UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 30, 1999
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File No. 333-10843
SRI RECEIVABLES PURCHASE CO., INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of 51-349276
incorporation or organization) (I.R.S. Employer Identification
No.)
10201 Main Street, Houston, Texas 77025
(Zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 667-5601
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for at least the
past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting common stock held
by non-affiliates as of April 29, 1999 was zero. The
number of shares of common stock outstanding as of April
29, 1999 was 1,000 shares which were held by Specialty
Retailers, Inc., a wholly-owned subsidiary of Stage
Stores, Inc.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL
INSTRUCTION (I)(1)(a) and (b) OF FORM 10-K AND IS
THEREFORE FILING THIS FORM UNDER THE REDUCED DISCLOSURE
FORMAT.
PART I
References to a particular year are to SRI Receivables
Purchase Co., Inc.'s fiscal year which is the 52 or 53 week
period ending on the Saturday closest to January 31, of the
following calendar year ( e.g., a reference to "1998" is a
reference to the fiscal year ended January 30, 1999).
ITEM 1. BUSINESS
General
1. SRI Receivables Purchase Co., Inc. (the "Company" or
"SRPC") is a wholly owned, special-purpose subsidiary of
Specialty Retailers, Inc. ("SRI"). The Company's ultimate parent
is Stage Stores, Inc. ("Stage Stores"). The Company, which was
incorporated in 1993, was established to acquire substantially
all of the trade accounts receivable generated by holders of
SRI's private label credit card accounts and to transfer such
accounts receivable to the SRI Receivables Master Trust (the
"Trust") under the terms of a pooling and servicing agreement.
The Company is a separate and distinct entity from Stage Stores
and its other affiliates. The Company was established with the
intent that, in the event of a liquidation, its creditors would
be entitled to satisfy their claims from the Company's assets
prior to any distribution to Stage Stores or any of its
subsidiaries. The Trust has issued certain certificates to third
parties representing undivided interests in the Trust. SRPC owns
an undivided interest in the accounts receivable not supporting
the certificates issued to third parties by the Trust (the
"Retained Interest").
2. Stage Stores, through SRI, operates the store of choice
for well-known, nationally recognized brand name apparel
accessories, cosmetics and footwear in over 500 small towns and
communities throughout the United States. At January 30, 1999,
SRI operated 679 stores in twenty-four states. Although the
stores may be operated under the "Stage", "Bealls" and "Palais
Royal" trade names depending on the geographical market, the vast
majority of the stores operate under one concept and strategy.
Stage Stores offers its customers a private label credit card
which can be used to make purchases at its stores. At January
30, 1999, Stage Stores had approximately 2.3 million of active
credit card accounts.
ITEM 2. PROPERTIES
None.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
This Item is omitted pursuant to general instruction I of Form 10-K.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
NONE.
ITEM 6. SELECTED FINANCIAL DATA
This Item is omitted pursuant to general instruction I of Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995.
Certain items discussed or incorporated by reference herein
contain forward-looking statements that involve risks and
uncertainties including, but not limited to, the seasonality of
demand for apparel which can be affected by weather patterns,
levels of competition, competitors' marketing strategies, changes
in fashion trends and availability of product and the failure of
SRI to achieve the expected results of merchandising and
marketing plans or store opening or closing plans. The occurrence
of any of the above could have a material adverse impact on the
amount or quality of accounts receivable transferred to SRPC,
which in turn could affect the operating results of SRPC.
Additionally, changes in economic conditions (including interest
rates and payment patterns of the holders of SRI private label
credit cards) could negatively impact SRPC's results of
operations. Also, see "Risk Factors" under Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations in Stage Stores Form 10-K for the period ended January
30, 1999, filed April 16, 1999, for a discussion of risk factors
relating to the operations of SRPC's parent company. Certain
information herein contains estimates which represent
management's best judgment as of the date hereof based on
information currently available; however, SRPC does not intend to
update this information to reflect developments or information
obtained after the date hereof and disclaims any legal obligation
to the contrary.
1998 Compared to 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS IS LIMITED TO AN ANALYSIS OF OPERATIONS
BETWEEN 1998 AND 1997 PURSUANT TO GENERAL INSTRUCTION I OF FORM
10-K.
The gain associated with the Retained Certificates for 1998
decreased 41.5% to $2.4 million from $4.1 million in 1997 due to
an increase in premium payments to SRI for the purchase of
accounts as well as an increase in the return paid to certificate
holders in the Trust partially offset by an increase in the
amount of service charge and late fee income and a decrease in
bad debt expense. SRPC paid $39.7 million in premiums on accounts
receivable purchased during 1998 and $27.2 million for the same
period in 1997. Interest income on balances with SRI increased
61.7% to $7.6 million in 1998 from $4.7 million in 1997 primarily
due to an increase in the net cash advances to SRI.
Recent Accounting Pronouncements
In April 1998, the Accounting Standards Executive Committee
issued Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities" ("SOP 98-5") effective for fiscal years
beginning after December 15, 1998. SOP 98-5 provides guidance on
the financial reporting of start-up costs and organization costs.
It requires costs of start-up activities and organization costs
to be expensed as incurred. Initial adoption of SOP 98-5 is to
be reported as the cumulative effect of a change in accounting
principle. The Company will adopt SOP 98-5 in the first quarter
of 1999 and estimates adoption will result in an after tax charge
of approximately $1.5 million.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See "Index to Financial Statements and Schedules" included
on page 5 for information required under this Item 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This Item is omitted pursuant to general instruction I of Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
This Item is omitted pursuant to general instruction I of Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
This Item is omitted pursuant to general instruction I of Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This Item is omitted pursuant to general instruction I of Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) and (d) Financial Statements
See "Index to Financial Statements and Schedules" on Page 5.
(b) Reports on Form 8-K
None.
(c) Exhibits - See "Exhibit Index" at X-1.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SRI Receivables Purchase Co., Inc.
/s/ Carl Tooker April 29, 1999
Carl Tooker
Chairman, Chief Executive Officer and
President (principal executive officer)
SRI Receivables Purchase Co., Inc.
/s/ James Marcum April 29, 1999
James Marcum
Vice Chairman and Chief Financial Officer
(principal financial and accounting officer)
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the date indicated.
/s/ Carl Tooker Chairman of the Board of Directors April 29, 1999
Carl Tooker
/s/ James Marcum Director April 29, 1999
James Marcum
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page
Financial Statements Number
Report of Independent Accountants F-1
Balance Sheet at January 30, 1999 and January 31, 1998 F-2
Statement of Income for the fiscal years 1998, 1997 and 1996 F-3
Statement of Cash Flows for the fiscal years 1998, 1997 and 1996 F-4
Statement of Stockholder's Equity for the
fiscal years 1998, 1997 and 1996 F-5
Notes to Financial Statements F-6
Schedules
All schedules are omitted because they are not applicable or
the required information is shown in the financial statements or
notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
SRI Receivables Purchase Co., Inc.
In our opinion, the financial statements listed in the
accompanying index present fairly, in all material respects, the
financial position of SRI Receivables Purchase Co., Inc. (the
"Company") at January 30, 1999 and January 31, 1998, and the
results of its operations and its cash flows for each of the
three years in the period ended January 30, 1999, in conformity
with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Houston, Texas
April 9, 1999
SRI Receivables Purchase Co., Inc.
(An indirect, wholly-owned subsidiary of Stage Stores, Inc.)
Balance Sheet
(in thousands, except par value)
January 30, 1999 January 31, 1998
ASSETS
Retained Certificates in Trust $ 83,044 $ 72,445
Restricted cash 5,926 7,808
Prepaid expenses 899 473
Debt issue costs 1,231 1,874
Trust organization costs 3,171 3,883
Total assets $ 94,271 $ 86,483
LIABILITIES AND STOCKHOLDER'S
EQUITY
Accrued expenses and other
accrued liabilities $ 709 $ 630
Payable to SRI, net 23,497 14,324
Deferred income taxes 2,179 1,217
Long-term debt 30,000 30,000
Total liabilities 56,385 46,171
Common stock, par value $0.01, 1
share authorized, issued and
outstanding -- --
Additional paid-in capital 32,130 34,556
Retained earnings 5,756 5,756
Stockholder's equity 37,886 40,312
Commitments and contingencies -- --
Total liabilities and
stockholder's equity $ 94,271 $ 86,483
SRI Receivables Purchase Co., Inc.
(An indirect, wholly-owned subsidiary of Stage Stores, Inc.)
Statement of Income
(in thousands)
Fiscal Year
1998 1997 1996
Gain associated with Retained Certificates $2,405 $4,099 $7,249
Interest income on balances with SRI 7,598 4,659 2,044
Interest income 219 245 150
Interest expense 3,740 3,740 2,538
Amortization of debt issue costs 642 637 382
General and administrative expenses 938 597 932
Operating income 4,902 4,029 5,591
Income tax expense 1,826 1,483 2,023
Income before extraordinary item 3,076 2,546 3,568
Extraordinary item - write-off
of trust organization costs -- (642) --
Net income $3,076 $1,904 $3,568
SRI Receivables Purchase Co., Inc.
(An indirect, wholly-owned subsidiary of Stage Stores, Inc.)
Statement of Cash Flows
(in thousands)
Fiscal Year
1998 1997 1996
Cash flows from operating activities:
Net income $3,076 $1,904 $3,568
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Amortization of trust organization
and debt issue costs 1,659 1,254 1,385
Extraordinary item -- 642 --
Deferred income taxes 962 (58) 380
Change in operating assets and liabilities:
Increase (decrease) in payable to SRI 9,173 (20,717) 16,519
Increase (decrease) in accrued
expenses and other liabilities 79 (589) (7)
Unrealized gain associated with
the Retained Certificates (3,363) (424) (1,262)
Total adjustments 8,510 (19,892) 17,015
Net cash provided by (used in)
operating activities 11,586 (17,988) 20,583
Cash flows from investing activities:
(Increase) decrease in restricted cash 1,882 (2,176) (1,221)
Purchases of accounts receivable from SRI (589,685) (486,774) (458,408)
Transfer of accounts receivable to Trust 585,299 508,912 441,345
Net cash provided by (used in)
investing activities (2,504) 19,962 (18,284)
Cash flows from financing activities:
Proceeds from issuance of long-term debt -- -- 30,000
Additions to debt issue costs -- (70) (2,822)
Dividends paid to SRI (9,082) (1,904) (29,477)
Net cash used in financing activities (9,082) (1,974) (2,299)
Net change in cash and cash equivalents -- -- --
Cash and cash equivalents:
Beginning of year -- -- --
End of year $ -- $ -- $ --
Supplemental disclosure of cash flow information:
Interest paid $3,750 $3,750 $2,039
Supplemental schedule of non-cash
investing and financing activities:
Contribution of ineligible accounts receivable $3,276 $4,530 $4,944
Contribution of trust organization costs $ 304 $ 300 $ 87
SRI Receivables Purchase Co., Inc.
(An indirect, wholly-owned subsidiary of Stage Stores, Inc.)
Statement of Stockholder's Equity
(in thousands)
Common Stock
Additional
Shares Paid-In Retained
Outstanding Amount Capital Earnings Total
Balance, February 3, 1996 1 $ -- $52,195 $4,165 $56,360
Net income -- -- -- 3,568 3,568
Dividends -- -- (27,500) (1,977) (29,477)
Contribution of ineligible
accounts receivable -- -- 4,944 -- 4,944
Contribution of trust
organization costs -- -- 87 -- 87
Balance, February 1, 1997 1 -- 29,726 5,756 35,482
Net income -- -- -- 1,904 1,904
Dividends -- -- -- (1,904) (1,904)
Contribution of ineligible
accounts receivable -- -- 4,530 -- 4,530
Contribution of trust
organization costs -- -- 300 -- 300
Balance, January 31, 1998 1 -- 34,556 5,756 40,312
Net income -- -- -- 3,076 3,076
Dividends -- -- (6,006) (3,076) (9,082)
Contribution of ineligible
accounts receivable -- -- 3,276 -- 3,276
Contribution of trust
organization costs -- -- 304 -- 304
Balance, January 30, 1999 1 $ -- $32,130 $5,756 $37,886
SRI Receivables Purchase Co., Inc.
(An indirect, wholly-owned subsidiary of Stage Stores, Inc.)
Notes to Financial Statements
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS:
SRI Receivables Purchase Co., Inc. ("SRPC" or the "Company")
is a wholly owned, special-purpose subsidiary of Specialty
Retailers, Inc. ("SRI"). The Company's ultimate parent is Stage
Stores Inc. ("Stage Stores"). The Company was incorporated in
1993 and was established to acquire substantially all of the
trade accounts receivable generated by holders of SRI's private
label credit card accounts and transfer such accounts receivable
to SRI Receivables Master Trust (the "Trust") under the terms of
a pooling and servicing agreement.
The Company is a separate and distinct entity from Stage
Stores and its other affiliates. The Company was established
with the intent that in the event of a liquidation, its creditors
would be entitled to satisfy their claims from the Company's
assets prior to any distribution to Stage Stores or any of its
subsidiaries.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
Fiscal Year: References to a particular year are to the
Company's fiscal year which is the 52 or 53 week period ending on
the Saturday closest to January 31 of the following calendar year
(e.g., reference to "1998" is a reference to the fiscal year
ended January 30, 1999).
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Retained Certificates in Trust: Retained certificates in
Trust constitutes the Class D term certificates, the Class C
revolving certificate and the transferor certificate (the
"Transferor Certificate" and along with the Class D term
certificates and the Class C revolving certificate, the "Retained
Certificates") which are held by SRPC. SRPC accounts for the
Retained Certificates under Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" ("SFAS 115"). Under SFAS 115, the Retained
Certificates are accounted for as debt securities and classified
as trading securities. Accordingly, the Retained Certificates are
recorded at fair value in the accompanying balance sheet with any
change in fair value reflected currently in income.
Fair value is determined based upon the purchase price of
the receivables as well as actual and estimated finance charge
income, servicing cost and bad debt expense associated with the
underlying accounts receivable portfolio, return paid to the
holders of the Class A, B and C term certificates (the "Term
Certificates") and the Class A and B revolving certificates (the
"Revolving Certificates"). The realized gain associated with the
Retained Certificate represents: (i) actual finance charge income
billed to the holders of the underlying accounts receivable; less
(ii) actual servicing costs incurred by SRPC under an agreement
with SRI, actual return paid to the holders of the Term
Certificates and Revolving Certificates, actual premium payments
made to SRI and actual bad debt write-offs net of any recoveries
of such write-offs (see Note 3). The change in the unrealized
gain (loss) associated with the Retained Certificates represents:
(i) estimated future finance charge income to be billed to the
holders of the underlying accounts receivable as the underlying
accounts receivable portfolio liquidates; less (ii) the estimated
servicing cost to be incurred by SRPC over the liquidation
period, estimated return to be paid to the holders of the Term
Certificates and Revolving Certificates over the liquidation
period and estimated future bad debt expense associated with the
underlying accounts receivable portfolio.
Restricted Cash: The Company records its undivided interest
in the cash balances of the Trust as restricted cash.
Trust Organization Costs: Trust organization costs are
amortized on a straight-line basis over the expected life of the
underlying certificates to their legal maturities of three to
nine years. Trust organization costs are net of accumulated
amortization of $4.6 million and $3.7 million at January 30, 1999
and January 31, 1998, respectively.
Statement of Cash Flows: The Company considers highly liquid
investments with initial maturities of less than three months to
be cash equivalents in its statement of cash flows.
Financial Instruments and Derivatives: The Company records
all financial instruments, other than the Retained Certificates,
at cost. The fair values of these financial instruments
approximate cost. The Company has entered into two interest rate
cap agreements in order to hedge its interest rate risk. The cost
of entering into the agreements was not material and there are no
future costs related to the exercise of these agreements. If
future interest rates increase above specified amounts,
reimbursements to the Company under the agreements will reduce
interest expense.
Income Taxes: Although SRPC is included in the consolidated
federal tax return of Stage Stores, the provisions for federal
income taxes has been computed as if SRPC had filed a separate
federal income tax return. The asset and liability approach is
used to recognize deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between
the carrying amounts and the tax basis of assets and liabilities.
Start-up Costs: In April 1998, the Accounting Standards
Executive Committee issued Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" ("SOP 98-5"),
effective for fiscal years beginning after December 15, 1998.
SOP 98-5 provides guidance on the financial reporting of start-up
costs and organization costs. It requires costs of start-up
activities and organization costs to be expensed as incurred.
Initial adoption of SOP 98-5 is to be reported as the cumulative
effect of a change in accounting principle. The Company will
adopt SOP 98-5 in the first quarter of 1999.
Reclassification: The accompanying financial statements
include reclassifications from financial statements issued in
previous years.
NOTE 3 - RECEIVABLES TRANSFER AND PURCHASE AGREEMENTS:
The Company has entered into a Receivables Purchase
Agreement (the "Purchase Agreement") with SRI. The Purchase
Agreement requires SRPC to purchase eligible accounts receivable
at a price which may be greater or less than the face amount of
such receivables.
The purchase price is based on: (i) the expected yield on
the receivables, reduced by certain costs to SRPC; (ii) the
expected losses on the receivables, net of certain expected
benefits to SRPC from SRI; and (iii) a reasonable rate of return
on SRPC's capital. SRPC paid $39.7 million in premiums on
accounts receivable purchased during 1998, $27.2 million during
1997 and $19.8 million during 1996 to compensate SRI for the cost
of servicing the accounts receivable not offset by the fee SRI
charged the Trust described in Note 4. The Purchase Agreement
terminates upon the occurrence of certain events specified
therein.
The Purchase Agreement and the Pooling and Servicing
Agreement (see Note 4) allow SRPC to sell defaulted accounts
receivable to SRI, subject to certain limitations. The Purchase
Agreement does not allow for the repurchase of any other
defaulted receivables by SRI. Sales of defaulted accounts
receivable are limited to 95% of the immediately preceding fiscal
year's default ratio, as defined in the various agreements,
applied to eligible accounts receivable transferred from SRI
during any fiscal period.
In 1998, Stage Stores formed Granite National Bank, N.A.
(the "Bank") as a limited purpose national bank that would
originate credit card receivables. Commencing in August, 1998,
the Bank began to originate receivables and SRI ceased to
originate receivables. SRI and the Bank entered into a
Receivables Transfer Agreement (the "Transfer Agreement") under
which SRI purchases all of the receivables originated by the Bank
on a daily basis. The Transfer Agreement contains no provisions
for recourse against the Bank.
NOTE 4 - POOLING AND SERVICING AGREEMENT:
The Company has entered into a Pooling and Servicing
Agreement (the "Agreement"), with the Trust, SRI and Bankers
Trust (Delaware), as the trustee. Under the terms of the
Agreement, as well as various supplements, the Trust has issued
to third parties $165.0 million of long-term Class A, B and C
Term Certificates (the "Term Certificates"), as well as Revolving
Class A and Class B Certificates under the revolving certificate
facility (the "Revolving Certificates"). The Trust has also
issued $35.1 million in Class D Term Certificates to the Company,
which do not receive a return. During September 1998, the Company
amended the Revolving Certificates to increase the limit that may
be outstanding from $82.5 million to $165.0 million through March
31, 1999. The maximum outstanding under the Revolving
Certificates will be reduced to $144.4 million from April 1, 1999
to September 30, 1999 and $82.5 million thereafter. Amounts
outstanding under the Revolving Certificates are funded by
issuance of commercial paper in the open market through a
facility agent at various rates and maturities. If the commercial
paper market is unavailable, amounts outstanding under the
Revolving Certificates will be funded by a liquidity provider.
If accounts receivable balances in the Trust fall below the level
required to support the Term Certificates and Revolving
Certificates, certain principal collections may be retained in
the Trust until such time as the receivable balances exceed the
certificates then outstanding and the required Retained
Certificates. The Trust may issue additional series of
certificates from time to time. Terms of any future series will
be determined at the time of issuance.
The Company owns an undivided interest in the accounts
receivable in the Trust not represented by the Term Certificates
or Revolving Certificates and SRI continues to service all of the
accounts receivable in the Trust. The outstanding balances of the
Term Certificates totaled $165.0 million at January 30, 1999 and
January 31, 1998. There was $115.6 million and $77.0 million
outstanding under the Revolving Certificate at January 30, 1999
and January 31, 1998.
The repayment of the Class B Term Certificates is contingent
upon full repayment of the Class A Term Certificates. The
repayment of the Class C Term Certificates is contingent upon
full repayment of the Class B Term Certificates. The repayment
of the Class D Term Certificates is contingent upon full
repayment of the Class C Term Certificates.
The repayment of the Class B Revolving Certificates is
contingent upon full repayment of the Class A Revolving
Certificates. The repayment of the Class C Revolving
Certificates is contingent upon full repayment of the Class B
Revolving Certificates.
Total accounts receivable transferred to the Trust during
1998, 1997 and 1996 were $585.3 million, $508.9 million and
$441.4 million, respectively. The cash flows generated from the
accounts receivable in the Trust are dedicated to: (i) the
purchase of new accounts receivable generated by the Company;
(ii) payment of a return on the certificates; and (iii) the
payment of a servicing fee to SRI. Any remaining cash flows are
remitted to SRPC. The term certificates entitle the holders to
receive a return, based upon the London Interbank Offered Rate
("LIBOR"), plus a specified margin. Principal payments commence
on December 31, 1999 but can be accelerated upon occurrence of
certain events. The Company is currently protected against
increases above 12% with respect to the Term Certificates under
an agreement entered into with a bank. The Company is exposed to
a loss in the event of non-performance by the bank, however, such
an event is not anticipated. The Revolving Certificates entitles
the holder to receive a return based upon a commercial paper
rate, or a base rate plus a specified margin depending on the
type of funding outstanding for the Revolving Certificates. The
purchase commitment for the Revolving Certificates which was
entered in December 1997 is three years, subject to renewal at
the option of the parties. At January 30, 1999, the average
rates of return on the Class A, B, and C Term Certificates were
6.0%, 6.6% and 8.0%, respectively. At January 30, 1999, the
average rate of return on the Class A and B Revolving
Certificates was 4.9%.
SRI acts as agent to service the accounts receivable but
this appointment may be revoked under certain circumstances.
Under the Agreement, SRI receives a servicing fee equal to 2% of
all Term and Revolving Certificates outstanding. SRI received
$5.9 million, $4.6 million and $4.1 million during 1998, 1997
and 1996, respectively, as compensation for servicing the accounts
receivable under the Agreement.
NOTE 5 - LONG-TERM DEBT:
During 1996, the Company issued $30.0 million in aggregate
principal amount of 12.5% Trust Certificate-Backed Notes (the
"SRPC Notes"). The SRPC Notes are collateralized by the Retained
Certificates. Interest and principal payments are made from
amounts otherwise received by SRPC from funds associated with the
Retained Certificates. Interest is payable semi-annually on June
15 and December 15 of each year commencing December 15, 1996.
Principal matures December 2000.
NOTE 6 - INCOME TAXES:
All Company operations are domestic. Income tax expense
charged to continuing operations consisted of the following (in
thousands):
Fiscal Year
1998 1997 1996
Federal income tax expense (benefit):
Current $794 $1,596 $1,582
Deferred 863 (202) 339
1,657 1,394 1,921
State income tax expense (benefit):
Current 71 113 61
Deferred 98 (24) 41
169 89 102
$1,826 $1,483 $2,023
A reconciliation between the federal income tax expense
charged to continuing operations computed at statutory tax rates
and the actual income tax expense recorded follows (in
thousands):
Fiscal Year
1998 1997 1996
Federal income tax expense at the statutory rate $1,716 $1,410 $1,957
State income taxes, net 110 73 66
$1,826 $1,483 $2,023
Deferred tax liabilities (assets) consist of the following
(in thousands):
January 30, 1999 January 31, 1998
Gross deferred tax liabilities:
Unrealized gain associated with
the Retained Certificates $ 2,310 $1,309
Gross deferred tax assets:
Other (131) (92)
Deferred tax assets valuation allowance -- --
$ 2,179 $ 1,217
In connection with the write-off of trust organization costs
during 1997, the Company recorded an extraordinary charge of $1.0
million, before applicable income taxes of $0.4 million.
NOTE 7 - COMMITMENTS AND CONTINGENCIES:
Litigation: Although no litigation is currently pending, the
Company is subject to claims and litigation arising in the normal
course of its business.
Concentration of Credit Risk: Financial instruments which
potentially subject the Company to concentrations of credit risk
are primarily cash and accounts receivable. The credit risk
associated with the Company's accounts receivable is limited by
the large number of customers in SRI's customer base.
Substantially all of SRI's customers reside in the central United
States.
NOTE 8 - RELATED PARTY TRANSACTIONS:
In connection with the transactions discussed in Note 3 and
Note 4, the Company will record a payable to or a receivable from
SRI. Intercompany interest was charged on receivable balances
from SRI at LIBOR plus 1.0% (5.9% at January 30, 1999).
The following documents are the exhibits to the Form 10-K.
For convenient reference, each exhibit is listed according to the
Exhibit Table of Regulation S-K.
Exhibit
Number Exhibit
*3.1 Certificate of Incorporation of SRI Receivables
Purchase Co., Inc. (Incorporated by Reference to
Exhibit 3.1 of Registration No. 333-10843 on Form S-4
of SRI Receivables Purchase Co., Inc.).
*3.2 By-Laws of SRI Receivables Purchase Co., Inc.
(Incorporated by Reference to Exhibit 3.2 of
Registration No. 333-10843 on Form S-4 of SRI
Receivables Purchase Co., Inc.).
*4.1 Indenture among SRI Receivables Purchase Co., Inc.,
Specialty Retailers, Inc., as Administrative Agent,
and Bankers Trust Company, as Trustee and Collateral
Agent, relating to the 12.5% Trust Certificate-Backed
Notes of SRI Receivables Purchase Co., Inc.
(including form of Note). (Incorporated by Reference
to Exhibit 4.1 on Form 10-Q of Apparel Retailers,
Inc., dated May 4, 1996).
*4.2 Amended and Restated Pooling and Servicing Agreement by
and among SRI Receivables Purchase Co., Inc.,
Specialty Retailers, Inc., and Bankers Trust
(Delaware) dated August 11, 1995 (Incorporated by
Reference to Exhibit 4.6 on Form 10-Q of Apparel
Retailers, Inc., dated October 28, 1995).
*4.3 First Amendment to Amended and Restated Pooling and
Servicing Agreement by and among SRI Receivables
Purchase Co., Inc., Specialty Retailers, Inc., and
Bankers Trust (Delaware) dated May 30, 1996
(Incorporated by Reference to Exhibit 4.2 on Form 10-
Q of Apparel Retailers, Inc., dated May 4, 1996).
**4.4 Second Amendment to the Amended and Restated
Pooling and Servicing Agreement by and among SRI
Receivables Purchase Co., Inc., Specialty Retailers,
Inc., and Bankers Trust (Delaware) dated August 1,
1998.
*4.5 Amended and Restated Series 1997-1 Supplement dated as
of October 16, 1998 to Amended and Restated Pooling
and Servicing Agreement dated as of August 11, 1995
and Amended on May 30, 1996 and August 1, 1998 by and
among SRI Receivables Purchase Co., Inc., Specialty
Retailers, Inc., and Bankers Trust (Delaware) on
behalf of the Series 1997-1 Certificateholders.
(Incorporated by reference to Exhibit 4.2 on Form 10-
Q Stage Stores, Inc. (commission file number 001-
14035) for the quarter ended October 31, 1998 filed
on December 15, 1998).
*4.6 Class A Certificate Purchase Agreement amount SRI
Receivables Purchase Co., Inc., Specialty Retailers,
Inc., the Class A Purchasers party thereto and Credit
Suisse First Boston dated as of December 3, 1997.
(Incorporated by Reference to Exhibit 4.8 on Form 10-
K of Stage Stores, Inc., for the fiscal year ended
January 31, 1998).
*4.7 Class B Certificate Purchase Agreement amount SRI
Receivables Purchase Co., Inc., Specialty Retailers,
Inc., the Class B Purchasers party thereto and Credit
Suisse First Boston dated as of December 3, 1997.
(Incorporated by Reference to Exhibit 4.9 on Form 10-
K of Stage Stores, Inc., for the fiscal year ended
January 31, 1998).
*4.8 Class B-2 Certificate Purchase Agreement dated as of
October 16, 1998 by and among SRI Receivables
Purchase Co., Inc., Specialty Retailers, Inc., the
Class B-2 Purchasers parties thereto, and Credit
Suisse First Boston. (Incorporated by reference to
Exhibit 4.3 on Form 10-Q of Stage Stores, Inc.
(commission file number 001-14035) for the quarter
ended October 31, 1998 filed on December 15, 1998).
*4.9 Amendment No. 1 to Class A Certificate Purchase
Agreement dated as of October 16, 1998 by and among
SRI Receivables Purchase Co., Inc., Specialty
Retailers, Inc., the Class A Purchasers parties
thereto and Credit Suisse First Boston. (Incorporated
by reference to Exhibit 4.4 on Form 10-Q Stage
Stores, Inc. (commission file number 001-14035) for
the quarter ended October 31, 1998 filed on December
15, 1998).
*4.10 Amendment No. 1 to Class B Certificate Purchase
Agreement dated as of October 16, 1998 by and
among SRI Receivables Purchase Co., Inc., Specialty
Retailers, Inc., the Class B Purchasers
parties thereto and Credit Suisse First Boston.
(Incorporated by reference to Exhibit 4.5 on
Form 10-Q Stage Stores, Inc. (commission file number
001-14035) for the quarter ended October 31, 1998 filed
on December 15, 1998).
*4.11 Amended and Restated Series 1993-1 Supplement among SRI
Receivables Purchase Co., Inc., Specialty Retailers,
Inc. and Bankers Trust (Delaware) dated May 30, 1996
(Incorporated by Reference to Exhibit 4.3 on Form 10-
Q of Apparel Retailers, Inc., dated May 4, 1996).
*4.12 Amended and Restated Series 1995-1 Supplement by and
among SRI Receivables Purchase Co., Inc., Specialty
Retailers, Inc. and Bankers Trust (Delaware) on
behalf of the Series 1995-1 Certificateholders dated
May 30, 1996 (Incorporated by Reference to Exhibit
4.6 on Form 10-Q of Apparel Retailers, Inc., dated
May 4, 1996).
*4.13 Amended and Restated Receivables Purchase Agreement
among SRI Receivables Purchase Co., Inc. and the
Originators dated as of May 30, 1996 (Incorporated by
Reference to Exhibit 4.7 on Form 10-Q of Apparel
Retailers, Inc., dated May 4, 1996).
**4.14 First Amendment to the Amended and Restated Receivables
Purchase Agreement by and among SRI Receivables
Purchase Co., Inc. and the Originators dated as of
August 1, 1998.
**4.15 Receivables Transfer Agreement among Specialty
Retailers, Inc. and Granite National Bank, N.A. dated
August 1, 1998.
*4.16 Certificate Purchase Agreements between SRI Receivables
Purchase Co., Inc. and the Purchasers of the Series
1993-1 Offered Certificates (Incorporated by
Reference to Exhibit 4.10 of Registration No. 33-
68258 on Form S-4 of Specialty Retailers, Inc.).
*4.17 Certificate Purchase Agreement among SRI Receivables
Purchase Co., Inc., Specialty Retailers, Inc. and the
Certificate Purchaser dated as of August 11, 1995
(Incorporated by Reference to Exhibit 4.9 on Form 10-
Q of Apparel Retailers, Inc., dated October 28,
1995).
*10.1 Registration Rights Agreement dated as of May 30, 1996
by and among SRI Receivables Purchase Co., Inc. and
BT Securities Corporation relating to the sale of SRI
Receivables Purchase Co., Inc. 12.5% Trust
Certificate-Backed Notes (Incorporated by Reference
to Exhibit 10.1 of Registration No. 333-10843 on Form
S-4 of SRI Receivables Purchase Co., Inc.).
*10.2 Employment Agreement between Stage Stores, Inc. and
Carl E. Tooker dated April 1, 1998. (Incorporated by
Reference to Exhibit 10.3 on Form 10-K of Stage
Stores, Inc., for the fiscal year ended January 31,
1998).
*10.3 Stock Option Agreement between Specialty Retailers,
Inc. and Carl E. Tooker dated June 9, 1993
(Incorporated by Reference to Exhibit 10.18 of
Registration No. 33-68258 on Form S-4 of Specialty
Retailers, Inc.).
*10.4 Employment Agreement between James Marcum and Stage
Stores, Inc. dated April 1, 1998. (Incorporated by
Reference to Exhibit 10.6 on Form 10-K of Stage
Stores, Inc., for the fiscal year ended January 31,
1998).
**27.1 Financial Data Schedule.
__________
* Previously Filed
** Filed Herewith
Exhibit 4.4
SECOND AMENDMENT TO THE AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
THIS SECOND AMENDMENT (this "Amendment") to the Amended and
Restated Pooling and Servicing Agreement (the "Agreement") dated
as of August 11, 1995, by and among SRI Receivables Purchase Co.,
Inc., a Delaware corporation (the "Transferor"), Specialty
Retailers, Inc., a Texas corporation (the "Servicer" or "SRI")
and Bankers Trust (Delaware), a Delaware banking corporation (the
"Trustee") is made and entered into as of August 1, 1998 by and
among the Servicer, the Trustee and the Transferor.
WHEREAS, Granite National Bank, N.A. (the "Bank") has been
formed for the purpose of extending credit to enable Obligors to
pay for merchandise or services purchased at an SRI Store;
WHEREAS, the Bank and SRI have entered into that certain
Receivables Transfer Agreement dated as of the date hereof
whereby the Bank agrees to sell, and SRI agrees to purchase the
Receivables arising under Charge Account Agreements between the
Bank and Obligors;
WHEREAS, pursuant to Section 13.1 of the Agreement, the
parties hereto contemplated the inclusion of the SRI Credit Card
Bank;
WHEREAS, the Servicer, the Trustee on behalf of the Trust
and the Transferor desire to effectuate the establishment of the
Granite Accounts with the Bank, as the SRI Credit Card Bank, and
the transfer of the Receivables arising hereunder to the Trust,
by modifying and amending certain terms of the Agreement in the
manner more particularly described herein below;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged:
The Servicer, the Trustee on behalf of the Trust and the
Transferor hereby agree as follows:
1. Defined Terms. Capitalized terms used herein but not
otherwise defined shall have the meanings set forth in the
Agreement, as amended by this Amendment.
2. Bank. The definition of the Bank shall read as
follows:
"Bank" means Granite National Bank, N.A., a national
banking association.
3. Credit and Collection Policy. The definition of Credit
and Collection Policy shall be amended and restated to read as
follows:
"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) of
the Receivables Purchase Agreement.
4. Eligible Receivable. Clause (h) of the definition of
Eligible Receivable shall be amended and restated to read as
follows:
(h) it arises under a Charge Account Agreement that
has been duly authorized by (i) the applicable Originator or
(ii) the creditor of an account approved by each Rating
Agency as an Automatic Additional Account or Supplemental
Account, 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
Trust to any dispute, offset, counterclaim or defense
whatsoever.
5. Additional Defined Terms. The following defined terms
shall be added to Section 1.1 of the Agreement:
"Granite Additional Accounts" shall mean each credit
card account established pursuant to a Charge Account
Agreement between the Bank and any Person which is
identified by an account number, excluding the Granite
Original Accounts.
"Granite Original Accounts" means Accounts which the
Bank establishes with Obligors who had Charge Account
Agreements with SRI on August 1, 1998.
"Merchant Agreement" means an agreement between the
Bank and a merchant pursuant to which the merchant agrees to
honor credit cards issued by the Bank to Obligors and the Bank
agrees to make loans to Obligors for the purpose of purchasing
goods and services at stores operated by the merchant. Without
limiting the foregoing, the Retail Credit Services Agreement
dated as of August 1, 1998 between the Transferor and the Bank is
a Merchant Agreement.
7. SRI Store. The definition of SRI Store shall be
amended and restated to read as follows:
"SRI Store" means any merchant which is a party to a
Merchant Agreement with the Bank.
8. Transferred Account. The definition of Transferred
Account shall be amended and restated to read as follows:
"Transferred Account" shall mean an Account to which a
new credit account number has been issued 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
computer files or microfiche lists delivered to the Trustee
or the bailee of the Trustee pursuant to Section 2.1 or 2.6
as an account into which an Account has been transferred.
9. Addition of Accounts. Section 2.6(b)(i) shall be
amended and restated to read as follows:
(i) the cumulative number of Accounts the Receivables
of which have been added or are designated to be added to
the Trust pursuant to subsection 2.6(a) since the later of
the Initial Closing Date and the first day of the twelfth
preceding Monthly Period which satisfy the conditions of
clause (a) of the definition of "Automatic Additional
Accounts" and the Granite Additional Accounts on such date
shall not be in excess of 20% of the amount equal to (w) the
number of the Active Accounts as of the later of the Initial
Closing Date, the Latest Rating Agency Approval Date and the
last day of the twelfth preceding Monthly Period plus (x)
the number of Accounts the Receivables of which were
designated to be added to the Trust pursuant to clause (b)
of the definition of "Automatic Additional Accounts" (other
than Granite Additional Accounts) on the first day of such
addition after the later of the Initial Closing Date, the
Latest Rating Agency Approval Date and the last day of the
twelfth preceding Monthly Period plus (y) the number of
Supplemental Accounts, if any, the Receivables of which were
designated to be added to the Trust after the later of the
Initial Closing Date, the Latest Rating Agency Approval Date
and the last day of the twelfth preceding Monthly Period
minus (z) any Removed Accounts removed after the later of
the Initial Closing Date, the Latest Rating Agency Approval
Date and the last day of the twelfth preceding Monthly
Period; and
10. Effectiveness of Amendments. The parties hereto
expressly acknowledge that the effectiveness of this Amendment is
conditioned upon the receipt of written confirmation from each
Rating Agency to the effect that the original rating of any
Series or any class of any Series will not be reduced or
withdrawn as a result of this Amendment. Upon receipt by the
Trustee of such written confirmation, this Amendment shall be
deemed effective on the date hereof. Except as expressly set
forth above, all terms of the Agreement shall be and remain in
full force and effect and shall constitute the legal, valid and
binding and enforceable obligations of the parties thereto. To
the extent any terms and conditions in the Agreement shall
contradict or be in conflict with any provisions of this
Amendment, the provisions of this Amendment shall govern.
11. Governing Law. THIS AMENDMENT AND THE 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 AND THEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
12. Counterparts. This Amendment may be executed in
separate counterparts each of which shall be an original and all
of which taken together shall constitute one and the same
agreement.
13. Trustee. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the sufficiency of this
Amendment or for or in respect of any recitals contained herein,
all of which recitals are made solely by the Transferor.
IN WITNESS WHEREOF, the parties thereto have executed this
Second Amendment as of August 1, 1998.
SPECIALTY RETAILERS, INC., Servicer
By: /s/ Mark Hess
Its: Treasurer
SRI RECEIVABLES PURCHASE CO., INC.,
Transferor
By: /s/ James Marcum
Its: Chief Financial Officer
BANKERS TRUST (DELAWARE), Trustee
By: /s/ Donna G. Mitchell
Its: Trust Officer
Exhibit 4.14
FIRST AMENDMENT TO THE AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
THIS FIRST AMENDMENT (this "Amendment") to the Amended and
Restated Receivables Purchase Agreement (the "Agreement") dated
as of May 30, 1996, by and among SRI Receivables Purchase Co.,
Inc., a Delaware corporation (the "Purchaser") and the
Originators parties thereto (the "Originator") is made and
entered into as of August 1, 1998 by and among the Purchaser and
the Originator.
WHEREAS, Granite National Bank, N.A. (the "Bank") has been
formed for the purpose of extending credit to enable Obligors to
pay for merchandise or services purchased at an SRI Store;
WHEREAS, the Bank and SRI have entered into that certain
Receivables Transfer Agreement dated as of the date hereof
whereby the Bank agrees to sell, and SRI agrees to purchase the
Receivables arising under Charge Account Agreements between the
Bank and Obligors.
WHEREAS, pursuant to Section 13.1 of the Pooling and
Servicing Agreement, the parties thereto contemplated the
inclusion of the SRI Credit Card Bank;
WHEREAS, the Originator and the Purchaser desire to
effectuate the establishment of the Granite Accounts with the
Bank, as the SRI Credit Card Bank, and the transfer of the
Receivables thereunder to the Trust, by modifying and amending
certain terms of the Agreement pursuant to Section 8.01 thereof
and in accordance with Section 13.1 of the Pooling and Servicing
Agreement in the manner more particularly described herein below;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged:
The Originator and the Purchaser hereby agree as follows:
1. Defined Terms. Capitalized terms used herein but not
otherwise defined shall have the meanings set forth in the
Agreement, as amended by this Amendment.
2. Bank. The definition of the Bank shall read as
follows:
"Bank" means Granite National Bank, N.A., a national
banking association.
3. Eligible Receivable. Clause (h) of the definition of
Eligible Receivable shall be amended and restated to read as
follows:
(h) it arises under a Charge Account Agreement that
has been duly authorized by (i) the applicable Originator or
(ii) the creditor of an account approved by each Rating
Agency as an Automatic Additional Account or Supplemental
Account, 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
Trust to any dispute, offset, counterclaim or defense
whatsoever.
4. Merchant Agreement. The definition of Merchant
Agreement shall read as follows:
"Merchant Agreement" means an agreement between the
Bank and a merchant pursuant to which the merchant agrees to
honor credit cards issued by the Bank to Obligors and the
Bank agrees to make loans to Obligors for the purpose of
purchasing goods and services at stores operated by the
merchant. Without limiting the foregoing, the Retail Credit
Services Agreement dated as of August 1, 1998 between the
Purchaser and the Bank is a Merchant Agreement.
5. SRI Store. The definition of SRI Store shall be
amended and restated to read as follows:
"SRI Store" means any merchant which is a party to a
Merchant Agreement with the Bank.
6. Transferred Account. The definition of Transferred
Account shall be amended and restated to read as follows:
"Transferred Account" shall mean an Account to which a
new credit account number has been issued 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
computer files or microfiche lists delivered to the
Purchaser pursuant to this Agreement or as an account into
which an Account has been transferred.
7. Effectiveness of Amendments. The parties hereto
expressly acknowledge that the effectiveness of this Amendment is
conditioned upon the receipt of written confirmation from each
Rating Agency to the effect that the original rating of any
Series or any class of any Series will not be reduced or
withdrawn as a result of this Amendment. Upon receipt by the
Trustee of such written confirmation, this Amendment shall be
deemed effective on the date hereof. Except as expressly set
forth above, all terms of the Agreement shall be and remain in
full force and effect and shall constitute the legal, valid and
binding and enforceable obligations of the parties thereto. To
the extent any terms and conditions in the Agreement shall
contradict or be in conflict with any provisions of this
Amendment, the provisions of this Amendment shall govern.
8. Governing Law. THIS AMENDMENT AND THE 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 AND THEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
9. Counterparts. This Amendment may be executed in
separate counterparts each of which shall be an original and all
of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties thereto have executed this
First Amendment as of August 1, 1998.
SPECIALTY RETAILERS, INC.,
Originator
By: /s/ Mark Hess
Its: Treasurer
SRI RECEIVABLES PURCHASE CO., INC.,
Transferor
By: /s/ James Marcum
Its: Chief Financial Officer
Exhibit 4.15
RECEIVABLES TRANSFER AGREEMENT
Dated as of August 1, 1998
among
SPECIALTY RETAILERS, INC.
as Purchaser
and
GRANITE NATIONAL BANK, N.A.
TABLE OF CONTENTS
Page
I DEFINITIONS 1
1.01 Certain Defined Terms 1
1.02 Accounting and UCC Terms 5
II AMOUNTS AND TERMS OF THE PURCHASES 5
2.01 The Purchases 5
2.02 Delivery of Receivables 6
2.03 Payments and Computations 6
III CONDITIONS TO PURCHASES 6
3.01 Conditions Precedent to Purchaser's Purchase 6
3.02 Conditions Precedent to the Bank's Sale 7
IV REPRESENTATIONS AND WARRANTIES 7
4.01 Representations and Warranties of the Purchaser 7
4.02 Representations and Warranties of the Bank 8
(a) Organization and Good Standing 8
(b) Due Qualification 8
(c) Due Authorization 9
(d) No Conflicts 9
(e) No Violation 9
(f) No Proceedings 9
(g) All Consents Required 9
(h) Bona Fide Receivables 10
(i) Place of Business 10
(j) Use of Proceeds 10
(k) Not an "Investment Company" 10
(l) ERISA Liens 10
(m) ERISA and the Code 10
4.03 Representations and Warranties of the Bank
Relating to this Agreement and the Receivables 10
(a) Binding Obligation; Valid Sale and Assignment 10
(b) Notice of Breach 12
V GENERAL COVENANTS 12
Section 5.01 Covenants of the Bank 12
(a) Receivables to be Accounts, General
Intangibles or Chattel Paper 12
(b) Security Interests 12
(c) Charge Account Agreements and Credit and
Collection Policies 12
(d) Delivery of Collections 13
(e) Conveyance of Accounts 13
(f) Notice of Liens 13
(g) Compliance with Laws, Etc 13
(h) Preservation of Corporate Existence 13
(i) Visitation Rights 13
(j) Keeping of Records and Books of Account 13
(k) Performance and Compliance with Receivables
and Charge Account Agreements 14
(l) Location of Records 14
(m) Furnishing Copies, Etc 14
(n) Obligation to Record and Report 14
(o) Continuing Compliance with the UCC and Other
Applicable Law 14
(p) Collections by Bank 14
(q) Further Action Evidencing Purchases 15
5.02 Purchaser Covenant Regarding Sale Treatment 15
VI PURCHASE TERMINATION EVENT 16
6.01 Purchase Termination Event 16
VII NO RECOURSE 16
7.01 No Recourse Against Bank 16
7.02 Indemnities by the Purchaser 16
VIII MISCELLANEOUS 16
8.01 Amendment 16
8.02 Notices, Etc 16
8.03 No Waiver: Remedies 17
8.04 Binding Effect 17
8.05 Governing Law 17
8.06 Costs, Expenses and Taxes 17
8.07 Acknowledgment of Assignment 18
RECEIVABLES TRANSFER AGREEMENT
This RECEIVABLES TRANSFER AGREEMENT dated as of August
1, 1998 (this "Agreement"), is among GRANITE NATIONAL BANK, N.A.,
a national banking association (the "Bank"), and SPECIALTY
RETAILERS, INC., a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Bank intends to sell Receivables to the
Purchaser on the terms and subject to the conditions set forth in
this Agreement; and
WHEREAS, the Purchaser desires to purchase Receivables
from the Bank 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:
ARTICLE I
DEFINITIONS
Section I.1 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 each credit card account
established pursuant to a Charge Account Agreement between the
Bank and any Person which is identified by an account number.
"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 the President, any Vice
President, the Chief Financial Officer, the Treasurer, any
Assistant Treasurer, the Controller and any Assistant Controller.
"Bank" has the meaning specified in the preamble.
"Business Day" means any day other than a Saturday or a
Sunday or 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.
"Charge Account Agreement" means the agreement between
a Person and the Bank, which may consist of more than one
document, pursuant to which the Bank agrees to make loans to a
Person to enable such Person to pay for purchased merchandise or
services or to obtain cash advances under a revolving credit plan
that permits such Person to purchase merchandise and services or
to obtain cash advances 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.
"Closing Date" means August 1, 1998.
"Collections" shall mean all payments received by the
Bank, the Purchaser or the Servicer 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 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).
"Credit Services Agreement" means the Credit Services
Agreement dated as of August 1, 1998 between the Bank and the
Purchaser.
"Effective Date" shall mean, with respect to any
transaction, the earlier of the date on which such transaction is
first recorded on the Bank's or the Purchaser's computer master
file of consumer revolving credit card accounts and the effective
date of such recordation.
"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 the Bank 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.
"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 and (vii) all other fees and charges.
"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.
"Initial Outstanding Balance" of a Receivable means the
Outstanding Balance of such Receivable on the Effective Date of
such Receivable.
"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.
"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.
"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 Bank.
"Obligor" means a Person obligated to make payments
with respect to a Receivable arising under an Account pursuant to
a Charge Account Agreement.
"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 such 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.
"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 Purchaser 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 and Servicing Agreement" means the Amended and
Restated Pooling and Servicing Agreement dated as of August 11,
1995, among SRI Receivables Purchase Co., Inc., Specialty
Retailers, Inc. and Bankers Trust (Delaware), as amended,
modified or supplemented from time to time.
"Purchase Date" has the meaning specified in
Section 2.01(a).
"Purchase Price" means the Outstanding Balance of
Receivables tendered to the Purchaser or offset against amounts
owed by the Bank to the Purchaser pursuant to Section 2.03(a).
"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).
"Receivable" means any account or general intangible
representing the indebtedness of an Obligor under a Charge
Account Agreement arising in an Account from a sale of
merchandise or services or a cash advance, 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 Bank
under the applicable Charge Account Agreement.
"Receivables Purchase Agreement" means the Amended and
Restated Receivables Purchase Agreement dated as of May 30, 1996,
among SRI Receivables Purchase Co., Inc. and the Originators
parties thereto, as amended, modified or supplemented from time
to time.
"Receivables Statement" has the meaning specified in
Section 2.02(a).
"Relevant UCC State" means each jurisdiction in which
the filing of a UCC financing statement is necessary or desirable
to evidence the Purchases.
"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.
"Servicer" means SRI or any Person appointed as
successor as provided in the Pooling and Servicing Agreement to
service the Receivables.
"SRI" means Specialty Retailers, Inc.
"SRPC" means SRI Receivables Purchase Co., Inc.
"UCC" means the Uniform Commercial Code, as amended
from time to time, as in effect in the applicable jurisdiction.
Section I.2. 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.
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
Section II.1. The Purchases. (1) The Bank 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"):
(1) all right, title and interest of the Bank in
and to the Receivables, if any, existing on the Closing
Date and thereafter created and arising in connection
with the 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");
(2) all guarantees, insurance and other
agreements or arrangements of whatever character from
time to time supporting or securing payment of any
Receivables;
(3) all payment and enforcement rights (but not
any obligations) to, in and under the Related
Contracts; and
(iv) proceeds of any and all of the Purchases
described in subparagraphs (i) through (iii) above and,
to the extent not otherwise included, all payments
under insurance, 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 the Bank on the Closing Date and on the Effective Date of
any such subsequently created Receivable during the period from
the Closing Date until the Purchase Termination Date (each such
date, including each such Closing Date, being a "Purchase Date").
(2) 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 Bank of the
Receivables and not as a lending transaction. The sale of
Receivables by the Bank hereunder shall be without recourse to,
or representation or warranty of any kind (express or implied)
by, the Bank, 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 Bank to the Purchaser of the
Purchases, the Bank 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 Bank
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 II.2. Delivery of Receivables. (1) On each
Effective Date, the Bank shall deliver, or shall cause to be
delivered, all of its Receivables to the Purchaser. Such
delivery shall be evidenced no less frequently than each Business
Day by delivering, or causing the Servicer to deliver, to the
Purchaser a statement or report (a "Receivables Statement")
specifying to the Purchaser the aggregate outstanding principal
balance of the Receivables which were transferred to the
Purchaser after the date of the last Receivables Statement.
(2) 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 the Bank's right, title and interest in and
to such Receivables shall have been sold, assigned, transferred,
conveyed and set over to the Purchaser.
Section II.3. Payments and Computations. (1) The
Purchase Price for Receivables purchased from the Bank pursuant
to Section 2.01 shall be paid or provided for on the Purchase
Date of such Receivables by offsetting the Purchase Price against
any amounts due and owing to the Purchaser by the Bank and
arising under the Credit Services Agreement or, if no amounts are
owing to the Purchaser, by payment in cash in immediately
available funds.
(2) All cash payments hereunder to the Bank shall be
made not later than the close of business (Central 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 the Bank to the Purchaser from time to time.
(3) Whenever any cash 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.
ARTICLE III
CONDITIONS TO PURCHASES
Section III.1. Conditions Precedent to Purchaser's
Purchase. The obligation of the Purchaser to purchase
Receivables hereunder from the Bank on the Closing Date 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 as of the Closing Date
and in form and substance satisfactory to the Purchaser:
(1) a copy of duly adopted resolutions of the Board of
Directors of the Bank authorizing this Agreement, the
documents to be delivered by the Bank hereunder and the
transactions contemplated hereby, certified by the Secretary
or Assistant Secretary of the Bank;
(2) a duly executed certificate of the Secretary or an
Assistant Secretary of the Bank certifying the names and
true signatures of the Authorized Officers authorized on
behalf of the Bank to sign this Agreement or any instruments
or documents in connection with this Agreement;
(3) (A) executed UCC-1 financing statements with
respect to the Receivables, naming the Bank as seller and
the Purchaser as purchaser, in proper form for filing in
such jurisdictions 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;
(iv) written confirmation from each Rating Agency to
the effect that the Accounts referred to herein will be
deemed to be Automatic Additional Account pursuant to clause
(b) of the definition thereof in the Pooling and Servicing
Agreement; and
(v) written confirmation that each of the First
Amendment to the Receivables Purchase Agreement and the
Second Amendment to the Pooling and Servicing Agreement have
been fully executed and are in full force and effect.
Section III.2. Conditions Precedent to the Bank's Sale.
The obligation of the Bank to make its sale of Receivables
hereunder to the Purchaser on the Closing Date is subject to the
condition precedent that the Bank shall have received on or
before the Closing Date the following, each (unless otherwise
indicated) dated as of the Closing Date and in form and substance
satisfactory to the Bank:
(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
(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.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section IV.1. Representations and Warranties of the
Purchaser. The Purchaser represents and warrants as to itself as
follows:
(1) 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.
(2) 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.
(3) 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 IV.2. Representations and Warranties of the
Bank. The Bank hereby represents and warrants to the Purchaser
that, as of the Closing Date and as to matters involving Accounts
created after the Closing Date, as of the date the Receivables of
such Accounts are designated for sale to the Purchaser:
(1) Organization and Good Standing. The Bank is a
national banking association, duly organized, validly
existing and in good standing under the laws of the United
States, with full power and authority to own its properties
and conduct its business as such properties are presently
owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this
Agreement.
(2) Due Qualification. The Bank 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 required under federal and applicable state law.
(3) 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
the Bank by all necessary corporate action on its part and
this Agreement will remain, from the time of its execution,
an official record of the Bank. This Agreement has been
duly executed and delivered by the Bank and constitutes the
legal, valid and binding obligation of the Bank, enforceable
against the Bank in accordance with its terms.
(4) 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 the Bank, do not
(i) contravene its articles of association 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 the Bank, 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 the Bank 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 the Bank other than as
specifically contemplated by this Agreement.
(5) 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 the Bank.
(6) No Proceedings. There are no proceedings or
investigations pending or, to the knowledge of the Bank,
threatened against the Bank 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 the Bank, would materially and
adversely affect the performance by the Bank 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.
(7) All Consents Required. All approvals,
authorizations, consents, orders or other actions of any
Person or of any governmental body or official relating to
the Bank 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.
(8) Bona Fide Receivables. Each Receivable sold
hereunder by the Bank is or will be an account receivable
arising out of the Bank's performance in accordance with the
terms of the Charge Account Agreement giving rise to such
Receivable. The Bank 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 Receivable
would not be enforceable against the Obligor when due.
(9) Place of Business. The principal place of
business of and the offices where the Bank keeps its records
concerning the Receivables is at 10201 Main Street, Houston,
Texas 77025 and the offices where the Bank keeps the
related contracts is located at 1020 Willow Creek,
Jacksonville, Texas 75766.
(10) Use of Proceeds. As of the Closing Date, no
proceeds of the sale of any Receivables will be used by the
Bank to purchase or carry any margin security.
(11) Not an "Investment Company". The Bank 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.
(12) ERISA Liens. The Bank 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.
(13) 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 the Bank 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. The Bank shall be deemed each time that it delivers
or causes to be delivered a Receivables Statement to represent
and warrant to the Purchaser, as of the related Purchase Date,
that the representations and warranties of the Bank set forth in
Section 4.02, are true and correct as of such date. Upon
discovery by the Bank 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 IV.3. Representations and Warranties of the
Bank Relating to this Agreement and the Receivables.
(1) Binding Obligation; Valid Sale and Assignment.
The Bank hereby represents and warrants to the Purchaser that as
of the date each Receivable is sold hereunder:
(1) This Agreement constitutes the legal, valid and
binding obligation of the Bank, enforceable against the Bank
in accordance with its terms, except (A) as 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).
(2) This Agreement constitutes a valid sale, transfer,
assignment, set-over and conveyance to the Purchaser of all
right, title and interest of the Bank 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 the Bank or any of its Affiliates
except for Permitted Liens.
(3) The Bank is not insolvent and has adequate capital
to conduct its business as it is presently being conducted.
(4) The Bank is the legal and beneficial owner of all
right, title and interest in and to each Receivable conveyed
to the Purchaser by the Bank and each such Receivable has
been or will be sold to the Purchaser free and clear of any
Lien other than Permitted Liens.
(5) All consents, licenses, approvals or
authorizations of or registrations or declarations with any
Governmental Authority required to be obtained, effected or
given by the Bank in connection with the sale of the Bank's
Receivables to the Purchaser have been duly obtained,
effected or given and are in full force and effect.
(6) The Bank has clearly and unambiguously marked its
primary computer records and its primary microfiche storage
files regarding the Bank'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.
(7) All information with respect to the Accounts and
the Receivables provided to the Purchaser by the Bank was
true and correct in all material respects as of the Closing
Date or with respect to Accounts created after the Closing
Date, as of the day such Account is established.
(8) Each of the Bank's Receivables has been conveyed
to the Purchaser free and clear of any Lien of any Person
claiming through or under the Bank or any of its Affiliates
(other than Permitted Liens) and in compliance in all
material respects with all Requirements of Law applicable to
the Bank.
(9) With respect to each of the Bank'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 the Bank 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.
(10) Each Receivable sold to the Purchaser on such day
has been conveyed to the Purchaser by the Bank in
compliance, in all material respects, with all Requirements
of Law applicable to the Bank 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 the Bank 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.
(2) 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 Bank 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. The Bank agrees to
cooperate with the Purchaser or any agent of the Purchaser in
attempting to cure any such breach.
ARTICLE V
GENERAL COVENANTS
Section V.1. Covenants of the Bank. So long as the
Purchaser shall have any Net Ownership Interest in any
Receivables sold by the Bank or until the Purchase Termination
Date shall have occurred, whichever is later, the Bank covenants
that:
(1) Receivables to be Accounts, General Intangibles or
Chattel Paper. The Bank 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). The Bank
will take no action to cause any Receivable to be anything
other than an "account," "general intangible" or "chattel
paper" (each as defined in the UCC as in effect in the
Relevant UCC State).
(2) Security Interests. Except for the conveyances
hereunder, the Bank 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; the Bank will immediately notify the Purchaser of
the existence of any Lien on any Receivable; and the Bank
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 the Bank; provided, however, that
nothing in this Section 5.01(b) shall prevent or be deemed
to prohibit the Bank from suffering to exist upon any of the
Receivables any Permitted Lien.
(3) Charge Account Agreements and Credit and
Collection Policies. The Bank shall comply with and perform
its obligations under any Charge Account Agreement to which
the Bank 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. The Bank 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); provided, however, that
the Bank will not make any such change with the intent to
materially benefit it over the Purchaser, except as
otherwise restricted by an endorsement, sponsorship, or
other agreement between the Bank and an unrelated third
party or by the terms of the Charge Account Agreements. The
Bank may make any changes to the Charge Account Agreements
or Credit and Collection Policy permitted by the Purchaser.
(4) Delivery of Collections. In the event that the
Bank receives Collections, it agrees to pay to the Purchaser
or such other Person designated by the Purchaser all
payments received by it in respect of the Receivables as
soon as practicable after receipt thereof by the Bank (but
in no event later than the second Business Day following the
date of receipt).
(5) Conveyance of Accounts. The Bank covenants and
agrees that it will not, without the consent of the
Purchaser, convey, assign, exchange or otherwise transfer
any Account to any Person other than Purchaser prior to the
termination of this Agreement.
(6) Notice of Liens. The Bank shall notify the
Purchaser promptly after becoming aware of any Lien on any
Receivable other than Permitted Liens.
(7) Compliance with Laws, Etc. The Bank 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.
(8) Preservation of Corporate Existence. The Bank
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.
(9) Visitation Rights. At any reasonable time during
normal business hours and from time to time, the Bank 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 the Bank
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 the Bank for the
purpose of examining such records, books of account and
documents, and to discuss the affairs, finances and accounts
of the Bank relating to the Receivables or to the Bank's
performance hereunder with any of its officers or directors
and with its independent certified public accountants.
(10) Keeping of Records and Books of Account. The Bank
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, all
documents, books, records and other information reasonably
necessary or advisable for the collection of all such
Receivables.
(11) Performance and Compliance with Receivables and
Charge Account Agreements. The Bank 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.
(12) Location of Records. The Bank shall keep its
principal 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 the Bank specified in
Section 4.02(i) 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.
(13) Furnishing Copies, Etc. The Bank shall furnish to
the Purchaser (i) upon the Purchaser's request, a
certificate of an Authorized Officer of the Bank 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 the Bank in
making such determination; (ii) 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 (iii) 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 the
Bank, as the Purchaser may from time to time reasonably
request.
(14) Obligation to Record and Report. The Bank 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.
(15) Continuing Compliance with the UCC and Other
Applicable Law. The Bank shall, 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 or recording UCC financing
statements in each relevant jurisdiction prior to or
substantially contemporaneously with any Purchases. The
Bank shall notify each Obligor, prior to or substantially
contemporaneously with the establishment of such Obligor's
Charge Account Agreement with the Bank, that the Bank
intends to transfer Receivables arising in such Obligor's
Account to the SRI Receivables Master Trust (unless and
until such time as the Bank shall have received an Opinion
of Counsel to the effect that such notice is not required
under applicable law to perfect the interest of the Buyer or
such Trust in such Receivables).
(16) Collections by Bank. In the event that the Bank
receives any amounts in respect of Collections of
Receivables, the Bank 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.
(17) Further Action Evidencing Purchases. (1) The Bank
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 the Bank 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, the Bank 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.
(2) The Bank 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 the Bank, or the underlying
Charge Account Agreements with respect thereto, without the
signature of the Bank where permitted by law.
(3) If the Bank 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 the Bank as provided in Section 8.06.
Section V.2. 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.
ARTICLE VI
PURCHASE TERMINATION EVENT
Section VI.1. Purchase Termination Event. If the Bank
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 the
Bank, or the Bank 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 the Bank 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 Bank in accordance with the provisions of
this Agreement, then the Purchaser's obligation to purchase
Receivables from the Bank shall automatically be terminated upon
the happening of such event (a "Purchase Termination Event").
ARTICLE VII
NO RECOURSE
Section VII.1. No Recourse Against Bank.
Notwithstanding anything to the contrary herein, the Purchaser
shall have no recourse against the Bank on account of the
performance or non-performance of any Obligor or any Receivable,
any reduction in the outstanding balance of any Receivable, any
misrepresentation or breach of warranty by the Bank, or for any
other reason. Each sale of Receivables hereunder shall be final
and irrevocable.
Section VII.2. Indemnities by the Purchaser. Without
limiting any other rights that the Bank may have hereunder or
under applicable law, the Purchaser hereby agrees to indemnify
the Bank from and against any and all claims, losses and
liabilities (including reasonable attorneys' fees) arising out of
or resulting from the Bank'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.
ARTICLE VIII
MISCELLANEOUS
Section VIII.1. 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 Bank.
Section VIII.2. 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 the Bank, at its address at 1020 Willow Creek,
Jacksonville, Texas 75766, Attention: Treasurer (with copies to
such Persons as may be designated by the Bank from time to time);
and if to the Purchaser, at its address at 10201 Main Street,
Houston, Texas 77025, 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.
Section VIII.3. 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 VIII.4. Binding Effect. This Agreement
shall be binding upon and inure to the benefit of the Bank and
the Purchaser and their respective successors and assigns, except
that the Bank shall not 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 the Bank until such time,
after the Purchase Termination Date, as the Purchaser shall not
have any Net Ownership Interest in any Receivables.
Section VIII.5. 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 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 VIII.6. Costs, Expenses and Taxes. The Bank
agrees 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
Bank agrees 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 VIII.7. Acknowledgment of Assignment. The
Bank acknowledges that the Purchaser shall sell, transfer, assign
or otherwise convey its rights in the Receivables to SRPC,
subject to the terms and conditions of the Receivables Purchase
Agreement.
* * * * *
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 BANK
GRANITE NATIONAL BANK, N.A.
/s/ Charles Sledge
By: Charles Sledge
Its: V.P. Controller and Secretary
THE PURCHASER:
SPECIALTY RETAILERS, INC.
/s/ Mark Hess
By: Mark Hess
Its: Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE SRI RECEIVABLES PURCHASE CO., INC. FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-END> JAN-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 89,869
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 94,271
<CURRENT-LIABILITIES> 709
<BONDS> 30,000
<COMMON> 0
0
0
<OTHER-SE> 37,886
<TOTAL-LIABILITY-AND-EQUITY> 94,271
<SALES> 0
<TOTAL-REVENUES> 10,222
<CGS> 0
<TOTAL-COSTS> 1,580
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,740
<INCOME-PRETAX> 4,902
<INCOME-TAX> 1,826
<INCOME-CONTINUING> 3,076
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,076
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
