Exhibit 4.2
Certificate Purchase Agreement dated as of March 1, 2001, by and among Saks
Credit Corporation, as Transferor, Saks Incorporated, as Servicer, Enterprise
Funding Corporation, as Purchaser, and Bank of America, N.A., as Agent, Senior
Class Agent, and individually as a Bank Investor
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CERTIFICATE PURCHASE AGREEMENT
(Series 2001-1)
by and among
SAKS CREDIT CORPORATION,
SAKS INCORPORATED
(formerly named "▇▇▇▇▇▇▇▇'▇, Inc."),
ENTERPRISE FUNDING CORPORATION,
and
BANK OF AMERICA, N.A.
Dated as of March 1, 2001
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions................................................ 2
SECTION 1.2. Other Terms................................................ 12
SECTION 1.3. Computation of Time Periods................................ 12
ARTICLE II
PURCHASE OF SENIOR CERTIFICATES
SECTION 2.1. Purchase................................................... 13
SECTION 2.2. Increase of Senior Class Investor Amount................... 13
SECTION 2.3. Fees....................................................... 17
SECTION 2.4. Sharing of Payments, Etc................................... 17
SECTION 2.5. Right of Setoff............................................ 18
SECTION 2.6. Interest Rate; Eurodollar Rate Protection; Illegality...... 18
SECTION 2.7. Notice of Reinvestment Termination Date.................... 22
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.1. Representations and Warranties of the Transferor........... 22
SECTION 3.2. Representations and Warranties of the Servicer............. 27
SECTION 3.3. Covenants of the Transferor................................ 29
SECTION 3.4. Covenants of the Servicer.................................. 39
SECTION 3.5. Tax Treatment.............................................. 40
SECTION 3.6. Conditions Precedent to Initial Transfer................... 41
SECTION 3.7. [RESERVED]................................................. 42
SECTION 3.8. Periodic Notices and Reports............................... 42
ARTICLE IV
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 4.1. Indemnities by the Transferor.............................. 43
SECTION 4.2. Indemnity for Taxes, Reserves and Expenses................. 46
SECTION 4.3. Taxes...................................................... 48
SECTION 4.4. Other Costs, Expenses and Related Matters.................. 49
SECTION 4.5. Indemnification by Servicer................................ 50
ARTICLE V
THE AGENT; BANK COMMITMENT; SENIOR CLASS AGENTS
SECTION 5.1. Authorization and Action of Agent.......................... 51
SECTION 5.2. Agent's Reliance, Etc...................................... 53
SECTION 5.3. Credit Decision............................................ 53
SECTION 5.4. Indemnification of the Agent............................... 54
SECTION 5.5. Successor Agent............................................ 54
SECTION 5.6. Payments by the Agent...................................... 55
SECTION 5.7. Bank Commitment; Assignment to Bank Investors.............. 55
SECTION 5.8. Authorization and Action of Senior Class Agent............. 60
SECTION 5.9. Senior Class Agents' Reliance, Etc......................... 62
SECTION 5.10. Credit Decision............................................ 62
SECTION 5.11. Indemnification of the Senior Class Agent.................. 62
SECTION 5.12. Successor Senior Class Agent............................... 63
SECTION 5.13. Payments by the Senior Class Agents........................ 64
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Term of Agreement.......................................... 65
SECTION 6.2. Waivers; Amendments........................................ 65
SECTION 6.3. Notices, Etc............................................... 65
SECTION 6.4. Governing Law; Submission to Jurisdiction; Integration..... 66
SECTION 6.5. Severability............................................... 67
SECTION 6.6. Counterparts............................................... 67
SECTION 6.7. Successors and Assigns..................................... 67
SECTION 6.8. Confidentiality............................................ 69
SECTION 6.9. No Bankruptcy Petition Against the Senior Class Conduits... 70
SECTION 6.10. No Recourse................................................ 70
SECTION 6.11. Setoff..................................................... 71
SECTION 6.12. Further Assurances......................................... 71
EXHIBITS
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EXHIBIT A Form of Additional Investment Certificate
EXHIBIT B Form of Assignment and Assumption Agreement
EXHIBIT C Form of Secretary's Certificate
EXHIBIT D [Reserved]
EXHIBIT E [Reserved]
EXHIBIT F Defined Terms in Financial Covenants
EXHIBIT G Proceedings
CERTIFICATE PURCHASE AGREEMENT (this "Agreement"), dated as of March
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1, 2001, by and among SAKS CREDIT CORPORATION, a Delaware corporation (together
with its successors and permitted assigns, the "Transferor"), SAKS INCORPORATED
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(formerly named "▇▇▇▇▇▇▇▇'▇, Inc."), a Tennessee corporation, as servicer (in
such capacity, the "Servicer"), ENTERPRISE FUNDING CORPORATION, a Delaware
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corporation (together with its successors and permitted assigns, "EFC" and a
---
"Purchaser"), and BANK OF AMERICA, N.A., a national banking association ("Bank
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of America"), as agent for the Senior Class Conduits and the Bank Investors (in
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such capacity, the "Agent"), as a Senior Class Agent and individually as a Bank
-----
Investor.
W I T N E S S E T H:
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WHEREAS, the Transferor may desire to convey, transfer and assign,
from time to time, to each of the Senior Class Conduits, one or more
certificates issued by the Saks Credit Card Master Trust pursuant to a master
pooling and servicing agreement (as amended, restated or supplemented from time
to time, the "Master Pooling and Servicing Agreement") dated as of August 21,
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1997 among the Transferor, the Servicer and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, a national banking association (formerly known as "Norwest Bank
Minnesota, National Association"), as trustee (the "Trustee") as supplemented
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by a Series 2001-1 Supplement dated as of the date hereof (as amended, restated
or supplemented from time to time, the "Series Supplement") among the
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Transferor, the Servicer and the Trustee;
WHEREAS, the Senior Class Conduits may desire to, and the Bank
Investors, if requested, shall, accept such conveyance, transfer and assignment
of such certificates on the terms and conditions set forth herein; and
WHEREAS, the Servicer has joined in this Agreement to make certain
representations, warranties, covenants and agreements for the benefit of the
Agent, the Senior Class Agents, the Senior Class Conduits and the Bank
Investors.
NOW THEREFORE, the parties hereto hereby agree as follows:
1
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. All capitalized terms used herein shall
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have the meanings herein specified or as specified in the Master Pooling and
Servicing Agreement or the Series Supplement, and shall include in the singular
number the plural and in the plural number the singular:
"Act" shall mean the Securities Act of 1933, as amended.
---
"Additional Investor Amount" shall have the meaning set forth in
--------------------------
Section 2.2(a) hereof.
"Additional Investment Certificate" shall mean a certificate of the
---------------------------------
Transferor substantially in the form of Exhibit A hereto.
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"Adjusted LIBOR Rate" means, with respect to any period during which
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the return to any Bank Investor or a related Program Support Provider is to be
calculated by reference to the London interbank offered rate, a rate which is
1.25% in excess of a rate per annum equal to the sum (rounded upwards, if
necessary, to the next higher 1/100 of 1%) of (A) the rate obtained by dividing
(i) the applicable LIBOR Rate by (ii) a percentage equal to 100% minus the
reserve percentage, if any, used for determining the maximum reserve requirement
as specified in Regulation D (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) that is applicable to the
Agent during such period in respect of eurocurrency or eurodollar funding,
lending or liabilities (or, if more than one percentage shall be so applicable,
the daily average of such percentage for those days in such period during which
any such percentage shall be applicable) plus (B) the then daily net annual
assessment rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) as
estimated by the Agent for determining the current annual assessment, if any,
payable by the Agent to the Federal Deposit Insurance Corporation in respect of
eurocurrency or eurodollar funding, lending or liabilities.
"Affected Assets" shall mean, collectively, the Senior Class
---------------
Certificates and the Trust Property.
"Agent" shall mean Bank of America, in its capacity as agent for the
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Senior Class Conduits and the Bank Investors, and any successor agent appointed
pursuant to Article V hereof.
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"Agreement" shall mean this Certificate Purchase Agreement, as it may
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from time to time be amended, supplemented or otherwise modified in accordance
with the terms hereof.
"Amortizing Investor Classes" shall mean Class A, Class B and the
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Collateral Indebtedness Interest of Series 1998-2 issued by the Trust pursuant
to the Series 1998-2 Supplement to the Master Pooling and Servicing Agreement
dated as of May 21, 1998 by and among the Transferor, the Servicer and the
Trustee.
"Assignment" shall mean, with respect to each Senior Class, an
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assignment pursuant to an Assignment and Assumption Agreement by which a Senior
Class Conduit or a Bank Investor may assign its interests in the Senior Class
Certificates, the Senior Class Certificate Principal Balance and the Trust
Property pursuant to Section 5.7 hereof.
"Assignment Amount" shall mean, with respect to each Bank Investor at
-----------------
any time, an amount equal to the lesser of (a) such Bank Investor's Commitment
and (b) the sum of, without duplication, (i) the Bank's Pro Rata Share for such
Bank Investor of the Senior Class Investor Amount for the related Senior Class
held by the related Senior Class Conduit at such time, (ii) an amount equal to
the Bank Pro Rata Share for such Bank Investor of all Carrying Costs accrued
through the date of Assignment, and (iii) to the extent not paid by the
Transferor as provided in subsection 5.7(d) hereof, an amount equal to the Bank
Pro Rata Share for such Bank Investor of all Carrying Costs to accrue with
respect to each Senior Class through the maturity of all outstanding Related
Commercial Paper.
"Assignment and Assumption Agreement" shall mean an Assignment and
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Assumption Agreement substantially in the form of Exhibit B hereto.
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"Bank Base Rate" means, a rate per annum equal to the greater of (i)
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the prime rate of interest announced publicly by the Agent from time to time,
changing when and as said prime rate changes (such rate not necessarily being
the lowest or best rate charged by the Agent) and (ii the sum of (a) 2.00% and
(b) the rate 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 that is a Business
Day, the average of the quotations for such day for such transactions received
by the Agent from three Federal funds brokers of recognized standing selected by
it.
3
"Bank Investors" shall mean, (i) with respect to the Senior Class of
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which EFC is a member, Bank of America and its successors and assigns, and (ii)
with respect to any other Class, the financial institutions specified as such in
any supplement hereto and their respective successors and permitted assigns.
"Bank of America" shall mean Bank of America, National Association,
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together with its successors and permitted assigns.
"Bank Pro Rata Share" shall mean, for each Bank Investor, the
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percentage equivalent of a fraction, the numerator of which is the Commitment of
such Bank Investor and the denominator of which is the sum of the Commitments of
all Bank Investors in the Senior Class of which such Bank Investor is a member.
"Benefit Plan" shall mean any employee benefit plan as defined in
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Section 3(3) of ERISA which the Transferor or any Eligible Originator maintains.
"Business Taxes" shall mean any Federal, state or local income taxes
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or taxes measured by income, property taxes, excise taxes, franchise taxes or
other similar taxes.
"Capitalization" shall have the meaning set forth in Exhibit F
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attached hereto.
"Closing Date" shall mean March 1, 2001.
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"Collateral Agent" shall mean (i) with respect to EFC, any Person
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acting as collateral agent for certain secured parties under the EFC commercial
paper program and (ii) with respect to any other Senior Class Conduit, the
collateral agent specified in any supplement hereto for such Senior Class
Conduit, if any.
"Commercial Paper" shall mean the promissory notes of a Senior Class
----------------
Conduit issued by such Senior Class Conduit in the commercial paper market.
"Commitment" shall mean, for each Bank Investor, the commitment of
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such Bank Investor to make acquisitions from the Transferor or the related
Senior Class Conduit in accordance herewith in an amount not to exceed (i) for
Bank of America, the dollar amount set forth opposite such Bank Investor's
signature on the signature pages hereto under the heading "Commitment", minus
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the dollar amount of any Commitment or portion thereof assigned pursuant an
Assignment and Assumption Agreement in accordance with Section 5.7 hereof prior
to the time of determina-
4
tion, plus the dollar amount of any increase to such Bank Investor's Commitment
----
consented to by such Bank Investor prior to the time of determination, (ii) in
the case of a Bank Investor for any other Senior Class, the amount set forth in
any supplement hereto for the related Senior Class, minus the dollar amount of
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any Commitment or portion thereof assigned pursuant an Assignment and Assumption
Agreement in accordance with Section 5.7 hereof prior to the time of
determination, plus the dollar amount of any increase to such Bank Investor's
----
Commitment consented to by such Bank Investor prior to the time of
determination, and (iii) in the case of any permitted assignee of a Bank
Investor pursuant to Section 5.7 hereof, the amount set forth in the Assignment
and Assumption Agreement pursuant to which such assignee acquired its interest
in the Senior Class Certificates, the Senior Class Investor Amount and the Trust
Property, minus the dollar amount of any Commitment or portion thereof assigned
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pursuant an Assignment and Assumption Agreement in accordance with Section 5.7
hereof prior to the time of determination, plus the dollar amount of any
----
increase to such Bank Investor's Commitment consented to by such Bank Investor
prior to the time of determination.
"Commitment Termination Date" shall mean September 15, 2001, or such
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later date to which the Commitment Termination Date may be extended by the
Transferor, the Senior Class Agents and the Bank Investors not later than 30
days prior to the then current Commitment Termination Date.
"Conduit Assignee" shall mean (i) with respect to EFC, any commercial
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paper conduit administered by Bank of America and (ii) with respect to any other
Senior Class Conduit, any commercial paper conduit administered by the entity
specified in any supplement hereto for the related Senior Class, in each case
designated from time to time by the related Senior Class Agent to accept an
assignment from such Purchaser of all or a portion of the Senior Class
Certificates, Senior Class Investor Amount and Trust Property, and in each case
that has the same or higher rating by each of Moody's and Standard & Poor's as
EFC or such other Senior Class Conduit, as applicable.
"Conduit Termination Events" shall mean (i) a Program Support Provider
--------------------------
shall have notified the related Senior Class Conduit that an Event of Default
has occurred under a related Program Support Agreement; or (ii) the Commercial
Paper of any Senior Class Conduit shall not be rated at least "A-1" by Standard
& Poor's and at least "P-1" by Moody's.
"Defined Benefit Plan" shall mean a "defined benefit plan" as defined
--------------------
in Section 3(35) of ERISA which is or was at any time during the current year or
the
5
immediately preceding five years contributed to by the Transferor, any Eligible
Originator or any ERISA Affiliate of the Transferor or any Eligible Originator
on behalf of its employees.
"Early Collection Fee" means, for any funding period (such funding
--------------------
period to be determined without regard to the last sentence in Section 2.6(a)
hereof) during which the portion of the Senior Class Certificate Principal
Balance that was allocated to such funding period is reduced for any reason
whatsoever, the excess, if any, of (i) the additional Carrying Costs that would
have accrued during such funding period if such reductions had not occurred,
minus (ii) the income, if any, received by the recipient of such reductions from
investing the proceeds of such reductions.
"EFC" shall mean Enterprise Funding Corporation, a Delaware
---
corporation, together with its successors and permitted assigns.
"Eligible Receivables" shall mean, as of the end of the most recent
--------------------
Monthly Period (solely for the purposes of any Program Support Agreement related
to EFC), the product of (x) the aggregate Floating Allocation Percentage with
respect to Default Amounts for all Senior Classes and (y) the sum of the Excess
Funding Amount and the Aggregate Principal Receivables and (z) the Bank Pro Rata
Share as it applies to Bank of America. For purposes of this definition, the
Servicer shall have the option to calculate the Floating Allocation Percentage
on a daily basis method, using the current day Aggregate Investor Amount in the
numerator and the current day Aggregate Principal Receivables and Excess Funding
Account balance in the denominator.
"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder.
"ERISA Affiliate" shall mean, with respect to any Person, (i) any
---------------
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code) as such
Person; (ii) a trade or business (whether or not incorporated) under common
control (within the meaning of Section 414(c) of the Internal Revenue Code) with
such Person; or (iii) for purposes of Code Section 412, a member of the same
affiliated service group (within the meaning of Section 414(m) of the Internal
Revenue Code) as such Person, any corporation described in clause (i) above or
any trade or business described in clause (ii) above.
6
"Excluded Taxes" shall have the meaning set forth in Section 4.3
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hereof.
"Fee Letters" shall mean, collectively, the letter agreement or
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agreements, dated the date hereof, (i) among the Transferor and the Senior Class
Conduits and (ii) among the Transferor, the Agent and the Senior Class Agents on
behalf of the Bank Investors, in each case, with respect to the fees to be paid
by the Transferor hereunder, as amended, modified or supplemented from time to
time.
"Four-Quarter Period" shall have the meaning set forth in Exhibit F
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attached hereto.
"GAAP" shall mean generally accepted accounting principles set forth
----
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such accounting profession, which are in effect as of the date of
this Agreement.
"Guaranty" shall mean, with respect to any Person any agreement by
--------
which such Person assumes, guarantees, endorses, contingently agrees to purchase
or provide funds for the payment of, or otherwise becomes liable upon, the
obligation of any other Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person or otherwise assures
any other creditor of such other Person against loss, including, without
limitation, any comfort letter, operating agreement or take-or-pay contract and
shall include, without limitation, the contingent liability of such Person in
connection with any application for a letter of credit.
"Indemnified Amounts" shall have the meaning set forth in Section 4.1
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hereof.
"Indemnified Parties" shall have the meaning set forth in Section 4.1
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hereof.
"Law" shall mean any applicable law (including common law),
---
constitution, statute, treaty, regulation, rule, ordinance, order, injunction,
writ, decree or award of any Official Body.
"LIBOR Rate" means, with respect to any funding period, the rate per
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annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
7
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in U.S. dollars at approximately 11:00 a.m. (London time) two
London Business Days prior to the first day of such funding period for a term of
one month or three months, as determined in accordance with Section 2.6 hereof.
If for any reason such rate is not available, the term "LIBOR Rate" shall mean,
for any funding period, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in dollars at approximately 11:00 a.m.
(London time) two London Business Days prior to the first day of such funding
period for a term of one month or three months, as applicable; provided,
--------
however, if more than one rate is specified on the Reuters Screen LIBO Page, the
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applicable rate shall be the arithmetic mean of all such rates. If for any
reason neither of such rates is available, the term "LIBOR Rate" shall mean, for
any funding period, the rate at which deposits in U.S. dollars are offered to
the Agent in the London interbank market at approximately 11:00 a.m. (London
time) two London Business Days prior to the first day of such funding period for
a term of one month or three months, as applicable.
"London Business Day" shall mean, with respect to the determination of
-------------------
the LIBOR Rate, any Business Day other than a Business Day on which banking
institutions in London, England trading in dollar deposits in the London
interbank market are authorized or obligated by Law or executive order to be
closed.
"Majority Investors" shall mean at any time, with respect to a Senior
------------------
Class, Persons consisting of the Bank Investors for such Senior Class and
assignees thereof which hold commitments in respect of the Senior Class Facility
Limit aggregating in excess of 51% of the applicable Senior Class Facility Limit
as of such date.
"Master Pooling and Servicing Agreement" shall have the meaning
--------------------------------------
specified in the recitals hereto.
"Material Adverse Effect" shall mean any event or condition which
-----------------------
would have a material adverse effect on (i) the collectibility of the
Receivables considered in the aggregate, (ii) the condition (financial or
otherwise), businesses or the property of the Transferor or Saks and its
subsidiaries taken as a whole, (iii) the ability of the Transferor, Saks or any
Eligible Originator to perform its respective obligations under the Transaction
Documents to which it is a party or (iv) the interests of the Agent, any Senior
Class Agent, any Senior Class Conduit or any Bank Investor under the Transaction
Documents.
8
"▇▇▇▇▇'▇" shall mean ▇▇▇▇▇'▇, Inc., a Mississippi corporation, and its
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permitted successors and assigns.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding five years contributed to by the Transferor, any
Eligible Originator or any ERISA Affiliate of the Transferor or any Eligible
Originator on behalf of its employees.
"Net Investment" shall (solely for the purposes of this Agreement and
--------------
any Program Support Agreement with respect to EFC), mean the Senior Class
Certificate Principal Balance for the Senior Class of which EFC is a member.
"Official Body" shall mean any government or political subdivision or
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any agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Other Transferor" shall mean any Person other than the Transferor
----------------
that has entered into a receivables purchase agreement, transfer and
administration agreement or other similar agreement with a Senior Class Conduit.
"Parisian, Inc." shall mean Parisian, Inc., an Alabama corporation,
--------------
and its permitted successors and assigns.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
----
other entity succeeding to the functions currently performed by the Pension
Benefit Guaranty Corporation.
"Potential Pay Out Event" shall mean an event which, but for the lapse
-----------------------
of time or the giving of notice, or both, would constitute a Pay Out Event.
"Pre Funding Account Deposit" shall have the meaning set forth in
---------------------------
Section 2.2(b)(i) hereof.
"Program Support Agreement" shall mean an agreement between a Senior
-------------------------
Class Conduit and a Program Support Provider evidencing the obligation of such
Program Support Provider to provide liquidity support, credit enhancement or
asset purchase facilities for or in respect of any assets or liabilities of any
Senior
9
Class Conduit in connection with the issuance by such Senior Class Conduit of
Commercial Paper.
"Program Support Provider" shall mean the Person or Persons who will
------------------------
provide liquidity or program support to a Senior Class Conduit in connection
with the issuance by such Senior Class Conduit of Commercial Paper.
"Purchasers" shall have the meaning specified in the preamble to this
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Agreement.
"Recipient" shall have the meaning set forth in Section 2.4 hereof.
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"Records" shall mean all Account Agreements and other documents,
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books, records and other information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software and related
property and rights) maintained with respect to Receivables and the related
Obligors.
"Reinvestment Termination Date" shall mean the Business Day on which
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the Agent or a Senior Class Agent delivers to the Transferor (and, in the case
of notice from a Senior Class Agent, to the Agent) written notice that a Senior
Class Conduit has elected not to maintain its interest in the related Senior
Class Investor Amount. Any such notice shall be effective on the Business Day
given if such notice is given by 11:00 a.m. (New York time) on such Business Day
and shall be effective on the immediately succeeding Business Day if such notice
is given after 11:00 a.m. (New York time) on such Business Day.
"Related Commercial Paper" shall mean with respect to EFC, Commercial
------------------------
Paper issued by EFC, all or a portion of the proceeds of which were used to
finance the acquisition of an interest in the Senior Class Certificates, and
(ii) with respect to any other Senior Class Conduit, the Commercial Paper
specified as "Related Commercial Paper" in any supplement hereto.
"Reportable Event" shall mean any of the events set forth in Section
----------------
4043(b) of ERISA, other than those events for which notice to the PBGC is waived
under applicable PBGC regulations.
"Saks" shall mean Saks Incorporated, a Tennessee corporation (formerly
----
named "▇▇▇▇▇▇▇▇'▇, Inc."), together with its successors and permitted assigns.
10
"Section 4.2 Costs" shall have the meaning set forth in Section 4.2
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hereof.
"Senior Class" shall mean each group of Senior Certificateholders
------------
consisting of a multi-seller commercial paper conduit, the related Bank
Investors and their respective assigns and participants.
"Senior Class Agent" shall mean, (i) with respect to the Senior Class
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of which EFC is a member, Bank of America, and (ii) with respect to any other
Senior Class, the financial institution or other Person identified in any
supplement hereto for such Senior Class.
"Senior Class Conduit" shall mean, with respect to any Senior Class,
--------------------
the Certificateholder in such Senior Class which is a multi-seller commercial
paper conduit (and if more than one Certificateholder in such Senior Class is a
multi-seller commercial paper conduit, "Senior Class Conduit" shall mean such
Certificateholders collectively).
"Senior Class Facility Limit" shall mean, (i) with respect to the
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Senior Class of which EFC is a member, $250,410,000, and (ii) with respect to
any other Class, the amount indicated in any supplement hereto for such Senior
Class; provided that in each case such amount may not at any time exceed the
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aggregate Commitments for the related Bank Investors.
"Series Supplement" shall have the meaning specified in the recitals
-----------------
hereto.
"Subordinated Note" shall have the meaning specified in the
-----------------
Receivables Purchase Agreements.
"Taxes" shall have the meaning set forth in Section 4.3 hereof.
-----
"Telerate Page 3750" shall mean the British Bankers Association Libor
------------------
Rates (determined at 11:00 a.m. London time) that are published by Bridge
Information Systems, Inc.'s service (or any successor service).
"Termination Date" shall mean the earliest of (i) the Business Day
----------------
designated by the Transferor to the Agent and each Senior Class Agent as the
termination date at any time following 30 days' written notice to the Agent and
each Senior Class Agent, (ii) the date on which a Pay Out Event is declared or
11
automatically occurs pursuant to the Master Pooling and Servicing Agreement or
the Series Supplement, (iii) two Business Days prior to the Commitment
Termination Date, (iv) the Reinvestment Termination Date (unless, on such
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Business Day, the related Bank Investors accept an assignment of the Senior
Class Investor Amount with respect to the related Senior Class) and (v) the date
on which a Program Support Agreement shall have terminated.
"Termination Event" shall, solely for the purposes of any Program
-----------------
Support Agreement related to EFC, be deemed to have occurred if the Net
Investment is greater than the amount of Eligible Receivables (as defined
herein).
"Transaction Costs" shall have the meaning set forth in Section 4.4
-----------------
hereof.
"Transaction Documents" shall mean, collectively, this Agreement, each
---------------------
Receivables Purchase Agreement, the Master Pooling and Servicing Agreement, the
Series Supplement and the related Fee Letter, the Certificates and all of the
other instruments, documents and other agreements executed and delivered by the
Transferor or any Eligible Originator in connection with any of the foregoing in
connection with Series 2001-1, in each case, as the same may be amended,
restated, supplemented or otherwise modified from time to time.
"Transferor" shall mean Saks Credit Corporation, a Delaware
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corporation, together with its successors and permitted assigns.
SECTION 1.2. Other Terms. All accounting terms not specifically
-----------
defined herein shall be construed in accordance with GAAP. The symbol "$" shall
mean the lawful currency of the United States of America. 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.
SECTION 1.3. 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", the words
"to" and "until" each means "to but excluding", and the word "within" means
"from and excluding a specified date and to and including a later specified
date". The definitions of all terms defined herein shall include the singular
as well as the plural form of such terms and the masculine of such terms as well
as the feminine and neuter genders of such terms.
12
ARTICLE II
PURCHASE OF SENIOR CERTIFICATES
SECTION 2.1. Purchase. Upon the terms and subject to the conditions
--------
set forth herein, (x) the Transferor may, at its option, convey, transfer and
assign to the Purchasers or the Bank Investors, as applicable, and (y) the
Purchasers may, at their respective option, or the Bank Investors shall, if the
related Purchaser determines not to so accept and if so requested, accept such
conveyance, transfer and assignment from the Transferor of, without recourse
except as provided herein and in the other Transaction Documents, on the Closing
Date, Senior Class Certificates in the aggregate face amount of $250,410,000.
The Senior Class Certificates shall accrue interest as described in the Master
Pooling and Servicing Agreement, as supplemented by the Series Supplement, from
and including the Closing Date. The Senior Class Certificates purchased by EFC
shall be delivered to and be registered in the name of "Bank of America, N.A.,
as agent for the members of the Senior Class of which Enterprise Funding
Corporation and Bank of America, N.A. are members" and shall be in the face
amount of up to $250,410,000.
SECTION 2.2. Increase of Senior Class Investor Amount.
----------------------------------------
(a) Upon the terms and subject to the conditions set forth herein and
provided that neither the Commitment Termination Date nor the Termination Date
(excluding, in the case of the Bank Investors, a "Termination Date" occurring as
a result of clause (iv) or (v) of the definition of "Termination Date") shall
have occurred, (x) the Transferor may, at its option, on any Business Day during
the Revolving Period, after delivery to the Agent (which the Agent shall forward
to each Senior Class Agent) of an Additional Investment Certificate (to be
received by the Agent and each Senior Class Agent not later than 1:00 P.M., New
York City time, on the second Business Day prior to the Business Day on which
the proposed increase in the Senior Class Investor Amount is to occur), convey,
transfer and assign to the Senior Class Conduits or the Bank Investors, as
applicable, and (y) the Senior Class Conduits may, at their respective option,
or the Bank Investors shall, if the related Senior Class Conduit has assigned
its interest in the Senior Class Certificate Principal Balance in whole to the
related Bank Investors and if so requested under subsection 2.2(b), accept such
conveyance, transfer and assignment from the Transferor of, without recourse
except as provided herein and in the other Transaction Documents, an additional
undivided interest in the Trust in the amount specified in such Additional
Investment Certificate (each, an "Additional Investor Amount"); provided that:
-------------------------- --------
13
(i) such Additional Investor Amount shall not cause the Senior Class
Certificate Balance for any Class plus the Interest Component of all Related
----
Commercial Paper issued by the related Senior Class Conduit and then
outstanding, if any, to exceed the Senior Class Facility Limit for such Class;
(ii) the sum of the Senior Class Investor Amounts for all Classes
shall not exceed the lesser of (x) an amount equal to, without duplication, the
sum of: (I) all Collections of Principal Receivables on deposit in the Series
1998-2 Principal Account, (II) all Collections of Principal Receivables on
deposit in the Collection Account with respect to the Amortizing Investor
Classes awaiting transfer to the Series 1998-2 Principal Account on the next
succeeding Distribution Date or awaiting distribution to the Certificateholders
of the Amortizing Investor Classes on the next succeeding Distribution Date, and
(III) all Collections of Principal Receivables previously paid to the
Certificateholders of the Amortizing Investor Classes, and (y) $245,500,000 or
such other amount as shall have been agreed to in writing by the Transferor, the
Class Agents, the Purchasers and the Bank Investors;
(iii) after giving effect to such Additional Investor Amount, the
Transferor Amount as of the Business Day immediately preceding the date of the
Additional Investment Certificate and as reported in such Additional Investment
Certificate, shall not be less than the Minimum Transferor Amount;
(iv) after giving effect to such Additional Investor Amount, the
Subordinate Class Investor Amount, as of the Business Day immediately preceding
the date of the Additional Investment Certificate and as reported in such
Additional Investment Certificate, shall not be less than the Minimum
Enhancement Amount;
(v) the amounts on deposit in the Spread Account shall not be less
than the Required Spread Account Amount;
(vi) no Potential Pay Out Event or Pay Out Event shall have occurred
and be continuing;
(vii) The Two Month Rolling Spread Percentage (as defined in the
Series Supplement) as most recently calculated shall be equal or greater than
3%; and
(viii) all of the representations and warranties of the Transferor
and the Servicer made herein shall be true and correct as of such date (except
to the extent any such representation or warranty expressly relates to an
earlier date).
14
The Senior Class Conduits or the Bank Investors, as the case may be, shall
acquire such additional interest in consideration of the Senior Class Conduits'
or the Bank Investors', as the case may be, payment to the Transferor in
immediately available funds in an amount equal to the Additional Investor Amount
for the related Senior Class, and the Senior Class Investor Amount for each
Senior Class shall be increased to be equal to the Senior Class Investor Amount
immediately prior to such acquisition plus the Additional Investor Amount for
----
such Senior Class so acquired. Each Additional Investor Amount shall be an
amount that results in the acquisition by each Senior Class, subject to the
limitations on allocation in this Section, of an Additional Investor Amount of
not less than $500,000 and integral multiples of $100,000 in excess thereof.
Each acquisition of an Additional Investor Amount hereunder by a Senior Class
shall be made ratably in accordance with the respective Senior Class Facility
Limits, up to the amount of the Senior Class Facility Limit for such Senior
Class; provided that if one or more (but not all) Senior Class Facility Limits
--------
have been reached, but availability exists under one or more other Senior Class
Facility Limits related to one or more Senior Class, acquisitions of Additional
Investor Amounts hereunder by such Senior Class(es) shall be made ratably among
them in accordance with their respective Senior Class Facility Limits. Bank
Investors of a Senior Class (in the aggregate) shall be made ratably in
accordance with the respective Commitments of such Bank Investors up to the
Commitment of such Bank Investor.
(b) (i) The Transferor may request that the Purchasers or Bank
Investors, as applicable, deposit additional amounts in the related Pre-Funding
Account (any such amount, a "Pre-Funding Account Deposit") as of the first
---------------------------
Business Day of any calendar week. The making of any such Pre-Funding Account
Deposit shall be subject to all of the terms and conditions of this Agreement,
except that the sum of the Pre-Funding Account Deposits made on any Business Day
shall not exceed $75,000,000 and the aggregate amount on deposit in the Pre-
Funding Accounts may not exceed $75,000,000 at any time.
(ii) The Transferor shall deliver to the applicable Class Agent,
by no later than 2:00 P.M. (New York time) on the second Business Day
preceding the Business day on which any Pre-Funding Account Deposit is
requested to be made, an Additional Investment Certificate with respect to
any Pre-Funding Account Deposit to be requested specifying (i) the
aggregate amount of the requested Pre-Funding Account Deposit, (ii) the
date such Pre-Funding Account Deposit is requested to be made, and (iii)
compliance with the limit on the size of the Pre-Funding Account Deposit
and the limit on the amount on deposit in the Pre-Funding Accounts set
forth herein. On the
15
Business Day immediately after each deposit date, each applicable Class
Agent shall report to the Transferor and the Servicer the amount of the
Pre-Funding Account Deposit, if any, made by the related Purchasers or Bank
Investors.
(iii) Each Pre-Funding Account Deposit shall be disbursed to the
Transferor in accordance with Section 9(c) of the Series Supplement,
subject to compliance with the conditions precedent set forth in this
Agreement.
(c) The Transferor may, at its option, request that a Purchaser or
Bank Investor, as applicable, acquire an Additional Investor Amount through a
direct payment by such Purchaser or Bank Investor, as applicable, rather than
through a withdrawal from the related Pre-Funding Account. The Transferor shall
deliver to the applicable Class Agent, by no later than 12:00 noon (New York
time), on the second Business Day prior to the Business Day on which the
proposed increase in the Senior Class Investor Amount is to occur, an Additional
Investment Certificate outlining such request; provided that the sum of the
--------
amounts remitted pursuant to this Section 2.2(c) on any Business Day and any
Pre-Funding Account Deposits made pursuant to Section 2.2(b) on such Business
Day, in each case with respect to a Class, shall be issued in minimum
denominations of $500,000 and in integral multiples of $100,000 in excess
thereof.
(d) If a Senior Class Conduit elects not to acquire any such
Additional Investor Amount, the Transferor (i) may withdraw its request that the
Senior Class Conduits acquire such Additional Investor Amount or (ii) may
request the related Bank Investors to accept an assignment of the Additional
Investor Amount for the related Senior Class Conduit, in which case, the Senior
Class Certificate Principal Balance for such Senior Class Conduit, prior to such
request to acquire such Additional Investor Amount, shall be assigned to the
related Bank Investors. The Transferor may not request and no Bank Investor
shall acquire an Additional Investor Amount on or after the occurrence and
during the continuation of a Potential Pay Out Event or a Pay Out Event or after
the Commitment Termination Date.
(e) In the event the Transferor requests the Senior Class Conduits or
any or all Bank Investors to make any such acquisition of additional interests
in the Trust, the Transferor shall indemnify each Senior Class Conduit and each
such Bank Investor against any loss or expense incurred by any Senior Class
Conduit or any such Bank Investor, either directly or indirectly (including, in
the case
16
of the Senior Class Conduits, through a Program Support Agreement), as a result
of any failure by the Transferor to complete any such acquisition of an
Additional Investor Amount (other than as a result of an election by such Senior
Class Conduit not to acquire such Additional Investor Amount) including, without
limitation, any loss or reasonable out-of-pocket expenses incurred by the Senior
Class Conduits or any such Bank Investor, either directly or indirectly
(including, in the case of the Senior Class Conduits, pursuant to a Program
Support Agreement), by reason of the liquidation or reemployment of funds
acquired by the Senior Class Conduits (or any Program Support Provider) or any
such Bank Investor (including, without limitation, funds obtained by issuing
commercial paper or promissory notes or obtaining deposits as loans from third
parties) for the Senior Class Conduits to fund such acquisition of an Additional
Investor Amount.
(f) Each acquisition of an Additional Investor Amount shall be
subject to the further condition precedent that, prior to the date of such
acquisition, the Transferor shall have delivered to the Agent (and the Agent
shall forward to each Senior Class Agent) on the date that the Additional
Investment Certificate is delivered under subsection 2.2(a), a certification in
form and substance satisfactory to the Agent and each Senior Class Agent, dated
the date that such certificate is delivered, that the conditions specified in
clauses (i) through (viii) of subsection 2.2(a) have been satisfied (it being
understood that such certification may be included on the face of the Additional
Investment Certificate).
SECTION 2.3. Fees. The Transferor shall pay such fees as are set
----
forth in the Fee Letters at the times and in the amounts set forth therein.
SECTION 2.4. Sharing of Payments, Etc. If any Senior Class Conduit or
-------------------------
any Bank Investor (for purposes of this Section only, a "Recipient") shall
---------
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of setoff, or otherwise) on account of Senior Class Certificates owned by
it (other than pursuant to Section 2.2(c) or Section 2.3 or Article IV hereof)
in excess of its ratable share of payments on account of Senior Class
Certificates obtained by the Senior Class Conduits and/or the Bank Investors
entitled thereto, such Recipient shall forthwith purchase from the Senior Class
Conduits and/or the Bank Investors entitled to a share of such amount
participations in the Senior Class Certificates owned by such Persons as shall
be necessary to cause such Recipient to share the excess payment ratably with
each such other Person entitled thereto; provided, however, that if all or any
-------- -------
portion of such excess payment is thereafter recovered from such Recipient, such
purchase from each such other Person shall be rescinded and each such other
Person shall repay to the Recipient the purchase price paid by such
17
Recipient for such participation to the extent of such recovery, together with
an amount equal to such other Person's ratable share (according to the
proportion of (a) the amount of such other Person's required payment to (b) the
total amount so recovered from the Recipient) of any interest or other amount
paid or payable by the Recipient in respect of the total amount so recovered.
SECTION 2.5. Right of Setoff. Without in any way limiting the
---------------
provisions of Section 2.4, each of the Senior Class Conduits and the Bank
Investors is hereby authorized (in addition to any other rights it may have) at
any time after the Termination Date or during the continuance of a Potential Pay
Out Event to setoff, appropriate and apply (without presentment, demand, protest
or other notice which are hereby expressly waived) any deposits and any other
indebtedness held or owing by a Senior Class Conduit or a Bank Investor to, or
for the account of, the Transferor against all amounts owing by the Transferor
to such Senior Class Conduit or Bank Investor under this Agreement (even if
contingent or unmatured), provided that no Senior Class Conduit and no Bank
Investor shall setoff against any property of the Transferor which shall have
been pledged to the Trust or in which the Trust shall have been granted an
interest.
SECTION 2.6. Interest Rate; Eurodollar Rate Protection; Illegality.
-----------------------------------------------------
(a) Prior to the Termination Date. At all times hereafter, but prior
-----------------------------
to the Termination Date, and not with respect to any portion of the Senior Class
Certificate Principal Balance held by any Bank Investor, the Transferor may,
subject to the applicable Senior Class Agent's approval (which approval shall be
transmitted through the Agent) and the limitations described below, request
(which request shall be made through the Agent) that the Senior Class
Certificate Principal Balance held by a Senior Class Conduit be allocated among
one or more funding periods, so that the aggregate amounts so allocated with
respect to such Senior Class Conduit at all times shall equal the Senior Class
Certificate Principal Balance held by such Senior Class Conduit. The Transferor
shall give each Senior Class Agent irrevocable notice (which notice shall be
given through the Agent) by telephone of the new requested funding period(s) at
least two (2) Business Days prior to the expiration of any then existing funding
period; provided, however, that the applicable Senior Class Conduit or the
-------- -------
related Senior Class Agent may select, in its sole discretion, any such new
funding period if (i) the Transferor fails to provide such notice on a timely
basis or (ii) such Senior Class Conduit or the related Senior Class Agent
determines, in its sole discretion, that the funding period requested by the
Transferor is unavailable or for any reason commercially undesirable. Each
Senior Class Conduit confirms that it is its intention to fund all or
substantially all of the Senior Class Certificate Principal
18
Balance held by such Senior Class Conduit by issuing Related Commercial Paper;
provided that such Senior Class Conduit or the related Senior Class Agent may
--------
determine, from time to time, in its sole discretion, that funding such Senior
Class Certificate Principal Balance by means of Related Commercial Paper is not
possible or is not desirable for any reason. In the case of any funding period
outstanding upon the Termination Date, such funding period shall end on such
date. In the case of the Senior Class of which EFC is a member, if any Program
Support Provider acquires from EFC an interest in the Senior Class Certificate
Principal Balance held by EFC, then Bank of America may exercise the right of
selection granted to EFC or its related Senior Class Agent hereby. If any
Program Support Provider acquires from a Purchaser an interest in the Senior
Class Certificate Principal Balance held by such Purchaser, then the initial
funding period applicable to any such interest shall be a period of not greater
than 14 days and shall accrue Carrying Costs on the basis of the Bank Base Rate.
Thereafter, with respect to such portion of the Senior Class Certificate
Principal Balance and with respect to any other portion of the Senior Class
Certificate Principal Balance held by the Program Support Providers (or any of
them), provided that the Termination Date shall not have occurred, Carrying
Costs shall accrue on the basis of either the Bank Base Rate or the Adjusted
LIBOR Rate (with a funding period of either one month or three months), as
determined by Bank of America.
Any portion of the Senior Class Certificate Principal Balance
transferred to the Bank Investors (or any of them) pursuant to this Agreement
prior to the Termination Date, shall initially bear interest at the Bank Base
Rate (with a funding period of either one month or three months) for a period of
not greater than 14 days. Thereafter, with respect to such portion of the
Senior Class Certificate Principal Balance and with respect to any other portion
of the Senior Class Certificate Principal Balance held by the Bank Investors (or
any of them), provided that the Termination Date shall not have occurred, the
interest rate applicable thereto shall be, at the Transferor's option, either
the Bank Base Rate or the Adjusted LIBOR Rate for such period as may be
specified by the Transferor. The Transferor shall give the Agent irrevocable
notice by telephone (and the Agent shall immediately forward such notice to the
applicable Senior Class Agent) of each requested funding period (which funding
period in the case of the Adjusted LIBOR Rate shall be a period of either one or
three months) at least two (2) Business Days prior to the expiration of any then
existing funding period; provided, however, that such Senior Class Agent may
-------- -------
select, in its sole discretion, the term of any such subsequent funding period
and the rate applicable thereto if (i) the Transferor fails to provide such
notice on a timely basis or (ii) such Senior Class Agent determines, in its sole
discretion, that the requested funding period is unavailable or for any reason
commercially undesirable.
19
Each Senior Class Agent confirms that it is its intention to fund all or
substantially all of the Senior Class Certificate Principal Balance funded by
the related Bank Investors at the Adjusted LIBOR Rate; provided that such Senior
--------
Class Agent may determine, from time to time, in its sole discretion, that
funding the related Senior Class Certificate Principal Balance by such means is
not possible or is not desirable for any reason. In the case of any funding
period outstanding upon the occurrence of the Termination Date, such funding
period shall end on the date of such occurrence.
(b) After the Termination Date. At all times on and after the
--------------------------
Termination Date, the Senior Class Certificate Principal Balance (or applicable
portion thereof) shall bear interest at the Bank Base Rate plus 2.0%; provided,
---- --------
however, that in the event the Termination Date has occurred because a Conduit
-------
Termination Event has occurred, the Senior Certificate Principal Balance (or
applicable portion thereof) shall bear interest at the Adjusted LIBOR Rate.
(c) Eurodollar Rate Protection. If a Senior Class Agent is unable to
--------------------------
obtain on a timely basis the information necessary to determine the LIBOR Rate
for any proposed funding period, then
(i) the Agent (acting at the direction of such Senior Class
Agent) shall forthwith notify the Bank Investors and the Transferor that
the Adjusted LIBOR Rate cannot be determined for such funding period, and
(ii) while such circumstances exist, none of the Senior Class
Agents, the Bank Investors or the Agent shall allocate the Senior Class
Certificate Principal Balance purchased during such period or reallocate
the Senior Class Certificate Principal Balance allocated to any then
existing funding period ending during such period, to a funding period
which accrues Carrying Costs on the basis of the Adjusted LIBOR Rate.
If, with respect to any outstanding funding period which accrues
Carrying Costs on the basis of the Adjusted LIBOR Rate, the Senior Class
Conduits or any of the Bank Investors owning any interest in Senior Class
Certificates notifies the Senior Class Agent that it or any Program Support
Provider is unable to obtain matching deposits in the London interbank market to
fund its purchase or maintenance of such interest in the Senior Class
Certificates or that the Adjusted LIBOR Rate applicable to the Senior Class
Certificate Principal Balance will not adequately reflect the cost to the Person
of funding or maintaining its respective interest in the Senior Class
Certificates for such funding period then the Agent (acting at the direction of
such Senior Class Agent) shall forthwith so notify
20
the Transferor, whereupon neither any Senior Class Conduit nor the Bank
Investors, as applicable, shall, while such circumstances exist, allocate any
Senior Class Certificate Principal Balance acquired during such period or
reallocate the Senior Class Certificate Principal Balance allocated to any
funding period ending during such period, to a funding period which accrues
Carrying Costs on the basis of the Adjusted LIBOR Rate.
(d) Illegality. Notwithstanding any other provision of this
----------
Agreement, if a Senior Class Conduit or any of the Bank Investors, as
applicable, shall notify the Senior Class Agent that such Person has determined
(or has been notified by any Program Support Provider) that the introduction of
or any change in or in the interpretation of any law or regulation makes it
unlawful (either for a Senior Class Conduit, such Bank Investor, or such Program
Support Provider, as applicable), or any central bank or other governmental
authority asserts that it is unlawful, for the Senior Class Conduit, such Bank
Investor or such Program Support Provider, as applicable, to fund the purchases
or maintenance of the Senior Class Certificate Principal Balance at the Adjusted
LIBOR Rate, then (x) as of the effective date of such notice from such Person to
the Senior Class Agent, the obligation or ability of such Senior Class Conduit
or such Bank Investor, as applicable, to fund its purchase or maintenance of the
Senior Class Certificate Principal Balance at the Adjusted LIBOR Rate shall be
suspended until such Person notifies the Senior Class Agent that the
circumstances causing such suspension no longer exist and (y) such Senior Class
Certificate Principal Balance allocated to each funding period which accrues
Carrying Costs on the basis of the Adjusted LIBOR Rate in which such Person owns
an interest shall either (1) if such Person may lawfully continue to maintain
such interest in the Senior Class Certificate Principal Balance at the Adjusted
LIBOR Rate until the last day of the applicable funding period, be reallocated
on the last day of such funding period to another funding period in respect of
which the Senior Class Certificate Principal Balance accrues Carrying Costs on a
basis other than the Adjusted LIBOR Rate or (2) if such Person shall determine
that it may not lawfully continue to maintain such interest in the Senior Class
Certificate Principal Balance at the Adjusted LIBOR Rate until the end of the
applicable funding period, such Person's share of the Senior Class Certificate
Principal Balance allocated to such funding period shall be deemed to accrue
Carrying Costs on the basis of the Bank Base Rate from the effective date of
such notice until the end of such funding period.
(e) Compensation. The Transferor shall compensate each Senior Class
------------
Conduit and each Bank Investor, upon its written request (which request shall
set forth in reasonable detail the basis for requesting such amounts and shall
be
21
delivered to the Transferor through the Agent), for all reasonable losses, out-
of-pocket expenses and liabilities (including, without limitation, any interest
paid by such Senior Class Conduit or Bank Investor to lenders of funds borrowed
by it to make or carry any Senior Class Certificate Principal Balance and any
loss sustained by such Senior Class Conduit or Bank Investor in connection with
the re-employment of such funds), which such Senior Class Conduit or Bank
Investor actually sustains if any payment in respect of any portion of the
Senior Class Certificate Principal Balance funded by such Senior Class Investor
or Bank Investor at a fixed rate occurs on a date which is not a day agreed upon
by the Transferor and such Senior Class Conduit or Bank Investor.
SECTION 2.7. Notice of Reinvestment Termination Date. A Senior Class
---------------------------------------
Conduit that elects not to maintain its interest in the related Senior Class
Investor Amount shall use commercially reasonable efforts to give the related
Senior Class Agent and the Agent two (2) Business Days prior written notice of
such election; provided that the Senior Class Conduit shall give the related
--------
Senior Class Agent and the Agent notice immediately after such election is made
by such Senior Class Conduit. The Agent shall use commercially reasonable
efforts to give the Transferor by facsimile immediate written notice of such
election. Notwithstanding anything to the contrary in this Section 2.7, the
giving of such notice shall not be a condition to the effectiveness of any such
election and the failure to give any such notice shall not prevent any transfer
in connection with such election; provided, that the foregoing shall not relieve
--------
such Senior Class Conduit and the Agent of their notice obligations and the
Transferor shall retain all rights and remedies with respect to the failure to
give any such notice.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.1. Representations and Warranties of the Transferor. As of
------------------------------------------------
the date hereof and as of each day that an acquisition of an Additional Investor
Amount is made hereunder, the Transferor represents and warrants to the Agent,
each Senior Class Agent, each Senior Class Conduit and each Bank Investor, that
all representations and warranties described in this Section 3.1 are true and
correct as of such day as though made on and as of such day:
(a) Corporate Existence and Power. The Transferor is a corporation
-----------------------------
duly organized and validly existing in good standing under the laws of its
22
jurisdiction of incorporation, and has all corporate power, authority and legal
right and all material governmental licenses, authorizations, consents and
approvals required to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted in each
jurisdiction in which it presently owns properties and presently conducts its
business, except where the absence of any such licenses, authorizations,
consents or approvals would not have a Material Adverse Effect, and to execute,
deliver and perform its obligations under this Agreement, the Master Pooling and
Servicing Agreement, the Series Supplement and all other Transaction Documents
to which the Transferor is a party, and to execute and deliver to the Senior
Class Agents the Senior Class Certificates pursuant to the Series Supplement.
(b) Due Qualification. The Transferor is duly qualified to do
-----------------
business and is in good standing (or is exempt from such requirement) in each
jurisdiction in which the nature of its business requires it to be so qualified,
and has obtained all necessary licenses and approvals in each jurisdiction in
which the failure to be so qualified or to obtain such licenses and approvals
would have a Material Adverse Effect.
(c) Corporate and Governmental Authorization; Contravention. The
-------------------------------------------------------
execution and delivery by the Transferor of this Agreement, each Receivables
Purchase Agreement, the Master Pooling and Servicing Agreement, the Series
Supplement, the Fee Letters, the Certificates and the other Transaction
Documents to which the Transferor is a party, the performance by the Transferor
of the transactions contemplated hereby and thereby and the fulfillment by the
Transferor of the terms hereof and thereof, are within the Transferor's
corporate powers, have been duly authorized by all necessary corporate action,
require no action, approval or consent by or in respect of, or filing with, any
Official Body or official thereof that has not been taken or obtained, and do
not conflict with, violate or result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, any Requirement of Law applicable to the Transferor, or the
Articles of Incorporation or Bylaws of the Transferor or any agreement,
judgment, injunction, order, writ, decree or other instrument binding upon the
Transferor, or result in the creation or imposition of any Lien on the assets of
the Transferor or any of its Subsidiaries.
(d) Binding Effect. Each of this Agreement, the Master Pooling and
--------------
Servicing Agreement, the Series Supplement, the Fee Letters, the Certificates
and the other Transaction Documents to which the Transferor is a party
constitutes the legal, valid and binding obligation of the Transferor,
enforceable
23
against the Transferor in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
moratorium or other similar laws now or hereafter in effect affecting the rights
of creditors generally and to general equitable principles whether or not
considered at law or in equity, and to limitations upon indemnification and
contribution contained in applicable securities laws and regulations.
(e) Accuracy of Information. All information heretofore furnished by
-----------------------
the Transferor to the Agent, any Senior Class Agent, any Senior Class Conduit or
any Bank Investor for purposes of or in connection with this Agreement, the
Master Pooling and Servicing Agreement, the Series Supplement or any transaction
contemplated hereby or thereby is, and all such information hereafter furnished
by the Transferor to any such party will be, true and accurate in every material
respect, on the date such information is stated or certified.
(f) Tax Status. The Transferor has filed all tax returns (federal,
----------
state and local) required to be filed and has paid or made adequate provision
consistent with GAAP for the payment of all its taxes, assessments and other
governmental charges.
(g) No Proceedings. Except as set forth in Exhibit G hereto, there
-------------- ---------
are no actions, suits, proceedings or investigations pending or, to the best
knowledge of the Transferor, threatened against or affecting the Transferor or
any Affiliate of the Transferor or their respective properties, in or before any
court, regulatory body, administrative agency, arbitrator or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Agreement, the
Master Pooling and Servicing Agreement, the Series Supplement, the Certificates
or the other Transaction Documents, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, the Master Pooling and Servicing Agreement, the Series Supplement,
the Certificates or the other Transaction Documents, or (iii) seeking any
determination or ruling that, individually or in the aggregate, would have a
Material Adverse Effect.
(h) Use of Proceeds. The Transferor is not engaged in the business
---------------
of extending credit for the purposes of purchasing or carrying margin stock, and
no proceeds of any acquisition of an interest in the Senior Class Certificates,
directly or indirectly, will be used for a purpose that violates, or would be
inconsistent with, Regulations T, U and X promulgated by the Federal reserve
Board from time to time.
24
(i) Aggregate Principal Balance. On each day, the product of (i) the
---------------------------
daily aggregate Floating Allocation Percentage with respect to Default Amounts
for all Senior Classes and (ii) the sum of the Excess Funding Amount and the
Aggregate Principal Receivables, is not less than the sum of the Senior Class
Certificate Principal Balances for all Senior Classes.
(j) Transferor Amount; Subordinate Class Investor Amount. After
----------------------------------------------------
giving effect to the issuance of the Senior Class Certificates on the Closing
Date, (i) the Transferor Amount is not less than the Minimum Transferor Amount
and (ii) the Subordinate Class Investor Amount is not less than the Minimum
Enhancement Amount.
(k) Credit Card Guidelines. Since July 15, 1999, there have been no
----------------------
material changes in the Credit Card Guidelines other than as permitted under the
Master Pooling and Servicing Agreement. Since such date, no material adverse
change has occurred in the overall rate of collection of the Receivables.
(l) No Pay Out Event. No event has occurred and is continuing and no
----------------
condition exists which constitutes a Pay Out Event or a Potential Pay Out Event.
(m) Not an Investment Company. The Transferor is not, and is not
-------------------------
controlled by, an "investment company" within the meaning of the 1940 Act, or is
exempt from all provisions of such Act.
(n) ERISA. No liability exists under Title IV of ERISA or under
-----
Section 412 of the Internal Revenue Code arising out of a Defined Benefit Plan
or a Multiemployer Plan of the Transferor or any ERISA Affiliate.
(o) Bulk Sales. No transaction contemplated by this Agreement, any
----------
Receivables Purchase Agreement or the Master Pooling and Servicing Agreement
requires compliance with any bulk sales act or similar law.
(p) Transfers Under Receivables Purchase Agreement. Each Receivable
----------------------------------------------
which has been transferred to the Transferor by an Eligible Originator has been
purchased by the Transferor from such Eligible Originator pursuant to, and in
accordance with, the terms of a Receivables Purchase Agreement.
(q) Reasonable Equivalent Value. The Transferor has given reasonably
---------------------------
equivalent value to each Eligible Originator in consideration for the
25
transfer to the Transferor of the applicable Receivables and Collections and
Related Security, if any, from such Eligible Originator, and each such transfer
shall not have been made for or on account of an antecedent debt owed by such
Eligible Originator to the Transferor. The Transferor has received reasonably
equivalent value in consideration for the transfer to the Trust of the
Receivables and Collections and Related Security, if any, and will have received
reasonably equivalent value in consideration for the sale of the Senior
Certificates (and any sale of additional interests in the Trust in connection
with any Additional Investor Amount) to the Senior Class Conduits and the Bank
Investors.
(r) Representations and Warranties. Each representation and warranty
------------------------------
of the Transferor set forth in Article IV of each Receivables Purchase Agreement
and in Article II of the Master Pooling and Servicing Agreement is true and
correct in all material respects and the Transferor hereby remakes all such
representations and warranties for the benefit of the Agent, each Senior Class
Agent, each Senior Class Conduit and each Bank Investor.
(s) Validity of Certificates. The Certificates have been or will be
------------------------
issued pursuant to the terms of the Master Pooling and Servicing Agreement and
the Series Supplement and, as or when executed by the Transferor and
authenticated by the Trustee in accordance with the Master Pooling and Servicing
Agreement and the Series Supplement and delivered pursuant to this Agreement,
have been or will be validly issued and outstanding and entitled to the benefits
of the Master Pooling and Servicing Agreement and the Series Supplement. The
Certificates are or will be in all material respects in the form contemplated by
the Master Pooling and Servicing Agreement and the Series Supplement. At the
time of transfer to the Purchasers hereunder, the Transferor had or shall have
good and marketable title to the Certificates free and clear of any Lien.
(t) No General Solicitation. None of the Transferor or any of its
-----------------------
affiliates (as defined in Rule 501(b) under the Act) or any Person (other than
the Purchasers and their respective affiliates, as to whom the Transferor makes
no representation) acting on its behalf has engaged, in connection with the
offering of the Senior Class Certificates, in any form of general solicitation
or general advertising within the meaning of Rule 502(c) under the Act.
(u) No Registration under the Act; Trust Indenture Act. It is not
--------------------------------------------------
necessary in connection with the offer, sale and delivery of the Certificates to
the Purchasers to register the Certificates under the Act. The Master Pooling
and
26
Servicing Agreement is not required to be qualified under the Trust Indenture
Act of 1939.
The representations and warranties set forth in this Section shall
survive the sale of the Senior Class Certificates to the Senior Class Conduits
or the Bank Investors and the acquisition by the Senior Class Conduits or the
Bank Investors of any additional interests in the Trust in connection with any
Additional Investor Amounts. Upon discovery by the Transferor, the Agent, any
Senior Class Agent, any Senior Class Conduit or any Bank Investor of a breach of
any of the foregoing representations and warranties, the party discovering such
breach shall give prompt written notice thereof to each other party, provided
that the failure by any such party to give any such notice shall not impair any
of such parties' rights hereunder.
SECTION 3.2 Representations and Warranties of the Servicer. As of
----------------------------------------------
the date hereof and as of each day that an acquisition of an Additional Investor
Amount is made hereunder, the Servicer hereby makes and shall be deemed to have
made the following representations and warranties:
(a) Organization and Good Standing. The Servicer is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all corporate power, authority and
legal right and all material governmental licenses, authorizations, consents and
approvals required to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted in each
jurisdiction in which it presently owns properties and presently conducts its
business, except where the absence of any such licenses, authorizations,
consents or approvals would not have a Material Adverse Effect, and to execute,
deliver and perform its obligations under this Agreement, the Master Pooling and
Servicing Agreement and all other Transaction Documents to which it is a party
and to service the Receivables as required under federal and state law.
(b) Due Qualification. The Servicer is duly qualified to do
-----------------
business and is in good standing (or is exempt from such requirements) in each
jurisdiction in which the nature of its business requires it to be so qualified
and has obtained all necessary licenses and approvals in each jurisdiction in
which the failure to be so qualified or to obtain such licenses and approvals
would have a Material Adverse Effect or a material adverse effect on the
Servicer's ability to perform its obligation under the Master Pooling and
Servicing Agreement or to service the Receivables as required under federal and
state law.
27
(c) Corporate and Governmental Authorization; Contravention. The
-------------------------------------------------------
execution and delivery and performance by the Servicer of this Agreement and the
other Transaction Documents to which the Servicer is a party, the performance by
the Servicer of the transactions contemplated hereby and thereby and the
fulfillment by the Servicer of the terms hereof and thereof are within the
Servicer's corporate powers, have been duly authorized by all necessary
corporate action, require no action, consent or approval by or in respect of, or
filing with, any Official Body or official thereof that has not been taken or
obtained, and do not conflict with, violate or result in any breach of any of
the terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default under, any Requirement of Law applicable to the
Servicer, or the Articles of Incorporation or Bylaws of the Servicer or any
agreement, judgment, injunction, order, writ, decree or other instrument binding
upon the Servicer and will not result in the creation or imposition of any Lien
on assets of the Servicer or any of its Subsidiaries.
(d) Binding Effect. Each of this Agreement and the other Transaction
--------------
Documents to which the Servicer is a party constitutes the legal, valid and
binding obligation of the Servicer, enforceable against the Servicer in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect
affecting the enforcement of creditors' rights in general and to general
equitable principles, whether or not considered at law or in equity, and to
limitations upon indemnification and contribution contained in applicable
securities laws and regulations.
(e) Accuracy of Information. All information heretofore furnished by
-----------------------
the Servicer to the Transferor, the Agent, any Senior Class Agent, any Senior
Class Conduit or any Bank Investor for purposes of or in connection with this
Agreement, the Master Pooling and Servicing Agreement, the Series Supplement or
any transaction contemplated hereby or thereby is, and all such information
hereafter furnished by the Servicer to any such party will be, true and accurate
in every material respect, on the date such information is stated or certified.
(f) Tax Status. The Servicer has filed all tax returns (federal,
----------
state and local) required to be filed and has paid or made adequate provision
consistent with GAAP for the payment of all taxes, assessments and other
governmental charges.
(g) No Proceedings. Except as set forth in Exhibit G hereto, there
-------------- ---------
are no proceedings or investigations pending or, to the best knowledge of the
28
Servicer, threatened against the Servicer or any Affiliate of the Servicer
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Agreement or
the other Transaction Documents, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement and the other Transaction Documents or (iii) seeking any determination
or ruling that, individually or in the aggregate, would have a Material Adverse
Effect.
(h) Credit Card Guidelines. Since July 15, 1999, there have been no
----------------------
material changes in the Credit Card Guidelines other than as permitted hereunder
and under the Master Pooling and Servicing Agreement. Since such date, no
material adverse change has occurred in the overall rate of collection of the
Receivables.
(i) Collections and Servicing. Since July 15, 1999, there has been
-------------------------
no material adverse change in the ability of the Servicer to service and collect
the Receivables and no material adverse change has occurred in the overall rate
of collections of Receivables.
(j) Not an Investment Company. The Servicer is not an "investment
-------------------------
company" within the meaning of the 1940 Act, or is exempt from all provisions of
such Act.
(k) ERISA. The Servicer is in compliance in all material respects
-----
with ERISA.
The representations and warranties set forth in this Section shall
survive the sale of the Senior Class Certificates to the Senior Class Conduits
or the Bank Investors and the acquisition by the Senior Class Conduits or the
Bank Investors of any additional interests in the Trust in connection with any
Additional Investor Amounts. Upon discovery by the Servicer, the Transferor,
the Agent, any Senior Class Agent, any Senior Class Conduit or any Bank Investor
of a breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice thereof to each other
party, provided that the failure by any such party to give any such notice shall
not impair any of such parties' rights hereunder.
SECTION 3.3 Covenants of the Transferor. At all times from the date
---------------------------
hereof to the later to occur of (i) the Termination Date or (ii) the date on
which all amounts due to the Senior Certificateholders under this Agreement and
the other
29
Transaction Documents shall have been paid in full, unless the Agent and each
Senior Class Agent shall otherwise consent in writing:
(a) Financial Reporting. The Transferor will, and will cause each
-------------------
Eligible Originator and each of such Eligible Originator's Subsidiaries to,
maintain, for itself and each of its respective Subsidiaries, a system of
accounting established and administered in accordance with GAAP, and will
furnish to the Agent (and the Agent shall furnish to each Senior Class Agent):
(i) Annual Reports. Within one hundred (100) days after the
--------------
close of the Transferor's and Saks' fiscal years, (beginning with the
fiscal year ending in 2001) audited financial statements, prepared in
accordance with GAAP on a consolidated basis for Saks and its Subsidiaries,
in each case, including balance sheets as of the end of such period,
related statements of operations, shareholder's equity and cash flows,
accompanied by an unqualified audit report certified by
PricewaterhouseCoopers, LLP, or other independent certified public
accountants, acceptable to the Agent, prepared in accordance with GAAP.
.
(ii) Quarterly Reporting. Within fifty (50) days after the close
-------------------
of the first three quarterly periods of each of the Transferor's and Saks'
fiscal years, for (x) the Transferor and (y) for Saks and its Subsidiaries,
in each case, consolidated unaudited balance sheets and consolidated
related statements of operations and cash flows as at the end of such
period for such period and for the period from the beginning of such fiscal
year to the end of such quarter, and showing the computation of each of the
financial ratios and restrictions set forth in Section 3.4(d) hereof all
certified by its chief financial officer, chairman, president, treasurer or
any executive or senior vice president.
(iii) Compliance Certificate. Together with the financial
----------------------
statements required hereunder, a compliance certificate signed by the chief
financial officer, chairman, president, treasurer or any executive or
senior vice president of the Transferor or Saks, as applicable, stating
that (x) the attached financial statements have been prepared in accordance
with GAAP and accurately reflect the financial condition of the Transferor
or Saks as applicable (in the case of quarterly statements, subject to
normal adjustments) and (y) to the best of such Person's knowledge, no Pay
Out Event or Potential Pay Out Event exists, or if any Pay Out Event or
Potential Pay Out Event exists, stating the nature and status thereof.
30
(vi) Shareholders Statements and Reports. Promptly upon the
-----------------------------------
furnishing thereof generally to the shareholders of Saks, copies of all
financial statements, reports and proxy statements so furnished to the
extent not included in the filings provided pursuant to paragraph (v)
below.
(v) S.E.C. Filings. Promptly upon (x) the filing thereof,
--------------
copies of all annual, quarterly, monthly or other regular reports and
reports on Form 8-K and (y) the effectiveness thereof, copies of all
registration statements, in each case which Saks or any subsidiary files
with the Securities and Exchange Commission (excluding any filings on Form
S-8).
(vi) Notice of Pay Out Events or Potential Pay Out Events. As
----------------------------------------------------
soon as possible and in any event within two (2) days after the occurrence
of each Pay Out Event or each Potential Pay Out Event, a statement of the
chief financial officer or chief accounting officer of the Transferor
setting forth details of such Pay Out Event or Potential Pay Out Event and
the action which the Transferor proposes to take with respect thereto.
(vii) Change in Credit Card Guidelines and Debt Ratings. Within
-------------------------------------------------
thirty (30) days after the date of any material change in or amendment to
the Credit Card Guidelines is made, a copy of the Credit Card Guidelines
then in effect indicating such change or amendment. Within fifteen (15)
days after any change in Saks' public or private debt ratings by any rating
agency that has been requested by Saks to provide any such rating, if any,
a written certification of Saks' public and private debt ratings after
giving effect to any such change.
(viii) Credit Card Guidelines. Within ten (10) Business Days of
----------------------
the request of the Agent or any Senior Class Agent (which request by any
Senior Class Agent shall be made through the Agent), a complete copy of the
Credit Card Guidelines then in effect.
(ix) ERISA. Promptly after the filing or receiving thereof,
-----
copies of all reports and notices with respect to any Reportable Event
which the Transferor, any Eligible Originator or any ERISA Affiliate of the
Transferor or any Eligible Originator files under ERISA with the Internal
Revenue Service, the PBGC or the U.S. Department of Labor or which the
Transferor, any Eligible Originator or any ERISA Affiliates of the
Transferor or any Eligible Originator receives from the Internal Revenue
Service, the PBGC or the U.S. Department of Labor.
31
(x) Other Information. Such other information (including non-
-----------------
financial information) as the Agent or any Senior Class Agent may from time
to time reasonably request (which request by any Senior Class Agent shall
be made through the Agent) with respect to any Eligible Originator, the
Transferor or any Subsidiary of any of the foregoing.
(b) Conduct of Business. The Transferor will carry on and conduct
-------------------
its business in substantially the same manner and in substantially the same
fields of enterprise as it is presently conducted and do all things necessary to
remain duly incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted. The Transferor may merge or consolidate with any Subsidiary of Saks
that is a special purpose entity designed to be a bankruptcy-remote financing
vehicle (i) where the successor entity, if not the Transferor, adopts the
obligations of the Transferor hereunder, (ii) no Pay Out Event, Potential Pay
Out Event or Servicer Default shall have occurred and be continuing whether as a
result thereof or otherwise, and (iii) upon delivery of an opinion of counsel of
the Transferor that the assets and liabilities of such entity would not be
consolidated with the assets and liabilities of Saks.
(c) Compliance with Laws. The Transferor will comply with all laws,
--------------------
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it or its respective properties may be subject.
(d) Furnishing of Information and Inspection of Records. The
---------------------------------------------------
Transferor will, and will exercise its rights under Section 5.1(c) of each
Receivable Purchase Agreement to obtain information from each Eligible
Originator in order to, furnish to the Agent (which the Agent shall furnish to
each Senior Class Agent) from time to time such information with respect to the
Receivables as the Agent or such Senior Class Agent may reasonably request
(which request by any Senior Class Agent shall be made through the Agent),
including, without limitation, listings identifying the Obligor and the
Outstanding Principal Balance for each Receivable. The Transferor will permit,
and will exercise its rights under Section 5.1(c) of each Receivable Purchase
Agreement in order to permit, at any time and from time to time during regular
business hours and upon reasonable prior notice (which notice by any Senior
Class Agent shall be given through the Agent), the Agent and each Senior Class
Agent, or their respective agents or representatives, (i) to examine and make
copies of and take abstracts from all Records (at the expense of the Transferor)
and (ii) to visit the offices and properties of the Transferor or such Eligible
Originator, as applicable, for the purpose of examining such Records, and to
discuss matters
32
relating to Receivables or the Transferor's or such Eligible Originator's
performance hereunder and under the other Transaction Documents to which such
Person is a party with any of the officers, directors, employees or independent
public accountants of the Transferor or such Eligible Originator, as applicable,
having knowledge of such matters.
(e) Keeping of Records and Books of Account. The Transferor will,
---------------------------------------
and will cause each Eligible Originator to, maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Receivables in the event of the
destruction of the originals thereof), and keep and maintain, all documents,
books, records and other information reasonably necessary or customary for the
collection of all Receivables (including, without limitation, records adequate
to permit the daily identification of each new Receivable and all Collections of
and adjustments to each existing Receivable). The Transferor will give the
Agent (and the Agent shall give each Senior Class Agent) notice of any material
change in the administrative and operating procedures of the Transferor or any
Eligible Originator.
(f) Sale Treatment. The Transferor will not (i) account for
--------------
(including for accounting and tax purposes), or otherwise treat, the
transactions contemplated by each Receivables Purchase Agreement in any manner
other than as a sale of the Receivables by such Eligible Originator to the
Transferor, or (ii) account for (other than for tax purposes) or otherwise treat
the transactions contemplated hereby in any manner other than as a sale of an
undivided percentage ownership interest in the Receivables by the Transferor to
the Senior Class Conduits or the Bank Investors, as applicable. In addition,
the Transferor shall, and shall cause each Eligible Originator to, disclose (in
a footnote or otherwise) in all of its respective financial statements
(including any such financial statements consolidated with any other Persons'
financial statements) the existence and nature of the transaction contemplated
by the Master Pooling and Servicing Agreement and by each Receivables Purchase
Agreement and the interest of the Transferor (in the case of an Eligible
Originator's financial statements), the Senior Class Conduits and the Bank
Investors in the Affected Assets.
(g) Corporate Documents. The Transferor shall not amend, alter,
-------------------
change or repeal any Articles of its Articles of Incorporation without the prior
written consent of the Agent and each Senior Class Agent.
(h) No Sales, Liens, Etc. Except as otherwise permitted by the
--------------------
Master Pooling and Servicing Agreement, the Series Supplement, this Agreement
33
or any other Transaction Document, the Transferor will not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Lien upon (or the filing of any financing statement with respect to),
any of the Trust Property.
(i) No Extension or Amendment of Receivables; Discount Percentage.
-------------------------------------------------------------
Except as otherwise permitted by the Transaction Documents, the Transferor will
not, and will not change or waive Section 5.1(f) of any Receivable Purchase
Agreement to permit any Eligible Originator to, extend, amend or otherwise
modify the terms of any Receivable, or amend, modify or waive any term or
condition of any Account related thereto. The Transferor further covenants
that, except as otherwise required by any Requirement of Law, it shall not, and
shall not cause or otherwise permit the Servicer at any time to, reduce the
periodic finance charges assessed on any Receivable or other fees on any Account
if, as a result of such reduction, the reasonable expectation of the Portfolio
Adjusted Yield as of such date would be less than 2.00%.
(j) Changes to Account Agreements. The Transferor shall not change
-----------------------------
the terms and provisions of the Account Agreements or the Credit Card Guidelines
in any respect (including, without limitation, the calculation of the amount,
and the timing, of uncollectible Receivables) except to the extent permitted by
the Master Pooling and Servicing Agreement.
(k) No Change in Business or Credit Card Guidelines. The Transferor
-----------------------------------------------
will not make any change in the character of its business or in the Credit Card
Guidelines, which change would, in either case, impair the collectibility of any
substantial portion of the Receivables or otherwise result in a Material Adverse
Effect.
(l) Amendment of Receivables Purchase Agreement, Master Pooling and
---------------------------------------------------------------
Servicing Agreement and Series Supplement. The Transferor will not amend,
-----------------------------------------
waive, modify or supplement any Receivables Purchase Agreement, the Master
Pooling and Servicing Agreement, the Series Supplement or any other Transaction
Document to which it is a party without the prior written consent of the Agent
and each Senior Class Agent to the substance and form of any such amendment,
modification, waiver or supplement and, in addition, will not permit any
Eligible Originator to take (or acquiesce in the taking of any such action) any
action (including any omission to act) under any Transaction Document to which
it is a party that would have a material adverse effect on the Agent, any Senior
Class
34
Conduit or any Bank Investor or which is inconsistent with the terms of the
Master Pooling and Servicing Agreement, the Series Supplement or this Agreement.
(m) Other Debt. Except as permitted by this Agreement, the Master
----------
Pooling and Servicing Agreement or the Receivables Purchase Agreement, the
Transferor will not create, incur, assume or suffer to exist any indebtedness
whether current or funded, or any other liability other than (i) indebtedness of
the Transferor representing fees, expenses and indemnities arising hereunder,
under any Series Supplement, any Enhancement or under a Receivables Purchase
Agreement for the purchase price of the Receivables under such Receivables
Purchase Agreement, and (ii) other indebtedness incurred in the ordinary course
of its business, the amount thereof which is past due not to exceed $10,500 at
any time outstanding.
(n) ERISA Matters. The Transferor will not (i) engage in any
-------------
prohibited transaction (as defined in Section 4975 of the Code and Section 406
of ERISA) for which an exemption is not available or has not previously been
obtained from the U.S. Department of Labor; (ii) permit to exist any accumulated
funding deficiency (as defined in Section 302(a) of ERISA and Section 412(a) of
the Code) or funding deficiency with respect to any Defined Benefit Plan other
than a Multiemployer Plan that could reasonably result in the PBGC or IRS filing
a lien; (iii) fail to make any payments to any Multiemployer Plan that the
Transferor, such Eligible Originator or any ERISA Affiliate of the Transferor or
such Eligible Originator is required to make under the agreement relating to
such Multiemployer Plan or any law pertaining thereto; (iv) terminate any
Defined Benefit Plan so as to result in any liability; or (v) permit to exist
any occurrence of any Reportable Event which represents a material risk of a
liability to the Transferor, such Eligible Originator, or any ERISA Affiliate of
the Transferor or such Eligible Originator under ERISA or the Code.
(o) Receivables Purchase Agreement. The Transferor, in its capacity
------------------------------
as purchaser of the Receivables from the Eligible Originators pursuant to the
related Receivables Purchase Agreement, will at all times enforce the covenants
and agreements of each Eligible Originator in each Receivables Purchase
Agreement. With respect to any Receivable sold by an Eligible Originator to the
Transferor, the Transferor shall, and shall cause such Eligible Originator to,
effect such sale under, and pursuant to the terms of, a Receivables Purchase
Agreement, including, without limitation, the payment by the Transferor, either
in cash, by increase in the amount of the Subordinated Note, a contribution of
capital or any combination thereof, to such
35
Eligible Originator in an aggregate amount equal to the purchase price for such
Receivable as required by the terms of such Receivables Purchase Agreement.
(p) Master Pooling and Servicing Agreement. The Transferor will
--------------------------------------
comply with the covenants set forth in Section 2.5 of the Master Pooling and
Servicing Agreement.
(q) Notice of Breach; Liens. The Transferor shall advise the Agent
-----------------------
(and the Agent shall forward such advisement to each Senior Class Agent)
promptly, in reasonable detail, (i) after becoming aware of any Lien on any
Receivable or other Trust Property other than the conveyances under the Master
Pooling and Servicing Agreement or under a Receivables Purchase Agreements or
Liens permitted under Section 2.5(b) of the Master Pooling and Servicing
Agreement or under Section 5.2(a) of each Receivable Purchase Agreement, (ii) of
any breach by the Transferor or the Servicer of any of their respective
representations, warranties and covenants contained herein or in the Master
Pooling and Servicing Agreement and (iii) of the occurrence of any other event
which would have a material adverse effect on the Trustee's interest in the
Receivables or the collectibility thereof.
(r) Notice of Additions. On or before the fifth Business Day prior
-------------------
to the Additional Account Closing Date with respect to any Additional Accounts
designated pursuant to subsections 2.6(a) or (b) of the Master Pooling and
Servicing Agreement (other than the Additional Accounts and related Receivables
(the "2001 Additional Accounts") to be designated from Saks Transitional Credit
------------------------
Corporation on or about the date of this Agreement and the date of the Series
Supplement as to which no notice is required hereunder), the Transferor shall
give the Agent (and the Agent shall forward to each Senior Class Agent) written
notice that the Receivables in such Additional Accounts will be included,
specifying the approximate aggregate amount of Receivables in such Additional
Accounts. Subject to the foregoing exception, the Transferor shall give the
Agent (and the Agent shall forward to each Senior Class Agent) five (5) Business
Days prior written notice of (i) any designation of Accounts to be included as
Accounts pursuant to subsection 2.5(d) of the Master Pooling and Servicing
Agreement and (ii) any discontinuance or suspension of any such designation,
provided that the Agent and the Senior Class Agent acknowledges notice of, and
consents to, the removal of Accounts and related Receivables (the "2001 Removed
------------
Accounts") from the Trust in connection with the sale of certain stores pursuant
--------
to that certain Asset Purchase and Sale Agreement, dated on or about January 28,
2001. between Saks Incorporated and the The May Department Stores Company (the
"Store Sales Agreement"). The Transferor shall not include as Automatic
---------------------
Additional Accounts any Accounts of a type not included
36
as Accounts on the Initial Closing Date or included on any Additional Account
Closing Date pursuant to which Additional Accounts are designated pursuant to
subsection 2.6(b) of the Master Pooling and Servicing Agreement or consented to
in writing by the Agent and each Senior Class Agent.
(s) Protection of Interest in Trust Property. The Transferor shall
----------------------------------------
execute and file such continuation statements and any other documents reasonably
requested by the Trustee, the Agent, any Senior Class Agent, any Senior Class
Conduit or any Bank Investor (in the case of any Senior Class Agent, any Senior
Class Conduit or any Bank Investor, such request to be made through the Agent)
or which may be required by law to fully preserve and protect the interest of
the Trustee in and to the Receivables and the other Trust Property.
(t) Transfer of Transferor Interest and Subordinate Class
-----------------------------------------------------
Certificates. The Transferor shall not assign, transfer or otherwise convey to
------------
any Person any interest in the Transferor Interest or the Subordinate Class
Certificates held by it without (i) the prior written consent of the Agent and
each Senior Class Agent and (ii) delivering to the Trustee prior thereto an
Opinion of Counsel to the effect that (x) the conveyed interest in the
Transferor's Interest or the Subordinate Class Certificates will be treated as
either debt or an interest in a partnership for federal income tax purposes and
that the conveyance of such interest will not cause the Trust to be
characterized for federal income tax purposes as an association or a publicly
traded partnership taxable as a corporation or otherwise have any material
adverse impact on the federal or applicable state income taxation of any
outstanding Certificates or any Certificate Owner and (y) such transfer will not
cause a taxable event for federal income tax purposes to any Investor
Certificateholder.
(u) No Assignment. The Transferor shall not assign any of its rights
-------------
or delegate any of its duties hereunder or under the Master Pooling and
Servicing Agreement or the Series Supplement or under any of the other
Transaction Documents to which it is a party without the prior written consent
of the Agent and each Senior Class Agent.
(v) No Designation. The Transferor shall not designate an Eligible
--------------
Originator other than ▇.▇. ▇▇▇▇▇▇▇▇▇'▇, Inc., ▇▇▇▇▇'▇, Inc., Parisian, Inc.,
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ & Co., National Bank of the Great Lakes, Saks & Company or
Saks, or any of their Affiliates without, the prior written consent of the Agent
and each Senior Class Agent.
37
(w) Consent of Agent and Senior Class Agent. The Transferor shall
---------------------------------------
obtain the written consent of the Agent and each Senior Class Agent prior to
taking any action under the Master Pooling and Servicing Agreement that would
require (i) the satisfaction of the Rating Agency Condition under the Master
Pooling and Servicing Agreement (whether or not any Series is then currently
rated by any rating agency) or (ii) the consent of the Trustee, provided that
the addition of the 2001 Additional Accounts, the removal of the 2001 Removed
Accounts, the issuance of Series 2001-2 shall not require the approval of the
Agent or any Senior Class Agent hereunder.
(x) Notice of Delegation of Servicer's Duties. The Transferor
-----------------------------------------
promptly shall notify the Agent (and the Agent shall forward such notice to each
Senior Class Agent) of any delegation by the Servicer of any of the Servicer's
duties under the Master Pooling and Servicing Agreement or the Series
Supplement, provided that the designation of Parisian, Inc. or any other
Affiliate of the Transferor as Subservicer shall be permitted without notice.
(y) Notice of Resignation or Removal of the Trustee. The Transferor
-----------------------------------------------
promptly shall notify the Agent (and the Agent shall forward such notice to each
Senior Class Agent) of any resignation or removal of the Trustee under the
Master Pooling and Servicing Agreement.
(z) Reduction of Investor Amounts. If, on any day, (x) the Senior
-----------------------------
Class Certificate Principal Balance for any Senior Class plus the Interest
----
Component of all Related Commercial Paper issued by the related Senior Class
Conduit and then outstanding, if any, exceeds the Senior Class Facility Limit
for such Class or (y) the product of (i) the aggregate Floating Allocation
Percentage with respect to Default Amounts for all Senior Classes (as of the end
of the most recent Monthly Period) and (ii) the sum of the Excess Funding Amount
and the Aggregate Principal Receivables, is less than the sum of the Senior
Class Certificate Principal Balances for all Senior Classes, the Transferor
shall distribute on such day to such Senior Class Conduit, in accordance with
subsection 4.5(d) of the Series Supplement an amount sufficient to (I) reduce
the sum of the Senior Class Investor Amount and the Interest Component of all
outstanding Related Commercial Paper for such Senior Class to an amount which is
less than the Senior Class Facility Limit for such Senior Class or (II) reduce
the sum of the Senior Class Certificate Principal Balances for all Senior
Classes plus the Subordinate Class Investor Amount to an amount which is less
----
than the Series Allocation Percentage with respect to Principal Receivables (as
of the end of the most recent Monthly Period) of the Aggregate Outstanding
Principal Balance, as applicable.
38
SECTION 3.4 Covenants of the Servicer. At all times from the date
-------------------------
hereof to the later to occur of (i) the Termination Date or (ii) the date on
which all amounts due to the Senior Certificateholders under this Agreement and
the other Transaction Documents shall have been paid in full, unless the Agent
and each Senior Class Agent shall otherwise consent in writing:
(a) Records. The Senior Class Certificateholders and their agents
-------
and representatives shall at all times upon reasonable prior notice have full
access during normal business hours to all Records of the Servicer, and the
Agent, each Senior Class Agent and the Senior Class Certificateholders and their
agents and representatives may examine the same, take extracts therefrom and
make photocopies thereof, and the Servicer agrees to render to such Persons, at
the Servicer's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto.
(b) No Extension or Amendment of Receivables. Except as otherwise
----------------------------------------
expressly permitted by the Transaction Documents, the Servicer will not extend,
amend or otherwise modify the terms of any Receivable, or amend, modify or waive
any term or condition of any Account related thereto. The Servicer further
covenants that, except as otherwise required by any Requirement of Law, it shall
not reduce the periodic finance charges assessed on any Receivable or other fees
on any Account if, as a result of such reduction, the reasonable expectation of
the Portfolio Adjusted Yield as of such date would be less than 2.00%.
(c) Conduct of Business. The Servicer will, and will cause each of
-------------------
its Subsidiaries to which it delegates any servicing functions under the Master
Pooling and Servicing Agreement to, carry on and conduct its business in
substantially the same fields of enterprise as it is presently conducted and do
all things necessary to remain duly incorporated, validly existing and in good
standing in its jurisdiction of incorporation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted, except where the failure to be so qualified will not have a Material
Adverse Effect. All Eligible Originators shall at all times be direct or
indirect wholly-owned (except for director's qualifying shares and/or shares of
preferred stock) subsidiaries of Saks.
(d) Financial Covenants. The Servicer shall:
-------------------
39
(i) not permit Consolidated Net Worth at any time to be less
than (A) the amount equal to ninety percent (90%) of the Servicer's
Consolidated Net Worth as of November 1, 1998 after completion of the Saks
Acquisition plus (B) an amount equal to one hundred percent (100%) of the
Net Proceeds of each sale of capital stock or other equity interest
(including those instruments and securities exchangeable, convertible or
exercisable into capital stock or other equity interests at such time as
such instruments are recognizable in Consolidated Net Worth in accordance
with GAAP) in the Servicer or any Subsidiary after November 1, 1998 plus
----
(C) an amount equal to the sum of fifty percent (50%) of Consolidated Net
Income of the Servicer and its Subsidiaries (without deduction for any
negative Consolidated Net Income) for each full fiscal quarter ending after
November 1, 1998; and
(ii) not permit, at the end of any Four-Quarter Period of the
Servicer, the Consolidated Fixed Charge Ratio for such Four-Quarter Period
to be equal to or less than 1.50 to 1.00; and
(iii) not permit, at the end of any Four-Quarter Period of the
Servicer, the ratio of Consolidated Funded Total Indebtedness to
Consolidated EBITDA for such Four-Quarter Period to be greater than 3.50 to
1.00;
Capitalized terms used in this Section 3.4(d) and not otherwise defined in
Section 1.1 hereof are used as defined in Exhibit F attached hereto. The
definitions contained in this subsection and in Exhibit F shall not otherwise be
---------
used or applied for any other purpose or used to define or construe any other
provisions hereof or of any other Transaction Documents.
(e) No Assignment. The Servicer shall not assign any of its rights
-------------
or delegate any of its duties hereunder or under the Master Pooling and
Servicing Agreement or the Series Supplement or under any of the other
Transaction Documents to which it is a party without the prior written consent
of the Agent and each Senior Class Agent, provided that any designation of
▇▇▇▇▇'▇, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ & Co., Parisian Inc. or any other Affiliate of
the Transferor shall be permitted without notice.
SECTION 3.5 Tax Treatment. The Transferor, the Senior Class Conduits
-------------
and the Bank Investors have entered into this Agreement, and the Transferor has
entered into the Series Supplement, with the intention that the Senior Class
Certificates will qualify under applicable tax law as indebtedness, and the
40
Transferor and each Senior Class Conduit and Bank Investor by its acceptance of
the Senior Class Certificates agree to and shall treat the Senior Class
Certificates for purposes of federal and state income or franchise taxes and any
other tax imposed on or measured by income, as indebtedness unless otherwise
required by the Internal Revenue Service.
SECTION 3.6 Conditions Precedent to Initial Transfer. On or prior to
----------------------------------------
the Closing Date, the Transferor and the Servicer shall deliver to the Agent
(with sufficient copies for each Senior Class Agent and their respective
counsel) the following documents, instruments and fees, all of which shall be in
a form and substance acceptable to the Agent and each Senior Class Agent:
(a) A copy of the resolutions of the Board of Directors (or Executive
Committee) of each of the Transferor and the Servicer, certified by an Executive
Vice President, Senior Vice President, Treasurer, Secretary or Assistant
Secretary, approving the execution, delivery and performance by the Transferor
and the Servicer, respectively, of the Series Supplement, this Agreement, the
Certificates and the other Transaction Documents to which the Transferor or the
Servicer is a party.
(b) The Certificate of Incorporation of the Transferor and the
Servicer, certified by the Secretary of State or other similar official of its
jurisdiction of incorporation dated a recent date and further certified by an
officer of each respective corporation.
(c) A Good Standing Certificate for the Transferor and the Servicer
and issued by the Secretary of State or other similar official of its
jurisdiction of incorporation and certificates of qualification as a foreign
corporation issued by the Secretaries of State or other similar officials of
each jurisdiction where such qualification is material to the transactions
contemplated by the Transaction Documents to which such Person is a party, in
each case dated a date reasonably prior to the Closing Date.
(d) A certificate of an Executive Vice President, Senior Vice
President, Treasurer, Secretary or Assistant Secretary of the Transferor and
the Servicer substantially in the form of Exhibit C hereto.
---------
(e) Favorable opinions of ▇▇▇▇▇▇ & Bird LLP, counsel to the
Transferor, the Servicer and each Eligible Originator in substantially the form
of such opinions previously delivered in respect of other Series of Certificates
issued by the
41
Trust with respect to certain corporate and enforceability, UCC, federal and
state income tax, FIRREA and substantive non-consolidation matters.
(f) Favorable opinions of counsel to the Trustee, as to the due
authorization, execution and delivery by the Trustee of the Series Supplement
and each other Transaction Document executed by the Trustee.
(g) An executed copy of the Master Pooling and Servicing Agreement,
the Series Supplement, this Agreement, the Fee Letters, and executed or a
certified copy of each of the other Transaction Documents to be executed by the
Transferor or the Servicer.
(h) The Class A Variable Funding Certificates in the face amount of
$250,410,000 and the Subordinate Class Certificates in the face amount of
$16,000,000, in each case duly executed by the Transferor and duly authenticated
by the Trustee and issued, in the case of the Class A Variable Funding
Certificates, to the parties specified in Section 2.1 hereof and, in the case of
the Subordinate Class Certificates, to the Transferor.
(i) Payment of (i) any fees to be paid on or prior to the Closing
Date pursuant to the Fee Letter and (ii) all up-front fees to be paid to the
Senior Class Conduits.
(j) Such other documents, instruments, certificates and opinions as
the Agent, any Senior Class Agent or any Bank Investor shall reasonably request.
SECTION 3.7 [RESERVED]
SECTION 3.8 Periodic Notices and Reports. Notices, Certificates and
---------------------------- -------------------------
Reports Delivered to the Trustee and the Rating Agencies. In addition to those
--------------------------------------------------------
notices, certificates and reports required to be delivered to the Agent pursuant
to Section 3.3 hereof, the Transferor shall furnish to the Agent (and the Agent
shall forward to each Senior Class Agent) a copy of each notice, certificate or
report delivered to the Trustee or a Rating Agency pursuant to the Master
Pooling and Servicing Agreement or the Series Supplement concurrently with the
delivery of any such notice, certificate or report to the Trustee or a Rating
Agency, as the case may be.
42
ARTICLE IV
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 4.1 Indemnities by the Transferor. Without limiting any
-----------------------------
other rights which the Agent, the Senior Class Agents, the Senior Class Conduits
or the Bank Investors may have hereunder or under applicable law, the Transferor
hereby agrees to indemnify the Senior Class Conduits, the Bank Investors, the
Agent, the Senior Class Agent, the Collateral Agents, each Program Support
Provider and any successors and permitted assigns and any of their respective
officers, directors and employees (collectively, the "Indemnified Parties") from
-------------------
and against any and all damages, losses, claims, liabilities, costs and
expenses, including, without limitation, reasonable attorneys' fees (which such
attorneys may be employees of a Program Support Provider, the Agent, a Senior
Class Agent or a Collateral Agent, as applicable) and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts") awarded
-------------------
against or reasonably incurred by any Indemnified Party in any action or
proceeding between the Transferor or the Servicer and any of the Indemnified
Parties or between any of the Indemnified Parties and any third party or
otherwise arising out of or as a result of this Agreement, the other Transaction
Documents, the ownership or maintenance, either directly or indirectly, by the
Agent, any Senior Class Agent, any Senior Class Conduit or any Bank Investor of
the Senior Class Certificates or any of the other transactions contemplated
hereby or thereby, excluding, however, (i) Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of such
Indemnified Party, (ii) recourse (except as otherwise specifically provided in
this Agreement or the Master Pooling and Servicing Agreement) for amounts due
under the Receivables which are uncollectible and (iii) Indemnified Amounts
specifically excluded from coverage under Section 4.2. Without limiting the
generality of the foregoing, the Transferor shall indemnify each Indemnified
Party for Indemnified Amounts relating to or resulting from:
(i) any representation or warranty made by the Transferor, any
Eligible Originator or the Servicer or any officer of the Transferor, any
Eligible Originator or the Servicer under or in connection with this
Agreement, any Receivables Purchase Agreement, any of the other Transaction
Documents or any other information or report delivered by the Transferor or
the Servicer pursuant hereto or thereto, which shall have been false or
incorrect in any material respect when made or deemed made;
43
(ii) the failure by the Transferor, any Eligible Originator or
the Servicer to comply with any applicable law, rule or regulation with
respect to any Receivable or the related Account, or the nonconformity of
any Receivable or the related Account with any such applicable law, rule or
regulation;
(iii) the failure to vest and maintain vested in the Trustee, on
behalf of the Trust, an undivided first priority, perfected percentage
ownership or security interest in the Trust Property free and clear of any
Lien (except as expressly permitted by the Transaction Documents);
(iv) the failure to file, or any delay in filing, financing
statements, continuation statements, or other similar instruments or
documents under the UCC of any applicable jurisdiction or other applicable
laws with respect to any of the Trust Property;
(v) any dispute, claim, offset or defense (other than discharge
in bankruptcy) of the Obligor to the payment of any Receivable (including,
without limitation, a defense based on such Receivable or the related
Account not being the legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of merchandise or services related to such
Receivable or the furnishing or failure to furnish such merchandise or
services;
(vi) any failure of the Servicer to perform its duties or
obligations in accordance with the provisions of the Master Pooling and
Servicing Agreement and the Series Supplement; or
(vii) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with merchandise or services
which are the subject of any Receivable;
(viii) the transfer of an ownership interest in any Receivable
other than an Eligible Receivable as defined in the Master Pooling and
Servicing Agreement;
(ix) the failure by the Transferor, any Eligible Originator or
the Servicer to comply with any term, provision or covenant contained in
this
44
Agreement or any of the other Transaction Documents to which it is a
party or to perform any of its respective duties under the Accounts;
(x) the failure of any Eligible Originator to pay when due any
taxes, including without limitation, sales, excise or personal property
taxes payable in connection with any of the Receivables;
(xi) any repayment by any Indemnified Party of any amount
previously distributed in reduction of the Senior Class Investor Amount
which such Indemnified Party believes in good faith is required to be made;
(xii) the commingling by the Transferor, any Eligible Originator
or the Servicer of Collections of Receivables at any time with other funds;
(xiii) any investigation, litigation or proceeding related to
this Agreement, any of the other Transaction Documents, the use of proceeds
of the acquisition of interests in the Senior Class Certificates by the
Transferor, the ownership of the Senior Class Certificates or any Trust
Property;
(xiv) any inability to obtain any judgment in or utilize the
court or other adjudication system of, any state in which an Obligor may be
doing business as a result of the failure of the Transferor or any Eligible
Originator to qualify to do business or file any notice of business
activity report or any similar report;
(xv) any failure of the Transferor to give reasonably
equivalent value to an Eligible Originator in consideration of the purchase
by the Transferor from such Eligible Originator of any Receivable, or any
attempt by any Person to void, rescind or set-aside any such transfer under
statutory provisions or common law or equitable action, including, without
limitation, any provision of the Bankruptcy Code; or
(xvi) any action taken by the Transferor, any Eligible
Originator or the Servicer in the enforcement or collection of any
Receivable;
provided, however, that if the Senior Class Conduits enter into
-------- -------
agreements for the purchase of certificates representing interests in amounts
due under receivables or of interests in receivables from one or more Other
Transferors, the Senior Class Conduits shall allocate such Indemnified Amounts
which are in connection with a
45
Program Support Agreement or the program support furnished by a Program Support
Provider among the Transferor and each Other Transferor; and provided, further,
-------- -------
that if such Indemnified Amounts are attributable to the Transferor or the
Servicer and not attributable to any Other Transferor, the Transferor shall be
solely liable for such Indemnified Amounts or if such Indemnified Amounts are
attributable to Other Transferors and not attributable to the Transferor or the
Servicer, such Other Transferors shall be solely liable for such Indemnified
Amounts.
SECTION 4.2 Indemnity for Taxes, Reserves and Expenses. (a) If
------------------------------------------
after the date hereof, the adoption of any Law or bank regulatory guideline or
any amendment or change in the interpretation of any existing or future Law or
bank regulatory guideline by any Official Body charged with the administration,
interpretation or application thereof, or the compliance with any directive of
any Official Body (in the case of any bank regulatory guideline, whether or not
having the force of law):
(i) shall subject any Indemnified Party to any tax, duty or
other charge (other than Excluded Taxes) with respect to this Agreement,
the other Transaction Documents, the ownership, maintenance or financing of
the Senior Class Certificates, the Receivables or payments of amounts due
hereunder, or shall change the basis of taxation of payments to any
Indemnified Party of amounts payable in respect of this Agreement, the
other Transaction Documents, the ownership, maintenance or financing of the
Senior Class Certificates, the Receivables or payments of amounts due
hereunder or its obligation to advance funds hereunder, under a Program
Support Agreement or otherwise in respect of this Agreement, the other
Transaction Documents, the ownership, maintenance or financing of the
Senior Class Certificates or the Receivables (except for changes in the
rate of general corporate, franchise, net income or other income tax
imposed on such Indemnified Party by the jurisdiction in which such
Indemnified Party's principal executive office is located);
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System
other than any such requirement used in determining the Adjusted LIBOR
Rate) against assets of, deposits with or for the account of, or credit
extended by, any Indemnified Party or shall impose on any Indemnified Party
or on the London interbank market any other condition affecting this
Agreement, the other Transaction Documents, the ownership, maintenance or
46
financing of the Senior Class Certificates, the Receivables or payments of
amounts due hereunder or its obligation to advance funds hereunder, under a
Program Support Agreement or otherwise in respect of this Agreement, the
other Transaction Documents, the ownership, maintenance or financing of the
Senior Class Certificates or the Receivables; or
(iii) imposes upon any Indemnified Party any other expense
(including, without limitation, reasonable attorneys' fees and expenses,
and expenses of litigation or preparation therefor in contesting any of the
foregoing) with respect to this Agreement, the other Transaction Documents,
the ownership, maintenance or financing of the Senior Class Certificates,
the Receivables or payments of amounts due hereunder or its obligation to
advance funds hereunder, under a Program Support Agreement or otherwise in
respect of this Agreement, the other Transaction Documents, the ownership,
maintenance or financing of the Senior Class Certificates or the
Receivables,
and the result of any of the foregoing is to increase the cost to such
Indemnified Party with respect to this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the Senior Class
Certificates, the Receivables, the obligations hereunder, the funding of any
purchases hereunder, a Program Support Agreement, by an amount deemed by such
Indemnified Party to be material, then, within ten (10) days after demand by
such Indemnified Party through the Agent, the Transferor shall pay to the Agent,
for the benefit of such Indemnified Party, such additional amount or amounts as
will compensate such Indemnified Party for such increased cost or reduction.
(b) If any Indemnified Party shall have determined that after the
date hereof, the adoption of any applicable Law or bank regulatory guideline
regarding capital adequacy, or any change therein, or any change in the
interpretation thereof by any Official Body, or any directive regarding capital
adequacy (in the case of any bank regulatory guideline, whether or not having
the force of law) of any such Official Body, has or would have the effect of
reducing the rate of return on capital of such Indemnified Party (or its parent)
as a consequence of such Indemnified Party's obligations hereunder or with
respect hereto to a level below that which such Indemnified Party (or its
parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Indemnified Party to be material, then from time to time,
within ten (10) days after demand by such Indemnified Party through the Agent,
the Transferor shall pay to the Agent, for the benefit of such Indemnified
47
Party, such additional amount or amounts as will compensate such Indemnified
Party (or its parent) for such reduction.
(c) Each Senior Class Agent will notify the Agent and the Agent will
promptly notify the Transferor of any event of which it has knowledge, occurring
after the date hereof, which will entitle an Indemnified Party to compensation
pursuant to this Section. A notice by the Agent or the applicable Indemnified
Party claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error. In determining such amount, the Agent or any applicable
Indemnified Party may use any reasonable averaging and attributing methods.
(d) Anything in this Section 4.2 to the contrary notwithstanding, if
a Senior Class Conduit enters into agreements for the acquisition of
certificates representing interests in other receivables from one or more Other
Transferors, such Senior Class Conduit shall allocate the liability for any
amounts under this Section which are in connection with a Program Support
Agreement or the program support provided by a Program Support Provider
("Section 4.2 Costs") to the Transferor and each Other Transferor; provided,
------------------- --------
however, that if such Section 4.2 Costs are attributable to the Transferor, an
-------
Eligible Originator or the Servicer and not attributable to any Other
Transferor, the Transferor shall be solely liable for such Section 4.2 Costs or
if such Section 4.2 Costs are attributable to Other Transferors and not
attributable to the Transferor, an Eligible Originator or the Servicer, such
Other Transferors shall be solely liable for such Section 4.2 Costs.
SECTION 4.3 Taxes. All payments made hereunder by the Transferor or
-----
the Servicer (each, a "payor") to any Senior Class Conduit, any Bank Investor or
-----
the Agent (each, a "recipient") shall be made free and clear of and without
---------
deduction for any present or future income, excise, stamp or franchise taxes and
any other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority on any recipient (or any assignee of
such parties) (such non-excluded items being called "Taxes"), but excluding
-----
franchise taxes imposed on net income (or any interest or penalties with respect
thereto) and taxes imposed on or measured by the recipient's net income required
to be paid by any recipient in connection herewith to any taxing authority
("Excluded Taxes"). In the event that any withholding or deduction from any
----------------
payment made by the payor hereunder is required in respect of any Taxes, then
such payor shall:
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
48
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the recipient such additional amount or amounts as is
necessary to ensure that the net amount actually received by the recipient will
equal the full amount such recipient would have received had no such withholding
or deduction been required.
Moreover, if any Taxes are directly asserted against any recipient with respect
to any payment received by such recipient hereunder, the recipient shall
promptly notify the Transferor and the Servicer, and the recipient may pay such
Taxes and the payor will promptly pay such additional amounts (including any
penalties, interest or expenses) as shall be necessary in order that the net
amount received by the recipient after the payment of such Taxes (including any
Taxes on such additional amount) shall equal the amount such recipient would
have received had such Taxes not been asserted.
If the payor fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the recipient the required receipts or
other required documentary evidence, the payor shall indemnify the recipient for
any incremental Taxes, interest, or penalties that may become payable by any
recipient as a result of any such failure.
SECTION 4.4 Other Costs, Expenses and Related Matters.
-----------------------------------------
(a) The Transferor agrees, upon receipt of a written invoice in
reasonable detail, to pay or cause to be paid, and to save the Senior Class
Conduits, the Bank Investors, the Senior Class Agents and the Agent harmless
against liability for the payment of, all reasonable out-of-pocket expenses
(including, without limitation, attorneys', accountants' and other third
parties' fees and expenses, any filing fees and expenses incurred by officers or
employees of the Senior Class Conduits, the Bank Investors, the Agent and/or the
Senior Class Agents) or intangible, documentary or recording taxes incurred by
or on behalf of any Senior Class Conduit, any Bank Investor, the Agent and any
Senior Class Agent (i) in connection with the negotiation, execution, delivery
and preparation of this Agreement, the other Transaction Documents and any
documents or instruments delivered pursuant hereto and thereto and the
transactions contemplated hereby or thereby, and (ii) from time to time (a)
relating to any amendments, waivers or consents under this Agreement and the
other Transaction Documents, (b) arising in connection with any Senior Class
Conduit's, any Bank Investor's, the Agent's or any Senior Class Agent's
enforcement or preservation of rights, or (c) arising in
49
connection with any audit, dispute, disagreement, litigation or preparation for
litigation involving this Agreement or any of the other Transaction Documents
(all of such amounts, collectively, "Transaction Costs").
-----------------
(b) The Transferor shall pay to each Senior Class Agent, for the
account of the related Senior Class Conduit and Bank Investors, as applicable,
on demand any Early Collection Fee due on account of the receipt by a Senior
Class Conduit or Bank Investor of any amounts applied in reduction of the Senior
Class Investor Amount on any day other than the last day of any applicable
funding period.
SECTION 4.5 Indemnification by Servicer. The Servicer shall
---------------------------
indemnify and hold harmless each Indemnified Party from and against any loss,
liability, expense, damage or injury suffered or sustained by reason of willful
misfeasance, bad faith, or negligence in the performance of the duties of the
Servicer or by reason of reckless disregard of obligations and duties of the
Servicer hereunder or under the Master Pooling and Servicing Agreement or by
reason of any acts, omissions or alleged acts or omissions of the Servicer
pursuant to this Agreement or the Master Pooling and Servicing Agreement;
provided, however, that the Servicer shall not indemnify any such Indemnified
-------- -------
Party for any such loss, liability, expense, damage or injury suffered or
sustained by reason of any action taken or omitted at the written request of
such Indemnified Party; and provided, further, that the Servicer shall not
-------- -------
indemnify any such Indemnified Party for any such loss, liability, expense,
damage or injury incurred with respect to any action taken by such Indemnified
Party constituting fraud, gross negligence, breach of fiduciary duty or willful
misconduct, with respect to the uncollectibility of the Receivables or with
respect to any federal, state or local income or franchise taxes (or any
interest or penalties with respect thereto) required to be paid by any such
Indemnified Party in connection herewith to any taxing authority. The Servicer
shall not be liable for acts or omissions of any Successor Servicer. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof.
50
ARTICLE V
THE AGENT; BANK COMMITMENT; SENIOR CLASS AGENTS
SECTION 5.1. Authorization and Action of Agent.
---------------------------------
(a) Each Senior Class Conduit and each Bank Investor hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Transaction Documents
as are delegated to the Agent by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. In furtherance, and without
limiting the generality of the foregoing, each Senior Class Conduit and each
Bank Investor hereby appoints the Agent as its agent to execute and deliver all
further instruments and documents, and take all further action that the Agent
may deem necessary or appropriate or that a Senior Class Conduit or a Bank
Investor may reasonably request in order to perfect, protect or more fully
evidence the interests transferred or to be transferred from time to time by the
Transferor hereunder, or to enable any of them to exercise or enforce any of
their respective rights hereunder. The Senior Class Agents jointly may direct
the Agent to take any such incidental action hereunder. With respect to other
actions which are incidental to the actions specifically delegated to the Agent
hereunder, the Agent shall not be required to take any such incidental action
hereunder, but shall be required to act or to refrain from acting (and shall be
fully protected in acting or refraining from acting) upon the joint direction of
the Senior Class Agents; provided, however, that the Agent shall not be required
-------- -------
to take any action hereunder if the taking of such action, in the reasonable
determination of the Agent, shall be in violation of any applicable law, rule or
regulation or contrary to any provision of this Agreement or shall expose the
Agent to liability hereunder or otherwise. Upon the occurrence and during the
continuance of any Pay Out Event or Potential Pay Out Event, the Agent shall
take no action hereunder (other than ministerial actions or such actions as are
specifically provided for herein) without the prior consent of the Required
Investor Certificateholders. The Agent shall not, without the prior written
consent of each Senior Class Agent and Bank Investor, agree to (i) amend, modify
or waive any provision of this Agreement in any way which would (A) reduce or
impair Collections or the payment of fees payable hereunder to the Senior Class
Conduits or the Bank Investors or delay the scheduled dates for payment of such
amounts, (B) increase the Servicing Fee Percentage, (C) modify any provisions of
this Agreement, the Master Pooling and Servicing Agreement or the Series
Supplement relating to the timing of payments required to be made by the
Transferor or the Servicer or the application of the proceeds of such payments,
(D) the appointment of any Person (other than the Trustee) as successor
51
Servicer, (E) release any property from the lien provided by this Agreement
(other than as expressly contemplated herein), or (F) modify Section 3.4(d)
hereof or the definition of "Minimum Enhancement Amount" in the Series
Supplement or the definitions of "Defaulted Account" or "Eligible Receivable" in
the Master Pooling and Servicing Agreement, or (ii) amend, modify or waive any
provision of any Transaction Document relating to a Pay Out Event or Potential
Pay Out Event or waive any Pay Out Event or Potential Pay Out Event. The Agent
shall not agree to any amendment of or waiver under this Agreement which
increases the dollar amount of a Bank Investor's Commitment without the prior
written consent of such Bank Investor. In addition, the Agent shall not agree
to any amendment of or waiver under this Agreement not specifically described in
the two preceding sentences without the consent of the Required Investor
Certificateholders. In the event the Agent requests a Senior Class Agent's, a
Senior Class Conduit's or a Bank Investor's consent pursuant to the foregoing
provisions and the Agent does not receive a response (either positive or
negative) from such Senior Class Agent, Senior Class Conduit or Bank Investor
within 10 Business Days of such Person's receipt of such request in writing,
then such Senior Class Agent, Senior Class Conduit or Bank Investor (and its
percentage interest hereunder, if applicable) shall be disregarded in
determining whether the Agent shall have obtained sufficient consent hereunder.
(b) The Agent shall use commercially reasonable efforts to (i)
forward any communication (whether written or otherwise) received by it from the
Transferor to each applicable Senior Class Agent, and (ii) forward, at the
direction of any Senior Class Agent, any Senior Class Conduit or any Bank
Investor or as otherwise provided by this Agreement, any communication received
by it from any Senior Class Agent, any Senior Class Conduit or any Bank
Investor, to the Transferor or the Servicer, as applicable. Any communication
between the Transferor or the Servicer and any Senior Class Agent, any Senior
Class Conduit or any Bank Investor made pursuant to this Agreement or any other
Transaction Document (other than such Person's Fee Letters) shall be made, to
the extent possible, through the Agent. The Agent may, where appropriate,
deliver copies (including facsimile or electronic copies) of any communication
it is required to deliver pursuant to this Agreement or any other Transaction
Document.
(c) The Agent shall exercise such rights and powers vested in it by
this Agreement and the other Transaction Documents, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs.
52
SECTION 5.2. Agent's Reliance, Etc. 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 Agent under or in connection with this
Agreement or any of the other Transaction Documents, except for its or their own
gross negligence or willful misconduct. Without limiting the foregoing, the
Agent: (i) may consult with legal counsel (including counsel for the Transferor
or the Servicer), independent public accountants 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; (ii) makes no warranty or representation to any Senior Class Conduit or
Bank Investor and shall not be responsible to any Senior Class Conduit or Bank
Investor for any statements, warranties or representations made in or in
connection with this Agreement; (iii) 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 of the other Transaction Documents on the
part of the Transferor or the Servicer or to inspect the property (including the
books and records) of the Transferor or the Servicer; (iv) shall not be
responsible to any Senior Class Conduit or any Bank Investor for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any of the other Transaction Documents or any other
instrument or document furnished pursuant hereto or thereto; and (v) shall incur
no liability under or in respect of this Agreement or any of the other
Transaction Documents 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 5.3. Credit Decision. Each Senior Class Conduit and Bank
---------------
Investor acknowledges that it has, independently and without reliance upon the
Agent, any of the Agent's Affiliates, any other Bank Investor or any other
Senior Class Conduit and based upon such documents and information as it has
deemed appropriate, made its own evaluation and decision to enter into this
Agreement and the other Transaction Documents to which it is a party and, if it
so determines, to accept the transfer of all or any portion of the Senior Class
Certificates. Each Senior Class Conduit and Bank Investor also acknowledges
that it will, independently and without reliance upon the Agent, any of the
Agent's Affiliates, any other Bank Investor or any other Senior Class Conduit
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 and the other Transaction Documents to which it is a party.
53
SECTION 5.4. Indemnification of the Agent. Each Bank Investor agrees
----------------------------
to indemnify the Agent (to the extent not reimbursed by the Transferor), ratably
(and not jointly) in accordance with their respective Commitments, 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 its capacity as such) in any way relating to or arising out of this
Agreement and the other Transaction Documents or any action taken or omitted by
the Agent hereunder or thereunder, provided that a Bank Investor shall not 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 foregoing, the Bank Investors agree to reimburse the Agent, ratably (and not
jointly) in accordance with their respective Commitments, promptly upon demand
for any out-of-pocket expenses (including counsel fees) incurred by the Agent
(in its capacity as such) in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and the other Transaction
Documents, to the extent that such expenses are incurred in the interests of or
otherwise in respect of the Senior Class Conduits or the Bank Investors
hereunder and/or thereunder and to the extent that the Agent is not reimbursed
for such expenses by the Transferor.
SECTION 5.5 Successor Agent. The Agent may resign at any time,
---------------
effective upon the appointment and acceptance of a successor Agent as provided
below, by giving written notice thereof to each Senior Class Agent, each Senior
Class Conduit, each Bank Investor, the Transferor and the Servicer, and may be
removed at any time (i) with cause by holders of more than 50% of the aggregate
Senior Class Investor Amounts or (ii) without cause at the direction of the
Servicer provided that the Bank Investor affiliated with the successor Agent
provides a Commitment equal to at least the Commitment of the former Agent as
adjusted after the appointment of the successor Agent. Upon any removal of the
Agent without cause pursuant to clause (ii) of the preceding sentence, the
Servicer shall appoint a successor Agent. Upon any such resignation or a removal
for cause, the continuing and new Bank Investors representing not less than 50%
of the new aggregate Commitment amount shall appoint a successor Agent
affiliated with the continuing or new Bank Investor, with the Servicer's
consent, which shall not be unreasonably withheld. Each Senior Class Conduit
and each Bank Investor agrees that it shall not unreasonably withhold or delay
its approval of the appointment of a successor Agent. If no such successor Agent
shall have been so appointed, and shall have accepted such appointment, within
30 days after the retiring Agent's giving of notice of resignation or the
holders
54
of more than 50% of the aggregate Senior Class Investor Amounts removal of the
retiring Agent then the retiring Agent may, on behalf of the Senior Class
Conduits and the Bank Investors, appoint a successor Agent which successor Agent
shall be either (i) a commercial bank organized under the laws of the United
States or of any state thereof and have a combined capital and surplus of at
least $500,000,000 or (ii) an Affiliate of such a bank. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article V shall continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. The successor
agent shall promptly notify the Transferor and the Servicer of its appointment
hereunder.
SECTION 5.6. Payments by the Agent. Unless specifically allocated to
---------------------
a Bank Investor or a Senior Class Conduit pursuant to the terms of this
Agreement, all amounts received by the Agent, if any, on behalf of the Senior
Class Conduits or the Bank Investors shall be paid by the Agent to the
applicable Senior Class Agent (at the account specified on the signature pages
hereto or as may be specified in writing to the Agent) in accordance with their
respective related pro rata interests in the Senior Class Investor Amount on the
Business Day received by the Agent, unless such amounts are received after 12:00
noon on such Business Day, in which case the Agent shall use commercially
reasonable efforts to pay such amounts to the Senior Class Conduits or Bank
Investors on such Business Day, but, in any event, shall pay such amounts to the
Senior Class Conduits or Bank Investors in accordance with their respective
related pro rata interests in the Senior Class Investor Amount not later than
the following Business Day.
SECTION 5.7. Bank Commitment; Assignment to Bank Investors.
---------------------------------------------
(a) Bank Commitment. At any time prior to the Commitment
---------------
Termination Date and prior to the Termination Date (excluding a "Termination
Date" occurring as a result of clause (iv) or (v) of the definition of
"Termination Date"), in the event that any Senior Class Conduit does not acquire
an Additional Investor Amount as requested under Section 2.2(a), then at any
time, the Transferor shall have the right to require such Senior Class Conduit
to assign its interests in the Senior Class Certificate Principal Balance in
whole to the related Bank Investors pursuant to this Section 5.7. In addition,
at any time prior to the Commitment Termination Date (i) upon the occurrence of
a Pay Out Event, a Senior Class Agent may request that
55
the related Senior Class Conduit assign its interest in the Senior Class
Certificate Principal Balance in whole to the related Bank Investors pursuant to
this Section 5.7, and (ii) if a Senior Class Conduit gives notice to the
Transferor of a Reinvestment Termination Date and requests that its interest in
the Senior Class Certificate Principal Balance be assigned to the related Bank
Investors, such interest shall be assigned in whole to the related Bank
Investors pursuant to this Section 5.7, and, in each case, the Transferor hereby
agrees to pay the amounts described in Section 5.7(d) below. Upon any such
election or notice by a Senior Class Agent or a Senior Class Conduit, the
applicable Senior Class Agent shall give a notice of Assignment to the related
Bank Investors and such Bank Investors shall thereupon be deemed to have
accepted such Assignment and shall assume all the applicable Senior Class
Conduit's obligations hereunder. In connection with any Assignment from a Senior
Class Conduit to the related Bank Investors pursuant to this Section, each Bank
Investor shall, by the close of business on the date specified in such notice of
Assignment, pay to such Senior Class Conduit (in immediately available funds) an
amount equal to its Assignment Amount (it being understood that notwithstanding
the foregoing assignment of Senior Class Certificate Principal Balance, the
related Bank Investors, as assignees, continue to be obligated to fund
Additional Investor Amounts under Section 2.2 in accordance with the terms
thereof and shall not have the right to elect the commencement of the
amortization of such Senior Class Certificate Principal Balance pursuant to the
definition of "Reinvestment Termination Date" notwithstanding that the Purchaser
had such right). Consent of the Transferor shall in no event be required in
order for any Senior Class Conduit to assign any interest in the Senior Class
Certificate Principal Balance to the related Bank Investors. Upon any Assignment
by a Senior Class Conduit to the related Bank Investors contemplated hereunder,
such Senior Class Conduit shall cease to acquire any Additional Investor Amounts
hereunder.
(b) Assignment. No Bank Investor may assign all or a portion
----------
of its interests in the Senior Class Certificates, the Senior Class Certificate
Principal Balance, the Trust Property or its rights and obligations hereunder to
any Person unless approved in writing by the Agent, the related Senior Class
Agent and the Transferor (in each case such approval not to be unreasonably
withheld or delayed) and made in accordance with the Master Pooling and
Servicing Agreement and the Series Supplement. In the case of an Assignment by
a Bank Investor to another Person, the assignor shall deliver to the assignee(s)
an Assignment and Assumption Agreement in substantially the form of Exhibit B
---------
hereto, duly executed, assigning to the assignee a pro rata interest in the
Senior Class Certificates, the Senior Class Certificate Principal Balance, the
Trust Property and the assignor's rights and obligations hereunder and the
assignor shall promptly execute and deliver all
56
instruments and documents required by the Master Pooling and Servicing Agreement
and the Series Supplement and all further instruments and documents, and take
all further action, that the assignee may reasonably request, in order to
protect, or more fully evidence the assignee's right, title and interest in and
to such interest and to enable the Agent, on behalf of such assignee, to
exercise or enforce any rights hereunder and under the other Transaction
Documents to which such assignor is or, immediately prior to such Assignment,
was a party. Upon any such Assignment, (i) the assignee shall have all of the
rights and obligations of the assignor hereunder and under the other Transaction
Documents to which such assignor is or, immediately prior to such Assignment,
was a party with respect to such interest for all purposes of this Agreement and
under the other Transaction Documents to which such assignor is or, immediately
prior to such Assignment, was a party, and (ii) the assignor shall relinquish
its rights with respect to such interest for all purposes of this Agreement and
under the other Transaction Documents to which such assignor is or, immediately
prior to such Assignment, was a party. No such Assignment shall be effective
unless a fully executed copy of the related Assignment and Assumption Agreement
shall be delivered to the Agent and the Transferor. All reasonable out-of-pocket
costs and reasonable legal expenses of the Agent and the initial Bank Investors
hereto incurred in connection with any Assignment from the initial Bank
Investors to other Bank Investors hereunder shall be borne by the Transferor. No
Bank Investor shall assign any portion of its Commitment hereunder without also
simultaneously assigning an equal portion of its interest in the applicable
Program Support Agreement.
(c) Effects of Assignment. By executing and delivering an Assignment
---------------------
and Assumption Agreement, the assignor and assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than
as provided in such Assignment and Assumption Agreement, the assignor makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, the other Transaction Documents or any other instrument or document
furnished pursuant hereto or thereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, the other
Transaction Documents or any such other instrument or document; (ii) the
assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Transferor or the Servicer or the
performance or observance by the Transferor or the Servicer of any of their
respective obligations under this Agreement, the other Transaction Documents or
any other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, the Master Pooling and
Servicing Agreement, the Series
57
Supplement and such other instruments, documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Assumption Agreement and to purchase such interest; (iv)
such assignee will, independently and without reliance upon the Agent, or any of
its Affiliates, or the assignor and based on such agreements, documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Transaction Documents; (v) such assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement, the other Transaction Documents and any other instrument or
document furnished pursuant hereto or thereto as are delegated to the Agent by
the terms hereof or thereof, together with such powers as are reasonably
incidental thereto and to enforce its respective rights and interests in and
under this Agreement, the other Transaction Documents and the Trust Property;
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement and the other
Transaction Documents are required to be performed by it as the assignee of the
assignor; and (vii) such assignee agrees that it will not institute against any
Senior Class Conduit any proceeding of the type referred to in Section 6.9 prior
to the date which is one year and one day after the payment in full of all
Commercial Paper issued by any Senior Class Conduit.
(d) Transferor's Obligation to Pay Certain Amounts; Additional
----------------------------------------------------------
Assignment Amount. The Transferor shall pay to the Agent for the benefit of the
-----------------
related Senior Class Agent, and the Agent shall pay to such related Senior Class
Agent, for the account of the related Senior Class Conduit, in connection with
any Assignment by a Senior Class Conduit to the related Bank Investors pursuant
to this Section 5.7, an amount equal to all Carrying Costs to accrue through the
maturity of all outstanding Related Commercial Paper. To the extent that such
Carrying Costs relate to interest or discount on Commercial Paper issued to fund
the related Senior Class Certificate Principal Balance, if the Transferor fails
to make payment of such amounts at or prior to the time of Assignment by a
Senior Class Conduit to the related Bank Investors, such amount shall be paid by
such Bank Investors (in accordance with their respective Bank Pro Rata Shares)
to the Senior Class Conduit as additional consideration for the interests
assigned to the Bank Investors and the amount of the "Senior Class Certificate
Principal Balance" of the Senior Class Certificates held by the Bank Investors
and the "Senior Class Investor Amount" of the related Senior Class shall be
increased by an amount equal to the additional amount so paid by the Bank
Investors.
58
(e) Payments. After any Assignment by the Senior Class Conduit to
--------
the related Bank Investors pursuant to this Agreement, all payments to be made
hereunder by the Transferor or the Servicer for the benefit of the related
Senior Class Agent, for the benefit of the related Senior Class Conduit, shall
be made to the Agent's account as such account shall have been notified to the
Transferor and the Servicer, and the Agent shall forward such payment to the
related Senior Class Agent's account as such account shall have been notified to
the Agent for the benefit of the related Bank Investors. In the event that the
sum of the Assignment Amount paid by the Bank Investors and the amounts paid to
the related Senior Class Conduit pursuant to 5.7(d) in connection with such
assignment is less than the sum of the related Senior Class Investor Amount plus
the Interest Component of all outstanding Related Commercial Paper, then to the
extent payments made hereunder in respect of the Senior Class Investor Amount
exceed such Assignment Amount plus all other amounts accruing to the applicable
Bank Investors after the date of such Assignment, such excess shall be remitted
by the Agent to the related Senior Class Agent for the benefit of such Senior
Class Conduit.
(f) Downgrade of Bank Investor. If at any time prior to any
--------------------------
Assignment by a Senior Class Conduit to the related Bank Investors as
contemplated pursuant to this Section, the short term debt rating of any Bank
Investor shall be "A-2" or "P-2" from Standard & Poor's or Moody's,
respectively, with negative credit implications, such Bank Investor, upon
request of the related Senior Class Agent, shall, at its own expense, within 30
days of such request, assign its rights and obligations hereunder to another
financial institution (which institution's short term debt shall be rated at
least "A-2" and "P-2" from Standard & Poor's or Moody's, respectively, and which
shall not be so rated with negative credit implications). If the short term
debt rating of a Bank Investor shall be "A-3" or "P-3", or lower, from Standard
& Poor's or Moody's, respectively (or such rating shall have been withdrawn by
Standard & Poor's or Moody's), such Bank Investor, upon request of the related
Senior Class Agent, shall, within five (5) Business Days of such request, at its
own expense, assign its rights and obligations hereunder to another financial
institution (which institution's short term debt shall be rated at least "A-2"
and "P-2" from Standard & Poor's and Moody's, respectively, and which shall not
be so rated with negative credit implications). In either such case, if any
such Bank Investor shall not have assigned its rights and obligations under this
Agreement within the applicable time period described above, the related Senior
Class Conduit or the Transferor shall have the right to require such Bank
Investor to accept the Assignment of the Bank Pro Rata Share for such Bank
Investor of the related Senior Class Investor Amount; such Assignment shall
occur in accordance with the applicable provisions of this Section. Such Bank
Investor shall be obligated to pay to
59
the related Senior Class Conduit, in connection with such Assignment, in
addition to the Bank Pro Rata Share of the related Senior Class Investor Amount,
an amount equal to the interest component of the outstanding Commercial Paper
issued to fund the portion of the related Senior Class Investor Amount being
assigned to such Bank Investor, as reasonably determined by the Agent.
Notwithstanding anything contained herein to the contrary, upon any such
Assignment to a downgraded Bank Investor as contemplated pursuant to the
immediately preceding sentence, the aggregate available amount of the related
Senior Class Facility Limit, solely as it relates to the acquisition of any
Additional Investor Amount by the related Senior Class Conduit, shall be reduced
by the amount of the unused Commitment of such downgraded Bank Investor; it
being understood and agreed, that nothing in this sentence or the two preceding
sentences shall affect or diminish in any way any such downgraded Bank
Investor's Commitment to the Transferor or such downgraded Bank Investor's other
obligations and liabilities hereunder and under the other Transaction Documents.
The related Senior Class Agent shall give the Agent and the Transferor prompt
written notice of any Assignment to a Bank Investor pursuant to this Section
5.7.
SECTION 5.8 Authorization and Action of Senior Class Agent.
----------------------------------------------
(a) Each of the Senior Class Conduits and related Bank Investors
of each Class hereby appoints and authorizes the Senior Class Agent with respect
to such Class to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Senior Class Agent by the
terms hereof, together with such powers as are reasonably incidental thereto. In
furtherance, and without limiting the generality, of the foregoing, each of the
Senior Class Conduits and related Bank Investors hereby appoint the related
Senior Class Agent as their agent to execute and deliver all further instruments
and documents, and take all further action that the related Senior Class Agent
may deem necessary or appropriate or that the related Senior Class Conduit or
Bank Investors may reasonably request in order to perfect, protect or more fully
evidence the interests transferred or to be transferred from time to time by the
Transferor hereunder, or to enable any of them to exercise or enforce any of
their respective rights hereunder or under the Senior Class Certificates, and
such other instruments or notices, as may be necessary or appropriate for the
purposes stated hereinabove. With respect to actions which are incidental to the
actions specifically delegated to the Agent hereunder, the Majority Investors
may direct the related Senior Class Agent to direct the Agent to take any such
incidental action hereunder and the approval of the Majority Investors is
required to direct and/or approve the related Senior Class Agent's decision to
remove the Agent pursuant to Section 5.5. The Majority Investors may direct the
60
related Senior Class Agent to direct the Agent not to take or to cease taking
any action which is incidental to the actions specifically delegated to the
Agent hereunder. With respect to other actions which are incidental to the
actions specifically delegated to a Senior Class Agent hereunder, a Senior Class
Agent shall not be required to take any such incidental action hereunder, but
shall be required to act or to refrain from acting (and shall be fully protected
in acting or refraining from acting) upon the direction of the related Majority
Investors; provided, however, that no Senior Class Agent shall be required to
-------- -------
take any action hereunder if the taking of such action, in the reasonable
determination of such Senior Class Agent, shall be in violation of any
applicable law, rule or regulation or contrary to any provision of this
Agreement or shall expose such Senior Class Agent to liability hereunder or
otherwise. Upon the occurrence and during the continuance of any Pay Out Event
or Potential Pay Out Event, the Senior Class Agent shall take no action
hereunder (other than ministerial actions or such actions as are specifically
provided for herein) without the prior consent of each related Investor. Unless
otherwise provided herein, the Senior Class Agent shall not authorize the
release by the Agent of any property conveyed to the Agent by the Transferor
hereunder without the prior consent of the Majority Investors. The Senior Class
Agent shall not, without the prior written consent of each of the related Senior
Class Conduits (if any interest is held by a Senior Class Conduit at such time)
and Bank Investors, agree to (i) amend, modify or waive any provision of this
Agreement in any way which would (A) reduce or impair Collections or the payment
of Carrying Costs or fees payable under the related Fee Letters or delay the
scheduled dates for payment of such amounts, (B) increase the applicable Class
Monthly Servicing Fee, (C) modify any provisions of this Agreement relating to
the timing of payments required to be made by the Transferor or the application
of the proceeds of such payments, or (D) the appointment of any Person (other
than the Agent) as Successor Servicer. In addition, each Senior Class Agent
agrees that it shall not agree to any amendment of or waiver under this
Agreement not specifically contemplated by the preceding sentence without the
consent of the related Majority Investors. In the event the Senior Class Agent
requests a Person's consent pursuant to the foregoing provisions and the Senior
Class Agent does not receive a consent (either positive or negative) from such
Person within 10 Business Days of such Person's receipt of such request, then
such Person (and its percentage interest hereunder) shall be disregarded in
determining whether the Senior Class Agent shall have obtained sufficient
consent hereunder.
(b) The Senior Class Agent shall exercise such rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
61
SECTION 5.9 Senior Class Agents' Reliance, Etc. Neither any Senior
-----------------------------------
Class Agent nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them as
Senior Class Agent under or in connection with this Agreement, except for its or
their own gross negligence or willful misconduct. Without limiting the
foregoing, the Senior Class Agent: (i) may consult with legal counsel
(including counsel for the Transferor), independent public accountants 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; (ii) makes no warranty or representation to any Senior
Class Conduit or Bank Investor and shall not be responsible to any Senior Class
Conduit or Bank Investor for any statements, warranties or representations made
in or in connection with this Agreement; (iii) 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 on the part of the Transferor or to
inspect the property (including the books and records) of the Transferor; (iv)
shall not be responsible to any Investor for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
the Senior Class Certificates or any other instrument or document furnished
pursuant hereto; and (v) shall incur no liability under or in respect of this
Agreement by acting upon any notice (including notice by telephone), consent,
certificate or other instrument or writing (which may be by telex) believed by
it to be genuine and signed or sent by the proper party or parties.
SECTION 5.10 Credit Decision. Each Senior Class Conduit and Bank
---------------
Investor acknowledges that it has, independently and without reliance upon the
Senior Class Agent or any of the Senior Class Agent's Affiliates, and based upon
such documents and information as it has deemed appropriate, made its own
evaluation and decision to enter into this Agreement and, if it so determines,
to accept the transfer of an interest in a Certificate hereunder. Each Investor
also acknowledges that it will, independently and without reliance upon the
Senior Class Agent or any of the Senior Class Agent's 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.
SECTION 5.11. Indemnification of the Senior Class Agent. Each Bank
-----------------------------------------
Investor agrees to indemnify the related Senior Class Agent (to the extent not
reimbursed by the Transferor), ratably (and not jointly) according to their
respective Commitments, 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
62
Senior Class Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by the Senior Class Agent under this Agreement,
provided that a Bank Investor shall not be liable for any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the related Senior Class Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank Investor agrees to reimburse the related Senior Class Agent, ratably
(and not jointly) according to their respective Commitments, promptly upon
demand for any out-of-pocket expenses (including counsel fees) incurred by such
Senior Class Agent in connection with the modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that such expenses are incurred in the interests of or otherwise in
respect of the Series 2001-1 Certificates and to the extent that the Senior
Class Agent is not reimbursed for such expenses by the Transferor.
SECTION 5.12 Successor Senior Class Agent. A Senior Class Agent may
----------------------------
resign at any time by giving written notice thereof to the Agent, each other
Senior Class Agent, each member of the Class, the Transferor and the Servicer
and may be removed at any time with cause by the related Senior Class Conduit or
Bank Investor. Upon any such resignation or removal, the members of the related
Class acting jointly shall appoint a successor Senior Class Agent. Each Senior
Class Conduit and Bank Investor agrees that it shall not unreasonably withhold
or delay its approval of the appointment of a successor Senior Class Agent. If
no such successor Senior Class Agent shall have been so appointed, and shall
have accepted such appointment, within 30 days after the retiring Senior Class
Agent's giving of notice of resignation or the removal of the retiring Senior
Class Agent, then the retiring Senior Class Agent may, on behalf of the related
Senior Class Conduits and Bank Investors, appoint a successor Senior Class Agent
which successor agent shall be either (i) a commercial bank organized under the
laws of the United States or of any state thereof and have a combined capital
and surplus of at least $500,000,000 or (ii) an Affiliate of such a bank. Upon
the acceptance of any appointment as Senior Class Agent hereunder by a successor
Senior Class Agent, such successor Senior Class Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Senior Class Agent, and the retiring Senior Class Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Senior Class Agent's resignation or removal hereunder as Senior Class
Agent, the provisions of this Article V shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Senior Class Agent under
this
63
Agreement. Each successor Senior Class Agent shall promptly notify the
Transferor and the Servicer of its appointment hereunder.
SECTION 5.13. Payments by the Senior Class Agents. Unless
-----------------------------------
specifically allocated to a Senior Class Conduit or a Bank Investor pursuant to
the terms of this Agreement, all amounts received by the Senior Class Agent on
behalf of the Senior Class Conduit or the Bank Investors shall be paid by the
Senior Class Agent to the Senior Class Conduit or the Bank Investors, as
applicable (at the accounts specified to the Senior Class Agent) in accordance
with their respective related pro rata interests in the Senior Class Investor
Amount on the Business Day received by the Senior Class Agent, unless such
amounts are received after 12:00 noon on such Business Day, in which case the
Senior Class Agent shall use commercially reasonable efforts to pay such amounts
on such Business Day, but, in any event, shall pay such amounts in accordance
with their respective related pro rata interests in the Senior Class Investor
Amount not later than the following Business Day.
64
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Term of Agreement. This Agreement shall terminate on
-----------------
the date following the Termination Date upon which all amounts due to the Series
2001-1 Certificateholders under this Agreement and the other Transaction
Documents have been paid in full; provided, however, that (i) the rights and
-------- -------
remedies of the Agent, the Senior Class Agents, the Senior Class Conduits and
the Bank Investors with respect to any representation and warranty made or
deemed to be made by the Transferor or the Servicer pursuant to this Agreement,
(ii) the indemnification and payment provisions of Article IV, and (iii) the
agreement set forth in Section 6.9 hereof, shall be continuing and shall survive
any termination of this Agreement.
SECTION 6.2. Waivers; Amendments. No failure or delay on the part of
-------------------
the Agent, any Senior Class Agent, any Senior Class Conduit or any Bank Investor
in exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of
any other power, right or remedy. The rights and remedies herein provided shall
be cumulative and nonexclusive of any rights or remedies provided by law. Any
provision of this Agreement may be amended in writing signed by the Transferor,
the Servicer, the Agent, each Senior Class Agent, each Senior Class Conduit
(prior to an assignment in whole by such Senior Class Conduit of its interest in
the related Senior Class Certificate Principal Balance), and each Bank Investor
and any right or remedy herein provided to the Agent, any Senior Class Agent,
any Senior Class Conduit or any Bank Investor may be waived in writing signed by
the Agent and each Senior Class Agent; provided, however, that (i) any
-------- -------
supplement to this Agreement to add an additional Senior Class Conduit as a
party hereto must be signed only by the Transferor, the Servicer, such
additional Senior Class Conduit and the Bank Investors related to such Senior
Class Conduit, and (ii) any amendment to the representations, warranties and
covenants of the Servicer in this Agreement in connection with the appointment
of a Successor Servicer shall not require the consent of the Transferor or the
Servicer.
SECTION 6.3. Notices, Etc. Except where telephonic instructions or
-------------
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto shall be in writing and shall be sent by first-class prepaid United
States mail,
65
overnight delivery service for which a receipt or other tracking service is
available or facsimile transmission with a confirmation of the receipt thereof
and shall be deemed to be given for purposes of this Agreement five (5) days
after the same shall have been deposited in the mail or with such an overnight
delivery service or, where applicable, on the day that the receipt of such
facsimile transmission is confirmed in accordance with the provisions of this
Section 6.3. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section, notices, demands,
instructions and other communications in writing shall be given to or made upon
the respective parties hereto at their respective addresses or facsimile numbers
indicated on the signature pages hereto, and, in the case of telephonic
instructions or notices, by calling the telephone number or numbers indicated
for such party on the signature pages hereto or, in the case of a Bank Investor
which becomes a party hereto pursuant to an Assignment and Assumption Agreement,
on the signature page to the Assignment and Assumption Agreement pursuant to
which it becomes a party hereto.
SECTION 6.4. Governing Law; Submission to Jurisdiction; Integration.
------------------------------------------------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE TRANSFEROR AND THE
SERVICER EACH HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. The Transferor and the Servicer each hereby irrevocably
waives, to the fullest extent it may effectively do so, any objection which it
may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum. Nothing in this Section shall
affect the right of the Senior Class Conduits to bring any action or proceeding
against the Transferor, the Servicer or their respective property in the courts
of other jurisdictions.
(b) EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH, RELATING
66
TO OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
(c) This Agreement contains the final and complete integration
of all prior expressions by the parties hereto with respect to the subject
matter hereof and shall constitute the entire Agreement among the parties hereto
with respect to the subject matter hereof superseding all prior oral or written
understandings.
(d) The Transferor hereby appoints ▇▇▇▇▇ ▇▇▇▇▇▇, Saks
Incorporated, ▇▇ ▇▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as the authorized
agent upon whom process may be served in any action arising out of or based upon
this Agreement, the other Transaction Documents to which such Person is a party
or the transactions contemplated hereby or thereby that may be instituted in the
United States District Court for the Southern District of New York and of any
New York State court sitting in The City of New York by the Agent, any Senior
Class Agent, any Senior Class Conduit, any Bank Investor or any assignee of any
of them.
SECTION 6.5. Severability. Any provisions of this Agreement which
------------
are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 6.6. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
SECTION 6.7. Successors and Assigns.
----------------------
(a) This Agreement shall be binding on the parties hereto and
their respective successors and permitted assigns; provided, however, that the
-------- -------
Transferor may not assign any of its rights or delegate any of its duties
hereunder without the prior written consent of the Agent and each Senior Class
Agent.
(b) Without limiting the foregoing, a Purchaser may, from time
to time, with prior or concurrent notice to the Transferor and the Servicer, in
one transaction or a series of transactions, assign all or a portion of the
Senior Class
67
Certificates and its rights and obligations under this Agreement and any other
Transaction Documents to which it is a party to a Conduit Assignee. Upon and to
the extent of such assignment by a Purchaser to a Conduit Assignee, (i) such
Conduit Assignee shall be the owner of the assigned portion of the Senior Class
Certificates, (ii) the related administrative or managing agent for such Conduit
Assignee will act as the Senior Class Agent for such Conduit Assignee, with all
corresponding rights and powers, express or implied, granted to the Senior Class
Agent hereunder or under the other Transaction Documents, (iii) such Conduit
Assignee and its Program Support Providers and other related parties shall have
the benefit of all the rights and protections provided to the Purchaser and its
Program Support Providers, respectively, herein and in the other Transaction
Documents (including, without limitation, any limitation on recourse against
such Conduit Assignee or related parties, any agreement not to file or join in
the filing of a petition to commence an insolvency proceeding against such
Conduit Assignee, and the right to assign to another Conduit Assignee as
provided in this paragraph), (iv) such Conduit Assignee shall assume all (or the
assigned or assumed portion) of the Purchaser's obligations, if any, hereunder
or any other Transaction Document, and the Purchaser shall be released from such
obligations, in each case to the extent of such assignment, and the obligations
of the Purchaser and such Conduit Assignee shall be several and not joint, (v)
all distributions in respect of the Senior Class Certificates shall be made to
the applicable agent or administrative agent, as applicable, on behalf of such
Purchaser and such Conduit Assignee on a pro rata basis according to their
respective interests, (vi) the definition of the "Interest Component" with
respect to the portion of the Senior Class Investor Amount funded with
commercial paper issued by the Purchaser from time to time shall be determined
in the manner set forth in the definition of "Interest Component" applicable to
such Purchaser on the basis of the interest rate or discount applicable to
commercial paper issued by such Conduit Assignee (rather than such Purchaser),
(vii) the defined terms and other terms and provisions of this Agreement and the
other Transaction Documents shall be interpreted in accordance with the
foregoing, and (viii) if requested by the Agent or the agent or administrative
agent with respect to the Conduit Assignee, the parties will execute and deliver
such further agreements and documents and take such other actions as the Agent
or such agent or administrative agent may reasonably request to evidence and
give effect to the foregoing. No Assignment by a Purchaser to a Conduit Assignee
of all or any portion of the Class A Certificates shall in any way diminish the
related Bank Investors' obligation under Section 5.7(i) to fund any Additional
Investor Amount not funded by the related Purchaser or such Conduit Assignee or
(ii) to acquire from the related Purchaser or such Conduit Assignee all or any
portion of the Senior Class Certificates.
68
(c) The Transferor hereby agrees and consents to the assignment by
each Senior Class Conduit from time to time of all or any part of its rights
under, interest in and title to this Agreement and the Senior Class Certificates
to any Program Support Provider for such Senior Class Conduit; provided,
--------
however, that any such assignment shall be made in accordance with the
-------
provisions of the Master Pooling and Servicing Agreement and the Series
Supplement and any applicable provisions of this Agreement. In addition, the
Transferor hereby consents to and acknowledges the assignment by (i) EFC of all
of its rights under, interest in and title to this Agreement and the Senior
Class Certificates to the Collateral Agent and (ii) each other Senior Class
Conduit of all of its rights under, interest in and title to this Agreement and
the Senior Class Certificates to any Program Support Provider for such Senior
Class Conduit.
SECTION 6.8. Confidentiality.
---------------
(a) The Transferor and the Servicer agree to maintain the
confidentiality of this Agreement, the Senior Class Certificates, the Fee
Letters, and all other related documents and drafts thereof in communications
with third parties (other than its employees, accountants, auditors, regulators,
shareholders or counsel); provided, however, that this Agreement may be
-------- -------
disclosed to third parties to the extent such disclosure is (i) directly related
to its efforts solicit additional or substitute Bank Investors or Agents,
provided that such potential Bank Investors or Agents agree to maintain such
information confidential in accordance with this Section 6.8 and provided that
the Fee Letter not be disclosed without the written consent of Bank of America ,
(ii) required in order to comply with any applicable law, order, regulation or
ruling, or (iii) required in response to any summons or subpoena or in
connection with any litigation; and provided, further, however, that the
-------- ------- -------
Transferor and the Servicer shall have no obligation of confidentiality in
respect of any information which may be generally available to the public or
becomes available to the public through no fault of theirs. Such documents
shall include, but not be limited to, research studies, proprietary technology,
trade secrets, know-how, market studies and forecasts, competitive analyses,
pricing policies, the substance of agreements with customers and others,
marketing arrangements, customer lists and other documents embodying such
confidential information.
(b) The Agent, each Senior Class Agent, each Senior Class
Conduit and each Bank Investor agree to maintain the confidentiality for all
purposes, including Section 100(b) of Regulation FD issued by the Securities and
Exchange Commission, of any information obtained by it in respect of the
Receivables (including credit losses and delinquency levels) and any other
proprietary or confidential information with respect to Obligors, the Accounts,
the
69
Transferor or any Eligible Originator in communications with third parties
(other than its employees, accountants, auditors, regulators, shareholders or
counsel) and shall not use or permit others to use such information to purchase
or sell any securities of Saks or its affiliates (other than purchases of Senior
Class Certificates); provided, however, that such information may be disclosed
-------- -------
to third parties to the extent such disclosure is (i) required in order to
comply with any applicable Law, or (ii) required in response to any summons or
subpoena or in connection with any litigation or (iii) to any Program Support
Provider, Collateral Agent or Bank Investor or any prospective Bank Investor or
Program Support Provider or to any rating agency providing a rating for the
Related Commercial Paper, provided that the Agent, the applicable Senior Class
Agent, the applicable Senior Class Conduit and the applicable Bank Investor
inform such person that such information is sensitive, proprietary and
confidential and shall be held confidential for all purposes including Section
100(b) of Regulation FD issued by the Securities and Exchange Commission and
shall not be used to purchase or sell any securities of Saks or any Affiliate
thereof (other than purchases of the Senior Class Certificates hereby).
Notwithstanding the foregoing, (i) each Senior Class Conduit shall be permitted
to disclose Receivable performance information and details concerning the
structure of the facility contemplated hereby and by the Series Supplement, in
summary form and in a manner not identifying the Transferor, to prospective
investors in Related Commercial Paper, and (ii) the Agent, each Senior Class
Agent and each Senior Class Conduit shall have no obligation of confidentiality
in respect of any information which may be generally available to the public or
becomes available to the public through no fault of theirs.
SECTION 6.9. No Bankruptcy Petition Against the Senior Class
-----------------------------------------------
Conduits. Each of the Transferor, the Servicer, the Agent, the Senior Class
--------
Agents and the Bank Investors hereby covenants and agrees that, prior to the
date which is one year and one day after the payment in full of all outstanding
Commercial Paper or other indebtedness of the Senior Class Conduits, it will not
institute against, or join any other Person in instituting against any Senior
Class Conduit any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States.
SECTION 6.10. No Recourse. (a) The obligations of each Senior Class
-----------
Conduit under this Agreement are solely the corporate obligations of such Senior
Class Conduit. Notwithstanding anything to the contrary contained in this
Agreement, the obligations of the Senior Class Conduits under this Agreement and
all other Transaction Documents are solely the corporate obligations of the
respective Senior Class Conduits and shall be payable solely to the extent of
funds received by any of them, as appropriate, from the Transferor or the Trust
in accordance herewith
70
or the Series Supplement or from any party to any Transaction Document in
accordance with the terms thereof in excess of funds necessary to pay matured
and maturing Commercial Paper.
(b) The obligations of the Transferor arising under this
Agreement shall be payable solely from amounts available therefore in accordance
with the Series Supplement and amounts otherwise released by the Trust to the
Transferor as holder of the Transferor Interest or any other interest in the
Trust.
SECTION 6.11. Setoff. The Transferor and the Servicer hereby
------
irrevocably and unconditionally waive all right of setoff that it may have under
contract (including this Agreement), applicable law or otherwise with respect to
any funds or monies of the Senior Class Conduits at any time held by or in the
possession of the Transferor.
SECTION 6.12. Further Assurances.
------------------
(a) The Transferor and the Servicer each agrees to do such
further acts and things and to execute and deliver to the Agent, each Senior
Class Agent, each Senior Class Conduit, each Bank Investor or each Collateral
Agent such additional assignments, agreements, powers and instruments as are
reasonably required by such party to carry into effect the purposes of this
Agreement or to better assure and confirm unto such party its rights, powers and
remedies hereunder.
(b) The Agent, each Senior Class Agent and each Senior Class
Conduit each agrees to do such further acts and things and to execute and
deliver to the Transferor such additional instruments as are reasonably required
by such party to carry into effect the purposes of this Agreement or to better
assure and confirm unto such party its rights, powers and remedies hereunder.
71
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Certificate Purchase Agreement as of the date first written above.
SAKS CREDIT CORPORATION,
as Transferor
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Address for notices:
Saks Credit Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Telephone: (___) ___-____
Telecopy: (___) ___-____
SAKS INCORPORATED,
as Servicer
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Treasurer
Address for notices:
Saks Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
ENTERPRISE FUNDING CORPORATION,
as a Purchaser and a Senior Class
Conduit
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Address for notices:
Enterprise Funding Corporation
c/o Global Securitization Services, LLC
▇▇ ▇▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(with a copy to the Agent and the related Senior Class
Agent)
Commitment: Bank of America, N.A., as Agent,
---------- as a Senior Class Agent and as a
$250,410,000 Bank Investor
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
Address for notices:
Bank of America, N.A.
Bank of America Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ -
Global Asset Backed Securitization
Group
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Account for payments:
Bank of America, N.A.
ABA No.: ▇▇▇▇▇▇▇▇▇
For Credit To: Bank of America, Charlotte
Account No.: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
EXHIBIT F
DEFINED TERMS UNDER THE FINANCIAL COVENANTS
"Acquisition" means the acquisition, including without limitation by means
-----------
of merger or consolidation, by the Servicer or any Subsidiary of (i) a
controlling equity interest in another Person (including the purchase of an
option, warrant or convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by the holder thereof),
whether by purchase of such equity interest or upon exercise of an option or
warrant for, or conversion of securities into, such equity interest, (ii) assets
of another Person which constitute all or substantially all of the assets of
such Person or (iii) a Business Unit.
"Audited Restated Financial Statements" means, collectively, the audited
-------------------------------------
restated combined income statement of the Servicer and its Subsidiaries (giving
effect to the Saks Acquisition) for the Fiscal Year ended January 31, 1998 and
the audited restated combined balance sheet of the Servicer and its Subsidiaries
(giving effect to the Saks Acquisition) as at January 31, 1998.
"Authorized Representative" means any of the Chairman, Vice Chairmen,
-------------------------
President or Executive Vice Presidents of the Servicer and, with respect to
financial matters, the Treasurer or Chief Financial Officer of the Servicer.
"Business Unit" means (i) one or more retail stores, warehouses or
-------------
distribution centers, including the related land, buildings and trade fixtures
of a Person or a division of a Person, which may, but is not required to,
include inventory, receivables, furniture, fixtures and equipment, and
intangible and other assets related to such retail stores, warehouses or
distribution centers or (ii) all or substantially all of a line or lines of
business conducted by a Person or a division of a Person.
"Capital Leases" means all leases which have been or should be capitalized
--------------
in accordance with Generally Accepted Accounting Principles as in effect from
time to time including Statement No. 13 of the Financial Accounting Standards
Board and any successor thereof.
"Closing Date" means the date on which the conditions set forth in Section
------------
5.01 of the Credit Agreement have been satisfied.
"Combined Three Month Statements" has the meaning assigned thereto in
-------------------------------
Section 6.01(f) of the Credit Agreement.
"Consistent Basis" in reference to the application of Generally Accepted
----------------
Accounting Principles means the accounting principles observed in the period
referred to are comparable in all material respects to those applied in the
preparation of the Audited Restated Financial Statements, which accounting
principles shall be the same in all material respects as those accounting
principles applied in the preparation of the Combined Three Month Statements.
"Consolidated EBITDA" means, with respect to the Servicer and its
-------------------
Subsidiaries for any period of computation thereof, the sum of, without
duplication, (i) Consolidated Net Income, plus (ii) Consolidated Interest
----
Expense, plus (iii) taxes on income, plus (iv) amortization, plus (v)
---- ---- ----
depreciation, all determined on a consolidated basis in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis; provided
--------
however, that (x) extraordinary and unusual charges incurred by the Servicer
-------
directly as a result of (A) the Acquisition by the Servicer of Saks effective
September 17, 1998 (including in any event repayment or retirement of
Indebtedness of the Saks REMIC Subsidiaries), the Acquisition by the Servicer of
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ & Co. effective January 31, 1998, the Acquisition by the
Servicer of Parisian, Inc. effective October 11, 1996, the Acquisition by the
Servicer of Younkers, Inc. effective February 3, 1996, the Acquisition by the
Servicer of ▇.▇. ▇▇▇▇▇▇▇▇▇'▇, Inc. effective February 1, 1997, the retirement of
the Parisian Senior Subordinated Notes, and the retirement of the Senior Notes
and (B) any Permitted Acquisition after the Closing Date in an amount up to and
including 10% of the Cost of Acquisition for such Permitted Acquisition, and (y)
any non-recurring, non-cash loss, shall all be excluded from the computation of
Consolidated Net Income; provided further, however, that effective as of the
-------- -------
effective date of any Acquisition, Consolidated EBITDA shall be computed giving
pro forma effect to such Acquisition for each Four-Quarter Period then and
thereafter occurring until such Acquisition has been effective for a complete
Four-Quarter Period.
"Consolidated Financing Charges" means those charges owed and allocated to
------------------------------
third parties with respect to accounts receivable securitizations transacted in
the ordinary course of business.
"Consolidated Fixed Charge Ratio" means, with respect to the Servicer and
-------------------------------
its Subsidiaries for the Four-Quarter Period ending on the date of computation
thereof, the ratio of (i) Consolidated EBITDA plus Consolidated Financing
----- ----
Charges plus, to the extent deducted in arriving at Consolidated EBITDA, lease,
----
rental and all
other payments made in respect of or in connection with operating leases, to
(ii) Consolidated Fixed Charges during such Four-Quarter Period.
"Consolidated Fixed Charges" means, with respect to the Servicer and its
--------------------------
Subsidiaries, for the periods indicated, the sum of, without duplication, (i)
---
Consolidated Interest Expense, plus (ii) to the extent deducted in arriving at
----
Consolidated EBITDA, lease, rental and all other payments made in respect of or
in connection with operating leases, plus (iii) Consolidated Financing Charges,
----
all determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis; provided, however, that
--------
effective as of the effective date of any Acquisition, such calculations shall
be computed giving pro forma effect to such Acquisition for each Four-Quarter
Period then and thereafter occurring until such Acquisition has been effective
for a complete Four-Quarter Period.
"Consolidated Funded Total Indebtedness" means, at any time as of which the
--------------------------------------
amount thereof is to be determined, all Indebtedness for Money Borrowed of the
Servicer and its Subsidiaries (including, but not limited to, all current
maturities and borrowings under short term loans) plus the face amount of all
----
issued and outstanding standby letters of credit and all obligations (to the
extent not duplicative) arising under such letters of credit, all determined on
a consolidated basis in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis.
"Consolidated Interest Expense" means, with respect to any period of
-----------------------------
computation thereof, the gross interest expense of the Servicer and its
Subsidiaries, including without limitation (i) the amortization of debt
discounts, (ii) the amortization of all fees (including, without limitation,
fees payable in respect of a Swap Agreement) payable in connection with the
incurrence of Indebtedness to the extent included in interest expense and (iii)
the portion of any payments made in connection with Capital Leases allocable to
interest expense, all determined on a consolidated basis in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis.
"Consolidated Net Income" means, for any period of computation thereof, the
-----------------------
net income of the Servicer and its Subsidiaries as determined on a consolidated
basis in accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis; but excluding as income: (i) net gains on the sale,
conversion or other disposition of capital assets and net gains on the
acquisition, retirement, sale or other disposition of capital stock and other
securities of Servicer or its Subsidiaries,
(ii) any write-up of any asset, and (iii) any other net gain or credit of an
extraordinary nature, all determined in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Net Worth" means at any time as of which the amount thereof
----------------------
is to be determined, the shareholders' equity of the Servicer and its
Subsidiaries determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis (excluding
intercompany items among the Servicer and its Subsidiaries and any upward
adjustment after the Closing Date due to revaluation of assets).
"Contingent Obligation" of any Person means (i) all contingent liabilities
---------------------
required (or which, upon the creation or incurring thereof, would be required)
to be included in the consolidated financial statements (including footnotes) of
such Person in accordance with Generally Accepted Accounting Principles applied
on a Consistent Basis, including Statement No. 5 of the Financial Accounting
Standards Board, (ii) all reimbursement obligations of such Person with respect
to any letter of credit and (iii) without duplication, all obligations of such
Person guaranteeing or in effect guaranteeing any Indebtedness of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
including obligations of such Person however incurred:
(a) to purchase such Indebtedness or any property or assets constituting
security therefor;
(b) to advance or supply funds in any manner (x) for the purchase or
payment of such Indebtedness or (y) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement condition of the
primary obligor;
(c) to grant or convey any lien, security interest, pledge, charge or
other encumbrance on any property or assets of such Person to secure payment of
such Indebtedness;
(d) to lease property or to purchase securities or other property or
services primarily for the purpose of assuring the owner or holder of such
Indebtedness of the ability of the primary obligor to make payment of such
Indebtedness; or
(e) otherwise to assure the owner of the Indebtedness of the primary
obligor against loss in respect thereof.
With respect to Contingent Obligations, such liabilities shall be computed
at the amount which, in light of all the facts and circumstances existing at the
time, represent the present value of the amount which can reasonably be expected
to become an actual or matured liability.
"Cost of Acquisition" means, as at the date of closing any Acquisition, the
-------------------
sum of the following: (i) the value of the capital stock, or warrants or
---
options to acquire capital stock, of the Servicer or any Subsidiary to be
transferred in connection therewith, (ii) any cash or other property (excluding
property described in clause (i)) or the unpaid principal amount of any debt
instrument given as consideration in such Acquisition, and (iii) any
Indebtedness or liabilities assumed by the Servicer or its Subsidiaries in
connection with such Acquisition. For purposes of determining the Cost of
Acquisition for any transaction, (A) the capital stock of the Servicer shall be
valued (I) at its market value as reported on the New York Stock Exchange or any
national securities exchange with respect to shares that are freely tradeable,
and (II) with respect to shares that are not freely tradeable, as determined by
the Board of Directors of the Servicer (which determination shall be
conclusive), (B) the capital stock of any Subsidiary shall be valued as
determined by the Board of Directors of such Subsidiary (which determination
shall be conclusive), and (C) with respect to any Acquisition accomplished
pursuant to the exercise of options or warrants or the conversion of securities,
the Cost of Acquisition shall include both the cost of acquiring such option,
warrant or convertible security as well as the cost of exercise or conversion.
"Credit Agreement" shall mean the Second Amended and Restated Credit
----------------
Agreement dated as of August 26, 1999 among the Servicer, each Lender party
thereto, Bank of America, N.A., as Administrative Agent, ▇▇▇▇▇▇ Guaranty Trust
Company of New York and The Chase Manhattan Bank, as Co-Syndication Agents, and
Citibank, N.A., as documentation agent.
"Dollars" and the symbol "$" means dollars constituting legal tender for
------- -
the payment of public and private debts in the United States of America.
"Fiscal Year" means the 52-week or 53-week period of the Servicer ending on
-----------
the Saturday of each calendar year closest (whether before or after) to January
31 and "Fiscal Year" followed by a numerical year means the Fiscal Year which
has a Fiscal Year Beginning occurring during such numerical calendar year.
"Fiscal Year Beginning" means the first day of a Fiscal Year.
---------------------
"Four-Quarter Period" means a period of four full consecutive fiscal
-------------------
quarterly periods, taken together as one accounting period, and in the event any
such fiscal quarterly period occurs prior to the effective date of any
Acquisition, or is the period in which such effective date occurs (each a "Pre-
---
Acquisition Period"), all financial statements, data, computations and
------------------
determinations for such Four-Quarter Period shall be made on a pro forma basis
for each Pre-Acquisition Period giving effect to such Acquisition for all prior
periods.
"GAAP" means or "Generally Accepted Accounting Principles" means those
---- ----------------------------------------
principles of accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants or which
have other substantial authoritative support and are applicable in the
circumstances as of the date of a report, as such principles are from time to
time supplemented and amended, subject to compliance at all times with Section
1.02 of the Credit Agreement.
"Indebtedness" means with respect to any Person, without duplication, all
------------
Indebtedness for Money Borrowed, all indebtedness of such Person for the
acquisition of property, all indebtedness secured by any Lien on the property of
such Person whether or not such indebtedness is assumed, all liability of such
Person by way of endorsements (other than for collection or deposit in the
ordinary course of business), all Contingent Obligations, all Rate Hedging
Obligations, that portion of obligations with respect to Capital Leases which in
accordance with Generally Accepted Accounting Principles is classified as a
liability on a balance sheet and all Synthetic Lease Indebtedness; but excluding
all accounts payable in the ordinary course of business and only so long as
payment therefor is due within one year; provided, that in no event shall the
--------
term Indebtedness include surplus and retained earnings, minority interest in
Subsidiaries, lease obligations (other than pursuant to Capital Leases or in
connection with any tax retention operating lease or any form of synthetic lease
as provided above), reserves for deferred income taxes and investment credits,
other deferred credits and reserves, and deferred compensation obligations.
"Indebtedness for Money Borrowed" means for any Person all indebtedness in
-------------------------------
respect of money borrowed, including without limitation all Capital Leases and
the deferred purchase price of any property or asset, evidenced by a promissory
note, bond or similar written obligation for the payment of money (including,
but not limited to, conditional sales or similar title retention agreements).
"Lien" means any interest in property securing any obligation owed to, or a
----
claim by, a Person other than the owner of the property, whether such interest
is
based on the common law, statute or contract, and including but not limited
to the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes. For the purposes of these financial covenant
definitions, the Servicer and its Subsidiaries shall be deemed to be the owners
of any property which either of them have acquired or hold subject to a
conditional sale agreement, financing lease, or other arrangement pursuant to
which title to the property has been retained by or vested in some other Person
for security purposes.
"Net Proceeds" from a disposition of assets (other than assets sold in the
------------
ordinary course of business and accounts receivable sold in connection with an
accounts receivable securitization transacted in the ordinary course of business
by a Securitization Subsidiary) or issuance of equity means cash payments
received therefrom as and when received, net of (i) all reasonable legal,
accounting, banking, underwriting, title and recording expenses, commissions,
discounts and other fees and expenses incurred in connection therewith, (ii) all
taxes required to be paid or accrued as a consequence of such disposition or
issuance and (iii) all amounts necessary to repay Indebtedness for Money
Borrowed the repayment of which is secured by such disposed assets.
"Parisian Indenture" means that certain Amended and Restated Indenture
------------------
dated as of October 11, 1996 among the Servicer, Parisian, Inc. and AmSouth Bank
of Alabama (formerly known as AmSouth Bank, N.A.), as trustee, as amended from
time to time thereafter.
"Parisian Senior Subordinated Notes" means the 9.875% Senior Subordinated
----------------------------------
Notes Due 2003 of Parisian, Inc. in the original aggregate principal amount of
$125,000,000 issued pursuant to the Parisian Indenture.
"Permitted Acquisition" means an Acquisition beyond the normal course of
---------------------
business effected with the consent and approval of the board of directors or
other applicable governing body of the Person being acquired, and with the duly
obtained approval of such shareholders or other holders of equity interest as
such Person may be required to obtain, so long as (i) immediately prior to and
immediately after the consummation of such Acquisition, no Default or Event of
Default has occurred and is continuing, (ii) substantially all of the sales and
operating profits generated by such Person (or assets) so acquired or invested
are derived from (A) the same or related line or lines of business as conducted
by the Servicer and its Subsidiaries on the Closing Date or (B) a line or lines
of business not inconsistent with, the business substantially as conducted by
the Servicer and its Subsidiaries on the Closing Date; provided, that the Cost
--------
of Acquisition of all such Acquisitions permitted pursuant to
this clause (ii)(B) shall not in the aggregate exceed $100,000,000 during any
Four-Quarter Period and (iii) if the Cost of Acquisition therefor equals or
exceeds $250,000,000, pro forma historical financial statements as of the end of
the most recently completed Four-Quarter Period giving effect to such
Acquisition are delivered to the Agent not less than five (5) Business Days
prior to the consummation of such Acquisition, together with a certificate of an
Authorized Representative demonstrating compliance with the financial covenants
set forth in Article VIII of the Credit Agreement after giving effect to such
Acquisition.
"Person" means an individual, partnership, limited partnership,
------
corporation, limited liability company, limited liability partnership, trust,
unincorporated organization, association, joint venture or a government or
agency or political subdivision thereof.
"Rate Hedging Obligations" means any and all obligations of the Servicer or
------------------------
any Subsidiary, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or cross-
currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts, warrants and those commonly known as
interest rate "swap" agreements; and (ii) any and all cancellations, buybacks,
reversals, terminations or assignments of any of the foregoing.
"Saks" means Saks Holdings, Inc., a Delaware corporation.
----
"Saks Acquisition" has the meaning assigned thereto in Section 5.01(a)(xiv)
----------------
of the Credit Agreement.
"Saks REMIC Subsidiary" means any of Calwin Realty II, Inc., Win Realty
---------------------
Holdings II, Inc., Florida Win Trust, Or. Win, Inc., York Win Realty, Inc.,
Fifth Win, Inc., Ohio Win, Inc., Tex Win II, Inc., Vir. Win, Inc., Cal SFA,
Inc., Penn SFA, Inc., Tex SFA, Inc., Fifth Avenue Capital Trust and Fifteenth
Win, Inc.
"Securitization Subsidiary" means SAKS Credit Corporation, SAKS
-------------------------
Transitional Credit Corporation, National Bank of the Great Lakes, SFA Finance
Company II and any other present or future Subsidiary (including any credit card
bank) of the Servicer and organized for the purpose of and is only engaged in
(i)
originating, purchasing, acquiring, financing, servicing or collecting accounts
receivable obligations of customers of the Servicer or its Subsidiaries, (ii)
issuing or servicing credit cards, engaging in other credit card operations or
financing accounts receivable obligations of customers of the Servicer and its
Subsidiaries, (iii) the sale or financing of such accounts receivable and
interests therein and (iv) other activities incident thereto.
"Senior Indenture" means that certain Indenture dated as of May 21, 1997
----------------
among the Servicer and The First National Bank of Chicago, as trustee, as
amended from time to time thereafter.
"Senior Notes" means the 8.125% Senior Notes due 2004 of the Servicer in
------------
the aggregate principal amount of $125,000,000 issued pursuant to the Senior
Indenture.
"Servicer" shall mean, for the purpose of these financial covenant
--------
definitions, Saks Incorporated, having a principal place of business in
Birmingham, Alabama.
"Subsidiary" means any corporation or other entity in which more than 50%
----------
of its outstanding voting stock or more than 50% of all equity interests is
owned directly or indirectly by the Servicer and/or by one or more of the
Servicer's Subsidiaries at or after the Closing Date, and specifically includes
Saks and each of its subsidiaries as of the Closing Date.
"Swap Agreement" means one or more agreements between the Servicer and
--------------
another Person, on terms mutually acceptable to the Servicer and such Person,
which agreements create Rate Hedging Obligations.
"Synthetic Lease Indebtedness" means, with respect to a Person that is a
----------------------------
lessee under a synthetic lease, an amount equal to (i) the aggregate purchase
price of any property that the lessor under such synthetic lease acquired,
through one or a series of related transactions, and thereafter leased to such
Person pursuant to such synthetic lease less (ii) the aggregate amount of all
----
payments of fixed rent or other rent payments which reduce such Person's
obligation under such synthetic lease and which are not the financial equivalent
of interest. Synthetic Lease Indebtedness of a Person shall also include,
without duplication, the amount of Synthetic Lease Indebtedness of others to the
extent guarantied by such Person.