Exhibit 4.8
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
Dated as of August 11, 1995
among
SRI RECEIVABLES PURCHASE CO., INC.
as Purchaser
and
THE ORIGINATORS PARTIES HERETO
- 1 -
TABLE OF CONTENTS
PAGE
----
I DEFINITIONS............................................................. 2
1.01 Certain Defined Terms.......................................... 2
1.02 Accounting and UCC Terms....................................... 12
II AMOUNTS AND TERMS OF THE PURCHASES...................................... 13
2.01 The Purchases.................................................. 13
2.02 Delivery of Receivables........................................ 14
2.03 Payments and Computations...................................... 14
2.04 Ineligible Receivables; Repurchase of Receivables.............. 16
2.05 Customer Service Adjustments................................... 17
2.06 Addition of Originators; Merger of Originators................. 18
2.07 Addition of Accounts........................................... 18
2.08 Removal of Accounts............................................ 19
III CONDITIONS TO PURCHASES................................................. 20
3.01 Conditions Precedent to Purchaser's Initial Purchase........... 20
3.02 Conditions Precedent to Each Originator's Sale................. 20
IV REPRESENTATIONS AND WARRANTIES.......................................... 22
4.01 Representations and Warranties of the Purchaser................ 22
4.02 Representations and Warranties of Each of the Originators...... 22
(a) Organization and Good Standing........................ 23
- i -
(b) Due Qualification..................................... 23
(c) Due Authorization..................................... 23
(d) No Conflicts.......................................... 23
(e) Taxes................................................. 23
(f) No Violation.......................................... 24
(g) No Proceedings........................................ 24
(h) All Consents Required................................. 24
(i) Bona Fide Receivables................................. 24
(j) Place of Business..................................... 24
(k) Use of Proceeds....................................... 24
(l) Purchase Termination Event............................ 25
(m) Not an "Investment Company"........................... 25
(n) Software.............................................. 25
(o) Tradenames............................................ 25
(p) ERISA Liens........................................... 25
(q) ERISA and the Code.................................... 25
4.03 Representations and Warranties of Each Originator Relating
to this Agreement and the Receivables................................... 25
(a) Binding Obligation; Valid Sale and Assignment......... 25
(b) Notice of Breach...................................... 27
V GENERAL COVENANTS....................................................... 28
Section 5.01 Covenants of Each Originator.......................... 28
- ii -
(a) Receivables to be Accounts or General Intangibles..... 28
(b) Security Interests.................................... 28
(c) Charge Account Agreements and Credit and Collection
Policies ........................................... 28
(d) Delivery of Collections............................... 29
(e) Conveyance of Accounts................................ 29
(f) Notice of Liens....................................... 29
(g) Compliance with Laws, Etc............................. 29
(h) Preservation of Corporate Existence................... 29
(i) Visitation Rights..................................... 29
(j) Keeping of Records and Books of Account............... 29
(k) Performance and Compliance with Receivables and Charge
Account Agreements............................................. 30
(l) Location of Records................................... 30
(m) Furnishing Copies, Etc................................ 30
(n) Obligation to Record and Report....................... 30
(o) Continuing Compliance with the UCC.................... 30
(p) In-Store Payments..................................... 31
(q) Payments.............................................. 31
(r) Further Action Evidencing Purchases................... 31
(s) Change in Business.................................... 31
5.02 Mergers........................................................ 32
5.03 Transfer of Account Relationships.............................. 32
- iii -
5.04 Purchaser Covenant Regarding Sale Treatment.................... 32
5.05 Tradename License.............................................. 32
VI PURCHASE TERMINATION EVENTS............................................. 33
6.01 Purchase Termination Events.................................... 33
VII INDEMNIFICATION......................................................... 35
7.01 Indemnities by the Originators................................. 35
7.02 Indemnities by the Purchaser................................... 36
VIII MISCELLANEOUS........................................................... 37
8.01 Amendment...................................................... 37
8.02 Notices, Etc................................................... 37
8.03 No Waiver: Remedies............................................ 37
8.04 Binding Effect................................................. 37
8.05 Governing Law.................................................. 37
8.06 Costs, Expenses and Taxes...................................... 38
8.07 Acknowledgment of Assignments.................................. 38
8.08 No Petition in Bankruptcy...................................... 38
EXIHIBT A Form of Additional Originator Agreement................... A-1
- iv -
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
This AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
dated as of August 11, 1995 ("THIS AGREEMENT"), is among those Originators set
forth on SCHEDULE I (each an "ORIGINATOR" and, together with any Originator
permitted to be added as an Originator under the terms of this Agreement, the
"ORIGINATORS") and SRI RECEIVABLES PURCHASE CO., INC., a Delaware corporation
(the "PURCHASER").
W I T N E S S E T H:
WHEREAS, each of the Originators intends to sell Receivables
to the Purchaser on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, this Agreement was originally executed on, and dated
as of, July 30, 1993;
WHEREAS, the Originators under this Agreement as of July 30,
1993 (the "INITIAL ORIGINATORS") were Palais Royal, Inc., a Texas corporation
("PALAIS"), 3 ▇▇▇▇▇ Brothers 3, Inc., a Texas corporation ("BEALLS") and Fashion
Bar, Inc., a Colorado corporation ("FASHION BAR");
WHEREAS, Bealls and Fashion Bar have each merged with and into
Palais effective as of August 2, 1993, rendering Palais the sole Originator
under the Agreement on the date hereof;
WHEREAS, this Agreement has been amended by the First
Amendment to Receivables Purchase Agreement dated October 7, 1994, and the
Second Amendment to Receivables Purchase Agreement dated as of January 31, 1995,
and is being amended and restated on the date hereof; and
WHEREAS, the Purchaser desires to purchase Receivables from
each Originator on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1
ARTICLE I
DEFINITIONS
Section 1.01 CERTAIN DEFINED TERMS. As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"ACCOUNT" shall mean (a) each credit card account established
pursuant to a Charge Account Agreement between an Originator and any Person, the
Receivables from which are designated for sale by an Originator to the
Purchaser, which is identified by (i) an account number, (ii) the amount of
Receivables outstanding in such Account as of the Cut-Off Date and (iii) the
amount of Principal Receivables in such Account as of its Cut-Off Date, in each
case in the computer file or microfiche list delivered to the Purchaser pursuant
to this Agreement, (b) each Automatic Additional Account, and (c) each
Supplemental Account identified in each file or list delivered to the Purchaser.
The definition of Account shall include each Transferred Account but shall not
include any Purged Accounts. The term "Account" shall be deemed to refer to a
Supplemental Account only from and after the Addition Date with respect thereto,
and the term "Account" shall be deemed to refer to any Removed Account only
prior to the Removal Date with respect thereto.
"ACCOUNT PROPERTY" has the meaning specified in SECTION 2.01.
"ADDITION DATE" shall mean each date as of which Receivables
under Supplemental Accounts are designated for sale to the Purchaser pursuant to
SECTION 2.07.
"ADDITIONAL ORIGINATOR" has the meaning specified in SECTION
2.06.
"ADDITIONAL ORIGINATOR AGREEMENT" has the meaning specified in
Section 2.06.
"AFFILIATE" means, with respect to a particular Person, (a)
any Person that, directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person, or (b) any Person who is a director
or officer or general partner (i) of such Person, (ii) of any subsidiary of such
Person, or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect,
(i) to vote 5% or more of the securities having ordinary voting power to elect
the directors of such Person, or (ii) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"AUTHORIZED OFFICERS" means those officers of the Persons
designated in SCHEDULE II hereto (or in such other Schedule as may be delivered
to the parties hereto from time to time) as duly authorized to execute and
deliver this Agreement and any instruments or documents in connection herewith
on behalf of such Persons and to take, from time to time, all other actions on
behalf of the Originators in connection herewith.
2
"AUTOMATIC ADDITIONAL ACCOUNT" shall mean
(a) a consumer revolving credit card account (or any successor
credit card account designations used by an Originator) coming into existence
after the applicable Cut-Off Date:
(i) which is originated by an Originator during the normal
operation of such Originator's credit card business and is not acquired
by such Originator from another credit card issuer;
(ii) which was in existence and owned by such Originator on
the date on which Receivables generated in such account are to be first
sold to the Purchaser and is in existence at the close of business on
the date it is to be first sold to the Purchaser;
(iii) which is payable in Dollars; and
(iv) the Receivables in which have not been charged off prior
to the date of their designation for sale to the Purchaser; or
(b) any other consumer revolving credit card account,
Receivables from which the Purchaser permits to be automatically sold to the
Purchaser.
"BUSINESS DAY" means any day other than (a) a Saturday or a
Sunday, (b) another day on which an Originator is closed, as set forth on a list
furnished to the Purchaser on or before December 1 of the year preceding the
year to which such list relates or (c) another day on which banking institutions
in New York, New York (or such other city(ies) designated by the Purchaser) are
authorized or obligated by law or executive order to be closed; PROVIDED,
HOWEVER, that Originators shall not designate, in the aggregate, more than 8
days in each year (excluding Saturdays and Sundays) under clause (b) as
non-Business Days, of which no more than four (inclusive of Saturdays and
Sundays) shall be consecutive.
"CHARGE ACCOUNT AGREEMENT" means the agreement, which may
consist of more than one document, pursuant to which a Person is obligated to
pay for purchased merchandise or services under a credit plan that permits such
Person to purchase merchandise and services on credit, together with any finance
charges and other charges related thereto, as such agreement may be amended,
modified or supplemented from time to time; PROVIDED, that only agreements
between such Person and (i) an Originator or (ii) the creditor of an account
designated as an Automatic Additional Account or Supplemental Account under this
Agreement shall be considered a Charge Account Agreement hereunder.
"CLOSING DATE," with respect to Receivables originated by an
Originator, means the date of the initial purchase of such Receivables under
this Agreement.
3
"COLLECTIONS" shall mean all payments received by the
Originator in respect of the Receivables, in the form of cash, checks or any
other form of payment in accordance with the Charge Account Agreement in effect
from time to time on any Receivables.
"CREDIT AND COLLECTION POLICY" means the credit, collection,
customer relations and service policies that apply to an Eligible Account, as
such policies currently exist and as such policies may be amended, modified or
supplemented from time to time subject to SECTION 5.01(C).
"CUT-OFF DATE" shall mean, for Receivables in Accounts owned
by each Initial Originator, July 30, 1993, and for Receivables in Accounts owned
by each Additional Originator, the date specified as such in the Additional
Originator Agreement.
"DATE OF PROCESSING" shall mean, with respect to any
transaction, the date on which such transaction is first recorded on an
Originator's or the Purchaser's computer master file of consumer revolving
credit card accounts (without regard to the effective date of such recordation).
"DEFAULTED ACCOUNT" shall mean each Account with respect to
which, in accordance with the Credit and Collection Policy of the applicable
Originator, such Originator has charged off the Receivables in such Account as
uncollectible; an Account shall become a Defaulted Account on the day on which
such Receivables are recorded as charged off as uncollectible on the
Originator's computer master file of consumer credit card revolving accounts.
Notwithstanding any other provision hereof, any Receivables in a Defaulted
Account that are Ineligible Receivables shall be treated as Ineligible
Receivables rather than Receivables in Defaulted Accounts.
"DEFAULTED RECEIVABLE" means a Receivable in a Defaulted
Account.
"DEFAULTED RECEIVABLE RECEIPTS" has the meaning specified in
the definition of "Recoveries."
"DEFAULTED RECEIVABLE REPURCHASE AMOUNT" has the meaning
specified in subsection 2.04(c)(ii).
"DISCOUNT FACTOR" means the discount factor determined in
accordance with SCHEDULE V hereto.
"DISTRIBUTION DATE" shall mean the fifteenth day of each month
or, if such fifteenth day is not a Business Day, the next succeeding Business
Day.
"DOLLARS", "$", or "U.S. $" shall mean United States dollars.
"ELIGIBLE ACCOUNT" shall mean, as of the Closing Date (or,
with respect to Supplemental Accounts as of each Addition Date and with respect
to Automatic Additional
4
Accounts, as of the date the Receivables arising in such Accounts are designated
for sale to the Purchaser), each Account owned by an Originator:
(a) which is payable in Dollars;
(b) which has not been identified by such Originator
in its computer files as an account as to which such
Originator has any confirmed record of any fraudrelated
activity by the Obligor;
(c) which has not been sold or pledged to any other
party and which does not have Receivables which have been sold
or pledged to any other party;
(d) which was created in accordance with the Credit
and Collection Policy of such Originator at the time of
creation of such account or the Receivables of which the
Purchaser permits to be sold automatically to the Purchaser;
(e) the Receivables in which such Originator has not
charged off (or required to be charged off) in its customary
and usual manner for charging off Receivables in such Accounts
as of the Closing Date (or, with respect to Supplemental
Accounts as of the Addition Date and with respect to Automatic
Additional Accounts, as of the date the Receivables of such
Accounts are first designated for sale to the Purchaser)
unless such Account is subsequently reinstated; and
(f) which is not an Automatic Additional Account
which the Purchaser and any Originator have elected to exclude
from sale under this Agreement.
"ELIGIBLE RECEIVABLE" means a Receivable that satisfies each
of the following criteria:
(a) it arises under an Eligible Account;
(b) it constitutes an "account" or a "general
intangible" as defined in Article 9 of the UCC as then in
effect in the Relevant UCC State;
(c) it is, at the time of its transfer to the
Purchaser, the legal, valid and binding obligation of a Person
or is guaranteed by a Person who (i) is living, (ii) is not a
minor under the laws of his/her state of residence and (iii)
is competent to enter into a contract and incur debt (or with
respect to obligations from Persons who do not qualify under
clauses (ii) or (iii), is so guaranteed by a Person who
qualifies under clauses (i), (ii) and (iii)); PROVIDED,
HOWEVER that (1) no more than 10% of all Eligible Receivables
shall be from Obligors which are (x) non-U.S. Persons or (y)
the United States, a state of any instrumentality thereof and
(2) no such Receivables shall be obligations of any Affiliate
(other than directors, officers and employees) of
5
the Transferor; and PROVIDED, FURTHER, that no more than 6% of
all Eligible Receivables shall be from Obligors which are
non-U.S. Persons, unless the Rating Agency provides its
written consent to an increase in such percentage;
(d) it and the underlying Charge Account Agreement do
not contravene in any material respect any laws, rules or
regulations applicable thereto (including, without limitation,
rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) that
could reasonably be expected to have an adverse impact on the
amount of Collections thereunder, and the Originator of such
Receivable is not in violation of any such laws, rules or
regulations in any respect material to such Charge Account
Agreement;
(e) all material consents, licenses, or
authorizations of, or registrations with, any governmental
authority required to be obtained or given in connection with
the creation of such Receivable or the execution, delivery,
creation and performance of the underlying Charge Account
Agreement have been duly obtained or given and are in full
force and effect as of the date of the creation of such
Receivable;
(f) at the time of its sale to the Purchaser, the
Purchaser will have good and marketable title free and clear
of all Liens and security interests arising under or through
the Purchaser (other than Permitted Liens);
(g) it is not a Defaulted Receivable or a Receivable
owing from a bankrupt Obligor; and
(h) it arises under a Charge Account Agreement that
has been duly authorized by the applicable Originator and
which, together with such Receivable, is in full force and
effect and constitutes the legal, valid and binding obligation
of the Obligor of such Receivable enforceable against such
Obligor in accordance with its terms and is not subject at the
time of transfer to the Purchaser to any dispute, offset,
counterclaim or defense whatsoever.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or
not incorporated) that is a member of a group of which any Originator is a
member and which is treated as a single employer under Section 414 of the Code
and the regulations promulgated and rules issued thereunder.
6
"EXCESS CASH" means all cash and cash equivalents held by the
Purchaser in excess of any other due and owing obligations of the Purchaser and
any reserves against future obligations which the Purchaser deems reasonably
necessary or prudent to establish and maintain.
"FINANCE CHARGE COLLECTIONS" shall mean with respect to any
Business Day Collections received with respect to each Finance Charge
Receivable.
"FINANCE CHARGE RECEIVABLES" shall mean all amounts billed
from time to time to the Obligors on any Account in respect of (i) Periodic
Finance Charges, (ii) over limit fees, (iii) late charges, (iv) returned check
fees, (v) annual membership fees and annual service charges, if any, (vi)
transaction charges, (vii) all other fees and charges, and (viii) Recoveries.
"GOVERNMENTAL AUTHORITY" means the United States of America,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"INCIPIENT PURCHASE TERMINATION EVENT" means any condition,
act or event specified in SECTION 6.01 that, with the giving of notice or the
lapse of time, or both, would become a Purchase Termination Event.
"INELIGIBLE RECEIVABLES" has the meaning specified in SECTION
2.04(A).
"INITIAL ORIGINATORS" has the meaning specified in the
recitals.
"INITIAL OUTSTANDING BALANCE" of a Receivable means the
Outstanding Balance of such Receivable on the Initiation Date of such
Receivable.
"INITIATION DATE" means, with respect to any Receivable, the
Business Day following the Date of Processing of such Receivable.
"IN-STORE PAYMENT" means any payment made by an Obligor with
respect to a Receivable by delivery of cash, a check or money order, or any
other form of payment to a cashier or other employee of any SRI Store.
"LIBOR" shall mean the rate obtained by dividing (x) the
three-month rate described on the Dow ▇▇▇▇▇ Telerate System, p. 3750, as of
11:00 a.m. London time divided by (y) a percentage equal to one minus the stated
maximum rate (stated as a decimal) of all reserves required to be maintained
against "Eurocurrency Liabilities" as specified in Regulation D (or against any
other category of liabilities which includes deposits by reference to which the
interest rate on LIBOR is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of any bank to
United States residents); PROVIDED, HOWEVER, with respect to clause (x) above,
in the event such rate shall not be provided, "LIBOR" shall mean (a) the
arithmetic average (rounded upwards to the nearest 1/16th of 1%) of the rates at
which deposits in
7
United States dollars are offered to four reference banks selected by BT
Securities Corp. in the interbank Eurodollar market at approximately 11:00 a.m.
(London time) divided by (b) the percentages profiled in clause (y) above.
"LIEN" means any mortgage, deed of trust, pledge,
hypothecation, assignment, participation or equity interest, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement under
the UCC (other than any such financing statement filed for informational
purposes only) or comparable law of any jurisdiction to evidence any of the
foregoing.
"LOCK BOXES" has the meaning specified in SECTION 2.01.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which any Originator or any ERISA
Affiliate (other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code) is making or accruing an
obligation to make contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.
"MONTHLY PERIOD" shall mean the period from and including the
first day of each fiscal month of the Originators to and including the last day
of each such fiscal month.
"NET OWNERSHIP INTEREST" means, with respect to any
Receivable, an amount equal to the aggregate Initial Outstanding Balance of such
Receivable, plus interest or finance charges accrued on such Receivable to such
time less the cumulative amount of Collections with respect to such Receivable
actually received by the Purchaser or the applicable Originator prior to such
time as such Net Ownership Interest may be adjusted from time to time pursuant
to Section 2.05.
"OBLIGOR" means a Person obligated to make payments with
respect to a Receivable arising under an Account pursuant to a Charge Account
Agreement.
"ORIGINATOR" has the meaning specified in the preamble.
"OUTSTANDING BALANCE" means, with respect to a Receivable on
any day, the aggregate amount owed by the Obligor thereunder as of the close of
business on the prior Business Day (net of returns and adjustments).
"PERIODIC FINANCE CHARGES" shall have, with respect to any
Account, the meaning specified in the Charge Account Agreement applicable to
such Account for finance charges (due to periodic rate) or any similar term.
8
"PERMITTED LIEN" shall mean with respect to the Receivables:
(i) Liens in favor of the Purchaser created pursuant to this Agreement; (ii)
Liens in favor of any transferee of the Purchaser; and (iii) Liens which secure
the payment of taxes, assessments and governmental charges or levies, if such
taxes are either (a) not delinquent or (b) being contested in good faith by
appropriate legal or administrative proceedings and as to which adequate
reserves in accordance with generally accepted accounting principles shall have
been established, but only so long as such proceedings could not subject the
Purchaser or any transferee of the Purchases to any civil or criminal penalty or
liability or involve any risk of loss, sale or forfeiture of any property,
rights or interests covered by this Agreement.
"PERSON" means any legal person, including an individual,
corporation, partnership, association, joint venture, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of a
similar nature.
"POOLING AGREEMENT" shall mean the Pooling and Servicing
Agreement dated as of July 30, 1993 by and among the Bankers Trust (Delaware),
as Trustee, the Purchaser, as Transferor and Specialty Retailers, Inc., as
Servicer, as amended, supplemented and modified from time to time.
"PRINCIPAL COLLECTIONS" shall mean with respect to any
Business Day the Collections received with respect to each Principal Receivable.
"PRINCIPAL RECEIVABLES" shall mean amounts shown on the
Purchaser's records as amounts payable by Obligors with respect to Eligible
Receivables on any Account other than such amounts that are Finance Charge
Receivables or Receivables in Defaulted Accounts and shall include, without
limitation, amounts payable for purchases of goods or services. A Receivable
shall be deemed to have been created at the end of the day on the Date of
Processing of such Receivable. In calculating the aggregate amount of Principal
Receivables on any day, the amount of Principal Receivables shall be reduced by
the aggregate amount of credit balances in the Accounts on such day.
"PURCHASE CONSIDERATION" means, with respect to each purchase
of newly created Receivables from an Originator on the Initiation Date of such
Receivables, the aggregate consideration payable by the Purchaser to such
Originator equal to the Purchase Price of such Receivables, which shall be paid
pursuant to SECTION 2.03, either in cash, an increase in the principal amount of
the Revolving Note, or a combination thereof.
"PURCHASE DATE" has the meaning specified in SECTION 2.01(A).
"PURCHASE PRICE" means the product of (i) the Outstanding
Balance of such Receivable tendered to the Purchaser pursuant to SECTION 2.02(A)
and (ii) a percentage equal to 100% minus the Discount Factor for the Purchase
of such Receivable.
9
"PURCHASE TERMINATION DATE" means the date on which the
Purchaser's obligation to purchase Receivables shall terminate pursuant to
SECTION 6.01.
"PURCHASE TERMINATION EVENT" has the meaning specified in
SECTION 6.01.
"PURCHASER" has the meaning specified in the preamble.
"PURCHASES" has the meaning specified in SECTION 2.01(A).
"PURGED ACCOUNT" shall mean an Account that has an Outstanding
Balance of zero and has been terminated pursuant to the applicable Credit and
Collection Policy due to an extended period of inactivity.
"RECEIVABLE" means, with respect to any Obligor, any account
or general intangible representing the indebtedness of such Obligor under a
Charge Account Agreement arising in an Account from a sale of merchandise or
services, and includes the right to payment of any interest or finance charges
and other obligations of such Obligor with respect thereto. Each Receivable
includes, without limitation, all rights of the Originator under the applicable
Charge Account Agreement. Each increase in the Outstanding Balance of any
Receivable (other than any such increase resulting from the accrual of interest
or finance charges or other fees with respect to such Receivable) shall, for
purposes of ARTICLE II, constitute a separate Principal Receivable.
"RECEIVABLES STATEMENT" has the meaning specified in SECTION
2.02(A).
"RECOVERIES," with respect to any period, shall mean the
PRODUCT of (i) any amounts received during such period ("DEFAULTED RECEIVABLE
RECEIPTS") with respect to Receivables in Accounts which previously became
Defaulted Accounts and (ii) the fraction resulting from (A) one MINUS (B) a
fraction, the numerator of which is the cumulative aggregate Defaulted
Receivable Repurchase Amount paid by the Originators during the preceding six
full Monthly Periods pursuant to Section 2.04(c), and the denominator of which
is the total principal amount of Receivables which become Defaulted Receivables
during such six Calculation Periods.
"RELEVANT UCC STATE" means each jurisdiction in which the
filing of a UCC financing statement is necessary or desirable to evidence the
Purchases.
"REMOVAL DATE" shall mean the date mutually designated by an
Originator and the Purchaser for removal of a Removed Account.
"REMOVED ACCOUNTS" shall have the meaning specified in Section
2.08(a).
"REPURCHASE AMOUNT" shall have the meaning specified in
SECTION 2.04(B).
"REPURCHASE DIVIDEND AMOUNT" has the meaning set forth in
SECTION 2.04(C)(IV).
10
"REQUIREMENTS OF LAW" for any Person shall mean the
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation, or determination of an arbitrator or Governmental Authority in
each case applicable to or binding upon such Person or to which such Person is
subject, whether federal, state or local, including, without limitation, usury
laws, the federal Truth in Lending Act and Regulation Z and Regulation B of the
Board of Governors of the Federal Reserve System.
"REVOLVING NOTE" shall mean a note in the form of EXHIBIT A
hereto issued to an Originator, SRI or any Affiliate of SRI, which shall contain
the terms set forth in SECTION 2.03.
"SETTLEMENT DATE" means the date upon which the Purchaser and
any Originator shall reconcile any amounts owed to each other, except amounts
payable in respect of Purchases of Receivables, which date shall occur at least
once each fiscal month.
"SETTLEMENT PERIOD" means a period from and including a
Settlement Date to but excluding the next following Settlement Date.
"SETTLEMENT STATEMENT" means a statement, dated the last day
of each Settlement Period, reflecting the adjustments and credits pursuant to
SECTION 2.05 for such Settlement Period and for any Receivables being sold or
repurchased by the Originator on the date thereof, substantially in the form of
EXHIBIT A hereto, signed by an Authorized Officer of an Originator.
"SRI" shall mean Specialty Retailers, Inc., a corporation
organized under the laws of the State of Delaware.
"SRI CREDIT CARD BANK" means a bank that is an Affiliate of
SRI and which qualifies as a bank under federal or state banking law.
"SRI STORE" means any merchant which sells merchandise or
services on credit pursuant to a Charge Account Agreement.
"SRI SUB" means SRI Receivables, Inc., a Delaware corporation.
"SUPPLEMENTAL ACCOUNTS" shall have the meaning specified in
SECTION 2.07(B).
"TRANSFERRED ACCOUNT" shall mean an Account with respect to
which a new credit account number has been issued by the Originator under
circumstances resulting from a lost or stolen credit card and not requiring
standard application and credit evaluation procedures under the Credit and
Collection Policy, and which can be traced or identified by reference to or by
way of the computer files or microfiche lists delivered to the Purchaser
pursuant to this Agreement or as an account into which an Account has been
transferred.
11
"UCC" means the Uniform Commercial Code, as amended from time
to time, as in effect in the applicable jurisdiction.
Section 1.02. ACCOUNTING AND UCC TERMS. All accounting terms
not specifically defined herein shall be construed in accordance with United
States generally accepted accounting principles ("U.S. GAAP"); and all terms
used in Article 9 of the UCC that are used but not specifically defined herein
are used herein as defined therein.
12
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
Section 2.01. THE PURCHASES. (a) Each Originator does hereby
sell, transfer, assign, and otherwise convey to the Purchaser, without recourse,
all of its right, title and interest in, to and under (collectively, the
"PURCHASES"):
(i) all right, title and interest of such Originator
in and to the Receivables existing on the Cut-Off Date for
such Originator and thereafter created and arising in
connection with the Accounts and any accounts that meet the
definition of Automatic Additional Accounts, including,
without limitation, all accounts, contract rights, chattel
paper, instruments, general intangibles and other obligations
of any Obligor with respect to any such Receivables, then or
thereafter existing, whether or not arising out of or in
connection with the sale or lease of goods or the rendering of
services, including without limitation, the right to payment
of any interest, Finance Charge Receivables, returned check
fees or late charges and other obligations of an Obligor with
respect to any such Receivables, and all rights in and to all
security agreements, and other contracts securing or otherwise
relating to any such accounts, contract rights, chattel paper,
instruments, general intangibles or obligations (any and all
such security agreements and other contracts being the
"RELATED CONTRACTS");
(ii) all guarantees, insurance and other agreements
or arrangements of whatever character from time to time
supporting or securing payment of any Receivables;
(iii) all payment and enforcement rights (but not any
obligations) to, in and under the Related Contracts;
(iv) the following:
(A) any lock box account relating to the
Receivables (the "LOCK BOXES") and all funds, and all
certificates and instruments, if any, from time to
time representing or evidencing or held in the Lock
Boxes (the "ACCOUNT PROPERTY");
(B) all notes, certificates of deposit and
other instruments from time to time hereafter
delivered to or otherwise possessed by an Originator
for and on behalf of the Purchaser in substitution
for or in addition to any of the then existing
Account Property; and
(C) all interest, dividends, cash,
instruments and other property from time to time
received, receivable or otherwise distributed in
respect of or in exchange for any and all of the
existing Account Property;
13
(v) proceeds of any and all of the Purchases
described in subparagraphs (i) through (iv) above (including,
without limitation, Recoveries and proceeds that constitute
property of the types described in clauses (i) through (iv)
above) and, to the extent not otherwise included, all payments
under insurance (whether or not the Trustee is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any
of such foregoing Purchases;
from each Originator on the Closing Date and on the Initiation Date of any such
subsequently created Receivable during the period from the Closing Date with
respect to such Originator until the Purchase Termination Date with respect to
such Originator (each such date, including each such Closing Date, being a
"PURCHASE DATE").
(b) The parties to this Agreement intend that the transactions
contemplated hereby shall be, and shall be treated as, a purchase by the
Purchaser and a sale by the applicable Originator of the Receivables and not as
a lending transaction. The sale of Receivables by any Originator hereunder shall
be without recourse to, or representation or warranty of any kind (express or
implied) by, such Originator or any other Originator, except as otherwise
specifically provided herein. If, notwithstanding the express intent of the
parties hereto, it is determined that this Agreement does not constitute a valid
sale, transfer and assignment by the Originators to the Purchaser of the
Purchases, each Originator shall be deemed to have granted to the Purchaser a
"security interest" (as defined in the UCC as in effect in the Relevant UCC
State) in such property of the Originators which comprises the Purchases
described herein, and this Agreement shall be deemed to constitute a security
agreement under the UCC in effect in the Relevant UCC State.
Section 2.02. DELIVERY OF RECEIVABLES. (a) On each Business
Day prior to the Purchase Termination Date, each Originator shall deliver, or
shall cause to be delivered, all of its Receivables to the Purchaser by
delivering to the Purchaser a statement or report (a "RECEIVABLES STATEMENT")
specifying to the Purchaser the aggregate outstanding principal balance of such
Receivables.
(b) Upon the fulfillment of the conditions set forth in
ARTICLE III, the delivery to the Purchaser of the Receivables Statement and
payment of the Purchase consideration as provided in Section 2.03, all such
Originator's right, title and interest in and to such Receivables shall have
been sold, assigned, transferred, conveyed and set over to the Purchaser.
Section 2.03. PAYMENTS AND COMPUTATIONS. (a) Subject to
Section 2.03(b), the Purchase Price for Receivables purchased from an Originator
pursuant to Section 2.01 shall be paid or provided for on the Purchase Date of
such Receivables (i) first by payment in cash in immediately available funds (to
the extent of Excess Cash, after such application to pay other Originators
pursuant to this Section 2.03 as Purchaser has elected to make) and (ii) then by
increasing the principal amount of the Revolving Note issued to such Originator
by the amount of the Purchase Price that is not paid pursuant to clause (i)
(such increase to be made by notation thereon). The
14
failure of an Originator to note the increase of the principal amount of the
Revolving Note thereon shall not relieve the Purchaser from its obligations to
such Originator.
(b) $35,177,048.02 of the Receivables sold by Palais Royal,
Inc. to the Purchaser on the Closing Date are to be conveyed by Palais to the
Purchaser as a capital contribution in exchange for 999 shares of common stock
of the Purchaser which, together with the 1 share of common stock purchased by
Palais Royal, Inc. on July 30, 1993, represent all of the outstanding common
stock of the Purchaser. All Ineligible Receivables sold by Palais Royal, Inc. to
the Purchaser shall be deemed to be a capital contribution to the Purchaser.
(c) The Purchaser shall pay all amounts to be paid in cash
with respect to the Purchases to the Originator (or such other person as is
designated by such Originator) on the date of the Purchase thereof and shall pay
all amounts in respect of principal of and interest on any Revolving Note in
accordance with the terms thereof. Each Revolving Note shall contain the
following terms:
(i) interest shall accrue on the outstanding principal amount
of each Revolving Note at a per annum rate of interest (calculated on
the basis of a 360-day year of twelve 30- day months) equal to LIBOR +
1%;
(ii) the outstanding principal of and accrued interest on each
Revolving Note shall be payable out of Excess Cash;
(iii) all amounts paid with respect to an outstanding
Revolving Note shall be allocated first to accrued interest until all
such interest is paid, and then to outstanding principal;
(iv) an Originator shall only be permitted to look to Excess
Cash for payment of the Revolving Note and to the extent that such
amounts are insufficient, such Originator shall not have any claim
against the Purchaser or additional recourse against the Purchaser
(other than with respect to Excess Cash available in the future) and
such Revolving Note shall be fully subordinated to the rights of any
other creditors of the Purchaser;
(v) no Revolving Note may be sold or otherwise transferred;
PROVIDED that nothing shall prevent the Revolving Note from being
pledged to any creditor of the Originators or SRI or such creditor from
exercising its rights under such pledge;
(vi) the Purchaser may offset any amount due and owing by the
applicable Originator against any amount due and owing by the Purchaser
to such Originator under the terms of the Revolving Note;
(vii) the Purchaser, at its option, may repay all or any
portion of the accrued interest on and principal of any Revolving Note
at any time; and
15
(viii) no draw shall be made on a Revolving Note issued to an
Originator if, as a result of such draw, the outstanding principal
balance thereof shall exceed 15 per cent of the outstanding balance of
Receivables at such time.
(d) All payments hereunder to an Originator shall be made not
later than the close of business (New York City time) on the date specified
therefor in lawful money of the United States of America in same day funds to
the bank account designated in writing by such Originator to the Purchaser from
time to time.
(e) Whenever any payment to be made hereunder shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
Section 2.04. INELIGIBLE RECEIVABLES; REPURCHASE OF
RECEIVABLES. (a) In the event of a breach of any representations and warranties
set forth in Section 4.02(i) or Sections 4.03(a)(iii) through (xii) with respect
to a Receivable sold by an Originator, or in the event that a Receivable is not
an Eligible Receivable as a result of the failure to satisfy the conditions set
forth in the definition of Eligible Receivable, each such Receivable which is
the subject of such breach or is not an Eligible Receivable shall be designated
an "INELIGIBLE RECEIVABLE" and the applicable Originator shall pay the
Outstanding Balance (including any Finance Charge Receivables) of such
Ineligible Receivable to the Purchaser either, at the option of the Purchaser,
in the form of cash or a reduction of the Revolving Note, and such Originator
shall either be deemed to have made a contribution of equity, or shall be issued
stock, equal in value to such cash or reduction; PROVIDED, HOWEVER, that if such
representations and warranties with respect to such Receivable shall
subsequently be true and correct in all material respects as if such Receivable
had been created on such day or such Receivable shall subsequently satisfy the
conditions set forth in the definition of Eligible Receivable, such Receivable
shall be designated an Eligible Receivable, and the principal amount of the
Revolving Note shall increase by the principal amount of such Receivable
(determined in accordance with the procedures set forth in the definition of
Principal Receivable).
(b) In the event of a breach of any of the representations and
warranties set forth in Sections 4.02(a), (b) and (c) and 4.03(a)(i) and (ii),
the Purchaser may direct the Originators to repurchase an amount of Receivables
as designated by the Purchaser, and the Originators shall be obligated to
repurchase such Receivables on a date specified by the Purchaser (such date, the
"REPURCHASE DATE") occurring within such applicable period on the terms and
conditions set forth below; PROVIDED, HOWEVER, that no such reassignment shall
be required to be made if, at any time during such applicable period, the
representations and warranties contained in Sections 4.02(a), (b) and (c) and
Sections 4.03(a)(i) and (ii) shall then be true and correct in all material
respects. The Originators shall, on the Business Day (in next day funds)
preceding the Repurchase Date, deposit an amount equal to the principal amount
of such Receivables as are designated by the Purchaser (the "REPURCHASE
AMOUNT"). On the Distribution Date following the Transfer Date on which such
amount has been paid in full to the Purchaser, the Receivables and all monies
due or to become due with respect thereto and all proceeds of the Receivables
allocated to the Receivables for which the Repurchase Amount has been paid shall
be released to the Originators after payment of all amounts
16
otherwise due hereunder on or prior to such dates and the Purchaser shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranty, as shall be prepared by and as are
reasonably requested by the Originators to vest in the Originators or its
designee or assignee, all right, title and interest of the Purchaser in and to
such Receivables, all monies due or to become due with respect thereto and all
proceeds of such Receivables. If the Purchaser gives notice directing the
Originators to accept reassignment as provided above, the obligation of the
Originators to accept reassignment of the applicable Receivables and pay the
Repurchase Amount pursuant to this Section 2.04(b) shall constitute the sole
remedy respecting a breach of the representations and warranties contained in
Sections 4.02(a), (b) and (c) and 4.03(a)(i) and (ii) available to the
Purchaser.
(c) (i) On each Distribution Date with respect to a Monthly
Period during each fiscal year of an Originator, Originator shall
repurchase from the Purchaser all Defaulted Receivables purchased by
the Purchaser from such Originator pursuant to Section 2.4(f) of the
Pooling Agreement and Section 5 of the First Amendment to the Pooling
Agreement on such Distribution Date.
(ii) Such Originator shall, on the Transfer Date (in next day
funds) preceding each Distribution Date, deposit an amount equal to the
principal amount of such Defaulted Receivables (the "DEFAULTED
RECEIVABLE REPURCHASE AMOUNT") into the Collection Account. On such
Distribution Date, such repurchased Defaulted Receivables and all
monies due or to become due with respect thereto and all proceeds of
such repurchased Defaulted Receivables allocated to such repurchased
Defaulted Receivables for which the Defaulted Receivable Repurchase
Amount has been paid shall be released to such Originator after payment
of all amounts otherwise due hereunder on or prior to such dates and
such Originator shall execute and deliver such instruments of transfer
or assignment, in each case without recourse, representation or
warranty, as shall be prepared by and as are reasonably requested by
such Originator to vest in such Originator or its designees or assigns,
all right, title and interest of the Purchaser in and to such
repurchased Defaulted Receivables, all monies due or to become due with
respect thereto and all proceeds of such repurchased Defaulted
Receivables. Thereafter, such Defaulted Receivables shall not be
considered Receivables for any purpose hereunder.
(iii) In consideration for such Originator's obligation to
repurchase Defaulted Receivables as set forth in this subsection (c),
so long as such Originator complies with such obligation, such
Originator shall retain any amounts which do not constitute Recoveries
received by such Originator with respect to Defaulted Receivables.
(iv) On each Distribution Date on which any Originator is
obligated to repurchase Defaulted Receivables in accordance with clause
(i) of the Section 2.04(c), such obligation shall be expressly subject
to the condition precedent that the Purchaser shall have declared a
dividend to all holders of its common stock in an aggregate amount
equal to
17
principal amount of Defaulted Receivables repurchased by all
Originators on such Distribution Date (the "REPURCHASE DIVIDEND
AMOUNT").
Section 2.05 CUSTOMER SERVICE ADJUSTMENTS. Any Originator may
accept a return of goods for full or partial credit or make a daily adjustment
in the principal amount or finance or other charges accrued or payable with
respect to the account of a customer who has purchased merchandise or services
on credit under a Charge Account Agreement; PROVIDED, that such adjustment is
permitted under such Originator's applicable Credit and Collection Policy. The
aggregate amount of all such adjustments made by such Originator during any
Settlement Period shall be payable to the Purchaser by such Originator and shall
be due no later than the Settlement Date that occurs at the end of such
Settlement Period. Such payments shall, at the option of the Purchaser, be made
in cash or pursuant to a decrease in the principal amount of the Revolving Note.
Section 2.06. ADDITION OF ORIGINATORS; MERGER OF ORIGINATORS.
Notwithstanding anything to the contrary in this Agreement, any direct or
indirect wholly-owned subsidiary of SRI (whether now in existence or acquired or
created after the date hereof) may at any time become an Originator hereunder,
whether in addition to or in substitution for one or more then-existing
Originators (each such additional or substitute Originator, an "ADDITIONAL
ORIGINATOR"); PROVIDED, that, (i) at the time such direct or indirect
wholly-owned subsidiary becomes an Additional Originator, such direct or
indirect wholly-owned subsidiary shall execute an agreement (an "ADDITIONAL
ORIGINATOR AGREEMENT") in which such Additional Originator (a) agrees to sell
Receivables to the Purchaser on the terms and subject to the conditions set
forth in this Agreement, and becomes a party to this Agreement, (b) complies
with the conditions set forth in SECTION 3.01, (c) makes the representations and
warranties set forth in SECTION 4.02 and 4.03 and (d) agrees to comply with the
covenants set forth in ARTICLE V and (ii) the Purchaser shall have consented in
writing to the inclusion of the Additional Originator pursuant to this SECTION
2.06. An agreement substantially in the form attached hereto as EXHIBIT A shall
be an acceptable Additional Originator Agreement. Following the addition or
substitution of any Additional Originator, the term "Originator" as used in this
Agreement shall include for all purposes such Additional Originator. Nothing
herein shall prevent one or more Originators from merging with and into a direct
or indirect wholly-owned subsidiary of SRI (whether or not such direct or
indirect wholly-owned subsidiary is a then-existing Originator) and, in the
event of such merger, such surviving corporation shall be deemed an "Originator"
for purposes of this Agreement; PROVIDED that any such surviving corporation
must (a) agree in writing to sell Receivables to the Purchaser on the terms and
subject to the conditions set forth in this Agreement and become a party to this
Agreement, (b) comply with the conditions set forth in SECTION 3.01, (c) make
the representations and warranties set forth in SECTION 4.02 and 4.03 and (d)
agree in writing to comply with the covenants set forth in ARTICLE V; PROVIDED
FURTHER that in the event of any merger of Originators which are then a party to
this Agreement, the conditions set forth in (a), (b) and (c) shall be deemed
satisfied.
Section 2.07. ADDITION OF ACCOUNTS. (a) Unless the Purchaser
or any Originator otherwise elects (which either can do at its option, subject
to Section 2.07(b)), all Accounts which meet the definition of Automatic
Additional Accounts shall be included as Accounts from and after
18
the date upon which such Automatic Additional Accounts are created and all
Receivables in such Automatic Additional Accounts, whether such Receivables are
then existing or thereafter created, shall be sold automatically to the
Purchaser. For all purposes of this Agreement, all receivables of such Automatic
Additional Accounts shall be treated as Receivables upon their creation and
shall be subject to the eligibility criteria specified in the definitions of
"Eligible Receivable" and "Eligible Account."
(b) Notwithstanding an Originator's election to
terminate or suspend the inclusion of Automatic Additional Accounts, the
Purchaser may require such Originator to designate additional credit card
accounts or any successor credit card account designation accounts
("SUPPLEMENTAL ACCOUNTS") to be included as Accounts in such amount as
designated by the Purchaser.
Section 2.08. REMOVAL OF ACCOUNTS. The Purchaser and any
Originator may from time to time mutually designate Accounts which will no
longer be subject to this Agreement and, following such designation, no
Receivables created under such Accounts will be sold to the Purchaser hereunder
(the "REMOVED ACCOUNTS").
19
ARTICLE III
CONDITIONS TO PURCHASES
Section 3.01. CONDITIONS PRECEDENT TO PURCHASER'S INITIAL
PURCHASE. The obligation of the Purchaser to purchase Receivables hereunder on
the occasion of the initial Purchase from any Originator is subject to the
conditions precedent that the Purchaser shall have received on or before the
date of such Purchase the following, each (unless otherwise indicated) dated the
day of such initial sale and in form and substance satisfactory to the
Purchaser:
(i) a copy of duly adopted resolutions of the Board of
Directors of such Originator authorizing this Agreement, the documents
to be delivered by such Originator hereunder and the transactions
contemplated hereby, certified by the Secretary or Assistant Secretary
of such Originator;
(ii) a duly executed certificate of the Secretary or an
Assistant Secretary of such Originator certifying the names and true
signatures of the Authorized Officers authorized on behalf of such
Originator to sign this Agreement or any instruments or documents in
connection with this Agreement;
(iii) (A) executed UCC-1 financing statements with respect to
the Receivables, naming such Originator as seller and the Purchaser as
purchaser, in proper form for filing in such jurisdiction in which the
Purchaser deems it necessary or desirable to perfect the Purchaser's
ownership thereof under the UCC or comparable law of such jurisdiction
and (B) evidence that all other actions necessary or, in the opinion of
the Purchaser, desirable or required to perfect the Purchaser's
ownership of the Receivables sold hereunder have been duly taken; and
(iv) a letter signed by such Originator or such other of its
Affiliates which is a party to any then current Lock-Box Agreements,
which Agreements are listed on SCHEDULE IV, in form and substance
satisfactory to the Purchaser, which letter shall be acknowledged by
the lock-box bank.
Section 3.02. CONDITIONS PRECEDENT TO EACH ORIGINATOR'S SALE.
The obligation of each Originator to make its initial sale of Receivables
hereunder is subject to the condition precedent that such Originator shall have
received on or before the date of such sale the following, each (unless
otherwise indicated) dated the day of such initial sale and in form and
substance satisfactory to such Originator:
(a) a copy of duly adopted resolutions of the Board of
Directors of the Purchaser authorizing this Agreement, the documents to
be delivered by the Purchaser hereunder and the transactions
contemplated hereby, certified by the Secretary or Assistant Secretary
of the Purchaser; and
20
(b) a duly executed certificate of the Secretary or
Assistant Secretary of the Purchaser certifying the names and true
signatures of the officers authorized on its behalf to sign this
Agreement and the other documents to be delivered by it hereunder.
21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants as to itself as follows:
(a) It (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and is duly qualified as a foreign corporation and is in
good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on its condition (financial or
otherwise), operations, properties or prospects, (ii) has the requisite
corporate power and authority to effect the transactions contemplated
hereby, and (iii) has all requisite corporate power and authority and
the legal right to own, pledge, mortgage and operate its properties,
and to conduct its business as now or currently proposed to be
conducted.
(b) The execution, delivery and performance by it of
this Agreement and all instruments and documents to be delivered
hereunder by it, and the transactions contemplated hereby and thereby,
(i) are within its corporate powers, have been duly authorized by all
necessary corporate action, including the consent of shareholders where
required, and do not (A) contravene its charter or by-laws, (B) violate
any law or regulation or any order or decree of any court or
governmental instrumentality, (C) conflict with or result in the breach
of, or constitute a default under, any indenture, mortgage or deed of
trust or any material lease, agreement or other instrument binding on
or affecting it or any of its respective subsidiaries or any of its
properties or (D) result in or require the creation or imposition of
any Lien except as created or imposed hereunder, and no transaction
contemplated hereby requires compliance on its part with any bulk sales
act or similar law, and (ii) do not require the consent, authorization
by or approval of or notice to or filing or registration with, any
governmental body, agency, authority, regulatory body or any other
Person other than those which have been obtained except for the filing
of the financing statements referred to in SECTION 3.01 hereof. This
Agreement has been duly executed and delivered by the Purchaser and
constitutes the legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms.
(c) There is no pending or, to its knowledge after due
inquiry, threatened action or proceeding affecting the Purchaser before
any court, governmental agency or arbitrator that may reasonably be
expected to materially and adversely affect its condition (financial or
otherwise), operations, properties or prospects, or that purports to
affect the legality, validity or enforceability of this Agreement, and
none of the transactions contemplated hereby is or, to its knowledge is
threatened to be, restrained or enjoined (temporarily, preliminarily or
permanently).
Section 4.02. REPRESENTATIONS AND WARRANTIES OF EACH OF THE
ORIGINATORS. Each Originator hereby severally represents and warrants to the
Purchaser that, as of the Closing Date
22
with respect to such Originator and as to matters involving (x) Supplemental
Accounts, as of the applicable Addition Date and (y) Automatic Additional
Accounts, as of the date the Receivables of such Accounts are designated for
sale to the Purchaser:
(a) ORGANIZATION AND GOOD STANDING. Such Originator is
a corporation duly organized and validly existing in good standing
under the laws of the jurisdiction of its incorporation and has full
corporate power, authority and legal right to own its properties and
conduct its business as such properties are presently owned and such
business is presently conducted, and to execute, deliver and perform
its obligations under this Agreement.
(b) DUE QUALIFICATION. Such Originator is duly
qualified to do business and is in good standing (or is exempt from
such requirement) in any state required in order to conduct business,
and has obtained all necessary licenses and approvals with respect to
such Originator required under federal and applicable state law.
(c) DUE AUTHORIZATION. The execution and delivery of
this Agreement and the consummation of the transactions provided for in
this Agreement have been duly authorized by such Originator by all
necessary corporate action on its part and this Agreement will remain,
from the time of its execution, an official record of such Originator.
This Agreement has been duly executed and delivered such Originator and
constitutes the legal, valid and binding obligation of such Originator,
enforceable against such Originator in accordance with its terms.
(d) NO CONFLICTS. The execution, delivery and
performance of this Agreement, the performance of the transactions
contemplated by this Agreement, and the fulfillment of the terms hereof
by such Originator, do not (i) contravene its charter or by-laws, (ii)
violate any provision of, or require any filing (except for the filings
under the UCC required by this Agreement, each of which has been duly
made and is in full force and effect), registration, consent or
approval under, any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to such Originator, except for such filings,
registrations, consents or approvals as have already been obtained and
are in full force and effect, (iii) result in a breach of or constitute
a default or require any consent under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which such
Originator is a party or by which it or its properties may be bound or
affected except those as to which a consent or waiver has been obtained
and is in full force and effect and an executed copy of which has been
delivered to the Purchaser, or (iv) result in, or require, the creation
or imposition of any lien upon or with respect to any of the properties
now owned or hereafter acquired by such Originator other than as
specifically contemplated by this Agreement.
(e) TAXES. Such Originator has filed all tax returns (federal,
state and local) required to be filed and has paid or made adequate
provision for the payment of all taxes,
23
assessments and other governmental charges due from such Originator or
is contesting any such tax assessment or other governmental charge in
good faith through appropriate proceedings. Such Originator knows of no
basis for any material additional tax assessment for any fiscal year
for which adequate reserves have not been established.
(f) NO VIOLATION. The execution and delivery of this
Agreement, the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not conflict
with or violate any Requirements of Law applicable to such Originator.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of such Originator, threatened against
such Originator before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (i) asserting
the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement,
(iii) seeking any determination or ruling that, in the reasonable
judgment of such Originator, would materially and adversely affect the
performance by such Originator of its obligations under this Agreement
or (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement.
(h) ALL CONSENTS REQUIRED. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental
body or official relating to such Originator and required in connection
with the execution and delivery of this Agreement, the performance of
the transactions contemplated by this Agreement and the fulfillment of
the terms hereof, have been obtained.
(i) BONA FIDE RECEIVABLES. Each Receivable sold hereunder by
such Originator is or will be an account receivable arising out of such
Originator's performance (or, in the case of an Account that is an
Automatic Additional Account pursuant to clause (b) of the definition
of Automatic Additional Account, the performance of the owner of such
Account at the time such Receivable was originated) in accordance with
the terms of the Charge Account Agreement giving rise to such
Receivable. Such Originator has no knowledge at the time of the sale of
such Receivable to the Purchaser hereunder of any fact which should
have led it to expect that such Eligible Receivable would not be
enforceable against the Obligor when due.
(j) PLACE OF BUSINESS. The principal place of business of such
Originator is as indicated for such Originator on SCHEDULE I hereto,
and the offices where such Originator keeps its records concerning the
Receivables and related contracts are as indicated for such Originator
on SCHEDULE III hereto.
(k) USE OF PROCEEDS. As of the Closing Date, no proceeds of
the sale of any Receivables will be used by such Originator to purchase
or carry any margin security.
24
(l) PURCHASE TERMINATION EVENT. No Purchase Termination Event
or Incipient Purchase Termination Event has occurred and is continuing
for such Originator.
(m) NOT AN "INVESTMENT COMPANY". Such Originator is not an
"investment company" or "controlled" by an "investment company" within
the meaning of the Investment Company Act, or is exempt from all
provisions of such Act.
(n) SOFTWARE. All of the computer hardware and software
necessary to collect the Receivables is described on SCHEDULE VI.
(o) TRADENAMES. SCHEDULE VII lists all of the tradenames of
each Originator for the six-year period preceding the date such
Originator became a party to this Agreement.
(p) ERISA LIENS. Such Originator owns the Receivables free and
clear of any liens, claims (including but not limited to claims of
ownership) or encumbrances, including but not limited to federal ERISA
liens and claims arising pursuant to 31 U.S.C. Section 3713.
(q) ERISA AND THE CODE. The execution and delivery of this
Agreement and the transactions contemplated hereby do not and will not
involve any transaction by any Originator that is prohibited under
Section 406(a) of ERISA or in connection with which an excise tax could
be imposed pursuant to Section 4975(a) or (b) of the Internal Revenue
Code of 1986, as amended (the "CODE"), by reason of the prohibited
transactions described in Section 4975(c)(1) (A), (B), (C) or (D) of
the Code.
The representations and warranties set forth in this Section
4.02 shall survive the sale and assignment of the respective Receivables to the
Purchaser pursuant to this Agreement. Each Originator shall be deemed each time
that it delivers or causes to be delivered a Receivables Statement to severally
represent and warrant to the Purchaser, as of the related Purchase Date, that
the representations and warranties of such Originator set forth in Section 4,02,
are true and correct as of such date. Upon discovery by such Originator or the
Purchaser of a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice to the other.
Section 4.03. REPRESENTATIONS AND WARRANTIES OF EACH
ORIGINATOR RELATING TO THIS AGREEMENT AND THE RECEIVABLES.
(a) BINDING OBLIGATION; VALID SALE AND ASSIGNMENT. Each
Originator hereby severally represents and warrants to the Purchaser that as of
the date each Receivable is sold hereunder:
(i) This Agreement constitutes the legal, valid and
binding obligation of such Originator, enforceable against such
Originator in accordance with its terms, except (A) as
25
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general, and (B) as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in
equity).
(ii) This Agreement constitutes a valid sale, transfer,
assignment, set-over and conveyance to the Purchaser of all right,
title and interest of such Originator in and to the Receivables now
existing or hereafter created and arising in connection with the
Accounts, all monies due or to become due with respect thereto
(including all Finance Charge Receivables), all other proceeds of such
Receivables, and such Receivables and all proceeds thereof will be held
by the Purchaser free and clear of any Lien of any Person claiming
through or under such Originator or any of its Affiliates except for
Permitted Liens.
(iii) Such Originator is not insolvent and has adequate
capital to conduct its business as it is presently being conducted.
(iv) Such Originator is the legal and beneficial owner of all
right, title and interest in and to each Receivable conveyed to the
Purchaser by such Originator and each such Receivable has been or will
be sold to the Purchaser free and clear of any Lien other than
Permitted Liens.
(v) All consents, licenses, approvals or authorizations
of or registrations or declarations with any Governmental Authority
required to be obtained, effected or given by such Originator in
connection with the sale of such Originator's Receivables to the
Purchaser have been duly obtained, effected or given and are in full
force and effect.
(vi) Such Originator has clearly and unambiguously marked its
primary computer records and its primary microfiche storage files
regarding such Originator's Receivables as the property of the
Purchaser and shall maintain such records in a manner that will
properly reflect the Purchaser's interest in such Receivables.
(vii) Each Account classified as an "Eligible Account" by such
Originator in any document or report delivered hereunder will satisfy
the requirements contained in the definition of Eligible Account at the
time of such delivery and each Receivable classified as an "Eligible
Receivable" by such Originator in any document or report delivered
hereunder will satisfy the requirements contained in the definition of
Eligible Receivable at the time of such delivery.
(viii) All information with respect to the Accounts and the
Receivables provided to the Purchaser by such Originator was true and
correct in all material respects as of the Closing Date with respect to
such Originator, or with respect to Supplemental Accounts as of each
Addition Date and with respect to Automatic Additional Accounts, as of
the day
26
Receivables arising under each such Account are designated for sale to
the Purchaser, as the case may be.
(ix) Each of such Originator's Receivables has been conveyed
to the Purchaser free and clear of any Lien of any Person claiming
through or under such Originator or any of its Affiliates (other than
Permitted Liens) and in compliance in all material respects with all
Requirements of Law applicable to such Originator.
(x) With respect to each of such Originator's
Receivables then existing, all consents, licenses, approvals or
authorizations of or registrations or declarations with any
Governmental Authority required to be obtained, effected or given by
such Originator in connection with the conveyance of such Receivable to
the Purchaser have been duly obtained, effected or given and are in
full force and effect.
(xi) Each Receivable sold to the Purchaser on such day has
been conveyed to the Purchaser by the applicable Originator in
compliance, in all material respects, with all Requirements of Law
applicable to such Originator and, with respect to each such
Receivable, all consents, licenses, approvals or authorizations of or
registrations or declarations with, any Governmental Authority required
to be obtained, effected or given by such Originator in connection with
the conveyance of such Receivable to the Purchaser have been duly
obtained, effected or given and are in full force and effect.
(b) NOTICE OF BREACH. The representations and
warranties set forth in this SECTION 4.03 shall survive the sale and assignment
of the respective Receivables to the Purchaser. Upon discovery by the applicable
Originator or the Purchaser of a breach of any of the representations and
warranties set forth in this SECTION 4.03, the party discovering such breach
shall give prompt written notice to the other party mentioned above. Such
Originator agrees to cooperate with the Purchaser or any agent of the Purchaser
in attempting to cure any such breach.
27
ARTICLE V
GENERAL COVENANTS
Section 5.01. COVENANTS OF EACH ORIGINATOR. So long as the
Purchaser shall have any Net Ownership Interest in any Receivables sold by any
Originator or until the Purchase Termination Date shall have occurred with
respect to all the Originators, whichever is later, each Originator covenants
that:
(a) RECEIVABLES TO BE ACCOUNTS OR GENERAL INTANGIBLES.
Such Originator will take no action to cause any Receivable to be
evidenced by any instrument (as defined in the UCC as in effect in the
Relevant UCC State). Such Originator will take no action to cause any
Receivable to be anything other than an "account" or "general
intangible" (each as defined in the UCC as in effect in the Relevant
UCC State).
(b) SECURITY INTERESTS. Except for the conveyances
hereunder, such Originator will not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Receivable, whether now existing or hereafter created,
or any interest therein; such Originator will immediately notify the
Purchaser of the existence of any Lien on any Receivable; and such
Originator shall defend the right, title and interest of the Purchaser
in, to and under the Receivables, whether now existing or hereafter
created, against all claims of third parties claiming through or under
such Originator; PROVIDED, HOWEVER, that nothing in this SECTION
5.01(B) shall prevent or be deemed to prohibit such Originator from
suffering to exist upon any of the Receivables any Permitted Lien.
(c) CHARGE ACCOUNT AGREEMENTS AND CREDIT AND COLLECTION
POLICIES. Such Originator shall comply with and perform its obligations
under any Charge Account Agreement to which such Originator is a party
that relates to the Accounts and the Credit and Collection Policy
except insofar as any failure to comply or perform would not materially
and adversely affect the rights of the Purchaser. Such Originator may
change the terms and provisions of such Charge Account Agreements or
the Credit and Collection Policy in any respect (including, without
limitation, the reduction of the required minimum monthly payment, the
calculation of the amount, or the timing, of chargeoffs and the
Periodic Finance Charges and other fees to be assessed thereon) only
(i) (A) if it owns a comparable segment of charge card accounts, such
change is made applicable to the comparable segment of the revolving
credit card accounts owned by such Originator, if any, which have
characteristics the same as, or substantially similar to, the Accounts
that are the subject of such change and (B) if it does not own such a
comparable segment, it will not make any such change with the intent to
materially benefit such Originator over the Purchaser, except as
otherwise restricted by an endorsement, sponsorship, or other agreement
between such Originator and an unrelated third party or by the terms of
the Charge Account Agreements and (ii) if such change is permitted by
the Purchaser.
28
(d) DELIVERY OF COLLECTIONS. In the event that such
Originator receives Collections, such Originator agrees to pay to the
Purchaser or such other Person designated by the Purchaser all payments
received by such Originator in respect of the Receivables as soon as
practicable after receipt thereof by such Originator (but no event
later than the second Business Day following the date of receipt).
(e) CONVEYANCE OF ACCOUNTS. Such Originator covenants
and agrees that it will not, without the consent of the Purchaser or
unless such Account is a Removed Account, convey, assign, exchange or
otherwise transfer any Account to any Person other than Purchaser prior
to the termination of this Agreement.
(f) NOTICE OF LIENS. Such Originator shall notify the
Purchaser promptly after becoming aware of any Lien on any Receivable
other than Permitted Liens.
(g) COMPLIANCE WITH LAWS, ETC. Such Originator shall
comply in all material respects with all applicable laws, rules,
regulations and orders applicable to the Receivables, including,
without limitation, rules and regulations relating to truth in lending,
fair credit billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy, where failure to so comply
could reasonably be expected to have an adverse impact on the amount of
Collections thereunder.
(h) PRESERVATION OF CORPORATE EXISTENCE. Except as
contemplated by Section 2.06, each Originator shall, to the extent it
remains a party to this Agreement, preserve and maintain in all
material respects its corporate existence, corporate rights (charter
and statutory) and corporate franchises.
(i) VISITATION RIGHTS. At any reasonable time during
normal business hours and from time to time, such Originator shall
permit (i) the Purchaser, or any Person designated by the Purchaser, to
examine and make copies of and abstracts from the records, books of
account and documents (including, without limitation, computer tapes
and disks) of such Originator relating to Receivables owned or to be
purchased by the Purchaser hereunder and to the underlying Charge
Account Agreements and (ii) the Purchaser, or Person designated by the
Purchaser (upon the giving of appropriate notice to the Purchaser) to
visit the properties of such Originator for the purpose of examining
such records, books of account and documents, and to discuss the
affairs, finances and accounts of such Originator relating to the
Receivables or to such Originator's performance hereunder with any of
its officers or directors and with its independent certified public
accountants.
(j) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Such
Originator shall maintain and implement, or cause to be maintained or
implemented, administrative and operating procedures reasonably
necessary or advisable for the collection of all such Receivables, and,
until the delivery to the Purchaser, keep and maintain, or cause to be
kept and maintained,
29
all documents, books, records and other information reasonably
necessary or advisable for the collection of all such Receivables.
(k) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND
CHARGE ACCOUNT AGREEMENTS. Such Originator shall at its expense take
all actions on its part reasonably necessary to maintain in full force
and effect its rights under all Charge Account Agreements to which such
Originator is a party.
(l) LOCATION OF RECORDS. Such Originator shall keep its
chief place of business and chief executive office, and the offices
where it keeps the records concerning the Receivables and all
underlying Charge Account Agreements (and all original documents
relating thereto), at the address or addresses of such Originator
specified in SCHEDULE III hereto or upon written notice to the
Purchaser, at such other locations in a jurisdiction where all action
required by SECTION 5.01(O) shall have been taken and completed and be
in full force and effect.
(m) FURNISHING COPIES, ETC. Such Originator shall
furnish to the Purchaser (i) upon the Purchaser's request, a
certificate of an Authorized Officer of such Originator certifying, as
of the date thereof, that no Purchase Termination Event has occurred
and is continuing and setting forth the computations used such
Authorized Officer of such Originator in making such determination;
(ii) as soon as possible and in any event within five days after the
occurrence of any Purchase Termination Event or Incipient Purchase
Termination Event, a statement of an Authorized Officer of such
Originator setting forth details of such Purchase Termination Event or
Incipient Purchase Termination Event and the action that such
Originator proposes to take or has taken with respect thereto; (iii)
promptly after obtaining knowledge that a Receivable was, at the time
of the Purchaser's purchase thereof, not an Eligible Receivable, notice
thereof; (iv) on the Business Day following the request, a computer
file or microfiche list containing a true and correct list of all
Accounts, identified by account numbers and the outstanding balance of
the Receivable in such Account; and (v) promptly following the
Purchaser's request therefor, such other information, documents,
records or reports with respect to the Receivables or the underlying
Charge Account Agreements or the conditions or operations, financial or
otherwise, of such Originator, as the Purchaser may from time to time
reasonably request.
(n) OBLIGATION TO RECORD AND REPORT. Such Originator
shall record each Purchase as a sale on its books and records, reflect
each Purchase in its financial statements, tax returns and other
applicable documents as a sale and recognize gain or loss, as the case
may be, on each Purchase.
(o) CONTINUING COMPLIANCE WITH THE UCC. Each Originator
shall, without limiting the requirements of SECTION 5.01(S), at its
expense, preserve, continue, and maintain or cause to be preserved,
continued, and maintained the Purchaser's valid and properly protected
title to each Receivable purchased hereunder, including, without
limitation, filing
30
or recording UCC financing statements in each relevant jurisdiction
prior to or substantially contemporaneously with any Purchases.
(p) IN-STORE PAYMENTS. In the event that such
Originator or any SRI Store receives any amounts in respect of
Collections of Receivables, including, without limitation, all In-Store
Payments, such Originator or SRI Store shall deposit or otherwise
credit, or cause to be deposited or otherwise credited, as soon as
reasonably practicable but in any event not later than the close of
business on the second Business Day following the date of processing of
such Collections, to an account designated by the Purchaser, an amount
equal to the amount so received and hold such amount in trust for the
Purchaser pending such remittance.
(q) PAYMENTS. Each Originator shall instruct Obligors
to deliver payments to such Originator's Lock Box (if any), the
Purchaser or such other Person who may be servicing the Receivables;
PROVIDED this section shall not apply to In-Store Payments.
(r) FURTHER ACTION EVIDENCING PURCHASES. (i) Such
Originator agrees that from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable or that the
Purchaser may reasonably request, to protect or more fully evidence the
Purchaser's ownership, right, title and interest in the Receivables
sold by such Originator and its rights under the Charge Account
Agreements with respect thereto, or to enable the Purchaser to exercise
or enforce any such rights. Without limiting the generality of the
foregoing, each Originator will upon the request of the Purchaser (A)
execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or, in the opinion of the Purchaser, desirable, (B) indicate
on its books and records that Receivables have been sold and assigned
to the Purchaser, and provide to the Purchaser, upon request, copies of
any such records and (C) contact customers to confirm and verify
Receivables.
(ii) Such Originator hereby irrevocably authorizes the
Purchaser to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Receivables sold
by such Originator, or the underlying Charge Account Agreements with
respect thereto, without the signature of such Originator where
permitted by law.
(iii) If such Originator fails to perform any of its
agreements or obligations under this Agreement, the Purchaser may (but
shall not be required to) perform, or cause performance of, such
agreements or obligations, and the expenses of the Purchaser incurred
in connection therewith shall be payable by such Originator as provided
in SECTION 8.05.
(s) CHANGE IN BUSINESS. Such Originator shall (i) not make any
change in the nature of its business as conducted on the date hereof
that could reasonably be expected to
31
have a material adverse effect on the value or collectability of the
Receivables and (ii) promptly notify the Purchaser of any change of
name or new trade names of such Originator.
Section 5.02. MERGERS. None of the Originators will merge into
another entity unless permitted pursuant to Section 2.06.
Section 5.03. TRANSFER OF ACCOUNT RELATIONSHIPS. Nothing in
this Agreement shall prohibit the transfer of any account relationship
(including, without limitation, any Charge Account Agreement and any related
books and records) by any Originator to any other Originator or to any
Additional Originator, whether by assignment and assumption of such accounts or
by such Originator's or Additional Originator's initiation of replacement
accounts and the termination of existing accounts as balances thereunder are
paid; PROVIDED that prior to such transfer the Originator transferring the
account relationship will deliver to the Purchaser an opinion of counsel,
reasonably acceptable to the Purchaser, to the effect that the Purchaser's
ownership interest in such account relationship will not be adversely affected
by such transfer.
Section 5.04. PURCHASER COVENANT REGARDING SALE TREATMENT. The
Purchaser shall record each Purchase as a purchase on its books and records and
reflect each Purchase in its financial statements, tax returns and other
applicable documents as a purchase.
Section 5.05. TRADENAME LICENSE. Each Originator hereby grants
to the Purchaser a non-exclusive and, except to the extent provided below,
non-transferable license to use the various tradenames (the "LICENSED NAMES")
listed in SCHEDULE VII with respect to such Originator and any other tradenames
used by such Originator on or after the date hereof. This license and the rights
of use hereunder are only for use in connection with the billing and collection
of Receivables sold under this Agreement. This license and the right of use of
the Licensed Name hereunder may be transferred by the Purchaser to the extent
necessary to collect the Receivables in a commercially reasonable manner. The
rights of use granted under this license are limited to such uses of the
Licensed Names as are reasonably necessary to the collection by the Purchaser in
a commercially reasonable manner of the Receivables and are further subject to
maintaining the then current standards of quality of the business of the
Originators. The license is limited to actions taken in accordance with the
terms of this Agreement and shall expire on the expiration of a reasonable time
for the collection of all Receivables. Notwithstanding any other provisions to
the contrary in this Agreement or in any other agreement between the parties, no
other uses or display of the Licensed Names shall be made by Purchaser except as
granted in this paragraph.
32
ARTICLE VI
PURCHASE TERMINATION EVENTS
Section 6.01. PURCHASE TERMINATION EVENTS. If any of the
following events (each a "PURCHASE TERMINATION EVENT") shall occur and be
continuing:
(i) Any Originator or the Purchaser shall consent to
the appointment of a bankruptcy trustee or receiver or liquidator in
any bankruptcy proceeding or any other insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of
or relating to all or substantially all of its Accounts or a decree or
order of a court or agency or supervisory authority having jurisdiction
in the premises for the appointment of a bankruptcy trustee or receiver
or liquidator in any bankruptcy proceeding or any other insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceeding, or for the winding up or liquidation of its affairs, shall
have been entered against such Originator or Purchaser, or such
Originator or Purchaser shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or such Originator shall become unable for
any reason to sell Receivables to the Purchaser in accordance with the
provisions of this Agreement; or the Purchaser shall become unable for
any reason to purchase Receivables from the Originators in accordance
with the provisions of this Agreement;
(ii) the Internal Revenue Service shall file notice of a lien
pursuant to Section 6321 of the Code with regard to any of the assets
of any Originator, or the Pension Benefit Guaranty Corporation shall,
or shall indicate its intention to, file notice of a lien pursuant to
Section 4068 of ERISA with regard to any of the assets of any
Originator, and (in either case) the aggregate amount secured or to be
secured, by such lien exceeds $500,000, and such lien shall not be
released within 30 days following the filing date for such lien; or
(iii) any Originator or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, if solely as a result of such reorganization or
termination the aggregate annual contributions of any Originator or its
respective ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or have been or are being terminated have been or will
be increased over the amounts required to be contributed to such
Multiemployer Plans by such Originator or such ERISA Affiliates for the
plan year immediately preceding the plan year in which such
notification is received by an amount exceeding $500,000, and any Lien
arising therefrom is not released within 30 days following the filing
date for such lien;
33
then the Purchaser's obligation to purchase Receivables from such
Originator as to which such Purchase Termination Event relates or, if
such Purchase Termination Event relates to the Purchaser, from all
Originators shall automatically be terminated upon the happening of
such event.
34
ARTICLE VII
INDEMNIFICATION
Section 7.01. INDEMNITIES BY THE ORIGINATORS. Without limiting
any other rights that the Purchaser may have hereunder or under applicable law,
each Originator hereby agrees to indemnify the Purchaser from and against any
and all claims, losses and liabilities (including reasonable attorneys' fees)
(all the foregoing being collectively referred to as "INDEMNIFIED AMOUNTS")
arising out of or resulting from this Agreement or in respect of any Receivable
or any Charge Account Agreement, excluding, however, Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of the
Purchaser; PROVIDED, HOWEVER, that except as expressly provided in Section 2.04
and in this Section 7.01 below, in no event will any Originator have any
indemnity or other obligation hereunder or otherwise with respect to any loss
suffered in respect of any Eligible Receivable sold to the Purchaser in
accordance with this Agreement, the parties hereby acknowledging that such sales
are to be without recourse. Without limiting or being limited by the foregoing,
but subject to the proviso in the immediately preceding sentence, each
Originator shall pay on demand to the Purchaser any and all amounts necessary to
indemnify the Purchaser from and against any and all Indemnified Amounts
relating to or resulting from:
(a) reliance on any representation or warranty or statement
made or deemed made by such Originator (or any of its officers) under
or in connection with this Agreement or in any certificate delivered
pursuant hereto that, in either case, shall have been false or
incorrect in any material respect when made or deemed made;
(b) the failure by such Originator to comply with any
applicable law, rule or regulation of any Governmental Authority with
respect to any Receivable or the related Charge Account Agreement of
such Originator, or the nonconformity of any Receivable or the related
Charge Account Agreement of such Originator with any such applicable
law, rule or regulation;
(c) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivables of such Originator;
(d) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Receivable of such Originator (including, without limitation, a
defense based on such Receivable or the related Charge Account
Agreement not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any
other
35
claim resulting from the sale of the merchandise or services related to
any such Receivable or the furnishing or failure to furnish such
merchandise or services;
(e) any failure of such Originator to perform its duties or
obligations under this Agreement or the applicable Charge Account
Agreement;
(f) any products liability claim arising out of or in
connection with merchandise, insurance or services that are the subject
of any charge pursuant to any Charge Account Agreement of such
Originator;
(g) the commingling of Collections of Receivables at any time
with other funds of such Originator;
(h) any set-off by any creditor of an Originator (other than
any Obligor) against Collections; or
(i) any investigation, litigation or proceeding related to
this Agreement or in respect of any Receivable or any Charge Account
Agreement of such Originator.
Notwithstanding the foregoing, no Originator shall under any
circumstances be required to indemnify the Purchaser for any Indemnified Amounts
that result from any delay in the collection of any Receivables or any default
by an Obligor with respect to any Receivables.
Section 7.02. INDEMNITIES BY THE PURCHASER. Without limiting
any other rights that any Originator may have hereunder or under applicable law,
the Purchaser hereby agrees to indemnify such Originator from and against any
and all claims, losses and liabilities (including reasonable attorneys' fees)
arising out of or resulting from such Originator's reliance on any
representation or warranty made by the Purchaser in this Agreement or in any
certificate delivered pursuant hereto that, in either case, shall have been
false or incorrect in any material respect when made or deemed made.
36
ARTICLE VIII
MISCELLANEOUS
Section 8.01. AMENDMENT. This Agreement and the rights and
obligations of the parties hereunder may not be changed orally, but only by an
instrument in writing signed by the Purchaser and the Originator affected
thereby.
Section 8.02. NOTICES, ETC. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telex, facsimile or cable communication) and mailed, telegraphed,
telexed, transmitted, cabled or delivered, if to any Originator, at its address
set forth in SCHEDULE I hereto; and if to the Purchaser, at its address at ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: President (with copies to such
Persons as may be designated by the Purchaser from time to time). All such
notices and communications shall when mailed, telegraphed, telexed, transmitted
or cabled be effective when deposited in the mails, delivered to the telegraph
company, confirmed by telex answerback, transmitted by telecopier or delivered
to the cable company, respectively, except that notices to the Purchaser
pursuant to ARTICLE II shall not be effective until received by the Purchaser.
Section 8.03. NO WAIVER: REMEDIES. No failure on the part of
the Purchaser to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 8.04. BINDING EFFECT. This Agreement shall be binding
upon and inure to the benefit of each Originator and the Purchaser and their
respective successors and assigns, except that no Originator shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Purchaser. This Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with its terms, and
shall remain in full force and effect as between the Purchaser and each
Originator until such time, after the Purchase Termination Date applicable to
such Originator, as the Purchaser shall not have any Net Ownership Interest in
any Receivables; PROVIDED, HOWEVER, that the indemnification provisions of
ARTICLE VIII shall be continuing and shall survive any termination of this
Agreement.
Section 8.05. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT
THAT THE VALIDITY OR
37
PROTECTION OF THE PURCHASER'S OWNERSHIP OF THE PURCHASED RECEIVABLES, OR
REMEDIES HEREUNDER IN RESPECT THEREOF MAY BE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 8.06. COSTS, EXPENSES AND TAXES. In addition to the
limited rights of indemnification granted to the Purchaser under ARTICLE VII
hereof, the Originators jointly and severally agree to pay on demand all costs
and expenses of the Purchaser in connection with the preparation, execution and
delivery of this Agreement and the documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Purchaser with respect thereto and with respect to advising the
Purchaser as to its rights and remedies under this Agreement, and all costs and
expenses (including, without limitation, reasonable counsel fees and expenses),
in connection with the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement and the documents to be delivered
hereunder. In addition, the Originators jointly and severally agree to pay any
and all stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement
or the other documents to be delivered hereunder, and agree to hold the
Purchaser harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omitting to pay such taxes and fees.
Section 8.07. ACKNOWLEDGMENT OF ASSIGNMENTS. This Agreement
(i) may not be assigned by any Originator and (ii) may not be assigned by the
Purchaser, except in each case in connection with a sale of substantially all of
the Receivables or by operation of law.
Section 8.08. NO PETITION IN BANKRUPTCY. Each Originator
severally covenants and agrees that prior to the date which is three years after
the Purchase Termination Date for the last Originator which is a party to this
Agreement, it will not institute against or join any other Person in instituting
against the Purchaser 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. Each Originator shall not be
permitted, and hereby waives all rights, to set-off amounts owed to such
Originator by the Purchaser against amounts owed by any Originator hereunder to
the Purchaser.
[End of Article VIII]
38
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
THE ORIGINATOR:
PALAIS ROYAL, INC.
▇▇▇▇▇ ▇. ▇▇▇▇
By: ▇▇▇▇▇ ▇. ▇▇▇▇
Its: Senior Vice President,
Secretary and Treasurer
THE PURCHASER:
SRI RECEIVABLES PURCHASE
CO., INC.
▇▇▇▇▇ ▇. ▇▇▇▇
By: ▇▇▇▇▇ ▇. ▇▇▇▇
Its: Senior Vice President,
Secretary and Treasurer
39
Schedule I to the
Receivables Purchase Agreement
LIST OF ORIGINATORS
CHIEF PLACE OF BUSINESS,
JURISDICTION OF CHIEF EXECUTIVE OFFICE AND
NAME OF ORIGINATOR INCORPORATION MAILING ADDRESS
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Palais Royal, Inc. Texas ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Schedule II to the
Receivables Purchase Agreement
LIST OF AUTHORIZED OFFICERS
SELLER NAME TITLE
------ ---- -----
Palais Royal, Inc. ▇▇▇▇ ▇▇▇▇▇▇ President
▇▇▇▇▇ ▇. ▇▇▇▇ SVP, Secretary &
Treasurer
▇▇▇ ▇▇▇▇▇ Vice President &
Controller
▇▇▇▇ ▇▇▇▇▇▇ Vice President
▇▇▇ ▇▇▇▇▇▇▇ Assistant Secretary
Schedule III to the
Receivables Purchase Agreement
LOCATION OF RECORDS
Palais Royal, Inc.
Location of
Physical Records: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Location of
Related Account
Contracts: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Schedule IV to the
Receivables Purchase Agreement
LOCK-BOX BANKS
Palais Royal, Inc.
Lock-Box
Account Number: 101-8190029
Address of
Lock-Box Bank: Norwest Bank of Denver
1700 Lincoln
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Mailing Address of
Lock-Box Bank: Norwest Bank of Denver
P.0, Box 1265
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Schedule V to the
Receivables Purchase Agreement
DISCOUNT FACTOR
With respect to any Settlement Period, the "DISCOUNT
FACTOR" is equal to the greater of (i) zero or (ii) the result
of the following equation:
(A+B-C) x D
WHERE:
A = LIBOR as of the second Business Day
preceding the commencement of such
Settlement Period, expressed on an
annualized basis
B = 3%
C = Portfolio Yield
D = Portfolio Turnover Factor
"PORTFOLIO YIELD" shall mean, with respect to any
Settlement Period, the percentage equivalent of a fraction,
(a) the numerator of which is the product of (i) the Finance
Charge Collections on the Receivables during the preceding
Settlement Period and (ii) a fraction (A) the numerator of
which is the number of days in such preceding Settlement
Period and (B) the denominator of which is the number of days
in the fiscal year in which such preceding Settlement Period
occurs, and (b) the denominator of which is the average daily
Outstanding Balance of Receivables during the preceding
Settlement Period.
"PORTFOLIO TURNOVER FACTOR" means, at any time, (a)
the average of the Outstanding Balance of Receivables on the
last day of each Monthly Period during the immediately
preceding fiscal year DIVIDED BY (b) the aggregate charge
sales recorded by the Originators during such fiscal year.
Notwithstanding the foregoing, the Discount Factor
shall not in any event reduce the Purchase Price of the
Receivables below 95% of the book value of the Receivables
sold.
Schedule VI to the
Receivables Purchase Agreement
SOFTWARE & HARDWARE
At point of sale, NCR 2152 registers and Symbol UPC
scanners are used to enter sales which are captured by an Innovative
Electronics in-store-processor [ISP] and sent on dedicated circuits to
the IBM 9221 model 191 mainframe for credit authorizations and posting
each night. STC 4480 model 20 and 22 cassette tape drives are used to
produce the off-site backups. All of the A/R software was developed
in-house. The register and ISP software is from NCR and Innovative
Electronics respectively. Store payments are processed in the same way.
Mail payments are processed by an NCR 7770-3801
Remittance Processing System running NCR software. A tape is
transmitted to the mainframe each day.
New accounts which were mailed in are processed for
scoring on a Fair-▇▇▇▇▇ packaged system called the Micro-ASAP 6000
System. A tape is transmitted to the mainframe each day. Speedy
applications are sent real time to Trans-Union for approval, scoring
and to set account limits.
Accounts in collections are called on a Davox
packaged system. Tapes are transmitted back and forth with the
mainframe. The collection system is in-house developed software. Bad
checks are processed by a PC using software written by a contractor.
The billing system was also developed in-house, but
uses Group 1 software for mail optimization.
Schedule VII to the
Receivables Purchase Agreement
TRADENAMES
Palais Royal, Inc. "Palais Royal"
"Fashion Bar"
"Stage"
"Hannah"
"FB Petite"
"FB Careers"
"FB Ltd"
"Bealls"