<PAGE>
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of June
28, 2000, by and among DILLARD ASSET FUNDING COMPANY, a Delaware business trust,
as Transferor, DILLARD NATIONAL BANK, a national banking association, as
Servicer, and THE CHASE MANHATTAN BANK, as Trustee.
WHEREAS, the Transferor, the Servicer and the Trustee are parties to
the Pooling and Servicing Agreement, dated as of August 1, 1998 (the "Original
Agreement");
WHEREAS, the parties desire to amend and restate the Original
Agreement to read in its entirety as set forth below;
NOW, THEREFORE, pursuant to Section 13.01(b) of the Original
Agreement, the parties hereto hereby agree that effective on and as of the date
hereof, the Original Agreement is hereby amended to read in its entirety as
follows:
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties and the
Certificateholders:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement,
the following words and phrases shall have the following meanings:
"Account" shall mean each credit card account established pursuant to
a Credit Card Agreement between an Originator (whether originated or acquired by
such Originator), and any Person identified by account number and by the
Receivable balance as of the Cut-Off Date and as of each Addition Date in each
computer file or microfiche list delivered to the Trustee by the Transferor
pursuant to Section 2.1 or 2.6. The definition of Account shall include each
Transferred Account. The term "Account" shall be deemed to refer to an
Additional Account only from and after the Addition Date with respect thereto,
and the term "Account" shall be deemed to refer to any Removed Account only
prior to the Removal Date with respect thereto.
"Account Information" shall have the meaning specified in subsection
2.2(b).
"Accumulation Period" shall mean, with respect to any Series, or any
Class within a Series, a period following the Revolving Period during which
Collections of Principal Receivables are accumulated in an account for the
benefit of the Investor Certificateholders of a Series, or a Class within such
Series, which shall be the controlled accumulation period, the rapid
accumulation period or other accumulation period, in each case as defined with
respect to such Series in the related Supplement.
"Addition Date" shall mean each date as of which Additional Accounts
will be included as Accounts pursuant to Section 2.6.
<PAGE>
"Additional Accounts" shall have the meaning specified in subsection
2.6(a).
"Affiliate" of any Person shall mean any other Person controlling,
controlled by or under common control with such Person.
"Aggregate Investor Default Amount" shall have, with respect to any
Series of Certificates, the meaning stated in the related Supplement.
"Aggregate Investor Interest" shall mean, as of any date of
determination, the sum of the Investor Interests of all Series of Certificates
issued and outstanding on such date of determination.
"Aggregate Investor Percentage" with respect to Principal Receivables,
Finance Charge Receivables and Receivables in Defaulted Accounts, as the case
may be, shall mean, as of any date of determination, the sum of such Investor
Percentages of all Series of Certificates issued and outstanding on such date of
determination; provided, however, that the Aggregate Investor Percentage shall
not exceed 100%.
"Agreement" shall mean this Amended and Restated Pooling and Servicing
Agreement and all amendments hereof and supplements hereto, including any
Supplement.
"Amortization Period" shall mean, with respect to any Series, or any
Class within a Series, a period following the Revolving Period during which
principal is distributed to Investor Certificateholders, which shall be the
controlled amortization period, the principal amortization period, the rapid
amortization period, or other amortization period, in each case as defined with
respect to such Series in the related Supplement.
"Annual Membership Fee" shall have the meaning specified in the Credit
Card Agreement applicable to each Account for annual membership fees or similar
terms.
"Annual Account Additions" shall mean on any date of determination,
(i) the number of Accounts the Receivables of which have been added to the Trust
pursuant to subsection 2.6(b) and (d) from and including the first day of the
eleventh Monthly Period preceding such date of determination; plus (ii) the
number of Accounts, if any, the Receivables of which have been designated to be
added to the Trust pursuant to subsection 2.6(a), from and including the first
day of the eleventh Monthly Period preceding such date of determination.
"Annual Quotient" shall have the meaning specified in subsection
2.6(c)(ii).
"Applicants" shall have the meaning specified in Section 6.7.
-2-
<PAGE>
"Appointment Day" shall have the meaning specified in subsection
9.2(a).
"Assignment" shall have the meaning specified in subsection
2.6(c)(iii).
"Authorized Newspaper" shall mean a newspaper of general circulation
in the Borough of Manhattan, The City of New York printed in the English
language and customarily published on each Business Day, whether or not
published on Saturdays, Sundays and holidays.
"Average Principal Receivables" shall mean, for any period, an amount
equal to (a) the sum of the aggregate amount of Principal Receivables at the end
of each day during such period divided by (b) the number of days in such period.
"Bankruptcy Code" shall mean the United States federal Bankruptcy
Code, Title 11 of the United States Code, as amended.
"Base Amount" shall mean, at any date of determination, with reference
to Annual Account Additions or Semi-annual Account Additions, the number of
Accounts included in the Trust on the first day of the relevant measurement
period before giving effect to any Accounts added to the Trust on such first
day.
"Base Rate" shall have the meaning, with respect to any Series,
specified in the related Supplement.
"Bearer Certificates" shall have the meaning specified in Section 6.1.
"Bearer Rules" shall mean the provisions of the Internal Revenue Code,
in effect from time to time, governing the treatment of bearer obligations,
including sections 163(f), 871, 881, 1441, 1442 and 4701, and any regulations
thereunder including, to the extent applicable to any Series, Proposed or
Temporary Regulations.
"Book-Entry Certificates" shall mean certificates evidencing a
beneficial interest in the Investor Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 6.10; provided, however, that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer authorized and
Definitive Certificates are to be issued to the Certificate Owners, such
certificates shall no longer be "Book-Entry Certificates."
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in New York, New York (or, with respect to any
Series, any additional city specified in the related Supplement) are authorized
or obligated by law or executive order to be closed.
-3-
<PAGE>
"Certificate" shall mean any one of the Investor Certificates of any
Series or the Transferor Certificate.
"Certificateholder" or "Holder" shall mean the Person in whose name a
Certificate is registered in the Certificate Register and, if applicable, the
holder of any Bearer Certificate or Coupon, as the case may be.
"Certificate Interest" shall mean interest payable in respect of the
Investor Certificates of any Series pursuant to Article IV of the Supplement for
such Series.
"Certificate Owner" shall mean, with respect to a Book- Entry
Certificate, the Person who is the beneficial owner of such Book- Entry
Certificate, as may be reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency (directly or
as an indirect participant, in accordance with the rules of such Clearing
Agency).
"Certificate Principal" shall mean principal payable in respect of the
Investor Certificates of any Series pursuant to Article IV of this Agreement.
"Certificate Rate" shall mean, with respect to any Series of
Certificates (or, for any Series with more than one Class, for each Class of
such Series), the percentage (or formula on the basis of which such rate shall
be determined) stated in the related Supplement.
"Certificate Register" shall mean the register maintained pursuant to
Section 6.3, providing for the registration of the Certificates and transfers
and exchanges thereof.
"Class" shall mean, with respect to any Series, any one of the classes
of Certificates of that Series as specified in the related Supplement.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency or Foreign Clearing Agency effects book- entry transfers and pledges of
securities deposited with the Clearing Agency or Foreign Clearing Agency.
"Clearstream Banking" shall mean Clearstream Banking, societe anonyme
(formerly known as Cedelbank).
"Closing Date" shall mean, with respect to any Series, the date of
issuance of such Series of Certificates, as specified in the related Supplement.
-4-
<PAGE>
"Collateral Interest" shall have the meaning, with respect to any
Series, specified in the related Supplement.
"Collection Account" shall have the meaning specified in subsection
4.2(a).
"Collections" shall mean all payments (including Insurance Proceeds)
received by the Servicer in respect of the Receivables, in the form of cash,
checks, wire transfers, ATM transfers or other form of payment in accordance
with the Credit Card Agreement in effect from time to time. A Collection
processed on an Account in excess of the aggregate amount of Receivables in such
Account as of the Date of Processing of such Collection shall be deemed to be a
payment in respect of Principal Receivables to the extent of such excess.
Collections with respect to any Monthly Period shall include the amount of
Recoveries (if any) allocable to the Trust with respect to such Monthly Period,
to be applied as if such amounts were Collections of Finance Charge Receivables
for all purposes. Collections with respect to any Monthly Period shall also
include the amount deposited by the Transferor into the Finance Charge Account
(or Series Account if provided in any supplement) pursuant to Section 2.8.
"Commission" shall mean the Securities and Exchange
Commission.
"Companion Series" shall mean (i) each Series which has been paired
with another series (which Series may be prefunded in whole or in part), such
that the reduction of the Investor Interest of such Series results in the
increase of the Investor Interest of such other Series, as described in the
related Supplements, and (ii) such other Series, as described in the related
Supplements.
"Controlled Distribution Amount," with respect to any Series, shall
have the meaning specified in the related Supplement.
"Corporate Trust Office" shall mean the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at 450 West 33rd Street, 14th Floor, New York, New York 10001,
Attention: Capital Markets Fiduciary Services, Dillard 2000, except that for
purposes of subsection 6.3(d) and Section 11.16, such term shall mean the office
or agency of the Trustee in the Borough of Manhattan, the City of New York,
which office at the date hereof is located at 55 Water Street, New York, New
York 10041.
"Coupon" shall have the meaning specified in Section 6.1.
"Credit Adjustment" shall have the meaning specified in subsection
4.3(c).
"Credit Card Agreement" shall mean the agreement and Federal Truth in
Lending Statement for credit card accounts between any
-5-
<PAGE>
Obligor and an Originator (whether such accounts are originated or acquired by
such Originator), as such agreement may be amended, modified or otherwise
changed from time to time.
"Credit Card Guidelines" shall mean the Transferor's policies and
procedures relating to the operation of its credit card business, including,
without limitation, the policies and procedures for determining the
creditworthiness of credit card customers, the extension of credit to credit
card customers, and relating to the maintenance of credit card accounts and
collection of credit card receivables, as such policies and procedures may be
amended from time to time.
"Credit Card Portfolio" shall mean the Receivables owned by the
Transferor arising under the Accounts.
"Credit Enhancement" shall mean, with respect to any Series, the
subordination, the cash collateral guaranty or account, collateral interest,
letter of credit, surety bond, insurance policy, spread account, reserve
account, cross-support feature or any other contract or agreement for the
benefit of the Certificateholders of such Series (or Certificateholders of a
Class within such Series) as designated in the applicable Supplement.
"Credit Enhancement Provider" shall mean, with respect to any Series,
the Person, if any, designated as such in the related Supplement.
"Cut-Off Date" shall mean July 31, 1998.
"Date of Processing" shall mean, with respect to any transaction, the
date on which such transaction is first recorded on the Servicer's computer
master file of Dillard's or Mercantile accounts (without regard to the effective
date of such recordation).
"Default Amount" shall mean, with respect to any Defaulted Account,
the amount of Principal Receivables (other than Ineligible Receivables) in such
Defaulted Account on the day such Account became a Defaulted Account.
"Defaulted Account" shall mean each Account with respect to which, in
accordance with the Credit Card Guidelines or the Servicer's or the related
Originator's customary and usual servicing procedures for servicing credit card
receivables comparable to the Receivables, the Servicer has charged off the
Receivables in such Account as uncollectible. An Account shall become a
Defaulted Account on the day on which such Receivables are recorded as charged
off as uncollectible on the computer master file of the respective Originator's
accounts. Notwithstanding any other provision hereof, any Receivables in a
Defaulted Account that are Ineligible Receivables shall be treated as Ineligible
Receivables rather than Receivables in Defaulted Accounts.
"Definitive Certificate" shall have the meaning
specified in Section 6.10.
-6-
<PAGE>
"Depository" shall have the meaning specified in Section 6.10.
"Depository Agreement" shall mean, with respect to a Series having
Book-Entry Certificates, the agreement among the Transferor, the Trustee and the
Clearing Agency, or as otherwise provided in the related Supplement.
"Determination Date" shall mean, unless otherwise specified in the
related Series Supplement, the fourth calendar day of each month, or if such day
is not a Business Day, the next preceding Business Day.
"DIC" shall mean Dillard Investment Co., Inc., a
corporation organized under the laws of Delaware or any successor
thereto.
"Dillard's" shall mean Dillard's Inc., a corporation
organized under the laws of Delaware or any successor thereto.
"Discount Option Receivables" shall mean, on any date on and after the
date on which the Transferor's exercise of its discount option pursuant to
Section 2.8 takes effect, the sum of (a) the aggregate Discount Option
Receivables at the end of the prior day (which amount, prior to the date on
which the Transferor's exercise of its discount option takes effect and with
respect to Receivables generated prior to such date, shall be zero) plus (b) any
New Discount Option Receivables created on such day minus (c) any Discount
Option Receivables Collections received on such Date of Processing.
"Discount Option Receivables Collections" shall mean on any Date of
Processing on and after the date on which the Transferor's exercise of its
discount option pursuant to Section 2.8 takes effect, the product of (a) a
fraction the numerator of which is the amount of the Discount Option Receivables
and the denominator of which is the sum of the Principal Receivables plus the
amount of Discount Option Receivables in each case (for both numerator and
denominator) at the end of the prior Monthly Period and (b) Collections of
Principal Receivables, prior to any reduction for Finance Charge Receivables
which are Discount Option Receivables, received on such Date of Processing.
"Discount Percentage" shall have the meaning specified in Section
2.8.
"Distribution Account" shall have the meaning specified in subsection
4.2(c).
"Distribution Date" shall mean, with respect to each Series, the
dates specified in the related Supplement.
"DNB" shall mean Dillard National Bank, a national banking
association organized and existing under the laws of the
-7-
<PAGE>
United States and having its headquarters, on the date hereof, in Gilbert,
Arizona, or any successor thereto.
"DNB-La." shall mean Dillard National Bank (formerly known as
Mercantile Stores National Bank), a national banking association organized and
existing under the laws of the United States and having its headquarters, on the
date hereof, in Baton Rouge, Louisiana, or any successor thereto.
"Dollars", "$" or "U.S. $" shall mean United States
dollars.
"Eligible Account" shall mean, as of the Cut-Off Date (or, with
respect to Additional Accounts as of the relevant Addition Date), each Account
owned by an Originator:
(a) which is payable in Dollars;
(b) the Obligor on which has provided, as its most recent billing
address, an address which is located in the United States or its
territories or possessions;
(c) which such Originator has not classified on its
electronic records as counterfeit, deleted, fraudulent, stolen
or lost;
(d) which such Originator has not charged off in its customary and
usual manner for charging off such Accounts as of the Cut-Off Date (or,
with respect to Additional Accounts, as of the relevant Addition Date);
and
(e) the Obligor of which has not been identified by such Originator
on its electronic records as being involved in a voluntary or
involuntary bankruptcy proceeding.
"Eligible Deposit Account" shall mean either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from each Rating Agency in one
of its generic credit rating categories which signifies investment grade.
"Eligible Institution" shall mean (a) the Servicer so long as the
Rating Agency Condition is satisfied, (b) a depository institution (which may be
the Trustee or an Affiliate) organized under the laws of the United States or
any one of the states thereof which at all times (i) has either (x) a long-term
unsecured debt rating of "A2" or better by Moody's or (y) a certificate of
deposit rating of "P-1" by Moody's, (ii) has either (x) a long- term unsecured
debt rating of "AAA" by Standard & Poor's or (y) a certificate of deposit rating
of "A-l+" by
-8-
<PAGE>
Standard & Poor's and (iii) is a member of the FDIC or (c) any other institution
that is acceptable to the Rating Agencies.
"Eligible Receivable" shall mean each Receivable:
(a) which has arisen under an Eligible Account (in the case of
Accounts conveyed to the Trust on the Initial Closing Date and in the
case of Additional Accounts conveyed to the Trust on the relevant
Addition Date);
(b) which was created in compliance, in all material respects, with
all Requirements of Law applicable to the Originator thereof and
pursuant to a Credit Card Agreement which complies, in all material
respects, with all Requirements of Law applicable to such Originator;
(c) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given by
such Originator in connection with the creation of such Receivable or
the execution, delivery and performance by such Originator of the
Credit Card Agreement pursuant to which such Receivable was created,
have been duly obtained, effected or given and are in full force and
effect as of such date of creation;
(d) as to which, as of the Closing Date, or in the case of
Receivables in Additional Accounts as of the relevant Addition Date,
the Transferor had good title thereto, free and clear of all Liens
arising under or through the Transferor or any of its Affiliates (other
than Liens permitted pursuant to subsection 2.5(b));
(e) which is the legal, valid and binding payment obligation of the
Obligor thereon, enforceable against such Obligor in accordance with
its terms, except as affected by bankruptcy, insolvency,
reorganization, moratorium and other similar laws, now or hereafter in
effect, relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a suit in equity or at law)
and an implied covenant of good faith and fair dealing;
(f) which constitutes an "account" or a "general intangible" under
and as defined in Article 9 of the UCC as then in effect in the State
of Arizona, in the case of Receivables originated by DNB, and in the
State of Louisiana, in the case of Receivables originated by DNB-La;
and
(g) which, if such Receivable arose under an Eligible Account as to
which, pursuant to the terms of such Eligible Account, a discount of
the principal amount of the first Receivable generated thereunder on or
after the date such Eligible Account was opened by the related Obligor
was available
-9-
<PAGE>
to such Obligor, such discount has been applied and the Principal
Amount thereof is net of such discount.
"Enhancement Invested Amount" shall have the meaning, with respect to
any Series, specified in the related Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Euroclear Operator" shall mean Morgan Guaranty Trust Company of New
York, Brussels, Belgium office, as operator of the Euroclear System.
"Excess Funding Account" shall have the meaning specified in
subsection 4.2(d).
"Excess Funding Amount" shall mean, as of any date of determination,
the principal amount on deposit in the Excess Funding Account.
"Exchange" shall mean either of the procedures described under
Section 6.9.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Exchange Date" shall have the meaning, with respect to any Series
issued pursuant to an Exchange, specified in Section 6.9.
"Exchange Notice" shall have the meaning, with respect to any Series
issued pursuant to an Exchange, specified in Section 6.9.
"Extended Trust Termination Date" shall have the meaning specified
in subsection 12.1(a).
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Fee Determination Date" shall have the meaning specified in Section
4.5(a).
"Finance Charge Account" shall have the meaning specified in
subsection 4.2(b).
"Finance Charge Receivables" shall mean Receivables created in
respect of the Periodic Finance Charges and Late Fees and similar fees and
charges, Annual Membership Fees and Special Fees to the extent such Special Fees
are categorized by the Servicer as Finance Charge Receivables. Finance Charge
Receivables with respect to any Monthly Period shall include the amount of
Recoveries (if any), Discount Option Receivables (if any), Insurance Proceeds
and investment earnings from any of the Trust Accounts, and other amounts
allocable to any Series
-10-
<PAGE>
of Certificates pursuant to any Supplement with respect to such Monthly Period
that are to be treated as Finance Charge Receivables but shall exclude charges
for credit insurance. For purposes of this Agreement, the amounts of Late Fees,
similar fees and charges, and Special Fees to be included in Finance Charge
Collections shall be determined in accordance with Sections 4.5 and 4.6 hereof.
If so provided in the related Supplement, Finance Charge Receivables for the
Series issued pursuant to such Supplement may be equal to, or may not be greater
than, a fixed percentage of the outstanding balance of some or all Receivables
in the applicable Trust.
"Foreign Clearing Agency" shall mean Clearstream Banking
and the Euroclear Operator.
"Funding Period" shall have the meaning specified in Section 4.4.
"Global Certificate" shall have the meaning specified in Section
6.13.
"Governmental Authority" shall mean the United States of America,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Group" shall mean, with respect to any Series, the group of Series
in which the related Supplement specifies that such Series shall be included.
"Ineligible Receivable" shall have the meaning specified in
subsection 2.4(d)(iii).
"Initial Closing Date" shall mean August 14, 1998.
"Initial Investor Interest" shall mean, with respect to any Series
of Certificates, the amount stated in the related Supplement.
"Insolvency Event" shall have the meaning specified in subsection
9.2(a).
"Insurance Proceeds" shall mean any amounts recovered by the
Servicer pursuant to any credit insurance policies covering any Obligor with
respect to Receivables under such Obligor's Account.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended from time to time.
"Investor Account" shall mean each of the Finance Charge Account,
the Principal Account, the Excess Funding Account and the Distribution Account.
-11-
<PAGE>
"Investor Certificate" shall mean any one of the certificates
(including, without limitation, the Bearer Certificates, the Registered
Certificates or the Global Certificates) issued by the Trust, executed by the
Transferor and authenticated by the Trustee substantially in the form (or forms
in the case of a Series with multiple Classes) of the investor certificate
attached to the related Supplement.
"Investor Certificateholder" shall mean each holder of record of an
Investor Certificate.
"Investor Charge-Off" shall have, with respect to each Series, the
meaning specified in the applicable Supplement.
"Investor Default Amount" shall have, with respect to any Series of
Certificates, the meaning stated in the related Supplement.
"Investor Exchange" shall have the meaning specified in subsection
6.9(b).
"Investor Interest" shall have, with respect to any Series of
Certificates, the meaning stated in the related Supplement.
"Investor Percentage" shall have, with respect to Principal
Receivables, Finance Charge Receivables and Receivables in Defaulted Accounts,
and any Series of Certificates, the meaning stated in the related Supplement.
"Investor Servicing Fee" shall have, with respect to each Series,
the meaning specified in Section 3.2.
"Late Fees" shall have the meaning specified in the Credit Card
Agreement applicable to each Account for late fees or similar terms.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement; provided, however, that any
assignment pursuant to Section 7.2 shall not be deemed to constitute a Lien.
"MCC" shall mean Mercantile Credit Corporation, a corporation
organized under the laws of Louisiana, or any successor thereto.
"MFI" shall mean Mersco Factors, Inc., a corporation
organized under the laws of Delaware, or any successor thereto.
"Mercantile" shall mean Mercantile Stores Company, Inc.,
a corporation organized under the laws of Delaware, or any successor
thereto.
-12-
<PAGE>
"Minimum Aggregate Principal Receivables" shall mean, as of any date
of determination, the sum of the numerators used on such date to calculate the
Investor Percentage with respect to Principal Receivables for all Series
outstanding on such date, less the amount on deposit in the Excess Funding
Account as of such date of determination.
"Minimum Transferor Interest" shall mean, with respect to any
Monthly Period, an amount equal to the product of the Minimum Transferor
Interest Percentage and the sum of (i) the Average Principal Receivables for
such Monthly Period, (ii) the Excess Funding Amount and (iii) any amounts on
deposit in any Principal Funding Account and any other Series Account (if so
specified in the applicable Supplement).
"Minimum Transferor Interest Percentage" shall mean the highest
percentage specified as the "Minimum Transferor Interest Percentage" in any
Supplement; provided, however, that the Transferor may reduce the Minimum
Transferor Interest Percentage upon (w) 30 days' prior notice to the Trustee,
each Rating Agency and any Credit Enhancement Provider entitled to receive such
notice pursuant to the relevant Supplement, (x) written confirmation from each
Rating Agency that such action will satisfy the Rating Agency Condition, (y)
delivery to the Trustee and each such Credit Enhancement Provider of an
Officer's Certificate stating that the Transferor reasonably believes that such
reduction will not, based on the facts known to such officer at the time of such
certification, then or thereafter cause a Pay Out Event to occur with respect to
any Series and (z) delivery to the Trustee of a Tax Opinion; provided further
that the Minimum Transferor Interest Percentage shall not at any time be less
than 0%.
"Monthly Period" shall mean, unless otherwise defined in any
Supplement, the period from and including the first day of a calendar month to
and including the last day of a calendar month.
"Monthly Servicer's Certificate" shall mean with respect to a
Series, a certificate substantially in the form required by the related
Supplement, executed by a Servicing Officer and provided pursuant to Section 3.4
hereof.
"Moody's" shall mean Moody's Investors Service, Inc., or
any successor thereto.
"New Discount Option Receivables" shall mean, as of any date of
determination, the product of the Discount Percentage and the amount of
Principal Receivables (before subtracting out Finance Charge Receivables which
are Discount Option Receivables) arising on such date of determination.
"Notice Date" shall have the meaning specified in subsection
2.6(c)(i).
"Obligor" shall mean, with respect to any Account, the Person or
Persons obligated to make payments with respect to such Account, including any
guarantor thereof.
-13-
<PAGE>
"Officer's Certificate" shall mean a certificate signed by any Vice
President or more senior officer of the Transferor or Servicer and delivered to
the Trustee.
"Original Purchase Agreements" shall mean the Receivables Sale
Agreement, dated as of June 30, 1998, between DIC and DNB and the Receivables
Purchase Agreement, dated as of May 29, 1997, between MFI and DNB-La.
"Originators" shall mean DNB and DNB-La.
"Opinion of Counsel" shall mean a written opinion of counsel, who
may be counsel for or an employee of the Person providing the opinion, and who
shall be reasonably acceptable to the Trustee.
"Participation" shall have the meaning specified in subsection
2.6(a)(ii).
"Paying Agent" shall mean any paying agent appointed pursuant to
Section 6.6 and identified in the related Supplement.
"Pay Out Commencement Date" shall mean, (a) with respect to each
Series, the date on which a Trust Pay Out Event is deemed to occur pursuant to
Section 9.1 or (b) with respect to any Series, a Series Pay Out Event is deemed
to occur pursuant to the Supplement for such Series.
"Pay Out Event" shall mean, with respect to each Series, a Trust Pay
Out Event or a Series Pay Out Event.
"Periodic Finance Charges" shall have the meaning specified in the
Credit Card Agreement applicable to each Account for finance charges (due to
periodic rate) or any similar term.
"Permitted Investments" shall mean, unless otherwise provided in the
Supplement with respect to any Series:
(a) book-entry securities or negotiable instruments or securities
represented by instruments in bearer or registered form which evidence
(i) obligations of or fully guaranteed by the United States of America;
(ii) demand deposits, time deposits or certificates of deposit of any
depositary institution or trust company incorporated under the laws of
the United States of America or any state thereof (or domestic branches
of foreign banks) and subject to supervision and examination by federal
or state banking or depositary institution authorities; provided,
however, that at the time of the Trust's investment or contractual
commitment to invest therein, the certificates of deposit or short-term
deposits of such depositary institution or trust company shall have a
credit rating from Moody's and Standard & Poor's of "P-1" and "A-1+",
respectively; (iii) commercial paper having, at the time of the Trust's
investment or contractual commitment to invest therein,
-14-
<PAGE>
a rating from Moody's and Standard & Poor's of "P-1" and "A-l+",
respectively and (iv) bankers' acceptances issued by any depository
institution or trust company described in clause (a)(ii) above;
(b) demand deposits in the name of the Trust or the
Trustee in any depositary institution or trust company referred
to in clause (a)(ii) above;
(c) repurchase agreements transacted with either:
(i) an entity subject to the United States federal
bankruptcy code; provided that (A) the repurchase agreement
matures prior to the next Distribution Date or is due on
demand, (B) the Trustee or a third party acting solely as agent
for the Trustee has possession of the collateral, (C) the
Trustee on behalf of the Trust has a security interest in the
collateral, (D) the market value of the collateral is
maintained at the requisite collateral percentage of the
obligation in accordance with standards of the Rating Agencies,
(E) the failure to maintain the requisite collateral level will
obligate the Trustee to liquidate the collateral immediately,
(F) the securities subject to the repurchase agreement are
either obligations of, or fully guaranteed as to principal and
interest by, the United States of America or any
instrumentality or agency thereof, certificates of deposit or
bankers acceptances and (G) the securities subject to the
repurchase agreement are free and clear of any third party lien
or claim; or
(ii) a financial institution insured by the FDIC, or
any broker-dealer with "retail customers" that is under the
jurisdiction of the Securities Investors Protection Corp.
("SIPC"); provided that (A) the market value of the collateral
is maintained at the requisite collateral percentage of the
obligation in accordance with the standards of the Rating
Agencies, (B) the Trustee or a third party (with a short-term
debt rating of P-1 or higher by Moody's) acting solely as agent
for the Trustee has possession of the collateral, (C) the
Trustee on behalf of the Trust has a security interest in the
collateral, (D) the collateral is free and clear of third party
liens and, in the case of an SIPC broker, was not acquired
pursuant to a repurchase or reverse repurchase agreement and
(E) the failure to maintain the requisite collateral percentage
will obligate the Trustee to liquidate the collateral;
provided, however, that at the time of the Trust's investment
or contractual commitment to invest in any repurchase
agreement, the short-term deposits or commercial paper rating
of such entity or institution in subsections (i)
-15-
<PAGE>
and (ii) shall have a credit rating of "P-1" from
Moody's and "A-1+" from Standard & Poor's; and
(d) any other investment that by its terms converts to cash
within a finite time period if the Rating Agency Condition is satisfied
with respect thereto.
"Person" shall mean any legal person, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, governmental entity or
other entity of similar nature.
"Pool Factor" shall mean, except with respect to any Series
issued in more than one Class, a number carried out to seven decimals
representing the ratio of the applicable Investor Interest as of such Record
Date (determined after taking into account any reduction in the Investor
Interest which will occur on the following Distribution Date) to the applicable
Initial Investor Interest, and with respect to a Series having more than one
Class, as specified in the Supplement relating to such Series.
"Portfolio Yield" shall have the meaning, with respect to any
Series, specified in the related Supplement.
"Pre-Funding Account" shall have the meaning specified in
Section 4.4.
"Principal Account" shall have the meaning specified in
subsection 4.2(b).
"Principal Receivable" shall mean each Receivable other than
(i) Finance Charge Receivables, and (ii) Receivables in Defaulted Accounts. A
Receivable shall be deemed to have been created at the end of the day on the
Date of Processing of such Receivable. In calculating the aggregate amount of
Principal Receivables on any day, the amount of Principal Receivables shall be
reduced by the aggregate amount of credit balances in the Accounts on such day.
Any Receivables which the Transferor is unable to transfer as provided in
subsection 2.5(e) shall not be included in calculating the aggregate amount of
Principal Receivables.
"Principal Sharing Series" shall mean a Series, that, pursuant
to the related Supplement, is entitled to Shared Principal Collections.
"Principal Shortfalls" shall mean, with respect to a Transfer
Date, the aggregate amount for all outstanding Series that the related
Supplements specify are "Principal Shortfalls" for such Transfer Date.
"Principal Terms" shall have the meaning, with respect to any
Series issued pursuant to an Exchange, specified in subsection 6.9(c).
-16-
<PAGE>
"Purchase Agreements" shall mean (i) the DIC Receivables
Purchase Agreement, dated as of August 14, 1998, between Dillard Investment
Company and the Transferor; (ii) the MFI Receivables Purchase Agreement, dated
as of August 14, 1998, between Mersco Factors, Inc. and the Transferor; (iii)
the DNB Receivables Purchase Agreement, dated as of August 14, 1998, between DNB
and the Transferor; and (iv) the MSNB Receivables Purchase Agreement, dated as
of August 14, 1998, between DNB- La. and the Transferor;
"Rating Agency" shall mean, with respect to each Series, the
rating agency or agencies, if any, specified in the related Supplement.
"Rating Agency Condition" shall mean, at any time with respect
to a Series, the written confirmation of the Rating Agency that a specified
event or modification of the terms of such Series will not result in the
withdrawal or downgrade of the rating of the Certificates of any Series then in
effect.
"Reassignment" shall have the meaning specified in subsection
2.7(b)(ii).
"Reassignment Date" shall have the meaning specified in
subsection 2.4(e).
"Receivable" shall mean any amount owing by any Obligor under
an Account including, without limitation, amounts owing for the payment of goods
and services, Annual Membership Fees, Periodic Finance Charges, Late Fees and
Special Fees, if any but excluding credit insurance premiums.
"Record Date" shall mean, with respect to any Distribution
Date, the last Business Day of the preceding Monthly Period.
"Recoveries" shall mean, (i) with respect to any Monthly Period
or any shorter period commencing on or after the Recovery Determination Date,
the product of (a) all amounts recorded as recoveries on the Credit Card
Portfolio by the Servicer during such Monthly Period or such shorter period, as
the case may be, and (b) the Trust Percentage; and (ii) with respect to any
Monthly Period or any shorter period ending prior to the Recovery Determination
Date, Recoveries shall include all amounts recorded as recoveries with respect
to the Accounts by the Servicer during such period.
"Recovery Determination Date" shall mean the date specified by
the Servicer in an Officer's Certificate delivered to the Trustee as the date
upon which the Servicer will begin to calculate Recoveries.
"Registered Certificates" shall have the meaning specified in
Section 6.1.
-17-
<PAGE>
"Removal Date" shall mean the date on which Receivables in
certain designated Removed Accounts will be reassigned by the Trustee to the
Transferor.
"Removal Notice Date" shall mean the day no later than the
fifth Business Day prior to a Removal Date.
"Removed Accounts" shall have the meaning specified in
subsection 2.7(a).
"Requirements of Law" for any Person shall mean the certificate
of incorporation or articles of association and bylaws or other organizational
or governing documents of such Person, and any law, treaty, rule or regulation,
or determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System).
"Responsible Officer" shall mean any officer within the
Corporate Trust Office (or any successor group of the Trustee), including any
Vice President, any Assistant Secretary or any other officer of the Trustee
customarily performing functions similar to those performed by any person who at
the time shall be an above designated officer, with direct responsibility for
the administration of this Agreement, and also, with any particular officer to
whom any corporate trust matter is referred because of such Officer's knowledge
of and familiarity with the particular subject.
"Revolving Period" shall have, with respect to each Series, the
meaning specified in the related Supplement.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Semi-annual Account Additions" shall mean on any date of
determination, (i) the number of Accounts the Receivables of which have been
added to the Trust pursuant to subsection 2.6(b) and (d) from and including the
first day of the fifth Monthly Period preceding such date of determination; plus
(ii) the number of Accounts, if any, the Receivables of which have been
designated to be added to the Trust pursuant to subsection 2.6(a), from and
including the first day of the fifth Monthly Period preceding such date of
determination.
"Semi-annual Quotient" shall have the meaning specified in
subsection 2.6(c)(ii).
"Series" shall mean any Series of Investor Certificates, which
may include within any such Series a Class or Classes of Investor Certificates
subordinate to another such Class or Classes of Investor Certificates.
-18-
<PAGE>
"Series Account" shall mean, with respect to any Series, any
account or accounts established pursuant to a Supplement for the benefit of such
Series.
"Series Pay Out Event" shall have, with respect to any Series,
the meaning specified pursuant to the Supplement for the related Series.
"Series Servicing Fee Percentage" shall mean, with respect to
any Series, the amount specified in the related Supplement.
"Series Termination Date" shall mean, with respect to any
Series of Certificates, the date stated in the related Supplement.
"Servicer" shall mean initially DNB, and its permitted
successors and assigns and thereafter any Person appointed as successor as
herein provided to service the Receivables.
"Servicer Default" shall have the meaning specified in Section
10.1.
"Servicing Fee" shall have the meaning specified in Section
3.2.
"Servicing Officer" shall mean any officer of the Servicer
involved in, or responsible for, the administration and servicing of the
Receivables whose name appears on a list of servicing officers furnished to the
Trustee by the Servicer, as such list may from time to time be amended.
"Shared Excess Finance Charge Collections" shall mean, with
respect to any Transfer Date, the aggregate amount for all outstanding Series
that the related supplements specify are to be treated as "Shared Excess Finance
Charge Collections" for such Transfer Date.
"Shared Principal Collections" shall mean, with respect to any
Transfer Date, the aggregate amount for all outstanding Series that the related
Supplements specify are to be treated as "Shared Principal Collections" for such
Transfer Date.
"Special Fees" shall mean any fees which are not now but from
time to time may be assessed on the Accounts. On or after the date on which any
of such Special Fees begin to be assessed on the Accounts, the Transferor may
designate in an Officer's Certificate whether such Special Fees shall be treated
as Principal Receivables or Finance Charge Receivables.
"Standard & Poor's" shall mean Standard & Poor's Ratings
Services, a Division of The McGraw-Hill Companies, Inc.
"Successor Servicer" shall have the meaning specified in
subsection 10.2(a).
-19-
<PAGE>
"Supplement" or "Series Supplement" shall mean, with respect to
any Series, a supplement to this Agreement complying with the terms of Section
6.9 of this Agreement, executed in conjunction with any issuance of any Series
of Certificates (or, in the case of the issuance of Certificates on the Initial
Closing Date, the supplement executed in connection with the issuance of such
Certificates).
"Tax Opinion" shall mean with respect to any action, an Opinion
of Counsel delivered to the Trust and the Trustee to the effect that, for U.S.
federal income tax purposes, (a) such action will not adversely affect the tax
characterization as debt of Investor Certificates of any outstanding Series or
Class that were characterized as debt at the time of their issuance, (b)
following such action the Trust will not be deemed to be an association (or a
"publicly traded partnership" within the meaning of Section 7704(b) of the Code)
taxable as a corporation and (c) such action will not cause or constitute a
taxable event in which gain or loss would be recognized by any Investor
Certificateholder (other than DNB or any Certificateholder that is an Affiliate
of DNB) or the Trust.
"Termination Notice" shall have, with respect to any Series,
the meaning specified in subsection 10.1(d).
"Transfer Agent and Registrar" shall have the meaning specified
in Section 6.3 and shall initially be the Trustee.
"Transfer Date" shall mean, unless otherwise specified in the
related Supplement, with respect to any Series, the Business Day immediately
prior to each Distribution Date.
"Transferor" shall mean Dillard Asset Funding Company and its
successors in interest and permitted assigns.
"Transferor Certificate" shall mean the certificate executed by
the Transferor and authenticated by the Trustee, substantially in the form of
Exhibit A and exchangeable as provided in Section 6.9; provided, however, that
at any time there shall be only one Transferor Certificate.
"Transferor Exchange" shall have the meaning specified in
subsection 6.9(b).
"Transferor Interest" shall mean, on any date of determination,
the aggregate amount of Principal Receivables and the principal amounts on
deposit in the Excess Funding Account, any Principal Funding Account and any
other Series Account (if so provided in the applicable Supplement) at the end of
the day immediately prior to such date of determination, minus the Aggregate
Investor Interest at the end of such day, minus the aggregate Enhancement
Invested Amounts (if such amounts are not included in the Investor Interest in
the applicable Supplement), if any, for each Series outstanding at the end of
such day.
-20-
<PAGE>
"Transferor Percentage" shall mean, on any date of
determination, when used with respect to Principal Receivables, Finance Charge
Receivables and Receivables in Defaulted Accounts, a percentage equal to 100%
minus the Aggregate Investor Percentage with respect to such categories of
Receivables.
"Transferor Servicing Fee" shall have the meaning specified in
Section 3.2.
"Transferred Account" shall mean (a) an Account with respect to
which a new credit account number has been issued by the Servicer or the
Transferor under circumstances resulting from a lost or stolen credit card or
from the transfer from one affinity group to another affinity group and not
requiring standard application and credit evaluation procedures under the Credit
Card Guidelines or (b) an Eligible Account resulting from the conversion of an
Account that was a standard account to a premium account or from a premium
account to a standard account, and which in either case can be traced or
identified by reference to or by way of the computer files or microfiche lists
delivered to the Trustee pursuant to Section 2.1 or 2.6 as an account into which
an Account has been transferred.
"Trust" shall mean the trust created by this Agreement, the
corpus of which shall consist of the Receivables now existing or hereafter
created and arising in connection with the Accounts, all monies due or to become
due with respect to the Receivables, all proceeds (as defined in Section 9-306
of the UCC) of the Receivables and Insurance Proceeds relating to the
Receivables, the right to receive certain amounts paid or payable as Recoveries,
such funds as from time to time are deposited in the Collection Account, the
Finance Charge Account, the Principal Account, the Distribution Account, the
Excess Funding Account and any Series Account and the rights to any Credit
Enhancement with respect to any Series. The name of such Trust shall be "Dillard
Credit Card Master Trust I" or any other name at the option of the Transferor;
provided, however, that at least 5 Business Days prior to any change in the name
of Trust, the Transferor shall give written notice of such change to the
Servicer, the Trustee, each Rating Agency, any Credit Enhancement Provider and
all Certificateholders.
"Trust Accounts" shall mean the Collection Account, the
Principal Account, the Finance Charge Account, the Distribution Account and the
Excess Funding Account.
"Trust Extension" shall have the meaning specified in
subsection 12.1(a).
"Trust Pay Out Event" shall have, with respect to each Series,
the meaning specified in Section 9.1.
"Trust Percentage" shall mean, with respect to any Monthly
Period, a fraction expressed as a percentage, the numerator of which is the
aggregate principal amount of Principal Receivables (prior to giving effect to
any reduction thereof for Finance Charge Receivables
-21-
<PAGE>
which are Discount Option Receivables) as of the close of business on the last
day of the prior Monthly Period and the denominator of which is the aggregate
principal balance of the Credit Card Portfolio as of the close of business on
the last day of the prior Monthly Period.
"Trust Portfolio" shall mean the Receivables owned by the Trust
arising under the Accounts.
"Trust Termination Date" shall mean (i) if a Trust Extension
shall not have occurred, the earlier to occur of (a) the first Business Day
after the Distribution Date following the date on which funds shall have been
deposited in the Distribution Account or the applicable Series Account for the
payment of Investor Certificateholders of each Series then issued and
outstanding sufficient to pay in full such certificates, (b) the date specified
in subsection 9.2(b) and (c) July 15, 2021, and (ii) if a Trust Extension shall
have occurred, the Extended Trust Termination Date.
"Trustee" shall mean The Chase Manhattan Bank, a New York
banking corporation, and its successors and any corporation resulting from or
surviving any consolidation or merger to which it or its successors may be a
party and any successor trustee appointed as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in the State of Arizona, Delaware, Louisiana or New
York, as applicable.
"Undivided Interest" shall mean the undivided interest in the
Trust evidenced by an Investor Certificate.
Section 1.2 Other Definitional Provisions.
(a) All terms defined in any Supplement or this Agreement shall
have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
Section 1.1, and accounting terms partially defined in Section 1.1 to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles or regulatory accounting procedures applicable to
the Transferor, as applicable. To the extent that the definitions of accounting
terms herein are inconsistent with the meanings of such terms under generally
accepted accounting principles or such regulatory accounting procedures, the
definitions contained herein shall control.
(c) The agreements, representations and warranties of DNB in
this Agreement and in any Supplement in its capacity as Servicer shall be deemed
to be the agreements, representations and warranties of DNB solely in such
capacity for the time periods during
-22-
<PAGE>
which DNB acts in such capacity under this Agreement and the agreements,
representations and warranties of Dillard Asset Funding Company in this
Agreement and in any Supplement in its capacity as Transferor shall be deemed to
be the agreements, representations and warranties of Dillard Asset Funding
Company solely in such capacity for the time periods and for so long as Dillard
Asset Funding Company acts in such capacity under this Agreement.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to any Supplement or this
Agreement as a whole and not to any particular provision of this Agreement or
any Supplement; and Section, subsection, Schedule and Exhibit references
contained in this Agreement or any Supplement are references to Sections,
subsections, Schedules and Exhibits in or to this Agreement or any Supplement
unless otherwise specified. The Monthly Servicer Certificate, the form of which
is attached as Exhibit C, shall be in substantially the form of Exhibit C, with
such changes as the Servicer may determine to be necessary or desirable;
provided, however, that no such change shall serve to exclude information
required by the Agreement or any Supplement. The Servicer shall, upon making
such determination, deliver to the Trustee and each Rating Agency an Officer's
Certificate to which shall be annexed the form of the related Exhibit, as so
changed. Upon the delivery of such Officer's Certificate to the Trustee, the
related Exhibit, as so changed, shall for all purposes of this Agreement
constitute such Exhibit. The Trustee may conclusively rely upon such Officer's
Certificate in determining whether the related Exhibit, as changed, conforms to
the requirements of this Agreement.
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES
Section 2.1 Conveyance of Receivables. The Transferor does
hereby transfer, assign, set over, and otherwise convey to the Trust for the
benefit of the Certificateholders, without recourse, all of its right, title and
interest in and to (i) the Receivables existing as of the Cut-Off Date and
thereafter created and arising in connection with the Accounts (other than
Additional Accounts), (ii) all monies due or to become due with respect to such
Receivables, (iii) all proceeds of such Receivables, (iv) Insurance Proceeds
relating to such Receivables and (v) Recoveries.
In connection with such transfer, assignment, set-over and
conveyance, the Transferor agrees to file, at its own expense, a financing
statement (including any continuation statements with respect to such financing
statement when applicable) with respect to the Receivables now existing and
hereafter created for the perfection of a security interest (as defined in the
UCC) in accounts and general intangibles (as defined in Section 9-106 of the
UCC) meeting the requirements of applicable state law in such manner and in such
-23-
<PAGE>
jurisdictions as are necessary to perfect such security interest in favor of the
Trust, and to deliver a file-stamped copy of such financing statement or
continuation statement or other evidence of such filing (which may, for purposes
of this Section 2.1, consist of telephone confirmation of such filing) to the
Trustee as soon as practicable after the date of issuance of the Certificates,
and in the case of any continuation statements filed pursuant to this Section
2.1, as soon as practicable after receipt thereof by the Transferor. The
foregoing transfer, assignment, set-over and conveyance to the Trust shall be
made to the Trustee, on behalf of the Trust, and each reference in this
Agreement to such transfer, assignment, set-over and conveyance shall be
construed accordingly.
In connection with such transfer, the Transferor agrees, at its
own expense, within 10 Business Days of the Initial Closing Date to indicate in
its records that Receivables created in connection with the Accounts have been
transferred to the Trust. In addition, the Transferor agrees to cause each of
the Originators, within 10 Business Days of the Initial Closing Date to (a)
indicate in the computer files of the Originators that Receivables created in
connection with the Accounts as of the Initial Closing Date have been
transferred to the Trust pursuant to this Agreement for the benefit of the
Certificateholders and (b) to deliver to the Trustee a computer file or
microfiche list containing a true and complete list of all such Accounts,
identified by account number and setting forth the Receivable balance as of the
Cut-Off Date. Such file or list shall be marked as Schedule 1 to this Agreement,
delivered to the Trustee as confidential and proprietary, and is hereby
incorporated into and made a part of this Agreement. The Transferor further
agrees to cause each of the Originators not to remove such indication in the
file referenced in clause (i) of this paragraph with respect to any Account
during the term of this Agreement unless and until such Account becomes a
Removed Account or a Defaulted Account.
The Transferor hereby grants to the Trustee a security interest
in all of the Transferor's right, title and interest in, to and under the
Receivables existing as of the Cut-Off Date and thereafter created and arising
in connection with the Accounts (other than Additional Accounts), all moneys due
or to become due with respect to such Receivables, all proceeds of such
Receivables and all Insurance Proceeds relating to such Receivables and all
Recoveries and all proceeds thereof to secure a loan in an amount equal to the
unpaid principal amount of the Investor Certificates issued hereunder or to be
issued pursuant to this Agreement and the interest accrued at the related
Certificate Rate, and this Agreement shall constitute a security agreement under
applicable law.
Pursuant to the request of the Transferor, the Trustee shall
cause Certificates in authorized denominations evidencing the entire interest in
the Trust to be duly authenticated and delivered to or upon the order of the
Transferor pursuant to Section 6.2.
-24-
<PAGE>
Section 2.2 Acceptance by Trustee.
(a) The Trustee hereby acknowledges its acceptance, on behalf
of the Trust, of all right, title and interest previously held by the Transferor
in and to the Receivables existing as of the Cut-Off Date and thereafter created
and arising in connection with the Accounts, all monies due or to become due
with respect thereto (including all Finance Charge Receivables), all proceeds of
such Receivables, Insurance Proceeds relating to such Receivables and all
Recoveries and the proceeds thereof, and declares that it shall maintain such
right, title and interest, upon the Trust herein set forth, for the benefit of
all Certificateholders. The Trustee further acknowledges that, prior to or
simultaneously with the execution and delivery of this Agreement, the Transferor
delivered or caused to be delivered to the Trustee the computer file or
microfiche list described in the third paragraph of Section 2.1.
(b) The Trustee hereby agrees not to disclose to any Person any
of the account numbers or other information contained in the computer files or
microfiche lists delivered to the Trustee by the Transferor pursuant to Sections
2.1, 2.6 and 2.7 ("Account Information") except as required in connection with
the performance of its duties hereunder or in enforcing the rights of the
Certificateholders or to a Successor Servicer appointed pursuant to Section
10.2, or as mandated pursuant to any Requirement of Law applicable to the
Trustee or as requested by any Person in connection with financing statements
filed with respect to the Trust. The Trustee agrees (i) to take such measures as
shall be reasonably requested by the Transferor or the Servicer to protect and
maintain the security and confidentiality of such information, and, in
connection therewith, shall allow the Transferor and the Servicer to inspect the
Trustee's security and confidentiality arrangements from time to time during
normal business hours and (ii) not to use any of the Account Information to
compete, directly or indirectly, with either Originator or the Servicer. In the
event that the Trustee is required by law to disclose any Account Information,
the Trustee shall provide the Transferor and the Servicer with prompt written
notice, unless such notice is prohibited by law, of any such request or
requirement so that the Transferor or the Servicer may request a protective
order or other appropriate remedy. The Trustee shall use its best efforts to
provide the Transferor and the Servicer with written notice no later than five
Business Days prior to any disclosure pursuant to this subsection 2.2(b).
(c) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement. Neither the Trust nor the Trustee accepts any
duty or obligation of the Transferor hereunder to any Person, including, but not
limited to, any duty or obligation to any Obligor.
Section 2.3 Representations and Warranties of the Transferor.
The Transferor hereby represents and warrants to the Trust as of the Initial
Closing Date:
-25-
<PAGE>
(a) Organization and Good Standing. The Transferor is a
business trust duly organized and validly existing in good standing
under the laws of the jurisdiction of its organization and (i) has full
power, authority and legal right to execute, deliver and perform its
obligations under this Agreement and the Purchase Agreements and to
execute and deliver to the Trustee the Certificates pursuant hereto,
and (ii), in all material respects, to own its properties and conduct
its business as such properties are presently owned and such business
is presently conducted.
(b) Due Qualification. The Transferor is duly qualified to do
business and is in good standing (or is exempt from such requirement)
and has obtained all necessary licenses and approvals with respect to
the Transferor in each jurisdiction in which failure to so qualify or
to obtain such licenses and approvals would render any Credit Card
Agreement relating to an Account or any Receivable unenforceable by the
Transferor or the Trust or would have a material adverse effect on the
Certificateholders; provided, however, that no representation or
warranty is made with respect to any qualifications, licenses or
approvals which the Trustee would have to obtain to do business in any
state in which the Trustee seeks to enforce any Account or Receivable.
(c) Due Authorization. The execution and delivery of this
Agreement and the execution and delivery to the Trustee of the
Certificates by the Transferor and the consummation of the transactions
provided for in this Agreement and the Purchase Agreements have or had,
as the case may be, have been duly authorized by the Transferor by all
necessary corporate action on its part and this Agreement will remain,
from the time of its execution, an official record of the Transferor.
(d) No Conflict. The execution and delivery of this Agreement,
the Purchase Agreements and the Certificates, the performance of the
transactions contemplated by this Agreement and the Purchase Agreements
and the fulfillment of the terms hereof will not conflict with, result
in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material
default under, any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Transferor is a party or by
which it or any of its properties are bound, except to the extent that
the same could not reasonably be expected to have a material adverse
effect on the Certificateholders.
(e) No Violation. The execution and delivery of
this Agreement, the Purchase Agreements, any Supplement and the
Certificates, the performance of the transactions contemplated
by this Agreement and the Purchase Agreements and the
fulfillment of the terms hereof and thereof will not conflict
with or violate any Requirements of Law applicable to the
-26-
<PAGE>
Transferor, except to the extent that the same could not reasonably be
expected to have a material adverse effect on the Certificateholders.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Transferor, threatened against
the Transferor before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (i) asserting
the invalidity of this Agreement or any Purchase Agreement or the
Certificates, (ii) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this
Agreement, the Purchase Agreements or the Certificates, (iii) seeking
any determination or ruling that, in the reasonable judgment of the
Transferor, would materially and adversely affect the performance by
the Transferor of its obligations under this Agreement or a Purchase
Agreement, (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Agreement or any Purchase Agreement or the Certificates or (v) seeking
to affect adversely the income tax attributes of the Trust.
(g) Eligibility of Accounts. As of the Cut-Off Date, each
Account was an Eligible Account and no selection procedures adverse to
the Investor Certificateholders have been employed by the Transferor in
selecting the Accounts from among the Eligible Accounts in the Credit
Card Portfolio.
(h) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental
body or official required in connection with the execution and delivery
of this Agreement and the Certificates, the performance of the
transactions contemplated by this Agreement and the fulfillment of the
terms hereof, have been obtained, except where the failure to obtain
such approvals, authorizations, consents, orders or other actions could
not reasonably be expected to have a material adverse effect on the
Certificateholders.
For the purposes of the representations and warranties
contained in this Section 2.3 and made by the Transferor on the Initial Closing
Date, "Certificates" shall mean the Certificates issued on the Initial Closing
Date. The representations and warranties set forth in this Section 2.3 shall
survive the transfer and assignment of the respective Receivables to the Trust
and termination of the rights and obligations of the Servicer pursuant to
Section 10.1. The Transferor hereby represents and warrants to the Trust, with
respect to any Series of Certificates, as of its Closing Date, unless otherwise
stated in such Supplement, that the representations and warranties of the
Transferor set forth in Section 2.3 are true and correct as of such date (for
the purposes of such representations and warranties, "Certificates" shall mean
the Certificates issued on the related Closing Date). Upon discovery by the
Transferor, the Servicer or the Trustee of a breach of
-27-
<PAGE>
any of the foregoing representations and warranties, the party discovering such
breach shall give prompt written notice to the others.
Section 2.4 Representations and Warranties of the Transferor
Relating to the Agreement and the Receivables.
(a) Binding Obligation; Valid Transfer and
Assignment. The Transferor
hereby represents and warrants to the Trust that, as of the Initial
Closing Date:
(i) This Agreement constitutes a valid and legally
binding obligation of the Transferor, enforceable against the
Transferor in accordance with its terms, except (A) as may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and the
rights of creditors of business trusts organized under the laws of the
state of its organization, and (B) as may be limited by general
equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
(ii) This Agreement constitutes either (A) a valid
transfer, assignment, set over and conveyance to the Trust of all
right, title and interest of the Transferor in and to the Receivables
now existing and hereafter created and arising in connection with the
Accounts (other than Receivables in Additional Accounts), all proceeds
of such Receivables and Insurance Proceeds relating thereto, and such
Receivables and all proceeds thereof and Insurance Proceeds relating
thereto will be held by the Trust free and clear of any Lien of any
Person claiming through or under the Transferor or any of its
Affiliates except for (x) Liens permitted under subsection 2.5(b), (y)
the interest of the Transferor as Holder of the Transferor Certificate
and (z) the Transferor's right, if any, to interest accruing on, and
investment earnings, if any, in respect of the Finance Charge Account,
the Principal Account or any Series Account, as provided in this
Agreement or the related Supplement, or (B) a grant of a security
interest (as defined in the UCC) in such property to the Trust, which
is enforceable with respect to the existing Receivables, the proceeds
thereof and Insurance Proceeds relating thereto upon execution and
delivery of this Agreement, and which will be enforceable with respect
to such Receivables hereafter created, the proceeds thereof and
Insurance Proceeds relating thereto, upon such creation. If this
Agreement constitutes the grant of a security interest to the Trust in
such property, upon the filing of the financing statement described in
Section 2.1 and in the case of the Receivables hereafter created and
proceeds thereof and Insurance Proceeds relating thereto, upon such
creation, the Trust shall have a first priority perfected security
interest in the Transferor's rights in such property (subject to
Section 9-
-28-
<PAGE>
306 of the UCC), except for Liens permitted under subsection 2.5(b).
Neither the Transferor nor any Person claiming through or under the
Transferor shall have any claim to or interest in the Principal
Account, the Finance Charge Account, the Distribution Account or any
Series Account, except for the Transferor's rights to receive interest
accruing on, and investment earnings in respect of, the Finance Charge
Account and Principal Account as provided in this Agreement (or, if
applicable, any Series Account as provided in any Supplement) and, if
this Agreement constitutes the grant of a security interest in such
property, except for the interest of the Transferor in such property as
a debtor for purposes of the UCC.
(b) Eligibility of Receivables. The Transferor
hereby represents and warrants to the Trust as of the Initial Closing
Date and as of each Addition Date, as the case may be, that:
(i) Each Receivable is an Eligible
Receivable as of the Cut-Off Date or the Addition Date, as applicable.
(ii) Each Receivable then existing has been
transferred to the Trust free and clear of any Lien of any Person
claiming through or under the Transferor or any of its Affiliates
(other than Liens permitted under subsection 2.5(b)) and in compliance,
in all material respects, with all Requirements of Law applicable to
the Transferor.
(iii) With respect to each Receivable then existing,
all consents, licenses, approvals or authorizations of or registrations
or declarations with any Governmental Authority required to be
obtained, effected or given by the Transferor in connection with the
conveyance of such Receivable to the Trust have been duly obtained,
effected or given and are in full force and effect.
(iv) On each day on which any new Receivable is
created, the Transferor shall be deemed to represent and warrant to the
Trust that (A) each Receivable created on such day is an Eligible
Receivable, (B) each Receivable created on such day has been conveyed
to the Trust in compliance, in all material respects, with all
Requirements of Law applicable to the Transferor, (C) with respect to
each such Receivable, all consents, licenses, approvals or
authorizations of or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given by
the Transferor in connection with the conveyance of such Receivable to
the Trust have been duly obtained, effected or given and are in full
force and effect and (D) the representations and warranties set forth
in subsection 2.4(a) are true and correct with respect to each
Receivable created on such day as if made on such day.
-29-
<PAGE>
(v) As of the Initial Closing Date, Schedule 1 to this
Agreement, and as of the applicable Addition Date with respect to
Additional Accounts designated pursuant to Sections 2.6(a) and (b), the
related computer file or microfiche list referred to in Section 2.6, is
an accurate and complete listing in all material respects of all the
Accounts as of the Cut-Off Date, or with respect to Additional
Accounts, as of the applicable Addition Date and the information
contained therein with respect to the identity of such Accounts and the
Receivables existing thereunder is true and correct in all material
respects as of the Cut-Off Date or such applicable Addition Date.
(c) Notice of Breach. The representations and warranties set
forth in this Section 2.4 shall survive the transfer and assignment of the
respective Receivables to the Trust. Upon discovery by the Transferor, the
Servicer or the Trustee of a material breach of any of the representations and
warranties set forth in this Section 2.4, the party discovering such breach
shall give prompt written notice to the other parties mentioned above. The
Transferor agrees to cooperate with the Servicer and the Trustee in attempting
to cure any such breach.
(d) Transfer of Ineligible Receivables.
(i) Automatic Removal. In the event of a
breach with respect to a Receivable of any representations and warranties set
forth in subsection 2.4(b)(ii), or in the event that a Receivable is not an
Eligible Receivable as a result of the failure to satisfy the conditions set
forth in clause (d) of the definition of Eligible Receivable, and any of the
following three conditions is met: (A) as a result of such breach or event such
Receivable is charged off as uncollectible or the Trust's rights in, to or under
such Receivable or its proceeds are impaired or the proceeds of such Receivable
are not available for any reason to the Trust free and clear of any Lien; (B) a
Lien upon the subject Receivable (1) arises in favor of the United States of
America or any State or any agency or instrumentality thereof and involves taxes
or liens arising under Title IV of ERISA or (2) has been consented to by the
Transferor, DNB or DNB-La.; or (C) the unsecured short-term debt rating of
Dillard's is not at least "P-1" by Moody's and "A-1" by Standard & Poor's and
the Lien upon the subject Receivable ranks prior to the Lien created pursuant to
this Agreement; then, upon the earlier to occur of the discovery of such breach
or event by the Transferor or the Servicer or receipt by the Transferor of
written notice of such breach or event given by the Trustee or the Servicer,
each such Receivable shall be automatically removed from the Trust on the terms
and conditions set forth in subsection 2.4(d)(iii).
(ii) Removal After Cure Period. In the
event of a breach of any of the representations and warranties set forth in
subsection 2.4(b) other than a breach or event as set forth in clause (d)(i)
above, and as a result of such breach the related Account becomes a Defaulted
Account or the Trust's rights in, to or under the Receivable or its proceeds are
impaired or the proceeds of such Receivable are not
-30-
<PAGE>
available for any reason to the Trust free and clear of any Lien, then, upon the
expiration of 60 days (or such longer period as may be agreed to by the Trustee
in its sole discretion, but in no event later than 120 days) from the earlier to
occur of the discovery of any such event by either the Transferor or the
Servicer, or receipt by the Transferor of written notice of any such event given
by the Trustee or Servicer, each such Receivable shall be removed from the Trust
on the terms and conditions set forth in subsection 2.4(d)(iii); provided,
however, that no such removal shall be required to be made if, on any day within
such applicable period, such representations and warranties with respect to such
Receivable shall then be true and correct in all material respects as if such
Receivable had been created on such day.
(iii) Procedures for Removal. When the
provisions of subsection 2.4(d)(i) or (ii) above require removal of a
Receivable, the Transferor shall accept reassignment of such Receivable (an
"Ineligible Receivable") by directing the Servicer to deduct the principal
balance of each such Ineligible Receivable from the Principal Receivables in the
Trust and to decrease the Transferor Interest by such amount. On and after the
date of such removal, each Ineligible Receivable shall be deducted from the
aggregate amount of Principal Receivables used in the calculation of any
Investor Percentage, the Transferor Percentage or the Transferor Interest. In
the event that the exclusion of an Ineligible Receivable from the calculation of
the Transferor Interest would cause the Transferor Interest to be reduced below
the Minimum Transferor Interest, the Transferor shall promptly, but in no event
later than 10 Business Days after such event, make a deposit in the Excess
Funding Account in immediately available funds in an amount equal to the amount
by which the Transferor Interest would be reduced below the Minimum Transferor
Interest. The portion of such deposit allocated to the Investor Certificates of
each Series shall be distributed to the Investor Certificateholders of each
Series in the manner specified in Article IV, if applicable, on the Distribution
Date relating to the Monthly Period in which such deposit is made. Upon the
reassignment to the Transferor of an Ineligible Receivable, the Trust shall
automatically and without further action be deemed to transfer, assign, set-over
and otherwise convey to the Transferor, without recourse, representation or
warranty, all the right, title and interest of the Trust in and to such
Ineligible Receivable, all monies due or to become due with respect to such
Ineligible Receivable and all proceeds of such Ineligible Receivable and
Insurance Proceeds relating to such Ineligible Receivable allocated to such
Ineligible Receivable pursuant to any Supplement. Such reassigned Ineligible
Receivable shall be treated by the Trust as collected in full as of the date on
which it was transferred. The Trustee shall execute such documents and
instruments of transfer or assignment and take other actions as shall reasonably
be requested by the Transferor to evidence the conveyance of such Ineligible
Receivable pursuant to this subsection 2.4(d)(iii). The obligation of the
Transferor set forth in this subsection 2.4(d)(iii), or the automatic removal of
such Receivable from the Trust, as the case may be, shall constitute the sole
remedy respecting any breach of the representations and warranties set forth in
the above-referenced subsections with respect
-31-
<PAGE>
to such Receivable available to Certificateholders or the Trustee on
behalf of Certificateholders.
(iv) Proceeds Held by Servicer. For the
purposes of subsections 2.4(d)(i) and (ii) above, proceeds of a Receivable shall
not be deemed to be impaired hereunder solely because such proceeds are held by
the Servicer (if the Servicer is DNB, DNB-La., Dillard's or a Sub-Servicer) for
more than the applicable period under Section 9-306(3) of the UCC.
(e) Reassignment of Trust Portfolio. In the event of a breach
of any of the representations and warranties set forth in subsection 2.4(a)
which has a material adverse effect on the Holders of the Investor Certificates,
either the Trustee or the Holders of Investor Certificates evidencing Undivided
Interests aggregating more than 50% of the Aggregate Investor Interest, by
notice then given in writing to the Transferor (and to the Trustee and the
Servicer, if given by the Investor Certificateholders), may direct the
Transferor to accept reassignment of an amount of Principal Receivables (as
specified below) within 60 days of such notice (or within such longer period as
may be specified in such notice), and the Transferor shall be obligated to
accept reassignment of such Principal Receivables on a Distribution Date
specified by the Transferor (such Distribution Date, the "Reassignment Date")
occurring within such applicable period on the terms and conditions set forth
below; provided, however, that no such reassignment shall be required to be made
if, at any time during such applicable period, the representations and
warranties contained in subsection 2.4(a) shall then be true and correct in all
material respects. The Transferor shall deposit on the Transfer Date (in New
York Clearing House, next day funds) preceding the Reassignment Date an amount
equal to the reassignment deposit amount for such Receivables in the
Distribution Account or Series Account, as provided in the related Supplement,
for distribution to the Investor Certificateholders pursuant to Article XII. The
reassignment deposit amount with respect to each Series for such reassignment,
unless otherwise stated in the related Supplement, shall be equal to (i) the
Investor Interest and Enhancement Invested Amount, if any, of such Series at the
end of the day on the last day of the Monthly Period preceding the Reassignment
Date, less the amount, if any, previously allocated for payment of principal to
such Certificateholders on the related Distribution Date in the Monthly Period
in which the Reassignment Date occurs, plus (ii) an amount equal to all interest
accrued but unpaid on the Investor Certificates of such Series at the applicable
Certificate Rate through the Reassignment Date, less the amount, if any,
previously allocated for payment of interest to the Certificateholders of such
Series on the related Distribution Date in the Monthly Period in which the
Reassignment Date occurs. Payment of the reassignment deposit amount with
respect to each Series, and all other amounts in the Distribution Account or the
applicable Series Account in respect of the preceding Monthly Period, shall be
considered a prepayment in full of the Receivables represented by the Investor
Certificates on the Distribution Date following the Transfer Date on which such
amount has been deposited in full into the Distribution Account or the
applicable Series Account, the Receivables and all monies due or to become due
with respect to such
-32-
<PAGE>
Receivables and all proceeds of the Receivables and Insurance Proceeds relating
to such Receivables and Recoveries (if any) allocable to the Series shall be
released to the Transferor after payment of all amounts otherwise due hereunder
on or prior to such dates and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be prepared by and as are reasonably
requested by the Transferor to vest in the Transferor, or its designee or
assignee, all right, title and interest of the Trust in and to the Receivables,
all monies due or to become due with respect to such Receivables and all
proceeds of the Receivables and Insurance Proceeds relating to such Receivables
and Recoveries (if any) allocable to the Series. If the Trustee or the Investor
Certificateholders give notice directing the Transferor to accept reassignment
as provided above, the obligation of the Transferor to accept reassignment of
the Receivables and pay the reassignment deposit amount pursuant to this
subsection 2.4(e) shall constitute the sole remedy respecting a breach of the
representations and warranties contained in subsection 2.4(a) available to the
Investor Certificateholders or the Trustee on behalf of the Investor
Certificateholders.
Section 2.5 Covenants of the Transferor. The
Transferor hereby covenants that:
(a) Receivables to be Accounts or General Intangibles. Except
in connection with the enforcement thereof, the Transferor will take no
action to cause any Receivable to be evidenced by any instrument (as
defined in the UCC). Each Receivable shall be payable pursuant to a
contract which does not create a Lien on any goods purchased
thereunder. The Transferor will take no action to cause any Receivable
to be anything other than an "account" or "general intangible" (as
defined in the UCC).
(b) Security Interests. Except for the conveyances hereunder,
the Purchase Agreements and the Original Purchase Agreements, the
Transferor will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on
any Receivable, whether now existing or hereafter created, or any
interest therein; the Transferor will immediately notify the Trustee of
the existence of any Lien on any Receivable, and the Transferor shall
defend the right, title and interest of the Trust in, to and under the
Receivables, whether now existing or hereafter created, against all
claims of third parties claiming through or under the Transferor;
provided, however, that nothing in this subsection 2.5(b) shall prevent
or be deemed to prohibit the Transferor from suffering to exist upon
any of the Receivables any Liens for municipal or other local taxes if
such taxes shall not at the time be due and payable or if the
Transferor shall currently be contesting the validity thereof in good
faith by appropriate proceedings and shall have set aside on its books
adequate reserves with respect thereto.
-33-
<PAGE>
(c) Finance Charges and Other Fees. The Transferor, except as
otherwise required by any Requirement of Law, or as is deemed by the
Servicer to be necessary in order for an Originator to maintain its
credit card business, based upon a good faith assessment by the
Servicer, in its sole discretion, of the nature of the competition in
the credit card business, shall not at any time reduce the Periodic
Finance Charges assessed on any Receivable or other fees on any Account
if, as a result of such reduction, the Servicer's reasonable
expectation of the Portfolio Yield as of such date (after giving effect
to any concurrent exercise of a discount option) would be less than the
Base Rate.
(d) Credit Card Agreements and Account Guidelines. The
Transferor shall cause the Originators to comply with and perform their
respective obligations under the Credit Card Agreements relating to the
Accounts and the Credit Card Guidelines except insofar as any failure
to comply or perform would not materially and adversely affect the
rights of the Trust or the Certificateholders hereunder or under the
Certificates. The Transferor may permit an Originator to change the
terms and provisions of its Credit Card Agreements or the Credit Card
Guidelines in any respect (including, without limitation, the reduction
of the required minimum monthly payment, the calculation of the amount,
or the timing, of charge offs and the Periodic Finance Charges and
other fees to be assessed thereon) only if such change (i) would not,
in the reasonable belief of such Originator, cause a Pay Out Event to
occur, and (ii) is made applicable to the comparable segment of the
revolving credit card accounts owned by such Originator (if the
Originator owns such a comparable segment) which have characteristics
the same as, or substantially similar to, the Accounts that are the
subject of such change, except as otherwise restricted by an
endorsement, sponsorship, or other agreement between such Originator
and an unrelated third party or by the terms of the Credit Card
Agreements.
(e) Account Allocations.
(i) In the event that the Transferor is unable for any
reason to transfer Receivables to the Trust in accordance with the
provisions of this Agreement (including, without limitation, by reason
of the application of the provisions of Section 9.2 or an order by any
federal governmental agency having regulatory authority over the
Transferor or any court of competent jurisdiction that the Transferor
not transfer any additional Principal Receivables to the Trust) then,
in any such event, (A) the Transferor agrees to allocate and pay to the
Trust, after the date of such inability, all Collections with respect
to Principal Receivables, and all amounts which would have constituted
Collections with respect to Principal Receivables but for the
Transferor's inability to transfer such Receivables (up to an aggregate
amount equal to
-34-
<PAGE>
the amount of Principal Receivables in the Trust on such date); (B) the
Transferor agrees to have such amounts applied as Collections in
accordance with Article IV; and (C) for only so long as all Collections
and all amounts which would have constituted Collections are allocated
and applied in accordance with clauses (A) and (B) above, Principal
Receivables (and all amounts which would have constituted Principal
Receivables but for the Transferor's inability to transfer Receivables
to the Trust) that are written off as uncollectible in accordance with
this Agreement shall continue to be allocated in accordance with
Article IV, and all amounts that would have constituted Principal
Receivables but for the Transferor's inability to transfer Receivables
to the Trust shall be deemed to be Principal Receivables for the
purpose of calculating (i) the applicable Investor Percentage with
respect to any Series and (ii) the Aggregate Investor Percentage
thereunder. If the Transferor is unable pursuant to any Requirement of
Law to allocate Collections as described above, the Transferor agrees
that it shall in any such event allocate, after the occurrence of such
event, payments on each Account with respect to the principal balance
of such Account first to the oldest principal balance of such Account
and to have such payments applied as Collections in accordance with
Article IV. The parties hereto agree that Finance Charge Receivables,
whenever created, accrued in respect of Principal Receivables that have
been conveyed to the Trust, or that would have been conveyed to the
Trust but for the above described inability to transfer such
Receivables, shall continue to be a part of the Trust notwithstanding
any cessation of the transfer of additional Principal Receivables to
the Trust and that Collections with respect thereto shall continue to
be allocated and paid in accordance with Article IV.
(ii) In the event that, pursuant to subsection 2.4(d),
the Transferor accepts reassignment of an Ineligible Receivable as a
result of a breach of the representations and warranties in subsection
2.4(b) relating to such Receivable, then, in any such event, the
Transferor agrees to account for payments received with respect to such
Ineligible Receivable separately from its accounting for Collections on
Principal Receivables retained by the Trust. If payments received from
or on behalf of an Obligor are not specifically applicable either to an
Ineligible Receivable of such Obligor reassigned to the Transferor or
to the Receivables of such Obligor retained in the Trust, then the
Transferor agrees to allocate payments proportionately based on the
total amount of Principal Receivables of such Obligor retained in the
Trust and the total amount owing by such Obligor on any Ineligible
Receivables reassigned to the Transferor, and the portion allocable to
any Principal Receivables retained in the Trust shall be treated as
Collections and deposited in accordance with the provisions of Article
IV.
-35-
<PAGE>
(f) Conveyance of Accounts. The Transferor shall permit the
transfer of Accounts (i) directly to any Affiliate of an Originator
that executes an agreement assuming with respect to such Accounts the
obligations and duties of such Originator or indirectly to any
Affiliate in one or more substantially simultaneous transactions among
such Originator, such Affiliate and any other Affiliates of such
Originator or (ii) to any other Person, provided that such other Person
executes such an agreement and the Rating Agency Condition is
satisfied; provided, however, that the Transferor shall not prohibit
such Originator from conveying, assigning, exchanging or otherwise
transferring the Accounts in connection with a transaction complying
with the provisions of the DNB Purchase Agreement.
Section 2.6 Addition of Accounts.
(a) (i) If, (A) as of the end of any Monthly Period, the
Transferor Interest is less than the Minimum Transferor Interest for that period
the Transferor shall designate additional eligible accounts from the Originators
("Additional Accounts") to be included as Accounts in a sufficient amount such
that the Transferor Interest after giving effect to such addition will be at
least equal to the Minimum Transferor Interest, or (B) as of the end of any
Monthly Period, the sum of the aggregate amount of Principal Receivables is less
than the Minimum Aggregate Principal Receivables (as adjusted for any Series
having a Companion Series as described in the Supplement for such Series), the
Transferor shall designate Additional Accounts to be included as Accounts in a
sufficient amount such that the aggregate amount of Principal Receivables will
be equal to or greater than the Minimum Aggregate Principal Receivables.
Receivables from such Additional Accounts shall be transferred to the Trust on
or before the tenth Business Day following the end of such Monthly Period.
(ii) In lieu of, or in addition to,
designating Additional Accounts pursuant to clause (i) above, the Transferor
may, subject to the conditions specified in paragraph (c) below, convey to the
Trust participations representing undivided interests in a pool of assets
primarily consisting of receivables arising under revolving credit card accounts
or other revolving credit accounts owned by the Transferor or any Affiliate of
any Transferor and collections thereon ("Participations"). The addition of
Participations in the Trust pursuant to this paragraph (a) or paragraph (b)
below shall be effected by an amendment hereto, dated the applicable Addition
Date, pursuant to subsection 13.1(a).
(b) In addition to its obligation under subsection 2.6(a), the
Transferor may, but shall not be obligated to, designate from time to time
Additional Accounts of the Transferor to be included as Accounts or
Participations to be included as Trust Assets, in either case as of the
applicable Addition Date.
-36-
<PAGE>
(c) The Transferor agrees that any such transfer of Receivables
from Additional Accounts, under subsection 2.6(a) or (b) shall satisfy the
following conditions (to the extent provided below):
(i) On or before the fifth Business Day prior to the
Addition Date with respect to additions pursuant to subsection 2.6(a)
and on or before the tenth Business Day prior to the Addition Date with
respect to additions pursuant to subsection 2.6(b) (the "Notice Date"),
the Transferor shall give the Trustee, each Rating Agency and the
Servicer written notice that such Additional Accounts or Participations
will be included, which notice shall specify the approximate aggregate
amount of the Receivables to be transferred.
(ii) The Transferor (A) shall transfer to the Trust
Receivables only in Eligible Accounts, and (B) shall satisfy the
applicable condition in accordance with subsection 2.6(e) if such
designation of Additional Accounts is made pursuant to subsection
2.6(b) or (d) and if the addition of such Additional Accounts
(1) would cause the quotient (the "Annual Quotient") of (x) the
sum of the Annual Account Additions after giving effect to such
addition plus the related Base Amount divided by (y) the
related Base Amount to exceed 20%, or
(2) would cause the quotient (the "Semi-annual Quotient") of
(x) the sum of the Semi-annual Account Additions after giving
effect to such addition plus the related Base Amount divided by
(y) the related Base Amount to exceed 15%;
or if any such Additional Accounts were not originated in the
ordinary course of an Originator's business.
(iii) On or before the Addition Date, the Transferor
shall have delivered to the Trustee a written assignment (including an
acceptance by the Trustee on behalf of the Trust for the benefit of the
Investor Certificateholders) in substantially the form of Exhibit B
(the "Assignment") and the Transferor shall have indicated in its
computer files that the Receivables created in connection with the
Additional Accounts have been transferred to the Trust and, within five
Business Days thereafter, or as otherwise agreed upon between the
Transferor and the Trustee, the Transferor shall have delivered to the
Trustee a computer file or microfiche list containing a true and
complete list of all Additional Accounts, adequately identified by
billing cycle and/or account number and the aggregate amount of the
Receivables in such Additional Accounts, as of the Addition Date, which
computer file or microfiche list shall be as of the date of such
Assignment incorporated into and made a part of such Assignment and
this Agreement.
-37-
<PAGE>
(iv) The Transferor shall represent and warrant that
(x) each Additional Account is, as of the Addition Date, an Eligible
Account, and each Receivable in such Additional Account is, as of the
Addition Date, an Eligible Receivable, (y) no selection procedures
believed by the Transferor to be materially adverse to the interests of
the Investor Certificateholders were utilized in selecting the
Additional Accounts from the available Eligible Accounts from the
Credit Card Portfolio, and (z) as of the Addition Date, the Transferor
is not insolvent.
(v) The Transferor shall represent and warrant that,
as of the Addition Date, the Assignment constitutes either (x) a valid
transfer and assignment to the Trust of all right, title and interest
of the Transferor in and to the Receivables then existing and
thereafter created in the Additional Accounts, and all proceeds (as
defined in the UCC) of such Receivables and Insurance Proceeds relating
thereto and such Receivables and all proceeds thereof and Insurance
Proceeds relating thereto will be held by the Trust free and clear of
any Lien of any Person claiming through or under the Transferor or any
of its Affiliates, except for (i) Liens permitted under subsection
2.5(b), (ii) the interest of the Transferor as Holder of the Transferor
Certificate and (iii) the Transferor's right to receive interest
accruing on, and investment earnings in respect of, the Finance Charge
Account and the Principal Account, or any Series Account as provided in
this Agreement and any related Supplement or (y) a grant of a security
interest (as defined in the UCC), in such property to the Trust, which
is enforceable with respect to then existing Receivables of the
Additional Accounts, the proceeds (as defined in the UCC), thereof and
Insurance Proceeds relating thereto upon the conveyance of such
Receivables to the Trust, and which will be enforceable with respect to
the Receivables thereafter created in respect of Additional Accounts
conveyed on such Addition Date, the proceeds (as defined in the UCC),
thereof and Insurance Proceeds relating thereto upon such creation; and
(z) if the Assignment constitutes the grant of a security interest to
the Trust in such property, upon the filing of a financing statement as
described in Section 2.1 with respect to such Additional Accounts and
in the case of the Receivables thereafter created in such Additional
Accounts and the proceeds (as defined in the UCC), thereof, and
Insurance Proceeds relating thereto, upon such creation, the Trust
shall have a first priority perfected security interest in such
property (subject to Section 9-306 of the UCC), except for Liens
permitted under subsection 2.5(b). (v) The Transferor shall deliver an
Officer's Certificate substantially in the form of Schedule 2 to
Exhibit B to the Trustee confirming the items set forth in paragraph
(iii) above.
-38-
<PAGE>
(vi) The Transferor shall deliver an Opinion of
Counsel with respect to the Receivables in the Additional Accounts to
the Trustee substantially in the form of Exhibit E.
(vii) With respect to a Participation included as
Trust Assets pursuant to subsection 2.6(b), the Transferor shall
deliver a Tax Opinion.
(d) In addition to the occasional designation of Additional
Accounts as required or permitted pursuant to subsections 2.6(a) and (b) above,
the Transferor agrees that each new Account originated in the normal course of
an Originator's business and purchased by the Transferor pursuant to a Purchase
Agreement shall automatically be included as an Account (and the Receivables
arising thereunder automatically transferred to the Trust) effective on the
tenth Business Day following the end of the Monthly Period in which such account
is originated and purchased; provided, however, that such automatic inclusion
and transfer shall not occur with respect to any such account if: (i) such
account does not qualify as an Eligible Account, (ii) the inclusion in the Trust
of the Receivables in such Account, if such Accounts had been designated by the
Transferor pursuant to subsection 2.6(b), would have caused the limitations set
forth in subsection 2.6(c)(ii) to be exceeded (unless the Transferor shall have
satisfied any applicable condition to such addition), or (iii) the Transferor
otherwise designates such account as an account which is not to be included as
an Account pursuant to this subsection 2.6(d). On or before the fifth Business
Day of each month next succeeding a calendar month in which Accounts were
included pursuant to the preceding sentence, the Transferor shall (i) indicate
in its books and records, including the computer files of the receivables, that
the Receivables created in connection with such included Accounts have been
transferred to the Trust, and (ii) shall deliver to the Trustee a computer file
or microfiche list containing a true and complete list of all such included
Accounts identified by account number and by the Receivables balance as of the
end of such calendar month, which computer file or microfiche list shall be
delivered to the Trustee as confidential and proprietary and incorporated into
and made a part of this Agreement. The Transferor, at its option, may, by
providing written notice to the Trustee and the Servicer, terminate or suspend
the automatic inclusion of Additional Accounts at any time.
(e) (i) The Rating Agency Condition shall be applicable and
must be satisfied whenever the Semi-annual Quotient exceeds the amount set forth
in subsection 2.6(c)(ii)(B)(2) or whenever the Annual Quotient exceeds the
amount set forth in 2.6(c)(ii)(B)(1) or whenever Additional Accounts are added
that were not originated in the ordinary course of an Originator's business.
Section 2.7 Removal of Accounts.
(a) Subject to the conditions set forth below, the Transferor
may, but shall not be obligated to, designate Receivables from Accounts for
deletion and removal ("Removed Accounts") from the Trust;
-39-
<PAGE>
provided, however, that the Transferor shall not make more than one such
designation in any Monthly Period. On or before the fifth Business Day (the
"Removal Notice Date") prior to the date on which the designated Removed
Accounts will be reassigned by the Trustee to the Transferor (the "Removal
Date"), the Transferor shall give the Trustee and the Servicer written notice
that the Receivables from such Removed Accounts are to be reassigned to the
Transferor.
(b) The Transferor shall be permitted to designate and require
reassignment to it of the Receivables from Removed Accounts only upon
satisfaction of the following conditions:
(i) The removal of any Receivables of any Removed
Accounts on any Removal Date shall not, in the reasonable belief of the
Transferor, (a) cause a Pay Out Event to occur; provided, however, that
for the purposes of this subsection 2.7(b)(i), the Receivables of each
Removed Account shall be considered to have been removed as of the
Removal Date, (b) cause the Transferor Interest to be less than the
Minimum Transferor Interest on such Removal Date, (c) cause the sum of
the aggregate amount of Principal Receivables and the Excess Funding
Amount to be less than the Minimum Aggregate Principal Receivables, or
(d) result in the failure to make any payment specified in the related
Supplement with respect to any Series.
(ii) On or prior to the Removal Date, the Transferor
shall have delivered to the Trustee for execution a written assignment
in substantially the form of Exhibit G (the "Reassignment") and, within
five Business Days thereafter, or as otherwise agreed upon between the
Transferor and the Trustee, the Transferor shall have delivered to the
Trustee a computer file or microfiche list containing a true and
complete list of all Removed Accounts identified by account number and
the aggregate amount of the Receivables in such Removed Accounts as of
the Removal Date, which computer file or microfiche list shall as of
the Removal Date modify and amend and be made a part of this Agreement.
(iii) The Transferor shall represent and warrant that
no selection procedures believed by the Transferor to be materially
adverse to the interests of the Certificateholders were utilized in
selecting the Removed Accounts to be removed from the Trust.
(iv) Such other conditions as set forth in
the related Supplement.
(v) On or before the tenth Business Day prior to the
Removal Date, each Rating Agency shall have received notice of such
proposed removal of the Receivables of such Accounts and the Transferor
shall have received written confirmation from each Rating Agency that
such removal will satisfy the Rating Agency Condition; and
-40-
<PAGE>
(vi) The Transferor shall have delivered to the
Trustee an Officer's Certificate confirming the items set forth in
clauses (i) through (v) above. The Trustee may conclusively rely on
such Officer's Certificate, shall have no duty to make inquiries with
regard to the matters set forth therein and shall incur no liability in
so relying.
Upon satisfaction of the above conditions, the Trustee shall
execute and deliver the Reassignment to the Transferor, and the Receivables from
the Removed Accounts shall no longer constitute a part of the Trust.
Section 2.8 Discount Option. The Transferor shall have the
option to designate at any time a fixed or floating percentage (the "Discount
Percentage"), of the amount of Receivables arising in the Accounts on or after
the date such designation becomes effective that would otherwise constitute
Principal Receivables (prior to subtracting from Principal Receivables, Finance
Charge Receivables that are Discount Option Receivables) to be treated as
Finance Charge Receivables. The Transferor may from time to time increase
(subject to the limitations described below), reduce or eliminate the Discount
Percentage for Discount Option Receivables arising in the Accounts on and after
the date of such change. The Transferor must provide 30 days' prior written
notice to the Servicer, the Trustee, each Credit Enhancement Provider and each
Rating Agency of any such exercise of the discount option or increase, reduction
or elimination of the Discount Percentage, and such exercise of the discount
option or increase, reduction or elimination of the Discount Percentage shall
become effective on the date specified therein only if (i) the Transferor has
delivered to the Trustee an Officer's Certificate to the effect that, based on
the facts known to such officer at the time, the Transferor reasonably believes
that such increase, reduction or elimination shall not at the time of its
occurrence cause a Pay Out Event, or an event which with notice or the lapse of
time would constitute a Pay Out Event, to occur with respect to any Series and
(ii) the Transferor, the Servicer and the Trustee shall have received written
confirmation from each Rating Agency that the Rating Agency Condition is
satisfied.
On each Date of Processing after the date on which the
Transferor's exercise of its discount option takes effect, the Transferor shall
treat Discount Option Receivables Collections as Collections of Finance Charge
Receivables.
ARTICLE III
ADMINISTRATION AND
SERVICING OF RECEIVABLES
Section 3.1 Acceptance of Appointment and Other Matters
Relating to the Servicer.
-41-
<PAGE>
(a) DNB agrees to act as the Servicer under this Agreement. The
Investor Certificateholders of each Series by their acceptance of the related
Certificates consent to DNB acting as Servicer.
(b) The Servicer shall service and administer the Receivables
and shall collect payments due under the Receivables in accordance with its
customary and usual servicing procedures for servicing credit card receivables
comparable to the Receivables and in accordance with the Credit Card Guidelines
and shall have full power and authority, acting alone or through any party
properly designated by it hereunder, to do any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer is hereby
authorized and empowered (i) to make withdrawals from the Collection Account as
set forth in this Agreement, (ii) unless such power and authority is revoked by
the Trustee on account of the occurrence of a Servicer Default pursuant to
Section 10.1, to instruct the Trustee to make withdrawals and payments, from the
Finance Charge Account, the Principal Account, the Excess Funding Account and
any Series Account, in accordance with such instructions as set forth in this
Agreement, (iii) unless such power and authority is revoked by the Trustee on
account of the occurrence of a Servicer Default pursuant to Section 10.1, to
instruct the Trustee in writing, as set forth in this Agreement, (iv) to execute
and deliver, on behalf of the Trust for the benefit of the Certificateholders,
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Receivables and, after the delinquency of any Receivable and to the extent
permitted under and in compliance with applicable law and regulations, to
commence enforcement proceedings with respect to such Receivables and (v) to
make any filings, reports, notices, applications, registrations with, and to
seek any consents or authorizations from the Securities and Exchange Commission
and any state securities authority on behalf of the Trust as may be necessary or
advisable to comply with any federal or state securities or reporting
requirements. The Trustee agrees that it shall promptly follow the instructions
of the Servicer to withdraw funds from the Principal Account, the Finance Charge
Account, the Excess Funding Account, or any Series Account and to take any
action required under any Credit Enhancement at such time as required under this
Agreement. The Trustee shall execute at the Servicer's written request such
documents prepared by the Transferor and acceptable to the Trustee as may be
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
(c) In the event that the Transferor is unable for any reason
to transfer Receivables to the Trust in accordance with the provisions of this
Agreement (including, without limitation, by reason of the application of the
provisions of Section 9.2 or the order of any federal governmental agency having
regulatory authority over the Transferor or any court of competent jurisdiction
that the Transferor not transfer any additional Principal Receivables to the
Trust) then, in any such event, (A) the Servicer agrees to allocate, after such
date, all
-42-
<PAGE>
collections with respect to Principal Receivables, and all amounts which would
have constituted Collections with respect to Principal Receivables but for the
Transferor's inability to transfer such Receivables (up to an aggregate amount
equal to the aggregate amount of Principal Receivables in the Trust as of such
date) in accordance with subsection 2.5(e); (B) the Servicer agrees to apply
such amounts as Collections in accordance with Article IV, and (C) for only so
long as all Collections and all amounts which would have constituted Collections
are allocated and applied in accordance with clauses (A) and (B) above,
Principal Receivables and all amounts which would have constituted Principal
Receivables but for the Transferor's inability to transfer Receivables to the
Trust that are written off as uncollectible in accordance with this Agreement
shall continue to be allocated in accordance with Article IV and all amounts
which would have constituted Principal Receivables but for the Transferor's
inability to transfer Receivables to the Trust shall be deemed to be Principal
Receivables for the purpose of calculating the applicable Investor Percentage
thereunder. If the Servicer is unable pursuant to any Requirement of Law to
allocate payments on the Accounts as described above, the Servicer agrees that
it shall in any such event allocate, after the occurrence of such event,
payments on each Account with respect to the principal balance of such Account
first to the oldest principal balance of such Account and to have such payments
applied as Collections in accordance with Article IV. The parties hereto agree
that Finance Charge Receivables, whenever created, accrued in respect of
Principal Receivables which have been conveyed to the Trust, or which would have
been conveyed to the Trust but for the above described inability to transfer
such Receivables, shall continue to be a part of the Trust notwithstanding any
cessation of the transfer of additional Principal Receivables to the Trust and
that Collections with respect thereto shall continue to be allocated and paid in
accordance with Article IV.
(d) In the event that pursuant to subsection 2.4(d), the
Transferor accepts reassignment of an Ineligible Receivable as a result of a
breach of the representations and warranties in subsection 2.4(b) relating to
such Receivable, then, in any such event, the Servicer agrees to account for
payments received with respect to such Ineligible Receivable separately from its
accounting for Collections on Principal Receivables retained by the Trust. If
payments received from or on behalf of an Obligor are not specifically
applicable either to an Ineligible Receivable of such Obligor reassigned to the
Transferor or to Receivables of such Obligor retained in the Trust, then the
Servicer agrees to allocate payments proportionately based on the total amount
of Principal Receivables of such Obligor retained in the Trust and the total
amount owing by such Obligor on any Ineligible Receivables purchased by the
Transferor, and the portion allocable to any Principal Receivables retained in
the Trust shall be treated as Collections and deposited in accordance with the
provisions of Article IV.
(e) The Servicer shall not be obligated to use
separate servicing procedures, offices, employees or accounts for
servicing the Receivables from the procedures, offices, employees and
-43-
<PAGE>
accounts used by the Servicer in connection with servicing other credit card
receivables.
Section 3.2 Servicing Compensation. As compensation for its
servicing activities hereunder and reimbursement for its expenses as set forth
in the immediately following paragraph, the Servicer shall be entitled to
receive a servicing fee prior to the termination of the Trust pursuant to
Section 12.1. The Servicing Fee shall be payable, with respect to each Series,
at the times and in the amounts set forth in the related Supplement. The
Servicing Fee shall be allocated between the Investor Certificates (the
"Investor Servicing Fee") and the Holder of the Transferor Certificate (the
"Transferor Servicing Fee").
The Servicer's expenses include the amounts due to the Trustee
pursuant to Section 11.5 and the reasonable fees and disbursements of
independent public accountants and all other expenses incurred by the Servicer
in connection with its activities hereunder; provided, however that the Servicer
shall not be liable for any liabilities, costs or expenses of the Trust, the
Investor Certificateholders or the Certificate Owners arising under any tax law,
including without limitation any federal, state or local income or franchise
taxes or any other tax imposed on or measured by income (or any interest or
penalties with respect thereto or arising from a failure to comply therewith).
The Servicer shall be required to pay such expenses for its own account and
shall not be entitled to any payment therefor other than the servicing fee
specified herein.
Section 3.3 Representations and Warranties of the Servicer.
DNB, as initial Servicer, hereby makes, and any successor Servicer by its
appointment hereunder shall make, the following representations and warranties
on which the Trustee has relied in accepting the Receivables in Trust and in
authenticating the Certificates issued on the Initial Closing Date:
(a) Organization and Good Standing. The Servicer is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power,
authority and legal right to own its properties and conduct its credit
card business as such properties are presently owned and as such
business is presently conducted, and to execute, deliver and perform
its obligations under this Agreement.
(b) Due Qualification. The Servicer is duly qualified to do
business and is in good standing (or is exempt from such requirement)
and has obtained all necessary licenses and approvals, except to the
extent that the failure so to qualify or register would not have a
material adverse effect on the Servicer's ability to perform its
obligations hereunder.
-44-
<PAGE>
(c) Due Authorization. The execution, delivery, and
performance of this Agreement have been duly authorized by the Servicer
by all necessary corporate action on the part of the Servicer.
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Servicer, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereinafter in effect, affecting the enforcement of
creditors' rights in general or the rights of creditors of national
banking associations.
(e) No Violation. The execution and delivery of this Agreement
by the Servicer, and the performance of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof applicable to
the Servicer, will not conflict with, violate, result in any breach of
any of the material terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, any
Requirement of Law applicable to the Servicer or any indenture,
contract, agreement, mortgage, deed of trust or other instrument to
which the Servicer is a party or by which it is bound except to the
extent that the same could not reasonably be expected to have a
material adverse effect on the Certificateholders or any Credit
Enhancement Provider.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against
the Servicer before any court, regulatory body, administrative agency
or other tribunal or governmental instrumentality seeking to prevent
the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, seeking any determination
or ruling that, in the reasonable judgment of the Servicer, would
materially and adversely affect the performance by the Servicer of its
obligations under this Agreement, or seeking any determination or
ruling that would materially and adversely affect the validity or
enforceability of this Agreement.
(g) Compliance with Requirements of Law. The Servicer shall
duly satisfy all obligations on its part to be fulfilled under or in
connection with each Receivable and the related Account, will maintain
in effect all qualifications required under Requirements of Law in
order to service properly each Receivable and the related Account and
will comply in all material respects with all other Requirements of Law
in connection with servicing each Receivable and the related Account
the failure to comply with which would have a material adverse effect
on the Certificateholders or any Credit Enhancement Provider.
-45-
<PAGE>
Section 3.4 Reports and Records for the Trustee.
(a) Daily Reports. On each Business Day during any period
during which the Servicer is required to make daily deposits to the Collection
Account pursuant to Section 4.3(a), the Servicer shall prepare and make
available at the office of the Servicer for inspection by the Trustee a record
setting forth (i) the aggregate amount of Collections processed by the Servicer
on the preceding Business Day and (ii) the aggregate amount of Receivables as of
the close of business on the preceding Business Day.
(b) Monthly Servicer's Certificate. Unless otherwise stated in
the related Supplement with respect to any Series, on each Determination Date
the Servicer shall forward, as provided in Section 13.5, to the Trustee, the
Paying Agent, any Credit Enhancement Provider and each Rating Agency, a
certificate of a Servicing Officer in the form of Exhibit C (which includes the
Schedule thereto specified as such in each Supplement) setting forth (i) the
aggregate amount of Collections processed during the preceding Monthly Period,
(ii) the aggregate amount of the applicable Investor Percentage of Collections
of Principal Receivables processed by the Servicer pursuant to Article IV during
the preceding Monthly Period with respect to each Series then outstanding, (iii)
the aggregate amount of the applicable Investor Percentage of Collections of
Finance Charge Receivables processed by the Servicer pursuant to Article IV
during the preceding Monthly Period with respect to each Series then
outstanding, (iv) the aggregate amount of Receivables processed as of the end of
the last day of the preceding Monthly Period, (v) the balance on deposit in the
Finance Charge Account, the Principal Account or any Series Account applicable
to any Series then outstanding on such Determination Date with respect to
Collections processed by the Servicer during the preceding Monthly Period, (vi)
the aggregate amount, if any, of withdrawals, drawings or payments under any
Credit Enhancement, if any, for each Series then outstanding required to be made
with respect to the previous Monthly Period in the manner provided in the
related Supplement, (vii) the sum of all amounts payable to the Investor
Certificateholders of each Series (or for a Series of more than one Class, each
such Class) on the succeeding Distribution Date in respect of Certificate
Principal and Certificate Interest with respect to such preceding monthly Period
and (viii) such other matters as are set forth in Exhibit C.
Section 3.5 Annual Servicer's Certificate. On or
before March 31 of each calendar year, beginning with March 31, 2001, the
Servicer will deliver, as provided in Section 13.5, to the Trustee, any
Credit Enhancement Provider and each Rating Agency, an Officer's
Certificate substantially in the form of Exhibit D stating that (a) a
review of the activities of the Servicer during the twelve month period
ending on December 31 of the preceding calendar year, or for the initial
period, from the Closing Date until December 31, 2000, and of its
performance under this Agreement was made under the supervision of the
officer signing such certificate and (b) to the best of such Officer's
knowledge, based on such review, the Servicer has fully performed all its
obligations under this Agreement throughout such period, or, if there has
been a default in the performance of any such obligation, specifying each
such default known to such officer and the nature and status thereof. A
-46-
<PAGE>
copy of such certificate may be obtained by any Investor Certificateholder by a
request in writing to the Trustee addressed to the Corporate Trust Office.
Section 3.6 Annual Independent Accountants' Servicing
Report.
(a) On or before March 31 of each calendar year, beginning with
March 31, 2001, the Servicer shall cause a firm of nationally recognized
independent certified public accountants (who may also render other services to
the Servicer, DNB, DNB-La., Dillard's or the Transferor) to furnish, as provided
in Section 13.5, a report addressed to the Trustee, any Credit Enhancement
Provider and the Transferor, to the effect that such firm has examined
management's assertion that, as of the date of such report, the system of
internal control over servicing of securitized credit card receivables met the
criteria for effective internal control described in the report entitled
"Internal Control - Integrated Framework" issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO") and that in their opinion,
management's assertion is fairly stated, in all material respects. A copy of
such report shall be distributed by the Servicer to each Rating Agency and will
be available for distribution to Certificateholders upon written request
therefor addressed to the Trustee at the Corporate Trust Office.
(b) On or before March 31 of each calendar year, beginning with
March 31, 2001, the Servicer shall cause a firm of nationally recognized
independent certified public accountants (who may also render other services to
the Servicer, DNB, DNB-La., Dillard's or the Transferor) to furnish, as provided
in Section 13.5, a report, prepared using generally accepted attestation
standards, addressed to the Trustee, any Credit Enhancement Provider and the
Transferor, to the effect that they have compared the amounts set forth in the
monthly certificates forwarded by the Servicer pursuant to subsection 3.4(c)
during the period covered by such report (which shall be the twelve-month period
ending on December 31 of the preceding calendar year, or for the initial period,
from the Closing Date until December 31, 2000 with the Servicer's computer
reports which were the source of such amounts and found them to be in agreement
or shall disclose any exceptions noted. Additionally, such firm shall
recalculate the mathematical accuracy of amounts derived in the monthly
certificates. A copy of such report shall be distributed by the Servicer to each
Rating Agency and will be available for distribution to Certificateholders upon
written request therefor addressed to the Trustee at the Corporate Trust Office.
Section 3.7 Tax Treatment. The Transferor has structured this
Agreement and the Investor Certificates with the intention that the Investor
Certificates will qualify under applicable federal, state, local and foreign tax
law as indebtedness. The Transferor, the Servicer, the Holder of the Transferor
Certificate, each Investor Certificateholder, and each Certificate Owner, agree
to treat and to take no action inconsistent with the treatment of the Investor
Certificates (or beneficial interest therein) as indebtedness for
-47-
<PAGE>
purposes of federal, state, local and foreign income or franchise taxes and any
other tax imposed on or measured by income. Each Investor Certificateholder and
the Holder of the Transferor Certificate, by acceptance of its Certificate and
each Certificate Owner, by acquisition of a beneficial interest in a
Certificate, agree to be bound by the provisions of this Section 3.7. Each
Certificateholder agrees that it will cause any Certificate Owner acquiring an
interest in a Certificate through it to comply with this Agreement as to
treatment as indebtedness under applicable tax law, as described in this Section
3.7.
Section 3.8 Notices to the Transferor. In the event that DNB is
no longer acting as Servicer, any Successor Servicer appointed pursuant to
Section 10.2 shall deliver or make available to the Transferor each certificate
and report required to be prepared, forwarded or delivered thereafter pursuant
to Sections 3.4, 3.5 and 3.6.
Section 3.9 Sub-Servicing. The Servicer may appoint any
Affiliate as a sub-servicer (each, a "Sub-Servicer") hereunder, provided,
however, that such appointment shall not relieve the Servicer of its duties
hereunder. Each duly appointed Sub-Servicer is hereby authorized to take any
action which is authorized to be taken by the Servicer hereunder. The Servicer
hereby appoints each of DNB-La. and MCC as a Sub-Servicer hereunder.
Any amounts received by a Sub-Servicer in respect of a
Receivable shall be deemed to have been received by the Servicer whether or not
actually received by it. The Servicer shall supervise, monitor and oversee the
servicing of the Receivables by the Sub-Servicers and the performance by the
Sub-Servicers of all services, duties, responsibilities and obligations that are
to be observed or performed by the Sub-Servicers. Upon the termination or
resignation of the Servicer in accordance with the terms hereof, the services,
duties, responsibilities and obligations of the Sub-Servicers hereunder shall be
terminated. As compensation for the performance of its obligations as a
Sub-Servicer under this Agreement, each Sub-Servicer shall be entitled to
receive a fee from the Servicer in such amounts as shall be separately agreed
between the Servicer and such Sub-Servicer.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.1 Rights of Certificateholders. Each Series of
Investor Certificates shall represent Undivided Interests in the Trust,
including the benefits of any Credit Enhancement issued with respect to such
Series and the right to receive the Collections and other amounts at the times
and in the amounts specified in this Article IV to be deposited in the Investor
Accounts and any other Series Account (if so specified in the related
Supplement) or to be paid to the Investor Certificateholders of such Series;
provided, however, that the aggregate interest represented by such Certificates
at any time in the Principal
-48-
<PAGE>
Receivables shall not exceed an amount equal to the Investor Interest at such
time. The Transferor Certificate shall represent the remaining undivided
interest in the Trust, including the right to receive the Collections and other
amounts at the times and in the amounts specified in this Article IV to be paid
to the Holder of the Transferor Certificate; provided, however, that the
aggregate interest represented by such Transferor Certificate at any time in the
Principal Receivables shall not exceed the Transferor Interest at such time and
such Certificate shall not represent any interest in the Investor Accounts,
except as provided in this Agreement, or the benefits of any Credit Enhancement
issued with respect to any Series.
Section 4.2 Establishment of Accounts.
(a) The Collection Account. The Servicer, for the benefit of
the Certificateholders, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account bearing a designation
clearly indicating that the funds deposited therein are held in trust for the
benefit of the Certificateholders (the "Collection Account"). Pursuant to
authority granted to it pursuant to subsection 3.1(b), the Servicer shall have
the revocable power to instruct the Trustee to withdraw funds from the
Collection Account for the purposes of carrying out its duties hereunder.
(b) The Finance Charge and Principal Accounts. The Trustee, for
the benefit of the Investor Certificateholders, shall establish and maintain in
the State of New York with the Paying Agent in the name of the Trust two
Eligible Deposit Accounts (the "Finance Charge Account" and the "Principal
Account", respectively), bearing a designation clearly indicating that the funds
therein are held for the benefit of the Investor Certificateholders; provided,
however, that each of such accounts may be established as sub-accounts of the
Collection Account. The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Finance Charge Account and the
Principal Account and in all proceeds thereof. The Finance Charge Account and
the Principal Account shall be under the sole dominion and control of the
Trustee for the benefit of the Investor Certificateholders. Pursuant to
authority granted to it hereunder, the Servicer shall have the revocable power
to instruct the Trustee to withdraw funds from the Finance Charge Account and
Principal Account for the purpose of carrying out the Servicer's duties
hereunder. The Trustee at all times shall maintain accurate records reflecting
each transaction in the Principal Account and the Finance Charge Account and
that funds held therein shall at all times be held in trust for the benefit of
the Investor Certificateholders.
(c) The Distribution Account. The Trustee, for the benefit of
the Investor Certificateholders, shall cause to be established and maintained in
the name of the Trust, an Eligible Deposit Account bearing a designation clearly
indicating that the funds deposited therein are held in trust for the benefit of
the Investor Certificateholders (the "Distribution Account"). The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Distribution
-49-
<PAGE>
Account and in all proceeds thereof. The Distribution Account shall be under the
sole dominion and control of the Trustee for the benefit of the Investor
Certificateholders.
(d) The Excess Funding Account. The Trustee, for the benefit of
the Investor Certificateholders, shall establish and maintain an Eligible
Deposit Account bearing a designation clearly indicating that the funds therein
are held for the benefit of the Investor Certificateholders (the "Excess Funding
Account"). The Trustee shall possess all right, title and interest in all funds
on deposit from time to time in the Excess Funding Account and in all proceeds
thereof. The Excess Funding Account shall be under the sole dominion and control
of the Trustee for the benefit of the Investor Certificateholders. If, at any
time, the Excess Funding Account ceases to be an Eligible Deposit Account, the
Trustee shall notify the Rating Agency and within 10 Business Days establish a
new Eligible Deposit Account which shall be designated as the new Excess Funding
Account and shall transfer any cash or any investments to such new Excess
Funding Account. From the date such new Excess Funding Account is established,
it shall be the "Excess Funding Account." Pursuant to authority granted to it
hereunder, the Servicer shall have the revocable power to instruct the Trustee
to withdraw funds from the Excess Funding Account for the purpose of carrying
out the Servicer's duties hereunder. The Trustee at all times shall maintain
accurate records reflecting each transaction in the Excess Funding Account and
that funds held therein shall at all times be held in trust for the benefit of
the Investor Certificateholders.
(e) Series Accounts. If so provided in the related Supplement,
the Trustee, for the benefit of the Investor Certificateholders, shall cause to
be established and maintained in the name of the Trust, one or more Series
Accounts. Each such Series Account shall bear a designation clearly indicating
that the funds deposited therein are held for the benefit of the Investor
Certificateholders of such Series. Each such Series Account will be an Eligible
Deposit Account, if so provided in the related Supplement and will have the
other features and be applied as set forth in the related Supplement.
(f) Administration of the Finance Charge, Principal Accounts
and Excess Funding Account. Funds on deposit in the Principal Account, the
Finance Charge Account and the Excess Funding Account shall, at the written
direction of the Servicer, be invested in Permitted Investments. Any such
investment shall mature and such funds shall be available for withdrawal on or
prior to the Transfer Date related to the Monthly Period in which such funds
were processed for collection, or if so specified in the related Supplement,
immediately preceding a Distribution Date. The Trustee shall maintain for the
benefit of the Investor Certificateholders possession of the negotiable
instruments or securities evidencing the Permitted Investments described in
clause (a) of the definition thereof from the time of purchase thereof until the
time of sale or maturity; provided, however, that no such investment shall be
disposed of prior to its maturity date. All interest and earnings (net of losses
and investment expenses) on funds on deposit in the Principal Account and the
Finance Charge Account shall be turned over
-50-
<PAGE>
by the Trustee to the Transferor not less frequently than monthly, and all
interest and earnings (net of losses and investment expenses) on funds on
deposit in the Excess Funding Account shall be deposited by the Trustee not less
frequently than monthly in the Finance Charge Account for application as
Collections of Finance Charge Receivables. Subject to the restrictions set forth
above, the Servicer, or a Person designated in writing by the Servicer, of which
the Trustee shall have received written notification thereof, shall instruct the
Trustee with respect to the investment of funds on deposit in the Principal
Account and the Finance Charge Account. For purposes of determining the
availability of funds or the balances in the Finance Charge Account, the
Principal Account and, except as provided in the second preceding sentence, the
Excess Funding Account, for any reason under this Agreement, all investment
earnings on such funds shall be deemed not to be available or on deposit.
Section 4.3 Collections and Allocations.
(a) Collections. Except as provided below, the Servicer shall
deposit all Collections in the Collection Account as promptly as possible after
the Date of Processing of such Collections, but in no event later than the
second Business Day following such Date of Processing. In the event of the
insolvency of the Servicer, then, immediately upon the occurrence of such event
and thereafter, the Servicer shall deposit all Collections into the Collection
Account, and in no such event shall the Servicer deposit any Collections
thereafter into any account established, held or maintained with the Servicer.
The Servicer shall allocate such amounts to each Series of
Investor Certificates and to the Holder of the Transferor Certificate in
accordance with this Article IV and shall cause the withdrawal by the Trustee of
the required amounts from the Collection Account or pay such amounts to the
Holder of the Transferor Certificate in accordance with this Article IV, in both
cases as modified by any Supplement. The Servicer shall make such deposits or
payments on the date indicated therein in immediately available funds or as
otherwise provided in the Supplement for any Series of Certificates with respect
to such Series.
Notwithstanding anything in this Agreement to the contrary, for
so long as, and only so long as, DNB shall remain the Servicer hereunder, and
(a)(i) the Servicer provides to the Trustee a letter of credit covering risk
collection of the Servicer acceptable to each Rating Agency, and (ii) the
Transferor shall not have received a notice from any Rating Agency that such
letter of credit would result in the lowering of such Rating Agency's
then-existing rating of the Investor Certificates, (b) Dillard's (so long as the
Servicer is wholly-owned by Dillard's) shall have and maintain a long-term
unsecured debt rating in one of the four highest categories assigned by Moody's
and shall have and maintain a short-term debt rating of A-1+ from Standard &
Poor's or (c) such other arrangement is made by the Servicer which is approved
in writing by the Rating Agencies, the Servicer need not deposit Collections
into the Collection Account, the Principal Account, the Finance Charge Account,
the Excess Funding Account or any Series Account, as provided in any Supplement,
or make payments to the Holder of the Transferor
-51-
<PAGE>
Certificate as provided in Article IV, but may make such deposits, payments and
withdrawals on each Transfer Date in an amount equal to the net amount of such
deposits, payments and withdrawals which would have been made but for the
provisions of this paragraph.
Notwithstanding anything else in this Agreement to the
contrary, with respect to any Monthly Period, whether the Servicer is required
to make monthly or daily deposits from the Collection Account into the Finance
Charge Account, the Principal Account, the Excess Funding Account or any Series
Account, as provided in any Supplement, (i) the Servicer will only be required
to deposit Collections from the Collection Account into the Finance Charge
Account, the Principal Account, the Excess Funding Account or any Series Account
in an amount equal to the lesser of (x) the amount required to be deposited into
any such deposit account pursuant to the terms of this Agreement or any
Supplement and (y) the amount required to be distributed on or prior to the
related Distribution Date to Investor Certificateholders or to any Credit
Enhancement Provider pursuant to the terms of any Supplement or agreement
relating to such Credit Enhancement and (ii) if at any time prior to such
Distribution Date the amount of Collections deposited in the Collection Account
exceeds the amount required to be deposited pursuant to clause (i) above, the
Servicer will be permitted to withdraw the excess from the Collection Account.
(b) Allocations for the Transferor Certificate. Throughout the
existence of the Trust, unless otherwise stated in any Supplement, the Servicer
shall allocate to the Holder of the Transferor Certificate an amount equal to
the product of (A) the Transferor Percentage and (B) the aggregate amount of the
Collections allocated to Principal Receivables and Finance Charge Receivables,
respectively, in respect of each Monthly Period. Notwithstanding anything in
this Agreement to the contrary, unless otherwise stated in any Supplement, the
Servicer need not deposit this amount or any other amounts so allocated to the
Transferor Certificate pursuant to any Supplement into the Collection Account
and shall pay, or be deemed to pay, such amounts as collected to the Holder of
the Transferor Certificate.
(c) Adjustments for Miscellaneous Credits and Fraudulent
Charges. The Servicer shall be obligated to reduce on a net basis in each
Monthly Period the aggregate amount of Principal Receivables used to calculate
the Transferor Interest as provided in this subsection 4.3(c) (a "Credit
Adjustment") with respect to any Principal Receivable (i) which was created in
respect of merchandise refused or returned by the Obligor thereunder or as to
which the Obligor thereunder has asserted a counterclaim or defense, (ii) which
is reduced by the Servicer or related Originator by any rebate, refund,
charge-back or adjustment (including Servicer errors) or (iii) which was created
as a result of a fraudulent or counterfeit charge.
In the event that the inclusion of the amount of a Credit
Adjustment in the calculation of the Transferor Interest would cause the
Transferor Interest to be an amount less than the Minimum Transferor Interest,
the Transferor shall make a deposit, no later than
-52-
<PAGE>
the Business Day following the Date of Processing of such Credit Adjustment, in
the Excess Funding Account in immediately available funds in an amount equal to
the amount by which such Credit Adjustment would cause the Transferor Interest
to be less than the Minimum Transferor Interest on such Date of Processing.
(d) Transfer of Defaulted Accounts. Unless otherwise provided
in any Supplement, on the date on which an Account becomes a Defaulted Account,
the Trust shall automatically and without further action or consideration be
deemed to transfer, set over, and otherwise convey to the Transferor, without
recourse, representation or warranty, all the right, title and interest of the
Trust in and to Receivables in such Defaulted Account, all monies due or to
become due with respect to such Receivables, all proceeds of such Receivables
and Insurance Proceeds relating to such Receivables allocable to the Trust with
respect to such Receivables. Notwithstanding any such transfer of accounts,
amounts recovered with respect to such defaulted accounts may still be allocated
to the Trust to the extent provided for in the definition of Recoveries.
(e) Operation of Excess Funding Account. On each Determination
Date on which one or more Series is in its Amortization Period or Accumulation
Period, the Servicer shall determine the aggregate amount of Principal
Shortfalls, if any, with respect to each such Series that is a Principal Sharing
Series, and the Servicer shall instruct the Trustee, in writing, to withdraw
such amount (up to the Excess Funding Amount) from the Excess Funding Account on
the next succeeding Transfer Date and deposit such amount in the Distribution
Account for allocation among each such Series as Shared Principal Collections as
specified in each related Supplement. On any Business Day on which the
Transferor Interest exceeds the Minimum Transferor Interest, the Servicer shall
instruct the Trustee, in writing, to withdraw the amount of such excess (up to
the Excess Funding Amount) from the Excess Funding Account on such day and pay
such amount to the Holder of the Transferor Certificate.
Section 4.4 Allocations During Funding Period. To the extent
that the Servicer establishes an Eligible Deposit Account as a pre-funding
account (the "Pre-Funding Account") with respect to any Series, bearing a
designation indicating that the funds deposited therein are for the benefit of
such Series, during the period (the "Funding Period"), as set forth in the
related Supplement, that the Pre-Funding Account maintains a balance, the date
upon which an increase in the Invested Amount of such Series in accordance with
the terms of such related Supplement occurs shall be treated as an Addition Date
solely for the purpose of calculating the applicable Investor Percentages. Such
Addition Date shall be deemed to occur on the date of each such increase and the
applicable Investor Percentages shall be calculated accordingly.
-53-
<PAGE>
Section 4.5 Certain Fees.
(a) On or prior to each Determination Date following a Monthly
Period all of the days of which follow the Fee Determination Date, the
Transferor shall notify the Servicer of the amounts of Late Fees and similar
fees and charges and Special Fees to be included as Collections of Finance
Charge Receivables arising from the Accounts with respect to the preceding
Monthly Period. Until the date specified by the Servicer in an Officer's
Certificate delivered to the Trustee as a date after which the Servicer can
compute the actual amount of Collections of such fees and charges (the "Fee
Determination Date"), such amounts shall be deemed to be equal to the product of
(x) the amount of Late Fees and similar fees and charges and Special Fees, as
the case may be, billed with respect to such Monthly Period and (y) a fraction,
the numerator of which is the amount of Collections of Periodic Finance Charges
and Annual Membership Fees arising from the Accounts with respect to such
Monthly Period, and the denominator of which is the amount of Periodic Finance
Charges and Annual Membership Fees arising from the Accounts billed with respect
to such Monthly Period.
(b) On and after the Fee Determination Date, the amounts of
Late Fees and similar fees and charges and Special Fees to be included as
Collections of Finance Charge Receivables shall be the actual amounts of such
fees and charges, as computed by the Servicer. On each Transfer Date prior to
the first Monthly Period all of the days of which follow the Fee Determination
Date, the Transferor shall pay to the Servicer and the Servicer shall deposit
into the Collection Account, for allocation as Collections of Finance Charge
Receivables in the manner provided in Article IV (in immediately available
funds) the amounts of Late Fees and similar fees and charges and Special Fees
arising from the Accounts to be so included as Collections of Finance Charge
Receivables with respect to the preceding Monthly Period, as calculated pursuant
to this Section 4.5.
[THE REMAINDER OF ARTICLE IV IS RESERVED AND SHALL BE SPECIFIED
IN ANY SUPPLEMENT WITH RESPECT TO ANY SERIES]
ARTICLE V
[ARTICLE V IS RESERVED AND SHALL BE SPECIFIED
IN ANY SUPPLEMENT WITH RESPECT TO ANY SERIES]
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates. Subject to Sections 6.10 and
6.13, the Investor Certificates of each Series and any Class thereof may be
issued in bearer form (the "Bearer Certificates") with attached interest coupons
and a special coupon (collectively, the "Coupons") or in fully registered form
(the "Registered Certificates"), and shall be substantially in the form of the
exhibits with respect thereto attached
-54-
<PAGE>
to the related Supplement. The Transferor Certificate shall be substantially in
the form of Exhibit A. The Investor Certificates and the Transferor Certificate
shall, upon issue pursuant hereto or to Section 6.9 or Section 6.10, be executed
and delivered by the Transferor to the Trustee for authentication and redelivery
as provided in Sections 2.1 and 6.2. Any Investor Certificate shall be issuable
in a minimum denomination of $1,000 Undivided Interest and integral multiples
thereof, unless otherwise specified in any Supplement. The Transferor
Certificate shall be issued as a single certificate. Each Certificate shall be
executed by manual or facsimile signature on behalf of the Transferor by an
authorized signatory thereof. Certificates bearing the manual or facsimile
signature of the individual who was, at the time when such signature was
affixed, authorized to sign on behalf of the Transferor or the Trustee shall not
be rendered invalid, notwithstanding that such individual has ceased to be so
authorized prior to the authentication and delivery of such Certificates or does
not hold such office at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein, executed by or on behalf of the
Trustee by the manual signature of a duly authorized signatory, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication
except Bearer Certificates which shall be dated the applicable Issuance Date as
provided in the related Supplement.
Section 6.2 Authentication of Certificates. Contemporaneously
with the initial assignment and transfer of the Receivables, whether now
existing or hereafter created (other than Receivables in Additional Accounts)
and the other components to the Trust, the Trustee shall authenticate and
deliver the initial Series of Investor Certificates, upon the written order of
the Transferor against payment to the Transferor of the Initial Investor
Interest (net of any purchase or underwriting discount). Upon the receipt of
such payment and the issuance of the Investor Certificates, such Investor
Certificates shall be fully paid and non-assessable. The Trustee shall
authenticate and deliver the Transferor Certificate to the Transferor
simultaneously with its delivery of the initial Series of Investor Certificates.
Upon an Exchange as provided in Section 6.9 and the satisfaction of certain
other conditions specified therein, the Trustee shall authenticate and deliver
the Investor Certificates of additional Series (with the designation provided in
the related Supplement), upon the order of the Transferor, to the Persons
designated in such Supplement. Upon the order of the Transferor, the
Certificates of any Series shall be duly authenticated by or on behalf of the
Trustee, in authorized denominations. If specified in the related Supplement for
any Series, the Trustee shall authenticate and deliver outside the United States
the Global Certificate that is issued upon original issuance thereof, upon the
written order of the Transferor, to the Depository against payment of the
purchase price therefor. If specified in the related Supplement for any Series,
the Trustee shall authenticate Book-Entry Certificates that are issued upon
original issuance thereof, upon the written order of the
-55-
<PAGE>
Transferor, to a Clearing Agency or its nominee as provided in Section 6.10
against payment of the purchase price thereof.
Section 6.3 Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at the office or agency
to be maintained by a transfer agent and registrar (the "Transfer Agent and
Registrar"), in accordance with the provisions of Section 11.16, a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, the Transfer Agent and Registrar shall provide for the
registration of the Investor Certificates of each Series (unless otherwise
provided in the related Supplement) and of transfers and exchanges of the
Investor Certificates as herein provided. The Trustee is hereby initially
appointed Transfer Agent and Registrar for the purposes of registering the
Investor Certificates and transfers and exchanges of the Investor Certificates
as herein provided. If any form of Investor Certificate is issued as a Global
Certificate, the Transferor may, or if and so long as any Series of Investor
Certificates are listed on the Luxembourg Stock Exchange and such exchange shall
so require, the Transferor shall appoint a co- transfer agent and co-registrar
in Luxembourg or another European city. Any reference in this Agreement to the
Transfer Agent and Registrar shall include any co-transfer agent and co-
registrar unless the context otherwise requires. The Trustee shall be permitted
to resign as Transfer Agent and Registrar upon 30 days' written notice to the
Servicer. In the event that the Trustee shall no longer be the Transfer Agent
and Registrar, the Transferor shall appoint a successor Transfer Agent and
Registrar.
Upon surrender for registration of transfer of any Certificate
at any office or agency of the Transfer Agent and Registrar, the Transferor
shall execute, subject to the provisions of subsection 6.3(c), and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of like
aggregate Undivided Interests; provided, however that the provisions of this
paragraph shall not apply to Bearer Certificates.
At the option of an Investor Certificateholder, Investor
Certificates may be exchanged for other Investor Certificates of the same Series
in authorized denominations of like aggregate Undivided Interests, upon
surrender of the Investor Certificates to be exchanged at any such office or
agency. At the option of any Holder of Registered Certificates, Registered
Certificates may be exchanged for other Registered Certificates of the same
Series in authorized denominations of like aggregate Undivided Interests in the
Trust, upon surrender of the Registered Certificates to be exchanged at any
office or agency of the Transfer Agent and Registrar maintained for such
purpose. At the option of a Bearer Certificateholder, subject to applicable laws
and regulations (including without limitation, the Bearer Rules), Bearer
Certificates may be exchanged for other Bearer Certificates or Registered
Certificates of the same Series in authorized denominations of like aggregate
Undivided
-56-
<PAGE>
Interests in the Trust, in the manner specified in the Supplement for such
Series, upon surrender of the Bearer Certificates to be exchanged at an office
or agency of the Transfer Agent and Registrar located outside the United States.
Each Bearer Certificate surrendered pursuant to this Section 6.3 shall have
attached thereto (or be accompanied by) all unmatured Coupons, provided that any
Bearer Certificate so surrendered after the close of business on the Record Date
preceding the relevant Distribution Date after the related Series Termination
Date need not have attached the Coupons relating to such Distribution Date.
Whenever any Investor Certificates of any Series are so
surrendered for exchange, the Transferor shall execute, and the Trustee shall
authenticate and (unless the Transfer Agent and Registrar is different than the
Trustee, in which case the Transfer Agent and Registrar shall) deliver, the
Investor Certificates of such Series which the Certificateholder making the
exchange is entitled to receive. Every Investor Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in a form satisfactory to the Trustee and the
Transfer Agent and Registrar duly executed by the Certificateholder thereof or
his attorney- in-fact duly authorized in writing.
The preceding provisions of this Section 6.3 notwithstanding,
the Trustee or the Transfer Agent and Registrar, as the case may be, shall not
be required to register the transfer of or exchange any Investor Certificate of
any Series for a period of 15 days preceding the due date for any payment with
respect to the Investor Certificates of such Series.
Unless otherwise provided in the related Supplement, no service
charge shall be made for any registration of transfer or exchange of
Certificates, but the Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
All Investor Certificates (together with any Coupons attached
to Bearer Certificates) surrendered for registration of transfer and exchange
shall be canceled by the Transfer Agent and Registrar and disposed of in its
customary manner. The Trustee shall cancel and destroy any Global Certificates
upon its exchange in full for Definitive Certificates and shall deliver a
certificate of destruction to the Transferor. Such certificate shall also state
that a certificate or certificates of each Foreign Clearing Agency to the effect
referred to in Section 6.13 was received with respect to each portion of such
Global Certificate exchanged for Definitive Certificates.
The Transferor shall execute and deliver to the Trustee or the
Transfer Agent and Registrar, as applicable, Bearer Certificates and Registered
Certificates in such amounts and at such times as are necessary to enable the
Trustee to fulfill its responsibilities under this Agreement and the
Certificates.
-57-
<PAGE>
(b) Except as provided in Section 6.9 or 7.2 or in any
Supplement, in no event shall the Transferor Certificate or any interest therein
be transferred hereunder, in whole or in part, unless the Transferor shall have
consented in writing to such transfer and unless the Trustee shall have received
(1) written confirmation from each Rating Agency that such transfer will satisfy
the Rating Agency Condition and (2) a Tax Opinion with respect to such transfer.
(c) Unless otherwise provided in the related Supplement,
registration of transfer of Registered Certificates containing a legend relating
to the restrictions on transfer of such Registered Certificates (which legend
shall be set forth in the Supplement relating to such Investor Certificates)
shall be effected only if the conditions set forth in such related Supplement
are satisfied.
Whenever a Registered Certificate containing the legend sat
forth in the related Supplement is presented to the Transfer Agent and Registrar
for registration of transfer, the Transfer Agent and Registrar shall promptly
seek instructions from the Servicer regarding such transfer. The Transfer Agent
and Registrar and the Trustee shall be entitled to receive written instructions
signed by a Servicing Officer prior to registering any such transfer or
authenticating new Registered Certificates, as the case may be. The Servicer
hereby agrees to indemnify the Transfer Agent and Registrar and the Trustee and
to hold each of them harmless against any loss, liability or expense incurred
without negligence or bad faith on their part arising out of or in connection
with actions taken or omitted by them in reliance on any such written
instructions furnished pursuant to this subsection 6.3(c).
(d) The Transfer Agent and Registrar will maintain at its
expense in the Borough of Manhattan, the City of New York (and subject to this
Section 6.3, if specified in the related Supplement for any Series, any other
city designated in such Supplement) an office or offices or an agency or
agencies where Investor Certificates of such Series may be surrendered for
registration of transfer or exchange.
Section 6.4 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate (together, in the case of Bearer Certificates,
with all unmatured Coupons, if any, appertaining thereto) is surrendered to the
Transfer Agent and Registrar, or the Transfer Agent and Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Transfer Agent and Registrar and
the Trustee such security or indemnity as may be reasonably required by them to
save each of them and the Transferor harmless, then, in the absence of notice to
the Trustee that such Certificate has been acquired by a bona fide purchaser,
the Transferor shall execute and the Trustee shall authenticate and (unless the
Transfer Agent and Registrar is different from the Trustee, in which case the
Transfer Agent and Registrar shall) deliver (in compliance with applicable law),
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and aggregate Undivided Interest.
In connection with the issuance of any new Certificate under this Section 6.4,
the Trustee or the Transfer Agent
-58-
<PAGE>
and Registrar may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and the Transfer Agent
and Registrar) connected therewith. Any duplicate Certificate issued pursuant to
this Section 6.4 shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 6.5 Persons Deemed Owners. Prior to due presentation of
a Certificate for registration of transfer, the Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat the Person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Article V (as described in
any Supplement) and for all other purposes whatsoever, and neither the Trustee,
the Paying Agent, the Transfer Agent and Registrar nor any agent of any of them
shall be affected by any notice to the contrary; provided, however, that in
determining whether the holders of Investor Certificates evidencing the
requisite Undivided Interests have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, unless otherwise expressly
specified herein or in the related Supplement, Investor Certificates owned by
the Transferor, the Servicer or any Affiliate thereof shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Investor Certificates which a
Responsible Officer in the Corporate Trust Office of the Trustee knows to be so
owned shall be so disregarded. Investor Certificates so owned that have been
pledged in good faith shall not be disregarded as outstanding, if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Investor Certificates and that the pledgee is not the
Transferor, the Servicer or an Affiliate thereof.
In the case of a Bearer Certificate, the Trustee, the Paying
Agent, the Transfer Agent and Registrar and any agent of any of them may treat
the holder of a Bearer Certificate or Coupon as the owner of such Bearer
Certificate or Coupon for the purpose of receiving distributions pursuant to
Article IV and Article XII and for all other purposes whatsoever, and neither
the Trustee, the Paying Agent, the Transfer Agent and Registrar nor any agent of
any of them shall be affected by any notice to the contrary. Certificates so
owned which have been pledged in good faith shall not be disregarded and may be
regarded as outstanding, if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Investor Certificates
and that the pledgee is not the Transferor, the Servicer or an Affiliate
thereof.
Section 6.6 Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Investor
Certificateholders from the appropriate account or accounts maintained for the
benefit of Certificateholders as specified in this
-59-
<PAGE>
Agreement or the related Supplement for any Series pursuant to Articles IV and V
hereof. Any Paying Agent shall have the revocable power to withdraw funds from
such appropriate account or accounts for the purpose of making distributions
referred to above. The Trustee (or the Servicer if the Trustee is the Paying
Agent) may revoke such power and remove the Paying Agent, if the Trustee (or the
Servicer if the Trustee is the Paying Agent) determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect or for other good cause. The Trustee (or the
Servicer if the Trustee is the Paying Agent) shall notify the Rating Agencies of
the removal of any Paying Agent. If any form of Investor Certificate is issued
as a Global Certificate, or if and so long as any Series of Investor
Certificates are listed on the Luxembourg Stock Exchange and such exchange shall
so require, the Transferor shall appoint a co-paying agent in Luxembourg or
another European city. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Servicer. In the event that any Paying
Agent shall no longer be the Paying Agent, the Transferor shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company). The
provisions of Sections 11.1, 11.2 and 11.3 shall apply to the Trustee also in
the capacity of Paying Agent, for so long as the Trustee shall act as Paying
Agent. Any reference in this Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.
If specified in the related Supplement for any Series, so long
as the Investor Certificates of such Series are outstanding, the Transferor
shall maintain a co-paying agent in New York City (for Registered Certificates
only) or any other city designated in such Supplement which, if and so long as
any Series of Investor Certificates is listed on the Luxembourg Stock Exchange
or other stock exchange and such exchange so requires, shall be in Luxembourg or
the location required by such other stock exchange.
(b) The Transferor shall cause the Paying Agent (other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders and shall agree, and if the Trustee is the Paying
Agent it hereby agrees, that it shall comply with all requirements of the
Internal Revenue Code regarding the withholding by the Trustee of payments in
respect of federal income taxes due from Certificateholders.
Section 6.7 Access to List of Certificateholders' Names and
Addresses. The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to the Servicer or the Paying Agent, within five Business
Days after receipt by the Trustee of a request therefor from the Servicer or the
Paying Agent, respectively, in writing, a list in such form as the Servicer or
the Paying Agent may reasonably require, of the names and addresses of the
Investor Certificateholders as of the most recent Record Date for payment of
distributions to Investor Certificateholders. Unless otherwise provided in the
related Supplement,
-60-
<PAGE>
Holders of Investor Certificates evidencing Undivided Interests aggregating not
less than 10% of the Investor Interest of the Investor Certificates of any
Series (the "Applicants") may apply in writing to the Trustee, and if such
application states that the Applicants desire to communicate with other Investor
Certificateholders of any Series with respect to their rights under this
Agreement or under the Investor Certificates and is accompanied by a copy of the
communication which such Applicants propose to transmit, then the Trustee, after
having been adequately indemnified by such Applicants for its costs and
expenses, shall afford or shall cause the Transfer Agent and Registrar to afford
such Applicants access during normal business hours to the most recent list of
Certificateholders held by the Trustee and shall give the Servicer notice that
such request has been made, within five Business Days after the receipt of such
application. Such list shall be as of a date no more than 45 days prior to the
date of receipt of such Applicants' request. Every Certificateholder, by
receiving and holding a Certificate, agrees with the Transferor, the Servicer
and the Trustee that none of the Transferor, Servicer, Trustee, Transfer Agent
or Registrar, nor any of their respective agents shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Certificateholders hereunder, regardless of the source from which such
information was obtained.
Section 6.8 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating agents
with respect to the Certificates which shall be authorized to act on behalf of
the Trustee in authenticating the Certificates in connection with the issuance,
delivery, registration of transfer, exchange or repayment of the Certificates.
Whenever reference is made in this Agreement to the authentication of
Certificates by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of the Trustee by
an authenticating agent and a certificate of authentication executed on behalf
of the Trustee by an authenticating agent. Each authenticating agent must be
acceptable to the Transferor.
(b) Any institution succeeding to the corporate agency business
of an authenticating agent shall continue to be an authenticating agent without
the execution or filing of any paper or any further act on the part of the
Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving
written notice of resignation to the Trustee and to the Transferor. The Trustee
may at any time terminate the agency of an authenticating agent by giving notice
of termination to such authenticating agent and to the Transferor. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time an authenticating agent shall cease to be acceptable to the Trustee or
the Transferor, the Trustee promptly may appoint a successor authenticating
agent. Any successor authenticating agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like affect as if originally
-61-
<PAGE>
named as an authenticating agent. No successor authenticating agent
shall be appointed unless acceptable to the Trustee and the Transferor.
(d) The Servicer agrees to pay each authenticating agent from
time to time reasonable compensation for its services under this Section 6.8.
(e) The provisions of Sections 11.1, 11.2 and 11.3
shall be applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.8, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the certificates described in the Pooling and
Servicing Agreement.
------------------------------
as Authenticating Agent
for the Trustee,
By:
---------------------------
Authorized signatory
Section 6.9 Tender of Transferor Certificate.
(a) Upon any Exchange, the Trustee shall issue to the Holder of
the Transferor Certificate under Section 6.1, for execution and redelivery to
the Trustee for authentication under Section 6.2, one or more new Series of
Investor Certificates. Any such Series of Investor Certificates shall be
substantially in the form specified in the related Supplement and shall bear,
upon its face, the designation for such Series to which it belongs, as selected
by the Transferor. Except as specified in any Supplement for a related Series,
all Investor Certificates of any Series shall rank pari passu and be equally and
ratably entitled as provided herein to the benefits hereof (except that the
Credit Enhancement provided for any Series shall not be available for any other
Series) without preference, priority or distinction on account of the actual
time or times of authentication and delivery, all in accordance with the terms
and provisions of this Agreement and the related Supplement.
(b) The Holder of the Transferor Certificate may tender the
Transferor Certificate to the Trustee in exchange for (i) one or more newly
issued Series of Investor Certificates or in connection with a Companion Series,
interests in such Series and (ii) a reissued Transferor Certificate (any such
tender, a "Transferor Exchange"). In addition, to the extent permitted for any
Series of Investor Certificates as specified in the related Supplement, the
Investor Certificateholders of such Series may tender their Investor
Certificates and the Holder of
-62-
<PAGE>
the Transferor Certificate may tender the Transferor Certificate to the Trustee
pursuant to the terms and conditions set forth in such Supplement in exchange
for (i) one or more newly issued Series of Investor Certificates and (ii) a
reissued Transferor Certificate (an "Investor Exchange"). The Transferor
Exchange and Investor Exchange are referred to collectively herein as an
"Exchange." The Holder of the Transferor Certificate may perform an Exchange by
notifying the Trustee, in writing at least three days in advance (an "Exchange
Notice") of the date upon which the Exchange is to occur (an "Exchange Date").
Any Exchange Notice shall state the designation of any Series (and Class
thereof, if applicable) to be issued on the Exchange Date and, with respect to
each such Series: (a) its Initial Investor Interest (or the method for
calculating such Initial Investor Interest) (b) its Certificate Rate (or the
method for allocating interest payments or other cash flows to such Series), if
any, and (c) the Credit Enhancement Provider, if any, with respect to such
Series. On the Exchange Date, the Trustee shall authenticate and deliver any
such Series of Investor Certificates only upon delivery to it of the following:
(a) a Supplement satisfying the criteria set forth in subsection 6.9(c) executed
by the Transferor and specifying the Principal Terms of such Series, (b) the
applicable Credit Enhancement, if any, (c) the agreement, if any, pursuant to
which the Credit Enhancement Provider agrees to provide the Credit Enhancement,
if any, (d) an Opinion of Counsel to the effect that, unless otherwise stated in
the related Supplement, the newly issued Series or Class of Investor
Certificates will be treated as debt secured by the Receivables for United
States federal income and Delaware and New York state income and corporate
franchise tax purposes, (e) a Tax Opinion, (f) written confirmation from each
Rating Agency that the Exchange will satisfy the Rating Agency Condition, (g) an
Officer's Certificate signed by an authorized signatory of the Transferor, that
on the Exchange Date (i) the Transferor, after giving effect to the Exchange,
would not be required to add Additional Accounts pursuant to subsection 2.6(a),
and (ii) after giving effect to such Exchange, the Transferor Interest would be
at least equal to the Minimum Transferor Interest and (h) the existing
Transferor Certificate or applicable Investor Certificates, as the case may be.
Upon satisfaction of such conditions, the Trustee shall cancel the existing
Transferor Certificate or applicable Investor Certificates, as the case may be,
and issue, as provided above, such Series of Investor Certificates and a new
Transferor Certificate, dated the Exchange Date. There is no limit to the number
of Exchanges that may be performed under this Agreement.
(c) In conjunction with an Exchange, the parties hereto shall
execute a Supplement, which shall specify the relevant terms with respect to any
newly issued Series of Investor Certificates, which may include without
limitation: (i) its name or designation, (ii) an Initial Investor Interest or
the method of calculating the Initial Investor Interest, (iii) the method of
determining any adjusted Investor Interest, if applicable, (iv) the Certificate
Rate (or formula for the determination thereof), (v) the Closing Date, (vi) each
Rating Agency rating such Series, (vi) the name of the Clearing Agency, if any,
(vii) the rights of the Holder of the Transferor Certificate that have been
transferred to the Holders of such Series pursuant to such Exchange
-63-
<PAGE>
(including any rights to allocations of Collections of Finance Charge
Receivables and Principal Receivables), (ix) the interest payment date or dates
and the date or dates from which interest shall accrue, (x) the periods during
which or dates on which principal will be paid or accrued, (xi) the method of
allocating Collections with respect to Principal Receivables for such Series
and, if applicable, with respect to other Series and the method by which the
principal amount of Investor Certificates of such Series shall amortize or
accrete and the method for allocating Collections with respect to Finance Charge
Receivables and Receivables in Defaulted Accounts, (xii) any other Collections
with respect to Receivables or other amounts available to be paid with respect
to such Series, (xii) the names of any accounts to be used by such Series and
the terms governing the operation of any such accounts and use of moneys
therein, (xiv) the Series Servicing Fee and the Series Servicing Fee Percentage,
(xv) the Minimum Transferor Interest and the Series Termination Date, (xvi) the
terms of any Credit Enhancement with respect to such Series, and the Credit
Enhancement Provider, if applicable, (xvii) the base rate applicable to such
Series, (xviii) the terms on which the Certificates of such Series may be
repurchased or remarketed to other investors, (xix) any deposit into any account
provided for such Series, (xx) the number of Classes of such Series, and if more
than one Class, the rights and priorities of each such Class, (xxi) the priority
of any Series with respect to any other Series, (xxii) the rights, if any, of
the Holder of the Transferor Certificate that have been transferred to the
Holders of such Series, (xxiii) the Pool Factor, (xxiv) the Minimum Aggregate
Principal Receivables, (xxv) whether such Series will be part of a Group, (xxvi)
whether such Series will or may be a Companion Series and the Series with which
it will be paired, if applicable and (xxvii) any other relevant terms of such
Series (including whether or not such Series will be pledged as collateral for
an issuance of any other securities, including commercial paper) (all such
terms, the "Principal Terms" of such Series). The terms of such Supplement may
modify or amend the terms of this Agreement solely as applied to such new
Series. If on the date of the issuance of such Series there is issued and
outstanding one or more Series of Investor Certificates and no Series of
Investor Certificates is currently rated by a Rating Agency, then as a condition
to such Exchange a nationally recognized investment banking firm or commercial
bank shall also deliver to the Trustee a certificate stating, in substance, that
the Exchange will not have an adverse effect on the timing or distribution of
payments to such other Series of Investor Certificates then issued and
outstanding.
Section 6.10 Book-Entry Certificates. Unless otherwise provided
in any related Supplement, the Investor Certificates, upon original issuance,
shall be issued in the form of typewritten Certificates representing the
Book-Entry Certificates, to be delivered to the depository specified in such
Supplement (the "Depository") which shall be the Clearing Agency or Foreign
Clearing Agency, by or on behalf of such Series. The Investor Certificates of
each Series shall, unless otherwise provided in the related Supplement,
initially be registered on the Certificate Register in the name of the nominee
of the Clearing Agency or Foreign Clearing Agency. No Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in
-64-
<PAGE>
the related Series of Investor Certificates, except as provided in Section 6.12.
Unless and until definitive, fully registered Investor Certificates of any
Series ("Definitive Certificates") have been issued to Certificate Owners
pursuant to Section 6.12:
(i) the provisions of this Section 6.10
shall be in full force and effect with respect to each such
Series;
(ii) the Transferor, the Servicer, the Paying Agent,
the Transfer Agent and Registrar and the Trustee may deal with the
Clearing Agency and the Clearing Agency Participants for all purposes
(including the making of distributions on the Investor Certificates of
each such Series) as the authorized representatives of the Certificate
Owners;
(iii) to the extent that the provisions of this
Section 6.10 conflict with any other provisions of this Agreement, the
provisions of this Section 6.10 shall control with respect to each such
Series; and
(iv) the rights of Certificate Owners of each such
Series shall be exercised only through the Clearing Agency or Foreign
Clearing Agency and the applicable Clearing Agency Participants and
shall be limited to those established by law and agreements between
such Certificate Owners and the Clearing Agency or Foreign Clearing
Agency and/or the Clearing Agency Participants. Pursuant to the
Depository Agreement applicable to a Series, unless and until
Definitive Certificates of such Series are issued pursuant to Section
6.12, the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit distributions
of principal and interest on the Investor Certificates to such Clearing
Agency Participants.
Section 6.11 Notices to Clearing Agency. Whenever notice or
other communication to the Certificateholders is required under this Agreement,
unless and until Definitive Certificates shall have been issued to Certificate
Owners pursuant to Section 6.12, the Trustee shall give all such notices and
communications specified herein to be given to Holders of the Investor
Certificates to the Clearing Agency or Foreign Clearing Agency for distribution
to Holders of Investor Certificates.
Section 6.12 Definitive Certificates. If (i) (A) the Transferor
advises the Trustee in writing that the Clearing Agency or Foreign Clearing
Agency is no longer willing or able to discharge properly its responsibilities
under the applicable Depository Agreement, and (B) the Trustee or the Transferor
is unable to locate a qualified successor, (ii) the Transferor, at its option,
advises the Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency or Foreign Clearing Agency with respect to any
Series of Certificates or (iii) after the occurrence of a Servicer Default,
Certificate Owners of a Series representing beneficial interests
-65-
<PAGE>
aggregating not less than 50% of the Investor Interest of such Series advise the
Trustee and the applicable Clearing Agency or Foreign Clearing Agency through
the applicable Clearing Agency Participants in writing that the continuation of
a book-entry system through the applicable Clearing Agency or Foreign Clearing
Agency is no longer in the best interests of the Certificate Owners, the Trustee
shall notify all Certificate Owners of such Series, through the applicable
Clearing Agency Participants, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners of such Series
requesting the same. Upon surrender to the Trustee of the Investor Certificates
of such Series by the applicable Clearing Agency or Foreign Clearing Agency,
accompanied by registration instructions from the applicable Clearing Agency or
Foreign Clearing Agency for registration, the Trustee shall issue the Definitive
Certificates of such Series. Neither the Transferor nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Certificates of such Series all references herein to obligations
imposed upon or to be performed by the applicable Clearing Agency or Foreign
Clearing Agency shall be deemed to be imposed upon and performed by the Trustee,
to the extent applicable with respect to such Definitive Certificates, and the
Trustee shall recognize the Holders of the Definitive Certificates of such
Series as Certificateholders of such Series hereunder.
Section 6.13 Global Certificate. If specified in the related
Supplement for any Series, the Investor Certificates may be initially issued in
the form of a single temporary Global Certificate (the "Global Certificate") in
bearer form, without interest coupons, in the denomination of the Initial
Investor Interest and substantially in the form attached to the related
Supplement. Unless otherwise specified in the related Supplement, the provisions
of this Section 6.13 shall apply to such Global Certificate. The Global
Certificate will be authenticated by the Trustee upon the same conditions, in
substantially the same manner and with the same effect as the Definitive
Certificates. The Global Certificate may be exchanged in the manner described in
the related Supplement for Registered or Bearer Certificates in definitive form.
Section 6.14 Meetings of Certificateholders. To the extent
provided by the Supplement for any Series issued in whole or in part in Bearer
Certificates, the Transferor, the Servicer or the Trustee may at any time call a
meeting of the Certificateholders of such Series, to be held at such time and at
such place as Transferor, the Servicer or the Trustee, as the case may be, shall
determine, for the purpose of approving a modification of or amendment to, or
obtaining a waiver of, any covenant or condition set forth in this Agreement
with respect to such Series or in the Certificates of such Series, subject to
Section 13.1.
-66-
<PAGE>
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
Section 7.1 Liability of the Transferor. The Transferor shall
be liable in accordance herewith to the extent of the obligations specifically
undertaken by the Transferor.
Section 7.2 Merger or Consolidation of, or Assumption
of the Obligations of, the Transferor.
(a) The Transferor shall not consolidate with or merge into any
other Person or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(i) (A) the Transferor is the surviving entity or (B)
if the Transferor is not the surviving entity, the Person formed by
such consolidation or into which the Transferor is merged or the Person
which acquires by conveyance or transfer the properties and assets of
the Transferor substantially as an entirety shall be organized and
existing under the laws of the United States of America or any State or
the District of Columbia and shall expressly assume, by an agreement
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the performance of every covenant and
obligation of the Transferor, as applicable hereunder and shall benefit
from all the rights granted to the Transferor, as applicable hereunder.
To the extent that any right, covenant or obligation of the Transferor,
as applicable hereunder, is inapplicable to the successor entity, such
successor entity shall be subject to such covenant or obligation, or
benefit from such right, as would apply, to the extent practicable, to
such successor entity. In furtherance hereof, in applying this Section
7.2 to a successor entity, Section 9.2 hereof shall be applied by
reference to events of involuntary liquidation, receivership or
conservatorship applicable to such successor entity as shall be set
forth in the Officer's Certificate described in subsection 7.2(a)(ii);
(ii) the Transferor shall have delivered to the
Trustee an Officer's Certificate certifying that such consolidation,
merger, conveyance or transfer and such supplemental agreement comply
with this Section 7.2 and that all conditions precedent herein provided
for relating to such transaction have been complied with and an Opinion
of Counsel that such supplemental agreement is legal, valid and
binding; and (iii) the Transferor shall have delivered notice to the
Rating Agency of such consolidation, merger, conveyance or transfer.
(b) The obligations of the Transferor hereunder
shall not be assignable nor shall any Person succeed to the obligations
of the Transferor hereunder (i) except for mergers, consolidations,
-67-
<PAGE>
assumptions or transfers in accordance with the provisions of the foregoing
paragraph or (ii) unless the assignee with respect to such obligations shall be
organized and existing under the laws of the United States of America or any
State or the District of Columbia and shall expressly assume, by an agreement
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the performance of every covenant and obligation of the
Transferor, as applicable hereunder and shall benefit from all the rights
granted to the Transferor, as applicable hereunder. To the extent that any
right, covenant or obligation of the Transferor, as applicable hereunder, is
inapplicable to the assignee, such assignee shall be subject to such covenant or
obligation, or benefit from such right, as would apply, to the extent
practicable, to such assignee.
Section 7.3 Limitation of Liability. The owner trustee,
administrators, directors, officers, employees or agents of the Transferor shall
not be under any liability to the Trust, the Trustee, the Certificateholders,
any Credit Enhancement Provider or any other Person hereunder or pursuant to any
document delivered hereunder, it being expressly understood that all such
liability is expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement and any Supplement and the
issuance of the Certificates; provided, however, that this provision shall not
protect the officers, directors, employees, or agents of the Transferor against
any liability which would otherwise be imposed by reason of willful misfeasance
or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Except as provided in Section
7.4, the Transferor shall not be under any liability to the Trust, the Trustee,
the Certificateholders, any Credit Enhancement Provider or any other Person for
any action taken or for refraining from the taking of any action in its capacity
as Transferor pursuant to this Agreement or any Supplement whether arising from
express or implied duties under this Agreement or any Supplement; provided,
however, that this provision shall not protect the Transferor against any
liability which would otherwise be imposed by reason of willful misfeasance or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. The Transferor and any director, officer,
employee or agent may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
Section 8.1 Liability of the Servicer. The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer in such capacity herein.
-68-
<PAGE>
Section 8.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) (A) the Servicer is the surviving entity or (B) if
the Servicer is not the surviving entity, the Person formed by such
consolidation or into which the Servicer is merged or the Person which
acquires by conveyance or transfer the properties and assets of the
Servicer substantially as an entirety shall be a corporation organized
and existing under the laws of the United States of America or any
State or the District of Columbia, and shall be a state or national
banking association or other entity which is not subject to the
bankruptcy laws of the United States of America and shall expressly
assume, by an agreement supplemental hereto, executed and delivered to
the Trustee in form satisfactory to the Trustee, the performance of
every covenant and obligation of the Servicer hereunder (to the extent
that any right, covenant or obligation of the Servicer, as applicable
hereunder, is inapplicable to the successor entity, such successor
entity shall be subject to such covenant or obligation, or benefit from
such right, as would apply, to the extent practicable, to such
successor entity);
(ii) the Servicer shall have delivered to the Trustee
an Officer's Certificate that such consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 8.2
and that all conditions precedent herein provided for relating to such
transaction have been complied with and an Opinion of Counsel that such
supplemental agreement is legal, valid and binding with respect to the
Servicer; and
(iii) the Servicer shall have delivered notice to the
Rating Agency of such consolidation, merger, conveyance or transfer.
Section 8.3 Limitation of Liability of the Servicer and Others.
The directors, officers, employees or agents of the Servicer shall not be under
any liability to the Trust, the Trustee, the Certificateholders, any Credit
Enhancement Provider or any other Person hereunder or pursuant to any document
delivered hereunder, it being expressly understood that all such liability is
expressly waived and released as a condition of, and as consideration for, the
execution of this Agreement and any Supplement and the issuance of the
Certificates; provided, however, that this provision shall not protect the
directors, officers, employees and agents of the Servicer against any liability
which would otherwise be imposed by reason of willful misfeasance or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. Except as provided in Section 8.4 with respect
to the Trust and the Trustee, its officers, directors, employees and agents, the
Servicer shall not be under any liability to the Trust, the Trustee, its
officers, directors, employees and agents, the Certificateholders or any other
Person for any action
-69-
<PAGE>
taken or for refraining from the taking of any action in its capacity as
Servicer pursuant to this Agreement or any Supplement; provided, however, that
this provision shall not protect the Servicer against any liability which would
otherwise be imposed by reason of willful misfeasance or gross negligence in the
performance of duties or by reason of its reckless disregard of its obligations
and duties hereunder or under any Supplement. The Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. Neither the Servicer nor
any Sub-Servicer shall be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the
Receivables in accordance with this Agreement which in its reasonable opinion
may cause it to incur any expense or liability.
Section 8.4 Servicer Indemnification of the Trust and the
Trustee. The Servicer shall indemnify and hold harmless the Trust and the
Trustee, its officers, directors, employees and agents, from and against any
reasonable loss, liability, expense, damage or injury suffered or sustained by
reason of any acts or omissions or alleged acts or omissions of the Servicer
with respect to activities of the Trust or the Trustee pursuant to this
Agreement or any Supplement, including, but not limited to any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim; provided, however, that the Servicer shall not indemnify the Trustee if
such acts, omissions or alleged acts or omissions constitute or are caused by
fraud, negligence, bad faith or willful misconduct by the Trustee; provided,
further, that the Servicer shall not indemnify the Trust, the Investor
Certificateholders or the Certificate Owners for any liabilities, costs or
expenses of the Trust with respect to any action taken by the Trustee at the
request of the Investor Certificateholders; provided, further, that the Servicer
shall not indemnify the Trust, the Investor Certificateholders or the
Certificate owners as to any losses, claims or damages incurred by any of them
in their capacities as investors, including without limitation losses incurred
as a result of Defaulted Accounts or Receivables which are written off as
uncollectible; and provided, further, that the Servicer shall not indemnify the
Trust, the Investor Certificateholders or the Certificate Owners for any
liabilities, costs or expenses of the Trust, the Investor Certificateholders or
the Certificate Owners arising under any tax law, including without limitation,
any federal, state, local or foreign income or franchise taxes or any other tax
imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith) required to be paid by
the Trust, the Investor Certificateholders or the Certificate Owners in
connection herewith to any taxing authority. Any such indemnification shall not
be payable from the assets of the Trust. The provisions of this indemnity shall
run directly to and be enforceable by an injured party subject to the
limitations hereof. The provisions of this Section 8.4 shall survive termination
of this Agreement and the resignation or removal of the Trustee.
-70-
<PAGE>
Section 8.5 The Servicer Not to Resign. The Servicer shall not
resign from the obligations and duties hereby imposed on it except upon
determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced as to clause (i) above by an
Opinion of Counsel to such effect delivered to the Trustee. No such resignation
shall become effective until the Trustee or a Successor Servicer shall have
assumed the responsibilities and obligations of the Servicer in accordance with
Section 10.2 hereof. If the Trustee is unable within 120 days of the date of
such determination to appoint a Successor Servicer, the Trustee shall serve as
Successor Servicer hereunder, until such time as a Successor Servicer shall have
been appointed and assumed the obligations of the Servicer in accordance with
Section 10.2.
Section 8.6 Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Trustee access to
the documentation regarding the Accounts and the Receivables in such cases where
the Trustee is required in connection with the enforcement of the rights of the
Investor Certificateholders, or by applicable statutes or regulations to review
such documentation, such access being afforded without charge but only (i) upon
reasonable request, (ii) during normal business hours, (iii) subject to the
Servicer's normal security and confidentiality procedures and (iv) at offices
designated by the Servicer. Nothing in this Section 8.6 shall derogate from the
obligation of the Transferor, the Trustee or the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors and
the failure of the Servicer to provide access as provided in this Section 8.6 as
a result of such obligations shall not constitute a breach of this Section 8.6.
Section 8.7 Delegation of Duties. It is understood and agreed
by the parties hereto that the Servicer may delegate certain of its duties
hereunder to any Affiliate which is wholly owned by the Servicer or Dillard's.
In the ordinary course of business, the Servicer may at any time delegate any
duties hereunder to any Person who agrees to conduct such duties in accordance
with the Credit Card Guidelines. Any such delegations shall not relieve the
Servicer of its liability and responsibility with respect to such duties, and
shall not constitute a resignation within the meaning of Section 8.5 hereof. If
any such delegation is to a party other than DNB-La or MCC, notification thereof
shall be given to each Rating Agency.
Section 8.8 Examination of Records. The Servicer shall clearly
and unambiguously identify each Account (including any Additional Account
designated pursuant to Section 2.6) in its computer or other records to reflect
that the Receivables arising in such Account have been conveyed to the Trust
pursuant to this Agreement. The Servicer shall, prior to the sale or transfer to
a third party of any receivable held in its custody, examine its computer and
other records to determine that such receivable is not a Receivable.
-71-
<PAGE>
Section 8.9 Securities Act Filings. The Servicer is hereby
authorized and agrees to (i) execute and file on behalf of the Trust, if
necessary, a registration statement filed on Form S-3, including any amendments
thereto and such other statements or documents, prepared by or on behalf of the
Transferor or the Trust and required to be executed and filed by the Trust
pursuant to the Securities Act, Exchange Act, or the implementing rules and
regulations thereof; and (ii) execute, if necessary, any and all other documents
reasonably determined by the Trust, the Servicer, Dillard's or an Affiliate
thereof to be necessary in order to (x) qualify or register all or part of the
Investor Certificates in any state or foreign jurisdiction in which such
Investor Certificates may be sold or (y) establish any of the Investor
Certificates on any national or international stock exchange for listing or
quotation.
ARTICLE IX
PAY OUT EVENTS
Section 9.1 Pay Out Events. If any one of the
following events (each, a "Trust Pay Out Event") shall occur:
(a) (i) a court having jurisdiction in the premises shall enter
a decree or order for relief in respect of the Transferor or Dillard's
in an involuntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
which decree or order is not stayed, or any other similar relief shall
be granted under any applicable federal or state law, (ii) an
involuntary case is commenced against the Transferor or Dillard's under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect which remains undismissed, undischarged or unbonded
for a period of 60 days or (iii) the Transferor or Dillard's shall have
a decree or an order for relief entered with respect to it or commence
a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect;
(b) the Transferor, DNB, DNB-La., or Dillard's shall consent to
the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities
or similar proceedings of or relating to all or substantially all of
its property, or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its
-72-
<PAGE>
affairs, shall have been entered against the Transferor, DNB, DNB-La.,
or Dillard's and such decree or order shall have remained in full force
and is changed or unstayed for a period of 60 days; or the Transferor,
DNB, DNB-La., or Dillard's shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or the Transferor shall become unable for
any reason to transfer Receivables to the Trust in accordance with the
provisions of this Agreement;
(c) DNB or DNB-La. becomes unable for any reason to
transfer Receivables to the Transferor or the Transferor becomes
unable for any reason to transfer Receivables to the Trust in
accordance with the provisions of this Agreement; or
(d) the Trust shall become subject to regulation by
the Securities and Exchange Commission as an "investment
company" within the meaning of the Investment Company Act;
then a Pay Out Event with respect to all Series of Certificates shall occur
without any notice or other action on the part of the Trustee or the Investor
Certificateholders immediately upon the occurrence of such event.
Section 9.2 Additional Rights Upon the Occurrence of
Certain Events.
(a) If any event set forth in Section 9.1(a) or (b) shall occur
(any such event, an "Insolvency Event"), the Transferor shall on the day of such
Insolvency Event (the "Appointment Day") immediately cease to transfer Principal
Receivables to the Trust and shall promptly give notice to the Trustee of such
Insolvency Event and the arrangement among the parties created hereby shall be
deemed to have been dissolved, subject to the liquidation and winding up
procedures described below. Notwithstanding any cessation of the transfer to the
Trust of additional Principal Receivables, Finance Charge Receivables, whenever
created, accrued in respect of Principal Receivables which have been transferred
to the Trust shall continue to be a part of the Trust, and Collections with
respect thereto shall continue to be allocated and paid in accordance with
Article IV. Within 15 days of the Appointment Day, the Trustee shall (i) publish
a notice in an Authorized Newspaper that an Insolvency Event has occurred and
that the Trustee intends to sell, dispose of or otherwise liquidate the
Receivables in a commercially reasonable manner and (ii) send written notice to
the Investor Certificateholders describing the provisions of this Section 9.2
and requesting instructions from such Holders. Unless within 75 days from the
day notice pursuant to clause (i) above is first published, the Trustee shall
have received written instructions of Holders of Investor Certificates
evidencing more than 50% of the Investor Interest of each Series issued and
outstanding (or, if any such Series has two or more Classes, each Class) to the
effect that such Certificateholders
-73-
<PAGE>
disapprove of the liquidation of the Receivables the Trustee shall use its best
efforts to sell, dispose of or otherwise liquidate the Receivables in a
commercially reasonable manner and on commercially reasonable terms, which shall
include the solicitation of competitive bids. The Trustee may obtain a prior
determination from any such conservator, receiver or liquidator that the terms
and manner of any proposed sale, disposition or liquidation are commercially
reasonable. The provisions of Sections 9.1 and 9.2 shall not be deemed to be
mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of
the Receivables pursuant to subsection (a) above shall be treated as Collections
on the Receivables and shall be allocated and deposited in accordance with the
provisions of Article IV; provided, that the Trustee shall determine
conclusively in its sole discretion the amount of such proceeds which are
allocable to Finance Charge Receivables and the amount of such proceeds which
are allocable to Principal Receivables. On the day following the last
Distribution Date in the Monthly Period during which such proceeds are
distributed to the Investor Certificateholders of each Series, the Trust shall
terminate.
(c) The Trustee may appoint an agent or agents to assist with
its responsibilities pursuant to this Article IX with respect to competitive
bids.
ARTICLE X
SERVICER DEFAULTS
Section 10.1 Servicer Defaults. If any one of the
following events (a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Trustee pursuant to
Article IV or to instruct the Trustee to make any required drawing,
withdrawal, or payment under any Credit Enhancement on or before the
date occurring ten Business Days after the date such payment, transfer,
deposit withdrawal or drawing or such instruction or notice is required
to be made or given, as the case may be, under the terms of this
Agreement;
(b) failure on the part of the Servicer duly to observe or
perform in any respect any other covenants or agreements of the
Servicer set forth in this Agreement, which has a material adverse
effect on the Investor Certificateholders of any Series and which
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the Holders of Investor Certificates
evidencing Undivided Interests aggregating not less than 50% of the
Investor Interest
-74-
<PAGE>
of any Series adversely affected thereby and continues to materially
adversely affect such Investor Certificateholders for such period; or
the Servicer shall delegate its duties under this Agreement, except as
permitted by Section 8.7;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to
this Agreement shall prove to have been incorrect when made, which has
a material adverse effect on the Investor Certificateholders of any
Series and 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 Servicer by the Trustee, or to the Servicer and the Trustee by the
Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 50% of the Investor Interest of any Series
adversely affected thereby and continues to materially adversely affect
such Investor Certificateholders for such period; or
(d) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings of
or relating to the Servicer or of or relating to all or substantially
all of its property, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer, and such decree
or order shall have remained in force undischarged or unstayed for a
period of 60 days; or the Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
any assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations;
then, so long as such Servicer Default shall not have been remedied or waived,
either the Trustee, or the Holders of Investor Certificates evidencing Undivided
Interests aggregating more than 50% of the Aggregate Investor Interest, by
notice then given in writing to the Servicer (and to the Trustee if given by the
Investor Certificateholders) (a "Termination Notice"), may terminate all of the
rights and obligations of the Servicer as Servicer under this Agreement. After
receipt by the Servicer of such Termination Notice, and on the date that a
Successor Servicer shall have been appointed by the Trustee pursuant to Section
10.2, all authority and power of the Servicer under this Agreement shall pass to
and be vested in a Successor Servicer; and, without limitation, the Trustee is
hereby authorized and empowered (upon the failure of the Servicer to cooperate)
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, all documents and other instruments
-75-
<PAGE>
upon the failure of the Servicer to execute or deliver such documents or
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such transfer of servicing rights and
obligations. The Servicer agrees to cooperate with the Trustee and such
Successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer to conduct servicing hereunder including, without
limitation, the transfer to such Successor Servicer of all authority of the
Servicer to service the Receivables provided for under this Agreement,
including, without limitation, all authority over all Collections which shall on
the date of transfer be held by the Servicer for deposit, or which have been
deposited or caused to be deposited by the Servicer, in the Collection Account,
the Finance Charge Account, the Principal Account, the Excess Funding Account
and any Series Account, or which shall thereafter be received with respect to
the Receivables, and in assisting the Successor Servicer and in enforcing all
rights to Insurance Proceeds applicable to the Trust. The Servicer shall
promptly transfer its electronic records or electronic copies thereof relating
to the Receivables to the Successor Servicer in such electronic form as the
Successor Servicer may reasonably request and shall promptly transfer to the
Successor Servicer all other records, correspondence and documents necessary for
the continued servicing of the Receivables in the manner and at such times as
the Successor Servicer shall reasonably request. To the extent that compliance
with this Section 10.1 shall require the Servicer to disclose to the Successor
Servicer information of any kind which the Servicer reasonably deems to be
confidential, the Successor Servicer shall be required to enter into each
customary licensing and confidentiality agreements as the Servicer shall deem
necessary to protect its interests. The Servicer shall, on the date of any
servicing transfer, transfer all of its rights and obligations under the Credit
Enhancement with respect to any Series to the Successor Servicer. The Servicer
being terminated shall bear all costs of such transfer, including but not
limited to those of the Trustee reasonably allocable to specific employees and
overhead, legal fees and expenses, accounting and financial consulting fees and
expenses, and costs of amending the Agreement, if any.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in subsection 10.1(a) for a period of 10 Business Days
or in subsection 10.1(b) or (c) for a period of 60 Business Days, shall not
constitute a Servicer Default if such delay or failure could not be prevented by
the exercise of reasonable diligence by the Servicer and such delay or failure
was caused by an act of God or the public enemy, acts of declared or undeclared
war, public disorder, rebellion, riot or sabotage, epidemics, landslides,
lightning, fire, hurricanes, tornadoes, earthquakes, nuclear disasters or
meltdowns, floods, power outages or similar causes. The preceding sentence shall
not relieve the Servicer from using its best efforts to perform its obligations
in a timely manner in accordance with the terms of this Agreement and the
Servicer shall provide the Trustee, any Credit Enhancement Provider, the
Transferor and the Holders of Investor Certificates with an Officer's
Certificate giving prompt notice of such failure or delay by it, together with a
description of the cause of such failure or delay and its efforts so to perform
its obligations.
-76-
<PAGE>
Section 10.2 Trustee to Act; Appointment of Successor.
(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 10.1, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or otherwise specified by the Trustee in writing or, if no
such date is specified in such Termination Notice, or otherwise specified by the
Trustee, until a date mutually agreed upon by the Servicer and Trustee. The
Trustee shall notify each Rating Agency of such removal of the Servicer. The
Trustee shall, as promptly as possible after the giving of a Termination Notice,
appoint a successor Servicer (the "Successor Servicer"), and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Trustee. The Trustee may obtain bids from any potential
successor Servicer. If the Trustee is unable to obtain any bids from any
potential successor Servicer and the Servicer delivers an Officer's Certificate
to the effect that the Servicer cannot in good faith cure the Servicer Default
which gave rise to a transfer of servicing, and if the Trustee is legally unable
to act as Successor Servicer, then the Trustee shall notify each Credit
Enhancement Provider of the proposed sale of the Receivables and shall provide
each such Credit Enhancement Provider an opportunity to bid on the Receivables
and shall offer the Transferor the right of first refusal to purchase the
Receivables on terms equivalent to the best purchase offer as determined by the
Trustee, but in no event less than an amount equal to the Aggregate Investor
Interest on the date of such purchase plus all interest accrued but unpaid on
all of the outstanding Investor Certificates at the applicable Certificate Rate
through the date of such purchase. The proceeds of such sale shall be deposited
in the Distribution Account or any Series Account, as provided in the related
Supplement, for distribution to the Investor Certificateholders of each
outstanding Series pursuant to Section 12.3. In the event that a Successor
Servicer has not been appointed and has not accepted its appointment at the time
when the Servicer ceases to act as Servicer, the Trustee without further action
shall automatically be appointed the Successor Servicer. Notwithstanding the
above, the Trustee shall, if it is legally unable so to act, petition a court of
competent jurisdiction to appoint any established financial institution having,
in the case of an entity that is subject to risk-based capital adequacy
requirements, risk-based capital of at least $50,000,000 or, in the case of an
entity that is not subject to risk-based capital requirements, having a net
worth of not less than $50,000,000 and whose regular business includes the
servicing of revolving credit card receivables as the Successor Servicer
hereunder. The Servicer shall provide the Trustee access to the documentation
and any software relating to the Receivables and the Collections and to any
personnel having knowledge of such documentation or software when the Trustee is
obligated to serve as Successor Servicer.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this
-77-
<PAGE>
Agreement to the Servicer shall be deemed to refer to the Successor Servicer.
Any Successor Servicer, by its acceptance of its appointment, will automatically
agree to be bound by the terms and provisions of each Credit Enhancement.
Notwithstanding the above, or anything in this Section 10.2 to the contrary, the
Trustee, if it becomes Servicer pursuant to this Section, shall have no
responsibility or obligation (i) to repurchase or substitute any Account or
Receivable, (ii) for any representation or warranty of the Servicer hereunder
and (iii) for any act or omission of either a predecessor or successor Servicer
other than the Trustee. The Trustee may conduct any activity required of it as
Servicer hereunder through an Affiliate or through an agent. Neither the Trustee
nor any other successor Servicer shall be deemed to be in default hereunder due
to any act or omission of a predecessor Servicer, including but not limited to
failure to timely deliver to the Trustee any Monthly Servicer's Certificate or
any funds required to be deposited to the Trust, or any breach of its duty to
cooperate with a transfer of servicing as required by Section 10.1.
(c) In connection with such appointment and assumption, the
Trustee shall be entitled to such compensation (including transition costs and
expenses), or may make such arrangements for the compensation of the Successor
Servicer out of Collections, as it and such Successor Servicer shall agree;
provided, however, that no such compensation shall be in excess of the Servicing
Fee permitted to be paid to the Servicer pursuant to Section 3.2. The Transferor
agrees that if the Servicer is terminated hereunder, it will agree to deposit a
portion of the Collections in respect of Finance Charge Receivables that it is
entitled to receive pursuant to Article IV to pay its share of the compensation
of the Successor Servicer.
(d) All authority and power granted to the Successor Servicer
under this Agreement shall automatically cease and terminate upon termination of
the Trust pursuant to Section 12.1 and shall pass to and be vested in the
Transferor and, without limitation, the Transferor is hereby authorized and
empowered to execute and deliver, on behalf of the Successor Servicer, as
attorney-in-fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things necessary or appropriate to effect the
purposes of such transfer of servicing rights. The Successor Servicer agrees to
cooperate with the Transferor in effecting the termination of the
responsibilities and rights of the Successor Servicer to conduct servicing on
the Receivables. The Successor Servicer shall transfer its electronic records
relating to the Receivables to the Transferor in such electronic form as the
Transferor may reasonably request and shall transfer all other records,
correspondence and documents to the Transferor in the manner and at such times
as the Transferor shall reasonably request. To the extent that compliance with
this Section 10.2 shall require the Successor Servicer to disclose to the
Transferor information of any kind which the Successor Servicer deems to be
confidential, the Transferor shall be required to enter into such customary
licensing and confidentiality agreements as the Successor Servicer shall deem
necessary to protect its interests.
-78-
<PAGE>
Section 10.3 Notification to Certificateholders. Within two
Business Days after the Servicer becomes aware of any Servicer Default, the
Servicer shall give written notice thereof to the Transferor, the Trustee, the
Rating Agencies and any Credit Enhancement Provider and the Trustee shall give
notice to the Investor Certificateholders at their respective addresses
appearing in the Certificate Register. Upon any termination or appointment of a
Successor Servicer pursuant to this Article X, the Trustee shall give prompt
written notice thereof to Investor Certificateholders at their respective
addresses appearing in the Certificate Register.
Section 10.4 Waiver of Past Defaults. The Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 66-2/3% of
the Investor Interest of each Series adversely affected by any default by the
Servicer or Transferor may, on behalf of all Certificateholders of such Series,
waive any default by the Servicer or Transferor in the performance of its
obligations hereunder and its consequences, except a default in the failure to
make any required deposits or payments of interest or principal relating to such
Series pursuant to Article IV which default does not result from the failure of
the Paying Agent to perform its obligations to make any required deposits or
payments of interest and principal in accordance with Article IV. The Servicer
shall give written notice of any such waiver to the Rating Agencies. Upon any
such waiver of a past default, such default shall cease to exist, and any
default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE XI
THE TRUSTEE
Section 11.1 Duties of Trustee.
(a) The Trustee, prior to the occurrence of any Servicer
Default and after the curing of all Servicer Defaults which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If a Responsible Officer has received written notice
that a Servicer Default has occurred (which has not been cured or waived), the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
substantially conform on their face to the requirements of this Agreement, but
shall not be required to verify the
-79-
<PAGE>
accuracy of the contents thereof or to verify any calculations contained
therein.
(c) Subject to subsection 11.1(a), no provision of this
Agreement shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:
(i) the Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the Holders of Investor
Certificates evidencing Undivided Interests aggregating more than 50%
of the Investor Interest of any Series relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee in
relation to such Series, under this Agreement; and
(iii) the Trustee shall not be charged with knowledge
of any failure by the Servicer referred to in clauses (a) and (b) of
Section 10.1 unless a Responsible Officer of the Trustee obtains actual
knowledge of such failure or the Trustee receives written notice of
such failure from the Servicer or any Holders of Investor Certificates
evidencing Undivided Interests aggregating not less than 10% of the
Investor Interest of any Series adversely affected thereby.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement except during such time,
if any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
(e) Except for actions expressly authorized by this Agreement,
the Trustee shall take no action reasonably likely to impair the interests of
the Trust in any Receivable now existing or hereafter created or to impair the
value of any Receivable now existing or hereafter created.
-80-
<PAGE>
(f) Except as provided in this subsection 11.1(f), the Trustee
shall have no power to vary the corpus of the Trust including, without
limitation, the power to (i) accept any substitute obligation for a Receivable
initially assigned to the Trust under Section 2.1 or 2.6 hereof, (ii) add any
other investment, obligation or security to the Trust, except for an addition
permitted under Section 2.6 or (iii) withdraw from the Trust any Receivables,
except for a withdrawal permitted under Sections 2.7, 9.2, 10.2, 12.1 or 12.2 or
subsections 2.4(d), 2.4(e) or Article IV.
(g) In the event that the Paying Agent or the Transfer Agent
and Registrar shall fail to perform any obligation, duty or agreement in the
manner or on the day required to be performed by the Paying Agent or the
Transfer Agent and Registrar, as the case may be, under this Agreement, the
Trustee shall be obligated promptly to perform such obligation, duty or
agreement in the manner so required, but shall not be obligated to expend its
own funds in so performing.
(h) If the Transferor has agreed to transfer any of its credit
card receivables (other than the Receivables) to another Person, upon the
written request of the Transferor, the Trustee will enter into such
intercreditor agreements with the transferee of such receivables as are
customary and necessary to identify separately the rights, if any, of the Trust
and such other Person in the Transferor's credit card receivables; provided,
however, that the Trustee shall not be required to enter into any intercreditor
agreement which could adversely affect the interests of the Certificateholders
and, upon the request of the Trustee, the Transferor will deliver an Opinion of
Counsel on any matters relating to such intercreditor agreement, reasonably
requested by the Trustee.
Section 11.2 Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 11.1:
(a) the Trustee may rely on and shall be protected in acting
on, or in refraining from acting in accord with, any assignment of
Receivables in Additional Accounts, the initial report, the Monthly
Servicer's Certificate, the annual Servicer's certificate, the monthly
payment instructions and notification to the Trustee, the monthly
Certificateholder's statement, any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to
be genuine and to have been signed or presented to it pursuant to this
Agreement by the proper party or parties;
(b) the Trustee may consult with counsel of its selection, and
any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel;
-81-
<PAGE>
(c) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement or any Credit
Enhancement, or to institute, conduct or defend any litigation
hereunder or in relation hereto, at the request, order or direction of
any of the Certificateholders or any Credit Enhancement Provider,
pursuant to the provisions of this Agreement, unless such
Certificateholders or Credit Enhancement Provider shall have offered to
the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee of the
obligations, upon the occurrence of any Servicer Default (which has not
been cured or waived), to exercise such of the rights and powers vested
in it by this Agreement and any Credit Enhancement, and to use the same
degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own
affairs;
(d) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement except to the extent of the Trustee's negligence;
(e) the Trustee shall not be bound to make any investigation
into the facts of matters stated or computations contained in any
assignment of Receivables in Additional Accounts, the initial report,
the Monthly Servicer's Certificate, the annual Servicer's certificate,
the monthly payment instructions and notification to the Trustee, the
monthly Certificateholder's statement, any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in
writing so to do by Holders of Investor Certificates evidencing
Undivided Interests aggregating more than 50% of the Investor Interest
of any Series which could be adversely affected if the Trustee does not
perform such acts;
(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian, and the Trustee shall not
be responsible for any misconduct or negligence on the part of any such
agent, attorney or custodian appointed by it with due care and in
accordance with the terms of this Agreement; and
(g) except as may be required by subsection 11.1(a), or
otherwise expressly required herein or in any Supplement, the Trustee
shall not be required to make any initial or periodic examination of
any documents or records related to the Receivables or the Accounts for
the purpose of establishing the presence or absence of defects, the
compliance
-82-
<PAGE>
by the Transferor with its representations and warranties or for
any other purpose.
Section 11.3 Trustee Not Liable for Recitals in Certificates.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 11.15, the
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee shall
not be accountable for the use or application by the Transferor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Transferor in respect of the Receivables or
deposited in or withdrawn from the Collection Account, the Principal Account or
the Finance Charge Account, or any Series Account by the Servicer.
Section 11.4 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Investor
Certificates, and the Trustee may transact banking business with the Transferor,
any Obligor and the Servicer, in each case with the same rights as it would have
if it were not the Trustee.
Section 11.5 The Servicer to Pay Trustee's Fees and Expenses.
The Servicer covenants and agrees to pay to the Trustee from time to time, and
the Trustee shall be entitled to receive such reasonable compensation as shall
be agreed upon from time to time between the Servicer and the Trustee (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the Trust hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and, subject to Section 8.4, the
Servicer will pay or reimburse the Trustee (without reimbursement from any
Investor Account, any Series Account or otherwise) upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement except any such
expense, disbursement or advance as may arise from its own negligence, bad faith
or wilful misconduct and except as provided in the following sentence. If the
Trustee is appointed Successor Servicer pursuant to Section 10.2, the provisions
of this Section 11.5 shall not apply to expenses, disbursements and advances
made or incurred by the Trustee in its capacity as Successor Servicer.
The obligations of the Servicer under this Section 11.5 shall
survive the termination of the Trust and the resignation or removal of the
Trustee.
Section 11.6 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation organized and doing business under
the laws of the United States of America or any state thereof authorized under
such laws to exercise corporate trust powers, having a long-term unsecured debt
rating of at least "Baa3" by Moody's and "BBB-" by Standard & Poor's having, in
the case of an entity that is
-83-
<PAGE>
subject to risk-based capital adequacy requirements, risk-based capital of at
least $50,000,000 or, in the case of an entity that is not subject to risk-based
capital adequacy requirements, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section 11.6, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in the most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 11.6, the Trustee shall resign immediately in the
manner and with the effect specified in Section 11.7.
Section 11.7 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from
the Trust hereby created by giving written notice thereof to the Servicer and
the Transferor. Upon receiving such notice of resignation, the Servicer shall
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.6 hereof and shall fail to resign
after written request therefor by the Transferor, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Transferor may, but shall not be required to, remove the Trustee and promptly
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
(c) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 11.7
shall not become effective until acceptance of appointment by the successor
trustee as provided in Section 11.8 hereof and any liability of the Trustee
arising hereunder shall survive such appointment of a successor trustee. The
Transferor shall give written notice of any resignation or removal of the
Trustee to the Rating Agencies.
Section 11.8 Successor Trustee.
(a) Any successor trustee appointed as provided in
Section 11.7 hereof shall execute, acknowledge and deliver to the
-84-
<PAGE>
Transferor, the Servicer and to its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as Trustee herein. The predecessor Trustee
shall deliver to the successor trustee all documents and statements held by it
hereunder, and the Transferor and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided
in this Section 11.8 unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 11.6 hereof.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.8, such successor trustee shall mail notice of such
succession hereunder to all Certificateholders at their addresses as shown in
the Certificate Register.
Section 11.9 Merger or Consolidation of Trustee. Any Person
into which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, provided such corporation shall be
eligible under the provisions of Section 11.6 hereof, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding. The Trustee shall give written
notice of any such merger or consolidation to the Rating Agencies.
Section 11.10 Appointment of Co-Trustee or Separate
Trustee.
(a) Notwithstanding any other provisions of this Agreement, at
any time, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint one or
more Persons to act as a co-trustee or co- trustees, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders, such
title to the trust, or any part thereof, and, subject to the other provisions of
this Section 11.10, such powers, duties, obligations, rights and trusts as the
Trustee may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 11.6 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 11.8 hereof.
-85-
<PAGE>
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any laws
of any jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be
personally liable by reason of any act or omission of any other
trustee hereunder; and
(iii) the Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect to this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
-86-
<PAGE>
Section 11.11 Tax Returns. In the event the Trust shall be
required to file tax returns, the Transferor, as soon as practicable after it is
made aware of such requirement, shall prepare or cause to be prepared any tax
returns required to be filed by the Trust and, to the extent possible, shall
file such returns at least five days before such returns are due to be filed.
The Trustee is hereby authorized to sign any such return on behalf of the Trust,
in the event that the Trustee is determined to be the person required by law to
sign such return. The Servicer shall prepare or shall cause to be prepared all
tax information required by law to be distributed to Certificateholders and
shall deliver such information to the Trustee at least five days prior to the
date it is required by law to be distributed to Certificateholders. The
Servicer, upon request, will furnish the Transferor with all such information
known to the Servicer as may be reasonably required in connection with the
preparation of all tax returns of the Trust. In no event shall the Trustee or
the Servicer be liable for any liabilities, costs or expenses of the Trust, the
Investor Certificateholders or the Certificate Owners arising under any tax law,
including without limitation federal, state, local or foreign income or excise
taxes or any other tax imposed on or measured by income (or any interest or
penalty with respect thereto or arising from a failure to comply therewith).
Section 11.12 Trustee may Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or any Series
of Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders any Series of Certificates, as their interests
may appear, in respect of which such judgment has been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default
shall occur and be continuing, the Trustee, in its discretion may, subject to
the provisions of Section 10.1, proceed to protect and enforce its rights and
the rights of the Holders of any Series of Certificates under this Agreement by
a suit, action or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this Agreement or
in aid of the execution of any power granted in this Agreement or for the
enforcement of any other legal, equitable or other remedy as the Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights of the Trustee or the Holders of any Series of Certificates.
Section 11.14 Rights of Certificateholders to Direct Trustee.
Holders of Investor Certificates evidencing Undivided Interests aggregating more
than 50% of the Aggregate Investor Interest (or, with respect to any remedy,
trust or power that does not relate to all Series, 50% of the Aggregate Investor
Interest of the Investor Certificates of
-87-
<PAGE>
all Series to which such remedy, trust or power relates) shall have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; provided, however, that, subject to Section 11.1, the Trustee shall
have the right to decline to follow any such direction if the Trustee being
advised by counsel determines that the action so directed may not lawfully be
taken, or if the Trustee in good faith shall, by a Responsible Officer or
Responsible Officers of the Trustee, determine that the proceedings so directed
would be illegal or subject it to personal liability or be unduly prejudicial to
the rights of Certificateholders not parties to such direction; and provided
further that nothing in this Agreement shall impair the right of the Trustee to
take any action deemed proper by the Trustee and which is not inconsistent with
such direction of such Holders of Investor Certificates.
Section 11.15 Representations and Warranties of
Trustee. The Trustee represents and warrants that:
(i) the Trustee is a banking corporation
organized, existing and authorized to engage in the business of
banking under the laws of the State of New York;
(ii) the Trustee has full power, authority and right
to execute, deliver and perform this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance
by it of this Agreement; and
(iii) this Agreement has been duly executed
and delivered by the Trustee.
Section 11.16 Maintenance of Office or Agency. The Trustee will
maintain at its expense in the Borough of Manhattan, the City of New York an
office or offices, or agency or agencies, where notices and demands to or upon
the Trustee in respect of the Certificates and this Agreement may be served. The
Trustee initially designates its Corporate Trust Office as its office for such
purposes in New York. The Trustee will give prompt written notice to the
Servicer and to Certificateholders (or in the case of Holders of Bearer
Certificates, in the manner provided for in the related Supplement) of any
change in the location of the Certificate Register or any such office or agency.
ARTICLE XII
TERMINATION
Section 12.1 Termination of Trust.
(a) The respective obligations and responsibilities of the
Transferor, the Servicer and the Trustee created hereby (other than the
obligation of the Trustee to make payments to Certificateholders as hereinafter
set forth) shall terminate, except with respect to the
-88-
<PAGE>
duties described in Sections 8.4 and 11.5 and subsections 2.4(c) and 12.3(b), on
the Trust Termination Date; provided, however, that the Trust shall not
terminate on the date specified in clause (i) of the definition of "Trust
Termination Date" if each of the Servicer and the Holder of the Transferor
Certificate notify the Trustee in writing, not later than five Business Days
preceding such date, that they desire that the Trust not terminate on such date,
which notice (such notice, a "Trust Extension") shall specify the date on which
the Trust shall terminate (such date, the "Extended Trust Termination Date").
The Servicer and the Holder of the Transferor Certificate may, on any date
following the Trust Extension, so long as no Series of Certificates is
outstanding, deliver a notice in writing to the Trustee changing the Extended
Trust Termination Date.
(b) All principal or interest with respect to any Series of
Investor Certificates shall be due and payable no later than the Series
Termination Date with respect to such Series. Unless otherwise provided in a
Supplement, in the event that the Investor Interest of any Series of
Certificates is greater than zero on its Series Termination Date (after giving
effect to all transfers, withdrawals, deposits and drawings to occur on such
date and the payment of principal to be made on such Series on such date), the
Trustee will sell or cause to be sold, and pay the proceeds first, to all
Certificateholders of such Series pro rata in final payment of all principal of
and accrued interest on such Series of Certificates, and second, as provided in
the related Supplement, an amount of Principal Receivables and the related
Finance Charge Receivables (or interests therein) up to 110% of the sum of the
Investor Interest of such Series plus the Enhancement Invested Amount or the
Collateral Interest (if not included in the Investor Interest) of such Series,
if any, at the close of business on such date (but not more than an amount of
Principal Receivables and the related Finance Charge Receivables equal to the
sum of (1) the product of (A) the Transferor Percentage, (B) the aggregate
amount of Principal Receivables in the Trust and (C) a fraction the numerator of
which is the applicable Investor Percentage with respect to Finance Charge
Receivables and the denominator of which is the sum of all Investor Percentages
with respect to Finance Charge Receivables of all Series and (2) the Investor
Interest of such Series plus the Enhancement Invested Amount or the Collateral
Interest (if not included in the Investor Interest) of such Series). The Trustee
shall notify each Credit Enhancement Provider of the proposed sale of such
Receivables and shall provide each Credit Enhancement Provider an opportunity to
bid on such Receivables. The Transferor shall be permitted to purchase such
Receivables in such case and shall have a right of first refusal with respect
thereto. Any proceeds of such sale in excess of such principal and interest paid
shall be paid to the Holder of the Transferor Certificate. Upon such Series
Termination Date with respect to the applicable Series of Certificates, final
payment of all amounts allocable to any Investor Certificates of such Series
shall be made in the manner provided in Section 12.3.
-89-
<PAGE>
Section 12.2 Optional Purchase.
(a) If so provided in any Supplement, the Transferor may, but
shall not be obligated to, cause a final distribution to be made in respect of
the related Series of Certificates on a Distribution Date specified in such
Supplement by depositing into the Distribution Account or the applicable Series
Account, not later than the Transfer Date preceding such Distribution Date, for
application in accordance with Section 12.3, the amount specified in such
Supplement.
(b) The amount deposited pursuant to subsection 12.2(a) shall
be paid to the Investor Certificateholders of the related Series pursuant to
Section 12.3 on the related Distribution Date following the date of such
deposit. All Certificates of a Series which are purchased by the Transferor
pursuant to subsection 12.2(a) shall be delivered by the Transferor upon such
purchase to, and be canceled by, the Transfer Agent and Registrar and be
disposed of in a manner satisfactory to the Trustee and the Transferor. The
Investor Interest of each Series which is purchased by the Transferor pursuant
to subsection 12.2(a) shall, for the purposes of the definition of "Transferor
Interest," be deemed to be equal to zero on the Distribution Date following the
making of the deposit, and the Transferor Interest shall thereupon be deemed to
have been increased by the Investor Interest of such Series.
Section 12.3 Final Payment with Respect to any Series.
(a) Written notice of any termination, specifying the
Distribution Date upon which the Investor Certificateholders of any Series may
surrender their Certificates for payment of the final distribution with respect
to such Series and cancellation, shall be given by the Trustee to Investor
Certificateholders of such Series mailed not later than the fifth day of the
month of such final distribution (subject to at least two Business Days' prior
notice from the Servicer to the Trustee) (or in the manner provided by the
Supplement relating to such Series) specifying (i) the Distribution Date (which
shall be the Distribution Date in the month (x) in which the deposit is made
pursuant to subsection 2.4(e), 9.2(a), 10.2(a) or 12.2(a) of this Agreement or
such other section as may be specified in the related Supplement, or (y) in
which the related Series Termination Date occurs) upon which final payment of
such Investor Certificates will be made upon presentation and surrender of such
Investor Certificates at the office or offices therein designated (which, in the
case of Bearer Certificates, shall be outside the United States), (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Investor Certificates at the office or
offices therein specified. The Servicer's notice to the Trustee in accordance
with the preceding sentence shall be accompanied by an Officers' Certificate
setting forth the information specified in Article V of this Agreement covering
the period during the then current calendar year through the date of such notice
and setting forth the date of such final distribution. The Trustee shall give
such notice to the Transfer Agent and Registrar and the Paying Agent and the
Rating Agencies at the time such notice is given to such Investor
Certificateholders.
-90-
<PAGE>
(b) Notwithstanding the termination of the Trust pursuant to
subsection 12.1(a) or the occurrence of the Series Termination Date with respect
to any Series, all funds then on deposit in the Finance Charge Account, the
Principal Account, the Excess Funding Account, the Distribution Account or any
Series Account applicable to the related Series shall continue to be held in
trust for the benefit of the Certificateholders of the related Series and the
Paying Agent or the Trustee shall pay such funds to the Certificateholders of
the related Series upon surrender of their Certificates (which surrenders and
payments, in the case of Bearer Certificates, shall be made only outside the
United States). In the event that all of the Investor Certificateholders of any
Series shall not surrender their Certificates for cancellation within six months
after the date specified in the above- mentioned written notice, the Trustee
shall give a second written notice (or, in the case of Bearer Certificates,
publication notice) to the remaining Investor Certificateholders of such Series
upon receipt of the appropriate records from the Transfer Agent and Registrar to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within one and one-half years after the second notice
with respect to a Series, all the Investor Certificates of such Series shall not
have been surrendered for cancellation, the Trustee may take appropriate steps
or may appoint an agent to take appropriate steps, to contact the remaining
Investor Certificateholders of such Series concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds in the
Distribution Account or any Series Account held for the benefit of such Investor
Certificateholders. The Trustee and the Paying Agent shall pay to the Transferor
upon request any monies held by them for the payment of principal or interest
which remains unclaimed for two years. After payment to the Transferor, Investor
Certificateholders entitled to the money must look to the Transferor for payment
as general creditors unless an applicable abandoned property law designates
another Person.
(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation shall be
canceled by the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee and the Transferor.
Section 12.4 Termination Rights of Holder of Transferor
Certificate. Upon the termination of the Trust pursuant to Section 12.1, and
after payment of all amounts due hereunder on or prior to such termination and
the surrender of the Transferor Certificate, the Trustee shall execute a written
reconveyance substantially in the form of Exhibit H pursuant to which it shall
reconvey to the Holder of the Transferor Certificate, without recourse,
representation or warranty, all right, title and interest of the Trust in the
Receivables, whether then existing or thereafter created, all moneys due or to
become due with respect to such Receivables (including all accrued interest
theretofore posted as Finance Charge Receivables) and all proceeds of such
Receivables and Insurance Proceeds relating to such Receivables allocable to the
Trust, except for amounts held by the Trustee pursuant to subsection 12.3(b).
The Trustee shall execute and deliver such instruments of transfer and
assignment, in each case without recourse, representation or warranty, as
-91-
<PAGE>
shall be reasonably requested by the Holder of the Transferor Certificate to
vest in such Holder all right, title and interest which the Trust had in the
Receivables.
Section 12.5 Defeasance. Notwithstanding anything to
the contrary in this Agreement or any Supplement:
(a) The Transferor may at its option be discharged from its
obligations with respect to all of the Investor Certificates issued by
the Trust or any specified Series thereof on the date the applicable
conditions set forth in Section 12.5(c) are satisfied ("Defeasance");
provided, however, that the following rights, obligations, powers,
duties and immunities shall survive until otherwise terminated or
discharged hereunder: (A) the rights of Holders of Investor
Certificates of the Trust or any specified Series thereof to receive,
solely from the trust fund provided for in Section 12.5(c), payments in
respect of principal of and interest on such Investor Certificates when
such payments are due; (B) the Transferor's obligations with respect to
such Series of Certificates under Sections 6.3, 6.4 and 12.3; (C) the
rights, powers, trusts, duties and immunities of the Trustee, the
Paying Agent and the Transfer Agent and Registrar hereunder; and (D)
this Section 12.5.
(b) Subject to Section 12.5(c), the Transferor at its option
may use Collections to purchase Permitted Investments rather than
additional Receivables for transfer to the Trust until such time as no
Receivables remain in the Trust.
(c) The following shall be the conditions to Defeasance under
Section 12.5(a): (1) the Transferor irrevocably shall have deposited or
caused to be deposited with the Trustee, under the terms of an
irrevocable trust agreement in form and substance satisfactory to the
Trustee, as trust funds in trust for making the payments described
below: (A) Dollars in an amount, or (B) Permitted Investments which
through the scheduled payment of principal and interest in respect
thereof will provide, not later than the due date of payment thereon,
money in an amount, or (C) a combination thereof, in each case
sufficient to pay and discharge, and, which shall be applied by the
Trustee to pay and discharge, all remaining scheduled interest and
principal payments on all outstanding Investor Certificates of the
Trust or any specified Series thereof on the dates scheduled for such
payments in this Agreement and the applicable Supplements and all
amounts owed to the Credit Enhancement Provider for any Series if so
provided in the related Supplements or agreements with such Credit
Enhancement Provider; (2) prior to each exercise of its right to
substitute money or Permitted Investments for Receivables, the
Transferor shall deliver to the Trustee a Tax Opinion with respect to
such substitution and an Opinion of Counsel to the effect that the
Trust will not be required to register as an
-92-
<PAGE>
"investment company" within the meaning of the Investment Company Act
of 1940, as amended; (3) such deposit and termination of obligations
will not result in a Pay Out Event for any Series and (4) the
Transferor shall deliver to the Trustee and Officer's Certificate and
an Opinion of Counsel, each stating that all conditions precedent
provided for herein relating to the contemplated Defeasance have been
complied with.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Amendment.
(a) This Agreement (including any Supplement) may be amended
from time to time by the Transferor, the Servicer and the Trustee, without the
consent of any of the Certificateholders, (i) to cure any ambiguity, to revise
any exhibits or schedules (other than Schedule 1), to correct or supplement any
provisions herein or thereon or (ii) to add any other provisions with respect to
matters or questions raised under this Agreement which shall not be inconsistent
with the provisions of this Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any of the Certificateholders unless such
Certificateholders have consented thereto.
(b) This Agreement (including any Supplement) and any schedule
or exhibit thereto may also be amended from time to time by the Transferor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that (i)
the Servicer shall have provided an Officer's Certificate to the Trustee to the
effect that such amendment will not materially and adversely affect the
interests of any Certificateholder, (ii) the Servicer shall have provided a Tax
Opinion to the Trustee with respect to such amendment and (iii) the Servicer
shall have provided at least ten Business Days' prior written notice to each
Rating Agency of such amendment and shall have received written confirmation
from each Rating Agency that such action will satisfy the Rating Agency
Condition; provided, further, that such amendment shall not, without the consent
of each Certificateholder of each Series affected thereby, (i) reduce in any
manner the amount of, or delay the timing of, distributions which are required
to be made on any Certificate of such Series, (ii) alter the requirements for
changing the Minimum Transferor Interest Percentage for such Series, (iii)
change the definition of or the manner of calculating the interest of any
Certificateholder of such Series, (iv) change the manner in which the Transferor
Interest is determined or (v) reduce the percentage pursuant to Subsection
13.1(c) required to consent to any such amendment.
-93-
<PAGE>
(c) This Agreement and any Supplement may also be amended from
time to time by the Transferor, the Servicer and the Trustee with the consent of
Certificateholders evidencing Undivided Interests aggregating more than 66 2/3%
of the Investor Interest of each and every Series adversely affected, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Certificateholders of any Series then issued and outstanding; provided,
however, that no such amendment under this subsection shall (i) reduce in any
manner the amount of, or delay the timing of, distributions which are required
to be made on any Certificate of such Series without the consent of all of the
related Certificateholders; (ii) change the definition of or the manner of
calculating the Investor Interest, the Investor Percentage or the Investor
Default Amount of such Series without the consent of the related
Certificateholders or (iii) reduce the aforesaid percentage required to consent
to any such amendment, in each case without the consent of each
Certificateholder of all Series affected. The Transferor shall give written
notice to the Ratings Agencies of any such amendment.
(d) It shall not be necessary to obtain the consent of
Certificateholders under this Section 13.1 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
(e) Promptly after the execution of any amendment pursuant to
subsection 13.1(a) or 13.1(c) above, the Trustee shall furnish notification of
the substance of such amendment to each Rating Agency providing a rating for any
Series.
(f) Any Supplement executed and delivered pursuant to Section
6.9 and any amendments regarding the addition to or removal of Receivables from
the Trust as provided in Sections 2.6 or 2.7, executed in accordance with the
provisions hereof, shall not be considered amendments to this Agreement for the
purpose of Section 13.1.
(g) In connection with any amendment, the Trustee may request,
in addition to the Opinion of Counsel required by subsection 13.2(d), an Opinion
of Counsel from the Transferor or the Servicer to the effect that the amendment
complies with all requirements of this Agreement. The Trustee may, but shall not
be obligated to, enter into any amendment which affects the Trustee's rights,
duties or immunities under this Agreement or otherwise.
Section 13.2 Protection of Right, Title and Interest to
Trust.
(a) The Servicer shall cause this Agreement, all amendments
hereto and/or all financing statements and continuation statements and any other
necessary documents covering the
-94-
<PAGE>
Certificateholders and the Trustee's right, title and interest to the Trust to
be promptly recorded, registered and filed, and at all times to be kept
recorded, registered and filed, all in such manner and in such places as may be
required by law fully to preserve and protect the right, title and interest of
the Certificateholders or the Trustee, as the case may be, hereunder to all
property comprising the Trust. The Servicer shall deliver to the Trustee
file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, promptly after the same become available
following such recording, registration of filing. The Transferor shall cooperate
fully with the Servicer in connection with the obligations set forth above and
will execute any and all documents reasonably required to fulfill the intent of
this subsection 13.2(a).
(b) Within 30 days after the Transferor makes any change in its
name, identity or corporate structure which would make any financing statement
or continuation statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of Section 9- 402(7) of the UCC, the Transferor
shall give the Trustee notice of any such change and shall file such financing
statements or amendments as may be necessary to continue the perfection of the
Trust's security interest in the Receivables and the proceeds thereof.
(c) Each of the Transferor and the Servicer will give the
Trustee prompt written notice of any relocation of any office from which it
services Receivables or keeps records concerning the Receivables or of its
principal executive office and whether, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof. Each of the Transferor and the Servicer
will at all times maintain each office from which it services Receivables and
its principal executive office within the United States of America.
(d) The Servicer will deliver to the Trustee: (i) upon each
date that any Additional Accounts are to be included in the Accounts pursuant to
Section 2.6(a) or (b), an Opinion of Counsel substantially in the form of
Exhibit E; and (ii) on or before March 31 of each year, beginning with March 31,
2001, an Opinion of Counsel, substantially in the form of Exhibit F.
Section 13.3 Limitation on Rights of
Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, nor shall such death or
incapacity entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or commence any proceeding in any
court for a partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of them.
-95-
<PAGE>
(b) No Certificateholder shall have any right to vote (except
with respect to the Investor Certificateholders as provided in Section 13.1
hereof) or in any manner otherwise control the operation and management of the
Trust, or the obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Certificateholder previously shall have given written notice to the Trustee, and
unless the Holders of Certificates evidencing Undivided Interests aggregating
more than 50% of the Investor Interest of any Series which may be adversely
affected but for the institution of such suit, action or proceeding, shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Certificateholders shall have the right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Agreement
to affect, disturb or prejudice the rights of the Certificateholders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Certificateholder, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 13.3, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 13.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
Section 13.5 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
when personally delivered at, sent by facsimile to, (ii) two Business Days after
being sent by courier at or (iii) five Business Days after being mailed by
registered mail, return receipt requested, to (a) in the case of the Transferor,
to Dillard Asset Funding Company, c/o Chase Manhattan Bank USA, N.A., 1201
Market Street, Wilmington, Delaware 19801, Attention: Corporate Trust
Department, with copies to James Freeman and David Helm, as Administrators, c/o
Dillard's Inc., 1600 Cantrell, Little Rock, Arkansas 72201, (b) in the case of
the
-96-
<PAGE>
Servicer, to Dillard National Bank, 396 North William Dillard Drive, Gilbert,
Arizona 85233, Attention Randall Hankins, (c) in the case of the Trustee, to the
Corporate Trust Office, (d) in the case of the Credit Enhancement Provider for a
particular Series, the address, if any, specified in the Supplement relating to
such Series and (e) in the case of the Rating Agency for a particular Series,
the address, if any, specified in the Supplement relating to such Series; or, as
to each party, at such other address as shall be designated by such party in a
written notice to each other party. Unless otherwise provided with respect to
any Series in the related Supplement any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Certificateholder as shown in the Certificate
Register, or with respect to any notice required or permitted to be made to the
Holders of Bearer Certificates, by publication in the manner provided in the
related Supplement. If and so long as any Series or Class is listed on the
Luxembourg Stock Exchange and such Exchange shall so require, any Notice to
Investor Certificateholders shall be published in a newspaper of general
circulation in Luxembourg within the time period prescribed in this Agreement.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Section 13.6 Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity of
enforceability of the other provisions of this Agreement or of the Certificates
or rights of the Certificateholders thereof.
Section 13.7 [RESERVED]
Section 13.8 Certificates Non-Assessable and Fully Paid. It is
the intention of the parties to this Agreement that the Certificateholders shall
not be personally liable for obligations of the Trust, that the Undivided
Interests represented by the Certificates shall be non-assessable for any losses
or expenses of the Trust or for any reason whatsoever, and that Certificates
upon authentication thereof by the Trustee pursuant to Sections 2.1 and 6.2 are
and shall be deemed fully paid.
Section 13.9 Further Assurances. The Transferor and the
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by the
Trustee more fully to effect the purposes of this Agreement, including, without
limitation, the execution of any financing statements or continuation statements
relating to the Receivables for filing under the provisions of the Uniform
Commercial Code of any applicable jurisdiction.
-97-
<PAGE>
Section 13.10 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trustee, any Credit
Enhancement Provider or the Investor Certificateholders, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
Section 13.11 Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
Section 13.12 Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto, the
Certificateholders and, to the extent provided in the related Supplement, to the
Credit Enhancement Provider named therein, and their respective successors and
permitted assigns. Except as otherwise provided in this Article XIII, no other
Person will have any right or obligation hereunder.
Section 13.13 Actions by Certificateholders.
(a) Wherever in this Agreement a provision is made that an
action may be taken or a notice, demand or instruction given by Investor
Certificateholders, such action, notice or instruction may be taken or given by
any Investor Certificateholder, unless such provision requires a specific
percentage of Investor Certificateholders.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder shall bind such
Certificateholder and every subsequent holder of such Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or omitted to be done by the Trustee or the Servicer
in reliance thereon, whether or not notation of such action is made upon such
Certificate.
Section 13.14 Rule 144A Information. For so long as any of the
Investor Certificates of any Series or any Class are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, each of the
Transferor, the Servicer, the Trustee and the Enhancement Provider for such
Series agree to cooperate with each other to provide to any Investor
Certificateholders of such Series or Class and to any prospective purchaser of
Certificates designated by such an Investor Certificateholder upon the request
of such Investor Certificateholder or prospective purchaser, any information
required to be provided to such holder or prospective purchaser to satisfy the
condition set forth in Rule 144A(d)(4) under the Securities Act.
-98-
<PAGE>
Section 13.15 Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding of
the parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 13.16 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
13.17No Recourse. No recourse may be taken, directly or indirectly, with respect
to the obligations of the Transferor, the Trust, Chase Manhattan Bank USA, N.A.
or the Trustee on the Certificates or under this Agreement or any certificate or
other writing delivered in connection herewith or therewith, against:
(i) the Trustee or Chase Manhattan Bank USA, N.A. in
its individual capacity;
(ii) any owner of a beneficial interest in the
Transferor; or
(iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Trustee or Chase Manhattan Bank USA, N.A. in
their individual capacities, any holder of a beneficial interest in the
Transferor, the Trustee or Chase Manhattan Bank USA, N.A. or of any successor or
assign of the Trustee or Chase Manhattan Bank USA, N.A. in their individual
capacities (or any of their successors or assigns), except as any such Person
may have expressly agreed (it being understood that the Trustee and Chase
Manhattan Bank USA, N.A. have no such obligations in their individual
capacities) and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Agreement, in
the performance of any duties or obligations of the Transferor hereunder, Chase
Manhattan Bank USA, N.A. shall be subject to, and entitled to the benefits of,
the terms and provisions of Article XI hereof.
-99-
<PAGE>
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers as of the day and year first above written.
DILLARD ASSET FUNDING COMPANY,
as Transferor
By: CHASE MANHATTAN BANK USA, N.A.,
not in its individual capacity
but solely as owner trustee
By:
-----------------------------
Name:
Title:
DILLARD NATIONAL BANK,
as Servicer
By:
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------------
Name:
Title:
-100-
<PAGE>
EXHIBIT A
TRANSFEROR CERTIFICATE
No. 1 One Unit
DILLARD CREDIT CARD MASTER TRUST I
ASSET BACKED CERTIFICATE
THIS CERTIFICATE WAS ISSUED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), AND MAY BE
SOLD ONLY PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE ACT OR AN
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE ACT. IN ADDITION, THE TRANSFER
OF THIS CERTIFICATE IS SUBJECT TO RESTRICTIONS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN. A COPY OF THE POOLING AND SERVICING
AGREEMENT WILL BE FURNISHED TO THE HOLDER OF THIS CERTIFICATE BY THE TRUSTEE
UPON WRITTEN REQUEST.
This Certificate represents an
Undivided Interest in the
Dillard Credit Card Master Trust I
Evidencing an Undivided Interest in a trust, the corpus of
which consists of a portfolio of Dillard's and Mercantile credit card
receivables generated or acquired by Dillard Asset Funding Company and other
assets and interests constituting the Trust under the Pooling and Servicing
Agreement described below.
This certifies that Dillard Asset Funding Company (the
"Holder") is the registered owner of an undivided interest in a trust (the
"Trust"), the corpus of which consists of a portfolio of receivables (the
"Receivables") now existing or hereafter created under selected Dillard's and
Mercantile credit card accounts (the"Accounts") of Dillard Asset Funding Company
(the "Transferor"), a business trust organized and existing under the laws of
the State of Delaware, all monies due or to become due in payment of the
Receivables (including all Finance Charge Receivables), all proceeds of such
Receivables and Insurance Proceeds relating to the Receivables, the other assets
and interests constituting the Trust and the proceeds thereof pursuant to the
Amended and Restated Pooling and Servicing Agreement dated as of June 28, 2000,
as supplemented by any Supplement relating to a Series of Investor Certificates
(the "Pooling and Servicing Agreement"), by and between Dillard Asset Funding
Company, as Transferor, Dillard National Bank, as Servicer, and The Chase
Manhattan Bank, as Trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth herein.
A-1
<PAGE>
To the extent not defined herein, the capitalized terms used
herein have the meanings assigned to them in the Pooling and Servicing
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement, to which
Pooling and Servicing Agreement, as amended from time to time, the Holder by
virtue of the acceptance hereof assents and by which the Holder is bound.
This Certificate has not been registered or qualified under the
Securities Act of 1933, as amended, or any state securities law. No sale,
transfer or other disposition of this Certificate shall be permitted other than
in accordance with the provisions of Section 6.3, 6.9 or 7.2 of the Pooling and
Servicing Agreement.
The Receivables consist of Principal Receivables which arise
generally from the purchase of goods and services and of Finance Charge
Receivables which arise generally from Periodic Finance Charges and other fees
and charges, as more fully specified in the Pooling and Servicing Agreement.
This Certificate is the Transferor Certificate (the
"Certificate"), which represents an Undivided Interest in the Trust, including
the right to receive the Collections and other amounts at the times and in the
amounts specified in the Pooling and Servicing Agreement to be paid to the
Holder of the Transferor Certificate. The aggregate interest represented by this
Certificate in the Principal Receivables in the Trust shall not at any time
exceed the Transferor Interest at such time. In addition to this Certificate,
Series of Investor Certificates will be issued to investors pursuant to the
Pooling and Servicing Agreement, each of which will represent an Undivided
Interest in the Trust. This Certificate shall not represent any interest in the
Investor Accounts, any Series Accounts or any Credit Enhancement, except to the
extent provided in the Pooling and Servicing Agreement. The Transferor Interest
on any date of determination will be an amount equal to the aggregate amount of
Principal Receivables and the principal amounts on deposit in the Excess Funding
Account, any Principal Funding Account and any other Series Account (if so
provided in the applicable Supplement) at the end of the day immediately prior
to such date of determination minus the Aggregate Investor Interest at the end
of such day, minus the aggregate Enhancement Invested Amounts (if such amounts
are not included in the Investor Interest in the applicable Supplement), if any,
for each Series outstanding at the end of such day.
The Servicer shall deposit all Collections in the Collection
Account as promptly as possible after the Date of Processing of such
Collections, but in no event later than the second Business Day following such
Date of Processing (except as provided below and except as provided in any
Supplement to the Pooling and Servicing Agreement). Unless otherwise stated in
any Supplement, throughout the existence of the Trust, the Servicer shall
allocate to the Holder of the Certificate an amount equal to the product of (A)
the Transferor Percentage and (B) the aggregate amount of such Collections
allocated to Principal Receivables and Finance Charge Receivables, respectively,
in respect of each Monthly Period. Notwithstanding the first sentence of this
paragraph, the Servicer need not deposit this amount or any other amounts
A-2
<PAGE>
so allocated to the Certificate pursuant to the Pooling and Servicing Agreement
into the Collection Account and shall pay, or be deemed to pay, such amounts as
collected to the Holder of the Certificate.
Dillard National Bank, as Servicer, is entitled to receive as
servicing compensation a monthly servicing fee. The portion of the servicing fee
which will be allocable to the Holder of the Certificate pursuant to the Pooling
and Servicing Agreement will be payable by the Holder of the Certificate and
neither the Trust nor the Trustee or the Investor Certificateholders will have
any obligations to pay such portion of the servicing fee.
This Certificate does not represent an obligation of, or any
interest in, the Transferor or the Servicer, and neither the Certificates nor
the Accounts or Receivables are insured or guaranteed by the Federal Deposit
Insurance Corporation or any other governmental agency. This Certificate is
limited in right of payment to certain Collections respecting the Receivables,
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
Upon the termination of the Trust pursuant to Section 12.1 of
the Pooling and Servicing Agreement, the Trustee shall assign and convey to the
Holder of the Certificate (without recourse, representation or warranty) all
right, title and interest of the Trust in the Receivables, whether then existing
or thereafter created, all monies due or to become due with respect thereto
(including all accrued interest theretofore posted as Finance Charge
Receivables) and all proceeds thereof and Insurance Proceeds relating thereto
and Interchange allocable to the Trust pursuant to any Supplement, except for
amounts held by the Trustee pursuant to subsection 12.3(b) of the Pooling and
Servicing Agreement. The Trustee shall execute and deliver such instruments of
transfer and assignment, in each case without recourse, as shall be reasonably
requested by the Holder of the Certificate to vest in such Holder all right,
title and interest which the Trustee had in the Receivables.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Certificate
shall not be entitled to any benefit under the Pooling and Servicing Agreement,
or be valid for any purpose.
IN WITNESS WHEREOF, Dillard Asset Funding Company has caused
this Certificate to be duly executed under its official seal.
DILLARD ASSET FUNDING COMPANY
By:
------------------------------
Authorized Officer
Date:
A-3
<PAGE>
Trustee's Certificate of Authentication
---------------------------------------
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is the Transferor Certificate referred to in the
within-mentioned Pooling and Servicing Agreement.
---------------------------,
as Trustee
By:
------------------------------
Authorized Officer
A-5
<PAGE>
EXHIBIT B
---------
FORM OF ASSIGNMENT OF
RECEIVABLES IN ADDITIONAL ACCOUNTS
----------------------------------
ASSIGNMENT No. _____ OF RECEIVABLES IN ADDITIONAL ACCOUNTS,
dated as ___________ __, by and between Dillard Asset Funding Company, a
business trust organized and existing under the laws of the State of Delaware
("Transferor"), to The Chase Manhattan Bank, a banking corporation organized and
existing under the laws of the State of New York (the "Trustee") pursuant to the
Pooling and Servicing Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Transferor and the Trustee are parties to the
Amended and Restated Pooling and Servicing Agreement, dated as of June 28, 2000
(hereinafter as such agreement may have been, or may from time to time be,
amended, supplemented or otherwise modified, the "Pooling and Servicing
Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the
Transferor wishes to designate Additional Accounts of the Transferor to be
included as Accounts and to convey the Receivables of such Additional Accounts,
whether now existing or hereafter created, to the Trust as part of the corpus of
the Trust (as each such term is defined in the Pooling and Servicing Agreement);
and
WHEREAS, the Trustee is willing to accept such
designation and conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferor and the Trustee hereby agree as
follows:
1. Defined Terms. All terms defined in the Pooling and
Servicing Agreement and used herein shall have such defined meanings when
used herein, unless otherwise defined herein.
"Addition Date" shall mean, with respect to the
Additional Accounts designated hereby, ___________, ____.
"Notice Date" shall mean, with respect to the Additional
Accounts designated hereby, __________, ____ (which shall be a date on or prior
to the fifth Business Day prior to the Addition Date with respect to additions
pursuant to subsection 2.6(a) of the Pooling and Servicing Agreement and the
tenth Business Day prior to the Addition Date with respect to additions pursuant
to subsection 2.6(b) of the Pooling and Servicing Agreement).
2. Designation of Additional Accounts. The Transferor
shall deliver to the Trustee not later than five Business Days after the
B-1
<PAGE>
Addition Date, a computer file or microfiche list containing a true and complete
list of each Dillard's and Mercantile account which as of the Addition Date
shall be deemed to be an Additional Account, such accounts being identified by
account number and by the amount of Receivables in such accounts as of the close
of business on the Addition Date. Such list shall be delivered five Business
Days after the date of this Agreement and shall be marked as Schedule 1 to this
Assignment and, as of the Addition Date, shall be incorporated into and made a
part of this Assignment.
3. Conveyance of Receivables.
(a) The Transferor does hereby transfer, assign, set- over and
otherwise convey to the Trust for the benefit of the Certificateholders, without
recourse on and after the Addition Date, all right, title and interest of the
transferor in and to the Receivables now existing and hereafter created in the
Additional Accounts designated hereby, all monies due or to become due with
respect thereto (including all Finance Charge Receivables) and all proceeds of
such Receivables, Insurance Proceeds relating to such Receivables and the
proceeds thereof.
(b) In connection with such transfer, the transferor agrees to
record and file, at its own expense, a financing statement with respect to the
Receivables now existing and hereafter created in the Additional Accounts
designated hereby (which may be a single financing statement with respect to all
such Receivables) for the transfer of accounts as defined in Section 9-106 of
the UCC as in effect in the State of New York meeting the requirements of
applicable state law in such manner and such jurisdictions as are necessary to
perfect the assignment of such Receivables to the Trust, and to deliver a
file-stamped copy of such financing statement or other evidence of such filing
(which may, for purposes of this Section 3, consist of telephone confirmation of
such filing) to the Trustee on or prior to the date of this Agreement.
(c) In connection with such transfer, the transferor further
agrees, at its own expense, on or prior to the date of this Assignment to
indicate in its computer files that Receivables created in connection with the
Additional Accounts designated hereby have been transferred to the Trust
pursuant to this Assignment for the benefit of the Certificateholders.
4. Acceptance by Trustee. The Trustee hereby acknowledges its
acceptance on behalf of the Trust for the benefit of the Certificateholders of
all right, title and interest previously held by the transferor in and to the
Receivables now existing and hereafter created, and declares that it shall
maintain such right, title and interest, upon the Trust herein set forth, for
the benefit of all Certificateholders.
5. Representations and Warranties of the Transferor.
The Transferor hereby represents and warrants to the Trust as of the
Addition Date:
B-2
<PAGE>
(a) Legal, Valid and Binding Obligation. This Assignment
constitutes a legal, valid and binding obligation of the transferor
enforceable against the transferor in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general and the rights of creditors of [banking associations] and
except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
(b) Eligibility of Accounts and Receivables. Each Additional
Account designated hereby is an Eligible Account and each Receivable in
such Additional Account is an Eligible Receivable.
(c) Selection Procedures. No selection procedures believed by
the Transferor to be materially adverse to the interests of the
Investor Certificateholders were utilized in selecting the Additional
Accounts designated hereby from the available Eligible Accounts in the
Credit Card Portfolio.
(d) Insolvency. The Transferor is not insolvent and, after
giving effect to the conveyance set forth in Section 3 of this
Assignment, will not be insolvent.
(e) Security Interest. This Assignment constitutes either: (i)
a valid transfer and assignment to the Trust of all right, title and
interest of the Transferor in and to Receivables now existing and
hereafter created in the Additional Accounts designated hereby, and all
proceeds (as defined in the UCC as in effect in the State of New York)
of such Receivables and Insurance Proceeds relating thereto, and such
Receivables and any proceeds thereof and Insurance Proceeds relating
thereto will be held by the Trust free and clear of any Lien of any
Person claiming through or under the Transferor or any of its
Affiliates except for (x) Liens permitted under subsection 2.5(b) of
the Pooling and Servicing Agreement, (y) the interest of the holder of
the Transferor Certificate and (z) the Transferor's right to receive
interest accruing on, and investment earnings in respect of, the
Finance Charge Account and the Principal Account as provided in the
Pooling and Servicing Agreement; or (ii) a grant of a security interest
(as defined in the UCC as in effect in the State of New York) in such
property to the Trust, which is enforceable with respect to existing
Receivables of the Additional Accounts, the proceeds (as defined in the
UCC as in effect in the State of New York) thereof and Insurance
Proceeds relating thereto, upon the conveyance of such Receivables to
the Trust, and which will be enforceable with respect to the
Receivables thereafter created in respect of Additional Accounts
designated hereby, the proceeds (as defined in the UCC as in effect in
the State of New York) thereof and Insurance Proceeds relating thereto,
upon such
B-3
<PAGE>
creation; and (iii) if this Assignment constitutes the grant of a
security interest to the Trust in such property, upon the filing of a
financing statement described in Section 3 of this Assignment with
respect to the Additional Accounts designated hereby and in the case of
the Receivables of such Additional Accounts thereafter created and the
proceeds (as defined in the UCC as in effect in the State of New York)
thereof, and Insurance Proceeds relating to such Receivables, upon such
creation, the Trust shall have a first priority perfected security
interest in such property (subject to Section 9-306 of the UCC as in
effect in the State of New York), except for Liens permitted under
subsection 2.5(b) of the Pooling and Servicing Agreement.
6. Conditions Precedent. The acceptance by the Trustee
set forth in Section 4 and the amendment of the Pooling and Servicing
Agreement set forth in Section 7 are subject to the satisfaction, on or
prior to the Addition Date, of the following conditions precedent:
(a) Officer's Certificate. The Transferor shall have delivered
to the Trustee a certificate of a Vice President or more senior officer
substantially in the form of Schedule 2 hereto, certifying that (i) all
requirements set forth in Section 2.6 of the Pooling and Servicing
Agreement for designating Additional Accounts and conveying the
Principal Receivables of such Account, whether now existing or
hereafter created, have been satisfied and (ii) each of the
representations and warranties made by the Transferor in Section 5 is
true and correct as of the Addition Date. The Trustee may conclusively
rely on such Officer's Certificate, shall have no duty to make
inquiries with regard to the matters set forth therein, and shall incur
no liability in so relying.
(b) Opinion of Counsel. The Transferor shall have delivered to
the Trustee an Opinion of Counsel with respect to the Additional
Accounts designated hereby substantially in the form of Exhibit E to
the Pooling and Servicing Agreement.
(c) Additional Information. The Transferor shall have delivered
to the Trustee such information as was reasonably requested by the
Trustee to satisfy itself as to the accuracy of the representation and
warranty set forth in subsection 5(d) to this Agreement.
7. Amendment of the Pooling and Servicing Agreement. The
Pooling and Servicing Agreement is hereby amended to provide that all references
therein to the "Pooling and Servicing Agreement," to "this Agreement" and
"herein" shall be deemed from and after the Addition Date to be a dual reference
to the Pooling and Servicing Agreement as supplemented by this Assignment.
Except as expressly amended hereby, all of the representations, warranties,
terms, covenants and conditions to the Pooling and Servicing Agreement shall
remain unamended and shall continue to be, and shall remain, in full force and
effect in accordance
B-4
<PAGE>
with its terms and except as expressly provided herein shall not constitute or
be deemed to constitute a waiver of compliance with or a consent to
noncompliance with any term or provisions of the Pooling and Servicing
Agreement.
8. Counterparts. This Assignment may be executed in
two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.
B-5
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment
of Receivables in Additional Accounts to be duly executed and delivered by their
respective duly authorized officers on the day and year first above written.
DILLARD ASSET FUNDING COMPANY
By:
------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:
------------------------------
Name:
Title:
Title:
B-6
<PAGE>
Schedule 1
to Assignment of
Receivables in
Additional Accounts
-------------------
ADDITIONAL ACCOUNTS
-------------------
B-7
<PAGE>
Schedule 2
to Assignment of
Receivables in
Additional Accounts
-------------------
Dillard Asset Funding Company
Dillard Credit Card Master Trust I
Officer's Certificate
__________________________, a duly authorized officer of
Dillard Asset Funding Company, a business trust organized and existing under the
laws of the State of Delaware, (the "Transferor"), hereby certifies and
acknowledges on behalf of the Transferor that to the best of his knowledge the
following statements are true on ____________, ____, (the "Addition Date"), and
acknowledges on behalf of the Transferor that this Officer's Certificate will be
relied upon by The Chase Manhattan Bank, as Trustee (the "Trustee") of the
Dillard Credit Card Master Trust I in connection with the Trustee entering into
Assignment No. ______ of Receivables in Additional Accounts, dated as of the
Addition Date (the "Assignment"), by and between the Transferor and the Trustee,
in connection with the Amended and Restated Pooling and Servicing Agreement,
dated as of June 28, 2000, as heretofore supplemented and amended (the "Pooling
and Servicing Agreement") pursuant to which Dillard Asset Funding Company, as
Transferor, Dillard National Bank, as Servicer and the Trustee are parties. The
undersigned hereby certifies and acknowledges on behalf of the Transferor that:
(a) on or prior to the Addition Date, The Transferor has
delivered to the Trustee the Assignment (including an acceptance by the Trustee
on behalf of the Trust for the benefit of the Investor Certificateholders) and
The Transferor has indicated in its computer files that the Receivables created
in connection with the Additional Accounts have been transferred to the Trust
and within five Business Days after the Addition Date The Transferor shall
deliver to the Trustee a computer file or microfiche list containing a true and
complete list of all Additional Accounts identified by account number and the
aggregate amount of the Receivables in such Additional Accounts as of the
Addition Date, which computer file or microfiche list shall be as of the date of
such Assignment, incorporated into and made a part of such Assignment and the
Pooling and Servicing Agreement.
(b) Legal, Valid and Binding Obligation. The Assignment
constitutes a legal, valid and binding obligation of The Transferor, enforceable
against The Transferor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws
B-8
<PAGE>
now or hereafter in effect affecting the enforcement of creditors' rights in
general and the rights of creditors of (banking associations) and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(c) Eligibility Of Accounts. Each Additional Account
designated pursuant to the Assignment is an Eligible Account and each
Receivable in such Additional Account is an Eligible Receivable.
(d) Selection Procedures. No selection procedures believed by
the Transferor to be materially adverse to the interests of the Investor
Certificateholders were utilized in selecting the Additional Accounts designated
hereby from the available Eligible Accounts in the Credit Card Portfolio.
(e) Insolvency. The Transferor is not insolvent and, after
giving effect to the conveyance set forth in Section 3 of the Assignment, will
not be insolvent.
(f) Security Interest. The Assignment constitutes either: (i) a
valid transfer and assignment to the Trust of all right, title and interest of
The Transferor in and to Receivables now existing and hereafter created in the
Additional Accounts designated pursuant to the Assignment, and all proceeds (as
defined in the UCC as in effect in the State of New York) of such Receivables
and Insurance Proceeds relating thereto, and such Receivables and any proceeds
thereof and Insurance Proceeds relating thereto will be held by the Trust free
and clear of any Lien of any Person claiming through or under the Transferor or
any of its Affiliates except for (x) Liens permitted under subsection 2.5(b) of
the Pooling and Servicing Agreement, (y) the interest of The Transferor as
holder of the Transferor Certificate and (z) the Transferor's right to receive
interest accruing on, and investment earnings in respect of, the Finance Charge
Account and the Principal Account as provided in the Pooling and Servicing
Agreement and any Supplement; or (ii) a grant of a security interest (as defined
in the UCC as in effect in the State of New York) in such property to the Trust,
which is enforceable with respect to the existing Receivables of the Additional
Accounts designated pursuant to the Assignment, the proceeds (as defined in the
UCC as in effect in the State of New York) thereof and Insurance Proceeds
relating thereto upon the conveyance of such Receivables to the Trust, and which
will be enforceable with respect to the Receivables thereafter created in
respect of Additional Accounts designated pursuant to the Assignment, the
proceeds (as defined in the UCC as in effect in the State of New York) thereof
and Insurance Proceeds relating thereto, upon such creation; and (iii) if the
Assignment constitutes the grant of a security interest to the Trust in such
property, upon the filing of a financing statement described in Section 3 of the
Assignment with respect to the Additional Accounts designated pursuant to the
Assignment and in the case of the Receivables of such Additional Accounts
thereafter created and the proceeds (as defined in the UCC as in effect in the
State of New York) thereof, and Insurance Proceeds relating to such Receivables,
upon such creation, the Trust shall have a first priority perfected security
interest in such property
B-9
<PAGE>
(subject to Section 9-306 of the UCC as in effect in the State of New York),
except for Liens permitted under subsection 2.5(b) of the Pooling and Servicing
Agreement.
(g) Requirements of Pooling and Servicing Agreement. All
requirements set forth in Section 2.6 of the Pooling and Servicing Agreement for
designating Additional Accounts and conveying the Principal Receivables of such
Accounts, whether now existing or hereafter created, have been satisfied.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand this
_____ day of___________, ____.
DILLARD ASSET FUNDING COMPANY
By:
----------------------------
Name:
Title:
B-10
<PAGE>
EXHIBIT C
---------
FORM OF MONTHLY SERVICER'S CERTIFICATE
--------------------------------------
Dillard National Bank
--------------------------------------------------------------------------------
DILLARD CREDIT CARD MASTER TRUST I
--------------------------------------------------------------------------------
1. Capitalized terms used in this Certificate have their
respective meanings set forth in the Amended and Restated Pooling and Servicing
Agreement; provided, that the "preceding Monthly Period" shall mean the Monthly
Period immediately preceding the calendar month in which this Certificate is
delivered. This Certificate is delivered pursuant to subsection 3.4(b) of the
Amended and Restated Pooling and Servicing Agreement. References herein to
certain sections and subsections are references to the respective sections and
subsections of the Amended and Restated Pooling and Servicing Agreement.
2. DNB is Servicer under the Amended and Restated
Pooling and Servicing Agreement.
3. The undersigned is a Servicing Officer.
4. The date of this Certificate is a Determination Date
under the Amended and Restated Pooling and Servicing.
5. The aggregate amount of Collections
processed during the preceding Monthly Period was equal to
excluding Annual Membership Fees and Interchange). . . . . . . . . $---------
6. The Aggregate Investor Percentage of
Receivables processed by the Servicer during the preceding
Monthly Period was equal to . . . . . . . . .. . . . . . . . . . . $---------
7. The Aggregate Investor Percentage of
Collections of Finance Charge Receivables processed by the
Servicer during the preceding Monthly Period was equal to
(excluding Annual Membership Fees and Interchange) . . . . . . . . $---------
8. The aggregate amount of Receivables
processed by the Servicer as of the end of the last day
of the preceding Monthly Period . . . . . . . . . . . . . . . . . . $---------
9. Of the balance on deposit in the
Finance Charge Account, the amount attributable to the
Aggregate Investor Percentage of Collections processed
by the Servicer during the preceding Monthly Period . . . . . . . . $---------
10. Of the balance on deposit in the
Principal Account, the amount attributable to the Aggregate
Investor Percentage of Collections processed by the Servicer
during the preceding Monthly Period . . . . . . . . . . . . . . . . $---------
C-1
<PAGE>
11. The aggregate amount, if any, of
withdrawals, drawings or payments under any Credit Enhancement,
if any, required to be made with respect to any Series outstanding
for the preceding Monthly Period . . . . . . . . . . . . . . . . . . $---------
12. The Aggregate Investor Percentage of
Collections of Principal Receivables processed by the Servicer
during the current month is equal to . . . . . . . . . . . . . . . . $---------
13. The amount equal to the Aggregate
Investor Percentage of Annual Membership Fees deposited to
the Finance Charge Account or any Series Account on or before
the Transfer Date during the current month is equal to . . . . . . . $---------
14. The aggregate amount of Interchange
to be deposited in the Finance Charge Account on the Transfer
Date of the current month is equal to . . . . . . . . . . . . . . . $---------
15. The aggregate amount of all sums
payable to the Investor Certificateholder of each Series on
the succeeding Distribution Date with respect to
Certificate Principal . . . . . . . . . . . . . . . . . . . . . . . $---------
16. The aggregate amount of all sums
payable to the Investor Certificateholder of each Series on
the succeeding Distribution Date with respect to
Certificate Interest . . . . . . . . . . . . . . . . . . . . . . . . $---------
17. To the knowledge of the undersigned, there are no
Liens on any Receivables in the Trust except as described below:
[If applicable, insert "None."]
C-2
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed
and delivered this certificate this ____ day of __________, ____.
DILLARD NATIONAL BANK,
as Servicer
By:
------------------------------
Name:
Title:
C-3
<PAGE>
Schedule to Monthly
Servicer's Certificate<F1>
Dillard National Bank
-------------------------------------------------------------------------------
DILLARD CREDIT CARD MASTER TRUST I
-------------------------------------------------------------------------------
---------------------
1 A separate schedule is to be attached for each series, with appropriate
changes and additions to reflect the specifics of the related Series
Supplement.
C-4
<PAGE>
EXHIBIT D
---------
FORM OF ANNUAL SERVICER'S CERTIFICATE
-------------------------------------
Dillard National Bank
-------------------------------------------------------------------------------
DILLARD CREDIT CARD MASTER TRUST I
-------------------------------------------------------------------------------
The undersigned, a duly authorized representative of DILLARD
NATIONAL BANK, a national banking association organized and existing under the
laws of the United States ("DNB"), as Servicer pursuant to the Amended and
Restated Pooling and Servicing Agreement dated as of June 28, 2000 (the "Pooling
and Servicing Agreement") by and among Dillard Asset Funding Company, DNB and
The Chase Manhattan Bank, as trustee (the "Trustee") does hereby certify that:
1. DNB is Servicer under the Pooling and Servicing
Agreement.
2. The undersigned is duly authorized pursuant to the Pooling
and Servicing Agreement to execute and deliver this Certificate to the
Trustee.
3. This Certificate is delivered pursuant to Section
3.5 of the Pooling and Servicing Agreement.
4. A review of the activities of the Servicer during [the
period from the Closing date until December 31, 2000] or [the
twelve-month period ended December 31, ___] was conducted under the
supervision of the undersigned.
5. Based on such review, the Servicer has, to the best of the
knowledge of the undersigned, fully performed all its obligations under
the Pooling and Servicing Agreement throughout such period and no
default in the performance of such obligations has occurred or is
continuing except as set forth in paragraph 6 below.
6. The following is a description of each default in the
performance of the Servicer's obligations under the provisions of the
Pooling and Servicing Agreement, including any Supplement, known to the
undersigned to have been made during such period which sets forth in
detail (i) the nature of each such default, (ii) the action taken by
the Servicer, if any, to remedy each such default and (iii) the current
status of each such default:
[If applicable, insert "None."]
D-1
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed
this certificate this ____ day of ____________, ____.
By:
------------------------------
Name:
Title: Vice President
D-2
<PAGE>
EXHIBIT E
---------
FORM OF OPINION OF COUNSEL REGARDING ADDITIONAL ACCOUNTS
--------------------------------------------------------
PROVISIONS TO BE INCLUDED IN OPINION OF COUNSEL TO BE DELIVERED PURSUANT
TO SUBSECTION 2.6(c)(vi) OF THE POOLING AND SERVICING AGREEMENT
The opinions set forth below may be subject to certain
qualifications, assumptions, limitations and exceptions taken or made in the
opinion of Transferor's counsel with respect to similar matters delivered on the
Closing Date.
The Assignment has been duly authorized, executed and delivered
by the Transferor and constitutes the legal, valid and binding agreement of the
Transferor, enforceable against the Transferor in accordance with its terms
subject to the effects of bankruptcy, insolvency, liquidation, receivership,
conservatorship, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
If the transfer of the Receivables in the Additional Accounts
designated in the Assignment to the Trust pursuant to the Pooling and Servicing
Agreement constitutes a true sale of such Receivables to the Trust:
With respect to such Receivables in existence on the date
hereof, such sale transfers all of the right, title and interest of the
Transferor in and to such Receivables and the proceeds thereof to the
Trust, free and clear of any liens now existing (other than existing
liens as to which a filing under the Code is not required to perfect
such liens) or hereafter created but subject to the rights of the
Transferor as holder of the Transferor Certificate. With respect to
such Receivables which come into existence after the date hereof, upon
the creation of such Receivables, such sale will transfer all of the
right, title and interest of the Transferor in and to such Receivables
and the proceeds thereof to the Trust free and clear of any liens other
than liens which are in existence on the date of such transfer
("Intervening Liens") but subject to the rights of the Transferor as
holder of the Transferor Certificate. Any such Intervening Liens would
be subject to the prior perfected security interest in favor of the
Trustee as set forth in paragraph 3 below. In either case, no further
action will thereafter be required under New York or federal law to
protect the Trust's ownership interest in such Receivables against
creditors of, or subsequent purchasers from, the Transferor. We note,
however, that unless the obligor in respect of a Receivable has
received notice of such assignment, bona fide payments made by such
obligor to a second assignee of such
E-1
<PAGE>
Receivable will discharge such obligor's obligations to the extent of
such payment, and such payment will be recoverable only from such
second assignee.
If the transfer of the Receivables to the Trust pursuant to the
Pooling and Servicing Agreement as supplemented by the Assignment does not
constitute a true sale of such Receivables to the Trust, then the Pooling and
Servicing Agreement creates a valid security interest in favor of the Trustee,
for the benefit of the Investor Certificateholders in the Transferor's right,
title and interest in and to such Receivables and the proceeds thereof. If the
transfer of such Receivables to the Trust constitutes a true sale of such
Receivables to the Trust but such sale is not effective as of such date to
convey Receivables not existing on such date, the Pooling and Servicing
Agreement as supplemented by the Assignment creates a valid security interest in
favor of the Trustee, for the benefit of the Investor Certificateholders, in the
Transferor's interest in such Receivables and the proceeds thereof to the extent
such interest is not so conveyed to the Trust. In either event, such security
interest constitutes a perfected security interest in such Receivables subject
to no prior or equal liens, enforceable as such against creditors of, and
purchasers from, the Transferor and the FDIC as conservator or receiver for the
Transferor, except:
(i) as enforceability may be subject to (A) the right
of the FDIC, as receiver for the Transferor, to enforce the Pooling and
Servicing Agreement, notwithstanding any provision thereof providing
for termination, default, acceleration, or exercise of rights upon, or
solely by reason of, insolvency or the appointment of a conservator or
receiver, (B) the FDIC's authority, as receiver for the Transferor, to
transfer any asset or liability of the Transferor to another depository
institution, (C) the statutory prohibition on any attachment or
execution being issued by any court upon assets in the possession of
the FDIC as receiver for the Transferor, (D) the right of the FDIC to
obtain a stay, for a period not to exceed 90 days, in any judicial
action or proceeding to which the Transferor is a party and (E) the
right of the FDIC, as receiver for the Transferor, to require a secured
party to establish its right to payments by submitting to and
completing the claims procedure established by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989;
(ii) as perfection may be limited (A) with respect to
any such Receivables which are evidenced by instruments (as defined in
Section 9-105(l)(i) of the Code) which are not in the possession of the
Trustee; and (B) in the case of proceeds, by Section 9-306 of the Code;
and
(iii) as priority may be subject to (A) any liens,
claims or other interests that arise by operation of law and do not
require any filing or similar action in order to take priority over a
perfected security interest; (B) any claim or lien in favor of the
United States, any state or any agency or
E-2
<PAGE>
instrumentality thereof (including, without limitation, liens arising
under the federal, state or local tax laws or under the Employee
Retirement Income Security Act of 1974, as amended); (C) the security
interest of any Person claiming any portion of the collateral as
proceeds (other than Receivables in which the Trustee has a prior lien)
of such Person's security interest or (D) the security interest of any
Person previously perfected without filing or the taking of possession
pursuant to Section 9-304(4) of the UCC; (E) liens under Section 4-208
of the Code (relating to the security interest of a collecting bank);
(F) with respect to any Receivables represented by chattel paper (and
proceeds thereof), the interest of a purchaser of such chattel paper
under Section 9-308 of the Code; and (G) a claim by the FDIC or any
other receiver or conservator of the Transferor for administrative
expenses. Such perfection and priority of the security interest of the
Trustee for the benefit of the Investor Certificateholders would not be
affected by an increase or a decrease in the relative interests in the
Receivables of the Transferor as holder of the Transferor Certificate
and the Investor Certificateholders.
In addition, in connection with the opinions set forth in
paragraph 2 and this paragraph 3, no opinion is expressed herein with respect to
Receivables or the proceeds thereof other than the Receivables in the Additional
Accounts designated by the Assignment and the proceeds thereof. No opinion is
expressed herein with respect to the perfection, priority or enforceability of
the Trust's interest in proceeds of the Receivables except to the extent such
proceeds consist of either (1) identifiable cash proceeds held in the Collection
Account maintained by a Eligible Institution in the name of the Trust in
accordance with the terms of the Pooling and Servicing Agreement and the
Supplements or (2) Permitted Investments held by or on behalf of the Trustee in
accordance with the terms of the Pooling and Servicing Agreement and the
Supplements. We do not express any opinion herein: (i) as to the creation,
validity or enforceability of any interest of the Transferor in the Receivables
or the proceeds thereof, (ii) as to the Transferor's title to any of the
Receivables or the proceeds thereof, (iii) as to whether the transfer of the
Receivables constitutes a true sale or a grant of a security interest, (iv) as
to whether the purported sale of all Receivables now existing and hereafter
created is effective to convey as a true sale to the Trust, as of the purported
date of sale, Receivables which do not exist as of such date of sale, or as to
whether Receivables hereafter created in an Account are deemed to exist as of
the date hereof or (v) as to whether a court may temporarily restrain the
exercise of the Trust's rights to the Receivables and the proceeds thereof.
Further, we point out that delays in the exercise of the rights and interests of
the Trust may occur with respect to the Receivables and their proceeds in the
possession of a receiver or conservator, regardless of whether the transaction
constitutes a true sale or a secured transaction, by actions unilaterally taken
by such receiver or conservator.
E-3
<PAGE>
With respect to the opinions expressed in paragraphs 2 and 3,
we note that pursuant to Section 2.1 of the Pooling and Servicing Agreement, the
Transferor has filed the Financing Statements with the Office of the Secretary
of State of the State of New York and the City Register in the County of New
York. In expressing the opinions set forth herein, we have assumed that in the
event that a change in the Transferor's name, identity or corporate structure
makes the Financing Statements seriously misleading within the meaning of
Section 9-402(7) of the New York Uniform Commercial Code (the "Code"), or the
Transferor moves the location of its executive office outside the State of
__________, the Transferor will file such financing statements or amendments as
may be necessary to continue the perfection of the Trust's interest in the
Receivables and the proceeds thereof as required by Section 13.2 of the Pooling
and Servicing Agreement within the time specified in Section 9-402(7) of the
Code or Section 9-103(3)(e) of the Code, as the case may be.
In expressing the opinions set forth herein, we have relied,
without independent investigation, upon reports received from the Office of the
Secretary of State of the State of __________ and the City Register in the
County of __________ with respect to financing statements and related filings
and with respect to certain notices of federal government liens, __________
State government tax liens, certain attachment liens and judgment liens with
respect to the Transferor on file with such offices. The effective dates of the
latest of such reports are set forth in Schedule A attached hereto (the "UCC
Report Schedule"). [In addition, with respect to the items identified on
Schedule B attached hereto, we have relied without independent investigation, on
a certificate of an officer of the Transferor attached hereto to the effect that
such items do not represent a lien or security interest on the Receivables.] [We
have assumed that no such filings or notices were made with respect to the
Transferor between the effective time of such reports and the time of the filing
of the Financing Statements. We note that the Transferor has delivered to us a
certificate to the effect of the preceding sentence.] In the Pooling and
Servicing Agreement, the Transferor represents and warrants that it has good and
marketable title to the Receivables free and clear of all Liens, and we note
that the Transferor has delivered to us a certificate to such effect.
In addition, we call to your attention the fact that if the
FDIC were appointed receiver for the Transferor, the FDIC could repudiate any
contract it determined to be burdensome and the repudiation of which it
determined would promote the orderly administration of the Transferor's affairs.
12 U.S.C. (S) 1821(e)(1), (2). However, Section 1821 provides that the FDIC's
power as receiver to repudiate contracts is not to be construed to permit the
avoidance of a properly perfected security interest except where such an
interest is taken in contemplation of insolvency or with the intent to hinder,
delay, or defraud the institution or the creditors of the institution. 12 U.S.C.
(S) 1821(e)(11). We have relied, without independent verification, upon on a
certificate of an officer of the Transferor (attached hereto as Annex I), to the
effect that (i) the Transferor was not as of the date of transfer
E-4
<PAGE>
of the Receivables, insolvent or on the verge of insolvency and was not rendered
insolvent or on the verge of insolvency by reason thereof, (ii) the transfer was
not made in contemplation of insolvency and (iii) the transfer was made in good
faith and without the intent to hinder, delay or defraud any of the Transferor's
creditors. In reliance upon the certificate of the Transferor referred to above,
we are of the opinion that the transfer of, or the grant of a security interest
in, the Receivables to the Trust would not be subject to repudiation by the
FDIC.
E-5
<PAGE>
EXHIBIT F
---------
FORM OF ANNUAL OPINION OF COUNSEL
---------------------------------
The opinions set forth below, which are to be delivered
pursuant to subsection 13.2(d)(ii) of the Pooling and Servicing Agreement, may
be subject to certain qualifications, assumptions, limitations and exceptions
taken or made in the opinion of counsel to the Transferor with respect to
similar matters delivered on the Closing Date.
1. If the transfer of the Receivables to the Trust pursuant to
the Pooling and Servicing Agreement constitutes a true sale of such Receivables
to the Trust:
(a) With respect to such Receivables in existence on the date
hereof, such sale transfers all of the right, title and interest of the
Transferor in and to such Receivables and the proceeds thereof to the
Trust, free and clear of any liens now existing (other than existing
liens as to which a filing under the Code is not required to perfect
such liens) or hereafter created but subject to the rights of the
Transferor as holder of the Transferor Certificate.
(b) With respect to such Receivables which come into existence
after the date hereof, upon the creation of such Receivables, such sale
will transfer all of the right, title and interest of the Transferor in
and to such Receivables and the proceeds thereof to the Trust free and
clear of any liens other than liens which are in existence on the date
of such transfer ("Intervening Liens") but subject to the rights of the
Transferor as holder of the Transferor Certificate. Any such
Intervening Liens would be subject to the prior perfected security
interest in favor of the Trustee as set forth in paragraph 3 below.
In either case, no further action will thereafter be required under New York or
federal law to protect the Trust's ownership interest in such Receivables
against creditors of, or subsequent purchasers from, the Transferor. We note,
however, that unless the obligor in respect of a Receivable has received notice
of such assignment, bona fide payments made by such obligor to a second assignee
of such Receivable will discharge such obligor's obligations to the extent of
such payment, and such payment will be recoverable only from such second
assignee.
2. If the transfer of the Receivables to the Trust pursuant to
the Pooling and Servicing Agreement does not constitute a true sale of such
Receivables to the Trust, then the Pooling and Servicing Agreement creates a
valid security interest in favor of the Trustee, for the benefit of the Investor
Certificateholders in the Transferor's right, title and interest in and to such
Receivables and the
F-1
<PAGE>
proceeds thereof. If the transfer of such Receivables to the Trust constitutes a
true sale of such Receivables to the Trust but such sale is not effective as of
such date to convey Receivables not existing on such date, the Pooling and
Servicing Agreement creates a valid security interest in favor of the Trustee,
for the benefit of the Investor Certificateholders, in the Transferor's interest
in such Receivables and the proceeds thereof to the extent such interest is not
so conveyed to the Trust. In either event, such security interest constitutes a
perfected security interest in such Receivables subject to no prior or equal
liens, enforceable as such against creditors of, and purchasers from, the
Transferor and the FDIC as conservator or receiver for the Transferor, except:
(i) as enforceability may be subject to (A) the right
of the FDIC, as receiver for the Transferor, to enforce the Pooling and
Servicing Agreement, notwithstanding any provision thereof providing
for termination, default, acceleration, or exercise of rights upon, or
solely by reason of, insolvency or the appointment of a conservator or
receiver, (B) the FDIC's authority, as receiver for the Transferor, to
transfer any asset or liability of the Transferor to another depository
institution, (C) the statutory prohibition on any attachment or
execution being issued by any court upon assets in the possession of
the FDIC as receiver for the Transferor, (D) the right of the FDIC to
obtain a stay, for a period not to exceed 90 days, in any judicial
action or proceeding to which the Transferor is a party and (E) the
right of the FDIC, as receiver for the Transferor, to require a secured
party to establish its right to payments by submitting to and
completing the claims procedure established by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989;
(ii) as perfection may be limited (A) with respect to
any such Receivables which are evidenced by instruments (as defined in
Section 9105(l)(i) of the Code) which are not in the possession of the
Trustee; and (B) in the case of proceeds, by Section 9-306 of the Code;
and
(iii) as priority may be subject to (A) any liens,
claims or other interests that arise by operation of law and do not
require any filing or similar action in order to take priority over a
perfected security interest; (B) any claim or lien in favor of the
United States, any state or any agency or instrumentality thereof
(including, without limitation, liens arising under the federal, state
or local tax laws or under the Employee Retirement Income Security Act
of 1974, as amended); (C) the security interest of any Person claiming
any portion of the collateral as proceeds (other than Receivables in
which the Trustee has a prior lien) of such Person's security interest
or (D) the security interest of any Person previously perfected without
filing or the taking of possession pursuant to Section 9-304(4) of the
UCC; (E) liens under Section 4-208 of the Code (relating to the
security interest of a collecting bank); (F)
F-2
<PAGE>
with respect to any Receivables represented by chattel paper (and
proceeds thereof), the interest of a purchaser of such chattel paper
under Section 9-308 of the Code; and (G) a claim by the FDIC or any
other receiver or conservator of the Transferor for administrative
expenses. Such perfection and priority of the security interest of the
Trustee for the benefit of the Investor Certificateholders would not be
affected by an increase or a decrease in the relative interests in the
Receivables of the Transferor as holder of the Transferor Certificate
and the Investor Certificateholders.
In addition, in connection with the opinions set forth in
paragraph 1 and this paragraph 2, no opinion is expressed herein with respect to
Receivables or the proceeds thereof other than the Receivables in the Additional
Accounts designated by the Assignment and the proceeds thereof. No opinion is
expressed herein with respect to the perfection, priority or enforceability of
the Trust's interest in proceeds of the Receivables except to the extent such
proceeds consist of either (1) identifiable cash proceeds held in the Collection
Account maintained by a Eligible Institution in the name of the Trust in
accordance with the terms of the Pooling and Servicing Agreement and the
Supplements or (2) Permitted Investments held by or on behalf of the Trustee in
accordance with the terms of the Pooling and Servicing Agreement and the
Supplements. We do not express any opinion herein: (i) as to the creation,
validity or enforceability of any interest of the Transferor in the Receivables
or the proceeds thereof, (ii) as to the Transferor's title to any of the
Receivables or the proceeds thereof, (iii) as to whether the transfer of the
Receivables constitutes a true sale or a grant of a security interest, (iv) as
to whether the purported sale of all Receivables now existing and hereafter
created is effective to convey as a true sale to the Trust, as of the purported
date of sale, Receivables which do not exist as of such date of sale, or as to
whether Receivables hereafter created in an Account are deemed to exist as of
the date hereof or (v) as to whether a court may temporarily restrain the
exercise of the Trust's rights to the Receivables and the proceeds thereof.
Further, we point out that delays in the exercise of the rights and interests of
the Trust may occur with respect to the Receivables and their proceeds in the
possession of a receiver or conservator, regardless of whether the transaction
constitutes a true sale or a secured transaction, by actions unilaterally taken
by such receiver or conservator.
With respect to the opinions expressed in paragraphs 1 and 2,
we note that pursuant to Section 2.1 of the Pooling and Servicing Agreement, the
Transferor has filed the Financing Statements with the Office of the Secretary
of State of the State of __________ and the City Register in the County of New
York. In expressing the opinions set forth herein, we have assumed that in the
event that a change in the Transferor's name, identity or corporate structure
makes the Financing Statements seriously misleading within the meaning of
Section 9-402(7) of the [New York Uniform Commercial Code] (the "Code"), or the
Transferor moves the location of its executive office outside the State of
__________, the Transferor will file such financing statements or
F-3
<PAGE>
amendments as may be necessary to continue the perfection of the Trust's
interest in the Receivables and the proceeds thereof as required by Section 13.2
of the Pooling and Servicing Agreement within the time specified in Section
9-402(7) of the Code or Section 9-103(3)(e) of the Code, as the case may be.
In expressing the opinions set forth herein, we have relied,
without independent investigation, upon reports received from the Office of the
Secretary of State of the State of __________ and the City Register in the
County of __________ with respect to financing statements and related filings
and with respect to certain notices of federal government liens, __________
State government tax liens, certain attachment liens and judgment liens with
respect to the Transferor on file with such offices. The effective dates of the
latest of such reports are set forth in Schedule A attached hereto (the "UCC
Report Schedule"). [In addition, with respect to the items identified on
Schedule B attached hereto, we have relied without independent investigation, on
a certificate of an officer of the Transferor attached hereto to the effect that
such items do not represent a lien or security interest on the Receivables.] [We
have assumed that no such filings or notices were made with respect to the
Transferor between the effective time of such reports and the time of the filing
of the Financing Statements. We note that the Transferor has delivered to us a
certificate to the effect of the preceding sentence.] In the Pooling and
Servicing Agreement, the Transferor represents and warrants that it has good and
marketable title to the Receivables free and clear of all Liens, and we note
that the Transferor has delivered to us a certificate to such effect.
In addition, we call to your attention the fact that if the
FDIC were appointed receiver for the Transferor, the FDIC could repudiate any
contract it determined to be burdensome and the repudiation of which it
determined would promote the orderly administration of the Transferor's affairs.
12 U.S.C. (S) 1821(e)(1), (2). However, Section 1821 provides that the FDIC's
power as receiver to repudiate contracts is not to be construed to permit the
avoidance of a properly perfected security interest except where such an
interest is taken in contemplation of insolvency or with the intent to hinder,
delay, or defraud the institution or the creditors of the institution. 12 U.S.C.
(S) 1821(e)(11). We have relied, without independent verification, upon on a
certificate of an officer of the Transferor (attached hereto as Annex I), to the
effect that (i) the Transferor was not as of the date of transfer of the
Receivables, insolvent or on the verge of insolvency and was not rendered
insolvent or on the verge of insolvency by reason thereof, (ii) the transfer was
not made in contemplation of insolvency and (iii) the transfer was made in good
faith and without the intent to hinder, delay or defraud any of the Transferor's
creditors. In reliance upon the certificate of the Transferor referred to above,
we are of the opinion that the transfer of, or the grant of a security interest
in, the Receivables to the Trust would not be subject to repudiation by the
FDIC.
F-4
<PAGE>
EXHIBIT G
---------
FORM OF REASSIGNMENT OF RECEIVABLES
-----------------------------------
REASSIGNMENT NO. ____ OF RECEIVABLES, dated as of __________
___, ____, by and between Dillard Asset Funding Company, a business trust
organized and existing under the laws of the State of Delaware (the
"Transferor"), and The Chase Manhattan Bank, a banking corporation organized
under the laws of the State of New York (the "Trustee") pursuant to the Pooling
and Servicing Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Transferor, Dillard National Bank, as Servicer and
the Trustee are parties to the Pooling and Servicing Agreement, dated as of June
28, 2000 (hereinafter as such agreement may have been, or may from time to time
be, amended, supplemented or otherwise modified, the "Pooling and Servicing
Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the
Transferor wishes to remove all Receivables from certain designated Accounts of
the Transferor (the "Removed Accounts") and to cause the Trustee to reconvey the
Receivables of such Removed Accounts, whether now existing or hereafter created,
from the Trust to the Transferor (as each such term is defined in the Pooling
and Servicing Agreement); and
WHEREAS, the Trustee is willing to accept such designation and
to reconvey the Receivables in the Removed Accounts subject to the terms and
conditions hereof;
NOW, THEREFORE, the Bank and the Trustee hereby agree as
follows:
1. Defined Terms. All terms defined in the Pooling and
Servicing Agreement and used herein shall have such defined meanings when
used herein, unless otherwise defined herein.
"Removal Date" shall mean, with respect to the Removed
Accounts designated hereby, ___________, _____.
"Removal Notice Date" shall mean, with respect to the Removed
Accounts designated hereby, ___________, _____ (which shall be a date on or
prior to the fifth Business Day prior to the Removal Date).
2. Designation of Removed Accounts. The Transferor
shall deliver to the Trustee, not later than five Business Days after the
Removal Date, a computer file or microfiche list containing a true and
complete list of each Dillard's and Mercantile account which as of the
G-1
<PAGE>
Removal Date shall be deemed to be a Removed Account, such accounts being
identified by account number and by the aggregate amount of Receivables in such
accounts as of the close of business on the Removal Date. Such list shall be
marked as Schedule 1 to this Reassignment and shall be incorporated into and
made a part of this Reassignment as of the Removal Date.
3. Conveyance of Receivables.
(a) The Bank does hereby reconvey to the Bank, without
recourse on and after the Removal Date, all right, title and interest of the
Trust in and to the Receivables now existing and hereafter created in the
Removed Accounts designated hereby, all monies due or to become due with respect
thereto (including all Finance Charge Receivables), all proceeds (as defined in
Section 9-306 of the UCC as in effect in the State of New York) of such
Receivables, Insurance Proceeds relating to such Receivables and the proceeds
thereof.
(b) In connection with such transfer, the Trustee agrees to
execute and deliver to the Transferor on or prior to the date of this
Reassignment, a termination statement with respect to the Receivables now
existing and hereafter created in the Removed Accounts designated hereby (which
may be a single termination statement with respect to all such Receivables)
evidencing the release by the Trust of its Lien on the Receivables in the
Removed Accounts, and meeting the requirements of applicable state law, in such
manner and such jurisdictions as are necessary to remove such Lien.
4. Representations and Warranties of the Bank. The
Transferor hereby represents and warrants to the Trust as of the Removal
Date:
(a) Legal Valid and Binding Obligation. This Reassignment
Constitutes a legal, valid and binding obligation of the Transferor
enforceable against the Transferor in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general and the rights of creditors of banking associations and except
as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity).
(b) Selection Procedures. No selection procedures
believed by the Transferor to be materially adverse to the
interests of the Investor Certificateholders were utilized in
selecting the Removed Accounts designated hereby.
5. Conditions Precedent. The amendment of the Pooling
and Servicing Agreement set forth in Section 6 hereof is subject to the
satisfaction, on or prior to the Removal Date, of the following condition
precedent:
G-2
<PAGE>
The Transferor shall have delivered to the Trustee an
Officer's Certificate certifying that (i) as of the Removal Date, all
requirements set forth in Section 2.7 of the Pooling and Servicing
Agreement for designating Removed Accounts and reconveying the
receivables of such Removed Accounts, whether now existing or hereafter
created, have been satisfied, and (ii) each of the representations and
warranties made by the Transferor in Section 4 hereof is true and
correct as of the Removal Date. The Trustee may conclusively rely on
such Officer's Certificate, shall have no duty to make inquiries with
regard to the matters set forth therein, and shall incur no liability
in so relying.
6. Amendment of the Pooling and Servicing Agreement. The
Pooling and Servicing Agreement is hereby amended to provide that all references
therein to the "Pooling and Servicing Agreement," to "this Agreement" and
"herein" shall be deemed from and after the Removal Date to be a dual reference
to the Pooling and Servicing Agreement as supplemented by this Reassignment.
Except as expressly amended hereby, all of the representations, warranties,
terms, covenants and conditions to the Pooling and Servicing Agreement shall
remain unamended and shall continue to be, and shall remain, in full force and
effect in accordance with its terms and except as expressly provided herein
shall not constitute or be deemed to constitute a waiver of compliance with or a
consent to non-compliance with any term or provision of the Pooling and
Servicing Agreement.
7. Counterparts. This Reassignment may be executed in
two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which
together shall constitute one and the same instrument.
8. GOVERNING LAW. THIS REASSIGNMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
G-3
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this
Reassignment of Receivables to be duly executed and delivered by their
respective duly authorized officers on the day and year first above written.
DILLARD ASSET FUNDING COMPANY
By:
------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
--------------------------------,
as Trustee
By:
------------------------------
Name:
Title:
G-4
<PAGE>
Schedule I
to Reassignment
of Receivables
---------------
REMOVED ACCOUNTS
----------------
G-5
<PAGE>
EXHIBIT H
---------
FORM OF RECONVEYANCE OF RECEIVABLES
-----------------------------------
RECONVEYANCE OF RECEIVABLES, dated as of ____________ ___,
____, by and between Dillard Asset Funding Company, a business trust organized
and existing under the laws of the State of Delaware (the "Transferor"), and The
Chase Manhattan Bank, a banking corporation organized and existing under the
laws of New York (the "Trustee") pursuant to the Pooling and Servicing Agreement
referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Transferor, Dillard National Bank and the Trustee
are parties to the Amended and Restated Pooling and Servicing Agreement dated as
of June 28, 2000 (hereinafter as such agreement may have been, or may from time
to time be, amended, supplemented or otherwise modified, the "Pooling and
Servicing Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the
Transferor wishes to cause the Trustee to reconvey all of the Receivables and
proceeds thereof, whether now existing or hereafter created, from the Trust to
the Transferor pursuant to the terms of Section 12.4 of the Pooling and
Servicing Agreement upon termination of the Trust pursuant to subsection 12.1(a)
of the Pooling and Servicing Agreement (as each such term is defined in the
Pooling and Servicing Agreement);
WHEREAS, the Trustee is willing to reconvey Receivables
subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferor and the Trustee hereby agree as
follows:
1. Defined Terms. All terms defined in the Pooling and
Servicing Agreement and used herein shall have such defined meanings when
used herein, unless otherwise defined herein.
"Reconveyance Date" shall mean ______________, ____.
H-1
<PAGE>
2. Return of Lists of Accounts. The Trustee shall deliver to
the Transferor, not later than three Business Days after the Reconveyance Date,
each and every computer file or microfiche list of Accounts delivered to the
Trustee pursuant to the terms of the Pooling and Servicing Agreement.
3. Conveyance of Receivables. (a) The Trustee does hereby
reconvey to the Transferor, without recourse, on and after the Reconveyance
Date, all right, title and interest of the Trust in and to each and every
Receivable now existing and hereafter created in the Accounts, all monies due or
to become due with respect thereto (including all Finance Charge Receivables),
all proceeds (as defined in Section 9- 306 of the UCC as in effect in the State
of [New York]) of such Receivables and Insurance Proceeds relating to such
Receivables and any Interchange, except for amounts, if any, held by the Trustee
pursuant to subsection 12.3(b) of the Pooling and Servicing Agreement.
(b) In connection with such transfer, the Trustee agrees to
execute and deliver to the Transferor on or prior to the date of this
Reconveyance, such UCC termination statements as the Transferor may reasonably
request, evidencing the release by the Trust of its lien on the Receivables.
4. Counterparts. This Reconveyance may be executed in
two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
5. GOVERNING LAW. THIS RECONVEYANCE SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
H-2
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this
Reconveyance of Receivables to be duly executed and delivered by their
respective duly authorized officers on the day and year first above written.
DILLARD ASSET FUNDING COMPANY
By:
------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
------------------------------,
as Trustee
By:
------------------------------
Name:
Title:
H-3
<PAGE>
SCHEDULE I
----------
LIST OF ACCOUNTS
----------------
Delivered to Trustee only
[Deemed Incorporated]
H-4
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . . 20
ARTICLE II CONVEYANCE OF RECEIVABLES;ISSUANCE OF CERTIFICATES . . . . 22
Section 2.1 Conveyance of Receivables . . . . . . . . . . . 22
Section 2.2 Acceptance by Trustee . . . . . . . . . . . . . 23
Section 2.3 Representations and Warranties of the Transferor 24
Section 2.4 Representations and Warranties of the Transferor
Relating to the Agreement and the Receivables . 26
Section 2.5 Covenants of the Transferor . . . . . . . . . . 30
Section 2.6 Addition of Accounts . . . . . . . . . . . . . 33
Section 2.7 Removal of Accounts . . . . . . . . . . . . . . 36
Section 2.8 Discount Option . . . . . . . . . . . . . . . . 37
ARTICLE III ADMINISTRATION ANDSERVICING OF RECEIVABLES . . . . . . . . 38
Section 3.1 Acceptance of Appointment and Other Matters
Relating to the Servicer. . . . . . . . . . . . 38
Section 3.2 Servicing Compensation . . . . . . . . . . . . 40
Section 3.3 Representations and Warranties of the Servicer 40
Section 3.4 Reports and Records for the Trustee . . . . . . 41
Section 3.5 Annual Servicer's Certificate . . . . . . . . . 42
Section 3.6 Annual Independent Accountants' Servicing Report 42
Section 3.7 Tax Treatment . . . . . . . . . . . . . . . . . 43
Section 3.8 Notices to the Transferor . . . . . . . . . . . 43
Section 3.9 Sub-Servicing . . . . . . . . . . . . . . . . . 43
ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS ANDALLOCATION AND APPLICATION
OF COLLECTIONS . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.1 Rights of Certificateholders . . . . . . . . . 44
Section 4.2 Establishment of Accounts . . . . . . . . . . . 44
Section 4.3 Collections and Allocations . . . . . . . . . . 46
Section 4.4 Allocations During Funding Period . . . . . . . 48
Section 4.5 Certain Fees . . . . . . . . . . . . . . . . . 49
ARTICLE V [ARTICLE V IS RESERVED AND SHALL BE SPECIFIEDIN ANY
SUPPLEMENT WITH RESPECT TO ANY SERIES] . . . . . . . . . . . 49
ARTICLE VI THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 49
Section 6.1 The Certificates . . . . . . . . . . . . . . . 49
Section 6.2 Authentication of Certificates . . . . . . . . 50
Section 6.3 Registration of Transfer and Exchange of
Certificates. . . . . . . . . . . . . . . . . . 50
Section 6.4 Mutilated, Destroyed, Lost or Stolen
Certificates. . . . . . . . . . . . . . . . . . 53
Section 6.5 Persons Deemed Owners . . . . . . . . . . . . . 53
Section 6.6 Appointment of Paying Agent . . . . . . . . . . 54
Section 6.7 Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . . . 55
-i-
<PAGE>
Section 6.8 Authenticating Agent . . . . . . . . . . . . . 55
Section 6.9 Tender of Transferor Certificate . . . . . . . 57
Section 6.10 Book-Entry Certificates . . . . . . . . . . . 59
Section 6.11 Notices to Clearing Agency . . . . . . . . . . 59
Section 6.12 Definitive Certificates . . . . . . . . . . . 59
Section 6.13 Global Certificate . . . . . . . . . . . . . . 60
Section 6.14 Meetings of Certificateholders . . . . . . . . 60
ARTICLE VII OTHER MATTERS RELATING TO THE TRANSFEROR . . . . . . . . 61
Section 7.1 Liability of the Transferor . . . . . . . . . . 61
Section 7.2 Merger or Consolidation of, or Assumption
of the Obligations of, the Transferor . . . . . 61
Section 7.3 Limitation of Liability . . . . . . . . . . . . 62
ARTICLE VIII OTHER MATTERS RELATING TO THE SERVICER . . . . . . . . . 62
Section 8.1 Liability of the Servicer . . . . . . . . . . . 62
Section 8.2 Merger or Consolidation of, or Assumption
of the Obligations of, the Servicer . . . . . . 62
Section 8.3 Limitation of Liability of the
Servicer and Others . . . . . . . . . . . . . 63
Section 8.4 Servicer Indemnification of the Trust
and the Trustee . . . . . . . . . . . . . . . 63
Section 8.5 The Servicer Not to Resign . . . . . . . . . . 64
Section 8.6 Access to Certain Documentation and
Information Regarding the Receivables . . . . 64
Section 8.7 Delegation of Duties . . . . . . . . . . . . . 65
Section 8.8 Examination of Records . . . . . . . . . . . . 65
Section 8.9 Securities Act Filings. . . . . . . . . . . . . 65
ARTICLE IX PAY OUT EVENTS. . . . . . . . . . . . . . . . . . . . . . 65
Section 9.1 Pay Out Events . . . . . . . . . . . . . . . . 65
Section 9.2 Additional Rights Upon the Occurrence
of Certain Events . . . . . . . . . . . . . . . 66
ARTICLE X SERVICER DEFAULTS. . . . . . . . . . . . . . . . . . . . . 67
Section 10.1 Servicer Defaults . . . . . . . . . . . . . . 67
Section 10.2 Trustee to Act; Appointment of Successor . . . 69
Section 10.3 Notification to Certificateholders . . . . . . 71
Section 10.4 Waiver of Past Defaults . . . . . . . . . . . 71
ARTICLE XI THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . 72
Section 11.1 Duties of Trustee . . . . . . . . . . . . . . 72
Section 11.2 Certain Matters Affecting the Trustee . . . . 73
Section 11.3 Trustee Not Liable for Recitals
in Certificates . . . . . . . . . . . . . . . . 75
Section 11.4 Trustee May Own Certificates . . . . . . . . . 75
Section 11.5 The Servicer to Pay Trustee's
Fees and Expenses . . . . . . . . . . . . . . . 75
Section 11.6 Eligibility Requirements for Trustee . . . . . 75
Section 11.7 Resignation or Removal of Trustee . . . . . . 76
Section 11.8 Successor Trustee . . . . . . . . . . . . . . 76
Section 11.9 Merger or Consolidation of Trustee . . . . . . 77
Section 11.10 Appointment of Co-Trustee or Separate Trustee . 77
Section 11.11 Tax Returns . . . . . . . . . . . . . . . . . . 78
-ii-
<PAGE>
Section 11.12 Trustee may Enforce Claims Without
Possession of Certificates. . . . . . . . . . 79
Section 11.13 Suits for Enforcement . . . . . . . . . . . . 79
Section 11.14 Rights of Certificateholders to
Direct Trustee. . . . . . . . . . . . . . . . 79
Section 11.15 Representations and Warranties of Trustee . . 79
Section 11.16 Maintenance of Office or Agency . . . . . . . 80
ARTICLE XII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.1 Termination of Trust . . . . . . . . . . . . . 80
Section 12.2 Optional Purchase . . . . . . . . . . . . . . 81
Section 12.3 Final Payment with Respect to any Series . . . 81
Section 12.4 Termination Rights of Holder of Transferor
Certificate. . . . . . . . . . . . . . . . . . 82
Section 12.5 Defeasance . . . . . . . . . . . . . . . . . . 83
ARTICLE XIII MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . 84
Section 13.1 Amendment . . . . . . . . . . . . . . . . . . 84
Section 13.2 Protection of Right, Title and
Interest to Trust . . . . . . . . . . . . . . 85
Section 13.3 Limitation on Rights of Certificateholders. . 86
Section 13.4 GOVERNING LAW . . . . . . . . . . . . . . . . 87
Section 13.5 Notices . . . . . . . . . . . . . . . . . . . 87
Section 13.6 Severability of Provisions . . . . . . . . . . 88
Section 13.7 [RESERVED] . . . . . . . . . . . . . . . . . . 88
Section 13.8 Certificates Non-Assessable and Fully Paid . . 88
Section 13.9 Further Assurances . . . . . . . . . . . . . . 88
Section 13.10 No Waiver; Cumulative Remedies . . . . . . . 88
Section 13.11 Counterparts . . . . . . . . . . . . . . . . 88
Section 13.12 Third-Party Beneficiaries . . . . . . . . . . 88
Section 13.13 Actions by Certificateholders . . . . . . . . 88
Section 13.14 Rule 144A Information . . . . . . . . . . . . 89
Section 13.15 Merger and Integration . . . . . . . . . . . 89
Section 13.16 Headings . . . . . . . . . . . . . . . . . . 89
-iii-
<PAGE>
EXHIBITS
Exhibit A Form of Transferor Certificate
Exhibit B Form of Assignment of Receivables in Additional Accounts
Exhibit C Form of Monthly Servicer's Certificate
Exhibit D Form of Annual Servicer's Certificate
Exhibit E Form of Opinion of Counsel Regarding Additional Accounts
Exhibit F Form of Annual Opinion of Counsel
Exhibit G Form of Reassignment of Receivables
Exhibit H Form of Reconveyance of Receivables
SCHEDULES
Schedule 1 List of Accounts [Deemed Incorporated]
-iv-
<PAGE>
--------------------------------------------------------------------------------
DILLARD ASSET FUNDING COMPANY
Transferor
DILLARD NATIONAL BANK
Servicer
and
THE CHASE MANHATTAN BANK
Trustee
on behalf of the Certificateholders
of Dillard Credit Card Master Trust I
---------------------------------------
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of June 28, 2000
--------------------------------------------------------------------------------
<PAGE>
6.____________________
7.[FN]
<F1>
A separate schedule is to be attached for each Series, with appropriate
changes and additions to reflect the specifics of the related Series
Supplement.
</FN>
