiveness of this Amendment, each
of the Company and the Master Servicer hereby reaffirms all
covenants, representations and warranties made by it in the
Supplement and in the other Transaction Documents and agrees
that all such covenants, representations and warranties shall
be deemed to have been re-made as of the effective date of this
Amendment, except to the extent any such representation and
warranty was expressly made as of any other date, in which case
such representation and warranty was true and correct in all
material respects as of such other date.
2.2 Each of the Company and the Master Servicer
hereby represents and warrants that this Amendment constitutes
its legal, valid and binding obligation, enforceable against
such Person in accordance with its terms.
SECTION 3. Reference to and Effect on the
Supplement.
3.l Upon the effectiveness of this Amendment, each
reference in the Supplement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import shall mean and be a
reference to the Supplement, as amended hereby, and each
reference to the Supplement in any other document, instrument
or agreement executed and/or delivered in connection with the
Supplement, including without limitation, in the Pooling
Agreement, shall mean and be a reference to the Supplement as
amended hereby.
3.2 Except as specifically amended above, the
Supplement and all other Transaction Documents executed and/or
delivered in connection therewith shall remain in full force
and effect and are hereby ratified and confirmed.
3.3 The execution, delivery and effectiveness of
this Amendment shall not operate as a waiver of any right,
power or remedy of any VFC Certificateholder under the
Supplement or any other Transaction Document executed in
connection therewith, nor constitute a waiver of any provision
contained therein, except as specifically set forth herein.
SECTION 4. Execution in Counterparts. This Amend
ment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an
original and all of which taken together shall constitute but
one and the same instrument.
SECTION 5. Governing Law. This Amendment shall be
governed by and construed in accordance with the laws of the
State of New York.
SECTION 6. Headings. Section headings in this
Amendment are included herein for convenience of reference only
and shall not constitute a part of this Amendment for any other
purpose.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers
thereunto duly authorized as of the date first above written.
SPECIALTY FOODS FINANCE CORPORATION
By:
Name:
Title: Vice President, Treasurer
and Assistant Secretary
SPECIALTY FOODS CORPORATION,
as Master Servicer
By:
Name:
Title: Vice President and Treasurer
THE CHASE MANHATTAN
BANK, not in its individual capacity but
solely as Trustee
By:
Name:
Title:
BANKERS TRUST COMPANY, as
Agent and VFC Certificateholder
By:
Name:
Title:
EXHIBIT 10.82
EXECUTION COPY
PERFORMANCE GUARANTY
THIS PERFORMANCE GUARANTY (this "Guaranty") is
made as of March 31, 1998 by SPECIALTY FOODS CORPORATION, a
Delaware corporation ("SFC"), as Master Servicer (in such
capacity, the "Master Servicer" and "Guarantor",) in favor
of SPECIALTY FOODS FINANCE CORPORATION, a Delaware
corporation (the "Company");
W I T N E S S E T H
WHEREAS, the Company, the Master Servicer and
certain of the subsidiaries of SFC named therein as sellers
(collectively, the "Sellers" and each a "Seller") are
parties to that certain Amended and Restated Receivables
Sale Agreement dated as of November 16, 1994 (as the same
may from time to time be amended, restated, supplemented or
otherwise modified, the "Receivables Sale Agreement");
WHEREAS, it is a condition precedent to the
willingness of the Company to continue to make available the
purchase facility under the Receivables Sale Agreement, that
SFC, individually and as Master Servicer, execute and
deliver this Guaranty;
NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. Definitions. Terms used herein and
not otherwise defined herein shall have the meanings
assigned under the Receivables Sale Agreement or, to the
extent not defined therein, under that certain Pooling
Agreement dated as of November 16, 1994 (as the same may be
amended, restated, supplemented or otherwise modified, the
"Pooling Agreement"), among the Company, the Master
Servicer, and The Chase Manhattan Bank, as Trustee.
SECTION 2. Performance Guaranty. (a) The
Guarantor hereby unconditionally and irrevocably guarantees
to the Company, and all of its respective successors,
endorsees, transferees and assigns (including the Trustee
for the benefit of the Investor Certificateholders), the due
and punctual performance by each Seller of all covenants,
agreements, terms, conditions, undertakings, indemnities and
other obligations to be performed and observed by such
Seller to the Company under the Receivables Sale Agreement
including, without limitation, the due and punctual payment
of all sums which are or may become due and owing by each
Seller under the terms and provisions of the Receivables
Sale Agreement, whether for fees, expenses, indemnified
amounts or otherwise, whether upon any termination or for
any other reason. Upon the failure by any Seller to pay
punctually any amount due by it under the Receivables Sale
Agreement, the Guarantor agrees that it shall forthwith on
demand pay such amount at the place and in the manner
specified in the Receivables Sale Agreement.
SECTION 3. Waivers; Guaranty Unconditional. (a)
The Guarantor hereby waives promptness, diligence and notice
of acceptance of this Guaranty, of any action taken or
omitted in reliance hereon or of any default in the payment
of any such sums or in the performance of any covenants,
agreements, terms, conditions, and any demand, protest or
other notice of any kind. The Guarantor expressly waives
the right to require the Company to protect, secure,
perfect, insure, proceed against or exhaust any security
granted to it as security for the payment of any sums due
under the Receivables Sale Agreement or to exhaust any right
or take any action against any Seller or any other Person or
any collateral. The Guarantor further agrees that the
execution and delivery of this Guaranty shall be conclusive
evidence against the Guarantor that its obligations under
this Guaranty are unconditional and absolute. SFC in its
capacity as Master Servicer and as Guarantor hereby warrants
to the Company that it has adequate means to obtain from
each Seller on a continuing basis all information concerning
each of the Transaction Documents, the financial condition
of each such Seller and the collectability of the Purchased
Receivables, and that it is not relying on the Company to
provide such information either now or in the future.
(b) The obligations of the Guarantor under this
Guaranty constitute a present and continuing guaranty of
payment and not of collectability, shall be absolute and
unconditional, shall not be subject to any counterclaim, set-
off, deduction or defense based upon any claim the Guarantor
or any Affiliate thereof may have against any Seller or
against the Company or any other Person and shall remain in
full force and effect without regard to and shall not be
released, discharged or in any way affected or impaired by,
any thing, event, happening, matter, circumstance or
condition whatsoever (whether or not the Guarantor shall
have any knowledge or notice thereof or consent thereto),
including, without limitation:
(i) any amendment or modification of or supplement
to the Receivables Sale Agreement agreed to by the
requisite parties specified therein, or any assignment
or transfer of any interest of the Company, therein,
including, without limitation, any renewal or extension
of the terms of payment of any sums due or contingently
due hereunder or the granting of time in respect of any
payment, or any furnishing or acceptance of security or
any release of any security so furnished or accepted
for the sum due or contingently due under any
Transaction Document or eligibility criteria for the
purchase of Purchased Receivables thereunder;
(ii) any waiver, consent, extension, granting of
time, forbearance, indulgence or other action or
inaction under or in respect of the Receivables Sale
Agreement or any other Transaction Document or any
exercise or nonexercise of any right, remedy or power
in respect thereof;
(iii) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or
similar proceedings with respect to any of the Sellers,
the Guarantor or any other Person, or the properties or
creditors of any of them;
(iv) the occurrence of any Purchase Termination
Event under the Receivables Sale Agreement, or any
invalidity or any unenforceability of, or any
misrepresentation, irregularity or other defect in the
Receivables Sale Agreement or any other Transaction
Document or any other document to be delivered in
connection therewith;
(v) any failure by the Company to take any
required steps to perfect and maintain any security
interest in, or to preserve any rights to, any security
or collateral for any Purchased Receivable or Related
Property;
(vi) any transfer or purported transfer, any
consolidation or merger of any of the Sellers, the
Guarantor or the Company with or into any other
corporation or entity, or any change whatsoever in the
objects, capital structure, constitution or business of
any of the Sellers or the Guarantor;
(vii) any failure on the part of any of the
Sellers to perform or comply with any term of the
Receivables Purchase Agreement, any other Transaction
Document or any other document to be delivered in
connection therewith;
(viii) any suit or other action brought by any
creditors of any of the Sellers or the Guarantor for
any reason whatsoever, including, without limitation,
any suit or action in any way attacking or involving
the Receivables Purchase Agreement, the Certificate
Purchase Agreement or any other Transaction Document or
any other document to be delivered in connection
therewith; or
(ix) any other fact or circumstance which might
constitute a defense available to, or a discharge of,
the Guarantor.
SECTION 4. Discharge Only Upon Payment in Full;
Reinstatement. The obligations of the Guarantor hereunder
shall remain in full force and effect until all obligations
guaranteed hereunder are fully satisfied. If at any time
any payment of any obligations guaranteed hereunder is
rescinded or must otherwise be restored or returned by the
Company upon the insolvency, bankruptcy or reorganization of
the Guarantor, each of the obligations of the Guarantor
hereunder, as applicable, shall be reinstated all as though
such payment had not been made.
SECTION 5. Subrogation. If the Guarantor shall
make any payment due in respect of the Receivables Sale
Agreement pursuant to this Guaranty, it shall, to the extent
permitted by applicable law, be subrogated to the rights of
the Company as against the Guarantor; provided, however,
that such rights of subrogation and all indebtedness and
claims arising therefrom shall be, and the Guarantor hereby
declares that they are, and shall at all times be, in all
respects subordinate and junior to all sums due or
contingently due under the Receivables Sale Agreement in
respect of which payment was not made. The Guarantor hereby
further agrees that the foregoing right of subrogation shall
not be effective until, and that it shall not be entitled to
receive any payment, under any condition, in respect of any
such subrogated claim unless and until (x) all sums which
may become due, or are stated in the Receivables Sale
Agreement to become due, shall have become due and shall
have been paid in full or funds for their payment shall have
been duly and sufficiently provided, and (y) all obligations
of the Company and the Master Servicer under the Pooling
Agreement and any Supplement entered into in connection
therewith have been fully paid and satisfied. The Guarantor
further agrees that, if, solely as a result of (i) the
existence of this Guaranty and (ii) the application of
Section 550 of the Bankruptcy Code, or any similar provision
of any state insolvency law, the Company is required in any
bankruptcy or insolvency proceeding to turn over or
otherwise pay to the estate of the Guarantor or lose the
right to receive from the Guarantor's estate any amount
representing or constituting a transfer avoidable as to the
Company (which transfer, but for the existence of this
Guaranty, would not have been recoverable from any such
Person), the Guarantor shall pay or cause to be paid to the
Company, an amount, in cash, equal to such avoided or
recovered amount.
SECTION 6. Representations and Warranties. The
Guarantor hereby represents and warrants on and as of the
date hereof, and on and as of each date on which a purchase
shall be made under the Receivables Sale Agreement, as
follows:
(a) the execution, delivery and performance by
the Guarantor of this Guaranty (i) is within its
corporate powers, (ii) has been duly authorized by all
necessary corporate action, (iii) does not contravene
or result in a default under or conflict with (1) its
certificate or articles of incorporation or by-laws or
the provisions of any indenture, instrument or material
agreement to which they may be party or is subject (2)
any law, rule or regulation applicable to it, (3) any
contractual restriction binding on or affecting the
Guarantor or its property or (4) any order, writ,
judgment, award, injunction or decree binding on or
affecting the Guarantor or its property, and (iv) does
not result in or require the creation of any adverse
claim upon or with respect to any of its properties.
This Guaranty has been duly executed and delivered by
the Guarantor.
(b) No authorization or approval or other action
by, and no notice to or filing with, any Governmental
Authority or other Person is required for the due
execution, delivery and performance by the Guarantor of
this Guaranty.
(c) This Guaranty constitutes the legal, valid
and binding obligation of such Guarantor enforceable
against it in accordance with its terms.
(d) There is no pending or threatened action or
proceeding affecting the Guarantor or any of its
subsidiaries before any Governmental Authority or
arbitrator which could materially adversely affect the
business, operations, property, financial or other
condition or operations of the Guarantor, the ability
of the Guarantor to perform its obligations under this
Guaranty or which affects or purports to affect the
legality, validity or enforceability of this Guaranty.
SECTION 7. Further Assurances. The Guarantor
hereby agrees, upon the written request of the Company, to
execute and deliver to the Company from time to time, any
additional instruments or documents reasonably considered
necessary by the Company to cause this Guaranty to be,
become or continue to be valid and effective in accordance
with its terms.
SECTION 8. No Proceedings. The Guarantor
covenants and agrees that it will not institute against, or
join any other Person in instituting against the Company any
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law, for one year and
one day after the last Investor Certificate issued by the
Trust is paid in full.
SECTION 9. Successors and Assigns. This Guaranty
shall inure to the benefit of the Company and its respective
successors, endorsees, transferees and assigns. Each such
Person shall have the right to assign any and all of its or
their rights hereunder to any other Person and the Person
acquiring any interest herein shall succeed to all of the
rights of the transferor thereof hereunder to the extent of
such transfer. Notwithstanding the immediate preceding
sentence, the Guarantor agrees that it will not assign or
transfer all or any portion of its rights or obligations
hereunder without the prior written consent of the Company.
The Guarantor acknowledges that the Company shall assign all
of its rights hereunder to the Trustee or any Control Party.
The Guarantor consents to such assignment and agrees that
any Control Party (or the Trustee at the direction of any
Control Party), to the extent provided in the Pooling
Agreement with respect to the enforcement of the Receivables
Sale Agreement, shall be entitled to enforce the terms of
this Guaranty and the rights (including, without limitation,
the right to grant or withhold any consent or waiver) of the
Company directly against the Guarantor, whether or not a
Purchase Termination Event or a Potential Purchase
Termination Event has occurred. The Guarantor further
agrees that, in respect of its obligations hereunder, (i)
it will act at the direction of and in accordance with all
requests and instructions from any Control Party (or the
Trustee, as the case may be) until all amounts due to the
Investor Certificateholders are paid in full and (ii) in the
event of any conflict or requests or instructions to the
Guarantor, among the Trustee, any Control Party and the
Company, the Guarantor will at all times act in accordance
with the requests and instructions of any Control Party.
Each Control Party and the Trustee, on behalf of the
Investor Certificateholders, shall have the rights of third-
party beneficiaries under this Guaranty.
SECTION 10. Taxes; Expenses of Enforcement, etc.
All payments required to be made by the Guarantor hereunder
shall be made without setoff or counterclaim and free and
clear and without deduction or withholding for or on account
of, any present or future taxes, levies, imposts, duties or
other charges of whatsoever nature imposed by any government
or political or taxing authority thereof, provided, however,
that if the Guarantor is required by law to make such
deduction or withholding, the Guarantor shall forthwith pay
to the Company, such additional amount as results in the net
amount received by the Company equaling the full amount
which would have been received by the Company had no
deduction or withholding been made. The Guarantor also
agrees to reimburse the Company for any reasonable costs,
internal charges and out-of-pocket expenses (including
reasonable attorney's fees and time charges of attorneys for
the Company, which attorneys may be the employees of the
Company) paid or incurred by the Company in connection with
the collection and enforcement of amounts due under this
Guaranty.
SECTION 11. Setoff. At any time after all or any
part of the obligations guarantied hereunder become due and
payable (by acceleration or otherwise), the Company may,
without notice to the Guarantor and regardless or the
acceptance of any security or collateral for the payment
hereof, appropriate and apply toward the payment of all or
any part of the obligations guarantied hereunder, (i) any
indebtedness due or becoming due from the Company to the
Guarantor, and (ii) any monies, credits or other property
belonging to the Guarantor, at any time held by it or coming
into the possession of the Company or any of its respective
affiliates.
SECTION 12. GOVERNING LAW. (a) THIS GUARANTY
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 13. WAIVER OF JURY TRIAL. THE GUARANTOR
HEREBY AND UNCONDITIONALLY WAIVES ITS RIGHTS TO A TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT AND ANY COUNTERCLAIM THEREIN.
SECTION 14. Submission To Jurisdiction; Waivers.
The Guarantor hereby irrevocably and unconditionally:
(a) submits for itself and its property in any
legal action or proceeding relating to this Guaranty,
or for the recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York,
the courts of the United States of America for the
Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding
may be brought in such courts and waives any objection
that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that
such action or proceeding was brought in an
inconvenient court;
(c) agrees that service of process in any action
or proceeding may be effected by mailing a copy thereof
by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to the
Guarantor at its address as set forth in Section 10.5
of the Pooling Agreement or under its name on the
signature page thereof, or at such other address of
which the Company shall have been notified pursuant
thereof;
(d) agrees that nothing herein shall affect the
right to effect service of process in any other manner
permitted by law or shall limit the right to sue in any
other jurisdiction; and
(e) waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover in
any legal action or proceeding referred to in this
section any special, exemplary, punitive or
consequential damages.
SECTION 15. Amendment and Waiver. No amendment
or waiver of any provision of this Guaranty shall be
effective unless in a writing signed by the Company, the
Guarantor, and the Control Party and such amendment or
waiver shall be effective only in the specific instance and
for the specific purpose for which given. No failure on the
part of the Company to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver hereof; nor
shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the
exercise of any other right.
SECTION 16. Severability. Wherever possible,
each provision of this Guaranty shall be interpreted in such
manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by
or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or the
remaining provisions of this Guaranty. Without limiting the
foregoing, if the liability of the Guarantor hereunder is
determined to have exceeded the maximum amount of liability
hereunder which could have been recovered from the Guarantor
under this Guaranty without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar
statute or common law, then this Guaranty shall remain
enforceable against the Guarantor for the full amount which
could have been claimed without becoming subject to such
avoidance.
SECTION 17. Merger. This Guaranty represents the
final agreement of the Guarantor with respect to the matters
contained herein and may not be contradicted by evidence of
prior or contemporaneous agreements, or subsequent oral
agreements, between the Guarantor and the Company.
SECTION 18. Headings. The captions and headings
of this Guaranty are for convenience of reference only and
shall not affect the interpretation hereof or thereof.
IN WITNESS WHEREOF, each of the undersigned has
caused this Guaranty to be duly executed by its duly
authorized officer as of the date first set forth above.
SPECIALTY FOODS CORPORATION
By:
Name:
Title:
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19,500
0
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