PROFFITTS CREDIT CORP
8-K/A, 1997-09-23
ASSET-BACKED SECURITIES
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<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                ----------------

                                  FORM 8-K/A
                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934


       Date of Report (Date of earliest event reported): August 21, 1997


                        PROFFITT'S CREDIT CORPORATION
                        -----------------------------


                      PROFFITT'S CREDIT CARD MASTER TRUST
                      -----------------------------------
               (Exact Name of Registrant as Specified in Charter)

     Nevada                     333-28811,                86-0852332 
      N/A                      333-28811-01                  N/A    
     ------                    ------------               ----------
 (State or Other               (Commission              (IRS Employer
 Jurisdiction of               File Number)           Identification No.)
 Incorporation)

                   P.O. Box 20080, Jackson, Mississippi 39289
                   ------------------------------------------
         (Addresses of Principal Executive Offices, including Zip Code)

                                 (601) 968-4400
                        ------------------------------
              (Registrant's Telephone Number, including Area Code)



<PAGE>   2



ITEM 5. OTHER EVENTS.

     Pursuant to the Prospectus dated August 14, 1997 filed with Registration
Statement No. 333-28811 and 333-28811-01 on Form S-3, the Proffitt's Credit
Card Master Trust issued on August 21, 1997 $180,000,000 6.50% Class A
Certificates, Series 1997-2 and $20,000,000 6.69% Class B Certificates, Series
1997-2 (collectively, the "Certificates").

     The net proceeds from the sale of the Certificates are estimated to be
approximately $220,185,000. The net proceeds will be used to repay outstanding
borrowings and to terminate the Company's previous securitization arrangement
with an asset-backed commercial paper conduit.

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS.

      (c)   Exhibits.

            The following exhibits are filed herewith:

      Exhibit No.       Description

      99.1              Underwriting Agreement dated as of August 14,
                        1997 by and among Proffitt's Credit Corporation
                        and NationsBanc Capital Markets, Inc. as
                        Representative of the Several Underwriters

      99.2              Master Pooling and Servicing Agreement dated as
                        of August 21, 1997 among Proffitt's Credit
                        Corporation, as Transferor, Proffitt's, Inc., as
                        Servicer, and Norwest Bank Minnesota, National
                        Association, as Trustee

      99.3              Series 1997-2 Supplement to the Master Pooling
                        and Servicing Agreement dated as of August 21,
                        1997 among Proffitt's Credit Corporation, as
                        Transferor, Proffitt's, Inc., as Servicer, and
                        Norwest Bank Minnesota, National Association, as
                        Trustee



                                      -2-



<PAGE>   3


                                   SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                             PROFFITT'S CREDIT CORPORATION
                                             (REGISTRANT)



                                             /s/ Douglas E. Coltharp
                                             -----------------------------------
                                             Douglas E. Coltharp
                                             President


Date:  September 23, 1997

                                      -3-



<PAGE>   4



                               INDEX TO EXHIBITS
                               -----------------
        <TABLE>
        <CAPTION>
        Exhibit
        -------
        <S>         <C>
          99.1      Underwriting Agreement dated as of August 14, 1997 by and
                    among Proffitt's Credit Corporation and NationsBanc Capital
                    Markets, Inc., as Representative of the Several
                    Underwriters

          99.2      Master Pooling and Servicing Agreement dated as of August
                    21, 1997 among Proffitt's Credit Corporation, as
                    Transferor, Proffitt's, Inc., as Servicer, and Norwest Bank
                    Minnesota, National Association, as Trustee

          99.3      Series 1997-2 Supplement to the Master Pooling and
                    Servicing Agreement dated as of August 21, 1997 among
                    Proffitt's Credit Corporation, as Transferor, Proffitt's,
                    Inc., as Servicer, and Norwest Bank Minnesota, National
                    Association, as Trustee
        </TABLE>




<PAGE>   1



                                 EXHIBIT 99.1

   Underwriting Agreement dated as of August 14, 1997 by and among Proffitt's
Credit Corporation and NationsBanc Capital Markets, Inc., as Representative of
                           the Several Underwriters



<PAGE>   2
                                                                EXHIBIT 99.1


                         PROFFITT'S CREDIT CORPORATION

                                   TRANSFEROR

                      PROFFITT'S CREDIT CARD MASTER TRUST

                                AUGUST 14, 1997

                             UNDERWRITING AGREEMENT

NationsBanc Capital Markets, Inc.,
As Representative
(the "Representative") of the
Several Underwriters,
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255

Ladies and Gentlemen:

          1. Introductory. Proffitt's Credit Corporation (the "Transferor")
proposes to form a master trust entitled the Proffitt's Credit Card Master
Trust (the "Trust"), which will issue, from time to time, asset backed
securities ("Securities") in one or more series (each, a "Series"). Each
Security will evidence a fractional, undivided percentage interest in the
Trust. The property of the Trust will include receivables (the "Receivables")
generated from time to time in a portfolio of credit card accounts owned by
certain affiliates of the Transferor (the "Accounts"), collections thereon and
certain related property to be conveyed to the Trust by the Transferor (the
"Trust Property").

          The Transferor proposes to enter into the Master Pooling and
Servicing Agreement, dated as of August 1, 1997 (the "Pooling and Servicing
Agreement") among the Transferor,




<PAGE>   3

Norwest Bank Minnesota, National Association, a national banking association
(the "Trustee") and Proffitt's Inc., as servicer (the "Servicer"). The
Transferor proposes to enter into the Series 1997-2 Supplement, dated as of
August 1, 1997 (the "Series 1997-2 Supplement"), to the Pooling and Servicing
Agreement, pursuant to which $180,000,000 aggregate initial principal amount of
6.50% Class A Asset Backed Certificates, Series 1997-2 (the "Class A
Certificates"), $20,000,000 aggregate initial principal amount of 6.69% Class B
Asset Backed Certificates, Series 1997-2 (the "Class B Certificates," and
together with the Class A Certificates, the "Certificates"), a Collateral
Indebtedness Interest, Series 1997-2 in the initial aggregate principal amount
of $21,000,000 (the "Collateral Interest") and $14,300,000 initial aggre gate
principal amount of Class D Asset Backed Certificates, Series 1997-2 (the
"Class D Certificates"). To the extent not defined herein, capitalized terms
used herein shall have the meanings specified in the Pooling and Servicing
Agreement and the Supplement.

          The Transferor proposes to sell to the underwriters identified on
Schedule I hereto (the "Underwriters") for whom you are acting as
representative (the "Representative") the principal amount of Certificates
identified on Schedule I. The Collateral Interest will be sold to the
Enhancement Provider (as defined herein) pursuant to the Loan Agreement, to be
dated as of the Closing Date (as defined in Section 3 hereof), among the
Transferor, the Trustee and the financial institution named therein (the
"Enhancement Provider") (such agreement, the "Enhancement Agreement").

          2. Representations and Warranties of the Transferor. The Transferor
represents and warrants to each Underwriter as of the date hereof, as follows:

          (a) a registration statement on Form S-3 (having the registration 
    number 333-28811) including a prospectus and such amendments thereto as may
    have been required to the date hereof, relating to the Certificates has been
    filed with the Securities and Exchange Commission (the "Commission") (which
    included a preliminary prospectus (the "Preliminary Prospectus") meeting the
    requirements of Rule 430 of the Securities Act as 1933, as amended (the
    "Act"), and such registration statement, as amended, has become effective;
    such registration statement, as amended, and the prospectus relating to the
    sale of the Certificates offered thereby by the Transferor constituting a
    part thereof, as from time to time amended or supplemented (including any
    prospectus


                                       2

<PAGE>   4

    filed with the Commission pursuant to Rule 424(b) of the rules and
    regulations of the Commission (the "Rules and Regulations") under the Act),
    are respectively referred to herein as the "Registration Statement" and the
    "Prospectus"; and the conditions to the use of a registration statement on
    Form S-3 under the Act, as set forth in the General Instructions to Form
    S-3, have been satisfied with respect to the Registration Statement;

          (b) as of the date of execution of this Agreement, the Registration
    Statement and the Prospectus, except with respect to any modification to
    which you have agreed in writing, shall be in all substantive respects in
    the form furnished to you prior to such date or, to the extent not completed
    on such date, shall contain only such specific additional information and
    other changes (beyond that contained in the latest Preliminary Prospectus
    that has previously been furnished to you) as the Transferor has advised
    you, prior to such time will be included or made therein;

          (c) on the effective date of the Registration Statement, the
    Registration Statement and the Prospectus complied in all material respects
    with the applicable requirements of the Act and the Rules and Regulations,
    and did not include any untrue statement of a material fact or, in the case
    of the Registration Statement, omit to state any material fact required to
    be stated therein or necessary to make the statements therein not misleading
    and, in the case of the Prospectus, omit to state any mate rial fact
    necessary to make the statements therein, in light of the circumstances
    under which they were made, not misleading, and on the date hereof and on
    the Closing Date (as defined in Section 3 hereof), the Registration
    Statement and the Prospectus will comply in all material respects with the
    applicable requirements of the Act and the Rules and Regulations, and
    neither of such documents included or will include any untrue statement of a
    material fact or omit to state any material fact required to be stated
    therein or necessary to make the statements therein not misleading;
    provided, however, that the foregoing does not apply to information
    contained in or omitted from either of the documents based upon written
    information furnished to the Transferor by any Underwriter specifically for
    use in connection with the preparation of the Registration Statement or the
    Prospectus;

                                       3

<PAGE>   5

          (d) the Transferor is a corporation duly organized and validly
    existing in good standing under the laws of the State of Nevada, with full
    power, authority and legal right to own its properties and conduct its
    business as described in the Prospectus, is duly qualified to do business
    and is in good standing (or is exempt from such requirements), and has
    obtained all necessary licenses and approvals (except with respect to the
    state securities or Blue Sky laws of various jurisdictions) in each
    jurisdiction in which failure to so qualify or obtain such licenses and
    approvals would have a material adverse effect on the interests of
    Certificateholders under the Pooling and Servicing Agreement or under the
    Supplement;

          (e) the Certificates, the Collateral Interest and the Class D
    Certificates on the date of this Agreement, will have been duly and validly
    authorized and, when the Certificates and the Class D Certificates are at
    Closing duly and validly executed by or on behalf of the Transferor,
    authenticated by the Trustee and delivered in accordance with the Pooling
    and Servicing Agreement and the Supplement and, when the Certificates, the
    Collateral Interest and the Class D Certificates are delivered and paid for
    as provided herein, will be validly issued and outstanding and entitled to
    the benefits and security afforded by the Pooling and Servicing Agreement
    and the Supplement;

          (f) the execution, delivery and performance by the Transferor of this
    Agreement, any applicable agreement relating to an Enhancement (an
    "Enhancement Agreement"), the Pooling and Servicing Agreement, the
    Supplement and the Certificates, the Collateral Interest and the Class D
    Certificates, and the consummation by the Transferor of the transactions
    provided for herein and therein, have been, or will have been, duly
    authorized by the Transferor by all necessary corporate action on the part
    of the Transferor; and neither the execution and delivery by the Transferor
    of such instruments, nor the performance by the Transferor of the
    transactions herein or therein contemplated, nor the compliance by the
    Transferor with the provisions hereof or thereof, will (i) conflict with or
    result in a breach of any of the terms and provisions of, or constitute a
    default under, any of the provisions of the articles or certificate of
    incorporation or by-laws of the Transferor, or (ii) conflict with any of the
    provisions of any law, government rule, regulation, judgment, decree or
    order binding on

                                       4

<PAGE>   6

    the Transferor or its properties or (iii) conflict with any of the
    provisions of any indenture, mortgage, contract or other instrument to which
    the Transferor is a party or by which it is bound or (iv) result in the
    creation or imposition of any lien, charge or encumbrance upon any of its
    property pursuant to the terms of any such indenture, mortgage, contract or
    other instrument other than pursuant to the Pooling and Servicing Agreement
    and the Supplement;

          (g) when executed and delivered by the parties thereto, the Pooling
    and Servicing Agreement, the Supplement and the Enhancement Agreement will
    each constitute a legal, valid and binding agreement of the Transferor,
    enforceable against the Transferor in accordance with its terms, except to
    the extent that the enforceability thereof may be subject to bankruptcy,
    insolvency, reorganization, receivership, conservatorship, moratorium or
    other similar laws now or hereafter in effect relating to creditors' rights
    in general and to general principles of equity (whether considered in a
    proceeding at law or in equity);

          (h) all approvals, authorizations, consents, orders or other actions
    of any person, corporation or other organization, or of any court,
    governmental agency or body or official (except with respect to the foreign
    or state securities or Blue Sky laws of various jurisdictions), required in
    connection with the valid and proper authorization, issuance and sale of the
    Certificates, the Collateral Interest and the Class D Certificates pursuant
    to this Agreement, the Enhancement Agreement, the Pooling and Servicing
    Agreement and the Supplement, have been or will be taken or obtained on or
    prior to the Closing Date;

          (i) this Agreement has been duly executed and delivered by the
    Transferor;

          (j) except as set forth in or contemplated in the Registration
    Statement and the Prospectus, there has been no material adverse change in
    the condition (financial or otherwise) of the Transferor since May 2, 1997;

          (k) any taxes, fees and other governmental charges in connection with
    the execution, delivery and performance by the Transferor of this Agreement,
    the Pooling and Servicing Agreement, the Supplement, the Enhancement

                                       5

<PAGE>   7

    Agreement and the Certificates shall have been paid or will be paid by or on
    behalf of the Transferor at or prior to the Closing Date to the extent then
    due; and

          (l) the Certificates, the Collateral Interest, the Class D
    Certificates, the Pooling and Servicing Agreement, the Supplement and the
    Enhancement Agreement conform in all material respects to the description
    thereof in the Prospectus.

          3. Purchase, Sale and Delivery of Certificates. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Transferor agrees to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Transferor, the principal amount of the Certificates set forth opposite
each Underwriter's name in Schedule I hereto at the purchase price of 99.587% of
the principal amount of such Certificates with respect to the Class A
Certificates and 99.642% of the principal amount of such Certificates with
respect to the Class B Certificates.

             Delivery of and payment for the Certificates will be made at the 
offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New
York, New York 10022, on August 21, 1997 (the "Closing Date"), or at such other
time thereafter or other place as you and the Transferor shall agree upon.
Delivery of such Certificates shall be made by the Transferor to the
Representative for the respective accounts of the several Underwriters against
payment by the several Underwriters, through the Representative of the purchase
price thereof by one or more wires of funds immediately available at Closing to
an account designated by the Transferor. Delivery of the Certificates shall be
made through the facilities of The Depository Trust Company ("DTC"). The
Certificates so to be delivered shall be global certificates registered in the
name of Cede & Co., as nominee for DTC. The number and denomination of
definitive certificates so delivered shall be specified by DTC.

          4. Offering by Underwriter. It is understood that several Underwriters
propose to offer the Certificates subject to this Agreement for sale to the
public as set forth in the Prospectus.

          5. Covenants of the Transferor. The Transferor hereby covenants and
agrees with each Underwriter that:

                                       6

<PAGE>   8

          (a) prior to the execution of this Agreement, the Transferor will
    prepare a Prospectus setting forth the amount of Certificates and the terms
    thereof, the price at which such Certificates are to be purchased by the
    Underwriters from the Transferor, either the initial public offering price
    or the method by which the price at which the Certificates are to be sold
    will be determined, the selling concessions and allowances, if any, and such
    other information as the Underwriters and the Transferor may mutually agree,
    and which the Transferor deems appropriate in connection with the offering
    of the Certificates, but the Transferor will not file any amendments to the
    Registration Statement as in effect with respect to the Certificates, or any
    amendments or supplements to the Prospectus, unless it shall first have
    delivered copies of such amendments or supplements to you, or if you shall
    have reasonably objected thereto promptly after receipt thereof; the
    Transferor will immediately advise you and your counsel (i) when notice is
    received from the Commission that any post-effective amendment to the
    Registration Statement has become or will become effective and (ii) of any
    order or communication suspending or preventing, or threatening to suspend
    or prevent, the offer and sale of the Certificates or of any proceedings or
    examinations that may lead to such an order or communication, whether by or
    of the Commission or any authority administering any state securities or
    Blue Sky law, as soon as practicable after the Transferor is advised
    thereof, and will use every reasonable effort both to prevent the issuance
    of any such order or communication and to obtain as soon as possible its
    lifting, if issued;

          (b) if, at any time when the Prospectus is required to be delivered
    under the Act, any event occurs as a result of which the Prospectus as then
    amended or supplemented would include any untrue statement of a material
    fact or omit to state any material fact necessary to make the statements
    therein, in light of the circumstances under which they were made, not
    misleading, or if it is necessary at any time to amend or supplement the
    Prospectus to comply with the Act or the Rules and Regulations, the
    Transferor will promptly prepare and (subject to review and no reasonable
    objection by you as described in Section 5(a) hereof) file with the
    Commission an amendment or supplement that will correct such statement or
    omission or an amendment that will effect such compliance and, within two
    Business Days thereafter, furnish to you as many copies of the

                                       7

<PAGE>   9

    Prospectus as amended or supplemented as you may reasonably request;
    provided, however, that your consent to any amendment shall not constitute a
    waiver of any of the conditions of Section 6 hereof;

          (c) the Transferor will make generally available to the holders of the
    Certificates (the "Certificateholders"), in each case as soon as reasonably
    practicable and within the time specified by, a statement which will satisfy
    the provisions of, Section 11(a) of the Act and Rule 158 of the Commission
    with respect to the Certificates;

          (d) the Transferor will furnish to each Underwriter copies of the
    Registration Statement (at least one copy to be delivered to the
    Representative will be signed and will include all documents and exhibits
    thereto or incorporated by reference therein) and all amendments thereto
    and, so long as delivery of a Prospectus by an Underwriter or dealer may be
    required by the Act, the Prospectus, and all amendments thereto and
    supplements thereto, in each case as soon as available and in such
    quantities as you reasonably request;

          (e) the Transferor will assist you in arranging for the qualification
    of the Certificates for sale and the determination of their eligibility for
    investment under the laws of such jurisdictions as you designate and will
    continue to assist you in maintaining such qualifications in effect so long
    as required for the distribution and will file or cause to be filed such
    statements and reports with respect to the distribution as may be required
    by the laws of each jurisdiction in which the Certifi cates have been
    qualified as provided above; provided, however, that neither the Transferor
    nor the Trust shall be required to qualify to do business in any
    jurisdiction where it is now not qualified or to take any action which would
    subject it to general or unlimited service of process in any jurisdiction in
    which it is now not subject to service of process;

          (f) except as otherwise specified in this Agreement, the Transferor
    will pay all expenses incident to the performance of its obligations under
    this Agreement and will reimburse the Underwriters for any expenses
    reasonably incurred by them in connection with qualification of the
    Certificates and determination of their eligibility for investment under the
    laws of such jurisdictions as you may designate and the reproduction of

                                       8

<PAGE>   10

    memoranda relating thereto, for any fees charged by investment rating
    agencies for the rating of such Certificates and, to the extent previously
    agreed upon with you, for reasonable expenses incurred in distributing the
    Prospectus (including any amendments and supplements thereto) to the
    Underwriters and the reasonable fees and disbursements of the Underwriter's
    counsel; and

          (g) the Transferor will, for so long as Certificates purchased
    pursuant hereto remain outstanding, deliver or cause to be delivered to you
    copies of the annual servicer's certificate and the annual accountants'
    reports delivered to the Trustee pursuant to the Pooling and Servicing
    Agreement.

          6. Conditions to the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Certificates will be
subject to the accuracy of the representations and warranties on the part of the
Transferor herein as of the date hereof and the Closing Date, to the accuracy of
the statements of the Transferor made pursuant to the provisions hereof, to the
performance by the Transferor in all material respects of its obligations
hereunder and to the following additional conditions precedent:

          (a) you shall have received a letter from Coopers & Lybrand L.L.P.,
    independent public accountants, and, if requested by you, a letter from such
    accountants, dated the Closing Date, each in the forms heretofore agreed to;

          (b) all actions required to be taken and all filings required to be
    made by the Transferor under the Act prior to the Closing Date for the
    Certificates shall have been duly taken or made; and prior to the Closing
    Date, no stop order suspending the effectiveness of the Registration
    Statement shall have been issued and no proceedings for that purpose shall
    have been instituted or, to the knowledge of the Transferor, threatened by
    the Commission;

          (c) the Certificates offered by means of the Registration Statement
    shall be rated at the time of issuance, in the case of the Class A
    Certificates, in the highest rating category by Moody's Investors Service,
    Inc. ("Moodys") and Standard & Poor's Ratings Service ("Standard & Poor's")
    and in the case of the Class B Certificates, in one of the three highest
    rating categories by Moody's and Standard and Poor's, and in

                                       9

<PAGE>   11

    each case shall not have been placed on any credit watch with a negative
    impli cation for downgrade;

          (d) you shall have received opinions of Alston & Bird LLP, counsel to
    the Transferor, of such local or corporate counsel to the Transferor and its
    affiliates and of Skadden, Arps, Slate, Meagher & Flom LLP as to matters of
    New York law, dated the Closing Date, substantially to the effect that:

              (i)   the Transferor is a corporation duly organized, validly
          existing and in good standing under the laws of the state of Nevada,
          with full power and authority to own its assets and operate its
          business as described in the Prospectus, and had at all relevant times
          and now has, the power, authority and legal right to acquire, own and
          service the Receivables transferred or proposed to be transferred to
          the Trust as described in the Prospectus;

              (ii)  the Transferor has full power and authority to sign the
          Registration Statement and to execute and deliver this Agreement, the
          Enhancement Agreement, the Receivable Purchase Agreements, the Pooling
          and Servicing Agreement and the Supplement and to consummate the
          transactions contemplated herein and therein;

              (iii) the agreements referred to in clause (ii) above have been
          authorized by all necessary action on the part of the Transferor and
          have been duly executed and delivered by the Transferor;

              (iv)  the Certificates have been duly authorized by all necessary
          action of the Transferor;

              (v)   this Agreement, the Enhancement Agreement, the Receivable
          Purchase Agreements, the Pooling and Servicing Agreement and the
          Supplement each constitutes the legal, valid and binding agreement of
          the Transferor, enforceable against the Transferor in accordance with
          its terms, subject, as to enforcement, to (A) the effect of
          bankruptcy, insolvency, fraudulent transfer, reorganization,
          moratorium, conservatorship, receivership, or other similar laws of
          general applicability relating to or affecting creditors' rights
          generally (B) the application of general principles of equity (re-


                                       10

<PAGE>   12

          gardless of whether enforceability is considered in a proceeding
          in equity or at law) and (C) the unenforceability under certain
          circumstances of provisions indemnifying a party against liability or
          providing for contribution with respect to such liability where such
          indemnification or contribution is contrary to public policy;

              (vi)  no consent, approval, authorization or order of, or filing
          with, any governmental agency or body or any court is required under
          applicable law for the consummation of the transactions contemplated
          herein, the Receivable Purchase Agreements, the Pooling and Servicing
          Agreement, the Supplement, or the Enhancement Agreement, except such
          as have been obtained or made and such as may be required under state
          securities or Blue Sky laws;

              (vii) the execution, delivery and performance by the Transferor of
          its obligations under this Agreement, the Receivable Purchase
          Agreements, the Pooling and Servicing Agreement, the Supplement or the
          Enhancement Agreement, the transfer of the Receivables to the Trust,
          the issuance and sale of the Certificates, and the consummation of any
          other of the transactions contemplated herein, in the Receivable
          Purchase Agreements, the Pooling and Servicing Agreement, the
          Supplement or the Enhance ment Agreement, will not conflict with,
          result in a breach of or violation of any of the terms of, or
          constitute a default under, the articles of incorporation or by-laws
          of the Transferor, each as amended, the terms of any indenture or
          other agreement or instrument known to such counsel to which the
          Transferor is a party or by which it or its properties are bound or
          any rule, order known to such counsel, statute or regulation, of any
          court, regulatory body, administrative agency or govern mental body
          having jurisdiction over the Transferor; provided, however, that such
          counsel need express no opinion as to state securities or Blue Sky
          laws or the securities laws of any foreign jurisdiction;

                                      11

<PAGE>   13

              (viii) except as otherwise disclosed in the Prospectus or the
          Registration Statement, to the best of such counsel's knowledge, there
          are no actions, proceedings or investigations pending or threatened
          before any court, administrative agency or other tribunal (A)
          asserting the invalidity of this Agreement, the Receivable Purchase
          Agreements, the Pooling and Servicing Agreement, the Supplement, the
          Enhancement Agreement or the Certificates, (B) seeking to prevent the
          issuance of the Certifi cates or the consummation of any of the
          transactions contemplated by this Agreement, the Receivable Purchase
          Agreements, the Pooling and Servicing Agreement, the Supplement, the
          Enhancement Agreement or the Certificates, which if adversely
          determined would materially and adversely affect the performance by
          the Transferor of its obligations under, or the validity or
          enforceability of, this Agreement, the Receivable Purchase Agreements,
          the Pooling and Servicing Agreement, the Supplement, the Enhancement
          Agreement or the Certificates, or (C) seeking adversely to affect the
          federal income tax attributes of the Certificates as described in the
          Prospectus under the headings "Federal Income Tax Consequences";

              (ix)   the Registration Statement has become effective under the
          Act; to the best of such counsel's knowledge, no stop order suspending
          the effectiveness of the Registration Statement has been issued and no
          proceedings for that purpose have been instituted or threatened under
          the Act; and the Registration Statement and the Prospectus (other than
          the financial, numerical and statistical information contained therein
          as to which such counsel need express no opinion) as of their
          respective effec tive date or date of issuance complied as to form in
          all material respects with the requirements of the Act and the rules
          and regulations promulgated thereunder;

              (x)    this Agreement, the Receivable Purchase Agreements, the
          Pooling and Servicing Agreement, the applicable Supplement, any
          Enhancement Agreement and the Certificates conform in all material
          respects to the descriptions thereof contained in the Registration
          Statement and the Prospectus;

                                      12

<PAGE>   14

              (xi)   the Pooling and Servicing Agreement and the Supplement will
          not be required to be qualified under the Trust Indenture Act of 1939,
          as amended, and neither the Transferor nor the Trust is now, and
          immediately following the sale of the Certificates pursuant hereto
          will be, required to be registered under the 1940 Act;

              (xii)  the statements in the Prospectus under the heading "Federal
          Income Tax Consequences" to the extent they constitute matters of
          Federal law or legal conclusions with respect thereto, have been
          reviewed by such counsel and are correct in all material respects; and

              (xiii) the statements in the Prospectus under the headings
          "Certain Legal Aspects of the Receivables" and "ERISA Considerations,"
          to the extent they constitute matters of Federal law or legal
          conclusions with respect thereto, have been reviewed by such counsel
          and are correct in all material respects;

    Such counsel also shall state that, subject to its customary practices and
    limitations relating to the scope of such counsel's participation in the
    preparation of the Registration Statement and the Prospectus and its
    investigation or verification of information contained therein, it has no
    reason to believe that at its effective date the Registration Statement
    contained any untrue statement of a material fact or omitted to state any
    material fact required to be stated therein or necessary to make the
    statements therein not misleading or that the Prospectus on the Closing Date
    includes any untrue statement of a material fact or omits to state a
    material fact necessary to make the statements therein, in the light of the
    circumstances under which they were made, not misleading (in each case,
    other than financial, numerical and statistical information contained
    therein as to which such counsel need express no opinion); in rendering such
    opinion, such counsel may rely as to matters of fact, to the extent deemed
    proper and as stated therein, on certificates of responsible officers of the
    Transferor, the Servicer, the Sellers and public officials;

          (e) you shall have received opinions of Alston & Bird LLP, special
    counsel for the Sellers, and of such local or corporate counsel to the
    Sellers, dated the

                                      13

<PAGE>   15

    Closing Date, in form and substance reasonably satisfactory to you and your
    counsel, to the effect that, with respect to each Seller:

              (i)   the Seller is a corporation duly organized, validly existing
          and in good standing under the laws of the state of its incorporation,
          with full power and authority to own its assets and operate its
          business as described in the Prospectus, and had at all relevant times
          and now has, the power, authority and legal right to acquire, own and
          service the Receivables transferred or proposed to be transferred to
          the Transferor as described in the Prospectus;

              (ii)  the Seller has full corporate power and authority to execute
          and deliver the Receivable Purchase Agreement to which it is a party
          and to consummate the transactions contemplated therein;

              (iii) the execution, delivery and performance of the Receivable
          Purchase Agreement to which the Seller is a party has been authorized
          by all necessary action on the part of the Seller and such agreement
          has been duly executed and delivered by the Seller;

              (iv)  the Receivable Purchase Agreement to which the Seller is a
          party constitutes the legal, valid and binding agreement of the
          Seller, enforceable against the Seller in accordance with its terms,
          subject, as to enforcement, to (A) the effect of bankruptcy,
          insolvency, fraudulent transfer, reorganization, moratorium,
          conservatorship, receivership, or other similar laws of general
          applicability relating to or affecting creditors' rights generally,
          (B) the application of general principles of equity (regardless of
          whether enforceability is considered in a proceeding in equity or at
          law) and (C) the unenforceability under certain circumstances of
          provisions indemnifying a party against liability or providing for
          contribution with respect to such liability where such indemnification
          or contribution is contrary to public policy;

              (v)   no consent, approval, authorization or order of, or filing
          with, any governmental agency or body or any court is required under
          applicable

                                      14

<PAGE>   16

          law for the consummation of the transactions contemplated by the
          Receivable Purchase Agreement to which the Seller is a party, except
          such as have been obtained or made;

              (vi)  the execution, delivery and performance by the Seller of its
          obligations under the Receivable Purchase Agreement to which it is a
          party, the transfer of the Receivables to the Trust, the sale of the
          Receivables purported to be sold thereunder, and the consummation of
          any other of the transactions contemplated in such agreement, will not
          conflict with, result in a breach of or violation of any of the terms
          of, or constitute a default under, the certificate or articles of
          incorporation or by-laws of the Seller, each as amended, the terms of
          any indenture or other agreement or instrument known to such counsel
          to which the Seller is a party or by which it or its properties are
          bound or any rule, order known to such counsel, statute or regulation,
          of any court, regulatory body, administrative agency or governmental
          body having jurisdiction over the Seller; and

              (vii) except as otherwise disclosed in the Prospectus or the
          Registration Statement, to the best of such counsel's knowledge (after
          reasonable investigation), there are no actions, proceedings or
          investigations pending or threatened before any court, administrative
          agency or other tribunal (A) asserting the invalidity of the
          Receivable Purchase Agreement to which the Seller is a party, (B)
          seeking to prevent the consummation of any of the transactions
          contemplated by such agreement, which if adversely determined would
          materially and adversely affect the performance by the Seller of its
          obligations under, or the validity or enforceability of, such
          agreement, or (C) seeking adversely to affect the federal income tax
          attributes of the Certificates as described in the Prospectus under
          the headings "Federal Income Tax Consequences".

          (f) you shall have received an opinion of Alston & Bird LLP, special
    counsel for the Servicer, and/or such local or corporate counsel to the
    Servicer, dated the Closing Date, substantially to the effect that:

              (i)   the Servicer is a corporation duly organized, validly
          existing and in good standing under

                                      15

<PAGE>   17

          the laws of the State of Tennessee, with full power and authority
          to own its assets and operate its business as described in the
          Prospectus, and had at all relevant times and now has, the power,
          authority and legal right to service the Receivables transferred or
          proposed to be transferred to the Trust as described in the
          Prospectus;

              (ii)  the Servicer has full power and authority to execute and
          deliver the Pooling and Servicing Agreement, the Supplement and the
          indemnification agreement between you and the Servicer, dated August
          14, 1997 (the "Indemnification Agreement") and to consummate the
          transactions contemplated herein and therein;

              (iii) the agreements referred to in clause (ii) above have been
          authorized by all necessary action on the part of the Servicer and
          have been duly executed and delivered by the Servicer;

              (iv)  the Pooling and Servicing Agreement and the Supplement each
          constitutes the legal, valid and binding agreement of the Servicer,
          enforceable against the Servicer in accordance with its terms,
          subject, as to enforcement, to (A) the effect of bankruptcy,
          insolvency, fraudulent transfer, reorganization, moratorium,
          conservatorship, receivership, or other similar laws of general
          applicability relating to or affecting creditors' rights generally,
          (B) the application of general principles of equity (regardless of
          whether enforceability is considered in a proceeding in equity or at
          law) and (C) the unenforceability under certain circumstances of
          provisions indemnifying a party against liability or providing for
          contribution with respect to such liability where such indemnification
          or contribution is contrary to public policy;

              (v)   no consent, approval, authorization or order of, or filing
          with, any governmental agency or body or any court is required under
          applicable laws for the consummation of the transactions contemplated
          herein, the Pooling and Servicing Agreement or the Indemnification
          Agreement, except such as have been obtained or made and such as may
          be required under state securities or Blue Sky laws;

                                      16

<PAGE>   18


              (vi)  the execution, delivery and performance by the Servicer of
          its obligations under the Pooling and Servicing Agreement, the
          Supplement or the consummation of any of the transactions contemplated
          by the Pooling and Servicing Agreement, the Supplement or the
          Indemnification Agreement, will not conflict with, result in a breach
          of or violation of any of the terms of, or constitute a default under,
          the certificate or articles of incorporation or by-laws of the
          Servicer, each as amended, the terms of any indenture or other
          agreement or instrument known to such counsel to which the Servicer is
          a party or by which it or its properties are bound or any rule, order
          known to such counsel, statute or regulation, of any court, regulatory
          body, administrative agency or governmental body having jurisdiction
          over the Servicer; provided, however, that such counsel need express
          no opinion as to state securities or Blue Sky laws; or

          (g) you shall have received an opinion or opinions from special tax
    counsel to the Transferor, dated the Closing Date, and in form and substance
    satisfactory to you and your counsel, to the effect that the Certificates
    are properly characterized as indebtedness for Mississippi and Minnesota
    state income tax purposes, that the Trust is properly characterized as not
    an association (or publicly traded partnership) taxable as a corporation
    under the laws of the States of Mississippi or Minnesota and that the Trust
    will not be subject to any income, franchise, excise or other tax under the
    laws of the States of Mississippi or Minnesota.

          (h) you shall have received an opinion or opinions from Alston & Bird
    LLP, special tax counsel to the Transferors, dated the Closing Date, and in
    form and substance acceptable to you and your counsel, to the effect that
    the Certificates are properly characterized as indebtedness for federal
    income tax purposes and that the Trust is properly characterized as not an
    association (or publicly traded partnership) taxable as a corporation for
    federal income tax purposes.

          (i) you shall have received an opinion or opinions of Alston & Bird
    LLP, special counsel for the Sellers and the Transferor, and/or such local
    counsel to the Transferor, dated the Closing Date, in form and substance
    satisfactory to you and your counsel, with respect to certain matters
    relating to the sale of the

                                      17

<PAGE>   19

    Receivables by the Sellers and the transfer of the Receivables by the
    Transferor, with respect to the perfection of the Transferor's and the
    Trust's interest in the Receivables and with respect to other related
    matters in a form previously approved by you and your counsel; in addition,
    you shall have received a reliance letter with respect to any opinion that
    the Transferor is required to deliver to the Rating Agency;

          (j) you shall have received from Skadden, Arps, Slate, Meagher & Flom
    LLP, special counsel for the Underwriters, such opinion or opinions, dated
    the Closing Date, in form and substance satisfactory to you, with respect to
    the validity of the Certificates, the Registration Statement, the Prospectus
    and other related matters as you may require, and the Transferor shall have
    furnished to such counsel such documents as they may reasonably request for
    the purpose of enabling them to pass upon such matters;

          (k) you shall have received, with respect to the Transferor, a
    certificate, dated the Closing Date, of a Senior Vice President or more
    senior officer of the Transferor in which such officer, to the Treasurer or
    any of his or her knowledge after reasonable investigation, shall state that
    (A) the representations and warranties of the Transferor in this Agreement
    are true and correct in all material respects on and as of the Closing Date,
    (B) the Transferor has complied in all material respects with all agreements
    and satisfied all conditions on its part to be performed or satisfied
    hereunder at or prior to the Closing Date, (C) the Registration Statement
    has become effective, no stop order suspending the effectiveness of the
    Registration Statement has been issued and no proceedings for that purpose
    have been instituted, or to the knowledge of such officer, are threatened by
    the Commission and (D) subsequent to the date of the Prospectus, there has
    been no material adverse change in the condition (financial or otherwise) of
    the Transferor except as set forth in or contemplated in the Registration
    Statement and the Prospectus or as described in such certificate;

          (l) you shall have received, with respect to Proffitt's Inc.
    ("Proffitt's"), a certificate, dated the Closing Date, of the Treasurer or
    any a Senior Vice President or more senior officer of Proffitt's in which
    such officer, to his or her knowledge after reasonable investigation, shall
    state that subsequent to the date

                                      18

<PAGE>   20

    of the Prospectus, there has been no material adverse change in the
    condition (financial or otherwise) of Proffitt's except as set forth in or
    contemplated in the Registration Statement and the Prospectus or as
    described in such certificate;

          (m) you shall have received an opinion of Chapman and Cutler, counsel
    to the Trustee, addressed to you dated the Closing Date, in form and
    substance satisfactory to you and your counsel, and to the Transferor and
    the Servicer and their counsel, to the effect that:

              (i)   the Trustee has been duly incorporated and is validly 
          existing as a national banking association under the laws of the
          United States and has the power and authority to enter into and to
          perform all actions required of it under the Pooling and Servicing
          Agreement, the Supplement and the Enhancement Agreement;

              (ii)  each of the Pooling and Servicing Agreement, the Supplement
          and the Enhancement Agreement has been duly authorized, executed and
          delivered by the Trustee and constitutes a legal, valid and binding
          obligation of the Trustee, enforceable against the Trustee in
          accordance with its terms, except as such enforceability may be
          limited by (A) bankruptcy, insolvency, liquidation, reorganization,
          moratorium, conservatorship, receivership or other similar laws now or
          hereafter in effect relating to the enforcement of creditors' rights
          in general, as such laws would apply in the event of a bankruptcy,
          insolvency, liquidation, reorganization, moratorium, conservatorship,
          receivership or similar occurrence affecting the Trustee, and (B)
          general principles of equity (regardless of whether such
          enforceability is considered in a proceeding in equity or at law);

              (iii) the Certificates have been duly authenticated and delivered
          by the Trustee;

              (iv)  the execution and delivery of the Pooling and Servicing
          Agreement, the Supplement and the Enhancement Agreement by the Trustee
          and the performance by the Trustee of their respective terms do not
          conflict with or result in a violation of (A) any law or regulation of
          the United States of America or the state of Minnesota governing the

                                      19

<PAGE>   21

          banking or trust powers of the Trustee, or (B) the articles of
          association or by-laws of the Trustee; and

              (v)   no approval, authorization or other action by, or filing
          with, any governmental authority of the United States of America
          or the sate of Minnesota having jurisdiction over the banking or trust
          powers of the Trustee is required in connection with the execution and
          delivery by the Trustee of the Pooling and Servicing Agreement, the
          Supplement and the Enhancement Agreement or the performance by the
          Trustee thereunder;

          (n) you shall have received an opinion or opinions of counsel to the
    Enhancement Provider, dated the Closing Date, and satisfactory in form and
    substance to you and your counsel, to the effect that:

              (i)   the Enhancement Provider is duly organized and validly
          existing under the laws of the jurisdiction of its incorporation, is
          duly qualified and/or licensed to do business in all jurisdictions
          where the nature of its operations as contemplated in the Enhancement
          Agreement requires such qualification, and has the power and authority
          (corporate and other) to enter into the Enhancement Agreement and to
          perform its obligations thereunder; and

              (ii)  the Enhancement Agreement has been duly authorized, executed
          and delivered by the Enhancement Provider, and constitutes the legal,
          valid and binding obligation of the Enhancement Provider, enforceable
          in accordance with its terms, except to the extent that the
          enforceability thereof may be subject to bankruptcy, insolvency,
          reorganization, conservatorship, moratorium or other similar laws now
          or hereafter in effect relating to creditors' rights as such laws
          would apply in the event of the insolvency, liquidation or
          reorganization or other similar occurrence with respect to the
          Enhancement Provider or in the event of any moratorium or similar
          occurrence affecting the Enhancement Provider.

          (o) you shall have received reliance letters, if applicable, with
    respect to any opinions delivered to the Transferor by foreign counsel of
    the Enhancement Provider for the Enhancement Agreement, if any, which

                                      20

<PAGE>   22

    opinions shall include matters relating to (i) the due organization of the
    Enhancement Provider, (ii) the authorization, execution, delivery and
    performance by the Enhancement Provider of the Enhancement Agreement and the
    binding effect of the Enhancement Agreement, and (iii) the enforceability in
    the foreign jurisdiction in which such Enhancement Provider is located of a
    judgment obtained under the Enhancement Agreement in a United States federal
    court or in a court of the State of New York; such reliance letters shall
    include all matters that are contained in the opinions of foreign counsel;

    The Transferor will furnish to you conformed copies of such opinions,
certificates, letters and documents as you reasonably request.

          7. Indemnification.

          (a) The Transferor will indemnify and hold harmless each Underwriter
    and each person, if any, who controls any Underwriter within the meaning of
    the Act or the Exchange Act and the respective officers, directors and
    employees of each such person, against any losses, claims, damages or
    liabilities, joint or several, to which such Underwriter or such controlling
    person may become subject, under the Act, the Exchange Act or otherwise,
    insofar as such losses, claims, damages or liabilities (or actions in
    respect thereof) arise out of or are based upon any untrue statement or
    alleged untrue statement of any material fact contained in the Registration
    Statement, the Prospectus or any amendment or supplement thereto, or arise
    out of or are based upon the omission or alleged omission to state therein a
    material fact required to be stated therein or necessary to make the
    statements therein not misleading; and will reimburse each Underwriter and
    each such officer, director, employee or controlling person for any legal or
    other expenses reasonably incurred by such Underwriter and each such
    officer, director, employee or controlling person in connection with
    investigating or defending any such loss, claim, damage, liability or
    action, subject to the following proviso, as such expenses are incurred;
    provided, however, that (i) the Transferor will not be liable in any such
    case to the extent that any such loss, claim, damage or liability arises out
    of or is based upon any such untrue statement or alleged untrue statement in
    or omission or alleged omission made in any such documents in reliance upon
    and in conformity with written information furnished to the Transferor by an


                                       21

<PAGE>   23

    Underwriter pecifically for use therein and (ii) such indemnity with respect
    to any untrue statement or alleged untrue statement or omission or alleged
    omission in the Preliminary Prospectus shall not inure to the benefit of any
    Underwriter (or any person controlling such Underwriter) from whom the
    person asserting any such loss, claim, damage or liability purchased the
    Certificates which are the subject thereof, if such person was not given or
    sent a copy of the Prospectus excluding documents incorporated therein by
    reference, at or prior to the confirmation of the sale of such Certificates
    to such person in any case where such delivery is required by the Act and
    the untrue statement or alleged untrue statement or omission or alleged
    omission of a material fact contained in the Preliminary Prospectus and
    forming the basis for the related cause of action was corrected in the
    Prospectus. This indemnity agreement will be in addition to any liability
    which the Transferor may otherwise have.

          (b) Each Underwriter severally, and not jointly, will indemnify and
    hold harmless the Transferor, each of its directors, each of its officers
    who have signed the Registration Statement and each person, if any, who
    controls the Transferor within the meaning of the Act or the Exchange Act
    and the respective officers, directors and employees of each such person
    against any losses, claims, damages or liabilities to which the Transferor
    or any such director, officer or controlling person may become subject,
    under the Act, the Exchange Act or otherwise, insofar as such losses,
    claims, damages or liabilities (or actions in respect thereof) arise out of
    or are based upon any untrue statement or alleged untrue statement of any
    material fact contained in the Registration Statement, the Prospectus, or
    any amendment or supplement thereto, or arise out of or are based upon the
    omission or alleged omission to state therein a material fact required to be
    stated therein or necessary to make the statements therein not misleading,
    in each case to the extent, but only to the extent, that such untrue
    statement or alleged untrue statement or omission or alleged omission was
    made in reliance upon and in conformity with written information furnished
    to the Transferor by such Underwriter specifically for use therein, and will
    reimburse any legal or other expenses reasonably incurred by the Transferor
    or any such director, officer or controlling person in connection with
    investigating or defending any such loss, claim, damage, liability or action
    as such expenses are incurred. This

                                      22

<PAGE>   24


    indemnity agreement will be in addition to any liability that such
    Underwriter may otherwise have.

          (c) Promptly after receipt by an indemnified party under this Section
    of notice of the commencement of any action, such indemnified party will, if
    a claim in respect thereof is to be made against the indemnifying party
    under this Section, notify the indemnifying party of the commencement
    thereof; but the omission and/or delay so to notify the indemnifying party
    will not relieve it from any liability which it may have to any indemnified
    party otherwise than in this Section unless such omission caused actual
    prejudice to the party not notified; in case any such action is brought
    against any indemnified party, and it notified the indemnifying party of the
    commencement thereof, the indemnifying party will be entitled to participate
    therein, and, to the extent that it may elect by written notice jointly with
    any other indemnifying party similarly notified, to assume the defense
    thereof, with counsel satisfactory to such indemnified party, and after
    notice from the indemnifying party to such indemnified party of its election
    so to assume the defense thereof, the indemnifying party will not be liable
    to such indemnified party under this Section for any legal or other expenses
    subsequently incurred by such indemnified party in connection with defense
    thereof other than reasonable costs of investigation. If the defendants in
    any action include both the indemnified party and the indemnifying party and
    the indemnified party shall have reasonably concluded that there may be
    legal defenses available to it and/or other indemnified parties that are
    different from or additional to those available to the indemnifying party,
    the indemnified party or parties shall have the right to select separate
    counsel to assert such legal defenses and to otherwise participate in the
    defense of such action on behalf of such indemnified party or parties. It is
    understood that the indemnifying party shall not, in connection with any
    proceeding or related proceedings in the same jurisdiction, be liable for
    the reasonable fees and expenses of more than one separate firm (in addition
    to local counsel, if any) for all such indemnified parties. No indemnifying
    party may avoid its duty to indemnify under this Section 7 if such
    indemnifying party shall, without the prior written consent of the
    indemnified party, effect any settlement or compromise of, or consent to the
    entry of any judgement in, any pending or threatened action in respect of
    which any indemnified party is or could have been a party and

                                      23

<PAGE>   25
                  
    indemnity could have been sought hereunder by such indemnified party unless
    such settlement includes an unconditional release of such indemnified party
    from all liability on all claims that are the subject matter of such action.
    An indemnifying party shall not be liable for any settlement of any claim
    effected without its written consent.

          (d) If recovery is not available under the foregoing indemnification
    provisions of this Section for any reason other than as specified therein,
    the parties entitled to indemnification by the terms thereof shall be
    entitled to contribution to liabilities and expenses, except to the extent
    that contribution is not permitted under Section 11(f) of the Act. In
    determining the amount of contribution to which the respective parties are
    entitled, there shall be considered (i) the relative benefit received by the
    Transferor on the one hand and the Underwriters on the other hand from the
    offering of the Certificates or (ii) if the allocation provided by clause
    (i) above is not permitted by applicable law, the relative benefits referred
    to in clause (i) above but also the relative fault of the Transferor on the
    one hand and the Underwriters on the other hand in connection with the
    statement or omission that resulted in such liabilities and expenses as well
    as any other relevant equitable con siderations. The relative benefits
    received by the Transferor on the one hand and the Underwriters on the other
    hand shall be deemed to be in the same proportion as the total net proceeds
    of the offering of the Certificates (before deducting expenses) received by
    the Transferor bear to the total underwriting discounts and commissions
    received by the Underwriters in connection with the offering of the
    Certificates. The relative fault of the parties shall be determined by
    reference to, among other things, the parties' relative knowledge and access
    to information concerning the matter with respect to which the claim was
    asserted, the opportunity to correct and prevent any statement or omission,
    and any other equitable considerations appropriate under the circumstances.
    The Transferor and the Underwriters agree that it would not be equitable if
    the amount of such contribution were determined by pro rata or per capita
    allocation (even if the Underwriter were treated as one entity for such
    purpose).

                                      24

<PAGE>   26

          8. Default of Underwriters. If any Underwriter or Underwriters
    participating in an offering of Certificates default in their obligations to
    purchase Certificates hereunder and the aggregate principal amount of such
    Certificates which such defaulting Underwriter or Underwriters agreed, but
    failed, to purchase does not exceed 10% of the total principal amount of the
    Certificates, you may make arrangement satisfactory to the Transferor for
    the purchase of such Certificates by other persons, including any of the
    Underwriters participating in such offering, but if no such arrangements are
    made within a period of 36 hours after the Closing Date, the non-defaulting
    Underwriters shall be obligated severally, in proportion to their respective
    total commitments hereunder, to purchase the Certificates which such
    defaulting Underwriters agreed but failed to purchase. If any Underwriter or
    Underwriters so default and the aggregate principal amount of Certificates
    with respect to which such default or defaults occur is more than 10% of the
    total principal amount of the Certificates and arrangements satisfactory to
    you and the Transferor for the purchase of such Certificates by other
    persons are not made within 36 hours after such default, this Agreement will
    terminate without liability on the part of any non-defaulting Underwriter or
    the Transferor, except as provided in Section 10. As used in this Agreement,
    the term "Underwriter" includes any person substituted for an Underwriter
    under this Section. Nothing herein will relieve a defaulting Underwriter
    from liability for its default.

          9. Termination of the Obligations of the Underwriters. The obligations
    of the Underwriters to purchase the Certificates on the Closing Date shall
    be terminable by the Underwriters by written notice delivered to the
    Transferor if at any time on or prior to the Closing Date (i) trading in
    securities generally on the New York Stock Exchange shall have been
    suspended or materially limited, or there shall have been any setting of
    minimum prices for trading on such exchange of the securities of Proffitt's
    or any suspension of trading of the securities of Proffitt's on any exchange
    or in the over-the-counter market, (ii) a general moratorium on commercial
    banking activities in New York, Alabama or Mississippi shall have been
    declared by any of Federal, New York, Alabama or Mississippi authorities,
    (iii) there shall have occurred any material outbreak or escalation of
    hostilities or other calamity or crisis, the effect of which on the
    financial markets of the United States is such as to make it, in your
    reasonable judgement, as representative of the Underwriters, impracticable
    to market the Certificates on the terms and in the manner contemplated in
    the Prospectus, (iv)

                                      25

<PAGE>   27

    any change or any development involving a prospective change, materially and
    adversely affecting (A) the Trust Property taken as whole or (B) the
    business or properties of the Transferor or Proffitt's occurs, which, in
    your reasonable judgment as representative of the Underwriters, in the case
    of either (A) or (B), makes it impracticable to market the Certificates on
    the terms and in the manner contemplated in the Prospectus.

          10. Survival of Certain Representations and Obligations. The
    respective indemnities, agreements, representations, warranties and other
    statements by the Transferor or its officers and of the several Underwriters
    set forth in or made pursuant to this Agreement will remain in full force
    and effect, regardless of any investigation, or statement as to the results
    thereof, made by or on behalf of the Underwriters, the Transferor or any of
    their respective officers or directors or any controlling person, and will
    survive delivery of and payment for the Certificates.

          If this Agreement is terminated pursuant to Sections 8 or 9 or if for
    any reason the purchase of the Certificates by the Underwriters is not
    consummated, the Transferor shall remain responsible for the expenses to be
    paid or reimbursed by it pursuant to Section 5(f), and the obligations of
    the Transferor and the Underwriters pursuant to Section 7 shall remain in
    effect.

          11. Representation of the Underwriters. Each of the Underwriters
    represents and warrants to, and agrees with, the Transferor that (w) it has
    only issued or passed on and shall only issue or pass on in the United
    Kingdom any document received by it in connection with the issue of the
    Certificates to a person who is of a kind described in Article 11(3) of the
    Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
    1996 or who is a person to whom the document may otherwise lawfully be
    issued or passed on, (x) it has complied and shall comply with all
    applicable provisions of the Financial Services Act 1986 with respect to
    anything done by it in relation to the Certificates in, from or otherwise
    involving the United Kingdom and (y) if that Underwriter is an authorized
    person under the Financial Services Act 1986, it has only promoted and shall
    only promote (as that term is defined in Regulation 1.02 of the Financial
    Services (Promotion of Unregulated Schemes) Regulations 1991) to any person
    in the United Kingdom the scheme described in the Prospectus if that person
    is of a kind described either in Section 76(2) of the Financial Services Act
    1986 or in

                                      26

<PAGE>   28

    Regulation 1.04 of the Financial Services (Promotion of Unregulated Schemes)
    Regulations 1991.

          12. Notices. All communications hereunder will be in writing and, if
    sent to an Underwriter, will be mailed, delivered or telecopied to
    NationsBanc Capital Markets, Inc., NationsBank Corporate Center, 100 North
    Tryon Street, Charlotte, North Carolina 28255-0001, Attention: Luis O.
    Araneda, facsimile number 704-388-0622 or if sent to the Transferor, will be
    mailed, delivered or telecopied to Proffitt's Credit Corporation, 750
    Lakeshore Parkway, Birmingham, Alabama 35211, Attention: Douglas Coltharp,
    facsimile number (205) 940-4709, or such other address specified in the
    applicable Terms Agreement; provided, however, that any notice to an
    Underwriter pursuant to Section 7 will be mailed, delivered or telecopied to
    such Underwriter at the address furnished by it in Schedule I hereto.

          13. Successors. This Agreement will inure to the benefit of and be
    binding upon the parties hereto and their respective successors and the
    officers, directors and controlling persons referred to in Section 7 hereof,
    and their successors and assigns, and no other person will have any right or
    obligation hereunder.


          14. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
    IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


                                      27



<PAGE>   29



          If the foregoing is in accordance with your understanding of our
    agreement, please sign and return to us a counterpart hereof, whereupon it
    will become a binding agreement among the Transferor and the several
    Underwriters in accordance with its terms. Alternatively, the execution of
    this Agreement by the Transferor and its acceptance by or on behalf of the
    Underwriters may be evidenced by an exchange of telecopied or other written
    communications.

                                              Very truly yours,


                                              PROFFITT'S CREDIT CORPORATION,
                                                     as Transferor



                                              By /s/ Douglas E. Coltharp
                                                 -------------------------------
                                                 Name: Douglas E. Coltharp
                                                 Title: President

The foregoing Agreement is
hereby confirmed and accepted
as of the date first
above written.

NATIONSBANC CAPITAL MARKETS, INC.,
as Representative of the
several Underwriters

By /s/ Luis O. Araneda
  -----------------------
  Name: Luis O. Araneda
  Title: Director


                                      28

<PAGE>   30

                                  Schedule I
                                  ----------


<TABLE>
<CAPTION>
                                                        Principal Amount of   
                                                        Class A Certificates  
                                                        --------------------
<S>                                                     <C>
NationsBanc Capital Markets, Inc. ...................       $  60,000,000
BancAmerica Securities, Inc. ........................          60,000,000
J.P. Morgan Securities Inc. .........................          60,000,000


<CAPTION>
                                                        Principal Amount of
                                                        Class B Certificates
                                                        --------------------

<S>                                                     <C>
NationsBanc Capital Markets, Inc....................        $  20,000,000
</TABLE>


                                     I-1


<PAGE>   1



                        
                                 EXHIBIT 99.2

      Master Pooling and Servicing Agreement dated as of August 21, 1997
   among Proffitt's Credit Corporation, as Transferor, Proffitt's, Inc., as
    Servicer,and Norwest Bank Minnesota, National Association, as Trustee





<PAGE>   2
                                                                    EXHIBIT 99.2




                          PROFFITT'S CREDIT CORPORATION

                                   TRANSFEROR


                                PROFFITT'S, INC.

                                    SERVICER


                                       AND


                  NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION

                                     TRUSTEE

                       ON BEHALF OF THE CERTIFICATEHOLDERS
                                     OF THE
                       PROFFITT'S CREDIT CARD MASTER TRUST




                         ------------------------------

                     MASTER POOLING AND SERVICING AGREEMENT

                           DATED AS OF AUGUST 21, 1997

                         ------------------------------










<PAGE>   3


                                       
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                        PAGE
                                                                                                        -----
<S> <C>                                                                                                 <C>
Article I  Definitions ..........................................................................          1
    Section 1.1   Definitions....................................................................          1
    Section 1.2   Other Definitional Provisions..................................................         20

Article II  Appointment of Trustee; Conveyance of Receivables; 
                  Issuance of Certificates ......................................................         21
    Section 2.1   Appointment of Trustee; Conveyance of Receivables..............................         21
    Section 2.2   Acceptance by Trustee..........................................................         23
    Section 2.3   Representations and Warranties Regarding the Transferor........................         24
    Section 2.4   Representations and Warranties of the Transferor Relating 
                  to the Agreement and any Supplement and the Receivables........................         26
    Section 2.5   Covenants of the Transferor and Servicer.......................................         32
    Section 2.6   Addition of Accounts; Repurchase of Investor Certificates......................         35
    Section 2.7   Removal of Accounts............................................................         39
    Section 2.8   Discount Option Receivables....................................................         40

Article III  Administration and Servicing of Receivables.........................................         41
    Section 3.1   Acceptance of Appointment and Other Matters Relating to 
                  the Servicer ..................................................................         41
    Section 3.2   Servicing Compensation.........................................................         43
    Section 3.3   Representations, Warranties and Covenants of the Servicer......................         44
    Section 3.4   Reports and Records for the Trustee............................................         47
    Section 3.5   Annual Servicer's Certificate..................................................         48
    Section 3.6   Annual Independent Public Accountants' Servicing Report........................         48
    Section 3.7   Tax Treatment..................................................................         50
    Section 3.8   Adjustments....................................................................         50

Article IV  Rights of Certificateholders and Allocation and Application 
                  of Collections ................................................................         51
    Section 4.1   Establishment of Collection Account and Allocations 
                  with Respect to the Exchangeable Transferor Certificate .......................         51

Article V  Is Reserved And May Be Specified In Any Supplement With 
                  Respect To Any Series .........................................................         57

Article VI  The Certificates.....................................................................         57
    Section 6.1   The Certificates...............................................................         57
    Section 6.2   Authentication of Certificates.................................................         58
</TABLE>





<PAGE>   4
<TABLE>
<S> <C>                                                                                                   <C>
    Section 6.3   Registration of Transfer and Exchange of Certificates..........................         58
    Section 6.4   Mutilated, Destroyed, Lost or Stolen Certificates..............................         62
    Section 6.5   Persons Deemed Owners..........................................................         62
    Section 6.6   Appointment of Paying Agent....................................................         63
    Section 6.7   Access to List of Certificateholders' Names and Addresses......................         64
    Section 6.8   Authenticating Agent...........................................................         64
    Section 6.9   Tender of Exchangeable Transferor Certificate..................................         65
    Section 6.10  Global Certificate; Euro-Certificate Exchange Date.............................         68
    Section 6.11  Book-Entry Certificates........................................................         69
    Section 6.12  Notices to Clearing Agency.....................................................         70
    Section 6.13  Definitive Certificates........................................................         70
    Section 6.14  Meetings of Certificateholders.................................................         71

Article VII  Other Matters Relating To The Trust.................................................         73
    Section 7.1   Liability of the Transferor....................................................         73
    Section 7.2   Merger or Consolidation of, or Assumption of 
                  the Obligations of, the Transferor ............................................         73
    Section 7.3   Limitation on Liability of the Transferor......................................         74

Article VIII  Other Matters Relating To The Servicer.............................................         75
    Section 8.1   Liability of the Servicer......................................................         75
    Section 8.2   Merger or Consolidation of, or Assumption of the 
                  Obligations of, the Servicer ..................................................         75
    Section 8.3   Limitation on Liability of the Servicer and Others.............................         76
    Section 8.4   Indemnification of the Trust and the Trustee...................................         77
    Section 8.5   The Servicer Not to Resign.....................................................         78
    Section 8.6   Access to Certain Documentation and Information 
                  Regarding the Receivables .....................................................         78
    Section 8.7   Delegation of Duties...........................................................         78
    Section 8.8   Examination of Records.........................................................         79

Article IX  Pay Out Events.......................................................................         79
    Section 9.1   Pay Out Events.................................................................         79
    Section 9.2   Additional Rights Upon the Occurrence of Certain Events........................         80

Article X  Servicer Defaults.....................................................................         82
    Section 10.1  Servicer Defaults..............................................................         82
    Section 10.2  Trustee to Act; Appointment of Successor.......................................         85
    Section 10.3  Notification to Certificateholders.............................................         87
    Section 10.4  Waiver of Past Defaults........................................................         87

Article XI  The Trustee..........................................................................         87
    Section 11.1  Duties of Trustee..............................................................         87
    Section 11.2  Certain Matters Affecting the Trustee..........................................         89
</TABLE>



                                       ii



<PAGE>   5


<TABLE>
<S> <C>                                                                                             <C>
    Section 11.3  Trustee Not Liable for Recitals in Certificates...........................         91
    Section 11.4  Trustee May Own Certificates..............................................         92
    Section 11.5  The Servicer to Pay Trustee's Fees and Expenses...........................         92
    Section 11.6  Eligibility Requirements for Trustee......................................         92
    Section 11.7  Resignation or Removal of Trustee.........................................         93
    Section 11.8  Successor Trustee.........................................................         94
    Section 11.9  Merger or Consolidation of Trustee........................................         94
    Section 11.10 Appointment of Co-Trustee or Separate Trustee.............................         94
    Section 11.11 Tax Returns and Compliance................................................         96
    Section 11.12 Trustee May Enforce Claims Without Possession of Certificates. ...........         96
    Section 11.13 Suits for Enforcement.....................................................         96
    Section 11.14 Rights of Certificateholders to Direct Trustee............................         97
    Section 11.15 Representations and Warranties of Trustee.................................         97
    Section 11.16 Maintenance of Office or Agency...........................................         97

Article XII  Termination....................................................................         98
    Section 12.1  Termination of Trust......................................................         98
    Section 12.2  Optional Purchase; Final Termination Date of 
                  Investor Certificates of any Series ......................................         99
    Section 12.3  Final Payment with Respect to any Series..................................        100
    Section 12.4  Transferor's Termination Rights...........................................        101
    Section 12.5  Defeasance................................................................        102

Article XIII  Miscellaneous Provisions......................................................        103
    Section 13.1  Amendment.................................................................        103
    Section 13.2  Protection of Right, Title and Interest to Trust..........................        106
    Section 13.3  Limitation on Rights of Certificateholders................................        107
    Section 13.4  Governing Law.............................................................        108
    Section 13.5  Notices...................................................................        108
    Section 13.6  Severability of Provisions................................................        109
    Section 13.7  Assignment................................................................        109
    Section 13.8  Certificates Nonassessable and Fully Paid.................................        109
    Section 13.9  Further Assurances........................................................        109
    Section 13.10 No Waiver; Cumulative Remedies............................................        109
    Section 13.11 Counterparts..............................................................        110
    Section 13.12 Third-Party Beneficiaries.................................................        110
    Section 13.13 Actions by Certificateholders.............................................        110
    Section 13.14 Merger and Integration....................................................        110
    Section 13.15 Headings..................................................................        110
    Section 13.16 Certificates and Opinions of Counsel......................................        110
    Section 13.17 No Petition Covenant......................................................        111
</TABLE>


                                      iii

<PAGE>   6



EXHIBITS

    Exhibit A:    Form of Exchangeable Transferor Certificate
    Exhibit B:    Form of Assignment of Receivables in Additional Accounts
    Exhibit C:    Form of Reassignment of Receivables
    Exhibit D:    Form of Series Closing Date Report
    Exhibit E:    Form of Monthly Servicer's Certificate
    Exhibit F:    Form of Annual Servicer's Certificate
    Exhibit G:    Form of Opinion of Counsel with Respect to the Pooling and 
                  Servicing Agreement and Additional Accounts
    Exhibit H:    Form of Annual Opinion of Counsel
    Exhibit I:    Account Agreements
    Exhibit J:    Form of Depository Agreement (Letter of Representations)


SCHEDULES

    Schedule 1    List of Accounts







                                       iv



<PAGE>   7


                  THIS MASTER POOLING AND SERVICING AGREEMENT, dated as of
August 21, 1997, is by and among PROFFITT'S CREDIT CORPORATION, a Nevada
corporation, as Transferor, PROFFITT'S, INC., a Tennessee corporation, as
Servicer, and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, as Trustee.

                  In consideration of the mutual agreements herein contained,
each party agrees as follows for the benefit of the other party and, to the
extent provided herein or in any Supplement, for the benefit of the
Certificateholders and any Enhancement Provider:


                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.1 DEFINITIONS. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:

                  "Account" shall mean each consumer revolving credit card
account, originated or acquired by the Sellers, the Transferor or their
Affiliates, including the Bank, which account (i) is identified on the
Servicer's master computer files by the identifying codes specified in the
computer file, microfiche or written list delivered to the Trustee by the
Transferor pursuant to Section 2.1 or Section 2.6, (ii) has been established or
exists pursuant to an Account Agreement between an Eligible Originator and any
Person not a Governmental Authority and (iii) is or will be identified by
account number and Receivable balance as of the Cut-Off Date and as of each
Additional Account Cut-Off Date in each computer file, microfiche or written
list delivered to the Trustee by the Transferor pursuant to Section 2.1 or
Section 2.6. The term "Account" shall include each Transferred Account, and
shall be deemed to refer to an Additional Account only from and after the
Additional Account Closing Date with respect thereto and to an Automatic
Additional Account included automatically pursuant to Section 2.6(d) only from
and after the Creation Date with respect thereto. An "Account" shall be deemed
to refer to any Removed Account only prior to its Removal Date.

                  "Account Agreements" shall mean the agreements and related
federal Truth-in-Lending Act disclosure statements substantially in the forms
attached as Exhibit I, as such agreements and/or statements and Exhibit I may be
amended, modified or changed from time to time, subject only to Section 2.5(c)
hereof.

                  "Accumulation Period" shall have, with respect to any Series,
the meaning, if any, specified in the applicable Supplement.

                  "Additional Account Closing Date" shall mean each date on
which Additional Accounts will be included as Accounts pursuant to Section 2.6.




<PAGE>   8

                  "Additional Account Cut-Off Date" shall mean with respect to
any Additional Account, the last day of the Monthly Period preceding the
Additional Account Closing Date.

                  "Additional Accounts" shall have the meaning specified in
Section 2.6(a).

                  "Adjusted Investor Amount" shall have the meaning specified in
the Supplements for all outstanding Series.

                  "Adjustment" shall have the meaning specified in Section
3.8(a).

                  "Adjustment Payment Obligation" shall have the meaning
specified in Section 3.8(a).

                  "Affiliate" of any Person shall mean any other Person directly
or indirectly controlling, controlled by or under common control with such
Person.

                  "Aggregate Adjusted Investor Amount" shall mean the aggregate
Adjusted Investor Amount for all Series outstanding, together with the aggregate
Investor Amounts for those Series that do not have Adjusted Investor Amounts
defined in their respective Supplement(s).

                  "Aggregate Automatic Addition Limit" shall mean (i) the number
of Eligible Accounts designated as Automatic Additional Accounts, pursuant to
Section 2.6(d), which would either (x) with respect to any period of three (3)
consecutive Monthly Periods commencing in January, April, July or October of a
calendar year equals 15% of the sum of the number of Accounts as of the last
Business Day preceding the commencement of such period (or, the Cut-Off Date,
whichever is later) and the number of Additional Accounts included as Accounts
pursuant to Section 2.6(a) or Section 2.6(b) since such first day or (y) with
respect to any period of twelve (12) consecutive Monthly Periods, equals 20% of
the sum of the number of Accounts as of the last Business Day preceding the
commencement of such period (or, the Cut-Off Date, whichever is later) and the
number of Additional Accounts included as Accounts pursuant to Section 2.6(a) or
Section 2.6(b) since such Business Day or (ii) such higher number of Automatic
Additional Accounts as to which shall meet the Rating Agency Condition.

                  "Aggregate Investor Amount" shall mean with respect to any
date of determination, the sum of the Investor Amounts with respect to all
Series of Investor Certificates then outstanding.

                  "Aggregate Investor Percentage" shall mean with respect to any
date of determination, the sum of the applicable Investor Percentages with
respect to all Series then outstanding.




                                        2

<PAGE>   9

                  "Aggregate Principal Receivables" shall mean, for any date of
determination, the aggregate amount of Principal Receivables at the end of such
day.

                  "Agreement" shall mean this Master Pooling and Servicing
Agreement and all amendments hereof and supplements hereto, including any
Supplement.

                  "Amortization Period" shall mean, with respect to any Series,
the period following the Revolving Period which shall be the Accumulation
Period, Controlled Amortization Period, Principal Amortization Period, Rapid
Amortization Period or other type of amortization period (as specified in any
related Supplement).

                  "Applicants" shall have the meaning specified in Section 6.7.

                  "Appointment Day" shall have the meaning specified in Section
9.2(a).

                  "Assignment" shall have the meaning specified in Section
2.6(c).

                  "Authorized Newspaper" shall mean one or more newspapers of
general circulation in the Borough of Manhattan, The City of New York printed in
the English language and customarily published on each Business Day, whether or
not published on Saturdays, Sundays and holidays, and shall include The Wall
Street Journal.

                  "Automatic Additional Accounts" shall have the meaning
specified in Section 2.6(d).

                  "Bank" shall mean any national banking association or banking
corporation organized under the laws of the United States or any state thereof
that is an Affiliate of the Company that may, as part of its activities,
originate, transfer and/or service Accounts and Receivables.

                  "Bearer Certificates" shall have the meaning specified in
Section 6.1.

                  "Bearer Rules" shall mean the provisions of the Code, in
effect from time to time, governing the treatment of bearer obligations,
including sections 163(f), 871, 881, 1441, 1442 and 4701, and any regulations
thereunder including, to the extent applicable to any Series, proposed or
temporary regulations.

                  "Book-Entry Certificates" shall mean beneficial interests in
the Investor Certificates, the ownership and transfers of which shall be
evidenced or made through book entries by a Clearing Agency as described in
Section 6.11; provided, that after the occurrence of a condition whereupon
book-entry registration and transfer are no longer permitted and Definitive
Certificates are issued to the Certificate Owners, such Definitive Certificates
shall replace Book-Entry Certificates.




                                        3

<PAGE>   10

                  "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in Birmingham, Alabama; Jackson,
Mississippi; Dallas, Texas; Atlanta, Georgia; Minneapolis, Minnesota or New
York, New York (or, with respect to any Series, any additional city specified in
the related Supplement) are authorized or obligated by law or executive order to
be closed.

                  "Cede" shall mean Cede & Co. as nominee of The Depository
Trust Company.

                  "Cedel" shall mean Cedel Bank, societe anonyme or any
successor thereto.

                  "Certificate" shall mean a certificate of any Series of the
Investor Certificates or the Exchangeable Transferor Certificate.

                  "Certificateholder" or "Holder" shall mean the Person in whose
name a Certificate is registered in the Certificate Register.

                  "Certificate Interest" shall mean interest payable with
respect to the applicable Series of Investor Certificates pursuant to the
applicable Supplement.

                  "Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, as reflected on the books of the Clearing Agency or on the books
of a Person maintaining an account with such Clearing Agency (directly a
participant or as an indirect participant, in accordance with the rules of such
Clearing Agency), and otherwise shall be (i) the registered owner of Registered
Certificates as shown on the Certificate Register of the Transfer Agent and
Registrar with respect to such Certificates or (ii) the Holder of any Bearer
Certificates.

                  "Certificate Principal" shall mean principal payable with
respect to the applicable Series of Investor Certificates pursuant to the
applicable Supplement.

                  "Certificate Rate" shall mean, with respect to any Series of
Certificates, the percentage (or formula on the basis of which such rate shall
be determined) stated in the applicable Supplement; provided that, unless
otherwise provided in the applicable Supplement, in each case such rate shall be
calculated and paid on the basis of a 360-day year consisting of twelve 30-day
months.

                  "Certificate Register" shall mean the register maintained
pursuant to Section (6.3) providing for the registration of the applicable
Certificates and transfers and exchanges thereof.

                  "Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended, or any successor provision thereto, including The Depository
Trust Company and Cede.




                                       4

<PAGE>   11

                  "Clearing Agency Participant" shall mean a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.

                  "Closing Date" shall mean, with respect to any Series, the
date of issuance of such Series of Certificates, as specified in the related
Supplement.

                  "Code" or "Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended from time to time.

                  "Collection Account" shall have the meaning specified in
Section 4.1.

                  "Collections" shall mean all payments (including Recoveries)
received by the Servicer with respect to the Receivables, in the form of cash,
checks, wire transfers, ATM transfers or other form of payment in accordance
with the related Account Agreements in effect from time to time. Collections
with respect to any Monthly Period shall include (i) interest and other
investment earnings (net of losses and investment expenses) on funds held in the
Excess Funding Account and (ii) the amount of Interchange (if any) allocable to
any Series pursuant to any Supplement with respect to such Monthly Period (to
the extent received by the Trust).

                  "Common Depositary" shall mean the Person appointed as such as
specified in the related Supplement, in its capacity as common depositary for
the respective accounts of a Foreign Clearing Agency.

                  "Company" shall mean Proffitt's, Inc. and its successors and
assigns.

                  "Controlled Amortization Period" shall have, with respect to
any Series, the meaning, if any, specified in the applicable Supplement.

                  "Corporate Trust Office" shall mean the principal office of
the Trustee at which at any particular time its corporate business shall be
administered, which office at the date of the execution of this Agreement is
located at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479-0070
Attn: Corporate Trust Services -- Asset-Backed Administration.

                  "Coupons" shall have the meaning specified in Section 6.1.

                  "Creation Date" shall mean the date that an Account is
originated and is identified on the Servicer's master computer files.

                  "Credit Card Guidelines" shall mean the policies and
procedures relating to the operation of the consumer revolving credit card
business of each Eligible Originator, including the policies and procedures for
determining the creditworthiness of customers, the extension of credit,
including special and other promotions, to customers and relating




                                       5

<PAGE>   12

to the maintenance of consumer revolving credit card accounts and the collection
of receivables, as such policies and procedures may be amended from time to time
in accordance with Section 2.5(c).

                  "Cut-Off Date" shall mean the close of business on July 31,
1997.

                  "Date of Processing" shall mean, with respect to any
transaction, the Business Day on which such transaction is first recorded in the
Servicer's computer master file of consumer revolving credit card accounts
(without regard to the effective date of such recordation).

                  "Debtor Relief Laws" shall mean the United States Bankruptcy
Code, as amended, and other insolvency, conservatorship, receivership,
reorganization, marshaling of assets or liabilities, liquidation, readjustment
of debts, moratorium, or other similar laws affecting the enforcement, of
creditors' rights in general.

                  "Default Amount" shall mean, for any Monthly Period, the
aggregate amount of Principal Receivables (other than Ineligible Receivables) in
all Accounts which became Defaulted Accounts during such Monthly Period
(determined in each case as of the date on which the related Account became a
Defaulted Account) minus Recoveries, if any, received during such Monthly
Period, provided the Default Amount shall not be less than $0.

                  "Defaulted Account" shall mean each Account with respect to
which, in accordance with the Credit Card Guidelines pursuant to which such
Account is governed or the customary and usual servicing procedures of the
Servicer for servicing consumer revolving credit card receivables comparable to
the Receivables, the Servicer has charged off the Receivables in such Account as
uncollectible; in any event, an Account shall be deemed a Defaulted Account no
later than the earlier of (i) the last day of the seventh calendar month in
which the related Obligor has failed to make a qualifying minimum payment on a
delinquent Account and (ii) 30 days after receipt of notice by the Servicer that
the related Obligor has died or has filed a bankruptcy petition or has had a
bankruptcy petition filed against him. Notwithstanding any other provision
hereof, any Receivables in a Defaulted Account which are Ineligible Receivables
shall be treated as Ineligible Receivables rather than as Receivables in
Defaulted Accounts.

                  "Defeasance" shall have the meaning specified in Section 12.5.

                  "Defeased Series" shall have the meaning specified in Section
12.5.

                  "Definitive Certificates" shall have the meaning specified in
Section 6.11.

                  "Definitive Euro-Certificates" shall have the meaning
specified in Section 6.10.




                                       6

<PAGE>   13

                  "Depository Agreement" shall mean the agreement among the
Transferor, the Trustee and the initial Clearing Agency, in the form attached
hereto as Exhibit J, or as otherwise provided in the related Supplement.

                  "Determination Date" shall mean, unless otherwise specified in
a Supplement for any Series, with respect to a Monthly Period, a Business Day
occurring in the first 10 days of the succeeding calendar month as selected from
time to time by Servicer prior to each Distribution Date.

                  "Discount Option" shall have the meaning specified in Section
2.8(c).

                  "Discount Option Receivables" shall, consistent with Section
2.8, be equal to, on any Date of Processing (commencing with the Cut-Off Date),
the sum of (a) the aggregate Discount Option Receivables at the end of the prior
Date of Processing plus (b) any new Discount Option Receivables created on such
Date of Processing minus (c) any Discount Option Receivable Collections received
on such Date of Processing. The "Discount Option Receivables" created on any
Date of Processing shall mean the product of (i) the amount of Principal
Receivables created on such Date of Processing (without giving effect to the
deduction of the Discount Option Receivables) and (ii) the Discount Percentage;
provided, however, that the aggregate "Discount Option Receivables" at the end
of the Date of Processing preceding the Cut Off Date shall be deemed to be
$5,347,005.

                  "Discount Option Receivable Collections" shall mean, on any
Date of Processing on and after the date on which the Transferor's exercise of
its discount option pursuant to Section 2.8 is in effect, the product of (a) a
fraction the numerator of which is the amount of Discount Option Receivables and
the denominator of which is the sum of the Principal Receivables and the
Discount Option Receivables, in each case at the end of the prior Monthly
Period, and (b) Collections of Principal Receivables (without giving effect to
Discount Option Receivables) on such Date of Processing.

                  "Discount Percentage" shall mean the percentage designated by
the Transferor pursuant to Section 2.8 or in any Supplement.

                  "Dissolution Event" shall have the meaning specified in
Section 9.2(a).

                  "Distribution Date" shall mean September 15, 1997 and the
fifteenth day of each calendar month thereafter, or, if such fifteenth day is
not a Business Day, the next succeeding Business Day, unless otherwise specified
in the applicable Supplement.

                  "Eligible Account" shall mean, as of the Cut-Off Date (or,
with respect to Additional Accounts, as of the relevant Additional Account
Cut-Off Date or, with respect to an Account included automatically pursuant to
Section 2.6(d), as of the Creation Date with respect thereto) each Account (i)
in existence and owned by any Eligible Originator or the Transferor, (ii)
payable in United States dollars, (iii) the credit card or cards related




                                       7

<PAGE>   14

to which have not been reported lost or stolen or designated counterfeit or
fraudulent, (iv) not identified by the Transferor in its computer files as
having been canceled or charged off due to the Obligor's bankruptcy or
insolvency or death, (v) the receivables in which have not been charged off as
uncollectible prior to the Cut-Off Date or Additional Account Cut-Off Date or
Creation Date, as applicable, in accordance with the Credit Card Guidelines,
(vi) the receivables in which have not been assigned, pledged or sold (other
than pursuant to this Agreement or a Receivables Purchase Agreement), (vii) the
Obligor of which has provided, as its most recent billing address, an address in
the United States or its territories or possessions and (viii) with respect to
which the Transferor or any corporate Affiliate of the Transferor is not the
Obligor.

                  "Eligible Originator" shall mean (i) each of the Sellers and
their respective successors and assigns, (ii) any of their Affiliates, including
the Bank or (iii) any other originator or acquirer of Receivables that is a
party to a Receivables Purchase Agreement, provided that, with respect to
clauses (ii) and (iii), the Transferor shall have met the Rating Agency
Condition and shall have delivered such notice(s) of compliance with such Rating
Agency Condition to the Trustee and the Servicer.

                  "Eligible Receivable" shall mean each Receivable which has
arisen under an Eligible Account:

                  (i)      which was created in compliance with all applicable
         requirements of law, and pursuant to an agreement which complies with
         all applicable requirements of law, in either case the failure to
         comply with which would have a material adverse effect upon
         Certificateholders,

                  (ii)     with respect to which all material consents,
         licenses, approvals or authorizations of, or registrations with, any
         governmental authority required to be obtained or given by an Eligible
         Originator or by the Transferor in connection with the creation of such
         Receivable or the execution, delivery and performance by the Eligible
         Originator of the related agreement have been duly obtained or given
         and are in full force and effect as of such date of creation;

                  (iii)    as to which upon the transfer of such Receivable to
         the Trust by the Transferor, the Trust will have good and marketable
         title, free and clear of all Liens (except those Liens permitted by
         Section 2.5(b));

                  (iv)     which has been the subject of either a valid transfer
         and assignment from the Transferor to the Trust of all of the
         Transferor's right, title and interest therein or the grant of a first
         priority perfected security interest therein (and in the proceeds
         thereof to the extent set forth in Section 9-306 of the UCC as in
         effect in the Relevant UCC State), effective until the termination of
         the Trust;




                                       8

<PAGE>   15

                  (v)      which will at all times be the legal, valid and 
         binding payment obligation of the Obligor thereof enforceable against
         such Obligor in accordance with its terms, except 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
         except as such enforceability may be limited by general principles of
         equity (whether considered in a suit at law or in equity);

                  (vi)     which constitutes either "chattel paper", an
         "account" or a "general intangible" under and as defined in Article 9
         of the UCC as then in effect in the Relevant UCC State;

                  (vii)    which, at the time of its transfer to the Trust, has
         not been waived or modified except in accordance with the Credit Card
         Guidelines or as permitted hereunder;

                  (viii)   which is not at the time of transfer to the Trust,
         subject, to the knowledge of the Transferor or the Servicer, any claim
         of rescission, setoff, counterclaim or any other defense (including the
         defense of usury) of the Obligor, which requires that such Receivable
         be charged off in accordance with the Credit Card Guidelines, other
         than defenses arising out of applicable bankruptcy, insolvency,
         reorganization, moratorium or other similar laws affecting the
         enforcement of creditors' rights in general and equity related
         defenses;

                  (ix)     as to which, at the time of transfer to the Trust,
         the Transferor and the Eligible Originator of such Receivable has
         satisfied all obligations required to be satisfied by such time; and

                  (x)      as to which the Eligible Originator and/or the
         Transferor has done nothing, at the time of its transfer to the Trust,
         to impair the rights of the Trust or Certificateholders therein.

                  "Eligible Servicer" shall mean the Company, McRae's, Inc. or
any other Affiliate of the Company; the Trustee; or otherwise any entity which,
at the time of its appointment as Servicer, (i) is an established financial
institution having capital or net worth of not less than $50,000,000, (ii) is
servicing a portfolio of consumer revolving credit card accounts, (iii) is
legally qualified and has the capacity to service the Accounts, (iv) has
demonstrated the ability to professionally service a portfolio of similar
consumer revolving credit card accounts in accordance with standards of skill
and care customary in the industry and (v) is qualified to use the software that
is then currently being used to service the Accounts or obtains the right to use
or has its own software which is adequate to perform its duties under this
Agreement.



                                       9

<PAGE>   16

                  "Enhancement" shall mean, with respect to any Series or class
of Certificates within a Series, any letter of credit, guaranteed rate
agreement, maturity guaranty facility, liquidity facility, cash collateral
account, cash collateral guaranty, surety bond, insurance policy, tax protection
agreement, interest rate swap, interest rate cap, spread account, reserve
account or other contract, agreement or arrangement (including the subordination
of a Series or class to another Series or class) for the benefit of
Certificateholders of such Series or class, as set forth in the applicable
Supplement.

                  "Enhancement Investor Amount" shall have, with respect to any
Series, the meaning specified in the applicable Supplement.

                  "Enhancement Provider" shall mean, with respect to any Series,
that Person designated as such in the applicable Supplement.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated
thereunder.

                  "Euro-Certificate Exchange Date" shall mean, with respect to
any Series, the date specified in the applicable Supplement.

                  "Euroclear Operator" shall mean Morgan Guaranty Trust Company
of New York, Brussels Office, as operator of the Euroclear System, or any
successor thereto.

                  "Euroclear System" shall mean the Euroclear Clearance System,
Societe Cooperative, a Belgian cooperative corporation, all operations of which
are conducted by the Euroclear Operator.

                  "Excess Funding Account" shall have the meaning specified in
Section 4.1(g).

                  "Excess Funding Amount" shall mean the amount held in the
Excess Funding Account.

                  "Exchange" shall mean the procedure described under Section
6.9.

                  "Exchange Date" shall have, with respect to any Series issued
pursuant to an Exchange, the meaning specified in Section 6.9.

                  "Exchangeable Transferor Certificate" shall mean the
certificate executed by the Transferor and authenticated by the Trustee,
substantially in the form of Exhibit A and exchangeable as provided in Section
6.9 for one or more Series of Investor Certificates and any reissued
Exchangeable Transferor Certificate.

                  "Exchange Notice" shall have, with respect to any Series
issued pursuant to an Exchange, the meaning specified in Section 6.9.




                                       10

<PAGE>   17

                  "FASIT" shall mean a financial asset securitization trust as
defined in the Code.

                  "FDIC" shall mean the Federal Deposit Insurance Corporation,
or any successor thereto.

                  "Final Termination Date" shall have the meaning specified in
Section 12.1(a).

                  "Finance Charge Receivables" shall mean (i) Receivables
created in respect of Finance Charges and (ii) Discount Option Receivables.
Collections of Finance Charge Receivables with respect to any Monthly Period
also shall include the sum of (a) the amount of Interchange (if any) allocable
to any Series pursuant to any Supplement with respect to such Monthly Period (to
the extent received by the Trust), (b) the excess, if any, of Recoveries
collected during such Monthly Period over the aggregate amount of Principal
Receivables in Defaulted Accounts charged off during such Monthly Period and
(c) interest, if any, earned (net of investment expenses and losses) on the
Excess Funding Account.

                  "Finance Charge Shortfalls" shall have, with respect to any
Series, the meaning specified in the applicable Supplement.

                  "Finance Charges" shall have the meaning specified in the
Account Agreement applicable to each Account, and in all events, notwithstanding
the terms of the Account Agreement, shall include interest, cash advance fees,
annual cardholder fees, late fees, over limit fees, returned check fees and all
other fees and charges on the Account (other than Insurance Charges and service
contract charges).

                  "Fiscal Year" shall mean the period beginning on the Sunday
following the Saturday that is closest to the 31st of January of each year, and
ending on the Saturday that is closest to the 31st of January of the following
year, or such other fiscal year as may hereafter be designated by each of
Proffitt's, Inc. and/or its corporate Affiliates.

                  "Foreign Clearing Agency" shall mean, with respect to any
Series, Cedel or the Euroclear Operator or any other established clearing agency
for securities outside the United States designated in the applicable
Supplement.

                  "Global Certificate" shall have the meaning specified in
Section 6.10(a).

                  "Governmental Authority" shall mean the United States of
America, any state or other political subdivision thereof and any United States
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.



                                       11

<PAGE>   18

                  "Group" shall mean, with respect to any Series, the group of
Series, if any, in which the related Supplement specifies such Series is to be
included.

                  "Ineligible Receivable" shall have the meaning specified in
Section 2.4(d)(iii).

                  "Initial Closing Date" shall mean August 21, 1997.

                  "Initial Investor Amount" shall mean, with respect to any
Series, the amount specified in the applicable Supplement.

                  "Insurance Charges" shall mean, with respect to any Account,
the monthly premiums charged to the related Obligor with respect to any
Insurance Policies.

                  "Insurance Policies" shall mean any credit life or health,
accident or supplemental or other insurance plans offered by or through the
Transferor or any Seller with respect to the Accounts.

                  "Insurance Proceeds" shall mean amounts received or recovered
pursuant to any Insurance Policies.

                  "Interchange" shall mean interchange fees payable (whether
directly or as a result of any assignment or transfer) to the Bank, any Seller
or the Transferor, through VISA USA, Inc. and MasterCard International
Incorporated, or any other credit card organization.

                  "Investor Amount" shall have, with respect to each Series, the
meaning specified in the applicable Supplement.

                  "Investor Certificate" shall mean any one of the certificates
executed by the Transferor and authenticated by the Trustee substantially in the
form attached to the applicable Supplement.

                  "Investor Certificateholder" shall mean the holder of record
of an Investor Certificate.

                  "Investor Charge Offs" shall have, with respect to each
Series, the meaning specified in the applicable Supplement.

                  "Investor Default Amount" shall mean, with respect to each
Series for any Monthly Period, an amount equal to the product of (a) the Default
Amount for such Monthly Period and (b) the related Investor Percentage for such
Monthly Period.

                  "Investor Monthly Servicing Fee" shall have, with respect to
each Series, the meaning specified in Section 3.2.




                                       12

<PAGE>   19

                  "Investor Percentage" shall have, with respect to each Series,
the meaning specified in the applicable Supplement.

                  "Knowledge" or "knowledge" as used with respect to a Person
(including references to such Person being aware of a particular matter) shall
mean those facts that are known or should reasonably have been known after due
inquiry, except as to the Trustee who shall have no duty of inquiry except as
provided in this Agreement, by the chairman, president, chief financial officer,
chief accounting officer, chief operating officer, chief credit officer, general
counsel, any assistant or deputy general counsel, or any senior or executive
vice president of such Person or the vice president of credit administration or
the treasurer, and, except in the case of the Trustee and unless otherwise
provided by this Agreement, the knowledge of any such persons obtained or which
would have been obtained from a reasonable investigation.

                  "Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right or interest 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 Uniform
Commercial Code (other than any such financing statement filed for informational
purposes only) or comparable law of any jurisdiction to evidence any of the
foregoing.

                  "Manager" shall mean the managing underwriter of Certificates
of any Series that are offered to the public.

                  "Minimum Aggregate Principal Receivables" shall mean the sum
of the numerators used to determine Investor Percentages with respect to
Principal Receivables for each Series outstanding for such period.

                  "Minimum Transferor Amount" shall mean the product of the
Aggregate Adjusted Investor Amount and the Minimum Transferor Interest
Percentage.

                  "Minimum Transferor Interest Percentage" shall mean the
highest percentage determined in accordance with the definitions of "Minimum
Transferor Interest Percentage" specified in the Supplements for all outstanding
Series.

                  "Monthly Period" shall mean, unless otherwise provided in a
Supplement, the period from and including the first day of a calendar month to
and including the last day of such calendar month.

                  "Monthly Servicer's Certificate" shall have the meaning
specified in Section 3.4(c).



                                       13

<PAGE>   20

                  "Monthly Servicing Fee" shall have the meaning specified in
Section 3.2.

                  "Moody's" shall mean Moody's Investors Service, Inc.

                  "Net Worth" shall mean, with respect to the Transferor and at
any time, an amount equal to the aggregate outstanding principal amount of all
Eligible Receivables at such time, minus the aggregate outstanding amount of all
Investor Certificates (other than Investor Certificates held by the Transferor)
at such time, minus the outstanding principal amount at such time of all
subordinated notes, if any, issued by the Transferor in connection with the
Receivables Purchase Agreement entered into with Eligible Originators, minus any
other liabilities of the Transferor, plus, if all of the subordinated notes of
the Transferor have zero balances outstanding, all cash of the Transferor.

                  "1933 Act" shall mean the United States Securities Act of
1933, as amended.

                  "1940 Act" shall mean the United States Investment Company Act
of 1940, as amended.

                  "Obligations" shall have the meaning specified in Section 2.1.

                  "Obligor" shall mean, with respect to any Account, the Person
or Persons obligated to make payments with respect to such Account, including
any guarantor thereof.

                  "Officer's Certificate" shall mean a certificate signed by any
executive or senior vice president or the vice president of credit
administration or the treasurer or more senior officer of either of the
Transferor or the Servicer and delivered to the Trustee.

                  "Opinion of Counsel" shall mean a written opinion of
independent outside counsel, who may be counsel for the Transferor or its
Affiliates, and which shall be reasonably acceptable to the Trustee.

                  "Paired Series" shall mean each Series that has been paired
with another Series (which Series may be prefunded or partially prefunded), such
that the reduction of the Investor Amount of such Series results in the increase
of the Investor Amount of such other Series.

                  "Pay Out Event" shall have, with respect to each Series, the
meaning specified in Section 9.1.

                  "Paying Agent" shall mean any paying agent appointed pursuant
to Section 6.6 and shall initially be the Trustee.




                                       14

<PAGE>   21

                  "PCC" shall mean Proffitt's Credit Corporation and its
successors and assigns.

                  "Permitted Investments" include (i) direct obligations of, and
obligations fully guaranteed by the United States of America, (ii) demand
deposits, time deposits or certificates of deposit of depository institutions or
trust companies, incorporated under the laws of the United States of America or
any state thereof (including the District of Columbia, and any domestic branch
or agency of any foreign bank), and which are subject to supervision and
examination by federal or state banking or depository institution authorities;
provided, however, that the commercial paper, if any, and short-term unsecured
debt obligations of such depository institution or trust company shall have, at
the time of the Trust's investment or contractual commitment to invest therein,
a credit rating from the Rating Agency in the highest investment category
granted by such Rating Agency, (iii) commercial paper having, at the time of the
Trustee's investment or contracted commitment to invest therein, a rating in the
highest investment category granted by such Rating Agency, (iv) bankers'
acceptances issued by any depository institution or trust company described in
clause (ii) above, (v) money market funds which have the highest rating from, or
have otherwise been approved in writing by the Rating Agencies, (vi) time
deposits (having maturities of not more than 30 days) or notes which are payable
on demand by an entity the commercial paper of which has a rating of the highest
investment category granted by the Rating Agencies, (vii) certain repurchase
obligations involving Permitted Investment instruments so long as the
counterparty thereto has, at the time of such investment, the highest short term
debt rating, or the equivalent from the applicable Rating Agencies, and (viii)
any other investments approved in writing by the applicable Rating Agencies
prior to the Trust's investment therein. For purposes of this paragraph, the
highest short term debt rating shall mean A-1+ or P-1 or the equivalent.

                  "Person" shall mean any legal person, including any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, limited liability company,
Governmental Authority or other entity of similar nature.

                  "Principal Account" shall have the meaning specified in each
Supplement.

                  "Principal Amortization Period" shall have, with respect to
any Series, the meaning, if any, specified in the applicable Supplement.

                  "Principal Receivables" shall mean Receivables other than
Finance Charge Receivables and Receivables in Defaulted Accounts.

                  "Principal Sharing Series" shall mean a Series that, pursuant
to the Supplement therefor, is entitled to receive Shared Principal Collections.




                                       15

<PAGE>   22

                  "Principal Shortfalls" shall have, generally, the meaning
specified in Section 4.1(h), and specifically, with respect to any Series, the
meaning specified in the applicable Supplement.

                  "Publication Date" shall have the meaning specified in Section
9.2(a).

                  "Principal Terms" shall have, with respect to any Series
issued pursuant to an Exchange, the meaning specified in Section 6.9.

                  "Qualified Institution" shall mean (i) a depository
institution or trust company, which may include the Trustee, organized under the
laws of the United States or any one of the States thereof including the
District of Columbia (or any domestic branch or agency of any foreign bank), the
deposits in which are insured by the FDIC and which at all times has a
short-term unsecured debt or certificate of deposit rating of at least A-1+ and
P-1 or a long-term unsecured debt rating of at least AAA and Aaa or the
equivalent, as applicable, by each Rating Agency or (ii) a depository
institution, which shall include the Trustee, or such other institution
otherwise acceptable as stated in writing by each Rating Agency rating any
Series; provided, however, that an institution which shall have corporate trust
powers (whether or not such institution takes deposits) and which maintains the
Collection Account, the Excess Funding Account, the Principal Account or any
other account maintained for the benefit of Certificateholders as a fully
segregated trust account with the trust department of such institution shall not
be required to meet the foregoing rating requirements, and provided Moody's is a
Rating Agency, need only at all times have a long-term unsecured debt rating of
at least Baa3.

                  "Rapid Amortization Period" shall have, with respect to any
Series, the meaning, if any, specified in the applicable Supplement.

                  "Rating Agency" shall mean, with respect to any Series, each
nationally recognized statistical rating agency or agencies, if any, selected by
the Transferor to rate the Investor Certificates of such Series.

                  "Rating Agency Condition" shall mean, with respect to any
action, that each Rating Agency shall have notified the Transferor and the
Trustee in writing that such action will not result in a reduction or withdrawal
of its rating of any outstanding Series with respect to which it is a Rating
Agency.

                  "Reassignment" shall have the meaning specified in Section
2.7(b).

                  "Receivable" shall mean any amount owing by an Obligor under
an Account, including any Additional Account or Automatic Additional Accounts,
from time to time, including, without limitation, amounts owing for the payment
of merchandise and services, Insurance Charges, service contract charges,
Finance Charges and all other fees and charges. In calculating the aggregate
amount of Receivables on any day, the amount of Receivables shall be reduced by
the aggregate amount of credit balances, and other




                                       16

<PAGE>   23

adjustments stated in Section 3.8 hereof, in the Accounts on such day. Any
Receivables which the Transferor is unable to transfer as provided in Section
2.5(d) shall not be included in calculating the aggregate amount of Receivables.

                  "Receivables Purchase Agreements" shall mean (i) the amended
and restated receivables purchase agreements dated as of August 21, 1997 between
the Transferor, as purchaser, and each of G. R. Herberger's, Inc., McRae's,
Inc., Parisian, Inc. and Proffitt's, Inc., in each case as Seller, as each such
agreement may be amended, restated or otherwise modified from time to time, and
(ii) any other receivables purchase agreement between a Seller of Receivables
and the Transferor, substantially in the form of the receivables purchase
agreements referred to in clause (i) above.

                  "Record Date" shall mean, unless otherwise specified with
respect to a Series in the applicable Supplement, with respect to any
Distribution Date, the close of business on the last Business Day of the
immediately preceding calendar month.

                  "Recoveries" shall mean all amounts (including Insurance
Proceeds, if any) received by the Servicer with respect to Receivables in
Defaulted Accounts.

                  "Registered Certificates" shall have the meaning specified in
Section 6.1.

                  "Relevant UCC State" shall mean all jurisdictions where UCC
filings are required to perfect and maintain the security interest of the
Trustee.

                  "Removal Date" shall have the meaning specified in Section
2.7(a).

                  "Removal Notice Date" shall have the meaning specified in
Section 2.7(a).

                  "Removed Accounts" shall have the meaning specified in Section
2.7(a).

                  "Repurchase Terms" shall mean, with respect to any Series
issued pursuant to an Exchange, the terms and conditions under which the
Transferor may repurchase such Series of Certificates pursuant to Section 12.2
and the related Supplement.

                  "Requirements of Law" shall mean, with respect to any Person,
the certificate or articles of incorporation or articles of association and the
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,
but not limited to, usury laws, the federal Truth in Lending Act, and
Regulations B and Z of the Board of Governors of the Federal Reserve System).

                  "Responsible Officer" shall mean, with respect to the Trustee,
for purposes of this Agreement, any Vice President, Assistant Vice President,
Assistant Secretary or




                                       17

<PAGE>   24

Assistant Treasurer of the Corporate Trust Department in Minneapolis, Minnesota
or any trust officer, or any officer of the Trustee customarily performing
functions similar to those performed by the person who at the time shall be such
officers, or to whom any corporate trust matter is referred because of his
knowledge of and familiarity with a particular subject, who shall, in any case,
be working in the Asset Backed Securities Group, or any successor thereto
responsible for the administration of this Agreement.

                  "Revolving Period" shall mean, with respect to each Series,
the period from and including the date of initial issuance of the Investor
Certificates of such Series to, but not including, the day on which an
Amortization Period for such Series commences.

                  "Sellers" initially shall mean G.R. Herberger's, Inc.,
McRae's, Inc., Parisian, Inc. and Proffitt's, Inc. and their successors and
assigns, and, subject only to the Rating Agency Condition, such other Affiliates
of the Company as the Transferor may designate from time to time, and which may
include the Bank.

                  "Series" shall mean any Series of Investor Certificates, each
as designated in the applicable Supplement (including any Enhancement Investor
Amount related thereto).

                  "Service Transfer" shall have the meaning specified in Section
10.1.

                  "Servicer" shall mean initially Proffitt's, Inc. and any
Person thereafter appointed as Successor Servicer as herein provided to service
the Receivables.

                  "Servicer Default" shall have the meaning specified in Section
10.1.

                  "Servicing Fee Percentage" shall have, with respect to any
Series, the meaning specified in the applicable Supplement.

                  "Servicing Officer" shall mean any officer of the Servicer
involved in, or responsible for, the administration and servicing of the
Receivables whose name appears on a list of servicing officers furnished to the
Trustee by the Servicer, as such list may from time to time be amended.

                  "Shared Excess Finance Charge Collections" shall have,
generally, the meaning provided in Section 4.1(i), and specifically, with
respect to any Series, the meaning specified in the applicable Supplement.

                  "Shared Principal Collections" shall have generally the
meaning specified in Section 4.1(h) and specifically, with respect to any
Series, the meaning specified in the applicable Supplement.

                  "Standard & Poor's" shall mean Standard & Poor's Ratings
Services, a Division of The McGraw-Hill Companies, Inc.





                                       18

<PAGE>   25

                  "Stated Series Termination Date" shall have, with respect to
any Series, the meaning specified in the applicable Supplement.

                  "Subservicer" shall mean initially McRae's, Inc. and any
Person thereafter appointed by the Servicer as subservicer of the Receivables.

                  "Successor Servicer" shall have the meaning specified in
Section 10.2.

                  "Supplement" shall mean, with respect to any Series, a
supplement to this Agreement complying with the terms of Section 6.9, executed
in conjunction with any issuance of any Series.

                  "Tax Opinion" shall have the meaning specified in Section
6.9(b).

                  "Termination Notice" shall have, with respect to any Series,
the meaning specified in Section 10.1.

                  "Transfer Agent and Registrar" shall have the meaning
specified in Section 6.3 and initially shall be the Trustee.

                  "Transferred Account" shall mean a consumer revolving credit
card account with respect to which a credit card account number has been issued
by the Servicer or the Transferor in accordance with the Credit Card Guidelines,
and which can be traced or identified by reference to or by way of the computer
files, or written microfiche lists delivered to the Trustee pursuant to Sections
2.1 and 2.6 as an Account which has been transferred (including such transfers
occurring between the Cut-Off Date and the Initial Closing Date).

                  "Transferor" shall mean PCC or any successor or assign that is
an Affiliate of the Company, including the Bank, as transferor of the
Receivables to the Trust, provided that each successor or assign, on the
effective date it becomes Transferor, has the Minimum Net Worth specified in
Section 2.5(f) hereof and satisfies the Rating Agency Condition, and except in
the case of the Bank, meets the separate business requirements of Section 2.5(g)
hereof.

                  "Transferor Amount" shall mean, on any date of determination,
the Aggregate Principal Receivables at the end of the day immediately prior to
such date of determination, plus the Excess Funding Amount at the end of such
day, minus the Aggregate Adjusted Investor Amount at the end of such day, minus
any Enhancement Investor Amount at the end of such day (to the extent not
included in the Aggregate Adjusted Investor Amount).

                  "Transferor Interest" shall have the meaning specified in
Section 4.1(b).




                                       19

<PAGE>   26

                  "Transferor Interest Percentage" shall mean, on any date of
determination, the Transferor Amount divided by the Aggregate Principal
Receivables.

                  "Transferor Percentage" shall mean, on any date of
determination, when used with respect to Collections of Principal Receivables,
Finance Charge Receivables and Receivables in Defaulted Accounts, one hundred
percent (100%) minus the Aggregate Investor Percentage as calculated on such
date with respect to such categories of Receivables by the Servicer.

                  "Trust" shall mean the trust created by this Agreement, the
corpus of which shall consist of the Trust Property.

                  "Trust Property" shall have the meaning specified in Section
2.1(b).

                  "Trustee" shall mean the institution executing this Agreement
as trustee, the successor to its corporate trust business, or its successor in
interest, or any successor trustee appointed as herein provided.

                  "UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any specified jurisdiction.

                  "Undivided Interest" shall mean the undivided interest of any
Certificateholder in the Trust.

                  SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.

                  All terms defined in any Supplement or this Agreement shall
have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions of
all terms defined herein shall include the singular as well as the plural form
of such terms and the masculine of such terms as well as the feminine and neuter
genders of such terms. The terms "include", "including" or "includes" shall mean
including without limitation by way of enumeration or otherwise.

                  As used herein and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1, and accounting terms partly defined in Section 1.1 to the extent not
defined, shall have the respective meanings given to them under generally
accepted accounting principles on the date of determination. To the extent that
the definitions of accounting terms herein are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained herein shall control.

                  The agreements and representations and warranties of
Proffitt's, Inc. in this Agreement in its capacity as Servicer, shall be deemed
to be the agreements,




                                       20

<PAGE>   27

representations and warranties of Proffitt's, Inc. solely in such capacity for
so long as it acts in such capacity under this Agreement.

                  The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to any Supplement or this
Agreement as a whole and not to any particular provision of such Supplement or
this Agreement, as the case may be; Section, subsection, Schedule and Exhibit
references contained in this Agreement or any Supplement are references to
Sections, subsections, Schedules and Exhibits in or to this Agreement or any
Supplement unless otherwise specified.


                                   ARTICLE II

                             APPOINTMENT OF TRUSTEE;
                           CONVEYANCE OF RECEIVABLES;
                            ISSUANCE OF CERTIFICATES

                  SECTION 2.1 APPOINTMENT OF TRUSTEE; CONVEYANCE OF RECEIVABLES.

                  (a) The Transferor appoints and authorizes Norwest Bank
Minnesota, National Association to act as Trustee as provided herein and to
exercise such powers under this Agreement as are delegated to the Trustee by the
terms hereof together with all such powers, obligations and duties as are
reasonably incidental thereto. The Trustee hereby accepts such appointment and
agrees to exercise such powers and perform such functions on behalf of the
Certificateholders from time to time as are specifically delegated to the
Trustee by the terms hereof.

                  (b) The Transferor does hereby transfer, assign, set-over, and
otherwise convey to the Trust for the benefit of the Certificateholders, without
recourse, all right, title and interest of the Transferor in and to the
Receivables, now existing and hereafter created, all monies due or to become due
with respect thereto (including all Finance Charges, Recoveries and Interchange,
if any) on and after the Cut-Off Date, all of the Transferor's rights, with
respect to the Receivables, under the Receivables Purchase Agreement, and all
proceeds of the foregoing (including Insurance Proceeds). Such property,
together with all monies as are from time to time deposited in the Collection
Account, the Excess Funding Account and any other account or accounts maintained
for the benefit of the Certificateholders and all monies as are from time to
time available under any Enhancement for any Series for payment to
Certificateholders shall constitute the property of the Trust (the "Trust
Property"). The foregoing transfer, assignment, set-over and conveyance does not
constitute and is not intended to result in a creation or an assumption by the
Trust, the Trustee or any Certificateholder of any obligation of the Servicer,
the Transferor, any Seller, any Eligible Originator or any other Person in
connection with the Accounts, the Receivables or under any agreement or
instrument relating thereto including, without limitation, any obligation to any
Obligors, merchant service establishments or insurers.




                                       21

<PAGE>   28

                  In connection with such transfers, the Transferor agrees to
record and file, at its own expense, financing statements (and assignment and
continuation statements with respect to such financing statements when
applicable) with respect to the Receivables now existing and hereafter created
for the transfer of chattel paper, accounts and general intangibles (each as
defined in the UCC in effect in the Relevant UCC State) meeting the requirements
of applicable state law in such manner and in such jurisdictions as are
necessary to perfect the transfers and assignments of the Receivables by the
Transferor to the Trust, and to deliver to the Trustee a file-stamped copy of
such financing statements or other evidence that such filings were made on or
prior to the Initial Closing Date.

                  In connection with such transfers, the Transferor agrees, at
its own expense, on or prior to the Initial Closing Date to cause the Servicer
to indicate or cause to be indicated clearly and unambiguously in the computer
files of the Transferor and the Sellers that the Receivables created in
connection with the Accounts (other than any Additional Account or any Automatic
Additional Account included pursuant to Section 2.6(d)) have been sold and
transferred to the Transferor pursuant to the Receivables Purchase Agreements or
otherwise and thereupon by the Transferor to the Trust pursuant to this
Agreement for the benefit of the Certificateholders. The Transferor further
agrees to deliver or cause to be delivered to the Trustee (a) on the Initial
Closing Date, a computer file, microfiche or written list containing a true and
complete list of all such Accounts, identified by account number and by
Receivable balance as of the Cut-Off Date and (b) so long as Automatic
Additional Accounts are being included pursuant to Section 2.6(d), on or prior
to the first Distribution Date that occurs after March 31, June 30, September 30
and December 31 of each year and otherwise at any time upon request of the
Trustee, a new computer file, microfiche or written list containing a true and
complete list of all Accounts identified as described in the preceding clause
(a) as of the last day of the most recent Monthly Period or an Officer's
Certificate stating that the file or list of Accounts most recently delivered
pursuant to this subsection remains a true and complete list of all Accounts.
Such file or list shall be marked as Schedule 1 to this Agreement, shall be
delivered to the Trustee as confidential and proprietary information belonging
solely to the Transferor and its Affiliates, and to be used by the Trustee
solely in pursuance of its duties hereunder, and is hereby incorporated into and
made a part of this Agreement. Any such additional file or list shall be marked
as Schedule 1 to this Agreement, shall be delivered to the Trustee as
confidential and proprietary information belonging solely to the Transferor and
its Affiliates, and to be used by the Trustee solely in pursuance of its duties
hereunder, shall replace the then existing Schedule 1 hereto, and shall be
incorporated into and made a part of this Agreement. The Transferor agrees, at
its own expense, by the end of the Monthly Period in which any Transferred
Accounts have been originated to cause the Servicer to indicate or cause to be
indicated clearly and unambiguously in the computer files of the Transferor and
the Sellers that the Receivables created in connection with the Transferred
Accounts have been transferred to the Transferor and thereupon transferred by
the Transferor to the Trust pursuant to this Agreement for the benefit of the
Certificateholders.





                                       22

<PAGE>   29

                  The Transferor hereby grants to the Trustee a first priority
perfected security interest in all of the Transferor's right, title and interest
in and to the Receivables, now existing and hereafter created, all monies due or
to become due with respect thereto on and after the Cut-Off Date (including all
Finance Charge Receivables and Recoveries), and all of the Transferor's rights,
with respect to the Receivables, under the Receivables Purchase Agreement, all
proceeds of the foregoing, such funds as are from time to time deposited in the
Collection Account, the Excess Funding Account and any other account or accounts
maintained for the benefit of Certificateholders, and the benefits of any
Enhancement for any Series for payment to Certificateholders in order to secure
the payment of each Series (the "Obligations"). This Agreement shall constitute
a security agreement under applicable law.

                  Pursuant to the request of the Transferor, the Trustee has
caused Certificates in authorized denominations evidencing the entire interest
in the Trust to be duly authenticated and delivered to or upon the order of the
Transferor pursuant to Section 6.2.

                  SECTION 2.2 ACCEPTANCE BY TRUSTEE.

                  (a) The Trustee hereby acknowledges its acceptance, as and to
the extent transferred, assigned, set over or otherwise conveyed to the Trust as
provided in Section 2.1(b) hereof, on behalf of the Trust, of all right, title
and interest previously held by the Transferor in and to the Receivables, now
existing and hereafter created, all monies due or to become due with respect
thereto on and after the Cut-Off Date (including Recoveries), all proceeds of
such Receivables, such funds as are from time to time deposited in the
Collection Account and any other account or accounts maintained for the benefit
of Certificateholders, and the benefits of any Enhancement for any Series, and
declares that it shall hold such right, title and interest, upon the trust
herein set forth, and subject to the terms hereof for the benefit of all
Certificateholders. The Trustee further acknowledges that, prior to or
simultaneously with the execution and delivery of this Agreement, the Transferor
delivered to the Trustee the computer file, microfiche or written list
represented by the Transferor to be the computer file, microfiche or written
list described in the third paragraph of Section 2.1(b).

                  (b) The Trustee hereby agrees not to use or disclose to any
Person (including any Certificateholder or Certificate Owner) any of the account
numbers, Obligor information or other information contained in the computer
files, microfiches or written lists delivered to the Trustee by the Transferor
pursuant to Sections 2.1 and 2.6, except as is required in connection with the
performance of its duties hereunder, or in connection with audits, examinations,
investigations and other inquiries which are required in connection with the
Trustee's regulatory supervision or in response to a court order, subpoena, or
other judicial or governmental demand or in enforcing the rights of the
Certificateholders or to a Successor Servicer appointed pursuant to Section 10.2
or a successor Trustee appointed pursuant to Section 11.8. The Trustee agrees to
take such 




                                       23

<PAGE>   30

measures as shall be reasonably necessary or reasonably requested by the
Transferor to protect and maintain the security and confidentiality of such
information.

                  (c) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.

                  SECTION 2.3 REPRESENTATIONS AND WARRANTIES REGARDING THE
TRANSFEROR.

                  The Transferor hereby represents and warrants to the Trustee,
on behalf of the Trust, with respect to any Series of Certificates, as of the
date of the related Supplement and the related Closing Date, unless otherwise
stated in such Supplement that:

                  (i)      Organization and Good Standing. The Transferor is a
         corporation, duly incorporated, validly existing and in good standing
         under the laws of its jurisdiction of incorporation, and has full
         power, authority and legal right to own its properties and conduct its
         business as such properties are presently owned and such business is
         presently conducted, to execute, deliver and perform its obligations
         under this Agreement, any Supplement hereto and the Receivables
         Purchase Agreements and to execute and deliver to the Trustee the
         Certificates pursuant hereto.

                  (ii)     Due Qualification. The Transferor is duly qualified
         to do business and is in good standing (or is exempt from such
         requirements) and has obtained all necessary licenses and approvals
         with respect to the Transferor, in each jurisdiction in which failure
         to so qualify or to obtain such licenses and approvals would render any
         Account Agreement relating to an Account or any Receivable
         unenforceable by it or the Trust or would have a material adverse
         effect on the Investor Certificateholders or on the Transferor's or the
         Servicer's ability to perform their respective obligations under this
         Agreement or any Supplement; provided, however, that no representation
         or warranty is made with respect to any qualifications, licenses or
         approvals which the Trustee would have to obtain to do business in any
         state in which the Trustee seeks to enforce any Receivable.

                  (iii)    Due Authorization. The execution and delivery of this
         Agreement and any Supplement and the execution and delivery to the
         Trustee of the Certificates and the consummation of the transactions
         provided for in this Agreement and any Supplement by the Transferor
         have been duly authorized by the Transferor by all necessary corporate
         action on the part of the Transferor.

                  (iv)     No Violation. The execution and delivery of this
         Agreement, any Supplement and the Certificates by the Transferor, the



                                       24

<PAGE>   31

         performance by the Transferor of the transactions contemplated by this
         Agreement and any Supplement and the fulfillment by the Transferor of
         the terms hereof and thereof will not conflict with, violate or result
         in any breach of any of the material terms and provisions of, or
         constitute (with or without notice or lapse of time or both) a default
         under, any Requirement of Law applicable to the Transferor or any
         indenture, contract, agreement, mortgage, deed of trust or other
         instrument to which the Transferor is a party or by which it or any of
         its properties are bound and which conflict, violation, breach or
         default would have a material adverse effect on the Transferor.

                  (v)      No Proceedings. There are no proceedings or
         investigations pending or, to the knowledge of the Transferor,
         threatened against the Transferor before any court, regulatory body,
         administrative agency, arbitrator or other tribunal or governmental
         instrumentality (i) asserting the invalidity of this Agreement, any
         Supplement or the Certificates, (ii) seeking to prevent the issuance of
         the Certificates or the consummation of any of the transactions
         contemplated by this Agreement, any Supplement or the Certificates,
         (iii) seeking any determination or ruling that, in the reasonable
         judgment of the Transferor, would materially and adversely affect the
         performance by the Transferor of its obligations under this Agreement
         or any Supplement, (iv) seeking any determination or ruling that would
         materially and adversely affect the validity or enforceability of this
         Agreement, any Supplement or the Certificates or (v) seeking to affect
         adversely the federal income tax attributes of the Trust.

                  (vi)     Eligibility of Accounts. As of the applicable Cut-Off
         Date or Additional Account Cut-Off Date, each Account was an Eligible
         Account and no selection procedures adverse to the Investor
         Certificateholders have been employed in selecting the Accounts.

                  (vii)    All Consents Required. All approvals, authorizations,
         consents, orders or other actions of any Person or of any Governmental
         Authority required to be obtained on or prior to the date as of which
         this representation is being made in connection with the execution and
         delivery by the Transferor of this Agreement, any Supplement and the
         Certificates, the performance by the Transferor of the transactions
         contemplated by this Agreement and any Supplement and the fulfillment
         by the Transferor of the terms hereof and thereof, have been obtained;
         provided, however, that no representation or warranty is made regarding
         state securities or "blue sky" laws in connection with any offer or
         sale of the Certificates.

                  (viii)   Amount of Receivables; Computer File. As of the
         Cut-Off Date, the amount of Receivables was approximately $270,651,000.
         The computer files, microfiche or written list delivered pursuant to
         Section 2.1




                                       25

<PAGE>   32

         hereof is complete and accurately reflects the information regarding
         the Receivables under the Accounts in all material respects as of the
         applicable time referred to in Section 2.1.

                  (ix)     No Insolvency. The Transferor is not insolvent
         immediately prior to any transfer of Accounts and Receivables
         hereunder, and will not be rendered insolvent immediately following
         such transfer.

                  (x)      No Investment Company. The Transferor is not an
         investment company subject to registration or regulation under the 1940
         Act.

                  In the event the Bank or another Affiliate of the Company is
substituted for PCC as Transferor, such Affiliate shall, immediately prior to
becoming the Transferor, make the representations and warranties set forth in
this Section 2.3, as of the date of its becoming the Transferor, in an Officer's
Certificate delivered to the Trustee and the Rating Agencies. The
representations and warranties set forth in this Section 2.3 shall survive the
transfer and assignment of the Receivables to the Trust. Upon discovery by the
Transferor, the Servicer or the Trustee of a breach of any of the
representations and warranties set forth in this Section 2.3, the party
discovering such breach shall give prompt written notice thereof to the others.

         SECTION 2.4 REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR RELATING
TO THE AGREEMENT AND ANY SUPPLEMENT AND THE RECEIVABLES.

                  (a)      Binding Obligation; Valid Transfer and Assignment.
The Transferor hereby represents and warrants to the Trustee, on behalf of the
Trust, with respect to any Series of Certificates, as of the Cut-Off Date or the
date of the related Supplement and the related Closing Date, unless otherwise
stated in such Supplement that:

                  (i)      Each of this Agreement and any Supplement constitutes
         a legal, valid and binding obligation of the Transferor, enforceable
         against the Transferor in accordance with its terms, subject to
         applicable bankruptcy, insolvency, receivership, conservatorship,
         reorganization, moratorium or other similar laws now or hereafter in
         effect affecting the enforcement of creditors' rights in general and
         the rights of creditors of national banking associations and except as
         such enforceability may be limited by general principles of equity
         (whether considered in a proceeding at law or in equity).

                  (ii)     This Agreement or, in the case of Receivables in
         Additional Accounts, the related Assignment constitutes either (A) a
         valid transfer and assignment to the Trust of all right, title and
         interest of the Transferor in and to the Receivables now existing and
         hereafter created and (x) acquired by the Transferor pursuant to the
         Receivables Purchase Agreements or (y) 




                                       26

<PAGE>   33

         originated by the Bank, all monies due or to become due with respect
         thereto (including all Finance Charge Receivables, Recoveries,
         Interchange, if any, and amounts held in any of the accounts
         established for the benefit of Certificateholders) on and after the
         Cut-Off Date or Additional Account Cut-Off Date or Creation Date, as
         applicable, and all proceeds (as defined in the UCC as in effect in the
         Relevant UCC State) of such Receivables, and such Receivables and all
         proceeds thereof will be held by the Trust free and clear of any Lien
         of any Person claiming through or under the Transferor or any of its
         Affiliates except for (a) Liens permitted under Section 2.5(b), (b) the
         interest of the Transferor as holder of the Exchangeable Transferor
         Certificate or any other class of Certificates held by the Transferor
         from time to time and (c) any right of the holder of the Exchangeable
         Transferor Certificate to receive interest accruing on, and investment
         earnings (net of investment losses and expenses) with respect to, the
         Collection Account and any other account or accounts maintained for the
         benefit of Certificateholders or any Enhancement Provider, if any, as
         provided in this Agreement and any Supplement, or (B) a grant of a
         security interest (as defined in the UCC as in effect in the Relevant
         UCC State) in such property to the Trustee on behalf of the Trust,
         which is enforceable with respect to existing Receivables (other than
         Receivables in Additional Accounts) and the proceeds thereof (to the
         extent set forth in Section 9-306 of the UCC in effect in the Relevant
         UCC State) upon execution and delivery of this Agreement, and which
         will be enforceable with respect to such Receivables thereafter
         created, and the proceeds thereof to such extent, upon such creation.
         If this Agreement constitutes the grant of a security interest to the
         Trust in such property, upon the filing of the applicable financing
         statements and in the case of the Receivables hereafter created and
         proceeds thereof upon such creation, the Trust shall have a first
         priority perfected security interest in such property and the proceeds
         thereof (to the extent set forth in Section 9-306 of the UCC in effect
         in the Relevant UCC State), except for Liens permitted under Section
         2.5(b). Except as otherwise specifically provided in this Agreement or
         any Supplement, neither the Transferor nor any Person claiming through
         or under the Transferor shall (other than as a result of such Person
         being a Holder of Certificates) have any claim to or interest in the
         Collection Account or any other account or accounts maintained for the
         benefit of Certificateholders or any Enhancement Provider, except for
         any right of the Transferor to receive interest accruing on, and
         investment earnings with respect to, any such account as provided in
         this Agreement and any Supplement and, if this Agreement constitutes
         the grant of a security interest in such property, except for the
         interest of the Transferor in such property as a debtor for purposes of
         the UCC as in effect in the Relevant UCC State.




                                       27

<PAGE>   34

                  (b)      Eligibility of Receivables. The Transferor hereby
represents and warrants to the Trustee, on behalf of the Trust, as of the
Cut-Off Date or Creation Date, as applicable, and in the case of Receivables in
Additional Accounts, as of the related Additional Account Cut-Off Date, that (i)
each Receivable then existing is an Eligible Receivable, and (ii) as of the
Initial Closing Date, and, as of the applicable Additional Account Cut-Off Date
with respect to Additional Accounts, and as of the applicable Distribution Date
on which a computer file, microfiche or written list is delivered pursuant to
Section 2.1(b), and with respect to Automatic Additional Accounts included
automatically pursuant to Section 2.6(d), Schedule 1 to this Agreement is in all
material respects an accurate and complete listing of all the Accounts as of the
Cut-Off Date or the applicable Additional Account Cut-Off Date or the applicable
Creation Date, as the case may be, and the information contained therein with
respect to the identity of such Accounts and the Receivables existing thereunder
is true and correct in all material respects as of such applicable Cut-Off Date
or Additional Account Cut-Off Date or Creation Date. On each day on which any
new Receivable is created and transferred, the Transferor shall be deemed to
represent and warrant to the Trust that each such Receivable created on such day
is an Eligible Receivable.

                  (c)      Notice of Breach. The representations and warranties
set forth in this Section 2.4 shall survive the transfer and assignment of the
Receivables to the Trust and the termination of the rights and obligations of
the Servicer pursuant to Section 10.1. Upon discovery by the Transferor, the
Servicer or the Trustee of a breach of any of the representations and warranties
set forth in this Section 2.4, the party discovering such breach shall give
prompt written notice thereof to the others.

                  (d)      Transfer of Ineligible Receivables.

                  (i)      Automatic Removal. In the event that a Receivable is
         not an Eligible Receivable as a result of the failure to satisfy the
         conditions set forth in clause (iii) of the definition of Eligible
         Receivable, and either of the following two conditions is met:

                           (A) the Lien upon the subject Receivable (1) ranks
                           prior to the Lien created pursuant to this Agreement,
                           (2) arises in favor of the United States of America
                           or any state or any agency or instrumentality thereof
                           or involves taxes or liens arising under Title IV of
                           ERISA, or (3) has been consented to by the
                           Transferor; or

                           (B) the Lien on the subject Receivable is not of the
                           types described in clause (A) above, but, as a result
                           of such breach or event, such Receivable becomes a
                           Receivable in a Defaulted Account or the Trust's
                           rights in, to or under such Receivable or its
                           proceeds are materially impaired or the proceeds of
                           such Receivable are not available for any reason 




                                       28

<PAGE>   35

                           to the Trust free and clear of any Lien except Liens
                           permitted pursuant to Section 2.5(b);

         then, upon the earlier to occur of the discovery of such breach or
         event by the Transferor or the Servicer or receipt by the Transferor or
         the Servicer of written notice of such breach or event given by the
         Trustee, each such Receivable or, at the option of the Transferor, all
         such Receivables with respect to the related Account, automatically
         shall be removed from the Trust on the terms and conditions set forth
         in Section 2.4(d)(iii).

                  (ii)     Removal after Cure Period. In the event of a breach
         of any of the representations and warranties set forth in Section
         2.4(b)(i) or (ii) with respect to a Receivable (other than in the event
         that a Receivable is not an Eligible Receivable as a result of the
         failure to satisfy the conditions set forth in clause (iii) of the
         definition of Eligible Receivable), and as a result of such breach or
         event, such Receivable becomes a Receivable in a Defaulted Account or
         the Trust's rights in, to or under such Receivable or its proceeds are
         materially impaired or the proceeds of such Receivable are not
         available for any reason to the Trust free and clear of any Lien except
         Liens permitted pursuant to Section 2.5(b), then, upon the expiration
         of 90 days or any longer period specified by the Trustee upon request
         by the Servicer (not to exceed an additional 90 days) from the earlier
         to occur of the discovery of any such event by the Transferor or the
         Servicer or receipt by the Transferor or the Servicer of written notice
         of any such event given by the Trustee, each such Receivable or, at the
         option of the Transferor, all such Receivables with respect to the
         related Account, shall be removed from the Trust on the terms and
         conditions set forth in Section 2.4(d)(iii); provided, however, that no
         such removal shall be required to be made if, on any day within such
         applicable period, (A) such representation and warranty with respect to
         such Receivable shall then be true and correct in all material respects
         as if such Receivable had been transferred to the Trust on such day,
         and (B) the related Account is no longer a Defaulted Account as the
         result of the breach of such representation and warranty, and the
         Trust's rights in, to or under such Receivable or its proceeds are no
         longer materially impaired as a result of a breach of such
         representation and warranty, and the proceeds of such Receivable are
         available to the Trust free and clear of all Liens resulting in the
         breach of such representation and warranty, as applicable.

                  (iii)    Removal Terms and Conditions. When required or
         permitted with respect to a Receivable by the provisions of Section
         2.4(d)(i) or Section 2.4(d)(ii) (an "Ineligible Receivable"), the
         Transferor shall accept reassignment of such Ineligible Receivable by
         directing the Servicer to deduct the principal balance of such
         Ineligible Receivable from the Aggregate Principal Receivables and to
         decrease the Transferor




                                       29

<PAGE>   36
         Amount by such amount. On and after the date of such removal, each
         Ineligible Receivable shall be deducted from the Aggregate Principal
         Receivables used in the calculation of any Investor Percentage, the
         Transferor Percentage or the Transferor Amount. In the event that the
         exclusion of an Ineligible Receivable from the calculation of the
         Transferor Amount would cause the Transferor Amount to be reduced below
         the Minimum Transfer Amount (after giving effect to the addition of any
         Principal Receivables to the Trust) or would otherwise not be permitted
         by law, the Transferor shall immediately deposit into the Excess
         Funding Account in immediately available funds an amount equal to the
         amount by which the Transferor Amount would be reduced below the
         Minimum Transfer Amount (or designate Additional Accounts pursuant to
         Section 2.6(b) for inclusion as Accounts no later than 10 Business Days
         after such event). Any such deposit into the Excess Funding Account in
         connection with the reassignment of an Ineligible Receivable shall be
         considered a payment in full of the Ineligible Receivable and such
         deposit shall be applied in accordance with the provisions of Article
         IV. Upon the reassignment to the Transferor of an Ineligible
         Receivable, the Trust shall, without further action, be deemed to
         transfer, assign, set-over and otherwise convey to the Transferor,
         without recourse, representation or warranty, all the right, title and
         interest of the Trust in and to such Ineligible Receivable, all monies
         due or to become due with respect thereto and all proceeds thereof. The
         Trustee shall execute such documents and instruments of transfer or
         assignment as are prepared by the Transferor and take such other
         actions as shall reasonably be requested by the Transferor to effect
         the conveyance of such Ineligible Receivable pursuant to this
         subsection. In the event that on any day within 90 days, or any longer
         period specified by the Trustee upon request by the Servicer (not to
         exceed an additional 90 days), of the date on which the removal of
         Receivables which are not Eligible Receivables from the Trust pursuant
         to this Section is effected, (A) the applicable representations and
         warranties with respect to such Receivable shall be true and correct in
         all material respects on such date and (B) the Receivable is an
         Eligible Receivable, the related Account is no longer a Defaulted
         Account and the Trust's rights in, to or under such Receivable or its
         proceeds are no longer materially impaired as a result of the breach of
         such representation and warranty and the proceeds of such Receivable
         are available to the Trust free and clear of all Liens resulting in the
         breach of such representation and warranty, the Transferor may, but
         shall not be required to, direct the Servicer to include such
         Receivable in the Trust. Upon reinclusion of a Receivable in the Trust
         pursuant to this subsection, the Transferor shall be deemed to make the
         applicable representations and warranties in Section 2.4(b) as of the
         date of such addition, as if the Receivable had been created on such
         date, and shall execute all such necessary documents and instruments of
         transfer or assignment and take such other actions as shall be
         necessary to effect and 




                                       30

<PAGE>   37

         perfect the reconveyance of such Receivable to the Trust. The
         obligation of the Transferor set forth in this subsection shall
         constitute the sole remedy respecting any breach by the Transferor of
         the representations and warranties set forth in the above-referenced
         subsections with respect to such Receivable available to
         Certificateholders or the Trustee on behalf of Certificateholders.

                  Notwithstanding any other provision of this Section 2.4(d), a
reassignment of an Ineligible Receivable shall not occur if the Transferor fails
to make a deposit or designation of Additional Accounts required by this Section
2.4(d) with respect to such Ineligible Receivable.

                  (iv) No Impairment. For the purposes of Sections 2.4(d)(i)
         and 2.4(d)(ii), proceeds of a Receivable shall not be deemed to be
         impaired hereunder solely because such proceeds are held by the
         Servicer for more than the applicable period under Section 9-306(3) of
         the UCC as in effect in the Relevant UCC State.

                  (e)  Reassignment of Trust Portfolio. In the event of a breach
of any of the representations or warranties set forth in Sections 2.3(i),
2.3(iii), 2.4(a) or a material amount of Receivables are not Eligible
Receivables, and such event has a materially adverse effect on Investor
Certificateholders (without regard to the amount of any Enhancement), either the
Trustee or the Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Aggregate Investor Amount, by notice then given
in writing to the Transferor (and to the Trustee and the Servicer, if given by
the Investor Certificateholders), may direct the Transferor to accept
reassignment of all Receivables within 90 days of such notice, or within such
longer period as may be specified in such notice by the Trustee upon request of
the Servicer (not to exceed an additional 90 days) and the Transferor shall be
obligated to accept such reassignment on a Distribution Date specified by the
Transferor occurring within such applicable period on the terms and conditions
set forth below; provided, however, that no such reassignment shall be required
to be made, and the Transferor shall not be obligated to accept such
reassignment, if, at any time during such applicable period, the representations
and warranties contained in Section 2.3(i), 2.3(iii) and 2.4(a) shall then be
true and correct in all material respects, or there shall no longer be a
material amount of Receivables which are not Eligible Receivables, as the case
may be. The Transferor shall deposit in the Collection Account on the Business
Day immediately prior to such Distribution Date (in immediately available funds)
an amount equal to the reassignment deposit amount for such Receivables for
distribution pursuant to the provisions of Section 12.3. The deposit amount for
such reassignment shall be equal to the Aggregate Investor Amount at the end of
the Business Day preceding the Distribution Date with respect to which such
deposit is made (less the aggregate principal amount, if any, held in the Excess
Funding Account and any Principal Account relating to any Series on such
Distribution Date), plus (i) an amount equal to all accrued but unpaid interest
on the Certificates of all Series at the applicable Certificate Rates through
the end of the respective interest accrual period(s) of such Series 



                                       31

<PAGE>   38



and (ii) any other unpaid amounts with respect to such Certificates. Payment of
the reassignment deposit amount and all other amounts in the Collection Account
in respect of the preceding Monthly Period shall be considered a prepayment in
full of all such Receivables. On the Distribution Date with respect to which
such amount has been deposited in full into the Collection Account, the
Receivables and all monies due or to become due with respect thereto and all
proceeds relating thereto shall be released to the Transferor and the Trustee
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, representation or warranty, as shall reasonably be
requested by the Transferor to vest in the Transferor or its designee or
assignee, all right, title and interest of the Trust in and to the Receivables,
all monies due or to become due with respect thereto and all proceeds thereof.
If the Trustee or the Investor Certificateholders give a notice directing the
Transferor to accept reassignment as provided herein and the Transferor is
obligated to accept such reassignment as provided herein, then such obligation
of the Transferor shall constitute the sole remedy respecting a breach of the
representations and warranties contained in Section 2.3(i), 2.3(iii) or 2.4(a)
or there being a material amount of Receivables which are not Eligible
Receivables available to the Investor Certificateholders or the Trustee on
behalf of the Investor Certificateholders.

                  (f) Nothing contained in this Section 2.4 shall create an
obligation on the part of the Trustee to verify the accuracy or continued
accuracy of the representations or warranties contained in this Section 2.4. The
Trustee shall have no obligation to give any notice pursuant to this Section 2.4
unless a Responsible Officer of the Trustee has actual knowledge of facts which
would permit the giving of such notice.

                  SECTION 2.5 COVENANTS OF THE TRANSFEROR AND THE SERVICER. The
Transferor and the Servicer hereby each covenant as follows:

                  (a) Receivables Not to be Evidenced by Instruments. The
Transferor and the Servicer 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).

                  (b) Security Interests. Except for the conveyances hereunder,
the Transferor 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
Transferor will not amend or permit any change to the Receivables Purchase
Agreements that would allow any Seller thereunder to convey, transfer or assign
any Accounts, unless the Rating Agency Condition is satisfied; the Transferor
will notify the Trustee of the existence of any Lien on any Receivable
transferred by the Transferor immediately upon discovery thereof; and the
Transferor will defend the right, title and interest of the Trust in, to and
under the Receivables, whether now existing or hereafter created, against all
claims of third parties claiming through or under the Transferor; provided,
however, that nothing in this Section 2.5(b) shall prevent or be deemed to
prohibit the Transferor from suffering to exist upon any of the Receivables any
Liens for state, municipal or other local taxes and other governmental




                                       32

<PAGE>   39

charges if such taxes or governmental charges shall not at the time be due and
payable or if the Transferor shall currently be contesting the validity thereof
in good faith by appropriate proceedings and shall have set aside on its books
adequate reserves under generally accepted accounting principles with respect
thereto; and provided, further, that nothing in this subsection shall prohibit
the Transferor from conveying an interest in the Exchangeable Transferor
Certificate in accordance with Section 6.3(b) hereof.

                  (c) Account Agreements and Credit Card Guidelines. The
Transferor and the Servicer shall comply, and shall cause the Eligible
Originators to comply with and perform, their respective obligations under the
applicable Account Agreements relating to the Accounts and the Credit Card
Guidelines except insofar as any failure so to comply or perform would not
materially and adversely affect the rights of the Trust or the Investor
Certificateholders hereunder (without regard to the amount of any Enhancement)
or under the Certificates. Subject to compliance with all Requirements of Law,
the failure to comply with which would have a material adverse effect on the
Investor Certificateholders (without regard to the amount of any Enhancement),
the Transferor or the Servicer may change, or cause any Eligible Originator to
change, the terms and provisions of the Account Agreements or the Credit Card
Guidelines in any respect (including, without limitation, the calculation of the
amount, or the timing, of charge offs) as follows: (a) if the Transferor owns a
comparable segment of accounts, then such change shall be made applicable to
such comparable segment of the accounts owned and serviced by the Transferor
that have characteristics the same as, or substantially similar to, the Accounts
that are the subject of such change, and (ii) if the Transferor or the
applicable Eligible Originator does not own such a comparable segment, then the
Transferor will not make or cause to be made any such change with the intent to
materially benefit the Transferor over the Investor Certificateholders.

                  (d) Account Allocations. In the event that the Transferor is
unable for any reason to transfer Receivables to the Trust in accordance with
the provisions of this Agreement (including, without limitation, by reason of
the application of the provisions of Section 9.2 or an order by any Federal
governmental agency having regulatory authority over the Transferor or an order
of any court of competent jurisdiction that the Transferor not transfer any
additional Receivables to the Trust) then, in any such event, (A) the Transferor
agrees (except as prohibited by any such order) to allocate and pay to the
Trust, after the date of such inability, all Collections (including Collections
of Finance Charge Receivables) with respect to Principal Receivables transferred
to the Trust prior to the occurrence of such event, and all amounts which would
have constituted Collections (including Collections of Finance Charge
Receivables) with respect to such Receivables which would have been Principal
Receivables but for the Transferor's inability to transfer such Receivables to
the Trust (up to an aggregate amount equal to the Aggregate Principal
Receivables in the Trust on such date); (B) the Transferor agrees to have such
amounts applied as Collections in accordance with Article IV; and (C) for only
so long as the allocation and application of such Collections and all amounts
which would have constituted Collections are made in accordance with clauses (A)
and (B) above, Collections of Principal Receivables and all amounts which would
have constituted



                                       33

<PAGE>   40

Collections of Principal Receivables but for the Transferor's inability to
transfer Receivables to the Trust which are charged off as uncollectible in
accordance with this Agreement and the Credit Card Guidelines shall continue to
be allocated in accordance with Article IV and all amounts which would have
constituted Collections of Principal Receivables but for the Transferor's
inability to transfer Receivables to the Trust shall be deemed to be Collections
of Principal Receivables for the purpose of calculating the applicable Investor
Percentage and the Aggregate Investor Percentage thereunder. If the Transferor
is unable pursuant to any Requirement of Law to allocate Collections as
described above, the Transferor agrees that it shall, in any such event, and to
the extent not prohibited by law, allocate, after the date that the Transferor
becomes unable to allocate Collections as described above, payments on each
Account with respect to the balance of such Account first to the oldest
Receivable in such Account and to have such payments applied as Collections in
accordance with Article IV.

                  (e)  Delivery of Collections. In the event that the Transferor
receives Collections, the Transferor agrees to pay to the Servicer all payments
received by the Transferor with respect to Collections on the Receivables
promptly after receipt thereof by the Transferor, but in no event later than two
(2) Business Days after the receipt by the Transferor thereof.

                  (f)  Minimum Net Worth of Transferor.

                  (i)  On the date of this Agreement, the Transferor shall 
have a Net Worth of at least $10,000,000.

                  (ii) The Transferor shall make no distributions of
         dividends or returns of capital comprising its Net Worth except to the
         extent that, after giving effect thereto, the Transferor shall have a
         Net Worth at least equal to 10% of the highest balance of Aggregate
         Principal Receivables outstanding with respect to the immediately
         preceding twelve (12) calendar month period.

                  (g)  Separate Business. Unless the Bank is serving as
Transferor, the Transferor, shall at all times (i) to the extent the
Transferor's office is located in the offices of Proffitt's, Inc. or any
Affiliate of Proffitt's, Inc., pay fair market rent for its executive office
space located in the offices of Proffitt's, Inc., or any Affiliate of
Proffitt's, Inc., (ii) have at all times at least two members of its board of
directors who are not and, within the immediately preceding two (2) years, have
not been employees, officers or directors of Proffitt's, Inc., or its Affiliates
(except for other bankruptcy remote single purpose entities) or of any major
creditor of Proffitt's, Inc. or its Affiliates and are persons who are familiar
and have experience with asset securitization, (iii) maintain the Transferor's
books, financial statements, accounting records and other corporate documents
and records separate from those of Proffitt's, Inc. or any other entity, (iv)
not commingle the Transferor's assets with those of Proffitt's, Inc. or any
other entity,




                                       34

<PAGE>   41


except to the extent otherwise permitted hereunder or for not longer than two
(2) Business Days after any Seller receives payments on Accounts as a result of
in-store payments by Obligors or that have otherwise been received by Sellers on
other Accounts sold to the Transferor and then transferred to the Trust, (v) act
solely in its corporate name and through its own authorized officers and agents,
(vi) make investments directly or by brokers engaged and paid by the Transferor
or its agents (provided that if any such agent is an Affiliate of the Transferor
it shall be compensated at a fair market rate for its services), (vii)
separately manage the Transferor's liabilities from those of Proffitt's, Inc. or
any Affiliates of Proffitt's, Inc. and pay its own liabilities, including all
administrative expenses, from its own separate assets, except that Proffitt's,
Inc. may pay the organizational expenses of the Transferor, and (viii) pay from
the Transferor's assets all obligations and indebtedness of any kind incurred by
the Transferor. The Transferor shall abide by all corporate formalities,
including the maintenance of current minute books, and the Transferor shall
cause its financial statements to be prepared in accordance with generally
accepted accounting principles in a manner that indicates the separate existence
of the Transferor and its assets and liabilities. Except as provided herein or
in the Receivables Purchase Agreements the Transferor shall (i) pay all its
liabilities, (ii) not assume the liabilities of Proffitt's, Inc. or any
Affiliate of Proffitt's, Inc., (iii) not lend funds or extend credit to
Proffitt's, Inc., or any Affiliate of Proffitt's, Inc., except pursuant to a
Receivables Purchase Agreement in connection with the purchase of Receivables
thereunder, (iv) not guarantee the liabilities of Proffitt's, Inc., or any
Affiliates of Proffitt's, Inc., and (v) not own the stock of, or any other
beneficial interest in, any subsidiaries or any other entity. The officers and
directors of the Transferor (as appropriate) shall make decisions with respect
to the business and operations of the Transferor independent of and not dictated
by any controlling entity. The Transferor shall not engage in any business not
permitted by its certificate or articles of incorporation as in effect on the
date hereof, provided such certificate or articles may be amended or changed
subject only to the Rating Agency Condition.

                  SECTION 2.6 ADDITION OF ACCOUNTS; REPURCHASE OF INVESTOR
CERTIFICATES.

                  (a) If, (1) as of the end of any Monthly Period, the
Transferor Amount is less than the Minimum Transferor Amount, the Transferor
shall either (i) cause the Trust to repurchase Investor Certificates (to the
extent permitted by and in accordance with the terms of any Supplement with
respect to any Series) or (ii) designate additional Eligible Accounts (the
"Additional Accounts") to be included as Accounts, in either case in a
sufficient amount such that the Transferor Amount as of the end of such Monthly
Period after giving effect to such repurchase or addition would have equaled or
exceeded the Minimum Transferor Amount or (2) as of the end of any Monthly
Period, the Aggregate Principal Receivables are less than the Minimum Aggregate
Principal Receivables, then the Transferor shall designate Additional Accounts
to be included as Accounts in a sufficient amount such that the Aggregate
Principal Receivables after giving





                                       35

<PAGE>   42


effect to such designations would have been equal to or greater than the Minimum
Aggregate Principal Receivables. Receivables from such Additional Accounts shall
be transferred to the Trust on or before 10 days following the Determination
Date following such Monthly Period (the "Additional Account Closing Date").
Failure either (i) to cause the Trust to repurchase Investor Certificates if
permitted pursuant to any Supplement or (ii) to add Additional Accounts as
required by this Section 2.6(a), shall be a Pay Out Event with respect to the
affected Series.

                  (b)   In addition to its obligation under Section 2.6(a), the
Transferor may, but shall not be obligated to, designate from time to time
Additional Accounts to be included as Accounts.

                  (c)   The Transferor agrees that any such transfer of
Receivables from Additional Accounts under Section 2.6(a) or (b) shall satisfy
the following conditions:

                  (i)   On or before the fifth Business Day prior to the
         Additional Account Closing Date, the Transferor shall give the Trustee
         and the Servicer written notice that such Additional Accounts will be
         included and specifying the approximate aggregate amount of the
         Receivables to be transferred;

                  (ii)  On or prior to the Additional Account Closing Date,
         the Transferor shall have delivered to the Trustee a written assignment
         (and the Trustee shall have accepted such assignment on behalf of the
         Trust for the benefit of the Investor Certificateholders and any
         Enhancement Provider) in substantially the form of Exhibit B (the
         "Assignment") and shall have clearly indicated in its computer files
         that the Receivables created in connection with the Additional Accounts
         have been transferred to the Trust and the Transferor shall have
         delivered to the Trustee a computer file, microfiche or written list
         represented by the Transferor to contain a true and complete list of
         all Additional Accounts identified by account number and by Receivable
         balance in such Additional Accounts as of the Additional Account
         Cut-Off Date, which computer file, microfiche or written list shall be
         as of the date of such Assignment incorporated into and made a part of
         such Assignment and this Agreement;

                  (iii) The Transferor shall represent and warrant that (x)
         each Additional Account was, as of the Additional Account Cut-Off Date,
         an Eligible Account, (y) no selection procedures believed by the
         Transferor to be materially adverse to the interests of any outstanding
         Series of Investor Certificates or any Enhancement Provider were
         utilized in selecting the Additional Accounts from the available
         Eligible Accounts in the Transferor's portfolio; and (z) as of the
         Additional Account Closing Date, the Transferor is not insolvent and
         will not be made insolvent by the transfer of the Receivables of such
         Additional Accounts;



                                       36

<PAGE>   43


                  (iv)     The Transferor shall represent and warrant that, as
         of the Additional Account Closing Date, the Assignment constitutes
         either (A) a valid transfer and assignment to the Trust of all right,
         title and interest of the Transferor in and to the Receivables then
         existing and thereafter created in the Additional Accounts, all monies
         due or to become due with respect thereto on and after the Additional
         Account Cut-Off Date, Recoveries and all proceeds of such Receivables
         (to the extent set forth in Section 9-306 of the UCC as in effect in
         the Relevant UCC State), and such Receivables and all proceeds thereof
         will be conveyed to the Trust free and clear of any Lien of any Person
         claiming through or under the Transferor or any of its Affiliates,
         except for (x) Liens permitted under Section 2.5(b) hereunder, (y) the
         interest of the holder of the Exchangeable Transferor Certificate or
         any other Class of Certificate held by the Transferor from time to time
         and (z) any right of the holder of the Exchangeable Transferor
         Certificate to receive interest accruing on, and investment earnings
         with respect to, the Collection Account and any other account or
         accounts maintained for the benefit of Certificateholders or any
         Enhancement Provider, if any, as provided in this Agreement and any
         Supplement, or (B) a grant of a security interest (as defined in the
         UCC as in effect in the Relevant UCC State) in such property to the
         Trustee on behalf of the Trust, which is enforceable with respect to
         then existing Receivables of the Additional Accounts, and the proceeds
         thereof (to the extent set forth in Section 9-306 of the UCC as in
         effect in the Relevant UCC State), upon the conveyance of such
         Receivables to the Trust, and which will be enforceable with respect to
         the Receivables thereafter created in respect of Additional Accounts,
         and the proceeds thereof (to the extent set forth in Section 9-306 of
         the UCC as in effect in the Relevant UCC State), upon such creation;
         and (C) if the Assignment constitutes the grant of a security interest
         to the Trust in such property, upon the filing of financing statements
         as described in Section 2.1 with respect to such Additional Accounts
         and in the case of such Receivables of Additional Accounts thereafter
         created and the proceeds thereof (to the extent set forth in Section
         9-306 of the UCC in effect in the Relevant UCC State) upon such
         creation, the Trust shall have a first priority perfected security
         interest in such property, except for Liens permitted under Section
         2.5(b) hereunder;

                  (v)      The Transferor shall deliver to the Trustee (with a
         copy to the Rating Agencies), an Officer's Certificate confirming the
         items set forth in paragraphs (ii), (iii) and (iv) above and paragraph
         (vii) below. The Trustee may conclusively rely on such Officer's
         Certificate, shall have no duty to make inquiries with regard to the
         matters set forth therein and shall incur no liability in so relying;





                                       37

<PAGE>   44


                  (vi)     The Transferor shall deliver to the Trustee and each
         Rating Agency, an Opinion of Counsel with respect to the Receivables in
         the Additional Accounts substantially in the form of Part One of
         Exhibit G;

                  (vii)    The Transferor shall record and file financing
         statements with respect to the Receivables then existing and thereafter
         created in the Additional Accounts for the transfer of accounts,
         general intangibles and chattel paper (each as defined in the UCC in
         effect in the Relevant UCC State) meeting the requirements of
         applicable state law in such manner and in such jurisdictions as are
         necessary to perfect the transfer and assignment of the Receivables in
         Additional Accounts by the Transferor to the Trust; and

                  (viii)   The Rating Agencies shall have received from the
         Transferor five (5) Business Days' notice, in the case of Additional
         Accounts being added pursuant to Section 2.6(a), and ten (10) Business
         Days' notice, in the case of Additional Accounts being added pursuant
         to Section 2.6(b), of such proposed addition of Additional Accounts
         and, in the event that Additional Accounts are being added pursuant to
         Section 2.6(b), the Rating Agency Condition shall have been satisfied.

                  (d) (i) The Transferor may from time to time, at its sole
         discretion, subject to and in compliance with the limitations and
         conditions specified below, (x) designate Eligible Accounts originated
         by a Seller (other than the initial Sellers) subsequent to its becoming
         an Eligible Originator to be included as Accounts as of the applicable
         Creation Date ("Automatic Additional Accounts"), and (y) may at any
         time discontinue or suspend designating Eligible Accounts to be
         included as Automatic Additional Accounts upon written notice to the
         Trustee. For purposes of this paragraph, Eligible Accounts shall be
         deemed to include only Eligible Accounts (x) of a type included as
         Accounts on the Initial Closing Date or any Additional Account Closing
         Date or consented to in writing by each Rating Agency and (y) not
         prohibited from being included as Accounts pursuant to the terms of any
         Supplement. The Transferor acknowledges and agrees with the Trustee,
         for the benefit of all Investor Certificateholders of all Series, that
         each Account originated or acquired by the Transferor on or after the
         Cut Off Date, shall be considered to be Automatic Additional Accounts
         constituting Accounts, each within the meaning of the Agreement, on and
         as of the applicable Creation Date of each such Account. The foregoing
         notwithstanding, Automatic Additional Accounts shall not include any
         Account acquired but not originated by any Eligible Originator and any
         Master Card or VISA credit cards, prior to the satisfaction of the
         Rating Agency Condition with respect thereto.




                                       38

<PAGE>   45


                  (ii)     The Transferor shall not be permitted to designate
         Automatic Additional Accounts pursuant to clause (i) above with respect
         to any period of the three consecutive Monthly Periods commencing in
         January, April, July or October of a calendar year, commencing in
         October 1997, unless the Rating Agency Condition is otherwise
         satisfied, if the number of Automatic Additional Accounts designated
         during such period or during any period of twelve (12) consecutive
         Monthly Periods would exceed the applicable Aggregate Automatic
         Addition Limit.

                  (iii)    The Transferor shall record and file financing
         statements with respect to the Receivables then existing and thereafter
         created in the Automatic Additional Accounts for the transfer of
         accounts, general intangibles and chattel paper (each as defined in the
         UCC in effect in the Relevant UCC State) meeting the requirements of
         applicable state law in such manner and in such jurisdictions as are
         necessary to perfect the transfer and assignment of the Receivables in
         Automatic Additional Accounts by the Transferor to the Trust.

                  SECTION 2.7       REMOVAL OF ACCOUNTS.

                  (a) Subject to the conditions set forth below, during the
Revolving Period, the Transferor may, but shall not be obligated to, designate,
from time to time, Accounts for deletion and removal ("Removed Accounts") from
the Accounts and accept reconveyance of all Receivables in the Removed Accounts
without notice to the Investor Certificateholders; provided, however, that the
Transferor shall not make more than one such designation in any Monthly Period.
On or before the tenth Business Day (the "Removal Notice Date") prior to the
date on which the designated Removed Accounts will be reassigned by the Trustee
to the Transferor (the "Removal Date"), the Transferor shall give the Trustee
and the Servicer written notice that the Receivables from such Removed Accounts
are to be reassigned to the Transferor.

                  (b)      The Transferor shall be permitted to designate and 
require reassignment to it of Receivables from Removed Accounts only upon 
satisfaction of the following conditions:

                  (i)      On or prior to the Removal Date, the Transferor shall
         have delivered or caused to be delivered to the Trustee for execution a
         written instrument of reassignment in substantially the form of Exhibit
         C (the "Reassignment") and a computer file, microfiche or written list
         containing a true and complete list of all Removed Accounts identified
         by account number and by the aggregate balance of the Receivables in
         such Removed Accounts as of the Removal Notice Date, which computer
         file, microfiche or written list shall as of the Removal Date modify,
         amend and be made a part of this Agreement;



                                       39

<PAGE>   46


                  (ii)     The Transferor shall represent and warrant that no
         selection procedures believed by the Transferor to be materially
         adverse to the interests of the Certificate Owners of any outstanding
         Series of Investor Certificates or any Enhancement Provider were
         utilized in selecting the Removed Accounts;

                  (iii)    The removal of any Receivables of any Removed
         Accounts on any Removal Date shall not, (a) in the reasonable belief of
         the Transferor, result in a Pay Out Event or (b) cause the Transferor
         Amount to be less than the Minimum Transferor Amount, and the aggregate
         amount of Principal Receivables in the Trust shall not be less than the
         Minimum Aggregate Principal Receivables;

                  (iv)     The Rating Agencies shall have delivered to the
         Transferor a letter confirming that the Rating Agency Condition has
         been satisfied; and

                  (v)      The Transferor shall deliver to the Trustee (with a
         copy to the Rating Agencies) an Officer's Certificate confirming the
         items set forth in paragraphs (i) through (iv) above. The Trustee may
         conclusively rely on such Officer's Certificate, shall have no duty to
         make inquiries with regard to the matters set forth therein and shall
         incur no liability in so relying.

         Upon satisfaction of the above conditions, the Trustee shall execute
and deliver the Reassignment to the Transferor and take all actions and make all
deliveries contemplated therein, and the Receivables from the Removed Accounts
shall no longer constitute a part of the Trust.

                  SECTION 2.8 DISCOUNT OPTION RECEIVABLES.

                  (a) The Transferor has initially designated a percentage (the
"Discount Percentage") of the amount of Receivables arising in the Accounts that
otherwise would be treated as Principal Receivables to be treated as Finance
Charge Receivables in accordance with the provisions of this Section 2.8. The
Discount Percentage shall not apply to Finance Charges or to Receivables in
Defaulted Accounts. The Discount Percentage may be fixed or variable, and the
Transferor has designated 2% as the initial Discount Percentage.

                  (b) Discount Option Receivables shall be considered Finance
Charge Receivables for all purposes hereunder, including for the purposes of
allocating Collections pursuant to Article IV.

                  (c) The Transferor may, without notice to or consent of the
Investor Certificateholders, from time to time, elect (the "Discount Option") to
increase the Discount Percentage, to reduce the Discount Percentage, to apply
the Discount Percentage to Receivables created in Accounts not previously
subject to the Discount




                                       40

<PAGE>   47


Percentage and to eliminate the Discount Percentage in respect of Receivables
created in Accounts on and after the date of such change or previously subject
to the Discount Percentage; provided however, that the Transferor shall not
redesignate any existing Discount Option Receivables as Principal Receivables
and the Transferor shall not increase the Discount Percentage upon or following
a Pay Out Event, or if such increase would cause the Aggregate Principal
Receivables to be less than the Minimum Aggregate Principal Receivables.

                  (d) The Transferor shall provide to the Servicer, the Trustee
and each Rating Agency, and the Persons, if any, specified in any Supplement
with respect to each class of Investor Certificates of any then outstanding
Series which is not assigned a rating by any Rating Agency, 30 days' prior
written notice of any designation, increase, reduction or elimination of the
Discount Percentage, and such designation, increase, reduction or elimination
shall become effective on the date specified in such notice unless such
designation, increase, reduction or elimination in the reasonable belief of the
Transferor would cause a Pay Out Event, or an event which, with notice or the
lapse of time or both, would constitute a Pay Out Event, to occur with respect
to any Series; provided, however, that if such designation would cause the
Discount Percentage to be less than 1% or more than 3%, the Rating Agency
Condition shall have been satisfied with respect to all outstanding Series that
are assigned a rating by any Rating Agency, and the Persons, if any, specified
in any Supplement with respect to each class of Investor Certificates of any
then outstanding Series which is not assigned a rating by any Rating Agency,
shall have consented to such increase, reduction or elimination.


                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                               OF THE RECEIVABLES

                  SECTION 3.1 ACCEPTANCE OF APPOINTMENT AND OTHER MATTERS
RELATING TO THE SERVICER.

                  (a) Proffitt's, Inc. hereby agrees to act as the Servicer
under this Agreement. The Investor Certificateholders, by their acceptance of
the Investor Certificates, consent to Proffitt's, Inc., acting as Servicer.

                  (b) The Servicer shall service and administer the Receivables
and shall collect payments due under the Receivables in accordance with its
customary and usual policies and procedures in effect for servicing consumer
revolving credit card accounts receivables comparable to the Receivables, as
such policies and procedures may be modified from time to time, and in
accordance with the applicable Credit Card Guidelines and shall have full power
and authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable. The Servicer has
designated its




                                       41

<PAGE>   48


Affiliate, McRae's, Inc., as the initial Subservicer. Without limiting the
generality of the foregoing and subject to Section 10.1, the Servicer is hereby
authorized and empowered (i) to make withdrawals and payments and to instruct
the Trustee to make withdrawals and payments from the Collection Account, the
Excess Funding Account or any other account or accounts maintained for the
benefit of the Certificateholders or with regard to any Enhancement as set forth
in this Agreement and any Supplement, (ii) unless such power and authority is
revoked by the Trustee on account of the occurrence of a Servicer Default
pursuant to Section 10.1, to instruct the Trustee to take any action permitted
or required under any Enhancement at such time as is set forth in this Agreement
or any Supplement, (iii) to execute and deliver, on behalf of the Trust for the
benefit of the Certificateholders, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable law and regulations, to commence enforcement
proceedings with respect to such Receivables and (iv) to make any filings,
reports, notices, applications, or registrations with, and to seek any consents
or authorizations from, the Securities and Exchange Commission and any state
securities or "blue sky" law authorities on behalf of the Trust as may be
necessary or advisable to comply with any Federal or state securities or "blue
sky" laws or reporting requirements. Prior to receipt by a Responsible Officer
of the Trustee of written notice of a Servicer Default, the Trustee shall
promptly follow the written instructions of the Servicer to withdraw funds from
the Collection Account and any other account or accounts maintained for the
benefit of the Certificateholders or with regard to any Enhancement. The Trustee
shall furnish the Servicer with limited powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder, and the Trustee shall not be held responsible
for any act or omission by the Servicer in its use of such powers of attorney.

                  (c) In the event that the Transferor is unable for any reason
to transfer Receivables to the Trust in accordance with the provisions of this
Agreement (including by reason of the application of the provisions of Section
9.2 or the order of any Federal governmental agency having regulatory authority
over the Transferor or any court of competent jurisdiction that the Transferor
not transfer any additional Receivables to the Trust) then, in any such event,
(A) the Servicer agrees to allocate, after such date, all Collections (including
Collections of Finance Charge Receivables) with respect to Principal
Receivables, and all amounts which would have constituted Collections (including
Collections of Finance Charge Receivables) with respect to such Receivables
which would have been Principal Receivables but for the Transferor's inability
to transfer such Receivables to the Trust (up to an aggregate amount equal to
the Aggregate Principal Receivables in the Trust as of such date) in accordance
with Section 2.5(d) and to apply such amounts as Collections in accordance with
Article IV and (B) for only so long as all Collections and all amounts which
would have constituted Collections are allocated and applied in accordance with
clause (A) above, Collections of Principal Receivables and all amounts which
would have constituted Collections of Principal Receivables but for the
Transferor's inability to transfer Receivables to the Trust which are




                                       42

<PAGE>   49


charged off as uncollectible in accordance with this Agreement shall continue to
be allocated in accordance with Article IV and all amounts which would have
constituted Collections of Principal Receivables but for the Transferor's
inability to transfer Receivables to the Trust shall be deemed to be Collections
of Principal Receivables for the purpose of calculating the applicable Investor
Percentage thereunder; provided, that if the Servicer is unable pursuant to any
Requirement of Law to allocate payments on the Accounts as described above, the
Servicer agrees that it shall, in any such event, allocate, after the date that
the Transferor becomes unable to do so, payments on each Account with respect to
the balance of such Account first to the oldest Receivable in such Account and
to have such payments applied as Collections in accordance with Article IV.

                  (d) The Servicer shall not be obligated to use separate
servicing procedures, offices, employees or accounts for servicing the
Receivables from the procedures, offices, employees and accounts used by the
Servicer in connection with servicing other consumer revolving credit card
account receivables.

                  (e) The Servicer shall maintain fidelity bond or insurance
coverage against losses through wrongdoing of its officers and employees who are
involved in the servicing of Receivables covering such actions with such
insurers and in such amounts as the Servicer believes to be reasonable from time
to time.

                  (f) The Servicer shall comply with and perform its obligations
under the Account Agreements and the Credit Card Guidelines except insofar as
any failure to so comply would not materially and adversely affect the rights of
the Trust or the Certificateholders hereunder or under the Certificates.

                  SECTION 3.2 SERVICING COMPENSATION. As compensation for its
servicing activities hereunder and reimbursement for its expenses as set forth
in the immediately following paragraph, the Servicer shall be entitled to
receive a monthly servicing fee in respect of any Monthly Period (or portion
thereof) prior to the termination of the Trust pursuant to Section 12.1 (the
"Monthly Servicing Fee"). The Monthly Servicing Fee will be payable in arrears
on each Distribution Date in an amount equal to, with respect to each Series
then outstanding, one-twelfth (1/12th) of the product of the Servicing Fee
Percentage for such Series and the sum of the allocable portion of the
Transferor Amount and the Investor Amount of such Series, each as of the last
day of the preceding Monthly Period. The share of the Servicing Fee allocable to
each Series of Investor Certificateholders with respect to any Monthly Period
(or portion thereof) shall be equal to one twelfth (1/12th) of the product of
(A) the Servicing Fee Percentage for such Series and (B) the Investor Amount of
such Series, (after subtracting from the Investor Amount the aggregate amount of
any deposits previously made into any Principal Account) on the last date of the
applicable Monthly Period (or, in the case of the first Distribution Date, the
Initial Investor Amount, unless otherwise specified in any Supplement) (with
respect to any such Series, the "Investor Monthly Servicing Fee"), and shall be
paid to the Servicer pursuant to the applicable Supplement. The Investor Monthly
Servicing Fee will be funded from collections of Finance Charge Receivables
allocable to




                                       43

<PAGE>   50


the Investor Amount. The remainder of the Monthly Servicing Fee shall be paid by
the Transferor, and in no event shall the Trust, the Trustee, any Enhancement
Provider or the Investor Certificateholders be liable for the share of the
Monthly Servicing Fee to be paid by the Transferor. In the case of the first
Monthly Period, the Monthly Servicing Fee and the Investor Monthly Servicing Fee
shall accrue from the Initial Closing Date.

                  The Servicer's expenses include the amounts due to the Trustee
pursuant to Section 11.5 and the reasonable fees and disbursements of
independent accountants and the Subservicer, if any, and all other expenses
incurred by the Servicer in connection with its activities hereunder; provided,
that the Servicer shall not be liable for any liabilities, costs or expenses of
the Trust, the Investor Certificateholders or the Certificate Owners arising
under any tax law, including without limitation any federal, state or local
income or franchise taxes or any other tax imposed on or measured by income (or
any interest or penalties with respect thereto or arising from a failure to
comply therewith), except to the extent incurred as a result of the Servicer's
violation of the provisions of this Agreement. The Servicer shall be required to
pay such expenses for its own account and shall not be entitled to any payment
therefore other than the Monthly Servicing Fee.

                  SECTION 3.3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SERVICER. Proffitt's, Inc., as initial Servicer, hereby makes, and any successor
Servicer by its appointment hereunder shall make, the following representations,
warranties and covenants with respect to any Series of Certificates, as of the
date of the related Supplement and the related Closing Date, unless otherwise
stated in such Supplement, on which the Trustee has relied in accepting the
Receivables and the other property conveyed pursuant to Section 2.1 in trust and
in authenticating the Certificates:

                  (a) Organization and Good Standing. The Servicer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and has full power, authority and
legal right to own its properties and conduct its business as such properties
are presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement and any Supplement.

                  (b) Due Qualification. The Servicer is duly qualified to do
business and is in good standing (or is exempt from such requirements) in any
state where such qualification is necessary in order to service the Receivables
as required by this Agreement and any Supplement and has obtained all necessary
licenses and approvals as required under federal and state law, and if the
Servicer shall be required by any Requirement of Law to so qualify or obtain
such license or approval, then it shall do so, except where the failure to be so
qualified or to obtain such license or approval does not materially and
adversely affect the Servicer's ability to perform its obligations hereunder or
the enforceability of any Receivable.

                  (c) Due Authorization. The execution, delivery, and
performance of this Agreement and any Supplement and the consummation of the
transactions provided




                                       44

<PAGE>   51


for in this Agreement and any Supplement have been duly authorized by the
Servicer by all necessary action on the part of the Servicer.

                  (d) Binding Obligation. Each of this Agreement and any
Supplement constitutes a legal, valid and binding obligation of the Servicer,
enforceable against the Servicer in accordance with its terms, subject to
applicable bankruptcy, insolvency, receivership, conservatorship,
reorganization, moratorium or other similar laws now or hereinafter in effect
affecting the enforcement of creditors' rights in general (or, to the extent
applicable to the Servicer, the rights of creditors of banks) and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).

                  (e) No Violation. The execution and delivery of this Agreement
and any Supplement by the Servicer, the performance by the Servicer of the
transactions contemplated by this Agreement and any Supplement and the
fulfillment by the Servicer of the terms hereof and thereof, will not conflict
with, violate or result in any breach of any of the material terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, any Requirement of Law applicable to the Servicer or any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which the Servicer is a party or by which it is bound, where such conflict,
violation, breach or default would not have a material adverse effect.

                  (f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement or any Supplement, seeking any determination or ruling that, in the
reasonable judgment of the Servicer, would materially and adversely affect the
performance by the Servicer of its obligations under this Agreement or any
Supplement, or seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement or any
Supplement.

                  (g) Compliance with Requirements of Law. The Servicer shall
duly satisfy its obligations in all material respects on its part to be
fulfilled under or in connection with each Receivable and the corresponding
Account, will maintain in effect all material qualifications required under
Requirements of Law in order to service properly each Receivable and the
corresponding Account and will comply in all material respects with all other
Requirements of Law in connection with servicing each Receivable and the related
Account, the failure to comply with which would have a material adverse effect
on the Certificateholders (without regard to the amount of any Enhancement).

                  (h) No Rescission or Cancellation. Except in connection with
an Adjustment Payment Obligation pursuant to Section 3.8, the Servicer shall not
permit any rescission or cancellation of any Receivable except as ordered by a
court of competent




                                       45

<PAGE>   52


jurisdiction or other Governmental Authority or in the ordinary course of its
business and in accordance with the applicable Credit Card Guidelines.

                  (i) Protection of Certificateholders' Rights. The Servicer
shall take no action which, nor omit to take any action the omission of which,
would impair the rights of Certificateholders in any Receivable or the rights of
any Enhancement Provider, nor shall it reschedule, revise, waive or defer
payments due on any Receivable except in accordance with the applicable Credit
Card Guidelines.

                  (j) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any Governmental Authority
required to be obtained on or prior to each date as of which this representation
is being made in connection with the execution and delivery by the Servicer of
this Agreement and any Supplement, the performance by the Servicer of the
transactions contemplated by this Agreement and any Supplement and the
fulfillment by the Servicer of the terms hereof and thereof, have been obtained;
provided, however, that no representation or warranty is made regarding state
securities or "blue sky" laws in connection with any distribution of the
Certificates.

                  (k) Receivables Not to be Evidenced by Instruments. Except in
connection with its enforcement or collection of an Account, the Servicer 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).

         In the event of a breach of any of the representations and warranties
set forth in Section 3.3(g), (h), (i) or (k) with respect to a Receivable, and
such breach has a material adverse effect on the Certificateholders' interest in
such Receivable (without regard to the amount of any Enhancement) then, upon the
expiration of 90 days or any longer period specified by the Trustee upon request
of the Servicer (not to exceed an additional 90 days) from the earlier to occur
of the discovery of any such event by the Servicer or receipt by the Servicer of
written notice of any such event given by the Trustee, unless such breach has
been cured, each such Receivable or, at the option of the Transferor, all such
Receivables with respect to the related Account, shall be assigned and
transferred to the Servicer upon the deposit by the Servicer into the Collection
Account in immediately available funds prior to the next succeeding Distribution
Date of an amount equal to the amount of each such Receivable at the end of the
Monthly Period preceding such Distribution Date, plus the amount of finance
charges at the monthly periodic rate applicable to such Receivable from the last
date billed through the end of such Monthly Period to the extent not included in
the amount of such Receivable. Any such deposit into the Collection Account in
connection with any such assignment of a Receivable shall be considered a
payment in full of such Receivable and such deposit shall be applied in
accordance with the provisions of Article IV. Upon the assignment to the
Servicer of such a Receivable, the Trust shall, without further action, be
deemed to transfer, assign, set-over and otherwise convey to the Servicer,
without recourse, representation or warranty, all the right, title and interest
of the Trust in and to such Receivable, all monies





                                       46

<PAGE>   53


due or to become due with respect thereto and all proceeds thereof. The Trustee
shall execute such documents and instruments of transfer or assignment and take
such other actions as shall reasonably be requested by the Servicer to effect
the conveyance of such Receivable pursuant to this subsection. The obligation of
the Servicer set forth in this Section 3.3 shall constitute the sole remedy
respecting any breach by the Servicer of the representations and warranties set
forth in the above-referenced subsections with respect to such Receivable
available to Certificateholders or the Trustee on behalf of Certificateholders.
Notwithstanding any other provision of this Section 3.3, no assignment of a
Receivable to the Servicer pursuant to this Section 3.3 shall occur if the
Servicer fails to make the deposit required by this Section 3.3 with respect to
such Receivable.

                  SECTION 3.4 REPORTS AND RECORDS FOR THE TRUSTEE

                  (a) Initial Report. On the Closing Date with respect to each
Series of the Investor Certificates, the Servicer shall prepare and deliver, as
provided in Section 13.5, to the Trustee and the Rating Agencies, and the
Persons, if any, specified in any Supplement with respect to each class of
Investor Certificates of any then outstanding Series which is not assigned a
rating by any Rating Agency, an Officer's Certificate substantially in the form
of Exhibit D setting forth the Aggregate Principal Receivables, the Transferor
Amount, the Discount Option Receivables and the Transferor Interest Percentage
as of the end of the day two Business Days preceding the Closing Date and the
expected Transferor Amount after giving effect to the issuance of such Series.

                  (b) Daily Reports. For so long as deposits of Collections are
required to be made daily by the Servicer pursuant to Section 4.1(f), on each
Business Day commencing on the Initial Closing Date, the Servicer shall prepare,
maintain at the office of the Servicer and make available for inspection by the
Trustee, a record setting forth the aggregate amount of Collections processed by
the Servicer on the second preceding Business Day. The Servicer shall prepare
such other reports on a daily (or less frequent) basis as may be required by any
Supplement.

                  (c) Monthly Servicer's Certificate. By 1:00 p.m., Minneapolis,
Minnesota time on each Determination Date, the Servicer shall deliver, as
provided in Section 13.5, to the Trustee, the Paying Agent and the Rating
Agencies, an Officer's Certificate signed by a Servicing Officer substantially
in the form of Exhibit E (the "Monthly Servicer's Certificate") (with the
Monthly Certificateholder's Statement required pursuant to the applicable
Supplement attached) setting forth the following information (which, in the case
of clauses (iii), (iv) and (viii) below, will be stated on the basis of an
original principal amount of $1,000 per Certificate): (i) the aggregate amount
of Collections processed for the immediately preceding Monthly Period and the
aggregate amount of Collections of Finance Charge Receivables and the aggregate
amount of Collections of Principal Receivables processed during such Monthly
Period; (ii) the Investor Percentage with respect to each Series of Certificates
with respect to Collections of Principal Receivables, Finance Charge Receivables
and Defaulted Receivables



                                       47

<PAGE>   54

processed during the immediately preceding Monthly Period; (iii) for each Series
and for each class within any such Series, the amount of such distribution
allocable to principal, if applicable; (iv) for each Series and for each class
within any such Series, the amount of such distribution allocable to interest,
if applicable; (v) the aggregate outstanding balance of the Accounts which were
delinquent by 31 to 60 days, 61 to 90 days and 91 days or more as of the close
of business on the last day of the immediately preceding Monthly Period
immediately preceding such Distribution Date; (vi) for each Series and for each
class within any such Series, the Investor Default Amount for the immediately
preceding Monthly Period; (vii) for each Series and for each class within any
such Series, the amount of the Investor Charge Offs and the amount of the
reimbursements thereof for the next succeeding Distribution Date; (viii) for
each Series, the Monthly Servicing Fee for the next succeeding Distribution
Date; (ix) for each Series, the existing deficit controlled amortization amount
or deficit controlled accumulation amount, if applicable; (x) the aggregate
amount of Receivables in the Trust at the close of business on the last day of
the Monthly Period immediately preceding such Distribution Date; (xi) for each
Series, the Investor Amount at the close of business on the last day of the
Monthly Period immediately preceding such Distribution Date; (xii) the available
amount of Enhancement, if any, for each Series; and (xiii) whether a Pay Out
Event with respect to any Series shall have occurred during or with respect to
the immediately preceding Monthly Period. The Trustee shall make such statement
available to the Certificateholders, but shall be under no duty to recalculate,
verify or recompute the information supplied to it under this Section 3.4.

                  SECTION 3.5 ANNUAL SERVICER'S CERTIFICATE. The Servicer will
deliver, as provided in Section 13.5, to the Trustee, the Rating Agencies and
the Persons, if any, specified in the Supplement with respect to each class of
Investor Certificates of any then outstanding Series which is not assigned a
rating by any Rating Agency, on or before June 30 of each calendar year,
beginning with 1998, an Officer's Certificate substantially in the form of
Exhibit F (a) stating that a review of the activities of the Servicer during the
preceding Fiscal Year (or, in the case of the first such certificate, during the
period from the Initial Closing Date until February 3, 1998) and of its
performance under this Agreement was made under the supervision of the officer
signing such certificate and (b) stating that to the best of such officer's
Knowledge, based on such review, either there has occurred no event which, with
the giving of notice or passage of time or both, would constitute a Servicer
Default and the Servicer has fully performed all its obligations under this
Agreement throughout such year, or, if there has occurred such an event,
specifying each such event known to such officer and the nature and status
thereof. A copy of such Officer's Certificate may be obtained by any Investor
Certificateholder by a request in writing to the Trustee directed to the
Trustee's address specified in Section 13.5 hereof.

                  SECTION 3.6 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
REPORT.

                  (a) On or before June 30 of each calendar year, beginning with
1998, the Servicer shall cause a firm of nationally recognized independent
public accountants




                                       48

<PAGE>   55

(who may also render other services to the Servicer or the Transferor) to
furnish, as specified in Section 13.5, a report prepared in accordance with
standards established by the American Institute of Certified Public Accountants
and, accordingly, including such procedures or examination as they considered
necessary in the circumstances, to the Trustee, the Rating Agencies and the
Persons, if any, specified in any Supplement with respect to each class of
Investor Certificates of any then outstanding Series which is not assigned a
rating by any Rating Agency, and, as may be required by any Series Supplement,
any Enhancement Provider to the effect that, such firm has applied certain
procedures to certain documents and records relating to the servicing of the
Accounts, compared the information contained in the Servicer's certificates
issued during the period covered by the report with such documents and records
and that, based upon such procedures or examination, no matters came to the
attention of such accountants that caused them to believe that such servicing
was not conducted in all material respects, in conformity with Section 3.4(c),
except for such exceptions as such accountants believe to be immaterial and such
other exceptions as shall be set forth in such report. Such procedures or
examination will include comparisons of the mathematical calculations contained
in the Monthly Servicer's Certificates forwarded by the Servicer pursuant to
Section 3.4(c) during the period covered by such report with the Servicer's
computer reports that were the source of such amounts, and such report shall
state that, on the basis of such comparison, such accountants are of the opinion
that such amounts are consistent, except for such exceptions as they believe to
be immaterial and such other exceptions as shall be set forth in such report. In
the event such firm requires the Trustee to agree to the procedures performed by
such firm, the Servicer shall direct the Trustee in writing to so agree; it
being understood and agreed that the Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Trustee makes no independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or correctness
of such procedures. A copy of such report may be obtained by any Investor
Certificateholder or Certificate Owner by a request in writing to (i) the
Trustee directed to the Trustee's address specified in Section 13.5 hereof or
(ii) the Servicer at the Servicer's address specified in such Section 13.5.

                  (b) On or before June 30 of each calendar year, beginning with
1998, the Servicer shall cause a firm of nationally recognized independent
public accountants (who may also render other services to the Servicer or the
Transferor) to furnish, as specified in Section 13.5, a report to the Trustee,
the Rating Agencies and the Persons, if any, specified in any Supplement with
respect to each class of Investor Certificates of any then outstanding Series
which is not assigned a rating by any Rating Agency, and, as may be required by
any Series Supplement, any Enhancement Provider, to the effect that in
connection with their examination of the Monthly Servicer's Certificates,
nothing came to their attention that caused them to believe that the Servicer
failed to comply with provisions of Sections 3.2, 3.4(c), 4.1 and 8.8 of this
Agreement. In the event such firm requires the Trustee to agree to the
procedures performed by such firm, the Servicer shall direct the Trustee in
writing to so agree; it being understood and agreed that the Trustee will
deliver such letter of agreement in conclusive reliance upon the direction of
the Servicer, and the Trustee makes no independent inquiry or investigation as
to, and shall




                                       49

<PAGE>   56

have no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures. A copy of such report may be obtained by any
Investor Certificateholder or Certificate Owner by a request in writing to (i)
the Trustee directed to the Trustee's address specified in Section 13.5 hereof
or (ii) the Servicer at the Servicer's address specified in such Section 13.5.

                  SECTION 3.7 TAX TREATMENT. The Transferor has structured this
Agreement and the Investor Certificates (other than any Investor Certificates
held by the Transferor) with the intention that such Investor Certificates will
qualify under applicable federal income tax law as indebtedness of the
Transferor or, if specified in the applicable Supplement, an interest in a
partnership, and the Transferor, any entity acquiring any direct or indirect
interest in the Exchangeable Transferor Certificate, each Investor
Certificateholder (or Certificate Owner) by acceptance of its Certificate (or,
in the case of a Certificate Owner, by virtue of such Certificate Owner's
acquisition of a beneficial interest therein) and each holder of an interest in
any Enhancement Investor Amount by its acceptance thereof agrees, and shall be
deemed to agree, to treat such Investor Certificates (or beneficial interest
therein) or Enhancement Investor Amount for purposes of Federal, state and local
income or franchise taxes and any other tax imposed on or measured by income, as
indebtedness, or, if specified in the applicable Supplement, an interest in a
partnership. Each Certificateholder agrees that it will cause any Certificate
Owner acquiring an interest in a Certificate through it to comply with this
Agreement as to treatment as indebtedness or, if specified in the applicable
Supplement, an interest in a partnership, for certain tax purposes. Consistent
with the foregoing, the Trustee shall not: (i) file a Federal income tax return
on behalf of the Trust or apply for a taxpayer identification number on behalf
of the Trust unless required to do so as a result of a determination by the
Internal Revenue Service or pursuant to the terms of a Supplement, or (ii) make
any election pursuant to Treas. Reg. Section 301.7701-3 regarding the Trust
classification for federal tax purposes or any similar election under applicable
state law regarding the Trust's classification for state tax purposes.

                  SECTION 3.8 ADJUSTMENTS.

                  (a) If the Servicer adjusts downward the amount of any
Principal Receivable because of a rebate, refund, unauthorized charge or billing
error to an Obligor, or because such Receivable was created in respect of
merchandise or services which were refused, returned or not received by an
Obligor, or if the Servicer otherwise adjusts downward the amount of any
Principal Receivable without receiving Collections therefor or without charging
off such amount as uncollectible, then, in any such case, the Servicer shall
deduct from the Aggregate Principal Receivables and decrease the Transferor
Amount by the amount of such adjustment. Similarly, the amount of the Aggregate
Principal Receivables and the Transferor Amount will be reduced by the amount of
any Principal Receivable which was discovered as having been created through a
fraudulent or counterfeit charge or with respect to which the covenant contained
in Section 2.5(b) was breached. Any adjustment, required pursuant to either of
the two preceding sentences shall be made on or prior to the end of the Monthly
Period in which such adjustment



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<PAGE>   57

(each, an "Adjustment") arises. In the event that, following any such reduction,
the Transferor Amount would be less than the Minimum Transferor Amount, the
Transferor shall immediately pay to the Servicer for deposit into the Excess
Funding Account, in immediately available funds, an amount equal to the amount
by which the Transferor Amount would be reduced below the Minimum Transfer
Amount (" Adjustment Payment Obligation"). In the event that the Servicer
adjusts upwards the principal amount of any Receivable, the Aggregate Principal
Receivables and the Transferor Amount shall be increased by the amount of such
upward adjustment, and any unpaid Adjustment Payment Obligation shall be reduced
by the applicable amount.

                  (b) If (i) the Servicer makes a deposit into the Collection
Account in respect of a Collection of a Receivable and such Collection was
received by the Servicer in the form of a check which is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such dishonored
check or mistake. Any Receivable in respect of which a dishonored check is
received shall be deemed not to have been paid. Notwithstanding the first two
sentences of this paragraph, no adjustments shall be made pursuant to this
paragraph that will change any amount of Collections previously reported
pursuant to Section 3.4(c).


                                   ARTICLE IV

                   RIGHTS OF CERTIFICATEHOLDERS AND ALLOCATION
                         AND APPLICATION OF COLLECTIONS

                  SECTION 4.1 ESTABLISHMENT OF COLLECTION ACCOUNT AND
ALLOCATIONS WITH RESPECT TO THE EXCHANGEABLE TRANSFEROR CERTIFICATE.

                  (a) The Collection Account. The Servicer shall establish and
maintain or cause to be established and maintained in the name of the Trustee,
on behalf of the Trust, with the Trustee or another Qualified Institution a
segregated corporate trust account (the "Collection Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Investor Certificateholders. The Trustee shall possess all right,
title and interest in all amounts held from time to time in the Collection
Account and in all proceeds thereof. The Collection Account shall be under the
sole dominion and control of the Trustee for the benefit of the Investor
Certificates. If, at any time, the institution holding the Collection Account
ceases to be a Qualified Institution, the Trustee (or the Servicer on behalf of
the Trustee) shall within five (5) Business Days of a Responsible Officer of the
Trustee receiving written notice or having actual knowledge of such event
establish a new Collection Account meeting the conditions specified above with a
Qualified Institution and shall transfer any cash and/or any investments to such
new Collection Account, and from the date such new Collection Account is
established, it shall be the "Collection Account." The foregoing




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<PAGE>   58

notwithstanding, pursuant to the authority granted to the Servicer in Section
3.1(b), the Servicer shall have the power, revocable by the Trustee, to make
withdrawals and payments from the Collection Account and to instruct the Trustee
to make withdrawals and payments from the Collection Account for the purposes of
carrying out the Servicer's or the Trustee's duties hereunder.

                  (b) Interest in the Trust. Each Series shall represent
interests in the Trust, including the benefits of Enhancement, if any, to be
provided with respect to such Series as indicated in the Supplement relating to
such Series and the right to receive Collections and other amounts at the times
and in the amounts specified in this Article IV to be deposited in the
Collection Account and any other accounts maintained for the benefit of the
Certificates or to be paid to the Investor Certificateholders of such Series.
The Exchangeable Transferor Certificate shall represent the interest in the
Trust not represented by any Series then outstanding, including the right to
receive Collections and other amounts at the times and in the amounts specified
in this Article IV to be paid to the Transferor (the "Transferor Interest");
provided, however, that the Exchangeable Transferor Certificate shall not
represent any interest in the Collection Account or any other accounts
maintained for the benefit of the Certificateholders or the benefits of
Enhancement, if any, to be provided by an Enhancement Provider issued with
respect to any Series, except as specifically provided in this Article IV.

                  (c) Administration of the Collection Account. At the written
direction of the Servicer, funds held in the Collection Account to be invested
shall be invested by the Trustee in Permitted Investments selected by the
Servicer. All such Permitted Investments shall be held by the Trustee for the
benefit of the Investor Certificateholders. Investments of funds representing
Collections collected during any Monthly Period shall be invested in Permitted
Investments that will mature so that such funds will be available by the close
of business on the Business Day preceding the Distribution Date next succeeding
such Monthly Period. Any funds held in the Collection Account to be so invested
shall be invested solely in Permitted Investments. All Permitted Investments
shall be held to maturity. The Trustee shall maintain possession of the
negotiable instruments or securities, if any, evidencing such Permitted
Investments. For purposes of determining the availability of funds or balances
in the Collection Account, all investment earnings on such funds shall be deemed
not to be available or on deposit until actually credited to such account. On
each Distribution Date, all interest and other investment earnings (net of
losses and investment expenses) on funds held in the Collection Account shall be
paid to the Holder of the Exchangeable Transferor Certificate. The Transferor at
its option may direct the Servicer's investment of funds pursuant to this
Section 4.1(c).

                  (d) Allocations For the Exchangeable Transferor Certificate.
Throughout the existence of the Trust, the Servicer shall allocate to the Holder
of the Exchangeable Transferor Certificate an amount equal to the product of (A)
the Transferor Percentage and (B) the aggregate amount of Collections allocated
to Principal Receivables and Finance Charge Receivables, respectively, in
respect of each Monthly Period. Notwithstanding anything to the contrary in
Section 4.1, unless specified in any




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<PAGE>   59

Supplement, the Servicer need not deposit this amount, or any other amounts so
allocated to the Exchangeable Transferor Certificate pursuant to any Supplement,
into the Collection Account and shall pay such amounts as collected to the
Holder of the Exchangeable Transferor Certificate.

                  (e) Allocation of Collections Between Collections of Principal
Receivables and Collections of Finance Charge Receivables. Collections of
Receivables (other than Recoveries) for any day during a Monthly Period shall be
allocated first to Finance Charge Receivables in an amount equal to the sum of
(i) the amount of Finance Charge Receivables billed during the prior Monthly
Period and (ii) the amount of Finance Charge Receivables for prior Monthly
Periods which were not covered by Collections on Receivables (other than
Recoveries) allocated to Receivables for such Monthly Periods. The balance of
Collections of Receivables for such day shall be allocated to Principal
Receivables. If the Servicer shall at any time be able to determine the actual
amount of Collections processed on any day which are Collections of Finance
Charge Receivables, Collections of Principal Receivables and Recoveries, the
Servicer, upon ten (10) days notice to the Trustee, the Transferor (if the
Servicer is not then the Transferor) and each Rating Agency, may at its option
henceforth allocate Collections received on each day in accordance with the
actual amount of Collections of Finance Charge Receivables (other than
Recoveries), Collections of Principal Receivables and Recoveries collected on
such day.

                  (f) Collections. The Servicer will apply all Collections with
respect to the Receivables for each Monthly Period as described in this Article
IV and each Supplement. Except as otherwise provided herein or in the applicable
Supplement, the Servicer shall deposit Collections into the Collection Account
no later than the second Business Day following the Date of Processing of such
Collections. Subject to the express terms of any Supplement, but notwithstanding
anything else in this Agreement to the contrary, for so long as, and only so
long as, the Company or an Affiliate of the Company shall be the Servicer
hereunder and no Pay Out Event relating to a Servicer Default shall have
occurred and be continuing, and either (i) the Company or such Affiliate shall
maintain a short-term debt or certificate of deposit rating of P-1 by Moody's
and of A-1+ by Standard & Poor's, or (ii) Proffitt's, Inc. shall have obtained a
written notification from each Rating Agency to the effect that such Rating
Agency does not intend to downgrade or withdraw its then current rating of any
outstanding Series of Investor Certificates despite the Servicer's inability to
satisfy the rating requirement specified in clause (i), and for two Business
Days following any reduction of either such rating or failure to satisfy the
conditions of clause (ii), the Servicer need not deposit Collections into the
Collection Account or make payments to the holder of the Exchangeable Transferor
Certificate prior to the close of business on the second Business Day following
the Date of Processing, but rather may make a single deposit in the Collection
Account in immediately available funds on the Business Day prior to each
Distribution Date in an amount equal to the Collections with respect to the
Monthly Period preceding such Distribution Date to the extent such amounts and
Collections are allocated to one or more Series in accordance with Article IV.
Collections shall not be required to be invested in Permitted Investments until
such




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<PAGE>   60

time as they are deposited into the Collection Account. The Servicer shall
promptly notify the Trustee of any downgrade or withdrawal of its short-term
credit or certificate of deposit rating or, if an Affiliate of Proffitt's, Inc.
is acting as Servicer hereunder, of any such downgrade or withdrawal of any such
rating of such Affiliate.

                  Should the Servicer be required to make daily deposits of
Collections into the Collection Account pursuant to this subsection, during any
Amortization Period, the Servicer may, subject to the provisions of the
applicable Supplement, cease depositing Collections of Principal Receivables
received in any Monthly Period and allocable to a Series at such time as the
amount of Collections of Principal Receivables allocable to such Series and
deposited into the Collection Account equals the amount of principal scheduled
or permitted to be paid on the next succeeding Distribution Date with respect to
such Series. Collections of Principal Receivables allocable to such Series in
excess of such amount shall be distributed, on a daily basis as they are
collected, to the Transferor.

                  (g) Excess Funding Account. The Servicer, for the benefit of
the Certificateholders, shall establish and maintain or cause to be established
and maintained in the name of the Trustee, on behalf of the Trust, with a
Qualified Institution a segregated trust account, which may be a subaccount of
the Collection Account, bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Investor Certificateholders
(the "Excess Funding Account"). The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Excess Funding Account
and in all proceeds thereof. The Excess Funding Account shall be under the sole
dominion and control of the Trustee for the benefit of the Investor
Certificateholder. If, at any time, the institution holding the Excess Funding
Account is not the Trustee, or if another Person, such institution ceases to be
a Qualified Institution, the Trustee (or the Servicer on its behalf) shall
within five (5) Business Days of a Responsible Officer of the Trustee receiving
written notice or having actual knowledge of such event establish a new Excess
Funding Account meeting the conditions specified above with a Qualified
Institution and shall transfer any cash and/or any investments to such new
Excess Funding Account, and from the date such new Excess Funding Account is
established, it shall be the "Excess Funding Account." The foregoing
notwithstanding, pursuant to the authority granted to the Servicer in Section
3.1(b), the Servicer shall have the power, revocable by the Trustee, to make
withdrawals and payments from the Excess Funding Account and to instruct the
Trustee to make withdrawals and payments from the Excess Funding Account for the
purposes of carrying out the Servicer's or the Trustee's duties hereunder.

                  At the written direction of the Servicer, funds held in the
Excess Funding Account to be invested shall be invested by the Trustee in
Permitted Investments selected by the Servicer. All such Permitted Investments
shall be held by the Trustee for the benefit of the Investor Certificateholders.
The Trustee shall maintain for the benefit of the Investor Certificateholders
possession of the negotiable instruments or securities, if any, evidencing such
Permitted Investments. Funds held in the Excess Funding Account on any date
(after giving effect to any withdrawals from the Excess Funding Account on such





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<PAGE>   61

date) will be invested in Permitted Investments that will mature so that funds
will be available at the close of business on the next Business Day following
such date. On each Determination Date, the Servicer shall instruct the Trustee
to withdraw on the next succeeding Distribution Date from the Excess Funding
Account and deposit in the Collection Account all interest and other investment
earnings (net of losses and investment expenses) on funds held in the Excess
Funding Account, for application as Collections of Finance Charge Receivables
with respect to the prior Monthly Period. Interest (including reinvested
interest) and other investment income and earnings on funds held in the Excess
Funding Account shall not be considered part of the Excess Funding Amount for
purposes of this Agreement. On each Business Day (other than following a Pay Out
Event), the Servicer shall determine the amount by which the Transferor Amount
exceeds the Minimum Transferor Amount on such date and shall instruct the
Trustee to withdraw such amount from the Excess Funding Account on such date and
pay such amount to the holder of the Exchangeable Transferor Certificate. On
each Determination Date on which one or more Series is in an Amortization
Period, the Servicer shall determine the aggregate amount of Principal
Shortfalls, if any, with respect to each such Series that is a Principal Sharing
Series (after giving effect to the allocation and payment provisions in the
Supplement with respect to each such Series on the next succeeding Distribution
Date), and the Servicer shall instruct the Trustee to withdraw such amount (up
to the Excess Funding Amount) from the Excess Funding Account on the next
succeeding Distribution Date and allocate such amount among each such Series as
Shared Principal Collections as specified in each related Supplement to the
extent needed to cover the principal payments due to or for the benefit of such
Series.

                  (h) Principal and Shared Principal Collections. Collections of
Principal Receivables and certain other amounts for any Monthly Period allocated
to any Series in a Group will be used first to cover certain amounts described
in the related Series Supplements (including any required deposits into a
Principal Account or required distributions to Certificateholders of such
Series). For each Distribution Date, the Servicer will determine the amount of
collections of Principal Receivables for any Monthly Period (plus certain other
amounts required by the related Series Supplement) allocated to such Series
remaining after covering such required deposits and distributions and any
similar amount remaining for any other Series in such Group (collectively,
"Shared Principal Collections"), and will allocate the Shared Principal
Collections to cover any principal distributions to Certificateholders and
deposits to Principal Accounts for any Series in such Group which are either
scheduled or permitted and which have not been covered out of collections of
Principal Receivables and certain other amounts for such Series, provided that
the Series Supplement for such Series so provides ("Principal Shortfalls"). If
Principal Shortfalls exceed Shared Principal Collections for any Monthly Period,
Shared Principal Collections will be allocated pro rata among the Series in a
Group entitled to the benefits thereof based on the respective Principal
Shortfalls of such Series. To the extent that Shared Principal Collections
exceed Principal Shortfalls, the balance will be distributed to the holder of
the Exchangeable Transferor Certificate; provided, however, that (i) such Shared
Principal Collections will be distributed to the holder of the Exchangeable
Transferor Certificate only to the extent the Transferor Amount is greater




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<PAGE>   62

than the Minimum Transferor Amount and (ii) in certain circumstances provided in
the applicable Supplement, such Shared Principal Collections will be deposited
in the Excess Funding Account. Any such reallocation of collections of Principal
Receivables and other amounts will not result in a reduction in the Investor
Amount of the Series to which such collections were initially allocated.

                  (i) Shared Excess Finance Charge Collection. Collections of
Finance Charge Receivables and certain other amounts allocable to any Series
which is included in such Group in excess of the amounts necessary to make
required payments with respect to such Series that are payable out of
collections of Finance Charge Receivables ("Shared Excess Finance Charge
Collections") will be applied to cover any shortfalls with respect to amounts
payable from collections of Finance Charge Receivables allocable to any other
Series included in such Group, pro rata based upon the amount of the shortfall,
if any, with respect to each other Series in such Group, provided, however, that
the sharing of Shared Excess Finance Charge Collections among Series in a Group
will continue only until such time, if any, at which the Transferor shall
deliver to the Trustee a certificate of an authorized officer to the effect
that, in the reasonable belief of the Transferor or its counsel, the continued
sharing of Shared Excess Finance Charge Collections among Series in any Group
would have adverse regulatory implications with respect to the Transferor.
Following the delivery by the Transferor of any such certificate to the Trustee
there will not be any further sharing of Shared Excess Finance Charge
Collections among the Series in a Group. In all cases, any Shared Excess Finance
Charge Collections remaining after covering shortfalls with respect to all
outstanding Series in a Group will be paid to the holder of the Exchangeable
Transferor Certificate.

                  On each Distribution Date, (i) the Servicer shall allocate
Shared Excess Finance Charge Collections with respect to the Series in a Group
to each Series in such Group, pro rata, in proportion to the Finance Charge
Shortfalls, if any, with respect to each such Series and (ii) the Servicer shall
withdraw (or shall instruct the Trustee to withdraw) from the Collection Account
and pay to the holder of the Exchangeable Transferor Certificate an amount equal
to the excess, if any, of (x) the aggregate amount of Shared Excess Finance
Charge Collections for all such Series for such Distribution Date over (y) the
aggregate amount of Finance Charge Shortfalls for all such Series for such
Distribution Date.

                  (j) Net Deposits. For so long as Proffitt's, Inc. or an
Affiliate of Proffitt's, Inc. shall be the Servicer hereunder and a Servicer
Default shall not have occurred and be continuing, the Servicer may make
deposits into the Collection Account or the Excess Funding Account on any date
net of amounts payable as of such date to the Transferor or the Servicer from
amounts held in the Collection Account or the Excess Funding Account, it being
understood that the Investor Monthly Servicing Fee with respect to any Series
shall be payable to the Servicer only in accordance with the provisions
specified in the related Supplement and that the foregoing shall in no event
increase the amount payable to the Transferor or the Servicer hereunder or
pursuant to any Supplement.




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<PAGE>   63

                    [THE REMAINDER OF ARTICLE IV IS RESERVED
                     AND MAY BE SPECIFIED IN ANY SUPPLEMENT
                           WITH RESPECT TO ANY SERIES]


                                    ARTICLE V

                   [ARTICLE V IS RESERVED AND MAY BE SPECIFIED
                  IN ANY SUPPLEMENT WITH RESPECT TO ANY SERIES]



                                   ARTICLE VI

                                THE CERTIFICATES

                  SECTION 6.1 THE CERTIFICATES. Subject to Sections 6.10 and
6.11, the Investor Certificates of each Series and any class thereof may be
issued in bearer form (the "Bearer Certificates") with attached interest coupons
and a special coupon (collectively, the "Coupons") or in fully registered form
(the "Registered Certificates"), and shall be substantially in the form of the
exhibits with respect thereto attached to the applicable Supplement. The
Exchangeable Transferor Certificate shall be substantially in the form of
Exhibit A. The Investor Certificates and the Exchangeable Transferor Certificate
shall, upon issue pursuant hereto or to Section 6.9 or Section 6.11, be executed
and delivered by the Transferor (or the Trustee on behalf of the Trust, if
specified in the applicable Supplement) to the Trustee for authentication and
redelivery as provided in Section 6.2. Any Investor Certificates shall be issued
in minimum denominations of $1,000 and in integral multiples of $1,000 in excess
thereof, unless otherwise specified in any Supplement. If specified in the
related Supplement for any Series, the Investor Certificates shall be issued
upon initial issuance as a single certificate in an original principal amount
equal to the Initial Investor Amount as described in Section 6.10. The
Exchangeable Transferor Certificate may also be issued in two or more
certificates. Each Certificate executed by the Transferor shall be executed by
manual or facsimile signature on behalf of the Transferor by its President, any
Executive Vice President, Senior Vice President or the Treasurer. Certificates
bearing the manual or facsimile signature of the individual who was, at the time
when such signature was affixed, authorized to sign on behalf of the Transferor
or the Trustee shall not be rendered invalid, notwithstanding that such
individual has ceased to be so authorized prior to the authentication and
delivery of such Certificates or does not hold such office at the date of such
Certificates. No Certificate shall be entitled to any benefit under this
Agreement or any applicable Supplement, or be valid for any purpose, unless
there appears on such Certificate a certificate of authentication substantially
in the form provided for herein executed by or on behalf of the Trustee by the
manual signature of a Responsible Officer, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, 




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<PAGE>   64

that such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication, except Bearer
Certificates which shall be dated the Issuance Date.

                  SECTION 6.2 AUTHENTICATION OF CERTIFICATES. Contemporaneously
with the assignment and transfer of the Receivables and the other property to
the Trust, the Trustee shall authenticate and deliver the initial Series of
Investor Certificates upon the order of the Transferor, to the Persons
designated in the related Supplement. The Trustee shall authenticate and deliver
the Exchangeable Transferor Certificate to the Transferor simultaneously with
its delivery of the initial Series of Investor Certificates. Upon an Exchange as
provided in Section 6.9 of the Agreement and the satisfaction of the conditions
specified therein, the Trustee shall authenticate and deliver the Investor
Certificates of additional Series (with the designation provided in the
applicable Supplement), upon the order of the Transferor, to the Persons
designated in such Supplement. Upon the order of the Transferor, the
Certificates of any Series shall be duly authenticated by or on behalf of the
Trustee, in authorized denominations equal to (in the aggregate) the Initial
Investor Amount of such Series of Investor Certificates. If specified in the
related Supplement for any Series, the Trustee shall authenticate and deliver
outside the United States the Global Certificate that is issued upon original
issuance thereof, upon the written order of the Transferor, to the Common
Depositary as provided in Section 6.10 against payment of the purchase price
therefor. If specified in the related Supplement for any Series, the Trustee
shall authenticate Book-Entry Certificates that are issued upon original
issuance thereof, upon the written order of the Transferor, to a Clearing Agency
or its nominee as provided in Section 6.11 against payment of the purchase price
therefor.

                  SECTION 6.3 REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES.

                  (a) The Trustee shall cause to be kept at the office or agency
to be maintained by a transfer agent and registrar (which initially shall be the
Trustee) (the "Transfer Agent and Registrar") in accordance with the provisions
of Section 6.3(c) a register (the "Certificate Register") in which, subject to
such reasonable regulations as it may prescribe, the Transfer Agent and
Registrar shall provide for the registration of the Registered Certificates and
of transfers and exchanges of the Registered Certificates as herein provided.
The Trustee is hereby initially appointed Transfer Agent and Registrar for the
purpose of registering the Registered Certificates and transfers and exchanges
of the Registered Certificates as herein provided. The Trustee shall be
permitted to resign as Transfer Agent and Registrar upon 30 days' prior written
notice to the Transferor and the Servicer, provided, however, that such
resignation shall not be effective and the Trustee shall continue to perform the
duties of Transfer Agent and Registrar until the Transferor has appointed a
successor Transfer Agent and Registrar acceptable to the Transferor and the
Trustee. If specified in the related Supplement for any Series of Certificates,
the Transferor shall appoint any co-transfer agent and co-registrar chosen by
the Transferor, and acceptable to the Trustee, including, if and so long as the
Registered Certificates are listed on the Luxembourg Stock Exchange or other
stock exchange and such exchange shall so require, a co-transfer agent and
co-registrar in Luxembourg or the location





                                       58

<PAGE>   65

required by such other stock exchange. If specified in such related Supplement,
so long as the Registered Certificates relating to such Supplement are
outstanding, the Transferor shall maintain a co-transfer agent and co-registrar
in New York City or any other city designated in such Supplement and any
reference in this Agreement to the Transfer Agent and Registrar shall include
any co-transfer agent and co-registrar unless the context requires otherwise.

                  Upon surrender for registration of transfer of any Registered
Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, the Transferor (or the Trustee on behalf of the
Trust, if specified in the applicable Supplement) shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee, one or
more new Registered Certificates in authorized denominations of the same Series
representing like aggregate Undivided Interests in the Trust; provided, however,
that the provisions of this paragraph shall not apply to Bearer Certificates.

                  At the option of any Holder thereof, Registered Certificates
may be exchanged for other Registered Certificates of the same class and Series
in authorized denominations of like aggregate Undivided Interests in the Trust,
upon surrender of the Registered Certificates to be exchanged at any office or
agency of the Transfer Agent and Registrar maintained for such purpose. At the
option of any Holder thereof, subject to applicable laws and regulations, Bearer
Certificates may be exchanged for other Bearer Certificates or Registered
Certificates of the same class and Series in authorized denominations of like
aggregate Undivided Interests in the Trust, upon surrender of the Bearer
Certificates to be exchanged at an office or agency of the Transfer Agent and
Registrar located outside the United States. Each Bearer Certificate surrendered
pursuant to this Section 6.3 shall have attached thereto all unmatured Coupons,
provided that any Bearer Certificate so surrendered after the close of business
on the Record Date preceding the relevant Distribution Date after the related
Series Termination Date need not have attached the Coupon relating to such
Distribution Date. No Registered Certificates may be exchanged for a Bearer
Certificate.

                  The preceding provisions of this Section 6.3(a)
notwithstanding, the Trustee or the Transfer Agent and Registrar, as the case
may be, shall not be required to register the transfer or exchange of any
Certificate of any Series for a period of 15 days preceding the due date for any
payment with respect to the Certificates of such Series.

                  Whenever any Investor Certificates of any Series are
surrendered for exchange, the Transferor (or the Trustee on behalf of the Trust,
if specified in the applicable Supplement) shall execute, and the Trustee shall
authenticate and the Transfer Agent and Registrar shall deliver (in the case of
Bearer Certificates, outside the United States), the Investor Certificates of
such Series which the Certificateholder making the exchange is entitled to
receive. Every Investor Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of 



                                       59

<PAGE>   66

transfer in a form satisfactory to the Trustee and the Transfer Agent and
Registrar duly executed by the Certificateholder thereof or his attorney duly
authorized in writing.

                  Except as provided in any Supplement, no service charge shall
be made for any registration of transfer or exchange of Investor Certificates,
but the Transfer Agent and Registrar and the Trustee or any co-transfer agent
and co-registrar or co-trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Investor Certificates.

                  All Investor Certificates (together with any Coupons attached
to Bearer Certificates) surrendered for registration of transfer or exchange
shall be canceled by the Transfer Agent and Registrar and disposed of in a
manner satisfactory to the Trustee and the Transferor. The Trustee shall cancel
and mutilate the Global Certificate upon its exchange in full for Definitive
Certificates and shall deliver such canceled and mutilated Global Certificate to
the Transferor. The Trustee shall also forward to the Transferor a copy of each
certificate of each Foreign Clearing Agency to the effect referred to in Section
6.10 which was received by the Trustee with respect to each portion of the
Global Certificate exchanged for Definitive Certificates.

                  The Transferor shall execute and deliver to the Trustee or the
Transfer Agent and Registrar, as applicable, Bearer Certificates and Registered
Certificates in such amounts and at such times as are necessary to enable the
Trustee to fulfill its responsibilities under this Agreement and the
Certificates.

                  (b) Except as provided in Sections 6.9 and 7.2 or in any
Supplement, the Transferor's interest in the Exchangeable Transferor Certificate
and other amounts payable to the Transferor pursuant to this Agreement shall not
be sold, transferred, assigned, exchanged, pledged, participated or otherwise
conveyed, unless (i) the Servicer has delivered to the Trustee an Officer's
Certificate stating that such sale, transfer, assignment, exchange, pledge,
participation or conveyance will not, while any Series of Certificates remains
outstanding, reduce the Transferor's retained interest in the Exchangeable
Transferor Certificate below the Minimum Transferor Interest Percentage and (ii)
prior to such sale, transfer, assignment, exchange, pledge, participation or
conveyance, the Rating Agency Condition is satisfied and (iii) the Trustee
receives prior thereto an Opinion of Counsel to the effect that (x) the conveyed
interest in the Exchangeable Transferor Certificate will be treated as either
debt or an interest in a partnership for Federal income tax purposes and that
the conveyance of such interest will not cause the Trust to be characterized for
Federal income tax purposes as an association taxable as a corporation or
otherwise have any material adverse impact on the Federal or applicable state
income taxation of any outstanding Series of Investor Certificates or any
Certificate Owner and (y) such transfer will not cause a taxable event for
Federal income tax purposes to any Investor Certificateholder.

                  (c) The Transfer Agent and Registrar will maintain at its
expense in the Borough of Manhattan, the City of New York (and, if specified in
the related Supplement




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<PAGE>   67

for any Series, Luxembourg (or subject to Section 6.3(a) any other city
designated in such Supplement)), an office or offices or agency or agencies
where Investor Certificates may be surrendered for registration of transfer or
exchange (except that Bearer Certificates may not be surrendered for exchange at
any such office or agency in the United States).

                  (d) Unless otherwise provided in any related Supplement,
registration of transfer of Registered Certificates containing a legend relating
to the restrictions on transfer of such Registered Certificates (which legend
shall be set forth in the Supplement relating to such Investor Certificates)
shall be effected only if:

                  (i)      (a) the sale is of at least U.S. $500,000 principal
         amount of such Certificates and (b) a letter from the purchaser
         satisfactory to counsel to the Servicer is executed and received; or

                  (ii)     (a) the Registered Certificates are transferred in
         compliance with Rule 144 (or any amendment thereto) or Rule 144A (or
         any amendment thereto) under the 1933 Act, and (b) a letter from the
         purchaser satisfactory to counsel to the Servicer is executed and
         received; or

                  (iii)    the Registered Certificates are sold or otherwise
         transferred in any other transaction that does not require registration
         under the 1933 Act, and, if the Transferor, the Servicer, the Trustee
         or the Transfer Agent and Registrar so request, an Opinion of Counsel
         satisfactory to it or them, in form and substance satisfactory to it or
         them, is furnished to such effect.

                  Registered Certificates issued upon registration of transfer
of, or Registered Certificates issued in exchange for, Registered Certificates
bearing the legend referred to above shall also bear such legend unless the
Transferor, the Servicer, the Trustee and the Transfer Agent and Registrar
receive an Opinion of Counsel satisfactory to each of them, to the effect that
such legend may be removed.

                  Whenever a Registered Certificate containing the legend set
forth in the related Supplement is presented to the Transfer Agent and Registrar
for registration of transfer, the Transfer Agent and Registrar shall promptly
seek written instructions from the Servicer regarding such transfer. The
Transfer Agent and Registrar and the Trustee shall be entitled to receive
written instructions signed by a Servicing Officer prior to registering any such
transfer or authenticating new Registered Certificates, as the case may be. The
Servicer hereby agrees to indemnify the Transfer Agent and Registrar and the
Trustee and to hold each of them harmless against any loss, liability or expense
incurred on their part and arising out of or in connection with actions taken or
omitted by them in good faith and in the exercise of ordinary care in reliance
on and in accordance with any such written instructions furnished pursuant to
this Section 6.3(d).



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<PAGE>   68

                  SECTION 6.4 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (a) any mutilated Certificate (together, in the case of Bearer Certificates,
with all unmatured Coupons, if any, appertaining thereto) is surrendered to the
Transfer Agent and Registrar, or the Transfer Agent and Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Transfer Agent and Registrar, the
Trustee and the Transferor such security or indemnity as may be required by them
to save each of them harmless, then, in the absence of notice to the Trustee
that such Certificate has been acquired by a bona fide purchaser, the Transferor
(or the Trustee on behalf of the Trust, if specified in the applicable
Supplement) shall execute and the Trustee shall authenticate and the Transfer
Agent and Registrar shall deliver (in the case of Bearer Certificates, outside
the United States), in exchange for or in lieu of any such mutilated, destroyed,
lost or stolen Certificate, a new Certificate of like tenor and aggregate
Undivided Interest, if applicable. In connection with the issuance of any new
Certificate under this Section 6.4, the Trustee or the Transfer Agent and
Registrar may require the payment by the Certificateholder of a sum sufficient
to cover any tax or governmental charges (including those incurred by the
Trustee or the Transfer Agent and Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section 6.4 shall constitute complete and
indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found and
presented at any time.

                  SECTION 6.5 PERSONS DEEMED OWNERS. Prior to due presentation
of a Certificate (other than a Bearer Certificate) for registration of transfer,
the Trustee, the Paying Agent, the Transfer Agent and Registrar and any agent or
representative of any of them may treat the person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Article IV and for all other purposes whatsoever, and
neither the Trustee, the Paying Agent, the Transfer Agent and Registrar nor any
agent or representative of any of them shall be affected by any notice to the
contrary. In the case of a Bearer Certificate, the Trustee, the Paying Agent,
the Transfer Agent and Registrar and any agent or representative of any of them
may treat the bearer of a Bearer Certificate or Coupon as the owner of such
Bearer Certificate or Coupon for the purpose of receiving distributions pursuant
to Article IV and for all other purposes whatsoever, and neither the Trustee,
the Paying Agent, the Transfer Agent and Registrar nor any agent or
representative of any of them shall be affected by any notice to the contrary.
Notwithstanding the foregoing provisions of this Section 6.5, in determining
whether the holders of the requisite Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Transferor, the Servicer or any Affiliate thereof
shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
Certificates so owned which have been pledged in good faith shall not be
disregarded and may be regarded as outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the United States, the Transferor, the
Servicer or an Affiliate thereof.



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<PAGE>   69

                  SECTION 6.6 APPOINTMENT OF PAYING AGENT. The Paying Agent
shall make distributions to Investor Certificateholders from the Collection
Account (or any other account or accounts maintained for the benefit of
Certificateholders as specified in the related Supplement for any Series)
pursuant to Articles IV and V. Any Paying Agent shall have the revocable power
to withdraw funds from the Collection Account (or any other account or accounts
maintained for the benefit of Certificateholders as specified in the related
Supplement for any Series) for the purpose of making the distributions referred
to above. The Trustee (or the Servicer if the Trustee is the Paying Agent) may
revoke such power and remove the Paying Agent if the Trustee (or the Servicer if
the Trustee is the Paying Agent) determines in its sole discretion that the
Paying Agent shall have failed to perform its obligations under this Agreement
in any material respect or for other good cause. The Paying Agent shall (unless
otherwise specified in the related Supplement for any Series) initially be the
Trustee and any co-paying agent chosen by the Transferor and acceptable to the
Trustee, including, if and so long as any Series of Investor Certificates is
listed on the Luxembourg Stock Exchange or other stock exchange and such
exchange so requires, a co-paying agent in Luxembourg or the location of such
other stock exchange. The Trustee shall be permitted to resign as Paying Agent
upon 30 days' prior written notice to the Servicer and the Transferor; provided,
however, that such resignation shall not be effective and the Trustee shall
continue to perform the duties of Paying Agent until the appointment of a
successor Paying Agent, pursuant to this Section 6.6. The Transferor shall
notify the Rating Agencies and the Trustee (if it is not then serving as the
Paying Agent) of any resignation or replacement of the Paying Agent. In the
event that the Trustee shall no longer be the Paying Agent, the Transferor shall
appoint a successor to act as Paying Agent and such successor shall be
acceptable to the Trustee. The Trustee shall cause the initial Paying Agent
(unless the initial Paying Agent is the Trustee) and each successor Paying Agent
or any additional Paying Agent appointed by the Transferor to execute and
deliver to the Trustee an instrument in which such initial or successor Paying
Agent or additional Paying Agent shall agree with the Trustee that, as Paying
Agent, such initial or successor Paying Agent or additional Paying Agent will
hold all sums, if any, held by it for payment to the Investor Certificateholders
in trust for the benefit of the Investor Certificateholders entitled thereto
until such sums shall be paid to such Certificateholders. The Paying Agent shall
return all unclaimed funds to the Trustee and upon removal of a Paying Agent
shall also return all funds in its possession to the Trustee. The provisions of
Sections 11.1, 11.2 and 11.3 shall apply to the Trustee also in its role as
Paying Agent, for so long as the Trustee shall act as Paying Agent. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.

                  If specified in the related Supplement for any Series, so long
as the Investor Certificates of such Series are outstanding and such Investor
Certificates are held by the related Certificate Owners as Definitive
Certificates (for Registered Certificates not held in book-entry form, the
Transferor shall, if the Paying Agent is not located in New York City, appoint a
co-paying agent in New York City acceptable to the Trustee or any other city
designated in such Supplement which, if and so long as any Series of Investor




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Certificates is listed on the Luxembourg Stock Exchange or other stock exchange
and such exchange so requires, shall be in Luxembourg or such other locations
required by such other stock exchange.

                  SECTION 6.7 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer or the Paying Agent (or any agent thereof),
within five Business Days after receipt by the Trustee of a request therefor
from the Servicer or the Paying Agent, respectively, in writing, a list in the
form maintained by the Trustee, of the names and addresses of the Investor
Certificateholders (other than Bearer Certificateholders). If Holders
representing Undivided Interests in the Trust aggregating not less than 10% of
the Investor Amount of the Investor Certificates of such Series (the
"Applicants") apply in writing to the Trustee, and such application states that
the Applicants desire to communicate with other Investor Certificateholders of
such Series with respect to their rights under this Agreement or under the
Investor Certificates and is accompanied by a copy of the communication which
such Applicants propose to transmit, then the Trustee, after having been
adequately indemnified by such Applicants for its costs and expenses, and having
given the Servicer notice that such request has been made together with copies
of such applications and proposed communications to Investor Certificateholders,
shall afford or shall cause the Transfer Agent and Registrar to afford such
Applicants access during normal business hours to the most recent list of
Investor Certificateholders (other than Bearer Certificateholders) held by the
Trustee, or shall mail or cause to be mailed such list within five Business Days
after the receipt of such application. Such list shall be as of a date no more
than 45 days prior to the date of receipt of such Applicants' request.

                  Every Certificateholder, by receiving and holding a
Certificate agrees with the Trustee that none of the Trustee, the Transfer Agent
and Registrar, the Transferor, the Servicer or the Sellers, nor any of their
respective agents or representatives shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Investor
Certificateholders (other than Bearer Certificateholders) hereunder, regardless
of the sources from which such information was derived.

                  SECTION 6.8 AUTHENTICATING AGENT.

                  (a) The Trustee may appoint one or more authenticating agents
with respect to the Certificates which shall be authorized to act on behalf of
the Trustee in authenticating the Certificates in connection with the issuance,
delivery, registration of transfer, exchange or repayment of the Certificates.
Whenever reference is made in this Agreement to the authentication of
Certificates by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of the Trustee by
an authenticating agent and a certificate of authentication executed on behalf
of the Trustee by an authenticating agent. Each authenticating agent must be
reasonably acceptable to the Transferor.




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<PAGE>   71

                  (b) Any institution succeeding to the corporate agency
business of an authenticating agent shall continue to be an authenticating agent
without the execution or filing of any paper or any further act on the part of
the Trustee or such authenticating agent.

                  (c) An authenticating agent may at any time resign by giving
written notice of resignation to the Trustee and to the Transferor. The Trustee
may at any time terminate the agency of an authenticating agent by giving notice
of termination to such authenticating agent and to the Transferor. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time an authenticating agent shall cease to be acceptable to the Trustee or
the Transferor, the Trustee promptly may appoint a successor authenticating
agent. Any successor authenticating agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
authenticating agent. No successor authenticating agent shall be appointed
unless acceptable to the Trustee and the Transferor.

                  (d) The Trustee agrees to pay from its own funds, on behalf of
the Trust, to each authenticating agent from time to time reasonable
compensation for its services under this Section 6.8.

                  (e) The provisions of Sections 11.1, 11.2 and 11.3 shall be
applicable to any authenticating agent.

                  (f) Pursuant to an appointment made under this Section 6.8,
the Certificates may have endorsed thereon, in lieu of the Trustee's certificate
of authentication, an alternate certificate of authentication in substantially
the following form:

                  "This is one of the Certificates described in the Master
         Pooling and Servicing Agreement.



                                     -----------------------------
                                     as Authenticating Agent
                                     for the Trustee,


                                     By:
                                        --------------------------
                                         Authorized Officer"

                  SECTION 6.9 TENDER OF EXCHANGEABLE TRANSFEROR CERTIFICATE.

                  (a) The Transferor and the Trustee may at any time and from
time to time enter into one or more Supplements for the purpose of authorizing
the issuance by



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<PAGE>   72

the Trust to the Transferor, one or more Series of Investor Certificates. Upon
any Exchange, the Trustee shall issue to the Transferor under Section 6.1 for
execution (unless the Trustee is to execute such Series on behalf of the Trust,
as specified in the applicable Supplement) and redelivery to the Trustee for
authentication under Section 6.2 one or more new Series of Investor
Certificates. Any such Series of Investor Certificates shall be substantially in
the form specified in the applicable Supplement and shall bear, upon its face,
the designation for such Series to which it belongs so selected by the
Transferor. Except as specified in the Supplement for any Series as to differing
treatment of the Investor Certificates within such Series, all Investor
Certificates of any Series shall be equally and ratably entitled as provided
herein to the benefits hereof without preference, priority or distinction on
account of the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Agreement and the applicable
Supplement.

                  (b) The Holder of the Exchangeable Transferor Certificate may
tender the Exchangeable Transferor Certificate to the Trustee in exchange for
(i) one or more newly issued Series of Investor Certificates and (ii) a reissued
Exchangeable Transferor Certificate (any such tender an "Exchange"). The
Transferor may perform an Exchange by notifying the Trustee, in writing at least
three (3) days in advance (an "Exchange Notice") of the date upon which the
Exchange is to occur (an "Exchange Date"). Any Exchange Notice shall state the
designation of any Series to be issued on the Exchange Date and, with respect to
each such Series: (x) its Initial Investor Amount (or the method for calculating
such Initial Investor Amount), if any, which, in the aggregate, at any time, may
not be greater than the current principal amount of the Exchangeable Transferor
Certificate less the product of the Minimum Transferor Interest Percentage and
the Aggregate Principal Receivables at such time, and (y) its Certificate Rate
(or the method for allocating interest payments or other cash flows to such
Series), if any and (z) the applicable Enhancement, if any, for such Investor
Certificates. On the Exchange Date, the Trustee shall authenticate and deliver
any such Series only upon delivery to it of the following: (A) a Supplement in
form satisfactory to the Trustee executed by the Transferor and specifying the
Principal Terms of such Series, (B) the applicable Enhancement, if any, (C) an
Opinion of Counsel to the effect that, unless otherwise specified in the related
Supplement, the newly issued Series of Investor Certificates will be
characterized as either indebtedness or an interest in a partnership under
existing law for Federal income tax purposes and that the issuance of the newly
issued Series of Investor Certificates will not have any material adverse effect
on the Federal income tax characterization of any outstanding Series of Investor
Certificates that have been the subject of a previous opinion of tax counsel or
result in the Trust being taxable as an association for Federal or applicable
state tax purposes (such opinion, a "Tax Opinion"), (D) an agreement, if any,
pursuant to which the Enhancement Provider agrees to provide Enhancement, (E)
written confirmation from each Rating Agency that the Exchange will satisfy the
Rating Agency Condition and (F) the existing Exchangeable Transferor
Certificate, together with a written certification from the Transferor that the
Transferor Amount is at least equal to the Minimum Transferor Amount. Upon
satisfaction of such conditions, the Trustee shall cancel the existing
Exchangeable Transferor Certificate and




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<PAGE>   73

issue, as provided above, such Series of Investor Certificates and new
Exchangeable Transferor Certificate, dated the Exchange Date.

                  (c) In conjunction with an Exchange, the parties hereto shall
execute a Supplement, which shall specify the relevant terms with respect to any
Series of Investor Certificates, which may include, without limitation: (i) its
name or designation, (ii) an Initial Investor Amount or the method of
calculating the Initial Investor Amount, (iii) a Certificate Rate or Certificate
Rates (or formula for the determination thereof), (iv) the rights of the Holder
of the Exchangeable Transferor Certificate that have been transferred to the
Holders of such Series pursuant to such Exchange, (v) the interest payment date
or dates and the date or dates from which interest shall accrue, (vi) the method
of allocating Collections of Principal Receivables for such Series and, if
applicable, with respect to other Series and the method by which the principal
amount of Investor Certificates of such Series shall amortize or accrete and the
method for allocating Collections of Finance Charge Receivables and Receivables
in Defaulted Accounts, (vii) the names of any accounts to be used by such Series
and the terms governing the operation of any such account, (viii) the Servicing
Fee Percentage, (ix) the Minimum Transferor Interest Percentage, (x) the Minimum
Aggregate Principal Receivables, (xi) the Series Termination Date, (xii) the
terms of Enhancement, if any, (xiii) the Enhancement Provider, if any, (xiv) the
base rate, if any, (xv) the Repurchase Terms or the terms on which the
Certificates of such Series may be remarketed to other investors, (xvi) any
deposit into any account provided for such Series, (xvii) the number of classes
of such Series, and if more than one class, the rights and priorities of each
such class, (xviii) the extent to which the Investor Certificates will be
issuable in temporary or permanent global form, and in such case, the depository
for such global certificate or certificates, the terms and conditions, if any,
upon which such global certificate may be exchanged in whole or in part for
Definitive Certificates, and the manner in which any interest payable on a
temporary or global certificate will be paid, (xix) whether the Certificates may
be issued in bearer form and any limitations imposed thereon and provisions
relating to compliance with applicable laws and rules for bearer instruments,
(xx) the priority of any Series with respect to any other Series, and (xxi) any
other relevant terms of such Series (all such terms, the "Principal Terms" of
such Series). The terms of such Supplement may modify or amend the terms of this
Agreement solely as applied to such new Series. If on the date of the issuance
of such Series, there is issued and outstanding no Series of Investor
Certificates which is currently rated by a Rating Agency, then as a condition to
such Exchange, a nationally recognized investment banking firm or commercial
bank (which may include NationsBanc Capital Markets, Inc.) shall also deliver to
the Trustee an opinion stating, in substance, that the Exchange will not have an
adverse effect on the timing or distribution of payments to such other Series of
Investor Certificates then issued and outstanding.

                  (d) The creation or sale of any additional interest in the
Trust or the Receivables, whether or not designated as an Exchange (including,
but not limited to, the receipt by the Trust or the Transferor of the proceeds
of any loan or additional loan provided by an Enhancement Provider) shall
require the delivery of a Tax Opinion with respect to such interest.




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<PAGE>   74

                  SECTION 6.10 GLOBAL CERTIFICATE; EURO-CERTIFICATE EXCHANGE
DATE.

                  (a) If specified in the related Supplement for any Series, the
Investor Certificates may be initially issued in the form of a single temporary
Global Certificate (the "Global Certificate") in bearer form, without interest
coupons, in the denomination of the Initial Investor Amount and substantially in
the form attached to the applicable Supplement. Unless otherwise specified in
the applicable Supplement, the provisions of this Section 6.10 shall apply to
such Global Certificate. The Global Certificate will be authenticated by the
Trustee upon the same conditions, in substantially the same manner and with the
same effect as the Definitive Certificates. The Global Certificate may be
exchanged as described in this Section 6.10 or in the applicable Supplement for
Bearer Certificates and/or Registered Certificates in definitive form (the
"Definitive Euro-Certificates"). Notwithstanding the foregoing, no Certificates
shall be issued in bearer form unless the Transferor has determined, and
delivers an Opinion of Counsel to the Trustee substantially to the effect that,
the terms and procedures governing issuance and transfer of such Certificates
result in favorable treatment to Investor Certificateholders under the Bearer
Rules.

                  (b) The Manager shall, upon its determination of the date of
completion of the distribution of the Certificates, so advise the Trustee, the
Transferor, the Common Depositary, and each Foreign Clearing Agency in writing
forthwith. Without unnecessary delay, but prior to the Euro-Certificate Exchange
Date, the Transferor will execute and deliver to the Trustee at its office or to
the Trustee's designated agent outside the United States definitive Bearer
Certificates in an aggregate principal amount equal to the Initial Investor
Amount. All Bearer Certificates so issued and delivered will have Coupons
attached. The Global Certificate may be exchanged for an equal aggregate
principal amount of Definitive Euro-Certificates only on or after the
Euro-Certificate Exchange Date. A United States institutional investor will be
required to deliver to the Transferor, the Trustee and the Manager at the time
of its purchase of Registered Certificates a signed certificate substantially in
the form attached to the Supplement for the related Series. Upon any demand for
exchange for Definitive Certificates in accordance with this paragraph, the
Transferor shall cause the Trustee to authenticate and deliver the Definitive
Certificates to the Holder (x) outside the United States, in the case of Bearer
Certificates, and (y) according to the instructions of the Holder, in the case
of Registered Certificates, but only upon presentation to the Trustee of a
written statement substantially in the form attached to the Supplement for the
related Series with respect to the Global Certificate or portion thereof being
exchanged signed by a Foreign Clearing Agency, to the effect that it has
received in writing or by tested telex a certification substantially in the form
of the certificate attached to the Supplement for the related Series, such
certificate being dated no earlier than 15 days prior to the Euro-Certificate
Exchange Date and signed by or on behalf of the person appearing in the records
of a Foreign Clearing Agency as the beneficial owner of the Global Certificate
or portion thereof being exchanged. Upon receipt of such certification, the
Trustee shall cause the Global Certificate to be endorsed in accordance with
paragraph (d) below. Unless otherwise



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<PAGE>   75

provided in the applicable Supplement, any exchange as provided in this Section
6.10(b) shall be made free of charge to the holders and the beneficial owners of
the Global Certificate and to the beneficial owners of the Definitive Euro-
Certificates issued in exchange, except that a person receiving Definitive
Euro-Certificates must bear the cost of insurance, postage, transportation and
the like in the event that such person does not receive such Definitive
Euro-Certificates in person at the offices of a Foreign Clearing Agency.

                  (c) The delivery to the Trustee by a Foreign Clearing Agency
of any written statement referred to above may be relied upon by the Transferor
and the Trustee as conclusive evidence that a corresponding certification or
certifications has or have been delivered to such Foreign Clearing Agency,
pursuant to the terms of this Agreement.

                  (d) Upon any such exchange of all or a portion of the Global
Certificate for a Definitive Euro-Certificate or Certificates, such Global
Certificate shall be endorsed by or on behalf of the Trustee to reflect the
reduction of its principal amount by an amount equal to the aggregate principal
amount of such Definitive Euro-Certificate or Certificates. Until so exchanged
in full, such Global Certificate shall in all respects be entitled to the same
benefits under this Agreement as Definitive Euro-Certificates authenticated and
delivered hereunder, except that the beneficial owners of such Global
Certificate shall not be entitled to receive payments of interest on the
Certificates until they have exchanged their beneficial interests in such Global
Certificate for Definitive Euro-Certificates.

                  SECTION 6.11 BOOK-ENTRY CERTIFICATES. Unless otherwise
provided in any related Supplement, the Investor Certificates, upon original
issuance, will be issued in the form of the requisite number of typewritten
Certificates representing the Book-Entry Certificates, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the
Transferor. The Investor Certificates shall initially be registered on the
Certificate Register in the name of Cede, the nominee of the Clearing Agency,
and no Certificate Owner will receive a definitive certificate representing such
Certificate Owner's interest in the Investor Certificates, except as provided in
Section 6.13. Unless and until definitive, fully registered Investor
Certificates (the "Definitive Certificates") have been issued to Certificate
Owners pursuant to Section 6.13:

                  (i)      the provision of this Section 6.11 shall be in full
         force and effect;

                  (ii)     the Transferor, the Servicer, the Paying Agent, the
         Transfer Agent and Registrar and the Trustee may deal with the Clearing
         Agency for all purposes (including the making of distributions on the
         Investor Certificates) as the authorized representatives of the
         Certificate Owners;

                  (iii)    to the extent that the provisions of this Section
         6.11 conflict with any other provisions of this Agreement, the
         provisions of this Section 6.11 shall control;




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<PAGE>   76

                  (iv)     the rights of Certificate Owners shall be exercised
         only through the Clearing Agency and the Clearing Agency Participants
         and shall be limited to those established by law and agreements between
         such Certificate Owners and the Clearing Agency and/or the Clearing
         Agency Participants. Pursuant to the Depository Agreement, unless and
         until Definitive Certificates are issued pursuant to Section 6.13, the
         initial Clearing Agency will make book-entry transfers among the
         Clearing Agency Participants and receive and transmit distributions of
         principal and interest on the Investor Certificates to such Clearing
         Agency Participants; and

                  (v)      whenever this Agreement requires or permits actions
         to be taken based upon instructions or directions of a specified
         percentage of the Investor Amount of any or all Series of Certificates
         outstanding, the Clearing Agency shall be deemed to represent such
         percentage only to the extent that it has received instructions to such
         effect from Certificate Owners and/or Clearing Agency Participants
         owning or representing, respectively, such required percentage of the
         beneficial interest in Investor Certificates.

                  SECTION 6.12 NOTICES TO CLEARING AGENCY. Whenever notice or
other communication to the Investor Certificateholders is required under this
Agreement, unless and until Definitive Certificates shall have been issued to
Certificate Owners pursuant to Section 6.13, the Trustee, the Servicer and the
Paying Agent shall give all such notices and communications specified herein to
be given to Holders of the Investor Certificates to the Clearing Agencies.

                  SECTION 6.13 DEFINITIVE CERTIFICATES. If Book-Entry
Certificates have been issued pursuant to Section 6.11 and if (i)(A) the
Transferor advises the Trustee in writing that the Clearing Agency is no longer
willing or able to discharge properly its responsibilities under the Depository
Agreement, and (B) the Trustee or the Transferor is unable to locate a qualified
successor (which successor must be treated as maintaining a book-entry system
within the meaning of Section 163(f)(3) of the Code), (ii) the Transferor at its
option, advises the Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency with respect to the Certificates
or (iii) after the occurrence of a Servicer Default, Certificate Owners
representing beneficial interests aggregating more than 50% of the Investor
Amount of any Series advise the Trustee and the Clearing Agency through the
Clearing Agency Participants in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interests of the
Certificate Owners, the Trustee shall notify the Certificate Owners, through
each applicable Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the Investor Certificates by the Clearing
Agency, accompanied by registration instructions from the Clearing Agency for
registration, the Trustee shall 




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<PAGE>   77

issue the Definitive Certificates. None of the Servicer, the Transferor, the
Transfer Agent and Registrar nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Trustee to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.

                  SECTION 6.14 MEETINGS OF CERTIFICATEHOLDERS.

                  (a) Unless not permitted by the Supplement for any Series
issued in whole or in part in Bearer Certificates, the Transferor, the Servicer
or the Trustee may at any time call a meeting of the Certificateholders of such
Series or of all Series, to be held at such time and at such place as the
Transferor, the Servicer or the Trustee, as the case may be, shall determine,
for the purpose of approving a modification of or amendment to, or obtaining a
waiver of, any covenant or condition set forth in this Agreement with respect to
such Series or in the Certificates of such Series, subject to Section 13.1.
References in this Section 6.14 to Certificateholders shall be deemed to refer
to the Exchangeable Transferor Certificates and only those Series of Investor
Certificates for which this Section 6.14 is applicable. Notice of any meeting of
Certificateholders, setting forth the time and place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be given in
accordance with Section 13.5 and at least once in an Authorized Newspaper and,
if and for so long as the Certificates are listed on the Luxembourg Stock
Exchange or other stock exchange and such exchange so requires, in a newspaper
of general circulation in Luxembourg (which newspaper shall be printed in the
English or French language and customarily published on each business day in
Luxembourg) or the location required by such other stock exchange, the first
publication to be not less than 20 nor more than 180 days prior to the date
fixed for the meeting. To be entitled to vote at any meeting of
Certificateholders, a person shall be (i) a Holder of one or more Certificates
of the applicable Series or (ii) a person appointed by an instrument in writing
as proxy by the Holder of one or more Certificates. The only Persons who shall
be entitled to be present or to speak to any meeting of Certificateholders shall
be the Persons entitled to vote at such meeting and their counsel and any
representatives of the Transferor, the Servicer and the Trustee and their
respective counsels.

                  (b) At a meeting of Investor Certificateholders, persons
entitled to vote Investor Certificates evidencing Undivided Interests
aggregating a majority of the Investor Amount of the applicable Series or all
outstanding Series, as the case may be, shall constitute a quorum. No business
shall be transacted in the absence of a quorum, unless a quorum is present when
the meeting is called to order. In the absence of a quorum at any such meeting,
the meeting may be adjourned for a period of not less than 10 days; in the
absence of a quorum at any such adjourned meeting, such adjourned meeting may be
further adjourned for a period of not less than 10 days; at the reconvening of
any meeting




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<PAGE>   78

further adjourned for lack of a quorum, the Persons entitled to vote at least
25% in Undivided Interest of the applicable Series or all outstanding Series, as
the case may be, shall constitute a quorum for the taking of any action set
forth in the notice of the original meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided above, except that such notice must
be given not less than five (5) days prior to the date on which the meeting is
scheduled to be reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage of the aggregate principal amount of the
outstanding Investor Certificates which shall constitute a quorum.

                  (c) Any Certificateholder who has executed an instrument in
writing appointing a person as proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted; provided that such
Certificateholders shall be considered as present or voting only with respect to
the matters covered by such instrument in writing. Subject to the provisions of
Section 13.1, any resolution passed or decision taken at any meeting of Investor
Certificateholder duly held in accordance with this Section 6.14 shall be
binding on all the Investor Certificateholders whether or not present or
represented at the meeting.

                  (d) The holding of Bearer Certificates shall be proved by the
production of such Bearer Certificates or by a certificate, satisfactory to the
Servicer and the Trustee, executed by any bank, trust company or recognized
securities dealer, wherever situated, satisfactory to the Servicer and the
Trustee. Each such certificate shall be dated and shall state that on the date
thereof a Bearer Certificate bearing a specified serial number was deposited
with or exhibited to such bank, trust company or recognized securities dealer by
the person named in such certificate. Any such certificate may be issued in
respect of one or more Bearer Certificates specified therein. The holding by the
person named in any such certificate of any Bearer Certificate specified therein
shall be presumed to continue for a period of one year from the date of such
certificate unless at the time of any determination of such holding (i) another
certificate bearing a later date issued in respect of the same Bearer
Certificate shall be produced, (ii) the Bearer Certificate specified in such
certificate shall be produced by or certified by a bank, trust company or
recognized securities dealer on behalf of some other person or (iii) the Bearer
Certificate specified in such certificate shall have ceased to be outstanding.
The appointment of any proxy shall be proved by having the signature of the
person executing the proxy guaranteed by any bank, trust company or recognized
securities dealer satisfactory to the Trustee. The holding of Registered
Certificates shall be proved by the Certificate Register or by a certificate or
certificates of the Transfer Agent and Registrar.

                  (e) The Trustee shall appoint a temporary chairman of the
meeting. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the holders of a majority in Undivided Interest of the
Certificates of such Series represented at the meeting. No vote shall be cast or
counted at any meeting in respect of any Certificate challenged as not
outstanding and ruled by the chairman of the meeting to be not outstanding. The
chairman of the meeting shall have no right to vote except as a
Certificateholder or proxy. Any meeting of Certificateholders duly called at
which a






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quorum is present may be adjourned from time to time, and the meeting may be
held as so adjourned without further notice.

                  (f) The vote upon any resolution submitted to any meeting of
Certificateholders shall be by written ballot on which shall be subscribed the
signatures of the Certificateholders or proxies and on which shall be inscribed
the serial number or numbers of the Certificates held or represented by them.
The permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record in duplicate of
the proceedings of each meeting of Certificateholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was published as
provided above. The record shall be signed and verified by the permanent
chairman and secretary of the meeting and one of the duplicates shall be
delivered to the Servicer and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the matters
therein stated.


                                   ARTICLE VII

                             OTHER MATTERS RELATING
                                TO THE TRANSFEROR

                  SECTION 7.1 LIABILITY OF THE TRANSFEROR. The Transferor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Transferor in such capacity herein.
 
                  SECTION 7.2 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE TRANSFEROR. The Transferor shall not consolidate with or
merge into any other business entity or convey or transfer its properties and
assets substantially as an entirety to any Person, unless:
 
                  (i)      the entity formed by such consolidation or into which
         the Transferor is merged or the Person which acquires by conveyance or
         transfer the properties and assets of the Transferor substantially as
         an entirety shall be organized and existing under the laws of the
         United States of America or any State or the District of Columbia, a
         national banking association or a state banking corporation or other
         depository entity whose deposits are insured by the FDIC which is not
         subject to the bankruptcy laws of the United States of America, or a
         single purpose, bankruptcy remote entity that is organized under the
         laws of any state of the United States, in each case, which is
         wholly-owned (other than director qualifying 






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<PAGE>   80

         shares) directly or indirectly, by Proffitt's, Inc. or its successors
         or assigns, and meets the Rating Agency Condition and if the Transferor
         is not the surviving entity, shall expressly assume, by an agreement
         supplemental hereto, executed and delivered to the Trustee, in form
         satisfactory to the Trustee, the performance of every covenant and
         obligation of the Transferor, as applicable, hereunder and shall
         benefit from all the rights granted to the Transferor, as applicable,
         hereunder. To the extent that any right, covenant or obligation of the
         Transferor is inapplicable to the successor entity, such successor
         entity shall be subject to such covenant or obligation, or benefit from
         such right, as would apply, to the extent practicable, to such
         successor entity;

                  (ii)     no Pay Out Event shall occur as a result of any such
         consolidation, merger, conveyance or transfer;

                  (iii)    the Transferor has delivered to the Trustee an
         Officer's Certificate and an Opinion of Counsel each stating that such
         consolidation, merger, conveyance or transfer and such supplemental
         agreement comply with this Section 7.2 and that all conditions
         precedent herein provided for relating to such transaction have been
         complied with;

                  (iv)     the Transferor shall have delivered written notice of
         such consolidation, merger, conveyance or transfer to the Trustee, each
         Rating Agency assigning a rating to any class of Investor Certificates
         of any then outstanding Series, each Person, if any, specified in the
         Supplement with respect to each class of Investor Certificates of any
         then outstanding Series which is not assigned a rating by any Rating
         Agency and each Enhancement Provider; and

                  (v)      the Transferor shall have received written notice
from each Rating Agency that such consolidation, merger, conveyance or transfer
will not result in a downgrading or withdrawal of its then current rating of any
outstanding Series or Class of rated Investor Certificates.

                  (b)      The obligations of the Transferor hereunder shall not
be assignable nor shall any Person succeed to the obligations of the Transferor
hereunder except in each case in accordance with the provisions of the foregoing
paragraph.

                  SECTION 7.3 LIMITATION ON LIABILITY OF THE TRANSFEROR. The
directors, officers, employees, agents and representatives of the Transferor
shall not be under any liability to the Trust, the Servicer, the Trustee, the
Certificateholders, any Enhancement Provider, if any, or any other Person
hereunder or pursuant to any document delivered hereunder, it being expressly
understood that all such liability is expressly waived and released as a
condition of, and as consideration for, the execution of this Agreement and any
Supplement and the issuance of the Certificates; provided, however, that this
provision shall not protect the officers, directors, employees or agents of the
Transferor against any




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<PAGE>   81

liability which would otherwise be imposed by reason of bad faith or gross
negligence in the performance of duties hereunder. Except as provided in Section
7.1, the Transferor shall not be under any liability to the Trust, the Servicer,
the Trustee, the Certificateholders, any Enhancement Provider or any other
Person for any action taken or for refraining from the taking of any action in
its capacity as Transferor pursuant to this Agreement or any Supplement, however
arising under this Agreement or any Supplement; provided, however, that this
provision shall not protect the Transferor against any liability which would
otherwise be imposed by reason of its bad faith or gross negligence in the
performance of its duties as Transferor hereunder. The Transferor and any
director, officer, employee, agent or representative of the Transferor may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.




                                  ARTICLE VIII

                             OTHER MATTERS RELATING
                                 TO THE SERVICER

                  SECTION 8.1 LIABILITY OF THE SERVICER. The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer in such capacity herein.

                  SECTION 8.2 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SERVICER. The Servicer shall not consolidate with or merge
into any other business entity or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:

                  (i)      the entity formed by such consolidation or into which
         the Servicer is merged or the Person which acquires by conveyance or
         transfer the properties and assets of the Servicer substantially as an
         entirety shall be organized and existing under the laws of the United
         States of America or any State or the District of Columbia, or shall be
         a national banking association, state banking corporation or other
         entity which is not subject to the bankruptcy laws of the United States
         of America, and if the Servicer is not the surviving entity, shall be
         qualified to be an Eligible Servicer and shall expressly assume, by an
         agreement supplemental hereto, executed and delivered to the Trustee,
         the performance of every covenant and obligation of the Servicer, as
         applicable, hereunder and shall benefit from all the rights granted to
         the Servicer, as applicable, hereunder. To the extent that any right,
         covenant or obligation of the Servicer is inapplicable to the successor
         entity, such successor entity shall be subject to such covenant or
         obligation,




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<PAGE>   82

         or benefit from such right, as would apply, to the extent practicable,
         to such successor entity;

                  (ii)     the Servicer has delivered to the Trustee an
         Officer's Certificate and an Opinion of Counsel each stating that such
         consolidation, merger, conveyance or transfer and such supplemental
         agreement comply with this Section 8.2 and that all conditions
         precedent herein provided for relating to such transaction have been
         complied with;

                  (iii)    the Servicer shall have received written notice from
         each Rating Agency that such assignment and succession will not result
         in a downgrading or withdrawal of its then current rating of any
         outstanding Series of Investor Certificates and shall have delivered
         copies of each such notice to the Transferor and the Trustee and each
         Person, if any, specified in the Supplement with respect to each class
         of Investor Certificates of any then outstanding Series which is not
         assigned a rating by any Rating Agency.

                  (iv)     The Transferor shall have delivered 15 Business Days'
         prior written notice of such consolidation, merger, conveyance or
         transfer to the Trustee, each Rating Agency assigning a rating to any
         class of Investor Certificates of any then outstanding Series, and each
         Person, if any, specified in the Supplement with respect to each class
         of Investor Certificates of any then outstanding Series which is not
         assigned a rating by any Rating Agency, and each Enhancement Provider;
         and

The Servicer shall promptly advise the Rating Agencies in writing of any such
consolidation, merger, conveyance or transfer.

                  SECTION 8.3 LIMITATION ON LIABILITY OF THE SERVICER AND
OTHERS. The directors, officers, employees, agents and representatives of the
Servicer shall not be under any liability to the Trust, the Transferor, the
Trustee, the Certificateholders, any Enhancement Provider or any other Person
hereunder or pursuant to any document delivered hereunder, it being expressly
understood that all such liability is expressly waived and released as a
condition of, and as consideration for, the execution of this Agreement and any
Supplement and the issuance of the Certificates; provided, however, that this
provision shall not protect the directors, officers, employees or agents of the
Servicer against any liability which would otherwise be imposed by reason of bad
faith or negligence in the performance of the Servicer's express duties
hereunder. Except as provided in Section 8.4, the Servicer shall not be under
any liability to the Trust, the Transferor, the Trustee, the Certificateholders,
any Enhancement Provider or any other Person for any action taken or for
refraining from the taking of any action in its capacity as Servicer pursuant to
this Agreement or any Supplement, however arising under this Agreement or any
Supplement; provided, however, that this provision shall not protect the
Servicer against any liability which would otherwise be imposed by reason of bad
faith or 




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<PAGE>   83

gross negligence in the performance of its duties as Servicer hereunder. The
Servicer and any director, officer, employee, agent, or representative of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the
Receivables in accordance with this Agreement or any Supplement and which in its
reasonable opinion may involve it in any expense or liability.

                  SECTION 8.4 INDEMNIFICATION OF THE TRUST AND THE TRUSTEE. The
Servicer shall indemnify and hold harmless the Transferor, the Trust, for the
benefit of the Certificateholders, and the Trustee, including its officers,
directors, agents and employees, from and against any loss, liability, expense,
damage or injury suffered or sustained by them and arising out of or relating to
any claims, actions or proceedings brought or asserted by third parties
regarding the activities of the Trust or the Trustee for which the Servicer is
responsible pursuant to this Agreement or any Supplement, including but not
limited to any judgment, award, settlement, reasonable attorneys' fees and other
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim; provided, however, that the Servicer
shall not indemnify (a) the Transferor, the Trust or the Trustee or their
respective officers, directors, agents and employees for liabilities imposed by
reason of fraud, negligence or breach of fiduciary duty by (i) the Trustee in
the performance of its duties under this Agreement or (ii) the Transferor or any
Certificateholders, (b) the Transferor, the Trust, the Trustee, the Certificate
Owners or the Certificateholders for liabilities arising from actions taken by
the Trustee at the request of Certificateholders, (c) the Transferor, the Trust,
the Trustee, the Certificate Owners or the Certificateholders as to any losses,
claims or damages incurred by a Certificateholder or a Certificate Owner in its
capacity as an investor, including without limitation losses incurred as a
result of Defaulted Receivables or Receivables which are charged off as
uncollectible or (d) the Trust, the Trustee, the Certificate Owners or the
Certificateholders for any liabilities, costs or expenses of the Trust, the
Trustee or the Certificate Owners or Certificateholders arising under any tax
law, including without limitation any Federal, state or local income or
franchise tax or any other tax imposed on or measured by income (including any
interest or penalties with respect thereto or arising from a failure to comply
therewith) required to be paid by the Trust, the Certificate Owners or the
Certificateholders in connection with the Trust or this Agreement to any taxing
authority. Except as set forth in the preceding sentence, neither the Servicer
nor any of its directors, officers, employees or agents will be under any other
liability to the Trust, the Trustee, the Certificateholders or any other person
for any action taken, or for refraining from taking any action pursuant to this
Agreement. Neither the Transferor nor the Servicer nor any of their respective
directors, officers, employees or agents will be protected against any liability
which would otherwise be imposed by reason of bad faith or gross negligence by
or on behalf of the Transferor or the Servicer in the performance of their
respective duties hereunder. The Transferor and the Servicer will be liable for
any actual damages resulting directly from the material failure to perform any
of their respective obligations under this Agreement. In addition, the Servicer
is not under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its





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<PAGE>   84

servicing responsibilities under this Agreement and which in its opinion may
expose it to any expense or liability. The Servicer shall not be liable for any
acts or omissions of any Successor Servicer.

                  Subject to Sections 7.1 and 10.2(b) of the Agreement, any
indemnification pursuant to this Section 8.4 shall only be from the assets of
the Servicer. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof and shall
survive the termination of this Agreement, the resignation and removal of the
Trustee and the payment in full of the Certificates.

                  SECTION 8.5 THE SERVICER NOT TO RESIGN. The Servicer shall not
resign from the obligations and duties hereby imposed on it as such except upon
determination that (i) the performance of its duties hereunder is or will become
impermissible under applicable law, regulation or order and (ii) there is no
reasonable action which the Servicer could take to make the performance of its
duties hereunder permissible under applicable law. Any such determination
permitting the resignation of the Servicer shall be evidenced as to clause (i)
of this Section by an Opinion of Counsel to such effect delivered to the
Trustee. No such resignation will become effective until the Trustee or a
Successor Servicer has assumed the Servicer's responsibilities and obligations
under this Agreement. If the Trustee is unable within 120 days of the date of
such determination to appoint a Successor Servicer pursuant to Section 10.2(a),
the Trustee or its duly appointed agent (which may not be the outgoing Servicer)
shall serve as Successor Servicer hereunder but the Trustee shall have continued
authority to appoint another Person as Successor Servicer.

                  SECTION 8.6 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE RECEIVABLES. The Servicer shall provide to the Trustee access to
the documentation regarding the Accounts and the Receivables in such cases where
the Trustee is required in connection with the enforcement of the rights of the
Investor Certificateholders, or by applicable statutes or regulations, to review
such documentation, such access being afforded without charge but only (i) upon
reasonable request, (ii) during normal business hours, (iii) subject to such
security and confidentiality requirements and procedures as are specified herein
and/or which the Servicer may deem reasonably necessary and (iv) at offices
designated by the Servicer. Nothing in this Section 8.6 shall derogate from the
obligation of the Transferor, the Trustee or the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors and
the failure of the Servicer to provide access as provided in this Section 8.6 as
a result of such obligation shall not constitute a breach of this Section 8.6.

                  SECTION 8.7 DELEGATION OF DUTIES. It is understood and agreed
by the parties hereto that the Servicer may delegate certain of its duties
hereunder to any Person, including McRae's, Inc., as Subservicer who agrees to
conduct such duties in accordance with the applicable Credit Card Guidelines and
the terms of this Agreement. The fees of any Person to whom such duties are
delegated shall be paid for by the Servicer, from any source, including the
Monthly Servicing Fee. Any such delegations shall not relieve the




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<PAGE>   85

Servicer of its liability and responsibility with respect to such duties, and
shall not constitute a resignation within the meaning of Section 8.5 hereof. If
any such delegation is not in the ordinary course of business, notification
thereof shall be given by the Servicer to each Rating Agency.

                  SECTION 8.8 EXAMINATION OF RECORDS. The Transferor and the
Servicer shall clearly and unambiguously identify each Account (including any
Account designated pursuant to Section 2.6) in its computer or other records to
reflect that the Receivables arising in such Account have been conveyed to the
Trust pursuant to this Agreement. The Transferor and the Servicer shall, prior
to the sale or transfer to a third party of any receivable held in its custody,
examine its computer and other records to determine that such receivable is not
a Receivable.



                                   ARTICLE IX

                                 PAY OUT EVENTS

                  SECTION 9.1 PAY OUT EVENTS. Unless modified with respect to
any Series of Investor Certificates by the Supplement for such Series, if any
one of the following events shall occur:
 
                  (a) the Transferor or the Company shall (i) become insolvent
         or admit in writing its inability to generally pay its debts as they
         become due or voluntarily and generally suspend payment of its
         obligations, (ii) voluntarily seek, consent to, or acquiesce in the
         benefit or benefits of any Debtor Relief Law, (iii) become a party to
         (or be made the subject of) any proceeding provided for by any Debtor
         Relief Law, other than as a creditor or claimant, and, in the event
         such proceeding is involuntary, (A) within 10 Business Days after the
         Transferor or the Company has knowledge of such proceeding or the
         filing thereof either (I) the petition instituting same has not been
         dismissed or (II) an order has not been entered by the court having
         jurisdiction which allows continued transfer to the Trust of Principal
         Receivables with no adverse effect to the Trust or the
         Certificateholders or (B) an order as contemplated in (A)(II) above
         having previously been entered, is no longer in effect other than by
         reason of the termination of such proceeding, or (iv) become unable for
         any reason to transfer Receivables to the Trust in accordance with the
         provisions of this Agreement; or

                  (b) the Trust or the Transferor shall become an "investment
         company" within the meaning of the 1940 Act; or

         then, a Pay Out Event with respect to all Series of Certificates then
         outstanding shall occur without any notice or other action on the part
         of the Trustee or all Investor Certificateholders immediately upon the
         occurrence of such event. Upon 




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<PAGE>   86

         actual notice of the occurrence of any Pay Out Event, the Trustee shall
         advise (i)each Rating Agency assigning a rating for any class of
         Investor Certificates of any then outstanding Series and (ii)each
         Person, if any, specified in any Supplement with respect to each class
         of Investor Certificates of any then outstanding Series which is not
         rated by any Rating Agency, in writing of the occurrence of any Pay Out
         Event.

                  SECTION 9.2 ADDITIONAL RIGHTS UPON THE OCCURRENCE OF CERTAIN
EVENTS.

                  (a) If the Transferor voluntarily goes into liquidation or
consents to the appointment of a conservator, receiver or liquidator under any
Debtor Relief Laws with respect to the Transferor or of or relating to all or
substantially all its property, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a conservator or receiver or liquidator in any Debtor Relief Law proceedings, or
for the winding-up or liquidation of its affairs, shall have been entered
against the Transferor; or the Transferor shall admit in writing its inability
to pay its debts generally as they become due, files a petition to take
advantage of any applicable Debtor Relief Laws, makes an assignment for the
benefit of its creditors or voluntarily suspends payment of its obligations
generally; or the Transferor shall become unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of this Agreement
(such voluntary liquidation, appointment, entering of such decree, admission,
filing, making, suspension or inability, a "Dissolution Event"), the Transferor
shall promptly give notice of such event to the Trustee, and the Transferor
shall on the day of such appointment, voluntary liquidation, entering of such
decree, admission, filing, making, suspension or inability, as the case may be
(the "Appointment Day"), immediately cease to transfer Principal Receivables to
the Trust hereunder. Notwithstanding any cessation of the transfer to the Trust
of additional Principal Receivables, Principal Receivables transferred to the
Trust prior to the occurrence of such Dissolution Event and Collections in
respect of such Principal Receivables and Finance Charge Receivables whenever
created shall continue to be part of the Trust, and such Collections shall
continue to be allocated, deposited and held in accordance with the provisions
of Article IV. Within 15 days of the receipt by the Trustee of the notice of a
Dissolution Event, the Trustee shall (i) publish a notice in an Authorized
Newspaper that a Dissolution Event has occurred and that the Trustee intends to
sell, dispose of or otherwise liquidate the Receivables in a commercially
reasonable manner and (ii) send written notice to the Investor
Certificateholders and any Enhancement Provider entitled thereto describing the
provisions of this Section 9.2 and requesting instructions from such Holders,
which notice shall request each Investor Certificateholder to advise the Trustee
in writing that it elects one of the following options: (A) the Investor
Certificateholder wishes the Trustee to instruct the Servicer not to sell,
dispose of or otherwise liquidate the Receivables and to instruct the Servicer
to reconstitute the Trust upon the same terms and conditions set forth herein,
or (B) the Investor Certificateholder wishes the Trustee to instruct the
Servicer to sell, dispose of or otherwise liquidate the Receivables, or (C) the
Investor Certificateholder refuses to advise the Trustee as to the specific
action the Trustee shall instruct the Servicer to take. If after




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90 days from the day notice pursuant to clause (i) above is first published (the
"Publication Date"), the Trustee shall not have received written instructions of
Holders of Investor Certificates aggregating in excess of 50% of the related
Investor Amount of each Series (or in the case of a Series having more than one
class of Investor Certificates, each class of such Series) and each Holder of
any interest in the Exchangeable Transferor Certificate other than the
Transferor to the effect that the Trustee shall instruct the Servicer not to
sell, dispose of, or otherwise liquidate the Receivables and to instruct the
Servicer to reconstitute the Trust upon the same terms and conditions as set
forth herein, the Trustee shall instruct the Servicer to proceed to sell,
dispose of, or otherwise liquidate the Receivables in a commercially reasonable
manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids and the Servicer shall proceed to consummate
the sale, liquidation or disposition of the Receivables as provided above with
the highest bidder for the Receivables. If, however, with respect to the portion
of the Receivables allocable to any outstanding Series, the Holders of more than
50% of the principal amount of each class of such Series and each Holder of any
interest in the Exchangeable Transferor Certificate other than the Transferor,
instruct the Trustee not to sell the portion of the Receivables allocable to
such Series, the Trust shall continue with respect to such Series pursuant to
the terms of the Agreement and the Supplement. If specified in the applicable
Supplement, the holder of an Enhancement Investor Amount with respect to a
Series shall be entitled to give instructions pursuant to this Section 9.2 as if
such Enhancement Investor Amount were a class of such Series. The portion of the
Receivables allocable to any Series shall be equal to the sum of (1) the product
of (A) the Transferor Percentage, (B) the Aggregate Principal Receivables and
(C) a fraction the numerator of which is the related Investor Percentage with
respect to Finance Charge Receivables and the denominator of which is the sum of
all Investor Percentages with respect to Finance Charge Receivables of all
Series outstanding and (2) the Investor Amount of such Series. The Transferor or
any of its Affiliates shall be permitted to bid for the Receivables. In addition
the Transferor or any of its Affiliates shall have the right to match any bid by
a third person and be granted the right to purchase the Receivables at such
matched bid price. The Trustee may obtain a prior determination from the
conservator or receiver that the terms and manner of any proposed sale,
disposition or liquidation are commercially reasonable. The provisions of
Sections 9.1 and 9.2 shall not be deemed to be mutually exclusive.

                  (b) The proceeds from the sale, disposition or liquidation of
the Receivables pursuant to Section (a) above shall be treated as Collections on
the Receivables allocable to the Investor Certificateholders and shall be
allocated and deposited as Collections allocable to the Investor
Certificateholders of the applicable Series in accordance with the provisions of
Article IV; provided that the Trustee shall determine conclusively without
liability for such determination the amount of such proceeds which are allocable
to Finance Charge Receivables and the amount of such proceeds which are
allocable to Principal Receivables. On the day following the Distribution Date
on which such proceeds are distributed to the Investor Certificateholders
(assuming that no Series elects to reconstitute the Trust), the Trust shall
terminate.




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                                    ARTICLE X

                                SERVICER DEFAULTS

                  SECTION 10.1 SERVICER DEFAULTS. If any one of the following
events (a "Servicer Default") shall occur and be continuing:
 
                  (a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Trustee to make such
payment, transfer or deposit or to give notice to the Trustee as to any required
drawing or payment under any Enhancement on or before the date occurring five
(5) Business Days after the date such payment, transfer, deposit or drawing or
such instruction or notice is required to be made or given, as the case may be,
under the terms of this Agreement or any Supplement; provided, however, that any
such failure caused by circumstances beyond the Servicer's control shall not
constitute a Servicer Default if the Servicer promptly remedies such failure
within five (5) Business Days after receiving notice of such failure or
otherwise becoming aware of such failure;

                  (b) failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in this
Agreement or any Supplement, which has a material adverse effect on the
Certificateholders of any Series then outstanding (without regard to the amount
of any Enhancement) and which continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the Holders of Investor Certificates evidencing
Undivided Interests aggregating more than 50% of the Investor Amount of any
Series adversely affected thereby, and which continues to materially adversely
affect the rights of the Investor Certificateholders of any Series then
outstanding (without regard to the amount of any Enhancement); or the Servicer
shall delegate its duties under this Agreement, except as permitted by Section
8.7;

                  (c) any representation, warranty or certification made by the
Servicer in this Agreement or any Supplement or in any certificate delivered
pursuant to this Agreement or any Supplement shall prove to have been incorrect
when made, and which has a material adverse effect on the rights of the
Certificateholders of any Series then outstanding (without regard to the amount
of any Enhancement) and which continues to be incorrect in any material respect
and which continues to affect materially and adversely the rights of the
Certificateholders of any Series then outstanding (without regard to the amount
of any Enhancement) for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Trustee, or to the Servicer and the Trustee by the
Holders of Investor




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<PAGE>   89

Certificates evidencing Undivided Interests aggregating more than 50% of the
Investor Amount of any Series adversely affected thereby; or

                  (d) the Servicer shall consent to the appointment of a
conservator, receiver or liquidator under any Debtor Relief Law proceedings of
or relating to the Servicer or of or relating to all or substantially all of its
property, or a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a conservator or
receiver or liquidator in any Debtor Relief Law proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; or the Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition to take
advantage of any applicable Debtor Relief Law, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations
generally;

then, so long as such Servicer Default shall not have been remedied, either the
Trustee or the Holders of Investor Certificates evidencing Undivided Interests
aggregating more than 50% of the Aggregate Investor Amount, by notice then given
in writing to the Servicer (and to the Trustee if given by the Investor
Certificateholders) (a "Termination Notice"), may terminate all of the rights
and obligations of the Servicer as Servicer under this Agreement and in and to
all Receivables and the proceeds thereof and appoint a new Servicer (a "Service
Transfer"). The rights and interests of the Transferor in the Transferor
Interest will not be affected by any Service Transfer.

                  The Transferor shall have the right to nominate to the Trustee
a potential Successor Servicer. The Trustee shall as promptly as possible
appoint the entity nominated by the Transferor if such entity meets the
eligibility criteria set out herein. If the Transferor does not nominate an
entity to be the Successor Servicer, the Trustee shall as promptly as possible
appoint a Successor Servicer, and if no Successor Servicer has been appointed by
the Trustee and has accepted such appointment by the time the Servicer ceases to
act as Servicer, all authority, power and obligations of the Servicer under this
Agreement will pass to, and be vested in, the Trustee. Prior to any Service
Transfer, the Trustee will seek to obtain bids from potential servicers meeting
the eligibility criteria set out herein, to serve as a Successor Servicer for
servicing compensation not in excess of the Servicing Fee. If the Trustee is
unable to obtain any bids from eligible entities and the Servicer delivers an
Officer's Certificate to the effect that it cannot in good faith cure the
related Servicer Default, then the Trustee will offer the Transferor the right
to accept the reassignment of all of the Receivables. The deposit amount of such
a reassignment shall be equal to the sum of the Aggregate Investor Amount (less
the aggregate amounts held in the Excess Funding Account and in any Principal
Account with respect to any Series) plus accrued and unpaid interest on the
Certificates of all Series plus certain amounts payable to Enhancement
Providers, if applicable.

                  The Trustee, upon giving or receiving a Termination Notice,
shall immediately notify the Rating Agencies and any Enhancement Provider of
such notice. 



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After receipt by the Servicer of such Termination Notice, and on the date that a
Successor Servicer shall have been appointed by the Trustee pursuant to Section
10.2, all authority and power of the Servicer under this Agreement shall pass to
and be vested in a Successor Servicer; and, without limitation, the Trustee is
hereby authorized and empowered (upon the failure of the Servicer to cooperate)
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, all documents and other instruments upon the failure of the Servicer
to execute or deliver such documents or instruments, and to do and accomplish
all other acts or things necessary or appropriate to effect the purposes of such
Service Transfer. The Servicer agrees to take all reasonable actions to
cooperate with the Trustee and such Successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder, including, without limitation, the transfer to such
Successor Servicer of all authority of the Servicer to service the Receivables
provided for under this Agreement, including, without limitation, all authority
over all Collections which shall on the date of transfer be held by the Servicer
for deposit, or which have been deposited by the Servicer, in the Collection
Account, or which shall thereafter be received with respect to the Receivables,
and in assisting the Successor Servicer and in enforcing all rights to
Recoveries. The Servicer shall promptly transfer its electronic records relating
to the Receivables to the Successor Servicer in such electronic form as the
Successor Servicer may reasonably request and shall promptly transfer to the
Successor Servicer all other records, correspondence and documents necessary for
the continued servicing of the Receivables in the manner and at such times as
the Successor Servicer shall reasonably request. To the extent that compliance
with this Section 10.1 shall require the Servicer to disclose to the Successor
Servicer information of any kind which the Servicer reasonably deems to be
confidential, the Successor Servicer shall be required to enter into such
customary licensing and confidentiality agreements as the Servicer shall deem
reasonably necessary to protect its interest.

                  Notwithstanding the foregoing, a delay in or failure of
performance referred to in Section 10.1(a) for a period of 10 Business Days
after the applicable grace period or under Section 10.1(b) or (c) for a period
of 60 Business Days after the applicable grace period shall not constitute a
Servicer Default if such delay or failure could not be prevented by the exercise
of reasonable diligence by the Servicer and such delay or failure was caused by
an act of God or public enemy, acts of declared or undeclared war, public
disorder, rebellion, riot or sabotage, epidemics, landslides, lightning, fire,
hurricanes, tornadoes, earthquakes, nuclear disasters or meltdowns, floods,
power outages, communication system failures or outages or similar causes. The
preceding sentence shall not relieve the Servicer from using its best reasonable
efforts to perform its obligations in a timely manner in accordance with the
terms of this Agreement or any Supplement and the Servicer shall provide the
Trustee, any Enhancement Provider, the Transferor and the Certificateholders
with an Officer's Certificate giving prompt notice of such failure or delay by
it, together with a description of the cause of such failure or delay and its
efforts so to perform its obligations. The Servicer shall immediately notify a
Responsible Officer of the Trustee in writing of any Servicer Default.




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                  SECTION 10.2 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

                  (a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 10.1, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or otherwise specified by the Trustee in writing or, if no
such date is specified in such Termination Notice, or otherwise specified by the
Trustee in writing, until a date mutually agreed upon by the Servicer and
Trustee (not to exceed 90 days from the date of delivery of such notice). The
Trustee shall as promptly as possible after the giving of a Termination Notice
appoint a successor servicer (the "Successor Servicer"), with the consent of any
Enhancement Provider, and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Trustee, the Transferor and
any Enhancement Provider. The Transferor shall have the right to nominate to the
Trustee the name of a potential successor servicer which nominee shall be
selected by the Trustee as the Successor Servicer, subject to the consent of any
Enhancement Provider. The Trustee shall seek bids from potential successor
servicers. If the Trustee is unable to obtain any bids from any potential
successor servicer and the Servicer delivers an Officer's Certificate to the
effect that it cannot in good faith cure the Servicer Default which gave rise to
a transfer of servicing, then the Trustee shall notify each Enhancement Provider
that a sale of the Receivables is proposed and shall provide each Enhancement
Provider an opportunity to bid on the Receivables and shall offer the Transferor
the right of first refusal to purchase the Receivables on terms equivalent to
the best purchase offer as determined by the Trustee, but in no event less than
an amount equal to the Aggregate Investor Amount (less the aggregate amount held
in the Excess Funding Account and any Principal Account with respect to any
Series) on the date of such purchase plus all accrued but unpaid interest on the
Certificates of all Series at the applicable Certificate Rates through the end
of the applicable interest accrual periods of such Series plus any other unpaid
amounts required to be paid pursuant to this Section 10.2 under any Supplement;
provided, however, that, if the Transferor shall not have a rating of P-3 or
Baa3 or higher by Moody's and A-3 or BBB- or higher by Standard & Poor's, no
such reassignment shall occur unless the Transferor shall deliver to the Trustee
and the Rating Agencies an Opinion of Counsel reasonably acceptable to the
Trustee that such reassignment would not constitute a fraudulent conveyance. In
the event that a Successor Servicer has not been appointed and has not accepted
its appointment at the time when the Servicer ceases to act as Servicer, the
Trustee (as trustee hereunder) without further action shall automatically be
appointed the Successor Servicer. Notwithstanding the above, the Trustee shall,
if it is legally unable so to act, petition a court of competent jurisdiction to
appoint any established financial institution having a net worth of not less
than $50,000,000 and whose regular business includes the servicing of consumer
revolving credit card receivables as the Successor Servicer hereunder.
Notwithstanding anything to the contrary in this Agreement, the entire amount of
the reassignment deposit amount shall be distributed to the Investor
Certificateholders of the related Series on the subsequent Distribution Date for
such Series pursuant to Section 12.3 (except for amounts payable to any
Enhancement Provider under the applicable Enhancement Agreement, which amounts
shall be distributed to such Enhancement Provider.)




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                  (b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to all servicing
functions under this Agreement and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer; provided, however, that, the outgoing
Servicer shall not be relieved of any liability hereunder for its actions prior
to the transfer of servicing hereunder; provided further, that the Successor
Servicer shall not be liable for any acts or omissions of the Servicer or for
any breach by the Servicer of any of its representations and warranties
contained herein or in any Supplement or amendment, by Officer's Certificate
delivered in connection herewith, and provided further, that, (i) the outgoing
Servicer shall not indemnify the Trust or the Trustee under Section 8.4 for
acts, omissions or alleged acts or omissions, including any involving negligence
or bad faith by a Successor Servicer and (ii) the outgoing Servicer shall not
pay or reimburse the Trustee pursuant to Section 11.5 for any expense,
disbursement or advance of the Trustee related to or arising as a result of the
negligence or bad faith of the Successor Servicer. Any Successor Servicer, by
its acceptance of its appointment, will automatically agree to be bound by the
terms and provisions of any applicable Enhancement agreement.

                  (c) In connection with such appointment and assumption, (i)
the Trustee shall be entitled to such compensation, or may make such
arrangements for the compensation of the Successor Servicer out of Collections,
as it and such Successor Servicer shall agree; provided, however, that no such
compensation shall be in excess of the Monthly Servicing Fee permitted to the
Servicer pursuant to Section 3.2, (ii) Proffitt's, Inc., as initial Servicer,
agrees to reimburse any reasonable out-of-pocket, system conversion and
modification, moving and related expenses incurred by the Successor Servicer, if
the Servicer is not Proffitt's, Inc., or an Affiliate of Proffitt's, Inc. or the
Trustee, in connection to the transfer of servicing to a Successor Servicer,
such reimbursement obligation in no event not to exceed $50,000, and (iii) if
the Monthly Servicing Fee payable to the Successor Servicer shall not be
sufficient to cover the actual costs of servicing the Receivables, Proffitt's,
Inc., as initial Servicer, agrees to reimburse any excess of the actual costs of
servicing the Receivables over the Monthly Servicing Fee accruing to the
Servicer; provided, however, that such reimbursement obligation may not exceed
the average costs of servicing for similar portfolios of Receivables.

                  (d) All authority and power granted to the Successor Servicer
under this Agreement shall automatically cease and terminate upon termination of
the Trust pursuant to Section 12.1 and shall pass to and be vested in the
Transferor and, without limitation, the Transferor is hereby authorized and
empowered to execute and deliver, on behalf of the Successor Servicer, as
attorney-in-fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things necessary or appropriate to effect the
purposes of such transfer of servicing rights. The Successor Servicer agrees to
cooperate with the Transferor in effecting the termination of the
responsibilities and rights of the Successor Servicer to conduct servicing on
the Receivables. The Successor



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Servicer shall transfer its electronic records relating to the Receivables to
the Transferor in such electronic form as the Transferor may reasonably request
and shall transfer all other records, correspondence and documents to the
Transferor in the manner and at such times as the Transferor shall reasonably
request. To the extent that compliance with this Section 10.2 shall require the
Successor Servicer to disclose to the Transferor information of any kind which
the Successor Servicer deems to be confidential, the Transferor shall be
required to enter into such customary licensing and confidentiality agreements
as the Successor Servicer shall deem necessary to protect its interests.

                  SECTION 10.3 NOTIFICATION TO CERTIFICATEHOLDERS. Upon the
occurrence of any Servicer Default, the Servicer shall give prompt written
notice thereof to the Trustee, the Rating Agencies and any Enhancement Provider,
and the Trustee shall give notice to the Investor Certificateholders at their
respective addresses appearing in the Certificate Register. Upon any termination
or appointment of a Successor Servicer pursuant to this Article X, the Trustee
shall give prompt written notice thereof to Investor Certificateholders at their
respective addresses appearing in the Certificate Register, the Rating Agencies
and to any Enhancement Provider. Notice to Holders of Bearer Certificates, if
any, shall be given by publication in the manner described in Section 13.5 of
the Agreement.

                  SECTION 10.4 WAIVER OF PAST DEFAULTS. The Holders of Investor
Certificates evidencing Undivided Interests aggregating more than 66-2/3% of the
Investor Amount of any Series then outstanding affected by any default by the
Servicer or the Transferor may, on behalf of all Holders of Certificates of such
affected Series, waive any default by the Servicer or the Transferor in the
performance of their respective obligations hereunder and its consequences,
except a default in the failure to make any required deposits or payments of
interest or principal with respect to any Series of Certificates. Upon any such
waiver of a past default, such default shall cease to exist, and any default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon except to the extent expressly so waived.



                                   ARTICLE XI

                                   THE TRUSTEE

                  SECTION 11.1 DUTIES OF TRUSTEE.

                  (a) The Trustee, prior to the occurrence of a Servicer Default
and after the curing or waiving of all Servicer Defaults which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Default has occurred
(which has not been cured or waived), the Trustee (as Trustee and not as
Successor Servicer) shall exercise such of the rights and powers vested




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in it by this Agreement or any Supplement, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.

                  (b)      The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement or any Supplement, shall
examine them to determine whether they conform as to form to the requirements of
this Agreement or any Supplement, but shall not be required to verify the
accuracy of any information, calculations or conclusions stated therein.

                  (c)      Subject to Section 11.1(a), no provision of this
Agreement or any Supplement shall be construed to relieve the Trustee from
liability for its own negligent action, its own bad faith, its own negligent
failure to act or its own willful misconduct; provided, however, that:

                  (i)      the Trustee shall not be liable for an error of
         judgment made in good faith by a Responsible Officer or Responsible
         Officers of the Trustee, unless it shall be proved that the Trustee was
         negligent in ascertaining the pertinent facts;

                  (ii)     the Trustee shall not be personally liable with
         respect to any action taken, suffered or omitted to be taken by it in
         good faith in accordance with the direction of the Holders of Investor
         Certificates evidencing Undivided Interests aggregating more than 50%
         of the Investor Amount of any Series adversely affected thereby
         relating to the time, method and place of conducting any proceeding for
         any remedy available to the Trustee, or exercising any trust or power
         conferred upon the Trustee, under this Agreement or any Supplement;

                  (iii)    the Trustee shall not be charged with knowledge of
         any failure by the Servicer (other than the Trustee, in its capacity as
         Successor Servicer) to comply with the obligations of the Servicer
         referred to in clauses (a), (b) and (c) of Section 10.1 unless a
         Responsible Officer of the Trustee obtains actual knowledge of such
         failure (it being understood that knowledge of the Servicer, in its
         capacity as agent for the Trustee, is not attributable to the Trustee)
         or the Trustee receives written notice of such failure from the
         Servicer, any Holders of Investor Certificates evidencing Undivided
         Interests aggregating more than 50% of the Investor Amount of any
         Series adversely affected thereby or any Enhancement Provider; and

                  (iv)     in making a determination of any material and adverse
         effect upon Certificateholders or the Investor Certificates, the
         Trustee may, as to matters of law, rely exclusively upon an Opinion of
         Counsel.



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                  (d) The Trustee (in its capacity as such) shall not be
required to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder, or in exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it, and none of the provisions contained in this Agreement
or any Supplement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer or the Successor Servicer under this Agreement or any Supplement except
during such time, if any, as the Trustee shall be the Successor Servicer in
accordance with the terms of this Agreement or any Supplement.

                  (e) Except for actions expressly authorized by this Agreement
or any Supplement, the Trustee shall take no action reasonably likely to impair
the interests of the Trust in any Receivable now existing or hereafter created
or to impair the value of any Receivable now existing or hereafter created.

                  (f) Except as specifically provided in this Agreement, the
Trustee shall have no power to vary the corpus of the Trust.

                  (g) In the event that the Paying Agent or the Transfer Agent
and Registrar shall not be the Trustee and shall fail to perform any obligation,
duty or agreement in the manner or on the day required to be performed by the
Paying Agent or the Transfer Agent and Registrar, as the case may be, under this
Agreement, the Trustee shall be obligated promptly upon a Responsible Officer of
the Trustee having written notice or actual knowledge thereof to perform such
obligation, duty or agreement in the manner so required.

                  (h) Any action, suit or proceeding brought in respect of one
or more particular Series shall have no effect on the Trustee's rights, duties
and obligations hereunder with respect to any one or more Series not the subject
of such action, suit or proceeding.

                  (i) The Trustee shall, upon the reasonable request of the
Transferor, enter into any intercreditor agreement relating to the assets of the
Transferor; provided however, that the Trustee shall have received an Officer's
Certificate from the Transferor stating that the Transferor does not believe
that any such intercreditor agreement will materially and adversely affect any
outstanding Investor Certificates of any Series, and the Trustee shall have
received a reliance letter entitling it to rely upon any Opinions of Counsel to
the Transferor delivered in connection with such intercreditor agreement.

                  SECTION 11.2 CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 11.1:

                  (a) the Trustee may rely on and shall be protected in acting
on, or in refraining from acting in accord with, any resolution, Officer's
Certificate, Opinion of



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Counsel, certificate of independent public accountants or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document, including, without limitation, any
request or instruction by the Servicer or the Transferor to make any deposit or
payment or any draw on any Enhancement or to transfer any Receivables or
Accounts, prima facie properly executed and submitted to it pursuant to this
Agreement or any Supplement by the proper party or parties;

                  (b) the Trustee may consult with counsel as to matters of law
and any advice or Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel as to any
actions required to be taken or withheld hereunder;

                  (c) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement or any Supplement, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any of the Certificateholders or Certificate
Owners or any Enhancement Provider, pursuant to the provisions of this Agreement
or any Supplement or any Enhancement, unless such Certificateholders or
Certificate Owners or such Enhancement Provider shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing contained herein
shall, however, relieve the Trustee (as Trustee but not as Successor Servicer)
of the obligations, upon the occurrence of any Servicer Default (which has not
been cured or waived), to exercise such of the rights and powers vested in it by
this Agreement or any Supplement, and to use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;

                  (d) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement or any Supplement;

                  (e) except as may be required by Sections 11.1(a) or 11.1(b),
the Trustee shall not be bound to make any investigation into the facts of
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, except to the extent specifically requested in writing so to do by
Holders of Investor Certificates evidencing Undivided Interests aggregating more
than 50% of the Investor Amount of any Series which could be adversely affected
if the Trustee does not perform such acts and the Trustee is reasonably
indemnified therefor;

                  (f) the Trustee (in its capacity as such) may execute any of
the trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents or attorneys or a custodian, and the Trustee (in its
capacity as such) shall not be responsible for any misconduct or negligence on
the part of any such agent, attorney or custodian appointed with due care by it
hereunder;




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                  (g) except as may be required by Sections 11.1(a) or 11.1(b)
hereof, the Trustee shall not be required to make any initial or periodic
examination of any documents or records related to the Receivables or the
Accounts for the purpose of establishing the presence or absence of defects, the
compliance by the Transferor or Servicer with their representations, warranties
or covenants or for any other purpose;

                  (h) the permissive right of the Trustee to take actions
enumerated in this Agreement or any Supplement shall in no event be construed as
a duty;

                  (i) whenever in the administration of this Agreement or any
Supplement, the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officer's Certificate;

                  (j) except with respect to any Enhancement Investor Amount,
the Trustee shall not be deemed to be a fiduciary for the Enhancement Provider,
if any, in its capacity as such, and the Trustee's sole responsibility with
respect to the Enhancement Provider in its capacity as such shall be to perform
those duties with respect to the Enhancement Provider as are specifically set
forth in the related Enhancement agreement and no implied covenants shall be
read into this Agreement against the Trustee with respect to the Enhancement
Provider;

                  (k) the Trustee shall have no duty (i) to see to any
recording, filing or depositing of this Agreement or any agreement referred to
herein or any financing statement or continuation statement evidencing a
security interest in the Receivables or the Accounts, or to see to the
maintenance of any such recording, filing or depositing or any rerecording,
refiling or redepositing of any thereof or (ii) to confirm or verify the
contents of any reports or certificates of the Servicer delivered to the Trustee
pursuant to this Agreement believed by the Trustee to be genuine and to have
been signed or presented by the proper party or parties; and

                  (l) in the event the entity serving as Trustee hereunder is
also serving as Paying Agent or Transfer Agent and Registrar hereunder, the
rights, powers, immunities and indemnities afforded to the Trustee hereunder
shall also be afforded to such Paying Agent and Transfer Agent and Registrar.

                  SECTION 11.3 TRUSTEE NOT LIABLE FOR RECITALS IN CERTIFICATES.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the certificates of
authentication on the Certificates). Except as set forth in Section 2.2(a) or
Section 11.15, the Trustee makes no representations as to (i) the validity or
sufficiency of this Agreement or any Supplement or of the Certificates (other
than the certificates of authentication on the Certificates), (ii) the existence
or validity of any Receivable, (iii) the validity of any transfer or assignment
of 



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any Receivable to the Trust, (iv) the validity of any grant of a security
interest to the Trust in any Receivable, (v) the perfection of any security
interest (whether as of the date hereof or at any future time) in any
Receivable, (vi) the maintenance of or the taking of any action to maintain such
perfection, (vii) the receipt by the Trustee or the Servicer of any Receivable,
(viii) the performance or enforcement of any Receivable, (ix) the compliance by
the Transferor or the Servicer with any covenant or representation, (x) the
breach by the Transferor or the Servicer of any warranty or representation made
hereunder or in any related document or the accuracy of any such warranty or
representation or (xi) any action taken by the Servicer in the name of the
Trustee. The Trustee shall not be accountable for the use or application by the
Transferor of any of the Certificates or of the proceeds of such Certificates,
or for the use or application of any funds paid to the Transferor in respect of
the Receivables or deposited in or withdrawn from the Collection Account or
other accounts now or hereafter established to effectuate the transactions
contemplated herein and in accordance with the terms hereof.

                  SECTION 11.4 TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity may become the owner or pledgee of Investor
Certificates with the same rights as it would have if it were not the Trustee.

                  SECTION 11.5 THE SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES.
The Servicer covenants and agrees to pay to the Trustee from time to time out of
its own funds, and the Trustee shall be entitled to receive, reasonable
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services rendered by
it in the execution of the trust hereby created and in the exercise and
performance of any of the powers and duties hereunder or pursuant to any
Supplement of the Trustee, and, subject to Section 8.4, the Servicer will pay or
reimburse the Trustee (without reimbursement from the Collection Account or
otherwise) upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement or any Supplement (including the reasonable fees
and expenses of its agents and counsel) except any such expense, disbursement or
advance as may arise from its negligence or bad faith and except as provided in
the following sentence. If the Trustee is appointed Successor Servicer pursuant
to Section 10.2, the provisions of this Section 11.5 shall not apply to
expenses, disbursements and advances made or incurred by the Trustee in its
capacity as Successor Servicer. If Proffitt's, Inc. is not the Servicer,
Proffitt's, Inc. shall guarantee the payment of all amounts payable to the
Trustee under this Section 11.5, and upon any payment pursuant to such guaranty,
and Proffitt's, Inc. shall be subrogated to all rights of the Trustee to recover
such amounts from the Servicer.

                  The obligations of the Servicer and the Transferor under this
Section 11.5 and Section 8.4 shall survive the termination of the Trust and the
resignation or removal of the Trustee or the Servicer.

                  SECTION 11.6 ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee
hereunder shall at all times be a national banking association, a banking
corporation or a 




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trust company organized and doing business under the laws of the United States
of America or any state thereof authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000, a
rating as to its long-term unsecured debt obligations of at least Baa3 by
Moody's (if Moody's shall then be a Rating Agency) and BBB- by Standard & Poor's
(if Standard & Poor's shall then be a Rating Agency) and a rating as to its
short-term deposits or long-term unsecured debt obligations that satisfies the
rating requirement of any other applicable Rating Agency and subject to
supervision or examination by Federal or state authority. If such banking
corporation or national banking association publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section 11.6,
the combined capital and surplus of such corporation or national banking
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 11.6, the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.7.

                  SECTION 11.7 RESIGNATION OR REMOVAL OF TRUSTEE.

                  (a) The Trustee may at any time resign as Trustee and be
discharged from the trust hereby created by giving written notice thereof to the
Transferor and the Servicer. Upon receiving such notice of resignation, the
Transferor shall promptly appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted such appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.

                  (b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.6, or becomes insolvent, and shall
fail to resign after written request therefor by the Transferor, or if at any
time the Trustee shall be legally unable to act, or shall be adjudged bankrupt
or insolvent, or a receiver or conservator of the Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Transferor may, but shall not be required
to, remove the Trustee and promptly appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee.

                  (c) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 11.7
shall not become effective until acceptance of appointment by the successor
trustee as provided in Section 11.8. Any liability of the Trustee arising
hereunder shall survive such appointment of a successor trustee.



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                  SECTION 11.8 SUCCESSOR TRUSTEE.

                  (a) Any successor trustee appointed as provided in Section
11.7 shall execute, acknowledge and deliver to the Transferor and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder and under any Supplement, with like
effect as if originally named as Trustee herein. The predecessor Trustee shall,
upon payment of its reasonable fees and expenses, deliver to the successor
trustee all documents held by it hereunder, and the Transferor and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.

                  (b) No successor trustee shall accept appointment as provided
in this Section 11.8 unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 11.6 hereof and shall
be an Eligible Servicer, and, the applicable Rating Agencies shall have
consented to such appointment.

                  (c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.8, such successor trustee shall mail notice of such
succession hereunder to each Rating Agency and all Certificateholders (other
than Holders of Bearer Certificates) at their addresses as shown in the
Certificate Register. Notice to Holders of Bearer Certificates shall be given by
publication in the manner described in Section 13.5 of the Agreement.

                  SECTION 11.9 MERGER OR CONSOLIDATION OF TRUSTEE. Any Person
into which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially all the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided such Person shall be eligible
under the provisions of Section 11.6 and shall be an Eligible Servicer, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding.

                  SECTION 11.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

                  (a) Notwithstanding any other provision of this Agreement or
any Supplement, at any time, for the purpose of meeting any legal requirements
of any jurisdiction in which any part of the Trust may at the time be located,
the Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee, or separate trustee, of all
or any part of the Trust, and to vest in such Person, in such capacity and for
the benefit of the Certificateholders, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section 11.10,




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such powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
11.6 and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.8.

                  (b)      Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:

                  (i)      all rights, powers, duties and obligations conferred
         or imposed upon the Trustee shall be conferred or imposed upon and
         exercised or performed by the Trustee and such separate trustee or
         co-trustee jointly (it being understood that such separate trustee or
         co-trustee is not authorized to act separately without the Trustee
         joining in such act), except to the extent that under any laws of any
         jurisdiction in which any particular act or acts are to be performed
         (whether as Trustee hereunder or as successor to the Servicer
         hereunder), the Trustee shall be incompetent or unqualified to perform
         such act or acts, in which event such rights, powers, duties and
         obligations (including the holding of title to the Trust or any portion
         thereof in any such jurisdiction) shall be exercised and performed
         singly by such separate trustee or co-trustee, but solely at the
         direction of the Trustee;

                  (ii)     no trustee hereunder shall be personally liable by
         reason of any act or omission of any other trustee hereunder appointed
         with due care; and

                  (iii)    the Trustee may at any time accept the resignation of
         or remove any separate trustee or co-trustee.

                  (c)      Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article XI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement or any Supplement, specifically including
every provision of this Agreement or any Supplement relating to the conduct of,
affecting the liability of, or affording protection to, the Trustee. Every such
instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.

                  (d)      Any separate trustee or co-trustee may at any time
appoint the Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect to this Agreement or any




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Supplement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

                  SECTION 11.11 TAX RETURNS AND COMPLIANCE.

                  (a) In the event the Trust shall be required to file tax
returns, the Servicer shall prepare or cause to be prepared and is authorized
hereunder to sign any tax returns required to be filed by the Trust and, to the
extent possible, shall file such returns at least five (5) days before such
returns are due to be filed. The Servicer shall prepare or shall cause to be
prepared all tax information required by law to be distributed to
Certificateholders and Certificate Owners and shall deliver such information to
the Paying Agent at least five (5) days prior to the date it is required by law
to be distributed to Certificateholders and Certificate Owners. The Trustee
shall, upon request, furnish the Servicer with all such information known to the
Trustee as may be reasonably required in connection with the preparation of such
tax returns and shall, upon request, execute such tax returns. In no event shall
the Trustee, the Paying Agent or the Servicer be liable for any liabilities,
costs or expenses of the Trust, the Investor Certificateholders or the
Certificate Owners arising under any tax law, including without limitation,
Federal, state, local or foreign income or excise taxes or any other tax imposed
on or measured by income (or any interest or penalty with respect thereto or
arising from a failure to comply therewith), except to the extent that such tax
is imposed as a result of a violation by such Person of the provisions of this
Agreement or any Supplement.

                  (b) The Trustee and each Paying Agent shall comply with all
Federal withholding requirements respecting payments to Investor
Certificateholders or persons receiving funds from the Trust. In the event the
Trustee or Paying Agent does withhold any amount from interest, principal, or
other payments pursuant to Federal withholding requirements, the Trustee or
Paying Agent shall indicate the amount withheld in writing with any payment to
the person otherwise entitled to such amount.

                  SECTION 11.12 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under this Agreement or any
Supplement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee. Any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.

                  SECTION 11.13 SUITS FOR ENFORCEMENT. If a Servicer Default
shall occur and be continuing, the Trustee, in its discretion, may, subject to
the provisions of Section 10.1, proceed to protect and enforce its rights and
the rights of the Certificateholders




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under this Agreement or any Supplement by such suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or any Supplement or in aid of
the execution of any power granted in this Agreement or any Supplement or for
the enforcement of any other legal, equitable or other remedy as the Trustee,
being advised by counsel, shall deem effectual to protect and enforce any of the
rights of the Trustee or the Certificateholders.

                  SECTION 11.14 RIGHTS OF CERTIFICATEHOLDERS TO DIRECT TRUSTEE.
Holders of Investor Certificates evidencing Undivided Interests aggregating more
than 50% of the Aggregate Investor Amount of all Series affected by the conduct
of any proceeding or the exercise of any right conferred on the Trustee shall
have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee; provided, however, that, subject to Section
11.1, the Trustee shall have the right to decline to follow any such direction
if the Trustee, as advised by counsel, determines that the action so directed
may not lawfully be taken, or if the Trustee in good faith shall, by a
Responsible Officer or Responsible Officers of the Trustee, determines that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Certificateholders of such Series not
parties to such direction or to the rights of Certificateholders of other
Series; and provided further that nothing in this Agreement or any Supplement
shall impair the right of the Trustee to take any action deemed proper by the
Trustee and which is not inconsistent with such direction.

                  SECTION 11.15 REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The
Trustee represents and warrants that:

                  (i)      The Trustee is a national banking association,
         organized, existing and in good standing under the federal banking laws
         of the United States and is, and will remain for the term of this
         Agreement, duly qualified and in good standing in the States of
         Minnesota and New York;

                  (ii)     The Trustee has full power, authority and right to
         execute, deliver and perform this Agreement and any Supplement, and has
         taken all necessary action to authorize the execution, delivery and
         performance by it of this Agreement and any Supplement; and

                  (iii)    This Agreement and any Supplement has been, or will
         be duly executed and delivered by the Trustee, and assuming due
         execution and delivery by the other parties thereto constitutes a
         legal, valid and binding obligation of the Trustee enforceable against
         the Trustee in accordance with its terms.

                  SECTION 11.16 MAINTENANCE OF OFFICE OR AGENCY. For so long as
any Investor Certificates are held by Certificate Owners in Definitive
Certificates, the Trustee will maintain at its expense in the Borough of
Manhattan, The City of New York, an office




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or offices or agency or agencies where notices and demands to or upon the
Trustee in respect of the Certificates and this Agreement may be served. The
Trustee initially appoints The Depository Trust Company, 55 Water Street, New
York, New York 10004, Attention: Norwest New York City as its agent for such
purposes in New York. The Trustee will give prompt written notice (or in the
case of Holders of Bearer Certificates, notice by publication in the manner
described in Section 13.5 of the Agreement) to the Servicer and to
Certificateholders of any change in the location of such Corporate Trust Office,
or such other office or agency.


                                   ARTICLE XII

                                   TERMINATION

         SECTION 12.1 TERMINATION OF TRUST.

                  (a) The respective obligations and responsibilities of the
Transferor, the Servicer, the Paying Agent and the Trustee and their agents
hereunder created hereby (other than the obligation of the Trustee to make
payments to Certificateholders as hereafter set forth) shall terminate, except
with respect to the duties described in Sections 2.4(c), 8.4, 11.5 and 12.3(b),
upon the earliest of (i) the day designated by the Transferor after the
Distribution Date following the date on which funds shall have been deposited in
the Collection Account or applicable Principal Account sufficient to pay the
Aggregate Investor Amount and any Enhancement Investor Amount plus applicable
Certificate Interest accrued through such Distribution Date, and (ii) the day on
which the final payment of principal is made to the Certificateholders, and all
right, title and interest to the Receivables and other funds of the Trust (other
than funds held in the Principal Account) will be transferred to the holder of
the Exchangeable Transferor Certificate (the "Final Termination Date");
provided, however, in no event shall the Trust created by this Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of George Herbert Walker Bush, former President of the United
States of America, living on the date of this Agreement. The Servicer shall
promptly notify the Trustee of any prospective termination pursuant to this
Section 12.1.

                  (b) If on the last Distribution Date in the month immediately
preceding the month in which the Final Termination Date occurs (after giving
effect to all transfers, withdrawals, deposits and drawings to occur on such
date and the payment of principal on any Series of Certificates to be made on
such Distribution Date pursuant to Article IV), the Investor Amount or any
Enhancement Investor Amount of any Series would be greater than zero, the
Servicer shall sell within 30 days after such Distribution Date all of the
Receivables in a commercially reasonable manner and on commercially reasonable
terms which shall include the solicitation of competitive bids and shall
consummate the sale with the highest bidder for the Receivables. The Transferor
or any of its Affiliates shall be permitted to bid for the Receivables. In
addition, the Transferor or any Affiliate shall have the right to match any bid
by a third Person and be granted the right to purchase




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the Receivables at such matched bid price. The proceeds of any such sale shall
be treated as Collections on the Receivables and shall be allocated in
accordance with Article IV; provided, however, that the Trustee shall determine
conclusively the amount of such proceeds which are allocable to Finance Charge
Receivables and the amount of such proceeds which are allocable to Principal
Receivables. Prior to such sale of Receivables, the Servicer shall continue to
collect Collections on the Receivables and allocate such payments in accordance
with the provisions of Article IV.

                  SECTION 12.2 OPTIONAL PURCHASE; FINAL TERMINATION DATE OF
INVESTOR CERTIFICATES OF ANY SERIES.

                  (a) If provided in any Supplement with respect to a Series of
Investor Certificates (which provisions must refer specifically to this Section
12.2), on any Distribution Date, the Transferor may, but shall not be obligated
to, purchase such Series by depositing into the Collection Account, prior to
such Distribution Date, an amount equal to the Investor Amount thereof plus
interest accrued and unpaid thereon at the applicable Certificate Rate through
the interest accrual period preceding such Distribution Date plus any other
unpaid amounts required to be paid pursuant to this Section 12.2 under any
Supplement; provided, however that, if the Transferor shall not have a rating of
P-3 or Baa3 or higher by Moody's, and A-3 or BBB- or higher by Standard &
Poor's, no such purchase of any Series of Investor Certificates shall occur
unless the Transferor shall deliver to the Trustee and the Rating Agencies an
Opinion of Counsel reasonably acceptable to the Trustee that such purchase of
any Series of Investor Certificates would not constitute a fraudulent
conveyance. Nothing herein limits the right of the Transferor or any Affiliate
to purchase Investor Certificates on the open market and submit them to the
Trustee for cancellation.

                  (b) The amount deposited pursuant to Section 12.2(a) shall be
paid to the Investor Certificateholders of the related Series pursuant to
Article IV on the Distribution Date following the date of such deposit. All
Certificates of a Series which are purchased by the Transferor pursuant to
Section 12.2(a) shall be delivered by the Transferor upon such purchase to, and
be canceled by, the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee and the Transferor.

                  (c) All principal or interest with respect to any Series of
Investor Certificates shall be due and payable no later than the Stated Series
Termination Date with respect to such Series. Unless otherwise provided in a
Supplement, in the event that the Investor Amount or any Enhancement Investor
Amount of any Series of Certificates is greater than zero on its Stated Series
Termination Date (after giving effect to all transfers, withdrawals, deposits
and drawings to occur on such date and the payment of principal to be made on
such Series on such date), the Trustee will sell or cause to be sold, and pay
the proceeds to all Certificateholders of such Series pro rata in final payment
of all principal of and accrued interest on such Series of Certificates, an
amount of Receivables or interests in Receivables up to 110% of the Adjusted
Investor Amount and any Enhancement Investor Amount of such Series at the close
of business on such date (but not more than



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an amount of Receivables equal to the sum of (1) the product of (A) the
Transferor Percentage, (B) the Aggregate Principal Receivables and (C) a
fraction the numerator of which is the related Investor Percentage with respect
to Finance Charge Receivables and the denominator of which is the sum of all
Investor Percentages with respect to Finance Charge Receivables of all Series
outstanding and (2) the Investor Amount and any Enhancement Investor Amount of
such Series). The Trustee shall conduct the sale of Receivables in a
commercially reasonable manner and on commercially reasonable terms which shall
include the solicitation of competitive bids and shall consummate the sale with
the highest bidder for the Receivables. The Transferor or any of its Affiliates
shall be permitted to bid for the Receivables. In addition, the Transferor or
any Affiliate shall have the right to match any bid by a third Person and be
granted the right to purchase the Receivables at such matched bid price. Any
proceeds of such sale in excess of the outstanding principal and interest due to
Certificateholders of the applicable Series (which shall be paid to such
Holders) shall be paid to the Holder of the Exchangeable Transferor Certificate,
unless the applicable Supplement shall provide otherwise. Upon such Stated
Series Termination Date with respect to the applicable Series of Certificates,
final payment of all amounts allocable to any Investor Certificates of such
Series shall be made in the manner provided in Section 12.3.

                  SECTION 12.3 FINAL PAYMENT WITH RESPECT TO ANY SERIES.

                  (a) Written notice of any termination, specifying the
Distribution Date upon which the Investor Certificateholders of any Series may
surrender their Certificates for payment of the final distribution with respect
to such Series and cancellation, shall be given (subject to at least two (2)
Business Days' prior notice from the Servicer to the Trustee) by the Trustee to
Investor Certificateholders of such Series mailed not later than the fifth day
of the month of such final distribution (or in the case of the Holders of Bearer
Certificates by the publication by the Trustee of a notice at least once in a
newspaper of general circulation in Luxembourg (which newspaper shall be printed
in the English language and customarily published on each business day in
Luxembourg) and, so long as the Investor Certificates are listed on the
Luxembourg Stock Exchange or other stock exchange and such exchange so requires,
in Luxembourg or the location required by such other stock exchange) specifying
(a) the Distribution Date (which shall be the Distribution Date in the month in
which the deposit is made pursuant to Section 2.4, 9.2, 10.2 or 12.2(a) or such
other section as may be specified in the related Supplement) upon which final
payment of such Investor Certificates will be made upon presentation and
surrender of such Investor Certificates at the office or offices therein
designated, (which, in the case of Bearer Certificates, shall be outside the
United States), (b) the amount of any such final payment and (c) that the Record
Date otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Investor Certificates at
the office or offices therein specified. The Servicer's notice to the Trustee in
accordance with the preceding sentence shall be accompanied by an Officer's
Certificate setting forth the information specified in the applicable Supplement
covering the period during the then current calendar year through the date of
such notice and setting forth the date of such final distribution. The Trustee
shall give such notice to the Transfer Agent




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and Registrar and the Paying Agent at the time such notice is given to such
Investor Certificateholders.

                  (b) Notwithstanding the termination of the Trust pursuant to
Section 12.1(a) or the occurrence of the Stated Series Termination Date with
respect to any Series, all funds then on deposit in the Collection Account shall
continue to be held in trust for the benefit of the Certificateholders and the
Paying Agent or the Trustee shall pay such funds to the Certificateholders upon
surrender of their Certificates (which surrenders and payments, in the case of
Bearer Certificates, shall be made only outside the United States). In the event
that all of the Investor Certificateholders of such Series shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned notice, the Trustee shall give a second written notice
(or in the case of Bearer Certificates, publication notice) to the remaining
Investor Certificateholders of such Series upon receipt of the appropriate
records from the Transfer Agent and Registrar to surrender their Certificates
for cancellation and receive the final distribution with respect thereto. If
within one and one-half years after the second notice all the Investor
Certificates of such Series shall not have been surrendered for cancellation,
the Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Investor Certificateholders of such
Series concerning surrender of their Certificates, and the cost thereof shall be
paid out of the funds in the Collection Account held for the benefit of such
Investor Certificateholders. The Trustee shall pay or cause to be paid to the
Transferor upon request all monies held for the payment of principal or interest
which remain unclaimed after two years.

                  (c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation shall be
mutilated and physically canceled by the Transfer Agent and Registrar and be
disposed of in a manner satisfactory to the Trustee and the Transferor.

                  SECTION 12.4 TRANSFEROR'S TERMINATION RIGHTS. Upon the
termination of the Trust pursuant to Section 12.1 and the surrender of the
Exchangeable Transferor Certificate, the Trustee shall return to the Transferor
(without recourse, representation or warranty) all right, title and interest of
the Trust in the Receivables, whether then existing or thereafter created, and
all monies due or to become due with respect thereto, all proceeds thereof
except for amounts held by the Paying Agent pursuant to Section 12.3(b). The
Trustee shall execute and deliver such instruments of transfer and assignment,
in each case without recourse, and shall file and record UCC termination
statements in all Relevant UCC States as shall be reasonably requested by the
Transferor to vest in itself all right, title and interest which the Trust had
in the applicable Receivables.



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                  SECTION 12.5 DEFEASANCE. Notwithstanding anything to the
contrary in this Agreement:

                  (a) The Transferor may at the Transferor's option be
discharged from its obligations hereunder with respect to any Series or all
outstanding Series (the "Defeased Series") on the date the applicable conditions
set forth in subsection 12.5(c) are satisfied (a "Defeasance"); provided,
however, that the following rights, obligations, powers, duties and immunities
shall survive with respect to the Defeased Series until otherwise terminated or
discharged hereunder: (i) the rights of the Holders of Investor Certificates of
the Defeased Series to receive, solely from the trust fund provided for in
Section 12.5(c), payments in respect of principal of and interest on such
Investor Certificates when such payments are due; (ii) the right of any
Enhancement Provider to the repayment of any amount, including interest thereon,
due to it under the applicable Enhancement agreement and Supplement; (iii) the
Transferor's obligations with respect to such Certificates under Sections 6.3
and 6.4; (iv) the rights (including the right to payment of its fees and
expenses), powers, trusts, duties, and immunities of the Trustee, the Paying
Agent and the Transfer Agent and Registrar hereunder; and (v) this Section 12.5.

                  (b) Subject to Section 12.5(c), the Transferor at its option
may cause Collections allocated to the Defeased Series and available to purchase
Principal Receivables to be applied to purchase Permitted Investments rather
than Principal Receivables.

                  (c) The following shall be the conditions to Defeasance under
Section 12.5(a):

                  (i)   The Transferor irrevocably shall have deposited or 
                  caused to be deposited with the Trustee (such deposit to be
                  made from other than the Transferor's funds), under the terms
                  of an irrevocable trust agreement in form and substance
                  satisfactory to the Trustee, as trust funds in trust for
                  making the payments described below, (A) U.S. Dollars in an
                  amount, or (B) Permitted Investments which through the
                  scheduled payment of principal and interest in respect thereof
                  will provide, not later than the due date of payment thereon,
                  money in an amount, or (C) a combination thereof, in each case
                  sufficient to pay and discharge, and which shall be applied by
                  the Trustee to pay and discharge, all remaining scheduled
                  interest and principal payments on all outstanding Investor
                  Certificates of the Defeased Series on the dates scheduled for
                  such payments in this Agreement and the applicable Supplements
                  and all amounts owing to the Enhancement Providers with
                  respect to the Defeased Series;

                  (ii)  prior to its exercise of its right pursuant to this
                  Section 12.5 with respect to a Defeased Series to substitute
                  money or Permitted Investments for Receivables, the Transferor
                  shall have delivered to the Trustee an




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<PAGE>   109

                  Opinion of Counsel to the effect that such deposit and
                  termination of obligations will not have any material adverse
                  impact on the Federal income tax characterization of any
                  outstanding Series of Investor Certificates that have been the
                  subject of a previous opinion of tax counsel or result in the
                  Trust being taxable as an association for Federal or
                  applicable state (with respect only to those states as to
                  which state income tax opinions have been delivered previously
                  and which remain applicable) income tax purposes and an
                  Opinion of Counsel to the effect that such deposit and
                  termination of obligations will not result in the Trust being
                  required to register as an "investment company" within the
                  meaning of the 1940 Act;

                  (iii) the Transferor shall have delivered to the Trustee and
                  any Enhancement Provider an Officer's Certificate of the
                  Transferor stating the Transferor reasonably believes that
                  such deposit and termination of obligations will not, based on
                  the facts known to such officer at the time of such
                  certification, then cause a Pay Out Event with respect to any
                  Series or any event that, with the giving of notice or the
                  lapse of time, would result in the occurrence of a Pay Out
                  Event with respect to any Series; and

                  (iv) the Rating Agency Condition shall have been satisfied.


                                  ARTICLE XIII

                            MISCELLANEOUS PROVISIONS

                  SECTION 13.1 AMENDMENT.

                  (a) This Agreement and any Supplement may be amended from time
to time by the Servicer, the Transferor and the Trustee, without the consent of
any of the Investor Certificateholders, to cure any ambiguity, to revise certain
exhibits and schedules hereto, to correct or supplement any provisions herein
which may be inconsistent with any other provisions herein, to add other
identifying code numbers or identifying characteristics to the definition of
Account or to add any other provisions with respect to matters or questions
raised under this Agreement which shall not be inconsistent with the provisions
of this Agreement, including any matters arising under Section 2.5(d) necessary
to effect the conveyance contemplated thereunder and as otherwise permitted
herein; provided, however, that such action shall not adversely affect in any
material respect the interests of any of the Investor Certificateholders.
Additionally, this Agreement and any Supplement may be amended from time to time
by the Servicer, the Transferor and the Trustee, without the consent of any of
the Certificateholders, to add to, change or eliminate any of the provisions of
this Agreement or any right of Investor Certificateholders hereunder or to
enable Bearer Certificates to be issued in conformity with the Bearer Rules, to
provide that Bearer Certificates may be registrable as to




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principal, to change or eliminate any restrictions on the payment of principal
of, premium, if any, or any interest on Bearer Certificates to comply with the
Bearer Rules, to permit Bearer Certificates to be issued in exchange for
Registered Certificates (if then permitted by the Bearer Rules), to permit
Bearer Certificates to be issued in exchange for Bearer Certificates of other
authorized denominations or to permit the issuance of Certificates in
uncertificated form, provided any such action shall not adversely affect the
interests of the Holders of Bearer Certificates of any Series or any related
Coupons in any material respect unless such amendment is necessary to comply
with the Bearer Rules, or any right of the Investor Certificateholders
hereunder, provided that (x) the Servicer shall have furnished the Trustee with
an Officer's Certificate to the effect that the amendment will not materially
and adversely affect the interests of any Certificateholders thereunder, (y)
such amendment will not cause the Trust to be characterized as a corporation for
Federal income tax purposes or otherwise have a material adverse effect on the
Federal income taxation of any Series and (z) the Servicer shall have given each
Rating Agency ten (10) Business Days' prior written notice of such amendment and
shall have received written confirmation from each Rating Agency rating the
affected Series that the Rating Agency Condition will be met. No such amendment,
however, may effect any of the amendments that require unanimous
Certificateholder consent as set forth in Section 13.1(b), or (i) reduce in any
manner the amount of, or delay the timing of, distributions which are required
to be made on any Investor Certificates of any Series, (ii) change the
definition of or the manner of calculating the interest of any
Certificateholder, (iii) alter the requirements for changing the percentage by
which the Minimum Transferor Amount is determined, (iv) change the manner in
which the Transferor Amount is determined, or (v) reduce the percentage required
in Section 13.1(b) to consent to such amendment. Notwithstanding the foregoing,
any amendments providing for the transfer of Receivables to or by, and the
generation of new Receivables by, the Bank as Seller, Transferor or Eligible
Originator, the appointment of the Bank as Servicer, and/or the assignment of
this Agreement including any Supplement to the Bank in connection with such
transfer and any amendments to this Agreement necessary to reflect such Bank and
any related special purpose, bankruptcy remote entity that is an Affiliate of
the Company and that is organized for purposes of purchasing Accounts and
Receivables from such Bank and serving as Transferor, will be deemed not to
materially and adversely affect the interests of the Certificateholders.

                  Prior to executing any amendment in accordance with this
Section 13.1(a), the Trustee shall receive and shall be permitted to rely upon
an Opinion of Counsel to the effect that the conditions and requirements of this
Section 13.1(a) have been satisfied. The Transferor shall deliver prior written
notice of any amendment pursuant to this Section 13.1(a) to each Rating Agency.

                  (b) This Agreement and any Supplement may also be amended from
time to time by the Servicer, the Transferor and the Trustee with the consent of
the Holders of Investor Certificates evidencing Undivided Interests aggregating
not less than 50% of the Investor Amount of all Series adversely affected, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this




                                      104

<PAGE>   111

Agreement or modifying in any manner the rights of the Investor
Certificateholders of any Series then issued and outstanding; provided, however,
that no such amendment shall (i) reduce in any manner the amount of, or delay
the timing of, distributions which are required to be made on any Investor
Certificate of such Series without the consent of all holders of the related
Investor Certificates, (ii) change the definition of or the manner of
calculating the Investor Amount, the Investor Percentage, the required amount
under any Enhancement or the Investor Default Amount of such Series without the
consent of the related Investor Certificateholders or (iii) reduce the aforesaid
percentage required to consent to any such amendment, without the consent of all
holders of the related Investor Certificates of all Series adversely affected
thereby. Any amendment pursuant to this Section 13.1(b) shall require that each
Rating Agency rating the affected Series confirm that such amendment will not
cause a reduction or withdrawal of the rating of any outstanding Series of
Certificates.

                  (c) Each Certificateholder, by acquiring an interest in a
Certificate, is deemed to consent to any amendment to this Agreement or any
Supplement necessary for the Transferor to elect FASIT status for the Trust or
any portion thereof under the Code, provided that such election may not be made
unless the Transferor delivers to the Trustee an Opinion of Counsel to the
effect that (i) the issuance of FASIT regular interests will not adversely
affect the tax characterization as debt of Certificates of any outstanding
Series or Class with respect to which an Opinion of Counsel was delivered at the
time of their issuance that such Certificates would be characterized as debt,
(ii) following such issuance, the Trust will not be classified for Federal
income tax purposes as an association (or publicly traded partnership) taxable
as a corporation and (iii) such issuance will not cause or constitute an event
in which gain or loss would be recognized for federal income tax consequences by
any Certificateholder.

                  (d) Promptly after the execution of any such amendment other
than an amendment pursuant to Section 13.1(a), the Trustee shall furnish written
notification (or in the case of Bearer Certificates, publication notice in the
manner described in Section 13.5) of the substance of such amendment to each
Investor Certificateholder, and the Servicer shall furnish written notification
of the substance of such amendment to any related Enhancement Provider and each
Rating Agency.

                  (e) It shall not be necessary for the consent of Investor
Certificateholders under this Section 13.1 to approve the particular form of any
proposed amendment, but it shall be sufficient if such Certificateholders shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.

                  (f) Any Assignment or Reassignment regarding the addition to
or removal of Receivables from the Trust respectively, as provided in Sections
2.6 and 2.7, respectively, executed in accordance with the provisions hereof
shall not be considered




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<PAGE>   112

amendments to this Agreement, including, without limitation, for the purpose of
Sections 13.1(a), (b),(c) and (g).

                  (g) Prior to the execution of any amendment to this Agreement,
the Trustee shall be entitled to receive and rely upon an Opinion of Counsel
substantially in the form of Part Two of Exhibit G. The Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Trustee's
own rights, duties or immunities under this Agreement or otherwise.

                  (h) Notwithstanding anything in this Section 13.1 to the
contrary, any Supplement may be amended on the terms and in accordance with the
procedures specified therein.

                  SECTION 13.2 PROTECTION OF RIGHT, TITLE AND INTEREST TO TRUST.

                  (a) The Servicer shall cause this Agreement, any Supplement,
all amendments hereto and/or all financing statements, amendments and
continuation statements and any other necessary documents covering the right,
title and interest of the Trust in the property conveyed hereunder to be
promptly recorded, registered and filed, and at all times to be kept recorded,
registered and filed, all in such manner and in such places as may be required
by law fully to preserve and protect the right, title and interest of the
Trustee hereunder to all property comprising the Trust. The Servicer shall
deliver to the Trustee file-stamped copies of, or filing receipts for, any
document recorded, registered or filed as provided above, as soon as available
following such recording, registration or filing. The Transferor shall cooperate
fully with the Servicer in connection with the obligations set forth above and
will execute any and all documents reasonably required to fulfill the intent of
this Section 13.2(a).

                  (b) Within 30 days after the Transferor makes any change in
its name, identity or corporate structure which would make any financing
statement, amendment or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-402(7)
of the UCC as in effect in the Relevant UCC State, the Transferor shall give the
Trustee notice of any such change and shall file such financing statements or
amendments as may be necessary to continue the perfection of the Trust's
security interest in the Receivables and the proceeds thereof.

                  (c) The Transferor and the Servicer will give the Trustee
prompt written notice of any relocation of any office from which the Servicer
services Receivables or keeps records concerning the Receivables or of its
principal executive office and whether, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements, continuation statements or
amendments as may be necessary to continue the perfection of the Trust's
security interest in the Receivables and the proceeds thereof notwithstanding
any relocation of any office from which the Servicer services Receivables or
keeps records



                                      106

<PAGE>   113

concerning the Receivables or of its principal executive office. The Servicer
will at all times maintain each office from which it services Receivables, and
the Transferor and the Servicer will at all times maintain their respective
principal executive offices, within the United States of America.

                  (d) The Servicer will deliver to the Trustee and each Rating
Agency: (i) upon each date that any Additional Accounts are to be included in
the Accounts pursuant to Section 2.6 (other than Section 2.6(d)), an Opinion of
Counsel substantially in the form of Part One of Exhibit G; and (ii) on or
before June 30 of each year, beginning with June 30, 1998, an Opinion of
Counsel, dated as of a date within 90 days of such day, substantially in the
form of Exhibit H.

                  SECTION 13.3 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.

                  (a) The death or incapacity of any Investor Certificateholder
shall not operate to terminate this Agreement or the Trust, nor shall such death
or incapacity entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or commence any proceeding in any
court for a partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of them.

                  (b) No Investor Certificateholder shall have any right to vote
(except as provided herein) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall any
Investor Certificateholder be under any liability to any third person by reason
of any action taken by the parties to this Agreement pursuant to any provision
hereof.


                  (c) No Investor Certificateholder shall have any right by
virtue of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Certificateholder previously shall have given notice to the Trustee,
and unless the Holders of Certificates evidencing Undivided Interests
aggregating more than 66 2/3% of the Investor Amount of any Series which may be
adversely affected but for the institution of such suit, action or proceeding
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Certificateholders shall have the right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Agreement
to affect, disturb or prejudice the rights of the Certificateholders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Certificateholder, or to enforce any right under
this Agreement, except in the manner herein provided and for the




                                      107

<PAGE>   114

equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 13.3, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity. Each Certificate Owner by its acquisition of a
Book Entry Certificate shall be deemed to have consented to the provisions of
this Section 13.3.

                  SECTION 13.4 GOVERNING LAW. This Agreement shall be construed
in accordance with the laws of the State of New York, and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.

                  SECTION 13.5 NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
sent by facsimile transmission to, sent by courier to or mailed by registered
mail, return receipt requested, to (a) in the case of the Transferor and the
Servicer, 3455 Highway 80 West, Jackson, Mississippi 39209, Attention: Chief
Financial Officer, facsimile number (205) 940-4908, telephone number (205)
940-4000, (b) in the case of the Trustee, Norwest Bank Minnesota, N.A., Norwest
Center, Sixth and Marquette, Minneapolis, Minnesota 55479-0070, Attention:
Corporate Trust Services -- Asset-Backed Administration and (c) as to such other
parties to which notices hereunder or under any Supplement are required to be
given pursuant to the terms of any Supplement, the addresses specified in any
Supplement or, as to each party, such other address as shall be designated by
such party in a written notice to each other party. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Certificateholder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder receives such notice.

                  Any notice required or permitted to be made to Holders of
Bearer Certificates by publication shall be published in an Authorized Newspaper
and, if the Certificates of such Series are then listed on the Luxembourg Stock
Exchange and such stock exchange shall so require, in a newspaper of general
circulation in Luxembourg (which newspaper shall be printed in the English
language and customarily published on each business day in Luxembourg) and, if
the Certificates of such Series are listed on any other stock exchange and such
stock exchange shall so require, in any other city required by such stock
exchange outside the United States, or, if not practicable, elsewhere in Europe.

                  In case by reason of the suspension of publication of any
Authorized Newspaper or permitted newspaper with respect to Luxembourg or by
reason of any other cause it shall be impracticable to publish any notice to
Holders of Bearer Certificates as provided above, then such notification to
Holders of Bearer Certificates as shall be given with approval of the Trustee
shall constitute sufficient notice to such Holders for every purpose hereunder.
Neither the failure to give notice by publication to Holders of Bearer
Certificates as provided above, nor any defect in any notice so published, shall
affect the sufficiency of any notice mailed to Holders of Registered
Certificates as provided above.



                                      108

<PAGE>   115

                  Copies of all notices, reports, certificates and amendments
delivered hereunder shall be mailed to the Rating Agency as follows: Moody's
Investors Service, Inc., 99 Church Street, New York, NY 10007, Attention: ABS
Monitoring Department - 4th Floor; and to Standard & Poor's Ratings Services, 25
Broadway, New York, NY 10004, Attention: Asset Backed Surveillance Department.

                  SECTION 13.6 SEVERABILITY OF PROVISIONS. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or rights of the Certificateholders thereof.

                  SECTION 13.7 ASSIGNMENT. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 7.2, 8.2, 8.5 and
13.2(b), this Agreement, including any Supplement, may not be assigned by the
Transferor or the Servicer, as the case may be, without the prior consent of
Holders of Investor Certificates evidencing Undivided Interests aggregating more
than 50% of the Aggregate Investor Amount.

                  SECTION 13.8 CERTIFICATES NONASSESSABLE AND FULLY PAID. It is
the intention of the parties to this Agreement that the Investor
Certificateholders (and the Certificate Owners) shall not be personally liable
for obligations of the Trust, that the Undivided Interests represented by the
Investor Certificates shall be nonassessable for any losses or expenses of the
Trust or for any reason whatsoever, and that Investor Certificates upon
authentication thereof by the Trustee pursuant to Section 6.2 are and shall be
deemed fully paid.

                  SECTION 13.9 FURTHER ASSURANCES. The Transferor and the
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by the
Trustee more fully to effect the purposes of this Agreement including, without
limitation, the execution of any financing statements or continuation statements
relating to the property of the Trust for filing under the provisions of the UCC
of each Relevant UCC State.

                  SECTION 13.10 NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of the Trustee or the Investor
Certificateholders, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.




                                      109

<PAGE>   116

                  SECTION 13.11 COUNTERPARTS. This Agreement and any Supplement
may be executed in two or more counterparts (and by different parties on
separate counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.

                  SECTION 13.12 NO THIRD-PARTY BENEFICIARIES. This Agreement and
any Supplement will inure to the benefit of and be binding upon the parties
hereto, the Certificateholders and the Certificate Owners and their respective
successors and permitted assigns. Except as otherwise provided in this Agreement
or any Supplement, no other person will have any right or obligation hereunder,
whether as third party beneficiaries or otherwise.

                  SECTION 13.13 ACTIONS BY CERTIFICATEHOLDERS.

                  (a) Wherever in this Agreement or any Supplement, a provision
is made that an action may be taken or a notice, demand or instruction given by
Investor Certificateholders, such action, notice or instruction may be taken or
given by any Investor Certificateholder of any Series, unless such provision
requires a specific percentage of Investor Certificateholders of a certain
Series or all Series.

                  (b) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder shall bind such
Certificateholder and every subsequent holder of such Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or omitted to be done by the Trustee or the Servicer
in reliance thereon, whether or not notation of such action is made upon such
Certificate.

                  SECTION 13.14 MERGER AND INTEGRATION. Except as specifically
stated otherwise herein, this Agreement, including any Supplements, set forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived or supplemented except as
provided herein.

                  SECTION 13.15 HEADINGS. The cover page, titles, table of
contents, headings and subheadings of this Agreement are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.

                  SECTION 13.16 CERTIFICATES AND OPINIONS OF COUNSEL.

                  (a) Any certificate delivered hereunder may be based, insofar
as it relates to legal matters, upon an Opinion of Counsel, unless the Person
delivering such certificate knows, or in the exercise of reasonable care should
know, that such opinion with respect to the matters upon which such certificate
may be based as aforesaid is erroneous. Any Opinion of Counsel or certificate
delivered hereunder may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations




                                      110

<PAGE>   117

by, an officer or officers of the Servicer or the Transferor, stating that the
information with respect to such factual matters is in the possession of such
Person, unless the Person delivering such certificate or such counsel knows, or
in the exercise of reasonable care should know, that such certificate, opinion
or representations with respect to such matters are erroneous. Any Opinion of
Counsel delivered hereunder may contain necessary exceptions and qualifications.

                  (b) Any Opinion of Counsel or certificate delivered hereunder
may be based, insofar as it relates to accounting matters, upon a certificate or
opinion of or representations by an independent public accountant or firm of
accountants, unless such counsel or the Person delivering such certificate, as
the case may be, knows that the certificate or opinions or representations with
respect to the accounting matters upon which the certificate or opinion may be
based as aforesaid are erroneous, or in the exercise of reasonable care should
know that the same are erroneous. Any certificate, opinion or representations of
any firm of independent public accountants filed with the Trustee shall contain
a statement that such firm is independent.

                  (c) Where any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements, opinions or
other instruments hereunder, they may, but need not, be consolidated and form
one instrument.

                  SECTION 13.17 NO PETITION COVENANT. Notwithstanding any prior
termination of this Agreement, the Transferor, the Servicer, the Trustee, the
Transfer Agent and Registrar and each Paying Agent shall not, prior to the date
which is one year and one day after the termination of this Agreement with
respect to the Trust, acquiesce, petition or otherwise invoke or cause the Trust
to invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against the Trust under any Federal or state
Debtor Relief Laws, or appointing of a receiver, liquidator, conservator,
assignee, trustee, custodian, sequestrator or other similar official for the
Trust or any substantial part of its property or ordering the winding-up or
liquidation of the affairs of the Trust.






                                      111

<PAGE>   118



                  IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee and Paying Agent have caused this Master Pooling and Servicing Agreement
to be duly executed by their respective officers as of the day and year first
above written.


                                    PROFFITT'S CREDIT CORPORATION,
                                     as Transferor


                                    By: /s/ Douglas E. Coltharp
                                       ------------------------------------
                                      Name:   Douglas E. Coltharp
                                      Title:  President


                                    PROFFITT'S, INC.,
                                     as Servicer


                                    By  /s/ Douglas E. Coltharp
                                       ------------------------------------
                                      Name:  Douglas E. Coltharp
                                      Title:  Executive Vice President &
                                              Chief Financial Officer



                                    NORWEST BANK MINNESOTA,
                                     NATIONAL ASSOCIATION,
                                    as Trustee


                                    By: /s/ Marianna C. Stershic
                                       ------------------------------------
                                      Name:   Marianna C. Stershic
                                      Title:  Senior Vice President







                                      112

<PAGE>   1







                                 EXHIBIT 99.3
                                      

     Series 1997-2 Supplement to the Master Pooling and Servicing Agreement
dated as of August 21, 1997 among Proffitt's Credit Corporation, as Transferor,
Proffitt's, Inc., as Servicer, and Norwest Bank Minnesota, National Association,
                                   as Trustee





<PAGE>   2
                                                                    EXHIBIT 99.3



                          PROFFITT'S CREDIT CORPORATION
                                   TRANSFEROR

                                PROFFITT'S, INC.
                                    SERVICER

                                       AND

                  NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
                                     TRUSTEE

                       ON BEHALF OF THE CERTIFICATEHOLDERS
                       -----------------------------------

                            SERIES 1997-2 SUPPLEMENT
                           DATED AS OF AUGUST 21, 1997

                                     TO THE

                     MASTER POOLING AND SERVICING AGREEMENT

                           DATED AS OF AUGUST 21, 1997

                         ------------------------------


                                  $235,300,000

                       PROFFITT'S CREDIT CARD MASTER TRUST

                                  SERIES 1997-2



                  THIS SERIES 1997-2 SUPPLEMENT, dated as of August 21, 1997
(this "Series Supplement"), is by and among PROFFITT'S CREDIT CORPORATION, a
Nevada corporation, as Transferor, PROFFITT'S, INC., a Tennessee corporation, as
Servicer, and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States (together
with its successors in trust thereunder the "Trustee"), as trustee under the
Master Pooling and Servicing Agreement, dated as of August 21, 1997 (the
"Agreement"), by and among the Transferor, the Servicer and the Trustee.




<PAGE>   3


                             PRELIMINARY STATEMENTS

                  Section 6.9 of the Agreement provides, among other things,
that the Transferor and the Trustee may at any time and from time to time enter
into one or more Supplements to the Agreement for the purpose of authorizing the
issuance by the Trust to the Transferor, for execution and redelivery to the
Trustee for authentication, one or more Series of Investor Certificates. The
Transferor and the Servicer each hereby enter into this Series Supplement with
the Trustee as required by Section 6.9(c) of the Master Pooling and Servicing
Agreement to provide for the issuance, authentication and delivery of the
Investor Certificates of Series 1997-2.

                  Pursuant to this Series Supplement, the Transferor and the
Trustee shall create a new Series of Investor Certificates and shall specify the
Principal Terms thereof. The Series 1997-2 Certificates shall not be
subordinated to any other Series.

                  SECTION A. DESIGNATION. The Certificates issued hereunder 
shall be designated generally as the "Series 1997-2 Certificates." The Series
1997-2 Certificates shall be one of the Series of Investor Certificates in
Group One and shall be a Principal Sharing Series. The Transferor and the
Servicer each hereby enter into this Series Supplement with the Trustee as
required by Section 6.9(c) of the Agreement to provide for the issuance,
authentication and delivery of the Class A Asset Backed Certificates, Series
1997-2, the ClassB Asset Backed Certificates, Series 1997-2 and the Class D
Asset Backed Certificates, Series 1997-2. In addition, this Supplement further
creates a fourth Class of uncertificated interests in the Trust which, except
as expressly provided for herein, shall be deemed to be "Investor Certificates"
for all purposes under the Agreement and this Series Supplement and which shall
be known as "Collateral Indebtedness Interest, Series 1997-2". The first
Distribution Date with respect to Series 1997-2 shall be the September 1997
Distribution Date. In the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision contained in
the Agreement, the terms and provisions of this Series Supplement shall govern.

                  SECTION B. DEFINITIONS. All capitalized terms not otherwise
defined herein are defined in the Agreement. All Article, Section or subsection
references herein shall mean Articles, Sections or subsections of the Agreement,
except as otherwise provided herein. Unless otherwise stated herein, as the
context otherwise requires or if such term is otherwise defined in the
Agreement, each capitalized term used or defined herein shall relate only to the
Series 1997-2 Certificates and no other Series of Certificates issued by the
Trust. The following words and phrases shall have the following meanings with
respect to the Series 1997-2 Certificates and the definitions of such terms are
applicable to the singular as well as the plural form of such terms and to the
masculine as well as the feminine and neuter genders of such terms:

                  "Accumulation Commencement Monthly Period" shall mean the
Monthly Period in which the Accumulation Period commences.



                                     - 1 -

<PAGE>   4

                  "Accumulation Period" shall mean the Class A Accumulation
Period and the Class B Accumulation Period.

                  "Accumulation Period Factor" shall mean, for each Monthly
Period, a fraction, the numerator of which is equal to the sum of the initial
investor amounts of all outstanding Series, and the denominator of which is
equal to the sum, without duplication, of (a) the Initial Investor Amount (plus
the aggregate initial principal amount of any Additional Class D Certificates),
(b) the initial investor amounts (or other applicable amounts) of all
outstanding Series (other than Series 1997-2) which are not expected to be in
their revolving periods during such Monthly Period and (c) the initial investor
amounts (or other applicable amounts) of all other outstanding Series which are
not allocating Shared Principal Collections to other Series and are expected to
be in their revolving periods during such Monthly Period.

                  "Accumulation Period Length" shall have the meaning specified
in Section 4.15.

                  "Additional Class D Certificates" shall have the meaning
specified in Section 4.16.

                  "Adjusted Investor Amount" shall mean, as of any date of
determination, an amount equal to the sum of the Class A Adjusted Investor
Amount, the Class B Adjusted Investor Amount, the Collateral Indebtedness Amount
and the Class D Investor Amount, in each case as of such date.

                  "Allocable Amounts" shall mean with respect to any
Distribution Date, the sum of the Class A Allocable Amount, the Class B
Allocable Amount, the Collateral Allocable Amount and the Class D Allocable
Amount.

                  "Amortization Period" shall mean the Accumulation Period or
the Rapid Amortization Period.

                  "Available Cash Collateral Amount" shall mean, with respect to
any Distribution Date, the amount held in and available to be withdrawn from the
Cash Collateral Account on such date.

                  "Available Enhancement Amount" shall mean an amount equal to
the sum of the Available Cash Collateral Amount, the Collateral Indebtedness
Amount and the Class D Investor Amount.

                  "Available Principal Collections" shall mean, with respect to
any Distribution Date, an amount equal to (a) the applicable Investor Percentage
of Collections of Principal Receivables for the related Monthly Period, plus (b)
amounts designated as Available Principal Collections pursuant to Section 4.8,
minus (c)




                                     - 2 -

<PAGE>   5

Reallocated Principal Collections applied pursuant to Section 4.9 for the
related Monthly Period, plus (d) Shared Principal Collections allocated to
Series 1997-2.

                  "Available Reserve Account Amount" shall mean, with respect to
any Distribution Date, the lesser of (a) the amount held in and available to be
withdrawn from the Reserve Account on such date (before giving effect to any
deposit or withdrawal to be made to or from the Reserve Account on such date)
and (b) the Required Reserve Account Amount for such Distribution Date. 

                  "Base Rate" shall mean, with respect to any Monthly Period,
the sum of (a) the annualized percentage equivalent of a fraction, the numerator
of which is equal to the Monthly Interest payable on the Series 1997-2
Certificates on the Distribution Date immediately following the last day of such
Monthly Period and the denominator of which is the Investor Amount as of the
last day of the preceding Monthly Period and (b) the product of (i) 2.00% per
annum and (ii) a fraction the numerator of which is an amount equal to the
Adjusted Investor Amount and the denominator of which is the Investor Amount, in
each case determined as of the last day of such preceding Monthly Period.

                  "Business Day" shall have the meaning provided in the
Agreement.

                  "Cash Collateral Account" shall have the meaning specified in
Section 4.12(a).

                  "Cash Enhancement Surplus" shall mean, as of any date of
determination, the lesser of (a) the Enhancement Surplus and (b) the excess of
the amount held in and available to be withdrawn from the Cash Collateral
Account over the Required Cash Collateral Amount.

                  "Class A Accumulation Period" shall mean, unless a Pay Out
Event with respect to Series 1997-2 shall have occurred prior thereto, the
period commencing at the close of business on the last day of the July 2001
Monthly Period, or such later date as shall be determined in accordance with
Section 4.15, and ending on the first to occur of (a) the commencement of the
Rapid Amortization Period, (b) the payment in full to Class A Certificateholders
of the Class A Investor Amount or (c) the Stated Series Termination Date.

                  "Class A Additional Interest" shall have the meaning specified
in Section 4.3(a).

                  "Class A Adjusted Investor Amount" shall mean, on any date of
determination while the Class A Certificates are outstanding, an amount equal to
the Class A Investor Amount minus the Principal Account Balance, but in no event
shall the Class A Adjusted Investor Amount be less than zero.




                                     - 3 -

<PAGE>   6

                  "Class A Adjustment Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Series Adjustment
Amount for Series 1997-2 with respect to the related Monthly Period and (ii) the
percentage equivalent of a fraction the numerator of which is the Class A
Adjusted Investor Amount and the denominator of which is the Adjusted Investor
Amount, each as of the last day of the Monthly Period preceding the related
Monthly Period.

                  "Class A Allocable Amount" shall mean, with respect to any
Distribution Date, the sum of the Class A Investor Default Amount and the Class
A Adjustment Amount.

                  "Class A Available Funds" shall mean, with respect to any
Monthly Period, an amount equal to the sum of (a) the applicable Class A
Investor Percentage of Collections of Finance Charge Receivables and any other
amounts that are to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement, (b) if such Monthly Period immediately precedes a
Distribution Date that occurs prior to the Class B Principal Commencement Date,
the amount of the Principal Investment Proceeds if any, with respect to such
Monthly Period, (c) the amount, if any, to be withdrawn from the Reserve Account
on the Distribution Date immediately following the last day of such Monthly
Period and included in Class A Available Funds pursuant to Section 4.14(d), and
(d) amounts required to be included in Class A Available Funds pursuant to
Section 4.14(b).

                  "Class A Certificate Rate" shall mean, with respect to the
Class A Certificates and each Interest Period, a per annum rate of 6.50%.

                  "Class A Certificateholder" shall mean any Person in whose
name a Class A Certificate is registered in the Certificate Register.

                  "Class A Certificates" shall mean any one of the Certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-1.

                  "Class A Expected Payment Date" shall mean the August 2002
Distribution Date.

                  "Class A Initial Investor Amount" shall mean the aggregate
initial principal amount of the Class A Certificates, which is $180,000,000.

                  "Class A Interest Shortfall" shall have the meaning specified
in Section 4.3(a).

                  "Class A Investor Amount" shall mean, on any date of
determination, an amount equal to (a) the Class A Initial Investor Amount, minus
(b) the aggregate amount of principal payments made to the Class A
Certificateholders prior to such date, minus (c)



                                     - 4 -

<PAGE>   7

the excess, if any, of the aggregate amount of Class A Investor Charge Offs for
all prior Distribution Dates over the sum of the aggregate amount of Class A
Investor Charge Offs reimbursed pursuant to Section 4.8(b) and, without
duplication, the aggregate amount of the reductions of the Series Adjustment
Amounts allocable to the Class A Certificates pursuant to Section 4.7(f) prior
to such date; provided, however, that the Class A Investor Amount may not be
reduced below zero.

                  "Class A Investor Charge Offs" shall have the meaning
specified in Section 4.7(a).

                  "Class A Investor Default Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (i) the Default Amount
for the related Monthly Period and (ii) the applicable Class A Investor
Percentage for such Monthly Period.

                  "Class A Investor Percentage" shall be calculated by
substituting the Class A Adjusted Investor Amount and the Class A Initial
Investor Amount in all references to the Adjusted Investor Amount and the
Initial Investor Amount, respectively, in the definition of Investor Percentage.

                  "Class A Monthly Interest" shall have the meaning specified in
Section 4.3(a).

                  "Class A Monthly Principal" shall have the meaning specified
in Section 4.4(a).

                  "Class A Penalty Rate" shall mean the sum of the Class A
Certificate Rate and 2.00% per annum.

                  "Class A Required Amount" shall have the meaning specified in
Section 4.5(a).

                  "Class A Servicing Fee" shall have the meaning specified in
Section G hereof.

                  "Class B Accumulation Amount" means for any Distribution Date
with respect to the Class B Accumulation Period, an amount equal to the Class B
Investor Amount as of the beginning of the Accumulation Period.

                  "Class B Accumulation Period" shall mean, unless a Pay Out
Event with respect to Series 1997-2 shall have occurred prior thereto, the
period commencing on the Distribution Date on which the Class A Investor Amount
is paid in full or if the Class A Investor Amount is paid in full on the Class A
Expected Payment Date, at the close of business on the Class A Expected Payment
Date, and ending on the first to occur of (a) the commencement of the Rapid
Amortization Period, (b) the payment in full to Class B




                                     - 5 -

<PAGE>   8

Certificateholders of the Class B Investor Amount or (c) the Stated Series
Termination Date.

                  "Class B Additional Interest" shall have the meaning specified
in Section 4.3(b).

                  "Class B Adjusted Investor Amount" shall mean, on any date of
determination, an amount equal to the Class B Investor Amount minus, prior to
the payment in full of the Class A Investor Amount, the excess of the Principal
Account Balance over the Class A Investor Amount, and after the payment in full
of the Class A Investor Amount, the Principal Account Balance, if any, but in no
event shall the Class B Adjusted Investor Amount be less than zero.

                  "Class B Adjustment Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Series Adjustment
Amount for Series 1997-2 with respect to the related Monthly Period and (ii) the
percentage equivalent of a fraction the numerator of which is the Class B
Adjusted Investor Amount and the denominator of which is the Adjusted Investor
Amount, each as of the last day of the Monthly Period preceding the related
Monthly Period.

                  "Class B Allocable Amount" shall mean, with respect to any
Distribution Date, the sum of the Class B Investor Default Amount and the Class
B Adjustment Amount.

                  "Class B Available Funds" shall mean, with respect to any
Monthly Period, an amount equal to the sum of (i) the applicable Class B
Investor Percentage of Collections of Finance Charge Receivables and any other
amounts that are to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement, (b) if such Monthly Period immediately precedes a
Distribution Date that occurs on or after the Class B Principal Commencement
Date, the amount of Principal Investment Proceeds, if any, with respect to such
Monthly Period, (c) the amount, if any, to be withdrawn from the Reserve Account
on the Distribution Date immediately following the last day of such Monthly
Period and included in Class B Available Funds pursuant to Section 4.14(d), and
(d) the amount, if any, required to be included in Class B Available Funds
pursuant to Section 4.14(b).

                  "Class B Certificate Rate" shall mean, with respect to the
Class B Certificates and each Interest Period, a per annum rate of 6.69%.

                  "Class B Certificateholder" shall mean any Person in whose
name a Class B Certificate is registered in the Certificate Register.

                  "Class B Certificates" shall mean any one of the Certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2.



                                     - 6 -

<PAGE>   9

                  "Class B Expected Payment Date" shall mean the September 2002
Distribution Date.

                  "Class B Initial Investor Amount" shall mean the aggregate
initial principal amount of the Class B Certificates, which is $20,000,000.

                  "Class B Interest Shortfall" shall have the meaning specified
in Section 4.3(b).

                  "Class B Investor Amount" shall mean, on any date of
determination, an amount equal to (a) the Class B Initial Investor Amount, minus
(b) the aggregate amount of principal payments made to the Class B
Certificateholders prior to such date, minus (c) the aggregate amount of Class B
Investor Charge Offs for all prior Distribution Dates, minus (d) the amount of
ClassB Subordinated Principal Collections allocated on all prior Distribution
Dates pursuant to Section 4.9(a), minus (e) an amount equal to the amount by
which the Class B Investor Amount has been reduced on all prior Distribution
Dates pursuant to Section 4.7(a), plus (f) the sum of the amount of Excess
Spread and Shared Excess Finance Charge Collections allocated and available on
all prior Distribution Dates pursuant to Section 4.8(e) for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and (e)
and, without duplication, the aggregate amount of the reductions of the Series
Adjustment Amounts allocable to the Class B Investor Amount pursuant to Section
4.7(f) prior to such date; provided, however, that the Class B Investor Amount
may not be reduced below zero.

                  "Class B Investor Charge Offs" shall have the meaning
specified in Section 4.7(b).

                  "Class B Investor Default Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (i) the Default Amount
for the related Monthly Period and (ii) the applicable Class B Investor
Percentage for such Monthly Period.

                  "Class B Investor Percentage" shall be calculated by
substituting the Class B Adjusted Investor Amount and the Class B Initial
Investor Amount in all references to the Adjusted Investor Amount and the
Initial Investor Amount respectively, in the definition of Investor Percentage.

                  "Class B Monthly Interest" shall have the meaning specified in
Section 4.3(b).

                  "Class B Monthly Principal" shall have the meaning specified
in Section 4.4(b).




                                     - 7 -

<PAGE>   10

                  "Class B Penalty Rate" shall mean the sum of the Class B
Certificate Rate and 2.00% per annum.

                  "Class B Principal Commencement Date" shall mean the
Distribution Date on which the Class A Investor Amount is paid in full or, if
the Class A Investor Amount is paid in full on the Class A Expected Payment Date
and a Pay Out Event has not commenced, the Distribution Date following the Class
A Expected Payment Date.

                  "Class B Required Amount" shall have the meaning specified in
Section 4.5(b).

                  "Class B Servicing Fee" shall have the meaning specified in
Section G hereof.

                  "Class B Subordinated Principal Collections" shall mean, with
respect to any Monthly Period, an amount equal to the product of (i) the
applicable Class B Investor Percentage with respect to Collections of Principal
Receivables and (ii) the aggregate amount of Collections of Principal
Receivables for such Monthly Period.

                  "Class D Additional Interest" shall have the meaning specified
in Section 4.3(d).

                  "Class D Adjustment Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Series Adjustment
Amount for Series 1997-2 with respect to the related Monthly Period and (ii) the
percentage equivalent of a fraction the numerator of which is the Class D
Investor Amount and the denominator of which is the Adjusted Investor Amount,
each as of the last day of the Monthly Period preceding the related Monthly
Period.

                  "Class D Allocable Amount" shall mean, with respect to any
Distribution Date, the sum of the Class D Investor Default Amount and the Class
D Adjustment Amount.

                  "Class D Available Funds" shall mean, with respect to any
Monthly Period, an amount equal to the applicable Class D Investor Percentage of
Collections of Finance Charge Receivables and any other amounts that are to be
treated as Collections of Finance Charge Receivables in accordance with the
Agreement.

                  "Class D Certificate Rate" shall mean, for any Interest Period
with respect to the Class D Certificates, the rate designated in the letter
agreement, dated as of August 21, 1997, between the Transferor and the Trustee;
provided, in no event shall the Class D Certificate Rate exceed LIBOR plus 1.00%
per annum.

                  "Class D Certificateholder" shall mean any Person in whose
name a Class D Certificate is registered in the Certificate Register.




                                     - 8 -

<PAGE>   11

                  "Class D Certificates" shall mean any one of the Certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-3.

                  "Class D Initial Investor Amount" shall mean the aggregate
initial principal amount of the Class D Certificates, which is $14,300,000.

                  "Class D Interest Shortfall" shall have the meaning specified
in Section 4.3(d).

                  "Class D Investor Amount" shall mean, on any date of
determination, an amount equal to (a) the Class D Initial Investor Amount (plus
the aggregate initial principal amount of any Additional Class D Certificates
issued during the Revolving Period), minus (b) the aggregate amount of principal
payments made to the Class D Certificateholders prior to such date, minus (c)
the amount of Class D Subordinated Principal Collections allocated on all prior
Distribution Dates pursuant to Section 4.9(a), (b) and (c), minus (d) an amount
equal to the amount by which the Class D Investor Amount has been reduced on all
prior Distribution Dates pursuant to Section 4.7(a), (b), (c) and (d), plus (e)
the sum of the amount of Excess Spread and Shared Excess Finance Charge
Collections allocated and available on all prior Distribution Dates pursuant to
Section 4.8(n) for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c) and (d) and, without duplication, the aggregate amount of
the reductions of the Series Adjustment Amounts allocable to the Class D
Investor Amount pursuant to Section 4.7(f) prior to such date; but in no event
shall the Class D Investor Amount be reduced below zero.

                  "Class D Investor Charge Off" shall have the meaning provided
in Section 4.7(d).

                  "Class D Investor Default Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (i) the Default Amount
for the related Monthly Period and (ii) the applicable Class D Investor
Percentage for such Monthly Period.

                  "Class D Investor Percentage" shall be calculated by
substituting the Class D Investor Amount and the Class D Initial Investor Amount
in all references to the Adjusted Investor Amount and the Initial Investor
Amount, respectively, in the definition of Investor Percentage.

                  "Class D Monthly Interest" shall have the meaning specified in
Section 4.3(d).

                  "Class D Monthly Principal" shall have the meaning specified
in Section 4.4(d).




                                     - 9 -

<PAGE>   12

                  "Class D Penalty Rate" shall mean, for any Interest Period,
the sum of the Class D Certificate Rate for such Interest Period and 2.00% per
annum.

                  "Class D Servicing Fee" shall have the meaning specified in
Section G hereof.

                  "Class D Subordinated Principal Collections" shall mean, with
respect to any Monthly Period, an amount equal to the product of (i) the
applicable Class D Investor Percentage with respect to Collections of Principal
Receivables and (ii) the aggregate amount of Collections of Principal
Receivables for such Monthly Period.

                  "Closing Date" shall mean August 21, 1997.

                  "Collateral Additional Interest" shall have the meaning
specified in Section 4.3(c).

                  "Collateral Adjustment Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (i) the Series
Adjustment Amount for Series 1997-2 with respect to the related Monthly Period
and (ii) the percentage equivalent of a fraction the numerator of which is the
Collateral Indebtedness Amount and the denominator of which is the Adjusted
Investor Amount, each as of the last day of the Monthly Period preceding the
related Monthly Period.

                  "Collateral Allocable Amount" shall mean, with respect to any
Distribution Date, the sum of the Collateral Default Amount and the Collateral
Adjustment Amount.

                  "Collateral Available Funds" shall mean, with respect to any
Monthly Period, an amount equal to the applicable Collateral Investor Percentage
of Collections of Finance Charge Receivables and any other amounts that are to
be treated as Collections of Finance Charge Receivables in accordance with the
Agreement.

                  "Collateral Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Default Amount for
the related Monthly Period and (ii) the applicable Collateral Investor
Percentage during such Monthly Period.

                  "Collateral Indebtedness Amount" shall mean, on any date of
determination, an amount equal to (a) the Collateral Initial Indebtedness
Amount, minus (b) the aggregate amount of principal payments made to the
Collateral Indebtedness Holder on or prior to such date, minus (c) the amount of
Collateral Subordinated Principal Collections allocated on all prior
Distribution Dates pursuant to Sections 4.9(a) and 4.9(b), minus (d) an amount
equal to the amount by which the Collateral Indebtedness Amount has been reduced
on all prior Distribution Dates pursuant to Sections 4.7(a) and 4.7(b), plus (e)
the sum of the Excess Spread and Shared Excess Finance Charge Collections
allocated and available on all prior Distribution Dates for the purpose of



                                     - 10 -

<PAGE>   13

reimbursing amounts deducted pursuant to the foregoing clauses (c) and (d) and,
without duplication, reductions of the Series Adjustment Amount allocable to the
Collateral Indebtedness Interest pursuant to Section 4.7(f) prior to such date;
but in no event shall the Collateral Indebtedness Amount be reduced below zero.

                  "Collateral Indebtedness Charge Off" shall have the meaning
specified in Section 4.7(c).

                  "Collateral Indebtedness Holder" shall mean the entity
designated as such in the Loan Agreement.

                  "Collateral Indebtedness Interest" shall mean a fractional
undivided interest in the Trust which shall consist of the right to receive, to
the extent necessary to make the required payments to the Collateral
Indebtedness Holder under this Series Supplement, the portion of Collections
allocable thereto under the Agreement and this Series Supplement, funds held in
the Collection Account allocable thereto pursuant to the Agreement and this
Series Supplement and, subject to the rights of the Series 1997-2
Certificateholders with respect thereto, funds held in the Cash Collateral
Account and the Reserve Account.

                  "Collateral Initial Indebtedness Amount" shall mean the
aggregate initial principal amount of the Collateral Indebtedness Interest,
which is $21,000,000.

                  "Collateral Interest Shortfall" shall have the meaning
specified in Section 4.3(c).

                  "Collateral Investor Percentage" shall be calculated by
substituting the Collateral Indebtedness Amount and the Collateral Initial
Indebtedness Amount in all references to the Adjusted Investor Amount and the
Initial Investor Amount, respectively, in the definition of Investor Percentage.

                  "Collateral Interest Shortfall" shall have the meaning
specified in Section 4.3(c).

                  "Collateral Monthly Interest" shall have the meaning specified
in Section 4.3(c).

                  "Collateral Monthly Principal" shall have the meaning
specified in Section 4.4(c).

                  "Collateral Penalty Rate" shall mean, for any Interest Period,
the sum of the Collateral Rate for such Interest Period and 2.00% per annum.

                  "Collateral Rate" shall mean the rate designated as such in
the Loan Agreement.





                                     - 11 -

<PAGE>   14

                  "Collateral Required Amount" shall have the meaning specified
in Section 4.5(c).

                  "Collateral Servicing Fee" shall have the meaning specified in
Section G hereof.

                  "Collateral Subordinated Principal Collections" shall mean,
with respect to any Monthly Period, an amount equal to the product of (i) the
applicable Collateral Investor Percentage with respect to Collections of
Principal Receivables and (ii) the aggregate amount of Collections of Principal
Receivables for such Monthly Period.

                  "Controlled Accumulation Amount" shall mean (a) for any
Distribution Date with respect to the Class A Accumulation Period, $15,000,000;
provided, however, if the Accumulation Period Length shall be determined to be
less than 12 months in accordance with Section 4.15, the Controlled Accumulation
Amount with respect to the Class A Certificates shall be equal to (i) the
product of (x) the Class A Initial Investor Amount and (y) the Accumulation
Period Factor for such Monthly Period divided by (ii) the Required Accumulation
Factor Number and (b) for any Distribution Date with respect to the Class B
Accumulation Period, $20,000,000.

                  "Controlled Deposit Amount" shall mean, for any Distribution
Date with respect to the Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Distribution Date and any Deficit
Controlled Accumulation Amount for the immediately preceding Distribution Date.

                  "Covered Amount" shall mean (a) for any Distribution Date with
respect to the Class A Accumulation Period or the first Special Distribution
Date, if such Special Distribution Date occurs on or prior to the Distribution
Date on which the Class A Investor Amount shall be paid in full, an amount equal
to the product of (i) a fraction, the numerator of which is the actual number of
days in the related Interest Period and the denominator of which is 360, (ii)
the Class A Certificate Rate and (iii) the Principal Account Balance, if any, as
of the preceding Distribution Date and (b) for any Distribution Date with
respect to the Class B Accumulation Period or the first Special Distribution
Date, if such Special Distribution Date occurs after the Distribution Date on
which the Class A Investor Amount shall have been paid in full, an amount equal
to the product of (i) a fraction, the numerator of which is the actual number of
days in the related Interest Period and the denominator of which is 360, (ii)
the Class B Certificate Rate and (iii) the Principal Account Balance, if any, as
of the preceding Distribution Date.

                  "Defaulted Receivables" shall mean for any Monthly Period, the
Principal Receivables in Accounts which became Defaulted Accounts during such
Monthly Period.

                  "Deficit Controlled Accumulation Amount" shall mean (a) on the
first Distribution Date with respect to the Class A Accumulation Period or the
Class B Accumulation Period, the excess, if any, of the applicable Controlled
Accumulation




                                     - 12 -

<PAGE>   15

Amount for such Distribution Date over the amount deposited into the Principal
Account as Class A Monthly Principal or Class B Monthly Principal, as the case
may be, for such Distribution Date, and (b) on each subsequent Distribution Date
with respect to the Class A Accumulation Period or the Class B Accumulation
Period, the excess, if any, of the applicable Controlled Deposit Amount for such
subsequent Distribution Date over the amount deposited into the Principal
Account as Class A Monthly Principal or Class B Monthly Principal, as the case
may be, for such subsequent Distribution Date.

                  "Enhancement Provider" shall mean the CIA Lenders and other
Collateral Indebtedness Holders identified in the Loan Agreement.

                  "Enhancement Surplus" shall mean, with respect to any
Distribution Date, the excess, if any, of (a) the sum of the amount held in and
available to be withdrawn from the Cash Collateral Account, the Collateral
Indebtedness Amount and the Class D Investor Amount over (b) the Required
Enhancement Amount.

                  "Excess Spread" shall mean, with respect to any Distribution
Date, the sum of the amounts, if any, specified pursuant to Sections 4.6(a)(iv),
4.6(b)(iii), 4.6(c)(ii), 4.6(d)(ii) and 4.12(b) with respect to such
Distribution Date.

                  "Finance Charge Shortfall" shall have the meaning specified in
Section 4.11.

                  "Initial Investor Amount" shall mean the aggregate initial
principal amount of the Series 1997-2 Certificates, which is $235,300,000.

                  "Interest Period" shall mean, with respect to any Distribution
Date, the period from and including the Distribution Date immediately preceding
such Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to, but excluding, such Distribution Date.

                  "Investor Amount" shall mean, as of any date of determination,
an amount equal to the sum of the Class A Investor Amount, the Class B Investor
Amount, the Collateral Indebtedness Amount and the Class D Investor Amount, in
each case as of such date.

                  "Investor Default Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Default Amount for
the immediately preceding Monthly Period and (b) the applicable Investor
Percentage applicable to Allocable Amounts for such Monthly Period.

                  "Investor Monthly Servicing Fee" shall have the meaning
specified in Section G hereof.




                                     - 13 -

<PAGE>   16


                  "Investor Percentage" shall mean:

                           (a) with respect to (A) Principal Receivables during
                  any Monthly Period with respect to the Revolving Period, (B)
                  Finance Charge Receivables during any Monthly Period other
                  than during a Rapid Amortization Period, and (C) the Allocable
                  Amount during any Monthly Period, the percentage equivalent of
                  a fraction the numerator of which is equal to the Adjusted
                  Investor Amount as of the last day of the immediately
                  preceding Monthly Period (or the Initial Investor Amount, in
                  the case of the first Monthly Period applicable to Series
                  1997-2) and the denominator of which is the greater of (i) the
                  sum of the Aggregate Principal Receivables and the Excess
                  Funding Amount, in each case at the close of business on the
                  last day of the immediately preceding Monthly Period and (ii)
                  the sum of the numerators used to calculate the applicable
                  investor percentages with respect to Principal Receivables,
                  Finance Charge Receivables or the Allocable Amount, as
                  applicable, for all Series outstanding as of the date on which
                  such determination is being made;

                           (b) with respect to Finance Charge Receivables (and
                  any other amounts treated as Finance Charge Receivables)
                  during any Monthly Period with respect to a Rapid Amortization
                  Period, the percentage equivalent of a fraction the numerator
                  of which is equal to the Investor Amount as of the last day of
                  the Revolving Period and the denominator of which is the
                  greater of (i) the sum of the Aggregate Principal Receivables
                  and the Excess Funding Amount, in each case at the close of
                  business on the last day of the immediately preceding Monthly
                  Period and (ii) the sum of the numerators use to calculate the
                  investor percentages with respect to Finance Charge
                  Receivables for all Series outstanding as of the date on which
                  such determination is being made; and

                           (c) with respect to Principal Receivables during any
                  Monthly Period with respect to an Amortization Period, the
                  percentage equivalent of a fraction the numerator of which is
                  equal to the Investor Amount as of the last day of the
                  Revolving Period and the denominator of which is the greater
                  of (i) the sum of the Aggregate Principal Receivables and the
                  Excess Funding Amount, in each case at the close of business
                  on the last day of the immediately preceding Monthly Period
                  and (ii) the sum of the numerators used to calculate the
                  investor percentages with respect to Principal Receivables for
                  all Series outstanding as of the date on which such
                  determination is being made; provided, however, that if the
                  Series 1997-2 Certificates are paired with a Paired Series and
                  a Rapid Amortization Period commences for such Paired Series,
                  the Transferor may, by written notice to the Trustee and
                  Servicer, designate a different numerator to be used to
                  determine such percentage, (provided that such




                                     - 14 -

<PAGE>   17

                  numerator is not less than the Adjusted Investor Amount as of
                  the last day of the revolving period for such Paired Series).

                  "LIBOR" shall have the meaning specified in the Loan
Agreement.

                  "Loan Agreement" shall mean the agreement among the
Transferor, the Servicer, the Trustee and the Collateral Indebtedness Holder,
dated as of the date hereof, as amended, supplemented or otherwise modified from
time to time in accordance with its terms.

                  "Minimum Transferor Interest Percentage" shall have the
meaning specified in Section C.

                  "Monthly Interest" shall mean, with respect to any
Distribution Date, the sum of the Class A Monthly Interest, the Class B Monthly
Interest, the Collateral Monthly Interest and the Class D Monthly Interest for
such Distribution Date.

                  "Paired Series" shall have the meaning specified in Section
L2.

                  "Portfolio Adjusted Yield" shall mean, with respect to any
Monthly Period, the Portfolio Yield with respect to such Monthly Period minus
the Base Rate with respect to such Monthly Period.

                  "Portfolio Yield" shall mean, with respect to any Monthly
Period, the annualized percentage equivalent of a fraction, the numerator of
which is (x) the sum of (i) the amount of collections of Finance Charge
Receivables and Shared Excess Finance Charge Collections allocated to the Series
1997-2 Certificates for such Monthly Period, plus (ii) the amount of investment
earnings (net of investment expenses and losses), if any, on the Principal
Account and Reserve Account balances, plus (iii) interest and earnings (net of
investment expenses and losses), if any, on funds held in the Cash Collateral
Account and included as Excess Spread pursuant to Section 4.12(b), plus (iv) the
amount of funds withdrawn from the Reserve Account minus (v) an amount equal to
the Default Amount allocable to the Series 1997-2 Certificates for such Monthly
Period, and the denominator of which is (y) the Investor Amount as of the last
day of the preceding Monthly Period.

                  "Principal Account" shall have the meaning specified in
Section 4.13(a).

                  "Principal Account Balance" shall mean, with respect to any
date of determination during the Accumulation Period, the amount, if any, of
funds held in the Principal Account on such date of determination.

                  "Principal Investment Proceeds" shall have the meaning
specified in Section 4.13(b).



                                     - 15 -

<PAGE>   18

                  "Principal Shortfall" shall have the meaning specified in
Section 4.10.

                  "Rapid Amortization Period" shall mean the period commencing
at the close of business on the day on which a Pay Out Event with respect to
Series 1997-2 is deemed to have occurred, and ending on the first to occur of
(a) the payment in full of the Class A Investor Amount, the Class B Investor
Amount, the Collateral Indebtedness Amount and the Class D Investor Amount,
respectively or (b) the Stated Series Termination Date.

                  "Rating Agencies" shall mean Moody's, Standard & Poor's, and,
if applicable, such other nationally recognized statistical rating organization
that has rated the Certificates at the request of the Company.

                  "Reallocated Principal Collections" shall mean, with respect
to any Monthly Period, an amount equal to the sum of Class B Subordinated
Principal Collections, Collateral Subordinated Principal Collections and Class D
Subordinated Principal Collections for such Monthly Period.

                  "Reference Banks" shall mean four major banks in the London
interbank market selected by the Servicer upon notice to the Trustee.

                  "Required Accumulation Factor Number" shall be a fraction,
rounded upwards to the nearest whole number, the numerator of which is one and
the denominator of which is equal to the lowest monthly principal payment rate
on the Accounts for the 12 months preceding the date of such calculation (or any
lower monthly principal payment rate selected by the Servicer at its option in
its sole discretion), expressed as a decimal.

                  "Required Cash Collateral Amount" shall mean the amount
specified as such in the Loan Agreement or such higher amount designated by the
Transferor.

                  "Required Draw Amount" shall have the meaning specified in
Section 4.12(c).

                  "Required Enhancement Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of the Adjusted Investor
Amount (after giving effect to all reductions thereof to be made on such
Distribution Date) and 15.0%, but not less than $7,059,000; provided, however,
that (i) if a Pay Out Event shall have occurred, the Required Enhancement Amount
for each Distribution Date thereafter (subject to clause (ii) below) shall equal
the Required Enhancement Amount for the Distribution Date immediately preceding
the occurrence of such Pay Out Event, (ii) in no event shall the Required
Enhancement Amount exceed the sum of the Class A Adjusted Investor Amount and
the Class B Adjusted Investor Amount on such date and (iii) the Required
Enhancement Amount may be reduced without the consent of the Series 1997-2
Certificateholders if (x) the Transferor shall have received written notice from
each Rating Agency (with a copy delivered to the Trustee) that the Rating Agency
Condition is




                                     - 16 -

<PAGE>   19

satisfied, (y) the Transferor shall have delivered to the Trustee an Officer's
Certificate to the effect that, based on the facts known to such officer at such
time, in the reasonable belief of the Transferor, such reduction will not cause
a Pay Out Event or an event that, after the giving of notice or the lapse of
time, would constitute a Pay Out Event, to occur with respect to Series 1997-2
and (z) the Transferor shall have provided an Opinion of Counsel addressed to
the Trustee, dated the date of such reduction, that such reduction will not (a)
adversely affect the tax characterization of any outstanding Series or Class
with respect to which an Opinion of Counsel addressed to the Trustee was
delivered at the time of their issuance that such Investor Certificates would be
characterized as debt, (b) cause the Trust to be classified, for federal income
tax purposes, as an association (or publicly traded partnership) taxable as a
corporation and (c) cause or constitute an event in which gain or loss would be
recognized by any Certificateholder.

                  "Required Reserve Account Amount" shall mean, with respect to
any Distribution Date prior to the Reserve Account Funding Date, $0, and on or
after the Reserve Account Funding Date, an amount no less than (a) 1.50% of the
Class A Investor Amount as of the preceding Distribution Date (after giving
effect to all changes therein on such date) or (b) any other amount designated
by the Transferor; provided, however, that if such designation pursuant to (b)
above is of a lesser amount, (i) the Rating Agency Condition shall have been
satisfied, (ii) the Enhancement Provider shall have consented to such lower
amount and (iii) the Transferor shall have delivered to the Trustee an Officer's
Certificate to the effect that, based on the facts known to such officer at such
time, in the reasonable belief of such officer, such designation will not cause
a Pay Out Event or an event that, after the giving of notice or the lapse of
time, would cause a Pay Out Event, to occur with respect to Series 1997-2.

                  "Reserve Account" shall have the meaning specified in Section
4.14(a).

                  "Reserve Account Funding Date" shall mean the Distribution
Date with respect to the Monthly Period which commences no later than three (3)
months prior to the Class A Accumulation Period, provided that the Reserve
Account Funding Date shall be accelerated to (a) the Distribution Date with
respect to the Monthly Period which commences no later than four (4) months
prior to the Class A Accumulation Period if the average of the Portfolio
Adjusted Yields for any three consecutive Monthly Periods shall be less than
6.0%; (b) the Distribution Date with respect to the Monthly Period which
commences no later than six (6) months prior to the Class A Accumulation Period
if the average of the Portfolio Adjusted Yields for any three (3) consecutive
Monthly Periods shall be less than 3.0%; or (c) the Distribution Date which
commences no later than nine (9) months prior to the Class A Accumulation Period
if the average of the Portfolio Adjusted Yields for any three (3) consecutive
Monthly Periods shall be less than 2.0%.

                  "Reserve Account Surplus" shall mean, as of any date of
determination, the amount, if any, by which the amount held in the Reserve
Account exceeds the Required Reserve Account Amount.





                                     - 17 -

<PAGE>   20

                  "Reserve Draw Amount" shall have the meaning specified in
Section 4.14(c).

                  "Revolving Period" shall mean the period beginning on the
Closing Date and ending on the earlier of (a) the close of business on the day
preceding the commencement of the Class A Accumulation Period and (b) the close
of business on the day preceding the commencement of the Rapid Amortization
Period.

                  "Series Adjustment Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) any unpaid Adjustment
Payment Obligation for the related Monthly Period and (ii) the Investor
Percentage applicable to allocations of Allocable Amounts during the related
Monthly Period, as calculated on the last day of the Monthly Period preceding
the related Monthly Period.

                  "Series 1997-2" shall mean the Series the terms of which are
specified in this Series Supplement.

                  "Series 1997-2 Certificate" shall mean a Class A Certificate,
a Class B Certificate, a Class D Certificate and/or, unless the context requires
otherwise, the Collateral Indebtedness Interest.

                  "Series 1997-2 Certificateholder" shall mean a Class A
Certificateholder, a Class B Certificateholder, a Class D Certificateholder
and/or, unless the context requires otherwise, the Collateral Indebtedness
Holder.

                  "Servicing Fee" shall mean the amount paid monthly from the
Trust to the Servicer and which shall be equal to one-twelfth (1/12th) of the
product of the Servicing Fee Percentage and the Adjusted Investor Amount.

                  "Servicing Fee Percentage" shall mean 2.00% per annum.

                  "Shared Excess Finance Charge Collections" shall mean, with
respect to any Monthly Period, the aggregate amount for all outstanding Series
in Group One of Collections of Finance Charge Receivables which the related
Supplements specify are to be treated as "Shared Excess Finance Charge
Collections" for such Monthly Period.

                  "Shared Principal Collections" shall mean, with respect to any
Monthly Period, the aggregate amount for all outstanding Series in Group One of
Collections of Principal Receivables available after covering required
distributions and deposits under each Series Supplement and that are to be
treated as "Shared Principal Collections" pursuant to Section 4.6(e)(iii) and
Section 4.6(f)(v) and the respective applicable sections of any Supplement for
other Series in Group One.

                  "Special Distribution Date" shall mean each Distribution Date
with respect to the Rapid Amortization Period.






                                     - 18 -

<PAGE>   21

                  "Stated Series Termination Date" shall mean the December 2005
Distribution Date.

                  "Telerate Page 3750" shall mean the display page currently so
designated on the Dow Jones Telerate Service (or such other page as may replace
that page on that service for the purpose of displaying comparable rates or
prices).

                  "Treasury" shall mean the United States Department of the
Treasury and any successor Governmental Authority thereto.

                  SECTION C. MINIMUM TRANSFEROR INTEREST PERCENTAGE. The 
Minimum Transferor Interest Percentage applicable to the Series 1997-2
Certificates shall be 0%; provided, however, that (a) the Transferor may, at
its option and in its sole discretion, designate a higher percentage as the
Minimum Transferor Interest Percentage so long as, after giving effect to such
designation and any repurchase of Investor Certificates or designation of
Additional Accounts, the Transferor Amount shall equal or exceed the Minimum
Transferor Amount and (b) if on any Distribution Date during the Revolving
Period (after giving effect to all distributions and adjustments to be made on
such Distribution Date), the portion of the Class D Investor Amount owned by
the Transferor is less than 2% of the Investor Amount and the Minimum
Transferor Interest Percentage is less than 2%, the Transferor shall, on or
before the last day of the second Monthly Period following the Monthly Period
in which such Distribution Date occurred (unless the portion of the Class D
Investor Amount owned by the Transferor shall then equal or exceed 2% of the
Investor Amount), (i) repurchase or otherwise repay Investor Certificates (to
the extent permitted by any Supplement) or designate Additional Accounts to the
extent necessary to permit the designation of a Minimum Transferor Interest
Percentage of 2% without causing the Transferor Amount to be less than the
Minimum Transferor Amount and (ii) upon compliance with clause (i), designate
2% as the Minimum Transferor Interest Percentage. In the event that the
Transferor shall have designated a Minimum Transferor Interest Percentage in
excess of 0%, the Transferor may, during the Revolving Period, designate a
lower percentage (but not less than 0%) if the portion of the Class D Investor
Amount owned by the Transferor as a percentage of the Investor Amount averaged
over the three Distribution Dates preceding such designation (after giving
effect to all distributions and adjustments made on each such Distribution
Date) shall equal or exceed 4%; provided, however, that such lower percentage
may not be less than 2% if the portion of the Class D Investor Amount owned by
the Transferor as a percentage of the Investor Amount on the Distribution Date
preceding such designation (after giving effect to all distributions and
adjustments made on such Distribution Date) shall not equal or exceed 2%.

                  SECTION D. OPTIONAL PURCHASE; REASSIGNMENT AND TRANSFER TERMS.
All the Series 1997-2 Certificates may be repurchased by, and reassigned and
transferred to, the Transferor in the Transferor's sole discretion, on any
Distribution Date on or after the Distribution Date on which the sum of the
Class A Adjusted Investor Amount, the Class B Adjusted Investor Amount, the
Collateral Indebtedness Amount and the amount





                                     - 19 -

<PAGE>   22

of the Class D Investor Amount held by parties other than the Transferor or any
of its Affiliates is less than or equal to 10% of the sum of the Class A
Investor Amount on the Closing Date, the Class B Investor Amount on the Closing
Date, the Collateral Indebtedness Amount on the Closing Date and the highest
amount of the Class D Investor Amount held by parties other than the Transferor
or any of its affiliates since the Closing Date. The repurchase price for the
Series 1997-2 Certificates will be equal to (a) the Adjusted Investor Amount,
plus (b) accrued and unpaid interest on the 1997-2 Certificates, less (c) the
amount held in the Collection Account allocable to Series 1997-2 to be applied
other than to deposits to the Reserve Account, with any excess payable to the
Transferor as holder of the Exchangeable Transferor Certificate. The provisions
of this Section are subject to the provisions of Section12.2 of the Agreement.

                  SECTION E. DELIVERY AND PAYMENT FOR THE CERTIFICATES. The 
Trustee shall deliver the Series 1997-2 Certificates when authenticated in
accordance with Section 6.2 of the Agreement (except in the case of the
Collateral Indebtedness Interest, which shall be in uncertificated form). The
Class D and Collateral Indebtedness Interest shall bear legends appropriately
limiting their transfer in accordance herewith and applicable securities laws.

                  SECTION F. FORM OF DELIVERY OF THE SERIES 1997-2 CERTIFICATES.
The Class A Certificates and the Class B Certificates shall be delivered as
provided in Section6.11 of the Agreement. The Class A Certificates and the Class
B Certificates will initially be held by the Trustee as custodian for The
Depository Trust Company, and will be registered in the name of Cede & Co., as
nominee of The Depository Trust Company. The Class D Certificates shall be
delivered in registered form. The Collateral Indebtedness Interest shall be
issued in uncertificated form.

                  SECTION G. SERVICING COMPENSATION. The share of the Monthly
Servicing Fee allocable to the Series 1997-2 Certificateholders with respect to
any Distribution Date (the "Investor Monthly Servicing Fee") shall be equal to
one-twelfth (1/12th) of the product of (a) the Servicing Fee Percentage and (b)
each of the Class A Adjusted Investor Amount, the Class B Adjusted Investor
Amount, the Collateral Indebtedness Amount and the Class D Investor Amount,
respectively, as of the last day of the immediately preceding Monthly Period;
provided, however, with respect to the first Distribution Date, the Investor
Monthly Servicing Fee shall be equal to $313,734. The share of the Investor
Monthly Servicing Fee allocable to the Class A Certificateholders with respect
to any Distribution Date (the "Class A Servicing Fee") shall be equal to the
product of (a) one-twelfth ((1/12th) of the Servicing Fee Percentage and (b) the
Class A Adjusted Investor Amount; provided, however, that with respect to the
first Distribution Date, the Class A Servicing Fee shall be equal to $240,000.
The share of the Investor Monthly Servicing Fee allocable to the Class B
Certificateholders with respect to any Distribution Date (the "Class B Servicing
Fee") shall be equal to the product of (a) (1/12th) of the Servicing Fee
Percentage and (b) the Class B Adjusted Investor Amount; provided, however, that
with respect to the first Distribution Date, the Class B Servicing Fee shall be
equal to $26,667. The share of the Investor Monthly Servicing Fee allocable to
the




                                     - 20 -

<PAGE>   23

Collateral Indebtedness Holder with respect to any Distribution Date (the
"Collateral Servicing Fee") shall be equal to the product of (a) one-twelfth
(1/12th) of the Servicing Fee Percentage and (b) the Collateral Indebtedness
Amount; provided, however, that with respect to the first Distribution Date, the
Collateral Servicing Fee shall be equal to $28,000. The share of the Investor
Monthly Servicing Fee allocable to the Class D Certificateholders with respect
to any Distribution Date (the "Class D Servicing Fee") shall be equal to the
product of (a) one-twelfth (1/12th) of the Servicing Fee Percentage and (b) the
Class D Investor Amount; provided, however, that with respect to the first
Distribution Date, the Class D Servicing Fee shall be equal to $19,067. The
Class A Servicing Fee, the Class B Servicing Fee, the Collateral Servicing Fee
and the Class D Servicing Fee shall be payable solely to the extent amounts are
available for distribution in respect thereof pursuant to this Series
Supplement. The remainder of the Monthly Servicing Fee shall be paid from
amounts allocable to other Series (as provided in the Agreement and the
Supplements relating to such other Series) or by the Transferor and in no event
shall the Trust, the Trustee or the Series 1997-2 Certificateholders be liable
for the share of the Monthly Servicing Fee to be paid from amounts allocable to
any other Series or by the Transferor.

                  SECTION H. ARTICLE IV OF THE AGREEMENT. Any provisions of
Article IV of the Agreement which distribute Collections to the Transferor on
the basis of the Transferor Percentage shall continue to apply irrespective of
the issuance of the Series 1997-2 Certificates. Section 4.1 of the Agreement
shall read in its entirety as provided in the Agreement. Article IV of the
Agreement (except for Section 4.1) as it relates to Series 1997-2 shall read in
its entirety as follows:

                                   ARTICLE IV

                 RIGHTS OF SERIES 1997-2 CERTIFICATEHOLDERS AND
                    ALLOCATION AND APPLICATION OF COLLECTIONS

         SECTION 4.2. COLLECTIONS AND ALLOCATIONS. The Servicer shall apply, or
shall instruct the Trustee to apply, all Collections, and other funds held in
the Collection Account that are allocated to the Series 1997-2 Certificates as
described in this Article IV. Provided that daily deposits of Collections into
the Collection Account are required pursuant to Section 4.1(f), the applicable
Investor Percentage of Finance Charge Collections shall be deposited into the
Collection Account on a daily basis. During the Revolving Period, so long as the
Available Enhancement Amount is not less than the Required Enhancement Amount,
Collections of Principal Receivables allocable to Series 1997-2 with respect to
each Monthly Period need not be deposited into the Collection Account on a daily
basis during such Monthly Period; provided, however, that in the event that the
Minimum Transferor Amount exceeds the Transferor Amount on any date, such
Collections of Principal Receivables shall be deposited into the Excess Funding
Account until the Transferor Amount equals the Minimum Transferor Amount; and
provided, further, that on any date on which the sum of the Aggregate Principal
Receivables and the Excess Funding Amount is less than the Aggregate Adjusted
Investor Amount, such




                                     - 21 -

<PAGE>   24

Collections of Principal Receivables shall be deposited into the Collection
Account on a daily basis. During the Accumulation Period, after an amount of
Collections of Principal Receivables allocable to Series 1997-2 equal to the
Controlled Deposit Amount with respect to each Monthly Period has been deposited
into the Collection Account, and so long as the Available Enhancement Amount is
not less than the Required Enhancement Amount, Collections of Principal
Receivables allocable to Series 1997-2 with respect to each Monthly Period need
not be deposited into the Collection Account on a daily basis during such
Monthly Period; provided, however, that in the event that the Minimum Transferor
Amount exceeds the Transferor Amount on any date, such Collections of Principal
Receivables shall be deposited into the Excess Funding Account until the
Transferor Amount equals the Minimum Transferor Amount; and, provided, further,
that on any date on which the sum of the Aggregate Principal Receivables and the
Excess Funding Amount is less than the Aggregate Investor Amount, such
Collections of Principal Receivables shall be deposited into the Collection
Account on a daily basis. Notwithstanding the foregoing, the Servicer need not
make daily deposits of Collections into the Collection Account at any time when
the requirements of Section 4.1(f) of the Agreement are satisfied.

         SECTION 4.3 DETERMINATION OF MONTHLY INTEREST.

                  (a) The amount of monthly interest ("Class A Monthly
Interest") distributable from the Collection Account with respect to the Class A
Certificates on any Distribution Date shall be an amount equal to one-twelfth
(1/12th) of the product of (i) the Class A Certificate Rate for the related
Interest Period, and (ii) the outstanding principal amount of the Class A
Certificates as of the preceding Record Date; provided, however, with respect to
the first Distribution Date, Class A Monthly Interest shall be equal to
$780,000.

                  On the Determination Date preceding each Distribution Date,
the Servicer shall determine the excess, if any (the "Class A Interest
Shortfall"), of (x) the Class A Monthly Interest for such Distribution Date over
(y) the aggregate amount of funds allocated and available to pay such Class A
Monthly Interest on such Distribution Date. If the Class A Interest Shortfall
with respect to any Distribution Date is greater than zero, an additional amount
("Class A Additional Interest") equal to one-twelfth (1/12th) of the product of
(i) the Class A Penalty Rate for the related Interest Period, and (ii) such
Class A Interest Shortfall (or the portion thereof which has not theretofore
been paid to Class A Certificateholders), shall be payable as provided herein
with respect to the Class A Certificates on each Distribution Date following
such Distribution Date to and including the Distribution Date on which such
Class A Interest Shortfall is paid to Class A Certificateholders.
Notwithstanding anything to the contrary herein, Class A Additional Interest
shall be payable or distributed to Class A Certificateholders only to the extent
permitted by applicable law.

                  (b) The amount of monthly interest ("Class B Monthly
Interest") distributable from the Collection Account with respect to the Class B




                                     - 22 -

<PAGE>   25

Certificates on any Distribution Date shall be an amount equal to one-twelfth
(1/12th) of the product of (i) the Class B Certificate Rate for the related
Interest Period, and (ii) the outstanding principal amount of the Class B
Certificates as of the preceding Record Date; provided, however, with respect to
the first Distribution Date, Class B Monthly Interest shall be equal to $89,200.

                  On the Determination Date preceding each Distribution Date,
the Servicer shall determine the excess, if any (the "Class B Interest
Shortfall"), of (x) the Class B Monthly Interest for such Distribution Date over
(y) the aggregate amount of funds allocated and available to pay such Class B
Monthly Interest on such Distribution Date. If the Class B Interest Shortfall
with respect to any Distribution Date is greater than zero, an additional amount
("Class B Additional Interest") equal to one-twelfth (1/12th) of the product of
(i) the Class B Penalty Rate for the related Interest Period, and (ii) such
Class B Interest Shortfall (or the portion thereof which has not theretofore
been paid to Class B Certificateholders), shall be payable as provided herein
with respect to the Class B Certificates on each Distribution Date following
such Distribution Date to and including the Distribution Date on which such
Class B Interest Shortfall is paid to Class B Certificateholders.
Notwithstanding anything to the contrary herein, Class B Additional Interest
shall be payable or distributed to Class B Certificateholders only to the extent
permitted by applicable law.

                  (c) The amount of monthly interest ("Collateral Monthly
Interest") distributable from the Collection Account with respect to the
Collateral Indebtedness Interest on any Distribution Date shall be an amount
equal to the product of (i) the outstanding principal amount of the Collateral
Indebtedness Interest as of the preceding Record Date,(ii) the Collateral Rate
for the related interest Period, and (iii) a fraction, the numerator of which is
the actual number of days in such Interest Period and the denominator of which
is 360; provided, however, with respect to the first Distribution Date, the
Collateral Monthly Interest shall be equal to $90,781.25 .

                  On the Determination Date preceding each Distribution Date,
the Servicer shall determine the excess, if any (the "Collateral Interest
Shortfall"), of (x) the Collateral Monthly Interest for such Distribution Date
over (y) the aggregate amount of funds allocated and available to pay such
Collateral Monthly Interest on such Distribution Date. If the Collateral
Interest Shortfall with respect to any Distribution Date is greater than zero,
an additional amount ("Collateral Additional Interest") equal to the product of
(i) (A) a fraction, the numerator of which is the actual number of days in such
Interest Period and the denominator of which is 360, times (B) the Collateral
Penalty Rate and (ii) such Collateral Interest Shortfall (or the portion thereof
which has not theretofore been paid to the Collateral Indebtedness Holder) shall
be payable as provided herein with respect to the Collateral Indebtedness
Interest on each Distribution Date following such Distribution Date to and
including the Distribution Date on which such Collateral Interest Shortfall is
paid to the Collateral Indebtedness Holder. Notwithstanding anything to the
contrary herein, Collateral Additional Interest shall be payable or distributed
to the Collateral Indebtedness Holder only to the extent permitted by applicable
law.




                                     - 23 -

<PAGE>   26

                  (d) The amount of monthly interest ("Class D Monthly
Interest") distributable from the Collection Account with respect to the Class D
Certificates on any Distribution Date shall be an amount equal to the product of
(i) the Class D Certificate Rate for the related Interest Period; (ii) the
outstanding principal amount of the Class D Certificates as of the preceding
Record Date; and (iii) a fraction, the numerator of which is the actual number
of days in such Interest Period and the denominator of which is 360; provided,
however, with respect to the first Distribution Date, Class D Monthly Interest
shall be equal to $64,548.61.

                  On the Determination Date preceding each Distribution Date,
the Servicer shall determine the excess, if any (the "Class D Interest
Shortfall"), of (x) the Class D Monthly Interest for such Distribution Date over
(y) the aggregate amount of funds allocated and available to pay such Class D
Monthly Interest on such Distribution Date. If the Class D Interest Shortfall
with respect to any Distribution Date is greater than zero, an additional amount
("Class D Additional Interest") equal to the product of (i) (A) the actual
number of days in the related Interest Period divided by 360, times (B) the
Class D Penalty Rate and (ii) such Class D Interest Shortfall (or the portion
thereof which has not theretofore been paid to Class D Certificateholders) shall
be payable as provided herein with respect to the Class D Certificates on each
Distribution Date following such Distribution Date to and including the
Distribution Date on which such Class D Interest Shortfall is paid to Class D
Certificateholders. Notwithstanding anything to the contrary herein, Class D
Additional Interest shall be payable or distributed to Class D
Certificateholders only to the extent permitted by applicable law.

         SECTION 4.4 DETERMINATION OF MONTHLY PRINCIPAL.

                  (a) The amount of monthly principal ("Class A Monthly
Principal") distributable or available for deposit into the Principal Account
from the Collection Account with respect to the Class A Certificates on each
Distribution Date, beginning with the Distribution Date in the month following
the month in which an Amortization Period begins, shall be equal to the least of
(x) the Available Principal Collections held in the Collection Account and
available for distribution with respect to such Distribution Date, (y) with
respect to the Accumulation Period prior to the Class A Expected Payment Date,
the Controlled Deposit Amount for such Distribution Date and (z) the Class A
Adjusted Investor Amount on such Distribution Date.

                  (b) The amount of monthly principal ("Class B Monthly
Principal") distributable or available for deposit into the Principal Account
from the Collection Account with respect to the Class B Certificates on each
Distribution Date relating to an Amortization Period, beginning with the Class B
Principal Commencement Date, shall be equal to the least of (x) the Available
Principal Collections held in the Collection Account and available for
distribution with respect to such Distribution Date, minus the portion of such
amounts applied to Class A Monthly Principal on such Distribution Date, (y) for
each Distribution Date with respect to the Accumulation Period





                                     - 24 -

<PAGE>   27

prior to the Class B Expected Payment Date, the Controlled Deposit Amount for
such Distribution Date and (z) the Class B Adjusted Investor Amount on such
Distribution Date.

                  (c)     The amount, if any, of monthly principal ("Collateral
Monthly Principal") distributable with respect to the Collateral Indebtedness
Interest on each Distribution Date shall be equal to:

                          (i)      on any Distribution Date prior to the
         payment in full of the Class B Certificates, the lesser of (x) the
         Available Principal Collections held in the Collection Account and
         available for distribution with respect to such Distribution Date minus
         the portion of Available Principal Collections held in the Collection
         Account and available for distribution as Class A Monthly Principal or
         Class B Monthly Principal on such Distribution Date and (y) the
         Enhancement Surplus on such Distribution Date, provided that the
         Transferor shall have elected to pay such Collateral Monthly Principal
         (after giving effect to any increase in the amount held in the Cash
         Collateral Account or increase in the Class D Investor Amount on such
         Distribution Date); and

                          (ii)     beginning with the Distribution Date on
         which the Class B Certificates have been paid in full, the lesser of
         (x) the Available Principal Collections held in the Collection Account
         and available for distribution with respect to such Distribution Date
         minus the portion of such Available Principal Collections applied to
         any Class A Monthly Principal or Class B Monthly Principal on such
         Distribution Date and (y) the Collateral Indebtedness Amount on such
         Distribution Date.

                  (d)      The amount of monthly principal ("Class D Monthly
Principal") distributable with respect to the Class D Certificates on each
Distribution Date, beginning with the Distribution Date on which the Collateral
Indebtedness Amount has been paid in full, or prior thereto subject to the
consent of the Enhancement Provider and otherwise subject to the satisfaction of
the requirements of the Loan Agreement (and provided that such distribution
would not require the Transferor to designate a Minimum Transferor Interest
Percentage in accordance with Section C hereof), shall be equal to the least of
(x) the Available Principal Collections held in the Collection Account with
respect to such Distribution Date minus the amount portion of such Available
Principal Collections applied to any Class A Monthly Principal, Class B Monthly
Principal or Collateral Monthly Principal on such Distribution Date, (y) the
Enhancement Surplus on such Distribution Date and (z) the Class D Investor
Amount on such Distribution Date.

         SECTION 4.5 REQUIRED AMOUNTS.

                  (a) On each Determination Date, the Servicer shall determine
the amount (the "Class A Required Amount"), if any, by which (x) the sum of (i)
Class A Monthly Interest for the following Distribution Date, (ii) any Class A
Monthly Interest 





                                     - 25 -

<PAGE>   28

previously due but not paid to the Class A Certificateholders on a prior
Distribution Date, (iii) any Class A Additional Interest for the following
Distribution Date and any Class A Additional Interest previously due but not
paid to Class A Certificateholders on a prior Distribution Date, (iv) the Class
A Allocable Amount, if any, for such Distribution Date and (v) if Proffitt's,
Inc. is no longer the Servicer, the ClassA Servicing Fee for the related
Distribution Date and the amount of any Class A Servicing Fee previously due but
not distributed to the Servicer on a prior Distribution Date exceeds (y) the
ClassA Available Funds with respect to the preceding Monthly Period. In the
event that the Class A Required Amount for such Distribution Date is greater
than zero, the Servicer shall give written notice to the Trustee of such
positive Class A Required Amount on the date of computation and all or a portion
of the Excess Spread and the Shared Excess Finance Charge Collections allocable
to Series 1997-2 pursuant to Section 4.1(i) with respect to the related Monthly
Period in an amount equal to the Class A Required Amount for such Distribution
Date shall be distributed from the Collection Account on such Distribution Date
pursuant to Section 4.8(a). In the event that the Class A Required Amount for
such Distribution Date exceeds the amount of the Excess Spread and the Shared
Excess Finance Charge Collections allocable to Series 1997-2 with respect to the
related Monthly Period, all or a portion of the Available Cash Collateral Amount
with respect to such Distribution Date in an amount equal to such excess shall
be applied to fund the Class A Required Amount. In the event that the Class A
Required Amount for such Distribution Date exceeds the amount of the Excess
Spread, the Shared Excess Finance Charge Collections allocable to Series 1997-2
with respect to the related Monthly Period and the Available Cash Collateral
Amount with respect to such Distribution Date, all or a portion of the
Reallocated Principal Collections with respect to such Monthly Period in an
amount equal to such excess shall be distributed from the Collection Account on
such Distribution Date pursuant to Section 4.9(a).

                  (b) On each Determination Date, the Servicer shall determine
the amount (the "Class B Required Amount"), if any, equal to the sum of (x) the
amount, if any, by which the sum of (i) Class B Monthly Interest for the
following Distribution Date, (ii) any Class B Monthly Interest previously due
but not paid to the Class B Certificateholders on a prior Distribution Date,
(iii) any Class B Additional Interest for the following Distribution Date and
any Class B Additional Interest previously due but not paid to Class B
Certificateholders on a prior Distribution Date and (iv) if Proffitt's, Inc. is
no longer the Servicer, the Class B Servicing Fee for the related Distribution
Date and the amount of any Class B Servicing Fee previously due but not
distributed to the Servicer on a prior Distribution Date exceeds Class B
Available Funds with respect to the preceding Monthly Period and (y) the amount,
if any, by which the Class B Allocable Amount, if any, for such Distribution
Date exceeds the amount available to make payments with respect thereto pursuant
to Section 4.8(d). In the event that the Class B Required Amount for such
Distribution Date is greater than zero, the Servicer shall give written notice
to the Trustee of such positive Class B Required Amount on the date of
computation and all or a portion of the Excess Spread and the Shared Excess
Finance Charge Collections allocable to Series 1997-2 pursuant to Section 4.1(i)
with respect to the related Monthly Period shall be distributed from the
Collection Account on such




                                     - 26 -

<PAGE>   29

Distribution Date pursuant to Sections 4.8(c) and (d). In the event that the
Class B Required Amount for such Distribution Date exceeds such amounts
distributed pursuant to Sections 4.8(c) and (d), all or a portion of the
Available Cash Collateral Amount with respect to such Distribution Date (other
than that portion of the Available Cash Collateral Amount applied to fund the
amounts described in Sections 4.8(a) and (b) with respect to such Distribution
Date) in an amount equal to such excess shall be applied to fund the Class B
Required Amount. In the event that the Class B Required Amount for such
Distribution Date exceeds such portion of the Available Cash Collateral Amount
and the amounts distributed pursuant to Sections 4.8(c) and (d), all or a
portion of the Reallocated Principal Collections with respect to such Monthly
Period (other than the portion of the Reallocated Principal Collections applied
to fund the Class A Required Amount and other than Class B Subordinated
Principal Collections) in an amount equal to such excess shall be distributed
from the Collection Account on such Distribution Date pursuant to Section
4.9(b).

                  (c) On each Determination Date, the Servicer shall determine
the amount (the "Collateral Required Amount"), if any, equal to the sum of (x)
the amount, if any, by which the sum of (i) Collateral Monthly Interest for the
following Distribution Date, (ii) any Collateral Monthly Interest previously due
but not paid to the Collateral Indebtedness Holder on a prior Distribution Date,
(iii) any Collateral Additional Interest for the following Distribution Date and
any Collateral Additional Interest previously due but not paid to the Collateral
Indebtedness Holder on a prior Distribution Date and (iv) if Proffitt's, Inc. is
no longer the Servicer, the Collateral Servicing Fee for the related
Distribution Date and the amount of any Collateral Servicing Fee previously due
but not distributed to the Servicer on a prior Distribution Date exceeds the
amount available to make payments with respect thereto pursuant to Sections
4.6(c)(i) and 4.8(f) with respect to the preceding Monthly Period and (y) the
amount, if any, by which the Collateral Allocable Amount, if any, for such
Distribution Date exceeds the amount available to make payments with respect
thereto pursuant to Section 4.8(h). In the event that the Collateral Required
Amount for such Distribution Date is greater than zero, the Servicer shall give
written notice to the Trustee of such positive Collateral Required Amount on the
date of computation and all or a portion of the Available Cash Collateral Amount
with respect to such Distribution Date (other than that portion of the Available
Cash Collateral Amount applied to fund the amounts described in Sections 4.8(a),
(b), (c) (d) and (e) with respect to such Distribution Date) in an amount equal
to such excess shall be applied to fund the Collateral Required Amount. In the
event that the Collateral Required Amount for such Distribution Date exceeds the
portion of the Available Cash Collateral Amount with respect to such
Distribution Date not used to fund the amounts described in Sections 4.8(a),
(b), (c), (d) and (e) with respect to such Distribution Date, all or a portion
of the Reallocated Principal Collections with respect to such Monthly Period
(other than the portion of the Reallocated Principal Collections applied to fund
the Class A Required Amount or the Class B Required Amount and other than Class
B Subordinated Principal Collections or Collateral Subordinated Principal
Collections) in an amount equal to such excess shall be distributed from the
Collection Account on such Distribution Date pursuant to Section 4.9(c).



                                     - 27 -

<PAGE>   30

         SECTION 4.6 APPLICATION OF CLASS A AVAILABLE FUNDS, CLASS B
AVAILABLE FUNDS, COLLATERAL AVAILABLE FUNDS, CLASS D AVAILABLE FUNDS AND
COLLECTIONS OF PRINCIPAL RECEIVABLES.

         The Servicer shall apply or shall instruct the Trustee to apply, on
each Distribution Date, Class A Available Funds, Class B Available Funds,
Collateral Available Funds, Class D Available Funds and Collections of Principal
Receivables allocable to Series 1997-2 held in the Collection Account with
respect to the Monthly Period immediately preceding such Distribution Date to
make the following distributions:

                  (a)      On each Distribution Date, Class A Available Funds
with respect to the Monthly Period immediately preceding such Distribution Date
shall be distributed in the following priority:

                           (i)      an amount equal to Class A Monthly Interest
         for such Distribution Date, plus the amount of any Class A Monthly
         Interest previously due but not paid to Class A Certificateholders on a
         prior Distribution Date, plus the amount of any Class A Additional
         Interest for such Distribution Date and any Class A Additional Interest
         previously due but not distributed to Class A Certificateholders on a
         prior Distribution Date, shall be distributed to the Paying Agent for
         payment to the Class A Certificateholders;

                           (ii)     if Proffitt's, Inc. is no longer the
         Servicer, an amount equal to the Class A Servicing Fee for such
         Distribution Date, plus the amount of any Class A Servicing Fee
         previously due but not distributed to the Servicer on a prior
         Distribution Date, shall be distributed to the Servicer;

                           (iii)    an amount equal to the Class A Allocable
         Amount for such Distribution Date shall be treated as a portion of
         Available Principal Collections allocable to Series 1997-2 for such
         Distribution Date; and

                           (iv)     the balance, if any, shall constitute Excess
         Spread and shall be allocated and distributed as set forth in Section
         4.8.

                  (b)      On each Distribution Date, Class B Available Funds
with respect to the Monthly Period immediately preceding such Distribution Date
shall be applied in the following priority:

                           (i)      an amount equal to the Class B Monthly
         Interest for such Distribution Date plus the amount of any Class B
         Monthly Interest previously due but not distributed to Class B
         Certificateholders on a prior Distribution Date, plus the amount of any
         Class B Additional Interest for such Distribution Date and any Class B
         Additional Interest previously due but not distributed to Class B




                                     - 28 -

<PAGE>   31

         Certificateholders on a prior Distribution Date, shall be distributed
         to the Paying Agent for payment to the Class B Certificateholders;

                           (ii)     if Proffitt's, Inc. is no longer the
         Servicer, an amount equal to the Class B Servicing Fee for such
         Distribution Date, plus the amount of any Class B Servicing Fee
         previously due but not distributed to the Servicer on a prior
         Distribution Date, shall be distributed to the Servicer; and

                           (iii)    the balance, if any, shall constitute Excess
         Spread and shall be allocated and distributed as set forth in Section
         4.8.

                  (c)      On each Distribution Date, Collateral Available Funds
with respect to the Monthly Period immediately preceding such Distribution Date
shall be applied in the following priority:

                           (i)      if Proffitt's, Inc. is no longer the
         Servicer, an amount equal to the Collateral Servicing Fee for such
         Distribution Date, plus the amount of any Collateral Servicing Fee
         previously due but not distributed to the Servicer on a prior
         Distribution Date, shall be distributed to the Servicer; and

                           (ii)     the balance, if any, shall constitute Excess
         Spread and shall be allocated and distributed as set forth in Section
         4.8.

                  (d)      On each Distribution Date, Class D Available Funds
with respect to the Monthly Period immediately preceding such Distribution Date
shall be applied in the following priority:

                           (i)      if Proffitt's, Inc. is no longer the
         Servicer, an amount equal to the Class D Servicing Fee for such
         Distribution Date, plus the amount of any Class D Servicing Fee
         previously due but not distributed to the Servicer on a prior
         Distribution Date, shall be distributed to the Servicer; and

                           (ii)     the balance, if any, shall constitute Excess
         Spread and shall be allocated and distributed as set forth in Section
         4.8.

                  (e)      On each Distribution Date with respect to the
Revolving Period, all such Available Principal Collections, shall be applied in
the following priority:

                           (i)      an amount equal to Collateral Monthly
         Principal for such Distribution Date shall be applied in accordance
         with the Loan Agreement;




                                     - 29 -

<PAGE>   32

                           (ii)     an amount equal to Class D Monthly Principal
         for such Distribution Date shall be distributed to the Paying Agent for
         payment to the Class D Certificateholders; and

                           (iii)    the balance, if any, shall be treated as
         "Shared Principal Collections" with respect to Group One to be applied
         in accordance with Section 4.1(h) (and be retained in the Excess
         Funding Account if required by such provision).

                  (f)      On each Distribution Date following the commencement
of an Amortization Period, all such Available Principal Collections shall be
applied in the following priority:

                           (i)      an amount equal to Class A Monthly Principal
         for such Distribution Date shall, during the Class A Accumulation
         Period, be deposited in the Principal Account for payment to Class A
         Certificateholders on the earlier to occur of the Class A Expected
         Payment Date or the first Special Distribution Date or, during the
         Rapid Amortization Period, be distributed to the Paying Agent for
         payment to the Class A Certificateholders;

                           (ii)     an amount equal to Class B Monthly Principal
         for such Distribution Date shall, during the Class B Accumulation
         Period, be deposited in the Principal Account for payment to Class B
         Certificateholders on the earlier to occur of the Class B Expected
         Payment Date or the first Special Distribution Date or, during the
         Rapid Amortization Period, be distributed to the Paying Agent for
         payment to the Class B Certificateholders;

                           (iii)    an amount equal to Collateral Monthly
         Principal for such Distribution Date shall be applied in accordance
         with the Loan Agreement;

                           (iv)     an amount equal to Class D Monthly Principal
         for such Distribution Date shall be distributed to the Paying Agent for
         payment to the Class D Certificateholders; and

                           (v)      the balance, if any, shall be treated as
         "Shared Principal Collections" as provided in Section 4.1(h) and
         allocated among each Series in Group One as specified in each
         Supplement for Series included in Group One.

SECTION 4.7 DEFAULTED AMOUNTS; ADJUSTMENT AMOUNTS; INVESTOR CHARGE OFFS;
REDUCTIONS OF ADJUSTMENT AMOUNTS.

                  (a)      On each Determination Date, the Servicer shall
calculate the Class A Required Amount, if any, for the related Distribution
Date. If, on any Distribution Date, the Class A Required Amount for such
Distribution Date exceeds the sum of (x) the 





                                     - 30 -

<PAGE>   33

amount of the Excess Spread and the Shared Excess Finance Charge Collections
allocable to Series 1997-2 with respect to such Distribution Date, (y) the
Available Cash Collateral Amount with respect to such Distribution Date and (z)
the amount of Reallocated Principal Collections available pursuant to Section
4.9(a) with respect to the preceding Monthly Period, the ClassD Investor Amount
(after giving effect to any reduction thereof pursuant to Section 4.7(d)) shall
be reduced by the amount of such excess, but not by more than the excess of the
Class A Allocable Amount for such Distribution Date over the amount of Excess
Spread and Shared Excess Finance Charge Collections, the amount withdrawn from
the Cash Collateral Account and the amount of Reallocated Principal Collections
used to fund the Class A Allocable Amount for such Distribution Date. In the
event that such reduction would cause the ClassD Investor Amount to be a
negative number, the ClassD Investor Amount shall be reduced to zero and the
Collateral Indebtedness Amount (after giving effect to any reduction thereof
pursuant to Section 4.7(c)) shall be reduced by the amount by which the ClassD
Investor Amount would have been reduced below zero, but not by more than the
excess, if any, of the Class A Allocable Amount for such Distribution Date over
the amount of such reduction, if any, of the ClassD Investor Amount with respect
to such Distribution Date and the amount of Excess Spread and Shared Excess
Finance Charge Collections, the amount withdrawn from the Cash Collateral
Account and the amount of Reallocated Principal Collections used to fund the
Class A Allocable Amount for such Distribution Date. In the event that such
reduction would cause the Collateral Indebtedness Amount to be a negative
number, the Collateral Indebtedness Amount shall be reduced to zero and the
Class B Investor Amount (after giving effect to any reduction thereof pursuant
to Section 4.7(b)) shall be reduced by the amount by which the Collateral
Indebtedness Amount would have been reduced below zero, but not by more than the
excess, if any, of the Class A Allocable Amount for such Distribution Date over
the aggregate amount of the reductions, if any, of the Collateral Indebtedness
Amount and the Class D Investor Amount with respect to such Distribution Date
and the amount of Excess Spread and Shared Excess Finance Charge Collections,
the amount withdrawn from the Cash Collateral Account and the amount of
Reallocated Principal Collections used to fund the Class A Allocable Amount for
such Distribution Date. In the event that such reduction would cause the Class B
Investor Amount to be a negative number, the Class B Investor Amount shall be
reduced to zero, and the Class A Investor Amount shall be reduced by the amount
by which the Class B Investor Amount would have been reduced below zero, but not
by more than the excess, if any, of the Class A Allocable Amount for such
Distribution Date over the aggregate amount of the reductions, if any, of the
ClassD Investor Amount, the Collateral Indebtedness Amount and the Class B
Investor Amount for such Distribution Date and the amount of Excess Spread and
Shared Excess Finance Charge Collections, the amount withdrawn from the Cash
Collateral Account and the amount of Reallocated Principal Collections used to
fund the Class A Investor Allocable Amount for such Distribution Date (a "Class
A Investor Charge Off"). Class A Investor Charge Offs shall thereafter be
reimbursed and the Class A Investor Amount increased (but not by an amount in
excess of the aggregate unreimbursed Class A Investor Charge Offs) on any
Distribution Date by (i) the amount of Excess Spread and Shared Excess Finance
Charge Collections allocated and available for that purpose pursuant to Section
4.8(b), and (ii) without duplication, the 





                                     - 31 -

<PAGE>   34

aggregate amount of the reductions of the Series Adjustment Amounts allocable to
the Class A Investor Amount pursuant to Section 4.7(f).

                  (b)      On each Determination Date, the Servicer shall
calculate the Class B Required Amount, if any, for the related Distribution
Date. If, on any Distribution Date, the Class B Required Amount for such
Distribution Date exceeds the sum of (x) the amount of the Excess Spread and the
Shared Excess Finance Charge Collections allocable to Series 1997-2 with respect
to such Distribution Date which are not used to fund the Class A Required Amount
and Class A Investor Charge Offs on the related Distribution Date, (y) the
portion, if any, of the Available Cash Collateral Amount which is remaining
after applying the Available Cash Collateral Amount to fund the Class A Required
Amount with respect to such Distribution Date and (z) the amount of Reallocated
Principal Collections which are available to fund the Class B Required Amount on
such Distribution Date pursuant to Section 4.9(b), then the ClassD Investor
Amount (after giving effect to any reduction thereof pursuant to Sections 4.7(a)
and (d)) shall be reduced by the amount of such excess, but not by more than the
excess of the Class B Allocable Amount for such Distribution Date over the
amount of Excess Spread and Shared Excess Finance Charge Collections, the amount
withdrawn from the Cash Collateral Account and the amount of Reallocated
Principal Collections used to fund the Class B Allocable Amount for such
Distribution Date. In the event that such reduction would cause the Class D
Investor Amount to be a negative number, the ClassD Investor Amount shall be
reduced to zero, and the Collateral Indebtedness Amount (after giving effect to
any reduction thereof pursuant to Sections 4.7(a) and (c)) shall be reduced by
the amount by which the Class D Investor Amount would have been reduced below
zero, but not by more than the excess, if any, of the Class B Allocable Amount
for such Distribution Date over the amount of the reductions, if any, of the
Class D Investor Amount with respect to such Distribution Date and the amount of
Excess Spread and Shared Excess Finance Charge Collections, the amount withdrawn
from the Cash Collateral Account and the amount of Reallocated Principal
Collections used to fund the Class B Allocable Amount for such Distribution
Date. In the event that such reduction would cause the Collateral Indebtedness
Amount to be a negative number, the Collateral Indebtedness Amount shall be
reduced to zero, and the Class B Investor Amount shall be reduced by the amount
by which the Collateral Indebtedness Amount would have been reduced below zero,
but not by more than the excess, if any, of the Class B Allocable Amount for
such Distribution Date over the aggregate amount of the reductions, if any, of
the Collateral Indebtedness Amount and the Class D Investor Amount with respect
to such Distribution Date and the amount of Excess Spread and Shared Excess
Finance Charge Collections, the amount withdrawn from the Cash Collateral
Account and the amount of Reallocated Principal Collections used to fund the
Class B Allocable Amount for such Distribution Date (a "Class B Investor Charge
Off"). Class B Investor Charge Offs shall thereafter be reimbursed and the Class
B Investor Amount increased (but not by an amount in excess of the aggregate
unreimbursed Class B Investor Charge Offs) on any Distribution Date by (i) the
amount of Excess Spread and Shared Excess Finance Charge Collections allocated
and available for that purpose pursuant to Section 4.8(e), and (ii) without
duplication, the 




                                     - 32 -

<PAGE>   35

aggregate amount of the reductions of the Series Adjustment Amounts allocable to
the Class B Investor Amount pursuant to Section 4.7(f).

                  (c)      If, on any Distribution Date, the Collateral Required
Amount exceeds (x)the portion, if any, of the Available Cash Collateral Amount
after applying the Available Cash Collateral Amount to fund the Class A Required
Amount and the Class B Required Amount with respect to such Distribution Date
and (y) the amount of Reallocated Principal Collections which are available to
fund the Collateral Required Amount on such Distribution Date pursuant to
Section 4.9(c), then the ClassD Investor Amount (after giving effect to any
reduction thereof pursuant to Sections 4.7(a), (b) and (d)) shall be reduced by
the amount of such excess, but not by more than the excess of the Collateral
Allocable Amount for such Distribution Date over the amount of Excess Spread and
Shared Excess Finance Charge Collections, the amount withdrawn from the Cash
Collateral Account and the amount of Reallocated Principal Collections used to
fund the Collateral Allocable Amount for such Distribution Date. In the event
that such reduction would cause the Class D Investor Amount to be a negative
number, the Class D Investor Amount shall be reduced to zero, and the Collateral
Indebtedness Amount shall be reduced by the amount by which the Class D Investor
Amount would have been reduced below zero, but not by more than the excess, if
any, of the Collateral Allocable Amount for such Distribution Date over the
amount of the reductions, if any, of the Class D Investor Amount with respect to
such Distribution Date and the amount of Excess Spread and Shared Excess Finance
Charge Collections, the amount withdrawn from the Cash Collateral Account and
the amount of Reallocated Principal Collections used to fund the Collateral
Allocable Amount for such Distribution Date; provided, however, that the
Collateral Indebtedness Amount shall not be reduced below zero (a "Collateral
Indebtedness Charge Off"). Collateral Indebtedness Charge Offs shall thereafter
be reimbursed and the Collateral Indebtedness Amount increased (but not by an
amount in excess of the aggregate unreimbursed Collateral Indebtedness Charge
Offs) on any Distribution Date by (i) the amount of Excess Spread and Shared
Excess Finance Charge Collections allocated and available for that purpose
pursuant to Section 4.8(i), and (ii) without duplication, the aggregate amount
of the reductions of the Series Adjustment Amounts allocable to the Collateral
Indebtedness Amount pursuant to Section 4.7(f).

                  (d)      If, on any Distribution Date, the Class D Allocable
Amount exceeds the amount of Excess Spread and Shared Excess Finance Charge
Collections available to fund the Class D Allocable Amount pursuant to Section
4.8(m) on such Distribution Date, then the Class D Investor Amount shall be
reduced by the amount of such excess; provided, however, that the Class D
Investor Amount shall not be reduced below zero (a "Class D Investor Charge
Off"). Class D Investor Charge Offs shall thereafter be reimbursed and the Class
D Investor Amount increased (but not by an amount in excess of the aggregate
unreimbursed Class D Investor Charge Offs) on any Distribution Date by (i) the
amount of Excess Spread and Shared Excess Finance Charge Collections allocated
and available for that purpose pursuant to Section 4.8(n), and (ii) without
duplication, the aggregate amount of the reductions of the Series Adjustment
Amounts allocable to the Collateral Indebtedness Amount pursuant to Section
4.7(f).




                                     - 33 -

<PAGE>   36

                  (e)      Whenever funds or other amounts are available
hereunder in respect of the Class A Allocable Amount, the Class B Allocable
Amount, the Collateral Allocable Amount or the Class D Allocable Amount, as the
case may be, such funds or other amounts shall be applied first to the
elimination of any deficiency resulting from Default Amounts and then to any
deficiency resulting from Series Adjustment Amounts.

                  (f)      Any reduction of the Series Adjustment Amount for
Series 1997-2 as a result of the deposit of funds into the Excess Funding
Account, the repurchase or other repayment of Investor Certificates or the
increase of Principal Receivables in the Trust shall be allocated first to the
Class A Certificates, then to the Class B Certificates, then to the Collateral
Indebtedness Interest and finally to the Class D Certificates, in each case to
the extent of any unreimbursed reduction of the Investor Amount thereof
attributable to Series Adjustment Amounts.

         SECTION 4.8 EXCESS SPREAD; SHARED EXCESS FINANCE CHARGE COLLECTIONS.
The Servicer shall apply, or shall instruct the Trustee to apply, on each
Distribution Date, Excess Spread (including interest and earnings on funds held
in the Cash Collateral Account and included as Excess Spread pursuant to Section
4.12(b)) and Shared Excess Finance Charge Collections allocable to Series 1997-2
pursuant to Section 4.1(i) with respect to the related Monthly Period, to make
the following distributions in the following priority:

                  (a)      an amount up to the Class A Required Amount, if any, 
with respect to such Distribution Date shall be distributed by the Trustee to
fund any deficiency pursuant to Sections 4.6(a)(i), (ii) and (iii), in that
order of priority;

                  (b)      an amount equal to the aggregate amount of Class A
Investor Charge Offs which have not been previously reimbursed shall be treated
as a portion of Available Principal Collections allocable to Series 1997-2 for
such Distribution Date;

                  (c)      an amount up to the Class B Required Amount, if any,
with respect to such Distribution Date shall be distributed by the Trustee to
fund any deficiency pursuant to Sections 4.6(b)(i) and (ii), in that order of
priority;

                  (d)      an amount equal to any remaining portion of the 
Class B Required Amount for such Distribution Date shall be treated as a
portion of Available Principal Collections allocable to Series 1997-2 for such
Distribution Date;

                  (e)      an amount equal to the aggregate amount by which the
Class B Investor Amount has been reduced pursuant to clauses (c), (d) and (e) of
the definition of "Class B Investor Amount" (but not in excess of the aggregate
amount of such reductions which have not been previously reimbursed) shall be
treated as a portion of Available Principal Collections allocable to Series
1997-2 for such Distribution Date;




                                     - 34 -

<PAGE>   37

                  (f)      an amount equal to Collateral Monthly Interest for
such Distribution Date, plus the amount of Collateral Monthly Interest
previously due but not distributed to the Collateral Indebtedness Holder on a
prior Distribution Date, plus the amount of Collateral Additional Interest for
such Distribution Date and any Collateral Additional Interest previously due but
not distributed to the Collateral Indebtedness Holder shall be applied in
accordance with the Loan Agreement;

                  (g)      an amount equal to the Class A Servicing Fee, the 
Class B Servicing and the Collateral Servicing Fee for such Distribution Date
(or if Proffitt's, Inc. is no longer the Servicer, the portion thereof not paid
pursuant to Section 4.6), plus the amount of any Class A Servicing Fee, Class B
Servicing Fee or Collateral Servicing Fee previously due but not distributed to
the Servicer on a prior Distribution Date, shall be distributed to the Servicer;

                  (h)      an amount equal to the Collateral Allocable Amount
for such Distribution Date shall be treated as a portion of Available Principal
Collections allocable to Series 1997-2 for such Distribution Date;

                  (i)      an amount equal to the aggregate amount by which the
Collateral Indebtedness Amount has been reduced pursuant to clauses (c) and (d)
of the definition of "Collateral Indebtedness Amount" (but not in excess of the
aggregate amount of such reductions which have not been previously reimbursed)
shall be treated as a portion of Available Principal Collections allocable to
Series 1997-2 for such Distribution Date;

                  (j)      an amount equal to the greater of (i) the excess, if
any, of the Required Cash Collateral Amount over the Available Cash Collateral
Amount, and (ii) the excess, if any, of the Required Enhancement Amount over the
Available Enhancement Amount (in either case, without giving effect to any
deposit made on such date hereunder and after giving effect to any payment of
Collateral Monthly Principal or Class D Monthly Principal being made on such
date) shall be deposited into the Cash Collateral Account;

                  (k)      an amount equal to the ClassD Allocable Amount for
such Distribution Date shall be treated as a portion of Available Principal
Collections allocable to Series 1997-2 for such Distribution Date;

                  (l)      an amount equal to the aggregate amount by which the
ClassD Investor Amount has been reduced pursuant to clauses (c) and (d) of the
definition of "ClassD Investor Amount" (but not in excess of the aggregate
amount of such reductions which have not been previously reimbursed) shall be
treated as a portion of Available Principal Collections allocable to Series
1997-2 for such Distribution Date;





                                     - 35 -

<PAGE>   38

                  (m)      an amount equal to the excess, if any, of the 
Required Reserve Account Amount over the amount held in the Reserve Account
shall be deposited into the Reserve Account;

                  (n)      an amount equal to the aggregate of any other amounts
then due to the Collateral Indebtedness Holder pursuant to the Loan Agreement
shall be applied in accordance with the Loan Agreement;

                  (o)      an amount equal to Class D Monthly Interest for such
Distribution Date, plus the amount of Class D Monthly Interest previously due
but not distributed to the Class D Certificateholders on a prior Distribution
Date, plus the amount of Class D Additional Interest for such Distribution Date
and any Class D Additional Interest previously due but not distributed shall be
distributed to the Paying Agent for payment to the Class D Certificateholders;

                  (p)      an amount equal to the ClassD Servicing Fee for such
Distribution Date (or if Proffitt's, Inc. is no longer the Servicer, the portion
of the ClassD Servicing Fee for such Distribution Date not paid pursuant to
Section 4.6(d)(i)), plus the amount of any ClassD Servicing Fee previously due
but not distributed to the Servicer on a prior Distribution Date, shall be
distributed to the Servicer; and

                  (q)      the balance, if any, shall constitute "Shared Excess
Finance Charge Collections" with respect to Group One to be applied in
accordance with Section 4.1(i).

         SECTION 4.9 REALLOCATED PRINCIPAL COLLECTIONS. The Servicer shall
apply, or shall instruct the Trustee to apply, on each Distribution Date,
Reallocated Principal Collections (applying all ClassD Subordinated Principal
Collections prior to applying any Collateral Subordinated Principal Collections,
and applying all Collateral Subordinated Principal Collections prior to applying
any Class B Subordinated Principal Collections, and applying no ClassB
Subordinated Principal Collections with respect to the Class B Required Amount
pursuant to clause (b) below and applying no Class B Subordinated Principal
Collections or Collateral Subordinated Principal Collections with respect to the
Collateral Required Amount pursuant to clause (c) below) with respect to such
Distribution Date, to make the following distributions in the following
priority:

                  (a)      an amount equal to the excess, if any, of (i) the 
Class A Required Amount, if any, with respect to such Distribution Date over
(ii) the sum of (x) the amount of Excess Spread and Shared Excess Finance Charge
Collections allocable to Series 1997-2 with respect to the related Monthly
Period and (y) the Available Cash Collateral Amount with respect to such
Distribution Date shall be distributed by the Trustee to fund any deficiency
pursuant to Sections 4.6(a)(i), (ii) and (iii), in that order of priority;




                                     - 36 -

<PAGE>   39

                  (b)      an amount equal to the excess, if any, of (i) the 
Class B Required Amount, if any, with respect to such Distribution Date over
(ii) the sum of (x) the amount of Excess Spread and Shared Excess Finance Charge
Collections allocable to Series 1997-2 with respect to the related Monthly
Period available in respect of the Class B Required Amount pursuant to Section
4.8(c) and (d) on such Distribution Date and (y) the amount withdrawn from the
Cash Collateral Account in respect of the ClassB Required Amount with respect to
such Distribution Date shall be distributed by the Trustee to fund any
deficiency pursuant to Sections 4.8(c) and (d), in that order of priority; and

                  (c)      an amount equal to the excess, if any, of (i) the
Collateral Required Amount, if any, with respect to such Distribution Date over
(ii) the sum of (x) the amount of Excess Spread and Shared Excess Finance Charge
Collections allocable to Series 1997-2 with respect to the related Monthly
Period available in respect of the Collateral Required Amount pursuant to
Sections 4.8(f) and (h) on such Distribution Date and (y) the amount withdrawn
from the Cash Collateral Account in respect of the Collateral Required Amount
with respect to such Distribution Date shall be distributed by the Trustee to
fund any deficiency pursuant to Section 4.6(c)(i) and Sections 4.8(f) and (h),
in that order of priority.

             SECTION 4.10  PRINCIPAL SHORTFALL. The "Principal Shortfall" for 
Series 1997-2 shall be equal to (a) for any Distribution Date with respect to
the Revolving Period zero, or such higher amount designated by the Servicer in
an Officer's Certificate, (b) for any Distribution Date with respect to the
Accumulation Period (on or prior to the Class B Expected Payment Date), the
excess, if any, of the Controlled Deposit Amount with respect to such
Distribution Date over the amount of Available Principal Collections for such
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections), (c) for each Distribution Date with respect to a Rapid
Amortization Period, unless and until the Collateral Indebtedness Amount has
been paid in full, the excess, if any, of the sum of the Class A Investor
Amount, the Class B Investor Amount and the Collateral Indebtedness Amount over
the amount of Available Principal Collections for such Distribution Date
(excluding any portion thereof attributable to Shared Principal Collections) and
(d) for each Distribution Date after the Class A Investor Amount and the Class B
Investor Amount have been paid in full, the excess, if any, of the Investor
Amount over the amount of Available Principal Collections for such Distribution
Date, or such lesser amount designated by the Servicer.

             SECTION 4.11  FINANCE CHARGE SHORTFALL. The "Finance Charge 
Shortfall" for Series 1997-2 for any Distribution Date shall be equal to the
excess, if any, of (a) the full amount required to be paid, without
duplication, pursuant to Sections 4.6(a), 4.6(b), 4.6(c) and 4.6(d) and
Sections 4.8 (a)-(o) on such Distribution Date over (b) the Investor Percentage
of Collections of Finance Charge Receivables with respect to the related
Monthly Period.




                                     - 37 -

<PAGE>   40

         SECTION 4.12 CASH COLLATERAL ACCOUNT.

                  (a) The Servicer shall establish and maintain, in the name of
the Trustee, for the benefit of the Series 1997-2 Certificateholders, with a
Qualified Institution a segregated trust account (the "Cash Collateral
Account"), bearing a designation clearly indicating that the funds held therein
are held for the benefit of the Series 1997-2 Certificateholders. The Cash
Collateral Account shall initially be established with the Trustee. The Trustee
shall possess all right, title and interest in all funds held from time to time
in the Cash Collateral Account and in all proceeds thereof. The Cash Collateral
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Series 1997-2 Certificateholders. If, at any time, the
institution holding the Cash Collateral Account ceases to be a Qualified
Institution, the Trustee (or the Servicer on its behalf) shall within five (5)
Business Days establish a new Cash Collateral Account meeting the conditions
specified above with a Qualified Institution and shall transfer any cash and/or
any investments to such new Cash Collateral Account. The Trustee, at the
direction of the Servicer, shall make deposits to and withdrawals from the Cash
Collateral Account in the amounts and at the times set forth in this Agreement
and the Loan Agreement. All withdrawals from the Cash Collateral Account shall
be made in the priority set forth below. The interest of the Collateral
Indebtedness Holder in the Cash Collateral Account shall be subordinated to the
interests of the Class A Certificateholders and the Class B Certificateholders
as provided herein and in the Loan Agreement. The Collateral Indebtedness Holder
shall not be entitled to reimbursement from the Trust Property for any
withdrawals from the Cash Collateral Account except as specifically provided in
this Agreement and the Loan Agreement.

                  (b) Funds held in the Cash Collateral Account shall be
invested at the direction of the Servicer by the Trustee in Permitted
Investments. Funds held in the Cash Collateral Account on any Distribution Date,
after giving effect to any withdrawals from the Cash Collateral Account on such
Distribution Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Distribution Date. No Permitted Investment shall be disposed of prior to its
maturity; provided, however, that the Trustee may sell, liquidate or dispose of
a Permitted Investment before its maturity, if so directed by the Servicer, the
Servicer having reasonably determined that the interest of the 1997-2
Certificateholders may be adversely affected if such Permitted Investment is
held to its maturity. The proceeds of any such investments shall be invested in
such investments that will mature so that such funds will be available for
withdrawal on or prior to the Distribution Date immediately following the date
of such investment. The Trustee shall maintain for the benefit of the Series
1997-2 Certificateholders possession of the negotiable instruments or
securities, if any, evidencing such Permitted Investments. On each Distribution
Date, all interest and earnings (net of losses and investment expenses) on funds
held in the Cash Collateral Account shall be treated as a portion of Excess
Spread for such Distribution Date and applied in accordance with Section 4.8.




                                     - 38 -

<PAGE>   41

                  (c) On each Determination Date, the Servicer shall calculate
the amount (the "Required Draw Amount") by which the amounts specified in
clauses (a) through (f) and clauses (h) and (i) of Section 4.8 with respect to
the related Distribution Date exceed the amount of Excess Spread and Shared
Excess Finance Charge Collections allocable to Series 1997-2 with respect to the
related Monthly Period available to pay such specified amounts. In the event
that for any Distribution Date the Required Draw Amount is greater than zero,
the Servicer shall give written notice to the Trustee of such positive Required
Draw Amount on the related Determination Date. On the Distribution Date, the
Required Draw Amount, if any, up to the Available Cash Collateral Amount, shall
be withdrawn from the Cash Collateral Account and distributed to fund any
deficiency pursuant to clauses (a) through (f) and clause (h) of Section 4.8 (in
the order of priority set forth in Section 4.8).

                  (d) In the event that the Cash Enhancement Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Cash Collateral Account and all payments of principal to Series 1997-2
Certificateholders with respect to such Distribution Date, is greater than zero,
the Trustee, acting in accordance with the instructions of the Servicer, shall
withdraw from the Cash Collateral Account, and apply and pay in accordance with
the Loan Agreement, an amount equal to such Cash Enhancement Surplus; provided,
however, that the Transferor, at its option, to be exercised in its sole
discretion, may instruct the Servicer not to instruct the Trustee to withdraw
such Cash Enhancement Surplus (or any portion thereof), in which event the
Trustee shall not withdraw such Cash Enhancement Surplus (or portion thereof)
from the Cash Collateral Account.

         SECTION 4.13 PRINCIPAL ACCOUNT.

                  (a) The Servicer shall establish and maintain, in the name of
the Trustee, for the benefit of the Series 1997-2 Certificateholders, with a
Qualified Institution a segregated trust account (the "Principal Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Series 1997-2 Certificateholders. The Principal
Account shall initially be established with the Trustee. The Trustee shall
possess all right, title and interest in all funds held from time to time in the
Principal Account and in all proceeds thereof. The Principal Account shall be
under the sole dominion and control of the Trustee for the benefit of the Series
1997-2 Certificateholders. If, at any time, the institution holding the
Principal Account ceases to be a Qualified Institution, the Trustee (or the
Servicer on its behalf) shall within five (5) Business Days establish a new
Principal Account meeting the conditions specified above with a Qualified
Institution and shall transfer any cash and/or any investments to such new
Principal Account. Pursuant to the authority granted to the Servicer in Section
3.1(b) of the Agreement, the Servicer shall have the power, revocable by the
Trustee, to make withdrawals and payments or to instruct the Trustee to make
withdrawals and payments from the Principal Account for the purposes of carrying
out the Servicer's or the Trustee's duties hereunder.




                                     - 39 -

<PAGE>   42

                  (b) Funds held in the Principal Account shall be invested at
the direction of the Servicer by the Trustee in Permitted Investments. All such
Permitted Investments shall be held by the Trustee for the benefit of the Series
1997-2 Certificateholders; provided, however, that on each Distribution Date all
interest and other investment income (net of losses and investment expenses)
("Principal Investment Proceeds") on funds held therein shall be applied as set
forth in Section 4.13(c) below. Funds held in the Principal Account shall be
invested in Permitted Investments that will mature so that such funds will be
available for withdrawal on or prior to the following Distribution Date. No
Permitted Investment shall be disposed of prior to its maturity; provided,
however, that the Trustee may sell, liquidate or dispose of a Permitted
Investment before its maturity, if so directed by the Servicer, the Servicer
having reasonably determined that the interest of the 1997-2 Certificateholders
may be adversely affected if such Permitted Investment is held to its maturity.

                  (c) On each Distribution Date with respect to the Accumulation
Period, the Servicer shall direct the Trustee to withdraw from the Principal
Account and deposit into the Collection Account all Principal Investment
Proceeds then held in the Principal Account and such Principal Investment
Proceeds shall be treated as a portion of (x) prior to the payment in full of
the Class A Investor Amount, Class A Available Funds and (y) thereafter, Class B
Available Funds, in each case for such Distribution Date.

                  (d) Reinvested interest and other investment income on funds
deposited in the Principal Account shall not be considered to be principal
amounts held therein for purposes of this Agreement.

         SECTION 4.14 RESERVE ACCOUNT.

                  (a) The Servicer shall establish and maintain, in the name of
the Trustee, for the benefit of the Series 1997-2 Certificateholders, with a
Qualified Institution a segregated trust account (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Series 1997-2 Certificateholders. The Reserve
Account shall initially be established with the Trustee. The Trustee shall
possess all right, title and interest in all funds held from time to time in the
Reserve Account and in all proceeds thereof. The Reserve Account shall be under
the sole dominion and control of the Trustee for the benefit of the Series
1997-2 Certificateholders. If at any time the institution holding the Reserve
Account ceases to be a Qualified Institution, the Trustee (or the Servicer on
its behalf) shall within five (5) Business Days establish a new Reserve Account
meeting the conditions specified above with a Qualified Institution, and shall
transfer any cash and/or any investments to such new Reserve Account. The
Trustee, at the direction of the Servicer, shall (i) make withdrawals from the
Reserve Account from time to time in an amount up to the Available Reserve
Account Amount at such time, for the purposes set forth in this Agreement, and
(ii) on each Distribution Date (from and after the Reserve Account Funding Date)
prior to the termination of the Reserve Account shall make a deposit into the
Reserve Account in the amount specified in, and otherwise in accordance with,
Section 4.8(p).




                                     - 40 -

<PAGE>   43

                  (b) Funds held in the Reserve Account shall be invested at the
direction of the Servicer by the Trustee in Permitted Investments. Funds held in
the Reserve Account on any Distribution Date, after giving effect to any
withdrawals from the Reserve Account on such Distribution Date, shall be
invested in such investments that will mature so that such funds will be
available for withdrawal on or prior to the following Distribution Date. The
Trustee shall maintain for the benefit of the Series 1997-2 Certificateholders
possession of the negotiable instruments or securities, if any, evidencing such
Permitted Investments. No Permitted Investment shall be disposed of prior to its
maturity; provided, however, that the Trustee may sell, liquidate or dispose of
an Permitted Investment before its maturity, if so directed by the Servicer, the
Servicer having reasonably determined that the interest of the Series 1997-2
Certificateholders may be adversely affected if such Permitted Investment is
held to its maturity. On each Distribution Date, all interest and earnings (net
of losses and investment expenses) on funds held in the Reserve Account shall be
retained in the Reserve Account (to the extent that the Available Reserve
Account Amount is less than the Required Reserve Account Amount) and the
balance, if any, shall be deposited in the Collection Account and treated as a
portion of (x) until the payment in full of the Class A Investor Amount, Class A
Available Funds and (y) thereafter, Class B Available Funds, in each case for
such Distribution Date. For purposes of determining the availability of funds or
the balance in the Reserve Account for any reason under this Agreement, except
as otherwise provided in the preceding sentence, investment earnings on such
funds shall be deemed not to be available or held.

                  (c) On the Determination Date preceding each Distribution Date
with respect to the Accumulation Period (prior to the Class B Expected Payment
Date) and the first Special Distribution Date, the Servicer shall calculate the
"Reserve Draw Amount" which shall be equal to the excess, if any, of the Covered
Amount with respect to such Distribution Date or Special Distribution Date over
the Principal Investment Proceeds with respect to such Distribution Date or
Special Distribution Date.

                  (d) In the event that for any Distribution Date the Reserve
Draw Amount is greater than zero, the Reserve Draw Amount, up to the Available
Reserve Account Amount, shall be withdrawn from the Reserve Account on such
Distribution Date by the Trustee (acting in accordance with the instructions of
the Servicer), deposited into the Collection Account and included in (i) until
the payment in full of the Class A Investor Amount, Class A Available Funds and
(ii) thereafter, Class B Available Funds, in each case for such Distribution
Date.

                  (e) In the event that the Reserve Account Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Reserve Account with respect to such Distribution Date, is greater than
zero, the Trustee, acting in accordance with the instructions of the Servicer,
shall withdraw from the Reserve Account, and pay an amount equal to such Reserve
Account Surplus in accordance with the Loan Agreement.




                                     - 41 -

<PAGE>   44

                  (f)      Upon the earliest to occur of (i) the termination of 
the Trust pursuant to Article XII of the Agreement, (ii) the day on which the
Class A Investor Amount and Class B Investor Amount have been paid in full,
(iii) if the Accumulation Period has not commenced, the occurrence of a Pay Out
Event with respect to Series 1997-2 and (iv) if the Accumulation Period has
commenced, the earlier of the first Special Distribution Date and the Class B
Expected Payment Date, the Trustee, acting in accordance with the instructions
of the Servicer, after the prior payment of all amounts owing to the Series
1997-2 Certificateholders which are payable from the Reserve Account as provided
herein, shall withdraw from the Reserve Account and pay in accordance with the
Loan Agreement all amounts, if any, held in the Reserve Account, and the Reserve
Account shall be deemed to have terminated for all purposes of the Agreement.

         SECTION 4.15 POSTPONEMENT OF ACCUMULATION PERIOD. The Accumulation
Period is scheduled to commence at the end of the day on the last day of the
July 2001 Monthly Period; provided, however, that, if the Accumulation Period
Length (determined as described below) shall be less than 12 months, the date on
which the Accumulation Period actually commences may, at the option of the
Transferor, be delayed to the first day of any month that is a number of whole
months prior to the Class A Expected Payment Date at least equal to the
Accumulation Period Length and, as a result, the number of Monthly Periods in
the Accumulation Period shall at least equal the Accumulation Period Length. On
each Determination Date until the Accumulation Period begins, the Servicer shall
determine the "Accumulation Period Length," which shall equal the number of
whole months such that the sum of the Accumulation Period Factors for each month
during such period will be equal to or greater than the Required Accumulation
Factor Number; provided, however, that the Accumulation Period Length shall not
be determined to be less than one month.

         SECTION 4.16 ADDITIONAL ISSUANCES OF CLASS D CERTIFICATES.

                  (a)      On any day in the Revolving Period, the Trustee shall
issue to the Transferor for execution, upon the Transferor's request, and the
Trustee shall authenticate and deliver, in accordance with the Transferor's
instructions, an additional principal amount of Class D Certificates
("Additional Class D Certificates") as provided below.

                  (b)      Additional Class D Certificates may be issued, 
executed and delivered upon satisfaction of the following conditions:

                           (i)      after giving effect to the issuance of such
         Additional Class D Certificates, the Transferor Amount shall be at
         least equal to the Minimum Transferor Amount and the Aggregate
         Principal Receivables shall be at least equal to the Minimum Aggregate
         Principal Receivables;




                                     - 42 -

<PAGE>   45

                           (ii)     the Transferor shall have given notice by
         10:00 A.M., New York City time, on the date such Additional Class D
         Certificates are to be issued to the Trustee, the Paying Agent, the
         Servicer and the Collateral Indebtedness Holder of the proposed
         issuance of such Additional Class D Certificates;

                           (iii)    on or before the date on which such
         Additional Class D Certificates are issued, the Transferor shall have
         delivered an Opinion of Counsel addressed to the Trustee, dated the
         date of such issuance, to the effect that such issuance will not
         adversely affect the tax characterization as debt of Investor
         Certificates of any outstanding Series or Class with respect to which
         an Opinion of Counsel addressed to the Trustee was delivered at the
         time of their issuance that such Investor Certificates would be
         characterized as debt, cause the Trust to be classified, for federal
         income tax purposes, as an association (or publicly traded partnership)
         taxable as a corporation, and cause or constitute an event in which
         gain or loss would be recognized by any Certificateholder; and

                           (iv)     on or before the date such Additional Class
         D Certificates are issued, the Transferor shall deliver to the Trustee
         an Officer's Certificate confirming the matters set forth in clause (i)
         above. The Trustee may conclusively rely on such certificate, shall
         have no duty to make inquiries with regard to matters set forth therein
         and shall incur no liability in so relying; and

                           (v)      consent of the Enhancement Provider shall
         have been obtained (but only to the extent that the Additional Class D
         Certificates are issued to satisfy the Required Cash Collateral Amount
         provision pursuant to the Loan Agreement).


         SECTION I. ARTICLE V OF THE AGREEMENT. Article V of the Agreement as it
relates to Series 1997-2 shall read in its entirety as follows:

                                    ARTICLE V
                 DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS

         SECTION 5.1 DISTRIBUTIONS.

                  (a)      On each Determination Date, the Servicer shall
deliver to the Trustee and Paying Agent a certificate substantially in the form
of Exhibit B prepared by the Servicer. The Trustee shall be under no duty to
recalculate, verify or recompute the information on such certificate. 



                                     - 43 -

<PAGE>   46

                  (b) On each Distribution Date, the Paying Agent shall
distribute to each Class A Certificateholder of record as of the preceding
Record Date (other than as provided in Section 12.2 respecting a final
distribution) such Class A Certificateholder's pro rata share of the amounts
that are available on such Distribution Date to pay interest on the Class A
Certificates pursuant to this Agreement.

                  (c) On the Class A Expected Payment Date and each Special
Distribution Date, the Paying Agent shall distribute to each Class A
Certificateholder of record as of the preceding Record Date (other than as
provided in Section 12.2 respecting a final distribution) such Class A
Certificateholder's pro rata share of the amounts that are available on such
date to pay principal of the Class A Certificates pursuant to this Agreement.

                  (d) On each Distribution Date, the Paying Agent shall
distribute to each Class B Certificateholder of record as of the preceding
Record Date (other than as provided in Section 12.2 respecting a final
distribution) such Class B Certificateholder's pro rata share of the amounts
that are available on such Distribution Date to pay interest on the Class B
Certificates pursuant to this Agreement.

                  (e) On the Class B Expected Final Distribution Date and each
Special Distribution Date, the Paying Agent shall distribute to each Class B
Certificateholder of record as of the preceding Record Date (other than as
provided in Section 12.2 respecting a final distribution) such Class B
Certificateholder's pro rata share of the amounts that are available on such
date to pay principal of the Class B Certificates pursuant to this Agreement.

                  (f) On each Distribution Date, the Paying Agent shall
distribute to each Class D Certificateholder of record as of the preceding
Record Date (other than as provided in Section 12.2 respecting a final
distribution) such Class D Certificateholder's pro rata share of the amounts
that are available on such Distribution Date to pay interest on the Class D
Certificates pursuant to this Agreement.

                  (g) On each Distribution Date, the Paying Agent shall
distribute to each Class D Certificateholder of record as of the preceding
Record Date (other than as provided in Section 12.2 respecting a final
distribution) such Class D Certificateholder's pro rata share of the amounts
that are available on such date to pay principal of the Class D Certificates
pursuant to this Agreement.

                  (h) Except as provided in Section 12.2 with respect to a final
distribution and Section 5.3 with respect to payments to the Collateral
Indebtedness Holder, distributions to Series 1997-2 Certificateholders hereunder
shall be made by check mailed to each such Certificateholder at such
Certificateholder's address appearing in the Certificate Register without
presentation or surrender of any such Series 1997-2 Certificate or the making of
any notation thereon; provided, however, that with respect to




                                     - 44 -

<PAGE>   47

such Certificates registered in the name of a Clearing Agency, such
distributions shall be made to such Clearing Agency in immediately available
funds.

                  SECTION 5.2 STATEMENTS TO SERIES 1997-2 CERTIFICATEHOLDERS. On
each Distribution Date, the Paying Agent, on behalf of the Trustee, shall
forward to each Series 1997-2 Certificateholder, including, for the avoidance of
doubt, the Collateral Indebtedness Holder, a statement substantially in the form
of Exhibit C prepared by the Servicer setting forth certain information relating
to the Trust and the Series 1997-2 Certificates.

                  On or before January 31 of each calendar year, beginning with
1998, the Paying Agent, on behalf of the Trustee, shall furnish or cause to be
furnished to each Person who at any time during the preceding calendar year was
a Series 1997-2 Certificateholder a statement prepared by the Servicer
containing the information which is required to be contained in Exhibit C,
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Certificateholder of such Series, together with other
information as is required to be provided by an issuer of indebtedness under the
Code and such other customary information as is necessary to enable the
Certificateholders of such Series to prepare their tax returns. Such obligation
of the Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall have been provided by the Paying
Agent pursuant to any requirements of the Code as from time to time in effect.

                  SECTION 5.3 DISTRIBUTIONS TO COLLATERAL INDEBTEDNESS HOLDER.
Notwithstanding the foregoing provisions of this Article V, amounts payable to
the Collateral Indebtedness Holder pursuant to this Series Supplement shall be
distributed in the manner provided for in the Loan Agreement.

                               [END OF ARTICLE V]

                  SECTION J. PAY OUT EVENTS. If any one of the events 
specified in Section 9.1 of the Agreement or any of the following events shall
occur during either the Revolving Period or the Accumulation Period with
respect to the Series 1997-2 Certificates:


                  (a) failure on the part of the Transferor or the Servicer (x)
to make any payment or deposit required by the terms of the Agreement or this
Series Supplement on or before the date occurring five (5) Business Days after
the date such payment or deposit is required to be made or (y) duly to observe
or perform in any material respect any other covenants or agreements applicable
to such party set forth in the Agreement or this Series Supplement, which
failure has a material adverse effect on the Series 1997-2 Certificateholders,
and which continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Transferor by the Trustee, or to the Transferor




                                     - 45 -

<PAGE>   48

and the Trustee by the Series 1997-2 Certificateholders representing not less
than 50% of the Investor Amount, and continues to materially and adversely
affect the Series 1997-2 Certificateholders for such period;

                  (b) any representation or warranty made by the Transferor in
the Agreement or this Series Supplement, or information contained in a computer
file, microfiche or written list required to be delivered by the Transferor
pursuant to the Agreement, shall prove to have been incorrect in any material
respect when made or when delivered, (i) which continues to be incorrect in any
material respect for a period of 60 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Transferor by the Trustee, or to the Transferor and the Trustee by the Series
1997-2 Certificateholders representing not less than 50% of the Investor Amount,
and (ii) as a result of which the interests of the Series 1997-2
Certificateholders are materially and adversely affected and continue to be
materially and adversely affected for such period; provided, however, a Pay Out
Event shall not be deemed to have occurred if the Transferor has accepted
reassignment of the related Receivable, or all of such Receivables, if
applicable, during such period in accordance with the provisions of the
Agreement;

                  (c) the average of the Portfolio Yields for any three (3)
consecutive Monthly Periods is less than the average Base Rate for such three
(3) Monthly Periods;

                  (d) the failure to pay the Class A Investor Amount on the
Class A Expected Payment Date or the failure to pay the Class B Investor Amount
on the Class B Expected Payment Date;

                  (e) the Transferor shall fail to designate, or be unable to
designate, Additional Accounts, the Receivables of which will be Eligible
Receivables, as required by the Agreement, and such failure shall continue for a
period of five (5) Business Days;

                  (f) any Servicer Default shall occur which would have a
material adverse effect on the Series 1997-2 Certificateholders; or

                  (g) the Available Enhancement Amount shall be less than the
Required Enhancement Amount for three consecutive Monthly Periods; 

then, (i) in the case of any event described in clause (a), (b) or (f), after
the applicable grace period set forth in such subparagraphs, either the Trustee
or Series 1997-2 Certificateholders representing more than 50% of the Investor
Amount, by notice then given in writing to the Transferor and the Servicer (and
to the Trustee, if given by the Series 1997-2 Certificateholders) may declare
that a Pay Out Event has occurred with respect to only the Series 1997-2
Certificates as of the date of such notice and (ii) in the case of any event
described in Section 9.1 of the Agreement or in clauses (c), (d), (e) or (g)
above, a Pay Out Event with respect to only the Series 1997-2 Certificates will
be 




                                     - 46 -

<PAGE>   49

deemed to have occurred without any notice or other action on the part of the
Trustee or the Series 1997-2 Certificateholders or all certificateholders, as
appropriate, immediately upon the occurrence of such event.

         SECTION K. RESTRICTIONS ON TRANSFER.

                 (a)  The Collateral Indebtedness Interest shall be subject to
the restrictions on transfer set forth in the Loan Agreement.

                 (b)  The Transferor may at any time, without the consent of the
Class A Certificateholders and Class B Certificateholders, (i) sell or transfer
all or a portion of the Class D Certificates, provided that (A) the Transferor
shall have given notice to the Trustee, the Servicer and the Rating Agencies of
such proposed sale or transfer of the Class D Certificates at least five (5)
Business Days prior to the consummation of such sale or transfer; (B) the Rating
Agency Condition shall have been satisfied; (C) no Pay Out Event shall have
occurred prior to the consummation of such proposed sale or transfer of Class D
Certificates; (D) the Transferor shall have delivered an Officer's Certificate
dated the date of the consummation of such proposed sale or transfer to the
effect that, in the reasonable belief of the Transferor, such action will not,
based on the facts known to such officer at the time of such certification,
cause a Pay Out Event to occur with respect to any Series, and (E) the
Transferor shall have provided an Opinion of Counsel addressed to the Trustee,
dated the date of such certificate with respect to such action, that such
proposed sale or transfer will not adversely affect the tax characterization as
debt of Investor Certificates of any outstanding Series or Class with respect to
which an Opinion of Counsel addressed to the Trustee was delivered at the time
of their issuance that such Investor Certificates would be characterized as
debt, cause the Trust to be classified, for federal income tax purposes, as an
association (or publicly traded partnership) taxable as a corporation and cause
or constitute an event in which gain or loss would be recognized by any
Certificateholder.

                  (c) Each initial transferee of the Class D Certificates or any
interest therein and any assignee thereof or participant therein (each a
"holder") shall certify to the Transferor, the Servicer and the Trustee that it
has neither acquired nor will it sell, transfer, assign participate, pledge,
hypothecate, or otherwise dispose (any such act, a "transfer") of any interest
in its Class D Certificates or cause an interest in its Class D Certificates to
be marketed on or through (i) an "established securities market" within the
meaning of Section 7704(b)(1) of Code and any Treasury regulation thereunder,
including, without limitation, an over-the-counter market or an interdealer
quotation system that regularly disseminates firm buy or sell quotations or (ii)
a "secondary market" within the meaning of Section 7704(b)(2) of the Code and
any Treasury regulation thereunder, including, without limitation, a market
wherein interests in the Class D Certificates are regularly quoted by any Person
making a market in such interests and a market wherein any Person regularly
makes available bid or offer quotes with respect to interests in the Class D
Certificates and stands ready to effect buy or sell transactions at the quoted
price for itself or on behalf of others. In addition, each holder shall certify,
prior to any delivery



                                     - 47 -

<PAGE>   50

or transfer to it of a Class D Certificate or interest therein, that it is not
and will not become a partnership, Subchapter S corporation or grantor trust for
United States federal income tax purposes. If a holder cannot make the
certification described in the preceding sentence, the Transferor, the Trustee
or the Servicer may prohibit a transfer to such entity; provided, however, that
if the Transferor, the Trustee or the Servicer agrees to permit such a transfer,
the Transferor, the Servicer or the Trustee may require additional
certifications in order to prevent the Trust from being treated as a publicly
traded partnership. Each holder acknowledges that special tax counsel to the
Transferor may render Opinions of Counsel from time to time to the Transferor
and others that the Trust will not be treated as an association or as a publicly
traded partnership taxable as a corporation, and that such Opinions of Counsel
will rely in part on the accuracy of the certifications in this subsection K(c).

         SECTION K1. TAX CHARACTERIZATION OF THE CLASS D CERTIFICATES AND THE
COLLATERAL INDEBTEDNESS INTEREST. It is the intention of the parties hereto that
the Class D Certificates and the Collateral Indebtedness Interest be treated
under applicable tax law as indebtedness. In the event that either the Class D
Certificates or the Collateral Indebtedness Interest are not so treated, it is
the intention of the parties that the Class D Certificates or the Collateral
Indebtedness Interest, as the case may be, be treated under applicable tax law
as interests in a partnership that owns the Receivables. In the event that
either the Class D Certificates or the Collateral Indebtedness Interest are
treated under applicable tax law as interests in a partnership, it is the
intention of the parties that the Class D Certificates or the Collateral
Indebtedness Interest, as the case may be, be treated as guaranteed payments
and, if for any reason they are not so treated, that the holders of the Class D
Certificates or the Collateral Indebtedness Interest, as the case may be, be
specially allocated gross interest income equal to the interest accrued during
each Interest Period on the Class D Certificates and on the Collateral
Indebtedness Interest.

         SECTION L.  RATIFICATION OF MASTER POOLING AND SERVICING AGREEMENT. As
supplemented by this Series Supplement, the Agreement is in all respects
ratified and confirmed and the Agreement as so supplemented by this Series
Supplement shall be read, taken, and construed as one and the same instrument.

         SECTION L1. FASIT ELECTION. Each Series 1997-2 Certificateholder, by
acquiring an interest in a Series 1997-2 Certificate, is deemed to consent to
any amendment to the Agreement or this Series Supplement necessary for the
Transferor to elect for the Trust or any portion thereof to be treated as a
FASIT within the meaning of Section 860L of the Code (or any successor provision
thereto), provided that, such election may not be made unless the Transferor
delivers to the Trustee (i) an Opinion of Counsel to the effect that (x) the
issuance of FASIT regular interests will not adversely affect the tax
characterization as debt of Investor Certificates of any outstanding Series or
Class with respect to which an Opinion of Counsel was delivered at the time of
their issuance that such Investor Certificates would be characterized as debt,
(y) following such issuance, the Trust will not be classified, for federal
income tax purposes, as an association (or publicly traded partnership) taxable
as a corporation, and (z) such issuance will not




                                     - 48 -

<PAGE>   51

cause or constitute an event in which gain or loss would be recognized by any
Investor Certificateholder, and (ii) an Officer's Certificate to the effect that
such issuance will not have a material adverse effect on Investor
Certificateholders of any outstanding Series or class (viewed as a Series or a
class, as applicable).

         SECTION L2. PAIRED SERIES. Subject to obtaining confirmation by each
Rating Agency of the then existing ratings of each class of Series 1997-2
Certificates which are then rated, the consent of the Enhancement Provider, and
prior to a Pay Out Event, the Series 1997-2 Certificates may be paired with one
or more other Series (each a "Paired Series"). Each Paired Series either will be
pre-funded with an initial deposit to a pre-funding account in an amount up to
the initial principal balance of such Paired Series, primarily from the proceeds
of the sale of such Paired Series or will have a variable principal amount. Any
such pre-funding account will be held for the benefit of such Paired Series and
not for the benefit of the Series 1997-2 Certificateholders. As principal is
paid with respect to the Series 1997-2 Certificates, either (i) in the case of a
pre-funded Paired Series, an equal amount of funds held in any pre-funding
account for such pre-funded Paired Series will be released (which funds will be
distributed to the Transferor) or (ii) in the case of a Paired Series having a
variable principal amount, an interest in such variable Paired Series in an
equal or lesser amount may be sold by the Trust (and the proceeds thereof will
be distributed to the Transferor) and, in either case, the invested amount in
the Trust of such Paired Series will increase by up to a corresponding amount.
Upon payment in full of the Certificates, assuming that there have been no
unreimbursed charge offs with respect to any related Paired Series, the
aggregate investor amount of such related Paired Series will have been increased
by an amount up to an aggregate amount equal to the Investor Amount paid to the
Certificateholders since the issuance of such Paired Series. The issuance of a
Paired Series will be subject to the conditions described in Section 6.9(b) of
the Agreement. The numerator of the Investor Percentage with respect to
allocations of Principal Receivables may be changed upon the occurrence of a pay
out event with respect to a Paired Series (provided that such numerator is not
less than the Adjusted Investor Amount as of the last day of the revolving
period for such Paired Series).

         SECTION M.  COUNTERPARTS. This Series Supplement may be executed in any
number of counterparts (and by different parties on separate counterparts), each
of which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.

         SECTION N.  GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.

         SECTION O.  SUBORDINATION OF CERTAIN TERMINATION PAYMENTS.
Notwithstanding anything contained in Section 12.2(c) of the Agreement, upon the
sale of Receivables or interests therein as provided in Section 12.2(c) of the
Agreement, the




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<PAGE>   52

proceeds of any such sale payable in respect of the Series 1997-2 Certificates
shall be payable first to the Class A Certificates until paid in full, then to
the Class B Certificates until paid in full, then to the Collateral Indebtedness
Interest until paid in full and then to the Class D Certificates until paid in
full.


















                                     - 50 -

<PAGE>   53



                  IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Series Supplement to be duly executed by their
respective officers thereunto duly authorized as of the day and year first above
written.


                                     PROFFITT'S CREDIT CORPORATION,
                                     as Transferor

                                     By:    /s/ Douglas E. Coltharp
                                        ---------------------------------------
                                     Name:  Douglas E. Coltharp
                                     Title: President



                                     PROFFITT'S, INC.,
                                     as Servicer

                                     By:    /s/ Douglas E. Coltharp
                                        ---------------------------------------
                                     Name:  Douglas E. Coltharp
                                     Title: Executive Vice President &
                                            Chief Financial Officer



                                     NORWEST BANK MINNESOTA, 
                                     NATIONAL ASSOCIATION,
                                     as Trustee

                                     By:    /s/ Marianna C. Stershic
                                        ---------------------------------------
                                     Name:  Marianna C. Stershic
                                     Title: Assistant Vice-President





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