EXHIBIT 4.1(b)
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JCP RECEIVABLES, INC.
and
▇. ▇. ▇▇▇▇▇▇ COMPANY, INC.
Servicer
and
THE FUJI BANK AND TRUST COMPANY
Trustee
on behalf of the Certificateholders
of the JCP Master Credit Card Trust
$_________
SERIES E
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SERIES E SUPPLEMENT
Dated as of _______ __, 1998
to
MASTER
POOLING AND SERVICING AGREEMENT
Dated as of September 5, 1988, as amended as of October 15, 1997
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SERIES E SUPPLEMENT, dated as of ______ __, 1998 (this "Series Supplement")
among JCP Receivables, Inc. ("JCPR"), ▇. ▇. Penney Company, Inc. ("JCPenney"),
as Servicer, and The Fuji Bank and Trust Company, a banking corporation
organized and existing under the laws of New York (together with its successors
in interest, or any successor or additional trustee appointed as provided in the
Pooling and Servicing Agreement referred to below, the "Trustee"), as trustee
under the Master Pooling and Servicing Agreement dated as of September 5, 1988,
as amended as of October 15, 1997 (the "Pooling and Servicing Agreement").
PRELIMINARY STATEMENT
Section 6.12 of the Pooling and Servicing Agreement provides, among other
things, that JCPR, JCPenney and the Trustee will enter into a Supplement to
issue the first Series of Certificates and may thereafter at any time and from
time to time enter into a Supplement to the Pooling and Servicing Agreement for
the purpose of authorizing the issuance by the Trustee to JCPR for execution and
redelivery to the Trustee for authentication one or more additional Series of
Certificates. If this Supplement is entered into in conjunction with the
issuance of one or more Series of Certificates other than the initial Series,
JCPR has tendered the Exchange Notice required by subsection 6.12(b) of the
Pooling and Servicing Agreement. JCPR, JCPenney and the Trustee hereby enter
into this Series Supplement as required by subsection 6.12(c) of the Pooling and
Servicing Agreement to provide for the issuance, authentication and delivery of
the Class A Certificates and the issuance of the Class B Investor Interest and
the Class C Investor Interest (each as defined in Section 1 below).
In the event that any term or provision contained herein shall conflict
with or be inconsistent with any provision contained in the Pooling and
Servicing Agreement, the terms and provisions of this Series Supplement shall
govern. All capitalized terms not otherwise defined herein are defined in the
Pooling and Servicing Agreement. Each capitalized term defined herein shall
relate only to the Class A Certificates, the Class B Investor Interest and the
Class C Investor Interest and no other Series of Investor Certificates issued by
the Trust.
SECTION 1. Designation. (a) There is hereby created a Series of Investor
Certificates to be issued in three classes pursuant to the Pooling and Servicing
Agreement and this Series Supplement and to be known together as "Series E." The
three classes shall be designated the ___% Class A Asset Backed Certificates,
Series E (the "Class A Certificates"), the Class B Investor Interest, Series E
(the "Class B Investor Interest")
and the Class C Investor Interest, Series E (the "Class C Investor Interest").
The Class A Certificates shall be substantially in the form of Exhibit A
hereto. Each of the Class B Investor Interest and the Class C Investor Interest
shall be an uncertificated interest in the Trust (subject to the provisions of
subsection 11(c) hereof), which shall be deemed to be an "Investor Certificate"
for all purposes under the Pooling and Servicing Agreement and this Series
Supplement, except as expressly provided herein.
(b) Each of the Class B Investor Interest Holder and the Class C
Investor Interest Holder, as holder of an "Investor Certificate" under the
Pooling and Servicing Agreement, shall be entitled to the benefits of the
Pooling and Servicing Agreement and this Series Supplement upon payment by such
Class B Investor Interest Holder or such Class C Investor Interest Holder, as
applicable, of the purchase price of the Class B Investor Interest or the Class
C Investor Interest, as applicable. Notwithstanding the foregoing, except as
expressly provided herein, (i) (A) the provisions of Article VI of the Pooling
and Servicing Agreement relating to the registration, authentication, delivery,
presentation, cancellation and surrender of registered Certificates and (B) the
opinion described in subsection 6.12(b)(e) of the Pooling and Servicing
Agreement shall not, subject in the case of clause (A) to the provisions of
subsection 11(c) hereof, be applicable to the Class B Investor Interest or the
Class C Investor Interest and (ii) the provisions of Section 3.7 of the Pooling
and Servicing Agreement shall not apply to cause the Class C Investor Interest
to be treated as debt for federal, state and local income and franchise tax
purposes, but rather JCPR intends and, together with the Class C Investor
Interest Holder, agrees to treat the Class C Investor Interest for federal,
state and local income and franchise tax purposes as representing an equity
interest in the assets of the Trust.
SECTION 2. Definitions.
"Adjusted Investor Interest" shall mean, with respect to any date of
determination, an amount equal to the sum of (a) the Class A Adjusted Investor
Interest, (b) the Class B Adjusted Investor Interest and (c) the Class C
Adjusted Investor Interest.
"Amortization Commencement Date" shall mean the first day of the Controlled
Accumulation Period or the Rapid Amortization Period, as applicable.
"Assignee" shall have the meaning specified in subsection 9(a) hereof.
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"Available Investor Principal Collections" shall mean with respect to any
Monthly Period, an amount equal to (a) the Investor Principal Collections for
such Monthly Period, minus (b) the amount of Reallocated Class C Principal
Collections and Reallocated Class B Principal Collections with respect to such
Monthly Period which pursuant to Section 4.19 hereof are used to fund the Class
A Required Amount and the Class B Required Amount.
"Base Rate" shall mean, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is equal to the sum
of the Class A Monthly Interest, the Class B Monthly Interest and the Class C
Monthly Interest, each for the related Interest Period, and the
Certificateholder Servicing Fee, for such Monthly Period, and the denominator of
which is the Investor Interest as of the close of business on the last day of
such Monthly Period.
"Class A Account Percentage" shall mean, with respect to any date of
determination, the percentage equivalent of a fraction, the numerator of which
is the aggregate amount on deposit in the Principal Funding Account with respect
to Class A Monthly Principal as of the Record Date preceding the related
Transfer Date and the denominator of which is the aggregate amount on deposit in
the Principal Funding Account with respect to Class A Monthly Principal and
Class B Monthly Principal as of the Record Date preceding the related Transfer
Date.
"Class A Additional Interest" shall have the meaning specified in
subsection 4.13(a) hereof.
"Class A Adjusted Investor Interest" shall mean, with respect to any date
of determination, an amount equal to the Class A Investor Interest minus the
funds on deposit in the Principal Funding Account (in an amount not to exceed
the Class A Investor Interest) on such date of determination.
"Class A Available Funds" shall mean, with respect to any Monthly Period,
an amount equal to the sum of (a) the Class A Floating Allocation of the
Collections of Finance Charge Receivables and Net Recoveries allocated to the
Investor Certificates and deposited in the Finance Charge Account for such
Monthly Period, (b) the Class A Account Percentage of the Principal Funding
Investment Proceeds, if any, with respect to the related Transfer Date and (c)
the amount deposited into the Finance Charge Account pursuant to subsection
4.20(e) hereof.
"Class A Certificate Rate" shall mean % per annum, calculated on the basis
of a 360-day year consisting of twelve 30-day months.
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"Class A Certificateholder" shall mean the Person in whose name a Class A
Certificate is registered in the Certificate Register.
"Class A Certificates" shall mean any of the certificates executed by JCPR
and authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit A hereto.
"Class A Deficiency Amount" shall have the meaning specified in subsection
4.13(a) hereof.
"Class A Expected Final Distribution Date" shall mean the ____ Distribution
Date.
"Class A Fixed Allocation" shall mean, with respect to any Monthly Period
following the Revolving Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is the Class A
Investor Interest as of the close of business on the last day of the Revolving
Period and the denominator of which is equal to the Investor Interest as of the
close of business on the last day of the Revolving Period.
"Class A Floating Allocation" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class A Adjusted Investor Interest as
of the close of business on the last day of the preceding Monthly Period (or
with respect to the first Monthly Period, as of the Closing Date) and the
denominator of which is the Adjusted Investor Interest as of the close of
business on such day.
"Class A Initial Investor Interest" shall mean the aggregate initial
principal amount of the Class A Certificates, which is $___________.
"Class A Investor Allocation" shall mean with respect to any Monthly
Period, (a) with respect to Default Amounts and Finance Charge Receivables at
any time and Principal Receivables during the Revolving Period, the Class A
Floating Allocation, and (b) with respect to Principal Receivables during the
Controlled Accumulation Period or the Rapid Amortization Period, the Class A
Fixed Allocation.
"Class A Investor Charge-Offs" shall have the meaning specified in
subsection 4.17(a) hereof.
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"Class A Investor Default Amount" shall mean, with respect to each Transfer
Date, an amount equal to the product of (a) the Investor Default Amount for the
related Monthly Period and (b) the Class A Floating Allocation for the related
Monthly Period.
"Class A Investor Interest" shall mean, on any date of determination, an
amount equal to (a) the Class A Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to Class A Certificateholders prior
to such date and minus (c) the excess, if any, of the aggregate amount of Class
A Investor Charge-Offs pursuant to subsection 4.17(a) hereof over Class A
Investor Charge-Offs reimbursed pursuant to subsection 4.18(b) hereof prior to
such date of determination; provided, however, that the Class A Investor
Interest may not be reduced below zero.
"Class A Monthly Interest" shall mean the monthly interest distributable in
respect of the Class A Certificates as calculated in accordance with subsection
4.13(a) hereof.
"Class A Monthly Principal" shall mean the monthly principal to be
deposited or distributed in respect of the Class A Certificates as calculated in
accordance with subsection 4.14(a) hereof.
"Class A Required Amount" shall have the meaning specified in subsection
4.15(a) hereof.
"Class A Servicing Fee" shall have the meaning specified in Section 3
hereof.
"Class B Account Percentage" shall mean, with respect to any date of
determination, the percentage equivalent of a fraction, the numerator of which
is the aggregate amount on deposit in the Principal Funding Account with respect
to Class B Monthly Principal as of the Record Date preceding the related
Transfer Date and the denominator of which is the aggregate amount on deposit in
the Principal Funding Account with respect to Class A Monthly Principal and
Class B Monthly Principal as of the Record Date preceding the related Transfer
Date.
"Class B Additional Interest" shall have the meaning specified in
subsection 4.13(b) hereof.
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"Class B Adjusted Investor Interest" shall mean, with respect to any date
of determination, an amount equal to the Class B Investor Interest minus the
excess, if any, of the Principal Funding Account Balance over the Class A
Investor Interest on such date of determination (such excess not to exceed the
Class B Investor Interest).
"Class B Available Funds" shall mean, with respect to any Monthly Period,
an amount equal to the sum of (a) the Class B Floating Allocation of the
Collections of Finance Charge Receivables and Net Recoveries allocated to the
Investor Certificates and deposited in the Finance Charge Account for such
Monthly Period and (b) the Class B Account Percentage of the Principal Funding
Investment Proceeds, if any, with respect to the related Transfer Date.
"Class B Deficiency Amount" shall have the meaning specified in subsection
4.13(b) hereof.
"Class B Expected Final Distribution Date" shall mean the ____ Distribution
Date.
"Class B Fixed Allocation" shall mean, with respect to any Monthly Period
following the Revolving Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is the Class B
Investor Interest as of the close of business on the last day of the Revolving
Period and the denominator of which is equal to the Investor Interest as of the
close of business on the last day of the Revolving Period.
"Class B Floating Allocation" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class B Adjusted Investor Interest as
of the close of business on the last day of the preceding Monthly Period (or
with
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respect to the first Monthly Period, as of the Closing Date) and the denominator
of which is the Adjusted Investor Interest as of the close of business on such
day.
"Class B Initial Investor Interest" shall mean $__________.
"Class B Investor Allocation" shall mean with respect to any Monthly
Period, (a) with respect to Default Amounts and Finance Charge Receivables at
any time or Principal Receivables during the Revolving Period, the Class B
Floating Allocation, and (b) with respect to Principal Receivables during the
Controlled Accumulation Period or the Rapid Amortization Period, the Class B
Fixed Allocation.
"Class B Investor Charge-Offs" shall have the meaning specified in
subsection 4.17(b) hereof.
"Class B Investor Default Amount" shall mean, with respect to each Transfer
Date, an amount equal to the product of (a) the Investor Default Amount for the
related Monthly Period and (b) the Class B Floating Allocation for the related
Monthly Period.
"Class B Investor Interest" shall mean, on any date of determination, an
amount equal to (a) the Class B Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to the Class B Investor Interest
Holder prior to such date, minus (c) the aggregate amount of Class B Investor
Charge-Offs for all prior Transfer Dates pursuant to subsection 4.17(b) hereof,
minus (d) the amount of the Reallocated Class B Principal Collections allocated
pursuant to subsection 4.19(a) hereof on all prior Transfer Dates for which the
Class C Investor Interest has not been reduced, minus (e) an amount equal to the
amount by which the Class B Investor Interest has been reduced on all prior
Transfer Dates pursuant to subsection 4.17(a) hereof and plus (f) the aggregate
amount of Excess Spread allocated and available on all prior Transfer Dates
pursuant to subsection 4.18(d) hereof for the purpose of reimbursing amounts
deducted pursuant to the foregoing clauses (c), (d) and (e); provided, however,
that the Class B Investor Interest may not be reduced below zero.
"Class B Investor Interest Holder" shall mean the entity so designated in
writing by JCPR to the Trustee.
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"Class B Monthly Interest" shall mean the monthly interest distributable in
respect of the Class B Investor Interest as calculated in accordance with
subsection 4.13(b) hereof.
"Class B Monthly Principal" shall mean the monthly principal to be
deposited or distributed in respect of the Class B Investor Interest as
calculated in accordance with subsection 4.14(b) hereof.
"Class B Rate" shall mean 0% per annum, or such higher rate not in excess
of ___, as most recently designated to be the "Class B Rate" by JCPR to the
Trustee in writing.
"Class B Required Amount" shall have the meaning specified in subsection
4.15(b) hereof.
"Class B Servicing Fee" shall have the meaning specified in Section 3
hereof.
"Class C Adjusted Investor Interest" shall mean, with respect to any date
of determination, an amount equal to the Class C Investor Interest minus the
excess, if any, of the Principal Funding Account Balance over the sum of the
Class A Investor Interest and the Class B Investor Interest on such date of
determination (such excess not to exceed the Class C Investor Interest).
"Class C Available Funds" shall mean, with respect to any Monthly Period,
an amount equal to the Class C Floating Allocation of the Collections of Finance
Charge Receivables and Net Recoveries allocated to the Investor Certificates and
deposited in the Finance Charge Account for such Monthly Period.
"Class C Fixed Allocation" shall mean with respect to any Monthly Period
following the Revolving Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is the Class C
Investor Interest as of the close of business on the last day of the Revolving
Period and the denominator of which is equal to the Investor Interest as of the
close of business on the last day of the Revolving Period.
"Class C Floating Allocation" shall mean, with respect to any Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class C Adjusted Investor Interest as
of the close of business on the last day of the preceding Monthly Period and the
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denominator of which is equal to the Adjusted Investor Interest as of the close
of business on such day.
"Class C Initial Investor Interest" shall mean $ .
"Class C Investor Allocation" shall mean with respect to any Monthly
Period, (a) with respect to Default Amounts and Finance Charge Receivables at
any time or Principal Receivables during the Revolving Period, the Class C
Floating Allocation, and (b) with respect to Principal Receivables during the
Controlled Accumulation Period or the Rapid Amortization Period, the Class C
Fixed Allocation.
"Class C Investor Charge-Offs" shall have the meaning specified in
subsection 4.17(c) hereof.
"Class C Investor Default Amount" shall mean, with respect to each
Transfer Date, an amount equal to the product of (a) the Investor Default Amount
for the related Monthly Period and (b) the Class C Floating Allocation for the
related Monthly Period.
"Class C Investor Interest" shall mean, on any date of determination, an
amount equal to (a) the Class C Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to the Class C Investor Interest
Holder prior to such date, minus (c) the aggregate amount of Class C Investor
Charge-Offs for all prior Transfer Dates pursuant to subsection 4.17(c) hereof,
minus (d) the amount of Reallocated Principal Collections allocated pursuant to
subsections 4.19(a) and (b) hereof on all prior Transfer Dates, minus (e) an
amount equal to the amount by which the Class C Investor Interest has been
reduced on all prior Transfer Dates pursuant to subsections 4.17(a) and (b)
hereof, and plus (f) the aggregate amount of Excess Spread allocated and
available on all prior Transfer Dates pursuant to subsection 4.18(h) hereof for
the purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c), (d) and (e); provided, however, that the Class C Investor Interest may not
be reduced below zero.
"Class C Investor Interest Holder" shall mean the entity so designated
in writing by JCPR to the Trustee.
"Class C Monthly Interest" shall mean the monthly interest distributable in
respect of the Class C Investor Interest as calculated in accordance with
subsection 4.13(c) hereof.
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"Class C Monthly Principal" shall mean the monthly principal to be
deposited or distributed in respect of the Class C Investor Interest as
calculated in accordance with subsection 4.14(c) hereof.
"Class C Rate" shall mean 0% per annum, or such higher rate not in excess
of _____ , as most recently designated to be the "Class C Rate" by JCPR to the
Trustee in writing.
"Class C Servicing Fee" shall have the meaning specified in Section 3
hereof.
"Closing Date" shall mean ___________, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Controlled Accumulation Amount" shall mean for any Transfer Date with
respect to the Controlled Accumulation Period, $_________.
"Controlled Accumulation Period" shall mean, unless a Pay Out Event shall
have occurred prior thereto, the period commencing at the close of business on
the last day of ___________________ and ending on the first to occur of (a) the
commencement of the Rapid Amortization Period or (b) the payment of the Investor
Interest in full.
"Controlled Deposit Amount" shall mean, with respect to any Transfer Date,
the sum of (a) the Controlled Accumulation Amount for such Transfer Date and (b)
any existing Deficit Controlled Accumulation Amount.
"Covered Amount" shall mean an amount, determined as of each Transfer Date,
equal to one-twelfth of the product of (i) the Class A Certificate Rate times
(ii) the aggregate amount on deposit in the Principal Funding Account with
respect to Class A Monthly Principal as of the Record Date preceding such
Transfer Date.
"Deficit Controlled Accumulation Amount" shall mean, on the first
Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Accumulation Amount
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over the amount of Class A Monthly Principal for the related Distribution Date
and, on each subsequent Distribution Date with respect to the Controlled
Accumulation Period, the excess, if any, of the Controlled Deposit Amount over
the amount of Class A Monthly Principal for such Distribution Date.
"Excess Spread" shall mean, with respect to any Transfer Date, the sum of
the amounts with respect to such Transfer Date, if any, specified pursuant to
subsections 4.16(a)(iv), 4.16(b)(iii) and 4.16(c)(ii) hereof.
"Final Maturity Date" shall mean _______ __, ____.
"Fixed Investor Percentage" shall mean, with respect to any Monthly Period,
the percentage equivalent of a fraction, the numerator of which is the Investor
Interest as of the end of the last day of the Revolving Period and the
denominator of which is the greater of (a) the aggregate amount of Principal
Receivables in the Trust as of the end of the last day of the prior Monthly
Period and (b) the sum of the numerators used to calculate the Investor
Percentages for allocations with respect to Principal Receivables for all
outstanding Series on such date of determination.
"Floating Investor Percentage" shall mean, with respect to any Monthly
Period, the percentage equivalent of a fraction, the numerator of which is the
Adjusted Investor Interest as of the end of the last day of the preceding
Monthly Period (or with respect to the first Monthly Period, the Initial
Investor Interest), except that such numerator as applied to Finance Charge
Receivables during the Rapid Amortization Period shall be the Adjusted Investor
Interest as of the end of the last day preceding the commencement of the Rapid
Amortization Period, and the denominator of which is the greater of (a) the
aggregate amount of Principal Receivables in the Trust as of the end of the last
day of the preceding Monthly Period (or with respect to the first calendar month
in the first Monthly Period, the aggregate amount of Principal Receivables in
the Trust as of the end of the day immediately preceding the Closing Date and
with respect to the second calendar month in the first Monthly Period, the
aggregate amount of Principal Receivables as of the end of the last day of the
first calendar month in the first Monthly Period), and (b) the sum of the
numerators used to calculate the Investor Percentages for allocations with
respect to Finance Charge Receivables, Default Amounts or Principal Receivables,
as applicable, for all outstanding Series on such date of determination.
"Initial Investor Amount" shall mean, with respect to Series E, the
Initial Investor Interest.
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"Initial Investor Interest" shall mean $_____________.
"Interest Period" shall mean, with respect to any Distribution Date, the
period from and including the previous Distribution Date (or in the case of the
first Distribution Date, from and including the Closing Date) through the day
preceding such Distribution Date.
"Investment Letter" shall have the meaning specified in subsection 9(a)
hereof.
"Investor Amount" shall mean, with respect to Series E, the Investor
Interest.
"Investor Certificateholder" shall mean (a) with respect to the Class A
Certificates, the holder of record of a Class A Certificate, (b) with respect to
the Class B Investor Interest, the Class B Investor Interest Holder and (c) with
respect to the Class C Investor Interest, the Class C Investor Interest Holder.
"Investor Certificates" shall mean the Class A Certificates, the Class B
Investor Interest and the Class C Investor Interest.
"Investor Interest" shall mean, on any date of determination, an amount
equal to the sum of (a) the Class A Investor Interest, (b) the Class B Investor
Interest and (c) the Class C Investor Interest, each as of such date.
"Investor Percentage" shall mean for any Monthly Period, (a) with respect
to Finance Charge Receivables and Default Amounts at any time and Principal
Receivables during the Revolving Period, the Floating Investor Percentage and
(b) with respect to Principal Receivables during the Controlled Accumulation
Period or the Rapid Amortization Period, the Fixed Investor Percentage.
"Investor Principal Collections" shall mean, with respect to any Monthly
Period, the sum of (a) the aggregate amount deposited into the Principal Account
for such Monthly Period with respect to Series E pursuant to subsections 4.3(c)
and 4.3(f) of the Pooling and Servicing Agreement and (b) the aggregate amount
to be treated as Investor Principal Collections pursuant to subsections
4.16(a)(iii) and 4.18(a), (b), (c), (d), (g) and (h) hereof for such Monthly
Period (other than such amount paid from Reallocated Principal Collections).
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"Minimum JCPR Percentage" shall mean 10%.
"Monthly Interest" shall mean, with respect to any Transfer Date, the sum
of (a) the Class A Monthly Interest, the Class A Additional Interest, if any,
and the unpaid Class A Deficiency Amount, if any, (b) the Class B Monthly
Interest, the Class B Additional Interest, if any, and the unpaid Class B
Deficiency Amount, if any, and (c) the Class C Monthly Interest and any
previously due and unpaid Class C Monthly Interest, each with respect to such
Transfer Date.
"Monthly Period" shall have the meaning specified in the Pooling and
Servicing Agreement, except that the first Monthly Period with respect to the
Investor Certificates shall begin on and include the Closing Date and shall end
on and include ___________, 1998.
"Permitted Assignee" shall mean any Person who, if it were the Class B
Investor Interest Holder or the Class C Investor Interest Holder or holder of an
interest in the Trust, as applicable, would not cause the Trust to be taxable as
a publicly traded partnership for federal income tax purposes.
"Portfolio Yield" shall mean, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction the numerator of which is the sum
of (a) the amount of Finance Charge Receivables deposited in the Finance Charge
Account pursuant to Section 4.3 of the Pooling and Servicing Agreement and
allocated to Series E, calculated on a cash basis after subtracting the Investor
Default Amount of Series E for such Monthly Period and (b) the Principal Funding
Investment Proceeds for the Transfer Date related to such Monthly Period, and
the denominator of which is the Investor Amount of Series E as of the last day
of the preceding Monthly Period.
"Principal Funding Account" shall have the meaning set forth in subsection
4.20(a) hereof.
"Principal Funding Account Balance" shall mean, with respect to any date of
determination, the principal amount, if any, on deposit in the Principal Funding
Account on such date of determination.
"Principal Funding Investment Proceeds" shall mean, with respect to each
Transfer Date, the investment earnings on funds in the Principal Funding Account
(net of investment expenses and losses) for the period from and including the
immediately preceding Transfer Date to but excluding such Transfer Date.
"Principal Funding Investment Shortfall" shall have the meaning set forth
in subsection 4.20(d) hereof.
"Rapid Amortization Period" shall mean the Amortization Period commencing
on the Pay Out Commencement Date and ending on the Series E Termination Date.
"Rating Agency" shall mean ▇▇▇▇▇'▇ and Standard & Poor's.
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"Rating Agency Condition" shall mean the notification in writing by each
Rating Agency to JCPR, the Servicer and the Trustee that an action with respect
to the Trust will not result in such Rating Agency reducing or withdrawing its
then existing rating of the Certificates of any outstanding Series or class of a
Series with respect to which it is a Rating Agency.
"Reallocated Class B Principal Collections" shall mean, with respect to any
Transfer Date, Collections of Principal Receivables applied in accordance with
subsection 4.19(a) hereof in an amount not to exceed the product of (a) the
Class B Investor Allocation with respect to the Monthly Period relating to such
Transfer Date and (b) the Investor Percentage with respect to the Monthly Period
relating to such Transfer Date and (c) the amount of Collections of Principal
Receivables with respect to the Monthly Period relating to such Transfer Date;
provided, however, that such amount shall not exceed the Class B Investor
Interest after giving effect to any Class B Investor Charge-Offs for such
Transfer Date.
"Reallocated Class C Principal Collections" shall mean, with respect to any
Transfer Date, Collections of Principal Receivables applied in accordance with
subsections 4.19(a) and (b) hereof in an amount not to exceed the product of (a)
the Class C Investor Allocation with respect to the Monthly Period relating to
such Transfer Date and (b) the Investor Percentage with respect to the Monthly
Period relating to such Transfer Date and (c) the amount of Collections of
Principal Receivables with respect to the Monthly Period relating to such
Transfer Date; provided, however, that such amount shall not exceed the Class C
Investor Interest after giving effect to any Class C Charge-Offs for such
Transfer Date.
"Reallocated Principal Collections" shall mean the sum of (a) Reallocated
Class B Principal Collections and (b) Reallocated Class C Principal Collections.
"Required Class C Investor Interest" shall mean (a) initially, $_______ and
(b) on any Transfer Date thereafter, __% of the sum of the Class A Adjusted
Investor Interest and the Class B Adjusted Investor Interest on such Transfer
Date, after taking into account payments to be made on the related Distribution
Date, and the Class C Investor Interest on the prior Transfer Date, after any
adjustments to be made on such date, but not less than $______;
provided, however, that (x) if either (i) there is a reduction in the Class C
Investor Interest pursuant to clause (c), (d) or (e) of the definition of such
term or (ii) a Pay Out Event with respect to the Investor Certificates has
occurred, the Required Class C Investor Interest for any Transfer Date shall
equal the Required Class C Investor Interest for
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the Transfer Date immediately preceding such reduction or Pay Out Event, (y) in
no event shall the Required Class C Investor Interest exceed the sum of the
outstanding principal amounts of (i) the Class A Certificates and (ii) the Class
B Investor Interest, each as of the last day of the Monthly Period preceding
such Transfer Date after taking into account the payments to be made on the
related Distribution Date and (z) the Required Class C Investor Interest may be
reduced at JCPR's option at any time to a lesser amount if the Rating Agency
Condition shall have been satisfied.
"Revolving Period" shall mean the period from and including the Closing
Date to, but not including, the Amortization Commencement Date.
"Series E" shall mean the Series of the JCP Master Credit Card Trust
represented by the Investor Certificates.
"Series E Termination Date" shall mean the earliest to occur of (a) the
Distribution Date on which the Investor Interest is paid in full, (b) the Final
Maturity Date and (c) the termination of the Trust pursuant to Section 12.1 of
the Pooling and Servicing Agreement.
"Servicing Fee Percentage" shall mean 2.0%.
"Tax Opinion" shall mean with respect to any action, an Opinion of Counsel
to the effect that, for federal income tax purposes, (a) such action will not
adversely affect the tax characterization as debt of Investor Certificates of
any outstanding Series that were characterized as debt at the time of their
issuance, (b) following such action the Trust will not be deemed to be an
association (or publicly traded partnership) taxable as a corporation and (c)
such action will not cause or constitute an event in which gain or loss would be
recognized by any Investor Certificateholder or the Trust.
"Transfer" shall have the meaning specified in subsection 9(a) hereof.
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SECTION 3. Servicing Compensation. The share of the Investor Monthly
Servicing Fee with respect to Series E allocable to the Class A Investor
Interest with respect to any Transfer Date (the "Class A Servicing Fee") shall
be equal to one-twelfth of the product of (i) the Class A Floating Allocation,
(ii) the Servicing Fee Percentage and (iii) the Adjusted Investor Interest as of
the first day of the Monthly Period preceding such Transfer Date; provided,
however, that with respect to the first Transfer Date, the Class A Servicing Fee
shall be $___________. The share of the Investor Monthly Servicing Fee with
respect to Series E allocable to the Class B Investor Interest with respect to
any Transfer Date (the "Class B Servicing Fee") shall be equal to one-twelfth of
the product of (i) the Class B Floating Allocation, (ii) the Servicing Fee
Percentage and (iii) the Adjusted Investor Interest as of the first day of the
Monthly Period preceding such Transfer Date; provided, however, that with
respect to the first Transfer Date, the Class B Servicing Fee shall be
$___________. The share of the Investor Monthly Servicing Fee with respect to
Series E allocable to the Class C Investor Interest with respect to any Transfer
Date (the "Class C Servicing Fee") shall be equal to one-twelfth of the product
of (i) the Class C Floating Allocation, (ii) the Servicing Fee
Percentage and (iii) the Adjusted Investor Interest as of the first day of the
Monthly Period preceding such Transfer Date; provided, however, that with
respect to the first Transfer Date, the Class C Servicing Fee shall be
$__________. The Class A Servicing Fee shall be payable to the Servicer solely
to the extent amounts are available for distribution in respect thereof pursuant
to subsections 4.16(a)(ii) and 4.18(a) hereof. The Class B Servicing Fee shall
be payable to the Servicer solely to the extent amounts are available for
distribution in respect thereof pursuant to subsection 4.18(e) or, if
applicable, subsections 4.16(b)(ii) and 4.18(c) hereof. The Class C Servicing
Fee shall be payable to the Servicer solely to the extent amounts are available
for distribution in respect thereof pursuant to subsection 4.18(g) or, if
applicable, subsection 4.16(c)(i) hereof.
SECTION 4. Reassignment and Transfer Terms. The Investor Interest
shall be subject to retransfer to JCPR at its option, in accordance with the
terms specified in subsection 12.2(a) of the Pooling and Servicing Agreement, on
any Distribution Date on or after the month following the Class A Expected Final
Distribution Date. The deposit required in connection with any such repurchase
shall be equal to the sum of (a) the Investor Interest and (b) accrued and
unpaid interest on the Investor Certificates through the day preceding the
Distribution Date on which the repurchase occurs.
SECTION 5. Delivery and Payment for the Series E Certificates. The Trustee
shall deliver the Class A Certificates when authenticated in accordance
16
with Section 6.2 of the Pooling and Servicing Agreement to Credit Suisse First
Boston Corporation upon payment to JCPR of $_______.
SECTION 6. Form of Delivery of the Class A Certificates; Depository.
(a) The Class A Certificates shall be delivered as Book-Entry
Certificates as provided in Section 6.9 of the Pooling and Servicing Agreement.
(b) The Class A Certificates shall be initially registered in the
name of Cede & Co., as nominee of The Depository Trust Company.
SECTION 7. Article IV of the Pooling and Servicing Agreement as Applied to
Series E. Sections 4.1 through 4.9 shall be read in their entirety as provided
in the Pooling and Servicing Agreement, except as modified hereby. In addition,
the following Sections 4.11 through 4.20 shall be applicable to Series E.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.11 Rights of Series E Certificateholders, the Class B Investor
Interest Holder and the Class C Investor Interest Holder. The Investor
Certificates shall represent undivided interests in the Trust, consisting of the
right to receive, to the extent necessary to make the required payments with
respect to such Investor Certificates at the times and in the amounts specified
in this Agreement, (a) the Floating Investor Percentage and Fixed Investor
Percentage (as applicable from time to time) of Collections received with
respect to the Receivables and, without duplication, (b) funds on deposit in the
Collection Account, the Finance Charge Account, the Principal Account, the
Principal Funding Account and the Distribution Account. The Class C Investor
Interest shall be subordinate with respect to payment to the Class A
Certificates and the Class B Investor Interest. The Class B Investor Interest
shall be subordinate with respect to payment to the Class A Certificates.
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SECTION 4.12 Allocations for Series E.
With respect to the Investor Certificates, and notwithstanding anything in
the Pooling and Servicing Agreement to the contrary, with respect to any Monthly
Period (i) the Servicer will only be required to deposit Collections from the
Collection Account into the Finance Charge Account, the Principal Account or the
Principal Funding Account, as applicable, up to the required amount to be
deposited into any such account or, without duplication, distributed on or prior
to the related Distribution Date to the Investor Certificateholders and (ii) if
at any time prior to such Distribution Date the amount of Collections deposited
in the Collection Account exceeds the amount required to be deposited pursuant
to clause (i) above, the Servicer will be permitted to withdraw the excess from
the Collection Account.
SECTION 4.13 Determination of Monthly Interest.
(a) The amount of monthly interest distributable with respect to the
Class A Certificates shall be an amount equal to one-twelfth of the product of
(i) the Class A Certificate Rate times (ii) the outstanding principal balance of
the Class A Certificates determined as of the Record Date preceding the related
Transfer Date (the "Class A Monthly Interest"); provided, however, that with
respect to the _________, 1998 Distribution Date, Class A Monthly Interest shall
be $_____; provided, further, that in addition to the Class A Monthly Interest
an amount equal to the amount of any unpaid Class A Deficiency Amounts, as
defined below, plus an amount equal to the product of (A) the sum of the Class A
Certificate Rate plus 2% per annum and (B) any Class A Deficiency Amount from
the prior Transfer Date, as defined below (or the portion thereof which has not
theretofore been paid to Class A Certificateholders) (the "Class A Additional
Interest") shall also be distributable with respect to the Class A Certificates,
and on such Transfer Date the Trustee shall deposit such funds, to the extent
available, into the Distribution Account; provided further, that the "Class A
Deficiency Amount" for any Transfer Date shall be equal to the excess, if any,
of the aggregate amount accrued pursuant to this subsection 4.13(a) as of the
prior Interest Period over the amount actually transferred to the Distribution
Account for payment of such amount.
(b) The amount of monthly interest distributable with respect to the
Class B Investor Interest shall be an amount equal to one-twelfth of the product
of (i) the Class B Rate times (ii) the Class B Investor Interest determined as
of the Record Date preceding the related Transfer Date (the "Class B Monthly
Interest"); provided, however, that with respect to the ________, 1998
Distribution
18
Date, Class B Monthly Interest shall be $0; provided, further, that in addition
to the Class B Monthly Interest an amount equal to the amount of any unpaid
Class B Deficiency Amounts, as defined below, plus an amount equal to the
product of (A) the sum of the Class B Rate plus 2% per annum and (B) any Class B
Deficiency Amount from the prior Transfer Date, as defined below (or the portion
thereof which has not theretofore been paid to the Class B Investor Interest
Holder) (the "Class B Additional Interest") shall also be distributable with
respect to the Class B Investor Interest, and on such Transfer Date the Trustee
shall deposit such funds, to the extent available, into the Distribution
Account; provided further, that the "Class B Deficiency Amount" for any Transfer
Date shall be equal to the excess, if any, of the aggregate amount accrued
pursuant to this subsection 4.13(b) as of the prior Interest Period over the
amount actually transferred to the Distribution Account for payment of such
amount. Notwithstanding the foregoing, until JCPR shall make the designation
referred to in the definition of "Class B Rate," no interest shall be payable
with respect to the Class B Investor Interest.
(c) The amount of monthly interest distributable with respect to the
Class C Investor Interest shall be an amount equal to one-twelfth of the product
of (i) the Class C Rate times (ii) the Class C Investor Interest determined as
of the Record Date preceding the related Transfer Date or, with respect to the
________, 1998 Transfer Date, the Class C Initial Investor Interest (the "Class
C Monthly Interest"). Notwithstanding the foregoing, until JCPR shall make the
designation referred to in the definition of "Class C Rate," no interest shall
be payable with respect to the Class C Investor Interest.
SECTION 4.14 Determination of Monthly Principal.
(a) The amount of monthly principal to be deposited in the Principal
Funding Account or the Distribution Account, as applicable, from the Principal
Account with respect to the Class A Certificates on each Transfer Date ("Class A
Monthly Principal"), beginning with the Transfer Date in the month following the
month in which the Controlled Accumulation Period or, if earlier, the Rapid
Amortization Period, begins, shall be equal to the least of (i) the Available
Investor Principal Collections on deposit in the Principal Account with respect
to such Transfer Date, (ii) for each Transfer Date with respect to the
Controlled Accumulation Period, the Controlled Deposit Amount for such Transfer
Date and (iii) the Class A Adjusted Investor Interest (after taking into account
any adjustments to be made on such Transfer Date pursuant to Section 4.17
hereof) prior to any deposits or distributions with respect to such Transfer
Date.
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(b) The amount of monthly principal to be deposited in the Principal
Funding Account or the Distribution Account, as applicable, from the Principal
Account with respect to the Class B Investor Interest on each Transfer Date (the
"Class B Monthly Principal") with respect to the Controlled Accumulation Period
or the Rapid Amortization Period, beginning with the Transfer Date immediately
preceding the Distribution Date on which the Class A Investor Interest will be
paid in full (after taking into account payments to be made on such Distribution
Date), shall be an amount equal to the least of (i) the Available Investor
Principal Collections on deposit in the Principal Account with respect to such
Transfer Date (minus the portion of such Available Investor Principal
Collections applied to Class A Monthly Principal on such Transfer Date), (ii)
for each Transfer Date with respect to the Controlled Accumulation Period, the
Controlled Deposit Amount for such Transfer Date (minus the Class A Monthly
Principal with respect to such Transfer Date) and (iii) the Class B Adjusted
Investor Interest (after taking into account any adjustments to be made on such
Transfer Date pursuant to Sections 4.17 and 4.19 hereof) prior to any deposits
or distributions with respect to such Transfer Date.
(c) The amount of monthly principal to be deposited in the Principal
Funding Account or the Distribution Account, as applicable, from the Principal
Account with respect to the Class C Investor Interest on each Transfer Date (the
"Class C Monthly Principal") shall be (A) during the Revolving Period following
any reduction of the Required Class C Investor Interest pursuant to clause (z)
of the proviso in the definition thereof, an amount equal to the lesser of (1)
the excess, if any, of the Class C Investor Interest (after taking into account
any adjustments to be made on such Transfer Date pursuant to Sections 4.17 and
4.19 hereof) over the Required Class C Investor Interest on such Transfer Date
and (2) the Available Investor Principal Collections on such Transfer Date or
(B) during the Controlled Accumulation Period or the Rapid Amortization Period,
an amount equal to the lesser of (1) the excess, if any, of the Class C Investor
Interest (after taking into account any adjustments to be made on such Transfer
Date pursuant to Sections 4.17 and 4.19 hereof) over the Required Class C
Investor Interest on such Transfer Date and (2) the excess, if any, of (i) the
Available Investor Principal Collections on such Transfer Date over (ii) the sum
of the Class A Monthly Principal and the Class B Monthly Principal for such
Transfer Date.
SECTION 4.15 Coverage of Required Amount.
(a) On or before each Transfer Date, the Servicer shall determine the
amount (the "Class A Required Amount"), if any, by which the sum of (i) the
Class A Monthly Interest for the related Distribution Date, plus (ii) the Class
A Deficiency Amount, if any, for such Transfer Date, plus (iii) the Class A
Addi
20
tional Interest, if any, for such Transfer Date, plus (iv) the Class A Servicing
Fee for the prior Monthly Period plus (v) the Class A Servicing Fee, if any, due
but not paid on any prior Transfer Date, plus (vi) the Class A Investor Default
Amount, if any, for the prior Monthly Period, exceeds the Class A Available
Funds for the related Monthly Period.
(b) On or before each Transfer Date, the Servicer shall also determine
the amount (the "Class B Required Amount"), if any, equal to the sum of (i) the
amount, if any, by which the sum of (A) the Class B Monthly Interest for the
related Distribution Date, plus (B) the Class B Deficiency Amount, if any, for
such Transfer Date, plus (C) the Class B Additional Interest, if any, for such
Transfer Date, plus (D) if JCPenney or an Affiliate thereof is no longer the
Servicer, the Class B Servicing Fee for the prior Monthly Period, plus (E) if
JCPenney or an Affiliate thereof is no longer the Servicer, the Class B
Servicing Fee, if any, due but not paid on any prior Transfer Date, exceeds the
Class B Available Funds for the related Monthly Period, plus (ii) the Class B
Investor Default Amount, if any, for the prior Monthly Period.
(c) In the event that the Class A Required Amount for such Transfer
Date is greater than zero, all or a portion of the Excess Spread with respect to
such Transfer Date in an amount equal to the Class A Required Amount, to the
extent available, for such Transfer Date shall be distributed from the Finance
Charge Account on such Transfer Date pursuant to subsection 4.18(a) hereof. In
the event that the Class A Required Amount for such Transfer Date exceeds the
amount of Excess Spread with respect to such Transfer Date, the Collections of
Principal Receivables allocable to the Class C Investor Interest and the
Collections of Principal Receivables allocable to the Class B Investor Interest
with respect to the prior Monthly Period shall be applied as specified in
Section 4.19 hereof. In the event that the Class B Required Amount for such
Transfer Date exceeds the amount of Excess Spread available to fund the Class B
Required Amount pursuant to subsection 4.18(c) hereof, the Collections of
Principal Receivables allocable to the Class C Investor Interest (after
application to the Class A Required Amount) shall be applied as specified in
Section 4.19 hereof; provided, however, that the sum of any payments pursuant to
this paragraph shall not exceed the sum of the Class A Required Amount and the
Class B Required Amount.
SECTION 4.16 Monthly Payments. On or before each Transfer Date, the
Servicer shall instruct the Trustee in writing to withdraw and the Trustee,
acting in accordance with such instructions, shall withdraw on such Transfer
Date or the related Distribution Date, as applicable, to the extent of available
funds, the amounts required to be withdrawn from the Finance Charge Account, the
Principal Account, the Principal Funding Account and the Distribution Account as
follows:
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(a) An amount equal to the Class A Available Funds deposited into the
Finance Charge Account for the related Monthly Period will be distributed on
each Transfer Date in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Transfer Date, plus the amount of any Class A Deficiency Amount for such
Transfer Date, plus the amount of any Class A Additional Interest for such
Transfer Date, shall be deposited by the Servicer or the Trustee into the
Distribution Account;
(ii) an amount equal to the Class A Servicing Fee for such
Transfer Date plus the amount of any Class A Servicing Fee due but not paid
to the Servicer on any prior Transfer Date shall be distributed to the
Servicer;
(iii) an amount equal to the Class A Investor Default Amount, if
any, for the preceding Monthly Period shall be treated as a portion of
Investor Principal Collections and deposited into the Principal Account on
such Transfer Date; and
(iv) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.18 hereof.
(b) An amount equal to the Class B Available Funds deposited into the
Finance Charge Account for the related Monthly Period will be distributed on
each Transfer Date in the following priority:
(i) an amount equal to the Class B Monthly Interest for such
Transfer Date, plus the amount of any Class B Deficiency Amount for such
Transfer Date, plus the amount of any Class B Additional Interest for such
Transfer Date, shall be deposited by the Servicer or the Trustee into the
Distribution Account;
(ii) if JCPenney or an Affiliate thereof is no longer the
Servicer, an amount equal to the Class B Servicing Fee for such Transfer
Date, plus the amount of any Class B Servicing Fee due but not paid to the
Servicer on any prior Transfer Date for such Transfer Date shall be
distributed to the Servicer; and
22
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.18 hereof.
(c) An amount equal to the Class C Available Funds deposited into the
Finance Charge Account for the related Monthly Period will be distributed on
each Transfer Date in the following priority:
(i) if JCPenney or an Affiliate thereof is no longer the
Servicer, an amount equal to the Class C Servicing Fee for such Transfer
Date plus the amount of any Class C Servicing Fee due but not paid to the
Servicer on any prior Transfer Date shall be distributed to the Servicer;
and
(ii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.18 hereof.
(d) During the Revolving Period, an amount equal to the Available
Investor Principal Collections deposited into the Principal Account for the
related Monthly Period will be distributed on each Transfer Date in the
following priority:
(i) an amount equal to the Class C Monthly Principal shall be
distributed to the Class C Investor Interest Holder; and
(ii) an amount equal to the excess, if any, of (A) the Available
Investor Principal Collections for such Transfer Date over (B) the
applications specified in subsection 4.16(d)(i) above shall be paid to the
Holder of the Exchangeable Certificate, subject to the provisions of
Section 4.3(f) of the Pooling and Servicing Agreement.
(e) During the Controlled Accumulation Period or the Rapid
Amortization Period, an amount equal to the Available Investor Principal
Collections deposited into the Principal Account for the related Monthly Period
will be distributed on each Transfer Date in the following priority:
23
(i) an amount equal to the Class A Monthly Principal for such
Transfer Date shall (A) during the Controlled Accumulation Period, be
deposited into the Principal Funding Account and (B) during the Rapid
Amortization Period, be deposited into the Distribution Account;
(ii) after giving effect to the distribution referred to in
clause (i) above, an amount equal to the Class B Monthly Principal shall
(A) during the Controlled Accumulation Period, be deposited into the
Principal Funding Account and (B) during the Rapid Amortization Period, be
deposited into the Distribution Account;
(iii) after giving effect to the distributions referred to in
clauses (i) and (ii) above, an amount equal to the Class C Monthly
Principal shall (A) during the Controlled Accumulation Period, be deposited
into the Principal Funding Account and (B) during the Rapid Amortization
Period, be distributed to the Class C Investor Interest Holder; and
(iv) an amount equal to the excess, if any, of (A) the Available
Investor Principal Collections over (B) the applications specified in
subsections 4.16(e)(i) through (iii) above shall be paid to the Holder of
the Exchangeable Certificate, subject to the provisions of Section 4.3(f)
of the Pooling and Servicing Agreement.
(f) On the earlier to occur of (i) the first Transfer Date with
respect to the Rapid Amortization Period and (ii) the Transfer Date immediately
preceding the Class A Expected Final Distribution Date, the Trustee, acting in
accordance with instructions from the Servicer, shall cause to be withdrawn from
the Principal Funding Account and (A) deposited in the Distribution Account, the
amount deposited into the Principal Funding Account pursuant to subsections
4.16(e)(i) and 4.16(e)(ii) above and (B) pay to the Class C Investor Interest
Holder the amount deposited into the Principal Funding Account pursuant to
subsection 4.16(e)(iii) above.
(g) On each Distribution Date, the Trustee shall cause to be paid (i)
to the Class A Certificateholders from the Distribution Account, the amount
deposited into the Distribution Account pursuant to subsection 4.16(a)(i) hereof
on the preceding Transfer Date and (ii) to the Class B Investor Interest Holder
from the Distribution Account, the amount deposited into
24
the Distribution Account pursuant to subsection 4.16(b)(i) hereof on the
preceding Transfer Date.
(h) On the earlier to occur of (i) the first Distribution Date with
respect to the Rapid Amortization Period and (ii) the Class A Expected Final
Distribution Date, and on each Distribution Date thereafter, the Trustee, acting
in accordance with instructions from the Servicer, shall cause to be paid from
the Distribution Account the amount so deposited into the Distribution Account
pursuant to subsections 4.16(e) and 4.16(f) hereof on the related Transfer Date
in the following priority:
(i) an amount equal to the lesser of such amount deposited to
the Distribution Account and the Class A Investor Interest shall be paid to
the Class A Certificateholders; and
(ii) after giving effect to the distributions referred to in
clause (i) above, an amount equal to the lesser of such amount deposited
into the Distribution Account and the Class B Monthly Principal shall be
paid to the Class B Investor Interest Holder.
SECTION 4.17 Investor Charge-Offs.
(a) On or before each Transfer Date, the Servicer shall calculate the
Class A Investor Default Amount. If on any Transfer Date, the Class A Investor
Default Amount for the prior Monthly Period exceeds the sum of the amount
allocated with respect thereto pursuant to subsection 4.16(a)(iii), subsection
4.18(a) and Section 4.19 hereof with respect to such Monthly Period, the Class C
Investor Interest (after giving effect to reductions for any Class C Investor
Charge-Offs and any Reallocated Principal Collections on such Transfer Date)
will be reduced by the amount of such excess, but not by more than the lesser of
the Class A Investor Default Amount and the Class C Investor Interest (after
giving effect to reductions for any Class C Investor Charge-Offs and any
Reallocated Principal Collections on such Transfer Date) for such Transfer Date.
In the event that such reduction would cause the Class C Investor Interest to be
a negative number, the Class C Investor Interest will be reduced to zero, and
the Class B Investor Interest (after giving effect to reductions for any Class B
Investor Charge-Offs and any Reallocated Class B Principal Collections on such
Transfer Date) will be reduced by the amount by which the Class C Investor
Interest would have been reduced below
25
zero. In the event that such reduction would cause the Class B Investor Interest
to be a negative number, the Class B Investor Interest will be reduced to zero,
and the Class A Investor Interest will be reduced by the amount by which the
Class B Investor Interest would have been reduced below zero, but not by more
than the Class A Investor Default Amount for such Transfer Date (a "Class A
Investor Charge-Off"). If the Class A Investor Interest has been reduced by the
amount of any Class A Investor Charge-Offs, it will be reimbursed on any
Transfer Date (but not by an amount in excess of the aggregate Class A Investor
Charge-Offs) by the amount of Excess Spread allocated and available for such
purpose pursuant to subsection 4.18(b) hereof.
(b) On or before each Transfer Date, the Servicer shall calculate the
Class B Investor Default Amount. If on any Transfer Date, the Class B Investor
Default Amount for the prior Monthly Period exceeds the amount of Excess Spread
and Reallocated Class C Principal Collections which are allocated and available
to fund such amount pursuant to subsection 4.18(c) and Section 4.19 hereof, the
Class C Investor Interest (after giving effect to reductions for any Class C
Investor Charge-Offs and any Reallocated Principal Collections on such Transfer
Date and any adjustments with respect thereto as described in subsection 4.17(a)
above) will be reduced by the amount of such excess but not by more than the
lesser of the Class B Investor Default Amount and the Class C Investor Interest
(after giving effect to reductions for any Class C Investor Charge-Offs and any
Reallocated Principal Collections on such Transfer Date and any adjustments with
respect thereto as described in subsection 4.17(a) above) for such Transfer
Date. In the event that such reduction would cause the Class C Investor
Interest to be a negative number, the Class C Investor Interest will be reduced
to zero and the Class B Investor Interest will be reduced by the amount by which
the Class C Investor Interest would have been reduced below zero, but not by
more than the Class B Investor Default Amount for such Transfer Date (a "Class B
Investor Charge-Off"). The Class B Investor Interest will also be reduced by
the amount of Reallocated Class B Principal Collections in excess of the Class C
Investor Interest pursuant to Section 4.19 hereof and the amount of any portion
of the Class B Investor Interest allocated to the Class A Certificates to avoid
a reduction in the Class A Investor Interest pursuant to subsection 4.17(a)
above. The Class B Investor Interest will thereafter be reimbursed (but not to
an amount in excess of the unpaid principal balance of the Class B Investor
Interest) on any Transfer Date by the amount of Excess Spread allocated and
available for that purpose as described under subsection 4.18(d) hereof.
(c) On or before each Transfer Date, the Servicer shall calculate the
Class C Investor Default Amount. If on any Transfer Date, the Class C
26
Investor Default Amount for the prior Monthly Period exceeds the amount of
Excess Spread which is allocated and available to fund such amount pursuant to
subsection 4.18(h) hereof, the Class C Investor Interest will be reduced by the
amount of such excess but not by more than the lesser of the Class C Investor
Default Amount and the Class C Investor Interest for such Transfer Date (a
"Class C Investor Charge-Off"). The Class C Investor Interest will also be
reduced by the amount of Reallocated Principal Collections pursuant to Section
4.19 hereof and the amount of any portion of the Class C Investor Interest
allocated to the Class A Certificates or the Class B Investor Interest to avoid
a reduction in the Class A Investor Interest, pursuant to subsection 4.17(a)
hereof, or the Class B Investor Interest, pursuant to subsection 4.17(b) hereof,
respectively. The Class C Investor Interest will thereafter be reimbursed on any
Transfer Date by the amount of the Excess Spread allocated and available for
that purpose as described under subsection 4.18(i) hereof.
SECTION 4.18 Excess Spread. On or before each Transfer Date, the
Servicer shall instruct the Trustee in writing to apply Excess Spread with
respect to the related Monthly Period to make the following distributions on
each Transfer Date in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Transfer Date shall be used to fund the Class A Required Amount
and be applied in accordance with, and in the priority set forth in, subsection
4.16(a) hereof;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed shall be treated as a
portion of Investor Principal Collections and deposited into the Principal
Account on such Transfer Date;
(c) an amount equal to the Class B Required Amount, if any, with
respect to such Transfer Date shall be used to fund the Class B Required Amount
and be applied first in accordance with, and in the priority set forth in,
subsection 4.16(b) hereof and then any remaining amount available to pay the
Class B Investor Default Amount shall be treated as a portion of Investor
Principal Collections and deposited into the Principal Account on such Transfer
Date;
(d) an amount equal to the aggregate amount by which the Class B
Investor Interest has been reduced below the Class B Initial Investor Interest
for reasons other than the payment of principal to the Class B
(e) if JCPenney or an Affiliate thereof is the Servicer, an amount
equal to the aggregate amount of accrued but unpaid Class B Servicing Fees shall
be paid to the Servicer,
27
Investor Interest Holder (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) shall be treated as a
portion of Investor Principal Collections and deposited into the Principal
Account on such Transfer Date;
(f) an amount equal to the Class C Monthly Interest plus the amount of
any past due Class C Monthly Interest for the related Distribution Date shall be
distributed to the Class C Investor Interest Holder;
(g) if JCPenney or an Affiliate thereof is the Servicer, an amount
equal to the aggregate amount of accrued but unpaid Class C Servicing Fees shall
be paid to the Servicer;
(h) an amount equal to the Class C Investor Default Amount, if any,
for the prior Monthly Period shall be treated as a portion of Investor Principal
Collections and deposited into the Principal Account on such Transfer Date;
(i) an amount equal to the aggregate amount by which the Class C
Investor Interest has been reduced for reasons other than the payment of amounts
with respect to the Class C Monthly Principal (but not in excess of the
aggregate amount of such reductions which have not been previously reimbursed)
shall be treated as a portion of Investor Principal Collections and deposited
into the Principal Account on such Transfer Date; and
(j) the balance, if any, after giving effect to the payments made
pursuant to subparagraphs (a) through (i) above shall be paid to the Holder of
the Exchangeable Certificate.
SECTION 4.19 Reallocated Principal Collections. On or before each
Transfer Date, the Servicer shall instruct the Trustee in writing to withdraw
from the Principal Account and apply Reallocated Principal Collections (applying
all Reallocated Class C Principal Collections in accordance with subsections
4.19(a) and (b) hereof prior to applying any Reallocated Class B Principal
Collections in accordance with subsection 4.19(a) hereof for any amounts still
owing after the application of Reallocated Class C Principal Collections) with
respect to such Transfer Date, to make the following distributions on each
Transfer Date in the following priority:
(a) an amount equal to the excess, if any, of (i) the Class A Required
Amount, if any, with respect to such Transfer Date over (ii) the amount of
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Excess Spread with respect to the related Monthly Period, shall be applied
pursuant to subsections 4.16(a)(i), (ii) and (iii) hereof; and
(b) an amount equal to the excess, if any, of (i) the Class B Required
Amount, if any, with respect to such Transfer Date over (ii) the amount of
Excess Spread allocated and available to the Class B Investor Interest pursuant
to subsection 4.18(c) hereof on such Transfer Date shall be applied first
pursuant to subsections 4.16(b)(i) and (ii) hereof and then pursuant to
subsection 4.18(c) hereof.
On each Transfer Date, the Class C Investor Interest shall be reduced by
the amount of Reallocated Class C Principal Collections and by the amount of
Reallocated Class B Principal Collections for such Transfer Date. In the event
that such reduction would cause the Class C Investor Interest (after giving
effect to any Class C Investor Charge-Offs for such Transfer Date) to be a
negative number, the Class C Investor Interest (after giving effect to any Class
C Investor Charge-Offs for such Transfer Date) shall be reduced to zero and the
Class B Investor Interest shall be reduced by the amount by which the Class C
Investor Interest would have been reduced below zero. In the event that the
application of Reallocated Principal Collections would cause the Class B
Investor Interest (after giving effect to any Class B Investor Charge-Offs for
such Transfer Date) to be a negative number on any Transfer Date, Reallocated
Principal Collections shall be reallocated on such Transfer Date in an aggregate
amount not to exceed the amount which would cause the Class B Investor Interest
(after giving effect to any Class B Investor Charge-Offs for such Transfer Date)
to be reduced to zero.
SECTION 4.20 Principal Funding Account.
(a) The Trustee shall establish and maintain an account with a
Qualified Institution, which may be the Trustee, in the name of the Trust, on
behalf of the Trust, for the benefit of the Investor Certificateholders, which
account shall be a segregated trust account with the corporate trust department
of such Qualified Institution (the "Principal Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Investor Certificateholders. The Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Principal
Funding Account and in all proceeds thereof. The Principal Funding Account shall
be under the sole dominion and control of the Trustee for the benefit of the
Investor Certificateholders. If at any time the institution holding the
Principal Funding Account ceases to be a Qualified Institution, JCPR shall
notify the Trustee, and the Trustee upon being notified (or the Servicer on its
behalf) shall,
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within 10 Business Days, establish a new Principal Funding Account meeting the
conditions specified above with a Qualified Institution, and shall transfer any
cash or any investments to such new Principal Funding Account. The Trustee, at
the direction of the Servicer, shall (i) make withdrawals from the Principal
Funding Account from time to time, in the amounts and for the purposes set forth
in this Series Supplement, and (ii) on each Transfer Date (from and after the
commencement of the Controlled Accumulation Period) prior to the termination of
the Principal Funding Account make deposits into the Principal Funding Account
in the amounts specified in, and otherwise in accordance with, subsection
4.16(e) hereof.
(b) Funds on deposit in the Principal Funding Account shall be
invested at the direction of the Servicer by the Trustee in Permitted
Investments. Funds on deposit in the Principal Funding Account on any Transfer
Date, after giving effect to any withdrawals from the Principal Funding Account
on such Transfer Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Transfer Date.
(c) On each Transfer Date with respect to the Controlled Accumulation
Period and on the first Transfer Date with respect to the Rapid Amortization
Period, the Trustee, acting at the Servicer's direction given on or before such
Transfer Date, shall transfer from the Principal Funding Account to the Finance
Charge Account the Principal Funding Investment Proceeds on deposit in the
Principal Funding Account for application as Class A Available Funds and Class B
Available Funds in accordance with Section 4.16 hereof. Principal Funding
Investment Proceeds (including reinvested interest) shall not be considered part
of the amounts on deposit in the Principal Funding Account for purposes of this
Series Supplement.
(d) On or before each Transfer Date with respect to the Controlled
Accumulation Period and on or before the first Transfer Date with respect to the
Rapid Amortization Period, the Servicer shall calculate the amount, if any, by
which the Covered Amount for such Transfer Date exceeds the Class A Account
Percentage of Principal Funding Investment Proceeds for such Transfer Date (the
"Principal Funding Investment Shortfall").
(e) In the event that for any Transfer Date there is a Principal
Funding Investment Shortfall, the Servicer shall deposit into the Finance Charge
Account for application as Class A Available Funds the lesser of (i) the
Principal Funding Investment Shortfall and (ii) the amount, if any, of
Collections of
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Finance Charge Receivables and Net Recoveries allocable to the Holder of the
Exchangeable Certificate for the related Monthly Period.
[End of Article IV]
SECTION 8. Series E Termination. The right of the Investor
Certificateholders to receive payments from the Trust will terminate on the
first Business Day following the Series E Termination Date.
SECTION 9. Transfers of the Class B Investor Interest and the Class C
Investor Interest.
(a) Unless otherwise consented to by JCPR, no portion of the Class B
Investor Interest or the Class C Investor Interest or any interest therein may
be sold, conveyed, assigned, hypothecated, pledged, participated, exchanged or
otherwise transferred (each, a "Transfer") except in accordance with this
Section 9 and only to a Permitted Assignee. Any attempted or purported transfer,
assignment, exchange, conveyance, pledge, hypothecation or grant other than to a
Permitted Assignee shall be void. Unless otherwise consented to by JCPR, no
portion of the Class B Investor Interest or the Class C Investor Interest or any
interest therein may be Transferred to any Person (each such Person acquiring
the Class B Investor Interest or the Class C Investor Interest or any interest
therein, an "Assignee") unless such Assignee shall have executed and delivered
to JCPR on or before the effective date of any Transfer a letter substantially
in the form of Exhibit __ hereto (an "Investment Letter"), with respect to such
Transfer.
(b) No portion of the Class B Investor Interest or the Class C Investor
Interest or any interest therein may be Transferred to, and each Assignee will
certify that it is not, (a) an "employee benefit plan" (as defined in Section
3(3) of ERISA), whether or not subject to Title I of ERISA, including
governmental plans, foreign plans and church plans, (b) any "plan" (as defined
in Section 4975(e)(1) of the Code), whether or not subject to Section 4975 of
the Code, including individual retirement accounts and ▇▇▇▇▇ plans, or (c) any
other entity whose underlying assets include "plan assets" (within the meaning
of Department of Labor Regulation Section 2510.3-101, 29 C.F.R. (S) 2510.3-101
or otherwise under ERISA) by reason of a plan's investment in the entity,
including, without limitation, an insurance company general account.
SECTION 10. Other Terms of Series E.
(a) For Series E, the period of time for segregation of collections,
as described in subsection 4.3(a) of the Pooling and Servicing Agreement, shall
be five (5) consecutive Business Days following the
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Closing Date and for a period of two (2) consecutive Business Days each year
thereafter. JCPR shall have complete discretion with respect to the dates chosen
during the year for the two consecutive business day segregation.
(b) Interest on the Investor Certificates shall accrue from the
Closing Date to and including ________ __, 1998. Notwithstanding anything in
the Pooling and Servicing Agreement to the contrary, interest on the Investor
Certificates with respect to any Monthly Period shall accrue from and including
the Distribution Date in such Monthly Period to but excluding the next
succeeding Distribution Date.
(c) The Principal Amount (see Series C Supplement) in the case of
Series E shall be the Investor Interest.
(d) Subsections 9.1(h) and 9.1(i) of the Pooling and Servicing
Agreement shall not be applicable to Series E.
SECTION 11. Amendment and Ratification of Pooling And Servicing
Agreement.
(a) Following the payment in full of Series B and Series C, JCPenney
and JCPR may transfer all or a portion of JCPenney's or the Bank's consumer open
end credit card accounts and/or the receivables arising thereunder, which may
include all, but not less than all, of the Accounts and JCPenney's and JCPR's
remaining interest in the Receivables arising thereunder and in the Trust
(collectively, the "Assigned Assets"), together with all servicing functions and
other obligations under the Receivables Purchase Agreement and the Pooling and
Servicing Agreement or relating to the transactions contemplated thereby
(collectively, the "Assumed Obligations"), to another entity (the "Assuming
Entity") which may be an entity that is not affiliated with JCPenney or JCPR,
without the consent or approval of any of the Investor Certificateholders, if
the following conditions are satisfied: (i) the Assuming Entity, the Trustee and
JCPenney or JCPR, as the case may be, shall have entered into an assumption
agreement providing for the Assuming Entity to assume the Assumed Obligations,
including the obligations under the Receivables Purchase Agreement and the
Pooling and Servicing Agreement, as the case may be, to transfer the Receivables
arising under the Accounts to JCPR or the Trust, as the case may be, (ii) all
filings required to perfect the interest of JCPenney, JCPR or the Trustee, as
the case may be, in the Receivables arising under such Accounts shall have been
duly made and copies thereof shall have been delivered to the Trustee, (iii) the
Rating Agency Condition, (iv) the Trustee shall have received an Opinion of
Counsel with
32
respect to clauses (i) and (ii) above in form and substance satisfactory to the
Trustee and (v) the Trustee shall have received a Tax Opinion. After a permitted
transfer and assumption, neither JCPenney nor JCPR shall have further liability
or obligation under the Receivables Purchase Agreement or the Pooling and
Servicing Agreement, other than those liabilities that arose prior to such
transfer and assumption, and JCPenney and JCPR shall remain liable for all of
their respective representations, warranties and covenants made prior to such
transfer and assumption.
(b) Following the payment in full of Series B and Series C, an
amendment under Section 13.1(b) of the Pooling and Servicing Agreement may be
made without the consent or approval of any of the Investor Certificateholders
so long as the Rating Agency Condition shall be satisfied.
(c) This Series Supplement may be amended at any time by the Servicer,
JCPR and the Trustee with the consent solely of the Class B Investor Interest
Holder or the Class C Investor Interest Holder, as applicable, to add provisions
hereto that permit the Class B Investor Interest or the Class C Investor
Interest, as applicable, to be represented by a certificated security.
(d) As supplemented by this Series Supplement, the Pooling and
Servicing Agreement is in all respects ratified and confirmed and the Pooling
and Servicing Agreement as so supplemented by this Series Supplement shall be
read, taken, and construed as one and the same instrument.
SECTION 12. Counterparts. This Series Supplement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
SECTION 13. Governing Law. This Series Supplement shall be construed
in accordance with and governed by the substantive laws of the State of New York
applicable to agreements made and to be performed therein.
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IN WITNESS WHEREOF, JCPR, the Servicer and the Trustee have caused
this Series Supplement to be duly executed by their respective officers as of
the day and year first above written.
JCP RECEIVABLES, INC.
By:
--------------------------------------
Name: C. A. Walther
Title: President
THE FUJI BANK AND TRUST COMPANY
By:
--------------------------------------
Name:
Title:
▇. ▇. ▇▇▇▇▇▇ COMPANY, INC.
By:
--------------------------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President and Treasurer
34