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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 21, 1999
SAKS CREDIT CARD MASTER TRUST
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SAKS CREDIT CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
<TABLE>
<CAPTION>
DELAWARE 333-48739 63-1228533
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<S> <C> <C>
(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.)
INCORPORATION)
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140 INDUSTRIAL DRIVE, ELMHURST, ILLINOIS 60126
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(ADDRESSES OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(630) 516-8080
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Item 5. Other Events.
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Pursuant to the Prospectus Supplement dated July 14, 1999 to the Prospectus
dated April 17, 1998 filed with Registration Statement No. 333-48739 and 333-
48739-01 on Form S-3, the Saks Credit Card Master Trust issued $280,000,000
Class A Floating Rate Asset Backed Certificates, Series 1999-1 and $30,275,000
Class B Floating Rate Asset Backed Certificates, Series 1999-1 on July 21, 1999.
Item 7. Financial Statements, Pro Forma Financial Information, and Exhibits.
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(c) Exhibits.
The following exhibits are filed herewith:
Exhibit No. Description
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1.1 Underwriting Agreement dated as of July 14, 1999 by and
among Saks Credit Corporation and Banc of America
Securities LLC as Representative of the Several
Underwriters
4.1 Series 1999-1 Supplement dated as of July 21, 1999, to
the Master Pooling and Servicing Agreement dated as of
August 21, 1997, among Saks Credit Corporation, as
Transferor, Saks Incorporated, as Servicer, and Norwest
Bank Minnesota, National Association, as Trustee
5.1 Opinion and consent of Alston & Bird LLP with respect
to legality
8.1 Opinion and consent of Alston & Bird LLP with respect
to Federal income tax matters
23.1 Consent of Alston & Bird LLP (included in its opinion
filed as Exhibit 5.1)
24.1 Consent of Alston & Bird LLP (included in its opinion
filed as Exhibit 8.1)
99.1 Other Expenses of Issuance and Distribution
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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.
SAKS CREDIT CORPORATION
(Registrant)
/s/ Charles J. Hansen
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Charles J. Hansen
Senior Vice President
Date: July 28, 1999
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INDEX TO EXHIBITS
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Exhibit
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1.1 Underwriting Agreement dated as of July 14, 1999 by and among
Saks Credit Corporation and Banc of America Securities LLC as
Representative of the Several Underwriters
4.1 Series 1999-1 Supplement dated as of July 21, 1999, to the
Master Pooling and Servicing Agreement dated as of August 21,
1997, among Saks Credit Corporation, as Transferor, Saks
Incorporated, as Servicer, and Norwest Bank Minnesota,
National Association, as Trustee
5.1 Opinion and consent of Alston & Bird LLP with respect to
legality
8.1 Opinion and consent of Alston & Bird LLP with respect to
Federal income tax matters
23.1 Consent of Alston & Bird LLP (included in its opinion filed
as Exhibit 5.1)
24.1 Consent of Alston & Bird LLP (included in its opinion filed
as Exhibit 8.1)
99.1 Other Expenses of Issuance and Distribution
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Exhibit 1.1
Underwriting Agreement dated as of July 14, 1999 by and among
Saks Credit Corporation and Banc of America Securities LLC,
as Representative of the Several Underwriters
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SAKS CREDIT CORPORATION
Transferor
SAKS CREDIT CARD MASTER TRUST
July 14, 1999
UNDERWRITING AGREEMENT
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Banc of America Securities LLC
As Representative
(the "Representative") of the
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Several Underwriters
Bank of America Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
Ladies and Gentlemen:
1. Introductory. Saks Credit Corporation is the Transferor (the
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"Transferor") under the Saks Credit Card Master Trust (the "Trust"), which has
issued and will issue, from time to time, asset backed securities and other
interests ("Securities") in one or more series (each, a "Series"). Each
Security evidences and will evidence a fractional, undivided percentage interest
in the Trust. The property of the Trust includes and will include receivables
(the "Receivables") generated from time to time in a portfolio of credit card
accounts owned by an affiliate of the Transferor (the "Accounts"), collections
thereon and certain related property to be conveyed to the Trust by the
Transferor (the "Trust Property").
The Master Pooling and Servicing Agreement, dated as of August 21,
1997 (as amended or supplemented, the "Pooling and Servicing Agreement") is
among the Transferor, Norwest Bank Minnesota, National Association, a national
banking
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association (the "Trustee") and Saks Incorporated, as servicer (the "Servicer").
The Transferor proposes to enter into the Series 1999-1 Supplement, dated as of
July 21, 1999 (the "Series 1999-1 Supplement"), to the Pooling and Servicing
Agreement, pursuant to which $280,000,000 aggregate initial principal amount of
Class A Floating Rate Asset Backed Certificates, Series 1999-1 (the "Class A
Certificates"), $30,275,000 aggregate initial principal amount of Class B
Floating Rate Asset Backed Certificates, Series 1999-1 (the "Class B
Certificates," and together with the Class A Certificates, the "Certificates")
and $68,100,000 aggregate initial principal amount of Collateral Interest,
Series 1999-1 (as may be subdivided into separate interests, cumulatively the
"Collateral Interest"). To the extent not defined herein, capitalized terms
used herein shall have the meanings specified in the Pooling and Servicing
Agreement and the Series 1999-1 Supplement.
The Transferor proposes to sell to the underwriters identified on
Schedule I hereto (the "Underwriters"), for whom Banc of America Securities LLC
is acting as representative (the "Representative"), the principal amount of
Certificates identified on Schedule I.
2. Representations and Warranties of the Transferor. The Transferor
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represents and warrants to each Underwriter as of the date hereof, as follows:
(a) a Registration Statement on Form S-3 (File No. 333-48739),
including a prospectus and such amendments thereto as may have been
required to the date hereof, relating to asset backed securities of various
classes and series has been filed with the Securities and Exchange
Commission (the "Commission"). Such Registration Statement has become
effective. No stop orders suspending the effectiveness of the Registration
Statement have been issued and no procedures for that purpose have been
instituted or to the Transferor's knowledge, threatened by the Commission.
A prospectus supplement (the "Prospectus Supplement") setting forth the
terms of the offering, sale and plan of distribution of the Certificates
and additional information concerning the Certificates, including the terms
thereof, and the Transferor and its affiliates' credit card business has
been prepared and will be filed timely pursuant to Rule 424(b) of the Rules
and Regulations of the Commission (the "Rules and Regulations") following
the execution of this Agreement. Such Registration Statement, as from time
to time amended and supplemented, is referred to as the "Registration
Statement" and the final form of Prospectus included in the Registration
Statement, as supplemented by the Prospectus Supplement in the form to be
filed with the Commission pursuant to Rule 424(b) is referred to as
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the "Prospectus" (the "Prospectus"). The Prospectus Supplement shall be
deemed to have supplemented the Prospectus only with respect to the
offering of the Certificates; 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, and the conditions of Rule 415 under the
Act, 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 the Representative has agreed in writing, shall be in all substantive
respects in the form furnished to the Representative 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 Supplement that has previously been furnished
to the Representative) as the Transferor has advised the Representative,
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 material
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
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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;
(d) the Transferor is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware, with
full power, authority and legal right to own its properties and conduct its
business
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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 Series 1999-1 Supplement;
(e) the Certificates and the Collateral Interest on the date of this
Agreement, will have been duly and validly authorized and, when the
Certificates and the Collateral Interest are on the Closing Date, 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 Series 1999-1 Supplement and, when the Certificates are
delivered and paid for as provided herein and when the Collateral Interest
are delivered and paid for by the purchaser thereof or retained by the
Transferor, as the case may be, the Certificates and the Collateral
Interest will be validly issued and outstanding and entitled to the
benefits and security afforded by the Pooling and Servicing Agreement and
the Series 1999-1 Supplement;
(f) the execution, delivery and performance by the Transferor of this
Agreement, the Pooling and Servicing Agreement, the Series 1999-1
Supplement, the Certificates and the Collateral Interest, and the
consummation by the Transferor of the transactions provided for herein and
therein, have been, or will have been as of the Closing Date, 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 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
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 Series 1999-1 Supplement;
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(g) the Pooling and Servicing Agreement constitutes 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) when executed and delivered by the parties thereto, the Series
1999-1 Supplement will 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);
(i) 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 pursuant to this Agreement, the Pooling and Servicing
Agreement and the Series 1999-1 Supplement and the Collateral Interest
pursuant to the Pooling and Servicing Agreement and the Series 1999-1
Supplement, have been or will be taken or obtained on or prior to the
Closing Date;
(j) this Agreement has been duly executed and delivered by the
Transferor;
(k) 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 June 2,
1999;
(l) 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 Series 1999-1
Supplement and the Certificates (except for transfer, income or other taxes
due upon the sale of the Certificates by the Underwriters or any Subsequent
Purchaser) shall have been paid or will be paid by
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or on behalf of the Transferor at or prior to the Closing Date to the
extent then due; and
(m) the Certificates, the Collateral Interest, the Pooling and
Servicing Agreement and the Series 1999-1 Supplement conform and will
conform as of the Closing Date in all material respects to the descriptions
thereof in the Prospectus.
3. Purchase, Sale and Delivery of Certificates. On the basis of the
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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 99.70% of
the principal amount of such Certificates with respect to the Class A
Certificates and 99.65% 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 Alston & Bird LLP, 1201 W. Peachtree Street, Atlanta, Georgia 30309-
3424, on July 21, 1999 (the "Closing Date"), or at such other time thereafter or
other place as the Representative 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 the Underwriters. It is understood that the several
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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
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agrees with each Underwriter that:
(a) prior to the execution of this Agreement, the Transferor will
prepare a Prospectus Supplement 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
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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 the Representative,
or if the Representative shall have reasonably objected thereto promptly
after receipt thereof; the Transferor will immediately advise the
Representative and its 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 the Representative 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 the Representative as many
copies of the Prospectus as amended or supplemented as the Representative
may reasonably request; provided, however, that a consent by the
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Representative 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,
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Section 11(a) of the Act and Rule 158 of the Commission, as applicable to
and customary for asset backed securities generally, with respect to the
Certificates;
(d) the Transferor will make available to each Underwriter, at its
request, copies of the Registration Statement (and at least one copy, if
not previously delivered to the Representative, shall be delivered to the
Representative and 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 the Representative reasonably requests;
(e) the Transferor will assist the Representative 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 the
Representative designates and will continue to assist the Representative 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 Certificates have been qualified as provided
above; provided, however, that neither the Transferor nor the Trust shall
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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 the Representative may designate and the
reproduction of memoranda relating thereto, for any fees charged by
investment rating agencies for the rating of such Certificates, for all
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Representative and, to the extent
previously agreed upon with the Representative, 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 the
Representative
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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
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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) the Representative shall have received a letter from
PricewaterhouseCoopers LLP, independent public accountants, and, if
requested by the Representative, 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 Representative shall have received a copy of the
indemnification agreement, dated the date hereof, between the
Representative and the Servicer (the "Indemnification Agreement"), executed
by the Servicer and delivered to the Representative;
(d) 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. ("Moody's"), Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("Standard & Poor's") and Duff & Phelps Credit
Rating Co. ("Duff & Phelps") and in the case of the Class B Certificates,
in one of the three highest rating categories by Moody's, Standard and
Poor's and Duff & Phelps, and in each case shall not have been placed on
any credit watch with a negative implication for downgrade;
(e) the Representative shall have received opinions of Alston & Bird
LLP, counsel to the Transferor, and of such local or corporate counsel to
the Transferor and its affiliates, dated the Closing Date, substantially to
the effect that:
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(i) the Transferor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, 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 transfer 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 and the
Series 1999-1 Supplement and to consummate the transactions contemplated
herein, therein and in the Receivables Purchase Agreement and the Pooling
and Servicing Agreement;
(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 Receivables Purchase Agreement, the Pooling
and Servicing Agreement and the Series 1999-1 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 (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;
(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
Receivables Purchase Agreement, the Pooling and Servicing Agreement or the
Series 1999-1 Supplement, except such as have been obtained or made
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and such as may be required under foreign or state securities or Blue Sky
laws;
(vii) the execution and delivery of the Series 1999-1 Supplement, the
performance by the Transferor of its obligations under this Agreement, the
Receivables Purchase Agreement, the Pooling and Servicing Agreement and the
Series 1999-1 Supplement, 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 Receivables Purchase
Agreement, the Pooling and Servicing Agreement or the Series 1999-1
Supplement, will not conflict with, result in a breach of or violation of
any of the terms of, or constitute a default under, the Certificate 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 governmental body having
jurisdiction over the Transferor; provided, however, that such counsel need
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express no opinion as to state securities or Blue Sky laws or the
securities laws of any foreign jurisdiction;
(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 Receivables Purchase Agreement, the Pooling and
Servicing Agreement, the Series 1999-1 Supplement or the Certificates, (B)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agreement, the Receivables
Purchase Agreement, the Pooling and Servicing Agreement, the Series 1999-1
Supplement 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 Receivables Purchase Agreement, the Pooling and Servicing Agreement,
the Series 1999-1 Supplement or the Certificates, or (C) seeking adversely
to affect the federal income tax attributes of the Certificates as
described in the Prospectus Supplement under the heading "Certain Federal
Income Tax Consequences of the Offered Certificates" beginning at page S-56
thereof;
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(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
effective 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 Receivables Purchase Agreement, the Pooling
and Servicing Agreement, the Series 1999-1 Supplement and the Certificates
conform in all material respects to the descriptions thereof contained in
the Registration Statement and the Prospectus;
(xi) the Pooling and Servicing Agreement and the Series 1999-1
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 Supplement under the headings
"Series 1999-1 Summary-Tax Status" and "Certain Federal Income Tax
Consequences of the Offered Certificates" on page S-13 and beginning at
page S-56 respectively, 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
"Summary-ERISA Considerations," "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
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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 Seller and public officials;
(f) the Representative shall have received opinions of Alston & Bird
LLP, special counsel for the Seller, and of such local or corporate counsel
to the Seller, dated the Closing Date, in form and substance reasonably
satisfactory to the Representative and its counsel, to the effect that,
with respect to the Seller:
(i) the Seller is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States, with full power and authority to own its 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 power and authority as a national banking
association to execute and deliver the Receivables Purchase Agreement
and to consummate the transactions contemplated therein;
(iii) the execution, delivery and performance of the Receivables
Purchase Agreement 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 Receivables Purchase Agreement 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 or the rights of creditors of national
banking associations, (B) the application of general principles of
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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 law for the consummation of the transactions contemplated
by the Receivables Purchase Agreement, except such as have been
obtained or made;
(vi) the execution, delivery and performance by the Seller of its
obligations under the Receivables Purchase Agreement, 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 Articles of Association 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
(viii) 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
Receivables Purchase Agreement, (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 Supplement under the
headings "Certain Federal Income Tax Consequences of the Offered
Certificates" beginning at page S-56 thereof;
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(g) the Representative 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 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 Series 1999-1 Supplement and the Indemnification Agreement
and to consummate the transactions contemplated herein, therein and in
the Pooling and Servicing Agreement;
(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, the Series 1999-1
Supplement and the Indemnification Agreement 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 or any foreign
securities laws; and
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(vi) the execution and delivery of the Series 1999-1 Supplement
and the Indemnification Agreement, the performance by the Servicer of
its obligations under the Pooling and Servicing Agreement and the
Series 1999-1 Supplement, and the consummation of any of the
transactions contemplated by the Pooling and Servicing Agreement, the
Series 1999-1 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 Charter 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
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counsel need express no opinion as to state securities or Blue Sky
laws or any foreign securities laws;
(h) the Representative shall have received an opinion or opinions from
Alston & Bird LLP, special federal tax counsel to the Transferor, dated the
Closing Date, and in form and substance reasonably acceptable to the
Representative and its 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 from special tax
counsel to the Transferor, which may be Alston & Bird LLP, and/or such
local counsel to the Transferor, dated the Closing Date, and in form and
substance satisfactory to the Representative and its counsel, to the effect
that the Certificates are properly characterized as indebtedness for
Illinois 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 State of Illinois and that
the Trust will not be subject to any income, franchise, excise or other tax
under the laws of the State of Illinois;
(j) the Representative shall have received an opinion or opinions from
Alston Bird LLP, special counsel for the Seller and the Transferor, and/or
such local counsel to the Transferor dated the Closing Date, in form and
substance satisfactory to the Representative and its counsel, with respect
to (A) the validity, perfection and priority of the Trust's interest in the
Receivables and the proceeds thereof, and the validity, perfection and
priority of the Transferor's interest in the Receivables and the
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proceeds thereof, (B) the enforceability of the transfers by the Seller to
the Transferor under the Receivables Purchase Agreement notwithstanding the
insolvency of the Seller, (C) the nonconsolidation of the assets and
liabilities of the Transferor with assets and liabilities of its parent(s)
in the event of the insolvency or bankruptcy of such parent(s), and (D)
with respect to other related matters in a form previously approved by the
Representative and its counsel; in addition, the Representative shall have
received a reliance letter with respect to any opinion that the Transferor
is required to deliver to the Rating Agency;
(k) the Representative 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 the
Representative, with respect to certain New York law matters and to the
validity of the Certificates, the Registration Statement, the Prospectus
and other related matters as the Representative 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;
(l) the Representative shall have received, with respect to the
Transferor, a certificate, dated the Closing Date, of the Treasurer or a
Senior Vice President or more senior officer of the Transferor in which
such officer shall state that, to his or her knowledge after reasonable
investigation, (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;
(m) the Representative shall have received, with respect to Saks
Incorporated ("Saks"), a certificate, dated the Closing Date, of the
Treasurer or any Senior Vice President or more senior officer of Saks in
which such officer, to his or her knowledge after reasonable investigation,
shall state that (A) attached thereto is a true and complete copy of the
Charter of Incorporation and By-laws of Saks, and all
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amendments thereto, (B) attached thereto is a true and complete copy of the
resolutions of its Board of Directors or executive committee thereof
authorizing the execution and delivery of the Indemnification Agreement and
the transactions contemplated hereby and thereby, and that such resolutions
have not been amended, modified, revoked or rescinded and are in full force
and effect on the Closing Date, (C) the incumbency and specimen signature
of each officer of Saks who executed, or is executing, the Indemnification
Agreement or any other document delivered in connection therewith is
attached thereto, (D) no material consents, licenses or approvals are
required in connection with the execution, delivery and performance by Saks
of the Indemnification Agreement, and that the Indemnification Agreement is
valid and enforceable, and (E) subsequent to the date of the Prospectus,
there has been no material adverse change in the consolidated condition
(financial or otherwise) of Saks and its subsidiaries, except as set forth
in or contemplated in the Registration Statement and the Prospectus or as
described in such certificate;
(n) the Representative shall have received an opinion of counsel to
the Trustee, which may be an opinion of the Trustee's in-house counsel,
addressed to the Representative dated the Closing Date, in form and
substance satisfactory to the Representative and its 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 the Series 1999-1
Supplement and to perform all actions required of it under the Pooling
and Servicing Agreement and the Series 1999-1 Supplement;
(ii) each of the Pooling and Servicing Agreement and the Series
1999-1 Supplement 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);
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(iii) the Certificates have been duly authenticated and delivered
by the Trustee;
(iv) the execution and delivery of the Series 1999-1 Supplement by
the Trustee and the performance by the Trustee of the respective terms
of the Pooling and Servicing Agreement and the Series 1999-1
Supplement does 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 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
state 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 Series 1999-1 Supplement or the
performance by the Trustee thereunder or under the Pooling and
Servicing Agreement.
The Transferor will furnish to the Representative conformed copies of
such opinions, certificates, letters and documents as the Representative
reasonably requests.
7. Indemnification.
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(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
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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 Underwriter specifically 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 including the
Prospectus Supplement 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 or the Prospectus Supplement. 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
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incurred. This 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 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.
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(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 considerations. 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 Underwriters were treated as one entity for such purpose).
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
received by it.
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, the Representative may make arrangements 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 Under-writer or Underwriters
so default and the aggregate principal amount of Certificates with
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respect to which such default or defaults occur is more than 10% of the total
principal amount of the Certificates and arrangements satisfactory to the
Representative 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 Saks or any suspension of trading
of the securities of Saks on any exchange or in the over-the-counter market,
(ii) a general moratorium on commercial banking activities shall have been
declared by any applicable Federal or State 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 the reasonable judgment of the Representative, as
representative of the Underwriters, impracticable to market the Certificates on
the terms and in the manner contemplated in the Prospectus, (iv) the rating of
another Series or Class, or a class of securities shall have been reduced or
withdrawn, which reduction or withdrawal, in the judgment of the Representative,
makes it impracticable to market the Certificates on the terms and in the manner
contemplated in the Prospectus, (v) any public announcement that any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Securities Act) has under surveillance or review its rating of
the debt securities of either the Transferor or the Servicer (other than an
announcement with positive implications of a possible upgrading and no
implication of a possible downgrading or such rating), or (vi) 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 Saks occurs, which, in the reasonable judgment of the
Representative, 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. If this Agreement is terminated
pursuant to this Section, such termination shall be without liability of any
party to any other party.
10. Survival of Certain Representations and Obligations. The
---------------------------------------------------
respective indemnities, agreements, representations, warranties and other
statements by the Transferor
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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 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 Banc of
America Securities LLC, Bank of America Corporate Center, 100 North Tryon
Street, Charlotte, North Carolina 28255-0001, Attention: Luis O. Araneda,
facsimile number 704-386-2731, or to such other address as the Representative
may designate in writing to the Transferor, or if sent to the Transferor, will
be mailed, delivered or telecopied to Saks Credit Corporation, 140 Industrial
Drive, Elmhurst, Illinois 60126, Attention: Douglas Coltharp, facsimile number
(630) 516-8031, or to 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 such Underwriter.
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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. Severability of Provisions. Any covenant, provision, agreement
--------------------------
or term of this Agreement that is prohibited or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
14. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which shall together
constitute one instrument.
15. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY, AND
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CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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If the foregoing is in accordance with your understanding of this
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,
SAKS CREDIT CORPORATION,
as Transferor
By /s/ Charles J. Hansen
-----------------------------------
Name: Charles J. Hansen
Title: Senior Vice President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
BANC OF AMERICA SECURITIES LLC
as Representative of the
Several Underwriters
By /s/ Luis O. Araneda
------------------------
Name: Luis O. Araneda
Title: Managing Director
-30-
<PAGE>
Schedule I
----------
<TABLE>
<CAPTION>
Principal Amount of
Class A Certificates
--------------------
<S> <C>
Banc of America Securities LLC... $ 70,000,000
Banc One Capital Markets, Inc.... 70,000,000
Chase Securities Inc............. 70,000,000
J.P. Morgan Securities Inc....... 70,000,000
------------
Total............................ $280,000,000
<CAPTION>
Principal Amount of
Class B Certificates
--------------------
<S> <C>
Banc of America Securities LLC... $ 30,275,000
------------
Total............................ $ 30,275,000
</TABLE>
<PAGE>
Exhibit 4.1
Series 1999-1 Supplement dated as of July 21, 1999, to the Master Pooling and
Servicing Agreement dated as of August 21, 1997, among Saks Credit
Corporation, as Transferor, Saks Incorporated, as Servicer, and Norwest
Bank Minnesota, National Association, as Trustee
<PAGE>
SAKS CREDIT CORPORATION
Transferor
SAKS INCORPORATED
Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
on behalf of the Certificateholders
- -------------------------------------------------------------------------------
SERIES 1999-1 SUPPLEMENT
Dated as of July 21, 1999
to the
MASTER POOLING AND SERVICING AGREEMENT
Dated as of August 21, 1997
- -------------------------------------------------------------------------------
$378,375,000
SAKS CREDIT CARD MASTER TRUST
SERIES 1999-1
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C> <C>
PRELIMINARY STATEMENTS..................................................................................... 3
Section A. Designation............................................................................. 3
Section B. Definitions............................................................................. 4
Section C. Minimum Transferor Interest Percentage.................................................. 25
Section D. Optional Purchase; Reassignment and Transfer Terms...................................... 25
Section E. Delivery and Payment for the Certificates............................................... 26
Section F. Form of Delivery of the Series 1999-1 Certificates...................................... 26
Section G. Servicing Compensation.................................................................. 26
Section H. Article IV of the Agreement............................................................. 27
ARTICLE IV Rights of Series 1999-1 Certificateholders and Allocation and
Application of Collections............................................................................ 28
Section 4.2 Collections and Allocations............................................................. 28
Section 4.3 Determination of Monthly Interest....................................................... 29
Section 4.4 Determination of Monthly Principal...................................................... 31
Section 4.5 Required Amounts........................................................................ 33
Section 4.6 Application of Class A Available Funds, Class B Available Funds,
CTO Available Funds, Class D Available Funds and Collections of
Principal Receivables.......................................................................... 35
Section 4.7 Defaulted Amounts; Adjustment Amounts; Investor Charge Offs;
Reductions of Adjustment Amounts............................................................... 38
Section 4.8 Excess Spread; Shared Excess Finance Charge Collections................................. 41
Section 4.9 Reallocated Principal Collections....................................................... 43
Section 4.10 Principal Shortfall..................................................................... 43
Section 4.11 Finance Charge Shortfall................................................................ 44
Section 4.12 Spread Account.......................................................................... 44
Section 4.13 Principal Account....................................................................... 45
Section 4.14 Reserve Account......................................................................... 46
Section 4.15 Postponement of Accumulation Period..................................................... 49
Section I Article V of the Agreement.............................................................. 49
ARTICLE V DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS.................................................................................... 49
Section 5.1 Distributions........................................................................... 49
Section 5.2 Statements to Series 1999-1 Certificateholders.......................................... 51
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section J. Pay Out Events.......................................................................... 51
Section J1. CTO Defaults............................................................................ 53
Section K. Restrictions on Transfer................................................................ 53
Section K1. Tax Characterization of the Collateral Interest......................................... 57
Section L. Ratification of Master Pooling and Servicing Agreement.................................. 58
Section L1. FASIT Election.......................................................................... 58
Section L2. Paired Series........................................................................... 58
Section M. Counterparts............................................................................ 59
Section N. Governing Law........................................................................... 59
Section O. Subordination of Certain Termination Payments........................................... 59
EXHIBITS
Exhibit A-1 Form of Class A Certificate
Exhibit A-2 Form of Class B Certificate
Exhibit A-3 Form of Collateralized Trust Obligations
Exhibit A-4 Form of Class D Certificate
Exhibit B Form of Monthly Payment Instructions and Notification to Trustee
[RESERVED]
Exhibit C Form of Monthly Certificateholder's Statement
Exhibit D CTO Rate
Exhibit E Purchaser's Certificate
</TABLE>
ii
<PAGE>
SERIES 1999-1 SUPPLEMENT
THIS SERIES 1999-1 SUPPLEMENT, dated as of July 21, 1999 (this "Series
------
Supplement"), is by and among SAKS CREDIT CORPORATION, a Delaware corporation
- ----------
(the successor to Proffitt's Credit Corporation), as Transferor, SAKS
INCORPORATED (formerly named "Proffitt's, Inc."), a Tennessee corporation
("Saks"), 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 (as amended and supplemented, the "Agreement"), by and among the
---------
Transferor, the Servicer and the Trustee.
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, of 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 1999-1.
Pursuant to this Series Supplement, the Transferor and the Trustee are
creating a new Series of Investor Certificates and specifying the Principal
Terms thereof. The Series 1999-1 Certificates shall not be subordinated to any
other Series.
Section A. Designation. The Certificates and the Collateralized
-----------
Trust Obligations issued hereunder shall be designated generally as the "Series
------
1999-1 Certificates." The Series 1999-1 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 Floating Rate Asset
Backed Certificates, Series 1999-1, the Class B Floating Rate Asset Backed
Certificates, Series 1999-1, the Collateralized Trust Obligations, Series 1999-1
and the Class D Asset Backed Certificates, Series 1999-1. The first
Distribution Date with respect to Series 1999-1 shall be the August 1999
Distribution Date.
<PAGE>
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.
Notwithstanding the foregoing provisions of Section A, the provisions of Section
6.9(b) of the Agreement with respect to the delivery of an Opinion of Counsel to
the effect that a newly issued Series of Investor Certificates will be
characterized as either indebtedness or an interest in a partnership (that is
not taxable as a corporation) under existing law for Federal income tax purposes
shall not be applicable to the Class D Certificates.
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 1999-1 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 1999-1 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.
"Accumulation Period" shall mean, unless a Pay Out Event with
-------------------
respect to Series 1999-1 shall have occurred prior thereto, the period
commencing at the close of business on the last day of the June 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 holders of all Series 1999-1
Certificates of their respective Investor Amount or (c) the Stated Series
Termination Date.
"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 minus, at the
Transferor's option, an amount up to the Class D Initial Investor Amount, (b)
the initial investor amounts (or other applicable amounts) of all outstanding
Series (other than Series 1999-1) 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.
-4-
<PAGE>
"Accumulation Period Length" shall have the meaning specified in
--------------------------
Section 4.15.
"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 and the Collateral Interest
Adjusted Amount.
"Allocable Amounts" shall mean with respect to any Distribution
-----------------
Date, the sum of the Class A Allocable Amount, the Class B Allocable Amount and
the Collateral Interest Allocable Amount.
"Amortization Period" shall mean the Accumulation Period or the
-------------------
Rapid Amortization Period.
"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)
the portion of the Class A Available Funds used to cover the Class A Allocable
Amount, plus (c) amounts designated as Available Principal Collections pursuant
to Section 4.8, minus (d) Reallocated Principal Collections applied pursuant to
Section 4.9 for the related Monthly Period, plus (e) Shared Principal
Collections allocated to Series 1999-1.
"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.
"Average Excess Spread Percentage" shall mean, for any
--------------------------------
Distribution Date, the average of the Excess Spread Percentage for the three
consecutive Monthly Periods preceding such Distribution Date; provided, however,
that (i) for the August, 1999 Distribution Date, the Average Excess Spread
Percentage shall equal the Excess Spread Percentage for the July, 1999 Monthly
Period (and further provided that the Excess Spread Percentage for such Monthly
Period shall be calculated by accruing Monthly Interest from the Closing Date
through and including the last day of such Monthly Period); and (ii) for the
September, 1999 Distribution Date, the Average Excess Spread Percentage shall
equal the average of the Excess Spread Percentages calculated for the July, 1999
Monthly Period (as calculated pursuant to the preceding clause (i)) and for the
August, 1999 Monthly Period.
"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 1999-1 Certificates
-5-
<PAGE>
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.
------------
"Class A Account Percentage" means, with respect to any
--------------------------
Determination Date, the percentage equivalent of a fraction, the numerator of
which is the aggregate amount on deposit in the Principal Account with respect
to Class A Monthly Principal and the denominator of which is the aggregate
amount on deposit in the Principal Account, in each case as of the last day of
the preceding Monthly Period.
"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.
"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 1999-1 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 (i) 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, (ii) an amount equal to the product of (a) the
Class A Account Percentage and (b) the earnings (net of losses and investment
expenses), if any, earned on the Principal Account with respect to such Monthly
Period, and (iii) 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
-6-
<PAGE>
included in Class A Available Funds pursuant to Section 4.14(d), and
(iv) amounts required to be included in Class A Available Funds pursuant to
Section 4.14(b).
"Class A Certificateholder" shall mean any Person in whose name a
-------------------------
Class A Certificate is registered in the Certificate Register.
"Class A Certificate Rate" shall mean, with respect to the Class
------------------------
A Certificates and each Interest Period, a per annum rate of LIBOR plus 0.22%.
"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 Initial Investor Amount" shall mean the aggregate
-------------------------------
initial principal amount of the Class A Certificates, which is $280,000,000.
"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) 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(e) prior to such date; provided, however,
that the Class A Investor Amount may not be reduced below zero.
"Class A Investor Charge Off" 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 Class A Investor Percentage
applicable 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).
-7-
<PAGE>
"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 for the related Interest Period and 2.00% per annum.
"Class A Pool Factor" shall mean the seven-digit decimal, which
-------------------
the Servicer will compute monthly, expressing as of each Record Date, the Class
A Investor Amount as a proportion of the Class A Investor Amount as of the
Closing Date, which initially shall be 1.0000000.
"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 Account Percentage" means, with respect to any
--------------------------
Determination Date, the percentage equivalent of a fraction, the numerator of
which is the aggregate amount on deposit in the Principal Account with respect
to Class B Monthly Principal and the denominator of which is the aggregate
amount on deposit in the Principal Account, in each case as of the last day of
the preceding Monthly Period.
"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 while the Class B Certificates are outstanding, an amount equal to
the Class B Investor Amount, minus the excess of the Principal Account Balance
over the Class A Investor Amount, 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 1999-1 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.
-8-
<PAGE>
"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, (ii) an amount equal to the product of (a) the
Class B Account Percentage and (b) the earnings (net of losses and investment
expenses), if any, earned on the Principal Account with respect to such Monthly
Period, (iii) 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).
"Class B Certificateholder" shall mean any Person in whose name a
-------------------------
Class B Certificate is registered in the Certificate Register.
"Class B Certificate Rate" shall mean, with respect to the Class
------------------------
B Certificates and each Interest Period, a per annum rate of LIBOR plus 0.43%.
"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.
-----------
"Class B Initial Investor Amount" shall mean the aggregate
-------------------------------
initial principal amount of the Class B Certificates, which is $30,275,000.
"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
Class B 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(f) 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(e) 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).
-9-
<PAGE>
"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 Class B Investor Percentage
applicable 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).
"Class B Penalty Rate" shall mean the sum of the Class B
--------------------
Certificate Rate for the related Interest Period and 2.00% per annum.
"Class B Pool Factor," shall mean the seven-digit decimal, which
-------------------
the Servicer will compute monthly, expressing as of each Record Date, the Class
B Investor Amount as a proportion of the Class B Investor Amount as of the
Closing Date, and which decimal initially shall be 1.0000000.
"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 Account Percentage" means, with respect to any
--------------------------
Determination Date, the percentage equivalent of a fraction, the numerator of
which is the aggregate amount on deposit in the Principal Account with respect
to Class D Monthly Principal and the denominator of which is the aggregate
amount on deposit in the Principal Account, in each case as of the last day of
the preceding Monthly Period.
"Class D Adjusted Investor Amount" means, for any date of
--------------------------------
determination, an amount equal to the Class D Investor Amount, minus the excess
-10-
<PAGE>
of the Principal Account Balance over the sum of the Investor Amounts with
respect to the Class A Certificates, Class B Certificates and Collateralized
Trust Obligations (up to the Class D Investor Amount). In no event shall the
Class D Adjusted Investor Amount be less than zero.
"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 1999-1 with respect to the related Monthly Period and (ii) the
percentage equivalent of a fraction the numerator of which is the Class D
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 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" means, with respect to any Monthly
-----------------------
Period, an amount equal to the sum of (i) the applicable Class D Investor
Percentage of the Collections of Finance Charge Receivables with respect to such
Monthly Period and any other amounts that are to be treated as Collections of
Finance Charge Receivables, and (ii) an amount equal to the product of (a) the
Class D Account Percentage and (b) the earnings (net of losses and investment
expenses), if any, earned on the Principal Account with respect to such Monthly
Period.
"Class D Certificate" 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-4.
-----------
"Class D Certificateholder" shall mean any Person in whose name a
-------------------------
Class D Certificate is registered in the Certificate Register.
"Class D Initial Investor Amount" shall mean the aggregate
-------------------------------
initial principal amount of the Class D Certificates, which is $22,700,000.
"Class D Investor Amount" means, on any date of determination, an
-----------------------
amount equal to (a) the Class D Initial Investor Amount equal to $22,700,000,
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 used to make payments in respect of the Class
A Certificates, the Class B Certificates and the Collateralized Trust
Obligations on all prior Distribution Dates, minus (d) an amount equal to the
amount by which the Class D Investor Amount has been reduced on all prior
Distribution Dates in respect of the Class A Allocable Amount, the Class B
Allocable Amount, the CTO Allocable Amount and the Class D Allocable Amount,
plus (e) the sum of
-11-
<PAGE>
the amount of Excess Spread and Shared Excess Finance Charge Collections
allocated and available on all prior Distribution Dates 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 Amount allocable to the Class D Investor Amount; provided, however,
that the Class D Investor Amount may not be reduced below zero.
"Class D Investor Charge Offs" shall have the meaning specified
----------------------------
in Section 4.7(c).
"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 Class D Investor Percentage
applicable to Allocable Amounts for such Monthly Period.
"Class D Investor Percentage" shall be calculated by substituting
---------------------------
the Class D Adjusted 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 be zero.
------------------------
"Class D Monthly Principal" shall have the meaning specified in
-------------------------
Section 4.4(d).
"Class D Servicing Fee" shall have the meaning specified in
---------------------
Section G.
"Class D Subordinated Principal Collections" means, 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 July 21, 1999.
------------
"Collateral Charge Off" shall mean the sum of the CTO Charge Off
---------------------
and the Class D Investor Charge Off.
"Collateral 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 Interest under this
Series Supplement, the portion of Collections allocable thereto under the
Agreement and this Series Supplement, funds held in the Spread Account for the
sole benefit of the Collateralized Trust Obligations, funds held in the
Collection Account allocable to the Collateralized Trust Obligations and the
Class D Certificates
-12-
<PAGE>
thereto pursuant to the Agreement and this Series Supplement and, subject to the
respective rights of the Series 1999-1 Certificateholders with respect thereto,
funds held in the Reserve Account.
"Collateral Interest Account Percentage" means, with respect to
--------------------------------------
any Determination Date, the sum of the CTO Account Percentage and the Class D
Account Percentage as of such Distribution Date.
"Collateral Interest Adjusted Amount" means, for any
-----------------------------------
Determination Date, an amount equal to the sum of the CTO Adjusted Investor
Amount and the Class D Adjusted Investor Amount as of such Determination Date.
"Collateral Interest Adjustment Amount" shall mean, with respect
-------------------------------------
to each Distribution Date, the sum of the CTO Adjustment Amount and the Class D
Adjustment Amount as of such Distribution Date.
"Collateral Interest Allocable Amount" or "Collateral Allocable
------------------------------------ --------------------
Amount" shall mean, with respect to any Distribution Date, the sum of the CTO
- ------
Allocable Amount and the Class D Allocable Amount.
"Collateral Interest Amount" shall mean, as of any date of
--------------------------
determination, the sum of the CTO Investor Amount and the Class D Investor
Amount.
"Collateral Interest Default Amount" shall mean, with respect to
----------------------------------
each Distribution Date, an amount equal to the sum of the CTO Investor Default
Amount and the Class D Investor Default Amount as of such Distribute Date.
"Collateral Interest Monthly Principal" shall mean the sum of the
-------------------------------------
CTO Monthly Principal and the Class D Monthly Principal.
"Collateral Interest Percentage" shall mean the sum of the CTO
------------------------------
Investor Percentage and the Class D Investor Percentage.
"Collateral Interest Pool Factor," shall mean the seven-digit
-------------------------------
decimal, which the Servicer will compute monthly, expressing as of each Record
Date, the Collateral Interest Amount as a proportion of the Collateral Interest
Amount as of the Closing Date, which initially shall be 1.0000000.
"Collateral Interest Servicing Fee" shall have the meaning
---------------------------------
specified in Section G hereof.
"Collateral Monthly Interest" shall mean the sum of the CTO
---------------------------
Monthly Interest and the Class D Monthly Interest.
-13-
<PAGE>
"Collateral Required Amount" shall mean, as of any date of
--------------------------
determination, the sum of the CTO Required Amount and the Class D Allocable
Amount.
"Collateral Subordinated Principal Collections" shall mean, with
---------------------------------------------
respect to any Monthly Period, an amount equal to the sum of the CTO
Subordinated Principal Collections and the Class D Subordinated Principal
Collections for such Monthly Period.
"Collateralized Trust Obligations" shall mean any of the
--------------------------------
instruments executed by the Transferor and authenticated by the Trustee,
substantially in the form of Exhibit A-3, and which shall represent the interest
in the Collateral Interest not represented by the Class D Certificates. For
convenience, "Collateralized Trust Obligations" are sometimes referred to herein
as "CTOs".
"Controlled Accumulation Amount" shall mean for any Distribution
------------------------------
Date with respect to the Accumulation Period, $31,531,250; 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 shall be equal
to (i) the product of (x) the Initial Investor Amount minus, at the Transferor's
option, an amount up to the Class D Initial Investor Amount, and (y) the
Accumulation Period Factor for such Monthly Period divided by (ii) the Required
Accumulation Factor Number.
"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 an amount, determined as of each
--------------
Distribution Date with respect to any Interest Period, equal to the sum of (a)
the product of (i) a fraction, the numerator of which is the actual number of
days in such Interest Period and the denominator of which is 360, times (ii) the
Class A Certificate Rate in effect with respect to such Interest Period, times
(iii) the aggregate amount on deposit in the Principal Account with respect to
Class A Monthly Principal as of the Record Date preceding such Distribution
Date, plus (b) the product of (i) a fraction, the numerator of which is the
actual number of days in such Interest Period and the denominator of which is
360, times (ii) the Class B Certificate Rate in effect with respect to such
Interest Period times (iii) the aggregate amount on deposit in the Principal
Account with respect to Class B Monthly Principal as of the Record Date
preceding such Distribution Date, plus, (c) the product of (i) a fraction, the
numerator of which is the actual number of days in such Interest Period and the
denominator of which is 360, times (ii) the CTO Rate in effect with respect to
such Interest Period, times (iii) the aggregate
-14-
<PAGE>
amount on deposit in the Principal Account with respect to CTO Monthly Principal
as of the Record Date preceding such Distribution Date.
"CTO Account Percentage" means, with respect to any
----------------------
Determination Date, the percentage equivalent of a fraction, the numerator of
which is the aggregate amount on deposit in the Principal Account with respect
to CTO Monthly Principal and the denominator of which is the aggregate amount on
deposit in the Principal Account, in each case as of the last day of the
preceding Monthly Period.
"CTO Additional Interest" shall have the meaning specified in
-----------------------
Section 4.3 (c).
"CTO Adjusted Investor Amount" shall mean, on any date of
----------------------------
determination, an amount equal to the CTO Investor Amount, minus the excess of
the Principal Account Balance over the sum of the Class A Investor Amount and
the Class B Investor Amount, if any, on such date (up to the CTO Investor
Amount), but in no event shall the CTO Adjusted Investor Amount be less than
zero.
"CTO Adjustment Amount" shall mean, with respect to each
---------------------
Distribution Date, an amount equal to the product of (i) the Series Adjustment
Amount for Series 1999-1 with respect to the related Monthly Period and (ii) the
percentage equivalent of a fraction the numerator of which is the CTO 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.
"CTO Allocable Amount" shall mean, with respect to any
--------------------
Distribution Date, the sum of the CTO Default Amount and the CTO Adjustment
Amount.
"CTO Available Funds" means, with respect to any Monthly Period,
-------------------
an amount equal to the sum of (i) the applicable CTO Investor Percentage of the
Collections of Finance Charge Receivables with respect to such Monthly Period
and any other amounts that are to be treated as Collections of Finance Charge
Receivables, (ii) an amount equal to the product of (a) the CTO Account
Percentage and (b) the earnings (net of losses and investment expenses), if any,
earned on the Principal Account with respect to such Monthly Period, and (iii)
the amount, if any, to be withdrawn from the Reserve Account and included in CTO
Available Funds pursuant to Section 4.14(d).
"CTO Charge Off" shall have the meaning provided in Section
--------------
4.7(c).
-15-
<PAGE>
"CTO Default" means either of the following events: (i)
-----------
accrued but unpaid CTO Monthly Interest is not paid in full to the CTO Holders
on two consecutive Distribution Dates; or (ii) there is a charge off with
respect to the Collateralized Trust Obligations on three consecutive
Distribution Dates. If one CTO Monthly Interest payment is not paid in full, the
Servicer shall promptly notify the Rating Agencies.
"CTO Default Amount" shall mean, with respect to any
------------------
Distribution Date, an amount equal to the product of (i) the CTO Investor
Percentage applicable to Allocable Amounts with respect to such Monthly Period
and (ii) the Default Amount for such Monthly Period.
"CTO Holder" shall mean any Person in whose name a
----------
Collateralized Trust Obligation is registered in the Certificate Register.
"CTO Initial Investor Amount" shall mean the aggregate initial
---------------------------
principal amount of the Collateralized Trust Obligations, which is $45,400,000.
"CTO Interest Shortfall" shall have the meaning provided in
----------------------
Section 4.3(c).
"CTO Investor Amount" means, on any date of determination, an
-------------------
amount equal to (a) the CTO Initial Investor Amount equal to $45,400,000 minus
(b) the aggregate amount of principal payments made to the CTO Holders on or
prior to such date, minus (c) the amount of CTO Subordinated Principal
Collections used to make payments in respect of the Class A Certificates and
Class B Certificates on all prior Distribution Dates that have resulted in a
reduction of the CTO Investor Amount, minus (d) an amount equal to the amount by
which the CTO Investor Amount has been reduced on all prior Distribution Dates
in respect of the Class A Allocable Amount, the Class B Allocable Amount and the
CTO Allocable Amount, plus (e) the sum of the amount of Excess Spread and Shared
Excess Finance Charge Collections allocated and available on all prior
Distribution Dates 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 Amount allocable to the CTO Investor
Amount; provided, however, that the CTO Investor Amount may not be reduced below
zero.
"CTO Investor Percentage" shall be calculated by substituting
-----------------------
the CTO Adjusted Investor Amount and the CTO Initial Investor Amount in all
references to the Adjusted Investor Amount and the Initial Investor Amount,
respectively, in the definition of Investor Percentage.
"CTO Monthly Interest" shall have the meaning specified in
--------------------
Section 4.3(c).
-16-
<PAGE>
"CTO Monthly Principal" shall have the meaning specified in
---------------------
Section 4.4(c).
"CTO Penalty Rate" shall mean the sum of the CTO Rate for the
----------------
related Interest Period and 2.00% per annum.
"CTO Pool Factor" shall mean the seven-digit decimal, which the
---------------
Servicer will compute monthly, expressing as of each Record Date, the CTO
Investor Amount as a proportion of the CTO Investor Amount as of the Closing
Date, which initially shall be 1.0000000.
"CTO Rate" shall have the per annum rate specified in Exhibit D
-------- ---------
hereto.
"CTO Required Amount" shall have the meaning specified in
-------------------
Section 4.5(c).
"CTO Servicing Fee" shall have the meaning specified in Section G
-----------------
hereof.
"CTO Subordinated Principal Collections" means, with respect to
--------------------------------------
any Monthly Period, an amount equal to the product of (i) the applicable CTO
Investor Percentage with respect to Collections of Principal Receivables and
(ii) the aggregate amount of Collections of Principal Receivables for such
Monthly Period.
"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 Accumulation Period, the excess, if
any, of the Controlled Accumulation Amount for such Distribution Date over the
amount deposited into the Principal Account for such Distribution Date, and (b)
on each subsequent Distribution Date with respect to the 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 for such subsequent Distribution Date.
"Duff & Phelps" shall mean Duff & Phelps Credit Rating Co.
-------------
"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.
-17-
<PAGE>
"Excess Spread Percentage" means, for any Monthly Period, the
------------------------
amount (expressed as a percentage), if any, by which (i) the Portfolio Yield
(including for this purpose, any Shared Excess Finance Charge Collections
allocated to Series 1999-1 during such Monthly Period, but excluding Discount
Option Receivables Collections generated by using a Discount Percentage in
excess of 1%) for such Monthly Period exceeds (ii) the Base Rate for such
Monthly Period.
"Expected Payment Date" shall mean the July 15, 2002 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 1999-1 Certificates, which is $378,375,000.
"Interest Period" shall mean, with respect to any Distribution
---------------
Date, the period beginning on 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 and the Collateral Interest 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. The Servicer
will calculate the Investor Default Amount on each Determination Date for the
preceding Monthly Period. The Investor Default Amount will be allocated among
the Class A Investor Default Amount, the Class B Investor Default Amount and the
Collateral Interest Default Amount.
"Investor Monthly Servicing Fee" shall have the meaning
------------------------------
specified in Section G hereof.
"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
-18-
<PAGE>
immediately preceding Monthly Period (or the Initial Investor Amount, in
the case of the first Monthly Period applicable to Series 1999-1) and the
denominator of which is the greater of (i) the sum of the Aggregate
Principal Receivables and the amount in the Excess Funding Account, 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 Amounts, 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
during a Rapid Amortization 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 Revolving Period and the denominator of which is the
greater of (i) the sum of the Aggregate Principal Receivables and the
amount in the Excess Funding Account, 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 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 Adjusted 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
amount in the Excess Funding Account, 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 1999-1 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, the Servicer and the Rating Agencies,
designate a different numerator to be used to determine such percentage,
(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).
"LIBOR" means, as of any LIBOR Determination Date, the rate for
-----
deposits in United States dollars for a one-month period which appears on
Telerate Page 3750 as of 11:00 A.M., London time, on such date. If such rate
does not appear on Telerate Page 3750, the rate for that LIBOR Determination
Date will be determined on the basis of the rates at which deposits in United
-19-
<PAGE>
States dollars are offered by the Reference Banks at approximately 11:00 A.M.,
London time, on that day to prime banks in the London interbank market for a
onemonth period. The Trustee will request the principal London office of each of
the Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that LIBOR Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are provided,
the rate for that LIBOR Determination Date will be the arithmetic mean of the
rates quoted by four major banks in New York City, selected by the Servicer, at
approximately 11:00 A.M., New York City time, on that day for loans in United
States dollars to leading European banks for a one-month period.
"LIBOR Determination Date" shall mean July 19, 1999 for the
------------------------
period from and including the Closing Date through but excluding August 16,
1999, August 12, 1999 for the period from and including August 16, 1999 through
but excluding September 15, 1999, and for each Interest Period thereafter, on
the second London business day prior to the Distribution Date on which such
Interest Period commences.
"London business day" means any business day on which dealings
-------------------
in deposits in United States dollars are transacted in the London interbank
market.
"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 and
the CTO 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
------------------------
the Monthly Period, the Portfolio Yield with respect to such Monthly Period
minus 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 Series 1999-1 for such
Monthly Period (provided, however, that Shared Excess Finance Charge Collections
will be included in Portfolio Yield only to the extent that the Rating Agency
Condition with respect to Standard & Poor's is satisfied), 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) the amount of funds
withdrawn from the Reserve Account minus (iv) an amount equal to the Default
Amount allocable to Series 1999-1 for such Monthly Period, and the
-20-
<PAGE>
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).
"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
1999-1 has occurred, and ending on the first to occur of (a) the payment in full
of the Investor Amount or (b) the Stated Series Termination Date.
"Rating Agencies" shall mean Moody's, Standard & Poor's, Duff &
---------------
Phelps, 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 and Collateral Subordinated Principal Collections for such Monthly
Period.
"Reference Banks" shall mean four major banks in the London
---------------
interbank market selected by the Servicer.
"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 Draw Amount" shall have the meaning specified in
--------------------
Section 4.12(c).
"Required Reserve Account Amount" shall mean, with respect to
-------------------------------
any Distribution Date prior to the Reserve Account Funding Date, zero, and on or
after the Reserve Account Funding Date, an amount not less than (a) 1.50% of
-21-
<PAGE>
the 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,
and (ii) 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 1999-1.
"Required Spread Account Amount" shall mean as of any date of
------------------------------
determination an amount equal to the product of (i) the Required Spread Account
Percentage as shown in the following table, and (ii) the Investor Amount;
provided that the Required Spread Account Amount for the August 16, 1999
Distribution Date shall be zero.
<TABLE>
<CAPTION>
- --------------------------------------------------------
Average Required
Excess Spread
Spread Account
Percentage Percentage
- --------------------------------------------------------
<S> <C>
(greater than or equal to) 5.5% 0%
- --------------------------------------------------------
(greater than or equal to) 4.0% and 1.5%
(less than) 5.5%
- --------------------------------------------------------
(greater than or equal to) 3.5% and 2.0%
(less than) 4.0%
- --------------------------------------------------------
(less than) 3.5% 4.0%
- --------------------------------------------------------
</TABLE>
No amounts shall be held in the Spread Account as of the Closing Date.
"Required Spread Account Percentage" shall mean, as of any
----------------------------------
Distribution Date, the respective percentages specified above under the
definition of "Required Spread Account Amount" that are applied to the Investor
Amount as of the end of the preceding Monthly Period. Any reduction in the
Required Spread Account Percentage resulting from an increase in the Average
Excess Spread Percentage will not take effect until the amount on deposit in the
Spread Account is greater than or equal to the Required Spread Account Amount
for three consecutive Distribution Dates (in which case such reduction will take
effect on the third of such Distribution Dates).
"Reserve Account" shall have the meaning specified in Section
---------------
4.14(a).
-22-
<PAGE>
"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 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
Accumulation Commencement Monthly Period if the average of the Portfolio
Adjusted Yields for any three (3) consecutive Monthly Periods shall be less than
6.00%; (b) the Distribution Date with respect to the Monthly Period which
commences no later than six (6) months prior to the Accumulation Commencement
Monthly Period if the average of the Portfolio Adjusted Yields for any three (3)
consecutive Monthly Periods shall be less than 3.00%; or (c) the Distribution
Date which commences no later than nine (9) months prior to the Accumulation
Commencement Monthly Period if the average of the Portfolio Adjusted Yields for
any three (3) consecutive Monthly Periods shall be less than 2.00%.
"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.
"Reserve Draw Amount" shall mean, with respect to each
-------------------
Distribution Date relating to the Accumulation Period and the first Special
Distribution Date, an amount equal to the excess, if any, of the Covered Amount
with respect to such Distribution Date or Special Distribution Date over the
Principal Funding Investment Proceeds for such Distribution Date or Special
Distribution Date.
"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 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 Cut-Off Date" shall mean June 28, 1999.
-------------------
"Series 1999-1" shall mean the Series established hereby, and
-------------
the terms of which are specified in this Series Supplement.
-23-
<PAGE>
"Series 1999-1 Certificate" shall mean the Class A Certificates,
-------------------------
the Class B Certificates, the Collateralized Trust Obligations and the Class D
Certificates.
"Series 1999-1 Certificateholder" shall mean a Class A
-------------------------------
Certificateholder, a Class B Certificateholder, a CTO Holder, or a Class D
Certificateholder.
"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 on the
last day of the immediately preceding Monthly Period.
"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 herein as "Shared Principal Collections" pursuant to Section 4.6(e) and
Section 4.6(f)(v) and in 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.
"Spread Account" shall have the meaning specified in Section
--------------
4.12(a).
"Stated Series Termination Date" shall mean the December 15,
------------------------------
2005 Distribution Date.
"Telerate Page 3750" shall mean the display page currently so
------------------
designated on the 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 reasury and any successor Governmental Authority thereto.
-24-
<PAGE>
Section C. Minimum Transferor Interest Percentage. The Minimum Transferor
--------------------------------------
Interest Percentage applicable to the Series 1999-1 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 2.00% of the
Investor Amount and the Minimum Transferor Interest Percentage is less than
---
2.00%, 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 2.00% 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 2.00% without causing the
Transferor Amount to be less than the Minimum Transferor Amount and (ii) upon
compliance with clause (i), designate 2.00% 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 4.00%; provided, however,
that such lower percentage may not be less than 2.00% 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 2.00%.
Section D. Optional Purchase; Reassignment and Transfer Terms. All the
--------------------------------------------------
Series 1999-1 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, and the portion of the
Collateral Interest Adjusted 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
Initial Investor Amount, the Class B Initial Investor Amount, and the portion of
the maximum amount of the Collateral Interest Amount held by parties other than
the Transferor or any of its affiliates since the Closing Date. The repurchase
price for the Series 1999-1 Certificates will be equal to (a) the Adjusted
Investor Amount, plus (b) accrued and unpaid interest on the 1999-1
Certificates, less (c) the amount held in the Collection Account allocable to
Series
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<PAGE>
1999-1 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
Section 12.2 of the Agreement.
Section E. Delivery and Payment for the Certificates. The Trustee shall
-----------------------------------------
deliver the Series 1999-1 Certificates when authenticated in accordance with
Section 6.2 of the Agreement. The Collateralized Trust Obligations and the
Class D Certificates have not been registered under the Securities Act or any
state or foreign securities laws, and shall bear legends appropriately limiting
their transfer in accordance herewith and applicable securities laws.
Section F. Form of Delivery of the Series 1999-1 Certificates. The Class A
--------------------------------------------------
Certificates, the Class B Certificates and the Collateralized Trust Obligations
shall be delivered as provided in Section 6.11 of the Agreement. The Class A
Certificates, the Class B Certificates and the Collateralized Trust Obligations
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.
Section G. Servicing Compensation. The share of the Monthly Servicing Fee
----------------------
allocable to the Series 1999-1 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 and the Collateral Interest Adjusted 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 $231,229. 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 $171,111. 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) one-twelfth (/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 $18,501. The
share of the Investor Monthly Servicing Fee allocable to the Collateral Interest
with respect to any Distribution Date (the "Collateral Interest Servicing Fee")
---------------------------------
shall be equal to the product of (a) one-twelfth (/1//12th) of the Servicing Fee
Percentage and (b) the Collateral Interest Adjusted Amount; provided, however,
that with respect to the first Distribution Date, the Collateral Interest
Servicing Fee shall be equal to $41,617. The Collateral Interest Servicing Fee
shall be subdivided into the CTO Servicing Fee and the Class D Servicing Fee.
The share of the Collateral Interest Servicing Fee
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<PAGE>
allocable to the CTO Holders (the "CTO Servicing Fee") with respect to any
-----------------
Distribution Date shall be equal to one-twelfth (/1//12th) of the product of (a)
the Servicing Fee Percentage and (b) the CTO Adjusted Investor Amount; provided,
however, with respect to the first Distribution Date, the CTO Servicing Fee
shall be equal to $27,744. The share of the Collateral Interest Servicing Fee
allocable to the Class D Certificateholders (the "Class D Servicing Fee") with
---------------------
respect to any Distribution Date shall be equal to one-twelfth (/1//12th) of the
product of (a) the Servicing Fee Percentage and (b) the Class D Adjusted
Investor Amount; provided, however, with respect to the first Distribution Date,
the Class D Servicing Fee shall be equal to $13,873.
The Class A Servicing Fee, the Class B Servicing Fee and the Collateral
Interest Servicing Fee (including the CTO 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 1999-1 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 1999-1 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 1999-1 shall read in its entirety as
follows:
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<PAGE>
ARTICLE IV
Rights of Series 1999-1 Certificateholders and
----------------------------------------------
Allocation and Application of Collections
-----------------------------------------
Section 4.2. Collections and Allocations.
----------------------------
(a) 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 Series 1999-1 as described in this Article IV. Provided that daily deposits
of Collections into the Collection Account are required pursuant to Section
4.1(f) of the Agreement, the applicable Investor Percentage of Finance Charge
Collections shall be deposited into the Collection Account on a daily basis. If
the amount on deposit in the Collection Account in respect of the applicable
Investor Percentage of Finance Charge Collections is less than the sum of: (I)
the sum of Class A Monthly Interest, Class B Monthly Interest and CTO Monthly
Interest due on the next succeeding Distribution Date, (II) if Saks is no longer
the Servicer, the Servicing Fee due on the next succeeding Distribution Date,
and (III) an amount equal to the product of (a) the Default Amount allocated to
Series 1999-1 for the immediately preceding Monthly Period and (b) a factor of
1.80, or such lesser factor as may be determined by the Servicer subject to the
Rating Agency Condition with respect to Standard & Poor's, then Class B
Subordinated Principal Collections and Collateral Subordinated Principal
Collections shall also be deposited into the Collection Account until such time
that such deficiency is eliminated.
(b) During the Revolving Period, so long as the Collateral Interest
Adjusted Amount divided by the Adjusted Investor Amount is greater than or equal
to 18%, Collections of Principal Receivables allocable to Series 1999-1, other
than the amounts described in subsection 4.2(a), 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
allocable to Series 1999-1 (other than amounts deposited pursuant to the
preceding paragraph) 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 Collections of Principal Receivables shall be deposited
into the Collection Account on a daily basis until (unless otherwise required
herein) such time that the sum of the Aggregate Principal Receivables and the
Excess Funding Amount is greater than or equal to the Aggregate Adjusted
Investor Amount.
(c) During the Accumulation Period, so long as the Collateral Interest
Adjusted Amount divided by the Adjusted Investor Amount is greater than or equal
to 18%, after an amount of Collections of Principal Receivables allocable to
Series 1999-1 equal to the Controlled Deposit Amount with respect to each
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<PAGE>
Monthly Period has been deposited into the Collection Account, Collections of
Principal Receivables allocable to Series 1999-1 with respect to each Monthly
Period need not be deposited into the Collection Account on a daily basis during
such Monthly Period (subject to the provisions of subsection 4.2(a)); provided,
however, that in the event that the Minimum Transferor Amount exceeds the
Transferor Amount on any date, such remaining 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
Collections of Principal Receivables shall be deposited into the Collection
Account on a daily basis until (unless otherwise required herein) such time that
the sum of the Aggregate Principal Receivables and the Excess Funding Amount is
greater than or equal to the Aggregate Adjusted Investor Amount.
(d) Notwithstanding any of the foregoing provisions of this Section 4.2,
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 the product of
(i) the Class A Certificate Rate for the related Interest Period, (ii) the
actual number of days in such Interest Period divided by 360, and (iii) 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 $1,092,000.00.
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 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 but excluding the Distribution Date on which such Class A Interest Shortfall
is paid to Class A Certificateholders. Such Class A Additional Interest shall be
calculated in the same manner as Class A Monthly Interest. 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.
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<PAGE>
(b) The amount of monthly interest ("Class B Monthly Interest")
------------------------
distributable from the Collection Account with respect to the Class B
Certificates on any Distribution Date shall be an amount equal to the product of
(i) the Class B Certificate Rate for the related Interest Period, (ii) the
actual number of days in such Interest Period divided by 360, and (iii) 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 $122,664.21.
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 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 but excluding the Distribution Date on which such Class B Interest Shortfall
is paid to Class B Certificateholders. Such Class B Additional Interest shall be
calculated in the same manner as Class B Monthly Interest. 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 ("CTO Monthly Interest")
--------------------
distributable from the Collection Account with respect to the Collateralized
Trust Obligations on any Distribution Date shall be an amount equal to the
product of (i) the outstanding principal amount of the Collateralized Trust
Obligations as of the preceding Record Date, (ii) the CTO 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 CTO Monthly
Interest shall be equal to the amount specified in Exhibit D hereto.
-------
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "CTO Interest Shortfall"), of
----------------------
(x) the CTO Monthly Interest for such Distribution Date over (y) the aggregate
amount of funds allocated and available to pay such CTO Monthly Interest on such
Distribution Date. If the CTO Interest Shortfall with respect to any
Distribution Date is greater than zero, an additional amount ("CTO Additional
--------------
Interest") equal to the product of (i) the CTO Penalty Rate for the related
- --------
Interest Period, and (ii) such CTO Interest Shortfall (or the portion thereof
which has not theretofore been paid to the CTO Holders) shall be payable as
provided herein
-30-
<PAGE>
with respect to the Collateralized Trust Obligations on each Distribution Date
following such Distribution Date to but excluding the Distribution Date on which
such CTO Interest Shortfall is paid to the CTO Holders. Such CTO Additional
Interest shall be calculated in the same manner as CTO Monthly Interest.
Notwithstanding anything to the contrary herein, CTO Additional Interest shall
be payable or distributed to the Holder only to the extent permitted by
applicable law.
(d) Since the Class D Monthly Interest is zero, no monthly interest
shall be distributable from the Collection Account with respect to the Class D
Certificates on any Distribution Date.
Section 4.4 Determination of Monthly Principal.
----------------------------------
(a) During the Amortization Period, the amount of monthly principal
("Class A Monthly Principal") distributable to Class A Certificateholders
-------------------------
(during the Rapid Amortization Period) or available for deposit into the
Principal Account (during the Accumulation Period), from the Collection Account
with respect to the Class A Certificates on each Distribution 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, (y) for each Distribution Date with respect to the
Accumulation Period, 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 to Class B Certificateholders (during the Rapid Amortization
Period) or available for deposit into the Principal Account (during the
Accumulation Period) from the Collection Account with respect to the Class B
Certificates on each Distribution Date relating to an Amortization Period,
beginning with the Distribution Date on which an amount equal to the Class A
Investor Amount has been deposited into the Principal Account (after taking into
account deposits to be made on such Distribution Date), or with respect to any
Distribution Date relating to the Rapid Amortization Period, beginning with the
Distribution Date on which the Class A Certificates will be paid in full (after
taking into account payments to be made on such Distribution Date), shall be
equal to the least of (i) the Available Principal Collections on deposit in the
Principal Account with respect to such Distribution Date (minus the portion of
such Available Principal Collections applied to Class A Monthly Principal on
such Distribution Date), (ii) for each Distribution Date with respect to the
Accumulation Period, the Controlled Deposit Amount for such Distribution Date
(minus the Class A Monthly Principal with respect to such Distribution Date) and
(iii) the Class B Adjusted Investor Amount prior to any deposits on such
Distribution Date.
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<PAGE>
(c) The amount of monthly principal ("CTO Monthly Principal")
---------------------
distributable to CTO Holders (during the Rapid Amortization Period) or available
for deposit into the Principal Account from the Collection Account (during the
Accumulation Period) with respect to the Collateralized Trust Obligations on
each Distribution Date relating to an Amortization Period, beginning with the
Distribution Date on which an amount equal to the Class A Investor Amount and
the Class B Investor Amount has been deposited into the Principal Account (after
taking into account deposits to be made on such Distribution Date), or with
respect to any Distribution Date relating to the Rapid Amortization Period
beginning with the Distribution Date on which the Class A Certificates and the
Class B Certificates will be paid in full (after taking into account payments to
be made on such Distribution Date), shall be equal to the least of (i) the
Available Principal Collections on deposit in the Collection Account and
available for distribution with respect to such Distribution Date (minus the
portion of such Available Principal Collections applied to Class A Monthly
Principal and Class B Monthly Principal on such Distribution Date), (ii) for
each Distribution Date with respect to the Accumulation Period, the Controlled
Deposit Amount for such Distribution Date (minus the sum of the Class A Monthly
Principal and the Class B Monthly Principal with respect to such Distribution
Date) and (iii) the CTO Adjusted Investor Amount prior to any deposits on such
Distribution Date.
(d) The amount of monthly principal ("Class D Monthly Principal")
-------------------------
distributable to Class D certificateholders (during the Rapid Amortization
Period) or available for deposit into the Principal Account from the Collection
Account (during the Accumulation Period) with respect to the Class D
Certificateholders on each Distribution Date relating to an Amortization Period,
beginning with the Distribution Date on which an amount equal to the sum of the
Class A Investor Amount, the Class B Investor Amount and the CTO Investor Amount
has been deposited into the Principal Account (after taking into account
deposits to be made on such Distribution Date), or with respect to any
Distribution Date relating to the Rapid Amortization Period beginning with the
Distribution Date on which the Class A Certificates, the Class B Certificates,
and the Collateralized Trust Obligations will be paid in full (after taking into
account payments to be made on such Distribution Date), shall be equal to the
least of (i) the Available Principal Collections on deposit in the Collection
Account and available for distribution with respect to such Distribution Date
(minus the portion of such Available Principal Collections applied to Class A
Monthly Principal, Class B Monthly Principal and CTO Monthly Principal on such
Distribution Date), (ii) for each Distribution Date with respect to the
Accumulation Period, the Controlled Deposit Amount for such Distribution Date
(minus the sum of the Class A Monthly Principal, the Class B Monthly Principal
and CTO Monthly Principal with respect to such Distribution Date) and (iii) the
Class D Adjusted Investor Amount prior to any deposits on such Distribution
Date.
Section 4.5 Required Amounts.
----------------
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<PAGE>
(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 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 Saks
is no longer the Servicer, the Class A 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
Class A 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 1999-1 pursuant to Section 4.1(i) of the Agreement and Section 4.8(m)
hereof 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 1999-1 with respect to the related Monthly Period, 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 Saks 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 1999-1 pursuant to Section 4.1(i) of the Agreement and Section 4.8(m)
hereof with respect to the
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<PAGE>
related Monthly Period shall be distributed from the Collection Account on such
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 portion of 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
Collection) 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 "CTO Required Amount"), if any, equal to the sum of (x) the amount,
-------------------
if any, by which the sum of (i) CTO Monthly Interest for the following
Distribution Date, (ii) any CTO Monthly Interest previously due but not paid to
the CTO Holders on a prior Distribution Date, (iii) any CTO Additional Interest
for the following Distribution Date and any CTO Additional Interest previously
due but not paid to the CTO Holders on a prior Distribution Date and (iv) if
Saks is no longer the Servicer, the CTO Servicing Fee for the related
Distribution Date and the amount of any CTO 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),
4.8(g) and 4.8(h) with respect to the preceding Monthly Period and (y) the
amount, if any, by which the CTO Allocable Amount, if any, for such Distribution
Date exceeds the amount available to make payments with respect thereto pursuant
to Section 4.8(i). In the event that the CTO Required Amount for such
Distribution Date is greater than zero, the Servicer shall give written notice
to the Trustee of such positive CTO 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 1999-1 pursuant to Section 4.1(i) of the
Agreement and Section 4.8(m) hereof with respect to the related Monthly Period
shall be distributed from the Collection Account on such Distribution Date
pursuant to Sections 4.8(g), (h) and (i), and any remaining CTO Required Amount
shall be drawn from the Spread Account pursuant to Section 4.12 on such
Distribution Date. In the event that the CTO Required Amount for such
Distribution Date exceeds such portion of the amounts distributed pursuant to
the previous sentence, then Class D Subordinated Principal Collections not
required to fund the Class A Required Amount and the Class B Required Amount in
an amount equal to such excess shall be distributed from the Collection Account
on such Distribution Date.
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<PAGE>
Section 4.6 Application of Class A Available Funds, Class B Available
---------------------------------------------------------
Funds, CTO 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, CTO
Available Funds, Class D Available Funds and Collections of Principal
Receivables allocable to Series 1999-1 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 Saks 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, if any, for
such Distribution Date shall be treated as a portion of
Available Principal Collections allocable to Series 1999-1 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
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<PAGE>
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 Certificateholders on a prior
Distribution Date, shall be distributed to the Paying Agent for
payment to the Class B Certificateholders;
(ii) if Saks 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, CTO Available Funds with respect to
the Monthly Period immediately preceding such Distribution Date shall be applied
in the following priority:
(i) if Saks is no longer the Servicer, an amount equal to the CTO
Servicing Fee for such Distribution Date, plus the amount of
any CTO 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 Saks 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 treated as "Shared
------
-36-
<PAGE>
Principal Collections" with respect to Group One to be applied in accordance
- ---------------------
with Section 4.1(h) (and 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 Accumulation Period, be
deposited in the Principal Account for payment to Class A
Certificateholders on the earlier to occur of the 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 Accumulation Period, after
an amount equal to the Class A Investor Amount has been
deposited in the Principal Account, be deposited in the
Principal Account for payment to Class B Certificateholders on
the earlier to occur of the 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 after the Class A Investor Amount
has been paid in full;
(iii) an amount equal to CTO Monthly Principal for such Distribution
Date shall, during the Accumulation Period, after an amount
equal to the sum of the Class A Investor Amount and Class B
Investor Amount has been deposited in the Principal Account, be
deposited in the Principal Account for payment to CTO Holders
on the earlier to occur of the 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 CTO Holders after the Class A Investor Amount
and the Class B Investor Amount have been paid in full;
(iv) an amount equal to Class D Monthly Principal for such
Distribution Date shall, during the Accumulation Period, after
an amount equal to the sum of the Class A Investor Amount,
Class B Investor Amount and the CTO Investor Amount has been
deposited in the Principal Account, be deposited in the
Principal Account for payment to Class D
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Certificateholders on the earlier to occur of the 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 D Certificateholders after the
Class A Investor Amount, the Class B Investor Amount and the
CTO Investor Amount have been paid in full; 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 amount of the Excess Spread and the Shared Excess
Finance Charge Collections allocable to Series 1999-1 with respect to such
Distribution Date and (y) the amount of Reallocated Principal Collections
available pursuant to Section 4.9(a) with respect to the preceding Monthly
Period, the Collateral Interest Amount (after giving effect to any reduction
thereof pursuant to this Section 4.7) 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 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 Interest Amount to be a negative
number, the Collateral Interest Amount shall be reduced to zero and the Class B
Investor Amount (after giving effect to any reduction thereof pursuant to this
Section 4.7) shall be reduced by the amount by which the Collateral Interest
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 Interest Amount
with respect to such Distribution Date and the amount of Excess Spread and
Shared Excess Finance Charge Collections 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 Collateral Interest
Amount and the Class B Investor Amount for such Distribution Date and the
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amount of Excess Spread and Shared Excess Finance Charge Collections and the
amount of Reallocated Principal Collections used to fund the Class A 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 aggregate amount of the reductions of the Series Adjustment
Amounts allocable to the Class A Investor Amount pursuant to Section 4.7(e).
(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 1999-1 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 and (y) the amount
of Reallocated Principal Collections (exclusive of Class B Subordinated
Principal Collections) which are available to fund the Class B Required Amount
on such Distribution Date pursuant to Section 4.9(b), then the Collateral
Interest Amount (after giving effect to any reduction thereof pursuant to this
Section 4.7) 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 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 Interest Amount to be a negative number, the Collateral Interest
Amount shall be reduced to zero, and the Class B Investor Amount shall be
reduced by the amount by which the Collateral Interest 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 Interest Amount with respect to such
Distribution Date and the amount of Excess Spread and Shared Excess Finance
Charge Collections 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(f), and (ii) 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(e).
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(c) If, on any Distribution Date, the CTO Required Amount exceeds the
amount of the Excess Spread and the Shared Excess Finance Charge Collections
allocable to Series 1999-1 with respect to such Distribution Date which are not
used to fund the Class A Required Amount, Class A Investor Charge Offs, Class B
Required Amount, Class B Investor Charge Offs and the Reserve Account on the
related Distribution Date and the amounts, if any, in the Spread Account
available for the sole benefit of the Collateral Trust Obligations, then the
Collateral Interest Amount 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 and the amount withdrawn from the Spread Account and used to
fund the Collateral Allocable Amount for such Distribution Date. Collateral
Charge Offs shall be allocated first to the Class D Investor Amount, and the
Class D Investor Amount shall be reduced by such amount, but not by an amount in
excess of the Class D Investor Amount prior to such allocation ("Class D
-------
Investor Charge Off"). Any excess of the Collateral Charge Off over the Class D
- -------------------
Investor Charge Off shall then be allocated to the CTO Investor Amount in
reduction of the CTO Investor Amount ("CTO Charge Off"). Collateral Charge Offs
--------------
shall thereafter be reimbursed and the Collateral Investor Amount increased (but
not by an amount in excess of the aggregate unreimbursed Collateral 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(j), and (ii) without duplication, the aggregate amount of the
reductions of the Series Adjustment Amounts allocable to the Collateral Interest
Amount pursuant to Section 4.7(e). Collateral Charge Off reimbursements shall
be allocated first to the CTO Investor Amount and second to the Class D Investor
Amount in reimbursement thereof.
(d) Whenever funds or other amounts are available hereunder in
respect of the Class A Allocable Amount, the Class B Allocable Amount, or the
Collateral 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.
(e) Any reduction of the Series Adjustment Amount for Series 1999-1
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 Interest,
in each case to the extent of any unreimbursed reduction of the Investor Amount
thereof attributable to Series Adjustment Amounts.
(f) Any reduction or charge off of the Collateral Interest Amount
described within this Section 4.7 shall be allocated first to reduce the Class D
Investor Amount to not less than zero, and any remaining reductions of the
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Collateral Interest Amount shall be allocated to reduce the CTO Investor Amount
to not less than zero.
(g) Any reimbursements of the Collateral Interest Amount described
within this Section 4.7 shall be allocated first to the CTO Investor Amount in
reimbursement thereof, and any remaining reimbursements of the Collateral
Interest Amount thereafter shall be allocated to the Class D Investor Amount in
reimbursement thereof.
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 and Shared Excess Finance Charge Collections
allocable to Series 1999-1 pursuant to Section 4.1(i) with respect to the
related Monthly Period, in the following priority:
(a) an amount up to the Class A Required Amount, if any, with respect
to such Distribution Date shall be used 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 1999-1 for such
Distribution Date;
(c) an amount up to the Class B Required Amount, if any, with respect
to such Distribution Date shall be used to fund any deficiency pursuant to
Sections 4.6(b)(i) and (ii), in that order of priority;
(d) an amount equal to the Class B Allocable Amount for such
Distribution Date shall be treated as a portion of Available Principal
Collections allocable to Series 1999-1 for such Distribution Date;
(e) 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;
(f) an amount equal to unreimbursed reductions of the Class B
Investor Amount, if any, due to (i) Class B Investor Charge Offs; (ii)
allocations of Reallocated Principal Collections for the benefit of the Class A
Certificates on all prior Distribution Dates that have resulted in a reduction
of the Class B Investor Amount; or (iii) reallocations of the Class B Investor
Amount to the Class A Investor Amount as a result of unfunded Class A Allocable
Amounts shall each be treated as a portion of Available Principal Collections
allocable to Series 1999-1 for such Distribution Date;
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(g) an amount equal to CTO Monthly Interest for such Distribution
Date, plus the amount of CTO Monthly Interest previously due but not distributed
to the CTO Holders on all prior Distribution Dates, plus the amount of CTO
Additional Interest for such Distribution Date and any CTO Additional Interest
previously due but not distributed to the CTO Holders shall be distributed to
the CTO Holders;
(h) an amount equal to the Class A Servicing Fee, the Class B
Servicing Fee and the Collateral Servicing Fee for such Distribution Date (or if
Saks 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
all prior Distribution Dates, shall be distributed to the Servicer;
(i) an amount equal to the Collateral Interest Allocable Amount for
such Distribution Date shall be treated as a portion of Available Principal
Collections allocable to Series 1999-1 for such Distribution Date (allocable
first to cover the CTO Allocable Amount and allocable second to cover the Class
D Allocable Amount);
(j) an amount equal to the unreimbursed reductions of the Collateral
Interest Amount, if any, due to: (i) Collateral Interest Charge Offs; (ii)
Reallocated Principal Collections used to make payments in respect of the Class
A and Class B Certificates on all prior Distribution Dates that have resulted in
a reduction of the Collateral Interest Amount and (iii) reallocations of the
Collateral Interest Amount to the Class A Investor Amount or the Class B
Investor Amount as a result of unfunded Class A Allocable Amounts or unfunded
Class B Allocable Amounts, respectively, will be treated as a portion of
Available Principal Collections allocable to Series 1999-1 for such
Distribution Date (and with such amount allocable first to the CTO Allocable
Amount and second to the Class D Allocable Amount);
(k) an amount equal to the excess, if any, of the Required Spread
Account Amount over the amount held in the Spread Account shall be deposited
into the Spread Account;
(l) an amount equal to the aggregate of any other amounts, if any,
due to the Collateral Interest; and
(m) 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 Class D Subordinated Principal
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Collections prior to applying any CTO Subordinated Principal Collections, and
applying all CTO Subordinated Principal Collections prior to applying any Class
B Subordinated Principal Collections, and applying no Class B 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
CTO Subordinated Principal Collections with respect to the CTO 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 the amount of Excess Spread and Shared Excess Finance Charge Collections
allocable to Series 1999-1 and applied with respect to the Class A Required
Amount with respect to the related Monthly Period 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 excess, if any, of the Class B Required
Amount, if any, with respect to such Distribution Date over the amount of Excess
Spread and Shared Excess Finance Charge Collections allocable to Series 1999-1
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
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 1999-1 with respect to the related Monthly
Period available in respect of the Collateral Required Amount pursuant to
Sections 4.8(g) and (i) on such Distribution Date and (y) the amounts withdrawn
from the Spread Account in respect of the CTO 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(g) and (i), in that
order of priority.
Section 4.10 Principal Shortfall. The "Principal Shortfall" for Series
------------------- -------------------
1999-1 shall be equal to (a) for any Distribution Date with respect to the
Revolving Period, zero, (b) for any Distribution Date with respect to the
Accumulation Period (on or prior to the 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),
and (c) for each Distribution Date with respect to a Rapid Amortization Period,
unless and until the Class D Investor Amount has been paid in full, the excess,
if any, of the Investor Amount over the amount of Available Principal
Collections for such
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Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections).
Section 4.11 Finance Charge Shortfall. The "Finance Charge Shortfall" for
------------------------ ------------------------
Series 1999-1 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)-(m) on such
Distribution Date over (b) the Investor Percentage of Collections of Finance
Charge Receivables with respect to the related Monthly Period.
Section 4.12 Spread Account.
--------------
(a) The Servicer shall establish and maintain, in the name of the
Trustee, for the benefit of the Series 1999-1 CTO Holders, with a Qualified
Institution a segregated trust account (the "Spread Account"), bearing a
--------------
designation clearly indicating that the funds held therein are held for the
benefit of the Series 1999-1 CTO Holders. The Spread 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 Spread Account and in
all proceeds thereof. The Spread Account shall be under the sole dominion and
control of the Trustee for the benefit of the CTO Holders. If, at any time,
the institution holding the Spread Account ceases to be a Qualified
Institution, the Trustee (or the Servicer on its behalf) shall within five (5)
Business Days establish a new Spread Account meeting the conditions specified
above with a Qualified Institution and shall transfer any cash and/or any
investments to such new Spread Account. The Trustee, at the direction of the
Servicer, shall make deposits to and withdrawals from the Spread Account in the
amounts and at the times set forth in this Agreement. All withdrawals from the
Spread Account shall be made in the priority set forth below.
(b) Funds held in the Spread Account shall be invested at the
direction of the Servicer by the Trustee in Permitted Investments. Funds held
in the Spread Account on any Distribution Date, after giving effect to any
withdrawals from the Spread 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 any Permitted Investment before
its maturity, if so directed by the Servicer, the Servicer having reasonably
determined that the interest of the CTO Holders 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 CTO Holders possession of the negotiable instruments or
securities, if any, evidencing such Permitted Investments. On each Distribution
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Date, all interest and earnings (net of losses and investment expenses) on funds
held in the Spread Account shall be treated as a portion of Excess Spread for
such Distribution Date and applied in accordance with Section 4.8.
(c) On each Determination Date, the Servicer shall calculate the sum
of (i) the CTO Required Amount, (ii) the amount, if any, by which the CTO
Investor Amount will be reduced pursuant to Section 4.7 (without giving effect
to this Section 4.12(c)), and (iii) all unreimbursed reductions of the CTO
Investor Amount pursuant to Section 4.7 (the "Required Draw Amount"). 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 Spread Account
Amount, shall be withdrawn from the Spread Account and distributed to fund the
above items.
(d) If the amount in the Spread Account on any Distribution Date
exceeds the Required Spread Account Amount, after taking into account all
amounts deposited in the Spread Account and distributed therefrom on such
Distribution Date, such excess, if any, shall be distributed to the Transferor.
Section 4.13 Principal Account.
-----------------
(a) The Servicer shall establish and maintain, in the name of the
Trustee, for the benefit of the Series 1999-1 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 1999-1 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
1999-1 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.
(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
1999-1 Certificateholders; provided, however, that on each Distribution Date all
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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 Series 1999-1
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 for such Distribution Date as Class A Available Funds,
Class B Available Funds, CTO Available Funds and Class D Available Funds, as
herein provided.
(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 Series 1999-1 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 1999-1 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 1999-1
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(e).
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(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 1999-1 Certificateholders,
control of the negotiable instruments or securities, if any, evidencing such
Permitted Investments. Such control may be maintained through a Clearing Agency
or other securities intermediary, which shall agree with the Trustee that (i)
such investment property shall at all times be credited to a securities account
of the Trustee, (ii) such securities intermediary shall treat the Trustee as
entitled to exercise the rights that comprise each financial asset credited to
such securities account, (iii) all property credited to such securities account
shall be treated as a financial asset, (iv) such securities intermediary shall
comply with entitlement orders originated by the Trustee without the further
consent of any other person or entity, (v) such securities intermediary shall
not agree with any person other than the Trustee to comply with entitlement
orders originated by such other person, (vi) such securities intermediary waives
any lien on, security interest in, or right of set-off with respect to any
property credited to such securities account, and (vii) such agreement shall be
governed by the laws of the State of New York. No Permitted Investment shall be
disposed of prior to its maturity; provided, however, that the Trustee may sell,
liquidate or dispose of any Permitted Investment before its maturity, if so
directed by the Servicer, the Servicer having reasonably determined that the
interest of the Series 1999-1 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 Class A Available Funds. 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 and the first Special Distribution Date, the
Servicer shall calculate the Reserve Draw Amount.
(d) In the event that the Reserve Draw Amount for any Distribution
Date during the Accumulation Period or the first Special Distribution Date
following the commencement of the Rapid Amortization Period, 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
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by the Trustee (acting in accordance with the instructions of the Servicer),
deposited into the Collection Account and applied in the following priority:
(i) an amount up to the excess, if any, of (x) an amount equal
to that portion of the Covered Amount computed pursuant to clause (a) of the
definition of Covered Amount over (y) an amount equal to that portion of the
Class A Available Funds computed pursuant to clause (ii) of the definition of
Class A Available Funds shall be treated as Class A Available Funds to be
applied pursuant to subsection 4.6(a); and
(ii) an amount up to the excess, if any, of (x) an amount equal
to that portion of the Covered Amount computed pursuant to clause (b) of the
definition of Covered Amount over (y) an amount equal to that portion of the
Class B Available Funds computed pursuant to clause (b) of the definition of
Class B Available Funds shall be treated as Class B Available Funds to be
applied pursuant to subsection 4.6(b).
(iii) an amount up to the excess, if any, of (x) an amount equal
to that portion of the Covered Amount computed pursuant to clause (c) of the
definition of Covered Amount over (y) an amount equal to that portion of the CTO
Available Funds computed pursuant to clause (ii) of the definition thereof shall
be treated as a portion of CTO Available Funds to be applied pursuant to Section
4.6(c).
(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 to the Transferor.
(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, the Class B Investor Amount and the CTO Investor Amount have
been paid in full, (iii) if the Accumulation Period has not commenced, the day
on which a Pay Out Event with respect to Series 1999-1 has occurred and (iv) if
the Accumulation Period has commenced, the earlier of the first Special
Distribution Date and the 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 1999-1 Certificateholders which are payable from the
Reserve Account as provided herein, shall withdraw from the Reserve Account and
pay or distribute to the Transferor 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.
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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 June 2001
Monthly Period; provided, however, 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 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 nor greater than 12 months.
Section I. Article V of the Agreement. Article V of the Agreement as it
--------------------------
relates to Series 1999-1 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.
(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 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
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<PAGE>
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 Expected Payment 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 CTO Holder of record as of the preceding Record Date (other than as
provided in Section 12.2 respecting a final distribution) such CTO Holder's pro
rata share of the amounts that are available on such Distribution Date to pay
interest on the Collateralized Trust Obligations pursuant to this Agreement.
(g) On the Expected Payment Date and each Special Distribution Date,
the Paying Agent shall distribute to each CTO Holder of record as of the
preceding Record Date (other than as provided in Section 12.2 respecting a final
distribution) such CTO Holder's pro rata share of the amounts that are available
on such date to pay principal of the Collateralized Trust Obligations pursuant
to this Agreement.
(h) 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 that are distributable to the Class D Certificates pursuant to
this Series Supplement.
(i) On the Expected Payment Date and each Special 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.
(j) Except as provided in Section 12.2 with respect to a final
distribution, distributions to Series 1999-1 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 1999-1 Certificate or the making of
any notation thereon; provided, however, that with respect to such Certificates
registered in the name of
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<PAGE>
a Clearing Agency, such distributions shall be made to such Clearing Agency in
immediately available funds.
Section 5.2 Statements to Series 1999-1 Certificateholders. On each
----------------------------------------------
Distribution Date, the Paying Agent, on behalf of the Trustee, shall forward to
each Series 1999-1 Certificateholder, a statement substantially in the form of
Exhibit C prepared by the Servicer setting forth certain information relating to
- ---------
the Trust and the Series 1999-1 Certificates.
On or before January 31 of each calendar year, beginning with the year
2000, 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 1999-1 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.
[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
1999-1 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 holders of Class A Certificates, Class B
Certificates and Collateralized Trust Obligations, 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 and the Trustee by the Series
1999-1 Certificateholders representing not less than 50% of the Investor Amount,
and continues to materially and adversely affect the holders of Class A
Certificates, Class B Certificates and Collateralized Trust Obligations for such
period;
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<PAGE>
(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 holders of
Class A Certificates, Class B Certificates and Collateralized Trust Obligations
representing not less than 50% of the Investor Amount, and (ii) as a result of
which the interests of the Series 1999-1 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 Investor Amount on the 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; or
(f) any Servicer Default shall occur which would have a material
adverse effect on the holders of the Class A Certificates, the Class B
Certificates and the Collateralized Trust Obligations;
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 1999-1 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 1999-1 Certificateholders) may declare
that a Pay Out Event has occurred with respect to only the Series 1999-1
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) or (e) above, a
Pay Out Event with respect to only the Series 1999-1 Certificates will be deemed
to have occurred without any notice or other action on the part of the Trustee
or the Series 1999-1 Certificateholders or all certificateholders, as
appropriate, immediately upon the occurrence of such event.
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<PAGE>
Section J1. CTO Defaults. If a CTO Default has occurred, upon the direction
------------
of CTO Holders holding more than 50% of the CTO Investor Amount, (i) before the
payment in full of the Class A Certificates and the Class B Certificates, the
Required Spread Account Percentage will thereafter be equal to an amount such
that the amount required to be on deposit in the Spread Account equals the CTO
Investor Amount and (ii) following the payment in full of the Class A
Certificates and the Class B Certificates, the Trustee will sell or cause to be
sold an amount of Principal Receivables and the related Finance Charge
Receivables (or interests therein) up to 110% of the Investor Amount at the
close of business on the date of such sale and pay the proceeds of such sale and
in final payment of all principal of and accrued interest on Series 1999-1
(which proceeds will be applied first to the CTO Investor Amount until the
Collateralized Trust Obligations have been paid in full and then to the Class D
Investor Amount until the Class D Certificates have been paid in full);
provided, however, that the amount of such Principal Receivables shall not
exceed the sum of (1) the product of (A) the Transferor Amount on such date and
(B) a fraction, the numerator of which is the Investor Amount on such date and
the denominator of which is the Aggregate Investor Amount on such date and (2)
the Investor Amount on such date. The Transferor at its option and in its sole
discretion, may, but is not required to, purchase such Receivables in such case,
and will have a right of first refusal with respect thereto to the extent of a
bona fide offer by an unrelated third party for fair value. Any proceeds of
such sale in excess of such principal and interest paid will be paid to the
Transferor.
Section K. Restrictions on Transfer.
------------------------
(a) None of the Collateralized Trust Obligations have been registered
under the Securities Act or the securities or blue sky laws of any foreign or
domestic jurisdiction. Transfers and dispositions of Collateralized Trust
Obligations or any interest therein are restricted and will only be made in
compliance with applicable law and consistent with the following restrictions.
Any person seeking to transfer a Collateralized Trust Obligation or any interest
therein must satisfy the Servicer that such transfer or disposition is
permissible under and consistent with applicable securities laws and the
restrictions contained in this Section K. Each Collateralized Trust Obligation
will bear a conspicuous legend or legends substantially in the following form:
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF SAKS CREDIT
CORPORATION, SAKS INCORPORATED AND THE TRUSTEE THAT SUCH PURCHASER IS NOT
(I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), INCLUDING,
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<PAGE>
WITHOUT LIMITATION, INDIVIDUAL RETIREMENT ACCOUNTS OR KEOGH PLANS (III) AN
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" (AS DESCRIBED IN 29
C.F.R. 2510.3-101) BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY,
INCLUDING, WITHOUT LIMITATION, INSURANCE COMPANY GENERAL ACCOUNTS OR (IV) A
PERSON INVESTING "PLAN ASSETS" (AS DESCRIBED IN 29 C.F.R. 2510.3-101) OF
ANY SUCH PLAN.
THIS COLLATERALIZED TRUST OBLIGATION HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING THIS
COLLATERALIZED TRUST OBLIGATION, AGREES THAT THIS COLLATERALIZED TRUST
OBLIGATION MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY
(1) TO THE TRANSFEROR OR (2) IN RELIANCE ON RULE 144A UNDER THE SECURITIES
ACT TO A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE 144A ("QIB") PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF ANOTHER QIB, WHOM
THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A. EACH HOLDER OF A
COLLATERALIZED TRUST OBLIGATION BY ACCEPTING A BENEFICIAL INTEREST IN THIS
COLLATERALIZED TRUST OBLIGATION, IF SUCH PERSON ACQUIRED THIS
COLLATERALIZED TRUST OBLIGATION IN A TRANSFER DESCRIBED IN CLAUSE (2)
ABOVE, IS DEEMED TO REPRESENT THAT IT IS EITHER A QIB PURCHASING FOR ITS
OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF ANOTHER QIB.
(b) Upon surrender for registration of transfer of a Collateralized
Trust Obligation at the office of the Transfer Agent and Registrar, accompanied
by a certification by the CTO Holder substantially in the form attached as
Exhibit A-3 hereto, executed by the registered owner, in person or by such CTO
- -----------
Holder's attorney thereunto duly authorized in writing, such Collateralized
Trust Obligation shall be transferred upon the Certificate Register, and the
Transferor shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferees one or more new registered Collateralized
Trust Obligations of any authorized denominations and of a like aggregate
principal amount and tenor. All transfers of Collateralized Trust Obligations
and any interests therein shall be subject to the restrictions set forth in this
Section K
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<PAGE>
and to such other restrictions as shall be set forth in the text of the
Collateralized Trust Obligations.
(c) None of the Class D Certificates has been registered under the
Securities Act or the securities or blue sky laws of any foreign or domestic
jurisdiction. Transfers and dispositions of Class D Certificates or any interest
therein are restricted and will only be made in compliance with applicable law
and consistent with the following restrictions. Any person seeking to transfer a
Class D Certificate or any interest therein must satisfy the Servicer that such
transfer or disposition is permissible under and consistent with applicable
securities laws and the restrictions contained in this Section K. Each Class D
Certificate will bear a conspicuous legend or legends substantially in the
following form:
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES
THAT THIS CERTIFICATE AND/OR ANY INTEREST HEREIN MAY BE REOFFERED, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT
AND OTHER APPLICABLE LAWS AND ONLY (1) TO THE TRANSFEROR OR (2) IN RELIANCE
ON RULE 144A UNDER THE SECURITIES ACT TO A PERSON WHOM THE HOLDER
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING
OF RULE 144A ("QIB") PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR
THE ACCOUNT OF ANOTHER QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A. EACH HOLDER OF CLASS D CERTIFICATE, BY ACCEPTING A
BENEFICIAL INTEREST IN THIS CERTIFICATE, IF SUCH PERSON ACQUIRED THIS
CERTIFICATE IN A TRANSFER DESCRIBED IN CLAUSE (2) ABOVE, IS DEEMED TO
REPRESENT THAT IT IS EITHER A QIB PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF ANOTHER QIB.
(d) Upon surrender for registration of transfer of a Class D
Certificate at the office of the Transfer Agent and Registrar, accompanied by a
certification by the Class D Certificateholder substantially in the form
attached as Exhibit A-4 hereto, executed by the registered owner, in person or
------------------
by such Class D Certificateholder's attorney thereunto duly authorized in
writing, such Class D Certificate shall be transferred upon the Certificate
Register, and the Transferor shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferees one or more new
registered Class D Certificates of any
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<PAGE>
authorized denominations and of a like aggregate principal amount and tenor. All
transfers of Class D Certificates and any interests therein shall be subject to
the restrictions set forth in this Section K and to such other restrictions as
shall be set forth in the text of the Class D Certificates.
(e) The Transferor may at any time, without the consent of the Class
A Certificateholders, the Class B Certificateholders, the CTO Holders or any
holders of Class D Certificates, (i) sell or transfer all or a portion of the
Class D Certificates or any interest therein, 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 or any interest
therein 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 or any interest therein; (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.
(f) In addition to the foregoing restrictions of this Section K, each
initial transferee of the Collateralized Trust Obligations or 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 CTO or Class D Certificates or cause an
--------
interest in CTO or 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 CTO
or 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 CTO or Class D
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<PAGE>
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 or transfer to it of any 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(f).
Section K1. Tax Characterization of the Collateral Interest. It is the
-----------------------------------------------
intention of the parties hereto that the Collateral Interest (including all the
Collateralized Trust Obligations and Class D Certificates that comprise the
Collateral Interest) be treated under applicable tax law as indebtedness. In
the event that either the Collateralized Trust Obligations or the Class D
Certificates are not so treated, it is the intention of the parties that the
Collateralized Trust Obligations and the Class D Certificates, as applicable, be
treated under applicable tax law as an interest in a partnership that owns the
Receivables. In the event that either the Collateralized Trust Obligations or
the Class D Certificates are treated under applicable tax law as interests in a
partnership, it is the intention of the parties that either the Collateralized
Trust Obligations or the Class D Certificates, 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 Collateralized Trust Obligations and/or the Class D Certificates,
as the case may be, Interest be specially allocated gross interest income equal
to the interest accrued during each Interest Period on the Collateralized Trust
Obligations and/or the Class D Certificates, as the case may be.
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 1999-1 Certificateholder, by
--------------
acquiring an interest in a Series 1999-1 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
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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 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 1999-1
Certificates which are then rated, and prior to a Pay Out Event, the Series
1999-1 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 1999-1 Certificateholders. As principal is deposited into the
Principal Account or is paid with respect to the Series 1999-1 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 Series 1999-1
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.
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<PAGE>
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 proceeds of any such sale payable in respect of the Series 1999-1
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
Collateralized Trust Obligations until paid in full, and then to the Class D
Certificates until paid in full.
[Signatures on next page]
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<PAGE>
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.
SAKS CREDIT CORPORATION,
as Transferor
By: /s/ Charles J. Hansen
--------------------------
Name: Charles J. Hansen
Title: Senior Vice President
SAKS INCORPORATED,
as Servicer
By: /s/ Charles J. Hansen
--------------------------
Name: Charles J. Hansen
Title: Senior Vice President
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By: /s/ Sue Dignan
--------------------------
Name: S. Dignan
Title: Corporate Trust Officer
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<PAGE>
Exhibit 5.1
Opinion and consent of Alston & Bird LLP with respect to legality
-61-
<PAGE>
[ALSTON & BIRD LLP LETTERHEAD]
July 21, 1999
Saks Credit Corporation
140 Industrial Drive
Elmhurst, Illinois 60126
Re: Saks Credit Card Master Trust -- Series 1999-1 Class A and Series
1999-1 Class B Asset Backed Certificates
Ladies and Gentlemen:
We have acted as counsel to Saks Credit Corporation (the "Transferor")
in connection with the Registration Statement on Form S-3 (the "Registration
Statement") filed with the Securities and Exchange Commission (the
"Commission"), as supplemented by the Prospectus Supplement thereto dated July
14, 1999, relating to the offering of Class A Floating Rate Asset Backed
Certificates Series 1999-1 (the "Class A Certificates") and Class B Floating
Rate Asset Backed Certificates Series 1999-1 (the "Class B Certificates", and
together with the Class A Certificates, the "Offered Certificates") representing
undivided interests in the Saks Credit Card Master Trust (the "Trust"). The
Offered Certificates will be issued pursuant to the Master Pooling and Servicing
Agreement dated as of August 21, 1997 (as amended, the "Pooling and Servicing
Agreement") and the Series 1999-1 Supplement thereto dated as of July 21, 1999
(the "Series 1999-1 Supplement") by and among the Transferor, Saks Incorporated,
as servicer (the "Servicer") and Norwest Bank Minnesota, National Association,
as trustee (the "Trustee").
We have examined the Pooling and Servicing Agreement and the Series
1999-1 Supplement. We also have examined and relied upon such other records,
documents and other instruments that in our judgment are necessary or
appropriate in order to express the opinions hereinafter set forth. In such
examination, we have assumed the authenticity of original documents and the
genuineness of all signatures, the conformity to the originals of all documents
submitted to us as copies, and the truth, accuracy and completeness of the
information, representations and warranties contained in the records, documents,
instruments and certificates we have reviewed.
Based on the foregoing, we are of the opinion that the Offered
Certificates are legally issued, fully paid, non-assessable and binding
obligations of the Trust, and the holders of the Offered Certificates are
entitled to the benefits of the Pooling and Servicing Agreement and the Series
1999-1 Supplement.
The foregoing opinion is subject to applicable bankruptcy, insolvency,
receivership, conservatorship, reorganization, arrangement, fraudulent
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conveyance, moratorium, or other laws relating to or affecting the rights of
creditors generally and general principles of equity, including without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, and the possible unavailability of specific performance or injunctive
relief, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to all references to our firm included in or made a
part of the Registration Statement. In giving such consent, we do not consider
that we are "experts," within the meaning of the term as used in the Securities
Act or the rules and regulations of the Commission issued thereunder, with
respect to any part of the Registration Statement, including this opinion as an
exhibit or otherwise.
Yours very truly,
ALSTON & BIRD LLP
By: /s/ Ralph F. MacDonald, III
---------------------------
Ralph F. MacDonald, III
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<PAGE>
Exhibit 8.1
Opinion and consent of Alston & Bird LLP with respect to Federal income tax
matters
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<PAGE>
[ALSTON & BIRD LLP LETTERHEAD]
July 21, 1999
Saks Credit Corporation
140 Industrial Drive
Elmhurst, Illinois 60126
Re: Saks Credit Card Master Trust -- Series 1999-1 Class A and Series
1999-1 Class B Asset Backed Certificates
Ladies and Gentlemen:
We have acted as special Federal tax counsel to Saks Credit
Corporation (the "Transferor") in connection with the offering of Class A
Floating Rate Asset Backed Certificates, Series 1999-1 (the "Class A
Certificates") and Class B Floating Rate Asset Backed Certificates, Series 1999-
1 (the "Class B Certificates," and together with the Class A Certificates, the
"Offered Certificates") representing undivided interests in the Saks Credit Card
Master Trust (the "Trust"). The Offered Certificates will be issued pursuant to
a Master Pooling and Servicing Agreement dated as of August 21, 1997, as amended
and supplemented (the "Pooling and Servicing Agreement"), and the Series 1999-1
Supplement thereto (the "Series 1999-1 Supplement") among the Transferor, Saks
Incorporated, as servicer, and Norwest Bank Minnesota, National Association, as
trustee, We also are familiar with the Prospectus dated April 17, 1998 (the
"Prospectus") filed as part of the Registration Statement on Form S-3 (the
"Registration Statement") filed with the Securities and Exchange Commission (the
"Commission"), as supplemented by the Prospectus Supplement thereto dated July
14, 1999 (the "Prospectus Supplement"), relating to the offering of the Offered
Certificates.
We have examined the Pooling and Servicing Agreement and the Series
1999-1 Supplement, together with the Prospectus and Prospectus Supplement.
Except as limited below, we also have examined and relied upon such other
records, documents and other instruments that in our judgment are necessary or
appropriate in order to express the opinions hereinafter set forth. This
opinion is limited to the Offered Certificates and the facts existing as of the
date hereof, and we have no duty to update this opinion. Any future changes in
facts or laws, including the issuance of any other interest in the Trust, could
change this opinion and the discussions contained in the Prospectus and the
Prospectus Supplement. In such examination, we have assumed the authenticity of
original documents and the genuineness of all signatures, the conformity to the
originals of all documents submitted to us as copies, and the truth, accuracy
and completeness of the information, representations and warranties contained in
the records, documents, instruments and certificates we have reviewed.
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<PAGE>
Based upon and subject to the foregoing, we hereby confirm that the
statements relating to the Offered Certificates set forth in the Prospectus
under the heading "Certain Federal Income Tax Consequences" and in the
Prospectus Supplement under the heading "Certain Federal Income Tax Consequences
of the Offered Certificates," which statements have been prepared by us, to the
extent that they constitute matters of law or legal conclusions with respect
thereto, and subject to the qualification, exceptions and limitations contained
herein and therein, are correct in all material respects.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the references to this Firm in the Prospectus and
in the Prospectus Supplement. In giving such consent, we do not admit that we
are "experts," within the meaning of the term used in the Securities Act or the
rules and regulations of the Commission issued thereunder, with respect to any
part of the Registration Statement, including this opinion as an exhibit or
otherwise.
Very truly yours,
ALSTON & BIRD LLP
By: /s/ Terence J. Greene
--------------------------
Terence J. Greene, Partner
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<PAGE>
Exhibit 99.1
Other Expenses of Issuance and Distribution
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<PAGE>
Item 14. Other Expenses of Issuance and Distribution
The expenses in connection with the distribution of the Class A and
Class B Certificates, Series 1999-1, other than underwriting discounts, are set
forth in the following table. All amounts are estimated.
<TABLE>
<S> <C>
Legal Fees and Expenses........ 213,000
Accounting Fees and Expenses... 35,000
Rating Agency Fees............. 200,000
Printing and Engraving......... 35,000
Blue Sky Fees and Expenses..... 2,000
Miscellaneous.................. 15,000
--------
Total........... $500,000
</TABLE>
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